Brink's Q4 2024 Earnings Report

Brink's EPS Results

• Actual EPS: $2.12
• Consensus EPS: $1.86
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: N/A

Brink's Revenue Results

• Actual Revenue: $1.26 billion
• Expected Revenue: $1.25 billion
• Beat/Miss: Beat by +$10.85 million
• YoY Revenue Growth: N/A

Brink's Announcement Details

• Quarter: Q4 2024
• Date: 2/26/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 26, 2025
• Conference Call Time: 9:00AM ET

The Brink's (NYSE:BCO) Co. engages in providing cash management services, digital retail solutions, and ATM managed services. It operates through the following geographical segments: North America, Latin America, Europe, and Rest of World. The North America segment operates in the U.S. and Canada. The Latin America segment refers to the operations in Latin American countries. The Europe segment relates to operations in European countries. The Rest of World segment focuses on the operations in the Middle East, Africa, and Asia. The company was founded by Perry Brink and Fidelia Brink on May 5, 1859 and is headquartered in Richmond, VA.

Brink's Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the Brink's Fourth Quarter and Full Year twenty twenty four Earnings Presentation. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. This call and the Q and A session will contain forward looking statements and actual results could differ materially from projected or estimated results.

[Operator]

Information regarding factors that could cause such differences are available in the footnotes of today's press release and in the company's most recent SEC filings. The information presented and discussed on this call is represented of today only. Brink's assumes no obligation to update any forward looking statements. This call is copyrighted and may not be used without written permission from Brink's. I would now like to turn the call over to your host, Mr.

[Operator]

Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.

[Jesse Jenkins, Head & Vice President of Investor Relations at The Brink's Company]

Thanks and good morning. Here with me today are CEO, Mark Eubanks and CFO, Kurt McMacken. This morning, Brinks reported fourth quarter and full year twenty twenty four results on a GAAP, non GAAP and constant currency basis. Most of our comments today will be focused on our non GAAP results. These non GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented.

[Jesse Jenkins, Head & Vice President of Investor Relations at The Brink's Company]

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. Reconciliations of non GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation and in this morning's eight K filing, all of which can be found on our website. I will now turn the call over to Brink's CEO, Mark Eubanks.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Thanks, Jesse. Good morning and thank you for joining us. Starting on Slide three, we delivered total organic growth of 11% in the fourth quarter and 12% in the full year. ATM Managed Services and Digital Retail Solutions or AMS DRS grew 23% organically in both Q4 and the full year. This marks the twelfth consecutive quarter of double digit growth rates in these key lines of business and our growth outlook remains positive.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

These end markets are growing, our customers continue to value our offerings and we continue to capitalize on a robust global pipeline of opportunities. Cash and valuables management or CVM grew organically 7% in the fourth quarter and 9% for the full year. Our global services business, which has been softer over the last few quarters, ended 2024 as a bright spot in most markets. With increasing volatility in the precious metals markets, we are well positioned to benefit from rebounding demand in 2025. As we forecasted in our last earnings call, the U.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

