Ncr Atleos Corporation · NYSE:NATL
Ncr Atleos — Investor Day (September 2023)
75 slides from Ncr Atleos's investor day presentation, Sep 5, 2023
Slide 1: Investor Day September 5, 2023
Investor Day September 5, 2023 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements FORWARD-LOOKING STATEMENTS. NCR Atleos LLC ("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 amende
Slide 3: Notes to Investors
Notes to Investors SEGMENTS AND PRO-FORMA FINANCIAL INFORMATION. Following the completion of the planned separation from NCR Voyix, the Company plans to manage its business in a manner that is expected to result in the Company having three reportable segments as identified in these materials -- Self
Slide 4: Strategic Overview
Strategic Overview Tim Oliver, Chief Executive Officer Stuart Mackinnon, Chief Operating Officer Paul Campbell, Chief Financial Officer 4
Slide 5: Agenda
Welcome Michelle Morris, Communications Leader Opening Remarks Michael Hayford, NCR CEO Strategic Overview Tim Oliver, CEO Foundational ATM Len Graves, EVP Global Operations Patty Watson, CITO Network & ATMaaS Stuart Mackinnon, COO Diego Navarrete, EVP Global Sales Financial Overview Paul Campbell,
Slide 6: Investment Thesis
Investment Thesis 6 1 Steady global demand for cash and physical transactions suggests sustained demand for ATM capability. 2 Market leader with unmatched scale and installed base will enable above-market growth. 3 Best positioned to benefit from accelerating bank outsourcing, branch rationalization
Slide 7: Proven Management Team
Proven Management Team 7 Tim Oliver Chief Executive Officer Stuart Mackinnon Chief Operating Officer Paul Campbell Chief Financial Officer Dan Antilley Chief Security & Cash Operations Officer Len Graves Global Operations LaShawne Meriwether Chief Human Resources Officer Carolyn Muise Chief Customer
Slide 8: Introducing Atleos
Introducing Atleos Industry Leading Comprehensive ATM Platform of Scale1 #1 Retail surcharge-free network #1 Provider of multi-vendor ATM software applications and middleware 69% No. 1 branch transformation technologies (ITM) US SHARE2 +800K Global installed base +80K ATM locations we own and operat
Slide 9: Introducing Atleos: Revenue and Financial Snapshot
Introducing Atleos 9 Revenue by Geography1 45% 30% 13% 12% Americas (excluding US) APAC EMEA United States Revenue by Type1 Diverse, profitable revenue mix and attractive financial profile 2023E Results1 *See definition in Supplementary Materials. 1. Pro forma 2023 projected results. Financial Snaps
Slide 10: Our Transformation
10 Where we are 2023 Introducing Atleos Our Transformation PRODUCT FOCUS Hardware legacy Comprehensive solution set Integrated platform- based solutions GO-TO- MARKET APPROACH Spot selling Service led with subscription software offerings with professional services support As a Service strategy CUSTO
Slide 11: Sustained Market Demand & User Base
Sustained Market Demand & User Base Cash Remains a Mainstay Globally 11 ATM Cash Withdrawal Total Value ($B)1 Stable Installed Base Global ATM Installed Base (000s) 1. RBR 2023; 2. Board of Governors of the Federal Reserve System 3. European Central Bank, 2022 Diary of Consumer Payment Choice; 4. 20
Slide 12: Evolving Secular Trends Driving Market Expansion
Evolving Secular Trends Driving Market Expansion 12 US Banks and Credit Unions will spend nearly $100B on technology, related services, and staff in 20231 ~6.3% or $6B of that spend will be to build, run, and secure the ATM network1 ~29% avg. cumulative rise in ATM units per branch over the last dec
Slide 13: Our Strategy Positions Us for Continued Growth
Industry-leading technologies & services ATMaaSNetworkFoundational ATM Our Strategy Positions Us for Continued Growth 13 Extending our industry-leading position Driving more transactions and types of transactions across our network Accelerating the transition to As a Service with compelling economic
