NCR Corporation (NYSE: NCR) reported financial results today for
the three months ended December 31, 2020. Fourth quarter, full year
and other recent highlights include:
- Full year cash flow from operations of $641 million; Full
year free cash flow of $448 million
- Full year software and services revenue represents 72% of
total revenue, up from 65% in 2019
- Fourth quarter recurring revenue up 6%; represents 54% of
total revenue
- Fourth quarter cost actions achieve $150 million in savings
in 2021
- Announced proposed transaction with Cardtronics
“Our fourth quarter results marked a solid finish to an
unprecedented challenging year,” said Michael Hayford, President
and Chief Executive Officer. “We achieved sequential operating
performance improvement as we steadily adapted to conducting
business in the current environment. We generated strong cash flow,
increased recurring revenue and improved our cost structure. I am
extremely proud of the NCR team as we continue to execute our
strategy and expect to emerge from the pandemic a much stronger
company. We enter 2021 with a strong financial position and are
excited about the opportunity that the proposed transaction with
Cardtronics is expected to bring. The proposed transaction
accelerates our NCR-as-a-Service strategy and expands opportunities
in payments, while further shifting NCR’s revenue mix to software,
services and recurring revenue. We are positioning NCR to deliver
increased value to customers and sustainable long-term value
creation for stockholders.”
In this release, we use certain non-GAAP measures, including
presenting certain measures on a constant currency basis. These
non-GAAP measures include "free cash flow" and others with the
words “non-GAAP," or "constant currency" in their titles. These
non-GAAP measures are listed, described and reconciled to their
most directly comparable GAAP measures under the heading "Non-GAAP
Financial Measures" later in this release.
Fourth Quarter 2020
Operating Results
Revenue
Fourth quarter revenue of $1,631 million was down 14% year over
year. Foreign currency fluctuations did not have an impact on the
revenue comparison. The COVID-19 pandemic had a significant impact
to revenue and the shift from selling perpetual software licenses
to recurring revenue lowered revenue by $32 million. The following
table shows revenue for the fourth quarter:
$ in millions
Q4 2020
Q4 2019
% Increase
(Decrease)
% Increase
(Decrease)
Constant
Currency
Banking
$
795
$
944
(16
%)
(16
%)
Retail
569
609
(7
%)
(8
%)
Hospitality
182
232
(22
%)
(21
%)
Other
85
101
(16
%)
(17
%)
Total Revenue
$
1,631
$
1,886
(14
%)
(14
%)
Software
$
483
$
533
(9
%)
(10
%)
Services
671
673
—
%
(1
%)
Hardware
477
680
(30
%)
(30
%)
ATM
221
347
(36
%)
(37
%)
SCO/POS
256
333
(23
%)
(24
%)
Total Revenue
$
1,631
$
1,886
(14
%)
(14
%)
Software & Services %
71
%
64
%
Recurring Revenue
$
874
$
825
6
%
6
%
Recurring Revenue %
54
%
44
%
Banking revenue decreased 16% due to the continued impact of the
COVID-19 pandemic driven by a 36% decline in ATM hardware revenue.
An accelerated shift from selling perpetual software licenses to
recurring revenue also impacted the year-over-year revenue
comparison. Foreign currency fluctuations had no impact on the
revenue comparison.
Retail revenue decreased 7% due to a decrease in self-checkout
and point-of-sale revenue, partially offset by higher services
revenue. Foreign currency fluctuations had a favorable impact of 1%
on the revenue comparison.
Hospitality revenue decreased 22% driven primarily by a decline
in hardware revenue. Foreign currency fluctuations had an
unfavorable impact of 1% on the revenue comparison.
Gross Margin
Fourth quarter gross margin of $328 million decreased from $532
million in the prior year period. Gross margin rate was 20.1%, down
from 28.2%. The decrease in gross margin was driven by excess
inventory charges from the cost actions taken in the fourth quarter
of 2020, as well as the reduction in revenue impacted by the
COVID-19 pandemic and the shift to recurring revenue.
Fourth quarter gross margin (non-GAAP) of $465 million decreased
from $541 million in the prior year period. Gross margin rate
(non-GAAP) was 28.5%, down from 28.7%. The decrease in gross margin
(non-GAAP) was driven by the reduction in revenue impacted by the
COVID-19 pandemic and the shift to recurring revenue.
Operating Expenses
Fourth quarter operating expenses of $391 million increased from
$350 million in the prior year period. The increase in operating
expenses (GAAP) was driven by software impairment and cash charges
from the cost actions taken in the fourth quarter of 2020, offset
by a reduction from the net cost savings.
