Diebold Nixdorf Incorporated · NYSE:DBD
Diebold Nixdorf — Debt Investor Presentation (July 2019)
65 slides from Diebold Nixdorf's debt investor presentation, Jul 25, 2019
Slide 1: Diebold Nixdorf, Inc. Lender Presentation July 25, 2019
Diebold Nixdorf, Inc. Lender Presentation July 25, 2019
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 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 adjus
Slide 4: Agenda & Today's Speakers
Agenda & Today’s Speakers Introduction & Transaction Overview John Fiore Managing Director, J.P. Morgan Investment Highlights Gerrard Schmid CEO, Diebold Nixdorf DN Now Transformation Gerrard Schmid CEO, Diebold Nixdorf FinancialOverview Jeff Rutherford CFO, Diebold Nixdorf Q&A 3 | DIEBOLD NIXDORF
Slide 5: Situation Overview and Request from Lenders
Situation Overview and Request from Lenders Diebold Nixdorf, Inc. (“Diebold” or the “Company”) is seeking an amendment and tenor extension for its existing $500M revolver (“RC”) and $287M Term Loan A (“TLA”) due December 2020 to April 2022 (~16 months) Offer for extending RC and TLA lenders o ~1
Slide 6: Transaction Overview
Transaction Overview
Slide 7: Sources & Uses and Pro Forma Capitalization, 80% extension
Sources & Uses and Pro Forma Capitalization, 80% extension ($ in millions) Sources Amount ($M) Uses Amount ($M) Extended $360M Revolver due 2022 $92 Refinance Revolver due 2020 $92 Extended $207M Term Loan A due 2022 207 Refinance Term Loan A due 2020 230 Incremental Term Loan A due 2022 1 73 Cash t
Slide 8: Sources & Uses and Pro Forma Capitalization, 100% extension
Sources & Uses and Pro Forma Capitalization, 100% extension ($ in millions) Sources Amount ($M) Uses Amount ($M) Extended $450M Revolver due 2022 $115 Refinance Revolver due 2020 $115 Extended $258M Term Loan A due 2022 258 Refinance Term Loan A due 2020 287 Incremental Term Loan A due 2022 1 89 Cas
Slide 9: Summary of existing and proposed terms and conditions
Summary of existing and proposed terms and conditions Summary existing terms and conditions Proposed amendment provisions Borrower Diebold Nixdorf, Incorporated Guarantors Substantially all existing and future material domestic subsidiaries Same as existing Lead Arranger / Admin. Agent JPMorgan Chas
Slide 10: Existing and Pro Forma Debt Maturity Schedules
Existing and Pro Forma Debt Maturity Schedules ($ in millions) $813 $792 $604 385 $400 115 594 schedule 287 $44 $26 Existing maturity maturity Existing 2019 2020 2021 2022 2023 2024 2025 80% extension 100% extension $1,244 $1,401 73 89 268 335 $792 92 115 $792 594 $400 594 $400 schedule $183 77 $44
Slide 11: Timeline
Timeline July 2019 August 2019 SMTWTFSSMTWTFS 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 Key transaction date 14 15 16 17 18 19 20 11 12 13 14 15 16 17 Bank holiday 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 31 Date Event Diebold Nixdorf reports Q2 2019 earning
Slide 12: Key Investment Highlights
Key Investment Highlights
Slide 13: DN and Connected Commerce
DN and Connected Commerce We are shaping the future of banking and shopping experiences Digital + Physical Always-On Operational Insightful & Personalized More than Excellence Experiences Omnichannel Single Function to DIY to Transactions to Microcosm to Seamless Journeys XaaS Connections Ecosystem
Slide 14: Investment Highlights
Investment Highlights 1 Industry leader in Connected Commerce - #1 ATM footprint globally and #1 retail footprint in Europe 2 Critical partner in a key customer delivery channel for financial institutions and retail enterprises 3 Stable revenue outlook underpinned by recurring services/software busi
Slide 15: The Global Leader in Connected Commerce
1 The Global Leader in Connected Commerce Largest global ATM installed #1 ATM multivendor monitoring #2 in European retail software #1 retail footprint in Europe 4 base 1 with 31% market share 1,2 software 3 license sales 5 AMERICAS RETAIL EURASIA BANKING BANKING 11% Software ~33 % ~28 % ~39 % 52% P
