Martin Mucci - President and CEO Efrain Rivera - SVP, CFO and Treasurer.

Timothy McHugh - William Blair & Company Joseph Foresi - Janney Montgomery David Togut - Evercore ISI Rick Eskelsen - Wells Fargo Gary Bisbee - RBC Capital Markets Sara Gubbins - Bank of America Merrill Lynch Glenn Greene - Oppenheimer & Company, Inc.

David Grossman - Stifel, Nicolaus and Company Jeffrey Silber - BMO Capital Markets Jim MacDonald - First Analysis Mark Marcon - Robert W. Baird Lisa Ellis - Sanford Bernstein Phil Stiller - Citigroup Matthew O’Neill - Autonomous Research LLP.

Good morning. Welcome and thank you for standing by and welcome to today’s conference call. At this time all lines are on listen-only for today's conference until the question-and-answer portion of our call. [Operator Instructions]. Our conference is being recorded and if you have any objections you may disconnect at this time.

I will now turn our conference over to our host, Mr. Martin Mucci, President and Chief Executive Officer. Sir you may proceed. .

Thank you. Thank you for joining us for our discussion of the Paychex's Fiscal 2015 Year End Performance. Joining me today is Efrain Rivera, our Chief Financial Officer. This morning before the market opened we released our financial results for the fourth quarter and fiscal year ended May 31, 2015. We expect to file our Form 10-K by the end of July.

The earnings press release is available by accessing our Investor Relations page at paychex.com. This teleconference is being broadcast over the Internet and will be archived and available on our website for about one month.

On today's call I will review the highlights of the fourth quarter and fiscal 2015, and our operations, sales and product development areas. Efrain will review our fourth quarter and fiscal 2015 financial results and discuss our fiscal 2016 guidance and then we'll open it up for your questions.

We are pleased, very pleased with our solid financial performance during 2015. Our results met the guidance that we have been providing throughout the year. We also achieved two key milestones this year. Both our human resource services revenue and our operating income exceeded $1 billion for the first time in our Paychex’s history.

Efrain will talk about our financial results in more detail. However, I'd like to provide you with some highlights. Payroll service revenue continued to experience steady growth of 4%, driven by increases in revenue per check and client base.

HRS revenue for fiscal 2015 benefited from strong demand for our comprehensive human resource outsourcing solutions, both PEO and ASO, which drove double digit growth. Our payroll client base finished the year at approximately 590,000 clients, an increase of about 2% from the prior year.

We achieved good sales and retention results for our 401(k) product, and once again, we were recognized by Plansponsor magazine as the largest 401(k) record keeper by number of plans for the fifth consecutive year. Sales execution during ‘15 was strong, with significant growth in our new annualized revenue sold.

We did a great job with our team’s selling approach, which sells the full value of all products to the client upfront. In addition, our referral pipeline is strong. We have had success in adding new bank and franchise referral arrangements and increasing our web leads in addition to our strong CPA referral channel.

Client service is imperative for our success and we again excelled in fiscal 2015. This service is delivered through a combination of innovative technology, driven by SaaS solutions, accessed online through our mobile app and through the support of our dedicated service specialists that sets us apart from our competitors.

The value of our solutions and service team, including our 7/24 support resulted in consistently high satisfaction scores and our best year ever in client retention, in excess of 82% of our beginning client base. We continue to invest in our SaaS solutions and mobility offerings that position us for long-term growth.

We are experiencing increased demand for our SaaS solutions across our client base. This includes Paychex Flex, which offers powerful workforce management capabilities in a simple and streamlined user experience.

Paychex Flex couples this with the flexibility of choice for our client service needs, and this approach gives our clients access to a variety of customer service options based on their size and complexity. Our mobility app also continues to see a fast growing number of users, both clients and client employees.

On Monday, we announced our Paychex Flex hiring offering which gives clients a simplified recruiting process with automated job opening, positing, and administration as well as an ability to onboard new clients in a paperless electronic environment, collecting all new information electronically and populating the data into the employee record fully integrated with our Flex offering.

This continues to enhance the powerful human capital management solution that Flex brings to our clients. We are also pleased with the market acceptance we are seeing for our new full service product that helps clients in navigating the complexities of healthcare reform.

We have the ability to leverage our payroll data and our relationships with nationally recognized insurance agencies to offer our clients assistance and value in understanding the complexities of the Affordable Care Act, and how it impacts them and their employees.

We have continued our shareholder friendly actions, maintaining a very competitive dividend yield with our current quarterly dividend at $0.38 per share. We have also continued to repurchase Paychex stock and acquired approximately 4 million shares of common stock in fiscal ‘15.

In summary, I am proud of our employees’ efforts on behalf of our clients and our shareholders. They have continued to sell and deliver great solutions, drive high client satisfaction and record levels of client retention.

We have a solid leadership team that is clearly focused on growth through sales and service execution, technology innovation, and product expansion in fiscal 2016 and beyond. They have delivered solid consistent top line growth and strong operating margins. I will now turn the call over to Efrain Rivera to review our financial results in more detail.

Efrain?.

Payroll service revenue projected to increase in the range of 4% to 5%, compared to fiscal 2015. We don't expect much, if any, contribution from checks for payroll in 2015, although that number has bounced around a bit at this point. We think it will be largely flat, could be up a few tenths, it won't matter.

The projected growth rate is based on anticipated client base growth and increases in revenue per check. In addition, I want to call out some things specifically. In fiscal 2006 we have two additional payroll processing days. These will occur in the first and in the fourth quarter.

So let me just say that again we're going to have two additional payroll processing days. We are punctilious about the stuff because we know you will ask us. They occur in the first and in the fourth quarters. HRS revenue growth is expected to be in the range of 10% to 13%.

Both HRS revenue and total service revenue reflect the minimum premium plan offering within the PEO, will now have anniversaried and it's going to be a compare year-over-year, so 10% to 13% on HRS. Total service revenue, expected to increase in the range of 7% to 8%. Net income is expected to increase in the range of 8% to 9%.

We anticipate EPS to be comparable during each of the fourth quarters of the year. But timing of expenses during the year can change the pattern as it sometimes does. Let me just repeat that. We're anticipating net EPS will be comparable during each of the fourth quarters but timing of expenses during the year can change the pattern.

Operating income, net of certain items as a percent of service revenue is expected to be approximately 38%. So before I get the question let me answer it. If you look at where we are and for operating income net of flow where we ended the year at about 37.5, we expect improvement and we think it will be approximately 38%.

