Brinks Company (The)

Good afternoon and welcome to the Brinks first quarter 2025 earnings presentation. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. 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 are available in the footnotes of today's press release and in the company's most recent SEC filings. The information presented and discussed on this call is representative 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. I will now turn it over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.

Thanks and good afternoon. Here with me today are CEO Mark Eubanks and CFO Kurt McMacken. This afternoon brings reported first quarter 2025 results on a GAAP, non-GAAP, and constant currency basis. Most of our comments today will be focused on our non-GAAP results. These 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 metrics are useful to investors as they allow investors to evaluate performance using the same metrics as management. Reconciliation of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation, and in this afternoon's 8-K filing, all of which can be found on our website. I will now turn the call over to Brink CEO, Mark Eubanks.

Mark Eubanks Thanks, Jesse, and good afternoon, and thank you all for joining us. Starting with slide three, Brink delivered total organic growth of 6% in the first quarter at the top end of our previous guidance. ATM managed services and digital retail solutions, or AMS DRS, grew over 20% for the fourth consecutive quarter as we continue to build upon solid momentum in these higher margin recurring revenue businesses. We delivered solid year over year growth in our global services business, which particularly benefited our rest of world segment. Record Q1 operating profits were up 40 basis points in the quarter, with good productivity and favorable revenue mix from AMS, DRS, and Global Services. Adjusted EBITDA was $215 million with a margin of 17.2%. Earnings per share of $1.62 reflects the benefits of share repurchases as well as the planned increase in a year-over-year tax rate as we lap one-time benefits from a prior year. Adjusted EBITDA and EPS exceeded the high end of our Q1 guidance due to strong execution and the timing impact of some expenses that we shifted into Q2. On a trailing 12-month basis, free cash flow and conversion of 40% came in as expected, highlighted by continued progress on AR collections and customer payment terms. Strategically, we continue to focus on maximizing growth potential in AMF DRS, expanding our margins, and executing our focused capital allocation framework. AMS and DRS continue to gain momentum throughout the organization with solid growth across all segments. Now representing a quarter of our business, these recurring revenue offerings support performance consistency, margin expansion, and improved free cash flow, which is derived from improved working capital dynamics and lower capex intensity. I'll have much more on AMS DRS in a few slides. In our CVM business, growth was highlighted by strong performance in our global services business. As I'm sure you've seen in the news, precious metal movement was elevated during the quarter, which led to improved year-over-year growth. Our long-term customer relationships, our global network, and our industry-leading capabilities position us well to continue to capture elevated demand that may arise going forward. We also continue to diligently execute against our capital allocation framework. Year to date, we repurchased 1.3 million shares at an average price of $87.62 per share, representing about 3% of the outstanding shares at year-end 2024. Additionally, just last week, we announced the third consecutive annual increase to our quarterly dividend as we continue to focus our capital allocation on shareholder returns. With remaining repurchase capacity of over $180 million under our existing authorization, we are on track to meet or exceed our prior year share repurchase levels. Overall, it was a solid first quarter. We delivered solid organic growth in our key business lines, expanded operating profit margins, and we opportunistically increased the return of capital to shareholders. Supported by our strong Q1, we are affirming our full-year framework of mid-single-digit organic growth, 30 to 50 basis points of EBITDA margin expansion, and free cash flow conversion between 40 and 45%. As we look to the second quarter, we see similar mid-single-digit organic growth rates. EBITDA is expected to be between $205 and $225 million, with earnings per share between $1.25 and $1.65 per share. Q2 top line guidance reflects our expectations for continued momentum in AMS DRS, current FX rates, and its stable economic conditions. The second quarter guidance aligns to our first half expectations, including the timing impact of some restructured expenses shifting out of Q1 into the second quarter. Turn to slide four. You can see the performance against prior years. Constant currency and organic revenue growth were 6% with total revenue growth of 1%. Adjusted EBITDA was down $3 million with a $6 million increase in operating profit. In spite of higher restructuring costs versus the prior year, and less interest income from Argentina as inflation continues to moderate in the country. Earnings per share was up 13% on a constant currency basis and down 3 cents per share year over year. Our outstanding average share count was down 4%, with an expected increase in tax rate, which reduced EPS by 11 cents. Free cash flow performance was as expected in the quarter. In total, free cash flow was down $14 million on a trailing 12-month basis and reflects the payment of a previously disclosed Department of Justice and FinCEN resolution. Excluding this item, free cash flow would have been up $4 million year over year with conversion from EBITDA of 42%. On slide five, you can see the performance by segment. Starting with North America, on the left, constant currency growth of 4% and organic growth of 2% was consistent with the prior year. With several new customer onboardings this quarter, DRS growth continues to be a highlight in North America. CBM revenue was up organically year on year, primarily due to a slightly elevated global services volume. Record EBITDA margins included revenue mixed benefits, good pricing discipline, and continued productivity as we streamlined routing, labor management, and SG&A. With stable staffing and service levels and second half routing improvements that remain on track, we are well positioned to continue to deliver growth and margin improvement over the balance of the year. In Latin America, 7% organic growth was more than offset by year-over-year currency devaluation, primarily in Mexico and Argentina. Normalizing for the impact of Argentina inflation moderation, Latin American organic growth rates were stable sequentially. AMS and DRS mix increased to 18% of total revenue behind another strong quarter of growth in all countries. On the margin side, as you'll remember from last quarter, we expected to take some restructuring actions in the segment to streamline operations behind a growing AMS DRS mix. While we executed a portion of that restructuring in Q1, we had some actions that will push into the second quarter. Our restructuring actions position us well to protect margins and realize