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Brink's Reports Third-Quarter Results

Strong Results in North and South America More Than Offset Increased Currency Headwinds

2019 Guidance Adjusted for Expected Full-Year Impact of Currency Translation

RICHMOND, Va., Oct. 23, 2019 (GLOBE NEWSWIRE) -- The Brink’s Company (BCO), the global leader in total cash management, route-based secure logistics and payment solutions, today announced results for the third quarter of 2019. Highlights include:

(In millions, except for per share amounts) Third-Quarter 2019    
  GAAP   Change   Non-GAAP   Change   Constant Currency Change(b)
Revenue $ 928     9%   $ 925     8%   14%
Operating Profit $ 53     (22%)   $ 102     7%   25%
Operating Margin 5.7 %   (220 bps)     11.1 %   (10 bps)   110 bps
Net Income / Adjusted EBITDA(a) $ 5     (69%)   $ 145     7%   20%
EPS $ 0.11     (68%)   $ 1.05     11%   35%
  1. The non-GAAP financial metric, adjusted EBITDA, is presented with its corresponding GAAP metric, net income attributable to Brink's.
  2. Constant currency represents 2019 results at 2018 exchange rates.
•  Segment results: Revenue growth 8%, operating profit up 18%
  •  North America profit up 15%
  •  South America profit up 28%
  •  Rest of World profit up 5%
•  Total operating profit:
  •  GAAP: Profit down 22% to $53 million due primarily to negative currency translation; up 13% organically
  •  Non-GAAP: Profit up 7% to $102 million; increase in corporate expense of $13 million included expected investment in Strategy 2.0 and IT, and higher costs related to share-based compensation and insurance

Doug Pertz, president and chief executive officer, said: “The increase in our third-quarter non-GAAP results was attributable to strong organic and acquisition-related growth in North and South America, which more than offset the negative operating profit impact of $17 million related to currency translation, $6 million worse than we had assumed in our previous guidance. At previous guidance FX rates, operating profit growth would have been 14% versus prior year. In constant currency, revenue and operating profit increased 14% and 25%, respectively.

While we continue to forecast strong operating results for the full year, we expect the negative impact of foreign currency translation to be approximately $80 million, $20 million greater than prior guidance, and have adjusted our full-year guidance to reflect this impact.” (See “2019 Guidance” on page 3.)

Pertz added: “As we near the end of 2019, the integration of our Dunbar acquisition is ahead of schedule and continues to have a positive impact on our U.S. results. We expect our U.S. business to deliver a fourth-quarter margin rate of at least 10%, and a full-year margin rate of at least 8%.

“Looking ahead to 2020 and beyond, we expect our Strategy 1.0 initiatives to drive additional organic growth and profitability, as we continue to improve service levels and operating efficiencies more broadly throughout our global operations. Our Strategy 1.5 acquisition pipeline remains strong, and we expect to make additional accretive acquisitions. Our current strategic plan, ending this year, is expected to deliver operating profit growth of at least 20% CAGR over the three-year plan period. We’re currently developing and investing in Strategy 2.0, our next plan to accelerate growth, which will focus on expanding our presence in the cash ecosystem. We’re confident that this three-pronged strategy will drive continued strong revenue and profit growth throughout our next three-year plan period. We will provide a comprehensive strategic review at an Investor Day event in New York City in the first half of 2020 on a date to be announced.”

2019 Non-GAAP Guidance
Management updated its full-year 2019 non-GAAP guidance to reflect higher-than-expected negative currency translation, which includes $20 million impact on operating profit, increasing our full-year expectation to $80 million, up from $60 million, in the company’s prior guidance.

Full-year 2019 non-GAAP guidance now includes revenue growth of 8% (7% organic) to $3.7 billion (versus prior guidance of $3.75 million); operating profit growth of approximately 14% to a range between $385 million and $405 million (versus prior midpoint of $415 million); adjusted EBITDA growth of 11% to a range between $560 million and $580 million (versus a prior midpoint of $600 million), and earnings growth of 16% to a range between $3.90 and $4.10 per share (versus a prior midpoint of $4.20 per share).

