Good day and welcome to the NCR Corporation Second Quarter Fiscal Year 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Gavin Bell, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon, and thank you for joining our second quarter 2016 earnings call. Joining me on the call today and offering opening remarks are Bill Nuti, Chairman and Chief Executive Officer; Bob Fishman, Chief Financial Officer; and Paul Langenbahn, Senior Vice President and President of Hospitality. Additionally, available on the call today for Q&A are Andy Heyman, Senior Vice President and President, Financial Services; and Michael Bayer, Senior Vice President and President, Retail Solutions. Our presentations and discussions today include forecasts and statements that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. While these statements reflect our current outlook, expectations and beliefs, they are subject to a number of risks and uncertainties that could cause actual results to vary materially. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our Annual Report to Stockholders. On today's call, we will be referring to presentation materials posted on our website. We will also be discussing certain non-GAAP financial information, such as free cash flow and results from operations excluding the impact of special items. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures and other information concerning such measures are included in the presentation materials and in our earnings release. These are also available on the Investor Relations section of NCR's website. A replay of the call will be available later today on our website, ncr.com. With that, I would like to turn the call over to Bill Nuti. [05FJTM-E Bill Nuti] I was pleased with Q2 results and where we landed at the halfway mark of 2016. Overall, Q2 results came in better than expected on the back of higher revenue driven by software and services. Bob will take you through…

Thank you, Bill. Slide four shows our financial highlights for Q2. Revenue was up 4% on an adjusted constant currency basis. We were very pleased with our revenue performance in the quarter, which came in $40 million over the top end of our guidance. This was driven by strong performance in Software and Services and continued momentum in our hardware business. Our recurring revenue now comprises 43% of our total revenue, up from 42% in Q2 2015. Looking at margins, Q2 non-GAAP gross margin was 28.7%, which was down 30 basis points. While Software margins were higher in the quarter, this did not offset the lower hardware margins. We continue to expect improvements in hardware margins as unit volumes increase and new product introductions ramp up in the back half of the year. We also expect Services gross margin improvement due to increased productivity and efficiency gains. Q2 non-GAAP EPS was $0.72, above the top end of our guidance range we previously provided, and increased 18% year-over-year constant currency. We were also pleased with free cash flow in the quarter, which improved $84 million from the first quarter. Free cash flow was lower than the prior year due to higher working capital required to support the back half revenue. Slide five shows our Q2 operational results on an as-reported and constant currency basis. Revenue was up 1% as reported and 4% on an adjusted constant currency basis. We are using an adjusted constant currency measure throughout these documents to show revenue growth on a constant currency basis and to reflect the sale of the Interactive Printer Solutions business in May of 2016. The IPS sale was substantially completed in May, with the remainder of the Middle East/Africa countries expected to close at the end of September. The Middle East/Africa IPS…

Thanks, Bob. I'll start with a brief update on the omni-channel market. As was highlighted during our Investor Day earlier this year and on our previous earnings call, the omni-channel market is an evolving high-growth segment. While leading this segment has driven NCR's strategy for over 10 years, the market for omni-channel is here and beginning to coalesce around three strategic offers: omni-channel Software, channel transformation and digital enablement. Omni-channel Software consists of platform Software and application solutions that seamlessly integrate physical and digital channels, while aggregating and integrating vast and often disaggregated enterprise data into insightful and actionable information for both consumers and employees. NCR has a powerful lineup of omni-channel Software and application offers for the financial services, retail, hospitality, venue and small business markets. You would be familiar with some of our offers, such as Retalix 10 and Retail ONE for retail, Customer Experience Platform, or CxP, for financial services, Aloha Enterprise for hospitality, and NCR Silver for small business. Channel Transformation consists of solutions that transform both physical and digital channels, driving increased productivity and revenue for the enterprise while modernizing consumer experiences across all channels. Like omni-channel Software, NCR has a fulsome lineup of offers in branch transformation for banking, store transformation for virtually every segment in retail, hospitality and venue transformation for restaurants and major venues, such as stadiums, and small business transformation, which allows small businesses to be on an even playing field with the capabilities traditionally afforded larger businesses. Digital enablement consists of solutions that drive the growing digitization movement, particularly in the areas of mobile enablement and physical-to-digital business processes. These offers address the needs of the rapidly changing consumer behavior we're all witnessing in the market, combined with improving efficiencies and lower cost for our customers by digitizing outdated, labor-intensive…

Thank you. We'll take our first question from Kartik Mehta with Northcoast Research Partners. Please go ahead.