S. Dollar strengthened over the end of twenty twenty four and created a 10% headwind in the period, almost entirely in our higher margin Latin American segment. Despite this impact, we delivered $912,000,000 of EBITDA in 2024 and expanded our EBITDA margins by 40 basis points to a record high level of 18.2%. EPS of $7.17 included an approximate 4% reduction in share count year over year as we opportunistically executed our share repurchase program. Our strong fourth quarter performance was punctuated by robust free cash flow.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We delivered $400,000,000 for the full year and over $300,000,000 in the fourth quarter alone. Stronger than anticipated performance in the quarter was primarily the result of continued progress on working capital efficiencies, including accounts receivable collection and payables management. Kurt will have much more on free cash flow later in the call. From a strategic perspective, we're focused on creating value by improving our revenue mix, streamlining our operations and compounding free cash flow that we can return to our shareholders. In 2024, AMS DRS grew 200,000,000 and now represents 24% of our total revenue at the high end of our previous expectations.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We also continue to strengthen our global leadership team by adding three uniquely experienced global executives. One, to lead Brink's global services a second, to lead the Brink's business system, our continuous improvement program office and a third, to lead our Latin American segment. These leaders bring diverse experiences and successful track records from blue chip companies like Eaton, GE, Otis and Honeywell. We are already seeing the benefits in their leadership in areas of growth, continuous improvement, ethics and compliance and productivity enhancements, all of which will help us continue our growth and margin expansion progress into 2025 and beyond. We also continue to diligently execute our capital allocation framework, reducing our net leverage in 2024 to 2.8 times EBITDA, while returning approximately $250,000,000 to our shareholders through our repurchase program and our dividend growth policy.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We remain laser focused on accelerating this strategy, which is forming the basis of our framework for 2025, a continuation of the last three years. Next year, we plan to grow total organic revenue in mid single digits, highlighted by mid- to high teens organic growth in AMS DRS. Mixed benefits and productivity actions continue to help us deliver a 30 to 50 basis point expansion of EBITDA margins. We plan to convert 40% to 45% of EBITDA into free cash flow, returning about half of that cash to our shareholders. While our framework will sound familiar, investors have told us they would like to see additional data points so they can better understand the impact of the changing foreign currency environment in our results.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In order to provide as much clarity as possible, we're introducing additional guidance for the first quarter, which I'll explain further later in the presentation. Turning to Slide four, you can see the specifics on the fourth quarter. Constant currency revenue growth was 11% and total revenue growth was 1% as we exceed $5,000,000,000 of full year revenue for the first time in the company's history. Adjusted EBITDA was roughly flat to the previous year on a reported basis and was up 11% on a constant currency basis, reflecting strong productivity and the benefits of AMS DRS growth. While EPS benefited from a lower tax rate, it was down compared to prior year as we lacked benefits of a previously discussed marketable security gain in Q4 of twenty twenty three that we laid out in our initial 2024 guidance.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

$1,000,000,000,000 12 month free cash flow was also flat to the previous year with conversion from adjusted EBITDA of 44%, reflecting EBITDA growth and improved working capital management. Turning to Slide five, I thought it'd be helpful to walk through what we're seeing in each of our reported segments. Starting with North America on the left, organic growth was 2% for the full year and adjusted EBITDA was up 60 basis points for the full year. We exited the year on a strong note in Q4, posting our highest total and AMSDRS organic growth rates of the year. While AMSDRS was consistently strong all year, we did see our global service businesses return to growth late in the quarter and we're bullish on the potential that that business has into early twenty twenty five based on the trends in the precious metals markets.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Overall, the North American market remains stable and we continue to work on a solid pipeline of opportunities across all lines of business as we plan for continued growth acceleration into next year. Latin America was down 2% in total as we managed through a volatile FX picture. Similar to North America, we ended the year at the high point of organic growth rates even when excluding the impact of Argentina inflationary pricing. AMS DRS grew double digits organically over the full year. And despite severe currency impacts on the year, adjusted EBITDA margin in the region were roughly flat compared to prior year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In 2025, we expect meaningful year over year FX headwinds as we continue to lap the previously stronger Latin American currency basket, especially in the first half of the year. We also anticipate reported organic growth to decelerate as inflation has begun to moderate in Argentina this year. We view this as really good progress for the Argentinean economy as well as our business. In the rest of the segment, our organic growth rate should remain somewhat consistent in the mid single digits over the course of 2025. We also plan to take some restructuring actions in this segment early in the year to drive productivity, protect margins and better realize the AMS DRS operating model that has grown over the last few years.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Europe grew 7% organically in 2024 with total adjusted EBITDA growing slightly faster at 9%. Growth in the region was primarily related to AMS DRS as Europe continues to be a strong conversion market with customers moving from traditional services to AMS DRS. Organic growth was 6% in Q4 as we begin to lap strong comparisons to the prior year, which are expected to continue into the new year. Relatively modest growth and margin expansion in our Rest of World segment was impacted early in the year by the previously discussed softness in our Global Services business. As is the case with other regions, we saw good momentum in Global Services late in the quarter and have seen positive momentum into early twenty twenty five.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

