Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q2 2020 Earnings Presentation
32 slides from Ncr Voyix's earnings presentation, Jul 28, 2020
Slide 1: Q2 2020 Earnings Conference Call
Q2 2020 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO TIM OLIVER, CFO July 28, 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: COVID-19 Update
COVID-19 Update • Q2 2020 impacted by COVID-19 as expected • Expect COVID-19 to impact at least the remainder of 2020 • Build cash reserve to improve financial liquidity and flexibility ◦ Ended Q2 2020 with $1.7 billion cash on the balance sheet ◦ Expect to be FCF positive for 2020 • Accelerated shi
Slide 5: Q2 2020 Overview
Q2 2020 OVERVIEW Managing through COVID-19 UNCERTAINTY RECURRING REVENUE up 7% CC ACCELERATED MOMENTUM in shift to recurring revenue FREE CASH FLOW of $171M STRONG LIQUIDITY Position 5
Slide 6: Operating Framework
OPERATING FRAMEWORK • Executing plan to get us through tough period • Strategic advisors, elevating customer relationships • Accelerating NCR as a Service transformation • Simplify and enhance product offerings • Driving improvements and change company-wide 6
Slide 7: Shift to Contactless Commerce
SHIFT TO CONTACTLESS COMMERCE 7
Slide 8: Shift to Contactless Commerce
SHIFT TO CONTACTLESS COMMERCE 8
Slide 9: Shift to Contactless Commerce
SHIFT TO CONTACTLESS COMMERCE 9
Slide 10: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS Revenue FX Impact Adjusted EBITDA ($23)M $1.71 $263 Shift to $1.48 Shift to $201 Recurring billion Recurring million ($18)M billion ($22)M million Q2 2019 Q2 2020 Q2 2019 Q2 2020 Revenue down 13% as reported and down 12% CC; Adjusted EBITDA down 24%; Decline due to COVID-19
Slide 11: Banking
BANKING $ in millions Revenue Operating Income $868 $763 $129 $92 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Key Highlights • Revenue down 11% CC due to the continued impact of the COVID-19 pandemic driven by a 25% decline in ATM hardware revenue. An accelerated shift from selling perpetual software licenses t
Slide 12: Retail
RETAIL $ in millions Revenue Operating Income $558 $483 $40 $17 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Key Highlights • Revenue down 13% CC due to large customer hardware roll-out in the prior year period as well as continued impacts from the COVID-19 pandemic. • Operating Income down driven by the decline
Slide 13: Hospitality
HOSPITALITY $ in millions Revenue Operating Income $202 $160 $13 $0 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Key Highlights • Revenue down 20% CC mainly attributable to the COVID-19 pandemic. • Operating Income down driven by the reduction in revenue partially offset by a reduction in operating expenses. 13
Slide 14: Supplemental Revenue
SUPPLEMENTAL REVENUE $ in millions Q2 2020 Q2 2019 % Change % Change CC Software $460 $496 (7%) (6%) Services $605 $622 (3%) —% Hardware $419 $592 (29%) (29%) ATM $233 $312 (25%) (25%) SCO/POS $186 $280 (34%) (33%) Total Revenue $1,484 $1,710 (13%) (12%) Recurring Revenue $814 $776 5% 7% Recurring R
Slide 15: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA $ in millions Free Cash Flow Q2 2020 Q2 2019 Cash provided by Operating Activities $229 $87 Total capital expenditures ($61) ($73) Cash used in Discontinued Operations $3 ($5) Free Cash Flow $171 $9 Net Debt & EBITDA Q2 2020 Q1 2020 Q2 2019 Debt $4,690 $4,385 $3,116
Slide 16: Looking Forward
LOOKING FORWARD • Execute NCR As-A-Service 80/60/20 Strategy • Capitalize on changing consumer preferences with digital first solutions • Continue to launch innovative solutions • Maintain strong cash reserve and financial flexibility • Drive cash flow generation 16
Slide 17: Supplementary Materials
SUPPLEMENTARY MATERIALS 17
Slide 18: Q2 2020 GAAP Results
