NCR Atleos (NATL) - 2025 Q1 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Q1 2025 and 2024, including operations, balance sheets, cash flows, and detailed notes Condensed Consolidated Statements of Operations Net income reached $16 million in Q1 2025, a turnaround from a $8 million net loss in Q1 2024, despite a 7% revenue decrease to $980 million Q1 2025 vs Q1 2024 Statement of Operations Highlights | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $980 | $1,050 | -7% | | Income from Operations | $96 | $72 | +33% | | Net Income (Loss) | $16 | $(8) | N/A | | Diluted EPS | $0.23 | $(0.11) | N/A | - The shift from net loss to net income was primarily due to improved operational efficiency and lower operating expenses, which decreased from $978 million to $884 million year-over-year[10] Condensed Consolidated Balance Sheets Total assets increased to $5.74 billion by March 31, 2025, from $5.55 billion at year-end 2024, with total liabilities rising to $5.46 billion Balance Sheet Summary | Metric | March 31, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $1,937 | $1,766 | | Total Assets | $5,739 | $5,552 | | Total Current Liabilities | $1,888 | $1,702 | | Long-term Borrowings | $2,833 | $2,855 | | Total Liabilities | $5,461 | $5,288 | | Total Stockholders' Equity | $278 | $264 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $123 million in Q1 2025, a decrease from $148 million in Q1 2024, with reduced cash used in financing activities Q1 2025 vs Q1 2024 Cash Flow Summary | Cash Flow Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $123 | $148 | | Net Cash used in Investing Activities | $(37) | $(31) | | Net Cash used in Financing Activities | $(49) | $(87) | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies and financial results, covering segment performance, debt, spin-off related commitments, and derivative instruments - The company completed its separation from NCR Corporation (now Voyix) on October 16, 2023, and now operates as an independent publicly-traded company[24] - As of March 31, 2025, the company had approximately $2.5 billion in remaining performance obligations, with about three-quarters expected to be recognized as revenue over the next 12 months[34] - The company shares liability with Voyix for certain environmental matters, including the Kalamazoo River site, and has accrued $18 million for these shared matters as of March 31, 2025[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial performance, strategic shift to ATMaaS, spin-off impacts, and macroeconomic challenges, noting a 9% Adjusted EBITDA increase despite a 7% revenue decline Overview Atleos, a financial technology company, focuses on self-directed banking solutions and is transitioning to a recurring revenue ATMaaS model while managing macroeconomic challenges - The company's strategic focus is on delivering ATMaaS to its customer base of banks and retailers, aiming to drive stable cash flow and shift to a highly recurring revenue model[137] - Atleos continues to be exposed to macroeconomic pressures such as higher interest rates, increased logistics costs, and foreign currency fluctuations[142] Results of Operations Q1 2025 total revenue decreased 7% to $980 million due to strategic shifts, yet gross margin improved to 24.0% and Adjusted EBITDA grew 9% to $175 million Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $980M | $1,050M | (7)% | | Recurring Revenue | $742M | $763M | (3)% | | Net Income (Loss) | $17M | $(8)M | 313% | | Adjusted EBITDA | $175M | $160M | 9% | - The Self-Service Banking segment saw a 1% revenue decrease but a 14% increase in Adjusted EBITDA, driven by growth in ATMaaS and software revenue[179][184] - The Network segment revenue decreased 4%, partly due to lower Bitcoin transaction volumes, while Adjusted EBITDA increased 2% from cost optimization[179][182][185] Financial Condition, Liquidity and Capital Resources As of March 31, 2025, the company held $352 million in cash and $2.97 billion in total debt, with $123 million net cash from operations for the quarter - Net cash provided by operating activities decreased by $25 million YoY to $123 million in Q1 2025, primarily due to the timing of cash payments and receipts[188] Liquidity Position as of March 31, 2025 | Metric | Amount (in millions) | | :--- | :--- | | Cash and Cash Equivalents | $352 | | Total Debt | $2,968 | | Revolver Borrowing Capacity | $336 | - Adjusted free cash flow was negative $23 million for Q1 2025, compared to positive $69 million in Q1 2024, largely due to changes in restricted cash settlement activity[200] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from foreign currency fluctuations across 40 currencies and interest rate changes impacting variable-rate debt and ATM vault cash rental expenses - A hypothetical 10% appreciation of the U.S. Dollar would increase the fair value of the company's hedge portfolio by $13 million as of March 31, 2025[208] - A hypothetical 100 basis point increase in variable interest rates would increase pre-tax interest expense by approximately $4 million for the quarter[209] - The same 100 basis point increase would raise ATM vault cash rental expense by approximately $10 million for the quarter, excluding the impact of interest rate swaps[210] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025[213] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[214] PART II. Other Information Item 1. Legal Proceedings Legal proceedings, including shared matters with Voyix post-separation, are incorporated by reference from Note 9, "Commitments and Contingencies," of the financial statements - Information regarding legal proceedings is detailed in Note 9 of the Notes to Condensed Consolidated Financial Statements[216] Item 1A. Risk Factors No material changes to risk factors have occurred since those disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K[217] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Common stock repurchases are subject to restrictions from the senior secured credit facility and notes indentures, and are at the Board's discretion - The company's ability to repurchase its common stock is restricted by its credit facility and senior notes indentures[218] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications, employment agreements, and iXBRL interactive data files - Exhibits filed include certifications pursuant to the Sarbanes-Oxley Act and various employment-related agreements[222]