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Paychex's (PAYX) Q4 Earnings Miss Estimates. Increase Y/Y
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Paychex, Inc. (PAYX - Free Report) reported mixed fourth-quarter fiscal 2023 results wherein earnings missed the Zacks Consensus Estimate while revenues beat the same.
Adjusted earnings of 97 cents per share missed the consensus estimate by 1% but increased 19.8% on a year-over-year basis.
Total revenues of $1.23 billion beat the consensus estimate by 0.9% and increased 7.5% year over year. Service revenues of $1.2 billion were up 7% year over yeaPaychex, Inc. Price, Consensus and EPS Surprise.
Revenues from the Management Solutions segment increased 7% year over year to $905.2 million. The segment benefited from growth in the number of clients and client employees served for human capital management (“HCM”) and additional worksite employees for HR Solutions. Also, strong demand for HR Solutions, retirement and time and attendance solutions, price realization, higher product penetration and expansion of HCM ancillary services acted as tailwinds for the segment.
Professional Employer Organization (“PEO”) and Insurance Solutions’ revenues were $299.5 million, up 5% from the year-ago quarter’s level. The uptick was due to growth in the number of average worksite employees, a rise in average wages per worksite employee and an increase in state unemployment insurance revenues. Interest on funds held for clients increased 69% year over year to $24.9 million.
EBITDA of $498.3 million increased 12% year over year. Operating income increased 15% year over year to $453.3 million. The operating margin came in at 36.9%, up 250 basis points from the previous year’s reported figure.
Paychex exited the quarter with cash and cash equivalents of $1.22 billion, compared with $1.3 billion reported at the end of the prior quarter. Long-term debt was $798.2 million, compared with $798.1 million in the prior quarter.
The company generated $409.3 million in cash from operating activities and capital expenditures totaled $46 million.
Fiscal 2024 Outlook
Paychex provided its fiscal 2024 outlook wherein adjusted earnings per share (EPS) is expected to register 9-10% growth. PAYX expects total revenues to register 6-7% growth.
Management Solutions’ revenues are expected to grow around 5-6%. PEO and Insurance Solutions’ revenues are expected to grow 6-9%. Interest on funds held for clients is anticipated to be in the range of $135-$145 million. The company expects operating margin in the range of 41-42%.
Equifax (EFX - Free Report) reported better-than-expected first-quarter 2023 results. Adjusted earnings (excluding 52 cents from non-recurring items) came in at $1.43 per share, beating the Zacks Consensus Estimate by 4.4% but declining 35.6% from the year-ago figure. Total revenues of $1.3 billion surpassed the consensus estimate by 1.5% but decreased 4.5% on a reported basis from the year-ago figure. The top line was down 3% on a local currency basis.
Omnicom (OMC - Free Report) reported better-than-expected first-quarter 2023 results. OMC’s earnings of $1.56 per share beat the Zacks Consensus Estimate by 13%. EPS increased 12.2% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 2.3%. The top line increased 1% year over year.
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Paychex's (PAYX) Q4 Earnings Miss Estimates. Increase Y/Y
Paychex, Inc. (PAYX - Free Report) reported mixed fourth-quarter fiscal 2023 results wherein earnings missed the Zacks Consensus Estimate while revenues beat the same.
Adjusted earnings of 97 cents per share missed the consensus estimate by 1% but increased 19.8% on a year-over-year basis.
Total revenues of $1.23 billion beat the consensus estimate by 0.9% and increased 7.5% year over year. Service revenues of $1.2 billion were up 7% year over yeaPaychex, Inc. Price, Consensus and EPS Surprise.
Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. Quote
Quarter Details
Revenues from the Management Solutions segment increased 7% year over year to $905.2 million. The segment benefited from growth in the number of clients and client employees served for human capital management (“HCM”) and additional worksite employees for HR Solutions. Also, strong demand for HR Solutions, retirement and time and attendance solutions, price realization, higher product penetration and expansion of HCM ancillary services acted as tailwinds for the segment.
Professional Employer Organization (“PEO”) and Insurance Solutions’ revenues were $299.5 million, up 5% from the year-ago quarter’s level. The uptick was due to growth in the number of average worksite employees, a rise in average wages per worksite employee and an increase in state unemployment insurance revenues. Interest on funds held for clients increased 69% year over year to $24.9 million.
EBITDA of $498.3 million increased 12% year over year. Operating income increased 15% year over year to $453.3 million. The operating margin came in at 36.9%, up 250 basis points from the previous year’s reported figure.
Paychex exited the quarter with cash and cash equivalents of $1.22 billion, compared with $1.3 billion reported at the end of the prior quarter. Long-term debt was $798.2 million, compared with $798.1 million in the prior quarter.
The company generated $409.3 million in cash from operating activities and capital expenditures totaled $46 million.
Fiscal 2024 Outlook
Paychex provided its fiscal 2024 outlook wherein adjusted earnings per share (EPS) is expected to register 9-10% growth. PAYX expects total revenues to register 6-7% growth.
Management Solutions’ revenues are expected to grow around 5-6%. PEO and Insurance Solutions’ revenues are expected to grow 6-9%. Interest on funds held for clients is anticipated to be in the range of $135-$145 million. The company expects operating margin in the range of 41-42%.
Currently, Paychex carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earning Snapshots
Equifax (EFX - Free Report) reported better-than-expected first-quarter 2023 results. Adjusted earnings (excluding 52 cents from non-recurring items) came in at $1.43 per share, beating the Zacks Consensus Estimate by 4.4% but declining 35.6% from the year-ago figure. Total revenues of $1.3 billion surpassed the consensus estimate by 1.5% but decreased 4.5% on a reported basis from the year-ago figure. The top line was down 3% on a local currency basis.
Omnicom (OMC - Free Report) reported better-than-expected first-quarter 2023 results. OMC’s earnings of $1.56 per share beat the Zacks Consensus Estimate by 13%. EPS increased 12.2% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 2.3%. The top line increased 1% year over year.