Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q4 2019 Earnings Presentation
42 slides from Ncr Voyix's earnings presentation, Feb 11, 2020
Slide 1: Q4 2019 Earnings Conference Call
Q4 2019 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO ANDRE FERNANDEZ, CFO February 11, 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. 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 SOLID 2019 Continued to IMPROVE EXECUTION REVENUE GROWTH across all segments/industries RECURRING REVENUE up 8% CC Progress building STRATEGIC GROWTH PLATFORMS 2020 GUIDANCE: Revenue growth 0% - 1%; Non-GAAP EPS $2.75 - $2.85; FCF $250M-$300M 4
Slide 5: FY 2019 Financial Results
FY 2019 FINANCIAL RESULTS Revenue FX Impact Adjusted EBITDA ($119) million $6.92 $1,058 $6.41 billion $957 million billion million FY 2018 FY 2019 FY 2018 FY 2019 Revenue up 8% as reported and up 10% CC Adjusted EBITDA up 11% Non-GAAP Diluted EPS Free Cash Flow FX Impact ($0.16) $275 $2.81 $223 mill
Slide 6: Shift to As-a-Service Company
SHIFT TO AS-A-SERVICE COMPANY to drive increased recurring revenue across our strategic growth platforms Offerings Go To Market Delivery 6
Slide 7: M&A Update
M&A UPDATE Disciplined approach on acquisition strategy with 8 deals in 2019 for under $230M purchase price * Online and mobile banking Edge virtualization Brazil based IT services and digital platform provider technology provider for retail software assets for financial for large banks and hospital
Slide 8: Total NCR
TOTAL NCR $ in millions except for share amounts Fourth Quarter Full Year +8% As +5% As Reported Reported +10% CC +7% As +6% CC $6,915 Reported +1% As +14% CC $1,886 Reported +6% CC $1,801 $6,405 $2.62 $2.81 $0.84 $0.85 2018 2019 2018 2019 2018 2019 2018 2019 Revenue Non-GAAP EPS Revenue Non-GAAP EP
Slide 9: Banking
BANKING $ in millions Fourth Quarter Full Year +10% As +0% As Reported Reported +13% CC +25% As +2% CC $3,512 Reported $942 $944 +9% As +31% CC Reported $3,183 +14% CC $514 $144 $412 $132 2018 2019 2018 2019 2018 2019 2018 2019 Revenue Operating Income Revenue Operating Income 2019 Key Highlights •
Slide 10: Retail
RETAIL $ in millions Fourth Quarter Full Year +6% As +10% As Reported Reported +7% CC +1% As +10% CC Reported +14% As $2,217 +11% CC $609 Reported $2,097 $556 +21% CC $142 $144 $42 $37 2018 2019 2018 2019 2018 2019 2018 2019 Revenue Operating Income Revenue Operating Income 2019 Key Highlights • Rev
Slide 11: Hospitality
HOSPITALITY $ in millions Fourth Quarter Full Year +3% As +5% As Reported Reported +4% CC -34% As +5% CC $817 $843 Reported $232 -47% As -34% CC $222 Reported -45% CC $32 $85 $17 $56 2018 2019 2018 2019 2018 2019 2018 2019 Revenue Operating Income Revenue Operating Income 2019 Key Highlights • Reven
Slide 12: FY Supplemental Revenue
FY 19 SUPPLEMENTAL REVENUE $ in millions FY 2019 FY 2018 % Change % Change CC Software $2,008 $1,912 5% 6% Services $2,520 $2,460 2% 5% Hardware $2,387 $2,033 17% 20% ATM $1,263 $979 29% 33% SCO/POS $1,124 $1,054 7% 8% Total Revenue $6,915 $6,405 8% 10% Recurring Revenue $3,145 $2,970 6% 8% 2019 Key
Slide 13: Free Cash Flow, Net Debt & EBITDA
FREE CASH FLOW, NET DEBT & EBITDA $ in millions Free Cash Flow FY 2019 FY 2018 Cash provided by Operating Activities $628 $572 Total capital expenditures ($329) ($313) Cash used in Discontinued Operations ($24) ($36) Free Cash Flow $275 $223 Net Debt & EBITDA Q4 2019 Q3 2019 Q4 2018 Debt $3,559 $3,6
Slide 14: 2019 Productivity Initiatives
2019 PRODUCTIVITY INITIATIVES • Manufacturing transformation largely complete ◦ Improved product delivery performance ◦ Significant progress to hardware profitability • Completed $100M spend optimization program ◦ Maintained Opex / Revenue percentage flat offsetting higher real estate and employee-r
Slide 15: Strategy Activation
