Diebold Nixdorf Conference Call Summary Company Overview - **Company**: Diebold Nixdorf (NYSE: DBD) - **Industry**: Banking and Retail Technology Solutions Key Points and Arguments Company Positioning - Diebold Nixdorf is the leading player in global banking and retail self-checkout solutions, particularly in Europe [2][5] - The company has a strong backlog of approximately $920 million, indicating good revenue visibility for the next two quarters [3] Financial Performance - The company is on track to nearly double its free cash flow generation in 2025, with a commitment to return the majority to shareholders through a $200 million share repurchase program [4][32] - In Q3, Diebold Nixdorf reported a 2% year-over-year revenue growth and an adjusted EPS of $1.39, up more than $1 year-over-year [22] - The retail segment saw a 40% year-over-year order entry growth, with revenue up 8% [23] Product and Service Insights - The ATM business is stable, with an annual shipment of approximately 60,000 units expected to continue for the next six years [9] - The introduction of teller cash recyclers is a significant growth opportunity, aimed at reducing operational costs for banks [10][11] - The company has a 90%+ attach rate for services sold with products, with 70% of service revenue being recurring [3][12] Market Dynamics - The retail sector is recovering post-COVID, with growth opportunities particularly in North America, which is larger than the European market [13][15] - AI software developed by Diebold Nixdorf is effectively reducing theft at self-checkouts by 70% and improving customer experience through features like age verification and produce recognition [15][16][18] Strategic Initiatives - The company is focusing on a "local-for-local" manufacturing strategy to mitigate tariff impacts, which are estimated to be between $5-$10 million [5][6] - Diebold Nixdorf is enhancing operational efficiency through improved working capital management, with significant improvements in Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO) [28] Future Outlook - The company anticipates flat to low single-digit revenue growth in 2025, accelerating to mid-single-digit growth by 2027 [30] - Free cash flow conversion rates are projected to improve from 40% in 2025 to 60% by 2027 [31] - The company maintains a strong balance sheet with a net leverage ratio of 1.6, well within its target range [33] Capital Allocation - Diebold Nixdorf plans to continue prioritizing share repurchases over large acquisitions, focusing on small, bolt-on, and immediately accretive opportunities [35] Additional Important Insights - The company has undergone significant operational changes to improve cash flow management and reduce inventory buildup, which had previously been a challenge [42][43] - The recent S&P credit upgrade to B+ reflects the company's improved free cash flow generation and overall financial health [24] This summary encapsulates the key insights from the Diebold Nixdorf conference call, highlighting the company's strategic positioning, financial performance, product innovations, and future growth prospects.

Core Insights - Diebold Nixdorf has successfully supported the expansion of ROSSMANN into the Swiss market through a comprehensive model of retail technology solutions and services [1][2] - The partnership, initiated in 2021, has already facilitated the implementation of POS systems and self-service checkouts in over 2,350 stores in Germany, creating a successful operational blueprint for future expansions [2][4] - Plans are in place to connect additional devices to Diebold Nixdorf's eServices portal, enhancing the IT infrastructure of ROSSMANN stores [3] Company Overview - ROSSMANN, founded in 1972, is one of Europe's largest drugstore chains, employing 65,500 people and operating 4,966 stores [5] - In 2024, ROSSMANN generated sales of €15.3 billion across multiple countries, including Germany, Poland, and Switzerland [5] - Diebold Nixdorf operates in over 100 countries with approximately 21,000 employees, providing integrated solutions for banking and retail [6]

Core Insights - Diebold Nixdorf, a leader in banking and retail transformation, announced participation in upcoming investor conferences in December [1] Company Participation - Octavio Marquez, president and CEO, and Tom Timko, executive vice president and CFO, will participate in the UBS Global Industrials and Transportation Conference [1] - The format will include a fireside chat and one-on-one meetings [1] - The fireside chat is scheduled for Tuesday, December 2, 2025, at 2:40 p.m. [1]