the benefits of AMS DRS revenue model as we move forward in any economic scenario. Europe grew revenue by 5% organically in the first quarter, while AMS DRS mix increased by 2% sequentially to 42% of total revenue. We are making good progress converting and adding customers to DRS in Europe, including the rollout of cash accepting self-checkout devices in grocery and convenience stores. Europe remains a strong AMS market due to the consolidated nature of the banking footprint, and we continue to add new partners to our managed services network. We're making strong progress integrating the previously announced Sainsbury's ATM estate into our UK business, and we remain on track for full deployment by the middle of the year. EBITDA was flat on a year-on-year basis as we continue to take restructuring actions to optimize our operations and realize the benefits of accelerating AMS and DRS growth. Normalized for these actions, margins would have been up 40 basis points year over year. In the rest of world segment, organic growth accelerated to 9% this quarter, primarily driven by the increased movement of precious metals that I mentioned earlier. Record first quarter EBITDA margins were up 130 basis points due to growth and mixed benefits of the higher global services revenue. Turning to slide six, we have more detail by customer offering. Cash and valuables management grew 1% organically and accelerated sequentially when netting the impact of Argentina currency. As I mentioned earlier, global services was up sequentially and year over year with additional volume from gold and silver shipments seen primarily in the rest of world segment. Shipments continued to grow throughout the quarter before peaking in mid-March. Early in the second quarter, movement moderated but remains ahead of prior year. As we mentioned last quarter, dynamics in our global services business shift quickly and our ability to leverage existing infrastructure and customer relationships remain the keys to our success in this line of business. Given the slowing growth in early Q2, we remain cautious in our outlook on this business line for both the second quarter and the rest of the year, but remain as always well positioned to capitalize on any opportunities as they occur. In our more traditional cash in transit and money processing business, We are pleased to announce a new partnership with a leading financial institution in North America. After a competitive process, we were awarded full cash in transit, money processing, and cash vaulting services across both the US and Canada. We plan to onboard this new business over the coming months while ensuring a smooth transition and maintaining our high customer service levels. Importantly, as with any new CVM business, we will look to expand relationships with new retail customers and additional ATM estates as we use these as entry points into AMS and DRS moving forward. In DRS, we delivered another strong quarter of growth in all markets. Momentum continues as we win new accounts and convert existing customers. In North America, we delivered our best quarter of DRS growth since 2022 with new installations in the quarter from a leading auto parts store and additional momentum in the restaurant and QSR space. In Latin America, Mexico had a good month of installations as well, with ads in the wholesale and C-store markets. Conversions from traditional CIT to DRS accelerated in both North America and especially Europe, driving improved revenue mix and record first quarter EBITDA margins in North America. Looking ahead, we expect to see an impact on growth rates in the second quarter as we lap the previously mentioned equipment sales from last year. We feel good about the rest of the year in DRS, as we work from an increased base of business, install a larger backlog, and work to close a strong pipeline of opportunities. On the AMS side, we continue our efforts on onboarding large customers that we discussed in previous quarters in both Europe and North America. As I mentioned earlier, Sainsbury's onboarding remains well on track. In the US, we're making good progress deploying services into gas stations and convenience store customers that we won in previous quarters. As discussed previously, Due to the size of AMS deals, growth in this line of business is not expected to be as linear as DRS has been. With deployments on track, we expect AMS growth to begin to accelerate into the second half of 2025. We continue to make progress building both the quality and size of our pipeline, leading to improving win rates in this offering. Now let's turn to slide seven. Before I hand it off to Kurt to talk to the specifics of the quarter and our guidance, I thought it'd be helpful to frame how the current market dynamics may impact us at Brinks. While we've yet to experience any significant disruption in our business, uncertainty has increased in many of the economies where we serve, including the US. On the left side of the slide, you can see our organic growth rates over the last 18 years. As you can see, we have a history of performing well across many market conditions and business cycles. Our growth rates have been consistently in the mid single digit range outside of the pandemic when retail establishments were completely shut down and the great financial crisis in 2009. With a much larger base of business now in AMSDRS and a more diversified global footprint, we expect to be even more resilient going forward. Our customer diversity in retail and financial institutions help mitigate challenges in any one sector, and we're closely monitoring any potential increase in bankruptcies or store closures in the markets we serve. With a geographic footprint that serves customers in over 100 countries and a global services business that has historically performed well in downturns, we are well positioned and adequately diversified if economic conditions deteriorate. As a service-based business, we expect to be mostly insulated from direct tariff exposure. More than half of our costs are labor, including fleet and shipping expenses. Most of our cost is variable, allowing us to protect our margins if volumes slow in the future. With a base of locally managed operations in 51 countries, Materials and labor are primarily sourced by our local teams in local currency, and we have a long history of managing inflationary pressures with price discipline and productivity. We have a pipeline of productivity initiatives working through the Brinks business system that will continue to support margins. And as we continue to shift our business to AMS and DRS, we are increasing network density and improving routing flexibility, providing more certainty on our profit margin expansion plans over the balance of the year and for years to come. Overall, I'm pleased with the first quarter and the outlook for the rest of the year. Our business remains stable and well positioned to execute our strategy. A growing base of AMS and DRS, line of sight to productivity initiatives in the second half, and a first quarter above expectations provide a strong foundation to continue our organic growth and margin expansion journey for the rest of the year. And now I'd like to turn it over to Kurt to discuss the details of the quarter and more specifics on our outlook. Kurt?