Paychex, Inc. (reported better-than-expected first-quarter fiscal 2022 results. PAYX Quick Quote PAYX - Free Report)
Adjusted earnings (excluding 2 cents from non-recurring items) of $1.03 per share beat the Zacks Consensus Estimate by 6.2% and increased 15.7% on a year-over-year basis. Total revenues of $1.2 billion beat the consensus mark by 1.8% and increased 11.4% year over year.
Over the past year, shares of Paychex have gained 5.1% compared with 3.8% growth of the
industry it belongs to. Image Source: Zacks Investment Research Revenues in Detail
Revenues from Management Solutions increased 12% year over year to $905.5 million. The segment benefited from growth in the number of client employees served for human capital management (HCM) and additional worksite employees for HR Solutions; improved revenue per client on price realization and higher product penetration, including strong demand for HR Solutions, retirement, and time and attendance solutions; plus the expansion of HCM ancillary services.
Professional employer organization (“PEO”) and Insurance Solutions revenues were $282.8 million, up 8% from the year-ago quarter’s level. The uptick was owing to growth in the number of average worksite employees and an increase in PEO health insurance revenues.
Interest on funds held for clients increased 24% year over year to $17.9 million.
Operating income increased 12% year over year to $495.6 million. EBITDA of $539.7 million increased 8% year over year.
Balance Sheet & Cash Flow
Paychex exited first-quarter fiscal 2022 with cash and cash equivalents of $1.18 billion compared with $370 million at the end of the prior quarter. Long-term debt was $797.8 million compared with $797.7 million in the prior quarter.
Cash provided by operating activities was $364.3 million in the reported quarter. During the reported quarter, PAYX paid out $284.6 million as dividends.
Fiscal 2023 View
Paychex lowered its adjusted earnings per share view. Adjusted EPS is now expected to register 11-12% growth compared with the prior expectation of 9-10% growth.
PAYX continues to expect total revenues to register 7-8% growth.
Management Solutions revenues are expected to grow 5-7%. PEO and Insurance Solutions revenues are expected to grow 8-10%.
The adjusted operating margin is expected to grow 40-41%. Adjusted EBITDA margin is expected to be nearly 44%.
Currently, Paychex carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Performances of Other Business Services Companies Equifax ( reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same. EFX Quick Quote EFX - Free Report)
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