NCR Corporation (now identified in the request as NCR Voyix Corp.) — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; it does not provide a clear standalone Q4 results summary. Amounts below are in U.S. dollars.
Business context
NCR provided software, services, payments and technology for banking, retail, hospitality, and telecommunications and technology customers. Its strategy was to shift from a hardware-led model toward a software platform and payments company with more recurring and as-a-service revenue. The 2021 results include Cardtronics from its June 21, 2021 acquisition date.
Financial performance
| Metric | FY2021 | FY2020 | Change/comment |
|---|---|---|---|
| Total revenue | $7.156 billion | $6.207 billion | Up 15%; Cardtronics contributed $627 million after acquisition. |
| Service revenue | $4.963 billion | $4.202 billion | Up 18%, reflecting payments, cloud and managed-services growth. |
| Product revenue | $2.193 billion | $2.005 billion | Up 9%, primarily from self-checkout and point-of-sale. |
| Software and services mix | 72.7% of revenue | 71.7% | Software and services revenue rose 17% to $5.204 billion. |
| Recurring revenue | $4.166 billion; 58.2% of revenue | $3.338 billion; 53.8% | Up 25%; includes Cardtronics for the post-acquisition period. |
| Gross margin | $1.893 billion; 26.5% | $1.524 billion; 24.6% | Excluding specified restructuring and acquired-intangible amortization, margin was 27.8% versus 27.3%. |
| Operating income | $474 million; 6.6% margin | $221 million; 3.6% | Up 114%. |
| Net income attributable to NCR | $97 million | Net loss of $79 million | FY2021 diluted EPS was $0.58, versus a loss of $0.86. |
| Adjusted EBITDA (non-GAAP) | $1.244 billion; 17.4% margin | $896 million; 14.4% | Up 39%; excludes specified special items. |
| Operating cash flow | $1.077 billion | $641 million | Increase included a $300 million benefit from receivables sales. |
| Free cash flow (non-GAAP) | $460 million | $467 million | Down slightly; higher ATM-related capital spending, software investment and working capital weighed on the measure. |
Debt and liquidity
- Cash and cash equivalents were $447 million at year-end; restricted cash was a further $295 million.
- Total indebtedness was approximately $5.62 billion, substantially higher following the Cardtronics acquisition. The company reported $894 million of available borrowing capacity under its secured revolving facility.
- Interest expense increased to $238 million from $218 million. About 59% of borrowings were fixed-rate; management estimated a 100-basis-point rise in variable rates would add approximately $12 million to annual pretax interest expense. A similar rise could add approximately $44 million to ATM vault-cash rental expense, before the effect of interest-rate caps.
- Contractual obligations totaled $9.384 billion undiscounted, including $5.622 billion of debt principal, $1.553 billion of estimated debt interest, $1.438 billion of purchase obligations and $120 million of estimated environmental payments.
- Management said available cash, operating cash flow and financing were sufficient for expected requirements over the next 12 months and longer term. This assessment depends on cash generation, financing access and compliance with debt terms.
Material changes and notable items
- Cardtronics was acquired for total consideration of $2.674 billion. It added the Allpoint ATM network and expanded payments and ATM-as-a-Service. Banking revenue rose 20%; Retail rose 10%; Hospitality rose 24%; T&T fell 14%.
- The company incurred $42 million of debt-extinguishment loss, including the $37 million cash premium to redeem $400 million of 8.125% notes due 2025.
- Other income included a $118 million pension actuarial gain. The effective tax rate was 65%, affected by valuation allowances and an internal restructuring tax charge; reported tax expense was $186 million.
- Environmental reserves at year-end included $26 million net for Fox River, $99 million for Kalamazoo River and $16 million for Ebina. Kalamazoo remediation costs and recoveries remain uncertain; the company noted that under other assumptions its reserve could more than double.
Outlook, management commentary and risks
- Aspirational 2026 goals: recurring revenue of 80% of total revenue, annual non-GAAP EPS growth of 15%, and annual non-GAAP free cash flow of $1 billion. These are long-range goals, not near-term financial guidance; reconciliations were not provided because the company said it could not predict the relevant adjustments without unreasonable effort.
- On February 8, 2022, the Board announced a comprehensive strategic review of alternatives, potentially including a sale, merger, spin-off or other structural changes. No timetable or transaction outcome was assured.
- Management expected COVID-19 and supply-chain challenges to remain a near-term headwind, including cost escalation in labor, components and freight. Price increases, advance purchases and alternate sourcing were among mitigation actions, with no assurance of full or timely offset.
- Key risks include high indebtedness and variable-rate exposure; executing the recurring-revenue transformation; integrating Cardtronics and other acquisitions; cybersecurity, data privacy and cloud-service interruptions; payments, ATM-use and cryptocurrency regulation; supplier constraints; and environmental contingencies.
- LibertyX, a cryptocurrency software provider, was acquired on January 5, 2022, after the reporting period. Effective January 1, 2022, NCR also reorganized its reporting segments.
Important facts for investors to verify
- How much of the 15% revenue growth and recurring-revenue increase reflects Cardtronics versus organic growth; the filing does not provide a clear organic-growth figure in the cited results.
- Whether operating cash flow and free cash flow can be sustained after separating the one-time $300 million initial receivables-sale benefit from reported operating cash flow.
- Debt reduction progress, covenant headroom, refinancing needs and sensitivity to interest rates, including ATM vault-cash rental costs.
- Delivery against the 2026 aspirational targets and any updates or outcomes from the strategic review.
- Final Cardtronics purchase accounting, integration costs and realized synergies, as well as potential changes to environmental reserves and recoveries.