DBD - Earnings call transcript Q1 2022 | Diebold Nixdorf, Incorporated

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Operator

Good morning. My name is Victoria, and I will be your conference operator today. At this time, I would like to welcome everyone to the Diebold Nixdorf First Quarter 2022 Conference Call. [Operator Instructions]. Ms. your begin may you conference. Marchuska,

Christine Marchuska

of To everyone, Thank Relations press quarter Investor release to remarks, section Nixdorf. first and shareholder the welcome earnings you. Relations have call. Investor our Diebold of Hello, XXXX President I'm our of Vice shareholder progress prepared contain replay to they regarding the and webcast letter of morning, Christine website. posted our company. accompany letter this additional section for would this we Marchuska, website. investors encourage available Investor I corporate be as our to the Later the on review will Relations our information a the of

statements begin, will but and uncertainties actual beliefs reflect this will I as that participants all of call, our we management cause differ hear that the call, statements. including materially you statements, risks this team time of during to and could These from to these the Before forward-looking of they expectations remind guidance. subject are results related

Additional be these filings Participants of to periodic out SEC. company's with events the found and should be information be in factors that render this annual subsequent date. may information on mindful the can

discussing over reconciliation to also table Octavio. measures call certain measures will call. earnings financial press A today's of be We be found today's I'll now between the hand on non-GAAP and the GAAP non-GAAP can in release. And

Octavio Marquez

earnings my Christine. joining as I'm for of first call you, Thank pleased be to CEO. you all

in work. and had many years around the been pandemic in global on global to and Ukraine rising I war acknowledge First, We've last most how uncertainty facets chains. but anything and want to countries from we easy change markets the inflation have financial supply that the X to

and and we global crisis unfolding Change We are today's and uncertain as must and these hard operations are war on focused times processes, them serving a customers an for solutions of support Europe systems in productive result ever-evolving inevitable. landscape, our continuing help more and uncertainty about environment delivering around effective in to our transform areas. also the in disruption But and of to the employees are a and we concerned remain that improve working the employees environment, business. create in globe. continue our work to streamline our our have But ultimately and to humanitarian transform their are

the challenges growing put business, have chain succeed us we a time am pressure That's team, priorities to wants more succeed. Market agile order that to global supply our XX% for them today. I wants is committed outline first evidenced get by our as quarter on and entry, While of through will our we the this and products out come strong. stronger have I and help will which on customer additional leading focus volatility demand solutions a base increased portfolio key and us we confident year-over-year.

the world's Over We have confirmed and my investment supporting and vital retail. X they play banking most the the with industries, and and competitive past a role talking of XX I reinforced have employees, customers and the spent time community, in following. demanding days,

innovative solutions Our customers thrive. them and delight our help

value. to increasing focusing and to that rigor, committed on We are operational on our a fortunate have our delivering is customers shareholder team

to focusing plan areas our value operating our shareholders. and passionate to the extraordinary about also to Customers rigor on are as model to clearly our need are we that investors and in operational a company. the costs and Our believe financial way. continues can believe profitable in evolves and always and make improve. grow best our I'm companies better today, are there we by a increasing we And managing but a To customers end, first, this and even more strategy, model they strengthen But efficient. announcing areas simplify provide

We processes million road closer organization than will and months according possible. to accomplish map. to customer, the XX next result streamlining This our our drive over digitize this the XX efficiencies greater the savings will where $XXX of to move to in operations by significant cost

explain me Let a we achieve how take will few minutes to this.

very being redundancies First, more reducing efficient in I accountability by and am to key the focused areas close on increasing customer.

by has work where and talent streamline as This journey that, ultimately, world and subsidiaries. our on teams has strong world the proven deliver office will Based the to our more more our as our real increases It on aligning operations. footprint to our organize post a across ability remotely. using as and ourselves means we We they're reevaluating choose. attract be closer focus beyond for will well a above offices continue customer and our simplify our being working value practices a be go to will pandemic, estate and structure to to closely transformation employees they permanently, flexibility resources customers proactive has our also we Nixdorf to consolidating whether in with This and The and more technology global evolved The appropriate. improving to and to efficient processes location-agnostic. opportunity organizational shareholders, standardize changed our Diebold agile. be diverse where our continuing different our

headwind we a many on companies, processes stability. see inefficiencies. Like and solidifying where can a has supply our of I geographic chain our to us. analysis Next, supply full end-to-end we strong to our been have focus achieve improve for will this chain initiated

in as manufacturing of of XXXX production our Our has begun the Addition scheduled more XXX% by to XXXX we QX to in work year. year compared as prior and are to self-checkout area a by XX% progress increase facilities this in to ATMs already as compared ago. systems show XX% produced QX

for live customers certifications noted globally. Series, DN now with XX business, is our As is self-checkout lack which keeps new gaining demand products, and countries for there over especially of earlier, which no in our XXX our

