Conduent (NASDAQ: CNDT), a global technology-led business process
solutions company, today announced its third quarter 2023 financial
results.
Cliff Skelton, Conduent President and Chief Executive Officer
stated, “Our Q3 results represented a continuation of consistent
performance in Revenue and EBITDA, exceeding expectations. Our
portfolio diversity provided for an ability to accommodate
variation between businesses whereby revenue timing in one business
can be shored up by advantages in another. With respect to sales,
we continue to hit critical ‘singles and doubles’ with visibility
to large deals on the horizon. Macro-economic conditions in the
Commercial sector influenced near-term sales opportunities as
experienced by many of our competitors, but again, our diversity
allowed the Government and Transportation segments to provide
offset advantages. Our sales pipeline is stronger than ever and we
feel optimistic regarding future sales.
“Meanwhile, we continue to deliver on the strategies we outlined
in our March investor briefing, implementing our immediate payments
offering with the Commonwealth of Virginia and announcing a very
significant Government Healthcare contract with the State of Texas,
exemplifying and validating our market-leading claims management
platform. We continue on our journey to rationalize our portfolio
as demonstrated by our recent announcement to transition our
BenefitWallet HSA platform, and we intend to ‘stay the course’ on
our portfolio strategy.”
Key Financial Q3 2023 Results
($ in millions, except margin and per share
data) |
Q3 2023 |
Q3 2022 |
CurrentQuarterY/Y B/(W) |
Revenue |
$932 |
$977 |
(4.6)% |
Adjusted
Revenue(1) |
$932 |
$977 |
(4.6)% |
GAAP Net Income (Loss) |
$(289) |
$15 |
n/m |
Adjusted EBITDA(1) |
$92 |
$105 |
(12.4)% |
Adjusted EBITDA Margin (1) |
9.9% |
10.7% |
(80) bps |
GAAP Income (Loss) Before Income Tax |
$(313) |
$23 |
n/m |
GAAP Diluted EPS |
$(1.34) |
$0.06 |
n/m |
Adjusted Diluted EPS(1) |
$(0.09) |
$0.09 |
(200)% |
Cash Flow from Operating Activities |
$(11) |
$98 |
(111)% |
Adjusted Free Cash Flow(1) |
$(35) |
$78 |
(145)% |
|
|
|
|
Performance CommentaryDuring Q3 2023, we
entered into an agreement to transfer our BenefitWallet HSA
portfolio, marking an important milestone in our portfolio
rationalization strategy. We anticipate completing the transfer of
this portfolio in the first half of 2024, with an estimated pre-tax
gain of approximately $425 million.
Pre-tax income (loss) was $(313)M versus $23M in the prior year
period, mainly impacted by a goodwill impairment in the quarter,
triggered by entering into the BenefitWallet agreement.
Adjusted EBITDA of $92M and Adjusted EBITDA Margin of 9.9% were
ahead of expectations.
Revenue and Adjusted Revenue for Q3 2023 were also ahead of
expectations, however, lower than the prior year period primarily
due to some non-repeating items in the prior year.
New business TCV pipeline grew 13% quarter-over-quarter, driven
by a number of sizeable early stage opportunities in our Government
Segment.
Conduent’s $1.0 billion total liquidity position remains strong
with long-dated debt maturities and a modest net leverage
ratio.
In the quarter, we repurchased approximately 2 million shares of
common stock in connection with our ongoing share repurchase
program.
Other Q3 2023 Highlights Include:
- For the second consecutive year, recognized as a Leader in the
Everest Group Healthcare Payer Operations PEAK Matrix® Assessment
2023 that evaluates service providers on multiple factors;
- Launched partnership with Charles Schwab to expand capabilities
for benefit plans offerings for clients;
- Recognized by Comparably with a Best Leadership Team award
based on employee ratings of senior leadership and management
team;
- Conduent CX recognized as Leader in 2023 ISG Provider Lens for
Customer Experience Services for the third consecutive year;
and
- Named a finalist in four sustainability categories for the 2023
CiTTi Transportation Industry Awards in the UK.
FY 2023 Outlook(4)
|
FY 2022 Actuals |
FY 2023 Outlook(3) |
|
|
|
|
|
|
|
|
|
Adj.
Revenue(1) |
$3,851M |
$3,700M - $3,720M |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adj. EBITDA(1) /
Adj. EBITDA Margin(1) |
$394M / 10.2% |
Approx. 10.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adj. Free Cash
Flow(1) as % of Adj. EBITDA(1) |
1.5%(2) |
Approx. 0%(2) |
|
|
|
|
|
(1) Refer to Appendix for definition and complete Non-GAAP
reconciliations of Adjusted Revenue, Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted Diluted EPS and Adjusted Free Cash
Flow.(2) Normalized for the impact of payment of deferred
payroll taxes primarily related to the CARES Act of $27M in 2022,
Adjusted Free Cash Flow as a percentage of Adjusted EBITDA is
approximately 8% in 2022. Adjusted Free Cash Flow for 2023 includes
an outstanding US Federal tax refund of $29M expected to be
received in 2023.(3) Refer to Appendix for additional
information regarding Non-GAAP Outlook.
Conference CallManagement will present the
results during a conference call and webcast on November 1,
2023 at 9:00 a.m. ET.
The call will be available by live audio webcast along with the
news release and online presentation slides at
https://investor.conduent.com/.
The conference call will also be available by calling
877-407-4019 toll-free. If requested, the conference ID for this
call is 13741473.
The international dial-in is 1-201-689-8337. The international
conference ID is also 13741473.
A recording of the conference call will be
available by calling 1-877-660-6853 three hours after the
conference call concludes. The replay ID is 13741473.
