Brinks Company (The)

Good day and welcome to the Brinks Company's second quarter 2026 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. And 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 today's press release and presentation and in the company's 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, Senior Vice President of Financial Planning and Analysis. Mr. Jenkins, you may begin.

Thanks and good morning. Joining me are CEO Mark Eubanks and CFO Kurt McMaken. Today, Brinks reported second quarter results on a GAAP, non-GAAP, and constant currency basis. Most of our commentary 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. We believe these measures allow investors to better compare performance over time and to evaluate our performance using the same metrics as management. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in SEC filings, which can be found on our website. We will also have commentary on the status of our pending acquisition of NCR Atlios. As a reminder, this transaction remains subject to the completion of customary closing conditions and additional regulatory approvals. Other details, including risk factors related to the transaction, can be found in the pertinent SEC filings. I will now turn the call over to Brink CEO Mark Eubanks.

Thanks, Jesse. Good morning, everyone. Startinging on slide three, we delivered a strong second quarter with organic growth of 4% and ATM Managed Services and Digital Retail Solutions, or AMSDRS, growing 14%. This marks the 14th consecutive quarter of mid-teens or better organic revenue growth in AMSDRS, more than doubling in total revenue over the same period of time to over $1.5 billion. We continue to focus our strategic efforts on growing these valuable lines of business and have good line of sight into continued growth in the second half, supported by some recent customer wins, which I'll talk about later. Cash and valuables management, or CVM, performance was highlighted by continued strong growth in our global services business as we drive incremental revenue in the volatile precious metals markets. Supported by a favorable revenue mix and widespread productivity initiatives, we delivered record second quarter operating and EBITDA margins. EBITDA margins were 18.5% in the quarter, up 70 basis points year over year, with expansion across each of our operating segments. Cash flow continues to grow, with year-to-date and trailing 12-month free cash flow up $32 million over the prior periods. Total free cash flow generated over the last four quarters was $468 million, with conversion from EBITDA of 46% above our full year framework. Year to date, our results are slightly ahead of our original expectations. With EBITDA above the midpoint of our prior guidance, we're raising our full year profit expectations. As you'll see from our Q3 guidance in a few minutes, I'm confident in this team's ability to continue to improve the business, accelerate organic growth, and drive higher margins and free cash flow over the balance of the year. We remain well positioned to deliver against our full-year 2026 framework of mid-single-digit organic revenue growth with even a margin expansion of 30 to 50 basis points. Now turning to slide four, I'd like to provide an update on the NCR Atlios acquisition. Over the last few months, we've made considerable progress on many fronts and have moved our estimated closing timeline forward to early in the first quarter. Since our last public comments, we received overwhelming support from both NCR Atlios and Brink shareholders, with more than 99% of the votes cast in favor of the transaction. That endorsement reflects the confidence in the strategic merits of the combined companies. We also have satisfied several outstanding regulatory requirements. During the quarter, we were granted an early termination by the U.S. antitrust regulators. This clearance represents a meaningful step forward, with the U.S. representing the largest concentration of combined company pro forma revenue of almost 40%. Other recent antitrust clearances include Brazil, India, Turkey, Colombia, and we continue to work constructively with the remaining other jurisdictions. We're also making meaningful progress with foreign direct investment regulators, having received clearance across the majority of the Eurozone footprint, including France, Germany, Spain, Italy, and the UK. Money transmitter licensing requirements with the US regulators are also moving forward with urgency. We've achieved clearance in more than 80% of the necessary jurisdictions and remain well on track in the remaining markets. Over the next several months until closing, we will stay focused on the standalone commitments of both companies while accelerating integration planning. Although we'll continue to operate independently until closing, Our dedicated integration teams will work closely to ensure that we capture the strategic benefits of the combined businesses. As I continue to engage with the NCR Atlios team, I'm increasingly encouraged by the potential of the combination. With deep expertise and strong performers across both organizations, I'm confident we'll be able to deliver the solutions to our customers' most important challenges. I look forward to closing the acquisition and moving forward as one team as quickly as possible. Now shifting back to the quarter on slide five, I'll provide some commentary on performance by line of business. Starting with CVM, organic growth was slightly positive in the quarter with strong global services volume and good pricing discipline offset by AMS DRS conversions. As we discussed last quarter, our global services business remained strong through the first half of the year. Moving to AMS DRS, revenue grew organically $50 million in the quarter at a rate of 14%. Late in the quarter, we saw several large installations and customer wins moving to the second half, primarily reflecting customer-driven timing decisions. In the AMS business, we were recently awarded a full ATM outsourcing agreement for a network consortium of banks in Europe that will come online over the