The Brink’s Company (NYSE:BCO) announced today that it has revised
its 2021 non-GAAP guidance to reflect the spread of the Covid-19
Delta variant and its expected impact on full-year
revenue. Management now expects full-year revenue of
$4.1 billion to $4.2 billion with a non-GAAP operating profit
margin of approximately 11.2%. The midpoint of the company’s prior
revenue guidance was $4.3 billion.
Management cited the persistence of the global pandemic as the
primary driver behind lower-than-expected revenue in several key
markets in Europe, North America and Latin America. In the U.S.,
labor shortages and inflationary cost pressures are affecting
near-term performance. The company has increased
selling prices in the U.S. which, when fully implemented, are
expected to offset wage increases and lead to improved results by
year-end.
Doug Pertz, president and chief executive officer, said:
“Despite a near-term revenue shortfall and the labor shortage in
the U.S., we continue to expect 2022 percentage profit growth in
the high teens as the pandemic subsides and revenue growth
improves, driven by improvement initiatives in our core operations
and initial results from our new digital solutions. Our preliminary
targets for 2022 continue to include adjusted EBITDA growth to a
range between $785 million and $825 million.
“We look forward to disclosing our new strategic plan, including
updated financial targets for 2022 and 2023, at our Investor Day
event that is currently planned for early December.”
Brink’s normally provides guidance on a full-year basis only.
Given the proximity to the end of 2021, management also disclosed
its revenue and margin outlook for third-quarter and fourth-quarter
results, which are included in the summary below.
2021 Guidance (Unaudited)1(In millions, except
for percentages)
Period |
|
Revenue |
Op Profit* |
OP Margin* |
EBITDA* |
1H
2021 (Actual) |
|
$2,027 |
201 |
9.9% |
303 |
Q3 2021** |
|
1,030 – 1,070 |
103 |
9.8% |
150 |
Q4 2021 ** |
|
1,040 – 1,100 |
162 |
15.1% |
208 |
FY 2021 ** |
|
$4,100 - 4,200 |
465 |
11.2% |
660 |
*Non-GAAP**At the mid-point of the Revenue range for Operating
Profit, Operating Profit Margin and Adjusted EBITDA. Amounts may
not add due to rounding.
About The Brink’s Company
The Brink’s Company (NYSE:BCO) is the global leader in total
cash management, route-based secure logistics and payment solutions
including cash-in-transit, ATM services, cash management services
(including vault outsourcing, money processing and intelligent safe
services), and international transportation of valuables. Our
customers include financial institutions, retailers, government
agencies, mints, jewelers and other commercial operations.
Our global network of operations in 53 countries serves customers
in more than 100 countries. For more information, please
visit our website at www.brinks.com or call 804-289-9709.
1GAAP to Non-GAAP Reconciliation:
|
2021 GAAPOutlook (b) |
ReconcilingItems (a) |
2021 Non-GAAPOutlook (a) |
Revenue |
|
|
|
1H 2021 (Actual) |
$2,027 |
- |
2,027 |
Q3 2021* |
1,030 - 1,070 |
- |
1,030 - 1,070 |
Q4 2021* |
1,040 - 1,100 |
- |
1,040 - 1,100 |
FY 2021* |
$4,100 - 4,200 |
- |
4,100 - 4,200 |
|
|
|
|
Operating
profit |
|
|
|
1H 2021 (Actual) |
$135 |
66 |
201 |
Q3 2021* |
75 |
28 |
103 |
Q4 2021* |
142 |
20 |
162 |
FY 2021* |
$352 |
113 |
465 |
|
|
|
|
Operating profit
margin |
|
|
|
1H 2021 (Actual) |
6.7% |
3.2% |
9.9% |
Q3 2021* |
7.1% |
2.7% |
9.8% |
Q4 2021* |
13.2% |
1.9% |
15.1% |
FY 2021* |
8.5% |
2.7% |
11.2% |
|
|
|
|
Adjusted
EBITDA |
|
|
|
1H 2021 (Actual) |
|
|
$303 |
Q3 2021* |
|
|
150 |
Q4 2021* |
|
|
208 |
FY 2021* |
|
|
$660 |
*At the mid-point of the Revenue range for Operating Profit,
Operating Profit Margin and Adjusted EBITDA.Amounts may not add due
to rounding.
