Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q3 2020 Earnings Presentation
29 slides from Ncr Voyix's earnings presentation, Oct 27, 2020
Slide 1: Q3 2020 Earnings Conference Call
Q3 2020 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO TIM OLIVER, CFO October 27, 2020 1
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” 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, pursua
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: Q3 2020 Overview
Q3 2020 OVERVIEW FREE CASH FLOW of $150M in Q3 and $299M YTD EBITDA margin rate EXPANSION to 15.7% RECURRING REVENUE up 6% CC REDUCED LEVERAGE while maintaining STRONG LIQUIDITY Position ADJUSTING to COVID-19 environment; Hardware Challenged 4
Slide 5: Strategic Update
STRATEGIC UPDATE • Successful progress on 80/60/20 goals • Banking - Accelerating shift to recurring software revenue • Retail - Gaining traction on self-checkout solutions • Hospitality - Momentum in Aloha Essentials continues • Accelerating NCR as a Service transformation • Continue to invest in s
Slide 6: Q3 2020 Financial Results
Q3 2020 FINANCIAL RESULTS $ in millions, except for EPS Margin % YoY CC Growth Revenue Adjusted EBITDA 48% 45.0% $400 $1,783 $2,000 $1,589 $278 30.0% 24% $249 $200 15.0% $1,000 —% 15.6% 15.7% (11)% —% $0 (24)% $0 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Revenue down 11% as reporte
Slide 7: Banking
BANKING $ in millions Revenue YoY CC Operating Income Growth Margin % $1,200 60% $180 20.0% $942 $146 $777 17.5% $800 30% $120 $99 15.0% 15.5% $400 —% $60 12.5% 12.7% (17)% $0 (30)% $0 10.0% Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Key Highlights • Revenue down 17% CC due to a 40%
Slide 8: Retail
RETAIL $ in millions Revenue YoY CC Operating Income Growth Margin % $750 40% $60 15.0% $539 $556 $45 $500 20% $40 $36 10.0% 8.1% 6.7% $250 —% $20 5.0% 2% $0 (20)% $0 —% Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Key Highlights • Revenue up 2% CC due to increase in self-checkout rev
Slide 9: Hospitality
HOSPITALITY $ in millions Revenue YoY CC Operating Income Growth Margin % $300 15% $20 20.0% $216 $10 $200 $173 —% $10 $7 10.0% 4.6% 4.0% $100 (15)% $0 —% (20)% $0 (30)% -$10 (10.0)% Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Key Highlights • Revenue down 20% CC driven primarily by
Slide 10: Supplemental Revenue
SUPPLEMENTAL REVENUE $ in millions Q3 2020 Q3 2019 % Change % Change CC Software $468 $512 (9%) (9%) Services $655 $640 2% 3% Hardware $466 $631 (26%) (26%) ATM $219 $368 (40%) (40%) SCO/POS $247 $263 (6%) (7%) Total Revenue $1,589 $1,783 (11%) (11%) Software & Services % 71% 65% Recurring Revenue $
Slide 11: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA $ in millions QTD YTD Free Cash Flow Q3 2020 Q3 2019 Q3 2020 Q3 2019 Cash provided by Operating Activities $212 $155 $495 $226 Total capital expenditures ($60) ($82) ($200) ($220) Cash used in Discontinued Operations ($2) ($16) $4 ($27) Free Cash Flow $150 $57 $299
Slide 12: Capital Structure Update
CAPITAL STRUCTURE UPDATE SUMMARY OF BENEFITS TRANSACTIONS • Redeemed notes due in 2022 and 2023 • Extended weighted average debt for $1.3B maturity • New bond offering for 8-yr and 10-yr • Reduced refinancing risk notes for $1.1B • Reduces interest expense $19M annually • Retired 132,000 Series A Co
Slide 13: Looking Forward
LOOKING FORWARD • Execute NCR As-A-Service 80/60/20 Strategy • Maintain strong cash reserve and financial flexibility • Drive cash flow generation • Building momentum for 2021 execution • Virtual Investor Day December 3, 2020 13
Slide 14: Supplementary Materials
SUPPLEMENTARY MATERIALS 14
Slide 15: Q3 2020 GAAP Results
Q3 2020 GAAP RESULTS $ in millions, except per share amounts % Change Q3 2020 Q3 2019 As Reported Revenue $1,589 $1,783 (11%) Gross Margin 427 507 (16)% Gross Margin Rate 26.9% 28.4% Operating Expenses 309 335 (8)% % of Revenue 19.4% 18.8% Operating Income 118 172 (31)% % of Revenue 7.4% 9.6% Intere
