Item 1. Business
ITEM 1. BUSINESS
Overview
The Brink’s Company is the global leader in total cash management, route-based logistics and payment solutions including cash-in-transit, ATM services, cash management services, including vault outsourcing, money processing, and intelligent safe services, and international transportation of valuables. Our customers include financial institutions, retailers, government agencies (including central banks), mints, jewelers and other commercial operations around the world. Our global network serves customers in more than 100 countries. We have controlling ownership interests in companies in 53 countries and agency relationships with companies in additional countries. We employ approximately 74,500 people and our operations include approximately 1,300 facilities and 16,300 vehicles.
We manage our business in the following four segments:
• North America – operations in the U.S. and Canada, including the Brink’s Global Services ("BGS") line of business,
• Latin America – operations in Latin American countries where we have an ownership interest, including the BGS line of business,
• Europe – total operations in European countries that primarily provide services outside of the BGS line of business, and
• Rest of World – operations in the Middle East, Africa and Asia. This segment also includes total operations in European countries that primarily provide BGS services and BGS activity in Latin American countries where we do not have an ownership interest.
Brink’s was founded in 1859 and The Brink’s Company was first incorporated in 1930 under the laws of the State of Delaware (at that time, the Company was named The Pittston Company). It succeeded to the business of a Virginia corporation in 1986 and was renamed The Brink’s Company in 2003. Our headquarters are located in Richmond, Virginia. The Brink’s Company, along with its subsidiaries, is referred to as “we,” “our,”, “us,” “Brink’s,” or “the Company” throughout this Annual Report on Form 10-K for the period ended December 31, 2021 ("this Form 10-K").
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Strategy
We have three long-term strategic objectives: Accelerate Profitable Growth, Deliver Operational Excellence, and Introduce Digital Solutions. We recently modified these long-term strategic objectives to reflect the evolution of our business.
We will Accelerate Profitable Growth by continuing to drive organic revenue growth, expanding high-value services, growing account share with existing and new customers, pursuing accretive acquisitions, and enhancing customer experience.
We will Deliver Operational Excellence by exceeding customer expectations, leading our industry in safety and security, and continuing to improve productivity in fleet, money processing and sales with the Lean Management Methodology and new approach to managing strategy deployment. Operational Excellence applies to every part of our business.
We will Introduce Digital Solutions by strengthening and leveraging our IT capabilities and operating systems to offer new digital solutions that are attractive and valuable to a much larger number of retailers. These solutions are more flexible and cost effective compared to traditional CIT services.
To execute our objectives, we manage the business with multi-year plans. Our current strategic plan covers 2022 – 2024 and is designed to build on our strong performance through 2019, which focused on the fundamentals to drive success. Our plan outlines how we will accelerate revenue growth and margin improvement, and position Brink’s to win across the evolving payments ecosystem, by continuing to deploy two strategies that we refer to as “Strategy 1.0” and “Strategy 2.0.”
Strategy 1.0 is about a focus on organic growth and operational excellence across our business, including our core cash logistics business. Important aspects continue to include cost discipline and driving key initiatives wider and deeper into the organization. This provides a strong foundation for future growth and an excellent platform for introducing our digital solutions.
Strategy 2.0 has two primary components: digital solutions and ATM managed services. They both capitalize on technology.
• Our digital solution for cash payments, also known as Brink’s Complete, enables large and small retail customers to process cash payments in a way that is as easy as card and mobile payments. It positions Brink’s as a provider of payment solutions – an important evolution of our strategy.
• Our ATM managed services include cash logistics, device management, transaction processing, and cash forecasting and analytics. We operate ATMs for retailers and independent ATM deployers and help financial institutions manage their ATM networks so they can focus on their core customer offerings.
Our strategy is supported by:
• Our proven ability to drive growth and profitability,
• Cash usage and demand for our high-value logistics services remains strong throughout the world,
• We are well-positioned to capitalize on the changing payments landscape, and
• We have a winning culture and great people, our most valuable assets.
