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NCR reports strong first quarter as ATM orders from U.S. regional banks increase

The company reported a $1.1 billion order backlog at the end of the first quarter, up 13 percent year-over-year.

April 28, 2011

Saying the first-quarter’s results were a good start to 2011, Bill Nuti, chairman and CEO of NCR Corp., yesterday reported a net income on higher revenues as ATM orders from regional banks dramatically grew year-over-year.

For the three-month period ending March 31, NCR reported a first-quarter net income of $13 million or 6 cents per diluted share, compared with a net loss of $19 million or 12 cents per diluted share for the same three-month period last year. The company’s earnings per share beat Wall Street’s estimates of 2 cents per share.

The Duluth, Ga.-based manufacturer reported first-quarter revenues of $1.095 billion, up 6 percent compared with $1.029 billion for the same three-month period last year. First quarter revenue in 2011 reflected a favorable impact of 2 percent as a result of foreign currency translation.

“Our first quarter results reflect good execution by the NCR team and give us incremental confidence to raise guidance for 2011,” said Nuti. “Our core industries generated solid order and revenue growth driven by our global-market leadership in the financial services, strong demand for our retail self-checkout solutions and growth services.”

Revenues from Financial Services in the quarter were $592 million, up 3 percent compared with $573 million for the same three-month period last year. 

During an analysts’ conference call, Nuti said there had been a 77 percent increase in ATM orders from regional banks compared with the same three-month period last year. “The regional bank market is coming back,” said Nuti, adding the increase in orders should continue for two years. At the end of that period, national banks, including Bank of America, JPMorgan Chase & Co. and Wells Fargo & Co., the first ones to deploy intelligent-deposit ATMs, will return to the ATM market to purchase the next phase of intelligent-deposit machines.

The world’s largest ATM manufacturer based on annual shipments, NCR also reported a 20 percent year-over-year increase in orders from Brazil, India, China, Middle East/Africa or the BICMEA countries, which are considered emerging markets. In January, NCR formed an Emerging Markets Group to promote sales in those areas. Nuti said sales and sales margins are growing in BICMEA countries because the company is offering new products with better prices.

He attributed the growth in ATM sales to the company's technology. Nuti noted the company's new SelfServ 16 ATM, a compact machine with the power of a larger ATM. NCR developed the SelfServ 16 with Cardtronics Inc., the nation’s largest non-bank owner of ATMs, for the off-premises market. Cardtronics, which is based in Houston, is an NCR valued-added reseller.

In addition, Nuti cited NCR's single-slot intelligent-deposit ATM module as boosting sales. NCR’s next-generation Scalable Deposit Module (SDM) technology enables consumers to deposit both cash and checks simultaneously through a single slot.

He also said its service delivery has generated customer loyalty and helped the company sign new business. The company reported a $1.1 billion order backlog at the end of the first quarter, up 13 percent year-over-year. “It is the strongest order backlog we have had in many, many years,” said Nuti adding that the backlog began growing in the fourth quarter and continued into the first and second quarters. The order backlog includes products other than ATMs.

NCR ended the quarter with $480 million in cash and cash equivalents compared with a cash balance of $496 million as of Dec. 31, 2010. NCR raised its income from operations guidance to $170 million to $185 million for the year from its previous guidance of $160 million to $180 million.

Gil B. Luria, an analyst with Wedbush Securities in Los Angeles, said, "NCR remains poised to exceed expectations as core ATM and retail businesses see accelerating growth in 2011. We believe that share gains may create upside to NCR’s top line as well as its gross margins.”

Luria is senior vice president of Equity Research, Computer Services and Financial Technology at Webush Securities.