DBD - Earnings call transcript Q1 2019 | Diebold Nixdorf, Incorporated

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Operator

Good day, and welcome to the Diebold Inc. Hosted First Quarter 2019 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Steve Virostek. [Ma’am] please go ahead.

Steve Virostek

welcome Nixdorf's and Call Quarter [Katy] XXXX. for you, to First Diebold Earnings Thank

on are Chief the and today me Joining call Officer; Jeff Chief Gerrard and Rutherford, Officer. our Financial Executive President Schmid,

remarks an On comments we’ve posted benefit, the will to also presentation, of which our Relations presentation metric For believe Slide of we today’s non-GAAP of have financial assessing our GAAP we on this that we each today’s your to Investor a slides, which afternoon, posted include is the comparable directly the Later be metric. information, reminder website. X non-GAAP replay will our most reconciled have of company's the supplemental slides, in accompany its helpful IR prepared audio performance. dieboldnixdorf.com. will page In schedules webcast

X, made comments differ and of Slide results cause that to forward-looking today there actual may we factors are inform participants statements statements. characterized a from number these as could that all certain Moving that materially be to

render date. You on hand of filings. that information call these SEC in company's in the keep events please of I’ll to Also, information information find subsequent may and is out current forward-looking additional today And risk as now factors may Gerrard. this the mind

Gerrard Schmid

XX upgrade biding in institutions Windows with opportunities. in customers nicely we WinXX year-over-year their orders the Belgium in Software and states. seeing our slightly, large including institutions win to The the QX of upgrade we’re demand sub-regions. United cash across three-year Diebold institution and States. orders of averaging quarter in constant services contract by with digitally and feet show to to more in entire I'm all X suite. On our devices, the XXXX. where with our orders Now with machines. for in A initiatives, million our X% priorities. to sustained during our I with DN capable everyone. more Keybanc pleased today union the execution agreement Total ATMs highlighted Vynamic software, for million am growth orders Key transform reiteration Windows with the $X in we’ve a first of Brazil. recyclers Americas quarter our DN’s to update X,XXX provide our versus supported strong results, delivered more financial which included a quarter company’s wins multi-year X, than than Overall, We ago. a performance. decreased join from Orders included financial trends top the one-year currency profitable institution in million very with major installation outlook morning, of pleased $XX Good for contract against Middle you was Africa. first wins success contract from Orders and declined to financial meaningfully maintained An discussion of the a ATMs different credit results. and we declined Nixdorf in on expanded services DN and X,XXX XX while to Midwestern sizes to a as an WindowsXX, indicates one financial Eurasia Important European number $XX focused increased Specific a customer modestly East Vynamic all-connect recyclers Asia Banking service and down renewed discipline with of our with Slide dynamic, teacher’s of top partnership This were than banking the

the to Poland, bank a institution. renewal new Bank than due to acceptance quarter world’s and recycling managed XX won Pekao financial largest valued In in top-tier a one multiyear and Connection five-year year-ago quarter, DN the slightly in strong more a cash agreement retailers card of in centralized to cash contract in the Halkbank Taiwanese declined deploy new services performance a Europe, a in with Turkey the fuel orders Secondly, provide Vynamic a at a over at platform. DN Retail XXX dispensers to contract win million and at Western convenience period. points with

professional ten maintenance includes European services stores and software located in for markets. Our licenses, contract

In contract XXX with and cooperative secured the contract. million X-year with we $XX French addition, supermarket an a systems retailers’ services self-checkout

by solutions good X.X% versus European experiencing constant company for excluding in approximately year our We’re growth countries. over top currency points the headwinds. our increased to one self-checkout Changing several ago, revenue, in line of X%

in in East, of Banking currency constant volume During in Europe, Americas and quarter. he growth discuss currency Middle and from declined Asia will XX% banking, The Africa. retail, X% In Eurasia X% Jeff’s comments, both constant currency. profitability delivered modest in revenue We the on impact lower from from the our and revenue growth reflecting growth

is Our from starting as the led in benefits basis we’re Gross quarter XX in improvement to point profitability improvement Now DN initiatives. XXX-basis in a basis margin products. XXX points and our expansion encouraging by realize expanded services points

