# Concentrix Corp (CNXC) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Concentrix Corp's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1803599/000180359924000011/cnxc-20231130.htm
Accession: 0001803599-24-000011
Filing date: 2024-01-29
Report date: 2023-11-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/CNXC/
All MD&A years: /company/CNXC/mda/
Previous year: /company/CNXC/mda/fy2022/ (FY 2022)
Next year: /company/CNXC/mda/fy2024/ (FY 2024)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our historical consolidated financial statements and the notes to those consolidated financial statements. It contains forward-looking statements, which are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those projected or implied in the forward-looking statements. Please see “Risk Factors” and “Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements.

The following discussion compares our results for the fiscal year ended November 30, 2023 to the fiscal year ended November 30, 2022. The discussion comparing our results for the fiscal year ended November 30, 2022 to the fiscal year ended November 30, 2021 is included within Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K filed with the SEC on January 27, 2023, and is incorporated by reference herein.

Unless otherwise indicated or except where the context otherwise requires, references to “we,” “our,” “us,” “the Company,” or “Concentrix,” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to Concentrix Corporation and its subsidiaries.

Overview and Basis of Presentation

Concentrix is a leading global provider of Customer Experience (“CX”) solutions and technology that help iconic and disruptive brands drive deep understanding, full lifecycle engagement, and differentiated experiences for their end-customers. We provide end-to-end capabilities, including CX process optimization, technology innovation and design engineering, front- and back-office automation, analytics and business transformation services to clients in five primary industry verticals. Our differentiated portfolio of solutions supports Fortune Global 500 as well as new economy clients across the globe in their efforts to deliver an optimized, consistent brand experience across all channels of communication, such as voice, chat, email, social media, asynchronous messaging, and custom applications. We strive to deliver exceptional services globally supported by our deep industry knowledge, technology and security practices, talented people, and digital and analytics expertise.

We generate revenue from performing services that are generally tied to our clients’ products and services. Any shift in business or the size of the market for our clients’ products or services, or any failure of technology or failure of acceptance of our clients’ products or services in the market may impact our business. The staff turnover rate in our business is high, as is the risk of losing experienced team members. High staff turnover rates may increase costs and decrease operating efficiencies and productivity. For more information on the risks associated with our business, please see “Risk Factors” in this Annual Report on Form 10-K.

Webhelp Combination

On September 25, 2023, we completed our acquisition (the “Webhelp Combination”) of all of the issued and outstanding capital stock (the “Shares”) of Marnix Lux SA, a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (“Webhelp Parent”) and the parent company of the Webhelp business (“Webhelp”), from the holders thereof (the “Sellers”). The acquisition was completed pursuant to the terms and conditions of the Share Purchase and Contribution Agreement, dated as of June 12, 2023, as amended by First Amendment to Share Purchase and Contribution Agreement, dated as of July 14, 2023 by and among Concentrix, OSYRIS S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and a direct wholly owned subsidiary of Concentrix Corporation, Webhelp Parent, the Sellers, and certain representatives of the Sellers.

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Webhelp is a leading provider of CX solutions, including sales, marketing, and payment services, with significant operations and client relationships in Europe, Latin America, and Africa. Since the closing of the Webhelp Combination, we have operated under the trade name “Concentrix + Webhelp” while we transition Webhelp operations and branding to the Concentrix name. The preliminary purchase consideration for the acquisition of the Shares is valued at approximately $3,752.4 million, net of cash and restricted cash acquired.

PK Acquisition

On December 27, 2021, we completed our acquisition of PK, a leading CX design engineering company with more than 5,000 staff in four countries, for total consideration of $1,573.3 million, net of cash and restricted cash acquired. PK creates pioneering experiences that accelerate digital outcomes for their clients’ customers, partners and staff. The acquisition of PK expanded our scale in the digital IT services market and supported our growth strategy of investing in digital transformation to deliver exceptional customer experiences. The addition of the PK staff and technology to our team further strengthened our capabilities in CX design and development, artificial intelligence (“AI”), intelligent automation, and customer loyalty.

ServiceSource Acquisition

On July 20, 2022, we completed our acquisition of ServiceSource International, Inc. (“ServiceSource”) for total consideration of $141.5 million, net of cash and restricted cash acquired. ServiceSource is a global outsourced go-to-market services provider, delivering business-to-business (“B2B”) digital sales and customer success solutions that complemented our existing offerings in this area.

Revenue and Cost of Revenue

We generate revenue through the provision of CX solutions and technology to our clients pursuant to client contracts. Our client contracts typically consist of a master services agreement, supported in most cases by multiple statements of work, which contain the terms and conditions of each contracted solution. Our client contracts can range from less than one year to over five years in term and are subject to early termination by our clients for any reason, typically with 30 to 90 days’ notice.

Our CX solutions and technology are generally characterized by flat unit prices. Approximately 97% of our revenue is recognized as services are performed, based on staffing hours or the number of client customer transactions handled using contractual rates. Remaining revenue from the sale of these solutions are typically recognized as the services are provided over the duration of the contract using contractual rates.

Our cost of revenue consists primarily of personnel costs related to the delivery of our solutions and technology. The costs of our revenue can be impacted by the mix of client contracts, where we deliver the CX solutions and technology, additional lead time for programs to be fully scalable and transition and initial set-up costs. Our cost of revenue as a percentage of revenue has also fluctuated in the past, based primarily on our ability to achieve economies of scale, the management of our operating expenses, and the timing and costs incurred related to our acquisitions and investments.

