Brinks Company (the) · NYSE:BCO
Brinks Company (the) — Q2 2019 Earnings Presentation
35 slides from Brinks Company (the)'s earnings presentation, Jul 24, 2019
Slide 1: Second Quarter 2019
Second Quarter 2019 July 24, 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: Second-Quarter Highlights
Second-Quarter Highlights (Non-GAAP, $ Millions) • Strong growth in revenue, operating profit, adjusted EBITDA and EPS • Operating profit up 17%, up 41% in constant currency • Profits in U.S. more than doubled, Mexico +49% • Dunbar integration on track; expect to exceed targeted synergies of ~$45M •
Slide 4: U.S. Profit Momentum Continues
U.S. Profit Momentum Continues ($ Millions) Revenue +54% Op Profit +132% 2Q Highlights • Revenue up 54%, operating profit up 132% • Improvement in legacy business and $302 Dunbar acquisition $23 • Margin rate up 260 bps to 7.7% • 2019 exit rate margin target of ~10% 8.8% $197 8.1% Margin • Dunbar in
Slide 5: Second-Quarter 2019 Non-GAAP Results
Second-Quarter 2019 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +11% Op Profit +17% Adj. EBITDA +13% EPS +8% Constant currency +20% Constant currency +41% Constant currency +30% Constant currency +40% Organic +8% Organic +28% Acq +12% Acq +14% FX (9%) FX (25%) $108 $154 $988 $1.09 $9
Slide 6: First-Half 2019 Non-GAAP Results
First-Half 2019 Non-GAAP Results (Non-GAAP, $ Millions, except EPS) Revenue +8% Op Profit +18% Adj. EBITDA +16% EPS +12% Constant currency +19% Constant currency +45% Constant currency +36% Constant currency +50% Organic +7% Organic +30% Acq +12% Acq +16% FX (10%) FX (28%) $2.17 $310 $1,990 $215 $1,
Slide 7: First-Half Adjusted EBITDA and EPS vs 2018
First-Half Adjusted EBITDA and EPS vs 2018 (Non-GAAP, $ Millions, except EPS) 2019 EPS: $1.63 (+12% vs PY) 2018 EPS: $1.45 +16% vs PY $19 $265 $85 $174 ( $46 ) $79 ( $42 ) ( $2 ) $83 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Continuing Ops & Ta
Slide 8: Argentina – Impact of Currency Devaluation
Argentina – Impact of Currency Devaluation Operating Profit: 2019 versus 2018 Illustrative Devaluation Impact (USD / ARS Rate: 42.5 as of July 22, 2019) FY Impact 2019 Average BCO Alternate Scenarios 2019 USD / ARS ~39 ~44 ~47 ~49 ~45 Downsides Exchange Rate: Guidance Upside (17) (11) (8) (55) Jan.
Slide 9: Free Cash Flow (incl. completed acquisitions)
Free Cash Flow (incl. completed acquisitions) $600 Adjusted EBITDA (Non-GAAP, $ Millions) $45 Working Capital: Targeting ~flat Cash Restructuring: ~$45 million, primarily acquisition-related $512 $65 Cash Taxes: Higher income offset by lower ETR, FTCs and refund timing $36 $425 $80 Cash Interest: Hi
Slide 10: 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 ~2.0 ~2.9 ~ $2,300 Adjusted EBITDA + ~$480 ~$595 ~$650 ~$785 Synergized Acquisitions ~ $1,300 $1,214 $612 ~ $600 ~ $600 $512 $512 $425
Slide 11: 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 $600 Million – 3-yr CAGR ~21%* Strategy 1.5 Acquisitions • Focus on “core-core” & “core-adjacent” 2019 • Capture synergies & improve density 13.3% Adj. EBITDA $120 Margin • 12 Acquisitions closed
Slide 12: 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 13: 2019 Guidance Affirmed
2019 Guidance Affirmed (Non-GAAP, $ Millions, 20% Op Profit Growth (+100 bps) Including $20-$30 Million OpEx Investment except EPS) Revenue +9% Op Profit +20% Adj. EBITDA EPS Constant currency +15% Constant currency +37% Constant currency +30% Constant currency +44% Organic +7% Organic +27% +17% +21
Slide 14: Continued Improvement Expected in 2019 and Beyond
Continued Improvement Expected in 2019 and Beyond (Non-GAAP, $ Millions) Operating Profit & Adj. EBITDA ~16% 14.9% ~15% 13.3% 11.8% Adj. EBITDA ~11% Margin 10.1% ~10% 8.8% $590 - $610 7.4% Op Profit $512 Margin ~ $185 ~$475 $425 $165 ~ $150 Adj. $342 $144 EBITDA $126 D&A/Other $405- $425 $347 ~ $325
Slide 15: Appendix
Appendix
Slide 16: Second-Quarter Revenue and Operating Profit vs 2018
