Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - BRINKS CO | ex991q22017.htm |
| 8-K - 8-K - BRINKS CO | july2017form8-k2q2017earni.htm |
S ECU RE LOG IST ICS. WORLDW ID E.
Second
Quarter
J u l y 26 , 2017
Exhibit 99.2
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 information. Forward-looking information in these materials
includes, but is not limited to information regarding: 2017 non-GAAP outlook, including revenue, organic growth, operating profit, operating profit margin,
earnings per share, capital expenses and adjusted EBITDA; 2019 non-GAAP financial targets, including revenue, organic growth, operating profit, adjusted
EBITDA and earnings per share; results from improvement initiatives; closing of the Temis acquisition and the impact of completed acquisitions including
synergies.
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 and execute further cost and
operational improvement and efficiencies in our core businesses; our ability to improve service levels and quality in our core businesses; market volatility and
commodity price fluctuations; seasonality, pricing and other competitive industry factors; investment in information technology and its impact on revenue and
profit growth; our ability to maintain an effective IT infrastructure and safeguard confidential information; our ability to effectively develop and implement
solutions for our customers; risks associated with operating in foreign countries, including changing political, labor and economic conditions, regulatory issues,
currency restrictions and devaluations, restrictions on and cost of repatriating earnings and capital, and restrictive government actions, including
nationalization; labor issues, including negotiations with organized labor and work stoppages; the strength of the U.S. dollar relative to foreign currencies and
foreign currency exchange rates; our ability to identify, evaluate and complete acquisitions and other strategic transactions (including those in the home
security industry) and to successfully integrate acquired companies; costs related to dispositions and market exits; our ability to obtain appropriate insurance
coverage, positions taken by insurers relative to claims and the financial condition of insurers; safety and security performance and loss experience; employee
and environmental liabilities in connection with former coal operations, including black lung claims ; the impact of the Patient Protection and Affordable Care
Act on legacy liabilities and ongoing operations; funding requirements, accounting treatment, and investment performance of our pension plans, the VEBA and
other employee benefits; changes to estimated liabilities and assets in actuarial assumptions; the nature of hedging relationships and counterparty risk; access
to the capital and credit markets; our ability to realize deferred tax assets; the outcome of pending and future claims, litigation, and administrative proceedings;
public perception of our business and reputation; changes in estimates and assumptions underlying critical accounting policies; the promulgation and adoption
of new accounting standards, new government regulations and interpretation of existing standards and 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, 2016, 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 appendix and in the
First Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s website: www.brinks.com.
2
CEO Overview
Doug Pertz
CEO Overview
4
SECOND-QUARTER HIGHLIGHTS
• Strong improvement in revenue, operating profit, earnings and cash flow
• Profit growth in North and South America led by U.S., Mexico, Brazil and Argentina
• Execution of 3-year strategic plan gaining traction
• 4 acquisitions completed YTD through 7/26; Temis expected to close in 4Q, more in pipeline
• 2017 non-GAAP EPS guidance raised to $2.95 - $3.05 per share
o Includes $.09 from completed acquisitions
• 2019 non-GAAP adjusted EBITDA target raised to $560 million
o Includes $60 million from completed acquisitions
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s website:
www.brinks.com
Second-Quarter 2017 Non-GAAP Results
5
Continued Momentum in Second Quarter
($ in millions)
$717
$760
2016 2017
REVENUE
($ Millions)
+6% Organic
$39
$60
2016 2017
5.5%
Margin
OPERATING PROFIT
7.9%
Margin
+ 52%
ADJUSTED EBITDA
$70
$91
0
20
40
60
80
100
2016 2017
9.7%
Margin
12%
Margin
($ Millions)
+31%
EPS
+64%
$0.39
$0.64
2016 2017
($ Millions)
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s website:
www.brinks.com
Non-GAAP Operating Profit 2016 – 2019
6
New Target: 11%+ Operating Margin in 2019
($ Millions)
2016 Actual Rest of World Contingency 2019 TargetNorth America South America
$212
$400
$125
$58
$27 ($67)
$355
$45
Completed
Acquisitions
July 2017
OP
Margin 7.3% 3.5% 1.1% 0.3% (1.7%) 10.5% 0.8% 11.3%
(as of July 2017)
Includes:
AATI
LGS
Pagfacil
Maco
2019 Target
before Acquisitions
7
Sales, Marketing &
Intelligent Safes
Global Breakthrough Initiatives
• “Next generation” trucks starting to come on-line in U.S.