In fiscal years 2023 and 2022, approximately 82% and 78%, respectively, of our consolidated revenue was generated from our non-U.S. operations, and approximately 64% and 68%, respectively, of our consolidated revenue was priced in U.S. dollars. We expect that a majority of our revenue will continue to be generated from our non-U.S. operations while being priced in U.S. dollars. As a result, we have certain client contracts that are priced in non-U.S. dollar currencies for which a substantial portion of the costs to deliver the services are in other currencies. Accordingly, our revenue may be earned in currencies that are different from the currencies in which we incur corresponding expenses. Fluctuations in the value of currencies, such as the Philippine peso, the Indian rupee, the euro, and the Canadian dollar, against the U.S. dollar or other currencies in which we bill our clients, and inflation in the local economies in which these delivery centers are located, can impact the operating and labor costs in these delivery centers, which can result in reduced profitability. As a result, our revenue growth, costs and profitability

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have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates and inflation.

Margins

Our gross margins fluctuate and can be impacted by the mix of client contracts, services provided, shifts in the geography from which our CX services and technology are delivered, client volume trends, the amount of lead time that is required for programs to become fully scaled, and transition and set-up costs. Our operating margin fluctuates based on changes in gross margins as well as overall volume levels, as we are generally able to gain scale efficiencies in our selling, general and administrative costs as our volumes increase.

Economic and Industry Trends

The CX solutions industry in which we operate is competitive, including on the basis of pricing terms, delivery capabilities and quality of services. Further, there can be competitive pressure for labor in various markets, which could result in increased labor costs. Accordingly, we could be subject to pricing and labor cost pressures and may experience a decrease in revenue and operating income. Our business operates globally in over 70 countries across six continents. We have significant concentrations in the Philippines, India, Brazil, the United States, Turkey, Colombia, Egypt, the United Kingdom, Morocco, China, and elsewhere throughout EMEA, Latin America, and Asia-Pacific. Accordingly, we would be impacted by economic strength or weakness in these geographies and by the strengthening or weakening of local currencies relative to the U.S. dollar.

Seasonality

Our revenue and margins fluctuate with the underlying trends in our clients’ businesses and trends in the level of consumer activity. As a result, our revenue and margins are typically higher in the fourth fiscal quarter of the year than in any other fiscal quarter.

Critical Accounting Policies and Estimates

The discussion and analysis of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we review and evaluate our estimates and assumptions. Our estimates are based on our historical experience and a variety of other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making our judgment about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies involve the more significant judgments, estimates and/or assumptions used in the preparation of our consolidated financial statements.

Revenue Recognition

We recognize revenue from our client contracts over time as the promised services are delivered to clients for an amount that reflects the consideration to which we are entitled in exchange for those services. We recognize revenue over time as the client simultaneously receives and consumes the benefits provided by us as we perform the services. We account for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payments terms, are identified, the contract has commercial substance and the consideration is probable of collection. Revenue is presented net of taxes collected from clients and remitted to government authorities. We generally invoice a client after the performance of services, or in accordance with the specific contractual provisions. Payments are due as per contract terms and do not contain a significant financing component.

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In most cases, our contracts consist of a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).

Service contracts are most significantly based on a fixed unit-price per transaction or other objective measure of output. Revenue on unit-price transactions is recognized over time using an objective measure of output such as staffing hours or the number of transactions processed by service advisors. Certain contracts may be based on a fixed price. Revenue on fixed price contracts is recognized over time using an input measure or on a straight line basis over the term of the contract as the services are provided based on the nature of the contract.

Certain client contracts include additional payments from the client based upon the achievement of certain agreed-upon service levels and performance metrics. Certain contracts also provide for a reduction in consideration paid to the Company in the event that certain agreed-upon service levels or performance metrics are not achieved. Revenue based on such arrangements is accounted for as variable consideration when the likely amount of revenue to be recognized can be estimated to the extent that it is unlikely that a significant reversal will occur.

Business Combinations

We continually seek to augment organic growth with strategic acquisitions of businesses and assets that complement and expand our existing capabilities. Recent acquisitions have sought to enhance our capabilities and domain expertise in our strategic industry verticals, expand our geographic footprint, and further expand into higher value service offerings.

We allocate the fair value of purchase consideration to the assets acquired and liabilities assumed generally based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The determination of the fair value of assets and liabilities may involve engaging independent third parties to perform an appraisal. When determining the fair values of assets acquired and liabilities assumed, we make significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins, attrition rates and discount rates. Fair value estimates are based on the assumptions we believe a market participant would use in pricing the asset or liability. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Goodwill

As of November 30, 2023, we had goodwill of $5,078.7 million recorded on our consolidated balance sheet. The Company tests goodwill for impairment annually at the reporting unit level in the fiscal fourth quarter or more frequently if events or changes in circumstances indicate that it may be impaired. For purposes of the goodwill impairment test, the Company can elect to perform a quantitative or qualitative analysis. If the qualitative analysis is elected, goodwill is tested for impairment at the reporting unit level by performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The factors that are considered in the qualitative analysis include: macroeconomic conditions; industry and market considerations; cost factors such as increases in labor, or other costs that would have a negative effect on earnings and cash flows; and other relevant entity-specific events and information.

If we elect to perform or are required to perform a quantitative analysis, then the reporting unit’s carrying value is compared to its fair value. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value and the excess is recognized as an impairment loss. As part of our fiscal year 2023 assessment, we reconciled the fair value of our reporting unit to our market capitalization. The result of the analysis demonstrated that our reporting unit’s fair value substantially exceeded its carrying value.

Based on our 2023 impairment assessment, we concluded that no impairment charges were necessary. We recorded no impairment charges related to goodwill during the fiscal years ended November 30, 2023 and 2022.

