(By Balaseshan) Automatic Data Processing (NASDAQ: ADP) reported a 0.9% rise in quarterly earnings, in line with consensus, on higher revenue and strong performance from its business segments. Further, the company appointed Jan Siegmund as finance chief.
Earnings from continuing operations for the first quarter were $302.5 million or $0.62 per share, up from $300.4 million or $0.61 per share last year. Earnings per share (EPS) rose to $0.63 from $0.61.
Total revenue increased 5% for the latest quarter, 3% organically, to $2.64 billion, on solid performance from its business segments.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.62 per share on revenue of $2.63 billion for the first quarter.
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Employer Services' revenues rose 6% for the quarter, 5% organically, compared to last year's first quarter. Professional Employer Organization (PEO) Services' revenues increased 13% for the first quarter. Dealer Services' revenues grew 9% for the quarter, 7% organically.
Interest on funds held for clients declined 12% to $106.8 million, due to a decline of about 60 basis points in the average interest yield to 2.7%, partially offset by an increase of 6% in average client funds balances to $16.1 billion.
Looking ahead into the fiscal 2013, the company still expects total revenue growth of 5% to 7% and EPS from continuing operations growth of 5% to 7%, while Street analysts predict EPS to grow 6.60% on revenue growth of 6.40%.
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For the fiscal 2013, interest on funds held for clients is expected to decline 14% to 15% from $493.3 million in fiscal 2012 to $420 million to $425 million. Interest income on corporate funds is expected to decline approximately $20 million from $85.2 million in fiscal 2012.
In combination, the company expects the total impact related to the client funds extended investment strategy to be a decline of $80 to $85 million from $556 million in fiscal 2012. Its prior forecast anticipated a decline of $75 to $85 million.
In a separate release, the company said Jan Siegmund, its Chief Strategy Officer and President, Added Value Services, has been appointed Chief Financial Officer, effective November 5. He succeeds Chris Reidy, who has served as CFO since 2006. Reidy will remain available through calendar year-end to facilitate an orderly transition of his responsibilities to Siegmund.
ADP said it will commence a search that will consider internal and external candidates to fill the positions previously held by Siegmund.
ADP closed Wednesday's regular session down 0.69% at $57.79. The stock has been trading between $47.60 and $59.96 for the past 52 weeks.