CBIZ, Inc.

Good day and welcome to the CBiz second quarter 2025 conference call. All participants will be in list and only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like I would now like to turn the conference over to Lori Novickis, Director of Corporate Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us for today's conference call to discuss SEBA's second quarter and first half 2025 results. As a reminder, this call is being webcast and a link to the live webcast, along with today's press release and investor presentation, can be found on the Investor Relations page of our website, cbiz.com. 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 may discuss certain non-GAAP financial measures. Reconciliations of these measures can be found in the financial tables of today's press release and investor presentations. Today's call may also include forward-looking statements regarding our business, financial condition, results of operations, cash flows, strategies, and prospects. Forward-looking statements represent only our expectations, estimates, and projections as of this date of this call and are not intended to give any assurance of future results. Because forward-looking statements relate to matters that have not yet occurred, These statements are inherently subject to risks and uncertainties. Many factors could cause future results to differ materially, and CBIS assumes no obligation to update these statements except as required by law. A more detailed description of such factors can be found in today's press release and in our financial filings with the Securities and Exchange Commission. Joining us for today's call are Jerry Briscoe, President and Chief Executive Officer of and Brad Bacchia, Chief Financial Officer. I will now turn the call over to Jerry Grusko for his opening remarks. Jerry?

Thank you, Lori, and good afternoon, everyone. I'm pleased to report that our second quarter results reflect the resiliency of our core and recurring essential business, though the current economic climate continued to impact our more market-sensitive areas. Today, in addition to talking about the second quarter and first half results, I'll address the proactive measures we are taking to drive revenue and control expenses in response to these market conditions. And I will also discuss why we think the Markham acquisition is one of the most important in value-creating strategic decisions in our history. I'll provide an update on integration and our continued excitement about the strength of our combined team and the opportunities ahead for accelerated growth and profitability. Year-to-date organic revenue for our core services within our benefits and insurance segment and our core accounting and tax services grew by low single digits, and our national practice segment grew by 13%. Likewise, year-to-date adjusted EBITDA more than doubled compared to last year, reflecting both the strength of our business model as well as the accretive nature of the Markham acquisition. The second quarter business climate was largely unchanged from the first quarter, with continued uncertainty around tariffs, geopolitical unrest, and government funding cuts. Our middle market clients rely on us for essential services like our accounting, tax, benefits, and insurance in all economic environments. But they often wait for more stable conditions before investing in discretionary project-based services. The first half of 2025 has been anything but stable and certain. Our second quarter sentiment analysis, with responses from nearly 1,400 clients and client-facing professionals, substantiated these trends. Nearly 60% expressed a neutral outlook, citing higher operational costs, mixed economic forecasts, and challenging tariff and trade policies as top concerns. As a result, overall revenue for the non-recurring project-based portions of our business, when excluding our SEC-related practice, is down low single digits year over year. Industry reports and discussions indicate that growth in these areas has been particularly challenging for our competitors as well this year. For the first time in years, we're also seeing pressure on rate increases. Over the past several years, we've achieved net rate increase in the mid to high single digits, and for the first six months, we billed clients accordingly. However, in Q2, we saw increased client pushback, aligning with our survey data that clients are prioritizing cost controls. Year-to-date, our rate increase has averaged about 4%. which is 200 to 300 basis points below our expectations going into the year and is expected to create a headwind of about $75 million for the full year. Given the current and anticipated economic client, we've accelerated several significant revenue and cost control initiatives. On revenue, each of our nearly 1,000 managing directors has been tasked with identifying new target clients, scheduling meetings to introduce our expanded services, conducting stewardship meetings with top clients, and participating in industry groups charged with pursuing top opportunities. On the cost side, we've expedited a number of integration-related decisions, including workforce integration. With nearly 450 fewer full-time equivalent employees in our core businesses compared to last year, we're seeing enhanced team utilization and improved compensation expenses. Looking ahead, We expect continued steady demand for our core recurring essential businesses to provide line of sight to the lower end of our revenue guidance, even as non-recurring services face ongoing headwinds. We believe our revenue and cost initiatives will partially offset these pressures and support the achievement of our adjusted EBITDA and EPS guidance. Let me reiterate the strategic rationale for the Markham transactions. We're even more excited about the strength of the team that joined us, the client fit, and the opportunities for growth and profitability neither firm could have achieved on their own. Markham's business closely resembles SEVA's legacy core in accounting and tax business. They serve middle market clients, maintain deep client relationships, achieve high retention rates, and generate strong cash flow. They also share a successful track record of organic and inorganic growth, and bring operational excellence and complementary capabilities in technology, industry practices, and offshoring. Markham also strengthened our presence in key U.S. markets like New York, where we are now the largest accounting service provider outside the Big Four, as well as in New England, the Mid-Atlantic, South Florida, and Southern California. The acquisition expanded our client base and opened new cross-serving opportunities to deliver an even broader array of services and depth of expertise to our combined clients. Our increased size and scale as the largest professional service advisor of our kind to middle market clients, including as the nation's seventh largest accounting firm, strengthens our position as an employer of choice for exceptional talent, allows us to pursue larger and more complex client engagements, enhancing our ability to reach total addressable market that extends to roughly 200,000 middle market U.S. businesses that collectively generate over $10 trillion in annual revenue, and employ approximately 48 million people, and it supports substantial investments in critical areas, including AI and other advanced technologies, offshoring, automation, and branding, all while leveraging our collective infrastructure to expand margins and enhance profitability. On integration, as previously shared, we delayed client-facing changes during busy season, instead focusing on back-office opportunities. That work is now in full swing and on schedule. Early results are positive, and when we have faced challenges, we've acted quickly with our primary focus being supporting our team and our clients. With that, I'll turn it over to Brad for some details.