Paychex, Inc. · NASDAQ:PAYX
Paychex — Q3 FY2019 Earnings Presentation
18 slides from Paychex's earnings presentation, March 2019
Slide 1: Third Quarter Highlights and Financial Results Fiscal 2019
Third Quarter Highlights and Financial Results Fiscal 2019
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 (“U.S.”) Private Securities Litigation Reform Act of 1995. Forward-looking stat
Slide 3: Contents
Contents Paychex Overview Quarterly Highlights Financial Results Oasis Acquisition Fiscal 2019 Outlook & Preliminary Fiscal 2020 Framework 3
Slide 4: Paychex Overview
Integrated, cloud-based HCM platform Paychex Overview Unique, high-touch and technology-enabled service A leading provider of integrated model human capital management (HCM) Market capitalization of solutions for payroll, benefits, human resources, and insurance approximately $28B services for
Slide 5: Total Service Revenue Year to Date
Total Service Revenue Year to Date (In millions) Management Solutions PEO and Insurance Services $2,734 $2,486 $2,340 $559 $309 $398 $2,088 $2,175 $2,031 2017 2018 2019 Fiscal Year-to-Date Ended February 28, Note: Results are restated for adoption of Accounting Standards Codification Topic 606, “Rev
Slide 6: Third Quarter Fiscal 2019 Highlights
Third Quarter Fiscal 2019 Highlights Continued solid growth across our major product lines, in particular comprehensive HR outsourcing services, retirement services, insurance services, and time and attendance solutions Effective December 20, 2018, acquired Oasis Outsourcing Group Holdings, L.P.
Slide 7: Third Quarter Fiscal 2019 Financial Highlights
Third Quarter Fiscal 2019 Financial Highlights Prior year periods presented have been restated for adoption of ASC Topic 606, “Revenue from Contracts with Customers” (“ASC Topic 606”). Refer to the presentation entitled “Impacts of ASC Topic 606 and Other Items” on our Investor Relations webpage u
Slide 8: Financial Results
Three Months Ended Nine Months Ended February 28, % February 28, % 2019 Change 2019 Change Management Solutions $ 801.6 4% $ 2,174.7 4% Financial Results PEO and Insurance Services 245.8 65% 559.0 40% Total Service Revenue 1,047.4 14% 2,733.7 10% Interest on Funds Held for Clients 23.0 27% 58.4 28%
Slide 9: Financial Results for the Quarter and Nine Months ended February 28, 2018 as Reported and as Adjusted
Financial Results for the Quarter and Nine Months ended February 28, 2018 as Reported and as Adjusted (In Millions, Except Per Share Amounts) Three Months Ended Nine Months Ended February 28, 2018 February 28, 2018 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Payroll Servi
Slide 10: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In Millions, Except Per Share Amounts) Three Months Ended Nine Months Ended February 28, % February 28, % 2019 2018(1) Change 2019 2018(1) Change Operating Income $ 429.3 $ 369.0 16% $ 1,056.8 $ 989.4 7% Non-GAAP Adjustments: Termination of License Agreements - 32.6 - 32
Slide 11: Operating Income and EBITDA Margins
Operating Income and EBITDA Margins ($ In Millions) Nine Months Ended February 28, % (1) 2019 2018 Change Total Revenue $ 2,792.1 $ 2,532.0 10% Operating Income $ 1,056.8 $ 989.4 7% Operating Margin 37.8% 39.1% Adjustments: Depreciation 91.7 88.0 Amortization 34.0 14.3 Total Adjustments 125.7 102.3
Slide 12: Strong Earnings History
Strong Earnings History * 5-Year CAGR Net Income (in millions) Diluted EPS $1,050 $994 $3.00 $2.75 $950 $2.50 $826 $2.28 $850 $2.09 $757 $750 $2.00 $1.85 $675 $1.71 $627 $650 $1.50 $550 $450 $1.00 FY14 FY15 FY16 FY17(1) FY18(1) FY14 FY15 FY16 FY17(1) FY18(1) (1) Fiscal 2017 and 2018 financial result
Slide 13: Investment Portfolios Results
Investment Portfolios Results Three Months Ended Nine Months Ended February 28, % February 28, % 2019 2018 Change 2019 2018 Change Average Investment Balances (in billions): Funds Held For Clients $ 4.4 $ 4.6 (4%) $ 3.9 $ 4.0 (2%) Corporate Investments $ 0.8 $ 0.9 (15%) $ 0.8 $ 0.9 (10%) Average Rat
Slide 14: Balance Sheet and Cash Flows
Balance Sheet and Cash Flows ($ in Millions) February 28, 2019 May 31, 2018 • Strong liquidity position with >$800M Cash, Restricted Cash, & Total Corporate in cash, restricted cash, and total Investments $ 886.4 $ 719.7 corporate investments Short-term Borrowings $ 53.6 $ - • $800M of new debt to f
Slide 15: Oasis Acquisition
Oasis Acquisition On December 20, 2018, completed the acquisition of Oasis for $1.2B. The acquisition was financed with cash on hand and $800M of new long-term debt. With the acquisition of Oasis, Paychex became the second largest PEO in the U.S. by number of worksite employees served. Paychex,
Slide 16: Fiscal Year 2019 Full Year Outlook
Fiscal Year 2019 Full Year Outlook Fiscal 2019 outlook shown below is based on our financial results with the implementation of ASC 606, “Revenue from Contracts with Customers,” on a full retrospective basis. The guidance in the table below is based on results excluding the acquisition of Oasis. Yea
Slide 17: Preliminary Framework for Fiscal 2020
Preliminary Framework for Fiscal 2020 Preliminary Fiscal 2020 Expectations Excluding Oasis: Management Solutions Revenue Comparable to fiscal 2019 growth PEO and Insurance Services Revenue Low double-digit growth Operating Margin 37% to 38% Oasis: Revenue $355M - $375M Diluted Earnings Per Share Neu
Slide 18: PAYCHEX
PAYCHEX Payroll | Benefits | HR | Insurance 18