DBD 8-K
DIEBOLD NIXDORF, Inc (DBD)
8-K
2022-11-08
For: 2022-11-08
View Original
Added on
April 08, 2026
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 8, 2022
(Exact name of registrant as specified in its charter)
_________________________________________________
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code: (330 ) 490-4000
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
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Item 2.02
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Results of Operations and Financial Condition |
On November 08, 2022, Diebold Nixdorf, Incorporated (the “Company”) issued a news
release announcing its results for the third quarter of 2022 (the "News Release"). The News
Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The Company also issued a shareholder letter (the "Letter") which includes financial results. The Company intends to post a copy of the Letter to the investor
relations page of its corporate website. A copy of the Letter is furnished as Exhibit 99.2 to this current report.
The information in this Item 2.02 shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
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Item 9.01
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Financial Statements and Exhibits |
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(d) Exhibits.
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Exhibit
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Number
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Description
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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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
hereunto duly authorized.
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Diebold Nixdorf, Incorporated
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Date:
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November 08, 2022
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By:
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/s/ Jeffrey Rutherford
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Name:
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Jeffrey Rutherford
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Title:
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Executive Vice President and Chief Financial
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Exhibit 99.1
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press release
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Media contact:
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Investor contact:
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Mike Jacobsen, APR
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Christine Marchuska, CAIA
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+1 330 490 4498
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+1 607 206 9212
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FOR IMMEDIATE RELEASE:
November 8, 2022
Diebold Nixdorf Reports 2022 Third Quarter Financial Results
Please visit http://www.dieboldnixdorf.com/earnings for a comprehensive shareholder letter and additional content
HUDSON, Ohio - Diebold Nixdorf (NYSE:DBD) today reported its third quarter 2022 financial results.
Key Highlights
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•
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Stable demand, evidenced by product backlog of ~$1.4 billion at the end of Q3
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New operating model well underway, having executed and identified ~$170 million of savings, and modeling an additional ~$25 million of savings from the company's
previously disclosed cost savings plan
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Entered into a Transaction Support Agreement (TSA) with lenders to refinance debt
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Octavio Marquez, Diebold Nixdorf president and chief executive officer, said: "Since March of this year, our fundamental objectives have remained focused on taking important steps to
strengthen our business and competitive position. In the third quarter, while the macroeconomic environment presented widely discussed challenges, the combination of stable demand, industry-leading solutions, progress with the TSA, and our ongoing
cost reductions and operational improvements contributed to Diebold Nixdorf's ongoing confidence in our strategic operating model. We have solid financial fundamentals and have consistently seen steady demand for our product and solution set."
Business Highlights
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•
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Banking
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◦
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Continued shift from legacy systems to DN Series™ ATMs as the latter, specifically cash recyclers, composed the vast majority of total new Banking orders in North
America in Q3
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Secured an ~$8 million deal with Banco Azteca, replacing its existing ATM fleet with DN Series plus Vynamic suite
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Won an ~$3 million deal with Kapital Bank in Uzbekistan - expanding its ATM network with DN Series to fully meet its vision to offer a large range of innovative
services and banking products
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•
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Retail
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◦
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Self-checkout (SCO) products continue to drive our Retail business with consistent demand for these solutions, specifically in Europe
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◦
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Secured an ~$10 million deal with one of Europe’s leading fuel and convenience retailers for Vynamic FCx platform, Vynamic software and services for
implementation and maintenance for more than 1,300 sites in Spain and Portugal during 2023 and 2024
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◦
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Won an ~$5 million deal over several entities which are part of a large European conglomerate for SCO, ePOS replacement and additional DN retail solutions
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TSA update
As previously announced, last month the company entered into a TSA with the holders of over a majority of our term loans and each series of our outstanding secured and
unsecured notes. Following the initial execution of the TSA, additional eligible creditors have executed joinders thereto, and as a result, the percentage of the company’s term loans held by holders who are party to the TSA has increased from
approximately 79% to approximately 97% today, and the percentage of the company’s 2024 senior notes that are held by holders who are party to the TSA has increased from approximately 59% to approximately 83% today.
Page 1 of 15
Jeffrey Rutherford, Diebold Nixdorf executive vice president and chief financial officer,
said: "Overall supply chain material availability and logistics are improving; however, our models assumed a quicker normalization of supplier relationships than
we are currently experiencing. However, it is also worth noting that this is more of a short-term challenge as we seek to normalize our working capital management, including with respect to our supplier relationships. In Q4, the conversion of backlog
to revenue recognition will continue to be challenging and we could see as much as 15% risk of unit-to-revenue conversion and its corresponding attached services and software. Note a 15% variance in units would equate to approximately $100 million in
revenue and approximately $30 million in adjusted EBITDA, depending on geography, customer and product mix. We expect that units that are not revenue recognized in Q4 will shift to 2023. Please see our Shareholder Letter for our Operating Forecast
and Strategic Operating Model."
Overview Presentation and Conference Call
More information on Diebold Nixdorf's quarterly earnings is available on its Investor Relations website. Octavio Marquez, president and chief executive officer, and Jeffrey
Rutherford, executive vice president and chief financial officer, will discuss the company's financial performance during a conference call today at 8:30 a.m. (ET). The call / webcast is available at http://www.dieboldnixdorf.com/earnings. The replay
of the webcast can be accessed on the website for up to three months after the call.
About Diebold Nixdorf
Diebold Nixdorf, Incorporated (NYSE: DBD) automates, digitizes and transforms the way people bank and shop. As a partner to the majority of the world’s top 100 financial
institutions and top 25 global retailers, our 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 22,000 employees worldwide. Visit www.DieboldNixdorf.com for more information.
Twitter: @DieboldNixdorf
LinkedIn: www.linkedin.com/company/diebold
Facebook: www.facebook.com/DieboldNixdorf
YouTube: www.youtube.com/dieboldnixdorf
Disclaimer
This press release does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any securities referred to herein. Any solicitation or
offer will only be made pursuant to an offering memorandum and disclosure statement and only to such persons and in such jurisdictions as is permitted under applicable law.
Page 2 of 15
Non-GAAP Financial Measures and Other Information
To supplement our condensed consolidated financial statements presented in accordance with GAAP, the company considers certain financial measures that are not prepared in
accordance with GAAP, including Non-GAAP results, adjusted diluted earnings per share, free cash flow (use) and unlevered free cash flow (use), net debt, EBITDA, adjusted EBITDA and constant currency results. The company calculates constant currency
by translating the prior year results at current year exchange rates. The company uses these Non-GAAP financial measures, in addition to GAAP financial measures, to evaluate our operating and financial performance and to compare such performance to
that of prior periods and to the performance of our competitors. Also, the company uses these Non-GAAP financial measures in making operational and financial decisions and in establishing operational goals. The company also believes providing these
Non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors evaluate our operating and financial performance and trends in our business, consistent with how management evaluates such performance and trends.
The company also believes these Non-GAAP financial measures may be useful to investors in comparing its performance to the performance of other companies, although its Non-GAAP financial measures are specific to the company and the Non-GAAP financial
measures of other companies may not be calculated in the same manner. We provide EBITDA and Adjusted EBITDA because we believe that investors and securities analysts will find EBITDA and adjusted EBITDA to be useful measures for evaluating our
operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditure and working capital requirements.
We consider free cash flow (use) to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the purchase of property and equipment and capitalized software
development, changes in cash of assets held for sale and the use of cash for M&A and the legal settlement for impaired cloud implementation costs, and excluding the use/proceeds of cash for the settlement of foreign exchange derivative
instruments, can be used for debt servicing, strategic opportunities, including investing in the business, making strategic acquisitions, strengthening the balance sheet and paying dividends. Unlevered free cash flow (use) provides incremental
visibility into the company's liquidity by excluding cash used for interest payments from free cash flow (use). For more information, please refer to the section, "Notes for Non-GAAP Measures."
Forward-Looking Statements
This press release contains 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, potential impact of the ongoing coronavirus (COVID-19) pandemic, 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 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.
Page 3 of 15
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:
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our ability to successfully complete the transactions contemplated by the TSA, including the ability to negotiate and execute definitive documentation, the
receipt of required consents to any or all of such transactions, satisfaction of any conditions in any such documentation and the availability of alternative transactions;
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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;
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our ability to successfully convert our backlog into sales, including our ability to overcome supply chain and liquidity challenges;
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the ultimate impact of the ongoing COVID-19 pandemic and other public health emergencies, including further adverse effects to the company’s supply chain,
maintenance of increased order backlog, and the effects of any COVID-19 related cancellations;
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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, such as the current $150m+ cost savings plan;
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the success of the company’s new products, including its DN Series line and EASY family of retail checkout solutions, and EV charging service business;
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the impact of a cybersecurity breach or operational failure on the company's business;
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the company's ability to generate sufficient cash to service its debt or to comply with the covenants contained in the agreements governing its debt and to
successfully refinance its debt;
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the company’s ability to attract, retain and motivate key employees;
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the company’s reliance on suppliers, subcontractors and availability of raw materials and other components;
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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;
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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;
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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 May 2022) and the merger/squeeze-out;
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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;
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the impact of competitive pressures, including pricing pressures and technological developments;
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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, hostilities or conflicts (including the conflict between Russia and Ukraine), disruption in energy supply, taxes and regulations and laws affecting the
worldwide business in each of the company's operations;
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the company's ability to maintain effective internal controls;
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unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments;
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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 government
regulations.
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and other factors included in the company’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2021, its Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2022, and in other documents the company files with the SEC.
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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.
Page 4 of 15
Summary Financial Results
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Three months ended
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September 30, 2022
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September 30, 2021
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% Change
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($ in millions, except per share data)
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GAAP
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Non-GAAP1
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GAAP
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Non-GAAP1
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GAAP
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Non-GAAP
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||||||||||||||||||
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Total net sales
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$
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810.4
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$
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805.3
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$
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958.2
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$
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958.2
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(15.4
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)
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(16.0
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Gross profit
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$
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193.8
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$
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199.3
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$
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260.1
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$
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262.9
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(25.5
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(24.2
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Operating profit
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$
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5.5
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$
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60.0
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$
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38.7
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$
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81.3
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(85.8
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)
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(26.2
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)
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Operating margin
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0.7
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%
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7.5
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%
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4.0
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%
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8.5
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%
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(330)
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bps |
(100)
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bps |
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Net income (loss)
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$
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(50.5
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)
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$
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(9.7
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$
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(2.0
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$
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26.9
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N/M
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N/M
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Diluted earnings (loss) per share2
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$
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(0.63
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$
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(0.12
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$
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(0.03
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$
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0.34
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N/M
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N/M
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Adjusted EBITDA
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$
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75.6
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$
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102.7
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(26.4
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Total net sales decreased 15.4%, or $147.8 million YoY, primarily due to the foreign currency translation impact of the declining value of the Euro in comparison to the U.S. dollar and longer lead times resulting from global supply chain and logistics issues.
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Non-GAAP operating profit declined 26.2% to $60.0 million and Non-GAAP operating margin decreased 100 bps to 7.5%; due
primarily to revenue delays and net inflationary costs.
