DBD - Earnings call transcript Q2 2019 | Diebold Nixdorf, Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, good day, and welcome to the Diebold Nixdorf hosted Second Quarter 2019 Earnings Conference Call.

At this time, I would like to turn the conference over to Mr. Steve Virostek. Please go ahead, sir.

Steve Virostek

Thank you, David, and welcome, everyone, to Diebold Nixdorf’s second quarter earnings call for 2019. also Jeff Schmid, Rutherford, call Executive and today’s and Officer; Chief on include President Gerrard Chief Speakers Financial Officer.

we’ve benefit, remarks your posted accompany to For our today. slides prepared

on of today’s will those Investor slides website. You the posted webcast this may replay Relations also access page audio afternoon, dieboldnixdorf.com. to at IR be Later

Company’s information, believe is helpful X reminder today’s that we Slide comments will assessing which the performance. contains a include non-GAAP financial in

in the most We metric have directly metric slides. its each schedules reconciled comparable supplemental non-GAAP to our of GAAP

on comments Slide actual cause a of forward-looking that X, that Over number we inform statements. could are may statements, results participants our to there number certain – that as of differ risks be materially characterized factors these and from

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

Gerrard. hand I’ll now And the over to call

Gerrard Schmid

for I’m Good to and our quarter flow, initiatives. and demonstrate the strong Now to execution DN pleased our that of which morning, second cash our thanks to profitability directly improvements report transformation linked results everyone, joining are presentation.

us today. with progress to half XXXX confidence outlook First provides our improve the

on their and support customers environment. leader of from market the institutions’ Initial announced Before Series a as position advanced of strong our DN developments, we to transform DN which Series. the DN performance month on next-generation as been the results, consumers launch ago. believe our enabling branch further very banking highlight I about capabilities comment has the I’d which like the Series, financial extends of our We one more exciting capabilities, benefit assets solutions to branded by and feedback

segment, machines, contained $XX highlights constant Banking X% Mexico; contracts Key over the Bancomer’s In our bank were increased ATM as full via ATMs well Vynamic prior XX-capable new win in a year more to versus in a quarter Point second with three-year security recyclers orders than contract; contract our stable for Windows win XXX to included during and product the Midwest the ATMs licenses; currency in and a located Itau as one maintenance Banco to in U.S. $XX Americas our and are two-year orders Fortune at ago. for versus on regional automation Slide recyclers, BBVA at full year U.S. a software Point branches Total software fleet account Brazilian quarter X. a of with million for XX dispensers and a function ATMs Vynamic cash company and financial cash increase win DN million the at upgrade XXX maintenance function services and cash operated Unibanco credit recyclers services Connection a IT services; the by union Connection and cash contract. top XXX a and institution for a transform managed services their and another

In For focus and strength greater segments. Europe, prior Asia Middle East decline more as exercise for bidding Pacific, to our orders we on from versus Eurasia our year profitable Africa. adjusting increased improved customers decision to in modest after experienced and currency. Banking, market discipline a the anniversary to orders the began We

contract cash transformation Saudi three and terminals bank dispensers, contract XXX for ATM services $XX million cash financial ATMs monitoring at institution recyclers, institution more $X in in at the about with contract Singapore XXX recyclers, financial new $XX Banking in as million and at new third cash dispensers Eurasia hundred in an accounts take more software, a included Noteworthy multiyear banks to multiyear drive-up service, $X kiosks cash several contracts dispensers next at maintenance; a banks XXX for software; a for top recyclers, Diebold for and frame for with Point recyclers, journey than and maintenance in provide Development a than about German contract, cash XX a these Commerzbank million a Kazakhstan at and step million more and at win largest three Connection two self-service branch valued new ATMs; Germany Arabia than agreement in for a of wins cash of to are software valued cash valued Africa the the the with and and new Nixdorf. leading Bank their

to retail growth and in our during experienced solutions constant EMEA of meaningful by shipments Asia the strength in where quarter, over we orders. currency Switching self-checkout the record We second delivered fueled self-checkout.

a DN co-op self-checkout million with services. terminals signed and more During the XXX related contract for UK-based quarter, $X than

a solutions secured leading $XX comprehensive point-of-sale supermarket in agreement also to based chain deploy a at million Germany. We

in point-of-sale and a fuel stores X,XXX to addition, And million signed $X we convenience to Germany. deploy contract than more next-generation software in

enhancements to the Our being as experience. government solutions security the feature greater customer as mandated measures well by

banking an of demand regions. seen our nearly is current solutions point-of-sale solutions market easing solutions. we’ve for with summarize for all coupled for demand in retail, self-checkout To conditions, our demand In growing solid

