Paychex Earnings Call Nuggets: Stock Buyback and Sales Execution
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…
Glenn Fodor – Autonomous Research: Does that preclude you just going off and signing your own referral agreements with, perhaps CPA organization or is everything you do going to be through them?
Martin Mucci – President and CEO: It’s a partnership. They’ll help us get started in there because of the connections and experience, but we’re already working with CPAs in that area directly. We’ll be running at day-to-day and we’ll be working with CPA and the CPA community to get the referrals and everything, and that’s already started actually as we gear up for first quarter calendar start.
David Togut – Evercore Partners: Marty, you highlighted improving sales execution in the quarter in core payroll and HR Services. Can you quantify year-over-year bookings growth in the August quarter, so we can gauge the financial impact of what you signed in the quarter?
Martin Mucci – President and CEO: David, we don’t give that much – we’ve never given that much specific on the sales. I will tell you though that we’ve now seen, at least three quarters now, and of course we get an extra month in here since we released the quarter. We feel very good about the sales execution, particularly in those markets. We’re really seeing some nice sales growth and we don’t typically quantify it, we talk a little bit about the selling season after the January quarter, but we do feel very good and it’s very consistent. So, even though small business starts haven’t quite picked up as much, our execution on the sales side is going very well…
David Togut – Evercore Partners: What do you attribute the improved bookings, is it just execution? Is it new products? What are the drivers of higher bookings?
Martin Mucci – President and CEO: I think it’s a combination. I think the execution is very good. We’ve got some new leadership in there over the last couple of years. I think we’ve gotten some very good training programs underway and I think the product execution has been good. The mobility platform is completely solid now and has been out there, we’ve been introducing a number of other products and so forth, so I think its product innovation. I think it’s execution by the sales team. I think businesses – I think like the CPA relationships, the referrals are picking up again and so where new business start having quite – they are still little sluggish, the CPA referrals have really started to pick-up again very strongly, and we are doing well against regional competitors, in particular.
David Togut – Evercore Partners: Just on that theme, Marty. You’ve indicated you have next generation suite of products coming out in the November-December timeframe. There is a little discussion of that in your 10-Q, particularly in integrated workforce management solution. Can you give us some more details about what you have coming up in November, December in terms of new products and what the actual advance of your existing product functionality today?
Martin Mucci – President and CEO: I think what we’ve seen that we released in kind of the June-July timeframe and then coming up in the November-December timeframe, it’s much more about, I would say, integration, particularly for the mid-market space (Delaware 50), you are going to see much better integration of the product set. So, we have a complete set of products; time and attendance online, HR administration, benefit enrolment and expense management and so forth. But I think here what you are going to see is much more integration of that. We’ve had single sign-on which are going to have a cleaner look and feel and integration between the products including one of the key things for employers which is the ability to update all of their employee information and do edits on that information that will come even easier than it is today. So, I think that what we feel is we are making this – we have a full product suite, but the integration, the look and the feel and the use of the product by the client will be even better than it ever has been…
David Togut – Evercore Partners: Just a quick final question from me. Probably saw ADP had a high profile innovation day yesterday, some new products focused on the mid-market. I don’t know if you had any reaction to that in terms of what they are introducing, relative to existing product set how should we think about competitive dynamics, particularly in the mid-market?
Martin Mucci – President and CEO: Well, I think, obviously, they’ve been a good competitor. They continue to be a good competitor. I think we are very much head-to-head in this midmarket and with some others. And I think we have a very competitive suite of products, will get even better in the fall timeframe and we kind of just keep introducing things. I’ve never felt better frankly about our innovation and our product suite than I have over the last few years, as we’ve introduced all of our mobility, full suites that’s out there now including doing all the payroll online and certainly all of our online products are SaaS-based products. I feel very good and very competitive with everything that they are offering.
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