Ncr Voyix Corporation · NYSE:VYX

Ncr Voyix — NCR — Investor Day (November 2018)

63 slides from Ncr Voyix's investor day presentation, Nov 7, 2018

  1. Slide 1: New York City, November 7, 2018

    New York City November 7, 2018 1

  2. Slide 2: Forward-looking statements

    FORWARD-LOOKING STATEMENTS. Comments made during this presentation 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 or current fact, are e

  3. Slide 3: Agenda

    AGENDA  INTRODUCTION AND WELCOME Michael Nelson, VP Investor Relations  NCR OVERVIEW AND STRATEGY Mike Hayford, President and CEO  OPERATIONALIZING THE STRATEGY Owen Sullivan, Chief Operating Officer  NCR FINANCIAL OVERVIEW Andre Fernandez, Chief Financial Officer  Q&A NCR Leadership Team  DEM

  4. Slide 4: NCR history timeline

    Radiant JetPay, StopLift, Patent for Ritty’s acquisition and Zipscene Incorruptible cashier bought acquisitions First electric First commercially First self cash register available computer with checkout systems a solid state processor NCR Silver launched Retalix acquisition First Sales NCR enters S

  5. Slide 5: Enabling the world's largest brands

    ENABLING THE WORLD’S LARGEST BRANDS Rp Walmart >;< @® starpucks watz ranco| Cow go: > oss! © meijer @ i EABUNKIW se PMOCYS RS wy TARGET a ra Sra OG Bradesco @K Wild > McDonald's nes Sai I nsbury'‘ Ss KING ints PACKERS ot @ ' en ® BARCLAYS Ean

  6. Slide 6: About NCR

    ABOUT NCR $6.4B $984M 1,270 20,000+ SERVICE Trailing 12 Trailing 12 month PATENTS HELD PROFESSIONALS 34,000 month revenue EBITDA in 90 countries PROFESSIONALS BY NCR around the world 7th 18M TOP 100 MOST REPUTABLE DIGITAL BANKING TECHNOLOGY BRAND IN USERS INNOVATORS TECHNOLOGY 75,000 8M 134 years as

  7. Slide 7: Financial, Retail, Hospitality market leadership

    FINANCIAL RETAIL HOSPITALITY #1 #1 #1 PROVIDER OF MULTI-VENDOR GLOBAL MARKET SHARE LEADER IN POINT OF SALE ATM SOFTWARE IN RETAIL SELF-CHECKOUT SOFTWARE RESTAURANTS INSTALLED BASE GLOBALLY ATM FAMILY (SelfServ) MARKET LEADER IN ENTERPRISE POINT OF SALE SOFTWARE FOR GROCERY, DRUG AND CONVENIENCE STOR

  8. Slide 8: NCR Vision

    NCR VISION To be the leading software and services-led enterprise provider in the vertical industries we serve. FINANCIAL RETAIL HOSPITALITY 8

  9. Slide 9: Shareholder value creation drivers

    NCR Shareholder Value Creation will be driven by: Top-Line Mix shift Spend Revenue Growth to Software Optimization & Services 9

  10. Slide 10: Stabilize, near-term and future growth

    FUTURE Drive 3-5% Growth NEAR-TERM: Drive 1-3% Growth EXECUTE ON TODAY: STRATEGIC Stabilize Growth SHIFT THE MIX GROWTH PLATFORMS STRATEGIC GROWTH BUILD THE TEAM PLATFORMS SIMPLIFY TO COMPLEMENTARY DRIVE EXECUTION ACQUISITIONS/ STARTS WITH THE PARTNERSHIPS CUSTOMER 10

  11. Slide 11: Leadership team

    Mike Hayford CEO Andre J. Fernandez, Jim Bedore Debra Bronder Owen Sullivan EVP and Chief EVP, General Counsel & SVP, Chief HR Officer EVP, Chief Operating Officer Financial Officer Corporate Secretary NCR BANKING GROUP NCR COMMERCE GROUP Frank D'Angelo Paul Langenbahn EVP and President, EVP and Pre

  12. Slide 12: Organized for customer success

    ORGANIZED FOR CUSTOMER SUCCESS GLOBAL CUSTOMERS NCR BANKING GROUP NCR COMMERCE GROUP Digital Banking | Branch | ATM Retail | Hospitality | SMB | JetPay SHARED SERVICES Product Management Software Delivery / Leveraged Sales Hardware Delivery Services Delivery & Marketing Professional Services Infrast

  13. Slide 13: NCR Strategy

    NCR STRATEGY A

  14. Slide 14: Helping customers compete in the evolving digital world

    NCR IS WELL POSITIONED TO HELP OUR CUSTOMERS COMPETE IN THE EVOLVING DIGITAL WORLD PHYSICAL PRESENCE DIGITAL WORLD 14

  15. Slide 15: Digital first across verticals

    • Digital First • Digital First • Digital First Banking Restaurant Retail • Digital Small • Digital • Digital Business Connected Convenience Essentials Services and Fuel 15

