What happened

Shares of Diebold Nixdorf (DBD) fell 14% through 10:50 a.m. EDT after the maker of ATMs and "intelligent deposit terminals" announced even worse results for the third quarter of 2021 than it had warned investors about three months ago.

Despite Diebold's second-quarter warning, analysts optimistically forecast the company would still rack up more than $1 billion in sales in Q3, and earn $0.51 per share in (admittedly pro forma) profit. Instead, Diebold reported this morning that its Q3 sales were just $958.2 million, and its earnings only $0.34 per share.  

White arrow declining sharply atop a stock tickertape display bathed in red.

Image source: Getty Images.

So what

Diebold's sales declined 4% year over year for the quarter, and gross profits on those sales fell 8%. Despite a 160 basis point improvement in operating profits, the company ended up with a $0.03 per share loss for the quarter when calculated according to generally accepted accounting principles (GAAP).

On the one hand, that was a whole lot better than the $1.31 per share that Diebold lost in Q3 2020. On the other hand, it was still a GAAP loss -- versus the $0.34 per share pro forma profit.  

On top of all that, Diebold reported $157.5 million in negative free cash flow for the quarter. That was roughly twice the cash burn rate experienced in Q2, and brings the company's total cash losses for the year to $306.5 million.

Now what

And even then, the bad news wasn't over. In light of the disappointing Q3 results, Diebold proceeded to lower guidance for the rest of this year. Instead of the $4 billion to $4.1 billion in full-year sales it previously expected, Diebold says it will now collect no more than $3.95 billion. Adjusted EBITDA and return on invested capital expectations also got chopped and, in the worst blow of all, management slashed free cash flow expectations, saying it now sees no more than $80 million to $100 million in FCF likely this year.

On the plus side, going from negative $306.5 million through Q3, to even $80 million in positive FCF by the end of the fourth quarter, will be a neat trick. All I can say on that score is: Cross your fingers and hope that it actually happens.