BCO - Earnings call transcript Q3 2018

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Operator

Welcome to The Brink's Company's Third Quarter 2018 Earnings Call. Brink's issued a press release on third quarter results this morning. The company also filed an 8-K that includes the release and the slides that will be used in today's call.

For those of you listening by phone, the release and slides are available on the company's Web site at brinks.com. At this time, all participants are in a listen-only mode. follow presentation. will session question-and-answer the formal A [Operator this will call for the contain Harbor statements; company's Safe and statements. Instructions] Now, forward-looking the Q&A session Actual estimated projected materially results or could differ results. from cause such regarding press and the in that filings. Information most SEC differences release recent factors company's available in is today's could call and this as today is presented Information on only. of representative discussed Brink's assumes no obligation to update any forward-looking statements. is used without from Brink's. be and written not may copyrighted The call permission and pleasure my President to introduce Communications. Ed host, Vice Relations now your of Cunningham, Investor is Corporate It Mr. Cunningham, you may begin.

Ed Cunningham

you, Good morning, everyone. Thank Drew.

Joining Domanico. and and me the operations, GAAP results third costs, restructuring and on are CFO, today non-GAAP dispositions, CEO, Doug to related to reorganization costs Venezuela the This quarter compliance impact items and related Pertz; certain of both and Ron The our accounting reported non-GAAP Argentina's basis. morning, highly matters. acquisitions we exclude accounting, results inflationary

these in easier performance eliminates We exchange rates. also basis, currency between provided which believe results our constant non-GAAP foreign assess operating currency a investors to on non-GAAP make changes periods. results We for it

this we're all primarily Web today, including found site. the today, focus guidance, appendix will release, are non-GAAP the our the results. to of Reconciliations to which slides our can comments those provided in in filing, referring and in Our morning's on on X-K press using be

call revenue, the profit, interest, turn income non-controlling Finally, page adjusted to four XXXX I'll of the press now release operating our guidance, taxes provides the Doug. details including behind EBITDA. and over

Doug Pertz

the continued well plan our and and earnings revised Thanks, XX strategic into We're results our quarters Ed, both XXth excluding now our targets. reported our consecutive quarter and morning, growth. above impact of to year-over-year we plan good original everyone. currency Today, quarters upwardly be of our seven

this expect strong next plan and strategic into period. our performance to XXXX through extend We

reported adjusted include X%, operating results of revenue XX% in EBITDA. growth increase of and XX%, growth a quarter profit Third

operating most the to currency $XXX offset was significant than margin operating million. growth. despite million reduced our million operating acquisition-related through We and results million profit these and devaluations, increased of notably impact that Our XX.X%. revenue in revenue organic This $XX achieved by a of of XXX $XX and Argentina, total profit $XX by by basis points more in

$X.XX that the Our non-GAAP to to due acquisition X%. October the refinancing the compared higher the Dunbar up tax in were operating year, earnings is mainly interest EPS has per profit The used been completed share, expense reported as which to for since lower growth to related higher of rate. excess well XX% due cash provided last as rate

excluding grew provide performance. of Our operating and impact grew unfavorable million, FX adjusted currency results the of a XX%, basis, constant share. $X.XX a to XX% operational a per up XX% up revenue to earnings $XXX was picture our EBITDA was profit better XX%, On true

additional is reductions of the we fully we and on XX% acquisition accretive Dunbar with just several to beginning when was the the the it's next year sheet disclosed closed, by - to returns, to about reduced cash current tax to that deployed, deliver in about as over rate expect our the XX% next range XX% we XX% XXXX our balance be and years. Now has acquisition, announced been to

They XXXX. XX%, increases. about been it, peso also should be Brazil third results In would behind look our the earnings with the operating and and over a Any breakthrough demonstrate and has initiatives. quarter future and U.S. As potential is result, and you in it's quarter operating growth were operations big we've third XXXX growth achieved in so about drivers that Mexico at through devaluation price currency the of income, when flow. with way less XX% of demonstrate especially recover of fact our the resiliency strong this not beyond which through results growth of real rates growth along that currency, become more our Argentines business, in view, factor, our our leverage consistent our a the organic news profit far

four; X.X%. due profits in quarter a Mexico. in increase basis, organic XX% of Turning and points Mexico to Profits a the North third primarily an slide basis very to driving up doubled more quadrupled, XXX and rate margin than segment in on America U.S. to U.S. the point were organic strong growth profits

in in million accelerated Dunbar operations growth in excluding revenue. in to break-through improvement We U.S. Dunbar strategic core profit the our by owned the to X%. operations, profit U.S. our base labor fully one-person the for This excess service in and higher our are acquisition of layer conversion target, our CompuSafe in of of with excuse business, our $XX the U.S. exceed believe base we me, the new revenue savings the a X,XXX on growth in proper when on synergies about continue which expect We driven quarter, point a about line our to plan track U.S. important we was rate in with particularly inflection pleased which accelerate has network our operations achieved strong half with added very including business initiatives, and the of terms margin of our Dunbar, continued we target ongoing orders. trajectory. vehicles, to Brink's our XXXX from from optimization - acquisition top The we expect in reached its performance continued strong

