DBD - Earnings call transcript Q3 2019 | Diebold Nixdorf, Incorporated

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Operator

Good day, and welcome to the Diebold Nixdorf Hosted Third Quarter 2019 Earnings Call.

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

Steve Virostek

Thank you, Britney, and welcome everyone to Diebold Nixdorf's third quarter earnings call for 2019.

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

of the During be our today's IR Relations webcast on to be replay Web referencing will this page Investor the slides which will an prepared can be of remarks, audio dieboldnixdorf.com. Later we site. posted afternoon, also accessed

the financial reconcile Slide metric. company's provided helpful our comments of that a two number is supplemental the of our In metric comparable schedules believe to performance. presentation its information, non-GAAP schedules today, in have GAAP we contains directly most assessing each a reminder we to which pertain slides, non-GAAP which

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

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

I will to back Gerrard. hand call the that, with And

Gerrard Schmid

thanks primarily Steve. in flow transformation everyone beginning greater a morning, and customer's solutions. XXXX, the our profits, changes end and were DN When to out improvements you, Thank call. at for joining Now efforts our while enabling of on we laid sustainable Good focused our our operating cash focus on

year-to-date key delivered on I very the measures am a progress. and basis, gross cash our both to have This margins flow improvements of quarter we encouraged by and year-over-year as

plans. our our solution financial strengthening improvements three, are sustainable evolving operational see position DN to efficiency, our can slide while and As Now we on by executing you set driving

our largest solutions around partner the and connected daily more millions than a banks of to European business the countries. spanning transactions As commerce XXX world enable critical retailers,

and macroeconomic geographic benefits, and leadership many breadth changes the landscape. also in exposes company the has to Our it industry

approximately currencies. dollar revenue other prior X% has the this example, just U.S. the currency fluctuations exchange the $XXX as by foreign year On strengthened basis, For foreign a have over reduced headwinds million, against we year-to-date revenue or year. effectively faced numerous versus company's

early being the confidence in some That services it retail are weakening We future said, confident are Europe. markets, Data of newly economic of AllConnect dynamic or in software, managed we be notably enabled most our in solutions, our Engine launched in also observing services Series, activity our competitiveness through capabilities. DN offering, self-checkout solutions, whether our our customer signs

and experienced speak four, however with reacted growth quarters for highlights. certain & software activity. Point-of-sale economic to to self-checkout including XX of On Dave integration a after customers declined new for and in contract solid quarter slide kiosk Starting European at segment monitoring orders as slowing growth Buster's orders, restaurants. Retail third kiosks solutions, we I'll several our self-service

later We certain also quarters. contracts saw into extend

as we decreased orders our period reported as Asia. in periods. Banking, the deals slipped prior currency in were maintain EMEA on in Eurasia in we versus constant U.K. relatively into prior year future Americas against the a Business strong orders challenging, and For few remain contracts flat year in Banking Latin with profitable a focus America. up customers conditions comparison

U.S. continue the easing larger We complete in some of solid upgrades. banks as activity XX demand in with regional Windows see U.S., banks to from their the from they

platform sizable institution. a quarter, at to financial U.S. top software secured new debit we the During contract XX a transform the

lens and headwinds foreign revenue on quarter provides perspective quarter, $X months. basis actions. Non-GAAP and Now unchanged revenue year result our in important of improved we of total basis transactions $XX despite prior over points the approach or We third this DN points versus a was the from million for and as a an portfolio complete profit versus to initiatives, will revenue meaningful believe few expect of after our million the XX% as currency become accounting to approximately performance, even currency next our year, foreign few our for the hundred more a performance XXX shaping one ago Turning essentially this primarily gross headwinds.