• Lower R&M expenses beginning to have an impact in U.S. and Mexico
• Expect to convert 60% of U.S. routes by end of 2019
• Lower labor costs beginning to have impact in U.S., Mexico and Canada
• Installed high-speed money processing machines in Chicago, Brooklyn; several
more locations by year-end 2017
• CompuSafe® service ramping up in U.S., Mexico, Brazil and several other
countries
• Recycler pilots in progress, expect relatively small impact from additional sales
in 2017
• Successfully working with union in Mexico to drive labor efficiency
Reduced Crew Size
Fleet Investments
Network
Optimization
Labor
Management
APG – Accelerate Profitable Growth
Acquisition Update:
• “Core – Core” – Core businesses in Core Markets
• 4 completed YTD through 7/26
• Expected to be accretive in 2017
• Expect significant accretion in 2019
• Temis France expected to close in 4Q
• Robust pipeline of additional opportunities
Expected impact of completed acquisitions on 2019 non-
GAAP targets:
• +$175 million revenue
• +$45 million operating profit
• +$60 million adjusted EBITDA
• +$.45 EPS
8
Executing Our Plan to Acquire Core Business in Core Markets
U.S.
(AATI)
Brazil
(PagFacil)
Argentina
(Maco)
Chile
(LGS)
Synergistic, Accretive Acquisitions in Our Core Markets
France
(Temis
announced
7/25)
Maco Accelerates Profitable Growth (APG)
• $209 million expected purchase price
• $90 million LTM revenue, $24 million LTM
adjusted EBITDA
• Significant consolidation synergies expected
• ~6x Adjusted EBITDA post-integration (8.7x
pre-integration)
• Solidifies #2 position in Argentina
• Strong customer base, increased route density
• Expected to be slightly accretive in 2017,
significant contribution in 2019
9
Core Acquisition in High-Margin Market
Brink's
Brink’s Maco
Prosegur
Loomis
Growing Share…in a Growing Market
Source: Internal estimates
Argentina
Ron Domanico
Financial Review
Value Creation Strategy – Brink’s Building Blocks
GROWTH (APG)
• Grow Organically
• Pursue Adjacencies
• Introduce Differentiated
Service (IDS)
• Make Acquisitions
MARGINS (CTG)
• Pricing
• Lean Cost Structure
• Optimize Procurement
• Operating Leverage
• Corporate Cost Discipline
• Interest, Taxes, EPS
RETURNS (ROI)
• Capital Structure
• Financial Leverage
• Capital Expenditures
• Accretive Acquisitions
• Shareholder Returns
CREDIBILITY
• Reduce Complexity
• Increase Transparency
• Set Aggressive Targets
• Meet / Exceed Goals
11
($ Millions)
0% 6%
Organic
Adjusted
2016 RevenueCurrency Acq/Disp
2016
Revenue
2017
Revenue
0%% Change
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com. Amounts may not add due to rounding.
$717 $717
$760
( $3 ) $3
$43
Non-GAAP Revenue: Second Quarter 2017 vs 2016
12
5.5% 7.9%
Organic
Adjusted
2016 Op ProfitCurrency Acq/Disp
2016
OP Profit
2017
OP Profit
OP Margin
$39 $38
$60
($2) $1
$22
Non-GAAP Operating Profit: Second Quarter 2017 vs 2016
13
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com. Amounts may not add due to rounding.
