Good morning and welcome to the CBIZ Fourth Quarter and Full-Year 2016 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lori Novickis, Director of Corporate Relations. Please go ahead.

Thank you, Anita. Good morning, everyone, and thank you for joining into the CBIZ fourth quarter and full-year 2016 results conference call. In connection with this call, today’s press release has been posted on the Investor Relations page of our website, www.cbiz.com. This call is being webcast. A link to live webcast, as well as a replay can also be found on our website. Before we begin our presentation, we would like to remind you that during the call, management may discuss certain non-GAAP financial measures. A reconciliation of these measures to comparable GAAP measures can be found in the financial tables of today’s press release. Finally, remember that management may also make forward-looking statements. Such statements are based on current information and management’s expectations as of this date and do not guarantee future performance. Forward-looking statements involve certain risks, uncertainties, and a function that can be difficult to predict. Actual results can and sometimes do differ materially. A more detailed description of such risks and uncertainties can be found in the company’s filings with the Securities and Exchange Commission. Joining us for today’s call are Jerry Grisko, President and CEO; and Ware Grove, Chief Financial Officer. I will now turn the call over to Jerry Grisko for his opening remarks. Jerry?

Thank you, Lori, and good morning, everyone. 2016 was another good year for CBIZ and we’re very pleased with the results that we reported earlier this morning for the fourth quarter and for the full-year. For the year and for the quarter, we reported continued strong growth in revenue and improvement in pre-tax margin and growth in earnings per share. Our full-year revenue was in line with expectations and our income from continuing operations exceeded the high-end of our guidance. Total revenue for the fourth quarter was up 8.7%, with same-unit revenue growth up 2.9% compared to the same period a year ago. The fourth quarter is typically a seasonally weaker quarter for us. And for the most recent quarter, we recorded a small loss of $0.01 per share, which compares favorably to the loss of $0.02 a share that we recorded in the fourth quarter of 2015. Total revenue for the full-year 2016 was up 6.6% over the same period a year ago, with 2.6% representing organic revenue growth. We are very pleased to report an improvement of 70 basis points in margin and pre-tax income from continuing operations. And we’re also pleased to report a 15.2% increase in fully diluted earnings per share that being $0.76 per share for the full-year of 2016, compared with the $0.66 per share reported a year ago. We are particularly pleased with the strong results recorded by our Financial Services Group. Total revenue within this group increased by 5.2% for the full-year, with same-unit revenue up 5.1% compared to the prior year. For the fourth quarter, total revenue increased by 5.8%, with same-unit revenue growing by 5.3%. Strong growth within this group was recorded both within our core tax and accounting service lines and within our government healthcare consulting business. For the…

Yes. Thank you, Jerry, and good morning, everyone. Let me reiterate that we are pleased with the results that we reported for the fourth quarter and year ended December 31, 2016. We think that generally favorably – favorable economic conditions will continue and we look for continued progress in growing revenue and expanding margins as we turn to 2017 As Jerry mentioned, we closed six acquisitions during 2016 that are expected to contribute approximately $41 million to annual revenue. Spending on acquisitions for the full-year was approximately $51 million, including payments for earn-outs on acquisitions closed in previous years. Future cash payments for earn-outs are estimated at $16.5 million in 2017, $8.2 million in 2018, $7 million in 2019, and then approximately $1.3 million in 2020. Cash flow for the full-year of 2016 was strong with adjusted EBITDA at $94.8 million, up 9% over $87 million a year ago. As a percent of revenue, adjusted EBITDA was a 11.9% in 2016 compared with a 11.6% for the full-year 2015. Day sales outstanding at year-end 2016 were 76 days and that compares with 72 days a year ago. But the increase being primarily attributed to the balance sheet impact of acquisitions rather than a slowdown in our cash collection efforts. Bad debt expense in 2016 was at 51 basis points of revenue and that compares with 75 basis points of revenue for the full-year 2015. Capital spending for the full-year of 2016 was $4.7 million with $1.5 million of capital spending in the fourth quarter. Capital spending has consistently been in a $4 million to $6 million range annually, and we expect a similar level of capital spending as we look forward to 2017. At year-end 2016, the balance outstanding on our $400 million unsecured credit facility was $191 million, and…

