Concentrix Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 + 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 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 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 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; cyberattacks on our or our clients’ networks and information technology systems; the failure of our staff and contractors to adhere to our and our clients’ controls and processes; the inability to protect personal and proprietary information; the inability to execute on our digital customer experience strategy; the loss of key personnel or the inability to attract and retain staff with the skills and expertise needed for our business; increases in the cost of labor; the effects of the COVID-19 pandemic and other communicable diseases, natural disasters, adverse weather conditions or public health crises; 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; competitive conditions in our industry and consolidation of our competitors; higher than expected tax liabilities; the demand for customer experience solutions and technology; variability in demand by our clients or the early termination of our client contracts; the level of business activity of our clients and the market acceptance and performance of their products and services; currency exchange rate fluctuations; the operability of our communication services and information technology systems and networks; changes in law, regulations or regulatory guidance; damage to our reputation through the actions or inactions of third parties; 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 “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, 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. U.S. Pat. & Tm. Off. and applicable non-U.S. jurisdictions. Other names and marks are the property of their respective owners. Overview and Basis of Presentation 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. 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 32 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. We generate revenue from performing services that are generally tied to our clients’ products and services. Any shift in business or the size of the market for our clients’ products or services, or any failure of technology or failure of acceptance of our clients’ products or services in the market may impact our business. The staff turnover rate in our business is high, as is the risk of losing experienced team members. High staff turnover rates may increase costs and decrease operating efficiencies and productivity. 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 preliminary purchase consideration for the acquisition of the Shares is valued at approximately $4 billion. PK Acquisition On December 27, 2021, we completed our acquisition of PK, a leading CX design engineering company with more than 5,000 staff in four countries, for total consideration of $1,573.3 million, net of cash and restricted cash acquired. PK creates pioneering experiences that accelerate digital outcomes for their clients’ customers, partners and staff. The acquisition of PK expanded our scale in the digital IT services market and supported our growth strategy of investing in digital transformation to deliver exceptional customer experiences. The addition of the PK staff and technology to our team further strengthened our capabilities in CX design and development, artificial intelligence (“AI”), intelligent automation, and customer loyalty. ServiceSource Acquisition On July 20, 2022, we completed our acquisition of ServiceSource International, Inc. (“ServiceSource”) for total consideration of $141.5 million, net of cash and restricted cash acquired. ServiceSource is a global outsourced go-to-market services provider, delivering business-to-business (“B2B”) digital sales and customer success solutions that complemented our existing offerings in this area. Revenue and Cost of Revenue We generate revenue through the provision of CX solutions and technology to our clients pursuant to client contracts. Our client contracts typically consist of a master services agreement, supported in most cases by multiple statements of work, which contain the terms and conditions of each contracted solution. Our client contracts can range from less than one year to over five years in term and are subject to early termination by our clients for any reason, typically with 30 to 90 days’ notice. Our CX solutions and technology are generally characterized by flat unit prices. Approximately 98% of our revenue is recognized as services are performed, based on staffing hours or the number of client customer transactions handled using contractual rates. Remaining revenue from the sale of these solutions are typically recognized as the services are provided over the duration of the contract using contractual rates. Our cost of revenue consists primarily of personnel costs related to the delivery of our solutions and technology. The costs of our revenue can be impacted by the mix of client contracts, where we deliver the CX solutions and technology, additional lead time for programs to be fully scalable, and transition and initial set-up costs. 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. 33 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. dollars and we expect this to continue. As a result, we have certain client contracts that are priced in non-U.S. dollar currencies for which a substantial portion of the costs to deliver the services are in other currencies. Accordingly, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses. 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. 