President, Chief Executive Officer & Director, DIEBOLD NIXDORF INC
Diebold Nixdorf CEO: Banking On Tech | Mad Money | CNBC
With the announcement of Amazon's new shopping experience that lets customers shop without waiting in the checkout line, Jim ...
About Octavio Marquez
In a September 2017 interview on CNBC's *Mad Money*, Octavio Marquez discussed the state of Diebold Nixdorf following its acquisition of Wincor Nixdorf, which he described as "the biggest transformational deal" in the company's history. Marquez stated that the company's first priority was paying down debt, noting that leverage had moved from nearly four times to closer to three times after paying down $200 million. He identified four industry drivers—digitalization, individualization, automation, and miniaturization—and said the company plays on all of them. Marquez also addressed competition in retail technology, acknowledging Amazon as "the 800-pound gorilla" but asserting that Diebold Nixdorf is "right there with them," showcasing technology for phone-based checkout and optimized shopping lists. He described the company's role in "the store of the future" as managing everything with a plug, including electronic self-checkout and customer recognition. On labor trends, Marquez said the goal is to transition employees from repetitive tasks to consulting and advisory roles. He also noted that Diebold Nixdorf is the market leader in the Americas and most European countries, and that the company is re-entering the Chinese market through local joint ventures.
Transcript (18 segments)
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Interviewer0:05
What are the banks do when they suddenly start making a lot more money? It's an important question, because higher interest rates, like we're almost certain to get from the Fed tomorrow, a lot of financials to make a lot more money off your deposits, among other things. I bet the banks use some of that money to upgrade their technology: buying new ATMs, improve security systems and better software, and wonder fend off the competition. If that's the case, then this is a good time to check in with Diebold Nixdorf, simple DVD, the largest manufacturer and servicer of automatic teller machines in the U.S. and many other countries, with a substantial physical security business and a new business selling software to banks and, more important, perhaps retailers, courtesy of their acquisition of Wind Core Nixdorf, which closed over the summer. But while the bank stocks have been growing higher, Diebold Nixdorf is still down nearly 20 percent year-to-date. I'm gonna cut and reported a month ago he gave pretty conservative guidance. Still, this is a company has been trying to turn itself around. They've been cutting costs aggressively, and some of the largest customers are about to get a major boost. So is this a stock worth buying right here? Let's check it check in with any matters. He's to see you of Diebold Nixdorf, get a better sense of how his company's doing, where it's headed. Mr. Mathers, welcome back to Man Money. Good to see you, sir. Have a seat.
Okay, I don't know where to begin, because I like so much what you're talking about with the backlog retailing. But first I just want you to tell our viewers that it's been a little bit rocky since the merger. You did say orders disappointed in North America in the product reset, but that now seems behind you. How are things going right now?
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Octavio Marquez1:27
Things are going well. Okay, we just did the biggest transformational deal in the 150, 170-year history of our company. We've acquired a company pretty much the same size of ours. We've increased our TAM, our total addressable market, by 50 percent, and we merged two big organizations. So to be sure, Q3 was a little on the lighter side, and as much as you prepare for it, people do want to know who they're working for. Customers want to get every reinsured. But after we're through with that, everybody is lined up. The teams are working. I've talked to 150 customers personally in the last weeks, and there's a lot of excitement out there in the market, and there's a lot of momentum building in the company.
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Interviewer2:10
Last night there was a very important reorganization. It's a very big back, and I know that you have European banks you say are key drivers, and this is the beginning of the recapitalization. These banks are getting much more liquid. Well, that'd be good for Diebold next door.
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Octavio Marquez2:22
That's a very good thing for us. If you take a look at our industry, there's four main drivers in the industry: its digitalization, its individualization, targeting a market of one, it is automation, and its miniaturization, and we play on all four of those trends. And different theaters of operation have different drivers. Europe is a great automation driver at the moment.
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Interviewer2:47
Well, talk to me about this Pepco, the omni-channel Eastern European retail team. That seems like it's the store of the future to some degree.
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Octavio Marquez2:55
It's the complete total store management. We do everything for the store, everything that basically has a plug, it's being managed by Diebold Nixdorf. We do the electronic self-checkout. We do the recognition when you walk into the store. It's a great opportunity to do tomorrow's shopping, and you can experience it, and we provide the service around it.
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Interviewer3:15
No, I mean Amazon's coming out saying that they're gonna do something like that. Will you bring your cell phone, you don't have to have a checker. You're already there.
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Octavio Marquez3:20
We're already there. We actually showcased that at Money 2020 in Vegas a few weeks ago. Not only can you check out through your phone, you can actually do your shopping list on your cell phone, go into the store, and the store will rearrange your shopping list to minimize the walkways that you have to do in a store so you can optimize your shopping. So you will be a competitor. Amazon's retail is the next innovation market. It's a big driver. And Amazon is clearly the 800-pound gorilla, but we're there right there with them. And as they talk about delivering groceries right to the end-user, they're actually setting up kind of like the digital refrigerator boxes, and that's another opportunity for us to provide automation to the industry.
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Interviewer4:12
Okay, now there were people who did like it for the dividend, and you had to change. Because you've changed your balance sheet, you've got a little more debt on it. Well, the less debt than I thought you would at this point, but will you start building back a dividend? You know, right now, or is it better just considered a growth stock that is reorders really just about trying to give you capital and not necessarily the income participation?
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Octavio Marquez4:33
Well, we had to do the prudent thing. We levered the company up nearly four times when we announced the deal. We're actually currently closer to three than to four. We already paid down $200 million of debt. But our first priority is to pay down that and be sustainably below 3x leverage of net debt to EBITDA. After that, we have all the options on cash users going forward.
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Interviewer4:56
Um, the competition, NCR. Some people feel was able to take advantage of a glitch that you guys had just in terms of your of the combination. Are you taking back share from NCR? That's share that has been lost.
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Octavio Marquez5:09
If you take a look at the global market shares, there's been very little movement between the two. Okay, we're the market leader in the Americas. We're head-to-head with NCR in Europe. In most countries, we're actually number one. And we're both fighting in Asia against the local Asian competition.
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Interviewer5:25
Okay. China headwinds, where we now get a little better or is it just a tough moment?
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Octavio Marquez5:29
It's a very tough moment, but we're the only Western player that actually did local joint ventures, so we're back at the starting line to re-enter the market and have a shot at what still is the biggest growth market in our industry.
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Interviewer5:41
Okay. Things that you mentioned, the store of the future. What is what you're thinking about automation versus people? You know, we've got this new president coming in and we're talking about saving jobs, but in a lot of ways, when I think about that store of the future, that doesn't need as many employees.
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Octavio Marquez5:57
Well, the whole trend is that you use the human element for what it's meant for, which is consulting advice services, not repetitive administrative tasks. There's roughly three and a half million cashiers in this country. Three and a half million. Just imagine the stores had three and a half million advisors. How much their revenue would grow. And we help them to transition people from repetitive tasks into providing services to end consumers.
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Interviewer6:25
Excellent. Well, I'm glad you came. I know that it the stock has been down, but it does sound like that you've got a 2017 roadmap that is pretty darn strong. That's a matter. She's president CEO of the new Diebold Nixdorf. This is that combination of two companies have now come together for what I think could be a very good 2017. Yeah, bunnies back here. Feel great. Oh yeah. Jim Cramer here from there buddy. Thanks for watching. See me on YouTube. Click here to subscribe and get the jump with my exclusives with CEOs, plus market news, investing advice, and a whole lot more.