Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Brink’s Company (along with its subsidiaries, “Brink’s”, the “Company”, “we”, “us” or “our”) is a leading global provider of cash and valuables management, digital retail solutions, and ATM managed services throughout the world. These services include:
Cash and Valuables Management ("CVM")
• Cash-in-transit ("CIT") services – armored vehicle transportation of cash and coin
• Basic ATM services – replenishing funds and providing basic maintenance services to our customers’ automated teller machines
• Brink's Global Services ("BGS") – secure international transportation, pick-up, packaging, customs clearance, secure vault storage, and inventory management of high-value commodities
• Cash management services – counting, sorting, wrapping, check imaging, cashier balancing, counterfeit detection, account consolidation and electronic reporting
• Vaulting services – combines cash-in-transit services, cash management, vaulting and electronic reporting technologies for banks
• Other Services – guarding, commercial security, and payment services
Digital Retail Solutions ("DRS"), and ATM Managed Services ("AMS")
• DRS – services that facilitate faster access to cash deposits leveraging Brink’s tech-enabled devices and software platforms that enable enhanced customer analytics and visibility
• AMS – comprehensive solutions for ATM management, including cash forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, and installation services
We identify our operating segments based on how our chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. Our CODM is our President and Chief Executive Officer. Our CODM evaluates performance and allocates resources to each operating segment based on an operating profit or loss measure, excluding income and expenses not allocated to segments.
We manage our business in the following four segments:
• North America – operations in the U.S. and Canada, including the 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.
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RESULTS OF OPERATIONS
Consolidated Review
GAAP and Non-GAAP Financial Measures
We provide an analysis of our operations below on both a U.S. generally accepted accounting principles (“GAAP”) and non-GAAP basis. The purpose of the non-GAAP information is to report our operating profit, income from continuing operations and earnings per share without certain income and expense items that do not reflect the regular earnings of our operations. The non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as they allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We do not consider these items to be reflective of our core operating performance. The non-GAAP adjustments used to reconcile our GAAP results are described on pages 41 –43 and are reconciled to comparable GAAP measures on pages 48 – 50 .
Definition of Organic Growth
Organic growth represents the change in revenues or operating profit between the current and prior period, excluding the effect of acquisitions and dispositions and changes in currency exchange rates. See definitions on page 39 .
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions, except for per share amounts) 2024 2023 Change 2024 2023 Change
GAAP
Revenues $ 1,253.1 1,216.2 3 $ 2,489.2 2,401.6 4
Cost of revenues 937.8 943.8 (1) 1,865.0 1,864.1 —
Selling, general and administrative expenses 194.3 170.6 14 394.9 347.6 14
Operating profit 116.0 105.6 10 236.9 185.4 28
Income from continuing operations (a)
46.3 32.2 44 95.6 46.5 fav
Diluted EPS from continuing operations (a)
1.03 0.68 51 2.12 0.98 fav
Non-GAAP (b)
Non-GAAP revenues $ 1,253.1 1,216.2 3 $ 2,489.2 2,401.6 4
Non-GAAP operating profit 155.6 131.8 18 300.6 259.2 16
Non-GAAP income from continuing operations (a)
75.4 60.2 25 145.1 120.4 21
Non-GAAP adjusted EBITDA 225.9 194.3 16 444.1 384.8 15
Non-GAAP diluted EPS from continuing operations (a)
1.67 1.27 31 3.21 2.54 26
(a) Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.
(b) Non-GAAP results are reconciled to the applicable GAAP results on pages 48 – 50 and 51 .
GAAP Basis
Analysis of Consolidated Results: Second Quarter 2024 versus Second Quarter 2023
Consolidated Revenues Revenues increased $36.9 million due to organic increases in Latin America ($126.7 million), Europe ($25.6 million), North America ($10.4 million), and Rest of World ($4.0 million) and the favorable impact of acquisitions ($6.7 million), partially offset by the unfavorable impact of currency exchange rates ($136.5 million). The unfavorable currency impact was driven primarily by the Argentine peso. Revenues increased 14% on an organic basis primarily due to inflation-based price increases and organic growth in AMS and DRS revenue. See above for our definition of “organic growth.”
Consolidated Costs and Expenses Cost of revenues decreased 1% to $937.8 million primarily due to the impact of currency exchange rates and the prior year impact of a large loss event in our BGS line of business, partially offset by the impact of higher revenue. Selling, general and administrative costs increased 14% to $194.3 million primarily due to organic increases in labor costs and costs related to transformation initiatives, partially offset by lower acquisition and restructuring related costs and the impact of currency exchange rates.
Consolidated Operating Profit Operating profit increased $10.4 million due mainly to:
• organic increases in Latin America ($38.2 million), North America ($13.7 million), and Europe ($3.1 million), and
• lower corporate expenses on an organic basis ($13.4 million),
partially offset by:
• unfavorable changes in currency exchange rates ($43.8 million), driven by the Argentine peso,
• transformation initiative costs ($7.2 million), and
• an organic decrease in Rest of World ($1.6 million).
Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Income from continuing operations attributable to Brink’s shareholders increased $14.1 million to $46.3 million due to the increase in operating profit mentioned
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above and higher interest and other nonoperating income ($8.4 million), partially offset by higher interest expense ($5.4 million) and higher noncontrolling interest ($0.6 million). Earnings per share from continuing operations was $1.03, up from $0.68 in the second quarter of 2023.
Analysis of Consolidated Results: First Half 2024 versus First Half 2023
Consolidated Revenues Revenues increased $87.6 million due to organic increases in Latin America ($243.8 million), Europe ($42.7 million), North America ($13.9 million), and Rest of World ($11.9 million) and the favorable impact of acquisitions ($8.6 million), partially offset by the unfavorable impact of currency exchange rates ($233.3 million). The unfavorable currency impact was driven primarily by the Argentine peso. Revenues increased 13% on an organic basis primarily due to inflation-based price increases and organic growth in AMS and DRS revenue. See above for our definition of “organic growth.”
Consolidated Costs and Expenses Cost of revenues increased to $1,865.0 million primarily due to higher revenue, mostly offset by the impact of currency exchange rates, the prior year impact of a large loss event in our BGS line of business in the second quarter, and lower costs related to restructuring actions. Selling, general and administrative costs increased 14% to $394.9 million primarily due to organic increases in labor costs and higher transformation initiative costs, partially offset by the impact of currency exchange rates and lower restructuring related costs.
Consolidated Operating Profit Operating profit increased $51.5 million due mainly to:
• organic increases in Latin America ($65.7 million), North America ($23.5 million), Europe ($6.5 million), and Rest of World ($3.1 million),
• lower corporate expenses on an organic basis ($15.8 million),
• lower costs incurred related to reorganization and restructuring ($12.7 million), and
• lower costs incurred related to business acquisitions and dispositions ($6.8 million), including the impact of acquisition-related charges and intangible asset amortization, included in "Other items not allocated to segments",
partially offset by:
• unfavorable changes in currency exchange rates ($64.1 million), driven by the Argentine peso and
• transformation initiative costs ($12.0 million).
Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Income from continuing operations attributable to Brink’s shareholders increased $49.1 million to $95.6 million due to the increase in operating profit mentioned above and higher interest and other nonoperating income ($17.0 million), partially offset by higher interest expense ($14.6 million), higher income tax expense ($4.6 million), and higher noncontrolling interest ($0.2 million). Earnings per share from continuing operations was $2.12, up from $0.98 in the first six months of 2023.
Non-GAAP Basis
Analysis of Consolidated Results: Second Quarter 2024 versus Second Quarter 2023
Non-GAAP Consolidated Revenues There is no difference between GAAP and Non-GAAP revenue amounts for the periods presented. See above for details.
Non-GAAP Consolidated Operating Profit Non-GAAP operating profit increased $23.8 million due mainly to:
• organic increases in Latin America ($38.2 million), North America ($13.7 million), and Europe ($3.1 million), and
• lower corporate expenses on an organic basis ($13.4 million),
partially offset by:
• unfavorable changes in currency exchange rates ($43.7 million), driven primarily by the Argentine peso, and
• an organic decrease in Rest of World ($1.6 million).
Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Non-GAAP income from continuing operations attributable to Brink’s shareholders increased $15.2 million to $75.4 million due to the operating profit increase mentioned above and higher interest and other nonoperating income ($7.7 million), partially offset by higher income tax expense ($10.0 million), higher interest expense ($5.7 million), and higher noncontrolling interest ($0.6 million). Earnings per share from continuing operations was $1.67, up from $1.27 in the second quarter of 2023.
Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA increased 16% to $225.9 million primarily due to the increase in Non-GAAP operating profit ($23.8 million), excluding the impact of higher Non-GAAP depreciation and amortization ($2.3 million).
Analysis of Consolidated Results: First Half 2024 versus First Half 2023
Non-GAAP Consolidated Revenues There is no difference between GAAP and Non-GAAP revenue amounts for the periods presented. See page 36 for details.
Non-GAAP Consolidated Operating Profit Non-GAAP operating profit increased $41.4 million due mainly to:
• organic increases in Latin America ($65.7 million), North America ($23.5 million), Europe ($6.5 million), and Rest of World ($3.1 million), and
• lower corporate expenses on an organic basis ($15.8 million),
partially offset by:
• unfavorable changes in currency exchange rates ($73.8 million), driven primarily by the Argentine peso.
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Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Non-GAAP income from continuing operations attributable to Brink’s shareholders increased $24.7 million to $145.1 million due to the operating profit increase mentioned above and higher interest and other nonoperating income ($16.0 million), partially offset by higher income tax expense ($17.4 million), higher interest expense ($15.1 million) and higher noncontrolling interest ($0.2 million). Earnings per share from continuing operations was $3.21, up from $2.54 in the first six months of 2023.
Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA increased 15% to $444.1 million primarily due to the increase in Non-GAAP operating profit ($41.4 million), excluding the impact of higher Non-GAAP depreciation and amortization ($6.5 million).
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Revenues and Operating Profit by Segment: Second Quarter 2024 versus Second Quarter 2023
Organic Acquisitions / % Change
(In millions) 2Q'23 Change Dispositions (a)
Currency (b)
2Q'24 Total Organic
Revenues:
North America $ 397.4 10.4 4.8 (0.6) 412.0 4 3
Latin America 333.9 126.7 — (128.9) 331.7 (1) 38
Europe 285.9 25.6 1.9 (3.7) 309.7 8 9
Rest of World 199.0 4.0 — (3.3) 199.7 — 2
Segment revenues (c)
1,216.2 166.7 6.7 (136.5) 1,253.1 3 14
Revenues - GAAP $ 1,216.2 166.7 6.7 (136.5) 1,253.1 3 14
Operating profit:
North America $ 37.5 13.7 0.5 — 51.7 38 37
Latin America 65.9 38.2 — (40.9) 63.2 (4) 58
Europe 29.3 3.1 0.2 (0.4) 32.2 10 11
Rest of World 41.3 (1.6) — (0.7) 39.0 (6) (4)
Segment operating profit 174.0 53.4 0.7 (42.0) 186.1 7 31
Corporate (d)
(42.2) 13.4 — (1.7) (30.5) (28) (32)
Operating profit - non-GAAP 131.8 66.8 0.7 (43.7) 155.6 18 51
Other items not allocated to segments (e)
(26.2) (11.7) (1.6) (0.1) (39.6) 51 45
Operating profit - GAAP $ 105.6 55.1 (0.9) (43.8) 116.0 10 52
Amounts may not add due to rounding.
(a) Amounts include the impact of prior year comparable period results for acquired and disposed businesses. GAAP results also include the impact of acquisition-related intangible amortization, restructuring and other charges, and disposition-related gains/losses.
(b) The amounts in the “Currency” column consist of the effects of Argentina devaluations under highly inflationary accounting and the sum of monthly currency changes. Monthly currency changes represent the accumulation throughout the year of the impact on current period results of changes in foreign currency rates from the prior year period.
(c) Segment revenues equal our total reported non-GAAP revenues.
(d) Corporate expenses are not allocated to segment results. Corporate expenses include salaries and other costs to manage the global business and to perform activities required by public companies.
(e) See pages 41 - 43 for more information
Analysis of Segment Results: Second Quarter 2024 versus Second Quarter 2023
North America
Revenues increased 4% ($14.6 million) due to a 3% organic increase ($10.4 million) and the impact of acquisitions ($4.8 million), partially offset by the unfavorable impact of currency exchange rates $0.6 million. Organic revenue increased primarily due to price increases and growth in AMS and DRS revenue in the U.S., partially offset by lower BGS revenue. Operating profit increased 38% ($14.2 million) due to a 37% organic increase ($13.7 million) and the impact of acquisitions $0.5 million. The organic increase was primarily driven by cost productivity improvements in labor and other areas, including realizing benefits from transformation initiatives in the U.S., as well as increased revenue.
Latin America
Revenues decreased 1% ($2.2 million) due to the unfavorable impact of currency exchange rates ($128.9 million) primarily from the Argentine peso, largely offset by a 38% organic increase ($126.7 million). The organic increase was primarily driven by inflation-based price increases across the segment with a majority of the impact from Argentina, as well as growth in AMS and DRS revenue. Operating profit was down 4% ($2.7 million) primarily due to the unfavorable impact of currency exchange rates ($40.9 million), mostly offset by a 58% organic increase ($38.2 million). The organic increase was driven by inflation-based price increases which outpaced the impact of labor and other cost increases.
Europe
Revenues increased 8% ($23.8 million) due to a 9% organic increase ($25.6 million) and the impact of acquisitions ($1.9 million), partially offset by the unfavorable impact of currency exchange rates ($3.7 million). Organic revenue increased primarily due to price increases and the growth of AMS and DRS revenue. Operating profit increased $2.9 million primarily due to a 11% organic increase ($3.1 million) driven by higher revenue outpacing the impact of labor and other cost increases across the segment, cost productivity, and the mix benefit of higher AMS and DRS revenue.
Rest of World
Revenues increased $0.7 million due to a 2% organic increase ($4.0 million), partially offset by the unfavorable impact of currency exchange rates ($3.3 million). Organic growth in the segment was primarily due to growth in DRS and AMS revenue offset by volume reductions in CVM revenue, including the BGS line of business. Operating profit decreased 6% ($2.3 million) primarily due to a 4% organic decrease ($1.6 million).
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Revenues and Operating Profit by Segment: First Half 2024 versus First Half 2023
Organic Acquisitions / % Change
(In millions) YTD '23 Change Dispositions (a)
Currency (b)
YTD '24 Total Organic
Revenues:
North America $ 799.3 13.9 4.8 (0.5) 817.5 2 2
Latin America 649.4 243.8 — (226.8) 666.4 3 38
Europe 554.6 42.7 3.8 — 601.1 8 8
Rest of World 398.3 11.9 — (6.0) 404.2 1 3
Segment revenues (c)
2,401.6 312.3 8.6 (233.3) 2,489.2 4 13
Revenues - GAAP $ 2,401.6 312.3 8.6 (233.3) 2,489.2 4 13
Operating profit:
North America $ 76.1 23.5 0.5 — 100.1 32 31
Latin America 132.5 65.7 — (72.0) 126.2 (5) 50
Europe 51.3 6.5 0.4 (0.1) 58.1 13 13
Rest of World 78.6 3.1 (0.3) (1.3) 80.1 2 4
Segment operating profit 338.5 98.8 0.6 (73.4) 364.5 8 29
Corporate (d)
(79.3) 15.8 — (0.4) (63.9) (19) (20)
Operating profit - non-GAAP 259.2 114.6 0.6 (73.8) 300.6 16 44
Other items not allocated to segments (e)
(73.8) (6.4) 6.8 9.7 (63.7) (14) 9
Operating profit - GAAP $ 185.4 108.2 7.4 (64.1) 236.9 28 58
Amounts may not add due to rounding.
See page 39 for footnote explanations.
