DIEBOLD NIXDORF, Inc 10-Q for FY2024 Q2
DIEBOLD NIXDORF, Inc (DBD)
10-Q
2024-08-07
For: 2024-06-30
View Original
Added on
April 08, 2026
About this 10-Q
DIEBOLD NIXDORF, Inc filed this 10-Q on August 7, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $939.7M
- up 1.9% from $922.2M a year earlier
- Net income
- $14.9M
- compared with a net loss of $677.1M a year earlier
- Diluted EPS
- $0.40
- compared with -$8.46 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
Form 10-Q
__________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2024
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 1-4879
_________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (330 ) 490-4000
__________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ☒ | |||||||||||||
| Smaller reporting company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of common stock outstanding as of August 5, 2024 was 37,566,668 .
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Form 10-Q
Index
Part I – Financial Information
Item 1: Financial Statements
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in millions, except per share amounts)
| Successor | |||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Short-term investments | |||||||||||
Trade receivables, less allowances for doubtful accounts of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Securities and other investments | |||||||||||
Property, plant and equipment, net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred income taxes | |||||||||||
| Goodwill | |||||||||||
| Customer relationships, net | |||||||||||
| Other intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
3
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets - (Continued)
(in millions, except per share amounts)
| Successor | |||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||
| (Unaudited) | |||||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Notes payable | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Deferred revenue | |||||||||||
| Payroll and other benefits liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Pensions, post-retirement and other benefits | |||||||||||
| Deferred income taxes | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Equity | |||||||||||
| Diebold Nixdorf, Incorporated shareholders' equity | |||||||||||
Successor preferred stock, no par value, | |||||||||||
Successor common stock, $ | |||||||||||
| Paid-in-capital | |||||||||||
| Retained Earnings | |||||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Total Diebold Nixdorf, Incorporated shareholders' equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
4
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in millions, except per share amounts)
| Successor | Predecessor | |||||||||||||
| Three months ended | Three months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Net sales | ||||||||||||||
| Services | $ | $ | ||||||||||||
| Products | ||||||||||||||
| Cost of sales | ||||||||||||||
| Services | ||||||||||||||
| Products | ||||||||||||||
| Gross profit | ||||||||||||||
| Selling and administrative expense | ||||||||||||||
| Research, development and engineering expense | ||||||||||||||
| Loss (gain) on sale of assets, net | ( | |||||||||||||
| Impairment of assets | ||||||||||||||
| Operating profit (loss) | ( | |||||||||||||
| Other income (expense) | ||||||||||||||
| Interest income | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Foreign exchange gain (loss), net | ||||||||||||||
| Reorganization items, net | ( | |||||||||||||
| Miscellaneous gain, net | ||||||||||||||
| Profit (loss) before taxes | ( | |||||||||||||
| Income tax expense (benefit) | ( | |||||||||||||
| Equity in earnings (loss) of unconsolidated subsidiaries, net | ( | |||||||||||||
| Net income (loss) | ( | |||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ( | ||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | $ | $ | ( | |||||||||||
| Basic weighted-average shares outstanding | ||||||||||||||
| Diluted weighted-average shares outstanding | ||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | ||||||||||||||
| Basic earnings (loss) per share | $ | $ | ( | |||||||||||
| Diluted earnings (loss) per share | $ | $ | ( | |||||||||||
See accompanying notes to condensed consolidated financial statements.
5
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in millions, except per share amounts)
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Net sales | ||||||||||||||
| Services | $ | $ | ||||||||||||
| Products | ||||||||||||||
| Cost of sales | ||||||||||||||
| Services | ||||||||||||||
| Products | ||||||||||||||
| Gross profit | ||||||||||||||
| Selling and administrative expense | ||||||||||||||
| Research, development and engineering expense | ||||||||||||||
| Loss (gain) on sale of assets, net | ( | |||||||||||||
| Impairment of assets | ||||||||||||||
| Operating profit (loss) | ( | |||||||||||||
| Other income (expense) | ||||||||||||||
| Interest income | ||||||||||||||
| Interest expense | ( | ( | ||||||||||||
| Foreign exchange gain (loss), net | ( | |||||||||||||
| Reorganization items, net | ( | |||||||||||||
| Miscellaneous gain, net | ||||||||||||||
| Profit (loss) before taxes | ( | |||||||||||||
| Income tax expense (benefit) | ( | |||||||||||||
| Equity in earnings (loss) of unconsolidated subsidiaries, net | ( | ( | ||||||||||||
| Net income (loss) | ( | |||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | |||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | $ | $ | ( | |||||||||||
| Basic weighted-average shares outstanding | ||||||||||||||
| Diluted weighted-average shares outstanding | ||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | ||||||||||||||
| Basic earnings (loss) per share | $ | $ | ( | |||||||||||
| Diluted earnings (loss) per share | $ | $ | ( | |||||||||||
See accompanying notes to condensed consolidated financial statements.
6
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited and in millions)
| Successor | Predecessor | |||||||||||||
| Three months ended | Three months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
| Translation adjustment | ( | |||||||||||||
Foreign currency hedges (net of tax of $( | ( | |||||||||||||
| Interest rate hedges | ||||||||||||||
Net income recognized in other comprehensive income (net of tax of $ | ( | |||||||||||||
| Pension and other post-retirement benefits | ||||||||||||||
Net actuarial gain (loss) amortized (net of tax of $ | ||||||||||||||
| Other comprehensive income (loss), net of tax | ( | |||||||||||||
| Comprehensive loss | ( | ( | ||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interests | ( | ( | ||||||||||||
| Comprehensive loss attributable to Diebold Nixdorf, Incorporated | $ | ( | $ | ( | ||||||||||
See accompanying notes to condensed consolidated financial statements.
7
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited and in millions)
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
| Translation adjustment | ( | |||||||||||||
Foreign currency hedges (net of tax of $( | ( | |||||||||||||
| Interest rate hedges | ||||||||||||||
Net income recognized in other comprehensive income (net of tax of $ | ( | |||||||||||||
| Pension and other post-retirement benefits | ||||||||||||||
Net actuarial gain (loss) amortized (net of tax of $( | ||||||||||||||
| Other comprehensive income (loss), net of tax | ( | |||||||||||||
| Comprehensive loss | ( | ( | ||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interests | ( | |||||||||||||
| Comprehensive loss attributable to Diebold Nixdorf, Incorporated | $ | ( | $ | ( | ||||||||||
See accompanying notes to condensed consolidated financial statements.
8
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited and in millions)
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Cash flow from operating activities | ||||||||||||||
| Net income (loss) | $ | $ | ( | |||||||||||
| Adjustments to reconcile net loss to cash flow used by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Amortization of fair valued assets | ||||||||||||||
| Amortization of deferred financing costs into interest expense | ||||||||||||||
| Reorganization items (non-cash) | ||||||||||||||
| Reorganization items (debt make whole premium) | ||||||||||||||
| Share-based compensation | ||||||||||||||
| Debt prepayment costs | ||||||||||||||
| (Gain) loss on sale of assets, net | ( | |||||||||||||
| Impairment of assets | ||||||||||||||
| Deferred income taxes | ( | |||||||||||||
| Other | ||||||||||||||
| Changes in certain assets and liabilities: | ||||||||||||||
| Trade receivables | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Accounts payable | ( | ( | ||||||||||||
| Deferred revenue | ( | ( | ||||||||||||
| Sales tax and net value added tax | ( | ( | ||||||||||||
| Income taxes | ( | ( | ||||||||||||
| Accrued salaries, wages and commissions | ||||||||||||||
| Restructuring accrual | ( | |||||||||||||
| Warranty liability | ( | |||||||||||||
| Pension and post retirement benefits | ( | |||||||||||||
| Accrued interest | ||||||||||||||
| Certain other assets and liabilities | ( | |||||||||||||
| Net cash used by operating activities | ( | ( | ||||||||||||
9
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - (Continued)
(unaudited and in millions)
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Cash flow from investing activities | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Capitalized software development | ( | ( | ||||||||||||
| Proceeds from maturities of investments | ||||||||||||||
| Payments for purchases of investments | ( | ( | ||||||||||||
| Proceeds from sale of assets | ||||||||||||||
| Net cash used by investing activities | ( | ( | ||||||||||||
| Cash flow from financing activities | ||||||||||||||
| Revolving credit facility borrowings, net | ||||||||||||||
| Repayment of ABL credit agreement, net | ( | |||||||||||||
| Debt issuance costs | ( | ( | ||||||||||||
| Receipt of DIP financing | ||||||||||||||
| Borrowings - FILO | ||||||||||||||
| Repayments - FILO | ( | |||||||||||||
| Repayment of superpriority term loan | — | ( | ||||||||||||
| Repayment Exit facility | ( | — | ||||||||||||
| Other debt borrowings | ||||||||||||||
| Other debt repayments | ( | ( | ||||||||||||
| Debt make whole premium | — | ( | ||||||||||||
| Debt prepayment costs | ( | — | ||||||||||||
| Other | ( | ( | ||||||||||||
| Net cash (used), provided by financing activities | ( | |||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | |||||||||||||
| Change in cash, cash equivalents and restricted cash | ( | |||||||||||||
| Add: Cash included in assets held for sale at beginning of period | ||||||||||||||
| Less: Cash included in assets held for sale at end of period | ||||||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | ||||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | $ | $ | ||||||||||||
| Cash paid for: | ||||||||||||||
| Income taxes | $ | $ | ||||||||||||
| Interest | $ | $ | ||||||||||||
| Successor | Predecessor | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
| Total cash, cash equivalents and restricted cash at the end of the period | $ | $ | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
10
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 1: Basis of Presentation
The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In addition, some of the Company’s statements in this Quarterly Report on Form 10-Q may involve risks and uncertainties that could significantly impact expected future results. The results for interim periods are not necessarily indicative of results for the entire year.
The Company has reclassified the presentation of certain Predecessor information to conform to the Successor presentation.
Bankruptcy Accounting and Fresh Start Accounting
As described in Note 2, on June 1, 2023, the Company and certain of its U.S. and Canadian subsidiaries (collectively, the Debtors) filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas (the U.S. Bankruptcy Court) seeking relief under chapter 11 of title 11 of the U.S. Code (the U.S. Bankruptcy Code). The cases were jointly administered under the caption In re: Diebold Holding Company, LLC, et al. (Case No. 23-90602) (the Chapter 11 Cases). Additionally, on June 1, 2023, Diebold Nixdorf Dutch Holding B.V. (Diebold Dutch) filed a scheme of arrangement relating to certain of the Company’s other subsidiaries (the Dutch Scheme Parties) and commenced voluntary proceedings (the Dutch Scheme Proceedings and, together with the Chapter 11 Cases, the Restructuring Proceedings) under the Dutch Act on Confirmation of Extrajudicial Plans (Wet homologatie onderhands akkoord) in the District Court of Amsterdam (the Dutch Court). In addition, on June 12, 2023, Diebold Dutch filed a voluntary petition for relief under chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court seeking recognition of the Dutch Scheme Proceedings as a foreign main proceedings and related relief (the Chapter 15 Proceedings).
For periods subsequent to the filing of the Restructuring Proceedings, the Company applied Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic No. 852 – Reorganizations (ASC 852) in preparing its consolidated financial statements. According, during the pendency of the Chapter 11 Cases and Dutch Scheme Proceedings, prepetition liabilities of the Debtors and Dutch Scheme Parties subject to compromise under the Restructuring Proceedings were distinguished from liabilities that were not expected to be compromised and post-petition liabilities in our condensed consolidated balance sheets. Liabilities subject to compromise were recorded at the amounts expected to be allowed by the U.S. Bankruptcy Court. Additionally, the income, expenses, gains and losses directly and incrementally resulting from the Chapter 11 Cases and Dutch Scheme Proceedings were separately reported as Reorganization items, net in our condensed consolidated statement of operations.