Q2 2020 GAAP RESULTS $ in millions, except per share amounts % Change Q2 2020 Q2 2019 As Reported Revenue $1,484 $1,710 (13%) Gross Margin 372 471 (21)% Gross Margin Rate 25.1% 27.5% Operating Expenses 283 314 (10)% % of Revenue 19.1% 18.4% Operating Income 89 157 (43)% % of Revenue 6.0% 9.2% Intere
Slide 19: Q2 2020 Operational Results
Q2 2020 OPERATIONAL RESULTS $ in millions, except per share amounts % Change Q2 2020 Q2 2019 % Change Constant As Reported Currency Revenue $1,484 $1,710 (13%) (12%) Gross Margin (non-GAAP) 381 487 (22)% (19)% Gross Margin Rate (non-GAAP) 25.7% 28.5% (280 bps) (240 bps) Operating Expenses (non-GAAP)
Slide 20: 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 21: Non-GAAP Measures: Constant Currency, Net Debt
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 22: 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 23: 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) Q2 2020 Q1 2020 Q2 2019 LTM LTM LTM Q2 2020 Q2 2019 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 576 $ 600 $ 177 $ 64 $ 88 Pension Mark-to-Market Adju
Slide 24: GAAP to Non-GAAP Reconciliation Q2 2020
GAAP TO NON-GAAP RECONCILIATION Q2 2020 $ in millions, except per share amounts Acquisition- Q2 QTD 2020 Transformation related VA Release & Q2 QTD 2020 non- GAAP Costs amortization of Other GAAP intangibles Product revenue $481 $— $— $— $481 Service revenue 1,003 — — — 1,003 Total revenue 1,484 — —
Slide 25: GAAP to Non-GAAP Reconciliation Q2 2020 EPS
GAAP TO NON-GAAP RECONCILIATION Q2 2020 $ in millions, except per share amounts Q2 QTD 2020 Q2 QTD 2020 non- GAAP GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $64 $38 Dividends on convertible preferred shares
Slide 26: GAAP to Non-GAAP Reconciliation Q2 2019
GAAP TO NON-GAAP RECONCILIATION Q2 2019 $ in millions, except per share amounts Acquisition- Q2 QTD 2019 Transformation & related Q2 QTD 2019 non- GAAP Restructuring amortization of GAAP Costs intangibles Product revenue $664 $— $— $664 Service revenue 1,046 — — 1,046 Total revenue 1,710 — — 1,710 C
Slide 27: GAAP to Non-GAAP Reconciliation Q2 2019 EPS
GAAP TO NON-GAAP RECONCILIATION Q2 2019 $ in millions, except per share amounts Q2 QTD 2019 Q2 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $88 $116 Income from continuing operations attribut
Slide 28: GAAP to Non-GAAP Reconciliation: Operating Income
GAAP TO NON-GAAP RECONCILIATION Q2 2020 $ in millions Q2 2020 Q2 2019 Operating Income Operating Income Banking $92 $129 Retail 17 40 Hospitality — 13 Other 7 10 Total Operating Income (non-GAAP) 116 192 Less: Transformation and restructuring costs 8 14 Acquisition-related amortization of intangible
Slide 29: GAAP to Non-GAAP Reconciliation: Revenue by Segment
GAAP TO NON-GAAP RECONCILIATION Q2 2020 Q2 2020 Favorable (unfavorable) FX Constant Currency Revenue Revenue Growth % Reported impact Growth % (non-GAAP) Banking (12%) (1%) (11%) Retail (13%) —% (13%) Hospitality (21%) (1%) (20%) Other (5%) (3%) (2%) Total Revenue (13%) (1%) (12%) 29
Slide 30: GAAP to Non-GAAP Reconciliation: Revenue by Type
GAAP TO NON-GAAP RECONCILIATION Q2 2020 Q2 2020 Favorable (unfavorable) FX Constant Currency Revenue Revenue Growth % Reported impact Growth % (non-GAAP) Software (7%) (1%) (6%) Services (3%) (3%) —% Hardware (29%) —% (29%) ATM (25%) —% (25%) SCO/POS (34%) (1%) (33%) Total Revenue (13)% (1%) (12%) R
Slide 31: GAAP to Non-GAAP Reconciliation: Operational Results
GAAP TO NON-GAAP RECONCILIATION Q2 2020 Favorable % Change Q2 2020 Operational Results % Change As (unfavorable) FX Constant Reported impact Currency Revenue (13%) (1%) (12%) Gross Margin (non-GAAP) (22%) (3%) (19%) Gross Margin Rate (non-GAAP) (280 bps) (40 bps) (240 bps) Operating Expenses (non-GA
Slide 32: Thank You
THANK YOU 32