ADP® (Nasdaq:ADP), a leading global provider of Human Capital
Management (HCM) solutions, today announced its third quarter
fiscal 2018 financial results, and provided an update to its fiscal
2018 outlook.
Third Quarter Fiscal 2018 Consolidated
Results
Compared to last year’s third quarter, revenues grew 8% to $3.7
billion, 6% organic constant currency. Net earnings increased 9% to
$643 million and were ahead of Company expectations. Earnings
before income taxes increased to $853 million, or 3%. Adjusted EBIT
increased to $901 million, or 8%. Adjusted EBIT margin declined
about 20 basis points in the quarter to 24.4% largely due to the
impact of acquisition-related expenses and continued pressure from
growth in PEO pass-through revenues, which were partially offset by
operational and selling efficiencies. Our effective tax rate for
the quarter was 24.6%, and 24.3% on an adjusted basis. Diluted
earnings per share increased 11% to $1.45 and adjusted diluted
earnings per share increased 16% to $1.52.
“I am pleased with our successful results this quarter and with
the continued signs of improvement in some of our key performance
indicators such as our new business bookings, which grew 9%, and
our Employer Services retention, which improved 170 basis points,”
said Carlos Rodriguez, President and Chief Executive Officer, ADP.
“Our results reflect the fundamental strength of our business
model, and demonstrate that our strategy to drive sustainable
long-term growth is working.”
“ADP delivered another solid quarter coupling strong revenue
growth with improving trends underlying our margin performance,”
said Jan Siegmund, Chief Financial Officer, ADP. “Our
transformation initiatives continue to drive positive changes in
how we are doing business, and we were pleased to build on our
momentum this quarter by raising our full year adjusted EPS
guidance.”
Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings
per share, adjusted effective tax rate, and organic constant
currency 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.
Third Quarter Fiscal 2018 Segment Results
Employer Services – Employer Services offers a comprehensive
range of HCM and human resources outsourcing solutions.
- Employer Services revenues increased 7% on a reported basis, 4%
organic constant currency, compared to last year’s third
quarter.
- The number of employees on ADP clients' payrolls in the United
States increased 2.9% for the third 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 170 basis
points compared to last year’s third quarter.
- Employer Services segment margin decreased approximately 20
basis points compared to last year’s third quarter. This decrease
includes approximately 70 basis points of combined 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 10% compared to last year’s
third quarter driven primarily by a 9% increase in average worksite
employees for the quarter.
- PEO Services segment margin increased approximately 40 basis
points compared to last year’s third quarter.
- Average worksite employees paid by PEO Services were about
512,000.
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 third quarter, interest on funds held for clients
increased 21% to $135 million from $112 million a year ago.
- Average client funds balances increased 6% in the third quarter
to $28.8 billion compared to $27.3 billion a year ago.
- For the third quarter, the average interest yield on client
funds was 1.9% which was up 20 basis points compared to a year
ago.
Other Matters
On March 1, 2018, ADP announced that it is offering a voluntary
early retirement program to certain eligible U.S.-based associates
in support of ongoing transformation initiatives. ADP anticipates
recording a special termination charge in the fourth quarter of
fiscal 2018, and expects to fund a significant majority of the
program costs from the existing surplus in ADP’s U.S. defined
benefit plan. The Company expects this initiative to help reduce
its pre-tax operating expenses starting in early fiscal 2019.
On April 11, 2018, ADP declared a regular quarterly dividend of
69 cents per share. This 10% increase represents a return to
shareholders of a portion of the benefits from the Tax Cuts and
Jobs Act of December 2017. The Board of Directors anticipates
consideration of another dividend increase in November 2018
consistent with ADP’s historical pattern throughout its 43 year
track record of annual dividend increases.
In addition, on April 18, 2018, ADP announced that Thomas
J. Lynch and Scott F. Powers have been appointed to the
Board of Directors, effective April 18, 2018. These
appointments reflect ADP's commitment to thoughtfully bringing in
fresh perspectives and insights as the Company continues to execute
on its strategy and transformation initiatives to drive sustainable
long-term shareholder value.
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 transformation initiatives.
- Fiscal 2017 second quarter pre-tax gain on the sale of the CHSA
and COBRA businesses of $205 million.
- Fiscal 2018 pre-tax proxy contest charges of about $33
million.
- Fiscal 2018 one-time net tax benefit of about $43 million from
the Tax Cuts and Jobs Act.
- Fiscal 2018 anticipated pre-tax charges of about $46 million
related to transformation initiatives. This estimate does not
include anticipated fourth quarter charges related to the Company’s
recently announced voluntary early retirement program.
ADP continues to expect full-year fiscal 2018 revenue growth of
7% to 8%. This revenue forecast includes approximately two
percentage points of growth from acquisitions and the impact from
foreign currency. ADP now anticipates growth in worldwide new
business bookings of 6% to 7% compared to our prior forecast of up
5% to 7%. ADP now estimates adjusted EBIT margin to be about flat
for the full year compared to the prior forecast of down 50 basis
points.
