Paychex adds board members, announces quarterly dividend

Paychex Inc.’s board of directors has voted to expand the board from nine members to 10. The board has appointed Kevin Price to fill the new position.

Price is the founder and president of PartsScription, an innovative e-commerce platform that helps national and regional retailers to expand their product and parts capabilities. Prior to founding the company in 2006, Price served as customer care network vice president for Sears Holdings Corp. He brings more than 35 years of experience to the Paychex board.

“Not only is Kevin a strategic executive, but he is a successful entrepreneur whose experience building his own business is representative of many clients Paychex serves today,” said Paychex President and CEO Martin Mucci in a statement. “His insight and knowledge will make him a valuable addition to the Paychex board of directors.”

Separately, Paychex announced a quarterly dividend of 66 cents per share payable Aug. 26 to shareholders of record as of Aug. 2, 2021. Additionally, the board has authorized the purchase of up to $400 million of its common stock. The authorization expires Jan. 31, 2024.

“At Paychex, we take great pride in the company’s history of providing exceptional shareholder value,” Mucci said in a statement. “Today’s dividend and stock repurchase announcement are an illustration of that commitment and positions us to continue to make strategic investments in the long-term growth of Paychex.”

In June, the Rochester-based company reported fourth-quarter earnings of 72 cents per share, compared with 61 cents in the year-ago quarter. Adjusted net income for the quarter was $260.8 million, up from $220.6 million in the fourth quarter last year.

For the full year, sales were $4.06 billion, compared with $4.04 billion in fiscal 2020. On a per-share basis, adjusted earnings were $3.04, compared with $3 in fiscal 2020.

“We ended this year with strong momentum having navigated through a fiscal year of unprecedented challenges. Our fourth quarter results were driven by record client retention levels, record sales results and stronger checks per client, which were driven by improving macroeconomic conditions and gains in employment,” Mucci said in a statement in June. “Client base growth was strong and we ended the fiscal year with over 710,000 clients. We are proud to finish the year with positive service revenue growth which is a testament to the resiliency, innovation and commitment of our employees and the strength of our business model. Having navigated through the uncertain environment of the pandemic, we are well-positioned with the continued innovation of our technology and product suite to meet the continuing needs of businesses and help them succeed and thrive as they begin to bring employees back to work and adjust to the changes of how, where, and when work gets done.”

[email protected] / 585-653-4021
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Paychex revenues, income down in Q3

Paychex Inc. this week reported third-quarter sales and earnings that fell short of 2020 numbers.

For the quarter ended Feb. 28, the Rochester company reported total revenue of $1.1 billion, down 3 percent from $1.16 billion in the year-ago quarter. Net income for the quarter was $834.5 million, down 5 percent from $877.4 million a year ago. Adjusted net income for the third quarter was $841.6 million, compared with $862.6 million in the same quarter last year.

On a per-share basis, diluted earnings were 97 cents, down 1 percent from a year ago. Adjusted earnings were 96 cents per share.

Martin Mucci
Martin Mucci

“Client retention remains strong and at record levels, and our results for the third quarter show that our resilient business model has helped us navigate the uncertainties created by COVID-19,” said Paychex President and CEO Martin Mucci in a statement. “We continue to see progress in our key indicators and remain committed to providing our clients the flexibility, technology and resources they need to respond and adapt to the uncertainties of the COVID-19 environment.”

Company officials said results of operations continue to be impacted by the pandemic, but noted that client retention remains strong and at record levels.

“We’re anticipating client needs with solutions that prepare them for what’s next. Our sales, support, product development and marketing teams carefully listen to customer feedback — bringing to market new tools and technology designed to efficiently manage payroll, staffing, time tracking and scheduling,” Mucci said.

Paychex updated its full-year guidance, expecting revenues to be flat to decrease by 2 percent. Adjusted diluted earnings per share is expected to be in the range of flat to decrease by 2 percent.

[email protected] / 585-653-4021
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Small business jobs index improves in March

The Small Business Jobs Index increased to 94.25 in March.
The Small Business Jobs Index increased to 94.25 in March.

The latest Paychex | IHS Markit Small Business Employment Watch shows significant increases in job growth in March across each of the four U.S. regions and nearly all states and metros analyzed in the report.

The Small Business Jobs Index increased to 94.25 in March. Although the index remains 4.03 percent below its March 2020 level, last month’s 0.30 percent increase was the most substantial one-month gain since 2013.

Hourly earnings reached 2.98 percent, its fourth month of growth. Weekly earnings also increased, rising to 3.58 percent, a result of growth in weekly hours worked.

“The Small Business Jobs Index revealed a meaningful increase in March. But there remains much ground to make up,” said James Diffley, chief regional economist at IHS Markit.

The South continues to lead all regions in small-business job growth, and Florida remains the top state for job growth. Leisure and hospitality saw the greatest improvement among industry sectors, up 1 percent, and the sector also saw a significant gain in hourly earnings growth, according to the report.

