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The Suburbanite
  • Diebold predicts solid fourth quarter and bright 2012

  • Diebold Inc. said Thursday its third-quarter net income fell 9.4 percent as revenue declined, but it raised its full-year profit guidance because of lower costs.

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  • Despite a third-quarter decrease in Diebold’s net income from continuing operations —  $41.8 million or 65 cents per share, down from the 2010 third quarter’s $44.1 million and 66 cents per share —  company officials today predicted a strong fourth quarter based on this month’s orders.
    Third-quarter 2011 revenue was $709.3 million, down 5.2 percent from the third quarter 2010.
    During a 10 a.m. conference call, President and Chief Executive Officer Thomas W. Swidarski told investors, “Once again we delivered sound performance during the third quarter, showing significant year-over-year improvement in profit margins particularly in our services business. And we are delivering on our commitment to generate the majority of our earnings in the back half of the year. We continue to focus on more profitable business opportunities globally, while effectively driving improvements in our operations and reducing our cost structure. As a result, we are raising our previous earnings guidance range for 2011.
    “North America continues to perform very well, with high demand for our financial self-service solutions. In fact, U.S. regional bank product orders once again increased well in excess of 100 percent and the expected revenue is beginning to materialize as we approach the end of the year.”
    Though the company experienced “substantial revenue growth”  in Asia during the quarter,  overall revenue was impacted negatively by a significant decrease in what he described as “ the cyclical Brazil voting business” as well as declines in the overall security business, Swidarski said.
     Executive Vice President and Chief Financial Officer Bradley C. Richardson, also was upbeat about the future.
    “We expect fourth-quarter orders to be up significantly in virtually every region of the world,” he said, “which sets us up nicely for 2012.”
    Richardson added that company faith in the future has continued its share repurchase program, opportunistically buying 1.7 million shares at $27.55 per share, totaling $47 million. The stock repurchase was the primary reason for increased net debt of $232.2 million on Sept. 30. The majority of Diebold’s cash flow is expected to be generated during the fourth quarter, significantly reducing net debt by year’s end.
    THE BIG PICTURE
    Diebold’s total revenue for the third quarter 2011 was down 5.2 percent compared to the third quarter 2010, including a net positive currency impact of approximately 3 percent.
    Total operating expenses as a percentage of revenue for the third quarter 2011 were 19.7 percent, an increase of 0.8 percentage points from the third quarter of 2010.
    Additional information on Diebold’s earnings, including supplementary financial analysis and an earnings overview presentation, is available today on Diebold’s website at www.diebold.com.
    A replay of the conference call will be available later today on the company's website.

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