EX-99.2 4 exhibit_99-2.htm EXHIBIT 99.2 exhibit_99-2.htm

The Brink’s Company
First-Quarter 2013 Earnings
Conference Call
 NYSE:BCO
 April 25, 2013
 
Exhibit 99.2
 
 

 
Forward-Looking Statements
These materials contain forward-looking statements. Actual
results could differ materially from projected or estimated
results. Information regarding factors that could cause such
differences is available in today's release and in The Brink’s
Company’s most recent SEC filings.
 
Information discussed today is representative as of today
only and Brink's assumes no obligation to update any
forward-looking statements. These materials are
copyrighted and may not be used without written permission
from Brink's.
 
2
 
 

 
The Brink’s Company
Ed Cunningham
Director - Investor Relations
 
 

 
Highlights of First-Quarter Results
GAAP EPS $.04 vs $.43
 Includes theft loss ($.24 charge)
Non-GAAP Summary
 EPS $.35 vs $.67
 Includes theft loss ($.24 charge)
 Segment margin 5.2% vs 8% (7.2% ex theft loss)
 Revenue up 4% (6% organic growth)
Note: See reconciliation to GAAP results in Appendix
4
 
 

 
The Brink’s Company
Tom Schievelbein
Chairman, President and
Chief Executive Officer
 
 

 
CEO Overview
 International profits drive better-than-expected results
  Latin America, Asia-Pacific results offset theft loss and
 North America profit decline
 Full-year outlook affirmed
  Segment margin: 6% to 6.5%
  Organic revenue growth: 5% to 8%
6
Note: See reconciliation to GAAP results in Appendix
 
 

 
Strategy Update
 Maximize profits in North America and Europe
  North America guidance reduced
  Europe on track
 Grow Latin America
  Q1 stronger than expected
  Expect full-year profit growth
7
 
 

 
Strategy Update
 Exit underperforming markets
  Guarding operations in France and Morocco
  CIT markets in Germany, Poland and Turkey
 Acquisitions
  Chile - acquired remaining 26%
 Adjacencies
  Rede Trel acquisition complete
  Brink’s Money Card rollout
8
 
 

 
The Brink’s Company
Joe Dziedzic
Vice President and Chief
Financial Officer
Review and Outlook
 
 

 
1Q13 Non-GAAP Results
($ millions, except EPS)
Segment
Operating Profit
Revenue
 
 
 
 
Margin
8.0%
 
5.2%
EPS
Note: See reconciliation to GAAP results in Appendix
10
 
 

 
Non-GAAP EPS: 1Q12 Versus 1Q13
Segment
Operating
Profit
Non-Segment
Expense
Interest
Expense,
Net
Non-
Controlling
Interest
Tax
Rate/Diluted
Shares
1Q12
1Q13
Note: See reconciliation to GAAP results in Appendix
$(0.03) Profit
 decrease
 excluding
 items below
$(0.24) Belgium theft
 loss
$(0.04) Foreign
 currency
Amounts may not add due to rounding
$(0.01) Tax rate
$(0.01) Diluted shares
11
$0.03 Reduction in
benefit costs
 
 

 
Organic
 
 
 
 
 
Growth
 
10%
 
6%
 
Revenue
1Q13 Non-GAAP Segment Results
($ millions)
Revenue
Segment Operating Profit
 
 
 
 
 
 
Margin
 
 
8.0%
 
5.2%
Segment Operating Profit
 6% Organic growth, 2% unfavorable
 currency impact
 8% Organic growth in International
 North America flat
 Unfavorable currency impact of $3
 North America down $8
 International down $17
 $19 Belgium loss impacts North America
 segment by $4 and International by $15
12
Note: See reconciliation to GAAP results in Appendix
 
 

 
Capital
Expenditures
and Capital
Leases(b)
Non-GAAP Cash Flow, Capital Investment and Net Debt
13
($ millions)
(a) See reconciliation to GAAP results in Appendix
(b) From continuing operations
Non-GAAP
CFOA(a) (b)
$34
$39
North
America
International
Net Debt (a)
13
$232
$(6)
$336
$9
 
