Company: ADP
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000008670-25-000015
Chunk: 6

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 2
Chunk 6
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8 billion for the nine months ended March 31, 2024, coupled with an increase in average interest rates of 30 basis points.

See Note 12 of our Consolidated Financial Statements for further details on non-service components of pension income, net. 

28

Earnings Before Income Taxes ("EBIT") and Adjusted EBIT 

For the three and nine months ended March 31:

Three Months EndedNine Months EndedMarch 31,March 31,20252024YoY Growth20252024YoY GrowthEBIT$1,621.9 $1,546.3 5 %$4,119.4 $3,783.0 9 %  EBIT Margin29.2 %29.4 %(20) bps26.7 %26.2 %50 bpsAdjusted EBIT$1,629.7 $1,538.7 6 %$4,134.2 $3,779.1 9 %  Adjusted EBIT Margin29.3 %29.3 %10 bps26.8 %26.2 %60 bps

Note: Numbers may not foot due to rounding.

Earnings before income taxes increased for the three and nine months ended March 31, 2025, due to the components discussed above.

EBIT Margin decreased for the three months ended March 31, 2025, due to unfavorable impacts from interest expense, acquisition related expenses, and selling and marketing expenses, partially offset by contributions from client funds interest revenues discussed above and operating efficiencies for costs of servicing and implementing our clients on growing revenue.

EBIT Margin increased for the nine months ended March 31, 2025, due to contributions from client funds interest revenues discussed above, increased interest income on corporate funds, and operating efficiencies for costs of servicing and implementing our clients on growing revenue, partially offset by increased interest expense and acquisition related expenses.

Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, legal settlements, and net charges related to our broad-based transformation initiatives, in the applicable periods. 

Provision for Income Taxes

The effective tax rate for the three months ended March 31, 2025 and 2024 was 23.0% and 23.4%, respectively. The decrease in the effective tax rate is primarily due to a benefit for a decrease in uncertain tax position