DBD - Earnings call transcript Q2 2018 | Diebold Nixdorf, Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the Diebold Nixdorf Q2 2018 Earnings Call. At this time, I would like to turn the conference over to Mr. Steve Virostek. Please go ahead, sir.

Stephen A. Virostek

Thank you, Carla, and welcome to Diebold Nixdorf's second quarter earnings call for 2018.

the and Gerrard Officer. Chris on Chief President today Officer; Executive Chapman, me call Schmid, are and Joining Chief Financial

information your include assessing webcast the on we that and that certain in slides that we these non-GAAP supplemental of there posted helpful that we cause our slide directly slide the will which of could benefit, X, its comparable our On of to replay today, non-GAAP same For and results of our IR actual statements, everyone to remind a discussion comments from On our each are number reconciled dieboldnixdorf.com. to may Later remainder slides the are differ schedules X, Investor company's comments have the performance. accompany available we financial materially a post metric. will Relations GAAP to be In page slides, believe characterized these are we've factors metric most forward-looking we've statements. website. as

may of additional to I'll to information like the this the SEC today in company's on as forward-looking subsequent factors Gerrard. out now, call is these I'd of and events find listeners information current remind filings. information date. our also And may that over render hand You

Gerrard B. Schmid

and firstly, plans, an net expected impacting our topics: and voice designed already XXXX impacting leverage, main this for overview morning, than I to remarks in are and improve our the from of are customer-centric the relationships. ways joining customer flu including we in action be encompass line speaking parts discuss On you well the significant number I for business, our second, and of thank different which United and our performance, my joined proposition, we're three summer Banking quarter, and my Good while costs apologize our slide second Canada, morning. value the from in a everyone, I've States, world, both several customer underway, enhancing with France make our but third, Kingdom, can Nixdorf which profitability more X, to visits in to of time outlook; February, Singapore. conducting higher our Mexico, call. our Diebold upfront revenue the changes efficient. customers and Guys, today the customers; we United My feedback summarize Since spent feedback employees, of

ATM opinion customer to of Many channel understand While there as agreement there is cost touchpoint group who customer to are important of business. to the will differences better ATM ATMs Others role views the be it as the of an changing foreseeable for continue asset. regarding a a channel, long-term few view future. broad the that a strategic there is a leverage And doing seeking channel behavior. necessary third are this highly customers

Retail firsthand held also can the to detailed our value them discussions I with customers front, we how what On they serve and better. European hear

which includes strategy, Diebold Although, to across experience, resounding apps, valuable and locations. branded is The my the were in technology store all investing Nixdorf them a a relevant partner. slightly technology that end-to-end solutions is physical different each had of mobile support meetings and virtually websites, customer all of impression

always there's room However, we better. believe to do

$X.X with revenue. three-year home the and bank, Retail, XXX managed RFPs Moving Windows evidence quarter In stores. the second $XX received upgrades experience to regional U.S. continuing are major of customer standardize for four from WinXX a services French digitize company million across a in a received momentum. We and from sizable that a America, contract orders to our were slide signed including million we other X, in was In I'll U.S. improvement about Product ATMs orders, results. new XX order there quarter discuss gathering regionals. North with line

Although, versus recent total currency, quarters. constant is in stabilizing X% down year-on-year it was revenue

in the the are generated reasons take segment. incurred chain. our outlook to through, by second disappointing expectations will our of result and delays as for well commentary. into and approximately work Banking are that billion. our clear Retail ATM for his some is narrowing million Profits quite driving costs as more are higher impacted were our It operational a business. of from become billion These quarterly costs modest or on temporary, the which has extent, to sales. in Based higher costs details encouraged longer are are in supply XXXX others non-GAAP segments, to Americas about We Chris we lesser why in company revenue shipping experiencing get our in the me $X.X Banking $X.X our the while revenue $X costs, higher service revising quarter in the profit XXXX. outlook operating of matters in growth performance, higher main to profits We're below quarter orders we and and our and a the will complexity

the reflect two structure as companies, well legacy As of it is as the attributes our product lines. prior call, the because our of inherent the I cost on breadth complexity inefficient, mentioned continues in to

customer DN our to and this discuss relationships. decisively. in few taking net our minutes, next act branded steps leverage, commitment Over I'll intent Now and while minimize enhancing improve emphasize the to business, program We've profitability complexity the to our we're our

started our model. X, in and on slide well customer-centric and a and organization new workforce with model. across global differences implementing are are this prior April, operating towards driving consistency are the demand. market between new On way we work model see the streamlined significant aligning the matrix we you'll customer-centric we Having First, our

the result rate approximately total $XX of by realized are that first with Decisions will our million. quarter balance to XXXX, quarter program around generate far $XXX of end third thus We of cost by XXXX. savings expect in expected the run savings the million be of to of made

