Q2 2022 Diebold Nixdorf Inc Earnings Call
Good morning, My name is Adam I know will be your conference operator today at this time I would like to welcome everyone to the T. Bolt Nixdorf second quarter 2022 conference calls lines have been placed on mute to prevent any background noise.
The speaker's remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one no telephone keypad.
We'd like to withdraw your question. Please press star two thank you.
Scott you May begin your conference.
Yeah.
Hello, everyone and welcome to our second quarter 2022 earnings call I'm, Christy Martin She's got Vice President of Investor Relations for Diebold Nixdorf.
To accompany our prepared remarks, we have posted our press release and shareholder letter to the Investor Relations section of our corporate website I would encourage investors to review the shareholder letter as it contains additional information regarding the progress of the company.
Later this morning, a replay of this webcast will be available on the Investor Relations section of our website.
Before we begin I will remind all participants that during this call you will hear forward looking statements, including related to an update on guidance.
These statements reflect the expectations and beliefs of our management team at the time of this call, but they are subject to risks and uncertainties that could cause actual results to differ materially from these statements.
Additional information on these factors can be found in the company's periodic and annual filings with the SEC.
Participants should be mindful that subsequent events may render this information should be out of date.
We will also be discussing certain non-GAAP financial measures on today's call a reconciliation between GAAP and non-GAAP measures can be found in the tables of today's earnings release, and now I'll hand, the call over to Octavio.
Thank you Christine and thank you all for joining us today.
Over the past several weeks our company has worked quickly to take important steps to become more agile customer focused and better equipped to face the volatile macroeconomic environment.
During my first full quarter as CEO .
Delivered on our prior commitment with sequential quarter over quarter improvement on several key measures, including revenue growth margin expansion, adjusted EBITDA and cost savings through our restructuring initiatives.
All of the leading us to reaffirm our EBIT guidance for the full year.
Our.
<unk> is the strongest it has.
Ever been and we continue to see robust demand in order entry from a stable customer base that one part market leading solutions.
We ended the second quarter with $1 $4 billion in product backlog, our highest backlog today.
Order intake continues to outpace our ability to convert backlog to revenue.
Important to note that approximately 90% up our 2022 total company revenue is security there'll be a contract are scheduled backlog, which means committed spend. Additionally.
Additionally, approximately 70% of our service business is recurring in nature at any given time and we expect to grow this metric.
Okay.
Banking and retail are two of the world's most competitive and demanding industries.
And we continue to play a vital role in supporting our customers' efforts to succeed in an ever evolving customer landscape.
Demand remained strong across both areas, specifically for our cash recyclers and self checkout.
In banking, we address the demand for cash recyclers as banks rethink their branch footprint and move more transactions towards the self service channel.
DN series cash solutions are now live in over 90 countries with over 500 certification.
We continue to see a shift away from our legacy devices with our new DN series cash recyclers compromising now 82% of new banking orders in North America.
Okay.
We achieved a year over year growth of 70%, 79% and connected Atms to our DN all connect data engine.
In retail the evolution of consumer behavior, along with the rapidly changing labor dynamics have led to increased demand for self service and automation.
Growth is being driven by customer momentum for our self checkout solutions are self checkout.
Or scope business keeps gaining new customers globally.
Continues to grow faster than the market specific specifically in Europe , and we are seeing success now also in the North America market.
Okay.
We continue to look for ways to deploy one of our best assets, Our service organization, which includes a dedicated and talented global technique.
Technician base spare parts and logistics capabilities multilingual help them all working together to deliver on customer SLE.
Leveraging these assets, we continue to expand and explore the EV charging services business. We saw progress as we extended pilots with several existing customers. We also added several new countries to our service footprint and projects through original and new contracts with Oems charge point operators and retailers.
EV charging stations are a great example of what service horizontal for our managed service capabilities and we're looking forward to more opportunities, where we can add horizontal or vertical that align where we can leverage the scale of our service.