Slide 14: Foundational ATM Position
Foundational ATM Position Unmatched scale and capabilities globally 141. Self-Service Banking (SSB) as of 2023E. Diverse Hardware Portfolio Leading ATM Software Global Remote and Onsite Field Services Efficient maintenance for hardware systems leveraging big data and mobile technology Solving the di
Slide 15: Allpoint ATM Network
Allpoint ATM Network 15 +55K Global ATM Locations • Scalable Financial Utility • Extends Customer Service and Access to Cash In/Out • Financial Access for Un/Underbanked • Provides Physical Access to Neobanks • Complements ATM as a Service sale • Opportunity for Global Expansion Allpoint delivers th
Slide 16: ATM as a Service is a Win-Win
ATM as a Service is a Win-Win for Customers & Atleos… 16 Benefits to Customers Benefits to Atleos Reduce costs Future-proofed offerings Better performance metrics and customer satisfaction Accelerating ARR growth Increased margins Improved customer relationships
Slide 17: Significant TAM and ARPU Expansion
…and Offers Significant TAM and ARPU Expansion Total Addressable Market (TAM) 17Source: Gartner, Ovum, and management estimate. $5.5B ~$25B TAM Revenue (80% Recurring) $4.4B ~$10B TAM Revenue (67% Recurring) 2023E 2027EATMaaS
Slide 18: Increased Profitability and Margin Expansion
Increased Profitability and Margin Expansion 2023 Where we are going Lower Overhead Lower Direct Costs Transportation Savings Manufacturing Optimization Rebuilt Supply Chain (post pandemic) Enhanced Service Network Revenue mix shift towards higher margin software and services Annual productivity goa
Slide 19: Attractive and Achievable Financial Outlook
Attractive and Achievable Financial Outlook 2027 Targets 19 Total Revenue 6% CAGR ’23E-’27E Adj. EBITDA* 15% CAGR ’23E-’27E Free Cash Flow* *See definition in Supplementary Materials. Focus on recurring revenue* Incremental upside from additional ATMaaS adoption Mix shift to software and services Op
Slide 20: Comprehensive ATM Platform
Comprehensive ATM Platform 20 Foundational ATM Network ATMaaS HardwareSoftwareField Services AllpointRetail Network Channel Outsource Build, operate, and service ATM hardware and software Distributed self-service banking across a neutral third-party network Modern approach to self-service delivery a
Slide 21: Foundational ATM
Foundational ATM Field Services & Hardware Len Graves, Executive Vice President, Global Operations Software Patty Watson, Chief Information & Technology Officer 21
Slide 22: Strategic Highlights: Foundational ATM
1 Atleos supports the largest footprint of ATMs globally1 2 Industry leading hardware and software solutions provided around the world 3 Comprehensive ATM hardware suite driven by software, and application platform 4 Best-in-class global service footprint that ensures efficient maintenance and depen
Slide 23: Foundational ATM Products
Foundational ATM Products Modern Software stack Evolving capabilities Terminal / content management Transaction processing Security platforms Cash management & forecasting 16M service calls1 6M fixes on-site1 On-site maintenance Multivendor hardware maintenance Depot remanufacture Service account su
Slide 24: ATM Field Services Overview
CustomerDispatchHelp desk ATM Field Services Overview Delivering seamless customer experience with the highest-quality services 24 Manage • Managed Services • Cash management • Preventative maintenance Maintain • Remote diagnosis • On-site resolution Deploy • Site preparation • Staging activities •
Slide 25: Our Services Landscape
Our Services Landscape Services — NAMER Headcount 2,350 Dispatches 2.3M Services — CLA Headcount 1,800 Dispatches 1.0M Services — EMEA Headcount 2,100 Dispatches 1.4M Services — APAC Headcount 1,300 Dispatches 1.3M Command Center Headcount 1,000 Dispatches 6M Operating Services in +60 Countries +7,5
