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Paychex sees Q4 rise in service revenue

Rochester Business Journal
June 26, 2013

Paychex Inc. reported flat fiscal fourth-quarter profits but the period brought other strong indicators for the company.

Net income for the fourth quarter was $123.5 million, or 34 cents a share. An increase to the company’s tax provision for the settlement of a state income-related matter reduced diluted earnings per share by approximately 4 cents, company officials noted.

Revenue for the three months ended in May rose 6 percent to $585.3 million from $551.5 million a year ago.

Analysts polled by Thomson Reuters predicted earnings of 38 cents a share on revenue of $585.96 million for the Penfield-based payroll and human resources services company.

"Paychex closed the fiscal year with a strong fourth quarter," said Martin Mucci, the company's president and CEO. "As anticipated, we saw improvement in payroll services revenue growth, which was 4 percent for the fourth quarter, up from 1 percent growth experienced for the first nine months of the fiscal year.  Checks per payroll increased approximately 1 percent for the fourth quarter, as our rate of growth moderated from the higher levels experienced earlier in the year."

Other areas of the company saw growth, as well, Mucci noted.

"Our human resources revenue continued to grow at a double-digit rate," he said. "Sales execution in the fourth quarter was strong, particularly in the small market and Human Resource Services.  We finished the year with client retention at record levels."

For the full year the company reported total revenue of $2.3 billion, up from $2.2 billion reported last year. Net income for the fiscal year increased 4 percent to $569 million, while diluted earnings per share increased 3 percent to $1.56 a share.
 
Paychex has scheduled a conference call for 10:30 a.m. Thursday. Martin Mucci, Paychex president and CEO, will be participating in the call along with Efrain Rivera, senior vice president, CFO and treasurer. It will be broadcast on the company’s website on the investor relations page.

(c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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