Concentrix Reports Second Quarter 2022 Results

·20 min read
Concentrix
Concentrix

NEWARK, Calif., June 27, 2022 (GLOBE NEWSWIRE) -- Concentrix Corporation (NASDAQ: CNXC), a leading global provider of customer experience (CX) solutions and technology, today announced financial results for the fiscal second quarter ended May 31, 2022.

 

Three Months Ended

 

 

 

May 31, 2022

 

May 31, 2021

 

Change

Revenue ($M)

$

1,568.1

 

 

$

1,369.9

 

 

14.5

%

Operating income ($M)

$

156.9

 

 

$

128.2

 

 

22.4

%

Non-GAAP operating income ($M) (1)

$

212.8

 

 

$

172.1

 

 

23.6

%

Operating margin

 

10.0

%

 

 

9.4

%

 

60 bps

Non-GAAP operating margin (1)

 

13.6

%

 

 

12.6

%

 

100 bps

Net income ($M)

$

113.1

 

 

$

82.9

 

 

36.4

%

Non-GAAP net income ($M) (1)

$

154.8

 

 

$

124.9

 

 

23.9

%

Adjusted EBITDA ($M) (1)

$

249.9

 

 

$

208.3

 

 

20.0

%

Adjusted EBITDA margin (1)

 

15.9

%

 

 

15.2

%

 

70 bps

Diluted earnings per common share

$

2.14

 

 

$

1.57

 

 

36.3

%

Non-GAAP diluted earnings per common share (1)

$

2.93

 

 

$

2.37

 

 

23.6

%

(1) See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.

Second Quarter Fiscal 2022 Highlights:

  • Revenue was $1,568.1 million, up 14.5% from the prior year second quarter, including a 2.7-point negative impact of foreign exchange rates compared with the prior year period, compared with $1,369.9 million in the prior year second quarter, and up 9.4% on an adjusted constant currency basis.

  • Operating income was $156.9 million, or 10.0% of revenue, compared with $128.2 million, or 9.4% of revenue, in the prior year second quarter.

  • Non-GAAP operating income was $212.8 million, or 13.6% of revenue, compared with $172.1 million, or 12.6% of revenue, in the prior year second quarter.

  • Adjusted EBITDA was $249.9 million, or 15.9% of revenue, compared with $208.3 million, or 15.2% of revenue, in the prior year second quarter.

  • Cash flow from operations was $167.5 million in the quarter. Free cash flow for the quarter was $141.7 million.

  • Diluted earnings per common share (“EPS”) was $2.14 compared to $1.57 in the prior year second quarter.

  • Non-GAAP diluted EPS was $2.93 compared to $2.37 in the prior year second quarter.

"We are focused on driving returns for our shareholders by investing to expand the business while executing a balanced approach to capital deployment,” said Chris Caldwell, Concentrix President and CEO. “Our outlook for the balance of the year includes increased foreign currency headwinds with changes in a small portion of our client base looking to move more work offshore. Broad-based strength across the business, strong wins with enterprise and new-economy clients, and a robust pipeline across our strategic verticals keep us confident that we will continue to grow faster than the market while expanding our margins."

Quarterly Dividend and Share Repurchase Program:

  • Concentrix paid a $0.25 per share quarterly dividend on May 10, 2022. The Company’s Board of Directors has declared a quarterly dividend of $0.25 per share payable on August 9, 2022, to shareholders of record at the close of business on July 29, 2022.

  • Concentrix repurchased 0.4 million shares in the second quarter at a cost of $57.8 million under its previously announced share repurchase program. At May 31, 2022, the Company’s remaining share repurchase authorization was $417.1 million.

Third Quarter and Full Year Fiscal 2022 Outlook
The following statements are based on Concentrix’ current expectations for the third quarter and full year fiscal 2022. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, amortization of intangible assets, depreciation, share-based compensation and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

Third Quarter Fiscal 2022 Expectations:

  • Third quarter revenue is expected to be in the range of $1.575 billion to $1.605 billion, up approximately 13% to 15% as reported, including a 3-point negative impact of foreign exchange rates compared with the prior year period. This equates to 7% to 9% growth on an adjusted constant currency basis, which excludes a 9-point positive impact of businesses acquired and divested since the start of the prior year third quarter and the negative impact of foreign exchange rates.

