Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - BRINKS CO | ex991q42016.htm |
| 8-K - 8-K - BRINKS CO | bcoform8-k4q16earnings.htm |
February 8, 2017
Fourth Quarter 2016 Earnings Call
Secure Logistics. Worldwide.
Exhibit 99.2
2
Safe Harbor Statement & 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 information. Forward-looking information in these materials includes, but is not limited to: 2017 GAAP and non-
GAAP outlook, including revenue, organic growth, operating profit, earnings per share, currency translation impact, tax rate and capital expenditures; margin rate outlook (including
for the U.S. and Mexico businesses); adjusted EBITDA; and expectations regarding future cash payments to the primary U.S. pension plan and related to UMWA liabilities; and
expected cost savings from reorganization and restructuring activities. Forward-looking information in this document is subject to known and unknown risks, uncertainties and
contingencies, which are difficult to predict or quantify, and which could cause actual results, performance or achievements to differ materially from those that are anticipated. These
risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:
Our ability to improve profitability in our largest five markets; our ability to identify and execute further cost and operational improvements and efficiencies in our core businesses; our
ability to improve service levels and quality in our core business; continuing market volatility and commodity price fluctuations and their impact on the demand for our services; our
ability to maintain or improve volumes at favorable pricing levels and increase cost and productivity efficiencies, particularly in the United States and Mexico; investments in
information technology and adjacent businesses and their impact on revenue and profit growth; our ability to develop and implement solutions for our customers and gain market
acceptance of those solutions; our ability to maintain an effective IT infrastructure and safeguard confidential information; risks customarily associated with operating in foreign
countries including changing labor and economic conditions, currency restrictions and devaluations, safety and security issues, political instability, restrictions on, and cost of,
repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions; the strength of the U.S. dollar relative to foreign currencies and
foreign currency exchange rates; regulatory and labor issues in many of our global operations, including negotiations with organized labor and the possibility of work stoppages; our
ability to integrate successfully recently acquired companies and improve their operating profit margins; costs related to dispositions and market exits; our ability to identify evaluate
and pursue acquisitions and other strategic opportunities, including those in the home security industry and emerging markets; the willingness of our customers to absorb fuel
surcharges and other future price increases; our ability to obtain necessary information technology and other services at favorable pricing levels from third party service providers;
variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer; our ability to obtain appropriate insurance coverage,
positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, our loss experience, and changes in insurance costs;
costs associated with the purchase and implementation of cash processing and security equipment; employee, environmental, and other liabilities in connection with our former coal
operations, including black lung claims incidence; the impact of the Patient Protection and Affordable Care Act on UMWA and black lung liability and the Company's ongoing
operations; changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns, interest rates and annual actuarial revaluations, the
funding requirements, accounting treatment, investment performance and costs and expenses of our pension plans, the VEBA and other employee benefits, mandatory or voluntary
pension plan contributions; the nature of our hedging relationships; counterparty risk; changes in estimates and assumptions underlying our critical accounting policies; our ability to
realize deferred tax assets; the outcome of pending and future claims, litigation, and administrative proceedings; public perception of the Company's business and reputation; access
to the capital and credit markets; seasonality, pricing and other competitive industry factors; and the promulgation and adoption of new accounting standards and interpretations, new
government regulations and interpretation of existing regulations.
This list of risks, uncertainties and contingencies is not intended to be exhaustive. Additional factors that could cause our results to differ materially from those described in the
forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2015, and in our other public filings
with the Securities and Exchange Commission. The forward-looking information discussed today and included in these materials is representative as of today only and The Brink's
Company undertakes no obligation to update any information contained in this document.
These materials are copyrighted and may not be used without written permission from Brink's.
Today’s presentation is focused primarily on non-GAAP results. Detailed reconciliations of non-GAAP to GAAP results are included in the Fourth Quarter 2016 Earnings Release
available in the Quarterly Results section of the Brink’s website: www.brinks.com.
.
February 8, 2017
Fourth Quarter 2016 Earnings Call
Secure Logistics. Worldwide.
