NCR Corporation (
Q3 2010 Earnings Call Transcript
October 21, 2010 4:30 pm ET
Gavin Bell – Director, IR
Bill Nuti – Chairman & CEO
John Bruno – EVP, Industry Solutions Group
Bob Fishman – SVP & CFO
Reik Read – Robert Baird
Katy Huberty – Morgan Stanley
Matt Summerville – KeyBanc
Michael Saloio – Sidoti & Company
Gil Luria – Wedbush Securities
Chris Wein [ph] – Stifel Nicolaus
Maria [ph] – JP Morgan
Kartik Mehta – Northcoast Research
Previous Statements by NCR
» NCR Corp. Q2 2010 Earnings Call Transcript
» NCR Corp Q1 2010 Earnings Call Transcript
» NCR Corporation Q4 2009 Earnings Call Transcript
» NCR Corp. Q3 2009 Earnings Call Transcript
Welcome, and thank you for standing by. At this time, all participants are in a listen-only mode. Today’s conference is being recorded. So if you have any objections you may disconnect at this time.
I would now like to turn today’s meeting over to Gavin Bell. Thank you, you may begin.
Thank you, Connie. Good afternoon, and thanks everyone for joining us for our Third Quarter 2010 Earnings Call.
Bill Nuti, NCR’s Chairman and Chief Executive Officer will lead our conference call this afternoon. After Bill’s opening remarks, John Bruno, Executive Vice President of our Industry Solutions Group will update you on progress with respect to certain key initiatives. Bob Fishman, NCR’s Chief Financial Officer will then provide comments on NCR’s total company financial results.
Our discussion today includes forecast and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to vary materially. These risk factors are described in NCR’s periodic filings with the SEC and in our Annual Report to stockholders.
On today’s call, we will also be discussing certain non-GAAP financial information such as free cash flow and results excluding the impact of pension and other items. Reconciliations of non-GAAP financial results to our reported and forecasted GAAP results and other information concerning such measures are included in our earnings press release and are also available on the Investor page of NCR’s Web site.
A replay of this conference call will be available later today on NCR’s Web site, ncr.com. For those listening to the replay of this call, please keep in mind that the information discussed is as of October 21, 2010, and NCR assumes no obligation to update or revise this information included in the conference call whether as a result of new information or future results.
I’ll now turn the call over to Bill.
Thank you, Gavin, and good afternoon, and thank you all for joining us today. I was pleased with our third quarter results. During the third quarter, NCR continued to execute at a high level and generated solid financial results that were very balanced, both geographically and from an industry perspective. We continue to see encouraging trends in our core end markets as we lead the migration from old world traditional to more contemporary self-service channels.
Third quarter revenue grew 6% to $1.21 billion over the year ago period, and 7% on a constant currency basis. Gross margin on a U.S. GAAP basis improved 70 basis points year-over-year, and excluding the impact of higher pension expense, special items and investments in our entertainment business, gross margins improved 160 basis points from the prior year period.
Over the last couple of quarters, our gross margin performance excluding these items continues to rank amongst our best quarters in years. Compared to the year ago period, Non-Pension Operating Income or NPOI grew 29% to $90 million.
And non-GAAP EPS from continuing operations was $0.46 per diluted share compared to $0.37 per diluted share in last year’s third quarter. On a year-to-date basis, excluding the investments in our entertainment business, our 2010 year-to-date NPOI is 32% higher than 2009 year-to-date.
Given our results through the first nine months of 2010, we remain confident in our execution and are on track to deliver better than expected growth for the full year. We are therefore reaffirming our 2010 revenue growth range and raising our earnings guidance. In the third quarter, we also repurchased about 1.5 million shares of our stock under our Board authorized share repurchase program.
Our goal is to finish 2010 strong and enter 2011 prime to capitalize on the recovery of our core end markets and the investments we’ve made in emerging industries.
While the global economic recovery has been tentative and unpredictable, and remains so today, NCR has managed well through uncertainty. We will continue to be well positioned despite the uncertain economic recovery and feel very good about our position if things were to improve of the current base.
Today, we are a leaner and more efficient organization, and we have solidified our global leadership in all of our solutions areas by continuing to invest in innovation and in our manufacturing, go-to market and services capabilities.
As I’d mentioned many times, an exciting factor in NCR’s future growth potential is our role in driving the self-service revolution. This revolution is impacting all of our industries on a global basis, both core and emerging, but the most visible impact right now is in entertainment.
Our strategy here remains on track and we have made further progress rolling out our kiosk and digital download solutions. Our recently announced content agreement with Universal is an important milestone that will enhance the competitiveness of our kiosk.
Access to premium content that we can provide to our consumers at affordable prices is critical to our growth, and it’s a key channel for the studios. So we are excited to have completed this agreement. John will talk more about Universal and our Universal relationship in a moment.