Ncr Voyix Corporation · NYSE:VYX
Ncr Voyix — NCR — Q4 2020 Earnings Presentation
35 slides from Ncr Voyix's earnings presentation, Feb 9, 2021
Slide 1: Q4 2020 Earnings Conference Call
1 Q4 2020 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, PRESIDENT & CEO OWEN SULLIVAN, COO TIM OLIVER, CFO February 9, 2021
Slide 2: Forward-Looking Statements
2 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, pursuant to the safe h
Slide 3: Non-GAAP Measures
3 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: selected measures, su
Slide 4: Overview
4 Announced proposed transaction with CARDTRONICS OVERVIEW FREE CASH FLOW of $149M in Q4 and $448M FY 2020 RECURRING REVENUE up 6% Y/Y in Q4 Adjusted EBITDA margin rate EXPANSION Q/Q to 15.8% Completed $150M of COST REDUCTIONS
Slide 5: Strategic Update
5 STRATEGIC UPDATE • Successful progress on 80/60/20 goals • Banking – Digital banking momentum and accelerating shift to recurring software revenue • Retail - Gaining traction on NCR EmeraldTM and self-checkout solutions • Hospitality - Momentum in AlohaTM Essentials continues • Accelerating NCR-as
Slide 6: Q4 2020 Financial Results
6 Adjusted EBITDA down 14% y/y due to COVID-19 and shift to recurring; Up 4% q/q Non-GAAP EPS down due to decline in operating earnings Driving more linear free cash flow production Revenue Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue down 14% y/y due to COVID-19 and shift to recurrin
Slide 7: Banking
7 FY 2019 FY 2020 $200 $400 $600 $ in millions BANKING Revenue Operating Income Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 $0 $250 $500 $750 $1,000 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 $0 $60 $120 $180 10.0% 15.0% 20.0% 25.0% $795 $944 $87 $144 10.9% 15.3% Margin % Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 20.0 22.5 25.0 Digital B
Slide 8: Retail
8 Momentum in recurring revenue growth $ in millions, except platform lanes RETAIL Revenue Operating Income Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 $0 $250 $500 $750 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 $0 $20 $40 $60 —% 5.0% 10.0% 15.0% $556 $609 $49 $42 8.6% 6.9% Margin % SCO Revenue Platform Lanes Q4 19 Q1 20 Q2
Slide 9: Hospitality
9 $ in millions, except Aloha Essential Sites HOSPITALITY Revenue Operating Income Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 $0 $100 $200 $300 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 -$10 $0 $10 $20 (10.0)% —% 10.0% 20.0% $182 $232 $9 $17 Margin % 7.3% 4.9% Aloha Essential Sites Recurring Revenue Q4 19 Q1 20 Q2 20 Q3 20
Slide 10: Supplemental Revenue Q4
10 • Sequential improvement across software, services and hardware revenue • Positive mix shift to software, services and recurring revenue • Year-over-year declines largely driven by COVID-19 and shift to recurring revenue Q4 2020 Q3 2020 Q4 2019 Q4 20 v Q3 20 Q4 20 v Q4 19 Software $483 $468 $533
Slide 11: FY Supplemental Revenue
11 • Positive mix shift to software, services and recurring revenue • Year-over-year declines largely driven by COVID-19 and shift to recurring revenue FY 2020 FY 2019 FY 20 v FY 19 Software $1,885 $2,008 (6%) Services $2,567 $2,520 2% Hardware $1,755 $2,387 (26%) ATM $891 $1,263 (29%) SCO/POS $864
Slide 12: Free Cash Flow, Net Debt & EBITDA
12 Free Cash Flow Q4 2020 Q4 2019 FY 2020 FY 2019 Cash provided by Operating Activities $146 $408 $641 $634 Total capital expenditures ($63) ($109) ($263) ($329) Cash used in discontinued ops ($4) $3 $— ($24) Discretionary pension contributions $70 $— $70 $— Free Cash Flow $149 $302 $448 $281 $ in m
Slide 13: Cost Actions & Impacts
13 COST ACTIONS & IMPACTS IMPROVED COST STRUCTURE TO DRIVE MARGIN EXPANSION • Temporary COVID cost actions replaced with permanent reductions • Total cost actions of $150M • Turning attention to integration of Cardtronics and synergies COST ACTIONS • Recorded charge of approximately $200M in Q4 ◦ ~$
Slide 14: Outlook Q1 2021
14 OUTLOOK Q1 2021 • Revenue - Up 2% to 3% year over year • Adjusted EBITDA Margin - Expands approx. 250 bps year over year to roughly 15% • Free Cash Flow - Modest improvement from Q1 2020 to approx. breakeven
Slide 15: Looking Forward
15 LOOKING FORWARD • Pleased with 2020 execution • Accelerate NCR as-a-Service 80/60/20 Strategy • Return to growth • Building momentum for 2021 execution • Increased revenue and cash flow linearity • Cost takeout and positive operating leverage drive margin expansion • Set the stage to hit the grou
Slide 16: NCR + Cardtronics
16 Advances NCR's 80/60/20 targets NCR + CARDTRONICS Enhances NCR's scale and cash flow generation Expands payments opportunity Accelerates NCR-as-a-Service strategy Accretive to non-GAAP EPS in the full first year ... approx. 20-25% per share Strategically consistent … accretive
Slide 17: Supplementary Materials
17 SUPPLEMENTARY MATERIALS
Slide 18: Q4 & FY 2020 GAAP Results
18 Q4 2020 Q4 2019 % Change As Reported FY 2020 FY 2019 % Change As Reported Revenue $1,631 $1,886 (14%) $6,207 $6,915 (10%) Gross Margin 328 532 (38)% 1,524 1,921 (21)% Gross Margin Rate 20.1% 28.2% 24.6% 27.8% Operating Expenses 391 350 12% 1,303 1,310 (1)% % of Revenue 24.0% 18.6% 21.0% 18.9% Ope
Slide 19: Q4 & FY 2020 Non-GAAP Results
19 Q4 2020 Q4 2019 % Change As Reported % Change Constant Currency FY 2020 FY 2019 % Change As Reported % Change Adjusted Constant Currency Revenue $1,631 $1,886 (14%) (14%) $6,207 $6,915 (10%) (10%) Gross Margin (non-GAAP) 465 541 (14)% (14)% 1,696 1,966 (14)% (13)% Gross Margin Rate (non-GAAP) 28.
