Brinks Company (the) · NYSE:BCO
Brinks Company (the) — FY2019 Earnings Presentation
39 slides from Brinks Company (the)'s earnings presentation, Feb 6, 2020
Slide 1: Fourth Quarter & Full Year 2019
Fourth Quarter & Full Year 2019 February 6, 2020
Slide 2: Safe Harbor Statements and Non-GAAP Results
Safe Harbor Statements and Non-GAAP Results These materials contain 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 i
Slide 3: Highlights
Highlights (Non-GAAP, $ Millions, except EPS) • 12% EPS growth in 4Q ($1.18) and full year ($3.89) • Reduced by: • Argentina cash repatriation expense ($.06) • Non-cash charge related to equity investment in MoneyGram ($.05) • Segment operating profit up 22% in 4Q, 17% in full year • 3-year Strategi
Slide 4: Full-Year 2019 Non-GAAP Results
Full-Year 2019 Non-GAAP Results Strong Revenue and Profit Growth Despite Currency Headwinds (Non-GAAP, $ Millions, except EPS) Revenue +7% Op Profit +13% Adj. EBITDA +10% EPS +12% Constant currency +15% Constant currency +36% Constant currency +27% Constant currency +44% Organic +6% Organic +26% Acq
Slide 5: Strategic Plan (SP1) Targets Exceeded
Strategic Plan 1 (SP1) Targets Exceeded Substantial Value Created for Shareholders (Non-GAAP, $ Millions, except EPS) Revenue +27% Op Profit +81% Adj. EBITDA +65% EPS +71% CAGR +8% CAGR +22% CAGR +18% CAGR +19% Avg. Organic Growth +7% $3,680 $564 $392 $3,275 $3.89 $475 $2,908 $325 $3.50 $342 $216 $2
Slide 6: Fourth-Quarter Revenue and Operating Profit vs 2018
Fourth-Quarter Revenue and Operating Profit vs 2018 (Non-GAAP, $ Millions) Revenue Op Profit % Change 6% 3% 8% (5%) 3% % Change 28% 6% 34% (22%) 11% Constant Constant Currency Currency $25 $984 ( $48 ) $51 $936 $6 $139 ( $23 ) $908 $29 $116 $104 12.4% Margin 11.4% Margin 2018 Organic Acq / Disp* 201
Slide 7: Full-Year Revenue and Operating Profit vs 2018
Full-Year Revenue and Operating Profit vs 2018 (Non-GAAP, $ Millions) Revenue Op Profit % Change 6% 8% 15% (8%) 7% % Change 26% 10% 36% (23%) 13% Constant Constant Currency Currency $288 $3,948 ( $268 ) $3,680 $222 $35 $473 ( $81 ) $3,438 $91 $392 $347 10.6% Margin 10.1% Margin 2018 Organic Acq / Di
Slide 8: Full-Year Adjusted EBITDA & EPS vs 2018
Full-Year Adjusted EBITDA & EPS vs 2018 (Non-GAAP, $ Millions, except EPS) 2019 EPS: $3.89 (+12% vs PY) Adj. EBITDA 2018 EPS: $3.46 +10% vs PY $35 $564 $178 $392 ( $95 ) $152 ( $93 ) ( $4 ) $199 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Continu
Slide 9: North America
North America ($ Millions) Revenue +22% Op Profit +44% Constant currency +22% Constant currency +43% Full-Year Highlights Organic +5% Organic +30% U.S. Acq +17% Acq +13% FX - FX - • Revenue up 29%; operating profit up 52% • Organic revenue growth for 4Q and full-year of 2% reflects expected customer
Slide 10: South America
South America ($ Millions) Revenue (1%) Op Profit +9% Constant currency +23% Constant currency +47% Full-Year Highlights Organic +16% Organic +39% • Strong organic revenue and profit growth driven by Acq +8% Acq +8% FX (24%) FX (38%) Argentina and Brazil; segment margin up 230 bps to ~24% • Negative
