QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New York | 81-2983623 | |||||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||||||||||||||
100 Campus Drive, | Suite | |||||||||||||||||||
Florham Park, | New Jersey | 07932 | ||||||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, $0.01 par value | CNDT | NASDAQ Global Select Market |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Small reporting company | ☐ | Emerging growth company | ☐ |
Class | Outstanding at | |||||||||||||
Common Stock, | $0.01 par value |
CNDT Q1 2020 Form 10-Q |
Page | |||||||||||
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions, except per share data) | 2020 | 2019 | ||||||||||||||||||
Revenue | $ | 1,051 | $ | 1,158 | ||||||||||||||||
Operating Costs and Expenses | ||||||||||||||||||||
Cost of services (excluding depreciation and amortization) | 832 | 906 | ||||||||||||||||||
Selling, general and administrative (excluding depreciation and amortization) | 116 | 127 | ||||||||||||||||||
Research and development (excluding depreciation and amortization) | 1 | 3 | ||||||||||||||||||
Depreciation and amortization | 117 | 115 | ||||||||||||||||||
Restructuring and related costs | 7 | 16 | ||||||||||||||||||
Interest expense | 17 | 20 | ||||||||||||||||||
Goodwill impairment | — | 284 | ||||||||||||||||||
(Gain) loss on divestitures and transaction costs | 4 | 14 | ||||||||||||||||||
Litigation costs (recoveries), net | 6 | 12 | ||||||||||||||||||
Other (income) expenses, net | 2 | (1) | ||||||||||||||||||
Total Operating Costs and Expenses | 1,102 | 1,496 | ||||||||||||||||||
Income (Loss) Before Income Taxes | (51) | (338) | ||||||||||||||||||
Income tax expense (benefit) | (2) | (30) | ||||||||||||||||||
Net Income (Loss) | $ | (49) | $ | (308) | ||||||||||||||||
Net Income (Loss) per Share: | ||||||||||||||||||||
Basic | $ | (0.24) | $ | (1.49) | ||||||||||||||||
Diluted | $ | (0.24) | $ | (1.49) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions, except per-share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | ||||||||||||||||
Revenue | $ | 1,470 | $ | 1,585 | $ | 4,497 | $ | 4,856 | ||||||||
Related party | 10 | 11 | 32 | 38 | ||||||||||||
Total Revenues | 1,480 | 1,596 | 4,529 | 4,894 | ||||||||||||
Cost of services | 1,210 | 1,319 | 3,742 | 4,079 | ||||||||||||
Related party cost of services | 9 | 9 | 24 | 28 | ||||||||||||
Gross Margin | 261 | 268 | 763 | 787 | ||||||||||||
Operating Costs and Expenses | ||||||||||||||||
Research and development | 4 | 7 | 11 | 25 | ||||||||||||
Selling, general and administrative | 144 | 164 | 466 | 517 | ||||||||||||
Restructuring and related costs | 22 | 8 | 76 | 57 | ||||||||||||
Amortization of intangible assets | 60 | 63 | 182 | 200 | ||||||||||||
Interest expense | 35 | 1 | 105 | 3 | ||||||||||||
Related party interest | — | 10 | — | 30 | ||||||||||||
Separation costs | 2 | 15 | 8 | 34 | ||||||||||||
(Gain) loss on sale of asset and businesses | (16 | ) | — | (41 | ) | 1 | ||||||||||
Other (income) expenses, net | (3 | ) | (2 | ) | (24 | ) | 6 | |||||||||
Total Operating Costs and Expenses | 248 | 266 | 783 | 873 | ||||||||||||
Income (Loss) before Income Taxes | 13 | 2 | (20 | ) | (86 | ) | ||||||||||
Income tax expense (benefit) | 30 | 1 | 11 | (54 | ) | |||||||||||
(Loss) Income from Continuing Operations | (17 | ) | 1 | (31 | ) | (32 | ) | |||||||||
Income from discontinued operations, net of tax | — | — | 4 | — | ||||||||||||
Net (Loss) Income | $ | (17 | ) | $ | 1 | $ | (27 | ) | $ | (32 | ) | |||||
Basic Earnings (Loss) per Share: | ||||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | 0.01 | $ | (0.19 | ) | $ | (0.16 | ) | |||||
Discontinued operations | — | — | 0.02 | — | ||||||||||||
Total Basic (Loss) Income per Share | $ | (0.09 | ) | $ | 0.01 | $ | (0.17 | ) | $ | (0.16 | ) | |||||
Diluted Earnings (Loss) per Share: | ||||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | 0.01 | $ | (0.19 | ) | $ | (0.16 | ) | |||||
Discontinued operations | — | — | 0.02 | — | ||||||||||||
Total Diluted (Loss) Income per Share | $ | (0.09 | ) | $ | 0.01 | $ | (0.17 | ) | $ | (0.16 | ) |
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions) | 2020 | 2019 | ||||||||||||||||||
Net Income (Loss) | $ | (49) | $ | (308) | ||||||||||||||||
Other Comprehensive Income (Loss), Net | ||||||||||||||||||||
Currency translation adjustments, net | (28) | 7 | ||||||||||||||||||
Reclassification of currency translation adjustments on divestitures | — | 15 | ||||||||||||||||||
Reclassification of divested benefit plans and other | — | (1) | ||||||||||||||||||
Unrecognized gains (losses), net | (3) | 1 | ||||||||||||||||||
Changes in benefit plans, net | 1 | — | ||||||||||||||||||
Other Comprehensive Income (Loss), Net | (30) | 22 | ||||||||||||||||||
Comprehensive Income (Loss), Net | $ | (79) | $ | (286) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net (Loss) Income | $ | (17 | ) | $ | 1 | $ | (27 | ) | $ | (32 | ) | |||||
Other Comprehensive Income (Loss), Net(1): | ||||||||||||||||
Translation adjustments, net | 8 | (10 | ) | 34 | (25 | ) | ||||||||||
Unrealized gains, net | — | — | 2 | 1 | ||||||||||||
Changes in defined benefit plans, net | — | 1 | — | 2 | ||||||||||||
Other Comprehensive Income (Loss), Net | 8 | (9 | ) | 36 | (22 | ) | ||||||||||
Comprehensive (Loss) Income, Net | $ | (9 | ) | $ | (8 | ) | $ | 9 | $ | (54 | ) |
CNDT Q1 2020 Form 10-Q |
(in millions, except share data in thousands) | September 30, 2017 | December 31, 2016 | (in millions, except share data in thousands) | March 31, 2020 | December 31, 2019 | |||||||||||||||||
Assets | Assets | |||||||||||||||||||||
Cash and cash equivalents | $ | 468 | $ | 390 | Cash and cash equivalents | $ | 395 | $ | 496 | |||||||||||||
Accounts receivable, net | 1,380 | 1,286 | Accounts receivable, net | 690 | 652 | |||||||||||||||||
Net receivable from former parent company | 31 | — | ||||||||||||||||||||
Contract assets | Contract assets | 169 | 155 | |||||||||||||||||||
Other current assets | 233 | 241 | Other current assets | 318 | 283 | |||||||||||||||||
Total current assets | 2,112 | 1,917 | Total current assets | 1,572 | 1,586 | |||||||||||||||||
Land, buildings and equipment, net | 249 | 283 | Land, buildings and equipment, net | 321 | 342 | |||||||||||||||||
Operating lease right-of-use assets | Operating lease right-of-use assets | 265 | 271 | |||||||||||||||||||
Intangible assets, net | 959 | 1,144 | Intangible assets, net | 366 | 426 | |||||||||||||||||
Goodwill | 3,899 | 3,889 | Goodwill | 1,486 | 1,502 | |||||||||||||||||
