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Item 2. Management’s Discussion and Analysis

2021-07-29 compared with 2021-04-29 · 228 added, 113 removed, 249 unchanged (58% of the section changed)

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Dollar amounts within Item 2 are presented as actual, rounded, dollar amounts.

We have described in this Quarterly Report on Form 10-Q, the impact of the global Coronavirus Disease 2019 pandemic (“COVID-19”) on our financial results for the quarter ended March 31, 2021.

We have described in this Quarterly Report on Form 10-Q, the impact of the global Coronavirus Disease 2019 pandemic (“COVID-19”) on our financial results for the three months ended June 30, 2021.

See "Cautionary Note Regarding Forward-Looking Statements" below, Item 1A -“Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for further information regarding risks and uncertainties relating to COVID-19.

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The global COVID-19 pandemic continues to materially impact worldwide economic activity and levels of business confidence and has had widespread, rapidly-evolving and unpredictable impacts on global societies, economies, financial markets and business practices.

During 2020, COVID-19 materially impacted our business, however during the first fiscal quarter of 2021, we saw moderate improvement in key indicators.

During 2020, COVID-19 materially impacted our business, however during the first half of 2021, we saw moderate improvement in key indicators, despite being prevented from conducting business activities as usual from geographies affected by new variants of the COVID-19 virus.

Over the course of 2020, and continuing into 2021, our customers, contractors, suppliers, and other partners adapted in order to conduct business activities in a COVID-19 environment.

economy continued on a path to recovery in the first quarter of 2021 with millions of Americans receiving the COVID-19 vaccine, and states and municipalities increasingly reopening.

economy continued on a path to recovery in the first half of 2021 with millions of Americans receiving the COVID-19 vaccine, and states and municipalities increasingly reopening.

In addition, the U.S.

federal government continued to enact policies to provide fiscal stimulus to the economy and relief to those affected by the pandemic.

As the global economy begins to emerge from the impact of COVID-19 in 2021, our clients are focused on receiving personalized customer experiences, optimizing costs and supporting resilient operating models.

As the global

economy begins to emerge from the impact of COVID-19 in 2021, our clients are focused on receiving personalized customer experiences, optimizing costs and supporting resilient operating models.

We remain committed to helping our clients adapt and thrive through the ongoing uncertainties caused by COVID-19 and, going forward, to the shifting business environment.

Notwithstanding the moderate improvement in conditions during the first quarter of 2021, the COVID-19 pandemic continues, and due to the associated uncertainties, we continue to evaluate the nature and scope of the impact to our business and may take further strategic actions in order to manage our business operations, costs and liquidity in response to the ongoing impacts and changing conditions and markets resulting from COVID-19.

We have a business continuity plan in place and have adapted delivery to a work from home model, while actively working to understand our clients’ changing requirements, continuing to ensure data security, prioritizing critical processes, adjusting service levels and managing discretionary costs (such as travel costs) and fixed costs (such as non-critical personnel costs).

Notwithstanding the moderate improvement in conditions during the first half of 2021, the COVID-19 pandemic continues, with temporary shutdowns at our operations centers requested or mandated by governmental authorities, and due to the associated uncertainties, we continue to evaluate the nature and scope of the impact to our business and may take further strategic actions in order to manage our business operations, costs and liquidity in response to the ongoing impacts and changing conditions and markets resulting from COVID-19.

We have a business continuity plan in place and have, since early in the pandemic, adapted delivery to a work from home model, while actively working to understand our clients’ changing requirements, continuing to ensure data security, prioritizing critical processes, adjusting service levels and managing discretionary costs (such as travel costs) and fixed costs (such as non-critical personnel costs).

We have made ongoing efforts to reduce our reliance on travel by incorporating into our business model the ability to conduct business using virtual conferencing and collaboration tools.

Our work from home delivery capability steadily improved throughout 2020 and continued to improve during the first quarter of 2021.

Our work from home delivery capability steadily improved throughout 2020 and continued to improve during the first half of 2021.

We estimate that we are able to deliver a significant portion of our clients’ current requirements in a work from home model given the current lockdown restrictions in the locations in which we operate and certain clients not authorizing us to perform the remaining process work remotely due to its sensitive nature.

In addition, we have also worked, and continue to work with national, state, and local authorities to comply with applicable rules and regulations related to COVID-19.

There continues to be volatility and economic and geopolitical uncertainty in many markets around the world.

There continues to be volatility and economic and geopolitical uncertainty in many markets around the world due to the emergence and spread of new variants of COVID-19 across geographies.

Despite the efforts described above, there is a risk that if jurisdictions in which we operate reinstate prior restrictions, stagnate in their reopening processes, or implement new restrictions in response to new outbreaks or continued spread, our operations and business could be materially impacted.

In late March 2021, a new serious outbreak of the COVID-19 virus began affecting India with an exorbitant spike in the number of COVID patients.

The Indian government has reinstated lockdowns limiting in certain cases the movement of our employees to offices.

The Indian government reinstated lockdowns limiting in certain cases the movement of our employees to offices, however these lockdowns were lifted as the situation in India improved.

During the same period, the Philippines also began experiencing a spike in the number of COVID patients.

Although at present our Indian and Philippines operations have not been materially affected and we have initiated appropriate business continuity procedures, it is possible that these new developments could adversely affect our business and results of operations.

Our Indian and Philippines operations were not materially affected as we initiated appropriate business continuity procedures, so as to minimize the effects of these new developments, but it is possible that our business and results of operations could nevertheless be materially affected if any further developments, including new variants of the COVID-19 virus, emerge .

We also took actions in response to the pandemic that focused on helping our employees.

These actions included disseminating guidance and information to our employees, facilitating work from home, implementing best practices for employees while working from home, periodic CEO messaging, various programs aimed at employee wellness, including a global wellness program, enhanced leave for employees affected by COVID-19, enhanced awareness towards information security, and updated cyber security and data privacy policies, among others.

We have implemented broad travel restrictions and largely moved to virtual-only events for the safety of our employees and our customers.