  • Third quarter operating income is expected to be in the range of $161 million to $176 million and non-GAAP operating income is expected to be in the range of $220 million to $235 million.

  • The effective tax rate is expected to approximate 24% to 25%.

Full Year 2022 Expectations:

  • Revenue is expected to be in the range of $6.365 billion to $6.415 billion, up approximately 14% to 15% as reported, including a 3-point negative impact of foreign exchange rates compared with the prior year. This equates to 9% to 10% growth on an adjusted constant currency basis, which excludes an 8-point positive impact of businesses acquired and divested since the start of fiscal year 2021 and the negative impact of foreign exchange rates.

  • Operating income is expected to be in the range of $663 million to $688 million and non-GAAP operating income is expected to be in the range of $890 million to $915 million.

  • The effective tax rate is expected to approximate 24% to 25%.

Conference Call and Webcast
Concentrix will host a conference call for investors to review its second quarter fiscal 2022 results tomorrow morning, Tuesday, June 28, 2022 at 9:00 a.m. (ET)/6:00 a.m. (PT).

The live conference call will be webcast in listen-only mode in the Investor Relations section of the Concentrix website under “Events and Presentations” at https://ir.concentrix.com/events-and-presentations. A replay will also be available on the website following the conference call.

About Concentrix
Concentrix Corporation (Nasdaq: CNXC) is a leading global provider of customer experience (CX) solutions and technology, improving business performance for some of the world’s best brands including over 100 Fortune Global 500 clients and more than 125 new economy clients. Every day, from more than 40 countries and across 6 continents, our staff delivers next generation customer experience and helps companies better connect with their customers. We create better business outcomes and help differentiate our clients by reimagining everything CX through Strategy + Talent + Technology. Concentrix provides services to clients in our key industry verticals: technology & consumer electronics; retail, travel & ecommerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sector. Visit www.concentrix.com to learn more.

Use of Non-GAAP Information
In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including:

  • Constant currency revenue growth, which is revenue growth adjusted for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance. Constant currency revenue growth is calculated by translating the revenue of each fiscal year in the billing currency to U.S. dollars using the comparable prior year’s currency conversion rate in comparison to prior year’s revenue. Generally, when the U.S. dollar either strengthens or weakens against other currencies, revenue growth at constant currency rates or adjusting for currency will be higher or lower than revenue growth reported at actual exchange rates.

  • Adjusted constant currency revenue growth, which is constant currency revenue growth excluding revenue for businesses acquired or divested since the beginning of the prior year period so that revenue growth can be viewed without the impact of acquisitions or divestitures, thereby facilitating period-to-period comparisons of our business performance.

  • Non-GAAP operating income, which is operating income, adjusted to exclude acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, and share-based compensation.

  • Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.

  • Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, which is non-GAAP operating income, as defined above, plus depreciation.

  • Adjusted EBITDA margin, which is adjusted EBITDA, as defined above, divided by revenue.

  • Non-GAAP net income, which is net income excluding the tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, and share-based compensation.

  • Free cash flow, which is cash flows from operating activities less capital expenditures. We believe that free cash flow is a meaningful measure of cash flows since capital expenditures are a necessary component of ongoing operations. However, free cash flow has limitations because it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions.

  • Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, and share-based compensation.

We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. These non-GAAP financial measures exclude amortization of intangible assets. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the services performed for our clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity. Accordingly, we believe excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of our business nor reflect our underlying business performance, enhances our and our investors’ ability to compare our past financial performance with its current performance and to analyze underlying business performance and trends. These non-GAAP financial measures also exclude share-based compensation expense. Given the subjective assumptions and the variety of award types that companies can use when calculating share-based compensation expense, management believes this additional information allows investors to make additional comparisons between our operating results and those of our peers. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