ADP expects full year diluted earnings per share to be up 11% to
12% compared to our prior forecast of up 8% to 9%; and adjusted
diluted earnings per share growth to be 16% to 17% compared to our
prior forecast of 12% to 13% growth. ADP now anticipates an
adjusted effective tax rate of 26.2% compared to the prior
forecasted rate of 26.9%.
Reportable Segments Fiscal 2018 Forecast
- For the Employer Services segment, ADP anticipates revenue
growth of approximately 5%, compared to our prior forecast of 4% to
5%, and now expects margins to be about flat compared with our
prior forecasted margin contraction of 50 to 75 basis points.
- ADP maintains expectations for an increase in pays per control
of 2.5% for the year.
- For the PEO Services segment, ADP now anticipates revenue
growth of approximately 12% compared to our prior forecast of 12%
to 13%. ADP now expects PEO margins to be about flat compared with
our prior forecast of about flat to down 25 basis points for the
year.
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 April 30, 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 June 2018. The three-and-a-half and five-year
U.S. government agency rates based on the forward yield curves as
of April 30, 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
about $65 million, or 16%, compared to the prior forecast of up $55
to $65 million. This is based on anticipated growth in average
client funds balances of approximately 5% from $23.0 billion in
fiscal 2017, compared to the prior forecast of 4 to 5% 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 increase about $50 million
compared to the prior forecast of up $45 to $55 million.
Investor Webcast Today
ADP will host a conference call for financial analysts today,
Wednesday, May 2, 2018 at 8:30 a.m. ET. 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 |
|
Nine Months Ended |
|
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
Revenues,
other than interest on funds |
|
|
|
|
|
|
|
|
|
|
held for clients and PEO revenues |
|
$ |
2,492.9 |
|
|
$ |
2,329.8 |
|
|
$ |
6,762.7 |
|
|
$ |
6,444.4 |
|
|
|
Interest on
funds held for clients |
|
|
134.8 |
|
|
|
111.6 |
|
|
|
340.9 |
|
|
|
292.6 |
|
|
|
PEO
revenues (A) (B) |
|
|
1,065.3 |
|
|
|
969.4 |
|
|
|
2,903.6 |
|
|
|
2,577.9 |
|
|
|
|
Total
revenues |
|
|
3,693.0 |
|
|
|
3,410.8 |
|
|
|
10,007.2 |
|
|
|
9,314.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
Costs of
revenues: |
|
|
|
|
|
|
|
|
|
|
Operating
expenses (B) |
|
|
1,844.7 |
|
|
|
1,701.5 |
|
|
|
5,210.6 |
|
|
|
4,793.4 |
|
|
|
Systems
development & programming costs |
|
|
162.5 |
|
|
|
153.3 |
|
|
|
477.6 |
|
|
|
460.6 |
|
|
|
Depreciation & amortization |
|
|
70.2 |
|
|
|
56.2 |
|
|
|
202.1 |
|
|
|
168.4 |
|
|
|
|
Total costs of
revenues |
|
|
2,077.4 |
|
|
|
1,911.0 |
|
|
|
5,890.3 |
|
|
|
5,422.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general & administrative expenses |
|
|
755.1 |
|
|
|
665.0 |
|
|
|
2,134.8 |
|
|
|
1,953.6 |
|
|
Interest
expense |
|
|
18.6 |
|
|
|
16.8 |
|
|
|
74.1 |
|
|
|
57.2 |
|
|
|
|
Total
expenses |
|
|
2,851.1 |
|
|
|
2,592.8 |
|
|
|
8,099.2 |
|
|
|
7,433.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income, net |
|
|
(10.7 |
) |
|
|
(9.9 |
) |
|
|
(58.5 |
) |
|
|
(261.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
852.6 |
|
|
|
827.9 |
|
|
|
1,966.5 |
|
|
|
2,142.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
209.5 |
|
|
|
240.0 |
|
|
|
454.4 |
|
|
|
675.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
|
$ |
643.1 |
|
|
$ |
587.9 |
|
|
$ |
1,512.1 |
|
|
$ |
1,467.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
1.46 |
|
|
$ |
1.32 |
|
|
$ |
3.42 |
|
|
$ |
3.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share |
|
$ |
1.45 |
|
|
$ |
1.31 |
|
|
$ |
3.40 |
|
|
$ |
3.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share |
|
$ |
0.630 |
|
|
$ |
0.570 |
|
|
$ |
1.830 |
|
|
$ |
1.670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Other income, net: |
|
|
|
|
|
|
|
|
|
Interest