Slide 11: Argentina Revenue 2019-2020 by Quarter & Contribution
Argentina Revenue 2019-2020 by Quarter & Contribution Argentina Revenue 2019 Actual YoY 2020 Estimate YoY 2020 Guidance Devaluation: 42% Devaluation: 36% 2% (4%) (9%) (9%) (9%) (9%) QoQ (13%) $3,775 Devaluation (26%) $6101 95% USD ex. Argentina Revenue 88% 5% 12% Argentina 1Q19 2Q19 3Q19 4Q19 1Q20 2
Slide 12: Rest of World
Rest of World ($ Millions) Revenue (6%) Op Profit +1% Constant currency (2%) Constant currency +4% Full-Year Highlights Organic +1% Organic +3% • Decrease in revenue reflects sale of French Acq/Disp (3%) Acq/Disp +1% FX (4%) FX (3%) guarding business in June 2018 • France profit up +12%, margin up 1
Slide 13: CapEx Expected to Return to ~4.5% of Revenue in 2021
CapEx Expected to Return to ~4.5% of Revenue in 2021 Capital Expenditures 2016-20201 (Non-GAAP, $ Millions) Higher CapEx reflects investment in strategic initiatives $198 High $185 $182 Return $190 ~0.5% High High Growth Completed Return Return CapEx Acquisitions Growth Growth CapEx CapEx ~4.5% $124
Slide 14: Free Cash Flow
Free Cash Flow (incl. completed acquisitions) (Non-GAAP, $ Millions) $610 Adjusted EBITDA $564 $55 Working Capital: Revenue growth offset by DSO, DPO improvement Cash Restructuring: Primarily acquisition related $512 $85 Cash Taxes: 2019 included significant refunds $36 $127 $425 Cash Interest: Lowe
Slide 15: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Significant capacity for acquisitions Leverage Ratio1 1.4 2.4 2.4 ~2.0 ~2.9 ~ $2,250 Adjusted EBITDA + Synergized Acquisitions ~ $765 $1,349 ~ $610 ~ $1,250 $1,214 $564 $512 $425 $612 ~ $610 Dec 2017 Dec 201
Slide 16: Strategic Plan 1: Strategy 1.0 + 1.5 (2017-2019)
Strategic Plan 1: Strategy 1.0 + 1.5 (2017-2019) Organic Growth + Acquisitions 2019 Adjusted EBITDA $564 Million – 3-yr CAGR ~18% Strategy 1.5 Acquisitions • Focus on “core-core” & “core-adjacent” • Capture synergies & improve density13.3% Adj. EBITDA +$115 • 13 Acquisitions closed to date Margin Op
Slide 17: Strategic Plan Operating Profit (2017 – 2019)
Strategic Plan Operating Profit (2017 – 2019) (Non-GAAP, $ Millions) Three-Year Strategic Plan Operating Profit CAGR 22% OP OP Margin Margin 7.4% 10.6% $477 $100 $392 1.5 $377 $325 $100 Operating Acquisitions Profit 2019 Target March 2017 Investor Day $292 $216 1.0 + 2.0 Investment = Organic = Close
Slide 18: SP2: Further Expansion into the Total Cash Ecosystem
SP2: Further Expansion into the Total Cash Ecosystem (2020 – 2022) 1.0 WD +1.5 +2.0 = Accelerated Value Creation Expand high-margin, high-value, cost-effective offerings: Strategy 2.0 • Add new unvended and underserved customers Expand Services with attractively-priced, high-value services & Custome
Slide 19: 2020 Guidance
2020 Guidance (Non-GAAP, $ Millions, except EPS) Revenue +3% Op Profit +10% Adj. EBITDA EPS Constant currency +6% Constant currency +24% Constant currency +18% Constant currency +32% Organic +5% Organic +23% +8% +13% Acq/Disp 0% Acq/Disp +1% FX (3%) FX (14%) $600- $4.30- $420- $620 $4.50 $440 ~$3,77
Slide 20: 2020 Guidance - Operating Profit and Adjusted EBITDA
