Summary
Automatic Data Processing, Inc. (ADP) reported its first quarter fiscal year 2021 results, ending September 29, 2020. Despite ongoing impacts from the COVID-19 pandemic, the company demonstrated resilience, with total revenues slightly decreasing by 1% to $3,470.7 million. Net earnings saw a 3% increase to $602.1 million, resulting in a 4% rise in diluted Earnings Per Share (EPS) to $1.40. This performance was supported by effective cost management and transformation initiatives, which led to operating expense reductions and margin expansion in key segments. The company highlighted improvements in certain operational metrics, such as a slower decline in 'pays per control' and growth in Employer Services New Business Bookings, suggesting early signs of stabilization. ADP's strong business model, characterized by low capital intensity and robust free cash flow generation, enabled continued investment in innovation and shareholder returns, including dividends and share repurchases. The financial condition remains solid, with ample liquidity to navigate current economic uncertainties.
Financial Highlights
53 data points| Revenue | $3.47B |
| Cost of Revenue | $2.03B |
| Gross Profit | $1.44B |
| SG&A Expenses | $681.00M |
| Operating Expenses | $2.73B |
| Interest Expense | $15.10M |
| Net Income | $602.10M |
| EPS (Basic) | $1.40 |
| EPS (Diluted) | $1.40 |
| Shares Outstanding (Basic) | 428.60M |
| Shares Outstanding (Diluted) | 430.00M |
Key Highlights
- 1Total revenues for the quarter were $3,470.7 million, a slight decrease of 1% compared to the prior year, primarily due to lower interest on funds held for clients and a decrease in 'pays per control'.
- 2Net earnings increased by 3% to $602.1 million, and diluted EPS grew by 4% to $1.40, demonstrating improved profitability.
- 3Operating expenses decreased by 1% to $2,034.3 million, driven by cost and headcount actions from transformation initiatives and reduced travel expenses, contributing to margin expansion.
- 4Employer Services segment revenues decreased by 3% due to lower new business bookings and pays per control, but segment earnings before income taxes increased by 1% due to expense reductions.
- 5PEO Services segment revenues increased by 4% to $1,095.9 million, largely driven by an increase in zero-margin benefits pass-throughs, despite a 3% decrease in worksite employees.
- 6The company maintained strong liquidity with $1.6 billion in cash and cash equivalents and access to substantial committed credit facilities.
- 7ADP repurchased approximately 1.7 million shares of common stock during the quarter, reflecting its commitment to shareholder returns.