Thank you. Good afternoon, Bob and Bill. Bill or Bob, I was hoping to get your thoughts on spending patterns in Europe, especially the UK, because of Brexit, we've heard so much. And I'm wondering if you've seen any changes or is it status quo at this point in time and what your expectations are. William R. Nuti - Chairman, President & Chief Executive Officer: Well, let me kick it off. Hello, Kartik. Number one, all of what we've said today vis-à-vis guidance is baked in in terms of our Brexit point of view. But let me ask Andy, Michael, and Paul for your views on Brexit. Andy?

Yeah, it's a good question, Kartik. And on June 22, we certainly all felt around the world the vote. Our outlook always – we have a big business at NCR; it's very diversified. There's always some good things going on and some challenges. And Brexit certainly is affecting how people are thinking about investments. We've got a conservative outlook for the back half. And I think time will tell how things settle out. I think in the short term, there's certainly caution that we've built into our outlook for the year. Medium term, we really hear two points of view. One that could be steady state and others that are more cautious. So that's how things are shaking out now. For us at NCR, we look at this as change is a good thing. It's an efficiency play. It's going to cause a tremendous amount of focus on driving cost out of the system. We have tools that help financial institutions do that. And we also think that it will help our Service business as we see financial institutions look to increase demand around outsourced models, which we think plays well into our strengths. William R. Nuti - Chairman, President & Chief Executive Officer: Michael?

Hi, Kartik.

Hi, Michael.

Yeah, from our point of view in retail, we've seen, of course, two weeks of retail customer spendings going down, but then it normalized. The projects we have in the pipeline and the customers we are working with are committed to go through the Store Transformation. And we are looking closely with our customers on forward-looking trends. But right now, we don't see an impact with our retailers in the UK so far.

And then just a follow-on to retail you were talking about, it seems like one of the drivers has been self-checkout. Based on what you're seeing in terms of backlog and other conversations you're having, how much of this do you think is a short-term anomaly? How much of this do you think it can continue at least for the next two, three years? William R. Nuti - Chairman, President & Chief Executive Officer: Hey, Michael, I'll kick it off and then hand it over to you. Couple of thoughts, Kartik. Number one, the entire channel transformation space in physical channels, be it branch, store, hospitality, or venue, is a long-term trend. And the overall penetration of self-service at the front end has really not even begun. So I think we're in a long-term trend in all markets, not just retail. But, Michael, go ahead.

Yeah, I would say our customers have decided to go with us on to a journey and the journey is not self-checkout as such; it's changing the checkout experience. It's self-checkout in different form factors. It's in-aisle mobile point-of-sale. It's employees with tablets in point-of-sale. So it's the whole checkout experience, including mobile applications, which the customers have on their smartphones. That is a journey of three, five, or five-plus years, depending where the customer is right now. And we are blessed to have customers who have given us the trust to participate in that journey with us. And this is shown in all markets around the globe. In addition to that, we have to remind ourselves that self-checkout is not available in all of the countries around the world. The majority of self-checkout might be conducted in 10-plus countries. And we are opening more and more countries as the labor cost and the labor availability in the big cities is getting an ongoing, is becoming an ongoing headache for our customers. We've taken a lot of share in Russia. We are going into Southeast Asia. And there are more to come also in Latin America, as those markets are opening and the labor costs are increasing.

And then just one final question, Bob, for you. As you talked about driving down the leverage ratio, which obviously you will be, I'm just wondering where your comfort level is and your thoughts on how you would use free cash flow going forward once you get to that point where you think the leverage ratio is appropriate for the company.