Analysis of Segment Results: First Half 2024 versus First Half 2023
North America
Revenues increased 2% ($18.2 million) primarily due to a 2% organic increase ($13.9 million) and the impact of acquisitions ($4.8 million). Organic revenue increased primarily due to price increases and growth in AMS and DRS revenue in the U.S., partially offset by volume reductions due to the rationalization of our customer portfolio to optimize profitability and lower BGS revenue. Operating profit increased $24.0 million due to a 31% organic increase ($23.5 million) and the impact of acquisitions ($0.5 million). The organic increase was primarily driven by cost productivity improvements in labor and other areas, including realizing benefits from transformation initiatives in the U.S., as well as lower security losses and increased revenue.
Latin America
Revenues increased 3% ($17.0 million) due to a 38% organic increase ($243.8 million), mostly offset by the unfavorable impact of currency exchange rates ($226.8 million), primarily from the Argentine peso partially offset by favorable impact from the Mexican peso. The organic increase was driven by inflation-based price increases across the segment with a majority of the impact from Argentina, as well as growth in AMS and DRS revenue. Operating profit was down 5% ($6.3 million) due to the unfavorable impact of currency exchange rates ($72.0 million), mostly offset by a 50% organic increase ($65.7 million). The organic increase was driven by higher revenue which outpaced the impact of labor and other cost increases.
Europe
Revenues increased 8% ($46.5 million) due to a 8% organic increase ($42.7 million) and the favorable impact of acquisitions ($3.8 million). The organic increase was primarily due to price increases and the growth of AMS and DRS revenue. Operating profit increased 13% ($6.8 million), primarily due to a 13% organic increase ($6.5 million). The organic increase was primarily driven by higher revenue outpacing the impact of labor and other cost increases across the segment, cost productivity, and the mix benefit of higher AMS and DRS revenue.
Rest of World
Revenues increased 1% ($5.9 million) due to a 3% organic increase ($11.9 million), partially offset by the unfavorable impact of currency exchange rates ($6.0 million). Organic growth in the segment was primarily due to growth in BGS revenue and supplemented by continued growth in AMS and DRS revenue. Operating profit increased 2% ($1.5 million) due to a 4% organic increase ($3.1 million), partially offset by the unfavorable impact of currency exchange rates ($1.3 million). The organic increase was primarily due the increase in higher-margin revenue.
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Income and Expense Not Allocated to Segments
Corporate Expenses
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
General, administrative and other expenses $ (33.2) (47.3) (30) $ (74.4) (89.9) (17)
Foreign currency transaction gains 3.1 4.8 (35) 9.4 9.9 (5)
Reconciliation of segment policies to GAAP (0.4) 0.3 unfav 1.1 0.7 57
Corporate expenses $ (30.5) (42.2) (28) $ (63.9) (79.3) (19)
Corporate expenses include corporate headquarters costs, regional management costs, currency transaction gains and losses, costs related to global initiatives and adjustments to reconcile segment accounting policies to U.S. GAAP.
Corporate expenses for the first six months of 2024 decreased $15.4 million versus the prior year period. This was primarily driven by lower charges related to insurance and security losses ($22.8 million), partially offset by higher net compensation costs ($2.4 million) and higher technology costs ($2.2 million).
Other Items Not Allocated to Segments
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
Operating profit:
Reorganization and restructuring
(0.1) — unfav $ (1.5) (14.2) (89)
Acquisitions and dispositions (14.8) (15.0) (1) (30.7) (37.0) (17)
Argentina highly inflationary impact (11.4) (11.0) 4 (13.0) (22.2) (41)
Transformation initiatives (7.2) — unfav (12.0) — unfav
Department of Justice investigation
(6.0) — unfav (6.0) — unfav
Chile antitrust matter
(0.1) (0.2) (50) (0.5) (0.4) 25
Operating profit $ (39.6) (26.2) 51 $ (63.7) (73.8) (14)
Reorganization and Restructuring
2022 Global Restructuring Plan
In the first quarter of 2023, management completed the review and approval of remaining actions included in the previously announced 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. In total, we have recognized $34.0 million in charges under this program, including $0.8 million in the first six months of 2024. We expect total expenses from the program to be between $36 million and $38 million. When completed, the current restructuring actions are expected to reduce our workforce by 3,200 to 3,400 positions and result in annualized cost savings of approximately $60 million.
Other Restructurings
Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $4.1 million in the first six months of 2023, primarily severance costs. We recognized $0.7 million in net costs in the first six months of 2024. The majority of the costs in both the 2024 and 2023 periods result 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.
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Due to the unique circumstances around these charges, they have not been allocated to segment results and are excluded from non-GAAP results. Charges related to the employees, assets, leases and contracts impacted by these restructuring actions were excluded from the segments and corporate expenses as shown in the table below.
Three Months Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
Reportable Segments:
North America $ — (0.4) (100) $ (0.8) (4.0) (80)
Latin America (0.1) (0.4) (75) (0.3) (4.0) (93)
Europe (0.2) 0.2 unfav (0.5) (4.2) (88)
Rest of World — 0.6 (100) — (0.7) (100)
Total reportable segments (0.3) — unfav (1.6) (12.9) (88)
Corporate items 0.2 — fav 0.1 (1.3) fav
Total $ (0.1) — unfav $ (1.5) (14.2) (89)
Acquisitions and dispositions Certain acquisition and disposition items that are not considered part of the ongoing activities of the business and are special in nature are consistently excluded from segment and non-GAAP results. These items are described below:
2024 Acquisitions and Dispositions
• Amortization expense for acquisition-related intangible assets was $29.1 million in the first six months of 2024.
• Net charges of $1.2 million were incurred for post-acquisition adjustments to indemnification assets related to previous business acquisitions.
• We recognized $0.5 million in charges in Argentina in the first six months of 2024 for an inflation-adjusted labor increase to expected payments to union workers of the Maco businesses. See Note 6 for details.
• We incurred $0.4 million in integration costs in the first six months of 2024.
• Transaction costs related to business acquisitions were $0.3 million in the first six months of 2024.
• A net credit of $1.3 million related to the reversal of retention liability for key PAI employees was recorded in the first six months of 2024.
2023 Acquisitions and Dispositions
• Amortization expense for acquisition-related intangible assets was $28.6 million in the first six months of 2023.
• A net gain of $4.8 million was recognized upon derecognition of a contingent consideration liability related to the NoteMachine business acquisition.
• We recognized $3.3 million in charges in Argentina in the first six months of 2024 for an inflation-adjusted labor increase to expected payments to union workers of the Maco businesses.
• Net charges of $2.6 million were incurred for post-acquisition adjustments to indemnification assets related to previous business acquisitions.
• We incurred $1.2 million in integration costs, primarily related to PAI, in the first six months of 2023.
• Transaction costs related to business acquisitions were $2.4 million in the first six months of 2023.
• We recognized a $2.0 million loss on the disposition of Russia-based operations in the first six months of 2023.
• Compensation expense related to the retention of key PAI employees was $1.0 million in the first six months of 2023.
Argentina highly inflationary impact Beginning in the third quarter of 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, Argentine peso-denominated monetary assets and liabilities are now remeasured at each balance sheet date to the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in earnings. In addition, nonmonetary assets retain a higher historical basis when the currency is devalued. The higher historical basis results in incremental expense being recognized when the nonmonetary assets are consumed. In the first six months of 2024, we recognized $13.0 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $6.4 million. In the first six months of 2023, we recognized $22.2 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $18.2 million. These amounts are excluded from segment and non-GAAP results.
Transformation initiatives During 2023, we initiated a multi-year program intended to accelerate growth and drive margin expansion through transformation of our business model in the U.S., with expectations to then leverage the transformation changes and learnings globally. The program is designed to help us standardize our commercial and operational systems and processes, drive continuous improvement and achieve operational excellence. Accordingly, we incurred $5.5 million of expense in 2023 and an additional $12.0 million in the first six months of 2024. The transformation costs primarily include third party professional services and project management charges and are excluded from segment and non-GAAP results.
Department of Justice investigation During the second quarter of 2024, we accrued $6.0 million in connection with a U.S. Department of Justice investigation. Due to the special nature of this matter, this charge has not been allocated to segment results and is excluded from non-GAAP results. See Note 14 for details.
Chile antitrust matter We recognized an estimated loss of $9.5 million in the third quarter of 2021 related to a potential fine. In the first six months of 2024, we recognized an additional $0.5 million adjustment and, in the first six months of 2023, an additional $0.4 million
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adjustment to our estimated loss. The adjustments resulted primarily from changes in currency rates. Due to the special nature of this matter, this charge has not been allocated to segment results and is excluded from non-GAAP results. See Note 14 for details.