Other long-term assets | 328 | 476 | Other long-term assets | 384 | 387 | |||||||||||||||||
Total Assets | $ | 7,547 | $ | 7,709 | Total Assets | $ | 4,394 | $ | 4,514 | |||||||||||||
Liabilities and Equity | Liabilities and Equity | |||||||||||||||||||||
Short-term debt and current portion of long-term debt | $ | 71 | $ | 28 | ||||||||||||||||||
Current portion of long-term debt | Current portion of long-term debt | $ | 60 | $ | 50 | |||||||||||||||||
Accounts payable | 147 | 164 | Accounts payable | 168 | 198 | |||||||||||||||||
Accrued compensation and benefits costs | 221 | 269 | Accrued compensation and benefits costs | 151 | 174 | |||||||||||||||||
Unearned income | 184 | 206 | Unearned income | 109 | 108 | |||||||||||||||||
Net payable to former parent company | — | 124 | ||||||||||||||||||||
Other current liabilities | 591 | 611 | Other current liabilities | 535 | 647 | |||||||||||||||||
Total current liabilities | 1,214 | 1,402 | Total current liabilities | 1,023 | 1,177 | |||||||||||||||||
Long-term debt | 1,991 | 1,913 | Long-term debt | 1,596 | 1,464 | |||||||||||||||||
Pension and other benefit liabilities | 151 | 172 | ||||||||||||||||||||
Deferred taxes | 605 | 619 | Deferred taxes | 108 | 111 | |||||||||||||||||
Operating lease liabilities | Operating lease liabilities | 224 | 229 | |||||||||||||||||||
Other long-term liabilities | 132 | 173 | Other long-term liabilities | 81 | 91 | |||||||||||||||||
Total Liabilities | 4,093 | 4,279 | Total Liabilities | 3,032 | 3,072 | |||||||||||||||||
Contingencies (See Note 11) | Contingencies (See Note 11) | |||||||||||||||||||||
Series A Convertible Preferred Stock | 142 | 142 | ||||||||||||||||||||
Series A convertible preferred stock | Series A convertible preferred stock | 142 | 142 | |||||||||||||||||||
Common Stock | 2 | 2 | ||||||||||||||||||||
Additional paid-in-capital | 3,834 | 3,812 | ||||||||||||||||||||
Retained deficit | (34 | ) | — | |||||||||||||||||||
Common stock | Common stock | 2 | 2 | |||||||||||||||||||
Additional paid-in capital | Additional paid-in capital | 3,891 | 3,890 | |||||||||||||||||||
Retained earnings (deficit) | Retained earnings (deficit) | (2,236) | (2,185) | |||||||||||||||||||
Accumulated other comprehensive loss | (490 | ) | (526 | ) | Accumulated other comprehensive loss | (437) | (407) | |||||||||||||||
Total Equity | 3,312 | 3,288 | Total Equity | 1,220 | 1,300 | |||||||||||||||||
Total Liabilities and Equity | $ | 7,547 | $ | 7,709 | Total Liabilities and Equity | $ | 4,394 | $ | 4,514 | |||||||||||||
Shares of common stock issued and outstanding | 210,372 | 202,875 | Shares of common stock issued and outstanding | 209,058 | 211,511 | |||||||||||||||||
Shares of Series A convertible preferred stock issued and outstanding | 120 | 120 | ||||||||||||||||||||
Shares of series A convertible preferred stock issued and outstanding | Shares of series A convertible preferred stock issued and outstanding | 120 | 120 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net (loss) income | $ | (17 | ) | $ | 1 | $ | (27 | ) | $ | (32 | ) | |||||
Adjustments required to reconcile net loss to cash flows from operating activities: | ||||||||||||||||
Depreciation and amortization | 123 | 135 | 378 | 417 | ||||||||||||
Deferred tax expense (benefit) | 24 | (35 | ) | (7 | ) | (11 | ) | |||||||||
Gain on investments | (3 | ) | (3 | ) | (10 | ) | (6 | ) | ||||||||
Amortization of debt financing costs | 3 | — | 7 | — | ||||||||||||
Net (gain) loss on sale of asset and businesses | (16 | ) | — | (48 | ) | 1 | ||||||||||
Stock-based compensation | 8 | 8 | 26 | 18 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Increase in accounts receivable, net | (6 | ) | (27 | ) | (76 | ) | (137 | ) | ||||||||
Decrease (increase) in other current and long-term assets | 12 | 2 | (34 | ) | (64 | ) | ||||||||||
Decrease in accounts payable and accrued compensation | (1 | ) | (15 | ) | (86 | ) | (154 | ) | ||||||||
Increase (decrease) in restructuring liabilities | 1 | (17 | ) | 25 | 8 | |||||||||||
Decrease in other current and long-term liabilities | (26 | ) | (74 | ) | (80 | ) | (164 | ) | ||||||||
Net change in income tax assets and liabilities | 5 | 167 | 3 | 91 | ||||||||||||
Other operating, net | (3 | ) | (2 | ) | (6 | ) | (5 | ) | ||||||||
Net cash provided by (used in) operating activities | 104 | 140 | 65 | (38 | ) | |||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Cost of additions to land, buildings and equipment | (20 | ) | (31 | ) | (57 | ) | (86 | ) | ||||||||
Proceeds from sales of land, buildings and equipment | — | — | 33 | — | ||||||||||||
Cost of additions to internal use software | (11 | ) | (11 | ) | (26 | ) | (31 | ) | ||||||||
Proceeds (payments) from sale (purchase) of businesses | 56 | (1 | ) | 56 | (54 | ) | ||||||||||
Proceeds from investments | 117 | — | 117 | — | ||||||||||||
Net payments on related party notes receivable | — | 43 | — | 43 | ||||||||||||
Other investing | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Net cash provided by (used in) investing activities | 141 | (1 | ) | 122 | (129 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Proceeds on long term debt | — | 2 | 306 | 6 | ||||||||||||
Debt issuance fee payments | — | ��� | (9 | ) | — | |||||||||||
Payments on debt | (79 | ) | (6 | ) | (232 | ) | (18 | ) | ||||||||
Net (payments to) transfer from former parent | — | (145 | ) | (161 | ) | 190 | ||||||||||
Employee stock plans (tax) / proceeds, net | (3 | ) | — | (5 | ) | — | ||||||||||
Dividends paid on preferred stock | (2 | ) | — | (7 | ) | — | ||||||||||
Other financing | (2 | ) | — | (3 | ) | (1 | ) | |||||||||
Net cash (used in) provided by financing activities | (86 | ) | (149 | ) | (111 | ) | 177 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (2 | ) | 2 | (2 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | 159 | (12 | ) | 78 | 8 | |||||||||||
Cash and cash equivalents at beginning of period | 309 | 160 | 390 | 140 | ||||||||||||
Cash and Cash Equivalents at End of Period | $ | 468 | $ | 148 | $ | 468 | $ | 148 |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions) | 2020 | 2019 | ||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||
Net income (loss) | $ | (49) | $ | (308) | ||||||||||||||||
Adjustments required to reconcile net income (loss) to cash flows from operating activities: | ||||||||||||||||||||
Depreciation and amortization | 117 | 115 | ||||||||||||||||||
Contract inducement amortization | 1 | 1 | ||||||||||||||||||
Deferred income taxes | (9) | (45) | ||||||||||||||||||
