Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q3 2020 Earnings Presentation
34 slides from Brinks Company (the)'s earnings presentation, Oct 30, 2020
Slide 1: Third-Quarter Results
Third-Quarter Results October 29, 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," “model”, "predict," "intend," "plan," "believe," "potential," "may," "should" and similar expressions may identify forward-
Slide 3: 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 • Decisive and timely actions to preserve cash, ma
Slide 4: Key Messages
Key Messages Strong Revenue Recovery, Cost Reductions and G4S Acquisition Drive Continued Improvement (Non-GAAP, $ Millions, except EPS) 3Q20: Continued recovery amid pandemic • Reported revenue up 5%, up 11% constant currency • Revenue at 88% of 2019 pro forma levels, up from 78% in Q2, September a
Slide 5: Third-Quarter 2020 Sequential Non-GAAP Results
Third-Quarter 2020 Sequential Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +17% Op Profit +36% Adj. EBITDA +17% EPS 21% Constant currency +15% Constant currency +44% Constant currency +21% Constant currency +32% Organic +12% Organic +41% Acq +3% Acq +3% FX +3% FX (8%) % of 96% 78% 88%
Slide 6: Strong Recovery from April Low Point
Strong Recovery from April Low Point 2020 Revenue as a % of 2019 Revenue1 2Q 3Q 105% 100% ~91% 90% 90% 88% Sept 80% 75% 78% 71% April 50% 25% 0% Total Pro-forma1 Total Reported September Revenue Recovery to ~90% of Pre-Covid Levels on a Pro Forma basis 1. Results adjusted to include results for busi
Slide 7: Third-Quarter Revenue and Operating Profit vs 2019
Third-Quarter Revenue and Operating Profit vs 2019 (Non-GAAP, $ Millions) Revenue Operating Profit % Change (9%) 20% 11% (6%) 5% % Change (1%) 20% 19% (22%) (2%) Constant Constant Currency Currency $181 $1,026 ( $56 ) $971 $925 ( $79 ) $21 $122 ( $22 ) $102 ( $1 ) $100 11.1% 11.9% 10.1% 10.3% Margin
Slide 8: Third-Quarter Adjusted EBITDA and EPS vs 2019
Third-Quarter Adjusted EBITDA and EPS vs 2019 (Non-GAAP, $ Millions, except EPS) Q3 2020 EPS: $0.86 (18%) vs PY Q3 2019 EPS: $1.05 Third-quarter repurchase of ~1.1 million +1% shares reduced outstanding shares by ~2% vs PY $9 $147 $51 $100 ( $27 ) $44 ( $24 ) ( $6 ) $43 Op Profit Interest Taxes Othe
Slide 9: Third-Quarter 2020 Non-GAAP Results
Third-Quarter 2020 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +5% Op Profit (2%) Adj. EBITDA +1% EPS (18%) Constant currency +11% Constant currency +19% Constant currency +18% Constant currency +10% Organic (9%) Organic (1%) Acq +20% Acq +20% FX (6%) FX (22%) $1,026 $971 $925 $171 $
Slide 10: Cost Realignment
Cost Realignment ($ Millions, except headcount) 2020 Actions Current Projected Impact ~ $90 ~ $90 Variable Cost Actions • Direct Labor Headcount reductions Variable • Overtime management Other • Merit increases frozen ~ $70 • Temporary benefit reductions • Minimized professional fees ~6,500 • Essent
Slide 11: Capital Expenditures Reduced to ~3% of Revenue
1 Capital Expenditures Reduced to ~3% of Revenue 1 ($ Millions) $165 $165 $155 $26 $25 $25 YTD Cash Capex $79 $100 G4S $20 Acquisition $138 $140 $25 $130 $60 $55 $52 $50 $30 $24 YTD 2018 Actual 2019 Actual 2020 Original Target 2020 Revised Target Cash CapEx excl. Cash Devices Cash Devices Financing
Slide 12: Free Cash Flow