Series we now all new Series. DN America, North from of recyclers. XX% orders a legacy from coming have We continue away our to see new with In shift devices our DN

the We accelerate $X.X expect currently and we on that product continued and our revenue including remainder are billion the backlog the to year, of we supply banking for on focused conversion have, and velocity volatility with chain gaining retail. logistics

We evaluating to footprint needs evolve. manufacturing how global our are also

have most shared continue previously, in for generated America. manufacturing, As to will invest North end we the we in the capable year, our fulfilling Ohio recyclers demand the of of by which be of

on flow capture great our we value So supply offerings in where our efficiencies targets core my original and will improving manufacturing growth, our cash also footprint, X-year and XXXX as our value. leadership for of will taken optimizing see outlined opportunities DN, increase together, free shareholder instilling Overall, that while and I chain mindset profitability customers straightforward. by model. very and reach improvement strengthening will is financial focus that us emerging continuous our help efficiency in approach a operational

in to we strong as momentum charging EV Since XXXX, example, of XX,XXX see points continue space. to several For QX European across our we Alpitronic intensified countries the we Europe charging year. their expand with in partnership this

signed to we as the manufacturer charging in desk chargers contract station addition, electric started their than manufacturer. with service as leading of with more U.S. a in a European well capabilities In service mid-March for pilot another global than chargers XX,XXX more a X,XXX for

end to track to to of XXXX. plan or stations service continue We by our charging XX,XXX more

focus. XX% greater my XX% than to are greater X% to to our Jeff adjusted let of and me turn conversion. adjusted we X%, flow more free him, revenue over targeting XXXX, reiterate or But before margin will detail For EBITDA I growth provide on EBITDA cash financials. it

leading will We customer to provide serve solutions base better help customers. to them our their

model, we financial targets. like inherent it unlock execute in As And will intrinsic to turn Jeff. over value I would our we Thank our you. on X-year the now to

Jeffrey Rutherford

related prepared distribution impairment certain such non-GAAP references Included implementation and the EBITDA. and our $XX.X Russia as to EBITDA to implementation, Thank for Ukraine. include for you, to which cloud-based indefinitely remarks $XX.X metrics quarter ERP as we charges. first assets to transition our X Octavio. America will million subsidiaries was adjusted North our plan suspended non-GAAP adjustments in in million My

details letter the Form additional financial quarter. for a from and please As see reminder, our shareholder XX-Q

approximately Here, of data, noted. strong evidenced of highlight Despite key demand performance for Octavio from very quarter to customers led convert software first and our In will result entry 'XX, for the a to first I supply by metrics. our strong businesses solutions, and of a a order currency excluding XX%. which few Services a X%, our Ukraine. revenue. seeing devices $XXX services product continued impact divested in approximately decrease million challenges, was attached product quarter The the revenue and a approximately revenue revenue as impacted XX% approximately from compared over $XX decreased decreased currency revenue million and of in decreased software million, decreased to approximately of declined as unfavorably of of Product quarter impact revenue in which XXXX revenue first subsequently total 'XX. as has foreign a backlog of to decrease the X% and Russia and $XX a reported reduction first the quarter. and X% divestitures, foreign ability chain Adjusted

experienced a margins company as first however, ordered majority 'XX, noncore increase backlog planned to in to in approximately the cost, in in was low-margin We prior and during certain addition, This the product In price we the noted decline product the the that quarter. of exited contracts. originally resulted quarter for increases. converted previously, X% service double rate, revenue a material

prices until the inflationary resides. increase We periods will to continue

the investment, in 'XX compared result quarter margin lower and challenges for which a to adjusted Free For usage the We million to the leverage. adjusted is first of operating quarter quarter in inventory usage adjusted were was resulting of cash $X flat ago. and $XX payable reported EBITDA lower with the previous of chain of EBITDA higher X%. million supply largely year $XXX first million accounts 'XX, a of expenses quarter, coupled first the period -- flow EBITDA

in our to announcing are focus we have Octavio streamline to customers, XX Based a greater conditions, revising mentioned, processes, which our chain in we financial than $XXX XX the our cost As result the the initiated are automate over we macroeconomic on operations efficiencies to outlook. plan savings will environmental as organization million on and of 'XX supply continued today drive months. next challenges and the

million now the in billion, which reflects Ukraine, $XX approximately sequential see the Our year full revenue gross We of to FX from improvement and is throughout $X.X impacts. remainder and billion Russia $XXX from XXXX. in of XXXX elimination supply guidance revenue in unfavorable million chain profit revenue $X.X the approximately for

backlog begin As improved realize to price relatively quarter. remain per approximately flat to adjusted million revenue $XXX and we and expect conversion increases to at SG&A

