Ncr Atleos Corporation · NYSE:NATL
Ncr Atleos — Investor Day (September 2023)
51 slides from Ncr Atleos's investor day presentation, September 2023
Slide 1: Investor Presentation
@ NCR ATLEOS Investor Presentat
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: Investment Thesis
Investment Thesis 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 6: Proven Management Team
Presenter Proven Management Team Tim Oliver Stuart Mackinnon Paul Campbell Len Graves Patty Watson Diego Navarrete Chief Executive Officer Chief Operating Officer Chief Financial Officer Global Operations Chief Information & Global Sales Technology Officer LaShawne Meriwether Dan Antilley Jennifer P
Slide 7: Introducing Atleos
1 # Introducing Atleos Retail surcharge-free network 1 Industry Leading Comprehensive ATM Platform of Scale1 # +600K +80K +140 +20K Provider of multi-vendor ATM software applications Devices under ATM locations we Countries Employees management own and operate supported by globally and middleware 1
Slide 8: Introducing Atleos: Financial Snapshot
2023E Results1 Introducing Atleos 4.4B 14 Financial Snapshot $ % Americas (excluding US) Services Revenue Revenue Software CAGR ’20-’23E APAC 12% 9% 40% 13% ~$ 3.0B 26 % Revenue Revenue Recurring Revenue* Recurring Revenue* by Geography1 45% United by Type1 CAGR ’20-’23E States 22% EMEA 30% Hardware
Slide 9: Introducing Atleos: Our Transformation
Introducing Atleos Our Transformation Where we were Where we are Where we are going 2018 2023 2027+ PRODUCT Hardware legacy Comprehensive solution set Integrated platform- FOCUS based solutions GO-TO- Spot selling Service led with subscription As a Service strategy MARKET software offerings with APP
Slide 10: Sustained Market Demand & User Base
Sustained Market Demand & User Base Cash Remains a Mainstay Globally Stable Installed Base ATM Cash Withdrawal Total Value ($B)1 Global ATM Installed Base (000s) 1 14,307 14,058 13,796 13,530 1,906 1,910 1,828 1,885 1,891 1,899 13,261 2022 2023E 2024E 2025E 2026E 2027E 2022 2023E 2024E 2025E 2026E 2
Slide 11: Our Strategy Positions Us for Continued Growth
Our Strategy Positions Us for Continued Growth Industry-leading technologies & services Foundational ATM Network ATMaaS Extending our Driving more Accelerating the industry-leading transactions and transition to As a position types of transactions Service with across our network compelling economics
Slide 12: Foundational ATM Position
Foundational ATM Position Unmatched scale and capabilities globally 31% 10% 17% of total of total of total revenue revenue revenue Global Remote and Leading Diverse Onsite Field Services ATM Software Hardware Portfolio Efficient maintenance for Solving the digital first Valuable on-ramp to hardware
Slide 13: ATM Field Services Overview
ATM Field Services Overview Delivering seamless customer experience with the highest-quality services Deploy Maintain Manage Improve • Site preparation • Remote diagnosis • Managed Services • Customer experience • Staging activities • On-site resolution • Cash management • Lifecycle focus • Installa
Slide 14: Our Differentiated Hardware Solutions
Our Differentiated Hardware Solutions Evolving the Word’s Most Complete Portfolio Single Function Full Function Multi-Function Cash Dispensers Cash Recyclers ATMs/ITMs/Branch SelfServ™ 20 series SelfServ™ 60 series SelfServ™ 80 series Dual modules in lower Platform & Single module in lower enclosure
Slide 15: Our Software Value Proposition for Customers and End Users
Our Software Value Proposition for Customers and End Users Deliver exceptional experiences and drive cost efficiencies Digital-first experiences Improve Mobile interactions Experience User Experience Software-driven capabilities Optimize total ownership costs Innovation Reduce Cost Efficiency Channe
