NCR Atleos Corporation

Good day and welcome to the NCR Atlios Q1 FY24 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brendan Matrano. Please go ahead.

Good morning and thank you for joining the NCR Atlios first quarter earnings call. Joining me on the call today are Tim Oliver, CEO, Paul Campbell, CFO, and Stuart McKinnon, Chief Operating Officer. Tim will start this morning with an overview of first quarter performance and an update on our objectives for 2024. Next, Paul will review our financial results and outlook. Then we will move to Q&A. Before we get started, let me remind you that our presentation and discussions will include forward-looking statements. These statements reflect our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in today's materials and our periodic filings with the SEC, including our annual report. Also, in our review of results today, we will refer to certain non-GAAP financial measures which the company uses to measure its performance. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials and on the investor relations website. Note that on the website, we have also provided historical financial results on a carve-out accounting basis for 2022 and 2023 to aid in analysis and modeling. A replay of this call will be available later today on our website, investor.ncratlios.com. With that, I will turn the call over to Tim.

Thank you, Brendan, and thank you to everyone for joining us in this call this morning. Before I launch into a discussion of a very successful quarter, And because I'm hopeful that many of you are newer to the Atleos story, I think it makes sense to reiterate the significant opportunity and focus strategy of Atleos, now as an independent, pure-play ATM company. Atleos is a serviced fleet of approximately 600,000 ATMs, 15% of which we own and operate for our own network business. In the current global environment of steady, cash-based consumer transactions and a stable installed base of ATM hardware, our growth will come from generating more revenue for every machine that we support. Whether that's from providing higher quality, more efficient, and more comprehensive services to our financial institution clients, or by driving more transaction volume across our network machines located in blue chip retail locations, both are fueled by our customers' desire to improve financial access for their customers while outsourcing more of their cash ecosystem. And as we service both from a common infrastructure that is unmatched scale, is leverageable, and is world class. Our customers are increasingly reinvesting back into their retail banking footprint and embracing shared financial utilities. For them, this strategy will result in lower costs, higher quality, better consumer experience, broader reach, and in some instances, higher foot traffic. For NCR Atlios, it will drive higher revenue growth, higher profitability from a scale and richer revenue mix, and a predictable free cash flow. Turning to slide five, I'm pleased to report that we are off to a very good start for the year. First quarter financial results were at or above the high end of expectations, led by strong growth in both our transaction base and our services businesses. And profit margins are beginning to climb as we overcome the incremental costs resulting from our spin transaction through cost productivity and interest rates stopping increasing. The operational and tactical progress of our first quarter allows us to be increasingly confident about our full year of 2024. Improving service quality levels, cost productivity traction, key contractual renewals, and sufficient selling pipelines all support our full-year guidance. Paul will provide a much more granular view of our performance and our outlook in a few minutes. Moving to slide six, this has operating results for our two key segments. In our self-service banking segment, we grew our software and services revenue by 7% versus the prior year, catalyzed by our A-Team as a Service initiative which posted almost 40% year-over-year revenue growth, and exit this quarter at a run rate of nearly $200 million in annual revenue. Our ATM-as-a-Service active unit count grew modestly in the quarter to approximately 21,000, with increases across geographies. We closed 12 new ATM-as-a-Service deals in Q1, including our first one in Hong Kong, to finish with backlog up from year-end to over 4,000 units. We now support ATM-as-a-Service customers in 12 countries, illustrating the broad appeal of our offering and the significant opportunity for global expansion. More generally, strong ATM orders globally strengthened our backlog and included key competitive wins in cash-intensive growth markets like Mexico, Egypt, and Turkey for the deployment of our new recycling technology and the accompanying services. We will deploy our recycling technology for Egypt National Post. And with agreements with Yapi Credit Bank, and Garanti Bank will now implement over 5,000 recyclers in Turkey. Our network segment performed well in the first quarter, with robust transaction growth including record-high transaction volumes in the month of March. Top-line trends were positive in most markets, led by all-point surcharge-free withdrawals in the U.S. and the addition of ASDA, a premier grocer chain in the U.K. Overall cash withdrawals grew 11% year-over-year, including 14% growth in surcharge-free withdrawals. Scalable transaction growth against our fixed-cost infrastructure and a more profitable transaction mix allow double-digit profit growth in the network business. Execution of our transaction expansion strategy continues, with deposit transactions at retail locations becoming our fastest-growing transaction type. The first quarter saw the addition of a second large U.S. bank to the deposit network, evidencing the value that all banks can realize from our utility banking network. As part of our strategy to export the success of the Allpoint utility to other regions, we launched the first UK-based deposit accepting locations in partnership with Cash Access UK. Our retail footprint in the UK provides ideal locations for banks to send their customers for everyday banking where branch access may not be as convenient. We continue to strengthen our retail footprint with the extension of our relationships with CVS and 7-Eleven Canada, ensuring safe, convenient access to cash while also driving foot traffic for the retailers. FinTech transaction volumes accelerated to new highs as neobanks, who don't have traditional bank infrastructure, provide convenient cash access to their growing customer base. Turning to slide seven for an update on our strategic objectives. Last quarter, we outlined our objectives for 2024 and described them in three buckets. One, differentiate and grow. Two, optimize resource allocation. And three, complete the separation from VOYX. I'll highlight a few accomplishments in each of these three for this quarter. starting with differentiating growth. While I've already described the success of our growth strategies in Q1, we also seeded future period growth. We continued to drive innovation in the ATM market. We built out our tap transactions in a multi-issuer environment across the U.S. network, enabling faster, more secure transactions, aligning with a fast-growing neobank segment. Our partnership with a leading gig economy payment solution launched across our retail network, providing drivers direct access to their daily pay, further expanding our transaction set. And we activated the first retail deposit locations in the UK in a partnership with Cash Access UK and a major UK bank, which expanded additional transaction sets internationally. Both our engineering and our selling teams are energized by our renewed commitment to deliver innovative solutions and capabilities. Optimizing resource allocation means maximizing output for every unit of input of a scarce resource, whether that be people, cost, or capital. In Q1, we reorganized the customer service and business operations functions. We introduced an AI-driven tool to our service teams that has already improved both quality and speed. We kicked off multiple productivity initiatives targeting both direct and indirect costs that will help offset separation disenergies by the time we exit this year. And we redefined a vendor agreement to allow joint engineering production efforts that will reduce our costs and importantly alleviate supply constraints. And finally, the separation from our former sibling company, NCR Voyex, is on track. During the quarter, we transferred four countries back to Atlios that have been stranded with Voyex post-split. Only three relatively immaterial countries remain with Voyex, and they're expected to transfer by the third quarter. We also accelerated our efforts to close transition service agreements, or TSAs, between the two companies. Full separation will enable further cost savings for both sides and provide more strategic flexibility. I want to extend my appreciation to the entire NCR Atlios team for delivering a strong quarter through their dedication, hard work, and positive disposition. The esprit de corps and pride of place emanating from our new company is energizing and contagious. We have a lot to do, but the opportunity is compelling and the future is bright.

