Good morning. My name is Victoria, and I will be your conference operator today. At this time, I would like to welcome everyone to the Diebold Nixdorf First Quarter 2022 Conference Call. [Operator Instructions]. Ms. Marchuska, you may begin your conference.

Thank you. Hello, everyone, and welcome to our first quarter 2022 earnings call. I'm Christine Marchuska, Vice President of Investor Relations for Diebold Nixdorf. To accompany our prepared remarks, we have posted our press release and shareholder letter to the Investor Relations section of our corporate website. I would encourage investors to review the shareholder letter as they contain additional information regarding the progress of the company. Later this morning, a replay of this webcast will be available on the Investor Relations section of our website. Before we begin, I will remind all participants that during this call, you will hear forward-looking statements, including related guidance. These statements reflect the expectations and beliefs of our management team as of the time of this call, but they are subject to risks and uncertainties that could cause actual results to differ materially from these statements. Additional information on these factors can be found in the company's periodic and annual filings with the SEC. Participants should be mindful that subsequent events may render this information to be out of date. We will also be discussing certain non-GAAP financial measures on today's call. A reconciliation between GAAP and non-GAAP measures can be found in the table of today's earnings press release. And now I'll hand the call over to Octavio.

Thank you, Christine. I'm pleased to be joining all of you for my first earnings call as CEO. First, I want to acknowledge that the last 2 years have been anything but easy from the global pandemic and the war in Ukraine to rising inflation in most countries and uncertainty around financial markets and global supply chains. We've had to change many facets on how we work. We are concerned about the humanitarian crisis unfolding in Europe and as a result of the war and are continuing to support our employees in these effective areas. Change and disruption are inevitable. But in times of uncertainty and an ever-evolving global landscape, we must remain focused on serving our customers and delivering solutions that help them transform their business. But in today's uncertain environment, we also have to transform and are working hard to continue to improve our systems and processes, streamline our operations and ultimately create a more productive work environment for our employees around the globe. While supply chain challenges have put additional pressure on our business, we have a committed team, a leading solutions portfolio and the customer base that wants us to succeed and wants us to help them succeed. Market demand for our products is strong. That's evidenced by our growing order entry, which increased 23% first quarter year-over-year. I am confident we will get through this time of global volatility and come out stronger and more agile as we focus on the key priorities I will outline today. Over the past 60 days, I have spent my time talking with employees, customers and the investment community, and they have reinforced and confirmed the following. We play a vital role in supporting 2 of the world's most competitive and demanding industries, banking and retail. Our innovative solutions…

Thank you, Octavio. My prepared remarks will include references to certain non-GAAP metrics such as adjusted EBITDA. Included in our first quarter non-GAAP adjustments to EBITDA for 2 impairment charges. $38.4 million related to our North America cloud-based ERP implementation, which was indefinitely suspended as we transition our implementation plan to the distribution subsidiaries and $16.8 million for assets in Russia and Ukraine. As a reminder, please see our Form 10-Q and shareholder letter for additional financial details from the quarter. Here, I will highlight a few of our key performance metrics. Despite seeing very strong demand from customers for our devices and solutions, evidenced by strong order entry data, which Octavio noted. In the first quarter of '22, total revenue was $830 million, a decrease over the first quarter of 2021 of approximately 12% as reported and a decrease of approximately 7%, excluding a foreign currency impact of $36 million and a $14 million impact from divested businesses in Russia and Ukraine. Adjusted for foreign currency and divestitures, product revenue decreased approximately 10%. Services revenue decreased approximately 5% and software revenue decreased approximately 9% as compared to the first quarter of '21. Product revenue decreased as a result of continued supply chain challenges, which has unfavorably impacted our ability to convert backlog to revenue. The product revenue declined subsequently led to a reduction in attached services and software in the first quarter. In addition, as noted previously, the company exited certain low-margin noncore service contracts. We originally planned for a 5% increase in product cost, however, in the first quarter '22, we experienced approximately double that rate, and the majority of backlog converted to revenue was ordered prior to the price increases. This resulted in a material decline in product margins during the quarter. We will continue to increase…

[Operator Instructions]. And our first question comes from Matt Summerville of D.A. Davidson.