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Foreign Operations
We currently serve customers in more than 100 countries, including 52 countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, the imposition of international sanctions, including by the U.S. government, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations. The future effects, if any, of these risks are unknown. In April 2019, the U.S. government sanctioned the Venezuela central bank and, as a result, the Company has ceased support of the Venezuela business.
Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars, they are affected by changes in the value of various local currencies in relation to the U.S. dollar. Recent strengthening of the U.S. dollar relative to certain currencies has reduced some of our reported U.S. dollar revenues and operating profit and may continue through the end of 2024.
At June 30, 2024, Argentina's economy remains highly inflationary for accounting purposes. At June 30, 2024, we had net monetary assets denominated in Argentine pesos of $101.5 million (including cash of $84.5 million) and net nonmonetary assets of $139.9 million (including $99.8 million of goodwill, $2.9 million in equity securities denominated in Argentine pesos and $7.3 million in debt securities denominated in Argentine pesos).
During September 2019, the Argentine government announced currency controls on both companies and individuals. Under the exchange procedures implemented by the central bank, approval is required for many transactions, including dividend repatriation abroad.
We have previously elected to use other market mechanisms to convert Argentine pesos into U.S. dollars. Conversions under these other market mechanisms generally settle at rates that are less favorable than the rates at which we remeasure the financial statements of Brink’s Argentina. We did not have any such conversions or conversion losses in the six months ended June 30, 2024 or June 30, 2023.
Although the Argentine government has implemented currency controls, Brink’s management continues to provide guidance and strategic oversight, including budgeting and forecasting for Brink’s Argentina. We continue to control our Argentina business for purposes of consolidation of our financial statements and continue to monitor the situation in Argentina.
Changes in exchange rates may also affect transactions that are denominated in currencies other than the functional currency. From time to time, we use short term foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At June 30, 2024, the notional value of our short term outstanding foreign currency forward and swap contracts was $966 million, with average contract maturities of approximately one month. These short term foreign currency forward and swap contracts primarily offset exposures in the euro, the British pound and the Mexican peso and are not designated as hedges for accounting purposes. Accordingly, changes in their fair value are recorded immediately in earnings. At June 30, 2024, the fair value of our short term foreign currency contracts was a net liability of approximately $6.3 million, of which $7.1 million was included in prepaid expenses and other and $13.4 million was included in accrued liabilities on the condensed consolidated balance sheet. At December 31, 2023, the fair value of these foreign currency contracts was a net liability of approximately $1.1 million, of which $8.7 million was included in prepaid expenses and other and $9.8 million was included in accrued liabilities on the condensed consolidated balance sheet.
Amounts under these contracts were recognized in other operating income (expense) as follows:
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions) 2024 2023 2024 2023
Derivative instrument gains (losses) included in other operating income (expense)
$ (12.1) 10.4 $ 1.3 18.6
We also had a long term cross currency swap contract to hedge exposure in Brazilian real, which was designated as a cash flow hedge for accounting purposes. Accordingly, changes in the fair value of the cash flow hedge were initially recorded in the gains (losses) on cash flow hedges component of accumulated other comprehensive income (loss). We immediately reclassified from accumulated other comprehensive income (loss) to earnings an amount to offset the remeasurement recognized in earnings associated with the respective intercompany loan. Additionally, we reclassified amounts from accumulated other comprehensive income (loss) to interest expense amounts that were associated with the interest rate differential between a U.S. dollar denominated intercompany loan and a Brazilian real denominated intercompany loan.
44
In the first half of 2023, amounts under this contract were recognized in other operating income (expense) to offset transaction gains or losses and in interest expense as follows:
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions) 2024 2023 2024 2023
Derivative instrument losses included in other operating income (expense) $ — (3.8) $ — (7.2)
Offsetting transaction gains — 3.8 — 7.2
Derivative instrument losses included in interest expense — (0.2) — (0.5)
Net derivative instrument losses — (4.0) — (7.7)
In the second quarter of 2021, we entered into ten cross currency swaps to hedge a portion of our net investments in certain of our subsidiaries with euro functional currencies. We elected to use the spot method to assess effectiveness for these derivatives that are designated as net investment hedges. Accordingly, changes in fair value attributable to changes in the undiscounted spot rates are recorded in the foreign currency translation adjustments component of accumulated other comprehensive income (loss) and will remain there until the hedged net investments are sold or substantially liquidated. We have elected to exclude the spot-forward difference from the assessment of hedge effectiveness and are amortizing this amount separately on a straight-line basis over the term of these cross currency swaps.
In the third quarter of 2022, we terminated these cross currency swap contracts and received $67 million in cash as settlement. We subsequently entered into a total of nine cross currency swaps with a total notional value of $400 million to hedge a portion of our net investment in certain of our subsidiaries with euro functional currencies. Swaps with a total notional value of $215 million will terminate in May 2026 and swaps with a total notional value of $185 million will terminate in April 2031. We have designated these swaps as net investment hedges for accounting purposes.
In the third quarter of 2023, we entered into a zero cost foreign exchange collar contract with a $215 million notional amount and a May 2026 expiration date. We sold a put option with a lower strike price and bought a call option with a higher strike price to manage the foreign exchange risk related to the final settlement of the $215 million notional cross currency swaps. Upon the execution of the zero cost foreign exchange collar contract, we de-designated the existing $215 million notional cross currency swaps and re-designated the combined $215 million notional cross currency swaps and zero cost collar into a new hedging instrument. At re-designation, the existing $215 million notional cross currency swaps had a non-zero fair value representing an off-market component of the participating cross currency swaps. The off-market value is being ratably amortized into earnings through May 2026. The combined cross currency swaps and zero cost collar has been designated as a net investment hedge for accounting purposes.
At June 30, 2024, the notional value of these cross currency swap contracts was $400 million with a remaining weighted average maturity of 1.6 years for the cross currency swaps maturing in May 2026 and a remaining weighted average maturity of 5.7 years for the cross currency swaps maturing in April 2031. At June 30, 2024, the fair value of these currency swaps was a net liability of $23.4 million, of which $5.6 million was included in prepaid expenses and other and $29.0 million was included in other liabilities on the condensed consolidated balance sheet. At December 31, 2023, the fair value of these currency swaps was a net liability of $34.6 million of which $5.6 million was included in prepaid expenses and other and $40.2 million was included in other liabilities on the condensed consolidated balance sheet. At June 30, 2024, the fair value of the zero cost collar was an asset of $1.9 million, which was included in other assets on the condensed consolidated balance sheet. At December 31, 2023, the fair value of the zero cost collar was an asset of $0.1 million, which was included in other assets on the condensed consolidated balance sheet.
In the fourth quarter of 2023, we entered into a foreign exchange forward swap contract to hedge a portion of our net investments in certain of our subsidiaries with Hong Kong dollar functional currencies. As the contract is designated as a net investment hedge for accounting purposes, we will use the spot method to assess effectiveness of this derivative contract. We will record changes in fair value attributable to changes in the Hong Kong dollar undiscounted spot rates in the foreign currency translation adjustments component of accumulated other comprehensive income (loss) with amounts remaining in accumulated comprehensive income (loss) until the hedged net investments are sold or substantially liquidated. We have elected to exclude the spot-forward difference from the assessment of hedge effectiveness and are amortizing this amount separately on a straight-line basis over the term of the foreign exchange forward swap contract.
At June 30, 2024, the notional value of this foreign exchange forward swap contract was $55 million with a remaining weighted average maturity of 0.4 years. At June 30, 2024, the fair value of this foreign exchange forward swap was an asset of $0.2 million, which was included in prepaid expenses and other on the condensed consolidated balance sheet. At December 31, 2023, the fair value of this foreign exchange forward swap was an asset of $0.1 million, which was included in prepaid expenses and other on the condensed consolidated balance sheet.
The effect of the amortization of the spot-forward difference on the net investment hedges cross currency swaps is included in interest expense as follows:
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions) 2024 2023 2024 2023
Net derivative instrument gains included in interest expense $ (1.2) (1.5) $ (2.3) (2.9)
45
See Note 1 to the condensed consolidated financial statements for a description of how we account for currency remeasurement for Argentine subsidiaries, beginning July 1, 2018 under the heading, "Argentina".
