FLORHAM PARK, NJ, May 7, 2020 – Conduent, a business process services and solutions company, today announced its first-quarter 2020 financial results.
Cliff Skelton, Conduent CEO, stated “Throughout this global crisis, we have continued to provide critical services to our clients, while ensuring the health and safety of our associates and keeping our company strong. We have been able to move approximately 75% of our associates to a remote work environment amidst the COVID-19 crisis while meeting very important commitments to our clients and their millions of end-users. In addition, while we are operating in this new hybrid environment, we have been able to implement measures recommended by the CDC and the WHO for those performing essential work in our facilities, while at the same time continuing to deliver at service levels expected by our clients, evidenced by client feedback and our operating performance.” Skelton continued, “Meanwhile, we understand that these are very trying times for many, including our associates who have been exemplary throughout this crisis. We want to extend our best wishes and concerns to our many stakeholders and partners who may have been adversely affected. We remain confident that while likely different, a new and even better horizon is around the corner.”
Q1 2020 Performance Commentary
The Company’s business continuity program enabled teams to respond quickly to COVID-19 impacts and ensure sustained client delivery. However Q1 2020 performance was impacted by COVID-19 with volume reductions in our Transportation, Transaction Processing, and Customer Experience solutions resulting in an approximately $14 million revenue impact. Conduent expects this volume pressure and associated profit impacts to continue in Q2 2020. The Q1 2020 COVID-19 impacts were partially offset by volume increases in the Government Healthcare and Payments businesses and the Company expects these volume tailwinds to continue in Q2 2020 given the scope of the government programs that it supports.
The Company continued to show operational improvement with sustained, meaningful improvement in technology incidents and time to resolution. Conduent is now in the planning stage for migration to the ‘new normal’ operating model, which will allow for maximum workplace flexibility and Real Estate optimization.
Additional highlights from Q1 include strong sales performance with $324 million in new business signings, a 44% increase over Q1 2019, primarily driven by sales to new clients or new capabilities to existing clients.
From a client and partnership point of view, Conduent launched a new COVID-19 version of its Maven disease surveillance and outbreak management platform. Along with hosting partnerships with Amazon Web Services and Microsoft Azure, the platform is being used by public health agencies and could potentially be used by commercial organizations to manage and report on cases and potential exposures of COVID-19. It is also helping these agency professionals save time and resources by streamlining the contact tracing requirements associated with COVID-19.
Conduent is well positioned for improvements in growth, efficiency and quality as the ramp back to normal from the COVID-19 crisis takes place.
Key Financial First Quarter 2020 Results
- Revenue of $1,051 million, down (9.2)% year-over-year.
- Adjusted Revenue, excluding divestitures in Q1 2019, was down (6.3)% year-over-year, or (6.0)%in constant currency.
- Q1 2020 GAAP net loss of $(49) million compared to $(308) million in Q1 2019.
- Adjusted EBITDA, which excludes the impact of divestitures, was $96 million, down year-over-year primarily driven by the decline in revenue, impact of COVID-19 and non-recurring cost items. Adjusted EBITDA margin also excluding divestitures, was 9.1%, down (180) bps year-over-year.
- Pre-tax income was ($51) million compared to ($338) million in Q1 2019.
- Diluted EPS from continuing operations was ($0.24) versus ($1.49) in the same period last year.
- Adjusted diluted EPS from continuing operations was $0.05 compared to $0.14 in Q1 2019.
- Cash outflow from operations was $(192) million during Q1 2020 compared to cash outflows of$(49) million in Q1 2019. Adjusted Free Cash Flow, which excludes the impact of Texas Litigation payment and other adjustments, was an outflow of $(97) million during Q1 2020.
- As a precautionary measure, the Company borrowed $150 million from its revolving credit line in March 2020.
Brian Webb-Walsh, CFO, stated “We ended the quarter with a solid balance sheet and access to additional capital. Our plan is to position the company to weather the current storm, preserve cash, retain clients through improved quality and become more efficient. We are re-focusing our new investment spend this year on projects that drive efficiencies and near-term returns. Our priority is keeping our team safe, while we continue to serve our clients, manage our costs and position Conduent well for the future.”
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