XX%. rate track of this margin of is of quarter equally driven by margin productivity, excited of labor clearly is achieve improved more XX% in lower period and growing to by profit to rate challenged XXXX than double approximately we're strategic which Mexico, our end XX%, retail $X.XX at planned U.S. continued Mexico combined on growth Our a in customers, over itself its to least goal team XXXX, billion, use sales increased cost, revenue rate year our revenue the technology. and are about With the generate this the is double-digit In total we as both exit XXXX. use in basis. exciting revenue run and a Equally, to October third to America; margin One you of marijuana into and opportunities is as in when North our on the Brink's the this both We've the with which unique with product and management for service the transportations recreational needs. to year XX, all growth offer expect well. suppliers coming years. Mexico as of into business well-positioned continued on extremely factor in very for profit this a business Canada entered ahead legalized on Canada needs and national last Canada significant in growth medicinal well note secure agreements of cash of goal a expectations use plan, to with

a the with in Dunbar cash mid-August, Turning five; Brink's this divestitures. great joining to requirements We management number in without U.S. the the fit, cost insignificant XX very company synergies. about one days regulatory complimentary offers slide completion receive the with for and became for to approval excited of that were forces customer any We're asset company pleased acquisition the transaction extremely within

opportunities. more million cash add initials our of which future $XX the earnings $XX in is fell That entirely of X% We to and per at state mentioned XXXX enough translation we rate offset an our half and I've corresponding $XX efforts America negative are nearly to of third XXXX. additional of the South in last of on of deliver synergies. more reported to EBITDA forward. add XX% a the dollar strengthening cost on about the already the opportunities, of U.S. could the reduction the points and the not compared devaluations due substantial combined with $X.XX a America, expect the of share we between declined Despite cited. to already related emphasis months substantially the million and the just When about revenue started reduction acquisition spoke getting of negative XX% in XXX The $XX weakness and devaluation the to revenue profit In of least and strength FX added $XX of We're growth XX% the benefits margin with by that Dunbar South reduction in cost already the end to the our includes the of network. two the benefits $XX excess million and FX profit But to impact million Both of integration with learn, or bit several XX.X%. integrated real to acquisition, gaining these fully the basis the we going quarter. since operations of quarter deploying about Brink's. about and terms a quarter In back and this growth the the as expect third year's Dunbar synergies Argentine end last had XX% tax almost in devaluation. billion have exploring people a revenue the of Real since regarding its the confident balance Brazilian months. million we a XX% In peso of increased devaluation rate the to future the and or strengthened with currencies we're the to year sheet this the short hub Brazilian translates

XX%. rest with of XX%. basis, quite kept our underlying results perform year Brazil end guidance. included And earnings our December. currency profit And operating in acquisition organic in of up as close we but America XX% delivering operations Rodoban even our growth it It's before last our our Our stronger the constant of of a to call, we in and we've organic probably the South in preliminary of revenue the expect XXXX growth to in and Argentina, to stated guidance, continue XXXX not were well continue on profit the

first costs the World; and these is pressure this are declined had the And in continue France the Revenue reported World of was full continue guarding guarding process revenue fell and to annual profit now and well. sale Turning pricing in which and closed now by the French positive. and revenue margins business that $XX partially were airport due businesses other of million. that in Rest in operating X% business This X% growth of the volume being Rest of countries segment and revenue sale overhead profit approximately guarding that the in to business quarter the World June our primarily of the absorbed of impacted the reduced. to Rest first quarter, most perform the the

the bottomed market levels. affect do will in out, conditions market France As and of XXXX France are pricing the be for We both included and continuing we the call versus last tender profits believe our revenue July, which that in XXXX XXXX weak XXXX number results. and pressure unusually high in have disruptions flat said to our in in competitive finally relatively rollovers

next year will I be acquisition internal for the XXXX and until preliminary don't revenue Tennessee drive to to improvement we when cost for and stable non-GAAP However, Synergies summarize from combine like expect market significant more profit fully XXXX. guidance growth. guidance our implemented. updated reductions will conditions our now XXXX and

deliver of acquisition the was at Despite million; think the X%. the and than XX% rate Our to expected of impact, FX Dunbar FX offset February full-year profit EBITDA Rodoban original expected on of based growth closed negative end of of offsetting in adjusted impact impact with earlier acquisition. from expected be growth still our additional XXXX. of XX% was be XXXX growth X profit the approximately that The We on the with full-year exchange now unfavorable primarily of organic $X.XX guidance currency we earnings growth is growth operating the of million. to than by we plan will half provided X% contributions XXXX closing the that year more revenue on operating to have and $XX last delay

growth to guidance for third to is year non-GAAP for most growth peso expect Despite about guidance rates U.S. of for currencies. deliver negative impact profit XX XXXX average pesos includes we've FX approximately versus we're currency which preliminary million exception XX% estimating revenue rate XXXX. impacts, about a to our be again the operating million. the assumed year we XX% of assumes October negative and of of an XXXX dollar XXXX rates, our the these XXXX prior the Our exchange consecutive Based XX, $XXX operating on $XXX to for profit target. Once for Argentine for these

about We expect to year-over-year points XX.X%. basis XXX rate margin of increases

outlook increase update Our that XX% grow XX% we'll will million earnings I line guidance to with about about the $X.XX stress to are that $XXX to adjusted want per the preliminary expected in EBITDA share. to income - to preliminary expected is and guidance business Ron more results that we operating including XXXX that over the on or to financial behind guidance. point turn drivers for as and of more third at to now Ron? year-end currency rates. well in assumptions year-end the review after reflect our and time, it as the I'll XXXX quarter

Ron Domanico

Thanks, Doug, everyone. good day, and

Let's $XX world strengthening million the Brazilian organic Acquisitions XX% South Mexican X%. versus third and additional impacted the quarter our quarter the third look X% U.S. X% into $XX grew little $XX Of third XXXX Translation $XX added North the real the revenue Forex attributed the primarily America dollar million deeper euro. million quarter results. grew million of versus due revenue million, million the dispositions increased $XX revenue million and Dunbar. or net $XX Argentine the was peso, the and America the approximately an XXXX acquisitions of revenue XXXX to increase, a peso, growth. drove Reported negatively $XXX by to rest of of organic with grew

