DIEBOLD NIXDORF, Inc Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• 2024 performance was strong with $452 million of adjusted EBITDA above guidance range and $109 million free cash flow, best since 2016.
• Entered 2024 with ~$800 million product backlog. Closed year strong in banking with major deals, expanded globally in emerging markets. Shipped 200,000 DN Series ATMs. Announced new agreement with Group Mousquetaires in retail. Implemented lean operations for gross margin expansion in 2025.
• In 2024, teams executed to drive higher profitability and free cash flow, with lean operations creating foundation for gross margin expansion in 2025.

Segment Performance:

• Banking: 2024 was a strong year with improving revenue and profitability trends. Saw strong ATM refresh activity and adoption of recycling. Service had stable recurring revenue of approximately $400 million each quarter. Full year gross margin over 25% driven by strong pricing discipline. In 2025, expects to ship first fit-for-purpose ATMs in APAC in Q2 and launch branch automation solutions.
• Retail: Macro environment impacted revenue but showed sequential quarter improvement in Q4 with 15.7% revenue growth across product and service. Gross profit up sequentially. Sees second half recovery, with investments in North America sales team and AI capabilities, and wins in Europe around SCO and POS.

Guidance:

• 2025 total revenue flat to up low single digits, including 3%-4% unfavorable FX impact.
• Adjusted EBITDA in range of $470 million to $490 million.
• Free cash flow expected to be in range of $190 million to $210 million, aiming to nearly double 2024 free cash flow.
• 2025 financial outlook reflects meaningful improvement in revenue, adjusted EBITDA, and free cash flow, driven by service gross margin expansion and operating expense discipline.

Risks:

• Macro environment impacts on retail product revenue.
• Potential tariff effects on supply chain given some component sourcing from Asia.
• FX headwinds with approximately 3%-4% unfavorable impact on revenue.

Q: Backlog at year end?

A: Ended year with ~$800 million backlog, impacted by negative FX, objective is book-to-bill >1 times to hold backlog at ~$800 million.

Q: Cash flow linearity in 2025?

A: First half likely a use but less than prior years, targeting breakeven. Third quarter positive to offset, fourth quarter positive, on way to nearly double 2024 free cash flow.