second half of the year. In DRS, we continue to deploy our solution across the Paradis footprint that we discussed last quarter, and I'll talk more about another key win in North America on the next slide. AMS DRS remains compelling outside of the more penetrated North America and Europe segments with strong growth in both Latin America and rest of the world. These recent wins and solid deployment schedules in the second half give us confidence in our ability to deliver organic growth towards the top end of our full year framework of mid to high teens for the balance of the year. As we said last quarter, the visibility into our pipeline and backlog continues to support accelerated growth in the second half of the year. Stepping back and looking at total revenue trends for the quarter, we delivered a second quarter in line with our organic revenue expectations and customer engagement with our solutions remains very high. As you'll see in our Q3 guidance, we expect a slight acceleration in organic growth in the second half and remain on track to deliver against our organic growth framework for the full year. Moving on to slide six, you can see a few details on a new DRS win in North America. We recently signed an enterprise agreement with a large retail chain to provide a full DRS solution. We are nearly doubling our share of wallet with this customer by providing our tech-enabled solutions at over 5,000 retail locations across a broad US footprint. This customer will enjoy the security and reliability of Ring solutions, the integration of physical to digital payments, working capital transparency, and simplified cash handling. This in-store process simplification will unlock management time for more value-add activities across the entire retail environment, like employee training, customer assistance, and other in-store operational efficiency measures. While the customer benefits of DRS are clear, Brinks will also see meaningful productivity opportunities from this win as we increase density by adding a network that complements our existing footprint while optimizing the routes that already exist in most of our geographic locations. As I've said before, DRS is a true win-win in the marketplace, and we continue to have meaningful conversations with customers of all sizes in all of our markets. As we continue to improve our go-to-market approach and highly under-penetrated verticals, we expect to continue to deliver these kinds of wins that will set the foundation for future growth and market accretion for years to come. One other important point before we move to the next page relates to NCR's own U.S. ATM network, AllPoint. which has ATMs in all of these locations. This is an example of the opportunities that will create significant routing synergies and improve service levels as we increase network density. This optimization creates significant benefits for our DRS value proposition while also reducing service costs for an owned ATM network in the combined company. As we look at the next several years post-acquisition, we see meaningful additional opportunities to drive operating efficiencies, enhance service levels, and create value through the expanded network of the combined company. Now on to slide seven. You can see detail on a recent AMS win in a key Southeast Asia financial institution market. We recently won an AMS deal at Mandiri Bank in Indonesia, servicing more than a third of their entire estate Mandiri is the largest national bank in Indonesia operating over 13,000 total ATMs Southeast Asia remains an attractive market for AMS as we add Mandiri to the previously discussed wins in Indonesia and more recently the security bank win in the Philippines These end markets have favorable cash usage trends and remain attractive for outsourcing as banks look to optimize costs and better serve their customers For reference The total Menduria estate of over 13,000 ATMs is larger than many of the top 10 banks in the U.S. market. With the ATM Managed Services market still underpenetrated, we are having meaningful customer discussions across the globe. We continue to believe that outsourcing the operations and upkeep of these increasingly complex machines is the next logical step for financial institutions looking for ways to optimize their costs while continuing to improve customer experience at the intersection of physical and digital payments. After the completion of the NCR Atlas acquisition, we expect to have a best-in-class set of ATM managed services capabilities, positioning us to better serve financial institutions as they evaluate outsourcing opportunities in the markets around the world. Moving on to slide eight. Before I hand over to Kurt for more detail on the financials, I wanted to briefly update progress on North America margins. We continue to methodically advance toward 20% EBITDA margins, Coming in at 19.8% on a trillion 12 month basis at the end of the second quarter. With a solid revenue mix outlook over the second half of the year, supported by recent customer wins at Paradis, Pandora, and the large enterprise deal I spoke about a few slides ago, we expect to continue to march towards this level as an intermediate milestone in our continuous improvement journey. Our operations continue to improve and with a good pipeline of productivity initiatives, we expect to continue to drive asset efficiency and labor productivity as we move forward. Over the past five years, we've improved our service, strengthened our safety culture, improved our AMS DRS selling capabilities and eliminated waste from our operating model. The North America business is well positioned operationally to absorb additional capacity as we integrate the NCR Atlios business into our daily activities. With meaningful cost synergies contemplated in the North American markets, I remain confident that 20% margins is just the next milestone in our journey as a company, and I look forward to pressing beyond these levels in future years. And with that, I'll turn it over to Kurt to walk through the financials and Q3 guidance before I return with some closing comments in Q&A.