Diebold Nixdorf(DBD) - 2025 Q1 - Quarterly Report

Part I Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales decreased 6.1% to $841.1 million, primarily due to Retail segment decline, but net loss improved to $7.5 million from $14.0 million due to reduced interest expense and improved gross margins Overview Diebold Nixdorf automates banking and retail transactions globally through its Banking and Retail segments, managing business drivers like automation demand and mitigating $20.0 million in tariff impacts - The company operates in over 100 countries with approximately 21,000 employees, serving the majority of the world's top 100 financial institutions and top 25 global retailers[8] - The company operates through two segments: Banking and Retail[10] - The company estimates a total gross impact of $20.0 million from global tariffs in 2025 and aims to offset up to 50% of this impact through mitigation strategies like sourcing alternative parts, supplier negotiations, and price adjustments[10] Results of Operations Net sales decreased 6.1% to $841.1 million, driven by declines in both Banking and Retail segments, yet gross margin improved to 24.1% and net loss narrowed to $7.5 million due to reduced interest expense Net Sales by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Total Banking | $629.5 | $648.8 | (3.0)% | (0.2)% | | Total Retail | $211.6 | $246.6 | (14.2)% | (12.4)% | | Total Net Sales | $841.1 | $895.4 | (6.1)% | (3.6)% | - Total gross margin increased to 24.1% from 23.3% YoY, driven by a 90 basis point increase in services gross margin and a 60 basis point increase in product gross margin[14] - Interest expense decreased by $22.1 million (50.7%) due to debt refinancing completed in December 2024[18] Net Loss Summary (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Loss | $(7.5) | $(14.0) | 46.4% | Liquidity and Capital Resources The company improved its capital structure via December 2024 refinancing, resulting in $624.6 million total cash and availability, positive $15.7 million operating cash flow, and initiated a $100.0 million share repurchase program - On December 18, 2024, the company issued $950.0 million of 7.75% Senior Secured Notes due 2030 and entered into a new $310.0 million revolving credit facility[20] Total Cash and Cash Availability | | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $306.5 | $296.2 | | Short-term investments | $8.1 | $16.9 | | Revolving credit facility | $310.0 | $310.0 | | Total | $624.6 | $623.1 | Summary of Cash Flows (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Operating Activities | $15.7 | $(23.5) | | Investing Activities | $0.0 | $(18.0) | | Financing Activities | $(12.8) | $(158.0) | - A $100.0 million share repurchase program was approved on February 12, 2025. During Q1 2025, the company repurchased 184,961 shares for $8.0 million, with $92.0 million remaining under the program[26] Critical Accounting Policies and Estimates Financial statements adhere to U.S. GAAP, requiring management to make significant estimates and assumptions in areas such as revenue recognition, asset valuation, and legal contingencies, which are continuously evaluated - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events[29] - Key estimates include revenue recognition, valuation of trade receivables, inventories, goodwill, intangible assets, legal contingencies, income taxes, and pension benefits[29] Forward-Looking Statement Disclosure This report contains forward-looking statements subject to risks and uncertainties, including new product success, strategic execution, geopolitical instability, tariff impacts, competitive pressures, and cybersecurity risks - Forward-looking statements are not guarantees of future performance and involve risks and uncertainties[30][31] - Key risks include success of new products (DN Series®, Vynamic®), ability to generate cash flow, impact of tariffs, competitive pressures, cybersecurity incidents, and reliance on suppliers[33] Condensed Financial Statements and Notes Unaudited condensed financial statements for Q1 2025 show total assets of $3,625.6 million, a net loss of $7.5 million (or ($0.22) per share), reflecting recent debt refinancing and strong Banking segment performance Statement of Financial Position As of March 31, 2025, total assets increased to $3,625.6 million, driven by inventories and goodwill, while total liabilities rose slightly to $2,634.6 million, and total equity improved to $991.0 million Condensed Balance Sheet (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,727.2 | $1,667.9 | | Total Assets | $3,625.6 | $3,543.5 | | Total Current Liabilities | $1,283.5 | $1,266.3 | | Total Liabilities | $2,634.6 | $2,605.3 | | Total Equity | $991.0 | $938.2 | Statement of Earnings (Loss) For Q1 2025, the company reported a net loss of $7.5 million on $841.1 million in revenues, an improvement from Q1 2024, driven by higher operating profit and significantly lower interest expense Key Earnings Data (in millions, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $841.1 | $895.4 | | Gross Profit | $202.4 | $208.6 | | Operating Profit | $29.6 | $23.8 | | Net Loss | $(7.5) | $(14.0) | | Basic and Diluted Loss Per Share | $(0.22) | $(0.39) | Statement of Comprehensive Income (Loss) The company reported comprehensive income of $61.4 million for Q1 2025, a significant improvement