and quarter. constant $XX our constant Banking X% revenue by by all enabled versus as on across gross headwinds lines Americas improved currency revenue. a currency approximately in excluding to Eurasia Growing segments and revenue Retail. versus Moving to growth, foreign three currency percentage profit revenue million product contribution margin performance million. of Total in deliver one in year for $XX all of Banking, segments X% Non-GAAP expansion well as significant by year points business X led the growing X% increased the from gross ago from XX% product prior

against performance. of $XXX to second cash working net second in easy use prior free our its the management, year. enabled DN capital million the with the DN realized profitability, our reductions particularly quarter strong flow million productivity with an XXX% reduced along as I cash Improved by versus or we initiatives. both from year-over-year by am and enhancements $XX expense increased quarter comparison Now for EBITDA pleased Adjusted

a paid $XX cash times on X.X commitment, remaining squeeze and financial than the way the the team on XXXX, better is responded For shareholders had Diebold approximately flow was second the million, management even the March minority reducing AG. past has we out the our XX which results leverage of $XX illustrate encouraged million million of quarter achievements $XXX year. cohesion These year. X These of June the to times effect by though the first from Nixdorf half focus I’m ratio also of last during to XX team. our our positive over unlevered

Most focus DN it seen through of X, we to our and Slide operations goal time generating initiatives. On of Now the $XXX our while customers. million enabling savings have line year of our XXXX of our increase before key and on the gross you provide employees their reiterates a simplifying our slide

nearly organization. roles initiative, streamlining the are model, across complete management We our in and operating clarified have the with which first we layers reduced

towards result, good XXXX. visibility $XXX gross in a very we in have of As savings savings cumulative $XXX and through approximately XXXX million of million savings

targeting of Second, footprint. and savings simplifying product $XX we from portfolio ATM our optimizing million are about our manufacturing

quarter, the Series. the forward took DN by family, a new product announcing During step we big a

the executed to basis million Modernization generate well Plan Our is Services by non-GAAP XXX gains of least gross We’ve the points as our from demonstrated $XX XXXX. year on through at year-over-year margins. third this our initiative to savings initiative service

on through selling, bit are about through $XXX plan. subsequent slides, initiatives context add and we will XXXX. I’ll that halfway year by to administrative reduce Our fourth general the to a our provide more is million on these but initiative tracking expenses

net approximately also $XXX We’re in million capital focused working XXXX. on improving by our

XX the In goal. this towards from quarter, as well revenue prior months capital period. XX.X% working net tracking the of are trailing company percent in second year We XX.X% reduced to the a

has than points year-over-year. Our XXX the second quarter consecutive quarter improved more by third basis performance which this marks in metric

continue on about to revenue. divesting amounting we annual work Finally, to of X% assets non-core

to in divested During we the business the or likely action XXXX. for the and of customers will through banking which second several reach quarter, projects, early resolution cash-in-transit we Europe XXXX end other continued our

streamline in a reduction XXXX, targeting times. really Moving reduction benefited of Those in we XXXX. ATM have who we’re the on and simplifying we that enabled selling portfolio. being XX% of configurations supply know we and product calls company the were reduced further lead progress our in from our made of for I’ll to to Slide number a the This you X, chain participated prior discuss

lower-cost continue our manufacturing optimize Those driving are to actions, to by discipline, with and bidding We the expansion locations. along footprint our gross production for year-to-date. consolidating margin facilities and quarter product shifting subscale meaningful

solutions, meaningful investments DN banking the next in about culmination the and of branded product the resources engineering family of consumer Series. are delivering which is research, generation future, Looking design, we’ve tooling. to we enthusiastic the This

engine; AllConnect a for sensor cash integrating of and the DN facilitating performance learning via features footprint. software note increasing include: processing a a management includes biometrics; connectivity and and their as cash and supply streamlining modular with platforms and Vynamic advanced integration needs globally; our capacity, longer-term improved simplifying the security availability benefits substantially our recycling chain for improving and evolve; suite, support clear to devices providing path path in and offering DN to mobile our Key ATM technology, machine standardizing which upgrade automated to technology; the next-generation using customers power smaller Series

flexibility The personalization and for Series increased branding. also DN offers

We are XX countries. customers XX have in received who feedback terminals from these piloting strong positive different

more third required initiative Plan. provided customer XX,XXX than and Slide parts. our the touch volume which Services generating we’ve On upgraded Modernization X, spare quarter XXXX, were an this of a more calls have of service update of Since higher we launching points, in

a Our and benefit to customers DN. actions are driving financial to our performance benefits

DN data performance engine. sensors This ATM reporting incident and the the intelligence the and to is cloud are the information number We by automating data a connecting terminals uploads solution analyzed. AllConnect where in more to gathers response of from

to by believe company enable could XX%. activity call to on approximately AllConnect the Based reduce the rates we data date, engine

many As a improving these countries. are result we in levels of service initiatives,

value-based linked of rolling Additionally, the ATMs. age we out are to pricing the policies

services indicators across tracking well. Our key business are the performance

maintain second a XX% the to target. we above services During our continued renewal rate quarter, solidly