What does 38% mean? It could be 37.9, it could be 38.1, all of those are 38%. We don't anticipate that it will be 37.5. The effective tax rate for fiscal 2016 is expected to be consistent with the rate we experienced for this year, fiscal 2015. Interest on funds is anticipated to be relatively flat compared to fiscal 2015.

What this means, as I mentioned earlier, is that we are not anticipating at this point any change in that behavior. If it occurs we think it will be a second half event, second half of fiscal year '16 and we'll call it out when it happens. We haven't included anything in our guidance at this point.

So let me finish with this; while we don't provide guidance on specific quarters, I think it's important to indicate at this point of the year that we anticipate that all of the quarters will fall within the range of total service revenue provided with one exception, which is the third quarter where we believe that HRS revenue will be -- is projected currently to be below the low end of the full year range.

There is a number of factors influencing that, we can talk about them more in the Q&A, but third quarter we expect on HRS revenue not on payroll, and HRS revenue to fall below the low end of the full year range, has no impact, as I said, on full year guidance. So as you're adjusting your models take that into account.

Now before I turn things over to Marty I want to remind you that Paychex will be hosting an investor day on Wednesday July 15th. We will webcast it. The event will be a great opportunity to learn more about Paychex's technology and services and you'll see demos if you're here live, unfortunately can't webcast those easily.

And you're going to see the power of our technology and why we're excited about what the future holds for the company. We'll also provide a longer term outlook at the event and we hope to see many of you in a few weeks. Please sign up so we get a sense of who is coming. So with that I will conclude and I turn it back over to Marty..

Thanks, Efrain. Operator, we will now open the meeting to questions..

Thank you so much. [Operator Instructions]. Our first question is from Smitti Srethapramote with Morgan Stanley. Sir your line is open..

Hi, Efrain. This is Daniel calling in for Smitti. You sort of invited the question, but I guess I will just go ahead and ask it anyway.

Could you provide just a little more color on what’s driving the third quarter, I guess movement in HRS?.

Yeah, so the answer to that is that in the back half of this year, we had three vectors aligned. The first was real strong growth in the PEO, the start of our ACA compliance or ESR product and also strong performance in 401(k); all of those are more back half events and in particular impacted the third quarter.

And so, when we get to that quarter the comparison will become a bit more complicated, and by the end of the year it will normalize. So that’s basically what’s going on..

Got it, thanks. And then just thinking about Paychex Flex, it’s been a few quarters now, so perhaps Marty you could talk a little bit about the rollout so far.

And is the goal to transition as many clients as possible and perhaps you raised pricing a bit, and maybe you can just talk about the client reception you have seen so far?.

Yeah, we’ve seen good reception on it. It’s been a -- the effort is to go through so much feature functionality in it, and so it’s been a big effort on the training of our sales reps and the clients, but it’s going very well. I had an increasing level of penetration of sales folks selling Flex.

We ended the year very strong, and we really have put all the incentives in place to continue to sell it in fiscal ’16. So, I think we’re going to be off to a really strong start. Not to mention, as I mentioned earlier, we’ve continued to add and enhance it.

So you are going to see - like we added the recruiting and onboarding functionality totally integrated on Monday and released that. So I think these additional, these adds to the Flex platform are going to help a lot. So the goal is that’s what we are selling, and I think so far the sales and the clients are very receptive to it..

Got it.

And then is the goal basically to have SurePayroll and Flex and Flex Enterprise as the three foundations to your core offering, or will it continue to be more nuanced than that going forward?.

Yeah, basically, I think that’s right. SurePayroll will kind of remain on its platform. That’s really for that micro sized Flex and then Flex Enterprise will really be kind of -- has already kind of replaced what was kind of core in MMS.

We have our Preview product, and we do sell that on the high end as well, and it’s still a good product with a lot of feature and functionality for the high end, but we are finding that Flex is a great fit, Flex and Flex Enterprise are a great fit for the majority of our market, and that really will be the product set that we are selling, and in fact most clients have already kind of moved to it.

It’s not like there is a big migration. Certainly for the under 20, the core client base, there is no migration, that is Flex that really is our base..

Perfect, thank you..

Okay..

Thank you. Our next question is from Tim McHugh with William Blair & Company. Sir your line is open..

Yes, thanks. Just want to ask about client growth here, I guess 2% growth, it’s consistent I guess with what you have seen, I think the last year or two. But given the kind of new bookings growth you have talked about seeing in the last couple of quarters, I guess, I guess I was a little surprised it wasn’t a little higher.

I guess how is that compared to what I guess what you expected and how maybe you are thinking about next year, and I guess is just contrast that with the kind of overall new bookings or kind of – I think there was a new revenue sold, you characterized it as last quarter?.

Yeah, Tim so I think what we discovered, I think over the last 18 months is that there is a balance between revenue generated in new bookings and units generated in new bookings, and we're trying to strike a balance.

When we've gone pure units, we don't get revenue in the way we want, when we go the pure revenue, we don't get the units we want, and what I think that represents is what you see there -- what that represents is the fact that we're striking a balance between the two, and from a plan perspective, a revenue generated, new bookings revenue, it was pretty much spot on what we expected.

And mix is playing a bigger impact in terms of what we sell. So, we have a number of different products, and frankly we would prefer a $2,200 client to a $1,100 client, and that's going to be reflected going forward in our thinking about how we look at units. Some units are better than other units.

We want a mixture of both, but at the end of the day, we want revenue that's sustainable over the long term. .

Okay. I think you had talked about new revenue sold last quarter kind of growing at a double digit pace.

Can you give a sense of where Q4 and kind of the year ended up with regard to that metric?.

Yeah we stayed very consistent, I think overall on that. We ended up certainly for the year at double digit growth. In fact we're at the highest. For the year, we're at the highest growth in par we've had probably in eight years.

So as Efrain said there is that balance, but we've given the sales folks a lot more product to sell, the team’s selling approach that Mark Bottini and the team have done and we were selling much more multi-product upfront to the client instead of our older model of hey, sell them Payroll and comeback in with, do they need 401(k) and HR outsourcing.

We're finding clients are really benefiting and we're benefiting from the fact that we're team selling upfront and giving the full value of the product.

So we're very bullish on how the -- par is -- our annualized revenue sold has done and exactly what Efrain said, it's that balance now, but in the end its revenue growth that we want and that's what we're getting. .

