BRINKS CO Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Growth: Fourth quarter delivered 11% organic growth, 12% full-year organic growth. AMS DRS grew 23% organically in both Q4 and the full year, marking the twelfth consecutive quarter of double-digit growth in key lines of business.
• EBITDA and EPS: Delivered $912 million of EBITDA in 2024 with a record high EBITDA margin of 18.2%. EPS was $7.17, with an approximate 4% reduction in share count year over year due to share repurchases.
• Strategic Focus: Focused on improving revenue mix, streamlining operations, and compounding free cash flow. Added three global executives to strengthen the leadership team.
• Productivity: Direct labor as a percent of revenue down 310 basis points over two years. Routing efficiency and money processing improved, with employee safety and customer service also enhanced.
• Guidance Introduction: Introduced new guidance methodology for quarterly and full-year metrics, including revenue, adjusted EBITDA, and EPS.

Segment Performance

• North America: Full-year organic growth was 2%, with adjusted EBITDA up 60 basis points. Q4 saw the highest total and AMS DRS organic growth rates. The North American market remains stable with a solid pipeline of opportunities.
• Latin America: Total was down 2% due to volatile FX. AMS DRS grew double digits organically over the full year. In 2025, meaningful FX headwinds are expected, and reported organic growth is anticipated to decelerate.
• Europe: Organic growth was 7% in 2024, with total adjusted EBITDA growing slightly faster at 9%. Growth was primarily related to AMS DRS. Organic growth was 6% in Q4.
• AMS DRS: Grew 23% organically in both Q4 and the full year, now representing 24% of total revenue and targeting 25-27% by year-end. It had double-digit organic growth in every segment, with a healthy backlog.
• Cash and Valuables Management (CVM): Grew 7% in Q4 and 9% for the full year. Global Services stabilized in Q4, and precious metals shipments picked up late in the quarter.

Guidance

• Full-Year 2025: Targets mid-single-digit total organic growth, with mid to high teens organic growth in AMS DRS. Anticipates ~5% FX headwind over the full year. Sees 30-50 basis points margin expansion. Free cash flow conversion in line with 2024, with at least 50% of cash returned to shareholders.
• First Quarter 2025: Expect revenue of $1.225 billion at midpoint, mid-single-digit organic growth, and 6% FX headwind. Adjusted EBITDA expected between $190 million and $210 million. EPS expected between $1.10 and $1.40.

Risks

• Foreign Exchange Volatility: Impact on the Latin American segment due to currency fluctuations.
• Economic Conditions: Potential impacts from global economic slowdowns on non-Global Services businesses.
• Input Costs: Need to monitor and take actions if input costs become a significant issue.

Question and Answer

Q: George Tong from Goldman Sachs asked about the growth of the cash and valuables management business.

A: Mark Eubanks stated that volumes continue to improve, price inflation is positive across regions, and Argentina inflation moderation is contributing to the growth.

Q: Sam Kutz Worm from William Blair inquired about the components of growth for CIT and VGS businesses.

A: Mark Eubanks said CVM and related businesses are expected to be in the low single digits growth range.

Q: Tyler Barish from Truist asked about the source of growth in AMS DRS, specifically legacy conversions vs new business wins.

A: Mark Eubanks mentioned that most growth in AMS DRS is from new business, with less than a third from legacy conversions.

Q: Tyler Barish asked about the impact of the penny being discontinued on the business.

A: Kurt McMaken said the discontinuation of the penny is immaterial to the business, and Mark Eubanks added it's not an issue and may even be a benefit given the company's role in physical currency movement