“With vaccinations ramping up across the country and business restrictions easing as a result, small business employment growth is starting to move in a positive direction. Increased hiring and wage growth in the leisure and hospitality industry, which was particularly impacted over the past year, are promising signs,” said Paychex President and CEO Martin Mucci. “The extension of the Paycheck Protection Program for two more months provides additional support as the loans should help qualifying businesses weather remaining challenges resulting from the COVID-19 pandemic.”

The monthly report is compiled from aggregated payroll data of approximately 350,000 clients on the Paychex human capital management (HCM) suite. The national jobs index uses a 12-month same-store methodology to gauge small business employment trends on a national, regional, state, metro, and industry basis.

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Paychex posts decline in revenue, improvement in bottom line

Paychex Inc. reported a slight decline in revenue in the second quarter, but an earnings improvement of 4 percent.

For the second quarter ended Nov. 30, 2020, the Rochester payroll and benefits company posted a 1 percent drop in revenue to $983.7 million, with service revenue coming in at $968.9 million. Net income for the quarter increased 5 percent to $272.4 million, or 75 cents per diluted share. Adjusted net income was $264.8 million, or 73 cents per share.

Martin Mucci
Martin Mucci

“Financial results for the second quarter showed continued recovery in our key business metrics. The effects of the COVID-19 pandemic impacted our results and year-over-year comparisons, however, client retention remains strong and our sales performance has resulted in year-over-year growth in the number of clients sold and serviced,” said Paychex President and CEO Martin Mucci. “We remain focused on providing excellent customer service, human resource expertise, and product innovations to support our clients through the challenges of the pandemic. In addition, our margins have demonstrated sequential improvement as our cost-saving initiatives have proceeded as expected.”

Company officials said operations in the second quarter improved but continued to be impacted by COVID-19. Total revenues grew 6 percent from the first quarter, while earnings grew 16 percent compared with the previous quarter.

“More than ever before, companies are turning to technology solutions to maintain operations, stay connected with employees and keep their people productive,” Mucci said, noting that the company recently introduced additional enhancements to its Paychex Flex platform to help clients manage risk, stay compliant, better assess performance and adapt to mobile and artificial intelligence-driven trends.

“Headlining these product releases are an Apple Watch/Google Assistant device integration allowing employees greater access to their information, a professional employer organization Protection Plus Package to protect clients against unforeseen costs and additional forward-looking solutions in our platform to help employers and their employees complete key tasks quickly, safely, and accurately in a paperless, mobile fashion,” he added. “We believe our continuing investments in our service delivery platforms strongly position us to meet the demands of the current business environment and support employers no matter where they are in their HR journey.”

For the first six months, total revenue decreased 3 percent to $1.9 billion. Operating income decreased 8 percent to $638.3 million, with adjusted operating income of $670.5 million. Diluted earnings per share fell 8 percent to $1.34, with adjusted earnings per share of $1.36.

Cash, restricted cash and total corporate investments at quarter’s end were $963.4 million. Total short-term and long-term borrowings were $803.9 million. During the six months ended Nov. 30, Paychex paid dividends of $446.7 million and repurchased 400,000 shares of common stock for $28.8 million.

Looking ahead, Paychex expects full-year total revenue to range from a 3 percent loss to flat, with a loss in adjusted diluted earnings per share of 1 to 4 percent.

[email protected] / 585-653-4021
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Paychex Foundation to donate $500,000 to crisis fund

Paychex Inc. on Wednesday said its charitable arm plans to donate $1 million to United Way, with $500,000 earmarked for Rochester’s Community Crisis Fund, established in March to help with pressing needs in the community as a result of the COVID-19 crisis.

Martin Mucci
Martin Mucci

“Paychex and our employees have a strong, proud tradition of supporting United Way in Rochester and across the country, and it’s our employees and the results they’ve delivered that helped make this gift possible,” said Martin Mucci, Paychex president and CEO. “We believe that United Way is uniquely positioned to do the most good for the most people in need in each community. And now, more than ever, we stand with United Way in communities where our employees live, work and serve our clients, to do our part providing immediate relief for those hit hardest by this crisis, and to be there when the rebuilding begins.”

The $1 million donation from the Paychex Charitable Foundation will be directed to United Way organizations in Rochester and 10 other communities across the country where Paychex and its subsidiaries have the most significant employee presence and demonstrated community support.

A total of $750,000 will be directed to United Way of Greater Rochester Inc., with more than $500,000 designated to the Community Crisis Fund created in response to the COVID-19 outbreak to support nonprofits that provide direct services to those most affected by the coronavirus. The Community Crisis Fund is administered through a partnership of United Way of Greater Rochester and the Rochester Area Community Foundation.

Rochester is home to Paychex’s corporate headquarters and 5,000 of the company’s 16,000 employees. The company is a leading provider of integrated human capital management solutions for human resources, payroll, benefits and insurance services.

