cndt-20240331


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

_______________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-37817

CONDUENT INCORPORATED

(Exact Name of Registrant as specified in its charter)

New York

81-2983623

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

100 Campus Drive,

Suite 200,

Florham Park,

New Jersey

07932

(Address of principal executive offices)

(Zip Code)

(844) 663-2638

(Registrant’s telephone number, including area code)

_________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Small reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒


Class		Outstanding at April 30, 2024
Common Stock,	$0.01 par value	204,583,488


						CNDT Q1 2024 Form 10-Q


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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Form 10-Q") and any exhibits to this Form 10-Q may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act"). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available. The words “anticipate,” “believe,” “estimate,” “expect,” "plan," “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” "continue to," "endeavor," "if,” “growing,” “projected,” “potential,” “likely,” "see," "ahead," "further," "going forward," "on the horizon," and similar expressions (including the negative and plural forms of such words and phrases), 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. These statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, many of which are outside of our control, that could cause actual results to differ materially from those expected or implied by such forward-looking statements and could materially adversely affect our business, financial condition, results of operations, cash flows and liquidity.

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: risks related to pending dispositions, including the transfer of the Company’s BenefitWallet’s HSA, MSA and flexible spending account portfolio (the “BenefitWallet Transfer”) and the sale of the Company’s Curbside Management and Public Safety Solutions businesses, including but not limited to the Company’s ability to realize the benefits anticipated from such transactions, unexpected costs, liabilities or delays in connection with such transactions, and the significant transaction costs associated with such transactions; government appropriations and termination rights contained in our government contracts; the competitiveness of the markets in which we operate and 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; risk and impact of geopolitical events and increasing geopolitical tensions (such as the wars in the Ukraine and Israel), macroeconomic conditions, natural disasters and other factors in a particular country or region on our workforce, customers and vendors; our reliance 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; expectations relating to environmental, social and governance considerations; utilization of our stock repurchase program; 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; risks related to divestitures and acquisitions; 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 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; our ability to receive dividends and other payments from our subsidiaries; 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 of this Form 10-Q as well as in our 2023 Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q and Current Report on Form 8-K filed (or furnished) with the Securities and Exchange Commission (the "SEC"). Any forward-looking statements made by us in this Form 10-Q 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.


						CNDT Q1 2024 Form 10-Q


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CONDUENT INCORPORATED

FORM 10-Q

March 31, 2024

TABLE OF CONTENTS


		Page
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Income (Loss)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Statements of Shareholders' Equity	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20


Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

Part II — Other Information

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures		33

For additional information about Conduent Incorporated and access to our Annual Reports to Shareholders and SEC filings, free of charge, please visit our website at https://investor.conduent.com/. Any information on or linked from the website is not incorporated by reference into this Form 10-Q.


						CNDT Q1 2024 Form 10-Q


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PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)

CONDUENT INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)


	Three Months Ended March 31,
(in millions, except per share data)		2024		2023
Revenue		$	921	$	922

Operating Costs and Expenses
Cost of services (excluding depreciation and amortization)		735		720
Selling, general and administrative (excluding depreciation and amortization)		116		111
Research and development (excluding depreciation and amortization)		2		2
Depreciation and amortization		62		61
Restructuring and related costs		9		29
Interest expense		27		27

(Gain) loss on divestitures and transaction costs, net		(161)		2
Litigation settlements (recoveries), net		4		(21)
Loss on extinguishment of debt		2		—
Other (income) expenses, net		(2)		(1)
Total Operating Costs and Expenses		794		930

Income (Loss) Before Income Taxes		127		(8)

Income tax expense (benefit)		28		(2)
Net Income (Loss)		$	99	$	(6)



Net Income (Loss) per Share:
Basic		$	0.46	$	(0.04)
Diluted		$	0.46	$	(0.04)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


						CNDT Q1 2024 Form 10-Q


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CONDUENT INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended March 31,
(in millions)		2024		2023
Net Income (Loss)		$	99	$	(6)
Other Comprehensive Income (Loss), Net(1)
Currency translation adjustments, net		(11)		17


Unrecognized gains (losses), net		—		1

Other Comprehensive Income (Loss), Net		(11)		18

Comprehensive Income (Loss), Net		$	88	$	12

__________

(1)All amounts are net of tax. Tax effects were immaterial.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


						CNDT Q1 2024 Form 10-Q


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CONDUENT INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in millions, except share data in thousands)	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	415	$	498
Accounts receivable, net	600		559
Assets held for sale	192		180
Contract assets	166		178
Other current assets	216		240
Total current assets	1,589		1,655
Land, buildings and equipment, net	186		197
Operating lease right-of-use assets	188		191
Intangible assets, net	31		32
Goodwill	643		651
Other long-term assets	421		436
Total Assets	$	3,058	$	3,162
Liabilities and Equity
Current portion of long-term debt	$	33	$	34
Accounts payable	167		174
Accrued compensation and benefits costs	175		183
Unearned income	94		91
Liabilities held for sale	56		58
Other current liabilities	324		328
Total current liabilities	849		868
Long-term debt	1,083		1,248
Deferred taxes	43		30
Operating lease liabilities	155		157
Other long-term liabilities	81		84
Total Liabilities	2,211		2,387

Contingencies (See Note 12)
Series A convertible preferred stock	142		142

Common stock	2		2
Treasury stock, at cost	(44)		(27)
Additional paid-in capital	3,941		3,938
Retained earnings (deficit)	(2,752)		(2,849)
Accumulated other comprehensive loss	(446)		(435)
Total Conduent Inc. Equity	701		629
Noncontrolling Interest	4		4
Total Equity	705		633
Total Liabilities and Equity	$	3,058	$	3,162

Shares of common stock issued and outstanding	206,685		211,509
Shares of series A convertible preferred stock issued and outstanding	120		120
Shares of common stock held in treasury	13,665		8,841

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


						CNDT Q1 2024 Form 10-Q


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CONDUENT INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
(in millions)	2024		2023
Cash Flows from Operating Activities:
Net income (loss)	$	99	$	(6)
Adjustments required to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	62		61
Contract inducement amortization	1		1
Deferred income taxes	13		(8)


Amortization of debt financing costs	1		1
Loss on extinguishment of debt	2		—
(Gain) loss on divestitures and sales of fixed assets, net	(164)		—
Stock-based compensation	3		2

Changes in operating assets and liabilities:
Accounts receivable	(52)		42
Other current and long-term assets	(23)		(33)
Accounts payable and accrued compensation and benefits costs	(10)		(65)

Other current and long-term liabilities	(6)		(9)
Net change in income tax assets and liabilities	37		2
Net cash provided by (used in) operating activities	(37)		(12)
Cash Flows from Investing Activities:
Cost of additions to land, buildings and equipment	(13)		(11)

Cost of additions to internal use software	(8)		(11)

Proceeds from divestitures	164		—
Net cash provided by (used in) investing activities	143		(22)
Cash Flows from Financing Activities:


