NCR Corporation (NYSE: NCR) reported financial results today for the
three months ended March 31, 2012. Reported revenue of $1.24 billion
increased 18 percent from the first quarter of 2011. First-quarter
revenues include a negative impact of 1 percent as a result of foreign
NCR reported first-quarter income from continuing operations
(attributable to NCR) of $38 million, or $0.23 per diluted share,
compared to income from continuing operations (attributable to NCR) of
$19 million, or $0.12 per diluted share, in the first quarter of 2011.
Income from continuing operations in the first quarter of 2012 included
$39 million ($28 million or $0.17 per diluted share, after-tax) of
pension expense, $9 million ($6 million or $0.04 per diluted share,
after tax) of acquisition related amortization of intangibles, $4
million ($3 million or $0.02 per diluted share, after tax) of
acquisition related integration costs and a $3 million ($2 million or
$0.01 per diluted share, after tax) impairment charge related to an
investment. Income from continuing operations for the first quarter of
2011 included $51 million ($35 million or $0.22 per diluted share,
after-tax) of pension expense, and $3 million ($2 million or $0.01 per
diluted share, after-tax) of benefit from final settlement of a
litigation matter. Excluding these items, non-GAAP income from
continuing operations(2) in the first quarter of 2012 was
$0.47 per diluted share compared to $0.33 in the prior year period.
The results and cash flows related to the company's Entertainment line
of business have been classified as discontinued operations in each
period, and in the guidance, included in this release.
"Our strong first quarter results were driven by continued momentum in
our Financial Services business, particularly among U.S. regional banks
and in emerging markets worldwide," said Bill Nuti, chairman and CEO of
NCR. "This growth was supported by continued traction in our new
Hospitality vertical, as-expected contributions from Retail Solutions,
and continued penetration into emerging industry verticals. NCR is
driving profitable growth in and around its core businesses, with a
focus on increasing the software and services component of our revenue
mix. Our excellent start to the year and continued good execution give
us the confidence to raise our outlook for 2012."
First-Quarter 2012 Operating Segment Results(2)
As of January 1, 2012, the specialty retail business that was formerly
part of the Hospitality and Specialty Retail segment is now included in
the Retail Solutions segment, and the hospitality business that was
formerly part of the Retail Solutions segment is now included in the
Hospitality segment. As a result, the former Hospitality and Specialty
Retail segment has been renamed Hospitality.
NCR's Financial Services segment generated first-quarter revenue of $694
million, an increase of 17 percent from the first quarter of 2011. The
increase was driven primarily by growth in the Americas and Asia Middle
East Africa (AMEA) theaters. The first-quarter year-over-year revenue
comparison was negatively impacted by 2 percentage points of foreign
Operating income for Financial Services was $56 million in the first
quarter of 2012 as compared to $47 million in the first quarter of 2011.
This increase was driven by the impact of higher revenue, including an
improved mix of software and services revenue coupled with lower service
The Retail Solutions segment generated revenue of $347 million in the
first quarter of 2012, a decrease of 9 percent from the first quarter of
2011, on both an actual and a constant currency basis. The decrease
resulted from declines in the Americas and Europe theaters and the
impact from the movement of specialty retail and hospitality accounts
between the Retail Solutions segment and the Hospitality segment, as
Operating income for Retail Solutions was $2 million in the first
quarter of 2012 as compared to $8 million in the first quarter of 2011.
The decrease was driven by the decline in revenues and the movement of
accounts, as described above.
The Hospitality segment generated revenue of $113 million in the first
quarter of 2012, driven largely by product volumes and services revenue
in the Americas theater.
Operating income for Hospitality was $19 million in the first quarter of
The Emerging Industries segment generated first quarter revenue of $90
million, an increase of 5 percent. The increase was driven primarily
from growth in the services business with our Telecom & Technology
customers in the Americas and Europe theaters. The first quarter
year-over-year revenue comparison included 1 percentage point of benefit
from foreign currency translation.