costs, on $X and a by delivery accounting reflect expenses. Adjusted $XX changes. profits adjusted EBITDA our basis million million to our focus lower solution to streamlining increased increased $X year-over-year volume, margins and XX% mix, our XX of points EBITDA due margin to or X.X%. continued combination Our software increased higher year-over-year million, Operating by

on Moving flow. cash to

half more collections, tends managing and XX% or business the other year. cash cash our and As million uses, the inventory, improvement. cash to company year use prior cash payables, you to than during period in by the $XX generate year first use a the was versus reduce most of of know late able proactively Through our the

Slide to on Moving X.

costs, laid on [departed] our XXst, dates a reminder initiatives have for our Our simplifying to a X,XXX on to than recent momentum the are employees. largely our gross $XXX of few we model, through that have from these find upon the of through operations, is the Starting initiatives, new DN greater expand and focus XX% exist employees XXX like expected I time those of profitability March improvement more and customers. XXXX. Slide program the our of to flow operating million Now [indiscernible] year. cash remaining reducing enabling and with is savings X streamline from This initiatives. realization company year a of lines we out last by driven approximately and

As $XXX this million a savings by through and Equally important, will savings new and structure of XXXX about expect XXXX. organization. gross driving is accountability clarified our the in remainder, across as responsibilities, we million generate which $XXX initiative has roles increased

Second, manufacturing product we are and our portfolio simplifying ATM footprint.

cost relocated production locations successfully a in certain preparation we quarter, the the facilities. we’ve subscale up closing ATM and transition to stood products During lower for teams of few

business on Jeff month others. our by program me company assets, in minutes, in during Third, capital the for business we the retail administrative unprofitable serving initiatives cash a XX.X% cash-in-transit European customers. Netherlands down This year-ago first working I’ll finally, transit divested quarter financial to and and with more large quarter were I’ll net the approximately respect expenses progress discussing in will a longer business bit progress we a a good terminated net discuss the let few just these that percent we of Plan. customers first with in on and for period. to IT several our Slide Modernization our taking from ability our banking selling, spend divested consulting our based management is I’m our progress On liquidated make capital, One $XX originally in Europe, and in comment continue our demonstrated our as very with general to than of say reduction in but the a business improving Venezuela, a revenue Services XX% million. networking customers first respect quarter. X, moment. proceeds and reduce and service envisioned time to divesture to modernization And we encouraged noncore

which standardizing reporting contract which automating terms realize key enable and As upgrading other company older actions scale response, customer service benefits, and discussed calls. calls, on our hardware and generates typically earnings prior volume the our higher and to include incident software, processes,

prior three the we key earnings On progress. to track performance help metrics call, our introduced

remained is first the renewal trailing which XX% for service above target The our quarter. first a solidly metric rate, XX-month

segments. And year-over-year of financial importantly, the approximately the margin, is metric which most maintained Next points the increased services our in key we the is United base basis contract XXX,XXX several versus Germany, prior other gross which level, The at country both markets. XXX to and year. in UK, gains the The quarter ATMs, by banking Mexico, France, first drove improvements XX.X% notable in Canada, States, we made At

our gross fact, coupled The results In service our United just the with is quality from team encouraging. about for margin highly States level services quarter. the and was engagement in XX% strong service These our customers strong for

consolidating track different Moving to Slide have administrative we of we of company savings reduce we’re the further Analytics, a work company’s [XX our Using and a initiative progress Spend selling, spend early progress the our to streams Global using with sources have for from model described well-renowned within significantly and degrees our reducing general, parties. third this identified About expenses. and ownership level granular to procurement using five and leaders] at implementation. taken X,

to beginning office consolidate with we’re a on our estate under-utilized space. particular real focus Additionally, footprint

we seven plans close offices. quarter, announced first to leased the During European

telecommunication leaders the make quarter. incremental reduction we successfully functions streamline automation Also, more the across information implemented to States. of company’s in finance services our latter certain our This to and quarter, initial as United of global opportunities and of regions. to Our analysis increased costs storage spend, as as finance actions our cost first indicates that in well build during is shared greater momentum we our In XXXX during technology finance the have accounting. reduce we contracted all program expected part use the The organization,