On Slide six, you can see our progress growing adjusted EBITDA and expanding margins over the years in North America. On the right side, you can see a few of the drivers of the performance. First, we've improved the quality of our revenue considerably. This includes both growth in higher margin AMS and DRS revenue as well as portfolio rationalization efforts in 2023 that carried into early twenty twenty four. We've improved the quality of our customer base by eliminating lower margin accounts either through price realization, a conversion to DRS or AMS or in some situations, a decision to move on from unprofitable accounts.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We also delivered considerable cost productivity across the P and L with the rollout of the Brink's business system. This is the most noticeable in direct labor, our largest expense category. Direct labor as a percent of revenue is down an impressive three ten basis points over the last two years. This productivity is widespread and consistent. During 2024, our major productivity metrics in both routing efficiency and money processing improved year over year every quarter of the year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Maybe most importantly, these efficiency gains happened while we improved employee safety and customer service and quality with a total with our total recordable incident rate continuing to improve both year over year and sequentially in the fourth quarter. The systems and technology investments we discussed last quarter to centralized planning processes and improved messenger routing remain on track for full realization by the middle of twenty twenty five. These actions were necessary to drive improvement in subsequent years and fully realize the benefits of the AMS DRS operating model. I'm confident we're making the necessary investments to move our North American business towards our target of twenty percent EBITDA margins in the coming years. Turning to Slide seven, I'll provide details on revenue by customer offering.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Starting with the chart on the left, you can see that AMS DRS now represents 24% of our total revenue and we're targeting an increase to between twenty five percent and twenty seven percent of the business by year end. AMS DRS is now about 3.5 times bigger than it was when we first began to report it in 2020, and we're expecting mid to high teens organic growth in 2025. Our cash and valuables management business grew 7% organically in the fourth quarter and remained stable looking into next year. A positive in the fourth quarter in CBM was the stabilization of our global services business. Precious metals shipments picked up late in the quarter with additional momentum into early twenty twenty five.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

As we've discussed previously, volatility in these markets can be beneficial and we're seeing this dynamic play out in the cycle. Trends in the global services business move quickly and our ability to leverage pre existing infrastructure and relationships is key to capturing increased revenue and profit during times of volatility. Our capabilities are characterized by a global footprint of secure storage facilities and an established logistics network around the world. As one of the largest global players in the market, we're well positioned to capitalize on this opportunity. In DRS, we're still seeing strong demand patterns and have a healthy backlog of booked business.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Over the year, we increased our installed base of DRS devices by 20%. Operationally, we shortened our selling window and improved time to install devices, ultimately decreasing the time to revenue. Despite strong double digit organic growth in DRS in every segment, we exited the year with an expanded backlog of signed agreements in most countries, providing a good line of sight to our 2025 targets. In The U. S.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Specifically, our backlog more than doubled from the beginning of the year compared to where we exited the year. Our wide range of solutions are driving increasingly diverse end market demand. From single stores to large enterprise operations, we have a DRS solution that can be tailored to meet various customer needs. While our performance has been impressive, the markets are still growing and remain largely underpenetrated, giving us confidence we can continue our growth trajectory in the near term. On the AMS side, we increased ATM counts by double digits, while driving mid teens organic growth across all segments.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Pipelines remain full and we're having active conversations with many financial institutions and retailers across the globe. We're on track for full deployment of the previously announced Sainsbury's deployment in The UK by mid-twenty twenty five, an early result of our onboarding have been positive and ahead of schedule. The pace of growth remains robust across all regions and we recently added a large customer in Asia Pacific that will onboard later this year. As a trusted partner with major banking customers, we're well positioned to capture market share as outsourcing trends continue to accelerate. Overall, I'm pleased with the quarter and the year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

AMS and DRS continue to deliver and have a bright outlook. We remain positioned to benefit from the recovery in our global services business end markets, and we continue to drive operational excellence in our traditional cash and valuables management business. I'm encouraged by our progress, and I look forward to executing on our strategy in 2025. And with that, I'll turn it over to Kurt to discuss the details of the quarter, including a focus on free cash flow and capital allocation. I'll return to discuss our new guidance methodology and take questions.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Kurt?

