Full Year Revenue Up 10% and Up 13% Constant
Currency
NCR Corporation (NYSE: NCR) reported financial results today for
the full year and three months ended December 31, 2022. Full year
and fourth quarter results and other recent highlights include:
- Delivered strong full year and fourth quarter 2022
results
- Full year revenue of $7.8 billion, up 10%; up 13% on a
constant currency basis
- Full year recurring revenue of $4.8 billion, up 16% and up
20% on a constant currency basis
- Full year net income from continuing operations attributable
to NCR of $64 million, down 34%
- Full year Adjusted EBITDA of $1,370 million, up 10% and up
16% on a constant currency basis
- Full year GAAP diluted EPS from continuing operations of
$0.34, down 41%
- Full year Non-GAAP diluted EPS of $2.62, up 2%
- Expect 2023 to be another strong year executing strategic
initiatives, with improved profitability
- Company continues to move forward with previously announced
plan to separate into two companies
“Our fourth quarter results represented a good finish to a year
where we executed extremely well even with the challenging
macroeconomic environment throughout 2022,” said Michael Hayford,
Chief Executive Officer. “We delivered solid financial performance,
made progress on our strategy to NCR becoming a software-led
as-a-service company with higher recurring revenue streams, and
demonstrated our unwavering commitment to our customers with
further increases in our customer satisfaction metrics. We enter
2023 with products winning in the market and positive
momentum.”
Hayford continued, “We are making good progress on our plans to
separate NCR into two public companies. We continue to believe the
separation will unlock significant value for our customers and
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,” “Adjusted EBITDA,” 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.
Full Year and Fourth
Quarter 2022 Operating Results
Effective January 1, 2022, the Company realigned its reportable
segments to correspond with changes to its operating model,
management structure and organizational responsibilities. Prior
periods have been reclassified in order to conform to current
period presentation.
Revenue
Fourth quarter revenue of $2,009 million decreased 1% year over
year. On a constant currency basis, fourth quarter revenue was up
2% year over year. Full year revenue of $7,844 million increased
10% year over year. On a constant currency basis, full year revenue
was up 13% year over year. The following tables show revenue for
the fourth quarter and full year:
$ in millions
Q4 2022
Q4 2021
% Increase (Decrease)
% Increase (Decrease)
Constant Currency
Retail
$
575
$
608
(5
)%
(1
)%
Hospitality
239
231
3
%
5
%
Digital Banking
139
133
5
%
5
%
Payments & Network
319
295
8
%
11
%
Self-Service Banking
691
707
(2
)%
2
%
Other
57
68
(16
)%
(14
)%
Eliminations (1)
(11
)
(8
)
38
%
38
%
Total revenue
$
2,009
$
2,034
(1
)%
2
%
Recurring revenue
$
1,223
$
1,182
3
%
7
%
Recurring revenue %
61
%
58
%
$ in millions
FY 2022
FY 2021
% Increase (Decrease)
% Increase (Decrease)
Constant Currency
Retail
$
2,258
$
2,231
1
%
5
%
Hospitality
926
849
9
%
10
%
Digital Banking
543
513
6
%
6
%
Payments & Network
1,286
675
91
%
96
%
Self-Service Banking
2,621
2,617
—
%
4
%
Other
244
297
(18
)%
(14
)%
Eliminations (1)
(43
)
(26
)
65
%
65
%
Total segment revenue
$
7,835
$
7,156
9
%
13
%
Other adjustment (2)
9
—
Total revenue
$
7,844
$
7,156
10
%
13
%
Recurring revenue
$
4,841
$
4,166
16
%
20
%
Recurring revenue %
62
%
58
%
(1)
Eliminations include revenues
from contracts with customers and the related costs that are
reported in the Payments & Network segment as well as in the
Retail or Hospitality segments, including merchant acquiring
services that are monetized via payments.
(2)
Other adjustment reflects the
revenue attributable to the Company's operations in Russia for the
twelve months ending December 31, 2022 that were excluded from
management's measure of revenue due to our announcement to suspend
sales to Russia and anticipated orderly wind down of our operations
in Russia. The revenue attributable to Russian operations for the
three and twelve months ending December 31, 2021 of $15 million and
$48 million, respectively, is included in the respective segments.
