What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-02 · 131 added, 71 removed, 209 unchanged (49% of the section changed)

12 unchanged sentences

With a dedicated global team of approximately 55,000 associates, our solutions span customer service, business administration and operations, healthcare administration and payment management.

Across many industries and government agencies, we reduces costs, improves end-user experiences and enables digital transformation for our global clients.

Across many industries and government agencies, we reduce costs, improve end-user experiences and enable digital transformation for our global clients.

Headquartered in Florham Park, New Jersey, we have operations in 24 countries.

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• Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions, to government transportation agencies.

We deliver mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers and reducing impact on the environment.

We deliver mission-critical mobility and digital payment solutions for public transit and road usage charging that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment.

CNDT Q2 2024 Form 10-Q

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

During 2024 we have achieved the following:

• We continue to make progress with our portfolio rationalization strategy.

During the first quarter we closed the first tranche of the BenefitWallet portfolio transfer, representing approximately 40% of the total assets, receiving $164 million as the pro-rata share of the Purchase Price.

The second tranche closed in April representing approximately 20% of the total assets, receiving $85 million as the pro-rata share of the Purchase Price.

We anticipate the remainder of the portfolio to transfer later in the second quarter.

Proceeds from the first and second tranches, plus cash on hand, were used to voluntarily prepay $259 million of the Term Loan B.

• The Curbside Parking and Public Safety Solutions divestiture announced on December 28, 2023 closed on April 30, 2024.

We also continue to pursue other divestiture opportunities, each at different stages of the divestiture process.

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

CNDT Q1 2024 Form 10-Q

During the second quarter of 2024 we have achieved the following:

• Completed the transfer of the BenefitWallet Portfolio, receiving the remaining $261 million of the $425 million total purchase price.

• Completed the sale of the Curbside Management and Public Safety Solutions businesses on April 30, 2024 with a purchase price of $230 million, $50 million of which is deferred to the second quarter of 2025.

• Announced the Casualty Claims Solutions divestiture on May 3, 2024, which is anticipated to close in the third quarter of 2024.

• Used the proceeds from the divested businesses to voluntarily prepay $300 million of the Term Loan B.

• Repurchased 43.3 million shares of common stock, including approximately 38 million shares of common stock purchased from the Icahn Parties pursuant to the Purchase Agreement.

The aggregate purchase price for the repurchase from the Icahn Parties was approximately $132 million.

Financial Information and Analysis of Results of Operations

Three Months Ended

March 31, 2024 vs.

June 30, 2024 vs.

(in millions) 2024 2023 $ Change % Change

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Net Income (Loss) $ 216 $ (7) $ 223

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

CNDT Q2 2024 Form 10-Q

Six Months Ended

June 30, 2024 vs.

(in millions) 2024 2023 $ Change % Change

Revenue $ 1,749 $ 1,837 $ (88) (5) %

Operating Costs and Expenses

Cost of services (excluding depreciation and amortization) 1,412 1,424 (12) (1) %

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

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

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

Selling, general and administrative (excluding depreciation and amortization) 231 229 2 1 %

Research and development (excluding depreciation and amortization) 3 3 — — %

Depreciation and amortization 113 118 (5) (4) %

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

Restructuring and related costs 17 42 (25) (60) %

Interest expense 46 54 (8) (15) %

(Gain) loss on divestitures and transaction costs, net (508) 5 (513) n/m

Litigation settlements (recoveries), net 5 (22) 27 (123) %

Loss on extinguishment of debt 5 — 5 n/m

Other (income) expenses, net (2) (1) (1) n/m

Total Operating Costs and Expenses 1,322 1,852 (530)

Income (Loss) Before Income Taxes 427 (15) 442

Income tax expense (benefit) 112 (2) 114

Net Income (Loss) $ 315 $ (13) $ 328

Revenue for the three months ended June 30, 2024 decreased compared to the prior year period primarily due to the impact of the Benefit Wallet Transfer and the sale of The Curbside Management and Public Safety Solutions businesses.

Lost business in all three segments contributed to the decrease and was partially offset by new business ramp, particularly in our Transportation segment.

