NCR Corporation’s (NCR) first quarter loss per share of 10 cents exceeded the Zacks Consensus Estimate loss of 8 cents.

Revenue

NCR reported revenue of $1.03 billion in the first quarter, an increase of 2.0% from $1.00 billion in the year-ago quarter. This includes a benefit of five percentage points from foreign currency translation. Year-over-year revenue growth benefited from improving global economic conditions, which had a positive impact on the global financial services, retail and hospitality industries in the last quarter.
 
The company reports results according to the various geographic segments. Accordingly, the Americas reported revenues of $464.0 million, an increase of 1.0% from the year-ago quarter. This increase was fueled by higher spending on entertainment, which had suffered on account of the recession.

In the Europe Middle East Africa (EMEA) region, revenues were $363.0 million, a decrease of 6.0% from the year-ago quarter. The decrease in revenue was primarily driven by weakness at customers belonging to the financial services sector.

The Asia-Pacific and Japan (APJ) region reported revenues of $202.0 million, an increase of 24.0% from the year-ago quarter, attributable to higher sales in both the financial services and retail industries.

Operating Results

The GAAP gross margin for the quarter was 21.5%, versus 20.3% in the year-ago quarter. Gross margin was positively impacted by the strict cost control measures implemented by the company, as a result of which cost of sales remained almost flat on a year-over-year basis.

Loss from operations was $18.0 million in the first quarter of 2010, which included $56.0 million of pension expense and $5.0 million of cost incurred in connection with headquarters relocation. This compares to $10.0 million of loss from operations in the first quarter of 2009, which included $38.0 million of pension expense.

Excluding these items and pension expense, non-GAAP income from operations increased to $43.0 million in the first quarter of 2010 compared to $28.0 million in the first quarter of 2009. This translates to non-GAAP operating margin of 4.2% for the quarter, a significant improvement from 2.8% reported in the year-ago quarter.

First quarter net loss attributable to NCR was $19.0 million or $0.12 per diluted share versus a net loss of $15.0 million or $0.09 per diluted share in the year-ago quarter. This included $5.0 million of cost related to the relocation of the company’s headquarter. Excluding this item, the non-GAAP loss per diluted share was $0.10 versus $0.09 per diluted share in the year-ago quarter.

Balance Sheet

NCR generated $14.0 million of cash from operating activities during the first quarter of 2010 compared to $38.0 million in the year-ago period. Capital expenditures were $51.0 million in the first quarter of 2010, up from $25.0 million in the year-ago period.

NCR generated $37.0 million of free cash flow (cash from operations less capital expenditures) in the first quarter of 2010, compared to free cash flow of $13.0 million in the first quarter of 2009. NCR ended the first quarter with $408.0 million in cash and cash equivalents, down $43.0 million from the $408.0 million in the previous quarter.

Guidance

Management expects its full-year 2010 revenue increase to be up 2.0% to 5.0% on a constant currency basis from 2009 levels. This apart, the company expects GAAP income from operations in the range of $90.0 million to $110.0 million, down from its previous guidance of $95.0 to $115.0 million, and non-GAAP operating income in the range of $310.0 million to $330.0 million, unchanged from the prior guidance.

The company reiterated its earnings guidance. Consequently, diluted EPS (GAAP) is expected to remain in the range of$0.39 to $0.49, down from $0.41 to $0.51 and non-GAAP EPS in the range of $1.35 to $1.45, same as its previous guidance.
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