With that, over to you, Paul. Thanks, Tim, and thanks to all for joining us today. I echo Tim's comments that we had an excellent start to the year in our first full quarter as an independent company. We were particularly pleased with the financial results, momentum of our businesses, and the progress on our objectives. Importantly, it further validated the power of our strategy to generate higher revenue and profit per unit across our global install base of around 600,000 ATMs through adding incremental transaction and service revenue streams. In the discussion of non-GAAP financial results, there are certain instances where year-over-year comparisons are inconsistent. Normalizing these factors would have provided a more favorable comparison, but I prefer not to complicate a good set of results. Where meaningful, I will verbally reference those to provide a clearer view on how the business has performed. With that, I'll turn to slide 9 for a review of the consolidated first quarter results. Total company revenue of $1.05 billion was at the high end of expectations, led by 8% growth in service revenue that reflected our continued success in generating more revenue per unit. Strong services revenue contributed to 7% growth in recurring revenue to $763 million, which comprised 73% of total revenue, a new high for the company. First quarter adjusted EBITDA increased 11% year over year to $162 million on strong top line growth and 60 basis points of margin expansion to 15.4%. Moving down the P&L, we had interest expense of $79 million on an average total debt balance of 3.1 billion, including approximately 1.7 billion variable rate debt. The weighted average interest rate on debt was approximately 9.4%. First quarter effective tax rate was approximately 27%, and the fully diluted average share count was 73.1 million. Putting it together, first quarter diluted adjusted earnings per share was 41 cents, just above the high end of the first quarter guidance. We generate approximately 69 million of adjusted free cash flow in the quarter, putting us comfortably on track for our 2024 target of 170 to 230 million. Moving to slide 10, self-service banking is our largest business and is comprised of a stable global install base of approximately 520,000 of our 600,000 ATM units. These 520,000 units primarily generate recurring revenue from software and services attached to hardware units. We are transforming the business by leveraging our network segment infrastructure capabilities to deliver a broader range of services to our customer and a more comprehensive outsourced service model, ATM as a service. Self-service banking had a very solid first quarter with respect to financial results and progress with our strategy. Starting in the upper left, revenue grew 4% year-over-year to $628 million, with recurring revenue up 7% to a new high of 62% of the segment revenues. The recurring revenue growth reflects the success of our strategy to drive more revenue per unit, with service revenue up 5% and software revenue up 9% year over year. Top line strength was geographically broad-based, with growth in all regions other than Asia Pacific, which was slightly down due to timing of one-time hardware revenue. Adjusted EBITDA was 134 million compared to 139 million in the prior year. Adjusted EBITDA margin of 21% was down 160 basis points year over year, primarily due to dis-synergies from the separation, different cost allocation methodology in the prior year, and a shift of certain business functions from corporate to be managed in the segment. Moving to KPIs at the bottom of this slide, for the first quarter, all of our key metrics are heading in the right direction year over year and sequentially, indicating our strategy and execution is achieving the desired result of increasing monetization of our installed base. Starting in the bottom left, The current revenue is up to 62% on the combination of growth in legacy software and services revenue, plus incremental ATM as a service revenue. As Tim noted earlier, we finished the first quarter with almost 21,000 active ATM as a service units, adding approximately 400 units, which is consistent with the assumption behind our 2024 financial targets. ATM as a service revenue for the quarter was approximately $46 million, up 37% year-on-year, and our current ATM as a service unit backlog increased to more than 4,000 units. The backlog and sales funnel mix has a higher mix of deals that would be asset-light, which would not require CapEx funding. Annual recurring revenue in the bottom left increased 8% year-over-year and illustrates the compounding revenue benefit of our strategy to drive more recurring services to our customer base. Moving to slide 11, the network segment performed well in the first quarter. Starting at the top left, revenue increased 3% year-over-year, led by 11% growth in withdrawal volumes, more than offsetting the lower-than-expected volumes in our low-margin LibertyX transactions. Withdrawal transactions growth was broad-based, with North America up 7% and international up 14%, benefiting from the agreement with ASDA signed in the fourth quarter, which had a full quarter impact on Q1. Moving to the chart on the right, adjusted EBITDA increased 15% year-over-year to 86 million on top-line growth and margin expansion. Adjusted EBITDA margin expanded 270 basis points year-over-year to 28% from a combination of higher growth and more profitable transactions and difference in cost allocation under Carver accounting in the prior year. Our network strategy focuses on growing transaction volume on a relatively fixed base of approximately 80,000 over 600,000 ATM units. The key metrics at the bottom of the slide highlights how well this business has been doing that. On the left, you can see that we have continued to optimize the ATM portfolio by reducing low-performing locations, finishing the quarter with 81,000 units. The chart on the right shows the last 12 months' average revenue per unit, or ARPU, up 8% year over year, another proof point in the execution of our strategy to increasingly monetize existing network of ATMs. Slide 12 presents a summary of our segment revenue and adjusted EBIT results for the total company. Technology and telecom segment revenue and adjusted EBIT margin were slightly up year over year due to new customers expanding services in the first quarter. As a reminder, we created an other segment and put all of the activity with NCR Voix into this segment. This segment is largely uncontrollable by us, and as activities between the companies reduce, all of the impact will flow here and will not impact the core business segments. Unallocated corporate costs decreased 18% to $72 million, with primary contributors being the movement of some departments into the business segments and difference between historical cost allocation methodology under CAVA accounting. On slide 13, we present a walk of adjusted EBITDA to free cash flow for the quarter and a snapshot of our financial position at the end of the first quarter. Starting at the top of the slide, we generated significant free cash flow of $69 million from adjusted EBITDA of $162 million. You can see at the bottom of the slide the company's financial position strengthened further in the quarter, finishing with a little less than $2.6 billion of net debt and available liquidity of over $700 million. Consistent with our stated capital allocation priorities, more than all of the generated free cash flow was used to pay down approximately $80 million of debt, including $18 million of term loan principal and $62 million of revolving credit facility. We were delighted to reduce our net leverage ratio to below 3.5 times putting us well on our way to our goal of being below 3.2 times by the end of 2024 and below three times during the first half of 2025. Turning to slide 14, our total company financial outlook for Q2 and full year. I'll start with full year targets, which we have reaffirmed. We continue to expect total company revenues to be in the range of 4.2 to 4.4 billion. Adjusted EBITDA of $770 to $800 million diluted adjusted EPS of $2.90 to $3.20 and free cash flow of $170 to $230 million. We expect our EBITDA results will sequentially improve throughout the year in line with our normal historical performance. In 2023, calendarization was inconsistent with this, influenced by the separation. For the second quarter, we expect total company revenues to be in the range of $1.06 to $1.09 billion. adjusted EBITDA of 180 to 190 million, and diluted adjusted EPS of 63 cents to 73 cents. We expect free cash flow will be 0 to 25 million down from Q1 due to an increase in expected cash interest payments of 110 million in the second quarter compared to 19 million in the first quarter. Note that free cash flow will not be linear by quarter due to the timing of interest payments. For Q2 2024, interest expense will be 75 to 80 million, effective tax rate is expected to be approximately 20%, and fully diluted average share count is expected to be approximately 73.5 million. Moving to slide 15, at the segment level, we expect second quarter self-service banking revenue to be 645 to 660 million, with adjusted EBITDA margin of 22.5 to 23.5%. Network revenue of $325 million to $335 million with adjusted EBITDA margin of 28% to 29%. T&T revenue of $47 million to $50 million with adjusted EBITDA margin of approximately 20%. Other revenue of $43 million to $45 million with adjusted EBITDA margin in the high single digits. Unallocated corporate costs should be 6.5% to 7% of total company revenue. There's no change in the segment level full year guidance that was shared in our March 26th update. Including my comments on slide 16, we delivered strong first quarter results across the board, grew revenue, expanded margins, and generated significant free cash flow, which we used to reduce leverage to below 3.5 times. We issued Q2 guidance, improving sequentially, and we reiterated our full year guidance. With that, we'll turn it back to the operator for Q&A.

