Slide 1: Conduent Q3 2019 Earnings Results
November 6, 2019 Conduent Q3 2019 Earnings Results
Slide 2: Cautionary 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. These statements can be identified by the fact that they do not relate strictly to historica
Slide 3: Key Messages
Key Messages • Q3 Revenue: $1,098M; down (4)% Y/Y (ex divestitures) • Q3 Adj. EBITDA: $127M, down (11)% Y/Y (ex divestitures) Financials(1) • Q3 Adj. Diluted EPS: $0.16 / share • FY 2019 Guidance: Reaffirming FY 2019 Revenue and Adj. EBITDA margin guidance ranges • Pipeline(3): $12B, up 20% sequenti
Slide 4: Strategic & Operational Review Update
Strategic & Operational Review Update • Expect to complete comprehensive Strategic and Operational review in late Q4'19 or early Q1'20 • Any potential divestitures would be determined upon the completion of the review and would expect to be executed throughout FY 2020 • Focus of strategic review: –
Slide 5: Operating Model Upgrades
Operating Model Upgrades SALES QUALITY EFFICIENCY Levers for improved top-line: An improved foundation to drive Efficiencies to improve our cost 1) Client renewals, client satisfaction, reduce SLA structure and make us more nimble. 2) New service & solution sales to penalties, and enable new service
Slide 6: Financials
Financials CONDUENT ss
Slide 7: Q3 2019 P&L Metrics
Q3 2019 P&L Metrics Revenue(1) Adj. Operating Income(1) $1,500M $100M $89M $1,142M $1,098M $72M $1,000M (4)% Y/Y (19)% Y/Y $50M $500M $—M $—M Q3'18 Q3'19 Q3'18 Q3'19 GAAP: $1,304M $1,098M GAAP: $(252)M $(14)M Adj. EBITDA(1) $150M $142M $127M • Revenue(1): down due to client attrition, price downs on
Slide 8: Key Sales Metrics
Key Sales Metrics TCV Signings and Renewal Rate New Business (ARR and NRR) $2,400M 120% $300M 99% 94% 92% 92% 93% 90% $1,600M 90% $200M $57M $1,541M $906M 60% $53M $61M $63M $49M $800M $926M 60% $100M $43M $474M $727M $485M $140M $512M $32M $621M $81M $79M $65M $84M $71M $367M $346M $264M $225M $328
Slide 9: Q3 2019 P&L by Segment
Q3 2019 P&L by Segment Revenue(1) Adj EBITDA(1) Contributions 21% Y/Y Transportation, $201M (5)% Y/Y $47M 9% Y/Y $106M (11)% Y/Y $133M $127M Commercial, $577M $(159)M (7)% Y/Y Government, $320M (5)% Y/Y Commercial Government Transportation Unallocated Adjusted Corporate EBITDA Costs Y/Y compare adju
Slide 10: Q3 2019 Cash Flow and Balance Sheet
Q3 2019 Cash Flow and Balance Sheet Cash Balance Balance Sheet $400M ($ in millions) 12/31/2018 9/30/2019 $285M $18M Total Cash (3) $765 $236 $300M $236M Total Debt(3) 1,567 1,518 $(45)M $200M $(22)M Term Loan A(4,5) due 2022 705 667 $100M Term Loan B(4) due 2023 833 827 10.5% Senior Notes due 2024
Slide 11: FY 2019 Guidance
FY 2019 Guidance FY 2018 Completed Adjusted FY FY 2019 $ in Millions Divestiture Reported 2018(4) Guidance Impact(3) Revenue $5.39B $752M $4.64B Down (5) - (4)% (Constant Currency)(1,2) Adj. EBITDA Margin(2) 11.9% 11.5% 10.8% - 11.6% Adj. Free Cash Flow(2) as % of 34.1% ~20% Adj. EBITDA Note: Please
Slide 12: Q&A
Q&A 12
Slide 13: Appendix
Appendix 13
Slide 14: Modeling Considerations
Modeling Considerations Metric 2019 Guidance Capex Expect 4.5 - 5% of Revenue for FY 2019 Expect ~$50M in cash taxes for FY 2019 and Taxes FY 2019 adjusted tax rate of 29 - 32% Restructuring Expect ~$70M for FY 2019 Stranded Overhead Expect $20M impact for FY 2019 Interest Expect ~$80M for FY 2019 T
Slide 15: 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 dives
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 (GAAP). In addition, we have discussed our financial results using the non-GAAP measures. We believe these non- GAAP measures allow investor
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 Margin for the following items (as defined above), for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjusted Ope
Slide 18: 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 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, tax payments related to divestitu
Slide 20: Non-GAAP Reconciliations: Adjusted Revenue, Net Income, Tax, Operating Income, EBITDA
Non-GAAP Reconciliations: Adjusted Revenue, Adjusted Net Income (Loss), Adjusted Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q3 2019 Q2 2019 Q1 2019 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 ADJUSTED REVENUE Revenue $ 1,098 $ 1,112 $ 1,158 $ 5,393 $ 1,282 $ 1,304
Slide 21: Continued
CONTINUED (in millions) Q3 2019 Q2 2019 Q1 2019 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (14) $ (1,119) $ (338) $ (395) $ (143) $ (252) $ 54 $ (54) Adjustment: Total Non-GAAP Adjustments 66 1,162 387 702 224 334 18 126 Adjusted PBT (Before Ad
Slide 22: Continued
CONTINUED (in millions) Q3 2019 Q2 2019 Q1 2019 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 ADJUSTED EBITDA Income (Loss) From Continuing Operations $ (16) $ (1,029) $ (308) $ (416) $ (140) $ (237) $ 11 $ (50) Income tax expense (benefit) 2 (90) (30) 21 (3) (15) 43 (4) Depreciation and amortization 115
Slide 23: Non-GAAP Reconciliations: Adjusted Shares, Diluted EPS, Margins
Non-GAAP Reconciliations: Adjusted Weighted Average Shares Outstanding, Diluted EPS, Adjusted Effective Tax, Adjusted Operating Margin and Adjusted EBITDA Margins for the Non-GAAP reconciliations (Amounts are in whole dollars, shares are in thousands and margins are in %) Q3 2019 Q2 2019 Q1 2019 FY
Slide 24: Continued
CONTINUED (Margins are in %) Q3 2019 Q2 2019 Q1 2019 FY 2018 Q4 2018 Q3 2018 Q2 2018 Q1 2018 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (1.3)% (100.6)% (29.2)% (7.3)% (11.2)% (19.3)% 3.9 % (3.8)% Adjustments: Total non-GAAP adjustments 6.1 % 104.5 % 33.5 % 13.0 % 17.5 % 25.6
Slide 25: Non-GAAP Reconciliation: Adj. Free Cash Flow
Non-GAAP Reconciliation: Adj. Free Cash Flow Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2019 2018 2019 2018 Operating Cash Flow $ 18 $ (30) $ (216) $ 30 Cost of additions to land, buildings and equipment (33) (43) (109) (119) Proceeds from sales of land, buildings
Slide 26: © 2017 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks
© 2017 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks of Conduent Inc. in the United States and/or other countries.