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Good day, and welcome to the CBI

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

Thanks, Chris. Good afternoon, everyone, and thank you for joining us. I want to start today by highlighting how CBI

Thanks, Jerry, and good afternoon, everyone. My comments begin on Slide 11. Consolidated financial results for the fourth quarter and full year demonstrate the strength and resiliency in the CBI

Thanks, Brad. Our top priority in 2026 is reigniting our growth engine and leveraging our scale. We have clear strategic growth priorities and efficiency enablers that we are confident will drive value creation for shareholders in 2026 and beyond. We believe we have the building blocks to deliver on our long-term growth algorithm. Our diverse client base positions us to cross-serve and drive larger share of wallet. We are finding that our ability to provide specialized industry expertise is enabling us to deepen core client relationships and differentiate ourselves from our competitors. Looking forward, we are focused on compounding value through multiple growth engines. We see tremendous opportunity to not only retain business and expand within our existing clients, but also to land clients who seek multiservice capabilities we can now offer. Work completed in 2025 has built the foundation for us to realize operating margin expansion as we increasingly deploy technology and leverage our offshore teams. And last but certainly not least, we remain committed to high return capital allocation priorities that are supported by strong and consistent cash flow you have come to expect from CBI

[Operator Instructions] The first question today comes from Faiza Alwy with Deutsche Bank.

I wanted to ask about, Jerry, your comments around your revenue growth that you said was impacted by soft market conditions and also related to some productivity losses. And I'm curious if you can talk a bit more about that, particularly around the soft market conditions and the improving middle market sentiment that you mentioned, maybe if you have any views around why sentiment was softer last year and what's improving and your confidence around that?

Yes, Faiza, Happy to take the question. As we've talked for years, our client -- that middle market client is a highly resilient client, but what they need in order to invest forward is certainty and stability in the playing field or a business climate. And we saw anything but that certainly in the first half of the year and our market, our competitors, everybody kind of experienced the same thing. So that's really what I was referencing when I referred to kind of soft market conditions. What we did see kind of encouragingly is that as the year progressed, things did settle in a little bit, and our clients did begin to get more comfortable with investing and we benefited from that. We saw more activity in our advisory work, and we're expecting that work to kind of get you through into 2026 for sure. You asked a second part of that question that I can't recall.

I guess just around the confidence and the improving sentiment around the customer.

Yes, Faiza, we do a middle market pulse survey. What we're seeing in that survey is that our clients are more comfortable, more confident today than they were at this period -- at this time last year. And we're seeing that not only in our -- in the survey works, but we're also seeing it in the kind of green shoots that we're seeing on the project side of the business. So everything appears to be holding true. And we're expecting that, again, more of the activity that we saw kind of start to emerge in the second half of the year will continue through the first part of and into 2026.

Okay. And then I wanted to ask about your comments around the role of the trusted adviser and -- as you know, there's a lot of concern in the market around AI and all of that, and you certainly addressed a lot of it in your prepared comments. And I'm curious, as you think about that -- the role of the trusted adviser, are there portions of your business that are maybe a little bit more formulaic where some of your customers could just with big ease as it relates to new technology advancements? Like are there certain parts of your business where there's potential room for disruption or just would love to hear your perspective on that.

Yes. Again, Faiza, and I'll turn it to Peter Scavuzzo because he's obviously leading this with us, and he's here alongside us today, but let me start with the answer to that. Our client -- the answer is we see AI over time, definitely augmenting the work that we do for our clients. And there are certainly pieces of the work that we do that will be more automated and therefore, more efficient as a result of the tools that are available in the market. But it's very hard to separate that work from the remainder of the work that we do for them. And our clients, that middle market client oftentimes turns to that trusted adviser more than just for a tax return, more than just for an audit, more than just for payroll or benefit to insurance or the other services we provide but really for deep knowledge of their business, familiarity with them, deep knowledge of their industries and kind of a holistic approach to helping guide them through what is increasingly a complex business environment and some of their most important and impactful events in their lives, whether it be expansion of a plant or making an acquisition, it's very difficult for that client to separate one isolated piece of work that may have been performed more efficiently from the holistic body of work that we do. That's the special relationship that we have, the trusted relationship that we have with that middle market client. Peter, I don't know if you have anything to add.

Yes. A couple of items I'd add is they're coming to firms like CBI

Next question comes from Chris Moore with CJS Securities.

So maybe we can start with pricing. So at Q3, we had talked about roughly 4% for the year versus 6% or 7% in '23 and '24. You talked about mid-single digits. So that mid-single digits for '25, that's roughly 4%. Is that what we're saying?

Yes. Chris, we didn't specify 4%, 5%. But I will tell you, squarely in the mid-single-digit range for 2026.

Chris, Brad here. The -- for 2025, listen, we did what we said is we were navigating through the second quarter. We did see some -- listen, it was not a period of uncertainty. And what we saw with some of our clients coming to us, again, as trusted partners, long-standing trusted partners asking us for some assistance as they navigated through -- the broader world navigated through some uncertainty. But even with that, as we closed out 2025, Chris, we still delivered very consistent mid-single-digit price realization for the full year. So we're pleased with how we exited the year. And as we turn now well into 2026, and we see line of sight into this busy season and beyond. We see that holding up very nicely.

Got it. So, so far in '26 -- I mean, so there is an argument to be made that pricing in '26 could be a little bit better than you got in '25.

Yes. We're not -- listen, the guidance we have, the 2% to 5% guidance does not assume any significant year-over-year improvement in the pricing environment. So consistent normal pricing environment year-over-year mid-single digits, as Jerry said.