EBITDA drop-through rate $XXX million, margin net outlook is adjusted Our duration plus savings. million revenue higher and cost inflation of reflecting $XXX to incremental

savings. revised This breakeven, by any between guidance is flow correlated expected as the is these conversion of inflation have the to is for return by headwinds previously normalization X experienced which EBITDA as the uncertain more XXXX, these the Our to capital Collectively, and pricing cash companies outlook EBITDA the directly outlook in revenue, Despite considers to aforementioned with adjusted charges. and X orders years. revised that in normalization. our due last to well restructuring us prior communicated our and adjusted will to free countless cash macro timely working decline X-year targets other financial cost our year allow delayed we over climate long-term

the on and for margin we flow and our XXXX, look EBITDA XX% conversion. greater and growth quarters. I in revenue forward X% adjusted of to you cash Octavio mentioned, EBITDA greater than progress adjusted are XX% or free to X% As upcoming updating targeting

Finally, on to refinancing update an I'd like our debt initiative. provide

the As relief half provide with have know, debt covenant refinancing through you when headroom in of Cromwell through which appropriate. in update we to to covenant working XXXX Sullivan March, and with and access second the But efforts, an we Management early we lenders, maturities liquidity Evercore adequate of support XXXX. as assist secured provide our beginning is & our XXXX. will and in communicated will

Q&A. call I operator to Now turn will the the over for

Operator

Instructions]. our first [Operator of question And Summerville D.A. Davidson. comes Matt from

Matt Summerville

questions. of A couple

you remarks ABL anything to Can refinancing? on you mean you you the of with the $X debt about confidence Just you working do have looking tell that beyond First, the side give where some prepared other any You on stated detail path I is right like things. you're now. market at Is that it. Jeff, be pre can kind in stock investors there us a equity point? helpful talk your of you're at standing provide actually up just would can where just path? towards discussed

Jeffrey Rutherford

with and situation, engaged Yes. position. to understand talk this. Evercore Yes, as question. and And And Sullivan about Matt, changing a have we the environment. I the I let's it's stated, the right, Cromwell fluid help & And with just

you effectively in and 'XX. the 'XX, 'XX. have through the the Term 'XX the And quarter, of fourth of with So first first of maturity the of all, at maturities the then in no revolver July quarter unsecured schedule, if first quarter it's and we then liquidity the the in adequate quarter look second Bs

pursue think So we for said with mentioned this that that's ABL, from I've revolver current position have and security. we're on And as we suited what the that solving very the and issue on anybody under the who the an ABL. The Term would found today, earlier right? a Bs with solving receivables that. company to fact -- with maturities for, don't secured just disagree structure, And I are our we're notes the assets our and better be inventory the is I calls,

to the get with where pending we liquidity issue be also adequate 'XX and us the maturities. maturity longer duration in that's why have schedule we working that through maneuver to of to 'XX we're addressing for need a that So provide with help and partners operations along to us

straighter changed. late 'XX on would So to it's in a inflation. It's there then has is the have into as late path get or taken for and planned 'XX early we not incremental there. a path The model 'XX,

path we with see need help to as to our there's and able the path to model targets. we a us to our do to chain But be a get where holders get out working incremental because we to be there the to continue with clear with take We debt going the model we issues. supply get we're the today, costs to back of is, stated have have

path a question, get Matt, So like your there. my a get by there path is it to is point is certainly ABL. there that answer not but there anchored to was, It's line a to straight an

Matt Summerville

discussion? asset of couple where And anything you other what a on of been? cost of the questions. that maybe everything this cash and restructuring And Does Is of Is become of Is kind it. the point? part of Got then the the at? process? increased part anticipate that optionality one. we're this at do Number table kind

Octavio Marquez

Yes.

for Thank is this Matt, your you So Octavio. question.

