) posted third-quarter 2013 adjusted earnings (excluding all
special items and pension expenses) of 76 cents per share,
beating the Zacks Consensus Estimate of 68 cents.
NCR reported revenues of $1.51 billion in the third-quarter of
2013, up 5.1% from the year-ago quarter. Revenues in the quarter
missed the Zacks Consensus Estimate of $1.58 billion. The
year-over-year improvement in revenues was mainly due to software
revenue growth of 124% and addition of Retalix to the Retail
Service revenue growth was decent, offset by a decline in product
revenues. Revenues from the Financial Services segment were
$767.0 million, down 4.0% from the year-ago quarter. The downside
was driven by a decline in the Americas and Europe theater offset
to a considerable extent by growth in the Asia Middle East Africa
In the Retail Solutions segment, the company generated revenues
of $494.0 million, up 17.3% from the year-ago quarter. The
increase in revenues was driven by growth in all theaters,
primarily driven by the impact of the Retalix business.
The Hospitality segment witnessed a 24.8% increase in revenues,
attributable to an improvement in the American and Europe theater
Emerging Industries' revenues were $86.0 million, flat on a
year-over-year basis. Growth in AMEA theater was offset by a
decline in the Europe and Americas theaters business.
Adjusted gross margin in the quarter was 28.6% versus 27.3% in
the year-ago quarter. Gross margin improved 130 basis points year
on year, primarily due to favorable mix of revenues and software
Adjusted operating expenses increased 6.7% on a year-over-year
basis to $270.0 million due to an increase in selling, general
and administrative expenses and research and development
expenses. Moreover, as percentage of revenues, operating expenses
increased 27 basis points from the year-ago quarter to 17.9%.
Adjusted operating income increased 20.9% from the year-ago
quarter to $185.0 million. Adjusted operating margin was 12.3%
versus 10.7% in the year-ago quarter.
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NCR's adjusted net income (excluding all special items and
pension expenses) from continuing operations was$129.0 million or
76 cents in the quarter compared with $104.0 million or 64 cents
in the year-ago quarter.
Balance Sheet & Cash Flow
Net cash used in operating activities was $27.0 million compared
with net cash provided by operating activities of $32.0 million
in the previous quarter. Without considering the impact of
pension settlement payment that the company made to the U.S.
non-qualified pension plans during the quarter, free cash flow
for the quarter came in at ($66) million.
For full-year 2013, NCR expects revenues to increase in the range
of 9% to 11% year over year. Moreover, NCR expects its full-year
2013 non-pension operating income (NPOI) to remain in the range
of $700 million to $720 million. Non-GAAP earning per share are
expected to be in the range of $2.70 to $2.80. NCR expects
effective income tax rate to be approximately 23%.
NCR reported mixed third-quarter results, with earnings per share
beating the Zacks Consensus Estimate but revenues missing the
same. The company also maintained its fiscal 2013 guidance,
anticipating more balanced revenue growth across its segments.
The company also benefited from gross margin expansion as the
company recorded a decent amount of high-margin software
The company also witnessed a meaningful increase in its
bottom-line. NCR's growing exposure into ATM and self-service
kiosk spaces is encouraging, given tremendous growth prospects in
the respective markets. Continuous product launches, growing
popularity of its self-service offerings and synergies from
acquisitions are catalysts. However, softness in the ATM business
in mature markets and competition from
), European exposure and high debt burden are concerns.
Currently, NCR Corp. has a Zacks Rank #2 (Buy). Investors can
also consider other technology stocks such as
Western Digital Corp.
), both carrying a Zacks Rank #1 (Strong Buy).