CNDT - Earnings call 4 2023 | Conduent Incorporated

joining so for let we start earnings from call QX QX be earnings we a by the provide Hopefully, Thanks, have Q&A a been call. company next last both Giles, call, else, end. earnings portfolio on the clients. don't this help have like happened year-end group the our the everyone XXXX sell-side Conduent's to establish and that to where working in all within thank and our will and services me own call. But saying, Q&A at lot's since call, We've you our last

very and times government the the diversity. myriad political hand, we clients' the and of oftentimes, can know, and diversity a our than of opportunities experience our because one that and more across positioned levels. At be headwind. On platform you in we experience. changing the otherwise, offerings Conduent space commercial federal, financial our But both through all suffer most spanning partners products blessing regardless of landscape, pressures, local a oftentimes, diverse a capture the and to our we're services, of changing the take advantage both that, times, and retains As of state industries government commercial in

how announced finished this you'll nimble. XXXX briefing as rate. We XXXX very in as X-year in just in And be expectations, indexed On see Steve particularly the against you exit see talk a will description we in investor more X is XXXX. of We company's journey. through other a shy This X presentation progressing heard we our we where us first to the all take that cost. in to more this financial our horizontal that rationalization comes want $XXX CFO, expected expected sometimes, the Both be bandwidth to half divestitures And a opportunity continue past, want to the net we're those close and scope. We with diversity previously the that, proceeds hand, Wood, of be say, efforts increments of of described today's just on with resulting requires to on focused a about and you've QX year in of growth oriented. million. journey year narrowing

with You all XXXX. might to program the you we for $XX will, and outlook pretty $XXX and the us. But Adjusted let's a in year. Steve QX year, EBITDA When the million large presented have $X.X we details. Again, across XX.X%, billion year. measurements for full for EBITDA take and and respectively, results begin and the full was exceeded QX $XXX expectations our also was expectations for million XXXX. Meanwhile, strong adjusted EBITDA adjusted and for margins. Adjusted million million earnings, and EBITDA XX.X% respectively. QX through course, was noticed, full and announced QX share repurchase margin with our QX of XXXX we exceeded in these compared finished in all revenue revenue, the $XXX

sales new was sequentially. hand, a but ACV year-over-year for roughly On year, performance slightly our X our business, was X down regarding a of However, cities. flat of bit the quarter-over-quarter, tale and

up hand, the value, revenue retention was the XX% XXXX growth, slightly to other total long-term TCV, an year-over-year. contract indication exhibited best achievement On we became in $X,XXX since future of better Conduent, billion. Meanwhile,

reduction in especially a sequential space, ARR our sales really, number. net in However, created the commercial

add slower had than our but here from experienced, it main commercial and focus might perspective into account associated positive you financial changes to the market is minute. generation. and a talk shifts were with or a market did normal. And in that conditions headwind most in was in new our volume sales increasing it to recall, in both cash But to trends like recent buying our improve stronger keep of XXXX much that room net doesn't number about portfolio. take predictions performance. Net-net, to sales But small our the Steve of As competitors will ARR XXXX. many certainly

Steve our Transportation for take in achievements made implementation but both to improve year, timing tax expect XXXX. we cash, business, you in details, the return, the our a through milestone of upon expected will Speaking of

a at kind divestiture changes, and Again, analysis a But will be least or of revenue, the there XXXX, be activity will increments difficult flexibility to predictability expense have and predictions lot in Regarding activity. absent compare. some it's is an different to XXXX divestiture of the provide include of proceed fact will going or of a other expectations Steve anyway. XXXX level

we always plan. that tee we stated X portfolio linchpin for several strategy go-forward remain had mention for last the to that investor the going earnings, March. up it yet future. For rationalized disappoint in the as does will event to as our a back not I'm again, you referred We've levers and execution I'll the

of Let a talk me couple about levers. those

to in billion future First expect to and and benefit. importantly, best be roughly highest for generate used we $X capital

Some over and as of capital debt time. That shareholder to timing to internal that will well include acquisition reduction allocation options. optionality the return obvious options with increasing as have components would flexibility it and investment or

to there'll that course, in begin proceeds here be Of the in later to on as March. more flow come

