Paychex Q3 Results Top Estimates, Backs 2015 Outlook

(RTTNews) - Payroll and human resource service provider Paychex, Inc. (PAYX) reported Wednesday a profit for the third quarter that increased six percent from last year, helped by growth in both payroll and human resource services revenues.

Both earnings per share and quarterly revenues topped analysts' expectations. The company also reaffirmed its guidance for full-year 2015.

"We continued to make good progress against our initiatives during the third quarter. Selling season execution was strong in new annualized revenue sold," President and CEO Martin Mucci said.

The Rochester, New York-based company reported net income of $169.4 million or $0.46 per share for the third quarter, higher than $160.1 million or $0.44 per share in the prior-year quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.46 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 8 percent to $704.3 million from $650.4 million in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $701.16 million by a whisker.

Total service revenue for the quarter grew 8 percent to $693.6 million, with payroll service revenue improving 2 percent and human resource services revenue increasing 19 percent.

Operating income increased 5 percent to $264.3 million, and total expenses were $440 million, up 10 percent from the year-ago quarter.

"Demand for our comprehensive suite of human resource services continues to advance, and our full service products to help clients navigate health care reform are gaining market acceptance. We are also experiencing gains in the number of worksite employees served through our human resource service solutions," Mucci added.

Looking ahead to fiscal 2015, the company continues to expect net income to grow 6 to 8 percent and total service revenue to improve 8 to 10 percent from the fiscal 2014 level. Street is currently looking for full-year 2015 earnings of $1.85 per share on revenues of $2.73 billion.

Founded by Thomas Golisano in 1971, Paychex provides services such as calculating payroll, filing tax payments, administering retirement plans and handling workers' compensation. The company serves about 580,000 payroll clients nationwide and has more than 100 locations across the U.S.

PAYX closed Tuesday's regular trading session at $51.30, down $0.01 on a volume of 2.52 million shares. In the past 52-week period, the stock has been trading in a range of $39.80 to $51.72.