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Services
We design customized services to meet the cash and valuables supply chain needs of our customers. We enter into contracts with our customers to establish pricing and other terms. Cash-in-transit and ATM contracts usually cover an initial term of at least one year and in many cases one to three years, and generally remain in effect thereafter until canceled by either party. Contracts for cash management services are typically longer. Following are descriptions of our service offerings:
Core Services (50% of total revenues in 2021)
Cash-in-transit ("CIT") and basic ATM services are core services we provide to customers throughout the world. We charge customers per service performed or based on the value of goods transported. Revenues are affected by the level of economic activity in various markets as well as the volume of business for specific customers. Core services generated approximately $2.1 billion of revenues in 2021 ($1.9 billion in 2020 and $2.0 billion in 2019).
Cash-in-transit services – Serving customers since 1859, our success in CIT is driven by a combination of rigorous security practices, high-quality customer service, risk management and logistics expertise. Cash-in-transit services generally include the secure transportation of:
• cash between businesses and financial institutions, such as banks and credit unions
• cash, securities and other valuables between commercial banks, central banks and investment banking and brokerage firms
• new currency, coins, bullion and precious metals for central banks and other customers
Basic ATM services – We manage approximately 131,500 ATMs worldwide. We provide customers who own and operate ATMs a variety of service options. Basic ATM management services include cash replenishment, treasury management and first and second line maintenance.
High-Value Services (45% of total revenues in 2021)
Our Core Services, combined with our brand and global infrastructure, provide a broad platform from which we offer additional high-value services, which generated approximately $1.9 billion of revenues in 2021 ($1.6 billion in 2020 and $1.6 billion in 2019).
Global services - Brink’s Global Services ("BGS") is the leading global provider of secure transport of highly-valued commodities including diamonds, jewelry, precious metals, securities, banknotes, currency, high-tech devices, electronics and pharmaceuticals. Our specialized diamond and jewelry operations have offices in the world’s major diamond and jewelry centers. Serving customers in more than 100 countries, BGS provides secure transportation services including pick-up, packaging, customs clearance, secure vault storage and inventory management. BGS uses a combination of armored vehicles and secure air and sea transportation.
Cash management services - We offer a variety of cash management services, depending on customers’ unique needs. These include:
• money processing (e.g., counting, sorting, wrapping, checking condition of bills, etc.) and other cash management services
• digital cash payment services that provide advance credit for cash deposited in Brink's-provided tech-enabled safe and other services related to deploying and servicing “intelligent” safes and safe control devices, including our patented CompuSafe ® service
• check imaging services
Other cash management services include cashier balancing, counterfeit detection, account consolidation and electronic reporting. Retail and bank customers use Brink’s to count and reconcile coins and currency, prepare bank deposit information and replenish coins and currency in specific denominations.
Brink's offers a fully integrated approach to managing customers' supply chain of cash. These services include logistical support from point-of-sale through transport, vaulting, bank deposit and related credit reporting. We also offer a variety of technology applications including online cash tracking, cash inventory management, check imaging for real-time deposit processing, and a variety of other web-based tools that enable banks and other customers to reduce costs while improving service to their customers. We believe the quality and scope of our money processing and information systems differentiate our cash management services from competitive offerings.
Brink’s now offers a digital cash management solution in a number of countries, which enables business customers to access their cash without visiting a bank. Brink’s provides this solution through its Brink’s Complete service offering and its BLUbeem TM by Brink’s brand. In the U.S., these solutions are offered through Brink’s Capital LLC. Customers register their cash using a mobile application, and deposit that cash into a discreet and secure in-store Brink’s device. Brink’s digitally confirms the deposit and provides the customer with advance credit to the customer’s bank account for deposit by the next day, picking up the cash at a later time that is convenient for both parties. Through partnerships with digital payment providers, the BLUbeem digital cash management solution will be offered alongside these payment providers’ offerings, providing an integrated solution for cash, card and digital payment methods.
