ADP® (Nasdaq:ADP), a leading global provider of Human Capital
Management (HCM) solutions, today announced its fourth quarter and
fiscal 2018 financial results and provided its fiscal 2019 outlook.
Fourth Quarter and Fiscal 2018 Consolidated
Results
Compared to last year’s fourth quarter, revenues grew 8% to $3.3
billion, 6% organic constant currency. Net earnings were ahead of
Company expectations, but decreased 59% to $109 million primarily
due to the impact of pre-tax charges of $365 million related to the
Company’s Voluntary Early Retirement Program and other
transformation initiatives. Earnings before income taxes decreased
47% to $205 million, and include the effects of the charges
discussed above. Adjusted EBIT increased 31% to $576 million.
Adjusted EBIT margin increased about 300 basis points in the
quarter to 17.3%, supported by benefits from operational
efficiencies and transformation initiatives, offset in part by
acquisition-related expenses. ADP’s effective tax rate for the
quarter was 46.9%, and 28.7% on an adjusted basis. Diluted earnings
per share decreased 58% to $0.25 and adjusted diluted earnings per
share increased 39% to $0.92.
For the year, revenues grew 8% to $13.3 billion, 6% organic
constant currency. Net earnings were ahead of Company
expectations but decreased 6% to $1.6 billion primarily due to the
impacts of fiscal 2018 pre-tax charges of $405 million related to
the Company’s Voluntary Early Retirement Program and other
transformation initiatives, fiscal 2018 pre-tax charges of about
$33 million related to proxy contest matters, and a fiscal 2017
$205 million pre-tax gain on the sale of our CHSA and COBRA
businesses. Earnings before income taxes decreased 14% to
$2.2 billion, and include the effects of the items discussed
above. Adjusted EBIT increased 8% to $2.6 billion. Adjusted
EBIT margin increased about 10 basis points to 19.8% and included
about 30 basis points of pressure from acquisitions. Diluted
earnings per share decreased to $3.66, or 5%. Adjusted
diluted earnings per share increased to $4.35, representing growth
of 18%, and benefited from fewer shares outstanding and a lower
effective tax rate compared to last year.
“We are pleased with our growing momentum from our multi-year
investments in distribution, product, and operational initiatives,”
said Carlos Rodriguez, President and Chief Executive Officer, ADP.
“In particular, we remain confident that our client-centric focus
and our drive to meet the evolving needs of the global HCM market
through leading-edge product and unparalleled service is delivering
clear and positive results that are also contributing to an
improvement in retention and a sustained acceleration in our new
business bookings.”
“As we highlighted in our recent investor day, we see ample
opportunity to add value in new and innovative ways,” added Jan
Siegmund, Chief Financial Officer, ADP. “Investing in our strategic
initiatives while executing on margin opportunities is a key focus
of ours, and we believe that our strategy to create long-term
shareholder value by balancing top line revenue growth and strong
margins to drive EPS growth is working.”
Adjusted EBIT, adjusted EBIT margin, adjusted diluted earnings
per share, adjusted effective tax rate, constant currency, 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.
Fourth Quarter and Fiscal 2018 Segment
Results
Employer Services – Employer Services offers a comprehensive
range of HCM and human resources outsourcing solutions.
- Employer Services revenues increased 7% compared to last year’s
fourth quarter, 4% organic constant currency. Revenues increased 5%
for the fiscal year, 4% organic constant currency.
- Pays per control, the number of employees on ADP clients'
payrolls in the United States when measured on a same-store-sales
basis for a subset of clients ranging from small to large
businesses, increased 3.1% for the fourth quarter and 2.7% for the
full year.
- Employer Services client revenue retention was down 120 basis
points compared to last year’s fourth quarter, in line with
expectations, and up 50 basis points for the full year to
90.4%.
- Employer Services segment margin increased 200 basis points
compared to last year’s fourth quarter, including approximately 50
basis points of pressure from acquisitions. For the full year,
segment margin increased 10 basis points, including 40 basis points
of pressure from acquisitions.
PEO Services – PEO Services provides comprehensive employment
administration outsourcing solutions.
- PEO Services revenues increased 10% compared to last year’s
fourth quarter driven primarily by an 8% increase in average
worksite employees for the quarter. For the full year, revenues
increased 12%, driven by 9% growth in average worksite
employees.
- Average worksite employees paid by PEO Services were about
523,000 for the fourth quarter and 504,000 for the full year.
- PEO Services segment margin increased approximately 60 basis
points compared to last year’s fourth quarter, and increased
approximately 10 basis points for the full year.
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 fourth quarter, interest on funds held for clients
increased 20% to $126 million, and for the full year increased 17%
to $466 million.
- Average client funds balances increased 4% in the fourth
quarter to $24.9 billion, 3% on a constant currency basis. For the
full year, average client funds balances increased 6% to $24.3
billion, 5% on a constant currency basis.
- For the fourth quarter, the average interest yield on client
funds was 2.0%, which was up 30 basis points compared to a year
ago, and for the full year, average interest yield was 1.9%, up 20
basis points compared to a year ago.
Other Matters
On July 31, 2018, ADP acquired Celergo, a leading provider of
global payroll management services. Global HCM continues to
represent a significant opportunity for ADP, as multinational
companies are increasingly looking for business partners with
broad-based geographic and technological capabilities to facilitate
greater integration and alignment with their businesses. This
acquisition will enhance ADP’s international payroll offerings with
a strong proprietary cloud-based technology platform.
Fiscal 2019 Outlook
The following outlook reflects the impact of certain changes to
ADP’s segment reporting as well as the adoption of ASC 606,
“Revenue from Contracts with Customers.” Accordingly, comparisons
to fiscal 2018 results refer to pro-forma fiscal 2018 financials
using the same methodology. Please see the included bridge of
as-reported fiscal 2018 results to pro-forma fiscal 2018
results.
Certain components of ADP’s fiscal 2019 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 2018 pre-tax proxy contest charges of about $33
million.
- Fiscal 2018 one-time net tax benefit of about $196 million from
the Tax Cuts and Jobs Act.
- Fiscal 2018 pre-tax charges of about $405 million related to
the Voluntary Early Retirement Program, the Service Alignment
Initiative, and other transformation initiatives.
- Fiscal 2019 pre-tax restructuring charges of $15 million
related to the Service Alignment Initiative and other
transformation initiatives.
ADP anticipates full-year fiscal 2019 revenue growth of 5% to 7%
and expects adjusted EBIT margin to increase 100 to 125 basis
points for the full year, from 20.7% pro-forma adjusted EBIT margin
in fiscal 2018. This margin expansion outlook reflects
downward pressure created by the adoption of ASC 606 in fiscal 2019
and the associated comparison to pro-forma 2018 financials. ADP
estimates that margin expansion on an ASC 605 basis in fiscal 2019
would have been about 30 basis points higher.
ADP expects full-year diluted earnings per share to be up 19% to
21%, compared to $4.28 pro-forma fiscal 2018 diluted earnings per
share, and expects adjusted diluted earnings per share growth of
13% to 15%, compared to $4.53 pro-forma fiscal 2018 adjusted
diluted earnings per share. ADP anticipates an adjusted effective
tax rate of 25.1%.
Reportable Segments Fiscal 2019 Forecast
- For the Employer Services segment, ADP anticipates revenue
growth of approximately 4% to 6%, and expects margins to increase
150 to 175 basis points. ADP anticipates growth in Employer
Services new business bookings of 6% to 8% and Employer Services
client revenue retention to improve 25 to 50 basis points.
- ADP expects an increase in pays per control of 2.5% for the
year.