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Other Intangible Assets

As of November 30, 2023, we had other intangible assets, net of amortization, of $2,805.0 million. This amount consists primarily of $2,659.0 million in client relationship intangible assets. As amortizable intangible assets, we evaluate the intangible assets for recoverability whenever events or circumstances indicate a possible inability to recover their carrying value (an indicator of impairment). If an impairment indicator is present, we perform a test of recoverability by comparing estimates of undiscounted future cash flows to the carrying values of the related assets. We recorded no impairment charges related to other intangible assets during the fiscal years ended November 30, 2023 and 2022.

Recently Issued Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements, see Note 2—Summary of Significant Accounting Policies to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Results of Operations – Fiscal Years Ended November 30, 2023 and 2022

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Revenue

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended November 30,","","Percent Change"],["","2023","","2022","","2023 to 2022"],["","(in thousands)"],["Industry vertical:"],["Technology and consumer electronics","$","2,205,834","","","$","1,980,666","","","11.4","%"],["Retail, travel and ecommerce","1,448,666","","","1,184,086","","","22.3","%"],["Communications and media","1,117,694","","","1,076,289","","","3.8","%"],["Banking, financial services and insurance","1,091,853","","","967,810","","","12.8","%"],["Healthcare","696,266","","","608,169","","","14.5","%"],["Other","554,393","","","507,453","","","9.3","%"],["Total","$","7,114,706","","","$","6,324,473","","","12.5","%"]]
[[/GREPCENT_TABLE]]

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We generate revenue by delivering our CX solutions and technology to our clients categorized in the above primary industry verticals. Our solutions focus on end-to-end capabilities, including CX process optimization, technology innovation, front and back office automation, analytics and business transformation services.

Our revenue increased 12.5% in fiscal year 2023, including revenue from Webhelp acquired operations of $574.4 million, or an increase of 9.1%, compared to fiscal year 2022. The increase in revenue from Webhelp acquired operations combined with higher volumes across most verticals caused the increase in our revenue compared to the prior year. These increases were partially offset by an unfavorable translation effect of foreign currencies of $56.0 million, or 0.9%. The unfavorable foreign currency translation effect on revenue was primarily due to the weakening of the Argentine peso, Japanese yen and Australian dollar against the U.S. dollar.

Revenue in our technology and consumer electronics vertical increased over the prior year due to contributions from acquired operations, increases in volumes from several social media and internet-related service clients and increases in volumes from a broad-based group of hardware and software clients. Revenue in our retail, travel and ecommerce vertical increased over the prior year primarily due to contributions from acquired operations and increased volumes from a majority of our retail and ecommerce and travel and tourism clients. Revenue in our communications and media vertical increased over the prior year primarily due to contributions from acquired operations partially offset by decreases in volumes related to several clients in this industry vertical. Revenue from clients in the banking, financial services and insurance vertical increased over the prior year due to contributions from acquired operations and increased volumes from the majority of our clients in this industry vertical. Revenue in our healthcare vertical increased over the prior year due to increased volumes from a majority of our health insurance clients and contributions from acquired operations. Revenue in our other vertical increased over the prior year primarily due to contributions from acquired operations partially offset by a decrease in revenue from a government client and a few other clients in this vertical.

Cost of Revenue, Gross Profit and Gross Margin Percentage

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[[/GREPCENT_TABLE]]

Cost of revenue consists primarily of personnel costs. Gross margins can be impacted by resource location, client mix and pricing, additional lead time for programs to be fully scalable, and transition and initial set-up costs.

Our cost of revenue increased by 11.5% in fiscal year 2023, compared to fiscal year 2022, primarily due to the increase in our revenue and personnel costs related to staff supporting our acquired operations. These increases were partially offset by a $143.0 million, or 3.5%, reduction in the cost of revenue due to foreign currency translation. The foreign currency impacts on our cost of revenue were caused primarily by the weakening of the Philippine peso, Egyptian pound, Indian rupee and Argentine peso against the U.S. dollar.

Our gross profit increased by 14.2% in fiscal year 2023, compared to fiscal year 2022, primarily due to the increase in revenue and contributions from acquired operations and a net favorable foreign currency impact of $87.0 million. Our gross margin percentage increased from 35.7% in fiscal year 2022 to 36.2% in fiscal year 2023 and was affected by the mix of geographies where our services were delivered.

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Selling, General and Administrative Expenses

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[[/GREPCENT_TABLE]]

Our selling, general and administrative expenses consist primarily of support personnel costs such as salaries, commissions, bonuses, employee benefits and share-based compensation costs. Selling, general and administrative expenses also include the cost of our global delivery facilities, utility expenses, hardware and software costs related to our technology infrastructure, legal and professional fees, depreciation on our technology and facility equipment, amortization of intangible assets resulting from acquisitions, marketing expenses and acquisition-related and integration expenses.

Our selling, general and administrative expenses increased by 18.5% in fiscal year 2023, compared to fiscal year 2022, primarily due to incremental expenses associated with acquired operations, increases in expenses to support our revenue growth, an increase in amortization expense of $52.1 million primarily associated with the intangible assets recognized in the Webhelp Combination and our acquisitions of PK and ServiceSource, an increase in acquisition-related and integration expenses of $37.5 million related to the Webhelp Combination and our acquisitions of PK and ServiceSource, and an increase in share-based compensation expense of $15.0 million. These increases were partially offset by a $34.5 million reduction in selling, general and administrative expenses due to foreign currency translation. As a percentage of revenue, selling, general and administrative expenses increased from 25.6% for fiscal year 2022 to 26.9% for fiscal year 2023 due to the net effect of the changes described above.

Operating Income

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[[/GREPCENT_TABLE]]

Our operating income increased during fiscal year 2023, compared to fiscal year 2022, primarily due to the increase in gross profit partially offset by the increase in selling, general and administrative expenses.

Our operating margin decreased during fiscal year 2023, compared to fiscal year 2022, due to the increase in gross margin percentage more than offset by the increase in selling, general and administrative expenses as a percentage of revenue.

