CBIZ Q1 2023 Earnings Call Transcript

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Provided by Quartr
April 27, 2023

Key Takeaways

  • Total Q1 performance was strong with revenue up 16.1% and adjusted EPS rising 23.7% year-over-year.
  • Financial Services revenue grew 18.8% (organic 10.5%) on price increases, higher volume, the Somerset acquisition and robust demand for advisory and tax credit services.
  • Benefits & Insurance revenue increased 8.2%, driven by strong sales production, high client retention, rising benefits and casualty premiums, payroll pricing and expanded actuarial work.
  • Full-year guidance was reaffirmed at the high end of prior ranges, targeting 8–10% revenue growth and 11–13% adjusted EPS growth, reflecting sustained momentum.
  • Margin headwinds include normalized post-pandemic expenses, higher interest costs (≈75 bps drag) and a 28% effective tax rate (≈$0.08 EPS impact), partly offset by operational leverage.
AI Generated. May Contain Errors.
Earnings Conference Call
CBIZ Q1 2023
00:00 / 00:00

There are 7 speakers on the call.

Operator

After today's presentation, there will be an opportunity to ask 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.

Speaker 1

Good morning, everyone, and thank you for joining us for the CBIZ First Quarter 2023 Results conference call. In connection with this call, today's press release and quarterly investor presentation have been posted to the Investor Relations page of our site, cbis.com. As a reminder, this call is being webcast and a link to the live webcast can also be found on our site. An archived replay and transcript will also be made available following the call. Before we begin, we would like to remind you that during the call, management Today's press release and investor presentation.

Speaker 1

Today's call may also include forward looking statements regarding our business, Because forward looking statements relate to matters that have not yet These statements are inherently subject to risks and uncertainties. Many factors could cause future results to A more detailed description of such factors Can be found in our filings with the Securities and Exchange Commission. Joining us for today's call are Jerry Grisko, President and Chief Executive Officer and Ware Grove, Chief Financial Officer. I will now turn the call over to Jerry for his opening remarks.

Speaker 2

Thank you, Laurie. Good morning and thank you for joining us for today's call. We are pleased to share our Q1 performance for 2023 And to discuss our outlook for the remainder of the year. As I outlined during our last earnings call, we started 2023 following the second year of record performance for our business. From nearly every measurable perspective, our results last year were exceptional and provided strong momentum going into this year.

Speaker 2

I'm proud to share that our growth has continued with another strong quarter to start this year. To highlight our results for the Q1, Our total revenue increased 16.1% and our adjusted EPS is up 23.7% compared to the same period a year ago. That growth is a result of outstanding performance from both of our major divisions. Our Financial Services division experienced total revenue growth of 18.8% And organic revenue growth of 10.5% in the Q1. As you're aware, the Q1 is the traditional busy season for our accounting and and demand for those services remains robust.

Speaker 2

Our revenue growth in the Q1 reflects our ability to continue to capture price increases, An increase in the volume of work and the contribution of our most recent acquisition, Somerset CPA and Advisors, Which joined us effective February 1. We also benefited from demand for a number of services that we provide to assist our clients with emerging opportunities, Such as the employee retention tax credit as well as continued strong demand across nearly all of our major project oriented advisory services, Including our risk and advisory services, our valuation services, our services focused on the private equity industry and our forensic accounting services. We also experienced growth over the last year within our government healthcare consulting business. As we discussed on prior calls, Long term multiyear projects make up a sizable component of this business. So timing on the start of those contracts and any pause in that work Can impact revenue growth in a particular period.

