Summary
Automatic Data Processing, Inc. (ADP) reported solid revenue growth in its Form 10-Q for the period ending March 31, 2014. Total revenues increased by 7% year-over-year for the quarter and 8% for the nine-month period, driven primarily by the Employer Services and PEO Services segments. Net earnings from continuing operations also showed a healthy increase of 6% for the quarter and 7% for the nine months. The company highlighted strong client retention and an increase in 'pays per control,' indicating a growing client base. A significant strategic development announced during this period was the Board of Directors' approval to spin off the Dealer Services business into a separate, independent publicly traded company. This spin-off, anticipated for October 2014, aims to allow both entities to focus on their respective strategic opportunities. The company also continues its commitment to returning capital to shareholders through dividends and share repurchases.
Financial Highlights
51 data points| Revenue | $2.82B |
| Gross Profit | $1.24B |
| SG&A Expenses | $585.30M |
| Operating Expenses | $2.56B |
| Interest Expense | $900K |
| Net Income | $521.60M |
| EPS (Basic) | $1.09 |
| EPS (Diluted) | $1.08 |
| Shares Outstanding (Basic) | 478.90M |
| Shares Outstanding (Diluted) | 483.00M |
Key Highlights
- 1Total revenues grew 7% year-over-year to $3.32 billion for the third quarter and 8% to $9.13 billion for the first nine months of fiscal year 2014, driven by strong performance in Employer Services and PEO Services.
- 2Net earnings from continuing operations increased by 6% to $510.4 million for the quarter and 7% to $1.21 billion for the nine-month period.
- 3Diluted earnings per share (EPS) from continuing operations rose 7% to $1.06 for the quarter and 8% to $2.51 for the nine-month period.
- 4The company announced plans to spin off its Dealer Services business into a separate publicly traded company, expected to be completed in October 2014.
- 5Interest 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.
- 6Operating expenses and selling, general, and administrative expenses saw increases, largely in line with revenue growth and strategic investments in the salesforce.
- 7ADP repurchased approximately 6.2 million shares of common stock during the nine months ended March 31, 2014, as part of its ongoing capital return strategy.