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Thanks, Mark, and good morning, everyone. Starting on Slide eight, organic revenue grew $133,000,000 with 46% of that growth coming from higher margin AMS and DRS recurring revenues. Currency headwinds amounted to $123,000,000 in the period, primarily from the Argentine peso, Mexican peso and Brazilian real. Organically, adjusted EBITDA grew $28,000,000 or 11. Incremental margins on FX were 24% with the majority of the impact coming from our higher margin Latin American businesses.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Total adjusted EBITDA margins were down 30 basis points from the prior year, impacted by the regional revenue mix impact of foreign exchange. On Slide nine, starting on the left, interest expense was up $8,000,000 year over year to $60,000,000 The increase was driven by higher debt, including growth in DRS provisional capital and slightly higher financing leases. Next year, we expect interest expense to remain roughly flat year over year using current market expectations for two interest rate reductions. Tax expense was $29,000,000 in the quarter, representing a full year effective tax rate of 23% better than our expectations. Tax rate benefit was driven primarily by the impact of inflation adjustments in Argentina and the geographic mix of earnings.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

In 2025, we expect our tax rate to return to a more normalized level of 28%, a consistent reduction in our baseline effective tax rate of about five sixty basis points less than 2021. Interest income was $11,000,000 in the quarter and $49,000,000 for the full year. With inflation rates moderating in Argentina, we expect 2025 interest income to return to the more normalized levels we saw in 2022, especially in the second half of the year. The other category was $6,000,000.28000000 dollars lower than the prior year, primarily from the lapping impact of marketable security gains in the prior year that did not repeat, which are excluded from adjusted EBITDA. Income from continuing operations was $94,000,000 and our diluted share count was down 1,700,000 shares or 4%.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Our EPS in the period was $2.12 per share. Walking back up to adjusted EBITDA, depreciation and amortization was $56,000,000 in the fourth quarter, and we expect total depreciation and amortization to rise modestly in 2025, primarily reflecting increased depreciation from AMS and DRS equipment. In the stock comp and other category, stock based compensation was up about $6,000,000 in Q4. Looking into next year, stock compensation is expected to decrease slightly to between $30,000,000 and $35,000,000 Moving to Slide 10, you can see our free cash flow performance over the last several years. We generated $400,000,000 of free cash flow in 2024 with conversion from adjusted EBITDA of 44%.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

With a focus on continuous improvement, we continue to identify and implement actions to improve cash flow, including from working capital management with a particular focus on more timely collection of trade accounts receivable and optimizing payment terms to vendors. On the trade accounts receivable side, we were able to reduce our DSO by seven days. Over the last several years, we have increased our focus on DSO because it's the largest driver of our working capital performance. We are earlier in our journey on accounts payable, but during the fourth quarter and into 2025, we began to centralize and standardize our procurement teams and processes. We continue to work with certain key vendors to improve payment terms and relationships throughout the year.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

With planned systems and process enhancements underway in 2025, as well as continued growth in AMS DRS revenue, we expect to continue to make methodical progress in these areas in the coming years. Another component of success this year was capital efficiency. Our fleet decreased by over 300 vehicles during 2024 and we reduced our facility count by over 60 locations as we continue to drive operational efficiency with AMS and DRS growth. Cash CapEx of $147,000,000 in 2024 represents 2.9% of total revenue, well below our target of 3.5% to 4%. While we expect this number to increase slightly next year, we expect to remain under 3.5% of revenue in 2025.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