- For the PEO Services segment, ADP anticipates average Worksite
Employee growth of 7% to 8%, total revenue growth of 7% to 9%, and
revenue growth excluding zero-margin pass-through costs of 5%
to 7%. ADP expects PEO Services margins to decline 75 to 50 basis
points for the year, reflecting more than 75 basis points of
anticipated grow-over pressure related to fiscal 2018 worker’s
compensation reserve reductions by ADP Indemnity, the results of
which are now included in the PEO Services segment.
Client Funds Extended Investment Strategy Fiscal 2019
Forecast
The interest assumptions in our forecasts are based on Fed Funds
futures contracts and forward yield curves as of July 30, 2018. The
Fed Funds futures contracts used in the client short and corporate
cash interest income forecasts assume increases in the Fed Funds
rate in September 2018 and December 2018. The three-and-a-half and
five-year U.S. government agency rates based on the forward yield
curves as of July 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 $80 to $90 million, or 17% to 19%. This is based on
anticipated growth in average client funds balances of
approximately 3% to 4% from $24.3 billion in fiscal 2018, and an
average yield which is anticipated to increase about 30 basis
points to 2.2% compared to the fiscal 2018 average yield of
1.9%.
- The total contribution from the client funds extended
investment strategy is expected to increase about $60 to $70
million.
Investor Webcast Today
ADP will host a conference call for financial analysts today,
Wednesday, August 1, 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 |
|
Twelve Months Ended |
|
|
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Revenues, other than interest on funds |
|
|
|
|
|
|
|
|
|
|
|
held for clients and PEO revenues |
|
$ |
2,222.5 |
|
|
$ |
2,073.7 |
|
|
$ |
8,985.2 |
|
|
$ |
8,518.1 |
|
|
|
|
Interest on funds held for clients |
|
|
125.6 |
|
|
|
104.7 |
|
|
|
466.5 |
|
|
|
397.4 |
|
|
|
|
PEO revenues (A) (B) |
|
|
970.5 |
|
|
|
886.4 |
|
|
|
3,874.1 |
|
|
|
3,464.3 |
|
|
|
|
|
Total revenues |
|
|
3,318.6 |
|
|
|
3,064.8 |
|
|
|
13,325.8 |
|
|
|
12,379.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (B) |
|
|
1,727.2 |
|
|
|
1,622.5 |
|
|
|
6,937.9 |
|
|
|
6,416.1 |
|
|
|
|
Systems development & programming costs |
|
|
152.6 |
|
|
|
166.9 |
|
|
|
630.2 |
|
|
|
627.5 |
|
|
|
|
Depreciation & amortization |
|
|
72.4 |
|
|
|
57.8 |
|
|
|
274.5 |
|
|
|
226.2 |
|
|
|
|
|
Total costs
of revenues |
|
|
1,952.2 |
|
|
|
1,847.2 |
|
|
|
7,842.6 |
|
|
|
7,269.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
836.9 |
|
|
|
829.6 |
|
|
|
2,971.5 |
|
|
|
2,783.2 |
|
|
|
Interest expense |
|
|
28.5 |
|
|
|
22.9 |
|
|
|
102.7 |
|
|
|
80.0 |
|
|
|
|
|
Total expenses |
|
|
2,817.6 |
|
|
|
2,699.7 |
|
|
|
10,916.8 |
|
|
|
10,133.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense/(income), net |
|
|
296.5 |
|
|
|
(23.3 |
) |
|
|
237.9 |
|
|
|
(284.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
204.5 |
|
|
|
388.4 |
|
|
|
2,171.1 |
|
|
|
2,531.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
95.8 |
|
|
|
122.6 |
|
|
|
550.3 |
|
|
|
797.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
108.7 |
|
|
$ |
265.8 |
|
|
$ |
1,620.8 |
|
|
$ |
1,733.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.25 |
|
|
$ |
0.60 |
|
|
$ |
3.68 |
|
|
$ |
3.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.25 |
|
|
$ |
0.59 |
|
|
$ |
3.66 |
|
|
$ |
3.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.690 |
|
|
$ |
0.570 |
|
|
$ |
2.520 |
|
|
$ |
2.240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of other expense/(income),
net: |
|
|
|
|
|
|
|
|
|
|
Interest income on corporate funds |
|
$ |
(24.1 |
) |
|
$ |
(22.3 |
) |
|
$ |
(83.5 |
) |
|
$ |
(76.7 |
) |
|
|
Realized gains on available-for-sale securities |
|
|
(0.1 |
) |
|
|
(2.1 |
) |
|
|
(2.0 |
) |
|
|
(5.3 |
) |
|
|
Realized losses on available-for-sale securities |
|
|
1.3 |
|
|
|
1.1 |
|
|
|
4.5 |
|
|
|
3.1 |
|
|
|
Gain on sale of assets |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.7 |
) |
|
|
— |
|
|
|
Gain on sale of business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(205.4 |
) |
|
|
Voluntary Early Retirement Program |
|
|
319.6 |
|
|
|
— |
|
|
|
319.6 |
|
|
|
— |
|
|
|
Total other expense/(income), net |
|
$ |
296.5 |
|
|
$ |
(23.3 |
) |
|
$ |
237.9 |
|
|
$ |
(284.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Professional Employer Organization (“PEO”) revenues are
net of direct pass-through costs, primarily consisting of payroll
wages and payroll taxes of $9,593.9 million and $8,527.1 million
for the three months ended June 30, 2018 and 2017, respectively,
and $39,140.9 million and $34,567.4 million for the twelve months
ended June 30, 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
$732.0 million and $673.9 million for the three months ended June
30, 2018 and 2017, respectively, and $2,945.5 million and $2,628.4
million for the twelve months ended June 30, 2018 and 2017,
respectively. |
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
Consolidated Balance Sheets |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
|
|
|
|
June 30, |
|
June 30, |
|
2018 |
|
2017 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
2,170.0 |
|
|
$ |
2,780.4 |
|
Accounts receivable, net of allowance for doubtful accounts
of $51.3 and $49.6, respectively |
|
1,984.2 |
|
|
|
1,703.6 |
|
Other current assets |
|
758.0 |
|
|
|
883.2 |
|
Total
current assets before funds held for clients |
|
4,912.2 |
|
|
|
5,367.2 |
|
Funds held for clients |
|
27,137.8 |
|
|
|
27,291.5 |
|
Total
current assets |
|
32,050.0 |
|
|
|
32,658.7 |
|
Long-term
receivables, net of allowance for doubtful accounts of $0.5 and
$0.8, respectively |
|
25.5 |
|
|
|
28.0 |
|
Property,
plant and equipment, net |
|
793.7 |
|
|
|
779.9 |
|
Other
assets |
|
1,089.6 |
|
