What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-03 · 121 added, 55 removed, 191 unchanged (48% of the section changed)

10 unchanged sentences

We serve as a trusted business partner in both the front office and back office, enabling personalized, seamless interactions on a massive scale that improve end-user experience.

Headquartered in Florham Park, New Jersey, we have a team of approximately 58,000 associates as of March 31, 2022, servicing customers from service centers in 24 countries.

Headquartered in Florham Park, New Jersey, we have a team of approximately 58,000 associates as of June 30, 2022, servicing customers from service centers in 24 countries.

Our reportable segments correspond to how we organize and manage the business and are aligned to the solutions we offer our clients.

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We continue to transform our business through an intense focus on growth, quality, and efficiency – utilizing a programmatic and project management approach.

Beginning in the first quarter of 2020 and through the first quarter of 2022, we have expanded the focus of our project portfolio to include both efficiency and growth initiatives, aimed to position the company to pivot to revenue growth and margin expansion over time.

Beginning in the first quarter of 2020 and through the first and second quarter of 2022, we have expanded the focus of our project portfolio to include both efficiency and growth initiatives, aimed to position the company to pivot to revenue growth and margin expansion over time.

We intend to drive portfolio focus, operating discipline, sales and delivery excellence and innovation, complemented by tightly aligned investments to achieve this mission and purpose.

Our strategy is designed to deliver value by delivering profitable growth, expanding operating margins and deploying a disciplined capital allocation strategy.

During the three months ended March 31, 2022, our strategy is showing results, including the following:

During the six months ended June 30, 2022, our strategy is showing results, including the following:

CNDT Q2 2022 Form 10-Q

• Net income of $136 million for the three months ended March 31, 2022, as compared to net loss of $11 million for the same period in the prior year.

• Net Annual Recurring Revenue (ARR) activity metric (as defined in "Metrics") of $102 million, a 17% increase over the first quarter of 2021.

• New business signings results:

◦ New business total contract value (TCV) signings of $464 million for the three months ended March 31, 2022, representing an increase of 32% compared to the same period of the prior year.

◦ Annual recurring revenue signings of $107 million for the three months ended March 31, 2022, representing an increase of 14% compared to the same period of the prior year.

• Renewal TCV of $936 million for the three months ended March 31, 2022, substantially higher than the same period of the prior year.

• The Company completed the sale of its Midas suite of solutions on February 8, 2022 for cash consideration of $321 million and, subsequent to the end of the first quarter of 2022, announced the planned separation of the Transportation segment.

• Net income of $136 million for the six months ended June 30, 2022 as compared to net income of $1 million for the same period in the prior year.

• New Business annual contract value (ACV) of $180 million increased for the fourth consecutive quarter, with strong contributions of $124 million from the Commercial segment.

• Net Annual Recurring Revenue (ARR) activity metric of $104 million, as compared to $106 million in the same period in the prior year, $102 million in the first quarter of 2022 and positive for the seventh consecutive quarter.

• Annual recurring revenue signings of $207 million for the six months ended June 30, 2022 is substantially unchanged compared to the prior year.

• Renewal TCV of $1,238 million for the six months ended June 30, 2022 is 13% higher than the same period in the prior year.

COVID-19 Pandemic

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• Increased sanitation and social distancing for on-site essential associates.

At the end of the first quarter of 2022, we continued to have most of our workforce in a work-from-home environment.

At the end of the second quarter of 2022, we continued to have most of our workforce in either a work-from-home or hybrid environment.

We will continue to assess when to bring associates back to our offices, as appropriate, based on the specific COVID-19 conditions in certain geographies, as well as business requirements.

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Three Months Ended

March 31, 2022 vs.

June 30, 2022 vs.

