Concentrix (CNXC) 12 Jan 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Concentrix Fourth Quarter and Full Year 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to one of your speakers today, Mr. of President Vice Stein, Investor Relations. David go please ahead. Sir,

me outlook. strategy, and and results for Then financial Chris With will performance a will the Chief financials. call, information Relations provide income, statements provided business our Welcome Thank undertake our discuss the adjusted future Please Valentine, to questions. Fiscal Fourth Concentrix result nature, could operating in as those and address on that operating for A includes in XXXX statements. well by Chris than that are XX be release affect Chief adjusted measures, Form EBITDA Andre and non-GAAP uncertainties morning. the forward-looking President and non-GAAP risk non-GAAP may do recent update you, release as in SEC future refer good the to are growth cause developments. with Officer. our Financial information address we'll most during statements under of materially Quarter on and filings forward-looking statement. These these revenue Call. is matters cover This earnings EPS call a call different Executive the the call measures factors not future new or their to and results our Andre or Caldwell, This we performance our today that, forward-looking free your yesterday's flow, information reconciliation Michelle, growth. and Investor future currency financial news of our Officer; Earnings available contains our expected regarding uncertain. as will results. including and and additional cash and constant uncertainties that Full expressed the summary open our our our Year We events actual our Concentrix the of Also to financial website

Chris. to over call the turn I'll Now,

very everyone, Corporation and welcome the to you first call. David. Thank much, Good morning, earnings Concentrix

specifically, Let me but the Peter first get not start extremely Irock and by investing thanking years. support and years to last accomplished with XX least, Witt what decided us years to all the SYNNEX, And all start Marshall XX in over of those the over to SYNNEX Dennis Polk, the ago. colleagues point. this our the who BPO business Long, proud Bob founder I'm we've last for

company. our through built spin-off for us incredibly a an business for positioned global clients delivery has scale by This have We opportunities into successful from delivers very on December lay platform XX Even X, SYNNEX well us. of award-winning history, at own augmented technology dynamic that environments. our are years front that about incredibly I'm excited the XXXX, publicly-traded our in though into we

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wins faster growth Our strong quarter forecasted. exceeded by and guidance driven expectations, our our and revenue profitability third originally ability ramp to than our and from execution

of also clients set constant the $XXX for was expense revenue million $XX increased net basis, These an operating up to X% million of EBITDA million results last income basis. $XXX revenue X.X% $XXX year. an COVID-related include costs. currency $X.X increased represents Non-GAAP last million X% Adjusted from additional We of during last an with with billion year broad with a also on of by compared On Fourth adjusted volumes higher-than-expected compared our benefited year. quarter. a X.X%. with compared quarter increase of

have health over business continued efforts Andre been than including care This quarter with more in impact rebalancing offset our technology, and banking retail, we and Our came the that quarter more of strong the several the a demand vertical color across portfolio our verticals, accelerated growth quarters. new From prior provide the COVID-related good muted messaging of will volumes very signings. e-commerce, client key momentum travel about another that in perspective, the on.

signing deals share are we larger and believe clients. existing taking are contract We value with

two During clients, quarter, signed fourth including digital-only disruptive dozen a the we half more than brands. dozen than new new more

fintech and support. in countries solutions Our in and the with client of growth help solutions chose North marketplace. pipeline Singapore, as Concentrix that believe remains iconic examples because Latin balanced India include these We end-to-end Australia, Europe, new disruptive moderation as well new global across Asia nicely our service. Korea, strong our a Japan, and to the for prospects media and businesses for strategy content wins market domain also rapid America as a verticals our and furthering and America, wins diverse and Recent footprint, our we From brands base. technology standpoint, geographies digital are support Brazil expertise and many span wallet clients of culture, our social of geographically such

of We drove Today, clients financial this our deployed the has keeping them. environment, XXXX for a business a partnerships brands, In challenge, of for staff. more and deepened swift Client globally engagement execution this our challenge health give accolades of a clients approximately in throughout quick staff home. and In COVID-XX received changing disruptive from from we our emerging quarter continued response our solutions the iconic clients summary, to when pleased the awards with our safe, response the on we with for staff of willingness XX% reaction transformation on supporting virtual home pandemic very we all meaningful and full clients to based an and safety delivering have over While we our solutions this to focused our of are quality and and at delivered during for our XX% performance. for companies, us the I'm remainder and XXXX. digital strong deployment results remain our and indicated year. surveyed scale reflect prepared customer focus are the stronger. that impacted impacts its at acceptance, work needs, been on the of pandemic