|
|
1,352.2 |
|
Goodwill |
|
2,243.5 |
|
|
|
1,741.0 |
|
Intangible
assets, net |
|
886.4 |
|
|
|
620.2 |
|
Total assets |
$ |
37,088.7 |
|
|
$ |
37,180.0 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
135.4 |
|
|
$ |
149.7 |
|
Accrued expenses and other current liabilities |
|
1,547.7 |
|
|
|
1,381.9 |
|
Accrued payroll and payroll-related expenses |
|
667.7 |
|
|
|
562.5 |
|
Dividends payable |
|
298.9 |
|
|
|
250.5 |
|
Short-term deferred revenues |
|
226.5 |
|
|
|
232.9 |
|
Income taxes payable |
|
43.9 |
|
|
|
49.0 |
|
Total
current liabilities before client funds obligations |
|
2,920.1 |
|
|
|
2,626.5 |
|
Client funds obligations |
|
27,493.5 |
|
|
|
27,189.4 |
|
Total
current liabilities |
|
30,413.6 |
|
|
|
29,815.9 |
|
Long-term
debt |
|
2,002.4 |
|
|
|
2,002.4 |
|
Other
liabilities |
|
728.0 |
|
|
|
830.2 |
|
Deferred
income taxes |
|
107.3 |
|
|
|
163.1 |
|
Long-term
deferred revenues |
|
377.8 |
|
|
|
391.4 |
|
Total liabilities |
|
33,629.1 |
|
|
|
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 June 30, 2018 and June 30, 2017; outstanding,
438.8 and 445.0 shares at June 30, 2018 and June 30, 2017,
respectively |
|
63.9 |
|
|
|
63.9 |
|
Capital in
excess of par value |
|
1,014.8 |
|
|
|
867.8 |
|
Retained
earnings |
|
15,271.3 |
|
|
|
14,728.2 |
|
Treasury
stock - at cost: 199.9 and 193.7 shares at June 30, 2018 and June
30, 2017, respectively |
|
(12,209.6 |
) |
|
|
(11,303.7 |
) |
Accumulated
other comprehensive loss |
|
(680.8 |
) |
|
|
(379.2 |
) |
Total stockholders’ equity |
|
3,459.6 |
|
|
|
3,977.0 |
|
Total
liabilities and stockholders’ equity |
$ |
37,088.7 |
|
|
$ |
37,180.0 |
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
Statements of Consolidated Cash Flows |
|
|
|
(In
millions) |
|
|
|
(Unaudited) |
Twelve Months Ended |
|
June 30, |
|
2018 |
|
2017 *As Adjusted |
Cash Flows from Operating Activities: |
|
|
|
Net
earnings |
$ |
1,620.8 |
|
|
$ |
1,733.4 |
|
Adjustments
to reconcile net earnings to cash flows provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
377.6 |
|
|
|
316.1 |
|
Deferred income taxes |
|
0.5 |
|
|
|
10.0 |
|
Stock-based compensation expense |
|
175.4 |
|
|
|
138.9 |
|
Net pension expense |
|
330.4 |
|
|
|
24.2 |
|
Net amortization of premiums and accretion of discounts on
available-for-sale securities |
|
71.5 |
|
|
|
85.9 |
|
Gain on sale of assets |
|
(0.4 |
) |
|
|
— |
|
Gain on sale of divested businesses, net of tax |
|
— |
|
|
|
(121.4 |
) |
Other |
|
31.9 |
|
|
|
37.1 |
|
Changes in
operating assets and liabilities, net of effects from acquisitions
and divestitures of businesses: |
|
|
|
(Increase)/decrease in accounts receivable |
|
(291.8 |
) |
|
|
23.4 |
|
Decrease/(increase) in other assets |
|
93.5 |
|
|
|
(269.1 |
) |
Decrease in accounts payable |
|
(1.9 |
) |
|
|
(11.6 |
) |
Increase in accrued expenses and other liabilities |
|
107.7 |
|
|
|
159.0 |
|
Net cash
flows provided by operating activities |
|
2,515.2 |
|
|
|
2,125.9 |
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
Purchases
of corporate and client funds marketable securities |
|
(4,876.8 |
) |
|
|
(4,382.8 |
) |
Proceeds
from the sales and maturities of corporate and client funds
marketable securities |
|
3,455.0 |
|
|
|
3,593.6 |
|
Capital
expenditures |
|
(206.1 |
) |
|
|
(240.2 |
) |
Additions
to intangibles |
|
(264.7 |
) |
|
|
(230.4 |
) |
Acquisitions of businesses, net of cash acquired |
|
(612.4 |
) |
|
|
(87.4 |
) |
Proceeds
from the sale of property, plant, and equipment and other
assets |
|
0.4 |
|
|
|
— |
|
Proceeds
from the sale of divested businesses |
|
— |
|
|
|
234.0 |
|
Net cash
flows used in investing activities |
|
(2,504.6 |
) |
|
|
(1,113.2 |
) |
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
Net
increase/(decrease) in client funds obligations |
|
340.4 |
|
|
|
(6,120.6 |
) |
Payments of
debt |
|
(7.3 |
) |
|
|
(2.0 |
) |
Repurchases
of common stock |
|
(989.3 |
) |
|
|
(1,259.6 |
) |
Net
proceeds from stock purchase plan and stock-based compensation
plans |
|
69.3 |
|
|
|
95.7 |
|
Dividends
paid |
|
(1,063.7 |
) |
|
|
(995.2 |
) |
Other |
|
(5.3 |
) |
|
|
— |
|
Net cash
flows used in financing activities |
|
(1,655.9 |
) |
|
|
(8,281.7 |
) |
|
|
|
|
Effect of
exchange rate changes on cash, cash equivalents, restricted cash,
and restricted cash equivalents |
|
5.8 |
|
|
|
(8.0 |
) |
|
|
|
|
Net change
in cash, cash equivalents, restricted cash, and restricted cash
equivalents |
|
(1,639.5 |
) |
|
|
(7,277.0 |
) |
|
|
|
|
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 |
$ |
6,542.1 |
|
|
$ |
8,181.6 |
|
|
|
|
|
Reconciliation of cash, cash equivalents, restricted cash,
and restricted cash equivalents to the Consolidated Balance
Sheets |
|
|
|
Cash and
cash equivalents |
|
2,170.0 |
|
|
|
2,780.4 |
|
Restricted
cash and restricted cash equivalents included in funds held for
clients |
|
4,372.1 |
|
|
|
5,401.2 |
|
|
|
|
|
|
|
|
|
Total cash,
cash equivalents, restricted cash, and restricted cash
equivalents |
$ |
6,542.1 |
|
|
$ |
8,181.6 |
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
Cash paid for interest |
$ |
100.5 |
|
|
$ |
78.1 |
|
Cash paid for income taxes, net of income tax refunds |
$ |
529.7 |
|
|
$ |
817.1 |
|
|
|
|
|
*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 |
|
|
|
Twelve Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
$ |
2,499.7 |
|
|
$ |
2,337.4 |
|
|
7% |
|
$ |
10,057.8 |
|
|
$ |
9,535.2 |
|
|
5% |
|
PEO Services |
|
976.7 |
|
|
|
891.6 |
|
|
10% |
|
|
3,896.6 |
|
|
|
3,483.6 |
|
|
12% |
|
Other |
|
(157.8 |
) |
|
|
(164.2 |
) |
|
n/m |
|
|
(628.6 |
) |
|
|
(639.0 |
) |
|
n/m |
|
Total revenues |
$ |
3,318.6 |
|
|
$ |
3,064.8 |
|
|
8% |
|
$ |
13,325.8 |
|
|
$ |
12,379.8 |
|
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
$ |
711.9 |
|
|
$ |
618.4 |
|
|
15% |
|
$ |
3,087.4 |
|
|
$ |
2,918.5 |
|
|
6% |
|
PEO Services |
|
122.9 |
|
|
|