Revenue for the six months ended June 30, 2024 decreased, compared to the prior year period, primarily due to the impact of the Benefit Wallet Transfer, the sale of the Curbside Management and Public Safety Solutions businesses and lost business in our Commercial and Government segments partially offset by new business ramp, including the State of Victoria contract, stronger volumes and improved operational execution in our Transportation segment.

Cost of Services (excluding depreciation and amortization)

Cost of services for the three months ended June 30, 2024 decreased, compared to the prior year period, primarily due to the impact of the Benefit Wallet Transfer and the sale of the Curbside Management and Public Safety Solutions businesses.

Cost of services for the six months ended June 30, 2024 decreased slightly, compared to the prior year period, primarily driven by the impact of the Benefit Wallet Transfer and the sale of the Curbside Management and Public Safety Solutions businesses partially offset by the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year period described in Note 16 – Contingencies and Litigation to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

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

SG&A for the three months ended June 30, 2024 decreased, compared to the prior year period, primarily due to the impact of the sale of the Curbside Management and Public Safety Solutions businesses.

SG&A for the six months ended June 30, 2024 increased, compared to the prior year periods, driven by costs to transition away from a technology vendor, partially offset by the impact of the sale of the Curbside Management and Public Safety Solutions businesses.

CNDT Q2 2024 Form 10-Q

Depreciation and Amortization

Depreciation and amortization for the three and six months ended June 30, 2024 decreased, compared to the prior year periods due to the impact of the sale of the Curbside Management and Public Safety Solutions businesses and lower capital investments, partially offset by the current year write-off of an abandoned internal use software asset in our Commercial segment.

Restructuring and Related Costs

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Three Months Ended

June 30, Six Months Ended

(in millions) 2024 2023 2024 2023

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Termination, insourcing and asset impairment costs 3 8 7 15

Total net current period charges 9 29

Consulting and other costs (1)

Restructuring and related costs $ 8 $ 13 $ 17 $ 42

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

Restructuring and related costs for the three months ended March 31, 2024 decreased compared to the prior year period.

The decrease is primarily driven by severance and related costs related to the closure of one of our Commercial segment operations in Europe in the prior year period.

Restructuring and related costs for the six months ended June 30, 2024 decreased compared to the prior year period.

The decrease is primarily driven by severance and related costs due to the closure of one of our Commercial segment operations in Europe in the prior year period.

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

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Interest expense represents interest on long-term debt and the amortization of debt issuance costs.

Interest expense for the three months ended March 31, 2024, compared to the prior year period, was substantially unchanged.

Interest expense for the three and six months ended June 30, 2024 decreased, compared to the prior year periods primarily due to voluntary prepayments of the Term Loan B with proceeds from divestitures.

(Gain) Loss on Divestitures and Transaction Costs

The completion of the first tranche of the BenefitWallet Transfer in the first quarter of 2024 resulted in a gain of $164 million.

Additionally, professional fees and other costs related to certain consummated and non-consummated transactions considered by the Company are included in this financial statement line item for both years.

The completion of the BenefitWallet Transfer resulted in a gain of $261 million and $425 million for the three and six months ended June 30, 2024, respectively.

The completion of the sale of the Curbside Management and Public Safety businesses in the second quarter of 2024 resulted in a gain of $108 million for the three and six months ended June 30, 2024.

Additionally, professional fees and other costs related to these consummated and certain other non-consummated transactions considered by the Company are included in this financial statement line item for all periods.

Litigation Settlements (Recoveries), Net

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

The effective tax rate for the three months ended March 31, 2024 was 21.9%, compared to 20.8% for the three months ended March 31, 2023.

The March 31, 2024 rate approximates the U.S.

statutory rate of 21% as incremental tax from geographic mix of income and state taxes was offset by tax benefit from valuation and audit settlement reserve releases.

The effective tax rate for the three months ended March 31, 2023 also approximated the U.S.

statutory rate.

Excluding the impact of the Benefit Wallet Transfer, restructuring costs, amortization of intangible assets, litigation reserve, audit settlement reserve release, valuation allowance and other discrete tax items, the normalized effective tax rate for the three months ended March 31, 2024 was 22.2%.