The company’s prior full-year 2019 non-GAAP guidance was initially provided on February 6 and affirmed on July 24. The updated guidance uses October 22 exchange rates for the remainder of 2019, except for the Argentine peso, for which the company is assuming an average of 50 pesos to the U.S. dollar for the full year (and an average of 67 pesos to the dollar for the fourth quarter).

Conference Call
Brink’s will host a conference call on October 23 at 8:30 a.m. ET to review second-quarter results. Interested parties can listen by calling 888-349-0094 (in the U.S.) or 412-902-0124 (international). Participants can pre-register at http://dpregister.com/10135913 to receive a direct dial-in number for the call. The call also will be accessible live via webcast on the Brink’s website (www.brinks.com). A replay of the call will be available through November 23, 2019, at 877-344-7529 (in the U.S.) or 412-317-0088 (international). The conference number is 10135913. An archived version of the webcast will be available online in the Investor Relations section of www.brinks.com or by clicking here.

2019 Guidance (Unaudited)
(In millions, except for percentages and per share amounts)

  2018
GAAP
  2018
Non-GAAP(a)
  2019 GAAP 
Outlook(b)
  Reconciling Items(a)   2019 Non-GAAP
Outlook(a)
Revenues $ 3,489     3,438     3,704     (4 )   3,700  
Operating profit 275     347     250 – 270     135     385 – 405  
Nonoperating expense (232 )   (64 )   (137) – (139 )   49     (88) – (90 )
Provision for income taxes (70 )   (97 )   (59) – (68 )   ~ (33 )   (94) – (99 )
Noncontrolling interests (6 )   (7 )   (5 )       (5 )
Income from continuing operations attributable to Brink's (33 )   179     49 – 58     ~ 151     198 – 211  
EPS from continuing operations attributable to Brink's $ (0.65 )   3.46     0.95 – 1.15     2.95     3.90 – 4.10  
                         
Operating profit margin 7.9 %   10.1 %   6.7% – 7.3 %   ~ 3.7%     10.4% – 10.9 %
                         
Effective income tax rate 164.7 %   34.2 %   52.0 %   (20.5 )%   31.5 %
                         
Adjusted EBITDA     512                 560 – 580  


Changes from 2018 Revenue Change   Operating Profit Change   EPS Change
  2019 GAAP 
Outlook(b)
  % Change
vs. 2018
  2019 Non-GAAP
Outlook(a)
  % Change
vs. 2018
  2019 GAAP 
Outlook(b)
  2019 Non-GAAP
Outlook(a)
  2019 Non-GAAP
Outlook(a)
Organic 202     6     250     7     53 – 73     83 – 103     1.04 – 1.24  
Acquisitions / Dispositions(c) 288     8     288     8     (8 )   35     0.47  
Currency (275 )   (8 )   (275 )   (8 )   (70 )   (80 )   (1.07 )
Total 215     6     263     8     (25) – (5 )   38 – 58     0.44 – 0.64  

Amounts may not add due to rounding

  1. The 2018 Non-GAAP amounts are reconciled to the corresponding GAAP items on pages 10-13. The 2019 Non-GAAP outlook amounts exclude the year-to-date September 2019 Non-GAAP adjusting items applicable to each category. In addition, we have excluded certain other forecasted Non-GAAP adjusting items for the remainder of 2019, such as intangible asset amortization and U.S. retirement plan costs. We have not forecasted the impact of highly inflationary accounting on our Argentina operations for the remainder of 2019 or other potential Non-GAAP adjusting items for which the timing and amounts are currently under review, such as future restructuring actions. The 2019 Non-GAAP outlook amounts for operating profit, nonoperating expense, provision for income taxes, income from continuing operations, EPS from continuing operations, effective income tax rate and Adjusted EBITDA cannot be reconciled to GAAP without unreasonable effort. We cannot reconcile these amounts to GAAP because we are unable to accurately forecast the impact of highly inflationary accounting on our Argentina operations for the remainder of 2019 or other potential Non-GAAP adjusting items for which the timing and amounts are currently under review, such as future restructuring actions.
  2. The 2019 GAAP outlook excludes any forecasted impact from highly inflationary accounting on our Argentina operations for the remainder of 2019 as well as other potential Non-GAAP adjusting items for which the timing and amounts are currently under review, such as future restructuring actions.
  3. Non-GAAP amounts include the impact of prior year comparable period results for acquired and disposed businesses. GAAP results also include the impact of acquisition-related intangible amortization, restructuring and other charges, and disposition related gains/losses.


