NCR Delivers Decent 1Q Earnings - Analyst Blog
NCR Corp. ( NCR ) posted first-quarter 2013 earnings per share (EPS) of 54 cents, which surpassed the Zacks Consensus Estimate of 40 cents.
NCR reported revenues of $1.41 billion in the first quarter of 2013, up 13.3% from $1.24 billion in the year-ago quarter. The year-over-year improvement in revenues was mainly due to an increase of 41.0% in Retail solutions and a 16.0% increase in Hospitality revenues.
NCR is generating decent growth in software revenues across its segments, especially in SaaS. Moreover, the company is witnessing good business in line with its business expectation.
Revenues from the Financial Services segment were $714.0 million, up 3% from the year-ago quarter. The upside was driven by growth in the Europe, as well as Asia, the Middle East and Africa (AMEA) theaters, offset by lower revenues in the Americas.
In the Retail Solutions segment, NCR completed the acquisition of Retalix, Ltd. The company generated revenues of $489 million, up 41.0% from the first quarter of 2012. The increase in revenues is driven by growth in the Americas, Europe and AMEA theaters. Moreover, excluding Retalix, revenue growth was 27.0% in the first quarter of 2013.
The Hospitality segment witnessed a 16.0% increase in revenues and the growth can be attributed to an improvement in the American theater business.
Emerging Industries ' revenues were $76.0 million, down 15.0% from the first quarter of 2012, on both an actual and a constant currency basis. The decrease in revenues was mainly driven by declines in the Emerging Industries revenue in Americas and Europe theaters.
Gross margin in the quarter was 26.2% versus 20.3% in the year-ago quarter. Gross margin looked good, up 120 basis points year-on-year. Gross margin moved up excluding the effect of Retalix in the quarter. Software was a key contributor to gross margin expansion.
NCR reported a profit of $62.0 million or 37 cents per share in the reported quarter, compared with a loss of $10.0 million or 6 cents per share in the year-ago quarter. Excluding special items like impairment, pension expense, acquisition related transaction costs, amortization and legal settlement charges; non-GAAP income from continuing operations was 54 cents per share compared with 47 cents per share in the prior-year quarter.
Balance Sheet & Cash Flow
Net cash provided by operating activities was $21.0 million during the first quarter of 2012, down from net cash generation of $100.0 million in the previous quarter. The decrease can be attributed to a change in working capital in anticipation of higher revenues in the upcoming quarters.
NCR ended the first quarter of 2013 with $483 million in cash and cash equivalents compared with $1.07 billion as of Dec 31, 2012, due to the acquisition of Retalix. As of Mar 31, 2013, NCR had a total debt balance of $2.09 billion.
The company has raised its FY13 guidance. For the full-year 2013, NCR expects revenues to increase in the range of 9% to 11% compared with 2012.
Moreover, NCR also expects its full-year 2013 income from operations (GAAP) in the range of $546 million to $566 million, while the non-pension operating income (NPOI) is expected to remain in the range of $700 million to $720 million. GAAP earnings per share are expected to be in the range of $2.08 to $2.18 and non-GAAP diluted earnings per share to be in the range of $2.70 to $2.80 per diluted share.
NCR manufactures ATMs, point-of-sale devices, cash dispensers and various self-service kiosks. The company reported decent first-quarter results, with revenues growing across all segments and EPS surpassing the Zacks Consensus Estimate.
Given the ongoing improvement in NCR's Financial, Hospitality and Retail verticals, the company expects to report decent results for full-year 2013. NCR's growing exposure into ATM and self-service kiosks spaces is encouraging, given tremendous growth prospects in the respective markets.
Though stiff competition in the ATM space, European exposure and high debt burden are concerns, we are optimistic on the stock given the continuous products launches and synergies from acquisitions.
NCR has a Zacks Rank #2 (Buy).
One may consider other stocks that are going to report this earnings season. These include companies such as AOL Inc. ( AOL ), Micron Tech. ( MU ), and Paychex Inc. ( PAYX ). All these stocks carry a Zacks Rank #2 (Buy).
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