Paychex, Inc. · NASDAQ:PAYX
Paychex — Q4 2018 Earnings Presentation
19 slides from Paychex's earnings presentation, Jun 1, 2018
Slide 1: Fourth Quarter Highlights and Financial Results Fiscal 2018
Fourth Quarter Highlights and Financial Results Fiscal 2018 © 2018, PAYCHEX, Inc. All rights reserved.
Slide 2: Forward Looking Statements
Forward Looking Statements You should be aware that certain written and oral statements made by management may constitute “forward-looking statements” within the meaning of the safe-harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements ar
Slide 3: Contents
Contents Company Overview Quarterly Highlights Fourth Quarter Financial Results Fiscal 2019 Outlook © 2018, PAYCHEX, Inc. All rights reserved. 3
Slide 4: Paychex
Paychex A leading provider of integrated human capital management (HCM) solutions for payroll, human resources, retirement and insurance services for small- to mid-sized businesses. Integrated, cloud-based HCM platform Unique, high-touch and technology-enabled service model Market capitalizati
Slide 5: Revenue Source
Revenue Source Increasing attachment of HCM and employee benefit products FY18 Payroll Serves small- and mid-market businesses Small business targets businesses 45% with 1-50 employees Mid-market targets businesses with 50-1,000 employees 55% Integrated Flex platform allowing for clients to ad
Slide 6: Fourth Quarter 2018 Highlights
Fourth Quarter 2018 Highlights Continued solid growth across our major HCM product lines, in particular comprehensive HR outsourcing services, retirement services, insurance and time and attendance solutions Interest on funds held for clients and corporate investments benefited from higher inter
Slide 7: Fourth Quarter 2018 Financial Highlights
Fourth Quarter 2018 Financial Highlights Total revenue up 9%(1) Operating income increased 6%; growth moderated somewhat by accelerated investment in the business and growth in PEO pass-through insurance costs Combined interest on funds held for clients and investment income increased 29% Ca
Slide 8: 2018 Fourth Quarter Financial Results
2018 Fourth Quarter Financial Results (In Millions, Except Per Share Amounts) Three Months Twelve Months Ended % Ended % May 31, 2018 Change May 31, 2018 Change Payroll Services $ 452.4 3% $ 1,810.0 2% HRS Revenue 401.0 17% 1,507.4 14% Total Service Revenue 853.4 9% 3,317.4 7% Interest on Funds Held
Slide 9: 2018 Fourth Quarter Effective Tax Rate
2018 Fourth Quarter Effective Tax Rate Tax Reform reduced ETR by 5.3% and discrete tax items reduced the ETR further by 1.8% for Q4 Three Months Twelve Months Ended Ended May 31, 2018 May 31, 2018 Pre-Tax Reform Effective Tax Rate 35.8% 35.8% Annual Rate Items Impact of Tax Reform on Annual Effectiv
Slide 10: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In Millions, Except Per Share Amounts) Three Months Ended % Twelve Months Ended % May 31, 2018 May 31, 2017 Change May 31, 2018 May 31, 2017 Change Operating Income $ 317.8 $ 298.9 6% $ 1,287.5 $ 1,239.6 4% Non-GAAP Adjustments: Termination of License Agreements $ - $ -
Slide 11: Non-GAAP Financial Measures (Continued)
Non-GAAP Financial Measures (Continued) (In Millions, Except Per Share Amounts) Three Months Ended % Twelve Months Ended % May 31, 2018 May 31, 2017 Change May 31, 2018 May 31, 2017 Change Diluted Earnings Per Share $ 0.63 $ 0.54 17% $ 2.58 $ 2.25 15% Non-GAAP Adjustmens: Excess Tax Benefit Related
Slide 12: Strong Earnings History
Strong Earnings History * 5-Year CAGR Net Income (in millions) Diluted EPS $934 $950 $3.00 $2.58 $850 $817 $2.50 $757 $2.25 $750 $2.09 $675 $2.00 $1.85 $650 $627 $1.71 $1.50 $550 $450 $1.00 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 (1) Net income and diluted earnings per share were both impa
Slide 13: Sustained Financial Performance
Sustained Financial Performance (in millions) * 5-Year CAGR Service Revenue Operating Income $3,500 $3,317 $1,400 $1,288 $3,101 $1,240 $3,000 $2,906 $1,200 $1,147 $2,698 $1,054 $2,478 $983 $2,500 $1,000 $2,000 $800 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 © 2018, PAYCHEX, Inc. All rights re
Slide 14: Total Service Revenue Year to Date
Total Service Revenue Year to Date (In millions) Revenue growth sustained; HRS becoming larger portion with move to HCM product bundles Full Year ended May 31, Payroll revenue HRS revenue $3,317 $3,101 $2,698 $2,906 $2,478 $1,507 $1,322 $1,176 $1,041 $879 $1,657 $1,730 $1,779 $1,810 $1,599 2014 2015
Slide 15: Investment Portfolios Results
Investment Portfolios Results Fed Funds rate increased 3 times during fiscal 2018. Higher yields on longer-term investments resulting in change to net unrealized loss position. Twelve Months Ended % May 31, 2018 May 31, 2017 Change Average Investment Balances (in billions): Funds Held For Clients $
Slide 16: Balance Sheet and Cash Flows
Balance Sheet and Cash Flows ($ in Millions) Strong liquidity position with >$700M in cash and total corporate investments and no debt. Stellar ROE of 46%. May 31, 2018 May 31, 2017 Cash & Total Corporate Investments $ 719.7 $ 777.4 Short-term Borrowings $ - $ - Return on Equity 46% 42% Fiscal Year-
Slide 17: Fiscal Year 2019 Full Year Outlook
Fiscal Year 2019 Full Year Outlook Fiscal 2019 outlook is based on our financial results with the implementation of ASC 606, “Revenue from Contracts with Customers,” on a full retrospective basis. Year-over-Year Growth Payroll Service Revenue 2% - 3% HRS Revenue 10% - 11% Interest on funds held for
Slide 18: Long-Term Capital Allocation
Long-Term Capital Allocation • Cash deployment 1. Reinvest in the business – drive revenue growth and margin expansion 2. Strategic acquisitions 3. Return cash to shareholders through dividends and stock repurchase • In July 2016, the Board of Directors authorized a new stock repurchase plan to purc
Slide 19: © 2018, PAYCHEX, Inc. All rights reserved.
© 2018, PAYCHEX, Inc. All rights reserved.