Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q2 2020 Earnings Presentation
33 slides from Brinks Company (the)'s earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020
Second Quarter 2020 July 29, 2020 1
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," “model”, "predict," "intend," "plan," "believe," "potential," "may," "should" and similar expressions may identify forward-
Slide 3: Key Messages
Key Messages (Non-GAAP) Second-quarter results better than expected • Strong sequential growth in operating profit, adj. EBITDA and EPS • Revenue down 10% vs 2019, down 17% organically, flat on constant currency • 8.9% operating margin • Strong revenue recovery from April low point: total company (e
Slide 4: Our Priorities
Our Priorities PRIORITY 1 Our people and customers • Our highest priority is the health and safety of our employees, their families and our customers • Provide “essential services” to our customers PRIORITY 2 Preserve cash and optimize profitability • Take decisive and timely action to preserve cash
Slide 5: Second-Quarter 2020 Non-GAAP Results
Second-Quarter 2020 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue (10%) Op Profit (18%) Adj. EBITDA (6%) EPS (22%) Constant currency 0% Constant currency +3% Constant currency +10% Constant currency +3% Organic (17%) Organic (18%) Acq +16% Acq +21% FX (9%) FX (20%) $147 $914 $912 $134
Slide 6: June Revenue Recovery vs April Low Point
June Revenue Recovery vs April Low Point 2020 Revenue as a % of 2019 Revenue 103% 100% 89% June 86% 80% 75% 76% 71% April 50% 25% 0% Total Legacy Total Reported Brink’s Brink’s (ex. G4S) (incl. G4S 2020 results) Total Legacy Revenue Recovery to ~86% of Pre-Covid Level 1. Pro-forma to include TTM res
Slide 7: U.S. Volume and Revenue vs Pre-Covid Levels
U.S. Volume and Revenue vs Pre-Covid Levels ($ Millions) Total Volume (# of Stops) 1 Revenue Highlights • All open customers accepting cash 100% • Stops steadily increasing - no material changes in frequency (from pre-Covid 89% levels) among open customers 83% 10.5% • Many “non-essential” services r
Slide 8: Volume of U.S. Currency in Circulation Has Increased
Volume of U.S. Currency in Circulation Has Increased 125 120 115 110 105 Pre Covid-19 8.1% Margin 100 95 U.S. Currency in Circulation, Weekly1 90 Brink’s U.S. Notes Processed, Weekly2 8.9% Margin 85 5.9% Jan Feb Mar Margin Apr May Jun Jul 1. St. Louis Federal Reserve, indexed to January 2020. 2. Bri
Slide 9: Second-Quarter 2020 Non-GAAP Revenue and Operating Profit
Second-Quarter 2020 Non-GAAP Revenue and Operating Profit (Non-GAAP, $ Millions) Revenue Op Profit % Change (17%) 16% 0% (9%) (10%) % Change (18%) 21% 3% (20%) (18%) $914 ( $152 ) $149 $912 ( $86 ) $826 $89 ( $16 ) $19 $91 ( $18 ) $73 Margin Margin Margin 9.7% 10.0% 8.9% 2019 Organic Acq / Disp* 202
Slide 10: Second-Quarter 2020 – Adjusted EBITDA and EPS
Second-Quarter 2020 – Adjusted EBITDA and EPS (Non-GAAP, $ Millions, except EPS) EPS: 2Q19 $0.86 2Q20 $0.67 $5 $125 $44 Tax Rate 37.5% vs. 31.4% in 2019 $73 ( $23 ) $42 ( $21 ) $5 $34 Margin Margin 8.9% 15.2% Op Profit Interest Taxes Other Income from D&A Interest Exp Stock Comp Adjusted Expense Con
Slide 11: Cost Realignment
Cost Realignment ($ Millions, except headcount) 2020 Actions Current Projected Impact ~ $85 Direct, Indirect & SG&A Labor Other • Headcount reductions • Overtime management • Merit increases frozen ~ $65 • Temporary benefit reductions ~5,500 Fleet & Freight Labor • Further route optimization • Utili