basis Our key non-GAAP gross versus since prior performance points best represents combination. our XX.X%, margin which the to on increased approximately XXX the this year metric

delivered from three products all solid We contributions and software. margin with expansion segments, across services and

changes gross the business progress we Now through profit of SG&A the is indicative driving higher that for increased conduct initiatives. $X X% Adjusted as million by benefits. expenses our some of year-over-year third in Our the DN way quarter we're or EBITDA offset

positive excellent. of a DN collections, performance our On profits. payables, cash DN. flow change which quarter, the efficient improvement million management, our well in a to inventory year, basis, higher with of at prior $XXX of free these to cash million the ahead flow Our in by improved this believe XXXX. over generated million the compared as behaviors cash $XXX expectations. free million -- year-to-date operating We for flow areas $XX points was in sustainable free from $XXX operating execution flow team cash drove a more due as quarter is the broader third our When

Slide model have gross five $XXX towards sight Now we simplifying which also $XXX our manufacturing in optimizing complete for portfolio gross to through is line We've transition product $XXX of good our summarizes operating good XXXX. virtually is new made and XXXX. as and as key a initiative deliver our our million of well savings million and objective of The approximately savings ATM our of progress savings chart familiar footprint. DN of savings through to XXXX million cumulative

our to banking shifted Series. the next-generation a the realizing DN of benefits from launch successful solution, has focus Our

seen expanded plan points in to period positive generate modernization year gross quarter. margin, be basis our prior in results, Our can which continues the versus services to XXX which XX.X% non-GAAP the service by

number of execute and as productivity, support internal our an expenses a exception better actions a enhance on includes ticked continue by and which to reduce our while see in to up improve selling, processes, global about and the quarter, will XXXX. We initiative leverage through trend. right-size that general million our companywide long-term This scale, to we SG&A $XXX our structure, administrative

on focused remains our to and networking exceed $XXX goal XXXX improving year-on-year are capital, of DN track meet improvement. and possibly million we on our

capital a prior third reduced quarter, months trailing from percent of the the revenue we period. as networking year in XX For to XX.X% XX%

for will close initiatives, build earnings we out As on developing additional to future be XXXX our plans operating productivity and we XXXX, calls. which are shared

margins making points quarter, our we're progress which the period. increased initiatives ago XX.X% in efficiency from updates The to gross the six our year contributed simplifying product portfolio. product gains on our of the non-GAAP basis versus XXX manufacturing Slide

drivers DN the next-generation our platform. biggest our of competitive of banking is differentiation One Series,

While very technology, smaller recycling you we're our increase clear launch, still as features customer I data options industry-leading customer initial to cash has DN a in the our been and can the from footprint, node for which benefits technology, next-generation AllConnect capacity, and tell and more sensor personalization uptime in and the see includes better offer and they advanced engine, connectivity and security reception positive, increased modular upgradeable a early which will experience, greater stages of design, that branding.

more this that customers have early from to certification a announce hardware offers Series with DN a from XX customer including historically XXX customers We're value countries. process DN. initiated that better progress, interest have by driven proposition, vastly not pleased Series than encouraged DN across by purchased experience. compelling the we We're

the delivers On services touch software replacement slide We performance reducing an of than plan. This now seven, a modernization accelerated benefit volume older a update from points. and service provided quarter, the and our the we've XXX,XXX and of have of spare calls our parts. activity company hardware customers to for the benefit more in financial upgraded

indicators Our plan. the performance tracking across to business key are services

we maintain a rate ATMs services our During the stable contact above XX% of approximately are renewal and XXX,XXX third units. base to quarter, at continue

reaching team to which our Our segments key the XXXX. XX% fifth from service This services XX.X% the our continued margin, target gross basis and financial results very XXX in quarter by third delivering is gross success. all is consecutive in year-on-year increased quarter. encouraging margin expansion margin year-over-year, and the engagement metric and three of to contributed is XX% of our services These confidence underpins points

to administrative speak and I'll our for initiatives general reducing selling, eight, our slide expenses. On further

reduce we groundwork tracking use and realigning of savings are our are and functions, to we're over services automation. certain few outsourcing processes, shared resources and Year-to-date greater from support And to increasing expenses. quarters. centralizing finance in substantially finance for the making Within opportunities. our savings organization, sales organization, we've accounting next the able greater In been the market we lay doing to streamlining approaching continue so, $X with million our