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. Margins Our gross margins fluctuate and can be impacted by the mix of client contracts, services provided, shifts in the geography from which our CX services are delivered, client volume trends, the amount of lead time that is required for programs to become fully scaled, and transition and set-up costs. Our operating margin fluctuates based on changes in gross margins as well as overall volume levels, as we are generally able to gain scale efficiencies in our selling, general and administrative costs as our volumes increase. Economic and Industry Trends The CX solutions industry in which we operate is competitive, including on the basis of pricing terms, delivery capabilities and quality of services. Further, there can be competitive pressure for labor in various markets, which could result in increased labor costs. Accordingly, we could be subject to pricing and labor cost pressures and may experience a decrease in revenue and operating income. Our business operates in over 40 countries across 6 continents. We have significant concentrations in the Philippines, India, the United States, the United Kingdom, Canada, throughout Europe, China and Japan. Accordingly, we would be impacted by economic strength or weakness in these geographies and by the strengthening or weakening of local currencies relative to the U.S. dollar. Seasonality Our revenue and margins fluctuate with the underlying trends in our clients’ businesses and trends in the level of consumer activity. As a result, our revenue and margins are typically higher in the fourth fiscal quarter of the year than in any other quarter. Critical Accounting Policies and Estimates 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. 34 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) Revenue $ 1,632,834 $ 1,579,602 $ 4,883,944 $ 4,683,755 Cost of revenue 1,039,142 1,012,754 3,128,866 3,019,857 Gross profit 593,692 566,848 1,755,078 1,663,898 Selling, general and administrative expenses 431,425 409,303 1,274,198 1,201,696 Operating income 162,267 157,545 480,880 462,202 Interest expense and finance charges, net 49,293 20,272 130,496 42,015 Other expense (income), net 6,169 (12,086) 19,266 (22,247) Income before income taxes 106,805 149,359 331,118 442,434 Provision for income taxes 29,170 42,235 86,763 111,738 Net income before non-controlling interest 77,635 107,124 244,355 330,696 Less: Net income attributable to non-controlling interest — 434 — 591 Net income attributable to Concentrix Corporation $ 77,635 $ 106,690 $ 244,355 $ 330,105 Revenue Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Industry vertical: Technology and consumer electronics $ 528,281 $ 500,595 5.5% $ 1,549,093 $ 1,437,548 7.8% Retail, travel and ecommerce 322,394 299,595 7.6% 935,850 879,537 6.4% Communications and media 252,497 274,424 (8.0)% 767,278 808,884 (5.1)% Banking, financial services and insurance 246,771 234,844 5.1% 768,388 733,673 4.7% Healthcare 167,428 143,085 17.0% 509,960 441,473 15.5% Other 115,463 127,059 (9.1)% 353,375 382,640 (7.6)% Total $ 1,632,834 $ 1,579,602 3.4% $ 4,883,944 $ 4,683,755 4.3% We generate revenue by delivering our CX solutions and technology to our clients categorized in the above primary industry verticals. Our solutions focus on customer engagement, process optimization, and back-office automation. 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 $64.7 million, or 1.4%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Japanese yen, Argentine peso and Australian dollar against the U.S. dollar. For the three and nine months ended August 31, 2023, revenue in our technology and consumer electronics vertical increased as a result of contributions from acquired operations. For the three and nine months ended August 31, 2023, revenue in our retail, travel and ecommerce vertical increased primarily due to increased volumes across several of our largest clients in this vertical over the prior year periods. For the three and nine months ended August 31, 2023, revenue in our communications and media vertical decreased due to decreased volumes with several clients which more than offset volume increases across a number of clients. For the three and nine 35 months ended August 31, 2023, revenue from clients in the banking, financial services and insurance vertical increased primarily due to increased volumes across the majority of our clients in this vertical over the prior year periods. For the three and nine months ended August 31, 2023, revenue in our healthcare vertical increased due to increased volumes across the several of our largest healthcare clients over the prior year periods. For the three and nine months ended August 31, 2023, revenue in our other vertical decreased primarily due to decreases in revenue from several clients, including government clients, over the prior year periods. Cost of Revenue, Gross Profit and Gross Margin Percentage Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Cost of revenue $ 1,039,142 $ 1,012,754 2.6% $ 3,128,866 $ 3,019,857 3.6% Gross profit $ 593,692 $ 566,848 4.7% $ 1,755,078 $ 1,663,898 5.5% Gross margin % 36.4 % 35.9 % 35.9 % 35.5 % Cost of revenue consists primarily of personnel costs. 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 2.6% 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 Egyptian pound, Philippine peso and Indian rupee against the U.S. dollar. 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, Egyptian pound and Indian rupee against the U.S. dollar. 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 $68.0 million on gross profit. Our gross margin percentage for the nine months ended August 31, 2023 increased to 35.9% from 35.5% in the prior year period due to changes in the mix of geographies where our services were delivered. Selling, General and Administrative Expenses Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Selling, general and administrative expenses $ 431,425 $ 409,303 5.4% $ 1,274,198 $ 1,201,696 6.0% Percentage of revenue 26.4 % 25.9 % 26.1 % 25.7 % Our selling, general and administrative expenses consist primarily of support personnel costs such as salaries, commissions, bonuses, employee benefits and share-based compensation costs. 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. 