The other major components of free cash flow came in roughly as expected and are expected to remain stable into 2025. Moving to Slide 11. Our capital allocation framework has been consistent over the last several years, and we don't expect any changes next year. As always, we strive to allocate capital prioritizing long term shareholder value. Our framework is designed to compound free cash flow in future years by investing first in organic growth and margin enhancing opportunities.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

We are targeting CapEx as a percentage of revenue below 3.5% next year and plan to continue to drive capital efficiency by shifting our revenue to AMS and DRS. In 2024, we were able to lower our net leverage to 2.8 times moving further into our target range of two to three times. With leverage within our targeted range, over 60% of the cash we generated this year was allocated to shareholder returns. We spent $2.00 $4,000,000 on share repurchases, a 20% increase over last year, reducing share count by over 2,100,000.0 shares. We have also been diligent with our dividend policy, passing along double digit increases in each of the past two years.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

And finally, on M and A, our posture on deals hasn't changed. We have a full pipeline and continue to explore accretive opportunities that have a strong strategic fit, attractive returns and align with our current leverage targets and broader capital allocation framework. Turning to Slide 12, you can see recent capital allocation trends over time. Starting at the top right, shareholder returns have accelerated significantly to be the largest component of our capital allocation in each of the last two years. The increase is primarily driven by share repurchases with dividends remaining roughly flat and total dollars a turn since 2022.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

I'm proud of the success we have had accelerating shareholder returns, while consistently reducing debt levels over the last few years. I'll now hand it back to Mark for guidance and Q and A. Mark?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Thanks, Kurt. Our new approach to guidance intends to provide investors with a full year framework for value generating metrics like organic growth, adjusted EBITDA margin expansion and free cash flow conversion. We also plan to provide quarterly guidance throughout the year for revenue, adjusted EBITDA and EPS in order to provide investors with as much real time information as possible during the year. We believe this approach will allow our investors to focus on the components of our long term strategy that will ultimately create value. This changing guidance methodology is primarily the product of the current volatility that we see in the FX markets.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Now, let's take a look at the numbers. Our full year framework should look very familiar with total organic growth in the mid single digits and AMS DRS organic growth in the mid to high teens, reflecting the continuation of recent performance. If FX rates across our basket of currencies hold at the current levels, we're expecting a little less than 5% headwind over the full year. We expect margin expansion of 30 to 50 basis points as we deal with continued currency pressure in high margin Latin American countries and factor in lower interest income resulting from Argentina inflation moderation. Free cash flow conversion will be in line with 2024 and we're targeting at least 50% of that cash towards shareholder returns with repurchases of shares at similar level as 2024.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In the first quarter, we expect revenue of $1,225,000,000 at the midpoint, reflecting organic growth in the mid single digits and currency is expected to be a headwind of around 6%. The revenue guidance assumes strong continued growth in AMS DRS, positive momentum in global services and reflects current inflation moderation trends in Argentina. Adjusted EBITDA is expected to be between $190,000,000 and $210,000,000 We expect to see year over year margin expansion in all segments outside of Latin America, where we plan to take some restructuring actions to improve margins and right size our business for the balance of the year. EPS is expected to be between $1.1 and $1.4 Looking back over the year, I'm pleased with our performance. AMS and DRS are approaching 25% of our total business and the mix shift is delivering improvements in profit margins and free cash flow generation.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Our productivity journey is well underway as we deploy the Brink's business system deeper into our operations and our cash flow is resilient and growing. Our team of over 68,000 employees is aligned behind our strategy and we're working diligently to enable commerce across the globe. 2025 is off to a great start with continued momentum in our key lines of business of AMS, DRS and global services and I'm excited for the year ahead. With that, we're happy to now take your questions. Operator, please open the line.