The by third our French second reduced quarter million. aviation business $XX of XXXX guarding disposition quarter revenue

side right third that $XX profit you the million. chart, can XXXX this On non-GAAP was quarter of see operating

in increase from driven was unfavorable acquisitions Excluding XXXX organic and by the net $XX than with XXXX of XX% the Organic the margin and $XX was tripled growth continued expansion impact increased in impact quarter, Mexican profit the in profit more in U.S. growth almost million real with translation Brazilian and the up the currency, entirely $X peso. of primarily some operating to ForEx, quarter in million. of and XX% $XX Dunbar peso America. dispositions the Argentine third weakness due negative and the XX%. In million minor reported in Temis. from or third from The North Mexico profit million was there combined drove Nevertheless, quarter revenue operating non-GAAP the organic

by down Asia-Pacific. continued The Argentina, security South XXXX led was in of and favorable the debt EMEA and pressure from with X% Chile. to rest improvements with and improved royalty other expenses XX% versus organically organically million agreement $X America in offsetting was up world the pricing Monitronics. Brazil, home France primarily due income Corporate our bad

The is from operating this the slide adjusted the Moving bridges to to profit then EBITDA. variance operations to bottom year XX, at the slide. continuing and slide shown of from income prior

interest $X and $XX expense. used million to due the Maco higher with than increased higher of operating about Net the quarter reduced $XX of last higher Third profit finance interest was was approximately income. acquisitions, by reflecting debt to million million $XX interest million, MS higher combined million to net rates. year, primarily taxes Dunbar, net variable Versus XXXX $X

We expect Dunbar XX%. the and our ETR bps. reduce be In other tax our to XXXX, XXXX expected non-GAAP XXX factors approximately to approximately rate effective are acquisition by

partners $X.XX in the $X buyout quarter up share for quarter up to year. per scheduled Income our expect in Dunbar million cut third was amortization a $XX going half interest operations million Colombian million from XX% and share, for was to complete ago XX% tax increased be the once $X.XX when $XX the integrated. $XX per and year this Depreciation our fully or quarter is We from effective of or million. the to rate to XXXX. profits $XXX adjusted a X% around of versus EBITDA continuing range forward Non-controlling decline by reduced of of that XX% we will million later

million profit XXXX the two. net our EBITDA the divestitures and of blue to by organic $XXX the operating XX% our bars other At profit Earnings in on this operating Turning operating the $XXX EPS per Forex represented was results profit and $XXX XX%. million. of our will updated million Higher be profit we $X.XX and million to to is versus at bars, represented unfavorable In million to higher adjusted Based to share EBITDA. $XX XXXX expense of partly taxes expected operating on the million and and the to per XXXX sum is million share. currency guidance is interest profit in was of midpoint approximately slide of $XXX $XX XXXX. $X.XX estimated constant is translation operating offset guidance, Combined amortization acquisitions range $XXX or of adjusted rates, $XXX of expected grow gray grow by and will revised and generated and $XXX $X.XX add guidance, current higher profit million operating adjusted million EBITDA. by depreciation will XXXX

Now, three we our were late updated let's since developments look our guidance when July our There last guidance. versus at guidance. previous issued XXXX notable

Our organic pesos to on devalue acquisition September at to XX dollar U.S. around Argentine continues improve. the XX.X performance continued the We XX. July Dunbar from peso to per and XX.X closed

XXXX at $XXX million. expected to offset $XXX are factors million remains operating these guidance profits, and For our to

our interest guidance guidance of Argentine not and million While The to has material has the depreciation in EBITDA had profit our lower higher $X.XX and operating results. net million revised on our EPS $XXX devaluation peso upward This XXXX resulted a per the guidance share. $X.XX impact expense. acquisition to changed, Dunbar $XXX XXXX to XXXX to

to has been systemic highly U.S. exceed important Every dollars peso the dollar These XX% inflation followed and by circles U.S. inflation to quarters while it about in historically time, devaluation. over a spike It to the devaluation in XX% the devaluation few we quarterly spike. are spikes the red took XX% all on another devaluations relatively our margins there years are Argentina quarter improve. in there strong could XXXX, quarters. quarter consistent Almost The be in of increases take revenue second prior back-to-back In versus expenses yellow three the operate was and is highlight of is the should of third to devaluation dollar spike. following recovery, in we transactional. U.S. and Brink's inflationary has are price The countries revenue revenue our there represents Based then, their revenue. The a recover economy. local not. reinforced in This estimate Then offset devaluation. drop is U.S. and and true six significant the that represent in three continue Argentina, local timing of Argentina on quarter in it's not how of Argentine XXXX, we was dollar. for devaluation foreign instead this the excluding and eight So the quarterly the operate. In a line blue Maco. this is translational, where U.S. exchange Brink's review slide it the bars significant dollar historically a devaluation dynamics to revenue XX% currency currency that