The telephone recording will be available until November 15,
2023.
About Conduent Conduent delivers
digital business solutions and services spanning the commercial,
government and transportation spectrum – creating exceptional
outcomes for its clients and the millions of people who count on
them. The Company leverages cloud computing, artificial
intelligence, machine learning, automation and advanced analytics
to deliver mission-critical solutions. Through a dedicated global
team of approximately 60,000 associates, process expertise, and
advanced technologies, Conduent’s solutions and services digitally
transform its clients’ operations to enhance customer experiences,
improve performance, increase efficiencies and reduce costs.
Conduent adds momentum to its clients’ missions in many ways
including delivering 43% of nutrition assistance payments in the
U.S., enabling 1.3 billion customer service interactions annually,
empowering millions of employees through HR services every year and
processing nearly 12 million tolling transactions every day. Learn
more at www.conduent.com.
Non-GAAP Financial MeasuresWe have reported our
financial results in accordance with accounting principles
generally accepted in the U.S. (U.S. GAAP). In addition, we have
discussed our financial results using non-GAAP measures. We believe
these non-GAAP measures allow investors to better understand the
trends in our business and to better understand and compare our
results. Accordingly, we believe it is necessary to adjust several
reported amounts, determined in accordance with U.S. GAAP, to
exclude the effects of certain items as well as their related tax
effects. Management believes that these non-GAAP financial measures
provide an additional means of analyzing the results of the current
period against the corresponding prior period. However, these
non-GAAP financial measures should be viewed in addition to, and
not as a substitute for, our reported results prepared in
accordance with U.S. GAAP. Our non-GAAP financial measures are not
meant to be considered in isolation or as a substitute for
comparable U.S. GAAP measures and should be read only in
conjunction with our Consolidated Financial Statements prepared in
accordance with U.S. GAAP. Our management regularly uses our
non-GAAP financial measures internally to understand, manage and
evaluate our business and make operating decisions. Providing such
non-GAAP financial measures to investors allows for a further level
of transparency as to how management reviews and evaluates our
business results and trends. These non-GAAP measures are among the
primary factors management uses in planning for and forecasting
future periods. Compensation of our executives is based in part on
the performance of our business based on certain of these non-GAAP
measures. Refer to the “Non-GAAP Financial Measures” section
attached to this release for a discussion of these non-GAAP
measures and their reconciliation to the reported U.S. GAAP
measures.
Forward-Looking Statements
This press release, any exhibits or attachments to this release,
and other public statements we make may contain “forward-looking
statements” as defined in the Private Securities Litigation
Reform Act of 1995. The words “anticipate,” “believe,” “estimate,”
“expect,” “plan,” “intend,” “will,” “aim,” “should,” “could,”
“forecast,” “target,” “may,” “continue to,” “endeavor,” “if,”
“growing,” “projected,” “potential,” “likely,” “see,” “ahead,”
“further,” “going forward,” “on the horizon,” and similar
expressions (including the negative and plural forms of such words
and phrases), as they relate to us, are intended to identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. All statements other
than statements of historical fact included in this press release
or any attachment to this press release are forward-looking
statements, including, but not limited to, statements regarding our
financial results, condition and outlook; changes in our operating
results; general market and economic conditions; with respect to
sales, continuing to hit critical ‘singles and doubles’ and our
expectation regarding visibility to large deals on the horizon; our
belief regarding our sales pipeline being stronger than ever and
feeling optimistic regarding future sales; statements regarding
continuing on our journey to rationalize our portfolio and our
intention to ‘stay the course’ on our portfolio strategy;
statements regarding expectations regarding the transfer of our
BenefitWallet HSA portfolio, including anticipation of completing
the transfer of this portfolio in the first half of 2024 with an
estimated pre-tax gain of approximately $425 million; and our
projected financial performance for the full year 2023, including
all statements made under the section captioned “FY 2023 Outlook”
within this release. These statements reflect our current views
with respect to future events and are subject to certain risks,
uncertainties and assumptions, many of which are outside of our
control, that could cause actual results to differ materially from
those expected or implied by such forward-looking statements
contained in this press release, any exhibits to this press release
and other public statements we make.
Important factors and uncertainties that could cause our actual
results to differ materially from those in our forward-looking
statements include, but are not limited to: government
appropriations and termination rights contained in our government
contracts; our ability to renew commercial and government
contracts, including contracts awarded through competitive bidding
processes; our ability to recover capital and other investments in
connection with our contracts; our reliance on third-party
providers; risk and impact of geopolitical events and increasing
geopolitical tensions, macroeconomic conditions, natural disasters
and other factors in a particular country or region on our
workforce, customers and vendors; our ability to deliver on our
contractual obligations properly and on time; changes in interest
in outsourced business process services; claims of infringement of
third-party intellectual property rights; our ability to estimate
the scope of work or the costs of performance in our contracts; the
loss of key senior management and our ability to attract and retain
necessary technical personnel and qualified subcontractors; our
failure to develop new service offerings and protect our
intellectual property rights; our ability to modernize our
information technology infrastructure and consolidate data centers;
expectations relating to environmental, social and governance
considerations; utilization of our stock repurchase program; the
failure to comply with laws relating to individually identifiable
information and personal health information; the failure to comply
with laws relating to processing certain financial transactions,
including payment card transactions and debit or credit card
transactions; breaches of our information systems or security
systems or any service interruptions; our ability to comply with
data security standards; developments in various contingent
liabilities that are not reflected on our balance sheet, including
those arising as a result of being involved in a variety of claims,
lawsuits, investigations and proceedings; risk and impact of
potential goodwill and other asset impairments; our significant
indebtedness and the terms of such indebtedness; our failure to
obtain or maintain a satisfactory credit rating and financial
performance; our ability to receive dividends or other payments
from our subsidiaries; our ability to obtain adequate pricing for
our services and to improve our cost structure; our ability to
collect our receivables, including those for unbilled services; a
decline in revenues from, or a loss of, or a reduction in business
from or failure of significant clients; fluctuations in our
non-recurring revenue; increases in the cost of voice and data
services or significant interruptions in such services; changes in
government regulation and economic, strategic, political and social
conditions; volatility of our stock price and the risk of
litigation following a decline in the price of our stock; economic
factors such as inflation, the level of economic activity and labor
market conditions, as well as rising interest rates; the completion
of our portfolio rationalization strategy and other factors that
are set forth in the “Risk Factors” section, the “Legal
Proceedings” section, the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section and other
sections in our 2022 Annual Report on Form 10-K, as well as in our
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
filed with or furnished to the Securities and Exchange Commission.
