- Difficult global economic environment results in loss of $.09 per diluted share in both GAAP and non-GAAP EPS(1) from continuing operations
- Cash provided by operating activities was $38 million
- Company reports strong working capital performance
- Total cash and cash equivalents of $717 million as of March 31, 2009
- Company announces Entertainment investment
- NCR updates 2009 Outlook
DAYTON, Ohio – NCR Corporation (NYSE: NCR) reported financial results today for the three months ended March 31, 2009. Reported revenue of $1.01 billion decreased
15 percent from the first quarter of 2008 and included approximately 5 percentage points of negative impact from foreign currency translation.
NCR reported a first-quarter loss from continuing operations (attributable to NCR) of $15 million, or a $0.09 loss per diluted share, compared to income (attributable to NCR) of $49 million or $0.28 per diluted share in the first quarter of 2008. Income from continuing operations included a $5 million ($3 million after-tax) impairment charge related to an equity investment, which was offset by a $5 million ($3 million after-tax) benefit from an insurance settlement related to the Fox River environmental matter. Income from continuing operations in the first quarter of 2008 included a $16 million ($13 million after-tax) gain, or $0.07 gain per diluted share, resulting from the sale of a Canadian manufacturing facility. Excluding these items, non-GAAP loss from continuing operations(1) in the first quarter of 2009 was a loss of $0.09 per diluted share compared to income of $0.21 per diluted share in the prior-year period.
“NCR is managing through this global economic downturn by executing consistently on our strategy, accelerating our multi-year cost structure improvement plan, and pressing our competitive advantages in the global marketplace,” said Bill Nuti, chairman and chief executive officer of NCR. “The Company is focused on areas within our control, such as reducing our operating expenses, improving our working capital performance, and taking tangible steps to build our business by investing to drive shareholder value. While we expect the revenue environment will remain challenging, particularly due to difficult first half comparisons and lower volumes from retail customers, our aggressive cost reductions and investment initiatives will provide leverage as business conditions improve.”
First-Quarter 2009 Highlights
Financial highlights - Year-over-year revenue was impacted by the overall downturn in the global economy, particularly in the retail industry. Revenues declined 6 percent in the Americas region, primarily due to lower sales to customers in the retail and hospitality industry in the United States and a 2 percent negative impact from currency translation. In the Europe-Middle East-Africa (EMEA) region, the revenue decline of 22 percent was attributable to lower product sales to customers in the financial services and retail and hospitality industries, especially in the United Kingdom and Eastern Europe. Revenue was also negatively impacted by 9 percent due to foreign currency translation. Revenues fell 20 percent in the Asia-Pacific-Japan region due to significant product sales declines in Japan and to a lesser extent weakness in both Australia and India. In Japan, the current economic environment contributed to declines in sales to customers in both the financial services and retail and hospitality industries. Revenue was also negatively impacted by 5 percent from foreign currency translation.
Loss from operations was $10 million in the first quarter of 2009 and included $38 million of pension expense. This compares to $65 million of income from operations in the first quarter of 2008, which included $6 million of pension expense and a gain of $16 million from the sale of the Canadian manufacturing facility previously described. Excluding these items and pension expense, non-GAAP income from operations(2) decreased 49 percent to $28 million in the first quarter of 2009 compared to $55 million in the first quarter of 2008.
NCR generated $38 million of cash from operating activities during the first quarter of 2009 compared to $81 million in the year-ago period. Capital expenditures of $25 million in the first quarter of 2009 were 22 percent or $7 million lower than the $32 million in capital expenditures in the year-ago period. NCR generated $13 million of free cash flow (cash from operations less capital expenditures)(3) in the first quarter of 2009, compared to free cash flow of $49 million in the first quarter of 2008.
Other expense was $5 million in the first quarter of 2009 compared to other income of $1 million in the first quarter of 2008 primarily due to lower interest income. Other income and expense included a $5 million impairment charge related to an equity method investment, which was offset by a $5 million benefit from an insurance settlement related to the Fox River environmental matter. As a result of the loss in the first quarter of 2009, NCR recorded a tax benefit of $1 million compared to tax expense of $17 million in the prior year period.
NCR ended the quarter with $717 million in cash and cash equivalents, a $6 million increase from the $711 million balance as of December 31, 2008. As of March 31, 2009, NCR had a debt balance of $308 million, unchanged from the balance as of December 31, 2008.