Slide 12: Capital Expenditures Reduced to ~3% of Revenue
1 Capital Expenditures Reduced to ~3% of Revenue 1 ($ Millions) $165 $165 Cash CapEx $155 $26 $25 Cash Devices $25 YTD Cash Capex $54 $100 G4S $20 Acquisition Cash CapEx excl. Cash $138 $140 $25 $130 Devices Financing Leases $60 $55 $52 $50 $30 $19 YTD 2018 Actual 2019 Actual 2020 Original Target 20
Slide 13: Cash Flow
Cash Flow (Non-GAAP, $ Millions) $564 $564 Adjusted EBITDA $465 - $465 - $127 $515 $515 Working Capital and Cash Restructuring • DSO risk ... negotiating with vendors $24 $140 - • Cash restructuring related to G4S acquisition $160 and adjusting labor due to pandemic $80 $392 Op Profit Cash Taxes • 2
Slide 14: Strong Financial Health - Ample Liquidity & Covenant Headroom
Strong Financial Health - Ample Liquidity & Covenant Headroom ($ Millions, except where noted) Cash and Debt Capacity • ~$1.3 billion of liquidity expected $520 $520 after G4S acquisition completed • ~$800 million Revolver plus ~$520 ~$1.3 B million cash ~$1.5 B Liquidity • Incremental $590 million
Slide 15: Net Debt and Leverage
Net Debt and Leverage (Non-GAAP, $ Millions) Net Debt Adjusted EBITDA and Financial Leverage Leverage Ratio1 1.4 2.4 2.4 3.7 Fully-synergized Leverage Ratio2 ~3.3 ~$2,128 Pro-forma Bank defined EBITDA includes TTM EBITDA, Fully-Synergized Secured Remaining plus projected 18 month synergies for acqui
Slide 16: 2020 Sensitivity Model
2020 Sensitivity Model (Non-GAAP, $ Millions) Potential Second-Half Revenue Bridge Full-Year Adj. EBITDA $294 - $3,570 - ($125) - Revenue ~$3.3B ~$3.6B % of ($428) - $345 $3,894 ($149) $3,300 - 2H 2019 $3,680 ($156) $3,600 100% D&A ~$180 ~$180 $1.9B 85% ~$1.9B Adjusted EBITDA % ~14.0% ~14.5% 2H $1.6
Slide 17: 2021 Sensitivity Model
2021 Sensitivity Model (Non-GAAP, $ Millions) Potential 2021 Adjusted EBITDA Margin Potential 2021 Scenarios Revenue ~$4,025 ~$4,475 ~$4,925 Priority 3 EBITDA ~$615 ~$705 ~$805 • Resize the business, accelerate synergies & restructuring • Primary focus on sustainable fixed costs % ~15.3% ~15.8% ~16.
Slide 18: Summary and Conclusion
Summary and Conclusion 2020 • Encouraged by 2Q results, June revenue at 86% of 2019 level and increasing • Expect improving revenue and higher margin rate in second half • G4S acquisition performing well, on track for completion by year-end • 2020 Sensitivity Model: Revenue: $3.3B to $3.6B (85%-100%
Slide 19: Appendix
Appendix 19
Slide 20: Second-Quarter Results by Segment
Second-Quarter Results by Segment ($ Millions) North America South America Rest of World Revenue (21%) Op Profit (61%) Revenue (29%) Op Profit (26%) Revenue +29% Op Profit +20% Constant currency (17%) (57%) Constant currency: (5%) +3% Constant currency +34% +29% Organic (19%) (58%) Organic (8%) +1%
Slide 21: Cash in Circulation Continues to Grow
Cash in Circulation Continues to Grow Cash Availability Continues to Grow Number and value of notes in circulation consistently grows faster than GDP • 2009 – 2018 CAGR Value of Notes: USD ~7%, Euro ~5% • 2009 – 2018 CAGR Number of Notes: USD ~5%, Euro ~6% USD – notes in circulation1 Euro – notes in
Slide 22: Cash is Most Preferred Payment – 75% of Global Transactions
Cash is Most Preferred Payment – 75% of Global Transactions Drivers of Cash Usage Strong Cash Usage in our Largest Markets • Unbanked or underbanked rely on cash as a primary payment method • 25% of U.S. Households are unbanked / underbanked1 • All demographics use cash – all ages and income • Cash