($ in millions) 2022 2021 $ Change % Change

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Selling, general and administrative (excluding depreciation and amortization) 113 125 (12) (10) %

Research and development (excluding depreciation and amortization) 2 1 1 100 %

Depreciation and amortization 53 86 (33) (38) %

Restructuring and related costs 11 8 3 38 %

Interest expense 18 13 5 38 %

(Gain) loss on divestitures and transaction costs 3 (1) 4 n/m

Litigation settlements (recoveries), net (3) 1 (4) n/m

Loss on extinguishment of debt — 2 (2) n/m

Other (income) expenses, net (1) — (1) n/m

Total Operating Costs and Expenses 923 1,007 (84)

Income (Loss) Before Income Taxes 5 19 (14)

Income tax expense (benefit) 5 7 (2)

Net Income (Loss) $ — $ 12 $ (12)

CNDT Q2 2022 Form 10-Q

Six Months Ended

June 30, 2022 vs.

($ in millions) 2022 2021 $ Change % Change

Revenue $ 1,895 $ 2,054 $ (159) (8) %

Operating Costs and Expenses

Cost of services (excluding depreciation and amortization) 1,482 1,559 (77) (5) %

Selling, general and administrative (excluding depreciation and amortization) 215 251 (36) (14) %

Research and development (excluding depreciation and amortization) 3 1 2 n/m

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Litigation settlements (recoveries), net (31) 2 (33) n/m

Loss on extinguishment of debt — 2 (2) n/m

Other (income) expenses, net — — — n/m

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Net Income (Loss) $ 136 $ 1 $ 135

Revenue for the three months ended March 31, 2022 was down, compared to the prior year period, primarily due to lower federal stimulus revenue in the Government Services segment, as well as lost business from prior years partially offset by new business ramp across all segments.

Revenue for the three and six months ended June 30, 2022 decreased, compared to the prior year periods, primarily due to lower federal stimulus revenue in the Government Services segment, lost business from prior years, as well as negative foreign exchange translation impact, particularly the Euro and British pound, partially offset by new business ramp across all segments.

Cost of Services (excluding depreciation and amortization)

Cost of services for the three months ended March 31, 2022 decreased, compared to the prior year period, driven by lost business from prior years as well as increased operational efficiency, slightly offset by an increase in hiring activity to support new deal ramp in the Commercial segment.

Cost of services for the three and six months ended June 30, 2022 decreased, compared to the prior year periods, driven by lost business from prior years, increased operational efficiency and favorable foreign exchange translation impact, slightly offset by an increase in hiring activity to support new deal ramp in the Commercial segment.

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

SG&A for the three months ended March 31, 2022 decreased, compared to the prior year period, primarily driven by the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter.

SG&A for the three months ended June 30, 2022 decreased, compared to the prior year period, primarily driven by lower variable employee costs.

SG&A for the six months ended June 30, 2022 decreased, compared to the prior year period, primarily driven by the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, as well as lower variable employee costs.

Depreciation and Amortization

Depreciation and amortization for the three months ended March 31, 2022 decreased, compared to the prior year period, primarily due to portions of certain customer relationship intangible assets being fully amortized during both the first quarters of 2022 and 2021.

Depreciation and amortization for the three and six months ended June 30, 2022 decreased, compared to the prior year periods, primarily due to portions of certain customer relationship intangible assets from acquisitions in years past being fully amortized.

CNDT Q2 2022 Form 10-Q

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Three Months Ended

June 30, Six Months Ended

(in millions) 2022 2021 2022 2021

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On October 15, 2021, we completed the refinancing of our previously outstanding debt, which extended the maturity profile of our debt.

The increase in Interest expense for the three months ended March 31, 2022, compared to the prior year period, was driven by higher interest rates on our refinanced credit facilities, partially offset by a lower total outstanding debt balance.

The increase in Interest expense for the three and six months ended June 30, 2022, compared to the prior year periods, was driven by higher interest rates on our refinanced credit facilities, partially offset by a lower total outstanding debt balance.

(Gain) Loss on Divestitures and Transaction Costs

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Litigation Settlements (Recoveries), Net

Litigation settlements (recoveries), net for the three months ended March 31, 2022 primarily consist of $24 million of insurance recoveries related to the previously disclosed State of Texas matter.