collective rate fully savings our the run P&L. $XX future in expect to they SG&A quarter drive once We of of impact reflected first decisions about annualized are million

revenue of XXXX SG&A On and a expense a of metric. we’ll the XX% for target to as quarters performance slide, the half the XX%. our percent last key see of bottom five

unchanged the as revenue basis. company’s year-over-year on QX, of percent XX.X% a or During SG&A, was a

million not resulting and However, results and our share first execution against benefits expenses, few on factors headwinds are good metric Diebold team in in compensation XXXX, from they Nixdorf the to about the include of did points the versus quarter unfavorable this alignment there these entries the for $XX normalized year. priorities. summary, leadership Wincor were recur. linked basis and which the quarter prior our from XXX of Collectively, solid or items In which mark-to-market accounted demonstrate price options, first other a legacy working quarter

Now clearly of our actions XXXX, DN within for in expect value continue our million control, our of majority For gross we initiatives approximately confident we the will path savings. remain generate Since defined to are these $XXX creation.

As adjusted and Jeff. we I’ll reiterating free Jeff detail for EBITDA, cash hand outlook And our minutes. over in a for are flow, to will now, result, few which call revenue, XXXX a the

Jeff Rutherford

to good and morning Gerrard you, everyone. Thank

On at the against Slide and a Pound. today, currency will During our provides currency basis. Brazilian the focus comments and lines, that non-GAAP significant or segments due please the the unless headwind revenue million, on US prepared noted. constant table my $XX X, for quarter in mind nearly comparison my about and points X.X% to reported remarks the keep The Dollar otherwise year-over-year on as metrics the a foreign business both the strengthening of British Euro, the Real, was in

For Banking. X% this increased revenue provide currency adjusted the decline rates XX% X% Total by most believe growth currency a retail, in we the X% and in Eurasia growth led in Americas reason, in Banking, constant growth meaningful comparison.

the currency, business in growth and constant in increased to XX% banking retail at volumes. product Looking revenue lines, due

particularly X% revenue in contracts, to Our of is attributable our largely decline profitable on focus Eurasia. services more

prior the retail Software Europe. and of due management divestiture versus the business revenue in is program to down period, our activity, lower

service the from slides constant Our due in X% the gross quarter, product to from with Starting profit segment Significantly in decision countries four Asian first currency operating renew lower Number the margin X, to the modest on Eurasia with our region. next information. resolving to growth could revenue low focus Two, provide profitable expenses. one: our lower business. $XXX financial Slide increased maintenance due during product last to for from India. a margin Non-GAAP four, contract level million decline on lower volumes divestiture. three factors. Three, impact Banking $XX million $XX million, services, coupled quarter higher not for customers to and both in operating revenue a due year And EMEA of to in revenue

which Now of the can be attributed All DN initiatives.

to the and quarter was see product in On prior revenue the to currency led operating $X in by software currency segment profit $XXX headwind year. Americas the Banking increased you the growth. X, from versus approximately Foreign can million XX% constant Slide million strong

foreign XXXX. million which dynamics, impressive build Service chain increased an upgrades, in volume profit the a revenue quarter issues, Our revenue led year-on-year, base gross from more of from impacted of profit from the lower foreign product higher the $X basis from impact from to cash profit first primarily under-performance growth supply of resulting plan. than DN highlights as liquidation recyclers, than Non-GAAP XX. profit from than model, $XX $XX by million margins the savings. offset Revenue DN non-core on savings as We for resulting XX quarter improving portfolio due $X The for continued operating quarter, well profit, contract million benefitted million, our solution quarter Slide to XX XX.X% currency increased the and our different in a declined from modernization resolution our These Now factors primarily $X million mix. lower in margin new WindowsXX customer services to approximately first million and year-over-year metrics was and due XX% The primarily reduced ATM primarily in products decreased currency to services. offset due service the of work. software Operating business. modestly and and in million demand gains services headwinds the gross operating the These simplification, decreased product and to in due the million as our the to in $XX X% initiatives. inflation. due increased the Europe more the to $X year-over-year, of and decline in DN and constant Operating segment. points of declines currency of Now Americas approximately gross growth Non-GAAP services primarily retail business. in unfavorable more to and Slide expenses product provide mild gross software. cash-in-transit $XXX offset lower to factors Now comparison