Safe Harbor Statement
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, but are not limited to, statements regarding the Company’s expected future financial condition and growth, results of operations, including revenue and operating income, effective tax rate, margin expansion, capital allocation, business strategy, foreign currency exchange rate fluctuations, the shore preference of our clients and statements that include words such as believe, expect, may, will, provide, could and should and other similar expressions. These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things: risks related to general economic conditions, including uncertainty related to the COVID-19 pandemic, the conflict in Ukraine and their effects on the global economy, supply chains, inflation, the Company’s business and the business of the Company’s clients; risks related to the Company’s acquisition of ServiceSource International, Inc. (“ServiceSource”), including that the transaction will not be consummated; other communicable diseases, natural disasters, adverse weather conditions or public health crises; cyberattacks on the Company’s or its clients’ networks and information technology systems; the inability to protect personal and proprietary information; the failure of the Company’s staff and contractors to adhere to the Company’s and its clients’ controls and processes; the inability to execute on the Company’s digital CX strategy; the inability to successfully identify, complete and integrate strategic acquisitions or investments, including the acquisition and integration of ServiceSource; competitive conditions in the Company’s industry and consolidation of its competitors; geopolitical, economic and climate or weather related risks in regions with a significant concentration of the Company’s operations; higher than expected tax liabilities; the loss of key personnel; the demand for CX solutions and technology; variability in demand by clients or the early termination of the Company’s client contracts; the level of business activity of the Company’s clients and the market acceptance and performance of their products and services; the operability of communication services and information technology systems and networks; changes in law, regulations or regulatory guidance; currency exchange rate fluctuations; damage to the Company’s reputation through the actions or inactions of third parties; increases in the cost of labor; investigative or legal actions; and other factors contained in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2021 filed with the Securities and Exchange Commission and subsequent SEC filings. The Company does not undertake a duty to update forward-looking statements, which speak only as of the date on which they are made.

Copyright 2022 Concentrix Corporation. All rights reserved. Concentrix, the Concentrix logo, and all other Concentrix company, product and services names and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries. Concentrix and the Concentrix logo Reg. U.S. Pat. & Tm. Off. and applicable non-U.S. jurisdictions. Other names and marks are the property of their respective owners.


CONCENTRIX CORPORATION
CONSOLIDATED BALANCE SHEETS
(currency and share amounts in thousands, except par value)

 

May 31, 2022

 

November 30, 2021

 

(unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

163,364

 

 

$

182,038

 

Accounts receivable, net

 

1,311,715

 

 

 

1,207,953

 

Other current assets

 

153,904

 

 

 

153,074

 

Total current assets

 

1,628,983

 

 

 

1,543,065

 

Property and equipment, net

 

401,716

 

 

 

407,144

 

Goodwill

 

2,925,679

 

 

 

1,813,502

 

Intangible assets, net

 

1,037,987

 

 

 

655,528

 

Deferred tax assets

 

53,104

 

 

 

48,413

 

Other assets

 

565,183

 

 

 

578,715

 

Total assets

$

6,612,652

 

 

$

5,046,367

 

 

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

110,931

 

 

$

129,359

 

Current portion of long-term debt

 

105,000

 

 

 

 

Accrued compensation and benefits

 

437,516

 

 

 

453,434

 

Other accrued liabilities

 

346,204

 

 

 

351,642

 

Income taxes payable

 

23,371

 

 

 

33,779

 

Total current liabilities

 

1,023,022

 

 

 

968,214

 

Long-term debt, net

 

2,197,876

 

 

 

802,017

 

Other long-term liabilities

 

501,579

 

 

 

546,410

 

Deferred tax liabilities

 

164,073

 

 

 

109,471

 

Total liabilities

 

3,886,550

 

 

 

2,426,112

 

 

 

 

 

Redeemable non-controlling interest

 

2,157

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value, 10,000 shares authorized and no shares issued and outstanding as of May 31, 2022 and November 30, 2021, respectively

 

 

 

 

 

Common stock, $0.0001 par value, 250,000 shares authorized; 52,058 and 51,927 shares issued as of May 31, 2022 and November 30, 2021, respectively, and 51,342 and 51,594 shares outstanding as of May 31, 2022 and November 30, 2021, respectively