Free Cash Flow (Non-GAAP, $ Millions) 2019 Actual Adjusted EBITDA $564 ( $127 ) • 2020 EBITDA guidance re-instated ( $24 ) ( $80 ) Working Capital and Cash Restructuring ( $165 ) • Lower restructuring expected in 2021 post- COVID and G4S acquisition $169 Cash Taxes • 2019 and 2020 lower due to timin
Slide 13: Strong Financial Health - Ample Liquidity & Covenant Headroom
Strong Financial Health - Ample Liquidity & Covenant Headroom ($ Millions, except where noted) Cash and Debt Capacity • Increased liquidity in 2020 $570 $570 • Incremental $590 million Term Loan A closed on April 1, 2020 ~$1.5 B ~$1.5 B Liquidity • Incremental $400 million Senior Notes Liquidity clo
Slide 14: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Leverage Ratio1 2.4 2.4 3.7 ~3.6 Fully-synergized Secured Leverage Ratio3 (Max = 4.25) ~2.0 Pro forma2 ~$2,063 $105 ~ $1,900 $1,958 Adjusted EBITDA Unsecured $1,349 $987 Senior ~$612 $987 Notes 4 Pro forma 2
Slide 15: eCommerce Growth
While Pandemic Has Accelerated U.S. eCommerce by Several Years, 80%+ of Retail Transactions Still In-Person, Where Cash is Preferred Ecommerce growth is expected to moderate in 2021. Vast majority of retail transactions will continue to be in-person, offering significant growth opportunity for Brink
Slide 16: Cash Usage in U.S. Remains Close to Pre-Pandemic Levels
Cash Usage in U.S. Remains Close to Pre-Pandemic Levels 1. FED Cash accounted for 35% of 3. SQUARE Merchant acquirer reports cash in-person payments in 20191 usage holding steady 6% • Cash share of Square sellers’ payments3: • Feb. – 37% • April – 33% 27% 35% • Aug. – 33% • 85% of small businesses i
Slide 17: Strategy 2.0: New Solutions in the Cash Ecosystem
Strategy 2.0: New Solutions in the Cash Ecosystem 2.1 – Brink’s Complete Strategy 2.0 2.2 – Retail Cash Automation Expand Services 2.3 – ATM Managed Services & Customer Base 2.4 – Comprehensive Payment Solutions • $1.9B invested in 14 acquisitions, including G4S Strategy 1.5 Acquisitions • Pursue ad
Slide 18: Brink's Complete: A Step Change in Total Cash Management
Brink’s Complete … A Step Change in Total Cash Management SQUARE, INC.: 33% of Sellers’ Transactions Are in Cash1 Only Brink’s offers a total cash management solution that enables customers’ digital payments Brink’s Complete is a subscription-based solution that provides digital credit advances for
Slide 19: 2020 Guidance – Exceeds Top End of Previous Model
2020 Guidance – Exceeds Top End of Previous Model (Non-GAAP, $ Millions) 2020 USD Revenue as a % of 2019 Revenue 2020 Operating Profit and Margin $3,625- Revenue $873 $826 $971 ~$1,000 $3,700 ~9.5% 96% % of 2019 Revenue1 ~$340 - 88% ~90% ~88% ~11.5% $355 10.3% 78% Margin 8.9% 7.2% ~ $115 $100 $73 $6
Slide 20: 2021 Sensitivity Model
2021 Sensitivity Model (Non-GAAP, $ Millions) Potential 2021 Operating Profit Margin Potential 2021 Scenarios Revenue ~$4,025 ~$4,475 ~$4,925 Priority 3 ~15.8% ~16.3% Adj. EBITDA % ~15.3% • Resize the business, accelerate synergies & restructuring • Primary focus on permanent cost reductions Op Prof
Slide 21: Summary and Guidance
Summary and Guidance 2020 • Strong 3Q results, cost actions gaining traction, expect continued improvement in 4Q • 3Q revenue recovered to 88% of 2019, up from 78% and September at 90% • G4S acquisition performing well, on track for full-year synergy benefit in 2021 • 2020 guidance exceeds high end
Slide 22: Appendix
Appendix 22
Slide 23: Cash in Circulation and Demand Up Dramatically