And just a numbers clarification, I guess the growth in the outsourcing or HR outsourcing client, is that included in the payroll client growth rate that you quote or is that kind of a separate number?.

So I’ll give you the simple answer than the complicated one. So clients are clients. So if we tell you we are having 590,000, that's -- those are clients who are running payroll, are clients that are served by Paychex, actually who don't take payroll, include actually additional clients for the 590.

So that's the number that we don't typically disclose, but if we did disclose, it would be well over 600,000 clients. So some clients do take HR services, but don't take payroll. And as that number becomes bigger, we'll start splitting it out. .

Okay. Thanks..

Our next question is from Joseph Foresi with Janney Montgomery. Your line is open. .

Hi, I was wondering in next year's guidance, the revenue per check, what's the expectation there? And maybe you can quantify that and how are you're getting that increased revenue per check. .

We're not giving specific guidance on revenue per check, Joe. If you look over the last three years and simply do the math you'll see over that period of time, our revenue per client, not revenue per check has grown about $1,000 over that period of time.

In terms of revenue per check, how we're getting it, it's -- so we didn't give specific guidance on that, won't do that but it's a function of price. It's a function of additional products and features sold to clients I guess those are two big components. .

Okay. I figured I'd try. .

That's okay. .

On the free cash flow side, it was basically flat sort of year-over-year.

Could you just give us some idea of what your trajectory is if you're planning on growing it and if not what has changed on the CapEx side as we head forward?.

Yes, so Joe I would just say that to really understand that, you need to look at the delta between the two years of working capital adjustments. Working capital adjustments last year were about $54 million and this year working capital adjustments were $9 million. That really accounts for the big difference.

Our free cash flow number is a little perhaps different than others do but because we also include uses of cash for acquisitions. So we had a bigger acquisition last year than we did this year or more. So it's a little bit funky.

I just point you to the operating cash flows and that you can see that our operating cash flows were almost $900 million this year and then normalize the working capital adjustments, I think we were low this year, high last year. I think you're going to get to a number that’s certainly in excess to $900 million on operating cash flow.

And then of course there is all of the usage that we have for cash. But I don't anticipate by the way purchases for CapEx and property is really going to change all that much in the year. .

Got it. So theoretically it goes up obviously based on….

Yeah, that's our expectation. .

Got it okay. And then last one from me. HR’s been a -- HRO has been a fairly strong driver here over the last, I don't know two years. Now anything that you're seeing internally that would spark maybe a derivative or second derivative catalyst as you had into FY '16 or should we expect kind most -- much more of the same just with maybe tougher comps. .

I think that's our planning assumption, Joe. What we don't know, what we don't know is what market reaction will be to the -- what appears to be the beginning of the imposition of penalties for the 100 plus employer set at the beginning of 2016, and then the increased requirements on the 50 to 99 [ph] clients under ACA.

Why am I pointing all that out, simply because that regulatory overhang is going to probably create some changes in behaviors for clients that may drive them to be more interested in looking at a PEO solution or looking at our the Affordable Care Act solution.

That's one -- the pace of regulation also, be the recent regulations on overtime also are going to drive more regulatory overhang. So I would say that our planning assumption is, as you said, but there is a number of factors in the environment that could impact that direction. .

Yeah, as Efrain said, I would say the recent overtime, something that’s come out just the night before the last, I mean really, we think that could push our HR outsourcing because you're now going to need smaller businesses, are going to need to help with, not exempt and exempt rulings in the next year trying to figure out who is exempt and not exempt and time and attendance could be pushed as well.

Because you're going to have to be more careful about tracking the hours and keeping a record of those from a compliance standpoint with all the overtime rules changing as well as, as Efrain said, I think enforcement’s going to continue to pick up on things like ACA and overtime. .

Thank you. .

Thanks Joe. .

Our next question’s from David Togut with Evercore ISI. Your line is open. .

Thank you. Good morning, Martin and Efrain..

Hey David. .

Could you quantify your growth in net price increases expected for 2016?.

I'd love to give you the exact number David, but I'll just say it's in the range of 2% to 4%. .

2% to 4% is gross or net?.

That's going to be net. .

Got it. And then you've highlighted above 50 basis points of operating margin expansion targeted for 2016.

Could you talk about the drivers of that margin expansion and then more broadly how do you think about operating leverage beyond 2016?.

Yeah, so I'd say it's a continuation, David of what we've done since Marty’s been here, which is to say we want to deliver world class service, but we want to do it in a world class efficient way.

And so we're balancing the investment in IT that drives better service with greater efficiency from service providers being very, very careful not to upset the balance on the service side, so that they continue to drive the right kind of service.

So it's really -- that's a very circuitous way of saying we balance operating and IT expense to drive that result. I would say we target, we go and do a plan typically targeting at least 15 basis point of leverage. We come out a little bit higher, a little bit lower sometimes there.

So I think that's certainly in the intermediate term kind of what we're expecting. .

Yes, I think you'll see us continue to drive it. It's just part of our DNA, as Efrain said. The technology spend is more leveled off now. We've got into a very good place there, about the level of spend. And so it's continued to be a significant investment, but it won't have the double digit increases that we saw for years.

And so and then on the operation side we've continued to find other ways of reducing space and cost and really do it more from a service perspective, but also from a leveraging perspective. So that will continue. It gets harder all the time but that’s certainly part of the DNA that we take going forward every year. .

Closing question on capital allocation, how do you think about dividend growth in the next year or two, and then for the cash that isn't allocated to dividend, how will you allocate that?.

Yeah so we'd expect the dividend to grow roughly in line with earnings. That ultimately will be a discussion we have in July, that certainly would be the direction we'd go in that. It doesn't mean it's going to be point for point, but it will grow as earnings grow. And then we have some allocation for share buyback.

You can see we brought back about 4 million shares and actually share count went down slightly this year. So we'll continue to do, to prevent too much dilution from occurring and with a modest bias downward. And then finally M&A is important. Our pipeline is as robust as it has ever been.

And we're very, very interested in a number of properties that are available, but we're only interested at the right price and will pass if we don't like what we see. .

Got it. Thank you very much. .

Okay thanks. .

Our next question is from Rick Eskelsen with Wells Fargo. Your line is open. .

Hi, good morning. Thanks for taking my question. On the first one, just wanted to drill in on the payroll revenue growth that you guys are expecting. It sounds like a lot of it's driven by mix and also the price increases. Just maybe a little more detail on what you're expecting for the acceleration at the top end in the guidance for payroll. .