Litigation settlements (recoveries), net for the six months ended June 30, 2022 primarily consist of $24 million of insurance recoveries recorded in the first quarter of 2022 related to the previously disclosed State of Texas matter.

Refer to Note 12 – Contingencies and Litigation to the Condensed Consolidated Financial Statements for additional information.

The effective tax rate for the three months ended March 31, 2022 was 35.2%, compared to (23.4)% for the three months ended March 31, 2021.

The March 31, 2022 rate was higher than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, state and local taxes and permanently non-deductible amounts related to the divestiture transaction, partially offset by the tax benefit of valuation allowances released due to the gain from divestiture and tax credits.

The effective tax rate for the three months ended March 31, 2021 was negative as compared to the U.S.

statutory rate of 21%, primarily due to pre-tax loss and tax expense resulting from geographic mix of income, valuation allowances, and tax charges recognized on employee equity award vestings, partially offset by tax credits.

The effective tax rate for the three months ended June 30, 2022 was 99.6%, compared to 38.2% for the three months ended June 30, 2021.

The June 30, 2022 rate was higher than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, state and local taxes, other non-deductible permanent differences, and valuation allowances, partially offset by tax credits.

The effective tax rate for the three months ended June 30, 2021 was higher than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, other non-deductible permanent differences, valuation allowances and tax audit reserves, partially offset by tax credits.

CNDT Q2 2022 Form 10-Q

Excluding the impact of the Midas divestiture, the litigation insurance recoveries, amortization of intangible assets, restructuring costs and certain discrete tax items, the normalized effective tax rate for the three months ended March 31, 2022 was 29.6%.

The normalized effective tax rate for the three months ended March 31, 2021 was 23.4%, predominantly due to excluding the impact of valuation allowances, equity award vesting, amortization of intangible assets and restructuring costs.

The normalized effective tax rate for the three months ended March 31, 2022 was higher than the three months ended March 31, 2021 rate due to the geographic mix of income.

The Company believes it is reasonably possible that unrecognized tax benefits of approximately $11 million will reverse within 12 months due to an anticipated audit settlement.

Excluding the impact of discrete tax adjustments, amortization of intangible assets, litigation reserves and restructuring costs, the normalized effective tax rate for the three months ended June 30, 2022 was 46.7%.

The normalized effective tax rate for the three months ended June 30, 2021 was 25.7%, predominantly due to excluding the impact of discrete tax adjustments, amortization of intangible assets and restructuring costs.

The normalized effective tax rate for the second quarter of 2022 was higher than the second quarter of 2021 rate due to the geographic mix of income, increase in permanent tax differences and lower adjusted pre-tax income.

The effective tax rate for the six months ended June 30, 2022 was 37.0%, compared to 94.3% for the six months ended June 30, 2021.

The June 30, 2022 rate was higher than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, state and local taxes and permanently non-deductible amounts related to the Midas divestiture transaction, partially offset by the tax benefit of valuation allowances released due to the gain from this divestiture and tax credits.

The effective tax rate for the six months ended June 30, 2021 was higher than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, other non-deductible permanent differences, valuation allowances, and tax audit reserves, partially offset by tax credits.

The normalized effective tax rate for the six months ended June 30, 2021 was 24.7%, predominantly due to excluding the impact of discrete tax adjustments, charges for amortization of intangible assets and restructuring costs.

The normalized effective tax rate for the year-to-date June 30, 2022 was higher than the year-to-date June 30, 2021 rate predominantly due to the geographic mix of income, increase in permanent tax differences and lower adjusted pre-tax income.

We believe it is reasonably possible that unrecognized tax benefits of approximately $3 million will reverse within 12 months due to settlements.

A payment of $8 million was made in June 2022 decreasing unrecognized tax benefits.

In recent years, government agencies and global organizations have had an increased focus on the issues of taxation of multinational corporations.