A couple of questions. First, Jeff, just on the debt side of things. I mean the stock is looking like $3 pre market right now. Is there anything you can tell us to give your equity investors confidence that you do actually have a path towards refinancing? Can you talk about where you're at with that path? You discussed standing up in ABL at some point? Just any other detail you can provide would be helpful beyond the prepared remarks where you just stated you're kind of working on it.

Yes. Yes, Matt, and I understand the question. And it's a fluid situation, right, with the changing environment. And as I stated, we have engaged Evercore and Sullivan & Cromwell to help with this. And let's just talk about the position. So first of all, we have adequate liquidity and no maturities through the first quarter, effectively the first quarter of '23. And then if you look at the maturity schedule, it's the revolver in July '23, with the Term Bs in the fourth quarter of '23 and then the unsecured in the second quarter of '24. So that's what we're solving for, right? And as I've said on earlier calls, this -- our company with the receivables and inventory assets that we have is better suited from a revolver position to be with an ABL. And I don't think we found anybody who would disagree with that. The issue we're solving for the maturities I just mentioned and the fact that today, under our current structure, the ABL, the Term Bs and the secured notes are very pursue on security. So that's why we have the partners that we're working with to help us maneuver through that issue along with addressing the pending maturity schedule in '23 and '24 to get us where we need to be to provide adequate liquidity for operations and also a longer duration of maturities. So there is a path to get there. It's not a straighter path as we would have planned for in late '22 or into late '21 and then the early '22, it's changed. The model has taken on incremental inflation. We continue to see incremental supply chain issues. But there's a path to get there with the help we have and working with our debt holders to get us where we need to be because the model is, as we stated today, we do have a clear path with the costs we're going to be able to take out of the model to get back to our targets. So my point that to answer your question, Matt, is there is a path to get there. It's not a straight line like it was, but there is certainly a path to get there anchored by an ABL.

Got it. And maybe a couple of other questions. Does increased asset optionality become part of this process? Is that part of the discussion? Is kind of anything and everything on the table at this point? Is that kind of where we're at? Number one. And then what do you anticipate the cash cost of the restructuring been?

Yes. So Matt, this is Octavio. Thank you for your question. So I strongly believe in our 3-year model. I think that as you look into our model, we have a pathway for the company to get to the targets that we've established. Obviously, with this ever-changing environment, we will evaluate any option that presents itself, but we still believe firmly in the model, and I'm committed to making the model work for our shareholders. Again, as far as cost for restructuring, I will turn that over to Jeff.

Yes, Matt. So it's still early days. My estimate would be around $75 million in cash costs, but it's early days. And what I would say is we haven't modeled it into cash flow yet because we're still working through the details. But it will be in that approximately $75 million range from a cash perspective.

Our next question comes from Jeff Harlib of Barclays.

So Jeff, can you talk a little bit about the visibility on being able to push through the backlog and where you stand with your suppliers getting the components? What are the additional headwinds? Obviously, you missed the revenue guidance by a lot, your orders are strong. But maybe you can talk about that a little bit. And then also, if you can provide some bridge on -- so you did it on revenues, but on your adjusted EBITDA sort of a bridge as you see it now to bridge from the last year, the current or prior guidance to current?

