Diebold Nixdorf Incorporated · NYSE:DBD
Diebold Nixdorf — Debt Investor Presentation (August 2018)
46 slides from Diebold Nixdorf's debt investor presentation, Aug 27, 2018
Slide 1: Diebold Nixdorf, Inc. Lender Presentation
Diebold Nixdorf, Inc. Lender Presentation August 27, 2018 Confidential – do not redistribute Exhibit 99.1
Slide 2: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information To supplement our condensed consolidated financial statements presented in accordance with GAAP, the company considers certain financial measures that are not prepared in accordance with GAAP, including non-GAAP results, adjusted diluted earnings per share, free
Slide 3: Forward-looking Statements
Forward-looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated adjusted revenue growth, adjusted internal revenue growth, adjusted diluted earnings per share and
Slide 4: Today's speakers
Today’s speakers Christopher Chapman Senior Vice President, Chief Financial Officer John Fiore Managing Director Gerrard Schmid President & Chief Executive Officer Marco Prono Executive Director Mac Fowle Managing Director
Slide 5: Introduction
Diebold Nixdorf Introduction
Slide 6: Situation overview & amendment request
Situation overview & amendment request Diebold Nixdorf (DN) reported Q2 2018 results on August 1st: Solid orders and backlog entering 2H 2018 Revenue of $1.1 billion was in-line with expectations, down 2.5% y/y on an as-reported basis Adj. EBITDA of $46.8 million was down y/y due to Lower banking vo
Slide 7: Headwinds & revised outlook
Top-line momentum, offset by: Supply chain delays impacting delivery schedules Impact of stronger US dollar (~300bps benefit reduced to ~200bps) Competitive pressure in Asia Pacific Rising labor costs in service – address during contract renewals Inefficient operating model from Diebold / Nixdorf co
Slide 8: DN Now Cost Actions to Deliver +$200M Benefits
DN Now Cost Actions to Deliver +$200M Benefits Services improvement plan Operating model DN Now cost savings Simplify product portfolio Cost Savings ($M) 1 2 3 Streamlined operating model: More agile decision-making More efficient processes Global workforce aligned with demand 1 Services improvement
Slide 9: Key credit highlights
Key credit highlights Technology breadth, services platform and incumbency provide sustainable and proven barriers to entry Market leader in banking with Connected Commerce solutions and #1 position with global ATM installed base Industry-leading customer base serving nearly all of the top 100 finan
Slide 10: Status of Diebold Nixdorf AG minority shares
Status of Diebold Nixdorf AG minority shares Owned ~23M or ~77% of shares1 of Diebold Nixdorf AG as of July 31, 2018 through wholly-owned subsidiary Diebold KGaA ~4.5 million shares were settled through August 24th for an amount of ~$290M2 Redemptions were paid with cash on hand and borrowings under
Slide 11: Agenda
Agenda Q & A / Supplement Schedules Transaction Overview Financial Update Christopher Chapman, Chief Financial Officer, Diebold Nixdorf, Inc.
Slide 12: Financial Update
Christopher Chapman, Chief Financial Officer, Diebold Nixdorf, Inc. Financial Update
Slide 13: Revised outlook for 2018
Revised outlook for 2018 1 Outlook provided on Aug 1, 2018 2 Outlook provided on May 2, 2018 Current outlook1 Previous outlook2 Revenue ~$4.5 billion $4.5 – $4.7 billion Adjusted EBITDA $280 – $320 million $380 – $410 million Net Income (Loss) $(365) – $(325) million $(95) – $(75) million Free Cash
Slide 14: Solid backlog for 2018
Solid backlog for 2018 YoY backlog1 relatively flat at ~$1.11 billion Healthy activity across Americas Banking, with further orders expected in regionals A challenging Asian market due to competitive price pressure on products Finalizing certifications expected to enter backlog in 2H 2018 1 Orders a
Slide 15: Mix of Revenue from Business Line Q2-18
Mix of Revenue from Business Line Q2-18 Stable business shifting to Software and Services $Millions FX impact -6% cc Business Line Revenue YoY Total Revenue YoY $Millions -16% CC Flat CC Services / Software Product Note: Differences may occur due to rounding.
Slide 16: Q2 2018 Profitability
Q2 2018 Profitability Operating Profit Operating Margin Gross Profit Gross Margin Adj. EBITDAAdj. EBITDA Margin -350 bps $Millions -230 bps $Millions $Millions Operating Expense Op Ex as a % of Revenue -50 bps $Millions -300 bps Note: Differences may occur due to rounding.