Any forward-looking statements made by us in this release speak
only as of the date on which they are made. We are under no
obligation to, and expressly disclaim any obligation to, update or
alter our forward-looking statements, whether because of new
information, subsequent events or otherwise, except as required by
law.
Media Contacts:Sean Collins, Conduent,
+1-310-497-9205, sean.collins2@conduent.com
Investor Contacts:Giles Goodburn, Conduent,
+1-203-216-3546, ir@conduent.com
|
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions, except per share data) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
932 |
|
|
$ |
977 |
|
$ |
2,769 |
|
|
$ |
2,872 |
|
|
|
|
|
|
|
|
|
|
Operating Costs and
Expenses |
|
|
|
|
|
|
|
|
Cost of services (excluding depreciation and amortization) |
|
|
724 |
|
|
|
754 |
|
|
2,148 |
|
|
|
2,236 |
|
Selling, general and administrative (excluding depreciation and
amortization) |
|
|
115 |
|
|
|
117 |
|
|
344 |
|
|
|
332 |
|
Research and development (excluding depreciation and
amortization) |
|
|
2 |
|
|
|
2 |
|
|
5 |
|
|
|
5 |
|
Depreciation and amortization |
|
|
81 |
|
|
|
54 |
|
|
199 |
|
|
|
168 |
|
Restructuring and related costs |
|
|
7 |
|
|
|
4 |
|
|
49 |
|
|
|
24 |
|
Interest expense |
|
|
28 |
|
|
|
22 |
|
|
82 |
|
|
|
59 |
|
Goodwill impairment |
|
|
287 |
|
|
|
— |
|
|
287 |
|
|
|
— |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
1 |
|
|
8 |
|
|
|
(159 |
) |
Litigation settlements (recoveries), net |
|
|
— |
|
|
|
— |
|
|
(22 |
) |
|
|
(31 |
) |
Other (income) expenses, net |
|
|
(2 |
) |
|
|
— |
|
|
(3 |
) |
|
|
— |
|
Total Operating Costs
and Expenses |
|
|
1,245 |
|
|
|
954 |
|
|
3,097 |
|
|
|
2,634 |
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes |
|
|
(313 |
) |
|
|
23 |
|
|
(328 |
) |
|
|
238 |
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(24 |
) |
|
|
8 |
|
|
(26 |
) |
|
|
87 |
|
Net Income
(Loss) |
|
$ |
(289 |
) |
|
$ |
15 |
|
$ |
(302 |
) |
|
$ |
151 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per
Share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.34 |
) |
|
$ |
0.06 |
|
$ |
(1.42 |
) |
|
$ |
0.67 |
|
Diluted |
|
$ |
(1.34 |
) |
|
$ |
0.06 |
|
$ |
(1.42 |
) |
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) (UNAUDITED) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Income
(Loss) |
|
$ |
(289 |
) |
|
$ |
15 |
|
|
$ |
(302 |
) |
|
$ |
151 |
|
Other Comprehensive
Income (Loss), Net(1) |
|
|
|
|
|
|
|
|
Currency translation adjustments, net |
|
|
(18 |
) |
|
|
(37 |
) |
|
|
3 |
|
|
|
(82 |
) |
Unrecognized gains (losses), net |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
Other Comprehensive
Income (Loss), Net |
|
|
(19 |
) |
|
|
(38 |
) |
|
|
3 |
|
|
|
(84 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss), Net |
|
$ |
(308 |
) |
|
$ |
(23 |
) |
|
$ |
(299 |
) |
|
$ |
67 |
|
__________
(1) All amounts are net of tax. Tax effects
were immaterial.
