NCR Atleos Corporation Reports Third Quarter 2023 Results
- 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
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
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
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
SPIN-OFF INFORMATION. On
Non-GAAP Financial Measures
Non-GAAP Financial Measures. While Atleos reports its results in accordance with Generally Accepted Accounting Principles in
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
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 |
||||||||||||||
|
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 |
|
NCR ATLEOS CORPORATION REVENUE AND ADJUSTED EBITDA SUMMARY (Unaudited) (in millions)
|
Schedule B |
|
For the Periods Ended |
||||||||||||||||||||
|
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 |
(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@ncratleos.com
Investor Contact
brendan.metrano@ncratleos.com
Source: