10-QPeriod: Q3 FY2010

AUTOMATIC DATA PROCESSING INC Quarterly Report for Q3 Ended Mar 31, 2010

Filed May 6, 2010For Securities:ADP

Summary

Automatic Data Processing, Inc. (ADP) reported solid financial results for the nine months ended March 31, 2010, with net earnings from continuing operations increasing by 2% to $999.7 million, or $1.98 per diluted share, up from $977.9 million, or $1.93 per diluted share, in the prior year period. For the third quarter of fiscal year 2010, net earnings from continuing operations were largely flat year-over-year at $401.6 million ($0.79 diluted EPS), compared to $402.1 million ($0.80 diluted EPS) in the prior year quarter, indicating a slight sequential slowdown. The company demonstrated revenue growth in its PEO Services segment (+15% for the quarter and +10% year-to-date) and Employer Services segment (+1% for the quarter), while Dealer Services experienced a revenue decline (-3% for the quarter and -4% year-to-date). Total revenues for the nine months remained stable at $6.737 billion, but increased by 3% to $2.443 billion for the third quarter, driven by Employer and PEO Services. The company's strong operating cash flow of $1.287 billion for the nine months underscores its financial health.

Financial Highlights

30 data points
Beta

Revenue

$2.44B

45.5% Gross Margin

Net Income

$403.60M

16.5% Net Margin

EPS (Diluted)

$0.80

Cash & Equivalents

$1.97B

Free Cash Flow

$613.70M

Financial Statements
Beta
Revenue$2.44B
Cost of Revenue$1.33B
Gross Profit$1.11B
SG&A Expenses$504.90M
Operating Expenses$1.84B
Interest Expense$1.20M
Net Income$403.60M
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)502.40M
Shares Outstanding (Diluted)505.50M

Key Highlights

  • 1Net earnings from continuing operations increased by 2% year-over-year for the nine months ended March 31, 2010, reaching $999.7 million ($1.98 diluted EPS).
  • 2Third quarter net earnings from continuing operations were flat year-over-year at $401.6 million ($0.79 diluted EPS), showing a slight sequential deceleration.
  • 3Total revenues for the nine months ended March 31, 2010, were stable at $6.737 billion, but increased by 3% to $2.443 billion for the third quarter, driven by Employer and PEO Services growth.
  • 4PEO Services demonstrated robust revenue growth of 15% in the third quarter and 10% year-to-date, indicating strong performance in this segment.
  • 5Employer Services also showed positive revenue growth of 1% in the third quarter and a marginal decline of 1% year-to-date.
  • 6Dealer Services experienced a revenue decline of 3% in the third quarter and 4% year-to-date, reflecting ongoing challenges in the automotive sector.
  • 7Operating cash flow remained strong, with $1.287 billion generated in the first nine months of the fiscal year, underscoring the company's ability to generate cash from its operations.

Frequently Asked Questions

ADP saw varied revenue performance across its segments. PEO Services showed strong growth, with revenues increasing by 15% in the third quarter and 10% year-to-date. Employer Services experienced modest growth of 1% in the third quarter, while Dealer Services faced a revenue decline of 3% in the third quarter and 4% year-to-date, likely due to ongoing pressures in the automotive industry.

For the nine months ended March 31, 2010, ADP's net earnings from continuing operations grew by 2% to $999.7 million, translating to a diluted EPS of $1.98, up from $1.93 in the prior year. However, the third quarter showed a slight sequential slowdown, with net earnings from continuing operations remaining flat at $401.6 million ($0.79 diluted EPS) compared to $402.1 million ($0.80 diluted EPS) in the prior year's quarter.

ADP demonstrated a strong financial position. Operating cash flow was robust, generating $1.287 billion in the first nine months of the fiscal year. The company maintained a healthy balance sheet with significant cash and marketable securities and a low debt-to-equity ratio, indicating good liquidity and financial stability.