Record Second Quarter Revenue and Operating Profit
Strong Year-to-Date Cash Generation with an Increase of Over 150% in Net Cash from Operations
Affirmed Full-Year 2023 Guidance
Results Highlights:
- Q2 Revenue up 7%, reflecting 8% organic growth
- Q2 Operating profit: GAAP up 9% to $106M; non-GAAP up 6% to $132M
- Q2 Operating margin: GAAP up 2% to 8.7%; non-GAAP down 1% to 10.8%
- Q2 GAAP net income down 9% to $32M; adjusted EBITDA up 4% to $194M
- Q2 EPS: GAAP $0.68; non-GAAP $1.18
- YTD GAAP net cash from operations up $64M to $105M; non-GAAP free cash flow up $115M to $66M
RICHMOND, Va., Aug. 09, 2023 (GLOBE NEWSWIRE) -- The Brink’s Company (:BCO), a leading global provider of cash and valuables management, digital retail solutions, and ATM managed services, today announced second-quarter results.
Mark Eubanks, president and CEO, said: “We are proud of our performance in the second-quarter and the progress we are making to transform our business through digital retail solutions and ATM managed services. Record second quarter revenue was highlighted by 19% organic growth in AMS and DRS and continued strong pricing discipline in cash and valuables management. Double-digit organic operating profit growth includes price and revenue mix benefits, productivity gains, and the flow-through from the execution of our restructuring plans partially offset by a security loss in our global services business. Cash generation continues to improve with free cash flow up $115 million year-to-date through increased working capital discipline and EBITDA growth.
“We are leveraging the Brink's Business System to drive growth and efficiencies throughout the organization by sharing best practices and creating more consistency in our business model. We affirm our guidance for 2023 and remain confident in our outlook as we capitalize on a strong start to the year and deliver results that create long-term shareholder value.”
Security Losses
Second-quarter results included a $12 million increase in security losses year-over-year, primarily from a large loss event in our global services line of business. The company uses historical data to plan for losses, however the timing of large loss events is difficult to forecast on a quarterly basis. Given how we manage security loss risk, we do not expect the second-quarter increase to impact our full-year outlook.
Second-quarter results are summarized in the following table:
(In millions, except for per share amounts)Second-Quarter 2023 (vs. 2022) GAAP Change Non-GAAP Change ConstantCurrency
Change(b)Revenue$1,216 7% $1,216 7% 11%Operating Profit$106 9% $132 6% 18%Operating Margin 8.7% 20 bps 10.8% (10 bps) 70 bpsNet Income / Adjusted EBITDA(a)$32 (9%) $194 4% 12%EPS$0.68 (7%) $1.18 (12%) 4%
(a) The non-GAAP financial metric, adjusted EBITDA, is presented with its corresponding GAAP metric, net income attributable to Brink's.
(b) Constant currency represents 2023 Non-GAAP results at 2022 exchange rates.
2023 Guidance (Unaudited)
(In millions, except for percentages and per share amounts)
The 2023 Non-GAAP outlook amounts cannot be reconciled to GAAP without unreasonable effort, as we are unable to accurately forecast certain amounts that are necessary for reconciliation, including the impact of highly inflationary accounting on our Argentina operations in 2023 or other potential Non-GAAP adjusting items for which the timing and amounts are currently under review, such as future restructuring actions and the impact of possible future acquisitions. We are also unable to forecast changes in cash held for customer obligations or proceeds from the sale of property, equipment and investments in 2023. The 2023 Non-GAAP outlook reflects management's current assumptions regarding variables that are difficult to accurately forecast, including those discussed in the Risk Factors set forth in the Company's filings with the United States Securities and Exchange Commission. The 2023 outlook assumes the continuation of current economic trends and does not contemplate a significant economic downturn for the balance of the year.
| 2023 Non-GAAP Outlook | ||
| Revenues | $ | 4,800 - 4,950 |
| Operating profit | $ | 625 - 675 |
| Operating profit margin | ~13.3% | |
| Adjusted EBITDA | $ | 865 - 915 |
| Adjusted EBITDA margin | ~18.3% | |
| Free cash flow before dividends | $ | 325 - 375 |
| EPS from continuing operations attributable to Brink's | $ | 6.45 - 7.15 |
Conference Call
Brink’s will host a conference call on August 9 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 preregister at https://dpregister.com/sreg/10180693/f9e1ff8267 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 August 16, 2023 at 877-344-7529 (in the U.S.) or 412-317-0088 (international). The conference number is 4789365. An archived version of the webcast will be available online in the Investor Relations section of http://investors.brinks.com.
