CBIZ, INC. Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to "we", "us", "our", "CBIZ" or the "Company" shall meanCBIZ, Inc. , aDelaware corporation, and its operating subsidiaries. The following discussion is intended to assist in the understanding of our financial position atMarch 31, 2020 andDecember 31, 2019 , results of operations for the three months endedMarch 31, 2020 and 2019, and cash flows for the three months endedMarch 31, 2020 and 2019, and should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year endedDecember 31, 2019 . This discussion and analysis contains forward-looking statements and should also be read in conjunction with the disclosures and information contained in "Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q and in "Item 1A. Risk Factors" included in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the year endedDecember 31, 2019 .
Overview
We provide professional business services, products and solutions that help our clients grow and succeed by better managing their finances and employees. These services are provided to primarily small and midsized businesses, as well as individuals, governmental entities and not-for-profit enterprises throughoutthe United States . We also provide limited information technology services through our National Practices segment inthe United States and parts ofCanada . We deliver integrated services through three practice groups: Financial Services, Benefits and Insurance Services, and National Practices. Refer to Note 13, Segment Disclosures, to the accompanying condensed consolidated financial statements for a general description of services provided by each practice group.
Refer to the Annual Report on Form 10-K for the year ended
InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a pandemic as the disease spread throughout the world. As a provider of essential services, our primary concern is protecting the health and safety of our employees and the communities in which we operate while assuring the continuity of our business operations to serve our clients' needs. We announced a variety of measures to ensure the ongoing performance of our services to our clients while taking the necessary health and safety actions consistent with CDC guidelines starting in late February. As the COVID-19 situation evolved, these actions ultimately included bans on business travel and a migration to remote work conditions. A number of states enacted stay-at-home measures throughout March. Our workforce is accustomed to remote work conditions and is equipped to continue to serve client needs throughout this period of time. The widespread nature of these health related actions and the impact of these measures on the economy will create financial distress within our small and medium-size business client base and could cause a slowdown, write-down or write-off in client payments to us as a result. As discussed in the Liquidity and Capital Resources section, onMarch 25, 2020 , we borrowed substantially all of the available capacity on our 2018 credit facility as a precautionary measure to preserve flexibility during this period of disruption and uncertainty. As a result, atMarch 31, 2020 , we have unrestricted cash and cash equivalents of$216.9 million . We have taken a number of measures to control costs and expenditures including suspension of share repurchase activity. The high degree of uncertainty, coupled with the challenges of remote work conditions, has caused a temporary pause in acquisition activity as we work with potential acquisition candidates to assess next steps. We believe that we have ample liquidity, and we believe we are in strong financial condition atMarch 31, 2020 ; however, depending upon the severity and duration, the COVID-19 pandemic presents potential new risks to our business, which could have a material adverse effect on our results of operation and financial condition. The recurring and essential nature of the majority of our business services provides stability to our financial results, and through the first quarter of 2020, there has been no material adverse impact on our financial results. The deferral of tax-related filing deadlines as a result of the enactment of Coronavirus Aid, Relief, and Economic Security ("CARES") Act will cause tax compliance work to be delayed into the second or third quarters. The sharp increase in unemployment within our client base will impact volumes and demand for certain of our services. Client decisions on project work may be deferred or delayed and all of these factors are expected to result in lower second quarter of 2020 revenues compared to the same period in 2019. 20 -------------------------------------------------------------------------------- The conditions surrounding the COVID-19 pandemic remains highly uncertain. The longer the pandemic and the governmental response remains impactful to economic activities inthe United States and globally, the higher the possibility for a material adverse effect on our company. For this reason, we cannot reasonably estimate with any degree of certainty the future impact the COVID-19 pandemic may have on our results of operations, financial position, and liquidity.
See Part II, Item 1A, "Risk Factors", for a detailed discussion of the risk factor.
