Paychex, Inc. Reports Record Third Quarter Results
Paychex, Inc. Reports Record Third Quarter Results Wednesday March 26, 4:01 pm ET THIRD QUARTER FISCAL 2008 HIGHLIGHTS -- Diluted earnings per share increased 18% to $0.39 per share. -- Net income increased 13% to $142.5 million. -- Total revenue increased 10% to $532.2 million. -- Payroll service revenue increased 8% to $374.2 million. -- Human Resource Services revenue increased 18% to $120.6 million. -- Operating income increased 22% to $210.4 million.
ROCHESTER, N.Y.--(BUSINESS WIRE)--Paychex, Inc. (“we,” “our,” or “us”) (NASDAQ:PAYX - News) today announced a 13% increase in its record net income to $142.5 million for the three months ended February 29, 2008 (the “third quarter”), as compared with net income of $126.6 million for the same period last year. Diluted earnings per share were $0.39, an increase of 18% over $0.33 per share for the same period last year. Total revenue was $532.2 million, a 10% increase over $485.3 million for the same period last year.
“Third quarter results met our expectations and we expect to achieve our eighteenth consecutive year of record revenue and net income for fiscal 2008,” commented Jonathan J. Judge, President and Chief Executive Officer of Paychex. “Our operating income, net of certain items, was very strong for the third quarter, increasing 17% over the same period last year. However, we are seeing signs of a weakening economy indicated by a more difficult than normal third quarter selling season and increases in business failures. On a positive note, checks per client have not yet shown significant weakness.”
Payroll service revenue increased 8% to $374.2 million for the third quarter from the same period last year. The increase was due to client base growth, higher check volume, and price increases.
Human Resource Services revenue increased 18% to $120.6 million for the third quarter from the same period last year. The growth was generated from the following: retirement services client base increased 10% to 47,000 clients; comprehensive human resource outsourcing services client employees increased 17% to 409,000 client employees served; and workers’ compensation insurance client base increased 19% to 70,000 clients. Additionally, the asset value of the retirement services client employees’ funds increased 19% to $9.1 billion.
Total expenses increased 3% to $321.8 million for the third quarter from the same period last year as a result of increases in personnel and other costs related to selling and retaining clients, and promoting new services. Excluding a $13.0 million expense charge to increase the litigation reserve during the three months ended February 28, 2007, expenses would have increased 8%.
For the third quarter, our operating income was $210.4 million, an increase of 22% over the same period last year. Operating income, net of certain items (see Note 1) increased 17% to $173.0 million as compared to $148.3 million for the same period last year. As a percent of service revenues, operating income, net of certain items, improved to 35% from 33% for the same period last year.