• Organic Growth: 13% in the quarter.
• ATM Managed Services and Digital Retail Solutions Growth: 26% organically.
• Cash and Valuables Management Growth: 9% organically.
• FX Headwind: 11% impact due to US dollar strength.
• Adjusted EBITDA: $217 million, impacted by a $10 million increase in security losses.
• EBITDA Margin: 18%, down 80 basis points from the same quarter last year.
• Free Cash Flow: $135 million.
• Revenue Guidance for 2024: Over $5 billion, reflecting $100 million currency headwinds.
• Adjusted EBITDA Guidance for 2024: $900-$920 million.
• Free Cash Flow Guidance for 2024: $320-$360 million.
• Share Repurchases: $125 million year-to-date, targeting over $200 million in 2024.
• Interest Expense: $63 million in the quarter.
• Effective Tax Rate: Approximately 28%.
• EPS: $1.51 per share.
• Share Count Reduction: 5% year over year.

• Warning! GuruFocus has detected 4 Warning Signs with BCO.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Brink's Co (NYSE:BCO) achieved a total organic growth of 13% in the third quarter, with ATM Managed Services and Digital Retail Solutions growing 26% organically.
• The company reported $135 million in free cash flow, driven by better asset efficiency and working capital improvements.
• The Brink's Co (NYSE:BCO) increased its organic growth expectations for the remainder of the year to more than 20% for AMS and DRS revenues.
• The company executed $125 million in share repurchases year-to-date, reducing its share count by 5% year over year.
• The Brink's Co (NYSE:BCO) announced a significant partnership with Sainsbury's in the UK, increasing its ATM network by about 15% in the region.

Negative Points

• The company faced an 11% FX headwind due to the strength of the US dollar, particularly impacting high-margin Latin American businesses.
• Adjusted EBITDA was impacted by a $10 million increase in security losses during the quarter.
• The Brink's Co (NYSE:BCO) experienced a delay in productivity in North America due to issues with deploying a new routing system.
• Free cash flow guidance was reduced by $100 million due to currency devaluation, particularly from the Mexican peso.
• The global services business faced market softness, with high gold and silver prices reducing demand for movement and storage of precious metals.

Q & A Highlights

Q: Could you outline the relative impact of softer global services demand versus the increase in your ATM Managed Services (AMS) and Digital Retail Solutions (DRS) assumptions? A: Mark Eubanks, CEO: The Global Services business was a headwind in the quarter relative to expectations, particularly in North America. Despite this, we expect full-year growth in the business. The lack of volatility in precious metals has impacted demand, but we hope for some lift in Q4. AMS and DRS continue to show strong growth, contributing positively to our overall performance.

Q: Is the long-term free cash conversion target of near 50% still achievable in 2025? A: Kurt McMaken, CFO: We believe reaching the long-term target is intact, but we won't specify a timeline. We continue to work towards improving our cash conversion.

Q: Should we consider the recent FX movements as an incremental headwind for Q4 revenue guidance? A: Mark Eubanks, CEO: The recent FX movements are unprecedented and tied to the election. We base our guidance on rates at the end of the quarter, and while the situation has worsened slightly, we will see how it settles.

Q: Can you clarify the incremental FX headwind for the third and fourth quarters? A: Mark Eubanks, CEO: We expect a $100 million impact to guidance, with $50 million year-to-date through Q3 and another $50 million in Q4. The Mexican peso has been a significant factor, impacting our high-margin Latin American segment.

Q: How could new leadership in the Global Services business improve performance beyond external market conditions? A: Mark Eubanks, CEO: New leadership will take a fresh look at the business, markets, and customer coverage. This includes strengthening operational cadence and improving talent and compliance culture, which should enhance performance.

Q: Can you provide more details on the $10 million security losses in Q3? A: Mark Eubanks, CEO: The loss was due to a theft in Latin America, currently under investigation. It is a timing issue between Q3 and Q4, similar to a previous incident in Canada. We do not expect further impact this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.