Refer to section entitled "Non-GAAP Financial Measures" for
additional information.
- Fourth quarter gross margin of $485 million decreased from $503
million in the prior year period. Gross margin rate was 24.1%,
compared to 24.7% in the prior period. Fourth quarter gross margin
(non-GAAP) of $520 million decreased from $549 million in the prior
year period. Gross margin rate (non-GAAP) was 25.9%, compared to
27.0% in the prior period.
- Fourth quarter income from operations of $166 million increased
from $123 million in the prior year period. Fourth quarter
operating income (non-GAAP) of $232 million increased from $215
million in the prior year period.
- Fourth quarter net loss from continuing operations attributable
to NCR of $7 million decreased from net income from continuing
operations attributable to NCR of $64 million in the prior year
period.
- Fourth quarter Adjusted EBITDA of $380 million increased from
$353 million in the prior year period. Foreign currency
fluctuations had an unfavorable impact on the Adjusted EBITDA
comparison of 6%. Adjusted EBITDA margin rate was 18.9%, compared
to 17.4% in the prior year period.
- Fourth quarter cash provided by operating activities of $202
million decreased from cash provided by operating activities of
$270 million in the prior year period. Fourth quarter free cash
flow was $202 million, compared to free cash flow of $100 million
in the prior year period.
- Full year 2022 net income from continuing operations
attributable to NCR of $64 million decreased from net income from
continuing operations attributable to NCR of $97 million in the
prior year period.
- Full year 2022 Adjusted EBITDA increased to $1,370 million from
$1,244 million in the prior year period.
- Full year 2022 cash provided by operating activities was $447
million compared to $1.08 billion in the prior year period. Full
year 2022 free cash flow was $164 million compared to $460 million
in the prior year period.
2023
Outlook
For the full year 2023, we are forecasting:
- Revenue - $7.8 billion to $8.0 billion
- Adjusted EBITDA - $1.45 billion to $1.55 billion
- Non-GAAP diluted EPS(1) - $3.30 - $3.50
- Non-GAAP diluted EPS (prior convention)(1) - $2.55 to
$2.75
- Free cash flow - $400 million to $500 million
For the first quarter of 2023, we are forecasting:
- Revenue - $1.8 billion to $1.9 billion
- Adjusted EBITDA - approximately $300 million
- Non-GAAP diluted EPS(1) - $0.55 - $0.60
- Non-GAAP diluted EPS (prior convention)(1) - $0.35 to
$0.40
- Free cash flow - $100 million to $200 million
(1) Our Non-GAAP diluted EPS calculation previously included
stock-based compensation expense. Beginning in 2023, we will
exclude the impact of stock-based compensation expense from our
Non-GAAP diluted EPS calculation, which in 2022 would have resulted
in Non-GAAP diluted EPS of approximately $3.32.
With respect to our Adjusted EBITDA, Free Cash Flow and non-GAAP
diluted earnings per share guidance, we do not provide a
reconciliation of the respective GAAP measures because we are not
able to predict with reasonable certainty the reconciling items
that may affect the GAAP net income from continuing operations,
GAAP cash flow from operating activities and GAAP diluted earnings
per share from continuing operations without unreasonable effort.
The reconciling items are primarily the future impact of special
tax items, capital structure transactions, restructuring, pension
mark-to-market transactions, acquisitions or divestitures, or other
events. These reconciling items are uncertain, depend on various
factors and could significantly impact, either individually or in
the aggregate, the GAAP measures. Refer to the heading “Non-GAAP
Financial Measures” for additional information regarding our use of
non-GAAP financial measures.
Separation
Update
On September 15, 2022, NCR announced a plan to separate into two
independent, publicly traded companies – one focused on digital
commerce, the other on ATMs. The separation is intended to be
structured in a tax-free manner. The separation transaction will
follow the satisfaction of customary conditions, including
effectiveness of appropriate filings with the U.S. Securities and
Exchange Commission, and the completion of audited financial
statements. The current target is to complete the separation by the
end of 2023.
