Automatic Data Processing Inc.'s (ADP) fiscal fourth-quarter
earnings fell 41% absent a prior-year tax benefit as the
payroll-processing and human-resources outsourcing company saw
employees on clients' payrolls edge up and revenue increase.
President and Chief Executive Gary C. Butler said, "I am pleased
that the trends in our key business metrics turned positive as we
exited the year."
However, ADP projected earnings growth for the new year of 1% to
3% on revenue growth of 1% to 3%, while analysts forecast 5% and
4%, respectively, according to Thomson Reuters.
ADP and other staffing companies began to see the declines in
the number of workers on clients' payrolls moderate this year as
the economy have stabilized. Though mass layoffs have dropped from
last year, the U.S. unemployment rate has remained high. As the
economy recovers, the big driver will be generating new revenue
growth and the company was planning to expand its sales force in
the prior quarter.
In another sign of stabilization, fiscal third-quarter client
funds that are being processed by the companies were up on
increases in bonuses and unemployment withholding year-to-year,
which helps boost ADP's interest revenue.
For the quarter ended June 30, ADP reported a profit of $207.9
million, or 42 cents a share, down from $352.8 million, or 70
cents, a year earlier. The prior year included a $120 million tax
benefit. Revenue increased 4.4% to $2.2 billion.
Analysts most recently forecast earnings of 42 cents on revenue
of $2.14 billion.
Revenue at ADP's employer-services segment, by far its largest,
grew 4%. In the U.S., revenue rose slightly and employees on
clients' payrolls were up 0.3%.
Combined new business sold in its employer-services and
human-resources benefits outsourcing businesses rose 25%.
Its smaller human-resources outsourcing segment, which also
provides recruiting, posted revenue growth of 13% as employees on
clients' payrolls rose 8.5%.
Shares closed Wednesday at $42.10 and were inactive
premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com