ADP® (Nasdaq:ADP), a leading global provider of Human Capital
Management (HCM) solutions, today announced its second quarter
fiscal 2017 financial results, and provided an update to its fiscal
2017 outlook.
Second Quarter Fiscal 2017 Consolidated
Results
Compared to last year’s second quarter, revenues grew 6% to $3.0
billion, 7% on a constant dollar basis. Net earnings from
continuing operations grew 50% to $511 million, 49% on a constant
dollar basis. Adjusted EBIT grew 17% to $593 million, 16% on
a constant dollar basis. Adjusted EBIT margin increased about
180 basis points in the quarter to 19.8% driven by operational
efficiencies and slower growth in our selling expenses.
Diluted earnings per share from continuing operations increased to
$1.13, representing growth of 53% on a reported and constant dollar
basis. Adjusted diluted earnings per share from continuing
operations increased 20% to $0.87, 19% on a constant dollar basis,
and included a $0.01 tax benefit related to the adoption of new
stock-based compensation accounting guidance.
Constant dollar, adjusted EBIT, adjusted EBIT margin and
adjusted diluted earnings per share are non-GAAP financial
measures. For ADP’s definition of adjusted EBIT, see the
paragraph “Non-GAAP Financial Information” at the end of this
release. Please refer to the accompanying financial tables
for a reconciliation of non-GAAP financial measures to their
comparable GAAP measures.
“Overall, I am pleased with ADP’s second quarter results which
demonstrate the strength and stability of our business model.
We believe the client experience is a key component of our
success and that our investments and strategic initiatives are
continuing to have a positive impact on our business performance,”
said Carlos Rodriguez, president and chief executive officer,
ADP.
“ADP’s results reflect solid performance despite pressure from
new business bookings which declined 5% compared to last year’s
second quarter,” said Jan Siegmund, chief financial officer,
ADP. “This decline was driven by the continued difficult
grow-over related to the tailwinds from our fiscal 2016 sales of
additional modules related to the Affordable Care Act, and an
elevated level of buyer uncertainty around the November U.S.
elections. While below our expectations for the second
quarter, we believe this new business bookings pressure will begin
to subside as the year progresses.”
Second Quarter Fiscal 2017 Segment Results
Employer Services – Employer Services offers a comprehensive
range of HCM and human resources outsourcing solutions.
- Employer Services revenues increased 4% on a reported and
constant dollar basis when compared to last year’s second
quarter.
- The number of employees on ADP clients' payrolls in the United
States increased 2.3% for the second quarter when measured on a
same-store-sales basis for a subset of clients ranging from small
to large businesses.
- Employer Services client revenue retention was up 10 basis
points compared to last year’s second quarter.
- Employer Services segment margin increased approximately 150
basis points compared to last year’s second quarter. This
increase was primarily driven by operational efficiencies and
slower growth in our selling expenses.
PEO Services – PEO Services provides comprehensive employment
administration outsourcing solutions through a co-employment
relationship.
- PEO Services revenues increased 12% compared to last year’s
second quarter.
- PEO Services segment margin increased approximately 120 basis
points compared to last year’s second quarter, primarily driven by
operational efficiencies and slower growth in our selling
expenses.
- Average worksite employees paid by PEO Services increased 12%
for the quarter to approximately 452,000.
Interest on Funds Held for Clients – The safety, liquidity and
diversification of ADP clients’ funds are the foremost objectives
of the company’s investment strategy. Client funds are
invested in accordance with ADP’s prudent and conservative
investment guidelines and the credit quality of the investment
portfolio is predominantly AAA/AA.
- For the second quarter, interest on funds held for clients
increased 3% to $92 million from $89 million a year ago.
- Average client funds balances increased 2% in the second
quarter to $20.9 billion compared to $20.5 billion a year
ago.
- The average interest yield on client funds was 1.8% which was
about flat compared to a year ago.
Notable Subsequent Events
In January 2017, ADP acquired The Marcus Buckingham Company,
Inc. for total cash consideration at closing of approximately $70
million, and contingent consideration of up to $35 million, which
is payable over the next three years, subject to the achievement of
specified financial metrics and/or other conditions.
Fiscal 2017 Outlook
Certain components of ADP’s fiscal 2017 outlook and related
growth comparisons exclude the impact of the following items and
are discussed on an adjusted basis where applicable. Please
refer to the accompanying financial tables for a reconciliation of
these adjusted amounts to their closest comparable GAAP
measure.
- Fiscal 2016 first quarter pre-tax gain on sale of the
AdvancedMD business of $29 million
- Fiscal 2016 second quarter pre-tax gain on sale of a building
of $14 million
- Fiscal 2016 fourth quarter pre-tax workforce optimization
charge of $48 million
- Fiscal 2017 pre-tax restructuring charges of approximately $90
million, $41 million of which occurred in the first half of the
fiscal year, with the remaining $49 million expected to occur in
the latter part of the fiscal year
- Fiscal 2017 second quarter pre-tax gain on sale of the CHSA and
COBRA businesses of $205 million
ADP now assumes worldwide new business bookings to be about flat
with the $1.75 billion sold in fiscal 2016, compared to the prior
forecast of 4% to 6% growth. ADP now expects full year
revenue growth of about 6% compared to our prior forecast of 7% to
8% growth. This revenue forecast continues to include about
one percentage point of pressure from the disposition of our CHSA
and COBRA businesses.
Reflecting the tax benefit received in the second quarter, ADP
now anticipates an adjusted effective tax rate of 32.4% compared to
the prior forecast of 32.7%. ADP continues to expect full
year diluted earnings per share from continuing operations to grow
15% to 17%, and adjusted diluted earnings per share growth of 11%
to 13%. This earnings growth forecast still assumes an
adjusted EBIT margin expansion of about 50 basis points. The
forecast now assumes fiscal 2017 share repurchases of $1.2 to $1.4
billion funded by existing balance sheet cash, as compared to our
prior forecast of $1.0 to $1.4 billion.
Reportable Segments Fiscal 2017 Forecast
- For the Employer Services segment, ADP now anticipates revenue
growth of approximately 3% to 4% compared to the prior forecast of
approximately 4% to 5%. ADP now expects Employer Services
segment margin expansion of 25 to 50 basis points compared to our
prior forecast of about 50 basis points.
