| DGAP Post-admission Duties announcement: Diebold Nixdorf, Incorporated / Third country release according to Article 50 Para. 1, No. 2 of the WpHG [the German Securities Trading Act] Diebold Nixdorf, Incorporated: Release according to Article 50 of the WpHG [the German Securities Trading Act] with the objective of Europe-wide distribution 30.07.2020 / 14:16 Dissemination of a Post-admission Duties announcement according to Article 50 Para. 1, No. 2 WpHG transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | | | Diebold Nixdorf, Incorporated | | Date: July 30, 2020 | By: /s/ Jeffrey Rutherford | | | | Name: | Jeffrey Rutherford | | | | Title: | Senior Vice President and Chief Financial Officer | | | | | (Principal Financial Officer) | Media contact: Investor contact: Mike Jacobsen, APR Steve Virostek +1 330 490 3796 +1 330 490 6319 michael.jacobsen@dieboldnixdorf.com steve.virostek@dieboldnixdorf.com FOR IMMEDIATE RELEASE: July 30, 2020 DIEBOLD NIXDORF REPORTS 2020 SECOND QUARTER FINANCIAL RESULTS Company delivers strong year-over-year improvements to profitability -- driven by continued execution of DN Now transformation initiatives and resiliency of the company's business model NORTH CANTON, Ohio - Diebold Nixdorf (NYSE:DBD) today reported its second quarter 2020 financial results. Key highlights - Reported record levels for quarterly non-GAAP gross margin, non-GAAP operating profit margin & adjusted EBITDA margin
- Maintaining 2020 outlook for revenue and adjusted EBITDA, with improved outlook for free cash flow
- Successful $1.1 billion debt refinancing in July materially extends maturities
Gerrard Schmid, Diebold Nixdorf president and chief executive officer, said: 'Our second quarter financial results demonstrate the resiliency of ourbusiness during the COVID-19 pandemic as well as solid execution of our DN Now transformation initiatives. As the second quarter progressed, business activity picked up and the conversion rate to profitability was strong. For the quarter, GAAP operating margin expanded 170 basis points to 2.3% while non-GAAP operating margin increased 460 basis points to 11.0%. We are also pleased with the strong level of investor support for our recent refinancing, which further strengthened our balance sheet. 'While overall macroeconomic conditions remain uncertain, our execution and improving visibility enables the company to reiterate its 2020 outlook for revenue and adjusted EBITDA. Additionally, our outlook for net cash provided by operating activities and free cash flow has improved. Looking forward, we remain focused on operating margin expansion through our DN Now work streams, further optimizing our capital structure and continuing to differentiate our solutions to pursue growth opportunities.' Financial results compared with Q2 2019 - Revenue of $890.5M decreased 22.6%, or $260M YoY, reflecting approximately $108M of net unplanned reductions primarily related to COVID-19 pandemic delays, net planned reductions of approximately $113M including previously concluded divestitures and deliberate reductions in low-margin business, and foreign currency headwinds of approximately $39M
- GAAP operating profit increased 181% to $20.5M; non-GAAP operating profit improved 32.7% to $98.2M
- Net loss of $23.1M improved by 58.2% YoY
- Adjusted EBITDA of $122.4M improved 14.6%; adjusted EBITDA margin improved 440 basis points to 13.7% on a non-GAAP basis
- Net cash used by operating activities increased $80M YoY to $90.8M; free cash use increased $57M to $73.3M primarily due to the effects of the COVID-19 pandemic
- GAAP loss per share of $0.31 during the quarter improved versus the $0.66 loss per share in the prior year; on a non-GAAP basis, earnings of $0.38 per share improved versus $0.06 per share in the prior year
Other business updates - Made significant progress with next-generation DN Series ATMs including new orders with a top 10 and a top 25 financial institution in the United States. Also secured a new contract in Egypt for 350 DN Series ATMs plus remote monitoring and cash deposit software. Globally, DN Series certification projects nearly doubled since the beginning of the year to 475.