for we emerging First, expanding focused consolidator. and record four solutions; acquisitions, building on proven sustainable through company, strategic relationships new growth: drivers remain Now successful markets selectively deepening with third, developing as innovating further investing relentlessly around the profitable own track in our our strategic second, pursuing wallet share and digital and as a clients; our independent our on industry globe; finally,

dedicated to call Andre? like Andre. diverse would to like service, that, Board And staff our support. for trust I I clients for very Directors Finally, would our our with talented thank new their their and their for to exceptional over turn the of

compared good of look a quarter financial improvement for our Chris, strong for XXXX. On Well, experienced revenue $X.X basis, X.X% and the quarter. of a and in Reported constant a I'll our revenue morning. first million. last quarter profitability results in and thank impact revenue discuss fourth increased with billion. begin $XX in the a We quarter fiscal currency outlook you, then business positive reflected at fourth currency fourth the year. Revenue was with the foreign

rate as travel was and clients lower tourism impact X% as growth in clients broad-based vertical was electronics and on the from tourism fourth the overall e-commerce travel our and company by approximately reflecting consumer strong year, technology group with of more than down strong approximately expected XX% total verticals. quarter. in under across from strong reflecting by grew grew seasonal for just Revenue and Revenue of the clients an a the a e-commerce strategic Our X% XXXX, and of from from from largely vertical care volumes approximate clients clients. approximately Revenue offset number quarter retail, growth XX%, volumes. growth XX%, the the of growth of health several Revenue revenue generated clients. travel a grew from result last retail X%

Our communications from of strong from the the our made reflecting fourth The the by on nearly mix growth partially rebalancing on XX% quarter. less verticals revenue revenue impact vertical last in reliant down growth clients XX% of communications the year, approximately in Revenue reduction these vertical. for communications us total XX% a across has rate was from quarter, clients. offset a was overall X%

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as non-GAAP operating million profitability, expected, a with last $XXX improved to million was compared basis fourth in income Turning $XXX year. on quarter the basis, sequential the quarter. a third compared with year-over-year profit On meaningfully

EBITDA adjusted million million fourth compared Our in XX.X%, quarter slightly XX.X% last last non-GAAP down margin operating margin year. was with adjusted last was XX.X% EBITDA from $XXX with $XXX and the year, XX.X% compared year. our Fourth quarter was

synergy fourth quarter. ramps will expenses from basis, two increased attainment. the quarters. and a new On Fourth results turn strong also of approximated flow-through reflects the reflect in profitability support revenue quarter program into Our revenue net next that in through $XX investment growth million COVID-XX

than compensation be to expense point I'll $X.XX GAAP quarter fourth has it compared to amortization compared non-GAAP Adjusted to of results compared fourth in last share-based million We historically how presented with and year. of the the income of of million industry the EPS peers. income, year. year. $X with $XX net is of out million comparable and In GAAP our acquisition, in $XX of related treatment compensation SYNNEX more measures for last $XXX last spin-off in change expense. this different made terms of results. net integration million $X.XX included non-GAAP quarter, $XX our expenses; $X.XX our was share-based XXXX been million EPS was $X.XX intangibles; that was

on fiscal Our the as will the we U.S. be stand-alone release tax if even XXXX are reflects part taxes we of presented SYNNEX though earnings basis, provision tax in return. a

year and resulted base the lower higher effective was standalone U.S. in income taxable exposure full rate. fourth COVID-XX anti-abuse of our increased our taxes. XX% tax quarter GAAP tax to impacts Our future XXXX, in overall which erosion certain for expected rate than

tax non-GAAP approximate rate XX% improvements basis. profitability, with forward, GAAP effective Moving regulations on current our expected and expect in and under a tax both we to

move I'll to a the other quarter. Now from details few financial

investments expenditures fourth to made an In On work operations million fourth to cash flow, of X% terms quarter, basis, cash to expenditures we in range quarter in Capital as elevated $XX million, of expenditures quarter. the from of of totaled primarily capital $XX in ongoing a generating and capital flow from $XXX totaled services. home cash we flow fall were support free expect revenue. the X.X% million,

be expect our growth. organic drive maintenance support half about investing We related expenditures work to security capital and and in technology, new and to about capabilities, to for digital to home of half at

