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DIEBOLD NIXDORF (NYSE:DBD)
Q1 2021 Earnings Call
May 10, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Diebold Nixdorf, Inc. First Quarter 2021 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Steve Virostek, Head of Investor Relations. Please go ahead.

Steve Virostek -- Vice President, Investor Relations

Thank you, Whitney, and welcome everyone to Diebold Nixdorf's first quarter earnings call for 2021. Joining me on today's call are Gerrard Schmid, President and Chief Executive Officer; and Jeff Rutherford, Chief Financial Officer. To accompany our prepared remarks, we have uploaded slides to the Investor Relations page on dieboldnixdorf.com. Our remarks are being recorded today, and we will post a replay of this webcast on the IR website -- on the website later this afternoon.

Slide 2 contains a reminder that today's comments will include non-GAAP financial information, which we believe is helpful in assessing the company's performance. Reconciliation schedules for each non-GAAP metric can be located in the supplemental slides, as well as the tables of today's earnings release. On Slide 3, I will remind all participants that certain comments made today will be forward-looking and that there are a number of risk factors, which could cause actual results to differ materially from these statements. Additional information on these factors can be found in the company's SEC filings. Participants should be mindful that our forward-looking information is current as of today and subsequent events may render this information to be outdated.

And, now, I will hand the communications to Gerrard. Thank you, Steve, and good morning, everyone. I'm pleased to join you today to discuss the transformation of our business model, our competitive differentiation and our solid start to 2021. I'll begin on Slide 3 by recapping our investment thesis and our key financial metrics for 2021, which we are reaffirming today. We are continuing to make solid progress in transforming our business model to generate strong returns on invested capital, significant free cash flow growth, and leverage our competitive differentiation to grow the top line. In the first quarter, we delivered 4% revenue growth underpinned by market share gains in ATMs and self-checkout solutions. I'll provide additional color about key market trends in just a minute, but I'll simply say that our growth in Q1 gives us the confidence to reiterate our 2021 revenue outlook of $4 billion to $4.1 billion. Our return on invested capital continues to improve. To date, the main contributor has been our DN Now work streams, which includes services modernization, G&A efficiencies from enhancing our digital and cloud-enabled capabilities and selling a higher mix of self-checkout devices and DN Series ATMs. The company is off to a good start in Q1, and we're tracking to our previously disclosed plan of $160 million of gross savings this year. Transformation restructuring payments are also tracking to plan and our prior comments on this topic and we'll conclude this year. The combination of enhanced profitability and lower restructuring payments is driving a strong increase in free cash flow. Our outlook for 2021 is a range of $140 million to $170 million or approximately 30% of our adjusted EBITDA. The company's operating rigor is driving our transformation and value creation. While we have been tested during the global pandemic, we continue to demonstrate tremendous result with our ability to execute during this challenging time and we will continue to leverage this operating rigor going forward. Slide 4 summarizes how our competitive differentiation is playing out in the marketplace and in our first quarter results. Our retail business is benefiting from accelerating self-checkout demand, as well as mild growth in our point of sale business. These trends drove retail revenue growth of 11% in the quarter, excluding the impact of divestitures and currency. We expect growth will continue as retailers improve the end-to-end experience and reduce operating costs. We're growing faster than the market, because customers value our high degree of modularity, increased availability and our open architecture. During the quarter, we secured a multi-year agreement with the French retail group, Les Mousquetaires, to transform the checkout experience at nearly 2,000 stores with next generation point-of-sale and self-checkout products, our AllConnect Data Engine and dynamic self-service software. In the United States, we booked our initial order for DN Series EASY self-checkout units with a high profile convenience store retailer, operating in airports and other tourist destinations. Beyond the value of winning new self-checkout hardware deals, we're also benefiting from higher services attach rates that increase our recurring revenue. Moving now over to the banking business. We're seeing growing evidence of market share gains due to the advanced features and functionality