Diebold Nixdorf Incorporated Common stock

Good morning. My name is Bailey and I'll be your conference operator today. At this time, I would like to welcome everybody to the Deep Old Nixdorf fourth quarter 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll 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. Thank you. Ms. Machuska, you may now begin your conference.

Thank you. Hello everyone and welcome to our fourth quarter and full year 2022 earnings call. I'm Christine Marcheska, Vice President of Investor Relations for Diebold Nixdorf. To accompany our prepared remarks, we have posted our press release and presentation to the investor relations section of our corporate website. Later this morning, a replay of this webcast will also be available on the investor relations section of our website. Before we begin, I will remind all participants that during this call, you will hear forward-looking statements. These statements reflect the expectations and beliefs of our management team at 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 Participants should be mindful that subsequent events may render this information to be out of date.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 tables of today's earnings release. And now, I'll hand the call over to Octavio.

Thank you, Christine, and thank you all for joining us today. Before I start, as we announced this morning, I want to thank my colleague and friend, Jeff Rutherford, for his leadership over the past four years and his significant contributions to our company. I look forward to working with him over the next few weeks as he transitions his CFO role to Jim Barna. Jim, our head of treasury and tax, who has been part of our succession planning for the CFO role, has been instrumental in refinancing our debt and improving our operating model. I am excited about working with Jim during this new chapter for our company. With that, I will turn it over to Jeff for some remarks.

Thank you, Octavio. Over the last four years, we've accomplished a lot here at Diebold Nixdorf, and I'm confident in the path you are taking the company to success. I would like to thank the investment community for your continued support, and I wish Octavio and the company the best.

Thanks, Jeff. We also want to say thanks to Gary Greenfield, who stepped down as board chair after five years for his service to the company. We are grateful for the contributions of these leaders and for bringing us to this point in our transformation journey. As communicated earlier this week, we intend to announce a smaller board in our upcoming annual proxy statement. Our refreshed board and leadership team are excited and unified about our priorities as a company, which include operational execution, and now that our refinancing is behind us, a strong focus on deleveraging. With that, let's now discuss our quarterly results. From key customer wins to important milestones that are improving our operational rigor, the steps we took in 2022 to position our company for a stronger future will be a springboard for our success. As I reflect on the past 11 months as CEO of Diebold Nixdorf, I couldn't be prouder of our employees for helping me navigate an ever-changing environment and to our customers for the support they provided and their continued trust in VN Solutions. Last year, a significant amount of effort and time were spent on improving operations and completing our refinancing transactions. I am happy to say we ended 2022 on a positive note, both with the closing of our transaction support agreement and finishing the year with a record high backlog. Closing the TSA was an important milestone that provides us with the capital we need to normalize our operations, meet supplier commitments, and fully execute on our value-generating model. It also allows us to put our focus solely back on meeting customer demand, converting our record-high $1.4 billion backlog into revenue. composes $1.1 billion of the backlog, with retail composing the remainder $305 million. We now have scheduling and confirmation of 75% of our ATM unit count and 60% and 35% of our SCO and EPOS unit count, respectively, for 2020. As we continue to shift our customers and install base to the new DN series recycling ATMs and roll out our self-checkout family, including our new retail EC1 solution. Closing out 2022 with backlog and financial stability has allowed us to enter 2023 focused on clear priorities for our customers, employees, and shareholders. Our focus is straightforward, the leveraging free cash flow generation, and evaluating all strategic opportunities based on the following three goals. First and foremost, we plan to deliver our products to our customers and maintain operational excellence. Let me be clear. In the operational plan we presented in our last call, we are committed to delivering 60,000 ATMs, 35,000 SCOs, and 134 EPOS in 2023. Delivering these products is our first and primary focus as it translates directly into revenue and financial stability. Next, we will stabilize and grow our recurring revenue, protecting and selectively growing our contract base. And importantly for the leadership team and I, we will reinvigorate our culture after a year of so much change. These priorities, plus starting the deleveraging process are the foundation for our 2023 model, and we are committed to building and delivering our core solutions with a strong focus on unit conversion and unit economics. We started talking about this last quarter, and we believe it is the most simple and effective way to evaluate our performance from an operational standpoint. As I mentioned previously, in 2023, we plan to recognize revenue for 60,000 ATMs, 35,000 self-checkout solutions, and 134 point-of-sale devices. We have clear line of sight to our ability to manufacture and deliver these units. Stabilizing our business around our core expertise to drive growth and execute around our contract base will also expand our recurring revenue opportunities, creating longer-term value. And finally, we continue to optimize our pricing strategy and we'll see the benefit of these actions throughout the year. As the multiple pieces of our global supply chain continue to stabilize, We will see some variability quarter over quarter through 2023. However, with the significant work done in 2022, such as getting our Ohio manufacturing facility fully operational and setting up contract manufacturing for the India market, we're building resiliency in our operations. As we implement our plan, we will be diligent in managing our working capital and liquidity and make sure that costs don't creep back into our business as we continue to look for additional efficiencies. Demand for our banking and retail solutions in the market is high, and we will deliver. I look forward to sharing more information with you on these company-wide priorities in future quarters. Now, I would like to turn it over to Jim to cover our Q4 2022 financial performance.