Importantly, we recently implemented a new one simplified operating model that is helping us to improve our financial performance elevate customer service and put us on a path forward to a stronger future.
We have confidence in our operating model to drive us forward and double our efforts on what matters, most serving our customers and building value for shareholders.
We have the industry's best self service solutions, and elite and leading edge technology, coupled with the World class services.
And our simplified operating model will allow us to strongly leverage what we do back.
Going forward, our operating segments will be global banking and global retail.
And we will be discussing our business in terms of technology products solutions and services.
In terms of these new segments technology product solutions includes our hardware as well if our software licenses and.
In services includes our product related services, including installation maintenance and support for both hardware and software professional services billable work as well as advanced managed services and others.
This reporting better reflects how we will run the business and measure success.
Jeff will go through the numbers in more detail and we also have provided historical comparisons and our shareholder in our shareholder letter.
While we strive to improve what we do and how we do it at the company, we're still working against the expected headwinds that we discussed over the past few.
A few quarters.
Namely a difficult supply chain uninflated inflationary environment that is challenging our ability to deliver solutions to customers in a timely and cost efficient manner.
Specifically, we are still experiencing higher cost and parts and key components necessary to manufacture our products during the quarter.
But availability has improved.
In addition shipping product has moderately.
Improved, but we continued to experience longer lead times to deliver our solutions as global shipping demand is exceeding capacity at <unk>.
Logistics channels around the world.
The war in Ukraine continues to add complexity and uncertainty to logistics related issues.
And the global economy with respect to inflationary pressures as well that's the impact on foreign exchange.
Looking at the World today, we want to provide you a better picture on how our business is doing geographically.
Especially considering the FX challenges I mentioned earlier.
Our euro denominated business.
Constitutes approximately $1 6 billion of annual revenues.
We have seen from our original planning assumptions to today, a devaluation of 15%.
On a constant currency basis, and adjusted for divestitures, we expect growth to be flat on a year over year basis.
Jeff will provide more commentary on this as well.
Uh huh.
Yeah.
We are seeing steady progress with constructive discussions on repricing the backlog and are increasing our operational rigor and better managing costs of the company.
We continue to make progress Reconfiguring, our supply chain, we are proud that our facility in north Canton, Ohio keeps ramping up to meet demands of our North American market.
Simplifying the can do attitude of northeast, Ohio, and supporting our investments in the region as we expand and develop local suppliers.
We reiterate our target of meaning 80% of North America demand for cash recyclers from this U S based operation by the end of 2022.
However, as it stands today Paderborn, Germany continues to remain our main production facility for both banking and retail followed by Asia, and lastly, North Canada.
This will shift that we continue to see more production coming out of Europe coming out of the.
U S.
Important to note that our Brazilian facility in my analysis solely dedicated to the Brazilian ATM market.
During our Q1 call, we announced the commitment the commencement of our $150 million plus cost savings restructuring plan.
To date, we have identified and are executing against the $120 million of this initiative and have clear line of sight to more than $30 million of additional cost savings.
We are implementing these initiatives as quickly and efficiently as possible.
Finally.
We often receive questions from investors about mergers and acquisitions, including potential divestitures and other value creating strategic opportunities.
Part of our constant efforts to maximize shareholder shareholder value. We will continue to evaluate strategic alternatives that will benefit our shareholders.
Before Jeff provides more detail on our financials I want to thank our employees for their dedication.
Our customers for their continued trust and our shareholders for your support.
We have the right strategy in place and more than ever our leadership team is committed to improving our business and creating long term growth and value for our company.
I will now turn it over to Jeff.
Thank you Octavio.
My prepared remarks will include references to certain non-GAAP metrics, such as adjusted EBITDA. As a reminder, please see our shareholder letter for additional financial details from the quarter.
Here I will highlight a few of our key performance metrics.
We continue to see strong demand from customers for our products and solutions in the second quarter two.
2022, total revenue was $846 million, an increase of approximately 3% sequentially.
A decrease over second quarter 2021 of approximately 10% as reported and a decrease of approximately 1% <unk>.