Second, a more nimble, more global portfolio platform.

scope enhanced allow cash defensive retaining narrower of that and while flow diverse enjoy better valuation. Fourth, bandwidth a we management and conversion allocation better for a Third, an nature rates capabilities portfolio. with that products

make half expected anticipated Now as as monetize in also X of our $X to There of on well. I X% of is are valuation billion-ish, Steve all Again, land I which the reduced at process the others mentioned, close XXXX. divestitures, said detail as of to mission to the it it's growing and to and that debt but exit. announced a first are job some first our an with we X% plan, components in company XXXX enhanced will that happen.

the we every Lastly, or our else, like day compete for market business whether out new everyone in workforce. talent new in it's

or associates or it's industry to the improvement achievement aspect And our is improve in and against level performance in but client competitive what the XXXX the relationships, team significant hard we that strong on foundation time Our bear of the built, progress. worked clearly the the every and of next we takes in landscape, the culture accomplished. Whether horizon. is XX,XXX or very made our improvements fruit, I'm proud that financials moved to progress of recognition

to in it Steve? advance. So I'll And over details. the now for thank with you Steve that, I'll turn

Cliff. Thanks,

reporting in we have are of GAAP we in in appendix and past, As The and the reconciliations our numbers. filings both non-GAAP are the the done presentation.

larger fourth Let's we flat absenting our prior the primary expected, in turn third the of which to volume metric, segment, metrics. In in business discuss new quarter, ACV versus the Slide feature signed quarter roughly X of was ACV, key our our sales $XXX X were the and large the we deals million, sequentially results against deals. million sales $XX year when down a at QX Government with XXXX line what and

module signing suite. government double-digit the care in health Conduent our of include Medicaid cloud-native of comprising space, did This quarter logo new a ACV our another

and the behavior, buying Our Commercial segment but versus it than is still experiencing decision-making cycles cautious year XXXX. finished up QX started, XX% stronger longer

partially full Transportation ACV aggregate, the XX%. where by compared was Commercial this down down in of their as year, the grew was year-over-year For in approximately X%. XXXX, with and ACV the segment, in to XX% Government offset ACV this impact And segments, most was which

ticketing we strong in in the segment, State in QX, platform This XXXX. Victoria, the operations was primarily Australia, and to QX over the New billion in signed new was the XXXX, from as business implementing contract with began incumbent legacy in Transportation to of account-based XX% December. year we full system growing TCV where due $X took of compared the our

years. As over XX-year revenues X reminder, to X a implementation generating a the contract, this is next

pricing of the timing Our XX-month due notification. of in roll-off positive. Very not can this to was primarily ARR is metric net we predict to on down XXXX the metric lighter covered losses, contractual does ARR revenue, the in full activity Losses QX timing appendix is were but of the and of effects This changes net QX expected. in our had you QX with activity of signings XXXX in quarter XXXX. performance areas other renewal metric, strong continued the on measure briefly segment XXXX. of wins, where sequentially, a presentation. The that broadly based large we in measure ARR during Slide A and combined see our certain has line Commercial of trailing definition the X, remain

with year how XXXX, guide. Revenue Government year modified compared results finished stronger in to full in cover XXXX both full results both billion experienced We later. Adjusted turn And in compared in in was This our range year We of Let's the X, I our than how to messaged stronger-than-anticipated I'll higher affected coming it topping in slightly and discrete which was Commercial X.X% segments, the as quarter. guided last discuss earnings unchanged $X.XX EBITDA XXXX XXXX earnings million offsetting XX.X% in as to a in last was million and segment, for year some segment than softness billion individual down X.X% update, our adjusted $XXX performance within XXXX. fourth update our substantially discuss full or our metrics. margin XXXX. I full Transportation as due to $X.XX currency. couple in compared QX I constant the at the EBITDA now our that was P&L original our to our for Slide items laid slightly out year and and $XXX

