NCR Atleos Corporation (NYSE: NATL) (“Atleos”) reported
financial results today for the three months ended September 30,
2023. Third quarter results and other recent highlights
include:
- Revenue of $1.1 billion, increase of 4%
year-over-year
- Recurring revenue of $765 million, increase of 6%
year-over-year
- Net income (loss) attributable to Atleos of $(58) million on
a GAAP basis, impacted by substantial separation transaction
related expenses
- Adjusted EBITDA of $210 million, increase of 7%
year-over-year
- Announces investor update call on December 5, 2023
“Across the first three quarters of 2023, the Atleos team
simultaneously executed against our financial commitments, advanced
our strategy, and completed a transformational separation. Our
momentum is consistent with the expectations we described to
investors as we prepared for the separation. I appreciate the
exceptional commitment and effort that our employees demonstrated,”
said Tim Oliver, Chief Executive Officer. “We are energized by our
launch as a pure-play public company and will focus all of our
resources on meeting our ATM customers' needs and extending our
leadership position in digital-to-physical transactions.”
The core business segments continue to deliver strong
results:
- Self Service Banking: Revenue $656 million, increase of 4%
year-over-year; Adjusted EBITDA $172 million, increase of 23%
year-over-year
- Network: Revenue $335 million, increase of 7% year-over-year;
Adjusted EBITDA $113 million, increase of 14% year-over-year
Notes to Investors
Atleos has historically operated as a part of NCR Voyix
Corporation, formerly known as NCR Corporation (“Voyix” or “NCR”);
consequently, stand-alone financial statements have not
historically been prepared. The accompanying results have been
derived from NCR’s historical accounting records and are presented
on a stand-alone basis as if Atleos operations had been conducted
independently from NCR. Refer to the section entitled “Spin-off
Information” for additional information.
In this release, we use certain non-GAAP measures. These
non-GAAP measures include “Adjusted EBITDA,” and others with the
words “non-GAAP” in their titles. These non-GAAP measures are
listed, described and reconciled to their most directly comparable
GAAP measures under the heading “Non-GAAP Financial Measures” later
in this release.
About Atleos
Atleos (NYSE: NATL) is a leading provider of solutions that
enable banks and retailers to deliver best-in-class self-service
banking experiences for their customers. Atleos solutions help our
customers expand reach, provide greater financial access, and
reduce operational complexity through industry-leading
technologies, unmatched global services capabilities, the largest
surcharge-free network and expertise in running ATM networks.
Atleos is headquartered in Atlanta, Georgia, with 20,000 employees
globally.
Web site: https://www.ncratleos.com X (Twitter):
https://twitter.com/ncratleos Facebook:
https://www.facebook.com/Atleos.NCR/ LinkedIn:
https://www.linkedin.com/company/ncratleos YouTube:
https://www.youtube.com/@ncratleos Instagram:
https://www.instagram.com/ncratleos/
Cautionary Statements
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the “Act”). Forward-looking
statements use words such as “expect,” “anticipate,” “outlook,”
“intend,” “plan,” “confident,” “believe,” “will,” “should,”
“would,” “potential,” “positioning,” “proposed,” “planned,”
“objective,” “likely,” “could,” “may,” and words of similar
meaning, as well as other words or expressions referencing future
events, conditions or circumstances. We intend these
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Act.
Statements that describe or relate to Atleos’s plans, goals,
intentions, strategies, or financial outlook, and statements that
do not relate to historical or current fact, are examples of
forward-looking statements. Examples of forward-looking statements
in this release include, without limitation, statements regarding:
our expectations of demand for our solutions and execution and the
impact thereof on our financial results and our intention to focus
our resources on meeting our ATM customers' needs and extending our
leadership position in digital-to-physical transactions following
the spin-off. Forward-looking statements are based on our current
beliefs, expectations and assumptions, which may not prove to be
accurate, and involve a number of known and unknown risks and
uncertainties, many of which are out of Atleos’s control.