In the geographies most affected by the recent COVID-19 variants, these actions included healthcare support including securing and administering vaccines for our employees, facilitating our employees’ access to medical equipment, providing ambulance services and online medical consultations, extending medical insurance to our employees’ family members and enhancing the dollar value of such coverage.

We also instituted a one-time employee compensation payment to beneficiaries of employees, facilitated voluntary contributions from our clients and employees to support the family members of deceased employees and providing financial support for their children's education.

Other actions included disseminating guidance and information to our employees, facilitating work from home, implementing best practices for employees while working from home, periodic CEO messaging, various programs aimed at employee wellness, including a global wellness program, enhanced leave for employees affected by COVID-19, enhanced awareness towards information security, and updated cyber security and data privacy policies, among others.

We continue to have broad travel restrictions and largely operating in virtual-only events for the safety of our employees and our customers.

We also implemented pandemic-specific protocols for our essential employees whose jobs require them to be on-site or with our customers by implementing additional safety measures at all of our facilities, including increased frequency in cleaning and disinfecting, and enhanced hygiene and social distancing practices.

We continue to incur additional costs in order to ensure the continuity of our operations and shift towards a work from home model.

We continue to incur additional costs in order to ensure the continuity of our operations and support our work from home model.

Such costs include purchase of desktops and laptops for our employees, software and internet connectivity devices, technology tools for productivity enhancement, accommodation, meal, overtime, transportation and regular sanitization and cleaning costs of our offices and facilities.

We also expect that we will continue to incur additional costs to monitor and improve operational efficiency of our work from home model, implement new information technology solutions and security measures to safeguard against information security risks and protect the health and safety of our employees as they gradually return to the office.

We believe that these short-to-medium-term costs may benefit us in the long-term, as these steps have

broadened our “remote working” capabilities, which we expect to become a permanent feature in our future delivery model, as well as our business continuity plans.

In response to certain anticipated impacts from COVID-19, we implemented a series of temporary cost reduction measures in 2020 which continued in the first quarter of 2021 to further preserve financial flexibility.

We believe that these short-to-medium-term costs may benefit us in the long-term, as these steps have broadened our “remote working” capabilities, which we expect to become a permanent feature in our future delivery model, as well as our business continuity plans.

In response to certain anticipated impacts from COVID-19, we implemented a series of temporary cost reduction measures in 2020 which continued in the first half of 2021 to further preserve financial flexibility.

These actions included the postponement of certain discretionary spending including travel and marketing expenses, reevaluating the pace of our capital expenditures, rationalizing certain of our real estate and facilities, deferring non-critical hiring among others.

Certain impacts of COVID-19 on our business, results of operations, financial position and cash flow during the first quarter of 2021 has been described above and below, however the full extent of the impact for the period beyond the first quarter of 2021 is currently uncertain and will depend on many factors that are not within our control, including, but not limited to:

Certain impacts of COVID-19 on our business, results of operations, financial position and cash flow during the first half of 2021 has been described above and below, however the full extent of the impact for the period beyond the first half of 2021 is currently uncertain and will depend on many factors that are not within our control, including, but not limited to:

the duration and scope of the pandemic;

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For additional information and risks related to COVID-19, see Item 1A - “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

For the three months ended March 31, 2021, we had revenues of $261.4 million compared to revenues of $246.0 million for the three months ended March 31, 2020, an increase of $15.4 million, or 6.3%.

We serve clients mainly in the United States and the United Kingdom, with these two regions generating 85.8% and 9.5%, respectively, of our total revenues for the three months ended March 31, 2021, and 84.5% and 9.5%, respectively, of our revenues for the three months ended March 31, 2020.

For the three months ended March 31, 2021 and 2020, our total revenues from our top ten clients accounted for 39.3% and 37.3% of our total revenues, respectively.

For the three months ended June 30, 2021, we had revenues of $275.1 million compared to revenues of $222.5 million for the three months ended June 30, 2020, an increase of $52.6 million, or 23.6%.

For the six months ended June 30, 2021, we had revenues of $536.5 million compared to revenues of $468.5 million for the six months ended June 30, 2020, an increase of $68.0 million, or 14.5%.

We serve cli ents mainly in the United States and the United Kingdom, with these two regions generating 85.5% and 9.5%, respectively, of our total revenues for the three months ended June 30, 2021, and 85.0% and 8.5%, respectively, of our total revenues for the three months ended June 30, 2020.

For the six months ended June 30, 2021, these two regions generated 85.7% and 9.5%, respectively, of our total revenues and 84.7% and 9.0%, respectively, of our total revenues for the six months ended June 30, 2020.

For the three months ended June 30, 2021 and 2020, our total revenues from our top ten clients accounted for 37.8% and 38.7% of our total revenues, respectively.

For the six months ended June 30, 2021 and 2020, our total revenues from our top ten clients accounted for 38.5% and 37.1% of our total revenues, respectively.

Our revenue concentration with our top clients remains largely consistent year-over-year and we continue to develop relationships with new clients to diversify our client base.

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As part of this transfer, we hire and train employees to work at our operations centers on the relevant business operations, implement a process migration to these operations centers and then provide services either to the client or directly to the client’s customers.

Each client contract has different terms based on the scope, deliverables and complexity of the engagement.

Each client contract has different terms based

on the scope, deliverables and complexity of the engagement.

We also provide consulting services related to operations management that include industry-specific digital transformational services as well as cross-industry finance and accounting services as part of the Emerging Business operating segment.

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We actively cross-sell and, where appropriate, integrate our Analytics services with other operations management services as part of a comprehensive offering for our clients.

Our projects-based analytics services are cyclical and can be significantly affected by variations in business cycles.

In addition, our projects-based analytics services are documented in contracts with terms generally not exceeding one year and may not produce ongoing or recurring business for us once the project is completed.

These contracts also usually contain provisions permitting termination of the contract after a short notice period.

The short-term nature and specificity of these projects could lead to fluctuations and uncertainties in the revenues generated from providing analytics services.

