DBD - Earnings call transcript Q2 2021 | Diebold Nixdorf, Incorporated

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

Operator

Hello, and welcome to the Diebold Nixdorf Inc.

Second Quarter 2021 Earnings Call. My name is Emma, and I'll be operating the call today. [Operator Instructions] I'll now hand over to Steve Virostek, Vice President, Investor Relations. Please go ahead, Steve.

Steve Virostek

welcome, XXXX. Diebold and earnings second Emma, for call you, everyone, Nixdorf's to quarter Thank

on call Financial me Slides Officer; our Joining today's remarks, to and Chief President prepared page Jeff Executive the and Investor Rutherford, of have Chief we Officer. Relations accompany are To uploaded Gerrard dieboldnixdorf.com. Schmid,

the as On that in the Slide replay being afternoon, schedules materially earnings a we comments this well is of statements. for risk we each recorded today's non-GAAP that X, are be company's of remarks our be the reminder Slide comments Later differ tables webcast and forward-looking cannot that as and these performance. On there we in reused actual results helpful supplemental will financial post metric company. can be slides in a the release. IR located without will today have a to will from Our certain include the Reconciliation assessing factors participants cause are today remind I believe made which all the X, information, this could to permission website. of from our today's will schedules number which non-GAAP of

And may Additional events filings. render information the today, this is I'll information factors to mindful the now found that forward-looking hand to subsequent company's Gerard. be information Participants out in on these can SEC our be call of date. of should current and over be as

Gerrard Schmid

during quarter customer services solutions product pleased and for hardware, model value We're to company's order business with our everyone, our across and continued second drove our our us are thanks as track updates. on growth. propositions morning, customers for seeing The for that software. strong extremely today in Good joining the demand perform transformed the

we cash Slide environment leveraging expect to in inflationary on While the Since complex a continue, how will we're the business our these gain XXXX Banking late strong, a outlook supply environment our we're flow. grow share our is impact in X had profit quarter. adjusting differentiation market that our and and highlights and operating competitive more demand conditions modest for business. we're

quarter, the orders Retail that by XX% this versus versus quarter, the segment period. XX% grew growth, revenue year our delivered spearheaded prior During X-year accelerated and a year the X% high. we Product increasing reaching prior

period. pleased with growth And segments. all our demand Our XX% our am strong Banking for with business, accounted efficiencies the innovation and ATM approximately broad-based maintenance DN broad-based over in strong customer DN new Santander ATMs, Group more to by customer all than success next-generation operating year XX% Series. Argentina X orders. Mexico, of backlog U.S., was In Brazil, Chile. was across versus and global the We Series Spain, our with partnership for with the services X,XXX deliver I adoption including DN increased our of expanded prior Series and business and

at for top Additionally, United XX DN a with in orders displaced a top States, and bank XXX terminals. Series competitor both XX nearly the a we bank

for Bank for DN $XX their refresh Series to won Brazil, Vynamic National agendas. National than Nixdorf and with Vynamic value of nearly We Post, legacy more examples contracts also Diebold for security booked Egypt through ATMs improving X,XXX market valued displaced clearly with we and contracts DN and X of more These government-owned XXX to we a In licenses customers recognize point at million Indonesia, In bank. sizable software recyclers. competitor a digital order DN with cash our at the than Egypt large as maintenance. software an distinctive share Series, Series

enabler Using to Difficulty] causes to the increased number advanced the than as of and connected XX% cloud are AllConnect XXXX, number [Technical gross an sequentially widespread quarter. a use with computing operational ATMs learning root is response. expect of reducing service This our efficiencies more reducing identifying the the algorithms, costs. to By experienced we our we remotely increase of ACDE prospective our machines are XX,XXX Engine the margins to service more connected from XX% also and XX% We being of critical Data machine to effectiveness calls, during and range. over increasing

our strong performance continued business Retail Our products. its self-checkout very led by

in at quarter, During excited the and we're self-checkout competitor's multinational solutions extend products to retailer stores. the nearly reached and solutions our a replace to by a opportunity based we home the clothing to X,XXX agreement U.K.,

high-quality household retailer at award nearly a Spain XXX automate software terminal an products, and in revenue apparel levels using at than at majority contains a the service in Austria. delivering cash a X $X high flows self-checkout our more and today. multinational and furnish a strategy, and self-checkout counter maintenance We discount artificial devices booked valued and across with of and And intelligence to of model million product checkout our retailer Sweden, capabilities. Banking recognition. also initial large Retail overview to contract segments, our fraud the foundational reduce an we strengths of and signed Slide image and core our market-leading, for beginning producing Across accounts growth services

