Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Investor Presentation (June 2018)
39 slides from Brinks Company (the)'s investor presentation, Jun 5, 2018
Slide 1: Investor Presentation June 5, 2018
Exhibit 99.1 NYSE: BCO Investor Presentation June 5, 2018 Doug Pertz President & CEO
Slide 2: Safe Harbor Statement and Non-GAAP Results
Safe Harbor Statement 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 in
Slide 3: World's Largest Cash Management Company
World’s Largest Cash Management Company2 Global Market Leader Revenue Countries Regions Global cash market $16.5 billion1 SA, NA, EMEA, Asia Brink’s3 $3.2B 117 Pacific SA, EMEA, Asia, Prosegur $2.1B 15 Other Australia Loomis Loomis $2.0B 20 EMEA, NA G4S G4S $1.6B 44 EMEA, SA, Asia, NA Prosegur Garda
Slide 4: Lines of Business and Customers
Lines of Business and Customers 76% of Segment Revenue Outside of U.S. 2017 Revenue by LOB Customers Guarding $0.2B France Guarding (7%) Sale Retail Financial $3.2B Institutions Core High-Value Services Services $1.6B $1.3B (51%) (42%) Government/ Other High-Value Services Core Services • Brink’s Gl
Slide 5: Strong Position in Largest Markets
Strong Position in Largest Markets Estimated Market Share in Key Countries United States Canada Mexico Other Other Garda Garda Loomis GSI Other Argentina Brazil France Brink’s Maco Brink’s Rodoban Brink’s Temis Other Other Prosegur Other Loomis Prosegur Prosegur 5 Note: Internal estimates; includes
Slide 6: Cash is the World's Most Popular Form of Payment
Cash is the World’s Most Popular Form of Payment Cash Accounts for ~85% of Global Consumer Transactions 1 United States2 Estimated Cash Usage in Our Largest Markets • Most frequently used payment method • Notes in circulation growing ~5% 31% annually • Cash use strong across all income levels 68% So
Slide 7: Our Strategy
Our Strategy Introduce Accelerate Differentiated Profitable Growth Services • Grow high-value services • Leverage uniform, best-in- • Grow account share class global technology base Introduce Accelerate with large FI customers for logistics and operating Differentiated Profitable systems Services Gr
Slide 8: 2017 Non-GAAP Results
2017 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +10% Op Profit +30% Adj. EBITDA +24% EPS +33% Organic +6% Organic +26% Acq +2% Acq +9% FX +1% FX (5%) $425 $3,193 $281 $3.03 $2,908 13.3% $342 13.3%Margin Margin $216 8.8% $2.28 Margin 11.8% Margin 11.8% Margin 7.4% Margin 8.2% Margin
Slide 9: First-Quarter 2018 Non-GAAP Results
First-Quarter 2018 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +15% Op Profit +34% Adj. EBITDA +25% EPS +12% Organic +6% Organic +24% Acq +7% Acq +17% 1 FX +2% FX (7%) Excess net interest and tax impact 10% or $(0.06) per share $110 $853 13.3% $72 12.9%Margin $0.65 $740 Margin 8.4% M
Slide 10: Three-Year Strategic Plan – Strategy 1.0 Organic Growth
Three-Year Strategic Plan – Strategy 1.0 Organic Growth 2019 Organic Adjusted EBITDA $535M – 3-year CAGR ~16% 13.3% Margin Strategy 1.0 • Close the Gap Core Organic Growth • Accelerate Profitable Growth 2019 EBITDA Target: $535M • Introduce Differentiated Services 2017 2018 2019 Organic Growth = Inc
Slide 11: A Clear Path to Value Creation
A Clear Path to Value Creation 2017-2019 Non-GAAP Operating Profit Improvement Margin 7.4% ~11% ~10% Breakthrough Initiatives $390 $325 $216 2016 Branch Fleet Crew Labor Network Sales Growth/ Contingency 2019 Organic 2019 Organic Target Base Standardization Improvements Optimization CompuSafe Target
Slide 12: Three-Year Strategic Plan – Strategy 1.5 Organic Growth + Acquisitions
Three-Year Strategic Plan – Strategy 1.5 Organic Growth + Acquisitions 2019 Adjusted EBITDA Target $685 Million – 3-year CAGR ~26% Strategy 1.5 • Focus on “core-core” & “core-adjacent” Acquisitions 13.3% • Capture synergies & improveMargin density 2019 EBITDA Target: $150M • ~$685M 2018 Investment…$
Slide 13: Strategy 1.5 – Core Acquisitions
Strategy 1.5 – Core Acquisitions Synergistic, Accretive Acquisitions in Our Core Markets Acquisitions-to-Date • “Core/ Core” – Core businesses in Core Markets • 6 completed in 2017 France U.S. (Temis) (AATI) • 2 announced in 2018 U.S. –Dunbar in U.S. and Rodoban (Dunbar) in Brazil expected to close