Payments on debt	(175)		(10)


Treasury stock purchases	(17)		—
Taxes paid for settlement of stock-based compensation	(5)		(7)
Dividends paid on preferred stock	(2)		(2)

Net cash provided by (used in) financing activities	(199)		(19)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2)		2
Increase (decrease) in cash, cash equivalents and restricted cash	(95)		(51)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	519		598
Cash, Cash Equivalents and Restricted Cash at End of period(1)	$	424	$	547

___________

(1)Includes $9 million and $21 million of restricted cash as of March 31, 2024 and 2023, respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


						CNDT Q1 2024 Form 10-Q


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CONDUENT INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)


	Three Months Ended March 31, 2024
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		AOCL(1)		Non-controlling Interest		Shareholders' Equity
Balance at December 31, 2023	$	2	$	(27)	$	3,938	$	(2,849)	$	(435)	$	4	$	633
Dividends - preferred stock, $20/share	—		—		—		(2)		—		—		(2)
Stock incentive plans, net	—		—		3		—		—		—		3
Treasury stock purchases	—		(17)		—		—		—		—		(17)

Comprehensive Income (Loss):
Net Income (Loss)	—		—		—		99		—		—		99
Other comprehensive income (loss), net	—		—		—		—		(11)		—		(11)
Total Comprehensive Income (Loss), Net	—		—		—		99		(11)		—		88
Balance at March 31, 2024	$	2	$	(44)	$	3,941	$	(2,752)	$	(446)	$	4	$	705


	Three Months Ended March 31, 2023
(in millions)	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		AOCL(1)		Non-controlling Interest		Shareholders' Equity
Balance at December 31, 2022	$	2	$	—	$	3,924	$	(2,543)	$	(466)	$	—	$	917
Dividends - preferred stock, $20/share	—		—		—		(2)		—		—		(2)
Stock incentive plans, net	—		—		2		—		—		—		2
Treasury stock purchases	—		—		—		—		—		—		—

Comprehensive Income (Loss):
Net Income (Loss)	—		—		—		(6)		—		—		(6)
Other comprehensive income (loss), net	—		—		—		—		18		—		18
Total Comprehensive Income (Loss), Net	—		—		—		(6)		18		—		12
Balance at March 31, 2023	$	2	$	—	$	3,926	$	(2,551)	$	(448)	$	—	$	929

___________

(1)AOCL - Accumulated other comprehensive loss. Refer to Note 11 – Accumulated Other Comprehensive Loss for the components of AOCL.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


						CNDT Q1 2024 Form 10-Q


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Note 1 – Basis of Presentation

References herein to “we,” “us,” “our,” the “Company” and “Conduent” refer to Conduent Incorporated and its consolidated subsidiaries unless the context suggests otherwise.

Description of Business

Conduent Incorporated is a New York corporation, organized in 2016. As a global technology-led company, Conduent delivers digital business solutions and services to streamline and manage enterprise processes on behalf of commercial, government and transportation organizations – creating valuable outcomes for its clients and the millions of people who count on them. Conduent’s solutions combine innovative technology platforms with automation, artificial intelligence, process expertise and services that improve quality, efficiency and productivity. With a dedicated global team of approximately 57,000 associates, Conduent solutions span customer service, business administration and operations, healthcare administration and payment management. Across many industries and government agencies, Conduent reduces costs, improves end-user experiences and enables digital transformation for its global clients.

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The year-end Condensed Consolidated Balance Sheet was derived from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments necessary for a fair statement of the financial position, results of operations and cash flows have been made. These adjustments consist of normal recurring items. The interim results of operations are not necessarily indicative of the results of the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

In the first quarter of 2023, the Company identified an error and recorded an out-of-period adjustment to correct the recognition of revenue on a Government segment contract that originated in 2020 and impacted all quarterly periods through December 31, 2022. This adjustment resulted in a reduction to revenue and income (loss) before income taxes of $7 million and a corresponding decrease to accounts receivable of $1 million and an increase to other current liabilities of $6 million in the first quarter of 2023. The Company evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously issued interim or annual consolidated financial statements and the adjustment is not material to the year ending December 31, 2023.

The Company has evaluated subsequent events through May 2, 2024, and apart from the matters disclosed in Note 5 – Assets/Liabilities Held for Sale and Divestitures, Note 7 – Debt and Note 16 - Subsequent Event, no material subsequent events were identified.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to fair values of financial instruments, goodwill and intangible assets, income taxes and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Summary of Significant Accounting Policies

There have been no changes to the Company's significant accounting policies as described in the Note 1 - Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.


						CNDT Q1 2024 Form 10-Q


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Note 2 – Recent Accounting Pronouncements

The Company's significant accounting policies are described in Note 1 – Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

New Accounting Standards Adopted

The Company has not adopted any new accounting standards in 2024 that had a material impact on its Consolidated Financial Statements.

New Accounting Standards To Be Adopted

Segment Reporting: In November 2023, the Financial Accounting Standards Board ("FASB") issued final guidance that expands reportable segment disclosures, particularly incremental segment expense disclosures. This guidance is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is not early adopting this guidance. The Company is currently in the process of gathering the data required to be disclosed upon adoption. As the guidance is disclosure related, adoption will not have any impact on the Company's Condensed Consolidated Financial Statements.

Income Taxes: In December 2023, the FASB issued final guidance designed to improve income tax disclosures, particularly disclosures around business entities' income tax rate reconciliation and income taxes paid. The guidance requires consistent categories and greater disaggregation of information in the reconciliation of an entity's statutory tax rate to its effective tax rate and information about income taxes paid disaggregated by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024. The Company is not early adopting this guidance. The Company is currently in the process of gathering the data required to be disclosed upon adoption. As the guidance is disclosure related, adoption will not have any impact on the Company's Condensed Consolidated Financial Statements.

Note 3 – Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue by major service offering, the timing of revenue recognition and a reconciliation of the disaggregated revenue by reportable segment. Refer to Note 4 – Segment Reporting for additional information on the Company's reportable segments.


						CNDT Q1 2024 Form 10-Q


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	Three Months Ended March 31,
(in millions)		2024		2023
Commercial:
Customer experience management		$	151	$	177
Business operations solutions		138		135
Healthcare claims and administration solutions		93		90
Human capital solutions		101		106
Total Commercial		483		508
Government:
Government healthcare solutions		153		143
Government services solutions		105		121
Total Government		258		264
Transportation:
Road usage charging & management solutions		67		75
Transit solutions		76		40
Curbside management solutions		19		19
Public safety solutions		17		14
Commercial vehicles		1		2
Total Transportation		180		150




Total Consolidated Revenue		$	921	$	922

Timing of Revenue Recognition:
Point in time		$	31	$	27
Over time		890		895
Total Revenue		$	921	$	922

Contract Balances

The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are the Company’s rights to consideration for services provided when the right is conditioned on something other than passage of time (for example, meeting a milestone for the right to bill under the cost-to-cost measure of progress). Contract assets are transferred to Accounts receivable, net when the rights to consideration become unconditional. Unearned income includes payments received in advance of performance under the contract, which are realized when the associated revenue is recognized under the contract.

