Ncr Atleos Corporation · NYSE:NATL
Ncr Atleos — Q3 2024 Earnings Presentation
40 slides from Ncr Atleos's earnings presentation, Nov 13, 2024
Slide 1: Third Quarter 2024 Earnings Call
Third Quarter 2024 Earnings Call Wednesday, November 13th, 2024 Tim Oliver, President & Chief Executive Officer Paul Campbell, Chief Financial Officer Stuart Mackinnon, Chief Operating Officer 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS NCR Atleos Corporation (“NCR Atleos,” “Atleos” or the “Company”) cautions that comments made during this presentation and in these materials contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
Slide 3: Notes to Investors
NOTES TO INVESTORS NON-GAAP MEASURES. While Atleos reports its results in accordance with generally accepted accounting principles in the United States, or GAAP, comments made during this conference call and in these materials will include or make reference to certain "non-GAAP" measures, including:
Slide 4: Business Update
Business Update Tim Oliver President and Chief Executive Officer NCR Atleos Confidential 4
Slide 5: Strong Third Quarter Has Atleos on Track for Impressive First Year
Strong Third Quarter Has Atleos on Track for Impressive First Year On Track for Full Year 2024 Carrying Momentum into Q3 Exceeded Expectations Goal Achievement 2025 Financial performance above guided ranges Both Service and Hardware backlogs and Steady sequential improvement across for revenue, Adj.
Slide 6: Self-Service Banking Growth Strategy is Delivering Results
Self-Service Banking Growth Strategy is Delivering Results Q3 Results Business Developments • Revenue and EBITDA exceeded the high-end of segment guidance • ATMaaS Success − Won deal with a top U.S. bank for an off-premise fleet; potential for • Product & solution innovation and performance drove st
Slide 7: Network Strong & Steady Profits and Cash Flow Contribution
Network Strong & Steady Profits and Cash Flow Contribution Q3 Results Business Developments • Revenue and EBTIDA were in line with guidance ranges and up • Allpoint network expansion: Added four new regional merchants and sequentially new financial institutions to the Allpoint network, bolstering bo
Slide 8: Significant Progress on Key 2024 Objectives
Significant Progress on Key 2024 Objectives 2024 Objectives 2024 Initiatives Q3 2024 Progress Update Exceeded critical milestones in product development and ■ Offer best-in-class solutions and service service delivery ■ Leverage existing operations Grew ATMaaS revenue 23% y/y to $49 million with
Slide 9: Financial Review
Financial Review Paul Campbell Chief Financial Officer NCR Atleos Confidential 9
Slide 10: Q3 Revenue and EBITDA Exceeded Expectations
Q3 Revenue and EBITDA Exceeded Expectations $ in millions, except percentages and per share amounts Consolidated Revenue/Recurring Consolidated Adjusted EBITDA $207 $1,081 $1,078 $1,050 $200 $193 19.2% $1,000 17.9% $162 $793 $790 $763 $150 15.4% $500 $100 $0 Q1 24 Q2 24 Q3 24 Q1 24 Q2 24 Q3 24 ■ Q3
Slide 11: Strong Earnings and Continued Free Cash Flow Generation in Q3
Strong Earnings and Continued Free Cash Flow Generation in Q3 $ in millions, except percentages and per share amounts Non-GAAP Diluted EPS Adjusted Free Cash Flow $1.00 $100 $0.89 $0.81 $69 $0.41 $50 $38 $16 $0.00 $0 Q1 24 Q2 24 Q3 24 Q1 24 Q2 24 Q3 24 ■ Q3 was above the high-end of our guidance ran
Slide 12: Self-Service Banking Key Financial Metrics and KPIs
Self-Service Banking Key Financial Metrics and KPIs $ in millions, except percentages Revenue Adjusted EBITDA $700 $200 $673 $677 +3% y/y $167 +6% seq $158 $134 23.5% 24.7% $628 $625 21.3% $100 $550 $0 Q1 24 Q2 24 Q3 24 Q1 24 Q2 24 Q3 24 Key Strategic Metrics Recurring Revenue Mix % ARR 75% $1,664 $
Slide 13: ATM as a Service Key Financial Metrics and KPIs
ATM as a Service Key Financial Metrics and KPIs $ in millions, ARPU, and percentages Revenue Gross Profit(1) $20 $49 +23% y/y $46 $47 +19% y/y +4% seq $16.1 +12% seq $45 $42 $40 $15 $13.9 $14.4 $13.5 $13.5 $10 $20 $5 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Key Strategic Metrics A
Slide 14: Network Key Financial Metrics and KPIs
