Summary
Automatic Data Processing, Inc. (ADP) reported solid revenue growth for the second quarter of fiscal year 2011, with total revenues increasing by 9% year-over-year to $2.4 billion. This growth was driven by strong performance across all segments, particularly in Dealer Services, which saw a 26% revenue increase. The company's underlying business model, characterized by recurring revenues and strong client retention, continues to demonstrate resilience despite economic pressures. ADP also continued its commitment to shareholder returns, raising its dividend for the 36th consecutive year and actively repurchasing shares. While expenses also rose due to increased operating costs, acquisitions, and investments in client-facing associates, the company managed to maintain its earnings from continuing operations before income taxes, albeit with a slightly reduced margin. Investments in systems development and programming were also up, reflecting ongoing technological advancements. The company's financial position remains robust, supported by significant client fund balances and strong liquidity. Acquisitions, including Cobalt, are strategically integrated to support long-term growth, with management expecting them to not materially impact overall earnings for the fiscal year.
Financial Highlights
53 data points| Revenue | $2.41B |
| Gross Profit | $1.03B |
| SG&A Expenses | $570.10M |
| Operating Expenses | $1.95B |
| Interest Expense | $2.80M |
| Net Income | $310.10M |
| EPS (Basic) | $0.63 |
| EPS (Diluted) | $0.62 |
| Shares Outstanding (Basic) | 492.00M |
| Shares Outstanding (Diluted) | 496.90M |
Key Highlights
- 1Total revenues increased by 9% to $2.4 billion for the three months ended December 31, 2010, compared to $2.2 billion in the prior year period.
- 2Employer Services revenue grew 7%, PEO Services revenue grew 15%, and Dealer Services revenue grew 26%, indicating broad-based growth across segments.
- 3Net earnings from continuing operations saw a slight decrease of 2% to $310.1 million for the quarter, while diluted EPS from continuing operations remained flat at $0.62.
- 4The company completed six acquisitions in the first half of fiscal 2011, including Cobalt, to support its long-term growth strategies.
- 5ADP raised its dividend for the 36th consecutive year, demonstrating a consistent commitment to returning capital to shareholders.
- 6Client fund balances increased by 9% year-over-year, contributing to both revenue and the company's overall financial stability.
- 7Operating expenses increased by 12% due to higher pass-through costs in PEO Services, acquired businesses, and investments in client-facing associates.