ADP® (Nasdaq:ADP), a leading global provider of Human Capital
Management (HCM) solutions, today announced its second quarter
fiscal 2018 financial results, and provided an update to its fiscal
2018 outlook.
Second Quarter Fiscal 2018 Consolidated
Results
Compared to last year’s second quarter, revenues grew 8% to $3.2
billion, 7% organic. Net earnings were ahead of Company
expectations but declined 8% to $468 million primarily due to the
prior year second quarter $205 million pre-tax gain on the sale of
the CHSA and COBRA businesses. Earnings before income tax
declined to $566 million, or 28%. Adjusted earnings before
income tax increased to $602 million, or 2%. Adjusted EBIT
margin declined about 120 basis points in the quarter to 18.6% due
to pressure from higher pass-through revenues and acquisitions. The
enactment of the Tax Cuts and Jobs Act helped reduce the effective
tax rate for the quarter to 17.4%, and 25.6% on an adjusted basis.
This adjusted effective tax rate excludes a one-time net benefit of
approximately $46 million related to the revaluation of U.S.
deferred tax balances partially offset by a one-time transition tax
and the recording of a valuation allowance against our foreign tax
credits. Diluted earnings per share declined 7% to $1.05. Adjusted
diluted earnings per share increased 14% to $0.99.
“The world of work is going through transformative changes and
we are continuing to evolve our solutions to meet our clients’
dynamic needs,” said Carlos Rodriguez, President and Chief
Executive Officer, ADP. “With the recent acquisitions of Global
Cash Card and WorkMarket we have further solidified our strategy of
being the leading provider of HCM solutions across the entire
workforce as we now comprehensively address the growing importance
of freelance workers for our clients.”
“ADP delivered strong results in the quarter, posting solid
revenue, bookings and adjusted EPS growth. Based on the performance
in the first half of the year, and the ongoing benefit we expect
from corporate tax reform, we are raising our full year adjusted
EPS guidance to 12% to 13% growth,” said Jan Siegmund, Chief
Financial Officer, ADP.
Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings
per share, adjusted effective tax rate, and organic revenue are all
non-GAAP financial measures. Please refer to the accompanying
financial tables at the end of this release for a discussion of why
ADP believes these measures are important and for a reconciliation
of non-GAAP financial measures to their comparable GAAP financial
measures.
Second Quarter Fiscal 2018 Segment Results
Employer Services – Employer Services offers a comprehensive
range of HCM and human resources outsourcing solutions.
- Employer Services revenues increased 6% on a reported basis, 4%
organic compared to last year’s second quarter.
- The number of employees on ADP clients' payrolls in the United
States increased 2.6% 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 declined 20 basis
points compared to last year’s second quarter.
- Employer Services segment margin decreased approximately 50
basis points compared to last year’s second quarter. This
decrease resulted primarily from approximately 70 basis points of
pressure from acquisitions and foreign currency.
PEO Services – PEO Services provides comprehensive employment
administration outsourcing solutions through a co-employment
relationship.
- PEO Services revenues increased 15% compared to last year’s
second quarter driven primarily by a 10% increase in average
worksite employees for the quarter and higher than expected growth
in pass-through revenues.
- PEO Services segment margin declined approximately 30 basis
points compared to last year’s second quarter, primarily driven by
pressure from higher pass-through revenues.
- Average worksite employees paid by PEO Services were about
498,000 and we ended the quarter with about 504,000 worksite
employees.
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 16% to $107 million from $92 million a year ago.
- Average client funds balances increased 7% in the second
quarter to $22.5 billion compared to $20.9 billion a year
ago.
- For the second quarter, the average interest yield on client
funds was 1.9% which was up 10 basis points compared to a year
ago.
Notable Subsequent Events
The composition of work is increasingly moving toward the
freelance, or “gig,” worker and it is with this evolution in mind
that ADP acquired WorkMarket, a leading provider of cloud-based
freelance management solutions. With this acquisition, ADP
has expanded its market opportunities while building on its current
portfolio of industry-leading payroll and HCM solutions that help
clients and workers modernize the way work gets done, while
unlocking productivity, engagement, and growth. The purchase price
of this acquisition was approximately $125 million.
Fiscal 2018 Outlook
Certain components of ADP’s fiscal 2018 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 2017 pre-tax restructuring charges of $90 million
related to our Service Alignment Initiative.
- Fiscal 2017 second quarter pre-tax gain on the sale of the CHSA
and COBRA businesses of $205 million.
- Anticipated fiscal 2018 pre-tax restructuring charges of about
$25 million related to our Service Alignment Initiative.
- Fiscal 2018 pre-tax proxy contest charges of about $33
million.
- Fiscal 2018 second quarter one-time net tax benefit of about
$46 million from the Tax Cuts and Jobs Act.
ADP now anticipates full-year fiscal 2018 revenue growth of 7%
to 8% compared to the prior forecast of 6% to 8%. This revenue
forecast continues to include approximately one percentage point of
growth from acquisitions and the impact from foreign currency. This
revenue forecast continues to assume growth in worldwide new
business bookings of 5% to 7% compared to the $1.65 billion sold in
fiscal 2017. Adjusting for additional anticipated PEO pass-through
pressure, ADP now assumes adjusted EBIT margin will decline
approximately 50 basis points for the full year compared to the
prior forecast of down 25 to 50 basis points.
