Conduent Incorporated · NASDAQ:CNDT
Conduent — Q1 2020 Earnings Presentation
29 slides from Conduent's earnings presentation, May 7, 2020
Slide 1: Conduent Q1 2020 Earnings Results
May 7, 2020 Conduent Q1 2020 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: Business Update
Business Update “Throughout the Coronavirus pandemic, Conduent has continued to provide critical services to our customers and their end-users, while ensuring the health and safety of our greatest asset – our associates” – Cliff Skelton, CEO 3
Slide 4: Q1 2020 Highlights
Q1 2020 Highlights • Q1 Revenue of $1,051M, above expectations • Q1 Adj. EBITDA(1) of $96M, below expectations primarily driven by COVID-19 • $324M in new business signings in Q1 2020; up 44% Y/Y Business Update • Launched COVID-19 module for Maven Diseases Surveillance and Outbreak Management Softw
Slide 5: COVID-19 Business Continuity Response
COVID-19 Business Continuity Response ACTION FEEDBACK “Thankful for honest, transparent, and open • Health plan and time off flexibility communication.” • ~75% shifted to work-from-home "Thanks for you leadership and encouragement, ASSOCIATE • Increased leadership communication and your honesty abou
Slide 6: FY2020: Estimated COVID-19 and Related Impacts
FY2020: Estimated COVID-19 and Related Impacts HEADWIND NEUTRAL TAILWIND Commercial Customer Transaction Healthcare HRLS Experience Processing Government Healthcare and Government Eligibility Services Transportation Tolling Curbside Transit Public Safety Management Note: Positioning within category
Slide 7: Spotlight on Government Services Business
Spotlight on Government Services Business CNDT Footprint Current Market Opportunities • Serve ~50% of US volumes; Seeing >50% increases SUPPLEMENTAL NUTRITION ASSISTANCE 26 in card recipients States • Incremental opportunity in subsidized lunch programs • Unemployment debit cards issued are increasi
Slide 8: Adapting our Transformation Plan
Adapting our Transformation Plan Adapting our Transformation Plan to "next normal" post COVID-19 in an evolving environment GROWTH EFFICIENCY QUALITY • COVID-19 related • Immediate cost take out • Show continued improvement opportunities actions in delivery performance ◦ Contact tracing • Automation
Slide 9: Financials Update
Financials Update 9
Slide 10: Business Update: COVID-19 Impact in Q1 2020
Business Update: COVID-19 Impact in Q1 2020 ~$(14)M Positives: • Government volumes (SNAP & Unemployment) Negatives: Net COVID-19 Q1 Impact • Tolling, curbside management, and transit REVENUE(1) • Customer Experience declines (retail and tech) • BenefitWallet interest rate Total Q1 2020 Results: • T
Slide 11: Q1 2020 P&L Metrics
Q1 2020 P&L Metrics Revenue(1) Adj. Operating Income(1) $1,500M $75M $68M $1,122M $1,051M $1,000M $50M (6.3)% Y/Y (44.0)% Y/Y $38M (6.0)% in CC $500M $25M $—M $—M Q1 '19 Q1 '20 Q1 '19 Q1 '20 GAAP: $1,158M $1,051M GAAP: $(338)M $(51)M Adj. EBITDA(1) $150M $122M • Revenue(1): primarily down due to cli
Slide 12: Q1 2020 P&L by Segment
Q1 2020 P&L by Segment Revenue(1) Adj EBITDA(1) Contributions 14% Y/Y 11% Y/Y Transportation, $189M $32M $99M 2.7% Y/Y 3.1% in CC (17)% Y/Y $115M $96M Commercial, $572M $(150)M (6.5)% Y/Y Government, $290M (6.1)% in CC Commercial Government Transportation Unallocated Adjusted (10.8)% Y/Y Shared and
Slide 13: Key Sales Metrics
Key Sales Metrics TCV Signings New Logo & Capability + Existing Add-On $1,000M $400M $42M $500M $200M $148M $485M $515M $101M $727M $512M $132M $112M $282M $506M $180M $328M $324M $124M $225M $234M $209M $101M $97M $—M $—M Q1' 19 Q2' 19 Q3' 19 Q4' 19 Q1' 20 Q1' 19 Q2' 19 Q3' 19 Q4' 19 Q1' 20 New Bus
Slide 14: Q1 2020 Cash Flow and Balance Sheet
Q1 2020 Cash Flow and Balance Sheet Q1 2020 Cash Balance Balance Sheet ($ in millions) 12/31/2019 3/31/2020 $505M (3) $505 $413 Total Cash $150M Total Debt(3) 1,514 1,656 $413M Term Loan A(4,5) due 2022 664 652 $(97)M $(27)M Term Loan B(4) due 2023 824 822 Revolving Credit Facility due 2022 — 150 $(
Slide 15: Q&A
Q&A 15
Slide 16: Appendix
Appendix 16
Slide 17: Modeling Considerations
Modeling Considerations Metric FY2020 Commentary • FY2020 Cash income taxes: ~$40M in cash income taxes, including ~$5M benefit related to CARES Act Taxes • Payroll taxes: ~$65M of estimated payroll tax withholding will be deferred to 2021/2022 based on current employment levels Restructuring • Expe
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: Adjusted Revenue, Net Income, Tax, Operating Income and EBITDA
Non-GAAP Reconciliations: Adjusted Revenue, Adjusted Net Income (Loss), Adjusted Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED REVENUE Revenue $ 1,051 $ 4,467 $ 1,099 $ 1,098 $ 1,112 $ 1,158 Adjustment: (1)
Slide 24: CONTINUED
CONTINUED (in millions) Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (51) $ (2,106) $ (635) $ (14) $ (1,119) $ (338) Adjustment: Total Non-GAAP Adjustments 72 2,306 691 66 1,162 387 Adjusted PBT (Before Adjustment for Divestitures) 21 200
Slide 25: CONTINUED
CONTINUED (in millions) Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED EBITDA Income (Loss) From Continuing Operations $ (49) $ (1,934) $ (581) $ (16) $ (1,029) $ (308) Income tax expense (benefit) (2) (172) (54) 2 (90) (30) Depreciation and amortization 117 459 117 115 112 115 Contract in
Slide 26: Non-GAAP Reconciliations: Adjusted Weighted Average Shares, Diluted EPS, Margins
Non-GAAP Reconciliations: Adjusted Weighted Average Shares Outstanding, Adjusted 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 %) Q1 2020 FY 2019 Q4
Slide 27: CONTINUED
CONTINUED (Margins are in %) Q1 2020 FY 2019 Q4 2019 Q3 2019 Q2 2019 Q1 2019 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (4.9)% (47.1)% (57.8)% (1.3)% (100.6)% (29.2)% Adjustments: Total non-GAAP adjustments 6.9 51.6 62.9 6.1 104.5 33.5 Interest expense 1.6 1.7 1.6 1.8 1.8 1.7
Slide 28: Non-GAAP Reconciliation: Adj. Free Cash Flow
Non-GAAP Reconciliation: Adj. Free Cash Flow Three Months Ended March 31, (in millions) 2020 2019 Operating Cash Flow $ (192) $ (49) Cost of additions to land, buildings and equipment (11) (53) Proceeds from sales of land, buildings and equipment — 1 Cost of additions to internal use software (13) (
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.