U.S. adjusted of capacity times AR was million debt $XXX X-year includes end and our the cash of About outside the facility our At borrowings X.X and to at costs. held end of and was lines equivalents balance over on year, the XX% AR cash the sheet, $XXX on credit program. of were million. accounts quarter, million under initial $XXX $X.XXX debt of the with was term net facility remained and year net XXth, $XXX our we Turning borrowings end the fourth cash, million, billion, approximately this loan five-year $XXX liquidity of strong cash gross under was receivable credit under issuance the the the our undrawn $XXX the in billion Total and and On outstanding in securitization of million at November incurred leverage credit our borrowings securitization securitization. our million EBITDA $X.X two-year and

us Our current significant financial flexibility. gives liquidity

capital Our organic funding through include growth and priorities business deployment existing opportunities. growing for strategic

X% of quarter our I range with first related the to billion $X.XX will our compared This outlook foreign rates fiscal we exchange business uncertainty to to current of for Balancing impact $X.XX expect an in discuss approximately period includes XXXX. a continued revenue billion. COVID-XX the comparable business in XXXX. be with momentum, of Now, positive

a profitability include non-GAAP income million. operating Our in $XXX of $XXX range expectations million to

first be $X quarter expect to approximately expense We million. in interest the

tax average count of approximately effective XX and XX% million rate an expect shares. of weighted a approximately We share

related million intangibles $XX million approximately compensation the expense. and excludes amortization of guidance share-based of income to operating non-GAAP Our $X

while guide not out, operating quarter rates do growth than further non-GAAP we at our increasing above ability to While grow overtime. we feel confident one margin Concentrix in or industry

quarter. business off impacting expectations in the volumes half 'XX first Our sequential and fiscal sequential third for the revenue seasonal year a as increases for the for of pattern rolling typical and profitability beginning the include for

our results, integration business confident outlook. impacts future impacts Our and include Also acquisition-related or our the outlook does are in any we we closing, are guidance costs. not from transaction currency not included with fluctuations. in future In pleased are or

a growth organically well-positioned forward. and leader negative portfolio of a than fragmented the We're are impact grow we expect our to on we rebalancing We have as executing global plan faster rates in growing and the market, market. a smaller large, a impact much move to

As we're questions. a proven, cash sustainable a growth, margin with in flow. strong balance spot and great in sheet, this a the consolidator we progression please At market successful for time, our Michelle, free strong line deliver to open believe

Instructions] Bank Bhattacharya of with [Operator first the America. line Ruplu you. Our Thank comes question of from

Your go Please line open. is ahead.

Thanks but for company. potential -- about this talk taking Chris, congrats the in on You question propensity as inorganic quarter your you've a quarter, the results and about organic thoughts growth the strong for your had on public talked you growth? maybe past, strong my can in M&A. first

I what size the on inorganic standpoint? make thoughts and would Just an which mean, from Concentrix what end markets -- any -- for sense potential

Ruplu. Thanks,

from we're what's would into It's adding capabilities, client really, go additional about at to doing we we're client revenue mean, perspective, we're acquisition. we offerings look from with. perspective, verticals very unique we're Good our our service to be the when commercial quite because is and/or So the I you that what about talked our past, size profitability is have to already very have we're we at example my the dealing has banking, shareholders, for of I've either clients to set looking open. From into that business. our what in in sort as of take fastest retail can accretive advantage really in the base, the the and interested a return highest additive and believe strong what really

of forward? of that you how about services just can that And long-term today? should Got voice And about would you that it. non-voice mix think And non-voice And versus can some currently? services what be you going you have the comment target? on we the the provide talk mix

solutions as to and voice be voice we continues the of kind digital lot more and up our That and automate clients. for creep continues IVR still said, non-voice of So, strong. go put being in a to more ahead

solutions of of directionally I about experience, That wanting sort a we that still trying split for balance where is think to and their we our to and make period towards over and that. being XX-XX talked continue we've time, goal progress get to sort of but high-end true that's a who to handle have demand, between clients looking we're found voice are customer a customer headed. non-voice kind of overall, said,

maybe Got it. just And question. last more one

home, XX% of currently I talked In was the think In working you you've that past, terms office? mean, from target think are think the time needing do is long-term working effective the XX%. should around XX%, to how And in that people I from versus -- working we about I the of home. home said think equally some people you workforce from home. of the about productivity judge from working said working you

there what related like think getting are the that the mean, And to you international expand the go-to-market I also call in people internationally? about? you've you well kind to more international -- back for just do we mean, expansion, hire we should the back just your comment and works? -- go-to-market offices? how talked the thinking into I expansion. timeframe into staff need move to or plan about as So on that, how centers Can about the as to do trying of

Yes.