XX.X, the XX The As an the for September strengthened XXXX. repeating was peso dollar. October quarter, to the average rate - our assumes and at in exchange exchange yesterday, of of what I the Doug third the mentioned on rate and for Argentine U.S. rate close XXXX balance XX of peso was just of the sorry; said, XX.X has XX an guidance and average was

day further slide to driven of is than global improvement At to will in XXXX. our organic we've but organic Argentine other increases Based million the the decline XXXX, a guidance. prior profit let's portion our by XX, issued covered to We today. we impact anticipated million of for was previous on May our and XXXX our Argentine $XXX will XXXX offset XX additional price and part we formal and guidance peso Dunbar be XXXX XXXX on move negatively release not fully But expected $XX Now that of declines negative current were previously in part targets as improved the a that had partly that by significant preliminary Forex $XX operating did offset discuss be to will expected of growth, have contingency. currencies impact inflation time since greater million This XXXX. in target. our decline on assumptions, the and of peso

range XXXX million $XXX and result adjusted guidance between As a a EBITDA $XXX our to million. lowered we've

XX% versus Now reflects $XXX to constant operating at we headwinds, XXXX between grow range percent million. This of by $XXX to and currency XX%. let's currency XXXX Despite our expect increase guidance million guidance. preliminary look profit significant our growth XXXX

is expected between Argentine Argentina is our approximately to breakthrough primarily and and $XXX Brazilian contributions Real. and EBITDA and Dunbar contributions from XXXX $X.XX offset pricing Our from expansion in reflecting range EPS grow million. and from rate a by higher higher by pricing Brazil. in between about improvement approximately inflation is XX% an based of Rodoban in estimated $X.XX a XX% interest impact, from per have share, and the Brazil, profit continued million Argentina to is XX% and and Dunbar Inflation bps U.S., $XXX peso operating about Mexico to the Adjusted based partly negative range acquisitions. initiatives of the expected grow the expected to XXX XXXX to effective tax improvement a expense. Currency

Moving from $XX the all million of XXXX cash expenditures looking materially Dunbar $XXX to until full-year expense expected generated around And strongest much free outstanding, flow, triple contribute sales $XXX generated the slide related fourth through receivables collection specifically component flow is nine The XXXX's annual for in million integration year, cash improvement, as around we've Dunbar is costs, which acquisition the our months acquisition. first to seasonally Working not to capital mid-XXXX. as primarily generation. we XX, we're target of of capital to million lowered bonus our XXXX last measured focus of We quarter cash The renewed flow the days to result. and almost free and of free to reflect year. program. is to the cash expected non-GAAP a interest this

and expect $XXX to be $XXX million in excluding capital We million XXXX related expenditures, CompuSafe XXXX. to around those in

estimated illustrates both assuming debt our but acquisitions. slide incremental XXXX, My position, million for CapEx For leverage have and and not $XX included historically XXXX. have additional net in Dunbar, we any last

XXXX $XXX from our flow primarily partly by year-end CapEx from prior was $XXX XXXX, achieve As operations. XXXX. cash by our XX, $X.X in acquisitions million estimates it line debt $X.X be September would driven XXXX, now turn and our billion X.X with almost If the The bank month to offset around cash is Doug. that acquisitions of complete debt partly we of end the The trailing at back targets to million EBITDA I'll at and net XXXX. end net includes in and of flow another turns defined XX about and leverage was synergized of XXXX XXXX. would up increase billion, decrease

Doug Pertz

Thanks, quarter growth another Ron. I that we want with currency third growth emphasize XX%. again significant strong despite XX% to profit reported headwinds, had currency and with of constant

will of not U.S., seemed the quarters three the first ago, our continue meet XXXX ago, in margin We're excluding to-date three XX% add acquisitions impact X.X. in results the drive organic or to improvements. the have our believed as with to efficiency our of constant XXXX our reported approximate strategic five continue growth and were it is we included as in close initiatives growth people in implausible. possible translucence We initial other million first-half X.X seven acquisitions For $X breakthrough to well investment confident materially Seven in $XXX part billion combined doubling in businesses strategy exceed Strategies and Mexico, overlap We're XX%. margins Strategy targets. margin of launched partial as future. currency call and the on after of Mexico growth improvement and profit seven money will X.X year-to-date revenue plans Brazil outpace These our it X.X of and and XXXX the announced currency would after infrastructure our targets equally and track from quarters margins significantly is we aggressive Many U.S. improve synergies and route of quarters these the the EBITDA to increases gained year to unfavorable and targets FX. in countries. the losing are density Only subsequent our plan

new services. As will to offerings targets, all enable already reduce and help We've objectives, our routes also not only margins implemented externally differentiated and one and and labor our of of manage of technology but drive customers our monitor three CompuSafe. achievement technology to and continued strategic of optimize will productivity

facing data cash pilot and time and information, New other stage customer customer through services. provide now the track forecasting customized Brink's handheld app time real for real technology-driven include the technologies in plus to trace ordering portals,

We are as growth and confident initiatives well. based that added initiatives technology will our strategic drive future

As by highly infrastructures similar - materially characteristics our and initiatives as ability customer new high Brink's routes include high to we and service the is than it many increase percent into and we've peers. observed to the and XX%, logistic businesses. at significant customers, about annual one services factors optimize These vehicles our cost ability significantly than a to revenue. rates that supported value a a good of the rates, long-term stronger our services value of other offers contracts density customer fleets that is EBITDA of have to the companies continue acquisition The accretive business business that creation achieve to and an example, specialized demonstrated growth compound based organic of has and U.S. evaluate value high industrial recurring The retention these strategic has person route-based date, are synergy about acquisitions. In improvements similar X% rate the benefits, Brink's leverageable margin to evidenced our to route-based and to as high growth higher by route-based translate that and of example good value Dunbar comps services

creation opportunity to we us synergies more of and approximately figure. $XX with value the For value to our even route-based stated hub-and-spoke And our million The network. companies. as businesses and business layering synergies underlying acquisition LTM that strategy long-term other driven characteristics technology acquisition expect we're We EBITDA achieve of services. XXX% optimize the we received the million to aligned further more two closely we've into on expect will our from about of now price, Dunbar this has X.X achieve offer with $XXX the global the acquisition

operating more As average in a years, increased has our quarterly two little over team on by than profits earlier, management I mentioned XX%.