Slide 14: Dunbar Acquisition Overview
Dunbar Acquisition Overview Core Acquisition in Core Market Strong Returns • Combines #2 and #4 largest U.S. cash • $390M LTM revenue management companies • $520M purchase price • $43M LTM adjusted EBITDA • Funded from available cash • $40 - $45M cost synergies expected • Expected additional Capex o
Slide 15: Dunbar Business Overview
Dunbar Business Overview Operations Customers Other • Strong management team Financial • National footprint Institutions • Complementary customer base includes small-to-medium sized retailers and financial institutions • 78 branch facilities Retail • 5,400 employees • 1,600 vehicles 15
Slide 16: Strategy 1.0 + 1.5 = Core Organic Growth + Acquisitions
Strategy 1.0 + 1.5 = Core Organic Growth + Acquisitions (Non-GAAP, $ Millions) 2019 Adjusted EBITDA Target = $685 Million EBITDA 11.8% ~15% ~16% Margin OP 7.4% 3.7% 2% 0.4% (2.5%) ~11% ~12% Margin $150 $685 Adjusted EBITDA $535 $510 Op Profit $390 $342 Adjusted EBITDA $216 Op Profit 2016 Actual Nort
Slide 17: Non-GAAP Income Tax Evolution
Non-GAAP Income Tax Evolution 2018 Outlook Dunbar Acquisition Statutory Tax Rate1 • U.S. had no statutory • Increases U.S. statutory Argentina2 35% income for years income Brazil 34% - Paid no U.S. Federal tax Chile 27% - No Foreign Tax Credit • Utilizes FTC’s Colombia 37% (FTC) utilization France 3
Slide 18: Net Debt and Leverage
Net Debt and Leverage Assumes $685 in acquisitions in 2018 and $115 in 2019 (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Significant capacity for acquisitions Leverage Ratio per financial covenants1 0.7 1.4 ~1.3 ~1.9 ~1.5 $1,200 Bank defined EBITDA ~$465 ~$640 ~750 ~ $1,100
Slide 19: Currency Impact is Translational, Not Transactional
Currency Impact is Translational, Not Transactional (LC per 1 US$, except Euro) Exchange Rates Highlights Dec 31st, 2017 May 31st, 2018 Transactional Currency Impact • Almost all revenue and expenses transacted in local currency • Local currency organic growth and margin 3.31 1.26 1.20 19.7 19.9 exp
Slide 20: Argentina Devaluation Offset by Inflation-Driven Pricing and Organic Growth
Argentina Devaluation Offset by Inflation-Driven Pricing and Organic Growth (USD in millions) USD Revenue Indexed to 20141 Highlights • Local currency growth exceeds inflation over time due to price, ad valorem and volume CAGR ~19% • Union-negotiated salary increases drive $168 pricing $135 $134 • A
Slide 21: 2018 Guidance – as of April 25, 2018
2018 Guidance – as of April 25, 2018 (Non-GAAP, $ Millions except EPS) Revenue +8% Op Profit Adj. EBITDA EPS Organic +5% +30% - +37% +21% - +26% +20% - +27% Acq./Disp. +3% FX - $3,450 $515-$535 13.3% $3,193 $365-$385 $3.65-$3.85 ~15.2%Margin1 Margin ~10.9%1 $425 Margin 11.8% $3.03 $281 13.3%Margin M
Slide 22: Strategy 1.0 + 1.5 + Potential Future Acquisitions
Strategy 1.0 + 1.5 + Potential Future Acquisitions (Non-GAAP, $ Millions) Illustrative EBITDA Post-Synergy Potential with $800M of Acquisitions in 2018 and 2019 $50 - 80 $735 - $765 $150 $685 $535 Adjusted $342 EBITDA Adjusted EBITDA 11.8% ~15% ~16% Margin 2016 Actual 2019 Target Completed & 2019 Ta
Slide 23: Three-Year Strategic Plan – 2019 EBITDA Target Increased 45%
3 Year Strategic Plan – 2019 EBITDA Target Increased 45% (Non-GAAP, $ Millions) Operating Profit & Adj. EBITDA Expected Benefits • Deploys ~85% of $800 million acquisition target ~16% through 2019 ~15% • Core – Core accretive acquisitions at less 13.3% ~12% than 6.5x post synergy Adjusted EBITDA mul
Slide 24: Q&A
IIIBRINKS Q&A
Slide 25: Appendix
IIBRINKS Appendix
Slide 26: Cash in the U.S. Continues to Grow
Cash in the U.S. Continues to Grow Payment Methods by Volume1 Notes in Circulation3 % Cash Usage by Income1,4 % of U.S. (in billions) Households Other 45 $125,000 and greater 24% 19% 40 Electronic Cash 35 $100,000-$124,999 25% 9% 30 25 $75,000-$99,999 26% 12% 20 $50,000-$74,999 27% 17% Debit 15 10 $
Slide 27: A Clear Path to Value Creation in the U.S.
