Conduent (NASDAQ: CNDT), a global technology-led business process
solutions company, today announced its second quarter 2023
financial results.
Cliff Skelton, Conduent President and Chief Executive Officer
stated, “Our Q2 performance exceeded our expectations especially
with respect to Revenue, EBITDA, Net ARR and New Business signings.
Q2 included a large new logo win in Transportation, allowing us to
record the highest quarter in New Business TCV and ACV since Q4
2017. As an example of our non-financial success in Q2, we are
proud to be recognized again, but now globally, as one of
Newsweek’s Top 100 Global Most Loved Workplaces for 2023.
Reflecting on our March 2023 Investor Presentation, we announced
several key pillars for success as we execute toward our medium
term strategic and financial objectives. First, we described a
portfolio rationalization effort as a next step. That program is
now in full swing. Second, we said that a key growth area was our
Government Healthcare Business, specifically our MMIS Cloud-enabled
offering. We are proud to now be underway on several
implementations, including our largest deal to date, the State of
Texas, and are in contract negotiations with another large state
program. That pipeline remains strong. Finally, we described our
opportunities in Digital Payments — specifically real-time
payments. We are now the first and only BPO provider to process
transactions through the recently announced US Federal Reserve’s
FedNowSM Service. We are in full execution mode with the
commitments we made in March, allowing us to be a more agile and
focused provider.”
Key Financial Q2 2023 Results
($ in millions, except margin and per share
data) |
Q2 2023 |
Q2 2022 |
Current Quarter Y/Y B/(W) |
Revenue |
$915 |
$928 |
(1.4)% |
Adjusted Revenue(1) |
$915 |
$928 |
(1.4)% |
GAAP Net Income (Loss) |
$(7) |
$— |
n/m |
Adjusted EBITDA(1) |
$93 |
$87 |
6.9% |
Adjusted EBITDA Margin (1) |
10.2% |
9.4% |
80 bps |
GAAP Income (Loss) Before Income Tax |
$(7) |
$5 |
(240)% |
GAAP Diluted EPS |
$(0.04) |
$(0.01) |
(300)% |
Adjusted Diluted EPS(1) |
$0.01 |
$0.03 |
(67)% |
Cash Flow from Operating Activities |
$(10) |
$(16) |
38% |
Adjusted Free Cash Flow(1) |
$(26) |
$(31) |
16% |
Performance CommentaryACV of $208M and TCV of
$1,361M were driven by the $1 billion TCV signing with the State of
Victoria, Australia in our Transportation segment.
Both client retention and strong sales had a positive impact on
our Net ARR Metric at $137M for Q2 2023, up 31% versus the prior
year, and up 26% sequentially.
Revenue and Adjusted Revenue for Q2 2023 were ahead of
expectations. Commercial volumes were impacted by softness in
certain industries in our client base, while increased interest
rates positively impacted our BenefitWallet business.
Pre-tax income (loss) was $(7)M versus $5M in the prior year
period.
Adjusted EBITDA of $93M and Adjusted EBITDA Margin of 10.2% were
also ahead of expectations, and higher than the prior year
period.
Conduent's $1.1 billion total liquidity position remains strong
with long dated debt maturities and a modest net leverage
ratio.
In the quarter we repurchased 266,765 shares in connection with
our previously announced shared repurchase program.
Q2 2023 HighlightsConduent achieved several
milestones in technology-led solutions, operational excellence and
culture, including:
- Became first BPS provider to offer U.S.
Federal Reserve's FedNowSM Service for instant payments;
- Selected to implement new transit
ticketing system in Victoria, Australia;
- Introduced Rapid Assistance Solution to
help agencies expedite disbursement of emergency relief funds;
- Broadened Healthcare Payer portfolio
with new innovative AI-driven provider data management
solution;
- Named as a Leader in Healthcare Payer
Operational Transformation by NelsonHall;
- Demonstrated commitment to ESG through
updated report including SASB and TCFD disclosures;
- Recognized by Forbes as one of
America’s Best 500 Employers for Diversity for the third year in a
row;
- Named to Newsweek's Top 100 Global Most
Loved Workplaces 2023; and
- Recognized as Best Place to Work for
Disability Inclusion for the second consecutive year.
FY 2023 Outlook(4)
|
FY 2022 Actuals |
FY 2023
Outlook(4) |
|
|
|
Adj. Revenue(1) |
$3,851M |
$3,700M - $3,800M |
|
|
|
Adj. EBITDA(1) / Adj.
EBITDA Margin(1) |
$394M / 10.2% |
10.0% - 10.8% |
|
|
|
Adj. Free Cash Flow(2) as
% of Adj. EBITDA(1) |
1.5%(3) |
15% - 20%(3) |
(1) Refer to Appendix for definition and complete Non-GAAP
reconciliations of Adjusted Revenue, Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted Diluted EPS and Adjusted Free Cash Flow.(2)
Refer to Appendix for definition.(3) Normalized for the impact of
payment of deferred payroll taxes primarily related to the CARES
Act of $27M in 2022, Adjusted Free Cash Flow as a percentage of
Adjusted EBITDA is approximately 8% in 2022. Adjusted Free Cash
Flow for 2023 includes an outstanding US Federal tax refund of $29M
expected to be received in 2023.(4) Refer to Appendix for
additional information regarding Non-GAAP Outlook.
