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", "is designed to" 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 and inflation; 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 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; and supply-chain disruptions. 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, 2022 ("fiscal
2022"), 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, 2022 include:
10% 100 basis points 16%
Revenue Growth Earnings Before Income Taxes Margin Diluted EPS Growth
Expansion
11% 80 basis points 16%
Organic Constant Currency Adjusted EBIT Margin Expansion Adjusted Diluted EPS
Revenue Growth Growth
Employer Services PEO Services
6% Pays Per Control Growth 10% Average Worksite Employee Growth
Cash Returned via Shareholder Friendly Actions
$1.4B $0.9B Dividends | $0.6B Share Repurchases
We are a leading global provider of cloud-based Human Capital Management ("HCM")
technology solutions to employers around the world. Our HCM solutions, which
include both software and outsourcing services, are designed to help our clients
manage their workforces through a dynamic business and regulatory landscape and
the changing world of work. We are continuously seeking to enhance our leading
HCM solutions to further support our clients.
During the second quarter, we have continued to deliver a broad array of product
and service enhancements to our large and growing client base. We continued to
roll out our new user experience ("UX") to additional experiences within our key
platforms, further improving ease of use for RUN, Workforce Now, and other
solutions. We further extended the reach of our Next Gen payroll engine to a
broader subset of clients and prospects in our midmarket. We continued to
introduce automation and process improvements throughout our organization, all
while investing across sales, product, and client service to best position
ourselves for the attractive and growing global opportunity in HCM.
For the six months ended December 31, 2022, we delivered solid revenue growth of
10%, 11% organic constant currency. 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 6% for the six months ended December 31, 2022 as
compared to the six months ended December 31, 2021. PEO average worksite
employees increased 10% for the six months ended December 31, 2022, as compared
to the six months ended December 31, 2021.
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 re-investments, longer term
strategy, and 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, 2022 and we remain well positioned to support our associates and
our clients.
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