In accordance with ASC 852, we qualified for and adopted fresh start accounting (Fresh Start Accounting) upon emergence from the Restructuring Proceedings, at which point we became a new entity for financial reporting because (i) the holders of the then existing common shares of the Predecessor received less than 50% of the new shares of common stock of the Successor outstanding upon emergence and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plans (defined in Note 2) was less than the total of all post-petition liabilities and allowed claims.
Upon adoption of Fresh Start Accounting, the reorganization value derived from the enterprise value associated with the Plans was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes), with the remaining excess value allocated to goodwill in accordance with ASC 805 – Business Combinations. Deferred income tax amounts were determined in accordance with ASC 740 – Income Taxes.
References to “Predecessor” relate to the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 (Predecessor Period). References to “Successor” relate to the Condensed Consolidated Balance Sheets of the reorganized Company as of December 31, 2023 and June 30, 2024, and Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 (Successor Period) and are not comparable to the Predecessor as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. The Company’s financial results for future periods following the application of Fresh Start Accounting will be different from historical trends and the differences may be material.
11
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Principles of Consolidation
We consolidate all wholly owned subsidiaries and controlled joint ventures. All material intercompany accounts and transactions have been eliminated in consolidation.
Recently Issued Accounting Guidance
The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the FASB.
In March 2020, the FASB issued guidance that provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by the transition away from reference rates expected to be discontinued to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2024. The standard does not materially impact the Company's consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments of ASU 2023-07 improve segment reporting disclosures, including significant segment expenses. The Company is currently evaluating the impact of this guidance on the Company’s condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments for ASU 2023-09 enhance income tax disclosures by including additional disclosures related to rate reconciliation and information regarding income taxes paid. The Company is currently evaluating the impact of this guidance on the Company’s condensed consolidated financial statements.
Although there are other new accounting pronouncements issued by the FASB, the Company does not believe these pronouncements will have a material impact on its consolidated financial statements.
Note 2: Chapter 11 Cases and Dutch Scheme Proceedings
On June 1, 2023, the Debtors filed voluntary petitions in the U.S. Bankruptcy Court seeking relief under he U.S. Bankruptcy Code. The cases were jointly administered under the Chapter 11 Cases. Additionally, on June 1, 2023, Diebold Dutch filed a scheme of arrangement relating to the Dutch Scheme Parties and the Restructuring Proceedings under the Dutch Act on Confirmation of Extrajudicial Plans (Wet homologatie onderhands akkoord) in the Dutch Court. In addition, on June 12, 2023, Diebold Dutch filed a voluntary petition for relief under the Chapter 15 Proceedings.
On July 13, 2023, the U.S. Bankruptcy Court entered an order (the Confirmation Order) confirming the Debtors’ Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the U.S. Plan). On August 2, 2023, the Dutch Court entered an order (the WHOA Sanction Order) sanctioning the Netherlands WHOA Plan of Diebold Dutch and the Dutch Scheme Companies (the WHOA Plan) in the Dutch Scheme Proceedings. On August 7, 2023, the U.S. Bankruptcy Court entered an order in the Chapter 15 Proceedings recognizing the WHOA Plan and the WHOA Sanction Order.
On August 11, 2023 (the Effective Date or Fresh Start Reporting Date), the U.S. Plan and WHOA Plan (together, the Plans) became effective in accordance with their terms and the Debtors and the Dutch Scheme Parties emerged from the Chapter 11 Cases and the Dutch Scheme Proceedings. Following filing the notice of the Effective Date with the U.S. Bankruptcy Court, the Chapter 15 Proceedings were closed.
Note 3: Fresh Start Accounting
Upon emergence from the Chapter 11 Cases and Dutch Scheme Proceedings, the Company qualified for and adopted Fresh Start Accounting, which resulted in the Company becoming a new entity for financial reporting purposes (the Successor).
12
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The reorganization value derived from the range of enterprise values associated with the Plans was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes) with the remaining excess value allocated to goodwill.
As a result of the adoption of Fresh Start Accounting and the effects of the implementation of the Plans, the Company’s condensed consolidated financial statements of the Successor, are not comparable to its condensed consolidated financial statements of the Predecessor.
Note 4: Earnings (Loss) Per Share
Basic earnings (loss) per share is based on the weighted-average number of shares of common stock outstanding. Diluted earnings (loss) per share includes the dilutive effect of shares of potential common stock outstanding. Under the two-class method of computing earnings (loss) per share, non-vested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities. During the Predecessor Periods, the Company’s participating securities included restricted stock units (RSUs), director deferred shares and shares that vested but were deferred by employees. There were no participating securities in the Successor Period. The Company calculated basic and diluted earnings (loss) per share under both the treasury stock method and the two-class method. For the three and six months ended June 30, 2024 and 2023, there were no differences in the earnings (loss) per share amounts calculated using the two methods. Accordingly, the treasury stock method is disclosed below; however, because the Company was in a net loss position in the Predecessor Periods of the three and six months ended June 30, 2023, dilutive shares are excluded from the shares used in the computation of Predecessor Periods diluted loss per share.
The following table represents amounts used in computing earnings (loss) per share and the effect on the weighted-average number of shares of potential dilutive common stock:
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||
| Numerator | |||||||||||||||||||||||||||||
| Earnings (loss) used in basic and diluted loss per share | |||||||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | $ | $ | ( | ||||||||||||||||||||||||||
| Denominator | |||||||||||||||||||||||||||||
Weighted-average number of shares of common stock used in basic earnings (loss) per share (1) | |||||||||||||||||||||||||||||
Effect of dilutive shares (1) | |||||||||||||||||||||||||||||
| Weighted-average number of shares used in diluted earnings (loss) per share | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | |||||||||||||||||||||||||||||
| Basic earnings (loss) per share | $ | $ | ( | ||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | $ | ( | ||||||||||||||||||||||||||
| Anti-dilutive shares | |||||||||||||||||||||||||||||
| Anti-dilutive shares not used in calculating diluted weighted-average shares | |||||||||||||||||||||||||||||
(1)1.7 shares for the three months ended June 30, 2023 (Predecessor) are excluded from the computation of diluted loss per share because the effects are anti-dilutive, due to the net loss position.
13
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||
| Numerator | |||||||||||||||||||||||||||||
| Earnings (loss) used in basic and diluted loss per share | |||||||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ||||||||||||||||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | $ | $ | ( | ||||||||||||||||||||||||||
| Denominator | |||||||||||||||||||||||||||||
Weighted-average number of shares of common stock used in basic earnings (loss) per share (1) | |||||||||||||||||||||||||||||
Effect of dilutive shares (1) | |||||||||||||||||||||||||||||
| Weighted-average number of shares used in diluted earnings (loss) per share | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Diebold Nixdorf, Incorporated | |||||||||||||||||||||||||||||
| Basic earnings (loss) per share | $ | $ | ( | ||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | $ | ( | ||||||||||||||||||||||||||
| Anti-dilutive shares | |||||||||||||||||||||||||||||
| Anti-dilutive shares not used in calculating diluted weighted-average shares | |||||||||||||||||||||||||||||
(1)1.9 shares for the six months ended June 30, 2023 (Predecessor) are excluded from the computation of diluted loss per share because the effects are anti-dilutive, due to the net loss position.
Note 5: Income Taxes
Successor | Predecessor | |||||||||||||
Three months ended | Three months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
Income Tax Expense/(Benefit) | $ | $ | ( | |||||||||||
| Effective Tax Rate | % | % | ||||||||||||
Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
Income Tax Expense/(Benefit) | $ | $ | ( | |||||||||||
| Effective Tax Rate | % | % | ||||||||||||
The effective tax rate on the loss from continuing operations was 70.6 percent and 92.9 percent for the three and six months ended June 30, 2024, respectively. The effective tax rate differed compared to the U.S. federal statutory rate for the variations in the expected jurisdictional mix of earnings and expected permanent tax differences relative to pretax earnings. For the three and six months ended June 30, 2024, the Company estimated its annual effective tax rate and applied it to year-to-date ordinary income/loss pursuant to Accounting Standards Codification (ASC) 740-270-25-1. The Company reports the tax effect of unusual or infrequently occurring items, including changes in judgement about valuation allowances, uncertain tax positions, and effects of changes in tax laws or rates in the interim period in which they occur. The BEPS 2.0 Pillar Two global minimum tax rules, previously enacted by several jurisdictions in which the Company operates, became effective in 2024. The Company does not estimate a material impact on its annual effective tax rate from these rules.
The effective tax rate on the loss from continuing operations was 3.5 percent and 0.5 percent for the three and six months ended June 30, 2023, respectively. The tax provision for the three and six months ended June 30, 2023, was attributable to the
14
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
jurisdictional mix of pre-tax income and losses, reorganization charges, and discrete tax adjustments for current tax expense related to tax return to provision differences and changes in permanent reinvestment assertions. For the three and six months ended June 30, 2023, the Company calculated its income tax expense using the actual effective tax rate year to date, as opposed to the estimated annual effective tax rate, as provided in Accounting Standards Codification (ASC) 740-270-30-18.
Note 6: Inventories
Major classes of inventories are summarized as follows:
| Successor | |||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||
| Raw materials and work in process | $ | $ | |||||||||
| Finished goods | |||||||||||
| Total product inventories | |||||||||||
| Service parts | |||||||||||
| Total inventories | $ | $ | |||||||||
Note 7: Investments
The Company’s investments, primarily held by our subsidiaries in Brazil, consist of certificates of deposit that are recorded at fair value based upon quoted market prices. Changes in fair value are recognized in interest income, determined using the specific identification method, and were minimal. There were no sales of securities or proceeds from the sale of securities prior to the maturity date during the three and six months ended June 30, 2024 (Successor) and 2023 (Predecessor).
The Company has deferred compensation plans that enable certain employees to defer receipt of a portion of their cash, 401(k)
or share-based compensation and enable non-employee directors to defer receipt of director fees at the participants’ discretion.
For deferred cash-based compensation, the Company established rabbi trusts (refer to Note 15), which are recorded at fair value of the underlying securities and presented within securities and other investments. The related deferred compensation liability is recorded at fair value and presented within other long-term liabilities. Realized and unrealized gains and losses on marketable securities in the rabbi trusts are recognized in interest income.
The Company’s investments subject to fair value measurement consist of the following:
| Cost Basis | Unrealized Gain | Fair Value | ||||||||||||||||||
| As of June 30, 2024 (Successor) | ||||||||||||||||||||
| Short-term investments | ||||||||||||||||||||
| Certificates of deposit | $ | $ | — | $ | ||||||||||||||||
| Long-term investments | ||||||||||||||||||||
| Assets held in a rabbi trust | $ | $ | $ | |||||||||||||||||
| As of December 31, 2023 (Successor) | ||||||||||||||||||||
| Short-term investments | ||||||||||||||||||||
| Certificates of deposit | $ | $ | — | $ | ||||||||||||||||
| Long-term investments | ||||||||||||||||||||
| Assets held in a rabbi trust | $ | $ | $ | |||||||||||||||||
Securities and other investments also includes cash surrender value of insurance contracts of $3.6 and $3.6 as of June 30, 2024 (Successor) and December 31, 2023 (Successor), respectively.
15
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 8: Goodwill and Other Intangible Assets
The Company has the following operating segments: Banking and Retail. This is described in further detail in Note 19, and is consistent with how the Chief Executive Officer, the chief operating decision maker (CODM), makes key operating decisions, allocates resources, and assesses the performance of the business.
The excess of the Successor’s reorganization value over the fair value of identified tangible and intangible assets as of the Emergence Date is reported separately on the Company’s condensed consolidated balance sheets as goodwill.