The Brink’s Company and subsidiaries
(In millions, except for per share amounts) (Unaudited)

Third-Quarter 2019 vs. 2018

                             
GAAP     Organic   Acquisitions /           % Change  
  3Q'18   Change   Dispositions(a)   Currency(b)   3Q'19   Total   Organic  
Revenues:                            
North America $ 383     16     50     (3 )   447     17     4    
South America 216     39     13     (39 )   229     6     18    
Rest of World 254     3         (8 )   249     (2 )   1    
Segment revenues(g) $ 852     58     63     (49 )   925     8     7    
                                 
Other items not allocated to segments(d)     4             4     fav     fav    
Revenues - GAAP $ 852     62     63     (49 )   928     9     7    
                                 
Operating profit:                                
North America $ 34     4     2     (1 )   39     15     12    
South America 46     25     3     (15 )   59     28     54    
Rest of World 31     2         (1 )   32     5     6    
Segment operating profit 111     31     5     (16 )   130     18     28    
Corporate(c) (15 )   (12 )       (1 )   (28 )   81     76    
Operating profit - non-GAAP $ 95     19     5     (17 )   102     7     20    
                                 
Other items not allocated to segments(d) (28 )   (10 )   (14 )   2     (50 )   76     35    
Operating profit - GAAP $ 67     9     (8 )   (15 )   53     (22 )   13    
                                 
GAAP interest expense (17 )               (23 )   35          
                                 
GAAP interest and other income (expense) (8 )               (8 )   (4 )        
                                 
GAAP provision for income taxes 23                 15     (36 )        
                                 
GAAP noncontrolling interests 1                 1     (7 )        
                                 
GAAP income (loss) from continuing operations(f) 18                 6     (67 )        
                                 
GAAP EPS(f) $ 0.34                 0.11     (68 )        
                                 
GAAP weighted-average diluted shares 52.0                 51.1     (2 )        
                                 


                             
Non-GAAP(e)     Organic   Acquisitions /           % Change  
  3Q'18   Change   Dispositions(a)   Currency(b)   3Q'19   Total   Organic  
                             
Segment revenues - GAAP/non-GAAP $ 852     58     63     (49 )   925     8     7    
                                     
Non-GAAP operating profit 95     19     5     (17 )   102     7     20    
                                     
Non-GAAP interest expense (17 )                 (21 )   27          
                                     
Non-GAAP interest and other income (expense)                   (1 )   unfav          
                                     
Non-GAAP provision for income taxes 27                   25     (6 )        
                                     
Non-GAAP noncontrolling interests 2                   1     (35 )        
                                     
Non-GAAP income from continuing operations(f) 50                   54     8          
                                     
Non-GAAP EPS(f) $ 0.95                   1.05     11          
                                     
Non-GAAP weighted-average diluted shares 52.0                   51.1     (2 )        
                                     

Amounts may not add due to rounding.

  1. Non-GAAP amounts include the impact of prior year comparable period results for acquired and disposed businesses. GAAP results also include the impact of acquisition-related intangible amortization, restructuring and other charges, and disposition related gains/losses.
  2. The amounts in the “Currency” column consist of the effects of Venezuela devaluations, prior to deconsolidation, the effects of Argentina devaluations under highly inflationary accounting and the sum of monthly currency changes. Monthly currency changes represent the accumulation throughout the year of the impact on current period results from changes in foreign currency rates from the prior year period.
  3. Corporate expenses are not allocated to segment results. Corporate expenses include salaries and other costs to manage the global business and to perform activities required of public companies.
  4. See pages 8-9 for more information.
  5. Non-GAAP results are reconciled to applicable GAAP results on pages 10-13.
  6. Attributable to Brink's.
  7. Segment revenues equal our total reported non-GAAP revenues.