Yes. So let me take the first part of the question on what we're doing to address the velocity of converting our backlog. So, clearly, since we last spoke in February, we've seen different macroeconomic events like the closure of ports in China with their Zero COVID Policy, affecting our ability to source materials and also affecting our ability to ship finished products out of that region. With that said, we keep investing in our Ohio manufacturing facility, which will now be ready by end of year to supply most of the demand for the North America market. This will undoubtedly shorten the time from order placement manufacturing to revenue conversion. I think an important factor to consider is demand remains strong for our products and some of the headwinds that we have receiving components are starting to subside as evidenced by our factories manufacturing a lot more units during Q1 of this quarter than the prior year. Now we're trying to solve for how do we get those products into the hands of customers faster. Again, that reiterates the importance of rethinking our manufacturing footprint and making sure that our Ohio manufacturing is up and running as quickly as possible at full speed. So again, Q2, we are seeing in a similar trend. Our factories are fully loaded with significantly higher volumes than what we had last year. We now just need to expedite how we get all those products into the hands of our customers. We are working with our customers and our customers understand the global challenges we're experiencing and are working with us to make sure that we can deliver in the most appropriate and cost-effective way to them. So Jeff, can you take the second part of that question?

Yes. So Jeff, as we communicated in both the release and in the script is was the $300 million reduction -- a $300 million reduction in revenue at margin would generate approximately $80 million of reduction in gross product. And then the balance to get to the revised EBITDA numbers are effectively inflation, incremental inflation. Higher inflation, in particular in the first quarter than we had originally modeled. And then a longer duration of inflation, we had originally said we expected some normalization, especially in logistics costs post the Lunar New Year that has not happened. So there is incremental inflation in the model. So between the reduction in revenue and inflation is how we bridge from EBITDA to the original outlook to the revised outlook.

Okay. And how are you looking at the linearity of that based on your current view in terms of the build in 2Q, 3Q to 4Q?

Yes. One of the factors involved in that is the nature of the backlog. As we stated that the backlog that we converted to revenue in the first quarter was primarily prior to price increases and we honored the contractual pricing of those orders. Now we're getting into a mix where we're going to be experiencing price increase conversion to revenue. So the progression will be margin improvement in the second quarter and then a more normalized margin in the third and fourth quarter.

Our next question comes from Paul Chung from JP Morgan.

So just a follow-up on your portfolio of assets today. Where could you see opportunities to kind of monetize assets? It sounds like you're saving costs on real estate? How committed are you as well to your retail business?

Thank you, Paul. I'll take that. So as you've seen, our retail business has tremendous momentum, particularly around self-checkout. Orders grew 100% on a year-over-year basis. So it is an accretive business to us, and it's one that we're committed to. But as I mentioned earlier, we are -- we see our model being able to perform once we normalize the speed of backlog conversion and take the appropriate cost actions over the coming quarters. With that, we see our model getting back to performance. But as I mentioned, we are always evaluating that there are opportunities to accelerate shareholder value. So as of today, we believe in our model, and we believe that by accelerating backlog conversion and taking the cost out to the incremental cost, how we will have a performing model. So I'll just leave it at that, but we are always evaluating what's the best way to unlock shareholder value is.

Okay. Great. And then self-checkout was the bright spot in the quarter. So how big was that contribution? What's your visibility into the year? And are you making more progress in North America beyond the kind of airport win?

Yes. So as mentioned, orders are up 100% and our manufacturing facility are scheduled to almost double the amount of self-checkout, so that will be shaped. A good portion of that will be tied to some important wins in North America that you will see starting to roll out in the coming quarters. So we are making progress in the North America business with important retailers and you will start seeing that in the coming quarters.

Okay. And then last question, just on the EV charging business, you mentioned 27,000 signed contracts. How do we think about the revenue and margin contribution kind of per charging station? Is the cash paid upfront? And how material can this business be over time? You mentioned, I think, 30,000 by end of year and then the North America opportunity.

Yes. Thank you, Paul. The EV charging business is one that's constantly evolving. I've had multiple conversations with few companies starting with large deployments in Europe, charge-point operators, and there's one commonality. Everybody is looking for a global service provider that can help them maintain and operate a global fleet. I think we're in the early stages of how this market will evolve, but we do see it as something where our service infrastructure can be leveraged. And we will be updating you on what that looks financially once we're done with all the pilots that we have ongoing right now. But we do see this as an accretive business in the coming quarters and years. I would say that it's still an industry that's trying to figure out what the appropriate service model is as you saw some of the wins that we have been on our service desk for our capability to take cost and dispatch service to locations. So there's, I would say, a confluence of events that will make this business to continue to grow, and we want to be a company that's helping shape how the service is provided in that market.

