Diebold Nixdorf, Incorporated
Q1 2014 Earnings Call Transcript

Published: 29 Apr 2014

[Operator:]

Good day, everyone. Welcome to Diebold Incorporated's First Quarter 2014 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to the Vice President and Chief Communications Officer, Mr. John Kristoff. Please go ahead.

[John D. Kristoff:]

Thank you, Camille. Good morning, and thank you for joining us today for Diebold's First Quarter Conference Call. Joining me today are Andy Mattes, President and CEO; and Chris Chapman, Vice President, Global Finance and Interim Principal Financial Officer. Just a few notes before we get started. In addition to the earnings release, we've provided a supplementary presentation on the Investor page of our website. Andy and Chris will be walking through this presentation as part of their comments today and we would encourage you to follow along. Before we discuss our results, as of past calls, it is important to note that we are excluding certain restructuring charges, nonroutine income and expenses from our non-GAAP financials. We believe that excluding these items gives an indication of the company's baseline operational performance. As a result, many of the remarks this morning will focus on non-GAAP financial information. For a reconciliation of our GAAP to non-GAAP numbers, please refer to the supplemental material at the end of the presentation. In addition, all results of operations reported today, including prior periods, exclude discontinued operations. Finally, a replay of this conference call will be available later today from our website. And as a reminder, some of the comments today may be considered forward-looking statements. Internal and/or external factors could significantly impact actual results. As a precaution, please refer to the more detailed risk factors that have previously been filed with the SEC. And now with opening remarks, I'll turn it over to Andy.

[Andreas Walter Mattes:]

Thanks, John. Good morning, everyone, and thank you for joining the call today as we discuss our results for the first quarter. There are several items I will be covering today

[Christopher A. Chapman:]

