CBIZ, Inc.

Good day and welcome to the CBiz fourth quarter 2025 results conference call. All participants will be in listen 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 now like to turn the conference over to Chris Sikora, Vice President of Investor Relations and Corporate Finance. Please go ahead.

Good afternoon, and thank you for joining us on today's call to discuss CBIZ's fourth quarter and full year 2025 results. New this quarter, we posted an earnings presentation that tracks to our prepared remarks. The presentation is available on our Investor Relations website. Before we start, I'll remind all participants that you will be hearing forward-looking statements during this call. These statements reflect the expectations and beliefs of our management team at the time of the call, but are subject to risks that could cause actual results to differ materially from these statements. You can find additional information on these factors in the company's filings with the SEC. Participants should be mindful that subsequent events may render this information to be out of date. We will also discuss certain non-GAAP financial measures on today's call. As noted on slide three, a reconciliation between GAAP and non-GAAP financial measures can be found in the supplemental schedules of the presentation. Joining us for today's call are Jerry Gersko, President and Chief Executive Officer, Brad Lakia, Chief Financial Officer, and Peter Scavuzzo, Chief Strategy Officer and Technology Leader. I will now turn the call over to Jerry, who will begin on slide four.

Thanks, Chris. Good afternoon, everyone, and thank you for joining us. I want to start today by highlighting how CBIS is positioned to win in the middle market. We have nearly doubled in size, enhanced our service offerings, and advanced our investments in people, technology, and automation. The middle market professional services industry has historically grown above GDP with a large and growing total addressable market of diverse clients that rely on trusted advisors to help them navigate complex operating environments and grow their business. The industry benefits from secular growth drivers tied to greater complexity for business leaders, a shortage of accounting talent leading to increased outsourcing of accounting services, constant changes to accounting and tax standards, as well as the ongoing importance of adapting and modernizing processes with advances in AI and automation. We are now among just a handful of firms that have the scale and capabilities to meet middle market clients' growing demand for greater industry expertise, leading technology, and a broader range of services delivered by trusted advisors. Our strategic focus in 2026 and beyond is ensuring that we organize and invest in our capabilities to maximize the value of our scale and competitive position. We expect these investments to further strengthen our value proposition to clients differentiate CBIS in the market, and accelerate our growth. Moving to slide five, it is important to recognize the many accomplishments the CBIS team delivered in 2025. We made significant progress by completing the vast majority of the market integration priorities. We brought our teams together physically, enhanced their ability to work together through common systems and processes, and strengthened our go-to-market capabilities. These steps were necessary to unlock the opportunities associated with the acquisition and position CBIS for sustainable long-term growth. I want to thank our entire team for their hard work and support and their commitment to our clients, team members, and CBIS during this important year of transformation. In 2025, we delivered approximately 2% organic revenue growth with solid year-over-year improvement in bottom-line profitability. We continue to generate healthy cash flow from operations to support our business and to invest in attractive opportunities. While our revenue growth is impacted in part by soft market conditions that affected the entire industry, there was also a portion related to productivity losses often experienced in the first year following the combinations of two organizations of similar size. We believe these headwinds will abate in 2026 as we have seen improving middle market sentiment and we're in the process of completing our first busy season as a combined company on common platforms. Now moving to slide six. Operationally, we've built upon Markham's investments in transformation and innovation, including AI and data-focused priorities, and we've improved how we deploy our combined offshore teams. Having our teams work on common systems and apply the standardized processes and workflows that were established in 2025 allows us to increase utilization and enhance client experience by matching our best people to the clients most in need of their expertise. From a people and leadership standpoint, we have completed most of our internal reorganization priorities. Over the past year, we've strengthened our leadership bench by placing our best leaders into roles that directly drive growth, accelerate the formation of our industry groups, and advance the adoption of AI and innovation. Thanks to our team's hard work, Key retention metrics around clients and managing directors are in line with expectations, and synergies