Diebold Nixdorf Incorporated Common stock

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter of 2024, the Bold Nixdorf Earnings Call. All lines are put in place on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you'd like to ask a question, please press start followed by one on your telephone keypad. I would now like to hand this conference call over to our host, Christopher Sikora. Please go ahead.

Hello everyone and welcome to our first quarter 2024 earnings call. To accompany our prepared remarks, we have posted our slide presentation to the investor relations section of our website. Before we start, I will remind all participants that you will hear forward-looking statements during this call. These statements reflect the expectations and beliefs of our management team at the time of this call but they are subject to risks that could cause actual results to differ materially from these statements. You can find additional information on these factors 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 Participants should be mindful that subsequent events may render this information to be out of date.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. As noted on slide three, a reconciliation between GAAP and non-GAAP measures can be found in the supplemental schedules of the presentation. With that, I'll turn the call over to Octavio.

Thank you, Chris, and thank you all for joining us today. Before we start the call, I just wanted to say thank you to Jim for his leadership at CFO as we undertook major actions to fortify our balance sheet and improve our financial condition. Jim has played a vital role in strengthening our company, and we're extremely grateful for all his efforts. I look forward to working with Jim in his new role. We're also looking forward to welcoming Tom Timko as our new CFO, who officially starts on May 17th. Tom's years of experience at GE and GM, along with his deep background across key financial disciplines, will help us build off the foundation we have in place and further strengthen our financial and operational discipline. Now to begin. On slide four, we are off to a solid start in 2024, with good progress across our operational and financial priorities for the year. The strength of our first quarter positioned us well to achieve our full year expectations as we build upon this quarter. First, we continue winning in the market. with our leading self-service and automation technology. Product backlog remained at 1.1 billion at the end of the first quarter, which is consistent with our backlog levels at the end of 2023. We are encouraged by the demand environment, which remains stable and is supporting the product backlog. While we have also accelerated product revenue growth over the last several quarters. Additionally, We are gaining traction in the market with our managed services offering. During the quarter, we closed a five-year managed service agreement with a top five bank in Western Europe. We continue to believe that banks and retailers adopting an outsourced service model represents the next wave of service growth. Our value proposition of improving operational efficiency and reducing the total cost of operating ATMs and checkout devices is resonating well with customers. Next, we remain focused on driving innovation and reducing complexity for customers. Our recently introduced retail smart vision solution automates self-checkout age-restricted items for Edeka Jaeger at the Stuttgart Airport. Leveraging artificial intelligence and computer vision technology beats up transactions considerably and gives employees more time to service customers. Also, we are running multiple live pilots with global retailers, leveraging our technology to address shrink-related issues during checkout. We anticipate that over time, our approach to addressing shrink at checkout can be applied to the entire retail store ecosystem. On the banking side, we continue innovating and winning with DN Series recyclers. We have recently launched a standalone weatherized DN Series recyclers unit in North America that allows banks to continue redefining the branch footprint. Our high-capacity note recycler, specifically developed for the multiple heavy cash usage markets across the globe, is helping us win new customers. In addition, we simplified our software portfolio, making it easier to deploy and update across multiple hardware environments, which is expanding our multi-vendor opportunities. In terms of financial performance, we had another quarter of strong results as our team continued to improve our operational execution. Higher revenue and our focus on gross margin expansion combined with the benefit of strong operating expense management, is following through to the bottom line. The result is year-over-year profitability growth and better free cash flow performance. Cash and capital discipline is a focus area. The first quarter represents a positive step in better linearizing our historical seasonal cash generation. Across our operations, we are focused on working capital and asset efficiency to drive higher free cash flow. We included additional information on the topic in our earnings presentation. Disclosing that trade net working capital of $379 million is 10% of trailing 12-month revenue, representing the second straight quarter of leverage improvement. I am proud of our team as we keep building operating momentum and stay focused on delivering for our customers. Moving to slide five. We introduced the DN Continuous Improvement Flywheel last quarter to help us better articulate our longer-term objectives. We are pleased to see progress in the quarter as we embark on our Continuous Improvement journey. It starts with the people who make Diebold Nixdorf a great company. We are investing in our people so we can continue to create leading-edge products and deliver world-class service. We successfully onboarded Frank Bauer, Executive Vice President of Operational Excellence, earlier in the quarter. We are currently filling roles with experienced lead practitioners in supply chain and service that will accelerate the flywheel of continuous improvement in operational execution. We are strengthening our leadership bench with a clear focus on employee development. We expect our team to deliver profitable revenue growth and gross margin expansion. In the first quarter, innovation and commercial execution led to revenue growth. Improved year-over-year operating profit was driven by gross margin expansion and operating expense disciplines. We are in the early stages of implementing the tools of continuous improvement and lean operation. I am encouraged by the developments we have seen so far, most notably in manufacturing. Our team in North Canton has already identified ways to decrease ATM production time by approximately 15%. This example is just the beginning of what I think is possible across our global footprint as our teams embrace this mindset and identify future projects. Finally, we are executing on levers to improve free cash flow conversion. We see the opportunity to meaningfully improve over the next 12 to 24 months by driving higher profitability through margin expansion, stronger working capital and asset efficiency, lower restructuring with a strong focus on returns, and lowering our debt costs. These are just a few indicators that we are on the right track and making progress on our continuous improvement journey. Turning to slide six, I would like to highlight recent performance trends in our region. In North America, we continue to see strong adoption of cash recycling technology. Additionally, we are seeing improved service performance, which is benefiting from our investments in internal resources and process improvements. As our internal resources are getting more productive, we're moving away from the higher cost third parties used to supplement our workforce. This is resulting in higher quality service for our customers, as well as better service profitability. In Latin America, we are driving strong revenue growth across both product and service. Cash usage remains strong in the region, supporting demand for our DN series cash dispensers and recyclers. Service growth is driven by our large install base with strong recurring contract revenue streams. In Europe, the banking market remains stable, with steady activity across product and service. On the retail side, we continue to grow our install base of self-checkout units under service contracts. Over the past two years, we have basically doubled our self-checkout unit shipments annually as European retailers moved quickly to adopt a solution. And the vast majority of our shipments represented new placements in the market. As we move into 2024, We expect to continue increasing our self-checkout install base with more potential growth coming from North America. In Asia Pacific, Middle East, and Africa, stronger cash recycling trends are developing across the region. We had higher unit shipments in APAC for both cash dispensers and cash recyclers in the first quarter. Also, we shipped an additional 1,500 cash units leveraging our India contract manufacturing facility. We are seeing solid activity levels across all our regions, and we benefit from our diversified global business. With that, I will hand the call over to Jim to go into more details on our quarterly results.