have streamline our to steps taken chain, portfolio. our ATM inventories Second, to our product optimize and decisive simplify supply we

will exit The told we increase profits reduced globally. times, sales focus our and which cash expected We These efforts initiatives sacrificing operating as been fewer to in and we were all with on chain, choice. is order both, plans will both quarter, you with XXXX highest already communicated as our business major lead models lines sales the and well XX% scrutinizing simplify business shorter benefit help have Last and force customer without actions flow. in supply impact. to geographies to our and complexity

approximately collectively used of moving forward are our to structure. for We X% account revenues. enhance XX% divest noncore capital businesses, will which be to with to plans Proceeds

not we however, our our communicate as reasons, we'll comment on to For portfolio progress activities plans, specific conclusion. competitive optimization a will bring we

DN the includes are over Now to moving other materially In we our margin consistent next to to a by the designed large implement service firm margins, customer business implement to benefits In the services from three completed we simultaneously across over which service we to are robust quarter, starting of set let our levels. essential years. to expected These execution. the important steps are actions while addition a services global underway, initiatives mature we're operations. step consulting a actions enhance KPIs The is increase and several scale improving global taking and business, In drive our to actions planning services taking our program already profit quarters. will are sequentially to diagnostic,

over expect our the our report. disclosed having can chain our You to directly earnings by delays, next more To seeing suppliers hear to previously key the are including continue about to drive while on we improvements our are critical work base. supply address And we actions with personnel diversification few on next site. months, to continuing availability, this we in the area of component supplier improvements

we core infrastructure platforms, is and productivity On the to tools. and investing activity for expected application in number IT of This rationalizing front, continue quarters. are

deliver we global in leader customers. in making transacting convenient innovative the are of our cloud-based ways to commerce, business and in for investing more and next-generation As software offerings. product We're investments capabilities connected R&D

our of leveraging our to are we architecture to our the distribution broaden and offerings customers. open Additionally, scale

and ACTVX higher of plans performance, can better a further additional our the innovative these well partnerships is to As transactions. us goal and drive an differentiate integrate future, announce partnerships and and Mastercard our heightened Chris, diverse global solutions physical am Nixdorf. our employee and have who the operational town expect benefits more all build service leadership outlook. that quarter further the At and digital In the which is alignments during pleased our technology we and leverage you discuss as of to we to example, across profits. were increase locations with organization, consistent will which X,XXX more distribution. as communications. Underpinning together to attended geographic the our as To will over the QX the I than team in this we work internal by segments, of financials, a new our hosted The call employees. high to Diebold point, halls breadth I'll dozen turn XXXX frequency engagement announced

Christopher A. Chapman

good Thanks, Gerrard, morning, and everyone.

comments my today non-GAAP usual, results noted. will on unless focus otherwise As our

interact We've Banking about revenue XX% segment, largest Retail solutions. for was Banking generated customer-centric these are how the operating Americas new customers, reportable we segments our deeper our Retail. accounting over are changes X. and summarized quarter, out just delivering of model, we slide As roll to the while is the segments on on changing new with Banking we operating integrated the XX% in and Eurasia more focus aligned These with XX%.

Our in currency more decreased has total changed revenue Americas and Banking growth also products. you by slide was non-GAAP Eurasia On on reporting and can a secondary X% basis declines as software Retail. and see services Banking in to offset the than X, constant

revenue quarter Foreign impacted strength basis reflecting currency the in of XXX favorably euro. the the by points around

due the for and as up and business coming the nearly the flat in currency constant total in versus in mix revenue down XX% to product. Banking was was approximately X%. of balance by constant in the Services from the primarily two-thirds compare revenue and Looking Banking of volumes software prior year revenue the accounted software Product a quarter and was services for revenue Retail. currency, line, difficult lower was Retail with quarter, unchanged at

with revenue due I'll the variances XX% Banking. service discuss corresponding was primarily underperforming due operating basis constant lost year-over-year trend large product in and pronounced by expenses. after encouraging constant and several volumes second is growth of quarters revenue in installation for which contract a Pacific. year Eurasia in to Operating profit XX, volume currency this software as an currency segment unfavorable mix product million versus the activities. profit a currency than customer constant X% declined Americas quarter slide year-on-year in $XX to more Revenue XX and Banking to year-on-year declined the in due Slide X% this more declined our revenue offset on provides XX% of service segment. of improvements for prior Revenue to the software Services India. Moving highlights being lower lower Asia operating declines. Product well for down we as

quarter, second Operating profit partially prior this services revenue growth volumes by volume cost Product the year, accounts by declined of we North in million led due higher by America. from higher service America. software to and North lower During versus generated the in national Brazil, was $XX from product X% impacted for segment primarily offset sales.