2020 Guidance - Operating Profit and Adjusted EBITDA (Non-GAAP, $ Millions, except EPS) OP % Change vs. 2019 ~23% ~1% 24% (14%) ~10% $657 - $677 Adjusted $600 - $620** EBITDA $564 ~$182 $90 $3 ($55)** ~$180 D&A/Other $172 $475 - $495 $420 - $440 Operating $392 Profit 10.6% ~11.4% Margin Margin 2019
Slide 21: Continued Improvement Expected in 2020 and Beyond
Continued Improvement Expected in 2020 and Beyond (Non-GAAP, $ Millions, except EPS) Operating Profit & Adj. EBITDA 2020 Guidance 5% ~16.2% Revenue $3,775 (organic ) 15.3% Adj. EBITDA Op Profit $420 - $440 +10% Margin - Margin ~11.4% Adj. EBITDA $600 - $620 +8% - Margin ~16.2% ~11.4% Op Profit 10.6%
Slide 22: Appendix
Appendix (BRINKS
Slide 23: Fourth-Quarter 2019 Non-GAAP Results
Fourth-Quarter 2019 Non-GAAP Results Continued Revenue and Profit Growth (Non-GAAP, $ Millions, except EPS) Revenue +3% Op Profit +11% Adj. EBITDA +4% EPS +12% Constant currency +8% Constant currency +34% Constant currency +21% Constant currency +42% Organic +6% Organic +28% Acq +3% Acq +6% FX (5%)
Slide 24: Fourth-Quarter Adjusted EBITDA & EPS vs 2018
Fourth-Quarter Adjusted EBITDA & EPS vs 2018 (Non-GAAP, $ Millions, except EPS) 4Q19 EPS: $1.18 (+12% vs PY) Adj. EBITDA 4018 EPS: $1.05 +4% vs PY $7 $153 $49 $116 ( $26 ) $37 ( $28 ) ( $1 ) $61 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Continu
Slide 25: Strategy 1.5 – Core Acquisitions
Strategy 1.5 – Core Acquisitions Synergistic, Accretive Acquisitions in Our Core Markets Core Acquisitions-to-Date • 2017: 6 completed, including Maco • 2018: 3 completed, including Dunbar France U.S. (Temis) (AATI) • 2019: 4 completed U.S. U.S. (Dunbar) (Balance • Rodoban (Brazil), COMEF (Brazil),
Slide 26: Credit Facility and Debt Structure
Credit Facility and Debt Structure ($ Millions, except where noted) Debt Balance Credit Facility ~$2.5 B • Interest floats based on LIBOR plus a margin that is a minimum ~$2.2 B Available of 25 bps lower than previous Committed financing Available Capacity of Committed • Interest rate swap locking ~
Slide 27: Comparison to Route-Based Industrial Services Peers
Comparison to Route-Based Industrial Services Peers1 Peers Brink’s Specialized fleet Focus on route density and optimization Strong recurring revenue High customer retention Ability to leverage physical infrastructure Accretive/high-synergy M&A Technology-enhanced logistics Orga
Slide 28: Industrial Services/Route-Based Peer Comparisons
Industrial Services/Route-Based Peer Comparisons1 Business Overview 2020E Financial Metrics Growth Valuation 3-Year Adj. Adj. EBITDA Capex EBITDA Company Description OP Margin Margin (% of Rev) CAGR EV / Adj. EBITDA Cash 2 The Brink's Company (BCO) Management ~11% ~16% ~4% ~13% ~9x Uniform rental an
Slide 29: Debt Maturity Profile
Debt Maturity Profile ($ Millions) Maturity Schedule for Credit Facility and Senior Notes $1,000 Revolver Senior Notes $610 Term Loan A $600 $40 $40 $40 $40 2020 2021 2022 2023 2024 2025 2026 2027 | 29
Slide 30: Legacy Liabilities - Underfunding