 

5

 

 

 

5

 

Additional paid-in capital

 

2,404,281

 

 

 

2,355,767

 

Treasury stock, 716 and 333 shares as of May 31, 2022 and November 30, 2021, respectively

 

(118,248

)

 

 

(57,486

)

Retained earnings

 

589,740

 

 

 

392,495

 

Accumulated other comprehensive loss

 

(151,833

)

 

 

(70,526

)

Total stockholders’ equity

 

2,723,945

 

 

 

2,620,255

 

Total liabilities, redeemable non-controlling interest, and stockholders’ equity

$

6,612,652

 

 

$

5,046,367

 


CONCENTRIX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(currency and share amounts in thousands, except per share amounts)
(unaudited)

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

May 31, 2022

 

May 31, 2021

 

% Change

 

May 31, 2022

 

May 31, 2021

 

% Change

Revenue

 

 

 

 

 

 

 

 

 

 

 

Technology and consumer electronics

$

466,754

 

 

$

417,277

 

 

12

%

 

$

936,953

 

 

$

830,095

 

13

%

Retail, travel and ecommerce

 

295,025

 

 

 

231,966

 

 

27

%

 

 

579,942

 

 

 

470,967

 

23

%

Communications and media

 

273,817

 

 

 

254,860

 

 

7

%

 

 

534,460

 

 

 

503,650

 

6

%

Banking, financial services and insurance

 

255,583

 

 

 

228,816

 

 

12

%

 

 

498,829

 

 

 

437,900

 

14

%

Healthcare

 

148,252

 

 

 

115,418

 

 

28

%

 

 

298,388

 

 

 

240,642

 

24

%

Other

 

128,670

 

 

 

121,541

 

 

6

%

 

 

255,581

 

 

 

239,902

 

7

%

Total revenue

 

1,568,101

 

 

 

1,369,878

 

 

14

%

 

 

3,104,153

 

 

 

2,723,156

 

14

%

Cost of revenue

 

1,009,185

 

 

 

887,149

 

 

14

%

 

 

2,007,103

 

 

 

1,754,377

 

14

%

Gross profit

 

558,916

 

 

 

482,729

 

 

16

%

 

 

1,097,050

 

 

 

968,779

 

13

%

Selling, general and administrative expenses

 

402,004

 

 

 

354,505

 

 

13

%

 

 

792,393

 

 

 

705,666

 

12

%

Operating income

 

156,912

 

 

 

128,224

 

 

22

%

 

 

304,657

 

 

 

263,113

 

16

%

Interest expense and finance charges, net

 

12,973

 

 

 

6,745

 

 

92

%

 

 

21,743

 

 

 

14,448

 

50

%

Other expense (income), net

 

(2,545

)

 

 

(3,546

)

 

(28

)%

 

 

(10,161

)

 

 

257

 

(4,054

)%

Income before income taxes

 

146,484

 

 

 

125,025

 

 

17

%

 

 

293,075

 

 

 

248,408

 

18

%

Provision for income taxes

 

33,451

 

 

 

42,121

 

 

(21

)%

 

 

69,503

 

 

 

76,693

 

(9

)%

Net income before non-controlling interest

 

113,033

 

 

 

82,904

 

 

36

%

 

 

223,572

 

 

 

171,715

 

30

%

Less: Net income (loss) attributable to non-controlling interest

 

(109

)

 

 

 

 

100

%

 

 

157

 

 

 

 

100

%

Net income attributable to Concentrix Corporation

$

113,142

 

 

$

82,904

 

 

36

%

 

$

223,415

 

 

$

171,715

 

30

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.16

 

 

$

1.59

 

 

 

 

$

4.27

 

 

$

3.31

 

 

Diluted

$

2.14

 

 

$

1.57

 

 

 

 

$

4.23

 

 

$

3.26

 

 

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

51,564

 

 

 

51,275

 

 

 

 

 

51,596

 

 

 

51,215

 

 

Diluted

 

51,990

 

 

 

52,005

 

 

 

 

 

51,995

 

 

 

51,928

 

 


