Slide 1: Full Year & Q4 2021 Earnings Conference Call
1 FULL YEAR & Q4 2021 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO February 8, 2022
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS. Comments made during this conference call 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 the Securities Exchange Act of 1934, as amended, pursuant to the safe h
Slide 3: Non-GAAP Measures; Notes to Investors
3 NON-GAAP MEASURES. While NCR 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: selected measures,
Slide 4: 2021 Overview
4 2021 OVERVIEW Free Cash Flow of $460M Strong full year 2021 results Adjusted EBITDA growth of 39%; Margin expansion of 300 bps to 17.4%; Non-GAAP Diluted EPS up 51% Revenue growth and margin expansion across all industries Revenue up 15% Y/Y; Recurring revenue up 25% Y/Y Significant increase in cu
Slide 5: Business Update
5 BUSINESS UPDATE Initiating a comprehensive strategic review process Retail - Continued growth in NCR Commerce software platform Hospitality - Momentum in AlohaTM Essentials continues Banking – Digital banking momentum and early ATMaas traction Payments - Gaining traction across Merchant acquiring
Slide 6: Q4 2021 Financial Results
6 Adjusted EBITDA up 37% and margin rate up 160 bps y/y Non-GAAP EPS up 30% y/y Driving strong and linear free cash flow production Total Revenue Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue up 25% y/y; Recurring revenue up 35% y/y; Pro forma revenue up 8%; Pro forma(1) recurring reve
Slide 7: 2021 Financial Results
7 Adjusted EBITDA up 39% and margin rate up 300 bps y/y Non-GAAP EPS up 51% y/y Driving strong and consistent free cash flow production Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue up 15% y/y; Recurring revenue up 25% y/y; Pro forma revenue up 6%; Pro forma(1)
Slide 8: Banking
8 Q4 19 Q4 20 Q4 21 $100 $125 $150 $ in millions, except registered users BANKING Revenue Adjusted EBITDA Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $600 $1,200 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $125 $250 $795 Q4 19 Q4 20 Q4 21 20.0 24.0 28.0 Digital Banking Revenue Digital Banking Registered Users Recurring R
Slide 9: Retail
9 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $250 $500 $750 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $40 $80 $120 SCO Revenue Platform Lanes Q4 19 Q4 20 Q4 21 0 8,500 17,000 Recurring Revenue FY21 up 13% Q4 19 Q4 20 Q4 21 $150 $225 $300 Q4 19 Q4 20 Q
Slide 10: Hospitality
10 $ in millions, except Aloha Essential sites HOSPITALITY Revenue Adjusted EBITDA Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $80 $160 $240 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 $0 $10 $20 $30 Aloha Essential Sites Recurring Revenue Q4 19 Q4 20 Q4 21 2,500 5,000 7,500 10,000 FY21 up 148% FY21 up 9% Q4 19 Q4 20 Q4 21
Slide 11: Progress on NCR 80/60/20 Goals
11 FY 2021 FY 2020 80% of NCR's revenue will come from software and services 73% 72% 60% of NCR's revenue will come from recurring revenue 58% 54% 20% goal for Adjusted EBITDA as a percent of revenue 17.4% 14.4% Progress on NCR 80/60/20 Goals
Slide 12: Free Cash Flow, Net Debt & EBITDA
12 Free Cash Flow Q4 2021 FY 2021 Cash provided by operating activities $270 $1,077 Less: Total capital expenditures ($106) ($348) Less: Initial sale of Trade Accounts Receivable ($26) ($300) Less: Acquisition Related Items $— $55 Plus: Settlement Restricted Cash Activity ($42) ($41) Plus: Pension c
Slide 13: 2022 Guidance
13 Growth from 21% to 27% Growth from 27% to 39% Growth from 9% to 30% Total Revenue Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Growth from 12% to 15% 2022 GUIDANCE 2018 2019 2020 2021 2022 $0 $4,100 $8,200 2018 2019 2020 2021 2022 $0 $800 $1,600 2018 2019 2020 2021 2022 $0.00 $1.80 $3.60 2
Slide 14: 2022 Adjusted EBITDA Bridge
14 2022 ADJUSTED EBITDA BRIDGE $ in millions, except for EPS 2021 Volume/Price Full Year Cardtronics Net Productivity & Synergy Shift to Recurring Revenue 2022 Guidance $1,500-$1,575 $1,244
Slide 15: Looking Forward
15 LOOKING FORWARD Leverage software and payments platform to increase share of wallet Continued execution to drive solid return Continued transformation to drive re-rate of valuation Explore actions to accelerate shareholder value creation Capitalize on Cardtronics and LibertyXTM opportunities
Slide 16: Supplementary Materials
16 SUPPLEMENTARY MATERIALS
Slide 17: Q4 2021 GAAP Results
17 Q4 2021 Q4 2020 % Change Revenue $2,034 $1,631 25% Gross Margin 503 328 53% Gross Margin Rate 24.7% 20.1% Operating Expenses 380 391 (3)% % of Revenue 18.7% 24.0% Operating Income 123 (63) (295)% % of Revenue 6.0% (3.9%) Interest and other expense 49 (83) (159)% Income Tax Expense (Benefit) 109 (
Slide 18: Q4 2021 Operational Results
18 Q4 2021 Q4 2020 % Change Revenue $2,034 $1,631 25% Gross Margin (non-GAAP) 549 465 18% Gross Margin Rate (non-GAAP) 27.0% 28.5% Operating Expenses (non-GAAP) $334 $313 7% % of Revenue 16.4% 19.2% Operating Income (non-GAAP) $215 $152 41% % of Revenue 10.6% 9.3% Interest and other expense (non-GAA
