NCR Corporation Net Income dropped on 114% and Revenue dropped on 10.2%
02/09/2021 • About NCR Corporation (
$NCR) • By InTwits
NCR Corporation reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- NCR Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $31m in 2020, $91m in 2019, $143m in 2018, $128m in 2017, $73m in 2016
- In the last 5 years the company invested considerably less than D&A: $466m vs. $1,028m
- The company has potentially unprofitable business model: ROIC is 5.5%
- It operates with high leverage: Net Debt/EBITDA is 4.8x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 10.2%. Revenue decline showed acceleration in 20Q4 - it was 13.5% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 1.4% to 4.1% in 2020.
Gross Margin decreased on 3.2 pp from 27.8% to 24.6% in 2020. SG&A as a % of Revenue increased slightly on 1.7 pp from 15.2% to 16.9% in 2020. SG&A as a % of Revenue stuck to a growing trend at 0.66 pp per annum in 2016-2020.
Net Income margin decreased on 9.4 pp from 8.2% to -1.3% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.50% in 2020. NCR Corporation showed small CAPEX/Revenue decline of 1.5 pp from 2.0% in 2017 to 0.50% in 2020. For the last three years the average CAPEX/Revenue was 1.3%. During 2016-2020 CAPEX as a % of Revenue topped in 2018 at 2.2% and was declining since that time.
Return on investment
The company operates at low but positive ROIC (5.5%) and negative ROE (-10.3%). ROIC decreased on 8.8 pp from 14.3% to 5.5% in 2020. ROE dropped on 71.5 pp from 61.2% to -10.3% in 2020.
Leverage (Debt)
Debt level is 4.8x Net Debt / EBITDA and 5.2x Debt / EBITDA. Net Debt / EBITDA surged on 1.5x from 3.3x to 4.8x in 2020. Debt decreased on 8.1% while cash dropped on 33.6%.
NCR Corporation has no short term refinancing risk: cash is higher than short term debt (313.0%).
Management team
The company's CEO is Michael D Hayford "Mike". Michael D Hayford "Mike" has 2 years tenure with the company. Timothy C Oliver "Tim" is a the company's CFO. Timothy C Oliver "Tim" has spent 8 months years at the company.
Financial and operational results
FY ended 12/31/2020
NCR Corporation ($NCR) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 6,543 | 6,516 | 6,405 | 6,915 | 6,207 | -10.2% |
| Gross Profit | 1,782 | 1,855 | 1,675 | 1,921 | 1,524 | -20.7% |
| SG&A | 926 | 923 | 1,005 | 1,051 | 1,051 | 0.0% |
| EBITDA | 943 | 1,045 | 521 | 1,081 | 710 | -34.3% |
| EBIT | 599 | 691 | 191 | | | |
| Interest expence | 170 | 163 | 168 | | | |
| Tax | 92 | 242 | 73 | | | |
| Net Income | 270 | 232 | -88 | 564 | -79 | -114.0% |
| Stock Based Compensation | 61 | 77 | 72 | | | |
Balance Sheet
|
|---|
| Cash | 498 | 537 | 464 | 509 | 338 | -33.6% |
| Accounts Receivable | 1,282 | 1,270 | 1,356 | | | |