Conference CallManagement will present the
results during a conference call and webcast on August 2, 2023
at 9:00 a.m. ET.
The call will be available by live audio webcast along with the
news release and online presentation slides at
https://investor.conduent.com/.
The conference call will also be available by calling
877-407-4019 toll-free. If requested, the conference ID for this
call is 13739455.
The international dial-in is 1-201-689-8337. The international
conference ID is also 13739455.A recording of the conference call
will be available by calling 1-877-660-6853 three hours after the
conference call concludes. The replay ID is 13739455.
The telephone recording will be available until August 16,
2023.
About ConduentConduent delivers digital
business solutions and services spanning the commercial, government
and transportation spectrum – creating exceptional outcomes for its
clients and the millions of people who count on them. The Company
leverages cloud computing, artificial intelligence, machine
learning, automation and advanced analytics to deliver
mission-critical solutions. Through a dedicated global team of
approximately 60,000 associates, process expertise, and advanced
technologies, Conduent’s solutions and services digitally transform
its clients’ operations to enhance customer experiences, improve
performance, increase efficiencies and reduce costs. Conduent adds
momentum to its clients’ missions in many ways including delivering
43 percent of nutrition assistance payments in the U.S., enabling
1.3 billion customer service interactions annually, empowering
millions of employees through HR services every year and processing
nearly 12 million tolling transactions every day. Learn more at
www.conduent.com.
Non-GAAP Financial MeasuresWe have reported our
financial results in accordance with U.S. generally accepted
accounting principles (U.S. GAAP). In addition, we have discussed
our financial results using non-GAAP measures. We believe these
non-GAAP measures allow investors to better understand the trends
in our business and to better understand and compare our results.
Accordingly, we believe it is necessary to adjust several reported
amounts, determined in accordance with U.S. GAAP, to exclude the
effects of certain items as well as their related tax effects.
Management believes that these non-GAAP financial measures provide
an additional means of analyzing the results of the current period
against the corresponding prior period. However, these non-GAAP
financial measures should be viewed in addition to, and not as a
substitute for, our reported results prepared in accordance with
U.S. GAAP. Our non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable U.S. GAAP
measures and should be read only in conjunction with our
Consolidated Financial Statements prepared in accordance with U.S.
GAAP. Our management regularly uses our non-GAAP financial measures
internally to understand, manage and evaluate our business and make
operating decisions. Providing such non-GAAP financial measures to
investors allows for a further level of transparency as to how
management reviews and evaluates our business results and trends.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. Compensation
of our executives is based in part on the performance of our
business based on certain of these non-GAAP measures. Refer to the
"Non-GAAP Financial Measures" section attached to this release for
a discussion of these non-GAAP measures and their reconciliation to
the reported U.S. GAAP measures.
Forward-Looking Statements
This release and any attachments to this release may contain
"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,” “forecast,” “target,” “may,” "continue to," "if,”
“growing,” “projected,” “potential,” “likely,” "see," "ahead,"
"further," "going forward," "on the horizon," and similar
expressions, as they relate to us, are intended to identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. All statements other
than statements of historical fact included in this press release
are forward-looking statements, including, but not limited to,
statements regarding our financial results, condition and outlook;
changes in our operating results; general market and economic
conditions; our pipeline remaining strong; our belief that our
partnership with BNY Melon to initiate transactions through the
recently announced FedNowSM Service utilizing our Integrated
Payments Hub will provide breakthrough real time payments and
distribution capabilities for our clients, their end users and
future potential clients; our continued focus on shareholders,
clients and our associates; our long-term game plan; and our
projected financial performance for the full year 2023, including
all statements made under the section captioned “FY 2023 Outlook”
within this release. These statements reflect our current views
with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expressed
or implied herein as anticipated, believed, estimated, expected or
intended or using other similar expressions.
In accordance with the provisions of the Litigation Reform Act,
we are making investors aware that such forward-looking statements,
because they relate to future events, are by their very nature
subject to many important factors and uncertainties that could
cause actual results to differ materially from those contemplated
by the forward-looking statements contained in this press release,
any exhibits to this press release and other public statements we
make. Our actual results may vary materially from those expressed
or implied in our forward-looking statements.
