Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Investor Presentation (March 2018)
48 slides from Brinks Company (the)'s investor presentation, Mar 15, 2018
Slide 1: Investor Meeting March 15, 2018
S ECU RE LOG IST ICS. WORLDW ID E. Investor Meeting March 15, 2018 Dallas, Texas NYSE: BCO Exhibit 99.1
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: CEO Overview
CEO Overview Doug Pertz
Slide 4: World's Largest Cash Management Company
World’s Largest Cash Management Company2 Global cash market $16.5 billion1 South America 29% Rest of World 32% North America 39% GLOBAL MARKET LEADER Loomis G4S GardaProsegur Other 2017 SEGMENT REVENUE OPERATIONS • 41 countries • 1,100 facilities • 12,600 vehicles • 62,300 employees REVENUE COUNTRIE
Slide 5: Cash is By Far the Most Used Payment Method
ESTIMATED CASH USAGE IN OUR LARGE MARKETS Cash is By Far the Most Used Payment Method Throughout the World 1. MasterCard 2013 2. World Bank Group The Global Findex Database 2014 3. European Central Bank 31% United States4 85% Brazil1 68% France3 44% Canada5 90% Mexico6 Cash accounts for about ~85% o
Slide 6: Segment revenue, lines of business and customers
South America $925 Organic Revenue1:+19% Margin %: 19.8% Margin1: +270 bps CORE SERVICES • Cash-in-Transit (CIT) • ATM services HIGH-VALUE SERVICES • Brink’s Global Services (BGS) • Money processing • Vault outsourcing • CompuSafe® and retail services • Payments Core Services $1.6B (51%) High-Value
Slide 7: Strong Positions in Growth Markets
Loomis Garda Other Other Garda GSI Other RoomafdMrk Strong Positions in Growth Markets Estimated Market Share in Key Countries1,2 Canada U.S. France Mexico Chile Argentina Brazil Colombia Israel Hong Kong/ Macau Brink’s All others Legend 1. Internal estimates of market share of CIT/ATM markets (as o
Slide 8: Full-Year 2017 Non-GAAP Results
OPERATING PROFIT 8.2% Margin Full-Year 2017 Non-GAAP Results REVENUE ($ Millions) ADJUSTED EBITDA ($ Millions) EPS ($ Millions) +24% +33% $2,908 $3,193 2016 2017 $216 $281 2016 2017 7.4% Margin 8.8% Margin $342 $425 2016 2017 11.8% Margin 13.3% Margin $2.28 $3.03 2016 2017 +10% 6% Organic +30% Note:
Slide 9: 2018 Non-GAAP Guidance
2018 Non-GAAP Guidance ($ in millions) $3,193 ~ $3,450 2017 2018 REVENUE ($ Millions) +8% 5% Organic $281 $365- $385 2017 2018 OPERATING PROFIT ~10.9%1 Margin ADJUSTED EBITDA $425 $515-$535 2017 2018 13.3% Margin ~15.2%1 Margin ($ Millions) EPS $3.03 $3.65-$3.85 2017 2018 ($ Millions) +30% - 37% +21
Slide 10: Our Strategy
Our Strategy Accelerate Profitable Growth (APG) Close the Gap — Operational Excellence (CTG) Introduce Differentiated Services (IDS) ACCELERATE PROFITABLE GROWTH • Grow high-value services • Grow account share with large financial institution (FI) customers • Increase focus on smaller FIs • Penetrat
Slide 11: Three-Year Strategic Plan
Three-Year Strategic Plan ORGANIC GROWTH + ACQUISITIONS Strategy 1.0 Core Organic Growth 20182017 2019 • Focus on “Core-Core” & “Core-Adjacent” • Capture Synergies & Improve Density • 2017 Investment: $365M • 2018-2019 Planned Investment ~$400M per year • Close the Gap • Accelerate Profitable Growth
Slide 12: Strategy 1.0 Drives Strong Core Organic Growth
Strategy 1.0 Drives Strong Core Organic Growth EBITDA Target: $535 Million in 2019 (Before Acquisitions) ($ Millions) OP Margin 7.4% 3.7% 2% 0.4% (2.5%) ~11% ~10% $216 $390 $325 2016 Actual North America South America Rest of World Contingency 2019 Target Before Acquisitions 2019 Target Investor Day
Slide 13: Strategic Execution – Acquisitions
