Paychex, Inc. · NASDAQ:PAYX

Paychex — Q3 2016 Earnings Presentation

15 slides from Paychex's earnings presentation, April 2016

  1. Slide 1: Third Quarter Highlights and Financial Results Fiscal 2016

    Third Quarter Highlights and Financial Results Fiscal 2016 © 2015, PAYCHEX, Inc. All rights reserved.

  2. 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

  3. Slide 3: Contents

    Contents  Company Overview  Quarterly Highlights  Third Quarter Financial Results  Fiscal 2016 Outlook © 2015, PAYCHEX, Inc. All rights reserved. 3

  4. Slide 4: Company Overview

    Company Overview Paychex is a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small to medium-sized businesses  Market capitalization of approximately $19B  Strong financial position with no debt  Approximately 590,000 clie

  5. Slide 5: Revenue Source

    Revenue Source Small-Business Payroll  Small-business targets businesses with 1-50 employees HRS Mid-Market Payroll 39%  Mid-market targets businesses with 50-1,000 employees  Growing portfolio of standalone services – expense management; applicant tracking; time and labor Payroll Human Resource

  6. Slide 6: Third Quarter 2016 Highlights

    Third Quarter 2016 Highlights  Results reflected a solid third quarter with positive results across our major human capital management solutions.  Continued investment in user experience and flexibility of Paychex Flex. Earlier this year integrated Paychex Flex Time and Paychex Flex Benefits Admin

  7. Slide 7: Third Quarter 2016 Financial Highlights

    Third Quarter 2016 Financial Highlights  Total service revenue up 7%  Operating income, excluding interest on funds held for clients, increased 6%, with operating margin of 36%  Combined interest on funds held for clients and investment income increased 11%  Cash and total corporate investments

  8. Slide 8: 2016 Third Quarter Financial Results

    2016 Third Quarter Financial Results (In millions, except per share amounts) Three Months Nine Months Ended Ended Change Change February 29, February 29, % % 2016 2016 Payroll Service Revenue $ 439.6 4% $ 1,299.5 4% Human Resource Services Revenue 301.1 12% 864.7 13% Total Service Revenue 740.7 7% 2

  9. Slide 9: Payroll Service Revenue

    Payroll Service Revenue (In millions) YTD Full Year 1,657 1,539 1,599 1,510 1,439 1,300 1,205 1,248 1,141 1,157 1,082 2011 2012 2013 2014 2015 2016 % Full Year 2% 5% 2% 4% 4% Increase % of Service 71% 69% 67% 65% 61% Revenue © 2015, PAYCHEX, Inc. All rights reserved. 9

  10. Slide 10: Human Resource Services Revenue

    Human Resource Services Revenue (In millions) YTD Full Year 1,041 879 865 746 768 676 597 645 553 505 444 2011 2012 2013 2014 2015 2016 % Full Year 10% 13% 10% 18% 18% Increase % of Service 29% 31% 33% 35% 39% Revenue Reflects change to classify certain PEO direct costs as operating expenses rather

  11. Slide 11: Investment Portfolios Results

    Investment Portfolios Results Nine Months Ended February 29, February 28, 2016 2015 % Change Average Investment Portfolios (in billions): Funds Held for Clients $4.0 $4.0 1% Corporate Investments $0.9 $1.0 (5)% Average Rate of Return Earned: Funds Held for Clients 1.1% 1.0% Corporate Investments 0.8

  12. Slide 12: Balance Sheet and Cash Flows

    Balance Sheet and Cash Flows February 29, 2016 May 31, 2015 Cash & Investments $756 $936 Debt $0 $0 Return on Equity 39% 36% For the fiscal year-to-date ended: February 29, 2016 February 28, 2015 Operating Cash Flow $791.2 $692.8 Dividends Paid $455.0 $414.4 Dividend Coverage Ratio* 0.9x 1.4x * Rati

  13. Slide 13: Fiscal Year 2016 Outlook

    Fiscal Year 2016 Outlook Payroll Service Revenue 4% – 5% Human Resource Services Revenue (HRS) 10% – 13% Total Service Revenue 7% – 8% Net Income(1) 8% – 9% Operating Income, Net of Certain Items, as a Percent of Approximately 38% Service Revenue (1) Net income guidance excludes the impact of a net

  14. Slide 14: Long-Term Capital Strategy

    Long-Term Capital Strategy  Cash deployment  Investment for organic growth  Strategic, accretive acquisitions  Return cash to shareholders through dividends and stock repurchase  Authorization of stock repurchase up to $350 million through May 31, 2017. Purchased 2.2 million shares for $108 mil

  15. Slide 15: © 2015, PAYCHEX, Inc. All rights reserved.

    © 2015, PAYCHEX, Inc. All rights reserved.

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