Important factors and uncertainties that could cause our actual
results to differ materially from those in our forward-looking
statements include, but are not limited to: government
appropriations and termination rights contained in our government
contracts; our ability to renew commercial and government
contracts, including contracts awarded through competitive bidding
processes; our ability to recover capital and other investments in
connection with our contracts; our reliance on third-party
providers; risk and impact of geopolitical events and increasing
geopolitical tensions (such as the war in Ukraine), macroeconomic
conditions, natural disasters and other factors (such as pandemics,
including coronavirus) in a particular country or region on our
workforce, customers and vendors; conditions abroad, including
local economics, political environments, fluctuating foreign
currencies and shifting regulatory schemes; relying on third party
providers; our ability to deliver on our contractual obligations
properly and on time; changes in interest in outsourced business
process services; claims of infringement of third-party
intellectual property rights; our ability to estimate the scope of
work or the costs of performance in our contracts; the loss of key
senior management and our ability to attract and retain necessary
technical personnel and qualified subcontractors; our failure to
develop new service offerings and protect our intellectual property
rights; our ability to modernize our information technology
infrastructure and consolidate data centers; the continuing effects
of the COVID-19 pandemic on our business, operations, financial
results and financial condition, which is dependent on developments
which are uncertain and cannot be predicted; expectations relating
to environmental, social and governance considerations expose us to
potential liabilities, increased costs, reputational harm, and
other adverse effects on our business; we cannot guarantee that our
stock repurchase program will be utilized to the full value
approved or that it will enhance long-term stockholder value and
repurchases we consummate could increase the volatility of the
price of our common stock and could have a negative impact on our
available cash balance; the failure to comply with laws relating to
individually identifiable information and personal health
information; the failure to comply with laws relating to processing
certain financial transactions, including payment card transactions
and debit or credit card transactions; breaches of our information
systems or security systems or any service interruptions; our
ability to comply with data security standards; developments in
various contingent liabilities that are not reflected on our
balance sheet, including those arising as a result of being
involved in a variety of claims, lawsuits, investigations and
proceedings; changes in tax and other laws and regulations; risk
and impact of potential goodwill and other asset impairments; our
significant indebtedness and the terms of such indebtedness; our
failure to obtain or maintain a satisfactory credit rating and
financial performance; our ability to receive dividends or other
payments from our subsidiaries; our ability to obtain adequate
pricing for our services and to improve our cost structure; our
ability to collect our receivables, including those for unbilled
services; a decline in revenues from, or a loss of, or a reduction
in business from or failure of significant clients; fluctuations in
our non-recurring revenue; increases in the cost of voice and data
services or significant interruptions in such services; changes in
government regulation and economic, strategic, political and social
conditions; volatility of our stock price and the risk of
litigation following a decline in the price of our stock; economic
factors such as inflation, the level of economic activity and labor
market conditions, as well as rising interest rates; and other
factors that are set forth in the “Risk Factors” section, the
“Legal Proceedings” section, the “Management's Discussion and
Analysis of Financial Condition and Results of Operations” section
and other sections in our 2022 Annual Report on Form 10-K, as well
as in our Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K filed with or furnished to the Securities and Exchange
Commission. Any forward-looking statements made by us in this
release speak only as of the date on which they are made. We are
under no obligation to, and expressly disclaim any obligation to,
update or alter our forward-looking statements, whether because of
new information, subsequent events or otherwise except as required
by law.
Media Contacts:Sean Collins, Conduent,
+1-310-497-9205, sean.collins2@conduent.com
Investor Contacts:Giles Goodburn, Conduent,
+1-203-216-3546, ir@conduent.com
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions, except per share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
915 |
|
|
$ |
928 |
|
|
$ |
1,837 |
|
|
$ |
1,895 |
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
Cost of services (excluding depreciation and amortization) |
|
|
704 |
|
|
|
727 |
|
|
|
1,424 |
|
|
|
1,482 |
|
Selling, general and administrative (excluding depreciation and
amortization) |
|
|
118 |
|
|
|
113 |
|
|
|
229 |
|
|
|
215 |
|
Research and development (excluding depreciation and
amortization) |
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
3 |
|
Depreciation and amortization |
|
|
57 |
|
|
|
53 |
|
|
|
118 |
|
|
|
114 |
|
Restructuring and related costs |
|
|
13 |
|
|
|
11 |
|
|
|
42 |
|
|
|
20 |
|
Interest expense |
|
|
27 |
|
|
|
18 |
|
|
|
54 |
|
|
|
37 |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
|
|
(160 |
) |
Litigation settlements (recoveries), net |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(22 |
) |
|
|
(31 |
) |
Other (income) expenses, net |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
Total Operating Costs and Expenses |
|
|
922 |
|
|
|
923 |
|
|
|
1,852 |
|
|
|
1,680 |
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
|
(7 |
) |
|
|
5 |
|
|
|
(15 |
) |
|
|
215 |
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
— |
|
|
|
5 |
|
|
|
(2 |
) |
|
|
79 |
|
Net Income (Loss) |
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
(13 |
) |
|
$ |
136 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.61 |
|
Diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.60 |
|
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) (UNAUDITED) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Income (Loss) |
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
(13 |
) |
|
$ |
136 |
|
Other Comprehensive Income (Loss),
Net(1) |
|
|
|
|
|
|
|
|
Currency translation adjustments, net |
|
|
4 |
|
|
|
(40 |
) |
|
|
21 |
|
|
|
(45 |
) |
Unrecognized gains (losses), net |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
Other Comprehensive Income (Loss), Net |
|
|
4 |
|
|
|
(40 |
) |
|
|
22 |
|
|
|
(46 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss), Net |
|
$ |
(3 |
) |
|
$ |
(40 |
) |
|
$ |
9 |
|
|
$ |
90 |
|
__________
(1) All amounts are net of tax. Tax effects were
immaterial.
