DBD - Earnings call transcript Q3 2024 | Diebold Nixdorf, Incorporated

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Operator

Hello. Good day, and welcome to Diebold Nixdorf Third Quarter 2024 Earnings Call. My name is Paul, and I'll be coordinating today's call. [Operator Instructions]. And finally, I would like to advise all participants that this call is being recorded. you. Thank

to President over please of like Chris our go. the Vice Sikora, Investor turn now to call host, I'd Relations. Chris,

Christopher Sikora

call. presentation to Hello, quarter Investor Relations remarks, to welcome our the have To website. of earnings we slide everyone, prepared accompany our our posted section our and XXXX third

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

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

also will We measures financial discussing non-GAAP call. be on today's certain

a Slide found presentation. GAAP As in X, supplemental non-GAAP be schedules the noted reconciliation of the measures can between on and

to that, Octavio. With call I'll turn the over

Octavio Marquez

thank joining Thank Chris, us all and you, today. you for

Now on to Slide begin X.

on expansion. focus achieved strong customer the expectations of proud team and execution, of Diebold exceeding another Nixdorf am I quarters margin consecutive we global have quarter. X as resulted now in accountability Our

for is Our creating and products operating continuous principles operating platform focus on and our a lean improvement world-class solid services.

success. year-to-date on EBITDA of banking focused to $XXX is retail rest that guidance positioned the a technology throughout momentum year long-term Given high-performing to $XXX progressing high adjusted our positioned We finish execution, our remain our this and for strongly build well strong continuing we are and the million our in more disciplined, of efforts leader of the year end at million. to

make with a continuous always starts Diebold company. The improvement Moving to people, X. DN Nixdorf Slide great flywheel who

quarter, and to help in investing will the To our DN superior service. Creech people-focused team rounded to products Kathleen People forward, us deliver operations, We out can ensuring we work. leading-edge strategy executive initiatives, continue Chief of so achieve world-class during Officer. our we our drive our help we addition with great create implement our are Kathleen the make place as people leadership a people

have a team that aligned A our teams our embraced. serving and leadership With our delivering is major well-rounded is built and to value continuous customers addition, to our committed component the actively shareholders. principles, Kathleen's operating we journey and improvement which of adoption of have fully lean experienced

and to Over the of last we the quality, floor events conducted couple and and flow space drive Shingijutsu safety efficiency. to parts X and people months, Kaizen enhance inventory improve reduce of

the our activities of see, you form reflected lean can these are the in of impact margin As financials sequential in improvement.

X in the our few and photos Manaus, of facilities. action in a teams Brazil's includes Germany Paderborn, Slide

operating a want and operational thank and operations. embracing I service we system of employees We outside adoption will anticipate see I lean lean lean for our to competency our a transformation. enabled and measurable into commitment excellence we drive manufacturing, broaden by of continuous improvements are as our building our culture, and to mindset. continued improvement

improve further the efficiently. will effectively investing technicians, our and field support. more customer cloud-based help our help serve dedicated and to are and centers service to expand world-class of suite our desks We customers implementation This dispatch

financial will to to call turn Tom go the I that, the With over through results.

Thomas Timko

Thank an you, on non-GAAP Octavio. Starting results. with our X of overview Slide

initiatives, supply disciplined the our and continued benefits retail. and from chain Total profitable $XXX environment offset X.X% discipline. units million driven logistics recycling macro combined our profit Gross by year-over-year. decreased DN year-over-year, for another by and revenue revenue was primarily of X.X% improved ongoing year-over-year our with represents strong for growth, banking challenging service performance. up demand driven X.X% quarter pricing by continues third strong the The This performance. generate to improving was Series

points basis due XXX year-over-year profitability. Gross stronger margin product to by expanded

The the the quarter compensation. expense leverage. in a our normalization product X.X%. of The stock-based down and slightly the DN's we is maintain year-over-year increase margin incentive and up On improve in operating reflects discipline third long-term quarter Sequentially, represents was as operating basis, highest history. operating expense

