NCR Corp. (NCR) Tops Q4 EPS by 5c, Beats on Revenues; Offers FY18 EPS Mid-Point Guidance Below Consensus
NCR Corp. (NYSE: NCR) reported Q4 EPS of $0.92, $0.05 better than the analyst estimate of $0.87. Revenue for the quarter came in at $1.78 billion versus the consensus estimate of $1.75 billion.
- Revenue of $1.78 billion, at the high end of previously provided guidance
- Software revenue up 1% driven by cloud revenue growth of 6%; Full year net ACV of $67 million, up 46% from $46 million in the prior year
- GAAP diluted EPS of $(0.38), includes $130 million non-cash charge related to US tax reform; Non-GAAP diluted EPS of $0.92, at the high end of previously provided guidance
- Services gross margin expansion of 280 basis points
- Full year cash flow from operations of $755 million, and free cash flow of $453 million, both within previously provided guidance
- $300 million share repurchase planned for 2018 with $125 million completed to date
- 2018 guidance announced
Full Year 2018 Outlook
In 2018, our revenue growth is expected to be 0% to 3%. Our GAAP diluted earnings per share is expected to be $2.08 to $2.48, and our non-GAAP diluted earnings per share is expected to be $3.30 to $3.45. Our non-GAAP diluted earnings per share guidance assumes an effective tax rate of 24% for 2018 compared to 25% in 2017. The decrease is due to the expected impact of U.S. tax reform. Free cash flow is expected to be approximately 90% of non-GAAP net income.
To accelerate our transformation journey, we are evaluating programs to prioritize driving sustainable margin improvement in our hardware and services segments targeted at driving higher productivity, process efficiency, and, using technology as an enabler. As we finalize these programs, NCR expects to incur a related pre-tax charge over the next two years in the range of approximately $200 million to $250 million, with $100 million to $150 million in 2018, that will be included in income from operations. The cash impact of the restructuring plan is expected to be approximately $150 million to $200 million over the next two years, with $100 million in 2018. We plan to achieve run-rate savings of approximately $150 million per year by 2020. The estimate of the pre-tax charges and cash impact has been included in our 2018 GAAP diluted earnings per share and free cash flow guidance.
Q1 2018 Outlook
For the first quarter of 2018, revenue growth is expected to be down 1% to up 2%, GAAP diluted earnings per share is expected to be $0.16 to $0.29, and non-GAAP diluted earnings per share is expected to be $0.41 to $0.47.
NCR will provide additional information regarding its first quarter and full year 2018 guidance during its fourth quarter earnings conference call and webcast.
NCR Corp. sees FY2018 EPS of $3.30-$3.45, versus the consensus of $3.34.
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