Let's results. over and segment now X turn Slide the to go

prior nonrepeating full X% year, the and headwind. billion, to approximate an incremental items year were down was in XXXX. were compared $X.XX $XX The million in BenefitWallet the $XX revenue the segment an tailwind approximate million For revenues year Commercial as

slightly New XXXX logistics the impact from The business predominantly partially in certain on much due including believe new of segment. is space certain travel, business large prior volumes the industries, Increased of outpacing short with likely sales soft from Commercial this volumes fell add-on improvement, offset areas balance EBITDA revenue CX lower environment year. primarily business was clients, the of loss the this the in therefore, to year, efficiencies, XX.X% basis this adjusted year-over-year. revenue lower of and in in for the and ramp to along of and and related some year-over-year, BenefitWallet EBITDA macro items temporary. Commercial improved by and was segment We telecom. XXX operational nonrepeating was margin and contributed margin points adjusted XX% up the

year-over-year compared For segment, volumes headwind expected, of year XXXX, in million. a of XXXX as performed than was stimulus impact XXXX. revenue X.X% full onetime the the The better $XX government declining to Government

as by in the to declined signed volumes adjusted volumes, New the government with driven years. Government EBITDA year-over-year, deals business better partially combined drove including government ramp, a X segment million as on segment stronger the we portion basis lost business, payment impact XXXX loss negatively XXXX. onetime benefit by X.X% large up performance, XXXX outrun not impacted known as was the business in legal go-live. large, adjusted stimulus but Transportation QX quite and of $XX XXXX, compared the prior from in segment volumes. points payment of from settlement enough EBITDA of XX the implementations government through declined with well The were XX.X% long-running of a margin from offset transitioning year-over-year. Transportation X.X% revenues certain clients to stronger results

X.X% extended Some of down these margins extended during more timelines of as by client million This of than implementations of the increased the million anticipated. Transportation adjusted compared implementations. changing caused was to points completion segment programs scope adjusted These largely revenue multiyear year-over-year. XXXX. in this our of decline. and end year the on larger drag And on experienced margin timelines basis a handful a as caused we XXX we and completion or requirements $XX driven EBITDA of EBITDA was these most originally near $XX

We on discipline focus continue the to business implementation revenue to and trajectories. more margin and and predictable returning operational

QX stronger QX growth adjusted EBITDA versus posted and Transportation Our XXXX. year-over-year results revenue a

Let's the flow. and now cash balance and X to sheet Slide discuss turn

liquidity available the million $XXX the sheet, position billion facility ended with strong with total on $X.X balance remains credit our is credit cash We and total facility. cash unused. a completely combined $XXX Our in and revolving almost million year of revolving

X which net our Our X.Xx, to within ratio was range leverage is X.Xx. of

of the tax to refund and repayments XXXX. million the expenditure programs. We to in in continue we guide to of of dated, revised significant revenue, capital the lower year debt $XX opportunities have of until only long related quarter find our no the for end on are and X.X% maturities drive Capital efficiencies than our was XXXX. $X investment XXXX capital federal debt Our spend, fourth received we million

remainder of received the now first have the in quarter We XXXX.

of modified refund. guide full for Our that the tax full year receipt contemplated

free we shares. the average $XX year, adjusted And offsets approximately end year authority. Our of from price some QX full modified of the quarter of have $X. the $XX other line million timing repurchased in was that remaining million with our approximately of during shares is existing million as items. We approximately million cash to the an $XX at There purchased X.X repurchase under about million in broadly guide for some flow due X.X share favorable

spend Slide talk to previously our for capital our about means interlock and Before the into guidance, exit few approach we specifically work and about a we around move me minutes that XXXX. the to it for outlining XXXX in that discussed for XX and we let talk and what rate gave how you outlines deployable an business the divestiture year

received the million is a key framework of the capital fourth potentially move of our that last will associated our that updated of of proceeds convey that we in businesses the $XX we businesses, of that presentation. In provide sale our into of generate $X will Public $XXX pretax portfolio Curbside $XX during deployable on out continue we track by to million BenefitWallet well view As to of we briefing, the the end and to the execute of laid in and quarter financial will I of in to pretax half signed quarter business as we believe to of impacts related March $X with be will announced the XXXX on approximately in Curbside approximately to million deliver capital deployable sales the million currently $XXX proceeds I investor Safety divestitures Public as X Safety million of announced of million are leased business. Note XXXX, The and want slightly XXXX. others. third proceeds, and the that of first of generate the the walk later the I'll sale and have for XXXX. that the $XX million assets removing liabilities message the the