4
• EPS $.87 vs $.55, up 58%
• 10% organic revenue growth
• Operating profit $77 million, up 58% (71% organic growth)
• 10% operating margin, up from 6.6%
• U.S. profit $8 million vs year-ago loss
• Negative currency impact: $29 million on revenue, $8 million on operating profit, $.10 on EPS
CEO Overview
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results
section of the Brink’s website: www.brinks.com
Fourth-Quarter 2016 Non-GAAP Results
• EPS $2.24 vs $1.69, up 33%
• 6% organic revenue growth
• Operating profit $207 million, up 32% (43% organic growth)
• 7.1% operating margin, up from 5.3%
• Negative currency impact: $198 million on revenue; $22 million on operating profit; $.27 on EPS
• Adjusted EBITDA $333 million
Full-Year 2016 Non-GAAP Results
5
• 6% organic revenue growth to $3.0 billion
• Operating profit $230 - $240 million
• 7.7% - 8.0% operating margin, up from 7.1% in 2016
• EPS $2.45 - $2.55 vs $2.24 in 2016
• Adjusted EBITDA $370 - $380 million
• Negative currency impact: $80 million on revenue, $15 million on operating profit, $0.18 on EPS
CEO Overview
2017 Non-GAAP Guidance
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results
section of the Brink’s website: www.brinks.com
6
Our Strategy
Accelerate
Profitable
Growth
(APG)
Close the Gap
with Operational
Excellence
(CTG)
Introduce
Differentiated
Services
(IDS)
ACCELERATE
PROFITABLE GROWTH
• Grow High-Value Services
• Grow account share with
existing customers
• Increase focus on
smaller financial institutions
• Penetrate large, unvended
retail market
• Explore core and adjacent
acquisitions
INTRODUCE
DIFFERENTIATED
SERVICES
• Leverage uniform, best-in-
class global technology base
for logistics and operating
systems
• Offer end-to-end cash supply
chain managed services
• Launch customer portal and
value-added, fee-based
services
CLOSE THE GAP
• Lead industry in safety and security
• Exceed customer expectations
• Increase operational productivity
Culture
7
A Clear Path to Value Creation*
Incremental Improvements
Breakthrough Initiatives
Sales &
New Business
Branch
Standardization
Lean
Technology
Investments
Accretive
Acquisitions
OtherFleet One-Person
Vehicles
Optimize
Network
Current
Margin
Target
Margin
* For illustrative purposes only
8
A World of Opportunities
Current U.S. Mexico and
/Canada
Rest of
World
Total Acq Target
* For illustrative purposes only
• Improve customer experience
• Grow CompuSafe® and retail services
• Outsourced cash processing
• Optimize cost structure
• New markets for BGS
• Accretive acquisitions
• Customer-facing IT solutions Current
Margin
Mexico/
Canada
Rest of
World
Total Acq. Strategic Plan
Margin
U.S.
Global Margin Enhancement Opportunities
Financial Review
Secure Logistics. Worldwide.
10
$733
$695
$768
($29)
($9)
$73
Non-GAAP Revenue: 2016 vs 2015
($ Millions)
Fourth-Quarter
Full-Year
(4%) 10%
6%(7%)
Organic
Adjusted
2015 RevenueCurrency Acq/Disp
2015
Revenue
2016
Revenue
(1%)% Change
% Change (1%)
$2,977 ($198) $2,908$167$2,742($37)
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com.
Amounts may not add due to rounding.
11
$49
$42
$77
($8)
$2
$35
Non-GAAP Operating Profit: 2016 vs 2015
($ Millions)
Fourth-Quarter
Organic
Adjusted
2015 Op ProfitCurrency Acq/Disp
2015
Op Profit
2016
Op Profit
6.6% 10.0%OP Margin
Full-Year
7.1%5.3%OP Margin
$157 ($22) $207$68$139$4
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com.
Amounts may not add due to rounding.
12
$77
$44
$109
($6)
($26)
($1)
$33
$32
Non-GAAP Results – Fourth Quarter
($ Millions, except EPS)
EPS
2016 $0.87
2015 $0.55
Fourth-Quarter
2016
Net Interest TaxesOp Profit
Income from
Continuing Ops D&A
Minority
Interest
Interest Exp.
&Taxes
Adjusted
EBITDA
($3) ($9)$28 $17 ($1)$1 $10 $27
vs
2015
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com.
Amounts may not add due to rounding.
13
$207
$113
$333
$130
$89
( $19 )
( $69 )
( $5 )
Non-GAAP Results – Full Year
($ Millions, except EPS)
Full Year
2016
Net Interest TaxesOp Profit
Income from
Continuing Ops D&A
Minority
Interest
Interest Exp.
&Taxes
Adjusted
EBITDA
($4) ($17)$50 $29 ($6)- $18 $41
vs
2015
EPS
2016 $2.24
2015 $1.69
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com.
Amounts may not add due to rounding.
14
$143
$116
$137
2014 2015 2016
Compusafe
Facility
Equipment / Other
IT
Armored Vehicle
Capital Expenditures
($ Millions)
Note: See reconciliation to GAAP results in Appendix. Depreciation and amortization does not include intangible asset amortization.
Amounts may not add due to rounding.
