Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q3 2018 Earnings Presentation
35 slides from Brinks Company (the)'s earnings presentation, Oct 24, 2018
Slide 1: Third Quarter 2018
EXHIBIT 99.2 Third Quarter 2018 October 24, 2018
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: Third-Quarter 2018 Non-GAAP Results
Third-Quarter 2018 Non-GAAP Results Strong Organic Growth More Than Offsets Currency Headwinds (Non-GAAP, $ Millions, except EPS) Revenue +3% Op Profit +25% Adj. EBITDA +21% EPS +8% Constant currency +13% Constant currency +55% Constant currency +44% Constant currency +42% Organic +7% Organic +50% A
Slide 4: North America: U.S. Turnaround Accelerates, Continued Momentum in Mexico
North America: U.S. Turnaround Accelerates, Continued Momentum in Mexico ($ Millions) Revenue +21% Op Profit +99% Constant currency +24% Constant currency +105% 3Q Highlights Organic +7% Organic +84% • NA margin 8.8%, up 350 bps Acq +17% Acq +21% FX (2%) FX (6%) • U.S. profits up 355%; up 260% organ
Slide 5: Dunbar Acquisition Drives Accretive Growth
Dunbar Acquisition Drives Accretive Growth Highlights Expected Benefits • Transaction closed 8/13/18 • Core – Core accretive acquisition • 6.5x – 7.0x post synergy Adjusted • 3Q revenue of $51M EBITDA multiple • Action plans to drive cost and revenue synergies • “Excess” cash fully deployed • Financ
Slide 6: South America: Strong Organic Growth Offset by FX Impact
South America: Strong Organic Growth Offset by FX Impact ($ Millions) Revenue (13%) Op Profit (3%) Constant currency +15% Constant currency +42% 3Q Highlights Organic +14% Organic +39% • Organic revenue and operating profit growth Acq +1% Acq +3% FX (28%) FX (45%) throughout most of region • Underly
Slide 7: ROW: Continued Pricing Pressure in France
ROW: Continued Pricing Pressure in France ($ Millions) Revenue (4%) Op Profit (8%) Constant currency (2%) Constant currency (6%) 3Q Highlights Organic +1% Organic (4%) • Continued price and volume pressure in Acq/Disp (4%) Acq/Disp (2%) France FX (2%) FX (2%) • France profit growth expected in 2019
Slide 8: 2018 Non-GAAP Guidance Updated
2018 Non-GAAP Guidance Updated (Non-GAAP, $ Millions, except EPS) Revenue Op Profit Adj. EBITDA EPS Organic +7% +24% +20% +9% Acq/Disp +7% FX (6%) ~$3,450 $3.20 - $3.40 $500 - $520 $3,193 $3.03 $2,908 $425 $340 - $360 ~14.8% ~10.1% Margin $2.28 $342 $281 Margin 13.3% 8.8% Margin $216 Margin 11.8% 7.