Network Key Financial Metrics and KPIs $ in millions $ in millions Revenue Adjusted EBITDA $350 $120 $326 $332 $101 $103 +2% seq $310 +2% seq $86 31.0% 31.0% 27.7% $250 $60 $150 $0 Q1 24 Q2 24 Q3 24 Q1 24 Q2 24 Q3 24 Key Strategic Metrics LTM ARPU (in thousands) Network Managed Units $15.9 (in thous
Slide 15: Services & Software Momentum Drives Topline and Profit Growth
Services & Software Momentum Drives Topline and Profit Growth $ in millions Revenue Q1 2024 Q2 2024 Q3 2024 Services & Software $514 $540 $542 Transactional (Network segment) 303 319 324 Hardware 172 191 189 Total Core Revenues $989 $1,050 $1,055 Other – Voyix 61 31 23 Total Atleos Revenue $1,050 $1
Slide 16: Strong Financial Position and Significant Free Cash Flow
Strong Financial Position and Significant Free Cash Flow $ in millions Free Cash Flow Q3 2024 Adjusted EBITDA $207 Capital Expenditures ($33) Maintenance capital expenditures(3) ($19) Growth capital expenditures(3) ($10) ATMaaS capital expenditures(3) ($4) Cash paid for Taxes ($14) Cash paid for Int
Slide 17: Debt Refinancing Reflects Investor Confidence in Earnings Power
Debt Refinancing Reflects Investor Confidence in Earnings Power $ in millions, except percentages Credit Facility Refinancing Description Original(1) Current(1) Delta Revolver Credit Facility • Completed credit facilities refinancing transactions on October 17th Balance $180 $180 $- • Resulted in ~1
Slide 18: Raised 2024 EPS Outlook on Strong YTD Performance
Raised 2024 EPS Outlook on Strong YTD Performance $ in millions, except per share amounts Updated FY 2024 Previous FY 2024 Consolidated Targets Targets Low Mid-Point High Revenue ~$4,300 $4,260 $4,300 $4,340 Adjusted EBITDA ~$785 $770 $785 $800 Fully Diluted EPS (non-GAAP) ~$3.12 $2.90 $3.05 $3.20 A
Slide 19: Takeaways
Takeaways Outstanding Third Quarter Execution & Financial Results Great Progress on Operational & Strategic Objectives Raised Full Year Non-GAAP EPS Guidance On Track for Strong Finish to 2024 & Momentum into 2025 NCR Atleos Confidential 19
Slide 20: Supplementary Materials
SUPPLEMENTARY MATERIALS NCR Atleos Confidential 20
Slide 21: Certain Terms & Key Performance Indicators (KPIs)
Certain Terms & Key Performance Indicators (KPIs) Recurring revenue - all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, processing r
Slide 22: Non-GAAP Measures
NON-GAAP MEASURES While Atleos 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 inform
Slide 23: Non-GAAP Measures
NON-GAAP MEASURES Net Debt. Atleos determines Net Debt based on its total debt less cash and cash equivalents, with total debt being defined as total short-term borrowings plus total long-term debt as presented on the face of the Condensed Consolidated Balance Sheets. Atleos believes that Net Debt p
Slide 24: Non-GAAP Measures
NON-GAAP MEASURES With respect to our Adjusted EBITDA, adjusted free cash flow-unrestricted and non-GAAP diluted earnings per share forward-looking guidance, we do not provide a reconciliation of the respective GAAP measures because we are not able to predict with reasonable certainty the reconcilin
Slide 25: Q3 2024 GAAP Results
Q3 2024 GAAP RESULTS $ in millions, except per share amounts Q3 2024 Q3 2023 % Change Revenue $1,078 $1,067 1% Gross Margin 262 268 (2)% Gross Margin Rate 24.3% 25.1% Operating Expenses 143 177 (19)% % of Revenue 13.3% 16.6% Operating Income 119 91 31% % of Revenue 11.0% 8.5% Interest and other expe
Slide 26: Q3 2024 Operational Results (Non-GAAP)
Q3 2024 OPERATIONAL RESULTS (Non-GAAP) $ in millions, except per share amounts Q3 2024 Q3 2023 % Change Revenue $1,078 $1,067 1% Adjusted Gross Margin (non-GAAP) 286 288 (1)% Adjusted Gross Margin Rate (non-GAAP) 26.5% 27.0% Adjusted Operating Expenses (non-GAAP) 122 114 7% % of Revenue 11.3% 10.7%
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION $ in millions Q3 2024 % of Revenue Q2 2024 % of Revenue Q1 2024 % of Revenue Q3 2023 % of Revenue Net Income Attributable to Atleos (GAAP) $24 2.2 % $29 2.7 % $(8) (0.8)% $(58) (5.4)% Pension Mark-to-Market Adjustments — —% — —% — —% (6) (0.6)% Transformation & Restru