income on corporate funds |
|
$ |
(11.0 |
) |
|
$ |
(10.1 |
) |
|
$ |
(59.4 |
) |
|
$ |
(54.5 |
) |
|
Realized
gains on available-for-sale securities |
|
|
(1.3 |
) |
|
|
(0.6 |
) |
|
|
(1.9 |
) |
|
|
(3.1 |
) |
|
Realized
losses on available-for-sale securities |
|
|
1.6 |
|
|
|
0.8 |
|
|
|
3.2 |
|
|
|
2.0 |
|
|
Gain on
sale of assets |
|
|
— |
|
|
|
— |
|
|
|
(0.4 |
) |
|
|
— |
|
|
Gain on
sale of business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(205.4 |
) |
|
Total other
income, net |
|
$ |
(10.7 |
) |
|
$ |
(9.9 |
) |
|
$ |
(58.5 |
) |
|
$ |
(261.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(A)
Professional Employer Organization (“PEO”) revenues are net of
direct pass-through costs, primarily consisting of payroll wages
and payroll taxes of $10,176.2 million and $9,207.2 million for the
three months ended March 31, 2018 and 2017, respectively, and
$29,547.0 million and $26,040.3 million for the nine months ended
March 31, 2018 and 2017, 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 $821.9
million and $746.7 million for the three months ended March 31,
2018 and 2017, respectively, and $2,213.5 million and $1,954.5
million for the nine months ended March 31, 2018 and 2017,
respectively. |
|
|
|
|
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Consolidated
Balance Sheets |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
|
|
|
|
March 31, |
|
June 30, |
|
|
2018 |
|
|
|
2017 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
2,293.6 |
|
|
$ |
2,780.4 |
|
Accounts
receivable, net of allowance for doubtful accounts of $51.9 and
$49.6, respectively |
|
2,043.4 |
|
|
|
1,703.6 |
|
Other
current assets |
|
730.3 |
|
|
|
883.2 |
|
Total current assets
before funds held for clients |
|
5,067.3 |
|
|
|
5,367.2 |
|
Funds
held for clients |
|
33,646.7 |
|
|
|
27,291.5 |
|
Total current
assets |
|
38,714.0 |
|
|
|
32,658.7 |
|
Long-term receivables,
net of allowance for doubtful accounts of $0.4 and $0.8,
respectively |
|
27.3 |
|
|
|
28.0 |
|
Property, plant and
equipment, net |
|
794.6 |
|
|
|
779.9 |
|
Other assets |
|
1,391.0 |
|
|
|
1,352.2 |
|
Goodwill |
|
2,263.3 |
|
|
|
1,741.0 |
|
Intangible assets,
net |
|
875.3 |
|
|
|
620.2 |
|
Total
assets |
$ |
44,065.5 |
|
|
$ |
37,180.0 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
105.7 |
|
|
$ |
149.7 |
|
Accrued
expenses and other current liabilities |
|
1,505.3 |
|
|
|
1,381.9 |
|
Accrued
payroll and payroll-related expenses |
|
595.8 |
|
|
|
562.5 |
|
Dividends
payable |
|
275.1 |
|
|
|
250.5 |
|
Short-term deferred revenues |
|
235.4 |
|
|
|
232.9 |
|
Income
taxes payable |
|
80.2 |
|
|
|
49.0 |
|
Total current
liabilities before client funds obligations |
|
2,797.5 |
|
|
|
2,626.5 |
|
Client
funds obligations |
|
33,943.7 |
|
|
|
27,189.4 |
|
Total current
liabilities |
|
36,741.2 |
|
|
|
29,815.9 |
|
Long-term debt |
|
2,002.4 |
|
|
|
2,002.4 |
|
Other liabilities |
|
795.8 |
|
|
|
830.2 |
|
Deferred income
taxes |
|
105.5 |
|
|
|
163.1 |
|
Long-term deferred
revenues |
|
391.4 |
|
|
|
391.4 |
|
Total
liabilities |
|
40,036.3 |
|
|
|
33,203.0 |
|
|
|
|
|
Stockholders'
equity: |
|
|
|
Preferred stock, $1.00
par value: authorized, 0.3 shares; issued, none |
|
— |
|
|
|
— |
|
Common stock, $0.10 par
value: authorized, 1,000.0 shares; issued, 638.7 shares at March
31, 2018 and June 30, 2017; outstanding, 441.7 and 445.0
shares at March 31, 2018 and June 30, 2017, respectively |
|
63.9 |
|
|
|
63.9 |
|
Capital in excess of
par value |
|
964.1 |
|
|
|
867.8 |
|
Retained earnings |
|
15,466.1 |
|
|
|
14,728.2 |
|
Treasury stock - at
cost: 197.0 and 193.7 shares at March 31, 2018 and June 30, 2017,
respectively |
|
(11,826.1 |
) |
|
|
(11,303.7 |
) |
Accumulated other
comprehensive loss |
|
(638.8 |
) |
|
|
(379.2 |
) |
Total
stockholders’ equity |
|
4,029.2 |
|
|
|
3,977.0 |
|
Total liabilities and
stockholders’ equity |
$ |
44,065.5 |
|
|
$ |
37,180.0 |
|
|
|
|
|
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Statements of
Consolidated Cash Flows |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