The normalized effective tax rate for the three months ended March 31, 2023 was 35.0%, primarily due to excluding the impact of restructuring costs, litigation reserve releases, valuation allowance and certain discrete tax items.

The normalized effective tax rate for the three months ended March 31, 2024 was lower than the three months ended March 31, 2023 rate due to the geographic mix of income.

Litigation settlements (recoveries), net for the six months ended June 30, 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter.

The effective tax rate for the three months ended June 30, 2024 was 28.2%, compared to (3.3)% for the three months ended June 30, 2023.

The June 30, 2024 rate was higher than the U.S.

statutory rate of 21%, primarily due to state and local taxes, geographic mix of income, and other nondeductible permanent differences, partially offset by tax benefit of valuation allowances released due to the gain from divestitures and tax credits.

The effective tax rate for the three months ended June 30, 2023 was lower than the U.S.

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

CNDT Q2 2024 Form 10-Q

In 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules for a 15% global minimum tax, known as Pillar Two.

Pillar Two has now been enacted by approximately 30 countries.

Excluding the impact of the gain from divestitures, restructuring costs, amortization of intangibles, valuation allowance release and other discrete tax adjustments, the normalized effective tax rate for the three months ended June 30, 2024 was 23.6%.

The normalized effective tax rate for the three months ended June 30, 2023 was 42.2%, primarily due to excluding the impact of restructuring costs, amortization of intangible assets and other discrete tax adjustments.

The normalized effective tax rate for the three months ended June 30, 2024 was lower than the rate for the three months ended June 30, 2023 due to the geographic mix of income.

The effective tax rate for the six months ended June 30, 2024 was 26.3%, compared to 9.2% for the six months ended June 30, 2023.

The June 30, 2024 rate was higher than the U.S.

statutory rate of 21%, primarily due to state and local taxes, geographic mix of income, and other nondeductible permanent differences, partially offset by tax benefit from valuation allowances and audit settlement reserve releases.

The effective tax rate for the six months ended June 30, 2023 was lower than the U.S.

statutory rate of 21%, primarily due to the geographic mix of income, valuation allowances, and state and local taxes on pre-tax losses.

Excluding the impact of the gain from divestitures, restructuring costs, amortization of intangible assets, litigation reserve releases, audit settlement reserve release, valuation allowance and other discrete tax items, the normalized effective tax rate for the six months ended June 30, 2024 was 23.1%.

The normalized effective tax rate for the six months ended June 30, 2023 was 40.5%, primarily due to excluding the impact of the amortization of intangible assets, restructuring costs and litigation reserve releases.

The normalized effective tax rate for the six months ended June 30, 2024 was lower than the six months ended June 30, 2023 rate primarily due to the geographic mix of income.

In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax, known as Pillar Two.

This alternative minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the current period.

The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation.

The Company is continuing monitoring legislative developments, as well as additional guidance from countries that have enacted legislation.

We anticipate further legislative activity and administrative guidance in 2024.

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• Transportation.

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

Divestitures includes our BenefitWallet and Curbside Management and Public Safety Solutions businesses, which have been reclassified from our Commercial and Transportation segments, respectively.

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.

CNDT Q2 2024 Form 10-Q

Results of financial performance by segment were:

Three Months Ended

(in millions) Commercial Government Transportation Unallocated Costs Total

(in millions) Commercial Government Transportation Divestitures Unallocated Costs Total

Revenue $ 425 $ 245 $ 141 $ 17 $ — $ 828

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Adjusted EBITDA Margin 10.6 % 28.5 % 6.5 % 45.3 % — % 10.2 %

Six Months Ended

(in millions) Commercial Government Transportation Divestitures Unallocated Costs Total

Revenue $ 881 $ 503 $ 285 $ 80 $ — $ 1,749

Segment profit (loss) $ 39 $ 80 $ (9) $ 26 $ (143) $ (7)

