Ncr Atleos Corporation · NYSE:NATL
Ncr Atleos — Furey Research Hidden Gems Conference (November 2024)
41 slides from Ncr Atleos's conference presentation, Nov 25, 2024
Slide 1: NCR Atleos (NATL) Furey Research Hidden Gems Conference
NCR Atleos (NATL) Furey Research Hidden Gems Conference November 25, 2024 Tim Oliver, President & Chief Executive Officer Paul Campbell, Chief Financial 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: NCR Atleos: Industry Leading Comprehensive ATM Platform of Scale
NCR Atleos # Industry Leading Comprehensive ATM Platform of Scale 1 Global shipped share of +600K +80K +140 +20K devices for 6 consecutive years Global installed base Largest independent Countries Employees of serviced ATMs network of owned and supported by our globally operated ATMs ATMs # Largest
Slide 5: Atleos Financial Snapshot
Atleos Financial Snapshot 2024E Outlook1 4.3B 3.1B 785M 205M ~$ ~$ ~$ ~$ Revenue Recurring Adj. EBITDA* Free Cash Flow* Revenue Americas (excluding US) Services Software 9% 12% 39% APAC 11% Revenue Revenue by Geography1 47% United States by Type1 19% 33% Hardware EMEA 30% Network Transactions Growin
Slide 6: Significant Incremental Earnings Power & Free Cash Flow
Significant Incremental Earnings Power & Free Cash Flow Steady underlying demand trends for cash and physical transactions suggests 1 sustained demand for ATM capability, stable ATM fleet size, and constructive market dynamics 2 Market leader with unmatched scale and unique vertically integrated cap
Slide 7: Solid Underlying Market Fundamentals
Solid Underlying Market Fundamentals Cash Usage is Robust ATM Industry Device Count is Stable Favorable Market Structure ATM Cash Withdrawal Total Value ($B)1 Global ATM Installed Base (000s) 1 Global Hardware TAM 1.89M ATMs 14,307 1,891 1,899 1,906 1,910 1,885 Atleos 14,058 13,796 36% 13,530 1,828
Slide 8: Self Service Banking Business
Self Service Banking Business ~$2.7B revenue, ~$0.6B Adj. EBITDA, ~24% Adj. EBITDA Margin1 • Supports the largest footprint of ATM’s globally • Solid organic revenue growth over time • Strong and increasing profitability and cash flow generation from incremental service revenues • Industry leading h
Slide 9: Self Service Banking Growth Initiatives
Self Service Banking Growth Initiatives Driving additional service adoption on the path to full outsourcing ATM as a Service Transaction Processing Security Cash Operations Operations Cash Management Management Management Service & Software Anti-virus Back Management Currency Office Forecasting Inci
Slide 10: Network Business
Network Business ~$1.3B revenue, ~$0.4B Adj. EBITDA, ~30% Adj. EBITDA Margin1 +80,000 ATMs Drive Durable Recurring Revenue Located in Blue Chip Retail Partners • Only OEM that owns and operates an estate of ATMs at scale • Operating in 12 countries • Over 1,200 financial institutions in the Allpoint
Slide 11: Network Growth Initiatives
Network Growth Initiatives Four tracks to drive highly efficient revenue growth Add New Financial Migrate More Branch Expand Transaction Sets Enter New Markets Institutions to the Network Activities to the Network Drive transaction volumes on Introduction of utility type New financial institutions D
Slide 12: Complementary Core Lines Of Business Are Converging
Complementary Core Lines Of Business Are Converging Self Service Banking Network Banks are seeking to reduce costs Retailers are looking to deliver through reduction of high-cost Financial Services in their retail transactions in branch and expand location either through the launch access to their s
Slide 13: Our Growth Strategy
Our Growth Strategy Drive More Revenue & Profit per Unit on Installed Base of 600K Devices Cross-sell Network Self Service Banking Solutions Grow through a migration of Add new Network new and existing customers from Drive adoption of banking partners Grow transaction-based revenue incremental tradi
Slide 14: Significant Runway For Strong Long-Term Profit and Cash Flow Growth
Significant Runway For Strong Long-Term Profit and Cash Flow Growth Executing our 3–5 year objectives should drive exceptional profit and free cash flow growth, and still leaves a large addressable market opportunity for outsourced services 2024E ATM Services Installed Base 3-5 Year Projected ATM Se