are double our initial expectations. While there remains technology and real estate-related integration work ahead of us, along with opportunities for further cost synergies, the integration is largely behind us, and we are now focused on how we leverage our scale to accelerate growth. With that, I'll turn to our four strategic priorities guiding our efforts on slide seven. We are focused on four strategic priorities to drive growth and increase our value to our clients. Attracting and retaining top talent, elevating our national brand, utilizing industry specialization, and delivering value through our enhanced breadth and depth of service offerings. Together, these priorities will strengthen our ability to win the new business, retain and expand client relationships, and enhance and realize pricing. Our first growth priority is to attract and retain top talent. For 2025, we were pleased to fund substantial amounts of incentive compensation to recognize the contributions of our team in this critical year of transition. And in 2026, we plan to return to full incentive program funding tied to delivering on our top line growth objectives. We will also increase our producer count within our benefits and insurance group by approximately 15% this year, And we are investing in sales development resources to capture new opportunities. We now have the ability to attract a unique level of talent to CBiz. Recent examples include bringing on the head of AI incubation and a head of data from big four firms. And we have a pipeline of senior professionals who want to join the unique platform that we have now built. Our history tells us we have a strong track record of high returns on our investments and talent. We're confident that the continued investments in talent will allow us to command better pricing, expand existing relationships, and win new logos. We have scaled our brand and marketing approach, and our second growth priority is to continue to raise our brand visibility and to ramp up targeted marketing initiatives. While CBIS have a strong reputation with existing clients, we need to always be top of mind for new clients and event-driven project-based work. We see a large opportunity to explain the power of our new platform and the ways in which we can help current and potential clients. In 2025, our team generated more than 50,000 net new leads across key markets using targeted TV, digital, and out-of-home advertising, leading to improved win rates. In 2026, our focus will be on translating increased visibility into engagement for our services. supporting new client opportunities, and reinforcing our position when companies pursue transformational events. Our brand and marketing investments are a key component to both our go-to-market and our talent recruitment strategies. Our third growth priority is deepening and growing our industry specialization. Clients want advisors who bring deep industry-specific insights, and our expanded scale positions us to do just that. We've organized into 12 industry verticals, which allows us to lead with insights, anticipate client needs, and deliver coordinated, tailored solutions supporting stronger retention and more consistent growth. The strategy and model has already proven successful. Construction Executive, recently named CBiz, is the number one firm on its 2025 list of the top 50 construction accounting firms, reflecting the strength of our position in that industry. We are leveraging national resources while maintaining our local delivery advantage, and we're encouraged by the early progress we're seeing. All 12 industry verticals now have dedicated leadership that does align national and regional support to drive improved collaboration, cross-serving, and industry-focused client engagement. Finally, we are delivering a more coordinated client experience across our services. With our highly recurring essential revenue base and strong client retention, our most immediate growth opportunity is expanding relationships with our existing clients. We are seeing notably increased collaboration across service lines, early success from cross-serving initiatives, and growing interest in bundled solutions. This strengthens our new business efforts, allowing prospects to see the full breadth of our capabilities. In 2026, our efforts are centered on increasing the number of clients using multiple services. We have built a foundation for this work, and we are expecting these efforts to become a more meaningful contributor to organic growth over time. Taken together, we believe strong execution against these four priorities positions us to drive attractive levels of growth. At the same time, we remain focused on delivering their growth with strong earnings quality. Now turning to slide eight. An important value driver is our investment in automation, including artificial intelligence. In time, AI will meaningful change how professional services firms operate. It will increasingly automate routine manual tasks and reshape workflows across our service offerings. We want to be clear about what AI does and does not change. The core role of the trusted advisor. Applying judgment, advocating for outcomes, and leveraging experience, collaboration, and ethics remains indispensable. Trust is uniquely human. Our clients trust us as their advisors and