We to with associated the to continue bring activities strong external spend. discipline procurement also

by XX, For we the have $XX approximately September spend million. nine-months third-party ended reduced

reduce $XX this about further remarks. unfavorable space more underutilized And XX to our and progress either square provide China. by million continues our In his listed about of the non-GAAP we masked Year-to-date, quarter, by reducing by offices our estate will including the dozen to in holdings, slide. office than and our consolidate real year-end. Americas in on track streamlined footage third or expense closed With half to right on sized the SG&A X% we're presence color company we've locations was respect items on our Jeff during

SG&A a Looking the in result as our noticeable Now expense. which easing quarter, in as progress from initiatives fourth unfavorable to improvement items the well of we our expect DN will sequential

conclusion, our of as as percent XX.X%. has improvements substantial continues drive profitability past relatively percent ability XX% our Looking by reproduce same company to flow quarter to the months, are to revenue through points SG&A we XX SG&A revenue a that to lowered cash XX%. was confident and as target we And reiterating period. results at to year XX revenue remain the basis demonstrate prior of in the In our the our non-GAAP third even and of

about of for our order and upon currency our billion year-to-date are headwinds current outlook to book, $X.X XXXX. Based revising results, our we revenue

of performance. We compensation outlook for in flow than higher our narrowing expected million also adjusted million expenses $XXX to EBITDA on cash $XXX of stronger our based light are

our positive we from to working $XXX cash flow our million On outlook million. to of range modest are achievements, raising capital $XX free the strength of a

I'll to Jeff. the hand now, over call And

Jeff Rutherford

Thank Gerrard, and good everyone. you, morning,

Our Diebold ratio. and strengthening financial cash Nixdorf position leverage reducing its debt third our generating quarter positive results our flow demonstrate is that improving operating efficiencies, by

excluding shaping reported foreign constant billion $X.XX contains the was the basis, segments for nine unchanged in and on business total effects and impact our as after our comparison of a currency activities. of of actions, year-over-year revenue revenue currency lines, and essentially portfolio shaping factoring Slide portfolio the both three

Euro headwind and currency the the to strengthening was versus against the a British dollar points the prior year, foreign against U.S. to The Real approximately million the Brazilian quarter $XX the during Pound. or lesser about basis and primarily XXX due extent,

lens same for revenue Our portfolio segments, shaping retail Banking $XX about the point actions while from DN declined accounted X%. for of delivered the X% percentage the approximately Americas, or and variance. another of year-on-year X% million growth Eurasia declined Using

to three the revenue trends products and business States. and decline Looking X% maintenance at due activity in revenue attributable largely in increased to installation revenue primarily Europe in the our growth lower Americas. software services The within X% in lines, is United

Moving primarily portfolio million shaping actions three discuss X% due Starting to Eurasia product impacted slide quarter. customers although in activity I'll decreased highlights currency third revenue, EMEA. financial after in revenue adjusting to for revenue services increased $XXX segments. the all our the Banking, during for Lower XX, to installation Europe with and

benefits initiatives Software of items operating Now million decreased expense. modestly last revenue mentioned to Non-GAAP about $XX was year from in as to relatively SG&A by comments $XX profit the Gerrard due million his masked third the our were DN flat quarter year-over-year.

In software by X% and increased revenue to product led million the Banking Americas growth. segment, $XXX

in Brazil. recycler from lower shipments activity XX Latin the in benefit revenue refresh partially the declined to and America. year-on-year in growth Windows quarter cash and United by in primarily offset growth North to continue modestly States, Service We in due revenue maintenance, America Mexico

products. initiatives. margins significant profit from the our a to less and experienced year revenue lower $X Now than $XX million lower from million of of mix well of services increased product ago quarter revenue retail A margin DN one volumes by coupled And primary profit the product declines. the due favorable driver expected this gross gross gross to in is primarily, as expansion as Operating segment and with product stemming year-on-year our

versus $XX impacted operating prior. operating profit expense Additionally, higher by at million was slightly the

and a year-over-year XX, our million Profit our profit a and as we included of Gross approximately Now million. cost increased $XX headwinds currency slide of DN primarily provide $X result gains year-over-year productivity reductions comparison On metrics. non-GAAP foreign