Excluding a foreign currency impact of $58 million and a $28 million impact from divested businesses inclusive of Russia and Ukraine.
Adjusted for foreign currency and divestitures banking revenue increased 5% sequentially and decreased approximately 1% on a year over year basis, excluding the foreign currency impact of $29 million in divestitures of $11 million.
Retail revenue decreased 2% sequentially and remained flat to the second quarter 2021.
Excluding the foreign currency impact of $28 million in divestitures of $17 million.
Is that caveat pointed out with the current dynamic currency environment, we feel it would be helpful to break out our revenue by geography for the second quarter approximately 40% of our revenue was from the Americas.
50% from Europe , and 10% from APAC.
With the euro declining versus the dollar, although we see benefits on the cost side.
Our negative negatively impacted on revenues.
In May we began discussions with customers around backlog orders that had been placed previously previous to the commencement of our price increase increases last summer 2021.
This constructive talks have generally resulted in customers choosing to lock in their pricing or prepay or take a price increase relative to the inflationary environment.
To date, we have not had any material cancellations of orders and most customers are choosing the prior option, which is contributing to our target of accelerating the velocity of converting backlog to free cash flow.
We saw a sequential increase in technology product margins in the second quarter as planned and expect this trend to continue as price increases begin to flow through.
For the second quarter operating expenses were down to the previous period, a year ago and also down sequentially.
We reported adjusted EBITDA of $71 million and adjusted EBITDA margin of eight 3%.
Unlevered free cash flow for the second quarter of 2022 was at six the $1 million usage compared to $176 million usage last quarter, and a $52 million of usage in the second quarter of 2021.
The sequential benefit was driven by an increase in EBITDA and working capital changes.
We have executed approximately 80% of our cost savings plan with approximately $120 million of annualized cost either removed or in a transition period equating to roughly $12 million of non-GAAP savings in the second quarter.
We remain committed to our initial timeline of 12 to 18 months to execute cost savings, resulting in more than $150 million in shape.
Separately in the second quarter. The company received a favorable decision in the shareholder appraisal proceedings related to Diebold combination with Linkohr all claims seeking to increase cash compensation by the minority shareholders have been dismissed by the first level court in Germany.
For our 2022 financial outlook.
We are reiterating our adjusted EBITDA outlook of $320 million to $350 million. Additionally.
Additionally, we are reiterating our free cash flow outlook of breakeven, which includes our cash restructuring charges.
In terms of gross margins as we continued to realize price increases improved backlog to revenue conversion, we reiterate our guidance on sequential improvement in gross profit throughout the remainder of 2022.
We are adjusting our revenue guidance for the full year, 2022% to 355% to $3 75 billion with the majority of the revision due to foreign exchange.
For 2022 to 2024 as noted in our shareholder letter we are targeting the following as well as providing additional detail.
Revenue growth of 3% annually.
Gross margin growth of 200 to 250 basis points as a percentage of revenue by 2024.
SG&A to decline 150 basis points as a percentage of revenue and R&D to trend downward 50 basis points as a percentage of revenue adjusted.
Adjusted EBITDA margin of 13% as a percentage of revenue by 2024.
And additionally from 2024% to 22022% to 2020 for Unlevered free cash flow margin is mildly expand from approximately 50% in 2022 to approximately 70% in 2024.
I look forward to updating you on our progress.
In upcoming quarters.
Finally, I'd like to provide an update on our debt refinancing initiatives.
As communicated last quarter management is working with Evercore.
Sullivan and Cromwell to assist in our refinancing efforts to reach a resolution as soon as practical.
We are in constructive conversations with banks and other lending institutions and we will continue to provide detailed updates as to the various elements of our refinancing process as more information is available to share publicly.
As discussed previously as of July 20th our revolver is classified as current on our balance sheet.
The discussions that we're having with banks and other lenders are comprehensive with regard to near term maturities in our debt stack inclusive of the revolver.
Now I will turn the call.
Over to the operator for Q&A.