ADP expects full year diluted earnings per share to be up 8% to
9%, compared to our prior forecast of down 1% to up 1% and adjusted
diluted earnings per share growth to be 12% to 13% compared to our
prior forecast of 5% to 7% growth. This adjusted earnings per
share forecast reflects the ongoing estimated benefits from the
enactment of the Tax Cuts and Jobs Act, and ADP now forecasts an
adjusted effective tax rate for fiscal 2018 of 26.9% compared to
the prior forecast of 31.7%. This benefit is primarily
attributable to the lower blended federal corporate statutory rate
of 28.1% for fiscal 2018.
Reportable Segments Fiscal 2018 Forecast
- For the Employer Services segment, ADP still anticipates
revenue growth of approximately 4% to 5%, and continues to
anticipate a margin decline of 50 to 75 basis points for the
year.
- ADP maintains expectations for an increase in pays per control
of 2.5% for the year.
- For the PEO Services segment, taking into account higher
pass-through revenues, ADP now anticipates revenue growth of
approximately 12% to 13%, compared to our prior forecast of 11% to
13% and margin to be flat to down 25 basis points for the year,
compared to the prior forecast of up 25 to 50 basis points.
Client Funds Extended Investment Strategy Fiscal 2018
Forecast
The interest assumptions in our forecasts are based on Fed Funds
futures contracts and forward yield curves as of January 29,
2018. 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 March 2018. The
three-and-a-half and five-year U.S. government agency rates based
on the forward yield curves as of January 29, 2018 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 $55
to $65 million, or about 16%, compared to the prior forecast of up
$45 to $55 million. This is based on anticipated growth in
average client funds balances of approximately 4% to 5% from $23.0
billion in fiscal 2017, compared to the prior forecast of
approximately 3% growth and an average yield which is still
anticipated to increase about 20 basis points to 1.9% compared to
the fiscal 2017 average yield of 1.7%.
- The total contribution from the client funds extended
investment strategy is now expected to be up $45 to $55 million
compared to the prior forecast of up $35 to $45 million.
Investor Webcast TodayADP will host a
conference call for financial analysts today, Wednesday, January
31, 2018 at 8:30 a.m. EDT. 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 2016 and 2017, as well as quarterly details of the
fiscal 2018 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.
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, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenues, other than interest on funds |
|
|
|
|
|
|
|
|
|
|
held for clients and PEO revenues |
|
$ |
2,188.8 |
|
|
$ |
2,077.4 |
|
|
$ |
4,269.8 |
|
|
$ |
4,114.8 |
|
|
|
Interest on funds held for clients |
|
|
106.7 |
|
|
|
91.8 |
|
|
|
206.1 |
|
|
|
181.0 |
|
|
|
PEO revenues (A) (B) |
|
|
939.9 |
|
|
|
818.1 |
|
|
|
1,838.3 |
|
|
|
1,608.4 |
|
|
|
|
Total
revenues |
|
|
3,235.4 |
|
|
|
2,987.3 |
|
|
|
6,314.2 |
|
|
|
5,904.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
|
|
|
|
|
Operating expenses (B) |
|
|
1,719.3 |
|
|
|
1,560.4 |
|
|
|
3,366.0 |
|
|
|
3,091.9 |
|
|
|
Systems development & programming costs |
|
|
158.1 |
|
|
|
152.5 |
|
|
|
315.1 |
|
|
|
307.4 |
|
|
|
Depreciation & amortization |
|
|
69.3 |
|
|
|
54.9 |
|
|
|
131.9 |
|
|
|
112.2 |
|
|
|
|
Total
costs of revenues |
|
|
1,946.7 |
|
|
|
1,767.8 |
|
|
|
3,813.0 |
|
|
|
3,511.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
717.2 |
|
|
|
640.8 |
|
|
|
1,379.6 |
|
|
|
1,288.6 |
|
|
Interest expense |
|
|
27.5 |
|
|
|
20.5 |
|
|
|
55.5 |
|
|
|
40.4 |
|
|
|
|
Total
expenses |
|
|
2,691.4 |
|
|
|
2,429.1 |
|
|
|
5,248.1 |
|
|
|
4,840.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
(21.7 |
) |
|
|
(228.0 |
) |
|
|
(47.8 |
) |
|
|
(251.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
565.7 |
|
|
|
786.2 |
|
|
|
1,113.9 |
|
|
|
1,314.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
98.2 |
|
|
|
275.3 |
|
|
|
244.9 |
|
|
|
435.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
|
$ |
467.5 |
|
|
$ |
510.9 |
|
|
$ |
869.0 |
|
|
$ |
879.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
1.06 |
|
|
$ |
1.14 |
|
|
$ |
1.97 |
|
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
1.05 |
|
|
$ |
1.13 |
|
|
$ |
1.96 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.630 |