Forward-looking statements are not guarantees of future
performance, and there are a number of important factors that could
cause actual outcomes and results to differ materially from the
results contemplated by such forward-looking statements, including
those factors relating to:
- Strategy and Technology: transforming our business model;
development and introduction of new solutions; competition in the
technology industry; integration of acquisitions and management of
alliance activities; and our multinational operations;
- Business Operations: domestic and global economic and credit
conditions; risks and uncertainties from the payments-related
business and industry; disruptions in our data center hosting and
public cloud facilities; retention and attraction of key employees;
defects, errors, installation difficulties or development delays;
failure of third-party suppliers; a major natural disaster or
catastrophic event, including the impact of the coronavirus
(COVID-19) pandemic and geopolitical and macroeconomic challenges;
environmental exposures from historical and ongoing manufacturing
activities; and climate change;
- Data Privacy & Security: impact of data protection,
cybersecurity and data privacy including any related issues;
- Finance and Accounting: our level of indebtedness; the terms
governing our indebtedness; incurrence of additional debt or
similar liabilities or obligations; access or renewal of financing
sources; our cash flow sufficiency to service our indebtedness;
interest rate risks; the terms governing our trade receivables
facility; the impact of certain changes in control relating to
acceleration of our indebtedness, our obligations under other
financing arrangements, or required repurchase of our senior
secured notes; any lowering or withdrawal of the ratings assigned
to our debt securities by rating agencies; our pension liabilities;
and write down of the value of certain significant assets;
- Law and Compliance: allegations or claims by third parties that
our products or services infringe on intellectual property rights
of others, including claims against our customers and claims by our
customers to defend and indemnify them with respect to such claims;
protection of our intellectual property; changes to our tax rates
and additional income tax liabilities; uncertainties regarding
regulations, lawsuits and other related matters; and changes to
cryptocurrency regulations;
- Governance: actions or proposals from stockholders that do not
align with our business strategies or the interests of our other
stockholders;
- Separation: the potential strategic benefits, synergies or
opportunities expected from the separation may not be realized or
may take longer to realize than expected; the potential inability
to access, or reduced access, to the capital markets or increased
cost of borrowings, including as a result of a credit rating
downgrade; the incurrence of significant costs in connection with
the separation; the potential adverse reactions to the separation
by customers, suppliers, strategic partners or key personnel and
potential difficulties in maintaining relationships with such
persons and risks associated with third party contracts containing
consent, and/or other provisions that may be triggered by the
separation; unforeseen tax liabilities or changes in tax law;
non-compete restrictions in the separation agreement entered into
in connection with the separation; requests, requirements or
penalties imposed by any governmental authorities related to
certain existing liabilities; that Atleos may incur material costs
and expenses as a result of the Spin-off; that Atleos has no
history operating as an independent, publicly traded company, and
Atleos’s historical and pro forma financial information is not
necessarily representative of the results that it would have
achieved as a separate, publicly traded company and therefore may
not be a reliable indicator of its future results; Atleos’s
obligation to indemnify Voyix pursuant to the agreements entered
into in connection with the Spin-off (including with respect to
material taxes) and the risk Voyix may not fulfill any obligations
to indemnify Atleos under such agreements; that under applicable
tax law, Atleos may be liable for certain tax liabilities of Voyix
following the Spin-off if Voyix were to fail to pay such taxes;
that agreements binding on Atleos restrict it from taking certain
actions after the distribution that could adversely impact the
intended U.S. federal income tax treatment of the distribution and
related transactions; potential liabilities arising out of state
and federal fraudulent conveyance laws; the fact that Atleos may
receive worse commercial terms from third-parties for services it
presently receives from Voyix; that certain of Atleos’s executive
officers and directors may have actual or potential conflicts of
interest because of their previous positions at Voyix; potential
difficulties in maintaining relationships with key personnel; that
Atleos will not be able to rely on the earnings, assets or cash
flow of Voyix and Voyix will not provide funds to finance Atleos’s
working capital or other cash requirements.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those set forth in the forward-looking
statements. There can be no guarantee that Atleos will be able to
realize any of the potential strategic benefits, synergies or
opportunities as a result of these actions, nor can there be any
guarantee that shareholders will achieve any particular level of
shareholder returns. There can be no guarantee that the separation
will enhance value for shareholders, or that Atleos will be
commercially successful in the future, or achieve any particular
credit rating or financial results. Additional information
concerning these and other factors can be found in the Company’s
filings with the U.S. Securities and Exchange Commission, including
the Company’s Form 10, quarterly reports on Form 10-Q, and current
reports on Form 8-K. Any forward-looking statement speaks only as
of the date on which it is made. The Company does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
SPIN-OFF INFORMATION. On September 15, 2022, NCR Voyix
Corporation, formerly known as NCR Corporation (“Voyix” or “NCR”),
announced its plan to separate its businesses into two distinct,
publicly traded companies, whereby NCR would execute a Spin-off to
NCR shareholders of its self-service banking, network, and
telecommunications and technology businesses (the “Spin-off” or
“Separation”). On September 22, 2023, the Board of Directors of NCR
authorized the Spin-off of Atleos to be completed on October 16,
2023. Prior to October 16, 2023, the Company was wholly owned by
NCR.
