Diebold Nixdorf (DBD) Q4 2008 earnings summary

Executive summary

• FY08 revenue rose 7.6% to $3,170,080 thousand; income from continuing operations increased 125.9% to $101,537 thousand, while net income reached $88,583 thousand.

• Operating profit improved to $176,281 thousand from $104,678 thousand, aided by international growth and election systems results; reported earnings also reflected substantial restructuring and non-routine costs.

• The 2009 outlook remained cautious amid a difficult global economy; financial self-service demand was viewed as relatively stable, while U.S. security demand faced weakness.

Financial highlights

• Net sales were $3,170,080 thousand, up 7.6%; product revenue grew 9.3% to $1,562,948 thousand and services grew 5.9% to $1,607,132 thousand.

• Gross profit rose 16.5% to $794,616 thousand; gross margin expanded to 25.1% from 23.1%.

• Operating profit was $176,281 thousand, up 68.4%; net income was $88,583 thousand, up 124.0%, and diluted EPS was $1.33 versus $0.59.

• Income from continuing operations was $101,537 thousand, up 125.9%; diluted EPS from continuing operations was $1.52 versus $0.67.

• Non-routine legal, audit, consultation and advisory expenses were $45,145 thousand in 2008; this included a $13,500 thousand fee tied to the withdrawn United Technologies bid.

Outlook and guidance

• Management expected financial self-service demand to remain relatively stable in 2009, but anticipated continued pressure from a very difficult global economy.

• U.S. security demand was affected by weak new bank-branch construction and retail-store openings; the strategy emphasized diversified services and profitable growth.

• Additional EMEA security-closure charges of approximately $2,200 thousand were anticipated in 2009; remediation of internal-control weaknesses was estimated to cost $3,000 thousand.

• Expected 2009 pension contributions were $12,000–$15,000 thousand in management’s outlook; the financial statement note separately estimated $14,812 thousand for pension plans.

• A bulk cash acceptor was planned for rollout later in 2009, following 2008 deposit-automation shipment growth of more than 50% YoY.