Brink's Co. BCO

Sustainable Cost Realignment Drives Higher Margin Rate and Profit Growth  
Global Cash Usage Remains Resilient; U.S. Cash Processing and Cash-in-Circulation up vs Pre-pandemic Levels
Management Expects Strong Revenue and Profit Growth in 2021

Highlights:

• Revenue up 9%, continued organic recovery and acquisitions more than offset impact of pandemic
• GAAP operating profit up 53%, non-GAAP up 26%
• GAAP operating margin 11%, up 320 bps; non-GAAP 14.2%, up 180 bps
• GAAP net income $25M, adjusted EBITDA $194M
• GAAP EPS $.50; non-GAAP EPS $1.64, up 39%
• Full-year GAAP net cash provided by operating activities $318M, free cash flow before dividends $206M

RICHMOND, Va., Feb. 23, 2021 (GLOBE NEWSWIRE) -- The Brink’s Company (NYSE:BCO), the global leader in total cash management, route-based secure logistics and payment solutions, today announced fourth-quarter and full-year results.

(a) The non-GAAP financial metric, adjusted EBITDA, is presented with its corresponding GAAP metric, net income attributable to Brink's.
(b) Constant currency represents 2020 results at 2019 exchange rates.

Doug Pertz, president and chief executive officer, said: “Our fourth-quarter results clearly demonstrate the resiliency of our business, the persistent strength of cash usage around the world, and our strong rebound from the pandemic bottom.  Despite the pandemic’s continued impact on near-term revenue, we expect strong growth in our financial results as we move through 2021, with revenue and profit growth continuing to accelerate, especially in the second half.  Our confidence is based on continued retail recovery from pandemic lows, the realization of full-year benefits from the G4S acquisitions, and the sustainability of our cost reductions.

“At the midpoints of our non-GAAP guidance, we expect revenue growth of 17%, operating profit growth of 30% and EPS growth of 26%.  Adjusted EBITDA is expected to be in a range between $640 million and $730 million, an increase of 21% at the mid-point.

“In summary, our team continues to execute very effectively under difficult conditions, global cash usage remains strong, and we are well-positioned to deliver accelerated organic revenue and profit growth as economies reopen and as we execute on our strategic initiatives.”

G4S Acquisition Update
In February, Brink’s completed its acquisition of the majority of the cash operations of U.K.-based G4S plc. The completed acquisition includes the G4Si global logistics business and cash operations in 17 markets: the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic, the Philippines, Indonesia, Latvia, Lithuania, Estonia, Macau, Luxembourg and Kuwait. In 2019, the acquired G4S businesses generated combined pro forma revenue of approximately $800 million and adjusted EBITDA of approximately $115 million.

New Segment Reporting
Recent changes to the Brink’s organizational and management structure (related primarily to the G4S acquisition) resulted in changes to the company’s operating segments for financial reporting purposes during the fourth quarter.  Brink’s now reports results for four segments: North America (U.S. and Canada), Latin America (including Mexico), Europe and Rest of World.  Previously, Mexico was included in the North America segment and Europe was included in Rest of World.

Conference Call
Brink’s will host a conference call on February 23 at 8:30 a.m. ET to review fourth-quarter and full year results.  Interested parties can listen by calling 888-349-0094 (in the U.S.) or 412-902-0124 (international). Participants can pre-register at https://dpregister.com/sreg/10151538/e1068759fa to receive a direct dial-in number for the call.  The call also will be accessible live via webcast on the Brink’s website (www.brinks.com).  A replay of the call will be available through March 23, 2021 at 877-344-7529 (in the U.S.) or 412-317-0088 (international).  The conference number is 10151538.  An archived version of the webcast will be available online in the Investor Relations section of http://investors.brinks.com.

Amounts may not add due to rounding

The Brink’s Company and subsidiaries
(In millions, except percentages and per share amounts) (Unaudited)

Fourth-Quarter 2020 vs. 2019

Amounts may not add due to rounding.

The Brink’s Company and subsidiaries
(In millions, except percentages and per share amounts) (Unaudited)

Full-Year 2020 vs. 2019

Amounts may not add due to rounding. 

