Diebold Nixdorf(US:DBD)2022-11-08 19:26Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $805 million, with adjusted EBITDA of $76 million, aligning with the operating forecast [23][22] - Services gross margin improved sequentially by 100 basis points to 31.3%, while product gross margin percentage declined due to an unfavorable product mix [24][25] - Operating expenses decreased to approximately $139 million, with expectations for normalized quarterly operating expenses to be in the $155 million to $160 million range going forward [25][22] Business Line Data and Key Metrics Changes - Backlog remained near historic highs at approximately $1.4 billion in Q3, with expectations to decrease in Q4 due to product delivery [7][12] - The company expects to ship 52,000 ATMs, 25,000 self-checkout units, and 127 points of sale terminals in 2022, with a forecast of 60,000 ATMs and 35,000 self-checkouts for 2023 [11][12] - Cash dispensers represented approximately 47% of ATM units in Q3, up from 42% in Q2, indicating a shift in product mix [24] Market Data and Key Metrics Changes - Demand for banking and retail solutions remains strong, particularly in the Americas, with significant deployments in the US for self-checkout solutions [6][39] - Europe is expected to remain a flat market, while Asia Pacific presents opportunities for growth, particularly in India [40][41] Company Strategy and Development Direction - The company aims to maintain its leadership in banking and retail technology, focusing on market share growth in ATM products and self-checkout solutions [18][19] - A Transaction Support Agreement (TSA) was entered to extend near-term debt maturities and improve liquidity, reflecting confidence in the long-term strategic operating model [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in product revenues entering 2023, supported by a strong backlog and market demand [12][14] - The company is working to normalize supplier relationships and improve working capital management to enhance supply chain success [30][76] Other Important Information - The company has executed approximately $170 million in savings through cost management efforts and is modeling an additional $25 million in savings [9] - The forecast for unlevered free cash flow for 2022 is projected at a use of $243 million, primarily due to working capital normalization and TSA-related fees [28][30] Q&A Session Summary Question: What needs to happen for the company to ship 22,000 ATMs in Q4? - The company has 14,000 units ready for delivery, and converting a significant portion of that inventory is essential to meet the target [32][33] Question: Can you provide details on incoming order rates by region? - Order intake for self-checkout remains strong, with significant deployments in the US and continued demand across the Americas [35][39] Question: What is the impact of product mix on margins? - The product mix is expected to stabilize over several quarters, with a goal of achieving a normalized mix of cash dispensers and recyclers [45][47] Question: What are the conditions for closing the TSA transaction? - The TSA transaction is expected to close by the end of December, allowing for normalized supplier relationships and improved liquidity [90][89]