As a reminder, if you'd like to ask a question today. Please Chris Star followed by one on your telephone keypad now.
Just two questions. Please ensure you have today is fully booked in an unbeaten Luckily star followed by one on your telephone keypad.
The first question today comes from Matt Summerville with D. A Davidson. Please go ahead your line is open.
Sure.
Thanks.
First question.
Is there any more granularity you can provide as to how the debt.
That process evolved over the last 90 days, we reported last and whether or not you're able.
A little bit more of a ring fence around the timeframe, we might be looking at.
Resolution 10 minutes I'll walk.
Matt I would say what I said in my prepared remarks, what we're comfortable saying at this point in time.
We continue to have constructive discussions.
But we are not going to go into any further detail than what we've previously stated.
Got it and then.
With respect to the one.
You continue to talk about it as well.
I guess I'm curious as to whether you feel given where you are at 80%.
The way there if you're willing to maybe talk about how much upside we might be able to see on that one.
And then I would also be curious as to what youre seeing in realized price today.
Maybe where you are now starting the year.
Well as far as upside on $150 million, we're always looking for upside I mean, that's what we do right with what we have modeled in.
Uh huh.
Is the $150 million.
And that's probably discussed.
Discuss another another meeting sets, we make our model more efficient we will continue looking for opportunities to generate greater greater savings, but but we feel very comfortable that we will deliver on the 150 plus in the timeframe that we that we committed.
As far as the pricing environment, if you look at our our product gross margin sequentially.
They improve and that is part of though.
Part of that come from.
From our pricing activities and.
As Jeff mentioned, we expect that trend to continue for the remainder of the year.
More of the backlog is now.
That's being converted either reprice or half or has been sold with the appropriate price increases to the new cost structure. So you should see you should expect our product margins to continue improving sequentially through the remainder of the year.
Got it thank you.
Okay.
The next question comes from Jeff Harte with Barclays. Please go ahead. Your line is open.
Hi, good morning.
First Jeff can you talk about the.
The EBITDA add backs.
The restructuring and now you know backup.
Backup $77 million or trying to get that but then there is 43 million of non routine expenses I'm. Just wondering what these amounts are and as we look at our free cash flow estimates for the year, what should be sort of the actual free cash flow.
The sort of unusual cash charges since youre breakeven guidance.
Yeah, Thanks, Jeff for those questions.
I'll start with the free cash flow.
And I'll give you a bit of a walk from EBITDA to to where we need to end up with relative to free cash flow. So and this is indirect so we start with EBITDA. So take if you take the midpoint of the guidance.
Here are the scheduled uses of cash for that EBITDA.
Income taxes of approximately $50 million.
Pension and approximately $17 million.
Capex approx approximately $50 million, that's inclusive of capitalized R&D.
Andrew just slightly below $180 million.
We will pay a bonus.
In 2022 related to 2021.
And have no provision for bonus and and.
In 2022, so it shows up in that reconciliation, that's approximately $35 million.
Restructuring transformation, that's both severance and transition.
Transition costs freight for.
Ftes in and some third party payments.
And 2022 of approximately $85 million.
So youll get depending on where you start with your EBITDA range, you're going to get something around $70 million to $90 million to get to breakeven.
That 70% to $90 million.
As is.
Really related to the management of working capital and.
An expectation of inventory reduction in the back half of the year.
Continued.
Ah.
Good progress relative to two.
Deferred revenue and then and then other balance sheet items being managed to get back to.
Free cash flow zero.
So youre, saying that free cash flow zero as an actual amount because I know what are excluded restructuring.
Now now now it includes the restructuring.
Oh, Okay and then the other question was.
Yeah, well the other question was relative to.
The non-GAAP adjustments, we do disclose that both of them.
Release Scott.
Schedules and then.
Shareholder letter.
The biggest piece of that is what I referred to earlier.
Is the expense for our restructuring and transformation you can see that that that's approximately $78 million.
Pretty similar to what I said relative to cash payment.
Then we've adjusted out that amortization of <unk> nixdorf.