Slide 16: Atleos Digitization Delivers Cash Without the Card
Atleos Digitization Delivers Cash Without the Card Embedded Global Ready Application Programming Interface (API) within existing Over 40,000 ATMs enabled partner applications CASH-OUT CASH-IN Flexible Frictionless, secure Enable cardless cash in & out that meets business needs One time use code with
Slide 17: ATM & Self-Service Channel is Increasingly Relevant
ATM & Self-Service Channel is Increasingly Relevant Cash Use & Payment ATM Access & Convenience Financial Access for Demand Top priority in bank selection Lower-income households 5% Growth of cash in circulation from 50 % of consumers cite convenient ATM 20 % of US population <$25,000 2010-20221 loc
Slide 18: Retail Network of +80,000 ATMs Drive Durable Organic Revenue
Retail Branding Allpoint Retail Network of +80,000 ATMs Drive Durable Organic Revenue Located in Blue Chip Retail Partners 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 fro
Slide 19: Allpoint Enables Convenient Utility Banking
Retail Branding Allpoint Allpoint Enables Convenient Utility Banking Financial Institutions Network Operator Unrivaled scale of non-competing Drives additional foot traffic into a (retail) locations retail location Secure platform delivering Leverages existing Retail Network consistent user experien
Slide 20: Expanding Cash Access
Expanding Cash Access National Utility Banking Network +55K Global ATM Locations +75M Cardholders +1,100 Financial Institutions 20
Slide 21: Driving Retail Traffic for Merchants
Driving Retail Traffic for Merchants Financial Institution partner Retail partner withdrawals at Allpoint ATMs Allpoint ATM withdrawals 1M+ 6x May-22 May '21 June-22 Jun '22 June-23 Jun '23 Joined Allpoint in May 2021 Added Allpoint to 3,000+ stores in 2022 • Promotes retailers to members and waives
Slide 22: Allpoint Complements ATMaaS
Allpoint Complements ATMaaS Allpoint allows a bank to expand into other locations with minimal capital investment Run The ATM Channel + Extend The ATM Network ATMaaS Allpoint Modern approach to self-service Convenience and brand add delivery across your locations 55,000+ ATMs in Retail locations 22
Slide 23: Why Banks Adopt ATMaaS
Why Banks Adopt ATMaaS Channel-specific and Specialized and dated technology siloed responsibilities and skills Complex management Risks to data, cash, processes and and brand the need for 24x7 support coverage Reduce total cost of ownership by Difficulty keeping up ~20% with pace of change 23
Slide 24: ATMaaS Provides Opportunity to Increase Wallet Share
ATMaaS Provides Opportunity to Increase Wallet Share Installation & training ~2.5x Back office Device connectivity ATM hardware + Software management Atleos revenue expansion1 ATM software Transaction processing Field services Security & compliance Cash management & forecasting ~20% Client reporting
Slide 25: ATMaaS Economics are Compelling
ATMaaS Economics are Compelling Foundational ATMs ATM as a Service Foundational: US community financial institution, 25 ATMs As a Service: Shift to As a Service model, predictable, recurring 2.5x revenue Total Contract Value: $1,710K Total Contract Value: $4,280K $4,280K $950K $1,710K $900K $1,050K
Slide 26: Depth of Solutions is a Meaningful Differentiator
Depth of Solutions is a Meaningful Differentiator NCR Wins with… • Array of ATMaaS options with full outsourcing capabilities to our clients, • Easy deployment for clients and robust capabilities to compliment leading ATM applications • Premiere self-service technology provider with leading ATM ship