The changes in the carrying amount of goodwill for the six months ended June 30, 2024 (Successor):
| Banking | Retail | Total | ||||||||||||||||||
| Goodwill, balance at January 1, 2024 (Successor) | $ | $ | $ | |||||||||||||||||
| Currency translation adjustment | ( | ( | ( | |||||||||||||||||
| Goodwill, balance at June 30, 2024 (Successor) | $ | $ | $ | |||||||||||||||||
The following summarizes information on Intangible assets by major category:
| Successor | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Weighted-average remaining useful lives | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Trademarks and trade names | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Capitalized software development | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Technology know-how and development costs non-software | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other intangibles | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other intangible assets, net | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Costs incurred for the development of external-use software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established. These costs are included within other assets and are amortized on a straight-line basis over the estimated useful lives ranging from to five years . Amortization begins when the product is available for general release. Costs capitalized include direct labor and related overhead costs. Costs incurred prior to technological feasibility or after general release are expensed as incurred. The Company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. If future revenue does not support the unamortized program costs, the amount by which the unamortized capitalized cost of a software product exceeds the net realizable value is impaired.
16
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following table identifies the activity relating to total capitalized software development:
| 2024 | ||||||||
| Beginning balance as of January 1 (Successor) | $ | |||||||
| Capitalization | ||||||||
| Amortization | ( | |||||||
| Other | ( | |||||||
| Ending balance as of June 30 (Successor) | ||||||||
| 2023 | ||||||||
| Beginning balance as of January 1 (Predecessor) | $ | |||||||
| Capitalization | ||||||||
| Amortization | ( | |||||||
| Other | ( | |||||||
| Ending balance as of June 30 (Predecessor) | $ | |||||||
The Company's total amortization expense, excluding amounts related to deferred financing costs, was $25.1 and $24.7 for the three months ended June 30, 2024 (Successor) and 2023 (Predecessor), respectively. The Company's total amortization expense, excluding amounts related to deferred financing costs, was $51.5 and $48.0 for the six months ended June 30, 2024 (Successor) and 2023 (Predecessor), respectively.
Note 9: Product Warranties
The Company provides its customers a standard manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors such as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts.
Changes in the Company’s warranty liability balance are illustrated in the following table:
| Successor | Predecessor | |||||||||||||
| 2024 | 2023 | |||||||||||||
| Beginning balance as of January 1 | $ | $ | ||||||||||||
| Current period accruals | ||||||||||||||
| Current period settlements | ( | ( | ||||||||||||
| Currency translation adjustment | ( | |||||||||||||
| Ending balance as of June 30 | $ | $ | ||||||||||||
Note 10: Restructuring
In the fourth quarter of 2023, the Company completed the 2022 initiative that was announced in the second quarter of 2022. The focus was to streamline operations, drive efficiencies and digitize processes. The savings realized were in line with expectations. The most significant expense of the initiative related to severance payments, while the remainder of the expenses incurred primarily relate to transitioning personnel and consultant fees in relation to the transformation process.
Also during the fourth quarter of 2023, the Company introduced its continuous improvement initiative, noting that the Company is focused on consistently innovating its solutions to support a better transaction experience for consumers at bank and retail locations while simultaneously streamlining cost structures and business processes through the integration of hardware, software and services. The most significant expense of the quarter ended June 30, 2024 primarily relate to transitioning personnel and consultant fees in relation to the improvement process.
17
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following tables summarizes the impact of the Company’s restructuring and transformation charges on the consolidated statements of operations:
| Successor | Predecessor | |||||||||||||
| Three months ended | Three months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Cost of sales – services | $ | ( | $ | |||||||||||
| Cost of sales – products | ||||||||||||||
| Selling and administrative expense | ||||||||||||||
| Research, development and engineering expense | ( | |||||||||||||
| Loss on sale of assets, net | ||||||||||||||
| Total | $ | $ | ||||||||||||
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Cost of sales – services | $ | $ | ||||||||||||
| Cost of sales – products | ||||||||||||||
| Selling and administrative expense | ||||||||||||||
| Research, development and engineering expense | ||||||||||||||
| Loss on sale of assets, net | ||||||||||||||
| Total | $ | $ | ||||||||||||
The following table summarizes the Company’s severance accrual balance and related activity:
| 2024 | |||||||||||
| Beginning balance as of January 1 (Successor) | $ | ||||||||||
| Severance accrual | |||||||||||
| Payout/Settlement | ( | ||||||||||
| Other | ( | ||||||||||
| Ending balance as of June 30 (Successor) | $ | ||||||||||
| 2023 | |||||
| Beginning balance as of January 1 (Predecessor) | $ | ||||
| Severance accrual | |||||
| Payout/Settlement | ( | ||||
| Other | |||||
| Ending balance as of June 30 (Predecessor) | $ | ||||
18
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 11: Debt
Outstanding debt balances were as follows:
| Successor | ||||||||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||
| Notes payable – current | ||||||||||||||
| Other | $ | $ | ||||||||||||
| $ | $ | |||||||||||||
| Long-term debt | ||||||||||||||
| Exit Facility | $ | $ | ||||||||||||
| Revolving Facility | ||||||||||||||
| Other | ||||||||||||||
| $ | $ | |||||||||||||
| Long-term deferred financing fees | ( | ( | ||||||||||||
| $ | $ | |||||||||||||
DIP Facility and Exit Credit Agreement
On June 5, 2023, the Company, as borrower, entered into the credit agreement governing the Debtor's $1,250.0 debtor-in-possession term loan credit facility (DIP Facility) along with certain financial institutions party thereto, as lenders (the Lenders), and GLAS USA LLC, as administrative agent, and GLAS Americas LLC, as collateral agent (the DIP Credit Agreement), and the closing of the DIP Facility occurred on the same day. The DIP Facility provided for two tranches of term loans to be made on the closing date of the DIP Facility: (i) a $760.0 Term B-1 tranche and (ii) a $490.0 Term B-2 tranche.
On June 5, 2023, the proceeds of the DIP Facility were used, among others, to: (i) repay in full the term loan obligations, including a make-whole premium, under a $400.0 superpriority secured term loan facility (Superpriority Facility) and (ii) repay in full a $250.0 asset-based revolving credit facility (ABL Facility) and cash collateralize letters of credit thereunder. The payment for the Superpriority Facility totaled $492.3 and was comprised of $401.3 of principal and interest, $20.0 of premium, and a make-whole amount of $71.0 . The payment for the ABL Facility, including an additional tranche of commitments thereunder consisting of a senior secured "last out" term facility (FILO Tranche), and the cash collateralization of the letters of credit thereunder totaled $241.0 and was comprised of $211.2 of principal and interest and $29.8 of the cash collateralized letters of credit.
On the Effective Date (i.e., August 11, 2023), the Company, as borrower, entered into a credit agreement (the Exit Credit Agreement) governing its $1,250.0 senior secured term loan credit facility (the Exit Facility) along with the Lenders, GLAS USA LLC, as administrative agent, and GLAS Americas LLC, as collateral agent.
Concurrently with the closing of the Exit Facility, the Company’s existing $1,250.0 DIP Facility was terminated and the loans outstanding under the DIP Facility were converted into loans outstanding under the Exit Facility (the Conversion), and the liens and guarantees, including all guarantees and liens granted by certain subsidiaries of the Company that are organized in the United States and in certain foreign jurisdictions, granted under the DIP Facility were automatically terminated and released.
In connection with the Conversion, the entire $1,250.0 under the Exit Facility was deemed drawn on the Effective Date. The Exit Facility will mature on August 11, 2028.
The Company may repay the loans under the Exit Facility at any time; provided that certain repayments of the loans made on or prior to February 11, 2025 with the proceeds of certain types of indebtedness must be accompanied by a premium of either 1.00 % or 5.00 % of the principal amount of the loans repaid. The amount of the premium is based on the type of indebtedness incurred to repay the loans. Amounts borrowed and repaid under the Exit Facility may not be reborrowed.
The obligations of the Company under the Exit Facility are guaranteed by certain subsidiaries of the Company that are organized in the United States (the Guarantors). The Exit Facility and related guarantees are secured by perfected senior security interests and liens on substantially all assets of the Company and each Guarantor. Loans under the Exit Facility bear
19
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
interest at an adjusted secured overnight financing rate with a one-month tenor rate plus 7.50 percent per annum or an adjusted base rate plus 6.50 percent per annum.
The Exit Facility includes conditions precedent, representations and warranties, affirmative and negative covenants and events of default that are customary for financings of this type and size. Events of default include both credit and non-credit events such as a change of control, nonpayment of principal or interest, etc. In the event of a default, the Lenders may declare the outstanding amounts immediately due and payable.
Revolving Facility
On February 13, 2024, the Company, as borrower, entered into a credit agreement (the Revolving Credit Agreement) with certain financial institutions party thereto, as lenders, and PNC Bank, National Association, as administrative agent and collateral agent. The Revolving Credit Agreement provides for a superior-priority senior secured revolving credit facility (the Credit Facility) in an aggregate principal amount of $200.0 , which includes a $50.0 letter of credit sub-limit and a $20.0 swing loan sub-limit. Borrowings under the Credit Facility may be used by the Company for (i) the Repayment (as defined below) and (ii) general corporate purposes and working capital. As of the effective date of the Revolving Credit Agreement, the Credit Facility is fully drawn.
Concurrently with the closing of the Credit Facility, the Company prepaid $200.0 (the Repayment) of outstanding principal of its senior secured term loans under the Exit Credit Agreement, by and among the Company, certain financial institutions party thereto, as lenders, GLAS USA LLC, as administrative agent, and GLAS Americas LLC, as collateral agent. The Repayment pays down a portion of the borrowings outstanding under the Exit Facility.
The Credit Facility will mature on February 13, 2027.
The obligations of the Company under the Credit Facility are guaranteed by certain subsidiaries of the Company that are organized in the United States (the Guarantors). The Credit Facility and related guarantees are secured by perfected super-priority senior security interests and liens on substantially all assets of the Company and each Guarantor.
Loans under the Credit Facility bear interest at an adjusted secured overnight financing rate plus 4.00 percent per annum or an adjusted base rate plus 3.00 percent per annum.
The Credit Facility includes conditions precedent, representations and warranties, affirmative and negative covenants and events of default that are customary for financings of this type and size.
20
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The cash flows related to debt borrowings and repayments were as follows:
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Revolving credit facility borrowings | $ | $ | ||||||||||||
| Revolving credit facility repayments | $ | ( | $ | |||||||||||
| Other debt borrowings | ||||||||||||||
| FILO | $ | $ | ||||||||||||
| Proceeds from DIP Facility | ||||||||||||||
| International short-term uncommitted lines of credit borrowings | ||||||||||||||
| $ | $ | |||||||||||||
| Other debt repayments | ||||||||||||||
| Payments on Exit Financing | $ | ( | $ | |||||||||||
| Payments on Term Loan B Facility - USD under the Credit Agreement | ( | |||||||||||||
| Payments on Term Loan B Facility - Euro under the Credit Agreement | ( | |||||||||||||
| Repayment of ABL, net | ( | |||||||||||||
| Repayment of FILO | ( | |||||||||||||
| Repayment of 2025 Superpriority Term Loans | ( | |||||||||||||
| International short-term uncommitted lines of credit and other repayments | ( | ( | ||||||||||||
| $ | ( | $ | ( | |||||||||||
Below is a summary of financing information:
| Financing Facilities | Interest Rate Index and Margin | Maturity/Termination Dates | Initial Term (Years) | ||||||||||||||||||||
Exit Facility(i) | SOFR + | August 2028 | |||||||||||||||||||||
Revolving Credit Facility - Term Benchmark Advances(ii) | SOFR + | February 2027 | |||||||||||||||||||||
(i)SOFR with a floor of 4.0 percent
(ii) SOFR with a floor of 1.5 percent
Line of Credit
As of June 30, 2024, the Company had various international short-term lines of credit with borrowing limits aggregating to $6.7 . There were no outstanding borrowings on the short-term lines of credit as of June 30, 2024 or December 31, 2023. Short-term lines mature in less than one year and are used to support working capital, vendor financing and foreign exchange derivatives.