Second-Quarter Revenue and Operating Profit vs 2018 (Non-GAAP, $ Millions) Revenue Operating Profit % Change 8% 12% 20% (9%) 11% % Change 28% 14% 41% (25%) 17% Constant Constant Currency Currency $101 $988 ( $74 ) $10 $108 ( $19 ) $914 $21 $64 $824 $89 $76 10.1% Margin 8.8% 10.7% Margin Margin 9.4%
Slide 17: Second-Quarter Adjusted EBITDA and EPS vs 2018
Second-Quarter Adjusted EBITDA and EPS vs 2018 (Non-GAAP, $ Millions, except EPS) Q2 2019 EPS: $0.84 +8% vs PY Q2 2018 EPS: $0.78 +13% vs PY $10 $134 $43 $89 ( $23 ) $38 ( $22 ) ( $2 ) $43 Op Profit Net Interest Taxes Non-controlling Income from D&A Interest Exp Other Adjusted Interest Continuing Op
Slide 18: 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 ~$220 High Return Growth $185 $182 CapEx High High Return Return Growth Growth CapEx CapEx ~4.5% of Revenue $124 $106 Facili
Slide 19: Credit Facility and Debt Structure
Credit Facility and Debt Structure Debt Balance 2019 Credit Facility Amendment ~$2.5 B • Term Loan A increased from $469 million to $800 million ~$2.2 B Available Committed Available Capacity of • Secured revolving credit facility Committed consistent at $1.0 billion ~$0.8B Capacity of ~$0.7B • Inte
Slide 20: Strong and Sustainable Credit Statistics
Strong and Sustainable Credit Statistics ($ Millions) $1,000 Revolver Senior Notes $600 $610 Term Loan A $30 $40 $40 $40 $40 2019 2020 2021 2022 2023 2024 2025 2026 2027 Maturity Schedule for Credit Facility and Senior Notes 20
Slide 21: Legacy Liabilities – Underfunding at 12/31/2018
Legacy Liabilities – Underfunding at 12/31/2018 ($ Millions) Frozen Primary U.S. Pension UMWA Primary U.S. Pension UMWA 2015 2016 2017 2018 2015 2016 2017 2018 ($206) ($227) ($102) ($108) ($107) ($294) ($297) ($114) 21
Slide 22: Estimated Cash Payments to Frozen U.S. Pension Plan
Estimated Cash Payments to Frozen U.S. Pension Plan ($ 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 • Prepaid pension payments in 2014 with an $87 million contribution − Accelerat
Slide 23: 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 24: 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% ~16% ~5% ~21% ~10x Uniform rental
Slide 25: Compared to Industrial Services/Route-Based Peers…
Compared to Industrial Services/Route-Based Peers… 1 Growing Faster 21% CAGR Ahead of Peers & Closing the Gap Organic Revenue Growth Adj. EBITDA Margin Brink’s Peer Avg. Brink’s Peer Avg. 24% ~23% 7% ~16% ~6% 12% ~4% 2019 16-19 Avg '16-'18E 2016 2019 2016 2019 Total Revenue Guidance Actual Guidance
Slide 26: Strategy 1.5 – Core Acquisitions
Strategy 1.5 – Core Acquisitions Synergistic, Accretive Acquisitions in Our Core Markets Core Acquisitions-to-Date • 2017: 6 completed, including Maco 13.3% Margin France Temis • 2018: 3 completed, including Dunbar AATI U.S. (Temis) (AATI) Dunbar • 2019: 3 completed, 1 pending Balance • Rodoban (Bra
Slide 27: Strategic Plan 2017 – 2019 Operating Profit
Strategic Plan 2017 – 2019 Operating Profit (Non-GAAP, $ Millions) OP 7.4% ~11% Margin $475 -$495 ~ $105 $405 -$425 ~ $105 1.5 ~ $380 $325 Acquisitions 2019 Target March 2017 ~ $310 $216 Investor Day = Organic 1.0 + 2.0 Operating Investment = Closed Acquisitions Profit = Share-based Comp 2016 North
Slide 28: 2019 Guidance - Operating Profit and Adjusted EBITDA
2019 Guidance - Operating Profit and Adjusted EBITDA (Non-GAAP, $ Millions, except EPS) OP % Change vs. 2018 ~33% ~10% ~43% (~17%) (~6%) ~20% $675 - $695 $590 - $610*** Adjusted ~ $190 EBITDA $512 $35 ( $60 ) ~ $185 $165 $113 $485 – ( $20 ) D&A/Other $505 $405 – $425 $347 Operating Profit 10.1% ~11%
Slide 29: 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 2016 2017 (In millions) 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 30: 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 31: 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 32: 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 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 Full Year 2015 2016 2017 2018 Capital e
Slide 34: 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 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) 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