Thanks, Andy, and good morning, everyone. First I will walk through our first quarter financial performance, then I will provide an update on the legal and compliance front before discussing our 2014 revenue, earnings and free cash flow outlook. Now to review our financial results. Turning to Slide 16, total revenue for the quarter increased approximately 9%, or 12% on a constant currency basis, as a result of increased volume in Brazil and EMEA, partially offset with a decrease of 14% in North America. The currency impact was driven by a weakening of the Brazilian real and Indian rupee. As we move to Slide 17, Financial Self-Service revenue decreased approximately 1% on a constant-currency basis with increases in EMEA and Latin America, offset by declines in North America and Brazil. EMEA continues to gain momentum with growth in both product and service revenue. Latin America exceeded the prior year in both product and service revenue as they begin to execute on strong 2013 year-end backlog. In North America, the regional business was stable versus prior year, however, several large non-repeating projects in the National Account business led to the decline. Lower volume in Brazil was timing-related and performance will improve throughout the year as we execute on our backlog. Total Security revenue on Slide 18 was up 4% compared with the prior period. Our Electronic Security business grew 19%, driven by strong growth in North America, partially offsetting this increase was a 14% decline in our Physical Security business. Moving on to Slide 19, we've made a change in our revenue reporting for products and services. Previously, the sale of IT equipment in Brazil was reported under Financial Self-Service as it was relatively immaterial. Due to the large one-off order in Brazil tied to deliveries of IT-related equipment to the education ministry, we have reclassified this revenue for both current and prior year to a new category labeled Brazil Other, which includes election systems, lottery and IT technology. On Slide 20, gross margin for the quarter improved 3 percentage points to 24%. This was driven by a solid improvement in service gross margin, which increased 5.3 percentage points to 28.4%. This improvement reflects the continued benefit of our service transformation efforts across the globe, including the ongoing benefit from our pension freeze and voluntary early retirement program in North America. Product gross margin increased 0.6 percentage points to 18.4%. This was driven by better manufacturing utilization and favorable mix in Brazil. As I stated last quarter, we remain focused on our cost actions and driving additional efficiencies to show sustainable improvements in total gross margin. Moving on to Slide 21. Total operating expense increased $6.1 million compared with the first quarter 2013. During the first quarter, we started making the initial investments in our transformation. Over the mid to long term, these investments will continue to improve both our internal controls and processes, as well as reduce costs. Operating expense as a percent of revenue was 19.7% compared to 20.4% in the prior year period, reflecting continued leverage of approximately 1% on increased volume. Turning to Slide 22. Non-GAAP operating margin in the first quarter increased 3.8 percentage points to 4.3% versus the same period in 2013. We are encouraged with the initial improvements we've made to our cost structure and remain focused on executing our $150 million gross cost savings initiative. Looking at Slide 23. All regions improved in terms of profitability, except Latin America, which was overshadowed by the impact of the devaluation of the Venezuelan bolivar. North America and Brazil reflect the largest improvements. The increase in North America is directly related to the changes we've made in our cost structure. In Brazil, the favorable performance was driven by higher volumes and positive mix as previously mentioned. EPS on a GAAP basis was $0.15 during the quarter. This includes restructuring charges of $0.05, primarily related to severance costs tied to the BPO agreement with Accenture announced today and nonroutine expense of $0.01 related to legal fees from the previously settled SEC/DOJ investigations. In addition, we had a $0.03 impact from additional tax expense associated with the approximate $275 million foreign cash repatriation in the prior year. The combination of these factors brings us to $0.24 earnings per share on a non-GAAP basis for the first quarter. Included in our result is a $0.09 impact from the devaluation of the Venezuelan bolivar. Our Venezuelan operation consist of a 50% owned subsidiary, which is consolidated. Venezuela is measured using the U.S. dollar as its functional currency because its economy is considered highly inflationary. On March 24, 2014, the Venezuelan government announced a currency exchange mechanism, Sicad II, which yielded an exchange rate significantly higher than the rates established through the other regulated exchange mechanisms. As a result, we remeasured our Venezuela balance sheet using the Sicad II rate of 50.9 versus the previous rate of 6.3. This resulted in net losses of $12 million, but it recorded with the foreign exchange loss, which included a decrease of $6 million to our cash balance. In addition, this gave rise to a write-down of our Venezuelan service parts inventory of $4 million. We'll continue to monitor the business environment in Venezuela and will make appropriate changes as needed to strengthen our ability and execute on our financial plans within the region. First quarter non-GAAP effective tax rate was approximately 33%. We still expect our non-GAAP effective tax rate for the full year to be approximately 30%. Moving on to cash flow on Slide 25. Our Free Cash flow results reflect a $39 million free cash use, which improved approximately $2 million from the same period last year. Turning to Slide 26. The organization's focused efforts resulted in a DSO improvement of 6 days in the quarter versus the same period last year. Looking at Slide 27. Inventory turns reflected a small improvement at 5.4 turns compared to the first quarter 2013 of 5.2 turns. Net debt on Slide 28 for the period was $110 million, a $29 million increase from the prior year period. Net debt-to-capital ratio increased approximately 4 percentage points to 10%. Turning to Slide 29. As previously disclosed, the company has reached agreement with the DOJ and the SEC on the terms of the settlement regarding FCPA. Additionally, as previously disclosed, we will have an independent corporate monitor for a minimum period of 18 months. The government agencies have appointed a corporate monitor who will commence activities in the second quarter. We have made considerable improvements to our compliance program and will continue to implement enhancements as the need is identified. We're actively working to remediate our material weaknesses in Brazil and India. We have made solid progress and expect to have both remediated during the year. Looking at our outlook on Slide 30. We are encouraged with our strong start to the year in both orders and revenue. However, currency remains a risk and the Venezuelan devaluation puts pressure on our non-GAAP EPS for the full year. We estimate that for 2014, Venezuela results for second quarter through fourth quarter will generate essentially a 0 net income as a result of the devaluation. Additionally, as we previously discussed, we will be ramping up our reinvestment in the business this year, specifically in the areas of development, IT and back-office support as it relates to our engagement with Accenture. Therefore, we're raising our revenue guidance to be up to mid-single digits. We're maintaining non-GAAP EPS guidance of $1.65 to $1.85. This includes the adverse impact of the devaluation of the Venezuelan bolivar of approximately $0.12 to non-GAAP EPS on the full year. We expect restructuring charges and nonroutine expenses to be in the $0.30 to $0.35 and our full year non-GAAP effective tax rate to be approximately 30%. In regards to our free cash flow outlook for 2014, on Slide 30, we are maintaining our free cash flow outlook for the year of $80 million to $100 million. This includes an approximate $35 million increase on our capital expenditures as we make strategic reinvestments in our business. In closing, we're committed to continuous improvements to maintain and strengthen our control environment, while operationally reducing our costs, improving our working capital efficiencies. We're beginning to demonstrate tangible results from our turnaround efforts. However, we are early in the process and beginning the necessary reinvestments to position the company for long-term growth. With that, I'll turn the call back to John.

[John D. Kristoff:]

Thank you, Chris. Camille, we'll now take questions, please.

