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Operator: Good day, and welcome to the CBIZ Fourth Quarter 2022 Results Call. . 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.

Lori Novickis: Good morning, everyone, and thank you for joining us for the CBIZ Fourth Quarter and Full Year 2022 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 website, cbiz.com. As a reminder, this call is being webcast, and a link to the live webcast can also be found on our site. An archive 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 presentation.

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 estimates on the 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 CBIZ assumes no obligation to update these statements. 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. Jerry?

Jerome Grisko: Good morning, everyone, and thank you for joining us. On today’s call, we’re proud to share our fourth quarter and full year results for 2022 and our outlook for this year. Last year on this call, we discussed our record performance and results for 2021. We are pleased to report that our momentum continued throughout 2022. And from nearly every measurable perspective, our results for last year were exceptional and at or near our strongest performance in recent history. Most notably, for the full year, total revenue was up 27.8%, where organic revenue grew by 10.9%. Adjusted EPS was up by 28.3%. Adjusted EBITDA improved 28.1%. Our stock price increased by 19.8% and we made 2 sizable acquisitions adding over $154 million in annualized revenue.

At CBIZ, we always strive to achieve success by design and our full year results of the product of the strategic plan that we set for our business over 5 years ago and then diligently executed by our devoted team of over 6,500 professionals. Our results are also a product of the fundamental attributes of our business, which include the combination of the essential recurring services that we provide to our clients on a regular basis, supplemented by a number of more project-based discretionary services. Also, we serve a diverse client base that include companies of all sizes, doing business across our broad geographic footprint and representing a wide range of industries. Those attributes make us less susceptible to market conditions that may disproportionately impact businesses at certain sizes or industries or that are located in specific geographies.

And it’s based on those attributes that we entered 2022 confident in our ability to continue to perform well regardless of the business climate. While the year presented a number of challenges for many businesses, including labor shortages, increased wages, rising interest rates, supply chain shortages, inflation and threat of a recession, our strong performance throughout the year is a testament to the strength of our business model and the confidence and resilience of the clients that we serve. And while we expect that 2023 may also present a more challenging business climate for many, we remain equally confident in the resilience of both our business and our clients which will enable us to perform relatively strong as we move forward. As we demonstrated over the last year, our essential services help our clients to run their businesses and to take advantage of opportunities regardless of the business climate.

We are also uniquely positioned to help them with services and solutions to help navigate emerging challenges. Now turning to the performance of our individual divisions. Our Financial Services division had an especially strong year with a record 37.6% increase in total revenue when compared to 2021. This double-digit growth was driven by strong demand for all 3 major service lines, that being our core accounting and tax services, our advisory services and our government health care consulting services. Our growth within this group also reflects our ability to continue to improve pricing with our clients. This allowed us to respond to wage pressures in a highly competitive labor market. We also saw remarkable traction with many of our more bespoke services that we offer, including our work to support our clients and securing the employee retention tax credit.

As we demonstrated through the early days of the pandemic, our teams are always proactively identifying new ways to support our clients and guide them through emerging opportunities. In the second half of the year, we also saw the investments focused on attracting and retention of talent yield results as we accelerated hiring to drive an increase in much needed capacity. Within our advisory services, each of our significant service lines experienced strong demand for their more discretionary and project-based services that we provide to our clients, which created opportunities to drive rate increases and value billing. Our government health care consulting business also experienced nice growth through both new project work and the expansion of existing projects.

We were also able to drive some pricing improvement which has a more complex process given that much of this work is structured through multiyear contracts in published rates. Finally, throughout the year, we did see the return of some work that had been on hold or delayed due to the pandemic. During our quarterly calls throughout 2022, we talked about the importance and impact of a number of multiyear investments that we’ve been making to improve our processes, tools and training aimed at enhancing client and team member experience and maximizing profitability. The cumulative impact of these investments is evidenced in our results. As we look ahead in 2023, we will build on these efforts with a keen focus on innovation that includes how we use data to better serve our clients and adopt automation and improve processes to drive even greater efficiency.