CONCENTRIX CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(currency and share amounts in thousands, except per share amounts)
(unaudited)

 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Revenue

$

1,568,101

 

 

$

1,369,878

 

 

$

3,104,153

 

 

$

2,723,156

 

Revenue growth, as reported under U.S. GAAP

 

14.5

%

 

 

28.5

%

 

 

14.0

%

 

 

20.8

%

Foreign exchange impact

 

2.7

%

 

 

(4.2

)%

 

 

2.3

%

 

 

(3.1

)%

Constant currency revenue growth

 

17.2

%

 

 

24.3

%

 

 

16.3

%

 

 

17.7

%

Effect of excluding revenue of acquired and divested businesses

 

(7.8

)%

 

 

%

 

 

(6.3

)%

 

 

%

Adjusted constant currency revenue growth

 

9.4

%

 

 

24.3

%

 

 

10.0

%

 

 

17.7

%


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Operating income

$

156,912

 

$

128,224

 

$

304,657

 

$

263,113

Acquisition-related and integration expenses

 

1,726

 

 

 

 

2,648

 

 

Amortization of intangibles

 

41,469

 

 

34,597

 

 

79,525

 

 

69,198

Share-based compensation

 

12,647

 

 

9,283

 

 

27,816

 

 

16,401

Non-GAAP operating income

$

212,754

 

$

172,104

 

$

414,646

 

$

348,712


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Net income

$

113,142

 

 

$

82,904

 

 

$

223,415

 

 

$

171,715

Net income (loss) attributable to non-controlling interest

 

(109

)

 

 

 

 

 

157

 

 

 

Interest expense and finance charges, net

 

12,973

 

 

 

6,745

 

 

 

21,743

 

 

 

14,448

Provision for income taxes

 

33,451

 

 

 

42,121

 

 

 

69,503

 

 

 

76,693

Other expense (income), net

 

(2,545

)

 

 

(3,546

)

 

 

(10,161

)

 

 

257

Acquisition-related and integration expenses

 

1,726

 

 

 

 

 

 

2,648

 

 

 

Amortization of intangibles

 

41,469

 

 

 

34,597

 

 

 

79,525

 

 

 

69,198

Share-based compensation

 

12,647

 

 

 

9,283

 

 

 

27,816

 

 

 

16,401

Depreciation

 

37,137

 

 

 

36,226

 

 

 

73,174

 

 

 

72,225

Adjusted EBITDA

$

249,891

 

 

$

208,330

 

 

$

487,820

 

 

$

420,937


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Operating margin

10.0

%

 

9.4

%

 

9.8

%

 

9.7

%

Non-GAAP operating margin

13.6

%

 

12.6

%

 

13.4

%

 

12.8

%

Adjusted EBITDA margin

15.9

%

 

15.2

%

 

15.7

%

 

15.5

%


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Net income

$

113,142

 

 

$

82,904

 

 

$

223,415

 

 

$

171,715

 

Acquisition-related and integration expenses

 

1,726

 

 

 

 

 

 

2,648

 

 

 

 

Amortization of intangibles

 

41,469

 

 

 

34,597

 

 

 

79,525

 

 

 

69,198

 

Share-based compensation

 

12,647

 

 

 

9,283

 

 

 

27,816

 

 

 

16,401

 

Income taxes related to the above (1)

 

(14,180

)

 

 

(11,107

)

 

 

(27,933

)

 

 

(21,674

)

Income tax effect of assets held for sale (2)

 

 

 

 

9,247

 

 

 

 

 

 

9,247

 

Non-GAAP net income

$

154,804

 

 

$

124,924

 

 

$

305,471

 

 

$

244,887

 


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Net income

$

113,142

 

 

$

82,904

 

 

$

223,415

 

 

$

171,715

 

Less: net income allocated to participating securities

 

(1,700

)

 

 

(1,254

)

 

 

(3,243

)

 

 

(2,314

)

Net income attributable to common stockholders

 

111,442

 

 

 

81,650

 

 

 

220,172

 

 

 

169,401

 

Acquisition-related and integration expenses allocated to common stockholders

 