Other Operating Income (Expense)
Other operating income (expense) includes amounts included in segment results as well as income and expense not allocated to segments.
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
Foreign currency items:
Transaction gains (losses)
$ 7.2 (14.0) fav $ 1.7 (26.9) fav
Derivative instrument gains (losses)
(12.1) 10.4 unfav 1.3 18.6 (93)
Gains (losses) on sale of property and other assets 0.5 0.1 fav 1.3 (1.8) fav
Impairment losses (1.4) (0.5) unfav (1.9) (4.2) (55)
Indemnification asset adjustments (1.2) (2.1) (43) (1.2) (2.6) (54)
Share in earnings of equity affiliates 0.6 0.6 — 1.4 1.2 17
Royalty income 2.0 1.7 18 4.1 3.6 14
Contingent consideration liability adjustment — 4.8 (100) — 4.8 (100)
Other gains (losses)
(0.6) 2.8 unfav 0.9 2.8 (68)
Other operating income (expense) $ (5.0) 3.8 unfav $ 7.6 (4.5) fav
Nonoperating Income and Expense
Interest expense
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions)
2024 2023 change 2024 2023 change
Interest expense $ 56.5 51.1 11 $ 112.3 97.7 15
Interest expense was higher in the first six months of 2024 due to higher interest rates on corporate debt and overall higher borrowing levels. Borrowings were primarily used to fund growth in our DRS business and other general corporate initiatives.
Interest and other nonoperating income (expense)
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
Interest income $ 11.8 7.5 57 $ 27.4 14.0 96
Gain (loss) on equity and debt securities — (0.9) (100) 0.5 (1.0) fav
Foreign currency transaction gains (losses) — (0.7) (100) 0.1 (1.1) fav
Retirement benefit cost other than service cost (0.3) 0.8 unfav (1.4) 0.8 unfav
Argentina turnover tax (0.9) (1.4) (36) (2.0) (1.9) 5
Non-income taxes on intercompany billings (a)
(0.2) (0.2) — (0.6) (0.9) (33)
Other 2.1 (1.0) fav 1.8 (1.1) fav
Interest and other nonoperating income (expense) $ 12.5 4.1 fav $ 25.8 8.8 fav
(a) Certain of our Latin American subsidiaries incur non-income taxes related to the billing of intercompany charges. These intercompany charges do not impact the Latin America segment results and are eliminated in our consolidation.
46
Income Taxes
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions, except for effective tax rate)
2024 2023 2024 2023
Continuing operations
Provision for income taxes
$ 22.1 23.4 $ 48.3 43.7
Effective tax rate 30.7 % 39.9 % 32.1 % 45.3 %
Effective Tax Rate
Our effective tax rate may fluctuate materially from these estimates due to changes in pre-tax earnings, permanent book-tax differences, changes in the expected amount and geographical mix of earnings, changes in current or deferred taxes due to legislative changes, changes in valuation allowances or accruals for contingencies, changes in distributions of share-based payments, changes in U.S. taxable income, and other factors.
Noncontrolling Interests
Three Months
Ended June 30, % Six Months
Ended June 30, %
(In millions) 2024 2023 change 2024 2023 change
Net income attributable to noncontrolling interests $ 3.6 3.0 20 $ 6.5 6.3 3
The increase in the net income attributable to noncontrolling interests in the three months ended June 30, 2024, in comparison to the three months ended June 30, 2023, is primarily attributable to higher 2024 operating results reported by certain subsidiaries that are not wholly-owned. The net income attributable to noncontrolling interests in the six months ended June 30, 2024, is consistent with the net income attributable to noncontrolling interests in the six months ended June 30, 2023.
47
Non-GAAP Results Reconciled to GAAP
Non-GAAP results described in this filing are financial measures that are not required by or presented in accordance with GAAP. The purpose of the non-GAAP results is to report financial information from the primary operations of our business by excluding the effects of certain income and expenses that do not reflect the ordinary earnings of our operations. The specific items excluded have not been allocated to segments, are described in detail on pages 41 – 42 , and are reconciled to comparable GAAP measures below.
Non-GAAP results adjust the quarterly non-GAAP tax rates so that the non-GAAP tax rate in each of the quarters is equal to the full-year estimated non-GAAP tax rate. The full-year non-GAAP tax rate in both years excludes certain pretax and income tax amounts. Amounts reported for prior periods have been updated in this report to present information consistently for all periods presented.
The Non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. 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. We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part of our core business. Additionally, non-GAAP results are utilized as performance measures in certain management incentive compensation plans.
Non-GAAP results should not be considered as an alternative to revenue, net income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts. Non-GAAP financial measures may not be comparable to Non-GAAP financial measures presented by other companies.
YTD '24 YTD '23
(In millions, except for percentages) Pre-tax income Income taxes Effective tax rate Pre-tax income Income taxes Effective tax rate
Effective Income Tax Rate (a)
GAAP $ 150.4 48.3 32.1 % $ 96.5 43.7 45.3 %
Retirement plans (d)
(3.4) (0.7) (4.1) (0.7)
Reorganization and restructuring (b)
1.5 0.3 14.2 2.6
Acquisitions and dispositions (b)
30.5 2.3 38.6 4.4
Argentina highly inflationary impact (b)
13.2 0.1 22.8 (0.7)
Transformation initiatives (b)
12.0 0.3 — —
Valuation allowance on tax credits (e)
— — — (6.7)
Department of Justice investigation (b)
6.0 — — —
Chile antitrust matter (b)
0.5 0.1 0.4 0.1
Income tax rate adjustment (c)
— 8.5 — (0.9)
Non-GAAP $ 210.7 59.2 28.1 % $ 168.4 41.8 24.8 %
Amounts may not add due to rounding.
(a) From continuing operations.
(b) See “Other Items Not Allocated To Segments” on pages 41 – 42 for details. We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part of our core business.
(c) Non-GAAP income from continuing operations and non-GAAP EPS have been adjusted to reflect an effective income tax rate in each interim period equal to the full-year non-GAAP effective income tax rate. The full-year non-GAAP effective tax rate is estimated at 28.1% for 2024 and was 24.8% for 2023.
(d) Our U.S. retirement plans are frozen and costs related to these plans are excluded from non-GAAP results. Certain non-U.S. operations also have retirement plans. Settlement charges and curtailment gains related to these non-U.S. plans and costs related to our frozen non-U.S. retirement plans are also excluded from non-GAAP results.
(e) In the first six months of 2023, we recorded a portion of our valuation allowance on certain U.S. deferred tax assets primarily related to foreign tax credit carryforward attributes. The valuation allowance increase was due to new foreign tax credit Notices published by the U.S. Internal Revenue Service in 2023, which provided taxpayers relief from the 2022 foreign tax credit regulations until additional guidance is issued and effective date of such guidance is provided.
(f) Due to reorganization and restructuring activities, there was a $0.9 million non-GAAP adjustment to share-based compensation in the six months ended 2023. There is no difference between GAAP and non-GAAP share-based compensation amounts for the other periods presented.
(g) Due to the impact of Argentina highly inflationary accounting, there was a $0.3 million non-GAAP adjustment for a loss in the second quarter of 2023, and a $0.6 million non-GAAP adjustment for a loss in the six months ended 2023. There is no difference between GAAP and non-GAAP share-based compensation amounts for the other periods presented..
(h) Adjusted EBITDA is defined as non-GAAP income from continuing operations excluding the impact of non-GAAP interest expense, non-GAAP income tax provision, non-GAAP depreciation and amortization, non-GAAP share-based compensation and non-GAAP marketable securities (gain) loss.