Speaker 2

And in fact, we did see some delays in project timing through the Q1, But we expect those delays to be short lived and for those projects to get back on track later this year. Over the past Couple of years, the accounting industry has experienced labor constraints, which somewhat reduced the rate of growth that would have occurred had more We are pleased to see that the talent appears to be more readily available in recent months And we're happy that the investments that we've made in our recruitment team over the past several years have put us in a position to attract top talent to our team. Now turning to our Benefits and Insurance division, where we are also off to a very strong start to the year, with total revenue growth of 8.2% compared to the prior period. The growth within this division came from all 4 of our major service lines, largely fueled by strong sales production and favorable client retention rates. We also benefited from rising premiums within our employee benefits in our property and casualty insurance service lines, Increased pricing for our payroll services and increased project work within the actuarial group embedded within our Retirement Investment Services business.

Speaker 2

Now before I turn it over to Ware, I'd like to make a few comments on our full year guidance that we provided in February. To remind you, in February, we guided full year revenue growth within a range of 8% to 10% and adjusted EPS growth within a range of 11% to 13% Over the full year results delivered in 2022. Based on our exceptionally strong performance in the Q1 this year, We currently anticipate that our full year results will come in at the high end of that range. So with this, I'll turn it over to Ware Grove, our Chief Financial Officer, To provide additional information on our financial performance for the Q1 and more details on our full year guidance. Ware?

Speaker 3

Thank you, Jerry, and good morning, everyone. Let me take a few minutes to talk about key highlights of the Q1 numbers we released this morning. The strong momentum we saw through our business in 2022 has continued through the Q1 this year. Total revenue in the Q1 increased by 16.1% over Q1 a year ago. Same unit revenue was up by 10% With acquisitions contributing another 6.1 percent to growth compared with last year.

Speaker 3

Within Financial Services, For the Q1, total revenue grew by 18.8% and same unit revenue for the Q1 was up by 10.5% The strong revenue growth throughout traditional core accounting, advisory services and government healthcare consulting services. Within Benefits and Insurance, same unit revenue for the Q1 was up by 8.5%. We continue to see strong client retention And strong new client production. The investments we have made in recent years to hire new business producers has continued to gain traction As we see increasing new business production, we remain committed to further enhancing growth capabilities within the Benefits and Insurance Group, And we will continue to make investments in hiring additional producers. Effective February 1, we acquired Somerset CPAs and Advisors That is based in Indianapolis.

Speaker 3

With estimated annual revenue of approximately $55,000,000 in 2023, We expect to record approximately $52,000,000 of revenue from this acquisition. There are transaction closing costs plus onetime integration In a similar manner that reporting from Arx Paneth acquisition related costs last year, We will report an adjustment to eliminate these acquisition related costs from GAAP reported results to report adjusted results this year. You will find a reconciliation of these items as a schedule included in the earnings release. We are extremely pleased to have the Somerset team on board, And the business is performing in line with our expectations. With a view towards presenting meaningful For full information, eliminating the impact of these items, adjusted earnings per share for the Q1 this year was $1.46 up 23.7% compared with adjusted earnings per share last year of 1.18 Adjusted EBITDA, considering these same adjustments, was $113,300,000 for the 3 months this year, Up 22% over adjusted EBITDA of $92,900,000 last year.

Speaker 3

After seeing artificially low levels of expenses through the pandemic, we have previously talked about the level of health care and benefits, travel and entertainment expenses And marketing expenses that are normalizing to higher levels. We continue to see year over year impacts. And for the 1st 3 months of this year, These expenses represented a 60 basis point headwind to margin on income before tax compared with last year. We continue to project that these expenses will settle in lower than pre pandemic levels, but for a period of time, The year over year comparison presents a headwind. Interest expense also presents a headwind this year as rates have increased from a year ago.

Speaker 3

In the Q1, increased borrowing levels, coupled with higher rates, caused interest expense to increase as a percent of revenue By approximately 50 basis points. And for the full year, this could represent a headwind of approximately 75 basis points to margin. For the quarter, we reported an increase in interest expense of $2,400,000 and that impacted earnings per share by approximately $0.035 per share. Despite these headwinds, we are leveraging costs, eliminating the impact of the one time acquisition and transaction Integration costs for the Q1, we can report 100 basis points increase in adjusted pretax income margin. We will continue to say that Over time, we expect to achieve a 20 to 50 basis point annual increase in pretax income margin.