Slide 16: ATMs are a Critical Customer Delivery Channel for Banks
2 ATMs are a Critical Customer Delivery Channel for Banks DN Banking Customers Market Drivers CONTINUED DEMAND FOR AUTOMATION IN THE EXPANDING THE FINANCIAL PHYSICAL CURRENCY BRANCH TRANSACTION SET INCLUSION Cash and checks underpin Automated deposit ATM Cardless cash withdrawals Expanding f
Slide 17: Key Partner to Financial Institutions
total ATM application software* 2 Key Partner to Financial Institutions Banking – Business at a Glance Ranked Resolving on the Serving nearly all #6 2018 >10M Financial of the customer calls #1 Insights each year in ATMs top 100 FinTech Ranking 3 installed Financial Institutions globally 1 Globally
Slide 18: Retailers Are Investing to Meet Changing Customer Demands
2 Retailers Are Investing to Meet Changing Customer Demands DN Customers Market Drivers CONSUMER CONTINUED PERSONALIZATION AND CONNECTED CONNECTEDNESS HAS IMPORTANCE OF THE CUSTOMER EXPERIENCE COMMERCE ALTERED EXPECTATIONS PHYSICAL STORE Consumers use of mobile Physical stores are relevant ~51% of r
Slide 19: Key Partner to Retail Enterprises
2 Key Partner to Retail Enterprises Retail – Business at a Glance Over 24 Store Lifecycle of Top 25 1M MANAGEMENT 10 of 10 retailers EPOS Global Fortune 500 systems Unique global in Europe offering petroleum companies are our installed are Diebold Nixdorf customers worldwide #2 #2 customers #1 in Eu
Slide 20: Strong Recurring Revenue
3 Strong Recurring Revenue ATM Service Contract Base 1 (in thousands) TTM Service Renewal Rates 2,3 >95% Modest 625 626 622 Growth Q4-18 Q1-19 Q2-19 2021 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 2021 Target Target Line of sight on 2/3 rd of revenue at Leading global services offering start of fiscal year
Slide 21: Industry Leading Software Portfolio Enables Competitive Moat
3 Industry Leading Software Portfolio Enables Competitive Moat Diebold Nixdorf software powers financial and retail institutions globally The industry’s first end-to-end connected commerce software portfolio VYNAMIC VYNAMIC VYNAMIC VYNAMIC VYNAMIC VYNAMIC DIGITAL CONNECTION TRANSACTION OPERATIONS EN
Slide 22: Committed to Deleveraging
4 Committed to Deleveraging 5.3x Accomplishments Suspended quarterly dividends ~ 4.5x Services Modernization Plan - increased Service GM% for four consecutive quarters 1 New operating model - exited ~1,500 associates 2 Closed manufacturing facilities, exited Venezuela and < 3.0x CIT-Retail b
Slide 23: Outlook for 2019 & Targets for 2021
5 Outlook for 2019 & Targets for 2021 2019 Outlook 1 Revenue ~$4.5 billion Expectations for modest positive free cash flow 3,4 (in millions) Adjusted EBITDA 3 $400 – $420 million Adjusted EBITDA 1 mid-point $410 Net interest expense ($190) Net working capital $100 Adjusted EBITDA margin 1,3 ~9% Rest
Slide 24: DN Now Transformation
DN Now Transformation
Slide 25: DN Now Transformation
DN Now Transformation Committed management team: experienced team with broad operational expertise to drive results from DN Now transformation plans – DN continues to attract and retain strong leaders Refreshing the Board: new members aligned with company strategy, challenges and opportunities
Slide 26: DN Leadership Team
DN Leadership Team Established industry veterans with deep experience and customer trust Gerrard Schmid President and Chief Executive Officer RETAIL AND BANKING SEGMENTS PRODUCT AND SERVICES GROUPS ENABLEMENT FUNCTIONS Octavio Marquez Neil Emerson Hermann Wimmer Ulrich Näher Alan Kerr Olaf Heyden Je
Slide 27: Actions to Deliver ~$400M Gross Savings by end of 2021
Actions to Deliver ~$400M Gross Savings by end of 2021 Gross Savings 1 ($ in millions) Implementation Stage A Streamlined operating model: $150 $400 Global workforce aligned with demand DN Now gross savings increased More agile decision-making to $400M per February 13, 2019 More efficient proc