If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment.

We'll go first to Matt Somerville with DA Davidson.

Thanks. Good morning. You have Canyon Hayes on for Matt Somerville this morning. Morning. Morning. Maybe we could just talk about the ATM as a service deployment cadence to hit your annual targets. Looks like it was a flattish sequentially, and I was just curious about the cadence for the rest of the year. And I know we talked about backlog a little bit, but I'd be curious about the you know, funnel unit metrics there.

Yeah, Kanye, this is Paul here. Thanks for the question.

Yeah, that's a business that doesn't flow on a linear basis. As we've noted, we've got over 4,000 in backlog. This was similar to what we experienced last year. We did over 1,500 in a month last year and some months were less. So we're still seeing very robust funnel activity. The backlogs than other quarters. So we're supposed to align to our expectations originally, and just Q1 was a bit lighter than the future quarters will be. As we look through the year, we do see that there's going to be more in the back half than the first half.

So we're thinking it's kind of like 30%, 35% of our target in the first half, and then 65% to 70% in the second half.

Great. Thank you. Switching over to network, could we talk about the sustainability of transaction trends? I mean, being in the low double digits to mid-teens. Similarly, I'd be curious to see where ARPU trends from here and where ongoing net footprint rationalization is going to end up throughout the year.

Yeah, I think we are confident in the continued transaction growth.

Just that is not more people doing cash transactions. Cash transactions remain stable. and active in all of our markets, but our strategy of migrating transactions out of the branch into our retail utility network is resonating both with standard, you know, brick and mortar financial institutions and particularly neobanks who don't have any infrastructure and rely on us to support their growing customer base. So we're very comfortable with the transaction growth. We think that can continue along with that, you know, to the plan that we've outlined in our investor day. And those expanded transaction sets that we talked about – Tim talked about deposit transactions being our second – our highest growing transaction.

Those are significantly higher margin transactions for us, so that's what drives our ARPU growth.

And then, Stuart, the installed base – there's a question on the installed base. We think the installed base in the network segment will be largely flat to where it is today, so still around the 80,000, 81,000 units. Great.

We'll go next to George Tong with Goldman Sachs.

Hi, thanks. Good morning. You mentioned with your ATM as a service units, you expect most of the growth to happen in the second half of this year, and that some quarters could be lumpy in terms of growth in units. Can you elaborate on the amount of visibility you have in terms of the number of units in any given quarter and how much you expect the pipeline to ultimately convert to backlog and revenue?

Yeah, Josh, we talked about we've got 4,000 in the backlog today.

We're working through scheduling those rollouts. So they'll roll out at different times based upon the different aspects of those, whether there's ATM to be replaced or where the software stack is. So there's different complexities there. So, yeah, they'll roll out, and the funnel – We're expecting the funnel to come in on a more linear basis, and it's down to the timing of the scheduling of the rollout from our side.

George, this is Tim. You know, this is somewhat of a bifurcated market. We win either very large deals or deals that are relatively small. And so the typical win for us right now is 250 to 300 machines. There are transactions out there, deals that we've bid on that are 3,000 or 4,000 machines. Those move the needle very rapidly and cause in a singular quarter for that number to go up. We will be very careful on those larger transactions that often occur in places where it's more difficult to make, let's call it a fair return, a good ROI. We may pass on some of those at some times in India and other places and favor the deals that are less capital intensive and have a much better ROI in parts of the world like North America and the crown countries. So those deals are a little bit smaller. They accumulate a little bit slower, but I like the choices that we're making.

Got it. That's helpful. And sticking with ATM as a service, is it normal seasonality for the number of ATM as a service units to increase faster in the second half of the year, or can it vary in any given year in terms of the number of units you see in any given quarter?

In all the two years we've been at this, we haven't seen much of a trend. So I would say this has a lot more to do with the timing of singular transactions and not much to do with seasonality.

Got it. That's helpful. Thank you.

We'll go next to Michael O'Brien with Wolf Research.

Hey, good morning, and thanks for taking my question, and congrats on a great quarter. Two quick ones here. One, just want to quickly confirm that you're still targeting 30,000 ATM as a service units by the end of the fiscal year. And then my second question is regarding the margin expansion. If you could provide a little bit more color regarding what's driving that. Obviously, transformation costs are coming down. You're targeting reducing stranded costs as well. But then on the flip side, we have some of these ATM as a service units getting online which are higher margin as well. If you can provide a little breakdown of what exactly is driving the margin expansion for the quarter, that would be extremely helpful. Thank you.