Executive Summary
Quarter in Review - Revenue for the three months endedMarch 31, 2020 increased$7.5 million , or 2.8%, to$277.5 million from$270.0 million for the same period in 2019. The increase in revenue was primarily attributable to acquired businesses which contributed$5.2 million , or 1.9%, and same-unit revenue growth of$2.3 million , or 0.9%. A detailed discussion of revenue by practice group is included under "Operating Practice Groups." Income from continuing operations decreased$0.7 million , or 1.9%, to$36.9 million during the three months endedMarch 31, 2020 compared to$37.6 million during the same period in 2019. Refer to "Results of Operations - Continuing Operations" for a detailed discussion of the components of income from continuing operations.
Strategic Use of Capital -We completed three acquisitions during the first quarter of 2020. Refer to Note 11, Business Combinations, to the accompanying consolidated financial statements for further discussions on acquisitions.
We also have the financing flexibility and the capacity to actively repurchase shares of our common stock. We believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our shareholders. We repurchased 1.2 million shares of our common stock at a total cost of approximately$29.5 million in the first quarter of 2020, but suspended further repurchase activity in mid-March as the COVID-19 pandemic began to have a severe impact on macroeconomic conditions. During the first quarter of 2020, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our Share Repurchase Program (the "Share Repurchase Program"), which may be suspended or discontinued at any time and expires onApril 1, 2021 . The shares may be purchased in open market, privately negotiated or Rule 10b5-1 trading plan purchases, which may include purchases from our employees, officers and directors, in accordance with theSecurities and Exchange Commission (the "SEC") rules. CBIZ management will determine the timing and amount of the transactions based on its evaluation of market conditions and other factors.
Results of Operations - Continuing Operations
Revenue
The following tables summarize total revenue for the three months ended
Three Months Ended March 31,
% of % of $ %
2020 Total 2019 Total Change Change
Financial Services $ 188,777 68.0 % $ 185,144 68.6 % $ 3,633 2.0 %
Benefits and Insurance Services 79,612 28.7 % 76,255 28.2 % 3,357 4.4 %
National Practices 9,066 3.3 % 8,599 3.2 % 467 5.4 %
Total CBIZ $ 277,455 100.0 % $ 269,998 100.0 % $ 7,457 2.8 %
A detailed discussion of same-unit revenue by practice group is included under "Operating Practice Groups."
Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred
compensation plan, under which a CBIZ employee's compensation deferral is held
in a rabbi trust and invested accordingly as directed by the employee. Income
and expenses related to the non-qualified deferred compensation plan are
included in "Operating expenses," "Gross margin" and "Corporate General and
Administrative expenses" and are directly offset by deferred compensation gains
or losses in "Other (expense) income, net" in the accompanying Consolidated
Statements of Comprehensive Income. The non-qualified deferred compensation plan
has no impact on "Income from continuing operations before income tax expense"
or diluted earnings per share from continuing operations.
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--------------------------------------------------------------------------------Operating Expenses
The following table presents our operating expenses for the three months endedMarch 31, 2020 and 2019: Three Months Ended March 31, $ % 2020 2019 Change Change (In thousands, except percentages) Operating expenses$ 199,827 $ 215,496 $ (15,669 ) (7.3 )% Operating expenses % of revenue 72.0 % 79.8 % The deferred compensation plan decreased operating expenses by$14.8 million in the first quarter of 2020, but increased operating expenses by$8.2 million during the same period in 2019. Excluding the impact of the deferred compensation plan, operating expenses would have been$214.6 million , or 77.3% of revenue, for the first quarter of 2020, compared to$207.3 million , or 76.8% of revenue, for the first quarter of 2019. The majority of our operating expenses relate to personnel costs, which includes (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation. Excluding the impact of the deferred compensation plan, the increase in operating expense was primarily attributable to$4.7 million increase in personnel costs,$1.1 million increase in professional fees offset by a decrease of$0.7 million in travel and entertainment costs. In addition, the impact of COVID-19 resulted in approximately$2.0 million higher bad debt expense for the quarter endedMarch 31, 2020 .