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION $ in millions Q3 2024 Q3 2023 Income from Operations (GAAP) $119 $91 Transformation and restructuring costs 7 1 Stock-based compensation expense 9 12 Acquisition-related amortization of intangibles 24 24 Separation costs 5 46 Depreciation and Amortization 45 38 Other
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2024 $ in millions, except per share amounts Gross Margin Operating Income from Interest & Other Income Tax Effective Income Net Income Gross Margin attributable to rate Expenses operations Expenses, Net Expense (Benefit) Tax Rate Atleos GAAP Results $262 24.3% $14
Slide 30: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2024 Q2 2024 Q1 2024(1) GAAP Diluted Earnings per Share $0.32 $0.39 $(0.11) Plus: Special Items Transformation and restructuring costs 0.09 0.07 0.01 Stock-based compensation expense 0.11 0.11 0.12 Acquisition-related amortization of intangibles 0.25 0.23 0.25 Acqu
Slide 31: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2023 $ in millions, except per share amounts Income from Interest & Other Income Tax Effective Income Net Income (Loss) Gross Margin Gross Margin rate Operating Expenses attributable to operations Expenses, Net Expense (Benefit) Tax Rate Atleos GAAP Results $268 25
Slide 32: Q3 2024 Segment Results - GAAP
Q3 2024 SEGMENT RESULTS - GAAP* $ in millions Self-Service Banking Network T&T Other(1) Corporate(2) Total Unallocated Product Revenue $211 $14 $2 $8 $— $235 Service Revenue $466 $318 $44 $15 $— $843 Total Revenue $677 $332 $46 $23 $— $1,078 Cost of Products $167 $13 $3 $7 $11 $201 Cost of Services
Slide 33: Q3 2024 Segment Results - Non-GAAP
Q3 2024 SEGMENT RESULTS - NON-GAAP $ in millions Self-Service Network T&T Other(1) (4) Corporate(2) (4) Total(4) Banking Unallocated Product Revenue $211 $14 $2 $8 $— $235 Service Revenue $466 $318 $44 $15 $— $843 Total Revenue $677 $332 $46 $23 $— $1,078 Adjusted Cost of Products (non-GAAP) $167 $1
Slide 34: Q3 2024 GAAP to Non-GAAP Segment Reconciliation
Q3 2024 GAAP* TO NON-GAAP Segment Reconciliation $ in millions GAAP* Transformation Costs Stock Based Compensation Acquisition Related Amortization Separation Costs Non-GAAP of Intangibles Self Service Banking $167 $— $— $— $— $167 Network 13 — — — — 13 T&T 3 — — — — 3 Other 7 — — — — 7 Corporate Un
Slide 35: Q3 2024 GAAP to Non-GAAP Product Reconciliation
Q3 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions Stock Based Acquisition Related GAAP* Transformation Costs Compensation Amortization of Separation Costs Non-GAAP Intangibles GROSS PROFIT(1) Software and Services $183 $1 $— $— $— $184 Transactional 79 — — 20 — 99 Hardware 30 — — — — 30
Slide 36: Q2 2024 GAAP to Non-GAAP Product Reconciliation
Q2 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions Acquisition Related GAAP* Transformation Costs Stock Based Compensation Amortization of Non-GAAP Intangibles GROSS PROFIT(1) Software and Services $170 $— $— $(1) $169 Transactional 76 — — 20 96 Hardware 37 — — — 37 Corporate unallocated
Slide 37: Q1 2024 GAAP to Non-GAAP Product Reconciliation
Q1 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions GAAP* Stock Based Compensation Acquisition Related Non-GAAP Amortization of Intangibles GROSS PROFIT(1) Software and Services $162 $— $1 $163 Transactional 62 — 21 83 Hardware 29 — — 29 Corporate unallocated (38) 1 — (37) Total Core Gros
Slide 38: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION $ in millions Q3 2024 Q2 2024 Q1 2024 YTD 2024 Cash provided by operating activities $107 $9 $148 $264 Total capital expenditures $(33) $(32) $(30) $(95) Pension contributions $1 $— $1 $2 Restricted cash settlement activity $(37) $7 $(18) $(48) Transfer of temporary f
Slide 39: Reconciliation of Constant Currency
RECONCILIATION OF CONSTANT CURRENCY $ in millions, except percentages and per share amounts % Change as Favorable Q3 2024 Results Reported (Unfavorable) FX % Change Adjusted Constant Currency Impact Consolidated Revenue 1% (3)% 4% Recurring Revenue 3% (3)% 6% 39
Slide 40: Thank You
THANK YOU NCR Atleos Confidential 40