Yeah, Michael, firstly, yes, we're still on target. We're still trying to do the 30,000 units.

As you asked that question, everyone in the room was nodding with you. So we're still on that path. For the margin expansion, was your question from Q1 to Q2? Yes. Yeah, okay, sorry. Yeah, so from Q1 to Q2, part of it's in the network space, the transaction volumes that through the network come through very high margin accretive because effectively the fixed cost is still there. We also have the cost of initiatives that we kicked off as we separated. They compound as you go through the year. So there will be a good flow through from them in Q2 and then again increase into Q3 and into Q4.

So they're the two largest buckets that we have, Michael.

Gotcha. Thank you. And one follow-up on that. Regarding stranded costs, obviously you're a new public company. Um, have you guys done a deep dive on, on trying to cost analysis and, and, and what can be, you know, removed to, to increase margins going forward?

Yeah, we're working our way through the TSAs currently. And when you go through that process, you find that each organization ends up with cost structures that are somewhat larger than you otherwise might have. Uh, we've got, we've hired some outside help, some, some folks who do this for a from Voyage. It will be different than it is today. Some areas have to be a little bit more expensive. We need two audit firms. We need two legal departments. We need two internal audit organizations. But there's a lot of things that can be less expensive. And so we'll work with that outside firm. I don't know that you'll see much return in indirect cost this year and that we're working really hard at direct cost productivity currently through our service organization. But you'll start to see in the third and fourth quarter some reduction in what I'll call overhead costs.

Okay, great. Thanks for the detail. Sure.

As a reminder, that is star one for questions. We'll go next to Aaron Shashidri with BNP Paribas.

Yes, hi. Thanks for taking my questions. Just wanted to understand, I mean, I see the numbers are really nice, and seeing that there's EBITDA growth here, Just wanted to understand, within the segment EBITDA, what type of, I guess, when you grow revenue in self-service, what sort of EBITDA growth would you expect? What kind of operating leverage would you expect? And I just wanted to understand also, as your ATM as a service units come more online, do you expect to turn adjusted free cash flow rates

to growth kind of in the back half of the year as well?

Yeah, thanks, Wayne. Good question.

So in self-service banking, the margin flow really depends on the revenue type. So if it was incremental upfront hardware sales, you would see something around a 20% margin rate come through. When you're talking about ATM as a service, the more strategic revenue streams, of margin because we're leveraging existing infrastructure. So it's incremental flowing through an existing rails that we have.

So it really depends on the revenue streams.

Got it. Understood.

So I guess as you expect the units to grow, you should return that segment EBITDA to growth as well as you enter the back half of the year. Sounds like?

We will, Arun, but just to give context, that segment was $46 million in the quarter, so it's still 5% of the company, 10% of the segment. So it will need to get out to a more scalable for it to make a meaningful difference to the total segment margins.

Got it. Understood. And then the network revenue, as you said, flows through at a very high margin. It looks like it's 100% margin. Was there anything one time in – in Q1 that made it look like the margin growth was actually larger than the revenue growth, or we should just assume like a very high margin and maybe there was like one or two million at one-timers?

Yeah, there was no one-timers as such. There's a little bit of noise in our prior year accounting with it being on a carbon basis. Some of the allocation methodologies were slightly different. So it was a very strong quarter for the network segment. We were really pleased with the margins, but we wouldn't expect it to flow through 100% margins, so a little bit of

really good quarter performance for the network segment margins.

Got it. Great. And then finally, just wanted to follow up on the adjusted free cash flow. You saw very nice EBITDA growth, but adjusted free cash flow is about flat for the year, for the quarter. Is there anything one time there? And I guess, do you expect to return to, do you expect to grow adjusted free cash flow in the back half of the year?

Yeah, we find it hard to compare the adjusted free cash flow to the prior year because we didn't have any debt. The debt was all assigned to the mother company. So you think of the debt we paid, the cash payment for debt Q1 was $19 million. There was probably literally nothing in the prior year. So for the full year, we have $290 million, effectively, incremental cost of interest on the debt. So the cash flow compared to prior years isn't really a useful measure. But when we announced, in our guidance, we've got a cash flow conversion of 25%. So at the first half, we'll be kind of well on track to that conversion rate.

As a reminder, that is star one. If you would like to ask a question. We will take a follow-up from Matt Somerville with D.A. Davidson.

Hey, thanks for taking another question. Just wanted to check in on your thoughts on a dividend in the near term versus deleveraging. Any sort of commentary around there? Thank you.

Yeah, that's a fair question. We went out on the road and talked about this company ultimately paying a dividend. We thought that that might be in the latter half of the year. We were on the road back introducing people to NCR Atlios. And at the time, we said we wanted to make sure we had a couple quarters under our belt to see if we actually were capital back to shareholders. We are intent on reducing our indebtedness quickly. As Paul said, we're on path for our free cash flow generation. And I suspect in the second quarter, we'll have something more to say about this. I'm not certain that where our valuation is currently, that a dividend is the right way to return cash to shareholders. And I think the stock repurchase program might make more sense with our valuation where it is today. So But we'll address that. We did make a commitment to return some cash to shareholders once we were able to confirm we could generate the kind of cash we think that we can. And I think in a second, this call 90 days from now, we'll have more to say about that.

There are no other questions at this time.

Great. I'll wrap up quickly. today, and thanks to our employee base who really had a terrific quarter. As much as we try to make this look not too terribly complicated when we talk to you all, I assure you that underneath the covers, this is a very busy place with a lot going on, and we feel very good about the first quarter. I think what you're hearing today is cash is healthy, ATMs are relevant, and cash-intensive demographics and regions are still cash-intensive. I think you heard we have the most comprehensive and most capable offering for banks and retailers who want to outsource their cash ecosystem. You heard we're innovating. Our machines are more capable, and they're transacting more often. You heard we're generating more revenue per ATM through transaction volumes and, importantly, picking up more service revenue from our bank customers. And lastly, I'd say we're still undervalued, and we're going to do everything we can to fix that. We're going to reduce our leverage. We're going to perform predictably. and hopefully we're going to attract some new investors. So thank you very much for your time, and we'll talk again in 90 days.