Corporate General & Administrative Expenses
The following table presents our corporate general & administrative ("G&A")
expenses for the three months ended
Three Months Ended March 31,
$ %
2020 2019 Change Change
(In thousands, except percentages)
G&A expenses $ 10,489 $ 11,680 $ (1,191 ) (10.2 )%
G&A expenses % of revenue 3.8 % 4.3 %
The deferred compensation plan decreased G&A expenses by $1.8 million in the
first quarter of 2020, but increased G&A expenses by $0.9 million during the
same period in 2019. G&A expenses, excluding the impact of the deferred
compensation plan, would have been $12.3 million , or 4.4% of revenue, for the
first quarter of 2020, compared to $10.8 million , or 4.0% of revenue, for the
first quarter of 2019. An increase in consulting fees of $0.7 million and
personnel costs of $0.7 million contributed to the increase in G&A expenses.
Other (Expense) Income, net
The following table presents our other (expense) income, net for the three
months ended
Three Months Ended March 31,
$ %
2020 2019 Change Change
(In thousands, except percentages)
Interest expense $ (1,119 ) $ (1,401 ) $ 282 (20.1 )%
Gain on sale of operations, net 95 497 (402 ) (80.9 )%
Other income (expense), net (1) (15,800 ) 9,260 (25,060 ) n/m
Total other income (expense), net
n/m
(1) Other (expense) income, net includes a net loss of
first quarter of 2020, compared to a net gain of
period in 2019, associated with the value of investments held in a rabbi
trust related to the deferred compensation plan. The adjustments to theinvestments held in a rabbi trust related to the deferred compensation plan
are offset by a corresponding increase or decrease to compensation expense,
which is recorded as "Operating expenses" and "G&A expenses" in the
accompanying Consolidated Statements of Comprehensive Income. The deferred
compensation plan has no impact on "Income from continuing operations
before income tax expense" or diluted earnings per share from continuing
operations.
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-------------------------------------------------------------------------------- Interest Expense - Our primary financing arrangement is the 2018 credit facility. Interest expense was$1.1 million for the first quarter of 2020, compared to$1.4 million for the same period in 2019. Our average debt balance and interest rate was$145.2 million and 2.50% atMarch 31, 2020 compared to$151.2 million and 3.18% for the same period in 2019. Gain on Sale of Operations, net - We sold a small book of business in the in the Benefits and Insurance practice group during the first quarter of 2020 for a net gain of$0.1 million . For the same period in 2019, we sold a small accounting firm in the Financial Services practice group for a net gain of$0.5 million . Other (Expense) Income, net - For the first quarter of 2020, other (expense) income, net consists of a net loss of$16.6 million associated with the deferred compensation plan, as well as a$0.7 million net adjustment to decrease to the fair value of our contingent purchase price liability related to prior acquisitions. For the same period in 2019, other (expense) income, net consists of a net gain of$9.1 million associated with the deferred compensation plan, as well as$0.3 million net adjustment to decrease to the fair value of our contingent purchase price liability related to prior acquisitions.
Income Tax Expense
The following table presents our income tax expense for the three months endedMarch 31, 2020 and 2019: Three Months Ended March 31, $ % 2020 2019 Change Change (In thousands, except percentages) Income tax expense$ 13,453 $ 13,613 $ (160 ) (1.2 )% Effective tax rate 26.7 % 26.6 %
The effective tax rate for the first quarter of 2020 was 26.7%, compared to an effective tax rate of 26.6% for the comparable period in 2019.
Operating Practice Groups
We deliver our integrated services through three practice groups: Financial Services; Benefits and Insurance Services; and National Practices. A description of these groups' operating results and factors affecting their businesses is provided below.
Same-unit revenue represents total revenue adjusted to reflect comparable periods of activity for acquisitions and divestitures. Divested operations represent operations that did not meet the criteria for treatment as discontinued operations.