Thank you, Octavio. My prepared remarks will include references to certain non-GAAP metrics, such as adjusted EBITDA. Today, I will spend my time discussing the fourth quarter results relative to the full-year 2022 operating model included in our last earnings report on November 8th. For discussion of our fourth quarter and full-year performance relative to prior periods, please see the financial summary included in our earnings release. Total revenue of approximately $969 million was largely in line with our Q4 risk-adjusted operating model. We revenued the following units in Q4, 17,000 ATMs, approximately 6,000 SCOs, and approximately 33,000 EPOs. Adjusted EBITDA of approximately 104 million was also in line with our Q4 operating model and represents a sequential improvement of approximately $28 million or approximately 37% over the third quarter. The sequential improvement was driven by higher conversion of units to revenue along with continued execution on our cost savings plan and marks the return of exceeding $100 million of quarterly adjusted EBITDA. For the full year, we revenue total Total revenue for the full year, total revenue of approximately 3.461 billion. We recognized revenue on the following units in the full year of 2022. Approximately 49,000 ATMs, approximately 21,000 SCOs, and approximately 126,000 EPOS. Adjusted EBITDA of approximately 265 million was in line with our operating model considering the risk previously communicated in Q3. Turning to 2023 for a moment, with respect to liquidity, we are modeling to have adequate liquidity throughout 2023 to run our business and execute on our plan, and we'll vigilantly manage liquidity through increased operational rigor. We ended 2022 with approximately $345 million in liquidity, and as for our model, are targeting to end 2023 with greater than $375 million in liquidity. The increase is modeled to be the result of positive free cash flow generation, net of anticipated debt paid out in 64 of 123. Now Octavio will walk you through our banking and retail business and financial highlights.

We had a strong number of customer wins during the quarter. In banking, the shift from legacy ATM devices continued as our new DN series cash recyclers Comprice approximately 80% of total new banking orders in North America in the fourth quarter. In terms of financial performance, banking revenue came in at 689 million and segment operating profit was 102 million. Both metrics were up sequentially due largely to increased unit delivery and continued focus and driving efficiencies in the business. In retail, we saw contract-based growth in self-service solutions, including self-checkout, as the vast majority of SCO shipments represent new placements in the market and have generally a strong service attachment rate. Coming off a strong National Retail Federation show, better known as NRF, in New York City in January, our retail solutions remained in high demand, and our self-checkout business continues to grow faster than the market. Especially as we have started the rollout at a major grocer in the U.S. Increasingly, more U.S.-based retailers are seeing the difference of the DN SCO experience in these stores. In addition, we are also very excited about our new DN Series CC1 product. which received great feedback from over 160 customers who attended the launch during the NRF show. We believe this product is a game changer because it allows a retailer to easily and economically move from a traditional checkout to a self-checkout to stay ahead of consumer preferences. Retail revenue was approximately $276 million in the fourth quarter, while segment operating profit was $44 million. Sequentially, revenue growth was largely product-driven, which was a function of improved self-checkout volumes and a rebound in third-party solution business. Operating profit improvement was largely the result of gross margin improvements due to higher volume and mix. Despite significant supply chain challenges, retail managed to grow low single digits, excluding currency and divestitures, Now, I would like to provide you an update on the cost savings plan we implemented last year. We entered 2023 with $175 million of executed run rate cost savings and expect to close the year with a run rate of $190 million. We continue to target the midpoint of 2023 for completion of the restructuring. and expect to see some cost savings benefits in the first half of the year, offset by the reinstatement of our annual incentive compensation and merit pay increases. In closing, as we look ahead in 2023, we are well positioned for success with a strong order pipeline and a straightforward focus, converting our backlog into revenue. I'd like to recognize our incredible employees for their hard work and dedication. especially during a year of considerable change. Their hard work, discipline, and unwavering commitment to our customers are making a real difference in our efforts to strengthen our business and our competitive position. We look forward to continuing to make important strides to deliver world-class products and services that meet the demands of our banking and retail customers while sustaining our market competitiveness. We are building momentum and will leverage our leadership position to capitalize on opportunities in a transforming industry. I am excited to move forward in 2023 with a clear plan to success and a strong, committed global team.

