Revenue Up 4% and Up 8% Constant
Currency
NCR Corporation (NYSE: NCR) reported financial results today for
the three months ended September 30, 2022. Third quarter and other
recent highlights include:
- Revenue of $1.97 billion, up 4%; up 8% on a constant
currency basis
- GAAP diluted EPS from continuing operations of $0.46, up
667%
- Non-GAAP diluted EPS of $0.80, up 16% and up 40% on a
constant currency basis
- Net income from continuing operations attributable to NCR of
$69 million, up 475%
- Adjusted EBITDA of $380 million, up 8% and up 15% on a
constant currency basis
- Strong execution across strategic growth
initiatives
- Company continues to move forward with previously announced
plan to separate into two companies
“We are pleased with our third quarter results, which represent
strong execution with solid revenue growth and significant margin
expansion, despite ongoing macroeconomic and geopolitical
volatility,” said Michael Hayford, Chief Executive Officer. “Our
third quarter results demonstrate the power of our strategy that is
transforming NCR into a software-led as-a-service company with a
higher mix of recurring revenue streams.”
Hayford continued, “We are working towards separating NCR into
two public companies, which is the right next step in NCR’s
transformation. We believe the separation will unlock significant
value 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,” “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.
Third 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 Third quarter revenue of $1,972 million increased 4%
year over year. Foreign currency fluctuations had an unfavorable
impact on the revenue comparison of 4%. The following table shows
revenue for the third quarter:
$ in millions
Q3 2022
Q3 2021
% Increase
(Decrease)
% Increase (Decrease)
Constant Currency
Retail
$
575
$
541
6
%
12
%
Hospitality
238
224
6
%
8
%
Digital Banking
137
128
7
%
7
%
Payments & Network
336
304
11
%
14
%
Self-Service Banking
640
637
—
%
6
%
Other
58
75
(23
) %
(18
) %
Eliminations (1)
(12
)
(8
)
50
%
50
%
Total revenue
$
1,972
$
1,901
4
%
8
%
Recurring revenue
$
1,222
$
1,181
3
%
7
%
Recurring revenue %
62
%
62
%
(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.
- Third quarter gross margin of $493 million decreased from $520
million in the prior year period. Gross margin rate was 25.0%,
compared to 27.4% in the prior period. Third quarter gross margin
(non-GAAP) of $528 million decreased from $546 million in the prior
year period. Gross margin rate (non-GAAP) was 26.8%, compared to
28.7% in the prior period.
- Third quarter income from operations of $187 million increased
from $157 million in the prior year period. Third quarter operating
income (non-GAAP) of $249 million increased from $215 million in
the prior year period.
- Third quarter net income from continuing operations
attributable to NCR of $69 million increased from net income from
continuing operations attributable to NCR of $12 million in the
prior year period.
- Third quarter Adjusted EBITDA of $380 million increased from
$352 million in the prior year period. Foreign currency
fluctuations had an unfavorable impact on the Adjusted EBITDA
comparison of 7%. Adjusted EBITDA margin rate was 19.3%, compared
to 18.5% in the prior year period.
- Third quarter cash provided by operating activities of $127
million decreased from cash provided by operating activities of
$497 million in the prior year period. Third quarter free cash
outflow was $28 million, compared to free cash flow of $125 million
in the prior year period.
Strategic
Review
On September 15, 2022, the Company 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 and is targeted for the end of
2023. 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 financials.
2022 Third Quarter
Earnings Conference Call
A conference call is scheduled for today at 4:30 p.m. Eastern
Time to discuss the third 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 1883509.
