DIEBOLD NIXDORF, Inc — Call Transcript 2026

Morning, everyone. Thanks for joining us today. I'm Matt Summerville, the analyst at D.A. Davidson covering Diebold Nixdorf. With us today for a fireside chat, to my left, we have Tom Timko, the company's CFO, and to his left, Octavio Marquez, the company's CEO. This will last about 40 minutes. First, I was asked to just reference the forward-looking statement clause in the company's Form 10-K. With that, let's go ahead and kick it off, maybe talking a little bit about lean and continuous improvement. Octavio, since you've taken over as CEO, you've really embraced lean continuous, Tom, you've further accelerated that mentality through cost reduction and other optimization. Can you both speak to how this has become such an important part of how Diebold operates today, and maybe how you see these respective initiatives evolving moving forward? Well, thank you, Matt, and thanks for having us, and thanks, everyone, for being here. Three years ago, we made a very clear decision that we were going to run the company in a totally different way, and that we were going to be very focused on lean and continuous improvement. The reason why we saw that is that there's multiple opportunities in the company on how we can win in the market. We were very focused initially, as most companies do, deploying lean across our manufacturing operations. The results that we have achieved applying lean in our manufacturing operations have been, in our view, extraordinary. When I took over as CEO, our ATM product margins were 13%. Last quarter, they were 31%. That, we attribute a lot of that to the impact of lean in our operations. That was the first part of our operation where we've truly deployed our lean methodology and our lean way of thinking. When you think of our company, $3.8 billion, $2 billion of that is services. Our margin in services is now below our margin in products, and we're just starting our lean journey in services. If you look back at what we were able to achieve through lean in products, improving productivity in our manufacturing, and start applying those same principles to services, that's why we're so excited about the future, because there's ample runway to continue improving margins for the company. We've ingrained lean in our operations, when you think of our manufacturing, our service, our software development, the team has really embraced lean. We have a new COO, Frank Baur, who joined us also three years ago to help me implement lean. All our operations, I would say, are now in this continuous improvement journey. I'll pass it over to Tom to talk about the other part of lean, which is not just on the operations, manufacturing, and services, but how we're embracing lean in also our other functions. Yeah. I'll speak on behalf of all the colleagues who run sort of functions at the company, and I'll give you an example. In finance, our close process took the better part of the entire first month after the quarter would end. We spent a lot of time focused on what are we doing and how are we doing it and where are we doing it, and because of that, we now report earnings, full earnings, by the last week of the first month after the quarter. That's a two-week improvement from what we used to do. We did that by doing what we in lean, you refer to as Kaizen and going to Gemba and getting with the folks who are, whether it's making journal entries or you're closing a country, and figuring out what sort of bottlenecks there were and how to work through that. What it allows you to do, you get it done quicker with the same level of quality, and then you get that information, the right information to the right people at the right time to begin to enable them to make the right decisions much more timely, and the quarter's behind you, and now you're looking forward to the next quarter. It's not just in finance, too, right? It's in legal. The way we review contracts now has been extremely accelerated. We actually have implemented some AI there to be able to do that. HR, the same type of thing. You'll notice, Matt, you probably remember in every single earnings deck that we do, we dedicate one slide to all the lean initiatives, and we only call out some of the bigger ones. You'll see there's always three or four columns on that of, here's what we did, and it's all the pictures of people who participate. It's cultural, is what I'm trying to say, right? It's not just manufacturing. I'm a GE guy, prior to joining here at Diebold, and even before Larry, but definitely under Larry Culp, lean became a way of life, and it's what really accelerated the earnings in that company. There's a lot of similarities between GE and Diebold when the time I joined. I know the size difference is considerable. You had a company that had underappreciated cash flows, and they were able to unlock it there. If you look at us with cash flows now, last year, on our EBITDA of $335 million, we had cash flow conversion of 49%. This year, we expect to convert cash flow +50%. We think we have a very legitimate pathway that we can see, in 2027, to getting upwards of 60% free cash flow conversion. Very good. What has all this meant for the company's operating expense, how should we be thinking about OpEx going forward and some of the initiatives you've undertaken to streamline? Yeah. OpEx, that's been a big program. If you guys do the homework on our main competitors, you can see that our SG&A, in general, is higher to the tune of $50 million-$100 million of additional spend. We've implemented an OpEx program across everything. We've got 214 actions assigned to individuals. Some of it's headcount, a lot of it's work takeout. We expect to be able to reduce OpEx by one to two percentage points this year and then next year as well. That's about $50 million-ish or so, which I think makes us much more competitive. Over that same period of time, we're growing sales. We're able to either maintain or reduce OpEx in an environment where revenue is increasing. In light of where you've seen and where you've been able to take gross margins, I think one topical thing that probably brings up or is worth discussion here, what are you seeing in terms of DRAM pricing and what's the game plan as you think about that in the back half of 2026 and into 2027, and maybe talk about which of your businesses that impacts most. Yeah. I'll start and then you can jump in. Sure. In the first quarter, what we said is DRAM had an impact at around $3 million-$5 million. The way that the contracts for us are priced, we do get pricing, but there's a delay. For some of the orders that we took in the first quarter, those went out at what I would say was contractually determined when we took those orders. A lot of that happened through the continuing quarter as well, but that repricing kicks in, and you'll start to see more favorability in the second half of the year to offset that. If you keep that similar range for Q1 of $3 million-$5 million, that's the headwind that we're facing. Everybody's facing it. It's only a matter of time before we think we can price for that. Yes. Matt, probably to be clear on that one. Of our two businesses, the banking business, ATMs, teller cash recyclers, and retail point-of-sale and self-checkout, where the DRAM is an impact, the area that gets most impacted is the point-of-sale devices, where the DRAM is a very high percentage of the total bill-of-materials. That's where Tom talked about that's a headwind of $3 million-$5 million that we've now repriced, so we should start seeing our margins that ended for that particular product in the roughly 16% in Q1 get back to the high teens, low 20% as we go into Q3. When you think of our banking business, it really wasn't affected that much because when you think of an ATM, the component that's the memory is a very small portion of the bill-of-material. That one, we were able to mitigate completely. We expect margins to continue to improve sequentially as we go through the year. Perfect. Maybe let's get into the businesses a little bit. Let's maybe start with demand. Put a finer point on what you're seeing in the demand environment, maybe on the banking side. How would you frame recycling demand, industry shipment trends, and your outlook ahead? Yeah. Our banking business is very solid business. I think we're very proud of the franchise that we've built. When I look at the different geographies, clearly the U.S. market is one that is growing fast for us because the U.S. is adopting this recycling technology. This is the next shift in ATM technology, where instead of a machine that gives cash in, cash out, it's a machine the cash that comes in is the same cash that goes out. Not to get too technical, but that shift allows banks to reduce costs significantly. The cost of provisioning cash into the ATMs and taking cash out of the ATMs gets reduced significantly, upwards of 20%, and that is by avoiding cash-in-transit companies. Think of the big guys with big trucks going there to take money in and out, roughly 20%. When you think of cities like New York, where every truck roll is probably $100+, it adds up very quickly over time as you're doing that multiple times every month. Demand in the U.S., very strong for that. All the big banks are now kind of fully engaged in deploying recycling technology. Now we start seeing the regional banks, community banks, credit unions start using recycling as well. The U.S., we're very excited about the U.S. Europe continues to be very strong for us. We continue winning in the market. We'll probably continue growing in Europe as well. We're very happy with Europe. I would say that we have the more emerging markets where cash is still a very important part of their economies. Latin America, where we have a leading position, continues to grow. There, we're still waiting for a few very large tenders out of Brazil. The Brazilian market has very few banks. Two of them are big government institutions, but when they buy, they buy huge volumes. We're waiting for one of those tenders that has been delayed now a couple times this year, but we're optimistic that once it comes out, we will win the significant part of it. I think that I'm very excited about what we're doing in Asia Pacific. We launched what we call our fit-for-purpose devices for that market. Think that of a smaller, lighter footprint, more energy efficient device that we're selling in the India market now in some other markets there, that is really going to help us accelerate our growth in Asia Pacific, particularly in India, a market that we weren't present in for the past five years. Now that we're there, India is the fastest growing ATM market in the world, and now we have a product that allows us to compete and win in that market at the right margin level, because that is very important to us. Demand for banking is very, I would say, is very strong across the globe. Again, we might see small variations quarter-over-quarter around projects being delayed or some things like, for example, right now with the Middle East, we're a little concerned that Q1, we were able to deliver to all our customers there. Q2, we're now working on how do we get around some of the things that are going on there. We feel very good that banking will continue to grow throughout the year. Maybe just talk about, since you brought it up, what is your Middle East exposure across the two businesses? It's more for the banking business, and we work a lot through our distributors there. It's one of the fastest growing regions economically in the world, so it was a good market for us. Last year, we did roughly $50 million. This year we'll see where we end, but we feel good that even with some disruptions, we will be able to still see our banking business grow as we expect it to grow through the year. Remember that one of the key things that we've built into the company are multiple ways to win. We're not dependent on one market, one product line. We now have the ability to, if one part of the business is suffering, other parts of the business can make up the slack. Hopefully, we get to where all parts of the business are performing very highly. Contrary to what some might think is happening with bank branches here in the U.S., we've seen large banks like BofA, Chase, PNC, announce plans to open hundreds of new branches over the next several years. Can you talk about how you think about the revenue opportunity this poses for North America banking, and maybe speak to why these banks are opening up all these new branches when people tend to think about banking being in more of a digital transaction these days? Yeah. I've worked with banks, Matt, now for probably 30 years. 30 years ago, people told me that there would be no more branches 30 years ago. It's an interesting trend that's been a little bit slower to materialize. When you think of what's the easiest way and the highest quality deposits that a bank can get, they're always the deposits or the accounts that are opened in branches. We have multiple statistics on how an account that's opened inside a branch is a lot more productive or its life cycle than an account opened digitally. Big banks have realized this, and again, don't think that you'll see the branches of the past with 20 tellers and big marble columns. You'll start seeing more branches in neighborhoods, in different smaller formats that have a lot more automation. Why? Because you will have ATMs in those branches, but you will also have teller cash recyclers. Think of an ATM chopped in half with the same recycling mechanism, so the teller does not really have to count cash, and it becomes a different type of environment, more of a selling environment, advisory environment for bank customers. You'll see that fight for better quality deposits in the build-out of branches, and that creates a great opportunity for us in the North America market, not just with the ATM recyclers, but also as you think of the whole branch ecosystem, which is what we're very focused on. How do we make all the cash handling inside of a branch more efficient? That means the ATM, the teller cash recycler, the software that we put on top of that. The more exciting part for us is that as we put more of these devices in the ground, they all have common components. The best part of our business is our service business, $2.2 billion of basically recurring revenue. If we put more devices in the ground that use the same parts, that we can use our same technicians to maintain, it just becomes incremental margin dollars for us with very minimal cost associated to it. We're very excited about the branch build in the U.S., and once again, it falls in this philosophy of there's multiple ways that we will continue winning in the markets. I just want to add one thing to that, Matt. When you think about the ATM recycler and you think about our teller recyclers, they're mini safes, if you will. Right? The cassettes are interchangeable between the two. What that does and what we've seen for our customers who have deployed it, and these are big regional banks as well, is that it reduces the amount of cash that you need to have at any given branch. What does that mean? If there's a branch that has, I'm going to make up a number, $10 million of cash there that would service that branch, and that's what they kept there. We've seen reductions of 25% to, in some cases at smaller banks, 50%. What does that mean? That cash, that 25%-50% of what they hold now goes back to the bank to go earn, to be lent out, as opposed to sitting stagnant to service the branch. When you think about the ATM, when you think about teller cash recycling, how much have your per-branch economics improved as you've expanded your product set? Remember, in the teller cash recycler, we launched this product late last year, so we're in the early stages of deploying this. With recycling, banks achieve a 20% reduction in the cost of cash at the ATM. We believe that when you create this closed cash ecosystem between the teller cash recycler, the ATM, you can expect a similar decrease, if not more, on the amount of cost associated with the branch. It becomes a very easy investment for banks, one with a very quick ROI, plus it allows them to really focus the personnel in the branch, not on transactions, but really on serving customers and offering new advice and new products. Thank you. Maybe let's move over to retail for a few minutes. For 2026, how's the macro backdrop shaping retail customer deployment discussions across Europe and North America, and what are you seeing in terms of project timing or demand signals? Yes. Matt, our retail business is probably one of the things that we're the most excited about. Q1 growth up north of 20% year-over-year, and we see demand continue to be very strong. Again, even in a complicated macro environment, our products are winning in the market. Remember that our retail business, roughly $1 billion, about $900 million of that is done in Europe, where we have the number one market position for both point-of-sale and self-checkout. As I always joked, as much as I love Europe, it's not the biggest retail market in the world. The biggest retail market in the world is here in the U.S., and we still have a very small position here. We've made the investments to win in the U.S., and we're now winning in the U.S. We see that accelerating. That's part of how we're being able to grow our revenue so quickly in retail. Just in Q1, even with the small base we have in retail in the U.S., we were able to grow 70%. We're very excited about the opportunity for us in retail, and the technology that we're deploying with our loss prevention, our shrink prevention, avoiding theft at the self-checkout, avoiding theft in the aisles, has really resonated with grocers in North America, and that's been a big engine of growth for us. It's now being deployed in live stores across the U.S. For those that may not be as familiar as I might be with that product, during our time at NRF in January in New York, we noticed Diebold's ability to apply AI-enabled tools across the store, as you mentioned, in the aisle, at POS, at self-checkout, as a differentiator as we went around to some of the other booths there, which is great. Can you talk a little bit more specifically so people understand exactly the tool set you're bringing and the types of results that's providing the retailer? Sure. Remember, if you're a retailer, there's two competing pressures. You want to create the best checkout experience for your consumers, and you want to reduce as much cost as you can, and prevent losses. On the area of improving the customer experience, we have several use cases, but I'll talk about the two most important ones. The first one is age verification for restricted products. Think that when you're checking out at a self-checkout and you buy a bottle of wine, the transaction stops, and somebody has to come up to you, look at your ID, and then the transaction happens. Through our technology, we can, with certainty, identify the age of people, and then allow the transaction to happen. Again, this, depending on the jurisdiction, it has some limitations, but that is to improve the flow of transactions. The other part that's very interesting, when you buy fresh produce, think of you're buying bananas. You're going to check out at the self-checkout. You put the bananas on the self-checkout device, and it asks you to select what type of item you've placed. Through computer vision, we can identify that it's