The following table provides information about the balances of the Company's contract assets, unearned income and receivables from contracts with customers:


(in millions)	March 31, 2024		December 31, 2023
Contract Assets (Unearned Income)
Current contract assets	$	166	$	178
Long-term contract assets(1)	8		12
Current unearned income	(94)		(91)
Long-term unearned income(2)	(58)		(55)
Net Contract Assets	$	22	$	44
Accounts receivable, net	$	600	$	559

__________

(1)Presented in Other long-term assets in the Condensed Consolidated Balance Sheets.

(2)Presented in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Revenues of $44 million were recognized during the three months ended March 31, 2024 related to the Company's unearned income at December 31, 2023. Revenues of $29 million were recognized during the three months ended March 31, 2023 related to the Company's unearned income at December 31, 2022.


						CNDT Q1 2024 Form 10-Q


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The Company had no material asset impairment charges related to contract assets for the three months ended March 31, 2024 or 2023.

Transaction Price Allocated to the Remaining Performance Obligations

Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied at March 31, 2024 was approximately $1.5 billion. The Company expects to recognize approximately 63% of this revenue over the next two years and the remainder thereafter.

Note 4 – Segment Reporting

The Company's reportable segments correspond to how it organizes and manages the business, as defined by the Company's Chief Executive Officer, who is also the Company's Chief Operating Decision Maker (the "CODM"). The Company's segments involve the delivery of business process solutions on behalf of its clients to improve cost, performance, and end-user experiences.

The Company's financial performance is based on Segment Profit (Loss) for its three reportable segments (Commercial, Government and Transportation), Divestitures and Unallocated Costs. The Company's CODM does not evaluate operating segments using discrete asset information.

Commercial: The Commercial segment provides business process services and customized solutions and services to clients in a variety of industries. Across the Commercial segment, the Company operates on its clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enhance performance for the Company's clients and deliver better experiences for their consumers and employees.

Government: The Government segment provides government-centric business process services to U.S. federal, state and local government agencies and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services. The solutions in this segment help governments provide constituents access and delivery of benefits, respond to changing rules for eligibility and keep pace with increasing citizen expectations.

Transportation: The Transportation segment provides systems, support, and revenue-generating solutions, to government transportation agencies. The Company delivers mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment.

Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to the reportable segments.

Selected financial information for the Company's reportable segments was as follows:


	Three Months Ended March 31,
(in millions)	Commercial		Government		Transportation		Unallocated Costs		Total
2024
Revenue	$	483	$	258	$	180	$	—	$	921
Segment profit (loss)	$	40	$	42	$	(3)	$	(72)	$	7

2023
Revenue	$	508	$	264	$	150	$	—	$	922
Segment profit (loss)	$	35	$	73	$	(8)	$	(70)	$	30


						CNDT Q1 2024 Form 10-Q


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(in millions)	Three Months Ended March 31,
Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss)		2024		2023
Income (Loss) Before Income Taxes		$	127	$	(8)
Reconciling items:
Amortization of acquired intangible assets		1		2
Restructuring and related costs		9		29
Interest expense		27		27

(Gain) loss on divestitures and transaction costs, net		(161)		2
Litigation settlements (recoveries), net		4		(21)
Loss on extinguishment of debt		2		—
Other (income) expenses, net		(2)		(1)
Segment Profit (Loss)		$	7	$	30

Refer to Note 3 – Revenue for additional information on disaggregated revenues of the reportable segments.

Note 5 – Assets/Liabilities Held for Sale and Divestitures

Transfer of BenefitWallet Portfolio

In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement to transfer its BenefitWallet health savings account and medical savings account portfolio (collectively, the "Portfolio") to HealthEquity, Inc. ("HealthEquity") for an aggregate purchase price of $425 million (the "Purchase Price"), subject to customary purchase price adjustments. As of March 31, 2024, there were no asset or liability balances related to the Portfolio that would require disclosure as assets and liabilities held for sale on the Company's Condensed Consolidated Balance Sheet.

The transfer is closing in multiple tranches. The first tranche closed on March 7, 2024 with the Company receiving $164 million as the pro-rata share of the Purchase Price. As there were no assets or liabilities associated with the Portfolio, the Company recorded $164 million of pre-tax gain on this first tranche. During the three months ended March 31, 2024 and 2023, the Portfolio related to this first tranche generated revenue of $8 million and $10 million, respectively. The pre-tax profit, related to this first tranche, excluding unallocated costs, was $6 million and $9 million for the same periods, respectively.

On April 11, 2024, the second tranche closed and the Company received $85 million as the pro-rata share of the Purchase Price. The Company anticipates the third and final tranche will be completed in the second quarter of 2024. During the three months ended March 31, 2024 and 2023, the Portfolio related to the second and third tranches generated revenue of $18 million and $19 million for the same periods, respectively. The pre-tax profit, related to these two tranches, excluding unallocated costs, was $14 million and $16 million for the three months ended March 31, 2024 and 2023, respectively.

Divestiture of Curbside Management and Public Safety Solutions Businesses

In December 2023, the Company signed a definitive agreement to sell its Curbside Management and Public Safety Solutions businesses for $230 million (plus the assumption of certain indebtedness), subject to customary purchase price adjustments. The assets and liabilities of these businesses (collectively referred to as the "Disposal Group") have been reclassified as held for sale and measured at the lower of carrying value or fair value less costs to sell. The Disposal Group is currently reported in the Transportation segment. The Disposal Group generated revenue of $36 million and $33 million for the three months ended March 31, 2024 and 2023, respectively. The pre-tax profit of the Disposal Group, excluding unallocated costs, was $8 million and $5 million for the three months ended March 31, 2024 and 2023, respectively.

On April 30, 2024, Conduent completed the sale. See Note 16 - Subsequent Event for additional information regarding the sale.

The following is a summary of the major categories of assets and liabilities that have been reclassified as held for sale:


						CNDT Q1 2024 Form 10-Q


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(in millions)	March 31, 2024		December 31, 2023
Accounts Receivable, net	$	58	$	49
Other current assets	3		3

Land, building and equipment, net	56		52
Operating lease right-of-use assets	6		6

Goodwill	35		35
Other long-term assets	34		35
Total Assets held for sale	$	192	$	180
Current portion of long-term debt	$	6	$	5
Accounts payable	9		11
Accrued compensation and benefits costs	2		2
Unearned income	4		4
Other current liabilities	10		9
Long-term debt	16		19
Operating lease liabilities	4		4
Other long-term liabilities	5		4
Total Liabilities held for sale	$	56	$	58

Note 6 – Restructuring Programs and Related Costs

The Company engages in a series of restructuring programs related to exiting certain activities, downsizing its employee base, outsourcing certain internal functions and engaging in other actions designed to reduce its cost structure and improve productivity. The implementation of the Company's operational efficiency improvement initiatives has reduced the Company's real estate footprint across all geographies and segments resulting in lease right-of-use asset ("ROU") impairments and other related costs. Also included in Restructuring and related costs are incremental, non-recurring costs related to the consolidation of the Company's data centers, and bringing certain technology functions in-house, which totaled $2 million and $6 million for the three months ended March 31, 2024 and 2023, respectively. Management continues to evaluate the Company's businesses and, in the future, there may be additional provisions for new plan initiatives and/or changes in previously recorded estimates as payments are made, or actions are completed.