The Brink’s Company and subsidiaries
(In millions) (Unaudited)
Selected Items - Condensed Consolidated Balance Sheets
December 31, 2022 June 30, 2023Assets Cash and cash equivalents$972.0 890.1Restricted cash 438.5 433.5Accounts receivable, net 862.2 851.0Right-of-use assets, net 314.5 336.7Property and equipment, net 935.3 990.2Goodwill and intangibles 1,986.4 1,983.9Deferred tax assets, net 246.2 242.3Other 610.9 683.7 Total assets$6,366.0 6,411.4 Liabilities and Equity Accounts payable 296.5 231.5Debt 3,402.8 3,468.6Retirement benefits 305.5 307.2Accrued liabilities 1,019.4 949.4Lease liabilities 249.9 269.0Other 521.7 521.5Total liabilities 5,795.8 5,747.2 Equity 570.2 664.2 Total liabilities and equity$6,366.0 6,411.4Selected Items - Condensed Consolidated Statements of Cash Flows
Six MonthsEnded June 30, 2022 2023 Net cash provided by operating activities$41.1 105.3 Net cash used by investing activities (102.5) (144.6)Net cash provided (used) by financing activities 136.5 (54.3) Effect of exchange rate changes on cash (59.9) 6.7 Cash, cash equivalents and restricted cash: Increase (decrease) 15.2 (86.9)Balance at beginning of period 1,086.7 1,410.5 Balance at end of period$1,101.9 1,323.6 Supplemental Cash Flow Information Capital expenditures$(83.4) (89.4)Acquisitions, net of cash acquired (14.0) — Depreciation and amortization 121.3 137.2 Cash paid for income taxes, net (70.5) (54.7)
The Brink’s Company and subsidiaries
(In millions, except for per share amounts) (Unaudited)
Second-Quarter 2023 vs. 2022
GAAP Organic Acquisitions / % Change 2Q'22 Change Dispositions(a) Currency(b) 2Q'23 Total Organic Revenues: North America$402 (4) 1 (2) 397 (1) (1) Latin America 306 64 1 (37) 334 9 21 Europe 227 17 37 6 286 26 8 Rest of World 199 8 (2) (7) 199 — 4 Segment revenues(c)$1,134 86 37 (40) 1,216 7 8 Revenues - GAAP$1,134 86 37 (40) 1,216 7 8 Operating profit: North America$34 3 — — 38 10 9 Latin America 65 16 — (15) 66 2 25 Europe 22 1 6 1 29 31 3 Rest of World 40 3 — (1) 41 5 7 Segment operating profit 161 23 7 (16) 174 8 14 Corporate(d) (37) (7) — 1 (42) 15 19 Operating profit - non-GAAP$124 16 7 (14) 132 6 13 Other items not allocated to segments(e) (28) 3 — (2) (26) (5) (10) Operating profit - GAAP$97 19 7 (16) 106 9 19 GAAP interest expense (32) (51) 58 GAAP interest and other income (expense) 3 4 21 GAAP provision (benefit) for income taxes 29 23 (20) GAAP noncontrolling interests 3 3 — GAAP income from continuing operations(f) 35 32 (9) GAAP EPS(f)$0.73 0.68 (7) GAAP weighted-average diluted shares 47.8 47.3 (1)Amounts may not add due to rounding.
(a)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.(b)The amounts in the “Currency” column consist of 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.(c)Segment revenues equal our total reported non-GAAP revenues.(d)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.(e)See pages 7-9 for more information.(f)Attributable to Brink's.(g)Non-GAAP results are reconciled to applicable GAAP results on pages 10-13.The Brink’s Company and subsidiaries
(In millions, except for per share amounts) (Unaudited) Six Months Ended June 30, 2023 vs. 2022
GAAP Organic Acquisitions / % Change 2022 Change Dispositions(a) Currency(b) 2023 Total Organic Revenues: North America$770 30 2 (4) 799 4 4 Latin America 598 120 2 (70) 649 9 20 Europe 449 42 72 (8) 555 24 9 Rest of World 391 29 (3) (18) 398 2 7 Segment revenues(c)$2,208 221 73 (100) 2,402 9 10 Revenues - GAAP$2,208 221 73 (100) 2,402 9 10 Operating profit: North America$59 17 — — 76 30 29 Latin America 128 32 1 (27) 133 4 25 Europe 37 6 8 — 51 38 17 Rest of World 73 9 1 (3) 79 8 12 Segment operating profit 296 64 10 (31) 339 14 22 Corporate(d) (60) (24) — 4 (79) 32 40 Operating profit - non-GAAP$236 40 10 (26) 259 10 17 Other items not allocated to segments(e) (77) 17 (7) (6) (74) (4) (21) Operating profit - GAAP$159 57 3 (33) 185 17 36 GAAP interest expense (60) (98) 62 GAAP interest and other income (expense) 2 9 fav GAAP provision (benefit) for income taxes (12) 44 unfav GAAP noncontrolling interests 6 6 7 GAAP income from continuing operations(f) 107 47 (56) GAAP EPS(f)$2.22 0.98 (56) GAAP weighted-average diluted shares 48.0 47.4 (1)Amounts may not add due to rounding.