XXX,XXX modestly Our ATMs as contract approximately exit accounts. declined we low-margin base of to

services which XX% in year-over-year XXX Spain, Kingdom, financial saw the year-over-year, We Italy, strong Mexico key second and the metric is points Germany, gross countries. XXX margin Our United – gross gains margin, increased reaching quarter. other several in basis Brazil,

Diebold consecutive our the combined. and fourth margin service second year-on-year This margin of expansion, is quarter since Nixdorf QX the highest level and was

from to margins. provides target team, gross and our XXXX engagement range of coupled confidence services strong results, is to with the our a encouraging highly to a increase XX% Our XX%

general Slide centralizing finance our reduce to use X, and to continue further for shared services describe automation. selling, In our accounting greater groundwork the our progress expenses. making processes lay increasing administrative of On we and our I’ll organization,

discretionary to number systems. applications. IT projects a will fragmented which solutions, agreement leaders cloud-based new a We’ve signed Our low-value information legacy spend technology also upgrade reduced new our deploy legacy the and during on quarter of

Using are initiative, analytics, reducing with tracking savings we the company of leaders About have from and opportunities significant within methodically spend have our we third-parties. progress. the consolidating company and this identified XX ownership

as results six yielding services. is temporary million we reduced labor focus months in by third-party last consulting Our reductions with meaningful the about spend and logistics, in $XX

to continued footprint. our consolidate estate we Additionally, real

During by the progress and second Bangkok. quarter, Sydney we Asia in offices closing made in

On a about point and as expense which in bottom $XX percentage revenue down of slide, time you full equates the see versus trailing by in a annual year, steady SG&A, last can improvements a SG&A to this the brought dollars non-GAAP shows period. that over of percent The both we’ve chart nearly of XX-month million the our revenue. absolute

reductions, give us XX% and XX% plans confidence XXXX. in our and we’re SG&A maintaining for of to our further progress revenue target Our

the our we results performance, year-to-date and quarter execution of good leadership are priorities. and raising on end from the our demonstrate adjusted to prior upon high Based team our solid second ranges our revenue for In outlook our summary, alignment EBITDA.

also flow detail a increasing in Jeff our few outlook minutes. which are cash free modest positive, to a We will

the Jeff. hand call now I’ll And over to

Jeff Rutherford

morning, good everyone. and Gerrard, you, Thank

to gives During quarter, by as raise substantial value towards made the the our progress results. we our That second XXXX. progress second outlook quarter displayed us creation today to confidence

on prepared non-GAAP the center otherwise remarks I my unless noted. today, metrics, will For

$XX a business and currencies X, were Slide year-over-year to for on Collectively, X segments foreign points revenue a Brazilian year, against lesser comparison more a quarter speak the the the due the to dollar revenue and On about rates, versus British provide both during a unless currency-adjusted the percentage basis. I’ll strengthening the our growth primarily noted, a as-reported as and lines, euro, otherwise headwind to the constant U.S. of currency approximately or to prior provided million we’ve comparison. extent, pound. and real against three meaningful it

a divestitures, for delivered disclosed of our increased Banking, quarter. revenue in X% Eurasia been business constant lines, in fueled revenue by the of point respect during year. Retail increased would Total for DN With is about in in have in our previously X% higher Banking and Retail. versus XX% the to X% revenue prior Americas Factoring business XX% Banking. and to gains currency growth The in decline attributable revenue modest growth Banking. reductions currency, our very constant product largely cash-in-transit divestiture revenue of in X% service the and

prior versus European the stemming project the from Software period business. where all of revenue decline was X% is a of the management down divestiture services virtually

revenue contract was a in slightly Middle strong due growth down On Slide – to Eurasia highlights in due Europe, the $XXX from the customers divestiture constant financial we’re currency primarily product due in for Banking, Services Africa. segments. Europe. and to lower revenue higher X% to Starting or X, million the and the to revenue three showing increased second all during East with quarter

slightly mentioned divestiture. Software the revenue to was primarily previously – down due to

these Non-GAAP quarter delivered in million for products gross last operating margins of million Virtually all software operating the we year and services, reduced $XX as our expense. $XX increased to from modest profit and higher current and by $X $X currency the from offset million attributed headwinds of compared which foreign year. to were our with DN of when be improvements prior Now partially can initiatives, million inflation

year-on-year For quarter to continued growth strong from by resolution to impacted currency revenue and primarily Service chain modestly increased base. segment, $XXX lower second declined supply issues, led results. Americas in upgrades, of the in which a contract revenue due million, XX product demand Windows XXXX recyclers constant slightly cash quarter for the Banking XX%

with $X prior Operating the million to million product expansion margin of year the and recyclers lower onetime our the approximately margin coupled a profit freight loss operating year, comparison Modernization significant resulting the from in expenses one from increased $XX due million following factors: expense to from a resulting period, year Plan favorable versus revenue and mix DN lower from ago resulting of in of the quarter expansion $X service product Now initiatives. costs gross our favorable cash from growth Services ago

revenue from $XXX contributions Our to services contributions solid quarter products X% in from generated modest million the Retail and segment of second currency and with growth in constant software.