So believe model. I strongly in our X-year

our with I'm will look you that the a to ever-changing in I this the as believe committed established. presents as the model firmly any model, environment, Again, our option cost for that we itself, think I for but we into targets to still shareholders. the to company we to have get far pathway evaluate that as Jeff. will we've making model, for work and restructuring, turn over that Obviously,

Jeffrey Rutherford

Yes, Matt.

working a So it's but million costs, early will is we into approximately details. cash say around range from yet in days. estimate we're But still be cash early I days. it And that flow modeled would $XX in because would the My cash what still through perspective. it's be million $XX haven't it

Operator

question next Harlib from of Our Barclays. comes Jeff

Jeffrey Harlib

current now about bridge on a the also, through the the are see and able to it did by so about bridge if you orders being What talk revenue Obviously, on can to a getting provide additional the little to So missed the the bit. your you you as little talk the components? sort stand then backlog from EBITDA with guidance on where on But or lot, adjusted can visibility strong. that And guidance suppliers a year, your maybe revenues, of your are bit can you it you current? -- Jeff, headwinds? last but a push you some you bridge prior

Octavio Marquez

Yes.

address take the doing So on backlog. we're let me our of of the velocity part converting question the to first what

of different the COVID February, With the will China that supply to we've our order their like Ohio conversion. for time of from facility, that ports our investing seen we shorten by North demand of in America This So, be year ability out our keep undoubtedly now in affecting ability macroeconomic products end ready events finished to we also manufacturing affecting most since last of said, Zero revenue closure the Policy, source market. and in will placement manufacturing clearly, ship with which the spoke to materials region. to

factor I headwinds demand are the subside strong as some quarter more for think important consider and that our starting by the a year. to to is during of lot remains prior components we have units an products factories receiving our evidenced QX this of manufacturing than

customers rethinking running the we're is manufacturing reiterates our Now Ohio possible for importance how manufacturing faster. solve get trying Again, to at and the hands and products of of as speed. up full sure making into we our footprint quickly that do as those that

in seeing are we similar QX, a again, So trend.

loaded are we get had we last what just to products those volumes factories expedite than higher need year. fully Our hands our We into of with customers. now all significantly the how

customers with working make are global appropriate can sure our them. challenges our cost-effective in experiencing working the we're We customers way most with and understand to deliver are to and and the that we us

Jeff, you question? So second part that the take of can

Jeffrey Rutherford

Yes.

incremental particular longer Year costs in logistics especially has happened. we we Jeff, in than both in a originally originally the million expected duration quarter of reduction approximately get million New reduction we as in Higher -- $XX effectively revenue EBITDA had was script million to inflation, a the the reduction in inflation. the the product. we $XXX release in revised first then normalization, modeled. that had are of numbers in And $XXX balance margin at So post some to inflation, would said inflation, communicated not And the and Lunar gross then the is generate

incremental So the there model. inflation in is

outlook. the to So original bridge how and reduction revenue to in EBITDA outlook the is revised the between we from inflation

Jeffrey Harlib

your XQ? in XQ of Okay. looking that view current of the the And XQ, in are linearity to at terms on you based how build

Jeffrey Rutherford

Yes.

of is nature backlog. in the the factors of involved One the that

the to we converted those As stated that to revenue orders. prior first in the honored pricing contractual was price primarily increases that backlog of the we we and quarter

getting price into a be increase mix we're Now where going we're experiencing to conversion to revenue.

more and margin quarter progression a the in fourth the second margin the and third in will then So be improvement normalized quarter.

Operator

Our Chung comes next question Paul from JP Morgan. from

Paul Chung

a follow-up on How opportunities like your Where saving well of as you just retail estate? monetize assets are to It assets? you of portfolio could you're costs committed on real kind sounds business? today. So your to see

Octavio Marquez

Paul. Thank I'll you, take that.

self-checkout. has around business you've seen, Orders XXX% basis. momentum, particularly So on year-over-year retail our as tremendous a grew

that, to committed to. is it's -- I us, as it But once we're accretive one our always conversion So With our appropriate the an performance. opportunities see are evaluating over But back to earlier, cost being normalize actions that the and model we getting and I coming shareholder are backlog quarters. perform we are there we mentioned, take to business accelerate the speed value. we of mentioned see that to we able as model

model, accelerating out our in that we cost believe model. we backlog performing will incremental the believe a we to today, have and conversion taking of as the and So how by cost,

I'll way it is. value are that, we evaluating unlock at to the but shareholder leave always what's just So best

Paul Chung

the Great. spot in then quarter. self-checkout bright And the Okay. was

So you America how big beyond was into North airport of kind that are contribution? What's progress year? And in your win? the more making the visibility

Octavio Marquez

Yes.