Costs associated with restructuring, including employee severance and lease termination costs, are generally recognized when it has been determined that a liability has been incurred, which is generally upon communication to the affected employees or exit from the leased facility. In those geographies where the Company has either a formal severance plan or a history of consistently providing severance benefits representing a substantive plan, it recognizes employee severance costs when they are both probable and reasonably estimable. Asset impairment costs related to the reduction of the Company's real estate footprint include impairment of operating lease ROU assets and associated leasehold improvements.

A summary of the Company's restructuring program activity during the three months ended March 31, 2024 and 2023 is as follows:


(in millions)	Severance and Related Costs		Termination and Other Costs		Asset Impairments		Total
Accrued Balance at December 31, 2023	$	9	$	1	$	—	$	10
Provision	4		4		1		9
Changes in estimates	—		—		—		—
Total Net Current Period Charges(1)	4		4		1		9
Charges against reserve and currency	(7)		(3)		(1)		(11)
Accrued Balance at March 31, 2024	$	6	$	2	$	—	$	8


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(in millions)	Severance and Related Costs		Termination and Other Costs		Asset Impairments		Total
Accrued Balance at December 31, 2022	$	10	$	—	$	—	$	10
Provision	20		7		2		29
Changes in estimates	—		—		—		—
Total Net Current Period Charges(1)	20		7		2		29
Charges against reserve and currency	(8)		(3)		(2)		(13)

Accrued Balance at March 31, 2023	$	22	$	4	$	—	$	26

__________

(1)Represents amounts recognized within the Consolidated Statements of Income (Loss) for the years shown.

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by reportable and non-reportable segment:


	Three Months Ended March 31,
(in millions)		2024		2023
Commercial		$	1	$	20
Government		—		—
Transportation		1		—

Unallocated Costs(1)		7		9
Total Net Restructuring Charges		$	9	$	29

__________

(1)Represents costs related to the consolidation of the Company's data centers, operating lease ROU assets impairment, termination and other costs not allocated to the segments.

Note 7 – Debt

Long-term debt was as follows:


(in millions)	March 31, 2024		December 31, 2023
Term loan A due 2026	$	235	$	238
Term loan B due 2028	339		505
Senior notes due 2029	520		520
Revolving credit facility maturing 2026	—		—
Finance lease obligations	23		22
Other	14		15
Principal debt balance	1,131		1,300
Debt issuance costs and unamortized discounts	(15)		(18)
Less: current maturities	(33)		(34)
Total Long-term Debt	$	1,083	$	1,248

As of March 31, 2024, the Company had no outstanding borrowings under its revolving credit facility (the "Revolver"). However, the Company utilized $2 million of the Revolver to issue letters of credit as of March 31, 2024. The net Revolver available to be drawn upon as of March 31, 2024 was $548 million.

In March 2024, the Company utilized the proceeds from the closing of the first tranche of the BenefitWallet Transfer to voluntarily prepay $164 million of principal of the Senior Secured Term Loan B due 2028 ("Term Loan B") and wrote-off related debt issuance costs of $2 million which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss) for the three months ended March 31, 2024.

In April 2024, the Company voluntarily prepaid $95 million of principal of the Term Loan B and wrote-off related debt issuance costs of $1 million.

At March 31, 2024, the Company was in compliance with all debt covenants related to the borrowings in the table above.


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Note 8 – Financial Instruments

The Company is a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of its business. As a part of the Company's foreign exchange risk management strategy, the Company uses derivative instruments, primarily forward contracts, to hedge the funding of foreign entities which have a non-dollar functional currency, thereby reducing volatility of earnings or protecting fair values of assets and liabilities.

At March 31, 2024 and December 31, 2023, the Company had outstanding forward exchange contracts with gross notional values of $135 million and $148 million, respectively. At March 31, 2024, approximately 68% of these contracts mature within three months, 12% in three to six months, 15% in six to twelve months and 5% in greater than twelve months. Most of these foreign currency derivative contracts are designated as cash flow hedges and did not have a material impact on the Company's balance sheet, income statement or cash flows for the periods presented.

Refer to Note 9 – Fair Value of Financial Assets and Liabilities for additional information regarding the fair value of the Company's foreign exchange forward contracts.

Note 9 – Fair Value of Financial Assets and Liabilities

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows:

Level 1: Fair value is determined using an unadjusted quoted price in an active market for identical assets or liabilities.

Level 2: Fair value is estimated using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

Level 3: Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities.

Summary of Financial Assets and Liabilities Accounted for at Fair Value on a Recurring Basis

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases was Level 2.


(in millions)	March 31, 2024		December 31, 2023
Assets:
Foreign exchange contracts - forward	$	—	$	1
Total Assets	$	—	$	1
Liabilities:
Foreign exchange contracts - forward	$	—	$	—
Total Liabilities	$	—	$	—

Summary of Other Financial Assets and Liabilities

The estimated fair values of other financial assets and liabilities were as follows:


	March 31, 2024				December 31, 2023
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
Long-term debt	$	1,083	$	1,030	$	1,248	$	1,191
Liabilities held for sale	$	56	$	56	$	58	$	58

The fair value amounts for Cash and cash equivalents, Restricted cash, Accounts receivable, net and Short-term debt approximate carrying amounts due to the short-term maturities of these instruments.


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The fair value of Long-term debt was estimated using quoted market prices for identical or similar instruments (Level 2 inputs).

Note 10 – Employee Benefit Plans

The Company has post-retirement pension, savings and investment plans in several countries, including the U.S., India and the Philippines. In many instances, employees participating in defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan. In these plans, employees are permitted to contribute a portion of their salaries and bonuses to the plans. The Company, at its discretion, matches a portion of employee contributions.

The Company recognized an expense related to its defined contribution plans of $4 million and $3 million for the three months ended March 31, 2024 and 2023, respectively. The balance sheet and income statement impacts of any remaining defined benefit plans are immaterial for all periods presented in these Condensed Consolidated Financial Statements.

Note 11 – Accumulated Other Comprehensive Loss (AOCL)

Below are the balances and changes in AOCL(1):


(in millions)	Currency Translation Adjustments		Gains (Losses) on Cash Flow Hedges		Defined Benefit Pension Items		Total
Balance at December 31, 2023	$	(441)	$	2	$	4	$	(435)
Other comprehensive income (loss)	(11)		—		—		(11)


Balance at March 31, 2024	$	(452)	$	2	$	4	$	(446)


(in millions)	Currency Translation Adjustments		Gains (Losses) on Cash Flow Hedges		Defined Benefit Pension Items		Total
Balance at December 31, 2022	$	(472)	$	1	$	5	$	(466)
Other comprehensive income (loss)	17		1		—		18


Balance at March 31, 2023	$	(455)	$	2	$	5	$	(448)

__________

(1)All amounts are net of tax. Tax effects were immaterial.