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Q3 2022
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Q3 2021
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YTD
9/30/2022
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YTD
9/30/2021
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TTM
9/30/2022
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Net cash (used) provided by operating activities (GAAP measure)
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$
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(176.2
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$
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(147.9
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$
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(482.8
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)
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$
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(291.6
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)
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$
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(67.9
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)
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Excluding the impact of changes in cash of assets held
for sale and the use of cash for M&A activities
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3.4
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5.6
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6.8
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13.2
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14.6
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Excluding the use of cash for the settlement of foreign
exchange derivative instruments
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(0.1
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0.1
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0.6
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4.6
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0.5
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Excluding the use of cash for the legal settlement
related to the impaired cloud-based ERP
implementation fees
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5.6
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—
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10.6
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—
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10.6
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Capital expenditures
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(5.7
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(4.9
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(13.8
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(11.1
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(19.6
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Capitalized software development
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(6.6
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(10.4
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(24.0
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(21.6
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(33.5
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)
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Free cash flow (use) (Non-GAAP measure)
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$
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(179.6
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)
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$
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(157.5
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)
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$
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(502.6
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)
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$
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(306.5
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)
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$
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(95.3
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)
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Add back: cash interest
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$
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63.9
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$
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60.7
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$
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150.4
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$
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147.7
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$
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177.8
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Unlevered free cash flow (use)
(Non-GAAP measure)
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$
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(115.7
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)
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$
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(96.8
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)
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$
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(352.2
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)
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$
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(158.8
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)
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$
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82.5
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||||||
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•
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Free cash use of $179.6 million in the quarter was unfavorable by $22.1 million versus the prior year quarter reflecting reduced profitability and timing of disbursements, partially offset by improved collections.
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1 - See note 1 below for GAAP to Non-GAAP adjustments to net sales, gross profit and operating expenses, which include selling and administrative expense,
research, development and engineering expense, gain/loss on sale of assets, net, and impairment of assets; note 2 for adjusted EBITDA; and note 3 for adjusted net income/loss and adjusted EPS.
2 - Represents Diluted earnings (loss) per share attributable to Diebold Nixdorf, Incorporated.
Page 5 of 15
Financial Results of Operations and Segments
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GAAP Revenue Summary by Reportable Segment & Business Line - Unaudited
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||||||||||||||||||||
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Three months ended September 30, 2022 compared to three months ended September 30, 2021
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Three months ended
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||||||||||||||||||||
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September 30
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($ in millions)
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2022
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2021
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2021 in CC3
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% Change
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% Change in CC
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|||||||||||||||
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Banking
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||||||||||||||||||||
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Services
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$
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379.9
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$
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414.6
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$
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392.3
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(8.4
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)%
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(3.2
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)%
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||||||||||
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Products
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200.4
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255.5
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236.9
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(21.6
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)%
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(15.4
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)%
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|||||||||||||
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Total Banking Revenue
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$
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580.3
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$
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670.1
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$
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629.2
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(13.4
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)%
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(7.8
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)%
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||||||||||
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ATM Units Sold
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11,823
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14,283
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(17.2
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)%
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||||||||||||||||
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Retail
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||||||||||||||||||||
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Services
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$
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134.4
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$
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147.1
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$
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128.4
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(8.6
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)%
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4.7
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%
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||||||||||
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Products
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95.7
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141.0
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124.3
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(32.1
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)%
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(23.0
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)%
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|||||||||||||
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Total Retail Revenue
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$
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230.1
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$
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288.1
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$
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252.7
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(20.1
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)%
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(8.9
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)%
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||||||||||
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SCO Units Sold
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2,632
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4,368
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(39.7
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)%
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||||||||||||||||
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ePOS Units Sold
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32,060
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30,591
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4.8
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%
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||||||||||||||||
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Total by Business Line
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||||||||||||||||||||
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Services
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$
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514.3
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$
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561.7
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$
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520.7
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(8.4
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)%
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(1.2
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)%
|
||||||||||
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Products
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296.1
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396.5
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361.2
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(25.3
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)%
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(18.0
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)%
|
|||||||||||||
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Total Revenue
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$
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810.4
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$
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958.2
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$
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881.9
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(15.4
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)%
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(8.1
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)%
|
||||||||||
|
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
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||||||||||||||||||||
|
Nine months ended
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||||||||||||||||||||
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September 30
|
||||||||||||||||||||
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($ in millions)
|
2022
|
2021
|
2021 in CC3
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% Change
|
% Change in CC
|
|||||||||||||||
|
Banking
|
||||||||||||||||||||
|
Services
|
$
|
1,152.9
|
$
|
1,255.9
|
$
|
1,207.5
|
(8.2
|
)%
|
(4.5
|
)%
|
||||||||||
|
Products
|
580.4
|
692.2
|
652.9
|
(16.2
|
)%
|
(11.1
|
)%
|
|||||||||||||
|
Total Banking Revenue
|
$
|
1,733.3
|
$
|
1,948.1
|
$
|
1,860.4
|
(11.0
|
)%
|
(6.8
|
)%
|
||||||||||
|
ATM Units Sold
|
31,715
|
36,819
|
(13.9
|
)%
|
||||||||||||||||
|
Retail
|
||||||||||||||||||||
|
Services
|
$
|
413.0
|
$
|
466.1
|
$
|
422.2
|
(11.4
|
)%
|
(2.2
|
)%
|
||||||||||
|
Products
|
345.6
|
431.4
|
393.6
|
(19.9
|
)%
|
(12.2
|
)%
|
|||||||||||||
|
Total Retail Revenue
|
$
|
758.6
|
$
|
897.5
|
$
|
815.8
|
(15.5
|
)%
|
(7.0
|
)%
|
||||||||||
|
SCO Units Sold
|
15,272
|
15,288
|
(0.1
|
)%
|
||||||||||||||||
|
ePOS Units Sold
|
92,501
|
96,924
|
(4.6
|
)%
|
||||||||||||||||
|
Total by Business Line
|
||||||||||||||||||||
|
Services
|
$
|
1,565.9
|
$
|
1,722.0
|
$
|
1,629.7
|
(9.1
|
)%
|
(3.9
|
)%
|
||||||||||
|
Products
|
926.0
|
1,123.6
|
1,046.5
|
(17.6
|
)%
|
(11.5
|
)%
|
|||||||||||||
|
Total Revenue
|
$
|
2,491.9
|
$
|
2,845.6
|
$
|
2,676.2
|
(12.4
|
)%
|
(6.9
|
) %
|
||||||||||
|
3 - The company calculates constant currency by translating the prior-year period results at current year exchange rates.
|
||||||||||||||||||||
Page 6 of 15
|
GAAP and Non-GAAP Profit/Loss Summary - Unaudited
|
||||||||||||||||||||||||
|
Three months ended September 30, 2022 compared to three months ended September 30, 2021
|
||||||||||||||||||||||||
|
Three months ended
|
||||||||||||||||||||||||
|
September 30, 2022
|
September 30, 2021
|
Change
|
||||||||||||||||||||||
|
($ in millions)
|
GAAP
|
Non-GAAP4,5
|
GAAP
|
Non-GAAP4,5
|
GAAP
|
Non-GAAP
|
||||||||||||||||||
|
Services
|
$
|
514.3
|
$
|
510.3
|
$
|
561.7
|
$
|
561.7
|
$
|
(47.4
|
)
|
$
|
(51.4
|
)
|
||||||||||
|
Products
|
296.1
|
295.0
|
396.5
|
396.5
|
(100.4
|
)
|
(101.5
|
)
|
||||||||||||||||
|
Total net sales
|
$
|
810.4
|
$
|
805.3
|
$
|
958.2
|
$
|
958.2
|
$
|
(147.8
|
)
|
$
|
(152.9
|
)
|
||||||||||
|
Services
|
$
|
157.6
|
$
|
159.6
|
$
|
179.2
|
$
|
181.9
|
$
|
(21.6
|
)
|
$
|
(22.3
|
)
|
||||||||||
|
Products
|
36.2
|
39.7
|
80.9
|
81.0
|
(44.7
|
)
|
(41.3
|
)
|
||||||||||||||||
|
Total gross profit
|
$
|
193.8
|
$
|
199.3
|
$
|
260.1
|
$
|
262.9
|
$
|
(66.3
|
)
|
$
|
(63.6
|
)
|
||||||||||
|
Services
|
30.6
|
%
|
31.3
|
%
|
31.9
|
%
|
32.4
|
%
|
(130)bps
|
(110)bps
|
||||||||||||||
|
Products
|
12.2
|
%
|
13.5
|
%
|
20.4
|
%
|
20.4
|
%
|
(820)bps
|
(690) bps
|
||||||||||||||
|
Total gross margin
|
23.9
|
%
|
24.7
|
%
|
27.1
|
%
|
27.4
|
%
|
(320)bps
|
(270) bps
|
||||||||||||||
|
Operating expenses
|
$
|
188.3
|
$
|
139.3
|
$
|
221.4
|
$
|
181.6
|
$
|
(33.1
|
)
|
$
|
(42.3
|
)
|
||||||||||
|
Operating profit (loss)
|
$
|
5.5
|
$
|
60.0
|
$
|
38.7
|
$
|
81.3
|
$
|
(33.2
|
)
|
$
|
(21.3
|
)
|
||||||||||
|
Operating margin
|
0.7
|
%
|
7.5
|
%
|
4.0
|
%
|
8.5
|
%
|
(330) bps
|
(100) bps
|
||||||||||||||
|
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
|
||||||||||||||||||||||||
|
Nine months ended
|
||||||||||||||||||||||||
|
September 30, 2022
|
September 30, 2021
|
Change
|
||||||||||||||||||||||
|
($ in millions)
|
GAAP
|
Non-GAAP4,5
|
GAAP
|
Non-GAAP4,5
|
GAAP
|
Non-GAAP
|
||||||||||||||||||
|
Services
|
$
|
1,565.9
|
$
|
1,558.5
|
$
|
1,722.0
|
$
|
1,722.0
|
$
|
(156.1
|
)
|
$
|
(163.5
|
)
|
||||||||||
|
Products
|
926.0
|
917.2
|
1,123.6
|
1,123.6
|
(197.6
|
)
|
(206.4
|
)
|
||||||||||||||||
|
Total net sales
|
$
|
2,491.9
|
$
|
2,475.7
|
$
|
2,845.6
|
$
|
2,845.6
|
$
|
(353.7
|
)
|
$
|
(369.9
|
)
|
||||||||||
|
Services
|
$
|
459.9
|
$
|
471.8
|
$
|
540.0
|
$
|
550.6
|
$
|
(80.1
|
)
|
$
|
(78.8
|
)
|
||||||||||
|
Products
|
80.0
|
123.6
|
245.2
|
247.4
|
(165.2
|
)
|
(123.8
|
)
|
||||||||||||||||
|
Total gross profit
|
$
|
539.9
|
$
|
595.4
|
$
|
785.2
|
$
|
798.0
|
$
|
(245.3
|
)
|
$
|
(202.6
|
)
|
||||||||||
|
Services
|
29.4
|
%
|
30.3
|
%
|
31.4
|
%
|
32.0
|
%
|
(200) bps
|
(170) bps
|
||||||||||||||
|
Products
|
8.6
|
%
|
13.5
|
%
|
21.8
|
%
|
22.0
|
%
|
|
(1,320) bps
|
|
(850) bps
|
||||||||||||
|
Total gross margin
|
21.7
|
%
|
24.0
|
%
|
27.6
|
%
|
28.0
|
%
|
(590) bps
|
(400) bps
|
||||||||||||||
|
Operating expenses
|
$
|
709.3
|
$
|
484.0
|
$
|
697.4
|
$
|
574.7
|
$
|
11.9
|
$
|
(90.7
|
)
|
|||||||||||
|
Operating profit (loss)
|
$
|
(169.4
|
$
|
111.4
|
$
|
87.8
|
$
|
223.3
|
$
|
(257.2
|
)
|
$
|
(111.9
|
)
|
||||||||||
|
Operating margin
|
(6.8
|
4.5
|
%
|
3.1
|
%
|
7.8
|
%
|
(990) bps
|
(330) bps
|
|||||||||||||||
|
4 - See note 1 below for GAAP to Non-GAAP adjustments to net sales, gross profit and operating expenses, which include selling and administrative
expense, research, development and engineering expense, gain/loss on sales of assets, net, and impairment of assets.