and and Non-GAAP gross reflects Diebold the our on XX.X%, approximately margin sustainably XXXX basis best our to -- increased our which sustainable focus XXX improving performance points combination Nixdorf is and of profitability. since

than the mentioned initiatives. legacy Gerrard's higher the are and better expense is met masking XXXX to year-over-year the Wincor of million to which expected unfavorable price. which third and our incentive includes items in quarter third was Now progress stock in DN the of our compensation, due include few XXXX, from tied during items the to comments, transformation. value XXXX perform, $X enable DN HR On quarter, company's Now cash do million $X $XX of these expense performance approximately As quarter on the are flow a in expense a accounting basis, DN in program, the annual performance, of SG&A of mark-to-market million our option tools And in items invested to as other under large much

expense. report we sequential a expect improvement SG&A in quarter, fourth In the strong to

margin savings quarter million, from operating to our prior handful $X selling in period period have year-over-year XXX a rose include Correspondingly, points reclassification to basis versus and million Expenses involved of This realize by $XX X.X%. cost employees change a the adjusted X.X%. initiatives, Now adjusted in by service EBITDA DN to in margin $XX million activities. both who operating the $X expense. and EBITDA million basis XX increased points from pertains current profit of been million to the pre-sales prior approximately $XX the to and As year expanded we of software to expanded

our accomplishments, XX, slide cash pleased capital exceed to to to free continue Moving expectations. discuss I'm our flow which

$XX net strong flow, be of million which versus quarter XXX million cash million million to improvement harvesting prior XXX free management enhancements to Unlevered attributed clear generated third period. and sustainable gains free the The governance, translates year quarter, process $XXX capital. we the a for cash For can focus, the flow better working was better year-on-year. for

and of XX% their revenue, net for in year-over-year. of working payables collections, of XX.X% performance tremendous and a to like to finance from dedication recognize dozens decreased hard As segment and percentage the capital I'd work management, inventory leaders management.

quarter even the $XX when higher integration during Lower the offset cash is you more flow. increased payments cash in gratified generation third I'm million interest in approximately the improvements payments versus that restructuring impressive prior to Our debt company's by quarter year. by cash sustained outflows. consider

approximately cash million flow, the of which versus Over XX months comparable past we is better million by the generate $XXX period. free $XXX

by to on in employees these period approximately million Based approximately think have about time we $XXX unlevered same the Over engineered cash. million. manage cash flow cultural clearly results, improved $XXX our DN change the and way

provided of we've XX, and liquidity highlights slide of leverage On end our the as September.

Our liquidity available plus includes of credit. cash million million nearly of $XXX $XXX

third and through The in to in leverage chart growth company the transformation ratio EBITDA our reductions Now leverage needs, past progress seasonal ratio five net our trailing company's has R&D for steady the page illustrates our was So and and the XX-month approximately $X.XX debt approximately period. liquidity debt meet the flow over DN on quarters. reducing was X.X end in the cash times invest At this and the the program. sufficient of billion, quarter, fund

the A of vast the creation majority $XX Now approximately of the This sale amending April We Since to to right credit access is time Term a extending our equity from transformation. last the secured December facility, reduce our our ample of XXXX. value from and in to our net markets extension capital of deliver significant call, from by we schedule DN provides debt in to revolving and our on successfully Subsequent our Loan maturity this XXXX our the earnings change stake quarter, million used proceeds debt. slide. shown Kony

in demand our Loan lenders Term to oversubscribed. and our confidence was pleased event. We this the to for at our range strong receive to for result priced lenders company. We A as our the proposed support I thank a the you the unchanged extend of was refinancing all low-end want and debt from of are total of

already quarter, a rating treasurer the during activities. Zeeshan joined to Additionally, Moody's capital the our and new a and company cash credit Zeeshan management is market from making lead difference. brought agencies Naqvi global we on

entered to debt. Jim has pleased act. has Jim interest to Diebold our a year quarter, in reduced will the Officer. leverage robust interest I'm as transformation. and $XXX Accounting opportunistically also and our rate from Chief announce background Barnett to finance joined We and During we we save that Nixdorf this experience his $X approximately a our rate for global own million rate expect drive per million floating swaps approximately risk, their economy,

