UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 9, 2021
(Exact name of registrant as specified in its charter)
Commission File Number 001-00395
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (937 ) 445-1936
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 7.01. Regulation FD Disclosure.
On December 9, 2021 , members of the management team of NCR Corporation (the “Company”) will make presentations to attendees of the Company’s virtual Investor Day 2021 regarding, among other things, the Company’s business and long-term strategy. A copy of the materials to be used during the presentations is included as Exhibit 99.1 hereto. The materials and a webcast of the presentations may be accessed through the Company's website at www.ncr.com in the “Investor Relation” section.
The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits are attached with this current report on Form 8-K:
Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NCR Corporation | ||||||||
| By: | /s/ Timothy C. Oliver | |||||||
| Timothy C. Oliver | ||||||||
| Senior Executive Vice President and Chief Financial Officer | ||||||||
Date: December 9, 2021
N C R C O R P O R A T I O N December 9 , 2021 Welcome N C R C O R P O R A T I O N Notes to Investors FORWARD-LOOKING STATEMENTS. Comments made during this presentation and in these materials contain 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,” “goal”, “intend,” “plan,” “believe,” “will,” “target”, “thesis”, “should,” “would,” “potential,” “proposed,” “objective,” “strive”, “could,” “may,” “priorities,” “potential,” “upside,” “drivers,” “ought,” 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 these materials include, without limitation, NCR’s expected areas of focus and strategy to drive growth and create long-term stockholder value, including targets for 2026; statements regarding NCR’s anticipated change in reporting segments effective as of January 1, 2022, and revenue and adjusted EBITDA performance of such segments, including preliminary estimated results for 2021 and expected performance into 2026; expectations regarding return on investment and compound annual growth rate (CAGR); expectations regarding the impact of continued execution and transformation on Company performance and rerate of the Company’s valuation; expectations regarding changing NCR’s culture; NCR’s preparations and priorities relating to ESG commitments; expectations regarding solution set design and its impact on NCR; statements regarding anticipated or potential product offerings including, but not limited to, offers relating to cryptocurrency and Payments offers such as NCR Pay360 and various Allpoint product expansions; statements and expectations regarding the proposed transaction between NCR and LibertyX, the closing of the proposed transaction and its impact on NCR; expectations regarding outsourced manufacturing and benefits of simplified hardware; statements regarding the financial outlook and financial goals of the Company and its segments into 2026; statements regarding growth drivers and potential investments; statements regarding cash generation goals and redeployment priorities, and capital allocation strategy through 2026; and statements regarding the Company’s debt and preferred stock maturity status, and liquidity position and refinancing activity. Forward- looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements, including those factors listed in Item 1A “Risk Factors” of NCR’s Annual Report on Form 10-K filed with the U. S. Securities and Exchange Commission (SEC) on February 26, 2021, and those factors detailed from time to time in NCR’s other SEC reports including quarterly reports on Form 10-Q and current reports on Form 8-K. These materials are dated December 9, 2021, and NCR does not undertake any obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. 2 N C R C O R P O R A T I O N Notes to Investors ESTIMATED SEGMENTS. The Company currently manages and reports its business on an industry basis in four reportable segments. Effective as of January 1, 2022, the Company plans to manage its business in a manner that is expected to result in the Company having five reportable segments as identified in these materials--Retail, Hospitality, Digital Banking, Self Service Banking, and Payments & Network. There are certain revenue transactions that will be reported in multiple reportable segments and eliminated to reconcile to total NCR. In addition, all costs associated with corporate overhead and other immaterial operating segments will be reported as Corporate/Other. This presentation and these materials illustrate the Company’s business and preliminary estimated results for 2021 (and all years presented) on the basis of those anticipated five segments, which also includes the results of Cardtronics prior to the Company’s acquisition of Cardtronics plc on June 21, 2021, and excludes certain intercompany revenue and cost between NCR and Cardtronics. This does not represent a complete pro forma presentation pursuant to applicable SEC rules and regulations. NON-GAAP MEASURES. While NCR reports its results in accordance with generally accepted accounting principles in the United States, or GAAP, comments made during this presentation and in these materials will include or make reference to certain “non-GAAP” measures, including selected measures such as non-GAAP diluted earnings per share, free cash flow, and adjusted EBITDA margin. These measures are included to provide additional useful information regarding NCR’s financial results, and are not a substitute for their comparable GAAP measures. Explanations of these non-GAAP measures, and reconciliations of these non-GAAP measures to their directly comparable GAAP measures, are included in the accompanying “Supplementary Materials” unless noted therein and are available on the Investor Relations page of NCR’s website at www.ncr.com. Descriptions of many of these non-GAAP measures are also included in NCR’s SEC reports. These presentation materials and the associated remarks made during this presentation are integrally related and are intended to be presented and understood together. 3 N C R C O R P O R A T I O N Vis ion & Strategy Mike Hayford, CEO
N C R C O R P O R A T I O N 2018-2021: We delivered 5 N C R C O R P O R A T I O N Focus on Customers Resulted in Happier Customers 6 2018 2019 2020 2021 Net Promoter Score (NPS) 18 36 48 14 N C R C O R P O R A T I O N Moved to a software-led company Shifted to recurring revenue Improved margin 7 GOAL Q3 2021 2018 80% Software and services revenue 76% 68% 60% Recurring revenue* 62% 46% 20% Adjusted EBITDA* 18.5% 14.9% * See definition in Supplementary Materials. N C R C O R P O R A T I O N Deliver shareholder value Accelerate recurring revenue Drive free cash flow 8 NEW GOALS 2026 Target Annual non-GAAP EPS* growth 15% Recurring revenue* 80% Free Cash Flow* $1B by 2026 * See definition in Supplementary Materials.