of our next generation DN Series ATMs. In the United States, we're seeing gains among larger financial institutions, including an initial order to deliver DN Series cash recycling ATMs and maintenance services at a top 10 U.S. financial institution, which previously bought hardware from others. With this wining [Phonetic], we received DN Series orders from five of the top 10 U.S. banks and we see opportunities to add to our success. In Latin America, we're seeing DN Series orders from customers in Mexico, Colombia, Peru and Honduras, including a contract with Banco Nacional de Mexico, or Banamex, to deliver approximately 1,200 DN Series ATMs, Vynamic software licenses and maintenance services. A number of customers have indicated that DN Series is not only a hardware upgrade, there is a critical element for automating, digitizing and enhancing the self-service channels. For example, DN Series is facilitating higher service levels due to strong engineering and the AllConnect Data Engine, which leverages Internet of Things and machine learning to enable a data-driven service model. For legacy ATMs, we're seeing service cost reductions of approximately 20%. For customers that upgrading from legacy ATMs to DN Series, the potential performance improvements from ACDE can be even more significant. We increased the number of machines connected to ACDE by 10% sequentially during the first quarter. As we connect more devices to AllConnect Data Engine, we expect the operational efficiencies will add to our service margins and contribute to our target range of 32% to 33%. Additionally, DN Series also supports advanced, self-service capabilities through enhancements we're making to our dynamic offering. Our Video-as-a-Service offering is seeing solid demand. Furthermore, our software team has created a single stack environment to facilitate quicker implementations and more frequent updates of new capabilities such as cardless transactions, cash recycling and video teller access. We see opportunities to continue to grow our software business. And, as previously disclosed, we're making investments in our dynamic payment suites and are seeing heightened interest from early adopters for our cloud native solution, although the sales cycle is expected to be longer than our typical software sale. We're also hearing from more customers about their efficiency agendas and we're responding with pre-configured managed services, which support advanced capabilities and drive higher service levels. The number of managed services opportunities has increased in the past quarter across retail and banking customers. Beyond our growing pipeline, our managed services success in the quarter included a five-year contract to be the sole source supplier for maintenance, monitoring and help desk services for more than 4,000 self-service terminals and in a top five bank in the United Kingdom. Secondly, an extended managed services contract with increased scope at the largest private sector bank in India. And, thirdly, a three-year managed services contract extension covering more than 3,500 self-service terminals with HSBC, the largest bank in Hong Kong. Our financial results represent a very solid start to 2021. Adjusted EBITDA of $100 million was the highest first quarter in the company's history and while Jeff will discuss the details, I'm especially pleased that our operating profit growth of 25% and adjusted EBITDA growth of 12% significantly outpaced our top line growth of 4%. This demonstrates strong operating leverage in our business model. Next on the call, Jeff Rutherford, who will take you through a more detailed discussion of our financials and our financial outlook for 2021.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Thank you, Gerrard, and good morning, everyone. Our first quarter revenue growth and positive operating leverage demonstrates our transformed business model, which creating value for our stakeholders.

Slide 5 contains the first quarter P&L metrics for the past two years, providing a useful perspective of our transformed business model. Total first quarter revenue of $944 million reflects foreign currency benefits of $34 million versus the prior-year period, partially offset by $23 million headwind from divested businesses. Adjusted for foreign currency and divestitures, revenue increased 2.4% led by product growth of 11%, software growth of 7%, and a services decline of 4%.

We generated $273 million of non-GAAP gross profit in the quarter, an increase of $19 million or 7% versus the prior year period, reflecting higher revenue and improving margins from our DN Now achievements. Gross margin increased 110 basis points to 29%. We've expanded gross margins across all three segments, led by strong gains in software and services of approximately 590 basis points and 220 basis points, respectively. Product gross margins declined 200 basis points, due primarily to non-recurring benefits in the prior year period and a slightly less favorable customer mix.