107.1 |
|
|
15% |
|
|
504.2 |
|
|
|
448.6 |
|
|
12% |
|
Other |
|
(630.3 |
) |
|
|
(337.1 |
) |
|
n/m |
|
|
(1,420.5 |
) |
|
|
(836.0 |
) |
|
n/m |
|
Total pretax earnings |
$ |
204.5 |
|
|
$ |
388.4 |
|
|
(47)% |
|
$ |
2,171.1 |
|
|
$ |
2,531.1 |
|
|
(14)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
Segment
margin |
2018 |
|
2017 |
|
Change |
|
2018 |
|
2017 |
|
Change |
|
Employer Services |
|
28.5% |
|
|
26.5% |
|
2.0% |
|
|
30.7% |
|
|
30.6% |
|
0.1% |
|
PEO Services |
|
12.6% |
|
|
12.0% |
|
0.6% |
|
|
12.9% |
|
|
12.9% |
|
0.1% |
|
Other |
n/m |
|
n/m |
|
n/m |
|
n/m |
|
n/m |
|
n/m |
|
Total pretax margin |
|
6.2% |
|
|
12.7% |
|
(6.5)% |
|
|
16.3% |
|
|
20.4% |
|
(4.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
Earnings
per share information: |
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
Net
earnings |
$ |
108.7 |
|
|
$ |
265.8 |
|
|
(59)% |
|
$ |
1,620.8 |
|
|
$ |
1,733.4 |
|
|
(6)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
|
438.0 |
|
|
|
444.3 |
|
|
(1)% |
|
|
440.6 |
|
|
|
447.8 |
|
|
(2)% |
|
Basic
earnings per share |
$ |
0.25 |
|
|
$ |
0.60 |
|
|
(58)% |
|
$ |
3.68 |
|
|
$ |
3.87 |
|
|
(5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding |
|
440.9 |
|
|
|
447.1 |
|
|
(1)% |
|
|
443.3 |
|
|
|
450.3 |
|
|
(2)% |
|
Diluted
earnings per share |
$ |
0.25 |
|
|
$ |
0.59 |
|
|
(58)% |
|
$ |
3.66 |
|
|
$ |
3.85 |
|
|
(5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2018 |
|
2017 |
|
|
|
2018 |
|
2017 |
|
|
|
Key
Statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in pays per control - U.S. |
|
3.1% |
|
|
2.1% |
|
|
|
|
2.7% |
|
|
2.4% |
|
|
|
Change in client revenue retention percentage -
worldwide |
-1.2 pts |
|
0.6 pts |
|
|
|
0.5 pts |
|
(0.5) pts |
|
|
|
Employer Services/PEO new business bookings growth -
worldwide |
|
18% |
|
|
(7)% |
|
|
|
|
8% |
|
|
(5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PEO
Services: |
|
|
|
|
|
|
|
|
|
|
|
|
Paid PEO worksite employees at end of period |
|
535,000 |
|
|
491,000 |
|
|
|
|
535,000 |
|
|
491,000 |
|
|
|
Average paid PEO worksite employees during the period |
|
523,000 |
|
|
485,000 |
|
|
|
|
504,000 |
|
|
462,000 |
|
|
|
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 |
|
|
|
|
|
Twelve Months Ended |
|
|
|
|
|
June 30, |
|
|
|
|
|
June 30, |
|
|
|
|
|
2018 |
|
2017 |
|
Change |
|
% Change |
|
2018 |
|
2017 |
|
Change |
|
% Change |
Average
investment balances at cost (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
$ |
2.1 |
|
|
$ |
2.9 |
|
|
$ |
(0.7 |
) |
|
(26 |
)% |
|
$ |
2.0 |
|
|
$ |
2.8 |
|
|
$ |
(0.8 |
) |
|
(28 |
)% |
Corporate extended |
|
3.1 |
|
|
|
3.3 |
|
|
|
(0.2 |
) |
|
(7 |
)% |
|
|
3.1 |
|
|
|
3.4 |
|
|
|
(0.3 |
) |
|
(7 |
)% |
Total corporate |
|
5.2 |
|
|
|
6.2 |
|
|
|
(1.0 |
) |
|
(16 |
)% |
|
|
5.1 |
|
|
|
6.1 |
|
|
|
(1.0 |
) |
|
(17 |
)% |
Funds held for clients |
|
24.9 |
|
|
|
23.9 |
|
|
|
1.0 |
|
|
4 |
% |
|
|
24.3 |
|
|
|
23.0 |
|
|
|
1.3 |
|
|
6 |
% |
Total |
$ |
30.1 |
|
|
$ |
30.1 |
|
|
$ |
— |
|
|
— |
% |
|
$ |
29.4 |
|
|
$ |
29.2 |
|
|
$ |
0.3 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates earned exclusive of realized losses (gains) on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, other than corporate extended |
|
1.7 |
% |
|
|
1.1 |
% |
|
|
|
|
|
|
1.3 |
% |
|
|
0.8 |
% |
|
|
|
|
Corporate extended |
|
2.0 |
% |
|
|
1.7 |
% |
|
|
|
|
|
|
1.8 |
% |
|
|
1.6 |
% |
|
|
|
|
Total corporate |
|
1.9 |
% |
|
|
1.4 |
% |
|
|
|
|
|
|
1.6 |
% |
|
|
1.2 |
% |
|
|
|
|
Funds held for clients |
|
2.0 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
|
|
Total |
|
2.0 |
% |
|
|
1.7 |
% |
|
|
|
|
|
|
1.9 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized (loss)/gain position at end of period |
$ |
(355.7 |
) |
|
$ |
102.5 |
|
|
|
|
|
|
$ |
(355.7 |
) |
|
$ |
102.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
short-term financing (in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial paper borrowings |
$ |
2.8 |
|
|
$ |
3.0 |
|
|
|
|
|
|
$ |
2.8 |
|
|
$ |
3.1 |
|
|
|
|
|
U.S. & Canadian reverse repurchase agreement
borrowings |
|
0.3 |
|
|
|
0.3 |
|
|
|
|
|
|
|
0.4 |
|
|
|
0.3 |
|
|
|
|
|
|
$ |
3.1 |
|
|
$ |
3.3 |
|
|
|
|
|
|
$ |
3.1 |
|
|
$ |
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest rates paid on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. commercial paper borrowings |
|
1.8 |
% |
|
|
1.0 |
% |
|
|
|
|
|
|
1.4 |
% |
|
|
0.6 |
% |
|
|
|
|
U.S. & Canadian reverse repurchase agreement
borrowings |
|
1.7 |
% |
|
|
0.8 |
% |
|
|
|
|
|
|
1.3 |
% |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
funds held for clients |
$ |
125.6 |
|
|
$ |
104.7 |
|
|
$ |
20.8 |
|
|
20 |
% |
|
$ |
466.5 |
|
|
$ |
397.4 |
|
|
$ |
69.1 |
|
|
17 |
% |
Corporate
extended interest income (C) |
|
15.3 |
|
|
|
14.2 |
|
|
|
1.2 |
|
|
8 |
% |
|
|
58.0 |
|
|
|
54.3 |
|
|
|
3.7 |
|
|
7 |
% |
Corporate
interest expense-short-term financing (C) |
|
(13.9 |
) |
|
|
(8.1 |
) |
|
|
(5.8 |
) |
|
(72 |
)% |
|
|
(43.2 |
) |
|
|
(20.7 |
) |
|
|
(22.5 |
) |
|
(109 |
)% |
|
$ |
127.0 |
|
|
$ |
110.8 |
|
|
$ |
16.2 |
|
|
15 |
% |
|
$ |
481.3 |
|
|
$ |
430.9 |
|
|
$ |
50.3 |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 - Gains/losses
on sales of businesses and assets - All other interest expense and
income - Transformation initiatives - Non-operational costs related
to proxy contest matters See footnotes (a), (b), and (c) |
Adjusted net earnings |
Net earnings |
Pre-tax and 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 (b), (c), (d), (e) and (f) |
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), (e), and (f) |
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), and (f) |
Adjusted effective tax rate |
Effective tax rate |
See footnote (g) |
Constant Currency Basis |
U.S. GAAP P&L line items |
See footnote (h) |
Organic 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 |
|
|
|
|