Slide 28: Operating Model to Generate ~$130M Savings
A Operating Model to Generate ~$130M Savings 1,2 New Customer-Centric Model • Began implementing in September, 2018 • Agreements reached with several European Works Councils • Incents more agile decision-making & collaboration CUSTOMERS • Workforce alignment benefits realized in Q4-18 and 1H-19 EURA
Slide 29: Services Modernization Plan
B Services Modernization Plan Implementing a globally-consistent approach to Service delivery and management Actions Services Gross Margin 1 +490 bps 28% - 29% 26.0% 25.0% 24.7% 23.4% Accomplishments Upgraded >20K customer touchpoints 21.1% Connecting terminals AllConnect Data Engine Value-bas
Slide 30: Simplify Product Portfolio and Launch DN Series
C Simplify Product Portfolio and Launch DN Series TM Simplify Product Portfolio Launch DN Series Reducing legacy terminals to streamline Improving ATM performance using advanced sensor technology, machine learning, and connecting terminals to the DN AllConnect Data Engine TM the supply chain and
Slide 31: AllConnect Data Engine - A New Dimension in ATM Services
C AllConnect Data Engine - A New Dimension in ATM Services AllConnect Data Engine Approach A data-driven system that integrates big data, machine learning and advanced analytics When fully utilized, AllConnect Data Engine has the potential to reduce call rates by ~20% Locate Part Dispatch, Fault Loc
Slide 32: Further Reduction of SG&A Expenses
D Further Reduction of SG&A Expenses Focus areas • Finance – leveraging shared services and making greater use of automation • Information Technology – optimizing legacy platforms and leveraging scale • Procurement – applying global spend analytics to consolidate and reduce third party spend • Real
Slide 33: Improving Net Working Capital
Improving Net Working Capital Receivables Inventory Payables • Centralized collections governance • Clearer accountability for inventory • Implemented “no PO, no pay” • Increased visibility and escalation of management • Bi-monthly supplier payments past due accounts • Targets established and regula
Slide 34: Initiatives, Timeline & Savings Target of ~$400 Million
Initiatives, Timeline & Savings Target of ~$400 Million 2018A 2019E 2021E Streamline the operating model EXPECTED BENEFITS 1 Simplify product portfolio & manufacturing footprint ~$400M gross Implement services modernization plan savings Further reduction of SG&A expenses including global spend analy
Slide 35: Financial Overview
LY } Diebold Nixdorf ~ Financial Overvie
Slide 36: Q2-19 Highlights
Q2-19 Highlights Orders +5% YoY cc Revenue of $1.15B Adjusted EBITDA 1 of $107M Free Cash Use 1 of $16M Americas Banking orders were • Revenue growth of 8% YoY in cc • Gross profit 1 improved by $54M in-line with year-ago period; excluding significant foreign YoY with significant margin continued
Slide 37: Revenue by Business Line
Revenue by Business Line ($ in millions) Q2 2018 and Q2 2019 1H 2018 and 1H 2019 +6% cc +8% cc $2,170 $2,178 $1,106 $1,150 $242 $222 $114 -2% cc $123 -3% cc $742 $470 +20% cc $846 $389 +25% cc $1,186 -2% cc $1,110 $594 -1% cc $566 Q2-18 Q2-19 1H-18 1H-19 10% 11% 10% 11% 51% 49% 55% 54% 34% 39% 35% 4
Slide 38: Q2-19 Profitability
Q2-19 Profitability non-GAAP Gross Profit Gross Margin Operating Expense Op Ex as a % of Revenue +390 bps -200 bps $281 24.4% $221 $207 $Millions 20.0% $227 20.5% $Millions 18.0% Q2-18 Q2-19 Q2-18 Q2-19 Q2-18 Q2-19 Q2-18 Q2-19 Operating Profit Operating Margin Adj. EBITDA Adj. EBITDA Margin +590 bps
Slide 39: Free Cash Flow Improvements
Free Cash Flow Improvements In Q2-19, free cash use decreased by Free Cash Flow $109M YoY to a use of $16M 2018 2019 + Higher adjusted EBITDA + Net working capital improvements + Lower integration payments ‒ Higher restructuring payments $250 ‒ Higher interest expense $ Millions $ In Q2-19, Unle
