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 - The company reported a 36% year-over-year growth in product orders, with gross margin expanding by 20 basis points year-over-year and 140 basis points sequentially [5][20] - Free cash flow generation reached €6,000,000 in Q1, marking the best first quarter in the company's history [6][21] - The product backlog increased to approximately $900,000,000, up from $800,000,000 at year-end [19] Business Line Data and Key Metrics Changes - Banking segment saw order entry up approximately 50% year-over-year, with revenue increasing by $9,000,000 year-over-year, excluding FX impacts [23] - Retail segment experienced a 10% increase in order entry, indicating signs of stabilization and potential recovery in the second half of the year [25][26] Market Data and Key Metrics Changes - The company noted strong demand across all major geographies, particularly in Europe and Latin America, with significant orders from Brazil [62] - In the Asia Pacific region, the company is seeing strong order entry and success with high-capacity recyclers [63] Company Strategy and Development Direction - The company is focused on a three-year growth acceleration plan aimed at delivering mid-single-digit annual revenue growth and double-digit adjusted EBITDA growth by 2027 [11] - Emphasis on local manufacturing and lean operations to mitigate tariff impacts and improve profitability [7][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining the 2025 financial guidance despite tariff challenges, estimating a gross impact of approximately $20,000,000 from tariffs [28][30] - The company is prepared for potential supply chain impacts and is actively implementing mitigation strategies [27][29] Other Important Information - The company has a strong liquidity position with over $635,000,000 available, including $328,000,000 in cash and short-term investments [34] - A share repurchase program was initiated, with €100,000,000 authorized for repurchase, and €8,000,000 executed in March [6][34] Q&A Session Summary Question: Can you talk about the drivers behind the impressive backlog growth? - Management highlighted healthy banking cash recycling adoption and improved retail self-service activity as key drivers supporting revenue growth [45][46] Question: Have customers accelerated their order rates due to tariff uncertainties? - Management indicated that there was no significant impact from tariffs during Q1, and customer investment plans remain unchanged [48][49] Question: Can you provide details on the foreign exchange expense? - The foreign exchange expense was primarily a non-cash impact tied to intercompany loans, with expectations of reversal in the second quarter [50][51] Question: Can you provide granularity on banking orders across regions? - Management reported strong order activity in North America, Europe, Latin America, and Asia Pacific, with significant growth opportunities in each region [60][62][63] Question: What are the capital allocation priorities moving forward? - The company plans to return excess cash to shareholders through share repurchases while continuing to invest in growth strategies [86][88]

Financial Data and Key Metrics Changes - The company reported a 36% year-over-year growth in product orders, with gross margin expanding by 20 basis points year-over-year and 140 basis points sequentially [5][21][22] - Positive free cash flow of €6,000,000 was generated in Q1, marking the best first quarter in the company's history [6][22] - The product backlog increased to approximately $900,000,000, up from $800,000,000 at year-end [20][44] Business Line Data and Key Metrics Changes - Banking orders were up approximately 50% year-over-year, with revenue increasing by $9,000,000 year-over-year, excluding FX impacts [24][25] - Retail product revenue showed signs of stabilization, with order entry up approximately 10% [25][26] - The company is seeing strong adoption of cash recycling technology, particularly in Europe and Latin America [41][60] Market Data and Key Metrics Changes - The company operates in a combined CHF 32,000,000,000 total addressable market for banking and retail [9] - The macro environment continues to impact retail product revenue, but there are signs of recovery expected in the second half of the year [25][30] - The company has a strong pipeline in North America, with several new customers conducting proof of concepts and pilots [61] Company Strategy and Development Direction - The company is focused on a three-year growth acceleration plan aimed at delivering mid-single-digit annual revenue growth and double-digit adjusted EBITDA growth by 2027 [11][30] - The strategy includes capturing secular tailwinds in banking and retail, improving profitability through lean operations, and increasing cash generation [9][10] - The company is committed to maintaining a fortress balance sheet and returning capital to shareholders through share repurchase programs [6][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 financial guidance despite potential tariff impacts, estimating a gross impact of approximately $20,000,000 [28][30] - The geopolitical backdrop and new tariff policies are being monitored, with mitigation strategies in place to offset potential impacts [7][29] - Management remains optimistic about the demand for self-service and automation solutions in both banking and retail sectors [9][35] Other Important Information - The company is implementing Oracle Field Services combined with its AllConnect Data Engine Analytics platform to enhance customer support [15] - The company has over $635,000,000 in liquidity, with a net leverage ratio of 1.5 times [33] - The company is focused on operational efficiencies and cultural transformation to improve service delivery [18][19] Q&A Session Summary Question: Can you talk about the drivers behind the impressive backlog growth? - Management noted strong banking cash recycling adoption and improved retail self-service activity as key drivers supporting revenue growth [41][44] Question: Have customers accelerated their order rates due to tariff uncertainties? - Management clarified that tariffs were announced after Q1 ended, and the strength of the business drove higher orders during the quarter [44][45] Question: Can you provide details on the foreign exchange expense? - Management explained that the $18,500,000 foreign exchange expense was a non-cash, non-operational impact tied to intercompany loans affected by currency fluctuations [46][47] Question: Can you provide granularity on banking orders across regions? - Management highlighted strong order activity in the U.S., positive surprises in Europe, ongoing momentum in Latin America, and a deliberate strategy in Asia Pacific [60][61] Question: How are you structuring contracts to mitigate tariff impacts? - Management emphasized their local-to-local manufacturing structure and ongoing mitigation efforts to offset tariff impacts [68][70] Question: Can you elaborate on working capital improvements? - Management discussed favorable working capital efficiencies, particularly in inventory and accounts payable, contributing to improved free cash flow [76][80] Question: What are the capital allocation priorities moving forward? - Management stated that excess cash is being returned to shareholders through share repurchase programs while continuing necessary investments for growth [81][84]