Excluding this flat expense impact, been operating year-over-year. would have

As adjusted X.X% year. margin is EBITDA prior to compared XXX Adjusted with a the result, million EBITDA of $XXX expanded year-over-year. points basis up XX.X%

use more cash performance was and free better third combined at which working quarter was with flow The efforts favorable higher million efficiency. driven flow, was have favorable million, Looking by cash year-over-year. linear a only quarterly of $XX by our EBITDA capital $XX to

revenue linear use XXXX. more adjusted is is with disciplined much to expectation and resulting operating plus to million, compared higher XX.X%. the the flow initiatives, year Adjusted cash Moving and $XXX XX% of cash to us conversion. XX% growth positions flowing our our expense seasonality XXX in gross Similar prior profitability a Slide results. is from past year, This year-to-date year up last expansion bottom EBITDA continuous update a points margin cash to through This of and year-over-year free is representing strong expanded year-to-date line. flow. and compared and margin in full lowest since to cash quarter, improvement use our is our of basis well flow million Year-to-date free EBITDA with the approach X our $XX the free combined to to achieve

million, $XXX banking prior XX.X%. higher of delivered chain year-over-year demonstrating increased The from significant XXX operating Revenue quarter. America, basis deliveries was product leverage. Favorable drove X. combined efficiency due to by points, by greater performance and million to North with banking million in expansion product revenue another versus driven expanded was outstanding gross margin gross service year, Turning of supply growth pricing recycler improved cash continued year-over-year performance mix revenue margin rigor. profit X.X% this improved up $XXX and product gross and growth. Europe $XX Slide the to

reestablish Major of multiyear points in and quarter gross U.S., service Netherlands service renewal expansion expect the basis area a and Brazil, focus in include us win to new banking full which the facility up see contracts year-over-year. on Also, keeping continues performing well wins margin, was targets. year customers product is XXXX. improvement, us our in to track India which enabled we of region. the and and our benefits the large been the achieve to driving our XXX in be has year banking to this for and extremely presence has manufacturing

seeing slightly Moving versus to sequential and opportunity $XXX XX. signs but continues of growing growth in primarily revenue by self-service as the in contract lower stabilization declined macro expect projects, to revenue to slight growth. was a team was the quarter. revenue, retail into offset Slide shipments. environment retail we pipeline revenue the Product year. move down prior due The early the impact with XX% of down of timing product revenue was million is fourth will large Service delivery revenue year-over-year which

headwinds of retail our XX top was XX.X% Product quarter. in gross result points profitability supply was basis up margins chain from quarter the gross year-over-year under line with the of initiatives. pressure this margin a as

in offset retail retail quarter margin this the project and timing. to decrease more margin outlook the However, improving in than remains challenges, and in due near-term revenue expect gross in the sequentially Despite recovery the XXXX. gross market we service product fourth with by was a the long-term positive pushout of

drive are operating flow managing now with XX, company is cash highlighting free commercial more and Slide rigor. free linear cash to each The our efforts improved flow we efficiently On more quarter. across

already, As of see we in evidence pointed out year-to-date our you results. progress can our

beyond full We we XX a to next of conversion. cash certain sight over XX expect as XX% of corporate related delivering have nonrecurring of adjusted XX% our debt payments to Also, to conversion free the anticipated months, lower vendors of $XX continued XXXX, to of a profitability flow services, greater looking especially reminder, clear our line elimination on achieve EBITDA by through expansion, driving year than free in to an restructuring over greater refinancing, expectation margin million. cash with costs approaching higher flow

working reduced efficiency restructuring Continued and fees. professional capital and

Lastly, expect our high net of at XX, actions. of driven we the ratio year our EBITDA $XXX of the $XXX investments stronger cash lean at On the by remained of and quarter leverage a million improvement short-term X.Xx. of finish to the profitability, adjusted result to our million, end million. stable reflects This solid ended continuous performance guidance our as with Slide year-to-date, we and $XXX and impact