bananas, that it's tomatoes, and the transaction just flows very smoothly. That really helps, one, reduce the cost of personnel because there's less interventions in the self-checkout process, making the experience better for consumers. The part that's really resonated with a lot of our U.S. grocers has been shrink reduction or loss prevention. Our AI can detect at least 27 different use cases on how people can steal at the self-checkout. Through that, stop the transaction and ask for an intervention. Think about it, 27 different use cases on how to prevent shrink at the self-checkout. When you think that a grocer loses about 1% of revenues, not of profit, of revenues to shrink, and our solution can reduce up to 70% of that, it is a solution that provides a very quick ROI. The other part is that it's a very reliable solution. We have very few false positives. It's less than 0.5%, less than half of 1%. Again, not impacting the customer experience and significantly reducing the losses that stores are experiencing. What are you doing in the aisle? In the aisle, we connect to the CCTV system that every retail has. We capture the videos, and we can detect if somebody is conducting some anomalous behavior in the aisle. Think if you're in a high-value item part of the store where you might have wine or some, as you always do, put the wine bottle inside of your jacket as you're walking out to later. As you always do. We can flag that, then that consumer will be monitored as it moves through the store. When it gets to the checkout, if the consumer takes the bottle out of his jacket and scans it, well, that's just the way he shop, but if he conducts his transaction and does not scan that bottle, we can stop the transaction there. An intervention from the personnel of the store can be there. The good part is, since we have the video images, we can first nudge the customer to try and get him to scan that device by presenting the video and reminding him, hey, you might have forgotten to scan an item that you have. If that nudge doesn't help him, we can stop the transaction, and the store personnel can come and help him complete that transaction. Think about having a screen on some of the self-checkouts. It shows up there first. It shows that action to remind you. Then if you choose to ignore it, you can get an employee involved to help resolve the situation. That's helpful. Thank you. Super embarrassing, by the way. Can you talk just a little bit more broadly about the SCO market from a demand standpoint? Of course, geographic overlay is helpful. We went through a period, I would argue that there was a little bit of pull forward in deployment as a result of COVID, maybe a bit of a demand reset. Are we coming out of that demand reset? Have we seen firm inflection? Maybe if you could talk a little bit about that. Yeah. To your point, I think through COVID, and a little bit after that, there was a lot of demand for self-checkout as people were more conscious about how they wanted to check out. A little bit of panic around that. The market dipped a little bit right after COVID. Today, we're seeing the market get back to the same levels where it was before. What's interesting is we're seeing new use cases for self-checkout. When you think about, I assume everybody here got on an airplane. Every airport now is self-checkout. Wherever you buy in an airport is self-checkout. If you now go to fashion, which is another interesting use case, a lot of fashion retailers are now deploying self-checkout as well. If you go shop in New York at a, for example, at a Uniqlo, you'll be able to check out by just dropping your things in a bin at the self-checkout and through RFID identifying the item. I think that you will continue to see self-checkout be deployed in many new use cases as we move forward. When you look at your self-checkout, I think people generally assume it's a lane-based format. What other form factors are you maybe evaluating for deployment in self-checkout or for self-checkout? Matt, I always like to talk when we talk about self-checkout or checkout in general, I like to put it in one big bucket. There's multiple ways that people can check out. You can check out through giving things to a person that rings them up for you. You can do it yourself. You can use camera technology to walk in and walk out of a store and get charged for that. I think that that market will continue to evolve. There will be new form factors that we deploy in self-checkout. Today, the self-checkout machine at groceries has to be very big because the baskets are very big. At airports, it has to be very small because you're buying a pack of gum or a soft drink. You'll continue to see those form factors evolve as we build new use cases for different industries. Even in grocery, one of the things that we discuss a lot with some of our large customers is you don't need to deploy the big self-checkouts all lanes the same. You can have lanes that have what we call the three steps that you park your car here, you scan, and you bag. There's probably one-step self-checkouts that you could also deploy in a store for people that are buying five, six items, and to make the experience faster. You'll continue to see us evolve the form factors that we use in self-checkout and add other new technologies as well. Just to go back to North America on the retail side of the business, can you maybe compare and contrast the company strategy today versus maybe how the company was positioned in North America retail three or four years ago? You talk routinely about targeting the top 40 accounts in North America. Maybe give a little bit of a progress update and any proof points in terms of pipeline, demand signals, et cetera. Sure. We changed our strategy in retail as a company. We are the number one provider of retail technology in Europe, and our strategy had been that we would just follow our European retailers as they expanded globally. Think of companies like IKEA, H&M, C&A. If IKEA opened a store in Nashville, we would ship our products to Nashville to serve that store for them. We basically were following our European customers across the globe. Two and a half years ago, we saw the opportunity, as I said, the biggest retail market is the U.S., to really focus on the U.S. market. We selected 40 accounts, that these are well-known brand names for all of us, where we knew one of two things was happening, that they were at that point in their refresh cycle where they needed to buy new technology for their stores, or where we saw that our technology could really disrupt the competitive landscape. Think of our AI solutions. I'm happy to say that strategy has paid big dividends. Our retail pipeline has grown 500%. We now have significant wins in grocery, fuel and convenience, fashion, with U.S. retailers. We're happy. We're very happy on how that is progressing, and we've built a very strong team. We've built a team that is where our customers are. I never thought I'd have offices in some of the cities that we now have offices. Tom always gets a little bit paranoid when we spend more money on offices as we're trying to reduce cost. It is very important to have people next to the customer. We have invested in that. The good news around that is that we targeted these initial 40 because we thought that our product set would fit very nicely. As we're winning in those 40 accounts, new opportunities start emerging for us. We're very excited about how that strategy keeps playing out well for us. Got it. Maybe just talk a little bit about backlog and book-to-bill trends across the business. How are you feeling about regarding inbound order rates, visibility into the back half of 2026, and any early thoughts you may have on just big picture demand in 2027, given some of these businesses are longer cycle? We're starting to see sequential growth in our orders across both businesses. When we think about our backlog as it exists today, we ended Q1 at about $790 million. Because of that strong OE, we're starting to replenish that. Backlog at one point for Diebold was an important metric, and to a degree it still is, but less so. Less so because of all the lean manufacturing improvements that we've been able to deploy over the last couple of years. We've cut our lead times in order to deliver product from 200 days, in many cases, down to 120 or 90 or less. That's driven by a decision we made equally about four or five years ago, where we manufactured the majority of our ATMs and SCO equipment in Paderborn, Germany. Today, we have four manufacturing locations and have really deployed a local-to-local strategy, which has really helped us manage expenses in the areas in where we sell. We've got one with our partner, NASH, in India to sort of help us with that Asia-Pac region. Obviously, Paderborn continues to be very important to us. Then at our headquarters and facility in North Canton, that is a full-on manufacturing facility for us now, capable of doing both SCOs as well as ATM. We refer to it as a flex factory, where in the past, it used to be more of a conveyor belt type of manufacturing. Now it's flex. We can literally, within hours, change from manufacturing SCOs to going back to ATMs, so much more flexible in our response time. Then our last facility, which helps us in Latin America and South America, is in Manaus, Brazil. Again, it's that same sort of flexibility. When you're in an environment that we experienced just not too long ago with tariffs, not a big impact for us because we're manufacturing locally. There were some areas when those tariffs came out that we said, hey, we had things in the pipeline to kind of move, so it accelerated that movement into the regions where we're selling them, but we feel like that local-to-local plus lean has really helped us on product. Product margins, right? I mean, Matt, you'll remember last year, we were able to grow product margins 300%, and now we think that we can maintain that, and over time incrementally get maybe another 25 basis points here and there. When you're talking about being able to sell an ATM at a 31%+ margin, that's pretty good. We're pretty proud of that, and we're investing to maintain that. We have about seven to eight minutes left. I want to talk about profitability, but first, I want to make sure we cover balance sheet and cash flow. Diebold's balance sheet remains very underleveraged. You have a $200 million share repurchase in place. Where do you see the company's leverage guardrails going forward? How committed are you to maintaining leverage in that bandwidth? Obviously the company's buying back stock, but you guys also acquired some stock in the market not too long ago. Yeah. Maybe speak to that as well. Sure. We are committed to maintaining what we refer to as our fortress balance sheet. Our net debt leverage ratio last quarter was 1.2x. Our guideline is we'd like to keep that under 1.5x. For now, our capital allocation strategy is really focused on buying back stock. We announced the $100 million program last year. We did that in about 10 months, 11 months, wrapped that up, and the board supported us with another $200 million program repurchase. We're probably going to wrap that up in a similar amount of time. We've said that before. We're going to go back and get an additional authorization. Right now, we feel like our stock, even at these prices, continues to be undervalued. The ROI on buying that stock back now is something that we're going to continue to do. Remember, we are a very light CapEx environment. Think about 1%-1.5% of our revenue is CapEx, but we feel good about the capital allocation process. I think now as we look to refinance our debt, we have $950 million in secured notes that the no-call/make-whole provisions expire and reduce in December of this year. We will likely be in the market again. We'll look at perhaps a more flexible structure with a Term B and then some secured notes. A lot of that is TBD. We will definitely be refinancing at that point. Depending on the amount of cash that we have on hand, depending on the stock buyback programs, we're likely to continue to make an investment in our fortress balance sheet and pay down some of that debt as well. Maybe talk about some of the recent insider buying as well. Yeah. Well, look, the stock had a little bit of a dip recently. Nobody could understand why. We were in an open window, and we jumped at it. This is my third time that I've gone to the market and bought stock in an open window period. Octavio did the same thing, and our Chief Revenue Officer, so the guy who delivers everything, went out and made his first purchase as well. The management team believes in what this company can do. That's why we're here talking with investors, is to try to get that message out there about this company's ability to generate free cash flow, and then have multiple ways to distribute it. Right now, we're very focused on buying stock back. At the same point in time, we're beginning to grow a little bit more in terms of what do we want to do from an M&A perspective. We've got opportunities that are coming into us, and we'll continue to look at those. For now, we're kind of in a smaller sort of tuck-in acquisition mode, but I could see if it's the right opportunity at the right price, that we would be willing to spend a little bit more to make that acquisition. What do the credit rating agencies need to see to push your debt rating into investment grade? Do you think that ultimately can happen leaning into this refi? If you were to refi today, what would the spread favorability look like for you? Yeah, good question. I think they want to see consistent execution. The one thing that we've been able to demonstrate for the last, I think it's six quarters now, is positive free cash flow. That doesn't seem like a big deal, but for companies in our space and our competitors, the majority of our cash flow comes in in Q4. When the service contracts get renewed, there's a down payment associated with it. It had been a very long time that Diebold had been profitable or positive free cash flow in any other quarter except Q4. I would say as a result of some of the lean initiatives that we deployed around DSO and managing DIO better, we've been able to generate positive free cash flow for the last six quarters. Obviously, Q4 still a big quarter, but that is our focus to continue to remain cash flow positive in each quarter. There may be some quarters that we've got to make decisions on certain inventory, et cetera, that may push us more towards a break even, but we're very focused on that. That has been a big piece for them in some of the recent crediting upgrades. I think since, over the last two years, we've gotten two upgrades from both Moody's and S&P. We recently engaged with Fitch. They're a notch above Moody's and S&P at BB-, and we're hopeful that the continued execution, and maintaining our minimum cash balance in a range of $250 million-$300 million will likely get S&P and Moody's hopefully to bump that up as well. Probably, Matt, as we think of the rate that we will be able to refinance, if you think of our notes today, they're at 7.75%. If you look at how they're trading in the market right now, it would imply a rate that's closer to the low 6% something. We're very excited about doing that because just by doing that refinance at where we think we would land, would add probably $15 million-$20 million more of free cash flow to the company next year. Yeah. We're very focused on that, and that is something that we will definitely be doing once December comes along. Perfect. Then on free cash flow, how should we think about Diebold's long-term conversion on adjusted EBITDA, if that's the right way to look at it? What are the three, four, whatever, five sort of items you need to get there? Last year we did 49% conversion of free cash flow against EBITDA. What we said we'd do this year is 50%+ conversion, and we think we've got pretty good line of sight in 2027 to get that up to 60%+ conversion. For us, I still think we have ample opportunity with DSO. We're not at entitlement yet, and each day of DSO is $10 million of free cash flow for us. If you think if our DSO is in the mid-60%, we probably have entitlement in the high 40%, so we still have pretty good runway there. DIO is something that we've been very focused on. I think as Diebold begins to morph, and I talked about the lead times reducing on inventory, and since we're able to turn it more quickly, we don't need to build it in advance. We've got a shorter period of window, that means we're not carrying as much raw materials or finished goods until the point that we're actually going to be ready to go sell them and install them. We feel that we have opportunities there, then I would say the ongoing focus of OpEx and reductions across the board there in spend all contributes. To what Octavio said before on some of the products and margins, even within that space on free cash flow, we have multiple ways to win. DIO may be up one period because we decided to make an investment in X to secure revenue for the future, then we can do better on DSO. It's worked out well for us. Overall too, we've just been able to reduce the amount of professional fees associated with some of the projects and processes and even our OpEx evolution program as well. That'll go away after time as we've embed some of those 214 actions that I talked about into our operating culture. We just have about one minute left, real quick. On services gross profitability, you talked a lot about product. How should we be thinking about service gross margins, and what are some of the more iterative things you've done in that business to drive profitability higher looking ahead? Yeah, I'll start, and I'll let you finish. Just jump in there. Our biggest opportunity is service margins, no doubt. Our service margins are probably in the mid 25% area. We feel entitlement for us in that space should be much closer to 30%. What we've done is we've deployed what we refer to as our field technician software. It's based on an Oracle platform that makes sure that you got the right parts on the truck, you have the right person who's going to go to that service call, and the software predicts where that person needs to go. There could be an example where Octavio's a block away, I'm six blocks away. In the past, they would talk to each other. Octavio would take it because he's closer. He gets there, realizes, I don't have the right part, and geez, I've never really done this before. Our software knows the skill of the technicians as they're graded, knows what parts are on the truck, and now it deploys Tom. Tom goes there, fixes it right the first time, that's where we saw a lot of the inefficiencies in the past, was multiple visits to the same site to fix the machine, or overtime. We've been significantly able to scale back both of that. We're also densifying the amount of field technicians that we have, so more boots on the ground per machine. What that's doing, yes, it costs more. That's the investment we're willing to make. The SLAs are improving. As our Service-Level Agreements improve, so just think when I say that word, it's all about availability. As the availability of those machines continue to improve, that translates directly into wins on the product side. You get more wins, you get more C base on the service, and that helps. Well said, Tom. I think we need to wrap up there. Yeah. Thank you, guys. Thank you, Matt. Thank you for having us. Thanks. Appreciate it.