- Continued to lead the Americas region in deposit automation technology with a $13 million contract for cash recycling ATMs and related services at one of the largest financial institutions in Latin America.
- Signed a three-year product and managed services contract with A.S. Watson, the world's largest international health and beauty retailer with over 15,700 stores across 25 markets, to support its digital transformation strategy.
- Secured a new $17 million contract to deliver managed services, new point-of-sale and self-checkout solutions across several European countries with one of the world's largest home furnishing retailers.
- Extended a strategic relationship with Accenture to accelerate digital transformation and cloud migration activities.
1 of 13 2 of 13 GAAP and Non-GAAP Profit/Loss Summary Three months ended June 30, 2020 compared to June 30, 2019 | (Dollars in millions) | | | | | | | | Three Months Ended | | | | | | | | | | | | | | | | | | June 30, 2020 | | | | | | June 30, 2019 | | | | | Change | | | | | | | | GAAP | | Non-GAAP2 | | | | GAAP | | | | Non-GAAP2 | | | | GAAP | | Non-GAAP | | Services | $ | 468.5 | | $ | | 468.5 | | $ | 566.0 | | $ | 566.0 | | $ | (97.5) | $ | (97.5) | | | | Products | | | 311.4 | | | | | 311.4 | | | | | 470.2 | | | | | 470.2 | | | | | (158.8) | | (158.8) | | | | Software | | | 110.6 | | | | | 110.6 | | | | | 114.0 | | | | | 114.0 | | | | | (3.4) | | (3.4) | | | | Total Net Sales | $ | 890.5 | | $ | | 890.5 | | $ | 1,150.2 | | $ | 1,150.2 | | $ | (259.7) | $ | (259.7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services | $ | 131.1 | | $ | | 143.7 | | $ | 144.2 | | $ | 147.2 | | $ | (13.1) | $ | (3.5) | | | | Products | | | 70.4 | | | | | 71.6 | | | | | 99.3 | | | | | 96.3 | | | | | (28.9) | | (24.7) | | | | Software | | | 46.1 | | | | | 48.7 | | | | | 35.7 | | | | | 39.4 | | | | | 10.4 | | 9.3 | | | | Total gross profit | $ | 247.6 | | $ | | 264.0 | | $ | 279.2 | | $ | 282.9 | | $ | (31.6) | $ | (18.9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services | | | 28.0 % | | | | 30.7 % | | | | 25.5 % | | | | 26.0 % | | | | 250 | bps | 470 | bps | | Products | | | 22.6 % | | | | 23.0 % | | | | 21.1 % | | | | 20.5 % | | | | 150 | bps | 250 | bps | | Software | | | 41.7 % | | | | 44.0 % | | | | 31.3 % | | | | 34.6 % | | | | 1,040 | bps | 940 | bps | | Total gross margin | | | 27.8 % | | | | 29.6 % | | | | 24.3 % | | | | 24.6 % | | | | 350 | bps | 500 | bps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total operating expenses | $ | 227.1 | | $ | | 165.8 | | $ | 271.9 | | $ | 208.9 | | $ | (44.8) | $ | (43.1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating profit | $ | 20.5 | | $ | | 98.2 | | $ | 7.3 | | $ | 74.0 | | $ | 13.2 | $ | 24.2 | | | | Operating margin | | | 2.3 % | | | | 11.0 % | | | | 0.6 % | | | | 6.4 % | | | | 170 | bps | 460 | bps | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA | $ | 65.2 | | $ | | 122.4 | | $ | 54.0 | | $ | 106.8 | | $ | 11.2 | $ | 15.6 | | | | Adjusted EBITDA margin | | | 7.3 % | | | | 13.7 % | | | | 4.7 % | | | | 9.3 % | | | | 260 | bps | 440 | bps | | Six