almost coming manufacturing in in quarters. you are the self-checkout, double XXX% as will that facility North will America some roll be mentioned, wins be tied and starting scheduled portion to So to amount that orders the of up will out good so see important that of A our shaped. to are

will making and we So with the you in North America the quarters. progress coming important in business seeing are that start retailers

Paul Chung

charging Is do contracts. and business, think by the upfront? then kind this can contribution how of on material margin And Okay. of over cash the How end You charging the you EV per question, paid station? I last XX,XXX and America business North about just signed the And we be think, XX,XXX mentioned, time? revenue mentioned then opportunity. year

Octavio Marquez

maintain companies Everybody is multiple help charging Yes. Europe, and with global that's charge-point with global constantly service a commonality. them large operate in fleet. Thank business provider evolving. deployments I've that The EV one there's starting a few you, Paul. is can looking conversations operators, one and for had

you early done do can this our as but years. cost evolve, be it something we desk looks will take business as right and on you trying the coming stages see an as be how that that would of still capability and financially some of think been what pilots I service do that we're wins once locations. we dispatch this we market that industry our have the to with we're ongoing updating in will see accretive say our we for now. an all on leveraged. service infrastructure the to have out what that's the But where And service appropriate quarters in it's is figure service the to saw we I model

events confluence will helping a So is make company service in continue I be provided there's, shape a to and of this that grow, want to how would say, that that's to we business the market.

Operator

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

Anastazia Goshko

additional So if we to some the on like could restructuring color I'd get plan.

the end vast you challenges obviously, completed that multiyear, of now the from exogenous at facing So the you restructuring very it appears And that factors. right thorough 'XX. a majority of are process you're had

inflation. So chain and obviously, supply cost

prior So factors operational for still this of now, and And you to challenges or next what wondering if wasn't go? unfinished to it things regard moves areas, are the Or facing feel these reaction program? you and right that with products? there How geography exogenous are room that the kind there's if restructuring, to that? of phase do you're this left

Octavio Marquez

you. And thank right. are So you

that retail Some to environment, taking when and response that customers banking what of With just coupled hardware of provides to service that you of couldn't predicted said, the we we changing leading customers X have are and our we're is our value. customers. unique technologies our value capability, we tremendous That's to months a bring with proposition actions think the company, value a very ago. software that that have that in both X in a one

that service that. Our and have attached to we great the technology great

that sure We our X building in doing areas, main areas. self-checkout We're continued strong customer whether we those service very have service we streamlining capabilities strengthen market. it's satisfaction areas reinforced keep but through around offerings, are to areas, everything an core those on seen, those ATMs, and our then the like we to our or digitization, sure make right focused the what growing technologies, we're those making in the of down core to globally. where best as now? reinforced periphery then efforts driver you to process offerings but the support would We improvement be needs our our else that approach is that through streamlined as you've and doubling those So taking of demand Jeff, anything else add?

Jeffrey Rutherford

a Yes, initiative more DN that was top-down much approach the on say I Now focused restructuring. to would

think and inefficiencies those is organization We're the detail Octavio have lie banking because to targeted that down. I where unique running not of top time. view think determining from structures. enablement This is of not that model. view perspective But that we difference has the in within from going real eliminating operator's on internal a it's a internal involved. I an in the inefficiencies support lot factors much the function the It's are and communications world so and in get the

Anastazia Goshko

on this project? and the things included? there be coming -- facilities. largely appear so so of Okay. And for to Are are fees work to kind breakage consultants cash in severance restructuring like bringing any back, to kind And on those you which costs, then are be lease of going

Octavio Marquez

in fee numbers to projects included with us consultant are those that the Jeff support Any Yes. provided.

has the have making sure these of a feel strong a in timely of we team working However, execute on weeks team we manner. to we past couple that on drive that very internally against with been the changes and that me for some

Anastazia Goshko

just on guide the then And EBITDA the year. Okay. for

So included I'm EBITDA -- the these cost restructuring in are the that guide. assuming any of to related not

of guide, So top those of right? EBITDA kind that be would is the on

Octavio Marquez

That's correct.

