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Diebold reports second-quarter 2011 results

The company reported a 30 percent drop in earnings.  

July 26, 2011

Diebold Inc. released its second-quarter 2011 financial results on Wednesday. Net income from continuing operations attributable to Diebold of $20.3 million, or $0.31 per share, was down from $30.4 million and $0.46 per share, respectively, from the second quarter 2010.

Second-quarter 2011 revenue was $662.4 million, down 0.4 percent from the second quarter 2010.

Non-GAAP earnings per share from continuing operations attributable to Diebold, net of tax, were $0.44 per share, down from $0.53 per share in second-quarter 2010.

"We had a solid second quarter, with better than expected results in several key areas of the company," said Thomas W. Swidarski, Diebold president and chief executive officer. "Growth continues to accelerate in North America, particularly in the U.S. regional bank space, driven by strong demand for advanced deposit automation and new technology needed to meet pending regulatory and industry compliance standards."

Total gross margin for the second quarter 2011 was 25.6 percent, a decrease of 1.2 percentage points from the second quarter of 2010. Total gross margin in the second quarter of 2011 included restructuring charges of $2.8 million associated with the previously announced restructuring plan for EMEA. There were $0.2 million in restructuring charges in the second quarter of 2010.

"We also drove operational progress in EMEA during the quarter, and are on track to reach a break-even run rate in the region by year end. In addition, some business closed during the quarter earlier than originally forecasted, which reduces risk to the second half of our forecast for the year," Swidarski said.

Operating expenses

Total operating expenses as a percentage of revenue for the second quarter 2011 were 21.8 percent, an increase of 2.1 percentage points from the second quarter of 2010.

Operating expenses in the second quarter 2011 included $1.7 million of restructuring charges primarily associated with the previously announced restructuring plan for EMEA.

Second quarter 2011 operating expenses also included non-routine expenses of $4.7 million, which includes $4.2 million in legal, consultative, audit and severance costs related to the previously disclosed Foreign Corrupt Practices Act (FCPA) investigation, and $0.5 million for the settlement related to previously disclosed employment class-action lawsuits.

Diebold continues to conduct a global internal review of its compliance with the FCPA. The company excludes costs related to the review from its non-GAAP operating results.

Operating expenses in second-quarter 2010 included non-routine expenses of $1.1 million related to the FCPA investigation, and $4.1 million in impairment charges and restructuring charges of $1.0 million related to the U.S. workforce reduction.

Net debt, cash flow

The company's net debt was $149.7 million on June 30, an increase in net debt of $184.9 million from December 31, 2010, and a reduction of $44.4 million from June 30, 2010.

Net cash used in operating activities was $100.0 million for the six months ended June 30, an increase of $82.5 million from the six months ended June 30, 2010.

In the second quarter 2011, Diebold repurchased 1.1 million of its common shares for about $36 million under its repurchase plan.

"Our expanding offerings in services, coupled with innovative, reliable technology and our ability to consistently deliver on our commitments to customers, gives me confidence that we will meet our objectives as we look toward the remainder of 2011 and beyond," Swidarski said.  

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Diebold Nixdorf

As a global technology leader and innovative services provider, Diebold Nixdorf delivers the solutions that enable financial institutions to improve efficiencies, protect assets and better serve consumers.

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