Depreciation &
Amortization $ 147 132 127
Reinvestment Ratio 1.0 0.9 1.1
Cash 131 97 107
Capital Lease 12 19 29
Total $ 143 116 137
15
$318
$269 $247
$148
$158 $174
$467
$427 $421
Dec 2014 Dec 2015 Dec 2016
$272
$291
$333
2014 2015 2016
Debt and Leverage
($ Millions)
Leverage
Ratio* 1.2 0.9 0.7
Note: No cash payments expected until 2021 for primary U.S. pension
plan and 2027 for UMWA, based on 12/31/16 actuarial assumptions
Cash
Net Debt
Note: See reconciliation to GAAP results in Appendix
Debt Adjusted EBITDA
* Net Debt divided by Adjusted EBITDA
16
$157
$207
$135
$126
2015 2016
Adjusted EBITDA
($ Millions, except share price)
$167
Adjusted EBITDA Multiple
Trailing 12 Months
Adjusted EBITDA Multiple
$178
$138
$128
9.8%Margin 11.4%
Multiple 5.7 7.0
*Trailing 12 months as of 12/31/16
Source: Publicly available peer financial information
Share Price $28.86 $41.25
Adj. EBITDA
Brink’s
Peers
9.4* 10.0*
7.5*
Peer A Peer B Peer C
5.7
6.1
7.0
Dec 2015 Jun 2016 Dec 2016
Adjusted
EBITDA
2015
Adjusted
EBITDA
2016
Depreciation &
Amortization
/ Other
Op Profit
$333
$291
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings
Release available in the Quarterly Results section of the Brink’s website: www.brinks.com.
17
124
157
207
230-240
3.7%
5.3%
7.1%
7.7% - 8.0%
2014 2015 2016 2017
-20
-15
-10
-5
0
5
10
-25
25
75
125
175
225
275
2014 2015 2016 2017
Continued Improvement Expected in 2017 & Beyond
Non-GAAP Operating Profit
Margin
2017 Non-GAAP Outlook
• Revenue $3.0 billion (6% organic growth)
• EPS $2.45- $2.55
• Operating profit $230- $240; margin 7.7% - 8.0%
• Adjusted EBITDA $370 to $380 million
• Unfavorable currency impact on operating profit of ~$15
($ Millions, except % and per share amounts)
Looking Ahead - Brink’s Is A Great Opportunity
• Strategic plan in place, implementation has begun
• March 2 – communicate plan details, action steps, metrics
and 2019 financial targets
• Execute and win
• Accelerate profitable growth, close the margin gap,
introduce differentiated services
Outlook
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings
Release available in the Quarterly Results section of the Brink’s website: www.brinks.com.
February 8, 2017
Fourth Quarter 2016 Earnings Call
Secure Logistics. Worldwide.
Appendix
20
Non-GAAP 2017 Outlook
($ Millions, except EPS)
Note:
a) See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s website: www.brinks.com.
b) Revenue, operating profit and Adjusted EBITDA results adjusted to reflect currency impact assumed in the 2017 Non-GAAP outlook.
c) Attributable to Brink’s.
d) 2017 GAAP outlook does not include any forecasted amounts from Venezuela operations.
e) Adjusted EBITDA is defined as non-GAAP income from continuing operations excluding the impact of non-GAAP interest expense, non-GAAP income tax provision and non-GAAP depreciation and amortization.
At 2016 Actual Foreign
Exchange Rates
2016
GAAP
2016
Non-GAAP(a)
2016 Non-GAAP
Currency
Adjusted(b)
2017
GAAP
Outlook(d)
2017
Non-GAAP
Outlook(a)
Revenues(a) $ 3,021 2,908 2,828 ~3,000 ~3,000
Operating profit (loss)(a) 144 207 192 198 – 208 230 – 240
Nonoperating expense (19) (19) (19) (20) – (22) (20) – (22)
Provision for income taxes(a) (79) (69) (64) (66) – (69) (78) – (81)
Noncontrolling interests(a) (10) (5) (5) ~(6) ~(6)
Income (loss) from continuing operations(a)(c) 36 113 104 106 – 111 126 – 131
EPS from continuing operations(a)(c) $ 0.72 2.24 2.05 2.05 – 2.15 2.45 – 2.55
Operating profit margin 4.8% 7.1% 6.8% 6.6% – 6.9% 7.7% – 8.0%
Effective income tax rate(a) 62.8% 36.9% 36.9% ~37.0% ~37.0%
Adjusted EBITDA(a)(e) 333 316 340 – 350 370 – 380
Key Metrics Revenue Change Operating Profit Change EPS Change
2017
GAAP
Outlook(d)
% Change
vs. 2016
2017
Non-GAAP
Outlook(a)
% Change
vs. 2016
2017
GAAP
Outlook(d)
2017
Non-GAAP
Outlook(a)
2017
Non-GAAP
Outlook(a)
Organic 71 2 184 6 68 – 78 37 – 47 0.38 – 0.48
Dispositions (12) — (12) — 1 1 0.01
Currency (80) (3) (80) (3) (15) (15) (0.18)
Total (21) (1) 92 3 54 – 64 23 – 33 0.21 – 0.31
Amounts may not add due to rounding
Outlook for 2017
•U.S. operating profit margin of 4% to 5%
•Mexico operating profit margin of ~10%
21
$21
$24
$21
$59
$41
$31
$37
$49
$31
$38
$61
$77
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
$0.15 $0.16
$0.12
$0.58
$0.44
$0.30
$0.40
$0.55
$0.31
$0.39
$0.66
$0.87
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Brink’s Historical Non-GAAP Results
($ Millions, except per share amounts)
($)
Operating Profit EPS
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Fourth Quarter 2016 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com.