Should alternative options become available in the future that
could deliver superior value to our shareholders than the planned
separation, such as a whole or partial company sale of NCR, the
Board remains open to considering alternative scenarios.
2022 Fourth Quarter
and Full Year Earnings Conference Call
A conference call is scheduled for today at 4:30 p.m. Eastern
Time to discuss the full year and fourth quarter 2022 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 4153583.
More information on NCR’s full year and fourth quarter 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 leader in transforming,
connecting and running technology platforms for self-directed
banking, stores and restaurants. NCR is headquartered in Atlanta,
Georgia, with 38,000 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”). Forward-looking
statements use words such as “expect,” “anticipate,” “outlook,”
“intend,” “plan,” “confident,” “believe,” “will,” “should,”
“would,” “potential,” “positioning,” “proposed,” “planned,”
“objective,” “likely,” “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 plans, goals,
intentions, strategies, or financial outlook, and statements that
do not relate to historical or current fact, are examples of
forward-looking statements. Examples of forward-looking statements
in this release include, without limitation, statements regarding:
our expectations of demand for our solutions and execution, and the
impact thereof on our financial results in 2023; NCR’s focus on
advancing our strategic growth initiatives and transforming NCR
into a software-led as-a-service company with a higher mix of
recurring revenue streams; our expectations of NCR's ability to
deliver increased value to customers and stockholders; statements
regarding the planned separation of NCR into two separate
companies, including, but not limited to, statements regarding the
anticipated timing and structure of such planned transaction, the
future commercial or financial performance of the commerce company
or the ATM company following such planned transaction, value
creation and ability to innovate and drive growth generally as a
result of such transaction, and the expected capital structure of
the companies at the time of and following the transaction.
Forward-looking statements are based on our current beliefs,
expectations and assumptions, which may not prove to be accurate,
and involve a number of known and unknown risks and uncertainties,
many of which are out of NCR’s control. 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 relating
to:
- Strategy and Technology: transforming our business model;
development and introduction of new solutions; competition in the
technology industry; integration of acquisitions and management of
alliance activities; our multinational operations
- Business Operations: domestic and global economic and credit
conditions; risks and uncertainties from the payments-related
business and industry; disruptions in our data center hosting and
public cloud facilities; retention and attraction of key employees;
defects, errors, installation difficulties or development delays;
failure of third-party suppliers; the impact of the coronavirus
(COVID-19) pandemic and geopolitical and macroeconomic challenges;
environmental exposures from historical and ongoing manufacturing
activities; and climate change
- Data Privacy & Security: impact of data protection,
cybersecurity and data privacy including any related issues
- Finance and Accounting: our level of indebtedness; the terms
governing our indebtedness; incurrence of additional debt or
similar liabilities or obligations; access or renewal of financing
sources; our cash flow sufficiency to service our indebtedness;
interest rate risks; the terms governing our trade receivables
facility; the impact of certain changes in control relating to
acceleration of our indebtedness, our obligations under other
financing arrangements, or required repurchase of our senior
unsecured notes; any lowering or withdrawal of the ratings assigned
to our debt securities by rating agencies; our pension liabilities;
and write down of the value of certain significant assets
- Law and Compliance: protection of our intellectual property;
changes to our tax rates and additional income tax liabilities;
uncertainties regarding regulations, lawsuits and other related
matters; and changes to cryptocurrency regulations
- Governance: impact of the terms of our Series A Convertible
Preferred (“Series A”) Stock relating to voting power, share
dilution and market price of our common stock; rights, preferences
and privileges of Series A stockholders compared to the rights of
our common stockholders; and actions or proposals from stockholders
that do not align with our business strategies or the interests of
our other stockholders
- Planned Separation: an unexpected failure to complete, or
unexpected delays in completing, the necessary actions for the
planned separation, or to obtain the necessary approvals to
complete these actions; that the potential strategic benefits,
synergies or opportunities expected from the separation may not be
realized or may take longer to realize than expected; costs of