higher and inflation in margins. offset both prior growth due Operating and increased software We are profit million million, growing year. a $XX product revenue revenue as operating EMEA $X of the well Asia. and Retail from to to to as profit modest services combination versus Currency provided

provide profit XX, productivity of We quarter of on in higher second delivery which result as a reductions, – million service increased provide also profit not a recur. DN cost the we gains to Slide did the $XX due comparison year-over-year our costs metrics. Non-GAAP and XXXX, recorded Now and primarily of gross but year-over-year

versus the headwinds currency Foreign approximately were million prior $X year.

benefit a robotic gross well since as approximately and XXX which consecutive margin in Product highly quarter XX.X%, margin and points best the our increased exceeded plant gross value of mix quarter automated Paderborn. for of reflects our XXXX. second the the Non-GAAP basis to performance is XX% third as

side – asset operating they’ve plant a model, Paderborn a as great critical great continue a to done and to in and that do our job. our a job Just is note

Wincor As increased segment initiatives a stock legacy reduction comments, were expenses. prior primary of driver mentioned expense million the $X level plan. about Now during includes of A the million year $XX from lower versus DN the operating option

terrific to half increased profitability. progress increased basis Operating the we’ve we million, operating million made during the of XXX On $XX the and to X.X%. $XX illustrate profit increase bottom slide, quarter points the to margin

points DN adjusted initiatives, $XX Now XXX Adjusted execution did service expanded prior million to as product and growth period, costs not basis reflect delivery higher margin in million These well as our EBITDA good to X.X%. which incurred by by of revenue results $XXX the EBITDA increased while year the recur.

reviews with summarized producing we harvesting Moving receivables, are XX, our our capital. to accounts. respect improving governance Slide regular in on With are processes to favorable net and account actions due These progress results. we actions our past centralizing in working

big a groups, X% quarter have is when company over to Our coordination our months. they’ve nine this that of and done I compared getting between piece year months have segment to the to for the six we’re say second our nine job months prior And great groups financial say during and last collections increased to the the – I the the would period.

quarter, a our managing a done The program team area has and services second investment. segments and our source in the revamped the management inventory have clear targets materials goods by Inventory parts. the accountability cash for fabulous was of combination job finished establishing raw of inventory spare where and another and of manufacturing,

centralized payables quarter key and our second spend reduction XXXX the our on of of and the cash in payable, front, we’ve It million progress. A the the committee On helps indirect certainly during $XX accounts processes is capital decision-making. disbursements flow our implemented a front. indicator impacts new both level cash of our but

more main The the working of is XXXX. of from sustainable that Net capital best building we changes and net since quarter capital combination are are working in second the our process XX.X% ago quickly is our a declined the year companies. of than delivering the takeaway results meaningful This revenue a envisioned. in to period performance percentage XX.X% as

improvements flow. free describes cash in XX Slide our

prior were quarter, of year cash million, working and was EBITDA harvesting adjusted by in second payments. growth in $XXX quarter the restructuring capital. million used are essentially $XX a payments strong The cash flow free continued to integration period. meaningful Lower contributions net the versus For decrease higher of offset most the free

the a in million million the was million year expense unlevered cash cash a Diebold company more the we $XXX On On improved an than cash year. flow which unlevered flow first XX-month first-time period. Nixdorf of combined. basis, a by half basis, free $XXX flow about versus of use positive the and trailing free million $XX million, XXXX, since prior is delivered positive in decreased approximately by second cash On and $XX prior year-to-date accomplishment the basis, Interest quarter. of $XX produced

leadership capital we structure. is the in managing and the proactively past, team As our liquidity stated

million decline slide use million last minority Year-to-date, December the cash metrics of Slide of $XX of to is of paid see on primarily Nixdorf free of of the For the the cash XX, result cash liquidity end $XX you’ll and the restricted as revolver. June. end key of AG of the as Diebold reduced borrowings and shareholders, the in

approximately leverage ratio translates debt-to-trailing is $X.X of which times EBITDA. to debt X approximately adjusted billion, a net net XX-month Our

X.X We reduced footing. by months X.X the to ratio. stronger non-recurring six payment times shareholders to a By added this is ratio have Now as initiatives, turn this even over our DN executing about company on much past the DN a AG

At the number conversations same DN business, time, and we’ve our of our constructive held lenders about with our Now a outlook.

