Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q3 2015 Earnings Presentation
35 slides from Ncr Voyix's earnings presentation, Oct 27, 2015
Slide 1: Q3 2015 Earnings Conference Call
1 Q3 2015 EARNINGS CONFERENCE CALL BILL NUTI, CHAIRMAN AND CEO BOB FISHMAN, CFO October 27, 2015
Slide 2: Notes to Investors: Forward-Looking Statements
2 NOTES TO INVESTORS FORWARD-LOOKING STATEMENTS. Comments made during this conference call and in these materials contain forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that describe or relate to NCR's future plans, goals, intention
Slide 3: Q3 2015 Financial Results
3 Q3 2015 FINANCIAL RESULTS REVENUE Q3 2014 Q3 2015 $1.65 billion Revenue down 2% y/y, up 5% CC Recurring revenue up 1% y/y, up 8% CC, 42% of total revenue OPERATIONAL GROSS MARGIN Q3 2014 Q3 2015 28.9% 29.4% Up 50 bps y/y, up ~20 bps CC NPOI NPOI up 7% y/y, up 15% CC Non-GAAP EPS up 16% y/y, up 25%
Slide 4: Software-Related Revenue Growth
4 SOFTWARE-RELATED REVENUE GROWTH Q3 2015 Q3 2014 $125 QTD • QTD Software-related revenue up 1% y/y; up 5% CC • QTD Cloud revenue up 6% y/y; up 7% CC • QTD Professional Services revenue down 3% y/y; up 3% CC $434 Cloud Professional Services SW Licenses & SW Maintenance $157 Q3 2015 $1,288 Q3 2014 ($
Slide 5: Q3 2015 Summary
5 Q3 2015 SUMMARY Q3 aggregate results in-line with expectations • Balanced performance with margin expansion across all businesses • Continued significant FX headwinds and managing through challenging developing markets • On track to achieve full year earnings and free cash flow goals • Industry co
Slide 6: Q3 Operational Results
6 For the Three Months Ended September 30 2015 2014 As Reported Constant Currency Revenue $1,613 $1,647 (2)% 5% Operational Gross Margin 475 476 —% 6% Operational Gross Margin Rate 29.4% 28.9% Expenses (non-GAAP) 257 272 (6)% —% % of Revenue 15.9% 16.5% NPOI 218 204 7% 15% % of Revenue 13.5% 12.4% +
Slide 7: Q3 GAAP Results
7 For the Three Months Ended September 30 2015 2014 % Change Revenue $1,613 $1,647 (2)% Gross Margin (1) 457 404 13% Gross Margin Rate 28.3% 24.5% Expenses (1) 289 363 (20)% % of Revenue 17.9% 22.0% Income from Operations (1) 168 41 310% % of Revenue 10.4% 2.5% Interest and other expense (49) (60) (
Slide 8: Financial Services Q3 2015 Update
8 FINANCIAL SERVICES Q3 2015 Update • Revenue down 9% as reported and flat CC; CC growth in Americas, South Pacific & MEA offset by China/Russia (Up 3% CC excluding China & Russia) • Operating income down 6% as reported; up 2% CC due to a favorable mix of revenue and expense management • Remain focu
Slide 9: Retail Solutions Q3 2015 Update
9 RETAIL SOLUTIONS Q3 2015 Update • Revenue up 7% as reported and up 14% CC; CC growth in all regions • Operating income up 79% as reported and up 92% CC due to higher revenue, including more software-related revenue and expense management • Retail One omni-commerce platform continues to achieve pos
Slide 10: Hospitality Q3 2015 Update
10 HOSPITALITY Q3 2015 Update • Revenue up 5% as reported and up 8% CC growth due to higher software-related revenue • Operating income up 11% as reported and up 15% CC due to higher software-related revenue including cloud and professional services revenue • Stronger market and allocation of resour
Slide 11: Emerging Industries Q3 2015 Update