- ADP continues to expect pays per control to increase 2.5% for
the year.
- For the PEO Services segment, ADP now anticipates approximately
13% revenue growth compared to the prior forecast of 14% to
16%. ADP now expects PEO Services segment margin expansion of
at least 100 basis points compared to our prior forecast of about
75 basis points.
Client Funds Extended Investment Strategy Fiscal 2017
Forecast
The interest assumptions in our forecasts are based on Fed Funds
futures contracts and forward yield curves as of January 30,
2017. The Fed Funds futures contracts used in the client
short and corporate cash interest income forecasts assume an
increase in the Fed Funds rate in June 2017. The
three-and-a-half and five-year U.S. government agency rates based
on the forward yield curves as of January 30, 2017 were used to
forecast new purchase rates for the client and corporate extended,
and client long portfolios, respectively.
- Interest on funds held for clients is expected to increase $15
million, or about 4%, compared to the prior forecast of $5 to $10
million, or 2% to 3%. This is based on anticipated growth in
average client funds balances of approximately 3% from $22.4
billion in fiscal 2016 and an average yield which is anticipated to
be about flat at 1.7% compared to the fiscal 2016 average
yield.
- The total contribution from the client funds extended
investment strategy is now expected to be up $10 million compared
to our prior forecast of up $5 million compared with a year
ago.
Investor Webcast TodayADP will host a
conference call for financial analysts today, Wednesday, February
1, 2017 at 8:30 a.m. EST. The conference call will be webcast
live on ADP’s website at investors.adp.com and will be available
for replay following the call. A slide presentation will be
available shortly before the webcast.
Supplemental financial information including schedules of
quarterly and full year reportable segment revenues and earnings
for fiscal years 2015 and 2016 and the first two quarters of
fiscal 2017, as well as details of the first and second quarter
fiscal 2017 results from the client funds extended investment
strategy, are posted to ADP’s website at investors.adp.com.
ADP news releases, current financial information, SEC filings and
Investor Relations presentations are accessible at the same
website.
Non-GAAP Financial InformationThe company has
presented certain financial data that are considered non-GAAP
financial measures and are reconciled to their comparable GAAP
measures in the accompanying financial tables. The adjusted
EBIT performance measures include interest income earned on
investments associated with our client funds extended investment
strategy and interest expense on borrowings related to our client
funds extended investment strategy. ADP believes these
amounts to be fundamental to the underlying operations of our
business model. ADP’s calculation of adjusted EBIT may differ
from similarly titled measures used by other companies.
The presentation of growth rates on a constant dollar basis
represent a non-GAAP measure and are calculated by restating
current period results into U.S. dollars using the comparable prior
period’s foreign currency exchange rates.
About ADP (Nasdaq:ADP)Powerful technology plus
a human touch. Companies of all types and sizes around the
world rely on ADP’s cloud software and expert insights to help
unlock the potential of their people. HR. Talent. Benefits.
Payroll. Compliance. Working together to build a better
workforce. For more information, visit ADP.com.
|
Automatic Data Processing, Inc. and
Subsidiaries |
Statements of Consolidated Earnings |
(In millions, except per share amounts) |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenues, other than interest on funds |
|
|
|
|
|
|
|
|
|
|
held for clients and PEO revenues |
|
$ |
2,077.4 |
|
|
$ |
1,984.4 |
|
|
$ |
4,114.8 |
|
|
$ |
3,913.0 |
|
|
|
Interest on funds held for clients |
|
|
91.8 |
|
|
|
89.3 |
|
|
|
181.0 |
|
|
|
177.1 |
|
|
|
PEO revenues (A) (B) |
|
|
818.1 |
|
|
|
733.3 |
|
|
|
1,608.4 |
|
|
|
1,430.9 |
|
|
|
|
Total
revenues |
|
|
2,987.3 |
|
|
|
2,807.0 |
|
|
|
5,904.2 |
|
|
|
5,521.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
|
|
|
|
|
Operating expenses (B) |
|
|
1,560.4 |
|
|
|
1,479.4 |
|
|
|
3,091.9 |
|
|
|
2,919.3 |
|
|
|
Systems development & programming costs |
|
|
152.5 |
|
|
|
149.6 |
|
|
|
307.4 |
|
|
|
305.7 |
|
|
|
Depreciation & amortization |
|
|
54.9 |
|
|
|
53.5 |
|
|
|
112.2 |
|
|
|
104.0 |
|
|
|
|
Total
costs of revenues |
|
|
1,767.8 |
|
|
|
1,682.5 |
|
|
|
3,511.5 |
|
|
|
3,329.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
640.8 |
|
|
|
627.2 |
|
|
|
1,288.6 |
|
|
|
1,232.4 |
|
|
Interest expense |
|
|
20.5 |
|
|
|
16.8 |
|
|
|
40.4 |
|
|
|
21.8 |
|
|
|
|
Total
expenses |
|
|
2,429.1 |
|
|
|
2,326.5 |
|
|
|
4,840.5 |
|
|
|
4,583.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
(228.0 |
) |
|
|
(27.4 |
) |
|
|
(251.1 |
) |
|
|
(75.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income
taxes |
|
|
786.2 |
|
|
|
507.9 |
|
|
|
1,314.8 |
|
|
|
1,012.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
275.3 |
|
|
|
166.5 |
|
|
|
435.2 |
|
|
|
334.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings from continuing operations |
|
$ |
510.9 |
|
|
$ |
341.4 |
|
|
$ |
879.6 |
|
|
$ |