Nine Months Ended |
|
March 31, |
|
|
2018 |
|
|
2017 *As Adjusted |
Cash Flows from
Operating Activities: |
|
|
|
Net earnings |
$ |
1,512.1 |
|
|
$ |
1,467.6 |
|
Adjustments to
reconcile net earnings to cash flows provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
278.3 |
|
|
|
233.6 |
|
Deferred
income taxes |
|
18.0 |
|
|
|
22.2 |
|
Stock-based compensation expense |
|
119.4 |
|
|
|
101.2 |
|
Net
pension expense |
|
8.2 |
|
|
|
18.1 |
|
Net
amortization of premiums and accretion of discounts on
available-for-sale securities |
|
55.6 |
|
|
|
66.1 |
|
Gain on
sale of divested businesses, net of tax |
|
— |
|
|
|
(121.4 |
) |
Other |
|
22.0 |
|
|
|
24.8 |
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
divestitures of businesses: |
|
|
|
Increase
in accounts receivable |
|
(239.3 |
) |
|
|
(90.1 |
) |
Increase
in other assets |
|
(38.6 |
) |
|
|
(152.9 |
) |
Decrease
in accounts payable |
|
(31.1 |
) |
|
|
(29.5 |
) |
Increase
in accrued expenses and other liabilities |
|
105.4 |
|
|
|
129.0 |
|
Net cash flows provided
by operating activities |
|
1,810.0 |
|
|
|
1,668.7 |
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
Purchases of corporate
and client funds marketable securities |
|
(3,692.7 |
) |
|
|
(3,470.0 |
) |
Proceeds from the sales
and maturities of corporate and client funds marketable
securities |
|
2,702.5 |
|
|
|
2,704.6 |
|
Capital
expenditures |
|
(159.6 |
) |
|
|
(174.5 |
) |
Additions to
intangibles |
|
(195.8 |
) |
|
|
(162.1 |
) |
Acquisitions of
businesses, net of cash acquired |
|
(612.4 |
) |
|
|
(86.7 |
) |
Proceeds from the sale
of divested businesses |
|
— |
|
|
|
234.0 |
|
Net cash flows used in
investing activities |
|
(1,958.0 |
) |
|
|
(954.7 |
) |
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
Net increase in client
funds obligations |
|
6,700.2 |
|
|
|
636.7 |
|
Payments of debt |
|
(6.8 |
) |
|
|
(1.5 |
) |
Repurchases of common
stock |
|
(596.2 |
) |
|
|
(956.8 |
) |
Net proceeds from stock
purchase plan and stock-based compensation plans |
|
46.1 |
|
|
|
74.5 |
|
Dividends paid |
|
(785.1 |
) |
|
|
(739.4 |
) |
Net cash flows provided
by / (used in) financing activities |
|
5,358.2 |
|
|
|
(986.5 |
) |
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents, restricted cash, and restricted
cash equivalents |
|
53.1 |
|
|
|
(81.1 |
) |
|
|
|
|
Net change in cash,
cash equivalents, restricted cash, and restricted cash
equivalents |
|
5,263.3 |
|
|
|
(353.6 |
) |
|
|
|
|
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 |
$ |
13,444.9 |
|
|
$ |
15,105.0 |
|
|
|
|
|
Reconciliation
of cash, cash equivalents, restricted cash, and restricted cash
equivalents to the Consolidated Balance Sheets |
|
|
|
Cash and cash
equivalents |
|
2,293.6 |
|
|
|
2,995.5 |
|
Restricted cash and
restricted cash equivalents included in funds held for clients |
|
11,151.3 |
|
|
|
12,109.5 |
|
Total cash, cash
equivalents, restricted cash, and restricted cash equivalents |
$ |
13,444.9 |
|
|
$ |
15,105.0 |
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
Cash paid
for interest |
$ |
86.5 |
|
|
$ |
69.8 |
|
Cash paid
for income taxes, net of income tax refunds |
$ |
423.0 |
|
|
$ |
569.2 |
|
|
|
|
|
*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 |
|
|
|
|
Nine Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
March 31, |
|
|
|
|
|
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
2,804.1 |
|
|
$ |
2,627.2 |
|
|
7 |
% |
|
$ |
7,558.1 |
|
|
$ |
7,197.8 |
|
|
5 |
% |
|
PEO
Services |
|
1,071.1 |
|
|
|
974.4 |
|
|
10 |
% |
|
|
2,919.9 |
|
|
|
2,592.0 |
|
|
13 |
% |
|
Other |
|
(182.2 |
) |
|
|
(190.8 |
) |
|
n/m |
|
|
|
(470.8 |
) |
|
|
(474.9 |
) |
|
n/m |
|
|
Total
revenues |
$ |
3,693.0 |
|
|
$ |
3,410.8 |
|
|
8 |
% |
|
$ |
10,007.2 |
|
|
$ |
9,314.9 |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services |
$ |
1,022.5 |
|
|
$ |
963.0 |
|
|
6 |
% |
|
$ |
2,375.5 |
|
|
$ |
2,300.1 |
|
|
3 |
% |
|
PEO
Services |
|
136.3 |
|
|
|
120.0 |
|
|
14 |
% |
|
|
