NCR Atleos Corporation (NYSE: NATL) (“Atleos”) reported financial results today for the three months ended September 30, 2024. Third quarter results and other recent highlights include:
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Strong third quarter results exceeded revenue and profit guidance
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Revenue of $1.08 billion, Service revenue reached a new high of $843 million
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GAAP net income of $24 million; Adjusted EBITDA of $207 million
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GAAP fully diluted earnings per share of $0.32; Non-GAAP fully diluted earnings per share of $0.89
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Reaffirmed 2024 Guidance, Non-GAAP EPS guidance moved to high end of range
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Operating cash flow of $107 million in Q3 and $264 million year-to-date
- Adjusted free cash flow(1) of $38 million in Q3 and $123 million year-to-date
“NCR Atleos delivered another excellent quarter. We made significant strategic progress and expanded revenue per machine through rapidly growing new transaction types, adding new customers, and capturing more service revenue from our financial institution clients. We operated exceptionally well and improved customer performance metrics, while simultaneously working to eliminate inefficiencies associated with our separation transaction. And, importantly, we reported financial results that were better than anticipated and that allow us to again affirm our full year 2024 guidance,” said Tim Oliver, President and Chief Executive Officer. “I am grateful to the 20,000 Atleos employees around the world that enabled this performance,” Mr. Oliver continued.
“As we plan for 2025, our outlook is positive. We expect to see higher demand for hardware driven by both a typical replacement calendar and a desire for more capable ATMs with recycling, tap and other technologies. The outsourcing of non-core, ATM-centric services by our financial institution clients is accelerating as they transform their branch infrastructure to both manage costs and improve their customer’s experience. The model of a shared financial utility of networked ATM’s is getting increasing attention from banks and consumers are conducting more of their regular banking at our blue-chip retail locations. Our strategy to generate more revenue from each of the 600,000 ATMs that Atleos serves is working,” Mr. Oliver concluded.
Third Quarter 2024 Operating Results
The core business segments continue to deliver strong results.
- Third quarter revenue was $1.08 billion, including $790 million of recurring revenue, compared to $1.07 billion and $765 million, respectively, in the prior year period.
- Third quarter gross profit was $262 million with a gross profit rate of 24.3% on a GAAP basis, compared to $268 million and 25.1%, respectively, in the prior year period. Third quarter adjusted gross profit (non-GAAP) was $286 million with an adjusted gross profit rate of 26.5%, compared to $288 million and 27.0%, respectively, in the prior year period.
- Third quarter income from operations was $119 million on a GAAP basis, compared to $91 million in the prior year period. Third quarter adjusted income from operations (non-GAAP) was $164 million compared to $174 million in the prior year period.
- Third quarter net income attributable to Atleos was $24 million on a GAAP basis, compared to net loss attributable to Atleos of $58 million in the prior year period.
- Third quarter Adjusted EBITDA was $207 million compared to $210 million in the prior year period.
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(1) Adjusted free cash flow-unrestricted, as defined in the section entitled “Non-GAAP Financial Measures.” |
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NCR ATLEOS CORPORATION REVENUE AND ADJUSTED EBITDA SUMMARY (Unaudited) (in millions) |
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For the Periods Ended September 30 |
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Three Months |
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2024 |
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2023 |
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% Change |
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Revenue by segment |
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Self-Service Banking |
$ |
677 |
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|
$ |
656 |
|
|
3 |
% |
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Network |
|
332 |
|
|
|
335 |
|
|
(1 |
)% |
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T&T |
|
46 |
|
|
|
49 |
|
|
(6 |
)% |
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Total segment revenue |
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1,055 |
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|
|
1,040 |
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|
1 |
% |
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Other (1) |
|
23 |
|
|
|
27 |
|
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(15 |
)% |
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Consolidated revenue |
$ |
1,078 |
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|
$ |
1,067 |
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|
1 |
% |
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Adjusted EBITDA by segment |
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Self-Service Banking |
$ |
167 |
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|
$ |
172 |
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(3 |
)% |
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Self-Service Banking Adjusted EBITDA margin % |
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24.7 |
% |
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26.2 |
% |
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Network |
|
103 |
|
|
|
113 |
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(9 |
)% |
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Network Adjusted EBITDA margin % |
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31.0 |
% |
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33.7 |
% |
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T&T |
|
9 |
|
|
|
10 |
|
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(10 |
)% |
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T&T Adjusted EBITDA margin % |
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19.6 |
% |
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|
20.4 |
% |
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|
|
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Other (1) |
|
3 |
|
|
|
7 |
|
|
(57 |
)% |
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Corporate (2) |
|
(75 |
) |
|
|
(92 |
) |
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(18 |
)% |
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Total Adjusted EBITDA |
$ |
207 |
|
|
$ |
210 |
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|
(1 |
)% |
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Total Adjusted EBITDA margin % |
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19.2 |
% |
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|
19.7 |
% |
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(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. For periods after the separation from Voyix, Other also includes revenues from commercial agreements with Voyix. |
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(2) |
Corporate includes income and expenses related to corporate functions and, for periods prior to the separation from Voyix, certain allocations from Voyix that were not specifically attributable to an individual reportable segment. |
October 2024 Debt Refinancing
On October 17, 2024, the Company completed several transactions for its variable rate credit facilities enabled by improvements in its credit profile over the past year and market conditions. The effect of the transactions reduced the weighted average spread to SOFR by approximately 100 basis points on the Company’s outstanding variable rate debt of approximately $1.7 billion. The transactions did not materially affect the outstanding principal of $1.7 billion and maturity dates of the credit facilities were unchanged.
