What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-07-07 compared with 2023-04-07 · 166 added, 113 removed, 269 unchanged (51% of the section changed)

7 unchanged sentences

risks related to the proposed transaction with Webhelp, including that the proposed transaction will not be consummated;

the ability to complete works council consultations and receive shareholder approval and regulatory approvals for the proposed transaction in a timely manner, on acceptable terms or at all, or to satisfy the other closing conditions to the proposed transaction;

the ability to receive stockholder approval and regulatory approvals for the proposed transaction in a timely manner, on acceptable terms or at all, or to satisfy the other closing conditions to the proposed transaction;

conditions in the credit markets and the ability to obtain financing for the proposed transaction on a favorable basis, if at all;

1 unchanged sentence

dollar cost for euro-denominated obligations;

the ability to retain key employees and successfully integrate the Webhelp business;

our ability to realize estimated cost savings, synergies or other anticipated benefits of the proposed transaction, or that such benefits may take longer to realize than expected;

diversion of management’s attention;

the potential impact of the announcement or consummation of the proposed acquisition on relationships with clients and other third parties;

the unfavorable outcome of any legal proceedings that may be instituted against the Company or Webhelp;

risks related to general economic conditions, including consumer demand, interest rates, inflation, supply chains and the effects of the conflict in Ukraine;

27 unchanged sentences

Concentrix is a leading global provider of Customer Experience (“CX”) solutions and technology that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers.

We provide end-to-end capabilities, including CX process optimization, technology innovation and design engineering, front- and back-office automation, analytics and business transformation services to clients in five primary industry verticals.

We provide end-

to-end capabilities, including CX process optimization, technology innovation and design engineering, front- and back-office automation, analytics and business transformation services to clients in five primary industry verticals.

Our differentiated portfolio of solutions supports Fortune Global 500 as well as new economy clients across the globe in their efforts to deliver an optimized, consistent brand experience across all channels of communication, such as voice, chat, email, social media, asynchronous messaging, and custom applications.

5 unchanged sentences

Pending Combination with Webhelp

On March 29, 2023, we announced that we have entered into a binding put option agreement that is expected to result in the combination of the Concentrix and Webhelp businesses.

On March 29, 2023, we announced that we and OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix (“Purchaser”), had entered into a binding put option agreement with certain stockholders (the “Beneficiaries”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of Webhelp SAS (“Webhelp”) that is expected to result in the combination of the Concentrix and Webhelp businesses.

Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa.

The transaction is valued at approximately $4.8 billion, including the assumption of net debt, and is expected to close by the end of the year, subject to completion of the required works council consultations and the satisfaction of customary closing conditions, including approval by Concentrix shareholders and regulatory approvals.

The transaction is valued at approximately $4.8 billion, including the assumption of net debt, and is expected to close by the end of the year, subject to the satisfaction of customary closing conditions, including approval by our stockholders and certain regulatory approvals.

Certain required consultation processes with works councils representing certain Webhelp staff in France and the Netherlands were completed in late April 2023.

On May 30, 2023, the Beneficiaries completed the collection of powers of attorney from 100% of the other Sellers to allow a representative to act on behalf of the Sellers in connection with the execution of the Share Purchase and Contribution Agreement and other related agreements and documents.

On June 2, 2023, the Beneficiaries exercised the Put Option and on June 12, 2023, we, the Purchaser, the Beneficiaries and Webhelp Parent entered into the Share Purchase and Contribution Agreement.

PK Acquisition

17 unchanged sentences

Our cost of revenue as a percentage of revenue has also fluctuated in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, and the timing and costs incurred related to our acquisitions and investments.

In the first fiscal quarter of 2023 and 2022, approximately 79% and 78%, respectively, of our consolidated revenue was generated from our non-U.S.

In the second fiscal quarter of 2023 and 2022, approximately 80% and 78%, respectively, of our consolidated revenue was generated from our non-U.S.

operations, and approximately 68% and 67%, respectively, of our consolidated revenue was priced in U.S.

4 unchanged sentences

Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, and the Canadian dollar, against the U.S.

dollar or other currencies in which we bill our clients, and

inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability.

dollar or other currencies in which we bill our clients, and inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability.

As a result, our revenue growth, costs and profitability have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates and inflation.

11 unchanged sentences

Critical Accounting Policies and Estimates

During the three months ended February 28, 2023, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2022.

Results of Operations – Three Months Ended February 28, 2023 and 2022

Three Months Ended

February 28, 2023 February 28, 2022

($ in thousands)

During the three and six months ended May 31, 2023, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2022.

Results of Operations – Three and Six Months Ended May 31, 2023 and 2022

Three Months Ended Six Months Ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

($ in thousands) ($ in thousands)

Revenue $ 1,614,706 $ 1,568,101 $ 3,251,110 $ 3,104,153

8 unchanged sentences

Net income before non-controlling interest 78,850 113,033 166,720 223,572

Net income attributable to non-controlling interest — 266

Net income (loss) attributable to non-controlling interest — (109) — 157

Net income attributable to Concentrix Corporation $ 78,850 $ 113,142 $ 166,720 $ 223,415

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands)

Industry vertical:

8 unchanged sentences

Our solutions focus on customer engagement, process optimization, and back-office automation.