21
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 12: Equity
The following tables present changes in shareholders' equity attributable to Diebold Nixdorf, Incorporated and the noncontrolling interests:
| Accumulated Other Comprehensive Income (Loss) | Total Diebold Nixdorf, Incorporated Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Additional Capital | Retained Earnings | Treasury Shares | Equity Warrants | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 (Successor) | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest holders, net | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 (Successor) | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 (Successor) | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
22
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
| Accumulated Other Comprehensive Income (Loss) | Total Diebold Nixdorf, Incorporated Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Additional Capital | Accumulated Deficit | Treasury Shares | Equity Warrants | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation issued | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury shares | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation issued | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
23
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 13: Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in the Company’s accumulated other comprehensive income (loss) (AOCI), net of tax, by component for 2024:
| Translation | Foreign Currency Hedges | Interest Rate Hedges | Pension and Other Post-retirement Benefits | Other | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2024 (Successor) | $ | $ | ( | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications (1) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 (Successor) | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications (2) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 (Successor) | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
(1) Other comprehensive income (loss) before reclassifications within the translation component excludes a nominal translation amount attributable to noncontrolling interests.
(2) Other comprehensive income (loss) before reclassifications within the translation component excludes a $0.2 translation amount attributable to noncontrolling interests.
.
The following table summarizes the changes in the Company’s AOCI, net of tax, by component for 2023:
| Translation | Foreign Currency Hedges | Interest Rate Hedges | Pension and Other Post-retirement Benefits | Other | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2023 (Predecessor) | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 (Predecessor) | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications (2) | ||||||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from AOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 (Predecessor) | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||
(1) Other comprehensive income (loss) before reclassifications within the translation component excludes $(2.2 ) of translation attributable to noncontrolling interests.:
(2) Other comprehensive income (loss) before reclassifications within the translation component excludes $6.6 of translation attributable to noncontrolling interests.:
24
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following table summarizes the details about the amounts reclassified from AOCI:
| Successor | Predecessor | Affected Line Item on the Statement of Operations | ||||||||||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | |||||||||||||||||||||||||
| Pension and post-retirement benefits: | ||||||||||||||||||||||||||
Net actuarial gain (loss) amortized (net of tax of $ | $ | $ | Miscellaneous, net | |||||||||||||||||||||||
| Successor | Predecessor | Affected Line Item on the Statement of Operations | |||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||
| Pension and post-retirement benefits: | |||||||||||||||||||||||
Net actuarial gain (loss) amortized (net of tax of $( | $ | $ | Miscellaneous, net | ||||||||||||||||||||
Note 14: Benefit Plans
Qualified Retirement Benefits. The Company has a qualified retirement plan covering certain U.S. employees that has been closed to new participants since 2003 and frozen since December 2013.
The Company has a number of non-U.S. defined benefit plans covering eligible employees located predominately in Europe, the most significant of which are German plans. Benefits for these plans are based primarily on each employee's final salary, with periodic adjustments for inflation. The obligations in Germany consist of employer funded pension plans and deferred compensation plans. The employer funded pension plans are based upon direct performance-related commitments in terms of defined contribution plans. Each beneficiary receives, depending on individual pay-scale grouping, contractual classification, or income level, different yearly contributions. The contribution is multiplied by an age factor appropriate to the respective pension plan and credited to the individual retirement account of the employee. The retirement accounts may be used up at retirement by either a one-time lump-sum payout or payments of up to ten years .
The Company has other defined benefit plans outside the U.S., which have not been mentioned here due to materiality.
Supplemental Executive Retirement Benefits. The Company has non-qualified pension plans in the U.S. to provide supplemental retirement benefits to certain officers, which have also been frozen since December 2013. Benefits are payable at retirement based upon a percentage of the participant’s compensation, as defined.
Other Benefits. In addition to providing retirement benefits, the Company provides post-retirement healthcare and life insurance benefits (referred to as other benefits) for certain retired employees. Retired eligible employees in the U.S. may be entitled to these benefits based upon years of service with the Company, age at retirement and collective bargaining agreements. There are no plan assets and the Company funds the benefits as the claims are paid. The post-retirement benefit obligation was determined by application of the terms of medical and life insurance plans together with relevant actuarial assumptions and healthcare cost trend rates.
25
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following tables set forth the net periodic benefit cost for the Company’s U.S. defined benefit pension plans:
| Successor | Predecessor | ||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Interest cost | $ | $ | |||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||
| Recognized net actuarial loss | |||||||||||||||||
| Net periodic pension benefit cost | $ | $ | |||||||||||||||
| Successor | Predecessor | ||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Interest cost | $ | $ | |||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||
| Recognized net actuarial loss | |||||||||||||||||
| Net periodic pension benefit cost | $ | $ | |||||||||||||||
The following tables set forth the net periodic benefit cost for the Company’s Non-U.S. defined benefit pension plans:
| Successor | Predecessor | ||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Service cost | $ | $ | |||||||||||||||
| Interest cost | |||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||
| Recognized net actuarial gain | ( | ||||||||||||||||
| Amortization of prior service cost | ( | ||||||||||||||||
| Net periodic pension benefit cost | $ | $ | ( | ||||||||||||||
| Successor | Predecessor | ||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Service cost | $ | $ | |||||||||||||||
| Interest cost | |||||||||||||||||
| Expected return on plan assets | ( | ( | |||||||||||||||
| Recognized net actuarial gain | ( | ||||||||||||||||
| Amortization of prior service cost | ( | ||||||||||||||||
| Net periodic pension benefit cost | $ | $ | ( | ||||||||||||||
26
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following tables set forth the net periodic benefit cost for the Company’s other benefit plans during the period:
| Successor | Predecessor | ||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Interest cost | $ | $ | |||||||||||||||
| Recognized net actuarial gain | ( | ||||||||||||||||
| Net periodic pension benefit cost | $ | $ | ( | ||||||||||||||
| Successor | Predecessor | ||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Components of net periodic benefit cost | |||||||||||||||||
| Interest cost | $ | $ | |||||||||||||||
| Recognized net actuarial gain | ( | ||||||||||||||||
| Net periodic pension benefit cost | $ | $ | ( | ||||||||||||||
Contributions and Reimbursements
For the six months ended June 30, 2024 (Successor) and 2023 (Predecessor), there were contributions of $28.0 and $22.1 , respectively, made to the qualified and non-qualified pension plans.
The Company received reimbursements of $19.1 and $22.8 for certain benefits paid from its German plan trustee during the six months ended June, 30 2024 (Successor) and 2023 (Predecessor), respectively.
Note 15: Fair Value of Assets and Liabilities
Assets and liabilities subject to fair value measurement by fair value level are recorded as follows:
| Successor | ||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements Using | Fair Value Measurements Using | |||||||||||||||||||||||||||||||||||||||||||
| Classification on condensed consolidated Balance Sheets | Fair Value | Level 1 | Level 2 | Fair Value | Level 1 | Level 2 | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit | Short-term investments | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Assets held in rabbi trusts | Securities and other investments | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange forward contracts | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Deferred compensation | Other liabilities | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
The Company uses the end of period when determining the timing of transfers between levels. During the Successor and Predecessor Periods, there were no transfers between levels.
27
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The carrying amount of the Company's Revolving Credit Facility approximates fair value. The remaining debt had a carrying value of $1,065.9 and fair value of $1,098.9 at June 30, 2024, and a carrying value of $1,253.9 and fair value of $1,285.5 at December 31, 2023.
Refer to Note 11 for further details surrounding the Company's debt as of June 30, 2024 compared to December 31, 2023.
Note 16: Commitments and Contingencies
Indirect Tax Contingencies
The Company accrues for indirect tax matters when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they are charged against income. In evaluating indirect tax matters, management takes into consideration factors such as historical experience with matters of similar nature, specific facts and circumstances and the likelihood of prevailing. Management evaluates and updates accruals as matters progress over time. It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably to the Company and could require recognizing future expenditures. Also, statutes of limitations could expire without the Company paying the taxes for matters for which accruals have been established, which could result in the recognition of future gains upon reversal of accruals at that time.
At June 30, 2024, the Company was a party to several routine indirect tax claims from various taxing authorities globally that were incurred in the normal course of business, which neither individually nor in the aggregate are considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the condensed consolidated financial statements would not be materially affected by the outcome of these indirect tax claims and/or proceedings or asserted claims.
A loss contingency is reasonably possible if it has a more than remote but less than probable chance of occurring. Although management believes the Company has valid defenses with respect to its indirect tax positions, it is reasonably possible that a loss could occur in excess of the estimated liabilities. The Company estimated the aggregate risk at June 30, 2024 to be up to $80.1 for its material indirect tax matters. The aggregate risk related to indirect taxes is adjusted as the applicable statutes of limitations expire.
Legal Contingencies
At June 30, 2024, the Company was a party to several lawsuits that were incurred in the normal course of business, which neither individually nor in the aggregate were considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the Company's condensed consolidated financial statements would not be materially affected by the outcome of these legal proceedings or asserted claims.
In addition to these normal course of business litigation matters, the Company continues to be a party to the proceedings that began in the Predecessor Period described below:
Diebold Nixdorf Holding Germany GmbH, formerly Diebold Nixdorf Holding Germany Inc. & Co. KGaA (Diebold KGaA), is a party to two separate appraisal proceedings (Spruchverfahren) in connection with the purchase of all shares in its former listed subsidiary, Diebold Nixdorf AG. The first appraisal proceeding, which relates to the Domination and Profit Loss Transfer Agreement (DPLTA) entered into by Diebold KGaA and former Diebold Nixdorf AG, which became effective on February 17, 2017, is pending at the Higher Regional Court (Oberlandesgericht) of Düsseldorf (Germany) as the court of appeal. The DPLTA appraisal proceeding was filed by minority shareholders of Diebold Nixdorf AG challenging the adequacy of both the cash exit compensation of €55.02 per Diebold Nixdorf AG share (of which 6.9 million shares were then outstanding) and the annual recurring compensation of €2.82 per Diebold Nixdorf AG share offered in connection with the DPLTA.
The second appraisal proceeding relates to the cash merger squeeze-out of minority shareholders of Diebold Nixdorf AG in 2019 and is currently pending at the same Chamber for Commercial Matters (Kammer für Handelssachen) at the District Court (Landgericht) of Dortmund (Germany) that was originally competent for the DPLTA appraisal proceedings. The squeeze-out
28
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
appraisal proceeding was filed by former minority shareholders of Diebold Nixdorf AG challenging the adequacy of the cash exit compensation of €54.80 per Diebold Nixdorf AG share (of which 1.4 million shares were then outstanding) in connection with the merger squeeze-out.
In both appraisal proceedings, a court ruling would apply to all Diebold Nixdorf AG shares outstanding at the time when the DPLTA or the merger squeeze-out, respectively, became effective. Any cash compensation received by former Diebold Nixdorf AG shareholders in connection with the merger squeeze-out would be netted with any higher cash compensation such shareholder may still claim in connection with the DPLTA appraisal proceeding. The District Court of Dortmund dismissed in 2022 all claims to increase the cash compensation and the annual recurring compensation in the DPLTA appraisal proceeding and rejected in 2023 all claims to increase the cash compensation in the merger squeeze-out appraisal proceeding. These first instance decisions, however, are not final as some of the respective plaintiffs filed appeals in both, the DPLTA appraisal proceeding and the squeeze-out appraisal proceeding.
The Company believes that the compensation offered in connection with the DPLTA and the merger squeeze-out was in both cases fair and that the decisions of the District Court of Dortmund in the DPLTA and merger squeeze-out appraisal proceedings validate its position. German courts often adjudicate increases of the cash compensation to plaintiffs in varying amounts in connection with German appraisal proceedings. Therefore, the Company cannot rule out that a court may increase the cash compensation in these appraisal proceedings. The Company, however, is convinced that its defense in both appraisal proceedings is supported by strong sets of facts and the Company will continue to vigorously defend itself in these matters.