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Interest Expense and Finance Charges, Net

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[[/GREPCENT_TABLE]]

Amounts recorded in interest expense and finance charges, net consist primarily of interest on term loan borrowings under our senior credit facility, interest on borrowings under our accounts receivable securitization facility (the “Securitization Facility”), interest on our senior notes issued in August 2023, interest expense on the promissory note issued by us to certain Sellers in connection with the Webhelp Combination (the “Sellers’ Note”) and financing expenses associated with the commitment letter dated March 29, 2023 (the “Bridge Commitment Letter,” and the commitments pursuant to the Bridge Commitment Letter, the “Bridge Facility”), entered into in connection with the Webhelp Combination.

The increase in interest expense and finance charges, net during fiscal year 2023, compared to fiscal year 2022, was due to Bridge Facility financing fees and credit facility amendment fees of $22.5 million, higher interest rates on increased outstanding term loan borrowings under our senior credit facility, higher interest rates on outstanding borrowings under our Securitization Facility, interest expense on our senior notes of $49.0 million, interest expense, including imputed interest, associated with the Sellers’ Note of $5.7 million, partially offset by interest income of $14.3 million earned on the senior notes proceeds included in cash equivalents prior to the Webhelp Combination.

Other Expense (Income), Net

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[[/GREPCENT_TABLE]]

Amounts recorded as other expense (income), net include foreign currency transaction gains and losses other than cash flow hedges, investment gains and losses, the non-service component of pension costs, other non-operating gains and losses, and changes in the fair value of acquisition contingent consideration related to the Webhelp Combination.

Other expense (income), net in fiscal year 2023 was $52.1 million of expense compared to $34.9 million of income in fiscal year 2022. The change in other expense (income), net was primarily due to expense associated with an increase in the fair value of the acquisition contingent consideration associated with the Webhelp Combination from the closing date of the Webhelp Combination (the “Closing Date”) to fiscal year end of $15.7 million, a loss on derivative contracts entered into in connection with the Webhelp Combination of $14.6 million, losses associated with hedges, and unfavorable foreign currency transaction changes compared to the prior year.

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Provision for Income Taxes

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[[/GREPCENT_TABLE]]

Our provision for income taxes consists of our current and deferred tax expense resulting from our income earned in domestic and international jurisdictions.

Our provision for income taxes and effective tax rate decreased for fiscal year 2023, compared to fiscal year 2022, due to the geographical mix of income that resulted in lower U.S. minimum tax related to foreign earnings and higher use of net operating loss carryforwards.

See Note 13—Income Taxes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Certain Non-GAAP Financial Information

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

•Revenue in constant currency, which is revenue 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. Revenue in constant currency is calculated by translating the revenue of each fiscal year in the billing currency to U.S. dollars using the comparable prior year’s currency conversion rate. Generally, when the U.S. dollar either strengthens or weakens against other currencies, revenue growth at constant currency rates or adjusting for currency will be higher or lower than revenue growth reported at actual exchange rates.

•Non-GAAP operating income, which is operating income, adjusted to exclude acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets and share-based compensation.

•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, amortization of intangible assets, share-based compensation, imputed interest related to the sellers’ note, change in the fair value of acquisition contingent consideration and foreign currency losses (gains), net.

•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 ongoing operations. However, free cash flow has limitations because it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions.

•Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share, tax effected impact of acquisition-related and integration expenses, including related restructuring costs, amortization of intangible assets, share-based compensation, imputed interest related to the Sellers' Note,

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change in the fair value of acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP EPS excludes net income attributable to participating securities, and the per share, tax-effected impact of adjustments to net income described above reflect only those amounts that are attributable to common shareholders.

We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. These non-GAAP financial measures exclude amortization of intangible assets. Our acquisition activities have resulted in the recognition of intangible assets, which consist primarily of client relationships, technology and trade names. Finite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in our statements of operations. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the services performed for our clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity. Accordingly, we believe excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of our business nor reflect our underlying business performance, enhances our and our investors’ ability to compare our past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within our GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. These non-GAAP financial measures also exclude share-based compensation expense. Given the subjective assumptions and the variety of award types that companies can use when calculating share-based compensation expense, management believes this additional information allows investors to make additional comparisons between our operating results and those of our peers. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