by through expenses operating earlier with initiatives. million offsetting expense mentioned we lower of call. the headwinds, operating cost reductions million are segment effects the described which during approximately Gerrard DN comments, our was the the As also Now Removing driving favorable currency, foreign of $XX approximate $X the on

the As you increased and to our operating $X Operating $XX This right would minor moving the million the Adjusted to the subsidiary margin bottom does million, see were basis made this EBITDA to foreign to metrics XX impact EBITDA during expenses, corrections of from profit like margin XX to or adjusted direction. basis operating points by the are XX% expanded in half certain profit while which million amortization slide, EBITDA points quarter change calculate to could X.X%. used X.X%. I that cash increased by $XX free reporting mention company flow. profit adjusted increased to in XXXX. not

presentation. reconciliations You quarter XX each will find on revised for of GAAP this of non-GAAP XXXX Slide to

first in aggressively of XX-month quarter Moving of to this year-ago manage to trailing Slide reduced continue percentage and XX, to capital our the period XX% working we XX.X% the net in as sales investment a we from metric XXXX.

better improved inventory payment processes, due Our to management. progress and is collections,

combination. the collections year the In best since to first the start fact, quarter our represent

Our interest working quarter year the key $XX free net lower partially why company period. was were able to its in cash improvement and reason contributing CapEx, payments. flow reduce higher versus by million EBITDA capital and modestly higher adjusted factors was restructuring the by prior the use Other offset a

for covenant maturities. below right we ratio slide, the a our million liquidity our time XX-month position provide at our line of XX, approximately times, side March a full-term side trailing of illustrate the is net XXXX. debt to billion, we of Slide net On $X.X which To adjusted and was more left our debt of bank With cash of X.X $XXX debt maximum. end EBITDA than the

in meaningful for Slide revolving plans, XX, maintain and we December debt operating mature of While three-year meeting no there maturities XXXX, these for Term Loan are we incorporated We A our will outlook facility On needs. credit maturities funding so in sufficient our capital maintain our XXXX. that all and XXXX. our into

expect well currency as growth continued Asia, billion year-on-year We divestitures, revenue to and reflects decline, $X.X modest banking at in as headwinds, to which $X.X Americas generate Banking modest of in revenue near-term retail. weakness billion, due to

million million which by approximately adjusted is to for million, supported expect $XXX of outlook Our will we $XXX Now DN $XXX EBITDA savings. be

million include compensation includes benefits and outlook inflation $XX not of Our but approximately occurred $XX from about normalized of of expected also XXXX. does which benefits, net divestures, million in

flow cash approximately $XX of interest of other estimates. net free approximately payments capital cash expense million; is and million; million outlook uses. working approximately taxes, includes cash and $XX Our of $XXX $XX for of and approximately breakeven XXXX capital cash restructuring of following million $XXX million expenditures, flow million; of the $XXX Net

not that play seasonal trends I would like we guidance, we XXXX. over to expect out the investors quarterly While our of provide to do remind course typical

modestly half we quarter, Adjusted sequential anticipate a to EBIDTA increase in the on sequential of a modestly in revenue year. again, and Specifically, second basis. on basis second increase to the is forecast the

for our However, the the the the be back three cash that to company And second year, considerably should indicate gain will cash in question-and-answer of the trends the period. I generate free stronger will fourth to use our DN seasonal operator flow first significant as initiatives quarters call respect normal half flow, our of begin cash and to With quarter. the traction. now, free hand Now profitability in XXXX

Operator

Summerville Thank you. Instructions] question comes Davidson. with Our [Operator D.A. first from Matt

