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Diebold releases third quarter 2011 financial results

October 26, 2011

Diebold Incorporated today reported third quarter 2011 net income from continuing operations attributable to Diebold of $41.8 million, or $0.65 per share, down from $44.1 million and $0.66 per share, respectively, from the third quarter 2010. Third-quarter 2011 revenue was $709.3 million, down 5.2 percent from the third quarter 2010.

Non-GAAP earnings per share from continuing operations attributable to Diebold, net of tax, in the third quarter 2011 were $0.69 per share, down from $0.73 per share in the third quarter 2010.

"Once again we delivered sound performance during the third quarter, showing significant year-over-year improvement in profit margins -- particularly in our services business. And we are delivering on our commitment to generate the majority of our earnings in the back half of the year," said Thomas W. Swidarski, Diebold president and chief executive officer. "We continue to focus on more profitable business opportunities globally, while effectively driving improvements in our operations and reducing our cost structure. As a result, we are raising our previous earnings guidance range for 2011."

Total global product and services orders decreased 3 percent compared with the prior-year period. Excluding Brazil election systems and lottery, total global orders were essentially flat. North America orders benefitted from strong financial self-service growth, led by significant growth in the U.S. regional bank space.

"North America continues to perform very well, with high demand for our financial self-service solutions," Swidarski said. "In fact, U.S. regional bank product orders once again increased well in excess of 100 percent - and the expected revenue is beginning to materialize as we approach the end of the year. While we also saw substantial revenue growth in Asia during the quarter, overall revenue was negatively impacted by a significant decrease in the cyclical Brazil voting business as well as declines in our overall security business."

Asia Pacific orders decreased 9 percent mainly due to the timing of orders in China. Orders decreased 31 percent within EMEA, primarily as the result of a large order in Turkey in the prior-year period, which created a difficult comparison. Excluding Brazil election systems and lottery, Latin America orders were essentially flat. Security orders declined as the U.S. bank branch business continues to be challenged.

Total revenue for the third quarter 2011 was down 5.2 percent compared to the third quarter 2010, including a net positive currency impact of approximately 3 percent. Growth in North America and Asia Pacific was more than offset by revenue declines in EMEA and in Latin America, where Brazil realized $36.4 million less election systems revenue in the third quarter of 2011, compared with the third quarter 2010.

Total gross margin for the third quarter 2011 was 27.4 percent, an increase of 1.5 percentage points from the third quarter of 2010, due to more favorable customer and geographic mix.

Total operating expenses as a percentage of revenue for the third quarter 2011 were 19.7 percent, an increase of 0.8 percentage points from the third quarter of 2010. This increase is a result of lower revenue during the third quarter 2011, as operating expense decreased $1.5 million during the period.

"Looking at the remainder of 2011, we are revising our revenue outlook to reflect lower financial self-service revenue expectations in Europe and Brazil largely due to the recent strengthening of the dollar. With so many financial institutions facing a changing economic and regulatory environment, I remain extremely confident in our ability to provide leading-edge technology, software and expanded services that our customers are demanding to help measurably improve their business," Swidarski said.

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