Brinks Company (The)

Welcome to the Brinks Company's second quarter 2021 earnings call. Brinks issued a press release on second quarter results this morning. The company also filed an 8K that includes the release and the slides that will be used in today's call. For those of you listening by phone, the release and slides are available in the investor relations section of the company's website, Brinks.com. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Now for the company's safe harbor statement. This call and the Q&A session will contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today's press release and in the company's most recent SEC filings. Information presented and discussed on this call is representative as of today only. Brinks assumes no obligation to update any forward-looking statements. The call is copyrighted and may not be used without written permission from Brinks. It is now my pleasure to introduce your host, Ed Cunningham, Vice President of Investor Relations and Corporate Communications. Mr. Cunningham, you may begin.

Thanks, Kate, and good morning, everyone. Joining me today are CEO Doug Perch and CFO Rhonda Monaco. This morning we reported second quarter results on both a GAAP and non-GAAP basis. The non-GAAP results exclude a number of items, including our Venezuela operations, the impact of Argentina's highly inflationary accounting reorganization and restructuring costs, items related to acquisitions and dispositions, and costs related to an internal loss and certain accounting compliance matters. We're also providing our results on a constant currency basis, which eliminates changes in foreign currency exchange rates from the prior year. We believe the non-GAAP results make it easier for investors to assess operating performance between periods. Accordingly, our comments today will focus primarily on non-GAAP results. Reconciliations are provided in the press release, in the appendix to the slides we're using today, and in this morning's 8-K filing, all of which can be found on our website. I'll now turn the call over to Doug.

Thanks. Thanks, Ed, and good morning, everyone, and thanks for joining us. Today we reported strong second quarter results that clearly demonstrate the resiliency of our business and the continued strength of cash usage around the world. Reported revenue was up 27%, including organic growth of 15%. On a comparable basis in local currency, revenue has recovered to 97% of 2019 pre-COVID levels, supporting a strong recovery from the pandemic lows. even with the unanticipated continued shutdown of many economies, especially in Europe, Latin America, and parts of Asia during the first half of this year. Operating profit grew 51%, with a margin rate increase of 160 basis points to 10.5%, which is 80 basis points above the pre-pandemic second quarter 2019 rate of 9.7%. This suggests that our focus on sustainable cost reductions is having the desired impact on increased margins, even with revenues not yet back to pre-pandemic levels. Adjusted EBITDA was up 39%, with a margin rate increase of 130 basis points to 15.8%, which is 120 basis points above the pre-pandemic second quarter 2019 EBITDA rate. And earnings came in at $1.18 per share, up 62% over 2020, and up 40%. over the second quarter of 2019. We achieved these results despite extended shutdowns that affected the second quarter results. Given the year-to-date impact of the pandemic and the uncertainty regarding the future impact, we now expect full-year 2021 percent revenue growth in the mid to high teens. And we continue to expect earnings to be around the midpoint of the range, reflecting higher margins. We expect continued gradual revenue recovery in the second half of this year to provide a strong jumping-off point for 2022, when full-year revenue is expected to exceed pre-COVID levels. Our preliminary targets for 2022 continue to include strong growth in revenue, adjusted EBITDA, and cash flow. In summary, we believe the continued strong and steady improvement in our results, despite the extended pandemic headwinds, is very encouraging as we look ahead to 2022, when we expect to also layer on contributions from our digital growth strategies. We're looking forward to Investor Day in early December, when we'll provide detailed review of our core and digital growth strategies, as well as financial projections for 2022. We're trying to finalize the appropriate format, a virtual meeting, a live event in New York, or a hybrid as such. And we'll let you know as soon as we make that decision. Turning now to slide four, which summarizes our guidance and our preliminary target for 2022. With half of 2021 behind us, we now expect four-year 2021 revenue to be at the lower end of the range, but we still expect to achieve year-over-year percentage increases, as I said before, in the mid to upper teens for revenue. Our revenue expectations were adjusted for two reasons. The first is the unexpected persistence of the pandemic-related shutdowns, which, again, negatively impacted our first and second quarters revenues. The second factor is related to a change in how we recognize revenue for our recent acquisition of PAI. This technical change to net revenue recognition reduced our forecast PAI revenue by $50 million or so this year, but has no impact on profit and, in fact, actually increases our margin rate. While the ultimate duration and impact of the pandemic remains difficult to predict, we do not expect to return to a more normalized economic conditions as we move through the remainder of this year, and more importantly, as we go into 2022. Full-year 2021 operating profit is expected to be approximately at the midpoint of our guidance, reflecting year-over-year margin rate increases of at least 150 basis points as we drive adjusted EBITDA growth up 25% versus prior year to approximately $700 million, and EPS growth of 32% to approximately $5 per share. This slide also shows our preliminary 2022 EBITDA target of approximately $800 million, reflecting growth in the mid-teens. As Ron will show you, we're also targeting 2022 free cash flow goals of about 50% or more of EBITDA. It's important to note that our outlook for both 2021 and 2022 is driven primarily by growth in our core operations and does not include any material contribution from our strategy 2.1 digital solutions. More on our core and digital strategies as well as on our 2023 financial targets at our Investor Day event in December. I'll now turn it over to Ron for more financial details.