Summary
Automatic Data Processing, Inc. (ADP) reported its fiscal first quarter 2010 results, ending September 30, 2009. Total revenues saw a 4% decrease year-over-year, primarily due to declines in Employer Services and Dealer Services, partly influenced by foreign currency fluctuations. However, PEO Services revenues increased, showing resilience in that segment. Despite the revenue dip, the company demonstrated strong cost management, with total expenses decreasing by 5% due to lower operating and SG&A expenses, and reduced interest expense. This expense control, coupled with a slightly lower effective tax rate, led to a modest increase in net earnings from continuing operations by 2% and diluted EPS by 4% to $0.56. The company maintained a solid financial position with ample liquidity and a conservative debt-to-equity ratio, though it noted a decrease in cash flows from operations driven by higher pension plan contributions and income tax payments.
Financial Highlights
51 data points| Revenue | $2.10B |
| Cost of Revenue | $1.19B |
| Gross Profit | $906.60M |
| SG&A Expenses | $491.50M |
| Operating Expenses | $1.68B |
| Interest Expense | $3.20M |
| Net Income | $284.10M |
| EPS (Basic) | $0.57 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 501.40M |
| Shares Outstanding (Diluted) | 503.70M |
Key Highlights
- 1Total revenues declined 4% to $2,102.8 million, impacted by Employer Services (-3%) and Dealer Services (-4%), with foreign currency fluctuations contributing to the decrease.
- 2PEO Services showed revenue growth of 6% to $296.2 million, driven by an increase in worksite employees.
- 3Total expenses decreased by 5% to $1,689.2 million, largely due to cost-saving initiatives and lower interest expenses.
- 4Net earnings from continuing operations increased 2% to $284.1 million, resulting in diluted EPS of $0.56, up 4% from the prior year.
- 5Operating cash flow decreased by $154.5 million to $243.7 million, primarily due to higher pension contributions and income tax payments.
- 6The company maintained strong liquidity with $1.6 billion in cash and marketable securities, and a low long-term debt-to-equity ratio of 0.7%.
- 7Dealer Services revenues were impacted by dealership consolidations and closures, with an expected annualized revenue impact of approximately $50 million from GM and Chrysler dealership declines.