Stocks

Automatic Data Processing (ADP) Beats on Q4 Earnings & Revenues

Automatic Data Processing, Inc.ADP reported better-than-expected fourth-quarter fiscal 2021 results.

Adjusted earnings per share of $1.20 beat the Zacks Consensus Estimate by 6.2% and grew 5.3% year over year. Total revenues of $3.74 billion beat the consensus mark by 2% and improved 11% year over year on a reported basis and 9% on an organic constant-currency basis.

Let’s check out the numbers in detail.

Segments in Detail

Employer Services revenues of $2.53 billion increased 10% on a reported basis and 8% on an organic constant-currency basis. Pays per control increased 8% year over year. New business bookings increased 174%.

PEO Services revenues were up 12% year over year to $1.21 billion. Average worksite employees paid by PEO Services were 616,000, up 12% year over year.

Interest on funds held for clients decreased 10% to $103 million. The company’s average client funds balance increased 22% to $29.3 billion. Average interest yield on client funds declined 50 basis points to 1.4%.

Margins

Adjusted EBIT increased 4% year over year to $678 million. Adjusted EBIT margin declined 120 basis points to 18.1%. The downfall was backed by rise in selling expenses and other incentive compensation costs, implementation costs, and other growth investments, which were partially offset by higher revenues.

Employer Services segment margin decreased 90 bps. PEO Services segment margin grew 340 bps.

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing, Inc. Price, Consensus and EPS Surprise

Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. Quote

Balance Sheet and Cash Flow

ADP exited fourth-quarter fiscal 2021 with cash and cash equivalents of $2.58 billion compared with $1.89 billion in the prior quarter. Long-term debt was $2.98 billion compared with $1.99 billion in the prior quarter.

The company generated $652.8 million of cash from operating activities in the quarter. Capital expenditures were $33.3 million. The company paid out dividends worth $396 million and repurchased shares worth $469.8 million.

Fiscal 2022 Outlook

ADP expects fiscal 2022 revenues to register growth of 6% to 7%. Adjusted EPS is expected to register 9-11% growth.

The company expects Employer Services revenues to grow at a rate of 4% to 6% and PEO Services revenues at a rate of 9% to 11%.

Currently, ADP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax’s EFX second-quarter 2021 adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and improved on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and improved 26% year over year on a reported basis and 23% on a local-currency basis.

Robert Half’s RHI second-quarter 2021 earnings of $1.33 per share beat the consensus mark by 26.7% and were up more than 100% year over year. Revenues of $1.6 billion surpassed the consensus mark by 6.5% and increased 42.3% year over year on a reported basis and 40% on an adjusted basis.

ManpowerGroup’s MAN second-quarter 2021 adjusted earnings of $2.02 per share beat the consensus mark by 68.2% and improved more than 100%. Revenues of $5.28 billion beat the consensus mark by 2% and inched up 41% year over year on a reported basis and 31.3% on a constant-currency (cc) basis.


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