|
|
$ |
0.570 |
|
|
$ |
1.200 |
|
|
$ |
1.100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Other income, net: |
|
|
|
|
|
|
|
|
|
Interest income on corporate funds |
|
$ |
(22.7 |
) |
|
$ |
(21.3 |
) |
|
$ |
(48.5 |
) |
|
$ |
(44.3 |
) |
|
Realized gains on available-for-sale securities |
|
|
(0.2 |
) |
|
|
(2.0 |
) |
|
|
(0.5 |
) |
|
|
(2.5 |
) |
|
Realized losses on available-for-sale securities |
|
|
1.2 |
|
|
|
0.7 |
|
|
|
1.6 |
|
|
|
1.1 |
|
|
Gain on sale of assets |
|
|
— |
|
|
|
— |
|
|
|
(0.4 |
) |
|
|
— |
|
|
Gain on sale of business |
|
|
— |
|
|
|
(205.4 |
) |
|
|
— |
|
|
|
(205.4 |
) |
|
Total other income, net |
|
$ |
(21.7 |
) |
|
$ |
(228.0 |
) |
|
$ |
(47.8 |
) |
|
$ |
(251.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(A)
Professional Employer Organization (“PEO”) revenues are net of
direct pass-through costs, primarily consisting of payroll wages
and payroll taxes of $10,632.3 million and $9,145.5 million for the
three months ended December 31, 2017 and 2016, respectively, and
$19,370.8 million and $16,833.1 million for the six months ended
December 31, 2017 and 2016, 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 $705.2
million and $610.0 million for the three months ended December 31,
2017 and 2016, respectively, and $1,391.7 million and
$1,207.8 million for the six months ended December 31, 2017
and 2016, respectively. |
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
|
|
|
|
December 31, |
|
June 30, |
|
2017 |
|
2017 |
Assets |
|
|
|
Cash and
cash equivalents |
$ |
1,773.4 |
|
$ |
2,780.4 |
Other
current assets |
|
3,125.3 |
|
|
2,586.8 |
Total
current assets before funds held for clients |
|
4,898.7 |
|
|
5,367.2 |
Funds
held for clients |
|
34,451.3 |
|
|
27,291.5 |
Total
current assets |
|
39,350.0 |
|
|
32,658.7 |
|
|
|
|
Property, plant and equipment, net |
|
799.9 |
|
|
779.9 |
Other
non-current assets |
|
4,395.6 |
|
|
3,741.4 |
Total
assets |
$ |
44,545.5 |
|
$ |
37,180.0 |
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Other
current liabilities |
$ |
2,742.8 |
|
$ |
2,626.5 |
Client
funds obligations |
|
34,508.1 |
|
|
27,189.4 |
Total
current liabilities |
|
37,250.9 |
|
|
29,815.9 |
|
|
|
|
Long-term debt |
|
2,002.4 |
|
|
2,002.4 |
Other
non-current liabilities |
|
1,361.0 |
|
|
1,384.7 |
Total
liabilities |
|
40,614.3 |
|
|
33,203.0 |
|
|
|
|
Total
stockholders' equity |
|
3,931.2 |
|
|
3,977.0 |
Total
liabilities and stockholders' equity |
$ |
44,545.5 |
|
$ |
37,180.0 |
|
|
|
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Condensed
Statements of Consolidated Cash Flows |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
Six Months Ended |
|
December 31, |
|
|
2017 |
|
|
2016 *As Adjusted |
Cash Flows from
Operating Activities: |
|
|
|
Net
earnings |
$ |
869.0 |
|
|
$ |
879.6 |
|
Adjustments to reconcile net earnings to cash flows provided by
operating activities |
|
325.2 |
|
|
|
200.4 |
|
Changes
in operating assets and liabilities, net of effects from
acquisitions and divestitures of businesses |
|
(519.1 |
) |
|
|
(238.9 |
) |
Net cash flows
provided by operating activities |
|
675.1 |
|
|
|
841.1 |
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
Purchases and proceeds from corporate and client funds marketable
securities |
|
(588.2 |
) |
|
|
(481.5 |
) |
Capital
expenditures |
|
(118.3 |
) |
|
|
(119.7 |
) |
Additions to intangibles |
|
(132.4 |
) |
|
|
(106.6 |
) |
Acquisitions of businesses, net of cash acquired |
|
(487.4 |
) |
|
|
(20.0 |
) |
Proceeds
from the sale of divested businesses |
|
— |
|
|
|
234.0 |
|
Net cash flows
used in investing activities |
|
(1,326.3 |
) |
|
|
(493.8 |
) |
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
Net
increase / (decrease) in client funds obligations |
|
7,207.1 |
|
|
|
(2,799.9 |
) |
Repurchases of common stock |
|
(408.3 |
) |
|
|
(765.3 |
) |
Dividends paid |
|
(506.7 |
) |
|
|
(482.3 |
) |
Other
financing activities |
|
(11.8 |
) |
|
|
18.2 |
|
Net cash flows
provided by / (used in) financing activities |
|
6,280.3 |
|
|
|
(4,029.3 |
) |
|
|
|
|
Effect
of exchange rate changes on cash, cash equivalents, restricted
cash, and restricted cash equivalents |
|
49.1 |
|
|
|
(55.1 |
) |
|
|
|
|
Net
change in cash, cash equivalents, restricted cash, and restricted
cash equivalents |
|
5,678.2 |
|
|
|
(3,737.1 |
) |
|
|
|
|
Cash,
cash equivalents, restricted cash, and restricted cash equivalents,
beginning of period |
|