See page 4 for footnote explanations.
About The Brink’s Company
The Brink’s Company (:BCO) is a leading global provider of cash and valuables management, digital retail solutions, and ATM managed services. Our customers include financial institutions, retailers, government agencies, mints, jewelers and other commercial operations. Our network of operations in 52 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: 2023 outlook, including revenue, operating profit, adjusted EBITDA, earnings per share, and free cash flow (and drivers thereof), the impact of the global restructuring plan, expected impact from deployment of tech-enabled solutions, including digital retail solutions and ATM managed services, strategic priorities and initiatives, including the Brink's Business System.
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; general economic issues, including supply chain disruptions, fuel price increases, changes in interest rates, and interest rate increases; 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, including from a cybersecurity incident; 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 (including political conflict or unrest), 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 labor shortages negotiations with organized labor and work stoppages; pandemics (including the ongoing Covid-19 pandemic and related impact to and restrictions on the actions of businesses and consumers, including suppliers and customers), acts of terrorism, strikes or other extraordinary events that negatively affect global or regional cash commerce; 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 American Rescue Plan Act and 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, 2022, and in related disclosures 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: 2022 and 2023 (Unaudited)
(In millions, except for percentages)
| Revenues | |||||||||||||||||||||||||
| 2022 | 2023 | ||||||||||||||||||||||||
| 1Q | 2Q | 3Q | 4Q | Full Year | 1Q | 2Q | Six Months | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||
| North America | $ | 368.8 | 401.6 | 400.6 | 413.1 | 1,584.1 | $ | 401.9 | 397.4 | 799.3 | |||||||||||||||
| Latin America | 291.3 | 306.3 | 301.1 | 311.9 | 1,210.6 | 315.5 | 333.9 | 649.4 | |||||||||||||||||
| Europe | 222.1 | 226.7 | 220.0 | 262.6 | 931.4 | 268.7 | 285.9 | 554.6 | |||||||||||||||||
| Rest of World | 191.8 | 199.3 | 215.0 | 203.3 | 809.4 | 199.3 | 199.0 | 398.3 | |||||||||||||||||
| Segment revenues - GAAP and Non-GAAP | $ | 1,074.0 | 1,133.9 | 1,136.7 | 1,190.9 | 4,535.5 | $ | 1,185.4 | 1,216.2 | 2,401.6 | |||||||||||||||
| Operating Profit | |||||||||||||||||||||||||
| 2022 | 2023 | ||||||||||||||||||||||||
| 1Q | 2Q | 3Q | 4Q | Full Year | 1Q | 2Q | Six Months | ||||||||||||||||||
| Operating profit: | |||||||||||||||||||||||||
| North America | $ | 24.4 | 34.1 | 38.2 | 62.4 | 159.1 | $ | 38.6 | 37.5 | 76.1 | |||||||||||||||
| Latin America | 63.0 | 64.7 | 66.5 | 83.5 | 277.7 | 66.6 | 65.9 | 132.5 | |||||||||||||||||
| Europe | 14.8 | 22.4 | 25.9 | 35.3 | 98.4 | 22.0 | 29.3 | 51.3 | |||||||||||||||||
| Rest of World | 33.1 | 39.5 | 48.3 | 43.0 | 163.9 | 37.3 | 41.3 | 78.6 | |||||||||||||||||
| Corporate | (23.2 | ) | (36.7 | ) | (52.1 | ) | (36.8 | ) | (148.8 | ) | (37.1 | ) | (42.2 | ) | (79.3 | ) | |||||||||
| Non-GAAP | 112.1 | 124.0 | 126.8 | 187.4 | 550.3 | 127.4 | 131.8 | 259.2 | |||||||||||||||||
| Other items not allocated to segments(a) | |||||||||||||||||||||||||
| Reorganization and Restructuring | (11.7 | ) | (2.7 | ) | (19.6 | ) | (4.8 | ) | (38.8 | ) | (14.2 | ) | — | (14.2 | ) | ||||||||||
| Acquisitions and dispositions | (15.2 | ) | (15.4 | ) | (35.7 | ) | (20.3 | ) | (86.6 | ) | (22.0 | ) | (15.0 | ) | (37.0 | ) | |||||||||
| Argentina highly inflationary impact | (6.1 | ) | (9.0 | ) | (12.0 | ) | (14.6 | ) | (41.7 | ) | (11.2 | ) | (11.0 | ) | (22.2 | ) | |||||||||
| Change in allowance estimate | (16.7 | ) | 0.4 | 0.3 | 0.4 | (15.6 | ) | — | — | — | |||||||||||||||
| Ship loss matter | — | — | |||||||||||||||||||||||
