ADP(US:ADP)2023-04-30 16:00Revenue Growth - Total revenues for the three months ended March 31, 2023, were $4,927.8 million, representing a year-over-year growth of 9%[100] - For the nine months ended March 31, 2023, total revenues increased to $13,534.4 million, with a year-over-year growth of 9%[100] - The pays per control metric grew by 5% for the nine months ended March 31, 2023, compared to the same period in 2022[97] - Average worksite employees in PEO services increased by 8% for the nine months ended March 31, 2023, compared to the same period in 2022[97] - Employer Services revenues increased to $3,339.1 million for the three months ended March 31, 2023, an 11% increase from $3,002.0 million in 2022[120] - PEO Services revenues reached $1,592.0 million for the three months ended March 31, 2023, a 5% increase from $1,513.8 million in 2022[124] Earnings and Profitability - Adjusted EBIT for the three months ended March 31, 2023, was $1,372.3 million, reflecting a 14% year-over-year increase[111] - The EBIT margin for the three months ended March 31, 2023, improved to 27.7%, up 130 basis points from the previous year[111] - For the three months ended March 31, 2023, net earnings increased to $1,043.1 million, a 12% year-over-year growth from $928.5 million in 2022[117] - Diluted EPS for the three months ended March 31, 2023, rose to $2.51, reflecting a 14% increase compared to $2.21 in the same period of 2022[117] - Adjusted net earnings for the three months ended March 31, 2023, were $1,047.8 million, up 13% from $929.5 million in 2022[117] - Employer Services' earnings before income taxes increased by 14% for the three months ended March 31, 2023, driven by revenue growth[122] - PEO Services' earnings before income taxes increased by 15% for the three months ended March 31, 2023, due to increased revenues and lower state unemployment insurance costs[125] - The margin for Employer Services improved to 37.3% for the three months ended March 31, 2023, compared to 36.5% in 2022, reflecting an 80 basis points increase[121] - The margin for PEO Services increased to 16.4% for the three months ended March 31, 2023, up from 15.0% in 2022, representing a 140 basis points improvement[121] Cash Flow and Shareholder Returns - Cash returned to shareholders amounted to $2.2 billion, including $1.4 billion in dividends and $0.8 billion in share repurchases[95] - Cash provided by operating activities increased to $3,021.9 million for the three months ended March 31, 2023, up from $2,186.6 million in the same period of 2022, a change of $835.3 million[139] - The company purchased approximately 3.5 million shares of common stock at an average price of $231.45 during the nine months ended March 31, 2023[141] - The company repurchased approximately 3.5 million shares at an average price of $231.45 during the nine months ended March 31, 2023, compared to 7.0 million shares at $213.17 in the prior year[141] Tax and Effective Tax Rate - The effective tax rate for the three months ended March 31, 2023, was 23.5%, up from 22.0% in 2022, primarily due to higher reserves for uncertain tax positions[113] - The adjusted effective tax rate for the three months ended March 31, 2023, was 23.5%, compared to 22.0% in the same period of the previous year[132] Investment and Capital Expenditures - Capital expenditures for the nine months ended March 31, 2023, were $142.8 million, compared to $126.3 million for the same period in 2022, with expectations for fiscal 2023 between $175 million and $200 million[147] - The investment portfolio includes $3.0 billion of senior unsecured notes maturing in 2025, 2028, and 2030, with plans to refinance existing debt as needed[142] - Client funds investment strategy aims to maximize interest income while maintaining liquidity, with a maximum maturity of 10 years for investments[150] Market and Credit Risk - The company limits credit risk by investing primarily in AAA-rated and AA-rated securities, as rated by major credit agencies[158] - The company is exposed to market risk from changes in foreign currency exchange rates, which could impact consolidated results of operations[159] Financial Position and Liquidity - Cash and cash equivalents as of March 31, 2023, totaled $1.8 billion, primarily invested in time deposits and money market funds[136] - The company has $9.7 billion of committed credit facilities available to meet operating, investing, and financing activities[136] - The company has $9.7 billion available under revolving credit agreements, with no borrowings through March 31, 2023[145] - Average daily borrowings increased to $1.5 billion in Q1 2023 from $1.2 billion in Q1 2022, and for the nine months, it rose to $3.2 billion from $1.7 billion[144] - Weighted average interest rates for the three months ended March 31, 2023, were 4.5%, significantly up from 0.1% in the same period last year[144] Securities and Investment Performance - Total available-for-sale securities at fair value were $29.7 billion as of March 31, 2023, compared to $28.4 billion as of June 30, 2022[157] - Net unrealized pre-tax losses on available-for-sale securities were $(1.9 billion) as of March 31, 2023, compared to $(1.7 billion) as of June 30, 2022[157] - The annualized interest rate earned on the entire portfolio increased from 1.3% for the nine months ended March 31, 2022, to 2.2% for the nine months ended March 31, 2023[157] - A hypothetical 25 basis points increase in both short-term and intermediate-term interest rates would result in approximately a $12 million impact to earnings before income taxes over the next twelve months[157] - A hypothetical 25 basis points increase in only short-term interest rates would result in approximately a $5 million impact to earnings before income taxes over the next twelve months[157] Accounting and Reporting - The financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and judgments that affect reported amounts[161] - Recent accounting pronouncements are discussed in Note 2 of the Consolidated Financial Statements[162]