implementation of the separation and any changes to the
configuration of businesses included in the separation if
implemented; the potential inability to access or reduced access to
the capital markets or increased cost of borrowings, including as a
result of a credit rating downgrade; the potential adverse
reactions to the planned separation by customers, suppliers,
strategic partners or key personnel and potential difficulties in
maintaining relationships with such persons and risks associated
with third party contracts containing consent and/or other
provisions that may be triggered by the planned separation; the
risk that any newly formed entity to house the commerce or ATM
business would have no credit rating and may not have access to the
capital markets on acceptable terms; unforeseen tax liabilities or
changes in tax law; requests or requirements of governmental
authorities related to certain existing liabilities; and the
ability to obtain or consummate financing or refinancing related to
the transaction upon acceptable terms or at all.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those set forth in the forward-looking
statements. There can be no guarantee that the planned separation
will be completed in the expected form or within the expected time
frame or at all. Nor can there be any guarantee that the commerce
business and ATM business after a separation will be able to
realize any of the potential strategic benefits, synergies or
opportunities as a result of these actions. Neither can there be
any guarantee that shareholders will achieve any particular level
of shareholder returns. Nor can there be any guarantee that the
planned separation will enhance value for shareholders, or that NCR
or any of its divisions, or separate commerce and ATM business,
will be commercially successful in the future, or achieve any
particular credit rating or financial results. Additional
information concerning these and other factors can be found in the
Company’s filings with the U.S. Securities and Exchange Commission,
including the Company’s most recent annual report on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K. Any
forward-looking statement speaks only as of the date on which it is
made. The Company 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
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 Income
(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 income
(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, interest
and other income (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 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. Beginning in 2023, we
will exclude the impact of stock-based compensation expense from
our Non-GAAP diluted EPS calculation.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA). 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 stock-based compensation expense; 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 and transformation and restructuring charges, among
others. NCR uses Adjusted EBITDA to manage and measure the
performance of its business segments. NCR also uses Adjusted EBITDA
to manage and determine the effectiveness of its business managers
and as a basis for incentive compensation. NCR believes that
Adjusted EBITDA 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.
Adjusted EBITDA margin is calculated based on Adjusted EBITDA as
a percentage of total revenue. Adjusted EBITDA margin by segment is
calculated based on segment Adjusted EBITDA divided by the related
component of revenue.
Special Item Related to Russia The war in Eastern Europe and
related sanctions imposed on Russia and related actors by the
United States and other jurisdictions required us to commence the
orderly wind down of our operations in Russia beginning in the
first quarter of 2022. As of December 31, 2022, we have ceased
operations in Russia and are in process of dissolving our only
subsidiary in Russia. As a result, for the twelve months ending
December 31, 2022, our non-GAAP presentation of the measures
described above exclude the immaterial impact of our operating
results in Russia, as well as the impact of impairments taken to
write down the carrying value of assets and liabilities, severance
charges, and the assessment of collectability on revenue
recognition. We consider this to be a non-recurring special item
and management has reviewed the results of its business segments
excluding these impacts. We have not adjusted the presentation of
the prior year periods due to the immaterial impact of Russia to
revenue and income from continuing operations for the three and
twelve months ended December 31, 2021.
Free Cash Flow. NCR defines free cash flow as net cash provided
by (used in) operating activities less capital expenditures for
property, plant and equipment, less additions to capitalized
software, plus/minus restricted cash settlement activity, plus
acquisition-related items, less the impact from the initial sale of
trade accounts receivables under the agreement entered into during
the third quarter of 2021, and plus 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 may contribute to an understanding 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.