Fourth quarter operating expenses (non-GAAP) of $313 million
decreased from $324 million in the prior year period. The decrease
in operating expenses (non-GAAP) was primarily due to a reduction
from the net cost savings.
Operating Income
Fourth quarter loss from operations of $63 million decreased
from income from operations of $182 million in the prior year
period. Fourth quarter operating income (non-GAAP) of $152 million
decreased from $217 million in the prior year period. The decreases
in operating income, both GAAP and non-GAAP, were driven by the
impacts to gross margin and operating expenses described above.
Other Expense/Income
Fourth quarter other expense (GAAP) of $83 million decreased
from $99 million in the prior year period. The pension
mark-to-market adjustment was an expense of $34 million in the
fourth quarter of 2020, compared to expense of $75 million in the
prior year period. Fourth quarter other expense (non-GAAP) of $49
million decreased from $60 million. The decrease in other expense
(non-GAAP) was due to decreases in employee benefit plan related
expenses, as well as higher interest income.
Income Tax Expense/Benefit
Fourth quarter income tax benefit of $20 million decreased from
an income tax benefit of $301 million in the prior year period. The
fourth quarter effective income tax rate was 14%, compared to
(363)% in the prior year period. The prior year period included the
establishment of deferred tax assets from the transfer of certain
intangible assets among our wholly-owned subsidiaries, as well as a
valuation allowance release.
Fourth quarter income tax expense (non-GAAP) of $21 million
decreased from $34 million in the prior year period. The fourth
quarter effective income tax rate (non-GAAP) was 20%, compared to
22% in the prior year period. The decrease in income tax expense
(non-GAAP) was primarily driven by lower income before income
taxes.
Net Income from Continuing Operations Attributable to NCR
Fourth quarter net loss from continuing operations attributable
to NCR of $125 million decreased from net income from continuing
operations attributable to NCR of $384 million in the prior year
period. The decrease was driven by impacts to gross margin and
operating expenses described above.
Adjusted EBITDA
Fourth quarter adjusted EBITDA of $258 million decreased from
$299 million in the prior year period. The decrease in Adjusted
EBITDA was driven by impacts to gross margin and operating expenses
described above.
Cash Flow
Fourth quarter cash provided by operating activities of $146
million decreased from cash provided by operating activities of
$408 million in the prior year period. Fourth quarter free cash
flow was $149 million, compared to free cash flow of $302 million
in the prior year period. The decreases in cash provided by
operating activities and free cash flow were both driven by lower
operating earnings, partially offset by working capital
improvements.
Full Year 2020
Operating Results
Full year 2020 revenue of $6,207 million was down 10% year over
year. Foreign currency fluctuations did not have an impact on the
revenue comparison. The COVID-19 pandemic had a significant impact
to revenue and the shift from selling perpetual software licenses
to recurring revenue lowered revenue by $100 million.
Full year net loss from continuing operations attributable to
NCR of $7 million decreased from net income from continuing
operations attributable to NCR of $614 million in the prior year
period. Full year 2020 adjusted EBITDA of $896 million decreased
from $1,058 million in the prior year period.
Full year 2020 GAAP diluted EPS of $(0.30) was down from $3.71
in 2019. Full year diluted EPS (non-GAAP) of $1.69 was down from
$2.81 in 2019.
Full year 2020 cash provided by operating activities was $641
million and full year free cash flow was $448 million.
Cost
Actions
In the fourth quarter of 2020, as we continue to advance the
Company's strategic initiatives, we implemented certain changes to
drive sustained organizational efficiencies. As a result, we
incurred pre-tax charges of $202 million of which approximately
$155 million were non-cash charges related to excess inventory and
software impairment charges. We also incurred approximately $47
million in cash charges that are expected to drive $150 million of
savings in 2021.
Impact from
COVID-19
We continue to navigate through the challenging times presented
by COVID-19, with a sharp focus on safeguarding our employees and
helping our customers. Despite the unprecedented environment, our
teams are executing at a high level and we are advancing our
strategy.
While it is difficult to project how disruptive and protracted
the pandemic will be, we do expect it will negatively impact our
business into 2021. We expect all of our segment results to be
negatively impacted by the COVID-19 pandemic. We expect our
hardware revenues to be most impacted while our recurring revenue
streams are expected to be more resilient.
The COVID-19 pandemic is complex and rapidly evolving. The
ultimate impact on our overall financial condition and operating
results will depend on the currently unknowable duration and
severity of the pandemic, as well as any additional governmental
and public actions taken in response. We continue to evaluate the
long-term impact that COVID-19 may have on our business model,
which may result in additional charges in 2021. These charges may
include both cash and non-cash items. There can be no assurance
that the measures we have taken or will take will completely offset
the negative impact of COVID-19.
