Paychex, Inc. · NASDAQ:PAYX

Paychex — Q2 2016 Earnings Presentation

15 slides from Paychex's earnings presentation, Apr 11, 2016

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

    Second 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  Second 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: Second Quarter 2016 Highlights

    Second Quarter 2016 Highlights  Results reflected a solid second quarter with positive results across our major product lines.  Continued integration within Paychex Flex with the launch of the Paychex Flex Time and Paychex Flex Benefits Administration modules. These modules assist employers in all

  7. Slide 7: Second Quarter 2016 Financial Highlights

    Second Quarter 2016 Financial Highlights  Total service revenue up 7%  Operating income, excluding interest on funds held for clients, increased 9%, with operating margin of 40%  Combined interest on funds held for clients and investment income increased 7%  Cash and total corporate investments

  8. Slide 8: 2016 Second Quarter Financial Results

    2016 Second Quarter Financial Results (In millions, except per share amounts) Three Months Six Months Ended Ended Change Change November 30, November 30, % % 2015 2015 Payroll Service Revenue $ 427.4 4% $ 859.9 4% Human Resource Services Revenue 283.9 11% 563.6 13% Total Service Revenue 711.3 7% 1,4

  9. Slide 9: Payroll Service Revenue

    Payroll Service Revenue (In millions) YTD Full Year 1,657 1,539 1,599 1,510 1,439 824 860 754 763 791 716 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 1,041 879 746 676 597 564 499 419 333 365 291 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 Six Months Ended November 30, November 30, 2015 2014 % Change Average Investment Portfolios (in billions): Funds Held for Clients $3.8 $3.7 1% Corporate Investments $1.0 $1.0 3% Average Rate of Return Earned: Funds Held for Clients 1.2% 1.1% Corporate Investments 0.8% 0

  12. Slide 12: Balance Sheet and Cash Flows

    Balance Sheet and Cash Flows November 30, 2015 May 31, 2015 Cash & Investments $912.9 $936.4 Debt $0 $0 Return on Equity 39% 36% For the fiscal year-to-date ended: November 30, 2015 November 30, 2014 Operating Cash Flow $419.9 $404.7 Dividends Paid $303.6 $276.2 Dividend Coverage Ratio* 1.2x 1.2x *

  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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