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, interchange and network revenue,
cryptocurrency-related 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 2022
Q4 2021
Gross Margin (GAAP)
$
485
$
503
Transformation and restructuring costs
8
25
Acquisition-related amortization of
intangibles
27
21
Gross Margin (Non-GAAP)
$
520
$
549
Reconciliation of Gross Margin Rate (GAAP)
to Gross Margin Rate (Non-GAAP)
Q4 2022
Q4 2021
Gross Margin Rate (GAAP)
24.1
%
24.7
%
Transformation and restructuring costs
0.4
%
1.3
%
Acquisition-related amortization of
intangibles
1.4
%
1.0
%
Gross Margin Rate (Non-GAAP)
25.9
%
27.0
%
Reconciliation of Income from Operations
(GAAP) to Operating Income (Non-GAAP)
$ in millions
Q4 2022
Q4 2021
Income (Loss) from Operations
(GAAP)
$
166
$
123
Transformation and restructuring costs
20
40
Acquisition-related amortization of
intangibles
42
44
Acquisition-related costs
1
8
Separation costs
3
—
Operating Income (Non-GAAP)
$
232
$
215
Reconciliation of Net Income from Continuing
Operations Attributable to NCR (GAAP) to Earnings Before Interest,
Depreciation, Taxes and Amortization (Adjusted EBITDA)
$ in millions
Q4 2022
Q4 2021
FY 2022
FY 2021
Net Income (Loss) from Continuing
Operations Attributable to NCR (GAAP)
$
(7
)
$
64
$
64
$
97
Transformation and restructuring costs
30
46
123
66
Acquisition-related amortization of
intangibles
42
44
172
132
Acquisition-related costs
1
6
10
98
Pension mark-to-market adjustments
8
(118
)
8
(118
)
Separation costs
3
—
3
—
Depreciation and amortization (excluding
acquisition-related amortization of intangibles)
109
107
423
357
Loss on Debt Extinguishment
—
—
—
42
Interest expense
81
64
285
238
Interest income
(7
)
(4
)
(13
)
(8
)
Income tax expense (benefit)
92
109
148
186
Stock-based compensation expense
28
35
125
154
Russia
—
—
22
—
Adjusted EBITDA (Non-GAAP)
$
380
$
353
$
1,370
$
1,244
Reconciliation of Diluted Earnings Per Share
from Continuing Operations (GAAP) to Non-GAAP Diluted
Earnings Per Share from Continuing Operations (Non-GAAP)
Q4 2022
Q4 2021
FY 2022
FY 2021
Diluted Earnings Per Share from
Continuing Operations (GAAP) (1)
$
(0.08
)
$
0.43
$
0.34
$
0.58
Transformation and restructuring costs
0.20
0.26
0.71
0.38
Acquisition-related amortization of
intangibles
0.15
0.23
0.82
0.70
Acquisition-related costs
0.01
0.13
0.06
0.71
Separation costs
0.01
—
0.01
—
Pension mark-to-market adjustments
(0.01
)
(0.62
)
(0.01
)
(0.62
)
Debt refinancing
—
—
—
0.28
Valuation allowance & other tax
adjustments
0.48
0.32
0.48
0.46
Russia
—
—
0.13
—
Diluted Earnings Per Share from
Continuing Operations (Non-GAAP) (1)
$
0.79
$
0.76
$
2.62
$
2.56
(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 2022
Q4 2021
FY 2022
FY2021
Net cash provided by (used in)
operating activities
$
202
$
270
$
447
$
1,077
Total capital expenditures
(88
)
(106
)
(377
)
(348
)
Restricted cash settlement activity
33
(42
)
27
(41
)
Acquisition related items
—
—
—
55
Initial sale of trade accounts
receivable
—
(26
)
—
(300
)
Pension contributions
55
4
67
17
Free cash flow
$
202
$
100
$
164
$
460
Reconciliation of As Reported Growth %
(GAAP) to Growth Constant Currency % (Non-GAAP)
Three months ended December
31, 2022
Twelve months ended December
31, 2022
$ in millions
As Reported Growth %
Favorable (Unfavorable) FX
Impact
Growth % Constant
Currency (non-GAAP)
As Reported Growth %
Favorable (Unfavorable) FX
Impact
Growth % Constant
Currency (non-GAAP)
Revenue by segment
Retail
(5
)%
(4
)%
