Concentrix Corporation (CNXC) Reports Q3 Results, Raises Guidance; Announces $0.25

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Concentrix Corporation (NASDAQ: CNXC), a leading global provider of customer experience (CX) solutions and technology, today announced financial results for the fiscal third quarter ended August 31, 2021.

Three Months Ended
August 31, 2021 August 31, 2020 Change
Revenue ($M) $ 1,397.3 $ 1,163.7 20.1 %
Operating income ($M) $ 151.4 $ 76.8 97.1 %
Non-GAAP operating income ($M) (1) $ 181.6 $ 121.7 49.2 %
Operating margin 10.8 % 6.6 % 420 bps
Non-GAAP operating margin (1) 13.0 % 10.5 % 250 bps
Net income ($M) $ 109.8 $ 45.4 141.9 %
Non-GAAP net income ($M) (1) $ 131.7 $ 78.9 66.9 %
Adjusted EBITDA ($M) (1) $ 214.8 $ 153.2 40.2 %
Adjusted EBITDA margin (1) 15.4 % 13.2 % 220 bps
Diluted earnings per common share (2) $ 2.08 $ 0.88 136.4 %
Non-GAAP diluted earnings per common share (1), (2) $ 2.49 $ 1.53 62.7 %

(1) See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.(2) For the three months ended August 31, 2020, weighted average number of shares used for diluted EPS is based on the number of shares issued in connection with the spin-off of 51.6 million.

Third Quarter Fiscal 2021 Highlights:

  • Revenue was $1,397.3 million, up 20.1% from the prior year third quarter, compared with $1,163.7 million in the prior year third quarter, and 19.2% on an adjusted constant currency basis.
  • Operating income was $151.4 million, or 10.8% of revenue, compared with $76.8 million, or 6.6% of revenue, in the prior year third quarter.
  • Non-GAAP operating income was $181.6 million, or 13.0% of revenue, compared with $121.7 million, or 10.5% of revenue, in the prior year third quarter.
  • Adjusted EBITDA was $214.8 million, or 15.4% of revenue, compared with $153.2 million, or 13.2% of revenue, in the prior year third quarter.
  • Cash flow from operations was $93.0 million in the quarter. Free cash flow for the quarter was $50.9 million.
  • Diluted earnings per common share (“EPS”) was $2.08 compared to $0.88 in the prior year third quarter.
  • Non-GAAP diluted EPS was $2.49 compared to $1.53 in the prior year third quarter.

“We delivered outstanding organic growth and profit progression in the third quarter,” said Chris Caldwell, Concentrix President and CEO. “For the full year, we now expect above-market adjusted constant currency revenue growth to approximate 17 percent with meaningful profit margin expansion above pre-COVID levels. Looking forward, we are bullish on CX market fundamentals, demand for our innovative digital and technology-infused solutions, our ability to execute, and opportunities for value creation.”

Quarterly Dividend and Share Repurchase ProgramThe company also announced the Concentrix Board of Directors has declared a quarterly dividend of $0.25 per share. The dividend will be payable in cash on November 2, 2021, to shareholders of record at the close of business on October 22, 2021. In addition, the Board of Directors has authorized the company to purchase up to $500 million of the company’s outstanding shares from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans. The repurchase program has no termination date and may be suspended or discontinued at any time.

Caldwell added, “Our strong results year to date and strong financial position provide flexibility for us to invest in the business and enhance shareholder value. Based on our current financial strength and our confidence in the future, we are pleased to announce a quarterly dividend and share repurchase program as part of our initiatives to increase shareholder value. We also continue to be focused on completing complementary and financially compelling acquisitions.”

Business OutlookThe following statements are based on Concentrix’ current expectations for the fourth quarter of fiscal 2021. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, divestitures, spin-off related expenses, the amortization of intangibles, depreciation, share-based compensation and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

Fourth Quarter Fiscal 2021 Expectations:

  • Fourth quarter revenue is expected to be in the range of $1.44 billion to $1.48 billion as reported.
  • Fourth quarter operating income is expected to be in the range of $149.6 million to $159.6 million and non-GAAP operating income is expected to be in the range of $195.0 million to $205.0 million.
  • The effective tax rate is expected to approximate 27% to 28%.

Conference Call and WebcastConcentrix will host a conference call for investors to review its third quarter fiscal 2021 results tomorrow morning, Tuesday, September 28, 2021 at 9:00 a.m. (ET)/6:00 a.m. (PT).

The live conference call will be webcast in listen-only mode in the Investor Relations section of the Concentrix website under “Events and Presentations” at https://ir.concentrix.com/events-and-presentations. A replay will also be available on the website following the conference call.

About ConcentrixConcentrix Corporation (Nasdaq: CNXC) is a leading global provider of customer experience (CX) solutions and technology, improving business performance for some of the world’s best brands including over 100 Fortune Global 500 clients and over 115 global disruptor clients. Every day, from more than 40 countries and across 6 continents, our staff delivers next generation customer experience and helps companies better connect with their customers. We create better business outcomes and help differentiate our clients through technology, design, data, process, and people. Concentrix provides services to clients in our key industry verticals: technology & consumer electronics; retail, travel & ecommerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sector. Visit concentrix.com to learn more.

Use of Non-GAAP InformationIn addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including:

  • Constant currency revenue growth, which is revenue growth 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. Constant currency revenue growth is calculated by translating the revenue of each fiscal year in the billing currency using their comparable prior year’s currency conversion rate in comparison to prior year’s revenue. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.
  • Adjusted constant currency revenue growth, which is constant currency revenue growth excluding revenue for businesses acquired or divested since the beginning of the prior year period so that revenue growth can be viewed without the impact of acquisitions or 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, spin-off related expenses, amortization of intangible assets, share-based compensation and gain on divestitures and related transaction costs.
  • 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, spin-off related expenses, amortization of intangible assets, share-based compensation and gain on divestitures and related transaction costs.
  • 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…

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