Item 1. Business
ITEM 1. BUSINESS
Overview
The Brink’s Company is a leading global provider of cash and valuables management, digital retail solutions, and ATM managed services. Our customers include financial institutions, retailers, government agencies, 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 72,200 people and our operations include approximately 1,300 facilities and 16,400 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, 2022 ("this Form 10-K").
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Strategy
Over the past several years, our business has evolved significantly. We have a much larger footprint and new digital capabilities. This means we have the opportunity to simplify cash and valuables management for our customers with tech-enabled services and to optimize our operations and leverage the benefits of scale across our expanded footprint.
Our strategy is to grow Brink’s by providing a superior customer experience and driving continuous improvement. We will achieve this by delivering on four strategic pillars : Growth and Customer Loyalty, Innovation, Operational Excellence, and Talent. This framework considers our global footprint and values-driven culture:
• Placing customers at the center of everything we do and understanding their current and future needs to better define our value proposition;
• Leveraging technology to drive product and business innovation to maintain our competitive advantage and increase revenue;
• Sharing infrastructure and best practices across our operations to increase scale and profitability; and
• Establishing a workplace and employer brand that attracts, develops, and empowers diverse talent to ensure we have the best people and perspectives to achieve our goals.
We will prioritize Growth and Customer Loyalty by creating a consistent and exceptional experience across all service lines and deploying sales fundamentals & standardized processes.
We will pursue Innovation by using tech-enabled solutions to introduce new value propositions and optimize operations, challenging convention to differentiate our services and reshape our business.
We will achieve Operational Excellence by driving a continuous improvement culture focused on customer experience and by building scale by sharing activities, infrastructure and knowledge.
We will develop our Talent by attracting, developing, and empowering the best people, by strengthening core competencies across the company and by fostering an inclusive culture that inspires excellence.
To execute our objectives, we manage the business with multi-year plans. In our current strategic plan, we are focusing on the implementation of the strategic pillars across our traditional (cash and valuables management) and emerging (Digital Retail Solutions and ATM Managed Services) service lines. We remain focused on how we will accelerate revenue growth, margin improvement and cash flows and position Brink’s to win across the evolving payments ecosystem.
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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 logistics services 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, digital retail solutions, and ATM managed services are typically longer. Following are descriptions of our service offerings:
Cash and Valuables Management (84% of total revenues in 2022)
Cash and valuables management services are provided to customers throughout the world. Revenues are affected by the level of economic activity in various markets as well as the volume of business for specific customers. Valuables management includes the transportation and storage of banknotes, precious metals and other valuables across the world. These services may be impacted by global economic conditions, interest rates as well as regional demand for precious metals and luxury goods. Cash and valuables management services generated approximately $3.8 billion of revenues in 2022 ($3.7 billion in 2021 and $3.3 billion in 2020).
Cash-in-transit services – Serving customers since 1859, our success in cash-in-transit ("CIT") is driven by a combination of rigorous security practices, high-quality customer service, risk management and logistics expertise. Cash-in-transit services include the secure transportation of cash between retail 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; and new currency, coins, bullion and precious metals for central banks and other customers.
Basic ATM services – 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.
Brink's Global Services ("BGS") – Serving customers in more than 100 countries, BGS is the leading global provider of secure transport of high-value commodities including diamonds, jewelry, luxury goods, precious metals, securities, banknotes, currency, high-tech devices, electronics, pharmaceuticals and fine art. Additional BGS services include pick-up, packaging, customs clearance, secure storage and inventory management. BGS also has specialized diamond and jewelry operations in the world’s major diamond and jewelry centers.
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.), check imaging services and other cash management services (e.g., cashier balancing, counterfeit detection, account consolidation and electronic reporting).
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.
Other Services – Guarding services, commercial security systems services, and payment services.
Digital Retail Solutions ("DRS"), and ATM Managed Services ("AMS") (16% of total revenues in 2022)
DRS and AMS are technology enabled services provided to customers throughout the world. Revenues are typically contractually recurring with multi-year terms. DRS and AMS services generated approximately $0.7 billion of revenues in 2022 ($0.5 billion in 2021 and $0.4 billion in 2020).
Digital Retail Solutions – DRS includes services that facilitate faster access to cash deposits leveraging Brink’s tech-enabled sales and software platforms and enable enhanced customer analytics and visibility. DRS offers businesses of all sizes a cost-effective solution that simplifies cash acceptance and enables merchants to access their cash without visiting a bank. In addition, DRS allows more small and mid-size retailers to safely and affordably accept and receive cash quickly. DRS includes our patented Brink’s Complete TM and CompuSafe® services.
ATM Managed Services – We provide comprehensive services for ATM management beyond basic ATM services including cash forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, and installation services. AMS provides an economical solution for financial institutions, retailers and independent ATM owners to outsource day-to-day operation of ATMs. For certain customers, we take ownership of ATM devices as part of our managed services offering.
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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, value-added solutions 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.
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, cash devices and related processes, including Brink’s Complete TM , CompuSafe ® , iDeposit, and Daily Credit. Brink's patents will expire between 2023 and 2040. 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, in the U.S., 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 culture. Our values 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, 2022, our company had approximately 69,500 full-time and 2,700 part-time employees. Approximately 87% or 62,600 of our employees are outside the United States. Of our approximately 9,600 employees in the United States, approximately 300 were classified as part-time employees. Certain employees in the United States provide corporate services for the various regions in which we operate.