  16. Slide 16: Digital First Banking

    DIGITAL FIRST BANKING Enabling the transformation of retail banking 1 Branch Transformation Digital Transaction Zone Digital Banking Common Transaction Services 16

  17. Slide 17: Digital First Banking market $26.1B

    DIGITAL FIRST BANKING Enabling the transformation of retail banking 1 Total Digital First Banking $26.1B Current Market Capabilities Expansion $15.7B $10.4B Source: NCR estimates based on RBR, Ovum data Total Addressable Market 2023 16

  18. Slide 18: Digital First Banking: ATM transaction zone

    DIGITAL FIRST BANKING ATM – Transaction zone for digital 1 17

  19. Slide 19: Digital First Restaurant

    DIGITAL FIRST RESTAURANT #1 Provider of Enterprise Restaurant Systems in North America 2 Enterprise software solutions that run the Restaurant Integrated Payments Mobile Ordering and Delivery Digital Connected Services 18

  20. Slide 20: Digital First Restaurant market $9.7B

    DIGITAL FIRST RESTAURANT #1 Provider of Enterprise Restaurant Systems in North America 2 Total Digital First Restaurant $9.7B Current Market Capabilities Expansion $6.0B $3.7B Source: NCR estimates based on IHL, Euromonitor data Total Addressable Market 2023 18

  21. Slide 21: Digital First Retail

    DIGITAL FIRST RETAIL #1 global provider of enterprise software for retail stores 3 Enterprise software solutions that run the retail store Integrated Payments Self-Checkout with Fraud Protection Digital Connected Services 19

  22. Slide 22: Digital First Retail market $22.2B

    DIGITAL FIRST RETAIL #1 global provider of enterprise software for retail stores 3 Total Digital First Retail $22.2B Current Market Capabilities Expansion $17.2B $5.0B Source: NCR estimates based on IHL, Euromonitor data Total Addressable Market 2023 19

  23. Slide 23: Digital Connected Services

    DIGITAL CONNECTED SERVICES Wall-to-wall multivendor service support 4 Managed Services Break/Fix Services Multi-Vendor Maintenance IoT-enabled Services 20

  24. Slide 24: Digital Connected Services market $27.5B

    DIGITAL CONNECTED SERVICES Wall-to-wall multivendor service support 4 Total Digital Connected Business $27.5B Current Market Capabilities Expansion $20.7B $6.8B Source: NCR estimates based on IDC, IHL,Gartner, HDI data Total Addressable Market 2023 20

  25. Slide 25: Digital First Convenience and Fuel

    DIGITAL FIRST CONVENIENCE AND FUEL #1 Provider in North America of Enterprise Solutions that run the Store, Pump and Kitchen 5 Enterprise software solutions that run convenience store, pump and food service Integrated Payments Consumer Self-ordering and Self-checkout 1:1 marketing at the pump and in

  26. Slide 26: Digital First Convenience and Fuel market $3.4B

    DIGITAL FIRST CONVENIENCE AND FUEL #1 Provider in North America of Enterprise Solutions that run the Store, Pump and Kitchen 5 Total Digital First Convenience & Fuel $3.4B Current Market Capabilities Expansion $1.8B $1.6B Source: NCR estimates based on IHL, Euromonitor, Gartner data Total Addressabl

  27. Slide 27: Digital Small Business Essentials

    DIGITAL SMALL BUSINESS ESSENTIALS Turnkey software that runs the small business 6 Cloud based Point of Sale Inventory Management Human Capital Management Integrated Payments 22

  28. Slide 28: Digital Small Business market $7.0B

    DIGITAL SMALL BUSINESS ESSENTIALS Turnkey software that runs the small business 6 Total Digital Small Business $7.0B Current Market Capabilities Expansion $2.9B $4.1B Source: NCR estimates based on Square Public Filings, World Bank, IHL data Total Addressable Market 2023 22

  29. Slide 29: Strategic growth platforms

    23 STF

  30. Slide 30: Targeted M&A to enhance our solution offerings

    Targeted M&A to enhance our solution offerings TARGET DEAL DEAL PROFILE FLOW PROFILE  Tuck in acquisitions that utilize the NCR  4 to 6 deals per year  Enterprise Value brand & distribution to accelerate growth ~$100M on average  Companies in existing markets  Product-focused, up- sell, cross-s

  31. Slide 31: Integrated payments acquisition

     Integrated payments to enterprise point of sale systems  Full end-to-end merchant acquiring services  Accelerates NCR’s strategy of increasing recurring revenue and expanding margins 25