11 EMERGING INDUSTRIES Q3 2015 Update • Revenue up 2% as reported and up 11% CC; CC growth driven by Telecom & Technology revenue Telecom & Technology ▪ Revenue growth and margin expansion due to improved Services performance Travel ▪ Redesigning check-in experiences around the world - record 46 mil
Slide 12: Q3 Supplemental Revenue Information
12 Q3 SUPPLEMENTAL REVENUE INFORMATION For the Periods Ended September 30 Three Months 2015 2014 % Change % Change (Constant Currency) Cloud $133 $125 6% 7% Software License and Software Maintenance 158 157 1% 6% Professional Services 143 148 (3%) 3% Total Software-Related Revenue 434 430 1% 5% Hard
Slide 13: Free Cash Flow
13 FREE CASH FLOW QTD YTD FY 2015e FY 2014 Q3 2015 Q3 2014 Q3 2015 Q3 2014 Cash Provided by Operating Activities (1) $170 $124 $416 $235 $620 - $650 $524 Net capital expenditures (54) (58) (164) (197) (215) - (235) (258) Cash (Used in) Provided by Discontinued Operations (10) 66 (27) 28 (35) (1) Pen
Slide 14: Restructuring Progress Update
14 RESTRUCTURING PROGRESS UPDATE Expected Savings • $18M in 2014, ~$70M in 2015 and ~$105M in 2016 • ~50% of the savings benefiting NPOI in each year GAAP Income Statement Impact • Total charge of $217M to $225M from 2014 through 2015; • $36M YTD Q3 2015 • ~$20M to ~$28M remaining in FY 2015 Cash Im
Slide 15: Net Debt & EBITDA Metrics
15 NET DEBT & EBITDA METRICS Q3 2014 Q4 2014 Q3 2015 Debt $3,745 $3,659 $3,248 Cash 424 511 303 Net Debt $3,321 $3,148 $2,945 Adjusted EBITDA $963 (1) $1,000 $1,012 (1) Net Debt / Adjusted EBITDA 3.4x 3.1x 2.9x $ in millions, except metrics (1) Adjusted EBITDA for the trailing twelve-month period. A
Slide 16: FY 2015 Guidance
16 Current 2015 Guidance Prior 2015 Guidance 2014 Revenue $6,380 - $6,410 $6,525 - $6,675 $6,591 Year-over-Year Revenue Growth (3%) - (2%) (1%) to 1% 8% Constant Currency Year-Over-Year Revenue Growth 3% - 4% (1) 5% to 7% 10% Income from Operations (GAAP)(2) $196 - $214 $194 - $259 $353 Non-Pension
Slide 17: 2015 Segment Revenue Guidance
17 2015 SEGMENT REVENUE GUIDANCE Segment 2015e 2015e Constant Currency FY 2014 Financial Services (6%) - (5%) 1% - 2% $3,561 Retail Solutions 1% - 2% 5% - 6% $2,008 Hospitality 3% - 5% 5% - 7% $659 Emerging Industries (3%) - (1%) 5% - 7% $363 Total (3%) - (2%) 3% - 4% $6,591 $ in millions Note - The
Slide 18: Q4 2015 Guidance
18 Q4 2015 GUIDANCE Q4 2015e Q4 2014 Revenue $1,687 - $1,717 (1) $1,768 Income from Operations (GAAP) $199 - $217 (2) $35 Non-Pension Operating Income (Non-GAAP) $264 - $274 (3) $251 Tax rate 27% to 30% 20% Other expense ~$55 $57 $ millions(1) Includes an estimated unfavorable foreign currency impac
Slide 19: Supplementary Non-GAAP Materials
SUPPLEMENTARY NON-GAAP MATERIALS
Slide 20: Non-GAAP Measures
20 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 inform
Slide 21: Non-GAAP Measures: Adjusted EBITDA
21 NON-GAAP MEASURES Adjusted EBITDA. NCR believes that Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) provides useful information to investors because it is an indicator of the strength and performance of the Company's ongoing business operations, includin
Slide 22: Income from Operations to NPOI and Adjusted EBITDA
22 Income from Operations (GAAP) to Non-Pension Operating Income (non-GAAP) and Adjusted EBITDA (non-GAAP) in millions Q3 2014 LTM FY 2014 Q3 2015 LTM Q2 2015 LTM FY 2015e Q4 2015e Q4 2014 Income (Loss) from Operations (GAAP) $615 $353 $32 ($95) $196 - $214 $199 - $217 $35 Pension Expense (Benefit)
Slide 23: Q3 QTD 2015 GAAP to Non-GAAP Reconciliation
