NCR Corporation

Good day and welcome to the NCR Corporation fourth quarter fiscal year 2021 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Michael Nelson, Treasurer, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining our full year and fourth quarter 2021 earnings call. Joining me on the call today are Mike Hayford, CEO of Owen Sullivan, President and 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 February 8th, 2022, 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 for our fourth quarter and full year 2021 earnings call. I will begin with some of my views on the business, including an update on our move to NCR becoming a software-led as-a-service company with a higher shift to recurring revenue streams. I will also provide commentary on the strategic review process we noted in our earnings release. Tim will then review our financial performance and an outlook into 2022. And then Owen, Tim, and I will take your questions. Let's begin on slide four with some highlights from this past year. We entered the fourth quarter with momentum across our business and finished a very strong year. Keep in mind, we entered 2021 hoping that the COVID pandemic was mostly behind us. But we continued to experience COVID-related flare-ups throughout the year, and then the added challenges brought on by the supply chain issues in the second half of 2021. Throughout the year, our team continued to execute and delivered a very strong year for our shareholders. I want to specifically call out our 15,000 customer engineers who have continued to work to support our clients in stores, restaurants, and banks during the past two years of the pandemic. I'm also proud of the continued execution our teams have done to improve our products and services as we have been making our way back to the office with a flexible hybrid work environment. During this time, we've had a keen focus on taking care of our customers with the belief that happy customers will buy more from NCR. We also successfully completed one of the largest acquisitions in NCR's history. We completed the Cartronics acquisition mid-year and are well on our way with integrating the two companies. In 2021, NCR delivered 15% total revenue growth, with recurring revenue growth of 25%. Adjusted EBITDA increased 39%, while adjusted EBITDA margins expanded 300 basis points to 17.4%. Our earnings per share increased 51%, and we delivered free cash flow of $460 million for the year. Now moving to slide five. We have had strong momentum across our strategic growth platforms which support our transitions to shift NCR to a software-led as a service company. Our 2022 outlook expects another strong year with strong revenue growth and significantly higher profitability. Tim will discuss our guidance in more detail later. In banking, we continue to have positive momentum in our digital banking platform. In the fourth quarter, digital banking had 37 renewals, four new logo deals, and three business banking wins, all positive drivers of growth. Demand has been strong for our digital banking platform as well as for our online digital account opening, which we obtained through the acquisition of Terrafina. We have made significant progress returning digital banking to a growth engine for NCR. During the fourth quarter, digital banking revenue accelerated to 14% growth on a year-over-year same-period basis. We are receiving increased interest in our ATM-as-a-Service solution. An integrated go-to-market model combining the NCR and Cataractics team provided a key point of competitive differentiation. Seacoast Bank of Florida and Texas-based EECU both selected NCR's ATM-as-a-Service offering to own, run, manage, and modernize their ATM fleet. And Bank of Barada, one of India's largest banks with over 9,000 ATMs, selected NCR's ATM as a service offering. In retail, we have positive momentum in winning the upgrade imperative for retail point of sale solutions. We have recently signed a contract to migrate A.S. Watson from NCR's legacy POS to our next-gen NCR Commerce platform with a five-year subscription. AS Watson is one of the world's largest international health and beauty retailers with over 16,000 stores in 28 markets. We also had a competitive win with ASDA, one of the largest retailers in the UK. ASDA will be migrating from a competitor's legacy product to our NCR Commerce platform with a five-year subscription covering software, services, and hardware in our company's journey for NCR to run the store. During the quarter, we continued to gain traction from our digital-first retail front-end app, Fresh Hop. This SaaS solution helps grocers implement their own e-commerce and delivery services through the NCR Commerce platform. In self-checkout, we were also seeing continued adoption with our market-leading solutions. Bed Bath & Beyond has started to roll out NCR cloud-enabled self-checkout solutions across its footprint which represents a meaningful expansion of self-checkout into department and specialty retail stores. In hospitality, our focus on customer success and wallet share gain is proving itself in our ability to attract new customers and better service existing customers. NCR expanded our relationship with Landry's, a multinational entertainment company with more than 60 restaurant brands, signing a five-year Aloha Essentials subscription and launching e-commerce solutions for quick, and easy mobile ordering and delivery. The agreement drives Landry's end-to-end digital transformation, freeing its restaurants to focus on delivering exceptional guest experiences. Our payments business continued to success during the fourth quarter as we increased the number of payment processing sites attached to our POS by 42% from the third quarter. And we are extremely pleased with the performance of Cartronics, As we continue to add and expand with financial and retail partners, we are driving more transactions across the Allpoint network. In the fourth quarter, total NCR payment network transactions increased 12% compared to the fourth quarter of 2020. We expect to drive both merchant acquiring transaction growth and new transaction type growth on the Allpoint network. With the launch of Pay360, which will bring more transaction types, including complete digital currency solutions and the ability to buy and sell cryptocurrency to our proprietary all-point network. And finally, as we noted in the press release, we have launched a board-led strategic review process that will include the input of our executive team, our board of directors, and outside advisors. As you heard at our Investor Day on December 9th of last year, the entire management team is very excited about the progress we have made to transform our company and even more optimistic about the future. We highlighted an almost 3x increase in our customer satisfaction measured by MPS since 2018. We have shifted our company from a hardware-centric brand to a software-led as-a-service company. and we have invested to build competitive products across all of our business lines. But while this execution over the past three years has exceeded our goals and has been recognized by our customers, the marketplace, and our employees, our stock price has not reflected that performance. We have consistently said if execution and transparency were not sufficient to improve our market valuation, we would consider taking the appropriate actions to more immediately and directly liberate that value. While we are not presupposing an outcome from this review, we do intend to consider various potential actions, structures, and solutions that will unlock value for our shareholders. With that, let me pass it over to Tim.