2020 Fourth Quarter
Earnings Conference Call
A conference call is scheduled for today at 4:30 p.m. Eastern
Time to discuss the fourth quarter and full year 2020 results.
Access to the conference call and accompanying slides, as well as a
replay of the call, are available on NCR's web site at http://investor.ncr.com. Additionally, the live
call can be accessed by dialing 888-820-9413 (United States/Canada
Toll-free) or 786-460-7169 (International Toll) and entering the
participant passcode 7622865.
More information on NCR’s fourth quarter and full year earnings,
including additional financial information and analysis, is
available on NCR’s Investor Relations website at http://investor.ncr.com/.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a leading software- and
services-led enterprise provider in the financial, retail and
hospitality industries. NCR is headquartered in Atlanta, Ga., with
36,000 employees globally. NCR is a trademark of NCR Corporation in
the United States and other countries.
Website: www.ncr.com Twitter:
@NCRCorporation Facebook: www.facebook.com/ncrcorp LinkedIn: https://www.linkedin.com/company/ncr-corporation
YouTube: www.youtube.com/user/ncrcorporation
Cautionary Statements
This release contains “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 harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the “Act”), including statements
containing the words “expect,” “intend,” “plan,” “believe,” “will,”
“should,” “would,” “could,” “may,” and words of similar meaning, as
well as other words or expressions referencing future events,
conditions or circumstances. We intend these forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Act. Statements that
describe or relate to NCR’s or Cardtronics’ plans, goals,
intentions, strategies, or financial outlook (including NCR’s
expectations in 2021 regarding its first quarter revenue, EBITDA
margin and free cash flow, as well as general year over year
improvements), and statements that do not relate to historical or
current fact, are examples of forward-looking statements. Examples
of forward-looking statements include, without limitation,
statements regarding NCR’s and Cardtronics’ plans to manage their
respective business through the novel strain of the coronavirus
identified in late 2019 (“COVID-19”) pandemic and the health and
safety of our customers and employees; the expected impact of the
COVID-19 pandemic on NCR’s Banking, Retail and Hospitality segments
including the impact on NCR’s customers’ businesses and their
ability to pay; expectations regarding NCR’s or Cardtronics’
respective operating goals and actions to manage these goals;
expectations regarding cost and revenue synergies; expectations
regarding NCR’s or Cardtronics’ cash flow generation, cash reserve,
liquidity, financial flexibility and impact of the COVID-19
pandemic on NCR’s and Cardtronics’ respective employee bases;
expectations regarding NCR’s and Cardtronics’ respective abilities
to capitalize on market opportunities; expectations regarding
leveraging the debit network to monetize payment transactions;
expectations regarding accretion; expectations regarding long-term
strategy and our ability to create stockholder value; NCR’s or
Cardtronics’ respective financial outlook; expectations regarding
NCR’s continued focus on our long-term fundamentals, including,
but, not limited to, NCR’s execution of its NCR-as-a-Service
80/60/20 strategy and return to growth; expected increased revenue
and cash flow linearity; margin expansion; NCR’s expected areas of
focus to drive growth and create long-term stockholder value; the
effect of the announcement of the proposed transaction on the
ability of Cardtronics to retain and hire key personnel and
maintain relationships with customers, suppliers and others with
whom Cardtronics does business, or on Cardtronics operating results
and business generally; risks that the proposed transaction
disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed
transaction; the outcome of any legal proceedings related to the
proposed transaction; the occurrence of any event, change or other
circumstances that could give rise to the termination of the
acquisition agreement; the ability of the parties to consummate the
proposed transaction on a timely basis or at all; the satisfaction
of the conditions precedent to consummation of the proposed
transaction, including the ability to secure regulatory approvals
on the terms expected, at all or in a timely manner; the ability of
the Company to implement its plans, forecasts and other
expectations with respect to its business after the completion of
the proposed transaction and realize expected benefits; business
disruption following the proposed transaction; and the potential
benefits of an acquisition of Cardtronics. Forward-looking
statements are not guarantees of future performance, and there are
a number of important factors that could cause actual outcomes and
results to differ materially from the results contemplated by such
forward-looking statements, including those factors listed in Item
1A “Risk Factors” of NCR’s Annual Report on Form 10-K filed with
the U. S. Securities and Exchange Commission (SEC) on February 28,
2020 and Cardtronics’ Annual Report on Form 10-K filed with the SEC
on March 2, 2020, and those factors detailed from time to time in
NCR’s and Cardtronics’ other SEC reports including quarterly
reports on Form 10-Q and current reports on Form 8-K. In addition,
there can be no assurance that a transaction with Cardtronics PLC
will be agreed to or occur, and if agreed, the terms of any such
transaction. NCR does not undertake any obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
otherwise required by law.