Slide 17: Segment highlights
Segment highlights Americas Banking Retail Eurasia Banking +2% cc FX impact $Millions $Millions Operating Profit Revenue Operating Profit Revenue Operating Profit Revenue -13% cc $Millions FX impact $Millions -4% cc $Millions FX impact $Millions
Slide 18: 2018 Adjusted EBITDA Bridge
2018 Adjusted EBITDA Bridge ~ $380 - $410 ~ ~ $280 - $320 Service Costs Higher service costs in Banking and Retail due to slower than anticipated realization of efficiencies, inflationary pressures and discrete, one-time items 1 Supply Chain: Increased ATM supply chain costs from component shortages
Slide 19: DN Net Working Capital Metrics
DN Net Working Capital Metrics Q4 2016 through Q4 2019E Net Working Capital $B NWC % of revenue 20.3% 22.3% 23.1% 24.6% 21.7% 24.5% 23.4% ~24% ~21% ~22% ~22% ~23% ~19% Components of Net Working Capital as a % of Revenue ~12% ~14% ~17% Approximate Assumes no impact from changes in revenue or working
Slide 20: Cash Outlook for 2H 2018 and 2019
Cash Outlook1 for 2H 2018 and 2019 ($B) ~ ~ ~ ~ ~ ~ ~($0.1) ~ ~ ~$0.3 ~ ~ ~ ~ ~ ~ ~ ~ 1 As of August 25, 2018 Ending cash includes cash & cash equivalents and short-term investments FCF, or free cash flow (use) is defined as net cash provided by (used in) operating activities less capital expenditur
Slide 21: LTM adjusted EBITDA outlook for 2H 2018
LTM adjusted EBITDA1 outlook for 2H 2018 ($M) 1DN defines EBITDA as net income (loss) excluding income tax benefit, net interest, and depreciation and amortization expense. The company defines adjusted EBITDA as EBITDA before the effect of share-based compensation, foreign exchange (gain) loss net m
Slide 22: Integration achievements – combination to date
Integration achievements – combination to date ~$160M savings Net reduction in employees by >1,000 Realized ~$120M of savings during 2017 and ~$40M of opex savings in 1H 2018 Right-sized global manufacturing capacity Reduced number of ATM terminals by more than 50% Eliminated redundant R&D spend; re
Slide 23: Summary conclusions
Summary conclusions Action Key takeaways Numerous initiatives underway $200M in on-going expense savings from streamlining operating model, improving services and stabilization of supply chain Cost to achieve of 1.0-1.5x run-rate savings Optimization of COLI creates additional liquidity Addressing n
Slide 24: Transaction Overview
Diebold Nixdorf Transaction Overview
Slide 25: Amendment overview
Amendment overview RC / TLA Lenders TLB Lenders Mechanics $20mm RC commitment reduction $130M TLA paydown (ratable) $100M TLB repurchase (ratable) Price N/A Fixed price of 99% of par Expires at 5:00 pm ET on 8/28 Tendered amount allocated ratably, if over participation Tender includes exit consent t
Slide 26: Sources and Uses and Pro Forma Capitalization
Sources and Uses and Pro Forma Capitalization Current and pro forma capitalization Source: Company filings and compliance certificates Note: Differences may occur due to rounding; Excludes fees and expenses for illustrative purposes 1 Reflects estimated RC and cash balances as of week of August 20,
Slide 27: TLA-1 facility terms
Borrower Diebold Nixdorf, Incorporated Facility Up to $650M TLA-1 Tenor / Maturity 4 years Margin / OID L + 925 bps / 98 OID Amortization 2.5% per annum Security Secured by a first priority security interest in substantially all tangible and intangible assets (including capital stock of subsidiaries
Slide 28: Summary existing terms and conditions
Summary existing terms and conditions Certain amendment provisions Borrower Diebold Nixdorf, Incorporated Same as existing Guarantors Substantially all existing and future material domestic subsidiaries Lead Arranger / Admin. Agent JPMorgan Chase Bank, N.A. Facilities / Tranche sizes $520M Revolving
Slide 29: Summary existing terms and conditions: financial covenants
Summary existing terms and conditions Certain amendment provisions Financial Covenants1 (RC / TLA / TLA-1 only, TLB covenant-lite) Maximum Total Net Leverage Ratio of 4.75x, stepping down to 4.5x as of December 31, 2018, 4.25x as of December 31, 2019 and thereafter Minimum Interest Coverage Ratio (E