[Operator]

Thank you. We will now begin the question and answer session. And the first question will come from George Tong with Goldman Sachs. Please go ahead.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Your cash and valuables management business grew 7% in the quarter. Can you deconstruct trends you're seeing from a price and volume perspective?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure. Thanks, George. Good morning. We continue to see volumes continue to improve and improve that ratio more towards the balance fifty-fifty like we've talked about previously. I think part of that is some of the Argentina inflation moderation.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We're seeing that come down, which is why you see the printed organic growth numbers more in line with the rest of the regions and the long term trends. I think you'll also see in 2024, we did have some more price built into the market. Part of that is we talk about North America with the portfolio rationalization in the first half of the year. But I think if you just sort of look in general, price inflation remains positive across all of our regions. So if you think about looking around just sort of around the world, that also is in line, George, with our money processing volumes, kind of some of the underlying metrics operationally that continues to be consistent throughout the year in all of our regions.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Of course, as you think about our revenue profile and growth profile, a lot of that is, as we've talked about is AMSDRS growth, which is really a mix impact as well, not just that's not part of price. As we continue to look forward, that CBM part will continue to be positive in 2025, particularly as we saw BGS start to pick up in the fourth quarter. And we've seen that momentum continue as I mentioned into 2025. That's on the back of a lot of this metals move that we've seen around the world.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Got it. That's helpful. And then you're accelerating investments to improve margins in North America. Can you outline the opportunity you see there? How much in investments you're making?

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

And if you think the opportunity to close the gap with margins in North America is greater than the international margin opportunity?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure. Well, we don't think, George, there's really a ceiling for us on those margins. I talked we talked about a 20% EBITDA as a near term target. We think that's still in line of sight. The investments we're making are really focused predominantly right now on route optimization technology.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And we talked about that in Q3. We expect to have that fully implemented by midyear this year and expect to realize those benefits in the second half of the year. I think some of the other opportunities that we've seen for investment are really around some of our legacy tech debt that we've moved some on prem data centers to the cloud. We talked about that as well in Q3 to really give us more flexibility and scalability as we take the business up. You heard my prepared remarks, we started disclosing labor as part of a breakout in our gross margin cost of goods.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

You can see that's improved three ten basis points. And really that's attributed to our real productivity benefits coming through in both our external routing and logistics network, but also our money processing as you think on our internal cash centers. So we really are starting to realize those benefits and seeing that margin progression step forward, particularly in North America. We think that's going to again close the gap with our particularly Latin America as we see our lean journey in Latin America is a couple of years ahead to be honest from North America. But we expect that to catch up and we expect to scale some of these best practices not only into Latin America but also into Europe and rest of the world.

[George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs]

Got it. That's helpful. Thank you.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Thanks, George.

[Operator]

The next question will come from Sam Cutswarm with William Blair. Please go ahead.

[Sam Kusswurm, Equity Research Associate at William Blair]

Hey, Mark. Hey, Kurt. Thanks for taking our questions here.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes. Good morning, Sam.

[Sam Kusswurm, Equity Research Associate at William Blair]

Good morning. I guess to start, your guidance is assuming mid single digit organic growth for 2025 and I think you also shared mid to high teens organic growth for AMS DRS business. I think you touched on this a bit briefly in the prepared remarks, but can you also break down for us your assumptions for the CIT and BGS businesses?

[Sam Kusswurm, Equity Research Associate at William Blair]

In terms of the components of growth?

[Sam Kusswurm, Equity Research Associate at William Blair]

Yes, it's organic growth assumptions.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Yes. So if you I mean, kind of if you do the math, I mean, CVM would be back into the low single digits growth is the way to think about that. Sam, that's total

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

growth.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

And then you said BGS. As part of CDM. Did you say BGS as part of CDM? Yes, we don't break that out. But I mean, it's going to again be in that, I would say, consistent that whole group of businesses think about that as low single digits.