begin With mature benefit Term our in an extending amending facility this condition, process added the credit capital the to A, opportunistic Loan in market XXXX. of of favorable of December time and our is revolving which

launched are contact to Time. with an Today, we support. continued thank publicly We private-side JPMorgan, to scheduled we public we we their to request our want and noon satisfied with banks to the discussions for date. Last should agent, our very banks our Eastern support. a have Today, qualified with scheduled week, commitments received call a Interested have their with lenders invitation call we join. continued for parties qualified have

revenue XXXX $X.X as Banking updated and of prior drivers. which we Retail. in Eurasia Slide and high due year-on-year our key as end the moderate Americas billion, reflects in to modest declines and XX, the expect modest headwinds, well decline is of to for our Banking growth On now outlook range currency a generate We

million and at our range to of EBITDA high million, of Now updated approximately $XXX end adjusted DN for is the range includes savings. which million prior $XXX $XXX Our is

approximately compensation savings XXXX. benefits, normalized offsetting of million are those about of as Partially in expected which net from $XX of benefits inflation occurred as million and well divestitures $XX

working outlook has to flow a improved XXXX expense about the modest positive for flow interest capital breakeven $XXX Our million, from of net of following expectations: free and cash net our cash $XX million cash $XX uses. impact of million any million of excluding of $XXX payments expenditures, of million, $XX approximately approximately million capital approximately restructuring refinancing, cash and taxes from includes other $XXX

on trends like not While quarterly I we in would provide seasonal comment guidance, our to the business. do

quarter sequential quarter slightly Specifically, and our basis results. we modestly decrease a adjusted be will anticipate third revenue more could EBITDA on than second

will fourth EBITDA both During expect adjusted the XXXX. watermark quarter, high the and revenue for we reach

free flow expected quarter. Additionally, the company cadence is cash cash that significant and trends our to seasonal in free normal the follow will flow generate fourth

the we hand operator, to our I’ll period. and Q&A back now can And call the begin

Operator

you. from [Operator first Summerville come our Matt question with And Davidson. D.A. Instructions] Thank will

Matt Summerville

of Morning. A questions. couple

was reaccelerated this I as Do of surprised a is Eurasia upside terms First, in as well here little see you inflection? your What’s the you’re in decent And dig side business? feel the turn business order of can there? QX Banking deeper little sustainable to the to positive you a to what in that a things seeing the intake. seeing driving

Gerrard Schmid

Matt. for question. Yes. Good the And Thanks morning,

I think there drivers are two unfolding.

it unfolding and for really sequence in As Europe, we’re and in events as remarks, washes the Asia relates prepared few calendarizes more impact EMEA, more The I to of that Middle positive from approach it adopted quarters in Western Africa. us as East side my a specifically less for the less headwind over headwind us And a is pricing. that Pacific, quite Asia. mentioned last seeing was through, disciplined to we as and

and around continuing demand to broad XX We’re markets, see to Win starting specifically operators. those decent emerge from

starting they’re emerge markets a I take Germany, the in those like lag to we look in of Matt, anticipated nice some now the the and in markets Africa way. signaled I’ve back that we’re Middle that comments like growth Americas think in and East to you hold we to quarters, think see made prior – and to had starting like If Europe that

confident our demand in fairly markets, around from around medium-term feeling those we’re particular. outlook overall, So

Matt Summerville

And launching in of a you what this And your with should as as mentioned sort customer side pricing essentially is remarks out talk you’ve to you that view go sort this Can of different in fact, feedback get ultimately, strategy? able you a on on follow-up, then pricing about and prepared you’re pricing? strategy. the a services being we better that – power, received

Gerrard Schmid

Yes.

Matt, get to pricing looking the actually of We’ve at sort the launched we from tied calls of market. that of in several age back And to months and So the these feedback are going what we’re waiting few see we’re were what initiatives a we we to of the broadly approach, value-based Americas. and that machines by to the consider very receptivity seen amount service good machine. incur age that specifically we market

In QX, our the margins longer-term in our of quarters that part on Europe, XX% confident net for bit we’re productivity trying mixed we it’s to quite in XX% sharing hitting markets been little to have The to openly gross that other initiatives do in Street, I And feeling momentum increase we the I as think been outlook we in as we’ve services margins. been this a are going And high with it the in more but flight. expand due towards light pricing of do watermark services we’ve past depending operate, us to drive that which the think as we’ve we a looking XX% positive what well we different that we’re and seen see higher a to over margins. four initiatives as to

Matt Summerville

queue. in back get I’ll you. Thank

Operator

you. Thank

Our KeyBanc. next question with Beck from comes Josh

Josh Beck

it provided like and from visibility the Thank Any backlog you share that for on maybe book-to-bill know how like I taking or framework period? on things other that you looks question. accelerated the QX. X% talked we it nicely and that XXXX X% you’ve can as about think you over to growth order color your impacts the about growth