Goodwill impairment | — | 284 | ||||||||||||||||||
(Gain) loss from investments | (1) | (1) | ||||||||||||||||||
Amortization of debt financing costs | 2 | 2 | ||||||||||||||||||
(Gain) loss on divestitures and transaction costs | 4 | 14 | ||||||||||||||||||
Stock-based compensation | 4 | 7 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
(Increase) decrease in accounts receivable | (42) | (60) | ||||||||||||||||||
(Increase) decrease in other current and long-term assets | (42) | (112) | ||||||||||||||||||
Increase (decrease) in accounts payable and accrued compensation | (55) | 58 | ||||||||||||||||||
Increase (decrease) in restructuring liabilities | (7) | 4 | ||||||||||||||||||
Increase (decrease) in other current and long-term liabilities | (131) | (12) | ||||||||||||||||||
Net change in income tax assets and liabilities | 16 | 5 | ||||||||||||||||||
Other operating, net | — | (1) | ||||||||||||||||||
Net cash provided by (used in) operating activities | (192) | (49) | ||||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Cost of additions to land, buildings and equipment | (11) | (53) | ||||||||||||||||||
Proceeds from sale of land, buildings and equipment | — | 1 | ||||||||||||||||||
Cost of additions to internal use software | (13) | (17) | ||||||||||||||||||
Payments for acquisitions, net of cash acquired | — | (90) | ||||||||||||||||||
Proceeds (payments) from divestitures, including cash sold | 1 | (9) | ||||||||||||||||||
Net cash provided by (used in) investing activities | (23) | (168) | ||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Proceeds from revolving credit facility | 150 | — | ||||||||||||||||||
Payments on debt | (15) | (14) | ||||||||||||||||||
Taxes paid for settlement of stock based compensation | (3) | (6) | ||||||||||||||||||
Dividends paid on preferred stock | (2) | (2) | ||||||||||||||||||
Net cash provided by (used in) financing activities | 130 | (22) | ||||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (7) | 2 | ||||||||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (92) | (237) | ||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 505 | 765 | ||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash at End of period(1) | $ | 413 | $ | 528 |
CNDT Q1 2020 Form 10-Q |
(in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | AOCL(1) | Shareholders' Equity | ||||||||||||||||||||||||
Balance at December 31, 2019 | $ | 2 | $ | 3,890 | $ | (2,185) | $ | (407) | $ | 1,300 | |||||||||||||||||||
Cash dividends paid - preferred stock, $20/per share | — | — | (2) | — | (2) | ||||||||||||||||||||||||
Stock option and incentive plans, net | — | 1 | — | — | 1 | ||||||||||||||||||||||||
Comprehensive Income (Loss): | |||||||||||||||||||||||||||||
Net Income (Loss) | — | — | (49) | — | (49) | ||||||||||||||||||||||||
Other comprehensive income (loss), net | — | — | — | (30) | (30) | ||||||||||||||||||||||||
Total Comprehensive Income (Loss), Net | — | — | (49) | (30) | (79) | ||||||||||||||||||||||||
Balance at March 31, 2020 | $ | 2 | $ | 3,891 | $ | (2,236) | $ | (437) | $ | 1,220 |
(in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | AOCL(1) | Shareholders' Equity | ||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 2 | $ | 3,878 | $ | (233) | $ | (425) | $ | 3,222 | |||||||||||||||||||
Cash dividends paid - preferred stock, $20/per share | — | — | (2) | — | (2) | ||||||||||||||||||||||||
Cumulative impact of adopting the new lease standard | — | — | (8) | — | (8) | ||||||||||||||||||||||||
Stock option and incentive plans, net | — | 1 | — | — | 1 | ||||||||||||||||||||||||
Comprehensive Income (Loss): | |||||||||||||||||||||||||||||
Net Income (Loss) | — | — | (308) | — | (308) | ||||||||||||||||||||||||
Other comprehensive income (loss), net | — | — | — | 22 | 22 | ||||||||||||||||||||||||
Total Comprehensive Income (Loss), Net | — | — | (308) | 22 | (286) | ||||||||||||||||||||||||
Balance at March 31, 2019 | $ | 2 | $ | 3,879 | $ | (551) | $ | (403) | $ | 2,927 |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions) | 2020 | 2019 | ||||||||||||||||||
Commercial Industries: | ||||||||||||||||||||
Customer experience management | $ | 168 | $ | 171 | ||||||||||||||||
Business operations solutions | 153 | 166 | ||||||||||||||||||
Commercial healthcare solutions | 113 | 122 | ||||||||||||||||||
Human resource services | 138 | 153 | ||||||||||||||||||
Total Commercial Industries | 572 | 612 | ||||||||||||||||||
Government Services: | ||||||||||||||||||||
Government healthcare solutions | 152 | 177 | ||||||||||||||||||
Government services solutions | 138 | 148 | ||||||||||||||||||
Total Government Services | 290 | 325 | ||||||||||||||||||
Transportation: | ||||||||||||||||||||
Roadway charging & management services | 78 | 79 | ||||||||||||||||||
Transit solutions | 67 | 54 | ||||||||||||||||||
Curbside management solutions | 22 | 27 | ||||||||||||||||||
Public safety solutions | 20 | 21 | ||||||||||||||||||
Commercial vehicles | 2 | 3 | ||||||||||||||||||
Total Transportation | 189 | 184 | ||||||||||||||||||
Other: | ||||||||||||||||||||
Divestitures | — | 36 | ||||||||||||||||||
Education | — | 1 | ||||||||||||||||||
Total Other | — | 37 | ||||||||||||||||||
Total Consolidated Revenue | $ | 1,051 | $ | 1,158 | ||||||||||||||||
Timing of Revenue Recognition: | ||||||||||||||||||||
Point in time | $ | 30 | $ | 39 | ||||||||||||||||
Over time | 1,021 | 1,119 | ||||||||||||||||||
Total Revenue | $ | 1,051 | $ | 1,158 |
CNDT Q1 2020 Form 10-Q |
(in millions) | March 31, 2020 | December 31, 2019 | ||||||||||||
Contract Assets (Unearned Income) | ||||||||||||||
Current contract assets | $ | 169 | $ | 155 | ||||||||||
Long-term contract assets(1) | 8 | 10 | ||||||||||||
Current unearned income | (109) | (108) | ||||||||||||
Long-term unearned income(2) | (19) | (21) | ||||||||||||
Net Contract Assets (Unearned Income) | $ | 49 | $ | 36 | ||||||||||
Accounts receivable, net | $ | 690 | $ | 652 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | Segment Revenue | Segment Profit (Loss) | Segment Revenue | Segment Profit (Loss) | ||||||||||||
2017 | ||||||||||||||||
Commercial Industries | $ | 864 | $ | 53 | $ | 2,663 | $ | 114 | ||||||||
Public Sector | 540 | 59 | 1,629 | 179 | ||||||||||||
Other | 76 | 1 | 237 | (7 | ) | |||||||||||
Total | $ | 1,480 | $ | 113 | $ | 4,529 | $ | 286 | ||||||||
2016 | ||||||||||||||||
Commercial Industries | $ | 923 | $ | 42 | $ | 2,869 | $ | 103 | ||||||||
Public Sector | 584 | 78 | 1,734 | 217 | ||||||||||||
Other | 89 | (23 | ) | 291 | (75 | ) | ||||||||||