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
|
(in millions, except share
data in thousands) |
|
September 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
451 |
|
|
$ |
582 |
|
Accounts receivable, net |
|
|
612 |
|
|
|
630 |
|
Contract assets |
|
|
197 |
|
|
|
171 |
|
Other current assets |
|
|
275 |
|
|
|
242 |
|
Total current assets |
|
|
1,535 |
|
|
|
1,625 |
|
Land, buildings and equipment,
net |
|
|
241 |
|
|
|
266 |
|
Operating lease right-of-use
assets |
|
|
202 |
|
|
|
197 |
|
Intangible assets, net |
|
|
34 |
|
|
|
39 |
|
Goodwill |
|
|
668 |
|
|
|
955 |
|
Other long-term assets |
|
|
466 |
|
|
|
489 |
|
Total Assets |
|
$ |
3,146 |
|
|
$ |
3,571 |
|
Liabilities and
Equity |
|
|
|
|
Current portion of long-term
debt |
|
$ |
40 |
|
|
$ |
35 |
|
Accounts payable |
|
|
166 |
|
|
|
228 |
|
Accrued compensation and
benefits costs |
|
|
195 |
|
|
|
197 |
|
Unearned income |
|
|
99 |
|
|
|
81 |
|
Other current liabilities |
|
|
305 |
|
|
|
382 |
|
Total current liabilities |
|
|
805 |
|
|
|
923 |
|
Long-term debt |
|
|
1,266 |
|
|
|
1,277 |
|
Deferred taxes |
|
|
61 |
|
|
|
83 |
|
Operating lease
liabilities |
|
|
167 |
|
|
|
160 |
|
Other long-term
liabilities |
|
|
85 |
|
|
|
69 |
|
Total Liabilities |
|
|
2,384 |
|
|
|
2,512 |
|
|
|
|
|
|
Series A convertible preferred
stock |
|
|
142 |
|
|
|
142 |
|
|
|
|
|
|
Common stock |
|
|
2 |
|
|
|
2 |
|
Treasury stock, at cost |
|
|
(7 |
) |
|
|
— |
|
Additional paid-in
capital |
|
|
3,937 |
|
|
|
3,924 |
|
Retained earnings
(deficit) |
|
|
(2,852 |
) |
|
|
(2,543 |
) |
Accumulated other
comprehensive loss |
|
|
(463 |
) |
|
|
(466 |
) |
Total Conduent Inc. Equity |
|
|
617 |
|
|
|
917 |
|
Non-controlling Interest |
|
|
3 |
|
|
|
— |
|
Total Equity |
|
|
620 |
|
|
|
917 |
|
Total Liabilities and Equity |
|
$ |
3,146 |
|
|
$ |
3,571 |
|
|
|
|
|
|
Shares of common stock issued
and outstanding |
|
|
216,287 |
|
|
|
218,348 |
|
Shares of series A convertible
preferred stock issued and outstanding |
|
|
120 |
|
|
|
120 |
|
Shares of common stock held in
treasury |
|
|
2,226 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash Flows from
Operating Activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(289 |
) |
|
$ |
15 |
|
|
$ |
(302 |
) |
|
$ |
151 |
|
Adjustments required to
reconcile net income (loss) to cash flows from operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
81 |
|
|
|
54 |
|
|
|
199 |
|
|
|
168 |
|
Contract inducement amortization |
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
2 |
|
Goodwill impairment |
|
|
287 |
|
|
|
— |
|
|
|
287 |
|
|
|
— |
|
Deferred income taxes |
|
|
(9 |
) |
|
|
11 |
|
|
|
(23 |
) |
|
|
43 |
|
Amortization of debt financing costs |
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
(Gain) loss on divestitures and sales of fixed assets, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(166 |
) |
Stock-based compensation |
|
|
5 |
|
|
|
6 |
|
|
|
13 |
|
|
|
15 |
|
Changes in operating assets and liabilities |
|
|
(88 |
) |
|
|
10 |
|
|
|
(213 |
) |
|
|
(123 |
) |
Net cash provided by (used in) operating activities |
|
|
(11 |
) |
|
|
98 |
|
|
|
(33 |
) |
|
|
93 |
|
Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
|
Cost of additions to land, buildings and equipment |
|
|
(13 |
) |
|
|
(11 |
) |
|
|
(33 |
) |
|
|
(62 |
) |
Cost of additions to internal use software |
|
|
(9 |
) |
|
|
(16 |
) |
|
|
(31 |
) |
|
|
(48 |
) |
Proceeds from divestitures |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
326 |
|
Net cash provided by (used in) investing activities |
|
|
(22 |
) |
|
|
(26 |
) |
|
|
(64 |
) |
|
|
216 |
|
Cash Flows from
Financing Activities: |
|
|
|
|
|
|
|
|
Payments on revolving credit facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(100 |
) |
Payments on debt |
|
|
(10 |
) |
|
|
(8 |
) |
|
|
(30 |
) |
|
|
(24 |
) |
Treasury stock purchases |
|
|
(6 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
Taxes paid for settlement of stock-based compensation |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(7 |
) |
|
|
(1 |
) |
Dividends paid on preferred stock |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
Contribution from noncontrolling interest |
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
(16 |
) |
|
|
(11 |
) |
|
|
(48 |
) |
|
|
(132 |
) |
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
2 |
|
|
|
(10 |
) |
Increase (decrease) in cash,
cash equivalents and restricted cash |
|
|
(50 |
) |
|
|
57 |
|
|
|
(143 |
) |
|
|
167 |
|
Cash, Cash Equivalents and
Restricted Cash at Beginning of Period |
|
|
505 |
|
|
|
530 |
|
|
|
598 |
|
|
|
420 |
|
Cash, Cash Equivalents
and Restricted Cash at End of period(1) |
|
$ |
455 |
|
|
$ |
587 |
|
|
$ |
455 |
|
|
$ |
587 |
|
__________
(1) Includes $4 million and $10 million
restricted cash as of September 30, 2023 and 2022, respectively,
that were included in Other current assets on their respective
Condensed Consolidated Balance Sheets.
Appendix
Definitions
Net ARR Activity Metric (TTM)
Projected Annual Recurring Revenue for contracts signed in the
prior 12 months, less the annualized impact of any client losses,
contractual volume and price changes, and other known impacts for
which the company was notified in that same time period, which
could positively or negatively impact results. The metric
annualizes the net impact to revenue. Timing of revenue impact
varies and may not be realized within the forward 12-month
timeframe. The metric is for indicative purposes only. This metric
excludes COVID-related volume impacts and non-recurring revenue
signings. This metric is not indicative of any specific 12 month
timeframe.
