# DIEBOLD NIXDORF, Inc (DBD) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from DIEBOLD NIXDORF, Inc's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/28823/000002882322000058/dbd-20211231.htm
Accession: 0000028823-22-000058
Filing date: 2022-03-11
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/DBD/
All MD&A years: /company/DBD/mda/
Next year: /company/DBD/mda/fy2022/ (FY 2022)

ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Management’s discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes that appear elsewhere in this annual report on Form 10-K. For additional information regarding general information regarding the Company, its business, strategy, competitors and operations, refer to Item 1 of this annual report on Form 10-K.

Business Drivers

The business drivers of the Company's future performance include, but are not limited to:

•demand for services on distributed IT assets such as ATMs, POS and SCO, including managed services and professional services;

•timing of system upgrades and/or replacement cycles for ATMs, POS and SCO;

•demand for software products and professional services;

•demand for security products and services for the financial, retail and commercial sectors; and

•demand for innovative technology in connection with the Company's Connected Commerce strategy.

The following discussion should be read in conjunction with the consolidated financial statements and the accompanying notes that appear elsewhere in this annual report on Form 10-K.

COVID-19 Impact

The Company continues to deliver high service levels to customers, even in hard-hit areas around the world, and received positive feedback from customers, including critical infrastructure providers, such as supermarkets and financial institutions, as to how effectively it has responded to the pandemic.

The Company continues to focus on the stability of its suppliers and supply chain to prepare for any potential difficulties stemming from the pandemic. In 2021, the Company faced unprecedented challenges brought on by the second year of the pandemic. Supply chain disruption, whether it be access to critical raw material components, such as semiconductor chips, or freight lead times and availability, negatively affected virtually every business in some form – Diebold Nixdorf included. The Company’s 2021 financial performance was heavily impacted by longer lead times – both inbound and outbound – as well as non-billable inflationary pressures associated with these headwinds. While the Company believes that many of these headwinds peaked in the second half of 2021, its expectation is that there will not be a material improvement in raw material and freight costs through the end of the third quarter of 2022. We look forward to moving past the global macroeconomic challenges we have faced over the past two years by utilizing various mitigation strategies (e.g., supply chain optimization and price increases) to deliver for our customers and shareholders. We believe the Company is well-positioned to capitalize on the strong demand for our products and solutions as customers continue to desire our market leading devices, services and software, as the market moves toward a self-service automation focus driven by the changed behavior of consumers.

Given the measure of uncertainty surrounding the COVID-19 pandemic and the impacts it may have on our business and the businesses of our customers and suppliers, the possible resurgence of COVID-19 infection rates, including as a result of new variants, and government actions in response thereto could disrupt our operations and our supply chain and materially adversely affect our business. Because the situation continues to evolve, we cannot reasonably estimate the ultimate impact to our business, results of operations, cash flows and financial position that the COVID-19 pandemic may have, but such impact could be material.

DN Now Transformation Activities

Commensurate with its strategy, in 2021, the Company completed the execution of its multi-year transformation program called DN Now. The Company’s DN Now initiatives consisted of a number of work streams designed to improve operational efficiency and sustainably increase profits and cash flows. The Company has achieved a substantial amount of annual cost savings associated with the DN Now initiatives. In connection with its DN Now initiatives, the Company incurred restructuring and transformation expenses, the most notable of which are severance accruals and third-party transformation fees, totaling $98.9 and $181.8 in 2021 and 2020, respectively.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

RESULTS OF OPERATIONS

This Results of Operations focuses on discussion of 2021 results as compared to 2020 results. For discussion of 2020 results as compared to 2019 results, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

Net Sales

The following table represents information regarding our net sales for the years ended December 31:

[[GREPCENT_TABLE]]
[["","","","","","% Change in CC (1)","","% of Total Net Sales for the Year Ended"],["","2021","","2020","","% Change","","","2021","","2020"],["Segments"],["Eurasia Banking"],["Services","$","758.0","","","$","819.0","","","(7.4)","","","(10.2)","","","19.4","","","21.0"],["Products","595.8","","","612.1","","","(2.7)","","","(4.7)","","","15.3","","","15.7"],["Total Eurasia Banking","$","1,353.8","","","$","1,431.1","","","(5.4)","","","(7.9)","","","34.7","","","36.7"],["Americas Banking"],["Services","$","923.2","","","$","962.9","","","(4.1)","","","(4.1)","","","23.6","","","24.7"],["Products","434.1","","","456.5","","","(4.9)","","","(4.6)","","","11.2","","","11.7"],["Total Americas Banking","$","1,357.3","","","$","1,419.4","","","(4.4)","","","(4.2)","","","34.8","","","36.4"],["Retail"],["Services","$","622.4","","","$","582.6","","","6.8","","","2.6","","","15.9","","","14.9"],["Products","571.7","","","469.2","","","21.8","","","18.5","","","14.6","","","12.0"],["Total Retail","$","1,194.1","","","$","1,051.8","","","13.5","","","9.6","","","30.5","","","26.9"],["Total net sales","$","3,905.2","","","$","3,902.3","","","0.1","","","(1.8)","","","100.0","","","100.0"]]
[[/GREPCENT_TABLE]]

(1) The Company calculates constant currency (CC) by translating the prior-year period results at the current year exchange rate.

Net sales increased $2.9, or 0.1 percent, including a net favorable currency impact of $74.0 primarily related to the euro, resulting in a constant currency decrease of $71.1, $59.8 of which is attributable to divested businesses.

