# DIEBOLD NIXDORF, Inc: Form 10-Q for the period ended Mar 31, 2022

- Company: [DIEBOLD NIXDORF, Inc](/companies/dbd.md) (CIK 28823)
- Form: 10-Q
- Filed: 2022-05-10
- Accepted by EDGAR: May 10, 2022, 16:40 ET
- Period: 2022-03-31
- Accession: 0000028823-22-000069
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/28823/000002882322000069/dbd-20220331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/28823/000002882322000069/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $829.8m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2022-01-01 to 2022-03-31 | $644.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2022-01-01 to 2022-03-31 | $185.3m | us-gaap:GrossProfit |
| Research and development | 3 months, 2022-01-01 to 2022-03-31 | $32.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-01-01 to 2022-03-31 | $181.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-01-01 to 2022-03-31 | −$83.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-01-01 to 2022-03-31 | $48.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | $50.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | −$183.1m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2022-01-01 to 2022-03-31 | −$2.33 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 3 months, 2022-01-01 to 2022-03-31 | −$226.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Share repurchases | 3 months, 2022-01-01 to 2022-03-31 | $5.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2022-03-31 | $1.78bn | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $3.32bn | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $1.66bn | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2022-03-31 | −$1.02bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 46,336 characters.

### Overview

Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that appear within this Quarterly Report on Form 10-Q.

#### Introduction

The Company is a world leader in enabling Connected Commerce™. The Company automates, digitizes and transforms the way people bank and shop. The Company’s integrated solutions connect digital and physical channels conveniently, securely and efficiently for millions of consumers every day. As an innovation partner for a majority of the world's top 100 financial institutions and top 25 global retailers, the Company delivers unparalleled services and technology that power the daily operations and consumer experience of banks and retailers around the world. The Company has a presence in more than 100 countries with approximately 22,000 employees worldwide.

#### Strategy

The Company is focused on consistently innovating its solutions to support a better transaction experience for consumers at bank and retail locations while simultaneously streamlining cost structures and business processes through the integration of hardware, software and services.

#### COVID-19

The Company continues to deliver high service levels to customers, even in hard-hit areas around the world, and received positive feedback from customers, including critical infrastructure providers, such as supermarkets and financial institutions, as to how effectively it has responded to the pandemic.

The Company continues to focus on the stability of its suppliers and supply chain to prepare for any potential difficulties stemming from the pandemic. Supply chain disruption, whether it be access to critical raw material components, such as semiconductor chips, or freight lead times and availability, negatively affected virtually every business in some form – Diebold Nixdorf included. The Company’s financial performance continues to be heavily impacted by longer lead times – both inbound and outbound – as well as non-billable inflationary pressures associated with these headwinds. While it will take time, we look forward to moving past the global macroeconomic challenges we have faced over the past two years by utilizing various mitigation strategies (e.g., supply chain optimization and price increases) to deliver for our customers and shareholders. We believe the Company is well-positioned to capitalize on the strong demand for our products and solutions as customers continue to desire our market-leading devices, services and software, as the market increasingly moves toward a self-service automation focus driven by the evolving behavior of consumers.

Given the measure of uncertainty surrounding the COVID-19 pandemic and the impacts it may have on our business and the businesses of our customers and suppliers, the possible resurgence of COVID-19 infection rates, including those resulting from new variants, and government actions in response thereto could disrupt our operations and our supply chain and materially adversely affect our business. Because of this uncertainty, we cannot reasonably estimate the ultimate impact to our business, results of operations, cash flows and financial position that the COVID-19 pandemic may have, but such impact could be material.

CONNECTED COMMERCE SOLUTIONS™

The Company offers a broad portfolio of solutions designed to automate, digitize and transform the way people bank and shop. As a result, the Company’s operating structure is focused on its two customer segments — Banking and Retail. Leveraging a broad portfolio of solutions, the Company offers customers the flexibility to purchase the combination of services, software and products that drive the most value to their businesses.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Banking

The Company provides integrated solutions for financial institutions of all sizes designed to help drive operational efficiencies, differentiate the consumer experience, grow revenue and manage risk. Banking operations are managed within two geographic regions. The Eurasia Banking region includes the economies of Western Europe, Eastern Europe, Asia, the Middle East and Africa. The Americas Banking region encompasses the U.S., Canada, Mexico and Latin America.

#### Banking Services

Services represents the largest operational component of the Company and includes product-related services, implementation services and managed services. Product-related services incidents are managed through remote service capabilities or an on-site visit. The portfolio includes contracted maintenance, preventive maintenance, “on-demand” maintenance and total implementation services. Implementation services help our customers effectively respond to changing customer demands and includes scalable solutions based on globally standardized processes and tools, a single point of contact and reliable local expertise. Managed services and outsourcing consist of managing end-to-end business processes and technology integration. Our integrated business solutions include self-service fleet management, branch life-cycle management and ATM as-a-service capabilities.