More information on NCR’s third 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 2022; 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 digital 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; and 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 digital 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 digital
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 digital 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, 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
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 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 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 September 30, 2022, we have ceased
operations in Russia and are in process of dissolving our only
subsidiary in Russia. As a result, for the three and nine months
ending September 30, 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
nine months ended September 30, 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 3rd 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
Q3 2022
Q3 2021
Gross Margin (GAAP)
$
493
$
520
Transformation and restructuring costs
8
3
Acquisition-related amortization of
intangibles
27
23
Gross Margin (Non-GAAP)
$
528
$
546
Reconciliation of Gross Margin Rate (GAAP)
to Gross Margin Rate (Non-GAAP)
Q3 2022
Q3 2021
Gross Margin Rate (GAAP)
25.0
%
27.4
%
Transformation and restructuring costs
0.4
%
0.1
%
Acquisition-related amortization of
intangibles
1.4
%
1.2
%
Gross Margin Rate (Non-GAAP)
26.8
%
28.7
%
Reconciliation of Income from Operations
(GAAP) to Operating Income (Non-GAAP)
$ in millions
Q3 2022
Q3 2021
Income (Loss) from Operations
(GAAP)
$
187
$
157
Transformation and restructuring costs
17
5
Acquisition-related amortization of
intangibles
44
45
Acquisition-related costs
1
8
Operating Income (Non-GAAP)
$
249
$
215
Reconciliation of Net Income from Continuing
Operations Attributable to NCR (GAAP) to Earnings Before Interest,
Depreciation, Taxes and Amortization (Adjusted EBITDA)
$ in millions
Q3 2022
Q3 2021
Net Income (Loss) from Continuing
Operations Attributable to NCR (GAAP)
$
69
$
12
Transformation and restructuring costs
17
5
Acquisition-related amortization of
intangibles
44
45
Acquisition-related costs
1
9
Depreciation and amortization (excluding
acquisition-related amortization of intangibles)
107
104
Loss on Debt Extinguishment
—
42
Interest expense
74
68
Interest income
(3
)
—
Income tax expense (benefit)
43
29
Stock-based compensation expense
28
38
Adjusted EBITDA (Non-GAAP)
$
380
$
352
Reconciliation of Diluted Earnings Per Share
from Continuing Operations (GAAP) to Non-GAAP Diluted
Earnings Per Share from Continuing Operations (Non-GAAP)
Q3 2022
Q3 2021
Diluted Earnings Per Share from
Continuing Operations (GAAP) (1)
$
0.46
$
0.06
Transformation and restructuring costs
0.11
0.03
Acquisition-related amortization of
intangibles
0.23
0.24
Acquisition-related costs
0.01
0.05
Debt extinguishment
—
0.28
Debt refinancing
—
0.01
Diluted Earnings Per Share from
Continuing Operations (Non-GAAP) (1)
$
0.80
$
0.69
(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
Q3 2022
Q3 2021
Net cash provided by (used in)
operating activities
$
127
$
497
Total capital expenditures
(115
)
(102
)
Restricted cash settlement activity
(43
)
—
Initial sale of Trade Accounts
Receivable
—
(274
)
Pension contributions
3
4
Free cash flow
$
(28
)
$
125
Reconciliation of As Reported Growth %
(GAAP) to Growth Constant Currency % (Non-GAAP)
Three months ended September
30, 2022
Nine months ended September
30, 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
6
%
(6
) %
12
%
4
%
(4
) %
8
%
Hospitality
6
%
(2
) %
8
%
11
%
(1
) %
12
%
Digital Banking
7
%
—
%
7
%
6
%
—
%
6
%
Payments & Network
11
%
(3
) %
14
%
154
%
(8
) %
162
%
Self-Service Banking
—
%
(6
) %
6
%
1
%
(4
) %
5
%
Other
(23
) %
(5
) %
(18
) %
(18
) %
(3
) %
(15
) %
Eliminations
50
%
—
%
50
%
78
%
—
%
78
%
Total segment revenue
4
%
(4
) %
8
%
14
%
(3
) %
17
%
Total revenue
4
%
(4
) %
8
%
14
%
(4
) %
18
%
Recurring Revenue
3
%
(4
) %
7
%
21
%
(4
) %
25
%
Adjusted EBITDA
8
%
(7
%)
15
%
11
%
(5
%)
16
%
Non-GAAP Diluted EPS
16
%
(24
%)
40
%
1
%
(11
%)
12
%
Schedule A
NCR CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in millions, except per share
amounts)
For the Periods Ended
September 30
Three Months
Nine Months
2022
2021
2022
2021
Revenue
Product
$
590
$
520
$
1,720
$
1,553
Service
1,382
1,381
4,115
3,569
Total Revenue
1,972
1,901
5,835
5,122
Cost of products
524
429
1,560
1,290
Cost of services
955
952
2,900
2,442
Total gross margin
493
520
1,375
1,390
% of Revenue
25.0
%
27.4
%
23.6
%
27.1
%
Selling, general and administrative
expenses
284
294
906
835
Research and development expenses
22
69
146
204
Income (loss) from operations
187
157
323
351
% of Revenue
9.5
%
8.3
%
5.5
%
6.9
%
Loss on extinguishment of debt
—
(42
)
—
(42
)
Interest expense
(74
)
(68
)
(204
)
(174
)
Other income (expense), net
(1
)
(5
)
9
(23
)
Total interest and other expense, net
(75
)
(115
)
(195
)
(239
)
Income (loss) from continuing
operations before income taxes
112
42
128
112
% of Revenue
5.7
%
2.2
%
2.2
%
2.2
%
Income tax expense (benefit)
43
29
56
77
Income (loss) from continuing
operations
69
13
72
35
Income (loss) from discontinued
operations, net of tax
—
—
5
—
Net income (loss)
69
13
77
35
Net income (loss) attributable to
noncontrolling interests
—
1
1
2
Net income (loss) attributable to
NCR
$
69
$
12
$
76
$
33
Amounts attributable to NCR common
stockholders:
Income (loss) from continuing
operations
$
69
$
12
$
71
$
33
Dividends on convertible preferred
stock
(4
)
(4
)
(12
)
(12
)
Income (loss) from continuing operations
attributable to NCR common stockholders
65
8
59
21
Income (loss) from discontinued
operations, net of tax
—
—
5
—
Net income (loss) attributable to NCR
common stockholders
$
65
$
8
$
64
$
21
Income (loss) per share attributable to
NCR common stockholders:
Income (loss) per common share from
continuing operations
Basic
$
0.47
$
0.06
$
0.43
$
0.16
Diluted (1)
$
0.46
$
0.06
$
0.42
$
0.15
Net income (loss) per common
share
Basic
$
0.47
$
0.06
$
0.47
$
0.16
Diluted (1)
$
0.46
$
0.06
$
0.45
$
0.15
Weighted average common shares
outstanding
Basic
137.0
131.5
136.4
130.8
Diluted (1)
140.3
137.8
140.9
137.1
(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.