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[[GREPCENT_TABLE]]
[["","Fiscal Years Ended November 30,"],["","2023","","2022"],["","($ in thousands except per share amounts)"],["Revenue","$","7,114,706","","","$","6,324,473"],["Foreign currency translation","56,041","","","\u2014"],["Revenue in constant currency","$","7,170,747","","","$","6,324,473"],["Operating income","$","661,327","","","$","640,192"],["Acquisition-related and integration expenses","71,336","","","33,763"],["Amortization of intangibles","214,832","","","162,673"],["Share-based compensation","62,493","","","47,516"],["Non-GAAP operating income","$","1,009,988","","","$","884,144"],["Net income","$","313,842","","","$","435,049"],["Net income attributable to non-controlling interest","\u2014","","","591"],["Interest expense and finance charges, net","201,004","","","70,076"],["Provision for income taxes","94,386","","","169,363"],["Other expense (income), net","52,095","","","(34,887)"],["Acquisition-related and integration expenses","71,336","","","33,763"],["Amortization of intangibles","214,832","","","162,673"],["Share-based compensation","62,493","","","47,516"],["Depreciation","171,801","","","146,864"],["Adjusted EBITDA","$","1,181,789","","","$","1,031,008"],["Operating margin","9.3","%","","10.1","%"],["Non-GAAP operating margin","14.2","%","","14.0","%"],["Adjusted EBITDA margin","16.6","%","","16.3","%"],["Net income","$","313,842","","","$","435,049"],["Acquisition-related and integration expenses","71,336","","","33,763"],["Acquisition-related expenses included in interest expense and finance charges, net (1)","25,556","","","\u2014"],["Acquisition-related expenses included in other expense (income), net (1)","14,629","","","\u2014"],["Imputed interest related to Sellers' Note included in interest expense and finance charges, net","2,998","","","\u2014"],["Change in acquisition contingent consideration included in other expense (income), net","15,681","","","\u2014"],["Foreign currency losses (gains), net (3)","14,938","","","(38,871)"],["Amortization of intangibles","214,832","","","162,673"],["Share-based compensation","62,493","","","47,516"],["Income taxes related to the above (2)","(105,616)","","","(52,091)"],["Non-GAAP net income","$","630,689","","","$","588,039"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","Fiscal Years Ended November 30,"],["","2023","","2022"],["Diluted earnings per common share (\u201cEPS\u201d)","$","5.70","","","$","8.28"],["Acquisition-related and integration expenses","1.30","","","0.64"],["Acquisition-related expenses included in interest expense and finance charges, net (1)","0.46","","","\u2014"],["Acquisition-related expenses included in other expense (income), net (1)","0.27","","","\u2014"],["Imputed interest related to Sellers' Note included in interest expense and finance charges, net","0.05","","","\u2014"],["Change in acquisition contingent consideration included in other expense (income), net","0.28","","","\u2014"],["Foreign currency losses (gains), net (3)","0.27","","","(0.74)"],["Amortization of intangibles","3.90","","","3.10"],["Share-based compensation","1.14","","","0.90"],["Income taxes related to the above (2)","(1.92)","","","(0.99)"],["Non-GAAP Diluted EPS","$","11.45","","","$","11.19"]]
[[/GREPCENT_TABLE]]

(1)    Included in these amounts are a) expensed Bridge Facility financing fees and interest expense associated with our senior notes, net of interest earned on the invested senior notes proceeds in advance of the Webhelp Combination, and b) losses associated with non-designated call option contracts put in place to hedge foreign exchange movements in connection with the Webhelp Combination that are included within interest expense and finance charges, net and other expense (income), net, respectively, in the consolidated statement of operations.

(2)    The tax effect of taxable and deductible non-GAAP adjustments was calculated using the tax deductible portion of the expenses and applying the entity specific, statutory tax rates applicable to each item during the respective fiscal years.

(3)    Foreign currency losses (gains), net are included in other expense (income), net and primarily consist of gains and losses recognized on the revaluation and settlement of foreign currency transactions and realized and unrealized gains and losses on derivative contracts that do not qualify for hedge accounting. The reported amounts for non-GAAP net income and non-GAAP EPS for the fiscal year ended November 30, 2023 include adjustments to exclude these foreign currency losses (gains), net, which were not adjusted in similar non-GAAP measures previously reported for the corresponding periods in fiscal year 2022. In order to enhance comparability, similar adjustments were made for non-GAAP net income and non-GAAP EPS for the fiscal year ended November 30, 2022.    

Client Concentration

In fiscal years 2023 and 2022, no client accounted for more than 10% of our consolidated revenue.

Liquidity and Capital Resources

Our primary uses of cash are working capital, capital expenditures to expand our delivery footprint and enhance our technology solutions, debt repayments and acquisitions, including our combination with Webhelp in September 2023 and our acquisitions of PK and ServiceSource in fiscal year 2022. Our financing needs for these uses of cash have been a combination of operating cash flows and third-party debt arrangements. Our working capital needs are primarily to finance accounts receivable. When our revenue is increasing, our net investment in working capital typically increases. Conversely, when revenue is decreasing, our net investment in working capital typically decreases. To increase our market share and better serve our clients, we may further expand our operations through investments or acquisitions. We expect that such expansion would require an initial investment in working capital, personnel, facilities, and operations. These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, available liquidity, including capacity on our debt arrangements, or the issuance of securities. We funded the Webhelp Combination through (i) proceeds from our August 2023 offering and sale of senior notes, (ii) term loan borrowings under our senior credit facility, and (iii) cash on hand.

In September 2021, considering our strong free cash flow, low leverage and adequate liquidity to support capital return to stockholders while maintaining flexibility to pursue acquisitions, our board of directors authorized a share repurchase program. Under the share repurchase program, the board of directors authorized the repurchase of up to

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$500 million of our common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans. The share repurchase program has no termination date and may be suspended or discontinued at any time. During the fiscal years ended November 30, 2023 and 2022, we repurchased 709,438 and 841,979 shares, respectively, of our common stock under the share repurchase program for approximately $64.0 million and $120.8 million, respectively, in the aggregate. At November 30, 2023, approximately $290.1 million remained available for share repurchases under the existing authorization from our board of directors.

During December 2023, we repurchased 65,995 shares of our common stock for an aggregate purchase price of $6.3 million.

During fiscal years 2023 and 2022, we paid the following dividends per share approved by our board of directors:

[[GREPCENT_TABLE]]
[["Announcement Date","Record Date","Per Share Dividend Amount","Payment Date"],["January 18, 2022","January 28, 2022","$0.25","February 8, 2022"],["March 29, 2022","April 29, 2022","$0.25","May 10, 2022"],["June 27, 2022","July 29, 2022","$0.25","August 9, 2022"],["September 28, 2022","October 28, 2022","$0.275","November 8, 2022"],["January 19, 2023","January 30, 2023","$0.275","February 10, 2023"],["March 29, 2023","April 28, 2023","$0.275","May 9, 2023"],["June 28, 2023","July 28, 2023","$0.275","August 8, 2023"],["September 27, 2023","October 27, 2023","$0.3025","November 7, 2023"]]
[[/GREPCENT_TABLE]]

On January 24, 2024, the Company announced a cash dividend of $0.3025 per share to stockholders of record as of February 5, 2024, payable on February 15, 2024.