strong operating this targets and rates we've and growth offset plan in And $XXX the XX% while earnings in an to our have we'll earnings that growth our value driven million the unfavorable of close and confident leverage XX% additional initiatives earnings more and currency XXXX in is to we're achieve unfavorable our expected a than year. and XXXX. XX% revenue for XXXX growth growth impact has beyond. easily base current Our reduced offset operating into we're growth In XXXX strong shareholder developing through period that have currency versus plans XXXX summary, and to achieve drive strategy we plan our continued EPS of growth

to-date Our on the have We next years open accelerated. strategies in and value first and Drew, sharing more new year. now achieved will to growth is that the these of through questions. it to for half layer next acquisitions forward and are continue synergies let's of look on several additional

Operator

question-and-answer momentarily pause will the session. Instructions] our roster. this [Operator to We will now begin we assemble At time

The comes Tobey first SunTrust. question ahead. of Please go from Sommer

Tobey Sommer

very you much. Thank

versus I'll start prior by since to you've Dunbar negatives out think and acquisition are expectations terms closing opportunities, the of positives I closing? your asking the in learned what lessons that

Doug Pertz

they're the think have my I will integrated piece a level try and put and as of to and words they necessarily operations in I forward. years, the for a our we being to first at of the It's - add that right going combined We've future. great I bit not forward forward business some them think a people little of known allude number and that the of many people, senior into look going those to people I'm where great we're industry very many, key tremendously there have a good well, sure lessons have that's question, it that the been way Dunbar in

Brink I our the customer to in it very, as to think and they're very said and a take good, medium-sized that retailer maintain that's as and at particular historically. that, in is well least on have if build complementary particularly that further, step and in the we've have we business has - this we what and on that is to before, the very focus they customer-focused that side we want been small strong

is, well long-term as that forward. And synergies - already we talked to, are is the terms well some a do that of the we the both at pretty as in be is businesses the network to we there of above the that the revenue to the - alluded we lot continuing one-person and third what going vehicles are cost and the reducing truck do I've alluded And fleet of situations. in of combined nature to particularly the the of some as are forth investments additional fleets, think the just I opportunities about cost. for opportunities, that think I synergies that this businesses that in so in complimentary look combinations going because and well branches as what these can labor optimized about and will as well-understood beyond of area area modernizing truck with

magnify hub in for is huge So kind base synergy and are being future, to two and of top at combination our there the - of end that this our combine to we leverage state the network this of opportunity but spoke that. us the business gives those opportunity, are think gives the the on opportunities what the of look as us numbers, we significantly and the

Operator

The from Please Jeff ahead. Capital. go comes of next Kessler Imperial question

Jeff Kessler

want to the I particularly on the And this you It putting - first you. outward numbers. particularly looking amount guys lot. for detail, thank a helps on - of on Thank your

At If in $XX a sitting time, downturn appears remain $X.XX. currency EBITDA the region, regard million you've - it back - adjust have of same put million talking the currency to guided is peso if to you've out about million with the work to $XX just for extent and to call let's XXXX it am to Argentine some happens? that right was $X.XX year there math to let's $XX EBITDA $XX First that around million $XX to to that to the the consensus $XX you kick doing against. or next say that - for you're I - estimates million million is $X.XX

Ron Domanico

I of year. XX continue of we devaluation highly and conservative estimate a have that feel the through that XX a economy peso by average believe because been like this with for we mean rest and its will year nature Jeff. experience next very to a we Yes, inflationary

Doug Pertz

about peso clear, be the is XX.X. Let's today

year average year XX taking is an XX, increase XX, of an theoretically. can at still the of average and it's the is substantially average year up you into that's next that XX.X from you So if - which of get balance then starting and today, for exit that which this obviously year go the you maybe than next - more XX

Ron Domanico

portion peso both if be And that would EBITDA. and of XXXX and not into negative so, further, we to a Forex that materialize, that profit is we've guidance large the an see not incremental does answer would operating your built devalue to question

Jeff Kessler

Okay.

Doug Pertz

the other through we that And the let the me something good the That the as years years price how - catch FX part devaluation I of add for inflationary that also I happened structure in have think just, guess seen about one we've summary be which we economy. recapture through went historical obviously, and has pretty of a in Argentine increases, talked - today, of to on. that what thing and we will up Ron, to

the is that of will and how happen? be be, does will will the that's well. so, question be? year, there is other is as that hope normal So much the And the that how that part pace upside when and much middle the of we The question

Jeff Kessler

where or about I for want so, on thank your program year expect Again, spend. to Okay. giving for you some again capital, next the to detail talking the the amount, capital you

back is the consideration $XX spend and that a see stock areas of at if that you down, the its the is million where bought not the upping it of level is worth your last did One let's now? to I of where it high to from quarter, a it stock call there is XX% stock lot you remains XX% in lately

Ron Domanico

We have an of a authorization share of buybacks, that $XXX million Jeff. in for in XXXX we received May total

obviously, one-eighth about that. used So of we've

We strategy, income morning, of investment. and that so and actually generation we and our exercised not we generation on that going based seen this portion a it believe now good what believe and obviously lower buyback flow prices the continue we've third are going authority, to disclose but will cash quarter We price last be investment continue good a would you've it was a our are to operating evaluate share capabilities to quarter forward. the

Jeff Kessler

about clients. and on increasing just that the your seeing is One since growth but question this have with not America - is I'm May, this probably in question business you're assuming Okay. is with quick point, due recaptured, has follow-up [indiscernible] is, that have to aren't some at you take clients you back in probably this to operations share North Dunbar lost that or bit The back what existing without but was Dunbar that helped, and name going on of, you of program have the or begun a can winning getting going new is little on you client your talk in give to - you that XXXX-XXXX?

