Conduent Incorporated · NASDAQ:CNDT
Conduent — Q3 2021 Earnings Presentation
26 slides from Conduent's earnings presentation, Nov 4, 2021
Slide 1: Conduent Q3 2021 Earnings Results
November 4, 2021 Conduent Q3 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: Q3 2021 Highlights
Q3 2021 Highlights • Q3 Revenue: $1,038M • Adj. EBITDA(1): $130M Q3 Results / • Adj. EBITDA Margin(1) :12.5% Metrics • TCV new business signings: $344M, $1,475M YTD • New business ARR signings: $87M, $297M YTD • Net ARR Activity Impact (TTM)(2): $132M, up 25% Qtr/Qtr • Revenue and EBITDA continue to
Slide 5: Growth and Retention
Growth and Retention New Business TCV Signings (incl. ARR + NRR) Net ARR Activity (TTM)(1,2) $2,000M $150 $132 $1,415M $1,475M $106 $1,000M $100 $87 $468M $60 $344M $50 $—M Q3 YTD $— 2020 2021 Q4' 20 Q1' 21 Q2' 21 Q3' 21 New Business ARR Sales Update New Business TCV Signing by Segment $400M $297M $
Slide 6: Continuing Our Momentum
Continuing Our Momentum A collaborative, teamwork-oriented culture laser-focused on driving valuable outcomes for clients 6
Slide 7: Financials
Financials CONDUENT ss
Slide 8: Q3 2021 P&L Metrics
Q3 2021 P&L Metrics Revenue Revenue Trend (Y/Y Compare) $1,500M (0.3)% Y/Y (0.5)% in CC 1.0% $1,041M (0.3)% $1,038M $1,000M (2.2)% (4.0)% (5.2)% (6.3)% (2) $500M (8.6)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 $—M 2020 2020 2020 2020 2021 2021 2021 Q3 '20 Q3 '21 Adj. EBITDA(1) / Margin • Revenue: (7.8)% Y/Y ◦ Revenue s
Slide 9: Q3 2021 P&L by Segment
Q3 2021 P&L by Segment Revenue Adj. EBITDA(1) Contributions Transportation, $180M 2.9% Y/Y (29)% Y/Y 4% Y/Y $25M $133M (8)% Y/Y $130M (5)% Y/Y Commercial $(81)M Industries, $509M $53M (1.7)% Y/Y Government Commercial Government Transportation Unallocated Adjusted Services, $349M Industries Services
Slide 10: Q3 2021 Cash Flow and Balance Sheet
Q3 2021 Cash Flow and Balance Sheet Balance Sheet (1) • Q3 2021 Adj. Free Cash Flow : $23M ($ in millions) 12/31/2020 9/30/2021 Total Cash(2) $458 $400 (6) • Q3 2021 Capex as % of revenue: 2.9% Total Debt(2) 1,510 1,405 Term Loan A(3,4) due 12/2022 654 585 • Net adjusted leverage ratio(7) of 2.0x Te
Slide 11: Updated FY 2021 Outlook
Updated FY 2021 Outlook Updated FY 2021 FY 2020 Actuals Outlook Revenue $4,163M $4,100M - $4,175M Adj. EBITDA(1) / Adj. EBITDA Margin(1) $480M / 11.5% 11.25% - 11.75% Adj. Free Cash Flow(2) as % of Adj. 28% (3) Approx. 20% (3) EBITDA(1) Restructuring $67M $45M - $50M CapEx $139M Approx. $150M (1) Re
Slide 12: Appendix
Appendix CONDUENT ss 12
Slide 13: Sales Metrics
Sales Metrics TCV Signings (incl. ARR + NRR) TCV Signings (incl. ARR + NRR) (TTM) $2,000M $3,000M $2,000M $1,000M 825 912 2,118 745 637 $1,000M 1,934 1,966 1,993 515 273 276 1,390 1,624 506 623 775 996 1,095 468 519 356 344 209 324 $0M $0M Q4' 19 Q1' 20 Q2' 20 Q3' 20 Q4' 20 Q1' 21 Q2' 21 Q3' 21 Q4'
Slide 14: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend 8.7% 9.7% (1.7)% 6.8% (3.3)% 1.5% 2.1% (6.5)% 0.3% (8.4)% (8.0)% (10.2)% (12.2)% (10.8)% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Revenue Revenue Improving t
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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) Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Revenue $ 1,038 $ 1,026 $ 1,028 $ 4,163 $ 1,055 $ 1,041 $
Slide 21: Continued
CONTINUED (in millions) Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ 19 $ 19 $ (9) $ (139) $ (11) $ (13) $ (64) $ (51) Adjustment: Total Non-GAAP Adjustments 45 42 56 337 74 87 104 72 Adjusted PBT $ 64 $ 61 $ 47 $ 198 $ 63
Slide 22: Continued
CONTINUED (in millions) Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 ADJUSTED EBITDA Income (Loss) From Continuing Operations $ 11 $ 12 $ (11) $ (118) $ (11) $ (7) $ (51) $ (49) Income tax expense (benefit) 8 7 2 (21) — (6) (13) (2) Depreciation and amortization 84 86 95 459 115 1
Slide 23: 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 %) Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020
Slide 24: Continued
CONTINUED (Margins are in %) Q3 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin 1.8 % 1.9 % (0.9)% (3.3)% (1.0)% (1.2)% (6.3)% (4.9)% Adjustments: Total non-GAAP adjustments 4.3 4.0 5.4 8.1 7.0 8.4 10.2 6.9 Interest expe
Slide 25: 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 2021 Q2 2021 Q1 2021 FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Operating Cash Flow $ 55 $ 105 $ (2) $ 161 $ 172 $ 107 $ 74 $ (192) Cost of additions to land, buildings and equipment (13) (25) (14) (76) (28) (18) (19) (11)
Slide 26: © 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.