381.3 |
|
|
|
341.5 |
|
|
12 |
% |
|
Other |
|
(306.2 |
) |
|
|
(255.1 |
) |
|
n/m |
|
|
|
(790.3 |
) |
|
|
(498.9 |
) |
|
n/m |
|
|
Total
pretax earnings |
$ |
852.6 |
|
|
$ |
827.9 |
|
|
3 |
% |
|
$ |
1,966.5 |
|
|
$ |
2,142.7 |
|
|
(8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
Nine Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
March 31, |
|
|
|
|
Segment margin |
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
Employer
Services |
|
36.5 |
% |
|
|
36.7 |
% |
|
(0.2 |
)% |
|
|
31.4 |
% |
|
|
32.0 |
% |
|
(0.5 |
)% |
|
PEO
Services |
|
12.7 |
% |
|
|
12.3 |
% |
|
0.4 |
% |
|
|
13.1 |
% |
|
|
13.2 |
% |
|
(0.1 |
)% |
|
Other |
n/m |
|
|
n/m |
|
|
n/m |
|
|
n/m |
|
|
n/m |
|
|
n/m |
|
|
Total
pretax margin |
|
23.1 |
% |
|
|
24.3 |
% |
|
(1.2 |
)% |
|
|
19.7 |
% |
|
|
23.0 |
% |
|
(3.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
Nine Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
March 31, |
|
|
|
|
Earnings per share
information: |
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
Net earnings |
$ |
643.1 |
|
|
$ |
587.9 |
|
|
9 |
% |
|
$ |
1,512.1 |
|
|
$ |
1,467.6 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding |
|
441.0 |
|
|
|
446.5 |
|
|
(1 |
)% |
|
|
441.5 |
|
|
|
448.9 |
|
|
(2 |
)% |
|
Basic earnings per
share |
$ |
1.46 |
|
|
$ |
1.32 |
|
|
11 |
% |
|
$ |
3.42 |
|
|
$ |
3.27 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding |
|
443.4 |
|
|
|
449.2 |
|
|
(1 |
)% |
|
|
444.1 |
|
|
|
451.3 |
|
|
(2 |
)% |
|
Diluted earnings per
share |
$ |
1.45 |
|
|
$ |
1.31 |
|
|
11 |
% |
|
$ |
3.40 |
|
|
$ |
3.25 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
pays per control - U.S. |
|
2.9 |
% |
|
|
2.5 |
% |
|
|
|
|
|
2.6 |
% |
|
|
2.5 |
% |
|
|
|
|
Change in
client revenue retention percentage - worldwide |
|
1.7 |
pts |
|
|
(1.7) |
pts |
|
|
|
|
|
1.0 |
pts |
|
|
(0.8) |
pts |
|
|
|
|
Employer Services/PEO
new business bookings growth - worldwide |
|
9 |
% |
|
|
(7) |
% |
|
|
|
|
|
4 |
% |
|
|
(5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PEO Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid PEO
worksite employees at end of period |
|
508,000 |
|
|
|
469,000 |
|
|
|
|
|
|
508,000 |
|
|
|
469,000 |
|
|
|
|
|
Average
paid PEO worksite employees during the period |
|
512,000 |
|
|
|
471,000 |
|
|
|
|
|
|
498,000 |
|
|
|
454,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
March 31, |
|
|
|
|
|
2018 |
|
2017 |
|
Change |
|
% Change |
|
2018 |
|
2017 |
|
Change |
|
% Change |
Average investment
balances at cost (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
$ |
1.9 |
|
|
$ |
2.7 |
|
|
$ |
(0.8 |
) |
|
(29 |
)% |
|
$ |
1.9 |
|
|
$ |
2.7 |
|
|
$ |
(0.8 |
) |
|
(29 |
)% |
Corporate
extended |
|
1.1 |
|
|
|
1.2 |
|
|
|
(0.2 |
) |
|
(15 |
)% |
|
|
3.2 |
|
|
|
3.4 |
|
|
|
(0.3 |
) |
|
(7 |
)% |
Total
corporate |
|
3.0 |
|
|
|
4.0 |
|
|
|
(1.0 |
) |
|
(25 |
)% |
|
|
5.1 |
|
|
|
6.1 |
|
|
|
(1.0 |
) |
|
(17 |
)% |
Funds
held for clients |
|
28.8 |
|
|
|
27.3 |
|
|
|
1.5 |
|
|
6 |
% |
|
|
24.1 |
|
|
|
22.7 |
|
|
|
1.4 |
|
|
6 |
% |
Total |
$ |
31.8 |
|
|
$ |
31.3 |
|
|
$ |
0.5 |
|
|
2 |
% |
|
$ |
29.2 |
|
|
$ |
28.8 |
|
|
$ |
0.4 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest rates
earned exclusive of realized losses (gains) on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
|
1.3 |
% |
|
|
0.8 |
% |
|
|
|
|
|
|
1.2 |
% |
|
|
0.7 |
% |
|
|
|
|
Corporate
extended |
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
Total
corporate |
|
1.5 |
% |
|
|
1.0 |
% |
|
|
|
|
|
|
1.6 |
% |
|
|
1.2 |
% |
|
|
|
|
Funds
held for clients |
|
1.9 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
|
|
Total |
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
(loss)/gain position at end of period |
$ |
(296.8 |
) |
|
$ |
70.7 |
|
|
|
|
|
|
$ |
(296.8 |
) |
|
$ |
70.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average short-term
financing (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
$ |
1.0 |
|
|
$ |
1.1 |
|
|
|
|
|
|
$ |
2.8 |
|
|
$ |
3.2 |
|
|
|
|
|
U.S.
