Diebold Nixdorf Incorporated · NYSE:DBD
Diebold Nixdorf — Diebold — Investor Presentation (December 2015)
57 slides from Diebold Nixdorf's investor presentation, December 2015
Slide 1: Investor Presentation December 2015
Investor Presentation December 2015 1
Slide 2: Important information for investors and shareholders
Important information for investors and shareholders In connection with the proposed business combination transaction, Diebold has filed a Registration Statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) that includes a preliminary prospectus of Diebold to be used in conne
Slide 3: Use of non-GAAP financial information
Use of non-GAAP financial information Diebold has included non-GAAP financial measures in this presentation to supplement Diebold’s condensed consolidated financial statements presented on a GAAP basis. Definitions of these non-GAAP financial measures and reconciliations of these non-GAAP financial
Slide 4: Forward-looking statements
Forward-looking statements Certain statements contained in this communication regarding matters that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These include statements regarding management’s intentions, plans, belief
Slide 5: Company Overview
ha Company Overview
Slide 6: Diebold, Incorporated – Who We Are
Diebold Overview Diebold, Incorporated – Who We Are Automating the way people connect with their money Secure Convenient Reliable Services-led, Software enabled, Supported by innovative hardware 6
Slide 7: Diebold Overview – 2014 Revenue Breakout
Diebold Overview Diebold Overview – 2014 Revenue Breakout Approximately $3 billion total revenue in 2014 INDUSTRY SOLUTION GEOGRAPHY 7% 24% 21% 46% 46% 54% 14% 72% 16% Financial Self-Service Service North America Security Product Asia Pacific Brazil Other Europe, Middle East and Africa Latin America
Slide 8: Diebold and Wincor Nixdorf to combine, creating premier self-service company
+ DIEBOLD AND WINCOR NIXDORF TO COMBINE, CREATING PREMIER SELF- SERVICE COMPANY FOR FINANCIAL AND RETAIL MARKETS
Slide 9: Creating premier self-service company for financial and retail markets
Diebold and Wincor Nixdorf Creating premier self-service company for financial and retail markets Combines leading innovators to deliver fully integrated software and self-service technology Innovative service solutions spanning the complete value chain Highly complementary geographic presence and c
Slide 10: Transaction overview
Diebold and Wincor Nixdorf Transaction overview Wincor Nixdorf shareholders will be offered – €38.98 per share in cash and 0.434 Diebold shares for each Wincor Nixdorf share1 Consideration Total transaction value of approximately $1.8 billion, inclusive of net debt1 – ~35% premium to closing stock p
Slide 11: Wincor Nixdorf Overview
Diebold and Wincor Nixdorf Wincor Nixdorf Overview Corporate profile • Leading IT solutions provider for banks and retailers • Advanced technology and software capabilities • Headquartered in Paderborn, Germany • Blue chip client base including: 25 out of the top 25 banks in Europe • 9,100 employees
Slide 12: Creating a runway for growth
Diebold and Wincor Nixdorf Creating a runway for growth 1 ~$3 billion of revenue from services and software in the combined company Services leadership Enhance services portfolio and increase up-sell of services Omnichannel software Wincor software and large professional services organization 2 inno
Slide 13: The time has never been better for this business combination
Diebold and Wincor Nixdorf The time has never been better for this business combination Industry Company-specific Capital Markets Self-service customers Wincor Nixdorf progress on demand innovation and 7-point restructuring Access to capital operating efficiency program Multi-vendor approach Diebold
Slide 14: Highly complementary revenue mix with ~$3 billion from services and software
