Good morning, and welcome to the CBIZ Fourth Quarter and Full Year 2017 Results Conference Call. All participants will be in listen only mode. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Lori Novickis, Direct of Corporate Relations. Please go ahead.

Thank you, Denise. Good morning, everyone and thank you for joining us for the CBIZ fourth quarter and full year 2017 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 also being webcast. A link to the 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 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 managements expectation as of this date and do not guarantee future performance. Forward-looking statements involved certain risks, uncertainties and assumptions 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. With this morning's release we were pleased to report strong results for both the fourth quarter and the full year of 2017. For both the quarter and the year, we reported continued growth in revenue and improvement in pre-tax margin and growth in our earnings per share. For the fourth quarter, we achieved total revenue growth of 9.1% and same unit revenue growth of 3.9%, you might remember that on our last earnings call we discussed the number of unusual events within our Financial Services Group that negatively impacted revenue for our third quarter. In those remarks we noted that while we expected much of that revenue to be recovered, the timing with lesser. As expected in the fourth quarter our Financial Services Group came in very strong, with revenue growth of 15.1% and same unit revenue growth of 7.2%. A portion of that growth is attributable to the work that otherwise would have been completed in the third quarter. We expect to continue to see some portion of that third quarter work also carry into the first quarter of 2018. Switching to our Benefits and Insurance Group, total revenue within that group increased by 1% in the fourth quarter, with organic revenue declining slightly by 0.8%. The largest contributor to those revenue results came from declines in a number of our more transactional businesses, which are far more susceptible to larger fluctuations in revenue from quarter-to-quarter and from year-to-year. For the full year revenue for the company grew by 6.9% and same unit revenue increased by 2.2%. We also achieved a 30 basis point improvement in pre-tax margin from continuing operations for the year. Adjusted for the one-time year-end impact of the tax Reform Act that Ware will address in greater detail…

Thank you, Jerry, and good morning, everyone. Let me take a few minutes to run through the highlights of the results we issued this morning for the fourth quarter and full-year 2017. And I also want to take a few minutes to explain the impact of tax reform on the reported results for 2017 and how this will impact our outlook for 2018. During 2017 as Jerry mentioned, we closed four acquisitions and we recently announced the acquisition of the Denver based Laurus Transaction Advisors business, which was effective February 1, 2018. On a combined basis annually these acquisitions will contribute approximately $31 million to revenue. We used approximately $39.9 million of cash for acquisition related payments during 2017, including earnout payments for acquisitions made in prior years. As of December 31, 2017, future cash spending for earnout payments on acquisitions already closed was estimated at approximately $13.3 million for 2018, approximately $13.7 million in 2019, $7.6 million in 2020 and approximately $500,000 in each 2021 and in 2022. In the fourth quarter of 2017, we were active in our share repurchases and we repurchased 628,000 shares during the fourth quarter. For the full year of 2017, we repurchased approximately 1.2 million shares at a total cost of approximately $18.3 million. Capital spending in the fourth quarter was approximately $3 million, and for the full year of 2017 capital spending was approximately $11.9 million and this was primarily driven by several major office moves that occurred during the year. Going forward annual capital spending is expected to be within a $7 million to $8 million range annually. Days sales outstanding on receivables was 75 days at year-end 2017, that compares for 76 days the prior year. Bad debt expense was 64 basis points compared to total revenue for 2017, and…

Thank you, Ware. As we've commented in the past, one of the strength of CBIZ is that we provide essential products and services that our clients need in good times and in bad. The number of these products and the scope of the services typically expand in more favorable economic environments and in times of change. As we look forward to 2018, we were encouraged by the strength of the economy, the general optimism among leaders of the small middle market business and the opportunities presented by the changes in the regulatory environment, particularly the opportunities presented through the new Tax Reform Act. With more than 50,000 business clients and over 40,000 individual clients, we anticipate very strong demand for our tax and advisory services related to the recent changes to the tax laws and how these changes are likely to impact our clients. In addition, like many other companies, we will also benefit from the lower overall federal tax rate apply to our businesses. As Ware commented, we expect our effective federal tax rate to be reduced from 35% to approximately 25%. A portion of the savings from the lower rate will allow us to accelerate certain investments to enhance the growth of the business. For example, we are planning to increase the number of new producers being hired, trained and supported in our Benefit and Insurance Group, which will allow us to increase the rate of organic revenue growth in that group. We are also planning to increase our investment in national branding to improve our market recognition of the unique value proposition that CBIZ brings to small middle market businesses and to high net worth individuals. While many of these investments would have been made overtime, the savings from the Tax Reform Act provides us with the opportunity to accelerate those investments and the resulting growth of the business. We are pleased to be able to make those investments, while also delivering on the year-over-year improvement in our operating results described earlier by Ware, including our guidance of the 13% to 17% improvement in our earnings per share. Turning to acquisitions, we continue to have a very full pipeline of attractive acquisition opportunities and while the timing of the closing of transactions is difficult to predict, our goal remains to close three to five transactions in 2018. With that, I'll turn it over for questions and answers.