678.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from discontinued operations before income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.4 |
) |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
|
|
|
|
|
|
|
|
|
Net
earnings from discontinued operations |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
|
$ |
510.9 |
|
|
$ |
341.4 |
|
|
$ |
879.6 |
|
|
$ |
678.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from continuing operations |
|
$ |
1.14 |
|
|
$ |
0.75 |
|
|
$ |
1.95 |
|
|
$ |
1.48 |
|
|
Basic earnings per share from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.00 |
) |
|
Basic earnings per share |
|
$ |
1.14 |
|
|
$ |
0.75 |
|
|
$ |
1.95 |
|
|
$ |
1.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
|
$ |
1.13 |
|
|
$ |
0.74 |
|
|
$ |
1.94 |
|
|
$ |
1.47 |
|
|
Diluted earnings per share from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.00 |
) |
|
Diluted earnings per share |
|
$ |
1.13 |
|
|
$ |
0.74 |
|
|
$ |
1.94 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.570 |
|
|
$ |
0.530 |
|
|
$ |
1.100 |
|
|
$ |
1.020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Other income, net: |
|
|
|
|
|
|
|
|
|
Interest income on corporate funds |
|
$ |
(21.3 |
) |
|
$ |
(17.3 |
) |
|
$ |
(44.3 |
) |
|
$ |
(35.9 |
) |
|
Realized gains on available-for-sale securities |
|
|
(2.0 |
) |
|
|
(0.5 |
) |
|
|
(2.5 |
) |
|
|
(1.5 |
) |
|
Realized losses on available-for-sale securities |
|
|
0.7 |
|
|
|
4.3 |
|
|
|
1.1 |
|
|
|
5.3 |
|
|
Gain on sale of business |
|
|
(205.4 |
) |
|
|
— |
|
|
|
(205.4 |
) |
|
|
(29.1 |
) |
|
Gain on sale of building |
|
|
— |
|
|
|
(13.9 |
) |
|
|
— |
|
|
|
(13.9 |
) |
|
Total other income, net |
|
$ |
(228.0 |
) |
|
$ |
(27.4 |
) |
|
$ |
(251.1 |
) |
|
$ |
(75.1 |
) |
|
(A) Professional Employer Organization (“PEO”) revenues are
net of direct pass-through costs, primarily consisting of payroll
wages and payroll taxes of $9,145.5 million and $8,373.0 million
for the three months ended December 31, 2016 and 2015,
respectively, and $16,833.1 million and $15,238.2 million for the
six months ended December 31, 2016 and 2015, respectively. |
(B) PEO revenues and operating expenses include pass-through
costs associated with benefits coverage, workers' compensation
coverage, and state unemployment taxes for worksite employees of
$610.0 million and $554.0 million for the three months ended
December 31, 2016 and 2015, respectively, and $1,207.8 million and
$1,088.1 million for the six months ended December 31, 2016 and
2015, respectively. |
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
|
|
|
|
December 31, |
|
June 30, |
|
2016 |
|
2016 |
Assets |
|
|
|
Cash and
cash equivalents |
$ |
2,705.2 |
|
$ |
3,191.1 |
Other
current assets |
|
2,676.5 |
|
|
2,468.1 |
Total
current assets before funds held for clients |
|
5,381.7 |
|
|
5,659.2 |
Funds
held for clients |
|
30,426.4 |
|
|
33,841.2 |
Total
current assets |
|
35,808.1 |
|
|
39,500.4 |
|
|
|
|
Property, plant and equipment, net |
|
733.2 |
|
|
685.0 |
Other
non-current assets |
|
3,458.1 |
|
|
3,484.6 |
Total
assets |
$ |
39,999.4 |
|
$ |
43,670.0 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Other
current liabilities |
$ |
2,553.7 |
|
$ |
2,515.6 |
Client
funds obligations |
|
30,402.6 |
|
|
33,331.8 |
Total
current liabilities |
|
32,956.3 |
|
|
35,847.4 |
|
|
|
|
Long-term debt |
|
2,002.5 |
|
|
2,007.7 |
Other
non-current liabilities |
|
1,225.5 |
|
|
1,333.3 |
Total
liabilities |
|
36,184.3 |
|
|
39,188.4 |
|
|
|
|
Total
stockholders' equity |
|
3,815.1 |
|
|
4,481.6 |
Total
liabilities and stockholders' equity |
$ |
39,999.4 |
|
$ |
43,670.0 |
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Condensed
Statements of Consolidated Cash Flows |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
Six Months Ended |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
Cash Flows from
Operating Activities: |
|
|
|
Net
earnings |
$ |
879.6 |
|
|
$ |
678.0 |
|
Adjustments to reconcile net earnings to cash flows provided by
operating activities |
|
200.4 |
|
|
|
279.7 |
|
Changes
in operating assets and liabilities, net of effects from
acquisitions and divestitures of businesses |
|
(238.9 |
) |
|
|
(442.3 |
) |
Net cash flows
provided by operating activities |
|
841.1 |
|
|
|
515.4 |
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
Purchases and proceeds from corporate and client funds marketable
securities |
|
(481.5 |
) |
|
|
224.7 |
|
Net
decrease / (increase) in restricted cash and cash equivalents held
to satisfy client funds obligations |
|
3,213.0 |
|
|
|
(6,063.2 |
) |
Capital
expenditures |
|
(119.7 |
) |
|
|
(99.4 |
) |
Additions to intangibles |
|
(106.6 |
) |
|
|
(105.7 |
) |
Other
investing activities |
|
214.0 |
|
|
|
177.9 |
|
Net cash flows
provided by / (used in) investing activities |
|
2,719.2 |
|
|
|
(5,865.7 |
) |
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
Net
(decrease) / increase in client funds obligations |
|
(2,799.9 |
) |
|
|
5,793.6 |
|
Net
proceeds from debt issuance |
|
— |
|
|
|
1,986.3 |
|
Repurchases of common stock |
|
(765.3 |
) |
|
|
(773.0 |
) |
Dividends paid |
|
(482.3 |
) |
|
|
(458.8 |
) |
Other
financing activities |
|
18.2 |
|
|
|
(21.3 |
) |
Net cash flows
(used in) / provided by financing activities |
|
(4,029.3 |
) |
|
|
6,526.8 |
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