Non-GAAP Financial Measures
Non-GAAP Financial Measures. While NCR reports its results in
accordance with Generally Accepted Accounting Principles in the
United States, or GAAP, in this release NCR also uses the non-GAAP
measures listed and described below.
Non-GAAP Diluted Earnings Per Share (EPS), Gross Margin
(non-GAAP), Gross Margin Rate (non-GAAP), Operating Expenses
(non-GAAP), Operating Income (non-GAAP), Operating Margin Rate
(non-GAAP), Other (Expense) (non-GAAP), Income Tax Expense
(non-GAAP), Effective Income Tax Rate (non-GAAP), and Net Income
from Continuing Operations Attributable to NCR (non-GAAP). NCR’s
non-GAAP diluted EPS, gross margin (non-GAAP), gross margin rate
(non-GAAP), operating expenses (non-GAAP), operating income
(non-GAAP), operating margin rate (non-GAAP), other (expense)
(non-GAAP), income tax expense (non-GAAP), effective income tax
rate (non-GAAP), and net income from continuing operations
attributable to NCR (non-GAAP) are determined by excluding, as
applicable, pension mark-to-market adjustments, pension
settlements, pension curtailments and pension special termination
benefits, as well as other special items, including amortization of
acquisition related intangibles and transformation and
restructuring activities, from NCR’s GAAP earnings per share, gross
margin, gross margin rate, expenses, income from operations,
operating margin rate, other (expense), income tax expense,
effective income tax rate and net income from continuing operations
attributable to NCR, respectively. Due to the non-operational
nature of these pension and other special items, NCR's management
uses these non-GAAP measures to evaluate year-over-year operating
performance. NCR also uses operating income (non-GAAP) and diluted
EPS (non-GAAP), to manage and determine the effectiveness of its
business managers and as a basis for incentive compensation. NCR
believes these measures are useful for investors because they
provide a more complete understanding of NCR's underlying
operational performance, as well as consistency and comparability
with NCR's past reports of financial results.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) NCR believes that Adjusted EBITDA
(adjusted earnings before interest, taxes, depreciation and
amortization) provides useful information to investors because it
is an indicator of the strength and performance of the Company's
ongoing business operations, including its ability to fund
discretionary spending such as capital expenditures, strategic
acquisitions and other investments. NCR determines Adjusted EBITDA
for a given period based on its GAAP net income from continuing
operations attributable to NCR plus interest expense, net; plus
income tax expense (benefit); plus depreciation and amortization;
plus other income (expense); plus pension mark-to-market
adjustments, pension settlements, pension curtailments and pension
special termination benefits and other special items, including
amortization of acquisition related intangibles.
Free Cash Flow. NCR defines free cash flow as net cash provided
by/used in operating activities and cash flow provided by/used in
discontinued operations less capital expenditures for property,
plant and equipment, additions to capitalized software,
discretionary pension contributions and pension settlements. NCR's
management uses free cash flow to assess the financial performance
of the Company and believes it is useful for investors because it
relates the operating cash flow of the Company to the capital that
is spent to continue and improve business operations. In
particular, free cash flow indicates the amount of cash generated
after capital expenditures, which can be used for, among other
things, investment in the Company's existing businesses, strategic
acquisitions, strengthening the Company's balance sheet, repurchase
of Company stock and repayment of the Company's debt obligations.
Free cash flow does not represent the residual cash flow available
for discretionary expenditures since there may be other
nondiscretionary expenditures that are not deducted from the
measure. Free cash flow does not have uniform definitions under
GAAP and, therefore, NCR's definitions may differ from other
companies' definitions of these 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 to the overall variability of foreign exchange
rates from period to period, NCR’s management uses constant
currency measures to evaluate period-over-period operating
performance on a more consistent and comparable basis. NCR’s
management believes that presentation of financial measures without
this result is more representative of the company's
period-over-period operating performance and provides additional
insight into historical and/or future performance, which may be
helpful for investors.
NCR'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, or superior to, results determined
in accordance with GAAP. These non-GAAP measures are reconciled to
their most directly comparable GAAP measures in the tables
below.
Use of Certain Terms
Recurring revenue includes 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, cloud revenue,
payment processing revenue, and certain professional services
arrangements, as well as term-based software license arrangements
that include customer termination rights.