Operating profit increased $16 million or 25% versus the prior quarter, while operating margins gained 150 basis points to 8.4%. SG&A expense was flat versus the prior year quarter, allowing the gross profit from incremental revenue to flow through to operating profit. R&D expense was $3 million higher year-over-year, due to planned growth investment. We delivered adjusted EBITDA of $100 million in the quarter, which increased $11 million or 12% over the prior year. Our adjusted EBITDA margin expanded 80 basis points year-over-year to 10.6%

The next three slides contain financial highlights for our segment. On Slide 6, Eurasia Banking revenue of $328 million, increased 5% versus the prior year period excluding the foreign currency benefit of $21 million and a $20 million impact from divestitures. Growth was driven by higher product volumes as the team converted our backlog, which has been building for several quarters.

Segment gross profit increased $7 million year-over-year with contributions from all three business lines. Foreign currency benefits of $8 million were partially offset by interim cost benefits from the prior year. Gross margin expanded 60 basis points year-over-year led by software and services improvements, while product margins declined due to a less favorable customer mix.

Moving to Slide 7, Americas Banking revenue of $312 million declined 7% versus the prior year, excluding a $6 million foreign currency headwind and a $2 million divestiture headwind. We experienced lower product volumes and installation activities in U.S. regional accounts and in Mexico versus the prior year period, although we see order growth picking up.

As Gerrard mentioned, our national account business is showing strength in both orders and revenue due to a customer acceptance of DN Series. The software business delivered strong double-digit growth in the quarter, due to the revenue recognition of a large contract. Segment gross profit of $97 million was down $7 million year-over-year due to lower volume and modest currency and divestiture headwinds. Gross margin expansion of 100 basis points to 31.3% was driven by benefits from DN Now initiatives.

On Slide 8, retail revenue of $304 million increased 11% year-over-year after adjusting for $19 million foreign currency tailwind and the divestiture headwind of $1 million. During the quarter, we experienced continued strength from self-checkout solutions as well as mild growth from point-of-sale products. Software growth was driven by a large project in Europe. When compared to the prior year period, retail gross profit increased 32% and $79 million, due primarily to revenue growth. Gross margin expanded 260 basis points, demonstrating that our team is doing a great job delivering positive operating leverage, revenue growth, a more favorable mix of self-checkout solutions and continued execution of DN Now initiatives.

On Slide 9, we summarize our free cash flow performance and update our leverage and debt maturity schedules. Free cash flow use of $70 million in the quarter was up slightly compared with the prior year quarter and was in line with our internal plan. Versus the prior year, free cash flow was impacted by higher interest payments related to the timing of our secured note payments and higher cash used for inventory. The combination of our growing product backlog coupled with longer lead times for electronic components and a weaker U.S. dollars resulting in higher cash requirements for inventory. We are working closely with our suppliers to manage these challenges, however, just like other technology companies, these dynamics will remain on our watchlist.

Cash from receivables and payables improved slightly versus the prior year. On an unlevered basis, free cash flow use improved from $30 million to $10 million year-over-year due to higher profits and lower restructuring events. For modeling purposes, investors should expect our cash interest payments to be approximately $30 million in the second and fourth quarters and approximately $60 million in the third quarter of 2021.

When compared with year-end, the company's cash balance reflects seasonal cash use for us approximately $30 million used to pay down a portion of the revolving credit facility. The company ended the quarter with $573 million of total liquidity, including $260 million of cash and short-term investments. At the end of the quarter, the company's leverage ratio of 4.4 times was unchanged versus year-end and down one-tenth of the term from the year ago period. On the right side of this slide, we update our gross debt levels as of March 31st. Note that we have no material debt maturities until November of 2023. We remain committed to strengthening our credit profile and we'll continue to evaluate opportunities to refinance that on more favorable terms.

Slide 10 contains our 2021 outlook, which we are reaffirming today. We expect to generate revenue of $4 billion to $4.1 billion, which equates to 3% to 5% annual growth. Our adjusted EBITDA range is $480 million to $500 million for the year, or 6% to 10% growth as we benefit from topline growth and operating leverage. As most of you are aware, our second quarter results for 2020 included significant non-recurring benefits to our services' gross profit margins and operating expense. We do not expect these benefits to recur during the second quarter of 2021.