due in markets incurred chain labor efficiency decline higher customer operation, freight in of resulting supply adversely some order impacted While higher shipping schedules. quarter, product attributable during anticipated our Also Brazil larger plans, costs from costs. sales in was our from cost realization meet and service than to our combination part our delivery mitigate a and seen is costs the of of we've slower costs of delays by increased the discrete and to expedited commodity

Partially installations was second of profit revenue currency identified and product compare ordering in majority XX, volumes large the as projects growth part to slide in higher Benelux, X% quarter was constant Product Retail decline declined initial in declined the by down North noncore of quick-serve Operating at in food lower in the to the in assets as prior-year $XX divestiture. volumes decline prior a the versus in from period. being difficult well Moving million were services Germany that are in quarter volume and offset subscale A France on the for product software. due kiosks global businesses and the America. as of year. quarter evaluated franchises the restaurant offsetting

the of higher in combined R&D spend. an In expenses also expansion unfavorable operating had projects increased investments mix software we from with Americas and addition,

points and basis to the quarter XX, Turning previously margin sales to with XXX gross the slide costs by in outlined. higher combined cost of reflecting higher lower freight XX.X% declined product the service volume

was down a from benefits the improve ongoing negative of basis, million. actions cost reflecting $X Our year-over-year, million of operating on is $XX expense an continues inclusive of absolute currency to impact and our which

one Operating of the versus a quarter our $X the reflecting quarter, during for primarily mark-to-market adjusted $X million programs. were $XX million EBITDA we second compensation described prior had of trends million and the benefit of Additionally, gross from above. profit down year, the profit

was Turning expense restructuring purchase to per loss expenses slide $X.XX of $X.XX. to year-to-date impairment charge. reporting items tax effective and required $X.XX non-routine $X.XX effective Impairment for a restructuring relating accounting expense XX% testing non-GAAP $X.XX of of noncash in XX, our and and $X.XX rate tax following segments. for goodwill rate change impact non-routine was discussed adjustments, was and from XX%. our the The previously the a share from was and the tax excludes non-GAAP our the reflecting of quarter $X.XX, to integration consisted activities, Non-routine price quarter non-GAAP

early quarter, collections to saw $X XX. by efficiency, working from biggest of a as prior shown and to cash with we days yield a million, second on capital six better for our quarter working improving DSO ago on the team our capital is signs reported performance the and The gains our activity sustainable second respect additional use initiatives improvement offset in the GAAP by we to earnings, and the in underway remains and are opportunity capital of focused million versus improvements our on number DIO. Inventory driving year. success slide expenditures. free improvements leadership of continued $XXX collections During year of was an Lower reduced

tight our net Looking approximately liquidity $X.X on our from and the $XXX of access With leverage our cash we as of and at had hand billion, had approximately of the end $XXX debt our information, million following quarter, leverage approximate EBITDA items being adjusted to slower expectations credit of specifically with is to million bridges of cost than impacting labor realization million facility. our around pressures, $XX in is chain; with times labor costs of to ratio Slide higher presented an being Now the expected service full the basis: anticipated XX due inflationary material remaining and the impacted year adjusted by our due a for change, mix plans trailing recaps related actions. increase efficiency the our of our changes on EBITDA outlook amount X.X to adjusted a market; On DN the our revised million impacting from an one-off million $XX our million our supply costs in volume based EBITDA. on and and temporarily revenue. revised XX-month and $XX in sales impact $XX nature, to basis, approximately

million. result, outlook to a a now million EBITDA for of XXXX range adjusted As $XXX is $XXX

a While of our to and we end, To to mitigate is our number Now improve we while change customer way and relationships. it DN end profitability are freight a the to operate. designed service the by executing under is program we leverage, initiatives portion enhancing expect costs of this more needed of the clear on costs net the year, the action that the higher fundamentally

deliver We this operating Included excess our of in based savings be over program improvement new million cost model. next expect a cost current on from $XXX $X.X million $XXX to base. to is billion realized in the year our of

in the stabilizing our IT a Additionally, launching platforms. more we including: new, simplifying and services new other environment improvement expect product supply from savings product meaningful our strengthening plan, ATM portfolio, initiatives cost-effective chain, investing

of these calls. savings and $XXX generate initiatives details we'll over expect further on provide We will million additional future