| Inventory | 699 | 780 | 806 | | | |
| Accounts Payable | 781 | 762 | 897 | | | |
| Short Term Debt | 50 | 52 | 185 | 383 | 108 | -71.8% |
| Long Term Debt | 3,001 | 2,939 | 2,980 | 3,671 | 3,618 | -1.4% |
Cash flow
|
|---|
| Capex | 73 | 128 | 143 | 91 | 31 | -65.9% |
| Acquisitions | | 8 | 206 | | | |
Ratios
|
|---|
| Revenue growth | 2.7% | -0.4% | -1.7% | 8.0% | -10.2% | |
| EBITDA growth | 112.9% | 10.8% | -50.1% | 107.5% | -34.3% | |
|
|---|
| Gross Margin | 27.2% | 28.5% | 26.2% | 27.8% | 24.6% | -3.2% |
| EBITDA Margin | 14.4% | 16.0% | 8.1% | 15.6% | 11.4% | -4.2% |
| EBIT Margin | 9.2% | 10.6% | 3.0% | | |
| SG&A, % of revenue | 14.2% | 14.2% | 15.7% | 15.2% | 16.9% | 1.7% |
| SBC, % of revenue | 0.9% | 1.2% | 1.1% | | |
| Net Income Margin | 4.1% | 3.6% | -1.4% | 8.2% | -1.3% | -9.4% |
| CAPEX, % of revenue | 1.1% | 2.0% | 2.2% | 1.3% | 0.5% | -0.8% |
|
|---|
| ROIC | 13.9% | 16.3% | 4.6% | 14.3% | 5.5% | -8.8% |
| ROE | 32.4% | 17.9% | -25.2% | 61.2% | -10.3% | -71.5% |
| Net Debt/EBITDA | 2.7x | 2.3x | 5.2x | 3.3x | 4.8x | 1.5x |
| Interest coverage ratio (ICR) | 3.5x | 4.2x | 1.1x | | |
| Interest expence / Average debt | 5.6% | 5.4% | 5.5% | | | |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | | | |
| Employees | 33,500 | 34,000 | 34,000 | | | |
| Revenue/Employee, th. $ | 195 | 192 | 188 | | | |
NCR Corporation ($NCR) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,503 | 1,484 | 1,589 | 1,631 | | -2.1% | -13.2% | -10.9% | -13.5% |
| EBITDA | 196 | 208 | 242 | 64 | | -9.3% | -23.0% | -17.4% | -78.8% |
| Net Income | 23 | 64 | 31 | -197 | | -37.8% | -27.3% | -65.6% | -156.4% |
Balance Sheet
|
|---|
| Cash | 1,214 | 1,681 | 1,605 | 338 | | 193.2% | 401.8% | 313.7% | -33.6% |
| Short Term Debt | 405 | 314 | 319 | 108 | | 1.3% | 4.7% | 4.2% | -71.8% |
| Long Term Debt | 4,455 | 4,838 | 4,629 | 3,618 | | 34.1% | 46.0% | 21.3% | -1.4% |
Ratios
|
|---|
| Gross Margin | 26.4% | 25.1% | 26.9% | 20.1% | | -0.3% | -2.5% | -1.6% | -8.1% |
| EBITDA Margin | 13.0% | 14.0% | 15.2% | 3.9% | | -1.0% | -1.8% | -1.2% | -12.1% |
| Net Income Margin | 1.5% | 4.3% | 2.0% | -12.1% | | -0.9% | -0.8% | -3.1% | -30.6% |
Peers in Technology Hardware, Storage & Peripherals
Below you can find NCR Corporation benchmarking vs. other companies in Technology Hardware, Storage & Peripherals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Ionix Technology Inc ($IINX) | - | 246.0% | -5.8% | 92.3% | 66.8% |
| Veritec Inc ($VRTC) | - | -52.2% | 53.1% | -38.5% | 42.9% |
| Pure Storage, Inc. ($PSTG) | - | 67.9% | 38.6% | 32.7% | 20.9% |
| USA Technologies, Inc. ($USAT) | - | 34.5% | - | - | 12.9% |
| CPI Card Group Inc. ($PMTS) | - | -17.4% | 0.4% | 8.7% | 12.3% |
| |
|---|
| Median (20 companies) | 1.4% | 2.1% | 5.6% | -3.7% | -8.8% |