Diebold and Wincor Nixdorf Highly complementary revenue mix with ~$3 billion from services and software “Diebold Nixdorf” Revenue1 ~$2.6 ~$2.6 ~$5.2 (billions) Geographic mix1,2 Americas EMEA Americas Americas 66% EMEA 16% 71% 12% EMEA 39% • Closely mirrors 43% Asia the total Asia Pacific addressabl
Slide 15: Combined company to pursue ~$60 billion total addressable market
Diebold and Wincor Nixdorf Combined company to pursue ~$60 billion total addressable market Payment Branch Automation Retail Automation Behind-the- Self-Service Counter OMNICHANNEL POINT-OF- BRANCH and SALE Back-End AUTOMATION DIGITAL/MOBILE PAYMENT SOLUTIONS Cash Hardware Management PLATFORMS Softw
Slide 16: Attractive financial model
Diebold and Wincor Nixdorf Attractive financial model • Revenue cross-sell / up-sell opportunities • Expect to improve revenue mix of services & software Revenue, Synergies • ~$160 million of annual cost synergies by end of year 3 & Operating • Additional benefits expected from current cost savings
Slide 17: Targeting >9% non-GAAP OP margins by end of year 3
Diebold and Wincor Nixdorf Targeting >9% non-GAAP OP margins by end of year 3 Combination benefit Combination Existing End of Year 3 initiatives costs plans Target Revenue • Increase sale of services • Dual sourcing ATMs • Organic growth • Cross sell software • Dealer rationalization • Improved mix
Slide 18: Financing overview and pro forma capitalization
Diebold and Wincor Nixdorf Financing overview and pro forma capitalization • Committed financing from J.P. Morgan and Credit Suisse • Permanent debt financing of $2.8 billion to fund transaction, refinance existing debt at both companies and provide liquidity Financing − $0.5 billion senior secured
Slide 19: Business combination agreement to facilitate integration and synergy realization
Diebold and Wincor Nixdorf Business combination agreement to facilitate integration and synergy realization • Agreed leadership structure Executive Committee • Defined business model – by Line of Business / Region CEO Andy Mattes • Reconfirmed Wincor-Nixdorf restructuring plan • Registered offices i
Slide 20: Expected roadmap
Diebold and Wincor Nixdorf Expected roadmap 2015 2016 2017 2018 Announcement & Business Combination Agreement Tender Offer Period Regulatory Approval Close Execute integration plan & deliver $160 million of cost synergies 20
Slide 21: Transaction meets all key criteria
Diebold and Wincor Nixdorf Transaction meets all key criteria Strategic fit • Accelerates transformation to services-led, software-enabled company • Creates a runway for growth Ability to execute Valuation • Experienced global management team • Approved by both Boards • Detailed integration and syne
Slide 22: Diebold 2.0 Transformation
DIEB@®LD Diebold 2.0 Transformation
Slide 23: Talented Team Driving Transformation
Diebold 2.0 Transformation Talented Team Driving Transformation Senior Leadership Team1 Attracted Talent from Instilling a Winning Top Companies Culture 5% 40% Target alignment 55% Pay for performance Director Level & Above1 Merit bonus 23% 24% Streamlined sales comp Increased equity stake 53% Compl
Slide 24: Diebold 2.0 Transformation – Crawl Phase Accomplishments
Diebold 2.0 Transformation Diebold 2.0 Transformation – Crawl Phase Accomplishments 2014 2015 2016 2017+ CRAWL WALK Pillars Accomplishments – Crawl Phase RUN Reduced cost and reinvested ~50% of savings COST in systems & processes Improved gross margin over 300 bps and operating margin by 100 bps CAS
Slide 25: Cost Structure Improvements – Cost Reduction Target of $200M through 2017
Diebold 2.0 Transformation Cost Structure Improvements – Cost Reduction Target of $200M through 2017 Cost Savings Program Cost Savings Investments $200M ($100M) Net Savings $100M Net Savings1 Progression – 50% of Total Cost Savings 2013 2014 2015 2016 2017 $30M $25M $20M $15M $10M Total: $100M 1 Rea
Slide 26: Diebold 2.0 Transformation – Walk Phase Objectives
Diebold 2.0 Transformation Diebold 2.0 Transformation – Walk Phase Objectives 2014 2015 2016 2017+ CRAWL WALK RUN Pillars Objectives – Walk Phase COST 1. Continue to build on accomplishments – cost, cash, talent and growth 2. Greater emphasis on improving revenue mix and top line growth in services