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The Pillar 2 Model Rules, released on December 20, 2021, define the scope and key mechanics for the Pillar 2 system of global minimum tax rules.

The Company is monitoring the development and assessing any potential impact.

We are monitoring the development and assessing any potential impact.

We do not anticipate a material impact based on current guidance.

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Divestitures includes our Midas business which was sold in the first quarter of 2022.

CNDT Q2 2022 Form 10-Q

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 our reportable segments.

We continue to modernize a significant portion of our infrastructure with new systems and processes and consolidate our data centers as part of our transformation initiatives.

We continue to modernize a significant portion of our infrastructure with new systems and processes and consolidate our data centers as part of our quality and efficiency initiatives.

There is a risk, however, that our modernization efforts and data center consolidations could materially and adversely disrupt our operations.

See Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

CNDT Q1 2022 Form 10-Q

Results of financial performance by segment were:

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Adjusted EBITDA Margin 8.6 % 35.1 % 13.5 % 47.1 % — % 12.5 %

CNDT Q2 2022 Form 10-Q

Six Months Ended

(in millions) Commercial Government Services Transportation Divestitures Unallocated Costs Total

Revenue $ 982 $ 565 $ 341 $ 7 $ — $ 1,895

Segment profit (loss) $ 50 $ 145 $ 24 $ 2 $ (131) $ 90

Segment depreciation and amortization $ 50 $ 16 $ 17 $ — $ 23 $ 106

Adjusted EBITDA $ 100 $ 161 $ 41 $ 2 $ (108) $ 196

% of Total Revenue 51.8 % 29.8 % 18.0 % 0.4 % — % 100.0 %

Adjusted EBITDA Margin 10.2 % 28.5 % 12.0 % 28.6 % — % 10.3 %

Revenue $ 1,000 $ 650 $ 369 $ 35 $ — $ 2,054

Segment profit (loss) $ 43 $ 195 $ 38 $ 16 $ (158) $ 134

Segment depreciation and amortization $ 50 $ 13 $ 17 $ 2 $ 27 $ 109

Adjusted EBITDA $ 93 $ 208 $ 55 $ 18 $ (131) $ 243

% of Total Revenue 48.7 % 31.6 % 18.0 % 1.7 % — % 100.0 %

Adjusted EBITDA Margin 9.3 % 32.0 % 14.9 % 51.4 % — % 11.8 %

(in millions) Three Months Ended

June 30, Six Months Ended

Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2022 2021 2022 2021

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Litigation costs (3) 1 (31) 2

Loss on extinguishment of debt — 2 — 2

Other (income) expenses, net (1) — — —

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Commercial Segment

Commercial revenue for the three months ended March 31, 2022 was substantially unchanged, compared to the prior year period, due to new business ramp, which was especially strong in Customer Experience Management, being offset by lost business from prior years.

Commercial revenue for the three and six months ended June 30, 2022 was lower compared to the prior year periods, primarily due to the merger of two of our clients resulting in lower volumes as well as unfavorable exchange rate movement and lost business from prior years, partially offset by strong new business ramp.

Segment Profit and Adjusted EBITDA

Increases in the Commercial segment profit and adjusted EBITDA margin for the three months ended March 31, 2022, compared to the prior year period, were mainly driven by increased operational efficiency and expense reductions resulting from progress in our efficiency initiatives, more than offsetting the dynamics of a challenging labor market in both North America and Europe.

Increases in the Commercial segment profit and adjusted EBITDA margin for the three and six months ended June 30, 2022, compared to the prior year periods, were mainly driven by increased operational efficiency and expense reductions resulting from progress in our efficiency initiatives and higher interest rates positively impacting our Benefit Wallet business, more than offsetting the dynamics of a challenging labor market in both North America and Europe.

CNDT Q2 2022 Form 10-Q

Government Services Segment

Government Services revenue for the three months ended March 31, 2022 decreased, compared to the prior year period.

Government Services revenue for the three and six months ended June 30, 2022 decreased, compared to the prior year periods.