range. from the includes million on to intangible around and to includes bottom backlog $X.X revenue of million, $XXX share-based expect prior a The $XX million is XX, the expense, expects end based is impact around first from integration expense. charges be of depreciation second goodwill is which on approximately model amortization the of expected of asset range billion, which expense the XXXX expected the in X% which operating currency the and slide amortization, X% activity mentioned of at amounts: we our year for we year, current to call. $XX order a of million Turning $XXX the and $XXX now of half quarter benefit, the approximate The down the as $XXX earnings GAAP impairment million million $XXX compensation, following of million restructuring which for million additional company charge, separations, net a $XX expect for our loss

tax we All profit of be from as range cash activities. capital will be a our year $XXX expect changes adjusted well the impacted in to to resulted flow full cost provide result expenditures full of outlined higher effective outlook. our offset by coupled are expense, expected a range earnings interest per during the outlook for As modest year. non-GAAP expect our the the with share payments to working to our of in, The for the and of year. now to Free volume, the outlook, the use full million providing for the revised of expected $XXX Efforts in decision to million to the expectation around year. $XXX as cash our million previously variability and and practice improve free DN be of XXXX year we reductions our EBITDA our Now in capital suspend severance

covenants, are trailing meet in not XX-month company our that currently we in as by that future While to there revised covenant facility defined a maintenance EBITDA outlook our net credit may agreement. the our periods compliance with its financial is potential debt indicates

accordingly. closing the comments. you to and back We amendment in address for constructive regarding will and With that, hand have some coming are update resolution Gerrard a engaged to this anticipate dialogue call the We concern. an in our lenders I'll we principal weeks

Gerrard B. Schmid

key points I'd Chris. XX. like Thank In few slide a on you, to closing, emphasize

growth and revenue including indications stability, First, pleased return segment see to growth. we services seeing and are we're in of to Americas particularly the software, Banking

we're with pace of our are operational actions matters purpose DN to These and not our Second, sense address our a profitability actions Now program. and improve customer through satisfied leverage, performance with costs under a to number and enhancing relationships. and designed our moving are our net while of

in anticipate expenses on and front. right further direction Third, progress operating we are our moving this the

marketplace Looking our partnerships. and in future, innovative the expect investments R&D differentiation sustain the we to to by

valued Nixdorf that a is for and success our Our relationships the prospects supported deep are as by Diebold viewed customer fact partner.

We are with hand with businesses. the solutions future. our back the along call the me We I'll progress. talented to and this At customers our relationships employees a enabler of industry-leading questions. provide in and to forward facilitate key automate their These digitize how dedication confidence our operator look time, updating on you our our in to

Operator

you, Thank sir.

our now will go Davidson. first D.A. Please take ahead. from Matt We Summerville question from

Matt J. Summerville

Diebold's Two compression Thank there the points service you. organization. guess on first, merger? seen Where the margin basis business the fact Can that is how you've since so be remedied? is disturbing is questions, to quickly and pretty the or accountability of with of that this bread can And used I me. through be to the you this inefficiency now terms in that sort of talk XXX butter for riddled

Gerrard B. Schmid

Matt, question. thank morning, and your Good Yeah. for you

the services I units, we comments the is the frankly effectively quarter complexity which multiple we of with the quarter. me are for at day, reason day, the end distributed first operating the today. the globally in reason model frame my had fundamental At quite across think the end So, answer why second – of where let and I operating are our of the actions of made the backdrop

can therefore operating the the throat to completed services and therefore, have global that common KPIs around path single personnel our operating performance. we services under globally, former a our the very to And operating clear revised of operating our robust consolidate of key I performance all we globally its model One drive how proverbial single organization consistency diagnostic And have have now conversation strength. can a services a with I structure where improvements. return of can is on a under having tenets we

Matt J. Summerville

seek that credit as amendments is to my question, or either required credit through Chris, any agreement, waivers have could as you then your this, there And be issue on your way equity? you go process debtholders or follow-up by to to

Christopher A. Chapman

supportive going down of work the something that simplest not Obviously, along at to don't on the think we've stage I finalize I very contemplate. what equity we of a foresee being or path requirement specifics we're process with comment I'm amendment. that through. we'll path the lender group as head got on this is going them would and that an a to

Matt J. Summerville

Thank you. in queue. I'll get back

Operator

from comes question Please Paul from next go JPMorgan. Coster ahead. Our

Paul Coster

my taking for question. Thanks Yes.

is prices anyway, part you of costs. And nature side? can off, position since for just why side, is on us not product issue a in service the supply on a describe you wondering it higher of I'm had First to the constraints you're the it the it's the labor raise that labor-driven

Gerrard B. Schmid

Yeah.