Yeah, I think there always three things, Rick. One is, price obviously is important. That price also has an element, as you mentioned of mix that can impact the price also. We kind of lump that together with price. And then we expect unit growth. We had 2% unit growth this year. We would expect something comparable, perhaps even a little better next year.

But that's -- those are the components of the payroll revenue growth..

And then just switching to the technology, you guys have signaled that it's flattening out in terms of the increase in spending.

Just -- now that you had several years of increased tax spending behind you, can you talk about what parts of the portfolio and offerings that you think are now more competitive, and what you still need to maybe do more on?.

Yeah, I feel very good about and very competitive in all sides, to be honest with you, and that was our goal really when we started increasing the spending about six years ago. One, on the core platform I think you will see changes in the user interface that are happening right now that will be expanding over the next few months.

So I think you're going to get a much cleaner HTML5 interface and -- all of that work has been done to really drive clients, to all come by the way with a mobile first kind of view of things.

So making things very simple for clients, so they can get at everything, whether they're on a mobile, mobility app, whether they are on their mobile phone, whether on tablet, or whether they're online. And I feel very good about where we are on those fronts. The mobility app I think is the best in the business.

And that -- and we continue to enhance everything that we have.

When you look at the mid-market space, kind of even the 20 and above 20 to 500 or so in particular, I think we're very well positioned now with Flex and everything that we're adding just like we added, Monday I mentioned, to have, to be able to add a new employee all electronically send everything out to them.

They can be updated and then seamlessly one time put in from the time you are recruited right through to the time you may retire from that business has made us extremely competitive. And I think, just at the right time it's a competitive market out there. We’re still seeing very good sales.

So I feel very good about the investments we’ve made in mobile, in the core base, SurePayroll, as well as the mid-market, all of those I feel very good.

And when you get to the ancillary products we’ve done the same thing; 401(k) we continue to be the leader and in the PEO space they have been upgraded at the same time as we’ve made these investments. So it’s made us very competitive in the PEO space as well from a product functionality standpoint..

Thanks. And then just the last one here, you talked about this a little bit earlier but on the healthcare reform, now that the Supreme Court ruling happened.

What are your expectations for how that’s going to drive clients moving forward? Do you think that there is any of your clients are kind of waiting and seeing and just sort of what, what does that do to your business? Thanks..

Yeah, we had a nice bump in that the last six months, I think as clients started to really pay attention to it and I do think now we’ll probably see another resurgence of interest in it.

And then as Efrain, I think mentioned earlier, I think when you get to the end of the year and those first filings have to be done and the penalty start to come into the 100 plus employee clients, I think they are really going to get a lot of attention at that point.

And so the 50 or up, below a 100 will have to file, or the 50 to 100 will have to file. So that will be an awakening, I think for them that well this is a lot more difficult. And I think this is going to be another good year for the ESR product that we have, that helps them with Affordable Care Act.

We can help them both monitor and judge kind of what they are doing on a day-to-day basis as well as the filing, and I think that puts us in a very strong position, particularly when you are a payroll and insurance client of ours..

Thank you very much..

You are welcome..

Our next question’s from Gary Bisbee with RBC Capital Markets. Your line is open..

Hi guys. Good morning. So I guess the first question, just can you give us an update on penetration and I realize probably in the 10-K you will give us a couple of customer counts to think about on some of the big product categories.

But it seems like most of the areas you are still very low penetration, payroll customer base and maybe just also how big is that opportunity? I mean could half of the payroll customers eventually buy some of these products and does that mean several years more growth and up sale of those? Thanks..

Yeah, Gary I think it obviously depends on the product, but I think each one of these we’ve progressed in our penetration. So we feel very good about that. I think all of them you are right we still continue to have low penetration and big opportunity in front of us, when you look at even health insurance.

We had a good year in health insurance, increase in sales and they are still at only probably 2% or 3% of the population. And so I think as Affordable Care Act, adds more pressure on health insurance and having health insurance for your employees comes up, that’s a great opportunity for us. When you look at 401(k) we’ve been in it a long time.

It’s probably one of our best between that and workers comp our best penetrated product, still a lot of opportunity there, and we are kind of driving a 5%, 6% kind of growth in that all the time and have more plans than anybody else.

And then PEO really we are perfectly positioned over the last year or so with our PEO functionality and the product and the strength of the sales team and that has just taken off. PEO has had very strong growth. So I think there is absolutely a lot of opportunity there.

We have continued to move ahead in our penetration but still lots of great opportunity in front of us..

It sounds like the Affordable Care Act compliance has done really well in the last six months or so, since you have launched it.

If we looked at your customer base, 50 plus employees, I mean is there a material amount who have signed up, or is that also just very, very early days at this point?.

What we would say -- I don’t think we have given out the numbers exactly of who is -- but we have done probably about almost 25% to a third of those who we think could take it, have taken it, at this point.

So we’ve still got some opportunity there and again I think it’s we are going to wait to see what the kind of the surge is after the end of the year, like into the calendar year and people start to see how much work is involved in filing and monitoring what they are doing with that..

Great, and then the retention, that’s very positive, obviously - -do you have a sense how much of that is just better economy and small business health, due to the economy and what not versus just customers being much more satisfied and happy with the products, probably more of the second than the first but any commentary there, right now..

So Gary, so here’s a comparison. So if you go back to the when we published this information we were at a 21% loss rate in ’11, now since 2011. Yeah, Marty can talk to some of the specific things that we’ve would been on the upside. I think we've just gotten much, much better.

But I think it's partially economy, but partially the result of the lot of things that we’ve done. .

Yeah, I think in '11 to '12 and a little bit to '13, it was much more the economy. What we're seeing now is much more about the service and the satisfaction levels. We've also gotten much better at getting into the -- very deeply into our service numbers and with what we call voice of the customer and you're getting immediate online kind of feedback.

We also have set up national retention team that when we think a client is thinking about leaving, they go to a team that is focused nationally on retention and on preventing the loss and seeing what we can do to improve the situation. And that's been very helpful as well.

So I think we've done a number -- and we've added 7/24 service, we've added multi-product centers for the larger, the more mid-market clients. So overall I think a lot of this, the last year, particularly year and half has been much more about service and product strength.

The other thing, there’s service, customer service and then there is service from a functionality and feature set. I think both of those have been the bigger impact, the last year, year and half. .