Operating income for Emerging Industries was $24 million in the first
quarter of 2012 as compared to $16 million in the first quarter of 2011.
This increase was primarily driven by an improved product and services
mix and lower service delivery costs.
First-Quarter 2012 Business Highlights
In the first quarter of 2012, NCR continued the introduction and
deployment of its self-service solutions across its core and emerging
industries while continuing to expand its global services business. The
following are NCR's first quarter business highlights.
In the Financial Services segment, LegacyTexas Bank, a $1.5 billion,
locally owned financial institution serving North Texas, agreed to
install new NCR SelfServ™ ATMs with scalable deposit module to speed up
deposit process time and deliver an enhanced experience to its
customers. NCR will also help enhance the uptime and performance of the
ATMs through its Total ATM Services package.
NCR and Cardtronics, the world's largest retail ATM owner, recently
launched the smallest-ever SelfServ™ ATM. The SelfServ™ 14 offers a
well-established cash dispenser with high availability while taking up
just 0.27 square meters of floor space. It also can run APTRA™ software,
enabling customers to deploy a single software solution across their
entire organization. Cardtronics has already purchased a significant
number of NCR SelfServ™ 14 ATMS for deployment in various locations
throughout the U.S.
NCR also announced a strategic investment in uGenius Technology, LLC, a
Utah-based pioneer in video banking solutions. During 2011, NCR and
uGenius collaborated to build NCR APTRA™ Interactive Teller, the first
ATM that lets consumers talk and bank with a live, remote teller. NCR
APTRA™ Interactive Teller allows bank branches to stay open longer and
offer more services to their customers. NCR is scheduled to begin
installations at various financial institutions throughout the U.S.,
Canada, Australia, and other countries over the coming months. Another
customer, Dollar Bank, plans to introduce NCR APTRA™ Interactive Teller
into its Pittsburgh locations in the near future.
In addition, NCR reached a reseller agreement for its APTRA™ Cash
Connect software with Glory, Ltd., one of the largest providers of cash
handling devices in the world. Under the agreement, Glory will resell
NCR APTRA™ Cash Connect as a software offering with its teller cash
recycler hardware globally. NCR's relationship with Glory makes APTRA™
Cash Connect accessible on more than 80 percent of the world's teller
automation installed base.
In Retail Solutions, NCR continued to win business with its suite of
point-of-sale technologies and suite of APTRA™ eMarketing solutions.
NCR announced that Ahold USA, the U.S. division of Amsterdam-based
Ahold, selected the NCR Advanced Marketing Solution to manage offers and
promotions to customers. The software will be available to all of Ahold
USA's local retail divisions, which operate more than 750 supermarkets
as Stop & Shop, Giant Foods of Landover, Giant Foods of Carlisle and
Martin's regional brands. NCR will also provide consulting services to
help Ahold USA manage the technology migration, in addition to ongoing
software maintenance and support.
Century 21, a discount designer department store chain, agreed to
upgrade its digital signage software to the most current version of the
NCR Netkey digital signage solution. The latest version of the NCR
Netkey digital signage solution will provide Century 21 with the ability
to improve the shopping experience for customers by delivering
informative, rich multimedia content and enhancing the effectiveness and
reach of its various marketing programs.
NCR announced a new release of its NCR Advanced Store software that will
help retailers bridge the gap between digital and physical channels and
enhance their ability to market to consumers at the point-of-sale. The
new release will help retailers quickly and cost-effectively power
loyalty programs, create offers and drive cross-selling initiatives
directly at the point-of-sale through native integration with the NCR
Advanced Marketing Solution, NCR's promotions and offer management
software. The unification of digital and physical channels will be
further facilitated through technology integration with inventory
management software from VendorNet Inc., which now provides retailers a
cost-effective, out-of-the-box solution to link their e-commerce
channels with store inventory, enabling consumers to buy products
on-line and easily pick them up in physical store locations.