Slide 27: Services-based Company, Enabled by Software, Supported by Innovative Hardware
Diebold 2.0 Transformation Services-based Company, Enabled by Software, Supported by Innovative Hardware Transformation initiatives improving mix of revenue and higher gross margins 100% Services & 53 56 57 58 58 60 59 60 62 Software 50% Product1 47 44 43 42 42 40 41 40 38 2008 2009 2010 2011 2012 2
Slide 28: Financial Self-Service
Financial Self-Service
Slide 29: Leading Global Service Capabilities
Financial Self-Service Leading Global Service Capabilities Strong Foundation Opportunities Cover entire service value chain Break Fix Maintenance Consult Design Build Run Multi-vendor service Capitalizing on market fragmentation With 9,000+ service techs Diebold has 1 the strongest global service or
Slide 30: Managed Services - Outsourcing
Financial Self-Service Managed Services - Outsourcing Largest Bank ATM fleet in North America Diebold Managed ATMs 28,000+ Diebold 15,500+ 16,000+ JP Morgan Chase Bank of America 12,500+ Wells Fargo 8,500+ PNC 5,000+ US Bank Source: RBR and Diebold internal estimates. 30
Slide 31: Software is Accelerating the Retail Banking Evolution
Financial Self-Service Software is Accelerating the Retail Banking Evolution Omni Multi Channel Channel Transaction Multi Vendor Migration ATM Application Monolithic ATM Application < 2005 > 2005 > 2012 > 2014 > 2016 Branch Branch Digital + ATM ATM MV Transformation Automation Analytics • Lower cost
Slide 32: Transforming our Software Platform with the Acquisition of Phoenix Interactive Design
Financial Self-Service Transforming our Software Platform with the Acquisition of Phoenix Interactive Design Best-in-class, multi-vendor, advanced function software with global scale SHARED VISION CUSTOMER RELATIONSHIPS about channel transformation and redefining the banking demanding increased func
Slide 33: Branch Automation Is Taking Shape Globally
Financial Self-Service Branch Automation Is Taking Shape Globally Source: JP Morgan Chase Investor Day presentation, February 2014 Traditional Branch Branch of the future Remote teller Branch headcount 9 6 ATM with videoconference option to remote teller % advisory staff (1) 40% 60% # Express Bankin
Slide 34: Innovation Delivered - The Consumer Banking Experience of the Future
Financial Self-Service Innovation Delivered - The Consumer Banking Experience of the Future Derived from the Responsive Banking Concept and unveiled at Money 20/20 Screen-less, Self-Service Irving Concept Dual-Sided, Self-Service Janus Concept • Collaborative innovation with Citigroup to pilot iris-
Slide 35: Introducing the newest family of Diebold self-service terminals
Financial Self-Service Introducing the newest family of Diebold self-service terminals Standard market High-performance Extended branch terminals terminals The backbone of reliable, Advanced-function, The ultimate solution for secure, cost-effective ATM intuitive, “future-proof” migrating transactio
Slide 36: Emerging Markets Opportunity
Financial Self-Service Emerging Markets Opportunity ATMs Per Million Population as of year-end 2013 Emerging markets represent ~70% of global ATM installed base 1,600 However, ATM/million population lags developed countries by >30% 1,400 Overall demand will remain strong long-term 1,200 – Growing mi
Slide 37: Security
Security
Slide 38: Diebold Security – Services-led Business
Security Diebold Security – Services-led Business Total Security – Revenue Breakout 2014 Revenue: Electronic Security ~$624M ~$619M ~$628M Products ~$606M 100% 38% 62% Services 80% 37% 49% 47% 44% 60% 2014 Revenue: Physical Security 40% 63% 51% 53% 56% 26% 20% Products Services 0% 74% 2011 2012 2013
Slide 39: Diebold Agrees to Sell North America Electronic Security Business to Securitas AB
Security Diebold Agrees to Sell North America Electronic Security Business to Securitas AB − Divestiture accelerates Diebold's transformation, enhancing focus on opportunities in dynamic self-service industry − Deal valued at approximately $350 million1 − Securitas to serve as Diebold's preferred el
