Ceridian Reports 2005 Results
Company Issues Guidance for 2006 2005 Revenues Rise 10%; EPS Triples Outlook for 2006 Projects Revenue Growth of 8% to 11%; EPS Growth in Double-digits to $.98 – $1.08, including stock-based compensation expense Fourth Quarter 2005 Highlights: * Diluted EPS was $.32. Includes the impact of ta
MINNEAPOLIS (February 15, 2006) – Ceridian Corporation (NYSE: CEN) today reported fourth quarter 2005 net earnings of $46.7 million, or $.32 per diluted share, on revenue of $379.5 million. For the fourth quarter of 2004, net earnings were $11.0 million, or $.07 per diluted share, on revenue of $361.3 million. For the year ended December 31, 2005, net earnings were $127.9 million, or $.86 per diluted share, on revenue of $1,459.0 million. For the year ended December 31, 2004, net earnings were $36.9 million, or $.24 per diluted share, on revenue of $1,320.4 million.
“Operationally, 2005 was an excellent year for Ceridian,” said Ronald L. Turner, chairman, president and chief executive officer of Ceridian. “We exceeded the earnings targets for the year by delivering significant margin improvements in Human Resource Solutions (HRS), and through exceptional performance at Comdata. Importantly, we were able to meet our financial targets while making investments to reshape and improve our operations. We believe that the investments we made in 2005 have created a more efficient operating structure that will result in better customer service, customer retention, and higher margins in 2006.
Commenting on the results for the fourth quarter, Turner said, “The overall performance in the quarter was very strong. Revenue and segment margins as a percentage of revenue at Comdata came in at the high-end of our expectations, driven by penetration into new markets, new products, higher fuel prices and high demand for Comdata’s credit, debit and stored value payment services. Growth was particularly strong in both the domestic and international retail markets, where Comdata’s Stored Value Systems unit is a leader in gift, merchandise return, and loyalty card solutions. Growth in Comdata’s transportation segment was driven by share gains in the domestic gasoline fleet market, higher fuel prices and greater activity in the trucking industry. Comdata’s unique BusinessLink product also continues to gain traction.
“In HRS, revenue growth in the quarter was 2.1% and segment margins as a percentage of revenue were 7.2%. Both metrics were negatively impacted by out of period revenue adjustments totaling $6.1 million. Further impacting HRS segment margins were severance charges and asset impairments due to changing business technology needs, which were partially offset by cost deferrals related to the out of period revenue adjustments that netted to an expense of $5.0 million,” Turner continued. “The key operational indicators in the HRS business were all favorable. New order growth was in the mid-teens on a percentage basis, customer retention for the quarter and year were at record levels, and float balances again grew in double digits. The economic environment remained favorable as interest rates and customer employment levels rose in line with our forecasts.”
“Results in U.S. HRS were particularly encouraging, especially in the areas of new order growth and cost control,” Turner concluded. “The actions taken over the past four quarters to re-shape our small business segment, consolidate facilities, exit or improve underperforming businesses, and streamline that organization are paying off.”
Also impacting the fourth quarter’s results were several discrete tax related items which netted to a reduction of the income tax provision by $12.4 million.
Further commenting on the results, Douglas C. Neve, executive vice president and chief financial officer said, “The strong overall earnings performance, along with effective management of working capital, contributed to another quarter of significant cash flow generation. Cash flow from operations for the quarter was $109.9 million, capital expenditures were $17.7 million, and depreciation and amortization expense was $22.3 million. This brought total cash flow from operations for the year to $285.6 million. For the year 2005, capital expenditures were $64.2 million, and depreciation and amortization expense was $85.3 million. The strong operational performance in the quarter, coupled with stock option exercises and borrowing in Canada related to the previously announced $130 million repatriation of accumulated foreign earnings, resulted in a cash balance of $335.6 million and a somewhat higher debt level of $106.5 million as of year end.
“We again actively repurchased shares during the quarter,” Neve continued. “We repurchased 3.5 million shares for $79.5 million, bringing the total repurchase for the year to 10.7 million shares for $222.3 million. Partially offsetting the share repurchases were stock option exercises on 3.5 million shares, which generated cash of $56.7 million during the quarter. For the full year, options on 5.8 million shares were exercised for $91.9 million. Expected uses of our cash on hand and future cash flow include a combination of additional share repurchases, acquisitions, and contributions to our pension plan.”
Source: Ceridian