New Business Annual Contract Value (ACV): (New
Business TCV / contract term) multiplied by 12.
New Business Total Contract Value (TCV):
Estimated total future revenues from contracts signed during the
period related to new logo, new service line or expansion with
existing customers.
TTM: Trailing twelve months.
PBT: Profit before tax.
Non-GAAP Financial Measures
We have reported our financial results in
accordance with accounting principles generally accepted in the
U.S. (U.S. GAAP). In addition, we have discussed our financial
results using non-GAAP measures.
We believe these non-GAAP measures allow investors to better
understand the trends in our business and to better understand and
compare our results. Accordingly, we believe it is necessary to
adjust several reported amounts, determined in accordance with U.S.
GAAP, to exclude the effects of certain items as well as their
related tax effects. Management believes that these non-GAAP
financial measures provide an additional means of analyzing the
results of the current period against the corresponding prior
period. However, these non-GAAP financial measures should be viewed
in addition to, and not as a substitute for, the Company’s reported
results prepared in accordance with U.S. GAAP. Our non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable U.S. GAAP measures and should be
read only in conjunction with our Consolidated Financial Statements
prepared in accordance with U.S. GAAP. Our management regularly
uses our non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions, and
providing such non-GAAP financial measures to investors allows for
a further level of transparency as to how management reviews and
evaluates our business results and trends. These non-GAAP measures
are among the primary factors management uses in planning for and
forecasting future periods. Compensation of our executives is based
in part on the performance of our business based on certain of
these non-GAAP measures.
A reconciliation of the following non-GAAP financial measures to
the most directly comparable financial measures calculated and
presented in accordance with U.S. GAAP are provided below.
These reconciliations also include the income tax effects for
our non-GAAP performance measures in total, to the extent
applicable. The income tax effects are calculated under the same
accounting principles as applied to our reported pre-tax
performance measures under Accounting Standards Codification 740,
which employs an annual effective tax rate method. The noted income
tax effect for our non-GAAP performance measures is effectively the
difference in income taxes for reported and adjusted pre-tax income
calculated under the annual effective tax rate method. The tax
effect of the non-GAAP adjustments was calculated based upon
evaluation of the statutory tax treatment and the applicable
statutory tax rate in the jurisdictions in which such charges were
incurred.
Adjusted Revenue, Adjusted Net Income (Loss), Adjusted
Diluted Earnings per Share, Adjusted Weighted Average Common Shares
Outstanding, and Adjusted Effective Tax Rate
We make adjustments to Net Income (Loss) before Income Taxes for
the following items, as applicable, to the particular financial
measure, for the purpose of calculating Adjusted Revenue, Adjusted
Net Income (Loss), Adjusted Diluted Earnings per Share, Adjusted
Weighted Average Common Shares Outstanding, and Adjusted Effective
Tax Rate:
- Amortization of acquired intangible assets. The amortization of
acquired intangible assets is driven by acquisition activity, which
can vary in size, nature and timing as compared to other companies
within our industry and from period to period.
- Restructuring and related costs. Restructuring and related
costs include restructuring and asset impairment charges as well as
costs associated with our strategic transformation program.
- Goodwill impairment. This represents goodwill impairment
charges related to entering the agreement to transfer the
BenefitWallet portfolio.
- (Gain) loss on divestitures and transaction costs. Represents
(gain) loss on divested businesses and transaction costs.
- Litigation settlements (recoveries), net represents settlements
or recoveries for various matters subject to litigation.
- Other charges (credits). This includes Other (income) expenses,
net on the Condensed Consolidated Statements of Income (loss) and
other insignificant (income) expense associated with providing
transition services on the California Medicaid contract loss and
other adjustments.
- Abandonment of Cloud Computing Project. This includes charges
in connection with the abandonment of a cloud computing project.
The costs include writing off previously capitalized costs and
accruing remaining hosting fees that continue to be incurred
without any economic benefit.
- Divestitures. Revenue and Adjusted EBITDA of divested
businesses are excluded.
The Company provides adjusted net income and adjusted EPS
financial measures to assist our investors in evaluating our
ongoing operating performance for the current reporting period and,
where provided, over different reporting periods, by adjusting for
certain items which may be recurring or non-recurring and which in
our view do not necessarily reflect ongoing performance. We
also internally use these measures to assess our operating
performance, both absolutely and in comparison to other companies,
and in evaluating or making selected compensation decisions.
Management believes that the adjusted effective tax
rate, provided as supplemental information, facilitates a
comparison by investors of our actual effective tax rate with an
adjusted effective tax rate which reflects the impact of the items
which are excluded in providing adjusted net income and certain
other identified items, and may provide added insight into our
underlying business results and how effective tax rates impact our
ongoing business.
Adjusted Revenue, Adjusted Operating Income and Adjusted
Operating Margin
We make adjustments to Revenue, Costs and Expenses and Operating
Margin for the following items, as applicable, for the purpose of
calculating Adjusted Revenue, Adjusted Operating Income and
Adjusted Operating Margin:
- Amortization of acquired intangible assets.
- Restructuring and related costs.
- Interest expense. Interest expense includes interest on
long-term debt and amortization of debt issuance costs.
- Goodwill impairment.
- (Gain) loss on divestitures and transaction costs.
- Litigation settlements (recoveries), net.
- Other charges (credits).
- Abandonment of Cloud Computing Project.
- Divestitures.
We provide our investors with adjusted revenue, adjusted
operating income and adjusted operating margin information, as
supplemental information, because we believe it offers added
insight, by itself and for comparability between periods, by
adjusting for certain non-cash items as well as certain other
identified items which we do not believe are indicative of our
ongoing business, and may also provide added insight on trends in
our ongoing business.