($ Millions)
$60
$33
$91
$34
$25
($7)
($19)
($2)
($ Millions, except EPS)
EPS
2017 $0.64
2016 $0.39
Net Interest & Other TaxesOp Profit
Income from
Continuing Ops D&A
Minority
Interest
Interest Exp.
&Taxes
Adjusted
EBITDA
($1) ($6)$21 $13 $1_ $7 $21
vs
2016
Non-GAAP Results – Second Quarter
14
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com. Amounts may not add due to rounding.
$72
$113
2016 2017
5.1%
Margin
OPERATING PROFIT
7.5%
Margin
+ 57%
First-Half 2017 Non-GAAP Results
15
A Strong First Half
$1,405
$1,500
2016 2017
REVENUE
($ Millions)
+7% Organic
ADJUSTED EBITDA
$132
$174
2016 2017
9.4%
Margin
11.6%
Margin
($ Millions)
+32%
EPS
+73%
$0.70
$1.21
2016 2017
($ Millions)
Note: See detailed reconciliations of non-GAAP to GAAP results included in the Second Quarter 2017 Earnings Release available in the Quarterly Results section of the Brink’s website:
www.brinks.com
2015 Actual 2016 Actual 2017 Outlook
Capital Expenditures
16
($ Millions)
CAPITAL EXPENDITURES 2015 – 2017
CompuSafe®
Facility
Equipment /
Other
IT
Armoured
Vehicle
D&A $132 $127 ~$145
Reinvestment Ratio1 0.9 1.1
TBD
$124
Total Before
CompuSafe®
$137
$180
Total Before
CompuSafe®
CompuSafe®
1. See Non-GAAP reconciliation in Appendix
$106
Total Before
CompuSafe®
$116
($ Millions)
Leverage
Ratio* 0.9 0.7 1.0
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 and Financial Leverage
* Net Debt divided by Adjusted EBITDA
$291
$333
$375
2015 2016 TTM Jun 2017
$313
$247
$360
$160
$174
$189
June 2016 Dec 2016 June 2017
$473
$421
$549
Debt and Leverage
17
($ Millions, except share price)
Multiple
9.9%Margin 12.5%
Multiple 6.1x 10.0x
Source: Most recent trailing 12 months and publicly available peer
financial information
Share Price $28.49 $67.00
Adj. EBITDA
Brink’s
Peers
Note: See detailed reconciliations of non-GAAP to GAAP results included in the First Quarter 2017 Earnings
Release and the Second Quarter 2017 Earning Release available in the Quarterly Results section of the Brink’s
website: www.brinks.com. Amounts may not add due to rounding.
Adjusted EBITDA
18
$161
$253
$124
$122
TTM June 2016 TTM June 2017
$375
$284
5.7x
7x
10.0x
Dec 2015 Dec 2016 Jun 2017
Trailing 12 Months Multiple
8.6x
11.8x
7.8x
Peer A Peer B Peer C
Depreciation &
Amortization
/Other
Op Profit
2017 Non-GAAP Guidance Increased
2016 Results
Prior 2017
Guidance
(4/26/2017) Organic Currency Acquisitions (1)
Updated
2017
Guidance
(7/26/2017)
Increase vs
2016
Revenue $2,908 $3,036 ‒ $92 $52 $3,180 9%
Operating Profit $212 $235-$245 $20 $5 $10 $270-$280 ~30%
Operating Margin 7.3% 7.8%-8.2% 8.5%-8.8% 1.2-1.5 pts.
Adjusted EBITDA $333 $370-$380 $20 $5 $20 $415-$425 ~26%
EPS $2.24 $2.55-$2.65 $.26 $.05 $.09 $2.95-$3.05 ~34%
19
Increase
1. Completed acquisitions as of 7/26/2017
($ Millions, except EPS)
Note: See detailed reconciliations of non-GAAP to GAAP results included in the First Quarter 2017 Earnings Release and the Second Quarter 2017 Earning Release available in the Quarterly
Results section of the Brink’s website: www.brinks.com. Amounts may not add due to rounding.