Our revenue increased 6.5% in the three months ended February 28, 2023, compared to the three months ended February 28, 2022, which included incremental revenue from acquired operations of $81.7 million, or an increase of 5.3%, compared to the prior year period, and increased volumes across the majority of our verticals over the prior year period.

Our revenue increased by 3.0% in the three months ended May 31, 2023, compared to the three months ended May 31, 2022, which included incremental revenue from acquired operations of $46.3 million, or an increase of 3.0%, compared to the prior year period, resulting in increased volumes across the majority of our verticals over the prior year period.

These increases were partially offset by an unfavorable translation effect of foreign currencies of $24.4 million, or 1.6%.

The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the euro, British pound, and Japanese yen against the U.S.

For the three months ended February 28, 2023, revenue in our technology and consumer electronics vertical increased as a result of contributions from acquired operations, increases in volumes from several social media and internet-related service clients, and increases in volumes from a broad-based group of hardware and software clients over the prior year period.

For the three months ended February 28, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to contributions from acquired operations and increased volumes across the majority of our clients in this vertical over the prior year period.

For the three months ended February 28, 2023, revenue in our communications and media vertical decreased slightly due to decreased volumes with several clients which more than offset contributions from acquired operations.

For the three months ended February 28, 2023, revenue from clients in the banking, financial services and insurance vertical increased due to increased volumes across the majority of our clients in this vertical over the prior year period.

For the three months ended February 28, 2023, revenue in our healthcare vertical increased due to contributions from acquired operations and increased volumes across the majority of our healthcare clients over the prior year

For the three months ended February 28, 2023, revenue in our other vertical decreased primarily due to decreases in revenue from several clients, including government clients.

The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Australian dollar, Argentine peso, and Japanese yen against the U.S.

Our revenue increased by 4.7% in the six months ended May 31, 2023, compared to the six months ended May 31, 2022, which included incremental revenue from acquired operations of $128.0 million, or an increase of 4.1%, compared to the prior year period, resulting in increased volumes across the majority of our verticals over the prior year period.

These increases were partially offset by an unfavorable translation effect of foreign currencies of $64.3 million, or 2.1%.

The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the British pound, Japanese yen and euro against the U.S.

For the three and six months ended May 31, 2023, revenue in our technology and consumer electronics vertical increased as a result of contributions from acquired operations.

For the three months ended May 31, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to increased volumes across the majority of our clients in this vertical over the prior year period.

For the six months ended May 31, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to

increased volumes across the majority of our clients in this vertical over the prior year period and contributions from acquired operations.

For the three months ended May 31, 2023, revenue in our communications and media vertical decreased due to decreased volumes with several clients.

For the six months ended May 31, 2023, revenue in the communications and media vertical decreased due to decreased volumes with several clients which more than offset contributions from acquired operations.

For the three and six months ended May 31, 2023, revenue from clients in the banking, financial services and insurance vertical increased primarily due to increased volumes across the majority of our clients in this vertical over the prior year periods.

For the three months ended May 31, 2023, revenue in our healthcare vertical increased due to increased volumes across the majority of our healthcare clients over the prior year period.

For the six months ended May 31, 2023, revenue in our healthcare vertical increased due to contributions from acquired operations and increased volumes across the majority of our healthcare clients over the prior year period.

For the three and six months ended May 31, 2023, revenue in our other vertical decreased primarily due to decreases in revenue from several clients, including government clients, over the prior year periods.

Cost of Revenue, Gross Profit and Gross Margin Percentage

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Cost of revenue $ 1,034,481 $ 1,009,185 2.5% $ 2,089,724 $ 2,007,103 4.1%

3 unchanged sentences

Gross margin can be impacted by resource location, client mix and pricing, additional lead time for programs to be fully scalable, and transition and initial set-up costs.

Our cost of revenue increased by 5.7% in the three months ended February 28, 2023, compared to the three months ended February 28, 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting acquired operations.

Our cost of revenue increased by 2.5% in the three months ended May 31, 2023, compared to the three months ended May 31, 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting acquired operations.

The increases were partially offset by a $49.2 million, or 4.9%, reduction in our cost of revenue due to foreign currency translation.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Philippine peso, Indian rupee, and euro against the U.S.

Our gross profit increased 8.0% in the three months ended February 28, 2023, compared to the three months ended February 28, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $20.3 million on gross profit.

Our gross margin percentage for the three months ended February 28, 2023 increased to 35.5% from 35.0% in the prior year period due to changes in the mix of geographies where our services were delivered.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Philippine peso, Indian rupee, and Egyptian pound against the U.S.

Our cost of revenue increased by 4.1% in the six months ended May 31, 2023, compared to the six months ended May 31, 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting acquired operations.

The increases were partially offset by a $109.4 million, or 5.5%, reduction in our cost of revenue due to foreign currency translation.

The foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Philippine peso, Indian rupee, and Egyptian pound against the U.S.

Our gross profit increased by 3.8% in the three months ended May 31, 2023, compared to the three months ended May 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $24.8 million on gross profit.