adds let obviously a try So, driven product on to being is The chain. and our which me our Yeah. at supply factors. The time. two portfolio, one really factor take supply by vulnerability are one the those excessive chain issues some own complexity

that remediating range where the on inherently that actions the call, will our supply of stabilize which product are articulated substantially We the chain. ATM I we're the complexity reducing through

segments, segment, driver of seeing which not is key where accessibility there putting components other just multiple certain global are on demand the we ATM across is certain that are the components. electronic The pressure

having much possible. of to our managing key that a access with are products we supply as suppliers chain of ensure specialists by those number that our as on-premise We can

we to to that around pricing services every opportunity our standard we front leverage a continue front course robust improve pricing, the On and pricing have on actions offset pressure. look continue to why already. very That's don't labor simply a to of strategy at

Paul Coster

really talking in a service-led CEO the all it issue. here prior How sale? an and as we service-led and which company? still clearly describe service the about about you service-led company company is it now? software leads, picture sales then, what (XX:XX:XX), of the crown a and this terms still jewel business the would Is profitability elevated was Is and with hardware are really the company, And it. Got was

Gerrard B. Schmid

Yeah. Sure.

comments installed to very, therefore, confidence well there. And just a business. me Let both business margins ability of is few I'll as lot stable. our as remind everyone to that software our our grow a our base very have make services in I services continue

the the attributes remain So, possibly inherent will has we Diebold to software, capabilities leverage we I true services of past in to our continue made strong as where seeking what think on in Nixdorf efficient the can be while front. hardware both core and as

Paul Coster

got Okay, it.

last question, is if Sorry, first I the may. When one debt repayment scheduled?

Christopher A. Chapman

We have crossed just amortization that debt on our our due amounts Based or basis. of various those XXXX. and that line. until We've don't come mature semi-annual have all got that quarterly nominal payments full a lines on are we

an As we as said, looking with to accordingly way process processes through our finalize work and and lenders. our that seek update I we're those amendment we'll everyone

Paul Coster

Great. Thank much. you very

Operator

take next & our ahead. from from We Justin will question now Gabelli Bergner Company. go Please

Justin Laurence Bergner

morning. Good

Gerrard B. Schmid

Good morning, Justin.

Justin Laurence Bergner

if you North bridge global On in or the that then, on little a costs nature sort million if as really negative EBITDA service million the America-centric? more you are could $XX detail service the of one-time it costs? delta relates to And the service side, issues clarify beyond in provide possible $XX bit could of

Christopher A. Chapman

Yeah.

into cost, I'll – me break couple just the clear buckets a of let On it here. services

but well, with. larger deal Retail that highlighted of to of we've a where those issues level more that have through markets, standpoint, had some line we some discrete these describe, more up Retail That's a a and services are from subscale one. we of inflationary and seen pressures line. few North the a roll costs noncore more And market cost business, or being we've the lot the didn't in them and our one some lot cost as First, markets software of Brazil. of in as the issues we getting do also, in two, Number pressures our of inflationary addressed businesses impacted America and/or Western the in of performance we European one-off and services,

And that there. some so, you're of pressure seeing

one-time what large across two I latter on into we're really break that if And million those lot the a those labor. is additional items range seeing so, $XX it in I of the that described and pockets,

or the in If our cost cost simple pressure QX seeing level what increase our sequential way point we've $XXX through you off service on service at It's base, year. and that's numbers think and it point, the XXX roughly of run we're of of the XXX giving outlook. rate remainder in (XX:XX:XX) million fairly sequential basis basis overall some of of about operations QX outlined, overall the sales the for that all cost that change that's changed we've the around

Justin Laurence Bergner

just cost Maybe are service $XX seem it of also the service I makes execution or mainly you it. way mean, presented a inflation-driven that follow-up are is the Got there, negative it issues like part inflation execution-driven. more hitting issues than million Are there the that business?

Gerrard B. Schmid

trucks, then which you've sitting and part delivery overall with you where with. your of in balance. just It's dealing deal that everything absolutely your the fees secondary have is to parts on organization of cost, there, and costs the service is got a people you're you've I mean, the your else our biggest the part in got

looking the the And overall the there, be and deploy gains to in labor you to thoughtful you're people more be less efficiency network. terms obviously so, how able service on optimize side, of

And balance so, with trying you're to inflationary right improve these pressures. then dealing full get you're that SLAs, while to and trying

a So, Justin. a of bit balance there, it's

Justin Laurence Bergner

little other just other that to impacting one it like That's the of would million A more Okay, there the helpful. revenue get seems $X.X of What's be billion sort EBITDA clarity prior million bridge? midpoint and currency. question the billion, And $XX $X.X how $XX is bridge, sort of mix from on great. is the then, to of helpful.