(16.9 |
) |
|
|
(20.9 |
) |
|
|
|
|
Net
change in cash and cash equivalents |
|
(485.9 |
) |
|
|
1,155.6 |
|
|
|
|
|
Cash and
cash equivalents, beginning of period |
|
3,191.1 |
|
|
|
1,639.3 |
|
Cash and
cash equivalents, end of period |
$ |
2,705.2 |
|
|
$ |
2,794.9 |
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
Cash
paid for interest |
$ |
39.2 |
|
|
$ |
4.3 |
|
Cash
paid for income taxes, net of income tax refunds |
$ |
332.6 |
|
|
$ |
311.9 |
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
|
|
|
|
Other Selected
Financial Data |
|
|
|
|
|
|
|
(Dollars in
millions, except per share amounts) |
|
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
|
% Change |
|
December 31, |
|
As |
|
Constant |
|
2016 |
|
2015 |
|
Reported |
|
Dollar Basis |
Revenues from
continuing operations |
|
|
|
|
|
|
|
Employer
Services |
$ |
2,309.3 |
|
|
$ |
2,212.6 |
|
|
4 |
% |
|
4 |
% |
PEO
Services |
|
822.9 |
|
|
|
737.4 |
|
|
12 |
% |
|
12 |
% |
Other |
|
(144.9 |
) |
|
|
(143.0 |
) |
|
n/m |
|
|
n/m |
|
Total
revenues from continuing operations |
$ |
2,987.3 |
|
|
$ |
2,807.0 |
|
|
6 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
Segment earnings from
continuing operations |
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
681.8 |
|
|
$ |
619.7 |
|
|
10 |
% |
|
9 |
% |
PEO
Services |
|
114.5 |
|
|
|
93.7 |
|
|
22 |
% |
|
22 |
% |
Other |
|
(10.1 |
) |
|
|
(205.5 |
) |
|
n/m |
|
|
n/m |
|
Total
pretax earnings from continuing operations |
$ |
786.2 |
|
|
$ |
507.9 |
|
|
55 |
% |
|
54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
Segment margin |
2016 |
|
2015 |
|
Change |
|
|
Employer
Services |
|
29.5 |
% |
|
|
28.0 |
% |
|
1.5 |
% |
|
|
PEO
Services |
|
13.9 |
% |
|
|
12.7 |
% |
|
1.2 |
% |
|
|
Other |
|
n/m |
|
|
|
n/m |
|
|
n/m |
|
|
|
Total
pretax margin |
|
26.3 |
% |
|
|
18.1 |
% |
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
% Change |
|
December 31, |
|
As |
|
Constant |
|
2016 |
|
2015 |
|
Reported |
|
Dollar Basis |
Segment revenues from
continuing operations |
|
|
|
|
|
|
|
Employer
Services |
$ |
4,570.6 |
|
|
$ |
4,343.4 |
|
|
5 |
% |
|
5 |
% |
PEO
Services |
|
1,617.6 |
|
|
|
1,438.9 |
|
|
12 |
% |
|
12 |
% |
Other |
|
(284.0 |
) |
|
|
(261.3 |
) |
|
n/m |
|
|
n/m |
|
Total
revenues from continuing operations |
$ |
5,904.2 |
|
|
$ |
5,521.0 |
|
|
7 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
Segment earnings from
continuing operations |
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
1,338.4 |
|
|
$ |
1,190.0 |
|
|
12 |
% |
|
12 |
% |
PEO
Services |
|
221.5 |
|
|
|
182.0 |
|
|
22 |
% |
|
22 |
% |
Other |
|
(245.1 |
) |
|
|
(359.1 |
) |
|
n/m |
|
|
n/m |
|
Total
pretax earnings from continuing operations |
$ |
1,314.8 |
|
|
$ |
1,012.9 |
|
|
30 |
% |
|
29 |
% |
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
Segment margin |
2016 |
|
2015 |
|
Change |
|
|
Employer
Services |
|
29.3 |
% |
|
|
27.4 |
% |
|
1.9 |
% |
|
|
PEO
Services |
|
13.7 |
% |
|
|
12.6 |
% |
|
1.0 |
% |
|
|
Other |
|
n/m |
|
|
|
n/m |
|
|
n/m |
|
|
|
Total
pretax margin |
|
22.3 |
% |
|
|
18.3 |
% |
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
% Change |
|
December 31, |
|
As |
|
Constant |
Earnings per share
information: |
|
2016 |
|
|
|
2015 |
|
|
Reported |
|
Dollar Basis |
Net
earnings from continuing operations |
$ |
510.9 |
|
|
$ |
341.4 |
|
|
50 |
% |
|
49 |
% |
Net
earnings |
$ |
510.9 |
|
|
$ |
341.4 |
|
|
50 |
% |
|
49 |
% |
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
|
447.9 |
|
|
|
457.6 |
|
|
(2 |
)% |
|
n/a |
|
Basic
earnings per share from continuing operations |
$ |
1.14 |
|
|
$ |
0.75 |
|
|
53 |
% |
|
52 |
% |
Basic
earnings per share |
$ |
1.14 |
|
|
$ |
0.75 |
|
|
53 |
% |
|
52 |
% |
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding |
|
450.3 |
|
|
|
460.3 |
|
|
(2 |
)% |
|
n/a |
|
Diluted
earnings per share from continuing operations |
$ |
1.13 |
|
|
$ |
0.74 |
|
|
53 |
% |
|
53 |
% |
Diluted
earnings per share |
$ |
1.13 |
|
|
$ |
0.74 |
|
|
53 |
% |
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
% Change |
|
December 31, |
|
As |
|
Constant |
Earnings per share
information: |
|
2016 |
|
|
|
2015 |
|
|
Reported |
|
Dollar Basis |
Net
earnings from continuing operations |
$ |
879.6 |
|
|
$ |
678.9 |
|
|
30 |
% |
|
29 |
% |
Net
earnings |
$ |
879.6 |
|
|
$ |
678.0 |
|
|
30 |
% |
|
29 |
% |
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
|
450.1 |
|
|
|
460.0 |
|
|
(2 |
)% |
|
n/a |
|
Basic
earnings per share from continuing operations |
$ |
1.95 |
|
|
$ |
1.48 |
|
|
32 |
% |
|
31 |
% |
Basic
earnings per share |
$ |
1.95 |
|
|
$ |
1.47 |
|
|
33 |
% |
|
32 |
% |
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding |
|
452.7 |
|
|
|
462.9 |
|
|
(2 |
)% |
|
n/a |
|
Diluted
earnings per share from continuing operations |
$ |
1.94 |
|
|
$ |
1.47 |
|
|
32 |
% |
|
31 |
% |
Diluted
earnings per share |
$ |
1.94 |
|
|
$ |
1.46 |
|
|
33 |
% |
|
32 |
% |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
Key Statistics: |
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Internal
revenue growth: |
|
|
|
|
|
|
|
Employer
Services |
|
5 |
% |
|
|
3 |
% |
|
|
|
|
PEO
Services |
|
12 |
% |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Internal
revenue growth - Constant Dollar Basis: |
|
|
|
|
|
|
|
Employer
Services |
|
5 |
% |
|
|
6 |
% |
|
|
|
|
PEO
Services |