This does conclude today's conference call. Thank you for your participation. You may now disconnect. you Thank you. Good day and welcome to the NCR Atlios Q1 FY24 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brendan Matrano. Please go ahead.

Good morning and thank you for joining the NCR Atlios first quarter earnings call. Joining me on the call today are Tim Oliver, CEO, Paul Campbell, CFO, and Stuart McKinnon, Chief Operating Officer. Tim will start this morning with an overview of first quarter performance and an update on our objectives for 2024. Next, Paul will review our financial results and outlook. Then we will move to Q&A. Before we get started, let me remind you that our presentation and discussions will include forward-looking statements. These statements reflect our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in today's materials and our periodic filings with the SEC, including our annual report. Also, in our review of results today, we will refer to certain non-GAAP financial measures which the company uses to measure its performance. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials and on the Investor Relations website. Note that on the website, we have also provided historical financial results on a carve-out accounting basis for 2022 and 2023 to aid in analysis and modeling. A replay of this call will be available later today on our website, investor.ncratlios.com. With that, I will turn the call over to Tim.

Thank you, Brendan, and thank you to everyone for joining us in this call this morning. Before I launch into a discussion of a very successful quarter, And because I'm hopeful that many of you are newer to the Atleos story, I think it makes sense to reiterate the significant opportunity and focus strategy of Atleos, now as an independent, pure-play ATM company. Atleos is a serviced fleet of approximately 600,000 ATMs, 15% of which we own and operate for our own network business. In the current global environment of steady, cash-based consumer transactions and a stable installed base of ATM hardware, our growth will come from generating more revenue for every machine that we support. Whether that's from providing higher quality, more efficient, and more comprehensive services to our financial institution clients, or by driving more transaction volume across our network machines located in blue chip retail locations, both are fueled by our customers' desire to improve financial access for their customers while outsourcing more of their cash ecosystem. And as we service both from a common infrastructure that is unmatched scale, is leverageable, and is world class. Our customers are increasingly reinvesting back into their retail banking footprint and embracing shared financial utilities. For them, this strategy will result in lower costs, higher quality, better consumer experience, broader reach, and in some instances, higher foot traffic. For NCR Atlios, it will drive higher revenue growth, higher profitability from a scale and richer revenue mix, and a predictable free cash flow. Turning to slide five, I'm pleased to report that we are off to a very good start for the year. First quarter financial results were at or above the high end of expectations, led by strong growth in both our transaction-based and our services businesses. And profit margins are beginning to climb as we overcome the incremental costs resulting from our spin transaction through cost productivity and interest rates stopping increasing. The operational and tactical progress of our first quarter allows us to be increasingly confident about our full year of 2024. Improving service quality levels, cost productivity traction, key contractual renewals, and sufficient selling pipelines all support our full-year guidance. Paul will provide a much more granular view of our performance and our outlook in a few minutes. Moving to slide six, this has operating results for our two key segments. In our self-service banking segment, we grew our software and services revenue by 7% versus the prior year, catalyzed by our A-Team as a Service initiative which posted almost 40% year-over-year revenue growth and exits this quarter at a run rate of nearly $200 million in annual revenue. Our ATM-as-a-Service active unit count grew modestly in the quarter to approximately 21,000, with increases across geographies. We closed 12 new ATM-as-a-Service deals in Q1, including our first one in Hong Kong, to finish with backlog up from year-end to over 4,000 units. We now support ATM-as-a-Service customers in 12 countries, illustrating the broad appeal of our offering and the significant opportunity for global expansion. More generally, strong ATM orders globally strengthened our backlog and included key competitive wins in cash-intensive growth markets like Mexico, Egypt, and Turkey for the deployment of our new recycling technology and the accompanying services. We will deploy our recycling technology for Egypt National Post. And with agreements with Yapi Credit Bank, and Garanti Bank will now implement over 5,000 recyclers in Turkey. Our network segment performed well in the first quarter, with robust transaction growth including record-high transaction volumes in the month of March. Top-line trends were positive in most markets, led by all-point surcharge-free withdrawals in the U.S. and the addition of ASDA, a premier grocer chain in the U.K. Overall cash withdrawals grew 11% year-over-year, including 14% growth in surcharge-free withdrawals. Scalable transaction growth against our fixed-cost infrastructure and a more profitable transaction mix allow double-digit profit growth in the network business. Execution of our transaction expansion strategy continues, with deposit transactions at retail locations becoming our fastest-growing transaction type. The first quarter saw the addition of a second large U.S. bank to the deposit network, evidencing the value that all banks can realize from our utility banking network. As part of our strategy to export the success of the Allpoint utility to other regions, we launched the first UK-based deposit accepting locations in partnership with Cash Access UK. Our retail footprint in the UK provides ideal locations for banks to send their customers for everyday banking where branch access may not be as convenient. We continue to strengthen our retail footprint with the extension of our relationships with CVS and 7-Eleven Canada, ensuring safe, convenient access to cash while also driving foot traffic for the retailers. FinTech transaction volumes accelerated to new highs as neobanks, who don't have traditional bank infrastructure, provide convenient cash access to their growing customer base. Turning to slide seven for an update on our strategic objectives. Last quarter, we outlined our objectives for 2024 and described them in three buckets. One, differentiate and grow. Two, optimize resource allocation. And three, complete the separation from VOYX. I'll highlight a few accomplishments in each of these three for this quarter. starting with differentiating growth. While I've already described the success of our growth strategies in Q1, we also seeded future period growth. We continued to drive innovation in the ATM market. We built out our tap transactions in a multi-issue environment across the U.S. network, enabling faster, more secure transactions, aligning with a fast-growing neobank segment. Our partnership with a leading gig economy payment solution launched across our retail network, providing drivers direct access to their daily pay, further expanding our transaction set. And we activated the first retail deposit locations in the UK in a partnership with Cash Access UK and a major UK bank, which expanded additional transaction sets internationally. Both our engineering and our selling teams are energized by our renewed commitment to deliver innovative solutions and capabilities. Optimizing resource allocation means maximizing output for every unit of input of a scarce resource, whether that be people, cost, or capital. In Q1, we reorganized the customer service and business operations functions. We introduced an AI-driven tool to our service teams that has already improved both quality and speed. We kicked off multiple productivity initiatives targeting both direct and indirect costs that will help offset separation disenergies by the time we exit this year. And we redefined a vendor agreement to allow joint engineering production efforts that will reduce our costs and importantly alleviate supply constraints. And finally, the separation from our former sibling company, NCR Voyex, is on track. During the quarter, we transferred four countries back to Atlios that have been stranded with Voyex post-split. Only three relatively immaterial countries remain with Voyex, and they're expected to transfer by the third quarter. We also accelerated our efforts to close transition service agreements, or TSAs, between the two companies. Full separation will enable further cost savings for both sides and provide more strategic flexibility. I want to extend my appreciation to the entire NCR Atlios team for delivering a strong quarter through their dedication, hard work, and positive disposition. The esprit de corps and pride of place emanating from our new company is energizing and contagious. We have a lot to do, but the opportunity is compelling and the future is bright.

