Ceridian(US:CDAY)2023-05-02 16:00PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Ceridian HCM Holding Inc.'s unaudited condensed consolidated financial statements for Q1 2023 and 2022 show a shift from net loss to net income and improved operating profit Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :----------------------------------- | :------------------ | :------------------ | | Total Revenue | $370.6 | $293.3 | | Gross Profit | $160.3 | $103.1 | | Operating Profit (Loss) | $38.4 | $(18.9) | | Net Income (Loss) | $9.9 | $(27.4) | | Basic Net Income (Loss) Per Share | $0.06 | $(0.18) | | Diluted Net Income (Loss) Per Share | $0.06 | $(0.18) | Condensed Consolidated Balance Sheets (As of March 31, 2023 vs. December 31, 2022) | Metric | March 31, 2023 (Millions USD) | December 31, 2022 (Millions USD) | | :----------------------------------- | :---------------------------- | :----------------------------- | | Total Assets | $10,061.5 | $7,917.2 | | Total Liabilities | $7,867.3 | $5,807.8 | | Total Stockholders' Equity | $2,194.2 | $2,109.4 | Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Metric | 2023 (Millions USD) | 2022 (Millions USD) | | :----------------------------------- | :------------------ | :------------------ | | Net Cash Provided by Operating Activities | $11.3 | $5.5 | | Net Cash Used in Investing Activities | $(1.4) | $(184.7) | | Net Cash Provided by Financing Activities | $2,090.8 | $3,883.7 | | Cash, Restricted Cash, and Equivalents at End of Period | $4,697.9 | $5,659.0 | Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering organization, accounting policies, fair value, customer funds, leases, goodwill, debt, employee benefits, share-based compensation, revenue, comprehensive loss, income taxes, commitments, contingencies, and net income per share calculations Note 1. Organization and Basis of Presentation Note 2. Summary of Significant Accounting Policies Note 3. Fair Value Measurements Note 4. Customer Funds Note 5. Leases Note 6. Goodwill and Other Intangible Assets, Net Note 7. Debt Note 8. Employee Benefit Plans Note 9. Share-Based Compensation Note 10. Revenue Note 11. Accumulated Other Comprehensive Loss Note 12. Income Taxes Note 13. Commitments and Contingencies Note 14. Net Income (Loss) per Share ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis covers Ceridian's Q1 2023 financial condition and results, including business model, global impacts, key performance, liquidity, and non-GAAP measures Overview of Business and Solutions Business Model and Global Events Impact How We Assess Our Performance Results of Operations Liquidity and Capital Resources Critical Accounting Policies and Estimates Non-GAAP Financial Measures - Ceridian is a global human capital management (HCM) software company, primarily offering Dayforce (flagship Cloud HCM) and Powerpay (Cloud HR and payroll for Canadian small businesses)80154178 - The company's business model focuses on rapid growth of Dayforce and maximizing customer lifetime value through a subscription-based PEPM model with high customer retention178180 - The U.S. Federal Reserve and Bank of Canada's interest rate increases favorably impacted float revenue but also increased term debt borrowing costs181 - Ceridian National Trust Bank commenced operations on January 3, 2023, centralizing regulatory oversight for U.S. payroll trust activities under the OCC and providing bankruptcy-remoteness for client funds212 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Ceridian's market risk exposure includes foreign currency, interest rate changes on customer funds and debt, and pension obligations, with specific impacts noted for LIBOR and investment rate shifts Foreign Currency Risk Interest Rate Risk Pension Obligation Risk - The company's results are subject to foreign currency fluctuations, particularly the Canadian Dollar, but historically, foreign currency denominated inflows naturally hedge against expenses, limiting material impact246 - A 100 basis point increase in LIBOR rates would increase interest expense on Term Debt and Revolving Credit Facility by approximately $6 million over the ensuing twelve-month period248 - A 100 basis point increase in market investment rates would result in approximately $24 million increase in float revenue over the ensuing twelve-month period, with no incremental costs of revenue276 - The company's U.S. pension plan was frozen in 2007, and the expected rate of return on plan assets for qualified pension benefits in 2023 is 5.20%279 ITEM 4. CONTROLS AND PROCEDURES Management evaluated disclosure controls and procedures as effective as of March 31, 2023, with no material changes to internal controls over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures Changes in Internal Control over Financial Reporting - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023251 - No material changes to internal controls over financial reporting occurred during the three months ended March 31, 2023252 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Ceridian is involved in various legal proceedings, none expected to materially impact financial position, with a claim by Bluemoon Capital Ltd. anticipated to be discontinued - The company is subject to various legal proceedings, but management believes their final disposition will not have a material adverse effect on financial position or operations149290 - A claim by Bluemoon Capital Ltd. in the Superior Court of Justice of Ontario, Canada, is expected to be discontinued on a without costs basis290 ITEM 1A. RISK FACTORS This section refers to risk factors from the 2022 Annual Report on Form 10-K, noting no material changes from previously disclosed risks - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022291 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS There were no unregistered sales of equity securities or use of proceeds to report for the period ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities to report for the period ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company's operations ITEM 5. OTHER INFORMATION There is no other information to report for the period ITEM 6. EXHIBITS This section lists all exhibits filed, including organizational documents, debt instruments, employment agreements, equity incentive plans, and certifications - The exhibits include the Fourth Amended and Restated Certificate of Incorporation, Third Amended and Restated Bylaws, Indenture for Convertible Senior Notes, and various forms of stock unit award agreements284 - Certifications from Co-Principal Executive Officers and Principal Financial Officer pursuant to the Securities Exchange Act of 1934 and Sarbanes-Oxley Act of 2002 are filed284286 SIGNATURES