8,181.6 |
|
|
|
15,458.6 |
|
Cash,
cash equivalents, restricted cash, and restricted cash equivalents,
end of period |
$ |
13,859.8 |
|
|
$ |
11,721.5 |
|
|
|
|
|
Reconciliation
of cash, cash equivalents, restricted cash, and restricted cash
equivalents to the Condensed Consolidated Balance
Sheets |
|
|
|
Cash and
cash equivalents |
|
1,773.4 |
|
|
|
2,705.2 |
|
Restricted cash and restricted cash equivalents included in funds
held for clients |
|
12,086.4 |
|
|
|
9,016.3 |
|
Total
cash, cash equivalents, restricted cash, and restricted cash
equivalents |
$ |
13,859.8 |
|
|
$ |
11,721.5 |
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
Cash
paid for interest |
$ |
54.3 |
|
|
$ |
39.2 |
|
Cash
paid for income taxes, net of income tax refunds |
$ |
389.2 |
|
|
$ |
332.6 |
|
|
|
|
|
*Prior-period information has been restated for the adoption of ASU
No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic
230). |
|
|
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
Other Selected
Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
% Change |
|
|
2017 |
|
|
|
2016 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
2,437.6 |
|
|
$ |
2,309.3 |
|
|
6 |
% |
|
$ |
4,754.0 |
|
|
$ |
4,570.6 |
|
|
4 |
% |
|
PEO
Services |
|
945.3 |
|
|
|
822.9 |
|
|
15 |
% |
|
|
1,848.8 |
|
|
|
1,617.6 |
|
|
14 |
% |
|
Other |
|
(147.5 |
) |
|
|
(144.9 |
) |
|
n/m |
|
|
|
(288.6 |
) |
|
|
(284.0 |
) |
|
n/m |
|
|
Total
revenues |
$ |
3,235.4 |
|
|
$ |
2,987.3 |
|
|
8 |
% |
|
$ |
6,314.2 |
|
|
$ |
5,904.2 |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
706.4 |
|
|
$ |
681.1 |
|
|
4 |
% |
|
$ |
1,353.0 |
|
|
$ |
1,337.1 |
|
|
1 |
% |
|
PEO
Services |
|
128.2 |
|
|
|
114.5 |
|
|
12 |
% |
|
|
245.0 |
|
|
|
221.6 |
|
|
11 |
% |
|
Other |
|
(268.9 |
) |
|
|
(9.4 |
) |
|
n/m |
|
|
|
(484.1 |
) |
|
|
(243.9 |
) |
|
n/m |
|
|
Total
pretax earnings |
$ |
565.7 |
|
|
$ |
786.2 |
|
|
(28 |
)% |
|
$ |
1,113.9 |
|
|
$ |
1,314.8 |
|
|
(15 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
Segment margin |
|
2017 |
|
|
|
2016 |
|
|
Change |
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
Employer
Services |
|
29.0 |
% |
|
|
29.5 |
% |
|
(0.5 |
)% |
|
|
28.5 |
% |
|
|
29.3 |
% |
|
(0.8 |
)% |
|
PEO
Services |
|
13.6 |
% |
|
|
13.9 |
% |
|
(0.3 |
)% |
|
|
13.2 |
% |
|
|
13.7 |
% |
|
(0.4 |
)% |
|
Other |
|
n/m |
|
|
|
n/m |
|
|
n/m |
|
|
|
n/m |
|
|
|
n/m |
|
|
n/m |
|
|
Total
pretax margin |
|
17.5 |
% |
|
|
26.3 |
% |
|
(8.8 |
)% |
|
|
17.6 |
% |
|
|
22.3 |
% |
|
(4.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
Earnings per share
information: |
|
2017 |
|
|
|
2016 |
|
|
% Change |
|
|
2017 |
|
|
|
2016 |
|
|
% Change |
|
Net
earnings |
$ |
467.5 |
|
|
$ |
510.9 |
|
|
(8 |
)% |
|
$ |
869.0 |
|
|
$ |
879.6 |
|
|
(1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
|
441.3 |
|
|
|
447.9 |
|
|
(1 |
)% |
|
|
441.8 |
|
|
|
450.1 |
|
|
(2 |
)% |
|
Basic
earnings per share |
$ |
1.06 |
|
|
$ |
1.14 |
|
|
(7 |
)% |
|
$ |
1.97 |
|
|
$ |
1.95 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding |
|
443.7 |
|
|
|
450.3 |
|
|
(1 |
)% |
|
|
444.4 |
|
|
|
452.7 |
|
|
(2 |
)% |
|
Diluted
earnings per share |
$ |
1.05 |
|
|
$ |
1.13 |
|
|
(7 |
)% |
|
$ |
1.96 |
|
|
$ |
1.94 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in
pays per control - U.S. |
|
2.6 |
% |
|
|
2.3 |
% |
|
|
|
|
2.5 |
% |
|
|
2.5 |
% |
|
|
|
Change in
client revenue retention percentage - worldwide |
|
(0.2 |
)
pts |
|
|
0.1 |
pts |
|
|
|
|
|
0.7 |
pts |
|
|
(0.4 |
)
pts |
|
|
|
Employer
Services/PEO new business bookings growth - worldwide |
|
6 |
% |
|
|
(5 |
)% |
|
|
|
|
2 |
% |
|
|
(3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PEO
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
Paid PEO
worksite employees at end of period |
|
504,000 |
|
|
|
457,000 |
|
|
|
|
|
504,000 |
|
|
|
457,000 |
|
|
|
|
Average
paid PEO worksite employees during the period |
|
498,000 |
|
|
|
452,000 |
|
|
|
|
|
491,000 |
|
|
|
445,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
December 31, |
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
% Change |
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
% Change |
|
Average
investment balances at cost (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
$ |
1.6 |
|
|
$ |
2.5 |
|
|
$ |
(1.0 |
) |
|
(38 |
)% |
|
$ |
1.9 |
|
|
$ |
2.7 |
|
|
$ |
(0.8 |
) |
|
(29 |
)% |
|
Corporate
extended |
|
4.0 |
|
|
|
4.5 |
|
|
|
(0.5 |
) |
|
(10 |
)% |
|
|
4.2 |
