Diebold Nixdorf showed improvement during the second quarter and boosted its financial expectations for the year. Investors reacted by driving the stock price higher.
GREEN Improved revenue and reduced costs helped Diebold Nixdorf stem the tide on its losses during the second quarter.
The improved numbers sparked a buying spree by investors.
The company reported a $50.3 million loss, or 66 cents per share, for the quarter that ended June 30, an improvement over the 2018 second quarter loss of $133.4 million, $1.76 per share. Overall sales rose to $1.15 billion for the quarter, a 4% gain compared with $1.11 million last year.
Through the first half of the year, Diebold Nixdorf has a loss of $183 million, or $2.39 per share, compared with $206.6 million, or $2.72 per share, during the first half of 2018. Revenue was $2.18 billion, up slightly from $2.17 billion last year.
Because of the improved numbers, Diebold Nixdorf adjusted its year-end projection to the higher end, with revenue expected to hit $4.5 billion, while earnings before interest, taxes, depreciation and amortization are now estimated at between $400 million and $420 million.
Gerrard Schmid, president and chief executive officer, said the results "were made possible by the strong commitment and cohesion of our global teams." The company's DN Now initiative, designed to cut costs by $400 million by 2021, has helped and is moving forward on schedule, he said.
Investors had a positive reaction to the results, which were released before the stock market opened. Diebold Nixdorf shares opened at $11.90 — compared with Wednesday's closing price of $10.29 — and traded over $13 per share early in the day before settling in the $12.50-per-share range.
By the end of the day, more than 5.32 million shares had traded compared with an average of 1.27 million. The stock closed at $13.17, gaining $2.88 on the day.
In the earnings announcement and in conversations with stock analysts, Schmid touted the company's new line of automatic teller machines called the DN Series. The product line "further extends our position as a market leader," he told analysts.
The products are generating excitement with customers, Schmid said. The line is being tested by 18 financial institutions in 13 counties, he said.
The company saw its biggest revenue gain in the Americas banking business segment. Revenue rose 13.3% to $419.9 million from $370.6 million last year. The company cited large sales to Brazilian banks, a deal to upgrade machines for a Mexican bank, and upgrades by U.S. financial institutions as reasons for improved revenue.
Product sales jumped 55.1% to $157.6 million from $101.6 million last year. Software revenue of $29.2 million was flat compared with $30.9 million last year and services slipped 2.1% to $233.1 million from $238.1 million last year.
The Eurasia banking segment saw revenue dip to 1.7% to $430.2 million, compared with $437.5 million a year ago. Product revenue was $170.2 million, up 11.7% from $152.4 million the previous year. The company cited product growth in Europe, the Middle East and Africa as reasons for improved revenue. Meanwhile, the Eurasia services segment fell 7.1% to $217.3 million from $233.9 million, while software fell 16.6% to $42.7 million from $51.2 million last year.
Diebold Nixdorf's retail segment, which sells and services checkout equipment, saw slight growth for the quarter with revenue of $300.1 million compared with $297.5 million last year. Schmid said the company's self-checkout business saw gains in North America and Europe.
Schmid said interest in the DN Series, changes with the banking industry and the need to upgrade some networks from the Windows 10 system are helping to drive higher orders for ATMs. "The pipeline is looking very, very healthy at the moment," he told stock analysts.
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