The transactions were effectuated via a First Amendment dated as of October 17, 2024 (the “First Amendment”) to the Credit Agreement dated as of September 27, 2023 (the “Credit Agreement”). The First Amendment provided for (a) an increase in the aggregate principal amount of the Company’s revolving credit commitments equal to $100 million and (b) a new class of incremental term loan commitments (the “Term A-2 Commitments” and, the loans made pursuant thereto, the “Term A-2 Loans”) in an aggregate principal amount equal to $300 million. The proceeds of the Term A-2 Loans were used to, among other things, prepay approximately $300 million of the Term B Loans outstanding under the Credit Agreement (the “Existing Term B Loans”). Immediately following the prepayment described above, the Existing Term B Loans were refinanced and replaced in their entirety with a new tranche of term loans under the Credit Agreement in an aggregate principal amount equal to $445 million.
The Company expects the resulting reduction in spread to SOFR in conjunction with market expectations for lower variable rates over the next year may result in meaningful incremental earnings and free cash flow in 2025.
Notes to Investors
On October 16, 2023, NCR Atleos Corporation (“Atleos”, the “Company”, “we” or “us”) became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the separation from NCR Voyix Corporation (“NCR” or “Voyix”), the Company’s historical combined financial statements were prepared on a standalone carve-out basis and were derived from Voyix’s consolidated financial statements and accounting records. Therefore, financial results for the three and nine months ended September 30, 2024 and 2023 may not be meaningfully comparable.
In this release, we use certain non-GAAP measures. These non-GAAP measures include “Adjusted EBITDA,” and others with the words “non-GAAP” or “adjusted” 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.
With respect to our Adjusted EBITDA, adjusted free cash flow-unrestricted and non-GAAP diluted earnings per share guidance, we do not provide a reconciliation of the respective GAAP measures because we are not able to predict with reasonable certainty the reconciling items that may affect the GAAP net income, GAAP cash flow from operating activities and GAAP diluted earnings per share without unreasonable effort. The reconciling items are primarily the future impact of special tax items, capital structure transactions, restructuring, pension mark-to-market transactions, acquisitions or divestitures, or other events. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures. Refer to the heading “Non-GAAP Financial Measures” for additional information regarding our use of non-GAAP financial measures.
Full Year 2024 Guidance
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$ in millions, except per share amounts |
Updated FY 2024 |
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Previous FY 2024 Guidance |
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Consolidated |
Guidance |
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Low |
Mid-Point |
High |
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Revenue |
Approximately $4,300 |
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$4,260 |
$4,300 |
$4,340 |
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Adjusted EBITDA |
Approximately $785 |
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$770 |
$785 |
$800 |
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Non-GAAP Diluted EPS (1) |
Approximately $3.12 |
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$2.90 |
$3.05 |
$3.20 |
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Adjusted free cash flow-unrestricted |
Approximately $205 |
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$190 |
$205 |
$220 |
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(1) Incorporates consensus average SOFR rates for the year in interest expense. |
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2024 Third Quarter Earnings Conference Call
A conference call is scheduled for November 13, 2024 at 8:30 a.m. Eastern Time to discuss the third quarter 2024 results. Access to the conference call and accompanying slides, as well as a replay of the call, are available on Atleos’ web site at http://investor.ncratleos.com. Additionally, the live call can be accessed by dialing 800-753-0725 (United States/Canada Toll-free) or 786-460-7170 (International Toll) and entering the participant passcode 9522236. References to Atleos’ website and/or other social media sites or platforms in this release do not incorporate by reference the information on such websites, social media sites, or platforms, and Atleos disclaims any such incorporation by reference.
More information on Atleos’ third quarter earnings, including additional financial information and analysis, is available on Atleos’ Investor Relations website at https://investor.ncratleos.com/.
About Atleos
Atleos (NYSE: NATL) is a leader in expanding self-service financial access, with industry-leading ATM expertise and experience, unrivalled operational scale including the largest independently-owned ATM network, always-on global services and constant innovation. Atleos improves operational efficiency for financial institutions, drives footfall for retailers and enables digital-first financial self-service experiences for consumers. Atleos is headquartered in Atlanta, Georgia, with approximately 20,000 employees globally.
Web site: https://www.ncratleos.com
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