 

 
2013 Outlook
 Organic growth 5% to 8%
 Unfavorable currency impact 2% to 4%
Assumptions vs 2012
14
April 25, 2013
Revenue
Non-GAAP Segment Margin Rate
 North America 2% to 3%
 International 7.0% to 8.0%
 Total segment 6.0% to 6.5%
Other Metrics
 Non-segment expense $41
 Interest expense $27 to $29
 Non-controlling interest $17 to $20
 Tax rate 36% to 39%
 Capital expenditures / leases flat at $205
 Growth in Latin America, North America and Europe flat
 Venezuela devaluation full year impact of $130 million,
 3% of total revenue
 Continued price/volume pressure partially offset by cost
 actions
 Decline from productivity spend, Venezuela devaluation
 and slight decline in Europe offset by Latin America
 growth
 Slight decrease
 Increase from recent acquisitions
 Continued focus on returns
 
 

 

The Brink’s Company
First-Quarter 2013 Earnings
Conference Call
 NYSE:BCO
 April 25, 2013
 
 
 

 
Appendix - Legacy Liabilities
 
 

 
 Legacy Liabilities at December 31, 2012
 
Estimated Contributions to U.S. Plans
 
 
 
2012A
 
2013
 
2014
 
2015
 
2016
 
2017
   
 
US Pension
$ 37
 
 14
 
 29
 
 42
 
 44
 
 38
 
 
 
UMWA
 0
 
 0
 
 0
 
 0
 
 0
 
 0
 
 
 
Black Lung/Other
 7
 
 5
 
 5
 
 5
 
 4
 
 4
 
 
 
 Total
$ 44
 
 19
 
 34
 
 47
 
 48
 
 42
 
 
($ millions)
$275
Under-
funding
Note: Above amounts based on actuarial assumptions at December 31, 2012.
17
Under-
funding
$257
 
 

 
Appendix
 Non-GAAP Reconciliations
 
 

 
 
(a) To eliminate results of additional European operations we intend to exit in 2013. Operations do not currently meet requirements to be classified as
     discontinued operations.
(b) To eliminate a $1.1 million adjustment to the amount of gain recognized on a 2010 business acquisition in Mexico as a result of a favorable
     adjustment to the purchase price received in the first quarter of 2013.
(c) To eliminate currency exchange losses related to a 16% devaluation of the official exchange rate in Venezuela from 5.3 to 6.3 bolivar fuertes to the
     U.S. dollar.
(d) To eliminate employee benefit settlement losses in Mexico.
(e) To eliminate expenses related to U.S. retirement plans.
(f)  To adjust effective income tax rate in the interim period to be equal to the midpoint of the estimated range of the full-year non-GAAP effective income
     tax rate. The midpoint of the estimated range of the full-year non-GAAP effective tax rate for 2013 is 37.5%.
GAAP
Basis
Additional
European
Operations to
be Exited (a)
Gains on
Acquisitions
and Asset
Dispositions (b)
Monetary Asset Re
-measurement
losses in
Venezuela (c)
Employee
Benefit
Settlement &
Severance
Losses (d)
U.S.
Retirement
Plans (e)
Adjust
Income Tax
Rate (f)
Non-
GAAP
Basis
First Quarter 2013
Revenue:
Latin America
$
 412.9
 
 
 
 
 
 
 412.9
EMEA
 286.0
 (3.9)
 
 
 
 
 
 282.1
Asia Pacific
 42.9
 
 
 
 
 
 
 42.9
International
 741.8
 (3.9)
 
 
 
 
 
 737.9
North America
 235.6
 
 
 
 
 
 
 235.6
Revenues
$
 977.4
 (3.9)
 
 
 
 
 
 973.5
Operating profit:
International
$
 35.6 
 1.2
 
 13.4
 0.3
 
 
 50.5
North America
 (2.4)
 
 
 
 
 2.9
 
 0.5
Segment operating profit
 33.2
 1.2
 
 13.4 
 0.3
 2.9
 
 51.0
Non-segment
 (17.0)
 
  (1.1)
 