Financial Services
Three Months Ended March 31,
$ %
2020 2019 Change Change
(In thousands, except per share data)
Revenue
Same-unit $ 187,385 $ 185,144 $ 2,241 1.2 %
Acquired businesses 1,392 - 1,392
Total revenue $ 188,777 $ 185,144 $ 3,633 2.0 %
Operating expenses 138,598 134,458 4,140 3.1 %
Gross margin $ 50,179 $ 50,686 $ (507 ) (1.0 )%
Gross margin percent 26.6 % 27.4 %
Three months ended March 31, 2020 compared to March 31, 2019 - The Financial
Services practice group revenue for the three months ended March 31, 2020 grew
by 2.0% to $188.8 million from $185.1 million during the same period in 2019,
primarily reflecting same-unit growth of $2.2 million , or 1.2%, driven by those
units that provide project work as well as moderate growth in government
healthcare compliance business which increased $3.0 million , or 4.7%, offset by
traditional accounting and tax-related services, which decreased $0.3 million ,
or 0.3%. Acquired businesses provided incremental revenue of $1.4 million .
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We provide a range of services to affiliated Certified Public Accounting ("CPA")
firms (the "CPA firms") under administrative service agreements ("ASAs"). Fees
earned under the ASAs are recorded as revenue in the accompanying Consolidated
Statements of Comprehensive Income and were $52.7 million and $50.2 million for
the three months ended March 31, 2020 and 2019, respectively.
Operating expenses increased by $4.1 million , or 3.1%, as compared to the same
period last year. Operating expense as a percentage of revenue increased to
73.4% for the quarter ended March 31, 2020 from 72.6% of revenue for the prior
year. The increase in operating expense was primarily attributed to higher bad
debt expense of $2.0 million as a result of the impact of COVID-19, and higher
other operating expenses of $2.1 million to support the revenue growth.
Personnel costs increased by $1.3 million , or 1.1%, with acquisitions
contributing approximately $1.0 million to personnel costs.
Benefits and Insurance Services
Three Months Ended March 31,
$ %
2020 2019 Change Change
(In thousands, except percentages)
Revenue
Same-unit $ 75,784 $ 76,255 $ (471 ) (0.6 )%
Acquired businesses 3,828 - 3,828
Total revenue $ 79,612 $ 76,255 $ 3,357 4.4 %
Operating expenses 65,223 61,371 3,852 6.3 %
Gross margin $ 14,389 $ 14,884 $ (495 ) (3.3 )%
Gross margin percent 18.1 % 19.5 %
Three months ended March 31, 2020 compared to March 31, 2019 - The Benefits and
Insurance Services practice group revenue increased by $3.4 million , or 4.4%, to
$79.6 million during the three months ended March 31, 2020 compared to $76.3
million for the same period in 2019. Acquisitions contributed $3.8 million of
incremental revenue for the three months ended March 31, 2020 . Same-unit revenue
remained relatively flat when compared to the same period in 2019.
Operating expenses increased by $3.9 million , or 6.3%, when compared to the same
period last year. Operating expense as a percentage of revenue increased to
81.9% for the quarter ended March 31, 2020 from 80.5% of revenue for the prior
period. The increase in operating expense was mostly attributable to higher
personnel costs of $3.4 million , of which $2.0 million related to acquired
businesses.
National Practices
Three Months Ended March 31,
$ %
2020 2019 Change Change
(In thousands, except percentages)
Same-unit revenue $ 9,066 $ 8,599 $ 467 5.4 %
Operating expenses 8,283 8,000 283 3.5 %
Gross margin $ 783 $ 599 $ 184 30.7 %
Gross margin percent 8.6 % 7.0 %
Three months ended March 31, 2020 compared to March 31, 2019 - The National
Practice group is primarily driven by a cost-plus contract with a single client,
which has existed since 1999. The cost-plus contract is a five year contract
with the most recent renewal through December 31, 2023 . Revenues from this
single client accounted for nearly 75% of the National Practice group's revenue.