|
|
|
5 - Consistent with the presentation in the second quarter of 2022, excludes the results of the non-core European retail business that is held for sale,
which represents a change to the initially published first quarter information. 2021 has not been revised. Refer to note 1 below for further information.
|
Page 7 of 15
|
Profit/Loss Summary by Segment - Unaudited6
|
||||||||||||||||
|
Three months ended September 30, 2022 compared to three months ended September 30, 2021
|
||||||||||||||||
| Three months ended |
||||||||||||||||
|
September 30, 2022
|
September 30, 2021
|
|||||||||||||||
|
Banking
|
Retail5
|
Banking
|
Retail5
|
|||||||||||||
|
($ in millions)
|
||||||||||||||||
|
Services
|
$
|
379.9
|
$
|
130.4
|
$
|
414.6
|
$
|
147.1
|
||||||||
|
Products
|
200.4
|
94.6
|
255.5
|
141.0
|
||||||||||||
|
Total net sales
|
$
|
580.3
|
$
|
225.0
|
$
|
670.1
|
$
|
288.1
|
||||||||
|
Services
|
$
|
117.8
|
$
|
41.8
|
$
|
135.7
|
$
|
46.2
|
||||||||
|
Products
|
25.7
|
14.0
|
48.1
|
32.9
|
||||||||||||
|
Total gross profit
|
$
|
143.5
|
$
|
55.8
|
$
|
183.8
|
$
|
79.1
|
||||||||
|
Services
|
31.0
|
%
|
32.1
|
%
|
32.7
|
%
|
31.4
|
%
|
||||||||
|
Products
|
12.8
|
%
|
14.8
|
%
|
18.8
|
%
|
23.3
|
%
|
||||||||
|
Total gross margin
|
24.7
|
%
|
24.8
|
%
|
27.4
|
%
|
27.5
|
%
|
||||||||
|
Segment operating expenses
|
$
|
60.4
|
$
|
24.7
|
$
|
74.2
|
$
|
35.5
|
||||||||
|
Operating profit
|
$
|
83.1
|
$
|
31.1
|
$
|
109.6
|
$
|
43.6
|
||||||||
|
Operating margin
|
14.3
|
%
|
13.8
|
%
|
16.4
|
%
|
15.1
|
%
|
||||||||
|
Segment operating profit
|
$
|
114.2
|
$
|
153.2
|
||||||||||||
|
Corporate charges7
|
54.2
|
71.9
|
||||||||||||||
|
Consolidated operating profit
|
$
|
60.0
|
$
|
81.3
|
||||||||||||
|
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
|
||||||||||||||||
| Nine months ended |
||||||||||||||||
|
September 30, 2022
|
September 30, 2021
|
|||||||||||||||
|
Banking
|
Retail5
|
Banking
|
Retail5
|
|||||||||||||
|
($ in millions)
|
||||||||||||||||
|
Services
|
$
|
1,152.9
|
$
|
405.6
|
$
|
1,255.9
|
$
|
466.1
|
||||||||
|
Products
|
580.4
|
336.8
|
692.2
|
431.4
|
||||||||||||
|
Total net sales
|
$
|
1,733.3
|
$
|
742.4
|
$
|
1,948.1
|
$
|
897.5
|
||||||||
|
Services
|
$
|
348.1
|
$
|
123.7
|
$
|
404.6
|
$
|
146.0
|
||||||||
|
Products
|
68.8
|
54.8
|
155.7
|
91.7
|
||||||||||||
|
Total gross profit
|
$
|
416.9
|
$
|
178.5
|
$
|
560.3
|
$
|
237.7
|
||||||||
|
Services
|
30.2
|
%
|
30.5
|
%
|
32.2
|
%
|
31.3
|
%
|
||||||||
|
Products
|
11.9
|
%
|
16.3
|
%
|
22.5
|
%
|
21.3
|
%
|
||||||||
|
Total gross margin
|
24.1
|
%
|
24.0
|
%
|
28.8
|
%
|
26.5
|
%
|
||||||||
|
Segment operating expenses
|
$
|
207.5
|
$
|
88.5
|
$
|
240.0
|
$
|
112.8
|
||||||||
|
Operating profit
|
$
|
209.4
|
$
|
90.0
|
$
|
320.3
|
$
|
124.9
|
||||||||
|
Operating margin
|
12.1
|
%
|
12.1
|
%
|
16.4
|
%
|
13.9
|
%
|
||||||||
|
Segment operating profit
|
$
|
299.4
|
$
|
445.2
|
||||||||||||
|
Corporate charges7
|
188.0
|
221.9
|
||||||||||||||
|
Consolidated operating profit
|
$
|
111.4
|
$
|
223.3
|
||||||||||||
|
6 - The Non-GAAP adjustments shown in Note 1 below are not assigned to a segment, as these adjustments relate to items that are considered non-routine in
nature and thus do not impact the way in which the business is managed or performance is assessed.
|
||||||||||||||||
|
7 - Corporate charges are not reflected in the segment operating results, as these expenses are managed separately and not included in the segment
results used to manage the business and assess performance. The unassigned corporate charges consist primarily of finance, IT, HR and legal expenditures.
|
||||||||||||||||
Page 8 of 15
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN MILLIONS, EXCEPT EARNINGS PER SHARE)
|
|
Q3 2022
|
Q3 2021
|
YTD
9/30/2022
|
YTD
9/30/2021
|
||||||||||||
|
Net sales
|
||||||||||||||||
|
Services
|
$
|
514.3
|
$
|
561.7
|
$
|
1,565.9
|
$
|
1,722.0
|
||||||||
|
Products
|
296.1
|
396.5
|
926.0
|
1,123.6
|
||||||||||||
|
Total
|
810.4
|
958.2
|
2,491.9
|
2,845.6
|
||||||||||||
|
Cost of sales
|
||||||||||||||||
|
Services
|
356.7
|
382.5
|
1,106.0
|
1,182.0
|
||||||||||||
|
Products
|
259.9
|
315.6
|
846.0
|
878.4
|
||||||||||||
|
Total
|
616.6
|
698.1
|
1,952.0
|
2,060.4
|
||||||||||||
|
Gross profit
|
193.8
|
260.1
|
539.9
|
785.2
|
||||||||||||
|
Gross margin
|
23.9
|
%
|
27.1
|
%
|
21.7
|
%
|
27.6
|
%
|
||||||||
|
Operating expenses
|
||||||||||||||||
|
Selling and administrative expense
|
163.1
|
195.5
|
557.9
|
603.7
|
||||||||||||
|
Research, development and engineering expense
|
26.7
|
25.6
|
92.1
|
95.3
|
||||||||||||
|
(Gain) loss on sale of assets, net
|
(5.6
|
)
|
—
|
(5.4
|
)
|
(1.9
|
)
|
|||||||||
|
Impairment of assets
|
4.1
|
0.3
|
64.7
|
0.3
|
||||||||||||
|
Total
|
188.3
|
221.4
|
709.3
|
697.4
|
||||||||||||
|
Percent of net sales
|
23.2
|
%
|
23.1
|
%
|
28.5
|
%
|
24.5
|
%
|
||||||||
|
Operating profit (loss)
|
5.5
|
38.7
|
(169.4
|
)
|
87.8
|
|||||||||||
|
Operating margin
|
0.7
|
%
|
4.0
|
%
|
(6.8
|
%)
|
3.1
|
%
|
||||||||
|
Other income (expense)
|
||||||||||||||||
|
Interest income
|
3.6
|
1.0
|
5.9
|
5.0
|
||||||||||||
|
Interest expense
|
(50.7
|
)
|
(51.3
|
)
|
(148.4
|
)
|
(149.7
|
)
|
||||||||
|
Foreign exchange gain (loss), net
|
5.3
|
4.4
|
2.9
|
0.9
|
||||||||||||
|
Miscellaneous, net
|
(9.7
|
)
|
4.6
|
(2.5
|
)
|
6.6
|
||||||||||
|
Total other (expense)
|
(51.5
|
)
|
(41.3
|
)
|
(142.1
|
)
|
(137.2
|
)
|
||||||||
|
Loss before taxes
|
(46.0
|
)
|
(2.6
|
)
|
(311.5
|
)
|
(49.4
|
)
|
||||||||
|
Income tax expense (benefit)
|
3.9
|
(1.1
|
)
|
119.0
|
(11.1
|
)
|
||||||||||
|
Equity in loss of unconsolidated subsidiaries
|
(0.6
|
)
|
(0.5
|
)
|
(3.0
|
)
|
(2.1
|
)
|
||||||||
|
Net loss
|
(50.5
|
)
|
(2.0
|
)
|
(433.5
|
)
|
(40.4
|
)
|
||||||||
|
Net income (loss) attributable to noncontrolling interests
|
(0.7
|
)
|
0.1
|
(1.4
|
)
|
0.1
|
||||||||||
|
Net loss attributable to Diebold Nixdorf, Incorporated
|
$
|
(49.8
|
)
|
$
|
(2.1
|
)
|
$
|
(432.1
|
)
|
$
|
(40.5
|
)
|
||||
|
|
||||||||||||||||
|
Basic and diluted weighted-average shares outstanding
|
79.1
|
78.3
|
78.9
|
78.2
|
||||||||||||
|
Basic and diluted loss per share attributable to Diebold Nixdorf, Incorporated
|
$
|
(0.63
|
)
|
$
|
(0.03
|
)
|
$
|
(5.48
|
)
|
$
|
(0.52
|
)
|
||||
Page 9 of 15
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
|
|
9/30/2022
|
12/31/2021
|
||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash, cash equivalents, and restricted cash
|
$
|
128.4
|
$
|
388.9
|
||||
|
Short-term investments
|
14.6
|
34.3
|
||||||
|
Trade receivables, less allowances for doubtful accounts
|
537.6
|
595.2
|
||||||
|
Inventories
|
666.2
|
544.2
|
||||||
|
Other current assets
|
330.5
|
324.7
|
||||||
|
Total current assets
|
1,677.3
|
1,887.3
|
||||||
|
Securities and other investments
|
7.2
|
11.0
|
||||||
|
Property, plant and equipment, net
|
112.3
|
138.1
|
||||||
|
Goodwill
|
649.6
|
743.6
|
||||||
|
Customer relationships, net
|
211.3
|
301.7
|
||||||
|
Other assets
|
249.7
|
425.5
|
||||||
|
Total assets
|
$
|
2,907.4
|
$
|
3,507.2
|
||||
|
|
||||||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Current liabilities
|
||||||||
|
Notes payable8
|
$
|
2,435.6
|
$
|
47.1
|
||||
|
Accounts payable
|
623.8
|
706.3
|
||||||
|
Deferred revenue
|
316.1
|
322.4
|
||||||
|
Other current liabilities
|
525.4
|
673.6
|
||||||
|
Total current liabilities
|
3,900.9
|
1,749.4
|
||||||
|
|
||||||||
|
Long-term debt
|
— |
2,245.6
|
||||||
|
Long-term liabilities
|
324.2
|
349.2
|
||||||
|
|
||||||||
|
Total Diebold Nixdorf, Incorporated shareholders' equity
|
(1,329.4
|
)
|
(845.1
|
)
|
||||
|
Noncontrolling interests
|
11.7
|
8.1
|
||||||
|
Total equity
|
(1,317.7
|
)
|
(837.0
|
)
|
||||
|
Total liabilities and equity
|
$
|
2,907.4
|
$
|
3,507.2
|
||||
|
8-$2,117.1 of Term Loan B and Senior Notes debt, with maturity dates subsequent to September 30, 2023, has been classified as current because it could
be called if the Company is unable to consummate the Transactions contemplated by the Transaction Support Agreement prior to December 31, 2022 or future reporting periods, and is also unable to obtain a waiver extension with respect to the
breached net leverage ratio covenant. While the Company expects the transactions contemplated by the Transaction Support Agreement will be consummated, there can be no assurance that such conditions will be satisfied.