Speaker 3

And in recent years, our performance has exceeded the higher end of that range. For the full year 'twenty three, we expect the margin on pretax revenue We'll fall within this range of 20 to 50 basis points of annual improvement. As always, details of The impact of accounting for gains and losses in our nonqualified deferred compensation plan are outlined in the release. Because we are comparing a period in 2022 with capital markets losses compared with capital markets This year, there is a significant impact to the GAAP reported numbers as you look at both gross margin and operating income. As a reminder, pretax income margin is not impacted by this accounting.

Speaker 3

Turning to the cash flow items. In 2022, we amended our unsecured credit facility to increase the availability from $400,000,000 to $600,000,000 And extended the maturity by 5 years. On March 31 this year, the balance outstanding on the newly upsized $600,000,000 unsecured facility was $403,700,000 with about $190,000,000 of unused capacity. The balance sheet at March 31 this year is strong with leverage of approximately 1.9x adjusted EBITDA. This provides plenty of capacity to continue with strategic acquisitions and provides the flexibility to continue with share repurchases.

Speaker 3

In the Q1 of this year, with the Somerset transaction, combined with earn out payments on previously closed transactions, We used approximately $67,700,000 for acquisition purposes. We expect to use $27,400,000 Approximately $33,400,000 in 2025 and then approximately $6,700,000 in 2026 For these estimated earn out payments, deploying capital for strategic acquisition purposes continues to be our highest priority. Since the end of 2019, we have closed 17 transactions and we have deployed approximately $348,000,000 Capital for acquisition purposes, including the earn out payments over time. Through March 31 this year, We have repurchased approximately 428,000 shares of our common stock in the open market at a cost of approximately $20,800,000 Since March 31, under our 10b program, we have repurchased an additional 210,000 shares, Making the total shares repurchased through April 26 this year approximately 640,000 shares. To recap repurchase activity in recent years, since the end of 2019, we have repurchased approximately 8,700,000 shares And that represents slightly more than 15% of the shares outstanding compared to the end of 2019.

Speaker 3

Approximately $308,000,000 of capital has been used towards this open market repurchase activity over that period. Day sales outstanding on March 31 this year was 94 days and that was the same as it was the Q1 a year ago. Bad debt expense for the 1st 3 months this year was 10 basis points of revenue compared with 14 basis points a year ago. Depreciation and amortization expense for the Q1 this year was $8,600,000 compared with $8,200,000 last year. For the full year, we expect depreciation and amortization at approximately $36,000,000 this year Compared with approximately $33,000,000 last year.

Speaker 3

Capital spending for the Q1 was $3,600,000 Greater spending is planned later this year for tenant improvements related to our anticipated Q3 move to our new headquarter facilities. Most of our capital spending is associated with leasehold improvements and furniture for office facilities. For the full year this year, we're Expecting capital spending to be approximately $15,000,000 to $20,000,000 As a reminder, we are a major tenant in our new headquarters building with a long term lease. We are not an owner of the building. The effective tax rate for the 3 months this year was 26.5%, Inspiration of certain grandfather tax benefits that were associated with stock based compensation expense as provided in the Tax Reform Act of 2017.

Speaker 3

Plus, there was an increase in nondeductible expenses in 23 as compared to last year. The impact of the increased tax rate in the Q1 Was approximately $0.03 a share and with a forecasted full year effective rate of 28%, We expect the full year impact at approximately 0 point 0 $0.08 per share. The increased effective tax rate in 2023 is a headwind And that's unique to this year compared with 2022. In future years, we expect the effective tax rate to be relatively level At approximately 28%, so there will be no further year over year headwind beyond this year. The recurring and essential nature of many of our services provide stability through economic cycles.

