Slide 1: Conduent Q4 and Full Year 2020 Earnings Results
February 18, 2021 Conduent Q4 and Full Year 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. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “will,” "aim," “should,” “could”, “may,” “continue to,”
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: Positive Industry Analyst Feedback
Positive Industry Analyst Feedback Industry Analyst Accolades Market Position Business Services HfS Top 50 BPO Providers, #2 – NelsonHall, Everest Group, ISG Everest Group Top 50 BPS Healthcare Providers, #7 – HfS Research, Everest Group, KLAS Gartner Market Share Analysis: BPO, Worldwide, #8 HR Ser
Slide 5: Q4 2020 and FY 2020 Highlights
Q4 2020 and FY 2020 Highlights FY 2020 Initial Guidance FY 2020 Outlook $ in Millions (Provided on Q4 2019 (Provided on Q3 2020 Actual Earnings Call)3 Earnings Call) Results Adj. Revenue(1) Down (6.0) - (8.0)% Down (6.4) - (7.4)% (6.0)% Compared to Guidance Adj. EBITDA Margin(1) 10.5 - 11.5% 11.25 -
Slide 6: Growth and Retention
Growth and Retention New Business TCV Signings (incl. ARR + NRR) Net ARR Activity(1) (Q4 2020 TTM(2)) $3,000M $2,000M $996M $1,934M $60M+ $1,000M $519M $209M New business ARR inclusive of losses, price and volume changes $—M contracted over the prior twelve months Q4 FY 2019 2020 New Business ARR Se
Slide 7: Business Update
Business Update 2020 Priorities 2020 Achievements 2021 Priorities P • COVID-19 response: WFH(1), P extended benefits, front-line GROWTH • Strengthen leadership and E safety, and business headwinds E talent bench O • New client operating model: O • Further centralization of P quality and client satis
Slide 8: Financials
Financials CONDUENT ss
Slide 9: FY 2020 P&L Metrics
FY 2020 P&L Metrics Revenue Adj. Operating Income(1) $6,000M $300M $277M (1) (6.9)% Y/Y $258M (6.0)% Y/Y $4,431M (1) $4,163M (6.0)% in CC $4,000M $200M $2,000M $100M $—M $—M (1) FY19 FY20 FY 19 FY 20 GAAP: $(2,106)M $(139)M Adj. EBITDA/Margin(1) Adj. EBITDA (2.6)% Y/Y • Revenue: Margin up 40 bps Y/Y
Slide 10: FY 2020 P&L by Segment
FY 2020 P&L by Segment Revenue Adj. EBITDA(1) Contributions Transportation, $719M 8.3% Y/Y (7.9)% Y/Y 27.7% Y/Y $117M $397M $480M (31.4)% Y/Y $(292)M Commercial $258M Industries, $2,163M (9.3)% Y/Y Government Services, $1,281M Commercial Government Transportation Unallocated Adjusted 1.4% Y/Y (2) In
Slide 11: Q4 / FY 2020 Cash Flow and Balance Sheet
Q4 / FY 2020 Cash Flow and Balance Sheet Balance Sheet • Q4 / FY Adj. Free Cash Flow(1): ◦ $130M / $145M ($ in millions) 12/31/2019 12/31/2020 Total Cash (2) $505 $458 (6) • Q4 / FY Capex as % of revenue: Total Debt(2) 1,514 1,510 ◦ 4.2% / 3.3% Term Loan A(3,4) due 2022 664 654 Term Loan B(3) due 20
Slide 12: FY 2021 Outlook
FY 2021 Outlook FY 2020 Actuals FY 2021 Outlook Revenue $4,163M $4,000M - $4,150M Adj. EBITDA / Adj. EBITDA Margin(1) $480M / 11.5% 11.0% - 11.5% Adj. Free Cash Flow(2) as % of Adj. EBITDA(1) 30% Approx. 20% Restructuring $67M $40M - $45M CapEx $139M Approx. $170M Note: this guidance contemplates in
Slide 13: Q&A
Q&A CONDUENT ss 13
Slide 14: Appendix
Appendix 14
Slide 15: Sales Metrics
Sales Metrics TCV Signings (incl. ARR + NRR) Cumulative Pipeline $2,000M $30B $21B $21B $22B $22B $22B $20B $1,000M $912M $745M $637M $10B $515M $506M $623M $468M $519M $209M $324M $—M $—B Q4' 19 Q1' 20 Q2' 20 Q3' 20 Q4' 20 Q4' 19 Q1' 20 Q2' 20 Q3' 20 Q4' 20 New Business Renewal New Business (ARR +
Slide 16: 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 busine
Slide 17: 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 18: 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 19: 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 20: 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, payments related to divestitures
Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Revenue, Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax Rate, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 FY 2019 ADJUSTED REVENUE Revenue $ 1,099 $ 1,051 $ 1,01
Slide 22: Continued
CONTINUED (in millions) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 FY 2019 ADJUSTED EFFECTIVE TAX Loss Before Income Taxes $ (635) $ (51) $ (64) $ (13) $ (11) $ (139) $ (2,106) Adjustment: Total Non-GAAP Adjustments 691 72 104 87 74 337 2,306 Adjusted PBT (Before Adjustment for Divestitures) 56
Slide 23: Continued
CONTINUED (in millions) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 FY 2019 ADJUSTED EBITDA Loss From Continuing Operations $ (581) $ (49) $ (51) $ (7) $ (11) $ (118) $ (1,934) Income tax expense (benefit) (54) (2) (13) (6) — (21) (172) Depreciation and amortization 117 117 115 112 115 459 459 C
Slide 24: 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 %) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020
Slide 25: Continued
CONTINUED (Margins are in %) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 FY 2019 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (57.8)% (4.9)% (6.3)% (1.2)% (1.0)% (3.3)% (47.1)% Adjustments: Total non-GAAP adjustments 62.9 6.9 10.2 8.4 7.0 8.1 51.6 Interest expense 1.6 1.6 1
Slide 26: Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow (in millions) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 FY 2019 Operating Cash Flow $ 348 $ (192) $ 74 $ 107 $ 172 $ 161 $ 132 Cost of additions to land, buildings and equipment (39) (11) (19) (18) (28) (76) (148) Proceeds from sa
Slide 27: © 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.