Slide 27: Managed ATM expansion
Managed ATM expansion 2023E ATM Install Base breakdown 2027E ATM Install Base breakdown ~600k+ ~600k+ Total Install Base Total Install Base ~86k Network ~125k ATMaaS ~83k Network ~18k ATMaaS 27
Slide 28: 2027 Financial Targets
2027 Financial Targets Revenue Margins Cash Flow $ 5.5B Total Revenue $ 1.4B Adj. EBITDA* $ 0.5B Free Cash Flow* 6% CAGR ’23E-’27E 15% CAGR ’23E-’27E Increasing recurring 25% Adj. EBITDA* 30% FCF conversion* revenue* profile to 80% margins with 11% CAGR ’23E-’27E *See definition in Supplementary Mat
Slide 29: Growing Towards Our Targets
Growing Towards Our Targets 2024E 2027E • Overcoming 2023 split dis-synergies 1-3% +6% • Lap headwinds of switch to recurring revenue* Revenue Growth • Compounding Services and Software volume • Monetization of Network through expanded transactions and users • Higher gross margin on increasing Servi
Slide 30: Attractive EBITDA Growth
Attractive EBITDA Growth Growth Drivers Adj. EBITDA* by source 15% CAGR • Mix shift towards recurring offerings generating higher gross margins $1.4B • Minimal growth in operating expenses • Monetization of endpoints via expanded transaction types and incremental users Revenue Mix Shift $0.8B • Fiel
Slide 31: Atleos Adjusted EBITDA Margin Rate Expansion
Atleos Adjusted EBITDA Margin Rate Expansion Adj. EBITDA margin* growth: 1-3% $1.4B 200-300 bps ~25% 200-300 bps $0.8B 150-250 bps 0-150 bps ~18%% Adj. EBITDA* Margin ~15% Productivity augmented by mix shift CAGR Mix shift and scale leverage augmented by productivity Adj. EBITDA* Margin Growth Drive
Slide 32: 2024 EBITDA to FCF Walk
2024 EBITDA to FCF Walk Controllable Growth Capex ~$0.8B ~$280M ~$100M Cash Interest ~$80M Cash Taxes Working $0.3B Capital ~$140M Maintenance CAPEX $0.2B ~$45M $0.15B Growth Capex One-time Separation 2024E Adj. EBITDA* 2024E FCF* 2024E FCF* 2024E FCF* Excluding Growth CAPEX Excluding One-time separ
Slide 33: Significant Free Cash Flow Generation
Significant Free Cash Flow* Generation Controllable Growth Capex 60% ~$1.4B FCF* conversion 30% ~$250M FCF* conversion ~$230M Cash Interest Slight use ~$100M $0.8B Cash Taxes Working ~$300M Capital Maintenance CAPEX $0.5B Growth Capex 2027E Adj. EBITDA* 2027E FCF* 2027E FCF* Excluding Growth CAPEX *
Slide 34: Self-Service Banking (SSB)
Self-Service Banking (SSB) Revenue Bridge from FY20 to FY27E Base Growth Drivers ($B) • Gain market share led by service wins • Shift to ATMaaS 8% • Subscription software expansion CAGR • Compounding annual price changes $0.4B $3.5B Upside Drivers $1.1B $(0.6)B • Accelerated demand for ATMaaS $2.5B
Slide 35: Network Revenue Bridge
Network Revenue Bridge 7% CAGR 2020 to 2027E Revenue ($B) 9% CAGR $1.7B $0.4B $0.3B $1.3B $1B *The 2020 Network revenue has been adjusted to reflect the historical revenue of Cardtronics plc prior to its acquisition in June 2021 35
Slide 36: Key Performance Indicators
Key Performance Indicators Self-Service Banking 80% Recurring Revenue1 (% of total) ATMaaS Units 58% 125,000 49% 21,000 ~600 2020 2023E 2027E 2020 2023E 2027E Network2: 6% Revenue per End Point Total CAGR Number of End Points 1% Total CAGR $19.2 ($K per End Point) 86K $15.0 $12.1 83K 83K * 2020 2023
Slide 37: Balance Sheet
Balance Sheet No debt expected to mature through 2027 Pro Forma Capital Structure ($M) 1,2 Total Debt 2,935 Limited expected Cash Balance (net of $150M pension payment) 300 exposure to mandatory Revolver ($500M undrawn at close) - pension contributions Net Debt* 2,635 Adj. EBITDA* 779 Expecting suff
Slide 38: Capital Allocation Strategy