22
Legacy Liabilities – Underfunding at December 31
($ Millions)
Primary U.S. Pension UMWA
($108)
($114)
($108)
2014 2015 2016
Primary U.S. Pension
($197)
($206)
($227)
2014 2015 2016
UMWA
23
Estimated Cash Payments: $0 to Primary U.S. Pension until 2021
$0 to UMWA until 2027
($ Millions)
Payments to Primary U.S. Pension Payments to UMWA
• Prepaid 2015 and 2016 pension payments in 3Q14
− Accelerated de-risking of invested asset allocation
− Reduced PBGC premiums (current borrowing costs are lower than PBGC premiums)
− No cash payments expected until 2021 based on actuarial assumptions at 12/31/2016
− Remeasurement occurs every year-end with 10K filing
• No cash payments to UMWA expected until 2027
$0
$13
$21
$17
$5
2016 2021 2022 2023 2024
$0
$11
2016 2027
Segment Results and Non-GAAP
Results Reconciled to GAAP
25
Non-GAAP Reconciliation – Net Debt
The Brink’s Company and subsidiaries
Non-GAAP Reconciliations – Net Debt (Unaudited)
(In millions)
a) Amount excludes $23.3 million at December 31, 2016 and $3.5 million at December 31, 2015 for those short term borrowings related to cash borrowed under lending
arrangements used in the process of managing customer cash supply chains, which is currently classified as restricted cash and not available for general corporate
purposes.
b) Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally
credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital
resources and in our computation of Net Debt.
Net Debt is a supplemental non-GAAP financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of our financial
leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be considered as an alternative to Debt
determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a non-
GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP, as of December 31, 2016,
December 31, 2015, and December 31, 2014.
Net Debt excluding cash and debt in Venezuelan operations was $255 million at December 31, 2016, $275 million at December 31, 2015, and $332 million as of December
31, 2014. Net Debt decreased by $26 million from December 31, 2015 primarily due to the repayments of debt from operating cash flows and the decrease in cash amounts
held by cash management services operations due to the shutdown of the Ireland business.
December 31, December 31, December 31,
(In millions) 2016 2015 2014
Debt:
Short-term debt(a) $ 140.5 29.1 59.4
Long-term debt 280.4 397.9 407.2
Total Debt 420.9 427.0 466.6
Less:
Cash and cash equivalents 183.5 181.9 176.2
Amounts held by Cash Management Services operations(b) (9.8) (24.2) (28.0)
Cash and cash equivalents available for general corporate purposes 173.7 157.7 148.2
Net Debt $ 247.2 269.3 318.4
26
Non-GAAP Reconciliation – Other
The Brink’s Company and subsidiaries
Non-GAAP Reconciliations – Other Amounts (Unaudited)
(In millions)
Amounts Used to Calculate Reinvestment Ratio
Fixed Assets Acquired
Full Year
2014 2015 2016
Capital expenditures - GAAP 136.1 101.1 112.2
Assets aquired under capital lease - GAAP 12.1 18.9 29.4
Fixed assets acquired - GAAP 148.2 120.0 141.6
Venezuela fixed assets acquired (5.4) (4.3) (5.0)
Fixed assets acquired - Non-GAAP 142.8 115.7 136.6
Depreciation
Depreciation - GAAP 156.4 135.7 128.0
Venezuela depreciation (9.5) (3.9) (0.7)
2016 Restructuring - - (0.8)
Depreciation - Non-GAAP 146.9 131.8 126.5
Reinvestment Ratio 1.0 0.9 1.1