Speaker 3

At this point, as we look at employment driven metrics in our benefits And in our payroll businesses, we are seeing continued signs of steady and strong employment within our clients. But as we look ahead And consider the potential for economic slowdown, if we experience pressure on revenue growth, we have a number of variable items in our cost structure, And we can take measures to mitigate the impact. The tools and systems we have put in place in recent years have enabled us to increase pricing And keep pace with underlying cost pressures, leverage costs and protect margins. The investments we made and are continuing to make in new business producers, Particularly focused within our Benefits and Insurance group have gained traction, and we are seeing strong new business coupled with strong client retention, And that is driving revenue growth. Now before I turn it back over to Jerry, I want to provide you with our thoughts on full year guidance.

Speaker 3

Our first quarter results came in very strong. And at this early stage of the year, we are very comfortable guiding at the high end of the full year ranges we set in February For both revenue growth and for growth in adjusted earnings per share. The results from the Somerset acquisition that was acquired in February contributed to the Q1 results in a very meaningful manner. It is common to see a seasonally strong Q1 from our core financial services operations And the initial results from the newly acquired Somerset operation were particularly strong. In the second quarter, After a busy tax season, we plan to address system and other integration issues with Somerset.

Speaker 3

We will We'll also work to gain greater visibility on full year forecasted expectations, and we will revisit annual guidance at the end of the second quarter. The increased tax rate this year, which is unique to 2023 when compared with the prior year, presents estimated headwinds equal to approximately $0.08 per share for the full year. We also commented on the headwinds presented by increased interest rates in 23 versus prior year. And in the Q1, increased interest expense impacted earnings per share by approximately 0.3.5p, And we expect increased rates may have a similar quarterly impact on full year this year as we compare it to the prior year. Now despite these headwinds that are unique to 23, the underlying operating results for the Q1 are extremely strong.

Speaker 3

Revenue growth was stronger than expected in the Q1, but with the second half more dependent upon project oriented business, At this early stage of the year, it is too early to update our annual guidance. So to recap our full year guidance, we'll say the following. We expect total revenue to increase at the higher end of the range of 8% to 10% growth for the year. On an adjusted basis, we expect 20 3, adjusted earnings per share to increase at the higher end of the growth range of 11% to 13% over the adjusted earnings per share of $2.13 That was reported in 2022. Now GAAP reported earnings per share is expected to increase at the higher end of the range A 15% to 17% growth over the $2.01 reported for 2022.

Speaker 3

The effective tax rate for the full year of 2023 is expected at approximately 28%. Now this could be impacted either up or down by a number of unpredictable factors. And lastly, the fully diluted weighted average share count is expected within a range of 50.5 To 51,000,000 shares for the full year 'twenty three, and you should note that this share count is now slightly lower than our initial estimate. So with these comments, I'll conclude and I'll turn it back over to Jerry.

Speaker 2

Thank you, Ware. As I generally do, I'd like to take a few minutes to provide an update on our M and A results for the Q1. Since the start of the year, we've completed 2 acquisitions. The first was a small litigation support firm located in Irvine, California. That firm was already working closely with our litigation support team on the West Coast And we'll bring expertise and talent to our growing practice in that market.

Speaker 2

Also, as Ware referred, Effective February 1, we are pleased to announce the acquisition of the non attest assets of Somerset, an accounting, tax and advisory firm headquartered in Indianapolis And with additional offices in Fort Wayne and Michigan City, Indiana and Nashville, Tennessee. Somerset is what we would consider a platform acquisition As it allows us to enter a growing and attractive geographic market with a firm that provides us with significant scale and a terrific team of professionals at the outset, Along with immediate opportunities to offer additional services to their clients and our clients. Combined, These two acquisitions added approximately 245 professionals $58,000,000 in annualized revenue to CBIZ. In addition to those 2 most recent acquisitions, our M and A pipeline remains healthy and we continue to be proactive in evaluating new opportunities. With that said, we will move it over to Q and A.