Reconciliation of Gross Margin (GAAP) to
Gross Margin (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
Gross Margin (GAAP)
$
328
$
532
Transformation and restructuring costs
131
2
Acquisition-related amortization of
intangibles
6
7
Gross Margin (Non-GAAP)
$
465
$
541
Reconciliation of Gross Margin Rate (GAAP)
to Gross Margin Rate (Non-GAAP)
Q4 2020
Q4 2019
Gross Margin Rate (GAAP)
20.1
%
28.2
%
Transformation and restructuring costs
8.0
%
0.1
%
Acquisition-related amortization of
intangibles
0.4
%
0.4
%
Gross Margin Rate (Non-GAAP)
28.5
%
28.7
%
Reconciliation of Operating Expenses (GAAP)
to Operating Expenses (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
Operating Expenses (GAAP)
$
391
$
350
Transformation and restructuring costs
(64)
(9)
Acquisition-related amortization of
intangibles
(13)
(15)
Acquisition-related costs
(1)
(2)
Operating Expenses (Non-GAAP)
$
313
$
324
Reconciliation of Income from Operations
(GAAP) to Operating Income (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
Income (Loss) from Operations
(GAAP)
$
(63)
$
182
Transformation and restructuring costs
195
11
Acquisition-related amortization of
intangibles
19
22
Acquisition-related costs
1
2
Operating Income (Non-GAAP)
$
152
$
217
Reconciliation of Other (Expense) (GAAP) to
Other (Expense) (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
Other Income (Expense) (GAAP)
$
(83)
$
(99)
Transformation and restructuring costs
7
—
Acquisition-related cost
(7)
—
Debt Refinancing
—
1
Internal reorganization and IP
transfer
—
(37)
Pension mark-to-market adjustments
34
75
Other Income (Expense)
(Non-GAAP)
$
(49)
$
(60)
Reconciliation of Income Tax (Benefit)
Expense (GAAP) to Income Tax Expense (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
Income Tax (Benefit) Expense
(GAAP)
$
(20)
$
(301)
Transformation and restructuring costs
37
3
Acquisition-related amortization of
intangibles
4
5
Pension mark-to-market adjustments
5
9
Debt refinancing
—
1
Valuation allowance release & other
tax adjustments
(5)
53
Internal reorganization & IP
transfer
—
264
Income Tax Expense (Non-GAAP)
$
21
$
34
Reconciliation of Net Income from Continuing
Operations Attributable to NCR (GAAP) to Earnings Before Interest,
Depreciation, Taxes and Amortization (Adjusted EBITDA)
$ in millions
Q4 2020
Q4 2019
FY 2020
FY 2019
Net Income (Loss) from Continuing
Operations Attributable to NCR (GAAP)
$
(125)
$
384
$
(7)
$
614
Transformation and restructuring costs
202
11
234
58
Acquisition-related amortization of
intangibles
19
22
81
86
Acquisition-related costs
(6)
2
(6)
3
Pension mark-to-market adjustments
34
75
34
75
Depreciation and amortization (excluding
acquisition-related amortization of intangibles)
74
59
275
232
Loss on debt extinguishment
—
—
20
—
Interest expense
51
54
218
197
Interest income
(3)
(1)
(8)
(4)
Internal reorganization & IP
transfer
—
(37)
—
(37)
Income tax expense (benefit)
(20)
(301)
(53)
(273)
Stock-based compensation expense
32
31
108
107
Adjusted EBITDA (Non-GAAP)
$
258
$
299
$
896
$
1,058
Reconciliation of Diluted Earnings Per Share
from Continuing Operations (GAAP) to Non-GAAP Diluted
Earnings Per Share from Continuing Operations (Non-GAAP)
Q4 2020
Q4 2019
FY 2020
FY 2019
Diluted Earnings Per Share (GAAP)
(1)
$
(1.06)
$
2.67
$
(0.30)
$
3.71
Transformation and restructuring costs
1.17
0.06
1.33
0.29
Acquisition-related amortization of
intangibles
0.11
0.12
0.45
0.45
Acquisition-related costs
(0.04)
0.01
(0.04)
0.03
Pension mark-to-market adjustments
0.20
0.46
0.20
0.44
Debt refinancing
—
—
0.10
0.03
Valuation allowance release & other
tax adjustments
0.04
(0.37)
(0.30)
(0.52)
Internal reorganization & IP
transfer
—
(2.09)
—
(2.00)
Diluted Earnings Per Share (Non-GAAP)
(1)
$
0.59
$
0.85
$
1.69
$
2.81
(1)
Non-GAAP diluted EPS is determined using
the conversion of the Series A Convertible Preferred Stock into
common stock in the calculation of weighted average diluted shares
outstanding. GAAP EPS is determined using the most dilutive
measure, either including the impact of dividends or deemed
dividends on the Company's Series A Convertible Preferred Stock in
the calculation of net income or loss available to common
stockholders or including the impact of the conversion of the
Series A Convertible Preferred Stock into common stock in the
calculation of the weighted average diluted shares outstanding.