Note 12 – Contingencies and Litigation

As more fully discussed below, the Company is involved in a variety of claims, lawsuits, investigations and proceedings concerning a variety of matters, including: governmental entity contracting, servicing and procurement law; intellectual property law; employment law; commercial and contracts law; the Employee Retirement Income Security Act ("ERISA"); and other laws and regulations. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing its litigation and regulatory matters using available information. The Company develops its view on estimated losses in consultation with outside counsel handling its defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in the Company's determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts in excess of any accrual for such matter or matters, this could have a material adverse effect on the Company's results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. The Company believes it has recorded adequate provisions for any such matters as of March 31, 2024. Litigation is inherently unpredictable, and it is not possible to predict the ultimate outcome of these matters and such outcome in any such matters could be more than any amounts accrued and could be material to the Company's results of operations, cash flows or financial position in any reporting period.


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Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships with suppliers, customers and non-consolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance under a contract could trigger an obligation of the Company. These potential claims include actions based upon alleged exposures to products, real estate, intellectual property (such as patents), environmental matters and other indemnifications. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the outcome of these claims. However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company's consolidated financial position or liquidity. As of March 31, 2024, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.

Litigation Against the Company

Skyview Capital LLC and Continuum Global Solutions, LLC v. Conduent Business Services, LLC: On February 3, 2020, plaintiffs Skyview LLC ("Skyview") filed a lawsuit in the Superior Court of New York County, New York. The lawsuit relates to the sale of a portion of Conduent Business Service, LLC's ("CBS") select standalone customer care call center business to plaintiffs, which sale closed in February 2019. Under the terms of the sale agreement, CBS received approximately $23 million of notes from plaintiffs (the "Notes"). The lawsuit alleges various causes of action in connection with the acquisition, including: indemnification for breach of representation and warranty; indemnification for breach of contract and fraud. Plaintiffs allege that their obligation to mitigate damages and their contractual right of set-off permits them to withhold and deduct from any amounts that are owed to CBS under the Notes, and plaintiffs seek a judgement that they have no obligation to pay the Notes. On August 20, 2020, CBS filed a counterclaim against Skyview seeking the outstanding balance on the Notes, the amounts owed for the Jamaica deferred closing, and other transition services agreement and late rent payment obligations. CBS also moved to dismiss Skyview’s claims in 2020. In May 2021, the court denied the motion and allowed the claims to proceed. Fact and expert discovery has been concluded and the parties filed summary judgment motions on July 24, 2023. On December 5, 2023, the court heard oral argument on the parties’ cross-motions for summary judgment and rendered its decision on December 8, 2023, finding there are certain material issues of fact that require trial, and also entering partial summary judgment for each side. On January 5, 2024, CBS filed its notice of appeal of the portion of the ruling that did not grant its motion for summary judgment in its entirety and that granted certain limited relief in favor of plaintiffs. On January 23, 2024, Skyview filed its own notice of appeal, challenging the decision granting a portion of CBS’s counterclaims. CBS continues to deny all the plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims and will continue to defend the litigation vigorously. The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.

Other Contingencies

Certain contracts, primarily in the Company's Government and Transportation segments, require the Company to provide a surety bond or a letter of credit as a guarantee of performance. As of March 31, 2024, the Company had $636 million of outstanding surety bonds issued to secure its performance of contractual obligations with its clients and $180 million of outstanding letters of credit issued to secure the Company's performance of contractual obligations to its clients as well as other corporate obligations. In general, the Company would only be liable for these guarantees in the event of default in the Company's performance of its obligations under each contract. The Company believes it has sufficient capacity in the surety markets and liquidity from its cash flow and its various credit arrangements to allow it to respond to future requests for proposals that require such credit support.

Note 13 – Preferred Stock

Series A Preferred Stock

In December 2016, the Company issued 120,000 shares of Series A convertible perpetual preferred stock with an aggregate liquidation preference of $120 million and an initial fair value of $142 million. The convertible preferred stock earns quarterly cash dividends at a rate of 8% per year ($9.6 million per year). Each share of convertible preferred stock is convertible at any time, at the option of the holder, into 44.9438 shares of common stock for a total of 5,393,000 shares (reflecting an initial conversion price of approximately $22.25 per share of common stock), subject to customary anti-dilution adjustments.


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Note 14 – Earnings (Loss) per Share

The Company did not declare any common stock dividends in the periods presented.

The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock:


	Three Months Ended March 31,
(in millions, except per share data in whole dollars and shares in thousands)	2024		2023
Basic Net Earnings (Loss) per Share:
Net Income (Loss)	$	99	$	(6)


Dividend - Preferred Stock	(2)		(2)
Adjusted Net Income (Loss) Available to Common Shareholders - Basic	$	97	$	(8)

Diluted Net Earnings (Loss) per Share:
Net Income (Loss)	$	99	$	(6)


Dividend - Preferred Stock	—		(2)
Adjusted Net Income (Loss) Available to Common Shareholders - Diluted	$	99	$	(8)

Weighted Average Common Shares Outstanding - Basic	209,160		218,410
Common Shares Issuable With Respect To:

Restricted Stock And Performance Units / Shares	1,194		—
8% Convertible Preferred Stock	5,393		—
Weighted Average Common Shares Outstanding - Diluted	215,747		218,410

Net Earnings (Loss) per Share:
Basic	$	0.46	$	(0.04)
Diluted	$	0.46	$	(0.04)

The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive (shares in thousands):
Restricted stock and performance shares/units	7,454		5,574

Convertible preferred stock	—		5,393
Total Anti-Dilutive and Contingently Issuable Securities	7,454		10,967


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Note 15 – Supplementary Financial Information

The components of Other assets and Other liabilities were as follows:


(in millions)	March 31, 2024		December 31, 2023
Other Current Assets
Prepaid expenses	$	91	$	70
Income taxes receivable	8		38
Value-added tax (VAT) receivable	8		8
Restricted cash	9		21


Other	100		103
Total Other Current Assets	$	216	$	240
Other Current Liabilities
Accrued liabilities to vendors	$	180	$	188
Litigation related accruals	10		6
Current operating lease liabilities	54		54
Restructuring liabilities	8		10
Income tax payable	12		1
Other taxes payable	15		19
Accrued interest	14		6
Other	31		44
Total Other Current Liabilities	$	324	$	328
Other Long-term Assets
Internal use software, net	$	138	$	143
Deferred contract costs, net	92		91
Product software, net	86		92

Deferred tax assets	21		21
Other	84		89
Total Other Long-term Assets	$	421	$	436
Other Long-term Liabilities

Income tax liabilities	3		6
Unearned income	58		55

Other	20		23
Total Other Long-term Liabilities	$	81	$	84

Note 16 – Subsequent Event

Certain subsequent event matters have been disclosed in Note 5 – Assets/Liabilities Held for Sale and Divestitures and Note 7 – Debt.