Slide 40: Liquidity and Capital Structure
Liquidity and Capital Structure Capital Structure / Net Debt Debt Maturity Schedule $ Millions Dec 31, 2018 Jun 30, 2019 $1,000 Cash, cash equivalents, restricted cash & $492 $273 other ST investments (GAAP Measure) $750 Debt Instruments ($2,240) ($2,216) $287 Term Loan A3 Millions Net Debt (non-GAA
Slide 41: 2019 Outlook
2019 Outlook 2019E Key expectations 2 + Growth in Americas Banking and Retail Total revenue – Decline in Eurasia Banking reflecting stability in EMEA and YoY declines in Asia ~$4.5B – Headwinds from foreign currency – Modest impact from divestitures + $175M savings from DN Now initiatives Adjusted E
Slide 42: Diebold Nixdorf
LY } Diebold Nixdorf
Slide 43: Diebold Nixdorf
LY } Diebold Nixdorf
Slide 44: Q2-19 Segment Highlights
Q2-19 Segment Highlights Revenue ($M) Operating Profit 1 ($M) • YoY increase driven by +4% cc • Increased 4% YoY in cc excluding ~5% – Bidding discipline, mix and unfavorable currency impact manufacturing efficiencies benefit • Strong products growth in EMEA partially gross product margins $438 $430
Slide 45: 1H-19 Segment Highlights
1H-19 Segment Highlights Revenue ($M) Operating Profit 1 ($M) • Unchanged YoY in constant currency • YoY increase driven by 0% cc excluding ~7% currency headwind – Bidding discipline and manufacturing efficiencies benefit gross product • Strong products growth in EMEA, margins partially offset by de
Slide 46: Income Tax Items
Income Tax Items ~$60M projected cash tax primarily from non U.S. subsidiaries Projected $60M of Cash Taxes for 2019 Main Drivers of GAAP ETR Main Drivers of Non-GAAP ETR • Cash income taxes are paid at • US GAAP effective tax rate is an • Non-GAAP effective tax rate is built off individual legal en
Slide 47: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation GAAP to non-GAAP $Millions Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Q1 2019 Q2 2019 Revenue (GAAP) $1,103 $1,134 $1,123 $1,250 $4,609 $1,064 $1,106 $1,119 $1, 290 $4,579 $1,028 $1,150 Net income (loss) ($55) ($24) ($33) ($103) ($2
Slide 48: SG&A Expense Reconciliation
SG&A Expense Reconciliation GAAP to non-GAAP $Millions Q1-17 Q2-17 Q3-17 Q4-17 2017 Q1-18 Q2-18 Q3-18 Q4-18 2018 Q1-19 Q2-19 Revenue (GAAP) $1,103 $1,134 $1,123 $1,250 $4,609 $1,064 $1,106 $1,119 $1,290 $4,579 $1,028 $1,150 Total SG&A (GAAP) $247 $237 $209 $241 $934 $228 $220 $216 $222 $886 $228 $22
Slide 49: Operating Profit – Segment View
Operating Profit – Segment View $Millions Q1-18 Q2-18 Q3-18 Q4-18 2018 Q1-19 Q2-19 Eurasia Banking 20 18 44 68 150 34 39 Americas Banking 5 (3) 2 14 17 18 33 Retail 10 6 18 13 47 8 16 Total Operational Segments $35 $20 $64 $95 $214 $60 $87 Corporate (17) (15) (8) (12) (52) (33) (13) Restructuring an
Slide 50: Q2 2019 Profit & Loss Statement Reconciliation
Q2 2019 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($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 51: Q2 2018 Profit & Loss Statement Reconciliation
Q2 2018 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Restructuring and Wincor Nixdorf DN Now Divestitures purchase Other 2018 % of Net transformation Legal / deal and fixed Acq. accounting Inventory non-routine 2018 % of Net (GAAP) Sales expenses Impairment expense asset sale
Slide 52: 1H 2019 Profit & Loss Statement Reconciliation
1H 2019 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($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 53: 1H 2018 Profit & Loss Statement Reconciliation
1H 2018 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($Millions) Restructuring and Wincor Nixdorf DN Now Divestitures purchase Other 2018 % of Net transformation Legal / deal and fixed Acq. accounting Inventory non-routine 2018 % of Net (GAAP) Sales expenses Impairment expense asset sale
Slide 54: Free Cash Flow Reconciliation from Continuing Operations