[Operator:]

[Operator Instructions] We'll take our first question from Gil Luria from Wedbush Securities.

[Gil B. Luria:]

First of all, North America you said single -- mid-single-digit order growth for the year but you had down revenue for the quarter. What's the outlook for the North America Financial Self-Service revenue for the year? And what's going to be driving them [indiscernible] the balance between regional and national and contribution from branch transformation?

[Christopher A. Chapman:]

Gil, starting with the last part of your question first, on the branch transformation front, I think we've seen that being a little bit of a longer sales cycle. So we don't see that being a significant contributor at this point in the 2014 growth. On the regional side, our expectation is to continue to see a ramp as we go throughout the year getting the benefit of some of the Windows 7 activity that we've seen. And so we're expecting our regional business to show some slight improvement over prior year, again, showing more of that momentum in the second half of the year as we start to revenue some of the orders. On the national front, again, we've mentioned some of the large -- or lumpiness of some of the larger orders. And so right now, we expect that business to be roughly flat in the full year and again, we'll provide additional color as we see some of that activity as it plays out over the next several quarters.

[Gil B. Luria:]

Got it. And then you seem to be making great progress on the $150 million plan. When cost-cutting, when do you plan to revisit either the scope or extending into the horizon of the cost cutting and introducing new opportunities for further cost reductions? When do you intend to revisit that with the investment community?

[Andreas Walter Mattes:]

Gil, it's Andy. The -- let me give you a baseball analogy. If you take a look at our Diebold 2.0 turnaround, we're probably in the second inning. We're still early. Before we squawk about extending the horizon, let's make sure we deliver a few more quarters. To give you a reasonable expectation, we will be talking about longer-term aspirations of the company at our Investor Day which, as usually, will be in the early part of November this year.

[Operator:]

We'll take our next question from Matt Summerville with KeyBanc.

[Matt J. Summerville:]

Just to put this in perspective. How big is Venezuela revenue and non-GAAP net income to Diebold in 2013, Chris?

[Christopher A. Chapman:]

Full impact for the full year 2013 was probably around, I don't have the exact number, Matt, about $35 million to $40 million approximately in terms of total revenue. Again, from a net income standpoint, it was roughly $5 million to $6 million. But remember again, this is a joint venture, so half of that goes away with the noncontrolling interest when you look at the full impact from an EPS standpoint.

[Matt J. Summerville:]

Got it. And then with what you decided to do with Accenture, Andy, if you look at the Accenture path you're moving down versus the previous path you were considering, I guess. Can you sort of walk through a little more granularity in terms of the cost benefit analysis that you would've done to come to this conclusion and why sort of now it makes sense to make what's a pretty substantial switch here?

[Andreas Walter Mattes:]

Happy to do so, Matt. Let's start out with, part of our turnaround strategy from the very beginning was going to global processes, global standards and pooling of resources in cost-optimized locations. The initial plan, when we outlined it to you and to your peers in November, was to do all of that in a Diebold-owned environment. After pressure testing the task and the to-dos, we figured we were better off by partnering up with somebody who actually does transformation as a living and brings a lot of expertise to it because the most important thing is to make sure that these transformation happened in a secure way, that our customers are not impacted and that we see the savings coming through as we progress. So biggest driver was confidence in our ability to deliver and to improve our financial controls in this process. From a cost-benefit point of view, we decided to invest more in 2014 and '15 in these transformational activities and we'll see the benefits come through in 2016 and thereafter on a very steady run rate going forward.

[Matt J. Summerville:]

And then just as a follow-up, I think in the past, you guys have talked about kind of the first half versus second half weighting of your EPS. Can you sort of go through that again given the timing of some of the things you're talking about today? It probably makes sense to revisit that.

[Christopher A. Chapman:]

Yes, Matt, I would reiterate where we were with the last call in terms of still expecting to see the back half of the year to be more heavily weighted. From a ramp standpoint as well, we're going to see continued increase on our overall investments in the business as we go throughout the quarter. You're going to see that start to ramp-up in the second quarter. And so again still a little bit of that back half weighting from a total earnings distribution.

[Operator:]

We'll take our next question from Matt Lipton with Autonomous Research.

[Matthew Lipton:]

Just a real quick clarification, first, Chris. The Accenture upfront investment, that's going to be excluded from non-GAAP EPS, so it's not contemplated in the guidance?