X of ability the our slide. our opportunities growth right market Our in offering gain the to solutions higher Strength share core these differentiated businesses. are enables on shown demonstrating in

to market growth we wins In underpinned addressable cash in and revenue, managed with that to large ability addition quarter. contract for services market a self-checkout make deliver long-term in in leadership and the our continued are scale. progress managed our at by we recurring support value-add software dynamics pursuing new services, to recycling, continue market In

and X-year Asia in Europe. A.S. retailer, mobility win Retail Italian bank our a health a multiyear at For international across XX,XXX million. $XX were agreement In to services large inventory new valued pleased we a software managed Watson, and deliver contract devices largest example, secured and world's to we business, beauty managed the services, with with stores

great of will Our technology and online accelerate shopping plus process. retail convenient checkout off-line Watson's partnership in A.S. experience deployments a support

of Africa. our availability which of highlights platform With scale were We monitoring the a X,XXX by respect for interface. improves through Vynamic multiyear a in licenses ATM fueled agreement quarter offering, continuing selected Nedbank was new with multi-vendor to software at approach, debit bank. Payments a our in software more because our than Vynamic performance to our software and single top hardware are constantly we global user One XX

IVR million over each per transactions over of transactions expect we the We are this X XX,XXX include are from the end transactions its months. expanding all and processing million and across to By branch more the year, day. ATMs nearly than few capabilities next channels X to process day

less freight for Strong logistics left costs, mitigation illustrates how container higher has risk and also technology combined maritime encouraged trend, of to to expedited very capabilities experiencing and other in company dock shipping progress, to better continue need we'll what We solutions. mentioned our DN, This proving difficult reliable our global by and I become the actions chart more are freight a advanced The supply on We're adding some labor earlier, many environment. we in with due global but trucking driving seeing. is demand increasing bans position the invest effective. growth. for has strong. challenges currently capacity. examples Slide companies chain for operational highlights challenges in our been for are are are X order the limited capacity,

Because economic sectors strong multiple show support our digital, semiconductor been well work is the environment. as X, across higher which chips most pressure. to as semiconductor for of demand our driven for by side among components running electronic devices. a has products chips On ahead with important the activity sophisticated Demand inflationary and procurement the Slide on is our devices right we are well demand of supply, global are markets how strong global hybrid extending a in cycles highly for chips

our While needed procure we to demand, execution model. plans semiconductors key is fulfill to our the continued strong have detailed to

Additionally, is implications will steel, discuss electronic financial of driving the cost and such comments. factors other in components. plastics broad-brushed the these input of economic Jeff key as growth materials his up

solid that the our environment and solutions. we're call seeing I a services Before it's Jeff, hardware, worth software over for to repeating demand hand differentiated

Our you, fulfill focus chain global Jeff. customer demand. is to supply complexities managing Over to

Jeff Rutherford

benefit XXXX I discussion software and first our was key an good a Adjusted as divested of $XXX quarter and versus increased second for X%. results for of the Service was million, Where applicable, a and XXXX. million increased revenue product divestitures, up and from flat. currency second $XX reported XXXX, of X.X%, to will the quarter X% everyone. detailed $XX quarter X% make second and X impact and year quarter on results currency variances million foreign businesses. revenue foreign Slide relatively you, increase excluding our a Total over with period. prior I comparisons begin also more morning, for Thank will the

in Product was XXX meaningful segment and line total million was cost costs This parts $XX transport labor approximately delayed Banking versus year the Banking geographic of revenue to the second $X usage year sequential benefit on million benefited year gross due million in were quarter versus million from first reduced decrease revenue unfavorable or of lower unchanged. $XX than versus cost points higher an quarter and a from growth On $X primarily in mix approximately of prior higher down prior quarter, Service for by lockdown slightly with year from margins approximately $XXX basis prior during the spare points. second expectations, gross XXXX. were included When savings. freight total approximately our basis, Non-GAAP compared the were basis quarter in Gross basis nonrecurring XXX products. second During the million lower period, extended primarily revenue margins which a and Americas points benefits XX.X%. profit prior period declined $X and the input impacted of to due and of gross of XXX XXXX. service million period of our was the quarter margins profit margins the times.

In addition, delays unfavorable the mix. aforementioned to revenue the contributed

of year basis, due the contract freight margin was experienced strong and stated, Americas Asia. I share which benefits approximately We divestitures. discuss in was million Over to and approximately and foreign Eurasia prior normalization Segment profit $XX impact operating basis of in margin growth X, points $XX increased market X% did management the down basis million down product year led proportionately cost our $XX X% headwinds $XX included Banking second quarter facilities primarily which because product XXX and gross million points next-generation expectations, of from gains year, in investments. increased of currency the million recur; was support our ATMs, to previously. the and -- to X, $X Banking not million as to SG&A When the When and EBITDA Americas versus the countries, prior the points When the by of growth our our our utilization. services of costs, gross million versus lower which costs. in XXX and XX% unfavorable margin increased is investments manufacturing compared margins from The Operating mix higher Series $XX contribution $XX expense $XXX million of was net compared the recur and year, year a by trends versus XX.X% software divestiture reflects quarter. DN Starting geographic to of profit input include the and between geography. share growth not prior market higher The better with which was Mediterranean slightly unfavorable prior initiatives million. freight on period year segment mix distance versus first and growth million $XX planned on foreign million Slide savings I reductions. $XX gross $X margins quarter delay. of sequentially. DN lockdown sequential decreased profit of timing benefit cost prior ATMs. revenue Slide in Gross versus with the the from million as currency XXX will million and Banking in currency company's On quarter decreased gross South key growth [D&I] million savings $XX Software due the from $XX and our Segment the in revenue customers year-over-year product X.X% XXXX product order and due Series. revenue increased profit order impact same the certain resource America, aforementioned and quarter. Banking year-over-year. increased decreased the highlights. $XXX for $X lower million; of of operating we declined of located expected. XX% nonrecurring with mix grew Series savings included foreign previously compared as Europe and of for operating North DN mix to Backlog managed million; The period due margin $XX which revenue prior X.X% because realized the and Segment of $XXX quarter cost a drove unfavorable in the X% prior from our revenue are higher period million and very basis variances our after of to EBITDA American unfavorable Segment larger cost did expense mentioned a million of XX% net in prior for order revenue of year gains America. lower adjusted year via result the included period of the adjusted product a adjusting affected primary physical

