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Good morning, everyone, and welcome to the CBI

Good morning, everyone, and thank you for joining us on today's conference call to discuss CBI

Thank you, Lori. Good morning, and thank you for joining us for today's call. We're pleased to share our third quarter performance and to discuss our outlook for the remainder of the year. This is an exciting time for our company as we're in the final stages of closing our acquisition of Marcum and I will provide an update on our progress a little bit later in today's call. First, I want to highlight the overall health of our business, which was demonstrated by our strong results for both the third quarter and year-to-date. For the first three quarters of this year, our business has generally performed as expected with total revenue up 7.1%. For the third quarter, total revenue was up 6.9%. While our first nine month results are as expected, we did face some unique headwinds in the second quarter, which impacted our results for that period. As we commented on our second quarter call, we planned out our results for this quarter being stronger, and they came in as expected. Another reason why we do not guide quarter-to-quarter, but only for the full year. Now turning to the performance of our two primary divisions, starting with our Financial Services division. The solid organic growth experienced in our core accounting and tax business was primarily driven by pricing. Our advisory services, which tend to be more project-based and discretionary, also had a solid third quarter with even stronger growth rates than anticipated. It's also worth highlighting that the performance of our government health care consulting business continues to be very strong and had a very strong year coming now from new contracts and the expansion of work for existing projects. Within our Benefits and Insurance division, we also experienced growth in all major service lines. As I've mentioned on past calls, we informally survey a cross section of our clients at the end of each quarter to hear their sentiment on the economy, plans to invest, opportunities and concerns. While client sentiment has waned somewhat compared to the same period last year, many of our clients continue to express cautious optimism through the remainder of this year. As anticipated, concerns around the pending national election, focus on both short-term, potential for market volatility and longer-term regulatory and legislative changes. Clients also cited continuing geopolitical concerns as reasons to wait and see how the next month’s unfold before committing to material incremental investments in the coming months. Access to talent and concerns around inflation are top of mind for these businesses, but the general outlook of the economy has improved when compared to the same period at the beginning of this year. As in any time of change, we see opportunities to serve our clients as they navigate this environment, given our unmatched breadth of services and depth of expertise. The health of our business remains very strong, and we're optimistic about the prospects for the business for the remainder of the year. Given our strong performance to date, I am pleased to reaffirm our guidance previously outlined for the full year 2024. We will provide 2025 guidance, including that impacted by Marcum when we announced Q4 and full year 2024 results. I will now turn it over to Ware to discuss more of the details on our performance for the third quarter and year-to-date. Ware?

Thank you, Jerry, and good morning, everyone. I want to take a few minutes to run through the highlights of the third quarter and year-to-date results we released this morning. As Jerry commented, major conditions for closing the Marcum transaction have been satisfied. We expect this transaction may close in coming days. You should note that in connection with this transaction, significant one-time non-recurring merger related expenses have been incurred both in the third quarter and then year-to-date. These expenses are eliminated from GAAP results when we report adjusted earnings per share. You will find a reconciliation of these items outlined in the release. Many of the quarterly pacing items that impacted second quarter results earlier this year have been resolved as expected. Third quarter adjusted earnings per share was reported at $0.84, up over 27% over third quarter a year ago. Adjusted earnings per share for the first nine months this year was up 7.5% compared with a year ago. The positive momentum established in the third quarter is expected to continue through the balance of this year and we expect full year 2024 adjusted earnings per share to increase within a range of 10% to 12% over the $2.41 reported a year ago. This full year expectation, of course, excludes any potential impact from the combined CBI

Thanks, Ware. I want to use the remaining time today to provide an update on the strategic rationale behind the Marcum acquisition, the largest in our history. We anticipate that the transaction will close in the coming days as many of the essential closing conditions have already been met, including Hart-Scott-Rodino clearance, CBI

Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] Our first question today comes from Andrew Nicholas from William Blair. Please go ahead with your question.

Hi. Good morning. Thanks for taking my questions. I wanted to maybe ask a high-level one on Marcum to start. Obviously, it's been a couple of months now since both your internal client base -- excuse me, employee base and Marcum partners and employees have gotten to know the deal, understand the deal and potentially get more comfortable with it. Just curious what the feedback has been internally? I imagine you have been traveling quite a bit speaking to various teams. Just wondering, what the feedback is? And any kind of color on what the post-integration maybe leadership structure might look like or any people from Marcum that you expect to play a big role in the combined firm?

Yeah, Andrew. Thank you. This is Jerry. I couldn't be more pleased with the reception that we've had, both from our internal team here -- our own team here at CBI

Great. Thank you very much for that. And then for my follow-up question, Jerry, I think you mentioned advisory being a bit stronger than you expected in the third quarter. Can you unpack that a little bit? Where are you seeing pockets of strength? I think one of the things that you highlighted last quarter is something that maybe underperformed your expectations was on kind of the size of M&A transactions. So just any other insight you can provide on that and maybe what the pipeline looks like there for the fourth quarter and early next year? Thank you.