Sales Performance - Total net sales for the three months ended September 30, 2025, increased by $18.1 million, or 2.0%, compared to the same period in 2024, with a net favorable currency impact of $26.3 million primarily related to the euro [19]. - Banking net sales represented 73.0% of total net sales for the three months ended September 30, 2025, down from 74.5% in 2024, with a decrease of $14.9 million after excluding currency impact [19]. - Retail net sales increased by $18.5 million, or 7.8%, for the three months ended September 30, 2025, driven by stronger electronic point of sale business [19]. - Total revenues for Q3 2025 reached $945.2 million, a 1.0% increase from $927.1 million in Q3 2024 [39]. - Total net sales for the three months ended September 30, 2025, were $945.2 million, a 1.0% increase from $927.1 million in the same period of 2024 [77]. Profitability - Net income for the three months ended September 30, 2025, was $41.7 million, compared to a net loss of $21.7 million in the same period of 2024, reflecting a significant improvement [25]. - Operating profit for Q3 2025 increased to $73.8 million, up from $46.4 million in Q3 2024, representing a 58.5% growth [39]. - Income before taxes for the three months ended September 30, 2025, was $52.4 million, significantly higher than $9.7 million in the same period of 2024 [77]. - Basic earnings per share for Q3 2025 were $1.13, compared to a loss of $0.60 per share in Q3 2024, indicating improved profitability [39]. - Comprehensive income for the nine months ended September 30, 2025, was $249.4 million, compared to a loss of $4.1 million in the same period of 2024 [43]. Expenses and Costs - Total operating expenses decreased by 9.9% to $171.3 million for the three months ended September 30, 2025, and by 4.7% to $521.8 million for the nine months ended September 30, 2025, compared to the same periods in 2024 [22]. - Selling and administrative expenses fell by 8.3% to $150.9 million for the three months ended September 30, 2025, and by 4.5% to $456.9 million for the nine months ended September 30, 2025, primarily due to lower refinancing and transformation costs [22]. - Research and development expenses decreased by 13.2% to $20.3 million for the three months ended September 30, 2025, and by 6.3% to $65.3 million for the nine months ended September 30, 2025 [22]. - Total cost of sales for Q3 2025 was $700.1 million, an increase from $690.5 million in Q3 2024, reflecting rising costs [39]. Assets and Liabilities - As of September 30, 2025, total assets increased to $3,723.8 million from $3,543.5 million as of December 31, 2024 [37]. - Outstanding total debt as of September 30, 2025, was $934.0 million, slightly up from $927.3 million as of December 31, 2024 [52]. - Cash and cash equivalents decreased to $246.1 million as of September 30, 2025, from $296.2 million as of December 31, 2024 [29]. - The Company had trade receivables of $580.1 million and contract liabilities of $300.6 million, down from $588.5 million and $320.7 million respectively at December 31, 2024 [72]. Shareholder Actions - The company repurchased a total of $77.4 million in common stock during the first three quarters of 2025, with $22.6 million remaining under the share repurchase program as of September 30, 2025 [33]. - The company repurchased a total of 667,401 shares during the third quarter of 2025 at an average price of $59.18 per share [83]. - The company announced a new $200.0 million share repurchase program on November 5, 2025 [83]. Tax and Tariffs - The effective tax rate decreased to 18.3% for the three months ended September 30, 2025, from 308.2% in the same period of 2024, primarily due to improved interest expense deductibility [25]. - The company estimates a net impact of approximately $5.0 to $10.0 million due to tariffs, assuming current tariff conditions remain in effect for 2025 [15]. Market Presence and Strategy - The company has a presence in over 100 countries with approximately 21,000 employees worldwide, focusing on automating and digitizing banking and retail experiences [13]. - The company anticipates continued focus on market expansion and new product development in the upcoming quarters [7]. - The Company is focused on enhancing consumer experience and streamlining cost structures through the integration of hardware, software, and services [14].