We of are and plus our free flat guidance revenue previous conversion. reiterating XX% cash flow

into and of the margin region. term. the are reentry accelerating will our In countries in the certain banking's recurring product Pacific mix revenue this grow near of Asia product ramps installed service quarter, is This our plan timing part fourth in drive higher The manufacturing lower as we region. regional to base

to we the to high gross our product However, see annualized XX% in basis. margin mid- range on an expect

to Turning on XXXX. early thoughts

year. next to planning annual our in you guideposts still process, are some give wanted for directional but We

retail. We path recovery to growth high expected in we in plus cash year-over-year, expect XXXX, second flow and single-digit a low expect to single-digit and year-over-year continued mid- Adjusted EBITDA start XX% on strength with of longer a grow our in which is free term. to revenue half plus range is meaningful banking XX% conversion conversion in the developing

additional XXXX the plan to Lotte Day industry City. longer-term at on New for will financial Palace and and Please your details York We the calendars join in Investor mark XX February provide our on outlook and morning. our at us

team formal date registration. and link Investor save to a the will Our send out that Relations

study. you who thank participated Slide XX. to Now perception in all our moving on to investor We recent of want

for your and like would towards blocks foundational investment-grade blocks to shareholder These geared share from practices are taken feedback the I've building worked building value to past. have create best forward. going We our significant companies the in implementing

net upcoming leverage enhance structure our Our refinancing. as at expense well as goal X.Xx interest our approximately with maintain to and is capital lower debt further

simplify to understand that we need nonrecurring items. We the past of complexity related the to

have year a a recent terms the overhang to the past normalized strong deck that with puts in and fees of suppliers. position optimize our focus cash restructuring elevated professional clears levels working corporate flow. particular and in This reduce return capital more to with further related to expect us We on to been years payment

strategy and balanced for ensure a unlock additional with we implementing return to customers value benefits mindset. allocation are we Additionally, shareholders. returns-based to a capital our

on made and have at elaborate of each Day. these detail will progress Investor we items in more our early We

back will Now turn the to call I Octavio.

Octavio Marquez

wrap a excited at about Thank continue be Nixdorf. we lot Diebold have you, Tom. to Slide to To up on XX, things

a for are improved customers our We have execution. and our company and operational employees stronger

banks in and of leading backlog. winning in base ahead recurring continue $X product traction year. of of significantly gain the initial mostly future XXXX our with market. world-class of am and expect the finish are strong, profitability DN We This approximately over attractive billion world's we $X billion shows our I customer that the as entering retailers, highly expectations excited our about the our revenue, to our service to solutions

tremendous made improvements at we manufacturing Additionally, journey. And our only are efficiency. the stages you in of have lean seen, have initial as we

our We our key lean well going our as the expanding are team as expertise added a year, to business. XXXX, enterprise have Board. particular strengthened focus on our we with service into with efforts throughout This management additions

We future and are all excited about of value focused on creation company disciplined for our shareholders. the the

call operator, that, up with questions. please And for open the

Operator

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

Matt Summerville

mentioned, delineate hoping upon you guys prepared you I to a some you that And if in that And between you you're what going first, remarks gives XXXX. funnel? and get kiosks a you your better could have is follow-up. with the response? expand could have What Tom, was Maybe then retail that. your in that in bit confidence, seeing confidence self-checkout I

Thomas Timko

Great. Yes. Matt. Thanks,

-- margins, it pushout actually and retail in by it was large really we As the all projects had by that retail some driven driven a convenience was food some service customers. of relates really to

more really, from a of timing QX. into So issue QX it's

more impacted think the of stabilization, we're in that see see the to volumes. up -- customer but base by you're our with headwinds slightly So still beginning being period-over-period, the I revenues reduced margins starting to

Octavio Marquez

is sorry interrupt. Adding this Octavio. to Matt, comment, to Tom's

we do We've more continue You there. North some see America talent build. to our to made in organization, and pipeline -- to asked our additional about team the the recently adding pipeline, investments that

we as pipeline to just accelerate need continue developing see need converting into pushing outwards, to we more is now. we continue we and and feel but confident again, them, look to just that the orders We there. opportunities, that So

Matt Summerville

the a And in of regional kind minute kind take then of what do maybe Octavio, the do you're as you we dive these and well-known specifically India. as years for on hyper-price This on quarterly being on deeper you covered calls, Asia just been typically seeing importantly that guys a lucrative has if competitive the a from I've using maybe with been Pacific, your inning then pretty a refresh and strategy lead of market, both market analogy, in the And back what has in out yet want over address we're in demand that obviously on XX of been getting side, banking I kind the the cycle. and now to this again. you in been your describe baseball business standpoint, market, can the market, service in hardware of you're the side. has Diebold market, out competitor

logic help kind that right the move? the of behind understand So and me this why is

Octavio Marquez

Sure.