Capital Allocation Strategy Organic Reduce Solid & growing investments leverage dividend Invest in internal Net leverage targets Target FCF dividend growth initiatives of 2.5x – 3.0x payout range1 of 35% - 50% *See definition in Supplementary Materials. 1. Target payout range of 35% growing to a tar
Slide 39: Strong FCF Enables Attractive Dividend and Deleveraging
Target Dividend Policy2 Strong FCF Enables Attractive Quarterly dividend of ~20 cents per share or $60M in Dividend and Deleveraging 20243 Free Cash Flow*1 ($M) $500 Intend to declare first dividend in Q1 20243 Dividend expected to grow materially as FCF* accelerates $150 35-50% Targeting net levera
Slide 40: Investment Thesis
Investment Thesis 1 Steady global demand for cash and physical transactions suggests sustained demand for ATM capability. 2 Market leader with unmatched scale and installed base will enable above-market growth. 3 Best positioned to benefit from accelerating bank outsourcing, branch rationalization,
Slide 41: Q&A
Q&A 41
Slide 42: Supplementary Materials
Supplementary Materials 42
Slide 43: Non-GAAP Measures
Non-GAAP Measures NCR Atleos reports its results in accordance with generally accepted accounting principles (GAAP) in the United States, comments made during this presentation and in these materials will include or make reference to certain non-GAAP measures. These measures are included to provide
Slide 44: Non-GAAP Measures
Non-GAAP Measures Net Debt NCR Atleos determines Net Debt based on its total debt less cash and cash equivalents, with total debt being defined as estimated total indebtedness expected to be incurred in connection with the planned spin-off of NCR Atleos from NCR, which is expected in the fourth quar
Slide 45: Non-GAAP Measures
Non-GAAP Measures Adjusted Free Cash Flow–Unrestricted (“Free Cash Flow” or “FCF”) NCR Atleos defines Adjusted free cash flow-unrestricted as net cash provided by operating activities less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus the
Slide 46: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Reconciliations With respect to our Adjusted EBITDA, Adjusted EBITDA margin, Net leverage ratio, and Adjusted free cash flow-unrestricted estimates for fiscal years 2023 and 2027, we are not providing a reconciliation of the respective GAAP measures because we are not able
Slide 47: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ($ in millions) ADJUSTED EBITDA BY SEGMENT 2020 2021 2022 Self-Service Banking $ 543 $ 600 $ 549 Payments & Network 13 214 352 Telecommunications & Technology 58 57 47 Total Segment Adjusted EBITDA $ 614 $ 871 $ 948 Corporate and Other (1) (221) (285) (263) Total NCR
Slide 48: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ($ in millions) REVENUE BY SEGMENT 2020 2021 2022 Self-Service Banking $ 2,527 $ 2,530 $ 2,582 Payments & Network 23 600 1,198 Telecommunications & Technology 301 253 219 Other (1) 99 118 123 Other adjustments (2) 41 48 9 TOTAL REVENUE $ 2,991 $ 3,549 $ 4,131 Pro form
Slide 49: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ($ in millions) REVENUE 2020 2021 2022 Recurring Revenue (1) $ 1,480 $ 2,120 $ 2,754 All other products and services 1,511 1,429 1,377 TOTAL REVENUE $ 2,991 $ 3,549 $ 4,131 Pro forma adjustments (2) 253 Pro forma revenue $ 4,384 1Recurring revenue includes all revenue
Slide 50: 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
Slide 51: Cash Usage and ATM Install Base – Additional Supporting Articles
Cash Usage and ATM Install Base – Additional Supporting Articles • ATM market has grown in more than half of countries analyzed by RBR • U.S. ATM count grew by 21,000 terminals in 2022 • 21 states have enacted or are progressing cashless ban legislation • Cash withdrawal value recovers after pandemi