Slide 40: Diebold Physical Security Overview
Security Diebold Physical Security Overview Drive up and barrier solutions for bank branches Teller Stations Drive-Up • Safes and lockers • After-hour depositories • Fire resistive solutions • Transaction drawers • Vaults • Vision window • Pneumatic tubes Barrier Solutions • Security vestibule • Loc
Slide 41: Earnings Recap
ha Earnings Recap
Slide 42: Third Quarter 2015 Key Takeaways
3Q15 Earnings Recap Third Quarter 2015 Key Takeaways • Fully arrived in “Walk” phase of Diebold 2.0 transformation • Announced an agreement to divest Electronic Security business in North America in a transaction valued at approximately $350 million1 • Narrowing the focus of the Brazil other busines
Slide 43: 3Q15 Industry Trends by Region
3Q15 Earnings Recap 3Q15 Industry Trends by Region North America: EMEA: • Total orders increased 4% • Total orders increased more than 20% with • FSS increased 4% strength across the region • Security increased 5% • Secured order from Riyad Bank in Saudi Arabia • Signed a multi-year contract to serv
Slide 44: 3Q15 Financial Results (non-GAAP)
3Q15 Earnings Recap 3Q15 Financial Results (non-GAAP) Year-over-year comparisons Revenue down 3% in constant currency Financial self-service +1% Security +7% (electronic security +12% and physical security down 1%) Total gross margin down 130 basis points to 24.9%, includes Brazil other IT equipment
Slide 45: Appendix
Appendix (from 3Q15 Earnings – Includes North America Electronic Security)
Slide 46: GAAP to non-GAAP Reconciliation – EPS
Appendix GAAP to non-GAAP Reconciliation – EPS 3Q14 3Q15 YTD ‘14 YTD ‘15 EPS (GAAP) $0.51 $0.33 $1.30 $0.63 Restructuring charges 0.01 0.08 0.07 0.21 Non-routine (income)/expense: Software impairment -- -- -- 0.09 Venezuela divestiture -- -- -- 0.07 Venezuela devaluation -- -- -- 0.07 Legal, indemni
Slide 47: Q3 2015 Profit & Loss Statement
Appendix Q3 2015 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($ Millions) 47
Slide 48: Q3 2014 Profit & Loss Statement
Appendix Q3 2014 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($ Millions) 48
Slide 49: Q3 2015 Product & Service Gross Profit
Appendix Q3 2015 Product & Service Gross Profit Reconciliation GAAP to non-GAAP ($ Millions) 49
Slide 50: Q3 2014 Product & Service Gross Profit
Appendix Q3 2014 Product & Service Gross Profit Reconciliation GAAP to non-GAAP ($ Millions) 50
Slide 51: YTD 2015 Profit & Loss Statement
Appendix YTD 2015 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($ Millions) 51
Slide 52: YTD 2014 Profit & Loss Statement
Appendix YTD 2014 Profit & Loss Statement Reconciliation GAAP to non-GAAP ($ Millions) 52
Slide 53: YTD 2015 Product & Service Gross Profit
Appendix YTD 2015 Product & Service Gross Profit Reconciliation GAAP to non-GAAP ($ Millions) 53
Slide 54: YTD 2014 Product & Service Gross Profit
Appendix YTD 2014 Product & Service Gross Profit Reconciliation GAAP to non-GAAP ($ Millions) 54
Slide 55: Free Cash Flow Reconciliation
Appendix Free Cash Flow Reconciliation ($ Millions) 3Q14 3Q15 YTD ‘14 YTD ’15 Net cash provided by (used in) operating activities ($19.0) ($20.9) ($110.7) ($120.1) Capital expenditures ($15.2) ($17.5) ($33.6) ($42.9) Free cash flow (use) (non-GAAP measure) ($34.2) ($38.4) ($144.3) ($163.0) 55
Slide 56: Free Cash Flow Reconciliation
Appendix Free Cash Flow Reconciliation ($ Millions) 2009 2010 2011 2012 2013 2014 2015 Outlook Net cash provided by (used in) operating activities (GAAP measure) $297 $273 $215 $136 $124 $187 ~$165 Capital expenditures ($44) ($51) ($54) ($50) ($35) ($62) ~($65) Free cash flow / (use) (non-GAAP measu
Slide 57: Investor Relations Contact Information
Appendix Investor Relations Contact Information Steve Virostek Vice President, Investor Relations Phone: +1 330-490-6319 E-mail: [email protected] Chris Sikora Manager, Investor Relations Phone: +1 330-490-6870 E-mail: [email protected] 57