With that, over to you, Paul. Thanks, Tim, and thanks to all for joining us today. I echo Tim's comments that we had an excellent start to the year in our first full quarter as an independent company. We were particularly pleased with the financial results, momentum of our businesses, and the progress on our objectives. Importantly, it further validated the power of our strategy to generate higher revenue and profit per unit across our global install base of around 600,000 ATMs through adding incremental transaction and service revenue streams. In the discussion of non-GAAP financial results, there are certain instances where year-over-year comparisons are inconsistent. Normalizing these factors would have provided a more favorable comparison, but I prefer not to complicate a good set of results. Where meaningful, I will verbally reference those to provide a clear review on how the business has performed. With that, I'll turn to slide 9 for a review of the consolidated first quarter results. Total company revenue of $1.05 billion was at the high end of expectations, led by 8% growth in service revenue that reflected our continued success in generating more revenue per unit. Strong services revenue contributed to 7% growth in recurring revenue to $763 million, which comprised 73% of total revenue, a new high for the company. First quarter adjusted EBITDA increased 11% year over year to $162 million on strong top line growth and 60 basis points of margin expansion to 15.4%. Moving down the P&L, we had interest expense of $79 million or an average total debt balance of 3.1 billion, including approximately 1.7 billion variable rate debt. The weighted average interest rate on debt was approximately 9.4%. First quarter effective tax rate was approximately 27%, and the fully diluted average share count was 73.1 million. Putting it together, first quarter diluted adjusted earnings per share was 41 cents, just above the high end of the first quarter guidance. We generate approximately 69 million of adjusted free cash flow in the quarter, putting us comfortably on track for our 2024 target of 170 to 230 million. Moving to slide 10, self-service banking is our largest business and is comprised of a stable global install base of approximately 520,000 of our 600,000 ATM units. These 520,000 units primarily generate recurring revenue from software and services attached to hardware units. We are transforming the business by leveraging our network segment infrastructure capabilities to deliver a broader range of services to our customer and a more comprehensive outsourced service model, ATM as a service. Self-service banking had a very solid first quarter with respect to financial results and progress with our strategy. Starting in the upper left, revenue grew 4% year-over-year to $628 million, with recurring revenue up 7% to a new high of 62% of the segment revenues. The recurring revenue growth reflects the success of our strategy to drive more revenue per unit with service revenue up 5% and software revenue up 9% year over year. Top line strength was geographically broad based with growth in all regions other than Asia Pacific which was slightly down due to timing of one time hardware revenue. Adjusted EBITDA was 134 million compared to 139 million in the prior year. Adjusted EBITDA margin of 21% was down 160 basis points year over year primarily due to dis-synergies from the separation, different cost allocation methodology in the prior year, and a shift of certain business functions from corporate to be managed in the segment. Moving to KPIs at the bottom of this slide, for the first quarter, all of our key metrics are heading in the right direction year over year and sequentially, indicating our strategy and execution is achieving the desired result of increasing monetization of our installed base. Starting in the bottom left, The current revenue is up to 62% on the combination of growth in legacy software and services revenue, plus incremental ATM as a service revenue. As Tim noted earlier, we finished the first quarter with almost 21,000 active ATM as a service units, adding approximately 400 units, which is consistent with the assumption behind our 2024 financial targets. ATM as a service revenue for the quarter was approximately 46 million, up 37% year on year, and our current ATM as a service unit backlog increased to more than 4,000 units. The backlog and sales funnel mix has a higher mix of deals that would be asset light, which would not require CapEx funding. Annual recurring revenue in the bottom left increased 8% year over year and illustrates the compounding revenue benefit of our strategy to drive more recurring services to our customer base. Moving to slide 11, the network segment performed well in the first quarter. Starting at the top left, revenue increased 3% year over year led by 11% growth in withdrawal volumes, more than offsetting the lower-than-expected volumes in our low-margin LibertyX transactions. Withdrawal transactions growth was broad-based, with North America up 7% and international up 14%, benefiting from the agreement with ASDA signed in the fourth quarter, which had a full quarter impact on Q1. Moving to the chart on the right, adjusted EBITDA increased 15% year-over-year to 86 million on top-line growth and margin expansion. Adjusted EBITDA margin expanded 270 basis points year-over-year to 28% from a combination of higher growth and more profitable transactions and difference in cost allocation under Carver accounting in the prior year. Our network strategy focuses on growing transaction volume on a relatively fixed base of approximately 80,000 over 600,000 ATM units. The key metrics at the bottom of the slide highlights how well this business has been doing that. On the left, you can see that we have continued to optimize the ATM portfolio by reducing low-performing locations, finishing the quarter with 81,000 units. The chart on the right shows the last 12 months' average revenue per unit, or ARPU, up 8% year over year, another proof point in the execution of our strategy to increasingly monetize existing network of ATMs. Slide 12 presents a summary of our segment revenue and adjusted EBIT results for the total company. Technology and telecom segment revenue and adjusted EBITDA margin were slightly up year over year due to new customers expanding services in the first quarter. As a reminder, we created an other segment and put all of the activity with NCR Voix into this segment. This segment is largely uncontrollable by us, and as activities between the companies reduce, all of the impact will flow here and will not impact the core business segments. Unallocated corporate costs decreased 18% to $72 million, with primary contributors being the movement of some departments into the business segments and difference between historical cost allocation methodology under CAVA accounting. On slide 13, we present a walk of adjusted EBITDA to free cash flow for the quarter and a snapshot of our financial position at the end of the first quarter. Starting at the top of the slide, we generated significant free cash flow of $69 million from adjusted EBITDA of $162 million. You can see at the bottom of the slide the company's financial position strengthened further in the quarter, finishing with a little less than $2.6 billion of net debt and available liquidity of over $700 million. Consistent with our stated capital allocation priorities, more than all of the generated free cash flow was used to pay down approximately $80 million of debt, including $18 million of terminal and principal and $62 million of revolving credit facility. We were delighted to reduce our net leverage ratio to below 3.5 times putting us well on our way to our goal of being below 3.2 times by the end of 2024 and below three times during the first half of 2025. Turning to slide 14, our total company financial outlook for Q2 and full year. I'll start with full year targets, which we have reaffirmed. We continue to expect total company revenues to be in the range of 4.2 to 4.4 billion. Adjusted EBITDA of $770 to $800 million diluted adjusted EPS of $2.90 to $3.20, and free cash flow of $170 to $230 million. We expect our EBITDA results will sequentially improve throughout the year in line with our normal historical performance. In 2023, calendarization was inconsistent with this, influenced by the separation. For the second quarter, we expect total company revenues to be in the range of $1.06 to $1.09 billion, adjusted EBITDA of 180 to 190 million, and diluted adjusted EPS of 63 cents to 73 cents. We expect free cash flow will be 0 to 25 million down from Q1 due to an increase in expected cash interest payments of 110 million in the second quarter compared to 19 million in the first quarter. Note that free cash flow will not be linear by quarter due to the timing of interest payments. For Q2 2024, interest expense will be 75 to 80 million, effective tax rate is expected to be approximately 20%, and fully diluted average share count is expected to be approximately 73.5 million. Moving to slide 15, at the segment level, we expect second quarter self-service banking revenue to be 645 to 660 million, with adjusted EBITDA margin of 22.5 to 23.5%. Network revenue of $325 million to $335 million with adjusted EBITDA margin of 28% to 29%. T&T revenue of $47 million to $50 million with adjusted EBITDA margin of approximately 20%. Other revenue of $43 million to $45 million with adjusted EBITDA margin in the high single digits. Unallocated corporate costs should be 6.5% to 7% of total company revenue. There's no change in the segment level full year guidance that was shared in our March 26th update. Including my comments on slide 16, we delivered strong first quarter results across the board, grew revenue, expanded margins, and generated significant free cash flow, which we used to reduce leverage to below 3.5 times. We issued Q2 guidance, improving sequentially, and we reiterated our full year guidance. With that, we'll turn it back to the operator for Q&A.