The Brink’s Company and subsidiaries
(In millions, except for per share amounts) (Unaudited)

Nine Months Ended September 30,

                             
GAAP     Organic   Acquisitions /           % Change  
  2018   Change   Dispositions(a)   Currency(b)   2019   Total   Organic  
Revenues:                            
North America $ 1,028     55     249     (8 )   1,324     29     5    
South America 704     107     50     (176 )   685     (3 )   15    
Rest of World 799     8     (35 )   (36 )   736     (8 )   1    
Segment revenues(g) $ 2,530     170     264     (220 )   2,744     8     7    
                               
Other items not allocated to segments(d) 51     (47 )   (1 )       4     (93 )   (92 )  
Revenues - GAAP $ 2,581     123     263     (220 )   2,747     6     5    
                               
Operating profit:                              
North America $ 80     33     16     (1 )   129     61     41    
South America 148     45     11     (57 )   147         31    
Rest of World 83     1     1     (3 )   82         1    
Segment operating profit 311     79     29     (60 )   359     15     26    
Corporate(c) (68 )   (17 )       2     (83 )   22     25    
Operating profit - non-GAAP $ 243     63     29     (58 )   276     14     26    
                               
Other items not allocated to segments(d) (50 )   (32 )   (42 )   10     (113 )   unfav     64    
Operating profit - GAAP $ 194     31     (13 )   (48 )   164     (16 )   16    
                                 
GAAP interest expense (48 )               (69 )   44        
                                 
GAAP loss on deconsolidation of Venezuela operations (127 )                   fav        
                                 
GAAP interest and other income (expense) (29 )               (22 )   (25 )      
                                 
GAAP provision for income taxes 53                 37     (30 )      
                                 
GAAP noncontrolling interests 5                 4     (27 )      
                                 
GAAP income (loss) from continuing operations(f) (68 )               32     fav        
                               
GAAP EPS(f) $ (1.34 )               0.63     fav        
                               
GAAP weighted-average diluted shares   51.0                 51.0            
                               


                             
Non-GAAP(e)     Organic   Acquisitions /           % Change  
  2018   Change   Dispositions(a)   Currency(b)   2019   Total   Organic  
                             
Segment revenues - GAAP/non-GAAP $ 2,530     170     264     (220 )   2,744     8     7    
                             
Non-GAAP operating profit 243     63     29     (58 )   276     14     26    
                             
Non-GAAP interest expense (47 )               (64 )   36        
                             
Non-GAAP loss on deconsolidation of Venezuela operations                            
                             
Non-GAAP interest and other income (expense) 4                 (5 )   unfav        
                             
Non-GAAP provision for income taxes 68                 65     (4 )      
                             
Non-GAAP noncontrolling interests 6                 4     (39 )      
                             
Non-GAAP income from continuing operations(f) 125                 138     10        
                             
Non-GAAP EPS(f) $ 2.41                 2.71     12        
                             
Non-GAAP weighted-average diluted shares   52.1                 51.0     (2 )      
                             

Amounts may not add due to rounding.

See page 4 for footnote explanations.