With that, I will now turn the call over to the operator for Q&A.

Thank you. Again, if you would like to ask a question, please press star and then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. The first question today comes from the line of Matt Somerville from DA Davidson. Please go ahead. Your line is now open.

Thanks. A couple of questions. Maybe first let's talk about pricing versus input cost. What was your total price capture in 22, and how much incremental price do you intend to capture in 23? And with that, what will your price-cost ratio look like?

So, Matt, thanks for the question, and one with multiple ways to answer this for you. So, let me start with the pricing question. Clearly, as inflationary pressures accelerated through 2022, we needed to take pricing action. And with extended supply chain lead times, we were always a little bit behind the curve in our cost to price ratio. We made significant changes to improve supply chain velocity, which we will start seeing. And I am confident that we've worked through most of the backlog that was, I would say, Incorrectly priced or price not not considering some of the inflationary pressures. So, as we stated in our, in our operating plan, you can see the walk through and we expect to get to the, you know, to our historical margins by the end of 20, you know, by the end of the year. So that's, you know, I will tell you, that's the work that we're doing in that aspect. It is important to note, we've changed many things around pricing, the frequency, the monitoring of input costs that in this changing environment needs to be done almost on a daily basis is one of the changes. We've changed sales compensation so that our sales teams are more heavily compensated based on the profitability of the deals that they bring. So, I am very confident and we can probably walk you through in a different call through all the pricing elements that are at play. But we feel confident that all these actions will help us, you know, get back to our historical margins. The other part of your question, Matt, if you... Sure. Around input cost. We do see, you know, that input costs have started to, you know, have stabilized and are actually starting to trend in a positive direction. I would give you the clear examples. You know, one of the biggest headwinds that we had was around microelectronics components, both in availability and cost. We see the cost starting to normalize and availability improves has improved significantly. Another big input cost has been global logistics where we now see container pricing trending trending favorably. It started trending favorably at the beginning of the quarter and we continue to see that trending favorably. So, I would say that both the new pricing discipline, the new pricing actions that we've taken, plus, you know, a stabilization on the component inputs, I think it's still too early to call that we will, you know, that it's a significant reduction. But at least we see that it has stabilized and now starting to trend in the right direction will clearly, you know, be beneficial as we go through the year.

Got it.

Thank you for that, Cullen. And then just as a follow-up, Octavio, now taking on the role as chairman, I'm wondering if this maybe allows the company to think differently strategically about the business. And as chairman and CEO, do you think it makes sense for the company to formally look at a strategic process as a means to drive accelerated deleveragement?

So, Matt, the first thing, I'm very excited about the, you know, the way the company has structured itself. I think it's part of a broader plan that the board of directors has. You know, we're refreshing our board, creating a smaller board. The decision to combine the CEO and chairman positions, you know, positions is very clear. You know, for the time being, we have to be very, very aligned on the priorities for the company. One of them is the leveraging. You know, that I want to be very clear about. So, we will clearly evaluate all options, and that is something that the board is very conscious about. And we will look at all possibilities. There's operational things that we can do to deleverage. We will use every tool at our disposal, you know, to really look at how we change the trajectory of the debt that the company has, the debt burden that the company has. So, I will tell you that we will look at all alternatives, and this is one of the priorities of our board.