Slide 26: Field Services Efficiencies Driving Productivity
Field Services Efficiencies Driving Productivity 26 Installed Base vs. Calls per Unit Driving Productivity 300 bps of Gross Margin Expansion in 2023E… Additional 300 bps Expected through 2027E Investment in Multi Year Programs Improved Productivity through Continuous Quality & Supply Chain Improveme
Slide 27: Our Differentiated Hardware Solutions
Our Differentiated Hardware Solutions Evolving the Word’s Most Complete Portfolio 27 Single Function Cash Dispensers Full Function Cash Recyclers Multi-Function ATMs/ITMs/Branch Platform & architecture Single cash dispense module Single module in lower enclosure (cash recycler) Dual modules in lower
Slide 28: Global Capacity and Business Continuity
Global Capacity and Business Continuity to Support our Customers 2023E Manufacturing Volume Manufacturing Consolidation Driving Network Improvements and Cost Efficiency 28 Outsourced Factory Atleos Factory Engineering COE1 Jabil (Mexico) NAMER market ATM Atlanta Services Dundee Engineering | Service
Slide 29: Key Actions Driving Manufacturing Productivity
2020 2021 2022 2023E 2024E 2025E 2026E 2027E Key Actions Driving Manufacturing Productivity Increasing Margins through Operational Excellence 29 Where We Are Going • Generating annual productivity • Supply chain localization • Site optimization What We Have DoneCost Drivers • Global supply shortages
Slide 30: Full Suite of ATM Software Solutions
Full Suite of ATM Software Solutions We have developed a suite of ATM software solutions to meet the digital first strategies of our customers 30 ATM Terminal Management ATM Security Platforms ATM Content Management Cash Management & Forecasting ATM Transaction Processing ATM Client Software
Slide 31: ATM Software Successes
ATM Software Successes 31 No. 1 ATM Software +800K ATMs in 140 countries >60% US Multivendor customers moved to 100% Atleos No. 1 ITM Market Share No. 1 Branch Transformation ITM driven by Activate +45% Market Share1 >130K ATMs running Atleos software in North America No.1 Multivendor ATM Applicatio
Slide 32: Our Value Proposition for Customers and End Users
Experience Efficiency Agility Our Value Proposition for Customers and End Users Improve User Experience Deliver exceptional experiences and drive cost efficiencies 32 Reduce Cost Expand Services Digital-first experiences Mobile interactions Software-driven capabilities Optimize total ownership costs
Slide 33: Atleos Digitization Delivers Cash Without the Card
Atleos Digitization Delivers Cash Without the Card 33 Embedded Application Programming Interface (API) within existing partner applications Global Ready Over 40,000 ATMs enabled Flexible Enable cardless cash in & out that meets business needs Frictionless, secure One time use code with time expirati
Slide 34: Constantly Expanding our Capabilities to Drive Growth
Constantly Expanding our Capabilities to Drive Growth 34 Then Market-leading ATM Technology Provider Today Market-leading ATM Solutions Provider Tomorrow Accelerated Growth Supported by Proven Tech Shift to subscription ATMaaS technology Built recycling solutions Interactive TM enables Branch Transf
Slide 35: Network & ATMaaS
Network & ATMaaS Stuart Mackinnon, Chief Operating Officer Diego Navarrete, Executive Vice President, Global Sales 35
Slide 36: Comprehensive ATM Platform
Comprehensive ATM Platform 36 Foundational ATM Network HardwareSoftwareField Services AllpointRetail Network Channel Outsource Build, operate, and service ATM hardware and software Distributed self-service banking across a neutral third-party network Modern approach to self-service delivery across l
