Automatic Data Processing Inc.'s (ADP) fiscal third-quarter
profit grew 5% as new business sales grew for Employer Services and
PEO Services, while the company added client revenue retention
during the key calendar year-end period was strong.
The company Monday also raised its current-year forecast, seeing
earnings from continuing operations rising 6% to 7% and revenue
growth, excluding acquisitions, of about 6%. In January, ADP had
projected 5% growth for each metric.
The payroll-processing and human-resources-outsourcing company
has seen results stabilize recently, though higher expenses due to
headcount additions and acquisition activity have weighed on the
bottom line. Meanwhile, the U.S. unemployment rate remains high,
although ADP has reported private-sector payrolls have expanded
each month since October 2010.
For the quarter ended March 31, ADP reported a profit of $423.8
million, or 85 cents a share, up from $403.6 million, or 80 cents a
share, a year earlier. Revenue climbed 12% to $2.74 billion.
Analysts surveyed by Thomson Reuters had expected a profit of 85
cents on revenue of $2.66 billion.
Gross margin narrowed to 44.4% from 45.5%.
Revenue at the company's employer-services segment, by far its
biggest by sales, increased 8.8%. In the U.S., revenue from ADP's
traditional payroll and payroll tax filing business was up 5%. New
business sales for Employer Services and PEO Services increased
13%.
Shares fell 0.9% to $54.20 in after-hours trading.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com