We expect that future cash dividends will be paid on a quarterly basis. However, any decision to pay future cash dividends will be subject to our board of directors’ approval, and will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our debt agreements, industry practice, legal requirements, regulatory constraints, and other factors that our board of directors deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets. We cannot guarantee that we will continue to pay a dividend in the future.

Debt Arrangements

Senior Notes

On August 2, 2023, we issued and sold (i) $800 million aggregate principal amount of 6.650% Senior Notes due 2026 (the “2026 Notes”), (ii) $800 million aggregate principal amount of 6.600% Senior Notes due 2028 (the “2028 Notes”) and (iii) $550 million aggregate principal amount of 6.850% Senior Notes due 2033 (the “2033 Notes” and, together with the 2026 Notes and 2028 Notes, the “Senior Notes”). The Senior Notes were sold in a registered public offering pursuant to our Registration Statement on Form S-3, which became effective upon filing, and a Prospectus Supplement dated July 19, 2023, to a Prospectus dated July 17, 2023.

The Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of August 2, 2023 (the “Base Indenture”), between Concentrix and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a first supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2026 Notes, a second supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2028 Notes, and a third supplemental indenture dated as of August 2, 2023 between Concentrix and the Trustee relating to the 2033 Notes (such supplemental indentures, together with the Base Indenture, the “Indenture”). The Indenture contains customary covenants and restrictions, including

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covenants that limit Concentrix Corporation’s and certain of its subsidiaries’ ability to create or incur liens on shares of stock of certain subsidiaries or on principal properties, engage in sale/leaseback transactions or, with respect to Concentrix Corporation, consolidate or merge with, or sell or lease substantially all its assets to, another person. The Indenture also provides for customary events of default.

In connection with the closing of the Webhelp Combination, we entered into cross-currency swap arrangements with certain financial institutions for a total notional amount of $500 million of the Senior Notes. In addition to aligning the currency of a portion of our interest payments to our euro-denominated cash flows, the arrangements effectively converted $250 million aggregate principal amount of the 2026 Notes and $250 million aggregate principal amount of the 2028 Notes into synthetic fixed euro-based debt at weighted average interest rates of 5.12% and 5.18%, respectively.

Bridge Facility and Restated Credit Facility

To provide the debt financing required to consummate the Webhelp Combination, we entered into the Bridge Commitment Letter, under which certain financing institutions committed to provide a 364-day bridge loan facility in an aggregate principal amount of $5,290 million consisting of (i) a $1,850 million tranche of term bridge loans (the “Term Loan Amendment Tranche”), (ii) a $1,000 million tranche of revolving commitments (the “Revolver Amendment Tranche”) and (iii) a $2,440 million tranche of term bridge loans (the “Acquisition Tranche”), each subject to the satisfaction of certain customary closing conditions, including the consummation of the Webhelp Combination.

The incurrence of the acquisition-related indebtedness that would be funded by the Acquisition Tranche of the Bridge Facility (or permanent financing in lieu thereof) and the Sellers’ Note was not permitted under our prior credit agreement dated as of October 16, 2020 (the “Prior Credit Facility”). Therefore, on April 21, 2023, we entered into an Amendment and Restatement Agreement (the “Amendment Agreement”) with the lenders party thereto, JPMorgan Chase Bank, N.A. and Bank of America, N.A. to amend and restate the Prior Credit Facility (as amended and restated, the “Restated Credit Facility”). As a result of having entered into the Amendment Agreement, among other things, we obtained requisite lender consent to incur acquisition-related indebtedness, and pursuant to the terms of the Bridge Commitment Letter, the commitments with respect to the Term Loan Amendment Tranche and the Revolver Amendment Tranche of the Bridge Facility were each reduced to zero, and the Acquisition Tranche was reduced by approximately $294.7 million. On August 2, 2023, the remaining outstanding commitment of approximately $2.15 billion under the Bridge Commitment Letter was reduced to zero in connection with the issuance of the Senior Notes.

The Restated Credit Facility provides for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $1,042.5 million. The Restated Credit Facility also provides for a senior unsecured term loan facility in an aggregate principal amount not to exceed approximately $2,144.7 million (the “Term Loan”), of which $1,850 million was incurred upon the amendment and approximately $294.7 million was drawn on a delayed draw basis (the “Delayed Draw Term Loans”) on the Closing Date. Aggregate borrowing capacity under the Restated Credit Facility may be increased by up to an additional $500 million by increasing the amount of the revolving credit facility or by incurring additional term loans, in each case subject to the satisfaction of certain conditions set forth in the Restated Credit Facility, including the receipt of additional commitments for such increase. During the fiscal year ended November 30, 2023, we voluntarily prepaid $194.7 million of the principal balance on the Term Loan, without penalty, resulting in an outstanding balance at November 30, 2023 of approximately $1,950 million.

The maturity date of the Restated Credit Facility remains December 27, 2026, subject, in the case of the revolving credit facility, to two one-year extensions upon our prior notice to the lenders and the agreement of the lenders to extend such maturity date. Due to the voluntary prepayments previously described, no principal payment on the term loans is due until fiscal year 2026 with the remaining outstanding principal amount due in full on the maturity date.

Borrowings under the Restated Credit Facility bear interest, in the case of SOFR rate loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an applicable margin, which ranges from 1.125% to

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2.000%, based on the credit ratings of our senior unsecured non-credit enhanced long-term indebtedness for borrowed money plus a credit spread adjustment to the SOFR rate of 0.10%. Borrowings under the Restated Credit Facility that are base rate loans bear interest at a per annum rate (but not less than 1.0%) equal to (i) the greatest of (A) the Prime Rate (as defined in the Restated Credit Facility) in effect on such day, (B) the NYFRB Rate (as defined in the Restated Credit Facility) in effect on such day plus ½ of 1.0%, and (C) the adjusted one-month term SOFR rate plus 1.0% per annum, plus (ii) an applicable margin, which ranges from 0.125% to 1.000%, based on the credit ratings of our senior unsecured non-credit enhanced long-term indebtedness for borrowed money.