Now turning to our Benefits and Insurance division, where we also experienced strong growth and performance across every major service line, resulting in organic revenue growth of 8.3% for the year. While the key drivers of that growth varied slightly within the 4 major service lines, all benefited from strong sales and continued favorable client retention rates. One service line that is worth noting is our retirement investment services business, where approximately $25 million of their revenue is tied to assets under management. As one would expect, those fees were down last year due to the performance of the broader stock market. Despite this, the team was able to grow revenues by increasing fees for other services, improving sales and continuing strong client retention rates.

We are extremely pleased with the performance of our business throughout 2022. While it’s difficult to predict the business climate in 2023 and how it may impact demand for certain of our more discretionary services, based on our strong financial performance over the past 2 years, the continued high demand for our services that we’ve experienced in recent months, the investments to accelerate growth that we’ve made in the business and our access to capital, we will once again be providing financial guidance for the year. With this, I will turn it over to Ware Grove, our Chief Financial Officer, to provide more specific details on our financial performance for the fourth quarter and the full year of 2022 and our thoughts on guidance for 2023.

Ware?

Ware Grove: Thank you, Jerry, and good morning, everyone. Let me take a few minutes to talk about key highlights of the fourth quarter and full year 2022 results that we released this morning. As Jerry commented, the strong momentum throughout our business continued through the fourth quarter. As we talk about results in 2022, bear in mind, we are focused on talking about adjusted results that serve to eliminate first year nonrecurring acquisition-related costs that are associated with the Marks Paneth acquisition that closed in January of 2022. There is a schedule in the release we issued this morning that serves to outline and reconcile those items for you, bridging from GAAP reported results of $2.01 per share for the full year to an adjusted $2.13 per share.

We are pleased that Marks Paneth recorded performance in line with both revenue and pretax contribution expectations for the year. The integration of operations has proceeded as planned. During the fourth quarter and for the 12 months this year, in connection with Marks Paneth, we incurred approximately $1.2 million and $10.5 million, respectively, of onetime first year nonrecurring transaction and integration costs. These nonrecurring costs represent approximately $0.02 per share for the quarter or $0.15 per share for the 12 months. In addition, in the third quarter of 2022 we recorded a gain of $2.4 million related to a sale of a book of business in our property and casualty line of service. This $2.4 million gain is recorded as other income and represents approximately $0.03 per share for the 12 months.

A year ago in the second quarter of ’21, we adjusted results to eliminate the impact of the $30.5 million UPMC settlement cost. Plus we eliminated the $6.3 million gain on the sale of operations that was recorded in the second quarter last year. On an adjusted basis, in 2021, we reported $0.19 per share for the fourth quarter loss, and we reported $1.66 per share for the 12 months. With these items in mind, and with a view towards presenting meaningful comparable information, eliminating the impact of these items, adjusted earnings per share this year is $2.13, up 28.3% compared with adjusted earnings per share of $1.66 last year. To recap highlights for ’22, Total revenue in the fourth quarter increased by $52.2 million, up 21.5% over fourth quarter a year ago.

The fourth quarter same unit revenue was up $24.5 million or up by 10.1%, with acquisitions contributing $27.7 million or 11.4% to growth compared with last year. For the full year, total revenue grew by $307.1 million, up 27.8% compared with 2021. Same unit revenue for the 12 months grew by $119.9 million or up by 10.9%, with acquisitions contributing $187.2 million or 16.9% to revenue growth for the 12 months this year compared with last year. Within Financial Services, for the fourth quarter, total revenue grew by $46 million were up by 29.5%. Same unit revenue for the fourth quarter was up 11.3% or up by $17.7 million, with strong revenue growth throughout core accounting services, advisory services and government health care consulting services.