Segment depreciation and amortization $ 52 $ 24 $ 13 $ 8 $ 14 $ 111

Adjusted EBITDA $ 91 $ 104 $ 4 $ 34 $ (129) $ 104

% of Total Revenue 50.3 % 28.8 % 16.3 % 4.6 % — % 100.0 %

Adjusted EBITDA Margin 10.3 % 20.7 % 1.4 % 42.5 % — % 5.9 %

Revenue $ 921 $ 534 $ 256 $ 126 $ — $ 1,837

Segment profit (loss) $ 37 $ 140 $ (6) $ 45 $ (149) $ 67

Segment depreciation and amortization $ 55 $ 20 $ 12 $ 10 $ 19 $ 116

Adjusted EBITDA $ 92 $ 160 $ 6 $ 55 $ (130) $ 183

% of Total Revenue 50.1 % 29.1 % 13.9 % 6.9 % — % 100.0 %

Adjusted EBITDA Margin 10.0 % 30.0 % 2.3 % 43.7 % — % 10.0 %

CNDT Q2 2024 Form 10-Q

(in millions) Three Months Ended

June 30, Six Months Ended

Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2024 2023 2024 2023

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Commercial Segment

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

Commercial revenue for the three and six months ended June 30, 2024 declined compared to the prior year periods, driven by lost business and lower volumes, partially offset by new business ramp.

Segment Profit and Adjusted EBITDA

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

Commercial segment profit and adjusted EBITDA for the three months ended June 30, 2024 decreased compared to the prior year period due to the impact of lost business and lower volumes, partially offset by new business ramp.

Commercial segment profit and adjusted EBITDA for the six months ended June 30, 2024 are substantially unchanged compared to the prior year period, with new business and cost efficiencies offsetting lost business and lower volumes.

Commercial segment profit also benefited slightly from the impact of lower depreciation.

Government Segment

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

Government revenue for the three and six months ended June 30, 2024 decreased, compared to the prior year periods, primarily driven by lost business and lower volumes, partially offset by the ramping of new business and a non-repeating item in the prior year period.

Segment Profit and Adjusted EBITDA

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

Government segment profit and adjusted EBITDA for the three and six months ended June 30, 2024 decreased compared to the prior year periods primarily due to lost business, lower volumes and the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year period and unfavorable revenue mix.

Transportation Segment

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

Segment Profit and Adjusted EBITDA

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

Transportation revenue for the three and six months ended June 30, 2024 increased compared to the prior year periods, primarily driven by the ramping of new business, including the State of Victoria contract, higher volumes, improved operational performance and less impact from extended implementation timelines compared to the prior year period, partially offset by the non-retained portion of a Tolling contract.

CNDT Q2 2024 Form 10-Q

Segment Profit and Adjusted EBITDA

Transportation segment profit and adjusted EBITDA for the three and six months ended June 30, 2024 decreased primarily due to the non-retained portion of a Tolling contract, partially offset by improved operational performance and less impact from extended implementation timelines compared to the prior year period.

Revenue, Segment Profit and Adjusted EBITDA

The decrease in revenue, segment profit and Adjusted EBITDA for the three and six months ended June 30, 2024 was due to the BenefitWallet portfolio and the Curbside Management and Public Safety businesses being included in the full three and six months of the prior year period whereas their results were only included until the date of their transfer and sale, respectively, in 2024.

Unallocated Costs

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

Unallocated Costs for the three and six months ended June 30, 2024 decreased compared to the prior year periods primarily due to lower technology costs and lower employee-related healthcare expenses.

We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business.

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We present certain key metrics, including Signings and Net ARR Activity below.

The metrics for all periods presented below have been recast to remove the activity related to the BenefitWallet Portfolio and the Curbside Management and Public Safety Solutions businesses.

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

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New business Annual Contract Value ("ACV") is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure.

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

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

For the three and six months ended June 30, 2024, the Company signed $142 million and $239 million of new business ACV, respectively.

CNDT Q2 2024 Form 10-Q

Signing information for the three and six months ended June 30, 2024 and 2023 is as follows:

Three Months Ended

March 31, 2024 vs.

June 30, 2024 vs.

($ in millions) 2024 (3)

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$ 109 $ 353 $ (244) (69) %

Six Months Ended

June 30, 2024 vs.