Operating expense for the second quarter is expected to be in line with the first quarter or approximately $194 million, although it could be slightly higher if the euro continues its strength against the U.S. dollar. Based on these factors, we expect adjusted EBITDA for the second quarter to be similar to our first quarter results.

Moving on to cash flow. We continue to expect $140 million to $170 million of positive cash flow for 2021, including up to $50 million for DN Now restructuring payments. Our outlook reflects a material improvement in the company's EBITDA, to free cash flow conversion rate from 12% in 2020 to approximately 30% in 2021.

This concludes our prepared remarks, so I'll hand the call back to the operator for our Q&A session.

Questions and Answers:

Operator

[Operator Instructions] Your first question is from the line of Matt Summerville with D A Davidson.

Matt Summerville -- D A Davidson -- Analyst

Thanks. Good morning. Jeff, to your comments just a few moments ago regarding second quarter EBITDA sort of matching up with what you delivered in Q1, can you talk about maybe what's driving, what sounds like a little bit of a change in cadence in that metric as we move through the year, perhaps, a little bit more second-half loaded than maybe you would have thought coming into the year?

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Yeah. Matt, it's mostly related to what happened in the second quarter of 2020. If you recall, if you go back to our reporting on the second quarter of 2020, we said at that time that our service gross margins were higher than what we modeled, mainly related to a decrease in the use of service parts during that period -- during the lockdowns, and we also took steps to reduce our SG&A costs and significantly reduced SG&A. So our second quarter is going to be a quarter where we're going to see revenue growth, as I think most companies in the U.S. will see in the second quarter, we're going to see good margin as our DN Now initiatives continue to generate increases in gross margins. It will be offset a little bit by the one-time effect of what happened in the second quarter in the services margin.

And then from an SG&A perspective, we're not going to repeat what happened, obviously, in the second quarter last year, where we had no travel. U.S. hospitalization rates were way down. We deferred the merit increase and we adjusted our accruals for bonus. So what you're going to see is, in the second quarter is, revenue growth, good margin, but SG&A and opex expense are going to be more comparable to the first quarter than the second quarter of last year. The end result of that right now is, what we're saying is, it's going to be, EBITDA will be generally flat with the first quarter of this year.

Matt Summerville -- D A Davidson -- Analyst

Got it. And then, as a follow-up, can you maybe talk a little bit on the retail side of the business? You had a win here in North America, which, to my knowledge, is probably one of the first if not the first you've had on SCO and POS, is that a sign of more to come? And can you also give us a sense for what kind of growth you're seeing and expecting in self-checkout for the first quarter and the full year? Thank you.

Gerrard Schmid -- President and Chief Executive Officer

Good morning, Matt. I'll take that one. So we were very pleased with that one in the U.S. It actually is not our first, but certainly one of the more notable ones that we've seen, as we said in our prepared remarks, related to a fairly high profile airport convenience provider. We continue to believe there is room for us to expand our presence in the United States. And if you take a look at the expansion plans of certain large European retailers, where we have very, very deep relationships, we would expect them to undertake some fairly material expansion plans in the U.S. over the next couple of years and early signs are positive that we may be able to leverage those relationships to further advance our self-checkout presence in the United States.

Yeah. As it relates to overall growth in self-checkouts, as you're well aware, Matt, we don't break it out separate from the other parts of the retail business, but last year we grew exceptionally strong and I'd say that this year, while it's still only in the first quarter, our sense is that we'll start to see a similar trajectory for 2021. Great. Thanks, Gerrard.

Operator

Your next question is from the line of Justin Bergner with G-Research.

Justin Bergner -- G-Research -- Analyst

Good morning, Gerrard. Good morning, Jeff.

