DOW JONES NEWSWIRES
Paychex Inc.'s (PAYX) fiscal second-quarter earnings rose 6.4%,
besting analysts' expectations for a flat bottom line, as the
payroll-processing company continued to make the most of its
challenging environment.
The company, which also provides human-resources and benefits
services to small to medium-sized businesses, said checks per
client rose 2.5% in the most recent period, while revenue per check
and client retention also improved.
The company in September planned changes to improve sales
productivity, as it expected attracting new business would probably
remain difficult. The economic downturn hit the company from both
sides: Elevated joblessness shrunk its client base, while low
interest rates weakened the revenue it earns from funds held for
clients.
For the quarter ended Nov. 30, the company posted a profit of
$133.9 million, or 37 cents a share, from $125.8 million, or 35
cents a share, a year earlier. Revenue increased 3.1% to $512
million.
Analysts surveyed by Thomson Reuters predicted earnings of 35
cents on revenue of $511 million.
Payroll-service fees, which provide most of Paychex's revenue,
were up 1.1%, while the human-resources segment reported sales
jumped 9.8%.
Operating income excluding interest on money held for clients
was up 7.9%. Interest income on that money, which has shrunk since
the Federal Reserve cut its federal-funds rate to nearly zero, fell
12%.
In September, Paychex promoted Martin Mucci to chief executive.
Mucci joined Paychex in 2002 as senior vice president of operations
following a 20-year career in the telecommunications industry. In
becoming CEO, he fills the role vacated by Jonathan J. Judge in
July.
Paychex shares were up 0.5% at $30.84 after hours. Through the
close, the stock has risen very slightly in 2010, underperforming
the boarder market.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com