For the three months ended

For the six months ended



November 30,

November 30,

In millions, except per share amounts

2021

2020

Change(2)

2021

2020

Change(2)

Total service revenue

$

$

%

$

$

%

Total revenue

$

$

%

$

$

%

Operating income

$

$

%

$

$

%

Diluted earnings per share

$

$

%

$

$

%

Adjusted diluted earnings per share(1)

$

$

%

$

$

%

·

Higher checks per payroll for HCM services and net gain in worksite employees for HR Solutions. 

·

Higher revenue per client resulting from improved price realization. 

·

Growth in client bases across HCM and ancillary products resulting from strong sales performance and high levels of retention, with notably strong demand for our HR Solutions offering.

·

Impact of improved market conditions on asset-based revenue for retirement services.

·

Increase in funding for temporary staffing clients.  

·

Increase in the number of average worksite employees and an increase in average wages per worksite employee.  

·

Increase in PEO health insurance revenue.

·

Higher revenue related to state unemployment insurance.

·

Increase in compensation costs due to an increase in wage rates and fringe benefits.

·

Increase in PEO direct insurance costs as a result of growth in number of PEO worksite employees and health insurance revenue.

·

Investment in product development and information technology.

·

Total service revenue and total revenue increased 15% and 14%, respectively, to $2.2 billion. 

·

Operating income increased 38% to $883.2 million.  Adjusted operating income(1) increased 32% to $883.2 million.

·

Diluted earnings per share increased 37% to $1.83 per share.  Adjusted diluted earnings per share(1) increased 32% to $1.80 per share.    

⁽¹⁾

Adjusted operating income and adjusted diluted earnings per share are not U.S. GAAP measures. Please refer to the “Non-GAAP Financial Measures” section on page 3 of this press release for a discussion of these non-GAAP measures and a reconciliation to the most comparable U.S. GAAP measures of operating income and diluted earnings per share.

·

Cash, restricted cash, and total corporate investments of $1.1 billion.  

·

Short-term and long-term borrowings, net of debt issuance costs, of  $806.4 million.  

·

Cash flow from operations was  $555.4 million for the six months. 

·

Paid cumulative dividends of $1.32 per share totaling $476.4 million.







For the three months ended

For the six months ended



November 30,

November 30,

$ in millions

2021

2020

Change

2021

2020

Change

Operating income

$

$

%

$

$

%

Non-GAAP adjustments:

Cost-saving initiatives(1)

 —

 —

Total non-GAAP adjustments

 —

 —

Adjusted operating income

$

$

%

$

$

%



Net income

$

$

%

$

$

%

Non-GAAP adjustments:

Excess tax benefit related to employee stock-based compensation payments(2)

Cost-saving initiatives(1)

 —

 —

Total non-GAAP adjustments

Adjusted net income

$

$

%

$

$

%



Diluted earnings per share(3)

$

$

%

$

$

%

Non-GAAP adjustments:

Excess tax benefit related to employee stock-based compensation payments(2)

Cost-saving initiatives(1)

 —

 —

 —

Total non-GAAP adjustments

Adjusted diluted earnings per share

$

$

%

$

$

%



Net income

$

$

%

$

$

%

Non-GAAP adjustments:

Interest expense, net

Income taxes

Depreciation and amortization expense

Total non-GAAP adjustments

EBITDA

%

%

Cost-saving initiatives(1)

 —

 —

Adjusted EBITDA

$

$

%

$

$

%



⁽¹⁾

One-time costs and corresponding tax benefit recognized during fiscal 2021 related to the acceleration of cost-saving initiatives, including the long-term strategy to reduce our geographic footprint and headcount optimization. These events are not expected to recur. 

⁽²⁾

Net tax windfall benefits related to employee stock-based compensation payments recognized in income taxes. This item is subject to volatility and will vary based on employee decisions on exercising employee stock options and fluctuations in our stock price, neither of which is within the control of management. 

⁽³⁾

The calculation of the impact of non-GAAP adjustments on diluted earnings per share is performed on each line independently. The table may not add down by +/- $0.01 due to rounding.

·

Management Solutions revenue is now anticipated to grow in the range of 10% to 11%;

·

PEO and Insurance Solutions revenue is now anticipated to grow in the range of 10% to 12%;

·

Total revenue is now anticipated to grow in the range of 10% to 11%;

·

Adjusted operating margin(1) is anticipated to increase to a range of  39% to 40%;

·

Adjusted EBITDA margin(1) is anticipated to increase to approximately 44%;

·

Other expense, net is now anticipated to be in the range of $15 million to $18 million; and

·

Adjusted diluted earnings per share(2) is now anticipated to grow in the range of 18% to 20%.