|
12 |
% |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services: |
|
|
|
|
|
|
|
Change in
pays per control - U.S. |
|
2.3 |
% |
|
|
2.5 |
% |
|
|
|
|
Change in
client revenue retention percentage - worldwide |
0.1 pts |
|
(1.2) pts |
|
|
|
|
Employer
Services/PEO new business bookings growth - worldwide |
|
(5 |
)% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
PEO
Services: |
|
|
|
|
|
|
|
Paid PEO
worksite employees at end of period |
|
457,000 |
|
|
|
405,000 |
|
|
|
|
|
Average
paid PEO worksite employees during the period |
|
452,000 |
|
|
|
403,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
Key Statistics: |
|
2016 |
|
|
|
2015 |
|
|
|
|
|
Internal
revenue growth: |
|
|
|
|
|
|
|
Employer
Services |
|
5 |
% |
|
|
3 |
% |
|
|
|
|
PEO
Services |
|
12 |
% |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Internal
revenue growth - Constant Dollar Basis: |
|
|
|
|
|
|
|
Employer
Services |
|
5 |
% |
|
|
6 |
% |
|
|
|
|
PEO
Services |
|
12 |
% |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services: |
|
|
|
|
|
|
|
Change in
pays per control - U.S. |
|
2.5 |
% |
|
|
2.4 |
% |
|
|
|
|
Change in
client revenue retention percentage - worldwide |
(.4) pts |
|
(1.4) pts |
|
|
|
|
Employer
Services/PEO new business bookings growth - worldwide |
|
(3 |
)% |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
PEO
Services: |
|
|
|
|
|
|
|
Paid PEO
worksite employees at end of period |
|
457,000 |
|
|
|
405,000 |
|
|
|
|
|
Average
paid PEO worksite employees during the period |
|
445,000 |
|
|
|
396,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
Other Selected Financial Data, Continued |
(Dollars in millions, except per share amounts or where
otherwise stated) |
(Unaudited) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
|
2016 |
|
2015 |
|
Change |
|
% Change |
Average
investment balances at cost (in billions): |
|
|
|
|
|
|
|
Corporate, other than corporate extended |
$ |
2.5 |
|
|
$ |
2.8 |
|
|
$ |
(0.3 |
) |
|
(11 |
)% |
Corporate
extended |
|
4.5 |
|
|
|
3.6 |
|
|
|
0.9 |
|
|
25 |
% |
Total
corporate |
|
7.0 |
|
|
|
6.4 |
|
|
|
0.6 |
|
|
9 |
% |
Funds
held for clients |
|
20.9 |
|
|
|
20.5 |
|
|
|
0.4 |
|
|
2 |
% |
Total |
$ |
27.9 |
|
|
$ |
27.0 |
|
|
$ |
1.0 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
Average
interest rates earned exclusive of realized losses (gains) on: |
|
|
|
|
|
|
|
Corporate, other than corporate extended |
|
0.7 |
% |
|
|
0.4 |
% |
|
|
|
|
Corporate
extended |
|
1.5 |
% |
|
|
1.6 |
% |
|
|
|
|
Total
corporate |
|
1.2 |
% |
|
|
1.1 |
% |
|
|
|
|
Funds
held for clients |
|
1.8 |
% |
|
|
1.7 |
% |
|
|
|
|
Total |
|
1.6 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gain position at end of period |
$ |
24.2 |
|
|
$ |
99.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
short-term financing (in billions): |
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
$ |
4.2 |
|
|
$ |
3.3 |
|
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.3 |
|
|
|
0.3 |
|
|
|
|
|
|
$ |
4.5 |
|
|
$ |
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates paid on: |
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
|
0.5 |
% |
|
|
0.2 |
% |
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.5 |
% |
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on funds held for clients |
$ |
91.8 |
|
|
$ |
89.3 |
|
|
$ |
2.5 |
|
|
3 |
% |
Corporate extended interest income (C) |
|
17.0 |
|
|
|
14.2 |
|
|
|
2.8 |
|
|
20 |
% |
Corporate interest expense-short-term financing (C) |
|
(5.5 |
) |
|
|
(1.7 |
) |
|
|
(3.8 |
) |
|
(217 |
)% |
|
$ |
103.3 |
|
|
$ |
101.7 |
|
|
$ |
1.6 |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
|
2016 |
|
2015 |
|
Change |
|
% Change |
Average
investment balances at cost (in billions): |
|
|
|
|
|
|
|
Corporate, other than corporate extended |
$ |
2.7 |
|
|
$ |
2.3 |
|
|
$ |
0.5 |
|
|
21 |
% |
Corporate
extended |
|
4.5 |
|
|
|
3.8 |
|
|
|
0.7 |
|
|
17 |
% |
Total
corporate |
|
7.2 |
|
|
|
6.1 |
|
|
|
1.1 |
|
|
19 |
% |
Funds
held for clients |
|
20.5 |
|
|
|
20.0 |
|
|
|
0.5 |
|
|
3 |
% |
Total |
$ |
27.7 |
|
|
$ |
26.0 |
|
|
$ |
1.6 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
Average
interest rates earned exclusive of realized losses (gains) on: |
|
|
|
|
|
|
|
Corporate, other than corporate extended |
|
0.7 |
% |
|
|
0.4 |
% |
|
|
|
|
Corporate
extended |
|
1.6 |
% |
|
|
1.6 |
% |
|
|
|
|
Total
corporate |
|
1.2 |
% |
|
|
1.2 |
% |
|
|
|
|
Funds
held for clients |
|
1.8 |
% |
|
|
1.8 |
% |
|
|
|
|
Total |
|
1.6 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gain position at end of period |
$ |
24.2 |
|
|
$ |
99.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
short-term financing (in billions): |
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
$ |
4.2 |
|
|
$ |
3.4 |
|
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.3 |
|
|
|
0.4 |
|
|
|
|
|
|
$ |
4.5 |
|
|
$ |
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates paid on: |
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
|
0.5 |
% |
|
|
0.2 |
% |
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.5 |
% |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on funds held for clients |
$ |
181.0 |
|
|
$ |
177.1 |
|
|
$ |
3.9 |
|
|
2 |
% |
Corporate extended interest income (C) |
|
35.1 |
|
|
|
30.8 |
|
|
|
4.3 |
|
|
14 |
% |
Corporate interest expense-short-term financing (C) |