23 in millions (except per share amounts) Q3 QTD 2015 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit Q3 QTD 2015 non-GAAP Product revenue $688 $
Slide 24: Q3 QTD 2014 GAAP to Non-GAAP Reconciliation
24 in millions (except per share amounts) Q3 QTD 2014 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit Q3 QTD 2014 non-GAAP Product revenue $721 $
Slide 25: Q3 YTD 2015 GAAP to Non-GAAP Reconciliation
25 in millions (except per share amounts) Q3 YTD 2015 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit Q3 YTD 2015 non-GAAP Product revenue $1,995
Slide 26: Q3 YTD 2014 GAAP to Non-GAAP Reconciliation
26 in millions (except per share amounts) Q3 YTD 2014 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit Q3 YTD 2014 non-GAAP Product revenue $2,077
Slide 27: Q4 QTD 2014 GAAP to Non-GAAP Reconciliation
27 in millions (except per share amounts) Q4 QTD 2014 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit Q4 QTD 2014 non-GAAP Product revenue $815 —
Slide 28: FY 2014 GAAP to Non-GAAP Reconciliation
28 in millions (except per share amounts) FY 2014 GAAP Restructuring plan Acquisition- related amortization of intangibles Acquisition- related costs Acquisition- related purchase price adjustments OFAC and FCPA Investigations Pension (expense) benefit FY 2014 non-GAAP Product revenue $2,892 — — — —
Slide 29: GAAP to Non-GAAP EPS Guidance Reconciliation
29 GAAP TO NON-GAAP RECONCILIATION Current 2015 Guidance Prior 2015 Guidance Diluted EPS (GAAP) ($0.60) - ($0.45) ($0.70) - ($0.40) Pension Expense (Benefit) 2.51 2.51 Restructuring Plan 0.23 - 0.28 0.18 - 0.28 Acquisition-Related Costs 0.04 0.04 Acquisition-Related Amortization of Intangibles 0.47
Slide 30: Revenue Growth to Constant Currency by Segment
30 GAAP TO NON-GAAP RECONCILIATION Revenue Growth % (GAAP) to Revenue Growth % on a Constant Currency Basis (non-GAAP) Q3 2015 QTD Revenue Growth % (GAAP) Favorable (unfavorable) FX impact Constant Currency Revenue Growth % (non-GAAP) Financial Services (9)% (9)% —% Retail Solutions 7% (7)% 14% Hosp
Slide 31: Revenue Growth to Constant Currency by Revenue Type
31 GAAP TO NON-GAAP RECONCILIATION Revenue Growth % (GAAP) to Revenue Growth % on a Constant Currency Basis (non-GAAP) Q3 2015 QTD Revenue Growth % (GAAP) Favorable (unfavorable) FX impact Constant Currency Revenue Growth % (non-GAAP) Cloud 6% (1)% 7% Software License/ Software Maintenance 1% (5)% 6
Slide 32: Q3 YTD Revenue Growth to Constant Currency
32 GAAP TO NON-GAAP RECONCILIATION Revenue Growth % (GAAP) to Revenue Growth % on a Constant Currency Basis (non-GAAP) Q3 2015 YTD Revenue Growth % (GAAP) Favorable (unfavorable) FX impact Constant Currency Revenue Growth % (non-GAAP) Cloud 11% (1)% 12% Professional Services (5)% (6)% 1% Total Softw
Slide 33: Operating Income Growth to Constant Currency
33 GAAP TO NON-GAAP RECONCILIATION Operating Income Growth % (GAAP) to Operating Income Growth % on a Constant Currency Basis (non-GAAP) Q3 2015 QTD Operating Income Growth % Reported Favorable (unfavorable) FX impact Constant Currency Operating Income Growth % (non- GAAP) Financial Services (6)% (8
Slide 34: Operating Income bps Growth to Constant Currency
34 GAAP TO NON-GAAP RECONCILIATION Operating Income Growth bps (GAAP) to Operating Income Growth bps on a Constant Currency Basis (non-GAAP) Q3 2015 QTD Operating Income bps Growth Reported Favorable (unfavorable) FX impact Constant Currency Operating Income bps Growth (non- GAAP) Financial Services
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