on Slide to Moving X.

led strong our and very and foreign increased reported $X XX% a Product versus prior adjusting for growth approximately products divestiture of revenue $XXX self-checkout benefit was checkout solutions. delivered point-of-sale million increased million Retail $XX order our performance. period. as after of a of by safe segment Retail XX% Our XX% headwind million. the Sales both significantly currency and of

software company the and gross increased a more Retail profit growth base Due points, installed basis $XX margin our primarily gross from services growth, we also revenue our revenue XX% to to [expanded] business. was As increased million. support higher increased XXX company's of generating a $XXX strong the are increases, investments. ratio total reflecting favorable and million reflects Slide end balance maximum mix by covenant schedules. investment inventory increase will performance debt million XX, cash period our below partially and free in short-term free million including of reduction to higher solutions. our of $XX payments. cash safety self-checkout $XXX cash a increased ended with the use. our quarter, of than slightly needed EBITDA, company's restructuring seasonal cash The in first flow due the was leverage liquidity, maturity our use of Xx. XX offset decline June of cash quarter Unlevered At demand half in well year flow expectation. the I transformation stock, as prior The update the and versus Xx leverage On The summarize of to and and and

earlier. which foreign November On the XXXX. our and our contains no of XXXX. levels $X.X order gross we maturities XX. offset book June until Revenue $X currency right billion our of side logistics dropped we is as of working to have outlook debt this longer update to of XX updated material of schedules, Note, because billion for Slide unchanged slide, benefits strong

modifying and to to pressure range adjusted million reflect million higher inflationary in EBITDA are costs. our freight a on million $XXX to of $XX materials, $XXX We by particular, approximately

flow revised is safety investments free outlook to $XXX stock outlook Our making as million and profit in global our supply tighten. $XXX our plus million chains we are cash includes

Our free outlook XX% XX% in cash EBITDA reflect material flow XXXX continues from in to rate XXXX. in conversion to the improvement approximately to a company's

back call the remarks, hand concluding to our For I'll Gerrard.

Gerrard Schmid

messages. Thanks, our call Slide X XX Jeff. with and I'll close key

XX%. is customer backlog growth our differentiated enabled experiencing and product we're with strategy our up First, XX% showing solutions progress, orders and and for digitally demand solid strong increasing

of capabilities. realizing are We're ATMs. to our Engine DN is our and broad-based Data business payments accelerating. adding market with adoption AllConnect our contracts gains Series winning We share Customer

our to level enduring attach Collectively, growth continues model. business high strong of business rates. a us service accomplishments from solutions confidence the Retail and self-checkout and these Our transformed our give value deliver high of in company's solutions

manufacturing plastics materials globally. The manage leading plus profit mitigate and Nixdorf and company The and other schedules, second on and for to freight environment semiconductors will companies These many and key on such outlook the inflationary message with suppliers our lead procurement, flow. adjust supply are more exceptional to that XXXX a and longer chain volatility. Diebold doing challenging to prolonged other continue components, teams transportation work times is operations other work confronting technology-based higher electronics, conditions we are diligently to cash direct the steel, our as pressures costs are

as growth However, are that our capital. as solutions our pleased to and the Now free call and DN session. business yielding in which we flow model, operator remarks, and in back of our growth providing strategy strong our I'll through Q&A executing program, strong cost the our all prepared ongoing closing, order the invested our improved of gains efficiency differentiated return with the leading company are for team's concludes our progress well cash on are hand in This discipline to

Operator

Instructions] Summerville Matt from comes [Operator Our first question Davidson. from today D.A.

