Diebold Nixdorf (DBD) investor relations material

Lean transformation and operational improvements

• Lean and continuous improvement initiatives have driven ATM product margins from 13% to 31% over three years, with similar principles now being applied to services and other functions for further margin expansion.

• Lean practices have been embedded across manufacturing, services, software development, finance, legal, and HR, resulting in faster financial closes, improved contract review, and a cultural shift.

• Cash flow conversion improved to 49% of EBITDA in 2023, with a target of 50%+ in 2024 and 60% by 2027, supported by ongoing lean initiatives and operational efficiencies.

• OpEx reduction programs with 214 targeted actions are expected to lower expenses by $50 million over two years, even as sales grow.

Market trends and business segment performance

• Banking business is experiencing strong demand globally, especially in the U.S. due to adoption of recycling ATM technology, and in Europe and Latin America, with new products tailored for the fast-growing Indian market.

• Retail business saw over 20% year-over-year growth in Q1, with U.S. retail revenue up 70% from a small base, driven by AI-enabled loss prevention and self-checkout solutions.

• DRAM pricing headwinds impacted point-of-sale margins in Q1, but repricing is expected to restore margins to high teens or low 20% by Q3.

• Self-checkout demand has rebounded post-COVID, with new use cases in airports and fashion retail, and evolving form factors to suit different environments.

Strategic initiatives and growth outlook

• North America retail strategy shifted to target top 40 U.S. accounts, resulting in a 500% pipeline growth and significant wins in grocery, fuel, convenience, and fashion.

• Local-to-local manufacturing strategy with four global sites has reduced lead times from 200 to as low as 90 days, supporting margin expansion and flexibility.

• Service business, representing $2.2 billion in recurring revenue, is being optimized with new field technician software and densification, aiming to raise service margins from mid-20% to 30%.

• Branch build-outs by major U.S. banks are creating new opportunities for ATM and teller cash recycler deployments, enhancing recurring service revenue.