from a $52.0 million loss in Q1 2024, primarily due to $69.8 million in currency translation gains Comprehensive Income (Loss) Summary (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss | $(7.5) | $(14.0) | | Other Comprehensive Income (Loss) | $68.9 | $(38.0) | | Comprehensive Income (Loss) | $61.4 | $(52.0) | Statement of Changes in Shareholders' Equity Total equity increased to $991.0 million at March 31, 2025, primarily driven by $69.1 million in other comprehensive income, offsetting net loss and treasury share purchases - Total equity increased to $991.0 million at March 31, 2025, from $1,025.7 million at March 31, 2024[40] Statement of Cash Flows Net cash from operating activities was $15.7 million in Q1 2025, a significant improvement from a $23.5 million use in Q1 2024, with overall cash increasing by $8.9 million Cash Flow Summary (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $15.7 | $(23.5) | | Net cash used by investing activities | $0.0 | $(18.0) | | Net cash used by financing activities | $(12.8) | $(158.0) | | Change in cash, cash equivalents and restricted cash | $8.9 | $(204.2) | Note 2: Earnings (Loss) Per Share For Q1 2025, basic and diluted loss per share improved to ($0.22) from ($0.39) in Q1 2024, based on a net loss of $8.3 million and 37.6 million weighted-average shares outstanding Earnings (Loss) Per Share | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to Diebold Nixdorf (in millions) | $(8.3) | $(14.6) | | Weighted-average shares (in millions) | 37.6 | 37.6 | | Basic and diluted loss per share | $(0.22) | $(0.39) | Note 7: Restructuring The company incurred $20.0 million in restructuring charges in Q1 2025, part of a $140 million continuous improvement initiative, primarily for personnel transition and consultant fees across segments - Total restructuring charges for Q1 2025 were $20.0 million, compared to $36.7 million in Q1 2024[49] - The continuous improvement initiative is expected to incur a total expense of $140 million[49] Note 8: Debt As of March 31, 2025, total outstanding debt was $929.0 million, reflecting the December 2024 refinancing that included $950.0 million in Senior Secured Notes and a new $310.0 million Revolving Credit Facility Outstanding Debt (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 2030 Senior Secured Notes | $950.0 | $950.0 | | Total outstanding debt | $929.0 | $927.5 | - On December 18, 2024, the company issued $950.0 million of 7.75% Senior Secured Notes due 2030 and entered into a new $310.0 million Revolving Credit Facility maturing in December 2029[49][50] Note 11: Commitments and Contingencies The company faces routine indirect tax claims with an estimated aggregate risk of up to $56.1 million, along with $107.1 million in performance guarantees and letters of credit, none expected to materially affect financial statements - The company estimated the aggregate risk for its material indirect tax matters to be up to $56.1 million at March 31, 2025[62] - At March 31, 2025, maximum future contractual obligations for performance guarantees, standby letters of credit, and surety bonds totaled $107.1 million[64] Note 13: Segments In Q1 2025, the Banking segment generated $629.5 million in net sales and $97.6 million in operating profit, while the Retail segment had $211.6 million in sales and $22.4 million in profit, with both segments experiencing declines Segment Performance (Q1 2025 vs Q1 2024, in millions) | Segment | Net Sales 2025 | Net Sales 2024 | Operating Profit 2025 | Operating Profit 2024 | | :--- | :--- | :--- | :--- | :--- | | Banking | $629.5 | $648.8 | $97.6 | $102.7 | | Retail | $211.6 | $246.6 | $22.4 | $26.6 | | Total Segment | $841.1 | $895.4 | $120.0 | $129.3 | Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk exposures since the December 31, 2024 Annual Report on Form 10-K filing - There have been no material changes in market risk exposures since December 31, 2024[73] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[77] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, its internal controls[78] Part II - Other Information Legal Proceedings Details regarding legal proceedings are provided in Note 11 of the condensed consolidated financial statements within this report - For information regarding legal proceedings, refer to Note 11 of the condensed consolidated financial statements[79] Risk Factors There have been no material changes to the company's risk factors since the December 31, 2024 Annual Report on Form 10-K filing - There has been no material change to risk factors since December 31, 2024[79] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 184,961 shares for $8.0 million at $43.25 per share, part of a $100.0 million program with $92.0 million remaining Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost (in millions) | Remaining Authorization (in millions) | | :--- | :--- | :--- | :--- | :--- | | March | 184,961 | $43.25 | $8.0 | $92.0 | Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[81] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include certifications from the CEO and CFO, and Inline XBRL documents[87] Signatures The report was signed on May 7, 2025, by Thomas S. Timko, Executive Vice President and Chief Financial Officer of Diebold Nixdorf, Incorporated - The report was signed on May 7, 2025, by Thomas S. Timko, EVP and CFO[87]