Investor Relations:

Efrain Rivera, CFO, or Terri Allen

585‑383‑3406

Media Inquiries:

Chris Muller,  Director,  Corporate Communications

585‑338-4346

·

our ability to keep pace with changes in technology and to provide timely enhancements to our products and services; 

·

software defects, undetected errors, or development delays for our products;

·

the possibility of cyberattacks, security vulnerabilities and Internet disruptions, including breaches of data security and privacy leaks, data loss and business interruptions;

·

the possibility of failure of our operating facilities, computer systems, or communication systems during a catastrophic event;

·

the failure of third-party service providers to perform their functions;

·

the possibility that we may be subject to additional risks related to our co-employment relationship with our PEO;

·

changes in health insurance and workers’ compensation insurance rates and underlying claim trends;

·

risks related to acquisitions and the integration of the businesses we acquire;

·

our clients’ failure to reimburse us for payments made by us on their behalf;

·

the effect of changes in government regulations mandating the amount of tax withheld or the timing of remittances;

·

our failure to comply with covenants in our debt agreements;

·

changes in governmental regulations and policies;

·

our ability to comply with U.S. and foreign laws and regulations;

·

our compliance with data privacy laws and regulations;

·

our failure to protect our intellectual property rights;

·

potential outcomes related to pending or future litigation matters;

·

the impact of the COVID-19 pandemic on the U.S. and global economy, and in particular on our small- and medium-sized business clients;

·

volatility in the political and economic environment;

·

changes in the availability of qualified people; and

·

the possible effects of negative publicity on our reputation and the value of our brand.







For the three months ended

For the six months ended



November 30,

November 30,



2021

2020

Change(2)

2021

2020

Change(2)

Revenue:

Management Solutions

$

$

%

$

$

%

PEO and Insurance Solutions

%

%

Total service revenue

%

%

Interest on funds held for clients(1)

%

%

Total revenue

%

%

Expenses:

Cost of service revenue

%

%

Selling, general and administrative expenses

%

%

Total expenses

%

%

Operating income

%

%

Other expense, net(1)

n/m

n/m

Income before income taxes

%

%

Income taxes

%

%

Net income

$

$

%

$

$

%



Basic earnings per share

$

$

%

$

$

%

Diluted earnings per share

$

$

%

$

$

%

Weighted-average common shares outstanding

Weighted-average common shares outstanding, assuming dilution









November 30,

May 31,



2021

2021

ASSETS

Cash and cash equivalents

$

$

Restricted cash

Corporate investments

Interest receivable

Accounts receivable, net of allowance for credit losses

PEO unbilled receivables, net of advance collections

Prepaid income taxes

Prepaid expenses and other current assets

Current assets before funds held for clients

Funds held for clients

Total current assets

Long-term restricted cash

Long-term corporate investments

Property and equipment, net of accumulated depreciation

Operating lease right-of-use assets, net of accumulated amortization

Intangible assets, net of accumulated amortization

Goodwill

Long-term deferred costs

Other long-term assets

Total assets

$

$



LIABILITIES

Accounts payable

$

$

Accrued corporate compensation and related items

Accrued worksite employee compensation and related items

Short-term borrowings

Deferred revenue

Other current liabilities

Current liabilities before client fund obligations

Client fund obligations

Total current liabilities

Accrued income taxes

Deferred income taxes

Long-term borrowings, net of debt issuance costs

Operating lease liabilities

Other long-term liabilities

Total liabilities



STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value; Authorized: 600.0 shares;
Issued and outstanding: 360.8 shares as of November 30, 2021
and 359.8 shares as of May 31, 2021

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$









For the six months ended



November 30,



2021

2020

OPERATING ACTIVITIES

Net income

$

$

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of premiums and discounts on available-for-sale ("AFS") securities, net

Amortization of deferred contract costs

Stock-based compensation costs

Provision for/(benefit) from deferred income taxes

Provision for credit losses

Net realized gains on sales of AFS securities

Changes in operating assets and liabilities:

Interest receivable

Accounts receivable and PEO unbilled receivables, net

Prepaid expenses and other current assets

Accounts payable and other current liabilities

Deferred costs

Net change in other long-term assets and liabilities

Net change in operating lease right-of-use assets and liabilities

Net cash provided by operating activities

INVESTING ACTIVITIES

Purchases of AFS securities

Proceeds from sales and maturities of AFS securities

Purchases of property and equipment

Proceeds from sales of property and equipment

 —

Acquisition of businesses, net of cash acquired

 —

Purchases of other assets

Net cash used in investing activities

FINANCING ACTIVITIES

Net change in client fund obligations

Net change in short-term borrowings

Dividends paid

Repurchases of common shares

 —

Activity related to equity-based plans

Net cash used in financing activities

Net change in cash, restricted cash, and equivalents

Cash, restricted cash, and equivalents, beginning of period

Cash, restricted cash, and equivalents, end of period

$

$



Reconciliation of cash, restricted cash, and equivalents

Cash and cash equivalents

$

$

Restricted cash

Restricted cash and restricted cash equivalents included in funds held for clients

Total cash, restricted cash, and equivalents

$

$