We anticipate that revenues from our analytics services will grow as we expand our service offerings and client base, both organically and through acquisitions.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2021, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

There have been no significant changes in our critical accounting policies and estimates, during the three and six months ended June 30, 2021, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three months ended March 31,

(dollars in millions)

The following table summarizes our results of operations for the three months and six months ended June 30, 2021 and 2020:

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

(dollars in millions) (dollars in millions)

Revenues, net $ 275.1 $ 222.5 $ 536.5 $ 468.5

Cost of revenues (1)

170.7 158.4 329.5 321.1

Gross profit (1)

104.4 64.1 207.0 147.4

Operating expenses:

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(1) Exclusive of depreciation and amortization expense.

Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

The following table summarizes our revenues by reportable segments for the three months ended March 31, 2021 and 2020:

Three months ended March 31, Percentage

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

The following table summarizes our revenues by reportable segments for the three months ended June 30, 2021 and 2020:

Three months ended June 30, Percentage

2021 2020 Change

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Total revenues, net $ 275.1 $ 222.5 $ 52.6 23.6 %

Revenues for the three months ended March 31, 2021 were $261.4 million, up $15.4 million, or 6.3%, compared to the three months ended March 31, 2020.

Revenue growth in Insurance of $7.4 million was primarily driven by expansion of business from our existing clients aggregating to $6.4 million and an increase in revenues of $1.1 million that was mainly attributable to the appreciation of the Australian dollar and the U.K.

Revenues for the three months ended June 30, 2021 were $275.1 million, up $52.6 million, or 23.6%, compared to the three months ended June 30, 2020.

Revenue growth in Insurance of $13.4 million was primarily driven by expansion of business from our existing clients aggregating to $12.1 million and an increase in revenues of $1.3 million that was mainly attributable to the appreciation of the Australian dollar, the U.K.

pound sterling and the South African ZAR against the U.S.

dollar during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Insurance revenues were 34.4% and 36.5% of our total revenues in the three months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Healthcare of $3.3 million was primarily driven by expansion of business from our new and existing clients aggregating to $3.3 million during the three months ended June 30, 2021.

Healthcare revenues were 10.3% and 11.2% of our total revenues in the three months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Emerging Business of $6.2 million was primarily driven by expansion of business from our new and existing clients aggregating to $5.6 million and an increase in revenues of $0.6 million that was mainly attributable to the appreciation of the Indian rupee and the U.K.

pound sterling against the U.S.

dollar during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

Insurance revenues were 34.9% and 34.0% of our total revenues in the three months ended March 31, 2021 and March 31, 2020, respectively.

Revenue growth in Healthcare of $3.3 million was primarily driven by expansion of business from our new and existing clients aggregating to $3.2 million during the three months ended March 31, 2021.

Healthcare revenues were 11.6% and 11.0% of our total revenues in the three months ended March 31, 2021 and March 31, 2020, respectively.

Revenue decline in Emerging Business of $5.1 million was primarily driven by lower travel and transportation volumes due to the impact of COVID-19.

Emerging Business revenues were 14.4% and 17.4% of our total revenues in the three months ended March 31, 2021 and March 31, 2020, respectively.

dollar during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Emerging Business revenues were 14.8% and 15.5% of our total revenues in the three months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Analytics of $29.7 million was attributable to the higher volumes in our annuity and project-based engagements from our new and existing clients of $28.7 million and an increase in revenues of $1.0 million mainly attributable to the appreciation of the U.K.

pound sterling against the U.S.

dollar during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

Analytics revenues were 39.1% and 37.6% of our total revenues in the three months ended March 31, 2021 and March 31, 2020, respectively.

dollar during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Analytics revenues were 40.5% and 36.7% of our total revenues in the three months ended June 30, 2021 and June 30, 2020, respectively.

Cost of Revenues and Gross Margin :

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Cost of Revenues Gross Margin

Three months ended March 31, Percentage change Three months ended March 31, Change

Three months ended June 30, Change Percentage

change Three months ended June 30, Change

2021 2020 2021 2020

(dollars in millions)

Insurance $ 59.4 $ 59.1 $ 0.3 0.5 % 37.3 % 27.3 % 10.0 %

Healthcare 17.7 19.6 (1.9) (9.7) % 37.4 % 21.4 % 16.0 %

Emerging Business 22.3 22.5 (0.2) (0.9) % 45.1 % 35.1 % 10.0 %

Analytics 71.3 57.2 14.1 24.7 % 36.0 % 29.9 % 6.1 %

Total $ 170.7 $ 158.4 $ 12.3 7.8 % 37.9 % 28.8 % 9.1 %

For the three months ended June 30, 2021, cost of revenues was $170.7 million compared to $158.4 million for the three months ended June 30, 2020, an increase of $12.3 million, or 7.8%.

Our gross margin for the three months ended June 30, 2021 was 37.9% compared to 28.8% for the three months ended June 30, 2020, an increase of 9.1% primarily driven by higher revenues and operational efficiencies during the three months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the three months ended June 30, 2020.

The increase in cost of revenues in Insurance of $0.3 million for the three months ended June 30, 2021 was primarily due to increases in employee-related costs, partially offset by lower COVID-19 related expenses.

Gross margin in Insurance increased by 10.0% during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to higher revenues and operational efficiencies during the three months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the three months ended June 30, 2020.

The decrease in cost of revenues in Healthcare of $1.9 million for the three months ended June 30, 2021 was primarily due to decreases in employee-related costs of $1.9 million.

Gross margin in Healthcare increased by 16.0% during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to higher revenues during the three months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the three months ended June 30, 2020.

The decrease in cost of revenues in Emerging Business of $0.2 million for the three months ended June 30, 2021 was primarily due to decreases in employee-related costs.

Gross margin in Emerging Business increased by 10.0% during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to higher revenues, decrease in employee-related costs and operational efficiencies during the three months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the three months ended June 30, 2020.

The increase in cost of revenues in Analytics of $14.1 million for the three months ended June 30, 2021 was primarily due to increases in employee-related costs of $8.5 million, higher other operating costs of $5.2 million and higher technology costs of $0.4 million.

Gross margin in Analytics increased by 6.1% during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to higher revenues during the three months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the three months ended June 30, 2020.

Selling, General and Administrative (“SG&A”) Expenses.

