Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q3 2019 Earnings Presentation
34 slides from Ncr Voyix's earnings presentation, Nov 7, 2019
Slide 1: Q3 2019 Earnings Conference Call
Q3 2019 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO ANDRE FERNANDEZ, CFO November 7, 2019 1
Slide 2: Notes to Investors: Forward-Looking Statements
NOTES TO INVESTORS FORWARD-LOOKING STATEMENTS. Comments made during this conference call and in these materials contain forward-looking statements. Statements that describe or relate to NCR's plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical
Slide 3: Notes to Investors: Non-GAAP Measures
NOTES TO INVESTORS NON-GAAP MEASURES. While NCR reports its results in accordance with generally accepted accounting principles in the United States (GAAP), comments made during this conference call and in these materials will include or make reference to certain "non-GAAP" measures, including: sele
Slide 4: Overview
OVERVIEW RESULTS EXCEED expectations Continued to IMPROVE EXECUTION BANKING REVENUE up 21% cc; ATM revenue up 60% cc Progress building STRATEGIC GROWTH PLATFORMS SIMPLIFIED capital structure 2019 REVENUE GUIDANCE increased 4
Slide 5: Q3 2019 Financial Results
Q3 2019 FINANCIAL RESULTS Revenue FX Impact Adjusted EBITDA $(21) million $1.78 $278 $1.55 billion $219 million billion million Q3 2018 Q3 2019 Q3 2018 Q3 2019 Revenue up 15% as reported and up 17% CC Adjusted EBITDA up 27% Non-GAAP Diluted EPS Free Cash Flow FX Impact ($0.02) $57 million $0.73 $0.5
Slide 6: Shift to Subscription
SHIFT TO SUBSCRIPTION to drive increased recurring revenue across our strategic growth platforms Digital First Digital First Digital First Banking Restaurant Retail Digital Digital Digital Small Connected Convenience Business Services and Fuel Essentials 6
Slide 7: Payments Integration
PAYMENTS INTEGRATION Aloha Controlled Retail Controlled Aloha GA* by Q1 Deployment Deployment by 2020 & Retail GA by YE 2019 Q1 2020 by Q2 2020 * General Availability 7
Slide 8: Banking
BANKING $ in millions Revenue Operating Income +18% As Reported +43% As +21% CC Reported $942 +47% CC $795 $146 $102 Q3 18 Q3 19 Q3 18 Q3 19 Key Highlights • Revenue up 21% CC driven by ATM hardware revenue growth of 60% CC and related software as well as services revenue growth • Operating Income u
Slide 9: Retail
RETAIL $ in millions Revenue +12% As Operating Income Reported +13% CC +24% As Reported $539 +28% CC $483 $36 $29 Q3 18 Q3 19 Q3 18 Q3 19 Key Highlights • Revenue up 13% CC driven by increase in payments, self-checkout and services revenue • Operating Income up 28% CC driven by increased volume and
Slide 10: Hospitality
HOSPITALITY $ in millions Revenue Operating Income +12% As Reported +13% CC $216 $193 -33% As Reported $15 -34% CC $10 Q3 18 Q3 19 Q3 18 Q3 19 Key Highlights • Revenue up 13% CC driven by increase in cloud, payments and point-of-sale revenue • Operating Income down 34% CC driven by increased investm
Slide 11: Supplemental Revenue
SUPPLEMENTAL REVENUE $ in millions Q3 2019 Q3 2018 % Change % Change CC Software $512 $480 7% 7% Services $640 $616 4% 6% Hardware $631 $454 39% 42% ATM $368 $237 55% 60% SCO/POS $263 $217 21% 22% Total Revenue $1,783 $1,550 15% 17% Key Highlights • Software growth of 7% CC driven by an increase in
Slide 12: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA $ in millions Free Cash Flow Q3 2019 Q3 2018 Cash provided by Operating Activities $155 $68 Total capital expenditures ($82) ($78) Cash used in Discontinued Operations ($16) ($12) Free Cash Flow $57 ($22) Net Debt & EBITDA Q3 2019 Q2 2019 Q3 2018 Debt $3,630 $3,116
Slide 13: Capital Structure Update
CAPITAL STRUCTURE UPDATE Summary of Transactions Benefits • Amended/extended senior secured credit facility • Extended weighted average debt maturity • Refinanced notes due in 2021 with new 8- and • Reduced refinancing risk 10-yr senior notes for $1B • Improved covenants • Retired Series A Convertib
Slide 14: 2019 Guidance
2019 GUIDANCE Current Guidance (1) (3) Previous Guidance Revenue Growth 5% - 6% 3% - 4% Adjusted EBITDA $1,040 - $1,080 $1,040 - $1,080 Non-GAAP Diluted EPS (2) $2.75 - $2.85 $2.75 - $2.85 Cash Flow from Operations $705 - $730 $705 - $730 Free Cash Flow $300 - $350 $300 - $350 $ in millions, except
Slide 15: Looking Forward
LOOKING FORWARD • Solid execution in Q3 reinforces full year confidence • Drive profitable growth with targeted investments • Shift to software, services and recurring revenue • Improve cost structure • Allocate capital to highest growth and return on investment opportunities • Drive cash flow gener
Slide 16: Supplementary Materials
SUPPLEMENTARY MATERIALS 16
Slide 17: Q3 2019 GAAP Results