Legacy Liabilities - Underfunding ($ Millions) Frozen Primary U.S. Pension UMWA Assets $ 721 729 777 687 699 Assets $ 227 217 219 182 178 Obligations $ (835) (837) (879) (794) (817) Obligations $ (433) (444) (513) (479) (425) Primary U.S. Pension UMWA 2015 2016 2017 2018 2019 2015 2016 2017 2018 201
Slide 31: Estimated Cash Payments for Legacy Liabilities
Estimated Cash Payments for Legacy Liabilities ($ Millions) Payments to Primary U.S. Pension Payments to UMWA $310 $14 $18 $16 $25 $24 $10 $2 $0 $16 2019 2020 2021 2022 2023 2024 2025 2026 2019 2028 2029 2030 After 2030 Primary US Pension • Based on actuarial assumptions (as of 12/31/19), no additio
Slide 32: International Pension Plans
International Pension Plans ($ Millions) Underfunding Estimated Future Benefit Payments from Plan Assets Assets $ 165 173 203 180 215 $15 Obligations $ (263) (267) (302) (264) (318) $14 $13 $12 $12 2015 2016 2017 2018 2019 ($84) ($94) ($98) ($99) ($103) 2020 2021 2022 2023 2024 | 32 Note: 2019 amoun
Slide 33: 2016-2017 Non-GAAP Results Reconciled to GAAP (1 of 3)
2016-2017 Non-GAAP Results Reconciled to GAAP (1 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Revenues: GAAP $ 721.8 739.5 755.8 803.5 3,020.6 $ 788.4 805.9 849.5 903.2 3,347.0 Venezuela operations(a) (32.1) (
Slide 34: 2016-2017 Non-GAAP Results Reconciled to GAAP (2 of 3)
2016-2017 Non-GAAP Results Reconciled to GAAP (2 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 Full Full Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Income (loss) from continuing operations attributable to Brink's: GAAP $ (3.1) 0.3 24.5 14.5 36.2 $ 34.7 14.3 19.9
Slide 35: 2016-2017 Non-GAAP Results Reconciled to GAAP (3 of 3)
2016-2017 Non-GAAP Results Reconciled to GAAP (3 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Adjusted EBITDA(j): Net income (loss) attributable to Brink's - GAAP $ (3.1) 0.3 24.5 12.8 34.5 $ 34.7 14.2 19.9 (5
Slide 36: Non-GAAP Reconciliation - Other
Non-GAAP Reconciliation - Other The Brink’s Company and subsidiaries Other Items Not Allocated to Segments (Unaudited) (In millions) Brink’s measures its segment results before income and expenses for corporate activities and for certain other items. See below for a summary of the other items not al
Slide 37: Non-GAAP Reconciliation - Other
Non-GAAP Reconciliation - Other The Brink’s Company and subsidiaries Non-GAAP Reconciliations — Other Amounts (Unaudited) (In millions) Property and Equipment Acquired During the Period Full-Year Full-Year Full-Year Full-Year 2016 2017 2018 2019 Capital Expenditures - GAAP 112.2 174.5 155.1 164.8 Ca
Slide 38: Non-GAAP Reconciliation – Cash Flows
Non-GAAP Reconciliation – Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year Full Year Full Year 2017 2018 2019 Cash flows from operating activities Operating activities - GAAP $ 296.4 $ 364.1 $ 368.6 Venezuela operations (17.3) (0.4) - (Increase) decrease in restricted cash hel
Slide 39: Non-GAAP Reconciliation – Net Debt
Non-GAAP Reconciliation – Net Debt The Brink’s Company and subsidiaries Non-GAAP Reconciliations - Net Debt (Unaudited) (In millions) December 31, December 31, December 31, (In millions) 2017 2018 2019 Debt: Short-term borrowings $ 45.2 $ 28.9 $ 14.3 Long-term debt 1,191.5 1,525.1 1,629.3 Total Debt