Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q3 2019 Earnings Presentation
31 slides from Brinks Company (the)'s earnings presentation, Oct 23, 2019
Slide 1: Third Quarter 2019
Third Quarter 2019 October 23, 2019
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 Review
Third-Quarter Review (Non-GAAP, $ Millions) • Solid growth in revenue, operating profit, adjusted EBITDA and EPS despite increased currency headwinds • FX translation impact of $17M on operating profit, ~60% worse than prior guidance • Segment profit up 18% • Up 28% organic; 33% constant currency •
Slide 4: Third-Quarter 2019 Non-GAAP Results
Third-Quarter 2019 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Strong Organic Growth More Than Offsets Currency Headwinds Revenue +8% Op Profit +7% Adj. EBITDA +7% EPS +11% Constant currency +14% Constant currency +25% Constant currency +20% Constant currency +35% Organic +7% Organic +20% ET
Slide 5: North America: Profit Growth in Mexico and U.S.
North America: Profit Growth in Mexico and U.S. ($ Millions) Revenue +17% Op Profit +15% Constant currency +17% Constant currency +17% 3Q Highlights Organic +4% Organic +12% • U.S. revenue up 22%; operating profit up 17% Acq +13% Acq +5% FX (1%) FX (1%) • U.S. margin of 6.4%; 8% excluding legal sett
Slide 6: South America: Strong Organic Growth Partially Offset by FX
South America: Strong Organic Growth Partially Offset by FX ($ Millions) Revenue +6% Op Profit +28% Constant currency +24% Constant currency +61% 3Q Highlights Organic +18% Organic +54% • Strong revenue and profit growth driven by Acq +6% Acq +7% FX (18%) FX (33%) Argentina and Brazil; margin up 440
Slide 7: Third-Quarter Revenue and Operating Profit vs 2018
Third-Quarter Revenue and Operating Profit vs 2018 (Non-GAAP, $ Millions) Revenue Operating Profit % Change 7% 7% 14% (6%) 8% % Change 20% 6% 25% (18%) 7% Constant Constant Currency Currency $63 $974 ( $49 ) $120 ( $17 ) $5 $58 $925 $19 $852 $102 $95 Original FX guidance ~$11M 10.1% Margin 8.8% 10.7
Slide 8: Third-Quarter Adjusted EBITDA and EPS vs 2018
Third-Quarter Adjusted EBITDA and EPS vs 2018 (Non-GAAP, $ Millions, except EPS) Q3 2019 EPS: $1.05 (+11% vs PY) Q3 2018 EPS: $0.95 +7% vs PY $10 $145 $47 $102 ( $22 ) $36 ( $25 ) ( $1 ) $54 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Share-based Adjusted Interest Conti
Slide 9: 2019 Guidance: Negative Currency Translation Increased by $20M
2019 Guidance: Negative Currency Translation Increased by $20M ($ Millions) Operating Profit FX Impact: 2019 versus 2018 Average USD/ARS 1 42 42 47 50 49 67 45 50 $20 worse ( $80 ) ( $12 ) ( $60 ) ( $5 ) Other ( $41 ) ( $41 ) (Brazil, Euro, Chile) ( $5 ) ( $5 ) $6 worse $14 worse ( $68 ) ( $22 ) ( $
Slide 10: 2019 Guidance Changes - Operating Profit, Adj. EBITDA and EPS
2019 Guidance Changes - Operating Profit, Adj. EBITDA and EPS (Non-GAAP, $ Millions, except EPS) OP % Change vs. 2018 ~33% ~10% ~43% (~17%) (~6%) ~20% (~6%) ~14% $675 - $695 ~ $190 $590 - $610 Adjusted $560 - $580 ~$185 EBITDA $512 $35 ( $60 ) ~ $175 4 $113 $165 ( $20 ) D&A/Other $485 – ( $20) $505
Slide 11: Free Cash Flow (incl. completed acquisitions)
Free Cash Flow (incl. completed acquisitions) (Non-GAAP, $ Millions) $570 Adjusted EBITDA $70 Working Capital and Cash Restructuring: Includes DSO $512 improvements offset by cash restructuring, primarily acquisition related $36 $40 Cash Taxes: Higher income offset by lower ETR, FTCs and refund timi
Slide 12: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Significant capacity for acquisitions Leverage Ratio2 1.4 ~1.3 2.4 ~2.0 ~2.2 ~3.0 ~ $2,350 Adjusted EBITDA + ~$480 ~$595 ~$620 ~$775 Synergized Acquisitions ~ $1,350 $1,214 $612 ~ $570 ~ $570 $512 $512 $425
Slide 13: 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 $570 Million – 3-yr CAGR ~19%* Strategy 1.5 Acquisitions • Focus on “core-core” & “core-adjacent” 2019 • Capture synergies & improve density 13.3% Adj. EBITDA $115 Margin • 13 Acquisitions closed
Slide 14: Strategic Plan 2017 – 2019 Operating Profit
Strategic Plan 2017 – 2019 Operating Profit (Non-GAAP, $ Millions) OP 7.4% ~10.7% Margin $470 -$490 ~ $100 $385 -$405 ~ $380 ~ $100 1.5 $325 Acquisitions 2019 Target ~ $295 $216 March 2017 Investor Day = Organic Includes 1.0 Operating + 2.0 = Closed Acquisitions Profit investment = Share-based Comp
Slide 15: Strategy 2.0 – Total Cash Ecosystem
Strategy 2.0 – Total Cash Ecosystem Further Expansion into Cash-Related, High-Value Services Strategy 2.0 • Expand high-margin, high-value, cost-effective service offerings: Expand Services o Increase share with existing customers via a broader array of high-value services 13.3% & Customer Margin o