On April 30, 2024, Conduent completed the sale of its Curbside Management and Public Safety Solutions Businesses. The Company received $174 million of cash consideration, a $50 million note receivable payable in one year, and other amounts receivable of $50 million (primarily related to the reimbursement for finance lease liability payoffs and the purchase of certain equipment on the buyer's behalf), which are payable in the fourth quarter of 2024. The sale is subject to customary purchase price adjustments expected to be settled in the fourth quarter of 2024.


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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A is presented in seven sections:

•Overview;

•Financial Information and Analysis of Results of Operations;

•Metrics;

•Capital Resources and Liquidity;

•Critical Accounting Estimates and Policies;

•Recent Accounting Changes; and

•Non-GAAP Financial Measures.

The MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes.

Overview

We deliver digital business solutions and services to streamline and manage enterprise processes on behalf of commercial, government and transportation organizations – creating valuable outcomes for our clients and the millions of people who count on them. Our solutions combine innovative technology platforms with automation, artificial intelligence, process expertise and services that improve quality, efficiency and productivity. With a dedicated global team of approximately 57,000 associates, our solutions span customer service, business administration and operations, healthcare administration and payment management. Across many industries and government agencies, we reduces costs, improves end-user experiences and enables digital transformation for our global clients.

Headquartered in Florham Park, New Jersey, we have operations in 25 countries.

Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate. These three segments are:

•Commercial – Our Commercial segment provides business process solutions and services to clients in a variety of industries. Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enhance performance for our clients and deliver better experiences for their consumers and employees.

•Government – Our Government segment provides government-centric business process services to U.S. federal, state and local government agencies and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services. The solutions in this segment help governments provide constituents access and delivery of benefits, respond to changing rules for eligibility and keep pace with increasing citizen expectations.

•Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions, to government transportation agencies. We deliver mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers and reducing impact on the environment.


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Executive Summary

During the first quarter of 2023, we held an investor briefing to communicate the next chapter in the Conduent journey. Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation. We remain focused on accelerating growth and enhancing value for our stakeholders and intend to achieve this by doubling down on key themes outlined in the March 2023 investor briefing. We also intend to continue our portfolio rationalization strategy, divesting certain solutions which have either scarcity value outside of Conduent or are capital intensive relative to their growth opportunity, and thereby allowing management the bandwidth and increased capital to focus on solutions where we believe we have competitive advantages or higher growth expectations.

We believe this focus on our portfolio rationalization strategy will result in a more nimble and faster growing Conduent with modest levels of net leverage, enhanced valuation, and significant excess capital to be deployed over time.

During 2024 we have achieved the following:

•We continue to make progress with our portfolio rationalization strategy. During the first quarter we closed the first tranche of the BenefitWallet portfolio transfer, representing approximately 40% of the total assets, receiving $164 million as the pro-rata share of the Purchase Price. The second tranche closed in April representing approximately 20% of the total assets, receiving $85 million as the pro-rata share of the Purchase Price. We anticipate the remainder of the portfolio to transfer later in the second quarter. Proceeds from the first and second tranches, plus cash on hand, were used to voluntarily prepay $259 million of the Term Loan B.

•The Curbside Parking and Public Safety Solutions divestiture announced on December 28, 2023 closed on April 30, 2024. We also continue to pursue other divestiture opportunities, each at different stages of the divestiture process.

•Continued our share repurchase program, repurchasing 4.8 million shares of common stock during the quarter.


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Financial Information and Analysis of Results of Operations


	Three Months Ended March 31,				2024 vs. 2023
(in millions)	2024		2023		$ Change		% Change
Revenue	$	921	$	922	$	(1)	—	%

Operating Costs and Expenses
Cost of services (excluding depreciation and amortization)	735		720		15		2	%
Selling, general and administrative (excluding depreciation and amortization)	116		111		5		5	%
Research and development (excluding depreciation and amortization)	2		2		—		—	%
Depreciation and amortization	62		61		1		2	%
Restructuring and related costs	9		29		(20)		(69)	%
Interest expense	27		27		—		—	%

(Gain) loss on divestitures and transaction costs, net	(161)		2		(163)		n/m
Litigation settlements (recoveries), net	4		(21)		25		(119)	%
Loss on extinguishment of debt	2		—		2		n/m
Other (income) expenses, net	(2)		(1)		(1)		n/m
Total Operating Costs and Expenses	794		930		(136)

Income (Loss) Before Income Taxes	127		(8)		135
Income tax expense (benefit)	28		(2)		30
Net Income (Loss)	$	99	$	(6)	$	105

Revenue

Revenue for the three months ended March 31, 2024 was substantially unchanged, compared to the prior year period, with new business ramp including the State of Victoria contract, stronger volumes and operational execution in our Transportation segment, offsetting lost business, lower volumes in our Commercial and Government segments, and the impact of the completion of the first tranche of the BenefitWallet Transfer.

Cost of Services (excluding depreciation and amortization)

Cost of services for the three months ended March 31, 2024 increased, compared to the prior year period, primarily driven by the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year described in Note 16 – Contingencies and Litigation to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

Selling, General and Administrative ("SG&A") (excluding depreciation and amortization)

SG&A for the three months ended March 31, 2024 increased, compared to the prior year period, driven by costs to transition away from a technology vendor.

Depreciation and Amortization

Depreciation and amortization for the three months ended March 31, 2024 was substantially unchanged compared to the prior year period.


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Restructuring and Related Costs

We engage in a series of restructuring programs related to optimizing our employee base, reducing our real estate footprint, exiting certain activities, outsourcing certain internal functions, consolidating our data centers and engaging in other actions designed to reduce our cost structure and improve productivity. The following are the components of our Restructuring and related costs:


	Three Months Ended March 31,
(in millions)		2024		2023
Severance and related costs		$	4	$	20
Data center consolidation costs		1		2
Termination, insourcing and asset impairment costs		4		7
Total net current period charges		9		29
Consulting and other costs(1)		—		—
Restructuring and related costs		$	9	$	29

___________

(1)Represents professional support costs associated with certain strategic transformation programs.

Restructuring and related costs for the three months ended March 31, 2024 decreased compared to the prior year period. The decrease is primarily driven by severance and related costs related to the closure of one of our Commercial segment operations in Europe in the prior year period.

Refer to Note 6 – Restructuring Programs and Related Costs to the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs.

Interest Expense

Interest expense represents interest on long-term debt and the amortization of debt issuance costs. Interest expense for the three months ended March 31, 2024, compared to the prior year period, was substantially unchanged.