Great and then just one cleanup one. It looks like from the press release you have restated the average investment balances for funds from clients and corporate investment the year ago relative to what was in your press release a year ago. Why is that and is that sort of a one-time thing or you changed it going forward, thanks. .

It’s probably average, Gary. And I'm not entirely sure. My guess is since it's an average, the number could have bounced around a little bit. But I don't think it should have changed dramatically. I think it probably had something to do with the averages in that quarter. .

Yes, okay. It looked like -- and it looked like the last quarter the same thing happened. The reason I ask is just the fund balance, if you use what was reported a year ago, looks like it grew 2.5, and I guess really today it’s really saying no growth. Maybe let me ask a different way. On the pseudo [ph] rate….

We did call that out, I think, in the press release, that it didn't grow in Q4. But let me just say one thing Gary, before we go down a lengthy conversation on this; timing of when a quarter ends and begin can really kind of throw that number. So I just caution to look at what we say for year and six months as opposed to a given quarter. .

Yeah and I guess just the last thing then just the pseudo rate drag which presumably continues for a while, and maybe a couple of years, that’s getting to unemployment [ph], is that -- and I think you hold on to the pseudo money longer than a lot of the other buckets of withholding.

So is that something we should think about being potentially a drag for the next two years or something on the growth of the [indiscernible] or is that something specifically….

I think it's going to have an impact at the margin. We do call that out in the press release that, that rates did impact the average client balances, probably not enough to make much of a difference. If you see, despite that Gary, our interest on funds held for clients were up 5% in the quarter.

So it really shouldn't -- if it does become an issue what we'll call it out. Not anticipating that it will be one though. .

Great, thank you. .

Okay. .

Our next question is from Sara Gubbins with Bank of America Merrill Lynch. Your line is open. .

Hi, thanks, good morning. You were talking about focusing on which units are growing.

And I am wondering do you think we will see a shift towards larger clients overtime on average?.

I think you'll see a shift overtime on higher value clients on average. So not necessarily larger but just understanding.

I think we've gotten much, much better at understanding what a particular client's needs are and putting as Marty said, the right team selling approach in front of that client, and trying to balance out the revenue opportunity of that client with the resources we put against that client.

So we need both, you need to fill the funnel, because some of the smaller clients become bigger clients, but we also have recognized that focusing solely on smaller clients, who don't have necessary the same life time value as a larger client, you need to have certain balance between the two.

So we're trying to strike it, sometimes very well, sometimes not so well. So that's what we're doing. .

And from a margin perspective, would that client that is buying a larger bundle be higher margin?.

Yes, typically would be Sara. .

Okay.

Could you also give us an update on your planned sales headcount growth next year?.

Yeah, so we're going to be growing sales headcount about 3%, this in next year's plan. .

Okay, and then last question, is it fair to say that the impact of the two additional payroll days next year is a little less than 1% incremental to your payroll service revenue?.

It is fair to say, it’s precisely half a point. .

Okay, thank you. .

Our next question is from Glenn Green with Oppenheimer. Your line is open. .

Thanks, good morning. Just actually following up on the last question, maybe you could give us the sales bookings growth expectations you're thinking about for fiscal '16. Can you sort of continue with this sort of double digit base? And you did allude to headcount growth of 3%. So it implied with that would be sort of the headcount productivity. .

Yeah, I think directionally, we certainly are looking for double digit growth. I think we had a big year this year and some of that was included, obviously the Affordable Care Act products and PEO growth. So, but we're looking for the same kind of directional way to grow, which is about low double digit growth. .

Okay, and then Efrain, you alluded to the M&A pipeline being robust, but want to be sensitive on valuation, but maybe strategically where you're looking, where are you seeing the opportunities or what would you like to fill out?.

I'll let Marty handle that. .

Yeah, I think really across the board, we look for client acquisition, so client base where we can grow our existing client base, as we look for some product tuck-ins. But we're in pretty good shape now. We had focused a lot on that over the last few years.

But we look at expanding any of the areas, so anywhere from Payroll to 401(k), to PEO, across the board, and maybe a few new markets, we look international as well. We did an international acquisition in Germany about two years ago, now I guess. And so we continue to look in other countries and for ways to get in and get started.

But growth in a lot of different ways, it's never been as robust. The problem, as Efrain said is getting it at the right valuation. .

Are there decent assets of sort of core meaningful, sort of core payroll clients, is that of interest and are there meaningful assets out there for sell?.

It's of interest, but I wouldn't say that there is anything out there right now, that's meaningful on the payroll side specifically. Everyone seems to be more interested in kind of staying the course and growing, and so at this point I don't -- we don't see as much there.

There is certainly always a lot of small ones and we're very active with the sales team on that. But as far as the significant one I wouldn't say there is payroll one [ph] right there in front of this at this point. .

Okay, great. Thanks a lot. .

Okay. .

Our next question is from David Grossman with Stifel. Your line is open..

Thank you. Good morning. .

Hey, Dave. .

I was wondering if you can just go back to the HRS business and the bundle. So if you remove the PEO from those numbers, can you give us, I guess first fundamentally, if you think about when you just selling that bundle without the PEO as part of that, there is no insurance element that's an important part of the sale.

Who are you really displacing there? Is there anybody or anything that you're displacing, or is this just an average [indiscernible] if you will or what's really being done internally? And can you give us a sense of just how big that bundled solution is when you again back out the PEO and what creative growth you're seeing in that business?.

Yeah, so if you don’t consider the PEO, David and I'll come back to PEO because you have to consider it. But if you don't consider, for a second most of those clients are internal Paychex clients, who have grown to a size where they would like to have, in particular HR outsourcing as part of the bundle.

So I would say, if you are looking solely at that portion of the client base, it's mostly internal clients. When you go to the PEO, that becomes a different animal because half -- almost half of the clients that we saw on the PEO are not clients of Paychex.

So I can't tell you who we’re taking share from, I can tell you that we had a very big year in PEO, worksite employees grew between 20% and 30% in the year. That's been -- that was our biggest year in many, many years in terms of PEO driven by ACA, better execution, great job by the HR sales force and also a great job by the ops people.

So it's a little bit of a tale of two cities. Inside everything else is really more of an inside game. When you get to PEO specific, it's a combination of both inside and outside. .

And if you back it out, the PEO what is the bundled solution represented as a percentage of revenue?.