Thank you, Mr. Grisko. We will now begin the question-and-answer session. [Operator Instructions] And your first question will come from Jim MacDonald of First Analysis. Please go ahead.

Yes, good morning, guys.

Good morning, Jim.

I'm sorry for my raspy voice. Could you talk a little bit - you mentioned the tax impact on your services, did that help at all in the fourth quarter? And when do you expect, will that help in the first quarter and do you have enough resources to be able to do the heavy lifting you do in the first quarter plus the tax advice?

Yes, so Jim I would say that as we surveyed our offices the tax impact in the fourth quarter because it came so late had very little impact on the revenue, they were obviously fielding lots of calls and proactively reaching out the clients and prospects, but it really did not translate into revenue for that period of time. Your question on the first quarter is a good one, which is you know we are typically at or near full capacity during that period of time. With that said, it usually ramps up into February and obviously March and I know from again anecdotally speaking with our offices that we've had lots of conversations with clients and prospects as to the impact of the Tax Reform Act. So while I don't think it's going to be a material - have a material impact on our revenue in the first quarter those conversations will continue beyond the tax filing deadlines into April 15th and hopefully translate into a nice lift in our seasonally slower period of time, which comes after April 15.

Great. And then a technical one, in the fourth quarter you have some catch up revenue, but your expenses also blipped up sequentially when they usually blip down, so maybe you can explain that to me?

Jim, are you talking - which expenses are you referring to?

Operating expenses.

There may have been some modest increase due to the - some restructuring activities in one of our national units, as we spoke did a minor restructuring in one of the units.

I can't point to anything other than that might have created some volatility or spike in operating expenses.

Yes, I guess part of it is probably the Rabbi trust which was probably more of an impact in that quarters, so I'm looking at a gross maybe not net.

Yes, exactly Jim, I assume that were kind of cleansing or eliminating the impact of that, but certainly the Rabbi trust had a big impact in the fourth quarter and for the full year for both operating expenses and for G&A expenses.

Okay. And I think Jerry mentioned that you're going to do some - beside the investments and benefits, group it sounded there were some other activities you are going to do maybe you could give some thoughts on what are you going to do to get that growing again?

Yes, so Jim, really if you look at that group as we've said in the past really the drag I think on organic revenue there has really come-in in two buckets. So first is some of our more transactional national businesses like life insurance, like executive search, which by their very nature tend to be more project oriented and harder to predict from quarter-to-quarter or period-to-period. And that was really I think the largest contributor to the impact on revenue growth in both the quarter and the year. The second thing is really our employee benefits group, the other three groups actually experienced quite nice sequential improvement year-over-year quarter-over-quarter. The employee benefits group is really just a product of the number of producers that we have on that team. When we look at that and have looked at that as we've commented in the past we are very pleased with the productivity of the producers we have based on industry standards they produce typically in the top quartile or decile for industry comparables, but we need more of them. And so with that recognition and realization we really set out over the past 12 months to add new producers to that team. We also wanted to make sure that we are not only adding numbers, but we are adding processes to be able to help them to be successful. So it's our recruiting, it's our training, developing, mentoring, et cetera. So we put that process in place and really ramped up the hiring of new producers we saw most of that - those numbers come into the fourth quarter of 2017, we will continue that into 2018 and beyond and expected as a result of those investments we will see considerably improved organic revenue coming from that group.

And Mr. McDonald, did you have any further question, sir.

