Ncr Atleos Corporation · NYSE:NATL
Ncr Atleos — Q4 2023 Earnings Presentation
33 slides from Ncr Atleos's earnings presentation, Mar 26, 2024
Slide 1: Fourth Quarter 2023 Earnings Call
February 14, 2024 (as corrected March 26, 2024)* Tim Oliver, President & Chief Executive Officer Paul Campbell, Chief Financial Officer Stuart Mackinnon, Chief Operating Officer Fourth Quarter 2023 Earnings Call * This presentation has been revised as described in Item 7.01 of the Form 8-K/A of NCR
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: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Forward-looking statements are based on our current beliefs, expectations and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of the Company's control, including the failure of NCR At
Slide 4: Non-GAAP Measures
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: adjusted gross mar
Slide 5: Business Update
Business Update Tim Oliver President and Chief Executive Officer 5
Slide 6: Good Q4, Outstanding 2023, Positioned for a Successful 2024
Good Q4 Outstanding 2023 Positioned for a Successful 2024 Executed split and achieved strategic objectives Grew revenue 1% to $4 billion, recurring revenue grew 7% and recurring mix increased to 71% from 68% Added 6K of ATMaaS units to finish the year at 20K+ 10+ new FI partners added in 2023 Revenu
Slide 7: Segment Operational Highlights
Segment Operational Highlights Recent Account Wins Recent Account Wins • Installed 2,000 ATMaaS units, exceeding 20K installed units • Q4 orders were very strong, boosting our H1 backlog • Achieved record output levels from our manufacturing facilitates • Strong profitability and cash flow generatio
Slide 8: Key Objectives for 2024
Differentiate & Grow Key Objectives for 2024 ■ Offer best-in-class solutions and service ■ Leverage existing operations ■ Expand markets and transaction sets ■ Advance ATMaaS model Optimize Resource Allocation Complete Separation ■ Complete the transfer of operations in certain markets that remained
Slide 9: Financial Review
Financial Review Paul Campbell Chief Financial Officer 9
Slide 10: Q4 2023 Consolidated Financial Results
Total Revenue/Recurring Q4 2023 CONSOLIDATED FINANCIAL RESULTS Q4 22 Q4 23 $0 $500 $1,000 $ in millions, except percentages and per share amounts $1,065 $187$1,098 $178 $709 $777 ■ Q4 '23 Revenue of $1,098M, +3% y/y ■ Q4 '23 Recurring Revenue of $777M, +10% y/y ■ Q4 '23 Adjusted EBITDA of $178M ■ Ex
Slide 11: Self-Service Banking Key Strategic Metrics
Adjusted EBITDA Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 40% 50% 60% $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Q4 22 Q4 23 $600 $660 $720 Q4 22 Q4 23 $105 $140 $175 $683 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 10 15 20 Recurring Revenue % ATMaaS Units (in thousands) ARR(2) Up 900 bps y/y U
Slide 12: Network Key Strategic Metrics
Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 80 85 90 $ in millions, except units and ARPU NETWORK Q4 22 Q4 23 $0 $175 $350 Q4 22 Q4 23 $0 $65 $130$298 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 $13.5 $14.0 $14.5 $15.0 $15.5 Self-Service Banking Terminal Network (in thousands) LTM ARPU (in thousands) Down 1% y/y Up 7% y/y 84 $
Slide 13: Segment Summary & Financial Position
Segment Summary & Financial Position (1) Cash and cash equivalents as presented on our Consolidated Balance Sheets. Updated from materials furnished on February 14, 2024. (2) Refer to the definitions in the supplementary section of the presentation. Balance Sheet & Liquidity December 31, 2023 Liquid
Slide 14: 2024 Financial Outlook
$ in millions, except per share amounts 2024 Financial Outlook Q1 2024 Targets FY 2024 Targets Consolidated Low High Low High Revenue $1,000 $1,050 $4,200 $4,400 Adjusted EBITDA $150 $160 $770 $800 Non-GAAP Diluted EPS $0.30 $0.40 $2.90 $3.20 Adjusted Free Cash Flow-Unrestricted Positive $170 $230 I
Slide 15: 2024 Outlook Revenue Growth Walk
(1) Management estimate. (2) NM: Growth rate not meaningful to this illustration. 2024 Outlook Revenue Growth Walk 15 Revenue 2023 2024 Guidance Midpoint $ Growth y/y % Growth y/y Self Service Banking Segment - Base $2,629 $2,686 $57 2.2% Self-Service Banking Segment - ATMaaS Hardware Related Impact
Slide 16: 2024 Outlook Adjusted EBITDA to FCF Walk
2024 Outlook Adjusted EBITDA to FCF Walk 2024 Adj. EBITDA Target Mid-Point* Cash Interest Expense(1) Cash Taxes (2) Capex • ATMaaS: ~$45M • Maintenance: ~$80M • Other Growth: ~$55M Working Capital / Other One Time Separation Costs 2024 FCF Target Mid-Point* ~($5M) ~$200M ~$785M * Midpoint of guidanc
Slide 17: 2024 Financial Outlook EBITDA & EBITDA Margin Walks