In 2020, the Company launched the AllConnect Data Engine (ACDE), which enables a more data-driven and predictive approach to services. As of March 31, 2022, more than 160,000 ATMs were connected to ACDE. As the number of connected devices increases, the Company expects to benefit from more efficient and cost-effective operations.

#### Banking Products

The banking portfolio of products consists of cash recyclers and dispensers, intelligent deposit terminals, teller automation, and kiosk technologies. As financial institutions seek to expand the self-service transaction set and reduce operating costs by shrinking their physical branch footprint, the Company offers the DN Series™ family of self-service solutions.

DN Series is the culmination of several years of investment in consumer research, design and engineering resources. Key benefits and features of DN Series include:

- superior availability and performance;
- next-generation cash recycling technology;
- full integration with the DN Vynamic™ software suite;
- a modular and upgradeable design which enables customers to respond more quickly to changing customer demands;
- higher note capacity and processing power;
- improved security safeguards to protect customers against emerging physical, data and cyber threats;
- a streamlined physical footprint which is up to 40% less than both legacy models and certain competing ATMs;
- made of recycled and recyclable materials and is 25% lighter than most traditional ATMs, reducing CO emissions both in the manufacturing and transportation of components and terminals;
- uses LED technology and highly efficient electrical systems, resulting in up to 50% power savings versus traditional ATMs; and
- increased branding options for financial institutions.

#### Banking Software

The Company’s software encompasses digital solutions that enhance consumer-facing offerings, as well as back-end platforms which manage transactions, operations and channel integration. These software applications facilitate millions of transactions via ATMs, kiosks, and other self-service devices, as well as via online and mobile digital channels.

### (unaudited)

### (dollars in millions, except per share amounts)

The Company's DN Vynamic software is the first end-to-end Connected Commerce software portfolio in the banking marketplace designed to simplify and enhance the consumer experience. This platform is cloud-native, provides new capabilities and supports advanced transactions via open application program interface (API). In addition, the Company’s software suite simplifies operations by eliminating the traditional focus on internal silos and enabling inter-connected partnerships between financial institutions and payment providers. Through its open approach, DN Vynamic brings together legacy systems, enabling new levels of connectivity, integration, and interoperability. The Company’s software suite provides a shared analytic and transaction engine. The DN Vynamic platform can generate new insights to enhance operations; prioritizing consumer preferences rather than technology.

An important enabler of the Company’s software offerings is the professional service employees who provide systems integration, customization, project management and consulting. This team collaborates with customers to refine the end-user experience, improve business processes, refine existing staffing models and deploy technology to automate both branches and stores.

#### Retail

The Company’s comprehensive portfolio of retail services, products and software improves the checkout process for retailers while enhancing shopping experiences for consumers.

#### Retail Services

DN AllConnect Services® for retailers includes maintenance and availability services to continuously optimize the performance and total cost of ownership of retail touchpoints, such as checkout, self-service and mobile devices, as well as critical store infrastructure. The solutions portfolio includes: implementation services to expand, modernize or upgrade store concepts; maintenance services for on-site incident resolution and restoration of multi-vendor solutions; support services for on-demand service desk support; operations services for remote monitoring of stationary and mobile endpoint hardware; as well as application services for remote monitoring of multi-vendor software and planned software deployments and data moves. As a single point of contact, service personnel plan and supervise store openings, renewals and transformation projects, with attention to local details and customers’ global IT infrastructure.

In addition to services for retailers, the Company provides installation, management, and delivery services for electric vehicle (EV) charging stations. The Company delivers this service primarily for EV charging station deployers and dealers through its DN AllConnect Services℠ offering, helping clients maintain the highest uptime at the lowest total cost of ownership for their EV charging networks.

#### Retail Products

The retail product portfolio includes modular and integrated, “all-in-one” point of sale (POS) and self-service terminals that meet changing consumer shopping journeys, as well as retailers’ and store staff’s automation requirements. The Company’s self-checkout (SCO) products and ordering kiosks facilitate a seamless and efficient transaction experience. The BEETLE®/iSCAN EASY eXpress™, hybrid products, can alternate from attended operation to SCO with the press of a button. The K-two Kiosk automates routine tasks and in-store transactions, offers order-taking abilities, particularly at quick service restaurants (QSRs) and fast casual restaurants and presents functionality that furthers store automation and digitalization. Supplementing the POS system is a broad range of peripherals, including printers, scales and mobile scanners, as well as the cash management portfolio, which offers a wide range of banknote and coin processing systems.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Retail Software

The DN Vynamic software suite for retailers provides a comprehensive, modular and open solution ranging from the in-store check-out solution to solutions across multiple channels that improve end-to-end store processes and facilitate continuous consumer engagements in support of a digital ecosystem. This includes click & collect, reserve & collect, in-store ordering and return-to-store processes across the retailers' physical and digital sales channels. Operational data from a number of sources, such as enterprise resource planning (ERP), POS, store systems and customer relationship management systems (CRM), may be integrated across all customer connection points to create seamless and differentiated consumer experiences.