In Hospitality, NCR secured additional client wins for its Aloha
enterprise solution and hardware. NCR recently announced an agreement
with the Green Bay Packers to implement NCR's Quest venue management
solution at Lambeau Field. The solution is designed to help the Packers
increase speed of service with faster payment processing, consolidate
operations across foodservice and retail, and build a foundation to
better manage gift card and loyalty programs for season ticket holders.
Approximately 425 wired, wireless and touchscreen point-of-sale
terminals are scheduled to be installed throughout the stadium by the
Envysion, Inc. announced the integration of its innovative Managed Video
as a Service (MVaaS) platform with NCR's Aloha Restaurant Guard, the
leading exception reporting and theft deterrence tool for restaurant
owners. The integration of these solutions enables restaurant owners to
monitor cash handling and exception reports, identify trends and
validate suspicious transactions identified by Restaurant Guard by
viewing the video taken at the time of the transaction.
In Emerging Industries, NCR announced it earned TL 9000 certification,
an ISO Quality Management System certification designed specifically for
the telecommunications industry. The certification was received
following an audit by Bureau Veritas, a global leader in conformity
assessment and certification services, who evaluated various aspects of
NCR's global Services organization. The criteria reviewed included
process documentation, corrective action and metric collection for
specialized service functions, such as installation and engineering, as
well as requirements to address communications between telecom network
operators and suppliers. The TL 9000 certification recognizes NCR's
ability to provide services that help drive productivity gains and
sustainable improvements for its global telecom customers.
NCR's services business continues to grow its global footprint. NCR
Predictive Services, a unique managed service offer for assisted- and
self-service technologies, is now available for NCR RealPOS™
point-of-sale terminals. Sainsbury's, one of the U.K.'s largest
retailers, has entered into a five-year managed services agreement
through which Sainsbury's will deploy NCR Predictive Services on its
point-of-sale and self-checkout lanes. NCR will also provide helpdesk
and multivendor support across 1,000 stores and 23 depots through its
Managed Services Retail Centre of Expertise. NCR Predictive Services is
also being evaluated by a major U.S. grocer.
First-Quarter 2012 Financial Highlights
Income from operations was $49 million in the first quarter of 2012,
which included $39 million of pension expense, $9 million of acquisition
related amortization of intangibles, and $4 million of acquisition
related integration costs. This compares to $20 million of income from
operations in the first quarter of 2011, which included $51 million of
pension expense. Excluding these items, non-GAAP income from operations(2)
was $101 million in the first quarter of 2012 compared to $71 million in
the first quarter of 2011.
Net cash provided by operating activities was $89 million during the
first quarter of 2012 compared to $49 million in the first quarter of
2011. Cash from operating activities in the first quarter of 2012 was
positively impacted by improvement in operating results period over
period. Net capital expenditures of $31 million in the first quarter of
2012 increased slightly from the $25 million in the first quarter of
2011. Discontinued operations resulted in $10 million of cash outflow in
the first quarter of 2012 compared to $20 million of cash outflow in the
first quarter of 2011, largely a result of cash outflow from the
Entertainment business. Free cash flow (net cash from operations and
discontinued operations, less capital expenditures for property, plant
and equipment, and additions to capitalized software)(3) was
$48 million in the first quarter of 2012, compared to $4 million in the
first quarter of 2011.
NCR contributed approximately $18 million to its international and
executive pension plans in the first quarter of 2012 compared to $20
million in the first quarter of 2011. The Company expects to contribute
approximately $215 million in aggregate to its international, executive,
and US qualified pension plans in 2012. The net funded status of the
company's global pension plans was approximately $(1.3) billion as of
December 31, 2011.
Other expense, net was $11 million in the first quarter of 2012 compared
to other income, net, of $6 million in the prior year period, mainly due
to higher interest expense in the current period.
Income tax benefit was $1 million in the first quarter of 2012 compared
to income tax expense of $6 million in the first quarter of 2011.