 
 10.5
 
 (7.6)
Operating profit
$
 16.2
 1.2
 (1.1)
 13.4
 0.3
 13.4
 
 43.4 
 

 
Amounts attributable to Brink’s:
 

 
Income from continuing operations
$
 2.1
 1.3
 (1.1)
 8.4
 0.2
 8.4
 (2.2)
 17.1
Diluted EPS - continuing operations
 0.04
 0.02
 (0.02)
  0.17
 
 0.17
 (0.04)
 0.35
Non-GAAP Reconciliations - 1Q13
Amounts may not add due to rounding.
19
 
 

 
GAAP
Basis
Additional
European
Operations to
be Exited (a)
Gains and Losses
on Acquisitions and
Dispositions (b)
Employee Benefit
Settlement &
Severance Losses (c)
U.S.
Retirement
Plans (d)
Adjust
Income Tax
Rate (f)
Non-
GAAP
Basis
First Quarter 2012
Revenue:
Latin America
$
 386.3
 
 
 
 
 
 386.3
EMEA
 280.4
 (3.8)
 
 
 
 
 276.6
Asia Pacific
 37.6
 
 
 
 
 
 37.6
International
 704.3
 (3.8)
 
 
 
 
 700.5
North America
 236.4
 
 
 
 
 
 236.4
Revenues
$
 940.7
 (3.8)
 
 
 
 
 936.9
Operating profit:
International
$
 65.2 
 1.2
 
 0.8
 
 
 67.2
North America
 5.8
 
 
 
 2.2
 
 8.0
Segment operating profit
 71.0
 1.2
 
 0.8 
 2.2
 
 75.2
Non-segment
 (24.3)
 
  
 
 14.7
 
 (9.6)
Operating profit
$
 46.7
 1.2
 
 0.8
 16.9
 
 65.6 
 
 
Amounts attributable to Brink’s:
 
 
Income from continuing operations
$
 20.9
 1.3
 (1.2)
 0.6
 10.2
 0.8
 32.6
Diluted EPS - continuing operations
 0.43
 0.02
 (0.02)
  0.01
 0.21
 0.02
 0.67
Non-GAAP Reconciliations - 1Q12
Amounts may not add due to rounding. See page 21 for notes.
20
 
 

 
 
(a) To eliminate results of additional European operations we intend to exit in 2013. Operations do not currently meet requirements to be classified as discontinued operations.
(b) To eliminate:
      • Gains related to the sale of investments in mutual fund securities ($1.9 million in the first quarter and $0.5 million in the third quarter). Proceeds from the sales were used to fund the settlement
        of pension obligations related to our former chief executive officer and chief administrative officer.
      • Gains and losses related to business acquisitions and dispositions. A $0.9 million gain was recognized in the second quarter and a $0.1 million loss was recognized in the third quarter. In the
        fourth-quarter of 2012, tax expense included a benefit of $7.5 million related to a reduction in an income tax accrual established as part of the 2010 acquisition of subsidiaries in Mexico, and
        pretax income included a $2.1 million favorable adjustment to the local profit sharing accrual as a result of the change in tax expectation.
      • Third quarter gain on the sale of real estate in Venezuela ($7.2 million).
      • Selling costs related to certain operations expected to be sold in the near term and costs related to an acquisition completed in first quarter 2013. A $0.8 million loss was recognized in the fourth
         quarter.
(c) To eliminate employee benefit settlement and acquisition-related severance losses (Mexico and Argentina). Employee termination benefits in Mexico are accounted for under FASB ASC
      Topic 715,
Compensation - Retirement Benefits.
(d) To eliminate expenses related to U.S. retirement plans.
(e) To eliminate tax benefit related to change in retiree health care funding strategy.
(f) To adjust effective income tax rate in the interim period to be equal to the full-year non-GAAP effective income tax rate. The full-year non-GAAP effective tax rate for 2012 was 36.3%.
Non-GAAP Reconciliations - Full Year 2012
GAAP
Basis
Additional
European
Operations to
be Exited (a)
Gains and
Losses on
Acquisitions &
Dispositions (b)
Employee Benefit
Settlement &
Severance
Losses (c)
U.S.
Retirement
Plans (d)
Tax Benefit on
change in health
Care Funding
Strategy (e)
Adjust
Income Tax
Rate (f)
Non-
GAAP
Basis
Full Year 2012
Revenue:
Latin America
$
 1,579.4
 
