Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q1 2019 Earnings Presentation
33 slides from Ncr Voyix's earnings presentation, May 7, 2019
Slide 1: Q1 2019 Earnings Conference Call
Q1 2019 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO ANDRE FERNANDEZ, CFO May 7, 2019
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. Statements that describe or relate to NCR's plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical
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: Overview
OVERVIEW RESULTS IN LINE with expectations Continued to IMPROVE EXECUTION BANKING REVENUE up 9% cc; ATM revenue up 27% cc RECURRING REVENUE up 6% cc 2019 GUIDANCE reaffirmed 4
Slide 5: Q1 2019 Financial Results
Q1 2019 FINANCIAL RESULTS Revenue Adjusted EBITDA FX Impact ($46m) $1.52 $1.54 $217 $218 billion billion million million Q1 2018 Q1 2019 Q1 2018 Q1 2019 Revenue up 1% as reported and up 4% CC; Adjusted EBITDA in line with expectations Recurring revenue up 6% CC, 49% of total revenue Non-GAAP Diluted
Slide 6: Strategic Growth Platforms
STRATEGIC GROWTH PLATFORMS Digital Digital Digital First First First Banking Restaurant Retail Digital Digital Digital Connected Convenience Small Services and Fuel Business Essentials 6
Slide 7: Payments Integration
PAYMENTS INTEGRATION Payments Q1 Plan On Track for Pricing Customers Live NCR Silver & Established Aloha GA* 2H19 * General Availability 7
Slide 8: Productivity Focus Areas
PRODUCTIVITY FOCUS AREAS SERVICES HARDWARE SPEND TRANSFORMATION NETWORK OPTIMIZATION • Service • Manufacturing • $100m savings in performance and transformation 2019 on track productivity initiatives largely initiative complete • Savings realized • 2019 on track to offsets higher real • Driving reve
Slide 9: Banking
BANKING $ in millions Revenue Operating Income $721 $758 $95 $84 Q1 18 Q1 19 Q1 18 Q1 19 Key Highlights • Revenue up 9% CC driven by 27% CC growth in ATM revenue • Operating Income up 20% CC driven by higher volume and favorable impact of productivity initiatives 9
Slide 10: Retail
RETAIL $ in millions Revenue Operating Income $521 $511 $35 $26 Q1 18 Q1 19 Q1 18 Q1 19 Key Highlights • Revenue up 1% CC driven by increase in Payments and Self-Checkout revenue partially offset by a large implementation services project in the prior year • Operating Income down 18% CC driven by an
Slide 11: Hospitality
HOSPITALITY $ in millions Revenue Operating Income $204 $193 $19 $16 Q1 18 Q1 19 Q1 18 Q1 19 Key Highlights • Revenue down 4% CC driven by lower hardware sales partially offset by higher cloud and payments revenue • Operating Income down 15% CC driven by a decline in hardware revenue and continued i
Slide 12: Supplemental Revenue
SUPPLEMENTAL REVENUE Q1 2019 Q1 2018 % Change % Change CC Software $467 $460 2% 3% Services $585 $601 (3%) 1% Hardware $484 $456 6% 9% ATM $236 $195 21% 27% SCO/POS $248 $261 (5%) (3%) Total Revenue $1,536 $1,517 1% 4% $ in millions Key Highlights • Software growth of 3% CC driven by a favorable mix
Slide 13: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA Free Cash Flow Q1 2019 Q1 2018 Cash used in Operating Activities ($16) ($24) Total capital expenditures ($65) ($71) Cash used in Discontinued Operations (6) (4) Free Cash Flow ($87) ($99) $ in millions Net Debt & EBITDA Q1 2019 Q4 2018 Q1 2018 Debt $3,211 $3,165 $3,
Slide 14: 2019 Guidance Reaffirmed
2019 GUIDANCE REAFFIRMED FY 2019 Guidance Revenue Growth 1% - 2% Net Income Attributable to NCR $290 - $305 Adjusted EBITDA $1,040 - $1,080 GAAP Diluted EPS $1.91 - $2.01 Non-GAAP Diluted EPS $2.75 - $2.85 Cash Flow from Operations $705 - $730 Free Cash Flow $300 - $350 $ in millions, except per sha
Slide 15: Looking Forward
LOOKING FORWARD • Solid execution in Q1 reinforces full year confidence • Deliver profitable growth • Mix shift to software, services and recurring revenue • Improve cost structure • Allocate capital to highest growth and return on investment opportunities • Drive cash flow generation 15
Slide 16: Supplementary Materials
SUPPLEMENTARY MATERIALS
Slide 17: Q1 2019 GAAP Results
Q1 2019 GAAP RESULTS % Change Q1 2019 Q1 2018 As Reported Revenue $1,536 $1,517 1% Gross Margin 411 420 (2)% Gross Margin Rate 26.8% 27.7% Operating Expenses 311 311 —% % of Revenue 20.2% 20.5% Operating Income 100 109 (8)% % of Revenue 6.5% 7.2% Interest and other expense (53) (46) 15% Income Tax (