Slide 37: Strategic Highlights: Network & ATMaaS
Strategic Highlights Network & ATMaaS 37 1 Our digital first platform provides a comprehensive suite of software solutions with end-to-end capabilities at significant scale 2 Delivering best-in-class self service banking solutions through our platform to a diverse, global customer base with unmatche
Slide 38: ATM & Self-Service Channel is Increasingly Relevant
ATM & Self-Service Channel is Increasingly Relevant 38 1. RBR 2023; 2. Aite-Novarica Group financial behaviors survey of North American and U.K. consumers, Q3 and Q4 2022 Cash Use & Payment Demand ATM Access & Convenience Top priority in bank selection Financial Access for Lower-income households 5%
Slide 39: Retail Network of +80,000 ATMs Drive Durable Organic Revenue
Retail Network of +80,000 ATMs Drive Durable Organic Revenue 39 BrandingRetail Allpoint Only OEM that owns and operates an estate of ATMs at scale • Trusted by largest banks in the world • Delivering frictionless self-service experience • Migrating transactions from teller and retail service desk to
Slide 40: Branding Enhances Brand Equity While Increasing In Store Purchases
Branding Enhances Brand Equity While Increasing In Store Purchases 40 BrandingRetail Allpoint Cardholder Adoption of Branded ATMsOverview - 50 100 150 200 250 300 350 400 J u n -2 1 J u l- 2 1 A u g -2 1 S e p -2 1 O c t- 2 1 N o v -2 1 D e c -2 1 J a n -2 2 F e b -2 2 M a r- 2 2 A p r- 2 2 M a y -2
Slide 41: Allpoint Enables Convenient Utility Banking
Allpoint Enables Convenient Utility Banking 41 Financial Institutions Unrivaled scale of non-competing (retail) locations Secure platform delivering consistent user experience Network Operator Drives additional foot traffic into a retail location Leverages existing Retail Network Integrates with ATM
Slide 42: Expanding Cash Access
Expanding Cash Access National Utility Banking Network 42 +55K Global ATM Locations +75M Cardholders +1,100 Financial Institutions
Slide 43: Driving Retail Traffic for Merchants
Driving Retail Traffic for Merchants 43 1M+ • Promotes retailers to members and waives fees on Allpoint transactions; charges members for non-Allpoint withdrawals • Over $20M in fees are saved annually by financial institution partner cardholders at retail partner alone • 52% of users come to stores
Slide 44: Allpoint Complements ATMaaS
Allpoint Complements ATMaaS Allpoint allows a bank to expand into other locations with minimal capital investment 44 Run The ATM Channel Extend The ATM Network+ ATMaaS Modern approach to self-service delivery across your locations Allpoint Convenience and brand add 55,000+ ATMs in Retail locations
Slide 45: Why Banks Adopt ATMaaS
Why Banks Adopt ATMaaS 45 Channel-specific and dated technology Specialized and siloed responsibilities and skills Risks to data, cash, and brand Complex management processes and the need for 24x7 support coverage Reduce total cost of ownership by ~20% Difficulty keeping up with pace of change
Slide 46: ATMaaS Delivering Cost Savings for Banks
ATMaaS Delivering Cost Savings for Banks 46 ATMaaS Model Traditional Model You contract for a business outcome You source & manage your own ATM program Predictable costs, known results Compliance burden transferred to provider Single contract, easy to manage Stay current on latest innovations and cu
Slide 47: ATMaaS Provides Opportunity to Increase Wallet Share
ATMaaS Provides Opportunity to Increase Wallet Share 47 1. Current management estimates over average contract life. 2. Management estimates as of 2023E. Back office Device connectivity Software management Transaction processing Security & compliance Cash management & forecasting Installation & train
Slide 48: ATMaaS Economics are Compelling