Adjusted EBITDA and EBITDA Margin
We use Adjusted EBITDA and Adjusted EBITDA Margin as an
additional way of assessing certain aspects of our operations that,
when viewed with the U.S. GAAP results and the accompanying
reconciliations to corresponding U.S. GAAP financial measures,
provide a more complete understanding of our on-going business.
Adjusted EBITDA represents income (loss) before interest, income
taxes, depreciation and amortization and contract inducement
amortization adjusted for the following items. Adjusted EBITDA
Margin is Adjusted EBITDA divided by revenue or adjusted revenue,
as applicable.
- Restructuring and related costs.
- Goodwill impairment.
- (Gain) loss on divestitures and transaction costs.
- Litigation settlements (recoveries), net.
- Other charges (credits).
- Abandonment of Cloud Computing Project.
- Divestitures.
Adjusted EBITDA is not intended to represent cash flows from
operations, operating income (loss) or net income (loss) as defined
by U.S. GAAP as indicators of operating performance. Management
cautions that amounts presented in accordance with Conduent’s
definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be
comparable to similar measures disclosed by other companies because
not all companies calculate Adjusted EBITDA and Adjusted EBITDA
Margin in the same manner.
Free Cash Flow
Free Cash Flow is defined as cash flows from operating
activities as reported on the consolidated statement of cash flows,
less cost of additions to land, buildings and equipment, cost of
additions to internal use software, and proceeds from sales of
land, buildings and equipment. We use the non-GAAP measure of Free
Cash Flow as a criterion of liquidity. We use Free Cash Flow as a
measure of liquidity to determine amounts we can reinvest in our
core businesses, such as amounts available to make acquisitions and
invest in land, buildings and equipment and internal use software,
after required payments on debt. In order to provide a
meaningful basis for comparison, we are providing information with
respect to our Free Cash Flow reconciled to cash flow provided by
operating activities, which we believe to be the most directly
comparable measure under U.S. GAAP.
Adjusted Free Cash Flow
Adjusted Free Cash Flow is defined as Free Cash Flow from above
plus adjustments for litigation insurance recoveries, transaction
costs, taxes paid on gains from divestitures and litigation
recoveries, proceeds from failed sale-leaseback transactions and
certain other identified adjustments. We use Adjusted Free Cash
Flow, in addition to Free Cash Flow, to provide supplemental
information to our investors concerning our ability to generate
cash from our ongoing operating activities; by excluding these
items, we believe we provide useful additional information to our
investors to help them further understand our ability to generate
cash period-over-period as well as added information on
comparability to our competitors. Such as with Free Cash Flow
information, as so adjusted, it is specifically not intended to
provide amounts available for discretionary spending. We have added
certain adjustments to account for items which we do not believe
reflect our core business or operating performance, and we computed
all periods with such adjusted costs.
Revenue at Constant Currency
To better understand trends in our business, we believe that it
is helpful to adjust revenue to exclude the impact of changes in
the translation of foreign currencies into U.S. Dollars. We refer
to this adjusted revenue as “constant currency.” Currency impact is
determined as the difference between actual growth rates and
constant currency growth rates. This currency impact is calculated
by translating the current period activity in local currency using
the comparable prior-year period’s currency translation rate.
Non-GAAP Outlook
In providing the Full Year 2023 outlook for Adjusted EBITDA we
exclude certain items which are otherwise included in determining
the comparable U.S. GAAP financial measure. A description of
the adjustments which historically have been applicable in
determining Adjusted EBITDA is reflected in the table below. In
addition, for “Full Year 2022 Actuals” we are excluding the impacts
of $7 million of Revenue and $2 million of Adjusted EBITDA related
to the divestiture of the Midas business. We are providing such
outlook only on a non-GAAP basis because the Company is unable
without unreasonable efforts to predict with reasonable certainty
the totality or ultimate outcome or occurrence of these adjustments
for the forward-looking period, which can be dependent on future
events that may not be reliably predicted. Based on past reported
results, where one or more of these items have been applicable,
such excluded items could be material, individually or in the
aggregate, to reported results. We have provided Full Year 2023
outlook for Adjusted revenue only on a non-GAAP basis using foreign
currency translation rates at current period end due to the
inability to, without unreasonable efforts, accurately predict
foreign currency impact on revenues. Full Year 2023 Outlook for
Adjusted Free Cash Flow is provided as a factor of expected
Adjusted EBITDA, and such outlook is only available on a non-GAAP
basis for the reasons described above. For the same reason, we are
unable to provide a GAAP expected adjusted tax rate, which adjusts
for our non-GAAP adjustments.
