Breaking Down Diebold Nixdorf, Incorporated (DBD) Financial Health: Key Insights for Investors

Understanding Diebold Nixdorf, Incorporated (DBD) Revenue Streams

Understanding Diebold Nixdorf, Incorporated’s Revenue Streams

The company's revenue is derived from two primary segments: Banking and Retail. Here’s a detailed breakdown of these revenue sources:

In the nine months ending September 30, 2024, the total revenue reached $2,762.2 million, significantly up from $591.8 million in the prior year’s corresponding period. This represents a growth rate of approximately 367.5%.

Year-over-Year Revenue Growth Rate

The revenue growth rate demonstrates a substantial increase, especially when compared to the previous year:

• 2023 Total Revenue: $2,131.9 million
• 2024 Total Revenue: $2,762.2 million
• Year-over-Year Growth: 29.5%

Revenue growth was primarily driven by increased ATM sales and recovery in service revenues as the company emerged from restructuring.

Contribution of Different Business Segments to Overall Revenue

The contribution of each business segment to the overall revenue for the nine months ended September 30, 2024, is as follows:

The Banking segment continues to be the dominant revenue driver, reflecting the demand for ATMs and banking solutions.

Analysis of Significant Changes in Revenue Streams

There have been notable changes in revenue streams, particularly:

• The Banking segment's revenue increased due to higher unit sales of ATMs, contributing significantly to the overall revenue.
• The Retail segment faced challenges due to market conditions, but it still managed to grow its revenue.

For the nine months ending September 30, 2024, the breakdown of revenue by segment is as follows:

The Banking segment's revenue growth is indicative of a strong recovery in demand for financial transaction technologies. The Retail segment, while growing, shows the impact of external economic factors affecting overall consumer spending.

A Deep Dive into Diebold Nixdorf, Incorporated (DBD) Profitability

A Deep Dive into Diebold Nixdorf, Incorporated's Profitability

Gross Profit:

Operating Profit:

Net Profit Margins:

Trends in Profitability Over Time:

• Gross profit increased to $236.6 million for the three months ended September 30, 2024, from $129.6 million in the prior year.
• Operating profit rose to $46.4 million in Q3 2024, compared to $36.9 million in Q3 2023.
• Net income showed a loss of $21.7 million for Q3 2024, worsening from a loss of $8.2 million in Q3 2023.

Comparison of Profitability Ratios with Industry Averages:

Analysis of Operational Efficiency:

• Operating expenses for the nine months ended September 30, 2024, totaled $478.4 million, reflecting a significant increase compared to $458.7 million in the same period of 2023.
• Research and development expenses amounted to $69.7 million for the nine months ended September 30, 2024, compared to $62.3 million in 2023.
• Cost management challenges are evident, with total operating profit decreasing in the nine months ended September 30, 2023, to (5.5 million) from 140.9 million in 2024.

Debt vs. Equity: How Diebold Nixdorf, Incorporated (DBD) Finances Its Growth

Debt vs. Equity: How Diebold Nixdorf, Incorporated Finances Its Growth

Overview of Debt Levels

As of September 30, 2024, the company's total outstanding debt amounts to $1,099.6 million, which includes:

• Exit Facility: $1,050.0 million
• Revolving Facility: $38.7 million
• Other Long-term Debt: $15.4 million

The short-term debt is recorded at $0.8 million .

Debt-to-Equity Ratio

The debt-to-equity ratio for the company is approximately 1.03, calculated as total debt of $1,099.6 million divided by total equity of $1,066.2 million as of September 30, 2024 . This ratio is slightly above the industry average, which typically ranges from 0.5 to 1.0.

Recent Debt Issuances and Credit Ratings

In recent months, the company has engaged in refinancing activities, reducing its long-term debt from $1,253.6 million at the end of 2023 to the current $1,099.6 million . The company’s credit ratings reflect a stable outlook with a rating of Caa2 from Moody's and CCC+ from S&P .

Debt Financing vs. Equity Funding

The company has strategically balanced its debt financing and equity funding. Current equity stands at $1,066.2 million, showing a strong base for potential equity financing in the future. The total equity has remained relatively stable, with minor fluctuations due to recent net losses .

This balanced approach indicates a focus on maintaining flexibility in financing while managing the risks associated with higher leverage .

Assessing Diebold Nixdorf, Incorporated (DBD) Liquidity

Assessing Diebold Nixdorf’s Liquidity

Current Ratio: As of September 30, 2024, the current ratio is 1.21, indicating that the company has $1.21 in current assets for every $1.00 in current liabilities.

Quick Ratio: The quick ratio stands at 0.92, suggesting that when excluding inventory, the company has $0.92 in liquid assets for every $1.00 in current liabilities.

Analysis of Working Capital Trends

The working capital as of September 30, 2024, is approximately $81.8 million. This reflects an increase from $55.3 million on December 31, 2023. The improvement in working capital is driven by better management of accounts receivable and inventory levels.

Cash Flow Statements Overview

For the nine months ended September 30, 2024, the cash flow from operating activities showed a net cash outflow of $47.0 million. This was primarily due to a net loss of $20.9 million and changes in working capital.

In terms of investing activities, the company reported a net cash outflow of $28.2 million, largely attributed to capital expenditures and investments in software development.

Financing activities saw a net cash outflow of $174.5 million, primarily due to repayments of the Revolving Credit Facility.

Potential Liquidity Concerns or Strengths

Despite the current ratio indicating a satisfactory liquidity position, the quick ratio below 1 suggests potential liquidity concerns. The company’s reliance on inventory to meet current liabilities may pose risks if inventory levels are not converted to cash quickly.

Moreover, the net cash used by operating activities reflects underlying operational challenges, which may affect future liquidity. However, the presence of $262.4 million in total cash and cash equivalents as of September 30, 2024, provides a buffer against short-term liquidity issues.

