01—Abstract
Summary
Summary of the 10-K filed August 24, 2011. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) demonstrated robust performance in its fiscal year ended June 30, 2011, with a notable 11% increase in consolidated revenues to $9.88 billiona.
This growth was driven by strong contributions across all its major segments: Employer Services, PEO Services, and Dealer Services. The company successfully navigated a challenging economic environment, showcasing resilient client retention and strategic acquisitions, including Cobalt Group, which significantly boosted Dealer Services revenue. ADP also returned substantial value to shareholders through dividends and share repurchases, underscoring its commitment to capital return while continuing to invest in innovation and international expansion.
The company's strategic focus on strengthening its core offerings, expanding its HR Business Process Outsourcing (BPO) capabilities, and pursuing international growth appears to be yielding positive results. With solid operating cash flow and a healthy balance sheet, ADP is well-positioned to continue its growth trajectory and market leadership in business outsourcing solutions.
02—Key points
Key Highlights
- Total revenues increased by 11% to $9.88 billion in fiscal 2011, driven by growth across all segments.
- Employer Services revenue grew 8% to $6.86 billion, supported by increased client retention and a rise in 'pays per control'.
- PEO Services revenue saw a significant 17% increase to $1.54 billion, primarily due to a 12% rise in worksite employees.
- Dealer Services revenue surged by 24% to $1.49 billion, largely influenced by the acquisition of Cobalt Group.
- Diluted earnings per share (EPS) from continuing operations increased by 5% to $2.52, on fewer outstanding shares.
- ADP returned approximately $1.4 billion to shareholders through dividends and share buybacks during fiscal 2011.
- The company maintained strong client retention rates, with Employer Services at 91.1% and Dealer Services at 88.6% (North America) and 92.8% (International).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed August 24, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $9.83B$8.93B | +10.1% |
| SG&A Expenses | $2.31B$2.13B | +8.8% |
| Operating Expenses | $8.03B$7.17B | +12.1% |
| Interest Expense | $8.60M$8.60M | 0.0% |
| Net Income | $1.25B$1.21B | +3.5% |
| EPS (Basic) | $2.54$2.42 | +5.0% |
| EPS (Diluted) | $2.52$2.40 | +5.0% |
| Shares Outstanding (Basic) | 493.50M500.50M | −1.4% |
| Shares Outstanding (Diluted) | 498.30M503.70M | −1.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of ADP's revenue growth in fiscal year 2011?
ADP's revenue growth in fiscal year 2011 was primarily driven by an 11% increase in consolidated revenues, fueled by strong performance in its Employer Services (8% growth), PEO Services (17% growth), and Dealer Services (24% growth) segments. Strategic acquisitions, particularly Cobalt Group in Dealer Services, and consistent client retention were key factors contributing to this top-line expansion.
How did ADP manage its expenses and profitability?
While total expenses increased by 13% in fiscal 2011, largely due to revenue growth and integration costs from acquisitions, ADP managed its profitability effectively. Earnings from continuing operations before income taxes grew 4%, and net earnings from continuing operations increased by 4% to $1.25 billion. The company maintained a strong effective tax rate of 35.1%.
What is ADP's strategy for shareholder returns?
ADP demonstrates a strong commitment to returning value to shareholders. In fiscal year 2011, the company returned approximately $1.4 billion to shareholders through a combination of dividends and share repurchases. This is in line with its long-standing practice of increasing dividends and actively managing its share count.
How is ADP positioned regarding its financial health and liquidity?
ADP maintains a solid financial position with $1.52 billion in cash and marketable securities at the end of fiscal 2011. The company generated robust operating cash flow of $1.71 billion and has significant credit facilities available, indicating strong liquidity and financial flexibility.
06—Continue