Diebold Inc. ( DBD) Q3 2011 Earnings Call October 27, 2011 10:00 AM ET Executives John Kristoff – VP and Chief Communications Officer Thomas Swidarski – President and CEO Bradley Richardson – EVP and CFO Analysts Kartik Mehta – Northcoast Research Matt Summerville – KeyBanc Gil Luria – Wedbush Securities Roman Leal – Goldman Sachs Zahid Siddique – Gabelli & Company Paul Coster – JP Morgan Presentation Operator
Finally a replay of this conference call will be available later today from our Web site. And as a reminder, some of the comments today may be considered forward-looking statements. Internal and/or external factors could significantly impact actual results. As a precaution please refer to the more detailed risk factors that have previously been filed with the SEC.Now with the opening remarks I’ll turn it over to Tom. Thomas Swidarski Thanks, John. Good morning, everyone. Thanks for joining our call today. Once again we delivered sound performance during the past quarter showing significant improvement in our profit margins, particularly in our Services business and are delivering on our commitments to generate the majority of our earnings in the back half of the year. We continue to effectively reduce our cost structure and drive improvements in our operations while focusing on more profitable business opportunities globally. In addition North America continued to perform exceptionally well with high demand for our financial self-service solutions. Given our market improvement of profitability and the continued strength in our North American business we have increased confidence in our earnings outlook for the remainder of the year. As such we are raising our full year EPS guidance to $2.15 to $2.25 per share. Total revenue for the third quarter decreased as we continue to be selective in the markets in deals we pursue, particularly in EMEA. The security business for bank branches in the United States remains challenged. However we have clearly improved our profitability through our continued focus on developing strategic relationships with customers and differentiating ourselves through high valued services. In turn we expect a strong fourth quarter with year-over-year increases in orders, revenue, margin and EPS. Our solid third quarter results combined with an expected strong fourth quarter provide us with momentum as we look to 2012.
During the quarter we had several key announcements regarding new innovations that help build the foundation to deliver even more value to our customers over the next several years. In August we unveiled a prototype of the world’s first virtualized ATM at VMworld. This is a very influential event hosted by VMware, the industry leader in Cloud computing and virtualization technologies and is attended by thousands of global IT professionals and decision makers worldwide.Developed in collaboration, the virtual ATM prototype removed onboard computer from the terminal, assigning each machine in a fleet to centralize computing resource. The result is now at a consolidation ensuring resources through our self-service network, but also across delivery channels. This opens the door to more effective channel orchestration. In short, virtualization will lead a lower total cost of ownership and increase ATM uptime. The virtualization concept has not only generated a significant amount of media coverage, but more importantly it has spawned a number of thought leadership discussions with strategic customers around the world. Virtualization represents an important milestone on Diebold’s roadmap, deleveraging cloud computing technology in the financial space, and will fundamentally change the way solutions are deployed in the marketplace. This technology is game-changer for our industry. Also in August we announced the Opteva Flex Performance Series. The most robust of service terminal we’ve ever offered, it combines traditional deposit automation capabilities including bulk cash and check-accepted with full currency recycling, the first in our industry. It can be configured with a separate cash dispenser and recycling module all in one ATM. This makes it well-suited for deposit automation intense market such as Latin America, Asia and EMEA, and as the North American market for deposit automation continues to evolve, the Flex series puts us in a very strong competitive position. We dramatically improved reliability and flexibility of these terminals, enabled financial institutions to transform the way they mage cash at the ATM, including efficiencies, decreasing cost and minimizing the administrative burden. Read the rest of this transcript for free on seekingalpha.com