Strategic Execution – Acquisitions Acquiring Businesses in Core Markets Acquisition Update: • “Core/ Core” – Core businesses in Core Markets • 6 completed in 2017 • 1 announced in 2018 • Rodoban in Brazil expected to close in 2Q 2018 • Closed and announced acquisitions expected to generate Adjusted
Slide 14: 2019 Target with Acquisitions
OP Margin 7.4% 3.7% 2% 0.4% (2.5%) ~11% ~12% $216 $390 $470 2016 Actual North America South America Rest of World Contingency 2019 Target Acquisitions 2019 Target w/ Acquisitions ($ Millions) EBITDA Margin 11.8% ~15% ~16% $625 $535 EBITDA Op Profit EBITDA Op Profit 1. Incudes announced and completed
Slide 15: Financing Capacity to Execute the Strategy
Financing Capacity to Execute the Strategy Credit Facility and Senior Notes Ten-Year Senior Notes • $600 million unsecured notes • 4.625% interest rate • Matures October 2027 Term Loan A • $500 million secured Term Loan A • Interest floats based on LIBOR plus a margin • Current interest rate ~3.3% •
Slide 16: Net Debt, Adjusted EBITDA and Financial Leverage
$306 $342 $425 $425 $525 $625 ~ $40 ~ $70 ~ $140 ~ $465 ~ $595 ~ $765 2015 2016 2017 Pro-forma 2017 Pro-forma 2018 Pro-forma 2019 $269 $247 $612 ~ $860 ~ $1,000 Dec 2015 Dec 2016 Dec 2017 Pro-forma 2018 Pro-forma 2019 ($ Millions) Leverage Ratio1 0.9 0.7 1.4 Net Debt Adjusted EBITDA and Financial Le
Slide 17: Capital Expenditures 2015–2020
2015 Actual 2016 Actual 2017 Actual 2017 Actual 2018 Outlook 2019 Outlook 2020 Outlook Capital Expenditures Before CompuSafe® Service CAPITAL EXPENDITURES 2015 – 20201 Facility Equipment / Other IT Armored Vehicles % Revenue 3.5% 4.2% 5.8% ~6% ~5.5% ~4% D&A1 $118 $112 $119 Reinvestment Ratio 0.9 1.1
Slide 18: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation 18 Actual 2017 Target 2018 Target 2019 Adjusted EBITDA $425 ~$525 ~$625 Working Capital & Other (86) ~(10) ~(15) Cash Taxes (84) ~(85) ~(75) Cash Interest (27) ~(60) ~(65) Non-GAAP Cash from Operating Activities 229 ~370 ~470 Capital Expenditures incl. CompuSafes (22
Slide 19: U.S. Update
U.S. Update Ray Shemanski
Slide 20: A Clear Path to Value Creation: U.S. Operating Profit Improvement
2016 Base Branch Standardization Fleet Improvements One-Person Vehicle Labor Network Optimization Sales Growth/ CompuSafe IT and Other Contingency 2019 Target Actual 0.8% ~10% Breakthrough Initiatives 1. Excludes Payment Services 2. Loomis Full-Year Report 2017 (2 – 3 %)~1% 2 – 2.5% ~2% ~1% 2 – 3% (
Slide 21: U.S. Non-GAAP Operating Margin Trend
0.8% 3.4% ~6% ~10% 2016 Actual 2017 Actual 2018 Target 2019 Target U.S. Non-GAAP Operating Margin Trend 1. Excludes Payment Services 21
Slide 22: U.S. Breakthrough Initiatives – Met 2017 Targets
FLEET COST IMPROVEMENTS ONE-PERSON VEHICLES PURCHASED ONE-PERSON VEHICLE LABOR • ~700 one-person vehicles now in service • Updating ~60% of fleet by end of 2019 • Reducing average fleet age from 10+ to 6 years • Employee and customer acceptance high 2017 Savings: $10 million NETWORK OPTIMIZATION 201
Slide 23: U.S. Breakthrough Initiatives: Fleet
2018 Plans • ~400 additional vehicles in 2018 • Average fleet age < 8 years by end of 2018; < 6 years by end of 2019 U.S. Breakthrough Initiatives Fleet New Vehicle Design Managing the Fleet • Fleet & Garage Management Systems • State-of-the-art technology enabling: • Greater vehicle uptime • Proper
Slide 24: U.S. Breakthrough Initiatives: One Person Vehicles
