NCR Corporation. Investor Presentation Third Quarter 2007

Transcription

1 NCR Corporation Investor Presentation Third Quarter 2007

2 Note to Investors Certain non-gaap financial information regarding NCR s operating results may be discussed during this presentation. Reconciliations of the differences between GAAP and non-gaap measures are available on the Investor page of NCR s website at Remarks and responses associated with this presentation include forward-looking statements that are based on current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to vary materially. These risk factors are detailed from time to time in NCR s SEC reports, including, but not limited to, Forms 10Q, 10K, 8K and the company s annual report to shareholders. 2

3 NCR s Business Portfolio Teradata Data Warehousing (includes hardware, software and support services) Financial Self Service (ATMs) Retail Store Automation (POS, self-checkout, airport & hotel check-in) 25% 23% Payment and Imaging (check processing) 3% 7% 14% Systemedia (business consumables) 28% 2006 Revenue Mix $6.1B Customer Services (supports NCR and third-party solutions) 3

4 Continued Operating Improvement ($ Millions) Revenue Non-Pension Operating Income* 6, , , , During the past few years, NCR has realigned/reduced its infrastructure cost, and positively changed its revenue mix towards higher margin products and services. *NPOI - Non-pension operating income (operating income before pension income/expense) Also excludes special items 4

5 Earnings Expansion Revenue $5.6 B $5.6 B $5.9 B $6.0 B $6.1 B NPOI 1 $136M $235M $367M $553M $618M % of revenue 2% 4% 6% 9% 10% Pension Income/ (Expense) 2 $74M $(105M) $(135M) $(131M) $(136M) Operating Income $189M $130M $232M $410M $473M % of revenue 3% 2% 4% 7% 8% EPS 2 $0.68 $0.42 $0.95 $1.68 $ Non-pension operating income is operating income before pension income/expense 2 Excludes special items, Non-GAAP results; see for GAAP to Non-GAAP reconciliation 5

6 Strategic Separation Global Leader in Enterprise Data Warehousing #1 in Data Warehousing Gartner The New NCR Global Leader in Self-Service #1 in self-service ATMs Retail Banking Report (RBR) #1 in self-checkout Venture Development Corp. #1 in self-service kiosks Frost & Sullivan 6

7 Teradata Data Warehousing Investing for Future Growth Leader in Enterprise Data Warehousing (EDW) -Unique, specialized, market-leading technology & architecture 1,600 1, ($M) Revenue 7-9% Growth Increasing demand for enterprise analytics more data, faster decisions '99 '00 '01 '02 '03 '04 '05 '06 '07G* Companies regularly upgrade as they add data, users, and more complex queries Competition IBM Oracle ($M) NPOI** 9% 12% 16% 22-23% 22% 21% '99 '00 '01 '02 '03 '04 '05 '06 '07G* -200 *Guidance from 7/31/ Guidance assumes combined company for entire year. Does not include special charges or incremental costs relating to strategic separation. **NPOI: Non-pension operating income (operating income before pension income/expense) 7

8 Proliferation of Fragmented Analytics Hundreds of Source Systems Thousands of Users/Depts. Accts. Payable Accts. Receivable Invoicing Data Marts Risk Management Marketing Sales/Orders Finance G/L Finance Pricing Customer Support HR Forecasting Benefits Payroll Purchasing Engineering Order Fulfillment Sales Manufacturing Inventory Redundant Data, Higher Costs, Poor Decisions Call Center Maintenance 8

9 Leaders are Implementing an EDW Lower Cost, Consistency of Data Hundreds of Source Systems Thousands of Users/Depts. Accts. Payable Accts. Receivable Invoicing Risk Management Marketing Sales/Orders Finance G/L Customer Support Enterprise Data Warehouse (EDW) Finance Forecasting Pricing Benefits HR Payroll Engineering Purchasing Sales Order Fulfillment Manufacturing Inventory Call Center Maintenance 9

10 Transaction Systems Help Run the Business Enterprise Analytic Systems Help Drive Business Decisions Operational/ERP Applications...Order processing, Financials, Sales Force Automation... Oracle/PeopleSoft/Retek, SAP, Siebel, Systems Integrators... Accenture BearingPoint CapGemini Cognizant IBM Business Intelligence Tools & Applications... Business Objects, Cognos, Hyperion, Fair Isaac, MicroStrategy, SAS, SPSS, Unica, Teradata Analytic Databases... Transaction & Special Purpose Databases... Oracle, IBM, Microsoft... Netezza, Data Allegro... Servers, Storage... Enterprise Application Integration TIBCO Data Acquisition & Integration Informatica, (IBM)Ascential, Trillium Technical Consulting... Teradata IBM Enterprise Data Warehouse Teradata, IBM Servers, Storage... 10

