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Paychex posts record profit

Paychex Inc.’s earnings rose 34 percent for the fiscal year ended May 31, the company reported today.
Net income reached a record $52.3 million, or 77 cents a share, up from $39 million, or 58 cents a share, the year before. Revenue rose 22 percent, from $267.2 million to $325.3 million.
The company’s fourth-quarter earnings increased 388 percent to $14.5 million, or 21 cents a share, compared with $10.5 million, or 15 cents a share, during the same period the year before. Revenue for the quarter totaled $85.9 million, a 20 percent increase over the same period a year ago, when the company’s revenue was $71.8 million.
Net client additions for the year increased 13 percent, said Thomas Golisano, CEO of Paychex. Clients using the company’s Taxpay electronic tax filing and payment service grew 25 percent.
Clients using the electronic-salary-deposit service jumped 40 percent and there was a 24 percent increase in the digital-check-signing process, he said.
“This growth in the basic payroll service and these add-on features were major factors in the revenue and net-income gains for the fourth quarter and fiscal year,” Golisano said. “Furthermore, the human-resources division achieved revenue growth of over 20 percent this year and is now contributing to profits.”
Paychex last week announced an agreement to merge with National Business Solution Inc. of St. Petersburg, Fla.
Outstanding shares of NBS are to be exchanged for some 3 million shares of Paychex common stock. The transaction will be accounted for as a pooling of interests.
NBS is a professional-employer organization, meaning it becomes a co-employer of client’s workers and then manages employee benefits for small and midsize companies. NBS has pooled more than 9,000 employees, and, in most instances, its leveraged purchasing power and management expertise has improved clients’ benefit programs while cutting costs.

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