Summary
Automatic Data Processing, Inc. (ADP) reported solid financial results for the second quarter of fiscal year 2015, reflecting continued growth in its core Employer Services and PEO Services segments. Total revenues increased by 7% year-over-year for the quarter, driven by robust performance in both segments, with Employer Services up 4% and PEO Services seeing a significant 18% increase. This growth was supported by new business bookings, improved client retention, and an increase in the number of employees on client payrolls. Despite pressures from foreign currency translation and a slower growth rate in interest income from client funds, the company demonstrated operating efficiencies, leading to an expansion in pre-tax margin. Net earnings from continuing operations rose by 6% to $334.0 million, translating to a 8% increase in diluted earnings per share from continuing operations to $0.70. The company also completed the tax-free spin-off of its Dealer Services business into CDK Global, Inc. during the prior fiscal year, and is strategically returning a significant portion of the dividend received from CDK to shareholders through share repurchases. ADP's financial condition remains strong, with substantial cash and marketable securities, underscoring its stable business model and commitment to shareholder returns.
Financial Highlights
50 data points| Revenue | $2.65B |
| Gross Profit | $1.07B |
| SG&A Expenses | $588.50M |
| Interest Expense | $2.20M |
| Net Income | $331.50M |
| EPS (Basic) | $0.70 |
| EPS (Diluted) | $0.69 |
| Shares Outstanding (Basic) | 476.60M |
| Shares Outstanding (Diluted) | 480.30M |
Key Highlights
- 1Total revenues increased by 7% to $2,661.3 million for the three months ended December 31, 2014, compared to the prior year period.
- 2Employer Services revenue grew 4% to $2,169.9 million, and PEO Services revenue surged 18% to $625.8 million, demonstrating strong performance in core segments.
- 3Net earnings from continuing operations increased by 6% to $334.0 million, leading to a 8% rise in diluted EPS from continuing operations to $0.70.
- 4Client funds balances grew 7% to $19.8 billion, although interest income from these funds grew at a slower rate due to lower interest rates.
- 5The company successfully executed the spin-off of its Dealer Services business into CDK Global, Inc. in September 2014.
- 6ADP is returning $825.0 million received as a dividend from CDK to shareholders via share repurchases.
- 7Operating expenses increased at a slower pace than revenue, leading to an improvement in overall margin for continuing operations.