48
Non-GAAP Results Reconciled to GAAP
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions, except for percentages and per share amounts) 2024 2023 2024 2023
Revenues:
GAAP $ 1,253.1 1,216.2 $ 2,489.2 2,401.6
Non-GAAP $ 1,253.1 1,216.2 $ 2,489.2 2,401.6
Operating profit:
GAAP $ 116.0 105.6 $ 236.9 185.4
Reorganization and restructuring (b)
0.1 — 1.5 14.2
Acquisitions and dispositions (b)
14.8 15.0 30.7 37.0
Argentina highly inflationary impact (b)
11.4 11.0 13.0 22.2
Transformation initiatives (b)
7.2 — 12.0 —
Department of Justice investigation (b)
6.0 — 6.0 —
Chile antitrust matter (b)
0.1 0.2 0.5 0.4
Non-GAAP $ 155.6 131.8 $ 300.6 259.2
Operating margin:
GAAP margin 9.3 % 8.7 % 9.5 % 7.7 %
Non-GAAP margin 12.4 % 10.8 % 12.1 % 10.8 %
Interest expense:
GAAP $ (56.5) (51.1) $ (112.3) (97.7)
Acquisitions and dispositions (b)
— 0.3 — 0.5
Non-GAAP $ (56.5) (50.8) $ (112.3) (97.2)
Interest and other nonoperating income (expense):
GAAP $ 12.5 4.1 $ 25.8 8.8
Retirement plans (d)
(1.9) (1.9) (3.4) (4.1)
Acquisitions and dispositions (b)
— 0.6 (0.2) 1.1
Argentina highly inflationary impact (b)
0.2 0.3 0.2 0.6
Non-GAAP $ 10.8 3.1 $ 22.4 6.4
Provision (benefit) for income taxes:
GAAP $ 22.1 23.4 $ 48.3 43.7
Retirement plans (d)
(0.4) (0.1) (0.7) (0.7)
Reorganization and restructuring (b)
(0.1) (0.1) 0.3 2.6
Acquisitions and dispositions (b)
1.0 2.0 2.3 4.4
Argentina highly inflationary impact (b)
0.2 (0.2) 0.1 (0.7)
Transformation initiatives (b)
0.2 — 0.3 —
Valuation allowance on tax credits (e)
— (4.1) — (6.7)
Chile antitrust matter (b)
0.1 0.1 0.1 0.1
Income tax rate adjustment (c)
7.8 (0.1) 8.5 (0.9)
Non-GAAP $ 30.9 20.9 $ 59.2 $ 41.8
Net income (loss) attributable to noncontrolling interests:
GAAP $ 3.6 3.0 $ 6.5 6.3
Acquisitions and dispositions (b)
0.3 0.3 0.5 0.5
Income tax rate adjustment (c)
(0.3) (0.3) (0.6) (0.6)
Non-GAAP $ 3.6 3.0 $ 6.4 6.2
Amounts may not add due to rounding.
See page 48 for footnote explanations.
49
Three Months
Ended June 30, Six Months
Ended June 30,
(In millions, except for percentages and per share amounts) 2024 2023 2024 2023
Income (loss) from continuing operations attributable to Brink's:
GAAP $ 46.3 32.2 $ 95.6 46.5
Retirement plans (d)
(1.5) (1.8) (2.7) (3.4)
Reorganization and restructuring (b)
0.2 0.1 1.2 11.6
Acquisitions and dispositions (b)
13.5 13.6 27.7 33.7
Argentina highly inflationary impact (b)
11.4 11.5 13.1 23.5
Transformation initiatives (b)
7.0 — 11.7 —
Valuation allowance on tax credits (e)
— 4.1 — 6.7
Department of Justice investigation (b)
6.0 — 6.0 —
Chile antitrust matter (b)
— 0.1 0.4 0.3
Income tax rate adjustment (c)
(7.5) 0.4 (7.9) 1.5
Non-GAAP $ 75.4 60.2 $ 145.1 120.4
Adjusted EBITDA (h) :
Net income (loss) attributable to Brink's - GAAP $ 46.2 32.1 $ 95.5 47.1
Interest expense - GAAP 56.5 51.1 112.3 97.7
Income tax provision - GAAP 22.1 23.4 48.3 43.7
Depreciation and amortization - GAAP 73.1 69.6 145.5 137.2
EBITDA $ 197.9 176.2 $ 401.6 325.7
Discontinued operations - GAAP 0.1 0.1 0.1 (0.6)
Retirement plans (c)
(1.9) (1.9) (3.4) (4.1)
Reorganization and restructuring (a)
0.1 (0.1) 1.5 13.0
Acquisitions and dispositions (a)
(0.1) 0.7 0.9 9.0
Argentina highly inflationary impact (a)
9.0 10.0 8.3 20.4
Transformation initiatives (a)
7.2 — 12.0 —
Department of Justice investigation (b)
6.0 — 6.0 —
Chile antitrust matter (a)
0.1 0.2 0.5 0.4
Income tax rate adjustment (b)
0.3 0.3 0.6 0.6
Share-based compensation (f)
7.3 8.3 16.6 20.1
Marketable securities (gain) loss (g)
(0.1) 0.5 (0.6) 0.3
Adjusted EBITDA $ 225.9 194.3 $ 444.1 384.8
Diluted EPS:
GAAP $ 1.03 0.68 $ 2.12 0.98
Retirement plans (d)
(0.04) (0.03) (0.06) (0.07)
Reorganization and restructuring (b)
0.01 0.01 0.02 0.24
Acquisitions and dispositions (b)
0.30 0.27 0.62 0.71
Argentina highly inflationary impact (b)
0.25 0.24 0.29 0.50
Transformation initiatives (b)
0.16 — 0.26 —
Valuation allowance on tax credits (e)
— 0.09 — 0.14
Department of Justice investigation (b)
0.13 — 0.13 —
Chile antitrust matter (b)
— — 0.01 0.01
Income tax rate adjustment (c)
(0.17) 0.01 (0.17) 0.03
Non-GAAP $ 1.67 1.27 $ 3.21 2.54
Depreciation and Amortization:
GAAP $ 73.1 69.6 $ 145.5 137.2
Reorganization and restructuring costs (a)
— (0.1) — (1.2)
Acquisitions and dispositions (a)
(14.6) (14.6) (29.1) (28.6)
Argentina highly inflationary impact (a)
(2.6) (1.3) (4.9) (2.4)
Non-GAAP $ 55.9 53.6 $ 111.5 105.0
Amounts may not add due to rounding.
See page 48 for footnote explanations.
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LIQUIDITY AND CAPITAL RESOURCES
Overview
Cash flows from operating activities decreased $107.5 million in the first six months of 2024 as compared to the first six months of 2023. Cash used for investing activities decreased by $28.2 million in the first six months of 2024 compared to the first six months of 2023. We financed our liquidity needs in the first six months of 2024 with existing cash from operations and cash flows from long term debt.
Operating Activities
Six Months
Ended June 30, $
(In millions) 2024 2023 change
Cash flows provided from (used in) operating activities
Operating activities - GAAP $ (2.2) 105.3 (107.5)
(Increase) decrease in restricted cash held for customers (see Note 13)
67.2 16.2 51.0
(Increase) decrease in customer obligations (a)
(4.6) 32.4 (37.0)
Capital expenditures - GAAP (108.9) (89.4) (19.5)
Proceeds from sale of property, equipment and investments 4.5 1.0 3.5
Proceeds from lessor debt financing (see Note 13)
7.2 1.4 5.8
Free cash flow before dividends - non-GAAP
$ (36.8) 66.9 (103.7)
(a) To adjust for the change in the balance of customer obligations related to cash received and processed in certain of our secure cash management services operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.
Non-GAAP free cash flow before dividends is a supplemental financial measure that is not required by, or presented in accordance with, GAAP. The purpose of this non-GAAP measure is to report financial information excluding the change in restricted cash held for customers, the impact of cash received and processed in certain of our secure cash management services operations, and capital expenditures, and to include proceeds from the sale of property, equipment and investments and proceeds from lessor debt financing. We believe this measure is helpful in assessing cash flows from operations, enables period-to-period comparability and is useful in predicting future cash flows. This non-GAAP measure should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our condensed consolidated statements of cash flows.