|
||||||||||||||||
Page 10 of 15
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN MILLIONS)
|
|
YTD 9/30/2022
|
YTD 9/30/2021
|
||||||
|
Cash flow from operating activities
|
||||||||
|
Net loss
|
$
|
(433.5
|
)
|
$
|
(40.4
|
)
|
||
|
Adjustments to reconcile net loss to cash flow used by operating activities:
|
||||||||
|
Depreciation and amortization
|
42.3
|
55.2
|
||||||
|
Amortization of Wincor Nixdorf purchase accounting intangible assets
|
52.8
|
59.3
|
||||||
|
Amortization of deferred financing costs into interest expense
|
12.0
|
13.0
|
||||||
|
Share-based compensation
|
9.6
|
12.7
|
||||||
|
(Gain) loss on sale of assets, net
|
(5.4
|
)
|
(1.9
|
)
|
||||
|
Deferred income taxes
|
112.8
|
(21.6
|
)
|
|||||
|
Net pension settlements
|
(14.3
|
)
|
—
|
|||||
|
Impairment of assets
|
64.7
|
0.3
|
||||||
|
Other
|
2.7
|
—
|
||||||
|
Changes in certain assets and liabilities
|
||||||||
|
Trade receivables
|
(2.5
|
)
|
(50.9
|
)
|
||||
|
Inventories
|
(186.5
|
)
|
(150.3
|
)
|
||||
|
Accounts payable
|
(18.9
|
)
|
95.6
|
|||||
|
Income taxes
|
(34.7
|
)
|
(25.5
|
)
|
||||
|
Deferred revenue
|
14.5
|
(87.2
|
)
|
|||||
|
Warranty liability
|
(5.2
|
)
|
(1.4
|
)
|
||||
|
Sales tax and net value added tax
|
(24.9
|
)
|
(35.7
|
)
|
||||
|
Accrued salaries, wages and commissions
|
(59.1
|
)
|
1.5
|
|||||
|
Restructuring accrual
|
21.2
|
(22.4
|
)
|
|||||
|
Pension and post retirement benefits
|
15.2
|
(5.8
|
)
|
|||||
|
Certain other assets and liabilities
|
(45.6
|
)
|
(86.1
|
)
|
||||
|
Net cash used by operating activities
|
(482.8
|
)
|
(291.6
|
)
|
||||
|
Cash flow from investing activities
|
||||||||
|
Capital expenditures
|
(13.8
|
)
|
(11.1
|
)
|
||||
|
Capitalized software development
|
(24.0
|
)
|
(21.6
|
)
|
||||
|
Proceeds from divestitures, net of cash divested
|
10.5
|
5.8
|
||||||
|
Net short-term investment activity
|
23.0
|
20.6
|
||||||
|
Proceeds from sale of assets
|
3.5
|
1.7
|
||||||
|
Net cash provided (used) by investing activities
|
(0.8
|
)
|
(4.6
|
)
|
||||
|
Cash flow from financing activities
|
||||||||
|
Revolving credit facility borrowings, net
|
240.0
|
187.9
|
||||||
|
Other debt borrowings
|
12.4
|
9.9
|
||||||
|
Other debt repayments
|
(12.3
|
)
|
(13.6
|
)
|
||||
|
Contributions from noncontrolling interest holders
|
—
|
12.7
|
||||||
|
Other
|
(6.6
|
)
|
(7.1
|
)
|
||||
|
Net cash provided by financing activities
|
233.5
|
189.8
|
||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(12.5
|
)
|
(4.3
|
)
|
||||
|
Change in cash, cash equivalents and restricted cash
|
(262.6
|
)
|
(110.7
|
)
|
||||
|
Add: Cash included in assets held for sale at beginning of period
|
3.1
|
2.7
|
||||||
|
Less: Cash included in assets held for sale at end of period
|
1.0
|
0.6
|
||||||
|
Cash, cash equivalents and restricted cash at the beginning of the period
|
388.9
|
324.5
|
||||||
|
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
128.4
|
$
|
215.9
|
||||
Page 11 of 15
Notes for Non-GAAP Measures
To supplement our condensed consolidated financial statements presented in accordance with GAAP, the company utilizes certain financial measures that are not prepared in
accordance with GAAP, including Non-GAAP results, EBITDA and Adjusted EBITDA, adjusted earnings per share, free cash flow (use) and net debt.
|
1.
|
Profit and loss summary ($ in millions):
|
Three months ended September 30, 2022 compared to three months ended September 30, 2021
| Q3 2022 | Q3 2021 |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Net
Sales
|
Gross
Profit
|
% of
Sales
|
OPEX
|
OP
|
% of
Sales
|
Net
Sales
|
Gross
Profit
|
% of
Sales
|
OPEX
|
OP
|
% of
Sales
|
|||||||||||||||||||||||||||||||||||||
|
GAAP results
|
$
|
810.4
|
$
|
193.8
|
23.9
|
%
|
$
|
188.3
|
$
|
5.5
|
0.7
|
%
|
$
|
958.2
|
$
|
260.1
|
27.1
|
%
|
$
|
221.4
|
$
|
38.7
|
4.0
|
%
|
||||||||||||||||||||||||
|
Restructuring and transition -
personnel
|
—
|
4.3
|
(12.2
|
)
|
16.5
|
—
|
0.5
|
(4.8
|
)
|
5.3
|
||||||||||||||||||||||||||||||||||||||
|
Transformation - other
|
—
|
—
|
(4.2
|
)
|
4.2
|
—
|
2.5
|
(13.1
|
)
|
15.6
|
||||||||||||||||||||||||||||||||||||||
|
Refinancing related costs
|
—
|
—
|
(13.4
|
)
|
13.4
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Held for sale non-core
European retail business
|
(5.1
|
)
|
1.2
|
(3.8
|
)
|
5.0
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||||||||||
|
Amortization of Wincor Nixdorf
purchase accounting
intangible assets (non-cash)
|
—
|
—
|
(16.6
|
)
|
16.6
|
—
|
—
|
(19.5
|
)
|
19.5
|
||||||||||||||||||||||||||||||||||||||
|
Non-routine income/expense:
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Divestitures and asset sales
|
—
|
—
|
5.5
|
(5.5
|
)
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||||||||||||
|
Crisis in Ukraine costs
|
—
|
—
|
(0.7
|
)
|
0.7
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Loss making contracts
related to discontinued
offering
|
—
|
—
|
—
|
—
|
—
|
2.3
|
(0.3
|
)
|
2.6
|
|||||||||||||||||||||||||||||||||||||||
|
Legal/deal expense
|
—
|
—
|
0.5
|
(0.5
|
)
|
—
|
—
|
(1.5
|
)
|
1.5
|
||||||||||||||||||||||||||||||||||||||
|
Other
|
—
|
—
|
—
|
—
|
—
|
(2.5
|
)
|
(0.6
|
)
|
(1.9
|
)
|
|||||||||||||||||||||||||||||||||||||
|
Other impairment
|
—
|
—
|
(4.1
|
)
|
4.1
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Non-routine (income)
expenses, net
|
—
|
—
|
1.2
|
(1.2
|
)
|
—
|
(0.2
|
)
|
(2.4
|
)
|
2.2
|
|||||||||||||||||||||||||||||||||||||
|
Non-GAAP results
|
$
|
805.3
|
$
|
199.3
|
24.7
|
%
|
$
|
139.3
|
$
|
60.0
|
7.5
|
%
|
$
|
958.2
|
$
|
262.9
|
27.4
|
%
|
$
|
181.6
|
$
|
81.3
|
8.5
|
%
|
||||||||||||||||||||||||
| Q3
2022 |
Q3 2021 | ||||||||||||||||||||||
|
Services
|
Products
|
Total
|
Services
|
Products
|
Total
|
||||||||||||||||||
|
GAAP Gross profit
|
$
|
157.6
|
$
|
36.2
|
$
|
193.8
|
$
|
179.2
|
$
|
80.9
|
$
|
260.1
|
|||||||||||
|
Restructuring and transition - personnel
|
3.0
|
1.3
|
4.3
|
—
|
0.5
|
0.5
|
|||||||||||||||||
|
Transformation - other
|
—
|
—
|
—
|
2.5
|
—
|
2.5
|
|||||||||||||||||
|
Held for sale non-core European retail business
|
(1.0
|
)
|
2.2
|
1.2
|
—
|
—
|
—
|
||||||||||||||||
|
Non-routine income/expense:
|
|||||||||||||||||||||||
|
Loss making contract related to discontinued offering
|
—
|
—
|
—
|
2.3
|
—
|
2.3
|
|||||||||||||||||
|
Other
|
—
|
—
|
—
|
(2.1
|
)
|
(0.4
|
)
|
(2.5
|
)
|
||||||||||||||
|
Non-routine (income) expenses, net
|
—
|
—
|
—
|
0.2
|
(0.4
|
)
|
(0.2
|
)
|
|||||||||||||||
|
Non-GAAP Gross profit
|
$
|
159.6
|
$
|
39.7
|
$
|
199.3
|
$
|
181.9
|
$
|
81.0
|
$
|
262.9
|
|||||||||||
Page 12 of 15
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
|
YTD 9/30/2022
|
YTD 9/30/2021
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Net
Sales
|
Gross
Profit
|
% of
Sales |
OPEX
|
OP
|
% of
Sales
|
Net
Sales
|
Gross
Profit
|
% of
Sales
|
OPEX
|
OP
|
% of
Sales
|
|||||||||||||||||||||||||||||||||||||
|
GAAP results
|
$
|
2,491.9
|
$
|
539.9
|
21.7
|
%
|
$
|
709.3
|
$
|
(169.4
|
)
|
(6.8
|
)%
|
$
|
2,845.6
|
$
|
785.2
|
27.6
|
%
|
$
|
697.4
|
$
|
87.8
|
3.1
|
%
|
|||||||||||||||||||||||
|
Restructuring and transition -
personnel
|
—
|
17.4
|
(66.5
|
)
|
83.9
|
—
|
12.1
|
(16.3
|
)
|
28.4
|
||||||||||||||||||||||||||||||||||||||
|
Transformation - other
|
—
|
—
|
(15.0
|
)
|
15.0
|
—
|
2.5
|
(43.5
|
)
|
46.0
|
||||||||||||||||||||||||||||||||||||||
|
Refinancing related costs
|
—
|
—
|
(13.4
|
)
|
13.4
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Held for sale non-core
European retail business
|
(16.2
|
)
|
2.6
|
(14.1
|
)
|
16.7
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||||||||||
|
Amortization of Wincor Nixdorf
purchase accounting
intangible assets (non-cash)
|
—
|
—
|
(52.8
|
)
|
52.8
|
—
|
—
|
(59.3
|
)
|
59.3
|
||||||||||||||||||||||||||||||||||||||
|
Non-routine income/expense:
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Divestitures and asset sales
|
—
|
—
|
5.5
|
(5.5
|
)
|
—
|
—
|
1.9
|
(1.9
|
)
|
||||||||||||||||||||||||||||||||||||||
|
Crisis in Ukraine Costs
|
—
|
—
|
(3.2
|
)
|
3.2
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Loss making contracts
related to discontinued
offering
|
—
|
—
|
—
|
—
|
—
|
2.3
|
(0.3
|
)
|
2.6
|
|||||||||||||||||||||||||||||||||||||||
|
Legal/deal expense
|
—
|
—
|
(1.4
|
)
|
1.4
|
—
|
—
|
(3.8
|
)
|
3.8
|
||||||||||||||||||||||||||||||||||||||
|
Other
|
—
|
1.1
|
0.3
|
0.8
|
—
|
(4.1
|
)
|
(1.4
|
)
|
(2.7
|
)
|
|||||||||||||||||||||||||||||||||||||
|
North America ERP
impairment
|
—
|
—
|
(38.4
|
)
|
38.4
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Inventory charge for legacy
products
|
—
|
34.4
|
—
|
34.4
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||||||||||||||
|
Russia/Ukraine Impairment