& Canadian reverse repurchase agreement borrowings |
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
0.4 |
|
|
|
0.3 |
|
|
|
|
|
|
$ |
1.1 |
|
|
$ |
1.2 |
|
|
|
|
|
|
$ |
3.2 |
|
|
$ |
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest rates
paid on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
commercial paper borrowings |
|
1.5 |
% |
|
|
0.7 |
% |
|
|
|
|
|
|
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 |
$ |
134.8 |
|
|
$ |
111.6 |
|
|
$ |
23.2 |
|
|
21 |
% |
|
$ |
340.9 |
|
|
$ |
292.6 |
|
|
$ |
48.3 |
|
|
16 |
% |
Corporate extended
interest income (C) |
|
4.9 |
|
|
|
5.0 |
|
|
|
(0.1 |
) |
|
(3 |
)% |
|
|
42.7 |
|
|
|
40.1 |
|
|
|
2.6 |
|
|
6 |
% |
Corporate interest
expense-short-term financing (C) |
|
(3.8 |
) |
|
|
(2.2 |
) |
|
|
(1.7 |
) |
|
(78 |
)% |
|
|
(29.3 |
) |
|
|
(12.6 |
) |
|
|
(16.7 |
) |
|
(132 |
)% |
|
$ |
135.8 |
|
|
$ |
114.4 |
|
|
$ |
21.4 |
|
|
19 |
% |
|
$ |
354.3 |
|
|
$ |
320.1 |
|
|
$ |
34.2 |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 - Transformation initiatives - 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: - Transformation
initiatives - 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 - Transformation initiatives - 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 - Transformation initiatives - Non-operational costs
related to proxy contest matters - Tax Cuts and Jobs Act See
footnotes (b), (c), (d), (f), and (g) |
Adjusted effective tax rate |
Effective tax
rate |
See footnote (e) |
Constant currency basis |
U.S. GAAP P&L line items |
See footnote (h) |
Organic revenue growth, constant currency |
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 and 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 corresponding U.S. GAAP measures, and
they may not be comparable to similarly titled measures at other
companies. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
% Change |
|
March 31, |
|
% Change |
|
|
2018 |
|
2017 |
|
As Reported |
|
Constant CurrencyBasis (h) |
|
2018 |
|
2017 |
|
As Reported |
|
Constant CurrencyBasis (h) |
Net earnings |
|
$ |
643.1 |
|
|
$ |
587.9 |
|
|
9 |
% |
|
8 |
% |
|
$ |
1,512.1 |
|
|
$ |
1,467.6 |
|
|
3 |
% |
|
2 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
209.5 |
|
|
|
240.0 |
|
|
|
|
|
|
|
454.4 |
|
|
|
675.1 |
|
|
|
|
|
All other
interest expense (a) |
|
|
14.8 |
|
|
|
14.6 |
|
|
|
|
|
|
|
44.8 |
|
|
|
44.6 |
|
|
|
|
|
All other
interest income (a) |
|
|
(6.1 |
) |
|
|
(5.2 |
) |
|
|
|
|
|
|
(16.7 |
) |
|
|
(14.3 |
) |
|
|
|
|
Gain on
sale of business |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
Transformation initiatives (b) |
|
|
39.7 |
|
|
|
0.6 |
|
|
|
|
|
|
|
39.7 |
|
|
|
41.6 |
|
|
|
|
|
Proxy contest matters (f) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
33.2 |
|
|
|
— |
|
|
|
|
|
Adjusted EBIT |
|
$ |
901.0 |
|
|
$ |
837.9 |
|
|
8 |
% |
|
6 |
% |
|
$ |
2,067.5 |
|
|
$ |
2,009.2 |
|
|
3 |
% |
|
2 |
% |
Adjusted
EBIT Margin |
|
|
24.4 |
% |
|
|
24.6 |
% |
|
|
|
|
|
|
20.7 |
% |
|
|
21.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
$ |
209.5 |
|
|
$ |
240.0 |
|
|
(13 |
)% |
|
(14 |
)% |
|
$ |
454.4 |
|
|
$ |
675.1 |
|
|
(33 |
)% |
|
(34 |
)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business (c) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(84.0 |
) |
|
|
|
|
Transformation initiatives (d) |
|
|
9.7 |
|
|
|
0.2 |
|
|
|
|
|
|
|
9.6 |
|
|
|
15.7 |
|
|
|
|
|
Proxy
contest matters (f) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
10.4 |
|
|
|
— |
|
|
|
|
|
Tax Cuts and Jobs Act (g) |
|
|
(2.8 |
) |
|
|
— |
|
|
|
|
|
|
|
42.9 |
|
|
|
— |
|
|
|
|
|
Adjusted provision for
income taxes |
|
$ |
216.4 |
|
|
$ |
240.2 |
|
|
(10 |
)% |
|
(11 |
)% |
|
$ |
517.3 |
|
|
$ |
606.8 |
|
|
(15 |
)% |
|
(16 |
)% |
Adjusted
effective tax rate (e) |
|
|
24.3 |
% |
|
|
29.0 |
% |
|
|
|
|
|
|
25.4 |
% |
|
|
30.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
643.1 |
|
|
$ |
587.9 |