ATMaaS Economics are Compelling 48 Atleos Solutions Hardware Software Maintenance ATM Monitoring Incident Management Management Reporting Security & Compliance Service Desk Performance Management Cash Management Vendor Management Advisory Service Foundational ATMs Foundational: US community financia
Slide 49: Financial Overview
Financial Overview Paul Campbell, Chief Financial Officer 49
Slide 50: Investment Highlights
*See definition in Supplementary Materials. Investment Highlights 50 1 2 3 Attractive recurring revenue growth driven by mix shift to Software & Services and monetization of end points Strong Adj. EBITDA* growth from favorable mix shift and continuous improvement initiatives Significant FCF generati
Slide 51: Growing Towards Our Targets
Growing Towards Our Targets 51*See definition in Supplementary Materials. Revenue Adj. EBITDA* Free Cash Flow* • Overcoming 2023 split dis-synergies • Lap headwinds of switch to recurring revenue* • Compounding Services and Software volume • Monetization of Network through expanded transactions and
Slide 52: Recurring Revenue Leads Growth
Recurring Revenue Leads Growth 52 Growth Drivers • Self-Service Banking is propelled by a shift towards recurring ATMaaS growth • Network growth driven by increased types and volumes of transactions • Continued growth with multi- vendor software • Gain on wallet share from service offering 2024E Rev
Slide 53: Attractive EBITDA Growth
Attractive EBITDA Growth *See definition in Supplementary Materials. 25% 15% CAGR $1.4B $0.8B Spin Adjustments 2023E 2027E Network Growth Volume Price & Productivity Revenue Mix Shift 18% Adj. EBITDA* Margin Operating Expense Adj. EBITDA* Margin Adj. EBITDA* by source 53 Growth Drivers • Mix shift t
Slide 54: Self-Service Banking (SSB)
*See definition in Supplementary Materials. Self-Service Banking (SSB) 54 Revenue ($B) Adj. EBITDA* ($B) $2.5 $2.5 $2.6 $2.6 $3.5 49% 52% 54% 58% 80% 0.4 0.6 0.8 1 0 1 2 3 4 2020 2021 2022 2023E 2027E Recurring revenue* Base Growth Drivers • Shift to ATMaaS • Gain market share led by service wins •
Slide 55: ATMaaS Economics are Compelling
ATMaaS Economics are Compelling 55 Illustrative purposes only Foundational ATMs Foundational: US community financial institution, 25 ATMs Total Contract Value: $1,710K Total Contract Value: $4,280K Year 5 $1,050K $150K $160K $170K $180K Year 4Year 3Year 2Year 1 Total $1,710K ATM as a Service As a Se
Slide 56: Self-Service Banking: Key Performance Indicators
Self-Service Banking: Key Performance Indicators 56 Recurring Revenue* (% of total) ATMaaS Units 49% 58% 80% 2020 2023E 2027E ~600 21,000 125,000 2020 2023E 2027E *See definition in Supplementary Materials. Key Customers
Slide 57: Network
Network1 57 *See definition in Supplementary Materials. 1Data is reflective of Payments & Network segment per Form 10 filed August 15, 2023. Revenue ($B) $1.7 $0.0 $0.6 $1.2 $1.3 2020 2021 2022 2023E 2027E $0.0 $0.2 $0.4 $0.4 $0.5 2020 2021 2022 2023E 2027E 7% Total CAGR 7% Total CAGR Adj. EBITDA* (
Slide 58: Network: Key Performance Indicators
Network1: Key Performance Indicators 58 Revenue per End Point ($K per End Point) Number of End Points $12.1 $15.0 $19.2 2020 2023E 2027E 83K 83K 86K 2020 2023E 2027E 6% Total CAGR 1% Total CAGR *Cardtronics Acquisition. 1Data is reflective of Payments & Network segment per Form 10 filed August 15, 2
Slide 59: Significant Free Cash Flow Generation
Significant Free Cash Flow* Generation 59*See definition in Supplementary Materials. Other CapEx 2027E Adj. EBITDA* 2027E FCF* Working Capital Cash Interest $0.5B Cash Taxes ATMaaS CapEx $1.4B 30% FCF* conversion
Slide 60: Balance Sheet
Balance Sheet 60 Pro Forma Capital Structure ($M) 1,2 Total Debt 2,935 Cash Balance (net of $150M pension payment) 300 Revolver ($500M undrawn at close) - Net Debt* 2,635 Adj. EBITDA* 779 Net Leverage Ratio* 3.4x Targeting 3.0x by mid 2025 Long Term Target: 2.5x – 3.0x No debt expected to mature thr