|
(10.5 |
) |
|
|
(3.6 |
) |
|
|
(6.8 |
) |
|
(188 |
)% |
|
$ |
205.7 |
|
|
$ |
204.3 |
|
|
$ |
1.4 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
(C) While “Corporate extended interest income” and “Corporate
interest expense-short-term financing,” related to our client funds
investment strategy, are non-GAAP measures, management believes
this information is beneficial to reviewing the financial
statements of ADP. Management believes this information is
beneficial as it allows the reader to understand the extended
investment strategy for ADP's client funds assets, corporate
investments, and short-term borrowings. A reconciliation of
the non-GAAP measures to GAAP measures is as follows: |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate extended interest income |
$ |
17.0 |
|
|
$ |
14.2 |
|
|
|
|
|
All
other interest income |
|
4.4 |
|
|
|
3.0 |
|
|
|
|
|
Total
interest income on corporate funds |
$ |
21.3 |
|
|
$ |
17.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate interest expense-short-term financing |
$ |
5.5 |
|
|
$ |
1.7 |
|
|
|
|
|
All
other interest expense |
|
14.9 |
|
|
|
15.1 |
|
|
|
|
|
Total
interest expense |
$ |
20.5 |
|
|
$ |
16.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate extended interest income |
$ |
35.1 |
|
|
$ |
30.8 |
|
|
|
|
|
All
other interest income |
|
9.2 |
|
|
|
5.0 |
|
|
|
|
|
Total
interest income on corporate funds |
$ |
44.3 |
|
|
$ |
35.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate interest expense-short-term financing |
$ |
10.5 |
|
|
$ |
3.6 |
|
|
|
|
|
All
other interest expense |
|
29.9 |
|
|
|
18.1 |
|
|
|
|
|
Total
interest expense |
$ |
40.4 |
|
|
$ |
21.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
Consolidated Statement of Adjusted / Non-GAAP Financial
Information |
|
(in millions, except per share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within the tables above and below, we use the term "constant
dollar basis" so that certain financial measures can be viewed
without the impact of foreign currency fluctuations to facilitate
period-to-period comparisons of business performance. The
financial results on a "constant dollar basis" are determined by
calculating the current year result using foreign exchange rates
consistent with the prior year. We believe "constant dollar
basis" provides information that isolates the actual growth of our
operations. Our constant dollar results are not measures of
performance calculated in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP")
and should not be considered in isolation from, as a substitute
for, or superior to the U.S. GAAP measures presented. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table reconciles our reported results to adjusted results
which exclude one or more of the following: our provision for
income taxes, certain interest amounts, the charges related to our
Service Alignment Initiative, the gain on the sale of our CHSA and
COBRA businesses in fiscal 2017, and the gain on sale of a building
and the gain on the sale of our AdvancedMD ("AMD") business in
fiscal 2016. We use certain adjusted results, among other measures,
to evaluate our operating performance in the absence of certain
items and for planning and forecasting of future periods. We
believe that the exclusion of these items helps us reflect the
fundamentals of our underlying business model and analyze results
against our expectations, against prior period, and to plan for
future periods by focusing on our underlying operations. We believe
that these adjusted results provide relevant and useful information
for investors because it allows investors to view performance in a
manner similar to the method used by management and improves their
ability to understand and assess our operating performance.
Generally, the nature of these exclusions are for specific items
that are not fundamental to our underlying business operations.
Specifically, we have excluded the impact of certain interest
expense and certain interest income from adjusted earnings from
continuing operations before interest and income taxes ("Adjusted
EBIT"). We continue to include the interest income earned on
investments associated with our client funds extended investment
strategy and interest expense on borrowings related to our client
funds extended investment strategy as we believe these amounts to
be fundamental to the underlying operations of our business model.
The amounts included as adjustments in the table below represent
the interest income and interest expense that is not related to our
client funds extended investment strategy and are labeled as "All
other interest expense" and "All other interest income." The
majority of charges related to our Service Alignment Initiative
represent severance charges. Severance charges have been taken in
the past and not included as an adjustment to get to adjusted
results. Unlike severance charges in prior periods, these specific
charges relate to a broad-based, company-wide Service Alignment
Initiative. Since Adjusted EBIT, Adjusted provision for income
taxes, Adjusted net earnings from continuing operations, Adjusted
diluted earnings per share ("Adjusted diluted EPS") from continuing
operations, Adjusted EBIT margin and Adjusted effective tax rate
are not measures of performance calculated in accordance with U.S.