[Christopher A. Chapman:]

No, no. There's going to be 2 pieces you'll see there. So, number one, we will have some severance activity that will be called out from a restructuring standpoint, that we will call out and exclude from our non-GAAP performance. However, the transition fees associated with that, which we expect to be about $12 million to $15 million over the next 18 months, that's just going to be part of our ongoing business operations. Again, as Andy mentioned, the plan was to do a lot of this on our own and that would have been internal cost. We're working with a partner, it's part of our ongoing business and so we're not looking to exclude that from our future non-GAAP earnings.

[Matthew Lipton:]

Got it. So it's in line with the $75 million of the $150 million that you had always talked about being reinvested in the business. Is that fair?

[Christopher A. Chapman:]

Yes, I would say it's part of that, maybe a little bit of an increase in that overall $75 million, getting us closer to $80 million to $85 million and, again, we're looking at some additional areas to offset that through additional business performance. So again maybe seeing a little bit higher reinvestment there again as we've switched our strategy with a little bit with regards to the back-office.

[Matthew Lipton:]

Got it. And then large Brazil order in the quarter. Can you just help us think about the profitability of that order relative to the company-wide margin? Was it magnitudes of the 4% operating margin and operating income profitability?

[Andreas Walter Mattes:]

Let me start with how we think about these Brazil other orders in general. These are clearly adjacencies to our business. So unless we like the overall margin picture of an order over the lifespan of an order, we will not go down that path to take on those businesses. But having said that, the revenue that you see coming through in the first quarter comes through at a pretty good margin and that's also the litmus test for why we went down the path of doing such a project.

[Matthew Lipton:]

Okay, fair enough. And then just one quick one on free cash flow. I see in the release that 97% to 99% of cash is still overseas. How much of the cash balance now can be repatriated without any further tax consequences? And then as you think about your repatriation plans over the rest of 2014, how should we think about that considering the commitment to the dividend and the free cash flow that's generating being lost in the U.S. over the next 6 to 9 months?

[Christopher A. Chapman:]

So again, I'll go backwards on your question here. So for 2014, we're looking at repatriating approximately $70 million to $80 million from our foreign jurisdictions. With regards to how much we can access without additional tax consequences, again, we did change our APB 23 assertion in the second quarter last year. And so there's, I'd say, approximately half of that, that we have access to on a go-forward basis without any additional material tax consequences compared to where we've been.

[Operator:]

We'll take our next question from Kartik Mehta with Northcoast Research.

[Kartik Mehta:]

Andy, as I listen to your expectations for the U.S., is it fair to say for you to expect kind of a low-single digit growth for the ATM part of -- in the U.S.?

[Andreas Walter Mattes:]

Yes.

[Kartik Mehta:]

And then Andy, you talked about Western Europe having -- gaining traction in Western Europe and I think you mentioned order out of U.K. are there other countries where you're gaining traction?

[Andreas Walter Mattes:]

Yes. Before you go down a country path, Kartik, let me remind you, we've taken an account path in Europe, so we're going after global accounts. We've mentioned Spain as a market where we are picking up speed very nicely on these curls earlier and we continue to go down that path. Barclays is another proof point of adding a very important global account to the list. And as we're adding more to the portfolio, we will disclose them to you. But it's really an account-centric approach but we're very encouraged with the picture that we're seeing in Europe and we're very encouraged with the opportunities and the conversations that we have with potential customers.

[Kartik Mehta:]

And Andy, as you look at the ATM market today, what would you anticipate worldwide growth? I know you're having great success in Western Europe. I think you're having success in India and other parts of Asia. But as you look at the entire world, what type of growth are you anticipating for 2014?

[Andreas Walter Mattes:]

Depending on currencies and some movement, I'd say low- to mid-single.

[Kartik Mehta:]

And then just one final question, Chris. Where would you anticipate ending up from a net debt perspective by end of year? Is your goal to pay down some of debt, or do you anticipate that debt level will increase a little bit more?

[Christopher A. Chapman:]

I'd expect our net debt to be largely similar with how we finished 2013. I mean give or take some small fluctuations but not a significant change there.

[Operator:]

We'll take our next question from Paul Coster with JPMorgan.

[Paul Coster:]

First up, the Brazil other revenue of $79 million, how much of that was actually onetime versus sort of recurring revenue? And is that reflective of the slight upward revisions to revenues for the year?

[Christopher A. Chapman:]

So Paul, a vast majority of that I would characterize as one-time. Again, while we will see some repeat activity in this space, not at this same magnitude. And yes, that did impact our full year in terms of the increase that we put out.