Segments

•Eurasia Banking net sales decreased $77.3, including a net favorable currency impact of $38.4 related primarily to the euro and divestitures of $44.8. Excluding the impact of currency and divestitures, net sales decreased $70.9 driven by unplanned reductions in installation activity, including delays resulting from global supply chain disruptions, non-recurrence of prior-year refresh projects and the Company's initiative to reduce low margin services contracts.

•Americas Banking net sales decreased $62.1, including a net unfavorable currency impact of $1.9 primarily related to the Brazilian real and divestitures of $9.6. Excluding currency and divestitures, net sales decreased $50.6 mostly from the postponement of installation activity into 2022 due to supply chain challenges. Also contributing to the reduction in revenue were large non-recurring 2020 product refresh projects in Canada, Mexico and on U.S. national accounts.

•Retail net sales increased $142.3, including a net favorable currency impact of $37.5 mostly related to the euro and offset by divestitures of $5.4. Excluding currency and divestitures, net sales increased $110.2 primarily from POS and SCO roll-outs in Europe and related software and professional services.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Gross Profit and Gross Margin

The following table represents information regarding our gross profit and gross margin for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020","","$ Change","","% Change"],["Gross profit - services","$","726.3","","","$","698.2","","","$","28.1","","","4.0"],["Gross profit - products","317.1","","","336.8","","","(19.7)","","","(5.8)"],["Total gross profit","$","1,043.4","","","$","1,035.0","","","$","8.4","","","0.8"],["Gross margin - services","31.5","%","","29.5","%"],["Gross margin - products","19.8","%","","21.9","%"],["Total gross margin","26.7","%","","26.5","%"]]
[[/GREPCENT_TABLE]]

Services gross margin increased 200 basis points, or 100 basis points after excluding the impacts of non-routine and restructuring charges, which were $25.5 higher in the prior year, primarily as a result of 2020 being the final year of amortization from certain intangible assets established in purchase accounting of $7.5 and a non-recurring $25.5 prior year loss contract provision related to discontinuance of a service support platform. Excluding the impact of non-routine and restructuring expense, services gross margin increased 100 basis points due in part to sustainable savings brought about by the Company’s service modernization plan as well as exiting low margin maintenance contracts, and efficiency improvements from Software Excellence initiatives across all three segments.

Product gross margin decreased 210 basis points, or 300 basis points after excluding a $13.5 year-over-year reduction in non-routine and restructuring charges. Excluding the impact of non-routine and restructuring expense, product gross margin decreased 300 basis points due to higher logistics costs and raw material price inflation.

Operating Expenses

The following table represents information regarding our operating expenses for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020","","$ Change","","% Change"],["Selling and administrative expense","$","775.6","","","$","858.6","","","$","(83.0)","","","(9.7)"],["Research, development and engineering expense","126.3","","","133.4","","","(7.1)","","","(5.3)"],["Loss (gain) on sale of assets, net","3.1","","","11.5","","","(8.4)","","","(73.0)"],["Impairment of assets","1.3","","","7.5","","","(6.2)","","","(82.7)"],["Total operating expenses","$","906.3","","","$","1,011.0","","","$","(104.7)","","","(10.4)"]]
[[/GREPCENT_TABLE]]

Selling and administrative expense decreased $83.0, or $8.3 excluding the impact of $74.7 of reduced non-routine and restructuring expenses. Non-routine and restructuring expenses decreased year-over-year due to the the DN Now transformation activities lessening in 2021 as the program reached its conclusion in the fourth quarter of 2021. The $8.3 reduction in selling and administrative expense, excluding the impact of non-routine and restructuring expenses, is the result of reduced incentive compensation.

Research, development and engineering expense decreased $7.1. Excluding the impact of non-recurring restructuring charges of $6.4 and non-recurring non-routine charges of $0.9, research, development and engineering expense remained flat year-over-year.

Net loss on sales of assets for 2021 was $3.1, primarily from the divestiture of the non-core German IT business. In 2020, the Company recorded a net loss on sale of assets of $11.5, primarily related to the divestitures of certain non-core operations in China, Brazil and Denmark, partially offset by a gain on sale of assets related primarily to the sale of Portavis GmbH, a retail business in Italy, and the Company's former headquarters building.

The Company recorded impairment charges of $1.3 in 2021 and $7.5 in 2020, which primarily relate to assets from non-core business being transferred to assets held for sale. The volume decreased in 2021 as the Company is reaching the completion of its initiative to divest non-core business interests.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Operating Profit (Loss)

The following table represents information regarding our operating profit (loss) for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020","","$ Change","","% Change"],["Operating profit (loss)","$","137.1","","","$","24.0","","","$","113.1","","","471.3"],["Operating margin","3.5","%","","0.6","%"]]
[[/GREPCENT_TABLE]]

Operating profit increased $113.1 compared to the prior year, which is almost entirely due to savings from reduced non-routine and restructuring charges related to the DN Now transformation, which lowered selling and administrative and research, development and engineering expenses. These charges lessened in 2021 as the Company began the transformation in the middle of 2018, reached its peak during 2019 and 2020, with the conclusion in the fourth quarter of 2021.