Overall, while the liquidity ratios indicate a manageable position, ongoing monitoring of cash flows and working capital management will be crucial for sustaining financial health.

Is Diebold Nixdorf, Incorporated (DBD) Overvalued or Undervalued?

Valuation Analysis

The valuation analysis for the company involves several key financial ratios and metrics that provide insights into whether the company is overvalued or undervalued.

Price-to-Earnings (P/E) Ratio

As of September 30, 2024, the basic earnings per share (EPS) was $-0.59. With the stock price trading at approximately $2.00, the P/E ratio is:

P/E Ratio = Stock Price / EPS = $2.00 / -0.59 = Undefined (Negative EPS)

Price-to-Book (P/B) Ratio

The book value per share as of September 30, 2024, is calculated as:

Book Value = Total Equity / Total Shares Outstanding = $1,066.2 million / 37.6 million shares = $28.43

The P/B ratio is:

P/B Ratio = Stock Price / Book Value = $2.00 / $28.43 = 0.070

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio

The total enterprise value (EV) is calculated as:

EV = Market Capitalization + Total Debt - Cash and Cash Equivalents

Assuming a market capitalization of $75.2 million (approximately 37.6 million shares at $2.00), total debt of $1,066.2 million, and cash of $251.1 million:

EV = $75.2 million + $1,066.2 million - $251.1 million = $890.3 million

EBITDA for the nine months ended September 30, 2024, is $140.9 million.

EV/EBITDA Ratio = EV / EBITDA = $890.3 million / $140.9 million = 6.31

Stock Price Trends

Over the past 12 months, the stock price has fluctuated as follows:

• 12 months ago: $3.50
• 6 months ago: $2.50
• 3 months ago: $1.80
• Current Price: $2.00

Dividend Yield and Payout Ratios

The company does not currently pay a dividend. Therefore, the dividend yield is 0%, and the payout ratio is also 0%.

Analyst Consensus on Stock Valuation

The latest analyst consensus indicates:

• Buy: 1 analyst
• Hold: 3 analysts
• Sell: 2 analysts

Key Risks Facing Diebold Nixdorf, Incorporated (DBD)

Key Risks Facing Diebold Nixdorf, Incorporated

Overview of Internal and External Risks:

Diebold Nixdorf, Incorporated faces various internal and external risks that may impact its financial health as of 2024. Key risks include:

• Industry Competition: The company operates in a highly competitive environment, facing pressure from both established players and new entrants in the banking and retail technology sectors.
• Regulatory Changes: Changes in regulations, particularly concerning data security and financial transactions, could impose additional compliance costs and operational adjustments.
• Market Conditions: Economic downturns or shifts in consumer behavior can adversely affect demand for the company's products and services.

Operational, Financial, or Strategic Risks:

Recent earnings reports highlighted several risks:

• Operational Risks: The company has reported losses, with a net loss of $21.7 million for the three months ended September 30, 2024.
• Financial Risks: High interest expenses of $120.6 million for the nine months ended September 30, 2024, have significantly impacted profitability.
• Strategic Risks: The company has faced challenges in revenue generation, with total revenue of $2,762.2 million for the nine months ended September 30, 2024, compared to $2,131.9 million in the same period of the previous year.

Mitigation Strategies:

The company has implemented several strategies to mitigate risks:

• Cost Management: Focus on reducing operational costs, evidenced by a gross profit of $688.4 million for the nine months ended September 30, 2024.
• Diversification: Expanding product lines and services to mitigate dependence on specific markets or sectors.
• Investment in Technology: Continuous investment in innovation to stay competitive and meet changing customer demands.

These metrics reflect the financial landscape and challenges faced by the company, underpinning the risks associated with its operations and market conditions.

Future Growth Prospects for Diebold Nixdorf, Incorporated (DBD)

Future Growth Prospects for Diebold Nixdorf, Incorporated

Analysis of Key Growth Drivers

Diebold Nixdorf is poised for growth driven by several key factors:

• Product Innovations: The company has been focusing on enhancing its software and hardware offerings, particularly in the banking sector, with net sales reaching $2,046.8 million in the nine months ended September 30, 2024.
• Market Expansions: The retail segment has seen net sales of $715.4 million in the same period, indicating potential for further market penetration.
• Acquisitions: Strategic acquisitions are anticipated to bolster the company's capabilities and market presence, particularly in underserved regions.

Future Revenue Growth Projections and Earnings Estimates

Revenue growth projections indicate a positive trend, with total revenue for the nine months ending September 30, 2024, at $2,762.2 million, compared to $2,131.9 million for the same period in the previous year. Earnings estimates suggest a continued recovery, despite a net loss of $22.4 million in the latest quarter.

Strategic Initiatives or Partnerships

The company is exploring various strategic initiatives:

• Partnerships with fintech companies: Collaborations are expected to enhance service delivery and integrate advanced technologies.
• Investment in digital transformation: The focus on digital solutions is set to drive efficiencies and customer engagement.

Competitive Advantages

Diebold Nixdorf's competitive advantages include:

• Strong brand recognition: Established in the banking sector, the company benefits from a long-standing reputation.
• Comprehensive product portfolio: A diverse range of products and services positions the company well against competitors.
• Global presence: Operations in multiple regions allow for diversified revenue streams and risk mitigation.

As of September 30, 2024, the company reported total liabilities of $2,825.4 million and total equity of $1,075.9 million. This balanced financial structure supports ongoing growth initiatives and stability in operations.

Updated on 16 Nov 2024

Resources:

1. Diebold Nixdorf, Incorporated (DBD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Diebold Nixdorf, Incorporated (DBD)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Diebold Nixdorf, Incorporated (DBD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.