Slide 61: Capital Allocation Strategy
*See definition in Supplementary Materials. 1. Target payout range of 35% growing to a target 50% by 2027E Capital Allocation Strategy 61 Organic investments Reduce leverage Solid & growing dividend Invest in internal growth initiatives Net leverage targets of 2.5x – 3.0x Target FCF dividend payout
Slide 62: Strong FCF Enables Attractive Dividend and Deleveraging
Strong FCF Enables Attractive Dividend and Deleveraging $150 $500 2024E 2025E 2026E 2027E *See definition in Supplementary Materials. 1. 2024 Free Cash Flow is exclusive of deal related one-time costs 2. Target payout range of 35% growing to a target 50% by 2027E. 3. Subject to NCR Atleos Board Appr
Slide 63: 2027 Financial Targets
2027 Financial Targets 63*See definition in Supplementary Materials. Total Revenue 6% CAGR ’23E-’27E Adj. EBITDA* 15% CAGR ’23E-’27E Free Cash Flow* $5.5B $1.4B $0.5B Increasing recurring revenue* profile to 80% with 11% CAGR ’23E-’27E 25% Adj. EBITDA* margins 30% FCF conversion* Revenue Margins Cas
Slide 64: Closing Remarks
Closing Remarks Tim Oliver, Chief Executive Officer 64
Slide 65: Investment Thesis
Investment Thesis 65 1 Steady global demand for cash and physical transactions suggests sustained demand for ATM capability. 2 Market leader with unmatched scale and installed base will enable above-market growth. 3 Best positioned to benefit from accelerating bank outsourcing, branch rationalizatio
Slide 66: Q&A
Q&A 66
Slide 67: Supplementary Materials
Supplementary Materials 67
Slide 68: Non-GAAP Measures: Adjusted EBITDA
Non-GAAP Measures Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) NCR Atleos’s management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors as an indicator of performance of the Company's ongoing business operati
Slide 69: Non-GAAP Measures: Net Debt
Non-GAAP Measures Net Debt NCR Atleos determines Net Debt based on its total debt less cash and cash equivalents, with total debt being defined as estimated total indebtedness expected to be incurred in connection with the planned spin-off of NCR Atleos from NCR, which is expected in the fourth quar
Slide 70: Non-GAAP Measures: Adjusted Free Cash Flow
Non-GAAP Measures Adjusted Free Cash Flow–Unrestricted (“Free Cash Flow” or “FCF”) NCR Atleos defines Adjusted free cash flow-unrestricted as net cash provided by operating activities less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus the
Slide 71: Non-GAAP Measures: Non-GAAP Reconciliations
Non-GAAP Measures Non-GAAP Reconciliations With respect to our Adjusted EBITDA, Adjusted EBITDA margin, Net leverage ratio, and Adjusted free cash flow-unrestricted estimates for fiscal years 2023 and 2027, we are not providing a reconciliation of the respective GAAP measures because we are not able
Slide 72: GAAP to Non-GAAP Reconciliation: Adjusted EBITDA by Segment
GAAP to Non-GAAP Reconciliation 721Corporate and other income and expenses not allocated to segments and other immaterial business operations that do not represent a reportable segment. ($ in millions) ADJUSTED EBITDA BY SEGMENT 2020 2021 2022 Self-Service Banking $ 543 $ 600 $ 549 Payments & Networ
Slide 73: GAAP to Non-GAAP Reconciliation: Revenue by Segment
GAAP to Non-GAAP Reconciliation 73 1Other revenue represents certain other immaterial business operations that do not represent a reportable segment. 2Other adjustment reflects the revenue attributable to the Company's operations in Russia that were excluded from management's measure of revenue due
Slide 74: GAAP to Non-GAAP Reconciliation: Recurring Revenue
GAAP to Non-GAAP Reconciliation 74 1Recurring revenue includes 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 revenue,
Slide 75: 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