Summary
Automatic Data Processing, Inc. (ADP) reported solid financial results for the quarter and six months ended December 31, 2013. Total revenues increased by 9% and 8% respectively, driven by growth across all key segments: Employer Services, PEO Services, and Dealer Services. Net earnings from continuing operations saw a healthy increase of 7% for the quarter and 8% for the six-month period, leading to diluted EPS of $0.78 and $1.46, respectively. The company's strong business model, characterized by recurring revenues and consistent cash flows, remains a key strength, as evidenced by solid client retention and the proactive return of capital to shareholders through dividends and share repurchases. Despite a continued decline in interest income from funds held for clients due to lower interest rates, ADP demonstrated resilience, with an increase in average client funds balance partially offsetting this impact. The company maintains a solid financial position with robust liquidity and a strong balance sheet. Management highlighted the consistent performance of its business segments, with Employer Services showing particularly strong revenue growth and margin expansion. PEO Services also experienced robust revenue growth driven by an increase in worksite employees. Dealer Services continued its upward trajectory with improved client retention and transaction volumes. While the company is facing ongoing litigation, it maintains a strong belief in its defenses and expects no material adverse impact. Overall, ADP's first half of fiscal year 2014 demonstrates continued operational strength and effective execution against its strategic priorities.
Financial Highlights
51 data points| Revenue | $2.49B |
| Gross Profit | $1.01B |
| SG&A Expenses | $578.80M |
| Operating Expenses | $2.45B |
| Interest Expense | $2.00M |
| Net Income | $377.00M |
| EPS (Basic) | $0.79 |
| EPS (Diluted) | $0.78 |
| Shares Outstanding (Basic) | 478.40M |
| Shares Outstanding (Diluted) | 482.80M |
Key Highlights
- 1Total revenues for the three months ended December 31, 2013, increased by 9% to $2,982.8 million, and by 8% to $5,822.5 million for the six months ended December 31, 2013.
- 2Net earnings from continuing operations increased by 7% to $377.0 million for the three months and 8% to $705.6 million for the six months ended December 31, 2013.
- 3Diluted earnings per share from continuing operations rose by 8% to $0.78 for the three months and 9% to $1.46 for the six months ended December 31, 2013.
- 4Employer Services segment revenue grew 9% year-over-year for both the three and six-month periods, with pretax earnings increasing by 16% and 15% respectively.
- 5PEO Services segment revenue increased by 14% and 13% for the three and six-month periods, respectively, demonstrating strong growth in worksite employees.
- 6The company continues to return capital to shareholders, repurchasing 5.6 million shares during the six months ended December 31, 2013.
- 7Interest income on funds held for clients decreased due to lower interest rates, though this was partially offset by an increase in the average client funds balance.