This decrease was primarily driven by significantly lower Federal stimulus revenue, while increases in volume, price and new business offset lost business from prior years.

Segment Profit and Adjusted EBITDA

Decreases in the Government Services segment profit and adjusted EBITDA margin for the three months ended March 31, 2022, compared to the prior year period, were mainly driven by lower Federal stimulus revenue, partially offset by expense reductions resulting from progress in our efficiency initiatives.

Decreases in the Government Services segment profit and adjusted EBITDA margin for the three and six months ended June 30, 2022, compared to the prior year periods, were mainly driven by lower Federal stimulus revenue.

Transportation Segment

Transportation revenue for the three months ended March 31, 2022 decreased, compared to the prior year period, primarily driven by the impact of lower volume and project timing in our International transit business, unfavorable exchange rate movement, a one-time revenue benefit in the prior year period and lost business from prior years, partially offset by new business.

Transportation revenue for the three months ended June 30, 2022 decreased, compared to the prior year period, primarily driven by unfavorable exchange rate movement, particularly the Euro.

Transportation revenue for the six months ended June 30, 2022 decreased, compared to the prior year period, primarily driven by the impact of lower volume and project timing in our International transit business, unfavorable exchange rate movement, particularly the Euro, a one-time revenue benefit in the prior year period and lost business from prior years, partially offset by new business.

Segment Profit and Adjusted EBITDA

Transportation segment profit and adjusted EBITDA margin decreased for the three months ended March 31, 2022, compared to the prior year period, mainly driven by the impact of lost business, project timing in the International business, and a one-time item benefiting the prior year period, partially offset by new business.

Transportation segment profit and adjusted EBITDA margin for the three months ended June 30, 2022 was substantially unchanged.

Transportation segment profit and adjusted EBITDA margin decreased for the six months ended June 30, 2022, compared to the prior year period, mainly driven by the impact of lost business, project timing in the International business, and a one-time item benefiting the prior year period, partially offset by new business.

Revenue, Segment Profit (Loss) and Adjusted EBITDA

The decline in revenue, segment profit and Adjusted EBITDA for the three months ended March 31, 2022 was primarily due to the sale of the Midas Suite of products.

The current year includes slightly more than one month of activity versus the prior year includes a full quarter of activity.

The decline in revenue, segment profit and Adjusted EBITDA for the three and six months ended June 30, 2022 was primarily due to the sale of the Midas Suite of products.

The current year includes slightly more than one month of activity versus the prior year, which includes a full six months of activity.

Unallocated Costs

Unallocated Costs for the three months ended March 31, 2022 decreased, compared to the prior year period primarily due to a portion of the recovery of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter that settled in February 2019 that was allocated to SG&A and progress with our efficiency initiatives.

Unallocated Costs for the three and six months ended June 30, 2022 decreased, compared to the prior year periods, primarily due to a portion of the recovery of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter that settled in February 2019 that was allocated to SG&A, progress with our efficiency initiatives and lower variable employee costs.

Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.

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Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons are not a good measure of renewal performance.

For the three months ended March 31, 2022, the Company signed $464 million of new business, representing a 32% increase compared to the prior year period.

Renewal TCV for the three months ended March 31, 2022 was $936 million.

New business ACV is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure.

CNDT Q2 2022 Form 10-Q

For the three months ended June 30, 2022, the Company signed $180 million of new business ACV, an increase for the fourth consecutive quarter, with strong contributions from the Commercial segment.

While down 30% compared to the corresponding prior year period, the prior year benefited from $85 million of stimulus signings and volume from a large client we no longer include in the sales metrics.

For the six months ended June 30, 2022, the Company signed $347 million of new business ACV, down 26% from the prior year, primarily due to $147 million of stimulus signings and volume from a large client we no longer include in the sales metrics.

Signing information for the three and six months ended June 30, 2022 and 2021 is as follows:

Three Months Ended

March 31, 2022 vs.