N C R C O R P O R A T I O N Investment Thesis Continued execution to drive solid return (15% non-GAAP EPS* growth goal) Continued transformation to drive rerate of valuation 9 EXECUTION TRANSFORMATION Software, services & recurring revenue* growth Leverage software platform to increase TAM* Topline revenue growth GOAL: 15% non-GAAP EPS* growth GOAL: $1B in annual FCF* by 2026 Transform undervalued assets Segmentation to better value to market comps Rerate to SaaS multiple * See definition in Supplementary Materials. N C R C O R P O R A T I O N 10 NCR Commerce Platform SOLUTIONS NCR Emerald™ Point of Sale Software Software Defined Store Digital Connected Services STORE OPERATIONS BACK OFFICE & DATA Data Analytics Back Office Inventory Cash Management 3rd PARTY API INTEGRATION API Toolkits Partner MarketplaceLoyalty & Promotions Consumer & Transaction Management Self-Checkout & Frictionless Freshop™ Online Ordering & Delivery CONSUMER ENGAGEMENT PAYMENTS Payment Processing Financial Services (Crypto) Connected Payments API API Digital Receipt END POINTS Point of Sale Self- Checkout Mobile (Order, Picking) Consumer Data Transaction Data Menu Services Order Services Payment Processing Payment Gateway N C R C O R P O R A T I O N Execut ing Our Strategy Mike Hayford N C R C O R P O R A T I O N Customer first culture: dramatically improved customer satisfaction Our products work Competing and winning in our markets Have changed culture/engaged with our employees Innovate new products Financial performance - hit our numbers 12 out of 13 quarters Changing NCR / / / / / / /C O N F I D E N T I A L F O R I N T E R N A L U S E O N L Y Change the product mix 12 Delivered on our promises Culture of accountability and execution
N C R C O R P O R A T I O N Developing science-based plans and targets in preparation for a commitment to Net Zero by no later than 2050 Measure and report scope 1 and 2 emissions baseline in 2022 Transition service technicians to electric vehicles by 2030 Pledge 1% of adj. net income to community philanthropy Advance NCR’s Diversity, Equity and Inclusion programs, including suppliers Embed financial inclusion into strategy Robust ESG oversight from Board, committees and executive team World class data privacy & security programs Leading business ethics and compliance approach 13 ESG Priorities NCR strives to be an ESG leader among peer technology companies ENVIRONMENTAL SOCIAL GOVERNANCE N C R C O R P O R A T I O N a t a g l a n c e Opening Remarks & Agenda Michael Nelson, VP Investor Relations & Treasurer Vision & Strategy Mike Hayford, CEO Software Tim Vanderham, CTO Retail David Wilkinson, President and GM Retail Hospitality Dirk Izzo, President & GM Hospitality Digital Banking Erica Pilon, Executive Director Digital Banking Self-Service Banking Frank Hauck, President & GM Global Banking Shawn Phillips, VP Business Operations Banking Payments & Network Don Layden, President and GM Payments Functional Execution Roundtable Owen Sullivan, President & COO Adrian Button, EVP Product & Service Operations Tim Vanderham, CTO Ismail Amla, EVP Professional Services Kate Mandrell, EVP Commercial Strategy & Ops Cardtronics Integration Update Don Layden, President and GM Payments Financial Outlook Tim Oliver, CFO Q&A Mike Hayford, Owen Sullivan, Tim Oliver, Don Layden, Patrice Graves 14 N C R C O R P O R A T I O N 0% 60% 0% 20% 15 Business Segments+: Highlighting High Value Assets 2021E-2026 REVENUE+ GROWTH CAGR TARGET A D J. E B IT D A * M A R G IN Retail Hospitality Payments & Network Digital Banking Self-Service Banking *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments. N C R C O R P O R A T I O N NCR Retai l David Wilkinson
N C R C O R P O R A T I O N Retail ~$2 . 2B Revenue+ 17 69% 17% 9%5% Grocery & Big Box SMB Convenience & Fuel Department & Specialty Enterprise POS Solutions $1.2B Business Self- Checkout $1B Business 2021E Total Revenue+ +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N Retail Strategy 18 Retail Growth Maintain self-checkout leadership and grow with the market Win the upgrade cycle with next-gen, cloud-based bundled POS software offerings Convert existing lanes to platform lanes and increase share of wallet through cross-sell and up-sell1. 2. 