Gerrard Schmid -- President and Chief Executive Officer

Good morning, Justin.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Good morning.

Justin Bergner -- G-Research -- Analyst

I guess, my first question would be on the payments platform that you're trying to develop or payment solution. Sort of, if you could provide a little bit more color on how your views have developed and evolved over the last three months, that would be helpful?

Gerrard Schmid -- President and Chief Executive Officer

Yeah, sure. So, Justin, just to manage everyone's expectations, I did say in our prepared remarks that we would expect the sales cycle to be somewhat longer than our typical software sales cycle, so just please do keep that in mind as you're thinking about modeling. Yeah. That being said, I would tell you that as we look at the market opportunity, as we look at the engagements that we're having with clients, our degree of confidence and conviction around the market opportunity has certainly grown in the past quarter, as evidenced by the nature of the interactions we're having with several larger banks across the world. So it's still early days in the journey, but I would say we're fairly certain that we have something that will be pretty interesting to the company going forward.

Justin Bergner -- G-Research -- Analyst

Okay, great. Secondly, I wanted to ask about sort of order patterns in the quarter. I think you might have alluded to it in your prepared remarks, but are there any sort of metrics you want to highlight? I mean, is the order environment good or are you being somewhat limited versus what you can deliver from backlog given the supply chain constraints? Any color there would be helpful.

Gerrard Schmid -- President and Chief Executive Officer

Yeah. So, Justin, as I think about 2021 in absolute terms, I think the demand environment is pretty robust across retail in particular and banking with a somewhat bias toward Americas demand, tracking somewhat ahead of Eurasia demand. But I think the demand environment is actually pretty solid. We continue to work through multiple factors through the year, primarily on the supply side, notwithstanding how strongly the U.S. is coming through the pandemic. We're not through this yet. Frankly, we still need to watch what's happening in markets like Southeast Asia and India. We still need to watch what's happening in terms of logistics and supply chains. But, all in all, the demand environment looking pretty decent and notwithstanding the decline in Americas' revenues in Q1. Behind that, it was actually pretty strong order activity in the quarter in the Americas. So, net-net, we're feeling pretty good about demand looking through the year.

Justin Bergner -- G-Research -- Analyst

Okay. And then, lastly, maybe you could address sort of what's causing the decline in product margins? If it's mix, maybe a little bit more elaboration there, is that sort of temporary or sustained? Will that revert once the DN Series ramps up as a large percentage of your hardware mix?

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Yeah. Justin, it's temporary. Typically, you start to see mix reflecting a different mix between high-margin markets versus less high-margin markets. And in the quarter, that's what we saw. It's not structural. I think you'll start to see that reverse itself as DN Series becomes a more dominant part of the portfolio, so we don't see it as being a structural phenomenon at all.

Justin Bergner -- G-Research -- Analyst

Okay. And as part of that sort of Americas versus Europe, when you say high-margin markets versus less high-margin markets?

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

No. Both, within Eurasia Banking and Americas, we have different markets that are higher margin versus less high margin. So it's not Americas versus Eurasia, it's literally on a country-by-country basis, Justin.

Justin Bergner -- G-Research -- Analyst

Okay. Thank you.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

You're welcome.

Operator

Your next question is from the line of Paul Chung with J.P. Morgan.

Paul Chung -- J.P. Morgan -- Analyst

Hi. Thanks for taking my questions. So just another follow-up on margins. Nice performance there on gross margins on the services side in retail. You mentioned the tough comps on 2Q, but how do you see kind of services gross margin as we move kind of through past 2Q and longer term, particularly as you see the DN Series ramp?

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Yeah. Paul, when we look at services gross margin, as I said earlier, we would expect the second quarter to be comparable to the first quarter of this year. And if you look back at the second quarter last year, we went over 30%, I think it was 30.7% margins in the second quarter last year. So that's the headwind on services margin. Now, going forward, we're going to continue to see strengthening service margins, especially as we rollout DN Series and AllConnect Data Engine. It won't be significant, it will be gradual as those things are rolled out in -- and acceptance and utilization of ACDE increases. But believe, Gerrard in his prepared remarks have talked about that, the target for services margin and that will be over the next quarters, but we should see gradual increase in service margins as we progress through the rollout of DN Series and utilization of ACDE.

Paul Chung -- J.P. Morgan -- Analyst

Okay, great. And then can you just talk about the wins across the globe, are DN Series orders kind of tracking your expectations? And where could you see upside there in terms of regions and target customers? And a same question on the services side, you had some nice wins there, how has the pricing environment been? And are the contract extension is kind of seeing any uplift there on price as well?

Gerrard Schmid -- President and Chief Executive Officer

Yeah. Hey there, Paul, it's Gerrard. So our DN Series rollout is tracking squarely in line with our plan. We set ourselves a pretty ambitious goal in terms of how we expected it to ramp and it's actually tracking right in line with that ambitious expectations. So, yeah, there is -- from an order perspective, the DN Series is already majority of our order activity and that will continue to dial-up as we move through the year.

On the services side, I think that the overall environment remains solid from a pricing perspective. There are one or two markets that are always complicated, but beyond that the overall service environment remains broadly stable. Pricing certainly is something we continue to keep an eye on. I think we're all are sensitive to inflationary pressures in the markets. I wouldn't say that we've seen much evidence of that from some of our competitors, but certainly something we keep an eye on right now.

Paul Chung -- J.P. Morgan -- Analyst

Okay, great. And then last question, Jeff, on free cash flow inventory side, any component shortages kind of impacting your investment cycle there? And then given the DN Series ramp in the second half, we expect more than kind of typical inventory build this year or kind of pretty similar to past years? And then I think you mentioned restructuring charges and cash would be about $50 million, is that correct? Thanks.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Yeah. I'll start with the last question, the restructuring payments this year we continue to forecast as $50 million. When we talk about working capital, so there is a couple of components of working capital that we've seen increase in working capital investment. One, I think, we're all very happy to experience and that was in the revenue growth. We're seeing an increase in the value of our days sales outstanding, so we are seeing a little bit of increase in investment from revenue growth and we'll take that all day, right.

The other piece that we're seeing a little bit of investment increase is in days inventory on hand. We are being very conservative relative to making sure we have a proper inventory on hand for order entry. So we are carrying some level of incremental inventory. You'll see that -- when we file the Q today, you'll see that in our inventory footnote in raw materials and width [Phonetic] is going to be up approximately $30 million. So we are investing incrementally in inventory. We expect that as logistics' issues and supplier issues curtail that -- that the opportunity will be to harvest that investment. The other thing that's hitting us on the working capital side, obviously, is FX from European markets.

Paul Chung -- J.P. Morgan -- Analyst

Okay, great. Thank you.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Sure.

Operator

Your next question is from the line of Kartik Mehta with Northcoast Research.

Kartik Mehta -- Northcoast Research -- Analyst

Hey, good morning, Gerrard and Jeff. Gerrard, I wanted to ask you a little bit about the Eurasia strength in the ATM business, especially on the product side, maybe where are you seeing that strength and what you would anticipate for the year?

Gerrard Schmid -- President and Chief Executive Officer

Yeah. Good morning, Kartik. So, as I said early on to one of the prior questions, we're not through this pandemic globally or notwithstanding the progress the United States is making. And when we take a look at demand activity in Eurasia, it is slightly more mix than we might see it in Americas. We're seeing solid activity in markets like Germany, like the Middle East, certain parts of Southeast Asia and equally a little bit more of a muted activity in some parts of Eastern Europe. But I'd say that markets where we have a very strong position are markets that continued to track nicely.

Kartik Mehta -- Northcoast Research -- Analyst

And then just out of curiosity, why was the service down so much in Eurasia on the ATM side? Imagine the product growth helped with installation revenue, but I'm wondering maybe why service was down.

