The Brink's Company (BCO) Earnings

Management highlights

- Overall Quarterly Financial Performance * Total company revenue increased 7% year-over-year, with 4% constant currency organic growth and a 3% foreign currency tailwind. * Adjusted EBITDA rose 11% year-over-year to $257 million, with EBITDA margins expanding 70 basis points to a record 18.5% for the quarter, with margin expansion across all segments. * Trailing 12-month free cash flow reached $468 million, with a 46% conversion rate from EBITDA, above the full-year target framework. EPS grew 18% year-over-year to $2.13. - NCR Atlios Acquisition Progress * Considerable regulatory progress has been made, pushing the estimated closing timeline forward to early Q1 2027. * The transaction received over 99% approval from both Brinks and NCR Atlios shareholders. Early termination of U.S. antitrust review has been granted, and antitrust clearances have also been received in Brazil, India, Turkey, and Colombia. * Foreign direct investment clearance has been obtained across most of the Eurozone (including France, Germany, Spain, Italy, and the UK), and over 80% of required U.S. money transmitter licensing approvals are complete. * Dedicated integration planning is underway, while both companies maintain focus on standalone performance until closing. - Recent Strategic Customer Wins * A large North American retail chain signed an enterprise DRS agreement covering over 5,000 U.S. locations, doubling Brinks' share of wallet with the customer and creating immediate routing and density synergies with NCR Atlios' existing Allpoint ATM network. * Brinks won a full ATM outsourcing agreement with a European bank consortium, which will go live in H2 2026, and a major AMS contract with Mandiri Bank, Indonesia's largest national bank, servicing over 13,000 ATMs. - Margin and Operational Improvement * Trailing 12-month North America segment EBITDA margins reached 19.8%, nearing the company's intermediate 20% margin target. Management views 20% as a milestone, not a ceiling, with further expansion expected from network density gains and post-acquisition synergies. * 39% of incremental organic revenue converted to incremental EBITDA in the quarter, driving overall margin expansion. The company continues to prioritize productivity initiatives and a shift to less capital-intensive recurring revenue offerings.

Guidance

- Full-year 2026 core framework is maintained: mid-single-digit total organic revenue growth, EBITDA margin expansion of 30 to 50 basis points, and 40% to 45% EBITDA-to-free cash flow conversion. Full-year 2026 adjusted EBITDA expectations were raised, as year-to-date results are above the midpoint of prior guidance. - Third quarter 2026 guidance expects total revenue between $1.365 billion and $1.415 billion, with a slight sequential acceleration in organic growth driven by AMSDRS growth toward the top end of its full-year mid-to-high teens organic growth framework. Adjusted EBITDA is guided between $263 million and $283 million, representing approximately 60 basis points of margin expansion to 19.6% at the midpoint. EPS is expected between $2.23 and $2.63. - Capital allocation guidance: Standalone net leverage is targeted to reach ~2.3x by the end of 2026 to position for the acquisition. Post-closing, the primary use of free cash flow will be preemptive debt paydown, with a target of net leverage below 3x by the end of 2027. Once net leverage reaches the 2-3x target range, at least 50% of free cash flow will return to shareholders via the prior capital allocation framework.

Segment performance

1. Cash and Valuables Management (CVM): Organic growth was slightly positive in the quarter. Strong global services volume and pricing discipline were offset by conversions to the AMS DRS segment. No absolute revenue amount was disclosed for the quarter, and it is the slower-growing legacy segment of the business. 2. ATM Managed Services and Digital Retail Solutions (AMSDRS): Organic revenue grew 14% year-over-year, adding $50 million in organic revenue for the quarter. This marked the 14th consecutive quarter of mid-teens or better organic growth, with total segment revenue more than doubling over the period to over $1.5 billion. The segment contributed 100% of the company's total $54 million in quarterly organic growth, making it the primary driver of the company's top-line expansion.

Risks & headwinds

- The NCR Atlios acquisition remains subject to completion of remaining customary closing conditions and additional regulatory approvals in a small number of remaining antitrust, foreign direct investment, and licensing jurisdictions, which could delay the closing timeline beyond the current target of early Q1 2027. - Argentina's ongoing austerity measures and depressed consumption create a near-term headwind for Latin American regional results, though management views the impact as manageable and the long-term business as attractive. - Forward-looking results, including post-acquisition synergy and growth targets, are subject to risks that actual performance could differ materially from projections, as disclosed in the company's SEC filings and press release. - Large-scale national bank outsourcing of ATM networks in North America has not yet materialized at scale, creating uncertainty around the timing of this large potential growth opportunity.

Analyst Q&A

• Q: Can you break down 14% AMSDRS organic growth between pricing vs volume, and how much second half growth is backed by contracted business vs pipeline? What drove regional growth deceleration across North America, Latin America, and Europe, and when will improvement come?

  A: 14% AMSDRS growth is overwhelmingly volume-driven, with pricing contributing very little to the overall growth number. Most volume growth comes from new customer wins and expansion of share of wallet with existing customers. Growth deceleration in Q2 was almost entirely driven by customer-driven timing delays that pushed large deployments from Q2 into the second half. Latin America saw a small headwind from depressed consumption in Argentina due to government austerity, but AMSDRS growth still hit 34% year-over-year in the region, and management expects growth to accelerate in the second half as delayed deployments come online. Management has high visibility into contracted second half growth from recently announced large wins, including the 5,000-location U.S. DRS deal, European bank consortium ATM contract, and Mandiri Bank Indonesia deal.

• Q: You are nearing your 20% intermediate North America EBITDA margin target. Is 20% a ceiling, or can margins expand further? How will the combined Brinks-NCR Atlios business drive incremental margin gains beyond obvious cost synergies?

  A: 20% is a milestone, not a long-term ceiling for margins. As AMSDRS grows and the company's route network becomes denser, network effects drive higher incremental margins by improving asset and labor productivity, both for new locations and existing CVM customers converted to DRS. Beyond formal cost synergies, combining the two networks will enable better optimization of field technician routing and scheduling. This not only lowers per-service costs but also improves service quality for customers, which drives further growth and creates a virtuous cycle of higher margins and faster expansion.

• Q: What inning is ATM outsourcing for regional and national banks in the U.S. and Europe, and could adoption accelerate in coming years?

  A: The ATM outsourcing trend is still in early innings across both regions, with a total available market 2-3x the current penetrated size over the next decade. Europe has seen more rapid adoption, with large full-network outsourcings and the emergence of bank consortium models that both favor Brinks' full-service offering. In North America, adoption has been faster among small community banks and credit unions, but large national banks have not yet widely moved to full outsourcing. Management expects large bank outsourcing to become a major source of incremental growth over the long term, and the combined Brinks-NCR Atlios best-in-class offering positions the company to win this future business.

• Q: What are the longest-lead regulatory items for the NCR Atlios acquisition, and could closing happen earlier than early Q1 2027?

  A: All remaining regulatory processes are progressing positively, with remaining approvals pending in a small number of European, Latin American, and Asia Pacific jurisdictions. There are no major outstanding issues blocking closing, but most regulatory processes are confidential. Closing could move earlier than the current early Q1 2027 target only if remaining regulatory approvals are completed faster than the current expected timeline.