Brinks Company (The)

Good day and welcome to the Brinks Company's second quarter 2025 earnings conference call. 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 today's press release and presentation and the company's most recent SEC filings. The information presented and discussed on this call is representative of today's only. Brinks assumes no obligations to update any forward-looking statements. This 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 morning. Here with me today are CEO Mark Eubanks and CFO Kurt McMacken. This morning brings reported second quarter 2025 results on a gap, non-gap, 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 measures are also useful to investors as they allow investors to evaluate performance using the same metrics as management. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation, and the 8 filing, all of which can be found on our website. I will now turn the call over to Brinks CEO, Mark Eubanks.

Thanks, Jesse. Good morning and thanks for joining us. Starting with the second quarter performance highlights on slide three, Brinks delivered strong organic revenue growth in all segments and lines of business. The 5% total company organic growth included 16% growth in ATM managed services and digital retail solutions, or AMSDRS, as well as 5% growth in North America. This is the fastest organic growth rate for North America segment in the last nine quarters. Total reported revenue growth of 4% exceeded our guidance for the period. Record Q2 EBITDA and operating profits were driven by strong productivity, revenue mixed benefits, and good pricing discipline. Second quarter EBITDA margins were 17.8%, and record second quarter operating margins were 12.6%, up 20 basis points year over year. The benefits of growth in AMS DRS were evident in both North America and Europe, where we posted record second quarter EBITDA margins. We continue to see margin improvement opportunities in these segments as we move through the balance of the year. Earnings per share of $1.79 reflects the benefits of our ongoing share repurchase program. with total diluted share count down 6%. Cash generation also continues to improve. In Q2, we delivered $102 million of free cash flow, a year-to-date increase of $36 million. We continue to shorten our cash cycle and deliver capital efficiency across our entire asset base. Looking at the second quarter in total, we over-delivered against our commitments. Organic growth remains robust with acceleration in our key business lines of AMS and DRS expected in the second half of the year. Profitability continues to improve as we drive meaningful operational consistency and shift our revenue to higher margin lines of business. The strong first half performance has increased our confidence and we're now expecting an increase in revenue and EBITDA for the full year. Kurt will have more color on our third quarter guidance and our full year framework at the end of the presentation. Turn to slide four, you can see how our year to date performance supports our value creation strategy. First, we're focused on delivering organic revenue growth primarily from our higher margin subscription-based services of AMS and DRS. Through the first half of the year, we remain on track for our full-year framework, delivering 5% organic growth and 18% organic growth in AMS DRS. This revenue growth and execution of productivity enhancements have driven operating margin expansion of 30 basis points year-to-date. As we've previously discussed, and as you can see from our Q3 guidance, we expect margin expansion to accelerate in the second half of the year, and we will remain on track to deliver our framework of 30 to 50 basis points of EBITDA margin expansion in 2025. We are delivering improvements in free cash flow as well. Trillion-12-month free cash flow has increased by $140 million, and conversion has improved to 48% of adjusted EBITDA. we are driving structural changes to the business that support this improving free cash flow generation. Our cash cycle continues to shorten with DSO improvement of six days. We're also improving our capital efficiency as we shift to less capital intensive AMS DRS offerings, reducing several hundred vehicles from our fleet year to date. And finally, we're focused on maximizing value for our shareholders with disciplined capital allocation. This year, capital has primarily been allocated to our share repurchase program where we've utilized $130 million year to date to repurchase approximately 1.5 million shares. With remaining capacity under our share repurchase program through the end of the year of $166 million, we remain on track to allocate at least 50% of our free cash flow towards shareholder returns in 2025. The meaningful progress we've made against these value creation goals in the first half of the year provides confidence and support to our increased expectations for the full year. On slide five, I'll provide a strategy update on our ATM managed services progress. Across the top of the slide, you can see the ATM ownership value chain from software on the machines all the way through cash logistics and money processing. Our business was historically focused on cash and transit and money processing, but over the last few years, we've added capabilities both organically and through acquisition, which have expanded our addressable market and moved us further up the value chain. This expanded market has allowed us to consistently deliver mid to high teens or better organic growth since we started reporting AMS. In the second quarter, we saw record transactions and cash dispensed in several of our large geographies, including North America. We recently finished onboarding several large new AMS customers, including Sainsbury's Bank in the UK and a few large convenience store chains in North America. The combination of record transactions and larger installed base support our increased