What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-06 compared with 2023-07-07 · 154 added, 154 removed, 281 unchanged (52% of the section changed)

1 unchanged sentence

The discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2022, as filed with the Securities and Exchange Commission on January 27, 2023.

References to “we,” “our,” “us,” “the Company” or “Concentrix” refer to Concentrix Corporation and its subsidiaries.

References to “we,” “our,” “us,” “the Company” or “Concentrix + Webhelp” refer to Concentrix Corporation and its subsidiaries.

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include, but are not limited to, statements regarding the combination with Webhelp and the timing thereof, our expected future financial condition, results of operations, effective tax rate, cash flows, leverage, liquidity, business strategy, competitive position, demand for our services and seasonality of our business, international operations, acquisition opportunities and the anticipated impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources and sustainability initiatives, and statements that include words such as believe, expect, may, will, provide, could and should and other similar expressions.

Forward-looking statements include, but are not limited to, statements regarding our expected future financial condition, results of operations, effective tax rate, cash flows, leverage, liquidity, business strategy, competitive position, demand for our services and seasonality of our business, international operations, acquisition opportunities and the anticipated impact of acquisitions, capital allocation and dividends, growth opportunities, spending, capital expenditures and investments, competition and market forecasts, industry trends, our human capital resources and sustainability initiatives, and statements that include words such as believe, expect, may, will, provide, could and should and other similar expressions.

These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Risks and uncertainties include, among other things:

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

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;

fluctuations in currency exchange rates and their impact on the U.S.

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;

risks related to the combination with Webhelp, including 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 combination, 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;

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

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

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

7 unchanged sentences

geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of our operations;

the inability to successfully identify, complete and integrate strategic acquisitions or investments, including our integration of ServiceSource International, Inc.;

the inability to successfully identify, complete and integrate strategic acquisitions or investments;

competitive conditions in our industry and consolidation of our competitors;

8 unchanged sentences

investigative or legal actions;

and other risks that are described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2022.

and other risks that are described under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended November 30, 2022 and “Risk Factors” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the six months ended May 31, 2023.

We do not intend to update forward-looking statements, which speak only as of the date hereof, unless otherwise required by law.

Concentrix, the Concentrix Logo, and all other Concentrix company, product and services names and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries.

Concentrix, Webhelp, Concentrix + Webhelp, the Concentrix and Webhelp logos, and all other Concentrix + Webhelp company, product and services names and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries.

Concentrix and the Concentrix Logo Reg.

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Overview and Basis of Presentation

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.

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.

Concentrix + Webhelp 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.

messaging, and custom applications.

We strive to deliver exceptional services globally supported by our deep industry knowledge, technology and security practices, talented people, and digital and analytics expertise.

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High staff turnover rates may increase costs and decrease operating efficiencies and productivity.

Pending Combination with Webhelp

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 Combination

On September 25, 2023, we completed our acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) 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 the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”).

The acquisition was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by First Amendment to Share Purchase and Contribution Agreement, dated as of July 14, 2023 by and among Concentrix, 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 Corporation (“Purchaser”), Webhelp Parent, the Sellers, and certain representatives of the Seller.

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 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.

The preliminary purchase consideration for the acquisition of the Shares is valued at approximately $4 billion.

PK Acquisition

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

In the third fiscal quarter of 2023 and 2022, approximately 81% 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.

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Critical Accounting Policies and Estimates

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

During the three and nine months ended August 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 Nine Months Ended August 31, 2023 and 2022

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

($ in thousands) ($ in thousands)

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Net income before non-controlling interest 77,635 107,124 244,355 330,696

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

Net income attributable to non-controlling interest — 434 — 591

Net income attributable to Concentrix Corporation $ 77,635 $ 106,690 $ 244,355 $ 330,105

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands)

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

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 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.

Our revenue increased by 3.4% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, which included incremental revenue from acquired operations of $26.8 million, or an increase of 1.7%, compared to the prior year period, resulting in increased volumes across the majority of our verticals over the prior year period.