#### Business Drivers

The business drivers of the Company's future performance include, but are not limited to:

- demand for self-service and automation from Banking and Retail customers driven by the evolution of consumer behavior;
- demand for cost efficiencies and better usage of real estate for bank branches and retail stores as they transform their businesses to meet the needs of their customers while facing macro-economic challenges;
- demand for services on distributed IT assets such as ATMs, POS and SCO, including managed services and professional services;
- timing of product upgrades and/or replacement cycles for ATMs, POS and SCO;
- demand for software products and professional services;
- demand for security products and services for the financial, retail and commercial sectors; and
- demand for innovative technology in connection with the Company's Connected Commerce strategy.

### Results of Operations

The following discussion of the Company’s financial condition and results of operations provides information that will assist in understanding the financial statements and the changes in certain key items in those financial statements. The following discussion should be read in conjunction with the condensed consolidated financial statements and the accompanying notes that appear elsewhere in this Quarterly Report on Form 10-Q.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Net Sales

The following tables represent information regarding the Company's net sales:

| Segments Eurasia Banking | Three months ended March 31 2022 | 2021 | % Change | % Change in CC (1) | Percent of Total Net Sales for the Three months ended March 31 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Services | $159.5 | $189.6 | (15.9) | (10.8) | 19.2 | 20.1 |
| Products | 118.4 | 138.2 | (14.3) | (8.6) | 14.3 | 14.6 |
| Total Eurasia Banking | 277.9 | 327.8 | (15.2) | (9.9) | 33.5 | 34.7 |
| Americas Banking |  |  |  |  |  |  |
| Services | 224.2 | 227.7 | (1.5) | (2.0) | 27.0 | 24.1 |
| Products | 60.6 | 84.0 | (27.9) | (28.5) | 7.3 | 8.9 |
| Total Americas Banking | 284.8 | 311.7 | (8.6) | (9.2) | 34.3 | 33.0 |
| Retail |  |  |  |  |  |  |
| Services | 142.5 | 156.3 | (8.8) | (3.1) | 17.2 | 16.6 |
| Products | 124.6 | 148.1 | (15.9) | (10.6) | 15.0 | 15.7 |
| Total Retail | 267.1 | 304.4 | (12.3) | (6.8) | 32.2 | 32.3 |
| Total net sales | $829.8 | $943.9 | (12.1) | (8.7) | 100.0 | 100.0 |

(1) The Company calculates constant currency by translating the prior-year period results at the current year exchange rate.

#### Three months ended March 31, 2022 compared with the three months ended March 31, 2021

Net sales decreased $114.1, or 12.1 percent, including a net unfavorable currency impact of $35.5 primarily related to the euro, resulting in a constant currency decrease of $78.6. After excluding the unfavorable currency impact, $8.8 of net sales generated during the three months ended March 31, 2021 from divested businesses, and $5.2 of net sales generated during the one month ended March 31, 2021 from business related to Russia and Ukraine, net sales decreased by $64.6.

### Segments

- Eurasia Banking net sales decreased $49.9, including a net unfavorable currency impact of $19.4, related primarily to the euro. After excluding the unfavorable currency impact, $4.1 of net sales generated by divested businesses, and $3.0 from businesses within Russia and Ukraine, net sales decreased $23.4, which was driven by unplanned reductions in installation activity, including delays resulting from global supply chain disruptions and the Company's initiative to reduce low margin service contracts.
- Americas Banking net sales decreased $26.9, including a net favorable currency impact of $1.8, related primarily to the Brazilian real. Excluding the favorable impact of currency, net sales decreased $28.7 primarily as a result of logistical scheduling challenges at customer sites.
- Retail net sales decreased $37.3, including a net unfavorable currency impact of $17.9 mostly related to the euro. After excluding the unfavorable currency impact, $4.7 of sales generated by divested businesses, and $2.2 from businesses within Russia and Ukraine, net sales decreased $12.5 primarily from reduced POS and SCO installation volume and related services in Europe. The reduced volume is partially attributable to the non-recurrence of prior-year rollouts in response to the pandemic, and partially attributable to supply chain disruptions.