So every this better Matt, you for I'll start since me question preparing quarter. ask

baseball better is game, first in a unit, whether we're we game. the So a analogy. I getting it's But still continue of I'll America, But with North full kind that have function being replaced the remember of geographies, see this think when out the a little of into the every recycler. middle to the to there third look machine at probably I

there. progress So we make significant continue to

are large recycling. starts with know, ready them you As for of customers. Not all it the

changes As they that. community now prepare infrastructure, translate providers as but in you also their requires regional software also buying are to machines capability. some as That the that unions for that into accounts, deploying network wait for everybody banks, know, is credit right even provide they it recyclers our will recycling

available. the that understand customers adoption themselves it's preparing and see the out see benefits where that functionality continued to turn benefit, just are we the So when

midway again, very But we refresh say, cycle, the would strong to America through. North and is continue see I a market

So If Again, deals. of America. we optimistic go last the very Brazil I some are quarter, mentioned about and very South, I America, large importance government Latin North

one winning next of We on have the We're won one. working now now them.

markets to grow, continue on those them. we're that excited will and very focused very, we're very So

us surprisingly been surprise of for more has were pleasant to but Europe be market, flattish we very it's actually expecting as a to it a continued grow.

is some mandating Windows driven customers networks of in some XX. the Europe by their move it of And that to

in that for seeing Germany, example. we're So

us. big as for So you again, market know, a

ATM certified benefiting we're in So first being the provider XX. from Windows

a and we remains stable going see success market, So Europe forward. continued

year. I'm they have very what accomplished So proud team for actually this of our European

market we which market side. very decided be a create why in a but we've is Matt. you our that was we're profile of to to been to will service It the when there. an facility continue hardware invest bit market And competitive manufacturing question, The do in first your go a cost We're iteration a little improving of actually is the to market That's hardware as there in journey. India, shrinking cost able right, to what multiple on are trying side. absolutely in is base APAC, compete profile the we years. the India effectively the we more our in there Indian And there we didn't participate for challenging on to

the base. have very I It regrowing that start want service is once in annuity service to you profitable India.

and goes it's very not other India. it's countries, -- it's just and The business small, You're usually I and profitable India very there Asia profitable. service say the exclusive OEM and Pacific to to

service with area its market globally our continue to do we're attractive adding and annuity what is is to one high -- growth do, an it. that's So to trying APAC

Operator

comes question from Bryson of of next the your Matt And line Wedbush.

Matthew Bryson

to up actually of the follow I'm questions Matt on some going asked.

they retail pushout you Tom, would like were in Just there way a terms had what specifics is was close? And with if when of give revenue, any to how thought more that you looked margins much closed gross can us impacted? things revenue the have in bit services going

Thomas Timko

handy in a impacted points that Yes. quarter-over-quarter a that Look, maybe perspective, it's Revenue-wise, have not I me. of probably that push sure basis I of XX our now. But result as quite margin probably right I'm range margins Matt, were in think to front from out. number XXX

on million was revenue. the it to probably Sorry, closer $XX-ish

Matthew Bryson

second the more you And just begin that then Asia, And with incremental need you anything support see you to the added expansion? up side, talk we around into opportunity in about there can that we cost through really the to that should think any efforts revenue is XXXX opportunity revenues of think model else the question that? to On showing about your in broadly to model? kind cost Awesome. what incremental see when is as revenue or can

Thomas Timko

Yes.

I'll and over So then kick to Octavio. answer it

it Pacific We're into its those the up So as think quarters. facility manufacturing. reentry banking's about countries over ramps -- sort accelerating Asia our as X next India of

grow installed in our of revenue service part recurring and higher So the the plan the base to drive region.