Schedule B
NCR CORPORATION
REVENUE AND ADJUSTED EBITDA
SUMMARY
(Unaudited)
(in millions)
For the Periods Ended
September 30
Three Months
Nine Months
2022
2021
%
Change
% Change
Constant
Currency
2022
2021
%
Change
% Change
Constant
Currency
Revenue by segment
Retail
$
575
$
541
6
%
12
%
$
1,683
$
1,623
4
%
8
%
Hospitality
238
224
6
%
8
%
687
618
11
%
12
%
Digital Banking
137
128
7
%
7
%
404
380
6
%
6
%
Payments & Network
336
304
11
%
14
%
967
380
154
%
162
%
Self-Service Banking
640
637
—
%
6
%
1,930
1,910
1
%
5
%
Other
58
75
(23
) %
(18
) %
187
229
(18
) %
(15
) %
Eliminations
(12
)
(8
)
50
%
50
%
(32
)
(18
)
78
%
78
%
Total segment revenue
$
1,972
$
1,901
4
%
8
%
$
5,826
$
5,122
14
%
17
%
Other adjustment (1)
—
—
9
—
Total revenue
$
1,972
$
1,901
4
%
8
%
$
5,835
$
5,122
14
%
18
%
Adjusted EBITDA by segment
Retail
$
128
$
104
23
%
$
299
$
323
(7
) %
Retail Adjusted EBITDA margin %
22.3
%
19.2
%
17.8
%
19.9
%
Hospitality
51
44
16
%
138
119
16
%
Hospitality Adjusted EBITDA margin %
21.4
%
19.6
%
20.1
%
19.3
%
Digital Banking
60
52
15
%
172
161
7
%
Digital Banking Adjusted EBITDA margin
%
43.8
%
40.6
%
42.6
%
42.4
%
Payments & Network
114
111
3
%
309
133
132
%
Payments & Network Adjusted EBITDA
margin %
33.9
%
36.5
%
32.0
%
35.0
%
Self-Service Banking
150
155
(3
) %
404
432
(6
) %
Self-Service Banking Adjusted EBITDA
margin %
23.4
%
24.3
%
20.9
%
22.6
%
Corporate and Other (2)
(112
)
(109
)
3
%
(307
)
(265
)
16
%
Eliminations
(11
)
(5
)
120
%
(25
)
(12
)
108
%
Total Adjusted EBITDA
$
380
$
352
8
%
15
%
$
990
$
891
11
%
16
%
Total Adjusted EBITDA margin %
19.3
%
18.5
%
17.0
%
17.4
%
(1)
Other adjustment reflects the revenue
attributable to the Company's operations in Russia for the three
and nine months ending September 30, 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 nine months ending September 30, 2021 of $14 million
and $33 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).