Three months ended June 30, Change Percentage

(dollars in millions)

General and administrative expenses $ 36.5 $ 28.8 $ 7.7 26.7 %

Selling and marketing expenses 19.8 13.0 6.8 52.3 %

Selling, general and administrative expenses $ 56.3 $ 41.8 $ 14.5 34.7 %

As a percentage of revenues 20.4 % 18.8 %

The increase in SG&A expenses of $14.5 million was primarily due to higher employee-related costs of $13.0 million, COVID-19-related expenses of $2.2 million, primarily related to financial support to family members of deceased employees and higher other operating costs of $0.6 million, partially offset by lower facilities costs of $1.3 million due to optimization of office space.

Depreciation and Amortization.

Three months ended June 30, Change Percentage

(dollars in millions)

Depreciation expense $ 8.9 $ 9.0 $ (0.1) (1.1) %

Intangible amortization expense 3.4 3.4 — — %

Depreciation and amortization expense $ 12.3 $ 12.4 $ (0.1) (0.8) %

As a percentage of revenues 4.5 % 5.6 %

The decrease in depreciation expense of $0.1 million was primarily due to lower depreciation on assets related to operating centers closed as a result of optimization of office space and increased reliance on the work from home model, due to the impact of COVID-19 during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Income from Operations.

Income from operations increased by $25.9 million, or 261.6%, from $9.9 million for the three months ended June 30, 2020 to $35.8 million for the three months ended June 30, 2021, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the three months ended June 30, 2021.

As a percentage of revenues, income from operations increased from 4.4% for the three months ended June 30, 2020 to 13.0% for the three months ended June 30, 2021.

Foreign Exchange Gain/(Loss).

Net foreign exchange gains and losses are primarily attributable to the movement of the U.S.

dollar against the Indian rupee, the U.K.

pound sterling, the Philippine peso and the South African ZAR during the three months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the Indian rupee decreased from 75.41 during the three months ended June 30, 2020 to 73.67 during the three months ended June 30, 2021.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar increased from 1.24 during the three months ended June 30, 2020 to 1.40 during the three months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the Philippine peso decreased from 50.28 during the three months ended June 30, 2020 to 48.20 during the three months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the South African ZAR decreased from 17.66 during the three months ended June 30, 2020 to 14.15 during the three months ended June 30, 2021.

We recorded a net foreign exchange gain of $1.4 million, each, for the three months ended June 30, 2021 and 2020.

Interest expens e.

Interest expense decreased from $2.9 million for the three months ended June 30, 2020 to $2.5 million for the three months ended June 30, 2021, primarily due to lower outstanding borrowings and lower effective interest rates of

1.8% under our Credit Facility during the three months ended June 30, 2021, compared to 2.2% during the three months ended June 30, 2020.

Other Income, net.

Three months ended June 30, Percentage

2021 2020 Change

(dollars in millions)

Gain on sale and mark-to-market of mutual funds $ 1.6 $ 3.1 $ (1.5) (48.4) %

Interest and dividend income 0.7 0.6 0.1 16.7 %

Other, net (0.1) 0.5 (0.6) (120.0) %

Other income, net $ 2.2 $ 4.2 $ (2.0) (47.6) %

Other income, net decreased by $2.0 million, from $4.2 million for the three months ended June 30, 2020 to $2.2 million for the three months ended June 30, 2021, primarily due to lower return on mutual fund investments of $1.5 million, partially offset by increase in interest income of $0.1 million during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Income Tax Expense.

The effective tax rate decreased from 32.4% during the three months ended June 30, 2020 to 24.0% during the three months ended June 30, 2021.

We recorded income tax expense of $8.9 million and $4.1 million for the three months ended June 30, 2021 and 2020, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, partially offset by recording of a one-time tax expense of $1.3 million due to the election of a new tax regime, during the three months ended June 30, 2020, for two of our Indian subsidiaries that provides for a lower tax rate on earnings in exchange for foregoing certain tax credits, including minimum alternative tax credits.

Net income increased from $8.4 million for the three months ended June 30, 2020 to $28.0 million for the three months ended June 30, 2021, primarily due to increase in income from operations of $25.9 million, lower interest expense of $0.4 million and lower loss from equity-method investment of $0.1 million, partially offset by higher income tax expense of $4.8 million and lower other income, net of $2.0 million.

As a percentage of revenues, net income increased from 3.8% for the three months ended June 30, 2020 to 10.2% for the three months ended June 30, 2021.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

The following table summarizes our revenues by reportable segments for the six months ended June 30, 2021 and 2020:

Six months ended June 30, Percentage

2021 2020 Change

(dollars in millions)

Insurance $ 185.8 $ 165.0 $ 20.8 12.6 %

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Analytics 213.7 174.1 39.6 22.8 %

Total revenues, net $ 536.5 $ 468.5 $ 68.0 14.5 %

Revenues for the six months ended June 30, 2021 were $536.5 million, up $68.0 million, or 14.5%, compared to the six months ended June 30, 2020.

Revenue growth in Insurance of $20.8 million was primarily driven by expansion of business from our existing clients aggregating to $18.4 million and an increase in revenues $2.4 million that was mainly attributable to the appreciation of the Australian dollar, the U.K.

pound sterling and the South African ZAR against the U.S.

dollar during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Insurance revenues were 34.6% and 35.2% of our total revenues in the six months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Healthcare of $6.6 million was primarily driven by expansion of business from our new and existing clients aggregating to $6.6 million during the six months ended June 30, 2021.

Healthcare revenues were 10.9% and 11.1% of our total revenues in the six months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Emerging Business of $1.0 million was primarily driven by expansion of business from our new clients and existing clients aggregating to $0.3 million and an increase in revenues of $0.7 million that was mainly attributable to the appreciation of the Indian rupee and the U.K.

pound sterling against the U.S.

dollar during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Emerging Business revenues were 14.6% and 16.5% of our total revenues in the six months ended June 30, 2021 and June 30, 2020, respectively.