Other Income (Expense)

The following table represents information regarding our other income (expense) for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020","","$ Change","","% Change"],["Interest income","$","6.1","","","$","6.8","","","$","(0.7)","","","(10.3)"],["Interest expense","(195.3)","","","(292.7)","","","97.4","","","33.3"],["Foreign exchange loss, net","(2.0)","","","(14.4)","","","12.4","","","86.1"],["Miscellaneous, net","3.4","","","6.8","","","(3.4)","","","50.0"],["Other income (expense)","$","(187.8)","","","$","(293.5)","","","$","105.7","","","36.0"]]
[[/GREPCENT_TABLE]]

Other income (expense) improved by $105.7, which is attributable to reductions in interest expense and foreign exchange loss. Interest expense decreased $97.4 due to nonrecurrence of a July 2020 make-whole premium and write-off of deferred debt issuance costs as a result of the repayment of a portion of the amounts outstanding under the Company's previous revolving and term loan credit agreement, with incremental savings from the pay down of debt and reduced interest rates. Foreign exchange loss, net, decreased $12.4 with no significant losses incurred in 2021.

Net Loss

The following table represents information regarding our income (loss), net of tax, for the years ended December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020","","$ Change","","% Change"],["Net loss","$","(78.1)","","","$","(267.8)","","","$","189.7","","","70.8"],["Percent of net sales","(2.0)","%","","(6.9)","%"],["Effective tax rate","(54.6)","%","","0.4","%"]]
[[/GREPCENT_TABLE]]

Net loss saw an improvement of $189.7 primarily due to the reduction of loss before taxes resulting from the increase in operating profit and decrease in interest expense described above. The effective tax rate for 2021 was (54.6) percent. Tax expense items contributing to the 2021 and 2020 differences between the U.S. federal income tax rate included valuation allowances related to certain foreign and U.S. tax attributes for which realization does not meet the more likely than not criteria, U.S. tax on foreign income, withholding taxes, non-deductible expenses and other items. These items were partially offset by benefits related to settling certain open tax years in Germany and the U.S. and other changes to uncertain tax position accruals, non-taxable incentives, and other items.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Segment Operating Profit Summary

The following tables represent information regarding the Company's operating profit by reporting segment. On a consolidated basis, and as shown in Note 22, segment operating profit decreased $41.3 in 2021 from the prior year, despite the $113.1 improvement to operating profit as presented on the consolidated statement of operations. The improvement in operating profit is primarily driven by a $82.9 reduction of DN Now restructuring and transformation expense and a $46.7 reduction in non-routine expenses, neither of which impact the segment results presented below.

[[GREPCENT_TABLE]]
[["Eurasia Banking:","2021","","2020","","$ Change","","% Change"],["Net sales","$","1,353.8","","","$","1,431.1","","","$","(77.3)","","","(5.4)"],["Segment operating profit","$","110.4","","","$","160.5","","","$","(50.1)","","","(31.2)"],["Segment operating profit margin","8.2","%","","11.2","%"]]
[[/GREPCENT_TABLE]]

Segment operating profit decreased $50.1 in 2021 compared to the prior year, due primarily to reductions in segment gross profit resulting from freight charges and inflationary pressures. Also contributing to the year-over-year decline are incremental spending in human resources and information technology, as well as the non-recurrence of one-time 2020 cost savings related to the COVID-19 pandemic.

Segment operating profit margin decreased 300 basis points mostly from the higher operating expense noted above.

[[GREPCENT_TABLE]]
[["Americas Banking:","2021","","2020","","$ Change","","% Change"],["Net sales","$","1,357.3","","","$","1,419.4","","","$","(62.1)","","","(4.4)"],["Segment operating profit","$","146.4","","","$","184.9","","","$","(38.5)","","","(20.8)"],["Segment operating profit margin","10.8","%","","13.0","%"]]
[[/GREPCENT_TABLE]]

Segment operating profit and segment operating profit margin decreased $38.5 and 220 basis points, respectively, which is entirely attributable to the reduction in gross profit resulting from decreased sales, and lower gross margin percentages as a result of increases in logistics costs as well as inflation of raw material pricing.

[[GREPCENT_TABLE]]
[["Retail:","2021","","2020","","$ Change","","% Change"],["Net sales","$","1,194.1","","","$","1,051.8","","","$","142.3","","","13.5"],["Segment operating profit","$","114.3","","","$","67.0","","","$","47.3","","","70.6"],["Segment operating profit margin","9.6","%","","6.4","%"]]
[[/GREPCENT_TABLE]]

Segment operating profit and segment operating profit margin increased $47.3 and 320 basis points, respectively, which is entirely attributable to the increase in gross profit resulting from higher sales of POS and SCO product and related professional services, which are high-margin offerings and drive an improvement in year-over-year solution mix.

LIQUIDITY AND CAPITAL RESOURCES

Capital resources are obtained from income retained in the business, borrowings under the Company’s senior notes, committed and uncommitted credit facilities and operating and capital leasing arrangements. Management expects that the Company’s capital resources will be sufficient to finance planned working capital needs, R&D activities, investments in facilities or equipment and required pension contributions for at least the next 12 months and for the foreseeable future thereafter. The Company had no restricted cash at December 31, 2021 and December 31, 2020. The Company has made acquisitions in the past and may make acquisitions in the future. Part of the Company's strategy is to optimize the business portfolio through divestitures and complementary acquisitions. The Company intends to finance any future acquisitions with cash and short-term investments, cash provided from operations, borrowings under available credit facilities, proceeds from debt or equity offerings and/or the issuance of common shares.