Slide 9: Preliminary 2019 Guidance
Preliminary 2019 Guidance (Non-GAAP, $ Millions, except EPS) Revenue Op Profit Adj. EBITDA EPS Organic +7% +26% +22% +29% Acq/Disp +8% FX (5%) $610- ~$3,800 $430- $630 $4.15- $450 $4.35 ~$3,450 $3,193 $500- $340- $520 ~16.3%15.8% - $360 $3.20- $2,908 Margin16.3% $3.40 Margin 11.2%xx%- $425 $3.03 ~14
Slide 10: Financial Update
Financial Update
Slide 11: Third-Quarter Revenue and Operating Profit vs 2017
Third-Quarter Revenue and Operating Profit vs 2017 (Non-GAAP, $ Millions) Revenue Op Profit % Change 7% 6% 13% (10%) 3% % Change 50% 6% 55% (31%) 25% Constant Constant Currency Currency $46 $935 ( $82 ) $4 $119 ( $24 ) $60 $38 $829 $852 $95 $76 11.2% Margin 9.2% Margin 2017 Organic Acq / Disp* 2018
Slide 12: Third-Quarter Adjusted EBITDA & EPS vs 2017
Third-Quarter Adjusted EBITDA & EPS vs 2017 (Non-GAAP, $ Millions, except EPS) Q3 2018 EPS: $0.91 (+8% vs PY) EBITDA Q3 2017 EPS: $0.84 +21% vs PY $6 $136 $46 $95 ( $17 ) $37 ( $29 ) ( $2 ) $47 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Continui
Slide 13: 2018 Updated Guidance vs 2017
2018 Updated Guidance vs 2017 (Non-GAAP, $ Millions) OP % Change vs. 2017 42% 9% 51% (26%) 24% $576 - $596 $162 $500 - $520** $160 Adjusted $425 $25 ( $74 ) EBITDA $108 - $128 D&A/Other $144 $414 - $434 $340 - $360 Operating $281 Profit 8.8% ~10.1% Margin Margin 2017 Actual Organic Acq / Disp* 2018
Slide 14: 2018 Updated Guidance vs July 25, 2018
2018 Updated Guidance vs July 25, 2018 (Non-GAAP, $ Millions) Adjusted $500 - $520* EBITDA $490 - $510 ~ $160 D&A/Other ~ $150 $10 ( $15 ) $5 Operating $340 - $360 $340 - $360 Profit ~10.4% ~10.1% Margin Margin 2018 Outlook as of Organic Dunbar FX 2018 Outlook 7/25/2018 EPS $3.35 - $3.55 $.01 $.02 (
Slide 15: Argentina Revenue 2013-2018 by Quarter
Argentina Revenue 2013-2018 by Quarter (excludes Maco) Devaluation (2%) (12%) (8%) (19%) (30%) (27%) (30%) USD Revenue 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Devaluation Recovery • Local currency growth has exceeded inflatio
Slide 16: Preliminary 2019 Guidance versus Prior 2019 Target
Preliminary 2019 Guidance versus Prior 2019 Target (Non-GAAP, $ Millions) Operating ~12% ~11.6% Profit Adjusted ~ $625 EBITDA $610 - $630* $40 - $60 ($70) $40 ($50) Operating ~ $470 Profit $430 - $450 2019 Prior Target Dunbar Organic 2018 FX 2019 FX 2019 Guidance (February 7, 2018) (October 23, 2018
Slide 17: 2019 Preliminary Guidance
2019 Preliminary Guidance (Non-GAAP, $ Millions) OP % Change vs. 2018 ~30% ~10% ~40% (~14%) ~26% $665 - $685 $610 - $630** ~ $185 ~ $180 $500 - $520 $35 ( $50 ) $105 Adjusted ~ $160 $480 - $500 EBITDA D&A/Other $430 - $450 $340 - $360 Operating Profit ~10.1% ~11.6% Margin Margin 2018 Guidance Organi
Slide 18: Free Cash Flow
Free Cash Flow (Non-GAAP, $ Millions) Free cash flow includes completed & announced acquisitions Actual Target Target 2017 2018 2019 Adjusted EBITDA $425 ~$510 ~$620 Guidance Working Capital & Other (86) ~(15) ~(45) DSO and DPO improvement, restructuring Cash Taxes (84) ~(75) ~(75) No cash taxes pro
Slide 19: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Assumes $685 in acquisitions in 2018 and $115 in 2019 Net Debt Adjusted EBITDA and Financial Leverage Significant capacity for acquisitions Leverage Ratio per financial covenants1 0.7 1.4 ~1.3 ~2.1 ~1.7 ~ $1,200 Bank-defined EBITDA ~$465 ~$565 ~$645 ~ $1,
Slide 20: 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 $620 Million – 3-yr CAGR ~22%* Strategy 1.5 • Focus on “core-core” & “core-adjacent” Acquisitions 13.3% • Capture synergies & improveMargin density 2019 EBITDA Target: $130* • ~$1.05B 2017-2018 i
Slide 21: Similarities with Route-Based Business Services Companies