June 30, 2022 vs.

($ in millions) 2022 (3)

$ Change % Change

New business ACV $ 180 $ 257 $ (77) (30) %

New business TCV $ 396 $ 771 $ (375) (49) %

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$ 82 $ 150 $ (68) (45) %

Six Months Ended

June 30, 2022 vs.

($ in millions) 2022 (3)

$ Change % Change

New business ACV $ 347 $ 467 $ (120) (26) %

New business TCV $ 860 $ 1,123 $ (263) (23) %

Renewals TCV 1,238 1,098 140 13 %

Total Signings $ 2,098 $ 2,221 $ (123) (6) %

Annual recurring revenue signings (1)

$ 207 $ 208 $ (1) — %

Non-recurring revenue signings (2)

$ 144 $ 276 $ (132) (48) %

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

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(3) Adjusted to remove Midas new business signings.

The total new business pipeline at the end of March 31, 2022 and 2021 was $22.0 billion and $21.0 billion, respectively.

CNDT Q2 2022 Form 10-Q

The total new business pipeline at the end of June 30, 2022 and 2021 was $22.0 billion and $21.0 billion, respectively.

Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.

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(in millions) Net ARR Activity metric

June 30, 2022 $ 104

March 31, 2022 102

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June 30, 2021 106

March 31, 2021 87

Capital Resources and Liquidity

As of March 31, 2022 and December 31, 2021, total cash and cash equivalents were $588 million and $415 million, respectively.

As of June 30, 2022 and December 31, 2021, total cash and cash equivalents were $519 million and $415 million, respectively.

We also have a $550 million revolving line of credit for our various cash needs, of which $4 million was used for letters of credit.

In the first quarter of 2022, we repaid $100 million that was outstanding as of December 31, 2021 under our revolving line of credit.

The net amount available to be drawn upon under our revolving line of credit as of March 31, 2022, was $540 million.

As of March 31, 2022, our total debt outstanding was $1.3 billion of which $30 million was due within one year.

The net amount available to be drawn upon under our revolving line of credit as of June 30, 2022, was $546 million.

As of June 30, 2022, our total debt outstanding was $1.3 billion of which $30 million was due within one year.

Refer to Note 7 – Debt in the Condensed Consolidated Financial Statements for additional debt information.

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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.

CNDT Q1 2022 Form 10-Q

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,

Six Months Ended June 30,

(in millions) 2022 2021 Better (Worse)

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Operating activities

The net improvement in cash used in operating activities of $13 million, compared to the prior year period, was primarily related to the $38 million of insurance recoveries related to the previously disclosed State of Texas matter, partially offset by lower Adjusted EBITDA and higher cash taxes.

The net decrease in cash generated from operating activities of $108 million, compared to the prior year period, was primarily related to lower Adjusted EBITDA, higher cash taxes mainly related to the Midas gain and insurance recoveries, higher cash interest and working capital timing, primarily related to Accounts receivable collections timing.

These items were partially offset by the $38 million of insurance recoveries related to the previously disclosed State of Texas matter.

CNDT Q2 2022 Form 10-Q

Investing activities

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Financing activities

The increase in cash used in financing activities was primarily related to the repayment of the $100 million borrowed under the revolver partially offset by lower Term loan principal payments.

The increase in cash used in financing activities was primarily related to the repayment of the $100 million borrowed under the revolver partially offset by lower Term loan and Senior note principal payments.

Material Cash Requirements from Contractual Obligations

The Company believes its balances of cash and cash equivalents, which totaled $588 million as of March 31, 2022, 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, 2022, the Company’s material cash requirements include debt, leases and estimated purchase commitments.

The Company believes its balances of cash and cash equivalents, which totaled $519 million as of June 30, 2022, 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 June 30, 2022, 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, 2021 for additional information on our material cash requirements.

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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, 2022 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no significant changes during the six months ended June 30, 2022 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

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.

CNDT Q1 2022 Form 10-Q

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis