Diebold Nixdorf Incorporated · NYSE:DBD
Diebold Nixdorf — Q2 2020 Earnings Presentation
31 slides from Diebold Nixdorf's earnings presentation, Jul 30, 2020
Slide 1: Investment Community Conference Call Second Quarter 2020
DieboldNixdorf.com Investment Community Conference Call Second Quarter, 2020 Thursday July 30, 2020
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 document contains statements that are not historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding potential impact of the ongoing coronavirus (COVID-19) pandemic
Slide 4: Mid-year update
Mid-year update Solid Q2 results demonstrate resiliency and criticality of Diebold Nixdorf + Fulfilling our mission as an essential business provider + Seeing self-service transactions return to pre-COVID levels in a number of markets + Clear progress on DN Now initiatives & incremental cost actio
Slide 5: Q2-2020 Results Demonstrate Resiliency
Q2-2020 Results Demonstrate Resiliency Services Products Software Expectations for 2020 Revenue Impact Mild 2 Moderate Mild Gross Margin1 Improving Broadly stable Improving Drivers of Operating DN Now savings target of ~$130M plus incremental actions of $80M - $100M Profit1 Q2-2020 Results Revenue2
Slide 6: Demand for Self-service Transactions Is Returning to Pre-COVID levels
Demand for Self-service Transactions Is Returning to Pre-COVID levels Sample ATM Transaction Activity1 Trailing 7-day average number of transactions per device New Business in Q2-2020 150 +3% change vs 125 pre-COVID average pre-COVID average Banking • DN Series ATM orders 100 + top 10 and top 25 US
Slide 7: Diebold Nixdorf's Value Creation Journey
Diebold Nixdorf’s Value Creation Journey Operating Margin Expansion Optimized Capital Structure Differentiation/Growth • Services - increase contract base • Execution of DN Now initiatives drives • Debt reduction Market-leading product-related services higher profits & cash flows enhanced with dat
Slide 8: Gross Margin Expansion Despite Revenue Headwinds
Gross Margin Expansion Despite Revenue Headwinds Revenue Gross Margin %1 Total Services Products Software 29.6% 24.6% YoY change by business line Q2-19 Revenue $1,150 $566 $470 $114 Services +470 bps Products +250 bps Software +940 bps COVID-19 delays ($108) ($33) ($69) ($6) Unplanned Foreign curren
Slide 9: Harvesting Efficiencies from Functional G&A Costs
Harvesting Efficiencies from Functional G&A Costs Focus areas Delivering Meaningful Reductions to Operating Expense1 • Finance Transformation – regionalizing, centralizing and automating core functions -$43M or -21% $250 R&D • Optimizing Information Technology Spend – $209 $209 SG&A $203 optimizing
Slide 10: Q2 2020 P&L Highlights
Q2 2020 P&L Highlights $ millions Q2-20 Q2-19 YoY variance Revenue $890 $1,150 ~43% from COVID-19 delays and FX headwinds ~57% from planned reductions from non-recurring projects partially offset by incremental business, divestitures and reduction of low-margin business DN Now initiatives drive gros
Slide 11: Eurasia Banking Highlights
Eurasia Banking Highlights $430 YoY drivers include $394 $338 • Delayed installations from COVID-19 of $40M Revenue ($M) • Deliberate actions to drive higher quality service revenue including divestitures of $23M and reductions to low-margin business of $4M • Non-recurring projects as planned; parti
Slide 12: Americas Banking Highlights
Americas Banking Highlights $402 $420 YoY drivers include $331 Revenue ($M) • $60M from planned reduction of non-recurring projects; partially offset by software growth • Foreign currency headwinds of $18M • Deliberate actions to drive higher quality revenue • Mild delays from COVID-19 pandemic 1 Q2
Slide 13: Retail Highlights
Retail Highlights YoY drivers include $292 $300 • Delayed installations from COVID-19 of $63M Revenue ($M) $221 • Foreign currency headwinds of $9M • Deliberate actions to drive higher quality revenue • Non-recurring projects as planned; partially offset by incremental business and growth of self-ch
Slide 14: Net Working Capital and Free Cash Flow
Net Working Capital and Free Cash Flow Net Working Capital as a % of TTM Revenue1 Free Cash Flow2 24.0% 1H-2020 1H-2019 22.8% -230 bps ($88) 19.1% ($138) 18.3% 17.7% Better than pre- COVID plan 15.6% 15.4% • YoY drivers include 13.9% 13.3% + Stronger operating profit + Lower cash taxes, interest pay
Slide 15: Debt Maturities and Leverage
Debt Maturities and Leverage Successful Refinancing in July 2020 Pro Forma Debt Maturity1 Schedule (M) • Raised ~$1.1 billion from Senior Secured Notes $1,095 $700 million notes due July 2025 €350 million notes due July 2025 $756 • Offerings were oversubscribed - new and current investors $400 •
Slide 16: Outlook for 2020
Outlook for 2020 2020E Key Expectations2 Reflects net unplanned effects of COVID-19, net planned reductions including the company’s focus on higher-quality Total Revenue $3.7 - $3.9B revenue, foreign currency headwinds of $90M and divestitures of $110M YoY drivers + Approximately $130M of DN Now sav