On slide approximately currency well the generate XXXX as reflects to significant environment. which in billion, headwind, We expect and drivers. of retail XX, the outlook we changes our key revenue now update $X.X our as for

outlet than includes triggered $XX an million now to better for additional of by $XXX million flow. incentive adjusted Our our $XXX EBITDA cash is expected is million which compensation, and

For DN by $XXX approximately occurred we $XX expected which about of million expect of of of and well divestitures as benefits, benefits million normalized million, to the $XX of as inflation from year, XXXX. net continue these compensation, benefit Now savings partially in non-recurring offset

transformation taxes, $XX million $XXX payment capital, cash to expenses, uses. approximately free free least components interest key million $XXX approximately other million expense, approximately and of a restructuring has flow a of of DN working range of outlook million $XX We're capital to to modest Now flow million improved from from cash generated positive of of include for $XXX cash payments and $XX net the for million $XX at cash and $XXX expenditures, of Our cash million. expecting million XXXX

generate prior to years. been cash capital quarter year-to-date our has reduced XXXX on levels inventory our accounts of versus receivables performance fourth the and performance and the flow net the and on lower opportunities working of strong payable Based of in

enable a us the secured down XXXX to flow pay mid noted XXXX used aforementioned Our outlook free of debt. should fours. flow ratio our in will It leverage end be approximately actions to with cash also should balance the and XX% that sheet be cash

As what our like to expect practice year when I'd provide the we about results in February, next comments a to to provide report fourth formal in XXXX. guidance however quarter for few

First, with be the to million. certain reduced completion DN's of by is revenue $XXX actions annual approximately portfolio shaping likely

customer backlog described to markets, confidence current points with moderating revenue coupled certain our lower by modestly Next, in year-on-year. Gerrard,

such Our some DN of our DN investments a wage gross volume, certification other savings we costs also revenue our Now inflation, least expected certain and to for $XXX to deliver offsets lower million, Series, issues needed however are at and fuel transformation. expect support

to a expect flow, respect growth With EBITDA and free we cash modestly lower restructuring adjusted year-on-year positive from contribution expenses.

now And operator the to the the back I'll begin period. hand call Q&A to

Operator

Instructions] Our Ishfaque with [Operator first comes you. Faruk Thank question & from Company. Sidoti

Ishfaque Faruk

you morning, My ATMs DN sense could been the the good give looks how so pilots guys are has Hi, for and is you it's undergoing pretty like question first well, Jeff banks? XXX in for Gerrard. going Series and certification us a far, it

Gerrard Schmid

I Good we've very, in very to DN Series. Ishfaque. our remarks, as been, Yes, morning, my pleased receptivity been with said customer we've

in in And to we one that move them actually in prepared our XXX them made installed process reference production. have in of into that's going banks before number required We the production normal through the a banks. remarks, they're certification can

for to say you'll start see the still obviously these but of so extremely indicators a I'd everyone this can early the numbers to are us large pleased a take stage nine ahead been XX reach period I of positive. at months, extremely bank machines. in given demand that the before for remind period there's will process production, So certification we've with

Ishfaque Faruk

you FX with slightly process mentioned do next you in one that some headwinds certification the length Jeff. Okay, more decline to the expect earlier? Is may of be the modest revenue Jeff, guys lower year. or you and like of that said for something

Jeff Rutherford

to expected spoke It's Gerrard not the FX on call. activities It's to due more certification. earlier the to the headwinds, and in the that markets

Ishfaque Faruk

All right, that's it for me.

Jeff Rutherford

Europe that as so, that some softening market. seeing of economic in both well demand contraction in And FX some given in specifically it's as we're retail

Ishfaque Faruk

Thank you.