Great. Appreciate that. I'll get back in queue. Thank you.

Thank you, Matt. Thank you. The next question today comes from the line of Paul Chung from JPMorgan. Please go ahead. Your line is now open.

Hi. Thanks for taking my question. So just on ATM shipments, you know, you recognized, I think, 49 for the year. I think the 3Q guy was around 52. So what drove the shortfall there? And, you know, on the confirmed 45K orders for 23, is this, you know, higher than normal confirmed orders this early in the year given some of the, you know, component shortages kind of hitting last year? How confident is the firm on kind of delivering on those units this year? And then I have a follow-up.

Sure, sure, sure. Pauline, thanks. Let me start with the one around where do we stand today with our backlog and confirmed manufacturing and deliveries to customer? As you saw, we have north of 70 plus percent in ATM, 60 percent in SCO. These are orders that are now scheduled in our manufacturing, are clear to build based on the customer's schedule. And clear to build to us means that we either have all the components we needed or we have commitment from our suppliers to deliver those components in the time that we need those components to complete those units. So, I will tell you that our view is we are extremely confident about delivering on those units. As far as how does that compare to it to it to history? And again, I'm always a little reluctant to talk about history because the world has changed so much over the past over the past. Year, at least, or the past 2 years. But if we look historically, we have never started the year with more than 30% of our backlog in this position. So we are clearly in a much better position right now to deliver on our operational plan than we've ever been before. So I'm confident about that. And the other side is we continue to receive significant orders from our clients. You know, our backlog, even though our revenue grew, didn't reduce as much as we were expecting to because we had strong order entry that, you know, again, that surpassed our expectations. So that helped us continue building on that backlog. So to make a long story short, Paul, we feel very confident on delivering on those units. And we feel very confident that with the demand and rescheduling backlog, we will get to the stated goals that align to our plan.

Okay, great. Thanks for that. on the planned revenue units of 60K that would, you know, suggest 20% increase in units. So how does that 60K unit projection translate to overall banking revenue results for 23? Can you talk about the ASP mix effects that you're seeing kind of services attached right in software?

Yeah, so, Paul, I, you know, we will start disclosing the, you know, as we go into Q1, the revenue, the units we manufacture. And remember, we don't manufacture either an ATM or a SCO or an EPOS device without a firm customer order. So, we'll start disclosing how many devices we manufacture and how many of those turned into revenue during the quarter. Let me give you a hypothetical example of what you will see. In the ideal world, you know, if we plan to deliver 60,000 ATMs for cash flow reasons and linearity, it would be great if we could manufacture 15,000 ATMs every quarter and then revenue 15,000 ATMs every quarter. What you will see us doing is probably Q1 and a portion of Q2, our manufacturing will exceed our revenue as we're shipping ATMs across the globe. But starting, you know, the second half of Q2 and forward, you will start seeing our manufacturing be lower than the units that we start revenue. So you'll start seeing that flow, and we will share that with you. As far as the ASPs and that, we will keep it consolidated. Remember, depending on the type of unit, whether it's a recycler or a cash dispenser, whether it's being sold to a large national bank in the U.S. or a small credit union or a global bank or Asian customer, the ASPs have great variation, but we will start giving you more color around that into the future. For now, you know, because in any given quarter, there can be some variation based on geographic mix and product mix, but overall the year, you know, it should be a fairly straightforward calculation.

Okay, thanks for that. And lastly, on free cash flow, have you provided an initial outlook for 23? I didn't see it, but How do we think about kind of working cap dynamics, cash interest expense, CapEx, and, you know, your expectations for how cash builds through the year?

Yep.

Thank you.

Yeah, so I'll turn it over to my colleague, Jim, so he can answer his first question as incoming CFO. Paul, so he will always have a special place in his heart as the first question comes from you.

I'd say, Paul, we kind of couched it there in the context of liquidity, right? I mean, we've talked about where we ended 22 and then, you know, where we expect to end 23. And so you can appreciate that within there, there is positive free cash flow generation. And, you know, the improvement absent all of the one-time items that we had in 2022, to your point, is going to come from a fair amount of working capital efficiency. And as it relates to, you know, how we see that sequencing throughout the year to Octavia's point, I mean, that's something that we continue to work through as we layer in, you know, where those efficiencies kind of mark themselves throughout the year.