3. Next-gen retail technology platform – NCR Emerald™ N C R C O R P O R A T I O N 19 NCR Commerce Platform SOLUTIONS NCR Emerald Point of Sale Software Software Defined Store Digital Connected Services STORE OPERATIONS BACK OFFICE & DATA Data Analytics Back Office Inventory Cash Management PAYMENTS Payment Processing Financial Services (Crypto) 3rd PARTY API INTEGRATION API Toolkits Partner MarketplaceLoyalty & Promotions Consumer & Transaction Management Self-Checkout & Frictionless Freshop™ Online Ordering & Delivery CONSUMER ENGAGEMENT Connected Payments END POINTS Point of Sale Self-Checkout Kiosk FuelMobile (Order, Picking)SmartSafe Customer ERP SYSTEMS N C R C O R P O R A T I O N 20 NCR Commerce Platform SOLUTIONS END POINTS NCR Emerald Point of Sale Software Software Defined Store Digital Connected Services STORE OPERATIONS BACK OFFICE & DATA Data Analytics Back Office Inventory Cash Management PAYMENTS Payment Processing Financial Services 3rd PARTY API INTEGRATION API Toolkits Partner MarketplaceLoyalty & Promotions Consumer & Transaction Management Self-Checkout & Frictionless Freshop Online Ordering & Delivery CONSUMER ENGAGEMENT Connected Payments Point of Sale Self-Checkout Kiosk FuelMobile (Order, Picking)SmartSafe
N C R C O R P O R A T I O N 3,037 4,249 17,000 2019 2020 2021 2026 Platform Lanes+ 21 Retail KPIs Grow faster than market $887 $991 $1,042 2019 2020 2021 2022 2023 2024 2025 2026 ARR ($M)+ $920 $894 $1,000 2019 2020 2021 2022 2023 2024 2025 2026 Self-Checkout Revenue ($M)+ Subscription-based lane connected to NCR Commerce Platform Conversion to platform lanes grows ARPU* by 1.5X immediately scaling to 4X Cross-sell, up-sell opportunity upside to 8X Currently 50/50 split of hardware vs software and services Growing faster than served market…mid-single digit revenue growth SCO as a Service success will impact reported growth rate Value of then-current quarter recurring revenue* annualized Growing faster than overall revenue driven by platform lane conversion Currently 40% software maintenance and professional services, 60% hardware maintenance...flips ratio by 2026 GOAL GOAL GOAL $2.25B Total Rev+… ~29% of NCR Rev+… ~20% Adj. EBITDA* Margin… ~45% Recurring Rev*… ~63% SW & SVCS Rev… E E E ~$1.3B BY 2026 ~$1.8B BY 2026 25% of installed base *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments. N C R C O R P O R A T I O N NCR Hospita l i ty Dirk Izzo N C R C O R P O R A T I O N Hospitality ~$0.8B Revenue+ 23 79% 21% Enterprise Restaurant Small & Medium Restaurant 2021E Total Revenue+ Enterprise Restaurant >50 Sites SMB Restaurant <50 Sites +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N Hospitality SMB Strategy 24 Bundle complete solution to run the restaurant – Aloha Essentials Shift distribution model to primarily direct Invest in a full cloud solution anchored by the NCR Commerce Platform Leading with integrated payment processing Hospitality Growth SMB 1. 2. 3. 4.
N C R C O R P O R A T I O N Hospitality Enterprise Strategy 25 Provide NCR Commerce Platform for restaurants/open APIs Leverage NCR global scale for service and support NCR Restaurant as a Service offering Retain base, migrate to NCR Commerce Platform and grow ARPU Hospitality Growth Enterprise 1. 2. 3. 4. N C R C O R P O R A T I O N 26 NCR Commerce Platform Aloha™ Point of Sale Software Aloha OrderPay Aloha Kitchen Digital Connected Services RESTAURANT OPERATIONS BACK OFFICE & DATA NCR Backoffice Advanced Analytics Pulse Real Time Restaurant Guard SOLUTIONS Customer ERP SYSTEMS PAYMENTS Payment Processing Connected Payments 3rd PARTY API INTEGRATION Partner Marketplace API Toolkits Order Aggregators Delivery Consumer Loyalty Order & Pay at Table Digital Ordering & Engagement Consumer Marketing CONSUMER ENGAGEMENT END POINTS Kiosk Server Handhelds Point of Sale Digital Signs Drive-Thru N C R C O R P O R A T I O N 27 NCR Commerce Platform Aloha Point of Sale Software Aloha OrderPay Aloha Kitchen Digital Connected Services RESTAURANT OPERATIONS BACK OFFICE & DATA NCR Backoffice Advanced Analytics Pulse Real Time Restaurant Guard SOLUTIONS PAYMENTS Payment Processing Connected Payments 3rd PARTY API INTEGRATION Partner Marketplace API Toolkits Order Aggregators Delivery Consumer Loyalty Order & Pay at Table Digital Ordering & Engagement Consumer Marketing CONSUMER ENGAGEMENT END POINTS Kiosk Server Handhelds Point of Sale Digital Signs Drive-Thru N C R C O R P O R A T I O N 0 1 3 2019 2020 2021 2022 2023 2024 2025 2026 Payments Sites+(K) $439 $417 $475 2019 2020 2021 2022 2023 2024 2025 2026 ARR+ ($M) 28 Hospitality KPIs Locations fully integrated with NCR Commerce Platform and sold as subscription SMB represents 75% of new sites in plan Conversion to platform site increases ARPU* to 1.5-3X Goal to convert more than half of our 100,000 sites to platform sites by 2026 All new platform sites will offer payments Currently new SMB sites have 85% attach rate for payments Goal to have 90% SMB installed base with attached payments Attached payments increases ARPU* by another 1X net Value of then-current quarter recurring revenue* annualized Would represent 70% of total hospitality annual revenue in 2026 2x Overall Growth Rate 7 7 10 8 8 10 2019 2020 2021E 2026 GOAL Platform Sites+ (K) ENT Total ~65K Sites ~40K Sites GOAL GOAL Small & Medium Business Enterprise E* E* $0.85B Total Rev+… ~11% of NCR Rev+… ~21% ADJ. EBITDA* Margin… ~53% Recurring Rev*… ~66% SW & SVCS Rev… *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments
N C R C O R P O R A T I O N Erica Pilon NCR Digital Banking N C R C O R P O R A T I O N Digital Banking ~$0.5B Revenue+ 30 ~26M Users 96%+ Customer Retention 9% Revenue Growth Q3 21 Y0Y% 75+ NPS Score 12B+ Customer Logins 2021 +See “Notes to Investors” for a description of Estimated Segments. N C R C O R P O R A T I O N Digital Banking Strategy 31 Retain existing customers Up-sell new products to existing install base Convert accounts to active Add new products, expand markets Digital Banking Growth 1. 2. 3. 4. N C R C O R P O R A T I O N BANK OPERATIONS BACK OFFICE & DATA Data Analytics Customer Profile Banker Sales & Servicing Virtual Assistant SOLUTIONS CUSTOMER ENGAGEMENT Mobile Check Image Deposit Zelle & P2P Payment Bill PaymentAccount Opening & Omni-Channel Sales Business Banking Statements and Forms Channel Software ACH, Wires, Payments Teller Financial Services (Crypto) Security & Fraud Bank Marketing API Integrations & Fintech ATM S/W 32 NCR Channel Services Platform BANK CORE, CARD, LOAN and CRM SYSTEMS CUSTOMER TOUCH POINTS Mobile / Online ATM / ITM Kiosk Branch
N C R C O R P O R A T I O N 33 NCR Channel Services Platform BANK OPERATIONS BACK OFFICE & DATA Data Analytics Customer Profile Banker Sales & Servicing Virtual Assistant SOLUTIONS CUSTOMER TOUCH POINTS Mobile / Online ATM / ITM Kiosk Branch CUSTOMER ENGAGEMENT Mobile Check Image Deposit Zelle & P2P Payment Bill PaymentAccount Opening & Omni-Channel Sales Business Banking Statements and Forms Channel Software ACH, Wires, Payments Teller Financial Services (Crypto) Security & Fraud Bank Marketing API Integrations & Fintech ATM S/W N C R C O R P O R A T I O N 15.6 17.5 18.5 21.8 24.5 25.5 2019 2020 2021E* 2026 Users+ (M) Active Users Registered Users GOAL 34 Digital Banking KPIs Registered vs active users* gap represents opportunity…paid on active users Active users defined by some use over the previous 90 days Correlation to revenue impacted by product mix and timing Value of then-current quarter recurring revenue* annualized ARR growth outpaces user growth due to modest ARPU* expansion Represents more than 90% of revenue $417 $416 $465 2019 2020 2021E 2026 ARR+ ($M) GOAL ~$1B BY2026 ~50M Registered Users $0.5B Total Rev+… ~7% of NCR Rev+… ~35% Adj. EBITDA* Margin… ~98% Recurring Rev*…~100% SW & Svcs Rev… *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N Frank Hauck Shawn Phillips NCR Self -Service Banking N C R C O R P O R A T I O N 68% 32% Self-Service Banking ~$2 .6B Revenue+ 36 Transform our traditional ATM business into recurring ATMaaS 2021E Total Revenue+ Software & Services ATM Hardware +See “Notes to Investors” for a description of Estimated Segments
N C R C O R P O R A T I O N 37 Continuing shift to recurring revenue* ATMaaS full- service outsourcing increases TAM* 2-3X ATM as a Service Strategy Full Service Offers ATM Hardware ATM Software Break/Fix ~30-40% of stack ~60-70% of stack Transaction Processing SW Management Cash and CIT Management Operations Back Office Component Offers Security and Compliance *See definition in Supplementary Materials. N C R C O R P O R A T I O N 58% 66% 68% 2019 2020 2021E 2026 Software & Services Revenue Mix 209 628 3,853 2019 2020 2021E 2026 ATMaaS Units+ GOAL 38 Self-Service Banking KPIs Expect high single-digit growth as hardware is displaced by services Hardware represents less than 20% of segment revenue in 2026 Number of ATMs traditionally managed by financial institutions customers that are now run aaS by NCR Full software stack, turn-key service agreement Agnostic to the OEM Revenue opportunity increases up to 3X for each aaS unit Value of then-current quarter recurring revenue* annualized Growth to be driven by ATMaaS success Should represent 76% of total self-service banking annual revenue in 2026 $1.3 $1.4 $1.4 2019 2020 2021E 2026 ARR+ ($B)85% by 2026 $2.3B by 2026 GOAL GOAL 120K by 2026 $2.65B Total Rev+… ~34% of NCR Rev+… ~23% Adj. EBITDA* Margin… ~52% Recurring Rev*… ~68% SW & Svcs Rev… *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments. N C R C O R P O R A T I O N NCR Payments & Network Don Layden N C R C O R P O R A T I O N Payments & Network ~$1.2B Revenue+ 40 2021E Total Revenue+ Merchant acquiring services to complete the payment at a point-of-sale Allpoint™ Proprietary network of 55,000 endpoints we use to deliver payment transactions 11% Surcharge Fees* 13% 36% Program & Branding Fees* Allpoint Network Fees* Interchange Fees* 26% 8% Network Processing Fees* 6% Merchant Acquiring* *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments
N C R C O R P O R A T I O N 41 Allpoint Network 55,000 sites Products Users other consumers 60 Million cardholders & N C R C O R P O R A T I O N NCR Pay 360 – Beyond Cash 42 Digital Wallet Loads Rebates/RewardsP2P Bill Payments Crypto Currency Cash Deposit Money TransferCheck deposit Emergency Cash Sports Betting Certain products are subject to legal and regulatory approval prior to launch N C R C O R P O R A T I O N 107 100 104 2019 2020 2021E 2026 Endpoints (K) GOAL 43 Payments & Network KPIs Access to the Allpoint Network as well as merchant acquiring terminals Allpoint geographic expansion and POS placements Value of then-current quarter recurring revenue* annualized All transaction-driven volume to be recurring Will represent 100% of total payments & network annual revenue in 2026 $1.3 $1.1 $1.2 2019 2020 2021E 2026 ARR+ ($B)200K by 2026 GOAL Payments processed across the Allpoint and merchant acquiring networks More terminals for merchant acquiring and global expansion of Allpoint More types of transactions 2.5 2.0 2.2 2019 2020 2021E 2026 Transactions+ (B) 8B by 2026 GOAL $1.15B Total Rev+… ~15% of NCR Rev+… ~34% Adj. EBITDA* Margin… ~100% Recurring Rev*…~100% SW & SvCs Rev… $1.9B by 2026 *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N Funct ional Roundtable Owen Sullivan
N C R C O R P O R A T I O N Evolution to Outsourced Manufacturing 45 4 5 Benefits of a Simplified Hardware 67% footprint reduction 90% of product outsourced 85% standardized products 72% improved product lead times 15% reduction in product cost 25% supplier simplification 2018 Custom products with vertically-integrated supply chain Present* 40% product rationalization Standard products & outsourced variable manufacturing *Subject to closing of pending transaction N C R C O R P O R A T I O N Focus on What We Do Best: User Experience 500 design engineers focused on innovation End-to-end intuitive design, simple to use products 1300+ active industry-leading patents 46 N C R C O R P O R A T I O N 47 NCR Commerce Platform SOLUTIONS NCR Emerald™ Point of Sale Software Software Defined Store Digital Connected Services STORE OPERATIONS BACK OFFICE & DATA Data Analytics Back Office Inventory Cash Management 3rd PARTY API INTEGRATION API Toolkits Partner MarketplaceLoyalty & Promotions Consumer & Transaction Management Self-Checkout & Frictionless Freshop™ Online Ordering & Delivery CONSUMER ENGAGEMENT PAYMENTS Payment Processing Financial Services (Crypto) Connected Payments API API Digital Receipt END POINTS Point of Sale Self- Checkout Mobile (Order, Picking) Consumer Data Transaction Data Menu Services Order Services Payment Processing Payment Gateway N C R C O R P O R A T I O N Cardtronics Integration Update Don Layden
N C R C O R P O R A T I O N Cardtronics Integration Update 49 4 9 On Track Organizational Alignment Cash Flow Generation Cost and Revenue Synergies Adjusted EPS* Accretion Accelerate 80/60/20 Strategy √ √ √ √ √ *See definition in Supplementary Materials. N C R C O R P O R A T I O N Financial Outlook Tim Oliver N C R C O R P O R A T I O N 2021 Hardware Software & Services Payments Liberty X 2026 Goal 2021 Retail Hospitality Digital Banking Self-Service Banking Payments Corporate & Elim 2026 Goal REVENUE+ BY SEGMENT REVENUE BY SOURCE N C R R ev en u e G ro w th C om p os it io n 51 2021E 2026 GOAL 20 E 2026 GOAL Retail Hospitality Digital Banking Self-Service Banking Payments & Network Corporate & Elim ~$7.7B ~$7.7B +7-8% CAGR +6-7% CAGR +13-14% CAGR +3-4% CAGR +12-14% CAGR Base CAGR 6% + 2-3 ppts Hardware Software & Services Payments LibertyX** Base GAGR 6% $10.3-11.8B + 2-3 ppts Upside +See “Notes to Investors” for a description of Estimated Segments **NCR has announced a definitive agreement to acquire LibertyX, a leading cryptocurrency software provider. Closing is subject to customary closing conditions, including obtaining certain regulatory licensing consents and approvals. N C R C O R P O R A T I O N 2021 Retail Hospitality Digital Banking Self-Service Banking Payments Corporate & Elim 2026 Goal 2021 Volume Inflation Mix Productivity & Price 2026 Goal N C R A d j. E B IT D A G ro w th C om p os it io n ADJ. EBITDA* BY SEGMENT+ 52 ADJ. EBITDA* BY SOURCE 2021E 20 6 GOAL ~$1.4B Retail Hospitality Digital Banking Self-Service Banking Payments & Network Corporate & Elim 2026 GOAL Volume Mix Productivity & PriceInflation ~18% Margin Rate $2.2-2.5B 2021E Base CAGR 9-10% + 2 ppts ~3 ppts Margin Rate Expansion Upside *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments
N C R C O R P O R A T I O N 2019 2020 2021E 2026 GOAL2019 2020 2021E 2026 GOAL N C R R et ai l F in an ci al G oa ls Retail Revenue+ Adj. EBITDA* 53 Base Growth Drivers Platform lane conversion and resulting higher ARPU* Up-sell/cross-sell grows ARPU* even higher over time Merchant acquiring Self-checkout grows faster than underlying market Potential Upside NCR Emerald run-the-store acceleration Retailer cash management Kiosk to replace service desk Acquisitions to support the above … like Freshop ~$2.25B $2.0B $2.2B +1-2 ppts ~$460M $363M $373M +2-3 ppts 7-8% CAGR 10-12% CAGR Merchant Acq. *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N 2019 2020 2021E 2026 GOAL2019 2020 2021E 2026 GOAL N C R H os p it al it y Fi n an ci al G oa ls Hospitality 54 ~$0.85B $0.7B $0.8B +1-2 ppts ~$175M $154M $122M Revenue+ Adj. EBITDA* Base Growth Drivers Platform site conversion results in 2x ARPU*. Attaching payments adds another 1x Up-sell / cross-sell of increased functionality to enterprise customers Payments penetration across legacy SMB customer base Potential Upside Information and back-office functionality Digital kitchen penetration Acquisitions to support the above or insource distribution +1-2 ppts 6-7% CAGR 10-12% CAGR Merchant Acq. *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N N C R D ig it al B an ki n g F in an ci al G oa ls Digital Banking 55 2019 2020 2021E 2026 GOAL 2019 2020 2021E 2026 GOAL Revenue+ Adj. EBITDA* ~$0.5B$0.5B$0.4B +3-4 ppts 13-14% CAGR ~$175M $158M $165M Base Growth Drivers Competitive wins Channel Services Platform sales into our existing FI customer base Terafina up-sell Potential Upside International offering Business consulting practice New functionality Acquisitions to support the above … like Terafina 13-15% CAGR +1-2 ppts *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N 2019 2020 2021E 2026 GOAL N C R S el f- Se rv ic e B an ki n g F in an ci al G oa ls Self-Service Banking 56 2019 2020 2021E 2026 GOAL Revenue+ Adj. EBITDA* ~$2.65B$2.6B $3.1B +0-1 ppts ~$615M $662M $555M Base Growth Drivers ATMaaS traction…ARPU* triples over contract life Enhanced recycler and kiosk products Potential Upside Insourcing service providers Security monitoring solutions Acquisitions to support the above Acceleration of fleet upgrade +0-1 ppts 3-4% CAGR 3-5% CAGR *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments
N C R C O R P O R A T I O N N C R P ay m en ts & N et w or k Fi n an ci al G oa ls Payments & Network 57 2019 2020 2021E 2026 GOAL 2019 2020 2021E 2026 GOAL Revenue+ Adj. EBITDA* +3-4 ppts ~$1.15B$1.1B $1.3B ~$400M $371M $314M Base Growth Drivers LibertyX** More endpoints Surcharge-free network access for online FIs Merchant acquiring at Retail and Hospitality Potential Upside Expansion of deposit acceptance capabilities Broaden supported transaction types LibertyX** outperform Acquisitions to support the above +2-3ppts 12-14% CAGR 12-14% CAGR *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments **NCR has announced a definitive agreement to acquire LibertyX, a leading cryptocurrency software provider. Closing is subject to customary closing conditions, including obtaining certain regulatory licensing consents and approvals. N C R C O R P O R A T I O N 2021 2026 2021 2026 N C R C or p or at e Fi n an ci al G oa ls Corporate & Other Revenue+ Adj. EBITDA* 58 Telecom & Technology Elimination of Merchant Acquiring resultsCorporate Costs ~$300M ~$60M ~($20M)~($25M) ~($490M) 2021E: $275M 2026 GOAL: ($100M) 2021E: ($450M) 2026 GOAL: ($800M) *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments N C R C O R P O R A T I O N 2021 Operations D&A Tax Cash Redeployment 2026 Goal N on -G A A P E P S & F re e C as h F lo w W al k Non-GAAP EPS* BY SOURCE 59 FREE CASH FLOW* 2026 Capital Cash Taxes Working Cap Interest Other Free Cash Flow*ADJ. EBITDA* +15-19% CAGR 2021E 20 6 OAL TaxD&A Adj. EBITDA* (from pg. 52) Cash Redeployment ~$1B ~$2.75 $2.2-2.5B *See definition in Supplementary Materials. N C R C O R P O R A T I O N FCF Conversion Goals C as h G en er at io n a n d R ed ep lo ym en t P ri or it ie s Redeployment Priorities Reduce leverage to 3.5x – 2.5x Organic growth through investments Tuck-in acquisitions Stock repurchase Dividend Anticipate $1B in annual free cash flow* by 2026 60 How We Achieve Improved Working Capital Metrics Reduced Interest Expense CapEx in-line with D&A Cash tax below statutory rates 2021E 2026 FCF* / ADJ. EBITDA* 35% 40-45% FCF* / Net Income 120% 100% 1st 2nd 3rd 4th 5th *See definition in Supplementary Materials.