The impact of the translation effects of foreign currencies was de minimis for the three months ended August 31, 2023 in comparison to the prior year period.

Our revenue increased by 4.3% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, which included incremental revenue from acquired operations of $154.9 million, or an increase of 3.3%, 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 $64.7 million, or 1.4%.

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.

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

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

For the three and nine months ended August 31, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to increased volumes across several of our largest clients in this vertical over the prior year periods.

For the three and nine months ended August 31, 2023, revenue in our communications and media vertical decreased due to decreased volumes with several clients which more than offset volume increases across a number of clients.

For the three and nine

months ended August 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 and nine months ended August 31, 2023, revenue in our healthcare vertical increased due to increased volumes across the several of our largest healthcare clients over the prior year periods.

For the three and nine months ended August 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 Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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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 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.

Our cost of revenue increased by 2.6% in the three months ended August 31, 2023, compared to the three months ended August 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 $23.3 million, or 2.3%, 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 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 foreign currency translation impact on our cost of revenue was caused primarily by the weakening of the Egyptian pound, Philippine peso and Indian rupee against the U.S.

Our cost of revenue increased by 3.6% in the nine months ended August 31, 2023, compared to the nine months ended August 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 $132.7 million, or 4.4%, 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.

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

Our gross profit increased by 4.7% in the three months ended August 31, 2023, compared to the three months ended August 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $22.9 million on gross profit.

Our gross margin percentage for the three months ended August 31, 2023 increased to 36.4% from 35.9% in the prior year period due to changes in the mix of geographies where our services were delivered.

Our gross profit increased by 5.5% in the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, primarily due to the increase in revenue and the contributions from acquired operations and a net favorable foreign currency impact of $68.0 million on gross profit.

Our gross margin percentage for the nine months ended August 31, 2023 increased to 35.9% from 35.5% 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 Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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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 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 25.6% 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.

Our selling, general and administrative expenses increased by 5.4% in the three months ended August 31, 2023, compared to the three months ended August 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 $5.9 million.

These increases were partially offset by a $4.7 million reduction in selling, general and administrative expenses due to foreign currency translation impacts.

As a percentage of revenue, selling, general and administrative expenses increased from 25.9% in the third fiscal quarter of 2022 to 26.4% in the third fiscal quarter of 2023 due to the net effect of the changes described.

Our selling, general and administrative expenses increased by 6.0% in the nine months ended August 31, 2023, compared to the nine months ended August 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 $16.3 million.

These increases were partially offset by a $33.7 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.

As a percentage of revenue, selling, general and administrative expenses increased from 25.7% in the nine months ended August 31, 2022 to 26.1% in the nine months ended August 31, 2023 due to the net effect of the changes described.

Operating Income

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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Operating margin 9.9 % 10.0 % 9.8 % 9.9 %

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.

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

Our operating margin decreased slightly during three and nine months ended August 31, 2023, compared to the three and nine months ended August 31, 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.

Interest Expense and Finance Charges, Net

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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Percentage of revenue 3.0 % 1.3 % 2.7 % 0.9 %

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.

Amounts recorded in interest expense and finance charges, net consist primarily of interest on our senior notes issued in August 2023, 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 Webhelp combination.

The increase in interest expense for the three months ended August 31, 2023, compared to the three months ended August 31, 2022, was due to Bridge Facility financing fees of $10.7 million, higher interest rates on increased outstanding term loan borrowings under our senior credit facility, higher interest rates on outstanding borrowings under our Securitization Facility and interest expense on our senior notes of $12.3 million partially offset by interest income related to the senior notes proceeds included in cash equivalents of $7.8 million.

The increase in interest expense for the nine months ended August 31, 2023, compared to the nine months ended August 31, 2022, was due to Bridge Facility financing fees and credit facility amendment fees of $22.5 million, higher interest rates on increased outstanding term loan borrowings under our senior credit facility, higher interest rates on outstanding borrowings under our Securitization Facility and interest expense on our senior notes of $12.3 million partially offset by interest income related to the senior notes proceeds included in cash equivalents of $7.8 million.

Other Expense (Income), Net

Three Months Ended % Change Six Months Ended % Change

May 31, 2023 May 31, 2022 2023 to 2022

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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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

Other expense (income), net in the three months ended August 31, 2023 was an expense of $6.2 million, compared to income of $12.1 million in the three months ended August 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the Webhelp combination of $2.0 million in addition to unfavorable foreign currency transaction changes compared to the prior year period.

Other expense (income), net in the nine months ended August 31, 2023 was an expense of $19.3 million, compared to income of $22.2 million in the nine months ended August 31, 2022.

The change in other expense (income), net was primarily due to a loss on derivative contracts entered into in connection with the Webhelp combination of $14.5 million in addition to unfavorable foreign currency transaction changes compared to the prior year period.

Three Months Ended % Change Nine Months Ended % Change

August 31, 2023 August 31, 2022 2023 to 2022

($ in thousands) ($ in thousands)

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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 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.

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

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

Certain Non-GAAP Financial Information

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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 Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

($ in thousands, except per share amounts)

33 unchanged sentences

Non-GAAP net income $ 141,028 $ 154,380 $ 415,654 $ 459,851

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

($ in thousands, except per share amounts)

10 unchanged sentences

Non-GAAP Diluted EPS $ 2.71 $ 2.95 $ 7.95 $ 8.74

(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.

(1) Included in these amounts are a) Bridge Facility financing fees expensed and interest expenses associated with the senior notes, net of interest earnings on invested proceeds incurred in advance of the Webhelp combination, 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.

Liquidity and Capital Resources

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments and acquisitions, including our fiscal year 2022 acquisitions of PK and ServiceSource.

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments and acquisitions, including our combination with Webhelp in September 2023 and our acquisitions of PK and ServiceSource in fiscal year 2022.

Our financing needs for these uses of cash have been a combination of operating cash flows and third-party debt arrangements.

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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.

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).

We funded the Webhelp combination through (i) proceeds from our August 2023 offering and sale of senior notes, (ii) term loan borrowings under our senior credit facility, and (iii) cash on hand.

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.

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

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 the three and nine months ended August 31, 2023, we purchased 320,105 and 430,529 shares, respectively, of our common stock under the share repurchase program for approximately $27.0 and $41.9 million, respectively, in the aggregate.

During the three and nine months ended August 31, 2022, we purchased 359,355 and 726,059 shares, respectively, of our common stock under the share repurchase program for approximately $49.0 and $106.8 million, respectively, in the aggregate.

At August 31, 2023, approximately $312.1 million remained available for share repurchases under the existing authorization from our board of directors.

During September 2023, we repurchased 95,111 shares of our common stock for an aggregate purchase price of $7.1 million.

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

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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.

June 28, 2023 July 28, 2023 $0.275 August 8, 2023

On September 27, 2023, we announced a cash dividend of $0.3025 per share to stockholders of record as of October 27, 2023, payable on November 7, 2023.

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

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Debt Arrangements

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.

On August 2, 2023, the Company issued and sold (i) $800 million aggregate principal amount of 6.650% Senior Notes due 2026 (the “2026 Notes”), (ii) $800 million aggregate principal amount of 6.600% Senior Notes due 2028 (the “2028 Notes”) and (iii) $550 million aggregate principal amount of 6.850% Senior Notes due 2033 (the “2033 Notes” and, together with the 2026 Notes and 2028 Notes, the “Senior Notes”).

The Senior Notes were sold in a registered public offering pursuant to the Company’s Registration Statement on Form S-3, which became effective upon filing, and a Prospectus Supplement dated July 19, 2023, to a Prospectus dated July 17, 2023.

The Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of August 2, 2023 (the “Base Indenture”), between Concentrix and U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a first supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2026 Notes, a second supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2028 Notes, and a third supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2033 Notes (such supplemental indentures, together with the Base Indenture, the “Indenture”).

The Indenture contains customary covenants and restrictions, including covenants that limit Concentrix Corporation’s and certain of its subsidiaries’ ability to create or incur liens on shares of stock of certain subsidiaries or on principal properties, engage in sale/leaseback transactions or, with respect to Concentrix Corporation, consolidate or merge with, or sell or lease substantially all its assets to, another person.

The Indenture also provides for customary events of default.

In connection with the closing of the Webhelp Combination, we entered into cross-currency swap arrangements for a total notional amount of $500 million of the Senior Notes.

In addition to aligning the currency of a portion of our interest payments to our euro-denominated cash flows, the arrangements effectively converted $250 million of each of the 2026 Notes and 2028 Notes into synthetic fixed Euro-based debt at weighted average interest rates of 5.12% and 5.18%, respectively.

Bridge Facility and Restated Credit Facility

To provide the debt financing required to consummate the Webhelp Combination, 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 million consisting of (i) a $1,850 million tranche of term bridge loans (the “Term Loan Amendment Tranche”), (ii) a $1,000 million tranche of revolving commitments (the “Revolver Amendment Tranche”) and (iii) a $2,440 million tranche of term bridge loans (the “Acquisition Tranche”), each subject to the satisfaction of certain customary closing conditions, including the consummation of the Webhelp 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 promissory note to be issued by Concentrix Corporation to certain Sellers at the closing of the Webhelp Combination was not permitted under our prior credit agreement dated as of October 16, 2020 (the “Prior Credit Facility”).

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.

to amend and restate the Prior Credit Facility (as amended and restated, the “Restated Credit Facility”).

On August 2, 2023, the remaining outstanding commitment of approximately $2.15 billion under the Bridge Commitment Letter was reduced to zero in connection with the issuance of the Senior Notes previously described.

The Restated Credit Facility provides for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $1,042.5 million.

The Restated Credit Facility also provides for a senior unsecured term loan facility in an

aggregate principal amount not to exceed approximately $2,144.7 million, of which $1,850 million was outstanding as of August 31, 2023 and approximately $294.7 million was drawn on a delayed draw basis on the closing date of the Webhelp Combination.

Aggregate borrowing capacity under the Restated Credit Facility may be increased by up to an additional $500 million 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 Facility, including the receipt of additional commitments for such increase.

In September 2023, we prepaid $69.7 million of the principal balance on the term loan facility, without penalty, resulting in an outstanding balance of approximately $2,075 million.

The maturity date of the Restated Credit Facility 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 the 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 Facility 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 Facility 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 Facility) in effect on such day, (B) the NYFRB Rate (as defined in the Restated Credit Facility) 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 Facility 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 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 Restated Credit Facility) not to exceed 3.75 to 1.0 (or for certain periods following certain qualified acquisitions, including the Webhelp Combination, 4.25 to 1.0) and (ii) a consolidated interest coverage ratio (as defined in the Restated Credit Facility) equal to or greater than 3.00 to 1.0.

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

None of our subsidiaries guarantees the obligations under the Restated Credit Facility.

Prior to entering into the Amendment Agreement, obligations under 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.

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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.

Borrowings under the Prior 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 $26.25 million.

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

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

Securitization Facility

On July 6, 2022, we entered into an amendment to our Securitization Facility, which was initially entered into on October 30, 2020, to (i) increase the commitment of the lenders to provide available borrowings from up to $350 million to up to $500 million, (ii) extend the termination date of the Securitization Facility from October 28, 2022 to July 5, 2024, and (iii) replace LIBOR with SOFR as one of the reference rates used to calculate interest on borrowings under the Securitization Facility.

extend the termination date of the Securitization Facility from October 28, 2022 to July 5, 2024, and (iii) replace LIBOR with SOFR as one of the reference rates used to calculate interest on borrowings under the Securitization Facility.