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
|
(in
millions, except share data in thousands) |
|
June 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
500 |
|
|
$ |
582 |
|
Accounts receivable, net |
|
|
583 |
|
|
|
630 |
|
Contract assets |
|
|
187 |
|
|
|
171 |
|
Other current assets |
|
|
247 |
|
|
|
242 |
|
Total current assets |
|
|
1,517 |
|
|
|
1,625 |
|
Land, buildings and equipment, net |
|
|
252 |
|
|
|
266 |
|
Operating lease right-of-use assets |
|
|
192 |
|
|
|
197 |
|
Intangible assets, net |
|
|
36 |
|
|
|
39 |
|
Goodwill |
|
|
967 |
|
|
|
955 |
|
Other long-term assets |
|
|
489 |
|
|
|
489 |
|
Total Assets |
|
$ |
3,453 |
|
|
$ |
3,571 |
|
Liabilities and Equity |
|
|
|
|
Current portion of long-term debt |
|
$ |
41 |
|
|
$ |
35 |
|
Accounts payable |
|
|
169 |
|
|
|
228 |
|
Accrued compensation and benefits costs |
|
|
180 |
|
|
|
197 |
|
Unearned income |
|
|
80 |
|
|
|
81 |
|
Other current liabilities |
|
|
325 |
|
|
|
382 |
|
Total current liabilities |
|
|
795 |
|
|
|
923 |
|
Long-term debt |
|
|
1,274 |
|
|
|
1,277 |
|
Deferred taxes |
|
|
75 |
|
|
|
83 |
|
Operating lease liabilities |
|
|
159 |
|
|
|
160 |
|
Other long-term liabilities |
|
|
81 |
|
|
|
69 |
|
Total Liabilities |
|
|
2,384 |
|
|
|
2,512 |
|
|
|
|
|
|
Series A convertible preferred stock |
|
|
142 |
|
|
|
142 |
|
|
|
|
|
|
Common stock |
|
|
2 |
|
|
|
2 |
|
Treasury stock, at cost |
|
|
(1 |
) |
|
|
— |
|
Additional paid-in capital |
|
|
3,931 |
|
|
|
3,924 |
|
Retained earnings (deficit) |
|
|
(2,561 |
) |
|
|
(2,543 |
) |
Accumulated other comprehensive loss |
|
|
(444 |
) |
|
|
(466 |
) |
Total Equity |
|
|
927 |
|
|
|
917 |
|
Total Liabilities and Equity |
|
$ |
3,453 |
|
|
$ |
3,571 |
|
|
|
|
|
|
Shares of common stock issued and outstanding |
|
|
218,246 |
|
|
|
218,348 |
|
Shares of series A convertible preferred stock issued and
outstanding |
|
|
120 |
|
|
|
120 |
|
Shares of common stock held in treasury |
|
|
267 |
|
|
|
— |
|
CONDUENT INCORPORATED |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
(13 |
) |
|
$ |
136 |
|
Adjustments required to reconcile net income (loss) to cash flows
from operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
57 |
|
|
|
53 |
|
|
|
118 |
|
|
|
114 |
|
Contract inducement amortization |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
Deferred income taxes |
|
|
(6 |
) |
|
|
1 |
|
|
|
(14 |
) |
|
|
32 |
|
Amortization of debt financing costs |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
(Gain) loss on divestitures and sales of fixed assets, net |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(166 |
) |
Stock-based compensation |
|
|
6 |
|
|
|
7 |
|
|
|
8 |
|
|
|
9 |
|
Changes in operating assets and liabilities |
|
|
(62 |
) |
|
|
(77 |
) |
|
|
(125 |
) |
|
|
(133 |
) |
Net cash provided by (used in) operating activities |
|
|
(10 |
) |
|
|
(16 |
) |
|
|
(22 |
) |
|
|
(5 |
) |
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Cost of additions to land, buildings and equipment |
|
|
(9 |
) |
|
|
(17 |
) |
|
|
(20 |
) |
|
|
(51 |
) |
Cost of additions to internal use software |
|
|
(11 |
) |
|
|
(16 |
) |
|
|
(22 |
) |
|
|
(32 |
) |
Proceeds from divestitures |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
325 |
|
Net cash provided by (used in) investing activities |
|
|
(20 |
) |
|
|
(31 |
) |
|
|
(42 |
) |
|
|
242 |
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Payments on revolving credit facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(100 |
) |
Payments on debt |
|
|
(10 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(16 |
) |
Treasury stock purchases |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Taxes paid for settlement of stock-based compensation |
|
|
1 |
|
|
|
— |
|
|
|
(6 |
) |
|
|
— |
|
Dividends paid on preferred stock |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Net cash provided by (used in) financing activities |
|
|
(13 |
) |
|
|
(11 |
) |
|
|
(32 |
) |
|
|
(121 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
|
1 |
|
|
|
(5 |
) |
|
|
3 |
|
|
|
(6 |
) |
Increase (decrease) in cash, cash equivalents and restricted
cash |
|
|
(42 |
) |
|
|
(63 |
) |
|
|
(93 |
) |
|
|
110 |
|
Cash, Cash Equivalents and Restricted Cash at Beginning of
Period |
|
|
547 |
|
|
|
593 |
|
|
|
598 |
|
|
|
420 |
|
Cash, Cash Equivalents and Restricted Cash at End of
period(1) |
|
$ |
505 |
|
|
$ |
530 |
|
|
$ |
505 |
|
|
$ |
530 |
|
___________
(1) Includes $5 million and $11 million restricted cash as
of June 30, 2023 and 2022, respectively, that were included in
Other current assets on their respective Condensed Consolidated
Balance Sheets.