Operator

Our next Research. Kartik with question comes Mehta Northcoast from

Kartik Mehta

I'm on you continue ATM still -- Gerrard, And in your weakening into that so talked little anticipating now that if Gerrard side Jeff, it some to a or and impacted Europe. you, XXXX the is already and just And orders demand having yet? wondering ATM strictly impact about is related? on an hasn't did it retail bit are Jeff you

Gerrard Schmid

you XXXX. been it's date on primarily the to we continue expect happens -- Kartik, through probably that would front, and on retail to what economic depending

On only that of the It's seen handful noticed quarter are we future from the to that date but are mindful But any that tied we thing changes clear to banking necessarily may unfold. a deals economic into side, this haven't was conditions, quarters. we extend yet in there. obviously not impact those

Kartik Mehta

America that's for I wondering countries, you since then presentation that slowing talked about the And any largest little America being bit. Brazil other And Latin a I'm you are that slide Latin in specific the think -- or countries maybe is in is that market impacted?

Gerrard Schmid

said we don't I had been see but believe in we America that Latin comps Kartik, Yes, there across active America. certain tough countries, Latin some activity where very continue actually was slowing, to

Kartik Mehta

Now finally, Jeff, maybe would higher color a SG&A a be revenue -- costs what would Obviously percentage those said just of some anticipating decline related conditions? if Maybe I gave than XXXX. indications what Thank the the bit be you. year-over-year. from a because do then, of of decline FX two business you're little it and you And of Jeff offset great. savings think on so you just DN portion And think more others, you're is anticipating what then on you

Jeff Rutherford

Yes, right. down is I Kartik, just question clear, and just, think be XXXX, we've covered your on, to about

XXXX. we're we in weakening on talking not will FX expect about yet guidance XXXX, what in XXXX, that giving but in headwinds expect be is So Europe and retail we we're

in and that at investments we're to time may initiative, also said long-term that. we when that'll growth, Now to to of we're have need what to get release not looking level make XXXX we're but some at have point P&L DN we're this to going experience to but And ready effect that. we going the be expect million, still we them offset as $XXX far As inflation

Kartik Mehta

Thank Jeff, it. appreciate I you,

Jeff Rutherford

margin certainly that expansion the gross coming SG&A and changes in expenses. from major reduction some expectation our But forefront in And through. are that of we're is at in expenses

be to haven't up EBITDA given on year-over-year, it but guidance expect We yet. we

Kartik Mehta

thanks, little I to just better. trying was it given some commentary -- you just understand so Jeff. Okay, had I a

Jeff Rutherford

Yes.

Operator

next Our Summerville from Davidson. comes question Matt with D.A.

Matt Summerville

to anticipated on down. the clear debt be want pay and --

at midpoint the $XX to to range, reducing cash from free be your what like that used there, of also proceeds to debt that half you're please? So, million, $XX numbers of in went saying correct addition net million Kony in reduce will sounded debt. Are my

Jeff Rutherford

Yes, that's correct.

Matt Summerville

Okay. And then kind of FIs maybe compare please it the readiness cycle maybe of and prior pertains contrast you XX the things as kind of the U.S. this Gerrard, cycle. could of versus Windows to side

Series? feel a you get terminals to gen is the to tank. And related of left of seeing customers delay current in next sort a trying have opting DN how purchases DN the of the follow-up then in also favor I for Are much Series. Just for generation

Gerrard Schmid

Good morning, Matt.

think to as break I U.S. the different market, tranches. related it So I'll two into

beyond the their much we XXXX, order from U.S. good very banks, regional I continue at will that XXXX. look well into from see are large the to to buying continue Win of that activity. take a as backend upgrade a number cycles XX taper those don't anticipate necessarily so activity the XXXX, that to their When look banks, of off We extend through normal starting refresh and anticipate through we activity them

tale break stories. it different two the into So of I'd

any banks material relates haven't patterns. delaying As of of Series, no nature we current seen any the evidence DN to buying

good of and run certification portfolio overall Now look when those Series. there, there's buying of with and a starting here processes again machines you DN plus to at one-offs mix the our have we still but the existing fleet banks

Matt Summerville

Jeff, to to is kind regard? there that flow respect maybe the would number kind it follow-up, maybe through for a flow-through the we of you going of go-forward XXXX, in then in relates on think And as million XXXX forward as triangulate and savings, that gross just $XXX as about us with a the