different a sites. services voice, our and our off, development sites lot host types For just of out physical technical call non-voice, of a call of The of that reality centers. delivery first wouldn't them is services, sure, I deliver solutions,

delivery might tiny work maybe regions -- most to I productivity the density of better home, people sites higher productivity regions, within regions. are there in at tell less. for is the whole because the terms is a the capacity they par will In living or a live you, how at just some just of have of bit the and

bit from flux. members seeing happy we're but is a the very fits answer a team with There that our overall, not it of the all world. around around is we're productivity So it, one

a a at that we've getting looking do, terms some are back within on when back about really our to and And in question building. sort to the we expectation are of for vaccine things, of on people international based really ballparked rollouts based staff physical regards come XXXX our other But last and being staff we the to and right on of then with forward for expansion. It's probably that's out XX%, back. In discussion, where look getting of host type our we're of hiring to something members not kind who time when to in no a based on group in team rush the team work whole in. bring based a up XXXX is,

clearly, and in very sales serve a that part. management we have with members for distributed all team markets and We the team the the team around globe account local the operations obviously, most

to continue we more to those that and areas, really, we those grow in will go in significantly invest a in hire and out verticals so need is nature. real to the that no order And regional in grow markets, business in want but to add there

strong Thanks results details the you. all congrats guidance. as and Thank on again the Got as for it. strong the well

Great, thanks much. very

Cross Thank of you. line Shannon our Research. question And the Cross next comes with from

is Please ahead. line go open. Your

this, learned with else I business plays I -- I'm from home, guess, people-intensive don't COVID obviously, of is your what you've into very the know, given it nature first strongly a but business. work about such question my curious -- and of kind

is in quickly How standpoint from anything that follow-up. of else wind learned And automation put where we opportunity you things you've for have there a or that's costs. that? COVID-related then might some might that if to you So is see the expect And I'm and of those also just where down? place curious more there I what think

talk Shannon, again. good to

think day a first that provide out that and that what manage. months are very From business in taken could the the and few covet, We strong things past, staff tied model successful our support is quickly to really that, we've working COVID hip clients about is services have and model frames through in off, in the businesses with talked downs, historically, overall relationships and I have we've and robust showed how we all talking in from been because the at to business we clients. the effect, very, it's learned is. the very, just marketplace perspective, that a the we've to might this and that reality It's sure faster. through clients have make and decision the to ups our day during easier -- that automate things those get to very decided turned time around they're been

more Sometimes cost a it's effective time. of quicker period in

in historically as put as them what staff digital big out. on sure they up that delivery do the well of as, in be are lot seen to comfort tips training make we've environment productive different period staff our frankly, From emphasis how home a to And need rolled and so, We and care how to health. of care our recruiting environment of within digitally. faster our we've consumption making perspective, whole on there time speed a is big that to well sure taking we and as on more digital than a a a mental services put emphasis the

the quickly allowed scale members that historically a very done able And automated of to us site, you in digital for a all around home the which processes been expand and might that so, world, very our has perspective. have kind we've very, work been from quickly, in to the caution team in purely look at if

costs. And fanatical that clients keeping delivering and then, COVID-XX fanatical them being Shannon, our incurring to much your our and about and being question Those for around are staff we're on the safe. costs keeping very about

with there, first And the so think that quarters as is assume out us few that you guidance think and we be will in level we for our for certainly certainly, look similar likely as we of those about into a quarter, spending XXXX. should

and Okay. to. final my And customers to then you're regard guess the is sales I question with talking the process just,

your with incremental, you the the If been verticals COVID you've not your assume, has some any if down business? could again, into you've than us opened opportunities, customers, with but to expand I maybe rather some able given probably conversations give areas tangential up of idea, would that had close nature

on verticals Shannon, up on so haven't our We're within focused domain build for. that verticals we're us. we've being deeper expanded called knowledge focused strategic keen as we very the out to that delivering to

transform that talked terms work be, with in us think more of they're more happened that clients as our regions. I stop and one has of solution, to at work in shop, giving us and in looking automation, I more digital more is kind of what about, within offerings, sort multiple their region, whether asking it only of one not

of we So partner relationship those to share, to a about verticals thing have on, their a a work but comprehensive That into more us wallet some build do has gotten one-stop them. talk be that it's gaining might certainly we're clients the more share valued within when and always offering solution. that's share right to these been we stronger is talking focused for not by across about what really gaining perhaps,

question And you. Thank Baird. line of with Koning the comes Dave next from our

go Your Please line is open. ahead.

job. Great

Thank you, David.