Christopher A. Chapman

on versus where the for that some we've make we a taking view on to chain these previously. it's full the just literally not very sure overcommitting we've of also updated revenue Part pragmatic Yeah. at that what and to had disruptions sequencing were supply year of we're it's

end we're the QX. of So, moved backlog seeing expecting are finalizing sitting to quarter while we've address was the to flight a certifications bottom going back got these quite closer is that of to some already towards that loaded fairly solid to projects backlog, end And quarters in the that in on month fourth certifications now coming couple right a where reality and us these. every the first take is We've month they a of things XXXX the in of push, finalizing our we're what in just it it's range lot a than year. of that's we're half

with overall various just So, would expectations. the at perspective, and full Asia biggest the decision looking negative an I up of time. price weakness, probably a taking Americas slower things are other to the activity on that that But picking new based healthy going be the being for reset we quite where the the from have there be thoughtful segments areas, to areas order across deals to year most you across and we've period seen continue we've area see say activity, very very making, those the regional of specifically, from

pricing head one So, thoughtful as a direction only market we're take to continues from that very standpoint. trying to approach a in

Justin Laurence Bergner

Thank Okay. you.

Operator

from now go take next Autonomous Please Research. from Wildhack will our question We Rob ahead.

Robert Wildhack

sense are shoe us What the was some detail to when Hey, the goodwill there here. more trying impairment, guys. your Can And tests the for a on I'm impairment is another here? driver you just annual get just quarter? remind drop give in possibly to if

Christopher A. Chapman

goodwill legacy segments, to you go in whenever is this the impairment, done an the impairment through the the not change segments. new SEC requires segments, and Well, you

works impairment Understanding this that was where allocated was the there finalized that impairment, one fourth and in was those quarter, math we on of legacy been segments, we being the prior segments on had spread the just across we've in that, we'll the the significant Service work entering operating – $XX and we'll is and do and then time. two that. that combination, testing the AP done EMEA that amount to as we Software, fourth so, the how update an at not annual new and the overall that our a million the or having previously. goodwill was of being terms it other In quarter segments accordingly And did

Robert Wildhack

or software, one-time and and were drivers and looks services in is North growth Thanks. is some there like the had America that it Banking sustainable that Americas then, did And benefits? okay. Thanks. more What

Christopher A. Chapman

Yeah.

On nice talking the activity. about, we've been we've America – it seeing very has been side, order North as

national about regional we've very specifically We order side. so, can activity seen say up. is some revenue And the continues order on I backlog but we've and built a picking side, talk of the what build the the nice on to it

slightly to And ramp starting secondly, because contract the about quarters the be the we're activity of that good there. had about overall service very so, solid have and comps of we've I for talking feel with going and specific we as sustainability the actually very Americas, couple expanding next And that that the said a up, base. activity earlier, to to Gerrard

to revenue And so, activity, in hardware increase we're pull as the we going see see additional the installation through.

very the So, about specifically in into quarters. head Americas, activities, I feel we good several next the the as

Robert Wildhack

Thank it. you. Got

Operator

go Our next question Investors. comes from Gabelli GAMCO Mario from ahead. Please

Mario Joseph Gabelli

to about that? access much of ownership any, so the the two-thirds in the give market Wincor, office, covenants. I if tied €XX. I the slides. in covenants German quick is Wincor a and debt sales of you. any you to related How have economic other to debt Can I'm your interest that review us XXX, don't the of Thank out understand

Gerrard B. Schmid

No. The not are Mario. that, tied covenants to

you put, pressure look it the million were €XXX that. overall so obligations, €XX about not If tied to shares €XX, on covenants. at (XX:XX:XX), that X.X current tied full million obligation Obviously, outstanding structure have the we is our if situations and you amount got could talk that address have to to at full but to those around that, would to

Mario Joseph Gabelli

preferred the correct? Right. on our only of put, equivalent But the as you interest that about you that talk minority that's treat

Gerrard B. Schmid

correct. That's

Mario Joseph Gabelli

Okay.

question So, to we is that dollars paid then company. the XYZ second

today, it and of with at look associated dealt you about any were I care that If Wincor? one non-cash charges, but the questions with the they're of investment those just earlier not cosmetic, they're because impairment in

Christopher A. Chapman

goodwill that, tied of that have to correct. been majority goodwill A Yeah. spread tied that, that the would have would to been

have (XX:XX:XX). it would So, been

Mario Joseph Gabelli

Wincor. the Yeah. that an value question What is of I'm obviously economic it at getting next has

the sell can that – only And bidder no there's weren't have you that. portion You for debt. almost and

gather let's the closely question. one question the on back I but but been after has the pretty by operation? far just there previous management, sense so, corporate basis and to for a in level through Strategically integrated work that? fixing Wincor you've and the go U.S. your at from – So, previous become on along, comments it's take – got how is global up us

Gerrard B. Schmid

Mario, you that for thank Yeah. question.