|
|
|
4.5 |
|
|
|
(0.3 |
) |
|
(6 |
)% |
|
Total
corporate |
|
5.6 |
|
|
|
7.0 |
|
|
|
(1.4 |
) |
|
(20 |
)% |
|
|
6.1 |
|
|
|
7.2 |
|
|
|
(1.1 |
) |
|
(15 |
)% |
|
Funds
held for clients |
|
22.5 |
|
|
|
20.9 |
|
|
|
1.6 |
|
|
7 |
% |
|
|
21.8 |
|
|
|
20.5 |
|
|
|
1.4 |
|
|
7 |
% |
|
Total |
$ |
28.1 |
|
|
$ |
27.9 |
|
|
$ |
0.1 |
|
|
— |
% |
|
$ |
27.9 |
|
|
$ |
27.7 |
|
|
$ |
0.3 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates earned exclusive of realized losses (gains) on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
|
1.1 |
% |
|
|
0.7 |
% |
|
|
|
|
|
|
1.1 |
% |
|
|
0.7 |
% |
|
|
|
|
|
Corporate
extended |
|
1.8 |
% |
|
|
1.5 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
Total
corporate |
|
1.6 |
% |
|
|
1.2 |
% |
|
|
|
|
|
|
1.6 |
% |
|
|
1.2 |
% |
|
|
|
|
|
Funds
held for clients |
|
1.9 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
1.9 |
% |
|
|
1.8 |
% |
|
|
|
|
|
Total |
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized (loss)/gain position at end of period |
$ |
(56.7 |
) |
|
$ |
24.2 |
|
|
|
|
|
|
$ |
(56.7 |
) |
|
$ |
24.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
short-term financing (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
$ |
3.5 |
|
|
$ |
4.2 |
|
|
|
|
|
|
$ |
3.7 |
|
|
$ |
4.2 |
|
|
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.5 |
|
|
|
0.3 |
|
|
|
|
|
|
|
0.5 |
|
|
|
0.3 |
|
|
|
|
|
|
|
$ |
4.0 |
|
|
$ |
4.5 |
|
|
|
|
|
|
$ |
4.2 |
|
|
$ |
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates paid on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
|
1.2 |
% |
|
|
0.5 |
% |
|
|
|
|
|
|
1.2 |
% |
|
|
0.5 |
% |
|
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
1.2 |
% |
|
|
0.5 |
% |
|
|
|
|
|
|
1.1 |
% |
|
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on funds held for clients |
$ |
106.7 |
|
|
$ |
91.8 |
|
|
$ |
14.9 |
|
|
16 |
% |
|
$ |
206.1 |
|
|
$ |
181.0 |
|
|
$ |
25.0 |
|
|
14 |
% |
|
Corporate extended interest income (C) |
|
18.3 |
|
|
|
17.0 |
|
|
|
1.3 |
|
|
8 |
% |
|
|
37.8 |
|
|
|
35.1 |
|
|
|
2.7 |
|
|
8 |
% |
|
Corporate interest expense-short-term financing (C) |
|
(12.5 |
) |
|
|
(5.5 |
) |
|
|
(7.0 |
) |
|
(126 |
)% |
|
|
(25.5 |
) |
|
|
(10.5 |
) |
|
|
(15.0 |
) |
|
(143 |
)% |
|
|
$ |
112.5 |
|
|
$ |
103.3 |
|
|
$ |
9.2 |
|
|
9 |
% |
|
$ |
218.4 |
|
|
$ |
205.7 |
|
|
$ |
12.7 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C) Please refer to the accompanying financial table at the
end of this release for a reconciliation of these non-GAAP measures
to their comparable GAAP financial measures. |
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
Consolidated Statement of Adjusted / Non-GAAP Financial
Information |
|
|
|
(in millions, except per share amounts) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
addition to our GAAP results, we use the adjusted results and other
non-GAAP metrics set forth in the table below to evaluate our
operating performance in the absence of certain items and for
planning and forecasting of future periods: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial Measure |
U.S. GAAP Measures |
Adjustments/Explanation - as applicable in the
periods |
|
Adjusted EBIT |
Net earnings |
- Provision for income taxes - All other interest
expense and income - Certain restructuring charges - Gains/losses
on sales of businesses and assets - Non-operational costs related
to proxy contest matters See footnotes (a), (b), and (f) |
|
Adjusted net earnings |
Net earnings |
Pre-tax and tax impacts of: - Certain restructuring
charges - Gains/losses on sales of businesses and assets -
Non-operational costs related to proxy contest matters - Tax Cuts
and Jobs Act See footnotes (b), (c), (d), (f), and (g) |
|
Adjusted provision for income taxes |
Provision for income taxes |
Tax impacts of: - Gains/losses on sales of businesses
and assets - Certain restructuring charges - Non-operational costs
related to proxy contest matters - Tax Cuts and Jobs Act See
footnotes (c), (d), (f), and (g) |
|
Adjusted diluted earnings per share |
Diluted earnings per share |
EPS impacts of: - Gains/losses on sales of businesses
and assets - Certain restructuring charges - Non-operational costs
related to proxy contest matters - Tax Cuts and Jobs Act See
footnotes (b), (c), (f), and (g) |
|
Adjusted effective tax rate |
Effective
tax rate |
See footnote (e) |
|
Constant Dollar Basis |
U.S. GAAP P&L line items |
See footnote (h) |
|