GAAP, they should not be considered in isolation from, as a
substitute for, or superior to earnings from continuing operations
before income taxes, provision for income taxes, net earnings from
continuing operations and diluted earnings per share ("Diluted
EPS") from continuing operations and they may not be comparable to
similarly titled measures used by other companies. |
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
December 31, |
|
% Change |
|
December 31, |
|
% Change |
|
|
|
2016 |
|
|
|
2015 |
|
|
As Reported |
|
Constant Dollar Basis |
|
|
2016 |
|
|
|
2015 |
|
|
As Reported |
|
Constant Dollar Basis |
Net
earnings from continuing operations |
|
$ |
510.9 |
|
|
$ |
341.4 |
|
|
50 |
% |
|
49 |
% |
|
$ |
879.6 |
|
|
$ |
678.9 |
|
|
30 |
% |
|
29 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
275.3 |
|
|
|
166.5 |
|
|
|
|
|
|
|
435.2 |
|
|
|
334.0 |
|
|
|
|
|
All other
interest expense |
|
|
14.9 |
|
|
|
15.1 |
|
|
|
|
|
|
|
29.9 |
|
|
|
18.1 |
|
|
|
|
|
All other
interest income |
|
|
(4.4 |
) |
|
|
(3.0 |
) |
|
|
|
|
|
|
(9.2 |
) |
|
|
(5.0 |
) |
|
|
|
|
Gain on
sale of business |
|
|
(205.4 |
) |
|
|
— |
|
|
|
|
|
|
|
(205.4 |
) |
|
|
(29.1 |
) |
|
|
|
|
Gain on
sale of building |
|
|
— |
|
|
|
(13.9 |
) |
|
|
|
|
|
|
— |
|
|
|
(13.9 |
) |
|
|
|
|
Service Alignment Initiative |
|
|
1.2 |
|
|
|
— |
|
|
|
|
|
|
|
41.1 |
|
|
|
— |
|
|
|
|
|
Adjusted
EBIT |
|
$ |
592.5 |
|
|
$ |
506.1 |
|
|
17 |
% |
|
16 |
% |
|
$ |
1,171.2 |
|
|
$ |
983.0 |
|
|
19 |
% |
|
18 |
% |
Adjusted
EBIT Margin |
|
|
19.8 |
% |
|
|
18.0 |
% |
|
|
|
|
|
|
19.8 |
% |
|
|
17.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
$ |
275.3 |
|
|
$ |
166.5 |
|
|
65 |
% |
|
65 |
% |
|
$ |
435.2 |
|
|
$ |
334.0 |
|
|
30 |
% |
|
30 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business (a) |
|
|
(84.0 |
) |
|
|
— |
|
|
|
|
|
|
|
(84.0 |
) |
|
|
(7.3 |
) |
|
|
|
|
Gain on
sale of building (b) |
|
|
— |
|
|
|
(5.3 |
) |
|
|
|
|
|
|
— |
|
|
|
(5.3 |
) |
|
|
|
|
Service Alignment Initiative (b) |
|
|
0.4 |
|
|
|
— |
|
|
|
|
|
|
|
15.5 |
|
|
|
— |
|
|
|
|
|
Adjusted
provision for income taxes |
|
$ |
191.7 |
|
|
$ |
161.2 |
|
|
19 |
% |
|
18 |
% |
|
$ |
366.7 |
|
|
$ |
321.4 |
|
|
14 |
% |
|
13 |
% |
Adjusted
effective tax rate (c) |
|
|
32.9 |
% |
|
|
32.6 |
% |
|
|
|
|
|
|
31.9 |
% |
|
|
33.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings from continuing operations |
|
$ |
510.9 |
|
|
$ |
341.4 |
|
|
50 |
% |
|
49 |
% |
|
$ |
879.6 |
|
|
$ |
678.9 |
|
|
30 |
% |
|
29 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business |
|
|
(205.4 |
) |
|
|
— |
|
|
|
|
|
|
|
(205.4 |
) |
|
|
(29.1 |
) |
|
|
|
|
Gain on
sale of building |
|
|
— |
|
|
|
(13.9 |
) |
|
|
|
|
|
|
— |
|
|
|
(13.9 |
) |
|
|
|
|
Service
Alignment Initiative |
|
|
1.2 |
|
|
|
— |
|
|
|
|
|
|
|
41.1 |
|
|
|
— |
|
|
|
|
|
Provision
for income taxes on gain on sale of business (a) |
|
|
84.0 |
|
|
|
— |
|
|
|
|
|
|
|
84.0 |
|
|
|
7.3 |
|
|
|
|
|
Provision
for income taxes on gain on sale of building (b) |
|
|
— |
|
|
|
5.3 |
|
|
|
|
|
|
|
— |
|
|
|
5.3 |
|
|
|
|
|
Income tax benefit for Service Alignment Initiative (b) |
|
|
(0.4 |
) |
|
|
— |
|
|
|
|
|
|
|
(15.5 |
) |
|
|
— |
|
|
|
|
|
Adjusted
net earnings from continuing operations |
|
$ |
390.3 |
|
|
$ |
332.8 |
|
|
17 |
% |
|
17 |
% |
|
$ |
783.8 |
|
|
$ |
648.5 |
|
|
21 |
% |
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share from continuing operations |
|
$ |
1.13 |
|
|
$ |
0.74 |
|
|
53 |
% |
|
53 |
% |
|
$ |
1.94 |
|
|
$ |
1.47 |
|
|
32 |
% |
|
31 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business |
|
|
(0.27 |
) |
|
|
— |
|
|
|
|
|
|
|
(0.27 |
) |
|
|
(0.05 |
) |
|
|
|
|
Gain on
sale of building |
|
|
— |
|
|
|
(0.02 |
) |
|
|
|
|
|
|
— |
|
|
|
(0.02 |
) |
|
|
|
|
Service Alignment Initiative |
|
|
0.00 |
|
|
|
— |
|
|
|
|
|
|
|
0.06 |
|
|
|
— |
|
|
|
|
|
Adjusted
diluted earnings per share from continuing operations |
|
$ |
0.87 |
|
|
$ |
0.72 |
|
|
20 |
% |
|
19 |
% |
|
$ |
1.73 |
|
|
$ |
1.40 |
|
|
24 |
% |
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) - The taxes on the gains on the sale of the businesses
were calculated based on the annualized marginal rate in effect
during the quarter of the adjustment. The tax amount was
adjusted for a book vs. tax basis difference for the period ended
December 31, 2016 due to the derecognition of goodwill upon
the sale of the business and for the period ended December 31,
2015 due to a previously recorded non tax-deductible goodwill
impairment charge. |
|
(b) - The tax benefit/provision on the Service Alignment
Initiative and the gain on the sale of the building was calculated
based on the annualized marginal rate in effect during the quarter
of the adjustment. |
|
(c) - The Adjusted effective tax rate is calculated as our
Adjusted provision for income taxes divided by our Adjusted net
earnings from continuing operations plus our Adjusted provision for
income taxes. |
Automatic Data Processing, Inc. and
Subsidiaries |
Fiscal 2017 GAAP to Non-GAAP Guidance
Reconciliation |
(Unaudited) |
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Fiscal 2017 |
|
|
|
June 30, 2016 |
|
