CBIZ is a Cleveland-based provider of professional business services, principally accounting, tax, and advisory work through its Financial Services practice group and employee benefits, insurance, and retirement services through its Benefits and Insurance Services group, and it has spent decades assembling those practices through a steady cadence of acquisitions. Its most recent quarter shows a company digesting the largest deal in its history, the merger with Marcum, an accounting and advisory firm, which has transformed the revenue base and compressed near-term earnings as the integration costs and amortization hit the income statement.
The quarter's story is a merger in progress. Total revenue was essentially flat year over year, with the six-month revenue up slightly, and the Financial Services group carrying the Marcum addition while the benefits and insurance side holds steady. Net income for the quarter fell sharply, with diluted earnings per share of $0.31 against $0.66 a year earlier, as the Marcum-related expenses and the costs of the integration landed, while the six-month diluted earnings per share rose to $2.83 from $2.58.
The forward question is whether CBIZ can integrate Marcum, realize the cross-selling and cost synergies that justified the deal, and return the earnings to a growth path that matches the enlarged revenue base. The Marcum merger is the analytical crux, and the next several quarters are the test of whether the acquisition earns its price.