Revenue growth in Analytics of $39.6 million was attributable to the higher volumes in our annuity and project based engagements from our new and existing clients of $37.9 million and an increase in revenues $1.7 million mainly attributable to the appreciation of the U.K.

pound sterling and the South African ZAR against the U.S.

dollar during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Analytics revenues were 39.8% and 37.2% of our total revenues in the six months ended June 30, 2021 and June 30, 2020, respectively.

Cost of Revenues and Gross Margin :

The following table sets forth cost of revenues and gross margin of our reportable segments.

Cost of Revenues Gross Margin

Six months ended June 30, Percentage change Six months ended June 30, Change

2021 2020 Change 2021 2020

(dollars in millions)

Insurance $ 115.5 $ 118.1 $ (2.6) (2.2) % 37.9 % 28.4 % 9.5 %

Healthcare 35.1 39.2 (4.1) (10.5) % 40.1 % 24.6 % 15.5 %

Emerging Business 43.1 48.0 (4.9) (10.2) % 44.9 % 38.1 % 6.8 %

Analytics 135.8 115.8 20.0 17.3 % 36.5 % 33.5 % 3.0 %

Total $ 329.5 $ 321.1 $ 8.4 2.6 % 38.6 % 31.5 % 7.1 %

For the three months ended March 31, 2021, cost of revenues was $158.8 million compared to $162.7 million for the three months ended March 31, 2020, a decrease of $3.9 million, or 2.4%.

Our gross margin for the three months ended March 31, 2021 was 39.2% compared to 33.9% for the three months ended March 31, 2020, an increase of 530 basis points (“bps”) primarily driven by higher revenues and lower operating costs.

The decrease in cost of revenues in Insurance of $2.9 million was primarily due to decreases in travel costs of $1.9 million, lower employee-related costs of $1.1 million and foreign exchange gain, net of hedging of $0.3 million.

This was partially offset by higher technology costs of $0.4 million, primarily due to increased usage of the work from home model.

Gross margin in Insurance increased by 890 bps during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to higher revenues, expansion in margin in certain existing clients and operational efficiencies during the three months ended March 31, 2021.

The decrease in cost of revenues in Healthcare of $2.2 million was primarily due to decreases in employee-related costs of $2.5 million and lower travel costs of $0.3 million.

This was partially offset by higher technology costs of $0.4 million, primarily due to increased usage of the work from home model and facilities cost of $0.2 million.

Gross margin in Healthcare increased by 1,500 bps during the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to higher revenues and increased mix of higher margin business during the three months ended March 31, 2021.

The decrease in cost of revenues in Emerging Business of $4.7 million was primarily due to a decreases in employee-related costs of $3.5 million, lower facilities costs of $0.7 million and lower travel costs of $0.5 million.

Gross margin in Emerging Business increased by 420 bps during the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to decrease in employee-related costs and other operating costs, partially offset by lower revenues during the three months ended March 31, 2021.

The increase in cost of revenues in Analytics of $5.9 million was primarily due to increase in employee-related costs of $4.8 million, higher other operating costs of $3.0 million and higher technology costs of $0.8 million.

This was partially offset by lower travel costs of $1.7 million, foreign exchange gain, net of hedging of $0.4 million and lower facilities costs of $0.6 million.

Gross margin in Analytics increased by 40 bps during the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to higher revenues and increased mix of higher margin business during the three months ended March 31, 2021.

For the six months ended June 30, 2021, cost of revenues was $329.5 million compared to $321.1 million for the six months ended June 30, 2020, an increase of $8.4 million, or 2.6%.

Our gross margin for the six months ended June 30, 2021 was 38.6% compared to 31.5% for six months ended June 30, 2020, an increase of 7.1% primarily driven by higher revenues and operational efficiencies during the six months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the six months ended June 30, 2020.

The decrease in cost of revenues in Insurance of $2.6 million for the six months ended June 30, 2021 was primarily due to decreases in other operating costs of $4.4 million, due to the impact of COVID-19 related expenses during the six months ended June 30, 2020 and foreign exchange gain, net of hedging of $0.1 million.

This was partially offset by higher employee-related costs of $1.9 million.

Gross margin in Insurance increased by 9.5% during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to higher revenues, expansion in margin in certain existing clients and operational efficiencies during the six months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the six months ended June 30, 2020.

The decrease in cost of revenues in Healthcare of $4.1 million for the six months ended June 30, 2021 was primarily due to decreases in employee-related costs of $4.3 million, partially offset by higher other operating costs of $0.2 million.

Gross margin in Healthcare increased by 15.5% during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to higher revenues during the six months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the six months ended June 30, 2020.

The decrease in cost of revenues in Emerging Business of $4.9 million for the six months ended June 30, 2021 was primarily due to decreases in employee-related costs of $3.8 million, lower other operating costs of $0.9 million and foreign exchange gain, net of hedging $0.2 million.

Gross margin in Emerging Business increased by 6.8% during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to higher revenues, decrease in employee-related costs and higher operational efficiencies during the six months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the six months ended June 30, 2020.

The increase in cost of revenues in Analytics of $20.0 million for the six months ended June 30, 2021 was primarily due to increases in employee-related costs of $13.3 million, higher other operating costs of $7.4 million and higher technology costs of $1.2 million, primarily due to increased usage of the work from home model.

This was partially offset by lower travel costs of $1.5 million and foreign exchange gain, net of hedging of $0.4 million.

Gross margin in Analytics increased by 3.0% during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to higher revenues during the six months ended June 30, 2021, compared to the impact of COVID-19 related expenses during the six months ended June 30, 2020.

Selling, General and Administrative (“SG&A”) Expenses.

Three months ended March 31, Change Percentage

Six months ended June 30, Percentage change

2021 2020 Change

(dollars in millions)

3 unchanged sentences

As a percentage of revenues 19.6 % 18.2 %

The increase in SG&A expenses of $5.5 million was primarily due to higher employee-related costs of $6.9 million, higher other operating costs of $1.2 million, partially offset by lower facilities costs of $1.5 million and lower travel costs of $1.1 million due to COVID-19 cost reduction measures.