[email protected] / 585-653-4021
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SBA funds start to flow, but there’s more help locally for next round

Even though additional pandemic aid for small businesses was under consideration in Congress this week, that may provide little clarity for small-business owners — especially really small ones — whether they will get the financial assistance they need. 

Perhaps more clear is that funding has started making its way to businesses in the Rochester area and there is plenty of help available for negotiating the application process whenever a new round begins. 

M&T Bank, based in Buffalo, processed more than 27,000 applications from Maryland to Buffalo in the last round, which ran out of money a little more than a week ago. The largest Small Business Administration lender in the area for more than two decades, even M&T was hard pressed to meet the overwhelming demand. 

Dan Burns
Dan Burns

“We went from 300 people assigned to do this work to 2,300 people,” said Dan Burns, Rochester region president for M&T. “I’ve never felt more proud of a group of people in my life.” 

In the Rochester area, the bank won approval for 1,800 Payroll Protection Program loans totaling $440 million. CNB reported that during the last round of funding, it helped 2,502 small businesses with SBA loans totaling  $289.6 million. 

Burns agreed that some particularly small businesses may not have won approval before the window closed. “There are a lot of small businesses that maybe, they’re trying to make ends meet and they don’t have a finance person,” he said. “We’re very hopeful that there will be an agreement in Washington and the window will open back up and we’ll be able to take care of these clients.”

National news reports have slammed some of the larger banks for focusing on businesses that most Americans would not consider small, winning hundreds of millions of dollars for public companies with hundreds of employees. 

The National Federation of Independent Businesses, an advocacy group, is lobbying for an aid package of more than $400 billion, with at least half reserved for companies with 20 or fewer employees. 

At the same time, several financial institutions and advisors have stepped forward to assist businesses with future applications. 

On Friday (April 24) at noon, the Canandaigua Chamber of Commerce will be holding a webinar with Canandaigua National Bank President and CEO Frank Hamlin III and other CNB officials. The topic is how the bank and other financial institutions can help businesses with SBA loans and other aid programs. They also offer advice on managing business finances during this disruptive time. Participants can register at 

RDG+Partners, a Pittsford-based accounting firm, is hosting a free weekly “COVID-19: Stay Strong Webinar Series” on Thursdays at 1:30 p.m. through the end of May. The seminars cover a variety of topics related to applying for federal aid programs. 

John Rizzo, managing partner of the firm, said “Perhaps the greatest challenge is that new information about financial disaster relief initiatives is released every day, and unless business owners are on top of it, they could miss updates that are critical to their success in securing funding.”

Rochester-based Paychex, meanwhile, has announced it will connect interested clients with several online lenders, including Biz2Credit, Fundera, and Lendio, so they can apply quickly when another opportunity arises. 

Martin Mucci
Martin Mucci

 “The fact that $349 billion in Paycheck Protection Program loans were allocated in just over two weeks speaks to the critical financial needs America’s businesses continue to have as they do everything they can to stay afloat during this unprecedented uncertainty due to COVID-19,” said Martin Mucci, Paychex president and CEO.

[email protected]/ (585) 363-7275

Paychex’s second quarter was positive

Paychex Inc. is going into the holiday season with something to celebrate.

The business services outsourcing company released its second-quarter results Wednesday, showing revenue increased 15 percent over the same time last year, and profits were up, even when subtracting the impact of an acquisition. The quarter ended Nov. 30.

Total revenue was $990.7 million, an increase of 15 percent, with Oasis Outsourcing Group Holdings L.P., purchased a year ago, contributing 9 percentage points to the overall revenue. Profits for the quarter amounted to $258.7 million, representing an increase of 10 percent.

Diluted earnings per share were 72 cents for the quarter, an increase of 11 percent, with adjusted earnings at 70 cents per share.

“During the second quarter, we delivered solid growth across our major business lines,” said Martin Mucci, president and CEO, in an earnings statement. “In particular, our human resource outsourcing services, time and attendance solutions, and retirement services performed well.”

“Our state-of-the-art technology and exceptional service distinguish us in the market as we deliver a more personalized and technology-enhanced experience for our clients and their employees,” Mucci said. Paychex provides human resources, payroll, benefits and insurance services to some 670,000 clients in 100 locations. Founded as a payroll outsourcing company, Paychex has expanded into the other areas, most recently putting emphasis on human resource services.

“We are heavily focused on continued innovation to meet our customers’ and their employees’ evolving needs, simplifying HR complexities and offering solutions to help them thrive and grow,” Mucci said.

The acquisition of Oasis contributed to some other increases – $244.1 million in revenue for professional employer organization and insurance services, an increase of 57 percent over the same period a year ago, with 47 points due to Oasis. Expenses, including amortization of Oasis assets, also rose by 18 percent to $649 million.

In the earnings statement, Mucci predicted the earnings and profit trends would continue through the fiscal year ending in May 2020.

[email protected]/ (585) 363-7275