(1
)%
1
%
(4
)%
5
%
Hospitality
3
%
(2
)%
5
%
9
%
(1
)%
10
%
Digital Banking
5
%
—
%
5
%
6
%
—
%
6
%
Payments & Network
8
%
(3
)%
11
%
91
%
(5
)%
96
%
Self-Service Banking
(2
)%
(4
)%
2
%
—
%
(4
)%
4
%
Other
(16
)%
(2
)%
(14
)%
(18
)%
(4
)%
(14
)%
Eliminations
38
%
—
%
38
%
65
%
—
%
65
%
Total segment revenue
(1
)%
(3
)%
2
%
9
%
(4
)%
13
%
Total revenue
(1
)%
(3
)%
2
%
10
%
(3
)%
13
%
Recurring Revenue
3
%
(4
)%
7
%
16
%
(4
)%
20
%
Adjusted EBITDA
8
%
(6
)%
14
%
10
%
(6
)%
16
%
NCR CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Schedule A
(Unaudited)
(in millions, except per share
amounts)
For the Periods Ended December
31
Three Months
Twelve Months
2022
2021
2022
2021
Revenue
Product
$
631
$
640
$
2,351
$
2,193
Service
1,378
1,394
5,493
4,963
Total Revenue
2,009
2,034
7,844
7,156
Cost of products
537
560
2,097
1,850
Cost of services
987
971
3,889
3,413
Total gross margin
485
503
1,858
1,893
% of Revenue
24.1
%
24.7
%
23.7
%
26.5
%
Selling, general and administrative
expenses
266
316
1,152
1,151
Research and development expenses
53
64
217
268
Income (loss) from operations
166
123
489
474
% of Revenue
8.3
%
6.0
%
6.2
%
6.6
%
Loss on extinguishment of debt
—
—
—
(42
)
Interest expense
(81
)
(64
)
(285
)
(238
)
Other income (expense), net
(2
)
113
7
90
Total interest and other expense, net
(83
)
49
(278
)
(190
)
Income (loss) from continuing
operations before income taxes
83
172
211
284
% of Revenue
4.1
%
8.5
%
2.7
%
4.0
%
Income tax expense (benefit)
92
109
148
186
Income (loss) from continuing
operations
(9
)
63
63
98
Income (loss) from discontinued
operations, net of tax
(9
)
—
(4
)
—
Net income (loss)
(18
)
63
59
98
Net income (loss) attributable to
noncontrolling interests
(2
)
(1
)
(1
)
1
Net income (loss) attributable to
NCR
$
(16
)
$
64
$
60
$
97
Amounts attributable to NCR common
stockholders:
Income (loss) from continuing
operations
$
(7
)
$
64
$
64
$
97
Dividends on convertible preferred
stock
(4
)
(4
)
(16
)
(16
)
Income (loss) from continuing operations
attributable to NCR common stockholders
(11
)
60
48
81
Income (loss) from discontinued
operations, net of tax
(9
)
—
(4
)
—
Net income (loss) attributable to NCR
common stockholders
$
(20
)
$
60
$
44
$
81
Income (loss) per share attributable to
NCR common stockholders:
Income (loss) per common share from
continuing operations
Basic
$
(0.08
)
$
0.45
$
0.35
$
0.62
Diluted (1)
$
(0.08
)
$
0.43
$
0.34
$
0.58
Net income (loss) per common
share
Basic
$
(0.15
)
$
0.45
$
0.32
$
0.62
Diluted (1)
$
(0.15
)
$
0.43
$
0.31
$
0.58
Weighted average common shares
outstanding
Basic
137.5
132.1
136.7
131.2
Diluted (1)
137.5
140.3
141.2
139.0
(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 ADJUSTED EBITDA
SUMMARY
Schedule B
(Unaudited)
(in millions)
For the Periods Ended December
31
Three Months
Twelve Months
2022
2021
% Change
% Change Constant
Currency
2022
2021
% Change
% Change Constant
Currency
Revenue by segment
Retail
$
575
$
608
(5
)%
(1
)%
$
2,258
$
2,231
1
%
5
%
Hospitality
239
231
3
%
5
%
926
849
9
%
10
%
Digital Banking
139
133
5
%
5
%
543
513
6
%
6
%
Payments & Network
319
295
8
%
11
%
1,286
675
91
%
96
%
Self-Service Banking
691
707
(2
)%
2
%
2,621
2,617
—
%
4
%
Other
57
68
(16
)%
(14
)%
244
297
(18
)%
(14
)%
Eliminations
(11
)
(8
)
38
%
38
%
(43
)
(26
)
65
%
65
%
Total segment revenue
$
2,009
$
2,034
(1
)%
2
%
$
7,835
$
7,156
9
%
13
%
Other adjustment (1)
—
—
9
—
Total revenue
$
2,009
$
2,034
(1
)%
2
%
$
7,844
$
7,156
10
%
13
%
Adjusted EBITDA by segment
