FORWARD-LOOKINGSTATEMENTS. 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 1955 (the "Act") including statements that contain the words "expect," "intend," "plan," "believe," "will," "should," "would," "could," "may," "ought," "objective," 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, statements about NCR's expected areas of focus and strategy to drive growth and create long-term stockholder value, including, but, not limited to, the Company's 80/60/20 strategy and accelerating NCR as a Service; NCR's expectations for financial performance through 2024; expectationsN O Nfor- acceleratingG A A PrecurringD I revenue;L U TstatementsE D EregardingP S the Company's Q4 2020 financial performance and the Company's estimated 2020 full year revenue; performance in the market and versus competitors; market share and growth; product introductions and competitive advantages; winning in the market; platform return on investment; NCR's cost reduction actions and their expected benefits in 2020 and beyond; NCR's financial objectives and expected impacts (headwinds and tailwinds) through 2024; and NCR's expected cash flow generation, redeployment and capital allocation strategy through 2024. 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 Securities and Exchange Commission (SEC) on February 28, 2020, and those factors detailed from time to time in NCR's other SEC reports. These materials are dated December 3, 2020, and NCR does not undertake any obligation to publicly update or revise any forward- looking statements, whether asa result of new information, future events or otherwise, except as otherwise required by law.
NON-GAAPMEASURES. While NCR reports its results in accordance with generally accepted accounting principles in the United States (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 free cash flow and adjusted EBITDA margin percentage. 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.
USE OF CERTAIN TERMS. As used in these materials: the term "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, and certain professional services arrangements, as well as term-based software license arrangements that include customer termination rights.
These presentation materials and the associated remarks made during this presentation are integrally related and are
Customer left to navigate NCR = Confusion & Frustration
Banking Product
?
M anufacturing
M anagement
Professional Services
? ?
Banking Software
Engineering
Banking Hardware
Banking Services
Banking Finance
Services Sales
Banking Sales
13
Today: Industry-Aligned GM Model
BUSINESS UNIT MODEL
One accountable voice to customer
Industry GM Organization
BANKING RETAIL HOSPITALITY
Lean Fac tory
Softw are
Services
Engineering
Corporate Functional Support
14
Leader Across Our Business Lines
BANKING
HOSPITALITY
RETAIL
15
Customer Screen shot
NCR Banking
Solutions That RUN Self-
Directed Banking
Frank Hauck
President & General Manager
16
NCR Banking Business
$3.1B 2020e Revenue
$.5B
▪Win in Digital Banking
▪Broaden Digital First platform
$.9B
$1.7B
▪Shift to cloud, SaaS & subscription
▪Maintain#1 self-service ATM share
▪Expand multi-vendor ATM business
Banking Software
ATM
Digital
▪Grow ATM-as-a-Service
& Services
Hardware
Banking
Representative customers
17
NCR Banking ATM-as-a-Service
Shawn Phillips
General Manager ATMaaS
18
The Market is Shifting to ATM-as-a-Service
ATM-as-a-Service
```
Hardw are
Softw are
SLM and
ATM
FLM
Monitoring
Incident
Management
Security &
Serv ice
Mgmt
Reporting
Compliance
Desk
ATM business
Subscription
Performance
Cash
Vendor
Adv isory
Management
Management
Mgmt
Serv ice
Everything a FI needs to RUN self-directed banking
from the world's #1 ATM provider*
* Source: NCR view based on 89,000 ATM shipments in 2019
19
The Economics of ATM-as-a-Service
Traditional: US Community Financial Institution, 25 ATMs
Cumulative: $1,650*
$1,050K $150K$150K$150K $150K
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
ATM Hardware & Software
Hardware & Software Maintenance
As a Service: Shift to As-a-Service model, predictable, recurring
TCV: $3,650*
$730K
$730K
$730K $730K
$730K
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
NCR ATM-as-a-Service
Including Hardware, Software & Service
*For illustrative purposes only
Hardware
Software
SLM and
ATM
Incident
Mgmt
Security &
Service
Performance
Cash
Vendor
Advisory
ATM
FLM
Monitoring
Mgmt
Reporting
Compliance
Desk
Mgmt
Mgmt
Mgmt
Service
Cleaning
20
NCR Digital Banking
Doug Brown
President Digital Banking
21
NCR Digital Banking - Leadership Market Position
Digital Banking $500M
24 Million
Digital Users
12% YoY Growth
650
Banks and Credit Unions
4.8
Star App Rating
Top 3 Mobile
in Consumer Experience (MagnifyMoney 2020)
20 of Top 35
North American Banks for Mobile Transactions
~2,250 Branches
live with NCR Digital First Teller
Industry Leader
IDC MarketScape
Celent 2020 Winner
22
NCR Digital Banking - Positioned for Growth
Digital
Banking
Superior customer experience
Innovation through fintech integration
Highest ROI platform
Bank and credit union domain expertise
23
NCR Banking - Growth Levers
Banking Growth
Surrounding with recurring service
software
ATM-CENTRIC
Shifting to ATM-as-a-Service
Reinvigorating our Digital Banking
DIGITALbusiness
BANKING
Broadening the Digital First platformATMs &
24
Leader Across Our Business Lines
BANKING
HOSPITALITY
RETAIL
25
NCR Retail Core
POS Software Solutions
That RUN The Store
David Wilkinson
President and GM, NCR Retail
26
NCR Retail Business
$2.1B 2020e Revenue
Run your store end-to-end
Leading with digital, our next generation retail store architecture connects every customer touchpoint into a single, amazing experience that makes shopping effortless for your customers while making business easier, faster and more profitable for you.
