Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q2 2018 Earnings Presentation
32 slides from Brinks Company (the)'s earnings presentation, Jul 25, 2018
Slide 1: Second Quarter 2018
Exhibit 99.2 Second Quarter 2018 July 25, 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: Second Quarter 2018 Non-GAAP Results
Second Quarter 2018 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +8% Op Profit +25% Adj. EBITDA +25% EPS +12% Organic +8% Organic +38% Excess net interest cost Acq +5% Acq +14% and tax impact 9% or FX (4%) FX (26%) $(0.06) per share $0.74 $824 $118 $0.66 $760 $76 $717 $95 $61 14.4% Ma
Slide 4: North America: Strong Margin Growth
North America: Strong Margin Growth ($ Millions) Revenue +4% Op Profit +55% 2Q Highlights Organic +5% Organic +60% • Profits in both U.S. and Mexico up more Acq - Acq - than 50% FX (1%) FX (4%) • 8.1% margin, up 270 bps • Continued improvement expected $324 $311 $26 8.1% Margin8.1% Margin $17 5.45.4
Slide 5: South America: Strong Revenue and Margin Growth
South America: Strong Revenue and Margin Growth ($ Millions) Revenue +14% Op Profit +27% 2Q Highlights Organic +20% Organic +43% • Strong organic growth throughout region Acq +15% Acq +19% more than offset FX impact FX (21%) FX (36%) • Underlying operations performing well, including acquisitions $2
Slide 6: ROW: Growth Offset by Pricing Pressure in France
ROW: Growth Offset by Pricing Pressure in France ($ Millions) Revenue +9% Op Profit +3% 2Q Highlights Organic +1% Organic (6%) • Continued price and volume pressure in Acq +2% Acq +6% France partially offset by growth in other FX +6% FX +3% countries • France: 2018 improvement delayed, expect 2019 p
Slide 7: 2018 Non-GAAP Guidance
2018 Non-GAAP Guidance (Non-GAAP, $ Millions, except EPS) Revenue Op Profit Adj. EBITDA EPS Total +5% Organic +7% +21% - 28% +15% - 20% +11% - 17% Acq/Disp +2% FX (4%) $3,350 $490 - $510 $3,193 ~14.9%1 $425 $340 - $360 Margin $3.35 - $3.55 1 ~10.4% 13.3% $3.03 $281 Margin Margin 8.8% Margin 2017 201
Slide 8: 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 $685 Million* – 3-yr CAGR ~26% Strategy 1.5 • Focus on “core-core” & “core-adjacent” Acquisitions 13.3% • Capture synergies & improveMargin density 2019 EBITDA Target: $150M* • ~$1.05B expected 2
Slide 9: Dunbar Acquisition Drives Accretive Growth
Dunbar Acquisition Drives Accretive Growth Update Expected Benefits • Expect to close before year-end • Core – Core accretive acquisition at 6.5x – 7.0x post synergy Adjusted EBITDA multiple • Developing action plans, refining synergy • “Excess” cash fully deployed at attractive estimates returns •
Slide 10: 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 (as of 5/31/2018) 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 O
Slide 11: | Finabicit upto =
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Slide 12: Q2-18 Revenue Up 8%, Operating Profit Up 25%
Q2-18 Revenue Up 8%, Operating Profit Up 25% (Non-GAAP, $ Millions) Revenue Op Profit Constant Constant Currency Currency $36 $855 ( $31 ) $60 $824 $760 $8 $92 ( $16 ) $23 $76 $61 • 9.2% • Margin • 8.0% • Margin 2017 Organic Acq / Disp* 2018 FX 2018 2017 Organic Acq / Disp* 2018 FX 2018 Revenue Reve
Slide 13: Q2-18 Adjusted EBITDA = $118 Million
Q2-18 Adjusted EBITDA = $118 Million (Non-GAAP, $ Millions) 2Q 2018 EPS: $0.74 2Q 2017 EPS: $0.66 $6 $118 $39 $76 ( $12 ) $35 ( $24 ) ( $2 ) $39 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Share-based Adjusted Interest Continuing Ops & Taxes Compensation EBITDA vs $15 (
Slide 14: Currency Impact is Translational, Not Transactional
Currency Impact is Translational, Not Transactional (LC per 1 US$, except Euro) Exchange Rates Highlights December 31, 2017 July 23, 2018 Transactional Currency Impact • Almost all revenue and expenses transacted in local currency • Local currency organic growth and margin 18.9 3.31 1.26 1.20 19.7 e