• Currently running ~600 one-person routes daily • Targeting ~100 additional routes for deployment in 2019 • Increasing mix of smaller, more efficient vehicles • Employee and customer acceptance high U.S. Breakthrough Initiatives One Person Vehicles ONE-PERSON VEHICLES PURCHASED ONE-PERSON VEHICLE L
Slide 25: U.S. Breakthrough Initiatives: Network Optimization
NETWORK OPTIMIZATION 2017 Savings: $1 million U.S. Breakthrough Initiatives Network Optimization 2019 Target Margin Improvement ~1.5% - 2% 2018 Optimization of High-Speed Branches • Optimize branch layout and process flow to maximize the utilization of high- speed machines. Hub and Spoke • Leverage
Slide 26: CompuSafe Service – Met 2017 New Order Target
U.S. Breakthrough Initiatives CompuSafe® Service – Met 2017 New Order Target HIGHLIGHTS • Sold 3,300 CompuSafe® units in 2017 vs 3,000 -3,500 target • Installed ~2,300 • 2H-17 run rate in line with 2019 target… pipeline strong • Continued investment in sales and operations COMPUSAFE UNITS1 1,750 1,1
Slide 27: CEO Overview
CEO Overview Doug Pertz
Slide 28: Non-GAAP Operating Profit & EBITDA
$216 $281 $365 – $385 ~ $470 $126 $144 ~ $150 ~ $155 7.4% 8.8% 10.6% - 11.2% ~12%11.8% 13.3% ~15.2% ~16% 2016 2017 2018 Outlook 2019 Target Continued Improvement Expected Non-GAAP Operating Profit & EBITDA 2018 Non-GAAP Outlook • Revenue ~$3.45 billion (5% organic growth) • Operating profit $365 - $
Slide 29: Q&A
Q&A
Slide 30: Appendix
Appendix
Slide 31: 20+ years of diverse senior level experience in guiding multinational organizations through both
20+ years of diverse senior level experience in guiding multinational organizations through both operational turnaround and growth acceleration Prior Experience: President and CEO of Recall Holdings Limited; CEO of IMC Global (now The Mosaic Company); CEO of Culligan Water Technologies; Group Ex
Slide 32: Cash in the U.S. Continues to Grow
43% 35% 27% 26% 25% 24% Less than $25,000 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$124,999 $125,000 and greater Cash in the U.S. Continues to Grow • Notes in circulation doubled to ~40 billion notes in 2016 vs 1996 • Value of notes in circulation annual growth rates (CAGR): • 2009 –
Slide 33: Licensing Agreement with MONI Smart Security
Licensing Agreement with MONI Smart Security Leveraging a Powerful Brand Brink’s has selected MONI as its licensing partner for residential security monitoring and related smart home applications in the U.S. and Canada • 3rd largest residential security monitoring provider in the U.S. • Approximatel
Slide 34: Tax Reform – Impact on Brink's
Tax Reform – Impact on Brink’s Note: The amounts described above represent the estimated impact of the enactment of the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. The final impact of Tax Reform may differ from these estimates, due to, among other things, changes in interp
Slide 35: Positive Operating Trends
$112 $130 0 20 40 60 80 100 120 140 160 Q4 2016 Q4 2017 14.6% Margin 15.1% Margin $768 $864 Q4 2016 Q4 2017 $94 $112 0 20 40 60 80 100 120 140 160 Q3 2016 Q3 2017 12.7% Margin 13.5% Margin $735 $829 Q3 2016 Q3 2017 Positive Operating Trends Q1 2017: S IGNIFICANT TRACTION ($ Millions) $689 $740 Q1 20
Slide 36: Historical Financial Summary
Historical Financial Summary NON-GAAP REVENUE & YoY GROWTH NON-GAAP OPERATING PROFIT & MARGIN ADJUSTED EBITDA & MARGIN $3,351 $2,977 $2,908 $3,193 0.6% (11.2%) (2.3%) 9.8% 2014 2015 2016 2017 ($ Millions) +3% Organic +6% Organic $287 $306 $342 $4258.6% 10.3% 11.8% 13.3% 2014 2015 2016 2017 ($ Millio
Slide 37: 2017 Segment Results
