Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Investor Day (December 2007)
77 slides from Ncr Voyix's investor day presentation, Dec 6, 2007
Slide 1: NCR Analyst Day
NCR Analyst Day DECEMBER 6, 2007 NEW YORK STOCK EXCHANGE NEW YORK, NEW YORK
Slide 2: Agenda
Agenda Bill Nuti – NCR Business Strategy Chairman & CEO Q&A Alan Chow – Product Development Strategy SVP, Product Development & CTO Peter Dorsman – Global Operations Strategy SVP, Global Operations Chris Wallace – Customer Services Strategy SVP, Worldwide Customer Services Bob Fishman – NCR Business
Slide 3: Note to Investors
Note to Investors Certain non-GAAP financial information regarding NCR’s operating results may be discussed during this presentation. Reconciliations of the differences between GAAP and non-GAAP measures are available on the Investor page of NCR’s website at www.ncr.com. Remarks and responses associ
Slide 4: NCR Business Strategy
NCR Business Strategy Bill Nuti Chairman & CEO
Slide 5: Shareholder Value – Key Levers
Shareholder Value – 3 Key Levers Profitable Revenue Growth Build a Competitive Cost Structure Optimize Capital Structure
Slide 6: Key Take-Aways
Key Take-Aways Strong foundation Consumer demand for self-service is fueling growth NCR is well positioned to be a global leader in self-service The addressable market for self-service is expanding Focused on improving execution Proven and experienced management team
Slide 7: NCR has Built a Solid Foundation
NCR has Built a Solid Foundation Mid-teens Growth 4,582 $ in Millions 4,635 Revenue 4,561 5%—6% Growth Non-Pension Operating Income $276 $ in Millions $248 $141 2004 2005 2006 2007 2004 2005 2006 2007G EPS Non-GAAP $0.86 $0.73 $1.20-$1.25 3.0% NPOI Margin -7% 6.0% 5.4% *— * $0.21 2004 2005 2006 2007
Slide 8: Consumers Driving Self-Service
Consumers Driving Self-Service Consumer Trends 50 billion ATM transactions $ 500 Billion in self-checkout purchases 70% of U.S. business travelers use self-check-in 8.8 billion digital photographs printed via self-service Business Trends New business models emerging that are 100% self-service In all
Slide 9: The Consumer is Demanding Self-Service
The Consumer is Demanding Self-Service In 2006, 66 percent of travelers used a kiosk to check in to a flight. - Forrester Research Combining Mobility, Internet & Self-Service Automation Extremely valuable 26% Very valuable 35% Somewhat valuable 24% Slightly 92% valuable 7% Not at all valuable 8% Sou
Slide 10: And the Market is Adjusting
And the Market is Adjusting IBM Press Release Sept. 25. 2007 New IBM Survey Finds Tech Savvy Consumers Expect Businesses to Provide More Self-Service Options By the end of 2007, 800,000 customer kiosks, not including ATMs, will be installed in North America and that number will hit 1.2 million by 20
Slide 11: Businesses Recognize Customer Interaction is Changing
Businesses Recognize Customer Interaction is Changing
Slide 12: Alternative Self-Service Channels are Growing in Popularity and Frequency of Use
Alternative Self-Service Channels are Growing in Popularity and Frequency of Use Evolution of Retail Banking Interactions Mobile Online Banking Call Center ATM Branch 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 source: Tower Group, ATM & Debit News & Internal NCR estimates
Slide 13: Consumer Interactions and Channels Are Changing in Retail
The Type of Consumer Interactions and Channels Are Changing in Retail as well…. POINT OF SERVICE MOBILITY INTERNET
Slide 14: This Phenomena is Occurring in ALL Major Industries
And This Phenomena is Occurring in ALL Major Industries FINANCIAL RETAIL TRAVEL & HOSPITALITY HEALTHCARE ENTERTAINMENT & GAMING PUBLIC SECTOR
Slide 15: And in Every Corner of the World…NOW