Our gross margin percentage for the three months ended May 31, 2023 increased to 35.9% from 35.6% in the prior year period due to changes in the mix of geographies where our services were delivered.

Our gross profit increased by 5.9% in the six months ended May 31, 2023, compared to the six months ended May 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $45.1 million on gross profit.

Our gross margin percentage for the six months ended May 31, 2023 increased to 35.7% from 35.3% in the prior year period due to changes in the mix of geographies where our services were delivered.

Selling, General and Administrative Expenses

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Selling, general and administrative expenses

3 unchanged sentences

Selling, general and administrative expenses also include the cost of our global delivery facilities, utility expenses, hardware and software costs related to our technology infrastructure, legal and professional fees, depreciation on our technology and facility equipment, amortization of intangible assets resulting from acquisitions, marketing expenses and acquisition-related and integration expenses.

Our selling, general and administrative expenses increased 8.9% in the three months ended February 28, 2023, compared to the three months ended February 28, 2022, primarily due to incremental selling, general and administrative expenses associated with the acquired operations and an increase in acquisition-related and integration expenses of $4.6 million.

Our selling, general and administrative expenses increased by 3.9% in the three months ended May 31, 2023, compared to the three months ended May 31, 2022, primarily due to incremental selling, general and administrative expenses associated with acquired operations and an increase in acquisition-related and integration expenses of $5.7 million.

These increases were partially offset by a $13.4 million reduction in selling, general and administrative expenses due to foreign currency translation.

As a percentage of revenue, selling, general and administrative expenses increased from 25.4% in the first fiscal quarter of 2022 to 26.0% in the first fiscal quarter of 2023 due to the net effect of the changes described.

As a percentage of revenue, selling, general and administrative expenses increased from 25.6% in the second fiscal quarter of 2022 to 25.9% in the second fiscal quarter of 2023 due to the net effect of the changes described.

Our selling, general and administrative expenses increased by 6.4% in the six months ended May 31, 2023, compared to the six months ended May 31, 2022, primarily due to incremental selling, general and administrative expenses associated with acquired operations and an increase in acquisition-related and integration expenses of $10.3 million.

These increases were partially offset by a $29.0 million reduction in selling, general and administrative expenses due to foreign currency translation.

As a percentage of revenue, selling, general and administrative expenses increased from 25.5% in the six months ended May 31, 2022 to 25.9% in the six months ended May 31, 2023 due to the net effect of the changes described.

Operating Income

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Operating income $ 162,566 $ 156,912 3.6% $ 318,613 $ 304,657 4.6%

Operating margin 10.1 % 10.0 % 9.8 % 9.8 %

Our operating income increased during the three months ended February 28, 2023, compared to the three months ended February 28, 2022, due to the increase in gross profit partially offset by the increase in selling, general and administrative expenses.

Our operating margin slightly decreased during the three months ended February 28, 2023, compared to the three months ended February 28, 2022, due to the increase in gross margin percentage, more than offset by the increase in selling, general and administrative expenses as a percentage of revenue.

Our operating income increased during the three and six months ended May 31, 2023, compared to the three and six months ended May 31, 2022, due to the increase in gross profit partially offset by the increase in selling, general and administrative expenses.

Our operating margin remained flat during the three and six months ended May 31, 2023, compared to the three and six months ended May 31, 2022, due to the increase in gross margin percentage offset by the increase in selling, general and administrative expenses as a percentage of revenue.

Interest Expense and Finance Charges, Net

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Interest expense and finance charges, net $ 47,213 $ 12,973 263.9% $ 81,203 $ 21,743 273.5%

Percentage of revenue 2.9 % 0.8 % 2.5 % 0.7 %

Amounts recorded in interest expense and finance charges, net consist primarily of interest on borrowings on the term loan (the “Term Loan”) under our amended senior secured credit facility (the “Credit Facility”) and interest on borrowings under our accounts receivable securitization facility (the “Securitization Facility”).

The increase in interest expense for the three months ended February 28, 2023, compared to the three months ended February 28, 2022, was due to the increase in our outstanding borrowings on the Term Loan under our Credit Facility and under our Securitization Facility and higher interest rates on these borrowings.

The increased borrowings are primarily due to borrowings incurred for our acquisitions of PK and ServiceSource in fiscal year 2022.

Amounts recorded in interest expense and finance charges, net consist primarily of interest on term loan borrowings under our senior credit facility, interest on borrowings under our accounts receivable securitization facility (the “Securitization Facility”) and financing expenses associated with our commitment letter dated March 29, 2023 (the “Bridge Commitment Letter,” and the commitments pursuant to the Bridge Commitment Letter, the “Bridge Facility”), entered into in connection with the pending Webhelp combination.

The increase in interest expense for the three and six months ended May 31, 2023, compared to the three and six months ended May 31, 2022, was due to Bridge Facility financing fees and credit facility amendment fees of $11.8 million, and higher interest rates on outstanding term loan borrowings under our senior credit facility and higher interest rates on outstanding borrowings under our Securitization Facility.