[Paul Coster:]

Got it. And secondly, the foreign exchange impact that you've experienced, some of it's translation, some of it's actually going to flow-through the income statement moving forward. The guidance that you've issued on the bottom line, does it sort of already take into consideration the flow-through at the income statement level and how much risk do you think there is there?

[Christopher A. Chapman:]

The guidance that we put out, obviously, takes into account the impact of Venezuela, which was a significant item that came through. And also, I would say, moderate movements that we see in the exchange over the coming quarters. And so that's all factored into our current guidance level.

[Paul Coster:]

Okay. Finally, so branch transformation seems to be occurring. I guess I'd like to sort of just get under the covers a little bit of your statement here. Is it that the there's projects occurring and you're not participating or there's no projects occurring and just the sales cycle for everyone is extended?

[Andreas Walter Mattes:]

No, the -- the project pipeline is ramping up very nicely. Over the last 6 months, we have more than doubled the number of POCs that we have out with customers in North America. So we feel very encouraged about that. But the time from POC heading a true [indiscernible], for both parties, the customers and ourselves, of how will their clients embrace the technology? How much are they going to be able to route to self-service versus human interaction in the branch? How quickly do they want to ramp it up? Those are not trivial decisions for any branch and for any bank. So that takes us time. And then we'll expect the order numbers to go up but still be more a 2015 revenue play. Also keep in mind, branch transformation has a second element to the time frames that the banks think about because their objective is to reduce the size of the branch, less people, more machinery. Well, in order to reduce the size of the branch, the leases of your branches have to be up for renewal because there's no landlord in the United States at this point in time that would let a bank move out of a physical branch and say, "Oh, sure, why don't you move on because the space has been designed for a branch and there's not another bank moving into it?" So some very practical parameters drive the industry and drive the rollout for all of us that participate in that industry.

[Operator:]

We'll take our next question from Justin Bergner with Gabelli & Company.

[Justin Bergner:]

My first question relates to the guidance for the year. It seems like you're absorbing over a $0.15 headwind from the Venezuela depreciation and loss of income and, perhaps, modest other currency effects. The extra income that you're getting from the large Brazil project seems to be something that would be significantly less than that $0.15-plus headwind. So I'm trying to get my hands around where you're going to get -- see strength elsewhere in your business to sort of make up for the net headwind between those 2 factors and meet your initial earnings guidance?

[Christopher A. Chapman:]

Justin, so to take the pieces of this, when you look at our original earnings guidance that we put out, we did assume some impacts for currency moving forward. Again, there was a lot of talking around what was going around Venezuela now, we didn't fully anticipate going to the Sicad II rate when we're initially going through some of the work. And so we did have some of that factored in to some of the outlook that we originally put out. So this is not all incremental in the full year when we look at the impact of Venezuela. Again, we're disclosing the full amount. We've maintained where we're at in the full guidance. And again, then we have, as you noted, talked about the increase for the other revenue in Brazil, which has been also helping to offset some of these other movements that we've seen.

[Justin Bergner:]

Got it. So I should interpret the unchanged guidance as reflecting sort of the incremental Venezuela currency headwind more or less offset by the incremental earnings from the large projects in Brazil? Or is there anything else that's a missing piece to that earnings guidance that I should think about versus what you gave a quarter ago?

[Christopher A. Chapman:]

I think you have the pieces, Justin.

[Justin Bergner:]

Okay, great. And then secondly, on bank branch automation, I know that everyone's focused around developments in North America. Could you maybe talk about what is happening in Europe or is on the verge of happening in Europe and how it's affecting the outlook for your business and profitability in that region?

[Andreas Walter Mattes:]

Europe is starting to embrace the technology. There's a few countries that are pretty active in Western Europe. We've seen a lot of positive momentum, especially in Italy and in France and also the increased opportunity that we have in the U.K., at the end of the day, hinges on the new technology because the benefit of what's happening is as banks look at a next-generation playing field, it gets re-leveled and people like ourselves get reinvited to the party and assuming the customers like our strategy going forward, we actually have an opportunity to get a bigger piece of the action. So good momentum on both sides of the Atlantic when it comes to innovative ATM technology and branch transformation.

[Justin Bergner:]

Excellent, that's good to hear. And will bank branch transformation in Europe where margins haven't historically run as high as North America, in your mind, be an opportunity for further margin enhancement in that region over the next 2 years?