|
—
|
—
|
(16.8
|
)
|
16.8
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Other Impairment
|
—
|
—
|
(9.5
|
)
|
9.5
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||||||||||||
|
Non-routine (income)
expenses, net
|
—
|
35.5
|
(63.5
|
)
|
99.0
|
—
|
(1.8
|
)
|
(3.6
|
)
|
1.8
|
|||||||||||||||||||||||||||||||||||||
|
Non-GAAP results
|
$
|
2,475.7
|
$
|
595.4
|
24.0
|
%
|
$
|
484.0
|
$
|
111.4
|
4.5
|
%
|
$
|
2,845.6
|
$
|
798.0
|
28.0
|
%
|
$
|
574.7
|
$
|
223.3
|
7.8
|
%
|
||||||||||||||||||||||||
|
YTD 9/30/2022
|
YTD 9/30/2021
|
|||||||||||||||||||||||
|
Services
|
Products
|
Total
|
Services
|
Products
|
Total
|
|||||||||||||||||||
|
GAAP Gross Profit
|
$
|
459.9
|
$
|
80.0
|
$
|
539.9
|
$
|
540.0
|
$
|
245.2
|
$
|
785.2
|
||||||||||||
|
Restructuring - personnel
|
7.4
|
10.0
|
17.4
|
10.2
|
1.9
|
12.1
|
||||||||||||||||||
|
Restructuring and transformation - other
|
—
|
—
|
—
|
2.5
|
—
|
2.5
|
||||||||||||||||||
|
Held for sale non-core European retail business
|
3.4
|
(0.8
|
)
|
2.6
|
—
|
—
|
—
|
|||||||||||||||||
|
Non-routine income/expense:
|
||||||||||||||||||||||||
|
Loss making contract related to discontinued offering
|
—
|
—
|
—
|
2.3
|
—
|
2.3
|
||||||||||||||||||
|
Other
|
1.1
|
—
|
1.1
|
(4.4
|
)
|
0.3
|
(4.1
|
)
|
||||||||||||||||
|
Inventory charge for legacy products
|
—
|
34.4
|
34.4
|
—
|
—
|
—
|
||||||||||||||||||
|
Non-routine expenses, net
|
1.1
|
34.4
|
35.5
|
(2.1
|
)
|
0.3
|
(1.8
|
)
|
||||||||||||||||
|
Non-GAAP Gross Profit
|
$
|
471.8
|
$
|
123.6
|
$
|
595.4
|
$
|
550.6
|
$
|
247.4
|
$
|
798.0
|
||||||||||||
Restructuring - personnel incurred in 2022 relates to the cost savings initiative focused on operational simplification and automation of processes, and the expenses include
severance and payroll expense of employees transitioning out of the organization. Costs of third-parties assisting with the execution of the program are categorized as Transformation - other. Restructuring and transformation expenses incurred in 2021
are consistent in nature with 2022, but relate to the DN Now initiative focused on transitioning to a shared service model which culminated in the fourth quarter of 2021. Refinancing related costs are initial fees paid to advisors that do not qualify
for capitalization. Held for sale non-core European retail business relates to the 2022 results of a majority-owned business that the company is committed to deconsolidate, that beginning in 2022 is excluded from the metrics used to evaluate the core
business and assign resources, and which will be autonomous following completion of a data center project which commenced in 2022. The 2021 results of the non-core European retail business have not been adjusted. The Wincor Nixdorf intangible asset
amortization relates to the intangible assets established in purchase accounting as management believes that this is useful information. The inventory charge for legacy products relates to excess and obsolete inventory as a result of a decision to
streamline the company's product portfolio. Divestitures and asset sales relates primarily to a building sale and IT asset sale in the third quarter of 2022, and the divestitures of non-core businesses in 2021. Crisis in Ukraine costs primarily
relate to humanitarian efforts for our employees and their families, as well as expenses incurred in connection with the economic sanctions levied and steps taken to-date to liquidate our Russian distribution subsidiary. Legal and deal expense
primarily relates to third-party expenses and fees paid by the company for M&A activity. North America ERP impairment is the decision made by new leadership to indefinitely suspend the North America ERP implementation and strategically shift the
digital transformation initiatives to the Company's distribution subsidiaries which have a much greater opportunity for process standardization and related cost reductions. Russia/Ukraine impairment relates to the charges taken for trade receivables
from customers in the region that are doubtful of being collected, inventory specifically for customers in the region and other assets which are not recoverable. Other impairment is the write-down of right-of-use assets and related leasehold
improvements for facilities identified for closure and impairment of discontinued internally developed software.
Page 13 of 15
|
2.
|
Reconciliation of GAAP net loss to EBITDA and Adjusted EBITDA (Non-GAAP measures) ($ in millions):
|
|
Q3 2022
|
Q3 2021
|
YTD
9/30/2022
|
YTD
9/30/2021
|
TTM
9/30/2022
|
||||||||||||||||
|
Net loss
|
$
|
(50.5
|
)
|
$
|
(2.0
|
)
|
$
|
(433.5
|
)
|
$
|
(40.4
|
)
|
$
|
(471.2
|
)
|
|||||
|
Income tax expense (benefit)
|
3.9
|
(1.1
|
)
|
119.0
|
(11.1
|
)
|
157.8
|
|||||||||||||
|
Interest income
|
(3.6
|
)
|
(1.0
|
)
|
(5.9
|
)
|
(5.0
|
)
|
(7.0
|
)
|
||||||||||
|
Interest expense
|
50.7
|
51.3
|
148.4
|
149.7
|
194.0
|
|||||||||||||||
|
Depreciation and amortization
|
29.9
|
36.2
|
95.1
|
114.5
|
129.7
|
|||||||||||||||
|
EBITDA
|
30.4
|
83.4
|
(76.9
|
)
|
207.7
|
3.3
|
||||||||||||||
|
Share-based compensation
|
2.7
|
4.7
|
9.6
|
12.7
|
10.7
|
|||||||||||||||
|
Amortization of cloud-based software implementation costs
|
0.6
|
—
|
1.6
|
—
|
1.6
|
|||||||||||||||
|
Foreign exchange (gain) loss, net
|
(5.3
|
)
|
(4.4
|
)
|
(2.9
|
)
|
(0.9
|
)
|
—
|
|||||||||||
|
Miscellaneous (gain) loss, net
|
9.7
|
(4.6
|
)
|
2.5
|
(6.6
|
)
|
5.7
|
|||||||||||||
|
Equity in loss of unconsolidated subsidiaries
|
0.6
|
0.5
|
3.0
|
2.1
|
0.6
|
|||||||||||||||
|
Restructuring and transformation expenses
|
20.7
|
20.9
|
98.1
|
72.5
|
122.6
|
|||||||||||||||
|
Refinancing related costs
|
13.4
|
—
|
13.4
|
—
|
13.4
|
|||||||||||||||
|
Non-routine (income) expense, net
|
(1.2
|
)
|
2.2
|
99.0
|
1.8
|
115.7
|
||||||||||||||
|
Held for sale non-core European retail business
|
4.0
|
—
|
14.0
|
—
|
14.0
|
|||||||||||||||
|
Adjusted EBITDA
|
$
|
75.6
|
$
|
102.7
|
$
|
161.4
|
$
|
289.3
|
$
|
287.6
|
||||||||||
|
Adjusted EBITDA % revenue
|
9.4
|
%
|
10.7
|
%
|
6.5
|
%
|
10.2
|
%
|
8.1
|
%
|
||||||||||
The company defines EBITDA as net loss excluding income tax benefit/expense, net interest expense, and depreciation and amortization expense. Consistent with the company's current
credit agreement, Adjusted EBITDA is EBITDA excluding the effects of the following items: share-based compensation, amortization of cloud-based software implementation costs, foreign exchange gain/loss net, miscellaneous net, equity in earnings of
unconsolidated subsidiaries, restructuring and transformation expenses, refinancing related costs, non-routine expenses and the adjusted EBITDA loss of our held for sale non-core European retail business, as outlined in Note 1 of the Non-GAAP
measures. To remain comparable to the U.S. GAAP depreciation and amortization measures, the company excluded the amortization of Wincor Nixdorf purchase accounting intangible assets from non-routine expenses, net in the Adjusted EBITDA reconciliation
of $16.6 and $19.5 for the three months ended September 30, 2022 and 2021 and $52.8 and $59.3 for the nine months ended September 30, 2022 and 2021. Additionally, $0.8 of restructuring-related share-based compensation activity was excluded from
restructuring and transformation expenses for the nine months ended September 30, 2022 and $1.9 of accelerated depreciation expense for the nine months ended September 30, 2021 was excluded from restructuring and transformation expenses. Deferred
financing fee amortization is included in interest expense; as a result, the company excluded from the depreciation and amortization caption $3.7 and $4.3 for the three months ended September 30, 2022 and 2021 and $12.0 and $13.0 for the nine months
ended September 30, 2022 and 2021. $1.0 and $2.7 of depreciation and amortization expense was excluded from Held for sale non-core European retail business for the three and nine months ended September 30, 2022, respectively.
These are Non-GAAP financial measures used by management to enhance the understanding of our operating results. EBITDA and Adjusted EBITDA are key measures we use to evaluate our
operational performance. We provide EBITDA and Adjusted EBITDA because we believe that investors and securities analysts will find EBITDA and Adjusted EBITDA to be useful measures for evaluating our operating performance and comparing our operating
performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements. However, EBITDA and Adjusted EBITDA should not
be considered as alternatives to net income as a measure of operating results or as alternatives to cash flows from operating activities as a measure of liquidity in accordance with GAAP.