Related legal fees are expensed as incurred.
Bank Guarantees, Standby Letters of Credit, and Surety Bonds
In the ordinary course of business, the Company may issue performance guarantees on behalf of its subsidiaries to certain customers and other parties. Some of those guarantees may be backed by standby letters of credit, surety bonds, or similar instruments. In general, under the guarantees, the Company would be obligated to perform, or cause performance, over the term of the underlying contract in the event of an unexcused, uncured breach by its subsidiary, or some other specified triggering event, in each case as defined by the applicable guarantee. At June 30, 2024, the maximum future contractual obligations relative to these various guarantees totaled $94.6 , of which $23.0 represented standby letters of credit to insurance providers, and no associated liability was recorded. At December 31, 2023, the maximum future payment obligations relative to these various guarantees totaled $117.1 , of which $23.0 represented standby letters of credit to insurance providers, and no associated liability was recorded.
Restricted Cash
The following table provides a reconciliation of Cash, cash equivalents and Short-term and Long-term restricted cash reporting within the Company's Condensed Consolidated Balance Sheets and in the Condensed Consolidated Statements of Cash Flows:
| Successor | ||||||||||||||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||||||||
| Professional fee escrow | ||||||||||||||||||||
| Bank collateral guarantees | ||||||||||||||||||||
| Pension collateral guarantees | ||||||||||||||||||||
| Restricted cash and cash equivalents | ||||||||||||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||||||||||||||
The balance of restricted cash at June 30, 2024 primarily relates to requirements of the Revolving Credit Agreement.
29
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 17: Revenue Recognition
A performance obligation is a contractual promise to transfer a distinct good or service to the customer. A contract's transaction price is allocated to each distinct performance obligation and is recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied. The following table represents the percentage of revenue recognized either at a point in time or over time:
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| Timing of revenue recognition | June 30, 2024 | June 30, 2023 | ||||||||||||
| Products transferred at a point in time | % | % | ||||||||||||
| Products and services transferred over time | % | % | ||||||||||||
| Net sales | % | % | ||||||||||||
Contract balances
Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract assets of the Company primarily relate to the Company's rights to consideration for goods shipped and services provided but not contractually billable at the reporting date.
The contract assets are reclassified into the receivables balance when the rights to receive payment become unconditional. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. In addition, contract liabilities are recorded as advanced payments for products and other deliverables that are billed to and collected from customers prior to revenue being recognizable. Contract assets are minimal for the periods presented.
The following table provides information about receivables and deferred revenue, which represent contract liabilities from contracts with customers:
| Contract balance information | Trade receivables | Contract liabilities | ||||||||||||||||||
| Balance at December 31, 2023 (Successor) | $ | $ | ||||||||||||||||||
| Balance at June 30, 2024 (Successor) | $ | $ | ||||||||||||||||||
There have been $9.7 and $13.1 of impairment losses recognized as bad debt related to receivables or contract assets arising from the Company's contracts with customers during the six months ended June 30, 2024 (Successor) and 2023 (Predecessor), respectively.
As of December 31, 2023, the Company had $376.2 of unrecognized deferred revenue constituting the remaining performance obligations that are unsatisfied (or partially unsatisfied). During the six months ended June 30, 2024, the Company recognized revenue of $212.2 related to the Company's deferred revenue balance at December 31, 2023.
Transaction price allocated to the remaining performance obligations
30
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 18: Finance Lease Receivables
Under certain circumstances, the Company provides financing arrangements to customers that are largely classified and accounted for as sales-type leases. The Company records interest income and any fees or costs related to financing receivables using the effective interest method over the term of the lease.
The following table presents the components of finance lease receivables:
| Successor | ||||||||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||
| Gross minimum lease receivables | $ | $ | ||||||||||||
| Allowance for credit losses | ( | ( | ||||||||||||
| Less: | ||||||||||||||
| Unearned interest income | ( | ( | ||||||||||||
| Total | $ | $ | ||||||||||||
Future minimum payments due from customers under finance lease receivables as of June 30, 2024 are as follows:
| 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| $ | |||||
Note 19: Segment Information
The Company's reportable operating segments are as follows: Banking and Retail. Segment operating profit as disclosed herein is consistent with the segment profit or loss measure used by the CODM and does not include corporate charges, amortization of acquired intangible assets, amortization of intangible assets recorded with fresh start accounting, asset impairment, restructuring and transformation charges, the results of the held-for-sale European retail business, or other non-routine, unusual or infrequently occurring items, as the CODM does not regularly review and use such financial measures to make decisions, allocate resources and assess performance.
Segment revenue represents revenues from sales to external customers. Segment operating profit is defined as revenues less expenses directly attributable to the segments. The Company does not allocate to its segments certain operating expenses which are managed at the headquarters level; that are not used in the management of the segments, not segment-specific, and impractical to allocate. Segment operating profit reconciles to consolidated Profit (loss) before taxes by deducting items that are not attributed to the segments and which are managed independently of segment results. Assets are not allocated to segments, and thus are not included in the assessment of segment performance, and consequently, we do not disclose total assets and depreciation and amortization expense by reportable operating segment.
31
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following tables present information regarding the Company’s segment performance and provide a reconciliation between segment operating profit and the consolidated Profit (loss) before taxes:
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||
| Net sales summary by segment | |||||||||||||||||||||||||||||
| Banking | $ | $ | |||||||||||||||||||||||||||
| Retail | |||||||||||||||||||||||||||||
Held for sale non-core business(7) | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||||||||
| Segment operating profit | |||||||||||||||||||||||||||||
| Banking | $ | $ | |||||||||||||||||||||||||||
| Retail | |||||||||||||||||||||||||||||
| Total segment operating profit | $ | $ | |||||||||||||||||||||||||||
Corporate charges not allocated to segments(1) | $ | ( | $ | ( | |||||||||||||||||||||||||
Impairment of assets(2) | ( | ||||||||||||||||||||||||||||
Amortization of fair value assets(3) | ( | ( | |||||||||||||||||||||||||||
Restructuring and transformation expenses(4) | ( | ( | |||||||||||||||||||||||||||
Refinancing related costs(5) | ( | ( | |||||||||||||||||||||||||||
Net non-routine income (expense)(6) | ( | ||||||||||||||||||||||||||||
Held for sale non-core business(7) | ( | ||||||||||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||||||||
| Operating profit (loss) | ( | ||||||||||||||||||||||||||||
| Other income (expense) | ( | ( | |||||||||||||||||||||||||||
| Profit (loss) before taxes | $ | $ | ( | ||||||||||||||||||||||||||
(1) Corporate charges not allocated to segments include headquarter-based costs associated primarily with human resources, finance, IT and legal that are not directly attributable to a particular segment and are separately assessed by the CODM for purposes of making decisions, assessing performance and allocating resources.
(2) Impairment of $(1.8 ) in the second quarter of 2023 relates to leased European facilities closures.
(3) The amortization of purchase accounting intangible assets and the depreciation and amortization of assets resulting from Fresh Start accounting are excluded from the segment results used by the CODM to make decisions, allocate resources or assess performance.
(4) Refer to Note 10 for further information regarding restructurings. Consistent with the historical reportable segment structure, restructuring and transformation costs are not assigned to the segments, and are separately analyzed by the CODM.
(5) Refinancing related costs are fees earned by our advisors that have been accounted for as period expense.
(6) Net non-routine expense consists of items that the Company has determined are non-routine in nature and not allocated to the reportable operating segments as they are not included in the measure used by the CODM to make decisions, allocate resources and assess performance.
(7) Held for sale non-core European retail business represents the revenue and operating profit of a business that had been classified as held for sale in the Predecessor Period and sold in September 2023.
32
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
| Successor | Predecessor | ||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Net sales summary by segment | |||||||||||||||||
| Banking | $ | $ | |||||||||||||||
| Retail | |||||||||||||||||
Held for sale non-core European retail business(7) | |||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||
| Segment operating profit | |||||||||||||||||
| Banking | $ | $ | |||||||||||||||
| Retail | |||||||||||||||||
| Total segment operating profit | $ | $ | |||||||||||||||
Corporate charges not allocated to segments(1) | $ | ( | $ | ( | |||||||||||||
Impairment of assets(2) | ( | ||||||||||||||||
Amortization of fair value assets(3) | ( | ( | |||||||||||||||
Restructuring and transformation expenses(4) | ( | ( | |||||||||||||||
Refinancing related costs(5) | ( | ( | |||||||||||||||
Net non-routine income (expense)(6) | ( | ||||||||||||||||
Held for sale non-core European retail business(7) | ( | ||||||||||||||||
| ( | ( | ||||||||||||||||
| Operating profit (loss) | ( | ||||||||||||||||
| Other income (expense) | ( | ( | |||||||||||||||
| Profit (loss) before taxes | $ | $ | ( | ||||||||||||||
(1) Corporate charges not allocated to segments include headquarter-based costs associated primarily with human resources, finance, IT and legal that are not directly attributable to a particular segment and are separately assessed by the CODM for purposes of making decisions, assessing performance and allocating resources.
(2) Impairment of $(2.7 ) in the six months ended June 30, 2023 relates to leased European facilities closures.
(3) The amortization of purchase accounting intangible assets and the depreciation and amortization of assets resulting from Fresh Start accounting are excluded from the segment results used by the CODM to make decisions, allocate resources or assess performance.
(4) Refer to Note 10 for further information regarding restructurings. Consistent with the historical reportable segment structure, restructuring and transformation costs are not assigned to the segments, and are separately analyzed by the CODM.
(5) Refinancing related costs are fees earned by our advisors that have been accounted for as period expense.
(6) Net non-routine expense consists of items that the Company has determined are non-routine in nature and not allocated to the reportable operating segments as they are not included in the measure used by the CODM to make decisions, allocate resources and assess performance.
33
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
The following table presents information regarding the Company’s segment net sales by service and product solution:
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||
| Segments | |||||||||||||||||||||||||||||
| Banking | |||||||||||||||||||||||||||||
| Services | $ | $ | |||||||||||||||||||||||||||
| Products | |||||||||||||||||||||||||||||
| Total Banking | |||||||||||||||||||||||||||||
| Retail | |||||||||||||||||||||||||||||
| Services | |||||||||||||||||||||||||||||
| Products | |||||||||||||||||||||||||||||
| Total Retail | |||||||||||||||||||||||||||||
| Held for sale non-core European retail business | |||||||||||||||||||||||||||||
| Services | |||||||||||||||||||||||||||||
| Products | |||||||||||||||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||
| Segments | |||||||||||||||||
| Banking | |||||||||||||||||
| Services | $ | $ | |||||||||||||||
| Products | |||||||||||||||||
| Total Banking | |||||||||||||||||
| Retail | |||||||||||||||||
| Services | |||||||||||||||||
| Products | |||||||||||||||||
| Total Retail | |||||||||||||||||
| Held for sale non-core European retail business | |||||||||||||||||
| Services | |||||||||||||||||
| Products | |||||||||||||||||
| Total revenue | $ | $ | |||||||||||||||
34
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)
Note 20: Cloud Implementation
At June 30, 2024, the Company had a net book value of capitalized cloud implementation costs of $18.8 , which relates to a combination of the distribution subsidiary ERP and corporate tools to support business operations.
35
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that appear within this Quarterly Report on Form 10-Q.
Introduction
The Company automates, digitizes and transforms the way people bank and shop. The Company’s integrated solutions connect digital and physical channels conveniently, securely and efficiently for millions of consumers every day. As a partner to the majority of the world's top 100 financial institutions and top 25 global retailers, the Company's integrated solutions connect digital and physical channels conveniently, securely and efficiently for millions of consumers each day. The Company has a presence in more than 100 countries with approximately 21,000 employees worldwide.