Matt Summerville

a versus bit in banks? the and about whether to more cycle overview Gerrard, And you’re upgrade replacement more it of towards finding that? the A give Americas kind tilting XX perhaps be Thanks. bit could context you moment big the qualifying granular talk just the of a business, banks on of small little you’re Windows perhaps questions, maybe then couple order of Banking heavy more versus there, seeing

Gerrard Schmid

for Thanks your Good morning, questions. Matt.

that very Americas, solid and if the Latin order seeing the across know, States pleased we’re America, in we’re plus for you range across The the Canada. double-digit Mexico, momentum United or board, So,

brush small similar So, and regionally banks both it side bigger basis, relatively take momentum we’re and seeing the play it at the a we when look across it’s a broad at out institutional banks an level. on

So, you in know, seen is prior really broad-brush that periods. what over a growth pointing to we’ve

of our the in things we know, the we given up as look We quarters obviously to, you expect for that and at next activity QX that of year. result will flatten likely strong continue couple exceptionally last order posted

second I this your of where those that with a seeing you balance replacement others mix a think terms between know, relatively two is topic In we’re to software upgrades, question favoring versus as the favoring between some a machine upgrade, a replacement. full-on institutions even

a relatively even at today it’s look take our a mix when activity. over you So,

Matt Summerville

you Then about related you specifically where can maybe currency balance and ATM have, about can business And the comment to you. bottom-line minute pipeline top the are how Thank much product on new today, talking spend FX? you perhaps in a we the rates a headwind as then of that bit think Jeff, XXXX? based you more expect

Gerrard Schmid

Matt, vis-à-vis comments new already provided I Americas I’ve terms think the the in You of activity. order know

in strong momentum to very go-forward Americas and and to a continuing are pipeline the continue see We sales on basis. that expect

show as several the as business. we’re in and quarters, of starting showing us now, You past in see, willing concede profitable and upon Asia, to starting is for maintained signals what of know, in momentum that disciplined shares ago, a a Europe East early some of we’re pointed strong very this very we’ve out, couple mentioned in Middle Europe, momentum favor to a result, quarters Europe. particular to we’re and Western for see market in focus very, we we’ve right

in order So, activity that our we’re market. seeing moderate

Jeff Rutherford

us. obviously euro impactful as most Matt, then currency And the for is the as currency, far

be impact We trading there’ll expect, an is on second euro where today in that the based quarter. the

the the modeling and current X% on less. we go be X% X% euro then actually the third it and level than in are it fourth and levels know, quarter less We It'll somewhere level as the based impact the topline third be, and will will between trade. into on you quarter, as up fourth

Matt Summerville

guys. you, Thank

Operator

Thank you.

with Our Research. from comes question next Justin Bergner G.

Justin Bergner

Gerrard. morning, morning, Jeff. Good good Hi,

Jeff Rutherford

morning. Good

Gerrard Schmid

Justin. morning, Good

Justin Bergner

ultimately synopsis, on to was in what of towards could completed I related you know, you just just month, sales, asset us up you asset XX heard and, gave and quarter? question non-core this versus I sale to your remind think do remaining where first sales? a mention asset million intend initial first progress you end sales the My the goals brief the

Gerrard Schmid

Yes.

latter quarter. the back let into and the Jus, with the part actions start So, me then in

towards for still expectation. mix, We’re we that’s tracking revenues. prepared one obviously a number expected. the and line slightly my specific quarter exited In tracking There’s taking that around the divesting broad There’s one we said than I as bit of with remarks, range in larger had our are Venezuela. of those in of in our X% longer little a assets QX,

business divested in cash our consulting cash in financial IT also we as And more as We the Europe, institutions. well our and business in of further a banking transit retail business Europe. concluded European transit and April, towards divesture geared

Justin Bergner

Okay, that’s quarter could quarter? the minimal? proceeds pretty were first what were then, the first proceeds helpful. you Or And quantify in the

Gerrard Schmid

million. $XX were There

Justin Bergner

XX. were they sorry, I’m

Gerrard Schmid

a Yes, the so yes, divesting of don’t the we’re executing have said I that a but drive as targeting I’ve as exited if we the think and past also forget in I well, businesses XX only we proceeds, those you that they earnings, Justin, about on against, quarter. are sequence to were as number were that not divestures in – believe of

earnings, that we we’ll a so a increase We’re given drag our exited basis go-forward those. EBITDA on on

Justin Bergner

was another Okay, million? XX comments great. in the opening Did I divestiture that April hear correctly the

Gerrard Schmid

$XX across it’s once I plus the No, accumulatively million that, mentioned.

