Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q1 2019 Earnings Presentation
35 slides from Brinks Company (the)'s earnings presentation, Apr 24, 2019
Slide 1: First Quarter 2019
First Quarter 2019 April 24, 2019
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: First-Quarter Highlights
First-Quarter Highlights (Non-GAAP) • Strong growth in revenue, operating profit and EPS • Operating profit up 19%, up 50% in constant currency • Continued acceleration of profit growth in U.S. and Mexico • U.S margins doubled to 8.1%; driven by core business, Dunbar and synergies • Strategy 1.0 (or
Slide 4: First-Quarter 2019 Non-GAAP Results
First-Quarter 2019 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Strong Profit Growth Overcomes Currency Headwinds Revenue +6% Op Profit +19% Adj. EBITDA +20% EPS +16% Constant currency +17% Constant currency +50% Constant currency +42% Constant currency +59% Organic +6% Organic +32% Acq +12%
Slide 5: U.S. First-Quarter Profit Triples
U.S. First-Quarter Profit Triples ($ Millions) Revenue +53% Op Profit +205% 1Q Highlights • Dunbar integration on track • Revenue up 53% $297 • Op profit up 205%; growth divided $24 approximately equally between: • U.S. breakthrough initiatives and 8.8% Dunbar synergies $195 8.1% Margin Margin • Dun
Slide 6: Financial Review
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Slide 7: First-Quarter Revenue and Operating Profit vs 2018
First-Quarter Revenue and Operating Profit vs 2018 (Non-GAAP, $ Millions) Revenue Op Profit % Change 6% 12% 17% (11%) 6% % Change 32% 18% 50% (31%) 19% Constant Constant Currency Currency $100 $1,002 ( $97 ) $48 $905 $853 $13 $107 ( $22 ) $23 $85 10.1% $72 Margin 8.8% 10.7% Margin Margin 9.4% Margin
Slide 8: Argentina Operating Profit: 2019 versus 2018
Argentina Operating Profit: 2019 versus 2018 (Non-GAAP, $ Millions except USD / ARS) FY Impact 2019 USD / ARS ~39 ~44 ~47 ~49 Op Profit (19) (17) (11) (8) (55) FX Impact (estimated) ~37 ~32 ~23 2018 USD / ARS ~20 USD 1 5 Op Profit 2019 vs 2018 (6) (estimated) (10) (10) 1Q 2Q 3Q 4Q FY Organic Pricing
Slide 9: Free Cash Flow (incl. completed acquisitions)
Free Cash Flow (incl. completed acquisitions) $600 Adjusted EBITDA (Non-GAAP, $ Millions) $45 Working Capital: Targeting ~flat Cash Restructuring: ~$45 million, primarily acquisition-related $512 $65 Cash Taxes: Higher income offset by lower ETR, FTCs and refund timing $36 $425 $80 Cash Interest: Hi
Slide 10: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Significant capacity for acquisitions Leverage Ratio2 1.4 ~1.3 2.4 ~2.0 ~2.0 Adjusted ~ $1,300 EBITDA + ~$480 ~$595 ~$645 Synergized $1,214 Acquisitions $612 ~ $600 $512 $512 $425 $425 Dec 2017 Dec 2018 2019
Slide 11: Comparison to Route-Based Industrial Services Peers
1 Comparison to Route-Based Industrial Services Peers 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
Slide 12: Strategy and Outlook
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Slide 13: Three-Year Strategic Plan - Strategy 1.0 + 1.5
Three-Year Strategic Plan - Strategy 1.0 + 1.5 Organic Growth + Acquisitions 2019 Adjusted EBITDA Target $600 Million – 3-yr CAGR ~21%* Strategy 1.5 Acquisitions • Focus on “core-core” & “core-adjacent” Adj. EBITDA $120 • Capture synergies & improve density 13.3% Op Profit $105 Margin • 10 Acquisiti
Slide 14: Strategy 2.0 – Total Cash Ecosystem
Strategy 2.0 – Total Cash Ecosystem Further Expansion into Cash-Related, High-Value Services Strategy 2.0 • Expand high-margin, high-value, cost-effective service offerings: Expand Services o Increase share with existing customers via a broader array of high-value services 13.3% Margin & Customer o
Slide 15: 2019 Guidance Affirmed
2019 Guidance Affirmed (Non-GAAP, $ Millions, 20% Op Profit Growth (+100 bps) Including $20-$30 Million OpEx Investment except EPS) Revenue +9% Op Profit +20% Adj. EBITDA EPS Constant currency +15% Constant currency +37% Constant currency +30% Constant currency +44% Organic +6% Organic +27% +17% +21
Slide 16: Continued Improvement Expected in 2019 and Beyond
Continued Improvement Expected in 2019 and Beyond (Non-GAAP, $ Millions) Operating Profit & Adj. EBITDA ~16% 14.9% 13.3% 11.8% Adj. EBITDA ~11% Margin 10.1% 8.8% $590 - $610 7.4% Op Profit $512 Margin ~ $185 $425 $165 Adj. $342 $144 EBITDA $126 D&A/Other $405- $425 $347 $281 Op Profit $216 2016 2017
Slide 17: Appendix
Appendix
Slide 18: First Quarter Adjusted EBITDA & EPS vs 2018
First Quarter Adjusted EBITDA & EPS vs 2018 (Non-GAAP, $ Millions, except EPS) Q1 2019 EPS: $0.79 (+16% vs PY) Adj. EBITDA Q1 2018 EPS: $0.68 +20% vs PY $9 $132 $42 $85 ( $24 ) $41 ( $20 ) ( $1 ) $40 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Co
Slide 19: Strategic Plan 2017 – 2019 Operating Profit
