Paychex, Inc. · NASDAQ:PAYX

Paychex — Q1 2016 Earnings Presentation

15 slides from Paychex's earnings presentation, October 2015

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

    First 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  First 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 $17B  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: First Quarter 2016 Highlights

    First Quarter 2016 Highlights  Results reflected a solid start to fiscal 2016 with positive results across our major product lines.  Launched the new Paychex Flex Hiring module, which gives employers access to paperless recruiting and employee screening, along with a robust onboarding module, for

  7. Slide 7: First Quarter 2016 Financial Highlights

    First Quarter 2016 Financial Highlights  Total service revenue up 8%  Operating income, excluding interest on funds held for clients, increased 11%, with operating margin of 40%  Combined interest on funds held for clients and investment income increased 6%  Cash and total corporate investments

  8. Slide 8: 2016 First Quarter Financial Results

    2016 First Quarter Financial Results (In Millions, Except Per Share Amounts) Three Months % Ended Change August 31, 2015 Payroll Service Revenue $ 432.5 5% Human Resource Services Revenue 279.7 15% Total Service Revenue 712.2 8% Interest on Funds Held for Clients 10.8 6% Total Revenue $ 723.0 8% Net

  9. Slide 9: Payroll Service Revenue

    Payroll Service Revenue (In millions) YTD Full Year 1,657 1,539 1,599 1,510 1,439 386 395 413 432 361 382 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 1,041 879 746 676 597 280 208 244 170 182 146 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 Three Months Ended August 31, August 31, 2015 2014 % Change Average Investment Portfolios (in billions): Funds Held for Clients $3.8 $3.7 2% Corporate Investments $1.0 $1.0 5% Average Rate of Return Earned: Funds Held for Clients 1.1% 1.1% Corporate Investments 0.7% 0.7

  12. Slide 12: Balance Sheet and Cash Flows

    Balance Sheet and Cash Flows August 31, 2015 May 31, 2015 Cash & Investments $953.9 $936.4 Debt $0 $0 Return on Equity 38% 36% For the fiscal year-to-date ended: August 31, 2015 August 31, 2014 Operating Cash Flow $278.3 $263.1 Dividends Paid $151.9 $138.3 Dividend Coverage Ratio* 1.7x 1.5x * Ratio

  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 1.3 million shares for $63 mill

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

    © 2015, PAYCHEX, Inc. All rights reserved.

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