Jeff Rutherford

$XXX but inflation XXXX, -- and other expected providing going by million offset similar going not to we but we're already and it's 'XX. be be said again, it's we so XXXX for what to in We're 'XX, in $XXX have saw Yes, going to in investments. to guidance million

So less same ratio. the will probably net the 'XX, dollars than it'll be of but type be

Matt Summerville

we speculate And basically your should of further comfortable then, Would you saying it XXXX. coming kind be Jeff, out leverage you're cash we saying target would next maybe ratio maybe in times, of year? net in also where care see approaching sub three-and-a-half? improvement Are free should to you four

Jeff Rutherford

capital I said we're give of guidance say is on working cash going we're harvesting the the quarter. had difficult though for not opportunity EBITDA. -- going for No, remember, What year already this I good today. in fourth to 'XX to become not to going year. an in And of such in have going flow, comparable is would starting fourth fourth us have to the same a that on in little you you're of it's capital to job a that quarter. see working a and We've We're in we done already bit that very that of expecting last starting the that quarter increase affect level

of be fourth hardest because In just would be will we had fourth such last event. are quarter not fact good as quarter 'XX one-time continuing, processes it's -- year. the time, collection a hit spread our And over period it's now

earlier we're said depth because going fourth heavy some of about to after it portion two not money as relative so harvest and does a I it's all is into quarter the -- of of we affect quarters the finance too what expecting next going to transformation, cash be moving We're of the to year. on have goes much so some capital. going I'm that people, get the to to the spend still not but are a in first high congratulating going restructuring to working that We're company in This And flow. payments. But company.

So, we free to but for have flow, cash going an expectation we're not guidance today. provide

Matt Summerville

it. guys. you, Thank Got

Operator

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

Justin Bergner

Gerrard. Jeff. Good morning, Good morning,

Jeff Rutherford

Justin. Morning,

Justin Bergner

to And relates confirm XXXX, shaping on and revenue versus experiencing I the actions questions versus couple whatever you're portfolio markets. guide are FX of $XXX core here, much wanted XXXX, in incremental reduced of an for A into looking million XXXX? that $XXX headwind just how to million then the portfolio shaping that actions

Jeff Rutherford

Yes. And going revenue, portfolio $XX so the of million number to for effect be and FX, affect approximately shaping, million will on the little it's approximately under for quarter. a the just $XX same be fourth it's

Justin Bergner

And it's million portfolio great. year? actions revenue in this further $XXX a year-on-year Okay, that versus shaping reduction XXXX, from

Jeff Rutherford

reduction off the Yes. throughout year, Yes, of end be spread 'XX. so but $XXX where million to going it'll we're

Justin Bergner

that's helpful. Okay,

there those other cash we of was respectively. I Are $XX million $XX look flow to persist in because and was in that headwinds of taxes Secondly, benefits? free million your sort and cash and those one-time a benefit other? sort guide commented know guess past XXXX, lingering taxes some cash the moving Are from to benefits flow, I about going free into as on you've

Jeff Rutherford

going that $XX favorable other a yes, but have there Gerrard million you thought right. had is it's go some to here's some forever to prior deals net and we've periods, questions payments coming than to deal, because guys about bore to I at out the one-time be and but death, what 'XX. refund, smiling had XXXX. love going into Yes, knows to on we I'd and he We are that last, me in taxes, we're we're on going some be can

all want be principles costs all money distribution structured manufacturing United to going our the are the than structured selling to is distribution into a and much tax making we're -- also we're more They we're too this and problem is is, from in know, way structure subsidiaries, products that we're are capital we're States, of they Germany subsidiaries. as perspective the the principles. our and you the Going our forward, and in are to

have our out. that right, to So, we will we When balance go that balance out, taxes down. cash

we are taxes we XXXX. cash as So, favorable anticipating movement into move still a in

Justin Bergner

comment coming little product service revenue, and issues look weaker I European bit little because lastly, on of performance side, was picture, mean, I as Okay, from sort on I'll ratio follow-up of installation sort in might more on Win-XX if the a better you sort guess tailwinds of the sort your be into or Eurasia revenue this of service quarter, these big XXXX? to any of complicated, revenue week the overseas, seems it you more but benefit offline, against able performance