For the 12 months, total revenue within Financial Services grew by $276 million, up by 37.6% and same-unit revenue for the 12 months was up by 11.9%. Within Benefits and Insurance, total revenue in the fourth quarter of ’22 grew by 6.6% and same-unit revenue grew by 7.4%. And for the full year, total revenue grew by 7.7%, with same-unit revenue growing by 8.3%. We continue to see strong client retention and new client production. The investment we have made in recent years to hire and increase the number of new business producers continues to gain traction. We remain committed to further enhancing growth capabilities within the Benefits and Insurance group and we will continue to make investments in hiring and developing additional producers in 2023.

Adjusted EBITDA, considering these same adjustments, was $190.1 million for the 12 months this year, up 28.1% over adjusted EBITDA of $148.5 million a year ago. Without going into detail during this call, a table reconciling reported GAAP numbers to these adjusted earnings per share and adjusted EBITDA numbers that I’m referencing is included in the earnings release issued this morning. During 2022, after seeing artificially low levels of certain expenses through the pandemic, we talked about the level of health care benefits, travel and entertainment expense and marketing expenses that are normalizing in the aftermath of the pandemic. These expenses, most notably travel and entertainment expense have leveled out at approximately 100 basis points lower than pre-pandemic levels in 2019.

For the full year of ’22, however, these expenses represented a 110 basis point headwind impact to margin on income before tax compared with the prior year. Comparing year-over-year adjusted results for the 12 months ended December this year, pretax income margin was flat at 10.6% for both ’22 and 2021. The expense items I described represented 110 basis points headwind for the 12 months this year. So we have successfully leveraged other costs, aside from the intentional increase in T&E and other increased expenses in the short list of items I mentioned. We will continue to say that, over time, we expect to achieve a 20 to 50 basis point annual increase in pretax margin. As you look at the track record in recent years, our performance has been near the higher end of this range, driving annual growth and earnings per share of approximately 18%.

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 2021 with capital markets gains, compared with this year with capital markets losses, there is a significant impact to the GAAP reported numbers as you look at both gross margin and operating income. And you can find this information noted in our release. As a reminder, pretax income margin is not impacted by this factor. Cash flow from operations continues to be solid. In 2022, we amended our unsecured credit facility to increase availability from $400 million to $600 million and extended the maturity by 5 years. At December 31, ’22, the balance outstanding on the newly upsized $600 million facility was $265.7 million, with about $320 million of unused capacity.

In 2022, we used approximately $108 million for acquisition purposes, including earn-out payments on acquisitions that were closed in previous years. With the Somerset transaction, which closed earlier this month, combined with estimated earn-out payments on previously closed transactions, we expect to use approximately $91.5 million in ’23, $56.5 million in 2024, $33.7 million in 2025 and approximately $6.8 million in 2026. Since the end of 2019, we have closed 16 transactions and have deployed approximately $319 million of capital for acquisition purposes, including the recently announced Somerset transaction, plus earn-out payments over that time. During the fourth quarter of 2022, we repurchased approximately 1.2 million shares of our common stock.

For the full year, we repurchased approximately 2.8 million shares in the open market at a cost of approximately $122 million. Since December 31, under a 10b program, we have repurchased an additional 75,000 shares to date in 2023. To recap repurchase activity in recent years since the end of 2019 and we have repurchased a total of approximately 8.2 million shares, representing about 15% of shares outstanding compared to the end of 2019. Approximately $277 million of capital has been used towards this repurchase activity over that time. With leverage of approximately 1.5x adjusted EBITDA at December 31, ’22, the balance sheet is strong. This provides plenty of capacity to continue with strategic acquisitions and provides the flexibility to continue share repurchase activity.

After the closing of the Somerset transaction in February this year, we estimate our leverage at approximately 1.6x EBITDA. Our highest priority for the use of capital continues to be for strategic acquisitions. With our strong cash flow and strong balance sheet, we also have the flexibility to actively repurchase shares. Earlier this month, we filed an 8-K announcing that the board has renewed the annual authorization to repurchase up to 5 million shares. Every year, at a minimum, we always want to repurchase the number of shares necessary to avoid the dilutive impact of new shares issued for acquisitions or for equity grants, and we intend to continue to actively repurchase shares. The 1% excise tax on net repurchases is new this year, and we are continuing to assess this added cost.

