NCR Corporation

Good day and welcome to the NCR Corporation's second quarter fiscal year 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Nelson, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining our second quarter earnings call. Joining me on the call today are Mike Hayford, President and CEO, Owen Sullivan, COO, and Tim Oliver, CFO. 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, but they're subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our annual reports. On today's call, we will also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials, the press release dated July 28, 2020, and on the investor relations page of our website. A replay of this call will be available later today on our website, ncr.com. With that, I would now like to turn the call over to Mike.

Thanks, Michael, and thank you, everyone, for joining us today. Before I get started, I want to thank Andre Fernandez for all his work during his time at NCR. I appreciate all he's done, particularly around firming up our balance sheet, increasing the transparency with the investment community, and helping organize our industry general manager structure. I also want to thank him for staying on until October 1st to ensure an effective leadership transition. I wish him well in his next endeavors. I will begin with some of my views on the business, including The Impact from the Coronavirus Pandemic. Then I will review our second quarter performance and talk about the success we are having with our digital-first contactless solutions. Owen will then review our business progress. Tim Oliver, our newly appointed CFO, will then review our second quarter financial numbers. Then Owen, Tim, and I will take your questions. Starting on slide four, just two years ago, we began the shift to a customer-centric digital first software and services business model. We made tremendous progress in 2019 and entered 2020 with strong momentum. When the global pandemic hit, we took aggressive steps to focus on three priorities. First, the security and safety of all of our employees around the globe. Second, continuing to serve our customers. And third, protect the financial health of our company. I want to express my appreciation to our employees who have shown incredible commitment and flexibility as well as an intense dedication to support our customers during these difficult times. While our financial results in the second quarter are disappointing on a year-over-year basis entirely due to the coronavirus pandemic, we are quite pleased with our company's performance during the quarter. Our revenues and margins held up better than we had expected Our business success in the competitive marketplace was very strong, and we continued to make progress on our strategic product initiatives. Now moving to slide five and an overview of our second quarter performance. First, while we do not expect the COVID-19 health crisis to be mitigated until 2020, sorry, until 2021, we have shifted our management attention from a focus on COVID-19 to a focus on growing the business in the second half of the year, winning in the marketplace, and continuing our strategic shift to NCR as a service, all while operating in a COVID-19 environment. We actually kicked off the second half of the year with a shift to offense and called it our 2020.5 plan versus the first half of 2020 where we found ourselves in a defensive position reacting most of the second quarter. Second, there were several bright spots in the quarter, including recurring revenue constant currency growth of 7% compared to last year. Third, we are generating accelerated momentum in our shift towards recurring revenues. We have shifted many of our software and solutions from an upfront software license to recurring revenue. This includes both software attached to a hardware sale as well as software sold independent of hardware. This remains a top strategic priority, and we have accelerated momentum as we enter the second half of the year. Finally, we made additional progress strengthening our liquidity and improving our financial flexibility. The cash preservation actions we took earlier in the year, coupled with our continued focus on cash management, helped drive free cash flow of $171 million during the second quarter. We ended the second quarter with $1.7 billion of cash on the balance sheet. which has provided significant liquidity and financial flexibility to invest in our strategic growth platforms and deliver uninterrupted value to our customers as consumers' transaction habits have shifted. With that, let me pass the call over to Owen.