Slide 19: Non-GAAP Measures Definitions
19 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 information regarding NC
Slide 20: Net Debt and Adjusted EBITDA Definitions
20 Net Debt and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA). NCR 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. NCR believes that Net Deb
Slide 21: Adjusted EBITDA Reconciliation by Quarter
21 Q4 2021 Q3 2021 Q4 2020 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 64 $ 12 $ (125) Pension Mark-to-Market Adjustments (118) — 34 Transformation & Restructuring Costs 46 5 202 Acquisition-Related Amortization of Intangibles 44 45 19 Acquisition-Related Costs 6 9 (6)
Slide 22: LTM Adjusted EBITDA Reconciliation
22 Q4 2021 LTM Q3 2021 LTM Q4 2020 LTM Q4 2019 LTM Q4 2018 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 97 $ (92) $ (7) $ 614 $ (36) Pension Mark-to-Market Adjustments (118) 34 34 75 (45) Transformation & Restructuring Costs 66 222 234 58 223 Acquisition-Related Amor
Slide 23: Adjusted EBITDA by Segment
23 Q4 2021 Q3 2021 Q4 2020 Banking $ 230 $ 242 $ 132 Retail 87 70 88 Hospitality 27 35 27 Other 11 10 11 Adjusted EBITDA by Segment $ 355 $ 357 $ 258 Corporate and Other (2) (5) — Adjusted EBITDA $ 353 $ 352 $ 258 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 24: Q4 2021 GAAP to Non-GAAP Reconciliation
24 Q4 QTD 2021 GAAP Transfor mation Costs Acquisition- related amortization of intangibles Acquisition - related costs Debt Refinancin g & Extinguish ment Tax Related Items Pension mark-to- market adjustments Q4 QTD 2021 non- GAAP Product revenue $640 $— $— $— $— $— $— $640 Service revenue 1,394 — —
Slide 25: FY 2021 GAAP to Non-GAAP Reconciliation
25 FY 2021 GAAP Transfor mation Costs Acquisition- related amortization of intangibles Acquisition - related costs Debt Refinancing & Extinguishmen t Tax Related Items Pension mark- to- market FY 2021 non- GAAP Product revenue $2,193 $— $— $— $— $— $— $2,193 Service revenue 4,963 — — — — — — 4,963 T
Slide 26: Q4 2021 Diluted EPS Reconciliation
26 Q4 QTD 2021 GAAP Q4 QTD 2021 non-GAAP Income from continuing operations attributable to NCR common stakeholders: Income from continuing operations (attributable to NCR) $64 $114 Dividends on convertible preferred shares (4) — Income from continuing operations attributable to NCR common stakeholde
Slide 27: FY 2021 Diluted EPS Reconciliation
27 FY 2021 GAAP FY 2021 non- GAAP Income from continuing operations attributable to NCR common stakeholders: Income from continuing operations (attributable to NCR) $97 $380 Dividends on convertible preferred shares (16) — Income from continuing operations attributable to NCR common stakeholders $81
Slide 28: Q4 2020 GAAP to Non-GAAP Reconciliation
28 Q4 QTD 2020 GAAP Transformation Costs Acquisition- related amortization of intangibles Acquisition- related costs VA Release Pension market-to- market Q4 QTD 2020 non-GAAP Product revenue $529 $— $— $— $— $— $529 Service revenue 1,102 — — — — — 1,102 Total revenue 1,631 — — — — — 1,631 Cost of pr
Slide 29: FY 2020 GAAP to Non-GAAP Reconciliation
29 FY 2020 GAAP Transformat ion Costs Acquisition- related amortization of intangibles Acquisition- related costs Debt Refinancing VA Release Pension market-to- market FY 2020 non-GAAP Product revenue $2,005 $— $— $— $— $— $— $2,005 Service revenue 4,202 — — — — — — 4,202 Total revenue 6,207 — — — —
Slide 30: Q4 2020 Diluted EPS Reconciliation
30 FY 2020 GAAP FY 2020 non- GAAP Income from continuing operations attributable to NCR common stakeholders: Income from continuing operations (attributable to NCR) ($125) $83 Dividends on convertible preferred shares ($12) $— Income from continuing operations attributable to NCR common stakeholders
Slide 31: FY 2020 Diluted EPS Reconciliation
31 FY 2020 GAAP FY 2020 non- GAAP Income from continuing operations attributable to NCR common stakeholders: Income from continuing operations (attributable to NCR) ($7) $242 Dividends on convertible preferred shares ($31) $— Income from continuing operations attributable to NCR common stakeholders
Slide 32: Quarterly Free Cash Flow Reconciliation
32 Q4 2021 Q3 2021 Q4 2020 Cash provided by operating activities $270 $497 $146 Less: Total capital expenditures ($106) ($102) ($63) Less: Sale of Accounts Receivables ($26) ($274) $— Plus: Pension contributions $4 $4 $75 Plus: Settlement Restricted Cash Activity ($42) $— $3 Free Cash Flow $100 $125
Slide 33: Annual Free Cash Flow Reconciliation
33 FY 2021 FY 2020 FY 2019 FY 2018 Cash provided by operating activities $1,077 $641 $634 $572 Less: Total capital expenditures ($348) ($263) ($329) ($313) Less: Sale of Accounts Receivables ($300) $— $— $— Plus: Pension contributions $17 $89 $23 $24 Plus: Settlement Restricted Cash Activity ($41) $
Slide 34: Thank You
34 THANK YOU