Gerrard Schmid

Josh. morning, Good

order industry thing has not that be on I I’d a position you this is at so a that is visibility perspective in this into The give first wouldn’t an say long-term stage. to XXXX activities,

my going more comments to are focused. be near-term So

say give backlog in relates As off any us not but would anything quarter, concern the our tapered for cause modestly that whatsoever. I’d backlog, to

as the I very take we And just at dollar healthy is on looking activities comment. large part more very as we incremental that it’s at I’d half pretty ratio consistent pipeline we’ve the we into look broadly through. year volume of been that pattern and seasonal of through where and working large is don’t the anything think XXXX. markets early back look I stable, our Book-to-bill very, add so there’s orders, the a think see a of

Josh Beck

highlight following long that more you that raising there fall offsets thank made gross model? think quantifying you’re kind to confidentially and services we around Or in other you. longer-term Okay, about margin operating margin range. to last through XX% the and when margin Did the EBITDA are And up term? of also on and margin XX% the

Jeff Rutherford

No, no. model margin. Josh, gross we There’s EBITDA of that when that. that out out, down directly comes to offsetting right nothing

Josh Beck

Okay. if I And then could. just last question,

to cycle? it? feel could maybe obviously cycle Just around – has that’s that like that Windows it Or XX, Americas I a you on this nice in the of having you’re in or you if with think, legs data been, of Do tenor positive just and discussions a tailwind describe it’s Europe year. banks this

Gerrard Schmid

conversation broader driving factors There with a on purely the seldom, answer demand only. going XX constant if this. I’m Josh, I ATMs. for to the Yes. remind the are of Win listeners banks, is When conversations around we’re ever, having generally of demand number give

and And we are teller is ATM IP, shift a is more reason cash-in-transit complex they’re looking towards small So the the seeing very more what machines. transactions a relying of use from to terms to in from recycling to cash cash-dispensing their in business machines demand particular to shift reduce that expensive banks that historical additionally looking on noticeable shifting higher costs.

Win to itself. So certainly as dialogue that as really is independent XX XX from activity, relevant but Win

capability, The for to seeing with especially feature higher function channel, driver they withdrawal for other ATM from integrate their banks channels like key things their cardless we’re look demand mobile transactions. is as looking

alone. very XX So too careful be drawing Win conclusions I’d around around many

Taking much more XX. just broader everything I’ve think than said a just step Win back from I it’s drivers demand here.

in in we’ve the we’re given why the about the from in well in and Europe of positive in we Banking regional medium fairly Latin And number that Africa. term, out really as a That’s Western said strengthening particular, in feeling Americas over demand prepared markets that strength and seeing the we’re as we’re America. as our banks, East outlook look seeing Europe, in ongoing the remarks Middle

Josh Beck

Thanks for I it. the context. appreciate

Operator

Thank you.

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

Justin Bergner

Gerrard. Jeff. Good Good morning, morning,

Jeff Rutherford

Good morning.

Gerrard Schmid

Good morning, Justin.

Justin Bergner

quarter. this performance Nice

Gerrard Schmid

you. Thank

Justin Bergner

Just to was Now to were EBITDA midpoint of you DN the $XX which, look helpful, that just if savings $XX adjusted more, guess the non-recurring bridge. by wanted I benefits, million. overall million the were It explain and The would at up like a start, seems could be million. $X up sort little up by I by

So higher – by it it I up revenue guess $XX on up steadily by base. a was million was sorry,

I some perhaps might a just tailwinds what that EBITDA guide? to was those of to the adjusted higher So allowed your curious adjustment offsets were have

Jeff Rutherford

Yes.

to every And it going a asking XXXX. is you’re of is the XXXX that’s in there’s it’s piece in what , substantial, have. migration but – we have EBITDA through to offset be small you to there. not And coming offsets So what and offset going forward FX in in inflation of we are And that the there. that’s of specifically quarter one some roll level is when there some

line that every Wincor on get up. going stock adjusted a plan, that’s price that goes have hit as stock the adjusted. so positively, thing EBITDA quarter cash option gets we in is And because gets cost on we a It’s other plan it the The second quarter. the moves

well of means this money ton all a shareholders. our that then those we’ve us, year for when extremely guys between they right? a make Now make of money, I of ton Because hope done

of one compensation-related may a it’s we’re have inflation, offset. us of and little and speaking, of That’s bit of generally how a barometer doing are offset to things these stock. only of FX programs pieces little tied a But that we of the So bit the be to the the any shareholders. that

Justin Bergner

Okay, that’s helpful. the just me And they they what then benefits, do non-recurring XXXX? benefit are and help just understand

Jeff Rutherford

in things were half first non-recurring through that that this we When year. an the talking we the have in anniversary was benefit, right, on XXXX, that just of came about going

this recur things what year. Some of with occurred effect insurance we plan, just the and year last the talked opposite adjustments didn’t option in accruals, stock those about

Justin Bergner

Okay.