Our next question comes from Ana Goshko, Bank of America.

So I'd like to get some additional color if we could on the restructuring plan. So obviously, you had a multiyear, very thorough restructuring process that you completed at the end of '21. And it appears that the vast majority of the challenges you're facing right now are from exogenous factors. So obviously, supply chain and cost inflation. So wondering if this next phase of restructuring, what areas, geography and products? How do you feel that there's still room to go? And if it wasn't for this the exogenous factors and challenges that you're facing right now, are these operational moves or reaction to that? Or are there kind of things you left unfinished with regard to the prior program?

So thank you. And you are right. Some of the actions that we're taking are in response of a changing environment, one that we couldn't have predicted just 3 to 4 months ago. With that said, when you think of our company, the value that we bring to customers both in banking and retail is that we have leading hardware and software technologies that coupled with a tremendous service capability, provides a very unique value proposition to our customers. That's what our customers value. Our great technology and the great service that we have attached to that. So what are we doing right now? We're doubling down our efforts to make sure that those 2 areas, building the best technologies, whether it's our self-checkout or our ATMs, that as you've seen, continued to have very strong demand in the market. We reinforced those areas. We reinforced our service capabilities as service is the main driver of customer satisfaction and then we keep streamlining the periphery around those areas, but making sure that we strengthen our core offerings, but we're focused on growing those core offerings and then taking an approach where everything else in support of those areas needs to be streamlined through digitization, through process improvement globally. Jeff, anything else you would like to add?

Yes, I would say that the DN Now initiative was much more focused on a top-down approach to restructuring. I think that the unique view that Octavio has from running the banking organization and determining where inefficiencies lie within those support structures. This is real time. We're not going to get in a lot of detail because we have internal communications and internal factors involved. But I think the difference is it's not targeted on enablement function so much in top down. It's a view of the world from an operator's perspective and eliminating the inefficiencies that are in the model.

Okay. And then -- so the cash restructuring costs, which appear to be coming back, so those are largely going to be for things like severance and lease breakage on facilities. Are you bringing any kind of consultants in to work on this project? And are there kind of fees included?

Yes. Any consultant fee to support us with the projects are included in those numbers that Jeff provided. However, we feel that we have a strong team internally to drive some of these changes and the team has been working on that with me for the past couple of weeks on making sure we execute against that in a very timely manner.

Okay. And then just on the EBITDA guide for the year. So any of these -- I'm assuming that cost related to the restructuring are not included in the EBITDA guide. So those would be kind of on top of the EBITDA guide, is that right?

That's correct.

Our next question comes from Matt Bryson, Wedbush Securities Equity Research.

I've got one question and one follow-up. Octavio, I think you talked to production of systems increasing yet obviously, shipments were a bit disappointed. I guess I just want to understand what exactly is the delta between you guys producing the system versus getting in the hands of the customer and booking the revenue. Is it logistics now that the primary bottleneck? Or is there something else? And then I guess my second part of that question is, when we do think about backlog when you give your -- in terms of your revenue projection, is there an implicit understanding that as you get to the end of the year that some of -- that you're going to be able to capitalize on some of that backlog growth and bring backlog down? Or is not part of your revenue assumptions that we should assume you're still going to exit this year with heightened backlog?

