NCR Corporation (NYSE: NCR) reported financial results today for
the three months ended March 31, 2019. First quarter and other
recent highlights include:
- Revenue of $1.54 billion, up
1% as reported and up 4% constant currency
- Banking revenue up 5% as reported;
Recurring revenue up 3% as reported
- Net income attributable to NCR of
$37 million; Adjusted EBITDA of $218 million
- GAAP diluted EPS of $0.20; Non-GAAP
diluted EPS of $0.48
- Program to achieve at least $100
million cost savings in 2019 is on track
- 2019 guidance reaffirmed
“Our first quarter results represent a solid start to the year
and keep us on track to achieve our full year targets,” said
Michael Hayford, President and Chief Executive Officer. “Our
performance included a return to growth and a strong quarter in our
banking segment. We continue to improve execution and are making
progress on the targeted investments needed to accelerate our mix
shift towards higher margin software, services and recurring
revenues. We remain confident our strategy will strengthen our long
term growth profile and deliver increased value and competitive
advantage to our customers.”
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.
First Quarter 2019
Operating Results
RevenueFirst quarter revenue of $1,536 million was up
1% year-over-year. Foreign currency fluctuations had an
unfavorable impact on the revenue comparison of 3%. The following
table shows revenue for the first quarter:
$ in millions
Q1 2019
Q1 2018 % Change
% Change
Constant
Currency
Banking $ 758 $ 721 5 % 9 % Retail 511 521 (2 %) 1 % Hospitality
193 204 (5 %) (4 %) Other 74 71 4 % 7 %
Total Revenue $ 1,536 $ 1,517 1
% 4 % Software $ 467 $ 460 2 % 3 % Services 585 601 (3 %) 1
% Hardware 484 456 6 % 9 % ATM
236 195 21 % 27 % SCO/POS
248 261 (5 %) (3 %)
Total Revenue
$ 1,536 $ 1,517 1 % 4 %
Banking revenue increased 5% due to 21% growth in ATM revenue
driven by higher backlog conversion. The revenue growth was mainly
driven by strength in North America. Foreign currency fluctuations
had an unfavorable impact of 4% on the revenue comparison.
Retail revenue decreased 2% driven by a large implementation
services project in the prior year partially offset by higher
payment processing revenue and strength in self-checkout revenue.
Foreign currency fluctuations had an unfavorable impact
of 3% on the revenue comparison.
Hospitality revenue decreased 5% driven by lower hardware
revenue partially offset by higher cloud and payments revenue.
Foreign currency fluctuations had an unfavorable impact of 1% on
the revenue comparison.
Gross MarginFirst quarter gross margin of $411 million decreased
from $420 million in the prior year period. Gross margin rate was
26.8%, down from 27.7%. First quarter gross margin (non-GAAP) of
$425 million decreased from $431 million in the prior year period.
Gross margin rate (non-GAAP) was 27.7%, down from 28.4%. The
decreases in gross margin were primarily due to decreases in the
Retail and Hospitality segments partially offset by an increase in
the Banking segment.
ExpensesFirst quarter operating expenses of $311 million was
flat with the prior year period. First quarter operating expenses
(non-GAAP) of $278 million decreased from $283 million in the prior
year period. The decrease in operating expenses (non-GAAP) was
primarily due to cost reduction benefits realized.
Operating IncomeFirst quarter income from operations of $100
million decreased from $109 million in the prior year period. First
quarter operating income (non-GAAP) of $147 million decreased from
$148 million in the prior year period.
Other (Expense)First quarter other (expense) of $53 million
increased from $46 million in the prior year period. First quarter
other (expense) (non-GAAP) of $53 million increased from $46
million in the prior year period. The increase was due to higher
interest expense.
Income Tax Expense (Benefit)First quarter income tax expense of
$9 million increased from $7 million in the prior year period. The
first quarter effective income tax rate was 19% compared to 11% in
the prior year period. First quarter income tax expense (non-GAAP)
of $20 million increased from $16 million in the prior year period.
The first quarter effective income tax rate (non-GAAP) was 21%
compared to 16% in the prior year period. Income tax increased
primarily due to favorable audit settlements realized in the prior
year period offset by lower income before taxes in the quarter.
Net Income from Continuing Operations Attributable to NCRFirst
quarter net income from continuing operations attributable to NCR
of $37 million decreased from net income from continuing operations
of $55 million in the prior year period. First quarter net income
from continuing operations attributable to NCR (non-GAAP) of $73
million decreased from $85 million in the prior year period.
