revenue, income, and EPS up 23%, 36%, and 36%, respectively. another solid and practically predictable quarter.
this business (and stock) continues to perform brilliantly. chexy changed my once naively held notion that techs are the only way to sexy returns.
Paychex, Inc. Reports Record First Quarter Results
PR Newswire - September 15, 1998 08:01
ROCHESTER, N.Y., Sept. 15 /PRNewswire/ -- Paychex, Inc. (Nasdaq: PAYX) today announced record net income of $31.4 million or $.19 diluted earnings per share for the first quarter ended August 31, 1998, a 36% increase over net income of $23.1 million or $.14 diluted earnings per share for the same period last year. Total service revenues were $139.3 million, an increase of 23% over $112.9 million for the same period last year.
PAYROLL SEGMENT
For the quarter ended August 31, 1998, operating income from payroll services increased 31% to $53.9 million from $41.2 million for the same period last year. Payroll service revenue was $128.0 million, an increase of 22% over $104.9 million for the same period last year.
The increases in revenues and operating income were the result of an 11% year-over-year increase in the Company's payroll client base and the continued growth of the Taxpay(R) and Direct Deposit products. Paychex currently services 300,900 payroll clients, with 228,900 utilizing Taxpay, the Company's tax filing and payment feature, 112,400 taking advantage of the Company's Direct Deposit product and 35,300 using the Company's Check Signing option.
HRS-PEO SEGMENT
For the quarter ended August 31, 1998, operating income for the HRS-PEO segment increased 117% to $2.6 million from $1.2 million for the same period last year. HRS-PEO service revenue was $11.3 million, an increase of 40% over $8.1 million for the same period last year.
The increases in service revenue and operating income for the quarter were due to the continued expansion of the segment's client bases, which produced higher recurring revenues. As of August 31, 1998, the segment had 6,700 401(k) plan recordkeeping clients, 17,300 section 125 clients, and 19,000 PEO worksite employees, an increase of 86%, 24%, and 31%, respectively, over August 31, 1997 levels. Segment results also benefited from the consolidation of the PEO administrative functions in Rochester, NY, completed in February 1998.
CORPORATE EXPENSES
Corporate expenses are primarily related to the Information Technology, Organizational Development, Finance and Senior Management functions of the Company. For the quarter ended August 31, 1998, operating expenses increased 23% from $12.1 million to $14.9 million. The period's increase is primarily due to additional employees required to support the continued growth of the Company's business segments, and from increased national marketing efforts, commenced in the third quarter of 1998.
B. Thomas Golisano, Chairman, President, and Chief Executive Officer of Paychex said, "First quarter fiscal 1999 is reflective of consistent results achieved the last several years. We reached another milestone as we are now servicing over 300,000 payroll clients. Expansion of our payroll client base and their utilization of our ancillary services continue to generate excellent results. Profits from the HRS-PEO segment continue to improve as we realize the benefits of expansion efforts and optimize the segment's support functions. HRS-PEO results are gradually becoming more important to the total profits of Paychex."
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