Speaker 1: Morning, everyone. Thanks for joining us today. I'm Matt Summerville, the analyst at D.A. Davidson covering Diebold Nixdorf. With us today for a fireside chat, to my left, we have Tom Timko, the company's CFO, and to his left, Octavio Marquez, the company's CEO. This will last about 40 minutes. First, I was asked to just reference the forward-looking statement clause in the company's Form 10-K. With that, let's go ahead and kick it off, maybe talking a little bit about lean and continuous improvement. Octavio, since you've taken over as CEO, you've really embraced lean continuous, Tom, you've further accelerated that mentality through cost reduction and other optimization. Can you both speak to how this has become such an important part of how Diebold operates today, and maybe how you see these respective initiatives evolving moving forward? Morning, everyone. morning everyone Thanks for joining us today. thanks for joining us today I'm Matt Summerville, the analyst at D.A. i'm matt summerville the analyst at d.a Davidson covering Diebold Nixdorf. davidson covering diebold nixdorf With us today for a fireside chat, to my left, we have Tom Timko, the company's CFO, and to his left, Octavio Marquez, the company's CEO. with us today for a fireside chat to my left we have tom timko the company's cfo and to his left octavio marquez the company's ceo This will last about 40 minutes. this will last about 40 minutes First, I was asked to just reference the forward-looking statement clause in the company's Form 10-K. first i was asked to just reference the forward-looking statement clause in the company's form 10-k With that, let's go ahead and kick it off, maybe talking a little bit about lean and continuous improvement. with that let's go ahead and kick it off maybe talking a little bit about lean and continuous improvement Octavio, since you've taken over as CEO, you've really embraced lean continuous, Tom, you've further accelerated that mentality through cost reduction and other optimization. octavio since you've taken over as ceo you've really embraced lean continuous tom you've further accelerated that mentality through cost reduction and other optimization Can you both speak to how this has become such an important part of how Diebold operates today, and maybe how you see these respective initiatives evolving moving forward? can you both speak to how this has become such an important part of how diebold operates today and maybe how you see these respective initiatives evolving moving forward

Speaker 2: Well, thank you, Matt, and thanks for having us, and thanks, everyone, for being here. Three years ago, we made a very clear decision that we were going to run the company in a totally different way, and that we were going to be very focused on lean and continuous improvement. The reason why we saw that is that there's multiple opportunities in the company on how we can win in the market. We were very focused initially, as most companies do, deploying lean across our manufacturing operations. The results that we have achieved applying lean in our manufacturing operations have been, in our view, extraordinary. When I took over as CEO, our ATM product margins were 13%. Last quarter, they were 31%. That, we attribute a lot of that to the impact of lean in our operations. Well, thank you, Matt, and thanks for having us, and thanks, everyone, for being here. well thank you matt and thanks for having us and thanks everyone for being here Three years ago, we made a very clear decision that we were going to run the company in a totally different way, and that we were going to be very focused on lean and continuous improvement. three years ago we made a very clear decision that we were going to run the company in a totally different way and that we were going to be very focused on lean and continuous improvement The reason why we saw that is that there's multiple opportunities in the company on how we can win in the market. the reason why we saw that is that there's multiple opportunities in the company on how we can win in the market We were very focused initially, as most companies do, deploying lean across our manufacturing operations. we were very focused initially as most companies do deploying lean across our manufacturing operations The results that we have achieved applying lean in our manufacturing operations have been, in our view, extraordinary. the results that we have achieved applying lean in our manufacturing operations have been in our view extraordinary When I took over as CEO, our ATM product margins were 13%. when i took over as ceo our atm product margins were 13% Last quarter, they were 31%. last quarter they were 31% That, we attribute a lot of that to the impact of lean in our operations. that we attribute a lot of that to the impact of lean in our operations That was the first part of our operation where we've truly deployed our lean methodology and our lean way of thinking. When you think of our company, $3.8 billion, $2 billion of that is services. Our margin in services is now below our margin in products, and we're just starting our lean journey in services. If you look back at what we were able to achieve through lean in products, improving productivity in our manufacturing, and start applying those same principles to services, that's why we're so excited about the future, because there's ample runway to continue improving margins for the company. We've ingrained lean in our operations, when you think of our manufacturing, our service, our software development, the team has really embraced lean. We have a new COO, Frank Baur, who joined us also three years ago to help me implement lean. That was the first part of our operation where we've truly deployed our lean methodology and our lean way of thinking. that was the first part of our operation where we've truly deployed our lean methodology and our lean way of thinking When you think of our company, $3.8 billion, $2 billion of that is services. when you think of our company $3.8 billion $2 billion of that is services Our margin in services is now below our margin in products, and we're just starting our lean journey in services. our margin in services is now below our margin in products and we're just starting our lean journey in services If you look back at what we were able to achieve through lean in products, improving productivity in our manufacturing, and start applying those same principles to services, that's why we're so excited about the future, because there's ample runway to continue improving margins for the company. if you look back at what we were able to achieve through lean in products improving productivity in our manufacturing and start applying those same principles to services that's why we're so excited about the future because there's ample runway to continue improving margins for the company We've ingrained lean in our operations, when you think of our manufacturing, our service, our software development, the team has really embraced lean. we've ingrained lean in our operations when you think of our manufacturing our service our software development the team has really embraced lean We have a new COO, Frank Baur, who joined us also three years ago to help me implement lean. we have a new coo frank baur who joined us also three years ago to help me implement lean All our operations, I would say, are now in this continuous improvement journey. I'll pass it over to Tom to talk about the other part of lean, which is not just on the operations, manufacturing, and services, but how we're embracing lean in also our other functions. All our operations, I would say, are now in this continuous improvement journey. all our operations i would say are now in this continuous improvement journey I'll pass it over to Tom to talk about the other part of lean, which is not just on the operations, manufacturing, and services, but how we're embracing lean in also our other functions. i'll pass it over to tom to talk about the other part of lean which is not just on the operations manufacturing and services but how we're embracing lean in also our other functions

Speaker 3: Yeah. I'll speak on behalf of all the colleagues who run sort of functions at the company, and I'll give you an example. In finance, our close process took the better part of the entire first month after the quarter would end. We spent a lot of time focused on what are we doing and how are we doing it and where are we doing it, and because of that, we now report earnings, full earnings, by the last week of the first month after the quarter. That's a two-week improvement from what we used to do. We did that by doing what we in lean, you refer to as Kaizen and going to Gemba and getting with the folks who are, whether it's making journal entries or you're closing a country, and figuring out what sort of bottlenecks there were and how to work through that. Yeah. yeah I'll speak on behalf of all the colleagues who run sort of functions at the company, and I'll give you an example. i'll speak on behalf of all the colleagues who run sort of functions at the company and i'll give you an example In finance, our close process took the better part of the entire first month after the quarter would end. in finance our close process took the better part of the entire first month after the quarter would end We spent a lot of time focused on what are we doing and how are we doing it and where are we doing it, and because of that, we now report earnings, full earnings, by the last week of the first month after the quarter. we spent a lot of time focused on what are we doing and how are we doing it and where are we doing it and because of that we now report earnings full earnings by the last week of the first month after the quarter That's a two-week improvement from what we used to do. that's a two-week improvement from what we used to do We did that by doing what we in lean, you refer to as Kaizen and going to Gemba and getting with the folks who are, whether it's making journal entries or you're closing a country, and figuring out what sort of bottlenecks there were and how to work through that. we did that by doing what we in lean you refer to as kaizen and going to gemba and getting with the folks who are whether it's making journal entries or you're closing a country and figuring out what sort of bottlenecks there were and how to work through that What it allows you to do, you get it done quicker with the same level of quality, and then you get that information, the right information to the right people at the right time to begin to enable them to make the right decisions much more timely, and the quarter's behind you, and now you're looking forward to the next quarter. It's not just in finance, too, right? It's in legal. The way we review contracts now has been extremely accelerated. We actually have implemented some AI there to be able to do that. HR, the same type of thing. You'll notice, Matt, you probably remember in every single earnings deck that we do, we dedicate one slide to all the lean initiatives, and we only call out some of the bigger ones. What it allows you to do, you get it done quicker with the same level of quality, and then you get that information, the right information to the right people at the right time to begin to enable them to make the right decisions much more timely, and the quarter's behind you, and now you're looking forward to the next quarter. what it allows you to do you get it done quicker with the same level of quality and then you get that information the right information to the right people at the right time to begin to enable them to make the right decisions much more timely and the quarter's behind you and now you're looking forward to the next quarter It's not just in finance, too, right? it's not just in finance too right It's in legal. it's in legal The way we review contracts now has been extremely accelerated. We actually have implemented some AI there to be able to do that. the way we review contracts now has been extremely accelerated. we actually have implemented some ai there to be able to do that HR, the same type of thing. hr the same type of thing You'll notice, Matt, you probably remember in every single earnings deck that we do, we dedicate one slide to all the lean initiatives, and we only call out some of the bigger ones. you'll notice matt you probably remember in every single earnings deck that we do we dedicate one slide to all the lean initiatives and we only call out some of the bigger ones You'll see there's always three or four columns on that of, here's what we did, and it's all the pictures of people who participate. It's cultural, is what I'm trying to say, right? It's not just manufacturing. I'm a GE guy, prior to joining here at Diebold, and even before Larry, but definitely under Larry Culp, lean became a way of life, and it's what really accelerated the earnings in that company. There's a lot of similarities between GE and Diebold when the time I joined. I know the size difference is considerable. You had a company that had underappreciated cash flows, and they were able to unlock it there. If you look at us with cash flows now, last year, on our EBITDA of $335 million, we had cash flow conversion of 49%. You'll see there's always three or four columns on that of, here's what we did, and it's all the pictures of people who participate. you'll see there's always three or four columns on that of here's what we did and it's all the pictures of people who participate It's cultural, is what I'm trying to say, right? it's cultural is what i'm trying to say right It's not just manufacturing. it's not just manufacturing I'm a GE guy, prior to joining here at Diebold, and even before Larry, but definitely under Larry Culp, lean became a way of life, and it's what really accelerated the earnings in that company. i'm a ge guy prior to joining here at diebold and even before larry but definitely under larry culp lean became a way of life and it's what really accelerated the earnings in that company There's a lot of similarities between GE and Diebold when the time I joined. there's a lot of similarities between ge and diebold when the time i joined I know the size difference is considerable. i know the size difference is considerable You had a company that had underappreciated cash flows, and they were able to unlock it there. you had a company that had underappreciated cash flows and they were able to unlock it there If you look at us with cash flows now, last year, on our EBITDA of $335 million, we had cash flow conversion of 49%. if you look at us with cash flows now last year on our ebitda of $335 million we had cash flow conversion of 49% This year, we expect to convert cash flow +50%. We think we have a very legitimate pathway that we can see, in 2027, to getting upwards of 60% free cash flow conversion. This year, we expect to convert cash flow + 50%. this year we expect to convert cash flow + 50% We think we have a very legitimate pathway that we can see, in 2027, to getting upwards of 60% free cash flow conversion. we think we have a very legitimate pathway that we can see in 2027 to getting upwards of 60% free cash flow conversion

Speaker 1: Very good. What has all this meant for the company's operating expense, how should we be thinking about OpEx going forward and some of the initiatives you've undertaken to streamline? Very good. very good What has all this meant for the company's operating expense, how should we be thinking about OpEx going forward and some of the initiatives you've undertaken to streamline? what has all this meant for the company's operating expense how should we be thinking about opex going forward and some of the initiatives you've undertaken to streamline

Speaker 3: Yeah. OpEx, that's been a big program. If you guys do the homework on our main competitors, you can see that our SG&A, in general, is higher to the tune of $50 million-$100 million of additional spend. We've implemented an OpEx program across everything. We've got 214 actions assigned to individuals. Some of it's headcount, a lot of it's work takeout. We expect to be able to reduce OpEx by one to two percentage points this year and then next year as well. That's about $50 million-ish or so, which I think makes us much more competitive. Over that same period of time, we're growing sales. We're able to either maintain or reduce OpEx in an environment where revenue is increasing. Yeah. yeah OpEx, that's been a big program. opex that's been a big program If you guys do the homework on our main competitors, you can see that our SG&A, in general, is higher to the tune of $50 million- $100 million of additional spend. if you guys do the homework on our main competitors you can see that our sg&a in general is higher to the tune of $50 million- $100 million of additional spend We've implemented an OpEx program across everything. we've implemented an opex program across everything We've got 214 actions assigned to individuals. we've got 214 actions assigned to individuals Some of it's headcount, a lot of it's work takeout. some of it's headcount a lot of it's work takeout We expect to be able to reduce OpEx by one to two percentage points this year and then next year as well. we expect to be able to reduce opex by one to two percentage points this year and then next year as well That's about $50 million-ish or so, which I think makes us much more competitive. that's about $50 million-ish or so which i think makes us much more competitive Over that same period of time, we're growing sales. over that same period of time we're growing sales We're able to either maintain or reduce OpEx in an environment where revenue is increasing. we're able to either maintain or reduce opex in an environment where revenue is increasing

Speaker 1: In light of where you've seen and where you've been able to take gross margins, I think one topical thing that probably brings up or is worth discussion here, what are you seeing in terms of DRAM pricing and what's the game plan as you think about that in the back half of 2026 and into 2027, and maybe talk about which of your businesses that impacts most. In light of where you've seen and where you've been able to take gross margins, I think one topical thing that probably brings up or is worth discussion here, what are you seeing in terms of DRAM pricing and what's the game plan as you think about that in the back half of 2026 and into 2027, and maybe talk about which of your businesses that impacts most. in light of where you've seen and where you've been able to take gross margins i think one topical thing that probably brings up or is worth discussion here what are you seeing in terms of dram pricing and what's the game plan as you think about that in the back half of 2026 and into 2027 and maybe talk about which of your businesses that impacts most

Speaker 3: Yeah. I'll start and then you can jump in. Yeah. yeah I'll start and then you can jump in. i'll start and then you can jump in