A Clear Path to Value Creation in the U.S. 2017-2019 U.S. Operating Profit Improvement Breakthrough Initiatives 8 – 9.5% 13.1% ~1% (2 – 3 %) 2.5 – 3% ~10% 1.5 – 2% 2 – 2.5% ~2% ~6% 2018 ~1% Target 2 – 3% 3.4% 2017 Actual Actual 0.8% 2016 Branch Fleet One-Person Network Sales Growth/ IT and Other Con
Slide 28: CapEx Expected to Return to ~4% of Revenue in 2020
CapEx Expected to Return to ~4% of Revenue in 2020 Capital expenditures 2015 – 20201 (Non-GAAP, $ Millions) • Higher 2017-19 CapEx reflects investment in strategic initiatives • Additional $50 million over 3 years related to Dunbar acquisition not included ~$200 ~$200 $185 $185 High High Return Retu
Slide 29: Strong Free Cash Flow Expected
Strong Free Cash Flow Expected Free cash flow includes completed and announced acquisitions, except Dunbar (Non-GAAP, $ Millions) Actual Target Target 2017 2018 2019 Adjusted EBITDA $425 ~$525 ~$625 Projected Adjusted EBITDA growth Working Capital & Other (86) ~(10) ~(15) Working capital improvement
Slide 30: 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 • $500 million secured • $600 million revolving credit Term Loan A unsecured notes facility • Interest floats based • 4.625% interest
Slide 31: Non-GAAP Reconciliation — Outlook
Non-GAAP Reconciliation — Outlook The Brink’s Company and subsidiaries 2018 and 2019 Guidance (Unaudited) (In millions, except as noted) 2018 2019 2018 GAAP Reconciling Non-GAAP 2019 GAAP Reconciling Non-GAAP Outlook(b) Items(a) Outlook(a) Outlook(b) Items(a) Outlook(a) Revenues $ 3,476 (26) 3,450 N
Slide 32: 2016 - 2018 Non-GAAP Results Reconciled to GAAP (1 of 4)
2016 - 2018 Non-GAAP Results Reconciled to GAAP (1 of 4) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 2018 Full Year 1Q 2Q 3Q 4Q Full Year 1Q Revenues: GAAP $ 3,020.6 $ 788.4 805.9 849.5 903.2 3,347.0 $ 879.1 Venezuela operations(a) (109.4) (48.1) (46.3) (20.
Slide 33: 2016 - 2018 Non-GAAP Results Reconciled to GAAP (2 of 4)
2016 - 2018 Non-GAAP Results Reconciled to GAAP (2 of 4) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 2018 Full Year 1Q 2Q 3Q 4Q Full Year 1Q Income (loss) from continuing operations attributable to Brink's: GAAP $ 36.2 $ 34.7 14.3 19.9 (52.0) 16.9 $ 22.1 Ret
Slide 34: 2016 - 2018 Non-GAAP Results Reconciled to GAAP (3 of 4)
2016 - 2018 Non-GAAP Results Reconciled to GAAP (3 of 4) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 2018 Full Year 1Q 2Q 3Q 4Q Full Year 1Q Adjusted EBITDA(j): Net income (loss) attributable to Brink's - GAAP $ 34.5 $ 34.7 14.2 19.9 (52.1) 16.7 $ 22.3 Inter
Slide 35: 2016 - 2018 Non-GAAP Results Reconciled to GAAP (4 of 4)
2016 - 2018 Non-GAAP Results Reconciled to GAAP (4 of 4) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (a) See “Other Items Not Allocated To Segments” on slide 36 for details. We do not consider these items to be reflective of our core operating performance due to the variability of
Slide 36: Non-GAAP Reconciliation — Items Not Allocated
Non-GAAP Reconciliation — Items Not Allocated 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. A summary of the other items not allocated to seg
Slide 37: 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 2015 2016 2017 Capital expenditures — G
Slide 38: Non-GAAP Reconciliation — Cash Flows
Non-GAAP Reconciliation — Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year 2017 Cash flows from operating activities Operating activities - GAAP $ 296.4 Venezuela operations (17.3) (Increase) decrease in restricted cash held for customers (44.3) (Increase) decrease in certain
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, (In millions) 2017 2016 Debt: Short-term borrowings $ 45.2 162.8 Long-term debt 1,191.5 280.4 Total Debt 1,236.7 443.2 Restricted cash borro