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ATM manufacturer NCR posts profit on strong revenues

NCR Corp., the world's largest ATM manufacturer based on annual shipments, yesterday reported a 35 percent increase in second-quarter net income compared with the same three-month period last year.

July 22, 2010

NCR Corp., the world's largest ATM manufacturer based on annual shipments, yesterday reported a 35 percent increase in second-quarter net income compared with the same three-month period last year.

The Duluth, Ga.-based manufacturer recorded a $31 million profit for the three-month period ending June 30, compared with $23 million in 2009's second quarter. Income from continuing operations was $20 million, the same as last year's second quarter.

The company posted a 5 percent increase in revenues of $1.18 billion compared with $1.12 billion for the same period last year. NCR's revenues beat Wall Street's expectations of $1.16 billion. The company's earnings of 35 cents per share also exceeded investor predictions of 27 cents per share.

"I am proud of how the NCR team executed in the second quarter and the first half of 2010," Bill Nuti, chairman and CEO (pictured), said during an analyst's conference call. "While global economic conditions continue to appear sluggish, NCR posted good results in the second quarter."

Nuti added that second-quarter orders, revenue and non-pension operating income growth, coupled with improving margins and continued productivity, gave the company increased confidence in 2010.

NCR's ATM orders achieved their greatest success in Europe/Middle/Africa (EMEA), where they grew 20 percent year-over-year. "The growth was due to a higher volume of product sales to customers in financial services," NCR executives said.

Gil B. Luria, an analyst with Wedbush Securities in Los Angeles, said there was strong ATM demand in Eastern Europe, Middle East and Africa because the economic crisis in that part of the world has not been as severe.

Overall revenue in EMEA was up 10 percent year-over-year which included equipment sales to the hospitality and retail industries. EMEA reported second-quarter revenues of $421 million compared with $384 million in the second quarter of 2009.

In Asia Pacific/Japan, NCR reported ATM orders in the "mid-teens" compared with a year earlier.The company reported declines in orders to the financial services industry, which executives attributed to "seasoning." Asia-Pacific-Japan reported overall revenues of $241 million in the second-quarter, up 2.5 percent compared with $235 million in last year's second quarter.

ATM orders in the Americas were in the low single digits due to lower volumes of products and services to customers in the financial-services industry. Overall revenue for the Americas was $515 million, up 1.9 percent compared with $505 million in 2009's second quarter.

There was, however, good news this quarter. NCR reported a large rollout of intelligent deposit ATMs to an unnamed regional bank. NCR will place several hundred SelfServ 32, 34, 38 ATMs with APTRA Edge and APTRA Edge software with the financial institution.

Challenges, however, remain for NCR, Luria said.

"There were signs of improvement, but the results were mixed," he said. "There was a decline in Asia Pacific, and the Americas were flat, excluding currency adjustments. [NCR] also did not adjust their guidance," a sign revenue improvement will be slow. NCR maintained a 2010 revenue guidance of 2 percent to 5 percent growth in constant currency. The company changed its 2010 guidance for income from operations to $83 million to $103 million for the year compared with a previous guidance of $90 million to $110 million.

NCR reported overall product revenue for the second quarter of $587 million, up 8.7 percent compared with $540 million in 2009's second quarter. Revenues from services were $590 million, up 1 percent compared $584 million for the same three-month period last year.

NCR ended the second quarter with $447 million in cash and cash equivalents, a $39 million increase from the $408 million balance as of March 31. The company's stock price closed Thursday at $13.17 on the New York Stock Exchange.