Strategic Plan 2017 – 2019 Operating Profit (Non-GAAP, $ Millions) OP 7.4% ~11% Margin $475 -$495 ~ $105 $405 -$425 ~ $105 1.5 ~ $380 $325 Acquisitions 2019 Target March 2017 ~ $310 $216 Investor Day = Organic 1.0 + 2.0 Operating Investment = Closed Acquisitions Profit = Share-based Comp 2016 North
Slide 20: 2019 Guidance - Operating Profit and Adjusted EBITDA
2019 Guidance - Operating Profit and Adjusted EBITDA (Non-GAAP, $ Millions) OP % Change vs. 2018 ~33% ~10% ~43% (~17%) (~6%) ~20% $675 - $695 $590 - $610*** Adjusted ~ $190 EBITDA $512 $33 ( $60 ) ~ $185 $165 $115 $485 – ( $20 ) D&A/Other $505 $405 – $425 $347 Operating Profit 10.1% ~11% Margin Marg
Slide 21: Industrial Services/Route-Based Peer Comparisons
Industrial Services/Route-Based Peer Comparisons 1 Business Overview 2019E Financial Metrics Growth Valuation 3-Year Adj. Adj. EBITDA Capex EBITDA Company Description OP Margin Margin (% of Rev) CAGR EV / Adj. EBITDA 2 Cash The Brink's Company (BCO) Management ~11% ~16% ~5% ~21% ~9x Uniform rental a
Slide 22: Compared to Industrial Services/Route-Based Peers
Compared to Industrial Services/Route-Based Peers… 1 Growing Faster 21% CAGR Ahead of Peers & Closing the Gap Organic Revenue Growth Adj. EBITDA Margin Brink’s Peer Avg. Brink’s Peer Avg. 24% ~23% ~16% ~6% ~6% 12% ~4% 2019 16-19 Avg '16-'18E 2016 2019 2016 2019 Total Revenue Guidance Actual Guidance
Slide 23: CapEx Expected to Return to ~4.5% of Revenue in 2020
CapEx Expected to Return to ~4.5% of Revenue in 2020 Capital expenditures 2015 – 20201 (Non-GAAP, $ Millions) Higher 2017-19 CapEx reflects investment in strategic initiatives ~$220 High Return Growth $185 $182 CapEx High High Return Return Growth Growth CapEx CapEx ~4.5% of Revenue $124 $106 Facili
Slide 24: Credit Facility and Debt Structure
Credit Facility and Debt Structure Debt Balance 2019 Credit Facility Amendment ~$2.5 B • Term Loan A increased from $469 million to $800 million ~$2.2 B Available Committed Available Capacity of • Secured revolving credit facility Committed consistent at $1.0 billion ~$0.8B Capacity of ~$0.7B • Inte
Slide 25: Financing Capacity to Execute the Strategy
Financing Capacity to Execute the Strategy Credit Facility & Senior Notes Five-Year Credit Facility Ten-Year Senior Notes Revolver Term Loan A • $1.0 billion secured • $800 million secured • $600 million revolving credit Term Loan A unsecured notes facility • Interest floats based • 4.625% interest
Slide 26: Strong and Sustainable Credit Statistics
Strong and Sustainable Credit Statistics ($ Millions) $1,000 Revolver Senior Notes $600 $610 Term Loan A $30 $40 $40 $40 $40 2019 2020 2021 2022 2023 2024 2025 2026 2027 Maturity Schedule for Credit Facility and Senior Notes 26
Slide 27: Legacy Liabilities – Underfunding at 12/31/2018
Legacy Liabilities – Underfunding at 12/31/2018 ($ Millions) Frozen Primary U.S. Pension UMWA Primary U.S. Pension UMWA 2015 2016 2017 2018 2015 2016 2017 2018 ($206) ($227) ($102) ($108) ($107) ($294) ($297) ($114) 27
Slide 28: Estimated Cash Payments to Frozen U.S. Pension Plan
Estimated Cash Payments to Frozen U.S. Pension Plan ($ Millions) Payments to Primary U.S. Pension Payments to UMWA $504 $17 $28 $24 $19 $32 $32 $6 $1 2019 2020 2021 2022 2023 2024 2025 2026 2018 2025 2026 2027 After 2027 • Prepaid pension payments in 2014 with an $87 million contribution − Accelerat
Slide 29: 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 2016 2017 (In millions) 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 30: 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 2016 2017 (In millions) Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full 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 31: 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 2016 2017 (In millions) 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 32: Non-GAAP Reconciliation - Other
Non-GAAP Reconciliation - Other The Brink’s Company and subsidiaries Other Items Not Allocated to Segments (Unaudited)) 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 allocated to se
Slide 33: Non-GAAP Reconciliation - Other
Non-GAAP Reconciliation - Other The Brink’s Company and subsidiaries Non-GAAP Reconciliations — Other Amounts (Unaudited) (In millions) Amounts Used to Calculate Reinvestment Ratio Property and Equipment Acquired During the Period Full-Year Full Year Full Year Full Year 2015 2016 2017 2018 Capital e
Slide 34: Non-GAAP Reconciliation – Cash Flows
Non-GAAP Reconciliation – Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year Full Year 2017 2018 Cash flows from operating activities Operating activities - GAAP $ 296.4 $ 364.1 Venezuela operations (17.3) (0.4) (Increase) decrease in restricted cash held for customers (44.3) (4
Slide 35: 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, (In millions) 2017 2018 Debt: Short-term borrowings $ 45.2 $ 28.9 Long-term debt 1,191.5 1,525.1 Total Debt 1,236.7 1,554.0 Restricted cash