11 Significant Growth Opportunity in Data Warehouse Market Enterprise Analytics Market ($30B) Analytic Applications Data Mining & BI Tools Data Warehouse Infrastructure Data Integration Tools Transactional Systems EDW $4B Teradata Non EDW $14B 2006 Data Warehouse Infrastructure Market for the Global 3000 $18B Three Ways to Grow 1) Penetrate data warehouse market and move customers to EDW Approach 2) Continually grow existing Teradata EDWs 3) Replace competitor EDWs Types of spend includes database, hardware, consulting and support services Source: IDC, Gartner, Teradata Analysis 11

12 Data Warehouse Needs Will Evolve Workload Complexity Query complexity grows Workload mixture grows Data volume grows Schema complexity grows Depth of history grows Number of users grows Expectations grow REPORTING WHAT happened? Primarily batch and some ad hoc reports ANALYZING WHY did it happen? Increase in ad hoc analysis PREDICTING WHAT WILL happen? Analytical modeling grows Data Sophistication OPERATIONALIZING WHAT IS happening? Continuous update and time-sensitive queries become important ACTIVATING MAKE it happen! Event-based triggering takes hold Batch Ad Hoc Analytics Continuous Update/Short Queries Event-Based Triggering Single View of the Business Better, Faster Decisions Drive Business Growth 12

13 Future Growth Opportunities Historical concentration in Retail and Telecommunications Industries, making progress in penetrating new industry verticals Global 3000 Penetration Targeted Prospects Existing Customers Retail Comm Fin Tvl/Trans Ins Manf Installed base drives 80%+ of Teradata Revenues New customers typically increase the size and scope of their data warehouses over time creating an annuity-like revenue stream Revenue Contribution 80-85% 15-20% New Customers Installed Base 13

14 Increasing Use of Self-Service Technologies Application Hardware Self Service Solution Human Factors Engineering ATMs Industry Consultancy Retail Self Check-Out Bill Payment Hotel Check- In / Out Implementation Support Food Order Airport Ticketing/ Travel Self Service Solution Components 14

15 Financial Self Service (ATMs) Focus on Profitability Good market with continued growth potential Protect/improve profitability while capturing fair share of market growth Opportunity to improve maintenance services capture rate Revenue opportunities New solutions enabled through technology leadership Sales coverage expansion Increase in R&D investment/efficiency Manufacturing capacity alignment Operating Income Improvement Product cost reduction Supply chain improvement Infrastructure expense reduction 1,095 11% Revenue and NPOI** Margin 1,149 14% 1,370 1,390 16% 15% 1,423 12% 5-7% Growth 14% Competition Diebold Wincor/Nixdorf G* Shown in $M *Guidance from 7/31/ Guidance assumes combined company for entire year. Does not include special charges or incremental costs relating to strategic separation **Non-pension Operating Income - operating income before pension income/expense 15

16 ATM Revenue Demand Drivers Demand for Deposit Automation - Increasing Around the World Automated deposit and processing of checks US Check 21 should drive upgrades in the US in early 2008, continuing through 2009 Automated deposit of cash Europe leading upgrade cycle Deposit/Recycling especially evident in cash-based countries in Europe & Asia Low Penetration in Emerging and Growth Markets Provides Growth Opportunity USA W.Europe China India Russia Population (in Ms) ,314 1, ATMs/Million 1,

17 Personas M Series: Delivering Unparalleled Flexibility Widest range of configurations: functionality and placements Intelligent Deposit: Check, Cash and Recycling Easy to upgrade...with deposit automation modules User-centered design for maximum adoption Expanded capacity, statement printer, passbook printer Cash Dispense Cash Dispense Cash Dispense Cash Dispense Envelope Cash Accept Cash Dispense Cash Accept Cash Dispense Cash Accept Cash Recycler Cash Dispense Cash Recycler Cash Dispense Dual Capacity Cash Dispense Cash Dispense, Envelope Deposit Cash Deposit Cash Dispense, Cash Accept Cash Dispense, Cash Accept, Check Accept Recycle Cash In/Out Cash Dispense, Recycle Cash In/Out Traditional Deposit Automation Recycling 17

18 Market Leader Unmatched industry knowledge Broadest solution portfolio Complete product refresh Growth opportunity in self-service technology as it becomes widely accepted by consumers Portfolio of industry-tested retail solutions Flexible point-of-sale (POS) terminals Industry-leading self-service solutions, such as self-checkout, self-ticketing, and kiosks Global leader in bi-optic scanners Competition POS: IBM, Wincor, Fujitsu Self-Checkout: IBM, Fujitsu Scanners: PSC Retail Store Automation Emerging Self-Service Growth Opportunity 714-8% Revenues and NPOI** Margin 797 0% % 4% 871 4% 5% G* Shown in $M 4-5% Growth *Guidance from 7/31/ Guidance assumes combined company for entire year. Does not include special charges or incremental costs relating to strategic separation **Non-pension Operating Income - operating income before pension income/expense 18