In addition, the interest rate margins were amended, such that borrowings under the Securitization Facility that are funded through the issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.70% and, otherwise, at a per annum rate equal to the applicable SOFR rate (which includes a SOFR related adjustment of 0.10%), plus a spread of 0.80%.

Under the Securitization Facility, Concentrix and certain of its U.S.

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 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

Under the Securitization Facility, Concentrix Corporation and certain of its U.S.

based subsidiaries (the “Originators”) sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix Corporation 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 Restated Credit Facility and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix Corporation, and certain events negatively affecting the overall credit quality of the transferred accounts receivable.

Sellers’ Note

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued a promissory note in the aggregate principal amount of €700 million (the “Sellers’ Note”) to certain Sellers (the “Noteholders”).

Pursuant to the Sellers’ Note, the unpaid principal amount outstanding will accrue interest from time to time at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025.

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

Cash Flows – Nine Months Ended August 31, 2023 and 2022

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

Nine Months Ended

August 31, 2023 August 31, 2022

($ in thousands)

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Net cash used in investing activities (115,717) (1,803,723)

Net cash provided by (used in) financing activities (162,019) 1,415,405

Net cash provided by financing activities

1,636,260 1,455,982

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Operating Activities

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.

Net cash provided by operating activities was $448.7 million for the nine months ended August 31, 2023, compared to $365.0 million for the nine months ended August 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 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.

Net cash used in investing activities for the nine months ended August 31, 2023 was $115.7 million, compared to $1,803.7 million for the nine months ended August 31, 2022.

The decrease in net cash used in investing activities over the prior year period primarily related to the aggregate cash of $1,705.4 million paid in connection with our acquisitions of PK and ServiceSource in the prior year period.

Financing Activities

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.

Net cash provided by financing activities for the nine months ended August 31, 2023 was $1,636.3 million, consisting primarily of proceeds, before expenses, of $2,137.0 million from the issuance of the Senior Notes in August 2023, partially offset by principal payments of $25.0 million made on term loan borrowings under our senior credit facility, net repayments of $356.5 million under our Securitization Facility, share repurchases of $41.9 million, dividends of $42.9 million, and cash paid of $30.5 million related to debt issuance costs for the Senior Notes, financing fees for the Bridge Facility and amendment fees related to our Restated Credit Facility.

Net cash provided by financing activities for the nine months ended August 31, 2022 was $1,456.0 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 $335.0 million, offset by repayments of $125.0 million on the term loan, share repurchases of $106.8 million, cash paid for debt issuance costs of $9.3 million and dividends of $39.1 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)

Six Months Ended

May 31, 2023 May 31, 2022

Nine Months Ended

August 31, 2023 August 31, 2022

($ in thousands)

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Free cash flow (a non-GAAP measure) $ 333,027 $ 267,765

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.

Our free cash flow was $333.0 million for the nine months ended August 31, 2023 compared to $267.8 million for the nine months ended August 31, 2022.

The increase in free cash flow for the nine months ended August 31, 2023 compared to the prior year period was due to the increase in cash provided by operating activities partially offset by an increase in capital expenditures.

Capital Resources

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 May 31, 2023 and November 30, 2022.

Excluding cash held related to Senior Notes proceeds that were subsequently used to fund the combination with Webhelp, as of August 31, 2023, we had total liquidity of $1,766.3 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $500.0 million under our Securitization Facility and remaining cash and cash equivalents.

Our cash and cash equivalents totaled $2,112.8 million and $145.4 million as of August 31, 2023 and November 30, 2022, respectively.

Cash and cash equivalents included $1,889.0 of Senior Notes proceeds that were subsequently used to fund the combination with Webhelp.

Of our total cash and cash equivalents, excluding the Senior Notes proceeds, 99% and 97% were held by our non-U.S.

legal entities as of August 31, 2023 and November 30, 2022, respectively.

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

12 unchanged sentences

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