Since 2020, the negative impact from the COVID-19 pandemic has affected the stability of our workforce. During 2022, we continued to take steps to develop a talent pool deep enough to absorb employee departures. Specifically, we enhanced workforce planning, updated job
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descriptions, identified critical role high potential employees and enhanced our brand attractiveness by establishing Brink’s as a company that is relevant, digital, inclusive and growing. We took actions in a number of markets to maintain the competitiveness of our compensation and benefits programs to assist with talent attraction and retention. We continue to 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 and performance assessments to reinforce our values and critical success factors throughout the organization. In 2022, we launched the Employee Experience Project, an onboarding training program for employees designed to represent our culture and values, focus on retention, increase employee engagement and reduce employee turnover.
Strategic acquisitions continue to be a part of our broader strategic plan. On October 3, 2022, the Company completed its acquisition of NoteMachine Limited and Testlink Services Limited and the three subsidiaries they directly owned as of the acquisition date (collectively, "NoteMachine"), one of the leading ATM networks in the United Kingdom, including 599 employees. It is expected that these employees will be added to our compensation and benefit programs in 2023. All management employees who came to us from acquisitions are expected to complete 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 response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interests of our employees, as well as the communities in which we operate. The changes comply with government regulations and include implementing additional safety measures, such as additional personal protective equipment and enhanced cleaning protocols for employees continuing critical on-site work.
We believe in supporting our employees’ health and well being. We have implemented a flexible work program that allows certain employees to work remotely as approved by their managers and is intended to help our employees maintain a reasonable professional/personal life balance as we continue to invest in and protect our strong Company culture. We also offer our employees a wide array of benefits such as life and health (medical, dental and vision) insurance, mental and emotional health resources, paid time off, retirement benefits, family leave and family care resources.
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. Our Sustainability Program, including environmental, social and governance ("ESG") matters, is overseen by our Board of Directors. In July 2022, we published our inaugural Sustainability Update, which outlined our ESG priorities and our commitment to five of the United Nations (“UN”) Sustainable Development Goals. In the Sustainability Update, we announced a target to increase the number of women in leadership roles (defined as salary grade 18 and above) by at least 50% by the end of 2026. In 2022, the Company also launched its Diverse Recruiting Guidelines, designed to ensure that we cultivate a pool of candidates with a wide range of qualities and perspectives and help prevent recruitment bias. Additionally, through the collaborative efforts of our Vice President of Diversity and our Head of Talent Management, the Company has integrated D&I strategies into our talent management review meetings, which we believe has allowed us to identify and increase the representation of diverse candidates in our succession planning and leadership development initiatives.
As part of our Sustainability Program, we signed the UN Global Compact, affirming our commitment to meet fundamental responsibilities in the areas of human rights, labor and the environment. We also joined the CEO Action for Diversity & Inclusion. More information on our ESG priorities can be found on our Sustainability page on our website.
In 2022, we implemented global D&I training, including unconscious bias training, both in-person and virtually, for management-level employees, with the goal of educating and empowering the Company's leaders to foster an inclusive culture within their teams.
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”) to support the development of our D&I initiatives. The D&I Council was expanded to Europe in 2022, and we expect to expand the D&I Council to Asia in 2023.
Our ERGs promote acceptance and inclusion and provide resources to raise awareness. In the U.S., we have groups for women, Black, Asian and Pacific Islander, Latinx and military veteran employees. In Brazil and Argentina, we have groups for women, LGBTQ+ employees and for people with disabilities. Brazil also has a group for Black employees. In Canada, Mexico and Chile, we have groups for women. In 2022, we expanded our ERGs and added two new groups in Europe – one for women and one for LGBTQ+ employees. Our ERGs are supported with an executive sponsor and chair who also sit on the D&I Council to liaise with leadership and employees. We believe that the ERGs play an essential role in fostering an inclusive culture within Brink’s and providing support. Brink’s is committed to supporting the formation and success of our ERGs and to continuing to promote diversity and inclusion within our global enterprise.
Labor Relations
As of December 31, 2022, approximately 30,600 of our employees in various countries in which we operate, or approximately 42% of our total workforce, were represented by trade union organizations and/or covered by collective bargaining agreements, which have various expiration dates from 2023 to 2026.
We believe our employee relations are satisfactory.
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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.
Business Acquisitions
On October 3, 2022, we acquired 100% of the capital stock of NoteMachine for approximately $194 million. NoteMachine is based in the United Kingdom and manages a portfolio of ATMs. NoteMachine generated approximately $150 million in revenues in the twelve month period prior to the acquisition.
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, we acquired multiple businesses providing secure international transportation of valuables as well as cash management operations located in the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic, the Philippines, 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. In the aggregate, the purchase consideration for the G4S acquisitions was $826 million. The G4S businesses acquired generated approximately $800 million in revenues in 2019.
See Note 7 to the consolidated financial statements for more detailed information on the acquired assets and liabilities from these acquisitions.
Reorganization and Restructuring
2022 Global Restructuring Plan
In the third quarter of 2022, management began a restructuring program across our global business operations. The actions were taken to enable growth, reduce costs and related infrastructure, and to mitigate the potential impact of external economic conditions. As a result of actions taken, we recognized $22.2 million in charges in 2022 under this restructuring, primarily severance costs. For the restructuring actions that were approved as of December 31, 2022, we expect to incur additional costs between $10 million and $14 million in future periods, primarily severance costs.
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, 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 and $16.6 million net costs in 2022, primarily severance costs. The majority of the costs from 2022 restructuring plans resulted from the exit of a line of business in a specific geography with most of the remaining costs due to management initiatives to address the COVID-19 pandemic. For the current restructuring actions that have not yet been completed, we expect to incur additional costs between $1 million and $3 million in future periods. These estimates are expected to be updated as management targets additional sections of our business.
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 .