Other Expense (Income), Net

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Other expense (income), net $ 9,383 $ (2,545) (468.7)% $ 13,097 $ (10,161) (228.9)%

Percentage of revenue 0.6 % (0.2) % 0.4 % (0.3) %

Amounts recorded as other expense (income), net include foreign currency transaction gains and losses other than cash flow hedges, investment gains and losses, the non-service component of pension costs, and other non-operating gains and losses.

Other expense (income), net in the three months ended February 28, 2023 was an expense of $3.7 million, compared to income of $7.6 million in the three months ended February 28, 2022.

The change in other expense (income), net was primarily due to unfavorable foreign currency transaction changes, partially offset by net gains on foreign currency forward contracts compared to the prior year period.

Provision for Income Taxes

Three Months Ended % Change

February 28, 2023 February 28, 2022 2023 to 2022

($ in thousands)

Amounts recorded as other expense (income), net include foreign currency transaction gains and losses other than cash flow hedges, non-designated hedging derivative activity, investment gains and losses, the non-service component of pension costs, and other non-operating gains and losses.

Other expense (income), net in the three months ended May 31, 2023 was an expense of $9.4 million, compared to income of $2.5 million in the three months ended May 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the pending Webhelp combination of $12.4 million.

Other expense (income), net in the six months ended May 31, 2023 was an expense of $13.1 million, compared to income of $10.2 million in the six months ended May 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the pending Webhelp combination of $12.4 million in addition to unfavorable foreign currency transaction changes compared to the prior year period.

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

Provision for income taxes $ 27,120 $ 33,451 (18.9)% $ 57,593 $ 69,503 (17.1)%

1 unchanged sentence

Our provision for income taxes consists of our current and deferred tax expense resulting from our income earned in domestic and international jurisdictions.

Our provision for income taxes decreased in the three months ended February 28, 2023, compared to the three months ended February 28, 2022, primarily due to a decrease in income before taxes.

The effective tax rate for the three months ended February 28, 2023 increased compared to the three months ended February 28, 2022 primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Our provision for income taxes decreased in the three and six months ended May 31, 2023, compared to the three and six months ended May 31, 2022, primarily due to a decrease in income before taxes.

The effective tax rate for the three and six months ended May 31, 2023 increased compared to the three and six months ended May 31, 2022 primarily due to the change in mix of income earned in different tax jurisdictions between periods.

Certain Non-GAAP Financial Information

33 unchanged sentences

These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

Three Months Ended

February 28, 2023 February 28, 2022

Three Months Ended Six Months Ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

($ in thousands, except per share amounts)

24 unchanged sentences

Acquisition-related and integration expenses 7,433 1,726 12,976 2,648

Acquisition-related expenses included in interest expense and finance charges, net (1)

11,840 — 11,840 —

Acquisition-related expenses included in other expense (income), net (1)

12,429 — 12,429 —

Amortization of intangibles 39,426 41,469 78,686 79,525

3 unchanged sentences

Non-GAAP net income $ 140,588 $ 154,804 $ 274,626 $ 305,471

Three Months Ended Six Months Ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

($ in thousands, except per share amounts)

Diluted earnings per common share (“EPS”) $ 1.51 $ 2.14 $ 3.18 $ 4.23

Acquisition-related and integration expenses 0.14 0.03 0.25 0.05

Acquisition-related expenses included in interest expense and finance charges, net (1)

0.23 — 0.23 —

Acquisition-related expenses included in other expense (income), net (1)

0.24 — 0.24 —

Amortization of intangibles 0.75 0.79 1.50 1.51

3 unchanged sentences

Non-GAAP Diluted EPS $ 2.69 $ 2.93 $ 5.24 $ 5.79

(1) Included in these amounts are a) Bridge Facility financing fees expensed and b) losses associated with non-designated call option contracts put in place to hedge foreign exchange movements in connection with the Webhelp combination that are included within interest expense and finance charges, net and other expense (income), net, respectively, in the consolidated statement of operations.

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

8 unchanged sentences

These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, available liquidity, including capacity on our debt arrangements, or the issuance of securities.

In September 2021, considering our strong free cash flow, low leverage and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, the Company’s board of directors authorized a share repurchase program.

Under the share repurchase program, the board of directors authorized the Company to purchase up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

We expect to fund the Webhelp combination through a combination of (i) term loan borrowings under our senior credit facility, (ii) cash on hand and (iii) proceeds from other financings or offerings of debt securities that we intend to obtain in lieu of borrowing under the Bridge Facility (as defined below) (or, to the extent such proceeds are not sufficient, borrowings under the Bridge Facility).

In September 2021, considering our strong free cash flow, low leverage and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, our board of directors authorized a share repurchase program.

Under the share repurchase program, the board of directors authorized us to purchase up to $500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.

The share repurchase program has no termination date and may be suspended or discontinued at any time.

During the three months ended February 28, 2023, we purchased 71,340 shares of our common stock under the share repurchase program for approximately $10.0 million in the aggregate.

During the three months ended February 28, 2022, we did not purchase any shares of our common stock under the share repurchase program.

At February 28, 2023, approximately $344.1 million remained available for share repurchases under the existing authorization from the Company’s board of directors.

During March 2023, we repurchased 39,084 shares of our common stock for an aggregate purchase price of $4.9 million.