Speaker 2: Sure. Sure. sure

Speaker 3: In the first quarter, what we said is DRAM had an impact at around $3 million-$5 million. The way that the contracts for us are priced, we do get pricing, but there's a delay. For some of the orders that we took in the first quarter, those went out at what I would say was contractually determined when we took those orders. A lot of that happened through the continuing quarter as well, but that repricing kicks in, and you'll start to see more favorability in the second half of the year to offset that. If you keep that similar range for Q1 of $3 million-$5 million, that's the headwind that we're facing. Everybody's facing it. It's only a matter of time before we think we can price for that. In the first quarter, what we said is DRAM had an impact at around $3 million-$5 million. in the first quarter what we said is dram had an impact at around $3 million-$5 million The way that the contracts for us are priced, we do get pricing, but there's a delay. the way that the contracts for us are priced we do get pricing but there's a delay For some of the orders that we took in the first quarter, those went out at what I would say was contractually determined when we took those orders. for some of the orders that we took in the first quarter those went out at what i would say was contractually determined when we took those orders A lot of that happened through the continuing quarter as well, but that repricing kicks in, and you'll start to see more favorability in the second half of the year to offset that. a lot of that happened through the continuing quarter as well, but that repricing kicks in and you'll start to see more favorability in the second half of the year to offset that If you keep that similar range for Q1 of $3 million-$5 million, that's the headwind that we're facing. if you keep that similar range for q1 of $3 million-$5 million that's the headwind that we're facing Everybody's facing it. everybody's facing it It's only a matter of time before we think we can price for that. it's only a matter of time before we think we can price for that

Speaker 2: Yes. Matt, probably to be clear on that one. Of our two businesses, the banking business, ATMs, teller cash recyclers, and retail point-of-sale and self-checkout, where the DRAM is an impact, the area that gets most impacted is the point-of-sale devices, where the DRAM is a very high percentage of the total bill-of-materials. That's where Tom talked about that's a headwind of $3 million-$5 million that we've now repriced, so we should start seeing our margins that ended for that particular product in the roughly 16% in Q1 get back to the high teens, low 20% as we go into Q3. When you think of our banking business, it really wasn't affected that much because when you think of an ATM, the component that's the memory is a very small portion of the bill-of-material. Yes. yes Matt , probably to be clear on that one. matt probably to be clear on that one Of our two businesses, the banking business, ATMs, teller cash recyclers, and retail point -of -sale and self-checkout, where the DRAM is an impact, the area that gets most impacted is the point -of -sale devices, where the DRAM is a very high percentage of the total bill -of -materials. of our two businesses the banking business atms teller cash recyclers and retail point -of -sale and self-checkout where the dram is an impact the area that gets most impacted is the point -of -sale devices where the dram is a very high percentage of the total bill -of -materials That's where Tom talked about that's a headwind of $3 million-$5 million that we've now repriced, so we should start seeing our margins that ended for that particular product in the roughly 16% in Q1 get back to the high teens, low 20% as we go into Q3. that's where tom talked about that's a headwind of $3 million-$5 million that we've now repriced so we should start seeing our margins that ended for that particular product in the roughly 16% in q1 get back to the high teens low 20% as we go into q3 When you think of our banking business, it really wasn't affected that much because when you think of an ATM, the component that's the memory is a very small portion of the bill -of -material. when you think of our banking business it really wasn't affected that much because when you think of an atm the component that's the memory is a very small portion of the bill -of -material That one, we were able to mitigate completely. We expect margins to continue to improve sequentially as we go through the year. That one, we were able to mitigate completely. that one we were able to mitigate completely We expect margins to continue to improve sequentially as we go through the year. we expect margins to continue to improve sequentially as we go through the year

Speaker 1: Perfect. Maybe let's get into the businesses a little bit. Let's maybe start with demand. Put a finer point on what you're seeing in the demand environment, maybe on the banking side. How would you frame recycling demand, industry shipment trends, and your outlook ahead? Perfect. perfect Maybe let's get into the businesses a little bit. maybe let's get into the businesses a little bit Let's maybe start with demand. let's maybe start with demand Put a finer point on what you're seeing in the demand environment, maybe on the banking side. put a finer point on what you're seeing in the demand environment maybe on the banking side How would you frame recycling demand, industry shipment trends, and your outlook ahead? how would you frame recycling demand industry shipment trends and your outlook ahead

Speaker 2: Yeah. Our banking business is very solid business. I think we're very proud of the franchise that we've built. When I look at the different geographies, clearly the U.S. market is one that is growing fast for us because the U.S. is adopting this recycling technology. This is the next shift in ATM technology, where instead of a machine that gives cash in, cash out, it's a machine the cash that comes in is the same cash that goes out. Not to get too technical, but that shift allows banks to reduce costs significantly. The cost of provisioning cash into the ATMs and taking cash out of the ATMs gets reduced significantly, upwards of 20%, and that is by avoiding cash-in-transit companies. Think of the big guys with big trucks going there to take money in and out, roughly 20%. Yeah. yeah Our banking business is very solid business. our banking business is very solid business I think we're very proud of the franchise that we've built. i think we're very proud of the franchise that we've built When I look at the different geographies, clearly the U.S. market is one that is growing fast for us because the U.S. is adopting this recycling technology. when i look at the different geographies clearly the u.s market is one that is growing fast for us because the u.s is adopting this recycling technology This is the next shift in ATM technology, where instead of a machine that gives cash in, cash out, it's a machine the cash that comes in is the same cash that goes out. this is the next shift in atm technology where instead of a machine that gives cash in cash out it's a machine the cash that comes in is the same cash that goes out Not to get too technical, but that shift allows banks to reduce costs significantly. not to get too technical but that shift allows banks to reduce costs significantly The cost of provisioning cash into the ATMs and taking cash out of the ATMs gets reduced significantly, upwards of 20%, and t hat is by avoiding cash-in-transit companies. the cost of provisioning cash into the atms and taking cash out of the atms gets reduced significantly upwards of 20%, and t hat is by avoiding cash-in-transit companies Think of the big guys with big trucks going there to take money in and out, roughly 20%. think of the big guys with big trucks going there to take money in and out roughly 20% When you think of cities like New York, where every truck roll is probably $100+, it adds up very quickly over time as you're doing that multiple times every month. Demand in the U.S., very strong for that. All the big banks are now kind of fully engaged in deploying recycling technology. Now we start seeing the regional banks, community banks, credit unions start using recycling as well. The U.S., we're very excited about the U.S. Europe continues to be very strong for us. We continue winning in the market. We'll probably continue growing in Europe as well. We're very happy with Europe. I would say that we have the more emerging markets where cash is still a very important part of their economies. Latin America, where we have a leading position, continues to grow. When you think of cities like New York, where every truck roll is probably $100 +, it adds up very quickly over time as you're doing that multiple times every month. when you think of cities like new york where every truck roll is probably $100 + it adds up very quickly over time as you're doing that multiple times every month Demand in the U.S., very strong for that. demand in the u.s very strong for that All the big banks are now kind of fully engaged in deploying recycling technology. all the big banks are now kind of fully engaged in deploying recycling technology Now we start seeing the regional banks, community banks, credit unions start using recycling as well. now we start seeing the regional banks community banks credit unions start using recycling as well The U.S., we're very excited about the U.S. the u.s we're very excited about the u.s Europe continues to be very strong for us. europe continues to be very strong for us We continue winning in the market. we continue winning in the market We'll probably continue growing in Europe as well. we'll probably continue growing in europe as well We're very happy with Europe. we're very happy with europe I would say that we have the more emerging markets where cash is still a very important part of their economies. i would say that we have the more emerging markets where cash is still a very important part of their economies Latin America, where we have a leading position, continues to grow. latin america where we have a leading position continues to grow There, we're still waiting for a few very large tenders out of Brazil. The Brazilian market has very few banks. Two of them are big government institutions, but when they buy, they buy huge volumes. We're waiting for one of those tenders that has been delayed now a couple times this year, but we're optimistic that once it comes out, we will win the significant part of it. I think that I'm very excited about what we're doing in Asia Pacific. We launched what we call our fit-for-purpose devices for that market. Think that of a smaller, lighter footprint, more energy efficient device that we're selling in the India market now in some other markets there, that is really going to help us accelerate our growth in Asia Pacific, particularly in India, a market that we weren't present in for the past five years. There, we're still waiting for a few very large tenders out of Brazil. there we're still waiting for a few very large tenders out of brazil The Brazilian market has very few banks. the brazilian market has very few banks Two of them are big government institutions, but when they buy, they buy huge volumes. two of them are big government institutions but when they buy they buy huge volumes We're waiting for one of those tenders that has been delayed now a couple times this year, but we're optimistic that once it comes out, we will win the significant part of it. we're waiting for one of those tenders that has been delayed now a couple times this year but we're optimistic that once it comes out we will win the significant part of it I think that I'm very excited about what we're doing in Asia Pacific. i think that i'm very excited about what we're doing in asia pacific We launched what we call our fit-for-purpose devices for that market. we launched what we call our fit-for-purpose devices for that market Think that of a smaller, lighter footprint, more energy efficient device that we're selling in the India market now in some other markets there, that is really going to help us accelerate our growth in Asia Pacific, particularly in India, a market that we weren't present in for the past five years. think that of a smaller lighter footprint more energy efficient device that we're selling in the india market now in some other markets there that is really going to help us accelerate our growth in asia pacific particularly in india a market that we weren't present in for the past five years Now that we're there, India is the fastest growing ATM market in the world, and now we have a product that allows us to compete and win in that market at the right margin level, because that is very important to us. Demand for banking is very, I would say, is very strong across the globe. Again, we might see small variations quarter-over-quarter around projects being delayed or some things like, for example, right now with the Middle East, we're a little concerned that Q1, we were able to deliver to all our customers there. Q2, we're now working on how do we get around some of the things that are going on there. We feel very good that banking will continue to grow throughout the year. Now that we're there, India is the fastest growing ATM market in the world, and now we have a product that allows us to compete and win in that market at the right margin level, because that is very important to us. now that we're there india is the fastest growing atm market in the world and now we have a product that allows us to compete and win in that market at the right margin level because that is very important to us Demand for banking is very, I would say, is very strong across the globe. demand for banking is very i would say is very strong across the globe Again, we might see small variations quarter-over-quarter around projects being delayed or some things like, f or example, right now with the Middle East, we're a little concerned that Q1, we were able to deliver to all our customers there. again we might see small variations quarter-over-quarter around projects being delayed or some things like, f or example right now with the middle east we're a little concerned that q1 we were able to deliver to all our customers there Q2, we're now working on how do we get around some of the things that are going on there. q2 we're now working on how do we get around some of the things that are going on there We feel very good that banking will continue to grow throughout the year. we feel very good that banking will continue to grow throughout the year

Speaker 1: Maybe just talk about, since you brought it up, what is your Middle East exposure across the two businesses? Maybe just talk about, since you brought it up, what is your Middle East exposure across the two businesses? maybe just talk about since you brought it up what is your middle east exposure across the two businesses

Speaker 2: It's more for the banking business, and we work a lot through our distributors there. It's one of the fastest growing regions economically in the world, so it was a good market for us. Last year, we did roughly $50 million. This year we'll see where we end, but we feel good that even with some disruptions, we will be able to still see our banking business grow as we expect it to grow through the year. Remember that one of the key things that we've built into the company are multiple ways to win. We're not dependent on one market, one product line. We now have the ability to, if one part of the business is suffering, other parts of the business can make up the slack. Hopefully, we get to where all parts of the business are performing very highly. It's more for the banking business, and we work a lot through our distributors there. it's more for the banking business and we work a lot through our distributors there It's one of the fastest growing regions economically in the world, so it was a good market for us. it's one of the fastest growing regions economically in the world so it was a good market for us Last year, we did roughly $50 million. last year we did roughly $50 million This year we'll see where we end, but w e feel good that even with some disruptions, we will be able to still see our banking business grow as we expect it to grow through the year. this year we'll see where we end, but w e feel good that even with some disruptions we will be able to still see our banking business grow as we expect it to grow through the year Remember that one of the key things that we've built into the company are multiple ways to win. remember that one of the key things that we've built into the company are multiple ways to win We're not dependent on one market, one product line. we're not dependent on one market one product line We now have the ability to, if one part of the business is suffering, other parts of the business can make up the slack. we now have the ability to if one part of the business is suffering other parts of the business can make up the slack Hopefully, we get to where all parts of the business are performing very highly. hopefully we get to where all parts of the business are performing very highly

Speaker 1: Contrary to what some might think is happening with bank branches here in the U.S., we've seen large banks like BofA, Chase, PNC, announce plans to open hundreds of new branches over the next several years. Can you talk about how you think about the revenue opportunity this poses for North America banking, and maybe speak to why these banks are opening up all these new branches when people tend to think about banking being in more of a digital transaction these days? Contrary to what some might think is happening with bank branches here in the U.S., we've seen large banks like B of A, Chase, PNC, announce plans to open hundreds of new branches over the next several years. contrary to what some might think is happening with bank branches here in the u.s we've seen large banks like b of a chase pnc announce plans to open hundreds of new branches over the next several years Can you talk about how you think about the revenue opportunity this poses for North America banking, and maybe speak to why these banks are opening up all these new branches when people tend to think about banking being in more of a digital transaction these days? can you talk about how you think about the revenue opportunity this poses for north america banking and maybe speak to why these banks are opening up all these new branches when people tend to think about banking being in more of a digital transaction these days