|---|
| NCR Corporation ($NCR) | - | -0.4% | -1.7% | 8.0% | -10.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Immersion Corporation ($IMMR) | 99.7% | 99.4% | 99.8% | 99.5% | 99.4% |
| Datasea Inc ($DTSS) | - | 39.3% | 54.4% | - | 89.7% |
| Pure Storage, Inc. ($PSTG) | 61.9% | 65.9% | 65.5% | 66.4% | 69.0% |
| Avid Technology, Inc. ($AVID) | 65.0% | 57.8% | 57.9% | 60.5% | 63.3% |
| Socket Mobile, Inc. ($SCKT) | 50.2% | 53.5% | 51.4% | 52.5% | 53.1% |
| |
|---|
| Median (21 companies) | 39.3% | 39.6% | 38.8% | 35.1% | 38.2% |
|---|
| NCR Corporation ($NCR) | 27.2% | 28.5% | 26.2% | 27.8% | 24.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Apple Inc. ($AAPL) | 32.7% | 31.2% | 30.8% | 29.4% | 28.7% |
| CPI Card Group Inc. ($PMTS) | 14.9% | -0.0% | 9.0% | 15.2% | 17.9% |
| Immersion Corporation ($IMMR) | -25.1% | -127.0% | 48.6% | -50.4% | 17.4% |
| Avid Technology, Inc. ($AVID) | 17.5% | 6.6% | 8.4% | 13.5% | 13.6% |
| Western Digital Corporation ($WDC) | 12.5% | 21.4% | 27.5% | 11.5% | 11.7% |
| |
|---|
| Median (19 companies) | 3.8% | 3.5% | 7.9% | 7.7% | 7.6% |
|---|
| NCR Corporation ($NCR) | 14.4% | 16.0% | 8.1% | 15.6% | 11.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Datasea Inc ($DTSS) | - | 0.0% | 0.0% | - | 20.9% |
| Hewlett Packard Enterprise Company ($HPE) | 10.8% | 10.9% | 9.6% | 9.8% | 8.8% |
| Pure Storage, Inc. ($PSTG) | 8.9% | 10.4% | 6.3% | 7.4% | 5.3% |
| Stratasys, Ltd. ($SSYS) | 6.7% | 3.3% | 3.5% | 3.5% | 5.2% |
| Western Digital Corporation ($WDC) | 4.5% | 3.0% | 4.0% | 5.3% | 3.9% |
| |
|---|
| Median (19 companies) | 2.0% | 1.8% | 2.4% | 2.3% | 2.3% |
|---|
| NCR Corporation ($NCR) | 1.1% | 2.0% | 2.2% | 1.3% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| HP Inc. ($HPQ) | 15.8% | 60.8% | 72.9% | 116.0% | 109.2% |
| Apple Inc. ($AAPL) | 27.0% | 23.8% | 28.0% | 29.5% | 33.0% |
| Avid Technology, Inc. ($AVID) | - | - | 252.4% | 42.1% | 30.0% |
| CPI Card Group Inc. ($PMTS) | 12.8% | -9.3% | 2.7% | 15.4% | 20.5% |
| Crossroads Systems Inc ($CRSS) | -175.9% | -96.3% | - | - | 3.9% |
| |
|---|
| Median (21 companies) | -2.6% | 0.2% | 2.2% | 2.9% | 2.0% |
|---|
| NCR Corporation ($NCR) | 13.9% | 16.3% | 4.6% | 14.3% | 5.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Diebold Nixdorf Incorporated ($DBD) | - | 8.3x | - | 6.6x | 7.3x |
| CPI Card Group Inc. ($PMTS) | 5.8x | - | 12.4x | 7.2x | 5.2x |
| Hewlett Packard Enterprise Company ($HPE) | 0.4x | 1.2x | 1.6x | 2.6x | 5.2x |
| Western Digital Corporation ($WDC) | 5.5x | 1.7x | 1.1x | 3.7x | 3.5x |
| Avid Technology, Inc. ($AVID) | 1.7x | 5.6x | 4.8x | 3.5x | 3.3x |
| |
|---|
| Median (11 companies) | 0.1x | 0.2x | 0.2x | 1.3x | 2.7x |
|---|
| NCR Corporation ($NCR) | 2.7x | 2.3x | 5.2x | 3.3x | 4.8x |