Purchase accounting.
Yeah.
Got it Okay, and then we have an asset held for sale and so forth.
Yes go ahead.
And just shifting gears.
On the expense reductions I think you had mentioned that you.
I don't remember if you said you have.
Executed or put in place a $120 million of the ones that we can you.
Can you just talk about the flow through of those savings for the rest of this year.
And when you expect to get close to the full run rate.
Well, we'll be we'll be pretty close to the full run rate on the 120 relatively soon.
So that that's generally head count reductions.
That.
There is a portion of those.
Cost reductions related to indirect spend reduction.
And that usually takes a little bit of a cycle to work through so so some of that will come through next year.
But we will see a bulk of the benefits coming through and are on a on an annualized basis by the time, we get to the end of the year.
Got it and my last question is just on the revenue.
You know the revenue realization.
Obviously, you still have.
We have supply chain transportation delays et cetera, and it looked like <unk> maybe.
It didn't ramp as quickly as you might have expected.
How do you see the visibility on being able to improve on that front with respect to supply chain to meet your commitments.
So Jeff this is soaked up.
Yes.
I would say that that Q2, if you if you were to add back some of the FX FX headwinds.
We ramped up pretty nicely from Q1, Q2, Q, both revenue and regaining some of the margin that we said that we would be improving sequentially. So I'm actually pleased with the progress that we're seeing.
Clearly, we need to keep accelerating that trend thinks that the good news is that we have.
We have all the orders that we need in place to meet our revenue commitments for the year, we are working very closely with our customers.
Final licensing installations scheduled finalizing delivery plan for them. So I would tell you that we're managing this at such a granular level that I'd probably be nowhere every ATM, it's going where every self checkout devices going to what customer on what date for the remainder of the year and we're just we're just managing that and being very tight.
Execution against that as we accelerate our backlog conversion.
We do have good line of sight than we and we're executing and managing things very closely that's part of the new operational rigor that we're trying to implement in the company.
Okay, great. Thanks very much.
Sure.
The next question comes from Anna <unk> from Bank of America. Please go ahead.
Hello. Your line is open please ask your question.
Behind that what are you Shimada will move onto the next question is from Kartik Mehta from Northcoast. Please go ahead. Your line is open.
Thank you good morning, Jeff I know you don't want to give any more details on the debt refinancing, but I'm wondering.
If there've been any changes surprises I'm not sure what the right adjective to us considering the environment changed quite a bit in the last six months.
Yeah.
Here's what I would say kartik.
Yes.
We still believe.
This model should be in an ABL, we've said that previously we've been saying that for a while.
Obviously.
The position that puts us N as is.
As.
And our process with our current debt holders.
Work with them to make that a possibility.
We are in that process.
Utilizing.
Our advisor says we've mentioned.
It would be premature for us to make a prediction on that process, where we're confident.
But obviously there is still work to be done.
We appreciate the support we've gotten from our banks and from the lenders groups.
We are in communication with them on a continuous basis, but but it's it's.
We're at a point in time that we really can't make a prediction on the outcome. Although we we remained very calm.
Kartik I would tell you from my side.
<unk>.
We continue working with our with our banking partners, we continue working with our lending group.
The conversations are very constructive we're all looking for the best possible outcome.
We feel confident that with the help of our advisers with the support of our lenders and our banking partners. We will we will we will find a resolution. So we remain confident that the progress that we're making.
And then just Jeff on free cash flow, obviously, you'll need to have a strong back half and I'm just wondering on a cadence perspective.
Primarily related to your ability to kind of convert that working capital.
To get to.
The breakeven.
Guidance.
Yes, yes, yes, we need we need.
We need to convert that that inventory that backlog.
Revenue both from a revenue perspective for EBITDA and then also for an inventory reduction perspective relative to working capital.
Perfect. Thank you very much as Octavio mentioned earlier.
Yeah.
No no.
Exact aveo mentioned earlier.
Yes.
Our management of that conversion of backlog to revenue is very granular and.
And it varies.