Cash FlowFirst quarter cash used by operating activities of $16
million decreased from cash used by operating activities of $24
million in the prior year period. Free cash outflow was $87 million
in the first quarter of 2019 as compared to $99 million in the
first quarter of 2018.
Restructuring and Transformation
Initiatives
Our previously announced transformation and restructuring
initiatives continue to progress. Our services performance and
profit improvement program continues to deliver revenue growth and
margin expansion. Our manufacturing transformation initiatives to
move to a variable cost structure by reducing the number of
manufacturing plants and ramping up production with contract
manufacturers is substantially complete. Additionally, we are
executing our spend optimization program to drive cost savings
through operational efficiencies to generate at least $100 million
of savings in 2019. This initiative will create efficiencies in our
corporate functions, reduce spend in the non-strategic areas and
limit discretionary spending. The benefits generated from the spend
optimization program will largely offset higher real estate and
people costs incurred in 2019. We incurred a pre-tax charge of $26
million in the first quarter of 2019 with a cash impact of $18
million. In 2019, for all initiatives, we expect to incur a pre-tax
charge of $60 million and a cash impact of $70 million to $80
million.
Full Year 2019 Outlook
We are reaffirming our 2019 guidance. Our revenue growth is
expected to be approximately 1% to 2%. Our GAAP diluted
earnings per share guidance is expected to be $1.91 to $2.01, and
our non-GAAP diluted earnings per share guidance is expected to
be $2.75 to $2.85. Non-GAAP diluted earnings per
share guidance assumes an effective tax rate of 23% to 24% for 2019
compared to 21% in 2018. We expect net income attributable to NCR
to be $290 million to $305 million and adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA) to
be $1.04 billion to $1.08 billion. Additionally, we expect cash
flow from operations to be $705 million to $730 million and free
cash flow to be $300 million to $350 million.
2019 First Quarter
Earnings Conference Call
A conference call is scheduled for today at 4:30 p.m. (EDT) to
discuss the first quarter 2019 results and guidance for full year
2019. 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 6612880.
More information on NCR’s Q1 2019 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,
hospitality, telecom and technology industries. NCR is
headquartered in Atlanta, Ga., with 34,000 employees and does
business in 180 countries. NCR is a trademark of NCR Corporation in
the United States and other countries.
Website: www.ncr.comTwitter:
@NCRCorporationFacebook: www.facebook.com/ncrcorpLinkedIn: https://www.linkedin.com/company/ncr-corporationYouTube:
www.youtube.com/user/ncrcorporation
Note to Investors This release contains forward-looking
statements. Forward-looking statements use words such as “expect,”
“anticipate,” “outlook,” “intend,” “plan,” “believe,” “will,”
“should,” “would,” “could,” and words of similar meaning.
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. The forward-looking statements in this
release include statements about NCR’s financial guidance and
outlook (including the section entitled “Full Year 2019 Outlook”
and the tables entitled “Reconciliation of Diluted Earnings Per
Share from Continuing Operations (GAAP) to Non-GAAP Diluted
Earnings Per Share from Continuing Operations (non-GAAP)” and
“Reconciliation of Net Income for Continuing Operations
Attributable to NCR (GAAP) to Earnings Before Interest,
Depreciation, Taxes and Amortization (Adjusted EBITDA)”; NCR’s
areas of focus on strategic growth and expected results and impact
of its spend optimization program in 2019; NCR’s expected areas of
focus to drive growth and create long-term stockholder value; NCR’s
cost savings program and its expected benefits in 2019; NCR’s
expected free cash flow generation and capital allocation strategy;
earnings per share; the effective tax rate in 2019; and the
expected impact of NCR’s previously announced restructuring and
transformation activities. 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: the strength of demand and pricing for
ATMs and other financial services hardware and its effect on the
results of our businesses and reportable segments; domestic and
global economic and credit conditions including, in particular,
those resulting from the imposition or threat of protectionist
trade policies or import or export tariffs, global and regional
market conditions and spending trends in the financial services and
retail industries, new comprehensive U.S. tax legislation, modified
or new global or regional trade agreements, the determination by
the United Kingdom to exit the European Union, uncertainty over
further potential changes in Eurozone participation and
fluctuations in oil and commodity prices; the transformation of our
business model and our ability to sell higher-margin software and
services; our ability to improve execution in our sales and
services organizations; our ability to successfully introduce new
solutions and compete in the information technology industry;
cybersecurity risks and compliance with data privacy and protection
requirements; the possibility of disruptions in or problems with
our data center hosting facilities; defects or errors in our
products; the impact of our indebtedness and its terms on our
financial and operating activities; the historical seasonality of
our sales; tax rates and new U.S. tax legislation; foreign currency
fluctuations; the success of our restructuring plans and cost
reduction initiatives, including those in our Hardware segment;
manufacturing disruptions, including those caused by or related to
outsourced manufacturing; the availability and success of
acquisitions, divestitures and alliances; our pension strategy and
underfunded pension obligation; reliance on third party suppliers;
the impact of the terms of our strategic relationship with
Blackstone and our Series A Convertible Preferred Stock; our
multinational operations, including in new and emerging markets;
collectability difficulties in subcontracting relationships in
certain geographical markets; development and protection of
intellectual property; workforce turnover and the ability to
attract and retain skilled employees; uncertainties or delays
associated with the transition of key business leaders;
environmental exposures from our historical and ongoing
manufacturing activities; and uncertainties with regard to
regulations, lawsuits, claims, and other matters across various
jurisdictions. 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.