Schedule C
NCR CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in millions, except per share
amounts)
September 30,
2022
December 31,
2021
Assets
Current assets
Cash and cash equivalents
$
434
$
447
Accounts receivable, net of allowances of
$29 and $24 as of September 30, 2022 and December 31, 2021,
respectively
1,116
959
Inventories
827
754
Restricted cash
302
295
Other current assets
512
421
Total current assets
3,191
2,876
Property, plant and equipment, net
620
703
Goodwill
4,572
4,519
Intangibles, net
1,184
1,316
Operating lease assets
377
419
Prepaid pension cost
263
300
Deferred income taxes
678
732
Other assets
898
776
Total assets
$
11,783
$
11,641
Liabilities and stockholders’
equity
Current liabilities
Short-term borrowings
$
106
$
57
Accounts payable
876
826
Payroll and benefits liabilities
319
389
Contract liabilities
507
516
Settlement liabilities
271
263
Other current liabilities
691
757
Total current liabilities
2,770
2,808
Long-term debt
5,611
5,505
Pension and indemnity plan liabilities
723
789
Postretirement and postemployment benefits
liabilities
121
119
Income tax accruals
108
116
Operating lease liabilities
358
388
Other liabilities
371
383
Total liabilities
10,062
10,108
Series A convertible preferred stock: par
value $0.01 per share, 3.0 shares authorized, 0.3 issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively; redemption amount and liquidation preference of $276
as of September 30, 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 September 30, 2022 and December 31, 2021, respectively
—
—
Common stock: par value $0.01 per share,
500.0 shares authorized, 137.0 and 132.2 shares issued and
outstanding as of September 30, 2022 and December 31, 2021,
respectively
1
1
Paid-in capital
675
515
Retained earnings
1,095
1,031
Accumulated other comprehensive loss
(326
)
(291
)
Total NCR stockholders' equity
1,445
1,256
Noncontrolling interests in
subsidiaries
1
3
Total stockholders' equity
1,446
1,259
Total liabilities and stockholders'
equity
$
11,783
$
11,641
Schedule D
NCR CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(in millions)
For the Periods Ended
September 30
Three Months
Nine Months
2022
2021
2022
2021
Operating activities
Net income (loss)
$
69
$
13
$
77
$
35
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Income from discontinued operations
—
—
(5
)
—
Loss on debt extinguishment
—
42
—
42
Depreciation and amortization
152
152
451
364
Stock-based compensation expense
28
38
97
119
Deferred income taxes
18
4
24
30
Loss (gain) on disposal of property, plant
and equipment and other assets
2
—
4
—
Changes in assets and liabilities:
Receivables
(65
)
318
(274
)
240
Inventories
(18
)
(84
)
(220
)
(165
)
Current payables and accrued expenses
55
76
113
210
Contract liabilities
(58
)
(38
)
(24
)
5
Employee benefit plans
(9
)
(9
)
(3
)
(30
)
Other assets and liabilities
(47
)
(15
)
5
(43
)
Net cash provided by operating
activities
$
127
$
497
$
245
$
807
Investing activities
Expenditures for property, plant and
equipment
$
(40
)
$
(38
)
$
(72
)
$
(68
)
Proceeds from sale of property, plant and
equipment and other assets
5
1
8
1
Additions to capitalized software
(75
)
(64
)
(217
)
(174
)
Business acquisitions, net of cash
acquired
(11
)
(2
)
(12
)
(2,466
)
Purchases of short-term investments
—
—
—
(13
)
Proceeds from sales of short-term
investments
—
—
—
14
Other investing activities, net
—
—
(5
)
(6
)
Net cash used in investing
activities
$
(121
)
$
(103
)
$
(298
)
$
(2,712
)
Financing activities
Short term borrowings, net
$
(2
)
$
—
$
—
$
—
Payments of senior unsecured notes
—
(400
)
—
(400
)
Payments on term credit facilities
(27
)
(1
)
(31
)
(106
)
Payments on revolving credit
facilities
(247
)
(746
)
(846
)
(1,431
)
Borrowings on term credit facilities
—
—
—
1,505
Borrowings on revolving credit
facilities
384
732
1,021
1,541
Proceeds from issuance of senior unsecured
notes
—
—
—
1,200
Debt issuance costs and bridge commitment
fees
—
(1
)
—
(52
)
Call premium paid on debt
extinguishment
—
(37
)
—
(37
)
Cash dividend paid for Series A preferred
shares dividends
(3
)
(3
)
(11
)
(11
)
Proceeds from employee stock plans
5
15
19
33
Tax withholding payments on behalf of
employees
(2
)
(3
)
(38
)
(28
)
Net change in client funds obligations
(3
)
5
(6
)
(3
)
Principal payments for finance lease
obligations
(4
)
(5
)
(12
)
(13
)
Other financing activities
(1
)
(1
)
(3
)
(2
)
Net cash provided by (used in)
financing activities
$
100
$
(445
)
$
93
$
2,196
Cash flows from discontinued
operations
Net cash provided by (used in)
discontinued operations
(1
)
(3
)
(1
)
(50
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(24
)
(8
)
(43
)
(12
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
$
81
$
(62
)
$
(4
)
$
229
Cash, cash equivalents and restricted
cash at beginning of period
664
697
749
406
Cash, cash equivalents, and restricted
cash at end of period
$
745
$
635
$
745
$
635
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025005985/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
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