FORWARD-LOOKING STATEMENTS
This document and other written or oral statements made from time to time by
Automatic Data Processing, Inc., its subsidiaries and variable interest entity
("ADP" or the "Company") may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Statements that
are not historical in nature and which may be identified by the use of words
like "expects," "assumes," "projects," "anticipates," "estimates," "we believe,"
"could" and other words of similar meaning, are forward-looking statements.
These statements are based on management's expectations and assumptions and
depend upon or refer to future events or conditions and are subject to risks and
uncertainties that may cause actual results to differ materially from those
expressed. Factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements or that could contribute to
such difference include: ADP's success in obtaining and retaining clients, and
selling additional services to clients; the pricing of products and services;
the success of our new solutions; compliance with existing or new legislation or
regulations; changes in, or interpretations of, existing legislation or
regulations; overall market, political and economic conditions, including
interest rate and foreign currency trends; competitive conditions; our ability
to maintain our current credit ratings and the impact on our funding costs and
profitability; security or cyber breaches, fraudulent acts, and system
interruptions and failures; employment and wage levels; changes in technology;
availability of skilled technical associates; the impact of new acquisitions and
divestitures; the adequacy, effectiveness and success of our business
transformation initiatives; and the impact of any uncertainties related to major
natural disasters or catastrophic events, including the coronavirus ("COVID-19")
pandemic. ADP disclaims any obligation to update any forward-looking statements,
whether as a result of new information, future events, or otherwise, except as
required by law. These risks and uncertainties, along with the risk factors
discussed under "Item 1A. - Risk Factors" in our Annual Report on Form 10-K for
the fiscal year ended June 30, 2021 ("fiscal 2021"), and in other written or
oral statements made from time to time by ADP, should be considered in
evaluating any forward-looking statements contained herein.
NON-GAAP FINANCIAL MEASURES
In addition to our U.S. GAAP results, we use adjusted results and other non-GAAP
metrics to evaluate our operating performance in the absence of certain items
and for planning and forecasting of future periods. Adjusted EBIT, adjusted EBIT
margin, adjusted net earnings, adjusted diluted earnings per share, adjusted
effective tax rate and organic constant currency are all non-GAAP financial
measures. Please refer to the accompanying financial tables in the "Non-GAAP
Financial Measures" section for a discussion of why ADP believes these measures
are important and for a reconciliation of non-GAAP financial measures to their
comparable GAAP financial measures.
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EXECUTIVE OVERVIEW
Highlights from the six months ended December 31, 2021 include:
10% 80 basis points 13%
Revenue Growth Earnings Before Income Taxes Margin Diluted EPS Growth
Expansion
10% 80 basis points 13%
Organic Constant Currency Adjusted EBIT Margin Expansion Adjusted Diluted EPS
Revenue Growth Growth
Employer Services PEO Services
7% Pays Per Control 15% Average Worksite Employee Growth
Cash Returned via Shareholder Friendly Actions
$1.8B $0.8B Dividends | $1.0B Share Repurchases
We are a leading global provider of cloud-based Human Capital Management ("HCM")
technology solutions to employers around the world. The global COVID-19 pandemic
has had a significant impact on the global business environment and on our
clients and we continue to advance and offer our HCM services, including the
processing of payroll and tax obligations, to our clients during this time.
ADP's efforts have also been focused on providing information and tools
throughout the pandemic to help clients understand and navigate the governmental
relief that has been adopted globally. In addition, we continue to add features
to our Return to Workplace solution that assists our clients in bringing their
employees back to work safely through a comprehensive set of tools designed to
streamline the entire process.
In the second quarter, we achieved new product milestones as we continue to
invest in our portfolio. We made further progress towards the development of a
new, unified user experience, and we introduced this modernization to our RUN
Powered by ADP ® and Next Gen HCM client bases in the U.S. and to our iHCM
client base in Europe. We reached a milestone of processing one million pay
slips for a single client, on a single day, for the first time in our history.
At the other end of the spectrum, we continued to see growth in our new Roll™ by
ADP mobile application, which serves the micro segment. Innovation is inherent
in ADP's business, and we have a growing, agile research and development
organization committed to delivering solutions in the market that redefine what
HCM solutions can do for employers.
For the six months ended December 31, 2021, we delivered solid revenue growth of
10%. Our pays per control metric, which represents the number of employees on
ADP clients' payrolls in the United States when measured on a same-store-sales
basis for a subset of clients ranging from small to large businesses, grew 7%
for the six months ended December 31, 2021 as compared to the six months ended
December 31, 2020. PEO average worksite employees increased 15% for the six
months ended December 31, 2021, as compared to the six months ended December 31,
2020. This remains a very dynamic and challenging business environment for our
clients and prospects, but we believe the value of working with a leading, world
class provider like ADP has become more compelling than ever. We see evidence of
this reflected in our continued sales momentum, as well as our very high levels
of client satisfaction and retention, which continue to drive our positive
financial results.
We have a strong business model, generating significant cash flows with low
capital intensity, and offer a suite of products that provide critical support
to our clients' HCM functions. We generate sufficient free cash flow to satisfy
our cash dividend and our modest debt obligations, which enables us to absorb
the impact of downturns and remain steadfast in our reinvestments, our longer
term strategy, and our commitments to shareholder friendly actions. We are
committed to building upon our past successes by investing in our business
through enhancements in research and development and by driving meaningful
transformation in the way we operate. Our financial condition remains solid at
December 31, 2021 and we remain well positioned to support our associates and
our clients.
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