Slide 16: Updated 2019 Guidance – Operational Performance Unchanged
Updated 2019 Guidance – Operational Performance Unchanged (Non-GAAP, $ Millions, Adjusted for $20M Incremental Negative FX Impact on Operating Profit except EPS) Revenue +8% Op Profit +14% Adj. EBITDA EPS Constant currency +16% Constant currency +37% Constant currency +28% Constant currency +47% Org
Slide 17: Continued Improvement Expected
Continued Improvement Expected (Non-GAAP, $ Millions) Operating Profit & Adj. EBITDA 3-yr.CAGR Op Profit ~22% ~15.4% Adj. EBITDA ~19% 14.9% ~15% 13.3% 11.8% Adj. EBITDA ~10.7% ~10% Margin 10.1% 8.8% $560 - $580 7.4% Op Profit $512 Margin ~$475 ~$175 $425 $165 ~ $150 Adj. $342 $144 EBITDA $126 D&A/Ot
Slide 18: Appendix
Appendix
Slide 19: CapEx Expected to Return to ~4.5% of Revenue in 2020
CapEx Expected to Return to ~4.5% of Revenue in 2020 Capital expenditures 2015 – 20201 (Non-GAAP, $ Millions) Higher 2017-19 CapEx reflects investment in strategic initiatives ~$210 High Return Growth $185 $182 CapEx High High Return Return Growth Growth CapEx CapEx ~4.5% of Revenue $124 $106 Facili
Slide 20: Credit Facility and Debt Structure
Credit Facility and Debt Structure Debt Balance Credit Facility ~$2.5 B • Interest floats based on LIBOR plus a margin that is a minimum ~$2.2 B Available of 25 bps lower than previous Committed Available Capacity of financing Committed • Interest rate swap locking ~$0.8B Capacity of ~$0.7B $400 mil
Slide 21: Comparison to Route-Based Industrial Services Peers
1 Comparison to Route-Based Industrial Services Peers Peers Brink’s Specialized fleet Focus on route density and optimization Strong recurring revenue High customer retention Ability to leverage physical infrastructure Accretive/high-synergy M&A Technology-enhanced logistics
Slide 22: Compared to Industrial Services/Route-Based Peers…
Compared to Industrial Services/Route-Based Peers… 1 Growing Faster 19% CAGR Ahead of Peers & Closing the Gap Organic Revenue Growth Adj. EBITDA Margin Brink’s Peer Avg. Brink’s Peer Avg. 24% ~23% 7% ~15% ~6% 12% ~4% 2019 16-19 Avg '16-'18E 2016 2019 2016 2019 Total Revenue Guidance Actual Guidance
Slide 23: Industrial Services/Route-Based Peer Comparisons
Industrial Services/Route-Based Peer Comparisons 1 Business Overview 2019E Financial Metrics Growth Valuation 3-Year Adj. Adj. EBITDA Capex EBITDA Company Description OP Margin Margin (% of Rev) CAGR EV / Adj. EBITDA 2 Cash The Brink's Company (BCO) Management ~11% ~15% ~5% ~19% ~10x Uniform rental
Slide 24: Estimated Cash Payments to Frozen U.S. Pension Plan
Estimated Cash Payments to Frozen U.S. Pension Plan ($ Millions) Payments to Primary U.S. Pension Payments to UMWA $504 $17 $28 $24 $19 $32 $32 $6 $1 2019 2020 2021 2022 2023 2024 2025 2026 2018 2025 2026 2027 After 2027 Primary US Pension • $87 million prepaid pension contribution in 2014 • Based o
Slide 25: 2016 - 2017 Non-GAAP Results Reconciled to GAAP (1 of 3)
2016 - 2017 Non-GAAP Results Reconciled to GAAP (1 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2016 2017 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Revenues: GAAP $ 721.8 739.5 755.8 803.5 3,020.6 $ 788.4 805.9 849.5 903.2 3,347.0 Venezuela operations(a) (32.1)
Slide 26: 2016 - 2017 Non-GAAP Results Reconciled to GAAP (2 of 3)
2016 - 2017 Non-GAAP Results Reconciled to GAAP (2 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations 2016 2017 (In millions) Q1 Q2 Q3 Q4 Full Year 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 $ 34.7 14.3 19.
Slide 27: 2016 - 2017 Non-GAAP Results Reconciled to GAAP (3 of 3)
2016 - 2017 Non-GAAP Results Reconciled to GAAP (3 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations 2016 2017 (In millions) Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Adjusted EBITDA(j): Net income (loss) attributable to Brink's - GAAP $ (3.1) 0.3 24.5 12.8 34.5 $ 34.7 14.2 19.9
Slide 28: Non-GAAP Reconciliation - Other
Non-GAAP Reconciliation - Other 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. See below for a summary of the other items not allocated to se
Slide 29: 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 Full Year 2015 2016 2017 2018 Capital e
Slide 30: Non-GAAP Reconciliation – Cash Flows
Non-GAAP Reconciliation – Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year Full Year 2017 2018 Cash flows from operating activities Operating activities - GAAP $ 296.4 $ 364.1 Venezuela operations (17.3) (0.4) (Increase) decrease in restricted cash held for customers (44.3) (4
Slide 31: 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 2018 Debt: Short-term borrowings $ 45.2 $ 28.9 Long-term debt 1,191.5 1,525.1 Total Debt 1,236.7 1,554.0 Restricted cash