Organic revenue growth |
Revenues |
Impact of acquisitions Impact of dispositions Impact
of foreign currency See footnote (i) |
|
Corporate extended interest income |
Interest income |
All other interest income See footnote (j) |
|
Corporate interest expense-short-term financing |
Interest expense |
All other interest expense See footnote (j) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe
that the exclusion of the identified 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 the 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. The nature of these exclusions are for specific
items that are not fundamental to our underlying business
operations. Since these adjusted financial measures and other
non-GAAP metrics 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 their U.S. GAAP
measures, and they may not be comparable to similarly titled
measures at other companies. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
December 31, |
|
% Change |
|
December 31, |
|
% Change |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
As Reported |
|
Constant Dollar Basis (h) |
|
|
2017 |
|
|
|
2016 |
|
|
As Reported |
|
Constant Dollar Basis (h) |
|
Net earnings |
|
$ |
467.5 |
|
|
$ |
510.9 |
|
|
|
(8 |
)% |
|
|
(9 |
)% |
|
$ |
869.0 |
|
|
$ |
879.6 |
|
|
|
(1 |
)% |
|
(2 |
)% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
98.2 |
|
|
|
275.3 |
|
|
|
|
|
|
|
244.9 |
|
|
|
435.2 |
|
|
|
|
|
|
All other interest
expense (a) |
|
|
15.0 |
|
|
|
14.9 |
|
|
|
|
|
|
|
30.0 |
|
|
|
29.9 |
|
|
|
|
|
|
All other interest
income (a) |
|
|
(4.4 |
) |
|
|
(4.4 |
) |
|
|
|
|
|
|
(10.7 |
) |
|
|
(9.2 |
) |
|
|
|
|
|
Gain on sale of
business |
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
|
Service Alignment
Initiative (b) |
|
|
3.3 |
|
|
|
1.2 |
|
|
|
|
|
|
|
— |
|
|
|
41.1 |
|
|
|
|
|
|
Proxy
contest matters (f) |
|
|
22.9 |
|
|
|
— |
|
|
|
|
|
|
|
33.3 |
|
|
|
— |
|
|
|
|
|
|
Adjusted EBIT |
|
$ |
602.5 |
|
|
$ |
592.5 |
|
|
|
2 |
% |
|
|
1 |
% |
|
$ |
1,166.5 |
|
|
$ |
1,171.2 |
|
|
|
— |
% |
|
(1 |
)% |
|
Adjusted
EBIT Margin |
|
|
18.6 |
% |
|
|
19.8 |
% |
|
|
|
|
|
|
18.5 |
% |
|
|
19.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
$ |
98.2 |
|
|
$ |
275.3 |
|
|
|
(64 |
)% |
|
|
(65 |
)% |
|
$ |
244.9 |
|
|
$ |
435.2 |
|
|
|
(44 |
)% |
|
(44 |
)% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business (c) |
|
|
— |
|
|
|
(84.0 |
) |
|
|
|
|
|
|
— |
|
|
|
(84.0 |
) |
|
|
|
|
|
Service Alignment
Initiative (d) |
|
|
1.3 |
|
|
|
0.4 |
|
|
|
|
|
|
|
— |
|
|
|
15.5 |
|
|
|
|
|
|
Proxy contest matters
(f) |
|
|
6.3 |
|
|
|
— |
|
|
|
|
|
|
|
10.3 |
|
|
|
— |
|
|
|
|
|
|
Tax Cuts
and Jobs Act (g) |
|
|
45.7 |
|
|
|
— |
|
|
|
|
|
|
|
45.7 |
|
|
|
— |
|
|
|
|
|
|
Adjusted provision for
income taxes |
|
$ |
151.5 |
|
|
$ |
191.7 |
|
|
|
(21 |
)% |
|
|
(22 |
)% |
|
$ |
300.9 |
|
|
$ |
366.7 |
|
|
|
(18 |
)% |
|
(19 |
)% |
|
Adjusted
effective tax rate (e) |
|
|
25.6 |
% |
|
|
32.9 |
% |
|
|
|
|
|
|
26.2 |
% |
|
|
31.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
467.5 |
|
|
$ |
510.9 |
|
|
|
(8 |
)% |
|
|
(9 |
)% |
|
$ |
869.0 |
|
|
$ |
879.6 |
|
|
|
(1 |
)% |
|
(2 |
)% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business |
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
|
Provision for income
taxes on gain on sale of business (c) |
|
|
— |
|
|
|
84.0 |
|
|
|
|
|
|
|
— |
|
|
|
84.0 |
|
|
|
|
|
|
Service Alignment
Initiative (b) |
|
|
3.3 |
|
|
|
1.2 |
|
|
|
|
|
|
|
— |
|
|
|
41.1 |
|
|
|
|
|
|
Income tax
provision/(benefit) for Service Alignment Initiative (d) |
|
|
(1.3 |
) |
|
|
(0.4 |
) |
|
|
|
|
|
|
— |
|
|
|
(15.5 |
) |
|
|
|
|
|
Proxy contest matters
(f) |
|
|
22.9 |
|
|
|
— |
|
|
|
|
|
|
|
33.3 |
|
|
|
— |
|
|
|
|
|
|
Income tax benefit for
proxy contest matters (f) |
|
|
(6.3 |
) |
|
|
— |
|
|
|
|
|
|
|
(10.3 |
) |
|
|
— |
|
|
|
|
|
|
Income
tax benefit from Tax Cuts and Jobs Act (g) |
|
|
(45.7 |
) |
|
|
— |
|
|
|
|
|
|
|
(45.7 |
) |
|
|
— |
|
|
|
|
|
|
Adjusted
net earnings |
|
$ |
440.4 |
|
|
$ |
390.3 |
|
|
|
13 |
% |
|
|
12 |
% |
|
$ |
846.3 |
|
|
$ |
783.8 |
|
|
|
8 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
$ |
1.05 |
|
|
$ |
1.13 |
|
|
|
(7 |
)% |
|
|
(7 |
)% |
|
$ |
1.96 |
|
|
$ |
1.94 |
|
|
|
1 |
% |
|
— |
% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business (c) |
|
|
— |
|
|
|
(0.27 |
) |
|
|
|
|
|
|
— |
|
|
|
(0.27 |
) |
|
|
|
|
|
Service Alignment
Initiative (b) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