N C R C O R P O R A T I O N D eb t & P re fe rr ed S to ck M at u ri ti es S ta tu s Preferred Shares* NCR is in a strong liquidity position…no major refinancing until 2026. 61 2021 2022 2023 $1,200M $733M $1,207M $1,300M $274M * First “Put” Date Preferred - Current balance sheet value of Series A preferred : $274M Term Loan A 5.125% Notes due Revolver Term Loan B 2024 2025 2026 2027 2028 2029 2030 $450M 5.250% Notes due $650M 5.000% Notes due $500M 5.750% Notes due $500M 6.125% Notes due Required U.S. Pension contribution N C R C O R P O R A T I O N 0% 60% 0% 20% 62 Business Segments+: Highlighting High Value Assets 2021E-2026 REVENUE+ GROWTH CAGR TARGET A D J. E B IT D A * M A R G IN Retail Hospitality Payments & Network Digital Banking Self-Service Banking *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments. 2021E N C R C O R P O R A T I O N 63 Business Segments+: Highlighting High Value Assets 0% 60% 0% 20%2021E-2026 REVENUE+ GROWTH CAGR GOAL A D J. E B IT D A * M A R G IN 2026 Retail Hospitality Payments & Network Digital Banking Self-Service Banking *See definition in Supplementary Materials. +See “Notes to Investors” for a description of Estimated Segments. N C R C O R P O R A T I O N Conclusion Mike Hayford
N C R C O R P O R A T I O N Investment Thesis Continued execution to drive solid return (15% non-GAAP EPS* growth goal) Continued transformation to drive rerate of valuation 65 EXECUTION TRANSFORMATION Software, services & recurring revenue* growth Leverage software platform to increase TAM* Topline revenue growth GOAL: 15% non-GAAP EPS* growth GOAL: $1B in annual FCF* by 2026 Transform undervalued assets Segmentation to better value to market comps Rerate to SaaS multiple * See definition in Supplementary Materials. N C R C O R P O R A T I O N Q&A N C R C O R P O R A T I O N Supplementary Mater ia ls N C R C O R P O R A T I O N NON-GAAP MEASURES 68 While NCR reports its results in accordance with generally accepted accounting principles (GAAP) in the United States, comments made during this conference call and in these materials will include non-GAAP measures. These measures are included to provide additional useful information regarding NCR's financial results and are not a substitute for their comparable GAAP measures. 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 this 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 definition may differ from other companies’ definitions of these measures. F R E E C A S H F L O W
N C R C O R P O R A T I O N NON-GAAP MEASURES 69 NCR believes the Adjusted EBITDA and Adjusted EBITDA margin percentage provides useful information to investors because it is an indicator of 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 based on its GAAP net income from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition related intangibles and restructuring charges, among others. For this presentation, Adjusted EBITDA is further adjusted to include Cardtronics adjusted EBITDA as reported in the applicable periods presented and eliminates any profit on transactions between the two companies prior to the acquisition on June 21, 2021. 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 percentage is calculated based on Adjusted EBITDA as a percentage of total revenue. However, with respect to our projection of Adjusted EBITDA and Adjusted EBITDA margin percentage, we are not providing a reconciliation to the respective GAAP measures because we are unable to predict with reasonable certainty the reconciling items that may affect GAAP net income from continuing operations without unreasonable effort. The reconciling items are primarily the future impact of special tax items, capital structure transactions, restructuring, pension mark-to-market transactions, acquisitions or divestitures, or other events. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures. A D J U S T E D E B I T D A a n d M A R G I N % N C R C O R P O R A T I O N NON-GAAP MEASURES 70 70 Non-GAAP Diluted Earnings per Share (EPS) is 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. Due to the non-operational nature of these pension and other special items, NCR’s management uses this non-GAAP measures to evaluate year-over-year operating performance. NCR believes this measure is 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. However, with respect to our projection of Diluted Earnings Per Share, we are not providing a reconciliation to the respective GAAP measures because we are unable to predict with reasonable certainty the reconciling items that may affect GAAP net income from continuing operations without unreasonable effort. The reconciling items are primarily the future impact of special tax items, capital structure transactions, restructuring, pension mark-to-market transactions, acquisitions or divestitures, or other events. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures. D I L U T E D E A R N I N G S P E R S H A R E ( E P S ) 70 N C R C O R P O R A T I O N GAAP TO NON-GAAP RECONCILIATION 71 71 A D J U S T E D E B I T D A In millions 2019 2020 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $614 ($7) Pension Mark-to-Market Adjustments 75 $34 Transformation & Restructuring Costs 58 234 Acquisition-Related Amortization of Intangibles 86 81 Acquisition-Related Costs 3 (6) Internal reorganization & IP Transfer (37) - Loss on Debt Extinguishment 0 20 Interest Expense 197 218 Interest Income (4) (8) Depreciation and Amortization 232 275 Income Taxes (273) (53) Stock Compensation Expense 107 108 NCR Adjusted EBITDA (non-GAAP) $1,058 $896 Cardtronics Adjusted EBITDA (Pre-acquisition) 308 264 NCR sales to Cardtronics (5) (9) Combined Adjusted EBITDA (non-GAAP) $1,361 $1,151 N C R C O R P O R A T I O N GAAP TO NON-GAAP RECONCILIATION 72 72 F R E E C A S H F L O W In billions 2026E Cash provided by Operating Activities $1.4-1.5 Total capital expenditures (~0.5-0.6) Pension contributions ~0.05-0.15 Free Cash Flow ~$1.0