Yeah. For us, we've always said we'd like to say stay solid DD. Think of that as between 2.5 and 3 times leverage. In terms of capital allocation, it's not a whole lot different from what we had said at Investor Day. It's a very balanced strategy around return of capital to shareholders, small M&A and then net debt pay down.

Thank you very much. I appreciate it, Bob. William R. Nuti - Chairman, President & Chief Executive Officer: Thanks, Kartik.

Thank you.

And our next question is from Ian Zaffino with Oppenheimer. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): Yes, hi. This is Dan Natoli in for Ian. Thanks for giving me the opportunity to ask a question. As a follow-up, maybe you could give us an idea when you feel ATM hardware will turn positive, just given the numbers. William R. Nuti - Chairman, President & Chief Executive Officer: Yeah. ATM hardware revenues will turn positive in Q3. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): Q3, okay. William R. Nuti - Chairman, President & Chief Executive Officer: In the current quarter. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): Okay. William R. Nuti - Chairman, President & Chief Executive Officer: As well as Q4. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): Okay. Q3, Q4. Excellent. And then in terms of the SCO hardware? William R. Nuti - Chairman, President & Chief Executive Officer: Yes. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): How long do you see that growth? I mean, is that something that we could say is the foreseeable future or maybe just get a better outlook as to how the SCO hardware. William R. Nuti - Chairman, President & Chief Executive Officer: Yeah, I think the best way to say that is it's a long-term trend. I think the entire channel transformation space is a long-term trend. And not just in self-checkout, as Michael said earlier, but across every industry. Daniello Natoli - Oppenheimer & Co., Inc. (Broker): Okay. Excellent. That's very helpful. Thank you.

And next we'll hear from Matt Summerville with Alembic Global Advisors.

This is going to be the last one.

Thank you. A couple questions. First, in the past, you've been willing to quantify your backlog and its relative position versus prior periods. If you're able to do that, can you talk a little bit more about your backlog position entering into the second half of the year; where you're at with SaaS signings and Service file value as well? Any numerical metrics you can put around that would be helpful. William R. Nuti - Chairman, President & Chief Executive Officer: Yeah, overall backlog, Matt, is up low-double digits. And Hardware is up low-double digits as well. So, those are driven by Hardware. But I would tell you that Software is also up mid-single digits. So a very solid backlog position. And then file value, Bob?

It's up low single-digits. So overall, Matt, we're very pleased. We had very strong order performance in the second quarter that allowed us to continue to grow the backlog. So being up low-single digits, it's roughly 13% up going into the third quarter, Matt. So that's a really good number for us.

Yeah, this is Paul. One other metric that we'll start tracking on for you is net ACV growth, which is – think of it as sort of analogous to backlog for our cloud business. And that's another area where we've seen really solid growth in Q2 and year-to-date is in our net ACV position. So we're very happy with that as well.

Got it. And then just back on the ATM business, or financial services, I should say. Overall, is the inflection point you anticipate seeing on a year-over-year basis being driven by something industry related? And geographic comments would be helpful. Or is it more related to your launch of your next-generation product family? William R. Nuti - Chairman, President & Chief Executive Officer: Andy, why don't you take that?

Yeah, it's hard to separate those two things with it, Matt. And the way I think about it is the competitive landscape has changed drastically the last 12 months, for obvious reasons. And we've been investing significantly in the new launch. That launch to-date has only driven about hundreds of units in the first half. It will drive thousands of units in the second half. And so you'll see new demand that we've already signed contracts for that drives double-digit growth in the second half. Marginally, where you're going to see that volume is in the Americas and in Europe. And then we see that expanding as we look down into 2017. William R. Nuti - Chairman, President & Chief Executive Officer: Hey, Matt, to put a few numbers around that, our new ATM product family, the Series 80, we'll ship about 4,000 of them in the back half and we only shipped about 700 in the first half. So, it's a big difference.

Great. Thank you, guys, very much.

And as there are no further phone questions, we'll turn it over to Mr. Bill Nuti for closing remarks. William R. Nuti - Chairman, President & Chief Executive Officer: Well, thank you very much, folks. Take care. Have a good night.