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 and other special items, including amortization of
acquisition related intangibles, 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 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.
Reconciliation of Gross Margin (GAAP)
to Gross Margin (non-GAAP)
$ in millions
Q1
2019 Q1 2018 Gross Margin (GAAP)
$ 411 $ 420 Transformation and
restructuring costs 8 4 Acquisition-related amortization of
intangibles 6 7
Gross Margin
(Non-GAAP) $ 425 $ 431
Reconciliation of Gross Margin Rate
(GAAP) to Gross Margin Rate (non-GAAP)
Q1 2019 Q1 2018 Gross Margin Rate
(GAAP) 26.8 % 27.7 % Transformation
and restructuring costs 0.5 % 0.2 % Acquisition-related
amortization of intangibles 0.4 % 0.5 %
Gross
Margin Rate (Non-GAAP) 27.7 %
28.4 %
Reconciliation of Operating Expenses
(GAAP) to Operating Expenses (non-GAAP)
$ in millions
Q1 2019 Q1 2018 Operating
Expenses (GAAP) $ 311 $ 311
Transformation and restructuring costs (18 ) (12 )
Acquisition-related amortization of intangibles (15 )
(16 )
Operating Expenses (Non-GAAP) $ 278
$ 283
Reconciliation of Income from
Operations (GAAP) to Operating Income (non-GAAP)
$ in millions
Q1 2019 Q1 2018 Income from
Operations (GAAP) $ 100 $ 109
Transformation and restructuring costs 26 16 Acquisition-related
amortization of intangibles 21 23
Operating Income (Non-GAAP) $ 147
$ 148
Reconciliation of Income Tax Expense
(GAAP) to Income Tax Expense (non-GAAP)
$ in millions
Q1 2019 Q1 2018 Income Tax
Expense (GAAP) $ 9 $ 7
Transformation and restructuring costs 6 4 Acquisition-related
amortization of intangibles 5 5
Income Tax Expense (Non-GAAP) $ 20
$ 16
Reconciliation of Net Income from
Continuing Operations Attributable to NCR (GAAP) toNet
Income from Continuing Operations Attributable to NCR
(non-GAAP)
$ in millions
Q1 2019 Q1 2018 Net
Income from Continuing Operations Attributable to NCR (GAAP)
$ 37 $ 55 Transformation and
restructuring costs 20 12 Acquisition-related amortization of
intangibles 16 18
Net Income from
Continuing Operations Attributable to NCR (Non-GAAP) $
73 $ 85
Reconciliation of Diluted Earnings Per
Share from Continuing Operations (GAAP) toNon-GAAP Diluted
Earnings Per Share from Continuing Operations (non-GAAP)
Q1 2019
Actual
Q1 2018
Actual
2019
Guidance(2)
Diluted Earnings Per Share (GAAP) (1) $
0.20 $ 0.35
$ 1.91 - $2.01 Transformation & restructuring
costs 0.13 0.08 0.31 Acquisition-related amortization of
intangibles 0.11 0.12 0.48 Acquisition-related costs — — 0.05
Diluted Earnings Per Share (non-GAAP) (1) $
0.48 $ 0.56 $ 2.75 - $2.85
(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.