Non-GAAP Reconciliations: Revenue
at Constant Currency, Adjusted Net Income (Loss), Adjusted
Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA
were as follows:
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED
REVENUE |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
932 |
|
|
$ |
977 |
|
$ |
2,769 |
|
|
$ |
2,872 |
|
Adjustment: |
|
|
|
|
|
|
|
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(7 |
) |
Adjusted
Revenue |
|
|
932 |
|
|
|
977 |
|
|
2,769 |
|
|
|
2,865 |
|
Foreign currency impact |
|
|
(7 |
) |
|
|
14 |
|
|
(5 |
) |
|
|
30 |
|
Revenue at Constant
Currency |
|
$ |
925 |
|
|
$ |
991 |
|
$ |
2,764 |
|
|
$ |
2,895 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME
(LOSS) |
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
(289 |
) |
|
$ |
15 |
|
$ |
(302 |
) |
|
$ |
151 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets(2) |
|
|
1 |
|
|
|
2 |
|
|
5 |
|
|
|
11 |
|
Restructuring and related costs |
|
|
7 |
|
|
|
4 |
|
|
49 |
|
|
|
24 |
|
Goodwill impairment |
|
|
287 |
|
|
|
— |
|
|
287 |
|
|
|
— |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
1 |
|
|
8 |
|
|
|
(159 |
) |
Litigation settlements (recoveries), net |
|
|
— |
|
|
|
— |
|
|
(22 |
) |
|
|
(31 |
) |
Other charges (credits) |
|
|
(2 |
) |
|
|
— |
|
|
(3 |
) |
|
|
— |
|
Total Non-GAAP
Adjustments |
|
|
296 |
|
|
|
7 |
|
|
324 |
|
|
|
(155 |
) |
Income tax adjustments(3) |
|
|
(25 |
) |
|
|
— |
|
|
(32 |
) |
|
|
60 |
|
Adjusted Net Income
(Loss) |
|
$ |
(18 |
) |
|
$ |
22 |
|
$ |
(10 |
) |
|
$ |
56 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EFFECTIVE
TAX |
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes |
|
$ |
(313 |
) |
|
$ |
23 |
|
$ |
(328 |
) |
|
$ |
238 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total Non-GAAP Adjustments |
|
|
296 |
|
|
|
7 |
|
|
324 |
|
|
|
(155 |
) |
Adjusted PBT Before
Adjustment for Divestitures |
|
|
(17 |
) |
|
|
30 |
|
|
(4 |
) |
|
|
83 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(2 |
) |
Adjusted
PBT |
|
$ |
(17 |
) |
|
$ |
30 |
|
$ |
(4 |
) |
|
$ |
81 |
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
$ |
(24 |
) |
|
$ |
8 |
|
$ |
(26 |
) |
|
$ |
87 |
|
Income tax adjustments(3) |
|
|
25 |
|
|
|
— |
|
|
32 |
|
|
|
(60 |
) |
Adjusted Income Tax
Expense (Benefit) |
|
|
1 |
|
|
|
8 |
|
|
6 |
|
|
|
27 |
|
Adjusted Net Income
(Loss) Before Adjustment for Divestitures |
|
|
(18 |
) |
|
|
22 |
|
|
(10 |
) |
|
|
56 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(2 |
) |
Adjusted Net Income
(Loss) |
|
$ |
(18 |
) |
|
$ |
22 |
|
$ |
(10 |
) |
|
$ |
54 |
|
CONTINUED |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED OPERATING
INCOME (LOSS) |
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
$ |
(313 |
) |
|
$ |
23 |
|
$ |
(328 |
) |
|
$ |
238 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
296 |
|
|
|
7 |
|
|
324 |
|
|
|
(155 |
) |
Interest expense |
|
|
28 |
|
|
|
22 |
|
|
82 |
|
|
|
59 |
|
Adjusted Operating
Income (Loss) Before Adjustment for Divestitures |
|
|
11 |
|
|
|
52 |
|
|
78 |
|
|
|
142 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(2 |
) |
Adjusted Operating
Income (Loss) |
|
$ |
11 |
|
|
$ |
52 |
|
$ |
78 |
|
|
$ |
140 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED
EBITDA |
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
$ |
(289 |
) |
|
$ |
15 |
|
$ |
(302 |
) |
|
$ |
151 |
|
Income tax expense
(benefit) |
|
|
(24 |
) |
|
|
8 |
|
|
(26 |
) |
|
|
87 |
|
Depreciation and
amortization |
|
|
81 |
|
|
|
54 |
|
|
199 |
|
|
|
168 |
|
Contract inducement
amortization |
|
|
1 |
|
|
|
1 |
|
|
3 |
|
|
|
2 |
|
Interest expense |
|
|
28 |
|
|
|
22 |
|
|
82 |
|
|
|
59 |
|
EBITDA Before
Adjustment for Divestitures |
|
|
(203 |
) |
|
|
100 |
|
|
(44 |
) |
|
|
467 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(2 |
) |
EBITDA |
|
|
(203 |
) |
|
|
100 |
|
|
(44 |
) |
|
|
465 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring and related costs |
|
|
7 |
|
|
|
4 |
|
|
49 |
|
|
|
24 |
|
Goodwill impairment |
|
|
287 |
|
|
|
— |
|
|
287 |
|
|
|
— |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
1 |
|
|
8 |
|
|
|
(159 |
) |
Litigation settlements (recoveries), net |
|
|
— |
|
|
|
— |
|
|
(22 |
) |
|
|
(31 |
) |
Other charges (credits) |
|
|
(2 |
) |
|
|
— |
|
|
(3 |
) |
|
|
— |
|
Adjusted
EBITDA |
|
$ |
92 |
|
|
$ |
105 |
|
$ |
275 |
|
|
$ |
299 |
|
___________
(1) Adjusted for the full impact from revenue and
income/loss from divestitures for all periods presented.(2)
Included in Depreciation and amortization on the Consolidated
Statements of Income (Loss).(3) The tax impact of Adjusted
Pre-tax income (loss) from continuing operations was calculated
under the same accounting principles applied to the ‘As Reported’
pre-tax income (loss), which employs an annual effective tax rate
method to the results and without regard to the adjustments
listed.