(Gain) Loss on Divestitures and Transaction Costs

The completion of the first tranche of the BenefitWallet Transfer in the first quarter of 2024 resulted in a gain of $164 million. Additionally, professional fees and other costs related to certain consummated and non-consummated transactions considered by the Company are included in this financial statement line item for both years.

Litigation Settlements (Recoveries), Net

Litigation settlements (recoveries), net for the three months ended March 31, 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter.

Income Taxes

The effective tax rate for the three months ended March 31, 2024 was 21.9%, compared to 20.8% for the three months ended March 31, 2023. The March 31, 2024 rate approximates the U.S. statutory rate of 21% as incremental tax from geographic mix of income and state taxes was offset by tax benefit from valuation and audit settlement reserve releases. The effective tax rate for the three months ended March 31, 2023 also approximated the U.S. statutory rate.

Excluding the impact of the Benefit Wallet Transfer, restructuring costs, amortization of intangible assets, litigation reserve, audit settlement reserve release, valuation allowance and other discrete tax items, the normalized effective tax rate for the three months ended March 31, 2024 was 22.2%. The normalized effective tax rate for the three months ended March 31, 2023 was 35.0%, primarily due to excluding the impact of restructuring costs, litigation reserve releases, valuation allowance and certain discrete tax items. The normalized effective tax rate for the three months ended March 31, 2024 was lower than the three months ended March 31, 2023 rate due to the geographic mix of income.


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In 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules for a 15% global minimum tax, known as Pillar Two. Pillar Two has now been enacted by approximately 30 countries. This alternative minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the current period. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation. We anticipate further legislative activity and administrative guidance in 2024.

Operations Review of Segment Revenue and Profit

Our financial performance is based on Segment Profit/(Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments:

•Commercial;

•Government; and

•Transportation.

The BenefitWallet and the Curbside Management and Public Safety Solutions businesses are expected to be reclassified to Divestitures from our Commercial and Transportation segments, respectively, beginning in the second quarter of 2024.

Results of financial performance by segment were:


	Three Months Ended March 31,
(in millions)	Commercial			Government			Transportation			Unallocated Costs			Total
2024
Revenue	$	483		$	258		$	180		$	—		$	921
Segment profit (loss)	$	40		$	42		$	(3)		$	(72)		$	7
Segment depreciation and amortization	$	30		$	13		$	11		$	8		$	62
Adjusted EBITDA	$	70		$	55		$	8		$	(64)		$	69

% of Total Revenue	52.5		%	28.0		%	19.5		%	—		%	100.0		%
Adjusted EBITDA Margin	14.5		%	21.3		%	4.4		%	—		%	7.5		%

2023
Revenue	$	508		$	264		$	150		$	—		$	922
Segment profit (loss)	$	35		$	73		$	(8)		$	(70)		$	30
Segment depreciation and amortization	$	30		$	10		$	11		$	9		$	60
Adjusted EBITDA	$	65		$	83		$	3		$	(61)		$	90

% of Total Revenue	55.1		%	28.6		%	16.3		%	—		%	100.0		%
Adjusted EBITDA Margin	12.8		%	31.4		%	2.0		%	—		%	9.8		%


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(in millions)	Three Months Ended March 31,
Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss)		2024		2023
Income (Loss) Before Income Taxes		$	127	$	(8)
Reconciling items:
Amortization of acquired intangible assets		1		2
Restructuring and related costs		9		29
Interest expense		27		27

(Gain) loss on divestitures and transaction costs		(161)		2
Litigation settlements (recoveries)		4		(21)
Loss on extinguishment of debt		2		—
Other (income) expenses, net		(2)		(1)
Segment Profit (Loss)		$	7	$	30
Segment depreciation and amortization (including contract inducements)		$	62	$	60


Adjusted EBITDA		$	69	$	90

Commercial Segment

Revenue

Commercial revenue for the three months ended March 31, 2024 declined compared to the prior year period, driven by lost business across the segment, the impact of the completion of the first tranche of the BenefitWallet portfolio transfer and lower volumes in certain industries of our client base, partially offset by new business ramp.

Segment Profit and Adjusted EBITDA

Commercial segment profit, adjusted EBITDA and adjusted EBITDA margin for the three months ended March 31, 2024 increased compared to the prior year period primarily driven by cost efficiencies, partially offset by the completion of the first tranche of the BenefitWallet Transfer.

Government Segment

Revenue

Government revenue for the three months ended March 31, 2024 decreased, compared to the prior year period, primarily driven by lost business and lower volumes, partially offset by the ramping of new business and a non-repeating item in the prior year.

Segment Profit and Adjusted EBITDA

Government segment profit, adjusted EBITDA and adjusted EBITDA margin for the three months ended March 31, 2024 decreased compared to the prior year period primarily due to the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year and revenue mix.

Transportation Segment

Revenue

Transportation revenue for the three months ended March 31, 2024 increased compared to the prior year period, primarily driven by the ramping of new business, including the State of Victoria contract, higher volumes and less impact from extended implementation timelines compared to the prior year.

Segment Profit and Adjusted EBITDA

Transportation segment profit, adjusted EBITDA and adjusted EBITDA margin for the three months ended March 31, 2024 increased primarily due to the impact of increased revenue and less impact from extended implementation timelines compared to the prior year, partially offset with costs to transition the non-retained portion of a Transit contract.


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Unallocated Costs

Unallocated Costs for the three months ended March 31, 2024 increased slightly compared to the prior year period primarily due to costs to transition away from a technology vendor.

Metrics

We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business. We disclose these metrics to provide transparency in our performance trends. We present certain key metrics, including Signings and Net ARR Activity below.

Signings

Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Total Contract Value ("TCV") is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons are not a good measure of renewal performance. New business Annual Contract Value ("ACV") is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure.

For the three months ended March 31, 2024, the Company signed $99 million of new business ACV.

Signing information for the three months ended March 31, 2024 and 2023 is as follows:


	Three Months Ended March 31,				2024 vs. 2023
($ in millions)	2024(3)		2023(3)		$ Change		% Change
New business ACV	$	99	$	125	$	(26)	(21)	%

New business TCV	$	153	$	244	$	(91)	(37)	%
Renewals TCV	417		390		27		7	%
Total Signings	$	570	$	634	$	(64)	(10)	%

Annual recurring revenue signings(1)	$	33	$	61	$	(28)	(46)	%
Non-recurring revenue signings(2)	$	71	$	67	$	4	6	%

___________

(1)Recurring revenue signings are for new business contracts longer than one year.

(2)Non-recurring revenue signings are for contracts shorter than one year.

(3)Adjusted to remove Midas new business signings.


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The total new business pipeline at the end of March 31, 2024 and 2023 was $24.0 billion and $23.2 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages. This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required.

Net ARR Activity

Net ARR Activity is a metric is defined as 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 non-recurring revenue signings. This metric is not indicative of any specific 12-month timeframe.