Page 14 of 15
|
3.
|
Reconciliation of GAAP net loss and net loss attributable to Diebold Nixdorf, Incorporated to Non-GAAP net income (loss) and net income (loss) attributable to
Diebold Nixdorf, Incorporated, and diluted GAAP EPS to Non-GAAP EPS ($ in millions, except per share data):
|
| Q3 2022 |
Q3 2021 |
YTD 9/30/2022 |
YTD 9/30/2021 |
|||||||||||||||||||||||||||||
|
|
$ |
per share
|
|
$ |
per share
|
|
$ |
per share
|
|
$ |
per share
|
|||||||||||||||||||||
|
Net loss
|
$
|
(50.5
|
)
|
$
|
(0.64
|
)
|
$
|
(2.0
|
)
|
$
|
(0.03
|
)
|
$
|
(433.5
|
)
|
$
|
(5.49
|
)
|
$
|
(40.4
|
)
|
$
|
(0.52
|
)
|
||||||||
|
Net income (loss) attributable to
noncontrolling interests
|
(0.7
|
)
|
(0.01
|
)
|
0.1
|
—
|
(1.4
|
)
|
(0.01
|
)
|
0.1
|
—
|
||||||||||||||||||||
|
Net loss attributable to Diebold
Nixdorf, Incorporated
|
$
|
(49.8
|
)
|
$
|
(0.63
|
)
|
$
|
(2.1
|
)
|
$
|
(0.03
|
)
|
$
|
(432.1
|
)
|
$
|
(5.48
|
)
|
$
|
(40.5
|
)
|
$
|
(0.52
|
)
|
||||||||
|
Restructuring and transformation
expenses
|
20.7
|
0.26
|
20.9
|
0.27
|
98.9
|
1.25
|
74.4
|
0.95
|
||||||||||||||||||||||||
|
Refinancing related costs
|
13.4
|
0.17
|
—
|
—
|
13.4
|
0.17
|
—
|
—
|
||||||||||||||||||||||||
|
Held for sale non-core European
retail business
|
5.0
|
0.06
|
—
|
—
|
16.7
|
0.21
|
—
|
—
|
||||||||||||||||||||||||
|
Amortization of Wincor Nixdorf
purchase accounting intangible
assets (non-cash)
|
16.6
|
0.21
|
19.5
|
0.25
|
52.8
|
0.67
|
59.3
|
0.76
|
||||||||||||||||||||||||
|
Non-routine (income) expense:
|
||||||||||||||||||||||||||||||||
|
Divestitures and asset sales
|
(5.5
|
)
|
(0.07
|
)
|
—
|
—
|
(5.5
|
)
|
(0.07
|
)
|
(1.9
|
)
|
(0.02
|
)
|
||||||||||||||||||
|
Crisis in Ukraine costs
|
0.7
|
0.01
|
—
|
—
|
3.2
|
0.04
|
—
|
—
|
||||||||||||||||||||||||
|
Loss making contracts related to
discontinued offering
|
—
|
—
|
2.6
|
0.03
|
—
|
—
|
2.6
|
0.03
|
||||||||||||||||||||||||
|
Legal/deal expense
|
(0.5
|
)
|
(0.01
|
)
|
1.5
|
0.02
|
1.4
|
0.02
|
3.8
|
0.05
|
||||||||||||||||||||||
|
Other
|
—
|
—
|
(1.9
|
)
|
(0.02
|
)
|
0.8
|
0.01
|
(2.7
|
)
|
(0.04
|
)
|
||||||||||||||||||||
|
North America ERP Impairment
|
—
|
—
|
—
|
—
|
38.4
|
0.49
|
—
|
—
|
||||||||||||||||||||||||
|
Inventory charge for legacy
products
|
—
|
—
|
—
|
—
|
34.4
|
0.44
|
—
|
—
|
||||||||||||||||||||||||
|
Russia/Ukraine Impairment
|
—
|
—
|
—
|
—
|
16.8
|
0.21
|
—
|
—
|
||||||||||||||||||||||||
|
Other Impairment
|
4.1
|
0.05
|
—
|
—
|
9.5
|
0.12
|
—
|
—
|
||||||||||||||||||||||||
|
Non-routine (income) expense, net
|
(1.2
|
)
|
(0.02
|
)
|
2.2
|
0.03
|
99.0
|
1.26
|
1.8
|
0.02
|
||||||||||||||||||||||
|
Valuation allowance
|
—
|
—
|
—
|
—
|
127.4
|
1.61
|
—
|
—
|
||||||||||||||||||||||||
|
Tax impact (inclusive of allocation of
discrete tax items)
|
(13.7
|
)
|
(0.17
|
)
|
(13.7
|
)
|
(0.17
|
)
|
(80.7
|
)
|
(1.03
|
)
|
(36.9
|
)
|
(0.47
|
)
|
||||||||||||||||
|
Total adjusted net income (loss)
(Non-GAAP measure)
|
$
|
(9.7
|
)
|
$
|
(0.12
|
)
|
$
|
26.9
|
$
|
0.34
|
$
|
(106.0
|
)
|
$
|
(1.34
|
)
|
$
|
58.2
|
$
|
0.73
|
||||||||||||
|
Net income (loss) attributable to noncontrolling interests
|
(0.7
|
)
|
(0.01
|
)
|
0.1
|
—
|
(1.4
|
)
|
(0.01
|
)
|
0.1
|
—
|
||||||||||||||||||||
|
Total adjusted net income (loss) attributable to
Diebold Nixdorf,
Incorporated (Non-GAAP measure)
|
$
|
(9.0
|
)
|
$
|
(0.11
|
)
|
$
|
26.8
|
$
|
0.34
|
$
|
(104.6
|
)
|
$
|
(1.33
|
)
|
$
|
58.1
|
$
|
0.73
|
||||||||||||
Refer to note 1 for additional information on non-routine (income) expense for the periods presented.
|
4.
|
Net debt is calculated as follows ($ in millions):
|
|
September 30,
2022
|
December 31,
2021 |
September 30,
2021
|
||||||||||
|
Cash, cash equivalents, restricted cash and short-term investments (GAAP measure)
|
$
|
143.0
|
$
|
423.2
|
$
|
229.6
|
||||||
|
Cash included in assets held for sale
|
1.0
|
3.1
|
0.6
|
|||||||||
|
Debt instruments
|
(2,435.6
|
)
|
(2,292.7
|
)
|
(2,496.2
|
)
|
||||||
|
Net debt (Non-GAAP measure)
|
$
|
(2,291.6
|
)
|
$
|
(1,866.4
|
)
|
$
|
(2,266.0
|
)
|
|||
We believe that given the significant cash, cash equivalents and short-term investments on its balance sheet that net cash against outstanding debt is a meaningful measure.
###
Page 15 of 15
Exhibit 99.2
Customer Stories
 |
Tomasz Rokita, General Manager – Banking,
Poland, DN
Bank Polsi
“PKO Bank Polski is leaping ahead on its
transformation journey, and we are proud to support
the bank as it continues to innovate. DN Series
helps PKO Bank Polski elevate its banking strategy
and integrate a customer-focused experience
across both physical and digital channels. Through
proven recycling technology, DN Series will also
reduce operational costs while enabling the bank to
offer more personalized and secure services to its
customers through the self-service channel.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
 |
Jerónimo Luque Frías, Chief Executive Officer
Caja Rural Granada
“We are glad to have Diebold Nixdorf as an ATM
expert by our side to help us modernize our self-service channel and create a "future-proof" ATM network that allows us to evolve new network functionalities, such as cash recycling.” |
2 | Shareholder Letter / Q3 2022
To Our Shareholders
In the third quarter, while the macroeconomic environment presented widely discussed challenges, the combination of stable demand, industry-leading solutions, and
progress with our ongoing cost mitigation and operational improvements contributed to Diebold Nixdorf's continued confidence in our strategic operating model.
We remain focused on our customers as a global leader in banking and retail technology, automation and related services. We have solid financial fundamentals, and
we have consistently seen steady demand for our product and solution set. Year to date, our Banking and Retail solutions continue to garner demand in the market, as evidenced by backlog trends.
To counter continued global pressures, we implemented a cost savings plan several months ago, identifying nearly $200M of potential savings. Since then, we have
significantly improved our cost management by eliminating redundancies, creating more efficient processes globally and decreasing indirect spend. In addition, we are actively taking appropriate steps to further improve key aspects of our
operations, such as regionalizing our manufacturing footprint and normalizing and ramping up our supply chain to drive unit growth and revenue conversion.
As previously announced, last month we were pleased to announce that we entered into a Transaction Support Agreement, or TSA, with the holders of over a majority
of our term loans and each series of our outstanding secured and unsecured notes to help us extend our near-term debt maturities and obtain additional liquidity. Following the initial execution of the TSA, additional eligible creditors have
executed joinders to it and, as a result, the percentage of the company’s term loans held by those who are party to the TSA has increased from ~79% to ~97% today, and the percentage of the company’s 2024 senior notes that are held by those who are
party to the TSA has increased from ~59% to ~83% today. We are working toward completing the transactions contemplated by the TSA in December, and from there will work to normalize our business and continue to execute on our model.
Throughout this letter we will detail our Q3 2022 performance with a focus on the following highlights:
|
●
|
Continued shift from legacy systems to DN SeriesTM ATMs as the latter, specifically cash recyclers, composed the vast majority of total new Banking orders in North America in Q3
|
|
●
|
Retail momentum for our self-checkout (SCO) business with DN named among the Top 5 Notable Tech Companies from GroceryShop
|
|
●
|
Growth of 52% YoY in connected devices for our DN AllConnect℠ Data Engine
|
|
●
|
Progress with ESG and DEI initiatives, including publishing our 2021 report
|
3 | Shareholder Letter / Q3 2022
As we look to the rest of the year, we will keep our customers and employees top of mind as we work to meet the demand for our products while continuing to navigate ongoing macroeconomic
challenges, maintain our operational rigor, and execute on our operating model.
Business Highlights
Banking
|
Demand for our Global Banking solutions continued in Q3 2022 with momentum for our DN Series ATMs, specifically for our cash recyclers in North America as banks
move forward with their branch transformations with a focus on automation, and in many cases a smaller real estate footprint.
|
 |
In the third quarter we:
|
●
|
Secured an approximately $8 million deal with Banco Azteca – driven by its move from window to self-service, replacing its existing ATM fleet with DN Series plus Vynamic suite.
|
|
|
●
|
Won an approximately $3 million deal with Kapital Bank in Uzbekistan - expanding its ATM network with DN Series 19'' screens to fully meet its vision to offer a large range of innovative
services and banking products on newly designed devices with the smallest footprint.
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Secured an approximately $3 million deal with Bank Al Falah in Pakistan to replace all of its ATMs with DN Series along with Vynamic Suite as it was drawn to our technology, security and
flexibility.
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We continue to make progress with our Vynamic Payments solution as we expand our footprint in Europe and Asia. Additionally, we signed a partnership agreement
with Featurespace, a world leader in financial crime prevention to integrate its highly specialized, fraud prevention technology into our Vyanmic Payments platform. With this integration, we will be able to provide financial institutions with a
fully integrated payments solution with proven real-time fraud detection and prevention capabilities without the concern of managing multiple vendors.
Our AllConnect Data Engine continues to see growth with 52% more self-service devices connected to this solution year-over-year versus Q3 2021. As DN connects more DN Series units to
our ACDE platform, we believe we can further optimize our services margins.
4 | Shareholder Letter / Q3 2022
Retail
|
Our SCO products continue to drive our Retail business with these solutions growing faster than the market, specifically in Europe. Additionally, in Q3 2022, we began
rolling out ACDE to our Retail partners and are receiving positive customer feedback as they desire more optimized solutions for SCO.
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 |
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Secured an approximately $10 million deal with one of Europe’s leading fuel and convenience retailers for Vynamic FCx platform, Vynamic software and services for implementation and
maintenance around these solutions. This rollout will include over 1,300 sites in Spain and Portugal throughout 2023 and 2024.
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Won an approximately $5 million deal over several entities that are part of a large European conglomerate for SCO, ePOS replacement, and additional DN retail solutions. This is a
multi-year contract with the customer continuing to look to DN to add on more of our offerings for its many stores and operations across Europe.
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For EV, we are preparing services in six eastern European countries with alpitronic; we are working on a service strategy for a large pan-European petrol station; and lastly, we
remain on track to meet our goal of 30,000 charger stations under contract by the end of 2022.
|
|
5 | Shareholder Letter / Q3 2022
ESG and DEI Initiatives
|
We recognize all the ways that our organization touches and impacts the world around us, and we remain focused on our commitment to diversity and sustainability.