Slide 15: 3-5 Year Strategy Objectives
3-5 Year Strategy Objectives Should Drive Tremendous Incremental Profit & Free Cash Flow 2024E 2027E • Service revenues grow double-digits, with ATM As A Service reaching ~$1.0B billion in annual revenue Revenue $4.3B • Transactional revenues grow mid-single digits, led by incremental volume ~6% CAG
Slide 16: Significant Opportunity to Create Value Through Capital Allocation
Significant Opportunity to Create Value Through Capital Allocation Reduce Leverage to LT Target Capital Allocation 3,500 4.0x Near-Term Priorities 3.3x 3,000 I. Reinvest to support our current business and high 3.0x 2,500 return growth opportunities $’s millions Leverage 2,000 II. Pay down debt to r
Slide 17: 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 18: 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 19: 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 20: Takeaways
Takeaways Strong Underlying Business Fundamentals and Cash Flow Transformational Increase in Potential Earnings Power from Banks Adopting an Outsourced Solutions Model for ATMs Effective Strategy that Positions Atleos as the Market Leader for ATM Outsourcing Solutions Demonstrated Ability to Execute
Slide 21: Supplementary Materials
SUPPLEMENTARY MATERIALS 21
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION $ in millions % of % of % of % of Q3 2024 Revenue Q2 2024 Revenue Q1 2024 Revenue Q3 2023 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 & Restruct
Slide 29: 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 30: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2024 $ in millions, except per share amounts Interest & Income Tax Effective Net Income Gross Margin Gross Margin Operating Income from Other rate Expenses operations Expenses, Expense Income Tax attributable (Benefit) Rate to Atleos Net GAAP Results $262 24.3% $14
Slide 31: 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 32: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q3 2023 $ in millions, except per share amounts Interest & Income Tax Effective Net Income Gross Margin Gross Margin Operating Income from (Loss) rate Expenses operations Other Expense Income Tax attributable to Expenses, Net (Benefit) Rate Atleos GAAP Results $268 25
Slide 33: Q3 2024 Segment Results - GAAP
Q3 2024 SEGMENT RESULTS - GAAP* $ in millions Self-Service Network T&T Other(1) Corporate(2) Total Banking 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 34: 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 35: Q3 2024 GAAP to Non-GAAP Segment Reconciliation
Q3 2024 GAAP* TO NON-GAAP Segment Reconciliation $ in millions GAAP* Transformation Costs Acquisition Related Stock Based Compensation 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 36: Q3 2024 GAAP to Non-GAAP Product Reconciliation
Q3 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions Transformation Stock Based Acquisition Related GAAP* 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 37: Q2 2024 GAAP to Non-GAAP Product Reconciliation
Q2 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions Stock Based Acquisition Related GAAP* Transformation Costs Compensation Amortization of Non-GAAP Intangibles GROSS PROFIT(1) Software and Services $170 $— $— $(1) $169 76 — — 20 96 Transactional Hardware 37 — — — 37 Corporate unallocated
Slide 38: Q1 2024 GAAP to Non-GAAP Product Reconciliation
Q1 2024 GAAP* TO NON-GAAP Product Reconciliation $ in millions Stock Based Acquisition Related GAAP* Compensation Amortization of Non-GAAP 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 39: 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 40: Reconciliation of Constant Currency
RECONCILIATION OF CONSTANT CURRENCY $ in millions, except percentages and per share amounts Favorable % Change % Change as (Unfavorable) Adjusted Q3 2024 Results Reported Constant FX Impact Currency Consolidated Revenue 1% (3)% 4% Recurring Revenue 3% (3)% 6% 40
Slide 41: Thank You
THANK YOU 41
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