Thank you, Ware. One of the strength of CBIZ is that our clients rely on us to provide certain essential products and services regardless of economic conditions. The scope of these offerings expand in more favorable economic times as our clients turn to us to help support their growth. We clearly benefited from a more favorable business climate and increased optimism among our clients in 2016. Turning to 2017, our nation’s new administration is fast at work establishing new policies and setting its agenda for the next four years. Almost regardless of the changes that are likely to come from Washington, history tells us that the clients will turn to us to help them understand the impact of these changes on their businesses, particularly with a wide scope of significant changes under discussion on item such as the Affordable Care Act and tax reform. We’re also encouraged by the depth of our pipeline for potential acquisitions. While it is always difficult to predict how many transactions we’ll close in a given year, our goal is to close no less than the three to five transactions that we typically completed here. Also, as we accommodated during our Analyst Day last fall, we’re now beginning to explore larger acquisition opportunities that have a close and complementary strategic fit with our existing business, but also have the potential to provide even faster future revenue growth and higher profit margins. Finally, before I conclude, I want to acknowledge the contributions of the more than 4,000 CBIZ associates who are working hard to serve our clients. CBIZ has assembled an outstanding team of highly-skilled professionals who bring a unique breadth of expertise and solutions to our clients throughout the U.S. I’m particularly proud that 25 of our offices were recognized as best places to work in their markets. Our Benefits & Insurance group is recognized as a best place to work in the industry, and CBIZ has recognized is among the best and brightest companies to work for in the nation. All of which speaks volumes about our culture and the high caliber of people who are part of our team here at CBIZ. So with these comments, I’d now like to turn the call over and take questions from you.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jim MacDonald from First Analysis. Please go ahead.

Hey. Good morning, guys.

Hi, Jim.

Hi, Jim.

Hey. So could you talk a little about the new Medicaid contract and that start to kick in, in the quarter?

Yes, Jim, this is Ware. We’re really happy. We’ve been talking about this expansion into the federal Medicaid, I’m sorry, Medicare market for the last couple of years. We were a little slower to get started just because the records from the prior service provider were a little slow to transition over to our group. But we did start it during the second-half of this year. It’s a multiple year contract that should give us in aggregate somewhere between $15 million and $20 million. It’s associated with kidney dialysis network of service providers. And I estimate, it should provide us probably $3 million to $4 million of annual revenue, as we go forward and it should be pretty steady from here on out.

So you’re sort of a full scale in the fourth quarter then?

No, not quite, I would say, we are starting to ramp up in the fourth quarter. We were little slow to get started, again because the records were little slow to transition across to us from the old service provider.

Yeah, Jim, it’s Jerry. The fourth quarter actually reflected little income from this contract. We’ll start to see it in kind of as we’re going to get it wrap up really into the first quarter and throughout the remainder of 2017 and thereafter.

Okay, great. And you talked a little bit about government policy and obviously some changes potential. Any – I mean, I know we don’t know what the final policies are, but if the Affordable Care Act has to go away, any impact on your business, I guess that’s what I’m trying to…?

No, we don’t see a material change. Jim, what we experienced when the Affordable Care Act was enacted was that our clients came to us to understand the impact of that new law on their business and their health plans. I expect that is modified in a material way they will come back to us again to ask us to explain which is always good for us anytime that we can be in front of a clients or prospect, it provides opportunities for us. So longer term, as far as clients – impact on clients, our clients, we did not see a significant migration away from traditional health plans when the – when the Affordable Care Act was enacted, we don’t expect that there would be any change in that going forward. The other question that we get is, is as it relates to our government healthcare consulting practice and again similarly we did not see a significant positive impact from the Affordable Care Act when it was enacted. We also don’t believe that will negatively impact the business in any material way if it is modified going forward.