Slide 20: Non-GAAP Measures Explanation
20 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 NC
Slide 21: Constant Currency, Net Debt and Adjusted EBITDA
21 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 to the overall
Slide 22: Non-GAAP Measures
22 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 substitutes for,
Slide 23: Net Income to Adjusted EBITDA Reconciliation
23 Net Income from Continuing Operations (GAAP) to Adjusted EBITDA (non-GAAP) Q4 2020 LTM Q3 2020 LTM Q4 2019 LTM Q4 2020 Q4 2019 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ (7) $ 502 $ 614 $ (125) $ 384 Pension Mark-to-Market Adjustments 34 75 75 34 75 Transformation &
Slide 24: Q4 2020 GAAP to Non-GAAP
24 Q4 QTD 2020 GAAP Transformatio n Costs Acquisition- related amortization of intangibles Acquisition- related costs VA Release Pension Mark-to- Market Q4 QTD 2020 non-GAAP Product revenue $529 $— $— $— $— $— $529 Service revenue 1,102 — — — — — 1,102 Total revenue 1,631 — — — — — 1,631 Cost of pro
Slide 25: Q4 2020 EPS Reconciliation
25 Q4 QTD 2020 GAAP Q4 QTD 2020 non- GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $(125) $83 Dividends on convertible preferred shares (12) — Income from continuing operations attributable to NCR common stockh
Slide 26: Q4 2019 GAAP to Non-GAAP
26 Q4 QTD 2019 GAAP Transformation & Restructuring Costs Acquisition- related amortization of intangibles Acquisition- related costs Debt Refinancing Valuation Allowance Release Int Reorg & IP Transfer Pension mark-to- market adjustment Q4 QTD 2019 non- GAAP Product revenue $766 $— $— $— $— $— $— $—
Slide 27: Q4 2019 EPS Reconciliation
27 Q4 QTD 2019 GAAP Q4 QTD 2019 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 $— $— Income from continuing operations attributable to NCR common stockhold
Slide 28: FY 2020 GAAP to Non-GAAP
28 FY 2020 GAAP Transformation Costs Acquisition- related amortization of intangibles Acquisition- related costs Debt Refinancing VA Release Pension mark-to- market FY 2020 non- GAAP Product revenue $2,005 $— $— $— $— $— $— $2,005 Service revenue 4,202 — — — — — — 4,202 Total revenue 6,207 — — — — —
Slide 29: FY 2020 EPS Reconciliation
29 FY 2020 GAAP FY 2020 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $(7) $242 Dividends on convertible preferred shares (31) — Income from continuing operations attributable to NCR common stockholders ($3
Slide 30: FY 2019 GAAP to Non-GAAP
30 FY 2019 GAAP Transformation & Restructuring Costs Acquisition- related amortization of intangibles Acquisition- related costs Debt Refinancing VA Release & Other Int Reorg & IP Transfer Pension mark-to- market adjustments FY 2019 non- GAAP Product revenue $2,681 $— $— $— $— $— $— $— $2,681 Servic
Slide 31: FY 2019 EPS Reconciliation
31 FY 2019 GAAP FY 2019 non-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) $— Income from continuing operations attributable to NCR common stockholders $
Slide 32: Operating Income GAAP to Non-GAAP Reconciliation
32 GAAP TO NON-GAAP RECONCILIATION Q4 2020 Q3 2020 Q4 2019 Operating Income Operating Income Operating Income Banking $87 $99 $144 Retail 49 45 42 Hospitality 9 7 17 Other 7 7 14 Total Operating Income (non-GAAP) 152 158 217 Less: Transformation and restructuring costs 195 19 11 Acquisition-related
Slide 33: Q4 2020 Operational Results
33 Q4 2020 Operational Results % Change As Reported Favorable (unfavorable) FX impact % Change Constant Currency Revenue (14%) —% (14%) Gross Margin (non-GAAP) (14%) —% (14%) Gross Margin Rate (non-GAAP) (20 bps) (20 bps) — bps Operating Expenses (non-GAAP) (3%) 1% (4%) % of Revenue 200 bps (10) bps
Slide 34: FY 2020 Operational Results
34 FY 2020 Operational Results % Change As Reported Favorable (unfavorable) FX impact % Change Constant Currency Revenue (10%) —% (10%) Gross Margin (non-GAAP) (14%) (1%) (13%) Gross Margin Rate (non-GAAP) (110 bps) (20 bps) (90 bps) Operating Expenses (non-GAAP) (3%) —% (3%) % of Revenue 130 bps (1
Slide 35: Thank You
35 THANK YOU