Great. Thank you. Thank you.

Thank you. The next question today comes from the line of Karthik Mehta from North Coast Research. Please go ahead. Your line is now open.

Good morning. Octavio, as you know, the company has refinanced its debt. It seems like it's in a better liquidity position. But has everything that's happened resulted in any kind of competitive issues where maybe customers might have backed off because of the situation Diebold was in? And if so, has that changed at all?

So, Karthik, and I think it's in our presentation slides, and I probably should have touched on that because it's a very promising statistic for the future and the proof of the relationships we have with customers. Clearly, delivery delays and, you know, a little bit of uncertainty around the financial situation was always in customers' minds. But we conducted our annual banking customer survey survey during the year, and I will tell you that 92% of our customers plan to maintain or expand their relationship with Diebold Nextdoor. That is, for a business-to-business company, it's an extremely high amount. So as I started my remarks, you know, when I say I thank our customers for their support, I mean that wholeheartedly because we continue to receive orders for both our, you know, recyclers for our self-checkout devices. And again, I think that the demand is there, the quality of the solutions is there, and our customers remain very committed to continuing doing business with us. we really didn't see any cancellations based on delivery times, and we don't expect to see any. So I think we entered the year with better operational rigor, better financial position, and an enviable customer base both in banking and retail that is rooting for us to be successful.

And then I know you talked a little bit about free cash flow, but Would you think that, I think you previously gave some thoughts on 2023 free cash flow. Are those still valid or has anything changed maybe to change your thoughts on that?

Yeah, I would say that we're generally in line. I think when we talked at the third quarter and we put this out in unlevered terms, I would say that we're materially in line with that as we think about where we expect 23 to ultimately land or how we're modeling it now. There are some things, as I mentioned previously, that we're working through in terms of working capital and related efficiencies. And obviously, you've got the EBITDA growth in there as well year over year. But I would say that the... The value that we put out there in our model that we talked about at the third quarter is still largely intact for how we currently think about 23. Yes. Thanks so much. I appreciate it.

yeah but the model that we put forward that's predicated on the unit conversion and unit economics that we put forward that that is our that is our guiding post you know we that's why we're so focused on talking about these units because these units support the model that we put forward and that's the model that we're driving for so so you know we as jim said you know there's always a year there'll be little little but we are committed to our model and are executing to that end.

Perfect. Thank you, Octavio. I appreciate the color.

Thank you. The next question today comes from the line of Matt Bryson from Wedbush Securities. Please go ahead. Your line is now open. Good morning.

Thanks for taking my question. With the shortfall in unit shipments on the ATM side versus your prior 2022 guide, and I'll tell you, I think you talked a bit about orders being better than expected and people were driving revenue backlog higher. Shouldn't both of those give you some conviction or some more buffer? uh, in terms of how you're thinking about your, your 2023. So,

So, so Matt, you know, what I would say is we feel very comfortable with the numbers that we have. We still, I would say that my 1st priorities deliver what we commit to what we committed to delivering. That's the 1st priority. So we, we have, we're in the middle of our 1st quarter. We're working hard to deliver our 1st quarter. Then we'll work hard to deliver our 2nd, 3rd and 4th quarters. And, yeah, if demand remains strong, if we, you know, we clearly would, if the markets change, we know there's possibilities. But right now, our focus is let's deliver what we promised and not over-rotate, you know, on what we can do. So, we have a solid plan, and that's what we're aiming for right now.

Thanks. I guess my follow-up is, given the high backlog levels, Um, does that shift how, how we should think about, uh, revenue linearity all throughout the year? Um, in the sense that I know from a manufacturing perspective, you're trying to even out your manufacturing. So you produce a bit more in the first half shift a bit more in the second half. Um, but it would seem to me that a normal year, your, your order flow would also tend to be more second half oriented where now you're just coming into the year. with a whole lot more in terms of orders in hand. So I guess, should linearity be different, or is there something on the manufacturing side where you get more of a ramp through the year so it looks more like normal Q1 through Q4 revenue ramp?