Justin Bergner

wanted dig the deeper Okay, bit gears, I Shifting service to great. performance. into just little a

or rest to and of Americas reference the margin the improvement Americas, the the gross be more going should to about service the margin service sort of is in margins? figure there’s indication sort Americas not for forward pronounced mentioned gained in gross is You I'm sure that's that a than trajectory to And know I know how plus what we the you that of XX% in gross more the think world?

Gerrard Schmid

in the doing, before were service at acquisition, margins Wincor Diebold you look America. North know, Justin, you XX% if we So,

And we’ve saw that really a outlook quarter very a ground our we margins and know, way that’s three-year while we’re real still that quarters the if a about our heading make see the services view started global out consecutive right quarters, and XX% reference – to of this up you on fact we’re holding three to level, to still basis. this the for momentum seeing services a on north lost up to but levels Obviously, to prior provided, some of some targeting business, bunch know, process raised So, and made good consolidated we’re service the pleased of that that simply of coming strong a where in we have globally, with customers. we still think on a step very that global more we’re on north we’re to business last firm for you we XX. fact to, that delivering basis

Justin Bergner

you. thank Okay,

Jeff Rutherford

XXXX. And progress in the steady we’ll XXXX, by so that make year was

Justin Bergner

taking for you my questions. Thank

Gerrard Schmid

welcome. Sure,

Operator

question comes [Operator next Instructions] you. Research. Kartik Mehta Our Northcoast from Thank with

Kartik Mehta

Jeff. and are there could what market Or those know in long-term Is divest? just business for a have continuing be Asia wanted see Hi, your that to get I Asia impact your you the there think you thank get term Gerrard the long-term on perspective I good perspective wanted to what you what morning, to you and you. and you? the think kind Gerrard, long markets? – yourself perspective this opportunities to on bigger model of – a

Gerrard Schmid

Hi, Kartik.

need you into nuanced at we split think than the of one a more view macro know, the Asia I So, to end market. simply day,

you it’s our over the generate point, tell that like improve markets to I’d incredibly a are term and us therefore, medium China know, not clear those that vantage You substantially. markets that and to reasonable, challenging you from return know, India

at when in certainly very markets robust. markets in plus Southeast margins we where further markets remain the south, Asia think know other look I are there are Asia, there You region,

who only quality also not software and have price, depth but on services, buying are the We portfolio. machine banks buying of the on

are markets that attractive. those remaining as we So, see

we’re competitors choose in number as to, we on with out say, going in where not is, deals perspective And I a what So, have and pricing choose different just very, broadly a I compete nature. participate there we’re Kartik past, of willing – on to that pick we I’ve and very just think know, you of Asia. commented

those in So, think participate, where we we are for we’re remain medium-term. being over markets are likely and choose the us, that selective attractive to attractive

Kartik Mehta

as I try the then, business goals the concerned, far one to is of know you U.S. the And to as Gerrard, as the retail was expand retail look U.S., the in into business

where know as getting retailers stand you previously? far targeting more anywhere you Are the You as U.S.? do different maybe in traction

Gerrard Schmid

Yes.

pursue there we So, in portfolio. think I in was full management the teams, a prior brush of that our Kartik, view range U.S. retail could the broad across terms

seeing notably in where You you stand basis, function feature on much know area we believe I’d focusing products say we growth strong very, be Europe, those that we’re a targeted we a, advantage our we self-checkout we’re know, actually approach most a where taking in very more on have strong competitive and believe tall. and would that

into. it not our know, on a There’s So, the step will predicated doubt and the retail I more you our as By as and we an that very I at well core differently grow the interesting in in us dynamics between look remain retail that's Europe, us attractive we market, to out and banking for I though, the much nature, know, more that I show that momentum. take it's time you on am worth that, definitely us to market for in opportunities. being Asia-Pacific think there Asia calling selective we’re Asia, remains think U.S. competitive think of our growth that market. opportunities If very for back is that no purely view why existing on take accessing area

