Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q2 2019 Earnings Presentation
35 slides from Ncr Voyix's earnings presentation, Jul 30, 2019
Slide 1: Q2 2019 Earnings Conference Call
Q2 2019 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO ANDRE FERNANDEZ, CFO July 30, 2019
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 23% cc; ATM revenue up 78% cc Progress building STRATEGIC GROWTH PLATFORMS and TARGETED M&A program 2019 REVENUE GUIDANCE increased 4
Slide 5: Q2 2019 Financial Results
Q2 2019 FINANCIAL RESULTS Revenue Adjusted EBITDA FX Impact $(36) million $1.71 $1.54 $235 $263 billion billion million million Q2 2018 Q2 2019 Q2 2018 Q2 2019 Revenue up 11% as reported and up 14% CC Adjusted EBITDA up 12% Non-GAAP Diluted EPS Free Cash Flow FX Impact ($0.05) $27 $0.76 $9 $0.65 mil
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 NCR Silver Aloha Integration On Track for Integration Complete on Track & POC+ NCR Silver & & Customers Live Live Aloha GA* 2H19 + Proof of Concept * General Availability 7
Slide 8: M&A Update
M&A UPDATE Minority Interest D3 Technology Texas P.O.S. OKI Brazil IT Services in NCR Manaus • Expands • Expands • Increases the • Expands addressable Hospitality breadth of addressable market for Digital sales and NCR's service market in First Banking services offerings in Brazil • Supports the cov
Slide 9: Banking
BANKING $ in millions Revenue Operating Income +20% As Reported +37% As +23% FXN Reported $868 +47% FXN $725 $129 $94 Q2 18 Q2 19 Q2 18 Q2 19 Key Highlights • Revenue up 23% CC driven by ATM hardware revenue growth of 78% CC and related software as well as services revenue growth • Operating Income
Slide 10: Retail
RETAIL $ in millions Revenue +4% As Operating Income Reported +6% FXN (2)% As $558 Reported $537 +14% FXN $41 $40 Q2 18 Q2 19 Q2 18 Q2 19 Key Highlights • Revenue up 6% CC driven by increase in payments, self-checkout and services revenue • Operating Income up 14% CC driven by services productivity
Slide 11: Hospitality
HOSPITALITY $ in millions Revenue Operating Income +2% As Reported +3% FXN $198 $202 (32)% As Reported (36)% FXN $19 $13 Q2 18 Q2 19 Q2 18 Q2 19 Key Highlights • Revenue up 3% CC driven by increase in cloud and payments revenue • Operating Income down 36% CC driven by unfavorable mix of revenue and
Slide 12: Supplemental Revenue
SUPPLEMENTAL REVENUE Q2 2019 Q2 2018 % Change % Change CC Software $496 $470 6% 7% Services $622 $610 2% 5% Hardware $592 $457 30% 33% ATM $312 $180 73% 78% SCO/POS $280 $277 1% 3% Total Revenue $1,710 $1,537 11% 14% $ in millions Key Highlights • Software growth of 7% CC driven by an increase in AT
Slide 13: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA Free Cash Flow Q2 2019 Q2 2018 Cash provided by Operating Activities $87 $119 Total capital expenditures ($73) ($85) Cash used in Discontinued Operations (5) (7) Free Cash Flow $9 $27 $ in millions Net Debt & EBITDA Q2 2019 Q1 2019 Q2 2018 Debt $3,116 $3,211 $3,112
Slide 14: 2019 Guidance
2019 GUIDANCE Current Guidance * Previous Guidance Revenue Growth 3% - 4% 1% - 2% Net Income Attributable to NCR $290 - $305 $290 - $305 Adjusted EBITDA $1,040 - $1,080 $1,040 - $1,080 GAAP Diluted EPS $1.91 - $2.01 $1.91 - $2.01 Non-GAAP Diluted EPS $2.75 - $2.85 $2.75 - $2.85 Cash Flow from Operat
Slide 15: Looking Forward
LOOKING FORWARD • Solid execution in Q2 reinforces full year confidence • Targeted investments to drive profitable growth • Mix shift to software, services and recurring revenue • Improve cost structure • Allocate capital to highest growth and return on investment opportunities • Drive cash flow gen
Slide 16: Supplementary Materials
SUPPLEMENTARY MATERIALS
Slide 17: Q2 2019 GAAP Results
Q2 2019 GAAP RESULTS % Change Q2 2019 Q2 2018 As Reported Revenue $1,710 $1,537 11% Gross Margin 471 403 17% Gross Margin Rate 27.5% 26.2% Operating Expenses 314 509 (38)% % of Revenue 18.4% 33.1% Operating Income (Loss) 157 (106) 248% % of Revenue 9.2% (6.9%) Interest and other expense (54) (50) 8%
Slide 18: Q2 2019 Operational Results