Non-GAAP Reconciliations:
Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS,
Adjusted Effective Tax Rate, Adjusted Operating Margin and Adjusted
EBITDA Margin were as follows:
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(Amounts are in whole dollars, shares are in thousands and margins
and rates are in %) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED DILUTED
EPS(1) |
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding |
|
|
217,348 |
|
|
|
215,775 |
|
|
|
217,992 |
|
|
|
215,632 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restricted stock and performance units / shares |
|
|
— |
|
|
|
3,668 |
|
|
|
— |
|
|
|
3,384 |
|
Adjusted Weighted
Average Common Shares Outstanding |
|
|
217,348 |
|
|
|
219,443 |
|
|
|
217,992 |
|
|
|
219,016 |
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
Continuing Operations |
|
$ |
(1.34 |
) |
|
$ |
0.06 |
|
|
$ |
(1.42 |
) |
|
$ |
0.66 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
1.37 |
|
|
|
0.03 |
|
|
|
1.49 |
|
|
|
(0.70 |
) |
Income tax adjustments(2) |
|
|
(0.12 |
) |
|
|
— |
|
|
|
(0.15 |
) |
|
|
0.27 |
|
Adjusted Diluted
EPS |
|
$ |
(0.09 |
) |
|
$ |
0.09 |
|
|
$ |
(0.08 |
) |
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EFFECTIVE TAX
RATE |
|
|
|
|
|
|
|
|
Effective tax
rate |
|
|
7.8 |
% |
|
|
33.8 |
% |
|
|
7.8 |
% |
|
|
36.7 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
(13.9 |
)% |
|
(6.3 |
)% |
|
(166.2 |
)% |
|
(4.3 |
)% |
Adjusted Effective Tax
Rate(2) |
|
(6.1 |
)% |
|
|
27.5 |
% |
|
(158.4 |
)% |
|
|
32.4 |
% |
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING
MARGIN |
|
|
|
|
|
|
|
|
Income (Loss) Before
Income Taxes Margin |
|
(33.6 |
)% |
|
|
2.4 |
% |
|
(11.8 |
)% |
|
|
8.3 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
31.8 |
% |
|
|
0.6 |
% |
|
|
11.6 |
% |
|
(5.5 |
)% |
Interest expense |
|
|
3.0 |
% |
|
|
2.3 |
% |
|
|
3.0 |
% |
|
|
2.1 |
% |
Margin for Adjusted
Operating Income Before Adjustment for Divestitures |
|
|
1.2 |
% |
|
|
5.3 |
% |
|
|
2.8 |
% |
|
|
4.9 |
% |
Divestitures(3) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Margin for Adjusted
Operating Income |
|
|
1.2 |
% |
|
|
5.3 |
% |
|
|
2.8 |
% |
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Margin Before
Adjustment for Divestitures |
|
|
(21.8 |
)% |
|
|
10.2 |
% |
|
|
(1.6 |
)% |
|
|
16.3 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures(3) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
(0.1 |
)% |
EBITDA
Margin |
|
|
(21.8 |
)% |
|
|
10.2 |
% |
|
|
(1.6 |
)% |
|
|
16.2 |
% |
Total non-GAAP adjustments |
|
|
31.7 |
% |
|
|
0.5 |
% |
|
|
11.5 |
% |
|
|
(5.8 |
)% |
Divestitures(3) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
0.1 |
% |
Adjusted EBITDA Margin
Before Adjustment for Divestitures |
|
|
9.9 |
% |
|
|
10.7 |
% |
|
|
9.9 |
% |
|
|
10.5 |
% |
Divestitures(3) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
(0.1 |
)% |
Adjusted EBITDA
Margin |
|
|
9.9 |
% |
|
|
10.7 |
% |
|
|
9.9 |
% |
|
|
10.4 |
% |
__________
(1) Average shares for the 2023 and 2022 calculation of
adjusted EPS excludes 5.4 million shares associated with our Series
A convertible preferred stock and includes the impact of preferred
stock dividend of approximately $2.0 million and $2.0 million for
the three months ended September 30, 2023 and 2022,
respectively.(2) The tax impact of Adjusted Pre-tax income
(loss) from continuing operations was calculated under the same
accounting principles applied to the ‘As Reported’ pre-tax income
(loss), which employs an annual effective tax rate method to the
results and without regard to the Total Non-GAAP
adjustments.(3) Adjusted for the full impact from revenue and
income/loss from divestitures for all periods presented.
Free Cash Flow and Adjusted Free Cash Flow
Reconciliation:
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating Cash
Flow |
|
$ |
(11 |
) |
|
$ |
98 |
|
|
$ |
(33 |
) |
|
$ |
93 |
|
Cost of additions to land, buildings and equipment |
|
|
(13 |
) |
|
|
(11 |
) |
|
|
(33 |
) |
|
|
(62 |
) |
Cost of additions to internal use software |
|
|
(9 |
) |
|
|
(16 |
) |
|
|
(31 |
) |
|
|
(48 |
) |
Free Cash
Flow |
|
$ |
(33 |
) |
|
$ |
71 |
|
|
$ |
(97 |
) |
|
$ |
(17 |
) |
Free Cash Flow |
|
$ |
(33 |
) |
|
$ |
71 |
|
|
$ |
(97 |
) |
|
$ |
(17 |
) |
Transaction costs |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
6 |
|
Vendor finance lease payments |
|
|
(5 |
) |
|
|
(2 |
) |
|
|
(12 |
) |
|
|
(7 |
) |
Portion of Texas litigation settlement (recoveries) recognized in
Litigation settlements (recoveries), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24 |
) |
Tax payment related to divestitures and litigation recoveries |
|
|
— |
|
|
|
6 |
|
|
|
5 |
|
|
|
24 |
|
Adjusted Free Cash
Flow |
|
$ |
(35 |
) |
|
$ |
78 |
|
|
$ |
(98 |
) |
|
$ |
(18 |
) |
Conduent (NASDAQ:CNDT)
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Conduent (NASDAQ:CNDT)
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