See page 4 for footnote explanations.

The Brink’s Company and subsidiaries
 (In millions) (Unaudited)

Selected Items - Condensed Consolidated Balance Sheets

Selected Items - Condensed Consolidated Statements of Cash Flows

About The Brink’s Company
The Brink’s Company (NYSE:BCO) is the global leader in total cash management, route-based secure logistics and payment solutions including cash-in-transit, ATM services, cash management services (including vault outsourcing, money processing and intelligent safe services), and international transportation of valuables. Our customers include financial institutions, retailers, government agencies, mints, jewelers and other commercial operations.  Our global network of operations in 53 countries serves customers in more than 100 countries. For more information, please visit our website at  www.brinks.com or call 804-289-9709.

Forward-Looking Statements
This release contains 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: future results, including 2021 revenue, operating profit (and the timing of revenue and profit growth), adjusted EBITDA, free cash flow, and earnings per share future costs related to Reorganization and Restructuring, and future funding of the Venezuela business. 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.

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 (“IT”) 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 (including the imposition of international sanctions, including by the U.S. government), currency restrictions and devaluations, restrictions on and cost of repatriating earnings and capital, impact on the Company’s financial results as a result of jurisdictions determined to be highly inflationary, and restrictive government actions, including nationalization; labor issues, including negotiations with organized labor and work stoppages; pandemics (including the ongoing COVID-19 pandemic and related impact to and restrictions on the actions of businesses and consumers, including suppliers and customers), acts of terrorism, strikes or other extraordinary events that negatively affect global or regional cash commerce;  anticipated cash needs in light of our current liquidity position and the impact of COVID-19 on our liquidity; 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 and to successfully integrate acquired companies; costs related to dispositions and product or 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, reputation and brand; 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, 2019 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020, June 30, 2020, and September 30, 2020, and in our other public filings with the Securities and Exchange Commission. The forward-looking information included in this document is representative only as of the date of this document and The Brink's Company undertakes no obligation to update any information contained in this document.

The Brink’s Company and subsidiaries
Segment Results: 2019 and 2020 (Unaudited)
(In millions, except for percentages)     

(a) See explanation of items on page 9.

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 allocated to segments.

Reorganization and Restructuring
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business.  As a result of these actions, we recognized $66.6 million net costs in operating profit and $0.6 million costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. We recognized charges of $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensation awards.  For the restructuring actions that have not yet been completed, we expect to incur additional costs between $4 million and $6 million in future periods.

Due to the unique circumstances around these charges, these management-directed items have not been allocated to segment results and are excluded from non-GAAP results.

Acquisitions and dispositions Certain acquisition and disposition items that are not considered part of the ongoing activities of the business and are special in nature are consistently excluded from non-GAAP results. These items are described below:

2020 Acquisitions and Dispositions

• Amortization expense for acquisition-related intangible assets was $35.1 million in 2020.
• We incurred $23.5 million in integration costs, primarily related to Dunbar and G4S, in 2020.
• Transaction costs related to business acquisitions were $19.3 million in 2020.
• Restructuring costs related to acquisitions were $4.7 million in 2020.

2019 Acquisitions and Dispositions

• We incurred $43.1 million in integration costs related to Dunbar, Rodoban, COMEF and TVS in 2019.
• Amortization expense for acquisition-related intangible assets was $27.8 million in 2019.
• Transaction costs related to business acquisitions were $7.9 million in 2019.
• Restructuring costs related to acquisitions, primarily Rodoban and Dunbar, were $5.6 million in 2019.
• In 2019, we recognized $2.2 million in net charges, primarily asset impairment and severance costs, related to the exit from our top-up prepaid mobile phone business in Brazil.
• Compensation expense related to the retention of key Dunbar employees was $1.5 million in 2019.

Argentina highly inflationary impact Beginning in the third quarter of 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, Argentine peso-denominated monetary assets and liabilities are now remeasured at each balance sheet date to the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in earnings. In addition, nonmonetary assets retain a higher historical basis when the currency is devalued. The higher historical basis results in incremental expense being recognized when the nonmonetary assets are consumed. In 2020, we recognized $10.7 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $7.7 million. In 2019, we recognized $14.5 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $11.3 million. These amounts are excluded from non-GAAP results.