look to us to harness these tools on their behalf, and that's exactly what CBIS is doing. We are positioning CBIS to lead and view AI as an extension of the automation initiatives we've leveraged for many years to generate a high return on investment. We are implementing AI as an enterprise-wide capability rather than a series of isolated pilots. This means standardizing workflows, strengthening data discipline, and establishing governance so outputs are reliable, repeatable, and audit-ready. Today, we have over 60 dedicated professionals focused on our technology and our AI strategy, and we are collaborating with top-tier cloud and AI providers to accelerate our transformation. We are embedding AI tools in our daily workflows, enabling all of our employees with structured training, and scaling proven capabilities already in production. A good example is tax. We currently use tax automation software to streamline 1040 return preparation. In parallel, we are layering in AI capabilities to process more complex data like K1 footnotes. Over time, we expect these enhanced capabilities will support margin expansion in our tax business, not by charging less, but by delivering more value with greater efficiency. AI also has the potential to create new revenue opportunities, particularly within our higher growth, higher margin advisory practice. As the regulatory and operating environment grows more complex, clients need more help interpreting data and making strategic decisions. exactly the kind of judgment-intensive work where clients seek out trusted advisors, especially one who can leverage AI. We believe our competitive scale and strategy positions us well to benefit as AI reshapes our industry. Our middle market clients typically do not have the scale, capital, or internal expertise to build and govern AI infrastructure themselves. We do. Our size and breadth allows us to invest in and deploy advanced tools across our platform while pairing them with trusted advisor relationships that clients depend on. Because the majority of our revenue is fixed fee or commission-based, we expect a great deal of productivity gains to flow to margins without pressuring our top line. Lastly, coming to the current demand and pricing, we are not seeing AI put pressure on either one. To the contrary, our pipeline remains healthy, retention is strong, and clients continue to lean into their advisory relationships. The use of efficiency tools is not without precedent. Over the past decade, our industry has significantly expanded the use of lower-cost offshore labor with full transparency to our clients, reducing the cost to deliver work, with accounting firms generating meaningful margin expansion from these activities. We see AI following a similar pattern. Delivery costs improve, but the value to the client remains and even grows, and pricing reflects that value. Firms that are prioritizing AI adoption are being rewarded with deeper client relationships and expanded wallet share. We believe we are well positioned on that side of the equation. In summary, our foundational platform work and scale automation initiatives are expected to support more efficient growth, margin expansion, and an increasingly favorable revenue mix. We believe that AI, deployed with discipline and governance, will be a meaningful driver of long-term value creation. Slide 9 details how offshoring continues to be a meaningful opportunity for SEVIS. We are accelerating our use of global resources to improve utilization, expand capacity, and support margin expansion. Ultimately, we believe offshoring provides a better experience for our U.S.-based team, enabling a higher level of service and responsiveness to our clients. Today, we operate offshore delivery centers in the Philippines and in India, with more than 500 professionals supporting our tax and test services. We expect to increase offshore hours from approximately 6% in 2025 to 10% in 2026. Over the next several years, we plan to expand this to more than 20%. We believe achieving these levels, which are consistent with comparable firms, will drive significant growth and margin opportunities over time. Now to wrap up by opening remarks, I want to comment on the current business climate and our outlook. While 2025 turned out to be a more cautious operating environment for our clients, our proprietary pulse survey and ongoing discussion with clients points to a more encouraging backdrop heading into this year. What we're hearing from clients is greater comfort with the business environment. While clients still recognize the economic and political environment remains highly dynamic, the incremental comfort indicates an increased opportunity for project-based work. We saw this picked up in the second half of last year. As a reminder, more than 70% of our revenue is recurring and resilient across cycles. The remaining portion is more project-based, and our assumptions regarding the level of activity largely drive the range of our 2% to 5% organic revenue growth outlook. Finally, as Brad will discuss in more detail, We are pleased with the strong free cash flow generation we expect in the coming year and view stock repurchases as highly attractive given our long track record of growing free cash flow. Now I would like to turn the call over to Brad for our financial review.