#### Three months ended March 31, 2022 compared with three months ended March 31, 2021

Net sales #N/A #N/A, or N/M percent, including a net favorable currency impact of $95.9 primarily related to the euro, resulting in a constant currency #N/A of $#N/A. After excluding the favorable currency impact and $46.6 of net sales generated during the three months ended March 31, 2022 from divested businesses, net sales #N/A by $#N/A.

### Segments

- Eurasia Banking net sales #N/A #N/A, including a net favorable currency impact of $51.6, related primarily to the euro, and the impact of divestitures of $34.7. Excluding the impact of currency and divestitures, net sales #N/A $#N/A driven by timing of installation activity.
- Americas Banking net sales #N/A #N/A, including a net favorable currency impact of $0.1, and the impact of divestitures of $7.8. Excluding the impact of currency and divestitures, net sales #N/A $#N/A due to timing of installation activity in connection with longer lead times throughout the supply chain and the absence of non-recurring U.S. regional Windows 10 upgrades completed during the nine months ended September 30, 2020.
- Retail net sales #N/A #N/A, including a net favorable currency impact of $44.2 mostly related to the euro, and the impact of divestitures of $4.1. Excluding the impact of currency and divestitures, net sales #N/A $#N/A primarily from POS and SCO roll-outs in Europe and related services occurring during the nine months ended September 30, 2021 as well as increased demand for professional services.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Gross Profit

The following table represents information regarding the Company's gross profit:

|  | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Gross profit - services | $152.0 | $184.0 | (17.4) |
| Gross profit - products | 33.3 | 89.2 | (62.7) |
| Total gross profit | $185.3 | $273.2 | (32.2) |
| Gross margin - services | 28.9% | 32.1% |  |
| Gross margin - products | 11.0% | 24.1% |  |
| Total gross margin | 22.3% | 28.9% |  |

Services gross margin decreased 320 basis points in the three months ended March 31, 2022 as a result of inflationary internal labor costs, higher third-party labor costs, reduced high-margin installation activity and lower fixed cost absorption due to the sales decline. Additionally, certain low-margin contracts were entered into within growing Eurasia markets in the interest of growing the Company's geographical footprint.

Product gross margin decreased 1,310 basis points in the three months ended March 31, 2022 due to higher inbound and outbound logistics costs and raw material price inflation.

#### Operating Expenses

The following table represents information regarding the Company's operating expenses:

|  | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Selling and administrative expense | $181.0 | $203.4 | (11.0) |
| Research, development and engineering expense | 32.3 | 34.1 | (5.3) |
| (Gain) loss on sale of assets, net | 0.2 | (0.5) | N/M |
| Impairment of assets | 55.2 | — | N/M |
| Total operating expenses | $268.7 | $237.0 | 13.4 |
| Percent of net sales | 32.4% | 25.1% |  |

Selling and administrative expense decreased $22.4 in the three months ended March 31, 2022 compared to the corresponding periods in 2021. The decrease is predominantly the result of $22.6 of restructuring and DN Now transformation expenses incurred in the first quarter of 2021. As a result of reduced profitability, expense related to the Company's annual incentive plan for the first quarter of 2022 is approximately $8.0 lower than 2021, which is offset by increased base wages and investments in growth.

In connection with the executive transition that took place in the first quarter of 2022 and the culmination of related process optimization workshops, the decision was made to indefinitely suspend the Company's North American ERP rollout. Due to the decision to focus the Company's cloud-based ERP implementation efforts on the distribution subsidiaries and the process workshops determining that work done for North America was not able to be leveraged at the distribution subsidiaries, the Company recorded an impairment of capitalized cloud-based North America ERP costs of $38.4 in the first quarter of 2022.

Also during the first quarter of 2022 and as a result of the Russian incursion into Ukraine and the related economic sanctions, the Company impaired $16.8 of assets connected with the Company's operations in Russia, Ukraine and Belarus.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Operating Profit (Loss)

The following table represents information regarding the Company's operating profit (loss):

|  | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | --- |
| Operating profit (loss) | $(83.4) | $36.2 | N/M |
| Operating margin | (10.1)% | 3.8% |  |

Operating profit decreased by $119.6 in the three months ended March 31, 2022, compared to the prior-year period. The decrease in operating profit is primarily the result of a $87.9 reduction in gross profit attributable to logistical issues and higher input costs. Also contributing to the decrease in gross profit were the $55.2 of impairment charges taken in the first quarter of 2022 and discussed above. These charges were partially offset by $22.6 of restructuring and DN Now transformation expenses that were incurred in the first quarter of 2021.