Core Insights - Diebold Nixdorf, Incorporated reported quarterly earnings of $1.39 per share, significantly exceeding the Zacks Consensus Estimate of $0.66 per share, and showing an increase from $0.53 per share a year ago, resulting in an earnings surprise of +110.61% [1] - The company achieved revenues of $945.2 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.69% and reflecting a year-over-year increase from $927.1 million [2] - Diebold Nixdorf's stock has increased by approximately 30.7% since the beginning of the year, outperforming the S&P 500's gain of 15.1% [3] Earnings Outlook - The future performance of Diebold Nixdorf's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $1.47 on revenues of $1.14 billion, and for the current fiscal year, it is $3.44 on revenues of $3.82 billion [7] Industry Context - The Internet - Software industry, to which Diebold Nixdorf belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5]

Core Insights - Diebold Nixdorf, Incorporated is on track to meet its three-year plan objectives, focusing on operational and financial strengthening, leading to sustainable growth and positive cash flow [1][5] - The company achieved positive free cash flow for four consecutive quarters and received a credit rating upgrade from Standard & Poor's, reflecting its strong financial position [2][23] - Total revenue grew by 2% year-over-year and 3% sequentially, with significant contributions from the retail sector, which saw an 8% increase in revenue [3][14] Financial Performance - Operating profit increased by 4% year-over-year and 19% sequentially, with adjusted earnings per share rising to $1.39, up over $1 year-over-year and approximately 50% sequentially [3][19] - Product orders grew by 25% year-over-year, with a backlog of approximately $920 million, indicating strong demand across banking and retail sectors [4][14] - Free cash flow nearly doubled sequentially to approximately $25 million, marking a significant improvement in working capital management [20][19] Strategic Initiatives - The company announced a new $200 million share repurchase program, demonstrating confidence in its long-term value and commitment to returning capital to shareholders [2][24] - Investments in technology and service enhancements are aimed at improving customer experience and operational efficiency, particularly in branch automation solutions [6][10] - The launch of a comprehensive branch automation solution is expected to redefine banking operations, helping banks reduce costs and improve efficiency [6][10] Market Trends - The retail segment is experiencing a recovery, with strong order entry growth of 40%, reflecting solid demand and execution [3][4] - The banking sector continues to show steady performance, with expectations for ongoing ATM refresh activity and the introduction of teller cash recyclers [21][26] - Geographic diversity in operations is providing resilience, with strong performance noted in North America and Europe, while Latin America is expected to improve in the coming quarters [48][51] Operational Efficiency - The company is focused on reducing SG&A expenses, with a target of achieving $50 million in net run rate savings next year through disciplined cost actions [18][19] - Manufacturing operations have seen improvements in lead times and quality, contributing to overall operational efficiency [11][19] - Continuous improvement initiatives are being implemented across the organization to enhance efficiency and effectiveness [11][12]

Financial Data and Key Metrics Changes - Total revenue grew 2% year-over-year and 3% sequentially, driven by retail business acceleration and steady banking contributions [5][14] - Operating profit increased by 4% year-over-year and 19% sequentially, with adjusted earnings per share rising to $1.39, up over $1 year-over-year and about 50% sequentially [5][18] - Free cash flow nearly doubled sequentially to approximately $25 million, marking the first time the company generated positive free cash flow for four consecutive quarters [18][19] Business Line Data and Key Metrics Changes - Retail segment revenue increased by 8% year-over-year, with order entry growing 40%, reflecting strong demand [5][20] - Banking segment revenue was roughly flat year-over-year but showed sequential growth, with gross margin increasing by 20 basis points year-over-year [19][20] Market Data and Key Metrics Changes - Product orders grew 25% year-over-year, with a backlog of approximately $920 million [4][14] - The company is seeing strong growth in APAC and the Middle East, expanding its install base and driving recurring service revenue [23] Company Strategy and Development Direction - The company is committed to generating $800 million in cumulative free cash flow by 2027 and achieving 60%+ conversion and approximately 15% adjusted EBITDA margins [8] - A new $200 million share repurchase program was announced, reflecting confidence in the company's cash generation and long-term value [4][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about retail growth trajectory going into Q4, with expectations of a strong Q4 performance [5][21] - The company is focused on maintaining a fortress balance sheet and disciplined capital allocation strategy, with a credit rating upgrade from S&P Global [21][22] Other Important Information - The company achieved significant improvements in working capital management, with year-over-year reductions in days inventory outstanding (DIO) by 11 days and days sales outstanding (DSO) by 9 days [18][19] - The company was named one of the world's best companies by Time Inc., highlighting employee satisfaction, revenue growth, and sustainability [13] Q&A Session Summary Question: Impact on service profitability from accelerated investments - Management expects service margins to be flat to slightly up, driven by product margins and operational expense resilience, with a $10 million investment spread between Q3 and Q4 [27][29] Question: Status of retail business in North America - Management confirmed ongoing proof of concepts and expressed optimism about the retail business, noting substantial order and revenue growth [30][32] Question: Annual refresh orders in banking - Management confirmed a pace of about 60,000 machines annually, focusing on new placements rather than upgrades [34] Question: Gross margin expectations for Q4 - Management anticipates a similar run rate for margins in Q4 compared to Q3, with slight improvements expected in both banking and retail segments [35][36] Question: Details on a small acquisition - The acquisition enhances capabilities to serve different brands of equipment in branches, expanding the addressable market in the multi-vendor space [40][41] Question: Demand trends for ATM business - Management reported steady demand in North America, strong performance in Europe, and a positive outlook for Asia-Pacific, while Latin America showed some caution due to political turmoil [48][50][53]