Continuous Improvement
The Company seeks to continually enhance the consumer experience at bank and retail locations while streamlining cost structures and business processes for its customers through the smart integration of hardware, software and services. The Company partners with other leading technology companies and regularly refines its research and development (R&D) spend to support a better transaction experience. In addition, the Company is focused on consistently innovating its solutions while effectively improving its business processes and cost management efforts.
SERVICES AND PRODUCT SOLUTIONS
The Company offers a broad portfolio of solutions designed to automate, digitize and transform the way people bank and shop. As a result, the Company’s operating structure is focused on its two customer segments — Banking and Retail. Leveraging a broad portfolio of solutions, the Company offers customers the flexibility to purchase the combination of services and products embedded with software that drive the most value to their businesses.
The Company continues to drive higher availability of its devices deployed worldwide through continuously improved processes and the increasing customer adoption of DN AllConnectSM Data Engine (ACDE), which enables a more data-driven and predictive approach to services. As of June 30, 2024, more than 250,000 of the company’s Banking and Retail devices were connected to ACDE. An instrumental solution for Diebold Nixdorf and its customers, ACDE is a key enabler to providing a higher-performing self-service channel, delivering a better consumer experience and driving loyalty while optimizing operational efficiencies for both customers and the Company.
Banking
The Company provides integrated solutions for financial institutions of all sizes designed to help drive operational efficiencies, differentiate the consumer experience, grow revenue and manage risk.
Banking Services
Banking services represents the largest operational component of the Company and includes product-related services, implementation services and managed services. Product-related services incidents are managed through remote service capabilities or an on-site visit. The portfolio includes contracted maintenance, preventive maintenance, “on-demand” maintenance and total implementation services. Implementation services help our customers effectively respond to changing customer demands and includes scalable solutions based on globally standardized processes and tools, a single point of contact and reliable local expertise. Managed services and outsourcing consist of managing the end-to-end business processes and technology integration. Our integrated business solutions include self-service fleet management, branch life-cycle management and ATM as-a-service capabilities.
36
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
The Company's DN Vynamic software is the first end-to-end software portfolio in the banking marketplace designed to simplify and enhance the consumer experience. This platform is cloud-native, provides new capabilities and supports advanced transactions via open application program interface (API). In addition, the Company’s software suite simplifies operations by eliminating the traditional focus on internal silos and enabling inter-connected partnerships between financial institutions and payment providers. Through its open approach, DN Vynamic brings together legacy systems, enabling new levels of connectivity, integration, and interoperability. The Company’s software suite provides a shared analytic and transaction engine. The DN Vynamic platform can generate new insights to enhance operations; prioritizing consumer preferences rather than technology.
Banking Products
The banking portfolio of products consists of cash recyclers and dispensers, intelligent deposit terminals, teller automation, and kiosk technologies. As financial institutions seek to expand the self-service transaction set and reduce operating costs by shrinking their physical branch footprint, the Company offers the DN Series™ family of self-service solutions.
DN Series is the culmination of several years of investment in consumer research, design and engineering resources. Key benefits and features of DN Series include:
◦superior availability and performance;
◦next-generation cash recycling technology;
◦full integration with the DN Vynamic™ software suite;
◦a modular and upgradeable design, which enables customers to respond more quickly to changing customer demands;
◦higher note capacity and processing power;
◦improved security safeguards to protect customers against emerging physical, data and cyber threats;
◦physical footprint as much as 40% less vs. competing ATMs in certain models;
◦made of recycled and recyclable materials and is 25% lighter than most traditional ATMs, reducing CO2 emissions both in the manufacturing and transportation of components and terminals;
◦uses LED technology and highly efficient electrical systems, resulting in up to 50% power savings versus traditional ATMs; and
◦increased branding options for financial institutions.
Retail
The Company’s comprehensive portfolio of retail services and products improves the checkout process for retailers while enhancing shopping experiences for consumers.
Retail Services
Diebold Nixdorf AllConnect Services® for retailers include maintenance and availability services to continuously optimize the performance and total cost of ownership of retail touchpoints, such as checkout, self-service and mobile devices, as well as critical store infrastructure. The solutions portfolio includes: implementation services to expand, modernize or upgrade store concepts; maintenance services for on-site incident resolution and restoration of multivendor solutions; support services for on-demand service desk support; operations services for remote monitoring of stationary and mobile endpoint hardware; as well as application services for remote monitoring of multivendor software and planned software deployments and data moves. As a single point of contact, service personnel plan and supervise store openings, renewals and transformation projects, with attention to local details and customers’ global IT infrastructure.
The DN Vynamic software suite for retailers provides a comprehensive, modular and open solution ranging from the in-store check-out to solutions across multiple channels that improve end-to-end store processes and facilitate continuous consumer engagements in support of a digital ecosystem. This includes click & collect, reserve & collect, in-store ordering and return-to-store processes across the retailers' physical and digital sales channels. Operational data
37
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
from a number of sources, such as enterprise resource planning (ERP), POS, store systems and customer relationship management systems (CRM), may be integrated across all customer connection points to create seamless and differentiated consumer experiences.
Retail Products
The retail product portfolio includes self-checkout (SCO) products and ordering kiosks facilitate a seamless and efficient transaction experience. In 2023, the Company introduced the DN Series™ EASY ONE, the newest member of its DN Series EASY family of self-service solutions. The DN Series EASY ONE is a revolutionary checkout platform built to transform the assisted and self-service shopping experiences, improve store efficiency and reduce retailer total cost of ownership. Designed for retail environments where maximum flexibility is required, the DN Series EASY ONE can be configured for assisted, semi-assisted or full self-service checkout while offering tremendous options for peripherals and mounting. The DN Series EASY MAX Kiosk automates routine tasks and in-store transactions, offers order-taking abilities, particularly at quick service restaurants (QSRs) and fast casual restaurants and presents functionality that furthers store automation and digitalization. The retail product portfolio also includes modular and integrated, “all-in-one” point-of-sale (POS) and self-service terminals that meet changing consumer shopping journeys, as well as retailers’ and store staff’s automation requirements. Supplementing the POS system is a broad range of peripherals, including printers, scales and mobile scanners, as well as the cash management portfolio, which offers a wide range of banknote and coin processing systems. Additionally, our retail software solutions are inclusive of a cloud native software platform which is hardware agnostic and multi-vendor capable.
Business Drivers
The business drivers of the Company's future performance include, but are not limited to:
•demand for self-service and automation from Banking and Retail customers driven by the evolution of consumer behavior;
•demand for cost efficiencies and better usage of real estate for bank branches and retail stores as they transform their businesses to meet the needs of their customers while facing macro-economic challenges;
•demand for services on distributed IT assets such as ATMs, POS and SCO, including managed services and professional services;
•timing of product upgrades and/or replacement cycles for ATMs, POS and SCO;
•demand for software products and professional services;
•demand for security products and services for the financial, retail and commercial sectors; and
•demand for innovative technology in connection with the Company's strategy.
38
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Results of Operations
The following discussion of the Company’s financial condition and results of operations provides information that will assist in understanding the financial statements and the changes in certain key items in those financial statements. This discussion focuses on comparison of Successor results for the three and six month periods ended June 30, 2024 compared to the Predecessor results for the period ended June 30, 2023. The following discussion should be read in conjunction with the condensed consolidated financial statements and the accompanying notes that appear elsewhere in this Quarterly Report on Form 10-Q.
Net Sales
| Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | 2023 in | Percent of Total Net Sales for the Three months ended | Percent of Total Net Sales for the Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | Constant Currency(1) | % Change | % Change in CC (1) | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Services | $ | 401.5 | $ | 400.2 | $ | 396.9 | 0.3 | 1.2 | 42.7 | 43.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | 305.9 | 264.7 | 261.7 | 15.6 | 16.9 | 32.6 | 28.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Banking | 707.4 | 664.9 | 658.6 | 6.4 | 7.4 | 75.3 | 72.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Services | 139.2 | 137.8 | 136.7 | 1.0 | 1.8 | 14.8 | 14.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | 93.1 | 119.5 | 118.7 | (22.1) | (21.6) | 9.9 | 13.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Retail | 232.3 | 257.3 | 255.4 | (9.7) | (9.0) | 24.7 | 27.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Net Sales | $ | 939.7 | $ | 922.2 | $ | 914.0 | 1.9 | 2.8 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) The Company calculates constant currency by translating the prior-year period results at the current year exchange rate.
Three months ended June 30, 2024 (Successor) compared with the three months ended June 30, 2023 (Predecessor)
The increase in net sales of 1.9 percent was primarily due to price increases and mix of unit sales in the Banking segments, offset by declines in product sales in the Retail segment, particularly in 3rd party products and to lesser degree SCO. The increase in net sales was also partially attributable to increases in Services revenues in both segments.
39
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
| Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended | Six months ended | 2023 in | Percent of Total Net Sales for the Six months ended | Percent of Total Net Sales for the Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | Constant Currency(1) | % Change | % Change in CC (1) | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Services | $ | 788.1 | $ | 781.3 | $ | 781.9 | 0.9 | 0.8 | 42.9 | 43.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | 568.1 | 476.5 | 475.1 | 19.2 | 19.6 | 31.0 | 26.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Banking | 1,356.2 | 1,257.8 | 1,257.0 | 7.8 | 7.9 | 73.9 | 70.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Services | 277.4 | 273.1 | 274.1 | 1.6 | 1.2 | 15.1 | 15.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | 201.5 | 249.4 | 251.0 | (19.2) | (19.7) | 11.0 | 14.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Retail | 478.9 | 522.5 | 525.1 | (8.3) | (8.8) | 26.1 | 29.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Net Sales | $ | 1,835.1 | $ | 1,780.3 | $ | 1,782.1 | 3.1 | 3.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) The Company calculates constant currency by translating the prior-year period results at the current year exchange rate.
Six months ended June 30, 2024 (Successor) compared with the six months ended June 30, 2023 (Predecessor)
The increase in net sales of 3.1 percent was primarily due to price increases, mix of unit sales and a $9.7 PIS/COFIN tax recovery in Brazil in the Banking segments. This was offset by declines in product sales in the Retail segment, particularly in 3rd party products and to lesser degree SCO. The increase in net sales was also partially attributable to increases in Services revenues in both segments.
Gross Profit
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit - services | $ | 142.7 | $ | 149.9 | (4.8) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit - products | 100.5 | 75.3 | 33.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total gross profit | $ | 243.2 | $ | 225.2 | 8.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross margin - services | 26.4 | % | 27.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Gross margin - products | 25.2 | % | 19.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total gross margin | 25.9 | % | 24.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2024 (Successor) compared with the three months ended June 30, 2023 (Predecessor)
Service margins were adversely impacted in the Successor Period by higher investments in resources and service infrastructure to ensure customer satisfaction.
Product gross profit performance was driven by favorable geographic mix, improved pricing realization, logistical costs and normalization of certain raw material costs.
40
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||
| Gross profit - services | $ | 258.8 | $ | 303.3 | (14.7) | ||||||||||||||||||||||||
| Gross profit - products | 193.0 | 131.2 | 47.1 | ||||||||||||||||||||||||||
| Total gross profit | $ | 451.8 | $ | 434.5 | 4.0 | ||||||||||||||||||||||||
| Gross margin - services | 24.3 | % | 28.8 | % | |||||||||||||||||||||||||
| Gross margin - products | 25.1 | % | 18.1 | % | |||||||||||||||||||||||||
| Total gross margin | 24.6 | % | 24.4 | % | |||||||||||||||||||||||||
Six months ended June 30, 2024 (Successor) compared with the six months ended June 30, 2023 (Predecessor)
Service margins were adversely impacted in the Successor Period by higher investments in resources and service infrastructure to ensure customer satisfaction.
Product gross profit performance favorable geographic mix, improved pricing realization, logistical costs and normalization of certain raw material costs, as well as the PIS/COFIN tax recovery in Brazil.
