Brinks Company (The)

Good morning and welcome to the Brinks third quarter 2026 earnings 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 your telephone keypad. To withdraw your questions, please press star, then 2. 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. Please note this event is being recorded. I would now like to turn the conference over to your host, Jesse Jenkins, Senior Vice President of Financial Planning and Analysis and Investor Relations. Mr. Jenkins, you may begin.

Thanks and good morning. Joining me today are CEO Mark Eubanks and CFO Kurt McMaken. Brinks reported third quarter results on a GAAP, non-GAAP, and constant currency basis this morning. 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 today's earnings release and the presentation appendix, both available 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 factors related to risk of 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. I'll begin on slide three with a quick overview of the quarter before updating progress on the NCR Atlas acquisition. In the third quarter, we delivered 4% organic growth with organic growth in ATM-managed services and digital retail solutions, or AMSDRS, accelerating sequentially to over 16%. Our AMSDRS growth strategy continues to drive growth and profitability across the business in this, our 15th consecutive quarter of at least mid-teens organic revenue growth. AMS DRS now represents 30% of our trailing 12-month revenue mix after reaching a record 32% in the third quarter. Strong momentum is continuing in the AMS DRS markets, and we expect a continuous acceleration into the fourth quarter. Cash and Valuables Management, or CVM, was highlighted by good pricing discipline and continued growth in our global services business. Supported by record AMS DRS revenue mix and good productivity, we delivered a third quarter with adjusted EBITDA margins above the midpoint of our previous guidance. Adjusted EBITDA margins were 19.9% in the quarter, up 90 basis points year-on-year, while operating profit margins expanded by 100 basis points. Record Q3 total company margin performance was highlighted by the continued expansion in North America, Europe, and rest of the world. As you'll see later, North America hit 20% adjusted EBITDA margins on a trailing 12-month basis, and our European segment expanded by over 400 basis points year-on-year. Trailing 12-month free cash flow was $413 million, with conversion of 40%, reflecting the adjusted EBITDA growth I previously mentioned, and continued CapEx leverage as we shipped our business to a less capital-intensive customer offering. The year-to-date free cash flow and adjusted EBITDA growth drove an expected leverage reduction to 2.6 times in the quarter. Year-to-date, our results remain in line with our full-year framework, and we expect to deliver on mid-single-digit organic revenue growth, 30 to 50 basis points of adjusted EBITDA margin expansion, with free cash flow conversion between 40 and 45%. I am confident in our team's ability to continue our growth trajectory in AMS DRS, improve our profit margins, and expand these results into higher free cash flow for years to come. Turning to slide four, I'd like to take a moment to revisit the strategic rationale of the NCR AOS acquisition. The deeper we progress with integration planning, the more excited I become about the potential of the combination. While both companies are performing well independently, we expect our complimentary customer offerings to create simplified solutions for customers. On the ATM Managed Services side, we have the potential to bring together a complete vertical stack of capabilities that touches every aspect of the value chain, from hardware and cash logistics through to software and processing capabilities. Over the last few months, we've had many conversations with financial institutions about the possibility of what this combination unlocks. Together, we will have a compelling best-in-class offer to present banks as they allocate capital towards other priorities and simplify ATM ownership in a managed services, our full outsource model. On the retail side, we are already seeing the potential of the combination. As I discussed last quarter, we recently signed an agreement with a large retail customer in North America to service approximately 5,500 locations with our DRS solution. each already containing an all-point ATM within the store. After deal completion, we will have the ability to combine services of both DRS devices and AMS into a single trip, improving service quality and eliminating inefficiency as we support the entire cash ecosystem. The efficiency gain will help lower our operating costs while helping customers optimize the cash ecosystem within their stores, creating a true win-win solution. As we continue to densify our service network across existing and new customers and drive significant back office synergies, our cost structure will continue to improve, creating a flywheel that will position us to capture new customers and expand our share of wallet with existing customers. The opportunity in front of us is so compelling. As we continue to drive more ATM outsourcing and penetrate deeper into the broad retail customer base, we believe the combination could expand our addressable opportunity to two to three times the current $36 billion global addressable market. As I've said many times, this was a strategy-first acquisition. and the more we explore the possibilities with the NCR team, the clearer it becomes that the growth potential is just as compelling as the value captured from the cost synergies. Turning to slide five, we've made considerable progress validating cost synergies and are optimistic there's a potential for more as we progress with integration planning. As we announced this morning, we're pulling forward our expected closing date again and now expect to close the transaction in early January of 2027. This would allow us to execute our synergy capture activities almost a full quarter faster than was originally contemplated. The chart in the middle of the page shows the impact of the improvement of the timeline where we will ultimately reach our full $200 million run rate synergy projection by the end of 2029. Beyond the timing improvement, we've also preliminarily identified the potential for additional synergies across each of our focus cost categories. Within SG&A, we've identified opportunities to further streamline management functions and simplify the organizational structure of the combined business. We also see the potential to leverage existing Atlios back office and customer support centers of excellence in the combined business as we shift costs to lower cost locations and drive standardization and simplification during integration. In the service network, our early estimates suggest additional opportunities in route density, operational footprint rationalization, and service network consolidation beyond the original simplifying assumptions around insourcing, cash