During fiscal years 2023 and 2022, the Company has paid the following dividends per share approved by the Company’s board of directors:

During the three and six months ended May 31, 2023, we purchased 39,084 and 110,424 shares, respectively, of our common stock under the share repurchase program for approximately $4.9 and $14.9 million, respectively, in the aggregate.

During the three and six months ended May 31, 2022, we purchased 366,704 shares of our common stock under the share repurchase program for approximately $57.9 million in the aggregate.

At May 31, 2023, approximately $339.1 million remained available for share repurchases under the existing authorization from our board of directors.

During June 2023, we did not repurchase any shares of our common stock.

During fiscal years 2023 and 2022, we have paid the following dividends per share approved by our board of directors:

Announcement Date Record Date Per Share Dividend Amount Payment Date

4 unchanged sentences

January 19, 2023 January 30, 2023 $0.275 February 10, 2023

On March 29, 2023, we announced a cash dividend of $0.275 per share to stockholders of record as of April 28, 2023, payable on May 9, 2023.

March 29, 2023 April 28, 2023 $0.275 May 9, 2023

On June 28, 2023, we announced a cash dividend of $0.275 per share to stockholders of record as of July 28, 2023, payable on August 8, 2023.

We expect that future cash dividends will be paid on a quarterly basis.

However, any decision to pay future cash dividends will be subject to our board of directors’ approval, and will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our debt agreements, industry practice, legal requirements, regulatory constraints, and other factors that our board of directors deems relevant.

Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets.

Our ability to pay dividends will depend on our ongoing

ability to generate cash from operations and on our access to the capital markets.

We cannot guarantee that we will continue to pay a dividend in the future.

Debt Arrangements

Credit Facility

On December 27, 2021, in connection with the closing of the acquisition of PK, we entered into an amended Credit Facility to (i) refinance the then-outstanding term loan (the “Prior Term Loan”) with a new term loan, which was fully advanced, in the aggregate outstanding principal amount of $2,100 million (the “Term Loan”), (ii) increase the commitments under our revolving credit facility (the “Revolver”) to $1,000 million, (iii) extend the maturity of the Credit Facility from November 30, 2025 to December 27, 2026, (iv)

replace LIBOR with SOFR as the primary reference rate used to calculate interest on the loans under the Credit Facility, and (v) modify the commitment fee on the unused portion of the Revolver and the margins in excess of the reference rates at which the loans under the Credit Facility bear interest.

The proceeds from the Term Loan and additional borrowings under the Securitization Facility were used to repay the outstanding principal amount of the Prior Term Loan and to finance the acquisition of PK, including the repayment of certain indebtedness of PK and the payment of fees and expenses in connection with the acquisition.

Borrowings under the Credit Facility bear interest, in the case of term or daily SOFR loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an adjustment of between 0.10% and 0.25% depending on the interest period of each SOFR loan, plus an applicable margin, which ranges from 1.25% to 2.00%, based on our consolidated leverage ratio.

Borrowings under the Credit Facility that are base rate loans bear interest at a per annum rate equal to (i) the greatest of (a) the Federal Funds Rate in effect on such day plus ½ of 1.00%, (b) the rate of interest last publicly announced by Bank of America as its “prime rate” and (c) the term SOFR rate plus 1.00%, plus (ii) an applicable margin, which ranges from 0.25% to 1.00%, based on our consolidated leverage ratio.

A commitment fee is payable on the unused portion of the Revolver that ranges from 22.5 to 30 basis points, based on our consolidated leverage ratio.

Beginning August 31, 2022, the outstanding principal of the Term Loan became payable in quarterly installments of $26.25 million, with the unpaid balance due in full on the maturity date.

During the three months ended February 28, 2022, we paid $25.0 million of voluntary principal repayments, without penalty, on the Term Loan.

Based on our required and voluntary principal prepayments made to date, the next quarterly installment of $26.25 million is due in November of 2024.

We may request, subject to obtaining commitments from any participating lenders and certain other conditions, incremental commitments to increase the amount of the Revolver or the Term Loan available under the Credit Facility in an aggregate principal amount of up to $450 million, plus an additional amount, so long as after giving effect to the incurrence of such additional amount, our pro forma first lien leverage ratio (as defined in the Credit Facility) would not exceed 3.00 to 1.00.

Obligations under the Credit Facility are secured by substantially all of the assets of Concentrix Corporation and certain of its U.S.

subsidiaries and are guaranteed by certain of its U.S.

Bridge Facility and Restated Credit Agreement

To provide the debt financing required to consummate the combination with Webhelp, we entered into a commitment letter dated March 29, 2023 (the “Bridge Commitment Letter,” and the commitments pursuant to the Bridge Commitment Letter, the “Bridge Facility”), under which certain financing institutions committed to provide a 364-day bridge loan facility in an aggregate principal amount of $5,290,000 consisting of (i) a $1,850,000 tranche of term bridge loans (the “Term Loan Amendment Tranche”), (ii) a $1,000,000 tranche of revolving commitments (the “Revolver Amendment Tranche”) and (iii) a $2,440,000 tranche of term bridge loans (the “Acquisition Tranche”), each subject to the satisfaction of certain customary closing conditions, including the consummation of the combination.