Q3 2019 GAAP RESULTS % Change Q3 2019 Q3 2018 As Reported Revenue $1,783 $1,550 15% Gross Margin 507 410 24% Gross Margin Rate 28.4% 26.5% Operating Expenses 335 285 18% % of Revenue 18.8% 18.4% Operating Income 172 125 38% % of Revenue 9.6% 8.1% Interest and other expense (64) (53) 21% Income Tax E
Slide 18: Q3 2019 Operational Results
Q3 2019 OPERATIONAL RESULTS % Change % Change Q3 2019 Q3 2018 As Constant Reported Currency Revenue $1,783 $1,550 15% 17% Gross Margin (non-GAAP) 513 425 21% 23% Gross Margin Rate (non-GAAP) 28.8% 27.4% 140 bps 150 bps Operating Expenses (non-GAAP) 311 264 18% 20% % of Revenue 17.4% 17.0% 40bps 50bp
Slide 19: Non-GAAP Measures
NON-GAAP MEASURES While NCR reports its results in accordance with generally accepted accounting principles (GAAP) in the United States, comments made during this conference call and in these materials will include non-GAAP measures. These measures are included to provide additional useful informati
Slide 20: Non-GAAP Measures: Constant Currency, Net Debt, Adjusted EBITDA
NON-GAAP MEASURES Constant Currency. NCR presents certain financial measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation by translating prior period results at current period monthly average exchange rates. Due
Slide 21: Non-GAAP Measures
NON-GAAP MEASURES NCR management's definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as s
Slide 22: Net Income to Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q3 2019 Q2 2019 Q3 2018 LTM LTM LTM Q3 2019 Q3 2018 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 197 $ 177 $ (38) $ 105 $ 85 Pension Mark-to-Market Adjustments (45)
Slide 23: Q3 2019 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Acquisition- Transformation related Acquisition- Valuation Q3 QTD Q3 QTD and amortization related Debt Allowance 2019 non- 2019 GAAP Restructuring of costs Refinancing Release GAAP costs intangibles Product revenue $712 $— $— $— $— $— $712 Service revenue
Slide 24: Q3 2019 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Q3 QTD 2019 Q3 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $105 $111 Dividends on convertible preferred shares $(79) — Income from continuing oper
Slide 25: Q3 2018 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2018 QTD Acquisition- Q3 QTD Transformation related Impact of Q3 QTD 2018 Costs amortization U.S. Tax 2018 non- GAAP of Reform GAAP intangibles Product revenue 534 $— $— — 534 Service revenue 1,016 — — — 1,016 Total revenue 1,550 — — — 1,550 Cost of products 473 (8
Slide 26: Q3 2018 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2018 QTD Q3 QTD 2018 Q3 QTD 2018 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $85 $86 Income from continuing operations attributable to NCR common $85 $86 stockholde
Slide 27: Revenue Growth to Constant Currency by Segment
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Revenue Growth % (GAAP) to Revenue Growth Constant Currency % (non-GAAP) Revenue Growth Revenue Growth Favorable Constant % (GAAP) (unfavorable) FX Currency % impact (non-GAAP) Banking 18% (3%) 21% Retail 12% (1%) 13% Hospitality 12% (1%) 13% Other 9% (1%)
Slide 28: Revenue Growth to Constant Currency by Type
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Revenue Growth % (GAAP) to Revenue Growth Constant Currency % (non-GAAP) Revenue Growth Revenue Growth Favorable Constant % (GAAP) (unfavorable) FX Currency % impact (non-GAAP) Software 7% —% 7% Services 4% (2%) 6% Hardware 39% (3%) 42% ATM 55% (5%) 60% SC
Slide 29: Q3 2019 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $146 15.5% Retail 36 6.7% Hospitality 10 4.6% Other 10 11.6% Total Operating Income (non-GAAP) 202 11.
Slide 30: Q3 2018 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2018 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $102 12.8% Retail 29 6.0% Hospitality 15 7.8% Other 15 19.0% Total Operating Income (non-GAAP) 161 10.
Slide 31: Operating Income Growth to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD Operating Income % (GAAP) to Operating Income Constant Currency % (non-GAAP) Operating Favorable Operating Income Growth (unfavorable) FX Income Growth % (GAAP) impact % (non-GAAP) Banking 43% (4%) 47% Retail 24% (4%) 28% Hospitality (33%) 1% (34%) Other (
Slide 32: Q3 Operational Results FX Impact
GAAP TO NON-GAAP RECONCILIATION Q3 2019 QTD % Change Favorable % Change Q3 Operational Results As (unfavorable) Constant Reported FX impact Currency Revenue 15% (2%) 17% Gross Margin (non-GAAP) 21% (2)% 23% Gross Margin Rate (non-GAAP) 140 bps (10 bps) 150 bps Operating Expenses (non-GAAP) 18% (2%)
Slide 33: Free Cash Flow 2019 Guidance
GAAP TO NON-GAAP RECONCILIATION Free Cash Flow 2019 Guidance Cash Provided by Operating Activities $705 - $730 Less: Total capital expenditures (350) - (375) Less: Cash used in Discontinued Operations (30) Free Cash Flow $300 - $350 $ in millions 33
Slide 34: Thank You
THANK YOU 34