The Net ARR activity metric for the trailing twelve months for each of the prior five quarters was as follows:


(in millions)	Net ARR Activity metric
March 31, 2024	$	17
December 31, 2023	62
September 30, 2023	103
June 30, 2023	137
March 31, 2023	108

Capital Resources and Liquidity

As of March 31, 2024 and December 31, 2023, total cash and cash equivalents were $415 million and $498 million, respectively. We also have a $550 million revolving line of credit for our various cash needs, of which $2 million was used for letters of credit. The net amount available to be drawn upon under our revolving line of credit as of March 31, 2024, was $548 million.

As of March 31, 2024, our total principal debt outstanding was $1,131 million, of which $33 million was due within one year. Refer to Note 7 – Debt in the Condensed Consolidated Financial Statements for additional debt information.

To provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements. However, we believe that our cash on hand, projected cash flow from operations, sound balance sheet and our revolving line of credit will continue to provide sufficient financial resources to meet our expected business obligations for at least the next twelve months.

Cash Flow Analysis

The following table summarizes our cash flows, as reported in our Condensed Consolidated Statement of Cash Flows in the accompanying Condensed Consolidated Financial Statements:


	Three Months Ended March 31,
(in millions)	2024		2023		Better (Worse)
Net cash provided by (used in) operating activities	$	(37)	$	(12)	$	(25)
Net cash provided by (used in) investing activities	$	143	$	(22)	165
Net cash provided by (used in) financing activities	$	(199)	$	(19)	(180)

Operating activities

The net increase in cash used in operating activities of $25 million, compared to the prior year period, was primarily related to lower adjusted EBITDA, slightly higher accounts receivable days sales outstanding and lower days payable outstanding. These were partially offset by lower cash income tax payments. In the first quarter of 2024, we had net cash tax refunds of $22 million, primarily due to the receipt of the U.S. federal income tax refund related to tax year 2018.


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Investing activities

Investing cash flow increased by $165 million mainly due to $164 million of proceeds received for the first tranche of the BenefitWallet Transfer.

Financing activities

The increase in cash used in financing activities was mainly driven by the voluntary prepayment of $164 million of debt using the proceeds received for the first tranche of the BenefitWallet Transfer along, with the repurchase of $17 million of treasury stock.

Sales of Accounts Receivable

We have entered into a factoring agreement in the normal course of business as part of our cash and liquidity management, to sell certain accounts receivable without recourse to a third-party financial institution. The transactions under this agreement are treated as sales and are accounted for as reductions in accounts receivable because the agreement transfers effective control over, and risk related to, the receivables to the buyer. Cash proceeds from this arrangement are included in cash flow from operating activities in the Condensed Consolidated Statements of Cash Flows.

The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the three months ended March 31, 2024 and 2023 was $(8) million and $(13) million, respectively.

Material Cash Requirements from Contractual Obligations

The Company believes its balances of cash and cash equivalents, which totaled $415 million as of March 31, 2024, along with cash generated by operations and amounts available for borrowing under its 2021 Revolving Credit Facility, will be sufficient to satisfy its cash requirements over the next 12 months and beyond.

At March 31, 2024, the Company’s material cash requirements include debt, leases and estimated purchase commitments. See Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on our material cash requirements.

Critical Accounting Estimates and Policies

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Condensed Consolidated Financial Statements and notes thereto.

There have been no significant changes during the three months ended March 31, 2024 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Changes

See Note 2 – Recent Accounting Pronouncements for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards.

Non-GAAP Financial Measures

We reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). In addition, within this Form 10-Q Part I Item 2 we have discussed our financial results using non-GAAP measures.


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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 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 non-GAAP financial measures Adjusted EBITDA and EBITDA Margin to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP are provided in the Segment Performance Review above.

Adjusted EBITDA and Adjusted 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 Margin is adjusted EBITDA divided by revenue. Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items:

•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 entering the agreement to transfer the BenefitWallet portfolio.

•(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.

•Loss on extinguishment of debt. This represents write-off of debt issuance costs related to prepayments of debt.

•Other charges (credits). This includes Other (income) expenses, net on the Consolidated Statements of Income (loss) and other insignificant (income) expenses and other adjustments.

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.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in foreign currency exchange rates which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. We may utilize derivative financial instruments to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We also may hedge the cost to fund material non-dollar entities by buying currencies periodically in advance of the funding date. This is accounted for using derivative accounting.


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Recent market and economic events have not caused us to materially modify nor change our financial risk management strategies with respect to our exposures to foreign currency risk. Refer to Note 18 – Financial Instruments in the Condensed Consolidated Financial Statements for additional discussion on our financial risk management.

During the reporting period, there have been no material changes to the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 4 — CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of our principal executive officer and principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms relating to the Company, including our consolidated subsidiaries, and was accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

The information set forth under Note 12 – Contingencies and Litigation in the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference in answer to this Item.

ITEM 1A — RISK FACTORS

Reference is made to the Risk Factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our risk factors as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Sales of Unregistered Securities during the Quarter ended March 31, 2024

During the quarter ended March 31, 2024, the Company did not issue any securities in transactions that were not registered under the Securities Act of 1933, as amended.

(b)Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended March 31, 2024 was as follows:


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Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as a Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions)
January 1-31, 2024	1,534,393	$	3.59	1,534,393	$	43
February 1-29, 2024	1,505,735	3.54		1,505,735	37
March 1-31, 2024	1,783,779	3.32		1,783,779	31
Total	4,823,907	$	3.48	4,823,907	$	31

(1) On May 16, 2023, the Board of Directors authorized a three year share repurchase program, granting approval for the Company to repurchase up to $75 million of its common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

(2) Average share price includes transaction commissions.

ITEM 3 — DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 — MINE SAFETY DISCLOSURES

None.

ITEM 5 — OTHER INFORMATION

10b5-1 Plans

During the three months ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).


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ITEM 6 — EXHIBITS

Incorporated by Reference

Exhibit No.

Description

Filed Herewith

Form

Exhibit No.

Filing Date

2.1

Custodial Transfer and Purchase Agreement, between Conduent Business Services, LLC and HealthEquity, Inc., dated as of September 18, 2023.

8-K

2.1

9/19/2023

3.1

Restated Certificate of Incorporation of Registrant filed with the Department of the State of New York on December 31, 2016.

8-K

3.1

12/23/2016

3.2

Amended and Restated By-Laws of Registrant as amended through October 31, 2023.

10-Q

3.2

11/1/2023

10.1**

Form of Director and Officer Indemnification Agreement.

10-Q

10.1

11/1/2023

10.6(a)(i)**

Form of Restricted Stock Unit Award Agreement 2024 under the 2021 PIP

10.6(a)(ii)**

Form of Performance Stock Unit Award Agreement 2024 (Adjusted Revenue Growth) under the 2021 PIP.

10.6(a)(iii)**

Form of Performance Stock Unit Award Agreement 2024 (rTSR) under the 2021 PIP.

31(a)

Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31(b)

Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).

32*

Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following materials from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in Inline XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Shareholders' Equity and (vi) Notes to Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

————————

* Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of Registrant’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing.

** Indicates management contract or compensatory plan or arrangement.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.