Appendix
Definitions
Net ARR Activity Metric (TTM)
Projected Annual Recurring Revenue for contracts signed in the
prior 12 months, less the annualized impact of any client losses,
contractual volume and price changes, and other known impacts for
which the company was notified in that same time period, which
could positively or negatively impact results. The metric
annualizes the net impact to revenue. Timing of revenue impact
varies and may not be realized within the forward 12-month
timeframe. The metric is for indicative purposes only. This metric
excludes COVID-related volume impacts and non-recurring revenue
signings. This metric is not indicative of any specific 12 month
timeframe.
New Business Annual Contract Value (ACV): (New
Business TCV / contract term) multiplied by 12.
Non-GAAP Financial Measures
We have reported our financial results in accordance with U.S.
generally accepted accounting principles (U.S. GAAP). In addition,
we have discussed our financial results using non-GAAP
measures.
We believe these non-GAAP measures allow investors to better
understand the trends in our business and to better understand and
compare our results. Accordingly, we believe it is necessary to
adjust several reported amounts, determined in accordance with U.S.
GAAP, to exclude the effects of certain items as well as their
related tax effects. Management believes that these non-GAAP
financial measures provide an additional means of analyzing the
results of the current period against the corresponding prior
period. However, these non-GAAP financial measures should be viewed
in addition to, and not as a substitute for, the Company’s reported
results prepared in accordance with U.S. GAAP. Our non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable U.S. GAAP measures and should be
read only in conjunction with our Consolidated Financial Statements
prepared in accordance with U.S. GAAP. Our management regularly
uses our supplemental non-GAAP financial measures internally to
understand, manage and evaluate our business and make operating
decisions, and providing such non-GAAP financial measures to
investors allows for a further level of transparency as to how
management reviews and evaluates our business results and trends.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. Compensation
of our executives is based in part on the performance of our
business based on certain of these non-GAAP measures.
A reconciliation of the following non-GAAP financial measures to
the most directly comparable financial measures calculated and
presented in accordance with U.S. GAAP are provided below.
These reconciliations also include the income tax effects for
our non-GAAP performance measures in total, to the extent
applicable. The income tax effects are calculated under the same
accounting principles as applied to our reported pre-tax
performance measures under ASC 740, which employs an annual
effective tax rate method. The noted income tax effect for our
non-GAAP performance measures is effectively the difference in
income taxes for reported and adjusted pre-tax income calculated
under the annual effective tax rate method. The tax effect of the
non-GAAP adjustments was calculated based upon evaluation of the
statutory tax treatment and the applicable statutory tax rate in
the jurisdictions in which such charges were incurred.
Adjusted Revenue, Adjusted Net Income (Loss), Adjusted
Diluted Earnings per Share, Adjusted Weighted Average Common Shares
Outstanding, and Adjusted Effective Tax Rate
We make adjustments to Net Income (Loss) before Income Taxes for
the following items, as applicable, to the particular financial
measure, for the purpose of calculating Adjusted Revenue, Adjusted
Net Income (Loss), Adjusted Diluted Earnings per Share, Adjusted
Weighted Average Common Shares Outstanding, and Adjusted Effective
Tax Rate:
- Amortization of acquired intangible assets. The amortization of
acquired intangible assets is driven by acquisition activity, which
can vary in size, nature and timing as compared to other companies
within our industry and from period to period.
- Restructuring and related costs. Restructuring and related
costs include restructuring and asset impairment charges as well as
costs associated with our strategic transformation program.
- Goodwill impairment. This represents goodwill impairment
charges related to the lower than expected new customer contract
signings and an unexpected softening of the future business
pipeline for certain solutions in our Commercial segment.
- (Gain) loss on divestitures and transaction costs. Represents
(gain) loss on divested businesses and transaction costs.
- Litigation settlements (recoveries), net represents settlements
or recoveries for various matters subject to litigation.
- Other charges (credits). This includes Other (income) expenses,
net on the Condensed Consolidated Statements of Income (loss) and
other insignificant (income) expense associated with providing
transition services on the California Medicaid contract loss and
other adjustments.
- Abandonment of Cloud Computing Project. This includes charges
in connection with the abandonment of a cloud computing project.
The costs include writing off previously capitalized costs and
accruing remaining hosting fees that continue to be incurred
without any economic benefit.
- Divestitures. Revenue and Adjusted EBITDA of divested
businesses are excluded.
The Company provides adjusted net income and adjusted EPS
financial measures to assist our investors in evaluating our
ongoing operating performance for the current reporting period and,
where provided, over different reporting periods, by adjusting for
certain items which may be recurring or non-recurring and which in
our view do not necessarily reflect ongoing performance. We also
internally use these measures to assess our operating performance,
both absolutely and in comparison to other companies, and in
evaluating or making selected compensation decisions.
Management believes that the adjusted effective
tax rate, provided as supplemental information, facilitates a
comparison by investors of our actual effective tax rate with an
adjusted effective tax rate which reflects the impact of the items
which are excluded in providing adjusted net income and certain
other identified items, and may provide added insight into our
underlying business results and how effective tax rates impact our
ongoing business.