  32. Slide 32: Payments value chain

    Payments Value Chain Payment Processing Revenue Merchant Acquirer Payment Card Issuer Point of Enterprise NCR Connected & Processor Network & Processor Sale Device Software / Systems Payments Merchant Merchant Payment Gateway 26

  33. Slide 33: Payments value chain

    Payments Value Chain Payment Processing Revenue Merchant Acquirer Payment Card Issuer Point of Enterprise NCR Connected Merchant Acquirer & Processor Network & Processor Sale Device Software / Systems Payments & Processor Merchant Merchant Payment Gateway 26

  34. Slide 34: AI and computer vision anti-fraud solution

     AI and computer vision anti-fraud solution for consumer self-service  Accelerate growth in self-checkout and store transformation  Cloud-based/SaaS revenue stream  Key enabler of frictionless commerce strategy 27

  35. Slide 35: Restaurant data aggregation and insights

     Aggregates data from restaurant customers  Enriching data with insights that provide marketing decisions back to restaurant  Enables NCR to begin monetizing the wealth of data we collect 28

  36. Slide 36: Investment highlights

    INVESTMENT HIGHLIGHTS Strong Brand Global Simplified Focus on Equity Customer Business Growth & Base Model Mix Shift 29

  37. Slide 37: Agenda

    AGENDA  INTRODUCTION AND WELCOME Michael Nelson, VP Investor Relations  NCR OVERVIEW AND STRATEGY Mike Hayford, President and CEO  OPERATIONALIZING THE STRATEGY 3 Owen Sullivan, Chief Operating Officer  NCR FINANCIAL OVERVIEW Andre Fernandez, Chief Financial Officer  Q&A NCR Leadership Team  D

  38. Slide 38: A fresh perspective

    A FRESH PERSPECTIVE CUSTOMER DELIVERY & ACCOUNTABILITY FOCUS EXECUTION New Structure Aligns Decisions to Customer Needs and Strategic Growth 31

  39. Slide 39: Organized for customer success

    ORGANIZED FOR CUSTOMER SUCCESS GLOBAL CUSTOMERS NCR BANKING GROUP NCR COMMERCE GROUP Digital Banking | Branch | ATM Retail | Hospitality | SMB | JetPay SHARED SERVICES Product Management Software Delivery / Leveraged Sales Hardware Delivery Services Delivery & Marketing Professional Services Infrast

  40. Slide 40: Critical imperatives

    CRITICAL IMPERATIVES MANUFACTURING SERVICES DELIVERING GO TO STRATEGIC & SUPPLY CHAIN SUCCESS PRODUCTS & MARKET PARTNERSHIPS TRANSFORMATION SOLUTIONS EXCELLENCE 33

  41. Slide 41: Critical imperatives

    CRITICAL IMPERATIVES MANUFACTURING SERVICES DELIVERING GO TO STRATEGIC & SUPPLY CHAIN SUCCESS PRODUCTS & MARKET PARTNERSHIPS TRANSFORMATION SOLUTIONS EXCELLENCE 33

  42. Slide 42: Rational decisions tied to market opportunities

    RATIONAL DECISIONS TIED TO MARKET OPPORTUNITIES 1 SPEND OPTIMIZATION 2 INVESTING IN THE FUTURE STRATEGIC GROWTH PLATFORMS 34

  43. Slide 43: Critical imperatives

    CRITICAL IMPERATIVES CUSTOMER DELIVERY & ACCOUNTABILITY FOCUS EXECUTION MANUFACTURING SERVICES DELIVERING GO TO STRATEGIC & SUPPLY CHAIN SUCCESS PRODUCTS & MARKET PARTNERSHIPS TRANSFORMATION SOLUTIONS EXCELLENCE 35

  44. Slide 44: Agenda

    AGENDA  INTRODUCTION AND WELCOME Michael Nelson, VP Investor Relations  NCR OVERVIEW AND STRATEGY Mike Hayford, President and CEO  OPERATIONALIZING THE STRATEGY Owen Sullivan, Chief Operating Officer  NCR FINANCIAL OVERVIEW 4 Andre Fernandez, Chief Financial Officer  Q&A NCR Leadership Team  D

  45. Slide 45: 2018 highlights and guidance

    CRITICAL IMPERATIVES REVENUE NON-GAAP GROSS 2018 MARGIN HIGHLIGHTS $6.3B - 28% - $6.5B 28.5% JetPay Acquisition $184M 100- NON-GAAP DILUTED EPS FREE CASH FLOW 6-7% 150 bps 5-7% ~10% $2.55 - $250M Cloud Revenue Services Margin ATM Order Growth Est. Total Backlog $2.75 - $300M Growth Expansion Growth