Operator

Thank you. We will now begin the question and answer session. Today's first question comes from Christopher Moore with CJS Securities. Please go ahead.

Speaker 4

Hey, good morning, guys. Congratulations on another great quarter. Thanks for taking a couple of questions. So one of the areas we've discussed frequently, you just touched on a little bit earlier, was how CBIZ will do in the next big turndown. Organic growth was down roughly 6% in 2,009, the last big one, partially offset by your ability to flex costs in that situation.

Speaker 4

So I guess the question is, how would you compare the revenue base today versus 2,009 both from recurring revenue as a percentage of revenue standpoint as well as in terms of the sustainability of the project work. Is the mix of the project work much different currently? Is that more or less vulnerable to a slowing economy?

Speaker 2

Yes. Chris, this is Jerry. It's a great question and one that we get from time to time, as you know. I would start with this. We're a different company today than we were in during that period of time.

Speaker 2

We've made substantial investments in the business. When we look back over that period of time, not only is the mix of recurring versus nonrecurring different today, about 75 Percent of our work tends to be within the recurring category. It was higher back then. We've also looked back and said at that time when we declined, as you said, Even at its lowest period, it was only off 6% compared to many others. But within that 6% Was a significant impact from our Benefits and Insurance Group.

Speaker 2

What was causing that was really we did not have enough producers At that time to overcome, the natural attrition rate in that business. Over that period of time, we've made substantial a similar Improvements and substantial investments in that area, and you're seeing that, in the rate of organic revenue growth that we're getting Kind of across the line within our Benefits and Insurance division. So I think we're a very different company today than we were back then. I think our mix It's different, recurring versus non recurring. And I think we've made investments that would Provide us with substantially stronger outcomes in a similar environment today.

Speaker 3

Yes. Chris, this is The only thing I would add is, I think it's important and instructed to look back to 2,009, 2010. And as Jerry comments, we're a much different company with different tools to manage the business at this point in time. But it's also instructive, I think, to look at the year 2000, the pandemic year that was kind of a recession like environment. Our same unit revenue was flat that year.

Speaker 3

So to Jerry's comment that the benefits and insurance group as we've invested, it's to gain more traction. So the positives there kind of outweighed the project oriented vulnerabilities that we saw in 2000. So Don't know what lies ahead, but I think those two data points are important to consider.

Speaker 4

Perfect. Thanks guys. That's very helpful. One of the things you talked about in your prepared remarks was the labor challenges slowed the accounting industry organic growth a little bit. Have you seen any estimates in terms of what that number was?

Speaker 4

Is that are we talking 1 a 100 or 200 basis points or just not sure if there was any statistics out there.

Speaker 2

Yes, I didn't hear it quantified. I'll give Maybe we have a different response here, but we didn't see it quantified. But as we went as we always do and spoke with our offices, The overriding response that we are getting over the past couple of years is that we had more work kind of in the pipeline than we could Always respond to just based on the number of heads that we had to do that work. We see that easing. You've seen some announcements from the big four recently where they've produced their workforce.

Speaker 2

We've heard of those things in other areas. So while it is and it has been, is and will always be a, I think a competitive work environment, we see some of those challenges that made it uber competitive over the past couple of years starting to ease.

Speaker 4

Got it. All right, guys. I appreciate it. I will leave it there.

Speaker 2

Thanks, Chris.

Operator

The next question comes from Andrew Nicholas with William Blair. Please go ahead.

Speaker 5

Hi, good morning. Thanks for taking my questions. I'll start with an M and A question. It seems like the pipeline is still good. I'm not sure if you have any update on market pricing, but maybe most importantly from my perspective, how should we think about Capacity and I don't necessarily mean that in terms of financial capacity, but More operational capacity, is it fair to assume that you'd be concentrating primarily on tuck ins through the rest of this year as you integrate a Somerset or is it possible that you would do a chunkier deal with the financial capacity that I think you have Later in 2023.