#### Other Income (Expense)

The following table represents information regarding the Company's other income (expense), net:

|  | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Interest income | $1.3 | $1.7 | (23.5) |
| Interest expense | (48.1) | (48.7) | 1.2 |
| Foreign exchange gain (loss), net | (4.7) | 5.7 | N/M |
| Miscellaneous, net | 2.6 | (0.7) | N/M |
| Other income (expense), net | $(48.9) | $(42.0) | (16.4) |

Interest income and expense remained materially consistent in for the three month periods ended March 31, 2022 and 2021.

Foreign exchange gain, net for the three months ended March 31, 2022 and March 31, 2021 includes realized gains and losses, primarily related to Brazilian real foreign currency exposure, which was favorable in the current year period and unfavorable in the prior year period. Miscellaneous, net for the three months ended March 31, 2022 is primarily driven by recognition of non-service pension plan benefits in Germany.

### (unaudited)

### (dollars in millions, except per share amounts)

#### Net Loss

The following table represents information regarding the Company's net loss:

|  | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | --- |
| Net loss | $(183.9) | $(8.1) | N/M |
| Percent of net sales | (22.2)% | (0.9)% |  |
| Effective tax rate | 35.5% | 17.4% |  |

Changes in net loss are a result of the fluctuations outlined in the previous sections, the most significant of which relates to the impairment charges of $55.2. The change in net loss is also impacted by a $49.7 increase in income tax expense for the three months ended March 31, 2022 that is the result of the jurisdictional mix of income and loss, in addition to various discrete tax adjustments for uncertain tax positions, expired and forfeited stock compensation, state tax rate benefit, and a change in valuation allowance.

### Segment Operating Profit Summary

The following tables represent information regarding the segment operating profit metrics, which exclude the impact of restructuring and non-routine charges, by reporting segment. Refer to note 19 of the condensed consolidated financial statements for further details of net sales and segment operating profit:

| Eurasia Banking: | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Net sales | $277.9 | $327.8 | (15.2) |
| Segment operating profit | $(8.5) | $25.0 | (134.0) |
| Segment operating profit margin | (3.1)% | 7.6% |  |

Segment operating profit decreased $33.5 in the three months ended March 31, 2022, as compared to the prior-year period, due to the sales decline, raw material price inflation and higher inbound logistics costs. Operating expenses remained materially consistent in comparison to the prior year period despite significant inflationary wage pressures, which were offset by reduced bonus expense.

| Americas Banking: | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Net sales | $284.8 | $311.7 | (8.6) |
| Segment operating profit | $17.2 | $40.2 | (57.2) |
| Segment operating profit margin | 6.0% | 12.9% |  |

Segment operating profit decreased $23.0 in the three months ended March 31, 2022 due to the sales decline, higher inbound and outbound logistics costs and raw material price inflation. Operating expenses remained materially consistent in comparison to the prior year period despite significant inflationary wage pressures, which were offset by reduced bonus expense.

### (unaudited)

### (dollars in millions, except per share amounts)

| Retail: | Three months ended March 31 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: |
| Net sales | $267.1 | $304.4 | (12.3) |
| Segment operating profit | $8.6 | $27.1 | (68.3) |
| Segment operating profit margin | 3.2% | 8.9% |  |

Segment operating profit decreased $18.5 in the three months ended March 31, 2022, as a result of decreased net sales. Gross margin percentage remained materially consistent with the prior year due to a shift towards higher margin sales, offset by inflationary cost pressures. Operating expenses remained materially consistent in comparison to the prior year period.

### Liquidity and Capital Resources

The Company's total cash and cash availability as of March 31, 2022 and December 31, 2021 was as follows:

|  | March 31, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Cash, cash equivalents and restricted cash | $224.7 | $388.9 |
| Less: Restricted cash | (0.4) | — |
| Additional cash availability from: |  |  |
| Cash included in assets held for sale | 2.4 | 3.1 |
| Uncommitted lines of credit | 37.5 | 27.5 |
| Revolving Facility | 170.1 | 284.0 |
| Short-term investments | 42.1 | 34.3 |
| Total cash and cash availability | $476.4 | $737.8 |

Capital resources are obtained from income retained in the business, borrowings under the Company’s senior notes, committed and uncommitted credit facilities and operating and capital leasing arrangements. Management expects that the Company’s capital resources will be sufficient to finance planned working capital needs, research and development activities, investments in facilities or equipment, and pension contributions for at least the next 12 months. The Company had $0.4 and $0.0 of restricted cash at March 31, 2022 and December 31, 2021, respectively. The balance in restricted cash relates to the Company's liability to a transaction-processing customer for transactions where we have received funds from transacting parties and must pass those funds to the end customer.