N C R C O R P O R A T I O N CERTAIN TERMS AND KEY PERFORMANCE INDICATORS (KPIs) 73 Revenue – for this presentation, to provide historical data that is comparable with the on-going business, we have added the revenue of Cardtronics, prior to the acquisition on June 21, 2021, to the historical revenue for NCR and eliminated any revenue on products and services sold by NCR to Cardtronics for those periods presented. 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, and certain professional services arrangements, as well as term-based software license arrangements that include customer termination rights. Elimination of Merchant acquiring payment services revenue and adjusted EBITDA – Effective January 1, 2022, the Company anticipates operating the business under new reportable segments. As part of this change in segment reporting, there are certain revenues and associated costs related to merchant acquired payments that will be reported primarily in the Payments and Networking segment but will also be reported in Retail or Hospitality, based on the customer industry. As a result, these revenues and costs that are reported in 2 segments will be eliminated to reconcile to total company revenue and adjusted EBITDA. Corporate & Other – includes the revenue and adjusted EBITDA for our Telecom and Technology business and cost and expenses that are corporate related and not specifically attributable to an individual reportable segment. C E R T A I N T E R M S & K E Y P E R F O R M A N C E I N D I C A T O R S ( K P I s ) N C R C O R P O R A T I O N CERTAIN TERMS AND KEY PERFORMANCE INDICATORS 74 Allpoint Network Fees – are fees from our Allpoint retail-based surcharge-free network in which financial institutions that participate pay a fixed monthly fee per cardholder and/or fixed fee per transaction so that cardholders gain surcharge-free access to our large network of ATMS. Annual Recurring Revenue (“ARR”) – Recurring revenue, excluding software license (SWL) sold as a subscription, for last 3 months x 4 plus rolling 4 quarters for term-based SWL arrangements that include customer termination rights. ATMaas Units – are the number of ATMs traditionally managed by financial institutions (customer) that are now managed as a service by NCR. These could include assets that are owned by NCR, the customer, or a third party. Average Revenue Per Unit (“ARPU”) – Total revenue/# of units, users, or subscribers. Endpoints – each access point to the Allpoint Network as well as merchant acquiring terminals. Hospitality Platform Sites – is subscription-based revenue contracts for hospitality customer locations connected to the NCR Commerce platform. Interchange Fees – are fees paid to an ATM operator by the cardholder’s financial institution for its customer’s use of an ATM and the connectivity to the applicable EFT network that transmits data between the ATM and the cardholder’s financial institution. Merchant Acquiring Fees – are fees for services rendered as the Company processes credit and debit card transactions for its merchant customers or for merchant customers of its third-party clients. C E R T A I N T E R M S & K E Y P E R F O R M A N C E I N D I C A T O R S ( K P I s ) N C R C O R P O R A T I O N CERTAIN TERMS AND KEY PERFORMANCE INDICATORS 75 Network Processing Fees – are fees from our processing arrangements in which we provide transaction processing services to merchants, financial institutions, and third-party operators. Payments Sites – are Hospitality Platform sites with payments. Program and Branding Fees – are fees paid under a bank-branding arrangement where ATMs that are Company-owned and operated are branded with the logo of the branding financial institution. Retail Platform Lanes – is subscription-based revenue contract for a retail lane connected to the NCR Commerce Platform and is live. Self-Checkout Revenue – is all revenue streams, which includes hardware, software related, and services for the Self-Checkout product line. Surcharge Fees – are fees paid by a financial institution’s customers to use an ATM. TAM – Total Addressable Market Transactions – are payments processed across the Allpoint and merchant acquiring networks. Users – are registered or active users of our digital banking customers. C E R T A I N T E R M S & K E Y P E R F O R M A N C E I N D I C A T O R S ( K P I s ) N C R C O R P O R A T I O N REVENUE 76 In billions 2019 2020 2021E NCR Total Revenue (as reported) $6.9 $6.2 $7.2 Cardtronics Revenue (pre-acquisition) 1.3 1.1 .6 NCR sales to Cardtronics (.1) (.1) (.1) Revenue $8.1 $7.2 $7.7 C O M B I N E D R E V E N U E In billions 2019 2020 2021E Retail $2.2 $2.0 $2.3 Hospitality 0.8 0.7 0.8 Digital Banking 0.4 0.5 0.5 Self-Service Banking 3.1 2.6 2.6 Payments & Network 1.3 1.1 1.2 Corporate and Other 0.3 0.3 0.3 Merchant Acquiring Elimination - - - Revenue $8.1 $7.2 $7.7 E S T I M A T E D S E G M E N T R E V E N U E
N C R C O R P O R A T I O N ESTIMATED SEGMENTS 77 77 C O M B I N E D A D J U S T E D E B I T D A In millions 2019 2020 Retail $363 $373 Hospitality 154 122 Digital Banking 158 165 Self-Service Banking 662 555 Payments & Network 371 314 Corporate and Other (347) (378) Merchant Acquiring Elimination - - Combined Adjusted EBITDA (non-GAAP) $1,361 $1,151