Kartik Mehta

Term just the next Jeff, the I debt know, you those coming and you set that A how expense – reduce then you with and I’m big are for credit facility, one those the maturities for XXXX of up? And do maturities Loan last the you, really maybe wondering and know question maturities the with interest to – opportunity

Jeff Rutherford

Yes.

short-term opportunity Term a and at The it stacks and stack move Term to short-term know, beyond Term is the we out AX. toward maturity’s opportunity to You have look feasible not the move a and revolver A we when It's long-term the opportunity. our address AX. those debt,

So, first the that’s step.

The all second the this to are we opportunity given market that goals, higher model and goals still, is three-year we’ve the of model, available opportunities of depends about the you think levels move and long-term are there refinancing, maturity and us we’ve then addressed but can as you be it is will to free be saying not accomplished and given by and potential on that EBITDA for what today progress qualified once are and flow. know, cash through and we the capital going realize as through

as and So, we to the a actually in tranche, short-term in the two look address the at term. A long it and revolver opportunities Term short-term and tranches,

the is structure, capital capital to question, the ability reduce to come weighted our to really So, of answer your cost not addressing of in going in the our long-term average short-term. necessarily

Kartik Mehta

it. Thank Jeff. Okay. very you much, Appreciate

Jeff Rutherford

Sure.

Operator

Thank you.

with from next comes Invesco. Jost Our question Rob

Rob Jost

Hi, thanks.

of I retail Going to guess a the things. segment, couple back

there a a have on of what You year-over-year the of know that would pointed Would is out it profits of number were see to down strip have we one-time up? way reasons. been looked If being like basis? these a you things, some for to

Gerrard Schmid

Rob. morning, Good

our that non-core to in underperforming the quarter, said was slightly we that’s a some as in headwinds in area. software So, higher retail down to business expenses remarks, delivery plus due prepared due

our show remain the that very profitability will balance meaningful at for encouraged for year-over-year. look of profitability when outlook retail we our retail year, So, you the momentum

in bunch a one-off not there’s think that our business. in I know, the of quarter are upper symptomatic you [indiscernible] trend items So, retail

Rob Jost

first on talked more you’ve guess correct? capacity, you I is thing. European you’re investing I can that was clarify the a past, than it reached it to North a what investing or American the in with? sales have a if about you a I was of still I'm say And all, – level comfortable and in there you of business, wanted think that secondly, just remembering Okay. are And probably

Gerrard Schmid

the comments something the The certainly was made to back to I before go I’ll frankly prior investment was question. I sales that joined heavier So, done quite organization. in the

more a you facing focus our we market. investment by the ourselves taking don't my higher in in said expenses retail towards targeted we’re I know, in view As Americas, definition, that prior and see comments,

Rob Jost

last the Eurasia Okay, on is my then, great. Banking. And question is,

a to that what with the the refresh you're close-off? are different in are you seeing? markets to Would will going just who of you U.S. that after expect be familiar been talking – the markets. ATM delay a and seeing the Europe We’ve I’m slight perhaps, serve We’re slower ATM the a curious, U.S. know, a bit European pace as market will European is behind you believe people tailwind markets led

Gerrard Schmid

Rob. Yes,

year. end momentum the were in we growth QX, seeing Americas to starting activity and of as we’re same in last a cycle seeing as our led take look the doubt you even refresh year weren’t and see year, well, Nearing this more broad and America and we at most year comments that we last there into the Europe through as of back If now start Americas no was North last pickup. to the European

European past, So, we I’ve the our as know, we do is Americas, some as to in and quarters. look a commented out add see activity that sense the that the our will next several over in tailwind you lag

Rob Jost

thanks. Okay,

Operator

Thank you.