I'll jump maybe to incentive comp. Brad went through this, but I didn't quite get it. So the -- in '25, I think we talked about roughly 9% of revenue, then we would kind of normalize, but that would depend on where we were in the 2% to 5% growth. So if we got to 5% growth, then we would get back kind of fully baked in closer to a 12% level if we get between the 2% and 5%, it will get somewhere between the 9% and 12%. Is that the way to look at it?

Yes, that's the way to look at it. What I mentioned in my remarks earlier, Chris, was if we saw a 2% growth to the low end of our guidance range, we would expect and we wouldn't really be seeing any incremental funding of those pools year-over-year. As we move and migrate to the top end of that guidance range 5%, we would be funding those pools more at historical targeted levels, and that would kind of result in a headwind of somewhere in the neighborhood of $60 million to $70 million year-over-year. And that's largely what our EBITDA or adjusted EBITDA guidance reflects.

Got it. That's helpful. And in terms of the going -- the delta between the 2% and 5% revenue growth. So that is mostly project revenue is the difference between whether or not we're at 2% or 5%. Is that right?

I would say broad market conditions, macro market conditions, right, that really drive more project-related work.

Can we talk maybe about -- I know SEC Capital Markets is one area that was softer in '25. Can we talk about kind of some of the project areas in '25 that were softer and what your thoughts are at this point in time in '26?

Yes. By the way, I appreciate the way you're framing it because the capital markets work that we experienced in '25 is really also market related, right? So we talk about market conditions. It's really all the project work we do and those -- that work that we're -- that is more susceptible to market conditions. So I put the capital markets work in that category. But to get to your specific question, we saw work within, for example, more discretionary work. So we do a lot of work around valuation. We do risk and advisory work. We have worked within that category that is IPO-related that was soft during that period of time. So there's a wide range of the -- what would normally be higher growth, higher margin, very attractive advisory services that we provide that in those environments, where our clients are doing less of that work and the markets are less receptive to that work. That revenue slows a little bit for us. But when the markets improve, it's a significant catalyst to our growth in our margin.

And do you have any thoughts in terms of '26, whether that markets are shifting in that direction?

Yes. Just I would say I would say, more optimistic and more favorable at this time than they were in the first half of 2025. So we're encouraged by the environment that we're entering into '26.

The next question today comes from Andrew Nicholas with William Blair.

I wanted to follow up on that last point and sorry to keep pointing in on it. But in terms of like the bottom and upper end of your guide, it sounds like the project-based work is a decent bit better than first half '25. Is that continuation giving you to the midpoint? And I guess maybe another way to ask the question, you talked about '25 growth between core accounting and advisory. Is there any way to kind of qualitatively speak to the different kind of chunks of your business, core accounting, advisory, B&IS and what your expectations are that are embedded in guidance for '26?

Yes, Andrew, there's a couple of parts there. Let me try to take the first part first, which is the -- how we're thinking about the midpoint of the guidance. I just kind of restate what Jerry said, which is really largely -- the range itself reflects kind of a view around macro conditions and how those macro conditions could shape the nonrecurring more advisory parts of our business. And so if you're looking for me to provide you like what is more prescriptively the midpoint of that range. I wouldn't want to do that. But what I would say is, though, to the extent that those market conditions continue to remain supportive as they were in the back half of 2025 and as we see them today, the midpoint of the guidance becomes something we feel is more realistic, more achievable. So I'll pause there and get your reactions to that because then I want to come back to the second part of your question.

Yes, that's helpful. And then, yes, I guess, the second part of my question was just how to think about core accounting versus advisory versus B&IS if there's a way to kind of disaggregate the growth rates there. I think core accounting is obviously less susceptible to the macro than the rest of it.

Yes. So the pieces that you identified, core accounting impacts and benefits in insurance, let me remind everyone that our revenues are largely recurring in essential and so those tend to be more predictable and grow at kind of steadier rates. The other pieces of the business are a little less predictable, but when the markets are favorable obviously, they grow faster, and the margins are enhanced. Last year, what we saw is really just as a result of the market -- the way the market just unfolded is slower growth in our advisory practices in the first half of the year, but it picked up in the second half of the year. So net-net, the business was in line with what we experienced on both the accounting and tax side and the Benefits & Insurance side. It just played out a little different as a year ago.

And then just a kind of related question. So this year, revenue guide 2% to 5% the long-term target is still mid-single digits. Can you help us kind of bridge to that target? Is the opportunity in '27, '28, '29 going forward? All centered around the cross-sell opportunity. And it sounds like you're incentivizing B&IS a little bit differently to help augment that. Or is there anything else that we should be thinking about as we bridge that to the medium-term target?

Yes. So Andrew, we really look at our growth opportunities with 3 levers, right? Pricing, and we talk a lot about pricing, and we're really pleased with the mid-single digits that we experienced in 2025. And again, what we're -- what we expect to see in 2026. Where the real opportunity comes as the next 2 levers, which are expanding the client relationship, so breadth of services that we can provide to them and new logos. And we think we have an opportunity on both of those fronts, primarily driven by the industry initiatives that we now have in place. If we think about those industries we are unmatched in the market among our competitors among -- with the breadth of services that we can provide. What we're doing within each of those industry groups is identifying the profile of the client, their unique needs in bringing really unique bundled services to that client. That will expand the share of wallet that we have with that client and also allowed us to go out and track and we're seeing evidence of this already being able to track very high-profile clients within that industry as a result of that service offering that no one else can have. So we think over time, '27, '28, as these things start to take hold, the real growth opportunity is going to be an expansion of wallet and in our ability to win new logos over time.