The Company's total cash and cash availability as of December 31, 2021 and 2020 was as follows:

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

[[GREPCENT_TABLE]]
[["","2021","","2020"],["Cash and cash equivalents","$","388.9","","","$","324.5"],["Additional cash availability from:"],["Uncommitted lines of credit","27.5","","","41.1"],["Revolving credit facility","284.0","","","283.1"],["Short-term investments","34.3","","","37.2"],["Total cash and cash availability","$","734.7","","","$","685.9"]]
[[/GREPCENT_TABLE]]

The following table summarizes the results, excluding the impact of cash in businesses held for sale, of our consolidated statement of cash flows for the years ended December 31:

[[GREPCENT_TABLE]]
[["Net cash flow provided (used) by:","2021","","2020","","2019"],["Operating activities","$","123.3","","","$","18.0","","","$","135.8"],["Investing activities","(49.2)","","","(82.6)","","","(6.8)"],["Financing activities","(3.6)","","","16.9","","","(215.5)"],["Effect of exchange rate changes on cash, cash equivalents and restricted cash","(5.7)","","","(3.2)","","","(1.1)"],["Net decrease in cash, cash equivalents and restricted cash","$","64.8","","","$","(50.9)","","","$","(87.6)"]]
[[/GREPCENT_TABLE]]

Operating Activities. Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments impact reported cash flows. Net cash provided by operating activities was $123.3 for the year ended December 31, 2021, compared to $18.0 net cash provided by operating activities for the year ended December 31, 2020.

•Cash flows from operating activities during the year ended December 31, 2021 compared to the year ended December 31, 2020 were favorably impacted by a $189.7 reduction in net loss. Refer to "Results of Operations" discussed above for further discussion of the Company's net loss.

•The net aggregate of inventories and accounts payable was an increase in operating cash flow of $156.6 during the year ended December 31, 2021, compared to a reduction in operating cash flow of $(4.2) during the year ended December 31, 2020. The $160.8 change is primarily a result of strict discipline surrounding days payable outstanding, partially offset by an increase in raw materials due to longer lead times resulting from supply chain delays.

•The net aggregate of trade receivables and deferred revenue was an increase in operating cash flow of $7.3 during the year ended December 31, 2021, compared to an increase in operating cash flow of $0.5 in the year ended December 31, 2020. The $6.8 net change is primarily due to improved collections in 2021.

•The net aggregate of income taxes and deferred income taxes was a decrease in operating cash flow of $17.9 of during the year ended December 31, 2021, compared to an decrease in operating cash flow of $50.2 during the year ended December 31, 2020. Refer to Note 4: Income Taxes for additional discussion on income taxes.

•Restructuring resulted in net cash use of $25.4 in 2021, compared to net cash proceeds of $18.0 in 2020. This is a result of restructuring provisions being recorded in the prior year due to the identification of additional redundant jobs, while in 2021 there was a reduction of new accruals and an increase in severance payments made.

•Non-cash adjustments to net income were less in 2021 compared to 2020. Depreciation expense decreased from $73.7 to $46.4 as a result of consecutive years of reduced capital expenditures. Amortization of deferred financing costs decreased from $45.4 to $17.3 as a result of the July 2020 refinancing event, which also included debt prepayment costs of $67.2.

Investing Activities. Net cash used by investing activities was $49.2 for the year ended December 31, 2021 compared to net cash used by investing activities of $82.6 for the year ended December 31, 2020. The most significant driver of the $33.4 reduction in cash usage was the 2020 usage of $37.0 in divestiture activity, compared to $1.1 proceeds from divestitures in 2021. Capital expenditures decreased from $27.5 in 2020 to $20.2 in 2021 as the Company has reduced its real estate footprint and focused its non-working capital investments into the implementation of cloud-based software solutions, which are reported in operating activities.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

The Company anticipates total capital expenditures and capitalized software development costs of approximately $55.0 in 2022 to be utilized for improvements to the Company's product line and investments in its infrastructure. Currently, the Company finances these investments primarily with funds provided by income retained in the business, borrowings under the Company's committed and uncommitted credit facilities, and operating and capital leasing arrangements. 

Financing Activities. Net cash used by financing activities was $3.6 for the year ended December 31, 2021 compared to net cash provided by financing activities of $16.9 for the year ended 2020, a change of $20.5. Refer to Note 11: Debt for details of the Company's cash flows related to debt borrowings and repayments, most notably those in connection with the July 2020 refinancing event.

Specifically, on July 20, 2020, the Company issued approximately $1,100.0 aggregate principal amount of senior secured notes consisting of $700 aggregate principal amount of Diebold Nixdorf, Incorporated’s 9.375 percent Senior Secured Notes due 2025 and €350.0 aggregate principal amount of 9.000 percent Senior Secured Notes due 2025 issued by its wholly-owned subsidiary, Diebold Nixdorf, Dutch Holding B.V. (collectively, the 2025 Senior Secured Notes) in private offerings exempt from registration under the Securities Act of 1933 (the Securities Act). The net proceeds from the offerings, along with cash on hand, was used to repay a portion of the amounts outstanding under the Credit Agreement, including all amounts outstanding under the Term Loan A Facility and Term Loan A-1 Facility and $193.8 of revolving credit loans, including all of the revolving credit loans due in December 2020, as well as all related fees and expenses. On July 20, 2020, the Company also amended the Credit Agreement to, among other things, extend the maturity of $330.0 of its revolving credit commitments and revolving credit loans from April 30, 2022 to July 20, 2023 (and, effective as of July 20, 2020, the Company terminated its other revolving credit commitments under the Revolving Facility other than approximately $39.0 of revolving credit commitments that still mature April 30, 2022). The Company’s current capital structure includes no significant maturities until 2023.