Speaker 2: Yeah. I've worked with banks, Matt, now for probably 30 years. 30 years ago, people told me that there would be no more branches 30 years ago. It's an interesting trend that's been a little bit slower to materialize. When you think of what's the easiest way and the highest quality deposits that a bank can get, they're always the deposits or the accounts that are opened in branches. We have multiple statistics on how an account that's opened inside a branch is a lot more productive or its life cycle than an account opened digitally. Big banks have realized this, and again, don't think that you'll see the branches of the past with 20 tellers and big marble columns. You'll start seeing more branches in neighborhoods, in different smaller formats that have a lot more automation. Why? Yeah. yeah I've worked with banks, Matt, now for probably 30 years. 30 years ago, people told me that there would be no more branches 30 years ago. i've worked with banks matt now for probably 30 years 30 years ago people told me that there would be no more branches 30 years ago It's an interesting trend that's been a little bit slower to materialize. it's an interesting trend that's been a little bit slower to materialize When you think of what's the easiest way and the highest quality deposits that a bank can get, they're always the deposits or the accounts that are opened in branches. when you think of what's the easiest way and the highest quality deposits that a bank can get they're always the deposits or the accounts that are opened in branches We have multiple statistics on how an account that's opened inside a branch is a lot more productive or its life cycle than an account opened digitally. we have multiple statistics on how an account that's opened inside a branch is a lot more productive or its life cycle than an account opened digitally Big banks have realized this, and again, don't think that you'll see the branches of the past with 20 tellers and big marble columns. big banks have realized this and again don't think that you'll see the branches of the past with 20 tellers and big marble columns You'll start seeing more branches in neighborhoods, in different smaller formats that have a lot more automation. you'll start seeing more branches in neighborhoods in different smaller formats that have a lot more automation Why? why Because you will have ATMs in those branches, but you will also have teller cash recyclers. Think of an ATM chopped in half with the same recycling mechanism, so the teller does not really have to count cash, and it becomes a different type of environment, more of a selling environment, advisory environment for bank customers. You'll see that fight for better quality deposits in the build-out of branches, and that creates a great opportunity for us in the North America market, not just with the ATM recyclers, but also as you think of the whole branch ecosystem, which is what we're very focused on. How do we make all the cash handling inside of a branch more efficient? That means the ATM, the teller cash recycler, the software that we put on top of that. Because you will have ATMs in those branches, but you will also have teller cash recyclers. because you will have atms in those branches but you will also have teller cash recyclers Think of an ATM chopped in half with the same recycling mechanism, so the teller does not really have to count cash, and it becomes a different type of environment, more of a selling environment, advisory environment for bank customers. think of an atm chopped in half with the same recycling mechanism so the teller does not really have to count cash and it becomes a different type of environment more of a selling environment advisory environment for bank customers You'll see that fight for better quality deposits in the build-out of branches, and that creates a great opportunity for us in the North America market, not just with the ATM recyclers, but also as you think of the whole branch ecosystem, which is what we're very focused on. you'll see that fight for better quality deposits in the build-out of branches and that creates a great opportunity for us in the north america market not just with the atm recyclers but also as you think of the whole branch ecosystem which is what we're very focused on How do we make all the cash handling inside of a branch more efficient? how do we make all the cash handling inside of a branch more efficient That means the ATM, the teller cash recycler, the software that we put on top of that. that means the atm the teller cash recycler the software that we put on top of that The more exciting part for us is that as we put more of these devices in the ground, they all have common components. The best part of our business is our service business, $2.2 billion of basically recurring revenue. If we put more devices in the ground that use the same parts, that we can use our same technicians to maintain, it just becomes incremental margin dollars for us with very minimal cost associated to it. We're very excited about the branch build in the U.S., and once again, it falls in this philosophy of there's multiple ways that we will continue winning in the markets. The more exciting part for us is that as we put more of these devices in the ground, they all have common components. the more exciting part for us is that as we put more of these devices in the ground they all have common components The best part of our business is our service business, $2.2 billion of basically recurring revenue. the best part of our business is our service business $2.2 billion of basically recurring revenue If we put more devices in the ground that use the same parts, that we can use our same technicians to maintain, it just becomes incremental margin dollars for us with very minimal cost associated to it. if we put more devices in the ground that use the same parts that we can use our same technicians to maintain it just becomes incremental margin dollars for us with very minimal cost associated to it We're very excited about the branch build in the U.S., and once again, it falls in this philosophy of there's multiple ways that we will continue winning in the markets. we're very excited about the branch build in the u.s and once again it falls in this philosophy of there's multiple ways that we will continue winning in the markets

Speaker 3: I just want to add one thing to that, Matt. When you think about the ATM recycler and you think about our teller recyclers, they're mini safes, if you will. Right? The cassettes are interchangeable between the two. What that does and what we've seen for our customers who have deployed it, and these are big regional banks as well, is that it reduces the amount of cash that you need to have at any given branch. What does that mean? If there's a branch that has, I'm going to make up a number, $10 million of cash there that would service that branch, and that's what they kept there. We've seen reductions of 25% to, in some cases at smaller banks, 50%. What does that mean? I just want to add one thing to that, Matt. i just want to add one thing to that matt When you think about the ATM recycler and you think about our teller recyclers, they're mini safes, if you will. when you think about the atm recycler and you think about our teller recyclers they're mini safes if you will Right? right The cassettes are interchangeable between the two. the cassettes are interchangeable between the two What that does and what we've seen for our customers who have deployed it, and these are big regional banks as well, is that it reduces the amount of cash that you need to have at any given branch. what that does and what we've seen for our customers who have deployed it and these are big regional banks as well is that it reduces the amount of cash that you need to have at any given branch What does that mean? what does that mean If there's a branch that has, I'm going to make up a number, $10 million of cash there that would service that branch, and that's what they kept there. if there's a branch that has i'm going to make up a number $10 million of cash there that would service that branch and that's what they kept there We've seen reductions of 25% to, in some cases at smaller banks, 50%. we've seen reductions of 25% to in some cases at smaller banks 50% What does that mean? what does that mean That cash, that 25%-50% of what they hold now goes back to the bank to go earn, to be lent out, as opposed to sitting stagnant to service the branch. That cash, that 25%- 50% of what they hold now goes back to the bank to go earn, to be lent out, as opposed to sitting stagnant to service the branch. that cash that 25%- 50% of what they hold now goes back to the bank to go earn to be lent out as opposed to sitting stagnant to service the branch

Speaker 1: When you think about the ATM, when you think about teller cash recycling, how much have your per-branch economics improved as you've expanded your product set? When you think about the ATM, when you think about teller cash recycling, how much have your per-branch economics improved as you've expanded your product set? when you think about the atm when you think about teller cash recycling how much have your per-branch economics improved as you've expanded your product set

Speaker 2: Remember, in the teller cash recycler, we launched this product late last year, so we're in the early stages of deploying this. With recycling, banks achieve a 20% reduction in the cost of cash at the ATM. We believe that when you create this closed cash ecosystem between the teller cash recycler, the ATM, you can expect a similar decrease, if not more, on the amount of cost associated with the branch. It becomes a very easy investment for banks, one with a very quick ROI, plus it allows them to really focus the personnel in the branch, not on transactions, but really on serving customers and offering new advice and new products. Remember, in the teller cash recycler, we launched this product late last year, so we're in the early stages of deploying this. remember in the teller cash recycler we launched this product late last year so we're in the early stages of deploying this With recycling, banks achieve a 20% reduction in the cost of cash at the ATM. with recycling banks achieve a 20% reduction in the cost of cash at the atm We believe that when you create this closed cash ecosystem between the teller cash recycler, the ATM, you can expect a similar decrease, if not more, on the amount of cost associated with the branch. we believe that when you create this closed cash ecosystem between the teller cash recycler the atm you can expect a similar decrease if not more on the amount of cost associated with the branch It becomes a very easy investment for banks, one with a very quick ROI, plus i t allows them to really focus the personnel in the branch, not on transactions, but really on serving customers and offering new advice and new products. it becomes a very easy investment for banks one with a very quick roi, plus i t allows them to really focus the personnel in the branch not on transactions but really on serving customers and offering new advice and new products

Speaker 1: Thank you. Maybe let's move over to retail for a few minutes. For 2026, how's the macro backdrop shaping retail customer deployment discussions across Europe and North America, and what are you seeing in terms of project timing or demand signals? Thank you. thank you Maybe let's move over to retail for a few minutes. maybe let's move over to retail for a few minutes For 2026, how's the macro backdrop shaping retail customer deployment discussions across Europe and North America, and what are you seeing in terms of project timing or demand signals? for 2026 how's the macro backdrop shaping retail customer deployment discussions across europe and north america and what are you seeing in terms of project timing or demand signals

Speaker 2: Yes. Matt, our retail business is probably one of the things that we're the most excited about. Q1 growth up north of 20% year-over-year, and we see demand continue to be very strong. Again, even in a complicated macro environment, our products are winning in the market. Remember that our retail business, roughly $1 billion, about $900 million of that is done in Europe, where we have the number one market position for both point-of-sale and self-checkout. As I always joked, as much as I love Europe, it's not the biggest retail market in the world. The biggest retail market in the world is here in the U.S., and we still have a very small position here. We've made the investments to win in the U.S., and we're now winning in the U.S. We see that accelerating. Yes. yes Matt, our retail business is probably one of the things that we're the most excited about. matt our retail business is probably one of the things that we're the most excited about Q1 growth up north of 20% year-over-year, and we see demand continue to be very strong. q1 growth up north of 20% year-over-year and we see demand continue to be very strong Again, even in a complicated macro environment, our products are winning in the market. again even in a complicated macro environment our products are winning in the market Remember that our retail business, roughly $1 billion, about $900 million of that is done in Europe, where we have the number one market position for both point -of -sale and self-checkout. remember that our retail business roughly $1 billion about $900 million of that is done in europe where we have the number one market position for both point -of -sale and self-checkout As I always joked, as much as I love Europe, it's not the biggest retail market in the world. as i always joked as much as i love europe it's not the biggest retail market in the world The biggest retail market in the world is here in the U.S., and we still have a very small position here. the biggest retail market in the world is here in the u.s and we still have a very small position here We've made the investments to win in the U.S., and we're now winning in the U.S. we've made the investments to win in the u.s and we're now winning in the u.s We see that accelerating. we see that accelerating That's part of how we're being able to grow our revenue so quickly in retail. Just in Q1, even with the small base we have in retail in the U.S., we were able to grow 70%. We're very excited about the opportunity for us in retail, and the technology that we're deploying with our loss prevention, our shrink prevention, avoiding theft at the self-checkout, avoiding theft in the aisles, has really resonated with grocers in North America, and that's been a big engine of growth for us. It's now being deployed in live stores across the U.S. That's part of how we're being able to grow our revenue so quickly in retail. that's part of how we're being able to grow our revenue so quickly in retail Just in Q1, even with the small base we have in retail in the U.S., we were able to grow 70%. just in q1 even with the small base we have in retail in the u.s we were able to grow 70% We're very excited about the opportunity for us in retail, and the technology that we're deploying with our loss prevention, our shrink prevention, avoiding theft at the self-checkout, avoiding theft in the aisles, has really resonated with grocers in North America, and that's been a big engine of growth for us. we're very excited about the opportunity for us in retail and the technology that we're deploying with our loss prevention our shrink prevention avoiding theft at the self-checkout avoiding theft in the aisles has really resonated with grocers in north america and that's been a big engine of growth for us It's now being deployed in live stores across the U.S. it's now being deployed in live stores across the u.s

Speaker 1: For those that may not be as familiar as I might be with that product, during our time at NRF in January in New York, we noticed Diebold's ability to apply AI-enabled tools across the store, as you mentioned, in the aisle, at POS, at self-checkout, as a differentiator as we went around to some of the other booths there, which is great. Can you talk a little bit more specifically so people understand exactly the tool set you're bringing and the types of results that's providing the retailer? For those that may not be as familiar as I might be with that product, during our time at NRF in January in New York, we noticed Diebold's ability to apply AI-enabled tools across the store, as you mentioned, in the aisle, at POS, at self-checkout, as a differentiator as we went around to some of the other booths there, which is great. Can you talk a little bit more specifically so people understand exactly the tool set you're bringing and the types of results that's providing the retailer? for those that may not be as familiar as i might be with that product during our time at nrf in january in new york we noticed diebold's ability to apply ai-enabled tools across the store as you mentioned in the aisle at pos at self-checkout as a differentiator as we went around to some of the other booths there which is great. can you talk a little bit more specifically so people understand exactly the tool set you're bringing and the types of results that's providing the retailer

Speaker 2: Sure. Remember, if you're a retailer, there's two competing pressures. You want to create the best checkout experience for your consumers, and you want to reduce as much cost as you can, and prevent losses. On the area of improving the customer experience, we have several use cases, but I'll talk about the two most important ones. The first one is age verification for restricted products. Think that when you're checking out at a self-checkout and you buy a bottle of wine, the transaction stops, and somebody has to come up to you, look at your ID, and then the transaction happens. Through our technology, we can, with certainty, identify the age of people, and then allow the transaction to happen. Again, this, depending on the jurisdiction, it has some limitations, but that is to improve the flow of transactions. Sure. sure Remember, if you're a retailer, there's two competing pressures. remember if you're a retailer there's two competing pressures You want to create the best checkout experience for your consumers, and you want to reduce as much cost as you can, and prevent losses. you want to create the best checkout experience for your consumers and you want to reduce as much cost as you can and prevent losses On the area of improving the customer experience, we have several use cases, but I'll talk about the two most important ones. on the area of improving the customer experience we have several use cases but i'll talk about the two most important ones The first one is age verification for restricted products. the first one is age verification for restricted products Think that when you're checking out at a self-checkout and you buy a bottle of wine, the transaction stops, and somebody has to come up to you, look at your ID, and then the transaction happens. think that when you're checking out at a self-checkout and you buy a bottle of wine the transaction stops and somebody has to come up to you look at your id and then the transaction happens Through our technology, we can, with certainty, identify the age of people, and then allow the transaction to happen. through our technology we can with certainty identify the age of people and then allow the transaction to happen Again, this, depending on the jurisdiction, it has some limitations, but that is to improve the flow of transactions. again this depending on the jurisdiction it has some limitations but that is to improve the flow of transactions The other part that's very interesting, when you buy fresh produce, think of you're buying bananas. You're going to check out at the self-checkout. You put the bananas on the self-checkout device, and it asks you to select what type of item you've placed. Through computer vision, we can identify that it's bananas, that it's tomatoes, and the transaction just flows very smoothly. That really helps, one, reduce the cost of personnel because there's less interventions in the self-checkout process, making the experience better for consumers. The part that's really resonated with a lot of our U.S. grocers has been shrink reduction or loss prevention. Our AI can detect at least 27 different use cases on how people can steal at the self-checkout. Through that, stop the transaction and ask for an intervention. The other part that's very interesting, when you buy fresh produce, think of you're buying bananas. the other part that's very interesting when you buy fresh produce think of you're buying bananas You're going to check out at the self-checkout. you're going to check out at the self-checkout You put the bananas on the self-checkout device, and it asks you to select what type of item you've placed. you put the bananas on the self-checkout device and it asks you to select what type of item you've placed Through computer vision, we can identify that it's bananas, that it's tomatoes, and the transaction just flows very smoothly. through computer vision we can identify that it's bananas that it's tomatoes and the transaction just flows very smoothly That really helps , one, reduce the cost of personnel because there's less interventions in the self-checkout process, making the experience better for consumers. that really helps , one reduce the cost of personnel because there's less interventions in the self-checkout process making the experience better for consumers The part that's really resonated with a lot of our U.S. grocers has been shrink reduction or loss prevention. the part that's really resonated with a lot of our u.s grocers has been shrink reduction or loss prevention Our AI can detect at least 27 different use cases on how people can steal at the self-checkout. our ai can detect at least 27 different use cases on how people can steal at the self-checkout Through that, stop the transaction and ask for an intervention. through that stop the transaction and ask for an intervention Think about it, 27 different use cases on how to prevent shrink at the self-checkout. When you think that a grocer loses about 1% of revenues, not of profit, of revenues to shrink, and our solution can reduce up to 70% of that, it is a solution that provides a very quick ROI. The other part is that it's a very reliable solution. We have very few false positives. It's less than 0.5%, less than half of 1%. Again, not impacting the customer experience and significantly reducing the losses that stores are experiencing. Think about it, 27 different use cases on how to prevent shrink at the self-checkout. think about it 27 different use cases on how to prevent shrink at the self-checkout When you think that a grocer loses about 1% of revenues, not of profit, of revenues to shrink, and our solution can reduce up to 70% of that, it is a solution that provides a very quick ROI. when you think that a grocer loses about 1% of revenues not of profit of revenues to shrink and our solution can reduce up to 70% of that it is a solution that provides a very quick roi The other part is that it's a very reliable solution. the other part is that it's a very reliable solution We have very few false positives. we have very few false positives It's less than 0.5%, less than half of 1%. it's less than 0.5% less than half of 1% Again, not impacting the customer experience and significantly reducing the losses that stores are experiencing. again not impacting the customer experience and significantly reducing the losses that stores are experiencing