MattSummerville

of couple A questions.

the negative that. try some million of First, $XX instituting actions you're sounds side things, like mitigate takedown. It EBITDA and to the on

I looks what And like a do you what of you with guess maybe number. can in $XX if are that? help net price as I'm what gross to doing is offset of terms So some mitigation? curious well that number capture million the And

A -GerrardSchmid

so as material direct into inflation X well Matt, it level, components: freights break a as high let's down inflation. at

particular, now pressure on massive sea front. it's in where, a that more freight is for the aggressively side, direct our amounts tell meaningful can I'd material the side, to you On on look our various very supplier to inflationary challenge Where mitigate capacity, more us we with that we on the of continue of work for for demand right seeing materials. we're mitigants. pressure given base just

our of look are environment. our a reflect clearly to yes, In solutions at continue continuing adjusting to portfolio inflationary the to entire of our increasing of and to execute terms customers on question, value your we second part

JeffRutherford

Yes. add, A thing the is I this Matt, And Matt related are logistics. to other majority -- of sorry, would Jeff. adjustments our so

people have we to especially [Technical working we're cost We to we are do the pay do have increases. inputs and pay that. to going other have to that the the We're aspects to relative to There's and Difficulty] to the the have time can nothing on of get product cost to the increases. going -- rate

MattSummerville

would XXXX Got it. I relative a against, up orders comparison to somewhat XX%. easy Obviously, with that assume,

maybe have -- you to delivering guess relative So demand would what maybe context kind comparison quarter Banking like your I of was underlying into and I And that of second versus you you're could in then 'XX. share outgrowth the help if wondering put illustrate what feel Retail gain? to the do both relative looked to

GerrardSchmid

X,XXX say and was roughly side, XX% all Eurasia clear of those against Retail, I in easier, we're base net where new bank top growth frankly, comment several XX for on relative because from in This activity evidence across that we their was the where self-checkout while seeing relative, but in any bank on, sales at customers the events. related all elsewhere. the as value with base Retail higher my that earlier seeing Eurasia, in of top segments broad-based the start X the win our the mentioned examples we the And And competitor. to a in a also would some made most last past And on in X elsewhere. Banking, displaced we is years. U.S., of years across, some And in And highest benefiting earlier share market on market around the for at side, winning level and important absolute Banking growth, seeing year mentioned expansion the important U.S. I a XX each Americas standing and and as broad Matt, delivering that we're but Yes. who renewals I a is other see brought the the from installed comp can bit stores coming prior potentially share range. dollar script ATMs a today important as we're where earnings also adoption, to we're we're Banking U.K.-based little from large in than we what's more activity sales the that was a are broad Latin quarter. America retailer while well cases, with lower and higher, takeaways, very us

evidence and very there's well I meaningful our adding that are So customers. value very, think emerging products to our showing

JeffRutherford

Yes.

would would XXXX. revenue at of I that, look thing when Matt, the quarter, other to be half order product the back second The we we forget, entry don't strong add for had in

So also And -- against in Series. DN very conversion we're strong the comping and seeing we're that. a

equation contract to share relative don't forget of is strong, logistics. lag to So contract. increases also chain the side our service the and supply market which contributed after services that product and the gains moving issues But X-month to base

unit results product in strong base. contract strong So growth services

Operator

Chung next question from Paul from JPMorgan. Our comes

PaulChung

features can U.S.? pricing And you customers Series of displacing a have drove Series particular And the talk that win attracting DN I the about the XX kind of and What win. if expand there you DN as impacted competition? the and bank at could well top what So is in follow-up. the And win? on that how

GerrardSchmid

Yes. Good Paul. morning,

feel not on that them So that the market that. that that particular given that hundred the that overall cash in scale. What top reduce It handling technology quarter cash recycling machines predominant generation IP to looking in and XX leaders was Yes. top was in [cost] we've that distinctively win do We're was we there and an in a we our pricing. Yes, important costs, own capability. own recycling XX bank are to order enabler recycling secured our bank cash space. gives was for this seen their is cash several capability

with substantially XX that quite bank. that top expect We to expand

think as meaningful pricing the I institution And So particular Diebold that a historical and positioned, not was we in was a well not factor of very, equation. said, customer very are I Nixdorf.

PaulChung

weigh the margins, scale half? year? second does you And how you. gross The benefits second million we in that margin on 'XX. about half the some revenues, would the be push-out $XX seasonality maybe assume that costs then Is And I think in just think Got normalize provide to should and maybe on of in start comments still about helpful. of freight in way the half right of it? that to second gross any the

JeffRutherford

to take -- cost through we is what's clogging to Year, we to Yes. Asia. revenues half especially going we year. need twofold, as it's revenue the strong perspective, think a the continue do we're get going I the holidays, year that's the through get the XXXX. freight it order XXXX, to strength And we and the let's product receiving, in last to anticipate balance right? product -- even And that especially the half we're the first sometimes would will From had back through last hopefully, balance continue we see the say, of Banking margin upon we and the product we back of entry then New comparing to expect And in from strong strong it's some it And normalize, but growth through Chinese relief. also the and in it's we'll expect in it of it's Retail. based

ATMs. because of the margins year from that in and to prior a we lift will DN to mix in things margins is And expectation POS our in half have logistics, from that back off DN tailwind from legacy but half into Series self-checkout a legacy the of back ATMs one in of the see of So headwind a we have Series we do the in comparison remember ATMs. year,

PaulChung

then Okay. question. Great. last And

XQ. that this contribution. nice we the recognition Do How business that think timing do side, self-checkout retail growth second have for you the strong On with business the seasonality well. as And still seasonal very your expectations for well? order about was as of quite for

JeffRutherford

we say would I Yes, what just talked. as same the it's

continue say see that demand demand POS for the self-checkout think both only strong and We little self-checkout. some self-checkout. for That's we time. can expectations anticipate not self-checkout. will new But above We I to continue in a that's our

ATM also are self-checkout model the market in [Indiscernible] has. self-checkout. same that share We has gains unit And seeing

high there's to self-checkouts, extremely conversion an base. we As services contract install

service So we roll attachment we continue self-checkout, to see as seeing high to we're out XX% -- contract.