Therefore, GAAP diluted EPS and non-GAAP diluted EPS may not
mathematically reconcile.
Reconciliation of Net Cash Provided by
Operating Activities (GAAP) to Free Cash Flow (Non-GAAP)
$ in millions
Q4 2020
Q4 2019
FY 2020
FY 2019
Net cash provided by (used in)
operating activities
$
146
$
408
$
641
$
634
Total capital expenditures
(63)
(109)
(263)
(329)
Net cash provided by (used in)
discontinued operations
(4)
3
—
(24)
Discretionary pension contributions
70
—
70
—
Free cash flow
$
149
$
302
$
448
$
281
Reconciliation of Revenue Growth % (GAAP)
to Revenue Growth Constant Currency % (Non-GAAP)
Three months ended December
31, 2020
Revenue
Growth %
(GAAP)
Favorable
(unfavorable)
FX impact
Revenue
Growth
Constant
Currency %
(Non-GAAP)
Banking
(16)%
—%
(16)%
Retail
(7)%
1%
(8)%
Hospitality
(22)%
(1)%
(21)%
Other
(16)%
1%
(17)%
Total Revenue
(14)%
—%
(14)%
Three months ended December
31, 2020
Revenue
Growth %
(GAAP)
Favorable
(unfavorable)
FX impact
Revenue
Growth
Adjusted
Constant
Currency %
(Non-GAAP)
Software
(9)%
1%
(10)%
Services
—%
1%
(1)%
Hardware
(30)%
—%
(30)%
ATM
(36)%
1%
(37)%
SCO/POS
(23)%
1%
(24)%
Total Revenue
(14)%
—%
(14)%
Three months ended December
31, 2020
Revenue Growth %
(GAAP)
Favorable
(unfavorable)
FX impact
Revenue Growth
Adjusted Constant
Currency %
(Non-GAAP)
Recurring Revenue
6%
—%
6%
NCR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Schedule A
For the Periods Ended December
31
Three Months
Twelve Months
2020
2019
2020
2019
Revenue
Product
$
529
$
766
$
2,005
$
2,681
Service
1,102
1,120
4,202
4,234
Total Revenue
1,631
1,886
6,207
6,915
Cost of products
479
599
1,733
2,146
Cost of services
824
755
2,950
2,848
Total gross margin
328
532
1,524
1,921
% of Revenue
20.1
%
28.2
%
24.6
%
27.8
%
Selling, general and administrative
expenses
326
276
1,069
1,051
Research and development expenses
65
74
234
259
Income (loss) from operations
(63)
182
221
611
% of Revenue
(3.9)
%
9.7
%
3.6
%
8.8
%
Loss on extinguishment of debt
—
—
(20)
—
Interest expense
(51)
(54)
(218)
(197)
Other expense, net
(32)
(45)
(42)
(73)
Total other expense, net
(83)
(99)
(280)
(270)
Income (loss) from continuing
operations before income taxes
(146)
83
(59)
341
% of Revenue
(9.0)
%
4.4
%
(1.0)
%
4.9
%
Income tax expense (benefit)
(20)
(301)
(53)
(273)
Income (loss) from continuing
operations
(126)
384
(6)
614
Loss from discontinued operations, net of
tax
(72)
(35)
(72)
(50)
Net income (loss)
(198)
349
(78)
564
Net income (loss) attributable to
noncontrolling interests
(1)
—
1
—
Net income (loss) attributable to
NCR
$
(197)
$
349
$
(79)
$
564
Amounts attributable to NCR common
stockholders:
Income (loss) from continuing
operations
$
(125)
$
384
$
(7)
$
614
Dividends on convertible preferred
stock
(12)
(6)
(31)
(110)
Income (loss) from continuing operations
attributable to NCR common stockholders
(137)
378
(38)
504
Loss from discontinued operations, net of
tax
(72)
(35)
(72)
(50)
Net income (loss) attributable to NCR
common stockholders
$
(209)
$
343
$
(110)
$
454
Income (loss) per share attributable to
NCR common stockholders:
Income (loss) per common share from
continuing operations
Basic
$
(1.06)
$
2.96
$
(0.30)
$
4.13
Diluted (1)
$
(1.06)
$
2.67
$
(0.30)
$
3.71
Net income (loss) per common
share
Basic
$
(1.62)
$
2.69
$
(0.86)
$
3.72
Diluted (1)
$
(1.62)
$
2.43
$
(0.86)
$
3.36
Weighted average common shares
outstanding
Basic
129.0
127.6
128.4
122.1
Diluted (1)
129.0
143.9
128.4
145.2
(1) Diluted EPS is determined
using the most dilutive measure, either including the impact of the
dividends and deemed dividends on NCR's Series A Convertible
Preferred Shares in the calculation of net income or loss per
common share from continuing operations and net income or loss per
common share or including the impact of the conversion of such
preferred stock into common stock in the calculation of the
weighted average diluted shares outstanding.