2017 Segment Results 37 The Brink’s Company and subsidiaries (In millions) Revenues 2017 Revenues: North America $ 1,254.2 South America 924.6 Rest of World 1,014.1 Segment revenues - GAAP and Non-GAAP 3,192.9 Other items not allocated to segments(a) Venezuela operations 154.1 GAAP $ 3,347.0 Operati
Slide 38: Other Items Not Allocated to Segments
38 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 segment results is below. Venezuela operations We have excluded from our segment results all of our Venezuela operating results, due
Slide 39: Other Items Not Allocated to Segments (con't)
Other Items Not Allocated to Segments (con’t) 39 The Brink’s Company and subsidiaries Other Items Not Allocated to Segments (Unaudited) Acquisitions and dispositions Certain acquisition and disposition items that are not considered part of the ongoing activities of the business and are special in na
Slide 40: 2018 and 2019 Guidance
2018 and 2019 Guidance 40 The Brink’s Company and subsidiaries 2018 and 2019 Guidance (Unaudited) (In millions, except per share amounts) (a) The 2018 and 2019 Non-GAAP outlook amounts for operating profit exclude the impact of other items not allocated to segments. The 2018 Non-GAAP outlook amounts
Slide 41: Non-GAAP Results Reconciled to GAAP
Non-GAAP Results Reconciled to GAAP 41 The Brink’s Company and subsidiaries (In millions) 2016 2017 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q 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) (21.5) (20.4) (35.4) (109.4) (48.1) (46.3)
Slide 42: Non-GAAP Results Reconciled to GAAP (con't)
Non-GAAP Results Reconciled to GAAP (con’t) 42 The Brink’s Company and subsidiaries (In millions, except per share amounts) 2016 2017 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Reconciliation to net income (loss): Net income (loss) attributable to Brink's $ (3.1) 0.3 24.5 12.8 34.5 $ 34.7 14.2 19.9
Slide 43: Non-GAAP Results Reconciled to GAAP (con't)
Non-GAAP Results Reconciled to GAAP (con’t) 43 The Brink’s Company and subsidiaries (In millions) 2016 2017 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full Year Adjusted EBITDA(j): Income from continuing operations - Non-GAAP $ 16.0 20.3 34.3 45.0 115.6 $ 30.0 34.1 43.5 49.6 157.2 Interest expense - Non-GAAP
Slide 44: Non-GAAP Results Reconciled to GAAP
Non-GAAP Results Reconciled to GAAP Note: Amounts may not add due to rounding See slide 48 for footnote explanations 2014 2015 Revenues: GAAP $ 3,562.3 $ 3,061.4 Venezuela operations(a) (211.8) (84.5) Non-GAAP $ 3,350.5 $ 2,976.9 Operating profit (loss): GAAP $ 59.4 $ 96.4 Venezuela operations(a) 94
Slide 45: Non-GAAP Results Reconciled to GAAP (con't)
Non-GAAP Results Reconciled to GAAP (con’t) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2014 2015 Adjusted EBITDA: Income from continuing operations - Non-GAAP $ 53.3 87.1 Interest expense - Non-GAAP 23.3 18.9 Income tax provision - Non-GAAP 48.5 53.6 Depreciation and
Slide 46: Non-GAAP Reconciliation — Net Debt
Non-GAAP Reconciliation — Net Debt The Brink’s Company and subsidiaries Non-GAAP Reconciliations — Net Debt (Unaudited) (In millions) a) Restricted cash borrowings are related to cash borrowed under lending arrangements used in the process of managing customer cash supply chains, which is currently
Slide 47: Non-GAAP Reconciliation — Cash Flows
Non-GAAP Reconciliation — Cash Flows The Brink’s Company and subsidiaries (In millions) 47 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
Slide 48: 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 2015 Full Year 2016 Full Year 2017 Capital expenditures — G