Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Investor Presentation (May 2010)
35 slides from Ncr Voyix's investor presentation, May 17, 2010
Slide 1: NCR Investor Presentation
Exhibit 99.1 NCR Investor Presentation May, 2010
Slide 2: Note to Investors
Note to Investors Certain non-GAAP financial information regarding NCR’s operating results may be discussed during this presentation. Reconciliation of the differences between GAAP and non-GAAP measures are included elsewhere in this presentation and are available on the Investor page of NCR’s websi
Slide 3: Vision and Mission
Vision and Mission Our Vision Our Mission Leading how the world “Provide our customers with connects, interacts, and the next generation of transacts with business. productivity gains and customer experience innovation through our deep knowledge of the changing global consumer and technology.” NCR C
Slide 4: The NCR Story
The NCR Story NCR is a global leader in providing products and services that support customer transactions • Number 1 or 2 globally in key solutions • At forefront of self-service revolution • Top Services provider across end-markets Consumer demand for self-service technologies creates a global opp
Slide 5: Q1 2010 vs. Q1 2009 Financial Highlights
Q1 2010 vs. Q1 2009 Financial Highlights Revenue up 2% to $1.03B Gross margin up 120 bps, inclusive of negative 70 bps effect from Entertainment NPOI (1) up 54% to $43M Non-GAAP EPS ex pension expense (1) $0.15; up 150% from $0.06 in Q1 2009 Improved backlog driven by 18% increase in orders; Double
Slide 6: Overview of NCR's Business
Overview of NCR’s Business Core Business Entertainment Pension Overview: NCR core vs. key competitors Financials GAAP impacts • Core produces more revenue • Expect 2010 revenue of $125- • $1 billion underfunded status as of • Core produces more profit $150 million and approx. $30 2009 year end • Cor
Slide 7: Financial Industry Growth Opportunities
Financial Industry Growth Opportunities Ongoing roll-out of advanced ATM technologies at large banks • Intelligent deposit & remittance are top apps • Customers building competitive advantage • NCR the global leader in multi-vendor software for self- service¹ Other sectors of banking industry expect
Slide 8: Emerging Regions will Continue to Grow
Emerging Regions will Continue to Grow Fewer than 30 ATM markets globally have reached a “developed state” threshold . .. Still potential for another 1.4 million ATMs in emerging countries Eastern Europe +172k Units Target per 100k ppl: 80 ATMs Current penetration: ~ 40 ATMs Middle East & Africa Nor
Slide 9: Manufacturing Efficiencies – New Facilities
Manufacturing Efficiencies – New Facilities Manaus, Brazil • Strengthen our position and capabilities in the world’s 3rd largest ATM market • Capitalize on self-service ATM demand in Brazil and surrounding regions • Well positioned for Intelligent Deposit • In-country R&D and manufacturing serves as
Slide 10: Self-Service Has Become a Retail Imperative
Self-Service Has Become a Retail Imperative NCR SelfServ Checkout • Market-leading solution installed in 22 countries • > 65k units installed at > 150 global retailers; penetration rate in grocery channel of ~ 20% with potential to achieve 90% + over the next ten years • Strongest value proposition;
Slide 11: Retail Industry Growth Opportunities
Retail Industry Growth Opportunities Offering leading edge solutions • NCR Advanced Marketing Solution in-store offer delivery platform in use at multiple Tier 1 U.S. Grocers (Marsh Supermarkets), Drug and C-stores • Broadest range of POS applications covering Food, GMS and Hospitality • Software so
Slide 12: Entertainment: NCR's 3rd Vertical
rd Entertainment: NCR’s 3 Vertical Entertainment is a $1B growth opportunity currently available to NCR - “Third Vertical” that will validate multi-industry self-service strategy • Number 1 or 2 globally in key solutions • At forefront of self-service revolution • Top services provider across end ma
