praise the lord and pass me a guinness. we have a blowout.
(consensus was $0.20.)
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Paychex, Inc. Reports Record Third Quarter Results
PR Newswire - March 17, 1999 07:57
ROCHESTER, N.Y., March 17 /PRNewswire/ -- Paychex, Inc. (Nasdaq: PAYX) today announced record net income of $36.2 million or $.22 diluted earnings per share for the third quarter ended February 28, 1999, a 37% increase over net income of $26.4 million or $.16 diluted earnings per share for the same period last year. Total service revenues were $158.4 million, an increase of 20% over $131.9 million for the same period last year.
For the nine months ended February 28, 1999, net income increased 36% to $101.2 million or $.61 diluted earnings per share as compared to net income of $74.2 million or $.45 diluted earnings per share for the same period last year. Total service revenues were $440.7 million, an increase of 22% over $362.0 million for the same period last year.
PAYROLL SEGMENT
For the quarter ended February 28, 1999, operating income from Payroll services increased 27% to $61.0 million from $48.1 million for the same period last year. Payroll service revenue was $144.3 million, an increase of 18% over $122.2 million for the same period last year.
For the nine months ended February 28, 1999, operating income from Payroll services increased 28% to $171.6 million from $133.6 million for the same period last year. Payroll service revenue was $403.3 million, an increase of 20% over $335.6 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 year-over-year growth of the Taxpay(R) and Direct Deposit products. Paychex currently services 316,900 payroll clients, with 246,700 utilizing Taxpay, the Company's tax filing and payment feature, 130,100 taking advantage of the Company's Direct Deposit product, and 38,100 using the Company's Check Signing option.
HRS-PEO SEGMENT
For the quarter ended February 28, 1999, operating income for the HRS-PEO segment increased to $3.2 million from $.5 million for the same period last year. HRS-PEO service revenue was $14.2 million, an increase of 47% over $9.6 million for the same period last year.
For the nine months ended February 28, 1999, operating income for the HRS-PEO segment increased to $8.4 million from $2.7 million for the same period last year. HRS-PEO service revenue was $37.4 million, an increase of 42% over $26.4 million for the same period last year.
The increases in service revenue for the quarter and nine months are primarily related to higher revenues from 401(k) plan recordkeeping clients. The increases in operating income for the quarter and nine months are due to service revenue gains, and continued benefits from the February 1998 consolidation of the PEO administrative functions in Rochester, NY, which impacted prior year results.
As of February 28, 1999, the segment had 9,100 401(k) plan recordkeeping clients and 16,900 PEO worksite employees. The number of worksite employees represents a 7% decline over a year ago, and is primarily due to the loss of two large PEO clients during November 1998. The loss of these clients is not expected to have a material impact on full-year results.
CORPORATE EXPENSES
Corporate expenses are primarily related to the Information Technology, Organizational Development, Finance, Marketing and Senior Management functions of the Company. For the quarter ended February 28, 1999, expenses increased 15% from $13.7 million to $15.7 million. For the nine months ended February 28, 1999, expenses increased 17% from $38.5 million to $44.8 million. The period increases are 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 latter part of the third quarter of fiscal 1998.
B. Thomas Golisano, Chairman, President, and Chief Executive Officer of Paychex said, "Payroll client growth, increased utilization of ancillary services, and leveraging of the operating expense base continue to drive the excellent financial results experienced in the third quarter and for the first nine months of fiscal 1999. We continue to be pleased with the future growth prospects of core payroll services, direct deposit, major market payroll services, 401(k) recordkeeping and our workers' compensation offerings." |