Slide 15: Argentina Revenue and OP 2013-2018 by Quarter
Argentina Revenue and OP 2013-2018 by Quarter (excludes Maco) Devaluation (2%) (12%) (8%) (19%) (30%) (27%) USD Revenue 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Devaluation Recovery • Local currency growth has exceeded inflation ov
Slide 16: 2018 Operating Profit Outlook Revised to Reflect FX Impact
2018 Operating Profit Outlook Revised to Reflect FX Impact Excluding FX, on track to exceed prior guidance (Non-GAAP, $ Millions) Constant Currency Constant Currency Revised Guidance Prior Guidance $20 ( $5 ) $399-$419 ($59) Revised $103-$123 $384-$404 Guidance ($19) FX ($40) $365-$385 $340-$360 Pri
Slide 17: Strong Free Cash Flow Expected
Strong Free Cash Flow Expected (Non-GAAP, $ Millions) Free cash flow includes completed & announced acquisitions, except Dunbar Actual Target Target 2017 2018 2019 Adjusted EBITDA $425 ~$500 ~$625* Projected Adjusted EBITDA growth Working Capital & Other (86) ~(10) ~(15) Working capital improvement,
Slide 18: 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 ~2.0 ~1.5 ~ $1,200 Bank defined EBITDA ~$465 ~$615 ~$750 ~ $1,
Slide 19: Continued Improvement Expected in 2018 and 2019
Continued Improvement Expected in 2018 and 2019 (Non-GAAP, $ Millions) Operating Profit & Adj. EBITDA 2018 Non-GAAP Outlook • Revenue ~3.3 billion (7% organic growth) ~16% ~14.9% • Operating Profit $340 - $360 million; margin 10.1% - 10.7% 13.3% ~12% • Adjusted EBITDA $490 to $510 million; margin Ad
Slide 20: Appendix
Appendix
Slide 21: 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 CapEx related to Dunbar acquisition not included ~$200 ~$200 $185 $185 High High Return Return High Growth Growth Return CapEx C
Slide 22: 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 23: Argentina Highly Inflationary – Accounting Effective Q3-18
Argentina Highly Inflationary – Accounting Effective Q3-18 3-Year Cumulative Inflation Determined to be >100% GAAP Non-GAAP • U.S. dollar becomes functional currency • Argentine peso remains the functional currency • Devaluation historically flows through equity • No significant impact versus histor
Slide 24: Venezuela Deconsolidation
Venezuela Deconsolidation • Brink’s Venezuela had been an integral part of Brink’s and a well-run business for many years. • In 2013, Brink’s Venezuela had revenue of $447 million, operating profit of $84 million and ~5,000 employees. • Economic turmoil in the first quarter of 2015 caused many U.S.
Slide 25: 1H-18 Revenue and Operating Profit
1H-18 Revenue and Operating Profit (Non-GAAP, $ Millions) Revenue Op Profit Constant Constant Currency Currency $87 $1,691 ( $14 ) $1,677 $104 $1,500 $17 $168 ( $20 ) $36 $148 8.8% $114 Margin 7.6% Margin 2017 Organic Acq / Disp* 2018 FX 2018 2017 Organic Acq / Disp* 2018 FX 2018 Revenue Revenue Rev
Slide 26: 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 Q2 Full Year Revenues: GAAP $ 739.5 3,020.6 Venezuela operations(a) (21.5) (109.4) Acquisitions and dispositions(a) (1.5) (2.8) Non-GAAP $ 716.5 2,908.4 Operating profit
Slide 27: 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 Q2 Full Year Income (loss) from continuing operations attributable to Brink's: GAAP $ 0.3 36.2 Retirement plans(c) 5.2 20.2 Venezuela operations(a) 5.0 2.6 Reorganizatio
Slide 28: 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 Q2 Full Year Adjusted EBITDA(e): Net income (loss) attributable to Brink's - GAAP $ 0.3 34.5 Interest expense - GAAP 4.9 20.4 Income tax provision - GAAP 14.5 78.5 Depre
Slide 29: 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 30: 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 31: 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 32: 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