Percentage of revenue….

Yeah. .

We don’t disclose it. PEO still is not even -- it doesn't come close to half of the HR Services growth. So most of it is everything else meaning Retirement Services plus Insurance plus what we call our ASO offering. Those things are growing nicely. So in the absence of PEO, we'd still have a pretty nice growth rate on those businesses. .

Right. And then I guess if we could back to the concept of higher revenue per client, because it came up in a couple different comments, one, in the context of how you're driving the sales force and how to think about unit growth and our thinking of pricing, not just pricing in Payroll but pricing per client.

So I think you said and maybe I just misunderstood this comment that it’s -- the revenue per client is up $1,000 in the past few years and that sounds pretty high.

So maybe you could explain a little bit about what that shift has been in terms of revenue per client today versus maybe what it was a couple of years ago and how we should think about where that's going to trend, particularly in the context of again this comment about bundled solution and trying to sell more into the existing business. .

Yeah, David I'm looking at the data from ’11. So in ‘11 our revenue per client was about $3,700 -- I'm sorry service revenue was about $3,600 and by 2015 it had grown to about $4,600.

So that's really a function of what Marty has been saying, what’s said at the beginning of the call which is, if you went back to where we were four or five years ago, and I think this is not well understood about the company, I think we were a hooks and ladder approach. So let's hook him with Payroll and then let's ladder on everything else.

We recognized post-recession that and this, to be fair, the credit goes to the sales force, and to our sales leader, he said, look certain clients need certain solutions very predictably. Let's do the data analytics and understand by size who needs what.

So we did it and we said you know what lo and behold, if you're -- I won't say the number but a client of a certain size you typically, in our base are going to take x, y and z. If we know that, then let's put the right sales people in front of that client and we have one doing that. So that's what you're seeing there. Obviously there is pricing too.

So I don't want to completely oversell the point, but I do think we have simply gotten better at understanding when we have a client, and by the way, we had well over a 100,000 of them that we sold, we have a lot of opportunities to go in and say, hey here's what you really need, if you're a client of a certain size.

And because of the breadth of what we offer, we have a lot more opportunities than most people to do that. So I think that's what's occurring there. .

So then, what's the right way to think that about the pricing units equation, because right now you're trending, as you mentioned about 2% client growth. So and that's everybody, right, I mean I guess that’s Payroll but I know you said you got others, but how do you want us to think that about the pricing element, because it's really not that 3%.

I mean it's really more driven by what the change in revenue per client’s going to be rather than the change in payroll price?.

Hey, I'm not ready to give a guidance on that, that's a good point. I think you can do the math.

If you look at revenue -- basically we give you enough by giving all of the clients and the breakouts of service revenue and you can see what the growth in revenue per client has been, you can see this isn’t a mystery, do the math and it's certainly mid-single digits or above.

So we're playing two games here, and I think it's important to understand that we've evolved the way we think about approaching the market, not just get more units and then put pricing on the units, but get more units, get pricing and get the right mix of clients, so that we can sell more feature rich bundles.

Just one final point I would make, David. Right now, if you compare what our sales force sells today to 10 years ago, very different animal in the Payroll space. We've got three bundles that basically take you from a basic payroll bundle to what is a pretty integrated HCM suite, that you can sell under 50.

So we are -- we allow the Payroll sales force to sell any one of those three bundles and we want them to capture the right set of revenue and we want to get the right mix of units, but we want to get as much share of wallet too as we can, when we have a sale. So you can model it out.

I think we given enough info there to kind of come to some conclusions on that. .

Okay, great, thanks for that. And then just last, a little bit it’s just repeated [ph] question here. You mentioned that we anniversary the minimum employment -- the change in the PEO in the second half of the last year.

So was there any impact on the fourth quarter growth rate of 16%?.

Yeah, this is the last time we'll call out. In the fourth quarter there was probably a pickup of about 1% in the quarter for minimum premium. So that brought it down to 15 or so, or probably a little bit under that, maybe between 14% and 15%. There were just a lot of, as I said before, vectors that lined up to drive -- deliver that quarter.

By the way we have called it a year ago. So we were expecting that by the end of the year we were going to have a pretty strong fourth quarter and I think that when we have this discussion a year ago I think there were some concerns about the fact that we were back ended or ahead more of a backend bias to our guidance.

But we thought we've ended up -- end up in the fourth quarter with a strong quarter and we ended up in the fourth quarter with a strong quarter. So we expect obviously based on the guidance for growth rates to moderate somewhat but that will see how the year progresses. .

Right, but is there -- I guess that's what I was getting at, is there anything in the business that you're seeing that would support that deceleration or are you just saying you know what…?.

No, no, there are really kind of three specific things that support our thesis that it will decelerate. The first thing, as I said, the PEO worksite employee growth was tremendous in the year. So we started from a lower base and by the end of the year we had hit an all-time high in terms of work-site employees.

So now I start at a higher base and it’s -- I'd love to think I'll have exactly the same year. 30 years of experience tells me that it’s probably not going to occur. That's the first thing. The second thing is the back half of the year we had strong sales of Affordable Care Act compliance products.

We again think that that's going to moderate as we go through the year. And then the third thing is we had a very strong year in 401(k) and we expect that to moderate. That's a planning assumption.

I would just say that's we said similar things last year and we were trying to project even more, even more a complex set of revenue and we came within several million dollars of what we expected to hit. So I think that's where we called it, we could end up being conservative. .

Hey, great. Thank you and good luck. .

Okay, thanks. .

Our next question is from Jeff Silber with BMO Capital Markets. Your line is open..

Thanks so much. Just a couple of quick numbers questions. Efrain, in the quarter, operating expenses rolling up a little less than 3% relative to the rest of the year, that [indiscernible] decelerated.

Anything going on there specifically?.

Basically it was just, Jeff the anniversaring of the minimum premium plan which was adopted in Q4. And so in our operating expenses you saw a low single digit that just because we're getting the more normalized compare on operating expenses in the quarter, that really kind of drove most of that difference. .

So that really shouldn't impact next year at all?.

No..

Okay, great and then your guidance for on interest on funds held for clients relatively flat. I understand you're not expecting any increase in interest expense, but shouldn't we see an increase in funds held for clients, that should drive that a little bit higher. .

I think it should be higher, Jeff. I think there is an element of conservatism in that number but what I'd say is this when the Fed raises rates will help a better sense of what the shape of yield curve is. And right now I’m duration neutral Better sense of what the shape of the yield curve is and right now I'm duration neutral.