Speaker 1: What are you doing in the aisle? What are you doing in the aisle? what are you doing in the aisle

Speaker 2: In the aisle, we connect to the CCTV system that every retail has. We capture the videos, and we can detect if somebody is conducting some anomalous behavior in the aisle. Think if you're in a high-value item part of the store where you might have wine or some, as you always do, put the wine bottle inside of your jacket as you're walking out to later. In the aisle, we connect to the CCTV system that every retail has. in the aisle we connect to the cctv system that every retail has We capture the videos, and we can detect if somebody is conducting some anomalous behavior in the aisle. we capture the videos and we can detect if somebody is conducting some anomalous behavior in the aisle Think if you're in a high-value item part of the store where you might have wine or some, a s you always do, put the wine bottle inside of your jacket as you're walking out to later. think if you're in a high-value item part of the store where you might have wine or some, a s you always do put the wine bottle inside of your jacket as you're walking out to later

Speaker 1: As you always do. As you always do. as you always do

Speaker 2: We can flag that, then that consumer will be monitored as it moves through the store. When it gets to the checkout, if the consumer takes the bottle out of his jacket and scans it, well, that's just the way he shop, but if he conducts his transaction and does not scan that bottle, we can stop the transaction there. An intervention from the personnel of the store can be there. The good part is, since we have the video images, we can first nudge the customer to try and get him to scan that device by presenting the video and reminding him, hey, you might have forgotten to scan an item that you have. If that nudge doesn't help him, we can stop the transaction, and the store personnel can come and help him complete that transaction. We can flag that, then that consumer will be monitored as it moves through the store. we can flag that then that consumer will be monitored as it moves through the store When it gets to the checkout, if the consumer takes the bottle out of his jacket and scans it, well, that's just the way he shop, but i f he conducts his transaction and does not scan that bottle, we can stop the transaction there. when it gets to the checkout if the consumer takes the bottle out of his jacket and scans it well that's just the way he shop, but i f he conducts his transaction and does not scan that bottle we can stop the transaction there An intervention from the personnel of the store can be there. an intervention from the personnel of the store can be there The good part is, since we have the video images, we can first nudge the customer to try and get him to scan that device by presenting the video and reminding him, hey, you might have forgotten to scan an item that you have. the good part is since we have the video images we can first nudge the customer to try and get him to scan that device by presenting the video and reminding him hey you might have forgotten to scan an item that you have If that nudge doesn't help him, we can stop the transaction, and the store personnel can come and help him complete that transaction. if that nudge doesn't help him we can stop the transaction and the store personnel can come and help him complete that transaction Think about having a screen on some of the self-checkouts. It shows up there first. It shows that action to remind you. Then if you choose to ignore it, you can get an employee involved to help resolve the situation. Think about having a screen on some of the self-checkouts. think about having a screen on some of the self-checkouts It shows up there first. it shows up there first It shows that action to remind you. it shows that action to remind you Then if you choose to ignore it, you can get an employee involved to help resolve the situation. then if you choose to ignore it you can get an employee involved to help resolve the situation

Speaker 1: That's helpful. Thank you. That's helpful. that's helpful Thank you. thank you

Speaker 2: Super embarrassing, by the way. Super embarrassing, by the way. super embarrassing by the way

Speaker 1: Can you talk just a little bit more broadly about the SCO market from a demand standpoint? Of course, geographic overlay is helpful. We went through a period, I would argue that there was a little bit of pull forward in deployment as a result of COVID, maybe a bit of a demand reset. Are we coming out of that demand reset? Have we seen firm inflection? Maybe if you could talk a little bit about that. Can you talk just a little bit more broadly about the SCO market from a demand standpoint? can you talk just a little bit more broadly about the sco market from a demand standpoint Of course, geographic overlay is helpful. of course geographic overlay is helpful We went through a period, I would argue that there was a little bit of pull forward in deployment as a result of COVID, maybe a bit of a demand reset. we went through a period i would argue that there was a little bit of pull forward in deployment as a result of covid maybe a bit of a demand reset Are we coming out of that demand reset? are we coming out of that demand reset Have we seen firm inflection? have we seen firm inflection Maybe if you could talk a little bit about that. maybe if you could talk a little bit about that

Speaker 2: Yeah. To your point, I think through COVID, and a little bit after that, there was a lot of demand for self-checkout as people were more conscious about how they wanted to check out. A little bit of panic around that. The market dipped a little bit right after COVID. Today, we're seeing the market get back to the same levels where it was before. What's interesting is we're seeing new use cases for self-checkout. When you think about, I assume everybody here got on an airplane. Every airport now is self-checkout. Wherever you buy in an airport is self-checkout. If you now go to fashion, which is another interesting use case, a lot of fashion retailers are now deploying self-checkout as well. Yeah. yeah To your point, I think through COVID, and a little bit after that, there was a lot of demand for self-checkout as people were more conscious about how they wanted to check out. to your point i think through covid and a little bit after that there was a lot of demand for self-checkout as people were more conscious about how they wanted to check out A little bit of panic around that. a little bit of panic around that The market dipped a little bit right after COVID. the market dipped a little bit right after covid Today, we're seeing the market get back to the same levels where it was before. today we're seeing the market get back to the same levels where it was before What's interesting is we're seeing new use cases for self-checkout. what's interesting is we're seeing new use cases for self-checkout When you think about, I assume everybody here got on an airplane. when you think about i assume everybody here got on an airplane Every airport now is self-checkout. every airport now is self-checkout Wherever you buy in an airport is self-checkout. wherever you buy in an airport is self-checkout If you now go to fashion, which is another interesting use case, a lot of fashion retailers are now deploying self-checkout as well. if you now go to fashion which is another interesting use case a lot of fashion retailers are now deploying self-checkout as well If you go shop in New York at a, for example, at a Uniqlo, you'll be able to check out by just dropping your things in a bin at the self-checkout and through RFID identifying the item. I think that you will continue to see self-checkout be deployed in many new use cases as we move forward. If you go shop in New York at a, for example, at a Uniqlo, you'll be able to check out by just dropping your things in a bin at the self-checkout and through RFID identifying the item. if you go shop in new york at a for example at a uniqlo you'll be able to check out by just dropping your things in a bin at the self-checkout and through rfid identifying the item I think that you will continue to see self-checkout be deployed in many new use cases as we move forward. i think that you will continue to see self-checkout be deployed in many new use cases as we move forward

Speaker 1: When you look at your self-checkout, I think people generally assume it's a lane-based format. What other form factors are you maybe evaluating for deployment in self-checkout or for self-checkout? When you look at your self-checkout, I think people generally assume it's a lane-based format. when you look at your self-checkout i think people generally assume it's a lane-based format What other form factors are you maybe evaluating for deployment in self-checkout or for self-checkout? what other form factors are you maybe evaluating for deployment in self-checkout or for self-checkout

Speaker 2: Matt, I always like to talk when we talk about self-checkout or checkout in general, I like to put it in one big bucket. There's multiple ways that people can check out. You can check out through giving things to a person that rings them up for you. You can do it yourself. You can use camera technology to walk in and walk out of a store and get charged for that. I think that that market will continue to evolve. There will be new form factors that we deploy in self-checkout. Today, the self-checkout machine at groceries has to be very big because the baskets are very big. At airports, it has to be very small because you're buying a pack of gum or a soft drink. You'll continue to see those form factors evolve as we build new use cases for different industries. Matt, I always like to talk when we talk about self-checkout or checkout in general, I like to put it in one big bucket. matt i always like to talk when we talk about self-checkout or checkout in general i like to put it in one big bucket There's multiple ways that people can check out. there's multiple ways that people can check out You can check out through giving things to a person that rings them up for you. you can check out through giving things to a person that rings them up for you You can do it yourself. you can do it yourself You can use camera technology to walk in and walk out of a store and get charged for that. you can use camera technology to walk in and walk out of a store and get charged for that I think that that market will continue to evolve. i think that that market will continue to evolve There will be new form factors that we deploy in self-checkout. there will be new form factors that we deploy in self-checkout Today, the self-checkout machine at groceries has to be very big because the baskets are very big. today the self-checkout machine at groceries has to be very big because the baskets are very big At airports, it has to be very small because you're buying a pack of gum or a soft drink. at airports it has to be very small because you're buying a pack of gum or a soft drink You'll continue to see those form factors evolve as we build new use cases for different industries. you'll continue to see those form factors evolve as we build new use cases for different industries Even in grocery, one of the things that we discuss a lot with some of our large customers is you don't need to deploy the big self-checkouts all lanes the same. You can have lanes that have what we call the three steps that you park your car here, you scan, and you bag. There's probably one-step self-checkouts that you could also deploy in a store for people that are buying five, six items, and to make the experience faster. You'll continue to see us evolve the form factors that we use in self-checkout and add other new technologies as well. Even in grocery, one of the things that we discuss a lot with some of our large customers is you don't need to deploy the big self-checkouts all lanes the same. even in grocery one of the things that we discuss a lot with some of our large customers is you don't need to deploy the big self-checkouts all lanes the same You can have lanes that have what we call the three steps that you park your car here, you scan, and you bag. you can have lanes that have what we call the three steps that you park your car here you scan and you bag There's probably one-step self-checkouts that you could also deploy in a store for people that are buying five, six items, and to make the experience faster. there's probably one-step self-checkouts that you could also deploy in a store for people that are buying five six items and to make the experience faster You'll continue to see us evolve the form factors that we use in self-checkout and add other new technologies as well. you'll continue to see us evolve the form factors that we use in self-checkout and add other new technologies as well

Speaker 1: Just to go back to North America on the retail side of the business, can you maybe compare and contrast the company strategy today versus maybe how the company was positioned in North America retail three or four years ago? You talk routinely about targeting the top 40 accounts in North America. Maybe give a little bit of a progress update and any proof points in terms of pipeline, demand signals, et cetera. Just to go back to North America on the retail side of the business, can you maybe compare and contrast the company strategy today versus maybe how the company was positioned in North America retail three or four years ago? just to go back to north america on the retail side of the business can you maybe compare and contrast the company strategy today versus maybe how the company was positioned in north america retail three or four years ago You talk routinely about targeting the top 40 accounts in North America. you talk routinely about targeting the top 40 accounts in north america Maybe give a little bit of a progress update and any proof points in terms of pipeline, demand signals, et cetera. maybe give a little bit of a progress update and any proof points in terms of pipeline demand signals et cetera

Speaker 2: Sure. We changed our strategy in retail as a company. We are the number one provider of retail technology in Europe, and our strategy had been that we would just follow our European retailers as they expanded globally. Think of companies like IKEA, H&M, C&A. If IKEA opened a store in Nashville, we would ship our products to Nashville to serve that store for them. We basically were following our European customers across the globe. Two and a half years ago, we saw the opportunity, as I said, the biggest retail market is the U.S., to really focus on the U.S. market. Sure. sure We changed our strategy in retail as a company. we changed our strategy in retail as a company We are the number one provider of retail technology in Europe, and our strategy had been that we would just follow our European retailers as they expanded globally. we are the number one provider of retail technology in europe and our strategy had been that we would just follow our european retailers as they expanded globally Think of companies like IKEA, H&M, C&A. think of companies like ikea h&m c&a If IKEA opened a store in Nashville, we would ship our products to Nashville to serve that store for them. if ikea opened a store in nashville we would ship our products to nashville to serve that store for them We basically were following our European customers across the globe. we basically were following our european customers across the globe Two and a half years ago, we saw the opportunity, as I said, the biggest retail market is the U.S., to really focus on the U.S. market. two and a half years ago we saw the opportunity as i said the biggest retail market is the u.s to really focus on the u.s market We selected 40 accounts, that these are well-known brand names for all of us, where we knew one of two things was happening, that they were at that point in their refresh cycle where they needed to buy new technology for their stores, or where we saw that our technology could really disrupt the competitive landscape. Think of our AI solutions. I'm happy to say that strategy has paid big dividends. Our retail pipeline has grown 500%. We now have significant wins in grocery, fuel and convenience, fashion, with U.S. retailers. We're happy. We're very happy on how that is progressing, and we've built a very strong team. We've built a team that is where our customers are. We selected 40 accounts, that these are well-known brand names for all of us, where we knew one of two things was happening, that they were at that point in their refresh cycle where they needed to buy new technology for their stores, or where we saw that our technology could really disrupt the competitive landscape. we selected 40 accounts that these are well-known brand names for all of us where we knew one of two things was happening that they were at that point in their refresh cycle where they needed to buy new technology for their stores or where we saw that our technology could really disrupt the competitive landscape Think of our AI solutions. think of our ai solutions I'm happy to say that strategy has paid big dividends. i'm happy to say that strategy has paid big dividends Our retail pipeline has grown 500%. our retail pipeline has grown 500% We now have significant wins in grocery, fuel and convenience, fashion, with U.S. retailers. we now have significant wins in grocery fuel and convenience fashion with u.s retailers We're happy. we're happy We're very happy on how that is progressing, and we've built a very strong team. we're very happy on how that is progressing and we've built a very strong team We've built a team that is where our customers are. we've built a team that is where our customers are I never thought I'd have offices in some of the cities that we now have offices. Tom always gets a little bit paranoid when we spend more money on offices as we're trying to reduce cost. It is very important to have people next to the customer. We have invested in that. The good news around that is that we targeted these initial 40 because we thought that our product set would fit very nicely. As we're winning in those 40 accounts, new opportunities start emerging for us. We're very excited about how that strategy keeps playing out well for us. I never thought I'd have offices in some of the cities that we now have offices. i never thought i'd have offices in some of the cities that we now have offices Tom always gets a little bit paranoid when we spend more money on offices as we're trying to reduce cost. tom always gets a little bit paranoid when we spend more money on offices as we're trying to reduce cost It is very important to have people next to the customer. it is very important to have people next to the customer We have invested in that. we have invested in that The good news around that is that we targeted these initial 40 because we thought that our product set would fit very nicely. the good news around that is that we targeted these initial 40 because we thought that our product set would fit very nicely As we're winning in those 40 accounts, new opportunities start emerging for us. as we're winning in those 40 accounts new opportunities start emerging for us We're very excited about how that strategy keeps playing out well for us. we're very excited about how that strategy keeps playing out well for us