Gerrard Schmid

saw which Eurasia, we wrapped bit into that. total usually activity, in service around activities. We too quarter. various just implementation is much the services Justin, activity quarter in Yes, project-based in wouldn't lower lost a read I the

more we In in know our out in early is this quarter, to be we outlook muted been markets, we of started economic same in had terms see suspicion some signs to saw quarters, some seeing that we that of might than somewhat the Americas. on out for Europe light come comment appears may the momentum sustained of that that Win-XX, prior I rather have have evolving that and spread

say we continue watching view on So, I'd that topic. to have a

Justin Bergner

for thanks questions. Great, taking my

Gerrard Schmid

Welcome.

Operator

[Operator Instructions] Our Jost next Invesco. with from Rob question comes

Rob Jost

seven, I step to your Hi, quarter, want just third I and couple. take I the is XX-month a this down rates renewal on trailing the slide slide, have a a thanks, go to basis. and in on to services, take wanted back

happening with because contract be XXX any would there, reduction there's helpful? points that loss of please about what's basis sort So, commentary looks project-based, that or talk like

Gerrard Schmid

for a reduction. modest very, ties in one high Once really Americas in change but most not to the again there Rob retain rates, that business, we're these that our and specifically accounted was in structural units Americas to seeing to the ability quarter, one contract any related contract. our in of very reduction are Yes, that renewal

Rob Jost

Thanks.

points Okay, unusual expenses, then into glide points here, a basis you XXX few going out -- basis you're you are type about another XXX or XXXX, path and and one-time XXXX, wondering of I of thinking the as of about figure then XXXX, reduction it in glide trying targeting kind I'm out into path a just here. the kind XX.X% in called I'm know SG&A, to just kind

Gerrard Schmid

doing going stepped to it's movements It's and… right, because not things of we're and to be the going linear, the be some some

Rob Jost

Okay.

Gerrard Schmid

a things principles, level looking you you look know, at business, on Germany full basis, distribution the SG&A, to regional When will about, looking U.S. can and are of It's not we're and and -- on there, service G&A be particularly to subsidiaries, get and you I with you at handled some be looking things the I'll you at. we when linear. at. being a understanding going is, be some have can That give we're it of more be stepped. What what said we're those are before requirements the insight types

to So, targeted be that's provide are we we XXXX. but will we cost provide sold of also committed some reductions, to goods some in of the but that of going additional million when into insight $XXX guidance,

Rob Jost

thanks. Okay,

Operator

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

Justin Bergner

which I thanks guess equity-holding taking Kony assets that your In your on follow-ups. monetized there that similar are of are portfolio stockholdings I books, that nature? in sale, sort be or of Oh, assets for light other aware can wasn't the of my

Gerrard Schmid

Justin, ventures, few similar majority be Kony, from related limited There in to assets certainly a where will transactions to similar relatively our equity other it's we have move to position, are would up actions to historical looking but benefits, to Kony. which joint equity positive very for those position us. underway are a much investment lower straight some certain

would math, you and close know, do, a the those. the number we being once obviously we have said, have revenue when he update talked to you that $XXX you million due Jeff, in do divestitures we heard from in an the future, that to that obviously, on that declines of With would when impact we of expect provide not-too-distant suggest as XXXX about will

Justin Bergner

are portfolio of more Were to quarter, of revenue? [ph] any proceeds or relate speaking that that you about great. or would from Okay, perspective, asset exits in additional kind meaningful the sales shaping current disposals there

Gerrard Schmid

Kony, in anything than we last haven't material had the XX other Yes, days.

Justin Bergner

you. thank Okay,

Steve Virostek

call today, here well, our time, follow-up give day. to everyone us joining a your at and Great, you appreciate and call questions, want if I I Relations. have great please thank a for Have Investor

Operator

today's Thank This you teleconference. everyone. concludes

disconnect. may now You

Diebold Nixdorf (DBD) 29 Oct 192019 Q3 Earnings call transcript