Speaker 2

Yes. Andrew, this is Jerry. Let me start here. My comments in no way reflect Any prediction of what actually will get closed throughout the remainder of the year. But what I would say is we certainly have capacity To be able to absorb another firm of the size of Somerset through the rest of the year, if that one would present itself, we also, of course, would have capacity to do More of the ordinary course types of transactions as well.

Speaker 2

So we don't find ourselves particularly resource constrained At this point, but it all depends on timing and it depends on the individual kind of circumstances around a particular deal, but I don't see that we're really resource constrained at this time.

Speaker 5

That's helpful. Thank you. And then on the project based revenue in the period, specifically in financial services, I guess I was surprised how strong demand was or at least the commentary around how strong demand was In the quarter, I think you noted strong demand in PE Services as well despite what I thought would be declining deal activity as a potential So could you just unpack some of that growth or the strength in project based revenue in the period And maybe any other tidbits you could provide on kind of how that's progressing in April and how you think it will move through the rest of this year?

Speaker 3

Yes. Hi, Andrew. This is Ware. Just to give you a little more color, we've described the advisory piece of the business as approximately a $200,000,000 Collection of business services. And within there, we include our risk and advisory service, that's internal audit, SOX, Co sourcing, outsourcing, that was very, very strong.

Speaker 3

The valuation team has good demand And a lot of that business tends to be recurring as does the RAS business. We also have the PE consulting business That's divided into 2 pieces. 1 is due diligence, transaction services. That Remains very, very strong. No prediction on the balance of the year, but that's very strong.

Speaker 3

We saw a bit of a softness In the West Coast based business that provides staff augmentation and advisory services to the venture capital business. So we got eyes on that, but the strength outweighs the hits and the misses. So net, we saw some good Strength and good growth in that advisory transaction business services.

Speaker 5

Great. That's also very helpful. And then maybe if I could squeeze one more in. I think in the past, you've talked about The strength and competitive positioning of your real estate practices across various regions and offices. I think Marks Paneth also had a sizable real estate practice within it that you're excited to cross sell into, given some of the headlines and concerns about the impact of Vacancy rates and higher interest rates on the commercial real estate market more specifically, I was hoping you could to flesh out your exposure there and if there's any risk that you see to the health of that end market, Whether it be this year or in the coming years?

Speaker 5

Thank you.

Speaker 3

So Andrew, this is Jerry.

Speaker 2

Prior to every Call or at the end of every quarter, we go office to office and ask those types of questions of the people who are client facing. And I think we were actually to see a higher level of caution from our real estate group. We're not hearing that. A No, I'm not speaking it may be an existence in a particular market or a particular type of real estate that they're holding, but we did not hear that in a In the responses that we're receiving from our clients, they are, of course, interest rates impact that size of the business. In some instances, what we heard is that provides opportunities for those with larger portfolios and more scale compared to those that may not have access To funding the way that the larger organizations do.

Speaker 2

So right now, I think it's a wait and see, But we're not hearing it. We certainly didn't feel it in the Q1, and we're not really hearing it across the board with our construction and real estate clients.

Speaker 5

That's helpful. Thank you very much.

Operator

The next question comes from Marc Riddick

Speaker 6

So I think you touched a little bit on the technology clients there, but I was wondering if you could talk if Are there sort of industry vertical standouts amongst your clients, maybe what you're seeing and some things that maybe we might not be thinking about On an industry vertical basis or a regional basis for that matter.

Speaker 2

Yes. Thanks, Mark. Let me start here. As we've stated in the past, a One of the I think the very attractive attributes of our business is we are not overly concentrated in any particular geography or any particular industry. And I think that helps us in kind of all business environments.