logistics, and second line maintenance. And finally, procurement appears to be a significant opportunity as we assess potential savings involving common vendors and similar spend across categories like fleet, information technologies, and parts and supplies. While we still have work to do to solidify and quantify this potential upside after we close the transaction, it's clear from the work we've done so far that we expect to capture more value and capture that value sooner than our original expectations. On to slide six. I'll provide a quick update on the significant progress we've made on the regulatory front. There are three areas of regulatory clearance that must be addressed before closing. I'm happy to report that all closing conditions have been met in two of those in both the foreign direct investment and money transmitter licensing. We've also made considerable progress in antitrust reviews, reaching resolution in 12 major jurisdictions. The remaining reviews, including those in the UK and EU, are progressing as expected. As we announced today, we expect the remaining regulatory approvals and other customary closing conditions to conclude within the next two months, allowing us to target closing in early January of next year. On to slide seven. You can see here our full timeline. Over the coming months, each company will remain focused on its standalone commitments while we accelerate integration planning and day one readiness. Our joint integration planning teams have developed a list of quick wins which we can distill into day one action plans to optimize and accelerate value capture post-closing. We're also making progress designing the combined leadership team and organizational structure with plans to finalize it within the coming weeks for implementation following closing. Shifting back to the quarter on slide eight, I'll provide some commentary on the performance by line of business, starting with CVM. Organic growth was down 1.5%, reflecting faster conversion to AMS DRS than in previous quarters. Underlying growth reflects strong pricing ahead of inflation and continued strong growth in our global services volumes. Sequentially, global services continued to moderate towards its historic norms, especially in North America. We expect these AMS DRS conversion and global services moderation dynamics to continue into the fourth quarter. Moving to AMS DRS, revenue growth accelerated sequentially to over 16%, our 15th consecutive quarter of at least mid-to-high teens organic growth. The acceleration was widespread, with growth advancing in all segments. In the AMS business, we saw good growth from customer wins in Mexico and continued to roll out the Mandiri Bank Network in Indonesia. In DRS, we continue to see stable, strong growth in all markets. Our value proposition is resonating with customers of all sizes and across diverse customer end markets. Pipelines and backlogs remain robust as we head into the close of the year and prepare for growth in 2027. This includes the large retail enterprise customer we announced last quarter in North America that is now expected to begin deployment early next year. As we look at the fourth quarter, we expect to see revenue accelerate in AMS DRS again, despite the lapping impact of a large equipment sale in the prior year in North America. Supported by strong backlogs and pipelines in DRS and a solid schedule of conversions, including a new customer rollout in Luxembourg and AMS that I'll discuss in a few slides, we remain confident that we're on track to deliver our full year framework of mid to high teens organic growth. Moving to slide 9, I want to highlight a financial institution contract award that we recently won in Canada that will support growth and improve density in this important market starting in 2027. This deal is with the top bank in Canada that has a large commercial presence across the major metropolitan areas in the country. As part of the competitive process, our commercial teams were able to secure the relationship, supporting traditional cash management services across the country. This key win in the Canadian banking sector establishes a foundation for long-term growth with one of Canada's premier financial institutions. The additional volume provided by these locations will give us a better foundation as we continue to penetrate a large and growing addressable market with ERS. On slide 10, you can see the details of an exciting new AMS win in Luxembourg. This deal continues a broader trend we're seeing across Europe where major banks join together to build a consortium and create a shared ATM network. These situations often create a unique entry point for Brinks as they initiate a general review of operations, including the consideration of a full outsourcing of the new estate. In this specific situation, the participating banks have built a shared Thank you for joining us today. aims to simplify the customer experience, allowing these banks to shift focus to other value-creating customer services like loans and account growth. Once we complete our pending acquisition, we'll explore leveraging the capabilities of NCR Atlios in hardware, second-line maintenance, and software that could enable us to add new transaction types to these machines as we scale our relationship. This is a big win for our European teams and illustrates the outsourcing capabilities we have today and the potential to build on those capabilities post-closing. We're having similar discussions with major potential customers across a range of geographic markets. We continue to see our offering is solving a diverse set of customer problems, and by continuing to win the marketplace, we're developing more proof points for additional potential future customers. I'm confident our AMS strategy remains in the early stages of development, and we are poised to capture significant future growth as this market continues to mature in the coming years. On slide 11, and before I turn it over to Kurt for more details on the financials, I want to recognize an important strategic milestone. I'm happy to report on a trailing 12-month basis, we reached 20% adjusted EBITDA margins in our North America segment in the third quarter. Our progress has been impressive over the last several years. With revenue mix aggressively shifting to higher margin services and supported by strong productivity enhancements across the cost base, we've expanded margins by more than 500 basis points since 2022. While reaching this milestone is certainly worth celebrating, I'm encouraged because I know that we are just getting started. With a solid AMS DRS pipeline reaching well into 2027, significant synergy potential from the NCR-Atlios deal, and ongoing efficiency initiatives across both Canada and the U.S., there remains significant potential to continue to expand the margins over the coming years. And with that, I'll turn it over to Kurt to walk through the financials and fourth quarter guidance before I return for some closing comments and Q&A. Kurt?