Similarities with Route-Based Business Services Companies Route-based Brink’s Service Providers Specialized fleet Focus on route density and optimization Strong recurring revenue Ability to leverage physical infrastructure Accretive/high-synergy M&A Organic growth: ~4-6% EBIT
Slide 22: Continued Improvement Expected in 2018 and 2019
Continued Improvement Expected in 2018 and 2019 (Non-GAAP, $ Millions, except EPS) Operating Profit & Adj. EBITDA 2018 Non-GAAP Guidance 7% Revenue $3.45B ~16.3% (organic growth) ~14.8% $340 - $360 Op Profit +24% ~10.1% margin 13.3% $500 - $520 Adj. EBITDA +20% Adj. EBITDA 11.8% ~11.6% ~14.8% margin
Slide 23: Appendix
Appendix
Slide 24: Nine-Months 2018 Non-GAAP Results
Nine-Months 2018 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +9% Op Profit +27% Adj. EBITDA +24% EPS +10% Constant currency +13% Constant currency +50% Constant currency +39% Constant currency +35% Organic +7% Organic +39% Acq +6% Acq +11% FX (4%) FX (23%) $365 $243 $2.30 $2.09 $2,53
Slide 25: Nine-Months 2018 Non-GAAP Results
Nine-Months 2018 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +9% Op Profit +27% Adj. EBITDA +24% EPS +10% Constant currency +13% Constant currency +50% Constant currency +39% Constant currency +35% Organic +7% Organic +39% Acq +6% Acq +11% FX (4%) FX (23%) $409 $2.82 $2,626 $286 $2,5
Slide 26: CapEx Expected to Return to ~4% of Revenue in 2020
CapEx Expected to Return to ~4% of Revenue in 2020 (Non-GAAP, $ Millions) Capital expenditures 2015-20201 Higher 2017-19 CapEx reflects investment in strategic initiatives ~$230 ~$200 High Return $185 $185 High Growth Return CapEx High Growth Return CapEx Growth CapEx $124 ~4% of Revenue $106 Facili
Slide 27: Non-GAAP Income Tax Evolution
Non-GAAP Income Tax Evolution 2018 Outlook Dunbar Acquisition Statutory Tax Rate1 • U.S. had no statutory • Increases U.S. statutory Argentina2 35% income for years income Brazil 34% - Paid no U.S. Federal tax • Utilizes FTCs Chile 27% - No Foreign Tax Credit (FTC) utilization Colombia 37% • Utilize
Slide 28: Currency Impact is Translational, Not Transactional
Currency Impact is Translational, Not Transactional (LC per 1 US$, except Euro) Exchange Rates Highlights December 31, 2017 October 22, 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.
Slide 29: 2016 Non-GAAP Results Reconciled to GAAP (1 of 3)
2016 Non-GAAP Results Reconciled to GAAP (1 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 Q1 Q2 Q3 Q4 Full Year Revenues: GAAP $ 721.8 739.5 755.8 803.5 3,020.6 Venezuela operations(a) (32.1) (21.5) (20.4) (35.4) (109.4) Acquisitions and dispositions(a) (0.8)
Slide 30: 2016 Non-GAAP Results Reconciled to GAAP (2 of 3)
2016 Non-GAAP Results Reconciled to GAAP (2 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 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 Retirement plans(c) 4.7 5.2 5.0 5.3 20.2 Venezuel
Slide 31: 2016 Non-GAAP Results Reconciled to GAAP (3 of 3)
2016 Non-GAAP Results Reconciled to GAAP (3 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 Q1 Q2 Q3 Q4 Full Year Adjusted EBITDA(e): Net income (loss) attributable to Brink's - GAAP $ (3.1) 0.3 24.5 12.8 34.5 Interest expense - GAAP 4.9 4.9 5.1 5.5 20.4 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. A summary of the other items not allocated to seg
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 2015 2016 2017 Capital expenditures — G
Slide 34: 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 $ 252.1 Venezuela operations (17.3) (Increase) decrease in certain customer obligations(a) (6.1) Operating activities - non-GAAP $ 2
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) 2016 2017 Debt: Short-term borrowings $ 162.8 $ 45.2 Long-term debt 280.4 1,191.5 Total Debt 443.2 1,236.7 Restricted cash bor