(2)
Except for the adjustments noted herein, this guidance does not
include the effects of any future acquisitions/divestitures,
pension mark-to-market adjustments, taxes or other events, which
are difficult to predict and may or may not be significant.
Reconciliation of Net Income from
Continuing Operations Attributable to NCR (GAAP) to Earnings Before
Interest,Depreciation, Taxes and Amortization (Adjusted
EBITDA)
$ in millions
Q1 2019
Actual 2019 Guidance Net Income
Attributable to NCR (GAAP) $ 37 $290 -
$305 Transformation and restructuring costs 26 60
Acquisition-related amortization of intangibles 21 95
Acquisition-related costs — 10 Interest, net 44 180 - 195 Taxes 9
85 - 95 Depreciation & Amortization (excluding
acquisition-related amortization of intangibles) 58 240 Stock
Compensation 23 80
Adjusted EBITDA
(Non-GAAP) $ 218 $1,040 -
$1,080
Reconciliation of Net Cash Provided by
Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
$ in millions
Q1 2019
QTD
Q1 2018
QTD
Net cash used by operating activities $ (16
) $ (24 ) Total capital expenditures
(65 ) (71 ) Net cash used in discontinued operations (6 ) (4 )
Free cash flow $ (87 ) $
(99 )
Reconciliation of Revenue Growth %
(GAAP) toRevenue Growth Constant Currency %
(non-GAAP)
Three months ended March
31, 2019
Revenue
Growth %
(GAAP)
Favorable
(unfavorable)
FX impact
Revenue
Growth
Constant
Currency %
(non-GAAP)
Banking 5% (4)% 9% Retail (2)% (3)% 1% Hospitality (5)% (1)% (4)%
Other 4% (3)% 7% Total Revenue 1% (3)% 4% Three
months ended March 31, 2019
Revenue
Growth %
(GAAP)
Favorable
(unfavorable)
FX impact
Revenue
Growth
Adjusted
Constant
Currency %
(non-GAAP)
Software 2% (1)% 3% Services (3)% (4)% 1% Hardware 6% (3)% 9% ATM
21% (6)% 27% SCO/POS (5)% (2)% (3)% Total Revenue 1% (3)% 4%
Schedule A
NCR
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(in millions, except per share
amounts)
For the Periods Ended March 31 Three Months
2019 2018
Revenue Products $ 539 $ 526 Services 997
991
Total Revenue 1,536 1,517 Cost of products
453 420 Cost of services 672 677
Total gross
margin 411 420 % of Revenue 26.8 % 27.7 % Selling, general and
administrative expenses 252 245 Research and development expenses
59 66
Income from operations 100 109 % of
Revenue 6.5 % 7.2 % Interest expense (45 ) (41 ) Other expense, net
(8 ) (5 ) Total other expense, net (53 ) (46 )
Income from
continuing operations before income taxes 47 63 % of Revenue
3.1 % 4.2 % Income tax expense 9 7
Income from
continuing operations 38 56 Loss from discontinued operations,
net of tax — (35 )
Net income 38 21 Net income
attributable to noncontrolling interests 1 1
Net
income attributable to NCR $ 37 $ 20
Amounts
attributable to NCR common stockholders: Income from continuing
operations $ 37 $ 55 Dividends on convertible preferred stock (13 )
(12 ) Income from continuing operations attributable to NCR common
stockholders 24 43 Loss from discontinued operations, net of tax —
(35 ) Net income attributable to NCR common stockholders $
24 $ 8
Income per share attributable to NCR common
stockholders: Income per common share from continuing
operations Basic $ 0.20 $ 0.36 Diluted (1) $ 0.20
$ 0.35
Net income per common share Basic $
0.20 $ 0.07 Diluted (1) $ 0.20 $ 0.06
Weighted average common shares outstanding Basic 119.3 119.2
Diluted (1) 122.2 123.8
(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 CORPORATIONREVENUE AND OPERATING
INCOME SUMMARY(Unaudited)(in millions)
For the Periods Ended
March 31 Three Months 2019 2018 %
Change
%
Change
Constant
Currency
Revenue by segment Banking
$ 758 $ 721 5 % 9 %
Retail
511 521 (2 )% 1 % Hospitality
193 204 (5 )% (4
)% Other
74 71 4 % 7 %
Total Revenue