The incurrence of the acquisition-related indebtedness that would be funded by the Acquisition Tranche of the Bridge Facility (or permanent financing in lieu thereof) and the note to be issued by Concentrix to the Sellers at the closing of the transaction was not permitted under our prior credit agreement dated as of October 16, 2020, among Concentrix, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent.

Therefore, on April 21, 2023, we entered into an Amendment and Restatement Agreement (the “Amendment Agreement”) with the lenders party thereto, JPMorgan Chase and Bank of America, N.A.

in order to amend and restate our prior credit agreement (as amended and restated, the “Restated Credit Agreement”).

As a result of having entered into the Amendment Agreement, among other things, we obtained requisite lender consent to incur acquisition-related indebtedness, and pursuant to the terms of the Bridge Commitment Letter, the commitments with respect to the Term Loan Amendment Tranche and the Revolver Amendment Tranche of the Bridge Facility were each reduced to zero, and the Acquisition Tranche was reduced by approximately $294,702.

If we utilize the Bridge Facility, amounts drawn thereunder will bear interest at a per annum rate equal to adjusted term SOFR plus a margin which may initially range from 1.125% to 2.000%, depending on our debt rating or leverage ratio, as applicable, as determined in accordance with the Bridge Commitment Letter, which margin will be increased by 0.25% on each of the 90th, 180th and 270th day after the closing of the Bridge Facility.

We will pay commitment fees on the undrawn amount of this commitment ranging from 0.125% to 0.275% if based upon our debt rating, or 0.225% to 0.300% if based upon our leverage ratio, as applicable, determined in accordance with the Bridge Commitment Letter.

The Restated Credit Agreement provides for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $1,042,500.

The Restated Credit Agreement also provides for a senior unsecured term loan facility in an aggregate principal amount not to exceed approximately $2,144,700, of which $1,850,000 is outstanding and approximately $294,702 is available to be drawn on a delayed draw basis (the “Delayed Draw Term Loans”), subject to customary conditions, concurrent with closing of the Webhelp combination.

Aggregate borrowing capacity under the Restated Credit Agreement may be increased by up to an additional $500,000 by increasing the amount of the revolving credit facility or by incurring additional term loans, in each case subject to the satisfaction of certain conditions set forth in the Restated Credit Agreement, including the receipt of additional commitments for such increase.

The date on which the Delayed Draw Term Loans under the Restated Credit Agreement will be funded must be no later than five business days after the End Date (as defined in the Share Purchase and Contribution Agreement), which may be extended pursuant to the Share Purchase and Contribution Agreement.

The lenders’ obligation to fund the Delayed Draw Term Loans on the closing date of the Webhelp combination is subject to several customary conditions, including, among others, consummation of the Webhelp combination.

The proceeds of the Delayed Draw Term Loans on the closing date of the Webhelp combination will be used to finance a portion of the Webhelp combination and any related refinancing, together with the payment of related fees and expenses.

The revolving credit facility is, subject to customary conditions, available for general corporate purposes and any other purpose not prohibited by the Restated Credit Agreement.

The maturity date of the Restated Credit Agreement remains December 27, 2026, subject, in the case of the revolving credit facility, to two one-year extensions upon our prior notice to the lenders and the agreement of the lenders to extend such maturity date.

The outstanding principal amount of the term loan is payable in quarterly installments in an amount equal to 1.25% of the existing

principal balance, plus any Delayed Draw Term Loans advanced on the closing date of the Webhelp combination, commencing on December 31, 2024, with the outstanding principal amount of the term loans due in full on the maturity date.

Borrowings under the Restated Credit Agreement bear interest, in the case of SOFR rate loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an applicable margin, which ranges from 1.125% to 2.000%, based on the credit ratings of our senior unsecured non-credit enhanced long-term indebtedness for borrowed money plus a credit spread adjustment to the SOFR rate of 0.10%.

Borrowings under the Restated Credit Agreement that are base rate loans bear interest at a per annum rate (but not less than 1.0%) equal to (i) the greatest of (A) the Prime Rate (as defined in the Restated Credit Agreement) in effect on such day, (B) the NYFRB Rate (as defined in the Restated Credit Agreement) in effect on such day plus 1/2 of 1.0%, and (C) the adjusted one-month term SOFR rate plus 1.0% per annum, plus (ii) an applicable margin, which ranges from 0.125% to 1.000%, based on the credit ratings of our senior unsecured non-credit enhanced long-term indebtedness for borrowed money.

The Restated Credit Agreement contains certain loan covenants that are customary for credit facilities of this type and that restrict our ability to take certain actions, including the creation of liens, mergers or consolidations, changes to the nature of our business, and, solely with respect to our subsidiaries, incurrence of indebtedness.

In addition, the Restated Credit Agreement contains financial covenants that require us to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Restated Credit Agreement) not to exceed 3.75 to 1.0 (or for certain periods following certain qualified acquisitions, 4.25 to 1.0) and (ii) a consolidated interest coverage ratio (as defined in the Restated Credit Agreement) equal to or greater than 3.00 to 1.0.