If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause for just a moment. We'll go first to Matt Somerville with DA Davidson.

Thanks. Good morning. You have Canyon Hayes on for Matt Somerville this morning.

Morning.

Morning. Maybe we could just talk about the ATM as a service deployment cadence to hit your annual targets. Looks like it was a flattish sequentially, and I was just curious about the cadence for the rest of the year. And I know we talked about backlog a little bit, but I'd be curious about the you know, funnel unit metrics there.

Yeah, Kanye, this is Paul here. Thanks for the question.

Yeah, that's a business that doesn't flow on a linear basis. As we've noted, we've got over 4,000 in backlog. This was similar to what we experienced last year. We did over 1,500 in a month last year and some months were less. So we're still seeing very robust funnel activity. The backlogs voluminous than other quarters. So we're still aligned to our expectations originally, and just Q1 was a bit lighter than the future quarters will be. As we look through the year, we do see that there's going to be more in the back half than the first half.

So we're thinking it's kind of like 30%, 35% of our target in the first half, and then 65% to 70% in the second half.

Great. Thank you. Switching over to network, could we talk about the sustainability of transaction trends? I mean, being in the low double digits to mid-teens. Similarly, I'd be curious to see where ARPU trends from here and where ongoing net footprint rationalization is going to end up throughout the year.

Yeah, I think we are confident in the continued transaction growth.

Just that is not more people doing cash transactions. Cash transactions remain stable. and active in all of our markets, but our strategy of migrating transactions out of the branch into our retail utility network is resonating both with standard, you know, brick and mortar financial institutions and particularly neobanks who don't have any infrastructure and rely on us to support their growing customer base. So we're very comfortable with the transaction growth. We think that can continue along with that, you know, to the plan that we've outlined in our investor day. And those expanded transaction sets that we talked about, Tim talked about deposit transactions being our highest growing transaction.

Those are significantly higher margin transactions for us. So that's what drives our ARPU growth.

And then, Stuart, the install base is a question on the install base. We think the install base in the network segment will be largely flat to where it is today. So still around the 80,000, 80,000, 1,000 units.

Great. Thank you for the call in.

We'll go next to George Tong with Goldman Sachs.

Hi, thanks. Good morning. You mentioned with your ATM as a service units, you expect most of the growth to happen in the second half of this year, and that some quarters could be lumpy in terms of growth in units. Can you elaborate on the amount of visibility you have in terms of the number of units in any given quarter and how much you expect the pipeline to ultimately convert to backlog and revenue?

Yeah, Josh, we talked about we've got 4,000 in the backlog today.

We're working through scheduling those rollouts. So they'll roll out at different times based upon the different aspects of those, whether there's ATM to be replaced or where the software stack is. So there's different complexities there. So, yeah, they'll roll out, and the funnel – We're expecting the funnel to come in on a more linear basis, and it's down to the timing of the scheduling of the rollout from our side.

George, this is Tim. You know, this is somewhat of a bifurcated market. We win either very large deals or deals that are relatively small. And so the typical win for us right now is 250 to 300 machines. There are transactions out there, deals that we've bid on that are 3,000 or 4,000 machines. Those move the needle very rapidly and cause in a singular quarter for that number to go up. We will be very careful on those larger transactions that often occur in places where it's more difficult to make, let's call it a fair return, a good ROI. We may pass on some of those at some times in India and other places and favor the deals that are less capital intensive and have a much better ROI in parts of the world like North America and the crown countries. So those deals are a little bit smaller. They accumulate a little bit slower, but I like the choices that we're making.

Got it. That's helpful. And sticking with ATM as a service, is it normal seasonality for the number of ATM as a service units to increase faster in the second half of the year, or can it vary in any given year in terms of the number of units you see in any given quarter?

In all the two years we've been at this, we haven't seen much of a trend. So I would say this has a lot more to do with the timing of singular transactions and not much to do with seasonality.

Got it. That's helpful. Thank you.

We'll go next to Michael O'Brien with Wolf Research.

