Diebold Nixdorf Shares Plunge 34% in Wake of Loss and Worsened Outlook

Shares of Diebold Nixdorf Inc. plummeted 34% in late Wednesday morning trading after the ATM manufacturer and banking and retail hardware and software provider reported an unexpectedly large second-quarter loss and said it is looking to revise its lending agreements in the face of lowered financial predictions.

“While revenue was in line with our expectations, the company’s bottom-line results were clearly disappointing as we experienced higher service and delivery costs during the quarter,” Gerrard Schmid, Diebold Nixdorf’s president and chief executive, said in a statement. “Contributing to this performance is a high degree of complexity that permeates our business, and we are focused on several actions to simplify our operations and rationalize our cost structure.”

The company reported a $138.5 million quarterly loss versus a $30.6 million loss a year earlier. The size of the loss surprised stock analysts, according to reports on the financial wires. Revenues declined 2.5% to $1.11 billion from $1.13 billion.

Diebold Nixdorf says it now expects to lose $325 million to $365 million in 2018, up from the $75 million to $95 million yearly loss it predicted in May. The May forecast itself represented a worsened outlook from previous guidance.

The new forecast spurred company executives to look for debt relief. “While we are currently in compliance with our debt covenants, we have engaged our principal lenders to amend our credit agreement as a result of our revised financial outlook,” Schmid said.

Diebold Nixdorf has a cost-control program under way that it says will produce $100 million in savings by 2019’s third quarter. The company expects to end 2018 with 30% fewer ATM models, a change it said will produce shorter lead times, reduce complexity, and generate economies of scale. In addition, Diebold Nixdorf its planning divestitures that currently generate 5% to 10% of net sales.

Worldwide product sales fell 13% in the second quarter to $389.3 million from $446 million a year earlier, while software and services revenues rose 4% to $716.3 million from $687.9 million. Under newly revised reporting segments, Diebold Nixdorf said its Americas Banking unit, which with $370 million in revenues represented 33% of total quarterly sales, experienced a 6% decline in product sales on a constant-currency basis, mainly because of reduced business in Brazil. Software and services sales in the region grew 5% thanks to growth in North America.

There was some good news. Diebold Nixdorf said order momentum for Windows 10 ATM operating-system upgrades is continuing, and that it has taken initial orders for kiosks and services from a “large quick-service restaurant in North America.” The company also reported new business from France and Canada.