And in Every Corner of the World…NOW . CREATING AN INCREDIBLE OPPORTUNITY FOR NCR
Slide 16: Our Strategy
Our Strategy Penetrate adjacent Self-Service technology segments Market share, wallet share, and mind share in our core industries: Expand / strengthen geographic presence and Sales coverage Travel & Gaming & Government & Healthcare Entertainment Public Sector Hospitality EXPAND INTO EMERGING GROWTH
Slide 17: Our Strategy
Our Strategy Profitable Revenue Growth Build a Competitive Cost Structure Optimize Capital Structure BUILD A COMPETITIVE COST STRUCTURE.CONTINUOUS IMPROVEMENT PRODUCT DEVELOPMENT GLOBAL OPERATIONS CUSTOMER SERVICES INFRASTRUCTURE
Slide 18: Our Strategy
Our Strategy Penetrate adjacent Self-Service technology segments Market share, wallet share, and mind share in our core industries: Expand / strengthen geographic presence and Sales coverage Travel & Hospitality Healthcare Gaming & Entertainment Government & Public Sector BUILD A COMPETITIVE COST ST
Slide 19: Strong Market Position
Strong Market Position #1 ATM MARKET SHARE #1 SELF-SERVICE CHECKOUT #1 AIRLINE KIOSK #1 HEALTHCARE KIOSK #1 TWO-SIDED TECHNOLOGY (2ST) #2 POINT-OF-SALE THE GLOBAL LEADER IN SELF-SERVICE TECHNOLOGIES
Slide 20: Right Time, Right Vision, Right Strategy…but
Right Time, Right Vision, Right Strategy…but “We are optimizing our organization structure to improve execution” Non-Bank or Retail market opportunities Slower to respond to the customer Lacked internal alignment Customer confusion Redundant spending Slower time-to-market Higher costs Low productivi
Slide 21: Organizational Transition Has Been Underway for Over Two Years
Organizational Transition Has Been Underway for Over Two Years August 2005 G&A Shared Services June 2006 Managed Services COE ServiceDeliveryCostCenter ServiceDeliveryCostCenter G&A Shared Services G&A Shared Services June 2006 Managed Services COE ServiceDelivery ServiceDeliveryCostCenter CostCente
Slide 22: Evolving Organization Structure
Evolving Organization Structure Industry Centric, More Efficient, Growth Oriented WORLDWIDE SALES & MARKETING CUSTOMER SERVICES CORPORATE DEVELOPMENT PRODUCT DEVELOPMENT GLOBAL OPERATIONS G&A SHARED SERVICES SYSTEMEDIA
Slide 23: Our Evolving Organization Model Has Multiple Benefits
Our Evolving Organization Model Has Multiple Benefits Reduce Cost Structure Customer Interface Reduced Product Cost Sales Coverage & Productivity Increased Productivity & Efficiency ADVANTAGES
Slide 24: And, Potential Issues to Mitigate…
And, Potential Issues to Mitigate… Loss of focus in core businesses Dedicated industry focus in Sales, Product Development & Services New industry knowledge Dedicated industry organization and new talent Execution Started process 18 months ago and we are seeing significant improvement Employee moral
Slide 25: NCR is Well Positioned…
NCR is Well Positioned… CHANNELS CAPABILITIES MARKETS SOLUTIONS “NCR is the only company with the capability to pull all these things together –web, kiosk, point-of-sale, and mobility” – CEO, NCR Customer Fortune 500 Company
Slide 26: Americas Market
Americas Market Size ‘07 – ‘10 CAGR Financial $4.4B 5-6% Retail $7.1B 3-4% Emerging Industries $3.8B 7-8% Financial market includes Hardware, Software, PS, TS and Services for the ATM, Payments, & Branch Solutions: Retail market includes Hardware, Software, PS, TS and Services for the Assisted Servi
Slide 27: EMEA Market
EMEA Market Size ‘07–’10 CAGR Financial $4.3B 4-5% Retail $ 10.3B 3-4% Emerging Industries $4.0B 7-8% Core Opportunities Financial Emerging market growth ?Teller Assisted Cash Rcl. ?Statement Printing (Germany) ?Branch automation ?Deposit ?Software & PS ?New SS applications ?Bill Pay & Top Up apps ?