But at this time, we intend to continue to actively repurchase shares. Days sales outstanding on December 31, ’22 was 74 days compared with 71 days a year ago. Bad debt expense for ’22 was 8 basis points of revenue compared to 28 basis points a year ago. Depreciation and amortization for the fourth quarter was $8.2 million versus $7.2 million last year. Full year depreciation and amortization was $32.9 million in ’22 versus $27.1 million last year. For 2023, we are projecting depreciation and amortization expense of approximately $35.9 million. Capital spending in the fourth quarter was $2.6 million and was $8.6 million for the 12 months. In 2023, capital spending may increase to approximately $15 million to $18 million, primarily as a result of facility tenant improvements, including the new headquarter space we will occupy later this year.

As a reminder, CBIZ is a tenant leasing our space in the new headquarters facility. We are not an owner of this real estate. With a rapid rise in interest rates during the second half of ’22, we have seen an impact to interest expense this past year, and we will see further increases in 2023 as we compare the relatively low borrowing rates in ’22 to current rates. The effective tax rate for the 12 months in 2022 was 25.5%, up from 23.8% a year ago. The increase in effective tax rate is primarily attributable to a higher level of income distribution within higher state tax rate jurisdictions such as New York or California to name a few. Effective in February this year, we announced the acquisition of Somerset, a financial services firm based in Indianapolis.

In 2023, we expect to record approximately $52 million of revenue from this newly acquired operation. In ’23, we expect to record a level of initial transaction and closing cost plus first year nonrecurring integration costs equal to approximately $0.05 per share in 2023. In a similar manner to reporting from Marks Paneth acquisition-related costs this past year, we will report an adjustment to eliminate these costs from GAAP reported results to report adjusted results for the Somerset transaction in 2023. We reported record high growth rates in revenue and earnings per share in ’22, and we are pleased to project further continued growth beyond these levels for 2023. For the full year of 2023, we expect revenue growth in the range of 8% to 10% over the $1.4 billion in ’22, and we expect adjusted earnings per share growth of 11% to 13% over adjusted results of $2.13 per share reported in ’22.

At this early stage of the year, there is an element of prudent caution in these ’23 guidance numbers. We are very alert to potential macroeconomic risks ahead, but the health of the business continues to be very strong. The recurring and essential nature of our core services provide stability to our outlook. The earnings release this morning outlined an expected increase in our tax rate for ’23 in to 28%, up from 25.5% in 2022. There are several factors driving this increase. The Tax Reform Act enacted back in 2017 provided grandfathered benefits that are expiring in ’23 in connection with stock compensation expense. And this will result in higher rates for 2023. In addition, in locations such as New York and California, where we are experiencing growth, higher state tax rates in these jurisdictions are driving an increase in the expected state tax rates.

And a third factor, there is a small impact as a result of the temporary stimulus passed during the pandemic that allowed 100% deductibility of business meals, and that is now reverting to 50% in 2023. Looking at the expected tax rate of 28% beyond 2023, we do not see further increases ahead. The increased rate we expect for ’23 will have a onetime year-over-year impact on the net income after tax and reported earnings per share. In 2023, the expected earnings per share impact is approximately $0.08 per share and the growth in EPS, excluding this impact, would be within a range of 15% to 17% over the adjusted $2.13 for 2022. Normalizing the ’23 outlook for the expected increased tax rate once we are past this year-over-year increase in ’23, tells you the underlying longer-term growth potential for earnings per share remains very high.

In fact, over the recent 5-year time span, the compound average growth rate in earnings per share has been in excess of 18%. As with many others, the rapid rise in interest rates we saw in the second half of ’22 also presents headwinds in ’23. Consistent with our track record of achieving this 18% growth in earnings per share, in ’23, the growth in adjusted EBITDA will reflect a similar growth rate, and we continue to believe we can achieve this type of growth in earnings per share over time once we are past the unique tax rate and interest expense headwinds expected in 2023. The recurring and an essential nature of many of our services provide stability through economic cycles. As we look at employment-driven metrics in our benefits and payroll businesses, we have not yet seen signs of slowdown.