$ 1,536 $ 1,517 1 % 4 %
Operating
income by segment Banking
$ 95 $ 84 Banking
operating income margin %
12.5 % 11.7 % Retail
26 35 Retail operating income margin %
5.1 %
6.7 % Hospitality
16 19 Hospitality operating income margin
%
8.3 % 9.3 % Other
10 10 All Other operating
income margin %
13.5 % 14.1 %
Subtotal-segment
operating income $ 147 $ 148 Total
Revenue operating income margin %
9.6 % 9.8 % Other
adjustments (1)
47 39
Total income from
operations $ 100 109
(1) The following table presents the
other adjustments for NCR:
For the Periods Ended March
31 Three Months In millions 2019
2018 Transformation and restructuring costs $ 26 $ 16
Acquisition-related amortization of intangible assets 21 23
Total other adjustments $ 47 $ 39
Schedule C
NCR CORPORATIONCONSOLIDATED BALANCE
SHEETS(Unaudited)
(in millions, except per share
amounts)
March 31,
2019
December 31,
2018
Assets Current assets Cash and cash equivalents $ 414 $ 464
Accounts receivable, net 1,335 1,356 Inventories 874 806 Other
current assets 393 397
Total current assets
3,016 3,023 Property, plant and equipment, net 373
359 Goodwill 2,705 2,692 Intangibles, net 573 595 Operating lease
assets 433 — Prepaid pension cost 148 140 Deferred income taxes 453
448 Other assets 497 504
Total assets $ 8,198
$ 7,761
Liabilities and stockholders’ equity
Current liabilities Short-term borrowings $ 297 $ 185 Accounts
payable 788 897 Payroll and benefits liabilities 184 238 Contract
liabilities 566 461 Other current liabilities 546 501
Total current liabilities 2,381 2,282
Long-term debt 2,914 2,980 Pension and indemnity plan liabilities
760 759 Postretirement and postemployment benefits liabilities 120
118 Income tax accruals 93 91 Operating lease liabilities 406 —
Other liabilities 184 259
Total liabilities
6,858 6,489 Redeemable noncontrolling interests 14 14
Series A convertible preferred stock: par value $0.01 per share,
3.0 shares authorized, 0.9 and 0.9 shares issued and outstanding as
of March 31, 2019 and December 31, 2018, respectively; redemption
amount and liquidation preference of $883 and $871 as of March 31,
2019 and December 31, 2018, respectively 872 859
Stockholders'
equity NCR stockholders' equity: Preferred stock: par value
$0.01 per share, 100.0 shares authorized, no shares issued and
outstanding as of March 31, 2019 and December 31, 2019,
respectively — — Common stock: par value $0.01 per share, 500.0
shares authorized, 119.8 and 118.7 shares issued and outstanding as
of March 31, 2019 and December 31, 2018, respectively 1 1 Paid-in
capital 48 34 Retained earnings 630 606 Accumulated other
comprehensive loss (230 ) (246 )
Total NCR stockholders'
equity 449 395 Noncontrolling interests in subsidiaries 5
4
Total stockholders' equity 454 399
Total liabilities and stockholders' equity $ 8,198
$ 7,761
Schedule D
NCR CORPORATIONCONSOLIDATED STATEMENTS
OF CASH FLOWS(Unaudited)(in millions)
For the Periods Ended March 31
Three Months 2019 2018
Operating activities
Net income
$ 38 $ 21 Adjustments to reconcile net
income to net cash provided by operating activities: Loss from
discontinued operations
— 35 Depreciation and amortization
81 86 Stock-based compensation expense
23 14 Deferred
income taxes
(5 ) 4 Changes in assets and
liabilities: Receivables
21 (114 ) Inventories
(68
) (42 ) Current payables and accrued expenses
(192
) (77 ) Contract liabilities
100 75 Employee benefit
plans
(4 ) (3 ) Other assets and liabilities
(10 ) (23 )
Net cash used in operating
activities (16 ) (24 )
Investing
activities Expenditures for property, plant and equipment
(22 ) (29 ) Additions to capitalized software
(43 ) (42 ) Business acquisition, net
(6