Retail
$
116
$
119
(3
)%
$
415
$
442
(6
)%
Retail Adjusted EBITDA margin %
20.2
%
19.6
%
18.4
%
19.8
%
Hospitality
54
39
38
%
192
158
22
%
Hospitality Adjusted EBITDA margin %
22.6
%
16.9
%
20.7
%
18.6
%
Digital Banking
54
52
4
%
226
213
6
%
Digital Banking Adjusted EBITDA margin
%
38.8
%
39.1
%
41.6
%
41.5
%
Payments & Network
96
105
(9
)%
405
238
70
%
Payments & Network Adjusted EBITDA
margin %
30.1
%
35.6
%
31.5
%
35.3
%
Self-Service Banking
161
148
9
%
565
580
(3
)%
Self-Service Banking Adjusted EBITDA
margin %
23.3
%
20.9
%
21.6
%
22.2
%
Corporate and Other (2)
(92
)
(104
)
(12
)%
(399
)
(369
)
8
%
Eliminations
(9
)
(6
)
50
%
(34
)
(18
)
89
%
Total Adjusted EBITDA
$
380
$
353
8
%
14
%
$
1,370
$
1,244
10
%
16
%
Total Adjusted EBITDA margin %
18.9
%
17.4
%
17.5
%
17.4
%
(1)
Other adjustment reflects the
revenue attributable to the Company's operations in Russia for the
twelve months ending December 31, 2022 that were excluded from
management's measure of revenue due to our announcement to suspend
sales to Russia and anticipated orderly wind down of our operations
in Russia. The revenue attributable to the Russian operations for
the three and twelve months ending December 31, 2021 of $15 million
and $48 million, respectively, is included in the respective
segments. Refer to the section entitled "Non-GAAP Financial
Measures" for additional information.
(2)
Corporate and Other includes
income and expenses related to corporate functions that are not
specifically attributable to an individual reportable segment along
with any immaterial operating segment(s).
NCR CORPORATION
CONSOLIDATED BALANCE
SHEETS
Schedule C
(Unaudited)
(in millions, except per share
amounts)
December 31, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
505
$
447
Accounts receivable, net of allowances of
$34 and $24 as of December 31, 2022 and December 31, 2021,
respectively
1,083
959
Inventories
772
754
Restricted cash
228
295
Prepaid and other current assets
508
421
Total current assets
3,096
2,876
Property, plant and equipment, net
648
703
Goodwill
4,540
4,519
Intangibles, net
1,145
1,316
Operating lease assets
371
419
Prepaid pension cost
212
300
Deferred income taxes
604
732
Other assets
910
776
Total assets
$
11,526
$
11,641
Liabilities and stockholders’
equity
Current liabilities
Short-term borrowings
$
104
$
57
Accounts payable
956
826
Payroll and benefits liabilities
207
389
Contract liabilities
537
516
Settlement liabilities
250
263
Other current liabilities
679
757
Total current liabilities
2,733
2,808
Long-term debt
5,561
5,505
Pension and indemnity plan liabilities
614
789
Postretirement and postemployment benefits
liabilities
91
119
Income tax accruals
97
116
Operating lease liabilities
353
388
Other liabilities
323
383
Total liabilities
9,772
10,108
Series A convertible preferred stock: par
value $0.01 per share, 3.0 shares authorized, 0.3 issued and
outstanding as of December 31, 2022 and December 31, 2021,
respectively; redemption amount and liquidation preference of $276
as of December 31, 2022 and December 31, 2021, respectively
275
274
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, 2022 and December 31, 2021, respectively
—
—
Common stock: par value $0.01 per share,
500.0 shares authorized, 138.0 and 132.2 shares issued and
outstanding as of December 31, 2022 and December 31, 2021,
respectively
1
1
Paid-in capital
704
515
Retained earnings
1,075
1,031
Accumulated other comprehensive loss
(300
)
(291
)