Cash in Circulation and Demand Up Dramatically U.S. Currency in Circulation (CiC) Soars in 20201 Cash is Strong in a Recession 2,000 • CiC in 2020 continues to grow significantly with Billions of U.S. Dollars government stimulus and constrained consumer 2020 1,800 credit (similar to 2008 recession)
Slide 24: Third-Quarter vs Second-Quarter Revenue and Operating Profit
Third-Quarter vs Second-Quarter Revenue and Operating Profit (Non-GAAP, $ Millions) Revenue Operating Profit % Change 12% 3% 15% 3% 17% % Change 41% 3% 44% (8%) 36% Constant Constant Currency Currency $24 $949 $22 $971 $99 $30 $2 $106 ( $6 ) $826 $100 $73 8.9% 11.1% 10.3% Margin Margin Margin 2Q20 O
Slide 25: Third-Quarter Results by Segment
Third-Quarter Results by Segment ($ Millions) North America South America Rest of World Revenue (10%) Op Profit (5%) Revenue (25%) Op Profit (35%) Revenue +58% Op Profit +69% Constant currency (7%) 0% Constant currency: (2%) (12%) Constant currency +55% +67% Organic (7%) 0% Organic (7%) (14%) Organi
Slide 26: Non-GAAP Income Tax
Non-GAAP Income Tax Tax Rate • Excludes impact of post Q3 G4S acquisitions • U.S. taxable income limitation • Inability to credit all taxes on cross border 37.5% payments 34.2% 34.2% 34.1% 31.4% 32.0% • U.S. taxable income decline is attributable to lower earnings in the U.S. cash business and lower
Slide 27: Debt Maturity Profile
Debt Maturity Profile ($ Millions) Maturity Schedule for Credit Facility and Senior Notes Revolver $1,000 Term Loan A Senior Notes $1,089 Senior Notes $600 $62 $70 $70 $70 $400 2020 2021 2022 2023 2024 2025 2026 2027 27
Slide 28: Estimated Cash Payments for Legacy Liabilities
Estimated Cash Payments for Legacy Liabilities ($ Millions) Payments to Primary U.S. Pension Payments to UMWA $310 $14 $18 $16 $10 $16 $25 $24 $2 $0 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 29: 2017-2018 Non-GAAP Results Reconciled to GAAP (1 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (1 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2017 2018 Full Year Q3 Full Year Revenues: GAAP $ 3,347.0 $ 852.4 $ 3,488.9 Venezuela operations(a) (154.1) - (51.4) Non-GAAP $ 3,192.9 $ 852.4 $ 3,437.5 Operating profi
Slide 30: 2017-2018 Non-GAAP Results Reconciled to GAAP (2 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (2 of 3 ) The Brink’s Company and subsidiaries Non-GAAP Reconciliations 2017 2018 (In millions) Full Year Q3 Full Year Income (loss) from continuing operations attributable to Brink's: GAAP $ 16.9 $ 17.5 (33.3) Retirement plans(c) 22.3 6.1 25.3 Venezuela
Slide 31: 2017-2018 Non-GAAP Results Reconciled to GAAP (3 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (3 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2017 2018 Full Year Q3 Full Year Adjusted EBITDA(j): Net income (loss) attributable to Brink's - GAAP $ 16.7 $ 17.4 (33.3) Interest expense - GAAP 32.2 17.0 66.7 Income
Slide 32: 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 33: Non-GAAP Reconciliation – Cash Flows
Non-GAAP Reconciliation – Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year 2019 Cash flows from operating activities Operating activities - GAAP $ 368.6 Increase in restricted cash held for customers (23.7) Increase in certain customer obligations(a) (11.4) Operating activitie
Slide 34: 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, September 30, (In millions) 2018 2019 2020 Debt: Short-term borrowings $ 28.9 $ 14.3 $ 13.3 Long-term debt 1,525.1 1,629.3 2,514.3 Total Deb