Yes. So first, let me address the production cycle and the difficulties of getting products to our customers. If you remember, for the past couple of quarters, we've been talking about material challenges in our supply chain and getting our manufacturing facilities up and running. Not to say that there aren't still component shortages and difficulties getting material to our -- into our factories. But I would say that the team has done a fairly good job of mitigating those effects. Now the main challenge is how do we get those products from our factories, both in Germany and China into the hands of our customers globally. There, the logistics challenge has proven to be greater than what we had expected. As Jeff mentioned, we have planned for the year with normalization of shipping after the Chinese Lunar New Year in February, something that clearly has not happened, and we're not forecasting that to improve anytime soon. So to us, it's important to accelerate the manufacturing of those devices, ship them as quickly as possible. And remember, that's the reason why we're standing up our Ohio manufacturing facility to reduce that cycle time that in today's world, shipping something from Europe into the Americas or from Asia to the Americas or Europe can take north of 40 days. So we have -- so that's why we need to shorten that cycle, and that's the expectation that we have that as we keep planning for this, we will be able to take those machines, schedule their installation with customers or if necessary, have our -- amend our contracts, so customers take ownership of those devices once they leave our factory. And those are all things that we're working on to try to accelerate our revenue conversion.

And then the backlog question, we are still forecasting higher order entry than revenue. So it's -- we would expect a backlog increase year-over-year when we get to the end of the year. So we're not -- order entry has been really good, obviously, in the first quarter, and we're forecasting that to continue throughout the year.

Awesome. And then, I guess, for my follow-up, when I'm looking at software gross margins, I kind of think about those gross margins being kind of somewhat more stable, more predictable. The quarter-over-quarter delta, what's the primary factor there? Is it -- I know it's a lot of customization work. So is it underutilization of software engineers? It's just -- obviously, you don't have the same input cost challenges that you do in that business as in the product side of things. And so if you could talk to why gross margin declines so much, that would be helpful.

Yes, that's just a 1-quarter issue that because one contract can swing that margin fairly materially, but we don't anticipate that happening in the rest of the year, and we'll get back to normalized software margin. That's a onetime contract hit in the first quarter.

Our next question comes from Rob Jost at Invesco Ltd.

Jeff, I wanted to ask about how you can respond. I don't know if there was industry-wide change here, but NCR talked about being much more aggressive about taking cost and setting themselves up to protect themselves against the kind of environment we've just gone through. What can you say about what you can do to do the same?

You mean from an operating cost perspective, is that the question, Rob?

Yes. Exactly. Yes.

And I think that what we're doing what we need to do from a model perspective, if we're looking at the model for inefficiencies and taking out excess or inefficient costs and announced that $150 million plus of savings. Are you talking about something beyond that?

More on driving price increases and getting the customers on board with the environment that we're in, where everything is more expensive now. And so as a result, prices have to go up.

Yes. So let take that, Jeff. So clearly, we are discussing with customers the new costs associated with delivering both the products and the services associated. Customers are open to those discussions. And we're being -- I would say that all new orders, we are -- we have now implemented price increases. We are -- we started that profit in the back half of last year. We are continuing to increase prices that we see input costs go up. So you should -- and that's why we're forecasting a normalization of margins towards margins improving sequentially over the coming periods. So customers are open to that. They understand the challenges that we're facing. So they're open to these discussions. We're actually approaching customers to, in some cases, to reprice backlog that has long duration and some long-term contracts or asking them for the prepayment of that to maintain the current pricing. Another important thing that we're doing in our service business with fuel prices increasing significantly, implemented a fuel surcharge in all our contracts in North America, which is now helping us -- which will help us offset some of those increases in the coming periods as well.

And then fuel surcharge, is that -- sorry go ahead.

I'm sorry, go ahead, please.

No, I was just -- I guess what I'm looking for to is for some -- just something that will -- it seems like what you're talking about is our actions taken in response to what's happening around you. Is there -- the fuel surcharge, is this the kind of thing where once it's in place, the next time there's a fuel increase that you are protected? Or is it just based on current levels? I'm just trying to understand kind of the structure of what you're putting in place with these new contracts.