Speaker 1: Got it. Maybe just talk a little bit about backlog and book-to-bill trends across the business. How are you feeling about regarding inbound order rates, visibility into the back half of 2026, and any early thoughts you may have on just big picture demand in 2027, given some of these businesses are longer cycle? Got it. got it Maybe just talk a little bit about backlog and book-to-bill trends across the business. maybe just talk a little bit about backlog and book-to-bill trends across the business How are you feeling about regarding inbound order rates, visibility into the back half of 2026, and any early thoughts you may have on just big picture demand in 2027, given some of these businesses are longer cycle? how are you feeling about regarding inbound order rates visibility into the back half of 2026 and any early thoughts you may have on just big picture demand in 2027 given some of these businesses are longer cycle

Speaker 3: We're starting to see sequential growth in our orders across both businesses. When we think about our backlog as it exists today, we ended Q1 at about $790 million. Because of that strong OE, we're starting to replenish that. Backlog at one point for Diebold was an important metric, and to a degree it still is, but less so. Less so because of all the lean manufacturing improvements that we've been able to deploy over the last couple of years. We've cut our lead times in order to deliver product from 200 days, in many cases, down to 120 or 90 or less. That's driven by a decision we made equally about four or five years ago, where we manufactured the majority of our ATMs and SCO equipment in Paderborn, Germany. We're starting to see sequential growth in our orders across both businesses. we're starting to see sequential growth in our orders across both businesses When we think about our backlog as it exists today, we ended Q1 at about $790 million. when we think about our backlog as it exists today we ended q1 at about $790 million Because of that strong OE, we're starting to replenish that. because of that strong oe we're starting to replenish that Backlog at one point for Diebold was an important metric, and to a degree it still is, but less so. backlog at one point for diebold was an important metric and to a degree it still is but less so Less so because of all the lean manufacturing improvements that we've been able to deploy over the last couple of years. less so because of all the lean manufacturing improvements that we've been able to deploy over the last couple of years We've cut our lead times in order to deliver product from 200 days, in many cases, down to 120 or 90 or less. we've cut our lead times in order to deliver product from 200 days in many cases down to 120 or 90 or less That's driven by a decision we made equally about four or five years ago, where we manufactured the majority of our ATMs and SCO equipment in Paderborn, Germany. that's driven by a decision we made equally about four or five years ago where we manufactured the majority of our atms and sco equipment in paderborn germany Today, we have four manufacturing locations and have really deployed a local-to-local strategy, which has really helped us manage expenses in the areas in where we sell. We've got one with our partner, NASH, in India to sort of help us with that Asia-Pac region. Obviously, Paderborn continues to be very important to us. Then at our headquarters and facility in North Canton, that is a full-on manufacturing facility for us now, capable of doing both SCOs as well as ATM. We refer to it as a flex factory, where in the past, it used to be more of a conveyor belt type of manufacturing. Now it's flex. We can literally, within hours, change from manufacturing SCOs to going back to ATMs, so much more flexible in our response time. Today, we have four manufacturing locations and have really deployed a local-to-local strategy, which has really helped us manage expenses in the areas in where we sell. today we have four manufacturing locations and have really deployed a local-to-local strategy which has really helped us manage expenses in the areas in where we sell We've got one with our partner, NASH, in India to sort of help us with that Asia-Pac region. we've got one with our partner nash in india to sort of help us with that asia-pac region Obviously, Paderborn continues to be very important to us. obviously paderborn continues to be very important to us Then at our headquarters and facility in North Canton, that is a full-on manufacturing facility for us now, capable of doing both SCOs as well as ATM. then at our headquarters and facility in north canton that is a full-on manufacturing facility for us now capable of doing both scos as well as atm We refer to it as a flex factory, where in the past, it used to be more of a conveyor belt type of manufacturing. we refer to it as a flex factory where in the past it used to be more of a conveyor belt type of manufacturing Now it's flex. now it's flex We can literally, within hours, change from manufacturing SCOs to going back to ATMs, so much more flexible in our response time. we can literally within hours change from manufacturing scos to going back to atms so much more flexible in our response time Then our last facility, which helps us in Latin America and South America, is in Manaus, Brazil. Again, it's that same sort of flexibility. When you're in an environment that we experienced just not too long ago with tariffs, not a big impact for us because we're manufacturing locally. There were some areas when those tariffs came out that we said, hey, we had things in the pipeline to kind of move, so it accelerated that movement into the regions where we're selling them, but we feel like that local-to-local plus lean has really helped us on product. Product margins, right? I mean, Matt, you'll remember last year, we were able to grow product margins 300%, and now we think that we can maintain that, and over time incrementally get maybe another 25 basis points here and there. Then our last facility, which helps us in Latin America and South America, is in Manaus, Brazil. then our last facility which helps us in latin america and south america is in manaus brazil Again, it's that same sort of flexibility. again it's that same sort of flexibility When you're in an environment that we experienced just not too long ago with tariffs, not a big impact for us because we're manufacturing locally. when you're in an environment that we experienced just not too long ago with tariffs not a big impact for us because we're manufacturing locally There were some areas when those tariffs came out that we said, hey, we had things in the pipeline to kind of move, so it accelerated that movement into the regions where we're selling them, but w e feel like that local-to-local plus lean has really helped us on product. there were some areas when those tariffs came out that we said hey we had things in the pipeline to kind of move so it accelerated that movement into the regions where we're selling them, but w e feel like that local-to-local plus lean has really helped us on product Product margins, right? product margins right I mean, Matt, you'll remember last year, we were able to grow product margins 300%, and now we think that we can maintain that, and over time incrementally get maybe another 25 basis points here and there. i mean matt you'll remember last year we were able to grow product margins 300% and now we think that we can maintain that and over time incrementally get maybe another 25 basis points here and there When you're talking about being able to sell an ATM at a 31%+ margin, that's pretty good. We're pretty proud of that, and we're investing to maintain that. When you're talking about being able to sell an ATM at a 31%+ margin, that's pretty good. when you're talking about being able to sell an atm at a 31%+ margin that's pretty good We're pretty proud of that, and we're investing to maintain that. we're pretty proud of that and we're investing to maintain that

Speaker 1: We have about seven to eight minutes left. I want to talk about profitability, but first, I want to make sure we cover balance sheet and cash flow. Diebold's balance sheet remains very underleveraged. You have a $200 million share repurchase in place. Where do you see the company's leverage guardrails going forward? How committed are you to maintaining leverage in that bandwidth? Obviously the company's buying back stock, but you guys also acquired some stock in the market not too long ago. We have about seven to eight minutes left. we have about seven to eight minutes left I want to talk about profitability, but first, I want to make sure we cover balance sheet and cash flow. i want to talk about profitability but first i want to make sure we cover balance sheet and cash flow Diebold's balance sheet remains very underleveraged. diebold's balance sheet remains very underleveraged You have a $200 million share repurchase in place. Where do you see the company's leverage guardrails going forward? you have a $200 million share repurchase in place. where do you see the company's leverage guardrails going forward How committed are you to maintaining leverage in that bandwidth? how committed are you to maintaining leverage in that bandwidth Obviously the company's buying back stock, but you guys also acquired some stock in the market not too long ago. obviously the company's buying back stock but you guys also acquired some stock in the market not too long ago

Speaker 3: Yeah. Yeah. yeah

Speaker 1: Maybe speak to that as well. Maybe speak to that as well. maybe speak to that as well

Speaker 3: Sure. We are committed to maintaining what we refer to as our fortress balance sheet. Our net debt leverage ratio last quarter was 1.2x. Our guideline is we'd like to keep that under 1.5x. For now, our capital allocation strategy is really focused on buying back stock. We announced the $100 million program last year. We did that in about 10 months, 11 months, wrapped that up, and the board supported us with another $200 million program repurchase. We're probably going to wrap that up in a similar amount of time. We've said that before. We're going to go back and get an additional authorization. Right now, we feel like our stock, even at these prices, continues to be undervalued. The ROI on buying that stock back now is something that we're going to continue to do. Remember, we are a very light CapEx environment. Sure. sure We are committed to maintaining what we refer to as our fortress balance sheet. we are committed to maintaining what we refer to as our fortress balance sheet Our net debt leverage ratio last quarter was 1.2x. our net debt leverage ratio last quarter was 1.2x Our guideline is we'd like to keep that under 1.5x. our guideline is we'd like to keep that under 1.5x For now, our capital allocation strategy is really focused on buying back stock. for now our capital allocation strategy is really focused on buying back stock We announced the $100 million program last year. we announced the $100 million program last year We did that in about 10 months, 11 months, wrapped that up, and the board supported us with another $200 million program repurchase. we did that in about 10 months 11 months wrapped that up and the board supported us with another $200 million program repurchase We're probably going to wrap that up in a similar amount of time. we're probably going to wrap that up in a similar amount of time We've said that before. we've said that before We're going to go back and get an additional authorization. we're going to go back and get an additional authorization Right now, we feel like our stock, even at these prices, continues to be undervalued. right now we feel like our stock even at these prices continues to be undervalued The ROI on buying that stock back now is something that we're going to continue to do. the roi on buying that stock back now is something that we're going to continue to do Remember, we are a very light CapEx environment. remember we are a very light capex environment Think about 1%-1.5% of our revenue is CapEx, but we feel good about the capital allocation process. I think now as we look to refinance our debt, we have $950 million in secured notes that the no-call/make-whole provisions expire and reduce in December of this year. We will likely be in the market again. We'll look at perhaps a more flexible structure with a Term B and then some secured notes. A lot of that is TBD. We will definitely be refinancing at that point. Depending on the amount of cash that we have on hand, depending on the stock buyback programs, we're likely to continue to make an investment in our fortress balance sheet and pay down some of that debt as well. Think about 1%-1.5% of our revenue is CapEx, but w e feel good about the capital allocation process. think about 1%-1.5% of our revenue is capex, but w e feel good about the capital allocation process I think now as we look to refinance our debt, we have $950 million in secured notes that the no-call/make-whole provisions expire and reduce in December of this year. i think now as we look to refinance our debt we have $950 million in secured notes that the no-call/make-whole provisions expire and reduce in december of this year We will likely be in the market again. we will likely be in the market again We'll look at perhaps a more flexible structure with a Term B and then some secured notes. we'll look at perhaps a more flexible structure with a term b and then some secured notes A lot of that is TBD. a lot of that is tbd We will definitely be refinancing at that point. we will definitely be refinancing at that point Depending on the amount of cash that we have on hand, depending on the stock buyback programs, we're likely to continue to make an investment in our fortress balance sheet and pay down some of that debt as well. depending on the amount of cash that we have on hand depending on the stock buyback programs we're likely to continue to make an investment in our fortress balance sheet and pay down some of that debt as well

Speaker 1: Maybe talk about some of the recent insider buying as well. Maybe talk about some of the recent insider buying as well. maybe talk about some of the recent insider buying as well

Speaker 3: Yeah. Well, look, the stock had a little bit of a dip recently. Nobody could understand why. We were in an open window, and we jumped at it. This is my third time that I've gone to the market and bought stock in an open window period. Octavio did the same thing, and our Chief Revenue Officer, so the guy who delivers everything, went out and made his first purchase as well. The management team believes in what this company can do. That's why we're here talking with investors, is to try to get that message out there about this company's ability to generate free cash flow, and then have multiple ways to distribute it. Right now, we're very focused on buying stock back. Yeah. yeah Well, look, the stock had a little bit of a dip recently. well look the stock had a little bit of a dip recently Nobody could understand why. nobody could understand why We were in an open window, and we jumped at it. we were in an open window and we jumped at it This is my third time that I've gone to the market and bought stock in an open window period. this is my third time that i've gone to the market and bought stock in an open window period Octavio did the same thing, and our Chief Revenue Officer, so the guy who delivers everything, went out and made his first purchase as well. octavio did the same thing and our chief revenue officer so the guy who delivers everything went out and made his first purchase as well The management team believes in what this company can do. the management team believes in what this company can do That's why we're here talking with investors, is to try to get that message out there about this company's ability to generate free cash flow, and then have multiple ways to distribute it. that's why we're here talking with investors is to try to get that message out there about this company's ability to generate free cash flow and then have multiple ways to distribute it Right now, we're very focused on buying stock back. right now we're very focused on buying stock back At the same point in time, we're beginning to grow a little bit more in terms of what do we want to do from an M&A perspective. We've got opportunities that are coming into us, and we'll continue to look at those. For now, we're kind of in a smaller sort of tuck-in acquisition mode, but I could see if it's the right opportunity at the right price, that we would be willing to spend a little bit more to make that acquisition. At the same point in time, we're beginning to grow a little bit more in terms of what do we want to do from an M&A perspective. at the same point in time we're beginning to grow a little bit more in terms of what do we want to do from an m&a perspective We've got opportunities that are coming into us, and we'll continue to look at those. we've got opportunities that are coming into us and we'll continue to look at those For now, we're kind of in a smaller sort of tuck-in acquisition mode, but I could see if it's the right opportunity at the right price, that we would be willing to spend a little bit more to make that acquisition. for now we're kind of in a smaller sort of tuck-in acquisition mode but i could see if it's the right opportunity at the right price that we would be willing to spend a little bit more to make that acquisition