Slide 13: Differentiated Entertainment Solutions
Differentiated Entertainment Solutions NCR Application Capabilities • DVD Rental • Packaged Media Sell-Through • Capacity and Title Depth • Digital Download and Portability • Games • Buy, Sell, Trade • In-store and Outdoor Kiosk • Home NCR Confidential 13
Slide 14: Execution Roadmap
Execution Roadmap Expect to deploy up to 10,000 kiosks by year- end 2010 – capitalize on rapid transition of DVD rental share Customer wins underscore market demand • Growing customer base - deployments across high traffic areas (supermarkets, convenience food shops) $85 million investment in 2010 (
Slide 15: Emerging Industry Profiles
Emerging Industry Profiles Travel & Lodging Healthcare & Public Sector Telecom & Technology • Airline Check-in • Patient Registration • Multi-billion dollar market • Car Rental • Revenue Cycle Management • Network design & implementation • Hotel/Resort Registration • Lab Results • Wireless implement
Slide 16: NCR the Largest Services Provider in Our Industry
NCR the Largest Services Provider in Our Industry NCR the largest provider across our end markets • Powers over 2 million consumer points of service worldwide • Designed to grow/scale capability/leverage into new industries • Strategically aligned with Engineering and Operations NCR is also the larg
Slide 17: Financial Summary
Financial Summary Expecting improved performance in 2010 and progress towards long term goals 2010 Guidance • Revenue growth of 2-5%; NPOI (1) in range of $310-$330 million (includes estimated $30M loss from Entertainment business) • GAAP diluted EPS of $0.39-$0.49; non-GAAP diluted EPS excluding pe
Slide 18: Revenue Performance
Revenue Performance Revenue from Continuing Operations $6,000 $5,750 +7% $5,500 +8% $5,315m $5,250 +2% to 5% +1% $4,970m $5,000 -12% $4,750 $4,612m $4,561m $4,582m $4,500 $4,250 $4,000 2005 2006 2007 2008 2009 2010(e) NCR Confidential 18
Slide 19: Managing for Margin
Managing for Margin Reducing our Cost Structure Key Initiatives • Value engineering • Product lifecycle management • Efx = Servicability, manufacturability and quality • Continuous improvement organization installed • Streamlined organization • Accelerating labor costs & expense reduction $200 milli
Slide 20: NPOI: Poised to Return to Growth
NPOI: Poised to Return to Growth NPOI: Non Pension Operating Income (1) +15% +26% $400m +9% to 16% $400 +11% $349m -29% $310m - $330M $276m $284m $248m $0 2005 2006 2007 2008 2009 2010(e) (1) See reconciliation of GAAP to non-GAAP measures in the Appendix to this presentation and/or on the Investor
Slide 21: Strong Balance Sheet
Strong Balance Sheet ($ in Millions) 12.31.09 Cash balance $451 Debt balance $ 15 Net cash position $436 Near Term Objectives • Liquidity • Financial Flexibility • Working Capital Improvements Long Term Objectives • Free Cash Flow generation NCR Confidential 21
Slide 22: Actions to Address Pension
Actions to Address Pension Pension Management Strategy • Global underfunded status of $1,048M at 12/31/09; improved to approximately $990M (A) underfunded status at 3/31/10 (see appendix #29) • Historically NCR has seen significant volatility (see appendix #33 and 34). Pension strategy is to reduce
Slide 23: 3-Year Vision for NCR
3-Year Vision for NCR Core Business Entertainment Pension Leading Financial Solutions #1 or #2 market share Under-funded pension provider position significantly leader in DVD Kiosk Market (US & Intl) reduced Leading Retail Solutions provider Physical DVD rental & sell- Volatility and risk of Leader
Slide 24: NCR Value Equation
NCR Value Equation Pension + Other B/S Core Business Entertainment Items Strong NPOI, EBITDA and Bulk of investing Less after tax Operational EPS underfunded position of complete by 2010 y/e – $85M investment, $30M ~$750M at 12/31/09 Core Markets (excluding NPOI loss and approx. Less after tax prese
Slide 25: Why Invest in NCR?