The Brink’s Company and subsidiaries
 (In millions) (Unaudited)

Selected Items - Condensed Consolidated Balance Sheets

  December 31, 2018   September 30, 2019
Assets      
Cash and cash equivalents $ 343.4     337.0  
Restricted cash 136.1     89.2  
Accounts receivable, net 599.5     653.1  
Right-of-use assets, net     269.3  
Property and equipment, net 699.4     718.1  
Goodwill and intangibles 907.5     1,049.2  
Deferred income taxes 236.5     236.3  
Other 313.6     350.4  
       
Total assets $ 3,236.0     3,702.6  
       
Liabilities and Equity      
       
Accounts payable 174.6     169.0  
Debt 1,554.0     1,749.9  
Retirement benefits 563.0     550.0  
Accrued liabilities 502.1     592.0  
Lease liabilities     217.9  
Other 275.7     238.6  
Total liabilities 3,069.4     3,517.4  
       
Equity 166.6     185.2  
       
Total liabilities and equity $ 3,236.0     3,702.6  


Selected Items - Condensed Consolidated Statements of Cash Flows

  Nine Months
 Ended September 30,
  2018   2019
Net cash provided by operating activities $ 148.6     151.8  
Net cash used by investing activities (623.3 )   (301.5 )
Net cash provided by financing activities 184.3     112.7  
       
Effect of exchange rate changes on cash (29.6 )   (16.3 )
Cash, cash equivalents and restricted cash:      
Decrease (320.0 )   (53.3 )
Balance at beginning of period 726.9     479.5  
Balance at end of period $ 406.9     426.2  
       
Supplemental Cash Flow Information      
       
Capital expenditures $ (104.0 )   (116.0 )
Acquisitions (521.0 )   (183.9 )
Depreciation and amortization 119.5     139.5  
Cash paid for income taxes, net (72.8 )   (33.4 )


About The Brink’s Company
The Brink’s Company (BCO) is the global leader in total cash management, route-based secure logistics and payment solutions including cash-in-transit, ATM services, cash management services (including vault outsourcing, money processing and intelligent safe services), and international transportation of valuables. Our customers include financial institutions, retailers, government agencies, mints, jewelers and other commercial operations. Our global network of operations in 41 countries serves customers in more than 100 countries. For more information, please visit our website at www.brinks.com or call 804-289-9709.

Forward-Looking Statements
This release contains forward-looking information. Words such as "anticipate," "assume," "estimate," "expect," “target” "project," "predict," "intend," "plan," "believe," "potential," "may," "should" and similar expressions may identify forward-looking information. Forward-looking information in these materials includes, but is not limited to: 2019 GAAP and non-GAAP outlook, including revenue, organic growth, operating profit, operating profit margin, expected currency impact and impact of acquisitions, tax rate, and adjusted EBITDA; drivers of profit growth; impact of currency translation; margin rate for the U.S. business, expected growth and profitability from Strategy 1.0 initiatives; future acquisitions; and costs related to Reorganization and Restructuring activities. Forward-looking information in this document is subject to known and unknown risks, uncertainties and contingencies, which are difficult to predict or quantify, and which could cause actual results, performance or achievements to differ materially from those that are anticipated.

These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to: our ability to improve profitability and execute further cost and operational improvement and efficiencies in our core businesses; our ability to improve service levels and quality in our core businesses; market volatility and commodity price fluctuations; seasonality, pricing and other competitive industry factors; investment in information technology (“IT”) and its impact on revenue and profit growth; our ability to maintain an effective IT infrastructure and safeguard confidential information; our ability to effectively develop and implement solutions for our customers; risks associated with operating in foreign countries, including changing political, labor and economic conditions, regulatory issues (including the imposition of international sanctions, including by the U.S. government), currency restrictions and devaluations, restrictions on and cost of repatriating earnings and capital, impact on the Company’s financial results as a result of jurisdictions determined to be highly inflationary, and restrictive government actions, including nationalization; labor issues, including negotiations with organized labor and work stoppages; the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates; our ability to identify, evaluate and complete acquisitions and other strategic transactions and to successfully integrate acquired companies; costs related to dispositions and product or market exits; our ability to obtain appropriate insurance coverage, positions taken by insurers relative to claims and the financial condition of insurers; safety and security performance and loss experience; employee and environmental liabilities in connection with former coal operations, including black lung claims; the impact of the Patient Protection and Affordable Care Act on legacy liabilities and ongoing operations; funding requirements, accounting treatment, and investment performance of our pension plans, the VEBA and other employee benefits; changes to estimated liabilities and assets in actuarial assumptions; the nature of hedging relationships and counterparty risk; access to the capital and credit markets; our ability to realize deferred tax assets; the outcome of pending and future claims, litigation, and administrative proceedings; public perception of our business, reputation and brand; changes in estimates and assumptions underlying critical accounting policies; the promulgation and adoption of new accounting standards, new government regulations and interpretation of existing standards and regulations.