months ended June 30, 2020 compared to June 30, 2019 | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | | | Six Months Ended | | | | | | | | | | | | | | | | | | June 30, 2020 | | | | | | June 30, 2019 | | | | | | Change | | | | | | | | GAAP | | Non-GAAP2 | | | | GAAP | | | | Non-GAAP2 | | | | GAAP | | Non-GAAP | | | | Services | $ | 972.3 | | $ | | 972.3 | | $ | 1,110.2 | | $ | 1,110.2 | | $ | (137.9) | $ | (137.9) | | | | Products | | | 611.9 | | | | | 611.9 | | | | | 845.9 | | | | | 845.9 | | | | | (234.0) | | (234.0) | | | | Software | | | 217.0 | | | | | 217.0 | | | | | 222.2 | | | | | 222.2 | | | | | (5.2) | | (5.2) | | | | Total Net Sales | $ | 1,801.2 | | $ | | 1,801.2 | | $ | 2,178.3 | | $ | 2,178.3 | | $ | (377.1) | $ | (377.1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services | $ | 249.0 | | $ | | 279.9 | | $ | 277.6 | | $ | 281.8 | | $ | (28.6) | $ | (1.9) | | | | Products | | | 137.2 | | | | | 145.5 | | | | | 183.0 | | | | | 178.2 | | | | | (45.8) | | (32.7) | | | | Software | | | 88.2 | | | | | 92.8 | | | | | 64.7 | | | | | 70.4 | | | | | 23.5 | | 22.4 | | | | Total gross profit | $ | 474.4 | | $ | | 518.2 | | $ | 525.3 | | $ | 530.4 | | $ | (50.9) | $ | (12.2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services | | | 25.6 % | | | | | 28.8 % | | | | | 25.0 % | | | | | 25.4 % | | | | | 60 | bps | 340 | bps | | | Products | | | 22.4 % | | | | | 23.8 % | | | | | 21.6 % | | | | | 21.1 % | | | | | 80 | bps | 270 | bps | | Software | | | 40.6 % | | | | | 42.8 % | | | | | 29.1 % | | | | | 31.7 % | | | | | 1,150 | bps | 1,110 | bps | | | Total gross margin | | | 26.3 % | | | | | 28.8 % | | | | | 24.1 % | | | | | 24.3 % | | | | | 220 | bps | 450 | bps | | | | | | | | | | | | | | | | | | | | | | | | | | Total operating expenses | $ | 479.9 | | $ | | 357.0 | | $ | 542.5 | | $ | 429.3 | | $ | (62.6) | $ | (72.3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating profit | $ | (5.5) | | $ | | 161.2 | | $ | (17.2) | | $ | 101.1 | | $ | 11.7 | $ | 60.1 | | | | Operating margin | | | (0.3)% | | | | | 8.9 % | | | | | (0.8)% | | | | | 4.6 % | | | | | 50 | bps | 430 | bps | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA | $ | 88.0 | | $ | | 211.9 | | $ | 83.8 | | $ | 171.9 | | $ | 4.2 | $ | 40.0 | | | | Adjusted EBITDA margin | | | 4.9 % | | | | | 11.8 % | | | | | 3.8 % | | | | | 7.9 % | | | | | 110 | bps | 390 | bps | - - See footnote 1 for GAAP to Non-GAAP adjustments for gross profit/gross margin; selling and administrative expense; research, development and engineering expense; and other operating income/expense and footnote 2 for Adjusted EBITDA.
3 of 13 Full-year 2020 Outlook3 | | 2020 Outlook | | Total Revenue | $3.7B | - $3.9B | | Adjusted EBITDA4 | $400M | - $440M | | Net cash provided by operating activities | $45M | - $55M | | Capital expenditures | $25M | | Free cash flow | $20M | - $30M | - - The company's 2020 outlook includes the impact of deconsolidating our joint venture in China, which was finalized in the second quarter 2020, and the divestiture of Diebold Nixdorf Portavis GmbH, which was finalized in the first quarter 2020.