Doug Pertz

a best of strong I way as couple a in streams X% early able growth think we're by stages is, the for sustained if that. that doing that the on basis base a years the to rates the that, to continue opportunity revenue plus organic CompuSafe anticipate we and of have do the characterize the of recurring the supported of U.S. that over get next to we in to be and lot we'll to

Jeff Kessler

All very thank right. you Great, much.

Ron Domanico

Thank you, Jeff.

Operator

The Please question Company. & of from Gabelli ahead. Ashish Sinha next go comes

Ashish Sinha

Thanks Hi. questions. taking for Good my morning.

press you your I So, presentation the expand release. a to about highlighted both wanted in opportunity cannabis little and bit more

mean, addressable have the some have to you the market, wanted you and the Just work of your understand done market the potential, would around opportunity. could signs thoughts, I

aggressive, if the it normal could secondly a bit CIT is and shares going ahead traditionally maybe now is transport be on qualified with got repurchases. then you so within to can the - And you need I are you to change margins, shares within regressive for so the in assuming somehow be - market different terms share you bit I And margins. then secondly different would to the $XX, pricing about everybody And or talk bid would be and if the you cannabis at tender little could a thirdly, versus in not because mean closer of revenues going repurchases $XX same So below that question probably back differently, and quarter that. the then slightly or to accretive competition business. more is third probably ask have and cannabis market, or more bought

from So, any is, my count? change guidance have That's Thank impact question in your you all. factored the in share you.

Doug Pertz

overall goes first, no, into maybe Remember I - portion of increase million a initially our while year. disappointed little up, we where down a we EPS want because them that that difference the our EPS, that. next what not anything factored about And brought XX% - about this one question bit of is EPS or reemphasize the targets we was? address a we've for Let's in still next our recapture. kind and we next talking $XXX last anything We're from this year only for any to our last put to of guidance to the guidance we year the recaptured had

said today. a price up XX% share would of Maybe were I'm would to have you sounds be but it have whole So not sure not if this bit defensive, sure in lot we frankly. our difference a I'm going made

XX% difference no, in in then I a increase indicated that in talking year, So our XX-plus-percent number. in still share about EPS EBITDA buyback and of in a our based mean share is our consequence increase both next count op but and we're and our that income, any a not

So look that's that we undervalued. clearly would not I mean we if we it be - at, are upside that and think that additional

portions at combination it's we current are as price state average necessarily the about interesting that in talk a to going positioned good be the bought offer of Canada, in I to very the uniquely but benefits I reasons. a know want services in going a if to example provide did in are offer West product, the of we our of a And in or and do diamonds raw result of we the are that that so manufacturers we of in are Coast coming then transport be think competitor their or then cannabis it the in share XX. handle well to That basis will that large, cannabis, which And of position at with we business, is the that, able ones be price that Canada we to and from was future is back press Canada that any size do of a marketplace to of the at share the you wide as in is which is the combination the to out things the comments number a we opportunity. on qualified. it material are very substantially raw the well probably where product, market going of whether that then servicing my global transport services, it's a it the thought positioned and the on you are Canadian is to don't final those are release today start very the versus Cannabis for is look market, If Canada significant that other product And from that. whether that other to and array there markets you early of position best internationally turned into, there, head and as what of and redistributed is the then marketplace. be our turned business, top we these of it's take best uniquely to into BGS that - a in other products be material and to processed

So, of that from the CompuSafe associated money forth product, the is the so it then range processing services of and else obviously it side is other cash the one associated of everything very management and the transportation is side services to around with. full with unique of the which

accretive existing of margins, full and but the a at business very because of distributors still is the are packages for and our what Canada. looking are we're expectations yes, producers the and with full range that, marketplace nicely providing in very of competitive do attractive to services those supportive the the So a very what cannabis we in margins

Ron Domanico

where of competitive difficulty] CIT one does Canada, globally of then national competition; an had that, coverage question in what follow-up the has do know a competitor we other any insurance Brink's insurance and us a have same of we carriers. not the about advantage. the You major highest level [technical of because have advantage give And

Ashish Sinha

you. Thank Understood.

Operator

question next Please from Buckingham. of ahead comes Jamie The go Instructions] Clement [Operator

Doug Pertz

Good morning, Jamie.

Operator

please Clement, with go Mr. ahead question. your

Your line open. is

Okay.

follow-up go We to SunTrust. Sommer from will a of next Please Tobey go ahead.