(a) |
The 2021 Non-GAAP outlook amounts exclude certain forecasted
Non-GAAP adjusting items, such as intangible asset amortization and
U.S. retirement plan costs. We have not forecasted the impact of
highly inflationary accounting on our Argentina operations in 2021
or other potential Non-GAAP adjusting items for which the timing
and amounts are currently under review, such as future
restructuring actions. The 2021 Non-GAAP outlook amounts for
operating profit and Adjusted EBITDA cannot be reconciled to GAAP
without unreasonable effort. We cannot reconcile these amounts to
GAAP because we are unable to accurately forecast the impact of
highly inflationary accounting on our Argentina operations in 2021
or other potential Non-GAAP adjusting items for which the timing
and amounts are currently under review, such as future
restructuring actions. The impact of highly inflationary accounting
on our Argentina operations and other potential Non-GAAP adjusting
items could be significant to our GAAP results. |
(b) |
The 2021 GAAP outlook excludes
any forecasted impact from highly inflationary accounting on our
Argentina operations as well as other potential Non-GAAP adjusting
items for which the timing and amounts are currently under review,
such as future restructuring actions. |
Forward-Looking Statements
This release contains forward-looking information. Words such as
"anticipate," "assume," "estimate," "expect," “target” "project,"
"predict," "intend," "plan," "believe," "potential," "may,"
"should" and similar expressions may identify forward-looking
information. Forward-looking information in these materials
includes, but is not limited to: future results, 2021 outlook,
expected economic recovery, the impact of labor shortages and price
increases in the U.S., results from the company’s digital
solutions, and the company’s strategic initiatives and plan,
including 2022 and 2023 financial targets.
Forward-looking information in this document is subject to known
and unknown risks, uncertainties and contingencies, which are
difficult to predict or quantify, and which could cause actual
results, performance or achievements to differ materially from
those that are anticipated. Forward-looking information in this
document is subject to known and unknown risks, uncertainties and
contingencies, which are difficult to predict or quantify, and
which could cause actual results, performance or achievements to
differ materially from those that are anticipated. These risks,
uncertainties and contingencies, many of which are beyond our
control, include, but are not limited to: our ability to improve
profitability and execute further cost and operational improvement
and efficiencies in our core businesses; our ability to improve
service levels and quality in our core businesses; market
volatility and commodity price fluctuations; seasonality, pricing
and other competitive industry factors; investment in information
technology (“IT”) and its impact on revenue and profit growth; our
ability to maintain an effective IT infrastructure and safeguard
confidential information; our ability to effectively develop and
implement solutions for our customers; risks associated with
operating in foreign countries, including changing political, labor
and economic conditions, regulatory issues (including the
imposition of international sanctions, including by the U.S.
government), currency restrictions and devaluations, restrictions
on and cost of repatriating earnings and capital, impact on the
Company’s financial results as a result of jurisdictions determined
to be highly inflationary, and restrictive government actions,
including nationalization; labor issues, including negotiations
with organized labor and work stoppages; pandemics (including the
ongoing Covid-19 pandemic and related impact to and restrictions on
the actions of businesses and consumers, including suppliers and
customers), acts of terrorism, strikes or other extraordinary
events that negatively affect global or regional cash commerce;
anticipated cash needs in light of our current liquidity position
and the impact of Covid-19 on our liquidity; the strength of the
U.S. dollar relative to foreign currencies and foreign currency
exchange rates; our ability to identify, evaluate and complete
acquisitions and other strategic transactions and to successfully
integrate acquired companies; costs related to dispositions and
product or market exits; our ability to obtain appropriate
insurance coverage, positions taken by insurers relative to claims
and the financial condition of insurers; safety and security
performance and loss experience; employee and environmental
liabilities in connection with former coal operations, including
black lung claims; the impact of the Patient Protection and
Affordable Care Act on legacy liabilities and ongoing operations;
funding requirements, accounting treatment, and investment
performance of our pension plans, the VEBA and other employee
benefits; changes to estimated liabilities and assets in actuarial
assumptions; the nature of hedging relationships and counterparty
risk; access to the capital and credit markets; our ability to
realize deferred tax assets; the outcome of pending and future
claims, litigation, and administrative proceedings; public
perception of our business, reputation and brand; changes in
estimates and assumptions underlying critical accounting policies;
the promulgation and adoption of new accounting standards, new
government regulations and interpretation of existing standards and
regulations.
This list of risks, uncertainties and contingencies is not
intended to be exhaustive. Additional factors that could cause our
results to differ materially from those described in the
forward-looking statements can be found under "Risk Factors" in
Item 1A of our Annual Report on Form 10-K for the period ended
December 31, 2020, and in related disclosures in our other public
filings with the Securities and Exchange Commission, including our
Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2021 and June 30, 2021. The forward-looking information
included in this document is representative only as of the date of
this document and The Brink's Company undertakes no obligation to
update any information contained in this document.