Adjusted Revenue, Adjusted Operating Income and Adjusted
Operating Margin
We make adjustments to Revenue, Costs and Expenses and Operating
Margin for the following items, as applicable, for the purpose of
calculating Adjusted Revenue, Adjusted Operating Income and
Adjusted Operating Margin:
- Amortization of acquired intangible assets.
- Restructuring and related costs.
- Interest expense. Interest expense includes interest on
long-term debt and amortization of debt issuance costs.
- Goodwill impairment.
- (Gain) loss on divestitures and transaction costs.
- Litigation settlements (recoveries), net.
- Other charges (credits).
- Abandonment of Cloud Computing Project.
- Divestitures.
We provide our investors with adjusted revenue, adjusted
operating income and adjusted operating margin information, as
supplemental information, because we believe it offers added
insight, by itself and for comparability between periods, by
adjusting for certain non-cash items as well as certain other
identified items which we do not believe are indicative of our
ongoing business, and may also provide added insight on trends in
our ongoing business.
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. GAAP financial measures,
provide a more complete understanding of our on-going business.
Adjusted EBITDA represents income (loss) before interest, income
taxes, depreciation and amortization and contract inducement
amortization adjusted for the following items. Adjusted EBITDA
Margin is Adjusted EBITDA divided by revenue or adjusted revenue,
as applicable.
- Restructuring and related costs.
- Goodwill impairment.
- (Gain) loss on divestitures and transaction costs.
- Litigation settlements (recoveries), net.
- Abandonment of Cloud Computing Project.
- Other charges (credits).
- Divestitures.
Adjusted EBITDA is not intended to represent cash flows from
operations, operating income (loss) or net income (loss) as defined
by U.S. GAAP as indicators of operating performance. Management
cautions that amounts presented in accordance with Conduent's
definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be
comparable to similar measures disclosed by other companies because
not all companies calculate Adjusted EBITDA and Adjusted EBITDA
Margin in the same manner.
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, and proceeds from sales of
land, buildings and equipment. We use the non-GAAP measure of Free
Cash Flow as a criterion of liquidity. We use Free Cash Flow as a
measure of liquidity to determine amounts we can reinvest in our
core businesses, such as amounts available to make acquisitions and
invest in land, buildings and equipment and internal use software,
after required payments on debt. In order to provide a meaningful
basis for comparison, we are providing information with respect to
our Free Cash Flow reconciled to cash flow provided by operating
activities, which we believe to be the most directly comparable
measure under U.S. GAAP.
Adjusted Free Cash Flow
Adjusted Free Cash Flow is defined as Free Cash Flow from above
plus adjustments for litigation insurance recoveries, transaction
costs, taxes paid on gains from divestitures and litigation
recoveries, proceeds from failed sale-leaseback transactions and
certain other identified adjustments. We use Adjusted Free Cash
Flow, in addition to Free Cash Flow, to provide supplemental
information to our investors concerning our ability to generate
cash from our ongoing operating activities; by excluding these
items, we believe we provide useful additional information to our
investors to help them further understand our ability to generate
cash period-over-period as well as added information on
comparability to our competitors. Such as with Free Cash Flow
information, as so adjusted, it is specifically not intended to
provide amounts available for discretionary spending. We have added
certain adjustments to account for items which we do not believe
reflect our core business or operating performance, and we computed
all periods with such adjusted costs.
Revenue at Constant Currency
To better understand trends in our business, we believe that it
is helpful to adjust revenue to exclude the impact of changes in
the translation of foreign currencies into U.S. Dollars. We refer
to this adjusted revenue as “constant currency.” Currency impact is
determined as the difference between actual growth rates and
constant currency growth rates. This currency impact is calculated
by translating the current period activity in local currency using
the comparable prior-year period's currency translation rate.
Non-GAAP Outlook
In providing the Full Year 2023 outlook for Adjusted EBITDA we
exclude certain items which are otherwise included in determining
the comparable U.S. GAAP financial measure. A description of
the adjustments which historically have been applicable in
determining Adjusted EBITDA are reflected in the table below. In
addition, for "Full Year 2022 Actuals" we are excluding the impacts
of $7 million of Revenue and $2 million of Adjusted EBITDA related
to the divestiture of the Midas business. We are providing such
outlook only on a non-GAAP basis because the Company is unable
without unreasonable efforts to predict with reasonable certainty
the totality or ultimate outcome or occurrence of these adjustments
for the forward-looking period, which can be dependent on future
events that may not be reliably predicted. Based on past reported
results, where one or more of these items have been applicable,
such excluded items could be material, individually or in the
aggregate, to reported results. We have provided Full Year 2023
outlook for Adjusted revenue only on a non-GAAP basis using foreign
currency translation rates at current period end due to the
inability to, without unreasonable efforts, accurately predict
foreign currency impact on revenues. Full Year 2023 Outlook for
Adjusted Free Cash Flow is provided as a factor of expected
Adjusted EBITDA, and such outlook is only available on a non-GAAP
basis for the reasons described above. For the same reason, we are
unable to provide a GAAP expected adjusted tax rate, which adjusts
for our non-GAAP adjustments.