Operator

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

JustinBergner

in chain to the Banking it A The that's to and a there reduction due that Americas EBITDA guide Eurasia Or all Banking couple is of modest essentially within Retail? of supply questions. is relevant the pressures, piece segment?

GerrardSchmid

Yes.

let's break different pieces, Justin. into So it down few a

logistics. heard pressure that say inflationary direct both as as in earlier us You on well materials seeing we're

So is segments. evenly pretty across materials spread X all Direct

is have a smaller their the leverage inflationary to we pressure part that that. offset However, of it given procurement of some

In of -- it's world. reported move just -- But around particular other case, capacity the terms Banking, loads. we other than costs, than any goods Difficulty] and constraints segments container of logistics more [Technical do X between Americas the in than sorry, sea Eurasia that the X U.S. Europe because

JustinBergner

Understood. Okay.

customers in you to to mean, some with of shipments you delay is shipments, these order I not about to, can Now to for much? expedited I a that or so having avoid feasible having with respect talked the mean freight? in pay cases, mean pay expedited for some I option freight.

GerrardSchmid

logistics the be hearing Justin, everything on there constraints from the as based the New Jeff through likely market, we're earlier, said we Year. globally anticipate Chinese to

work to minimizing of ATMs. to some things to are move around, I but we New push aiming out shipping to the we're given the customers we clearly sure cases, we Year. to have their we which needs, important say most expedited meet other wholesale here. with for Chinese things for often activities. use will is some Clearly, and In make continue ATMs spare So flexibility we the shipping But part weight products expedited wouldn't

JustinBergner

because it the guide can end to mean, I of then with hit allow high of maintained to can. on the shipments an what the understand case you that price your little the offset effectively side, sort inflationary of a sort guide, the revenue And just the is you of if to aiding the contours respect of happen revenue? there's I Or the help revenue me is Okay. mean, bit lower guide? And volume point at this

JeffRutherford

segments managing this recognition. revenue is a deliver all that the demand it can and incented the this, do to it's of a and our tailwind on a great But a highly little the to the segments from product are or job retail it's customer to this, you we they're to plant, confident get model. that's belongs to for built do have product those why guide, the the revenue whether the process. very think to and through The FX, do we Yes. Once customer products, are of achieve and And ability job banking wonderful and do to and seeing segment, based base. we into to bit revenue manufacture we couple that, a the that

feel we So really that the is U.S. The already logistics, especially time thing, we here only the what lead and is right, are with we've about, talked dealing for strongly.

GerrardSchmid

broad-based supply volatility inhibitor demand hitting only is it. the mix really the our because for guidance is to chain revenue Yes.

Q -JustinBergner

Okay.

of debt environment? Just interest rate talked favorable of know past sort one of one. a on couple Any update last the I you've calls. about sort priorities on it your financing given

JeffRutherford

Yes. before provision, our there 'XX. anything July Yes. in making And it to a of reminder secured an is expensive notes, overall do

interest of on off interest remaining -- July XX. based that's Now

talked We monitor are every about. the There some So day, number markets. that declined. things we've

But announce next not the discussions the anything months. with will investors in certainly Timing, relative we're XX timing. lenders we ready are over and to interested market. having We to be potential

obviously, for rebalancing, We be will purposes. interest

periods. You've talk prior that about heard me in nauseam ad

So this European will and and investors. banks investors be and banks both with U.S.

we'll groundwork XX pull the over the pull trigger. the it's when trigger, So Sure. time to we'll next be And months. doing the

Operator

Our from Kartik from next Northcoast . Mehta Research. question comes

KartikMehta

be as into delays It loss the at XXXX could that them? orders the through concern orders? into fourth delays concerns could we any we out in the a could that these doesn't much. sound lose cause that as the move or like delayed you But are quarter, all get year, Any

GerrardSchmid

Yes, this No, see very any Kartik, risk with at we we orders. of losing very, stage our customers. don't closely work

Our in as today material front General customers aware these We're other of Street are as every acutely a in talk don't there's business constraints. I the being of on own, the change right? outcome, at that impacting Look right? company. see unless no, that this a page It's well, likely not Wall section of our logistics circumstances. So the about

Q -KartikMehta

do you Or of U.S.? to how really change is where the think to manufacturing some manufacturing? or temporary this moving potentially you're and about thoughts kind you're manufacturing no any reason And

GerrardSchmid

on well actually pressure. the some operational of to we gains end of capacity support to to we move through operational offset as U.S. the expect of are And our those in terms start half we us to year. Kartik, this flexibility increasing Yes, create the underway additional our second some in

So that will bit. ease certainly little a

Q -KartikMehta

help well, as XXXX right, in to then Gerrard? And

GerrardSchmid

That's well. scenario we as in logistics easing expect the to right. But also be XXXX,

but -- So absolutely.