If we like the yield curve then we may extend a bit. And so right now my thinking is duration relatively neutral, I know where the intermediate portion of the bond yield curve is. And all of that equates to flattish.

It's probably going to be a bit up from where we're at, but not enough to really materially change things until I have a sense of what the Fed’s doing and what it signals more importantly, when it does its first increase, whether it going to signal rapid future increases or not.

I would just say we've been faked out so much than I'm a little bit gun shy in terms of making any calls on what's going to happen. So that's our book process. .

Okay, great, I understand, thanks so much. .

Our next question is from Jim MacDonald with First Analysis. Your line is open..

Yeah, good morning guys.

Could you give us some of your thoughts on the middle market area? How it's doing and what your expectations are for next year?.

Yeah, I think this year is -- right now as we're heading into '16. I think we feel good about the product and feature set that's out there for our sales folks to sell. I think we're feeling we've had some kick offs to the fiscal year already for the sales team. And there is a lot of excitement there.

Obviously some competition has cropped up over the last couple of years but we don't see that having a big impact so far. So I think the market has somewhat expanded. I do think the need for HR and time and attendance and so forth has come down market. So that mid-market is anything from frankly from 20, 25 plus. And we're seeing a lot more need there.

So I feel pretty good that the mid-market in '16 will be a strong year for us and that's what we're planning on. And then we're well positioned for both from a sales experience and sales team, very fully trained and full staffed. And then from a product and feature set and service perspective we're in good shape. .

Great, and then you talked a lot about the ACA but at the risk of adding one more. So any impact in January of a 1095 form, do you think that will have any kind of material impact? And do you think the charge will be similar or more than say W2. .

Well, I think for the whole service we're charging kind of a monthly charge that gives you both monitoring and recording. And so I don't think you'll see any big blip or big change there.

The big change would be if we sale a lot more of it because in that timeframe, they start to realize that there is a penalties that the filing is more difficult than they think and so forth. And so I don't think you'll see any big blip in Q3 because of that.

What you'll hopefully see is more sales all through the year and we'll continue to update Jim that as we go through the quarters. .

Okay, thanks a lot. .

Okay. .

Our next question is from Chenjin Wong [ph] with JPMorgan. Your line is open..

Hey, good morning. Good morning, thanks for taking my questions. Just on the client side, I know I heard a lot about shifting towards higher value clients. That all make sense but I'm curious, how -- from a unit perspective how is SurePayroll performing because I guess we could infer that there is a mix shift away from that. .

So I don't think that's a fair assumption. I think that they -- SurePayroll is doing fine, relatively a small part of our revenue base, as said in the past. Sure really doesn't influence the revenue picture very much a little bit. Certainly revenues influences the unit picture but no significant change from that perspective.

I want to be careful it could be misunderstood that we don't think that microenterprise space is important. We think it is important and it's important for a number of different reasons, not just because it represents a source of revenue, but a lot of those clients, we now see, have an opportunity to become full service outsourced clients.

And if they build the right relationships with Paychex their lifetime value will be significant. So we're not pivoting away from that, just thinking through how best to maximize the revenue opportunity we have with each sale. .

Okay. Yeah I know you pretty much have sort of talked about the sort of this the pendulum between do yourself and outsourcing for a while. Just feel like it shifting towards outsourcing on my side.

But I'm curious are you seeing any new trends there and just lastly the clarification on retention, can you -- did you give revenue retention as well as unit retention?.

I didn’t give revenue retention, revenue retention this last year was about 86%..

And I don’t think we are seeing a big shift or anything, but as Efrain said SurePayroll’s still doing well in that micro market. We are certainly still feeling good about the under 20 here and what we are seeing in selling on that side.

I don’t think there has been a big shift, although I do think that it -- everything is kind of coming down, as I said. So there is more need for even the under 20, more of getting -- we’ve had good success in selling time clocks and now the online time and attendance, even to smaller clients that we didn’t think would need it.

I think that may drive more to outsource because it’s not just simple payroll calculations where they are doing it themselves. I think they will look more for a well-rounded offering that integrates everything and that like time and attendance you can punch in and punch out on the mobile phone now.

So as those things keep getting easier and better integrated and coming down market I think more small will outsource..

Yeah, okay good, thanks guys appreciate the update. See you in a couple of weeks..

All right..

Our next question is from Mark Marcon with R.W. Baird. Your line is open..

Good morning Marty and Efrain..

Good morning..

With regards to your MMS clients, what percentage are on the latest version, the most up-to-date version of your solution?.

Yeah, I don’t know if we’ve really given that out yet. We’re going through -- the clients we are getting good satisfaction on the existing product. I would say the new sales are definitely leaning 70%-80% toward the new product, and featured functionality set, that that’s fitting those.

And I think you will see that shipped close to that, 90% to 100% in this upcoming fiscal year and then other clients will move over. There is not a big forced migration or any need for that, necessarily at all because they are still happy with the former product.

But I would say it’s from a sales perspective it’s 80% and we’ll be growing and existing base and I don’t think we’ve really given that out. So but it’s -- we’ve given that Flex Enterprise has been growing here. It’s a pretty small -- it’s a fairly small percentage and but we’ll continue to grow obviously over the next two years..

I am assuming the satisfaction level with Flex is higher than the base, is that correct?.

Yeah, although the base is pretty comfortable with the product we haven’t -- it’s not like there is a major issue there. I think it’s more but Flex is little bit higher, but it’s not -- the base is not like totally unsatisfied or leaving or anything like that. We would step up the migration but we’re not seeing that.

I think it’s, Flex is driving a lot more to the clients. Our goal there is to pull them over by saying hey, look at the additional feature, functionality integration and online opportunities you have there from this offering than what you have but there is not any general dissatisfaction with the existing product at this point..

Okay, and then with regards to the retention rate, I mean it’s improved nicely over the years.

Where do you think that can ultimately go to, do you think you have hit a peak level or do you think there is still room for improvement with regards to that retention rate assuming the economic environment doesn’t change?.

Yeah, it’s a good question, I think we always struggle with it. I think we’re feeling very strong that it’s over 82%. It’s obviously the best we’ve ever had. I think we’ll continue to try that. We’re always trying to drive it a little bit higher.