|
Twelve Months Ended |
|
|
|
|
|
|
June 30, |
|
% Change |
|
June 30, |
|
% Change |
|
|
2018 |
|
2017 |
|
AsReported |
|
ConstantCurrencyBasis (h) |
|
2018 |
|
2017 |
|
AsReported |
|
ConstantCurrencyBasis (h) |
Net
earnings |
|
$108.7 |
|
$265.8 |
|
(59)% |
|
(62)% |
|
$1,620.8 |
|
$1,733.4 |
|
(6)% |
|
(8)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
95.8 |
|
122.6 |
|
|
|
|
|
550.3 |
|
797.7 |
|
|
|
|
All other interest expense (a) |
|
14.6 |
|
14.8 |
|
|
|
|
|
59.4 |
|
59.3 |
|
|
|
|
All other interest income (a) |
|
(8.8) |
|
(8.1) |
|
|
|
|
|
(25.5) |
|
(22.4) |
|
|
|
|
Gain on sale of business |
|
— |
|
— |
|
|
|
|
|
— |
|
(205.4) |
|
|
|
|
Transformation initiatives (b) |
|
365.3 |
|
43.5 |
|
|
|
|
|
404.8 |
|
85.0 |
|
|
|
|
Proxy contest matters (c) |
|
— |
|
— |
|
|
|
|
|
33.3 |
|
— |
|
|
|
|
Adjusted
EBIT |
|
$575.6 |
|
$438.6 |
|
31% |
|
28% |
|
$2,643.1 |
|
$2,447.6 |
|
8% |
|
7% |
Adjusted EBIT Margin |
|
17.3% |
|
14.3% |
|
|
|
|
|
19.8% |
|
19.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
$ 95.8 |
|
$ 122.6 |
|
(22)% |
|
(25)% |
|
$ 550.3 |
|
$ 797.7 |
|
(31)% |
|
(32)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of business (d) |
|
— |
|
— |
|
|
|
|
|
— |
|
(84.0) |
|
|
|
|
Transformation initiatives (e) |
|
112.4 |
|
16.4 |
|
|
|
|
|
122.1 |
|
32.0 |
|
|
|
|
Proxy contest matters (c) |
|
— |
|
— |
|
|
|
|
|
10.4 |
|
— |
|
|
|
|
Tax Cuts and Jobs Act (f) |
|
(44.4) |
|
— |
|
|
|
|
|
(1.7) |
|
— |
|
|
|
|
Adjusted
provision for income taxes |
|
$163.8 |
|
$139.0 |
|
18% |
|
15% |
|
$681.1 |
|
$745.7 |
|
(9)% |
|
(10)% |
Adjusted effective tax rate (g) |
|
28.7% |
|
32.2% |
|
|
|
|
|
26.1% |
|
30.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
|
$108.7 |
|
$265.8 |
|
(59)% |
|
(62)% |
|
$1,620.8 |
|
$1,733.4 |
|
(6)% |
|
(8)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of business |
|
— |
|
— |
|
|
|
|
|
— |
|
(205.4) |
|
|
|
|
Provision for income taxes on gain on sale of business
(d) |
|
— |
|
— |
|
|
|
|
|
— |
|
84.0 |
|
|
|
|
Transformation initiatives (b) |
|
365.3 |
|
43.5 |
|
|
|
|
|
404.8 |
|
85.0 |
|
|
|
|
Income tax benefit for transformation initiatives (e) |
|
(112.4) |
|
(16.4) |
|
|
|
|
|
(122.1) |
|
(32.0) |
|
|
|
|
Proxy contest matters (c) |
|
— |
|
— |
|
|
|
|
|
33.3 |
|
— |
|
|
|
|
Income tax benefit for proxy contest matters (e) |
|
— |
|
— |
|
|
|
|
|
(10.4) |
|
— |
|
|
|
|
Tax Cuts and Jobs Act (f) |
|
44.4 |
|
— |
|
|
|
|
|
1.7 |
|
— |
|
|
|
|
Adjusted net earnings |
|
$406.0 |
|
$292.9 |
|
39% |
|
36% |
|
$1,928.1 |
|
$1,665.0 |
|
16% |
|
15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$0.25 |
|
$0.59 |
|
(58)% |
|
(61)% |
|
$3.66 |
|
$3.85 |
|
(5)% |
|
(6)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of business |
|
— |
|
— |
|
|
|
|
|
— |
|
(0.27) |
|
|
|
|
Transformation initiatives (b) |
|
0.57 |
|
0.06 |
|
|
|
|
|
0.64 |
|
0.12 |
|
|
|
|
Proxy contest matters (c) |
|
— |
|
— |
|
|
|
|
|
0.05 |
|
— |
|
|
|
|
Tax Cuts and Jobs Act (f) |
|
0.10 |
|
— |
|
|
|
|
|
— |
|
— |
|
|
|
|
Adjusted diluted EPS |
|
$0.92 |
|
$0.66 |
|
39% |
|
36% |
|
$4.35 |
|
$3.70 |
|
18% |
|
16% |
(a) Our Adjusted EBIT from continuing operations continues 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) We recorded a charge of $404.8 million related to
transformation initiatives in fiscal 2018. The charges within
transformation initiatives in fiscal 2018 includes $319.6 million
related to the special termination benefit charges and $17.5
million of other charges related to our Voluntary Early Retirement
Program ("VERP"), severance charges related to our Service
Alignment Initiative of $20.5 million, and other transformation
initiatives of $47.2 million which primarily consist of severance
charges totaling $41.9 million for fiscal 2018. Charges for
transformation initiatives in other periods presented primarily
represent severance charges related to our Service Alignment
Initiative and Workforce Optimization Effort. Unlike severance
charges in prior periods, which are not included as an adjustment
to get to adjusted results, these specific charges relate to
actions that are part of our broad-based, company-wide
transformation initiative. |
|
|
|
|
|
|
|
|
|
(c) Represents non-operational costs relating to proxy
contest matters. |
|
|
|
|
|
|
|
|
|
(d) The taxes on the gains on the sale of the businesses were
calculated based on the annualized marginal rate in effect during
the quarter of the adjustment. The tax amount was adjusted
for a book vs. tax basis difference for the year ended
June 30, 2017 due to the derecognition of goodwill upon the
sale of the business. |
|
|
|
|
|
|
|
|
|
(e) The tax benefit/provision on the transformation
initiatives and non-operational charges related to proxy contest
matters was calculated based on the annualized marginal rate in
effect during the quarter of the adjustment. |
|
|
|
|
|
|
|
|
|
(f) The one-time net provision from the enactment of the Tax
Cuts and Jobs Act is comprised of a one-time transition tax on the
earnings and profits of our foreign subsidiaries, accrued foreign
withholding taxes on future distributions of earning and profit
that may no longer be utilizable as foreign tax credits, and the
recording of a valuation allowance against our foreign tax credits
which may not be realized offset by the application of the newly
enacted U.S. corporate tax rates to our U.S. deferred tax
balances. 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. |
|
|
|
|
|
|
|
|
|
(g) 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. |
|
|
|
|
|
|
|
|
|
(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 revenue
growth rates to the non-GAAP measure of organic constant currency
revenue growth, 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 Services segment is
not impacted by acquisitions, dispositions or foreign
currency. |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
