Specialist
Former executive at NCR Corp
Agenda
- Updated perspective on Diebold’s (NYSE: DBD) end-market demand environment and broader macroeconomic environment’s impact on the company’s demand
- Competitive positioning of Diebold Nixdorf, NCR Corp (NYSE: NCR) and others
- Viability of Diebold’s current restructuring plan and its implications for ongoing performance and liquidity
- Long-term implications of consumer behaviour shifting in favour of electronic payments
- Diebold’s growth outlook with scenario analysis related to drivers and headwinds
Questions
1.
How should investors assess the US demand environment from the perspective of ATM hardware and the managed services side? What data points can we look at to contextualise the trends?
2.
Does the broader macroeconomic environment materially impact demand? I can see it going both ways in terms of businesses being slightly skittish in creating capital outlays to purchase or upgrade existing machines, but at the same time, seeing managed services and the cost benefits as a way to reduce costs associated with existing machines. What are your thoughts on that?
3.
What significant refresh drivers might be upcoming in the near term? How does this broader transition from the hardware model towards ATM-as-a-service impact upgrade cycles for hardware and any revenue opportunities?
4.
Do any of the market dynamics we’ve discussed change when speaking about different geographic markets? Understanding that the US install base is declining, but could certain areas potentially grow or lag the US decline and be a little more fruitful in revenue opportunity?
5.
How should we assess adoption or penetration across client segments and geographic groups? In your previous Forum Interview [see ATM Managed Services Opportunities – NCR, Cardtronics & Diebold – 10 March 2021], you expected around 30% or 40% adoption for this ATM-as-a-service transition, and posited 30% or 40% of adoption from community financial institutions by 2024. What is your updated perspective on that? Would you materially change that assumption?
6.
Could you broadly compare and contrast some of the short- and long-term strategies being implemented by Diebold and NCR? Are the two companies experiencing the same challenges and why?
7.
Where does Hyosung fit in the competitive discussion? Has it made any material inroads in the US? Where is it in the managed services aspect? What’s your overview on its position vs Diebold and NCR?
8.
What is your 1-3-5-year outlook for market share changes across Diebold, NCR and Hyosung?
9.
Which operators might be the largest winners or losers over the next 3-5 years? What informs your view?
10.
Recent news flow has highlighted Diebold’s operational challenges and supply chain issues seem to be a main friction point for the company’s operational performance thus far. What does that mean in practice, specifically for the ATM hardware side? What might be the friction points in raw materials, transportation, logistics and personnel?
11.
How does the managed services segment handle today’s inflationary pressures? It seems that Diebold has been renegotiating pricing or even giving options for pre-payment on some of these contracts at the current price. Which of those strategies might be more effective? How would you grade the company’s ability to execute on these strategies?
12.
Cost management has been another aspect of Diebold’s operational challenges. What levers can be pulled? How flexible can they be in terms of addressing costs across personnel, R&D, SG&A, broader marketing spend and so on?
13.
What is your 1-3-5-year growth outlook for Diebold? Management has already lowered its 2022 guidance around USD 3.7bn at the low end. Do you think this target is achievable? Would you expect more substantial downside and what informs this view?
14.
Keeping in mind the trajectory and shift in revenue contribution between the services side and the hardware side, is there a proportional impact to the top line? For every 1% increase in managed services, is there some proportional impact on top-line growth and profitability at the bottom line?
15.
What long-term target margin should Diebold and NCR be aiming for when looking at gross and operating margins for these businesses? We’ve seen some degradation across segments for Diebold, so what’s your long-term view in that?
16.
What’s your 1-3-year outlook for Diebold? What might be best- and worst-case scenarios specifically to this debt restructuring process?
17.
Is anything commonly misunderstood by the investment community regarding Diebold or the broader industry? What contrarian views should be re-evaluated?
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