Financial Data and Key Metrics Changes - Total revenue grew 2% year-over-year and 3% sequentially, driven by retail business acceleration and steady banking contributions [5][14] - Operating profit increased by 4% year-over-year and 19% sequentially, with adjusted earnings per share rising to $1.39, up over $1 per share year-over-year and about 50% sequentially [5][18] - Free cash flow nearly doubled sequentially to approximately $25 million, marking the first time the company generated positive free cash flow for four consecutive quarters [18][19] Business Line Data and Key Metrics Changes - Retail segment revenue was up 8% year-over-year, with order entry growing 40%, reflecting strong demand [5][20] - Banking segment revenue was roughly flat year-over-year but showed sequential growth, with gross margin increasing by 20 basis points year-over-year [19][20] Market Data and Key Metrics Changes - Product orders grew 25% year-over-year, with backlog standing at approximately $920 million [4][14] - North American operations benefited from higher throughput at the Ohio facility and increased sourcing of parts in the U.S. [11] Company Strategy and Development Direction - The company is on track to achieve its three-year plan objectives, focusing on operational and financial strengthening, with a goal of generating $800 million in cumulative free cash flow by 2027 [7][8] - A new $200 million share repurchase program was announced, reflecting confidence in the company's cash generation and long-term value [4][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about retail growth trajectory going into Q4, with expectations of a strong Q4 performance [5][21] - The company remains committed to maintaining a fortress balance sheet and disciplined capital allocation strategy [21][22] Other Important Information - The company received a credit rating upgrade from S&P Global from B to B plus, validating efforts to strengthen financial performance [21] - Significant progress was made in working capital management, with improvements in days inventory outstanding (DIO) and days sales outstanding (DSO) [18][19] Q&A Session Summary Question: Impact on service profitability from accelerated investments - Management expects service margins to be flat to slightly up, driven by product margins and operational expense resilience, with a $10 million investment spread between Q3 and Q4 [27][29] Question: Status of retail business in North America - Management confirmed ongoing proof of concepts and pilots, with optimism about the differentiated product and substantial order and revenue growth [30][32] Question: Annual refresh orders in banking - Management confirmed a pace of about 60,000 machines annually, focusing on new placements rather than upgrades [34] Question: Gross margin expectations for Q4 - Management anticipates a similar run rate for margins in Q4, with slight improvements expected in both banking and retail segments [35][36] Question: Details on a small acquisition - The acquisition enhances capabilities to serve different brands of equipment in branches, expanding the addressable market [40][41] Question: Demand response for branch automation solutions - Management noted strong interest from both large and smaller banks, with a trend of larger banks leading the way [42][43] Question: Share repurchase program and cash deployment - Management plans to maintain the momentum of the share repurchase program, with flexibility for future opportunities [46][47] Question: Geographic demand trends for ATMs - Management reported steady demand in North America, strong performance in Europe, and a cautious outlook for Latin America due to political turmoil [48][50][53]