Total | $ | 1,596 | $ | 97 | $ | 4,894 | $ | 245 |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Commercial Industries | Government Services | Transportation | Other | Shared IT / Infrastructure & Corporate Costs | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | Divestitures | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 572 | $ | 290 | $ | 189 | $ | — | $ | — | $ | — | $ | 1,051 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment profit (loss) | $ | 90 | $ | 93 | $ | 23 | $ | — | $ | 4 | $ | (165) | $ | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | 25 | $ | 6 | $ | 9 | $ | — | $ | — | $ | 18 | $ | 58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 115 | $ | 99 | $ | 32 | $ | — | $ | (3) | $ | (147) | $ | 96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 612 | $ | 325 | $ | 184 | $ | 36 | $ | 1 | $ | — | $ | 1,158 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment profit (loss) | $ | 117 | $ | 80 | $ | 19 | $ | 1 | $ | — | $ | (148) | $ | 69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | 22 | $ | 9 | $ | 9 | $ | — | $ | — | $ | 14 | $ | 54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 139 | $ | 89 | $ | 28 | $ | 1 | $ | — | $ | (134) | $ | 123 |
(in millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Reconciliation to Pre-tax Income (Loss) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Segment Profit | $ | 113 | $ | 97 | $ | 286 | $ | 245 | |||||||
Reconciling items: | |||||||||||||||
Amortization of intangible assets | (60 | ) | (63 | ) | (182 | ) | (200 | ) | |||||||
Restructuring and related costs | (22 | ) | (8 | ) | (76 | ) | (57 | ) | |||||||
Interest Expense | (35 | ) | (1 | ) | (105 | ) | (3 | ) | |||||||
(Gains) loss on sale of asset and businesses | 16 | — | 41 | (1 | ) | ||||||||||
Related party interest | — | (10 | ) | — | (30 | ) | |||||||||
Separation costs(1) | (2 | ) | (15 | ) | (8 | ) | (34 | ) | |||||||
Other income (expense), net | 3 | 2 | 24 | (6 | ) | ||||||||||
Pre-tax Income (Loss) | $ | 13 | $ | 2 | $ | (20 | ) | $ | (86 | ) |
(in millions) | Three Months Ended March 31, | |||||||||||||||||||||||||||||||
Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) | 2020 | 2019 | ||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | $ | (51) | $ | (338) | ||||||||||||||||||||||||||||
Reconciling items: | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 60 | 62 | ||||||||||||||||||||||||||||||
Restructuring and related costs | 7 | 16 | ||||||||||||||||||||||||||||||
Interest expense | 17 | 20 | ||||||||||||||||||||||||||||||
Goodwill impairment | — | 284 | ||||||||||||||||||||||||||||||
(Gain) loss on divestitures and transaction costs | 4 | 14 | ||||||||||||||||||||||||||||||
Litigation costs (recoveries), net | 6 | 12 | ||||||||||||||||||||||||||||||
Other (income) expenses, net | 2 | (1) | ||||||||||||||||||||||||||||||
Segment Pre-tax Income (Loss) | $ | 45 | $ | 69 | ||||||||||||||||||||||||||||
Segment depreciation and amortization (including contract inducements) | $ | 58 | $ | 54 | ||||||||||||||||||||||||||||
CA MMIS charge (credit) | (7) | — | ||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 96 | $ | 123 |
CNDT Q1 2020 Form 10-Q |
(in millions) | September 30, 2017 | December 31, 2016 | ||||||
Amounts billed or billable | $ | 1,115 | $ | 1,014 | ||||
Unbilled amounts | 267 | 279 | ||||||
Allowance for doubtful accounts | (2 | ) | (7 | ) | ||||
Accounts Receivable, Net | $ | 1,380 | $ | 1,286 |
(in millions) | Severance and Related Costs | Termination and Other Costs | Asset Impairments | Total | |||||||||||||||||||
Accrued Balance at December 31, 2019 | $ | 15 | $ | 6 | $ | — | $ | 21 | |||||||||||||||
Provision | — | 3 | 1 | 4 | |||||||||||||||||||
Changes in estimates | — | 1 | — | 1 | |||||||||||||||||||
Total Net Current Period Charges(1) | — | 4 | 1 | 5 | |||||||||||||||||||
Charges against reserve and currency | (8) | (5) | (1) | (14) | |||||||||||||||||||
Accrued Balance at March 31, 2020 | $ | 7 | $ | 5 | $ | — | $ | 12 |
(in millions) | Severance and Related Costs | Termination and Other Costs | Asset Impairments | Total | |||||||||||||||||||
Accrued Balance at December 31, 2018 | $ | 13 | $ | 36 | $ | — | $ | 49 | |||||||||||||||
Provision | 3 | 11 | 3 | 17 | |||||||||||||||||||
Changes in estimates | — | (1) | — | (1) | |||||||||||||||||||
Total Net Current Period Charges(1) | 3 | 10 | 3 | 16 | |||||||||||||||||||
Charges against reserve and currency | (5) | (6) | (3) | (14) | |||||||||||||||||||
Reclassification to operating lease ROU assets(2) | — | (22) | — | (22) | |||||||||||||||||||
Accrued Balance at March 31, 2019 | $ | 11 | $ | 18 | $ | — | $ | 29 |
CNDT Q1 2020 Form 10-Q |
(in millions) | Severance and Related Costs | Lease Cancellation and Other Costs | Asset Impairments | Total | |||||||||||
Accrued Balance at December 31, 2016 | $ | 15 | $ | 5 | $ | 1 | $ | 21 | |||||||
Restructuring provision | 38 | 33 | 4 | 75 | |||||||||||
Reversals of prior accruals | (5 | ) | (2 | ) | — | (7 | ) | ||||||||
Net Current Period Charges | 33 | 31 | 4 | 68 | |||||||||||
Payments and asset impairments | (34 | ) | (9 | ) | (6 | ) | (49 | ) | |||||||
Accrued Balance at September 30, 2017 | $ | 14 | $ | 27 | $ | (1 | ) | $ | 40 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Commercial Industries | $ | 13 | $ | — | $ | 44 | $ | 36 | |||||||
Public Sector | 7 | — | 21 | 5 | |||||||||||
Other | 2 | — | 3 | 4 | |||||||||||
Total Net Restructuring and Asset Impairment Charges | $ | 22 | $ | — | $ | 68 | $ | 45 |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions) | 2020 | 2019 | ||||||||||||||||||
Commercial Industries | $ | 2 | $ | 2 | ||||||||||||||||
Shared IT / Infrastructure & Corporate Costs | 3 | 14 | ||||||||||||||||||
Total Net Restructuring Charges | $ | 5 | $ | 16 |
(in millions) | September 30, 2017 | December 31, 2016 | ||||||
Term loan A due 2021(1) | $ | 727 | $ | 694 | ||||
Term loan B due 2023 | 844 | 750 | ||||||
Senior notes due 2024 | 510 | 510 | ||||||
Capital lease obligations | 39 | 43 | ||||||
Principal Debt Balance | $ | 2,120 | $ | 1,997 | ||||
Debt issuance costs and unamortized discounts | (58 | ) | (56 | ) | ||||
Less: current maturities | (71 | ) | (28 | ) | ||||
Total Long-term Debt | $ | 1,991 | $ | 1,913 |
(in millions) | March 31, 2020 | December 31, 2019 | ||||||||||||
Term loan A due 2022 | $ | 652 | $ | 664 | ||||||||||
Term loan B due 2023 | 822 | 824 | ||||||||||||
Revolving credit facility due 2022 | 150 | — | ||||||||||||
Senior notes due 2024 | 34 | 34 | ||||||||||||