So again, the ex sample of the fuel surcharge, we're basing it on ex percentage of fuel movement. So next time that there's some upward movement, we will be protected in that respect to the contract. Clearly on the hardware part of our business, we need to monitor input costs more closely. That's part of the supply chain reengineering that we're doing to be more proactive around our material procurement and making sure that we're passing those costs in a timely manner or reflecting in our list prices and our selling prices to customers. So what we've done is we've adjusted our thinking to be a lot more proactive. To your point, if it starts getting ahead of the future challenges that might appear and have the mechanisms in place so that it's not a reaction, but in a proactive manner, be able to address those future changes.

Okay. That's helpful. My second question is just around the outlook. Given the pricing increases, given the backlog, the top line growth seems low given that that's probably even under what inflation is currently? And I know it's probably not expected to go on at that level. But I'm just wondering, is there -- are we looking at a mix of ongoing churn and unprofitable contracts on the services side that are going to offset some of this natural growth that we would just get from what we're seeing today?

Yes. So maybe it would be good for me to walk you through a bridge from '21 to the outlook for '22. And there's a couple of factors that we need to take into consideration. So first of all, the -- in '21, the Ukraine, Russia revenue was approximately $80 million. So that's coming out of the model. And FX now year-over-year, we originally had modeled FX to be moderate. Now we're looking at and modeling it to be approximately $130 million unfavorable year-over-year from the strengthening US dollar. So -- and we have divestitures, we had small divestitures from '21. That's going to affect us $40 million. So if you take those into consideration, you're going to get something in the mid $3.6 billion. And then we're guiding, obviously, at the low end, a modest growth at the upper end, a more robust growth. So that range is really around supply chain and the ability to deliver product and convert from backlog to revenue. At the same time, as Octavio mentioned, we have pricing increases that are coming through. So it's a combination, that growth is the combination of pricing and adjusted for supply chain. I mean it's a fairly straight forward.

Appreciate the detail there.

Our next question comes from Arun Seshadri from Credit Suisse.

A couple from me. First, just to understand the magnitude of the margin improvement in Q2 and Q3, is there a way to sort of quantify and say if Q1 -- if the Q1 revenue was delivered at a sort of normalized margin, what would that -- what would gross profit have been? Just to get a sense for, I guess, broadly the risk to your full year forecast.

Yes. We haven't -- we didn't give that number. But I could tell you that it's -- the product side of it is approximately $100 million on the product revenue. And so you take that as margin. Right? And there's going to be attachment associated with that in services and software. So it was material.

Got it. Understood. And then as far as the repricing of the backlog goes, is that contractually written into your, I guess, your prior backlog? Or is it dependent on customers basically wanting to preserve their position in the line and therefore agreeing to reprice?

Yes. It is the latter, Arun. We're approaching each customer and each customer has an individual situation and being very transparent and open with our customers on what has changed the need for us to reprice, but also giving them the option that they want to prepay for that backlog and maintain their current pricing also doing that to improve our cash position. So the good news, and I like -- or remember, every machine that we build, every single ATM or a self-checkout device has a customer attached to it. We don't build inventory without having a customer attached to it. So we know who ordered the machine, when they ordered it and when they need it. So we're approaching every customer individually and tailoring a plan to each specific client and trying to find the best solution for them and for us.

Got it. Last thing for me, I guess a couple of smaller things. One is the restructuring charge. I understand it's not fully set in stone, the cash restructuring. Is that -- can we just assume it's distributed between '22 and '23? Or any color at this point you can provide in terms of the mix in '22 versus '23 of that $75 million in cash restructuring?

Yes. We haven't provided that. I would say that there is a sense of urgency on our part. And we have to take care of our internal communications and work, but we're committed to this, and it's going to be faster than -- it's not something that we're going to delay. We're going to do this as fast as -- while maintaining the proper controls and harvest these savings quickly.

Last thing for me. The software margin to a prior question, Jeff, you talked a little bit about software margins being a little bit lower because of 1 or 2 specific contracts where these -- so I assume these are sort of multi-country sort of contracts because we did see the margin go down pretty much across all the businesses on the software side.