- - With respect to the company's non-GAAP adjusted EBITDA outlook for 2020, it is not providing a reconciliation to the most directly comparable GAAP financial measure because it is unable to predict with reasonable certainty those items that may affect such measures calculated and presented in accordance with GAAP without unreasonable effort. These measures primarily exclude the future impact of restructuring actions and net non-routine items. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, net income calculated and presented in accordance with GAAP. Please see 'Non-GAAP Financial Measures and Other Information' for additional information regarding our use of non-GAAP financial measures.
Overview Presentation and Conference Call More information on Diebold Nixdorf's quarterly earnings is available on its Investor Relations website. Gerrard Schmid, president and chief executive officer, and Jeffrey Rutherford, chief financial officer, will discuss the company's financial performance during a conference call today at 8:30 a.m. (ET). Both the presentation and access to the call / webcast are available at http://www.dieboldnixdorf.com/earnings. The replay of the webcast can be accessed on the web site for up to three months after the call. | Forward-Looking Statements This press release contains statements that are not historical information are 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding potential impact of the ongoing coronavirus (COVID-19) pandemic, anticipated revenue, future liquidity and financial position. Statements can generally be identified as forward looking because they include words such as 'believes,' 'anticipates,' 'expects,' 'could,' 'should' or words of similar meaning. Statements that describe the company's future plans, objectives or goals are also forward-looking statements. Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may affect the company's results include, among others: the ultimate impact of the ongoing COVID-19 pandemic on the company's business, results of operations, financial condition and liquidity; the ultimate impact of the appraisal proceedings initiated in connection with the implementation of the domination and profit and loss transfer agreement with Diebold Nixdorf AG and the merger squeeze-out; the company's ability to achieve benefits from its cost-reduction initiatives and other strategic initiatives, such as DN Now, including its planned restructuring actions, and its incremental cost savings actions, as well as its business process outsourcing initiative; the success of the company's new products, including its DN Series line; the company's ability to comply with the covenants contained in the agreements governing its debt; the ultimate outcome of the company's pricing, operating and tax strategies applied to former Diebold Nixdorf AG and the ultimate ability to realize cost reductions and synergies; changes in political, economic or other factors such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the worldwide business in each of the company's operations; the company's reliance on suppliers and any potential disruption to the company's global supply chain; the impact of market and economic conditions, including any additional deterioration and disruption in the financial and service markets, including the bankruptcies, restructurings or consolidations of financial institutions, which could reduce our customer base and/or adversely affect our customers' ability to make capital expenditures, as well as adversely impact the availability and cost of credit; interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates; the acceptance of the company's product and technology introductions in the marketplace; competitive pressures, including pricing pressures and technological developments; changes in the company's relationships with customers, suppliers, distributors and/or partners in its business ventures; the effect of legislative and regulatory actions