The Restated Credit Agreement also contains various customary events of default, including payment defaults, defaults under certain other indebtedness, and a change of control of Concentrix.

None of our subsidiaries guarantee the obligations under the Restated Credit Agreement.

Prior to entering into the Amendment Agreement, obligations under our senior credit facility (the “Prior Credit Facility”) were secured by substantially all of the assets of Concentrix Corporation and certain of our U.S.

subsidiaries and were guaranteed by certain of our U.S.

subsidiaries.

The Credit Facility contains various loan covenants that restrict the ability of Concentrix Corporation and its subsidiaries to take certain actions, including incurrence of indebtedness, creation of liens, mergers or consolidations, dispositions of assets, repurchase or redemption of capital stock, making certain investments, entering into certain transactions with affiliates or changing the nature of our business.

In addition, the Credit Facility contains financial covenants that require us to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Credit Facility) not to exceed 3.75 to 1.0 and (ii) a consolidated interest coverage ratio (as defined in the Credit Facility) equal to or greater than 3.00 to 1.0.

The Credit Facility also contains various customary events of default, including payment defaults, defaults under certain other indebtedness, and a change of control of Concentrix.

We had no outstanding borrowings on the Revolver as of February 28, 2023 or November 30, 2022.

Borrowings under the Prior Credit Facility bore interest, in the case of term or daily SOFR loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an adjustment of between 0.10% and 0.25% depending on the interest period of each SOFR loan, plus an applicable margin, which ranged from 1.25% to 2.00%, based on our consolidated leverage ratio.

Borrowings under the Credit Facility that were base rate loans bore interest at a per annum rate equal to (i) the greatest of (a) the Federal Funds Rate in effect on such day plus ½ of 1.00%, (b) the rate of interest last publicly announced by Bank of America as its “prime rate” and (c) the term SOFR rate plus 1.00%, plus (ii) an applicable margin, which ranged from 0.25% to 1.00%, based on our consolidated leverage ratio.

From August 31, 2022 through the date of the Amendment Agreement, the outstanding principal of the term loans under the Prior Credit Facility was payable in quarterly installments of $26,250.

At May 31, 2023 and November 30, 2022, no amounts were outstanding under our revolving credit facility.

During the six months ended May 31, 2023, we paid $25.0 million of voluntary principal prepayments, without penalty, on the term loans under the Prior Credit Facility.

Securitization Facility

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based subsidiaries (the “Originators”) sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $500 million.

Borrowing availability under the Securitization Facility may be limited by our accounts receivable balances, changes in the credit ratings of our clients comprising the receivables, client concentration levels in the receivables, and certain characteristics of the accounts receivable being transferred (including factors tracking performance of the accounts receivable over time).

The Securitization Facility contains various affirmative and negative covenants, including a consolidated leverage ratio covenant that is consistent with the Credit Facility and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix, and certain events negatively affecting the overall credit quality of the transferred accounts receivable.

As of February 28, 2023 and November 30, 2022, we were in compliance with the debt covenants related to our debt arrangements.

Debt Commitment Letter

In connection with the pending combination with Webhelp, we entered into a commitment letter that includes a commitment for a 364-day bridge loan facility in an aggregate principal amount of $5.29 billion, consisting of three tranches:

(i) a $2.44 billion tranche of term bridge loans, (ii) a $1.85 billion tranche of term bridge loans and (iii) a $1.0 billion tranche of revolving commitments, each subject to the satisfaction of certain customary closing conditions including the consummation of the combination with Webhelp.

The bridge facility is available to (i) pay for a portion of the cash purchase price, (ii) directly or indirectly repay certain indebtedness of Webhelp Parent and its subsidiaries and certain indebtedness of the Company and its subsidiaries, and (iii) to pay fees, costs and expenses related to the transaction, the bridge facility and transactions being entered into or otherwise contemplated in connection therewith.

Additionally, the $1.0 billion tranche of revolving commitments will be available after the consummation of the combination for working capital and other general corporate purposes.

If we utilize the bridge facility, amounts drawn thereunder will bear interest at an annual rate equal to adjusted term SOFR plus a margin which may initially range from 1.125% to 2.000%, depending on our debt rating or leverage ratio, as applicable, as determined in accordance with the commitment letter, which margin will be increased by 0.25% on each of the 90th, 180th and 270th day after the closing of the bridge facility.

We will pay commitment fees on the undrawn amount of this commitment ranging from 0.125% to 0.275% if based upon our debt rating or 0.225% to 0.300% if based upon our leverage ratio, as applicable, determined in accordance with the commitment letter.

Cash Flows – Three Months Ended February 28, 2023 and 2022

The following summarizes our cash flows for the three months ended February 28, 2023 and 2022, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Three Months Ended

February 28, 2023 February 28, 2022

Borrowing availability under the Securitization Facility may be limited by our accounts receivable balances, changes in the credit ratings of our clients comprising the

receivables, client concentration levels in the receivables, and certain characteristics of the accounts receivable being transferred (including factors tracking performance of the accounts receivable over time).

The Securitization Facility contains various affirmative and negative covenants, including a consolidated leverage ratio covenant that is consistent with the Restated Credit Agreement and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix, and certain events negatively affecting the overall credit quality of the transferred accounts receivable.