Brink’s CompuSafe ® service –We manage approximately 47,400 installed Compusafe devices worldwide. Brink’s CompuSafe service provides an integrated, closed-loop system for minimizing theft and managing cash. We market CompuSafe services to a variety of cash-intensive customers including convenience stores, gas stations, restaurants, retail chains and entertainment
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venues. In a majority of instances, once the specialized safe is installed, the customer’s employees deposit currency into the safe’s cassettes, which can only be removed by Brink’s personnel or in some instances, securely by customer employees. Upon removal, the cassettes are securely transported to a vault for processing where contents are verified and transferred for deposit. Our CompuSafe service features currency-recognition and counterfeit-detection technology, multi-language touch screens and in some instances, an electronic interface between the point-of-sale, back-office systems and external banks. Our electronic reporting interface with external banks enables customers to receive same-day credit on their cash balances, even if the cash remains on the customer’s premises.
Vaulting services . Vaulting services combine cash-in-transit services, cash management services, vaulting and electronic reporting technologies to help banks expand into new markets while minimizing investment in vaults and branch facilities. In addition to providing secure storage, we process deposits, provide check imaging and reconciliation services, perform currency inventory management, process ATM replenishment orders and electronically transmit banking transactions.
ATM managed services – We provide comprehensive services for ATM management including cash replenishment, replenishment forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, installation services, and first and second line maintenance. These services are primarily offered in the U.S. and Europe. For certain customers, we take ownership of ATM devices as part of our managed services offering.
Payment services – We provide convenient payment services, including bill payment and collection services, and Brink’s Money™ prepaid cards and corporate debit cards. We offer Brink’s Money™ general purpose reloadable prepaid cards and corporate debit cards to consumers, employers and small and medium size businesses in the U.S. Our general purpose reloadable cards are sold to consumers through our direct-to-consumer marketing efforts, and our payroll cards are sold to employers who use them to pay employees electronically, while our business expense cards are sold to small businesses that set controls on employee spending. Brink’s Money™ cards can be used at stores, restaurants, online retailers, and at ATMs worldwide. These products are targeted toward the millions of unbanked and under-banked Americans and small businesses looking for alternative financial products.
Other Security Services (5% of total revenues in 2021)
Guarding – We protect airports, offices, warehouses, stores, and public venues with or without electronic surveillance, access control, fire prevention and trained patrolling personnel. Other security services generated approximately $0.2 billion of revenues in 2021 ($0.2 billion in 2020 and $0.1 billion in 2019).
We offer security and guarding services in Europe, Rest of World and Latin America. A portion of this business involves long-term contracts related primarily to security services at airports and embassies. Generally, guarding contracts are for a one-year period, and the majority of contracts are extended.
Commercial security systems – We provide commercial security system services in designated markets in Europe. Our security system design and installation services include alarms, motion detectors, closed-circuit televisions, digital video recorders, and access control systems, including card and biometric readers, electronic locks, and turnstiles. We may also provide monitoring services after systems have been installed.
Industry and Competition
Brink’s competes with large multinational, regional and smaller companies throughout the world. Our largest multinational competitors are Loomis AB (Sweden); Prosegur, Compania de Seguridad, S.A. (Spain); and Garda World Security Corporation (Canada).
We believe the primary factors in attracting and retaining customers are security expertise, service quality, and price. Our competitive advantages include:
• brand name recognition
• reputation for a high level of service and security
• risk management and logistics expertise
• global network and customer base
• proven operational excellence, and
• high-quality insurance coverage and financial strength
Although we face competitive pricing pressure in many markets, we resist competing on price alone. We believe our high levels of service, security expertise and value-added solutions differentiate us from competitors.
Seasonality
Our revenues and earnings are typically higher in the second half of the year, particularly in the fourth quarter, due to generally increased activity associated with the holiday season.
Insurance Coverage
The availability of high-quality and reliable insurance coverage is an important factor in our ability to attract and retain customers and manage the risks inherent in our business. We purchase insurance coverage for losses in excess of what we consider to be prudent levels of self-insurance. Our insurance policies cover losses from most causes, with the exception of war, nuclear risk and certain other exclusions typical in such policies.
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Insurance for security is provided by different groups of underwriters at negotiated rates and terms. Premiums fluctuate depending on market conditions. The security loss experience of Brink’s and, to a limited extent, other armored carriers affects our premium rates.