Refer to Note 11: Debt for additional information regarding the Company's debt obligations. The Company paid cash for interest related to its debt of $175.1 and $138.1 for the years ended December 31, 2021 and 2020, respectively. The increase is related to timing of payments and not reflective of a year-over-year increase in interest expense. As defined by the Company's Credit Agreement, the ratio of net debt to trailing 12 months adjusted EBITDA was 4.6 times as of December 31, 2021. As of December 31, 2021, the Company was in compliance with the financial and other covenants in its debt agreements.

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Contractual and Other Obligations. We have certain contractual obligations and commitments for general operating purposes. Refer to Note 11: Debt for scheduled maturities and interest rates of our long-term debt. Certain maturities are in the next three years, and as such, the Company is pursuing a significant refinancing of its borrowings, subject to certain limitations in its debt agreements and market conditions. The Company's leases support global staff via the use of office space, warehouses, vehicles and IT equipment and are discussed in additional detail within Note 16: Leases. Changes in our business needs, fluctuating interest rates, and other factors may result in actual payments differing from our estimates. We cannot provide certainty regarding the timing and amounts of these payments or our ability to refinance outstanding debt on favorable terms or at all. The Company’s material cash obligations include the following contractual and other obligations as of December 31, 2021:

[[GREPCENT_TABLE]]
[["","","","Payment due by period"],["","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["Short-term uncommitted lines of credit (1)","$","1.6","","","$","1.6","","","$","\u2014","","","$","\u2014","","","$","\u2014"],["Long-term debt","2,327.9","","","45.7","","","1,183.8","","","1,098.4","","","\u2014"],["Interest on debt (2)","485.3","","","159.7","","","274.9","","","50.7","","","\u2014"],["Minimum lease obligations","189.6","","","66.0","","","72.7","","","25.6","","","25.3"],["Purchase commitments","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Total","$","3,004.4","","","$","273.0","","","$","1,531.4","","","$","1,174.7","","","$","25.3"]]
[[/GREPCENT_TABLE]]

(1)The amount available under the short-term uncommitted lines at December 31, 2021 was $27.5. Refer to Note 11: Debt for additional information.

(2)Amounts represent estimated contractual interest payments on outstanding long-term debt and notes payable. Rates in effect as of December 31, 2021 are used for variable rate debt.

In addition to the general operating items above, the Company provides eligible employees with benefits pursuant to the pension and postretirement plans further described in Note 15: Benefit Plans. Future contributions and disbursements related to the plans are dependent upon a number of factors, including the funded status of the plans.

The Company expects to meet the material cash requirements for these obligations with cash from operations and borrowings under committed and uncommitted credit facilities as well as refinancings.

Off-Balance Sheet Arrangements. The Company enters into various arrangements not recognized in the consolidated balance sheets that have or could have an effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources. The principal off-balance sheet arrangements that the Company enters into are guarantees and sales of finance receivables. The Company provides its global operations guarantees and standby letters of credit through various financial institutions to suppliers, customers, regulatory agencies and insurance providers. If the Company is not able to comply with its contractual obligations, the suppliers, regulatory agencies and insurance providers may draw on the pertinent bank. The Company has sold finance receivables to financial institutions while continuing to service the receivables. The Company records these sales by removing finance receivables from the consolidated balance sheets and recording gains and losses in the consolidated statement of operations (refer to Note 7: Investments).

Supplemental Guarantor Financial Information. Diebold Nixdorf, Incorporated initially issued its 8.5 percent Senior Notes due 2024 (the 2024 Senior Notes) in an offering exempt from the registration requirements of the Securities Act, which were later exchanged in an exchange offer registered under the Securities Act. The 2024 Senior Notes are and will be guaranteed by certain of Diebold Nixdorf, Incorporated's existing and future subsidiaries which are listed on Exhibit 22.1 to this annual report on Form 10-K. The following presents the consolidating financial information separately for Diebold Nixdorf, Incorporated (the Parent Company), the issuer of the guaranteed obligations, and the guarantor subsidiaries, as specified in the indenture governing the Company's obligations under the 2024 Senior Notes, on a combined basis.

Each guarantor subsidiary is 100 percent owned by the Parent Company at the date of each balance sheet presented. The 2024 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain conditions. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent Company and the guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

The following tables present summarized financial information for the Parent Company and the guarantor subsidiaries on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the guarantor subsidiaries and (ii) equity in earnings from and investments in any non-guarantor subsidiary.