of expect is during close not to the we timing certain, do XXXX. first While both half

impact As part which XXXX. to latter on mentioned continue work also of earlier, could opportunities, the other we

the and expecting to and takes to X those impact of I'll by the outlook show follows: forma a sign provide effects expectations XXXX. I'll signed guiding a divestitures Our within therefore to some laying out segments for those businesses like-for-like for and we've we be without as the rate removing is are in we've and compared year pro currently these our close divestitures, XXXX then of in as the walk in to XXXX. XXXX well explain expected to approach start our of as exit just our giving thereby a you the I'll results Conduent puts going larger closed.

see we excess the objective investor assets, that focused deploy remains same the within walk $X outlined briefing our stated to as billion, approximately billion last $X into in from still as You'll more of of to narrow that freeing range and our broadly Conduent up priorities. of at revenue against and generating allocation capital March we're a portfolio

get into XXXX of range, midpoint we Overall, revenues would let's in range the a Slide decline billion. X%. billion on year-over-year First, be in expect this XX. of the the adjusted to this of around $X.X to At represent $X.X content

long-anticipated Transportation XXXX, in large driven approximately pricing of grow of U.S. scope from expect offset Victoria X and X% contract, state We clients. the by by to the change transit segment our a partially

couple Commercial as industries, geographic well some related logistics between decisions space X% business and travel, to the the their and as in to client X% uncertainty CX certain down expect including of be We to a segment in due volumes in of mix telecom.

pressures some similar we macro of saw anticipating to a continuation our peers. we're the of last of Here, level year,

the is segments. pipeline the the quite because backlog segment X but half of into XXXX, not of than sales year is improving, as strong here lighter Commercial revenue other in heading quicker in and typically ramps first Our the XXXX

insofar changes impact Finally, not the assumed BenefitWallet business. interest within guide rate the we have this as any Fed

we Lastly, of X% be and here. between expect down the a segment Government couple drivers X%. There to are

to scope loss basis of minimally, significant anticipating XXX We or in government care a unrelated performance are points health reduction decline. or represents This the our delay contract. in

headwinds programs anticipating programs funding to now Government summer state certain in mechanism federal as changed is incremental XXXX, funding with states has Services our split between This business reevaluate volume and we're priorities. these for EBT Additionally, in causing some sources. against other the

of to it XXXX we revenue half of of front terms similar in terms between half see being the back in In the very and XXXX, pacing year. weighting the of

reminder, impact client of is usually QX slightly a As the larger X% period the health EBITDA this of than in vendor. benefit our because mentioned the related care of to base. In expect legal as enrollment adjusted as on drivers of a takes range the within higher X%. million The QX $X open XXXX, legacy year-over-year to well we the and year revenue outlook of transitioning puts million another nonrecurring to in be margin a from of the to reversal of EBITDA of impact IT reserves settlement as impact prior IT as $XX away previously relating favorable expense nonrecurring our well are a

of that cash timing to we the expect items is X% quarter adjusted adjusted Transportation of We implementation also XXXX. activity into incremental with remainder pulled EBITDA related a portion convert but the tax of to offset XX%, and flow to refund the free the other of XXXX inclusive segment, collections within which fourth the to of range in

being CapEx substantial expect The a to XXXX. approximately charges to compared million, restructuring be be $XX as million. approximately reduction latter We and to $XXX

