Automatic Data Processing Inc.'s (ADP) fiscal second-quarter
earnings fell 1.8% as margins narrowed, but results topped
analysts' estimates, helped by better-than-expected revenue
growth.
The company also raised its current-year forecast, seeing
earnings from continuing operations and revenue growth of about 5%
each. In October, ADP had boosted its top- and bottom-line
forecasts, saying it expected 3% to 5% growth in each.
The payroll-processing and human-resources-outsourcing company
has seen stable results recently, though higher expenses due to
headcount additions and acquisition activity have dinged the bottom
line of late and unemployment has remained high.
For the quarter ended Dec. 31, ADP reported a profit of $310.1
million, down from $315.8 million. On a per-share basis, results
were flat at 62 cents. Revenue jumped 9.4% to $2.41 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 61 cents on $2.34 billion in revenue.
Gross margin fell to 42.6% from 44.2%.
Revenue at the company's employer-services segment, by far its
biggest by sales, climbed 6.9%. In the U.S., revenues from ADP's
traditional payroll and payroll tax filing business were flat. New
business sales for Employer Services and PEO Services grew 16%,
with sales in most of ADP's markets increasing by
double-digits.
President and Chief Executive Gary C. Butler said the company
was particularly pleased with the growth in the U.S., which has
been slower to recover as the economy stabilizes.
Shares closed at $49.69 Tuesday and were inactive premarket. The
stock has risen 7.4% this year.
-By Nathan Becker and John Kell, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;