Conduent Incorporated · NASDAQ:CNDT
Conduent — Investor Presentation (November 2020)
34 slides from Conduent's investor presentation, November 2020
Slide 1: Conduent Investor Deck
Conduent Investor Deck November 2020
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: Investment Thesis
Investment Thesis INDUSTRY IMPROVING RESILIENT ATTRACTIVE LEADER FUNDAMENTALS BUSINESS VALUATION Leading provider in Turnaround taking Strong balance sheet, Discounted valuation various commercial hold: improving client 2.4x net leverage, compared to peer set and government retention and cli
Slide 5: What We Do
What We Do
Slide 6: Purpose
Purpose Automating processes We deliver mission-critical services and Improving efficiencies solutions on behalf of businesses and governments – creating exceptional Enabling growth outcomes for our clients and the millions of people who count on them. Reducing costs Improving end-user outcomes, sat
Slide 7: An Essential Partner to our Clients
An Essential Partner to our Clients Contact Centers Transaction Human Processing Resource Services The Millions of Our Clients People Who Count Exceptional Outcomes on Them Efficiencies Mission-critical Improved End User Cost Savings Services & Solutions Experiences Growth Streamlined & Effective Si
Slide 8: Who We Are
Who We Are Among the Largest Business Services Companies in the Market COMMERCIAL GOVERNMENT TRANSPORTATION On behalf of global enterprises, we transform business On behalf of federal, state and local governments, we On behalf of government agencies and authorities in the processes by automating and
Slide 9: Driving Exceptional Outcomes for Clients
Driving Exceptional Outcomes for Clients Over 50% $17B $11B cost savings by in savings In child support payments Transforming traditional From more precise processed more efficiently communications into analysis of 25 million each year digital interactions medical bills Over Over Up to 40% $9.5B 40%
Slide 10: Conduent Services & Solutions
Conduent Services & Solutions Commercial Healthcare Commercial Contact Center Payer Provider Pharma & Medical Claims Phone Email Chat Self-service Life Sciences Management Commercial HR Services Commercial Transaction Processing Health & Wealth & HR Learning & Customer Document & Payments Finance, A
Slide 11: Significant Opportunity to Unlock Value
Significant Opportunity to Unlock Value CONDUENT1 PEER GROUP Key performance metrics Revenue: $2.4B COMMERCIAL Adj. EBITDA: $376M EV/EBITDA Multiple2: ~15x Key performance metrics Revenue: $1.3B Adj. EBITDA: $311M GOVERNMENT EV/EBITDA Multiple2: ~11x Key performance metrics Revenue: $782M TRANSPORTA
Slide 12: 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 13: 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 14: 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 15: Financials
Financials CONDUENT Pe 15
Slide 16: 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 17: 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 ~$3M COVID- 19 impact • Adj. Ope
Slide 18: Q3 2020 P&L by Segment
Q3 2020 P&L by Segment Revenue Adj. EBITDA(1) Contributions (12.9)% Y/Y 3% Y/Y 66% Y/Y (36)% Y/Y (10.4)% Y/Y 9.1% Y/Y (2) • Commercial: Adj. EBITDA decline driven by lower • Commercial: declines driven by COVID-19 related volume declines and interest rate impact, and prior year revenue and a non-rec
Slide 19: Q3 2020 Cash Flow and Balance Sheet
Q3 2020 Cash Flow and Balance Sheet Balance Sheet ($ 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 20: FY 2020 Outlook (as of 11/5/2020)
FY 2020 Outlook (as of 11/5/2020) 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
Slide 21: Q&A
Q&A CONDUENT Pe 21
Slide 22: Appendix
Appendix 22
Slide 23: Historical Sales Details
Historical Sales Details TCV Signings (incl. ARR + NRR) Cumulative Pipeline New Business (ARR + NRR Breakdown) Implied New Business Avg. Contract Length 23
Slide 24: Modeling Considerations (as of 11/5/2020)
Modeling Considerations (as of 11/5/2020) 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 I
Slide 25: Allocations Update
Allocations Update FROM FY 2019 TO FY 2019 Total Corporate Costs Unallocated(1) $659M $345M Total Corporate Costs Unallocated as % of Revenue 14.8% 7.7% Company Adj. EBITDA Margin(1) 11.1% 11.1% Commercial Adj. EBITDA Margin(1) 22.8% 15.8% Government Adj. EBITDA Margin(1) 31.3% 24.7% Transportation
Slide 26: AEBITDA to AFCF Bridge Q3 2020
AEBITDA to AFCF Bridge Q3 2020 (1) Refer to Appendix for complete Non-GAAP reconciliations of adjusted EBITDA. (2) May include changes in operating assets and liabilities, NY MMIS/HE charge, CA MMIS charge, and other adjustments. (3) Includes cost of additions to internal use software and cost of ad
Slide 27: AEBITDA to AFCF Bridge YTD
AEBITDA to AFCF Bridge YTD $15M $(11)M (1) Refer to Appendix for complete Non-GAAP reconciliations of adjusted EBITDA. (2) May include changes in operating assets and liabilities, NY MMIS/HE charge, CA MMIS charge, and other adjustments. (3) Includes cost of additions to internal use software and co
Slide 28: 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 29: 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 30: Non-GAAP Financial Measures: Adjusted Revenue and Operating Income
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 31: Non-GAAP Financial Measures: Adjusted EBITDA
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 32: Non-GAAP Financial Measures: Free Cash Flow
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 33: Footnotes
Footnotes The below footnotes correspond to the Cash Flow and Balance Sheet slide of the main deck. (1) Refer to Appendix for complete non-GAAP reconciliations of Adjusted Free Cash Flow. (2) Total Cash includes $8M of restricted cash and Total debt excludes deferred financing costs. (3) Revolving c
Slide 34: Trademark notice
© 2020 Conduent, Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks of Conduent, Inc. and/or its subsidiaries in the United States and/or other countries.