So, to journey would we're well journey. at but the on I that end of say the day, a operationally we on are integrate,

operate, we there manufacturing one a from single that are manufacturing linked. is environment perspective, services tightly absolutely So,

actions, like DN the value. your our I We're $XXX along But taking ever drive other lines improve what always seeing about focused our should we're further momentum of good a is really accelerate We're to were broader instance on And we that to feeling very major of and line moment, profitability. structure that options give the At thoughtful top North million are program. we our Now will articulated So, capital that think to by the we'll alternative, on if credible of cost consideration. improve deleveraging take-out first the we it board in the America. any, clearly, encouraged strategic be the markets, we higher in that the consider company. consider extremely executing if question

Mario Joseph Gabelli

I'm have over thank Well, highway. I another and pulled because Take you to on you. catch Thank I'll a care. up time,

Gerrard B. Schmid

Thank you.

Christopher A. Chapman

Thanks, Mario.

Operator

now take Davidson. We will from Matt Please Summerville a ahead. question from D.A. follow-up go

Matt J. Summerville

that idea there? analogy, Germany, service leadership – to to you? does I Are question And of you the this want that I understanding, whole make to before. that your out running confident you're my organization? service strategic sense in didn't have on us or of guess up mean follow in My I don't Gerrard. telling to you throat use still one choke Hey, already

Gerrard B. Schmid

question, So, let unpack perhaps. me and try your

operating I earlier model didn't historical throat the said on, one As choke. give to me

strong While deeply services, matrixed leaders geographies in were we notional multiple a had there model. multiple a with country-led was head and particularly they of

making a team with single that operating structure centralized model, under a decision effectively the we was have Under So, distributed. new broadly single leadership structure.

be So, there. to able make I do a difference believe we'll

Germany. Your sense run it make that question out to does next business is of

have out global whether interface leadership run will very, global my operate it tell that of think right? We closely. it's that I States. should And the in not United we not with today. very employees We you or business, countries, team Germany forget Let's and is XX-plus a of a be services question I

with think forward. be we question able business I right drive expansion the this clearly, feeling services at is good But do pretty to point we I'm demonstrate forward. in need And going our leadership time. to about have this capability margin that the to

Matt J. Summerville

from like bring As structure company, be think you for think company the a now about this proficient A talking again Operating something organizational it point B Officer? in get being that point you Gerrard, that would savings needs of of the $XXX sense Chief about? million-ish the with a very organization feel a you Is to do Diebold to you're time strategically, to now makes cost

Gerrard B. Schmid

Yeah.

us your think question to onboard have do strength bench underway of activities I to effectively management we So, help the broader and to additional a have execute. is right number execute we personnel

the about stages our of I recruiting. example, the IT final We're are final leaders stages situation There recruiting the in key talked past. of an as other new in So, who're CIO. a in

to helpful one this specific we how don't think but specific me. I understand the I in and at strengthen organization, your comment around time, around it's So, in roles get with into capabilities execution do point broader a question particularly that leave

Matt J. Summerville

bigger your and global in of the some continue you're like ATM what follow-up. seeing Can XX in next you Asia as within see Brazil? really this demand-wise to out talk environment worse over can on you, XX developed is What better? months? view bring you get maybe And Got XX just before maybe is countries? I'd picture on maybe the And to just just EMEA one playing dig well? the it. gets What Chris, about – more Does how just it to also Windows

Christopher A. Chapman

process I also earlier. the a hinted do across starting there's in activity very to been nice you Latin certification activity the If across driving an and I just America, it's Yeah. Americas, see in be including come. at been there's we if strong went where we're a America, where large mean I fairly the very uptick finalizing public in and quarters there clearly getting with North counterclockwise activity, going of tenders for it – several that's in Brazil, little to and and bit some see I'll demand POs some

see to we robust that fairly So, side, activity. on continue

through X have given take and of refresh, any in cycles, the a the there's to one a WinXX have going Some is of it base installed million base, and step time, fleets. think there. them, million-plus various you natural just that's At out then X installed of age and piece you back refresh being say, point you're the still I just

a And you refresh. going continue activity so, to you're see where through

and You've of up from of typically security last cycle. lot in do automation enablement that the POS upgrades, related, standpoint, terms both the the got enablement, factors of the the technology moving and that Windows a where around refresh in banks XX other chain mobile

demand Pacific, the that and changes is there. We've So, strong Asia about pick in quarters. the Americas' Asia market. several continuing toughest exhaustively still I the go If see China I past activity to to Pacific the up over talked next and

very fully how approach very, changed. market seeing our really so, And difficult that there in competitors, they're say, market. lot a I in has ability to hardware handling as have situations And of would to irrational you're participate taken the price that an

would buckets. going neutral And maybe seeing And right somewhat it, there. I you're to so, refresh continued that's pressure would be and various Western call three Europe Europe, activity, now. into then, split I

there the up that's seen how from reasons pretty the some probably comments and good Eastern and are European in distribution that globe would there's Middle channels been view overall a Africa, add? from Gerrard, we've side, activity economic we've you little from that's and quick what and various seen bit my political maybe of But around want seen that. to softer driving things. a couple the I look at that on been at around the same our We seeing the there Americas. level pretty pick happy activity it And we're East with the large, lastly, activity by and we're and haven't then we've getting.