Our plan, Matt, and remember, we don't discuss guidance based on quarters. But you're looking at things the right way. You know, in the perfect world, we would manufacture, as I said, 15,000 ATMs. You know, I can't do the math on the scope because 34 divided by 8,000, 9,000, you know, but whatever the math ends up being, that would be the perfect. We build it and we invoice it, you know, within that or, you know, there's that balance. Clearly, you know, based on where our manufacturing is, based on the shipment times, you know, I would encourage you to think that, you know, that we will be very stable in manufacturing throughout the year, trying to build as much as we can in the first half of the year. And, you know, that revenue will probably be lower than the ship, you know, revenue less units. Then we ship in Q1, and as we move into Q2, you will start seeing that kind of start to match up. And then as we move through the latter half of the year, you will see that Revenue starts exceeding manufacturing capacity as we close the year. So, and you'll see us, as I said, you'll see us disclosing that and it'll be very clear. You will be able to very clearly track how much we manufacture, how much became revenue that quarter, how much is carrying over to the next quarter, how much is being manufactured, how much is being revenue and it becomes. That's why I'm so passionate about our unit economics model, because every unit that we manufacture, and I think Paul asked this question earlier, and I didn't answer, but every unit that we manufacture, both an ATM and scope, carries a very, very high service attach rate. I would say in ATMs, it's almost... 95 plus percent, same as with Scope. And then it also carries significant software attached revenue in the banking side. And so, again, you will be able to start modeling those things very clearly as we move forward.

Thank you so much.

Thank you. The next question today comes from the line of Peter Sagan from Credit Sites. Please go ahead. Your line is now open.

Hi, good morning. Can you talk about some of the tailwinds you're seeing and the impact on the guidance? I'm assuming currency and also transportation costs have come down. Could you maybe quantify some impact in 2023?

Yeah. Peter, you know, so as I mentioned earlier, we see component pricing stabilizing. We still don't see significant reductions in component pricing. What we do see is that we will be able to avoid some of the headwinds like spot bites that were very critical for us. you know, suppliers that couldn't deliver to us for any reason and us having to go up into the open market at usually higher prices. So, you know, we feel that that type of dynamic with increased spot buys that affected our costs will be largely behind us. Transportation costs are clearly trending downward. That's, you know, that is true. We see that in container routes, both from Europe and from Asia. So those, you know, those factors are looking better throughout the year. And again, as I said, you know, currency, you know, also the, you know, we have a basket of currencies that we try to monitor from the euro, the pound, you know, the Brazilian reais, the Mexican peso. So there's always puts and takes there. Right now, I would tell you, you know, the plan we put forward, you know, as a company, that's what we're aiming for. Can there be tailwinds for currency? Probably. You know, probably. If that happens, we will adjust, you know, accordingly. Can there be headwinds? You know, the same thing. That's why we're so focused on talking about the units, because the units get us to our plan. And then, you know, currencies might fluctuate a little bit, but we will just deal with that as it happens.

Okay. And speaking of your plan, usually, that EBITDA is specified during these calls. Is there any read through for a lack of a sort of like reaffirming the 470 goal for this year?

so so what what i would tell you there is there's nothing to read into it and remember we're we're in a in a strange situation where i wouldn't call 470 or 470 is our operating plan as we went through refinancing in q3 and q4 we didn't put out guidance we put out our operating plan that is the plan that we're operating against that is the plan that Our team is committed on hitting, so you should read anything into it. We feel that that is our plan. If we were to provide guidance, we could present it higher and lower than that number. But since we've already shared our operating plan, that is our operating plan. That is what we're driving to. And the units are key to that. So, if we hit those units, we will be hitting our operating plan and that's how we should think about our business.

Okay, lastly, Some other companies, public traders, have looked to the equity market to reduce leverage. Is that something that you're currently evaluating?

So, Peter, we are evaluating the leveraging the company is clearly an area of focus, and All options to deleverage the company are options that we will evaluate. That is something that myself, the board of directors, take very seriously, and we're evaluating all options, and we look forward to communicating some of those actions as we kind of crystallize that plan and talk about that during future quarters. But, yes, we're looking at all tools at our disposal we're looking at.