As of May 31, 2023 and November 30, 2022, we were in compliance with the debt covenants related to our debt arrangements.

Cash Flows – Six Months Ended May 31, 2023 and 2022

The following summarizes our cash flows for the six months ended May 31, 2023 and 2022, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

Six Months Ended

May 31, 2023 May 31, 2022

($ in thousands)

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Operating Activities

Net cash provided by operating activities was $103.9 million for the three months ended February 28, 2023, compared to $45.0 million for the three months ended February 28, 2022.

Net cash provided by operating activities was $237.3 million for the six months ended May 31, 2023, compared to $212.5 million for the six months ended May 31, 2022.

The increase in net cash provided by operating activities over the prior year period was primarily due to favorable changes in working capital partially offset by a decrease in net income over the prior year period.

Investing Activities

Net cash used in investing activities for the three months ended February 28, 2023 was $39.6 million, compared to $1,610.8 million for the three months ended February 28, 2022.

Net cash used in investing activities for the six months ended May 31, 2023 was $71.8 million, compared to $1,637.4 million for the six months ended May 31, 2022.

The decrease in net cash used in investing activities over the prior year period primarily related to the aggregate cash of $1,565.3 million paid in connection with our acquisition of PK in the prior year period.

Financing Activities

Net cash used in financing activities for the three months ended February 28, 2023 was $34.5 million, consisting primarily of principal payments of $25.0 million made on the Term Loan, share repurchases of $10.0 million and dividends of $14.3 million, partially offset by net proceeds of $20.5 million from borrowings under the Securitization Facility.

Net cash provided by financing activities for the three months ended February 28, 2022 was $1,527.4 million, consisting primarily of net proceeds from the refinancing of the Term Loan of $1,400.0 million and net proceeds from the Securitization Facility of $149.0 million, partially offset by cash paid for debt issuance costs of $8.9 million and dividends of $13.1 million.

Net cash used in financing activities for the six months ended May 31, 2023 was $162.0 million, consisting primarily of principal payments of $25.0 million made on term loan borrowings under our senior credit facility, net repayments of $67.5 million under our Securitization Facility, share repurchases of $14.9 million, dividends of $28.6 million, and cash paid for debt issuance costs of $20.7 million related to financing fees for the Bridge Facility entered into in connection with the pending Webhelp combination and fees related to our Restated Credit Agreement.

Net cash provided by financing activities for the six months ended May 31, 2022 was $1,415.4 million, consisting primarily of net proceeds from the refinancing of the term loan facility under our senior credit facility of $1,400.0 million and net proceeds from the Securitization Facility of $106.0 million, offset by share repurchases of $57.9 million, cash paid for debt issuance costs of $8.9 million and dividends of $26.2 million.

We believe our current cash balances and credit availability are enough to support our operating activities for at least the next twelve months.

Free Cash Flow (a non-GAAP measure)

Three Months Ended

February 28, 2023 February 28, 2022

Six Months Ended

May 31, 2023 May 31, 2022

($ in thousands)

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Free cash flow (a non-GAAP measure) $ 165,547 $ 141,318

Our free cash flow was $64.3 million for the three months ended February 28, 2023 compared to a use of cash of $0.4 million for the three months ended February 28, 2022.

The increase in free cash flow for the three months ended February 28, 2023 compared to the prior year period was due to the increase in cash provided by operating activities and a decrease in capital expenditures.

Our free cash flow was $165.5 million for the six months ended May 31, 2023 compared to $141.3 million for the six months ended May 31, 2022.

The increase in free cash flow for the six months ended May 31, 2023 compared to the prior year period was due to the increase in cash provided by operating activities.

Capital Resources

As of February 28, 2023, we had total liquidity of $1,301.4 million, which includes undrawn Revolver capacity of $1,000.0 million under our Credit Facility, undrawn capacity of $123.0 million under our Securitization Facility and cash and cash equivalents.

Our cash and cash equivalents totaled $178.4 million and $145.4 million as of February 28, 2023 and November 30, 2022, respectively.

As of May 31, 2023, we had total liquidity of $1,406.4 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $211.0 million under our Securitization Facility and cash and cash equivalents.

Our cash and cash equivalents totaled $152.9 million and $145.4 million as of May 31, 2023 and November 30, 2022, respectively.

Of our total cash and cash equivalents, 97% were held by our non-U.S.

legal entities as of both February 28, 2023 and November 30, 2022.

legal entities as of both May 31, 2023 and November 30, 2022.

The cash and cash equivalents held by our non-U.S.

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cash to fund our international operations and expansions;

however, the Company has recorded deferred tax liabilities related to non-U.S.

however, we have recorded deferred tax liabilities related to non-U.S.

withholding taxes on the earnings of certain previously acquired non-U.S.

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If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our consolidated financial statements the impact of the state and withholding taxes depending upon the planned timing and manner of such repatriation.

Presently, we believe we have sufficient resources, cash flow and liquidity within the United States to fund current and expected future working capital, investment and other general corporate funding requirements.

We believe that our available cash and cash equivalents balances, the cash flows expected to be generated from operations, and our sources of liquidity will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months.

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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