Gerrard B. Schmid

Matt, little color. me to build let more that bit just Yeah. add on

came quarter mentioned to Americas, in I a in really past of prepared major channel strategic lot the APAC, around relative the in other how to and As capital and in then the does I've two encouraged And relevancy world on priorities. that their understand I from remarks, the ATM try time of with drive EMEA dimensions. my away spent their them customers this expenditures

relationships, a backdrop, view all, encouraged regardless but that a relevant behaviors. the the necessary see that quite as channel. channel channel, future. cluster customer it of then, number also the relevant of invest of set it continue of aggressively First specific future. in asset albeit, as channel, in ATMs, being will of foreseeable customers major There's seeing all cautiously they customers cost watch very a there's health third of somewhat they that but And on of evolving invest to them that of remain doing another customers foreseeable customer continue but strategic business, that see for will also will of relevant for it is to the where as continue all Against there point see of their our the by a encouraged them, that's that to

So, we quarters think us, the interesting think forward. about as an I several going backdrop gives next that

Matt J. Summerville

Thanks, guys.

Operator

We ahead. will our now question JPMorgan. Coster take final from go from Paul Please

Paul Coster

follow-up. my taking for Thanks Yeah.

two actually. got I've So,

The in an inflationary we're first is one really, environment. clearly,

you're be extent which Sounds further you're so us where expense manufacturing And case? a where be sort you somewhat? SKUs, it give environment? obviously Is constrained done? power hardware Thank the competitive some outsourcing also it can of you it a you. any function Will like some make you somewhat. depict you will of seems side? but what to action variable manufacturing to it's If my the other taking business, rationalizing question it, then sense assert us is, Can that pricing of just the considering like in the good. to is, is the you're have it And for rationalizing it

Christopher A. Chapman

Yeah. Thanks, Paul.

pricing take a Gerrard view the as that. earlier, around we thoughtful side very On to have hit

performance question very our we've to into the you take about we we're as we renewals, go in help we've the market our sure across your have. to market And overall levels look it organization, midyear to up. handle go the and that the feel all the look forward, and good service plans you as this are sure addition footprint. that the thoughtful competitive most and that will our efficiency you the to marking on and be, important those around talked where make first and by you that with this go the mitigate into and that say SLAs very at make of landscape got need taking that second your seen where are about in improving is at appropriate hard conversations, think is global at would Gerrard momentum we of a performance good forward-looking, we're But on improving and two, levels actions overall the overall be in component where to these to side, to Then performance. the I as clearly, the investing in and side. I they pricing various markets pressures manufacturing past our overall number offset got seeing and the continue very of where some

Gerrard B. Schmid

Right.

it's that important as range So, does product to rightly and think being simplify by models, the impact rationalization first choice. the product XXXX you our customer exiting focus out, pointed that is XX% not fewer I with today

a perspective, across of the we've clearly, and From analyses Americas, China. today that manufacturer done lot on major So, our a front. is Germany manufacturing detailed spread

our a our and we manufacturing shut of footprint. continued number evolve down year, rationalize to footprint. continued factories have we've to Last We

broader should Moving or outsourcing. around to would we we more question your consider aggressive

we ongoing we always remember to for is already the effectively our us. manufacturing. that products our have the think the an to rather evolving business I to assembly where than journey assembly But manufacturing lot important the final of quality to ship company ensure maintain in it's is appropriate that customers. and final-stage of A it's control outsourced,

What plants, different look load take balancing launch down labor efficient across do We always most rates, products. to you doing and markets manufacturing will different path the our of and will to ways continue continue different across for we is advantage accordingly. see that us

Paul Coster

you. Thank

Operator

gentlemen... and Ladies

Stephen A. Virostek

quarter like I'd joining to for today's thank for call. second earnings us Okay. everyone

you is If have follow-up e-mail website. and reach please the press much. the you via very questions, on on Thank address my which me release

Operator

now and all your Ladies participation this gentlemen, for Thank conference today's call. concludes you today.

You may now disconnect.

Diebold Nixdorf (DBD) 1 Aug 182018 Q2 Earnings call transcript