STRATEGY ACTIVATION • Shift to recurring ◦ Organization design ◦ Targeted business processes • Driving efficiencies as we evolve to NCR-as-a-Service ◦ $90M annualized run-rate saving by year-end 2020 ◦ $40M realized savings in 2020 15
Slide 16: 2020 Guidance - As Reported
2020 GUIDANCE - AS REPORTED $ in millions, except per share amounts Guidance Revenue Growth 0% - 1% Adjusted EBITDA $1,060 - $1,100 Non-GAAP Diluted EPS (1) $2.75 - $2.85 Cash Flow from Operations $640 - $735 Free Cash Flow $250 - $300 (1) For FY 2020, we have assumed an effective tax rate of 23% to
Slide 17: 2020 Earnings Bridges
2020 EARNINGS BRIDGES $ in millions, except per share amounts Adjusted EBITDA Non-GAAP EPS $1,060 - $1,100 $1,058 $2.75 - $2.81 $2.85 2019 Shift to Business Cost 2020 2019 Shift to Other Business Cost 2020 Recurring Growth Efficiencies Guidance Recurring Growth Efficiencies Guidance Revenue * Revenu
Slide 18: NCR Long-Term Value Creation Strategy
NCR LONG-TERM VALUE CREATION STRATEGY NEAR TERM: NCR AS-A-SERVICE FUTURE: 1-3% Growth 80/60/20 3-5% Growth SHIFT THE MIX Software & Services 65% to 80% Recurring Revenue 45% to 60% MARGIN EXPANSION Business Mix Shift, Efficiencies, Pricing Discipline EBITDA Margin 15.3% to 20% CAPITAL ALLOCATION Ope
Slide 19: Supplementary Materials
SUPPLEMENTARY MATERIALS 19
Slide 20: Q4 & FY 2019 GAAP Results
Q4 & FY 2019 GAAP RESULTS $ in millions, except per share amounts % Change % Change Q4 2019 Q4 2018 As Reported FY 2019 FY 2018 As Reported Revenue $1,886 $1,801 5% $6,915 $6,405 8% Gross Margin 532 442 20% 1,921 1,675 15% Gross Margin Rate 28.2% 24.5% 27.8% 26.2% Operating Expenses 350 379 (8)% 1,3
Slide 21: Q4 & FY 2019 Operational Results
Q4 & FY 2019 OPERATIONAL RESULTS $ in millions, except per share amounts % Change % Change % Change Q4 2019 Q4 2018 As Constant FY 2019 FY 2018 % Change As Constant Reported Currency Reported Currency Revenue $1,886 $1,801 5% 6% $6,915 $6,405 8% 10% Gross Margin (non-GAAP) 541 495 9% 12% 1,966 1,800
Slide 22: 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 23: Non-GAAP Measures: Constant Currency
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 24: 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 25: Net Income to Adjusted EBITDA
GAAP TO NON-GAAP RECONCILIATION $ in millions Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q4 2019 Q3 2019 Q4 2018 LTM LTM LTM Q4 2019 Q4 2018 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 614 $ 197 $ (36) $ 384 $ (33) Pension Mark-to-Market
Slide 26: Q4 2019 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q4 2019 $ in millions, except per share amounts Transformation Acquisition- Int Pension Q4 QTD Q4 QTD & related Acquisition Debt VA Reorg & mark-to- 2019 2019 Restructuring amortization - related Refinancing Release IP market non- GAAP costs of intangibles costs & Oth
Slide 27: Q4 2019 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q4 2019 $ in millions, except per share amounts Q4 QTD 2019 Q4 QTD 2019 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $384 $123 Dividends on convertible preferred shares
Slide 28: Q4 2018 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q4 2018 $ in millions, except per share amounts Acquisition- Impact Q4 QTD Transformation related Acquisition- of U.S. Pension mark- Q4 QTD 2018 & Restructuring amortization related Tax to-market 2018 non- GAAP Costs of costs Reform adjustments GAAP intangibles Produc
Slide 29: Q4 2018 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION Q4 2018 $ in millions, except per share amounts Q4 QTD 2018 Q4 QTD 2018 GAAP non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) ($33) $126 Dividends on convertible preferred share
Slide 30: FY 2019 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION FY 2019 $ in millions, except per share amounts Acquisition- Transformation related Acquisition- VA Int Reorg Pension FY 2019 & Restructuring amortization related Debt Release & IP mark-to- FY 2019 GAAP costs of costs Refinancing & Other Transfer market non-GAAP intan
