Ceridian Reports Third Quarter 2007 Results

Business Wire, Oct 22, 2007

MINNEAPOLIS -- Ceridian Corporation (NYSE:CEN):

Third Quarter 2007 Financial Highlights:

    --  Diluted EPS was $.28, including one-time net charges of $.03.
        Diluted EPS of $.32 for the third quarter of 2006 included an
        income tax related gain of $.06 and one-time net charge of
        $.01.
    --  Revenue was $412.4 million, up 6.7 percent over prior year.
        --  Human Resource Solutions (HRS) revenue up 3.4 percent, to
            $271.8 million.
        --  Comdata revenue up 13.7 percent, to $140.6 million.
    --  HRS and Comdata segment operating margins were 7.7 percent and
        30.4 percent, respectively, including the impact of one-time
        net charges.
    --  Average customer funds balance grew 11.3 percent.
    --  Cash balance at September 30, 2007 was $490.3 million. Debt
        balance stands at $85.5 million.
    --  Cash flow from operations was $114.6 million. Capital
        expenditures were $12.3 million.

Ceridian Corporation (NYSE:CEN) today reported third quarter 2007 net earnings of $41.0 million, or $.28 per diluted share, on revenue of $412.4 million. For the third quarter of 2006, net earnings were $45.6 million, or $.32 per diluted share on revenue of $386.5 million. For the nine months ended September 30, 2007, net earnings were $125.7 million, or $.87 per diluted share, on revenue of $1,225.9 million. For the nine months ended September 30, 2006, net earnings were $124.0 million, or $.85 per diluted share, on revenue of $1,161.1 million. One-time charges in the third quarter of 2007 for severance and proxy-related costs totaled $10.3 million pre-tax, or $.04 per diluted share. The company also recorded a one-time pre-tax gain of $3.1 million, or $.01 per diluted share, on the sale of an investment during the quarter. One-time items in the third quarter of 2006 included an income tax related gain of $.06 per diluted share, a gain of $.02 per diluted share on the sale of a business and a charge of $.03 per diluted share to reserve for the anticipated settlement of a legal matter.

"We are pleased with the Company's third quarter financial performance," said Kathryn V. Marinello, president and chief executive officer of Ceridian Corporation. "We continued to execute successfully on the five point operational plan adopted earlier this year."

"We continue to make progress improving margins in the HRS business," Marinello continued. "HRS margins improved 30 basis points compared to the prior year quarter, despite the net negative impact of allocated one-time items of $5.8 million. Excluding one-time items, HRS margins for the quarter improved over 400 basis points on a year-over-year basis. HRS margins rose due to higher customer retention levels, growth in our float balances, ongoing cost reduction and productivity improvement initiatives and lower legacy pension costs."

"Growth in the HRS business was driven by strong performance in Canada and growth in customer float balances. As expected, absolute growth in HRS revenue was dampened by approximately 1 percent by two business divestitures that occurred in the past twelve months and by relatively weak order activity earlier in the year. Order growth in HRS rebounded into the high teens on a percentage basis over the prior year on a strong across-the-board performance. Float balance growth was very strong at 11.3 percent and the yield was flat compared to the prior year quarter at 4.7 percent. The external economic environment had little impact on our results for the quarter. Customer employment levels during the quarter were up approximately 2 percent year-over-year and on plan."

"Comdata posted another solid performance," Marinello said. "Revenue was up 13.7 percent, extending Comdata's string of double-digit top-line growth quarters to fourteen. Overall growth in the transportation business was in the mid-single digits on a percentage basis, driven primarily by strong BusinessLink transaction growth in both the over-the-road and business fleet markets, private label processing and in regulatory compliance. Over-the-road trucking transactions were up about 1 percent. Organic growth in the retail services business was very strong at over 20 percent, driven primarily by robust demand for gift cards. Comdata's margins for the quarter were 30.4%, and included allocated proxy-related charges of $1.4 million. Margins were lower on a year-over-year basis because of a higher mix of lower margin gift card sales, additional IT investments, and seasonal pressure related to the mall gift card program management business acquired in the fourth quarter of 2006. Fuel prices had little impact on the quarterly results. About 30 percent of Comdata's diesel fuel price exposure for 2007 is covered by derivatives at a price of $2.65 per gallon."

Cash flow from operations, capital expenditures and depreciation and amortization for the quarter were $114.6 million, $12.3 million, and $21.0 million, respectively.

Stock-based compensation expense for the quarter was $4.8 million pre-tax, or $.02 per diluted share. Stock-based compensation expense in the third quarter of 2006 was $4.0 million pre-tax, or $.02 per diluted share.