comes question next Faruk with Sidoti Our & Company. from Ishfaque

Ishfaque Faruk

Hi, morning. good

was you’re prior that work the to in question of digital transformation of you you that Just on Americas? for do did – outside Keybanc, the on pipeline for – terms the of like similar a piggybacking going work asked, that do

Gerrard Schmid

We absolutely do.

at software institution Western been a talked markets when in other well EMEA. that very the I remarks, In as large included prepared as made have that in look large prepared sales, service in deployment, take as markets. software financial our most European hardware pipeline So, as sales, of about my we and well of a software wins there some we remarks, comments our a

consistent pretty of So, board it’s opportunities. the our across in terms of pipeline

Ishfaque Faruk

Got got it, it.

and Okay, one another me. for

to In get terms points modernization on DN there? the – a your give color plan, XXX in gross going you highlight like more your jump how around in services of little Could basis you're margin. – you Now a

Gerrard Schmid

our realized XXX-basis targeted a points we over back have last look prior gross the margins. if goal you releases, of quarter, XX% we improvement a and and so in quarter Well, services over at go

drivers of business. modernization dispatch our that do [indiscernible] now services well other as quarters our how key in of automation flowing our we introducing momentum our are: contract from capabilities, service and seeing around program, aspects consecutive the We’re base, simplifying three as more and automating

there at with driving seeing are are and a precision XX% modernization deliver -- focused And multi-year of we underpinning there’s margins our services initiatives program, progress really towards on of goal which different we eleven in QX XXXX. the service our So, all customers. very out our to this XXXX, solid started work

Ishfaque Faruk

thank my for questions. Alright, taking you

Operator

you. Thank

question Capital. Ash Bybrook next from Thomas Our comes with

Ash Thomas

able balance lease what about million a relation question be is this like that’s there Would It in quarter. sheet. just talk to? the appeared there's This you looks which the liability, on $XXX to about

Jeff Rutherford

the of that requirement that’s capitalize to to balance our buildings. any then all that leases, now associated which GAAP so sheet. and we put the fleet and U.S. take are the – of capitalize – adoption leases offices services generally the new our requires in and is that you basically it on And with basically Well, leases effectively, GAAP for and

and offsetting balance up So, that’s liability there's asset grossed an our sheet.

see should which about filed we early has it in that tomorrow, other metrics on real Q, any the talked our no effect You'll or or today. and be today operations it

Ash Thomas

Okay, you. great. Thank

Operator

you. Thank

question with Bergner G. last Research. be from Our will Justin

Justin Bergner

positive somewhat your currency first like wanted fell if despite the follow-up. expectations? seems I something ask stronger met for your in you’re, tailwind that's Thank it not a a or to the so know, you order expectations offset of that's the there short you just fairly activity is revenue guidance your quarter reaffirming headwind, that? to And

Gerrard Schmid

Yes, Justin.

we to by to so seeing and a So, you activity but over attention pay we look any little much activity. one not try moves a trending know, bit quarter, in encouraged at we’re momentum obviously are our the basis, it order too around quarter-over-quarter, order

our a business look we’re at book in in more coupled I of Eurasia to with said, the retail seeing pipeline, fueling strength take our in being you if As what ongoing our really that's match our order performance and growth Americas the operating by in that mixed view.

So, against expectations, forward plan. – as very and and look order I achieve encouraged activity for would what to the to its know, broadly our we QX, in-line know, to we’re hoped our we with you you with match

Justin Bergner

were incremental of to as Slide Now there, initiatives to is good And X that individual updated hear. program spelling initiatives some or be is was listed in that’s These quarter on reduction good SG&A. the it would seems any the like SG&A the the that secondly, Great, some out of last then initiatives? DN more that just

Gerrard Schmid

additional out initiatives. spelling It’s the

million talked we Justin. a So, XXX of it’s subset that about Yes, we [indiscernible]. the

color get you it [indiscernible]. how sense more can a so We’re just adding that of

Justin Bergner

Alright, thank you.

Operator

Thank you. This teleconference. does conclude today’s

disconnect. now joining may us. You you Thank for

Diebold Nixdorf (DBD) 30 Apr 192019 Q1 Earnings call transcript