Concentrix(CNXC)2025-04-04 12:01Revenue and Profitability - For the three months ended February 28, 2025, revenue decreased by 1.3% to $2,372,222 thousand compared to $2,402,748 thousand for the same period in 2024[120] - The cost of revenue decreased by 1.9% to $1,516,323 thousand, down from $1,546,219 thousand in the prior year[124] - Gross profit for the three months ended February 28, 2025, was $855,899 thousand, a slight decrease of 0.1% from $856,529 thousand in the previous year[124] - Revenue from the technology and consumer electronics vertical decreased by 1.1% to $657,692 thousand, while retail, travel, and e-commerce remained flat[121] - The unfavorable impact of foreign currency exchange rates on revenue was $62.4 million, or 2.6%, primarily due to the weakening of the euro and Brazilian real[122] Operating Performance - Operating income increased to $168,867 thousand for the three months ended February 28, 2025, compared to $148,439 thousand in the prior year[120] - Operating income increased by 13.8% to $168,867 thousand for the three months ended February 28, 2025, up from $148,439 thousand in the prior year, with an operating margin improvement from 6.2% to 7.1%[129] - Non-GAAP operating income was $321,486 thousand for the three months ended February 28, 2025, compared to $319,061 thousand for the same period in 2024[139] - Adjusted EBITDA decreased to $374,207 thousand for the three months ended February 28, 2025, from $384,318 thousand in the prior year[139] Net Income and Earnings Per Share - Net income for the three months ended February 28, 2025, was $70,257 thousand, up from $52,102 thousand in the same period last year[120] - For the three months ended February 28, 2025, diluted EPS increased to $1.04 from $0.76 for the same period in 2024, with non-GAAP diluted EPS rising to $2.79 from $2.57[140] Expenses and Taxation - Selling, general and administrative expenses decreased by 3.0% to $687,032 thousand for the three months ended February 28, 2025, compared to $708,090 thousand for the same period in 2024[127] - Interest expense and finance charges, net decreased by 11.5% to $72,994 thousand for the three months ended February 28, 2025, compared to $82,439 thousand for the same period in 2024[130] - Provision for income taxes increased by 47.4% to $30,535 thousand for the three months ended February 28, 2025, up from $20,722 thousand in the prior year, with an effective tax rate increase from 28.5% to 30.3%[134] - The effective tax rate increase was primarily due to tax law changes and a change in the mix of income earned in different tax jurisdictions[135] Share Repurchase and Dividends - The company repurchased 539,802 shares for approximately $25.8 million during the three months ended February 28, 2025, compared to 237,105 shares for $21.7 million in the same period last year[142] - As of February 28, 2025, approximately $582.3 million remained available for share repurchases under the existing authorization[142] - Future cash dividends will be subject to board approval and depend on financial condition, earnings, and other factors[146] Cash Flow and Liquidity - Net cash provided by operating activities was $1.4 million for the three months ended February 28, 2025, a significant improvement from a net cash used of $46.9 million for the same period in 2024[169] - Net cash used in investing activities decreased to $51.3 million for the three months ended February 28, 2025, compared to $60.6 million for the same period in 2024, primarily due to reduced capital expenditures[170] - Net cash provided by financing activities increased to $102.3 million for the three months ended February 28, 2025, compared to $14.4 million for the same period in 2024, driven by net borrowings under the Securitization Facility[171][172] - Free cash flow was a use of cash of $49.2 million for the three months ended February 28, 2025, an improvement from a use of cash of $102.9 million for the same period in 2024[173] - Adjusted free cash flow was a use of cash of $39.8 million for the three months ended February 28, 2025, compared to a use of cash of $81.3 million for the same period in 2024[174] - Total liquidity as of February 28, 2025, was $1,498.5 million, including undrawn capacity on the revolving credit facility of $1,042.5 million[175] - Cash and cash equivalents totaled $308.0 million as of February 28, 2025, with 98% held by non-U.S. legal entities[176] Debt and Financing - The company issued $800 million of 6.650% Senior Notes due 2026 and $800 million of 6.600% Senior Notes due 2028 as part of its financing strategy[148] - The Restated Credit Facility provides for a senior unsecured revolving credit facility of up to $1,042.5 million and a term loan facility of approximately $2,144.7 million[153] - The outstanding principal balance on the Term Loan was $1,500 million as of February 28, 2025, with no principal payment due until maturity[154] - The company entered into an amendment to the Securitization Facility to increase available borrowings from $600 million to $700 million and extend the termination date to January 14, 2027[160] - The Sellers' Note issued as part of the Webhelp Combination has an aggregate principal amount of €700 million, accruing interest at 2% per annum, due on September 25, 2025[164] Foreign Currency Exposure - Approximately 55% of revenue is priced in U.S. dollars, with significant exposure to contracts denominated in euros, British pounds, Japanese yen, and Brazilian real[180] - The potential loss in fair value from foreign currency hedging contracts due to a hypothetical 10% adverse change in exchange rates is approximately $103.7 million, which would be mitigated by corresponding gains on underlying exposures[181] - The company experienced a $22.2 million reduction in selling, general and administrative expenses due to changes in foreign currency exchange rates[128] - A one hundred basis point increase in interest rates on variable-rate debt would result in an estimated increase in interest expense of approximately $20.5 million per year[183]