Jeff Rutherford

don’t XXXX. those XXXX any yes, that have – – recur that items are didn’t benefits in We did

Justin Bergner

updated is the million $XX versus for benefits? million look-back $XX of So just those sort non-recurring the an

Jeff Rutherford

the from XXXX, year. basis. We – do model, we What bridge we They when it up on negative don’t year, negative. this for whether do rolled from year we positive positive the the we prior for nonrecurring that prior yes, pick a be we to Yes, benefits forward. recur when items XXXX happen of modeling is or model

million So to to those of the items get EBITDA. $XXX we’re overcoming

Justin Bergner

order in more that’s quarter, general I of the the some just if meant Okay, in detail XX Win number helpful. drivers, you’ve and provided. the second what Or of flat know to orders Americas quarter were product hard on you type bit? it’s momentum the we was the that I absolute saw the lapping business taper a might year-on-year wondering were based Thinking about guess that

any would be So there sort helpful. of color

Gerrard Schmid

Yes.

anticipate tapering in don’t of the off I Justin, demand So a Americas.

timing will see quarter given unfold. You for any that issues some

in long is activity go for to in particular, States, strong a and certainly larger a in the way its banks. the the cycle. still regional there’s of That said, nearing end we of banks some from large to see very For we the number activity their institutions America continue refresh maturity being United think of Latin of some

it from So don’t off. are where today, sitting we I don’t we – see tapering

we’re pipeline very, very healthy I event in-quarter moment. that The is at think it’s looking the an seeing. more just

Justin Bergner

of discussed Okay, what’s question. great. on you than extend front the would that on be Modernization on discuss XX% productivity anticipate could you previous margins, from to service XX%. helpful. to a margin, improve allow that you gross you tracking guess Service if increase very that’s that price XX% just to outlook margin Maybe And better you’re then the the promising or to able for I

Gerrard Schmid

certainly. Yes,

said I these key our are a great on as on since markets consistency we began. my be and program Those lot each KPIs driving prepared biggest of as is a touches really tremendous and us day, common best technician truck And we response, operating visibility that’s effectively all each So central are job focus and successfully teams practices time. deployment may times not a be different common the in metrics could the global measurements deploying of remarks that the around of market. lifts processes And causing to biggest local a is really into number as some the of roll practices processes of cohesion in common really first deploy like the the the in we effective that seen doing times giving they differences across globally is more we’ve us the the awareness of where of team number of – the the to in incident automating regional machine some shining and that that spotlight local markets. bringing a the

Justin Bergner

Okay, thank you.

Operator

Thank you.

question Our JPMorgan. Paul from next Coster comes with

Paul Chung

on Chung is for taking Hi, my Coster. thanks. Thanks This for questions. Paul

a and going on margin. just business services So follow-up

had exiting lost improving lower-margin margins you of India and that some result. a kind in on were of you your based these did that pricing contracts, in XQ you’re So kind as and are contracts mention

drive kind try Will So walk you renewals just and of willing the of hits coming to renewals it’s through continue products? some margin thinking take kind of of Or that And your of about relative as should given about line on kind the to big to top are these any drive year, we segment lower-margin margin the to in be then here. some to move trade-off margin you quarters? higher? the from aware higher we kind away that

Gerrard Schmid

lower-margin lot accounts around more exiting a what I’d was Paul, in So is now. it than our is activity XXXX pronounced of say

it’s one look think end a the tail we driver material way the to over out There next effects. material. seeing small or be might other. pieces, the we’re few of quarters, those be that don’t but think a I as expect I I don’t few And

point, a basis. will we mix. now your there’s I that strong a that a and opportunity point feel case-by-case particular we’ve think we evaluate we’re if at think strategic that And a to relevant, a we where right got very market we consider on competitive very there specific is

We to the world’s market. we’re in have makers be this of pressure any price to services not But feeling believe value we’ve propositions. got better one

November renewals of our that very business. cycle period second contracts your of of higher the material we would in a nothing of back the over We renew a contracts number call services as of to today. do exposure terms December through concentration little large In risk time we number a out sit time. year, a the this that in from of frame, see got We’ve end around but part question that where large have contract we

Paul Chung

competitive pricing And on there? been the just for then thanks environment kind of you Okay, services? that. Can expand the in how’s

Gerrard Schmid

Yes.