Operating Expenses
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||||||||||||||||||||
| Selling and administrative expense | $ | 152.2 | $ | 201.0 | (24.3) | ||||||||||||||||||||||||||||||||||||||||||
| Research, development and engineering expense | 22.1 | 25.4 | (13.0) | ||||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on sale of assets, net | (1.8) | 0.9 | N/M | ||||||||||||||||||||||||||||||||||||||||||||
| Impairment of assets | — | 1.8 | (100.0) | ||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 172.5 | $ | 229.1 | (24.7) | ||||||||||||||||||||||||||||||||||||||||||
| Percent of net sales | 18.4 | % | 24.8 | % | |||||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2024 (Successor) compared with the three months ended June 30, 2023 (Predecessor)
Selling and administrative expenses in both periods were driven by spending related to restructuring and transformational initiatives. The decline in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 is a result of spend management initiatives.
Research and development costs continues to decrease as a result of ongoing costs savings initiatives as well as project prioritization and rationalization.
(Gain) loss on sale of assets, net in the Successor period is the result of lease terminations in Poland.
Impairment for certain facilities leases in the U.K. as a result of an initiative to streamline administrative office space usage was recognized in the Predecessor period.
41
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
| Successor | Predecessor | |||||||||||||||||||||||||
| Six months ended | Six months ended | |||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||
| Selling and administrative expense | $ | 313.8 | $ | 384.8 | (10.6) | |||||||||||||||||||||
| Research, development and engineering expense | 46.3 | 51.8 | N/M | |||||||||||||||||||||||
| Loss (gain) on sale of assets, net | (2.8) | 1.2 | (100.0) | |||||||||||||||||||||||
| Impairment of assets | — | 2.7 | (18.9) | |||||||||||||||||||||||
| Total operating expenses | $ | 357.3 | $ | 440.5 | (21.1) | |||||||||||||||||||||
| Percent of net sales | 19.5 | % | 24.7 | % | ||||||||||||||||||||||
Six months ended June 30, 2024 (Successor) compared with the six months ended June 30, 2023 (Predecessor)
Selling and administrative expenses in both periods were driven by spending related to restructuring and transformational initiatives. The decline in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 is a result of spend management initiatives.
Research and development costs continues to decrease as a result of ongoing costs savings initiatives as well as project prioritization and rationalization.
(Gain) loss on sale of assets, net in the Successor period is the result of sales of fleet vehicles in the US and lease terminations in Poland.
Impairment for certain facilities leases in the U.K. as a result of an initiative to streamline administrative office space usage was recognized in the Predecessor period.
Operating Profit (Loss)
| Successor | Predecessor | |||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 70.7 | $ | (3.9) | N/M | |||||||||||||||||||||||||||||||||||||||
| Operating margin | 7.5 | % | (0.4) | % | ||||||||||||||||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||
| Operating profit (loss) | $ | 94.5 | $ | (6.0) | N/M | ||||||||||||||||||
| Operating margin | 5.1 | % | (0.3) | % | |||||||||||||||||||
42
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Other Income (Expense)
| Successor | Predecessor | |||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 3.0 | $ | 3.3 | (9.1) | |||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (38.6) | (69.7) | 44.6 | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange gain (loss), net | 7.6 | 1.5 | N/M | |||||||||||||||||||||||||||||||||||||||||||||||
| Reorganization items, net | — | (636.2) | 100.0 | |||||||||||||||||||||||||||||||||||||||||||||||
| Miscellaneous gain, net | 2.6 | 3.5 | (25.7) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | $ | (25.4) | $ | (697.6) | 96.4 | |||||||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, 2024 (Successor) compared with the three months ended June 30, 2023 (Predecessor)
Interest income remained materially consistent when comparing the Successor period to the Predecessor period.
Interest expense decreased as a result of the 67.7 percent decrease in debt balance somewhat offset by increasing variable interest rates. Refer to Note 11 to our condensed consolidated financial statements for further detail.
Foreign exchange gain (loss), net includes realized gains and losses, primarily related to the favorable exposures in the Brazilian Real, Colombian Peso, and Euro during the second quarter of 2024.
Miscellaneous gain, net was primarily driven by recognition of non-service pension credits, the most significant of which are in Germany.
| Successor | Predecessor | |||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended | Six months ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 7.2 | $ | 5.0 | 44.0 | |||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (82.2) | (151.6) | 45.8 | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange gain (loss), net | 8.0 | (9.1) | 187.9 | |||||||||||||||||||||||||||||||||||||||||||||||
| Reorganization items, net | — | (636.2) | 100.0 | |||||||||||||||||||||||||||||||||||||||||||||||
| Miscellaneous gain, net | 3.6 | 6.1 | (41.0) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | $ | (63.4) | $ | (785.8) | 91.9 | |||||||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, 2024 (Successor) compared with the six months ended June 30, 2023 (Predecessor)
The increase in interest income in the Successor period compared to the Predecessor period was driven by 15.6 percent increase in investment balance as well as increases in variable rates. Refer to Note 7 to our Condensed Consolidated Financial Statements for further detail.
Interest expense decreased as a result of the 67.7 percent decrease in debt balance somewhat offset by increasing variable interest rates. Refer to Note 11 to our condensed consolidated financial statements for further detail.
Foreign exchange gain (loss), net includes realized gains and losses, primarily related to the favorable exposures in the Brazilian Real, Colombian Peso and Thai Baht and offset by Euro and Canadian dollar exposures, which were unfavorable during the six months ended June 30, 2024.
Miscellaneous gain, net was primarily driven by recognition of non-service pension credits, the most significant of which are in Germany.
43
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Net Income (Loss)
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 14.8 | $ | (677.3) | 102.2 | ||||||||||||||||||||||||||||||||||||||||||
| Percent of net sales | 1.6 | % | (73.4) | % | |||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 70.6 | % | 3.5 | % | |||||||||||||||||||||||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Six months ended | Six months ended | |||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||
| Net income (loss) | $ | 0.8 | $ | (788.8) | 100.0 | |||||||||||||||||||||
| Percent of net sales | — | % | (44.3) | % | ||||||||||||||||||||||
| Effective tax rate | 92.9 | % | 0.5 | % | ||||||||||||||||||||||
Changes in net (loss) income are a result of the fluctuations outlined in the previous sections and impacted by income tax expense. Refer to Note 5 to our condensed consolidated financial statements for additional information regarding tax expense.
44
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Segment Operating Profit Summary
The following tables represent information regarding the segment operating profit metrics, which exclude the impact of restructuring and transformation, non-routine charges, amortization of fair value assets and the held for sale non-core European retail business (sold in September 2023) because these items are not assigned to a segment in any of the Company's reporting metrics, including those used by the Chief Operating Decision Maker for assessing performance and allocating resources. Refer to Note 19 to our condensed consolidated financial statements for further details regarding the determination of reportable segments and the reconciliation between segment operating profit and consolidated operating profit.
| Successor | Predecessor | |||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | |||||||||||||||||||||||||||||||||||||||||||
| Banking: | June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 707.4 | $ | 664.9 | 6.4 | |||||||||||||||||||||||||||||||||||||||
| Segment operating profit | $ | 134.6 | $ | 102.4 | 31.4 | |||||||||||||||||||||||||||||||||||||||
| Segment operating profit margin | 19.0 | % | 15.4 | % | ||||||||||||||||||||||||||||||||||||||||
Banking net sales were favorable in the Successor Period due to price increases and geographical mix of sales. Operating profit and margin increased as a result of price and cost actions and spend management initiatives resulting in lower operating expenses.
| Successor | Predecessor | |||||||||||||||||||||||||||||||||||||||||||
| Six months ended | Six months ended | |||||||||||||||||||||||||||||||||||||||||||
| Banking: | June 30, 2024 | June 30, 2023 | % Change | |||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,356.2 | $ | 1,257.8 | 7.8 | |||||||||||||||||||||||||||||||||||||||
| Segment operating profit | $ | 250.9 | $ | 182.3 | 37.6 | |||||||||||||||||||||||||||||||||||||||
| Segment operating profit margin | 18.5 | % | 14.5 | % | ||||||||||||||||||||||||||||||||||||||||
Banking net sales were favorable in the Successor Period due to price increases, geographical mix of sales, as well as a PIS/COFIN tax recovery in Brazil. Operating profit and margin increased as a result of price and cost actions and spend management initiatives resulting in lower operating expenses.
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| Retail | June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 232.3 | $ | 252.4 | (8.0) | ||||||||||||||||||||||||||||||||||||||||||
| Segment operating profit | $ | 34.7 | $ | 32.1 | 8.1 | ||||||||||||||||||||||||||||||||||||||||||
| Segment operating profit margin | 14.9 | % | 12.7 | % | |||||||||||||||||||||||||||||||||||||||||||
Retail segment operating profit was driven by service volume and improvements in product margin from normalization of supply chain logistics and input costs.
45
Management's Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| Retail | June 30, 2024 | June 30, 2023 | % Change | ||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 478.9 | $ | 512.8 | (6.6) | ||||||||||||||||||||||||||||||||||||||||||
| Segment operating profit | $ | 70.4 | $ | 71.1 | (1.0) | ||||||||||||||||||||||||||||||||||||||||||
| Segment operating profit margin | 14.7 | % | 13.9 | % | |||||||||||||||||||||||||||||||||||||||||||
Retail segment operating profit was flat driven by services volume and normalization of supply chain logistics and input costs, offset by product volumes.
Liquidity and Capital Resources
On June 5, 2023, the Company entered into the DIP Credit Agreement, which provided the $1,250.0 DIP Facility. The proceeds of the DIP Facility were used, among others, to: (i) repay in full the term loan obligations, including a make-whole premium, under the Superpriority Facility and (ii) repay in full the ABL Facility and cash collateralize letters of credit thereunder. The payment for the Superpriorty Facility totaled $492.3 and was comprised of $401.3 of principal and interest, $20.0 of premium, and a make whole amount of $71.0. The payment for the ABL Facility, including the FILO Tranche, and the cash collateralization of letters of credit thereunder totaled $241.0 and was comprised of $211.2 of principal and interest and $29.8 of cash collateralized letters of credit.
On the Effective Date, the Company’s existing the DIP Facility was terminated and the loans outstanding under the DIP Facility were converted into loans outstanding under the Exit Facility (the Conversion), and the liens and guarantees, including all guarantees and liens granted by certain subsidiaries of the Company that are organized in the United States and in certain foreign jurisdictions, granted under the DIP Facility were automatically terminated and released.
In connection with the Conversion, the entire $1,250.0 under the Exit Facility was deemed drawn on the Effective Date.
The Company may repay the loans under the Exit Facility at any time; provided that certain repayments of the loans made on or prior to February 11, 2025 with the proceeds of certain types of indebtedness must be accompanied by a premium of either 1.00% or 5.00% of the principal amount of the loans repaid. The amount of the premium is based on the type of indebtedness incurred to repay the loans. Amounts borrowed and repaid under the Exit Facility may not be reborrowed.
The Exit Facility will mature on August 11, 2028.
The obligations of the Company under the Exit Facility are guaranteed by certain subsidiaries of the Company that are organized in the United States (the Guarantors). The Exit Facility and related guarantees are secured by perfected senior security interests and liens on substantially all assets of the Company and each Guarantor.
Loans under the Exit Facility bear interest at an adjusted secured overnight financing rate with a one-month tenor rate plus 7.50% per annum or an adjusted base rate plus 6.50% per annum.