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--------------------------------------------------------------------------------Liquidity
Our principal sources of liquidity are cash generated from operating activities and financing activities. Our cash flows from operating activities are driven primarily by our operating results and changes in our working capital requirements while our cash flows from financing activities are dependent upon our ability to access credit or other capital. We historically maintain low cash levels and apply any available cash to pay down the outstanding debt balance. During the three months endedMarch 31, 2020 , we drew$210.0 million on our existing line of credit in response to the evolving COVID-19 pandemic and the uncertainty related to macroeconomic conditions and financial markets. We believe that the Company has ample liquidity, but we are increasing our cash position as a precautionary measure to preserve flexibility for working capital, ongoing operating needs and other general corporate purposes. We typically experience a use of cash to fund working capital requirements during the first quarter of each fiscal year due to the seasonal accounting and tax services period of the Financial Services practice group. Upon completion of the seasonal accounting and tax services period, cash provided by operations during the remaining three quarters of the fiscal year has historically substantially exceeded the use of cash in the first quarter of the fiscal year. Accounts receivable balances typically increase in the first quarter from revenue generated by the Financial Services practice group. A significant amount of this revenue is billed and collected in subsequent quarters. During the three months endedMarch 31, 2020 , we recorded$2.0 million additional bad debt expense due to the impact caused by the COVID-19 pandemic. Days sales outstanding ("DSO") from continuing operations represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months daily revenue. We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner. DSO was 94 days and 97 days atMarch 31, 2020 and 2019, respectively. DSO atDecember 31, 2019 was 75 days. The following table is derived from our Consolidated Statements of Cash Flows (in thousands): March 31, 2020 2019 Net cash used in operating activities$ (18,647 ) $ (24,753 ) Net cash provided by (used in) investing activities 4,355 (9,736 ) Net cash provided by financing activities 207,772
10,025
Net increase (decrease) in cash, cash equivalents and restricted cash$ 193,480 $ (24,464 ) Operating Activities - Cash used in operating activities was$18.6 million during the three months endedMarch 31, 2020 and consisted of working capital use of cash of$64.5 million , offset by net income of$36.8 million and certain non-cash items, such as depreciation and amortization expense of$5.7 million . Cash used in operating activities was$24.8 million during the three months endedMarch 31, 2019 and consisted of working capital use of cash of$69.1 million , partially offset by net income of$37.5 million and certain non-cash items, such as depreciation and amortization expense of$5.7 million . Investing Activities - Cash provided by investing activities for the three months endedMarch 31, 2020 consisted primarily of proceeds from the sales and maturities of client fund investments of$17.1 million and a net increase in funds held for clients of$0.8 million . This was offset by net cash used in investing activities for business acquisitions of$7.8 million , purchases of client fund investments of$3.4 million and capital expenditures of$2.6 million . Cash used in investing activities for the three months endedMarch 31, 2019 consisted primarily of capital expenditures of$5.5 million and net activity related to funds held for clients of$3.0 million , as well as the acquisition of Wenner for$1.3 million . The balances in funds held for clients and client fund obligations fluctuate with the timing of cash receipts and the related cash payments. The nature of these accounts is further described in Note 1, Organization and Summary of Significant Accounting Policies, to the condensed consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Financing Activities - Cash provided by financing activities for the three months endedMarch 31, 2020 consisted of$277.5 million in net proceeds from the credit facility, partially offset by a decrease in client fund obligations of$38.5 million and$29.5 million in share repurchases. Cash provided by investing activities for the three months endedMarch 31, 2019 consisted of$46.5 million in net proceeds from the credit facility, partially offset by a decrease in client fund obligations of$23.2 million and$11.6 million in share repurchases. 25 --------------------------------------------------------------------------------
Capital Resources
