Diebold reported first quarter 2013 net loss attributable to Diebold of US$13.4 million, or $0.21 per share. This compares with first quarter 2012 net income of $45.2 million, or $0.71 per share. First quarter 2013 revenue was $633.5 million, down 9.3 percent from the first quarter 2012.
Diebold reported first quarter 2013 net loss attributable to Diebold of US$13.4 million, or $0.21 per share. This compares with first quarter 2012 net income of $45.2 million, or $0.71 per share. First quarter 2013 revenue was $633.5 million, down 9.3 percent from the first quarter 2012.
Non-GAAP income (loss) attributable to Diebold in the first quarter 2013 was $(0.04) per share, compared with $0.74 per share in the first quarter 2012. The decrease in total revenue for the first quarter 2013 due to a net unfavorable currency impact of approximately two percent related mostly to the Brazilian Real. Volume in North America was significantly down due to expired regulatory deadlines related to the Americans with Disabilities Act and other compliance requirements. Internationally, the growth in Asia Pacific and EMEA was nearly offset with lower volume in Latin America, including Brazil.
Total gross margin for the first quarter 2013 was 20.5 percent, a decrease of 7.2 percentage points from the first quarter of 2012, with declines in both product and service. In the United States, both product and service margins were impacted by the decline in product volume, particularly in the regional bank business, coupled with a shift in business from the regional banks to the lower-margin national banks. Service and product margins were also down in the international operations due to customer and solutions mix differences compared with the comparable period in the prior year. Service gross margin in the first quarter 2013 includes intangible amortization expense of $0.3 million associated with the acquisition of GAS Tecnologia in Brazil.
"While the first quarter results we are announcing today are disappointing, they are in line with our internal forecasts,” said Henry Wallace, Executive Chairman, Diebold. “The dramatic mix shift in North America from higher-margin regional accounts to lower-margin national accounts, and the strong second-half earnings bias in Asia Pacific and Latin America/Brazil, resulted in an unusually weak first quarter.”
"While we are beginning to see traction on our key initiatives, we clearly need to significantly improve our execution,” said Wallace. “During the quarter, we made a number of key organizational decisions and changes to more rapidly seize marketplace opportunities, align with the increasingly global and more complex nature of our business and reduce our cost structure."
In a separate release today, the company provided details behind a multi-year realignment plan targeted to reduce its cost structure by $100 million to $150 million by 2015. "The decisions associated with our realignment plan are necessary for the sustainability and success of the company and to place Diebold on the right path for growth,” said George Mayes Jr., Diebold Executive VP and COO. “We believe doing so will ultimately improve profitability and deliver shareholder value.”
Despite the expected slow start to the year, Diebold has seen progress on several fronts, such as Asia Pacific, U.S. national accounts and electronic security. In addition, the company recently won one of the large ATM tenders it was anticipating in Brazil, much of which is expected to revenue in the second half of 2013. These factors, combined with the cost savings from the realignment plan announced recently, provide the company with increased confidence in its outlook for the full year. However, the company still faces difficult year-over-year comparisons, particularly in the second quarter. Regarding the company's outlook for the remainder of 2013, Wallace concluded, "We still expect 2013 non-GAAP earnings to be flat to down moderately from 2012, and revenue to be relatively flat.”