June 30, |
|
June 30, |
|
Revenue
growth consolidated: |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
Employer Services |
7% |
|
2% |
|
5% |
|
4% |
|
PEO Services |
10% |
|
16% |
|
12% |
|
13% |
|
Consolidated revenue growth as reported |
8% |
|
6% |
|
8% |
|
6% |
|
Adjustments: |
|
|
|
|
|
|
|
|
Impact of acquisitions |
(1)% |
|
—% |
|
(1)% |
|
—% |
|
Impact of dispositions |
—% |
|
1% |
|
—% |
|
1% |
|
Impact of foreign currency |
(1)% |
|
—% |
|
(1)% |
|
—% |
|
Consolidated revenue growth, organic constant
currency |
6% |
|
7% |
|
6% |
|
7% |
|
|
|
|
|
|
|
|
|
|
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
Services revenue growth as reported |
7% |
|
2% |
|
5% |
|
4% |
|
Adjustments: |
|
|
|
|
|
|
|
|
Impact of acquisitions |
(1)% |
|
—% |
|
(1)% |
|
—% |
|
Impact of dispositions |
—% |
|
1% |
|
—% |
|
1% |
|
Impact of foreign currency |
(1)% |
|
1% |
|
(1)% |
|
—% |
|
Employer Services revenue growth, organic constant
currency |
4% |
|
3% |
|
4% |
|
4% |
|
(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 |
|
Twelve Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
Corporate
extended interest income |
$ |
15.3 |
|
$ |
14.2 |
|
$ |
58.0 |
|
$ |
54.3 |
|
All other
interest income |
|
8.8 |
|
|
8.1 |
|
|
25.5 |
|
|
22.4 |
|
Total
interest income on corporate funds |
$ |
24.1 |
|
$ |
22.3 |
|
$ |
83.5 |
|
$ |
76.7 |
|
|
|
|
|
|
|
|
|
|
Corporate
interest expense-short-term financing |
$ |
13.9 |
|
$ |
8.1 |
|
$ |
43.2 |
|
$ |
20.7 |
|
All other
interest expense |
|
14.6 |
|
|
14.8 |
|
|
59.4 |
|
|
59.3 |
|
Total
interest expense |
$ |
28.5 |
|
$ |
22.9 |
|
$ |
102.7 |
|
$ |
80.0 |
|
Automatic Data Processing, Inc. and
Subsidiaries |
Fiscal 2018 Pro-forma to Fiscal 2019 Non-GAAP
Guidance Reconciliation |
(Unaudited) |
|
|
|
|
|
|
|
|
Fiscal 2018 |
|
Fiscal 2019 |
|
|
|
Pro-forma (a) |
|
Forecast |
|
Earnings
before income taxes / margin (GAAP) |
|
$ |
2,282.6 |
|
|
17.1% |
|
~ 420 - 455bps |
|
All other interest expense |
|
|
59.4 |
|
+45bps |
|
(5)bps |
b |
All other interest income |
|
|
(25.5 |
) |
(20)bps |
|
+5bps |
b |
Proxy contest matters - F18 |
|
|
33.3 |
|
+25bps |
|
(25)bps |
c |
Transformation initiatives - F18 |
|
|
404.8 |
|
+305bps |
|
(305)bps |
d |
Transformation initiatives - F19 |
|
|
- |
|
|
- |
|
+10bps |
d |
Adjusted EBIT margin (Non-GAAP) |
|
$ |
2,754.6 |
|
|
20.7% |
|
~ 100 - 125bps |
|
|
|
|
|
|
|
|
Effective
tax rate (GAAP) |
|
|
|
16.8% |
|
25.1% |
|
Proxy contest matters - F18 |
|
|
|
+0.1% |
|
- |
c |
Transformation initiatives - F18 |
|
|
|
+1.3% |
|
- |
d |
Tax Cuts and Jobs Act - F18 |
|
|
|
+7.9% |
|
- |
e |
Transformation initiatives - F19 |
|
|
|
- |
|
- |
d |
Adjusted effective tax rate
(Non-GAAP) |
|
|
|
26.2% |
|
25.1% |
|
|
|
|
|
|
|
|
Diluted
earnings per share (GAAP) |
|
|
$ |
4.28 |
|
19% - 21% |
|
Proxy contest matters - F18 |
|
|
|
0.05 |
|
~ (1%) |
c |
Transformation initiatives - F18 |
|
|
|
0.64 |
|
~ (21%) |
d |
Tax Cuts and Jobs Act - F18 |
|
|
|
(0.44) |
|
~ 16% |
e |
Transformation initiatives - F19 |
|
|
|
- |
|
~ 0% |
d |
Adjusted diluted earnings per share
(Non-GAAP) |
|
|
$ |
4.53 |
|
13% - 15% |
|
|
|
|
|
|
|
|
a) Pro-forma financials reflect the impact of ASC 606 on
prior year results. See included bridge. |
|
|
|
b) 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.” |
|
|
|
c) Impact of Fiscal 2018 charges in connection with proxy
contest matters. |
|
|
|
d) We recorded a charge of $404.8 million related to
transformation initiatives in fiscal 2018. The charges within
transformation initiatives in fiscal 2018 includes $319.6 million
related to the special termination benefit charges and $17.5
million of other charges related to our Voluntary Early Retirement
Program ("VERP"), severance charges related to our Service
Alignment Initiative of $20.5 million, and other transformation
initiatives of $47.2 million which primarily consist of severance
charges totaling $41.9 million for fiscal 2018. Unlike severance
charges in prior periods, that were not included as an adjustment
to get to adjusted results, these specific charges relate to
actions that are part of our broad-based, company-wide
transformation initiative. Expected fiscal 2019 charges
within transformation initiatives represent expected severance and
other one-time charges related to our Service Alignment Initiative
and other transformation initiatives. |
|
|
|
e) The one-time net benefit from the enactment of the Tax
Cuts and Jobs Act (the “Act”) is comprised of application of the
newly enacted rates to our U.S. deferred tax balances, partially
offset by foreign withholding taxes on future distributions, the
one-time transition tax and the recording of a valuation allowance
against our foreign tax credits which may not be realized. |
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-forma / Non-GAAP Financial
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except New Business
Bookings) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 FY2018 |
|
|
Q2 FY2018 |
|
|
Q3 FY2018 |
|
|
Q4 FY2018 |
|
|
FY2018 |
|
|
|
As Reported |
ASC 606 Adj. |
Other Adj.(a) |
Pro-Forma |
|
|
As Reported |
ASC 606 Adj. |
Other Adj.(a) |
Pro-Forma |
|
|
As Reported |
ASC 606 Adj. |
Other Adj.(a) |
Pro-Forma |
|
|
As Reported |
ASC 606 Adj. |
Other Adj.(a) |
Pro-Forma |
|
|
As Reported |
ASC 606 Adj. |
Other Adj.(a) |
Pro-Forma |
Segment Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
2,316.3 |
(2.0) |
|
(137.7) |
|
2,176.6 |
|
|
2,437.6 |
1.5 |
(144.1) |
2,295.0 |
|
|
2,804.1 |
2.3 |
(180.6) |
2,625.8 |
|
|
2,499.7 |
(3.6) |
(150.6) |
2,345.5 |
|
|
10,057.8 |
(1.8) |
(613.0) |
9,443.0 |
|
PEO Services |
903.6 |
0.4 |
|
(1.4) |
|
902.6 |
|
|
945.3 |
1.4 |
(1.5) |
945.2 |
|
|
1,071.1 |
0.6 |
(1.8) |
1,069.9 |
|
|
976.7 |
1.1 |
(1.5) |
976.3 |
|
|
3,896.6 |
3.5 |
(6.2) |
3,893.9 |
|
Other |
(141.1) |
— |
|
139.1 |
|
(2.0) |