Should we encounter softness in revenue or client demand, we have a number of variable items in our cost structure, and we can take actions to protect margins. 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. The investments we made and are continuing to make in new business producers, particularly within the 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. The business continues to perform well, and we are projecting continued strong growth and margin expansion. We have our eye on macroeconomic environment and the potential challenges ahead in 2023.

But to recap, we are comfortable to provide full year 2023 guidance and expectations as follows: we expect total revenue to increase within a range of 8% to 10% over the $1.4 billion reported for 2022; on an adjusted basis, we expect 2023 adjusted earnings per share to increase within a range of 11% to 13% over the adjusted earnings per share of $2.13 reported in 2022; GAAP reported earnings per share is expected to increase within a range of 15% to 17% over $2.01 reported in 2022.; the effective tax rate for the full year of ’23 is expected at approximately 28%. As I mentioned earlier, there are several considerations at play and the rate can be impacted either up or down by a number of unpredictable factors; and lastly, fully diluted weighted average share count is expected within a range of 51 million to 51.5 million shares for the full year of 2023.

So with these comments, I will conclude, and I’ll turn it back over to Jerry.

Jerome Grisko: Thank you, Ware. Given the importance of acquisitions on our growth strategy, I wanted to spend a few minutes on our approach to M&A, what we’ve accomplished over the past 12 months, including our recent announcement of our Somerset acquisition and the strength of our pipeline. As a quick reminder of our M&A strategy, we look for acquisitions that will allow us to enter attractive and growing geographic markets; strengthen our presence, scale and capacity in our existing markets; expand our service offerings to include additional services or specialties that we know to be in high demand by our clients and to access top talent. During 2022, we completed 2 sizable and strategic acquisitions. The first was Marks Paneth, a leading accounting and tax firm with multiple locations in the Metro New York area and with offices in Philadelphia, Boca Raton and Washington, D.C. The second was Stine & Associates, a risk and advisory services firm that provides consulting services around areas like cybersecurity and SOX compliance.

Stine brought offices in Tulsa and Oklahoma City, as well as a presence in capacity in Dallas, Houston, San Antonio and Denver. When combined, these 2 acquisitions added almost 700 professionals to our team and annualized revenue of approximately $154 million. To date, we have made significant progress with the integration of these teams into our operations. The investments that we’ve made in our integration approach and how we welcome these teams to CBIZ, have allowed us to accelerate the overall process and to realize the desired value of these acquisitions on or ahead of schedule. In addition to the acquisitions that we completed in 2022, we just announced our recent acquisition of Somerset CPAs and advisers, an accounting and tax firm that also offers a variety of consulting services.

headquartered in Indianapolis, Indiana with offices in Fort Wayne and Michigan City, Indiana and Nashville, Tennessee. Somerset brings 240 professionals and approximately $55 million in annualized revenue to CBIZ and allows us to enter a growing and attractive geographic market with a firm that has significant size and scale that will position CBIZ to be competitive right out of the gate. Each of these acquisitions adds to our CBIZ family bring strategic value and strength to the breadth of our services and the depth of expertise and helps us to differentiate ourselves within the markets that we serve. Our M&A pipeline remains healthy, and we have access to the capital needed to pursue these opportunities. With that, we will turn it over for Q&A.

Operator: . Our first question comes from Chris Moore from CJS Securities.

Christopher Moore: Maybe we just break down the 8% revenue growth estimate a little bit further. At the midpoint, from a same-store perspective, is that translate into roughly 4%? Or am I looking at that correctly?

Ware Grove: Chris, this is Ware. Yes, we’re looking at in that 8% to 10% range for revenue growth. We’re looking at roughly 5% to 6% for organic and the balance through acquisition.

