Conduent Incorporated · NASDAQ:CNDT
Conduent — Q4 2021 Earnings Presentation
30 slides from Conduent's earnings presentation, Feb 16, 2022
Slide 1: Conduent Q4 and Full Year 2021 Earnings Results
February 16, 2022 Conduent Q4 and Full Year 2021 Earnings Results
Slide 2: Cautionary Statements: Forward-Looking Statements
Cautionary Statements Forward-Looking Statements This document contains “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,”
Slide 3: Cautionary Statements: Non-GAAP Financial Measures
Cautionary Statements Non-GAAP Financial Measures We have reported our financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to b
Slide 4: 2021 Full Year Earnings Agenda
2021 Full Year Earnings 2021 Results – Operational Highlights – Sales – Financials 2022/23 Outlook – Game Plan – Financial Guidance Q&A 4
Slide 5: 2021 Results
2021 Results CONDUENT ss
Slide 6: Q4 & Full Year 2021 Highlights
Q4 & Full Year 2021 Highlights • Revenue: Q4 $1,048M / FY $4,140M • Adj. EBITDA(1): Q4 $114M / FY $487M Q4 / Full Year • Adj. EBITDA Margin(1): Q4 10.9% / FY 11.8% Results / Metrics • TCV new business signings: Q4 $310M, FY $1,785M • New business ARR signings: Q4 $111M, FY $408M • Net ARR Activity I
Slide 7: 2021 Operational Highlights & Recognition
2021 Operational Highlights & Recognition Client Industry Research Culture • Increase in Client Satisfaction 3 Years in a Row Recognized as a leader by the following; • Forbes: Best Employers for Diversity • GM Supplier of the Year Award • NelsonHall • Gold Stevie® Award: Leading Through Digital • I
Slide 8: Growth and Retention
Growth and Retention New Business TCV Signings (incl. ARR + NRR) Net ARR Activity (TTM)(1,2) $3,000M $150 $132 $128 $1,934M $1,785M $106 $2,000M $100 $87 $1,000M $60 $519M $310M $50 $—M Q4 FY $— 2020 2021 Q4' 20 Q1' 21 Q2' 21 Q3' 21 Q4' 21 New Business ARR Sales Update Full Year New Business TCV Sig
Slide 9: Full Year 2021 P&L Metrics
Full Year 2021 P&L Metrics Revenue Revenue Trend (Y/Y Compare) $6,000M (0.6)% Y/Y (0.9)% in CC 1.0% $4,163M (0.3)% (0.7)% $4,140M $4,000M (2.2)% (4.0)% (5.2)% $2,000M (8.6)% Q2 Q3 Q4 Q1 Q2 Q3 Q4 $—M 2020 2020 2020 2021 2021 2021 2021 FY '20 FY '21 Adj. EBITDA(1) / Margin • Revenue: ◦ Revenue benefit
Slide 10: FY 2021 P&L by Segment
FY 2021 P&L by Segment Revenue Adj. EBITDA(1) Contributions Transportation, $746M (6.8)% Y/Y 3.8% Y/Y 10.8% Y/Y $109M $440M 1.5% Y/Y $487M (7.0)% Y/Y $(302)M Commercial $240M Industries, $2,076M (4.0)% Y/Y Government Services, $1,318M Commercial Government Transportation Unallocated Adjusted Industr
Slide 11: Q4 & FY 2021 Cash Flow and Balance Sheet
Q4 & FY 2021 Cash Flow and Balance Sheet Balance Sheet • Adj. Free Cash Flow(1): Q4 $37M / FY $89M ($ in millions) 12/31/2020 12/31/2021 Total Cash(2) $458 $420 • Capex(6) as % of revenue: Q4 4.4% / FY 3.6% Total Debt(2,4) 1,504 1,400 Term Loan A(3) due 2026 — 265 • Net adjusted leverage ratio(7) of
Slide 12: 2022/23 Outlook
2022/23 Outlook 12
Slide 13: 2022 Priorities
2022 Priorities CONDUENT gS Mid market CXaaS Integrated Claims Capabilities Payments and Analytics Opportunistic Geographic Expansion M&A + Automation + Tech modernization + Shared services + Partnerships + Client penetration + Integrated sales model 13
Slide 14: FY 2022 and 2023 Outlook
FY 2022 and 2023 Outlook (4) FY 2021 FY 2021 FY 2022 FY 2023 Actuals (Ex Midas) Outlook Outlook Revenue/Adj. Revenue $4,140M $4,070M $3,825M - $3,975M 1% - 4% Growth Adj. EBITDA(1) / Adj. EBITDA $487M / 11.8% $458M / 11.3% 9.5% - 10.5% 10.5% - 11.5% Margin(1) Adj. Free Cash Flow(2) as % of 18% (3) A