Non-GAAP Financial Measures
Non-GAAP Financial Measures. While Atleos reports its results in
accordance with Generally Accepted Accounting Principles in the
United States, or GAAP, in this release Atleos also uses the
non-GAAP measures listed and described below.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA). Atleos’s management uses the
non-GAAP measure Adjusted EBITDA because it provides useful
information to investors as an indicator of performance of the
Company’s ongoing business operations. Atleos determines Adjusted
EBITDA based on GAAP Net income attributable to Atleos plus
interest expense, net; plus income tax expense (benefit); plus
depreciation and amortization; plus acquisition-related costs; plus
pension mark-to-market adjustments, pension settlements, pension
curtailments and pension special termination benefits; plus
separation-related costs; plus transformation and restructuring
charges (which includes integration, severance and other exit and
disposal costs); plus stock-based compensation expense; plus other
(expense) income items. These adjustments are considered
non-operational or non-recurring in nature and are excluded from
the Adjusted EBITDA metric utilized by our chief operating decision
maker (“CODM”) in evaluating segment performance and are separately
delineated to reconcile back to total reported income attributable
to Atleos. This format is useful to investors because it allows
analysis and comparability of operating trends. It also includes
the same information that is used by Atleos management to make
decisions regarding our segments and to assess our financial
performance. Refer to the table below for the reconciliations of
Net income attributable to Atleos (GAAP) to Adjusted EBITDA
(non-GAAP).
Special Item Related to Russia The war in Eastern Europe and
related sanctions imposed on Russia and related actors by the
United States and other jurisdictions required us to commence the
orderly wind down of our operations in Russia in the first quarter
of 2022. As of September 30, 2023, we have ceased operations in
Russia and are in the process of dissolving our only subsidiary in
Russia. As a result, for the three and nine months ended September
30, 2022, our presentation of segment revenue and Adjusted EBITDA
exclude the immaterial impact of our operating results in Russia,
as well as the impact of impairments taken to write down the
carrying value of assets and liabilities, severance charges, and
the assessment of collectability on revenue recognition. We
consider this to be a non-recurring special item and management has
reviewed the results of its business segments excluding these
impacts.
Atleos’s definitions and calculations of these non-GAAP measures
may differ from similarly-titled measures reported by other
companies and cannot, therefore, be compared with similarly-titled
measures of other companies. These non-GAAP measures should not be
considered as substitutes for, or superior to, results determined
in accordance with GAAP.
Use of Certain Terms
Recurring revenue 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, processing revenue,
interchange and network revenue, Bitcoin related revenue, and
certain professional services arrangements, as well as term-based
software license arrangements that include customer termination
rights.