Hey, good morning, and thanks for taking my question, and congrats on a great quarter. Two quick ones here. One, just want to quickly confirm that you're still targeting 30,000 ATM as a service units by the end of the fiscal year. And then my second question is regarding the margin expansion. If you could provide a little bit more color regarding what's driving that. Obviously, transformation costs are coming down. You're targeting reducing stranded costs as well. But then on the flip side, we have some of these ATM as a service units getting online, which are higher margin as well. If you can provide a little breakdown of what exactly is driving the margin expansion for the quarter, that would be extremely helpful. Thank you.

Yeah, Michael, firstly, yes, we're still on target. We're still trying to do the 30,000 units.

As you asked that question, everyone in the room was nodding with you. So we're still on that path. For the margin expansion, was your question from Q1 to Q2? Yes. Yeah, okay, sorry. Yeah, so from Q1 to Q2, part of it's in the network space. The transaction volumes, it's a VC. through the network come through very high margin accretive because effectively the fixed cost is still there. We also have the cost of initiatives that we kicked off as we separated. They compound as you go through the year. So there will be a good flow through from them in Q2 and then again increase into Q3 and into Q4.

So they're the two largest buckets that we have, Michael.

Gotcha. Thank you. And one follow-up on that. Regarding Stranded Costs, obviously you're a new public company. Have you guys done a deep dive on Stranded Costs analysis and what can be removed to increase margins going forward?

Yeah, we're working our way through the TSAs currently. And when you go through that process, you find that each organization ends up with cost structures that are somewhat larger than you otherwise might have. We've hired some outside help, some folks who do this for a living. It can then help us think about what our cost structure should look like once we're finally separate from Voyage. It will be different than it is today. Some areas have to be a little bit more expensive. We need two audit firms. We need two legal departments. We need two internal audit organizations. But there's a lot of things that can be less expensive. And so we'll work with that outside firm. I don't know that you'll see much return in indirect cost this year and that we're working really hard at direct cost for fourth quarter, some reduction in what I'll call overhead costs.

Okay, great. Thanks for the detail. Sure.

As a reminder, that is star one for questions. We'll go next to Aaron Shashidri with BNP Paribas.

Yes, hi. Thanks for taking my questions. Just wanted to understand, I mean, I see the numbers are really nice, and seeing that there's EBITDA growth here, Just wanted to understand, within the segment EBITDA, what type of, I guess, when you grow revenue in self-service, what sort of EBITDA growth would you expect? What kind of operating leverage would you expect? And I just wanted to understand also, as your ATM as a service units come more online, do you expect to turn adjusted free cash flow rates

to growth kind of in the back half of the year as well?

Yeah, thanks for the good question.

So in self-service banking, the margin flow through really depends on the revenue type. So if it was incremental upfront hardware sales, you would see something around a 20% margin rate come through. When you're talking about ATM as a service, the more strategic revenue streams, because we're leveraging existing infrastructure. So it's incremental flowing through an existing rails that we have.

So it really depends on the revenue streams.

Got it. Understood.

So I guess as you expect the units to grow, you should return that segment EBITDA to growth as well as you enter the back half of the year. Sounds like?

We will, Arun, but just to give context, that segment was $46 million in the quarter, so it's still 5% of the company, 10% of the segment. So it will need to get out to a more scalable for it to make a meaningful difference to the total segment margins.

Got it. Understood. And then the network revenue, as you said, flows through at a very high margin. It looks like it's 100% margin. Was there anything one time in... in Q1 that made it look like the margin growth was actually larger than the revenue growth, or we should just assume like a very high margin and maybe there was like one or two million at one-timers?

Yeah, there was no one-timers as such. There's a little bit of noise in our prior year accounting with it being on a Carver basis. Some of the allocation methodologies were slightly different. So it was a very strong quarter for the network segment. We were really pleased with the margins, but we wouldn't expect it to flow through 100% margins, so a little bit of

a really good quarter performance for the network segment margins.

Got it. And then finally, just wanted to follow up on the adjusted free cash flow. You saw very nice EBITDA growth, but adjusted free cash flow is about flat for the year, for the quarter. Is there anything one time there? And I guess, do you expect to return to, do you expect to grow adjusted free cash flow in the back half of the year?

Yeah, we find it hard to compare the adjusted free cash flow to the prior year because we didn't have any debt. The debt was all assigned to the mother company. So you think of the debt we pay, the cash payment for debt Q1 was $19 million. There was probably literally nothing in the prior year. So for the full year, we have $290 million, effectively, incremental cost of interest on the debt. So the cash flow compared to prior years isn't really a useful measure. When we announced, in our guidance, we've got a cash flow conversion of 25%. So at the first half, we'll be well on track to that conversion rate.

As a reminder, that is star 1 if you would like to ask a question. We will take a follow-up from Matt Somerville with D.A. Davidson.

Hey, thanks for taking another question. Just wanted to check in on your thoughts on a dividend in the near term versus deleveraging. Any sort of commentary around there? Thank you.

Yeah, that's a fair question. We went out on the road and talked about this company ultimately paying a dividend. We thought that that might be in the latter half of the year. We were on the road back introducing people to NCR Atlios. And at the time, we said we wanted to make sure we had a couple quarters under our belt to see if we actually were generating some capital back to shareholders. We are intent on reducing our indebtedness quickly. As Paul said, we're on path for our free cash flow generation. And I suspect in the second quarter, we'll have something more to say about this. I'm not certain that where our evaluation is currently, that a dividend is the right way to return cash to shareholders. And I think the stock repurchase program might make more sense with our evaluation where it is today. So But we'll address that. We did make a commitment to return some cash to shareholders once we were able to confirm we could generate the kind of cash we think that we can. And I think in the second, this call, 90 days from now, we'll have more to say about that.

There are no other questions at this time.

Great. I'll wrap up quickly. First, thank you, everybody, for today, and thanks to our employee base who really had a terrific quarter. As much as we try to make this look not too terribly complicated when we talk to you all, I assure you that underneath the covers, this is a very busy place with a lot going on, and we feel very good about the first quarter. I think what you're hearing today is cash is healthy, ATMs are relevant, and cash-intensive demographics and regions are still cash-intensive. I think you heard we have the most comprehensive and most capable offering for banks and retailers who want to outsource their cash ecosystem. You heard we're innovating. Our machines are more capable, and they're transacting more often. You heard we're generating more revenue per ATM through transaction volumes and, importantly, picking up more service revenue from our bank customers. And lastly, I'd say we're still undervalued, and we're going to do everything we can to fix that. We're going to reduce our leverage. We're going to perform predictably. and hopefully we're going to attract some new investors. So thank you very much for your time, and we'll talk again in 90 days.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.