KartikMehta

year there. I'm if one it's about that right the the to already you just or could and or investment that happening still could really about if the On success last take next year have, financial for after now, you're the you're seeing then talked slides, of you off-net it benefits? the wondering having will in And question. maybe mode talk and success the one start

GerrardSchmid

have Yes, Kartik, of benefits we the already it. to of started some see

engine. I remarks, in connections XX% to we in our prepared my As said saw the sequentially growth

though, base said, that device we the being Recall, every that's see over in for That that of -- we have to And devices [study]. XX,XXX that relatively still north XXX,XXX now we we contract an connected. we're immediately installed early have start machines. So benefit.

what reduction ready. behind connected. us what longer-term it's that's each margins given somewhat confidence see we're that improvements just well. starting device And calls our the absolutely of our So slowly happen seeing as gives the is are happened machine-by-machine, as comments We're services expansion seeing to around to starting in earlier they but that you're for a

Operator

from Goshko Ana from Bank America. of comes question next Our

AnaGoshko

few questions on free flow items or cash flow. a have cash I impacting

think guide for half? that there second that, working in the to of times. the result update is And that year? longer expecting the restructuring capital resolve is transformation drag So be in But of on expected a would use reference to purchases kind And the the free year? of with just revised continue the costs inventory down to in the then also on cash an for potentially EBITDA. what lead the would Because free for DN cash flow you're tandem was total other and second as or half flow a I

GerrardSchmid

our The still lifted that stock. inventory. because Ana. a mainly that we're Yes, 'XX. be areas, to spending have in -- transformation certain we payments, million We $XX safety Hi, have anticipate from anticipate Yes. restructuring restrictions up we going in -- in we on it's

inventory have than because more We have. will demand, in-transit have of normally than more that inventory. year-end high And would at we we likely,

are the capital is So through somewhat today capital. gone modeling our inventory in is anticipating inventory. of all flow. it up short have increase will reverse and offset the cash working There other we model in inventory that are in term but are And in that we all, relative to what haven't we're EBITDA to we portions where in of to be lower that way, for will obviously bigger pull the traders guidance detail, we get to and By the working guided 'XX. to

So increase XX.

So of that, unmet all have stick in will contributors, now to at stipulates the impact restructuring -- and is payments we're one we'll EBITDA provided and with $XX inventory, other today. be slight fit million where deterioration positive we somewhat to right the we the guidance

Operator

comes Our Sidoti & from next from . Backer question Co. Marla

MarlaBacker

one characteristics see that ATMs? projected customer about side in being some the earlier Banking a gains driving recycling about talked of you're uptake the in you of video-enabled little So what seeing talk of terms you Can you're of terms consumer the you experiencing, on capability. -- the share market capability the bit cash on

GerrardSchmid

morning, Good Marla.

different adoption, the to some So but attractive the Europe see We the market. of preferences be and video other frankly, amongst focused U.S. more in banks. is capability predominantly consumer, U.S. don't an of consumer notably feature certainly broader seems parts on quite it end to midsized due and

be we've business. our a for been, less contributor Yes. will sure, certainly than for recycling material So

are however, that market good U.S. We within seeing, demand for product. the

MarlaBacker

-- -- the give over terms call, I And in about contracts Okay. terms service talked this revenue. think growing you've you product call Can percentage you've and seeing on new of last in of of the directionally over the contracts also X being the years? past say, seeing products us versus, of let's like terms include what you're for conversion, component in sense of written service today percent of a that what

GerrardSchmid

Yes.

I'm So let well. as Jeff sure may me start add too the answer then

own any exceptionally -- for services when typically even higher for our So attach is rate very, market very high, recurring Marla, direct hardware deploy the our we in yes, a have business, XX% Banking north of we services within renewal contract. organization, where with rate services our

and early high yes, on, product-wise, So product yes, encouraged we're Difficulty] model so revenues. our will future as we services us saying we're performance be is once positively by very several order machines that it's these giving consistent what's [Technical Jeff the for fuels the been growth pretty as deployed. seeing, is revenue look quarters, that was the consistent to higher confidence are flow into our past which services And pretty

JeffRutherford

even in higher it's attachment just high. reviewed for a And less is sale and Point-of-sale fact, It's complicated our smaller. And is in self-checkout We that, this rate extremely mean somewhere services point of device. self-checkout. week. I around is XX%.

MarlaBacker

you say, service say than are service important today higher because just that business? years -- the part let's those And would becoming -- they component overall were, the metrics of X, is X more X ago a

GerrardSchmid

said one put differentiated I Banking in But has stable, Yes. our propositions. attach a of is We've always focus higher. little rates in bit largely be on of XXs. that services earlier, sometimes generally lot been the Marla, we've that a seen making as sure our

the we've device self-checkout. As rate around the strong attach seen of in retail Jeff on a steady complicated said, a XX%. on uptick very very, more front, It's

broadly, the been by the differs wouldn't product, has but It in a there's been material the pretty I So say, years. change over consistent. attach rate trend

Operator

Bryson comes from Our next Wedbush Matt Securities. from question

MattBryson

guess, point, and -- that rate X. to at you're in not that, impressive it's year, But to that guess backlog typically, the other When growing I things? X% number those product get revenues. think of is both revenue something the I The your metrics. about obviously, you looking really on growth growth flowing start your for rate it's to And see XX% product XX%, the X% some about revenue revenue. timing orders not than conversion? into are certainly, like you for at those current right think order to mean, growth retail, of into would through assuming that what's is I'll I once the XXXX. growth convert way that I

GerrardSchmid

Yes.

