01—Abstract
Summary
Summary of the 10-K filed August 8, 2014. Cited figures are marked; the original filing is the authoritative source.
Automatic Data Processing, Inc. (ADP) reported solid financial performance for the fiscal year ended June 30, 2014.
The company achieved an 8% increase in total revenues, reaching $12.2 billiona, driven by growth across its Employer Services, PEO Services, and Dealer Services segments. Net earnings from continuing operations saw an 11% increase to $1.5 billion, translating to diluted earnings per share of $3.11. The company highlighted strong client retention rates and consistent cash flow generation, underscoring the resilience of its business model.
A significant strategic development during the period was the Board of Directors' approval to spin off the Dealer Services business into an independent publicly traded company, expected to be completed by October 2014. This move is intended to allow both entities to focus on their respective core businesses and strategic opportunities. ADP also continued its commitment to shareholder returns, repurchasing approximately $667 millionb in stock and increasing its dividend for the 39th consecutive year.
02—Key points
Key Highlights
- Total revenues increased by 8% to $12.2 billion in fiscal year 2014.
- Net earnings from continuing operations grew by 11% to $1.5 billion.
- Diluted earnings per share from continuing operations increased by 11% to $3.11.
- The company announced plans to spin off its Dealer Services business, expected to be completed by October 2014.
- Employer Services, the largest segment, saw an 8% revenue increase and a 14% rise in earnings before income taxes.
- PEO Services demonstrated strong growth with a 15% revenue increase and a 17% rise in earnings before income taxes.
- ADP returned $1.55 billion to shareholders through dividends ($883.1 million) and share repurchases ($667.3 million).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed August 8, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $10.23B$9.44B | +8.3% |
| SG&A Expenses | $2.37B$2.20B | +7.7% |
| Operating Expenses | $10.00B$9.31B | +7.5% |
| Interest Expense | $6.10M$9.10M | −33.0% |
| Net Income | $1.52B$1.41B | +7.8% |
| EPS (Basic) | $3.17$2.91 | +8.9% |
| EPS (Diluted) | $3.14$2.89 | +8.7% |
| Shares Outstanding (Basic) | 478.90M482.70M | −0.8% |
| Shares Outstanding (Diluted) | 483.10M487.10M | −0.8% |
05—Questions
Frequently Asked Questions
What is the company's primary business and how is it segmented?
ADP is a leading provider of human capital management (HCM) solutions and integrated computing solutions for vehicle dealers. Its business is segmented into three reportable segments: Employer Services, Professional Employer Organization (PEO) Services, and Dealer Services. Employer Services offers a broad range of HR and payroll solutions. PEO Services (ADP TotalSource) provides comprehensive employment administration outsourcing through a co-employment model. Dealer Services offers technology solutions and digital marketing for automotive retailers.
What is the company's financial performance like for the fiscal year ended June 30, 2014?
For the fiscal year ended June 30, 2014, ADP reported total revenues of $12.2 billion, an 8% increase year-over-year. Net earnings from continuing operations were $1.5 billion, an 11% increase, resulting in diluted earnings per share of $3.11. The company highlighted strong revenue retention and growth across its key segments, although interest income on funds held for clients decreased due to lower interest rates.
What are the key strategic initiatives for ADP?
ADP's strategy focuses on three pillars: growing its cloud-based HCM, benefits, and payroll solutions for the U.S. market; investing in and scaling its HR Business Process Outsourcing (BPO) solutions; and leveraging its global presence to offer HCM, benefits, and payroll solutions internationally. A significant strategic move announced was the planned spin-off of its Dealer Services business to create two independent, focused companies.
How is ADP returning value to shareholders?
ADP demonstrated a strong commitment to shareholder returns. In fiscal year 2014, the company returned $1.55 billion to shareholders through dividends ($883.1 million) and share repurchases ($667.3 million). ADP also highlighted its track record of 39 consecutive years of dividend increases and planned to continue returning capital to shareholders following the Dealer Services spin-off.
06—Continue