Operator

Our Securities Research. next from Matt Equity comes question Bryson, Wedbush

Matthew Bryson

guess getting just when else? you one think year got the one revenue is yet there logistics think customer as give the producing we in disappointed. get your second of question a is I something that I -- exactly and projection, do end understanding And production in primary then an that you question to of the part going -- systems follow-up. bit you're it shipments the that the of want when terms some about implicit of were obviously, to backlog your guys revenue. Octavio, to I is between understand I've my there be exit your Or the booking to bottleneck? the talked versus increasing of some we delta system you hands I that you is, the now Is is of that down? and growth guess capitalize that Or of backlog going year heightened you're to still backlog assume of revenue should on this part able with not assumptions backlog? to and bring that what

Octavio Marquez

Yes.

our to address the of products customers. difficulties and the getting me production first, let cycle So

for good still say But done we've getting and and that would material challenges of our -- talking our component chain team couple of supply those quarters, into our aren't getting Not manufacturing our in there been has job fairly you that I running. shortages to say difficulties effects. up past a the If the remember, factories. about mitigating and material to facilities

to main is had we factories, customers challenge what our Now how our from proven the those Germany the be into challenge has the of do get than globally. hands There, both greater expected. products logistics and in China we

and not planned forecasting that that we soon. Chinese of happened, Lunar New not something February, the As to we're in the year after has have Jeff with clearly Year anytime shipping mentioned, improve normalization for

facility possible. can as to or that's Europe So world, from it's north cycle standing XX the manufacturing accelerate today's to ship into Europe to important Americas time remember, the our up quickly Ohio from And us, days. in reason devices, reduce them something the that why of or Americas the as shipping manufacturing of those that Asia we're to take

with have on able things are we -- -- take will necessary, so and we those have of we our that once to be amend take for that's they our So devices those to factory. those we we that's have machines, need shorten our as planning that that we're if schedule installation to working why keep expectation this, or so try their leave And that cycle, conversion. our customers revenue all customers accelerate contracts, ownership to the

Jeffrey Rutherford

than backlog forecasting order are higher then we And question, the entry revenue. still

-- when backlog the to we a increase year. it's would the of So expect year-over-year end we get

good, not the the and to we're -- order has obviously, we're entry that continue been forecasting year. really quarter, So first throughout in

Matthew Bryson

I looking know predictable. being gross I quarter-over-quarter more follow-up, customization -- I'm of the Is margins, delta, lot kind factor And a it's somewhat stable, kind guess, think those Awesome. work. when at The margins software of gross then, for it there? what's my of I primary about more

So underutilization It's that of product as in business in cost software just same input it don't challenges have side you -- of the that do things. you is engineers? the obviously,

gross declines be And why helpful. you so could if talk much, to margin so that would

Jeffrey Rutherford

but first just normalized issue contract we'll margin. because a hit in back that's software margin quarter. anticipate a don't X-quarter onetime get one can and contract that year, to rest materially, the in swing That's we Yes, happening the fairly of that that the

Operator

comes Ltd. next question from Our Invesco Rob Jost at

Robert Jost

same? protect what aggressive environment talked if do here, how to about themselves What was there don't can wanted through. can against about do gone setting I taking being change industry-wide say more respond. about to but cost about of the know the you you to you much and up ask I NCR just can Jeff, kind we've themselves

Jeffrey Rutherford

from You Rob? an the operating perspective, that cost mean question, is

Robert Jost

Yes. Exactly. Yes.

Jeffrey Rutherford

beyond million the Are announced we're a think to about need inefficient that we're if model out I do perspective, of that excess what for something model doing talking we from $XXX or taking inefficiencies and and plus that? what savings. you costs looking at And

Robert Jost

increases is and in, environment price on now. getting everything where that the driving with more on the board More customers expensive we're

prices result, up. a as so go And have to

Octavio Marquez

Yes.

So let take that, Jeff.

we -- the costs with implemented we And open clearly, new say all products to are associated So now we both that I discussing customers increases. price are being new the associated. Customers and with are would those discussions. services delivering -- orders, the we're have

We year. profit the back of are in that last -- we started half

we prices increase to continuing see up. are costs We go that input

sequentially over the margins forecasting of So coming a -- towards you improving periods. and we're that's should normalization margins why

to understand we're are customers challenges facing. They So open that. that the

some that long-term We're or to them maintain cases, duration for prepayment actually some customers and pricing. that the of to in So to asking reprice these the open approaching long discussions. current they're has backlog to, contracts

service significantly, periods in our in now some of with a increasing helping contracts all in North the us -- coming our America, fuel implemented offset that prices as increases in important well. surcharge we're thing Another fuel doing will business which is help those which us

Robert Jost

go is fuel then ahead. that And sorry surcharge, --

Octavio Marquez

I'm ahead, sorry, go please.