The Company has made acquisitions in the past and may make acquisitions in the future. Part of the Company’s strategy is to optimize the business portfolio through divestitures and complementary acquisitions. The Company intends to finance any future acquisitions with cash and short-term investments, cash provided from operations, borrowings under available credit facilities, proceeds from debt or equity offerings and/or the issuance of common shares.

As of March 31, 2022, the Company had a revolving facility provided by the Company's credit agreement (the Credit Agreement) of up to $330.0 (the Revolving Facility). The weighted-average interest rate on outstanding Revolving Facility borrowings as of March 31, 2022 and December 31, 2021 were 4.79 percent and 4.75 percent, respectively which are variable based on the London Interbank Offered Rate (LIBOR). There was $170.1 available under the Revolving Facility as of March 31, 2022, after excluding giving effect to $24.0 in outstanding letters of credit.

### (unaudited)

### (dollars in millions, except per share amounts)

The following table summarizes the results of the Company's condensed consolidated statement of cash flows for the three months ended March 31, 2022 and 2021:

| Summary of cash flows: | Three Months Ended March 31, 2022 | March 31, 2021 |
| --- | ---: | ---: |
| Net cash provided (used) by operating activities | $(226.2) | $(65.2) |
| Net cash provided (used) by investing activities | (5.8) | 3.2 |
| Net cash provided (used) by financing activities | 65.6 | (24.9) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1.5 | (1.8) |
| Change in cash, cash equivalents and restricted cash | $(164.9) | $(88.7) |

### Operating Activities

Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments items impact reported cash flows. Net cash used by operating activities was $226.2 for the three months ended March 31, 2022, a change of $161.0 from cash use of $65.2 for the three months ended March 31, 2021.

- Cash flows from operating activities during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 were unfavorably impacted by a $175.8 increase in net loss. Refer to "Results of Operations" discussed above for further discussion of the Company's net loss.
- The net aggregate of inventories and accounts payable was a decrease in operating cash flow of $160.7 during the three months ended March 31, 2022, compared to an increase in operating cash flow of $3.9 during the three months ended March 31, 2021. The $164.6 reduction is primarily a result of payable disbursement timing as well as an increase in inventory due to longer lead times resulting from supply chain delays as well as unexpected revenue delays.
- The net aggregate of trade receivables and deferred revenue was an increase in operating cash flow of $89.4 during the three months ended March 31, 2022, compared to an increase in operating cash flow of $30.9 in the three months ended March 31, 2021. The $58.5 net change is primarily the result of the impact of reduced sales on the trade receivables balance. Days sales outstanding has remained materially consistent.
- The net aggregate of income taxes and deferred income taxes was a decrease in operating cash flow of $38.1 of during the three months ended March 31, 2022, compared to an decrease in operating cash flow of $6.7 during the three months ended March 31, 2021. Refer to Note 4: Income Taxes for additional discussion on income taxes.
- Restructuring resulted in net cash use of $11.5 and $10.6 during the three months ended March 31, 2022 and 2021, respectively. Despite no new restructuring accruals being recorded during the quarter, the Company continues to make severance payments related to its DN Now program.
- Non-cash adjustments to net income increased during the three month ended March 31, 2022 compared to the three months ended March 31, 2021. In 2022, the Company recorded $55.2 in non-cash impairment charges. Refer to Note 20 and Note 21 for further discussion. Depreciation expense decreased from $19.8 to $14.5 as a result of consecutive years of reduced capital expenditures.

### Investing Activities

Cash flows from investing activities during the three months ended March 31, 2022 includes $4.0 and $7.6 for capital expenditures and software development, respectively, compared to $2.5 and $5.9, respectively, for the same period in 2021.

During the three months ended March 31, 2022, the Company received $5.8 of cash proceeds from the divestiture of its German reverse vending business. There was no acquisition or divestiture activity in the three months ended March 31, 2021.

During the three months ended March 31, 2022, net maturities from investing activity was $0.0, compared to $11.6 for the three months ended March 31, 2021.

### (unaudited)

### (dollars in millions, except per share amounts)

### Financing Activities

Net cash provided by financing activities was $65.6 for the three months ended March 31, 2022 compared to a $24.9 use of cash for the same period in 2021. The change was primarily a result of net borrowings on the revolving credit facility of $75.0 during the three months ended March 31, 2022, compared to net repayments of $30.0 during the three months ended March 31, 2021.

Additionally, during the first quarter of 2021, the Company entered into an agreement whereby its ownership percentage in a certain consolidated but non-wholly owned subsidiary in Europe was reduced by means of capital contributions from noncontrolling shareholders totaling $12.7, which is considered cash proceeds from financing activities in the Contributions from noncontrolling interest holders caption.