 
 
 
 
 
 1,579.4
EMEA
 1,158.4
 (15.4)
 
 
 
 
 
 1,143.0
Asia Pacific
 158.9
 
 
 
 
 
 
 158.9
International
 2,896.7
 (15.4)
 
 
 
 
 
 2,881.3
North America
 945.4
 
 
 
 
 
 
 945.4
Revenues
$
 3,842.1
 (15.4)
 
 
 
 
 
 3,826.7
Operating profit:
International
$
 227.6
 5.4
 (8.5)
 3.9
 
 
 
 228.4
North America
 32.5
 
 
 
 8.8
 
 
 41.3
Segment operating profit
 260.1
 5.4
 (8.5)
 3.9 
 8.8
 
 
 269.7
Non-segment
 (88.9)
 
  (0.8)
 
 47.4
 
 
 (42.3)
Operating profit
$
 171.2
 5.4
 (9.3)
 3.9
 56.2
 
 
 227.4 
 

 
Amounts attributable to Brink’s:
 

 
Income from continuing operations
$
 106.8
 5.7
 (14.0)
 2.8
 33.8
 (21.1)
 
 114.0
Diluted EPS - continuing operations
 2.20
 0.12
 (0.29)
  0.06
 0.70
 (0.43)
 
 2.35
Amounts may not add due to rounding.
21
 
 

 
Non-GAAP Reconciliations - Cash Flows
22
(a) To eliminate the change in the balance of customer obligations related to cash received and processed in certain of our secure Cash
 Management Services operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to
 customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our
 liquidity and capital resources.
(b) To eliminate cash flows related to our discontinued operations.
Non-GAAP cash flows from operating activities is a supplemental financial measure that is not required by, or presented in accordance with GAAP.
The purpose of the non-GAAP cash flows from operating activities is to report financial information excluding the impact of cash received and
processed in certain of our secure cash management service operations and without cash flows from discontinued operations.  Brink’s believes
these measures are helpful in assessing cash flows from operations, enable period-to-period comparability and are useful in predicting future
operating cash flows. Non-GAAP cash flows from operating activities should not be considered as an alternative to cash flows from operating
activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.
NON-GAAP CASH FLOWS FROM OPERATING ACTIVITIES - RECONCILED TO AMOUNTS REPORTED UNDER U.S. GAAP
 
First Quarter
 
 
2013 
 
 
2012 
Cash flows from operating activities - GAAP
$
 3.3
 
$
 (16.4)
Decrease (increase) in certain customer obligations (a)
 
 (16.8)
 
 
 18.8
Cash outflows (inflows) related to discontinued operations (b)
 
 7.1
 
 
 6.6
 
 
 
 
 
 
 
 
Cash flows from operating activities - Non-GAAP
$
 (6.4)
 
$
 9.0
 
 

 
NET DEBT RECONCILED TO GAAP
  March 31,
 
December 31,
 
  2013 
 
2012 
Debt:
 
 
 
 
 
 
Short-term debt
 
$
 71.1
 
 26.7 
 
Long-term debt
 
 
 438.6
 
 362.6 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 Cash and cash equivalents
 
 
 234.8
 
 201.7 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents available for general corporate purposes
 
 
 174.2 
 
 157.7 
 
 
 
 
 
 
 
 
 
 
 
Net Debt
 
$
 335.5 
 
  231.6 
(a) Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of
 time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate
 purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
Net Debt is a supplemental financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of
our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be
considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance
sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP financial measure, to Debt, which is the most directly comparable financial
measure calculated and reported in accordance with GAAP. Net Debt excluding cash and debt in Venezuelan operations was $395 million at
March 31, 2013, and $280 million at December 31, 2012.
Non-GAAP Reconciliations - Net Debt
23