Slide 16: Q3 2020 Operational Results
Q3 2020 OPERATIONAL RESULTS $ in millions, except per share amounts % Change Q3 2020 Q3 2019 % Change Constant As Reported Currency Revenue $1,589 $1,783 (11%) (11%) Gross Margin (non-GAAP) 446 513 (13)% (13)% Gross Margin Rate (non-GAAP) 28.1% 28.8% (70 bps) (70 bps) Operating Expenses (non-GAAP) 2
Slide 17: 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 18: Non-GAAP Measures: Constant Currency, Net Debt, Adjusted EBITDA
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 19: Non-GAAP Measures
NON-GAAP MEASURES NCR management's definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as s
Slide 20: GAAP to Non-GAAP Reconciliation: Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION $ in millions Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q3 2020 Q2 2020 Q3 2019 LTM LTM LTM Q3 2020 Q3 2019 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 502 $ 576 $ 197 $ 31 $ 105 Pension Mark-to-Market Adj
Slide 21: GAAP to Non-GAAP Reconciliation Q3 2020
GAAP TO NON-GAAP RECONCILIATION Q3 2020 $ in millions, except per share amounts Acquisition- Q3 QTD 2020 Transformation related Q3 QTD 2020 GAAP Costs amortization of Debt Refinancing non-GAAP intangibles Product revenue $521 $— $— $— $521 Service revenue 1,068 — — — 1,068 Total revenue 1,589 — — —
Slide 22: GAAP to Non-GAAP Reconciliation Q3 2020 EPS
GAAP TO NON-GAAP RECONCILIATION Q3 2020 $ in millions, except per share amounts Q3 QTD 2020 Q3 QTD 2020 non- GAAP GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $31 $77 Dividends on convertible preferred shares
Slide 23: GAAP to Non-GAAP Reconciliation Q3 2019
GAAP TO NON-GAAP RECONCILIATION Q3 2019 $ in millions, except per share amounts Transformati Acquisition- Q3 QTD 2019 on & related Acquisition- Debt Valuation Q3 QTD 2019 GAAP Restructuring amortization related costs Refinancing Allowance non-GAAP Costs of intangibles Release Product revenue $712 $—
Slide 24: GAAP to Non-GAAP Reconciliation Q3 2019 EPS
GAAP TO NON-GAAP RECONCILIATION Q3 2019 $ in millions, except per share amounts Q3 QTD 2019 Q3 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $105 $111 Dividends on convertible preferred shares
Slide 25: GAAP to Non-GAAP Reconciliation: Operating Income by Segment
GAAP TO NON-GAAP RECONCILIATION Q3 2020 $ in millions Q3 2020 Q3 2019 Operating Income Operating Income Banking $99 $146 Retail 45 36 Hospitality 7 10 Other 7 10 Total Operating Income (non-GAAP) 158 202 Less: Transformation and restructuring costs 19 7 Acquisition-related amortization of intangible
Slide 26: GAAP to Non-GAAP Reconciliation: Revenue by Segment
GAAP TO NON-GAAP RECONCILIATION Q3 2020 Q3 2020 Favorable (unfavorable) FX Constant Currency Revenue Revenue Growth % Reported impact Growth % (non-GAAP) Banking (18%) (1%) (17%) Retail 3% 1% 2% Hospitality (20%) —% (20%) Other (3%) 2% (5%) Total Revenue (11%) —% (11%) 26
Slide 27: GAAP to Non-GAAP Reconciliation: Revenue by Type
GAAP TO NON-GAAP RECONCILIATION Q3 2020 Q3 2020 Favorable (unfavorable) FX Constant Currency Revenue Revenue Growth % Reported impact Growth % (non-GAAP) Software (9%) —% (9%) Services 2% (1%) 3% Hardware (26%) —% (26%) ATM (40%) —% (40%) SCO/POS (6%) 1% (7%) Total Revenue (11)% —% (11%) Recurring R
Slide 28: GAAP to Non-GAAP Reconciliation: Operational Results
GAAP TO NON-GAAP RECONCILIATION Q3 2020 Favorable % Change Q2 2020 Operational Results % Change As (unfavorable) FX Constant Reported impact Currency Revenue (11%) —% (11%) Gross Margin (non-GAAP) (13%) —% (13%) Gross Margin Rate (non-GAAP) (70 bps) — bps (70 bps) Operating Expenses (non-GAAP) (7%)
Slide 29: Thank You
THANK YOU 29