Slide 28: APJ Market
APJ Market Size ‘07 – ‘10 CAGR Financial $3.5B 3-4% Retail $8.6B 4-5% Emerging Industries $3.7B 7-8% Core Opportunities Financial Emerging market growth Teller Assisted Cash Rcl. Cash Recycling Branch automation Deposit Software & PS New SS applications Bill Pay & Top Up apps Maint/Managed Services
Slide 29: Creating Shareholder Value
eating Shareholder Value Builda ' Competitive W Cost Structure Profitable Revenue Growth ptimize Capital Structure
Slide 30: Initiatives to Improve Cost Structure, Productivity, and Customer Satisfaction
Initiatives to Improve Cost Structure, Productivity, and Customer Satisfaction (Phase II Continued) Product Development PLM DFX Common Modular Architecture Global Operations Lean 6 Sigma Implementation Manufacturing (low cost, high productivity) Supply Chain Collaboration Customer Services Call Cent
Slide 31: Creating Shareholder Value
Creating Shareholder Value Profitable Revenue Growth Build a Competitive Cost Structure Optimize Capital Structure
Slide 32: Capital Structure Strategy Update
Capital Structure Strategy Update Current Board Authorized $583M buy-back to be executed over the next 1-2 Yrs. Regular and ongoing evaluation of optimal Capital Structure strategy…follows business strategy Capital allocation decision factors: ?Pension management ?Working capital ?Credit market cond
Slide 33: Experienced Management Team
Experienced Management Team Alan Chow Peter Dorsman Malcolm Collins Chris Wallace Dan Bogan SVP Product SVP Global SVP Worldwide SVP Worldwide VP Systemedia Development & CTO Operations Sales & Marketing Customer Services Business Unit Bill Nuti Chairman and CEO Mike Webster Andrea Ledford Bob Fishm
Slide 34: Speaker Biographies
Speaker Biographies Bill Nuti Chairman & CEO Alan Chow SVP, Product Development & CTO Peter Dorsman SVP, Global Operations Chris Wallace SVP, Worldwide Customer Services Bob Fishman Interim CFO and Corporate Controller
Slide 35: Summary
Summary Strong foundation Consumer demand for self-service is fueling growth NCR is well positioned to be a global leader in self-service The addressable market for self-service is expanding Focused on improving execution Proven and experienced management team
Slide 36: Product Development Strategy
Product Development Strategy Alan Chow SVP, Product Development & CTO
Slide 37: Creating Shareholder Value
Creating Shareholder Value Profitable Revenue Growth Build a Competitive Cost Structure Omtimize Capital Structure
Slide 38: Innovation Drives Profitable Revenue Growth
Innovation Drives Profitable Revenue Growth ADJACENT SOLUTIONS CORE SOLUTIONS NEW INDUSTRY EXTENSIONS PROFITABLE REVENUE GROWTH
Slide 39: Innovation Drives Profitable Revenue Growth: Core Solutions
Innovation Drives Profitable Revenue Growth CORE SOLUTIONS ATM POS SCANNER SELF-CHECKOUT KIOSKS PAYMENTS SYSTEMS
Slide 40: Innovation Drives Profitable Revenue Growth: Adjacent Solutions
Innovation Drives Profitable Revenue Growth CORE SOLUTIONS ADJACENT SOLUTIONS CONTACTLESS TELLER ASSISTED RECYCLING INTELLIGENT DEPOSIT
Slide 41: Innovation Drives Profitable Revenue Growth: New Industries
Innovation Drives Profitable Revenue Growth ADJACENT SOLUTIONS CORE SOLUTIONS NEW INDUSTRY EXTENSIONS TRAVEL & HOSPITALITY HEALTHCARE GAMING & ENTERTAINMENT GOVERNMENT / PUBLIC SECTOR
Slide 42: Driving Efficient Innovation
Driving Efficient Innovation MOVEMENT TO LOW COST REGIONS FOR ADDITIONAL CAPACITY REDUCING PRODUCT AND SERVICING COST Common Hardware & Software Platforms ?Re-use and modularity ?Accelerate time to market ?Reduce service incidents
Slide 43: Driving Efficient Innovation
Driving Efficient Innovation PRODUCT LIFE-CYCLE MANAGEMENT (PLM) DESIGN FOR LEAN MANUFACTURING DESIGN FOR SERVICEABILITY SERVICES Reduce parts and product ID Customer Focus and Responsiveness Reduce product cost Reduce conversion cost Remote Diagnostics System and Asset Management Reduce time and co
