ADP (ADP) Tops Q4 EPS by 2c, Offers Outlook

ADP (NASDAQ: ADP) reported Q4 EPS of $0.92, $0.02 better than the analyst estimate of $0.90. Revenue for the quarter came in at $3.32 billion versus the consensus estimate of $3.3 billion.

Fiscal 2019 Outlook

The following outlook reflects the impact of certain changes to ADP’s segment reporting as well as the adoption of ASC 606, “Revenue from Contracts with Customers.” Accordingly, comparisons to fiscal 2018 results refer to pro-forma fiscal 2018 financials using the same methodology. Please see the included bridge of as-reported fiscal 2018 results to pro-forma fiscal 2018 results.

Certain components of ADP’s fiscal 2019 outlook and related growth comparisons exclude the impact of the following items and are discussed on an adjusted basis where applicable. Please refer to the accompanying financial tables for a reconciliation of these adjusted amounts to their closest comparable GAAP measure.

Fiscal 2018 pre-tax proxy contest charges of about $33 million.
Fiscal 2018 one-time net tax benefit of about $196 million from the Tax Cuts and Jobs Act.
Fiscal 2018 pre-tax charges of about $405 million related to the Voluntary Early Retirement Program, the Service Alignment Initiative, and other transformation initiatives.
Fiscal 2019 pre-tax restructuring charges of $15 million related to the Service Alignment Initiative and other transformation initiatives.

ADP anticipates full-year fiscal 2019 revenue growth of 5% to 7% and expects adjusted EBIT margin to increase 100 to 125 basis points for the full year, from 20.7% pro-forma adjusted EBIT margin in fiscal 2018. This margin expansion outlook reflects downward pressure created by the adoption of ASC 606 in fiscal 2019 and the associated comparison to pro-forma 2018 financials. ADP estimates that margin expansion on an ASC 605 basis in fiscal 2019 would have been about 30 basis points higher.

ADP expects full-year diluted earnings per share to be up 19% to 21%, compared to $4.28 pro-forma fiscal 2018 diluted earnings per share, and expects adjusted diluted earnings per share growth of 13% to 15%, compared to $4.53 pro-forma fiscal 2018 adjusted diluted earnings per share. ADP anticipates an adjusted effective tax rate of 25.1%.

For earnings history and earnings-related data on ADP (ADP) click here.

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