Finance lease obligations | 20 | 17 | ||||||||||||
Principal debt balance | 1,678 | 1,539 | ||||||||||||
Debt issuance costs and unamortized discounts | (22) | (25) | ||||||||||||
Less: current maturities | (60) | (50) | ||||||||||||
Total Long-term Debt | $ | 1,596 | $ | 1,464 |
CNDT Q1 2020 Form 10-Q |
(in millions) | September 30, 2017 | December 31, 2016 | ||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 468 | $ | 390 | ||||
Restricted cash | 25 | 22 | ||||||
Accounts receivable, net | 1,380 | 1,286 | ||||||
Foreign exchange contracts - forwards | 2 | 1 | ||||||
Deferred compensation investments in cash surrender life insurance(1) | — | 99 | ||||||
Deferred compensation investments in mutual funds(1) | — | 10 | ||||||
Total | $ | 1,875 | $ | 1,808 | ||||
Liabilities: | ||||||||
Foreign exchange contracts - forwards | $ | 1 | $ | 3 | ||||
Deferred compensation plan liabilities | 116 | 113 | ||||||
Total | $ | 117 | $ | 116 |
(in millions) | March 31, 2020 | December 31, 2019 | ||||||||||||
Assets: | ||||||||||||||
Foreign exchange contract - forward | $ | 1 | $ | 2 | ||||||||||
Total Assets | $ | 1 | $ | 2 | ||||||||||
Liabilities: | ||||||||||||||
Foreign exchange contracts - forwards | $ | 3 | $ | — | ||||||||||
Total Liabilities | $ | 3 | $ | — |
September 30, 2017 | December 31, 2016 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||
(in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | (in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||||||||||||||
Short-term debt | 71 | 71 | 28 | 28 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities: | Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 1,991 | 2,085 | 1,913 | 1,933 | Long-term debt | $ | 1,596 | $ | 1,373 | $ | 1,464 | $ | 1,449 | |||||||||||||||||||||||||||||||||
Contingent consideration payable | Contingent consideration payable | $ | 4 | $ | 4 | $ | 4 | $ | 4 |
CNDT Q1 2020 Form 10-Q |
(in millions) | Currency Translation Adjustments | Gains (Losses) on Cash Flow Hedges | Defined Benefit Pension Items | Total | ||||||||||||||||||||||
Balance at December 31, 2019 | $ | (408) | $ | 3 | $ | (2) | $ | (407) | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (28) | (3) | 1 | (30) | ||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | — | — | — | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | (28) | (3) | 1 | (30) | ||||||||||||||||||||||
Balance at March 31, 2020 | $ | (436) | $ | — | $ | (1) | $ | (437) |
(in millions) | Currency Translation Adjustments | Gains (Losses) on Cash Flow Hedges | Defined Benefit Pension Items | Total | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | (426) | $ | 2 | $ | (1) | $ | (425) | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 7 | 1 | — | 8 | ||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 15 | — | (1) | 14 | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | 22 | 1 | (1) | 22 | ||||||||||||||||||||||
Balance at March 31, 2019 | $ | (404) | $ | 3 | $ | (2) | $ | (403) |
(in millions) | September 30, 2017 | December 31, 2016 | ||||||
Cumulative translation adjustments | $ | (438 | ) | $ | (472 | ) | ||
Other unrealized gains (losses), net | 1 | (1 | ) | |||||
Benefit plans net actuarial losses and prior service credits | (53 | ) | (53 | ) | ||||
Total Accumulated Other Comprehensive Loss | $ | (490 | ) | $ | (526 | ) |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
(in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCL(1) | Former Parent Company Investment | Conduent Shareholders' Equity | |||||||||||||||||
Balance at December 31, 2016 | $ | 2 | $ | 3,812 | $ | — | $ | (526 | ) | $ | — | $ | 3,288 | ||||||||||
Comprehensive (loss) income, net | — | — | (27 | ) | 36 | — | 9 | ||||||||||||||||
Cash dividends paid - preferred stock(2) | — | — | (7 | ) | — | — | (7 | ) | |||||||||||||||
Stock option and incentive plans, net | — | 22 | — | — | — | 22 | |||||||||||||||||
Balance at September 30, 2017 | $ | 2 | $ | 3,834 | $ | (34 | ) | $ | (490 | ) | $ | — | $ | 3,312 |
(in millions) | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCL(1) | Former Parent Company Investment | Conduent Shareholders' Equity | |||||||||||||||||
Balance at December 31, 2015 | $ | — | $ | — | $ | — | $ | (181 | ) | $ | 5,343 | $ | 5,162 | ||||||||||
Comprehensive loss, net | — | — | — | (22 | ) | (32 | ) | (54 | ) | ||||||||||||||
Net transfers from former parent | — | — | — | — | 382 | 382 | |||||||||||||||||
Balance at September 30, 2016 | $ | — | $ | — | $ | — | $ | (203 | ) | $ | 5,693 | $ | 5,490 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in millions, except per-share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Basic Earnings (Loss) per Share: | |||||||||||||||
Net (loss) income from continuing operations | $ | (17 | ) | $ | 1 | $ | (31 | ) | $ | (32 | ) | ||||
Accrued dividends on preferred stock | (2 | ) | — | (7 | ) | — | |||||||||
Adjusted Net (Loss) Income From Continuing Operations Available to Common Shareholders | (19 | ) | 1 | (38 | ) | (32 | ) | ||||||||
Income from discontinued operations, net of tax | — | — | 4 | — | |||||||||||
Adjusted Net (Loss) Income Available to Common Shareholders | $ | (19 | ) | $ | 1 | $ | (34 | ) | $ | (32 | ) | ||||
Weighted average common shares outstanding | 204,356 | 202,875 | 203,838 | 202,875 | |||||||||||
Basic Earnings (Loss) per Share: | |||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | 0.01 | $ | (0.19 | ) | $ | (0.16 | ) | ||||
Discontinued operations | — | — | 0.02 | — | |||||||||||
Basic (Loss) Income per Share | $ | (0.09 | ) | $ | 0.01 | $ | (0.17 | ) | $ | (0.16 | ) | ||||
Diluted Earnings (Loss) per Share: | |||||||||||||||
Net (loss) income from continuing operations | $ | (17 | ) | $ | 1 | $ | (31 | ) | $ | (32 | ) | ||||
Accrued dividends on preferred stock | (2 | ) | — | (7 | ) | — | |||||||||
Adjusted Net (Loss) Income from Continuing Operations Available to Common Shareholders | (19 | ) | 1 | (38 | ) | (32 | ) | ||||||||
Net income from discontinued operations | — | — | 4 | — | |||||||||||
Adjusted Net (Loss) Income Available to Common Shareholders | $ | (19 | ) | $ | 1 | $ | (34 | ) | $ | (32 | ) | ||||
Weighted average common shares outstanding(1) | 204,356 | 202,875 | 203,838 | 202,875 | |||||||||||
Diluted Earnings (Loss) per Share: | |||||||||||||||
Continuing operations | $ | (0.09 | ) | $ | 0.01 | $ | (0.19 | ) | $ | (0.16 | ) | ||||
Discontinued operations | — | — | 0.02 | — | |||||||||||
Diluted (Loss) Income per Share: | $ | (0.09 | ) | $ | 0.01 | $ | (0.17 | ) | $ | (0.16 | ) | ||||