The increase in SG&A expenses of $20.0 million was primarily due to higher employee-related costs of $19.7 million, COVID-19-related expenses of $2.2 million primarily related to financial support to family members of deceased employees, higher other operating costs of $2.0 million, partially offset by lower facilities costs of $2.8 million due to optimization of office space and lower travel costs of $1.1 million due to COVID-19 cost reduction measures.

Depreciation and Amortization.

Three months ended March 31, Change Percentage

Six months ended June 30, Percentage change

2021 2020 Change

(dollars in millions)

3 unchanged sentences

As a percentage of revenues 4.6 % 5.3 %

The decrease in intangibles amortization expense of $0.7 million was primarily due to end of useful lives for certain intangible assets during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

The increase in depreciation expense of $0.4 million was primarily due to depreciation related to our investments in new operating centers, internally developed software and accelerated depreciation resulting from a reduction in useful lives related to certain operating centers, due to the impact of COVID-19.

The decrease in intangibles amortization expense of $0.8 million was primarily due to end of useful lives for certain intangible assets during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

The increase in depreciation expense of $0.3 million was primarily due to depreciation related to our investments in new operating centers, internally developed software and accelerated depreciation resulting from a reduction in useful lives related to certain operating centers, due to the impact of COVID-19 during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Income from Operations.

Income from operations increased by $14.1 million, or 51.2%, from $27.5 million for the three months ended March 31, 2020 to $41.6 million for the three months ended March 31, 2021, primarily due to higher revenues and lower cost of revenues, partially offset by higher SG&A expenses during the three months ended March 31, 2021.

As a percentage of revenues, income from operations increased from 11.2% for the three months ended March 31, 2020 to 15.9% for the three months ended March 31, 2021.

Income from operations increased by $40.1 million, or 107.5%, from $37.3 million for the six months ended June 30, 2020 to $77.4 million for the six months ended June 30, 2021, primarily due to higher revenues, partially offset by higher cost of revenues, higher SG&A expenses during the six months ended June 30, 2021.

As a percentage of revenues, income from operations increased from 8.0% for the six months ended June 30, 2020 to 14.4% for the six months ended June 30, 2021.

Foreign Exchange Gain/(Loss).

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dollar against the Indian rupee, the U.K.

pound sterling, the Philippine peso and the South African ZAR during the three months ended March 31, 2021.

pound sterling, the Philippine peso and the South African ZAR during the six months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the Indian rupee increased from 73.08 during the three months ended March 31, 2020 to 73.17 during the three months ended March 31, 2021.

dollar against the Indian rupee decreased from 74.25 during the six months ended June 30, 2020 to 73.42 during the six months ended June 30, 2021.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar increased from 1.28 during the three months ended March 31, 2020 to 1.38 during the three months ended March 31, 2021.

dollar increased from 1.26 during the six months ended June 30, 2020 to 1.39 during the six months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the Philippine peso decreased from 50.83 during the three months ended March 31, 2020 to 48.39 during the three months ended March 31, 2021.

dollar against the Philippine peso decreased from 50.55 during the six months ended June 30, 2020 to 48.29 during the six months ended June 30, 2021.

The average exchange rate of the U.S.

dollar against the South African ZAR decreased from 16.13 during the three months ended March 31, 2020 to 15.02 during the three months ended March 31, 2021.

We recorded a net foreign exchange gain of $0.4 million for the three months ended March 31, 2021 compared to the net foreign exchange gain of $1.4 million for the three months ended March 31, 2020.

dollar against the South African ZAR decreased from 16.90 during the six months ended June 30, 2020 to 14.58 during the six months ended June 30, 2021.

We recorded a net foreign exchange gain of $1.8 million for the six months ended June 30, 2021, compared to the net foreign exchange gain of $2.7 million for the six months ended June 30, 2020.

Interest expense.

Interest expense decreased from $3.1 million for the three months ended March 31, 2020 to $2.5 million for the three months ended March 31, 2021, primarily due to lower outstanding borrowings and lower effective interest rates of 2.0% under our Credit Facility during the three months ended March 31, 2021, compared to 3.0% during the three months ended March 31, 2020.

Interest expense decreased from $6.0 million for the six months ended June 30, 2020 to $5.0 million for the six months ended June 30, 2021 primarily due to lower outstanding borrowings and lower effective interest rates of 1.9%

under our Credit Facility during the six months ended June 30, 2021, compared to 2.6% during the six months ended June 30, 2020.

Other Income, net.

Three months ended March 31, Percentage

Six months ended June 30, Percentage change

2021 2020 Change

(dollars in millions)

Gain on sale and mark-to-market of mutual funds $ 2.7 $ 5.2 $ (2.5) (48.1) %

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Other income, net $ 3.6 $ 6.8 $ (3.2) (47.1) %

Other income, net decreased by $1.1 million, from $2.5 million for the three months ended March 31, 2020 to $1.4 million for the three months ended March 31, 2021, primarily due to lower return on mutual fund investments of $1.0 million during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

Other income, net decreased by $3.2 million, from $6.8 million for the six months ended June 30, 2020 to $3.6 million for the six months ended June 30, 2021, primarily due to lower return on mutual fund investments of $2.5 million during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Income Tax Expense.

The effective tax rate increased from 20.7% during the three months ended March 31, 2020 to 21.9% during the three months ended March 31, 2021.

We recorded income tax expense of $9.0 million and $5.8 million for the three months ended March 31, 2021 and 2020, respectively.

The increase in income tax expense was primarily as a result of higher profit during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Net income increased from $22.4 million for the three months ended March 31, 2020 to $31.9 million for the three months ended March 31, 2021, primarily due to increase in income from operations of $14.1 million and lower interest expense of $0.6 million, partially offset by higher income tax expense of $3.2 million, lower other income, net of $1.1 million and lower foreign exchange gain, net of $1.0 million.

As a percentage of revenues, net income increased from 9.1% for the three months ended March 31, 2020 to 12.2% for the three months ended March 31, 2021.

The effective tax rate decreased from 24.3% during the six months ended June 30, 2020 to 22.9% during the six months ended June 30, 2021.

We recorded income tax expense of $17.9 million and $9.9 million for the six months ended June 30, 2021 and 2020, respectively.