1,700

 

 

 

 

 

 

2,610

 

 

 

 

Amortization of intangibles allocated to common stockholders

 

40,846

 

 

 

34,074

 

 

 

78,371

 

 

 

68,266

 

Share-based compensation allocated to common stockholders

 

12,457

 

 

 

9,143

 

 

 

27,412

 

 

 

16,180

 

Income taxes related to the above allocated to common stockholders (1)

 

(13,967

)

 

 

(10,939

)

 

 

(27,528

)

 

 

(21,382

)

Income tax effect of assets held for sale allocated to common stockholders (2)

 

 

 

 

9,107

 

 

 

 

 

 

9,122

 

Non-GAAP net income attributable to common stockholders

$

152,478

 

 

$

123,035

 

 

$

301,037

 

 

$

241,587

 


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Diluted earnings per common share (“EPS”) (3)

$

2.14

 

 

$

1.57

 

 

$

4.23

 

 

$

3.26

 

Acquisition-related and integration expenses

 

0.03

 

 

 

 

 

 

0.05

 

 

 

 

Amortization of intangibles

 

0.79

 

 

 

0.66

 

 

 

1.51

 

 

 

1.31

 

Share-based compensation

 

0.24

 

 

 

0.18

 

 

 

0.53

 

 

 

0.31

 

Income taxes related to the above (1)

 

(0.27

)

 

 

(0.22

)

 

 

(0.53

)

 

 

(0.41

)

Income tax effect of assets held for sale (2)

 

 

 

 

0.18

 

 

 

 

 

 

0.18

 

Non-GAAP diluted EPS

$

2.93

 

 

$

2.37

 

 

$

5.79

 

 

$

4.65

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares - diluted

 

51,990

 

 

 

52,005

 

 

 

51,995

 

 

 

51,928

 


 

Three Months Ended

 

Six Months Ended

 

May 31, 2022

 

May 31, 2021

 

May 31, 2022

 

May 31, 2021

Net cash provided by operating activities

$

167,469

 

 

$

203,231

 

 

$

212,484

 

 

$

239,115

 

Purchases of property and equipment

 

(25,773

)

 

 

(28,808

)

 

 

(71,166

)

 

 

(70,758

)

Free cash flow

$

141,696

 

 

$

174,423

 

 

$

141,318

 

 

$

168,357

 


 

Forecast

 

Three Months Ending August 31, 2022

 

Low

 

High

Operating income

$

161,200

 

$

176,200

Amortization of intangibles

 

41,300

 

 

41,300

Share-based compensation

 

17,500

 

 

17,500

Non-GAAP operating income

$

220,000

 

$

235,000


 

Forecast

 

Fiscal Year Ending November 30, 2022

 

Low

 

High

Operating income

$

663,352

 

$

688,352

Acquisition-related and integration expenses

 

2,648

 

 

2,648

Amortization of intangibles

 

162,000

 

 

162,000

Share-based compensation

 

62,000

 

 

62,000

Non-GAAP operating income

$

890,000

 

$

915,000

(1) The tax effect of taxable and deductible non-GAAP adjustments was calculated using the tax-deductible portion of the expenses and applying the entity-specific, statutory tax rates applicable to each item during the respective periods presented.

(2) In the second quarter of fiscal year 2021, we reached an agreement to sell our Concentrix Insurance Solutions (“CIS”) business and, therefore, we were no longer indefinitely reinvested with respect to our investment in this subsidiary. This amount represents the income tax impact of the change in this reinvestment assertion.

(3) Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For the purposes of calculating diluted EPS, net income attributable to participating securities was approximately 1.5% of net income for both the three months ended May 31, 2022 and 2021 and 1.5% and 1.3% of net income, respectively, for the six months ended May 31, 2022 and 2021, and was excluded from total net income to calculate net income attributable to common stockholders. In addition, the non-GAAP adjustments allocated to common stockholders were calculated based on the percentage of net income attributable to common stockholders.

CONTACT: Investor Contact: David Stein Investor Relations Concentrix Corporation david.stein@concentrix.com  (513) 703-9306


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