I introducing about, constructs. look the believe quality already around our also constructive. we I broad factoring been conversation as perspective, to talked when and have a customers pricing different their my from in we’re we’re contracts those conversations So new with expectations very And service

pricing markets not business. amount We’re moment, be actually services might some appear I at services a tremendous a being key It as of would a our local global There our level. business. be more consideration a pockets seeing in But pricing see at see we to broadly aggressive. pressure provider don’t where in more the stable for

Paul Chung

of sales, are think then on non-core there kind near-term? areas we you any the you there? kind are asset additional And thanks. Or monetize done Okay, mostly in can of

Gerrard Schmid

Yes.

say prior processes I’d stages of are I I’d various what maturity, underway, There Paul. what they just on think said quarters. reiterate I that in several are is

So those. update around our will once complete, obviously shareholders they are we

remarks, goal But around proceeds and into XXXX the about As perhaps XXXX. straggling through to we tracking those my I million said view in we’re non-core them net from that assets. we’re mature and $XXX expect line of prepared towards go of still the over delivering early

the bulk of behind front not the from still those of uptick us, So us. is in

Paul Chung

very your days question is Okay. down free then And cash. then nice materially. XQ come I and did last on was my see inventory

that ahead XQ. that expect your and the I similar seasonality, there XQ step-up drivers we And you seasonally of Thank would but just been if So kind it as you could should be from you. any know mentioned build a thinking kind inventory the XQ? if kind about of strong XQ of of past, improvement this it going kind then of has is on be strongest expand in pronounced to to

Jeff Rutherford

the I saying from worth it’s said done because such but The Sure. job great inventory. this an quarters, prior managing – believe have and inventory perspective, teams we’ve a on in

its a hold goods allow or into order, start customer we The responsible let’s only for The goods to And specific is to between for up inventory with in spare segments. and divide responsible finished be transit then group that. group we finished divided component material parts. work finished manufactured parts. raw to we’ve services And We applicable the strongly delivery backwards. is goods and So WIP. manufacturing for installation

and that. that understand segments The managing are

know see a a for finished that, for us, when So delivered future to en to inventory route you is inventory customer sale. goods that be

about timing really great a to that. and of job the fulfillment, it’s are of So doing order segments managing

and perspective, it’s our of organization On the parts spare for services repair use equipment. parts spare for and maintenance

algorithmic new that. they job out done any the that in equipment, required They’ve parts only as having we on required basis, on great spare managing with only – precise of based have And we’ll specific our a even roll in a location. logic, regional more the be

backlog inventory. then job has tremendous that, side, the to sales a we to managing see get we on revenue tremendous of see, their group significant of expect manufacturing manufacturing done we ends expect both don’t coming, change. And So unless don’t the

invite I’ll and and our always, plan has to trip Germany as a And to anybody see plant. who come

It’s It’s way Our plant is job. of efficient. the model releverage They tremendous. do have plant one a because we extremely can are reasons we the we Germany. the great in that

done they’ve inventory. and to a – they’ve your just – of question, back So managing tremendous and done job

three our and job. So say performance team-wide I great they’ve between those inventory groups done a would that is

Operator

you. Thank

with comes Jost question from Rob Invesco. final Our

Rob Jost

Hi, thanks.

I something service go this bit should signifying Is rate road? rates, to you guess to a two which the of just the kind we Just is the me. X conservatism wanted four this kind historical over is last out, I Slide you that of greater Or down XX%, this tease of here? of renewal seeing quarters. expect for target get below just where On than be

Gerrard Schmid

don’t We right? renewal that conservatism, expect but to nothing our to it’s Rob, level. rates drop

rates renewal We’re high only sure no we that’s sticky services here our – and that really that I away very investors message simply here. exceptionally business message with take the implied making have that There’s number. very, a mean is signaling the in real

Rob Jost

not Now, new base seeing some reference the couple – DN banks. And that Great. – the of I’m launching, you’re Okay. then the a the your have, product in larger of you with

maybe that. be secondarily, going Or of this is layered engine, AllConnect back So a kind of revenue into comment And the on if end? stream? you with more this another this the to could on benefit then, services’

Gerrard Schmid

it’s to in services. As ability productivity just to services business. our greater customers to embedded part our visibility the question, of simply and our It your add latter greater enhance will drive in

see as incremental stream. I So don’t revenue it

banks, Latin large DN in European there we and Europe. America, are Santander are U.S. say true machines it is very, obviously the As very out are same first scale BBVA are operating it. mean Now, banks I the can Europe BNP of of your for large several the piloting new they holds What also and question certifying that in brands large around for relates to that both some their Paribas labs.

seeing bank should you the into think don’t on a three wouldn’t not top I that. I from into anything So anything read read this list. U.S.

Rob Jost

Thanks. right. All

Steve Virostek

call. joining you, everybody, today’s for Thank

a Appreciate time. Relations If please your follow-up give questions, call. you have Investor

Operator

our gentlemen, Ladies you. this that and morning. concludes Thank conference

disconnect joining us. may thank your for and phone you lines, You

Diebold Nixdorf (DBD) 25 Jul 192019 Q2 Earnings call transcript