The Brink’s Company and
subsidiariesNon-GAAP Results Reconciled to GAAP
(Unaudited) (In millions, except for percentages)
Non-GAAP results described in this press release are financial
measures that are not required by or presented in accordance with
U.S. generally accepted accounting principles (“GAAP”). The purpose
of the Non-GAAP results is to report financial information from the
primary operations of our business by excluding the effects of
certain income and expenses that do not reflect the ordinary
earnings of our operations. The 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
such measures allow investors to evaluate our performance using the
same metrics that our management uses to evaluate past performance
and prospects for future performance. We do not consider these
items to be reflective of our core operating performance due to the
variability of such items from period-to-period in terms of size,
nature and significance. Additionally, Non-GAAP results are
utilized as performance measures in certain management incentive
compensation plans.
|
1H
2021 |
Revenues: |
|
GAAP |
$ |
2,026.5 |
|
Non-GAAP |
$ |
2,026.5 |
|
|
|
Operating profit
(loss): |
|
GAAP |
$ |
135.0 |
|
Reorganization and Restructuring(a) |
|
21.7 |
|
Acquisitions and dispositions(a) |
|
39.2 |
|
Argentina highly inflationary impact(a) |
|
6.5 |
|
Internal loss(a) |
|
(1.7) |
|
Non-GAAP |
$ |
200.7 |
|
|
|
Operating
margin: |
|
GAAP margin |
|
6.7% |
|
|
|
Non-GAAP margin |
|
9.9% |
|
|
|
Interest
expense: |
|
GAAP |
$ |
(55.4) |
|
Acquisitions and dispositions(a) |
|
0.8 |
|
Non-GAAP |
$ |
(54.6) |
|
|
|
Interest and other
income (expense): |
|
GAAP |
$ |
(0.9) |
|
Retirement plans(c) |
|
13.1 |
|
Acquisitions and dispositions(a) |
|
(1.0) |
|
Non-GAAP |
$ |
11.2 |
|
|
|
Taxes: |
|
GAAP |
$ |
36.3 |
|
Retirement plans(c) |
|
3.7 |
|
Reorganization and Restructuring(a) |
|
5.3 |
|
Acquisitions and dispositions(a) |
|
2.2 |
|
Argentina highly inflationary impact(a) |
|
(0.6) |
|
Internal loss(a) |
|
(0.7) |
|
Income tax rate adjustment(b) |
|
4.2 |
|
Non-GAAP |
$ |
50.4 |
|
|
|
Amounts may not add due to rounding. See page 6 for
footnote explanations.
The Brink’s Company and
subsidiariesNon-GAAP Results Reconciled to GAAP
(Unaudited) (In millions)
|
1H 2021 |
|
|
Income (loss) from
continuing operations attributable to Brink's: |
|
GAAP |
$ |
36.7 |
|
Retirement plans(c) |
|
9.4 |
|
Reorganization and Restructuring(a) |
|
15.9 |
|
Acquisitions and dispositions(a) |
|
36.4 |
|
Argentina highly inflationary impact(a) |
|
7.1 |
|
Internal loss(a) |
|
(1.0 |
) |
Income tax rate adjustment(b) |
|
(3.9 |
) |
Non-GAAP |
$ |
100.6 |
|
|
|
Adjusted
EBITDA(f): |
|
Net income (loss) attributable to Brink's - GAAP |
$ |
36.6 |
|
Interest expense - GAAP |
|
55.4 |
|
Income tax provision - GAAP |
|
36.3 |
|
Depreciation and amortization - GAAP |
|
116.5 |
|
EBITDA |
$ |
244.8 |
|
Discontinued operations - GAAP |
|
0.1 |
|
Retirement plans(c) |
|
13.1 |
|
Reorganization and Restructuring(a) |
|
21.0 |
|
Acquisitions and dispositions(a) |
|
15.1 |
|
Argentina highly inflationary impact(a) |
|
5.5 |
|
Internal loss(a) |
|
(1.7 |
) |
Income tax rate adjustment(b) |
|
0.3 |
|
Share-based compensation(d) |
|
18.7 |
|
Marketable securities (gain) loss(e) |
|
(14.2 |
) |
Adjusted EBITDA |
$ |
302.7 |
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization: |
|
|
|
GAAP |
$ |
116.5 |
|
Reorganization and Restructuring costs(a) |
|
(0.2 |
) |
Acquisitions and dispositions(a) |
|
(22.7 |
) |
Argentina highly inflationary impact(a) |
|
(1.0 |
) |
Non-GAAP |
$ |
92.6 |
|
Amounts may not add due to rounding.