Okay, just a couple quickies and I’ll get back in the queue. I sort of missed your tax guidance for 2017 and also G&A was a little high in the quarter, I don’t think you talked to that?

Yeah, a couple of things. Tax guidance is at 40% for 2017, I think we came in about 60 basis points lower in 2016 that I would guide you to use 40% going forward to 2017. And yeah, year-end, sometimes G&A can be a little lumpy just due to incentive compensation accruals and things related to kind of year-end final numbers. But year-over-year the leverage was negative and I did make a comment, there were a couple of things, not only the incentive comp, but there was a little lumpiness in some legal expenses, and you are going to see that from time to time. We continue to be comfortable that we can leverage G&A and I would kind of guide you to kind of a 10 basis point improvement each year as we go forward.

Great, thank you.

Our next question comes from Michael Colony [ph] with Sidoti & Company. Please go ahead.

Hi, good morning. Thank you for taking my call and congratulation on a great quarter there, filling in for Joan as she was unable to make the call today. But with that said, one of a questions or just a couple to ask this morning, last quarter you mentioned some turnover issue on the B&I side of the business, has this affected the result.

Yeah, Mike, we were – as we commented the last quarter, it was a few people that happened to a point in time we are pleased with our recruiting efforts there, we have filled the pipeline, it does take some time for our newer producers to reach the same level of productivity as some of our more senior people, but we are pleased with how we’ve responded to that.

Got it, thank you. And if you can just talked a little bit about the web based platform, where you guys employee benefits and payroll services. What kind of progress are you making there and I know Joan mentioned before is that you are talking about 5,000 customers, how many do you have now on that, that arena?

I don’t have the total count, I can get back to you with that number, but I will tell you that it is among our fastest-growing segments. Although again it’s growing off of a very small base, but we are pleased with the reception that we’re receiving in the market. And again that’s a combination of payroll and our employee benefits offering and technology. We’re pleased with the reception that we’re receiving from our clients and prospects. We’re pleased with the growth that we’re seeing and it also helps us obviously to increase the revenue per engagement when we combine all those services. So all signs are positive, but we will say again that it’s very early stage and really too small to materially impact the business right now.

Got it, great and if you can also provide an update on the cross-serving activities to your client base?

Right, so again we experienced year-over-year increase in those activities. Again continue to find opportunities to serve our clients in ways that our competitors cannot and we were very pleased with the results that we saw in 2016 and it was a nice improvement over the 2015 results and again kind of sequentially increasing year-over-year.

Great, thank you. That’s all we have.

[Operator Instructions] Our next question is a follow up from Jim Macdonald with First Analysis. Please go ahead.

Yeah, I thought I’d just dig into the guidance a little bit and what you’ve assumed there. So, any thoughts, have you just assumed the acquisitions you’ve made historically or any new acquisitions in the guidance or how have you thought about that?

Yeah, Jim, we typically do not include future acquisitions in the guidance. We hope to make and we plan to make additional acquisitions; but it’s pretty unpredictable as is any acquisition program. So the guidance really incorporates those businesses already acquired through the end of 2016 at this point in time.

Okay, and with interest rates going up a little bit, is that starting to benefit you guys on your client funds?

It is, we have actively invested to the extent that we’re able to the client funds on an overnight basis and we actually have a layer of those funds that are extended out a bit longer than an overnight basis; but the short-term rates really haven’t moved that much yet. So, we hope to get more basis points out of that investment, but we’re not seeing a significant move yet.

Okay, great, thanks.

[Operator Instructions] This concludes our question and answer session. I would like to turn the conference back over to Jerry Grisko for any closing remarks.

Thank you, Anita. I just want to end by thanking our associates for an outstanding 2016 and thank our shareholders and analysts for your continued support of the company. We look forward to another successful year in 2017. Thank you.

This conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.