|
|
(147.5) |
— |
145.6 |
(1.9) |
|
|
(182.2) |
— |
182.4 |
0.2 |
|
|
(157.8) |
— |
152.1 |
(5.7) |
|
|
(628.6) |
— |
619.2 |
(9.4) |
Segment Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
646.6 |
20.3 |
|
(131.0) |
|
535.9 |
|
|
706.4 |
20.6 |
(147.4) |
579.6 |
|
|
1,022.5 |
18.9 |
(172.6) |
868.8 |
|
|
711.9 |
42.3 |
(146.5) |
607.7 |
|
|
3,087.4 |
102.2 |
(597.5) |
2,592.1 |
|
PEO Services |
116.8 |
(3.7) |
|
11.4 |
|
124.5 |
|
|
128.2 |
1.2 |
5.3 |
134.7 |
|
|
136.3 |
3.6 |
8.4 |
148.3 |
|
|
122.9 |
8.1 |
12.0 |
143.0 |
|
|
504.2 |
9.3 |
37.1 |
550.6 |
|
Other |
(215.2) |
— |
|
119.6 |
|
(95.6) |
|
|
(268.9) |
— |
142.1 |
(126.8) |
|
|
(306.2) |
— |
164.2 |
(142.0) |
|
|
(630.3) |
— |
134.5 |
(495.8) |
|
|
(1,420.5) |
— |
560.4 |
(860.1) |
Segment Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services |
27.9% |
|
|
24.6% |
|
|
29.0% |
|
|
25.3% |
|
|
36.5% |
|
|
33.1% |
|
|
28.5% |
|
|
25.9% |
|
|
30.7% |
|
|
27.4% |
|
PEO Services |
12.9% |
|
|
13.8% |
|
|
13.6% |
|
|
14.3% |
|
|
12.7% |
|
|
13.9% |
|
|
12.6% |
|
|
14.6% |
|
|
12.9% |
|
|
14.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Revenue Growth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services, as reported |
2% |
|
|
2% |
|
|
6% |
|
|
6% |
|
|
7% |
|
|
8% |
|
|
7% |
|
|
8% |
|
|
5% |
|
|
6% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
acquisitions |
—% |
|
|
—% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(2)% |
|
|
(1)% |
|
|
(1)% |
|
|
Impact of
dispositions |
1% |
|
|
1% |
|
|
1% |
|
|
1% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
—% |
|
|
Impact of
foreign currency |
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(2)% |
|
|
(2)% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
|
(1)% |
|
Employer Services, organic const. currency |
3% |
|
|
3% |
|
|
4% |
|
|
4% |
|
|
4% |
|
|
5% |
|
|
4% |
|
|
5% |
|
|
4% |
|
|
4% |
|
PEO Services |
14% |
|
|
14% |
|
|
15% |
|
|
15% |
|
|
10% |
|
|
10% |
|
|
10% |
|
|
10% |
|
|
12% |
|
|
12% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Segment metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Services Bookings Growth |
|
|
|
(3)% |
|
|
|
|
|
5% |
|
|
|
|
|
13% |
|
|
|
|
|
19% |
|
|
|
|
|
9% |
|
Employer Services New Business Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.5 billion |
|
PEO Services zero-margin pass-through revenue |
|
|
|
595.3 |
|
|
|
|
|
607.1 |
|
|
|
|
|
626.4 |
|
|
|
|
|
634.4 |
|
|
|
|
|
2,463.1 |
|
PEO Services revenue ex zero-margin PT |
|
|
|
307.3 |
|
|
|
|
|
338.1 |
|
|
|
|
|
443.5 |
|
|
|
|
|
341.9 |
|
|
|
|
|
1,430.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Other adjustments include the inclusion of client fund
interest in our segments at actual interest rates, the inclusion of
ADP Indemnity in the PEO Services segment, and changes to certain
corporate allocations. |
Automatic Data Processing, Inc. and
Subsidiaries |
Pro-forma / Non-GAAP Financial Information |
(in millions, except per share amounts) |
(Unaudited) |
|
|
|
|
Q1 FY2018 |
Q2 FY2018 |
Q3 FY2018 |
Q4 FY2018 |
FY2018 |
|
|
|
As Reported |
ASC 606 Adj. |
ASU 2017-07 Adj.(a) |
Pro-Forma |
As Reported |
ASC 606 Adj. |
ASU 2017-07 Adj.(a) |
Pro-Forma |
As Reported |
ASC 606 Adj. |
ASU 2017-07 Adj.(a) |
Pro-Forma |
As Reported |
ASC 606 Adj. |
ASU 2017-07 Adj.(a) |
Pro-Forma |
As Reported |
ASC 606 Adj. |
ASU 2017-07 Adj.(a) |
Pro-Forma |
Statement of Consolidated Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, other than interest on funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
held for clients and PEO revenues |
2,080.9 |
(2.0) |
— |
2,078.9 |
|
|
2,188.8 |
1.5 |
— |
2,190.3 |
|
|
2,492.9 |
2.3 |
— |
2,495.2 |
|
|
2,222.5 |
(3.6) |
— |
2,218.9 |
|
|
8,985.2 |
(1.8) |
— |
8,983.4 |
|
Interest on funds held for clients |
99.4 |
— |
— |
99.4 |
|
|
106.7 |
— |
— |
106.7 |
|
|
134.8 |
— |
— |
134.8 |
|
|
125.6 |
— |
— |
125.6 |
|
|
466.5 |
— |
— |
466.5 |
|
PEO revenues |
898.5 |
0.4 |
— |
898.9 |
|
|
939.9 |
1.4 |
— |
941.3 |
|
|
1,065.3 |
0.6 |
— |
1,065.9 |
|
|
970.5 |
1.1 |
— |
971.6 |
|
|
3,874.1 |
3.5 |
— |
3,877.6 |
|
|
Total revenues |
3,078.8 |
(1.6) |
— |
3,077.2 |
|
|
3,235.4 |
2.9 |
— |
3,238.3 |
|
|
3,693.0 |
2.9 |
— |
3,695.9 |
|
|
3,318.6 |
(2.5) |
— |
3,316.1 |
|
|
13,325.8 |
1.7 |
— |
13,327.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
1,646.9 |
(25.3) |
9.3 |
1,630.9 |
|
|
1,719.3 |
(19.4) |
9.3 |
1,709.2 |
|
|
1,844.7 |
(8.8) |
9.3 |
1,845.2 |
|
|
1,727.2 |
(20.4) |
9.3 |
1,716.1 |
|
|
6,937.9 |
(74.0) |
37.2 |
6,901.1 |
|
Systems development & programming costs |
156.9 |
— |
1.9 |
158.8 |
|
|
158.1 |
— |
1.9 |
160.0 |
|
|
162.5 |
— |
1.9 |
164.4 |
|
|
152.6 |
— |
1.9 |
154.5 |
|
|
630.2 |
— |
7.6 |
637.8 |
|
Depreciation & amortization |
62.6 |
— |
— |
62.6 |
|
|
69.3 |
— |
— |
69.3 |
|
|
70.2 |
— |
— |
70.2 |
|
|
72.4 |
— |
— |
72.4 |
|
|
274.5 |
— |
— |
274.5 |
|
Selling, general & administrative expenses |
662.4 |
7.1 |
5.3 |
674.8 |
|
|
717.2 |
0.5 |
5.3 |
723.0 |
|
|
755.1 |
(10.8) |
5.3 |
749.6 |
|
|
836.9 |
(32.5) |
5.3 |
809.7 |
|
|
2,971.5 |
(35.8) |
21.2 |
2,956.9 |
|
Interest expense |
28.0 |
— |
— |
28.0 |
|
|
27.5 |
— |
— |
27.5 |
|
|
18.6 |
— |
— |
18.6 |
|
|
28.5 |
— |
— |
28.5 |
|
|
102.7 |
— |
— |
102.7 |
|
|
Total expenses |
2,556.8 |
(18.2) |
16.5 |
2,555.1 |
|
|
2,691.4 |
(18.9) |
16.5 |
2,689.0 |
|
|
2,851.1 |
(19.6) |
16.5 |
2,848.0 |
|
|
2,817.6 |
(52.9) |
16.5 |
2,781.2 |
|
|
10,916.8 |
(109.8) |
66.0 |
10,873.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
(26.2) |
— |
(16.5) |
(42.7) |
|
|
(21.7) |
— |
(16.5) |
(38.2) |
|
|
(10.7) |
— |
(16.5) |
(27.2) |
|
|
296.5 |
— |
(16.5) |
280.0 |
|
|
237.9 |
— |
(66.0) |
171.9 |
|
Earnings before income taxes |
548.2 |
16.6 |
— |
564.8 |
|
|
565.7 |
21.8 |
— |
587.5 |
|
|
852.6 |
22.5 |
— |
875.1 |
|
|
204.5 |
50.4 |
— |
254.9 |
|
|
2,171.1 |
111.5 |
— |
2,282.6 |
|
Provision for income taxes |
