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ADP Reports Fourth Quarter And Fiscal 2013 Results; Provides Fiscal 2014 Guidance

Stocks in this article: ADP

For the Year, Revenues Rise 7%, 6% Organic;

EPS from Continuing Operations Unchanged, Up 6% As Adjusted

Forecasting Fiscal 2014 Revenue Growth of about 7%;

Forecasting Fiscal 2014 EPS Growth of 8% to 10%, Compared with Adjusted $2.89 in Fiscal 2013

ROSELAND, N.J., Aug. 1, 2013 (GLOBE NEWSWIRE) -- ADP ® (Nasdaq:ADP) reported fiscal 2013 results and provided its initial outlook for fiscal 2014, Carlos Rodriguez, president and chief executive officer, announced today.

Fiscal 2013 Results
  As Reported As Adjusted
Revenues 7% to $11.31 billion 7% to $11.31 billion
Pretax earnings from continuing operations (1)% to $2.08 billion 4% to $2.13 billion
Net earnings from continuing operations (1)% to $1.36 billion 5% to $1.41 billion
Diluted earnings per share from continuing operations unchanged at $2.80 6% to $2.89 from $2.72
 
Fourth Quarter Fiscal 2013 Results
  As Reported As Adjusted
Revenues 7% to $2.81 billion 7% to $2.81 billion
Pretax earnings from continuing operations (7)% to $365.1 million 4% to $407.8 million
Net earnings from continuing operations (11)% to $227.0 million 5% to $269.7 million
Diluted earnings per share from continuing operations (10)% to $0.47 from $0.52 6% to $0.55 from $0.52

The above "As Reported" results include:

  • A $43 million pretax, non-cash goodwill impairment charge ($43 million after tax, $0.09 per share) recorded in the fourth quarter of fiscal 2013 related to the 2011 acquisition of ADP AdvancedMD; and  
  • For the full fiscal year only, a $66 million pretax gain on a sale of assets ($41 million after tax, $0.08 per share) recorded in the second quarter of fiscal 2012.

Please refer to the tables at the end of this release for a reconciliation of the "As Reported" results to the "As Adjusted" results that exclude these items.  All comparisons throughout the remainder of this release are on an "As Adjusted" basis.

As anticipated, the following previously communicated items affected the company's results: 

  • High-margin client interest revenues declined from a year ago due to a lower yield on the client funds portfolio, partially offset by growth in average client funds balances, and negatively impacted fourth quarter and full-year revenue growth 1%. This decline was the primary driver of the impact of the client funds extended investment strategy, which negatively impacted growth in pretax earnings from continuing operations in the fourth quarter and full year 6% and 4%, respectively. Pretax margin was negatively impacted 120 basis points in the fourth quarter and 110 basis points for the full year, more than offsetting the strong pretax margin expansion in the business segments. Additionally, diluted earnings per share from continuing operations was negatively impacted $0.03, or 6% for the quarter, and $0.12, or 4% for the year.  
  • Foregone revenues and earnings related to the fiscal 2012 second quarter sale of assets and the expiration of certain employment tax credits within our Tax Credit Services business negatively impacted full-year revenue growth 0.5%, pretax earnings from continuing operations growth 2%, pretax margin 20 basis points, and diluted earnings per share $0.04, or just over 1%. There was no impact to fourth quarter results as the sale of assets and the expiration of the tax credits occurred in the second quarter of the prior year.  
  • Unfavorable foreign exchange rates negatively impacted full-year revenue growth about 0.5% with minimal impact on full-year earnings. There was minimal impact to fourth quarter results from foreign exchange rates.   
  • Fiscal 2012 acquisitions contributed 1% to full-year revenue growth and negatively impacted pretax margins about 20 basis points with minimal impact on earnings. There was minimal impact to fourth quarter results from fiscal 2012 acquisitions as the acquisitions were all completed prior to the fourth quarter of fiscal 2012.

Fourth Quarter and Fiscal 2013 Discussion

Commenting on the results, Mr. Rodriguez said, "ADP reported very solid results for fiscal 2013. I am particularly pleased with the strength in combined worldwide new business bookings for Employer Services and PEO Services, which grew 14% for the quarter on a very tough grow-over comparable with last year's fourth quarter growth of 20%. As a result of the strong finish to the fiscal year, new business bookings grew 11% for the year, ahead of our expectations. I am also pleased that worldwide client revenue retention increased to a new record level, and each of our business segments continued to perform well achieving good revenue growth and strong pretax margin expansion.

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