Diebold Nixdorf Inc (NYSE: DBD) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced its earnings, exciting investors and sending the stock on a run for the top. Today, we’ll talk about:
- The report;
- what we’re seeing from DBD stock as a result; and
- what we’ll be watching for ahead.
DBD Gains On Earnings
As mentioned above, Diebold Nixdorf is having a strong start to the trading session today after reporting its earnings for the fourth quarter. Here’s what we saw from the report:
- Net Loss – In terms of net loss, DBD didn’t do all that well. In fact, net losses widened to $123.6 million, working out to be $1.62 per share. In the same quarter one year ago, the company produced a net loss of $110.1 million or $1.46 per share.
- Adjusted Loss – Once adjusted to exclude non-recurring items, the adjusted loss per share came in at $0.08. Analysts expected that the company would break even.
- Sales – While earnings proved to be a concern, sales excited investors. During the quarter, sales climbed 3.2% to come in at $1.29 billion. Analysts expected that sales would come in around $1.23 billion.
- Guidance – For the 2019 year, DBD is expecting for free cash flow to break even. Revenue is expected to come in the range between $4.4 billion and $4.5 billion and the three year cost cutting target has been raised to $400 million from $250 million.
In a statement, Gerrard Schmid, President and CEO at DBD, had the following to offer:
The company delivered solid fourth quarter results, as we’ve built momentum globally in executing our DN Now transformation plans. Revenue growth was underpinned by strength in Americas Banking and Retail. I am especially pleased with our ability to generate higher profits as we begin to realize the benefits of our DN Now initiatives. Adjusted EBITDA in the quarter increased nearly 21 percent, and the associated margin improved by 140 basis points from the prior year quarter. In addition, we generated strong free cash flow of $250 million due to better profitability, improved inventory management and solid collections. This represents the strongest profit and cash flow performance the company has delivered since the combination of Diebold and Wincor Nixdorf.
The above statement was followed up by Jeffrey Rutherford, SVP and CFO at DBD. Here’s what he had to say:
We have defined, executable plans thatare designed to create long-term, sustainable value. These plans include significant cost reductions and improved net working capital as we realize increased benefits from our global scale. As a result, we are increasing our threeyear savings target from $250 million to $400 million. Our DN Now actions are designed to yield returns on invested capital in the mid-teens and produce free cash flow that will reduce our ratio of net debt to trailing 12-months adjusted EBITDA to less than three times by 2021.
We are executing on several initiatives to improve our cost structure, intensify customer focus by evolving our connected commerce solutions and significantly improve our financial position. We are confident these plans will improve our financial performance for 2019 and beyond.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. When it comes to Diebold Nixdorf, the news proved to be positive. While earnings and net income missed the mark, revenue growth proved to be positive. With more aggressive cost cutting, the company may work its way to a profit over time. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:04), DBD is trading at $6.84 per share after a gain of $1.61 per share or 30.78% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on DBD. In particular, we’ll be following progress on the cost-cutting efforts as well as the continued expansion of sales. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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