146.7 |
5.6 |
— |
152.3 |
|
|
98.2 |
(192.2) |
— |
(94.0) |
|
|
209.5 |
3.0 |
— |
212.5 |
|
|
95.8 |
17.8 |
— |
113.6 |
|
|
550.3 |
(165.6) |
— |
384.7 |
|
Net earnings |
401.5 |
11.0 |
— |
412.5 |
|
|
467.5 |
214.0 |
— |
681.5 |
|
|
643.1 |
19.5 |
— |
662.6 |
|
|
108.7 |
32.6 |
— |
141.3 |
|
|
1,620.8 |
277.1 |
— |
1,897.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$0.90 |
$0.02 |
$— |
$ 0.93 |
|
$1.05 |
$0.48 |
$ — |
$1.54 |
|
$1.45 |
$0.04 |
$— |
$1.49 |
|
$0.25 |
$0.07 |
$— |
$0.32 |
|
$3.66 |
$0.63 |
$— |
$4.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP information (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
564.1 |
16.6 |
— |
580.7 |
|
|
602.5 |
21.8 |
— |
624.3 |
|
|
901.0 |
22.5 |
— |
923.5 |
|
|
575.6 |
50.4 |
— |
626.0 |
|
|
2,643.1 |
111.5 |
— |
2,754.6 |
|
|
Adjusted
EBIT Margin |
18.3% |
|
|
18.9% |
|
|
18.6% |
|
|
19.3% |
|
|
24.4% |
|
|
25.0% |
|
|
17.3% |
|
|
18.9% |
|
|
19.8% |
|
|
20.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted provision for income taxes |
149.5 |
5.6 |
— |
155.1 |
|
|
151.5 |
5.9 |
— |
157.4 |
|
|
216.4 |
3.0 |
— |
219.3 |
|
|
163.8 |
17.8 |
— |
181.5 |
|
|
681.1 |
32.5 |
— |
713.6 |
|
|
Adjusted
Effective Tax Rate |
26.9% |
33.7% |
—% |
27.1% |
|
|
25.6% |
27.1% |
—% |
25.7% |
|
|
24.3% |
13.3% |
—% |
24.0% |
|
|
28.7% |
35.3% |
—% |
29.3% |
|
|
26.1% |
29.1% |
—% |
26.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings |
405.9 |
11.0 |
— |
416.9 |
|
|
440.4 |
15.9 |
— |
456.2 |
|
|
675.9 |
19.5 |
— |
695.5 |
|
|
406.0 |
32.6 |
— |
438.7 |
|
|
1,928.1 |
79.0 |
— |
2,007.1 |
|
Adjusted diluted earnings per share |
$0.91 |
$0.02 |
$— |
$0.94 |
|
$0.99 |
$0.04 |
$— |
$1.03 |
|
$1.52 |
$0.04 |
$— |
$1.57 |
|
$0.92 |
$0.07 |
$— |
$0.99 |
|
$4.35 |
$0.18 |
$— |
$4.53 |
|
|
Growth |
6% |
|
|
7% |
|
|
14% |
|
|
13% |
|
|
16% |
|
|
18% |
|
|
39% |
|
|
41% |
|
|
18% |
|
|
19% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) ASU 2017-07 (Compensation - Retirement Benefits (Topic
715): Improving the Presentation of Net Periodic Pension Cost and
Net Periodic Post-retirement Benefit Cost) has no impact on
earnings, margin, or EPS. |
(b) Adjusted EBIT, adjusted EBIT margin, and
adjusted diluted earnings per share are non-GAAP financial
measures. Refer to included reconciliation to the closest pro-forma
financial GAAP measure. |
Automatic Data Processing, Inc. and
Subsidiaries |
Pro-forma / Non-GAAP Financial
Information |
(in millions, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
1Q FY18 |
|
2Q FY18 |
|
3Q FY18 |
|
4Q FY18 |
|
FY18 |
Pro-Forma
Net earnings |
$ |
412.5 |
|
|
$ |
681.5 |
|
|
$ |
662.6 |
|
|
$ |
141.3 |
|
|
$ |
1,897.9 |
|
Provision
for income taxes |
|
152.3 |
|
|
|
(94.0 |
) |
|
|
212.5 |
|
|
|
113.6 |
|
|
|
384.7 |
|
All other
interest expense (a) |
|
15.0 |
|
|
|
15.0 |
|
|
|
14.8 |
|
|
|
14.6 |
|
|
|
59.4 |
|
All other
interest income (a) |
|
(6.3 |
) |
|
|
(4.4 |
) |
|
|
(6.1 |
) |
|
|
(8.8 |
) |
|
|
(25.5 |
) |
Transformation initiatives (b) |
|
(3.3 |
) |
|
|
3.3 |
|
|
|
39.7 |
|
|
|
365.3 |
|
|
|
404.8 |
|
Proxy contest matters (c) |
|
10.5 |
|
|
|
22.9 |
|
|
|
- |
|
|
|
- |
|
|
|
33.3 |
|
Pro-Forma
Adjusted EBIT |
$ |
580.7 |
|
|
$ |
624.3 |
|
|
$ |
923.5 |
|
|
$ |
626.0 |
|
|
$ |
2,754.6 |
|
Adjusted
EBIT Margin |
|
18.9 |
% |
|
|
19.3 |
% |
|
|
25.0 |
% |
|
|
18.9 |
% |
|
|
20.7 |
% |
|
|
|
|
|
|
|
|
|
|
Pro-Forma
Diluted EPS |
$ |
0.93 |
|
|
$ |
1.54 |
|
|
$ |
1.49 |
|
|
$ |
0.32 |
|
|
$ |
4.28 |
|
Transformation initiatives (b) |
|
- |
|
|
|
- |
|
|
|
0.07 |
|
|
|
0.57 |
|
|
|
0.64 |
|
Proxy
contest matters (c) |
|
0.01 |
|
|
|
0.04 |
|
|
|
- |
|
|
|
- |
|
|
|
0.05 |
|
Tax Cuts and Jobs Act (d) |
|
- |
|
|
|
(0.55 |
) |
|
|
0.01 |
|
|
|
0.10 |
|
|
|
(0.44 |
) |
Pro-Forma
Adjusted diluted EPS |
$ |
0.94 |
|
|
$ |
1.03 |
|
|
$ |
1.57 |
|
|
$ |
0.99 |
|
|
$ |
4.53 |
|
|
|
|
|
|
|
|
|
|
|
(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”. |
(b) We recorded a charge of $404.8 million related to
transformation initiatives in fiscal 2018. The charges within
transformation initiatives in fiscal 2018 includes $319.6 million
related to the special termination benefit charges and $17.5
million of other charges related to our Voluntary Early Retirement
Program ("VERP"), severance charges related to our Service
Alignment Initiative of $20.5 million, and other transformation
initiatives of $47.2 million which primarily consist of severance
charges totaling $41.9 million for fiscal 2018. Unlike severance
charges in prior periods, that were not included as an adjustment
to get to adjusted results, these specific charges relate to
actions that are part of our broad-based, company-wide
transformation initiative. |
(c) Represents non-operational costs related to proxy contest
matters. |
(d) The one-time net benefit from the enactment of the Tax
Cuts and Jobs Act (the “Act”) is comprised of application of the
newly enacted rates to our U.S. deferred tax balances, partially
offset by foreign withholding taxes on future distributions, the
one-time transition tax and the recording of a valuation allowance
against our foreign tax credits which may not be realized. |
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; the success of our new solutions; 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 cyber breaches, fraudulent
acts, and system interruptions and failures; employment and wage
levels; changes in technology; availability of skilled technical
associates; the impact of new acquisitions and divestitures; and
the adequacy, effectiveness and success of our business
transformation initiatives. 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,” and in other
written or oral statements made from time to time by ADP, 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
Source: Automatic Data Processing, Inc.
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