Diebold Nixdorf Incorporated Common stock

Good morning. My name is Adam and I'll be your conference operator today. At this time, I would like to welcome everyone to the D-Build Next Door's fourth quarter and full year 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Ms. Machuska, you may begin your conference.

Hello, everyone, and welcome to our fourth quarter and full year 2021 earnings call. I'm Christine Marchuska, Vice President of Investor Relations for Diebold Nixdorf. To accompany our prepared remarks, we have posted our press release, earnings presentation, and a new shareholder letter to the Investor Relations section of our corporate website. I would encourage investors to review the shareholder letter as it contains additional information regarding the progress of the company. Later this morning, we will host a replay of this webcast. We also made an announcement today regarding our upcoming CEO transition. In a moment, we will share remarks from Gerard Schmidt, President and Chief Executive Officer, as well as Octavio Marquez, who will be succeeding Gerard at Diebold Mixed Source next CEO. In his message, Gerard will provide commentary on the business environment, our accomplishments in 2021, and then introduce Octavio. Finally, Jeff Rutherford, Chief Financial Officer, will discuss the company's financial performance, including highlights from the quarter and year, along with our guidance for 2022. Then take your questions. Before we begin, I will remind all participants that during this call, you will hear forward-looking statements, including guidance we will be providing for full year 2022. These statements reflect the expectations and beliefs of our management team as of the time of this call, but they are subject to risks and uncertainties that could cause actual results to differ materially from these statements. Additional information on these factors can be found in the company's periodic and annual filings with the SEC. Participants should be mindful that subsequent events may render this information to be out of date. We will also be discussing certain non-GAAP financial measures on today's call. A reconciliation between GAAP and non-GAAP measures can be found in the supplemental schedules of our earnings presentation slides as well as in the tables of today's earnings release. And now I'll hand the call over to Gerard.

