Automatic Data Processing, Inc.

Good morning. My name is Carmen, and I'll be your conference operator. At this time, I would like to welcome everyone to ADP's fourth quarter fiscal 2019 earnings call. I would like to inform you that this conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your questions, press the pound key. Thank you. I will now turn the conference over to Mr. Christian Crayenbuehl, Vice President, Investor Relations. Please go ahead.

Thank you, Carmen, and good morning, everyone. And thank you for joining ADP's fourth quarter fiscal 2019 earnings call and webcast. With me today are Carlos Rodriguez, our President and Chief Executive Officer, and Kathleen Winters, our Chief Financial Officer. Earlier this morning, we released our results for the fourth quarter and full year fiscal 2019. These earnings materials are available on the SEC's website and on our investor relations website at investors.adp.com, where you will also find the investor presentation that accompanies today's call, as well as our quarterly history of revenue and pre-tax earnings by reportable segment. During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and that exclude the impact of certain items. A description and the timing of these items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measure, can be found in our earnings release. Today's call will also contain forward-looking statements that refer to future events, and as such, involve some risk. We encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations. As always, please do not hesitate to reach out should you have any questions. And with that, let me turn the call over to Carlos.

Thank you, Christian, and thank you everyone for joining our call. This morning we reported our fourth quarter and full year fiscal 2019 results with a revenue of $3.5 billion for the quarter, up 6% reported, and organic constant currency. We ended the year with total revenue of $14.2 billion, up 6% reported, and 7% organic constant currency, in line with our expectations. We are pleased with our ability to balance this strong top line revenue growth with a substantial 160 basis points of adjusted EBIT margin expansion for the year. This margin expansion was ahead of our expectations as we executed well on our transformation initiatives, including our voluntary early retirement program, while also benefiting from increased operating efficiencies. When combined with share buybacks and a lower adjusted effective tax rate, we delivered very strong 20% adjusted EPS growth this year. Our core drivers of growth are also strong. with Employer Services New Business Bookings growing 11% in the fourth quarter and 8% for the year. We are especially pleased with this performance given the difficult compare in fiscal 2018 when bookings grew 19% in the fourth quarter and 9% for the full year. To put our Employer Services New Business Bookings performance into perspective, this year we sold approximately $1.6 billion of new annualized recurring revenues. which is a testament to the strength and scale of our Salesforce. When you add in the results of our PEO bookings, which grew double digits in 2019, our overall worldwide new business bookings continue to perform in line with our June 2018 Investor Day expectations, benefiting from our investments in targeted incremental selling opportunities, as well as investments in our Salesforce product and improvements in our productivity. We are very pleased with our strong recent track record of employer services bookings in fiscal years 2018 and 2019. With this in mind, we have continued to invest in our distribution and currently expect employer services bookings to grow 6% to 8% in fiscal 2020. As a reminder, the fourth quarter of fiscal 2019 benefited from incremental organic sales related to our recently completed client list acquisition. With this strong second half performance in fiscal 2019, Following a strong second half performance in fiscal 2018, we anticipate a difficult compare in the latter half of fiscal 2020. Our employer services revenue retention rate is another important indicator of the health of our business. And as you will recall, this was the first year we provided guidance for it. We are pleased to now report an improvement in our retention rate of 40 basis points to 90.8% in 2019, which was in line with our expectations. This increase was driven primarily by our mid-market business, which is benefiting from rising NPS scores following the completion of our platform migrations in late fiscal 2018, continuous investments in our Workforce Now platform, and service-related transformation initiatives. This puts us closer to our all-time high of 91.4%, which is no small accomplishment given the amount of change we've been undergoing as an organization. Our strategy is working. And on a broader level, our efforts over the past few years to improve the serviceability of our clients by migrating them to our strategic cloud-based software solutions and simplifying the service experience, while also closing subscale locations and transforming our client service model through our service alignment initiative, have contributed to improvements in our client satisfaction scores and overall service costs. You will hear more from Kathleen shortly. on some of our more recent transformation-related investments and anticipated benefits. But before that, I would like to briefly discuss some of our recent efforts around our product and innovation. The global human capital management market is strong and continues to benefit from an evolving regulatory landscape that increasingly elevates the value of HR as a strategic business partner. At our June 2018 Investor Day, we shared how we intend to position ourselves to take advantage of some of these trends. One such trend is the evolution of payments where employers increasingly recognize the need for differentiated payments and financial wellness offerings in order to attract and retain talent. A recent study by the ADP Research Institute identified that nearly 80% of employers in North America believe that companies will need to customize their employee payment options to remain competitive in the war for talent. while two-thirds of employees say off-cycle pay options, such as the ability to choose pay frequency, would make a difference when considering a job offer. At ADP, we continue to invest in new solutions aimed at tackling these evolving trends. With ADP's WiselyPay, we are enabling our clients to provide their employees with a fully electronic and proprietary payment solution, which we complement through our financial wellness tool, the MyWisely Companion mobile app. Recently, we enhanced our electronic payment functionality with the launch of Widely Now, which helps organizations and their HR departments address compliance risks by bringing automation to instant payments such as off-cycle and termination pay. With these solutions, organizations can leverage ADP's compliance expertise to pay unscheduled or off-cycle employee wages in order to meet the diverse range of local employer requirements. Tight labor markets the tight labor market has also increased the importance of recruiting. Organizations are increasingly looking to utilize technology that enables a more seamless and effective recruitment process. Providing employers with an integrated offering that equips their recruiters with tools that effectively identify and connect with top talent is therefore paramount in helping them stay ahead of the competition. It is with this objective in mind that ADP recently integrated ADP Recruiting Management, our all-in-one automated recruiting platform, with LinkedIn Recruiter System Connect. The integration allows recruiters to easily export basic profile data into ADP recruiting management while servicing critical candidate information in real time into LinkedIn Recruiter. With this integration, recruiters have access to everything they need in a single time-saving workflow without the inconvenience of manual data entry, moving between systems, or repetitive candidate outreach. Innovations like these demonstrate our commitment to delivering best-in-class products, and earlier this month, we were pleased to be recognized by both Nelson Hall and Everest Group as a leader in their respective recruitment process outsourcing assessments. This is just one example of how most mid- and large-sized businesses today use multiple systems and vendors to manage their workforce needs. The seamless integration of solutions is critical to ensuring that employee experience is executed flawlessly. As the HCM market's largest digital source for people management solutions, ADP Marketplace enables employers to build this more flexible HR ecosystem to fit their needs. This approach to providing an open ecosystem is integral to our open API strategy and is a foundation for our next generation HCM solutions. We were therefore pleased this quarter to host our second annual ADP Marketplace Partner Summit, which allowed us to recognize our partners for the creativity and success of their solutions while also allowing them to share in best practices. We are proud to have been the first HCM vendor to launch a marketplace, and we're pleased this year to see our total number of partners grow by 33%, with ADP Marketplace now offering almost 370 solutions across the HCM spectrum, representing 40% growth over the past 12 months. Let me conclude my remarks by saying that our evolution toward becoming an HCM technology company that provides great service would not be possible without the dedication of our associates who are integral in helping us accelerate our pace of change. We are proud of their efforts to deliver innovative solutions like these to our clients and for their efforts to ensure the success of our transformation initiatives. And with that, I'll turn it over to Kathleen for her commentary on our results and the fiscal 2020 outlook.