Yes, they can be across the segments. It was just an occurrence in the first quarter. And as I said, we don't expect to see a recurrence of that low margin in the model going forward.

Got it. And I appreciate the disclosure given all the sensitivities.

And our final question comes from Matt Summerville.

Yes. Just a couple of questions. How much unbillable inflation is currently sitting in your backlog? Or how much uncovered inflation with respect to price is sitting in your backlog? And how much of that do you feel you can recover by getting it repriced, if you will?

So very good question, Matt. We've seen -- remember that we have many long-term contracts that probably were signed middle of last year probably run through end of this year and some have even longer durations. So I would tell you that this will be done on an individual basis, customer by customer trying to find the most appropriate solution. In some cases, where customers have a big urgency to deliver equipment, we're talking with them about them paying for expedited freight to meet their commitments. So I would say that this is still work in progress, but the whole organization is very focused on how do we recover that unbillable inflation built into our backlog through multiple mechanisms. And unfortunately, it will be customer by customer, how we approach this.

In the past, I think you provided what that number was, and I was wondering if you could update that. I guess I had like a $35 million number sitting in my head coming out of '21, and I'm curious as to if you guys have that number and would be willing to share it again.

And you're specifically saying the unbillable -- let me understand the question. So what you're saying is the margin on backlog, how much inflation is nonbillable? And I think the math -- is going to be us is that we anticipate we will get halfway back to normal margin in the second quarter and then in the third quarter be back to a more normalized margin. So basically, you could take the basis difference between where we are in the first quarter and where we should be and half of that would be in the second quarter. So it's 500 basis points on basically $400 million of revenue.

Okay. And then I want to be maybe a little more clear on something. So $9 million of EBITDA in Q1, how should we think about the cadence kind of moving forward from here to get to, say, the midpoint of the revised guidance?

Yes. The fourth quarter will be basically comparable to the prior year fourth quarter, and then it will be progressing from where we're at today to the fourth quarter, incrementally improving quarter-by-quarter.

And then in light -- sorry go ahead.

Accelerate it, it's not that completely linear from second to third quarter. So I mean we don't give quarterly guidance. But what I would say is we'll get back to -- fourth quarter will be back to the prior year levels, and it's not going to be linear in the second and third quarter, but it's going to be progressive through the second and third quarter.

Got it. And then this year, in general, I want to talk about free cash flow a bit. One, given kind of where your leverage profile is today, I guess, where are you going to get the $75 million to fund this restructuring? So I'd like to get comfortable with that. Number one. Number two, I think towards the end of '21, for lack of a better term, you're kind of pulling forward some free cash flow with collections a bit. So maybe cannibalized in a little bit of '22 in that regard. So I want to think about how that factor plays into things this year. And then at the end of the day, I'm wondering in light of the first quarter burn, if you can do anything to drive better linearity in cash performance this year.

Well, it won't happen this year. What's going to happen this year with what I just said relative to EBITDA is going to result in linear free cash flow. If you look at where we're at and obviously, we will again generate significant free cash flow in the fourth quarter. That's been our trend, right? So the liquidity comes from cash reserves and modified covenants that renegotiated and continuing to monitor our cash usage. So we have a path for that. It's not -- we're already in May of the second quarter. So what we're talking about is the spend will be in the back half of the year, and we'll have adequate liquidity to do that.

There are no further questions at this time. I will now turn the call back to Octavio Marquez, CEO of Diebold Nixdorf. Please go ahead.

Thank you, operator, and thank you, everyone, who listened and participated in today's call. Although we continue to live in uncertain times of the challenging macroeconomic environment, we believe we've laid out a strong plan for profitable growth over the coming quarters and years, as shown by our strong order entry and forward-looking pipeline. There is no shortage of demand for our solutions and services. We look forward to seeing you at our upcoming investor conference as well as our next earnings release. Thank you all again. Thank you.

Thank you, everybody, for joining today's call. You may now disconnect.