Brinks Company (The)

Welcome to the Brinks Company third quarter 2021 earnings call. Brinks issued a press release on third 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 material 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 assume 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, Jason. Good morning, everyone. Joining me today are CEO Doug Pertz, CFO Ron DeMonaco, and our recently appointed Chief Operating Officer, Mark Eubanks. This morning we reported third quarter results on both the 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 rates in 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, the appendix to the slides we're using today, and in this morning's 8K filing, all of which can be found on our website. I'll now turn the call over to Doug.

Thanks, Ed. Good morning, everyone, and thanks for joining us. Today we reported third quarter results above the guidance we provided in September with double digit increases in revenue, profits, and earnings per share. Importantly, despite slower than expected revenue recovery from the pandemic lows, Third quarter revenue versus pre-COVID levels did grow sequentially over the second quarter. And despite other operational issues that impacted the quarter, including labor shortages and wage inflation in the U.S. that has not yet been offset by price increases that have been enacted, operating profit margin improved by 50 basis points to 10.8%. With continued revenue and margin improvement, this positions us well for 2022 and the future. We're affirming our four-year 2021 guidance, which includes revenue in the range between $4.1 billion and $4.2 billion, with a bias to the higher end of the range due to the strong third quarter results. Operating profit of approximately $465 million, which reflects a margin increase of close to 100 basis points versus prior year. And adjusted EBITDA of approximately $660 million, reflecting an EBITDA margin of approximately 16%. We're also affirming our preliminary 2022 adjusted EBIT target range between 785 and 825 million. After an expected margin improvement of approximately 100 basis points this year, we expect a similar operating profit margin increase next year with margins continuing to be driven by our Strategy 1.0 lean cost initiatives and further margin leverage driven by sustained fixed cost reductions and revenue growth. We expect continued revenue improvement in 2022, driven by continued revenue growth from the pandemic lows, organic revenue growth partially driven by higher than normal price increases that will offset wage inflation, and further revenue growth driven by initial contributions from our digital solutions that will be stronger next year. Based on these revenue drivers and an expected higher 2021 year-end revenue run rate, we believe revenue in 2022 will exceed 100% of the adjusted pre-COVID revenue level of approximately $4.55 billion, which includes historical revenue acquired with G4S and PAI. As a reference point, At 100% of the adjusted pre-COVID revenue level, we would expect 2022 adjusted EBITDA to be about $755 million. And we'd expect continued margin and growth and margin leverage as revenue grows above this pre-COVID levels, which would support our initial 2022 targets as we've provided. We're also pleased to announce today our plan to enter into a $150 million accelerated share repurchase agreement that would represent the repurchase of approximately 5% of the company's outstanding shares at the current share price. Based on our current share price and projected earnings for 2021 and 22, we believe the best investment for our shareholders is to buy Brink shares. We expect the $150 million ASR we are announcing today will be substantially completed by early November. Our board has approved another $250 million authorization to be used from time to time over the next two years. And finally, we're pleased to confirm that we'll host an Investor Day on December 15. It'll be a hybrid event with a virtual presentation of our strategic plan and financial targets, followed by a live Q&A with our management team. We hope you'll attend. Turning to the next slide, our third quarter results came in, as I said, above September guidance with revenue, operating profit, and EBITDA each exceeding our outlook and analyst consensus. On a reported basis, revenue was up 11% with organic growth of 6%. While not as strong as I said as originally expected, organic revenue grew sequentially from the second quarter and revenue as compared with pre-COVID levels also improved. Operating profit grew 16%, reflecting a margin increase of 50 basis points to 10.8%, hence demonstrating earnings leverage with our revenue increase. Adjusted EBIT was up 15%, with a margin of 60 basis points to 15.8%. EPS grew 28%, from $0.89 per share to $1.14. We achieved these results despite the ongoing impact of the global pandemic in several key markets and wage and labor issues in the U.S. As Mark will cover in a minute, we expect these conditions in the U.S. to improve as we move into 2022. On a global basis, we see encouraging trends indicating that revenue is recovering to pre-pandemic levels and above, as evidenced by the significant revenue recovery so far this year compared to pre-pandemic levels. though the rate of recovery may continue to be choppy and uneasy from country to country and region to region. On that note, I'm happy to turn it over to our new COO, Mark Eubanks, who will provide an overview of our segment reporting results and actions being taken in the U.S. Please join me in welcoming Mark to Brinks.