NCR ended the first quarter of 2012 with $414 million in cash and cash
equivalents compared to a balance of $398 million as of December 31,
2011. As of March 31, 2012, NCR had a long term debt balance of $809
million compared to a long term debt balance of $852 million as of
December 31, 2011.
NCR expects full-year 2012 revenues to increase in the range of 11 to 13
percent on a constant currency basis compared with 2011, up from
previous guidance of 7 to 9 percent growth.
NCR expects its full-year 2012 Income from Operations (GAAP) to be $366
million to $381 million, non-pension operating income (NPOI)(2)
to be in the range of $570 to $585 million, GAAP diluted earnings per
share to be $1.48 to $1.55 and non-GAAP diluted earnings per share(2)
to be in the range of $2.40 to $2.47 per diluted share. The 2012
non-pension operating income (NPOI) and non-GAAP diluted EPS guidance
excludes estimated pension expense of $165 million (approximately $119
million after-tax) compared with actual pension expense of $222 million
($155 million after-tax) in 2011 and amortization of intangibles from
the Radiant acquisition of approximately $35 million ($24 million after
tax). NCR expects approximately $40 million of Other Expense, net
including interest expense in 2012 and its full-year 2012 effective
income tax rate to be approximately 27 percent.
The company expects second quarter 2012 non-pension operating income
(NPOI)(2) to be in the range of $143 million to $148 million,
compared to $116 million in the second quarter of 2011, and second
quarter 2012 income from operations to be in the range of $95 million to
$100 million, compared to $62 million in the second quarter of 2011.
Prior 2012 Guidance
11% - 13%
7% - 9%
$366 - $381
$360 - $375
Income from Operations (GAAP)
Non-pension operating income(2)
$570 - $585
$560 - $575
$1.48 - $1.55
$1.47 - $1.54
$2.40 - $2.47
$2.36 - $2.43
The results related to the company's Entertainment line of business have
been classified as discontinued operations in each period, and in the
guidance, in this release. The prior 2012 revenue guidance of 7-9%
included the Entertainment business in the 2011 comparative period. The
current 2012 revenue guidance of 11-13% excludes the Entertainment
business in the 2011 comparative period.
2012 First Quarter Earnings Conference Call
A conference call is scheduled today at 4:30 p.m. (EDT) to discuss the
company's 2012 first quarter results and guidance for full-year 2012.
Access to the conference call, as well as a replay of the call, is
available on NCR's Web site at http://investor.ncr.com/.
NCR's web site (www.ncr.com)
contains a significant amount of information about NCR, including
financial and other information for investors (http://investor.ncr.com.).
NCR encourages investors to visit its web site from time to time, as
information is updated and new information is posted.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a global technology company leading how
the world connects, interacts and transacts with business. NCR's
assisted- and self-service solutions and comprehensive support services
address the needs of retail, financial, travel, hospitality,
entertainment, gaming and public sector organizations in more than 100
countries. NCR (www.ncr.com)
is headquartered in Duluth, Georgia.
NCR is a trademark of NCR Corporation in the United States and other
NCR) (non-GAAP) (2)
Reconciliation of Income from Operations (GAAP) to Non-GAAP
Measure (in millions)
Free Cash Flow
For the Periods Ended March 31(in
Free cash flow (non-GAAP)(3)
(1) While NCR reports its results in accordance with Generally Accepted
Accounting Principles in the United States, or GAAP, it believes that
certain non-GAAP measures provide additional useful information
regarding NCR's financial results. NCR's management evaluates the
company's results excluding certain items, such as pension expense, to
assess the financial performance of the company and believes this
information is useful for investors because it provides a more complete
understanding of NCR's underlying operational performance, as well as
consistency and comparability with NCR's past reports of financial
results. In addition, management uses certain of these measures to
manage and determine effectiveness of its business managers and as a
basis for incentive compensation. NCR management's calculation 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.