[[GREPCENT_TABLE]]
[["","","Summarized Balance Sheets"],["","","December 31, 2021","","December 31, 2020"],["Total current assets","","$","511.8","","","$","449.9"],["Total non-current assets","","$","2,032.2","","","$","1,504.6"],["Total current liabilities","","$","1,476.0","","","$","1,252.5"],["Total non-current liabilities","","$","1,970.9","","","$","2,084.3"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Summarized Statements of Operations"],["","","Year Ended"],["","","December 31, 2021","","December 31, 2020"],["Net sales","","$","1,038.3","","","$","1,097.4"],["Cost of sales","","767.3","","","784.3"],["Selling and administrative expense","","366.9","","","446.4"],["Research, development and engineering expense","","35.8","","","38.1"],["Impairment of assets","","\u2014","","","2.5"],["Loss (gain) on sale of assets, net","","(0.3)","","","(0.5)"],["Interest income","","1.0","","","1.1"],["Interest expense","","(139.7)","","","(267.8)"],["Foreign exchange (loss) gain, net","","8.3","","","(9.5)"],["Miscellaneous gain/(loss), net","","100.1","","","156.9"],["Loss from continuing operations before taxes","","$","(161.7)","","","$","(292.7)"],["Net (loss) income","","$","(78.8)","","","$","(269.1)"],["Net (loss) income attributable to Diebold Nixdorf, Incorporated","","$","(78.8)","","","$","(269.1)"]]
[[/GREPCENT_TABLE]]

As of December 31, 2021 and December 31, 2020, the Parent Company and the guarantor subsidiaries on a combined basis had the following balances with non-guarantor subsidiaries:

[[GREPCENT_TABLE]]
[["","","Summarized Balance Sheets"],["","","December 31, 2021","","December 31, 2020"],["Total current assets","","$","218.4","","","$","211.5"],["Total non-current assets","","$","622.9","","","$","867.5"]]
[[/GREPCENT_TABLE]]

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements. The consolidated financial statements of the Company are prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. Such estimates include revenue recognition, the valuation of trade and financing receivables, inventories, goodwill, intangible assets, other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, pension and post-retirement benefits and customer incentives, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. Management monitors the economic conditions and other factors and will adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

The Company’s significant accounting policies are described in Note 1: Summary of Significant Accounting Policies to the consolidated financial statements, which is contained in Item 8 of this annual report on Form 10-K. Management believes that,

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

of its significant accounting policies, its policies concerning revenue recognition, allowances for credit losses, inventory reserves, goodwill, long-lived assets, taxes on income, contingencies and pensions and post-retirement benefits are the most critical because they are affected significantly by judgments, assumptions and estimates. Additional information regarding these policies is included below.

Revenue Recognition. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The amount of consideration can vary depending on discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items contained in the contract with the customer of which generally these variable consideration components represents minimal amount of net sales. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

The Company's payment terms vary depending on the individual contracts and are generally fixed fee. The Company recognizes advance payments and billings in excess of revenue recognized as deferred revenue. In certain contracts where services are provided prior to billing, the Company recognizes a contract asset within trade receivables.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and that are collected by the Company from a customer are excluded from revenue.

The Company recognizes shipping and handling fees billed when products are shipped or delivered to a customer and includes such amounts in net sales. Although infrequent, shipping and handling associated with outbound freight after control over a product has transferred to a customer is not a separate performance obligation, rather is accounted for as a fulfillment cost. Third-party freight payments are recorded in cost of sales.

The Company includes a warranty in connection with certain contracts with customers, which are not considered to be separate performance obligations. The Company provides its customers a manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. For additional information on product warranty refer to Note 9: Product Warranties. The Company also has extended warranty and service contracts available for its customers, which are recognized as separate performance obligations. Revenue is recognized on these contracts ratably as the Company has a stand-ready obligation to provide services when or as needed by the customer. This input method is the most accurate assessment of progress toward completion the Company can apply.

Product revenue is recognized at the point in time that the customer obtains control of the product, which could be upon delivery or upon completion of installation services, depending on contract terms. The Company’s software licenses are functional in nature (the IP has significant stand-alone functionality); as such, the revenue recognition of distinct software license sales is at the point in time that the customer obtains control of the rights granted by the license.

Professional services integrate the commercial solution with the customer's existing infrastructure and helps define the optimal user experience, improve business processes, refine existing staffing models and deploy technology to meet branch and store automation objectives. Revenue from professional services are recognized over time, because the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are performed or when the Company’s performance creates an asset with no alternative use and the Company has an enforceable right to payment for performance completed to date. Generally revenue will be recognized using an input measure, typically costs incurred. The typical contract length for service is generally one year and is billed and paid in advance except for installations, among others.

Services may be sold separately or in bundled packages. For bundled packages, the Company accounts for individual services separately if they are distinct. A distinct service is separately identifiable from other items in the bundled package if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate services or distinct obligations in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the products or services. For items that are not sold separately, the Company estimates stand-alone selling prices using the cost plus expected margin approach. Revenue on service contracts is recognized ratably over time, generally using an input measure, as the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are performed. In some circumstances, when global service supply chain services are not included in a term contract and rather billed as they occur, revenue on these billed work services are recognized at a point in time as transfer of control occurs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

The following is a description of principal solutions offered within the Company's two main customer segments that generate the Company's revenue.

Banking

Products. Products for banking customers consist of cash recyclers and dispensers, intelligent deposit terminals, teller automation tools and kiosk technologies, as well as physical security solutions. The Company provides its banking customers front-end applications for consumer connection points and back-end platforms that manage channel transactions, operations and integration and facilitate omnichannel transactions, endpoint monitoring, remote asset management, customer marketing, merchandise management and analytics. These offerings include highly configurable, API enabled software that automates legacy banking transactions across channels.