[Andreas Walter Mattes:]

Well, the biggest driver for margin in Europe is actually volume. As volume will increase, so will our margin profile. And again, we feel very good about our position in Europe and we're looking forward to expand our footprint.

[Operator:]

[Operator Instructions] We'll take our next question from Jeff Kessler with Imperial Capital.

[Jeffrey T. Kessler:]

And since I do cover Brinks, just want to let you know I feel all your pain in Venezuela, but 3x over. Status -- if you could just give us some more details on the status of low energy ATMs in countries like Pakistan and India and can we see these types of technologies deployed in, like developed countries like, particularly in Americas, what will it take to do that?

[Andreas Walter Mattes:]

Well, an order to deploy it is as easy as getting the product certified. But let me get back to the why is that such an important milestone and why do we squawk about it? Our technology in India allows an ATM to be up and operational for 3 to 4 hours without power. It consumes less power than a 60-watt lightbulb. The batteries can get recharged off of a solar panel. And if you look at what's one of the main inhibitors for a country like India to roll out more technology to its rural population, it is the inadequacy of the power grid and the power provisioning to a more remote area. And if you then say, are there other markets that have similar challenges than a rural India? There's a lot of markets that come to mind. So it's no surprise that we won business in Pakistan. There's many other emerging markets that we could think about. And we're not only looking at taking the product that we've developed for India and introduce it to other markets. More importantly, is we're taking the IP that we've developed in that product and introduce it to every single one of our products going forward, because we believe that efficient power consumption will move up on the evaluation scale of our customers as time progresses in all nations, including the United States.

[Jeffrey T. Kessler:]

Obviously, what you're saying is they're obvious -- they're obviously both regulatory and functional hurdles to get through to get it to the United States, first?

[Andreas Walter Mattes:]

Yes, but that side, it's -- that's more a technicality than it is rocket science. But the more important thing is, once you start looking at it and once you start to develop IT, we feel very confident that we can add to it. And we believe that the whole notion of green technology, again, think about Europe, think about western Europe, it's very much front of mind with many decision-makers in Europe and we're scoring big on having proof points and being leading in the industry when it comes to that.

[Jeffrey T. Kessler:]

Okay. One other quick question. Update on SecureStat status. Last time you mentioned that you had 200 customers with about 10,000 sites. I'm wondering if that's increased at all, and if you can give us any idea of how far you think that can go, or perhaps this year.

[Andreas Walter Mattes:]

The good news is our Electronic Security business is growing very nicely in the United States, as well as outside of the United States. SecureStat is one of the main drivers. Because the benefit of SecureStat is, you don't have to change out your existing infrastructure in order to switch over to Diebold. Think about it as pretty much a portal technology where any keypad, any camera that you have out there can be hooked up to Diebold's monitoring centers and Diebold support. So huge enabler, with every growth that we have, SecureStat is one of the main drivers. I have to go back and find the exact number, I don't have them at top of mind. Happy to provide them to you through our IR team, if you're interested.

[Jeffrey T. Kessler:]

I am interested. So...

[Andreas Walter Mattes:]

Well get it for you.

[Jeffrey T. Kessler:]

What percent of Venezuela -- I'm sorry, what percent of Venezuela is your revenue?

[Christopher A. Chapman:]

On a full year basis, you can look at prior year, it's about 1.5%.

[Operator:]

We'll take our next question from Glenn Mattson with Sidoti.

[Glenn Mattson:]

Just real quick, did you -- did anybody say exactly what the onetime -- the stuff in Brazil above what you had prior expected, was what's the magnitude of that revenue?

[Christopher A. Chapman:]

If you look at the full year, total company, I would expect the onetime to be in the range -- and again, this is comparing versus prior year of about 3% to 4% on the full year basis, total revenue. And just to clarify, that's taking the PC plus some lottery activity that we previously announced the order on the fourth quarter -- on our fourth quarter call. So really it's those 2 big pieces that I would say largely will not repeat next year.

[Glenn Mattson:]

Remind me what the lottery was that you had said prior, what the revenue expectation was for that?

[Christopher A. Chapman:]

Approximately $50 million.

[Operator:]

There appears no further questions at this time. Mr. Kristoff, I'll turn it back over to you for any additional or closing remarks.

[John D. Kristoff:]

Thank you, Camille. As always, if you have any additional questions, please feel free to reach out to me or Jamie Finefrock, directly. And thank you, again for joining us this morning for our first quarter call.

[Operator:]

This does conclude today's presentation. Thank you for your participation.