Yes, sorry so you talked about these operational uses of cash from the better cash flow you're going to have, any thought on more acquisitions, more repurchases, dividends, other uses of cash.

So, Jim as you know, we've never really been cash flow constrained and we have, as I commented, a full pipeline of acquisitions, we continue to be very interested in growing through acquisitions. We're disciplined obviously to make sure that those acquisitions are the right cultural fit, which is our most important priority. And then beyond that that we're able to provide a reasonable return on the investments that we're making. So, certainly the increase cash flow gives us incremental dry powder there, but we've never really been capital constrained in that regard. So, we will continue to - I think the same outlook that we've had before, which is to continue to do everything we can to build that pipeline and to close as many of them as is prudent in any given period of time.

Great, thanks very much.

[Operator Instructions] And I'm showing no additional questions at this time. We will conclude the question and answer - we do have an additional question, that has come in, if you'd like to take it, it is from Stefan [indiscernible] of ACK Asset. Please go ahead.

Hey, good morning.

Good morning.

I just wanted to follow-up on the Q4 organic, I think, Jerry said what was - financial services was up 7.2%?

Yes, that's correct.

Is there any way to parse out how much of that - that's obviously step up in the organic growth rate, how much of that was revenue catch up from the third quarter versus what the underlying growth rate would have been?

I'm sorry, the question again is, how much was incremental, over what would have been expected?

Yes, well, in another words you addressed that Q3 you had some slippage due to the weather in Florida. So I'm just curious and I know it's probably hard to isolate these revenues specifically, but I'm just wondering what the 7.2% would have been on kind of a more normalized basis, if there's any way to characterize that? Or really said in other way, as we go into 2018, it sounds like you still have some catch up from the impact in Q3. And then with the tax reform and business confidence I'm just curious whether you think financial services can continue to grow at that mid-single-digit rate on an organic basis?

Yes, this is Ware, clearly, it's a great question. We came in light in the third quarter, with the comments that we expected to recapture a good share of that, at this stage it's really hard to precisely tell exactly how much came in versus what was lost. But we pointed to a $2 million of revenue impact due to the hurricane and a couple of contract delays in our government healthcare consulting. So, it's fair to think that a good portion of that probably came into the fourth quarter. What I would encourage you to do is kind of look at the full year and the organic revenue for the total Financial Services Group was 3.7% and that's probably a pretty good indicator as we go into 2018 as how that business is growing and how it's performing.

Okay. And you don't think there is some upside to that from the tax reform or you haven't seen it yet and therefore you don't want to really bank on it?

Well, we'd hope there's upside, we're optimistic, we're cautious in our guidance here at this early stage. We're certainly conducting a lot of conversations and meetings' translating that into revenue opportunities is yet to be seen. So, as we go through the year, hopefully we'll be talking about increasing guidance, but that remains to be seen at this stage.

Yes, as I commented, I think all signs are positive right now. Generally more optimism among our clients, generally more favourable business climate, and we track kind of the indicators that are published among for small middle market businesses, those are all very positive, some at historicized. And you put on top of that the regulatory changes, which are always good for our business, because it gives us an opportunity to be talking to our clients as well as introducing our services to prospects. So those are all very, very positive signs, we are very pleased with the organic revenue growth in that group that we experienced last year and we're equally encouraged by prospects for 2018.

Got it. Thank you very much.

[Operator instructions] And showing no additional questions at this time, we will conclude the question-and-answer session. I would like to hand the conference back to Jerry Grisko for his closing comments.

Thank you, Denise. Before we conclude today's call I want to take a moment to thank our over 4,600 team members for another very successful year and for the outstanding work that you do in serving our clients. As a testament to our culture here at CBIZ, I'm especially proud to report that our company was honored to receive over 50 various national and local awards and recognitions throughout 2017. The most recent was being named as one of the Best and Brightest Companies to Work for in the nation for the second year in a row. We were also named Best Place to Work by Business Insurance for the third year in a row, and we were proud recipient of many the best places to work in many of our local office. Finally, I'd like to thank our shareholders and our analysts for your continued support of the company and we look forward to another successful year in 2018. Thank you everyone and have a great day.

Thank you. Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. At this time you may disconnect your lines.