Refer to note 9 of the condensed consolidated financial statements for additional information regarding the Company's debt obligations. The Company paid cash for interest related to its debt of $58.6 and $60.0 for the three months ended March 31, 2022 and March 31, 2021, respectively. As defined by the Credit Agreement, the ratio of net debt to trailing 12 months adjusted EBITDA was 6.4 times as of March 31, 2022. As of March 31, 2022, the Company was in compliance with the financial and other covenants in its debt agreements.

**Contractual and Other Obligations** The Company enters into certain purchase commitments due within one year for materials through contract manufacturing agreements for a total negotiated price. At March 31, 2022, the Company had minimal purchase commitments due within one year for materials through contract manufacturing agreements at negotiated prices.

Except for the items noted above, all contractual and other cash obligations with initial and remaining terms in excess of one year and contingent liabilities remained generally unchanged at March 31, 2022 compared to December 31, 2021.

**Off-Balance Sheet Arrangements** The Company enters into various arrangements not recognized in the consolidated balance sheets that have or could have an effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources. The principal off-balance sheet arrangements that the Company enters into are guarantees and sales of finance receivables. The Company provides its global operations guarantees and standby letters of credit through various financial institutions to suppliers, customers, regulatory agencies and insurance providers. If the Company is not able to comply with its contractual obligations, the suppliers, regulatory agencies and insurance providers may draw on the pertinent bank. The Company has sold finance receivables to financial institutions while continuing to service the receivables. The Company records these sales by removing finance receivables from the consolidated balance sheets and recording gains and losses in the consolidated statement of operations (refer to note 5 of the condensed consolidated financial statements).

**Supplemental Guarantor Financial Information** Diebold Nixdorf, Incorporated initially issued the 8.5% Senior Notes due 2024 (the 2024 Senior Notes) in an offering exempt from the registration requirements of the Securities Act of 1933, which were later exchanged in an exchange offer registered under the Securities Act of 1933. The 2024 Senior Notes are and will be guaranteed by certain of Diebold Nixdorf, Incorporated's existing and future subsidiaries which are listed on Exhibit 22.1 to this Quarterly Report on Form 10-Q. The following presents the summarized financial information separately for Diebold Nixdorf, Incorporated (the Parent Company), the issuer of the guaranteed obligations, and the guarantor subsidiaries, as specified in the indenture governing the Company's obligations under the 2024 Senior Notes, on a combined basis.

Each guarantor subsidiary is 100 percent owned by the Parent Company at the date of each balance sheet presented. The 2024 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain conditions. Each entity in the consolidating financial information follows the same accounting policies as described in the condensed consolidated financial statements, except for the use by the Parent Company and the guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation.

The following tables present summarized financial information for the Parent Company and the guarantor subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the guarantor subsidiaries and (ii) equity in earnings from and investments in any non-guarantor subsidiary.

### (unaudited)

### (dollars in millions, except per share amounts)

|  | Summarized Balance Sheets March 31, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Total current assets | $521.1 | $511.8 |
| Total non-current assets | $2,092.5 | $2,032.2 |
| Total current liabilities | $1,514.8 | $1,476.0 |
| Total non-current liabilities | $2,021.8 | $1,970.9 |

|  | Summarized Statements of Operations Three months ended March 31, 2022 | Year ended December 31, 2021 |
| --- | ---: | ---: |
| Net sales | $225.5 | $1,038.3 |
| Cost of sales | 167.3 | 767.3 |
| Selling and administrative expense | 81.7 | 366.9 |
| Research, development and engineering expense | 9.6 | 35.8 |
| Impairment of assets | 38.4 | — |
| Gain on sale of assets, net | — | (0.3) |
| Interest income | — | 1.0 |
| Interest expense | (36.4) | (139.7) |
| Foreign exchange gain (loss), net | 3.0 | 8.3 |
| Miscellaneous, net | 15.7 | 100.1 |
| Loss from continuing operations before taxes | $(89.2) | $(161.7) |
| Net (loss) income | $(183.9) | $(78.8) |
| Net (loss) income attributable to Diebold Nixdorf, Incorporated | $(183.1) | $(78.8) |

As of March 31, 2022 and December 31, 2021, the Parent Company and the guarantor subsidiaries on a combined basis had the following balances with non-guarantor subsidiaries:

|  | Summarized Balance Sheets March 31, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Total current assets | $194.3 | $218.4 |
| Total non-current assets | $610.6 | $622.9 |