in the United States and internationally and the company's ability to comply with government regulations; the impact of a security breach or operational failure on the company's business; the company's ability to successfully integrate other acquisitions into its operations; the company's success in divesting, reorganizing or exiting non-core and/or non-accretive businesses; the company's ability to maintain effective internal controls; changes in the company's intention to further repatriate cash and cash equivalents and short-term investments residing in international tax jurisdictions, which could negatively impact foreign and domestic taxes; unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments; the investment performance of the company's pension plan assets, which could require the company to increase its pension contributions, and significant changes in healthcare costs, including those that may result from government action; the amount and timing of repurchases of the company's common shares, if any; and other factors included in the company's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2019 and in other documents that the company files with the SEC. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only to the date of this release. 5 of 13 | | | | YTD 6/30/2020 | | | | | | | | YTD 6/30/2019 | | | | | | | | Gross | % of | | | | % of | | | Gross | % of | | | | % of | | | Net Sales | | Profit | Sales | OPEX | | OP | Sales | | Net Sales | | Profit | Sales | OPEX | | OP | Sales | | GAAP Results | $ 1,801.2 | $ | 474.4 | 26.3 % $ | 479.9 | $ | (5.5) | (0.3)% -2.71 | $ 2,178.3 | $ | 525.3 | 24.1 % $ | 542.5 | $ | (17.2) | (0.8)% | | Restructuring and DN Now | | | | | | | | | | | | | | | | | | | | | transformation expenses | - | | 2.5 | | | (65.9) | | 68.4 | | | - | | 4.1 | | | (39.5) | | 43.6 | | | Non-routine income/expense: | | | | | | | | | | | | | | | | | | | | | Legal/deal expense | - | | (0.3) | | | (5.6) | | 5.3 | | | - | | - | | | (13.1) | | 13.1 | | | Acquisition integration | - | | - | | | - | | - | | | - | | - | | | (1.4) | | 1.4 | | | Wincor Nixdorf purchase | | | | | | | | | | | | | | | | | | | | | accounting adjustments | - | | 6.4 | | | (36.4) | | 42.8 | | | - | | 6.8 | | | (42.2) | | 49.0 | | | Costs related to previously | | | | | | | | | | | | | | | | | | | | | divested business in Germany | - | | 4.8 | | | - | | 4.8 | | | - | | - | | | - | | - | | | Divestitures and fixed asset | | | | | | | | | | | | | | | | | | | | | sales | - | | - | | | (12.8) | | 12.8 | | | - | | - | | | (14.4) | | 14.4 | | | Loss making contracts related | | | | | | | | | | | | | | | | | | | | | to discontinued offering | - | | 25.5 | | | - | | 25.5 | | | - | | - | | | - | | - | | | Inventory charge/gain | - | | 2.3 | | | - | | 2.3 | | | - | | (8.4) | | | - | | (8.4) | | | Other | - | | 2.6 | | | (2.2) | | 4.8 | | | - | | 2.6 | | | (2.6) | | 5.2 | | | Non-routine expenses, net | - | | 41.3 | | | (57.0) | | 98.3 | | | - | | 1.0 | | | (73.7) | | 74.7 | | | Non-GAAP Results | $ 1,801.2 | $ | 518.2 | 28.8 % $ | 357.0 | $ | 161.2 | 8.9 % | | $ 2,178.3 | $ | 530.4 | 24.3 % $ | 429.3 | $ | 101.1 | 4.6 % | | | | | | | | | | | | | | | | | | | | | | | | | | | | YTD 6/30/2020 | | | | | | | YTD 6/30/2019 | | | | | | | Services | | Products | | Software | | Total GP | | Services | | Products | | Software | | Total GP | | GAAP Results | $ | 249.0 | $ | 137.2 | $ | 88.2 | $ | 474.4 | | $ | 277.6 | $ | 183.0 | $ | 64.7 | $ | 525.3 | | Restructuring and DN Now | | | | | | | | | | | | | | | | | | | | transformation expenses | | | 1.3 | | - | | 1.2 | | 2.5 | | | 1.9 | | 0.1 | | 2.1 | | 4.1 | | Non-routine income/expense: | | | | | | | | | | | | | | | | | | | | Legal/deal expense | | | - | | (0.3) | | - | | (0.3) | | | - | | - | | - | | - | | Wincor Nixdorf purchase | | | | | | | | | | | | | | | | | | | | accounting adjustments | | | - | | 3.0 | | 3.4 | | 6.4 | | | - | | 3.2 | | 3.6 | | 6.8 | | Costs related to previously | | | | | | | | | | | | | | | | | | | | divested business in Germany | | | - | | 4.8 | | - | | 4.8 | | | - | | - | | - | | - | | Loss making contracts related to | | | | | | | | | | | | | | | | | | | | discontinued offering | | | 25.5 | | - | | - | | 25.5 | | | - | | - | | - | | - | | Inventory charge/gain | | | 2.5 | | (0.2) | | - | | 2.3 | | | (0.3) | | (8.1) | | - | | (8.4) | | Other | | | 1.6 | | 1.0 | | - | | 2.6 | | | 2.6 | | - | | - | | 2.6 | | Non-routine expenses, net | | | 29.6 | | 8.3 | | 3.4 | | 41.3 | | | 2.3 | | (4.9) | | 3.6 | | 1.0 | | Non-GAAP Results | | $ | 279.9 | $ | 145.5 | $ | 92.8 | $ | 518.2 | | $ | 281.8 | $ | 178.2 | $ | 70.4 | $ | 530.4 | | | | | | | | | | | | | | | | | | | | | Restructuring and DN Now transformation expenses relate to the business transformation plan focused on driving connected commerce, finance, sales and operational excellence, business integration and global workforce alignment, including GAAP restructuring costs, as well as the third-party costs of the DN Now transformation program. Legal and deal expenses primarily related to third-party expenses and fees paid by the company for the ongoing obligations related to prior regulatory settlements, including the cost of acquisition and real estate tax in connection with the squeeze-out proceedings and related expenses during 2019. The Wincor Nixdorf purchase accounting adjustments relate to the valuation of intangible asset charges as management believes that this is useful information to investors by highlighting the impact of the acquisition of Wincor Nixdorf on the company's operations. The Germany costs relate to a previously divested business. The divestitures and fixed asset sales relates to the divestitures and liquidation of Eurasia non-core businesses in both 2020 and 2019 as well as the Venezuela business in 2019. The loss making contracts represent charges incurred for expected losses through the contractual service period. The inventory charge/gain relates to the company's re-assessment of primarily finished goods and service parts due to contract cancellations and excess and obsolete inventory as a result of streamlining the company's product portfolio and optimizing its manufacturing footprint. Other includes incremental payments to essential service technicians for their contributions during the COVID-19 pandemic and certain IT projects, as well as executive severance and certain non-cash balance sheet adjustments in Brazil, Hong Kong and Canada in the prior year. This was partially offset by subsidies received for certain wages related to the COVID-19 pandemic. 10 of 13 2. Reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA measures (Dollars in millions): | | | Q2 2020 | | Q2 2019 | YTD 6/30/2020 | YTD 6/30/2019 | TTM 6/30/2020 | | Net loss | $ | (23.1) | | $ | (55.3) | | $ | (116.5) | | $ | (187.2) | | $ | (273.9) | | Income tax expense (benefit) | | (3.4) | | | 9.2 | | | 16.6 | | | 69.6 | | | 63.7 | | Interest income | | (2.4) | | | (2.2) | | | (3.5) | | | (5.1) | | | (7.7) | | Interest expense | | 48.3 | | | 49.9 | | | 96.3 | | | 100.8 | | | 198.4 | | Depreciation and amortization | | 45.8 | | | 52.4 | | | 95.1 | | | 105.7 | | | 193.6 | | EBITDA | | 65.2 | | | 54.0 | | | 88.0 | | | 83.8 | | | 174.1 | | Share-based compensation | | 3.6 | | | 4.8 | | | 7.6 | | | 14.1 | | | 17.5 | | Foreign exchange (gain) loss, net | | 7.6 | | | 5.1 | | | 7.2 | | | 2.3 | | | 10.0 | | Miscellaneous, net | | (6.5) | | | 0.4 | | | (5.6) | | | 1.8 | | | (3.8) | | Equity in earnings of unconsolidated subsidiaries | | - | | 0.2 | | | - | | 0.6 | | | (1.6) | | Restructuring and DN Now transformation expenses | | 23.0 | | | 28.4 | | | 59.2 | | | 43.6 | | | 128.5 | | Non-routine expenses, net | | 29.5 | | | 13.9 | | | 55.5 | | | 25.7 | | | 116.3 | | Adjusted EBITDA | $ | 122.4 | | $ | 106.8 | | $ | 211.9 | | $ | 171.9 | | $ | 441.0 | | | | | | | | | | | | | | | | | | Adjusted EBITDA % revenue | | 13.7 % | | | 9.3 % | | | 11.8 % | | | 7.9 % | | | 10.9 % | | | | | | | | | | | | | | | | | We define EBITDA as net loss excluding income tax benefit, net interest, and depreciation and amortization expense. As defined in the company's credit agreement, Adjusted EBITDA is EBITDA before the effect of the following items: share-based compensation, foreign exchange loss net, miscellaneous net, equity in earnings of unconsolidated subsidiaries, restructuring expenses and non-routine expenses net, as outlined in Note 1 of the non-GAAP measures. In order to remain comparable to the U.S. GAAP depreciation and amortization measures, the Company excluded the amortization of purchase accounting adjustments from non-routine expenses, net in the Adjusted EBITDA reconciliation of $21.4 and $24.4 for the three months ended June 30, 2020 and 2019, respectively, and $42.8 and $49.0 for the six months ended June 30, 2020 and 2019, respectively. Additionally, $3.8 and $9.2 of accelerated depreciation expense for the three and six months ended June 30, 2020 was excluded from Restructuring and DN Now transformation expenses. Deferred financing fees amortization is included in interest expense and GAAP depreciation and amortization; as a result, the Company excluded from the depreciation and amortization caption $7.2 and $5.0 for the three months ended June 30, 2020 and 2019, respectively, and $11.4 and $10.1 for the six months ended June 30, 2020 and 2019. Miscellaneous, net primarily consists of gain recognized on the surrender of company-owned life insurance contracts. These are non-GAAP financial measurements used by management to enhance the understanding of our operating results. EBITDA and Adjusted EBITDA are key measures we use to evaluate our operational performance. We provide EBITDA and Adjusted EBITDA because we believe that investors and securities analysts will find EBITDA and Adjusted EBITDA to be useful measures for evaluating our operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements. However, EBITDA and Adjusted EBITDA should not be considered as alternatives to net income as a measure of operating results or as alternatives to cash flows from operating activities as a measure of liquidity in accordance with GAAP. 11 of 13 3. Reconciliation of diluted GAAP EPS to non-GAAP EPS: | | | Q2 2020 | | Q2 2019 | | YTD 6/30/2020 | | YTD 6/30/2019 | | Total diluted EPS attributable to Diebold Nixdorf, Incorporated (GAAP | | | | | | | | | | | | | measure) | $ | (0.31) | | $ | (0.66) | | $ | (1.51) | | $ | (2.39) | | Restructuring and DN Now transformation expenses | | 0.34 | | | 0.37 | | | 0.87 | | | 0.57 | | Non-routine income/expense: | | | | | | | | | | | | | Legal/deal expense | | 0.04 | | | 0.05 | | | 0.07 | | | 0.17 | | Acquisition integration | | - | | 0.02 | | | - | | 0.02 | | Wincor Nixdorf purchase accounting adjustments | | 0.27 | | | 0.32 | | | 0.55 | | | 0.64 | | Costs related to previously divested business in Germany | | - | | - | | 0.06 | | | - | | Divestitures and fixed asset sales | | 0.19 | | | 0.14 | | | 0.16 | | | 0.19 | | Loss making contract related to discontinued offering | | 0.17 | | | - | | 0.33 | | | - | | Inventory charge/gain | | (0.02) | | | (0.06) | | | 0.03 | | | (0.11) | | Other | | (0.10) | | | 0.03 | | | (0.01) | | | 0.06 | | Total non-routine (income)/expense | | 0.55 | | | 0.50 | | | 1.19 | | | 0.97 | | Tax impact (inclusive of allocation of discrete tax items) | | (0.20) | | | (0.15) | | | (0.49) | | | 0.29 | | Total adjusted EPS (non-GAAP measure) | $ | 0.38 | | $ | 0.06 | | $ | 0.06 | | $ | (0.56) | | | | | | | | | | | | | | Restructuring and DN Now transformation expenses relate to the business transformation plan focused on driving connected commerce, finance, sales and operational excellence, business integration and global workforce alignment, including GAAP restructuring costs, as well as the third-party costs of the DN Now transformation program. Legal and deal expenses primarily related to third-party expenses and fees paid