On February 13, 2024, the Company, as borrower, entered into a credit agreement (the Revolving Credit Agreement) with certain financial institutions party thereto, as lenders, and PNC Bank, National Association, as administrative agent and collateral agent. The Revolving Credit Agreement provides for a superior-priority senior secured revolving credit facility (the Revolving Credit Facility) in an aggregate principal amount of $200.0, which includes a $50.0 letter of credit sub-limit and a $20.0 swing loan sub-limit. Borrowings under the Revolving Credit Facility may be used by the Company for (i) the repayment of outstanding principal under the senior secured term loans under the Exit Credit Agreement and (ii) general corporate purposes and working capital. Loans under the Revolving Credit Agreement bear interest at an adjusted secured overnight financing rate plus 4.00 percent per annum or an adjusted base rate plus 3.00 percent per annum.
Concurrently with the closing of the Revolving Credit Facility, the Company prepaid $200.0 of outstanding principal of its senior secured term loans under the Exit Credit Agreement.
The Revolving Credit Facility will mature on February 13, 2027.
46
Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
As of June 30, 2024, $39.3 was drawn under the Revolving Credit Facility.
Liquidity provided thereunder is expected to sustain the Company for at least the next twelve months.
The Company's total cash and cash availability was as follows:
| Successor | Successor | ||||||||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||||||||
| Cash and cash equivalents | $ | 276.7 | $ | 550.2 | |||||||||||||
| Additional cash availability from: | |||||||||||||||||
| Short-term investments | 8.7 | 13.4 | |||||||||||||||
| Total cash and cash availability | $ | 285.4 | $ | 563.6 | |||||||||||||
The following table summarizes the results of the Company's condensed consolidated statement of cash flows:
| Successor | Predecessor | |||||||||||||
| Six months ended | Six months ended | |||||||||||||
| Summary of cash flows: | June 30, 2024 | June 30, 2023 | ||||||||||||
| Net cash used by operating activities | $ | (31.5) | $ | (337.6) | ||||||||||
| Net cash used by investing activities | (15.8) | (6.6) | ||||||||||||
| Net cash (used), provided by financing activities | (169.9) | 563.4 | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (15.0) | 0.9 | ||||||||||||
| Change in cash, cash equivalents and restricted cash | $ | (232.2) | $ | 220.1 | ||||||||||
Operating Activities
Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments impact reported cash flows.
•Cash flows from operating activities during the Successor Period ended June 30, 2024 were driven by cash provided by trade receivables and cash uses for inventories, accounts payable and deferred revenue. The key drivers of these cash flows are timing of sales, collections, and vendor payments which can fluctuate significantly period to period.
•Cash flows from operating activities during the Predecessor Period ended June 30, 2023 were driven by uses for inventory and accounts payable primarily due to normalize supplier payments which is expected to revert to our historic level.
Investing Activities
Cash flows from investing activities during the Successor and Predecessor Periods, respectively, approximate normal operations of the Company and reflect expected trend. The increase in purchases of investments in the Successor period was due to excess cash from the receipt of a large customer payment during the quarter.
Financing Activities
Cash flows from financing activities during the Successor Period include a $200.0 borrowing against the Revolving Credit Facility which was used to pay down the Exit Facility, and a $160.7 repayment of the Revolving Credit Facility (refer to Note 11 of the condensed consolidated financial statements).
47
Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Contractual and Other Material Cash Obligations
The Company enters into certain purchase commitments due within one year for materials through contract manufacturing agreements for a total negotiated price. At June 30, 2024, the Company had minimal purchase commitments due within one year for materials through contract manufacturing agreements at negotiated prices.
Except for the repayment of the Exit Facility and the incurrence of debt under the Revolving Credit Facility, contractual and other cash obligations with initial and remaining terms in excess of one year and contingent liabilities remained generally unchanged at June 30, 2024 compared to December 31, 2023.
Off-Balance Sheet Arrangements
The Company enters into various arrangements not recognized in the consolidated balance sheets that have or could have an effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources. The principal off-balance sheet arrangements that the Company enters into are guarantees and sales of finance lease receivables. The Company provides its global operations guarantees and standby letters of credit through various financial institutions to suppliers, customers, regulatory agencies and insurance providers. If the Company is not able to comply with its contractual obligations, the suppliers, regulatory agencies and insurance providers may draw on the pertinent bank. The Company has sold finance lease receivables to financial institutions while continuing to service the receivables. The Company records these sales by removing finance lease receivables from the consolidated balance sheets and recording gains and losses in the consolidated statement of operations (refer to Note 18 of the condensed consolidated financial statements).
Critical Accounting Policies and Estimates
Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s condensed consolidated financial statements. The condensed consolidated financial statements of the Company are prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. Such estimates include revenue recognition, the valuation of trade receivables, inventories, goodwill, intangible assets, other long-lived assets, legal contingencies, and assumptions used in the calculation of income taxes, pension and post-retirement benefits and customer incentives, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. Management monitors the economic conditions and other factors and will adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
All other material critical accounting policies and estimates are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Forward-Looking Statement Disclosure
This Quarterly Report on Form 10-Q and the exhibits hereto may contain statements that are not historical information and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. These forward-looking statements include, but are not limited to, projections, statements regarding the Company's expected future performance (including expected results of operations and financial guidance), future financial condition, anticipated operating results, strategy plans, future liquidity and financial position.
Statements can generally be identified as forward looking because they include words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,” “potential,” “target,” “predict,” “project,” “seek,” and variations thereof or “could,” “should” or words of similar meaning. Statements that describe the Company's future plans, objectives or goals are also forward-looking statements, which reflect the current views of the Company with respect to future events and are subject to
48
Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
assumptions, risks and uncertainties that could cause actual results to differ materially. Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, the economy, its knowledge of its business, and key performance indicators that impact the Company, these forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in or implied by the forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
The factors that may affect the Company's results include, among others:
•the Company’s recent emergence from the Chapter 11 Cases and the Dutch Scheme Proceedings, which could adversely affect our business and relationships;
•the significant variance of our actual financial results from the projections that were filed with the U.S. Bankruptcy Court and Dutch Court;
•the overall impact of the global supply chain complexities on the Company and its business, including delays in sourcing key components as well as longer transport times, especially for container ships and U.S. trucking, given the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;
•the Company’s ability to generate sufficient cash or have sufficient access to capital resources to service its debt, which, if unsuccessful or insufficient, could force the Company to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance its indebtedness;
•the Company’s ability to comply with the covenants contained in the agreements governing its debt;
•the Company’s ability to successfully convert its backlog into sales, including our ability to overcome supply chain and liquidity challenges;
•the ultimate impact of infectious disease outbreaks and other public health emergencies, including further adverse effects to the Company’s supply chain, and maintenance of increased order backlog;
•the Company’s ability to successfully meet its cost-reduction goals and continue to achieve benefits from its cost-reduction initiatives and other strategic initiatives;
•the success of the Company’s new products, including its DN Series line and EASY family of retail checkout solutions, and electronic vehicle charging service business;
•the impact of a cybersecurity incident or operational failure on the Company’s business;
•the Company’s ability to attract, retain and motivate key employees;
•the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;
•changes in the Company’s intention to further repatriate cash and cash equivalents and short-term investments residing in international tax jurisdictions, which could negatively impact foreign and domestic taxes;
•the Company’s success in divesting, reorganizing or exiting non-core and/or non-accretive businesses and its ability to successfully manage acquisitions, divestitures, and alliances;
•the ultimate outcome of the appraisal proceedings initiated in connection with the implementation of the Domination and Profit Loss Transfer Agreement with the former Diebold Nixdorf AG (which was dismissed in the Company’s favor at the lower court level in 2022) and the merger/squeeze-out (which was dismissed in the Company's favor in 2023);
•the impact of market and economic conditions, including the bankruptcies, restructuring or consolidations of financial institutions, which could reduce the Company’s customer base and/or adversely affect its customers' ability to make capital expenditures, as well as adversely impact the availability and cost of credit;
•the impact of competitive pressures, including pricing pressures and technological developments;
•risks related to our international operations, including geopolitical instability and wars;
•changes in political, economic or other factors such as currency exchange rates, inflation rates (including the impact of possible currency devaluations in countries experiencing high inflation rates), recessionary or expansive trends, disruption in energy supply, taxes and regulations and laws affecting the worldwide business in each of the Company’s operations;
•the Company’s ability to maintain effective internal controls;
•unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments;
•the effect of changes in law and regulations or the manner of enforcement in the U.S. and internationally and the Company’s ability to comply with applicable laws and regulations; and
•other factors included in the Company’s filings with the Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 8, 2024, and this Quarterly Report on Form 10-Q.
49
Discussion and Analysis of
Financial Condition and Results of Operations as of June 30, 2024
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of market risk exposures. There have been no other material changes in this information since December 31, 2023.
Item 4: Controls and Procedures
This Quarterly Report on Form 10-Q includes the certifications of the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) required by Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.
Based on the performance of procedures by management, designed to ensure the reliability of financial reporting, management believes that the unaudited condensed consolidated financial statements fairly present, in all material respects, the Company's financial position, results of operations and cash flows as of the dates, and for the periods presented.
Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms and that such information is accumulated and communicated to management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosures.
In connection with the preparation of this Quarterly Report on Form 10-Q, the Company's management, under the supervision and with the participation of the CEO and CFO, conducted an evaluation of disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO have concluded that such disclosure controls and procedures were effective as of June 30, 2024.
Change in Internal Controls
During the quarter ended June 30, 2024, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
50
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
(in millions, except share and per share amounts)
Part II – Other Information
Item 1: Legal Proceedings
At June 30, 2024, the Company was a party to several lawsuits that were incurred in the normal course of business, which neither individually nor in the aggregate are considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the Company's condensed consolidated financial statements would not be materially affected by the outcome of these legal proceedings, commitments or asserted claims.
For more information regarding legal proceedings, please refer to Part I, Item 3 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and to Legal Contingencies in Note 16 of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Other than as described in Legal Contingencies in Note 16 of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material developments with respect to the legal proceedings reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Item 1A: Risk Factors
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There has been no material change to this information since December 31, 2023.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3: Defaults Upon Senior Securities
None.
Item 4: Mine Safety Disclosures
Not applicable.
Item 5: Other Information
Adoption, Modification or Termination of Trading Plans
During the quarter ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted terminated
51
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2024
(in millions, except share and per share amounts)
Item 6: Exhibits
| 101.INS* | Inline XBRL Instance Document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document included in Exhibit 101) | |||||||
*Filed herewith
**Furnished herewith
52
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DIEBOLD NIXDORF, INCORPORATED | ||||||||||||||
| Date: | August 07, 2024 | /s/ Octavio Marquez | ||||||||||||
| By: | Octavio Marquez | |||||||||||||
| President and Chief Executive Officer | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
53
EXHIBIT 31.1
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Octavio Marquez, certify that:
1)I have reviewed this quarterly report on Form 10-Q of Diebold Nixdorf, Incorporated;
2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | August 07, 2024 | /s/ Octavio Marquez | |||||||||
| Octavio Marquez | |||||||||||
| President and Chief Executive Officer (Principal Executive Officer) | |||||||||||
EXHIBIT 31.2
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas S. Timko, certify that:
1)I have reviewed this quarterly report on Form 10-Q of Diebold Nixdorf, Incorporated;
2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | August 07, 2024 | /s/ Thomas S. Timko | |||||||||
Thomas S. Timko | |||||||||||
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||||||
EXHIBIT 32.1
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350
In connection with the Quarterly Report on Form 10-Q of Diebold Nixdorf, Incorporated (Company) for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (Report), I, Octavio Marquez, President and Chief Executive Officer, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
1The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
| Date: | August 07, 2024 | /s/ Octavio Marquez | ||||||||||||
| Octavio Marquez | ||||||||||||||
| President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
EXHIBIT 32.2
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350
In connection with the Quarterly Report on Form 10-Q of Diebold Nixdorf, Incorporated (Company) for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (Report), I, Thomas S. Timko, Executive Vice President and Chief Financial Officer, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
1The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
| Date: | August 07, 2024 | /s/ Thomas S. Timko | ||||||||||||
Thomas S. Timko | ||||||||||||||
| Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||||||||