NCR CORPORATION REVENUE
AND OPERATING INCOME SUMMARY (Unaudited) (in
millions)
Schedule B
For the Periods Ended December
31
Three Months
Twelve Months
2020
2019
% Change
% Change
Constant
Currency
2020
2019
% Change
% Change
Constant Currency
Revenue by segment
Banking
$
795
$
944
(16)
%
(16)
%
$
3,098
$
3,512
(12)
%
(11)
%
Retail
569
609
(7)
%
(8)
%
2,080
2,217
(6)
%
(6)
%
Hospitality
182
232
(22)
%
(21)
%
684
843
(19)
%
(18)
%
Other
85
101
(16)
%
(17)
%
345
343
1
%
1
%
Total Revenue
$
1,631
$
1,886
(14)
%
(14)
%
$
6,207
$
6,915
(10)
%
(10)
%
Operating income by segment
Banking
$
87
$
144
$
381
$
514
Banking operating income margin %
10.9
%
15.3
%
12.3
%
14.6
%
Retail
49
42
116
144
Retail operating income margin %
8.6
%
6.9
%
5.6
%
6.5
%
Hospitality
9
17
7
56
Hospitality operating income margin %
4.9
%
7.3
%
1.0
%
6.6
%
Other
7
14
26
44
All Other operating income margin %
8.2
%
13.9
%
7.5
%
12.8
%
Subtotal-segment operating
income
$
152
$
217
$
530
$
758
Total Revenue operating income margin
%
9.3
%
11.5
%
8.5
%
11.0
%
Other adjustments (1)
215
35
309
147
Total income (loss) from
operations
$
(63)
$
182
$
221
$
611
(1) The following table presents the other
adjustments for NCR:
For the Periods Ended December
31
Three Months
Twelve Months
In millions
2020
2019
2020
2019
Transformation and restructuring costs
$
195
$
11
$
227
$
58
Acquisition-related amortization of
intangible assets
19
22
81
86
Acquisition-related costs
1
2
1
3
Total other adjustments
$
215
$
35
$
309
$
147
NCR CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited) (in
millions, except per share amounts)
Schedule C
December 31, 2020
September 30, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
338
$
1,605
$
509
Accounts receivable, net of allowances of
$51, $55, and $44 as of December 31, 2020, September 30, 2020 and
December 31, 2019, respectively
1,117
1,248
1,490
Inventories
601
748
784
Other current assets
422
396
361
Total current assets
2,478
3,997
3,144
Property, plant and equipment, net
373
384
413
Goodwill
2,837
2,828
2,832
Intangibles, net
532
547
607
Operating lease assets
344
347
391
Prepaid pension cost
199
193
178
Deferred income taxes
965
871
821
Other assets
686
661
601
Total assets
$
8,414
$
9,828
$
8,987
Liabilities and stockholders’
equity
Current liabilities
Short-term borrowings
$
8
$
222
$
282
Accounts payable
632
676
840
Payroll and benefits liabilities
268
289
308
Contract liabilities
507
512
502
Other current liabilities
673
579
606
Total current liabilities
2,088
2,278
2,538
Long-term debt
3,270
4,266
3,277
Pension and indemnity plan liabilities
851
875
858
Postretirement and postemployment benefits
liabilities
120
119
111
Income tax accruals
102
94
92
Operating lease liabilities
325
336
369
Other liabilities
334
253
240
Total liabilities
7,090
8,221
7,485
Series A convertible preferred stock: par
value $0.01 per share, 3.0 shares authorized, 0.3 issued and
outstanding as of December 31, 2020 and 0.4 issued and outstanding
as of September 30, 2020, and December 31, 2019, respectively;
redemption amount and liquidation preference of $276 as of December
31, 2020, $411 as of September 30, 2020 and $399 as of December 31,
2019
273
408
395
Stockholders' equity
NCR stockholders' equity:
Preferred stock: par value $0.01 per
share, 100.0 shares authorized, no shares issued and outstanding as
of December 31, 2020, September 30, 2020 and December 31, 2019,
respectively
—
—
—
Common stock: par value $0.01 per share,
500.0 shares authorized, 129.1, 128.5 and 127.7 shares issued and
outstanding as of December 31, 2020, September 30, 2020 and
December 31, 2019, respectively
1
1
1
Paid-in capital
368
332
312
Retained earnings
950
1,159
1,060
