ADP Reports Third Fiscal Quarter Results
Thursday April 22, 8:10 am ET
biz.yahoo.com
Revenues Increase 11%, EPS Declines 7%
Fiscal 2004 Revenue Guidance Raised to High-Single Digit Growth, EPS Guidance Unchanged
ROSELAND, N.J.--(BUSINESS WIRE)--April 22, 2004--Automatic Data Processing, Inc. (NYSE:ADP) reported 11% revenue growth, with revenues of $2.1 billion and $.50 earnings per share for the third fiscal quarter ended March 31, 2004, Arthur F. Weinbach, chairman and chief executive officer, announced today. Pretax and net earnings declined 10% and 9%, respectively, impacted by lower interest rates, incremental investment activity and by dilution from last year's acquisitions. Diluted earnings per share, on fewer shares outstanding, declined 7% from $.54 per share last year.
Commenting on the quarter, Mr. Weinbach said, "Employer Services' revenues grew 10% in the quarter. New business sales, which to ADP represents the annualized revenues anticipated from new orders, improved to 10% growth during the quarter, our first double-digit sales growth quarter in three years. Client retention was strong during this critical year-end retention period, improving more than 1.5% for the quarter compared to record levels a year ago. The number of employees on our clients' payrolls in North America increased compared with last year, representing the first growth quarter in nearly three years, while the number of employees on clients' payrolls in our European businesses continued to decline. Average client fund balances, which have been strong all year, increased 13% during the quarter excluding the impact of last year's ProBusiness acquisition and about 27% after the impact of the acquisition.
"Revenues in Brokerage Services grew 13% primarily driven by increased investor communications activity, higher trade volume and higher retail versus institutional mix. Non-proxy mutual fund mailings were again strong in the quarter with recent regulatory oversight resulting in extra communications. Brokerage Services' margin improved over last year from increased scale on higher volumes in our back office trading business. Dealer Services' revenues grew 8% and Claims Services' revenues were flat with last year.
"Our consolidated margin declined in the third quarter and was primarily impacted by lower interest rates on corporate and client fund investments and lower margins in Employer Services resulting from increased investment spending and the continued integration of last year's acquisitions. We continue to take advantage of opportunities to invest in our businesses, particularly in Employer Services, and have increased the incremental spending level to $165 - $180 million for the fiscal year, which now includes about $30 - $35 million of non-recurring charges anticipated in the fourth quarter.
"Our leading indicators have started to move in the right direction and we are pleased with the improvement in our revenues. We anticipate stronger Employer Services' sales growth in the fourth quarter due to easier comparisons with last year as well as increases in our sales force. With our stronger Brokerage Services' revenues, we are increasing our revenue guidance to high-single digit growth from mid-single digit growth and confirming our fiscal 2004 earnings per share guidance of $1.53 - $1.58.
"In fiscal 2004 we have acquired over 11 million shares of ADP stock for treasury for approximately $445 million reflecting our confidence in the long-term growth of our businesses," Mr. Weinbach concluded. |