Slide 30: Transaction timeline
S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Date Details Monday, August 27th Launch new transaction to market in conjunction with amendment to existing credit facility Tuesday, August 28th Dutch Auction bids due at 5:00 pm ET Wednesday, August 29
Slide 31: Q&A / Supplemental Schedules
Diebold Nixdorf Q&A Supplemental Schedules
Slide 32: Change of Reporting Segments
Change of Reporting Segments Prior Current 3 Lines of Business Primary Reporting Segment Revenue Gross Profit Operating Profit Secondary Reporting Revenue 2 Solutions BANKING RETAIL 3 Regions 3 Segments AMERICAS BANKING RETAIL 2 Business Lines SERVICES & SOFTWARE PRODUCTS Note: Reporting segments ch
Slide 33: LTM Q2 2018 covenant EBITDA reconciliation & detail
Acquisition integration cost (~$67M), Nixdorf purchase accounting (excl. amortization in D&A) (~$10M), legal / deal cost (~$5M), and impairments (~$90M) LTM Q2 2018 covenant EBITDA reconciliation & detail GAAP to non-GAAP ($Millions) 6/30/2018 Adjusted EBITDA Reconciliation Net Income / (Loss) ($326
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation GAAP to non-GAAP ($Millions) Note: Differences may occur due to rounding. Note: Differences may occur due to rounding.
Slide 35: Q2 2018 Profit & Loss Statement Reconciliation
Q2 2018 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Note: Differences may occur due to rounding. Note: Differences may occur due to rounding.
Slide 36: Q2 2017 Profit & Loss Statement Reconciliation
Q2 2017 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Note: Differences may occur due to rounding. Note: Differences may occur due to rounding.
Slide 37: Full Year 2016 Profit & Loss Statement Reconciliation
Full Year 2016 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Note: Differences may occur due to rounding.
Slide 38: Full Year 2017 Profit & Loss Statement Reconciliation
Full Year 2017 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Note: Differences may occur due to rounding.
Slide 39: YoY Revenue Variance and Mix for 2017
YoY Revenue Variance and Mix for 2017 Non-GAAP revenue decreased 8% in cc Decrease in banking Systems and Services Growth in Retail and Software 1 Note: Reflects unaudited pro forma non-GAAP financials for Diebold Nixdorf as if the acquisition had occurred on January 1, 2016. Pro forma calculations
Slide 40: P&L Highlights for 2017 non-GAAP
P&L Highlights for 2017 non-GAAP
Slide 41: P&L Highlights for 2017 non-GAAP
P&L Highlights for 2017 non-GAAP 1 Reflects unaudited pro forma non-GAAP financials for Diebold Nixdorf as if the acquisition had occurred on January 1, 2016. Pro forma calculations combine financial information from legacy Diebold and legacy Nixdorf, prepared in accordance with International Financ
Slide 42: Operating Profit Bridge – PF 2016 to 2017
Operating Profit Bridge – PF 2016 to 2017 ~($150) ~ $ Millions ATM industry shipments declined ~20% during 2017
Slide 43: Free Cash Flow Reconciliation from Continuing Operations
Free Cash Flow Reconciliation from Continuing Operations ($Millions)
Slide 44: 2016 Diebold Nixdorf Pro Forma Revenue & Adjusted EBITDA
2016 Diebold Nixdorf Pro Forma Revenue & Adjusted EBITDA ($Millions) Revenue Non GAAP GP Non GAAP OP Adjusted EBITDA Reported Total DN $3,333 $845M $159M $266 Pro-forma Wincor Nixdorf 1 $1,652 $394M $92M $133 Pro-Forma Total DN (Non-GAAP) $4,985 $1,239M $251M $399 % of Revenue 25% 5% 8% Note 1: The
Slide 45: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($Billions) Note: Differences may occur due to rounding. Note: Differences may occur due to rounding. Q2-18 Q3-18E Q4-18E Q1-19E Q2-19E Q3-19E Q4-19E Net cash provided by (used in) operating activities ($0.1) ($0.1) $0.3 ($0.2) ($0.1) ($0.0) $0.3 Capital expenditures ($
Slide 46: Diebold Nixdorf
mM Diebold Nixdorf 45 | DIEBOLD NIXDORF
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