GAAP
Cash flows from operating activities decreased $107.5 million in the first six months of 2024 compared to the same period in 2023. The decrease was attributed to restricted cash held for customers (restricted cash held for customers decreased by $67.2 million in 2024 compared to a decrease of $16.2 million in 2023), working capital changes, higher amounts paid for interest (we had $124.7 million in cash payments for interest in 2024 as compared to $110.0 million in 2023), and higher amounts paid for income taxes (we had $68.5 million in cash payments for taxes in 2024 as compared to $54.7 million in 2023), partially offset by changes in customer obligations related to certain of our secure cash management services operations (certain customer obligations increased by $4.6 million in 2024 compared to an decrease of $32.4 million in 2023) and higher operating profit.
Free cash flow before dividends - non-GAAP
Free cash flow before dividends decreased $103.7 million in the first six months of 2024 as compared to the same period in 2023. The decrease was attributed to higher amounts paid for capital expenditures (we had $108.9 million in capital expenditures in 2024 compared to $89.4 million in 2023), working capital changes, and higher amounts paid for interest and incomes taxes partially offset by higher operating profit and higher proceeds received from sale of property, equipment and investments (we received $4.5 million in proceeds in 2024 as compared to $1.0 million in 2023), and higher proceeds received from lessor debt financing (we received $7.2 million in proceeds in 2024 as compared to $1.4 million in 2023).
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Investing Activities
Six Months
Ended June 30, $
(In millions) 2024 2023 change
Cash flows from investing activities
Capital expenditures $ (108.9) (89.4) (19.5)
Acquisitions, net of cash acquired (14.4) — (14.4)
Dispositions, net of cash disposed — 1.1 (1.1)
Marketable securities:
Purchases (1.4) (44.5) 43.1
Sales 1.2 0.9 0.3
Proceeds from sale of property, equipment and investments
4.5 1.0 3.5
Net change in loans held for investment 3.5 (14.2) 17.7
Other (0.9) (0.4) (0.5)
Discontinued operations — 0.9 (0.9)
Investing activities $ (116.4) (144.6) 28.2
Cash used by investing activities decreased by $28.2 million in the first six months of 2024 versus the first six months of 2023. The decrease was primarily due to decreases in cash paid for marketable security purchases (we had $1.4 million in cash paid for purchases in 2024 as compared to $44.5 million in cash paid in 2023) and net change in loans held for investment (we had $3.5 million in cash received in 2024 compared to $14.2 million in cash paid in 2023), as discussed in Note 13. These movements were partially offset by increases in cash paid for capital expenditures and increases in cash paid for acquisitions.
52
Capital expenditures and depreciation and amortization were as follows:
Six Months
Ended June 30, $ Full Year
(In millions) 2024 2023 change 2023
Property and equipment acquired during the period
Capital expenditures:
North America $ 28.7 20.7 8.0 43.8
Latin America 17.1 21.8 (4.7) 48.8
Europe 39.6 27.4 12.2 72.1
Rest of World 20.0 15.3 4.7 30.6
Corporate 3.5 4.2 (0.7) 7.4
Capital expenditures - GAAP and non-GAAP $ 108.9 89.4 19.5 202.7
Financing leases: (b)
North America $ 14.4 32.8 (18.4) 59.4
Latin America 5.7 1.9 3.8 11.0
Europe 5.0 10.3 (5.3) 21.4
Rest of World 0.5 1.8 (1.3) 0.2
Financing leases - GAAP and non-GAAP $ 25.6 46.8 (21.2) 92.0
Total:
North America $ 43.1 53.5 (10.4) 103.2
Latin America 22.8 23.7 (0.9) 59.8
Europe 44.6 37.7 6.9 93.5
Rest of World 20.5 17.1 3.4 30.8
Corporate 3.5 4.2 (0.7) 7.4
Total property and equipment acquired $ 134.5 136.2 (1.7) 294.7
Depreciation and amortization (a)
North America $ 40.4 35.8 4.6 73.9
Latin America 28.1 26.2 1.9 53.6
Europe 28.4 27.8 0.6 54.2
Rest of World 12.7 11.7 1.0 24.4
Corporate 1.9 3.5 (1.6) 5.3
Depreciation and amortization - non-GAAP $ 111.5 105.0 6.5 211.4
Argentina highly inflationary impact 4.9 2.4 2.5 5.4
Reorganization and restructuring
— 1.2 (1.2) 1.2
Amortization of intangible assets 29.1 28.6 0.5 57.8
Depreciation and amortization - GAAP $ 145.5 137.2 8.3 275.8
(a) Incremental depreciation related to highly inflationary accounting in Argentina, accelerated depreciation related to restructuring activities and acquisition-related integration activities, and amortization of acquisition-related intangible assets have been excluded from non-GAAP amounts.
(b) Represents the amount of property and equipment acquired using financing leases. Because the assets are acquired without using cash, the acquisitions are not reflected in the condensed consolidated statements of cash flows. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years.
Non-GAAP capital expenditures and non-GAAP depreciation and amortization are supplemental financial measures that are not required by, or presented in accordance with GAAP. The purpose of these non-GAAP measures is to report financial information excluding incremental depreciation resulting from highly inflationary accounting in Argentina, accelerated depreciation from restructuring activities and acquisition-related integration activities, and amortization of acquisition-related intangible assets. We believe these measures are helpful in assessing capital expenditures and depreciation and amortization, enable period-to-period comparability and are useful in predicting future investing cash flows. These non-GAAP measures should not be considered as alternatives to capital expenditures and depreciation and amortization determined in accordance with GAAP and should be read in conjunction with our condensed consolidated statements of cash flows.
Our reinvestment ratio, which we define as the annual amount of property and equipment acquired during the period divided by the annual amount of depreciation, was 1.3 for the 12 months ending June 30, 2024 compared to 1.3 for the 12 months ending June 30, 2023.
Capital expenditures in the first six months of 2024 were primarily for cash devices, information technology, and armored vehicles.
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Financing Activities
Six Months
Ended June 30, $
(In millions) 2024 2023 change
Cash flows from financing activities
Borrowings and repayments:
Short-term borrowings $ (7.0) 76.2 (83.2)
Long-term revolving credit facilities, net (534.9) (42.6) (492.3)
Other long-term debt, net 754.4 (33.2) 787.6
Borrowings (repayments) 212.5 0.4 212.1
Acquisition of noncontrolling interest (0.2) (0.6) 0.4
Debt financing costs (9.6) — (9.6)
Repurchase shares of Brink's common stock (65.7) (17.5) (48.2)
Dividends to:
Shareholders of Brink’s (20.6) (19.5) (1.1)
Noncontrolling interests in subsidiaries (0.1) (2.8) 2.7
Acquisition-related financing activities:
Payment of acquisition related obligation
— (9.7) 9.7
Tax withholdings associated with share-based compensation (17.2) (6.9) (10.3)
Other — 2.3 (2.3)
Financing activities $ 99.1 (54.3) 153.4
Debt borrowings and repayments
Cash from financing activities increased by $153.4 million year over year as we had net cash from financing activities of $99.1 million in the first six months of 2024 compared to net cash used in financing activities of $54.3 million in the first six months of 2023. The change was driven primarily by an increase in net borrowings (as discussed in Note 9) compared to the prior year six month period, partially offset by increased cash used to repurchase shares of common stock (we used $65.7 million to repurchase shares in 2024 as compared to $17.5 million in 2023).
Dividends
We paid dividends to Brink’s shareholders of $0.4625 per share or $20.6 million in the first six months of 2024 compared to $0.4200 per share or $19.5 million in the first six months of 2023. Future dividends are dependent on our earnings, financial condition, shareholders’ equity levels, our cash flow and business requirements, as determined by the Board of Directors.
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Reconciliation of Net Debt to U.S. GAAP Measures
June 30, December 31,
(In millions) 2024 2023
Debt:
Short-term borrowings $ 138.6 151.7
Long-term debt 3,608.5 3,379.6
Total Debt 3,747.1 3,531.3
Less:
Cash and cash equivalents 1,189.2 1,176.6
Amounts held by Cash Management Services operations (a)
(168.1) (166.2)
Cash and cash equivalents available for general corporate purposes 1,021.1 1,010.4
Net Debt (b)
$ 2,726.0 2,520.9
(a) Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.
(b) Included within Net Debt is net cash from our Argentina operations of $85 million at June 30, 2024 and $63 million at December 31, 2023 (see Note 1 to the condensed consolidated financial statements for a discussion of currency controls in Argentina).