($ in millions) 2024 (3)

$ Change % Change

New business ACV $ 239 $ 328 $ (89) (27) %

New business TCV $ 422 $ 1,582 $ (1,160) (73) %

Renewals TCV 732 981 (249) (25) %

Total Signings $ 1,154 $ 2,563 $ (1,409) (55) %

Annual recurring revenue signings (1)

$ 94 $ 167 $ (73) (44) %

Non-recurring revenue signings (2)

$ 180 $ 419 $ (239) (57) %

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

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

(3) Adjusted to remove Midas new business signings.

CNDT Q1 2024 Form 10-Q

The total new business pipeline at the end of March 31, 2024 and 2023 was $24.0 billion and $23.2 billion, respectively.

(3) Adjusted to remove Curbside Management and Public Safety new business signings.

The total new business pipeline at the end of June 30, 2024 and 2023 was $21.8 billion and $19.0 billion, respectively.

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

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Net ARR Activity

Net ARR Activity is a metric is defined as Projected Annual Recurring Revenue for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results.

Net ARR Activity is a metric that is defined as Projected Annual Recurring Revenue for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results.

The metric annualizes the net impact to revenue.

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(in millions) Net ARR Activity metric

June 30, 2024 $ (49)

March 31, 2024 10

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June 30, 2023 141

March 31, 2023 108

CNDT Q2 2024 Form 10-Q

Capital Resources and Liquidity

As of March 31, 2024 and December 31, 2023, total cash and cash equivalents were $415 million and $498 million, respectively.

As of June 30, 2024 and December 31, 2023, total cash and cash equivalents were $300 million and $498 million, respectively.

We also have a $550 million revolving line of credit for our various cash needs, of which $3 million was used for letters of credit.

The net amount available to be drawn upon under our revolving line of credit as of March 31, 2024, was $548 million.

As of March 31, 2024, our total principal debt outstanding was $1,131 million, of which $33 million was due within one year.

The net amount available to be drawn upon under our revolving line of credit as of June 30, 2024, was $547 million.

As of June 30, 2024, our total principal debt outstanding was $833 million, of which $33 million was due within one year.

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

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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) 2024 2023 Better (Worse)

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Operating activities

The net increase in cash used in operating activities of $25 million, compared to the prior year period, was primarily related to lower adjusted EBITDA, slightly higher accounts receivable days sales outstanding and lower days payable outstanding.

These were partially offset by lower cash income tax payments.

In the first quarter of 2024, we had net cash tax refunds of $22 million, primarily due to the receipt of the U.S.

federal income tax refund related to tax year 2018.

CNDT Q1 2024 Form 10-Q

The net increase in cash used in operating activities of $56 million, compared to the prior year period, was primarily due to lower adjusted EBITDA, slightly higher accounts receivable days sales outstanding and lower days payable outstanding.

These were partially offset by lower cash income tax and interest payments.

We expect cash tax payments to increase significantly in the second half of 2024 resulting from payments on gains related to our divestitures.

Investing activities

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

Investing cash flow increased by $595 million mainly due to $599 million of proceeds received from the transfer of the BenefitWallet Portfolio and the sale of the Curbside Management and Public Safety Solutions businesses.

Financing activities

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

The increase in cash used in financing activities was primarily driven by the voluntary prepayment of $464 million of debt using the proceeds received for the transfer of the BenefitWallet Portfolio and the sale of the Curbside Management and Public Safety businesses as well as the repurchase of $168 million of treasury stock, including the $132 million purchased from the Icahn Parties.

CNDT Q2 2024 Form 10-Q

Sales of Accounts Receivable

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Cash proceeds from this arrangement are included in cash flow from operating activities in the Condensed Consolidated Statements of Cash Flows.

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

The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the six months ended June 30, 2024 and 2023 was $(16) million and $(24) million, respectively.

Material Cash Requirements from Contractual Obligations

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

At March 31, 2024, the Company’s material cash requirements include debt, leases and estimated purchase commitments.

The Company believes its balances of cash and cash equivalents, which totaled $300 million as of June 30, 2024, along with cash generated by operations and amounts available for borrowing under its 2021 Revolving Credit Facility, will be sufficient to satisfy its cash requirements over the next 12 months and beyond.

At June 30, 2024, the Company’s material cash requirements include debt, leases and estimated purchase commitments.

See Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on our material cash requirements.

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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, 2024 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no significant changes during the six months ended June 30, 2024 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Changes

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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