Reconciliation of Net Income
Attributable to Atleos (GAAP) to Adjusted Earnings Before Interest,
Taxes,
Depreciation and Amortization
(Adjusted EBITDA)
$ in millions
Q3 2023
Q3 2022
Net income attributable to Atleos
(GAAP)
$
(58
)
$
64
Interest expense
2
—
Related party interest expense, net
4
6
Income tax expense
147
36
Depreciation and amortization expense
38
42
Acquisition-related amortization of
intangibles
24
25
Stock-based compensation expense
12
14
Separation costs
46
—
Transformation and restructuring
1
10
Pension mark-to-market adjustments
(6
)
—
Adjusted EBITDA (Non-GAAP)
$
210
$
197
NCR ATLEOS CORPORATION
COMBINED STATEMENTS OF
OPERATIONS
(Unaudited)
(in millions, except per share
amounts)
Schedule A
For the Periods Ended
September 30
Three Months
Nine Months
2023
2022
2023
2022
Product revenue
$
252
$
260
$
748
$
794
Service revenue
815
770
2,345
2,272
Total revenue
1,067
1,030
3,093
3,066
Cost of products
209
225
619
719
Cost of services
590
564
1,739
1,670
Total gross margin
268
241
735
677
% of Revenue
25.1
%
23.4
%
23.8
%
22.1
%
Selling, general and administrative
expenses
160
131
445
446
Research and development expenses
17
7
54
52
Income from operations
91
103
236
179
% of Revenue
8.5
%
10.0
%
7.6
%
5.8
%
Interest expense
(2
)
—
(2
)
—
Related party interest expense, net
(4
)
(6
)
(13
)
(23
)
Other income (expense), net
5
3
6
—
Total interest and other expense, net
(1
)
(3
)
(9
)
(23
)
Income before income taxes
90
100
227
156
% of Revenue
8.4
%
9.7
%
7.3
%
5.1
%
Income tax expense
147
36
195
54
Net income (loss)
(57
)
64
32
102
Net income (loss) attributable to
noncontrolling interests
1
—
1
1
Net income (loss) attributable to
Atleos
$
(58
)
$
64
$
31
$
101
Net income (loss) per share
attributable to Atleos common stockholders - basic and
diluted
$
(0.82
)
$
0.91
$
0.44
$
1.43
Number of basic and diluted shares
outstanding (1)
70.6
70.6
70.6
70.6
(1)
On October 16, 2023, the date of
Separation, 70,606,892 shares of Atleos's Common Stock, par value
$0.01 per share, were distributed to Voyix shareholders of record
as of October 2, 2023, the Record Date. This share amount is
utilized for the calculation of basic and diluted earnings per
share for all periods presented prior to the Separation. For the
three and nine months ended September 30, 2023 and 2022, these
shares are treated as issued and outstanding for purposes of
calculating historical earnings per share. For periods prior to the
Separation, it is assumed that there are no dilutive equity
instruments as there were no equity awards of Atleos outstanding
prior to the Separation.
NCR ATLEOS CORPORATION
REVENUE AND ADJUSTED EBITDA
SUMMARY
(Unaudited)
(in millions)
Schedule B
For the Periods Ended
September 30
Three Months
Nine Months
2023
2022
% Change
2023
2022
% Change
Revenue by segment
Self-Service Banking
$
656
$
631
4
%
$
1,916
$
1,899
1
%
Network
335
313
7
%
944
900
5
%
T&T
49
53
(8
)%
148
166
(11
)%
Total segment revenue
1,040
997
4
%
3,008
2,965
1
%
Other (1)
27
33
(18
)%
85
92
(8
)%
Other adjustment (2)
—
—
—
9
(100
)%
Combined revenue
$
1,067
$
1,030
4
%
$
3,093
$
3,066
1
%
Adjusted EBITDA by segment
Self-Service Banking
$
172
$
140
23
%
484
390
24
%
Self-Service Banking Adjusted EBITDA
margin %
26.2
%
22.2
%
25.3
%
20.5
%
Network
113
99
14
%
279
271
3
%
Network Adjusted EBITDA margin %
33.7
%
31.6
%
29.6
%
30.1
%
T&T
10
11
(9
)%
26
35
(26
)%
T&T Adjusted EBITDA margin %
20.4
%
20.8
%
17.6
%
21.1
%
Other (1)
7
8
(13
)%
26
6
333
%
Corporate (3)
(92
)
(61
)
51
%
(261
)
(204
)
28
%
Total Adjusted EBITDA
$
210
$
197
7
%
$
554
$
498
11
%
Total Adjusted EBITDA margin %
19.7
%
19.1
%
17.9
%
16.2
%
(1)
Other represents certain other immaterial
business operations, including commerce-related operations in
countries that Voyix exited that are aligned to Atleos, that do not
represent a reportable segment.
(2)
Other adjustment reflects the revenue
attributable to the Company’s operations in Russia that were
excluded from management's measure of revenue due to our decision
to suspend sales to Russia in the first quarter of 2022 and the
anticipated orderly wind down of our operations in Russia. Refer to
the section entitled “Non-GAAP Financial Measures” for additional
information.
(3)
Corporate includes income and expenses
related to corporate functions and certain allocations from our
Parent that are not specifically attributable to an individual
reportable segment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114522172/en/
News Media Contact Scott Sykes NCR Atleos Corporation
scott.sykes@ncratleos.com
Investor Contact Brendan Metrano NCR Atleos Corporation
brendan.metrano@ncratleos.com
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