Gerrard Schmid -- President and Chief Executive Officer

Yeah, Kartik, I'm just taking a quick look at things. I'm pretty sure, but Jeff correct me if I'm wrong. We just had somewhat lower installation activities in the quarter rather than anything that was structural.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Yeah. C-base [Phonetic] remains pretty level and we see a good pipeline of growing the contract base. But in any given period, service revenue can adjust based on installation timing.

Kartik Mehta -- Northcoast Research -- Analyst

Perfect. And then just...

Gerrard Schmid -- President and Chief Executive Officer

And we still have the divestiture impact coming through, so we have the Portavis divestiture as well as the China defect divestiture coming through, that's about $40 million and those will anniversary as of the end of the second quarter. So the year-over-year pressure on Services will abate in the second half of the year.

Kartik Mehta -- Northcoast Research -- Analyst

Okay. And then just one last question, Jeff. I know you talked about it extensively last quarter during the conference call, but I'm just wondering if there is any change in thought process upon refinancing timing from your perspective?

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

You know what, we're still -- we will continue to evaluate that. We don't have any -- as I said in my prepared remarks, we don't have any maturities until '23, but there are certainly opportunities before then. With the debt we issued in July of last year, there is a no call provision until July of '22, but we'll look at the other opportunities, look at the Term Bs are extremely well priced and there may be some opportunities in unsecured, but our position hasn't changed that the natural target for refinancing would be in the second half of '22, unless there's a really attractive opportunity before that.

Kartik Mehta -- Northcoast Research -- Analyst

Perfect. Thank you very much. Appreciate it.

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Sure.

Operator

Your next question is from Marla Backer with Sidoti.

Marla Backer -- Sidoti -- Analyst

Thank you. So as you said a couple of times now on this call, it's -- we're not through this pandemic yet by any means, but -- and it all from my deep belief in the reopening of those markets that are in the process of reopening, but based on what you are seeing now, what you're hearing from your banking customers, do you believe that there are any sustainable changes coming out of the pandemic? And how people are using ATMs in, perhaps, managing for fewer visits? And if so, what if any impact do you think it could have on the business?

Gerrard Schmid -- President and Chief Executive Officer

Yeah. Good morning, Marla. The theme that we continue to hear that several of our customers talk about is whether the pandemic has reshaped their point of view around branch presence and their branch footprint. That's around the size and scale of their ATM network. So, I'd say, if anything as banks continue to accelerate their own digitalization journey, they're continuing to look at recycling as an important capability on the ATM sites to further shift small business transactions to the ATM away from the branch. They continue to look at video capabilities on the ATM to enhance their interaction with their consumers. So we're not seeing or hearing any structural post-pandemic expectation that ATMs will necessarily have a lower role in banking distribution going forward.

Marla Backer -- Sidoti -- Analyst

Okay. Thank you.

Operator

Your next question is from Matt Summerville with D A Davidson.

Matt Summerville -- D A Davidson -- Analyst

Yes, a couple of quick follow-ups. Maybe, Gerrard, can you give a little bit broader overview on what you're seeing with respect to DN Series uptake as it pertains to recycling in North America, Latin America, and EMEA recognizing it's a little bit more mature than some of the bigger Asian markets?

Gerrard Schmid -- President and Chief Executive Officer

Yeah, Matt. In the prepared remarks, we said that we believe we're in a phase right now where DN Series is showing up really strongly relative to some competitive alternatives and we're seeing a very noticeable uptick in demand among larger U.S. banks, several of which weren't necessarily periodic buyers of hardware from Diebold Nixdorf. So that's a very strong sign for us.

And we have continued to enjoy strong market presence in Latin America and those markets have been -- and in particular certain countries have been strong use of the recycling for some time, so we see that trend continuing. And EMEA has been more mature than the United States and -- but that dial just keep shifting by a few percentage points each year in favor recycling. So, all in all, the trend across all markets is continuing to shift in favor of recycling.