Services. The Company provides its banking customers product-related services which include proactive monitoring and rapid resolution of incidents through remote service capabilities or an on-site visit. First and second line maintenance, preventive maintenance and on-demand services keep the distributed assets of the Company's customers up and running through a standardized incident management process. Managed services and outsourcing consists of the end-to-end business processes, solution management, upgrades and transaction processing. The Company also provides a full array of cash management services, which optimizes the availability and cost of physical currency across the enterprise through efficient forecasting, inventory and replenishment processes.

Retail

Products. The retail product portfolio includes modular, integrated and mobile POS and SCO terminals that meet evolving automation and omnichannel requirements of consumers. Supplementing the POS system is a broad range of peripherals, including printers, scales and mobile scanners, as well as the cash management portfolio which offers a wide range of banknote and coin processing systems. Also in the portfolio, the Company provides SCO terminals and ordering kiosks which facilitate an efficient and user-friendly purchasing experience. The Company’s hybrid product line can alternate from an attended operator to self-checkout with the press of a button as traffic conditions warrant throughout the business day.

The Company's platform software is installed within retail data centers to facilitate omnichannel transactions, endpoint monitoring, remote asset management, customer marketing, merchandise management and analytics.

Services. The Company provides its retail customers product-related services which include on-demand services and professional services. Diebold Nixdorf AllConnect Services for retailers include maintenance and availability services to continuously improve retail self-service fleet availability and performance. These include: total implementation services to support both current and new store concepts; managed mobility services to centralize asset management and ensure effective, tailored mobile capability; monitoring and advanced analytics providing operational insights to support new growth opportunities; and store life-cycle management to proactively monitors store IT endpoints and enable improved management of internal and external suppliers and delivery organizations.

Inventory Reserves. At each reporting period, the Company identifies and writes down its excess and obsolete inventories to net realizable value based on usage forecasts, order volume and inventory aging. With the development of new products, the Company also rationalizes its product offerings and will write-down discontinued product to the lower of cost or net realizable value.

Goodwill. Goodwill is the cost in excess of the net assets of acquired businesses (refer to Note 8: Goodwill and Intangible Assets). The Company tests all existing goodwill at least annually as of October 31 for impairment on a reporting unit basis using either a quantitative or qualitative approach. The annual goodwill impairment test was performed using a qualitative analysis in 2021 and a quantitative analysis in 2020 and 2019.

A qualitative analysis is performed by assessing recent trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform a quantitative analysis.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

In years in which quantitative analyses were performed, the fair value of the reporting units is determined based upon a combination of the income and market approaches, which are standard valuation methodologies. The income approach uses discounted estimated future cash flows, whereas the market approach or guideline public company method utilizes market data of similar publicly traded companies. The fair value of the reporting unit is defined as the price that would be received in a sale of the net assets in an orderly transaction between market participants at the assessment date. The Company compares the fair value of each reporting unit with its carrying value and would recognize an impairment charge if the amount carrying amount exceeds the reporting unit’s fair value.

The techniques used in the Company's quantitative assessments incorporate a number of assumptions that the Company believes to be reasonable and to reflect market conditions at the assessment date. Assumptions in estimating future cash flows are subject to a high degree of judgment. The Company makes all efforts to forecast future cash flows as accurately as possible with the information available at the time the forecast is made. To this end, the Company evaluates the appropriateness of its assumptions as well as its overall forecasts by comparing projected results of upcoming years with actual results of preceding years and validating that differences therein are reasonable. Key assumptions, which typically are Level 3 inputs, include discount rates, terminal growth rates, market multiple data from selected guideline public companies, management's internal forecasts which include numerous assumptions such as projected net sales, gross profit, sales mix, operating and capital expenditures, among others. A number of benchmarks from independent industry and other economic publications were also used. Changes in assumptions and estimates after the assessment date may lead to an outcome where impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions.

The Company tests for interim impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the carrying value of a reporting unit below its reported amount. In evaluating whether it is more likely than not the fair value of a reporting unit is less than its carrying amount, the Company considers the following events and circumstances, among others, if applicable: (a) macroeconomic conditions such as general economic conditions, limitations on accessing capital or other developments in equity and credit markets; (b) industry and market considerations such as competition, multiples or metrics and changes in the market for the Company's products and services or regulatory and political environments; (c) cost factors such as raw materials, labor or other costs; (d) overall financial performance such as cash flows, actual and planned revenue and earnings compared with actual and projected results of relevant prior periods; (e) other relevant events such as changes in key personnel, strategy or customers; (f) changes in the composition of a reporting unit's assets or expected sales of all or a portion of a reporting unit; and (g) any sustained decrease in share price. If the Company's qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative impairment test is used to identify potential goodwill impairment and measure the amount of any impairment loss to be recognized.

Taxes on Income. Deferred taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences, operating loss carry-forwards and tax credits. Deferred tax liabilities are recognized for taxable temporary differences and undistributed earnings in certain jurisdictions. Deferred tax assets are reduced by a valuation allowance when, based upon the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Determination of a valuation allowance involves estimates regarding the timing and amount of the reversal of taxable temporary differences, expected future taxable income and the impact of tax planning strategies. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company operates in numerous taxing jurisdictions and is subject to examination by various federal, state and foreign jurisdictions for various tax periods. Additionally, the Company has retained tax liabilities and the rights to tax refunds in connection with various acquisitions and divestitures of businesses. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which the Company does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws between those jurisdictions, as well as the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities may differ from actual payments or assessments.

