Paychex, Inc. · NASDAQ:PAYX

Paychex — FY2016 Earnings Presentation

16 slides from Paychex's earnings presentation, Sep 10, 2016

  1. Slide 1: Highlights and Financial Results Fiscal 2016

    Highlights and Financial Results Fiscal 2016 © 2016, 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  Fiscal 2016 Financial Results  Fiscal 2017 Outlook © 2016, PAYCHEX, Inc. All rights reserved. 3

  4. Slide 4: Paychex Overview

    Paychex Overview Paychex is a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services for small to mid-sized businesses.  Market capitalization of approximately $19B  Strong financial position with no debt  Approximately 605,000 client

  5. Slide 5: Revenue Source

    Revenue Source Small Business Payroll  Small business targets businesses with 1-50 employees HRS Mid-Market Payroll 40%  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: Product Highlights

    Product Highlights 10M #1 Small Business (1-50 EE’s) Payroll 605,000 clients Employees paid #2 Mid-Market (50-500 EE’s) HR Outsourcing 944,000 Top ASO/PEO for Small 35,000 clients WSEs Business Retirement 74,000 plans 820,000 #1 Recordkeeper – # Plans participants Insurance 119,000 clients 150,000 T

  7. Slide 7: Fiscal 2016 Highlights

    Fiscal 2016 Highlights  Results reflected growth and progress against key initiatives, with positive results across our major human capital management (HCM) solutions.  Continued investment in user experience and flexibility of Paychex Flex. Earlier this year integrated Paychex Flex Time, Paychex

  8. Slide 8: Fiscal 2016 Financial Highlights

    Fiscal 2016 Financial Highlights  Total service revenue up 8%  Operating income, excluding interest on funds held for clients, increased 9%, with operating margin of 38%  Combined interest on funds held for clients and investment income increased 4%  Dividends as percent of net income of 80%  C

  9. Slide 9: Fiscal 2016 Financial Results

    Fiscal 2016 Financial Results (In millions, except per share amounts) Three Months Year Ended Ended Change Change May 31, 2016 May 31, 2016 % % Payroll Service Revenue $ 430.4 5% $ 1,729.9 4% Human Resource Services Revenue 311.2 14% 1,175.9 13% Total Service Revenue 741.6 9% 2,905.8 8% Interest on

  10. Slide 10: Strong Earnings History

    Strong Earnings History Net Income (in millions) EPS $800 $757 $2.25 $2.09 $750 $2.00 $700 $675 $1.85 $650 $627 $1.71 $1.75 $600 $569 $1.56 $1.51 $548 $550 $1.50 $500 $1.25 $450 $400 $1.00 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 © 2016, PAYCHEX, Inc. All rights reserved.

  11. Slide 11: Accelerating Performance

    Accelerating Performance (in millions) Service Revenue (1) Operating Income $3,000 $2,906 (Net of Certain Items) (2) $2,800 $2,698 $1,150 $1,101 $2,600 $2,478 $1,050 $1,012 $942 $2,400 $2,285 $950 $2,186 $864 $2,200 $850 $810 $2,000 $750 $1,800 $650 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16

  12. Slide 12: Investment Portfolios Results

    Investment Portfolios Results May 31, 2016 May 31, 2015 % Change Average Investment Portfolios (in billions): Funds Held for Clients $4.1 $4.1 1% Corporate Investments $.9 $1.0 (9)% Average Rate of Return Earned: Funds Held for Clients 1.1% 1.0% Corporate Investments 0.9% 0.7% Realized Gains, Net (i

  13. Slide 13: Balance Sheet and Cash Flows

    Balance Sheet and Cash Flows May 31, 2016 May 31, 2015 Cash & Investments $793 $936 Debt $0 $0 Return on Equity 40% 36% For the fiscal year-to-date ended: May 31, 2016 May 31, 2015 Operating Cash Flow $1,018.2 $895.2 Dividends Paid $ 606.5 $551.8 Dividend Coverage Ratio* 1.0x 1.4x * Ratio is calcula

  14. Slide 14: Fiscal Year 2017 Outlook

    Fiscal Year 2017 Outlook Payroll Service Revenue Approximately 4% Human Resource Services Revenue (HRS) 12% – 14% Total Service Revenue 7% – 8% Interest on Funds Held for Clients Mid-Single-Digit Growth Net Income(1) Approximately 8% Operating Income, Net of Certain Items, as a Percent of Service Ap

  15. Slide 15: 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. $290.3 million, for 6.1 million shares, u

  16. Slide 16: © 2016, PAYCHEX, Inc. All rights reserved.

    © 2016, PAYCHEX, Inc. All rights reserved.

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