Internal loss A former non-management employee in our U.S. global services operations embezzled funds from Brink's in prior years. Except for a small deductible amount, the amount of the internal loss related to the embezzlement was covered by our insurance. In an effort to cover up the embezzlement, the former employee intentionally misstated the underlying accounts receivable subledger data. In 2019, we incurred $4.5 million in costs (primarily third party expenses) to reconstruct the accounts receivables subledger.  In 2020, we incurred an additional $0.3 million in costs related to this activity. In the third quarter of 2019, we were able to identify $4.0 million of revenues billed and collected in prior periods which had never been recorded in the general ledger. We also identified and recorded $0.3 million in bank fees, which had been incurred in prior periods. The rebuild of the subledger was substantially completed during the third quarter of 2019. Based on the reconstructed subledger, we were able to analyze and quantify the uncollected receivables from prior periods. Although we plan to attempt to collect these receivables, we estimated an increase to bad debt expense of $13.7 million in the third quarter of 2019. The estimate of the allowance for doubtful accounts was adjusted in the fourth quarter of 2019 for an additional $6.4 million and again in 2020 for an additional $6.6 million. This estimate will be adjusted in future periods, if needed, as assumptions related to the collectability of these accounts receivable change. At December 31, 2020, we have recorded an allowance of $13.1 million on $14.2 million of accounts receivable, or 92%. Due to the unusual nature of this internal loss and the related errors in the subledger data, along with the fact that management has excluded these amounts when evaluating internal performance, we have excluded these net charges from segment and non-GAAP results.

Reporting compliance Certain compliance costs (primarily third party expenses) are excluded from 2019 and 2020 non-GAAP results.  These costs relate to the implementation and January 1, 2019 adoption of the new lease accounting standard ($0.5 million in 2020 and $1.8 million in 2019). We also incurred $0.3 million in costs related to mitigation of material weaknesses in 2019. We did not incur any such costs in 2020.

The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)
(In millions, except for percentages and per share amounts)

Non-GAAP results described in this press release are financial measures that are not required by or presented in accordance with U.S. generally accepted accounting principles (“GAAP”).  The purpose of the Non-GAAP results is to report financial information from the primary operations of our business by excluding the effects of certain income and expenses that do not reflect the ordinary earnings of our operations.  The specific items excluded have not been allocated to segments, are described on page 9 and in more detail in our Form 10-K, and are reconciled to comparable GAAP measures below.  In addition, we refer to non-GAAP constant currency amounts, which represent current period results and forecasts at prior period exchange rates.

Non-GAAP results adjust the quarterly Non-GAAP tax rates so that the Non-GAAP tax rate in each of the quarters is equal to the full-year estimated Non-GAAP tax rate.  The full-year Non-GAAP tax rate in both years excludes certain pretax and income tax amounts.  Amounts reported for prior periods have been updated in this report to present information consistently for all periods presented.

The 2021 Non-GAAP outlook amounts for operating profit, EPS from continuing operations, free cash flow before dividends and Adjusted EBITDA cannot be reconciled to GAAP without unreasonable effort. We cannot reconcile these amounts to GAAP because we are unable to accurately forecast the impact of highly inflationary accounting on our Argentina operations or other potential Non-GAAP adjusting items for which the timing and amounts are currently under review, such as future restructuring actions. We are also unable to forecast changes in cash held for customer obligations or proceeds from the sale of property, equipment and investments in 2021. The impact of highly inflationary accounting and other potential Non-GAAP adjusting items could be significant to our GAAP results.

The Non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part of our core business. Additionally, non-GAAP results are utilized as performance measures in certain management incentive compensation plans.

Non-GAAP Results Reconciled to GAAP

Amounts may not add due to rounding.

The Brink’s Company and subsidiaries
Non-GAAP Results Reconciled to GAAP (Unaudited)
(In millions, except for percentages and per share amounts)

Amounts may not add due to rounding.   
See page 10 for footnote explanations.

Amounts may not add due to rounding.   
See page 10 for footnote explanations.