Q2 2019 OPERATIONAL RESULTS % Change % Change Q2 2019 Q2 2018 As Constant Reported Currency Revenue $1,710 $1,537 11% 14% Gross Margin (non-GAAP) 487 449 8% 12% Gross Margin Rate (non-GAAP) 28.5% 29.2% (70 bps) (30 bps) Operating Expenses (non-GAAP) 295 284 4% 6% % of Revenue 17.3% 18.5% (120)bps (1
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
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: Net Income to Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q2 2019 Q1 2019 Q2 2018 LTM LTM LTM Q2 2019 Q2 2018 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 177 $ (54) $ (5) $ 88 $ (143) Pension Mark-to-Market Adjustments (4
Slide 22: Q2 2019 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2019 QTD Transformation Acquisition- Q2 QTD 2019 and related Q2 QTD 2019 GAAP Restructuring amortization of non-GAAP costs intangibles Product revenue $664 $— $— $664 Service revenue 1,046 — — 1,046 Total revenue 1,710 — — 1,710 Cost of products 539 (9) (2) 528 Cos
Slide 23: Q2 2019 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2019 QTD Q2 QTD 2019 Q2 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $88 $116 Dividends on convertible preferred shares $(12) — Income from continuing opera
Slide 24: Q2 2018 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2018 QTD Acquisition- Q2 QTD Transformation Asset related Acquisition- Impact of Q2 QTD 2018 Costs Impairment amortization related U.S. Tax 2018 non- GAAP charges of costs Reform GAAP intangibles Product revenue 525 $— $— $— — — 525 Service revenue 1,012 — — — — —
Slide 25: Q2 2018 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2018 QTD Q2 QTD 2018 Q2 QTD 2018 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) ($143) $97 Dividends on convertible preferred shares (12) — Income from continuing oper
Slide 26: Q2 2019 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2019 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $129 14.9% Retail 40 7.2% Hospitality 13 6.4% Other 10 12.2% Total Operating Income (non-GAAP) 192 11.
Slide 27: Q2 2018 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q2 2018 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $94 13.0% Retail 41 7.6% Hospitality 19 9.6% Other 11 14.3% Total Operating Income (non-GAAP) 165 10.7
Slide 28: Revenue Growth to Constant Currency by Segment
GAAP TO NON-GAAP RECONCILIATION Q2 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 20% (3%) 23% Retail 4% (2%) 6% Hospitality 2% (1%) 3% Other 6% (2%) 8%
Slide 29: Revenue Growth to Constant Currency by Category
GAAP TO NON-GAAP RECONCILIATION Q2 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 6% (1%) 7% Services 2% (3%) 5% Hardware 30% (3%) 33% ATM 73% (5%) 78%
Slide 30: Operating Income Growth to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Q2 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 37% (10%) 47% Retail (2%) (16%) 14% Hospitality (32%) 4% (36%) Othe
Slide 31: Q2 Operational Results Change Reconciliation
GAAP TO NON-GAAP RECONCILIATION % Change Favorable % Change Q2 Operational Results As (unfavorable) Constant Reported FX impact Currency Revenue 11% (3%) 14% Gross Margin (non-GAAP) 8% (4)% 12% Gross Margin Rate (non-GAAP) (70 bps) (40 bps) (30 bps) Operating Expenses (non-GAAP) 4% (2%) 6% % of Reve
Slide 32: 2019 Guidance: Diluted Earnings Per Share
GAAP TO NON-GAAP RECONCILIATION Diluted Earnings Per Share 2019 Guidance Diluted EPS (GAAP) (1) (2) $1.91 - $2.01 Transformation and restructuring costs $0.31 Acquisition-related amortization of intangibles $0.48 Acquisition-related costs $0.05 Non-GAAP Diluted EPS (1) (3) $2.75 - $2.85 (1) Non-GAAP
Slide 33: 2019 Guidance: Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION Earnings Before Interest, Taxes, Depreciation & Amortization (Adjusted EBITDA) 2019 Guidance Net Income Attributable to NCR (GAAP) $290 - $305 Transformation and restructuring costs 60 Acquisition-related amortization of intangibles 95 Acquisition-related costs 10 Int
Slide 34: 2019 Guidance: Free Cash Flow
GAAP TO NON-GAAP RECONCILIATION 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 34
Slide 35: Thank You
THANK YOU