It's a process, it's being managed very closely.
Perfect. Thank you Jeff Thank you Octavio.
Thanks, Paul.
Yeah.
The next question is from Peter <unk> from Credit Suisse. Peter Please go ahead.
Hi, good morning.
Follow up on that question is regarding free cash flow.
Cash used in operating activities and investing activities year to date.
So to clarify you are expecting to generate over $300 million free cash flow in the second half of this year to get some breakeven.
Okay.
Last year.
We generated.
$400 million in the fourth quarter and.
$250 million in the back half.
What again, what we need to happen in the back half of the year as the conversion of our inventory is high right now we admit that we need to convert back.
Backlog to revenue, which is effectively converting inventory to revenue the sooner we do that the sooner we convert that to cash based on 50 day DSO.
So we need we need good execution on that conversion in the back half of the year in reduction of inventory to make that number.
What.
Do you expect on your accounts payable.
Okay.
GPS.
<unk> thousand.
<unk> come down.
Okay.
Okay.
And just transitioning how can you give a little bit of context on how much the self checkout units averaging price versus Etfs.
You talked about the 22% growth range in the.
Next couple of years.
So it'd be more profitable than the EPS.
Okay.
Yes, so so clearly felt checkout, it's a more a more complex device.
The more.
The higher price than more and more profitable than our point of sale.
Point of sale. So so again the range remember goes from devices that are not the largest.
Card or devices that are cast enabled so we have a broad range that goes from probably 3000 to up to $67000 for the most complex self checkout device.
Remember the importance of self checkout as well.
I'm, sorry could you repeat that.
I was just trying to and how much is the best of luck.
Yes.
Okay.
Hello.
So on average Pos devices are probably in the in the <unk>.
<unk> two.
$2000 range or.
That's helpful. Thanks.
And then just on the.
Our German operations MTR as transitioning their competitiveness transition most of their manufacturing to a contract manufacturer.
Given the high cost of an attachment of the German operations.
Do you foresee any.
Impediment to making a similar move and that would be helpful.
The company.
So.
As I've stated before we.
We're very focused on streamlining our supply chain the first part.
Setting up our Ohio manufacturing something that I'm very proud of bringing back our manufacturing to Ohio and that will help us serve our North America market, which is a key.
Key market for us that will also alleviate some of the volume that comes out of Germany, and I still believe we have a very efficient operation in our in our German facility.
Obviously as we as we move into the future. We will continue to evaluate what the right manufacturing footprint this and whether we should look at that.
At other options on how we manufacture but for the time being my main focus is.
Adding velocity to our revenue conversion through our supply chain and making sure that we set up our Ohio manufacturing facility for future success.
Thank you for your time.
The next question comes from Arun Seshadri from Credit Suisse. Your line is open. Please go ahead.
Sorry.
The problem with my connection just one follow up for me.
Probably for Jeff just a question on restructuring expenses, and noncash sort of and sort of add backs.
To EBITDA this year and next year any way you could give us some direction around for the full year.
Offset offset adjusted EBITDA guidance of $3 20 to $3 50, you know.
How much would be quote unquote noncash EBITDA.
Sure.
Sort of a full sort of add back loaded number and then if you could give us some sense of the guests for 2024, how much would remain in.
In restructuring and if you can also breakdown cash restructuring expectations at this point or two.
2023.
Yeah, Here's what I would say is that the big.
Biggest portion.
Restructuring has has been taken now theres going to be some restructuring that's going to come through in the third quarter.
What you'll see is there will be some transition costs.
That will recognize it will not be as large as the $65 million that we took in the second quarter.
So.
It's going to it's going to be around $100 million.
Through the end of the year, well and as I said cash wise it'll be approximately $85 million.
The first quarter now as far as what goes into next year.
We haven't given any guidance on that yet for next year, but I would say that the P&L.
GAAP to non-GAAP adjustment will be approximately $100 million.
For 2022, with the $85 million of cash payment.
Okay.
Okay understood. Thank you Jeff.