Matt Summerville -- D A Davidson -- Analyst

And then, just with respect -- if you gave these metrics, I apologize if I missed it. But periodically you've been updating us as to where you are with certification projects as it pertains to DN Series. So maybe if you're able to provide those metrics around how many are under way, how they have been completed thus far here through the first quarter.

Gerrard Schmid -- President and Chief Executive Officer

Yeah. So for the U.S. what's most important to our -- the network processes and ensuring that those certifications are complete, so those are all now complete and behind us, which allows us to take DN Series to all natures of banks in the United States. In terms of the broad accounts, I know Steve will keep me correct here if I get it wrong, but I believe that at last count we were up at around 240 certifications that were complete, but, Steve, correct me if I'm, I just don't have that number at the top of mind. Yeah. Matt, we will follow up with you separately. It looks like Steve is trying to dig it up and we'll follow up with you separately on that.

Matt Summerville -- D A Davidson -- Analyst

No problem. Thank you, Gerrard.

Operator

Okay. Your final question is from the line of Justin Bergner with the G-Research.

Justin Bergner -- G-Research -- Analyst

Thanks as well for the follow. To build on earlier question, do you think the pandemic is creating changes that are favorable for your retail business looking forward?

Gerrard Schmid -- President and Chief Executive Officer

Justin, this is no doubt that changing consumer and retailer expectations have added further tailwinds to an existing tailwind that was building around self-checkout. So we see that tailwind likely to be in place for several years still to come as we see the mature markets in self-checkout further accelerate the adoption of self-checkout and as we see other markets that have been historical laggards should show real interest. So I think that the pandemic has been a nice boost on that front.

Yeah. On a sales demand, as we said in our prepared remarks, we saw some modest demand and modest growth in point-of-sale this quarter. I think we continue to watch how long that trend will sustain itself. I suspect that in due course the shift will continue to lean more and more in favor of self-checkout and perhaps modestly at the expense of point-of-sale, but that's not necessarily a bad outcome for us given the higher unit economics for us as well as the higher services attach rate, which allows us to drive higher recurring revenue.

Justin Bergner -- G-Research -- Analyst

Okay, great. And then just lastly, is there any element of your guidance while unchanged that may reflect higher cost inflation pressure or certain sales, maybe, in the hardware side not have being the potential to come through in a strong environment because of logistics and supply chain pressures?

Gerrard Schmid -- President and Chief Executive Officer

Yeah, Justin. Yeah, I'll go back to the answer I gave earlier. From a demand perspective, we're feeling pretty good about this year, both on retail and banking. So demand might lean one to be perhaps modestly more bullish than how we're currently look at the year. The flip side is, there are still some issues to work through. So, all in all, our view is that the guidance that we provided is a balanced set of outcomes and we're feeling positive about our outlook for the year. Clearly, we're not clear with only one quarter in and obviously we'll update the market as we move through the second quarter.

Justin Bergner -- G-Research -- Analyst

Great. Thank you.

Operator

At this time, there are no further questions. I will turn the call back to Mr. Virostek for any closing remarks.

Steve Virostek -- Vice President, Investor Relations

Thanks, everyone. I just wanted to follow up to Matt's question on the certification. So we're sitting at about 225 certifications out of about 700 projects and that's up from about 150 certifications at the end of 2020.

So, with that, I want to thank everybody for being with us on today's call. If you have follow-up questions, please give a call or email to Investor Relations. Have a great day.

Gerrard Schmid -- President and Chief Executive Officer

Thank you, everyone. [Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Steve Virostek -- Vice President, Investor Relations

Jeffrey Rutherford -- Senior Vice President and Chief Financial Officer

Gerrard Schmid -- President and Chief Executive Officer

Matt Summerville -- D A Davidson -- Analyst

Justin Bergner -- G-Research -- Analyst

Paul Chung -- J.P. Morgan -- Analyst

Kartik Mehta -- Northcoast Research -- Analyst

Marla Backer -- Sidoti -- Analyst

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