Non-GAAP Reconciliations:
Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted
Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA
were as follows:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED REVENUE |
|
|
|
|
|
|
|
|
Revenue |
|
$ |
915 |
|
|
$ |
928 |
|
|
$ |
1,837 |
|
|
$ |
1,895 |
|
Adjustment: |
|
|
|
|
|
|
|
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
Adjusted Revenue |
|
|
915 |
|
|
|
928 |
|
|
|
1,837 |
|
|
|
1,888 |
|
Foreign currency impact |
|
|
(1 |
) |
|
|
11 |
|
|
|
2 |
|
|
|
16 |
|
Revenue at Constant Currency |
|
$ |
914 |
|
|
$ |
939 |
|
|
$ |
1,839 |
|
|
$ |
1,904 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME (LOSS) |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
(13 |
) |
|
$ |
136 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets(2) |
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
9 |
|
Restructuring and related costs |
|
|
13 |
|
|
|
11 |
|
|
|
42 |
|
|
|
20 |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
|
|
(160 |
) |
Litigation settlements (recoveries), net |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(22 |
) |
|
|
(31 |
) |
Other charges (credits) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
Total Non-GAAP Adjustments |
|
|
17 |
|
|
|
13 |
|
|
|
28 |
|
|
|
(162 |
) |
Income tax adjustments(3) |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(7 |
) |
|
|
60 |
|
Adjusted Net Income (Loss) |
|
$ |
6 |
|
|
$ |
9 |
|
|
$ |
8 |
|
|
$ |
34 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EFFECTIVE TAX |
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
$ |
(7 |
) |
|
$ |
5 |
|
|
$ |
(15 |
) |
|
$ |
215 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total Non-GAAP Adjustments |
|
|
17 |
|
|
|
13 |
|
|
|
28 |
|
|
|
(162 |
) |
Adjusted PBT Before Adjustment for
Divestitures |
|
|
10 |
|
|
|
18 |
|
|
|
13 |
|
|
|
53 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
Adjusted PBT |
|
$ |
10 |
|
|
$ |
18 |
|
|
$ |
13 |
|
|
$ |
51 |
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
$ |
— |
|
|
$ |
5 |
|
|
$ |
(2 |
) |
|
$ |
79 |
|
Income tax adjustments(3) |
|
|
4 |
|
|
|
4 |
|
|
|
7 |
|
|
|
(60 |
) |
Adjusted Income Tax Expense (Benefit) |
|
|
4 |
|
|
|
9 |
|
|
|
5 |
|
|
|
19 |
|
Adjusted Net Income (Loss) Before Adjustment for
Divestitures |
|
|
6 |
|
|
|
9 |
|
|
|
8 |
|
|
|
34 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
Adjusted Net Income (Loss) |
|
$ |
6 |
|
|
$ |
9 |
|
|
$ |
8 |
|
|
$ |
32 |
|
CONTINUED |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
$ |
(7 |
) |
|
$ |
5 |
|
|
$ |
(15 |
) |
|
$ |
215 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
17 |
|
|
|
13 |
|
|
|
28 |
|
|
|
(162 |
) |
Interest expense |
|
|
27 |
|
|
|
18 |
|
|
|
54 |
|
|
|
37 |
|
Adjusted Operating Income (Loss) Before Adjustment for
Divestitures |
|
|
37 |
|
|
|
36 |
|
|
|
67 |
|
|
|
90 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
Adjusted Operating Income (Loss) |
|
$ |
37 |
|
|
$ |
36 |
|
|
$ |
67 |
|
|
$ |
88 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
(13 |
) |
|
$ |
136 |
|
Income tax expense (benefit) |
|
|
— |
|
|
|
5 |
|
|
|
(2 |
) |
|
|
79 |
|
Depreciation and amortization |
|
|
57 |
|
|
|
53 |
|
|
|
118 |
|
|
|
114 |
|
Contract inducement amortization |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
Interest expense |
|
|
27 |
|
|
|
18 |
|
|
|
54 |
|
|
|
37 |
|
EBITDA Before Adjustment for Divestitures |
|
|
78 |
|
|
|
77 |
|
|
|
159 |
|
|
|
367 |
|
Divestitures(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
EBITDA |
|
|
78 |
|
|
|
77 |
|
|
|
159 |
|
|
|
365 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restructuring and related costs |
|
|
13 |
|
|
|
11 |
|
|
|
42 |
|
|
|
20 |
|
(Gain) loss on divestitures and transaction costs, net |
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
|
|
(160 |
) |
Litigation settlements (recoveries), net |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(22 |
) |
|
|
(31 |
) |
Other charges (credits) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
93 |
|
|
$ |
87 |
|
|
$ |
183 |
|
|
$ |
194 |
|
___________
(1) Adjusted for the full impact from revenue and
income/loss from divestitures for all periods presented.
(2) Included in Depreciation and amortization on the
Consolidated Statements of Income (Loss).
(3) The tax impact of Adjusted Pre-tax income (loss) from
continuing operations was calculated under the same accounting
principles applied to the 'As Reported' pre-tax income (loss),
which employs an annual effective tax rate method to the results
and without regard to the adjustments listed.