Thank you, Christine. And good morning, everyone. It's a pleasure to speak with you today. In 2021, we faced unprecedented challenges brought on by the second year of the pandemic. And I'm pleased to report that in the fourth quarter, we delivered on our objectives. Our work over the last few months of 2021 was painstaking and meticulous, requiring us to look at every area of opportunity, from logistics and supply chain to prepayments and payables. What seemed impossible to those outside our company was in fact possible, and we've once again shown that we're resilient and strong. While supply chain and logistics challenges were two of the bigger themes in 2021, it is still noteworthy to share that in 2021, we shipped more ATMs, more self-checkout devices, and more point-of-sale devices than we did in 2020, a testament to the resilience of our model. While the pandemic has disrupted our world and caused us to rethink what the future might look like, We have time and again proven our ability to build an agile company that challenges the status quo and goes the extra mile to execute well. The environment we've been in for nearly two years has brought to the forefront the rapidly changing demands of consumers and the need for self-service solutions wherever possible. We are well positioned to offer these solutions plus growth opportunities for our customers. whether at a bank, a grocery store, or retailer, to help them deliver more digital, flexible, and effective consumer journeys. In retail, the evolution of consumer behavior, along with the rapidly changing labor dynamics, have led to increased demand for self-service and automation, and growth is being driven by customer momentum for our self-service solutions. In 2021, we saw growth above market rates in Europe for our self-service hardware, services, and software. We also continue to make inroads into other markets, such as the United States and Australia. In banking, we continue to see strength in demand for cash recyclers as banks rethink their branch footprint and move more towards automation and efficiency around their real estate. We've also seen a shift in market share thanks to our best in class DN series devices as our share with large US customers has increased. In 2021, our America's order levels were 16% higher than 2020 and 17% higher than pre-pandemic levels in 2019. On this note, Throughout last year, we expanded our relationship with a top five U.S. financial institution to deploy DN series cash recyclers. Let me now turn to highlight our world-class services organization. We, as well as our customers, consider this to be one of our best assets. And in many cases, it is a major contributor to DN winning new business and expanding our current relationships. It also provides opportunities for new horizontals, like electric vehicle or EV charging stations, which I will comment on later. In 2021, we continued our journey of delivering superior service by reaching a milestone with connected devices for our AllConnect data engine. With approximately 150,000 banking self-service devices connected to the solution, which represents approximately 122% year-on-year growth in connected devices. Our engine leverages real-time Internet of Things capability to support our predictive maintenance offering, which has been reducing customer downtime significantly. Equally, in retail, we continue to deliver value in services to our customers. I would be remiss to not mention an ongoing success story we achieved with one of our key customers, a major UK-based retailer. This customer relies on us for flawless execution and service excellence and has over 25,000 checkout lanes. I'm pleased to report that this past year we delivered 100% availability of point of sale and self-checkout estates on their two most demanding shopping days of the year. We helped this retailer improve their end customer satisfaction with shorter queues, shorter wait times, while increasing their sales for this period year over year. This is now the 10th consecutive year that we have achieved this performance goal and a testament to our services capability. We also implemented this program with another large European retailer with the same success, proving this is a repeatable model for retailers. We believe delivering or exceeding on the service expectations of our customers is one of the best foundations for putting additional technology into the field. And both of these retailers placed additional self-checkout orders with us in December. We were glad to see the trust our retailers have in us to continue to deliver quality services for them and their customers. Further augmenting our strength in services, I'd like to comment briefly now about the strides we made in the fourth quarter into EV charging stations, especially in Europe. Today, the EV charging value chain is fragmented. Multiple players, including startups, mid-sized companies, and large electronics conglomerates are competing in the space. Additionally, there are multiple roles along the value chain that are inconsistent. This is a large and growing market with significant demand. By 2026, the number of public EV charging stations in Europe and the United States will be greater than the number of ATM devices. With more EV drivers, especially in Europe where there are less likely to have home charging opportunities and rental and fleet cars and public transportation moving to more electric vehicles, there will be a need for more public charging stations. Currently, there are over 40 relevant OEM or charge point operators globally, and we are working or in talks with many of them. Our global service capability, including our technicians and our skills in global spare parts logistics management and multilingual help desks, have resonated with several market participants that lack access to these skills as they look to scale their own businesses. As of Q4 2021, we are contracted for several thousand charging stations in Europe and the U.S., with a short-term pipeline of three times the size of our current base. The team has set a target to service over 50,000 charging stations by the end of 2022. One notable recent win that I would like to pull out is with Compleo, one of the leading full-service providers of charging technology in Europe. With this partnership, DN will provide a full range of managed services for initially over 1,000 of Compleo's DC fast charging stations in public locations across Germany with the potential for expansion. Lastly, as you know, diversity and sustainability have been an important focus for us as a company. I'm proud to note that in 2021, females accounted for over 60% of our senior hires at the vice president and above level. And we made important strides environmentally, reducing our scope one and two carbon emissions by 6%. Our shareholder letter details further accomplishments on this front. And I want to emphasize how grateful I am to our teams for their work and dedication in this important area. As Christine mentioned earlier, we've also announced this morning that Octavia Markins will be the next CEO of Devo Mixed-Off. Over the past four years, we have undertaken a comprehensive restructuring and transformation efforts. The company has made significant strategic and operational progress. We have grown profitability, gained market share through our DN series and self-checkout solutions, and entered new growth markets. And I'm proud that we've achieved these goals while also delivering four years of consecutive improvements in customer satisfaction. We entered 2022 with a strong backlog, a seasoned executive team, and operations that have proven to be resilient despite the pandemic and a challenging macroeconomic backdrop. As we look ahead, to move past the pandemic and build further momentum in growth areas like EV charging services and payments. While continuing to optimize our core businesses in retail and banking, it is the right time for Octavio to assume the CEO role. Octavio needs no introduction to many of our customers and to our employees. He has been leading our global banking segment with responsibility for approximately 70% of the company's revenues and is deeply passionate about our customers and our business. He has a deep understanding of our business and is the right person to lead Diebold Nixdorf into the future. I will remain a member of Diebold Nixdorf's board of directors until my term expires at the 2022 shareholder meeting. I will also be working closely with Octavio and the rest of the leadership team as an advisor for a few months to ensure a smooth transition. It has been a tremendous privilege serving as CEO of Deval Nextoff, and I believe that we have materially advanced the operational and strategic direction of the organization. I'd like to thank my colleagues on the executive team, the board, and all of the employees at Deval NextOff for their support through this journey and to congratulate Octavio on his appointment. As this will also be my last earnings call, I would like to also thank the investment community for your support and ongoing interest in the company. I'd like to now hand the call over to Octavio for a brief introduction.