Total NCR stockholders' equity
1,480
1,256
Noncontrolling interests in
subsidiaries
(1
)
3
Total stockholders' equity
1,479
1,259
Total liabilities and stockholders'
equity
$
11,526
$
11,641
NCR CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Schedule D
(Unaudited)
(in millions)
For the Periods Ended December
31
Three Months
Twelve Months
2022
2021
2022
2021
Operating activities
Net income (loss)
$
(18
)
$
63
$
59
$
98
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Loss (income) from discontinued
operations
9
—
4
—
Loss on debt extinguishment
—
—
—
42
Depreciation and amortization
159
153
610
517
Stock-based compensation expense
28
35
125
154
Deferred income taxes
29
59
53
89
Impairment of other assets
—
24
—
24
Loss (gain) on disposal of property, plant
and equipment and other assets
(14
)
1
(10
)
—
Loss on divestiture
9
—
9
—
Changes in assets and liabilities:
Receivables
58
(25
)
(216
)
215
Inventories
32
(30
)
(188
)
(195
)
Current payables and accrued expenses
(65
)
45
48
255
Contract liabilities
23
(20
)
(1
)
(15
)
Employee benefit plans
(58
)
(117
)
(61
)
(147
)
Other assets and liabilities
10
82
15
40
Net cash provided by operating
activities
$
202
$
270
$
447
$
1,077
Investing activities
Expenditures for property, plant and
equipment
$
(20
)
$
(38
)
$
(92
)
$
(106
)
Proceeds from sale of property, plant and
equipment and other assets
2
—
10
1
Additions to capitalized software
(68
)
(68
)
(285
)
(242
)
Business acquisitions, net of cash
acquired
(1
)
(7
)
(13
)
(2,473
)
Proceeds from divestiture, net
(2
)
—
(2
)
—
Purchases of short-term investments
—
—
—
(13
)
Proceeds from sales of short-term
investments
—
—
—
14
Other investing activities, net
—
(1
)
(5
)
(7
)
Net cash used in investing
activities
$
(89
)
$
(114
)
$
(387
)
$
(2,826
)
Financing activities
Short term borrowings, net
$
1
$
—
$
1
$
—
Payments of senior unsecured notes
—
—
—
(400
)
Payments on term credit facilities
(32
)
(1
)
(63
)
(107
)
Payments on revolving credit
facilities
(346
)
(219
)
(1,192
)
(1,650
)
Borrowings on term credit facilities
—
—
—
1,505
Borrowings on revolving credit
facilities
312
215
1,333
1,756
Proceeds from senior unsecured and other
notes
12
—
12
1,200
Debt issuance costs and bridge commitment
fees
—
(1
)
—
(53
)
Call premium paid on debt
extinguishment
—
—
—
(37
)
Cash dividend paid for Series A preferred
shares dividends
(5
)
(4
)
(16
)
(15
)
Proceeds from employee stock plans
12
11
31
44
Tax withholding payments on behalf of
employees
(21
)
(22
)
(59
)
(50
)
Net change in client funds obligations
(22
)
7
(28
)
4
Principal payments for finance lease
obligations
(3
)
(4
)
(15
)
(17
)
Other financing activities
—
—
(3
)
(2
)
Net cash provided by (used in)
financing activities
$
(92
)
$
(18
)
$
1
$
2,178
Cash flows from discontinued
operations
Net cash provided by (used in)
discontinued operations
(19
)
(18
)
(20
)
(68
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(7
)
(6
)
(50
)
(18
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
$
(5
)
$
114
$
(9
)
$
343
Cash, cash equivalents and restricted
cash at beginning of period
745
635
749
406
Cash, cash equivalents, and restricted
cash at end of period
$
740
$
749
$
740
$
749
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230207006019/en/
News Media Contact Scott Sykes NCR Corporation
scott.sykes@ncr.com
Investor Contact Michael Nelson NCR Corporation
678.808.6995 michael.nelson@ncr.com
NCR (NYSE:NCR)
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