Slide 15: Appendix
Appendix CONDUENT ss 15
Slide 16: Sales Metrics
Sales Metrics TCV Signings (incl. ARR + NRR) New Business TCV Signings (TTM) $2,000M $3,000M $2,000M $1,000M 825 912 2,118 745 637 $1,000M 1,934 1,966 1,993 1,785 515 273 276 1,461 1,390 1,624 623 775 1,095 468 519 356 344 324 310 $0M $0M Q1' 20 Q2' 20 Q3' 20 Q4' 20 Q1' 21 Q2' 21 Q3' 21 Q4' 21 Q1' 2
Slide 17: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend (1.7)% 8.7% 9.7% (3.3)% (2.7)% 6.8% 1.5% 2.1% (8.4)% (8.0)% 0.3% 0.3% (10.2)% (12.2)% Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Revenue Revenue Transportation
Slide 18: Q4 Operational Highlights & Recognition
Q4 Operational Highlights & Recognition A collaborative, teamwork-oriented culture laser-focused on driving valuable outcomes for clients 18
Slide 19: Definitions
Definitions New Business Total Contract Value (TCV): Estimated total future revenues from contracts signed during the year related to new logo, new service line or expansion with existing customers. New Business Non-Recurring Revenue (NRR): metric measures the non-recurring revenue for any new busin
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures We have reported our financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non- GAAP measures allow investo
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Revenue, Adjusted Operating Income and Adjusted Operating Margin. We make adjustments to Revenue, Costs and Expenses and Operating Margin, as applicable, for the following items, for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjus
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 m
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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,
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax Rate, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020 Revenue $ 1,055 $ 1,028 $ 1,026 $ 1,038 $ 1,048 $ 4,140 $ 4,163 F
Slide 25: Continued
CONTINUED (in millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (11) $ (9) $ 19 $ 19 $ (54) $ (25) $ (139) Adjustment: Total Non-GAAP Adjustments 74 56 42 45 96 239 337 Adjusted PBT $ 63 $ 47 $ 61 $ 64 $ 42 $ 214 $ 198 Income
Slide 26: Continued
CONTINUED (in millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020 ADJUSTED EBITDA Income (Loss) From Continuing Operations $ (11) $ (11) $ 12 $ 11 $ (40) $ (28) $ (118) Income tax expense (benefit) — 2 7 8 (14) 3 (21) Depreciation and amortization 115 95 86 84 87 352 459 Contract induc
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS, Adjusted Effective Tax Rate, Adjusted Operating Margin, and Adjusted EBITDA Margin (Amounts are in whole dollars, shares are in thousands and margins are in %) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021
Slide 28: Continued
CONTINUED (Margins are in %) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (1.0)% (0.9)% 1.9 % 1.8 % (5.2)% (0.6)% (3.3)% Adjustments: Total non-GAAP adjustments 7.0 5.4 4.0 4.3 9.2 5.8 8.1 Interest expense 1.3 1.3 1.3 1.2
Slide 29: Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow (in millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020 Operating Cash Flow $ 172 $ (2) $ 105 $ 55 $ 85 $ 243 $ 161 Cost of additions to land, buildings and equipment (28) (14) (25) (13) (28) (80) (76) Proceeds from sale o
Slide 30: © 2020 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks
© 2020 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks of Conduent Inc. in the United States and/or other countries.