Slide 44: Global Operations Strategy
Global Operations Strategy Peter Dorsman SVP, Global Operations
Slide 45: Creating Shareholder Value
Creating Shareholder Value Profitable Revenue Growth Build a Competitive Cost Srtucture Omtimize Capital Structure
Slide 46: NCR's Global Operations—Prior
NCR’s Global Operations—Prior Outsourced Manufacturing NCR Manufacturing Facilities NCR Fulfillment Centers Dundee Waterloo Rotterdam Columbia, SC Atlanta Ebina San Diego Guadalajara Sao Paulo
Slide 47: NCR's Global Operations—2007
NCR’s Global Operations—2007 Contract Manufacturing NCR Manufacturing Facilities NCR Fulfillment Centers Budapest Columbia, SC Rotterdam Beijing Ebina Atlanta Guadalajara Pondicherry Sao Paulo SHIFT FROM HIGH-COST TO LOW-COST REGIONS EXPAND OUTSOURCED MANUFACTURING
Slide 48: Manufacturing Mix Shift
Manufacturing Mix Shift ATM Assembly Mix Low-Cost Region High-Cost Region 27% 73% 2005 78% 22% 2007 ATM Module Assembly Mix Low-Cost Region High-Cost Region 46% 54% 2005 90% 10% 2007
Slide 49: Business Unit Organization Model—Prior
Business Unit Organization Model—Prior Separate organizations performing same functions FINANCIAL DEMAND PLANNING ORDER MANAGEMENT SOURCING MANUFACTURING LOGISTICS SERVICE BILLING INVOICING COLLECTIONS RETAIL CUSTOMER SERVICES TERADATA SIGNIFICANT OPPORTUNITY TO ALIGN PROCESSES AND INPROVE RESULTS
Slide 50: One Global Operations Organization (2008 Plus)
One Global Operations Organization (2008 Plus) Lowers our Cost Improves Quality Increases Productivity DEMAND PLANNING ORDER MANAGEMENT SOURCING MANUFACTURING LOGISTICS SERVICE BILLING INVOICING COLLECTIONS
Slide 51: Global Operations Focus
Global Operations Focus Fast, Low Cost Lean Six Sigma Manufacturing Fulfillment Supply Base Lowest Total Cost Sourcing Efficient Distribution and Logistics Flexible & Responsive Simplified, Common Processes Increased Asset and Labor Flexibility Design for Manufacturability Continuous Improvement Imp
Slide 52: Operations: Enabling NCR's Success
Operations: Enabling NCR’s Success SALES OPERATIONS SERVICES PRODUCT DEVELOPMENT
Slide 53: Customer Services Strategy
Customer Services Strategy Chris Wallace SVP, Customer Services
Slide 54: Creating Shareholder Value
Creating Shareholder Value Profitable Revenue Growth Build a Competitive Cost Structure Omtimize Capital Structure
Slide 55: Leveraging Our Worldwide Service Model
Leveraging Our Worldwide Service Model One of the top 10 support providers in the world Providing a competitive advantage for NCR solutions Supporting: 9 of the world’s top 10 banks, 8 of the top 10 retailers 9 of the top 10 telecoms and 8 of the top 10 airlines Thousands of dedicated, NCR badged Se
Slide 56: Customer Services Strategy
Customer Services Strategy Enable growth of the new NCR with cost-effective service delivery and the world’s highest levels of customer satisfaction and solution availability Cost Obsession Total organization productivity Growth Opportunities dimensions of growth Enhancing People Relationships Devel
Slide 57: Customer Services Capabilities Example
Customer Services Capabilities Example STANDARD SERVICES INSTALLATION SERVICES MANAGED SERVICES ATM Network Design Services Site Assessment & Preparation Staging (preloading SW) On-site Installation Project Management Service Mgmt. ? Help Desk I Incident Mgmt. I Remote Monitoring I Currency Mgmt. I
Slide 58: Leveraging Offers into Emerging Industries
Leveraging Offers into Emerging Industries CORE INDUSTRIES Financial—Retail EMERGING INDUSTRIES Standard Services HW/SW Maintenance Design & Staging Services Installation, Rollout and Project Mgt. Managed Services Asset & SW Management Help Desk & Service Mgt. I Application I Hosting Remote Monitori
Slide 59: Global Customer Services Market Landscape