Free Cash Flow Reconciliation from Continuing Operations ($Millions) Jun-YTD Jun-YTD 2019 1Q-17 2Q-17 3Q-17 4Q-17 2017 1Q-18 2Q-18 3Q-18 4Q-18 2018 1Q-19 2Q-19 2018 2019 Outlook Net cash provided by (used in) operating activities - continuing ($66) ($119) ($50) $272 $37 ($142) ($114) ($115) $268 ($1
Slide 55: Enhancement to Collateral
Enhancement to Collateral Enhanced collateral as required by credit agreement’s covenant reset triggers Equity Conversion & Converted ~$0.9B of prior equity investments to intercompany loans which support Pledge Intercompany collateralization. Pledged ~$1.2B of DN US intercompany promissory notes wi
Slide 56: Contacts
Contacts Diebold Nixdorf J.P. Morgan, Leveraged Finance Origination J.P. Morgan, Leveraged Finance Distribution Jeff Rutherford John Fiore Chris Bonner Chief Financial Officer Managing Director Managing Director O: 330-490-6857 O: 312-732-2028 O: 212-270-4553 E: jeffrey.rutherford@dieboldnixdorf.com
Slide 57: Supplement: Industry Overview & Customer References
Supplement: Industry Overview & Customer References
Slide 58: Physical Currency Plays a Vital Role in the Global Economy
Physical Currency Plays a Vital Role in the Global Economy Cash and checks underpin Physical currency growth ~$17 trillion of global transactions of 4 – 6% CAGR 50 Euro US$ 45 43.4 41.6 39.8 40 38.1 Europe 36.4 34.5 North 35 33.0 ~$3.5T 31.3 America 29.5 30 ~$3.2T Central Asia 25 Europe, Middle 22.6
Slide 59: Key Banking Trends in the United States
Key Banking Trends in the United States ATMs & Online Banking Are the Most Popular From 2010 - 2017, large publicly-traded banks: Ways to Access Bank Accounts 100% – reduced the number of branches by 2.4% annually 81% 80% 77% 80% – maintained the total number of ATMs in use 60% 51% 40% – increased A
Slide 60: ATM Trends by Geographic Region
ATM Trends by Geographic Region Number of Bank Branches Value of Cash Withdrawals 1.07 1.06 World -1.0% $13.0 $13.0 World +0.1% EMEA -3.1% EMEA +2.7% Americas -1.5% Americas -1.7% Millions Asia Pacific +0.5% Billions US$ Asia Pacific -0.6% 2017 2018 2017 2018 Installed Base of ATMs by Region Install
Slide 61: Cash Withdrawal and ATM Shipment Forecasts
Cash Withdrawal and ATM Shipment Forecasts Volume of Cash Withdrawals and 3-year CAGR ATM Shipment Forecast and 3-year CAGR 95.4 94.7 World -0.2% 310 302 World -0.9% EMEA -0.2% EMEA -2.1% Americas +0.2% billion Americas -2.2% Thousands Asia Pacific -0.4% Asia Pacific +0.6% 2019E 2022E 2019E 2022E So
Slide 62: ePOS Trends by Geographic Region
ePOS Trends by Geographic Region Number of Retail Outlets Total Banner Sales World +6.7% $7.69 $8.20 1.92 1.96 World +2.3% EMEA +6.9% EMEA +1.7% Americas +3.3% Americas +1.4% Millions Trillions Asia Pacific +12.0% Asia Pacific +4.4% 2017 2018 2017 2018 Source: Edge Retail Insight Source: Edge Retail
Slide 63: Total Banner Sales, ePOS & SCO Shipment Growth to 2022E
Total Banner Sales, ePOS & SCO Shipment Growth to 2022E Total Banner Sales and CAGR ePOS & SCO Shipment Forecast and CAGR 2.42 World +6.6% 2.28 World +2.1% $9.4 $10.0 $10.6 $8.7 EMEA +4.8% EMEA +2.3% Americas -1.0% Millions Trillions Americas +4.7% Asia Pacific +2.8% Asia Pacific +11.0% 2019E 2020E
Slide 64: Banking Customer References
Banking Customer References ~1,100 branches 280 branches across 50 14.5 million customers IT solutions provider for Largest Islamic bank with Asian cities across > 950 branches 11 Danish banks > 1000 locations WHO HQ in North America HQ in Singapore HQ in Turkey HQ in Denmark HQ
Slide 65: Retail Customer References
Retail Customer References Quick Service Restaurant Leading petroleum Food & General Home furnishing Fashion Retailer with Quick Service Restaurant company Merchandise Retailer products multi-national focus active in +100 countries WHO active in 80+ countries HQ in UK HQ in Sweden
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