2019 Non-GAAP Guidance Increased
2016 Results
Prior 2019
Guidance Organic Currency Acquisitions (1)
Updated
2019
Guidance
(7/26/2017)
Increase vs
2016
Revenue $2,908 $3,275 ‒ $100 $175 $3,550 22%
Operating Profit $212 $330 $20 $5 $45 $400 89%
Operating Margin 7.3% 10% 11.3% 4 pts.
Adjusted EBITDA $333 $475 $20 $5 $60 $560 68%
EPS $2.24 $3.50 $.25 $.05 $.45 $4.25 90%
20
Increase
($ Millions, except EPS)
1. Completed acquisitions as of 7/26/2017
Note: See detailed reconciliations of non-GAAP to GAAP results included in the First Quarter 2017 Earnings Release and the Second Quarter 2017 Earning Release available in the Quarterly
Results section of the Brink’s website: www.brinks.com. Amounts may not add due to rounding.
Conclusion
$163
$212
$270 - $280
$4005.5%
7.3%
8.5% - 8.8%
11.3%
2015 2016 2017 2019
Continued Improvement Expected in 2017 &
Beyond
Non-GAAP Operating Profit
Margin
2017 Non-GAAP Outlook
• Revenue $3.2 billion (6% organic growth)
• Operating profit $270 - $280 million; margin 8.5% - 8.8%
• Adjusted EBITDA $415 to $425 million
• EPS $2.95- $3.05
($ Millions, except % and per share amounts)
2019 Non-GAAP Targets
• 8% annual revenue growth to $3.6 billion
• Operating profit $400 million; margin 11.3%
• Adjusted EBITDA $560 million
• $4.25 EPS
Target
Note: See detailed reconciliations of non-GAAP to GAAP results included in the First Quarter 2017 Earnings Release and the Second Quarter 2017 Earnings release available in the Quarterly Results
section of the Brink’s website: www.brinks.com. 22
Guidance
+ +
Why Brink’s?
Brink’s has the right leadership, the right strategy and the financial strength to drive
superior shareholder returns.
Market
Strength
• Premier global brand
with unmatched
footprint and
customers in 100+
countries
• Strong market
position
People
• New leadership with
proven track record
• Customer-driven
employees
• Continuous
improvement culture
Strategy and
Resources
• Solid strategy
• Industry’s strongest
balance sheet
Questions?
Appendix
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
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 June 30, 2017, December 31, 2016 and June
30, 2016.
26
June 30, December 31, June 30,
(In millions) 2017 2016 2016
Debt:
Short-term borrowings $ 175.7 162.8 77.2
Long-term debt 399.4 280.4 405.3
Total Debt 575.1 443.2 482.5
Restricted cash borrowings(a) (26.1) (22.3) (9.2)
Total Debt without restricted cash borrowings 549.0 420.9 473.3
Less:
Cash and cash equivalents 207.1 183.5 169.6
Amounts held by Cash Management Services operations(b) (18.4) (9.8) (9.6)
Cash and cash equivalents available for general corporate purposes 188.7 173.7 160.0
Net Debt $ 360.3 247.2 313.3
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
Capital expenditures — GAAP 101.1 112.2
Capital leases — GAAP 18.9 29.4
Total Property and equipment acquired 120.0 141.6
Venezuela property and equipment acquired (4.3) (5.0)
Total property and equipment acquired excluding Venezuela 115.7 136.6
Depreciation
Depreciation and amortization — GAAP 139.9 131.6
Amortization (4.2) (3.6)
Venezuela depreciation (3.9) (0.7)
Reorganization and Restructuring - (0.8)
Depreciation — Non-GAAP 131.8 126.5
Reinvestment Ratio 0.9 1.1
27