The increase in income tax expense was primarily as a result of higher profit during the six months ended June 30, 2021, compared to the six months ended June 30, 2020, which was partially offset by (i) recording of a one-time tax expense of $1.3 million due to the election of a new tax regime, during the six months ended June 30, 2020, for two of our Indian subsidiaries that provides for a lower tax rate on earnings in exchange for foregoing certain tax credits, including minimum alternative tax credits and (ii) recording of higher excess tax benefits related to stock awards of $1.8 million pursuant to ASU No.

2016-09 during the six months ended June 30, 2020 compared to $1.0 million during the six months ended June 30, 2021.

Net income increased from $30.8 million for the six months ended June 30, 2020 to $59.9 million for the six months ended June 30, 2021, primarily due to increase in income from operations of $40.1 million, lower interest expense of $1.0 million and lower loss from equity-method investment of $0.1 million, partially offset by higher income tax expense of $8.0 million, lower other income, net of $3.2 million and foreign exchange gain, net of $0.9 million.

As a percentage of revenues, net income increased from 6.6% for the six months ended June 30, 2020 to 11.2% for the six months ended June 30, 2021.

Liquidity and Capital Resources

Three months ended March 31,

Six months ended June 30,

(dollars in millions)

Opening cash, cash equivalents and restricted cash $ 225.5 $ 127.0

Net cash provided by/(used for) operating activities 15.2 (13.6)

Net cash (used for)/provided by investing activities (26.0) 36.0

Net cash (used for)/provided by financing activities (29.0) 86.7

Net cash provided by operating activities 53.9 58.9

Net cash provided by investing activities 11.7 1.1

Net cash used for financing activities (131.4) (13.4)

Effect of exchange rate changes (2.2) (2.8)

Closing cash, cash equivalents and restricted cash $ 157.5 $ 170.8

As of March 31, 2021 and 2020, we had $375.8 million and $367.4 million, respectively, in cash, cash equivalents and short-term investments, of which $337.5 million, and $273.9 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

We periodically evaluate opportunities regarding distribution to fund our operations in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.

As of June 30, 2021 and 2020, we had $294.7 million and $335.6 million, respectively, in cash, cash equivalents and short-term investments, of which $254.2 million and $275.5 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

We periodically evaluate opportunities to distribute cash among our group entities to fund our operations in the United States and other geographies, and as and when we decide to distribute, we may have to accrue, additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.

During the three months ended June 30, 2021, we repatriated to the United States $49.0 million (net of $2.6 million withholding taxes) from India, $42.5 million (net of $7.5 million withholding taxes) from the Philippines and $17.0 million (net of $0.9 million withholding taxes) from India in July 2021.

These distributions do not constitute a change in our permanent reinvestment assertion.

We base our decision to continue to indefinitely reinvest earnings in India and the Philippines on our estimate of the working capital required to support our operations in these geographies and periodically review our capital initiatives to support and expand our global operations, as well as an economically viable rate of return on our investments made in India and the Philippines as compared to those made in the United States.

Operating Activities:

Net cash provided by operating activities was $15.2 million for the three months ended March 31, 2021 compared to net cash used by operating activities of $13.6 million for the three months ended March 31, 2020, reflecting higher cash earnings along with lower working capital needs.

The major drivers contributing to the increase of $28.8 million year-over-year included the following:

• Increase in net income of $9.5 million in the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an increase in income from operations of $14.1 million driven by higher revenues

and lower cost of revenues, offset by higher income tax expense of $3.1 million and lower other income, net of interest expense of $1.5 million.

• Changes in accounts receivable, including advance billings, contributed lower cash flow of $14.9 million in the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The decrease was a result of the advance collections from certain customers during the three months ended December 31, 2020, partially offset by higher collections of our accounts receivables during the three months ended March 31, 2021.

Our accounts receivable days sales outstanding improved to 54 days as of March 31, 2021 from 68 days as of March 31, 2020.

• Increase in accrued employee costs, accrued expenses and other liabilities contributed higher cash flow of $24.2 million in the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The increase was primarily due to lower payment and higher provisions of annual performance incentive of $12.3 million and higher accrued expenses of $11.9 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

• Other drivers increasing cash flows in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 included:

income tax expense, net of advances and deferred taxes, of $9.9 million, primarily due to higher income tax provisions and timing of payments.

Net cash provided by operating activities was $53.9 million for the six months ended June 30, 2021 as compared to net cash provided by operating activities of $58.9 million for the six months ended June 30, 2020, reflecting higher working capital needs, offset by cash earnings.

The major drivers contributing to the decrease of $5.0 million year-over-year included the following:

• Changes in accounts receivable, including advance billings, contributed lower cash flow of $71.9 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The decrease was a result of higher accounts receivable resulting from revenue growth, change in credit terms for certain clients during the six months ended June 30, 2021 , and advance collections during the three months ended December 31, 2020.

This was partially offset by our accounts receivable days sales outstanding, which improved to 58 days as of June 30, 2021 from 63 days as of June 30, 2020.

• Increase in net income of $29.1 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in income from operations of $40.1 million driven by higher revenues, offset by higher income tax expense of $8.0 million and lower other income, net of interest expense of $3.1 million.

• Increase in accrued employee costs, accrued expenses and other liabilities contributed higher cash flow of $51.6 million in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The increase was primarily due to lower payment and higher provisions of annual performance incentives of $23.3 million, higher other employee cost accruals of $4.0 million and higher accrued expenses and other liabilities of $24.3 million, during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

• Other drivers decreasing cash flows during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 included:

income tax payments, net of refunds, of $13.8 million, primarily due to higher advance income tax payments on account of higher net income.

Investing Activities:

Cash flows used for investing activities were $26.0 million for the three months ended March 31, 2021 as compared to cash flows provided by investing activities of $36.0 million for the three months ended March 31, 2020.