Business highlights - In the first quarter of 2009, NCR recorded several important customer wins, delivering enhanced solutions to customers in the financial and retail industries, as well as verticals such as healthcare that offer additional growth opportunities for self-service solutions.
Unified Grocers, a leading U.S. cooperative grocery wholesaler, expanded their point-of sale (POS) technology relationship with NCR to provide unique technology solutions to smaller grocery stores through Unified Grocers’ Neighborhood Markets program. NCR and Unified Grocers jointly designed solutions for independent grocers in smaller footprint stores, which typically have three or four check-out lanes. Previously, NCR and United Grocers had agreed to promote the NCR Advanced Checkout Solution (ACS) POS software to Unified Grocers’ approximately 3,000 independently-owned retail grocery customers in the western United States.
H-E-B, one of the nation’s largest independently owned food retailers, signed on with NCR’s Advanced Marketing Solution to provide the retailer with the capability to create, distribute, manage and evaluate shopper specific promotions across multiple channels. Through centrally accessed promotions H-E-B now delivers consistent marketing messages to increase shopper sales and generate additional shopper trips.
Also in the first quarter, NCR introduced software that will allow consumers to deposit checks into their checking or savings accounts without leaving their homes and without purchasing any new hardware. This new software, NCR APTRA Consumer Passport, can be integrated with any financial institution’s online banking site and gives consumers the ability to deposit checks remotely, a service previously offered only to businesses.
NCR extended its self-service portfolio further into the healthcare market as NCR and Siemens entered an agreement with New York Presbyterian Hospital (NYP). Named one of America’s Top 100 Hospitals by U.S. News and World Report, NYP will deploy NCR MediKiosks to help streamline patient flow in NYP’s infusion department.
2009 Outlook
NCR announced on April 21, 2009 that it purchased the remaining equity in TNR Holdings Corp., the second largest DVD kiosk operator in North America, in order to expand the NCR SelfServ Entertainment portfolio across North America under the Blockbuster Express brand. Further to that announcement, NCR plans to make additional investments in 2009 to expand capabilities with the objective of becoming the leading global provider of self-service entertainment solutions. “The strength of our balance sheet provides NCR with the ability to invest in attractive growth opportunities,” said Mr. Nuti. “We’ve identified investments that will be a major step forward in NCR’s strategy of becoming the leading provider of self-service entertainment solutions.” As a result of this investment, combined with a difficult economic environment, NCR has revised 2009 guidance.
NCR now expects full-year 2009 revenues to be in the range of 5 percent to 10 percent lower on a constant currency basis compared with 2008. Based on average exchange rates for March, this would translate to reported revenue being down in the range of 10 percent to 15 percent for the year. Including the planned $60 million investment in the entertainment portfolio in 2009, which results in a $30 million negative impact to Non-pension operating income (NPOI)(2), the company expects its full-year 2009 NPOI(2) to be in the range of $310 million to $350 million and GAAP and non-GAAP earnings from continuing operations to be in the range of $0.60 to $0.75 per diluted share.(1) The 2009 EPS guidance includes pension expense of $170 million, an increase of approximately $145 million compared to 2008.
|
|
Revised 2009 Guidance |
Prior 2009 Guidance
|
|
Year-over-year revenue (constant currency) |
(5%) – (10%) |
(2%) – (6%) |
|
Non-pension operating income(2) |
$310 - $350 million |
$360 - $400 million |
|
Diluted earnings per share (GAAP) |
$0.60 - $0.75 |
$0.85 - $1.00 |
|
Diluted earnings per share (non-GAAP)(1) |
$0.60 - $0.75 |
$0.85 - $1.00 |
2009 First Quarter Earnings Conference Call
A conference call is scheduled today at 8:00 a.m. (EST) to discuss the company’s 2009 first-quarter results and guidance for full-year 2009. Access to the conference call, as well as a replay of the call, is available on NCR’s Web site at http://investor.ncr.com/. Supplemental financial information regarding NCR’s first quarter 2009 operating results is also available on NCR’s Web site.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a global technology company and leader in automated teller machines, self-checkouts and other self- and assisted-service solutions, serving customers in more than 100 countries. NCR's software, hardware, consulting and support services help organizations in retail, financial, travel, healthcare and other industries interact with consumers across multiple channels.
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NCR is a trademark of NCR Corporation in the United States and other countries.
News Media Contact
Alan Ulman
NCR Corporation
770.623.7998
alan.ulman@ncr.com
Investor Contact
Gavin Bell
NCR Corporation
212.589.8468
gavin.bell@ncr.com
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