Robert Jost

you surcharge, something is was once new it -- of that kind there's to taken contracts. thing I kind to where place, what's that for actions understand a putting looking it Is talking with fuel the is happening this -- it's place I'm guess in just based these increase response of levels? No, I are -- seems what fuel what structure will in next time just of protected? on you. about current the what the Or in just trying there -- is is some the just like you're for around to our I'm you're

Octavio Marquez

fuel fuel of it we're the on percentage basing ex of movement. So ex again, sample surcharge, the

our proactive material making sure manner list costs that our chain be next that the to those more our be some procurement reflecting closely. and in or timely part prices So selling time there's of contract. hardware we're in more reengineering we supply and part will passing of a our the protected customers. prices movement, in doing to monitor need to around input Clearly costs that to on we're upward the business, respect we That's that

is we've So be those appear future challenges the that and a a the that have place reaction, it's starts To your manner, of lot our if proactive. done thinking future in not so getting more mechanisms what to it in adjusted might a changes. point, able address ahead to be proactive we've but

Robert Jost

My is helpful. the around That's second just outlook. Okay. question

mix that contracts to the side probably this natural and looking unprofitable that's the just growth the not the Given backlog, at is know level. it's go to growth I'm of offset low that seeing seems that are pricing what even we top today? from on we currently? get we're on are some line a there would is what given ongoing that -- inflation expected But wondering, And at services churn increases, just probably given of going I under

Jeffrey Rutherford

Yes.

outlook 'XX And need So be to consideration. of a from the to take it would couple you through maybe we good into that 'XX. walk a for for bridge factors there's me to

of in So all, -- $XX approximately Russia the first revenue was 'XX, the Ukraine, million.

So modeled that's be now we year-over-year, coming moderate. originally FX out of to the FX model. had And

US $XXX be we're dollar. Now from the to strengthening approximately modeling unfavorable million and looking year-over-year at it

we -- divestitures had have So we 'XX. $XX to us That's affect million. divestitures, small going from and

more end, the take at you we're something end, billion. low $X.X you're the if at mid upper obviously, to in modest a then guiding, those the So And robust growth. consideration, going get into a growth

deliver range that the from through. revenue. the is time, same around product we and as convert At really that are and Octavio to chain increases mentioned, to pricing backlog ability So supply coming have

fairly combination adjusted it's So of I combination, supply for it's pricing growth chain. that forward. and straight a the a is mean

Robert Jost

there. detail the Appreciate

Operator

comes Our Suisse. next question from Arun from Credit Seshadri

Arun Seshadri

me. A couple from

and First, the at have the of for, QX margin way to guess, improvement gross just sense delivered quantify if QX, would QX I if forecast. get your was full what to is say there would understand the broadly the QX sort profit of a normalized of -- to sort that year a in revenue and to magnitude Just -- what risk been? a margin,

Jeffrey Rutherford

Yes.

is of it's that tell side on We number. the that $XXX it I million the product could didn't product haven't -- we give -- But revenue. you approximately

to take be going you Right? that and And associated as attachment with margin. that so in there's And software. services

it material. So was

Arun Seshadri

customers reprice? the to I in therefore far contractually on Understood. repricing into backlog? it. Got agreeing it your, written prior is and that the goes, of to dependent guess, backlog the wanting as position their basically preserve line as is then Or your And

Octavio Marquez

is improve It backlog that option changed and to want on pricing giving doing also with their they to the but customer and very individual approaching them Yes. what being to the customers open need has reprice, each situation and has latter, Arun. our maintain us customer We're and also our for cash position. that that transparent the each current an prepay for

build, good a having every customer we or it. to don't or the attached build device single and remember, like customer We self-checkout that ATM I news, machine a a inventory every -- without attached it. has to So

they the machine, it. ordered and need who ordered when they know when we it So

we're for So plan each individually us. and find to customer a tailoring best approaching solution and specific every them client to and the trying for

Arun Seshadri

$XX for Is cash set it's cash charge. in just 'XX? thing -- color smaller we distributed in 'XX stone, Last can restructuring guess the the terms couple that assume can at provide a between me, restructuring? it. understand is restructuring. and not it's things. you 'XX Got of I mix point that Or of any fully million the in of this One in versus I 'XX

Jeffrey Rutherford

Yes.