0.06 |
|
|
|
|
|
|
Proxy contest matters
(f) |
|
|
0.04 |
|
|
|
— |
|
|
|
|
|
|
|
0.05 |
|
|
|
— |
|
|
|
|
|
|
Tax Cuts
and Jobs Act (g) |
|
|
(0.10 |
) |
|
|
— |
|
|
|
|
|
|
|
(0.10 |
) |
|
|
— |
|
|
|
|
|
|
Adjusted
diluted EPS |
|
$ |
0.99 |
|
|
$ |
0.87 |
|
|
|
14 |
% |
|
|
13 |
% |
|
$ |
1.90 |
|
|
$ |
1.73 |
|
|
|
10 |
% |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) 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 adjustments
in the table above 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." |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) The
majority of charges relating 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 our broad-based, company-wide
Service Alignment Initiative. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) The
taxes on the gain on sale of the business 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) The
tax provision on the Service Alignment Initiative was calculated
based on the annualized marginal rate in effect during the quarter
of the adjustment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) The
Adjusted effective tax rate is calculated as our Adjusted provision
for income taxes divided by our Adjusted net earnings plus our
Adjusted provision for income taxes. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
Represents non-operational costs associated with proxy contest
matters. The tax benefit on the non-operational charges related to
proxy contest matters was calculated based on the annualized
marginal rate in effect during the quarter of the adjustment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) The
one-time net benefit from the enactment of the Tax Cuts and Jobs
Act (the “Act”) is comprised of the application of the newly
enacted U.S. corporate tax rates to our U.S. deferred tax balances
partially offset by the one-time transition tax and the recording
of a valuation allowance against our foreign tax credits which may
not be realized. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
"Constant dollar basis" provides information that isolates the
actual growth of our operations. "Constant dollar basis" is
determined by calculating the current year result using foreign
exchange rates consistent with the prior year. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) The
following table reconciles our reported growth rates to the
non-GAAP measure of organic revenue which excludes the impact of
acquisitions, the impact of dispositions, and the impact of foreign
currency. The impact of acquisitions and dispositions is calculated
by excluding the current year revenues of acquisitions until the
one year anniversary of the transaction and by excluding the prior
year revenues of divestitures for the one year period preceding the
transaction. The impact of foreign currency is determined by
calculating the current year result using foreign exchange rates
consistent with the prior year. The PEO segment is not
impacted by acquisitions, dispositions or foreign currency. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
Revenue
growth consolidated: |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
|
|
|
|
6 |
% |
|
|
4 |
% |
|
|
|
|
4 |
% |
|
|
5 |
% |
|
|
|
PEO Services |
|
|
|
|
15 |
% |
|
|
12 |
% |
|
|
|
|
14 |
% |
|
|
12 |
% |
|
|
|
Consolidated revenue growth as reported |
|
|
|
|
8 |
% |
|
|
6 |
% |
|
|
|
|
7 |
% |
|
|
7 |
% |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of acquisitions |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
Impact of dispositions |
|
|
|
|
1 |
% |
|
|
— |
% |
|
|
|
|
1 |
% |
|
|
— |
% |
|
|
|
Impact of foreign currency |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
Consolidated organic revenue growth |
|
|
|
|
7 |
% |
|
|
7 |
% |
|
|
|
|
6 |
% |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services revenue growth as reported |
|
|
|
|
6 |
% |
|
|
4 |
% |
|
|
|
|
4 |
% |
|
|
5 |
% |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of acquisitions |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
Impact of dispositions |
|
|
|
|
1 |
% |
|
|
— |
% |
|
|
|
|
1 |
% |
|
|
— |
% |
|
|
|
Impact of foreign currency |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
|
(1 |
)% |
|
|
— |
% |
|
|
|
Employer Services organic revenue growth |
|
|
|
|
4 |
% |
|
|
5 |
% |
|
|
|
|
3 |
% |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(j) The
following tables reconcile our "Total interest income" and "Total