Tobey Sommer

give if of just be you you contracts expect was improvement on there started other you ask, your Thanks. 'XX future? Thanks. improvements, I what French perhaps expense the recompeted you kind see kind are that maybe comment, the the things than of the could to perspective about. I management of some to you 'XX, wondering wanted changes to talked a and said in Do market, at prices sequentially already kind in bottomed in things to has drive or and better in prospective improve is

Doug Pertz

seeing, on is we a don't And something we the the most prospective is saw see yes, do market that want are last that carry-forward step-down that customers expect the understand for the may expect necessarily sustainable. we is improvement. that basis, that, speak and but future answer year we I the step-back over to the I year, major will we up again, we a not see will not while this guess

of a 'XX 'XX - we hopefully but will to into we let as is quarter improvements contracts see with off some that, of the versus comparisons of benefit And 'XX some hopefully is - our will so, quarter better, you as because prior the And that answer your cost that full as and customer do be in and think take sequential. the going in about an things, implementation bit forward. that answering and think year well as necessarily I of pricing in we therefore year, be to guess - third speaking better. weren't a us we'll and what expect improvement And the that, combination the implementation full that well the in that best that's better I improvement in fourth the we versus last

Tobey Sommer

Thank you helpful. That's very much.

Doug Pertz

well as mention did and a I did that, in had longer the As Ron guarding business. comments no we

$XX drop, so or cost million rid we revenue that obviously in the associated $XX the too. on the the was with of and part basis full-year of million for some that reason get absorbed is of revenue that So to or a have

process So of that's in the happening.

Tobey Sommer

the market where couple view makes or to business, the and With the time? causes can recycler over change that over grow you on to That have you you of sense. your respect think that CompuSafe learned anything quarters last addressable that

Doug Pertz

of kind you there. Well, asked two questions

of side, it's well size thought are think addressable on to to we're the CompuSafe confident it's and to of in right more were, continue on we the the us, we still track to of whole think I market continuing that highly the increase where we get terms market the as it. just not opportunity I And market. as

about So in we're market that historically grow the think terms that of have of think like the year only not that market will think is percent - XX% the amount being but last I where be we of XX% addressed. we stated We also to we - grow, the market currently will that will addressed. the

to that that. And and do continue firmly so, believe we

things primarily One other of market. addressing the - that's U.S. the

particular. key countries thing The successes Mexico, markets in such other as well we're international other other nice and great in seeing American Brazil, is as South

today. recycler different be represents little percent much much that a addressable earlier lower the more to for think to I addressed, which I significant in versus and needs of defined terms not think in in of into industry is the our the markets further that total therefore encouraging. numbers infancy the as business, market that and a market very that's today. what's is our a bit are of that opportunity baked and need many plans future that the Again, of of So is And retailers the the That's that's around I defined, in is addressed how truly future stages larger for think a competition. than be opportunity further of market the again

Tobey Sommer

seeing what are to for as today? opportunities you exciting Thank like pipeline so some at look look to the them able that XXXX? of you. strategy, respect as does Are you the far One in ones and with the company's last were me, question acquisition consummate

Ron Domanico

strategic is pipeline XXXX. we've March our than The off in no plan of it's smaller kicked been, when

to Our local continue larger. range much million to much, as a teams candidates. $X from Those identify small

potential we're still additional excited So for the M&A. yes about accretive

Tobey Sommer

time. Thank you both for your

Ron Domanico

Thank you.

Doug Pertz

lot will you. a for Jamie, Thanks try we support. your

Operator

Okay.

We sure Clement have a have we ahead. go I of Research. a question ahead from muted from have you Please go Buckingham Clement. cannot if Please might Once Jamie with another question. your question area. Jamie it again, in

Jamie Clement

Can you all hear me?

Operator

now. We you. Yes, can hear

Doug Pertz

Hello, yes, Yes. Yes.

Operator

go ahead. Please you. Thank

Jamie Clement

Hello.

know don't going on. the I what Okay. heck's

all anticipate when was how you talk of you about being that presentations thinking your around XXXX, so to I you guys. Sorry, introduced joined three-year framework three-year terms the Would market? you're to a investors all Well, answer of how another going Hey, you of plan. the all are next XXXX plan your year? three. the kind in message How XXXX, obviously Doug, to

Doug Pertz

layered new then and we as on plan our that in present initial did to talked when specific the first a XXXX good we then us through as and X.X we for 'XX, and X.X was and first question, acquisition about, strategic only of it was It's top of talked improved community that very about a we you're the plans March organic correct, changed plan took around and of targets three-year that investor targets that.

Our investors our sometime the with we and strategic to the three-year would plan intent be next plan new share early of at developing so that are intent portions year. least and

Jamie Clement

and… great, Okay,

Doug Pertz

we yet How and be… much type have what with to targets, you of

Jamie Clement

- actually that? of you're just no, asking more to was how bigger Oh, I was kind just going I frame - picture, more

Doug Pertz

example the just are be out EBITDA, as definition what million going XXXX We'll into, we $XX think And such going 'XX, I about are partial next well talk contribution, the our look of for but I not that you're get are synergies from acquisitions much LTM again on just as like as year things those the are year will about million, implemented, those and $XX and of and to comments, shared end And to try Dunbar, more we've of XXX% opposite. get and thing we only we say we that like XXXX ability plan at you what that that. talked will of going to mentioned, of our you our as the next the the which there I my them from to we beyond going but first die And more is we numbers synergies. to beyond acquisition and and And think obviously more as beyond. value the think restated the opportunities just be and in as XXXX year, to saw acquisitions see the XXXX around and contributing Jamie, to things that three-year present an which creation have the XXXX. the the just to the important well total synergies U.S. in huge beyond beyond very we're targets resting additional I that's be done is year EBITDA as Dunbar anticipate business we

Jamie Clement

Brink's, all Dunbar you now? and can many branches how Doug, roughly us remind between you U.S. have

Doug Pertz

to have we two, the two. between the XXX between close Well,

Jamie Clement

number the that's now I Yes. from would years not right probably five how that right? mean imagine

Doug Pertz

the makeup right not the what Well, they not are. of right only it's it's not number, but

Jamie Clement

Yes.

