Conduent Incorporated

Greetings and welcome to the Conduent first quarter 2023 earnings announcement. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Giles Goodburn, Vice President of Investor Relations.

Thank you, Operator, and thanks everyone for joining us today to discuss Conduent's first quarter 2023 earnings. We hope you had a chance to review our press release issued earlier this morning. Joining me today is Cliff Skelton, our President and CEO, and Steve Wood, our CFO. Today's agenda is as follows. Cliff will provide an overview of our results and a business update. Steve will then walk you through the financials for the quarter, as well as providing a financial outlook. Cliff will then offer his closing comments. This call is being webcast, and a copy of the slides used during this call as well as the press release, were filed with the SEC this morning on Form 8K. This information, as well as the detailed financial metrics package, are available on the investor relations section of the Conduent website. During this call, we may make statements that are forward-looking. These forward-looking statements reflect management's current beliefs, assumptions, and expectations, and are subject to a number of factors that may cause actual results to differ materially from those statements. Information concerning these factors is included in Conduit's annual report on Form 10-K, Files with the SEC. We do not intend to update these forward-looking statements as a result of new information or future events or developments, except as required by law. The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with US GAAP, They should be viewed in addition to and not as a substitute for the company's reported results. For more information regarding definitions of our non-GAAP measures and how we use them, as well as the limitations to their usefulness for comparative purposes, please see our press release. And now, I would like to turn the call over to Cliff.

Thank you, Giles, and good morning, everyone. Thanks for joining Conduit's Q1 earnings call. We appreciate you being here today. As is our custom, I'll provide some high-level comments about the quarter and characterize some of the nuance and timing of revenue, EBITDA, sales, et cetera. And Steve, of course, will go into a bit more depth. As you can tell, we've shifted our perspective here as we migrate to a new set of sales side analysis. And thus, we'll forego immediate questions following earnings. But as always, folks should feel free to reach out to our investor relations team with any kind of follow-up questions. First, let's start with a quick view of the numbers. Despite some one-time events, Steve will talk about those, in Q1, core run rate revenue beat our internal expectations due to increased volume, specifically in our government and commercial businesses, partially offset by client-driven revenue milestone changes in our transportation business and a prior period adjustment in our government business, both of which somewhat muted that positive growth in volume. These volume trends, if continued, and we do believe they will, should help bolster the remainder of 2023. Again, Steve will get into the details, but this is all part of the top line growth expectation that we previewed in our investor briefing in late March. As we've discussed in the past, that net ARR number, which was higher year over year again at $108 million, is a leading indicator regarding our growth trajectory. We're certainly and especially pleased with improvements in client retention. However, outrunning that government stimulus volume from 2021 and 2022 takes some time. Slowly but surely, we're outrunning the past and landing in that sweet spot growth range we've previously laid out for you. Regarding EBITDA, we exceeded our internal expectations, bolstered by expense favorability and a one-time legal settlement. Again, Steve will talk about the puts and takes regarding the segments, but of note, are the changes in the transportation business. I look at those as essentially discrete, primarily client-driven milestone adjustments and a little bit of pain before the gain exercise. Our new leadership team in transportation installed more operational discipline as we level set that project portfolio. New business sales were predictably lower year over year as we referenced in Q4 earnings and our investor briefing. As you know, and we discussed, Q4 was quite strong, and we expect a bracket Q1 with enhanced sales performance as some opportunities push to Q2 and beyond. We do see some late large opportunities that give us promise in Q2 and Q3, however. As you know, the timing of contracts, especially in the public sector, can have some back and forth to it based on contracting regulations. But meanwhile, overall pipeline is strong and building. across the entire segment base. Now, I'm often asked whether the economic slowdown is affecting our sales. The answer is we don't see a reduction in appetite, certainly not appetite to outsource in the commercial sector or fewer RFPs in the public sector. But we do see a slower timeline to contract. It's simply taking a little more time to put ink on paper and decision makers are more cautious. Steve will discuss, as always, the detail of our balance sheet, but it's strong. Liquidity and leverage ratios remain strong, with a consistent capital allocation appetite in very modest ranges. Regarding the future, we're on course, as we described in late March. Our base business is within the rails that Steve described, and we continue to see significant opportunities, especially in government health care and real-time payments. In fact, we're rolling out some new real-time payment and disbursement solutions as we speak. We continue to also believe in the portfolio rationalization opportunities we discussed. And while it's a multi-year journey, we're definitely underway. Finally, each quarter, we become increasingly proud of our progress related to culture, diversity, and being a great place to work. As you know, employees flock to and stay with not a business or a brand, but with a culture and its people and its leadership. We work hard every day to take care of our 60,000 hardworking associates across the globe, and I'm most appreciative of their efforts. I'm also thankful for our strong client base, and I look forward to a great remainder of 2023. I'll now turn it over to Steve for a more detailed view of the financials. Steve?