Net Debt is a supplemental non-GAAP financial measure that is not required by or presented in accordance with GAAP. We use Net Debt as a measure of our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage. Net Debt should not be considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our condensed consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP, as of June 30, 2024, and December 31, 2023.
Net Debt increased by $205 million primarily to fund general corporate purposes and other working capital needs.
Liquidity Needs
Our liquidity needs include not only the working capital requirements of our operations but also investments in our operations, business development activities, payments on outstanding debt, dividend payments and share repurchases.
Our operating liquidity needs are typically financed by cash from operations, short-term borrowings and the available borrowing capacity under our Revolving Credit Facility (our debt facilities are described in more detail in Note 9 to the condensed consolidated financial statements, including certain limitations and considerations related to the cash and borrowing capacity). As of June 30, 2024, $950 million was available under the Revolving Credit Facility. Based on our current cash on hand, cash generated from operations, and amounts available under our credit facilities, we believe that we will be able to meet our liquidity needs for the next 12 months.
Limitations on dividends from foreign subsidiaries . A significant portion of our operations are outside the U.S. which may make it difficult to or costly to repatriate additional cash for use in the U.S. See “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2023, for more information on the risks associated with having businesses outside the U.S.
Our conclusion that we will be able to fund our cash requirements for the next 12 months by using existing capital resources, cash on hand, and cash generated from operations does not take into account any potential material worsening of economic conditions or material increases in inflation that would adversely affect our business. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, or if other economic conditions change, such as material increases in inflation, from those currently prevailing or from those now anticipated, such as higher inflation or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our business, including material negative changes in the health and welfare of our employees or changes in the condition of our customers or suppliers, and the operating performance or financial results of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs. Our ability to raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:
• our future profitability;
• the quality of our accounts receivable;
• our relative levels of debt and equity;
• the volatility and overall condition of the capital markets; and
• the market prices of our securities.
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Equity
On November 2, 2023, our Board of Directors authorized a $500 million share repurchase program that expires on December 31, 2025 (the "2023 Repurchase Program").
Under the 2023 Share Repurchase Program, we are not obligated to repurchase any specific dollar amount or number of shares. The timing and volume of share repurchases may be executed at the discretion of management on an opportunistic basis, or pursuant to trading plans or other arrangements. Share repurchases under this program may be made in the open market, in privately negotiated transactions, or otherwise.
During the first six months ended June 30, 2024, we repurchased a total of 722,040 shares of our common stock for an aggregate of $65.7 million and an average price of $91.02 per share. These shares were retired upon repurchase. At June 30, 2024, $434 million remained available under the 2023 Repurchase Program.
In October 2021, we announced that our Board of Directors authorized a $250 million share repurchase program (the "2021 Repurchase Program"). Under the 2021 Repurchase Program, in 2023, we repurchased a total of 2,297,955 shares of our common stock for an aggregate of $169.9 million and an average price of $73.92 per share. These shares were retired upon repurchase. The 2021 Repurchase Program expired on December 31, 2023 with approximately $28 million remaining available.
U.S. Retirement Liabilities
Assumptions for U.S. Retirement Obligations
The amounts in the tables below are based on a variety of estimates, including actuarial assumptions as of the most recent measurement date. The assumptions used to estimate our U.S. retirement obligations can be found in our Annual Report on Form 10-K for the year ended December 31, 2023. The estimated amounts will change in the future to reflect payments made, investment returns, actuarial revaluations, and other changes in estimates. Actual amounts could differ materially from the estimated amounts and will be updated at December 31, 2024.
Our most significant actuarial assumptions include:
• Changing discount rates and other assumptions in effect at measurement dates (normally December 31)
• Investment returns of plan assets
• Addition of new participants (historically immaterial due to freezing of pension benefits and exit from coal business)
• Mortality rates
• Change in laws
Funded Status of U.S. Retirement Plans
Actual Actual Projected
(In millions) 2023 First half 2024 2nd half 2024 2025 2026 2027 2028
Primary U.S. pension plan
Beginning funded status $ (24.0) (10.9) (2.9) (5.1) 3.4 12.0 20.6
Net periodic pension credit (a)
15.1 8.0 8.1 14.5 12.8 10.8 11.6
Payment from Brink’s — — — — — 0.1 4.6
Benefit plan experience loss (2.0) — (10.3) (6.0) (4.2) (2.3) (2.3)
Ending funded status $ (10.9) (2.9) (5.1) 3.4 12.0 20.6 34.5
UMWA plans
Beginning funded status $ (94.9) (77.9) (85.1) (86.1) (86.6) (87.4) (88.6)
Net periodic postretirement cost (a)
(0.8) (0.1) 0.7 (0.5) (0.8) (1.2) (1.4)
Benefit plan experience gain 15.1 — — — — — —
Other 2.7 (7.1) (1.7) — — — —
Ending funded status $ (77.9) (85.1) (86.1) (86.6) (87.4) (88.6) (90.0)
Black lung plans
Beginning funded status $ (75.8) (74.4) (72.1) (68.8) (63.5) (58.6) (54.2)
Net periodic postretirement cost (a)
(3.9) (1.8) (1.9) (3.3) (3.0) (2.8) (2.6)
Payment from Brink’s 7.7 4.1 5.2 8.6 7.9 7.2 6.7
Benefit plan experience loss (2.4) — — — — — —
Ending funded status $ (74.4) (72.1) (68.8) (63.5) (58.6) (54.2) (50.1)
(a) Excludes amounts reclassified from accumulated other comprehensive income (loss).
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Primary U.S. Pension Plan
Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and benefits are not provided to employees hired after 2005 or to those covered by a collective bargaining agreement. We did not make cash contributions to the primary U.S. pension plan in 2023 or the first six months of 2024. There are approximately 10,500 beneficiaries in the plan.
Based on our current assumptions, we do not expect to make contributions until 2027.
UMWA Plans
Retirement benefits related to former coal operations include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees. There were approximately 2,400 beneficiaries in the UMWA plans as of December 31, 2023. The Company does not expect to make additional contributions to these plans until 2036, based on actuarial assumptions.
Black Lung
Under the Federal Black Lung Benefits Act of 1972, Brink’s is responsible for paying lifetime black lung benefits to miners and their dependents for claims filed and approved after June 30, 1973. There were approximately 700 black lung beneficiaries as of December 31, 2023.
Summary of Expenses Related to All U.S. Retirement Liabilities through 2028
This table summarizes actual and projected expense related to U.S. retirement liabilities.
Actual Actual Projected
(In millions) 2023 First half 2024 2nd half 2024 FY2024 2025 2026 2027 2028
Primary U.S. pension plan $ (13.6) (5.3) (5.6) (10.9) (5.0) 0.6 6.2 3.1
UMWA plans (5.1) (2.9) (5.4) (8.3) (5.6) (0.9) (0.8) (0.7)
Black lung plans 8.5 4.1 4.1 8.2 7.5 6.9 6.4 5.9
Total $ (10.2) (4.1) (6.9) (11.0) (3.1) 6.6 11.8 8.3
Summary of Payments from Brink’s to U.S. Plans and Payments from U.S. Plans to Participants through 2028
This table summarizes actual and projected payments from Brink’s to U.S. retirement plans and from the plans to participants.
Actual Actual Projected
(In millions) 2023 First half 2024 2nd half 2024 FY2024 2025 2026 2027 2028
Payments from Brink’s to U.S. Plans
Primary U.S. pension plan $ — — — — — — 0.1 4.6
Black lung plans 7.7 4.1 5.2 9.3 8.6 7.9 7.2 6.7
Total $ 7.7 4.1 5.2 9.3 8.6 7.9 7.3 11.3
Payments from U.S. Plans to participants
Primary U.S. pension plan $ 44.5 22.2 25.9 48.1 48.0 47.9 47.6 47.1
UMWA plans 19.8 8.8 9.7 18.5 18.3 18.1 18.0 17.9
Black lung plans 7.7 4.1 5.2 9.3 8.6 7.9 7.2 6.7
Total $ 72.0 35.1 40.8 75.9 74.9 73.9 72.8 71.7
Contingent Matters
See Note 14 to the condensed consolidated financial statements for information about contingent matters at June 30, 2024.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.