Slide 23: During a Recession, Cash Usage Grows
During a Recession, Cash Usage Grows Cash usage grew significantly in the last Drivers of Cash Usage recession in a Recession Cash as a % of Total Payments - U.S. • Cash usage in 2008-2009 grew significantly with 31% government stimulus and constrained consumer 29% credit 27% • Unbanked and underban
Slide 24: Cash is Safe and Vital to the Economy
Cash is Safe and Vital to the Economy Cash has Lower Germ Index COVID-19 Virus Survival Time NYC (in hours)1 Fast Food 664 Door Handle NYC 70 Park Bench 503 60 Average Germ-Score 285 for Credit Cards 50 NYC 40 Train Station 163 Bathroom 30 Average Germ-Score 160 Average for Cash 20 Average Cash Germ
Slide 25: Non-GAAP Income Tax
Non-GAAP Income Tax Tax Rate • Excludes impact of post Q2 G4S acquisitions • U.S. taxable income limitation • Inability to credit all taxes on cross border 37.5% payments 34.2% 34.2% 31.4% 32.0% • U.S. taxable income decline is attributable to lower earnings in the U.S. cash business and lower corpo
Slide 26: Debt Maturity Profile
Debt Maturity Profile ($ Millions) Maturity Schedule for Credit Facility and Senior Notes Revolver $1,000 Term Loan A Senior Notes $1,089 Senior Notes $600 $62 $70 $70 $70 $400 2020 2021 2022 2023 2024 2025 2026 2027 26
Slide 27: Estimated Cash Payments for Legacy Liabilities
Estimated Cash Payments for Legacy Liabilities ($ Millions) Payments to Primary U.S. Pension Payments to UMWA $310 $14 $18 $16 $10 $16 $25 $24 $2 $0 2019 2020 2021 2022 2023 2024 2025 2026 2019 2028 2029 2030 After 2030 Primary US Pension • Based on actuarial assumptions (as of 12/31/19), no additio
Slide 28: 2017-2018 Non-GAAP Results Reconciled to GAAP (1 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (1 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2017 2018 Full Year Q2 Full Year Revenues: GAAP $ 3,347.0 $ 849.7 3,488.9 Venezuela operations(a) (154.1) (25.6) (51.4) Non-GAAP $ 3,192.9 $ 824.1 3,437.5 Operating prof
Slide 29: 2017-2018 Non-GAAP Results Reconciled to GAAP (2 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (2 of 3 ) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2017 2018 Full Year Q2 Full Year Income (loss) from continuing operations attributable to Brink's: GAAP $ 16.9 $ (107.8) (33.3) Retirement plans(c) 22.3 6.1 25.3 Venezu
Slide 30: 2017-2018 Non-GAAP Results Reconciled to GAAP (3 of 3)
2017-2018 Non-GAAP Results Reconciled to GAAP (3 of 3) The Brink’s Company and subsidiaries Non-GAAP Reconciliations (In millions) 2017 2018 Full Year Q2 Full Year Adjusted EBITDA(j): Net income (loss) attributable to Brink's - GAAP $ 16.7 $ (107.9) (33.3) Interest expense - GAAP 32.2 15.8 66.7 Inco
Slide 31: 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. See below for a summary of the other items not al
Slide 32: Non-GAAP Reconciliation – Cash Flows
Non-GAAP Reconciliation – Cash Flows The Brink’s Company and subsidiaries (In millions) Full Year 2019 Cash flows from operating activities Operating activities - GAAP $ 368.6 Increase in restricted cash held for customers (23.7) Increase in certain customer obligations(a) (11.4) Operating activitie
Slide 33: 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, December 31, June 30, (In millions) 2017 2018 2019 2020 Debt: Short-term borrowings $ 45.2 $ 28.9 $ 14.3 $ 12.1 Long-term debt 1,191.5 1,525