Service Mark and Patents
BRINKS is a registered service mark in the U.S. and certain foreign countries. Brink's name and marks are of material significance to our business. We own patents for safes and related devices and services, iDeposit and Daily Credit processes, including our integrated CompuSafe ® service, which expire between 2022 and 2039. These patents provide us with important advantages. However, we are not dependent on the existence of these patents.
We have licensed the Brink’s name to a limited number of companies, including a company that provides residential smart home and home security services and a distributor of security products (padlocks, door hardware, etc.) to customers through major retail chains.
Government Regulation
Aspects of our business are, and anticipated products and services may be, subject to regulation by various federal, state and foreign governmental agencies. Various federal, state and local agencies in the U.S. and other countries in which we operate regulate certain current aspects of our business, including commercial lending, safety of operations, equipment and financial responsibility. Movement of valuable shipments are generally subject to import/export regulations. We are also subject to certain firearm regulations in connection with our armored logistics operations. We must comply with licensing, permits and registration requirements imposed by various federal, state and local governmental agencies in the U.S. and other countries in which we operate. Our permits and licensing requirements vary by jurisdictions based on the scope of business conducted and applicable laws and regulations. In addition, Brink’s Capital LLC has federally registered as a Money Services Business in anticipation of offering money transmission and payment services to customers.
Human Capital Management
Culture and Values
At Brink’s, the following values underpin our company culture: Safety, Integrity, Engagement, Continuous Improvement, Customer Focus and Diversity and Inclusion. Our values guide the way we work and are the cornerstone of our winning culture. They ensure that we work safely to protect ourselves and others, consider the customer first in all we do, display the highest standards of ethics, engage and empower employees, continually find new ways to improve the way we work, and foster a diverse and inclusive workplace.
Workforce Demographics
We have a culturally and geographically diverse workforce that serves customers in more than 100 countries. Based upon business demand, we have a need for a flexible workforce. In certain geographic regions, statutory employee protections may limit our ability to increase or decrease our workforce without significant expense.
At December 31, 2021, our company had approximately 72,200 full-time and 2,300 part-time employees. Approximately 86% or 64,000 of our employees are outside the United States. Of our approximately 10,500 employees in the United States, approximately 400 were classified as part-time employees. Certain employees in the United States provide corporate services for the various regions in which we operate.
The persistence of the COVID-19 pandemic has impacted the stability of our workforce. In the U.S., we have experienced labor shortages and inflationary wage pressures affecting near-term performance. Our inability to offer competitive compensation and benefits may impact our ability to attract and retain employees in certain markets. During 2021, we continued to take steps to develop a talent pool deep enough to absorb employee departures. Specifically, we enhanced workforce planning, updated job descriptions, identified critical role high potential employees and enhanced our brand attractiveness by establishing Brink’s as a company which is relevant, digital, inclusive and growing. We use employee opinion surveys to take the pulse of employees in the U.S., Brazil, Canada and Mexico. Globally, we are sharing our vision of a winning culture with our leadership through country communication plans, and using global leadership training to reinforce Brink’s Values and critical success factors throughout the organization. In 2022, we expect to launch a project that will focus on the employee experience and is designed to reduce employee turnover.
Strategic acquisitions continue to be a part of our broader strategic plan. We previously announced the acquisition of the majority of the international cash operations of U.K.-based G4S plc ("G4S") which was substantially completed as of December 31, 2020. During 2021, we closed on additional G4S acquisitions in Kuwait, Macau and Luxembourg and worked to integrate approximately 2,600 full-time employees into our operations. We either continued existing contractual and statutory obligations covering these employees, or added these employees to our local compensation and benefit programs. We continue to assimilate employees in all G4S locations into our business operations. As of April 1, 2021 we had completed the acquisition of PAI Midco, Inc. and its subsidiaries (“PAI”), including approximately 200 employees across three primary U.S. locations and another twelve field locations. Until December 31, 2021, PAI employees remained under existing benefit plan programs. On January 1, 2022, PAI employees were added to our U.S. compensation and benefit programs. All management employees who came to us from these acquisitions have successfully completed an orientation program to ensure that they are aligned with the Company’s compensation, performance management, talent management and compliance policies.