expectations for AMS and DRS in the second half of the year. During the quarter, we also closed a strategic investment in KAL that advances our existing AMS capabilities. KAL is a leading global hardware-independent ATM software provider and a globally recognized solutions provider for financial institutions and retailers. With many of our ATMs already using CAL software, We believe this partnership allows us to provide improved solutions to the managed services marketplace. Moving to slide six on DRS. First, a quick reminder of the value proposition of digital retail solutions for both our customers and for Brinks. For our customers, DRS helps move cash transactions into the digital world. Once cash is accepted at retailers from customers and deposited into a DRS device, there's now a digital record of the transaction and the customer's bank account is credited. To the retailer, this process looks and feels similar to credit and debit transactions, often at prices that are less than their typical 2% to 4% of credit card fees. Benefits of this process for customers include faster access to working capital and improvement in store productivity without the need to reconcile the cash received and then walk deposits to the bank. We've seen our customers reduce internal theft, and when interfaced with a point of sale operating system, allow customers to gain the ability to digitally track customer's individual cash transactions. The value proposition for Brinks includes a transition to flexible schedules, only dispatching service when needed or convenient. This allows us to provide a superior customer offering while improving labor and capex efficiency. Because this service includes flexible scheduling, we have extended our potential customer base to include enterprise customers that were not efficiently served by traditional services, as well as small and mid-sized businesses that were previously priced out of the cash management solution. By penetrating this large unvended market and converting existing CIT customers to DRS, we've been able to scale this business with double-digit growth rates over the last couple of years. Looking at a few highlights this quarter on DRS, We had record global device installations as we continue to build momentum in all markets. Encouraged by the traction that we've seen in the business, we continue to scale and invest in dedicated commercial capabilities across all markets to further penetrate this large untapped total addressable market. We believe these new investments will drive continued growth in both margin accretive conversions of existing customers, as well as the unvended retail locations. On slide seven, you can see the market expansion potential into AMS and DRS. Traditionally, Brinks has been the leader in the $28 billion cash logistics in market. Using industry data, we estimate that the current vended AMS market is roughly $8 billion. If you add the addressable market for unvended retailers with more than $5,000 in monthly cash transactions, and if all banks decide to outsource their ATM networks, our total addressable market would increase by two to three times our existing traditional market. This market potential is something we're already seeing in our numbers, with new customers like Sainsbury's Bank and AMS and a large part of our DRS growth coming from this unvended white space. This market expansion, coupled with the success we've already delivered, gives us confidence in our ability to achieve our mid to high teens organic growth framework for AMS DRS over the midterm. Turning to slide eight, I'll tie the last few slides to our Q2 results before turning to Kurt to provide some additional financial details on the quarter. We split our business into two main customer offerings, cash and valuables management, or CVM, and AMS DRS. Our CVM business includes the traditional parts of our business, like cash and transit, money processing, and our international shipping business we call global services. Organic growth in CVM was stable sequentially this quarter, with growth of 1% year over year. As we previously explained, headline growth in CVM is impacted by the conversion of traditional ATM or CIT customers to AMS DRS, which we estimate cost us a couple of points of growth in the quarter. Year to date, our global services business has supported CVM growth with high precious metals demand, partially related to global trade policy environment. AMS DRS had another strong quarter with organic growth of 16% in line with our expectations for the quarter. As we previously discussed, Growth this quarter was impacted by a one-time impact of higher equipment sales in the quarter last year. This included record growth in North America as we onboarded several large AMS customers and installed a record number of DRS devices in the quarter. As I've mentioned in the past few slides, we continue to build considerable momentum in AMS and DRS and expect our growth to accelerate in the second half of the year. Pipelines remain robust in both areas, and we continue to close new customer sales. With expectations increasing, we now expect to be at the top end of our organic growth guidance for AMS DRS for the full year. It was a great quarter of progress on our strategic initiatives. Growth in AMS DRS was strong and our outlook for the second half of the year has improved. Operating margins expanded in Q2 and are expected to accelerate into the second half of the year. Our cash generation was also strong, and we continue to improve capex efficiency and shorten our cash cycle. In the second quarter, we remained aggressive with our repurchase program, reducing our share count by 4% year-to-date. I'm confident we're executing the right strategy to drive shareholder value, and I'm encouraged by the opportunities that are in front of us. And with that, I'll turn it over to Kurt to discuss the financials, and I'll come back with some final thoughts in Q&A.