Yeah. So the strength really almost across the board, the combination of all of our advisory services performed really strong in the third quarter. As you know, that's a little less predictable, tends to be more project-based, tends to be more episodic. And it really came in pretty strong across the board. We were pleased with the activity that we saw on the PE advisory side, the amount of activity there. So deal flow, albeit not the larger transactions still were not as strong as they were, say, one year or two ago, but we had more transactions. So more work, smaller pieces but very strong performance in that group. So very encouraging.

Thank you, again.

Our next question comes from Chris Moore from CJS Securities. Please go ahead with your question.

Hey, good morning, guys. Thanks for taking a couple. So in terms of -- it looks like a lot of the organic growth you mentioned a couple of times was from pricing. I guess, I mean, normally think about 1% to 2% increase in pricing per year. Maybe just talk a little bit about what's going on there? And is it likely that we're back to the 1% to 2% next year?

Yeah. Chris, this is Ware. We continue to get relatively good increases driven by pricing and kind of more efficiencies in engagement management, combination of the two. But when you look at the organic revenue, and it's particularly easier to measure this on the Financial Services side, a good 80% to 90% of the increase is there continue to be driven by pricing. We've got efficiencies and improved realization and yield on engagements that also drives the top line. To your other question, I know we've commented before that with the inflationary rate lower than it was in recent years, it's reasonable to expect the commensurate reduction in pricing. So pricing is not 1% or 2%, it's higher than that, but it's lower than it has been in recent years.

Got it. And government health care services, it sounds like it's back. It's growing nicely and was that a surprise or you could see it from kind of what's happening out there?

Yes, absolutely. Great question. We can -- we've seen that. And you're probably referencing the stumble we had midyear a year ago. Second half last year was good. First half this year was terrific year-over-year. And that growth continues to grow at kind of the higher single-digit rates again. Cautionary note that as this business grows, and it's now cresting $200 million a year. That rate of growth on a percentage basis is harder to achieve, but it's very healthy. They're having a great year.

Got it. And maybe just one in terms of Marcum. We're talking about leverage being somewhere 3.2x to 3.5x post close and then 2.1x to 2.3x within 24 months Just from a -- I mean, from a deleveraging perspective, is that more back half loaded as -- is most of that deleverage going to happen in, say, in 2026 or is that reasonably smooth?

Yeah. A couple of things, Chris. We’ve got the seasonal nature of the business. So on a combined basis, the seasonal nature will be pretty similar to what you’ve seen with CBI

Got it.. I appreciate that. I’ll leave it there.

Thanks, Chris.

[Operator Instructions] Our next question comes from Marc Riddick from Sidoti. Please go ahead with your question.

Hey. Good morning, everyone. I wanted to touch a little bit on the pricing dynamic, again, for a moment, if we could. I was sort of thinking about the efforts that you've made over the years to strengthen pricing. And I was wondering if there was sort of a common threat or component in the pricing gains that you're seeing as well as maybe if there's any revenue mix benefit that we should be thinking of, whether that ties to the commentary that you had on the discretionary project-based work or how we should be thinking about that part of it?

Yeah. Let me -- there's a lot to unpack there. So let me just give you some information, and hopefully, I'll address your questions. But just to rewind the tape a little bit, we put some tools in place five or six years ago that helped us really take a granular look at our engagement profitability and yield and pricing actions. And that then enabled a really targeted ability to look at specific clients and specific service lines, specific books of business and things like that with action plans to get pricing, okay? Now you don't get a pricing 100% of the time. So there is a little blow back but minimal, we've experienced minimal over the years. Interestingly -- and so you've seen the pricing in recent years really be a major driver or a major contributor to the organic revenue growth. It continues to be a major contributor yet, again, this year. And I think the message is that we've now baked and embedded that approach into our annual planning, our annual engagement renewal cycle and it's to be expected. Now it's not always going to be 7%, 8%, 9% like it was in recent years. So this year, it's maybe half of that. But kind of commensurate with the underlying inflation rate. And then the other thing we can say is with respect to Marcum, I think we've said this where they have a very similar approach. So I think this is something that, together, we're totally in sync as we combine operations.

Excellent. And then one quick -- one of your comments and maybe sort of think about this, and I haven't thought about before. Is there sort of an update that we should be thinking about as far as client retention that you're seeing? And maybe if you -- it might be early, but if you can speak to client retention trends that you've seen historically with Marcum? Are they similar to what you've seen? And how do you think that might be combined? Thank you.

Yeah. Thanks, Marc. To answer your question, Marcum’s client retention rates are very similar to ours, which is very encouraging. I think we’re at the top – certainly top quartile, decile of our industry based on all the information we see, and they’re at the same place. So not like there’s something to fix there. They’re already best-in-class, and we would expect that to continue for both organizations going forward.

Thank you very much.

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Jerry Grisko for any closing remarks.

Yes. Thank you, as I always do, I want to end today's call by thanking our shareholders and our analysts for your continued support. I also want to thank our CBI