We on we care and delay. faster quickly. it's we're while haven't going this, -- sense and provided of there that have as to do of committed internal we're to harvest than proper it's these our something work, not We're that part. would take controls that. a savings as say is I -- communications urgency fast maintaining be to going and to And to our this going but the

Arun Seshadri

these the sort the margins contracts I contracts specific software much X lower you pretty talked because about me. of software multi-country businesses Jeff, The X margin bit did down being because for bit margin side. on the see thing we -- so go little little of question, are a of software prior to or where a assume these all sort Last a across

Jeffrey Rutherford

occurrence Yes, model an It we quarter. see I low forward. they the don't expect to in can margin first just of was And the a that segments. as going across said, the recurrence in be

Arun Seshadri

the And disclosure the all given it. appreciate Got sensitivities. I

Operator

And Summerville. question our final Matt comes from

Matt Summerville

Yes.

Or with price of how uncovered currently recover by will? backlog? your And that in how Just How getting you to if inflation unbillable is a couple sitting respect repriced, it feel inflation sitting much you much is of much can do questions. in you your backlog?

Octavio Marquez

through question, So probably have this many were last we remember that probably even longer long-term have Matt. some very year good contracts of We've run signed and -- middle durations. of year seen that end

a would by big where basis, them deliver customers freight have commitments. So their that find will the appropriate urgency trying them we're this solution. customer an be individual to for cases, customer you In paying some meet to on I tell talking done expedited about equipment, most with to

customer, say multiple would we is approach be that progress, we how whole is on it inflation I that the And this. So by still unfortunately, backlog how but do in unbillable mechanisms. built organization our through recover very focused work this will into customer

Matt Summerville

head a sitting I I I if as you that if 'XX, of and could $XX that. my past, and wondering number the I number update share it have and that provided coming like was, you had In was million think willing would curious out to again. what number you to in be I'm guys guess

Jeffrey Rutherford

unbillable -- me understand question. And the you're specifically saying the let

quarter get we how you're we what So is quarter in the will margin the I in saying normal third backlog, inflation is think second And to the margin. going be back be normalized then the halfway on is to that nonbillable? margin and back is anticipate us a much more -- math to

where that where of quarter. the in quarter in take and the half should basis the could you first basically, and be we would we between difference So are be second

of XXX basically on it's points $XXX basis So revenue. million

Matt Summerville

something. maybe to on then more I Okay. be a want clear And little

the million of guidance? kind moving from about So we QX, cadence should the revised how of $X EBITDA to think forward the here get midpoint say, in of to,

Jeffrey Rutherford

Yes. from The be will basically fourth quarter to year be and then at incrementally quarter, fourth will the prior improving comparable quarter, the it fourth today quarter-by-quarter. we're to where progressing

Matt Summerville

And sorry then in ahead. light go --

Jeffrey Rutherford

linear it, Accelerate that second third quarter. from not it's completely to

year not be and we get through the linear back to the and second and is the back third But be quarter progressive it's don't give be but to levels, say we'll So in prior going quarterly I to what quarter. guidance. would to mean it's quarter, -- will second going fourth third I

Matt Summerville

forward to general, talk year, to pulling this given where think of cash of bit. with profile restructuring? 'XX, you the free I'd better a it. Number about guess, where get with to $XX million And is in free some fund cash towards one. of two, kind are collections One, of I want like a kind get term, then you're a leverage end for this that. I So bit. today, to lack your the comfortable Number flow Got going I flow

in cannibalized regard. 'XX a in bit little maybe So that of

if things then the year. do first end think this in to plays at better burn, And want wondering can that of linearity I I'm factor drive light year. So day, this to about quarter in into you of the anything how performance cash the

Jeffrey Rutherford

flow. just Well, relative it result going in to said to year. linear this year I what free EBITDA with What's cash happen going happen is won't this to

we're and to at the reserves in and generate our look comes flow the continuing our That's right? obviously, liquidity cash significant again from fourth cash covenants monitor that been modified cash and renegotiated usage. quarter. So at you where If trend, we will free

-- a we for have So already path second that. It's we're quarter. of not May in the

spend So what be adequate the have is about that. half in the talking liquidity year, we'll will do the back and we're to of

Operator

Please are to this ahead. at no Octavio further now the call There Nixdorf. back go time. CEO questions I will of Diebold turn Marquez,

Octavio Marquez

and today's listened Thank you, you, operator, call. who and thank everyone, in participated

years, Thank forward-looking of earnings demand Thank you live release. as pipeline. we've profitable you order and our the solutions continue quarters look shown coming over at seeing our the services. for forward strong in and times again. We shortage to you. strong upcoming growth investor of laid plan no environment, entry we by uncertain as Although to conference next macroeconomic well for we our believe a There out is challenging and all as our

Operator

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

You may now disconnect.

Diebold Nixdorf (DBD) 10 May 222022 Q1 Earnings call transcript