Forecast |
|
Earnings from
continuing operations before income taxes margin (GAAP) |
|
$ |
2,234.7 |
|
19.2 |
% |
|
~+140bps |
|
|
Adjustments: |
|
|
|
|
|
|
|
All
other interest expense |
|
|
47.9 |
|
+40bps |
|
|
+5bps |
|
(a) |
All
other interest income |
|
|
(13.6 |
) |
(10)bps |
|
|
- |
|
(b) |
Gain
on sale of AMD - 1Q F16 |
|
|
(29.1 |
) |
(25)bps |
|
|
+25bps |
|
(c) |
Gain
on sale of building - 2Q F16 |
|
|
(13.9 |
) |
(10)bps |
|
|
+10bps |
|
(d) |
Workforce optimization effort - 4Q F16 |
|
|
48.2 |
|
+40bps |
|
|
(40)bps |
|
(e) |
Service alignment initiative - F17 |
|
|
- |
|
- |
|
|
~+70bps |
|
(f) |
Gain
on sale of CHSA and COBRA businesses - 2Q F17 |
|
|
- |
|
- |
|
|
(160)bps |
|
(g) |
Adjusted EBIT margin (Non-GAAP) |
|
$ |
2,274.2 |
|
19.5 |
% |
|
~+50 bps |
|
|
|
|
|
|
|
|
|
Effective tax rate (GAAP) |
|
|
33.2 |
% |
|
32.9 |
% |
|
Adjustments: |
|
|
|
|
|
|
Gain
on sale of AMD - 1Q F16 |
|
|
+0.11 |
% |
|
- |
|
|
Gain
on sale of building - 2Q F16 |
|
|
(0.03 |
%) |
|
- |
|
|
Workforce optimization effort - 4Q F16 |
|
|
+0.02 |
% |
|
- |
|
|
Service alignment initiative - F17 |
|
|
- |
|
|
+0.2 |
% |
|
Gain
on sale of CHSA and COBRA businesses - 2Q F17 |
|
|
- |
|
|
(0.7 |
%) |
|
Adjusted effective tax rate (Non-GAAP) |
|
|
33.3 |
% |
|
32.4 |
% |
|
|
|
|
|
|
|
|
Diluted
earnings per share from continuing operations (GAAP) |
|
$ |
3.25 |
|
12 |
% |
|
15% -
17 |
% |
|
Adjustments: |
|
|
|
|
|
|
Gain
on sale of AMD - 1Q F16 |
|
|
(0.05 |
) |
(1 |
%) |
|
+1 |
% |
(c) |
Gain
on sale of building - 2Q F16 |
|
|
(0.02 |
) |
(1 |
%) |
|
+1 |
% |
(d) |
Workforce optimization effort - 4Q F16 |
|
|
0.07 |
|
+2 |
% |
|
(2 |
%) |
(e) |
Service alignment initiative - F17 |
|
|
- |
|
- |
|
|
~+4 |
% |
(f) |
Gain
on sale of CHSA and COBRA businesses - 2Q F17 |
|
|
- |
|
- |
|
|
(8 |
%) |
(g) |
Adjusted diluted earnings per share from continuing
operations (Non-GAAP) |
|
$ |
3.26 |
|
13 |
% |
|
11% - 13 |
% |
|
|
|
|
|
|
|
|
a) No
material impact is expected from change in all other interest
expense in fiscal 2017 |
|
|
|
|
|
|
b) No
material impact is expected from change in all other interest
income in fiscal 2017 |
|
|
|
|
|
|
c) First
quarter fiscal 2016 gain on sale of AdvancedMD business will not
recur in fiscal 2017 |
|
|
|
|
|
|
d) Second quarter fiscal 2016 gain on sale of building is not
expected to recur in fiscal 2017 |
|
|
e) Fourth quarter fiscal 2016 impact of workforce optimization
effort is not expected to recur in fiscal 2017 |
|
|
f) Impact of Fiscal 2017 charges in connection with the
service alignment initiative: ~$41 million incurred in 1H F17, ~$49
million expected in the remainder of the year |
g)
Second quarter fiscal 2017 impact from gain on the sale of CHSA and
COBRA businesses |
|
|
|
|
|
Safe Harbor Statement
This document and other written or oral statements made from
time to time by ADP may contain “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements that are not historical in nature and which may be
identified by the use of words like “expects,” “assumes,”
“projects,” “anticipates,” “estimates,” “we believe,” “could” “is
designed to” and other words of similar meaning, are
forward-looking statements. These statements are based on
management’s expectations and assumptions and depend upon or refer
to future events or conditions and are subject to risks and
uncertainties that may cause actual results to differ materially
from those expressed. Factors that could cause actual results to
differ materially from those contemplated by the forward-looking
statements or that could contribute to such difference include:
ADP's success in obtaining and retaining clients, and selling
additional services to clients; the pricing of products and
services; compliance with existing or new legislation or
regulations; changes in, or interpretations of, existing
legislation or regulations; overall market, political and economic
conditions, including interest rate and foreign currency trends;
competitive conditions; our ability to maintain our current credit
ratings and the impact on our funding costs and profitability;
security or privacy breaches, fraudulent acts, and system
interruptions and failures; employment and wage levels; changes in
technology; availability of skilled technical associates; and the
impact of new acquisitions and divestitures. ADP disclaims any
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law. These risks and uncertainties, along with the
risk factors discussed under “Item 1A. - Risk Factors” in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2016
should be considered in evaluating any forward-looking statements
contained herein.
ADP and the ADP logo are registered trademarks of ADP,
LLC. ADP A more human resource. is a service mark of ADP,
LLC. All other marks are the property of their respective
owners. Copyright © 2017 ADP, LLC. All rights reserved.
ADP-Investor Relations
Investor Relations Contacts:
Christian Greyenbuhl
973.974.7835
Christian.Greyenbuhl@ADP.com
Byron Stephen
973.974.7896
Byron.Stephen@ADP.com
Media Contact:
Andy Hilton
973.974.4462
Andy.Hilton@ADP.com
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