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Diebold stock rises as ATM maker sticks with turnaround plan

By Jim Mackinnon
Beacon Journal business writer

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It probably wasn’t what Diebold Inc. reported in the way of fourth-quarter and full-year losses that sent shares soaring on Thursday.

Instead, it looks like what Diebold executives say the Green company is doing — and will do — to turn itself around that made the stock price jump more than 9 percent.

The financially struggling maker of ATMs and security systems remains in the initial “crawl” stage of its business turnaround plan, Andy Mattes, chief executive officer, told industry analysts Thursday. Business has been stabilized, he said.

“Our ongoing business improvement and cost-reduction efforts continued to build momentum in the quarter,” Mattes said. “The progress we’ve made so far is encouraging. However, we still have a lot of heavy lifting in front of us as we work through the ‘Crawl’ phase of our Crawl, Walk, Run approach to our turnaround efforts.”

Diebold reaffirmed its earnings outlook for 2014 and said its board of directors has decided to keep its $0.2875 quarterly dividend at its current level.

“We’re confident in our ability to generate the cash necessary to maintain a strong dividend while being in the midst of a major transformation effort,” Mattes said.

Diebold said it expects to earn between $1.25 and $1.55 a share this year, with adjusted earnings of $1.65 to $1.85 a share. Revenue is also expected to rise over 2013 levels.

Shares rose $3.14, or 9.4 percent, to $36.31. Shares are up 10 percent, including dividends, since Jan. 1 and are up 26.2 percent from a year ago.

Diebold said it lost $41 million, or 65 cents per share, on revenue of $811.4 million for its fourth quarter. A year ago the company had a loss of $11.9 million, or 19 cents per share, on revenue of $840.1 million.

When one-time expenses are factored in, Diebold had adjusted earnings of 57 cents per share for the fourth quarter compared to 43 cents a quarter a year ago.

For the year, Diebold said it lost $181.6 million, or $2.85 per share, on revenue of $2.86 billion. It recorded a profit of $73.6 million, or $1.17 a share, on revenue of nearly $3 billion for fiscal 2012. More than half of the company’s revenue last year came from outside the United States, Diebold said.

North American product and service orders rose 7 percent in the quarter compared to a year ago.

Diebold said it had $60 million in savings last year as part of a $150 million savings program that will continue over the next two years.

The company has identified several strong candidates for chief financial officer, Mattes said.

“We got our transformation efforts off to a good start in the second half of 2013 and delivered on the expectations that we set,” Mattes said.

Mattes was hired as CEO last year, replacing longtime chief executive Thomas Swidarski, who was fired in January 2012.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.


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