Dow Jones Newswires
Paychex Comfortable With 4Q Consensus View Of
15c/Shr
By JONATHAN WELSH
NEW YORK -- Paychex Inc. (PAYX), which provides a range of payroll and record-keeping
services to small and medium-size businesses, said it expects to report an increase of about 35% in
net income for the fiscal fourth quarter and a slightly higher increase for the full year.
Chairman, President and Chief Executive B. Thomas Golisano told Dow Jones Newswires he is
"very comfortable" with analysts' consensus estimate of 15 cents a share for the quarter ended May
31 and 55 cents for the year.
The Rochester, N.Y., company said it expects earnings for the quarter to rise about 35% to
roughly $38 million, or 15 cents a diluted share, compared with $28.1 million, or 11 cents a share,
a year earlier.
Per-share results reflect a 3-for-2 stock split distributed in May. The company said it has about
250 million shares outstanding. Revenue is expected to increase 19% to about $319 million.
Golisano attributed the increase in part to growing demand for payroll services, especially among
small businesses.
"First and foremost, we continued to increase the size of our client base," he said.
Driving the demand are increasingly complex payroll regulations that have made internal payroll
processing "a significant administrative burden" for smaller employers. Golisano noted the
company's average payroll client has 14 employees.
Paychex has also expanded into record-keeping services for clients' 401(k) plans, using the
"built-in infrastructure" it developed through its payroll business.
"Over the last three to five years, the success of Wall Street has created tremendous interest in
401(k) plans," Golisano said. Many small employers want to establish such programs and are
seeking administrative help.
In the last four years, he said, Paychex's client base for 401(k) services "has gone from zero to
10,000."
For the year, earnings are expected to increase 36% to about $139 million, or 55 cents a share, on
revenue of about $1.2 billion. Golisano said he expects to report results June 29.
- Jonathan Welsh; 201-938-5099
Paychex said it expects service revenue for its fourth quarter to increase by 19% to about $157
million. For the year, service revenue is expected to rise 21% to about $597 million. Service
revenue excludes direct costs related to Professional Employer Organization worksite employees.
-Jonathan Welsh; 201-938-5099 |