Accumulated other comprehensive loss
(271)
(297)
(269)
Total NCR stockholders' equity
1,048
1,195
1,104
Noncontrolling interests in
subsidiaries
3
4
3
Total stockholders' equity
1,051
1,199
1,107
Total liabilities and stockholders'
equity
$
8,414
$
9,828
$
8,987
NCR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Schedule D
For the Periods Ended December
31
Three Months
Twelve Months
2020
2019
As Revised(1)
2020
2019
As Revised(1)
Operating activities
Net income (loss)
$
(198)
$
349
$
(78)
$
564
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Loss from discontinued operations
72
35
72
50
Loss on debt extinguishment
—
—
20
—
Depreciation and amortization
95
84
364
333
Stock-based compensation expense
32
31
108
107
Deferred income taxes
(69)
(320)
(115)
(355)
Impairment of other assets
42
2
46
2
Gain (loss) on disposal of property, plant
and equipment
1
—
(1)
(6)
Bargain purchase gain from acquisition
(7)
—
(7)
—
Changes in assets and liabilities:
Receivables
154
10
420
(144)
Inventories
140
83
168
5
Current payables and accrued expenses
(101)
48
(295)
(20)
Contract liabilities
(4)
(6)
2
31
Employee benefit plans
(60)
72
(51)
59
Other assets and liabilities
49
20
(12)
8
Net cash provided by operating
activities
146
408
641
634
Investing activities
Expenditures for property, plant and
equipment
(8)
(38)
(31)
(91)
Proceeds from sale of property, plant and
equipment
—
—
7
11
Additions to capitalized software
(55)
(71)
(232)
(238)
Business acquisitions, net of cash
acquired
—
(117)
(25)
(203)
Purchases of short-term investments
(6)
—
(20)
—
Proceeds from sales of short-term
investments
7
—
27
—
Other investing activities, net
—
4
(3)
9
Net cash used in investing
activities
(62)
(222)
(277)
(512)
Financing activities
Short term borrowings, net
—
(4)
—
—
Payments on term credit facilities
(5)
(2)
(12)
(761)
Borrowings on term credit facilities
—
400
4
750
Payments on revolving credit
facilities
(1,282)
(1,137)
(1,998)
(3,216)
Borrowings on revolving credit
facilities
75
1,076
1,535
3,535
Payments of senior unsecured notes
—
(400)
(1,315)
(900)
Proceeds from issuance of senior unsecured
notes
—
—
1,500
1,000
Debt issuance costs
—
(4)
(21)
(32)
Repurchase of Series A preferred
shares
(144)
—
(144)
—
Cash paid for Series A preferred shares
dividends
(3)
—
(9)
(302)
Repurchases of common stock
—
—
(41)
(96)
Proceeds from employee stock plans
5
4
17
16
Tax withholding payments on behalf of
employees
(1)
—
(28)
(29)
Purchase of non-controlling interest
—
(3)
—
(3)
Net change in client funds obligations
18
(13)
12
(15)
Principal payments for finance lease
obligations
(4)
(4)
(13)
(4)
Other financing activities
—
(3)
(1)
(4)
Net cash provided by (used in)
financing activities
(1,341)
(90)
(514)
(61)
Cash flows from discontinued
operations
Net cash provided by (used in)
discontinued operations
(4)
3
—
(24)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
9
1
(7)
(6)
Increase (decrease) in cash, cash
equivalents, and restricted cash
(1,252)
100
(157)
31
Cash, cash equivalents and restricted
cash at beginning of period
1,658
463
563
532
Cash, cash equivalents, and restricted
cash at end of period
$
406
$
563
$
406
$
563
(1) Certain amounts have been
revised for the three and twelve months ended December 31, 2019 to
correct for errors related to the business activities of JetPay
Corporation, a wholly-owned subsidiary, which will be more fully
described in our upcoming Form 10-K filing.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209006112/en/
News Media Contact Scott Sykes NCR Corporation
212.589.8428 scott.sykes@ncr.com Investor Contact Michael
Nelson NCR Corporation 678.808.6995 michael.nelson@ncr.com
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