[Sam Kusswurm, Equity Research Associate at William Blair]

Got it. Okay.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

I think about one thing, we got to keep in mind is that there is a conversion impact that does kind of keep that rate in that lower single digit relative to the AMS to DRS growth. So there is some shift that's going from CBM and into AMS DRS.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

I think, Sam, we can though characterize where we're seeing where we are seeing growth. Again, we continue to see the sort of BGS, Global Services business in total organic growth accelerating out of Q4 into Q1 and probably as our outlook anticipates through the rest of 'twenty five. And if you just remember, we've been talking about softness really for the past three quarters in our Global Services business. That predominantly showed up in North America, although it's part of our North American segment, where we actually were slightly negative last year and expect that to flip this year to positive.

[Sam Kusswurm, Equity Research Associate at William Blair]

Got it. That's been helpful.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Yes, within that total CDM number that we were just talking about.

[Sam Kusswurm, Equity Research Associate at William Blair]

Got it. Awesome. And then you also finished the year with AMS CRS organic growth of 23%, I think for the year as well. So moving that business towards mid to high teens growth, is that more about the comps that you're going to have to deal with or moving towards a more normalized growth rate? Just trying to understand that a bit better.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure. Two things there, Sam, for us. One, it's just a lot of large numbers. That number is getting bigger and bigger. And so we would anticipate that a little bit slowing down.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

But it's also there's some impact here in Argentina also as that inflation starts to moderate, because we have some AMS DRS business down there that also becomes a little bit of a growth headwind compared to what we had previously. But our commitment on this mid to high teens, frankly, is what we said last year, Sam, and outperformed that. We expected that to be mid to high teens and that continued to surprise us. I'd say our performance in the quarter, we expect that to continue in the near term just given the nature of the recurring revenue piece of that. And we would hope to outperform that as we go forward.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We had two nice wins in the quarter with AMS DRS in North America specifically with two new logos. First in AMS, the BP convenience store gas station chain, this is hundreds of locations for our AMS business across several of their logos that they brand or franchise with really that deployment has already started and we expect it to finish up sometime in the third quarter. So again a good incremental organic win in the marketplace. On the DRS side, we're thrilled to partner with Western Union and are announcing that now to bring DRS technology to hundreds of locations across their network. We think this is going to be a really strong initiative to help them not only enhance security, their cash handling, but also help their agents locally operate more efficiently.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We started this rollout already. We're excited to announce the partnership and look forward to getting the rollout complete by the end of Q1 this year. So again, two good big partnerships that we're excited about building on a strong backlog that we brought into the year into 2025.

[Sam Kusswurm, Equity Research Associate at William Blair]

Got it. That's helpful color there. Thanks. If I could squeeze one more in then. I just wanted to ask about these FX headwinds as it relates to your free cash flow and ability to deploy that free cash flow towards areas like share repurchases.

[Sam Kusswurm, Equity Research Associate at William Blair]

So to put it simply, to what extent do these headwinds impact your ability to generate and deploy free cash flow in 2025, particularly as it relates to share repurchases?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure. So for us, free cash flow conversion will continue to improve, we think, with margins. And so as we do have some headwinds on margins in those sorry, headwinds to FX in those high margin geographies, that could be a headwind to free cash flow conversion. I'd say on the other side, we think interest rate reductions obviously are going to help us across the business, but of course faster AMSDRS deployment as well. AMS DRS is an inherently more capital efficient for us both in allowing us to optimize our network, but also allowing us to improve our payment terms and collapse our cash cycle.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

So that does again provide, Tio, and we think to the ability to convert free cash flow. One of the examples of that that we would could point to on this capital efficiency side, this year, we would see about 300 vehicles less across our network and about 35 less physical branches across Brinks. And so we're starting now to see some of this capital efficiency benefits as we start to reach a or maybe approach some tipping points here, allowing us really to optimize our networks.

[Sam Kusswurm, Equity Research Associate at William Blair]

Got it. Appreciate that. Thank you.