(1) With the exception of the third quarter 2016, the computation of weighted average shares is the same for basic and diluted earnings per share due to the net loss from continuing operations. For third quarter 2016, there were no Conduent options outstanding. |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions, except per share data in whole dollars and shares in thousands) | 2020 | 2019 | ||||||||||||||||||
Net income (loss) | $ | (49) | $ | (308) | ||||||||||||||||
Cash dividend paid - preferred stock | (2) | (2) | ||||||||||||||||||
Adjusted Net Income (Loss) Available to Common Shareholders | $ | (51) | $ | (310) | ||||||||||||||||
Weighted average common shares outstanding | 211,093 | 207,944 | ||||||||||||||||||
Common shares issuable with respect to: | ||||||||||||||||||||
Stock options | — | — | ||||||||||||||||||
Restricted stock and performance units / shares | — | — | ||||||||||||||||||
Adjusted Weighted Average Common Shares Outstanding | 211,093 | 207,944 | ||||||||||||||||||
Net Income (Loss) per Share: | ||||||||||||||||||||
Basic | $ | (0.24) | $ | (1.49) | ||||||||||||||||
Diluted | $ | (0.24) | $ | (1.49) |
(in millions) | March 31, 2020 | December 31, 2019 | ||||||||||||
Other Current Assets | ||||||||||||||
Prepaid expenses | $ | 86 | $ | 70 | ||||||||||
Income taxes receivable | 43 | 38 | ||||||||||||
Value-added tax (VAT) receivable | 21 | 20 | ||||||||||||
Restricted cash | 18 | 9 | ||||||||||||
Net receivable from buyers of divested businesses | 52 | 52 | ||||||||||||
Other | 98 | 94 | ||||||||||||
Total Other Current Assets | $ | 318 | $ | 283 | ||||||||||
Other Current Liabilities | ||||||||||||||
Accrued liabilities | $ | 285 | $ | 309 | ||||||||||
Litigation related accruals | 67 | 178 | ||||||||||||
Current operating lease liabilities | 87 | 91 | ||||||||||||
Restructure reserves | 7 | 15 | ||||||||||||
Income tax payable | 27 | 11 | ||||||||||||
Other taxes payable | 14 | 16 | ||||||||||||
Other | 48 | 27 | ||||||||||||
Total Other Current Liabilities | $ | 535 | $ | 647 | ||||||||||
Other Long-term Assets | ||||||||||||||
Internal use software, net | $ | 147 | $ | 150 | ||||||||||
Deferred contract costs, net | 76 | 84 | ||||||||||||
Product software, net | 50 | 40 | ||||||||||||
Other | 111 | 113 | ||||||||||||
Total Other Long-term Assets | $ | 384 | $ | 387 | ||||||||||
Other Long-term Liabilities | ||||||||||||||
Income tax liabilities | 20 | 20 | ||||||||||||
Unearned income | 19 | 21 | ||||||||||||
Restructuring reserves | 5 | 6 | ||||||||||||
Other | 37 | 44 | ||||||||||||
Total Other Long-term Liabilities | $ | 81 | $ | 91 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions) | 2020 | 2019 | ||||||||||||||||||
Revenue from related parties | $ | 6 | $ | 9 | ||||||||||||||||
Purchases from related parties | $ | 6 | $ | 12 |
(in millions) | Commercial Industries | Government Services | Transportation | Total | ||||||||||||||||||||||
Balance at December 31, 2019 | $ | 821 | $ | 621 | $ | 60 | $ | 1,502 | ||||||||||||||||||
Foreign currency translation | (9) | (6) | (1) | (16) | ||||||||||||||||||||||
Balance at March 31, 2020 | $ | 812 | $ | 615 | $ | 59 | $ | 1,486 |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in millions) | 2017 | 2016 | $ Change | 2017 | 2016 | $ Change | ||||||||||||||||||
Total Revenues | $ | 1,480 | $ | 1,596 | (116 | ) | $ | 4,529 | $ | 4,894 | (365 | ) | ||||||||||||
Total Cost of services | 1,219 | 1,328 | (109 | ) | 3,766 | 4,107 | (341 | ) | ||||||||||||||||
Gross Margin | 261 | 268 | (7 | ) | 763 | 787 | (24 | ) | ||||||||||||||||
Operating Costs and Expenses | ||||||||||||||||||||||||
Research and development | 4 | 7 | (3 | ) | 11 | 25 | (14 | ) | ||||||||||||||||
Selling, general and administrative | 144 | 164 | (20 | ) | 466 | 517 | (51 | ) | ||||||||||||||||
Restructuring and related costs | 22 | 8 | 14 | 76 | 57 | 19 | ||||||||||||||||||
Amortization of intangible assets | 60 | 63 | (3 | ) | 182 | 200 | (18 | ) | ||||||||||||||||
Interest expense | 35 | 1 | 34 | 105 | 3 | 102 | ||||||||||||||||||
Related party interest | — | 10 | (10 | ) | — | 30 | (30 | ) | ||||||||||||||||
Separation costs | 2 | 15 | (13 | ) | 8 | 34 | (26 | ) | ||||||||||||||||
(Gain) loss on sale of asset and businesses | (16 | ) | — | (16 | ) | (41 | ) | 1 | (42 | ) | ||||||||||||||
Other (income) expenses, net | (3 | ) | (2 | ) | (1 | ) | (24 | ) | 6 | (30 | ) | |||||||||||||
Total Operating Costs and Expenses | $ | 248 | $ | 266 | (18 | ) | $ | 783 | $ | 873 | (90 | ) | ||||||||||||
Income (Loss) before Income Taxes | $ | 13 | $ | 2 | $ | 11 | $ | (20 | ) | $ | (86 | ) | $ | 66 | ||||||||||
Income tax expense (benefit) | 30 | 1 | 29 | 11 | (54 | ) | 65 | |||||||||||||||||
(Loss) Income from Continuing Operations | $ | (17 | ) | $ | 1 | (18 | ) | $ | (31 | ) | $ | (32 | ) | 1 |
Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||
Revenue | $ | 1,051 | $ | 1,158 | $ | (107) | (9) | % | ||||||||||||||||||||||||||||||
Operating Costs and Expenses | ||||||||||||||||||||||||||||||||||||||
Cost of services (excluding depreciation and amortization) | 832 | 906 | (74) | (8) | % | |||||||||||||||||||||||||||||||||
Selling, general and administrative (excluding depreciation and amortization) | 116 | 127 | (11) | (9) | % | |||||||||||||||||||||||||||||||||
Research and development (excluding depreciation and amortization) | 1 | 3 | (2) | (67) | % | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 117 | 115 | 2 | 2 | % | |||||||||||||||||||||||||||||||||
Restructuring and related costs | 7 | 16 | (9) | (56) | % | |||||||||||||||||||||||||||||||||
Interest expense | 17 | 20 | (3) | (15) | % | |||||||||||||||||||||||||||||||||
Goodwill impairment | — | 284 | (284) | (100) | % | |||||||||||||||||||||||||||||||||
(Gain) loss on divestitures and transaction costs | 4 | 14 | (10) | (71) | % | |||||||||||||||||||||||||||||||||
Litigation costs (recoveries), net | 6 | 12 | (6) | (50) | % | |||||||||||||||||||||||||||||||||
Other (income) expenses, net | 2 | (1) | 3 | |||||||||||||||||||||||||||||||||||
Total Operating Costs and Expenses | 1,102 | 1,496 | (394) | |||||||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | (51) | (338) | 287 | |||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | (2) | (30) | 28 | |||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | (49) | $ | (308) | $ | 259 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | ||||||||||||||||||||
(in millions, except headcount in whole numbers) | 2020 | 2019 | ||||||||||||||||||
Severance and related costs | $ | — | $ | 3 | ||||||||||||||||