Slide 18: Q1 2019 Operational Results
Q1 2019 OPERATIONAL RESULTS % Change % Change Q1 2019 Q1 2018 As Constant Reported Currency Revenue $1,536 $1,517 1% 4% Gross Margin (non-GAAP) 425 431 (1)% 2% Gross Margin Rate (non-GAAP) 27.7% 28.4% (70 bps) (70 bps) Operating Expenses (non-GAAP) 278 283 (2%) 1% % of Revenue 18.1% 18.7% Operating
Slide 19: 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 20: 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 21: Net Income to Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q1 2019 Q1 2018 LTM LTM Q1 2019 Q1 2018 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ (54) $ 235 $ 37 $ 55 Pension Mark-to-Market Adjustments (45) 28 — — Transformat
Slide 22: Q1 2019 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2019 QTD Transformation Acquisition- Q1 QTD 2019 and related Q1 QTD 2019 GAAP Restructuring amortization of non-GAAP costs intangibles Product revenue $539 $— $— $539 Service revenue 997 — — 997 Total revenue 1,536 — — 1,536 Cost of products 453 (3) (3) 447 Cost of
Slide 23: Q1 2019 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2019 QTD Q1 QTD 2019 Q1 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $37 $73 Dividends on convertible preferred shares $(13) — Income from continuing operat
Slide 24: Q1 2018 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2018 QTD Acquisition- Q1 QTD Transformati related Q1 QTD 2018 on Costs amortizatio 2018 non- GAAP n of GAAP intangibles Product revenue 526 $— $— 526 Service revenue 991 — — 991 Total revenue 1,517 — — 1,517 Cost of products 420 — (4) 416 Cost of services 677 (4) (
Slide 25: Q1 2018 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2018 QTD Q1 QTD 2018 Q1 QTD 2018 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $55 $85 Dividends on convertible preferred shares (12) — Income from continuing operati
Slide 26: Q1 2019 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2019 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $95 12.5% Retail 26 5.1% Hospitality 16 8.3% Other 10 13.5% Total Operating Income (non-GAAP) 147 9.6%
Slide 27: Q1 2018 Operating Income Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q1 2018 QTD Operating Income and Operating Income Rate (non-GAAP) to Operating Income and Operating Income Rate (GAAP) Operating Income Operating Income Rate Banking $84 11.7% Retail 35 6.7% Hospitality 19 9.3% Other 10 14.1% Total Operating Income (non-GAAP) 148 9.8%
Slide 28: Revenue Growth GAAP to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Revenue Growth % (GAAP) to Revenue Growth Constant Currency % (non-GAAP) Revenue Growth Revenue Growth Favorable Constant % (GAAP) (unfavorable) FX Currency % impact (non-GAAP) Banking 5% (4%) 9% Retail (2%) (3%) 1% Hospitality (5%) (1%) (4%) Other 4% (3%) 7% Total Re
Slide 29: Operating Income GAAP to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Operating Income % (GAAP) to Operating Income Constant Currency % (non-GAAP) Operating Favorable Operating Income Growth (unfavorable) FX Income Growth % (GAAP) impact % (non-GAAP) Banking 13% (7%) 20% Retail (26%) (8%) (18%) Hospitality (16%) (1%) (15%) Other —% —% —
Slide 30: Diluted EPS 2019 Guidance
GAAP TO NON-GAAP RECONCILIATION Diluted Earnings Per Share 2019 Guidance Diluted EPS (GAAP) (1) (2) $1.91 - $2.01 Transformation & Restructuring costs $0.31 Acquisition-Related Amortization of Intangibles $0.48 Acquisition-Related Costs $0.05 Non-GAAP Diluted EPS (1) (3) $2.75 - $2.85 (1) Non-GAAP d
Slide 31: Adjusted EBITDA 2019 Guidance
GAAP TO NON-GAAP RECONCILIATION Earnings Before Interest, Taxes, Depreciation & Amortization (Adjusted EBITDA) 2019 Guidance Net Income Attributable to NCR (GAAP) $290 - $305 Transformation & Restructuring costs 60 Acquisition-Related Amortization of Intangibles 95 Acquisition-Related Costs 10 Inter
Slide 32: 2019 Free Cash Flow Guidance
GAAP TO NON-GAAP RECONCILIATION 2019 Guidance Cash Provided by Operating Activities $705 - $730 Less: Total capital expenditures (350) - (375) Less: Cash used in Discontinued Operations (30) Free Cash Flow $300 - $350 $ in millions 32
Slide 33: Thank You
THANK YOU