[Operator]

The next question will come from Tobey Sommer with Truist. Please go ahead.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Good morning. It's Tyler Barish on for Tobey. Hi, good morning. How much of the growth in AMS DRS came from legacy conversions versus new business wins?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We don't have that broken out, but it's actually we've said before, it's probably less than a third. In fact, it's been pretty low. Most of what we've done in the DRS side continues to be unvended or competitive acquisitions from other providers, whether that service was DRS or CIT or CBM, we wouldn't know. I think that on the AMS side, it's a little bit more difficult to say because the retail ATM networks are would largely be new business for them. Maybe they're changing providers and it's a market share shift for us.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

But when we talk about bank outsourcing, that's really a continued expansion of the available market because traditionally those banks were in sourced already. And so for them, maybe all we were doing was CIT only. And so that really is a pure conversion of CIT to AMS. But I would say that's not been the majority of what we're doing. Most of it is new business, new to cash management, largely in DRS and new to AMS under the retail banners.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Got it. Just hitting on tariffs, can you talk about the impact that we have seen gold prices rise, which can be a positive? But can you maybe just talk about the impact of some other economies around the world slow down maybe slightly from tariffs that would impact?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes, sure. Certainly, tariffs for us, we've seen that impact global markets in total as we've all seen. And one of those impacts has been around precious metals, particularly gold and silver. And so as we exited Q4 and have seen what's going on in Q1, what we expect to continue is a lot of

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

movement of

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

gold and silver certainly into The U. S. That's been well chronicled I think publicly in Wall Street Journal and Bloomberg. This is happening and we are is one of the biggest logistics the biggest logistics player in the space. We have seen those benefits.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

I think we're also seeing this though movements around Asia. Again, as global markets are balancing around currency and around hedges with around inflation and interest rates, This volatility is beneficial for our global services business. And so we already have a large installed logistics network both of vaults and logistics hubs, but also well established relationships with banks, custodians, so forth. So for us, this is really good. Being that it's a big fixed cost network, those create good incrementals for us on incremental profit conversion.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

But frankly, it's a reward for carrying this fixed infrastructure in times that aren't so robust. So this is a good opportunity for us. I'd say on the other side, from a tariff perspective on the non global services business, we really don't see any large impacts for us one way or the other. I think to your point, I think you insinuated maybe there's some economic local economy issues that could that you could see and but we certainly have not seen that yet. We've seen Brazil has had some economic headwinds in the last few quarters and but largely unrelated to the tariffs.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

But we don't see any direct impacts, Tyler, I think that we would see that you would hear from other companies, particularly those that are importing or exporting goods.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Tyler, the only thing I would add to that to Mark's comments is, we're keeping a close eye on input costs and we're ready to take actions if that becomes an issue.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Got it. And then just one final one. There's been some reports of the penny being discontinued. Would that have any meaningful impact on your business?

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Yes. No, there is news out there about the discontinuation of the penny. But for us, that is really not an issue. I mean, we have a coin business, but it's that's an immaterial kind of concept to us in terms of impact.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Got it.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

I understand.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And maybe even a benefit. I mean, we are one of the largest I mean, we're the largest in North America when it comes to physical currency movement and coin is a large also part of that that we partner not only with retailers, but also with the Fed as part of the distribution network.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Yes.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Thank you.

[Operator]

This concludes

[Operator]

our question and answer session. I would like to turn the conference back over to Mr. Mark Eubanks for any closing remarks. Please go ahead, sir.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes. Thank you. And we appreciate everyone for joining us today. We look forward to speaking with you each soon in the future.

[Operator]

Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Jesse Jenkins, Head & Vice President of Investor Relations
• Mark Eubanks, President and Chief Executive Officer
• Kurt McMaken, Executive VP & CFO

Analysts

• George Tong, Sr. Research Analyst - Equity Research at Goldman Sachs
• Sam Kusswurm, Equity Research Associate at William Blair
• Tyler Barishaw, Equity Research Associate at Truist Securities