$732 ~$785 $379 ~$675 $707 ($25) 24.4% ~26% ~27% 29.9% (1.3%) (1.4%) ~$365 (1.5%) +2.2% +1.0% $ in millions 2024 Financial Outlook EBITDA & EBITDA Margin Walks Consolidated Adjusted EBITDA Self-Service Banking Adj. EBITDA Margin Network Adj. EBITDA Margin $630 FY 2023 Vault Cash Costs Mix of Revenue
Slide 18: Takeaways
Takeaways Solid Fourth Quarter and 2023 Results Effectively Advancing Our Strategy: ATM as a Service Positive Momentum Heading Into 2024 Strong Fundamentals and Opportunity to Create Value 18
Slide 19: Supplementary Materials
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Slide 20: Non-GAAP measures definitions
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 information regarding At
Slide 21: Net Debt and Adjusted EBITDA definitions
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. Atleos believes that Net Debt provides useful information to investors because Atleos’ management reviews Net Debt as p
Slide 22: Forward-looking non-GAAP guidance note
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 reconciling items that may a
Slide 23: Q4 2023 GAAP Results
Q4 2023 Q4 2022 % Change Revenue $1,098 $1,065 3% Gross Margin 198 242 (18)% Gross Margin Rate 18.0% 22.7% Operating Expenses 163 152 7% % of Revenue 14.8% 14.3% Operating Income 35 90 (61)% % of Revenue 3.2% 8.5% Interest and other expense, net * (155) (89) 74% Income Tax Expense (Benefit) * 44 (4)
Slide 24: Q4 2023 Operational Results (Non-GAAP)
Q4 2023 Q4 2022 % Change Revenue $1,098 $1,065 3% Adjusted Gross Margin (non-GAAP) 272 267 2% Adjusted Gross Margin Rate (non-GAAP) 24.8% 25.1% Adjusted Operating Expenses (non-GAAP) 122 123 (1)% % of Revenue 11.1% 11.5% Adjusted Income from Operations (non-GAAP) 150 144 4% % of Revenue (Adjusted Op
Slide 25: GAAP to Non-GAAP Reconciliation
Q4 2023 Q4 2022 Net (Loss) Income Attributable to Atleos (GAAP) * $ (165) $ 7 Pension Mark-to-Market Adjustments 33 78 Transformation & Restructuring Costs 22 15 Acquisition-Related Amortization of Intangibles 24 24 Separation Costs 84 — Interest Expense * 75 8 Interest Income (5) — Depreciation and
Slide 26: GAAP to Non-GAAP Reconciliation FY 2023
FY 2023 Net Loss Attributable to Atleos (GAAP) $ (134) Pension Mark-to-Market Adjustments 27 Transformation & Restructuring Costs 28 Acquisition-Related Amortization of Intangibles 98 Separation Costs 170 Interest Expense (including Related party interest expense, net) 90 Interest Income (5) Depreci
Slide 27: GAAP to Non-GAAP Reconciliation Q4 2023
GAAP TO NON-GAAP RECONCILIATION $ in millions, except per share amounts Gross Margin Gross Margin rate Operating Expenses Income (loss) from operations Interest & Other Expenses, Net* Income Tax Expense (Benefit) * Effective Income Tax Rate* Net Income attributable to Atleos* Diluted Earnings per Sh
Slide 28: GAAP to Non-GAAP Reconciliation Q4 2022
GAAP TO NON-GAAP RECONCILIATION $ in millions, except per share amounts Gross Margin Gross Margin rate Operating Expenses Income (loss) from operations Interest & Other Expenses, Net Income Tax Expense (Benefit) Effective Income Tax Rate Net Income attributable to Atleos Earnings per Share(1) GAAP R
Slide 29: Q4 2023 Segment Results - GAAP
Self-Service Banking Network T&T Other(1) Corporate(2) Unallocated Total Product Revenue $232 $22 $3 $25 $— $282 Service Revenue $433 $301 $45 $37 $— $816 Total Revenue $665 $323 $48 $62 $— $1,098 Cost of Products $169 $18 $2 $23 $15 $227 Cost of Services $358 $226 $38 $32 $19 $673 SG&A and R&D Expe
Slide 30: Q4 2023 Segment Results - Non-GAAP
Self-Service Banking Network T&T Other(1) Corporate(2) Unallocated Total Product Revenue $232 $22 $3 $25 $— $282 Service Revenue $433 $301 $45 $37 $— $816 Total Revenue $665 $323 $48 $62 $— $1,098 Adjusted Cost of Products (non-GAAP) $169 $18 $2 $23 $15 $227 Adjusted Cost of Services (non-GAAP) $316
Slide 31: Q4 2023 GAAP to Non-GAAP Segment Reconciliation
GAAP Transformation Costs Stock Based Compensation Acquisition Related Amortization of Intangibles Separation Costs Non-GAAP Self Service Banking $ 358 $ — $ — $ — $ (42) $ 316 Network 226 — — (20) — 206 T&T 38 — — — (5) 33 Other 32 (1) — — (1) 30 Corporate Unallocated 19 — (2) — (3) 14 Total Cost o
Slide 32: GAAP to Non-GAAP Reconciliation Free Cash Flow
Q4 2023 Q4 2022 Cash provided by operating activities* $8 $33 Total capital expenditures $(47) $(27) Initial sale of accounts receivables $(166) $— Pension contributions $145 $1 Restricted cash settlement activity* $(8) $36 Adjusted Free Cash Flow-Unrestricted* $(68) $43 $ in millions GAAP TO NON-GA
Slide 33: Thank You
@ NCRATLEOS THANK YOU