Conduent Incorporated (NYSE:CNDT) Q3 2018 Earnings Conference Call Transcript

Nov 07, 2018 • 10:00 am ET

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Conduent Incorporated (NYSE:CNDT) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Conduent Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Alan Katz, VP of IR. Please go ahead, sir.

Executive
Alan Katz

Good morning, ladies and gentlemen, and welcome to Conduent's third quarter 2018 earnings call. Joining me on today's call is Ashok Vemuri, Conduent's CEO; and Brian Walsh, Conduent's CFO. Following our prepared remarks, we will take your questions.

This call is also being webcast. A copy of the slides used during this call was filed with the SEC this morning. Those slides, as well as a detailed financial metrics sheet, are available for download on the Investor Relations section of the Conduent website. We will also post a transcript later this week.

(Forward-Looking Cautionary Statements)

The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with U.S. GAAP, they should be viewed in addition to, and not as a substitute for, the company's reported results prepared in accordance with U.S. GAAP. For more information regarding definitions of our non-GAAP measures and how we use them as well as limitations as to their usefulness for comparative purposes, please see our press release, which was issued this morning and was furnished to the SEC on Form 8-K.

With that, I will turn the call over to Ashok for his prepared remarks. Ashok?

Executive
Ashok Vemuri

Good morning, everyone, and thank you for joining our third quarter 2018 earnings call. Brian and I will cover our financial and operational performance, and our progress towards becoming a market leading digital interactions company. We will then take your questions.

Before I turn to our performance, I'd like to provide a quick update on our Texas litigation. As you may have seen in our press release, we increased the reserve associated with this litigation. While we can't comment much on pending litigation, in October, we had discussions with the state to determine if a mutually acceptable settlement might be reached. Those discussions were not productive. In the wake of those discussions, we have recorded an additional $72 million reserve, increasing the total reserve to $110 million. We continue to vigorously defend ourselves in this matter.

Let's begin on slide three with an overview of our performance for the third quarter. As I have done throughout this year, I will be comparing our results adjusting for the impact of new accounting standards and our 2017 and 2018 divestitures. For the third consecutive quarter, our adjusted revenue which excludes strategic actions and the impact of divestitures was flat year-over-year. New business ramp and price increases were offset by contract losses from prior years.

In constant currency terms, excluding strategic actions, revenue grew 1% this quarter, a meaningful demonstration of the progress we are making in the core business. Excluding the impact of divestitures, adjusted EPS