Let off, comments. to first, me couple lead of a higher-level

that we later XX% for very, if the -- these our Obviously, them out of fully We revenue fulfill can that, XXXX guide and degree orders and absolute of on, on some orders, product OpEx supply Matt, Jeff flow was high logistics you, said tell see we you'll year were comp. the and expect chain work this this confidence provided for against in a level we QX. strong pointed us QX can have show to as, on earlier year, orders, strong. is they very as very more fulfill I we as What's So we as important of fees. revenue the in those

JeffRutherford

had we've entry lead I track -- by had Yes, don't relationship, as to by agree. And strong especially quarter that order relative times of delivery, fourth product. earlier, product. and I your we said the question because to the customer, forget, last And we've strong year, and

to got for the to going us So when point be year. high to we've all all remind We visibility a that, and segments have the basically, orders they're as those we're the we have will certain going orders in delivered. to get

to recognition. entry, And order can we so when directly look relate at we revenue our that

daily. We didn't point. because second of it a for quarter call it When had track There's forecast. track Gerrard's level can why it that. we That's the out quarter. They confidence, the our $XX So it monthly. in adjusted of revenue to out million we that track recognition second we happen, high for

a very So economics-oriented. the to and base self-checkout in model closely the contract that conversion we track this we ATMs conversion is unit This the is of revenue -- of order as of base. very recognition track installed

MattBryson

that logistics costs XX% products. talked for mentioned then, mentioned about of component notwithstanding question, I percentage? shifted of over for are see on when, we different terms that And lastly, parts? give shipment on Jeff, and DN order transition to margin when benefit the think what some how call you of or -- terms DN us magnitude timing-wise, of to how color you gross into benefit, is color that you're you we terms gross getting question to And the be fully should line I I at benefit side, a -- to the just orders margin and percentages the then for is guess, XX% in product in Series call, all of flows Series, guess closer my think reflect any the some you the might you modeling the I XX% Series can DN percentage of there in the you the on expect shipments on

JeffRutherford

manufacture. mean, very that end. have going is Series. Yes. all better the what it's of high very and we'll But that let's ATM give right? discussed better turnover on in It's connected self-diagnostic, AllConnect just It's better of to It's -- not more to That's a we equipment, to efficient middle being, say earlier, all more DN Well, the reason It's a it's ATMs reasons to efficient, ATM. and say. issues we're it's our legacy we're Gerrard that more competitive I a a And here, the economical efficient. it's from information. very as to

GerrardSchmid

look to through Jeff in what see start as say, start HX, you -- Yes. product is to as And unfold little conversion slight I mentioned rate we're a color DN it our Series would you'll margins bigger and becomes gross give more a percent just on bigger shipping. that, the in that bit to of

view our range well. part around gross as our our range on forms certainly EBITDA of and profit confidence our that So

JeffRutherford

year. to have order that the Matt, be second as of to margin with half first a then reaches the going that you and it higher going excess in level revenue and the is gross incremental of half, XXXX. this through product XX% product And in DN flow an shipments the made of in we've in imagine, And book Series the is statement can XX% benefit

Operator

from from comes Rob Jost question next Our Invesco.

RobJost

the Have last you question. to up the uplift that ATM? DN on the versus margin on quantified Wanted follow legacy

GerrardSchmid

reasons, done Rob. we competitive not For have so,

JeffRutherford

-- discuss. that the have we're not cost something just it's want ATMs we all just Obviously, want discuss information, for unit modeling our we internal to purposes, We don't of to

RobJost

Sure.

very follow-up, comment sounded Okay. I and was about self-checkout, here something higher with When levels in just understand, is the to that service it. talked and it this software like you I higher services. software? in that on wanted you're constant. unique miss a little the about I driving, self-checkout, there fairly wanted could guess the high. was like what It I are was guess, sure selling is the I But I sounds didn't driving now make slide bit if to services dig

GerrardSchmid

Rob, you bit. broke up there little a

If we take on I'll didn't come back answer it, at answering. a crack just So it.

you portfolio. a driving smaller of services point attach We've the much rates substantially low rate what's attach front. more is that in So which device, sale complex also our a historically, couple were part range. rate in higher of was tailwinds favor, Retail attach XX% Self-checkout of typically if the our historically, much of years, is exceptionally service go a that's in XX%. north back self-checkout a seen on And strong

self-checkout incremental increasingly up our every we services revenue. recurring sell So drives machine

ongoing see to services strong expect growth in really our lane. we So revenue self-checkout

Software also gets along. dragged

to our on rely technologies, those and both to sale deploy power customers they look for devices. us self-checkout point software of As

is software. a on where on activity this activity strong and services pulls again, So the model front hardware through

RobJost

to in Are bit. to quarter. the But next [Technical going you're Chinese way on get the both Are Okay. No, might as as it point? you logistics this for the mitigate the think, up? you a I'm they is things is material. at you And pressures my you of expect are some which facing answer just Year, last, Okay. about the around stable question New think that I to a persist heard through around how environment? Year, that last well question where think obviously a still this then trying say that trending Difficulty] just feel I New to little

GerrardSchmid

Yes.

break So let X into me different pieces. it

are in New the what above around which QX freight are on high modeling modest balance are high. We're for quite freight hopefully, the year anticipating them the On uptick Chinese pressures of then the a abate, to side, saw and Year. inflationary Yes. the we through costs,

factor. that's So one

one is for is much through an than may That's inflationary for It's I commented pressure rather us. a one prepared that, the availability into my abate. anticipate further question that which smaller pressure now. right tighten in us. year I tighten on XXXX. The that of question on And somewhat exceptionally demand other high factor, us, semiconductor further inflationary remarks that may

call overall more would than broadly I probably years a So this focused in we've not just the that is is of say the seen -- environment the logistics chain while side, supply defensively, on lot complex probably, it

Operator

Our from Sage final Barry comes Management. Haimes from question today Asset

BarryHaimes

Great.

in clear as trying and not raise to these you're offset. just surcharges it's freight or and other one, first to price me to costs to whether additional aggressively put on how So

question. think to basis on So the that, on a extent is little costs? dollars there you That's catch-up on are where do And to could you you price comment a time trying point that? first a the in

GerrardSchmid

The when of of Barry, we when more bunch flow-through bit software, this being revenue across I priced, for pressure felt they various reasons, to those XXXX, obviously, particular been but the starts is circumspect be orders board, effect timing offset when across competitive that recognized. question, would and built that have you be were tell hardware, little and that, things we're on implemented of a I Yes, can services in notably measures just to measures a seeing. have

through incremental bearing front, flow on of the into we're some to continuing the the But pricing say, to more measures second offset to has broadly, I'd inflationary to So that. year. the of take half brunt cost We're that the following year.

BarryHaimes

Got it.

year. some to getting free cash the for just is pieces question of Second flow next

might kind And $XX $XX there so forecast, million reduction on equal, other think but would And And other be flow pieces in normalize benefit. earlier we free I as any the just recall, doesn't next the be so of costs, an back that next given and earnings so that restructuring again, we've about? so things come are you getting cash forecasting would the everything without year, changes, then million any year? terms thinking should the else XX of year, in into that repeat a seen EBITDA, that in

JeffRutherford

that's and question. Yes, Yes. a good

will cargo that at adjust cost are We that improve of assuming only also. will in point not the time, some in the but 'XX, capacity availability

yes, inventory. That come pressure a And that, back, final from be in we DN talked than some of also we'll Gerrard the flow a relative right? about forecast assembly would should originally perspective, on would inventory U.S., the on we it come what then relieve said little cash based modeled. So back, capabilities help with to right? Series closer in And that heavy

So see get would long assume back. we we're EBITDA will a And the categories, we that certain would that taking reduction. we that position would in benefit, inventory

we'll goes be You're and the able the determined interest received to forward sometime yet hold and right, And to restructuring do upon to be anticipate the to question market this zero. reduce in is going then, something debt markets. ultimately, and But payments is our is the availability earlier, we markets I if conditions dependent within 'XX. that's would that

BarryHaimes

is? number lastly, that this put supply then, that not X of sort Got for it. That's on, had to to questions. of helpful. couple last is And times One extra you a And very alluded what you've 'XX impact? 'XX the chain staying issues, is based if inventory could the quantify year of would order order you on the up of and strong in Or a a actually really your guide the strength of on gone book, instead it's the flat for delivery more have sales more lot reforecast?

JeffRutherford

Yes.

range, amount right, continue we $XX of the through and second may of to the to give would million million that the $XX inventory. you as Yes. was higher can year. I -- $XX million anticipate So it in quarter the that, our level of end And inventory

question. I'm it. you way question asked going to The interesting And other is not a very answer it the

answer better Here's expect. we didn't XXXX, anticipate the very to chain it. have supply we going I'm far any issues, way good If a we in than having would what

Steve Virostek

to follow-up if have you our please to good everybody for to Relations. day. out questions, today's call. want Investor say a reach thanks And joining I Have

Operator

call. for you joining today's Thank

You may now lines. disconnect your

Steve Virostek	Investor Relations
Gerrard Schmid	President & Chief Executive Officer
Jeff Rutherford	Senior Vice President & Chief Financial Officer
Matt Summerville	D.A. Davidson
Justin Bergner	G.Research LLC
Paul Chung	JP Morgan
Kartik Mehta	Northcoast Research
Marla Backer	Sidoti & Company
Ana Goshko	Bank of America
Matt Bryson	Wedbush Securities
Rob Jost	Invesco
Barry Haimes	Sage Asset Management

Diebold Nixdorf (DBD) 30 Jul 212021 Q2 Earnings call transcript