Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q1 2020 Earnings Presentation
32 slides from Brinks Company (the)'s earnings presentation, May 5, 2020
Slide 1: First Quarter 2020
First Quarter 2020 May 5, 2020 1
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," These materials contain forward-looking information. Words such as "anticipate," "assume," "es
Slide 3: Today's Message
Today’s Message • First-quarter results affected by COVID-19, currency translation • Strong financial health; ample liquidity • Three priorities during the crisis: • Protect our employees and service customers • Preserve cash and optimize profitability • Position Brink’s to be stronger on the other
Slide 4: Our Priorities
Our Priorities PRIORITY 1 Our people and customers • Our highest priority is the health and safety of our employees, their families and our customers. • Provide “essential services” to our customers. PRIORITY 2 Preserve cash and optimize profitability • Take decisive and timely actions to preserve c
Slide 5: Our People & Customers – Health & Safety
Our People & Customers – Health & Safety PRIORITY 1 • Working with public health authorities to respond to affected employees with contact tracing and aggressive branch cleaning to mitigate further spreading. • Implementing best practices and training for hygiene, sanitization, and social distancing
Slide 6: First-Quarter 2020 Non-GAAP Results
First-Quarter 2020 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Impacted Globally by COVID-19 Pandemic Revenue (4%) Op Profit (26%) Adj. EBITDA (23%) EPS (56%) Constant currency +3% Constant currency (4%) Constant currency (8%) Constant currency (33%) Organic +2% Organic (5%) Tax Rate Acq +1%
Slide 7: First-Quarter 2020 Operating Profit
First-Quarter 2020 Operating Profit (Non-GAAP, $ Millions) % Change 10% 1% 11% (21%)(10%) (15%) (26%) Devaluation above $9 $1 $94 ( $18 ) original guidance $85 $76 ( $13 ) $63 9.4% ~9.9% ~8.5% 7.2% Margin Margin Margin Margin 9.4% 8.7% 7.2% Margin Margin Margin 2019 Organic excluding Acq / Disp* 202
Slide 8: First-Quarter 2020 – Adjusted EBITDA and EPS
First-Quarter 2020 – Adjusted EBITDA and EPS (Non-GAAP, $ Millions, except EPS) EPS: 1Q19 $0.81 1Q20 $0.36 (56%) vs PY EBITDA (23%) vs PY $7 $101 Tax Rate $39 49.8% vs. 31.4% in 2019 $63 ( $19 ) $37 ( $19 ) ( $6 ) $18 Op Profit Interest Taxes Other Income from D&A Interest Exp Stock Comp Adjusted Ex
Slide 9: First-Quarter Results by Segment
First-Quarter Results by Segment ($ Millions) North America South America Rest of World Revenue +2% Op Profit (25%) Revenue (14%) Op Profit (3%) Revenue (4%) Op Profit (37%) Constant currency +3% (24%) Constant currency: +8% +28% Constant currency (2%) (36%) Organic +2% (24%) Organic +8% +27% Organi
Slide 10: Strong Financial Health - Ample Liquidity
Strong Financial Health - Ample Liquidity PRIORITY 2 ($ Millions, except where noted) Cash and Debt Capacity ~$800 million liquidity expected after $300 G4S Acquisition ~$3.1 B ~$0.8 B • ~$500 million Revolver plus ~$300 Liquidity million cash Cash • Incremental $590 million Term Loan A $285 $258 cl
Slide 11: CapEx – Target 40-60% Cash Reduction
CapEx – Target 40-60% Cash Reduction PRIORITY 2 Cash Capital Expenditures 2018-2020 ($ Millions) Targeting ~40-60% reduction in cash CapEx. $165 $165 Cash CapEx Remaining CapEx $155 primarily for safety and $26 $25 Cash Devices security. $25 ~$100 G4S ~$20 Acquisition Cash CapEx excl. Cash $138 $140
Slide 12: Maximize Cash Flow
Maximize Cash Flow PRIORITY 2 Includes G4S Acquisition1 (Non-GAAP, $ Millions) $564 $564 Adjusted EBITDA Cash From Operating Activities Working Capital and Cash Restructuring Q2 – Q4 • DSO risk ... negotiating with vendors $334 Op Profit • Cash restructuring related to G4S acquisition $392 Op Profit
Slide 13: Protecting Profitability and Free Cash Flow
Protecting Profitability and Free Cash Flow PRIORITY 2 2019 Cost Structure 2020 Actions (Percent of Total Costs) Direct, Indirect & SG&A Labor • Headcount reductions … severance and furloughs • Negotiated with unions and works councils • Government programs offsetting some payroll costs • Overtime m
Slide 14: United States COVID-19 Volume Impact and Actions
United States COVID-19 Volume Impact and Actions PRIORITY 2 Volume & Revenue Impact Revenue • Service volume reductions began in mid-March … April expected to be low point • Q3 & Q4 improvement expected with economies re-opening • Retailers more impacted than Financial Institutions 100% • 44% of ret
Slide 15: Our Customer Base Diverse, Stable, Resilient and Essential
Our Customer Base Diverse, Stable, Resilient and Essential
Slide 16: A Strong Global Customer Base
A Strong Global Customer Base Percent of Revenue1 Brink’s Consolidated U.S. Mexico Brazil Argentina France = Financial Institutions = Retail = Gov’t / Other | 16 1. Brink’s Internal Analysis
Slide 17: U.S. Retail Driven by Large, Essential Customers & CompuSafe
U.S. Retail Driven by Large, Essential Customers & CompuSafe® 44% Essential Services Multi-location Customers Strong Recurring Revenue Temporarily Essential <20 CompuSafe closed Services ~30% 100+ Limited Operations 20-99 CIT Retail Revenue1 Retail Revenue by Retail Revenue1 customer size (locations