Christopher Moore: Got it. That’s helpful. Is there much Marks Paneth kind of synergy assumed in there? I’m just trying to get a sense as to, you guys didn’t assume much for ’22 and felt like ’23 is when you might start to see some of that maybe you could just talk to that a little bit.

Ware Grove: Yes, Chris, a little bit. This is Ware again. We have — typically, you’re aware that we have 3-year earn-out periods for these transactions. There is beyond the onetime nonrecurring first year expenses. We do have a layer of kind of transition expenses during that earnout. But yes, there is incremental improvement between year 1, year 2 and year 3. So there is some modest improvement projected for Marks Paneth.

Christopher Moore: Got it. And just with respect to the 28% tax rate, I just want to make sure I heard it correctly. So looking out beyond ’23, what you’re saying is that ’24 is not likely to be any higher than the 28% range, correct?

Ware Grove: Yes, that’s exactly right. This is — can be characterized as kind of a onetime 2023 versus ’22 headwind that’s presented by an increase in tax rates because primarily for the expiration of some of the grandfathered benefits that are now expiring as a result of the Tax Reform Act of 2017.

Christopher Moore: Got it. And maybe just one more for me. When you look at project work in fiscal year ’22, which areas could be more challenging to match in ’23? And which, if any, might be a little bit easier?

Jerome Grisko: Yes, Chris, time will tell, right? But when we look at project work, we basically say, of the types of things historically that have been impacted by a softer economy, that’s roughly about, total about 14% of our revenue. Of that 14% of our revenue, obviously, much of it — that work continues to be done. So what we did is we went back and looked at some historic numbers. And when we’ve seen some softness there, it’s been approximately call it, 13% to 14% of that 14% or about 2% of our total revenue. So we don’t think that it’s that material in the overall scheme or size of CBIZ, but that’s — those are the numbers.

Operator: . Our next question comes from Andrew Nicholas from William Blair.

Andrew Nicholas: I wanted to start by following up on that last answer with respect to business advisory. Have you seen demand there slow already? I know last quarter or last couple of quarters, you talked about being relatively sold out in that business. Wondering if you’ve already seen some softness there. And then relatedly, if there’s any way to quantify kind of what your expectation is or at least what’s built into guidance on the business advisory front for ’23, that would be helpful.

Jerome Grisko: Yes. Andrew, it’s Jerry. Through the most recent quarter, several months here, we continue to see overall strong demand for our advisory services. So we’re really encouraged by that. With that said, there are I think, 8 different service lines that we include in that advisory category. And there are a couple that are a little softer, but overall, continued strong demand for those services. When we look into ’23 budget, we are predicting continued strong demand for those services overall.

Andrew Nicholas: Understood. And then for my follow-up, I was just hoping you could spend a little bit more time on Somerset. It sounds like a good fit culturally. Can you speak a bit more to their areas of expertise, any cross-sell opportunities that immediately come to mind as you integrate them over the course of ’23. And then lastly, and I apologize for the multipart question, but anything you could say on the multiple paid or — and/or the expected contribution from an EPS perspective in ’23? All those things would be helpful.

Jerome Grisko: Yes. Let me take a crack on some of these things. As far as the fit, we couldn’t be more excited to bring them on, terrific organization, great leadership, strong culture. We were with that team. I think when we did the welcoming meeting. We had over 20 of our CBIZ team members together with their almost 300 members. I think there were 270 or something in the room. And you would think that we’ve been together for years. I mean, just a very strong cultural fit. So very encouraged by that. As far as specialties are concerned, they’re a terrific fit for us. They serve a very similar client base across very similar industries. They do have a couple of specialties. One in particular is dealerships. They represent a significant number of not only auto dealers, but also large equipment RV dealers and large equipment dealers.

