Payroll processor Automatic Data Processing, Inc. (ADP) reported Friday a profit for the third quarter that increased from last year, reflecting improved margins and revenue growth. Earnings per share from continuing operations topped analysts' expectations by a penny, while quarterly revenues matched their estimates. The company also raised its earnings and revenue growth outlook for the full-year 2013.
"Combined worldwide new business bookings for Employer Services and PEO Services grew 9%, and worldwide client revenue retention improved during this critical third quarter period. Our business segments continued to perform well driving good revenue growth and strong pretax margin expansion," President and CEO Carlos Rodriguez said.
The Roseland, New Jersey-based business outsourcing solutions provider reported net earnings of $482.7 million or $0.99 per share for the third quarter, higher than $452.4 million or $0.92 per share in the prior-year quarter.
Net earnings from continuing operations increased to $482.7 million or $0.99 per share from $450.2 million or $0.91 per share in the year-ago quarter. On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.98 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter grew 7 percent to $3.11 billion from $2.91 billion in the same quarter last year, and matched twenty-one Wall Street analysts' consensus estimate of $3.11 billion. On an organic basis, revenues were up 6 percent.
The company noted that fiscal 2012 acquisitions contributed one percentage point to total revenue growth and negatively impacted pretax margins 30 basis points.
Employer services revenues grew 7 percent from last year to $2.21 billion. The number of employees on ADP clients' payrolls in the US increased 2.7 percent for the quarter, as measured on a same-store-sales basis, and worldwide client retention increased 0.4 percentage points.
Revenues from PEO services, which comprise employment administration outsourcing solutions, increased 10 percent to $565.5 million, and dealer services revenues grew 8 percent year-over-year to $460.5 million.
Interest on funds held for clients slipped 16 percent from last year to $112 million, due to a decline of 50 basis points in the average interest yield to 1.9 percent.
Looking ahead to fiscal 2013, the company raised its earnings per share from continuing operations as well as revenue growth guidance to a range of 6 to 7 percent from the prior forecast of 5 to 7 percent.
Street is currently looking for full-year 2013 earnings of $2.90 per share on annual revenues of $11.31 billion.
"Our fiscal 2013 forecasts assume no changes in the current economic environment. We are narrowing our guidance for total company revenue and earnings per share growth for the year. We continue to anticipate driving good pretax margins in the business segments, although we anticipate a decline in total ADP pretax margin.," Rodriguez added.
In Friday's regular trading session, ADP is currently trading at $68.22, up $0.83 or 1.23% on a volume of 0.15 million shares after hitting a 52-week high of $68.70.
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