|
|
9 |
% |
|
8 |
% |
|
$ |
1,512.1 |
|
|
$ |
1,467.6 |
|
|
3 |
% |
|
2 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(205.4 |
) |
|
|
|
|
Provision
for income taxes on gain on sale of business (c) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
84.0 |
|
|
|
|
|
Transformation initiatives (b) |
|
|
39.7 |
|
|
|
0.6 |
|
|
|
|
|
|
|
39.7 |
|
|
|
41.6 |
|
|
|
|
|
Income
tax benefit for transformation initiatives (d) |
|
|
(9.7 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
(9.6 |
) |
|
|
(15.7 |
) |
|
|
|
|
Proxy
contest matters (f) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
33.2 |
|
|
|
— |
|
|
|
|
|
Income
tax benefit for proxy contest matters (f) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
(10.4 |
) |
|
|
— |
|
|
|
|
|
Income tax benefit from Tax Cuts and Jobs Act (g) |
|
|
2.8 |
|
|
|
— |
|
|
|
|
|
|
|
(42.9 |
) |
|
|
— |
|
|
|
|
|
Adjusted
net earnings |
|
$ |
675.9 |
|
|
$ |
588.3 |
|
|
15 |
% |
|
13 |
% |
|
$ |
1,522.1 |
|
|
$ |
1,372.1 |
|
|
11 |
% |
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
$ |
1.45 |
|
|
$ |
1.31 |
|
|
11 |
% |
|
9 |
% |
|
$ |
3.40 |
|
|
$ |
3.25 |
|
|
5 |
% |
|
4 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of business (c) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(0.27 |
) |
|
|
|
|
Transformation initiatives (b) (d) |
|
|
0.07 |
|
|
|
— |
|
|
|
|
|
|
|
0.07 |
|
|
|
0.06 |
|
|
|
|
|
Proxy
contest matters (f) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
0.05 |
|
|
|
— |
|
|
|
|
|
Tax Cuts and Jobs Act (g) |
|
|
0.01 |
|
|
|
— |
|
|
|
|
|
|
|
(0.10 |
) |
|
|
— |
|
|
|
|
|
Adjusted
diluted EPS |
|
$ |
1.52 |
|
|
$ |
1.31 |
|
|
16 |
% |
|
15 |
% |
|
$ |
3.43 |
|
|
$ |
3.04 |
|
|
13 |
% |
|
12 |
% |
(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
charges within transformation initiatives represent severance
charges related to our Service Alignment Initiative of $13.1
million, and other transformation initiatives of $26.6 million
which consist primarily of severance charges totaling $22.6 million
for the three months ended March 31, 2018. Charges for
transformation initiatives in other periods presented primarily
represent severance charges related to our Service Alignment
Initiative. Severance charges have been taken in the past and are
not included as an adjustment to get to adjusted results. Unlike
severance charges in prior periods, these specific charges relate
to actions that are part of our broad-based, company-wide
transformation 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 March 31, 2017 due to the
derecognition of goodwill upon the sale of the business. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) The
tax benefit on transformation initiatives 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 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 on the earnings and profits of our foreign
subsidiaries and the recording of a valuation allowance against our
foreign tax credits which may not be realized. We are still
analyzing certain aspects of the Act and refining calculations,
which could potentially result in the re-measurement of these
balances or potentially give rise to future adjustments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
"Constant currency basis" provides information that isolates the
actual growth of our operations. "Constant currency 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 |
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
March 31, |
Revenue
growth consolidated: |
|
|
|
2018 |
|
2017 |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
|
|
|
7 |
% |
|
2 |
% |
|
|
|
5 |
% |
|
4 |
% |
PEO Services |
|
|
|
10 |
% |
|
12 |
% |
|
|
|
13 |
% |
|
12 |
% |
Consolidated revenue growth as reported |
|
|
|
8 |
% |
|
5 |
% |
|
|
|
7 |
% |
|
6 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Impact of acquisitions |
|
|
|
(1 |
)% |
|
— |
% |
|
|
|
(1 |
)% |
|
— |
% |
Impact of dispositions |