ENTERPRISE
SELF-
POS SOLUTIONS
CHECKOUT
$1.2B Business
$900M Business
Representative customers
27
NCR RetailCustomers
Grocery & Big Box
Department &
Specialty
Convenience & Fuel
SMB
5%
9%
19%
67%
>1.5M checkout lanes worldwide*
* Source: NCR Product Management
28
NCR Retail Platform
▪ Simplifies the needed refresh cycle of our massive install base
Customers cansimply convert sites to the platform, add new capabilities, attach new services and NCR can expand wallet share
Strong NCR value proposition of faster time-to-market,lower cost of ownership and improved tech availability
We have theright sales and services coverage for this market
29
NCR Retail - Positioned for Growth
Retail Growth
Maintain self-checkout leadership and
grow with the market
Win the upgrade cycle for next-gen,
cloud-based bundled POS software offerings
30
Leader Across Our Business Lines
BANKING
HOSPITALITY
RETAIL
31
NCR Hospitality Core
POS Software Solutions That
RUN The Restaurant
Dirk Izzo
President & GM, NCR Hospitality
32
NCR Hospitality (Restaurant) Business
$700M 2020e Revenue
6%
27%
▪ Over 100,000 sites worldwide
▪#1 Restaurant POS software provider in U.S.
67%
(source: RBR 2020)
▪ Half of the top 100 worldwide restaurant brands use NCR
▪32 of the top 50 quick service restaurant chains use NCR
▪ More restaurant employees are trained on NCR Aloha than
Small & Medium
Enterprise
Others
any other restaurant software
Restaurant
Restaurant
33
We Provide Everything To RUN The Restaurant
Restaurant management platform (Aloha)
Digital, mobile, contactless experiences
Wall-to-wall services
Monthly Subscription & Transactions
"We're delighted to work with NCR to integrate Grubhub into the NCR Aloha POS for a ready-to-deploy solution
that enhances the delivery
experience and boosts
efficiency for restaurant
operators.