(2) The segment results included in this release and Schedule B hereto
and the non-GAAP income from operations (i.e. non-pension operating
income) and non-GAAP earnings per share discussed in this earnings
release, exclude the impact of pension expense and certain special
items. Due to the significant change in its pension expense from year to
year and the non-operational nature of pension expense and these special
items, including amortization of acquisition related intangibles, NCR's
management uses non-pension operating income and non-GAAP earnings per
share to evaluate year-over-year operating performance. NCR may, in
addition, segregate special items from its GAAP results from time to
time to reflect the ongoing earnings per share performance of the
company. NCR also uses non-pension operating income and non-GAAP
earnings per share to manage and determine the effectiveness of its
business managers and as a basis for incentive compensation. NCR
determines non-pension operating income based on its GAAP income (loss)
from operations excluding pension expense and special items. These
non-GAAP measures should not be considered as substitutes for or
superior to results determined in accordance with GAAP.
(3) Free cash flow does not have a uniform definition under GAAP and,
therefore, NCR's definition may differ from other companies' definitions
of this measure. 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,
and additions to capitalized software. 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.
This non-GAAP measure should not be considered a substitute for or
superior to cash flows from operating activities determined in
accordance with GAAP.
(4) The results and cash flows related to the company's Entertainment
line of business have been classified as discontinued operations in each
period, and in the guidance, presented in this release.
Note to investors - This news release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements use words such as "seek,"
"potential," "expect," "strive," "continue," "continuously,"
"accelerate," and other similar expressions or future or conditional
verbs such as "will," "should," "would" and "could". They include
statements as to NCR's anticipated or expected results; future financial
performance; projections of revenue, profit growth and other financial
items; discussion of strategic initiatives and related actions; comments
about NCR's future economic performance; comments about future market or
industry performance; and beliefs, expectations, intentions, and
strategies, among other things. Forward-looking statements are based on
management's current beliefs, expectations and assumptions, 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 factors, risks and uncertainties that could cause
actual outcomes and results to differ materially from the results
contemplated by such forward-looking statements. In addition to the
factors discussed in this release, these other factors, risks and
uncertainties include those relating to: domestic and global economic
and credit conditions, which could impact the ability of our customers
to make capital expenditures, purchase our products and pay accounts
receivable, and drive further consolidation in the financial services
sector and reduce our customer base; the financial covenants in our
secured credit facility and their impact on our financial and business
operations; our indebtedness and the impact that it may have on our
financial and operating activities and our ability to incur additional
debt; the adequacy of our future cash flows to service our indebtedness;
the variable interest rates borne by our indebtedness and the effects of
changes in those rates; shifts in market demands, continued competitive
factors and pricing pressures and their impact on our ability to improve
gross margins and profitability, especially in our more mature
offerings; manufacturing disruptions affecting product quality or
delivery times; the effect of currency translation; our ability to
achieve targeted cost reductions; short product cycles, rapidly changing
technologies and maintaining a competitive leadership position with
respect to our solution offerings; tax rates; ability to execute our
business and reengineering plans; turnover of workforce and the ability
to attract and retain skilled employees, especially in light of
continued cost-control measures being taken by the company; availability
and successful exploitation of new acquisition and alliance
opportunities; our ability to sell higher-margin software and services
in addition to our hardware; the timely development, production or
acquisition and market acceptance of new and existing products and
services (such as self-service technologies), including our ability to
accelerate market acceptance of new products and services; changes in
Generally Accepted Accounting Principles (GAAP) and the resulting
impact, if any, on the company's accounting policies; continued efforts
to establish and maintain best-in-class internal information technology
and control systems; market volatility and the funded status of our
pension plans; the success of our pension strategy; compliance with
requirements relating to data privacy and protection; expected benefits
related to acquisitions and alliances, including the acquisition of
Radiant Systems, Inc., not materializing as expected; and other factors
detailed from time to time in the company's U.S. Securities and Exchange
Commission reports and the company's annual reports to stockholders. 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.
(1) Other adjustments include $4 million of acquisition related
integration costs and $9 million of acquisition related
amortization of intangible assets.
Liabilities and stockholders' equity
For the Periods Ended March 31
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