Global Customer Services Market Landscape I Global^-^^ I Networking ^ Services | $20+Billion Market* | NCR Position = $1.8 B EMERGING SEL^555 SERVICE MARKETS Retail Travel & Hospitality Healthcare Entertainment & Gaming Public Sector eCommerce I Financial Payments 1 TWO SIGNIFICANT GROWTH PATHS LEVE
Slide 60: Managing Down the Cost Continuum
Managing Down the Cost Continuum TOTAL COST MODEL COST OF SERVICE X INCIDENTS = TOTAL COST
Slide 61: Taking Customer Services to the NEXT Level
Taking Customer Services to the NEXT Level I 2007 H Guidance H 6% H NPOI H Margin Service Productivity Service Technology Asset Management Service Our Brand Market Expansion Software Services Managed Services New Self-Service innovations Design for Service Remote Incident Resolution ~9% NPOI Margin
Slide 62: NCR Financial Strategy
NCR Financial Strategy Bob Fishman, CPA, CFA Interim CFO and Corporate Controller
Slide 63: Creating Shareholder Value
eating Shareholder Value R ’ Build a Profitable Competitive Revenue Growth Cost ue Structure Optimize Capital Structure
Slide 64: Revenue Trends
NCR Revenue Trends Revenue—$ Millions Q3 2007 YTD Revenue Mix GROWTH WITH STRONG GEOGRAPHIC DIVERSITY
Slide 65: Operating Margins by Segment
Operating Margins by Segment F”-Ul”— “tH Hill ~m~ Financial Self 15% 12% 12-13% Service Retail Store 4% 4% 5% Automation Customer Services 3% 5% 6% Total NCR 5% 6% ~7% Non-pension Operating Income—Operating income before pension expense Does not include special charges
Slide 66: Continued EPS Expansion
Continued EPS Expansion EPS Excluding Special Items Non-GAAP results; see NCR.com for GAAP to non-GAAP reconciliation
Slide 67: Creating Shareholder Value
Creating Shareholder Value R | Builda Profitable Competitive Revenue Growth Cost ue Structure Li Capital Structure
Slide 68: Profitable Revenue Growth—2007 to 2010
Profitable Revenue Growth—2007 to 2010
Slide 69: Optimizing Cost Structure—2007 to 2010
Optimizing Cost Structure—2007 to 2010 Company Organization Product Development Global Operations Customer Services Functional Model Synergies Common Platform Product Lifecycle Management DfM/DfS Manufacturing Productivity Demand to Supply Supplier Collaboration Parts and Logistics Delivery Producti
Slide 70: Revenue Growth and NPOI Margin
Revenue Growth and NPOI Margin EJflBffRBPHil Efiffll EBBIM KiBflSI BIBSBBBCI Service Retail Store (1%) 2% 7-8% 5-7% Automation Customer Services (5)% (1)% 4-5% 4-5% Total NCR (2)% 5-6% ~5% Service Retail Store 4% 4% 5% ~7% Automation Customer Services 3% 5% 6% ~9% Total NCR 5% 6% 7% ~9%
Slide 71: New Reporting Structure
New Reporting Structure Current 2008 Reporting Structure Revenue & NPOI Benefits Mirrors the way the business is managed More efficient sales motions Lower cost structure No more elimination item
Slide 72: Capital Available for Investment
Capital Available for Investment Cash Balance at spin-off ~$1,000 Minimum operating cash ($300) Currently available for investment $700 Authorized share repurchase program of $583M
Slide 73: Free Cash Flow Assumptions
Free Cash Flow Assumptions • Net Income less pension adjustment ~ Free Cash Flow - Pension adjustment = Cash pension contributions less pension expense ? $50M per year Focus on working capital CAPEX ? Depreciation ? $110M per year including Capitalized Software Funding to implement cost savings init
Slide 74: Capital Structure Strategy
Capital Structure Strategy Invest cash to create value Share repurchases of $583M in the next one to two years Disciplined Organic Investment -Increase self-service R&D and demand creation—Recycled $ • M&A -Acquire self-service technology to gain speed to market Do not increase leverage at this time
Slide 75: Creating Shareholder Value
Creating Shareholder Value INCREASE IN EPS 2007 VERSUS 2010 $0.15—0.25/share $0.35—0.45/share $0.15—0.20/share
Slide 76: Continued EPS Expansion
Continued EPS Expansion EPS Excluding Special Items Non-GAAP results; see NCR.com for GAAP to non-GAAP reconciliation
Slide 77: Questions
Questions