by the company for the ongoing obligations related to prior regulatory settlements, including the cost of acquisition and real estate tax in connection with the squeeze-out proceedings and related expenses during 2019. The Wincor Nixdorf purchase accounting adjustments relate to the valuation of intangible asset charges as management believes that this is useful information to investors by highlighting the impact of the acquisition of Wincor Nixdorf on the company's operations. The Germany costs relate to a previously divested business. The divestitures and fixed asset sales relates to the divestitures and liquidation of Eurasia non-core businesses in both 2020 and 2019 as well as the Venezuela business in 2019. The loss making contracts represent charges incurred for expected losses through the contractual service period. The inventory charge/gain relates to the company's re-assessment of primarily finished goods and service parts due to contract cancellations and excess and obsolete inventory as a result of streamlining the company's product portfolio and optimizing its manufacturing footprint. Other includes incremental payments to essential service technicians for their contributions during the COVID-19 pandemic and certain IT projects, as well as executive severance, and certain non-cash balance sheet adjustments in Brazil, Hong Kong and Canada. Additionally, Other includes gain on surrender of certain Company-owned life insurance policies. 12 of 13 4. Free cash flow (use) is calculated as follows (Dollars in millions): | | | Q2 2020 | | Q2 2019 | YTD 6/30/2020 | YTD 6/30/2019 | TTM 6/30/2020 | | Net cash provided (used) by operating activities (GAAP measure) | $ | (90.8) | | $ | (10.5) | | $ | (170.6) | | $ | (67.6) | | $ | 32.8 | | Excluding the impact of changes in cash of assets held for sale | | 2.1 | | | - | | 22.3 | | | - | | 22.3 | | Excluding the use of cash for the settlement of certain | | | | | | | | | | | | | | | | derivative instruments | | 18.8 | | | - | | 18.8 | | | - | | 18.8 | | Capital expenditures | | (3.4) | | | (5.6) | | | (8.8) | | | (20.3) | | | (31.4) | | Free cash flow/(use) (non-GAAP measure) | $ | (73.3) | | $ | (16.1) | | $ | (138.3) | | $ | (87.9) | | $ | 42.5 | | | | | | | | | | | | | | | | | We define free cash flow (use) as net cash provided (used) by operating activities (excluding assets held for sale) less cash used for the settlement of certain derivative instruments and capital expenditures. We consider free cash flow (use) to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the purchase of property and equipment, can be used for debt servicing, strategic opportunities, including investing in the business, making strategic acquisitions, strengthening the balance sheet and paying dividends. 5. Net debt is calculated as follows (Dollars in millions): | | | | | | December 31, | | | | | | June 30, 2020 | | 2019 | | | June 30, 2019 | | Cash, cash equivalents, restricted cash and short-term investments (GAAP measure) | $ | 455.4 | | $ | 290.9 | | $ | 272.9 | | Cash included in assets held for sale | | 2.0 | | | 97.2 | | | 4.1 | | Debt instruments | | (2,464.5) | | | (2,141.2) | | | (2,216.3) | | Net debt (non-GAAP measure) | $ | (2,007.1) | | $ | (1,753.1) | | $ | (1,939.3) | | | | | | | | | | | The company's management believes that given the significant cash, cash equivalents, restricted cash and short-term investments on its balance sheet that net cash against outstanding debt is a meaningful net debt calculation. As of June 30, 2020, approximately 58% of the company's cash, cash equivalents, restricted cash and short-term investments reside in international jurisdictions. For all other periods presented, more than 90% of the company's cash, cash equivalents, restricted cash and short-term investments reside in international jurisdictions. ### PR_20-3989 13 of 13
30.07.2020 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de
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