We think we can build on that. We’re excited about that. They’ve got a medical real estate kind of practice consultant that we’re excited about, we think we can build on that. We like their markets not only Indianapolis itself, but the other markets that they bring to us, including Michigan City and Fort Wayne and Nashville, all really good markets for us. So a lot there that we were excited about and are looking forward to getting — starting to bring into our fold. You talked about cross-serving in ’23. We typically don’t see a lot of cross-serving right out of the blocks because there’s sometimes spend kind of getting familiar with — for them getting familiar with our organization, and us getting familiar with them. We may see some, and we’ve certainly seen that with Marks Paneth and Stine and some of the others, but we don’t kind of build that into the model.

But overall, very, very encouraged by what we see culturally leadership and the opportunities that it presents together.

Andrew Nicholas: Anything to say on kind of expected bottom line contribution in ’23, and then I’ll get back in the queue.

Ware Grove: Yes, Andrew, this is Ware. Just building on the response I had earlier about the earn-out periods of time. We’re normalizing out roughly $0.05 of equivalent earnings per share, cost from the transaction-related costs and then clearly onetime nonrecurring expenses in the initial integration. Beyond that, though, in the 3-year earn-out period, we do have a layer of expenses. So the net contribution would be fairly modest in the first year on the bottom line. Would improve, clearly more to the CBIZ norm kind of at the end and post earn-out.

Operator: . Our next question comes from Marc Riddick from Sidoti.

Marc Riddick: So really kind of touched on pretty much all of my main questions. I guess maybe one of the things I’ll sort of ask in the round about — sorry about — there being emergency going by, I guess, in the background. I was wondering if you would talk a little bit, clearly, there’s market share gains being taken place in market, the organic growth that you’re seeing. I was wondering if you could talk a little bit about that whether you’re getting a sense that, that’s a function of share of wallet, multiservices being layered on existing clients, just — do you think you’re just gaining from competitors or the like? Maybe sort of talk a little bit about the end market gains that you seem to be having because there’s clear outperformance on a local level, it seems.

Jerome Grisko: Yes, Marc. I think it’s all of the above, right? I mean, I think there’s some component of all of those things. I will say that in speaking to our offices are our unique kind of approach to the market, that being the breadth of services that we offer, the depth of expertise really is a differentiator in the market. And I think we are taking market share as a result of that differentiating characteristic of the business as well as deeper share of wallet within our existing clients. The other thing that’s really kind of taking hold here is kind of our digital outreach and our ability to communicate both that breadth of services and depth of expertise to our clients more directly and not have to rely exclusively on the relationship manager, all of those things are helping us and we’re making pretty significant investments in making sure that we continue to accelerate our message to the market to take advantage of that.

Marc Riddick: Great. And then could you just add a little bit as to maybe what you’re seeing and planning for with pricing for this year, for pricing increases, timing and that type of thing.

Jerome Grisko: Yes. So as Ware indicated in his comments and I did in mine as well is we’ve been — we’ve made some significant investments in just our tools and our processes around pricing, as we’ve talked about on prior calls, over the past number of years. We really saw a significant impact and improvement in those areas in 2022. We would expect that we would not only hold those prices in ’23, but also continue to get even better pricing throughout 2023. So we have significant pricing built into our model for ’23 and a lot of confidence that we’ll be able to get that and hold it.

Marc Riddick: Great. And then 1 more if I could sneak in there. I wasn’t sure — I know that you mentioned high retention. Was there a ballpark retention rate number that was mentioned or maybe I missed it.

Jerome Grisko: Yes, we didn’t give it on this call, but 90-plus percent in most of our more significant service lines, which is really the high end of our industries.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jerry Grisko for any closing remarks.

Jerome Grisko: Thank you. As we wrap up today, as always, I want to thank our shareholders and analysts for your continued support. And for our CBIZ team, when I reflect on the record performance throughout the past year and all that you do to support each other and our clients I really can’t thank you enough and we, as a senior team, can’t thank you enough. At our core CBIZ is a people business and the results that we discuss today are the direct result of the hard work and dedication of each of our 6,500 team members. With that, we’ll conclude our call. Thank you, and have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.