Slide 31: FY 2019 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION FY 2019 $ in millions, except per share amounts FY 2019 non- FY 2019 GAAP GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $614 $423 Dividends on convertible preferred shares ($76)
Slide 32: FY 2018 GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION FY 2018 $ in millions, except per share amounts Acquisition- Transformation Goodwill & related Impact of Pension FY 2018 FY 2018 & Long-lived amortization Acquisition- U.S. Tax mark-to- non- GAAP Restructuring Asset of related costs Reform market GAAP costs Impairment
Slide 33: FY 2018 Diluted EPS Reconciliation
GAAP TO NON-GAAP RECONCILIATION FY 2018 $ in millions, except per share amounts FY 2018 non- FY 2018 GAAP GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) ($36) $394 Dividends on convertible preferred shares ($49)
Slide 34: Q4 & FY 2019 Operating Income Non-GAAP to GAAP
GAAP TO NON-GAAP RECONCILIATION Q4 & FY 2019 $ in millions Operating Income (non-GAAP) to Operating Income (GAAP) Q4 2019 FY 2019 Operating Income Operating Income Banking $144 $514 Retail 42 144 Hospitality 17 56 Other 14 44 Total Operating Income (non-GAAP) 217 758 Less: Transformation and restruc
Slide 35: Q4 & FY 2018 Operating Income Non-GAAP to GAAP
GAAP TO NON-GAAP RECONCILIATION Q4 & FY 2018 $ in millions Operating Income (non-GAAP) to Operating Income (GAAP) Q4 2018 FY 2018 Operating Income Operating Income Banking $132 $412 Retail 37 142 Hospitality 32 85 Other 13 49 Total Operating Income (non-GAAP) 214 688 Less: Transformation and restruc
Slide 36: Q4 & FY 2019 Revenue Growth to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Q4 & FY 2019 Revenue Growth % (GAAP) to Revenue Growth Constant Currency % (non-GAAP) Q4 2019 FY 2019 Constant Favorable Constant Revenue Favorable Currency Revenue Growth (unfavorable) FX Currency Growth % (unfavorable) FX Revenue % Reported impact Revenue Growth Rep
Slide 37: Q4 2019 Revenue Growth to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Q4 2019 Revenue Growth % (GAAP) to Revenue Growth Constant Currency % (non-GAAP) Q4 2019 Constant Currency Revenue Growth % Favorable (unfavorable) FX Revenue Growth % (non- Reported impact GAAP) Software 5% (1%) 6% Services 2% (3%) 5% Hardware 17% (3%) 20% ATM 29% (4
Slide 38: Q4 & FY 2019 Operating Income Growth to Constant Currency
GAAP TO NON-GAAP RECONCILIATION Q4 & FY 2019 Operating Income % (GAAP) to Operating Income Constant Currency % (non-GAAP) Q4 2019 FY 2019 Operating Favorable Operating Operating Favorable Operating Income Growth (unfavorable) FX Income Growth Income Growth (unfavorable) FX Income Growth % (GAAP) imp
Slide 39: Q4 Operational Results % Change
GAAP TO NON-GAAP RECONCILIATION Q4 2019 Favorable % Change Q4 Operational Results % Change As (unfavorable) FX Constant Reported impact Currency Revenue 5% (1%) 6% Gross Margin (non-GAAP) 9% (3)% 12% Gross Margin Rate (non-GAAP) 120 bps (40 bps) 160 bps Operating Expenses (non-GAAP) 15% (1%) 16% % o
Slide 40: FY19 Operational Results % Change
GAAP TO NON-GAAP RECONCILIATION Q4 2019 Favorable % Change FY19 Operational Results % Change As (unfavorable) FX Constant Reported impact Currency Revenue 8% (2%) 10% Gross Margin (non-GAAP) 9% (3)% 12% Gross Margin Rate (non-GAAP) 30 bps (30 bps) 60 bps Operating Expenses (non-GAAP) 9% (1%) 10% % o
Slide 41: Free Cash Flow 2020 Guidance
GAAP TO NON-GAAP RECONCILIATION $ in millions Free Cash Flow 2020 Guidance Cash Provided by Operating Activities $640 - $735 Less: Total capital expenditures $350 - $375 Less: Cash used in Discontinued Operations $40 - $60 Free Cash Flow $250 - $300 41
Slide 42: Thank You
THANK YOU 42