  46. Slide 46: Strategic uses of cash

    STRATEGIC USES OF CASH SHARE REPURCHASE $210M as of 11/6/2018 38

  47. Slide 47: Balancing the core business and investing in the future

    BALANCING THE CORE BUSINESS & INVESTING IN THE FUTURE 1 SPEND OPTIMIZATION 2 INVESTING IN THE FUTURE STRATEGIC GROWTH PLATFORMS 39

  48. Slide 48: Margin erosion and cost creep impacted profitability

    MARGIN EROSION AND COST CREEP HAVE NEGATIVELY IMPACTED PROFITABILITY Current Observations  Gross Margin % down and Opex up  Over $200m of cash restructuring: 2015 – 2018  Capex not driving margin improvement 2015 2016 2017 2018  No Operating Income Cash Restructure Non-GAAP Gross Margin % Non-GA

  49. Slide 49: Productivity focus areas

    PRODUCTIVITY FOCUS AREAS 1. “Mission One” 2. Hardware Network 3. SG&A / Opex  Service performance and  Plant rationalization and  Announced on Oct. 30 productivity initiatives contract manufacturing 2018 Earnings Call  Remote diagnostics,  Closing three facilities  Reduce SG&A and dispatch red

  50. Slide 50: Revenue mix shifting to software and services

    REVENUE MIX SHIFTING TO SOFTWARE AND SERVICES 2018 2023 Targets 68% 32% 80% 20% Software/Services Hardware Software/Services Hardware 48% Recurring Revenue* 60-70% Recurring Revenue* *NCR’s definition of recurring revenue includes maintenance and cloud revenue. 42

  51. Slide 51: ATM financials

    ATM FINANCIALS Revenue ATM Economics 2018 2023 Targets Recurring Maintenance Higher Margin Software Other ATM Other ATM Hardware  ATM business revenues are projected to be roughly flat over next 5 years. Total Deal Value  Other business revenues are projected ATM business is profitable and drives

  52. Slide 52: Financial policy

    FINANCIAL POLICY Disciplined Drive free Maintain Balanced Shareholder approach to cash flow strong liquidity allocation of return and M&A & Capex capital with reinvestment in appropriate the business leverage 44

  53. Slide 53: Debt and maturities profile

    DEBT & MATURITIES PROFILE ($ millions) Pension Contributions 5.000% Notes 4.625% Notes $36 5.875% Notes $500 6.375% Notes $100 $400 $88 Term Loan A $585 $600 $700 $0 $84 $90 $109 2018 2019 2020 2021* 2022 2023 2024***  Weighted average interest rate on NCR’s Additional outstanding borrowings as of

  54. Slide 54: Target operating model

    TARGET OPERATING MODEL Three to five years out Sustained revenue Sustained low double Expanded shareholder growth of 3-5% digit eps growth value through increased with new mix multiple 46

  55. Slide 55: Conclusion

    4 o- ~ | \\ CONCLUSION - é | | Se | #. Mike Hayford d CEO

  56. Slide 56: Investment highlights

    INVESTMENT HIGHLIGHTS Strong Brand Global Simplified Focus on Equity Customer Business Growth & Base Model Mix Shift 48

  57. Slide 57: Agenda

    AGENDA  INTRODUCTION AND WELCOME Michael Nelson, VP Investor Relations  NCR OVERVIEW AND STRATEGY Mike Hayford, President and CEO  OPERATIONALIZING THE STRATEGY Owen Sullivan, Chief Operating Officer  NCR FINANCIAL OVERVIEW Andre Fernandez, Chief Financial Officer 5  Q&A NCR Leadership Team  D

  58. Slide 58: New York Stock Exchange – Freedom Hall

    New York Stock Exchange – Freedom Hall 5 3 4 1 6 2 50

  59. Slide 59: Thank you

    Av IA/VESTOR DAY THANK YOU

  60. Slide 60: Supplementary materials

    SUPPLEMENTARY MATERIALS 52

  61. Slide 61: 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 information regarding NCR's

  62. Slide 62: Diluted EPS to non-GAAP diluted EPS

    DILUTED EPS TO NON-GAAP DILUTED EPS 2018 FY Guidance Diluted EPS (1) $0.10 - $0.68 Transformation and Restructuring Costs $0.75 - $1.00 Asset Impairment Charges $1.16 Impact of US Tax Reform ($0.27) Acquisition-Related Amortization of Intangibles $0.42 Acquisition-Related Costs $0.05 Non-GAAP Dilute

  63. Slide 63: Free cash flow guidance

    FREE CASH FLOW 2018 FY Guidance Cash Provided by Operating Activities $640 - $670 Total Capital Expenditures (330) – (350) Cash Used in Discontinued Operations 40 Free Cash Flow $250 - $300 $ in millions 55

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