(a) |
See “Other Items Not Allocated To Segments” on page 7 for details.
We do not consider these items to be reflective of our operating
performance as they result from events and circumstances that are
not a part of our core business. |
(b) |
Non-GAAP income from continuing
operations and non-GAAP EPS have been adjusted to reflect an
effective income tax rate in each interim period equal to the
full-year non-GAAP effective income tax rate. The full-year
non-GAAP effective tax rate is estimated at 32.0% for 2021. |
(c) |
Our U.S. retirement plans are
frozen and costs related to these plans are excluded from non-GAAP
results. Certain non-U.S. operations also have retirement plans.
Settlement charges and curtailment gains related to these non-U.S.
plans are also excluded from non-GAAP results. |
(d) |
There is no difference between
GAAP and non-GAAP share-based compensation amounts for the periods
presented. |
(e) |
There is no difference between
GAAP and non-GAAP marketable securities gain and loss amounts for
the periods presented. |
(f) |
Adjusted EBITDA is defined as
non-GAAP income from continuing operations excluding the impact of
non-GAAP interest expense, non-GAAP income tax provision, non-GAAP
depreciation and amortization, non-GAAP share-based compensation
and non-GAAP marketable securities (gain) loss. |
|
|
The Brink’s Company and
subsidiariesOther Items Not Allocated To Segments
(Unaudited)(In millions)
Brink’s measures its segment results before income and expenses
for corporate activities and for certain other items. See below for
a summary of the other items not allocated to segments.
Reorganization and Restructuring Other
Restructurings Management periodically implements restructuring
actions in targeted sections of our business. As a result of these
actions, we recognized $21.7 million net costs in the first six
months of 2021, primarily severance costs. For the restructuring
actions that have not yet been completed, we expect to incur
additional costs between $4 million and $6 million in future
periods.
Due to the unique circumstances around these charges, these
management-directed items have not been allocated to segment
results and are excluded from non-GAAP results.
Acquisitions and dispositions Certain
acquisition and disposition items that are not considered part of
the ongoing activities of the business and are special in nature
are consistently excluded from non-GAAP results. These items are
described below:
2021 Acquisitions and Dispositions
- Amortization expense for acquisition-related intangible assets
was $22.6 million in the first six months of 2021.
- We incurred $6.9 million in integration costs, primarily
related to G4S, in the first six months of 2021.
- Transaction costs related to business acquisitions were
$4.3 million in the first six months of 2021.
- Restructuring costs related to acquisitions were
$4.6 million in the first six months of 2021.
- Compensation expense related to the retention of key PAI
employees was $0.6 million in the first six months of
2021.
Argentina highly inflationary impact Beginning
in the third quarter of 2018, we designated Argentina's economy as
highly inflationary for accounting purposes. As a result, Argentine
peso-denominated monetary assets and liabilities are now remeasured
at each balance sheet date to the currency exchange rate then in
effect, with currency remeasurement gains and losses recognized in
earnings. In addition, nonmonetary assets retain a higher
historical basis when the currency is devalued. The higher
historical basis results in incremental expense being recognized
when the nonmonetary assets are consumed. In the first six months
of 2021, we recognized $6.5 million in pretax charges related
to highly inflationary accounting, including currency remeasurement
losses of $5.0 million. These amounts are excluded from
non-GAAP results.
Internal loss A former non-management employee
in our U.S. global services operations embezzled funds from Brink's
in prior years. Except for a small deductible amount, the amount of
the internal loss related to the embezzlement of funds was covered
by our insurance. In an effort to cover up the embezzlement, the
former employee intentionally misstated the underlying accounts
receivable subledger data. The rebuild of the subledger was
substantially completed during the third quarter of 2019. Based on
the reconstructed subledger, we were able to analyze and quantify
the uncollected receivables from prior periods. In the first six
months of 2021, we recognized a decrease in bad debt expense of
$2.7 million, primarily related to collection of these
receivables. This estimate will continue to be adjusted in future
periods, if needed, as assumptions related to the collectability of
these accounts receivable change. We also recognized
$0.9 million of legal charges in the first six months of 2021
as we attempt to collect additional insurance recoveries related to
these receivables. At June 30, 2021, we have recorded a $9.5
million allowance on $9.7 million of accounts receivable, or 98%.
Due to the unusual nature of this internal loss and the related
errors in the subledger data, along with the fact that management
has excluded these amounts when evaluating internal performance, we
have excluded these net charges from segment and non-GAAP
results.
Contact:Investor Relations 804.289.9709
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