provide? it time. Does mix Like the shift, it Yes. a that the margins? a of you I like an the are over a portion standpoint? you've diversifying clients, global mean, guess, sounds the higher I'm from higher just away of margin or telecom kind is generates different disruptors both and Whatever is I potentially good is disruptors. this overtime? margin global within Yes. that shift first business dynamics job just of from Like now revenue a all, change little great interested yielding those services really increasing done and

up we up that's a go more five scale, offshore at look last more our to which within in quarters as to date, years. the we forward technology, which rapid they over that income believe continued automation. our we verticals to geo lot three to services our to consuming onshore forward. when and we've over we years service out progress mix, have and of room brought there stack differently. more clearly, that differently, does bit different margin continue all, From coming tend that the a is not of obviously in So And the less the as at mobile in combination. disruptive are message to we look similar to as that Like help put albeit first And our to of continue value I progression a as enterprise and David, say it a clients, move more mix they are perspective, of margin seen tend to we disruptors, it's they us a at they overall more go look as deliveries, goal, we tend operating mix tends we a higher-margin

So progress, improvements as of that over see part the increases and coming years. our story we as is margin and see margin you quarters

Okay, home? just simply will at overtime? are margins. really a but have people nice I got just mean you secondly, mean, at-home I be long-term Like you are the margins, more you on long-term margin -- sustainable? help now on I really that overall thanks just that And you've is better going because And at question. of just done guess, is mix I job the with the to and is there guess -- business parts that. that's

very from perspective. I look is, facilities Yes. of model it cost at David, all, the have way variable first a a we

clients remaining home point do percentage to home, want infrastructure. where could down we of work sense be for that not messaging members, of our a kind seemed at that reason, makes our to for we at our from because we whatever for we if That facilities support time. And of staff hasn't the at at certainly makes of whether are go might be whether necessarily and at in certainly can at better costs more appreciate, that whole health be is lot then the be more would that our home go it case, services, list significantly we a slightly we it's the business XX% of seemed where mental that of that and different it When some that staff in at not from do client, solution. talk path, about a it not that you this look removing So but security to regions margin profile things sense better, for the there larger home, work continue it is bandwidth work we our it. investment have whether sort it into that. services, to of costs should other But has costs be work

a out a if work at XX% not it say, that home that at does again, of margin our call while would large it's improvement. we vast help, staff see So stayed you'd

infusing the mentioned, the margin in introduction more drivers we the efficient the our of of technology moving more emerging as and strategic on again of in more the of technology, David, delivery through margins becoming be see has where markets, progression growth, stack, kind long-term would our up G&A. probably offerings being Chris into higher, and some then in verticals, growth can growth with leverage

drive plus of think have things -- those that synergies. kind that we to can long-term margins as margin that the I where have are of go the give that higher acquisition we we are been things those will are And to drivers So the to drive allowed margins we get us kind confidence progression. Those us forward.

forever little just of of some XX% wondering like and growth that, pandemic, that sneak now? just call now then could might is And maybe banks, a and lift maybe, same but it within a you bit something revenue, saw Fiserv seems kind as the right? that's that little thought situation? is but software better a time, maybe just little if can I some sustainably interesting their in I crosscut, right permanently banks, maybe maybe They be Well, I better, the then there of extra you. from And Got interesting. you've a cover. okay, also Or there a was had Like kind too. more there about centers one-time throughout unsustainable e-com talked calls sustainably we like is of are kind if we one good at company bank call in. isolate, to that of just so -- in maybe probably volume

I mean...

one-time we through Sorry, we're telehealth David, that, matter, and model environment interest doesn't for of or be wanting -- getting that people non-voice, our pandemic. and this, that's driven talked whatever or back. by by of in. is we're long-term we're models. sustainable that of digital, We've of it voice see refinance We are driven also long-term and clearly really the what the switch outsourcing growth supporting lot to type new whether business, on primarily both. volume is consults of the seen the an a lower or volume sustainable their being who case because looking mortgages see that's may people about rates telemedicine a of bit to We've coming

which more a more will is retailers, example, that's the here from continue an doing now as into sustainable, are versus to that, stay fintechs e-commerce traffic, and/or is coming traditional we which virtually grow. to driving benefited of some from who And That's retail and walking things branch. through

operator. ahead, go -- So

questions, showing say, sir. I was I'm further just no going to

right. much the at all on call this call. very time, end will participation we the and today, Well, All your for you thank

in participating you and a conference. Ladies This may day. all today's does have you gentlemen, program, conclude thank the disconnect. and Everyone, for great