Paychex Earnings Call Nuggets: Stock Buyback and Sales Execution

Paychex, Inc. (NASDAQ:PAYX) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Stock Buyback

Glenn Fodor – Autonomous Research: Just on the stock buyback in the quarter, you bought back a little over 80 million. Last quarter you indicated that you would buyback to offset dilution. Your share count typically doesn’t increase that much and this slug of buyback which you just did basically offset last year’s 2 million share increase year-over-year. So, as we think about this remaining 200 million or more, that’s a lot more than you need to offset dilution. So, I just want to see what your thoughts are around that? Also the question is why buyback stock out of relative high multiple when clearly investors prefer dividends – prefer, in fact, higher dividend yield?

Efrain Rivera – SVP, CFO and Treasurer: Actually our share count has been creeping up, so we are just trying to keep it more in line with what we’ve seen recently, I’d say, we were in the market buying last quarter. We do it opportunistically based on where we see the price settling. We aren’t necessarily committed to using the entire 350 to purchase shares this quarter, but we’ll look at opportunistically to buy. I think with respect to the dividend, we had a nice increase there, 6%. Last July, we announced we feel pretty comfortable with where we are with respect to dividend increase. So, we’ll look at opportunities to buy back based on what happens with respect to share prices we got through the year.

Glenn Fodor – Autonomous Research: Then just final question on Brazil. Just on the entry strategy, just curious why enter the market by partnering with a portfolio of company rather than an existing player with local expertise? The release referenced that this is a large CPA-based market, so was it just not an opportunity to partner with a broad CPA organization for referrals?

Martin Mucci – President and CEO: No, I think the best opportunity was to partner with Semco; they were somebody who has helped other companies get started in Brazil. They have great connections there; great experience, very well respected and we thought that the best way for us to get there and get in there the quickest and most successfully was with someone like Semco. So, as we looked at various partnerships, they were certainly the best and I think we’ll move the quickest with them as well…

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