In the third quarter, we published our 2021 Environmental, Sustainability and Governance (ESG) Report, which includes a comprehensive overview of our
accomplishments to date.
|
 |
Here are a few, key highlights from the report:
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We worked to reduce our use of energy and other resources, including managing paper consumption and diverting waste streams that previously had gone into landfills, and we
reminded each other to make choices in our lives and our work that make a difference for our planet.
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We also worked to reduce our carbon footprint, promoted recycling and focused on using environmentally sustainable materials in our products and solutions.
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Our Banking product portfolio consists of ATMs, cash recyclers and dispensers, intelligent deposit terminals, teller automation and kiosk technologies. The sustainable features
and production of the company’s DN Series™ family of self-service solutions will significantly reduce power consumption and carbon dioxide (CO2) emissions.
|
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| ● | Our 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. As a single point of contact, services employees plan and supervise store openings, renewals and transformation
projects, with attention to local details and customers’ global information technology (IT) infrastructure. |
||
| ● |
We enhance our communities and conserve natural resources through a responsible supply chain and socially aware workplace. We are taking concrete steps every
day to reduce our global energy consumption. These include targeted improvements in building efficiency, personal practices and responsibilities, and reducing the total square footage of our facilities and offices around the world
without significantly reducing output. |
||
| ● |
As a global company, we support diverse customers in diverse markets with diverse needs. Diversity within our own company — whether cultural, gender, racial
or other — means we value the many different and varying perspectives and solutions that our people bring to the table. |
Financial Summary
Third Quarter 2022
Total Revenue ($M)
|
Total GAAP Revenue
|
Total Non-GAAP
Revenue1
|
|
 |
● |
GAAP and non-GAAP Revenue were down sequentially on a reported basis and down on a year-over-year basis due to a decline in revenue of ~$76M
from unfavorable FX and ~$32M from divestitures including Ukraine/Russia. The remaining ~$40M impact is a function of lower product volume and related attached services and software (due to supply chain and materials availability),
timing, and terminated services contracts. |
Gross Profit ($M) & Gross Margin
|
GAAP Gross Profit &
Gross Margin
|
Non-GAAP Gross
Profit1 & Gross Margin1
|
 |
● |
GAAP Gross Margin improved sequentially as the result of non-recurring inventory reserve and severance charges recognized in Q2. Non-GAAP
Gross Margin was largely flat on a sequential basis, which is reflective of an improvement in Services and a decline in Product on a quarter-over-quarter basis. GAAP and non-GAAP Gross Profit and Margin decreased as compared to Q3
2021 primarily due to FX, lower volume, and continued non-billable inflation associated with supply chain disruptions. |
|
GAAP Operating
Profit & Operating
Margin
|
Non-GAAP Operating
Profit1 & Operating
Margin1
|
 |
● |
GAAP and non-GAAP Operating Profit and Margin increased sequentially driven by our focus on cost management but decreased year-over-year as a
result of lower gross profit despite operating expense favorability. |
|
1)
|
Non-GAAP metric. See “Use of Non-GAAP Financial Information” and the Financial Tables in the back of this document for additional information. Note: Differences may occur due to rounding.
|
7 | Shareholder Letter / Q3 2022
Net Loss ($M)
 |
● |
Net Loss improved sequentially primarily as a result of non-recurring inventory reserve, severance and valuation allowance charges recorded in
Q2. Net Loss worsened on a year-over-year basis predominantly due to unfavorable gross profit. |
Adjusted EBITDA1 & Adjusted EBITDA Margin1
 |
● |
The sequential increase in Adjusted EBITDA and Adjusted EBITDA margin is directly attributable to the increase in operating profit and
operating margin, respectively. Likewise, the decrease in EBITDA as compared to Q3 2021 is a result of decrease in operating profit and operating margin. |
Product Related Backlog ($B)1
 |
● |
Backlog was largely flat closing Q3 at ~$1.4B fueled by consistent demand for our Banking & Retail products. Based on our operating
model, we expect ~80% of 2023 Product revenue to be secured by the backlog at year-end. |
|
1)
|
Non-GAAP metric. See “Use of Non-GAAP Financial Information” and the Financial Tables in the back of this document for additional information. Note: Differences may occur due to
rounding.
|
8 | Shareholder Letter / Q3 2022
Financial Discussion
Third Quarter 2022
Banking Highlights
Revenue ($M)
 |
Banking Revenue declined ~2% sequentially primarily as the result of supply chain constraints. Year-over-year, Banking Revenue declined ~5% on a constant currency basis and
~13% on a reported basis primarily due to lower volume due to supply chain / materials availability, timing challenges, and unfavorable product / country mix.
|
|
ATM Revenue Units
|
|
 |
Q3 2022 marks a sequential acceleration versus Q2 2022, which follows the normal seasonality of the business as volume / delivery builds in the back half of the year. Lower
year-over-year volume largely due to continued supply chain and materials availability issues and timing of unit shipments.
|
| Gross Profit ($M) & Margin |
|
 |
Banking Gross Profit and Margin declined sequentially and on a year-over-year basis primarily due to cost inflation, lower volume, and unfavorable country/product mix
whereby a significant portion of Q3 2022 sales were generated by lower margin North America enterprise accounts and LATAM units.
|
Note: There is no difference between GAAP and non-GAAP segment results; as the GAAP to non-GAAP adjustments are not assigned to the segment, as these
adjustments relate to items that are considered non-routine in nature and thus do not impact the way in which the business is managed, or performance is assessed. Differences may occur due to rounding.
9 | Shareholder Letter / Q3 2022
Retail Highlights
| Revenue ($M) |
|
 |
Retail Revenue was down ~12% sequentially as reported due to FX and supply chain constraints impacting product availability. As compared to Q3 2021, Retail Revenue declined ~3% on a
constant currency basis and ~19% on a reported basis, also primarily due to supply chain constraints.
|
| SCO & ePOS Revenue Units |
|
 |
Lower year-over-year SCO volume largely due to the timing of in-transit units to the Americas, materials availability issues, and general timing. EPOS outperformance largely due to
timing as units from Q2 were caught up in Q3 due to materials availability issues.
|
| Gross Profit ($M) & Margin |
|
 |
Retail Gross Profit declined sequentially and on a year-over-year basis due to lower revenues and heightened inflation (particularly in Products). Retail Gross Margin improved
sequentially driven by revenue mix (weighted toward Services). On a year-over-year basis, Retail Gross Margin declined due to a decrease in Product margins as a result of lower volumes and heightened inflation.
|
**Presented on a constant currency basis and excluding divestitures, the held for sale non-core European retail business and Russia/Ukraine (Non-GAAP).
See “Use of Non-GAAP Financial Information” and the Financial Tables in the back of this document for additional information.
Note: There is no difference between GAAP and non-GAAP segment results; as the GAAP to non-GAAP adjustments are not assigned to the segment, as these
adjustments relate to items that are considered non-routine in nature and thus do not impact the way in which the business is managed, or performance is assessed. Q3-22 results exclude the Held for sale non-core European retail business.
Differences may occur due to rounding.
10 | Shareholder Letter / Q3 2022
Services and Products Gross Margin
| GAAP Services Gross Profit ($M) & Margin |
|
 |
GAAP Services Gross Profit and Margin increased sequentially due to the non-recurrence of a Q2 2022 severance charge, and price increases flowing through. The decrease in Services
Gross Profit and Gross Margins in comparison to Q3 2021 is the result of FX, divestitures, lower product-related services such as installation (which carry a high gross margin) and inflationary labor costs.
|
| Non-GAAP Services Gross Profit1 ($M) & Margin1 |
|
 |
Non-GAAP Services Gross Profit and Margin improved sequentially as a result of price increases flowing through. On an adjusted basis Non-GAAP Services Gross Profit and Margin have
slightly decreased in comparison to Q3 2021 as a result of lower product-related services such as installation (which carry a high gross margin) and inflationary labor costs.
|
| GAAP Products Gross Profit ($M) & Margin |
|
 |
GAAP Products Gross Profit and Margin increased sequentially due to the non-recurrence of Q2 2022 inventory reserve and severance charges. The decrease in Products Gross Profit and
Gross Margins in comparison to Q3 2021 is the result of lower sales volumes, inflationary raw material and logistics costs, FX and divestitures.
|
| Non-GAAP Products Gross Profit1 ($M) & Margin1 |
|
 |
Non-GAAP Products Gross Margin decreased sequentially due to lower volumes and a geographical mix shift which resulted in a higher percentage of units sold being lower margin ATM
dispensers and ePOS units. This is the result of materials availability and not reflective of order entry trends. On an adjusted basis, the decrease in Products Gross Profit in comparison to Q3 2021 is the result of lower sales
volumes due to supply chain constraints and inflationary raw material and logistics costs.
|
**Presented on a constant currency basis and excluding divestitures, the held for sale non-core European retail business and Russia/Ukraine (Non-GAAP).
1) Non-GAAP Metric. See “Use of Non-GAAP Financial Information” and the Financial Tables in the back of this document for additional information.
Note: Differences may occur due to rounding.
11 | Shareholder Letter / Q3 2022
Forecasted Global Cash & Availability
| Key Assumptions / Drivers |
||||
 |
Forecast assumes refinancing that provides $284 million of cash to the balance
sheet before the end of Q4 2022, including estimated impact from changes to revolver structure1 and estimated transaction fees of $62 million in connection with the transactions contemplated by the TSA |
|||
| |
Global cash and availability is defined as (1) cash, cash equivalents and
short-term investments, plus (2) revolving credit facility availability. The company estimates it will maintain ~$125 million of unusable cash at international locations that do not participate in our in-house bank and has a cost to
repatriate |
|||
| ● |
Revolving credit facility availability reflects amount drawn, as well as outstanding letters of credit |
|||
| |
Annual cash interest forecasted to increase from ~$180 million to ~$210
million following the transactions contemplated by the TSA |
|||
|
1.
|
Assumes existing $330M Revolver is replaced with an ABL facility of $250M with a 12.5% covenant blocker which results in a net ($111M) reduction in borrowing capacity.
|
12 | Shareholder Letter / Q3 2022
Operating Forecast & Strategic Operating Model
*Includes ~($62)M of financing fees associated with the transactions contemplated by the TSA.
Forecasted Number of Revenue Units by Product by Year:
(1) With respect to the company’s adjusted EBITDA outlook, it is not providing a reconciliation to the most directly comparable GAAP financial measures because it
is unable to predict with reasonable certainty those items that may affect such measures calculated and presented in accordance with GAAP without unreasonable effort. These measures primarily exclude future restructuring actions and net
non-routine items. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, operating profit and net income calculated and presented in accordance with GAAP.
(2) Unlevered free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities from continuing operations less capital
expenditures, less cash used for capitalized software development, and excluding the impact of changes in cash of assets held for sale and the use of cash for M&A and the legal settlement for impaired cloud implementation costs,
excluding the use of cash for the settlement of foreign exchange derivative instruments and excluding the use of cash for interest payments. With respect to the company’s non-GAAP unlevered free cash flow outlook, it is not providing a
reconciliation to the most directly comparable GAAP financial measure because it is unable to predict with reasonable certainty those items that may affect such measure calculated and presented in accordance with GAAP without unreasonable
effort. This measure primarily excludes the future impact of changes in cash of assets held for sale, cash used for M&A activities and the settlement of foreign exchange derivative instruments. These reconciling items are uncertain,
depend on various factors and could significantly impact, either individually or in the aggregate, net cash provided (used) by operating activities calculated and presented in accordance with GAAP.
Discussion of Operating Forecast
On Oct. 20, 2022, and as shown above, we provided our operating forecast and strategic operating model for FY2023 and FY2024 as well as our
forecasted number of revenue units by year.