Data center consolidation | 2 | 9 | ||||||||||||||||||
Termination and other costs | 3 | 4 | ||||||||||||||||||
Total Net Current Period Charges | 5 | 16 | ||||||||||||||||||
Consulting and other costs(1) | 2 | — | ||||||||||||||||||
Restructuring and Related Costs | $ | 7 | $ | 16 |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
(in millions) | Revenue | % of Total Revenue | Segment Profit (Loss) | Segment Profit (Loss)% | Revenue | % of Total Revenue | Segment Profit (Loss) | Segment Profit (Loss)% | ||||||||||||||||||||
2017 | ||||||||||||||||||||||||||||
Commercial Industries | $ | 864 | 58 | % | $ | 53 | 6.1 | % | $ | 2,663 | 59 | % | $ | 114 | 4.3 | % | ||||||||||||
Public Sector | 540 | 37 | % | 59 | 10.9 | % | 1,629 | 36 | % | 179 | 11.0 | % | ||||||||||||||||
Other | 76 | 5 | % | 1 | 1.3 | % | 237 | 5 | % | (7 | ) | (3.0 | )% | |||||||||||||||
Total | $ | 1,480 | 100 | % | $ | 113 | 7.6 | % | $ | 4,529 | 100 | % | $ | 286 | 6.3 | % | ||||||||||||
2016 | ||||||||||||||||||||||||||||
Commercial Industries | $ | 923 | 58 | % | $ | 42 | 4.6 | % | $ | 2,869 | 59 | % | $ | 103 | 3.6 | % | ||||||||||||
Public Sector | 584 | 37 | % | 78 | 13.4 | % | 1,734 | 35 | % | 217 | 12.5 | % | ||||||||||||||||
Other | 89 | 5 | % | (23 | ) | (25.8 | )% | 291 | 6 | % | (75 | ) | (25.8 | )% | ||||||||||||||
Total | $ | 1,596 | 100 | % | $ | 97 | 6.1 | % | $ | 4,894 | 100 | % | $ | 245 | 5.0 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions) | Commercial Industries | Government Services | Transportation | Other | Shared IT / Infrastructure & Corporate Costs | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | Divestitures | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 572 | $ | 290 | $ | 189 | $ | — | $ | — | $ | — | $ | 1,051 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment profit (loss) | $ | 90 | $ | 93 | $ | 23 | $ | — | $ | 4 | $ | (165) | $ | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | 25 | $ | 6 | $ | 9 | $ | — | $ | — | $ | 18 | $ | 58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 115 | $ | 99 | $ | 32 | $ | — | $ | (3) | $ | (147) | $ | 96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% of Total Revenue | 54.4 | % | 27.6 | % | 18.0 | % | — | % | — | % | — | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA Margin | 20.1 | % | 34.1 | % | 16.9 | % | — | % | — | % | — | % | 9.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 612 | $ | 325 | $ | 184 | $ | 36 | $ | 1 | $ | — | $ | 1,158 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment profit (loss) | $ | 117 | $ | 80 | $ | 19 | $ | 1 | $ | — | $ | (148) | $ | 69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment depreciation and amortization | $ | 22 | $ | 9 | $ | 9 | $ | — | $ | — | $ | 14 | $ | 54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 139 | $ | 89 | $ | 28 | $ | 1 | $ | — | $ | (134) | $ | 123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% of Total Revenue | 52.8 | % | 28.1 | % | 15.9 | % | 3.1 | % | 0.1 | % | — | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA Margin | 22.7 | % | 27.4 | % | 15.2 | % | 2.8 | % | — | % | — | % | 10.6 | % |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
Three Months Ended March 31, | 2020 vs. 2019 | |||||||||||||||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||
New logo & New capability TCV | $ | 282 | $ | 124 | $ | 158 | 127 | % | ||||||||||||||||||||||||||||||
Add-on expansion TCV | 42 | 101 | $ | (59) | (58) | % | ||||||||||||||||||||||||||||||||
Renewals TCV | 515 | 727 | (212) | (29) | % | |||||||||||||||||||||||||||||||||
Total Signings | $ | 839 | $ | 952 | $ | (113) | (12) | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
New business TCV | $ | 390 | $ | 633 | $ | 1,577 | $ | 1,803 | ||||||||
Renewals TCV | 657 | 913 | 1,645 | 3,388 | ||||||||||||
Total Signings | $ | 1,047 | $ | 1,546 | $ | 3,222 | $ | 5,191 | ||||||||
Annual recurring revenue signings | $ | 92 | $ | 167 | $ | 366 | $ | 408 | ||||||||
Non-recurring revenue signings | $ | 86 | $ | 104 | $ | 287 | $ | 326 |
CNDT Q1 2020 Form 10-Q |
Nine Months Ended September 30, | Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2017 | 2016 | Increase (Decrease) | (in millions) | 2020 | 2019 | Better (Worse) | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 65 | $ | (38 | ) | $ | 103 | Net cash provided by (used in) operating activities | $ | (192) | $ | (49) | $ | (143) | ||||||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | 122 | (129 | ) | 251 | Net cash provided by (used in) investing activities | $ | (23) | $ | (168) | 145 | ||||||||||||||||||||||||||||||||||
Net cash (used in) provided by financing activities | (111 | ) | 177 | (288 | ) | |||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) financing activities | Net cash provided by (used in) financing activities | $ | 130 | $ | (22) | 152 |
CNDT Q1 2020 Form 10-Q |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||||||||||
(in millions) | Pre Tax Income (Loss) | Revenue | Margin | Pre Tax Income (Loss) | Revenue | Margin | |||||||||||||||
GAAP as Reported(1) | $ | 13 | $ | 1,480 | 0.9 | % | $ | 2 | 1,596 | 0.1 | % | ||||||||||
Adjustments: | |||||||||||||||||||||
Amortization of intangible assets | 60 | 63 | |||||||||||||||||||
NY MMIS | 1 | — | |||||||||||||||||||
Restructuring and related costs | 22 | 8 | |||||||||||||||||||
HE charge | (3 | ) | — | ||||||||||||||||||
Separation costs | 2 | 15 | |||||||||||||||||||
Interest expense | 35 | 1 | |||||||||||||||||||
Related party interest | — | 10 | |||||||||||||||||||
(Gain) loss on sale of asset and businesses | (16 | ) | — | ||||||||||||||||||
Other (income) expenses, net | (3 | ) | (2 | ) | — | ||||||||||||||||
Adjusted Operating Income/Margin | $ | 111 | $ | 1,480 | 7.5 | % | $ | 97 | $ | 1,596 | 6.1 | % | |||||||||
(1) Pre-Tax Income (Loss) and revenue from continuing operations. |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||
(in millions) | Pre Tax Income (Loss) | Revenue | Margin | Pre Tax Income (Loss) | Revenue | Margin | |||||||||||||||
GAAP as Reported(1) | $ | (20 | ) | $ | 4,529 | (0.4 | )% | $ | (86 | ) | 4,894 | (1.8 | )% | ||||||||
Adjustments: | |||||||||||||||||||||
Goodwill impairment | 182 | 200 | |||||||||||||||||||
Amortization of intangible assets | 10 | — | |||||||||||||||||||
NY MMIS | 76 | 57 | |||||||||||||||||||
Restructuring and related costs | (8 | ) | — | ||||||||||||||||||
HE charge | 8 | 34 | |||||||||||||||||||
Interest expense | 105 | 3 | |||||||||||||||||||
Related party interest | — | 30 | |||||||||||||||||||