Thank you. Thank you. Thank you.

Again, if you would like to ask a question, please press star followed by one on your telephone keypad. The next question today is a follow-up question from Matt Somerville from DA Davidson. Please go ahead. Your line is now open.

Thanks. Octavio, I was wondering, just with the ATM business, if you could sort of talk a little bit more specifically about the demand environment as we look ahead, and to the extent you can add regional color, maybe touch on North America, LATAM, EMEA, and Asia Pacific in terms of what you're seeing there.

Yeah, so I'll try to be very brief to kind of close Matt, but You know, I would say North America, as you know, it's a market that is embracing recycling technology as a good way to improve the cash efficiency in the branches and change the branch footprint service and be customers better. So, we continue to see, you know, a strong refresh cycle, you know, happening in North America. As you know, this is a multi-year cycle, but we see that new recycling technology plus the age of the fleet in North America will will allow us to have, you know, and our technology will allow us to continue having success in that market. Latin America, you know, that has a very special place in my heart, but it continues being a cash world. So, you know, we still see, you know, strong demand from almost every market in Latin America. You know, we have a very strong leadership position in some of those markets, and I would say all those markets with, you know, plus 60% share in some cases. So we We continue to work hard to maintain that leadership in Latin America, and demand there continues to be strong. Their recycling is well accepted, but they're clearly more of a cash dispenser market still with just access points being the key point for that market. Asia Pacific to us is very important. As you recall, we have exited the Indian market, which is one of the largest ATM markets in the world. Through contract manufacturing, we are reentering the Indian market, and we feel optimistic that that will once again create some additional volume for us in India as we perfect this contract manufacturing model. And lastly, Europe, I would say that Europe looks like a stable market. We continue to see the consolidation and the pooling of ATMs across countries and across banking institutions. But again, you know, as as that pooling happens, it does allow the opportunity to refresh those older machines. And so, it's a good opportunity, but we see that more as a stable market, you know, going forward. And importantly, as I described the different dynamics in the market, we're also working very hard to align our cost structure to those markets. So, you know, Our cost structure needs to reflect the opportunity where the opportunities are, and that's something that the team is working very diligently on.

You have been talking on a quarterly basis and sort of providing updates on the progress you. we're sort of seeing with respect to your EV charging infrastructure initiative. I'm curious as to where you ended 2022 in terms of number of ports or chargers under contract and what your goal may be for 2023 and longer term in that business.

Yeah, so Matt, we met all the goals that we had for units under contract for our EV charging initiative. You know, our goal, we've integrated that more tightly. That was kind of a separate growth initiative run separately. We integrated that into our retail portfolio as we see tremendous synergy. Remember, in our retail portfolio, we serve some of the largest fuel and convenience operators in the world that are also going to be large charge point deployers. We sell some of the large charge point operators So we've integrated that into retail because we see a lot of synergies and it's a service that, you know, and we have a large organization that can help us position that in different verticals. So, so we're very optimistic. So we exceeded the target of of 30,000. We ended close to 50,000 and and again, you know, it continues to be an interesting opportunity as you know, you follow that industry those vertical very closely. there's still a lot of conforming and defining what the models need to look like. And as I said before, this is a longer term opportunity where we want to be on the starting point and really adapt as that market continues to evolve.

Thank you.

And then just lastly, can you put a little bit of a finer point on where you're at exactly with the ramp of Ohio manufacturing and with respect to whether you're fully up and running with your Indian contract manufacturing partner. Thank you.

So Ohio is fully operational. Matt, you and me being now Ohio, you know, you longtime means recent Ohio residents. I am happy to walk you through our manufacturing facility anytime you, you, you want. And as far as India, we, we started setting that up early, early last year. And we shift the 1st, couple 100 units in December. So in both cases, we now feel we are fully operational and have plans on what each of these factories will deliver for us throughout the year.

Thank you.

Thank you. There are no additional questions waiting at this time, so I'll turn the call back over to Octavio Marquez, CEO of Deboff Nextor. Please go ahead. You're now open.

Thank you, operator, and thank everyone who listened and participated in today's call. We look forward to seeing you at upcoming investor conferences and during our next earnings call.

Thank you again. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.