interest expense" to “Corporate extended interest income” and
“Corporate interest expense-short-term financing,” related to our
client funds investment strategy which are non-GAAP measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
extended interest income |
|
|
|
$ |
18.3 |
|
|
$ |
17.0 |
|
|
|
|
$ |
37.8 |
|
|
$ |
35.1 |
|
|
|
|
All other
interest income |
|
|
|
|
4.4 |
|
|
|
4.4 |
|
|
|
|
|
10.7 |
|
|
|
9.2 |
|
|
|
|
Total
interest income on corporate funds |
|
|
|
$ |
22.7 |
|
|
$ |
21.3 |
|
|
|
|
$ |
48.5 |
|
|
$ |
44.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
interest expense-short-term financing |
|
|
|
$ |
12.5 |
|
|
$ |
5.5 |
|
|
|
|
$ |
25.5 |
|
|
$ |
10.5 |
|
|
|
|
All other
interest expense |
|
|
|
|
15.0 |
|
|
|
14.9 |
|
|
|
|
|
30.0 |
|
|
|
29.9 |
|
|
|
|
Total
interest expense |
|
|
|
$ |
27.5 |
|
|
$ |
20.5 |
|
|
|
|
$ |
55.5 |
|
|
$ |
40.4 |
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
Fiscal 2018 GAAP to Non-GAAP Guidance
Reconciliation |
(Unaudited) |
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Fiscal 2018 |
|
|
|
June 30, 2017 |
|
Forecast |
|
Earnings before income
taxes / margin (GAAP) |
|
$ |
2,531.1 |
|
20.4 |
% |
|
~(200) bps |
|
|
All other
interest expense |
|
|
59.3 |
|
+50bps |
|
|
- |
|
a |
All other
interest income |
|
|
(22.4 |
) |
(20)bps |
|
|
- |
|
a |
Gain on
sale of business - 2Q F17 |
|
|
(205.4 |
) |
(170)bps |
|
|
+170bps |
|
b |
Workforce
Optimization Effort - 4Q F17 |
|
|
(5.0 |
) |
(5)bps |
|
|
+5bps |
|
c |
Service
Alignment Initiative - F17 |
|
|
90.0 |
|
+75bps |
|
|
(75)bps |
|
d |
Service
Alignment Initiative - F18 |
|
|
- |
|
- |
|
|
+20bps |
|
e |
Proxy
contest matters - F18 |
|
|
|
|
+25bps |
|
f |
Adjusted EBIT margin (Non-GAAP) |
|
$ |
2,447.6 |
|
19.8 |
% |
|
~(50) bps |
|
|
|
|
|
|
|
|
|
Effective tax rate
(GAAP) |
|
|
31.5 |
% |
|
24.9 |
% |
|
Gain on
sale of business - 2Q F17 |
|
|
(0.9 |
%) |
|
- |
|
b |
Workforce
Optimization Effort - 4Q F17 |
|
|
(0.0 |
%) |
|
- |
|
c |
Service
Alignment Initiative - F17 |
|
|
+0.4 |
% |
|
- |
|
d |
Service
Alignment Initiative - F18 |
|
|
- |
|
|
+0.0 |
% |
e |
Proxy
contest matters - F18 |
|
|
- |
|
|
+0.1 |
% |
f |
Tax Cuts
and Jobs Act - F18 |
|
|
|
|
+1.9 |
% |
g |
Adjusted effective tax rate (Non-GAAP) |
|
|
30.9 |
% |
|
26.9 |
% |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP) |
|
$ |
3.85 |
|
18 |
% |
|
8%
- 9 |
% |
|
Gain on
sale of business - 2Q F17 |
|
|
(0.27 |
) |
(7 |
%) |
|
~+7 |
% |
b |
Workforce
Optimization Effort - 4Q F17 |
|
|
(0.01 |
) |
(0 |
%) |
|
~+0 |
% |
c |
Service
Alignment Initiative - F17 |
|
|
0.12 |
|
+3 |
% |
|
~(3 |
%) |
d |
Service
Alignment Initiative - F18 |
|
|
- |
|
- |
|
|
~+1 |
% |
e |
Proxy
contest matters - F18 |
|
|
- |
|
- |
|
|
~+1 |
% |
f |
Tax Cuts
and Jobs Act - F18 |
|
|
- |
|
- |
|
|
~(3 |
%) |
g |
Adjusted diluted earnings per share
(Non-GAAP) |
|
$ |
3.70 |
|
13 |
% |
|
12% - 13 |
% |
|
|
|
|
|
|
|
|
a) 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. These
adjustments in the table above 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”. No material impact is
expected from change in all other interest expense or income in
fiscal 2018. |
|
b) Second
quarter fiscal 2017 impact from gain on the sale of CHSA and COBRA
businesses |
|
c) Fourth
quarter fiscal 2017 Workforce Optimization Effort adjustment is a
reversal of the fiscal 2016 estimate and is not expected to recur
in fiscal 2018. The majority of charges relating to the
Workforce Optimization Effort 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 related to a broad-based,
company-wide Workforce Optimization Effort. |
|
d) Impact
of Fiscal 2017 charges in connection with the Service Alignment
Initiative |
|
e)
Expected impact of Fiscal 2018 charges in connection with the
Service Alignment Initiative |
|
f)
Expected impact of Fiscal 2018 charges in connection with proxy
contest matters. |
|
g)
Expected Fiscal 2018 one-time benefit from the enactment of the Tax
Cuts and Jobs Act |
|
|
|
Safe Harbor StatementThis 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, 2017
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 © 2018 ADP, LLC. All rights reserved.
ADP-Investor Relations
Investor Relations Contacts:Christian
Greyenbuhl973.974.7835Christian.Greyenbuhl@ADP.com
Media Contact:Michael
Schneider973.974.5678Michael.Schneider@ADP.com
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