Slide 17: Supplemental schedules
Supplemental schedules 16 | DIEBOLD NIXDORF
Slide 18: Transformation Update
Transformation Update On track to deliver ~$470M of gross savings by 2021 Timeline for completion 2019 2020 2021 Streamline operating model Simplify product portfolio & manufacturing footprint Benefits Operational Services modernization plan Excellence Harvest G&A efficiencies • Gross savings of ~$4
Slide 19: Stable Revenue and Increasing Profitability
Stable Revenue and Increasing Profitability ($ in millions) TTM Revenue TTM Gross Profit2 TTM Adjusted EBITDA2 Divested Rev., CC, & Account Rationalization Gross Profit Gross Margin % EBITDA EBITDA Margin % Pro Forma Revenue¹ 130% 6,000 GAAP Revenue YoY growth 110% 50% 600 20% 1,400 45% 18% $4,542 $
Slide 20: Focus on Cash Flow Generation
Focus on Cash Flow Generation ($ in millions) Net Working Capital1 TTM Capital Expenditures TTM Unlevered Free Cash Flow2 Net Working Capital % of TTM Revenue Capital Expenditures % of TTM Revenue $413 70% 5% 120 1,400 60% $275 $277 1,200 100 4% $1,089 $1,035 50% $205 $217 1,000 $869 80 $74 $838 $81
Slide 21: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation EBITDA bridge DN Now Program Actions & Savings $ Millions FYE 12/31 FY 2018 FY 2019 TTM Impact to Programs Description Revenue (GAAP) $4,579 $4,409 $4,032 EBITDA ($M) Net income (loss) ($529) ($345) ($274) Services • Enhance professional services Income tax (benefit) e
Slide 22: DN Now Transformation Expense and Cash Flow Bridge
DN Now Transformation Expense and Cash Flow Bridge GAAP Majority is severance expense related 1 Restructuring to headcount reduction Expense One-time implementation costs: Cumulative ($ in millions) FY 2018 FY 2019 Q1 2020 Q2 2020 – Accounting compliance, total including setting up regional cont
Slide 23: Q2 2020 Profit & Loss Statement
Q2 2020 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Restructuring and Wincor Nixdorf Loss making DN Now Divestitures purchase contract related to Other 2020 % of Net transformation Legal / deal and fixed accounting Inventory discontinued non-routine 2020 % of Net (GAAP) Sales
Slide 24: Q2 2019 Profit & Loss Statement
Q2 2019 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Restructuring and Wincor Nixdorf DN Now Divestitures purchase Other 2019 % of Net transformation Legal / deal and fixed Acq. accounting Inventory non-routine 2019 % of Net (GAAP) Sales expenses expense asset sale integration
Slide 25: YoY Revenue Variance for FX, Divestitures and Related Actions
YoY Revenue Variance for FX, Divestitures and Related Actions Reconciliation GAAP to non-GAAP ($Millions) $Millions Q2-20 Q2-19 Variance F/(U) Variance % 2020 YTD 2019 YTD Variance F/(U) Variance % Segment View Eurasia Banking Revenue (GAAP) 338 430 (93) -21.6% 648 813 (165) -20.4% FX Impact - (13)
Slide 26: YoY Gross Profit Variance for FX, Divestitures and Related Actions
YoY Gross Profit Variance for FX, Divestitures and Related Actions Reconciliation GAAP to non-GAAP ($Millions) $Millions Q2-20 Q2-19 Variance F/(U) Variance % 2020 YTD 2019 YTD Variance F/(U) Variance % Segment View Eurasia Banking Gross Profit (Non-GAAP) 102 121 (19) -15.5% 192 230 (38) -16.6% FX I
Slide 27: Revenue GAAP to Non-GAAP reconciliation
Revenue GAAP to Non-GAAP reconciliation Revenue – Total Company $Millions Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Revenue (GAAP) $1,103 $1,134 $1,123 $1,250 $1,064 $1,106 $1,119 $1,290 $1,028 $1,150 $1,079 $1,152 $911 $890 Constant Currency (84) (79) (57)
Slide 28: Gross Profit Reconciliation
Gross Profit Reconciliation Reconciliation GAAP to non-GAAP ($Millions) Gross Profit – Total Company $Millions Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Total Revenue (GAAP) $1,103 $1,134 $1,123 $1,250 $1,064 $1,106 $1,119 $1,290 $1,028 $1,150 $1,079 $1,152
Slide 29: Gross Profit and Operating Expense Reconciliation
Gross Profit and Operating Expense Reconciliation Reconciliation GAAP to non-GAAP ($Millions) Gross Profit – Segment View Q1-19 Q2-19 Q3-19 Q4-19 2019 Q1-20 Q2-19 Revenue (GAAP) $1,028 $1,150 $1,079 $1,152 $4,409 $911 $890 Americas Banking 363 420 404 418 1,604 345 331 Eurasia Banking 383 430 405 43
Slide 30: Adjusted EBITDA
Adjusted EBITDA Reconciliation GAAP to non-GAAP ($Millions) Adjusted EBITDA Reconciliation $Millions Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Revenue (GAAP) $1,123 $1,250 $1,064 $1,106 $1,119 $1,290 $1,028 $1,150 $1,079 $1,152 $911 $890 Net income (loss) ($33) ($103) (
Slide 31: Free Cash Flow and Net Debt Reconciliations
Free Cash Flow and Net Debt Reconciliations ($Millions) Free Cash Flow Reconciliation 2020 Q2-18 Q3-18 Q4-18 2018 Q1-19 Q2-19 Q3-19 Q4-19 2019 1Q-20 2Q-20 Outlook Net cash provided by (used in) operating activities - continuing - GAAP ($114) ($115) $268 ($104) ($57) ($11) $75 $128 $136 ($80) ($91) $