So this the timing lower the of of impact mix margin near regional will in the product term.

However, to basis XXXX. mid- on see we range XX% do to product annualized an margin the return to gross expect in our high

So the on XXX margin potential impact so. near-term or points here is basis around somewhere gross probably

Octavio Marquez

Matt, to gross that remember, Probably talking we're rate. about margin important

will revenue right flow the level be and goal incremental dollars And that to margin is see margin do through. now. always are that at we we However, our

So bit that leaning we have mix, in the we out with of manufacturing it in And will the that believe very, levels but our we're always fluctuate product margin we sustainable. a are very are are sustainable. globe, regional the that little part across efforts confident doing the

seeing you margins So you'll believe quarters little now, starting where the this right a bit again, is are the of quarters little lift they sustainable. revenue but lower, tell year, that around I what start a and would higher, some bit that next we fluctuating level some kind

Matthew Bryson

being isn't I in the understood. dollars. of any to CapEx accretive I it's is all guess OpEx my incremental do terms No, there yet? more, question or margin think model in we that margin in And have about guess that that was

Octavio Marquez

India in Pacific actually something help generally in and that -- for significant as would efficiently. significantly Matt, us that work workforce We don't in capital will our our will we're very particularly will you India more any capital any be don't that expenditures. know, see I we And and light utilize this doing. the No, we as require model is think expenditures, Asia

Thomas Timko

term margin as the be periods I and use in in of that, will those C Matt, to build would of that reaccelerating to in into profitable the that is thing to meant service order begin really The decrease the Yes. we're enter contracts. the investment seeing we banking, it's as investment add we some which base, only

Operator

follow-up Matt you Summerville Davidson. have question from a And of D.A.

Matt Summerville

Just kind improve that of realize trying implied XQ can walk year-on-year, or is to kind -- do from a in Nonetheless, to strongest. quarter you either that if what's that. all the ones. couple of EBITDA XQ, through fourth just down I typically quick helpful. still more sequentially bridge be Can linearity in either might you you're the of

that So goodness. to in providing out some would going retail QX, maybe pushing that's service in that with hit be

So help XQ me last the relative either EBITDA to year. the same understand, implied of I guess, the context period QX guide or

Thomas Timko

baseline. down QX Matt, a Yes. benefited running kind last and by lower-margin normalized and post-COVID, pent-up up really disciplined kind flow-through was be to year much backlog, is This into from linear XXXX the right? approach, more as more seeing driven clearly, that the operating of as countries the product QX as normalized demand. new look, revenue quarter. QX comes the of the more the Again, product viewed well ought it business impacted period-over-period. down shipments a That's of as to gets QX next what strongest All to pent-up come year we're quarter mix.

the it's a quarters our operating I'm EBITDA the end as of for disciplined versus approach but good to approach and of would just record to I like you -- where starting compare model. broken $XXX high and hold again, previous how operating look, to more landed. here, we're business, sound we're disciplined see linearity the want revenues, run a Again, the say, But some to to more at of take some the driving we guidance I just a million don't the you're rates

Matt Summerville

XX%? go to You I services margins be service do as a start then gross forward? margins follow-up, how product should we gross I company when How And the should talked looking see about be thinking here? in profitability thinking about ahead. about excess gross And of from the sustain

Thomas Timko

Yes.

in a So for opportunity great this 'XX. us is

goes kind story of the this. So like

throughout XX% We we expect and focused how margin, at maintain XXXX. that approximately be to month of our do are going to end December the on efforts

continuing look service QX, levels. the months October, early really that You customer reinvestment of our November, in at we're

by the result encouraged we're However, initiatives what in improvement operational sort to expect of higher and we efficiencies.

So the is to and service XX% towards year now, gross to closer full XX% group will drive to finish for our this year us targeting services really the of position right margins, 'XX.