Why Invest in NCR? Positioned for success • Growth strategy • Expanding market leadership • Global share and balance • Marquee customers • Strong balance sheet • Compelling value propositions • World-class employees • Track record is one of execution • Growth initiatives • Cost structure initiatives
Slide 26: Appendix
Appendix NCR Confidential 26
Slide 27: Reconciliation of GAAP to non-GAAP Measures
Reconciliation of GAAP to non-GAAP Measures Income (Loss) from Operations (GAAP) to Non-Pension Operating Income (non-GAAP) Q1 Q1 Guidance Actual 2010 2009 FY 2010 FY 2009 Income (Loss) from Operations (GAAP) $ (18) $ (10) $90 - $110 $ 97 Impairment of Assets Related to Equity Investment - - - 22 Gl
Slide 28: Addressing NCR's Valuation Gap
Addressing NCR’s Valuation Gap NCR trades at a material discount to the market and its peers, largely due to the current pension situation Pension assets invested in equities are not only volatile, but correlated with NCR’s operating businesses A significant portion of NCR’s capital is allocated to
Slide 29: NCR Pension Update – Q1 2010
NCR Pension Update – Q1 2010 ( $ Millions) Pension Metrics & Funded Status Asset Return Discount rate Funded Status 3/31/10 YTD (A) 12/31/09 3/31/10 (A) 12/31/09 3/31/10(A) US Plans 3.5% 5.75% 5.88% (822) (740) International Plans 2% 4.9% 4.8% (226)* (250) Global 2.9% 5.4% 5.45% (1,048) (990) The es
Slide 30: US Plans Only – Funded Status Bridge
US Plans Only – Funded Status Bridge ($Millions) (A) (52) 2,610 2,580 (6) 88 Assets Benefit Fees & Asset Payments Expenses Returns Asset Value, Asset Value, 12/31/09 3/31/10 (54) 46 Liabilities (44) 3,350 (A) 3,402 Benefit Discount Rate Interest Payments Movement Liability Value, Liability Value, 12
Slide 31: Rationale – Analyzed Various Options
Rationale – Analyzed Various Options Shift pension asset allocation to 100% fixed income by end of 2012 • Risk of equity exposure in pension plan must be reduced – Size of NCR pension plan (and therefore the associated risk) is disproportionate to the size of NCR – Riskiness and volatility of pensio
Slide 32: Pension Legislation Could Provide Relief
Pension Legislation Could Provide Relief NCR Leading Industry Coalition to Possible Impact of Pension Funding Relief Secure Passage of Pension Relief Legislation on NCR Possible Impact of Pension Funding Key Impact on NCR Conditions Status Relief Legislation on NCR Provisions Two relief options; 2+7
Slide 33: NCR Historical Pension Overview
NCR Historical Pension Overview ($ Millions) Pension Assets Plan 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 U.S. Plans $3,026 $2,686 $2,208 $2,797 $3,016 $3,098 $3,385 $3,423 $2,208 $2,582 International Plans 1,514 1,089 1,138 1,397 1,658 1,748 2,085 2,114 1,467 1,737 Total Plans $4,540 $3,77
Slide 34: Historical Funded Status, Funding and Expense
Historical Funded Status, Funding and Expense ($ Millions) Funded Status Plan 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 U.S. Plans 126% 108% 82% 94% 94% 92% 103% 107% 68% 76% International Plans 128% 97% 82% 85% 86% 90% 102% 105% 89% 88% Total Plans 126% 104% 82% 91% 91% 91% 103% 106% 75% 80
Slide 35: Sensitivity Analysis - US Plans ONLY
Sensitivity Analysis - US Plans ONLY ($ Millions) Historical Asset Returns and discount Rates for US Plan 10 yr 20 yr 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 avg avg Asset Returns -2% -6% -12% 36% 15% 10% 16% 7% -31% 28% 4% 10% Discount Rate 7.5% 7.3% 6.8% 6.3% 5.8% 5.5% 5.8% 6.3% 6.3% 5.8