Overall supply chain material availability and logistics are improving; however, our models assumed a quicker normalization of supplier relationships than we are
currently experiencing. However, it is also worth noting that this is more of a short-term challenge as we seek to normalize our working capital management, including with respect to our supplier relationships. In Q4, the conversion of
backlog to revenue recognition will continue to be challenging and we could see as much as 15% risk of unit-to-revenue conversion and its corresponding attached services and software. Note a 15% variance in units would equate to
approximately $100 million in revenue and approximately $30 million in adjusted EBITDA, depending on geography, customer and product mix. We expect that units that are not revenue recognized in Q4 will shift to 2023.
We remain encouraged by the consistent demand for our solutions. We ended the quarter with ~$1.4 billion in backlog and expect to cross into 2023 with approximately
$1.3 billion of backlog, which equates to securing approximately 80% of our Product revenue. Coupled with our ~$1.4 billion in Services contract revenue, approximately 65% to 70% of our total FY2023 revenue is secured.
With respect to our cost savings plan that we initiated in May to streamline our operations to focus the organization on our customers, drive efficiencies and
automate processes – we have now identified and are executing against approximately $200 million through our cost-savings restructuring plan and believe there are even more additional cost savings to be harvested as we continuously evaluate
reducing redundancies and increasing operational efficiencies with our streamlined, simpler model for our business.
Despite the global challenges we have faced and continue to face in 2022, we believe the trends in our business and markets, the
consistent demand for our solutions, and the completion of our refinancing favorably serve Diebold Nixdorf and will put our business back on track with our strategic operating models for FY2023 and FY2024. Our continued focus on operational
rigor and simplifying our business strategically positions us to capitalize on our strong customer relationships and market opportunities as we deliver value to our shareholders.
14 | Shareholder Letter / Q3 2022
Non-GAAP Financial Measures and Other Information
To provide investors with additional information regarding our financial results, the company discloses certain financial measures that are not
prepared in accordance with GAAP, including non-GAAP results, levered free cash flow/(use) and unlevered free cash flow/(use), net debt, EBITDA, adjusted EBITDA, segment gross profit, segment gross margin and constant currency results. The
company calculates constant currency by translating the prior year results at current exchange rates. The company uses these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate our operating and financial
performance and to compare such performance to that of prior periods and to the performance of our competitors. Also, the company uses these non-GAAP financial measures in making operational and financial decisions and in establishing
operational goals. The company also believes providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors evaluate our operating and financial performance and trends in our business,
consistent with how management evaluates such performance and trends. The company also believes these non-GAAP financial measures may be useful to investors in comparing its performance to the performance of other companies, although its
non-GAAP financial measures are specific to the company and the non-GAAP financial measures of other companies may not be calculated in the same manner. We provide EBITDA and Adjusted EBITDA because we believe that investors and securities
analysts will find EBITDA and adjusted EBITDA to be useful measures for evaluating our operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our
ability to meet our future debt service, capital expenditures and working capital requirements. We consider free cash flow (use) to be a liquidity measure that provides useful information to management and investors about the amount of cash
generated by the business that, after the purchase of property and equipment and capitalized software development, changes in cash of assets held for sale and the use of cash for M&A activities, and excluding the use/proceeds of cash for
the settlement of foreign exchange derivative instruments, can be used for debt servicing, strategic opportunities, including investing in the business, making strategic acquisitions, strengthening the balance sheet and paying dividends.
Unlevered free cash flow (use) provides incremental visibility into the company's liquidity by excluding cash used for interest payments from free cash flow (use). For more information, please refer to the Financial Tables in the back of this
document.
Forward-Looking Statements
This letter 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, potential impact of the ongoing coronavirus (COVID-19) pandemic,
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. Forward-looking statements reflect the current views of the Company with respect to future events and are subject to 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.
15 | Shareholder Letter / Q3 2022
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:
|
●
|
our ability to successfully complete the transactions contemplated by the TSA, including the ability to negotiate and execute definitive documentation,
the receipt of required consents to any or all of such transactions, satisfaction of any conditions in any such documentation and the availability of alternative transactions;
|
|
●
|
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;
|
|
●
|
our ability to successfully convert our backlog into sales, including our ability to overcome supply chain and liquidity challenges;
|
|
●
|
the ultimate impact of the ongoing COVID-19 pandemic and other public health emergencies, including further adverse effects to the Company’s supply chain,
maintenance of increased order backlog, and the effects of any COVID-19 related cancellations;
|
|
●
|
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, such as the current $150m+ cost savings plan;
|
|
●
|
the success of the Company’s new products, including its DN Series line and EASY family of retail checkout solutions, and EV charging service business;
|
|
●
|
the impact of a cybersecurity breach or operational failure on the Company's business;
|
|
●
|
the Company's ability to generate sufficient cash to service its debt or to comply with the covenants contained in the agreements governing its debt and
to successfully refinance its debt;
|
|
●
|
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;
|
|
●
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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;
|
|
●
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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;
|
|
●
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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 May 2022) and the merger/squeeze-out;
|
|
●
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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;
|
|
●
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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, hostilities or conflicts (including the conflict between Russia and Ukraine), disruption in energy supply, taxes and regulations and laws affecting
the worldwide business in each of the Company's operations;
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16 | Shareholder Letter / Q3 2022
|
●
|
the Company's ability to maintain effective internal controls;
|
|
●
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unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments;
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|
●
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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
government regulations.
|
|
●
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and other factors included in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2021, its
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, and in other documents the company files with the SEC.
|
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.
17 | Shareholder Letter / Q3 2022
Supplemental Schedules
18 | Shareholder Letter / Q3 2022
19 | Shareholder Letter / Q3 2022
Q3-22 v Q3-21 QTD Revenue GAAP to Non-GAAP Revenue Reconciliation ($ in Millions)
Segment View
Business Line View
20 | Shareholder Letter / Q3 2022
Q3-22 v Q3-21 QTD Gross Profit GAAP to Non-GAAP Reconciliation ($ in Millions)
Segment View
Business Line View
1 Amounts include the impact of held for sale non-core European retail business for comparability purposes.
Otherwise, there is no difference between GAAP and Non-GAAP segment results; as the GAAP to Non-GAAP adjustments shown in Note 1 of the Earnings Release are not assigned to the segments, as these adjustments relate to items that are
considered non-routine in nature and thus do not impact the way in which the business is managed or performance is assessed.
21 | Shareholder Letter / Q3 2022
Q3-22 v Q2-22 QTD Revenue GAAP to Non-GAAP Revenue Reconciliation ($ in Millions)
Segment View
Business Line View
22 | Shareholder Letter / Q3 2022
Q3-22 v Q2-22 QTD Revenue GAAP to Non-GAAP Gross Profit Reconciliation ($ in Millions)
Segment View
Business Line View
1 Amounts include the impact of held for sale non-core European retail business for comparability purposes. Otherwise, there is no difference between
GAAP and Non-GAAP segment results; as the GAAP to Non-GAAP adjustments shown in Note 1 of the Earnings Release are not assigned to the segments, as these adjustments relate to items that are considered non-routine in nature and thus do
not impact the way in which the business is managed or performance is assessed.
23 | Shareholder Letter / Q3 2022
Q3 2022 QTD Adjusted EBITDA
(in $ Millions)
(in $ Millions)
Trailing 12-month Adjusted EBITDA
(in $ Millions)
(in $ Millions)
The company defines EBITDA as net loss excluding income tax benefit/expense, net interest expense, and depreciation and amortization expense. Consistent with the company's current credit
agreement, Adjusted EBITDA is EBITDA excluding the effects of the following items: share-based compensation, amortization of cloud-based software implementation costs, foreign exchange gain/loss net, miscellaneous net, equity in earnings of
unconsolidated subsidiaries, restructuring and transformation expenses, refinancing related costs, non-routine expenses and the adjusted EBITDA loss of our held for sale non-core European retail business, as outlined in Note 1 of the Non-GAAP
measures. To remain comparable to the U.S. GAAP depreciation and amortization measures, the company excluded the amortization of Wincor Nixdorf purchase accounting intangible assets from non-routine expenses, net in the Adjusted EBITDA
reconciliation of $16.6 and $19.5 for the three months ended September 30, 2022 and 2021 and $52.8 and $59.3 for the nine months ended September 30, 2022 and 2021. Additionally, $0.8 of restructuring-related share-based compensation activity
was excluded from restructuring and transformation expenses for the nine months ended September 30, 2022 and $1.9 of accelerated depreciation expense for the nine months ended September 30, 2021 was excluded from restructuring and
transformation expenses. Deferred financing fee amortization is included in interest expense; as a result, the company excluded from the depreciation and amortization caption $3.7 and $4.3 for the three months ended September 30, 2022 and
2021 and $12.0 and $13.0 for the nine months ended September 30, 2022 and 2021. $1.0 and $2.7 of depreciation and amortization expense was excluded from Held for sale non-core European retail business for the three and nine months ended
September 30, 2022, respectively.
28 | Shareholder Letter / Q3 2022
These are Non-GAAP financial measures used by management to enhance the understanding of our operating results. EBITDA and Adjusted EBITDA are key measures we use to evaluate
our operational performance. We provide EBITDA and Adjusted EBITDA because we believe that investors and securities analysts will find EBITDA and Adjusted EBITDA to be useful measures for evaluating our operating performance and comparing our
operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements. However, EBITDA and Adjusted
EBITDA should not be considered as alternatives to net income as a measure of operating results or as alternatives to cash flows from operating activities as a measure of liquidity in accordance with GAAP.
24 | Shareholder Letter / Q3 2022
Q3 2022 QTD Free Cash Flow (in $ Millions)
Trailing 12-month Free Cash Flow (in $ Millions)
Free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities from continuing operations less capital expenditures, less
cash used for capitalized software development, and excluding the impact of changes in cash of assets held for sale and the use of cash for M&A and the legal settlement for impaired cloud implementation costs, and excluding the use of
cash for the settlement of foreign exchange derivative instruments. Unlevered free cash flow (use) provides incremental visibility into the company's liquidity by excluding cash used for interest payments from free cash flow (use). With
respect to the company’s non-GAAP unlevered free cash flow outlook for 2022, it is not providing a reconciliation to the most directly comparable GAAP financial measure because it is unable to predict with reasonable certainty those items
that may affect such measure calculated and presented in accordance with GAAP without unreasonable effort. This measure primarily excludes the future impact of changes in cash of assets held for sale, cash used for M&A activities and
the settlement of foreign exchange derivative instruments. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, net cash provided (used) by operating
activities calculated and presented in accordance with GAAP.
25 | Shareholder Letter / Q3 2022
Q3 2022 Net Debt (in $ Millions)
Trailing 12-month Return on Invested Capital (ROIC)
(in $ Millions)
2 Return on invested capital (ROIC) is a non-GAAP financial measure defined as adjusted net operating profit after tax (NOPAT) utilizing a 30%
estimated effective tax rate divided by average invested capital for the period. Invested capital consists of net debt, leases, pension and other post-retirement liabilities and equity.
3 Includes cash included in assets held for sale
3 Includes cash included in assets held for sale
26 | Shareholder Letter / Q3 2022
Software Business Line Distribution*
Q3 2022 QTD
(in $ Millions)
GAAP
Non-GAAP
27 | Shareholder Letter / Q3 2022
Q3 2022 YTD
GAAP
Non-GAAP
28 | Shareholder Letter / Q3 2022
Q3 2021 QTD
GAAP
Non-GAAP
29 | Shareholder Letter / Q3 2022
Q3 2021 YTD
GAAP
Non-GAAP
30 | Shareholder Letter / Q3 2022