Credit Facility - AtMarch 31, 2020 , we had$383.0 million outstanding under the 2018 credit facility, as well as letters of credit and performance guarantees totaling$3.6 million . Available funds under the credit facility, based on the terms of the commitment, were approximately$10.0 million atMarch 31, 2020 . The weighted average interest rate under the credit facility was 2.5% in the first quarter of 2020, compared to 3.18% for the same period in 2019. The credit facility allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the credit facility. Debt Covenant Compliance - We are required to meet certain financial covenants with respect to (i) a total leverage ratio and (ii) a minimum fixed charge coverage ratio. We are in compliance with our covenants as ofMarch 31, 2020 . Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future. For further discussion regarding our credit facility, refer to Note 4, Debt and Financing Arrangements, to the accompanying consolidated financial statements. Use of Capital -During the first quarter of 2020, we completed three acquisitions. Refer to Note 11, Business Combinations, to the accompanying consolidated financial statements for further discussion on acquisitions. We also have the financing flexibility and the capacity to actively repurchase shares of our common stock. We believe that repurchasing shares of our common stock is a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our shareholders. During the first quarter of 2020, we repurchased 1.2 million shares of our common stock at a total cost of approximately$29.5 million , but suspended further repurchase activities in mid-March as the COVID-19 pandemic began to have a severe impact on macroeconomic conditions.
Off-Balance Sheet Arrangements
We maintain ASAs with independent CPA firms (as described more fully under "Business - Financial Services" and in Note 1, Organization and Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 ), which qualify as variable interest entities. The accompanying condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ. We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled$1.3 million at bothMarch 31, 2020 andDecember 31, 2019 . In addition, we provide license bonds to various state agencies to meet certain licensing requirements. The amount of license bonds outstanding at bothMarch 31, 2020 andDecember 31, 2019 was$2.3 million . We have various agreements under which it may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations, warranties, covenants or agreements, related to matters such as title to assets sold and certain tax matters. Payment by us under such indemnification clauses is generally conditioned upon the other party making a claim. Such claims are typically subject to challenge by us and to dispute resolution procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement. Historically, we have not made any payments under these agreements that have been material individually or in the aggregate. As ofMarch 31, 2020 , we are not aware of any material obligations arising under indemnification agreements that would require payment.
Critical Accounting Policies
TheSEC defines critical accounting policies as those that are most important to the portrayal of a company's financial condition and results and that require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our discussion and analysis of results of operations, financial position and liquidity are based upon our consolidated financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgements that affect the amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities as of the date of the financial statements. As more information becomes known, these estimates and assumptions could change, which would have an impact on actual results that may differ materially from these estimates and judgments under different assumptions. We have not made any changes in estimates or judgments that have had a significant effect on the reported amounts as previously disclosed in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019 . 26 --------------------------------------------------------------------------------
New Accounting Pronouncements
Refer to Note 2, New Accounting Pronouncements, to the accompanying condensed consolidated financial statements for a discussion of recently issued accounting pronouncements. Forward-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact included in this Quarterly Report, including without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding our financial position, business strategy and plans and objectives for future performance are forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are commonly identified by the use of such terms and phrases as "intends", "believes", "estimates", "expects", "projects", "anticipates", "foreseeable future", "seeks", and words or phrases of similar import in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated services, sales efforts, expenses, and financial results. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any other public statements that we make, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, the impact of COVID-19 on the Company's business and operations and those of our clients; the Company's ability to adequately manage and sustain its growth; the Company's dependence on the current trend of outsourcing business services; the Company's dependence on the services of its CEO and other key employees; competitive pricing pressures; general business and economic conditions; and changes in governmental regulation and tax laws affecting the Company's insurance business or its business service operations. Such forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Should one or more of these risks or assumptions materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Consequently, no forward-looking statement can be guaranteed. A more detailed description of risk factors may be found in "Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Except as required by the federal securities laws, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our filings with theSEC , such as quarterly, periodic and annual reports. 27
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