"
34
Why We Will Win In The Market
Increase our share of wallet
Expand our market share - incremental site growth
Hospitality
Growth
Only 3% of our base is converted to Aloha Essentials
35
Functional Execution
Roundtable
Adrian Button
Product & Services Operations
EVP, Product &
− Quality & cost efficiency
Service Operations
Tim Vanderham
Software Engineering
SVP, Chief Technology
− Scalable software architecture & discipline
Officer
Mithu Bhargava
Professional Services
SVP, Professional Services
− Integration touchpoint & innovation
36
A Global, Efficient Network Delivering For
Our Customers
14K
Engineers
285K
Units/Year
9.4M
Dispatches/Year
22M
Service Calls/Year
13M
Devices Supported
150K
Manufacturing Plant
Parts Shipped Weekly
Service Operations Center Hub
Distribution/Fulfillment Center/Warehouse
37
NCR Platform Architecture
3rd Party Order Aggregators and Loyalty Providers
NCR Platform BSP/CSP
Buy Online/
Pick-UpIn-Store/
Restaurant/Branch
Mobile Ordering
and Order
Management
Data Analytics
Payment
and Business Ops
Processing
38
Professional Software Services
Delivering for Our Customers
4,100+
55+
7,100+
100+
Software Consultants
Countries
Projects Per Year
Packaged PS Offers
Run The Store
Run The Restaurant
Run Self-Directed Banking
▪ Services led migration to Next-
▪ Co-innovate digital makeline
▪ Modernize branch experience to self-
Generation Retail Software
experience leveraging Aloha
directed banking approach
Architecture
Essentials platform
▪ Advisory services to redefine
▪ Connected experiences across
▪ Order accuracy up 99%
consumer experience and create
physical to digital channels
▪ Wait times down 50%
upsell opportunities
Enabling e-commerce, mobile and integration to their back-office systems
39
Financial Outlook:
A Path to 80|60|20 Success
Tim Oliver, EVP, Chief Financial Officer
40
Update on More Tactical Topics
Q4 2020
2021
Results to date are consistent with Oct. 27th commentary
Revenue, EBITDA and cash flow expected to be similar to results in 2020 Q3
Productivity initiatives and asset reviews are ongoing
Cost reduction actions will achieve $125-150M of annual run-rate savings
Annual planning process is nearly complete
Anticipate modest sequential improvement in end markets across the full year of 2021
No further 2020 updates or 2021 guidance today
41
NCR 2020-2024 Financial Objectives
REVENUE
~ $7.4B
ADJ. EBITDA MARGIN %
~ 20%
~ $6.2B
~ 14%
2018A
2019A
2020E
2024E
2018A
2019A
2020E
2024E
FREE CASH FLOW
STRATEGIC EXECUTION
$600-700M
2018
2019
2020
2024
$400-500M
Software &
68%
65%
72%
~80%
~ $2B to
Services
Revenue
Redeploy
Recurring
46%
46%
54%
>60%
Revenue
Adj. EBITDA
15%
15%
14%
~20%
Margin
2018A
2019A
2020E
2024E
42
Defining 80|60|20
80 %
…of NCR's revenue will come from software and services.
60 %
…of NCR's revenue will come from recurring revenue.
Defined as contracts where there is a predictable revenue pattern that will occur at regular intervals. This
includes hardware and software maintenance, cloud, payment processing, certain professional services
arrangements, and term-based software licenses.
20 %
…goal for adjusted EBITDA as a percent of revenue.
Adjusted earnings before interest, taxes, depreciation and amortization as a % of revenue. Typical adjustments
include amortization as well as other special items, including pension, mark-to-market adjustment,
amortization of acquired intangible assets, restructuring charges, among others.
43
NCR Banking Financial Objectives
REVENUE
ADJ. EBITDA MARGIN %
~$3.1B
~23%
~18%
2018A
2019A
2020E
2024E
2018A
2019A
2020E
2024E
Company avg.
Corporate overhead
Adj. EBITDA
STRATEGIC EXECUTION
Metrics to watch
Q3 YTD
2024
2018
2019
2020
▪Digital Banking Revenue
$354.4M
Software &
69%
64%
71%
>80%
Services
▪Digital Banking Registered Users
24.3M
Revenue
Recurring
49%
46%
55%
>60%
Revenue
▪Recurring Revenue
$1.264B
Adj. EBITDA
17%
19%
18%
>20%
Margin
44
NCR Banking Business Revenue Composition
DIGITAL BANKING
OTHER
BANKING
Software &
Services
ATM's
Products
% Attach
Online/Mobile Banking - DI/D3
0%
Software - Remote Transactions
Professional Services - Digital Banking Consulting
Software - Enterprise Monitoring, Cx Marketing,
Security, Transaction Processing, Cash Management
Professional Services - ATM-Centric Consulting
15-100%
Software - ATM Multivendor
In
Services - Implementation, Break/Fix
Ascending
Order
Managed Services and ATM-as-a-Service
Software - Interactive Teller Machine
Software - Middleware
ATM Hardware
100%
2020 Est. Revenue
$0.5B
$1.7B
$0.9B
45
Banking: Digital Banking
Financial Objectives
REVENUE
~$0.5B
2018A
2019A
2020E
2024E
ADJ. EBITDA MARGIN %
~28%
2018A
2019A
2020E
2024E
Company avg.