40

### (unaudited)

### (dollars in millions, except per share amounts)

### Critical Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s condensed consolidated financial statements. The consolidated financial statements of the Company are prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. Such estimates include revenue recognition, the valuation of trade and financing receivables, inventories, goodwill, intangible assets, other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, pension and post-retirement benefits and customer incentives, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. Management monitors the economic conditions and other factors and will adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

There have been no material changes to the critical accounting policies and estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

### Forward-Looking Statement Disclosure

In this Quarterly Report on Form 10-Q, statements that are not reported financial results or other historical information are “forward-looking statements.” Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. These forward-looking statements include, but are not limited to, statements regarding the Company's expected future performance (including expected results of operations and financial guidance), future financial condition, future operating results, strategy and plans. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “will,” “believes,” “estimates,” “potential,” “target,” “predict,” “project,” “seek,” and variations thereof or similar expressions. These statements are used to identify forward-looking statements. These forward-looking statements reflect the current views of the Company with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially. Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, the economy, its knowledge of its business, and key performance indicators that impact the Company, these forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in or implied by the forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to:

- the overall impact of global supply chain complexities on the Company and its business, including delays in sourcing key components as well as longer transport times, especially for container ships and U.S. trucking, given the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;
- the ultimate impact of the ongoing COVID-19 pandemic, including further adverse effects to the Company’s supply chain, maintenance of increased order backlog, and the effects of any COVID-19 pandemic-related cancellations;
- the Company's ability to continue to sustain benefits from its cost-reduction initiatives and to achieve benefits from its growth and other strategic initiatives;
- the success of the Company’s new products, including its DN Series line, EASY family of retail checkout solutions, and EV charging service business;
- the impact of a cybersecurity breach or operational failure on the Company's business;
- the Company's ability to generate sufficient cash to service its debt, to comply with the covenants contained in the agreements governing its debt, or to refinance its existing indebtedness;
- the Company’s ability to attract, retain and motivate key employees;
- the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;

### (unaudited)

### (dollars in millions, except per share amounts)

- the outcome of the appraisal proceedings initiated in connection with the implementation of the DPLTA with the former Diebold Nixdorf AG and the merger/squeeze-out;
- changes in the Company's intention to further repatriate cash and cash equivalents and short-term investments residing in international tax jurisdictions, which could negatively impact foreign and domestic taxes;
- the Company's ability to successfully manage acquisitions, divestitures, and alliances;
- the impact of market and economic conditions, including the proliferation of cash and any deterioration or disruption in the financial and service markets, including the bankruptcies, restructurings or consolidations of financial institutions, which could reduce our customer base and/or adversely affect our customers' ability to make capital expenditures, as well as adversely impact the availability and cost of credit;
- competitive pressures, including pricing pressures and technological developments;
- changes in political, economic or other factors such as currency exchange rates, inflation rates (including the impact of possible currency devaluations in countries experiencing high inflation rates), recessionary or expansive trends, hostilities or conflicts (including the conflict between Russia and Ukraine), taxes and regulations and laws affecting the worldwide business in each of the Company's operations;
- the Company's ability to maintain effective internal controls;
- unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments; and
- the effect of changes in law and regulations or the manner of enforcement in in the U.S. and internationally and the Company’s ability to comply with government regulations.

Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

### (in millions, except share and per share amounts)

## Market risk

As filed, 639 characters.

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of market risk exposures. As discussed elsewhere in this Quarterly Report on Form 10-Q, the COVID-19 pandemic and related impacts on the global supply chain have negatively impacted our business and results of operations. As the Company cannot predict the full duration or extent of the pandemic, the future impact on the results of operations, financial position and cash flows, among others, cannot be reasonably estimated, but could be material. There have been no other material changes in this information since December 31, 2021.

## Controls and procedures

As filed, 2,094 characters.

This Quarterly Report on Form 10-Q includes the certifications of the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) required by Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Based on the performance of procedures by management, designed to ensure the reliability of financial reporting, management believes that the unaudited condensed consolidated financial statements fairly present, in all material respects, the Company's financial position, results of operations and cash flows as of the dates, and for the periods presented.

### Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms and that such information is accumulated and communicated to management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosures.

In connection with the preparation of this Quarterly Report on Form 10-Q, the Company's management, under the supervision and with the participation of the CEO and CFO, conducted an evaluation of disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO have concluded that such disclosure controls and procedures were effective as of March 31, 2022.

### Change in Internal Controls

During the first quarter ended March 31, 2022, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

### (in millions, except share and per share amounts)

## Risk factors

As filed, 166 characters.

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There has been no material change to this information since December 31, 2021.

Filed May 10, 2022.
Source: SEC EDGAR, the filing index for accession 0000028823-22-000069. Last ingested by Listed: Oct 28, 2026, 07:18 ET. No prices; not investment advice.