("ADP 1Q Profit Falls 2% On Cost Jump; Year View Raised,"
published at 8:13 a.m. EST, misstated the direction of gross margin
in the eighth paragraph. A corrected story follows.)
DOW JONES NEWSWIRES
Automatic Data Processing Inc.'s (ADP) fiscal first-quarter
earnings fell 2% as the payroll-processing and human-resources
outsourcing company reported higher expenses due to recent
headcount additions and acquisition activity.
However the results beat analysts' expectations as revenue and
the number of workers on clients' payrolls turned up.
For the year, ADP raised its guidance and now expects earnings
and revenue growth of 3% to 5%, up two percentage points for each
from July's downbeat target. The company added that including
acquisitions, its expects revenue growth of 7% to 8% for the
current year but no immediate impact on earnings.
President and Chief Executive Gary C. Butler said the sales were
"solid" compared with year-ago sales that included large
transactions.
ADP began seeing signs of stabilization in its business in
recent quarters, though unemployment has remained stubbornly high.
As the economy recovers, the big driver for ADP will be generating
new revenue, with sales force expansion plans among the ways to do
so.
For the quarter ended Sept. 30, ADP reported a profit of $278.5
million, down from $284.1 million. Per-share earnings were flat at
56 cents a share as the amount of stock outstanding fell. Revenue
increased 6.4% to $2.23 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of 53 cents on revenue of $2.15 billion.
Gross margin fell to 41.2% from 43.3% amid the cost
increases.
Combined new business sold in its employer-services and
human-resources benefits outsourcing businesses was flat.
Revenue at ADP's employer-services segment, by far its largest,
rose 6%. In the U.S., revenue at its traditional payroll segment
rose 2% and was up 9% at its beyond payroll business. Employees on
clients' payrolls were up 1.7%.
Shares closed Tuesday at $44.19 and were inactive premarket. The
stock is up 3.2% this year, less than the broader market.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com;