This list of risks, uncertainties and contingencies is not intended to be exhaustive. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2018, and in our other public filings with the Securities and Exchange Commission. The forward-looking information included in this document is representative only as of the date of this document and The Brink's Company undertakes no obligation to update any information contained in this document.


The Brink’s Company and subsidiaries
Segment Results: 2018 and 2019 (Unaudited)
(In millions, except for percentages)

...
  Revenues
  2018   2019
  1Q   2Q   3Q   4Q   Full Year   1Q   2Q   3Q   Nine
Months
Revenues:                                  
North America $ 320.1     324.0     383.4     438.8     1,466.3     $ 434.5     442.5     446.7     1,323.7  
South America 254.8     233.3     215.5     223.3     926.9     230.3     225.2     229.0     684.5  
Rest of World 278.4     266.8     253.5     245.6     1,044.3     240.2     246.6     248.9     735.7  
Segment revenues - GAAP and Non-GAAP 853.3     824.1     852.4     907.7     3,437.5     905.0     914.3     924.6     2,743.9  
                                   
Other items not allocated to segments(a)                                  
Venezuela operations 25.8     25.6             51.4                  
Acquisitions and dispositions                         (0.3 )   (0.2 )   (0.5 )
Internal loss                             4.0     4.0  
GAAP $ 879.1     849.7     852.4     907.7     3,488.9     $ 905.0     914.0     928.4     2,747.4  
                                   
  Operating Profit
  2018   2019
  1Q   2Q   3Q   4Q   Full Year   1Q   2Q   3Q   Nine
Months
Operating profit:                                  
North America $ 20.6     26.1     33.6     49.5     129.8     $ 44.0     46.4     38.7     129.1  
South America 55.6     46.1     46.3     50.7     198.7     43.0     45.0     59.4     147.4  
Rest of World 25.6     26.2     30.8     31.8     114.4     23.8     26.2     32.2     82.2  
Corporate (30.3 )   (22.2 )   (15.4 )   (28.1 )   (96.0 )   (26.0 )   (28.8 )   (27.9 )   (82.7 )
Non-GAAP 71.5     76.2     95.3     103.9     346.9     84.8     88.8     102.4     276.0  
                                   
Other items not allocated to segments(a)                                  
Venezuela operations 3.5     (1.2 )           2.3                  
Reorganization and Restructuring (3.7 )   (4.5 )   (7.3 )   (5.1 )   (20.6 )   (3.5 )   (10.6 )   (6.4 )   (20.5 )
Acquisitions and dispositions (6.5 )   (7.4 )   (10.7 )   (16.8 )   (41.4 )   (17.2 )   (22.6 )   (24.0 )   (63.8 )
Argentina highly inflationary impact         (8.3 )   0.3     (8.0 )   (4.3 )   (0.1 )   (7.9 )   (12.3 )
Internal loss                         (2.6 )   (11.3 )   (13.9 )
Reporting compliance     (1.4 )   (2.0 )   (1.1 )   (4.5 )   (1.4 )   (0.3 )   (0.3 )   (2.0 )
GAAP $ 64.8     61.7     67.0     81.2     274.7     $ 58.4     52.6     52.5     163.5  
                                   
  Margin
  2018   2019
  1Q   2Q   3Q   4Q   Full Year   1Q   2Q   3Q   Nine
Months
Margin:                                  
North America 6.4 %   8.1     8.8     11.3     8.9     10.1 %   10.5     8.7     9.8  
South America 21.8     19.8     21.5     22.7     21.4     18.7     20.0     25.9     21.5  
Rest of World 9.2     9.8     12.1     12.9     11.0     9.9