|
|
|
— |
% |
|
1 |
% |
|
|
|
— |
% |
|
1 |
% |
Impact of foreign currency |
|
|
|
(1 |
)% |
|
— |
% |
|
|
|
(1 |
)% |
|
— |
% |
Consolidated organic revenue growth, constant
currency |
|
|
|
6 |
% |
|
6 |
% |
|
|
|
6 |
% |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services revenue growth as reported |
|
|
|
7 |
% |
|
2 |
% |
|
|
|
5 |
% |
|
4 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Impact of acquisitions |
|
|
|
(1 |
)% |
|
— |
% |
|
|
|
(1 |
)% |
|
— |
% |
Impact of dispositions |
|
|
|
— |
% |
|
1 |
% |
|
|
|
1 |
% |
|
1 |
% |
Impact of foreign currency |
|
|
|
(2 |
)% |
|
— |
% |
|
|
|
(1 |
)% |
|
— |
% |
Employer Services organic revenue growth, constant
currency |
|
|
|
4 |
% |
|
3 |
% |
|
|
|
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 |
|
|
|
Nine Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
March 31, |
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate extended
interest income |
|
|
|
$ |
4.9 |
|
$ |
5.0 |
|
|
|
$ |
42.7 |
|
$ |
40.1 |
|
|
All other interest
income |
|
|
|
|
6.1 |
|
|
5.2 |
|
|
|
|
16.7 |
|
|
14.3 |
|
|
Total interest income
on corporate funds |
|
|
|
$ |
11.0 |
|
$ |
10.1 |
|
|
|
$ |
59.4 |
|
$ |
54.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate interest
expense-short-term financing |
|
|
|
$ |
3.8 |
|
$ |
2.2 |
|
|
|
$ |
29.3 |
|
$ |
12.6 |
|
|
All other interest
expense |
|
|
|
|
14.8 |
|
|
14.6 |
|
|
|
|
44.8 |
|
|
44.6 |
|
|
Total interest
expense |
|
|
|
$ |
18.6 |
|
$ |
16.8 |
|
|
|
$ |
74.1 |
|
$ |
57.2 |
|
|
|
|
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 |
% |
|
~(160)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 |
Transformation initiatives - F17 |
|
|
90.0 |
|
+75bps |
|
|
(75)bps |
|
d |
Transformation initiatives - F18 |
|
|
|
|
|
+35bps |
|
e |
Proxy
contest matters - F18 |
|
|
|
|
|
+25bps |
|
f |
Adjusted EBIT margin (Non-GAAP) |
|
$ |
2,447.6 |
|
19.8 |
% |
|
~ Flat |
|
|
|
|
|
|
|
|
|
Effective tax rate
(GAAP) |
|
|
31.5 |
% |
|
24.5 |
% |
|
Gain on
sale of business - 2Q F17 |
|
|
(0.9 |
%) |
|
- |
|
b |
Workforce
Optimization Effort - 4Q F17 |
|
|
(0.0 |
%) |
|
- |
|
c |
Transformation initiatives - F17 |
|
|
+0.4 |
% |
|
- |
|
d |
Transformation initiatives - F18 |
|
|
- |
|
|
(0.0 |
%) |
e |
Proxy
contest matters - F18 |
|
|
- |
|
|
+0.1 |
% |
f |
Tax Cuts
and Jobs Act - F18 |
|
|
|
|
+1.7 |
% |
g |
Adjusted effective tax rate (Non-GAAP) |
|
|
30.9 |
% |
|
26.2 |
% |
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP) |
|
$ |
3.85 |
|
18 |
% |
|
11% -
12 |
% |
|
Gain on
sale of business - 2Q F17 |
|
|
(0.27 |
) |
(7 |
%) |
|
~+7 |
% |
b |
Workforce
Optimization Effort - 4Q F17 |
|
|
(0.01 |
) |
(0 |
%) |
|
~+0 |
% |
c |
Transformation initiatives - F17 |
|
|
0.12 |
|
+3 |
% |
|
~(3 |
%) |
d |
Transformation initiatives - F18 |
|
|
- |
|
- |
|
|
~+2 |
% |
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 |
% |
|
16% - 17 |
% |
|
|
|
|
|
|
|
|
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 changes 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) The charges within transformation initiatives primarily
represent expected severance charges related to our Service
Alignment Initiative of $20 million, and other transformation
initiatives of $27 million. Severance charges have been taken
in the past and are not included as an adjustment to get to
adjusted results. Unlike severance charges in prior periods,
these specific charges relate to actions that are part of our
broad-based, company-wide transformation initiative. This estimate
does not reflect charges related to the Company's announced
voluntary early retirement program. |
|
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
Danyal Hussain973.974.7836Danyal.Hussain@ADP.com
ADP - Media
Media Contacts:Michael
Schneider973.974.5678Michael.Schneider@ADP.com
Allyce Hackmann201.400.4583Allyce.Hackmann@ADP.com
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