Financial Data and Key Metrics Changes - Total revenue grew 2% year-over-year and was up 3% sequentially, driven by retail business acceleration and steady banking contributions [5][14] - Operating profit increased by 4% year-over-year and 19% sequentially, reaching $87 million with a 9.2% operating margin [18] - Adjusted earnings per share rose to $1.39, up over $1 per share year-over-year and approximately 50% sequentially [5][18] - Free cash flow nearly doubled sequentially to approximately $25 million, marking positive free cash flow for four consecutive quarters [18][19] Business Line Data and Key Metrics Changes - Retail segment revenue increased by 8% year-over-year, with order entry growing 40%, reflecting strong demand [5][20] - Banking segment revenue was roughly flat year-over-year but showed sequential growth, with gross margin increasing by 20 basis points year-over-year [19][20] - Product orders grew 25% year-over-year, with a backlog of approximately $920 million [4][14] Market Data and Key Metrics Changes - Strong growth was observed in APAC and the Middle East, expanding the install base and driving recurring service revenue [23] - North America showed steady business with a focus on teller cash recyclers, while Europe had a blockbuster year with strong orders from all major markets [51][52] Company Strategy and Development Direction - The company is committed to generating $800 million in cumulative free cash flow by 2027 and achieving approximately 15% adjusted EBITDA margins [7][21] - A new $200 million share repurchase program was announced, reflecting confidence in the company's long-term value [4][21] - The company is focusing on branch automation solutions and enhancing service capabilities through targeted acquisitions and technology investments [11][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about retail growth trajectory going into Q4, with expectations for a strong Q4 performance [5][21] - The company is on track to meet its full-year guidance, with a focus on maintaining a fortress balance sheet and disciplined capital allocation [21][22] - Management highlighted the importance of automation in banking as a key factor for success in the evolving landscape [8][9] Other Important Information - The company received a credit rating upgrade from S&P Global from B to B plus, validating efforts to strengthen financial performance [21] - Significant progress was made in working capital management, with improvements in days inventory outstanding (DIO) and days sales outstanding (DSO) [19] Q&A Session Summary Question: Impact on service profitability from accelerated investments - Management expects service margins to be flat to slightly up, driven by product margins and operational expense resilience, with a $10 million investment spread between Q3 and Q4 [26][29] Question: Status of retail business in North America - Management confirmed an increase in proof of concepts globally, particularly in North America, and expressed optimism about the retail business [30][32] Question: Annual refresh orders in banking - Management confirmed a pace of about 60,000 machines annually, focusing on new placements rather than upgrades [34] Question: Gross margin expectations for Q4 - Management expects a similar run rate for margins in Q4 as seen in Q3, with improvements in both banking and retail segments [35][37] Question: Details on a small acquisition - The acquisition enhances capabilities to serve different brands of equipment in branches, expanding the addressable market [41][42] Question: Response to branch automation solutions - Management noted strong interest from both large and smaller banks in branch automation solutions, indicating a trickle-down effect from larger banks to regional and community banks [43][44]

Financial Performance - Q3 2025 - Revenue increased by 2% year-over-year (YoY)[9], reaching $945.2 million[73] - Adjusted Earnings Per Share (EPS) increased to $1.39, a YoY increase of more than $1[9] - The company achieved a strong operating margin of 9.2%[37] - Adjusted EBITDA margin improved to 12.9%, a 20 bps YoY increase and a 70 bps sequential increase[41, 47] - The company reported positive free cash flow for the fourth consecutive quarter[9], with $24.5 million in Q3 2025[82] Business Segments - Retail revenue increased by 8% YoY[9] - Banking segment revenue reached $690 million[49], with sequential growth of 1.6%[49] - Retail segment revenue reached $255 million[54], with sequential growth of 5.2%[54] Future Outlook and Strategy - The company reaffirmed its 2025 guidance, projecting adjusted EBITDA between $470 million and $490 million[58] - The company expects to nearly double full-year free cash flow YoY, targeting a 40%+ free cash flow conversion[58] - A new $200 million share repurchase authorization was announced[9, 60] - The company is targeting mid-single digit annual revenue growth rate by 2027[16] - The company is targeting adjusted EBITDA margins of approximately 15% by 2027[16]