The Restated Credit Facility contains certain loan covenants that are customary for credit facilities of this type and that restrict our ability to take certain actions, including the creation of liens, mergers or consolidations, changes to the nature of our business, and, solely with respect to our subsidiaries, incurrence of indebtedness. In addition, the Restated Credit Facility contains financial covenants that require us to maintain at the end of each fiscal quarter, (i) a consolidated leverage ratio (as defined in the Restated Credit Facility) not to exceed 3.75 to 1.0 (or for certain periods following certain qualified acquisitions, including the Webhelp Combination, 4.25 to 1.0) and (ii) a consolidated interest coverage ratio (as defined in the Restated Credit Facility) equal to or greater than 3.00 to 1.0. The Restated Credit Facility also contains various customary events of default, including payment defaults, defaults under certain other indebtedness, and a change of control of Concentrix Corporation.

None of our subsidiaries guarantees the obligations under the Restated Credit Facility.

Prior to entering into the Amendment Agreement, obligations under the Prior Credit Facility were secured by substantially all of the assets of Concentrix Corporation and certain of our U.S. subsidiaries and were guaranteed by certain of our U.S. subsidiaries. Borrowings under the Prior Credit Facility bore interest, in the case of term or daily SOFR loans, at a per annum rate equal to the applicable SOFR rate (but not less than 0.0%), plus an adjustment of between 0.10% and 0.25% depending on the interest period of each SOFR loan, plus an applicable margin, which ranged from 1.25% to 2.00%, based on our consolidated leverage ratio. Borrowings under the Prior Credit Facility that were base rate loans bore interest at a per annum rate equal to (i) the greatest of (a) the Federal Funds Rate in effect on such day plus ½ of 1.00%, (b) the rate of interest last publicly announced by Bank of America as its “prime rate” and (c) the term SOFR rate plus 1.00%, plus (ii) an applicable margin, which ranged from 0.25% to 1.00%, based on our consolidated leverage ratio. From August 31, 2022 through the date of the Amendment Agreement, the outstanding principal of the term loans under the Prior Credit Facility was payable in quarterly installments of $26.25 million.

At November 30, 2023 and 2022, no amounts were outstanding under our revolving credit facility.

During the fiscal year ended November 30, 2023, we voluntarily prepaid $25.0 million of the principal balance on the term loans under the Prior Credit Facility.

Securitization Facility

On July 6, 2022, we entered into an amendment to our Securitization Facility, which was initially entered into on October 30, 2020, to (i) increase the commitment of the lenders to provide available borrowings from up to $350 million to up to $500 million, (ii) extend the termination date of the Securitization Facility from October 28, 2022 to July 5, 2024, and (iii) replace LIBOR with SOFR as one of the reference rates used to calculate interest on borrowings under the Securitization Facility. In addition, the interest rate margins were amended, such that borrowings under the Securitization Facility that are funded through the issuance of commercial paper bear interest at the applicable commercial paper rate plus a spread of 0.70% and, otherwise, at a per annum rate equal to the applicable SOFR rate (which includes a credit spread adjustment to the SOFR rate of 0.10%), plus a spread of 0.80%.

Under the Securitization Facility, Concentrix Corporation and certain of its U.S. based subsidiaries sell or otherwise transfer all of their accounts receivable to a special purpose bankruptcy-remote subsidiary of Concentrix Corporation that grants a security interest in the receivables to the lenders in exchange for available borrowings of up to $500 million. Borrowing availability under the Securitization Facility may be limited by our accounts

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receivable balances, changes in the credit ratings of our clients comprising the receivables, client concentration levels in the receivables, and certain characteristics of the accounts receivable being transferred (including factors tracking performance of the accounts receivable over time).

The Securitization Facility contains various affirmative and negative covenants, including a consolidated leverage ratio covenant that is consistent with the Restated Credit Facility and customary events of default, including payment defaults, defaults under certain other indebtedness, a change in control of Concentrix Corporation, and certain events negatively affecting the overall credit quality of the transferred accounts receivable.

Sellers’ Note

On September 25, 2023, as part of the consideration for the Webhelp Combination, we issued the Sellers’ Note in the aggregate principal amount of €700 million to certain Sellers (the “Noteholders”). Pursuant to the Sellers’ Note, the unpaid principal amount outstanding accrues interest at a rate of two percent (2%) per annum, and all principal and accrued interest will be due and payable on September 25, 2025. The stated rate of interest is below our expected borrowing rate. As a result, we discounted the Sellers’ Note by €31,500. The discounted value is being amortized into interest expense over the two-year term.

As of November 30, 2023 and 2022, we were in compliance with the debt covenants related to our debt arrangements.

Cash Flows – Fiscal Years Ended November 30, 2023 and 2022

The following summarizes our cash flows for the fiscal years ended November 30, 2023 and 2022, as reported in our consolidated statement of cash flows in the accompanying consolidated financial statements.

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended November 30,"],["","2023","","2022"],["","($ in thousands)"],["Net cash provided by operating activities","$","678,008","","","$","600,720"],["Net cash used in investing activities","(2,109,240)","","","(1,839,279)"],["Net cash provided by financing activities","1,802,676","","","1,237,534"],["Effect of exchange rate changes on cash, cash equivalents and restricted cash","(12,420)","","","(24,522)"],["Net increase (decrease) in cash, cash equivalents and restricted cash","$","359,024","","","$","(25,547)"],["Cash, cash equivalents and restricted cash at beginning of year","157,463","","","183,010"],["Cash, cash equivalents and restricted cash at end of year","$","516,487","","","$","157,463"]]
[[/GREPCENT_TABLE]]

Operating Activities

Net cash provided by operating activities was $678.0 million for fiscal year 2023 in comparison to $600.7 million for fiscal year 2022. The increase in net cash provided by operating activities over the prior year was primarily related to favorable changes in operating assets and liabilities partially offset by a decrease in net income.