36 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 $33.7 million reduction in selling, general and administrative expenses due to foreign currency translation. As a percentage of revenue, selling, general and administrative expenses increased from 25.7% in the nine months ended August 31, 2022 to 26.1% in the nine months ended August 31, 2023 due to the net effect of the changes described. Operating Income Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Operating income $ 162,267 $ 157,545 3.0% $ 480,880 $ 462,202 4.0% Operating margin 9.9 % 10.0 % 9.8 % 9.9 % 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 Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Interest expense and finance charges, net $ 49,293 $ 20,272 143.2% $ 130,496 $ 42,015 210.6% 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 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 $7.8 million. 37 Other Expense (Income), Net Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Other expense (income), net $ 6,169 $ (12,086) (151.0)% $ 19,266 $ (22,247) (186.6)% Percentage of revenue 0.4 % (0.8) % 0.4 % (0.5) % 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 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 $14.5 million in addition to unfavorable foreign currency transaction changes compared to the prior year period. Three Months Ended % Change Nine Months Ended % Change August 31, 2023 August 31, 2022 2023 to 2022 August 31, 2023 August 31, 2022 2023 to 2022 ($ in thousands) ($ in thousands) Provision for income taxes $ 29,170 $ 42,235 (30.9)% $ 86,763 $ 111,738 (22.4)% Percentage of income before income taxes 27.3 % 28.3 % 26.2 % 25.3 % 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 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. 38 Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including: • Revenue in constant currency, which is revenue adjusted for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance. Revenue in constant currency is calculated by translating the revenue of each fiscal year in the billing currency to U.S. dollars using the comparable prior year’s currency conversion rate. Generally, when the U.S. dollar either strengthens or weakens against other currencies, our revenue growth at constant currency rates or adjusting for currency will be higher or lower than our revenue growth reported at actual exchange rates. • Revenue in adjusted constant currency, which is constant currency revenue excluding revenue from acquired operations in the current period for the twelve months following an acquisition and excluding revenue from divested operations in the comparative period for the twelve months preceding a divestiture. Revenue in adjusted constant currency presents organic constant currency revenue growth for the business, without the impact of acquisitions and divestitures, thereby facilitating period-to-period comparisons of our business performance. • Non-GAAP operating income, which is operating income, adjusted to exclude acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets and share-based compensation. • Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue. • Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, which is non-GAAP operating income, as defined above, plus depreciation. • Adjusted EBITDA margin, which is adjusted EBITDA, as defined above, divided by revenue. • Non-GAAP net income, which is net income excluding the tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets and share-based compensation. • Free cash flow, which is cash flows from operating activities less capital expenditures. We believe that free cash flow is a meaningful measure of cash flows since capital expenditures are a necessary component of ongoing operations. However, free cash flow has limitations because it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. • Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets and share-based compensation. We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. These non-GAAP financial measures exclude amortization of intangible assets. Our acquisition activities have resulted in the recognition of intangible assets, which consist primarily of client relationships, technology and trade names. Finite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in our statements of operations. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the services performed for our clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity. Accordingly, we believe excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of our business nor reflect our underlying business performance, enhances our and our investors’ ability to compare our past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within our GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes 39 impaired or the estimated useful life of an intangible asset is revised. These non-GAAP financial measures also exclude share-based compensation expense. Given the subjective assumptions and the variety of award types that companies can use when calculating share-based compensation expense, management believes this additional information allows investors to make additional comparisons between our operating results and those of our peers. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. 