Non-GAAP Reconciliations:
Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS,
Adjusted Effective Tax Rate, Adjusted Operating Margin and Adjusted
EBITDA Margin were as follows:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(Amounts are in whole dollars, shares are in thousands and margins
and rates are in %) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
ADJUSTED DILUTED EPS(1) |
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
218,394 |
|
|
|
215,629 |
|
|
|
218,396 |
|
|
|
215,886 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Restricted stock and performance units / shares |
|
|
928 |
|
|
|
3,489 |
|
|
|
805 |
|
|
|
3,241 |
|
Adjusted Weighted Average Common Shares
Outstanding |
|
|
219,322 |
|
|
|
219,118 |
|
|
|
219,201 |
|
|
|
219,127 |
|
|
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations |
|
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.60 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
0.07 |
|
|
|
0.06 |
|
|
|
0.12 |
|
|
|
(0.64 |
) |
Income tax adjustments(2) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
0.27 |
|
Adjusted Diluted EPS |
|
$ |
0.01 |
|
|
$ |
0.03 |
|
|
$ |
0.01 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EFFECTIVE TAX RATE |
|
|
|
|
|
|
|
|
Effective tax rate |
|
(3.3)% |
|
|
99.6 |
% |
|
|
9.2 |
% |
|
|
37.0 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
45.5 |
% |
|
(52.9)% |
|
|
31.3 |
% |
|
(1.8)% |
Adjusted Effective Tax
Rate(2) |
|
|
42.2 |
% |
|
|
46.7 |
% |
|
|
40.5 |
% |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING MARGIN |
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes Margin |
|
(0.8)% |
|
|
0.5 |
% |
|
(0.8)% |
|
|
11.3 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Total non-GAAP adjustments |
|
|
1.8 |
% |
|
|
1.5 |
% |
|
|
1.5 |
% |
|
(8.6)% |
Interest expense |
|
|
3.0 |
% |
|
|
1.9 |
% |
|
|
2.9 |
% |
|
|
2.0 |
% |
Margin for Adjusted Operating Income Before Adjustment for
Divestitures |
|
|
4.0 |
% |
|
|
3.9 |
% |
|
|
3.6 |
% |
|
|
4.7 |
% |
Divestitures(3) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Margin for Adjusted Operating Income |
|
|
4.0 |
% |
|
|
3.9 |
% |
|
|
3.6 |
% |
|
|
4.7 |
% |
ADJUSTED EBITDA MARGIN |
|
|
|
|
|
|
|
|
EBITDA Margin Before Adjustment for Divestitures |
|
8.5 |
% |
|
8.3 |
% |
|
8.7 |
% |
|
19.4 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
Divestitures(3) |
|
— |
% |
|
— |
% |
|
— |
% |
|
(0.1)% |
EBITDA Margin |
|
8.5 |
% |
|
8.3 |
% |
|
8.7 |
% |
|
19.3 |
% |
Total non-GAAP adjustments |
|
1.7 |
% |
|
1.1 |
% |
|
1.3 |
% |
|
(9.1)% |
Divestitures(3) |
|
— |
% |
|
— |
% |
|
— |
% |
|
0.1 |
% |
Adjusted EBITDA Margin Before Adjustment for
Divestitures |
|
10.2 |
% |
|
9.4 |
% |
|
10.0 |
% |
|
10.3 |
% |
Divestitures(3) |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Adjusted EBITDA Margin |
|
10.2 |
% |
|
9.4 |
% |
|
10.0 |
% |
|
10.3 |
% |
__________
(1) Average shares for the 2023 and 2022 calculation of
adjusted EPS excludes 5.4 million shares associated with our Series
A convertible preferred stock and includes the impact of preferred
stock dividend of approximately $3.0 million and $3.0 million for
the three months ended June 30, 2023 and 2022, respectively.
(2) The tax impact of Adjusted Pre-tax income (loss) from
continuing operations was calculated under the same accounting
principles applied to the 'As Reported' pre-tax income (loss),
which employs an annual effective tax rate method to the results
and without regard to the Total Non-GAAP adjustments.
(3) Adjusted for the full impact from revenue and
income/loss from divestitures for all periods
presented.Free Cash Flow and Adjusted Free Cash Flow
Reconciliation:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating Cash Flow |
|
$ |
(10 |
) |
|
$ |
(16 |
) |
|
$ |
(22 |
) |
|
$ |
(5 |
) |
Cost of additions to land, buildings and equipment |
|
|
(9 |
) |
|
|
(17 |
) |
|
|
(20 |
) |
|
|
(51 |
) |
Cost of additions to internal use software |
|
|
(11 |
) |
|
|
(16 |
) |
|
|
(22 |
) |
|
|
(32 |
) |
Free Cash Flow |
|
$ |
(30 |
) |
|
$ |
(49 |
) |
|
$ |
(64 |
) |
|
$ |
(88 |
) |
Free Cash Flow |
|
$ |
(30 |
) |
|
$ |
(49 |
) |
|
$ |
(64 |
) |
|
$ |
(88 |
) |
Transaction costs |
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
3 |
|
Vendor finance lease payments |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(7 |
) |
|
|
(5 |
) |
Portion of Texas litigation settlement (recoveries) recognized in
Litigation settlements (recoveries), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24 |
) |
Tax payment related to divestitures and litigation recoveries |
|
|
5 |
|
|
|
18 |
|
|
|
5 |
|
|
|
18 |
|
Adjusted Free Cash Flow |
|
$ |
(26 |
) |
|
$ |
(31 |
) |
|
$ |
(63 |
) |
|
$ |
(96 |
) |
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