Investing Activities

Net cash used in investing activities for fiscal year 2023 was $2,109.2 million. The net cash used in investing activities consisted primarily of the aggregate cash paid in connection with the Webhelp Combination of approximately $1,914.1 million, purchases of property and equipment of $180.5 million, and a premium paid for call options entered into in connection with the Webhelp Combination of $14.6 million.

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Net cash used by investing activities in fiscal year 2022 was $1,839.3 million, consisting primarily of the aggregate cash paid in connection with the acquisitions of PK and ServiceSource of $1,698.3 million and purchases of property and equipment of $140.0 million.

Financing Activities

Net cash provided by financing activities in fiscal year 2023 was $1,802.7 million, consisting primarily of proceeds, before expenses, of $2,137.0 million from the issuance of the Senior Notes in August 2023, proceeds from the Delayed Draw Term Loans of $294.7 million, partially offset by principal payments of $194.7 million made on the Term Loan, principal payments of $25.0 million made on term loan borrowings under our Prior Credit Facility, net repayments of $228.0 million under our Securitization Facility, repurchases of our common stock of $81.2 million, including repurchases under our share repurchase program and shares withheld upon the vesting of share-based awards to satisfy tax withholding obligation, dividends of $63.5 million, and cash paid of $30.5 million related to debt issuance costs for the Senior Notes, financing fees for the Bridge Facility and amendment fees related to our Restated Credit Facility.

Net cash provided by financing activities in fiscal year 2022 was $1,237.5 million, consisting primarily of net proceeds of $1,400.0 million from the refinancing of the term loan under our Prior Credit Facility and net proceeds of $251.5 million from borrowings under our Securitization Facility. The increases were offset primarily by payments of $225.0 million made on the term loan borrowings, repurchases of our common stock of $133.3 million, including repurchases under our share repurchase program and shares withheld upon the vesting of share-based awards to satisfy tax withholding obligations, and dividends paid of $53.4 million.

We believe our current cash balances and credit availability are enough to support our operating activities for at least the next twelve months.

Free Cash Flow (a non-GAAP measure)

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended November 30,"],["","2023","","2022"],["","($ in thousands)"],["Net cash provided by operating activities","$","678,008","","","$","600,720"],["Purchases of property and equipment","(180,532)","","","(140,018)"],["Free cash flow (a non-GAAP measure)","$","497,476","","","$","460,702"]]
[[/GREPCENT_TABLE]]

Our free cash flow was $497.5 million in fiscal year 2023, compared to $460.7 million in fiscal year 2022. The increase in free cash flow in fiscal year 2023 over the prior year primarily reflects increased net cash provided by operating activities partially offset by an increase in capital expenditures.

Capital Resources

As of November 30, 2023, we had total liquidity of $1,709.3 million, which includes undrawn capacity on our revolving credit facility of $1,042.5 million, undrawn capacity of $371.5 million under our Securitization Facility, and cash and cash equivalents.

Our cash and cash equivalents totaled $295.3 million and $145.4 million as of November 30, 2023 and 2022, respectively. Of our total cash and cash equivalents, 99% and 97% were held by our non-U.S. legal entities as of November 30, 2023 and 2022, respectively. The cash and cash equivalents held by our non-U.S. legal entities are no longer subject to U.S. federal tax on repatriation into the United States; repatriation of some non-U.S. balances is restricted by local laws. Historically, we have fully utilized and reinvested all non-U.S. cash to fund our international operations and expansions; however, we have recorded deferred tax liabilities related to non-U.S. withholding taxes on the earnings of certain previously acquired non-U.S. entities that are likely to be repatriated in

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the future. If in the future our intentions change, and we repatriate the cash back to the United States, we will report in our consolidated financial statements the impact of the state and withholding taxes depending upon the planned timing and manner of such repatriation.

We believe that our available cash and cash equivalents balances, the cash flows expected to be generated from operations, and our sources of liquidity will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months. We also believe that our longer-term working capital, planned capital expenditures and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financing activities.

Material Cash Requirements, including Contractual Obligations to Third Parties

The following table summarizes our material cash requirements from known contractual or other obligations as of November 30, 2023 that are not disclosed elsewhere in this Annual Report on Form 10-K:

[[GREPCENT_TABLE]]
[["","Payments Due by Period"],["","Total","","Less than 1 Year","","1 - 3 Years","","3 - 5 Years","","5 Years"],["","(in thousands)"],["Certain Contractual Obligations:"],["Interest on financing agreements (a)","$","1,186,887","","","$","295,864","","","$","530,385","","","$","184,821","","","$","175,817"],["Defined benefit plan funding (b)","77,942","","","\u2014","","","7,132","","","13,049","","","57,761"]]
[[/GREPCENT_TABLE]]

(a) Cash obligations for required interest payments on our variable-rate debt obligations at the current rates as of November 30, 2023.

(b) Includes projected contributions to achieve minimum funding objectives for our cash balance pension plan.

As of November 30, 2023, we have established a reserve of $87.9 million for unrecognized tax benefits. As we are unable to reasonably predict the timing of settlement related to these unrecognized tax benefits, the table above excludes such liabilities.

We currently expect our 2024 capital expenditures to be approximately $225 million to $255 million, which includes investments to support our growth and maintenance capital expenditures.

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