Speaker 1: What do the credit rating agencies need to see to push your debt rating into investment grade? Do you think that ultimately can happen leaning into this refi? If you were to refi today, what would the spread favorability look like for you? What do the credit rating agencies need to see to push your debt rating into investment grade? what do the credit rating agencies need to see to push your debt rating into investment grade Do you think that ultimately can happen leaning into this refi? do you think that ultimately can happen leaning into this refi If you were to refi today, what would the spread favorability look like for you? if you were to refi today what would the spread favorability look like for you

Speaker 3: Yeah, good question. I think they want to see consistent execution. The one thing that we've been able to demonstrate for the last, I think it's six quarters now, is positive free cash flow. That doesn't seem like a big deal, but for companies in our space and our competitors, the majority of our cash flow comes in in Q4. When the service contracts get renewed, there's a down payment associated with it. It had been a very long time that Diebold had been profitable or positive free cash flow in any other quarter except Q4. I would say as a result of some of the lean initiatives that we deployed around DSO and managing DIO better, we've been able to generate positive free cash flow for the last six quarters. Yeah, good question. yeah good question I think they want to see consistent execution. i think they want to see consistent execution The one thing that we've been able to demonstrate for the last, I think it's six quarters now, is positive free cash flow. the one thing that we've been able to demonstrate for the last i think it's six quarters now is positive free cash flow That doesn't seem like a big deal, but for companies in our space and our competitors, the majority of our cash flow comes in in Q4. that doesn't seem like a big deal but for companies in our space and our competitors the majority of our cash flow comes in in q4 When the service contracts get renewed, t here's a down payment associated with it. when the service contracts get renewed, t here's a down payment associated with it It had been a very long time that Diebold had been profitable or positive free cash flow in any other quarter except Q4. it had been a very long time that diebold had been profitable or positive free cash flow in any other quarter except q4 I would say as a result of some of the lean initiatives that we deployed around DSO and managing DIO better, we've been able to generate positive free cash flow for the last six quarters. i would say as a result of some of the lean initiatives that we deployed around dso and managing dio better we've been able to generate positive free cash flow for the last six quarters Obviously, Q4 still a big quarter, but that is our focus to continue to remain cash flow positive in each quarter. There may be some quarters that we've got to make decisions on certain inventory, et cetera, that may push us more towards a break even, but we're very focused on that. That has been a big piece for them in some of the recent crediting upgrades. I think since, over the last two years, we've gotten two upgrades from both Moody's and S&P. We recently engaged with Fitch. They're a notch above Moody's and S&P at BB-, and we're hopeful that the continued execution, and maintaining our minimum cash balance in a range of $250 million-$300 million will likely get S&P and Moody's hopefully to bump that up as well. Obviously, Q4 still a big quarter, but that is our focus to continue to remain cash flow positive in each quarter. obviously q4 still a big quarter but that is our focus to continue to remain cash flow positive in each quarter There may be some quarters that we've got to make decisions on certain inventory, et cetera, that may push us more towards a break even, but we're very focused on that. there may be some quarters that we've got to make decisions on certain inventory et cetera that may push us more towards a break even but we're very focused on that That has been a big piece for them in some of the recent crediting upgrades. that has been a big piece for them in some of the recent crediting upgrades I think since, over the last two years, we've gotten two upgrades from both Moody's and S&P. i think since over the last two years we've gotten two upgrades from both moody's and s&p We recently engaged with Fitch. we recently engaged with fitch They're a notch above Moody's and S&P at BB-, and we're hopeful that the continued execution, and maintaining our minimum cash balance in a range of $250 million-$300 million will likely get S&P and Moody's hopefully to bump that up as well. they're a notch above moody's and s&p at bb- and we're hopeful that the continued execution and maintaining our minimum cash balance in a range of $250 million-$300 million will likely get s&p and moody's hopefully to bump that up as well

Speaker 2: Probably, Matt, as we think of the rate that we will be able to refinance, if you think of our notes today, they're at 7.75%. If you look at how they're trading in the market right now, it would imply a rate that's closer to the low 6% something. We're very excited about doing that because just by doing that refinance at where we think we would land, would add probably $15 million-$20 million more of free cash flow to the company next year. Probably, Matt, as we think of the rate that we will be able to refinance, if you think of our notes today, they're at 7.75%. probably matt as we think of the rate that we will be able to refinance if you think of our notes today they're at 7.75% If you look at how they're trading in the market right now, it would imply a rate that's closer to the low 6% something. if you look at how they're trading in the market right now it would imply a rate that's closer to the low 6% something We're very excited about doing that because just by doing that refinance at where we think we would land, would add probably $15 million-$20 million more of free cash flow to the company next year. we're very excited about doing that because just by doing that refinance at where we think we would land would add probably $15 million-$20 million more of free cash flow to the company next year

Speaker 3: Yeah. Yeah. yeah

Speaker 2: We're very focused on that, and that is something that we will definitely be doing once December comes along. We're very focused on that, and that is something that we will definitely be doing once December comes along. we're very focused on that and that is something that we will definitely be doing once december comes along

Speaker 1: Perfect. Then on free cash flow, how should we think about Diebold's long-term conversion on adjusted EBITDA, if that's the right way to look at it? What are the three, four, whatever, five sort of items you need to get there? Perfect. perfect Then on free cash flow, how should we think about Diebold's long-term conversion on adjusted EBITDA, if that's the right way to look at it? then on free cash flow how should we think about diebold's long-term conversion on adjusted ebitda if that's the right way to look at it What are the three, four, whatever, five sort of items you need to get there? what are the three four whatever five sort of items you need to get there

Speaker 3: Last year we did 49% conversion of free cash flow against EBITDA. What we said we'd do this year is 50%+ conversion, and we think we've got pretty good line of sight in 2027 to get that up to 60%+ conversion. For us, I still think we have ample opportunity with DSO. We're not at entitlement yet, and each day of DSO is $10 million of free cash flow for us. If you think if our DSO is in the mid-60%, we probably have entitlement in the high 40%, so we still have pretty good runway there. DIO is something that we've been very focused on. I think as Diebold begins to morph, and I talked about the lead times reducing on inventory, and since we're able to turn it more quickly, we don't need to build it in advance. Last year we did 49% conversion of free cash flow against EBITDA. last year we did 49% conversion of free cash flow against ebitda What we said we'd do this year is 50%+ conversion, and we think we've got pretty good line of sight in 2027 to get that up to 60%+ conversion. For us, I still think we have ample opportunity with DSO. what we said we'd do this year is 50%+ conversion and we think we've got pretty good line of sight in 2027 to get that up to 60%+ conversion. for us i still think we have ample opportunity with dso We're not at entitlement yet, and each day of DSO is $10 million of free cash flow for us. we're not at entitlement yet and each day of dso is $10 million of free cash flow for us If you think if our DSO is in the mid-60%, we probably have entitlement in the high 40%, so we still have pretty good runway there. if you think if our dso is in the mid-60% we probably have entitlement in the high 40% so we still have pretty good runway there DIO is something that we've been very focused on. dio is something that we've been very focused on I think as Diebold begins to morph, and I talked about the lead times reducing on inventory, and since we're able to turn it more quickly, we don't need to build it in advance. i think as diebold begins to morph and i talked about the lead times reducing on inventory and since we're able to turn it more quickly we don't need to build it in advance We've got a shorter period of window, that means we're not carrying as much raw materials or finished goods until the point that we're actually going to be ready to go sell them and install them. We feel that we have opportunities there, then I would say the ongoing focus of OpEx and reductions across the board there in spend all contributes. To what Octavio said before on some of the products and margins, even within that space on free cash flow, we have multiple ways to win. DIO may be up one period because we decided to make an investment in X to secure revenue for the future, then we can do better on DSO. It's worked out well for us. We've got a shorter period of window, that means we're not carrying as much raw materials or finished goods until the point that we're actually going to be ready to go sell them and install them. we've got a shorter period of window that means we're not carrying as much raw materials or finished goods until the point that we're actually going to be ready to go sell them and install them We feel that we have opportunities there, then I would say the ongoing focus of OpEx and reductions across the board there in spend all contributes. we feel that we have opportunities there then i would say the ongoing focus of opex and reductions across the board there in spend all contributes To what Octavio said before on some of the products and margins, even within that space on free cash flow, we have multiple ways to win. to what octavio said before on some of the products and margins even within that space on free cash flow we have multiple ways to win DIO may be up one period because we decided to make an investment in X to secure revenue for the future, then we can do better on DSO. dio may be up one period because we decided to make an investment in x to secure revenue for the future then we can do better on dso It's worked out well for us. it's worked out well for us Overall too, we've just been able to reduce the amount of professional fees associated with some of the projects and processes and even our OpEx evolution program as well. That'll go away after time as we've embed some of those 214 actions that I talked about into our operating culture. Overall too, we've just been able to reduce the amount of professional fees associated with some of the projects and processes and even our OpEx evolution program as well. overall too we've just been able to reduce the amount of professional fees associated with some of the projects and processes and even our opex evolution program as well That'll go away after time as we've embed some of those 214 actions that I talked about into our operating culture. that'll go away after time as we've embed some of those 214 actions that i talked about into our operating culture

Speaker 1: We just have about one minute left, real quick. On services gross profitability, you talked a lot about product. How should we be thinking about service gross margins, and what are some of the more iterative things you've done in that business to drive profitability higher looking ahead? We just have about one minute left, real quick. we just have about one minute left real quick On services gross profitability, you talked a lot about product. on services gross profitability you talked a lot about product How should we be thinking about service gross margins, and what are some of the more iterative things you've done in that business to drive profitability higher looking ahead? how should we be thinking about service gross margins and what are some of the more iterative things you've done in that business to drive profitability higher looking ahead

Speaker 3: Yeah, I'll start, and I'll let you finish. Yeah, I'll start, and I'll let you finish. yeah i'll start and i'll let you finish

Speaker 2: Just jump in there. Just jump in there. just jump in there

Speaker 3: Our biggest opportunity is service margins, no doubt. Our service margins are probably in the mid 25% area. We feel entitlement for us in that space should be much closer to 30%. What we've done is we've deployed what we refer to as our field technician software. It's based on an Oracle platform that makes sure that you got the right parts on the truck, you have the right person who's going to go to that service call, and the software predicts where that person needs to go. There could be an example where Octavio's a block away, I'm six blocks away. In the past, they would talk to each other. Octavio would take it because he's closer. Our biggest opportunity is service margins, no doubt. our biggest opportunity is service margins no doubt Our service margins are probably in the mid 25% area. our service margins are probably in the mid 25% area We feel entitlement for us in that space should be much closer to 30%. we feel entitlement for us in that space should be much closer to 30% What we've done is we've deployed what we refer to as our field technician software. what we've done is we've deployed what we refer to as our field technician software It's based on an Oracle platform that makes sure that you got the right parts on the truck, you have the right person who's going to go to that service call, and the software predicts where that person needs to go. it's based on an oracle platform that makes sure that you got the right parts on the truck you have the right person who's going to go to that service call and the software predicts where that person needs to go There could be an example where Octavio's a block away, I'm six blocks away. there could be an example where octavio's a block away i'm six blocks away In the past, they would talk to each other. in the past they would talk to each other Octavio would take it because he's closer. octavio would take it because he's closer He gets there, realizes, I don't have the right part, and geez, I've never really done this before. Our software knows the skill of the technicians as they're graded, knows what parts are on the truck, and now it deploys Tom. Tom goes there, fixes it right the first time, that's where we saw a lot of the inefficiencies in the past, was multiple visits to the same site to fix the machine, or overtime. We've been significantly able to scale back both of that. We're also densifying the amount of field technicians that we have, so more boots on the ground per machine. What that's doing, yes, it costs more. That's the investment we're willing to make. The SLAs are improving. As our Service-Level Agreements improve, so just think when I say that word, it's all about availability. He gets there, realizes, I don't have the right part, and geez, I've never really done this before. he gets there realizes i don't have the right part and geez i've never really done this before Our software knows the skill of the technicians as they're graded, knows what parts are on the truck, and now it deploys Tom. our software knows the skill of the technicians as they're graded knows what parts are on the truck and now it deploys tom Tom goes there, fixes it right the first time, that's where we saw a lot of the inefficiencies in the past, was multiple visits to the same site to fix the machine, or overtime. tom goes there fixes it right the first time that's where we saw a lot of the inefficiencies in the past was multiple visits to the same site to fix the machine or overtime We've been significantly able to scale back both of that. we've been significantly able to scale back both of that We're also densifying the amount of field technicians that we have, so more boots on the ground per machine. we're also densifying the amount of field technicians that we have so more boots on the ground per machine What that's doing, yes, it costs more. what that's doing yes it costs more That's the investment we're willing to make. that's the investment we're willing to make The SLAs are improving. the slas are improving As our Service-Level Agreements improve, so just think when I say that word, it's all about availability. as our service-level agreements improve so just think when i say that word it's all about availability As the availability of those machines continue to improve, that translates directly into wins on the product side. You get more wins, you get more C base on the service, and that helps. As the availability of those machines continue to improve, that translates directly into wins on the product side. as the availability of those machines continue to improve that translates directly into wins on the product side You get more wins, you get more C base on the service, and that helps. you get more wins you get more c base on the service and that helps

Speaker 1: Well said, Tom. I think we need to wrap up there. Well said, Tom. well said tom I think we need to wrap up there. i think we need to wrap up there

Speaker 3: Yeah. Yeah. yeah

Speaker 1: Thank you, guys. Thank you, guys. thank you guys

Speaker 3: Thank you, Matt. Thank you for having us. Thank you, Matt. thank you matt Thank you for having us. thank you for having us

Speaker 1: Thanks. Thanks. thanks

Speaker 2: Appreciate it. Appreciate it. appreciate it