) — Other investing activities, net
3 (3 )
Net cash used in investing activities (68 )
(74 )
Financing activities Short term borrowings, net
7 (1 ) Payments on term credit facilities
(17
) (34 ) Payments on revolving credit facilities
(375
) (498 ) Borrowings on revolving credit facilities
430 613 Repurchases of Company common stock
— (165 )
Proceeds from employee stock plans
4 5 Tax withholding
payments on behalf of employees
(13 ) (11 )
Net
cash provided by (used in) financing activities 36
(91 )
Cash flows from discontinued operations Net
cash used in discontinued operations
(6 ) (4 ) Effect
of exchange rate changes on cash and cash equivalents
1
5
Decrease in cash, cash equivalents, and
restricted cash (53 ) (188 )
Cash, cash
equivalents and restricted cash at beginning of period
476 543
Cash, cash equivalents, and
restricted cash at end of period $ 423 $
355
Schedule E
NCR CORPORATIONREVENUE AND OPERATING
INCOME SUMMARY(Unaudited)(in millions)
2018 Q1
Q2 Q3 Q4
Total Revenue by segment Banking $ 721
$ 725 $ 795 $ 942 $ 3,183 Retail 521 537 483 556 2,097 Hospitality
204 198 193 222 817 Other 71 77 79
81 308
Total Revenue $
1,517 $ 1,537 $ 1,550 $ 1,801 $ 6,405
Operating income by segment Banking $ 84 $ 94 $ 102 $
132 $ 412 Banking operating income margin % 11.7 % 13.0 % 12.8 %
14.0 % 12.9 % Retail 35 41 29 37 142 Retail operating income margin
% 6.7 % 7.6 % 6.0 % 6.7 % 6.8 % Hospitality 19 19 15 32 85
Hospitality operating income margin % 9.3 % 9.6 % 7.8 % 14.4 % 10.4
% Other 10 11 15 13 49 Other operating income margin % 14.1 %
14.3 % 19.0 % 16.0 % 15.9 %
Subtotal-segment operating income $ 148 $ 165
$ 161 $ 214 $ 688 Total operating income
margin % 9.8 % 10.7 % 10.4 % 11.9 % 10.7 % Other adjustments (1) 39
271 36 151
497
Total income from operations $ 109 $ (106
) $ 125 $ 63 $ 191
(1) The following table
presents the other adjustments for NCR:
2018 In millions Q1 Q2 Q3
Q4 Total Restructuring and transformation costs $ 16
$ 66 $ 16 $ 125 $ 223 Asset impairment charges — 183 — — 183
Acquisition-related amortization of intangible assets 23 21 20 21
85 Acquisition-related costs — 1 —
5 6
Total other
adjustments $ 39 $ 271 $ 36 $ 151
497
Schedule F
NCR CORPORATIONREVENUE AND OPERATING
INCOME SUMMARY(Unaudited)(in millions)
2017 Q1
Q2 Q3 Q4
Total Revenue by segment Banking $ 704
$ 764 $ 828 $ 879 $ 3,175 Retail 509 544 528 588 2,169 Hospitality
195 210 230 243 878 Other 70 75
77 72 294
Total Revenue $
1,478 $ 1,593 $ 1,663 $ 1,782 $ 6,516
Operating income by segment Banking $ 68 $ 105 $ 123
$ 125 $ 421 Banking operating income margin % 9.7 % 13.7 % 14.9 %
14.2 % 13.3 % Retail 49 61 57 64 231 Retail operating income margin
% 9.6 % 11.2 % 10.8 % 10.9 % 10.7 % Hospitality 32 34 38 36 140
Hospitality operating income margin % 16.4 % 16.2 % 16.5 % 14.8 %
15.9 % Other 9 12 16 11 48 Other operating income margin %
12.9 % 16.0 % 20.8 % 15.3 % 16.3 %
Subtotal-segment operating income $ 158 $ 212
$ 234 $ 236 $ 840 Total operating income
margin % 10.7 % 13.3 % 14.1 % 13.2 % 12.9 % Other adjustments (1)
43 37 35 34
149
Total income from operations $ 115
$ 175 $ 199 $ 202 $ 691
(1) The following table presents the
other adjustments for NCR:
2017 In millions Q1 Q2 Q3
Q4 Total Restructuring and transformation costs $ 13
$ 8 $ 5 $ 3 $ 29 Acquisition-related amortization of intangible
assets 29 28 29 29 115 Acquisition-related costs 1
1 1 2 5
Total other adjustments $ 43 $ 37 $ 35
$ 34 $ 149
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News Media ContactScott SykesNCR
Corporation212.589.8428scott.sykes@ncr.com
Investor ContactMichael NelsonNCR
Corporation678.808.6995michael.nelson@ncr.com
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