Diebold Incorporated (DBD) Q1 2012 Earnings Call April 26, 2012 10:00 am ET Executives Tom Swidarski - President & CEO Brad Richardson - EVP & CFO Analysts Kartik Mehta - Northcoast Research Matt Summerville - KeyBanc Gil Luria - Wedbush Securities Zahid Siddique - Gabelli & Company Paul Coster - JPMorgan Roman Leal - Goldman Sachs Presentation Operator
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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 opening remarks, I will turn it over to Tom. Tom Swidarski Thank you John and good morning everyone. Thanks for joining our call today. We delivered record-setting first-quarter earnings per share performance and the strength we saw in the fourth quarter continued into 2012. We grew total revenue 14% during the quarter with a 21% increase in Financial Self-service. Once again we are seeing exceptionally strong results in North America as demand for deposit automation and integrated services continues to grow. Our leading position in the marketplace as well as the market we created for integrated services positions us well to capitalize on the increased investments activity happening in the self-service space. Clearly, we have enhanced our leadership position in the growing North American market and that is a primary component of the outstanding results we announced today. Additionally, our EMEA operation contributed to the growth in earnings with a significant year-over-year reduction in first-quarter losses as we continue to benefit from our restructuring efforts. And we reduced our operating expenses as a percent of revenue from the prior-year period. Finally our results were also positively affected by accelerated ATM installations related to the March deadline for ADA requirements. We anticipate that some ADA related activity will continue through the middle portion of the year and will begin to trail off by yearend. So given the strong start to the year and the continued underlying strength in our markets we have increased confidence in our ability to generate sustainable growth. Therefore we are raising our full-year outlook for both revenue and earnings.
As we look at the balance of 2012 I'm encouraged by our strong growth in Financial Self-service as our integrated services offerings continue to build momentum in the market. The total value of integrated services contracts we signed in the first quarter in North America alone approached $80 million, an increase of about 60% from the prior-year period.One example of the growing momentum in the IS space is Denali Alaskan Federal credit union, taking the responsive service from a single point of contact Denali selected Diebold to replace its sleet of about 50 ATMs, most of which will now have deposit automation and provide a variety of integrated services. Denali is highly representative of the nearly 300 customers who outsource key elements of their operations to Diebold during the quarter. This speaks to our unique innovative solutions that are highly valued in the regional bank segment as well as the trough these customers have placed in our capabilities. As we have communicated for many years, services are the key ingredient to our competitive differentiation and long-term value creation. The IS agreement with TD we discussed during our previous call exemplifies the critical need of banks of all sizes to focus on the co-operations. And our work with TD is evidence that we have built the infrastructure and competencies that handle the largest and most sophisticated global banks, from our knowledge of our customers' business processes to the breadth of our service organization and our growing electronic and logical security capabilities. We remain very optimistic about the scope of the potential of integrated service business. We continue to innovate and build off the initial success we have had in the space in Brazil and bring this expertise to key regions around the globe, all while capitalizing on the improved market environment in North America.
Now let's take a closer look at our performance on a regional basis. In North America, demand for products and services remains very strong. First-quarter revenue in the region increased more than 30% with very strong Financial Self-service growth primarily offset by an anticipated decline in securities. As I mentioned earlier in my comments we saw continued strong demand for deposit automation, integrated services and replacement activity associated with ADA compliance.Read the rest of this transcript for free on seekingalpha.com