Employee Safety and Wellness
Employee safety is of paramount importance as we strive to bring every employee home safe every night. In 2021, Company priorities continued to focus on mitigating the impacts of the COVID-19 pandemic by, among other things, prioritizing the health and safety of our employees, their families and our customers, while maintaining our essential services to our customers. This included investing in additional personal protective equipment, enhanced cleaning protocols, and work protocols aimed at minimizing unnecessary social contact both in our workplaces and while serving our customers. We have aligned our vaccine approach with government guidance and provided incentives in various countries to encourage employee immunization.
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Diversity and Inclusion
We are committed to providing a diverse and inclusive workplace and culture. Accordingly, we continue to identify opportunities to execute on our commitment to Diversity and Inclusion (“D&I”) to our stakeholders. Sustainability, including environmental, social and governance matters, are overseen by our Board. In February 2021, we welcomed our first D&I leader who began by building programs in the U.S. and will be expanding his work globally in 2022. He developed a global D&I training program retaining PDT Global, a worldwide inclusion and diversity training consultant. The training, which will be rolled out in 2022 to management-level employees, is intended to be continuous and include both digital and live training. Additionally, D&I initiatives are being infused into talent management through unconscious bias training, diverse interviewers and the use of diverse candidate pipelines. In 2021, we established a U.S. Diversity and Inclusion Council (“D&I Council”) made up of the Company’s senior leaders in various functions, and the executive sponsors and chairs of our employee resource groups (“ERGs”). The D&I Council is being piloted in the U.S. to support the development of our D&I initiatives. We expect to expand the D&I Council globally in 2022.
In 2021, the organization undertook an effort to assemble demographic data on workforce diversity, including gender, race and ethnicity. That demographic data is currently being analyzed to identify opportunities and goals, and how best to measure progress against those goals. In 2022, we expect to develop global gender diversity goals for leadership and enhance our succession planning efforts to emphasize diversity.
Our ERGs promote acceptance and inclusion and provide resources to raise awareness. In 2021, we expanded the scope and programs of our ERGs. In the U.S., we now have groups for women, Black, Asian and Pacific Islander, Latin X and military veteran employees. In Brazil we have groups for women, Black and LGBTQ+ employees and for people with disabilities. In Canada and Mexico we have groups for women. In the first half of 2022, we expect to add two new groups for women and LGBTQ+ employees in Europe. Our ERGs are supported with an executive sponsor and chair who also sit on the D&I Council to liaise with leadership and employees.
In early 2021, we signed the UN Global Compact, affirming our commitment to meet fundamental responsibilities in the areas of human rights, labor and the environment. More information on our environmental, social and governance priorities can be found on our Sustainability page on our website.
Labor Relations
North America – At December 31, 2021 we employed approximately 12,100 employees. We have no union employees in the U.S. At December 31, 2021, Brink’s was a party to nine collective bargaining agreements in Canada with various local unions covering approximately 1,200 employees. The agreements have various expiration dates from 2022 to 2025.
Outside of North America, approximately 51% of our employees are represented by trade union organizations and/or covered by collective bargaining agreements.
Latin America – At December 31, 2021, we employed approximately 30,200 employees, 71% of whom are covered by various collective bargaining agreements with expiration dates from 2022 to 2025.
Europe – At December 31, 2021, we employed approximately 15,400 employees, 51% of whom are covered by various collective bargaining agreements with expiration dates from 2022 to 2023.
Rest of World – At December 31, 2021, we employed approximately 16,800 employees, 17% of whom are covered by various collective bargaining agreements with expiration dates from 2022 to 2023.
We believe our employee relations are satisfactory.
Business Divestitures
Below is a summary of the significant businesses we exited in the last three years. These divestitures did not meet the criteria for classification as discontinued operations. Operating results for these businesses are included in continuing operations for all periods presented, as applicable. We continue to operate our global services business in each of these countries.
• In the first quarter of 2020, we sold 100% of our ownership interest in a French security services company.
• In the second quarter of 2019, we exited a top-up prepaid mobile phone business in Brazil.