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 Nine Months Ended August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022 ($ in thousands, except per share amounts) Revenue $ 1,632,834 $ 1,579,602 $ 4,883,944 $ 4,683,755 Foreign currency translation 405 — 64,727 — Revenue in constant currency $ 1,633,239 $ 1,579,602 $ 4,948,671 $ 4,683,755 Effect of excluding revenue of acquired and divested businesses (26,833) (142,525) (154,850) (349,684) Revenue in adjusted constant currency $ 1,606,406 $ 1,437,077 $ 4,793,821 $ 4,334,071 Operating income $ 162,267 $ 157,545 $ 480,880 $ 462,202 Acquisition-related and integration expenses 18,494 12,565 31,470 15,213 Amortization of intangibles 39,510 41,500 118,196 121,025 Share-based compensation 10,740 9,862 38,683 37,678 Non-GAAP operating income $ 231,011 $ 221,472 $ 669,229 $ 636,118 Net income $ 77,635 $ 106,690 $ 244,355 $ 330,105 Net income attributable to non-controlling interest — 434 — 591 Interest expense and finance charges, net 49,293 20,272 130,496 42,015 Provision for income taxes 29,170 42,235 86,763 111,738 Other expense (income), net 6,169 (12,086) 19,266 (22,247) Acquisition-related and integration expenses 18,494 12,565 31,470 15,213 Amortization of intangibles 39,510 41,500 118,196 121,025 Share-based compensation 10,740 9,862 38,683 37,678 Depreciation 38,246 36,933 114,632 110,107 Adjusted EBITDA $ 269,257 $ 258,405 $ 783,861 $ 746,225 Operating margin 9.9 % 10.0 % 9.8 % 9.9 % Non-GAAP operating margin 14.1 % 14.0 % 13.7 % 13.6 % Adjusted EBITDA margin 16.5 % 16.4 % 16.0 % 15.9 % Net income $ 77,635 $ 106,690 $ 244,355 $ 330,105 Acquisition-related and integration expenses 18,494 12,565 31,470 15,213 Acquisition-related expenses included in interest expense and finance charges, net (1) 13,716 — 25,556 — Acquisition-related expenses included in other expense (income), net (1) 2,064 — 14,493 — Amortization of intangibles 39,510 41,500 118,196 121,025 Share-based compensation 10,740 9,862 38,683 37,678 Income taxes related to the above (2) (21,131) (16,237) (57,099) (44,170) Non-GAAP net income $ 141,028 $ 154,380 $ 415,654 $ 459,851 40 Three Months Ended Nine Months Ended August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022 ($ in thousands, except per share amounts) Diluted earnings per common share (“EPS”) $ 1.49 $ 2.04 $ 4.67 $ 6.28 Acquisition-related and integration expenses 0.36 0.24 0.60 0.29 Acquisition-related expenses included in interest expense and finance charges, net (1) 0.26 — 0.49 — Acquisition-related expenses included in other expense (income), net (1) 0.04 — 0.28 — Amortization of intangibles 0.76 0.79 2.26 2.30 Share-based compensation 0.21 0.19 0.74 0.72 Income taxes related to the above (2) (0.41) (0.31) (1.09) (0.85) 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 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. 41 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 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. Our working capital needs are primarily to finance accounts receivable. When our revenue is increasing, our net investment in working capital typically increases. Conversely, when revenue is decreasing, our net investment in working capital typically decreases. To increase our market share and better serve our clients, we may further expand our operations through investments or acquisitions. We expect that such expansion would require an initial investment in working capital, personnel, facilities, and operations. 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 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. 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 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: Announcement Date Record Date Per Share Dividend Amount Payment Date January 18, 2022 January 28, 2022 $0.25 February 8, 2022 March 29, 2022 April 29, 2022 $0.25 May 10, 2022 June 27, 2022 July 29, 2022 $0.25 August 9, 2022 September 28, 2022 October 28, 2022 $0.275 November 8, 2022 January 19, 2023 January 30, 2023 $0.275 February 10, 2023 March 29, 2023 April 28, 2023 $0.275 May 9, 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. 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 42 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 Senior Notes 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. to amend and restate the Prior Credit Facility (as amended and restated, the “Restated Credit Facility”). 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 $294.7 million. 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 43 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. subsidiaries. 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 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) 44 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 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) Net cash provided by operating activities $ 448,744 $ 365,041 Net cash used in investing activities (115,717) (1,803,723) Net cash provided by financing activities 1,636,260 1,455,982 Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,715) (21,809) Net increase (decrease) in cash, cash equivalents and restricted cash $ 1,966,572 $ (4,509) Cash, cash equivalents and restricted cash at beginning of year 157,463 183,010 Cash, cash equivalents and restricted cash at the end of the period $ 2,124,035 $ 178,501 Operating Activities 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. 45 Investing Activities 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 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 $39.1 million. We believe our current cash balances and credit availability are enough to support our operating activities for at least the next twelve months. Free Cash Flow (a non-GAAP measure) Nine Months Ended August 31, 2023 August 31, 2022 ($ in thousands) Net cash provided by operating activities $ 448,744 $ 365,041 Purchases of property and equipment (115,717) (97,276) Free cash flow (a non-GAAP measure) $ 333,027 $ 267,765 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 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. legal entities are no longer subject to U.S. federal tax on repatriation into the United States; repatriation of some non-U.S. balances is restricted by local laws. Historically, we have fully utilized and reinvested all non-U.S. cash to fund our international operations and expansions; however, we have recorded deferred tax liabilities related to non-U.S. withholding taxes on the earnings of certain previously acquired non-U.S. entities that are likely to be repatriated in the future. 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. 46 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. We also believe that our longer-term working capital, planned capital expenditures and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financing activities.