Adj. EBITDA
Banking: Other Software &
Services Financial Objectives
REVENUE
~$2.6B
2018A
2019A
2020E
2024E
ADJ. EBITDA MARGIN %
~16%
2018A
2019A
2020E
2024E
Company avg.
Adj. EBITDA
46
NCR Retail Financial Objectives
REVENUE
ADJ. EBITDA MARGIN %
~$2.1B
~18%
~12%
2018A
2019A
2020E
2024E
2018A
2019A
2020E
2024E
Company avg.
Corporate overhead
Adj. EBITDA
STRATEGIC EXECUTION
Metrics to watch
Q3 YTD
2018
2019
2020
2024
Software &
63%
63%
67%
<80%
▪Platform Lanes
12,642
Services
Revenue
Recurring
▪SCO Revenue
$642M
37%
41%
47%
~60%
Revenue
▪Recurring Revenue
$717M
Adj. EBITDA
12%
12%
12%
<20%
Margin
47
NCR Hospitality Financial Objectives
REVENUE
ADJ. EBITDA MARGIN %
~ 16%
~$700M
~10%
2018A
2019A
2020E
2024E
2018A
2019A
2020E
2024E
Company avg.
Corporate overhead
Adj. EBITDA
STRATEGIC EXECUTION
Metrics to watch
Q3 YTD
2018
2019
2020
2024
Software &
70%
67%
75%
>80%
▪Number of Aloha Essentials Sites*
3,484
Services
Revenue
Recurring
48%
51%
61%
>60%
▪Recurring Revenue
$311M
Revenue
Adj. EBITDA
18%
13%
10%
~20%
* Subscription based sites
Margin
48
NCR Payments Business Financial Objectives
2020 Revenue: ~ $100M
2024 Revenue: ~ 20-30% CAGR
Retail
Hospitality
Non-NCR
NCR POS Addressable Market: $1.5B - $2B
49
Revenue Growth Bridge
BY CAUSE
2020E ~$6.2B
Price
Organic
Volume
Acq Volume
2024E~$7.4B
BY SEGMENT
2020E ~$6.2B
Banking
Retail
Hospitality
2024E~$7.4B
BY PRODUCT
2020E ~$6.2B
Hardware
Software
Serviices
2024E~$7.4B
50
Impact on Revenue of Shift to Recurring Revenue
Business Model
$600
Revenue $ millions
$500
$400
$300
Net Impact
$200
$100
$-
2018A
2019A
2020E
2021E
2022E
2023E
2024E
Revenue recognized upfront under
Cumulative effect on revenue of shift to
prior business model
recurring revenue business model
Net Impact is expected to become accretive in late 2022
51
Adj. EBITDA Margin Growth Bridge
BY CAUSE
2020E ~14%
BY SEGMENT
2020E ~14%
BY PRODUCT
2020E ~14%
Product Mix Shift
Hospitality
Shift to Recurring
Retail
Productivity
Banking
2024E
~20%
2024E
~20%
Services
Software
Hardware
2024E~20%
52
2024 Free Cash Flow Generation
$1.0- 1.1B
Operating Income
$600- 700M
* Free Cash Flow
* Free Cash Flow excludes discontinued operations and pension contributions
53
Cash Generation and Redeployment
Cash Generation Opportunities
Redeployment Priorities
Higher profitability
Cap Ex Efficiency
Cash cycle improvements
Services inventory
Invoice accuracy
Vendor management
Business Linearity
Uses:
4yr. Total
▪Organic growth (Cap Ex)
$0-250M >Deprec.
▪Acquisitions
~$600-$800M
▪Stock buyback
~$400-$500M
▪Reduce Leverage
Remainder
Legacy Uses:
▪Pension
~$300-$400M
▪Disc Operations
~$100-$150M
Approximately $2 Billion in cumulative free cash flow
54
Debt & Preferred Stock Maturities Status
5.250% Notes due 2030
6.125% Notes due 2029
5.000% Notes due 2028
5.750% Notes due 2027
Term Loan B
8.125% Notes due 2025
Preferred Shares
Revolver
AR Securitization
Pension Contributions
($ in millions)
$400
NCR is in a strong liquidity position…
$750
no major refinancing until 2025.
$500
$650
$1,100
$500
$300
$275
$450
2025-2030
2020
2021
2022
2023
2024*
* First "Put" Date Preferred - Current balance sheet value of Series A preferred : $275M
NCR Corporation published this content on 03 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 December 2020 14:44:05 UTC
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