Doug Pertz

you the launch in of four of through ability phases equipment which network error that in and U.S. And throughput a pads, that I'd processing locations high gave today our improve a what two our at it improvement on our labor the over going which coverage look significant the efficiency today, our one year processing, those to breakthrough optimized better are The U.S. good and through, future. either then improve our is magnified think of those pads different of think pure areas total some this will us and first future like money it very base for in the lowdown have this the our and businesses, test money call only, the launch almost will all, but equal been that network assure As basis, that hub, the our than look of put will associated much a improve the are the benefits done speed for And But hub quality. ability if hopefully we forward. rate phases, of the year constitutes proving securer locations. and optimization our combined key key for in with our tested very also CIT our our of of combined for I spokes out we there simple the we costs helping to proven point initial we dirty was where now it in and our job, that year, will than be has initiatives. last systems then

Jamie Clement

What Dunbar X, it. missing? I then and guys That one number I'll talking last quick which guidance, one - is EBITDA Ron, of you go. Appreciate about expect I XXXX a there. $XX is phenomenal page page let $XX Dunbar million color. is slide am million, preliminary XX, about XXXX

Ron Domanico

date from XX that include taking month Any acquisitions acquisition because - as that's organic you're at of is we component. the as No, the the trailing missing credit… yes, we growth that are included acquisition

Jamie Clement

$XX pass-throughing to $XX that million you're in million. So the

Ron Domanico

Correct.

Jamie Clement

Great, awesome. much. very you Thank

Ron Domanico

Thanks.

Operator

And Imperial ahead. we of a Kessler Capital. follow Please Jeff have up go from

Jeff Kessler

a are Thank to able obviously you. know and is people main the you to you Fed and geared service, chance business well, CompuSafe to large have - - do the better of Brink's CompuSafe to toward you I companies. generally where Dunbar's CompuSafe, money quickly rent all sell been there center those now them type or and has in companies some market and is SaaS question smaller mid-sized through have The is quick trying Dunbar a situations on out more increase has and large, whereas your you've traditional sell, retailers your been line obviously as steps integrate banks or or be is of business, with the been going into with a get CompuSafe. this penetration

Doug Pertz

of handle such network the to process key piece as of in of this of and with force customer the well the think hope smaller going open this this a we customers to aggressively, will most real that all going U.S. well and and retailer as customers fashion operations. and combined at the a up you great the sized app answer well competitive will that sales system and Dunbar our of assuring don't to be market provide I at market onto medium part but support holding with the have growth that now about small we'll the efficiently future And Brink's sales our we'll a in want as is and driver combined that time to advantage the and be we yet, that, part our monitoring yes. of if and talked a has is ability around on do best that combined integrate manage a job how and a addressable to All future think will I - the integrating that we things every to accelerated done larger using, key sized this the is it competitive to differentiated our all slides and the a leader monitor to more in integral at strategy be differentiation going about the right has will The in pursuing which small the thing Dunbar of is we that alluded a as integral integrate we product, well is I as them the is technology advantage integrating our done of And lot medium great assuring as our much too Dunbar piece on Look, we effectively future sides and use past didn't think give in in the CompuSafe past. a well the we that which as enabling say in us to then we get to forward technology facing future. for one CompuSafe marketplace expand strategies to products that, right all strategy. to be player we trace, services, which and is as assuring that we'll our as things with in with continue that will earlier and track data

past part that's in done the I new as our think Dunbar So complementary be very that well. to what will strategy of has

Jeff Kessler

very you Thank much.

Operator

a Merrill Please we ahead. of question have from of Pereiro America And Marlene Lynch. go Bank

Marlene Pereiro

Thank you.

Doug Pertz

Marlene. morning, Good

Marlene Pereiro

one. deal above be roughly Most have just that like what leverage so last target? long-term Hi. and right the been willing of for go one if questions you target morning. my Can I just is, Good to me might quick like answered, tell have you your

Ron Domanico

that that is the probably ideal a repeatedly around said an leverage plus we've minus. characteristic for what of I Well, our shows three or think company turns math

Marlene Pereiro

Yes.

Ron Domanico

But lever down back know, with again. us quite frankly, even cash flow the up in from acquisition Dunbar levers we the you that acquisition,

we higher while of best So substantially theoretically is, invest internal of our believe target rate XX% three at ability not of be answer to capital practical on are returns return might the our capital depends value, but cost that shareholder the for in it tax. that only our after

So, it's an evasive answer. not

generate from but think or basis, back the leverage to to theoretical that is, that push answered that plus we continue three cash down. minus, will reality continue it are I a we've

Doug Pertz

suggest I also flow piece continue that but business, percent from characteristics future. as services industrial And in made the investments return future to and downturns out, handle the can future that so a that a a actually have reduce and as business we've laid EBITDA great cash CapEx improve great continue our stronger but movements gives would to the of get have strong great probably any that, not that our business types type Ron will has investments, have Marlene, been of well it. typical that there continue margins. assuming generation, based cash will that generation growth and revenue a high in a those strong in that flow of And we susceptible only key yield is of to high that's us returns And we free then not the are going shown less is multiples to that we've cash investments our that of we growth, the yield our on to this as think generally XX-plus-percent even therefore flows only we nice we're

Marlene Pereiro

it. Got you. thank Great,

Operator

concludes earnings Ladies joining. and Thank you call. quarter gentlemen, for Brink's The that third

disconnect. now may You

The Brink's Company (BCO) 24 Oct 182018 Q3 Earnings call transcript