Matt Summerville

don't XX% you the but would Tom, to back. helpful picture is maybe And on just flow why maybe just cash the bigger understand provide the be again, on kind of this, it. to eventually tax term components EBITDA us that And touched thinking, And go that Help build. -- Got can of high? why 'XX, should then as last, it be pluses on long effective rate to you to big conversion XX%. and bridge detailed free touch we some your then driving minuses, of more incredibly

Thomas Timko

if I'll XXX EBITDA, Look, favorability, of had the bridge, the at sort flow rate. Directionally, for high the starting end. directionally penalty at here plus right, take QX points all everybody free single-digit first, these least now, my as And the about cash which the XX-ish story in the year-over-year right that's that next interest of just the now, are a prepayment But as one basis in point some 'XX year, this is point expense you expires Thanks. guide to Sure. is lower take mid- EBITDA correct. probably favorite think remarks, And right? for high Matt. growth in you of 'XX. aware, right, if we the

about So cash million conservatively, flow. of think as $XX plus that additional

right, Slide our that And perception to then and on lower in of tried in the prepared you'll because that hit year driving of DSO such we've me conclude -- a really the -- the and and to remarks, study that more, here. And see professional if during up range the not the in AR of we year. and That we well, to push focused fees, just is came had the as as XX-ish, the kind XX down. look just focus on look, this

into working plus those elements even that of right kind that just with alone up you -- range. flat float XX% Just capital,

effective you're as But opportunistically And rate rate, relates it extremely for high to done. the it yes, right, was look, tax quarter. the

income save higher higher in obviously, on taxes. third in last recapitalize the X Our cash tax tax rate jurisdictions rate we to certain as entities the compared quarter, to

what higher a may the the and rate taxes year terms slightly quarter in us pain So that. for really be out of bit cash little well works savings for of and on a in

continue So non-GAAP And year, a XX-ish expect rate we our to 'XX. is it year for expect be percent, what little be We to our line, bit a not tax can like laser-focused full next normal ETR we would more effective a rate to year on would premature the imply ourselves. which in favorable probably we're would to get company slightly approaching for fiscal XX%. going how QX if a to rate obviously and for be as of it's to

Operator

have And Wedbush. further we from a Bryson of follow-up Matt question

Matthew Bryson

one, first on I'm I'm going bit the actually questions a be to more again, follow Matt's up going and to pointed.

so EBITDA you've done in So million $XXX far.

in the end, down your revenue guidance Asia. efforts your talked down I know coming margin to because uptick flat, get -- a around million. sequentially to nice you've a your to little to given be about But to EBITDA in of got of $XXX revenue. So pretty gross high you around see has maybe bit got

so some there's offset, sequential call revenue? is an I that Is there mean, come above to that potentially really to the you're you unless else of other that out anything you in it in me number offsets. that well alongside EBITDA increase high But wouldn't a see positioned end seems

Thomas Timko

just product It's being we've extraordinarily really That's the the high right? articulated sort mean And highest us. what the of I little acceleration answer, earlier. It's simplest mix really to -- year, and of a it and Matt. volume. product margins product geographical had down mix QX of revenues mostly bit we banking, for sorry, the comes right? ever throughout

Matthew Bryson

slight in was the just my as bit operating was if last question, delta despite I currency. much was income? nicely that decline walk you Got surprised in a this better. I Tom, profit as it stable. and income stable it. revenues. net were sequentially profit But I we the think what guess, EBITDA And me a still I that's did offline it -- take net through bit can I guess was little relatively of dropped when can operating But

Thomas Timko

up -- right? A that tax, lot to primary Yes. we driver significantly on As in would jumped our right? basis, difference. I Matt, pretty So by a percent, the the big of non-GAAP quarter a say, of ETR that's difference. the discussed, XX-ish was of driven, driver

Operator

time, for his this over have call now Sikora closing Chris I'll At no further turn questions. the to remarks. we

Christopher Sikora

participating call for Nixdorf. again you today's Thank interest in your and in Diebold

As Tom mentioned, more Investor around we will February. details in on upcoming our Day be sending

to to have please free If out you Thanks, feel Relations. today's have day. reach any follow-up questions to Investor call, and a great

Operator

This concludes today's conference call. Enjoy the rest of your day.

You disconnect. may now

Diebold Nixdorf (DBD) 7 Nov 242024 Q3 Earnings call transcript