Slide 18: Recurring Revenue from Large U.S. Financial Institutions
Recurring Revenue from Large U.S. Financial Institutions (FI) 66% of U.S. FI Revenue from Customers with 50+ Locations1 <10 • Top 25 Tier 1 banks comprise ~50% of FI revenue 52% • Recurring revenue and 10-49 18% long-term contracts 18% • Stable recurring revenue during the crisis • Outsourcing oppor
Slide 19: Cash in Circulation Continues to Grow
Cash in Circulation Continues to Grow Cash Availability Continues to Grow Number and value of notes in circulation consistently grows faster than GDP • 2009 – 2018 CAGR Value of Notes: USD ~7%, Euro ~5% • 2009 – 2018 CAGR Number of Notes: USD ~5%, Euro ~6% USD – notes in circulation1 Euro – notes in
Slide 20: Cash is Most Preferred Payment – 75% of Global Transactions
Cash is Most Preferred Payment – 75% of Global Transactions Drivers of Cash Usage Strong Cash Usage in our Largest Markets • Unbanked or underbanked rely on cash as a primary payment method • 25% of U.S. Households are unbanked / underbanked1 • All demographics use cash – all ages and income • Cash
Slide 21: During a Recession, Cash Usage Grows
During a Recession, Cash Usage Grows Cash usage grew significantly in the last Drivers of Cash Usage recession in a Recession Cash as a % of Total Payments - U.S. • Cash usage in 2008-2009 grew significantly with 31% government stimulus and constrained consumer 29% credit 27% • Unbanked and underban
Slide 22: Cash is Safe and Vital to the Economy
Cash is Safe and Vital to the Economy Cash has Lower Germ Index COVID-19 Virus Survival Time NYC (in hours)1 Fast Food 664 Door Handle 70 NYC Park Bench 503 60 Average Germ-Score 285 for Credit Cards 50 NYC 40 Train Station 163 Bathroom 30 Average Germ-Score 160 Average for Cash 20 Average Cash Germ
Slide 23: Large U.S. Retail Opportunity for Brink's Pre- and Post-COVID-19
Large U.S. Retail Opportunity for Brink’s Pre- and Post-COVID-19 Large in-person retail market with one-third of purchases in cash 2019 Total U.S. Cash accounts for 32% Retail Market $5.5T1 of in-person purchases2 Check 89% of 2% Purchases Credit In-Person at 28% Point-of-Sale E-Commerce Cash 11% 32
Slide 24: Opportunity: 90% of U.S. Retail Locations Not Served by Cash Management
Opportunity: 90% of U.S. Retail Locations Not Served by Cash Management Industry in 2019 ~90% Unvended ~10% Vended BCO 3.8M Retail Brink’s initial Strategy 2.0 Locations1 targets include select enterprise companies with >500 locations Credit / Debit2 Unvended Market Landscape (Estimated) ~3% • 90% o
Slide 25: Why Do So Few Retailers Have a Cash Management Solution?
Why Do So Few Retailers Have a Cash Management Solution? Facts • Cash is a popular payment method for retailers & will be post COVID-19 • Cash logistics industry provides incomplete, limited-value service vs. credit cards Customer Perceptions Customer Needs Cash-in-Transit: • Digital credit for cash
Slide 26: Strategy 2.0 – Brink's Complete
Strategy 2.0 – Brink’s Complete™ The Right Service at the Right Time 26
Slide 27: Seizing the Unvended Opportunity with Strategy 2.0
Seizing the Unvended Opportunity with Strategy 2.0 Brink’s Complete disrupts cash management’s one-size-fits-all paradigm with flexible, tech-enabled solutions for a wider range of customers. Introducing Brink’s Complete A Strategy 2.0 Offering • Subscription-based cash management service, target co
Slide 28: Brink's Complete – How It Works
Brink’s Complete – How It Works Retailers use Brink’s 24SEVEN app to create and track deposits, place 1 change orders, and request support 2 Retailers place cash in a secure device – (provided by Brink’s) 3 Retailers receive advance credit for deposits the next day Brink’s collects and processes cas
Slide 29: Brink's Complete: The Right Service at the Right Time
Brink’s Complete The Right Service at the Right Time Brink’s Complete Value Proposition Simplified, cost-effective cash management Customer Benefits • Next-day credit • Target cost <1% of cash payments • Eliminates trips to the bank • Bank agnostic • Hassle-free onboarding, use and billing • Enables
Slide 30: Priority 3: Position Brink's to be stronger post-crisis
Priority 3: Position Brink’s to be stronger post-crisis PRIORITY 3 Continue to execute on all 3 layers of our strategic plan Strategy 1.0 WD – Wider and Deeper • Continue to implement organic growth initiatives across global network of countries • Accelerate restructuring to re-size business • Conti
Slide 31: Outlook 2020 – Targets through the Crisis
Outlook 2020 – Targets through the Crisis • At least $45M of Adjusted EBITDA in 2Q • Improvement in 3Q and 4Q with aggressive cost reduction actions and gradual economy re-openings • Positive operating cash flow for the year and ample liquidity 2021 and Beyond • Emerge from crisis stronger than ever
Slide 32: The world counts on Brink's.
The world counts on Brink’s. A Brink’s truck alone on the streets of Paris. We are grateful to our employees who continue to provide essential services to customers around the world during the COVID-19 pandemic. | 32