Pershing Square Capital Management, L.P. (“Pershing Square”)
today released two new questions for ADP (NASDAQ: ADP).
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the full release here:
http://www.businesswire.com/news/home/20171019005850/en/
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ADP has yet to answer any of the first four questions we have
asked. Today, Pershing Square released the following questions:
Questions:
Why does ADP continue to claim a 203% Total Shareholder
Return (“TSR”) during Mr. Rodriguez’s tenure when this number
includes an inaccurate start date, the increase in the stock price
due to Pershing Square’s involvement, and the performance of CDK
when it was no longer managed by Mr. Rodriguez?
In recent shareholder communications, ADP is now claiming
that it is implementing a plan to deliver 500bps of operational
margin improvement. ADP’s recently released guidance shows
only 100bps to 200bps of actual operating margin expansion by 2020
which compares with our estimated potential margin opportunity of
1,200bps by 2022. Investors cannot reconcile this 500bps
calculation. Please provide support for this calculation and
explain why these supposed savings do not translate into better
operating margins.
Pershing Square’s previous four questions are:
Question 1 – September 20,
2017:
What are ADP’s margins in Employer Services by sub-segment
(Small-Business (“SMB”), Mid-market, Enterprise, and
International), excluding float and allocating corporate
expenses?
- Is ADP earning comparable margins to
Paychex (~41%) in its SMB business? If so, that would imply 12%
margins for the rest of Employer Services.
Question 2 – September 28,
2017:
When ADP owned Dealer Services, it aimed to produce just ~50bps
of annual margin improvement. When Dealer Services was spun-off as
CDK Global (NASDAQ: CDK) (“CDK”), it promptly identified an
opportunity to double margins without negative consequence to CDK’s
customers, shareholders or other stakeholders. Why was ADP not able
to realize this opportunity when it owned CDK?
- CDK achieved this improvement by
engaging constructively with shareholders, hiring an outside
consultant to evaluate its potential, and announcing a
transformation plan – why won’t ADP do the same?
Question 3 – October 5,
2017:
Why is ADP’s labor productivity ~28% below its competitors’,
particularly in light of its enormous scale advantage?
Question 4 – October 10, 2017:
Competitors like Workday, Ultimate Software and Ceridian’s
Dayforce have taken substantial market share at the expense of ADP,
despite ADP spending significantly more on R&D. Why doesn’t ADP
have a best-in-class product for the Enterprise market?
We ask that ADP respond to all of these questions so
shareholders can better understand ADP’s potential.
Review all of Pershing Square’s weekly questions to shareholders
here: https://adpascending.com/questions/
Pershing Square published its most recent ADP presentation on
October 11, 2017. Shareholders can access that presentation here
and additional supporting materials here.
For additional information, visit our website:
www.ADPascending.com. Follow ADPascending on Facebook, Twitter and
YouTube.
To vote for Pershing Square’s Nominees for ADP’s Transformation,
please vote the GOLD Proxy Card or GOLD Voting Instruction
Form.
You can vote by Internet, telephone or by signing and dating the
GOLD Proxy Card or Voting Instruction Form and mailing it in the
postage paid envelope provided. We urge you NOT to vote using any
white proxy card or voting instruction form you receive from ADP.
Please discard the white proxy card.
If you have any questions about how to vote your shares, please
contact our proxy solicitor, D.F. King & Co., Inc., at (866)
342-1635.
About Pershing Square Capital Management, L.P.
Pershing Square Capital Management, L.P., based in New York
City, is a SEC-registered investment advisor to investment
funds.
This press release relates to Pershing Square’s solicitation of
proxies in connection with the 2017 annual meeting of stockholders
of ADP.
The information contained in this press release (the
“Information”) is based on publicly available information about
Automatic Data Processing, Inc. (“ADP” or the “Company”), which has
not been independently verified by Pershing Square Capital
Management, L.P. (“Pershing Square”). Pershing Square recognizes
that there may be confidential or otherwise non-public information
in the possession of ADP or others that could lead ADP or others to
disagree with Pershing Square’s conclusions. This press release and
the Information is not a recommendation or solicitation to buy or
sell any securities.
The analyses provided may include certain forward-looking
statements, estimates and projections prepared with respect to,
among other things, general economic and market conditions, changes
in management, changes in board composition, actions of ADP and its
subsidiaries or competitors, the ability to implement business
strategies and plans and pursue business opportunities in the human
capital management industry. Such forward-looking statements,
estimates, and projections reflect various assumptions by Pershing
Square concerning anticipated results that are inherently subject
to significant uncertainties and contingencies and have been
included solely for illustrative purposes, including those risks
and uncertainties detailed in the continuous disclosure and other
filings of ADP with the Securities and Exchange Commission at
www.sec.gov. No representations, express or implied, are made as to
the accuracy or completeness of such forward-looking statements,
estimates or projections or with respect to any other materials
herein. Actual results may vary materially from the estimates and
projected results contained herein.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171019005850/en/
Pershing SquareFran McGill, 212-909-2455McGill@persq.com
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