The Company assesses its position with regard to tax exposures and records liabilities for these uncertain tax positions and any related interest and penalties, when the tax benefit is not more likely than not realizable. The Company has recorded an accrual that reflects the recognition and measurement process for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. Additional future income tax expense or benefit may be recognized once the positions are effectively settled.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

At the end of each interim reporting period, the Company estimates the effective tax rate expected to apply to the full fiscal year. The estimated effective tax rate contemplates the expected jurisdiction where income is earned, as well as tax planning alternatives. Current and projected growth in income in higher tax jurisdictions may result in an increasing effective tax rate over time. If the actual results differ from estimates, the Company may adjust the effective tax rate in the interim period if such determination is made.

Contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. There is no liability recorded for matters in which the liability is not probable and reasonably estimable. Attorneys in the Company's legal department monitor and manage all claims filed against the Company and review all pending investigations. Generally, the estimate of probable loss related to these matters is developed in consultation with internal and outside legal counsel representing the Company. These estimates are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. The Company attempts to resolve these matters through settlements, mediation and arbitration proceedings when possible. If the actual settlement costs, final judgments, or fines, after appeals, differ from the estimates, the future results may be materially impacted. Adjustments to the initial estimates are recorded when a change in the estimate is identified.

Pensions and Other Post-retirement Benefits. Annual net periodic expense and benefit liabilities under the Company’s defined benefit plans are determined on an actuarial basis. Assumptions used in the actuarial calculations have a significant impact on plan obligations and expense. The Company periodically reviews the actual experience compared with the more significant assumptions used and make adjustments to the assumptions, if warranted. The discount rate is determined by analyzing the average return of high-quality (i.e., AA-rated), fixed-income investments and the year-over-year comparison of certain widely used benchmark indices as of the measurement date. The expected long-term rate of return on plan assets is determined using the plans’ current asset allocation and their expected long term rates of return. The rate of compensation increase assumptions reflects the Company’s long-term actual experience and future and near-term outlook. Pension benefits are funded through deposits with trustees. Other post-retirement benefits are not funded and the Company’s policy is to pay these benefits as they become due.

The following table represents assumed healthcare cost trend rates at December 31:

[[GREPCENT_TABLE]]
[["","2021","","2020"],["Healthcare cost trend rate assumed for next year","5.6","%","","6.3","%"],["Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)","4.0","%","","5.0","%"],["Year that rate reaches ultimate trend rate","2045","","2025"]]
[[/GREPCENT_TABLE]]

RECENTLY ISSUED ACCOUNTING GUIDANCE

Refer to Note 1: Summary of Significant Accounting Policies to the consolidated financial statements for information on recently issued accounting guidance.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS as of DECEMBER 31, 2021

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

FORWARD-LOOKING STATEMENT DISCLOSURE

In this annual report on Form 10-K, statements that are not reported financial results or other historical information are “forward-looking statements.” Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. These forward-looking statements include, but are not limited to, statements regarding the Company's expected future performance (including expected results of operations and financial guidance), future financial condition, future operating results, strategy and plans. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “will,” “believes,” “estimates,” “potential,” “target,” “predict,” “project,” “seek,” and variations thereof or similar expressions. These statements are used to identify forward-looking statements. These forward-looking statements reflect the current views of the Company with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.

Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, the economy, its knowledge of its business, and key performance indicators that impact the Company, these forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in or implied by the forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to:

•the overall impact of global supply chain complexities on the Company and its business, including delays in sourcing key components as well as longer transport times, especially for container ships and U.S. trucking, given the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;

•the ultimate impact of the ongoing COVID-19 pandemic, including further adverse effects to the Company’s supply chain, maintenance of increased order backlog, and the effects of any COVID-19 pandemic-related cancellations;

•the Company's ability to continue to sustain benefits from its cost-reduction initiatives and to achieve benefits from its growth and other strategic initiatives;

•the success of the Company’s new products, including its DN Series line, EASY family of retail checkout solutions, and EV charging service business;

•the impact of a cybersecurity breach or operational failure on the Company's business;

•the Company's ability to generate sufficient cash to service its debt, to comply with the covenants contained in the agreements governing its debt, or to refinance its existing indebtedness;

•the Company’s ability to attract, retain and motivate key employees;

•the Company’s reliance on suppliers, subcontractors and availability of raw materials and other components;

•the outcome of the appraisal proceedings initiated in connection with the implementation of the DPLTA with the former Diebold Nixdorf AG and the merger/squeeze-out;

•changes in the Company's intention to further repatriate cash and cash equivalents and short-term investments residing in international tax jurisdictions, which could negatively impact foreign and domestic taxes;

•the Company's ability to successfully manage acquisitions, divestitures, and alliances;

•the impact of market and economic conditions, including the proliferation of cash and any deterioration or disruption in the financial and service markets, including the bankruptcies, restructurings or consolidations of financial institutions, which could reduce our customer base and/or adversely affect our customers' ability to make capital expenditures, as well as adversely impact the availability and cost of credit;

•competitive pressures, including pricing pressures and technological developments;

•changes in political, economic or other factors such as currency exchange rates, inflation rates (including the impact of possible currency devaluations in countries experiencing high inflation rates), recessionary or expansive trends, taxes and regulations and laws affecting the worldwide business in each of the Company's operations;

•the Company's ability to maintain effective internal controls;

•unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments; and

•the effect of changes in law and regulations or the manner of enforcement in in the U.S. and internationally and the Company’s ability to comply with government regulations.

Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

36

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