Speaker 2

With all of that said, you mentioned IT. With the exception of the business That we're referenced, which is really kind of a very Silicon Valley focused prep for IPO technical accounting business, which did see a little bit of softness, Certainly, over the past 3, 6 months, we are not seeing across the board or in any particular material way Any one of our geographies or client concentration groups, again, that are material to our overall results Being impacted by the current environment.

Speaker 6

Okay. And then I was wondering if you could talk a little bit about maybe Whether it's something you're seeing now or maybe you anticipate going forward as far as the pace of client behaviors when it comes to The macro having an impact on outsourcing decisions or engaging on additional service offerings and the like As well as maybe sort of a competitive dynamic maybe that you're seeing relative to local competitors.

Speaker 2

I'm trying to anticipate a little bit around your question. But what I would say is that, Look, I think we are always trying to keep our finger on the pulse of the needs of the market. And what we're anticipating today Is that there's some more uncertainty in the future business climate than we've seen over the past couple of years, and we are Very proactive in reaching out to our clients on a digital outreach through thought leadership, through seminars, through webinars On the types of topics that are of greatest interest to them, so how to prepare In the event that there is a recession, those are things around cash flow analysis, access to Capital in the market and other services that we provide. And we have a pretty regular cadence of those types of programs, and we see Significant interest in those programs by our clients and by prospective clients. So when you ask the question around how we compare Relative to our competitors, another key attribute of our business is not only the depth of expertise that we have, certainly relative to some of our Smaller, more regional competitors, but the breadth of services that we have, which I think is unique to us compared to the entire market.

Speaker 2

And so that breadth of expertise I'm sorry, yes, that depth of expertise and breadth of services positions us well to be able to serve our clients in a unique way, Certainly in a more challenging business environment.

Speaker 6

Great. And then the last thing for me is, I was sort of curious as to if we should be thinking about Any particular timing of investment spending, whether it be on additional technology, additional a heads that are not related to acquisitions or anything along those lines that we should be thinking about from a timing perspective or anything

Speaker 3

Yes. Mark, this is Ware. I don't I think there's any lumpiness ahead. The one thing that I wanted to draw your attention to is the capital spending. And as we occupy our new headquarters, there may be a lump of capital spending.

Speaker 3

But in aggregate, for the year, We're forecasting a $15,000,000 to $20,000,000 spending level. And typically, in a normal year, it's $10,000,000 to $12,000,000 So it's not a Big item. We don't see anything on the technology or hiring side. We're Constantly looking for good people and we have a good recruiting team out there that's Improving our capacity, it's a good position to be in. We commented earlier on the fact that We were a bit capacity constrained last year, but that tended to ease in the second half of the year, and we're seeing a similar circumstance right now.

Speaker 3

So I think we're in good shape with I don't see any issue there with some lumpiness

Speaker 6

assistance on investment ahead. Great. And then can I sneak in one more, I guess, because I used to ask this often, but I'll throw it in there now? Us to thoughts on marketing spending or what we might see throughout the year and those kind of plans? Thanks.

Speaker 3

Yes. Mark, great question. And for anybody on the call, you may have noticed, we're running a wave of TV ad campaigns right now. So you'll see the CBS ads on CNBC. If you watch PGA and other sporting events, you'll see them there.

Speaker 3

We have gone dark for a while on that, so we're restoring that in a good way. And with respect to other items on the marketing side, we're more effectively using webinars and other virtual tools Along with digital marketing lead campaigns and things like that. So we're really using technology in, I think in a very efficient manner. So our marketing spend is not a significant part of the expense structure.

Operator

Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the call back to President and CEO, Jerry Grisko, for any closing remarks.

Speaker 2

Thank you. I want to thank our shareholders and analysts for joining us today and As always for your continued support, I also want to thank our CBIZ team for a fantastic start to the year and for all of your efforts to build on the momentum that we had coming off of our Record performance last year in 2022. Thank you everybody and enjoy the rest of your day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now

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