The decrease is mainly due to net purchase of investments of $13.5 million during three months ended March 31, 2021 as compared to net redemption of investments of $49.0 million during the three months ended March 31, 2020, higher capital expenditures for purchase of long-lived assets, including investments in infrastructure, technology assets, software and product developments of $0.3 million, partially offset by an acquisition of an additional stake in our equity affiliate of $0.7 million during the three months ended March 31, 2020 compared to the three months ended March 31, 2021.

Cash flows provided by investing activities were $11.7 million for the six months ended June 30, 2021 as compared to cash flows provided by investing activities of $1.1 million for the six months ended June 30, 2020.

The increase is mainly due to net redemption of investments of $31.0 million during six months ended June 30, 2021 as compared to

net redemption of investments of $23.8 million during the six months ended June 30, 2020, lower capital expenditures for purchase of long-lived assets, including investments in infrastructure, technology assets, software and product developments of $2.7 million during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 and acquisition of an additional stake in our equity affiliate of $0.7 million during the six months ended June 30, 2020.

Financing Activities:

Cash flows used for financing activities were $29.0 million during the three months ended March 31, 2021 as compared to cash flows provided by financing activities of $86.7 million during the three months ended March 31, 2020.

The decrease was primarily due to net proceeds of $99.8 million under our revolving Credit Facility and higher proceeds received from the exercise of stock options of $0.9 million during the three months ended March 31, 2020.

This was partially offset by higher purchases of treasury stock by $15.0 million under our share repurchase program during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020.

Cash flows used for financing activities were $131.4 million during the six months ended June 30, 2021 as compared to cash flows used for financing activities of $13.4 million during the six months ended June 30, 2020.

The increase in cash flows used for financing activities was primarily due to higher net repayment of $73.8 million under our revolving Credit Facility, higher purchases of treasury stock by $43.4 million under our share repurchase program and lower proceeds from the exercise of stock options of $0.8 million during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.

We expect to use cash from operating activities to maintain and expand our business by making investments primarily related to new facilities and capital expenditures associated with leasehold improvements to build our facilities, digital capabilities and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.

We incurred $12.7 million of capital expenditures in the three months ended March 31, 2021.

We expect to incur total capital expenditures of between $35.0 million to $40.0 million in 2021, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.

We incurred $19.9 million of capital expenditures in the six months ended June 30, 2021.

We expect to incur capital expenditures of between $35.0 million and $40.0 million in 2021, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.

In connection with any tax assessment orders that have been issued or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with respect to such assessment orders (see Note 24 - Commitments and Contingencies to our unaudited consolidated financial statements herein for further details).

We anticipate that we will continue to rely upon cash from operating activities to finance our smaller acquisitions, capital expenditures and working capital needs.

We anticipate that we will continue to rely upon cash from operating activities to finance our working capital needs, capital expenditures and smaller acquisitions.

If we have significant growth through acquisitions, we may need to obtain additional financing.

The Coronavirus Aid, Relief, and Economic Security Act, (the “CARES Act”) allows employers to defer the payment of the employer share of Federal Insurance Contributions Act (“FICA”) taxes for the period from April 1, 2020 and ending December 31, 2020.

As of March 31, 2021 and December 31, 2020, we deferred our contributions to FICA of $6.3 million,

respectively, under the CARES Act.

As of June 30, 2021 and December 31, 2020, we deferred our contributions to FICA of $6.3 million each under the CARES Act.

The deferred amount will be payable as follows:

(1) 50% of the deferred amount will be paid on December 31, 2021 and (2) the remaining 50% of the deferred amount will be paid on December 31, 2022.

(1) 50% of the deferred amount will be paid on or before December 31, 2021 and (2) the remaining 50% of the deferred amount will be paid on or before December 31, 2022.

Financing Arrangements (Debt Facility and Notes)

The following tables summarizes our Debt balances as of March 31, 2021 and December 31, 2020.

As of March 31, 2021

The following tables summarizes our Debt balances as of June 30, 2021 and December 31, 2020.

As of June 30,2021

(dollars in millions)

Revolving Credit

Facility Notes Total

Revolving Credit Facility Notes Total

Current portion of long-term borrowings $ 15.0 $ — $ 15.0

3 unchanged sentences

Long-term borrowings

$ — $ 139.4 $ 139.4

Total borrowings $ 15.0 $ 139.4 $ 154.4

1 unchanged sentence

(dollars in millions)

Revolving Credit

Facility Notes Total

Revolving Credit Facility Notes Total

Current portion of long-term borrowings $ 25.0 $ — $ 25.0

3 unchanged sentences

Long-term borrowings

$ 64.0 $ 138.0 $ 202.0

Total borrowings $ 89.0 $ 138.0 $ 227.0

*Unamortized debt issuance costs for our revolving Credit Facility of $0.4 million and $0.5 million as of March 31, 2021 and December 31, 2020, respectively, is presented under “Other current assets” and “Other assets” in our consolidated balance sheets.

*Unamortized debt issuance costs for our revolving Credit Facility of $0.4 million and $0.5 million as of June 30, 2021 and December 31, 2020, respectively, is presented under “Other current assets” and “Other assets” in our consolidated balance sheets.

See Note 17 - Borrowings to our unaudited consolidated financial statements herein for further details on our debt facilities.

1 unchanged sentence

In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases.

As of March 31, 2021 and December 31, 2020, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our unaudited and audited consolidated balance sheets, respectively.

As of June 30, 2021 and December 31, 2020, we had outstanding letters of credit of $0.5 million each, that were not recognized in our unaudited and audited consolidated balance sheets, respectively.

These are not reasonably likely to have, a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

1 unchanged sentence

Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2021:

The following table sets forth our contractual obligations as of June 30, 2021:

Payment Due by Period

17 unchanged sentences

(c) Represents our intent and ability to settle the principal amount of our Notes of $150 million in cash and does not reflect any assumptions about our ability or intent to settle the Notes before their maturity.

(d) Interest on borrowings is calculated based on the interest rate on the outstanding borrowings as of March 31, 2021.

(d) Interest on borrowings is calculated based on the interest rate on the outstanding borrowings as of June 30, 2021.

(e) Excludes $0.9 million related to uncertain tax positions, since the extent of the amount and timing of payment is currently not reliably estimable or determinable.

10 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