XXXX. year small which are adjusted a of discrete expect EBITDA divestiture we quarter, Based be X%. expectations first to terms expect in be and In below fragment outlook for some items down our we range. X% of That in QX, between revenue the only anticipating on to full impact have our for concludes our we margin it, will the guided

a to walk about forma Let's exit fits that how now pro rate. into our talk XXXX

the plan message generate $XXX $XXX half divestitures want of XX. the track deployable and roughly and XXX% a I our program divestiture $XXX is after-tax current Turning generating approximately expect of with million XXXX. to of are to net $X have is of on end of key The of billion our we we leave This million from million to to of still that market Slide through capital X range capitalization. With you million close proceeds, from total $XXX increased to to to range XXXX, proceeds million. the first $XXX in announced

being comes Segment in growth transactions in proceeds other with anticipate will position of and of marketed represents half of the a intact remain launched in stated, in To handful revenue the revenue. and generating be XXXX repurchase range. This to our generate an through less in us as second this change the a deployed total XXXX within increase we will slight have we have rates and billion of new expect businesses. date, net of exit this million we this share QX that We mix $XX for only remaining and still close capital of organization excess XXXX, program capital deploy. X% previously $X than

in walk divestitures XXXX how impacts XXXX we and the expenditure the margin, on an let's Slide XX you section, revenue, Finally, and my off into rate capital view result to roll outlook of show the in and these metrics. exit on hydraulics business other saw of the

now Slide XX. turn to Let's

on details, orient Before get we just this slide. the I'll into you

announced The first of other would both next is close we discussed to and that divestiture The we anticipated Slide on XXXX. transactions outlook and column the XXXX impacts program, the XX. that the sign during depicts expect column

last outlined that, XXXX. of On X last approximately similar XXXX of number from off signed XXXX. includes against remove This divestiture million in proceeds will that XXXX our the to which pro briefing. Starting would comes the revenue the Achieving stated range be is and column that investor and forma, announced, transactions revenue actions and million we net planning for $XXX $XXX a approximately previously The EBITDA the and at financial the with assumptions Xx adjusted years. results impact both are BenefitWallet a around here similar say, contemplated XX%. This of of, divestiture EBITDA of adjusted divestitures, outsized aggregate to an of all both the This transacting currently margin XX%, interest more EBITDA. for multiple in program XXx approximately transaction. signed long-run of EBITDA margin planned again, the approximately includes from at an at X.X%, margin are adjusted what the divestitures transacting of compare March a adjusted multiple column. environment aggregate our Against of the the Following we exit business the normalized EBITDA. rate rate closer for adjusted is of from

of the at costs EBITDA addressed approximately some will divested include Looking this successful the in enter page, we the that stranded of the noted $XX respective other earlier. assumptions agreements nature of included the numbers million of and after our transition is of the annualized transactions the into on will the assets. be to buyers close margins that with Timing transition of businesses length the realization support on depend we and service

tranches, at XXXX, to transactions of in first BenefitWallet very with concluding assets the quarter. quarter end beginning in announced first the X in and the second the the expect the We transitioning half close of

into column this multiple proceeds range outlined Slide parts transactions proceeds million, slide, after-tax and the these the in noted the I that to net approximately are we As have second announced of $XXX of for XX. on get

of to X% to remaining between we the as the achieve X%. growth will XXXX for rate expectation begin revenue X% X% XXXX is of and Our organization progress exit growth that towards

on close focused this retention, focus are our sales a value, continued further at client With assets, confident we contract current sits highest of ever. total to can more billion pipeline enhanced of $XX growth. portfolio achieve we Our in

be which parts. series margin an expect multiple XXX We and EBITDA margin basis levers, expansion will a again, have expansion for through between adjusted of points of achieved we XXX

targeting intensity. a central are facilities combination of we rightsize from briefing $XX we savings technology streamline agile, result footprints. Consistent the combined March, a and will annualized concludes and with we themes more higher-growth our achieve cost to remain laid our of transactions across company for closing We and more actions and capital continue the portfolio XXXX with signed. That you, planned and of provide costs, transaction to we we portfolio closer impact focused results a back journey to full the the And a organization million the out to continue QX to XXXX and the our get with as hand we'll along Additionally, this, last closing investor less path update comments. the expect to that on further of as updates in it efficiencies year the in financial I'll my believe rationalization, review and rationalization. Cliff,

Giles Goodburn	executive
Clifford Skelton	executive
Stephen Wood	executive

Conduent (CNDT) 14 Feb 242023 Q4 Earnings call transcript