Thanks.
As a reminder, if you'd like to ask a question today that scarf.
No telephone keypad now.
The next question comes from Brian <unk> of Wedbush. Please go ahead. Your line is open.
Yeah.
Thanks for taking my question this morning.
Question.
Thanks Brooks.
The backlog please.
On the <unk>.
Backlog side of things and.
Quoting backlog soon.
Seems like semiconductor availability target group.
We're completely comfortable.
Things are getting more difficult, maybe a little bit even though I guess, what exactly are the primary constraints.
In terms of converting backlog to that.
And do you have one insight into when those constraints are alleviated.
So I apologize for that.
A little bit hard to understand your question, but I'll do my best I think you were asking about what is the main.
The main difficulty in accelerating backlog conversion to date. So so I would tell you that this is.
And evolving profit so.
Probably at the beginning of the year late we were experiencing spilled component shortages.
Pipe shipping lane.
As we go into Q2, we saw easing up.
Shortages with more availability.
At higher prices, but more availability and we also saw improved.
Slightly improved shipping so what I would tell you is.
Yes.
As we move into the up into the following quarters. Our main concern is just making sure that we can get products shipped to customers on a timely manner and making sure that we received inbound material in a timely manner. So it's more around the logistics part of both inbound into our manufacturing facilities in outbound into customers.
Both part of the two I would say points that we're managing very very tightly.
And that has been involved in.
If we if we manage that correctly, we should be on track to accelerate revenues before the back half of the year.
Thanks, that's helpful.
The backlog number.
Predominantly systems and software.
Is there a multiplier effect.
If you ship a dollar of ATM.
Typically 20 points of services attached to it.
Or something that we should think about that line yes.
The revenue there.
Sure.
The risk map and we could probably provide that information later, but yes. Every every every self checkout devices, we ship or every ATM that we ship past installation service attached to it.
It also has in some cases and ATM almost certainly always software attached within self checkout.
Most of the time it has stopped with that.
Theres clearly unit economics that every piece of hardware that we ship does carry installation revenue in some and in some cases software revenue so.
It varies by geography, obviously, but there is a multiplying effect every every.
Product revenue generates.
Service and some software revenue as well.
I guess my last question you have to worry about double ordering at all.
It's obviously been difficult.
Your expectations are in control of it.
Jason its customers.
<unk>.
Because.
They've been uncertainty about the ability of the squad.
Uh huh.
Matt I would tell you that we are so we probably have the best customer base that any company could wish for.
<unk> global retailer, we have tight relationships with all of them.
I would tell you.
I'll give you some color around some of these things around retail our sales teams have been working with some of our largest customers too.
<unk> significantly ahead of when they need equipment to allow us to be able to deliver on time.
The situation around the supply chain is clearly not unique to us. So when you talk to customers that explain what's going on there's a lot of flexibility on their part to accommodate our needs I would say the same thing with our banking customers as they.
Rollout plan side of that.
Cover multiple months for the most part once we sit down with them understand their plans, we normally are able to to accommodate to their to their needs and try to make sure that we're that we're serving them in the best possible way. So I would tell you that we're that we're.
Confident that we haven't seen any any shortage of orders from customers in both in this first half of the year and I expect us to continue having strong demand for our products in the second half of the year.
Excellent. Thank you so much.
There are no further questions at this time, so I will now turn the call back over to.
Octavia Marquez CEO of Diebold Nixdorf.
Thank you operator, and thanks to everyone who listened in.
And participated in today's call.
I am very pleased with the progress we were making serving our customer simplifying and streamlining our business executing our cost savings plan and moving forward with our refinancing efforts, while we pack will be good macroeconomic challenges.
As noted previously we have laid out a path to profitable growth over the coming quarters and years.
And are beginning to execute on it.
Importantly, there continues to be no shortage of demand for our solutions and services.
We look forward to seeing you at upcoming Investor conferences that during our next earnings call. Thank you again.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Yes.
Okay.
Yes.
Okay.
Okay.
Yeah.