19 Store of the Future Travel Services Pharmacy & HealthCare Special Services Price Optimization Corporate HQ Back Office Systems Supply ChainFront Office Systems Systems Pharmacy & Physician Smart Shelves Data Warehouse Fitting Self Checkout Rooms Back Office Store Support Garden Center Product Locator & Extension Kiosks Core Merchandise Checkout Financial Services/ATM Loyalty Food Order Express Food Service Receiving Supply Chain Banking Customer Services RFID Receiving RFID Portal Self-Service technology provides strategic solutions 19

20 Customer Services Previous Strategy 3 rd Party Products ebusiness Support NCR Logo d Products Diffused service strategy that added cost to the infrastructure Bloated infrastructure with incompatible systems and duplication of effort Inconsistent service quality and profitability levels Now, focusing on maintenance of NCR products 20

21 Operational Excellence: CS Delivery Areas of Progress FIELD ORGANIZATION STRUCTURE # OF CALL CENTERS LOGISTICS Common organization model implemented in 4 Regions & 17 Areas Logistics Costs Parts Purchases 2006 $350M $180M 76.5% *FX Neutral Parts Fill Rate 2001 $409M $202M 77.0% GLOBAL SYSTEM CONSISTENCY NUMBER OF SERVICE EMPLOYEES SERVICE DELIVERY Cost Per Hour Calls Per CE SLA Resolution Customer Dispatch Billing Systems Systems Time to deploy from 1 Year to 3-4 Days % Reduction 2001 $ % 2006 $ % 21

22 NCR s Focus Going Forward EPS Expansion & Free Cash Flow Generation Severance Reduction Pension Reduction Revenue Growth in Key Solutions Reduce Cost of Goods Sold Improve Customer Services Profitability Invest in Sales/R&D Reduce Infrastructure / Back-office Costs 22

23 Continued Cost Reduction Phase II Reduce COGS Lower Pension Exp Invest for future growth COGS Reduction Manufacturing Costs Supply Chain Process Improvements (e.g. Order-to to-cash) Phase I $350M of G&A reduction Cost Areas Internal IT costs Real Estate Finance & Admin Human Resources BU Operations Actions ERP, legacy applications, telecommunications costs Excess capacity, reduced square footage/employee Outsourced orders, AR, AP to Accenture & added ERP Staffing, recruiting, align benefits to benchmarks Supply chain, Customer Services costs 23

24 Revenue Growth - with healthier mix G Teradata Data Warehousing (1)% 12% 9% 6% 7-9% Financial Self Service 5% 19% 1% 2% 5-7% Retail Store Automation 12% 8% (1)% 2% 4-5% Customer Services 0% (3)% (5)% (1)% 3-4% Total NCR Revenue 0% 7% 1% 2% 4-5% 24

25 Operating Margins Driving Beyond 10% (Excluding the Impact of Pension Expense/Income) G * Teradata Data Warehousing 12% 16% 21% 22% 22-23% Financial Self Service 14% 16% 15% 12% 14% Retail Store Automation 0% 3% 4% 4% 5% Customer Services (2)% (3)% 3% 5% 6% Total NCR (w/o options expense) 4% 6% 9% Total NCR 10% (w/ options expense) * Does not reflect incremental one-time and recurring costs associated with the strategic separation of Teradata from NCR 25

26 Continued EPS Expansion EPS excluding one-time items 1 $2.55 $2.65 $2.13 $1.68 $0.95 $ G 2 GAAP $0.30 $1.51 $2.80 $2.09 Non-GAAP $0.40 $0.95 $1.68 $2.13 $2.55-$ Non-GAAP results; see NCR.com for GAAP to non-gaap reconciliation EPS Guidance from 7/31/ Guidance assumes combined company for the entire year. Does not include special charges related to strategic separation or manufacturing realignment 26

27 Cash Flow Generation Shown in $ Millions G* Operating Cash Flow Capital Expenditures Free Cash Flow *2007 FCF does not include cash used for strategic separation or manufacturing realignment 27

28 Drivers of NCR s Earnings Expansion Enhance Revenue Revenue Operating Margins Costs Reduce Costs Driving the Profit Wedge Operational initiatives COGS reductions Invest for growth in demand creation and R&D Build a growth / customer-oriented culture Continued re-alignment of Customer Services business Continued G&A reductions Built-in earnings momentum as pension expense declines in the future Future pension expense should be lower due to freezing of the U.S. pension plan Revenue growth leverages the model Positive revenue mix shift - increasing Teradata Data Warehousing and Self Service, while Customer Services declines as low/no margin business de-emphasized Attractive contribution margin on incremental Data Warehousing and Self Service revenues 28

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