Slide 1: Conduent Q3 2020 Earnings Results
November 5, 2020 Conduent Q3 2020 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, that involve risks and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “will,” "aim," “s
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 (GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to better
Slide 4: Client and associate testimonials
"We benchmarked the performance of "Thank you for your firm and precise Conduent versus competitors comparing message. We MUST all do our part to core KPIs and Conduent was the get through this. Your leadership and convincing winner. Apart from the fact your caring is appreciated, truly. I am that C
Slide 5: Q3 2020 Highlights
Q3 2020 Highlights • Q3 Revenue and Adj. EBITDA above expectations ◦ Revenue of $1,041M; down (5.2)% Y/Y Business ◦ Adj. EBITDA(1) of $141M, up 11.0% Y/Y Update ◦ Adj. EBITDA margin(1) of 13.5%, up 190 bps Y/Y • $468M in TCV new business signings in Q3 2020; 2x Q3 2019 signings ◦ Annual Recurring Re
Slide 6: Strong Sales Quarter
Strong Sales Quarter New Business TCV Signings (incl ARR + NRR) Renewal Signings New Business (ARR) Select Wins COMMERCIAL New capability with global aircraft and defense manufacturer, providing learning services GOVERNMENT New logo with Kansas Department of Health and Environment, providing Family
Slide 7: Positioning Conduent for the Future
Positioning Conduent for the Future Driving Growth, Quality, and Efficiency through transformation Enabling Client Success • Improving quality of service delivery to clients • Expanding enterprise account team to enhance relationships and service • Standardizing governance and processes for client i
Slide 8: Financials
CONDUENT Pe Financials
Slide 9: COVID-19 Top-Line Impact Overview
COVID-19 Top-Line Impact Overview Q3 2020 COVID-19 Consolidated Revenue Impact YTD COVID-19 Consolidated Revenue Impact Total Company Total Company (5.2)% Y/Y as reported (6.7)% Y/Y as reported(1) (5.5)% Y/Y ex COVID-19 (5.3)% Y/Y ex COVID-19 ~$3M ~$(46)M Q3 2020 COVID-19 Revenue Segment Impact YTD
Slide 10: Q3 2020 P&L Metrics
Q3 2020 P&L Metrics Revenue Adj. Operating Income(1) (5.2)% Y/Y 22.0% Y/Y (5.4)% in CC GAAP: $(14)M $(13)M • Revenue: Adj. EBITDA(1) ◦ Decline driven by prior year lost business, partially offset by new business ramp 11.0% Y/Y ◦ ~(5.5)% BAU decline Y/Y when excluding ~$3M COVID- 19 impact • Adj. Ope
Slide 11: Q3 2020 P&L by Segment
Q3 2020 P&L by Segment Revenue Adj. EBITDA(1) Contributions (12.9)% Y/Y 3% Y/Y 66% Y/Y (36)% Y/Y (10.4)% Y/Y 9.1% Y/Y (2) • Commercial: Adj. EBITDA decline driven by lower • Commercial: declines driven by COVID-19 related volume declines and interest rate impact, and prior year revenue and a non-rec
Slide 12: Q3 2020 Cash Flow and Balance Sheet
Q3 2020 Cash Flow and Balance Sheet Balance Sheet ($ in millions) 12/31/2019 9/30/2020 Total Cash(2) $505 $496 • Q3 Adj. Free Cash Flow(1): $72M Total Debt(2) 1,514 1,652 664 651 • Q3 Capex(6) as % of revenue: 3.4% Term Loan A(3,4) due 2022 Term Loan B(3) due 2023 824 818 • Net adjusted leverage rat
Slide 13: FY 2020 Outlook
FY 2020 Outlook FY 2020 Initial Guidance $ in Millions Current (Provided on Q4 2019 FY 2020 Outlook Earnings Call)3 Adj. Revenue(1) Down (6.0) - (8.0)% Down (6.4) - (7.4)% Adj. EBITDA / Adj. EBITDA Margin(1,2) 10.5 - 11.5% 11.25 - 11.75% Adj. Free Cash Flow (2) as % of Adj. EBITDA 15 - 20% ~20% (1)
Slide 14: Q&A
Q&A CONDUENT Pe 14
Slide 15: Appendix
Appendix 15
Slide 16: Historical Sales Details
Historical Sales Details TCV Signings (incl. ARR + NRR) Cumulative Pipeline New Business (ARR + NRR Breakdown) Implied New Business Avg. Contract Length 16
Slide 17: Modeling Considerations
Modeling Considerations Metric FY 2020 Commentary • FY 2020 Cash income taxes: reduced to ~$12M Taxes • Payroll taxes: ~$55M of estimated payroll tax withholding will be deferred to 2021/2022 based on current employment levels Restructuring • Expect ~$65M of spend in FY 2020 Cash Interest • Expect F
Slide 18: Definitions
Definitions TCV: Total contract value. Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Total Contract Value (TCV) is the estimated total contractual revenue related to signed contracts. Excludes the impact of divest
Slide 19: 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 (GAAP). In addition, we have discussed our financial results using the non-GAAP measures. We believe these non- GAAP measures allow investor
Slide 20: 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 Margin for the following items (as defined above), for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjusted Ope
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Consolidated 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. GAA
Slide 22: 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, tax payments related to divestitu
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Revenue, Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED REVENUE Revenue $ 1,041 $ 1,016 $ 1
Slide 24: Continued
CONTINUED (in millions) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (13) $ (64) $ (51) $ (2,106) $ (635) $ (14) $ (1,119) $ (338) Adjustment: Total Non-GAAP Adjustments 87 104 72 2,306 691 66 1,162 387 Adjusted PBT (Befor
Slide 25: Continued
CONTINUED (in millions) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED EBITDA Income (Loss) From Continuing Operations (7) $ (51) $ (49) $ (1,934) $ (581) $ (16) $ (1,029) $ (308) Income tax expense (benefit) (6) (13) (2) (172) (54) 2 (90) (30) Depreciation and amortization
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS, Adjusted Effective Tax, Adjusted Operating Margin, and Adjusted EBITDA Margin (Amounts are in whole dollars, shares are in thousands and margins are in %) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2
Slide 27: Continued
CONTINUED (Margins are in %) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (1.2)% (6.3)% (4.9)% (47.1)% (57.8)% (1.3)% (100.6)% (29.2)% Adjustments: Total non-GAAP adjustments 8.4 10.2 6.9 51.6 62.9 6.1 104.5 33.5 I
Slide 28: Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow (in millions) Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Operating Cash Flow $ 107 $ 74 $ (192) $ 132 $ 348 $ 18 $ (185) $ (49) Cost of additions to land, buildings and equipment (18) (19) (11) (148) (39) (33) (23)
Slide 29: © 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.