Can you get it pass 83% or 84%, given that small client and the rate of turnover? I think you might be able to get it up another 50 to 100 basis points, maybe a little bit more overtime but it’s a struggle, but it is really what we are driving now and John Gibson leading the service team is really driving a lot of service options in trying to with this voice of the customer we are getting great feedback.

We are responding to the customers even faster and we’re learning how much effort. We now have systems that are learning how much effort they have to put into to either mobile online or talking to the payroll specialist and then we can kind of build their service around it, so it’s much more sophisticated.

Who knows maybe we could drive it to 83% to 83.5% or something. I don’t think too much further than that..

Okay, and then with regards to the delta between the bookings growth relative to the total service revenue growth, can you just go through the -- why those wouldn't be closer?.

Well, I'm not sure why you have assumed that Mark. Remember that each year in order to grow [indiscernible], replace the 18% [ph] clients plus get an incremental growth. So even if you had a real strong year in terms of sales you wouldn't see that reflected unless you had a series of those years in a row reflected in the base.

So I think we are comfortable that we're seeing revenue growth in the base, but you just don't see it from one year to the other. .

Got it.

And what percentage of the client base currently is getting the 1095 or has signed up for the 1095 program?.

We're not discussing that number. But Marty indicated that of the people that we thought -- early in the call, the people that we thought might be clients it was 25% plus. .

Great, thank you. .

Okay thanks Mark. .

Your next question is from Lisa Ellis with Bernstein. Your line is open..

Hey guys.

To what extent are you or the PEO and HR outsourcing markets more broadly, do you think impacted, if we see this big wave of consolidation across HMOs as well as other HR service providers?.

I think there is going to still be plenty of choice out there and opportunity to offer. You got to remember if they're combining and we are still going to have, I think very competitive products to compete. I don't think it's everyone are going to combine so much that you don't have enough choice and competition there.

So I don't think it will impact us too much at this point. I think actually to some degree it might make it easier from an operational perspective.

We -- when we got into the health insurance business, selling health insurance years ago we have to go out and connect with the top three carriers in every city and the number were -- it gets to be very large and complicated, to the degree that, that begins to consolidate it might make operationally things even easier, and you might actually have a little bit more clout with getting connection issues resolved and actually make the business more efficient.

So I think we have to wait and see how it is but I think the choice was -- enough choice will still be there. And I think actually it might even improve some of the customer service by the connections we have with them. .

Got it, and then it looks like SG&A for the full year was up 9% this past year, with a little bit of I guess lumpy uptick in this last quarter. You mention that headcount growth you're targeting about 3% next year.

Does that mean that we would expect SG&A growth to moderate relative to this year?.

It should moderate a bit. We just had a really a very, very strong sales growth this year. We expect it to be good next year but probably moderate a bit from the growth rate that we saw this year. .

Terrific, thanks. .

Our next question’s from Phil Stiller with Citi. Your line is open..

Hi, thanks for taking my questions. I've just couple of quick follow-ups. Efrain you said the two extra payroll days this year will add about 50 basis points to the growth rates. Just wondering what the impact on fiscal '17 will be if you have that analysis.

Are we going to lose all of that 50 basis points or can…?.

Good question, Phil. I haven’t and I will tell you this, I have buried in trying to figure out this call plus the Board meeting. So I haven’t looked at '17. It will have an impact. It's hard to say without understanding what -- where we end up from a client perspective and some of the other revenue issues we discussed.

So it will have some modest impact on '17, too early to call. .

Okay, and then lastly on M&A, I guess you talked about it earlier but on the valuation commentary without being sensitive.

I guess what metrics are you looking at? Are you willing to buy things that have higher multiples than your own stock?.

We -- when asked this question Marty and I -- we look at technology and we understand that if someone’s got a nice mousetrap we are going to have to pay for it. But that's why we think, being in a position of financial strength is important.

So we look at it differently if it's a pure technology buy or it's primarily technology, or if it's more of a client based play or a mixture of both. So our metrics adjust based on what it is we are buying. You pay for innovation, we understand that.

So we’re willing to look at businesses that we think have good technology but we are not willing to excessively overpay for that technology..

Okay, thanks..

Okay..

Our last question is from Matt O’Neill with Autonomous Research. Your line is open..

Hey guys, thanks for sneaking me in at the end here.

I just had a quick clarification, the 590 in clients, is that inclusive of SurePayroll?.

Correct, yes, it would be..

Got it. And then just noticing some recent announcements from some new entrants/potential competitors, most recently yesterday Square kind of formulized their payroll offering at least in California anyway.

Is there any kind of anecdotal evidence you guys are hearing reported back from your sales force as far as dynamics or shifts or anything kind of going on the competitive front or is it still the usual players that we are all used to, that you guys see day in day out?.

Yeah, it’s still pretty much the usual players.

I know that obviously there has been a lot of announcements but it really hasn’t -- we haven’t seen a big impact there, some for price but I think when they look at the feature functionality, the size of the company, whether it’s public or not, meaning that you are trusting your payroll taxes, a very significant cost as a small business with someone and that limited functionality and the limited compliance resources, when you think about Paychex we have 200 people that focus on compliance and been able to deal with all the agencies federal, state and local, it has not been a big impact at this point.

We certainly take all competitors very seriously but we haven’t seen a big impact at this point at all..

Got it, and so based on the sort of sales strategy of going kind of all-in, would you actually quantify it as potentially being harder for a new entrant to compete against somebody like you, with that backdrop, I guess of product offerings?.

So Matt we’ll talk about this at our Investor Day and I think that what, the people who pitched the segregation pieces are selling is the notion that integrated solutions are less important than getting the best deal in every disaggregated portion of the bundle.

We can tell you that when you tie that together with technology and you have very good offerings in each of the service areas that a small medium size enterprise wants, that’s a wining preposition. That’s what they are looking for and then put world class service on top of that with a great mobile platform, you got a pretty powerful combination.

So if you are going to compete against that with one cheap payroll offering I think you are going to be challenged..

Got it, thanks very much. I won’t take any more time..

Good, thanks..

That is all the questions we have gentlemen..

All right, thank you. At this point we’ll close the meeting and if you are interesting in replaying the webcast of this conference call it will be archived until August 3rd. Thank you for your interest in Paychex.

We very much appreciate your participation in our call and we look forward hopefully to see many of you at our Investor Day in just a few weeks in Rochester, New York. Thank you and take care..

That does conclude today’s conference call we thank you all for participating. You may now disconnect. And have a great rest of your day..