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Automatic Data Processing (ADP) Q2 Earnings & Revenues Beat

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Automatic Data Processing, Inc. (ADP - Free Report) reported better-than-expected second-quarter fiscal 2021 results.

Adjusted earnings per share of $1.52 beat the Zacks Consensus Estimate by 17.8% but were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year on a reported basis as well as on an organic constant-currency basis.

Let’s check out the numbers in detail.

Segments in Detail

Employer Services revenues of $2.51 billion decreased 1% year over year on a reported and 2% on an organic constant-currency basis. Pays per control decreased 6% year over year. New business bookings decreased 7%.

PEO Services revenues were up 5% year over year to $1.18 billion. Average worksite employees paid by PEO Services were 571,000, down 2% from the prior-year quarter.

Interest on funds held for clients decreased 23% to $105 million. The company’s average client funds balances remained flat at $25.1 billion. Average interest yield on client funds declined 50 basis points to 1.7%.

Margins

Adjusted EBIT decreased 1% year over year to $848 million. Adjusted EBIT margin declined 30 basis points to 22.9%.

Balance Sheet and Cash Flow

ADP exited second-quarter fiscal 2021 with cash and cash equivalents of $1.60 billion compared with $1.61 billion in the prior quarter. Long-term debt of $1.99 billion was flat sequentially.

The company generated $706.4 million of cash from operating activities in the quarter. Capital expenditures were $37.5 million. The company paid out dividends worth $390.7 million and repurchased shares worth $261.5 million.

Fiscal 2021 Outlook

ADP expects fiscal 2021 revenues to be up 1% to 3%. It had earlier expected revenues to be down 1% to up 1%. Adjusted earnings per share are anticipated to be down 2% to up 2% compared with the prior guidance of a decline of 3-7%.

Currently, ADP carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2020 earnings reports of key players like Waste Connections (WCN - Free Report) , Waste Management (WM - Free Report) and Republic Services (RSG - Free Report) . While Waste Connections will release earnings on Feb 17, Waste Management and Republic Services will report the same on Feb 18 and Feb 22, respectively.

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