(Gain) loss on sale of asset and businesses | (41 | ) | 1 | ||||||||||||||||||
Other (income) expenses, net | (24 | ) | 6 | — | |||||||||||||||||
Adjusted Operating Income/Margin | $ | 288 | $ | 4,529 | 6.4 | % | $ | 245 | $ | 4,894 | 5.0 | % | |||||||||
(1) Pre-Tax Income (Loss) and revenue from continuing operations. |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||||||||||
(in millions) | Pre-Tax Income (Loss) | Income Tax (Benefit) Expense | Effective Tax Rate | Pre-Tax Income (Loss) | Income Tax (Benefit) Expense | Effective Tax Rate | |||||||||||||||
GAAP as Reported From Continuing Operations | $ | 13 | $ | 30 | 230.8 | % | $ | 2 | $ | 1 | 50.0 | % | |||||||||
Non-GAAP adjustments(1) | 63 | 17 | 84 | 33 | |||||||||||||||||
Termination of COLI plan | — | (19 | ) | — | — | ||||||||||||||||
Adjusted(2) | $ | 76 | $ | 28 | 36.8 | % | $ | 86 | $ | 34 | 39.5 | % | |||||||||
(1) Refer to Net Income (Loss) reconciliation for details. | |||||||||||||||||||||
(2) The tax impact of Adjusted Pre-Tax Income (Loss) from continuing operations is calculated under the same accounting principles applied to the As Reported Pre-Tax Income, which employs an annual effective tax rate method to the results. |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||
(in millions) | Pre-Tax Income (Loss) | Income Tax (Benefit) Expense | Effective Tax Rate | Pre-Tax Income (Loss) | Income Tax (Benefit) Expense | Effective Tax Rate | |||||||||||||||
GAAP as Reported From Continuing Operations | $ | (20 | ) | $ | 11 | (55.0 | )% | $ | (86 | ) | $ | (54 | ) | 62.8 | % | ||||||
Non-GAAP adjustments(1) | 203 | 72 | 298 | 104 | |||||||||||||||||
Termination of COLI plan | — | (19 | ) | — | — | ||||||||||||||||
Adjusted(2) | $ | 183 | $ | 64 | 35.0 | % | $ | 212 | $ | 50 | 23.6 | % | |||||||||
(1) Refer to Net Income (Loss) reconciliation for details. | |||||||||||||||||||||
(2) The tax impact of Adjusted Pre-Tax Income (Loss) from continuing operations is calculated under the same accounting principles applied to the As Reported Pre-Tax Income, which employs an annual effective tax rate method to the results. |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||
(in millions, except earnings per share) | Net Income (Loss) | EPS | Net Income (Loss) | EPS | ||||||||||||
GAAP as Reported From Continuing Operations | $ | (17 | ) | $ | (0.09 | ) | $ | 1 | $ | 0.01 | ||||||
Adjustments: | ||||||||||||||||
Amortization of intangible assets | 60 | 63 | ||||||||||||||
NY MMIS | 1 | — | ||||||||||||||
Restructuring and related costs | 22 | 8 | ||||||||||||||
HE charge | (3 | ) | — | |||||||||||||
Separation costs | 2 | 15 | ||||||||||||||
(Gain) loss on sale of asset and businesses | (16 | ) | — | |||||||||||||
Other (income) expenses, net | (3 | ) | (2 | ) | ||||||||||||
Less: Income tax adjustments(1) | 2 | (33 | ) | |||||||||||||
Adjusted Net Income (Loss) and EPS | $ | 48 | $ | 0.22 | $ | 52 | $ | 0.24 | ||||||||
(shares) | ||||||||||||||||
Weighted average common shares outstanding | 204 | 203 | ||||||||||||||
Restricted stock and performance shares | 3 | 3 | ||||||||||||||
8% Convertible preferred stock | — | 5 | ||||||||||||||
Adjusted Weighted Average Shares Outstanding(2) | 207 | 211 | ||||||||||||||
(1) Reflects the income tax (expense) benefit of the adjustments. Refer to the Effective Tax Rate reconciliation details. | ||||||||||||||||
(2) Average shares for the 2017 calculation of adjusted EPS excludes 5 million shares associated with our Series A convertible preferred stock and includes the impact of the preferred stock quarterly dividend of $2 million for the three months ended September 30, 2017. Average shares for the 2016 calculation of adjusted EPS includes 5 million shares associated with our Series A convertible preferred stock and excludes the impact of the preferred stock quarterly dividend. |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||
(in millions, except earnings per share) | Net Income (Loss) | EPS | Net Income (Loss) | EPS | ||||||||||||
GAAP as Reported From Continuing Operations | $ | (31 | ) | $ | (0.19 | ) | $ | (32 | ) | $ | (0.16 | ) | ||||
Adjustments: | ||||||||||||||||
Amortization of intangible assets | 182 | 200 | ||||||||||||||
NY MMIS | 10 | — | ||||||||||||||
Restructuring and related costs | 76 | 57 | ||||||||||||||
HE charge | (8 | ) | — | |||||||||||||
Separation costs | 8 | 34 | ||||||||||||||
(Gain) loss on sale of asset and businesses | (41 | ) | 1 | |||||||||||||
Other (income) expenses, net | (24 | ) | 6 | |||||||||||||
Less: Income tax adjustments(1) | (53 | ) | (104 | ) | ||||||||||||
Adjusted Net Income (Loss) and EPS | $ | 119 | $ | 0.54 | $ | 162 | $ | 0.77 | ||||||||
(shares) | ||||||||||||||||
Weighted average common shares outstanding | 204 | 203 | ||||||||||||||
Restricted stock and performance shares | 3 | 3 | ||||||||||||||
8% Convertible preferred stock | — | 5 | ||||||||||||||
Adjusted Weighted Average Shares Outstanding(2) | 207 | 211 | ||||||||||||||
(1) Reflects the income tax (expense) benefit of the adjustments. Refer to the Effective Tax Rate reconciliation details. | ||||||||||||||||
(2) Average shares for the 2017 calculation of adjusted EPS excludes 5 million shares associated with our Series A convertible preferred stock and includes the impact of the preferred stock quarterly dividend of $7 million for the nine months ended September 30, 2017. Average shares for the 2016 calculation of adjusted EPS includes 5 million shares associated with our Series A convertible preferred stock and excludes the impact of the preferred stock quarterly dividend. |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
CNDT Q1 2020 Form 10-Q |
(a)Sales of Unregistered Securities during the Quarter ended March 31, 2020 |
CNDT Q1 2020 Form 10-Q |
Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K dated December 23, 2016. | ||||||||
Incorporated by reference to Exhibit 3.2 to Registrants Current Report on Form 8-K dated December 23, 2016. | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase. | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase. | |||||||
Inline XBRL Taxonomy Extension Label Linkbase. | ||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Linkbase. | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
* | Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate. |
CNDT Q1 2020 Form 10-Q |
CONDUENT INCORPORATED (Registrant) | ||||||||
By: | /S/ MARIO A. POMPEO | |||||||
Mario A. Pompeo Vice President and Chief Accounting Officer (Principal Accounting Officer) |
CNDT Q1 2020 Form 10-Q |