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Business Acquisitions
On April 1, 2021, we acquired 100% of the capital stock of PAI Midco, Inc., which directly or indirectly owns 100% of the ownership interests in four additional entities (collectively, "PAI"), for approximately $216 million. PAI was the largest privately-held provider of ATM services in the U.S. and generated approximately $94 million in revenues in 2020.
On February 26, 2020, we announced that we agreed to acquire the majority of the cash management operations of G4S, with closings planned in multiple phases in 2020. In March 2020, we acquired 100% of the capital stock of G4S International Logistics Group Limited, a company that directly or indirectly owns controlling interests in multiple businesses providing secure international transportation of valuables. In the second quarter of 2020, we acquired cash management operations from G4S located in the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic and the Philippines. In the third quarter of 2020, we acquired operations in Indonesia, Estonia, Latvia and Lithuania. In the first quarter of 2021, we acquired operations in Macau, Luxembourg and Kuwait, which completed the remaining planned G4S transactions. For the majority of the acquisitions in 2020 and the first quarter of 2021, we acquired 100% of the ownership interests. In Malaysia, the Dominican Republic, the Philippines, Indonesia and Kuwait, we acquired ownership interests of less than 100%. We believe that we meet the accounting criteria for consolidating these subsidiaries. In the aggregate, the purchase consideration for the G4S acquisitions as of December 31, 2021 is $826 million. The G4S businesses acquired generated approximately $800 million in revenues in 2019.
In January 2019, we acquired 100% of the capital stock of Rodoban Transportes Aereos e Terrestres Ltda., Rodoban Servicos e Sistemas de Seguranca Ltda., and Rodoban Seguranca e Transporte de Valores Ltda. (together "Rodoban") for $134 million. Rodoban provides CIT, money processing and ATM services primarily in southeastern Brazil. Also in 2019, we acquired three business operations in three countries for an aggregate purchase price of approximately $49 million. Below is a brief description of each of these additional three business acquisitions completed in 2019:
• In June 2019, we acquired 100% of the capital stock of Balance Innovations, LLC and its wholly owned subsidiary, Balance Innovations Services, Inc. (together "BI"). BI develops and licenses software that provides real-time data to optimize operations for general retail and convenience store industries throughout the United States and Canada.
• In June 2019, we acquired 100% of the capital stock of Comercio Eletronico Facil Ltda. ("COMEF"), a Brazil-based company. COMEF offers bank correspondent services and bill payment processing to consumers.
• In September 2019, we acquired 100% of the capital stock of Transportadora de Valores del Sur Limitada and its wholly owned subsidiary, TVS Pagos, Recaudos y Procesos S.A.S. (together "TVS"). TVS provides CIT and money processing services in Colombia.
See Note 7 to the consolidated financial statements for more detailed information on the acquired assets and liabilities from these acquisitions.
Reorganization and Restructuring
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensation awards. We recognized $66.6 million net costs in operating profit and $0.6 million costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. We recognized $43.6 million net costs in 2021, primarily severance costs. Substantially all of the costs from 2021 restructuring plans result from management initiatives to address the COVID-19 pandemic. For the current restructuring actions, we expect to incur additional costs between $1 million and $3 million in future periods.
See Note 24 to the consolidated financial statements for more detailed information on reorganization and restructuring activities.
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Available Information and Corporate Governance Documents
The following items are available free of charge on our website ( www.brinks.com ) as soon as reasonably possible after filing or furnishing them with the Securities and Exchange Commission (the “SEC”):
• Annual reports on Form 10-K
• Quarterly reports on Form 10-Q
• Current reports on Form 8-K, and amendments to those reports
The following documents are also available free of charge on our website:
• Corporate Governance Guidelines
• Code of Ethics
• The charters of the following committees of our Board of Directors (the “Board”): Audit and Ethics, Compensation and Human Capital, Corporate Governance and Nominating, and Finance and Business Development
Printed versions of these items will be mailed free of charge to shareholders upon request. Such requests can be made by contacting the Corporate Secretary at 1801 Bayberry Court, P. O. Box 18100, Richmond, Virginia 23226-8100.
Additional information about the Company may be found elsewhere in this report and in the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov .
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