Welcome to The Brink’s Company’s Fourth Quarter 2015 Earnings Call. Brink’s issued a press release on fourth 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 website at brinks.com. At this time, all participants are in a listen-only mode. A question-and- answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. Now, for the Company’s Safe Harbor statement, this call and the Q&A session contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today’s press release, investor presentation and in the Company’s most recent SEC filings. Information presented and discussed on this call is representative as of today only. Brink’s assumes no obligation to update any forward-looking statements. The call is copyrighted and may not be used without written permission from Brink’s. It is now my pleasure to introduce your host, Ed Cunningham, Vice President of Investor Relations and Corporate Communications. Mr. Cunningham, you may begin.

Thank you, Denise. Good morning everyone. Joining me today are CEO, Tom Schievelbein; and CFO, Joe Dziedzic. This morning, we reported results on both the GAAP and non-GAAP basis. The non-GAAP results exclude Venezuela operations, U.S. and Mexico retirement expenses, reorganization and restructuring charges, certain compensation items, acquisitions and dispositions. We believe the non-GAAP results make it easier for investors to assess operating performance between periods. Accordingly, our comments today including those referring to our guidance will focus primarily on non-GAAP results. Please note that as in past years, our quarterly non-GAAP results have been adjusted to reflect our full year tax rate, which was 37% in 2015. Prior to this adjustment, results for the first three quarters of 2015 gives an estimated full year rate of 42%. The resulting EPS figures for each quarter are provided on Page 16 of today’s press release. Joe will provide additional information on our tax rate in a few minutes. Summary reconciliation of non-GAAP to GAAP results is provided on Page 3 of the release. More detailed reconciliations are provided in the release and the appendix to the slides we’re using today and on our website. Finally, Page 9 of the press release provides a summary of several outlook items including guidance on revenue, operating profit and earnings per share. With that, I will turn the call over to Tom.

Thanks Ed. Good morning, everyone. I’m pleased to report that on a non-GAAP basis, our fourth quarter and full year earnings came in well ahead of the guidance we provided in October. Fourth quarter earnings per share was $0.55 versus the $0.58 we reported in a very strong year ago quarter. Revenue declined 14% or $115 million due to negative currency translation which also reduced operating profit by $16 million and EPS by $0.20. On a constant currency basis, the fourth quarter earnings per share was $0.75 or up 29%. Earnings for the full year showed very strong improvement at $1.69 per share, up 67% versus the $1.01 in 2014 despite currency headwinds that reduced annual revenue by $467 million, operating profit by $50 million and earnings per share by $0.64. So, even with the currency related decline of $467 million, about 75% of our total revenue in 2015 was generated outside of the United States. And we understand the currency fluctuations are a fact of life for global companies; we can’t control them and we can’t behind them. But it’s important to point out that despite strong currency headwinds that worsened throughout the year and continuing challenges in the U.S., we increased earnings by 67% in 2015; and on a constant currency basis full year earnings more than doubled. Our year-over-year improvement was driven by strong organic profit growth in Argentina, Mexico, Chile and Asia, and disciplined execution of restructuring plan that achieved $50 million in global cost reductions. These positive factors were partially offset by profit declines in the U.S. and Europe, and negative currency. The net result was a year-over-year operating profit improvement of $33 million, which boosted our margin rate by 160 basis points to 5.3%. While fourth quarter and full year results in the U.S.…

Thanks, Tom. Good morning, everyone. I’ll start this morning by comparing our full year results against the guidance we provided at the beginning of 2015. Last year at this time, we were estimating EPS of $1.55 to $1.75, driven by improvements from operations of $0.89 to $1.09. We ended the year up with $1.32 from operations, well above our original estimate and we needed every bit of it to cover the much higher than expected currency impact of $0.64 versus the $0.35 we expected at the beginning of 2015. Not everything went the way we had projected in 2015, particularly in the U.S. but we did deliver at the high end of our original guidance. Our 2016 EPS outlook has not changed. We expect continued operating improvement to overcome currency headwinds and drive another year of significant earnings growth from a $1.69 to a range between $2 and $2.20 per share. My next few slides will provide an overview of our fourth quarter results and full year results, then I’ll cover segment results with an emphasis on the challenges and opportunities we faced in our U.S. operations. I’ll close with the more detailed review of the assumptions behind our 2016 guidance. The fourth quarter was our most profitable quarter of 2014, accounting for $0.58 of the full year EPS of $1.01. This year fourth quarter 2015, we improved $0.17 operationally but currency completely offset these gains. This slide shows our fourth quarter reported revenue, operating profit and EPS and the impact of currency on each. Revenue declined entirely due to currency. In constant currency, operating profit grew by $6 million but currency was negative $16 million. The operational improvement for the quarter was led by Argentina’s volume and pricing increases, lower corporate expenses, price increases in Brazil combined with solid…

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Jamie Clement of Macquarie. Please go ahead.

Joe, if -- can I get a little bit more info on the retroactive price increases in Brazil, likely typically 1Q, 2Q in most of these Latin American markets? And by the way, maybe I am lumping them all together inaccurately, but usually see margin pressure in the first two quarters because you’ve got to up your wages because of inflation and then you get it back more in a gradual in Q3 and Q4; this year Q4 much more dramatic as a good guy for The Brink’s Company. So, can you talk us through that a little bit?

Certainly, the environment in Brazil just continued to deteriorate throughout the year. We saw less retroactive price increases in the first half with most of that being recovered in the third and fourth quarter. We actually got a little more of the retroactive price increases during the third quarter and we performed a little better in the third quarter versus what we expected, and we got the balance of it back in the fourth quarter. The Brazilian business also took some cost actions midyear as the environment continued to deteriorate and we saw volume pressure. And the fourth quarter ended up being our strongest by far; in fact, it came down to the month of December where we picked up a great seasonal volume pickup as well as the bulk of the price increases in the fourth quarter. It all came down to the very last minute, but the team was able to execute and deliver as they had expected to all year. And given our customers’ traditional practice of settling up by year-end, it just went down to the wire this year.

As we look at Brazil’s margin for the quarter, which was -- gosh, I mean it was high teens, and I look at it for the full year and I think it was more on the -- I think it was maybe more -- 8.0, I was going to say 9, okay. As we think about sort of modeling this business going forward, should we be thinking more -- which numbers do you think more about it?

Let’s start with the fourth quarter was extraordinarily high margin due to the factors we discussed. The way we’re thinking about Brazil is, given the incredibly difficult macro environment, the geopolitical environment continues to worsen, I think from the outside in, you’d say if a business can maintain their margin rate in Brazil and ex-currency maintain their local currency profit that would probably be viewed as a very good performance in that environment. That’s not what we’re targeting for Brazil. They have a growth plan. They have a plan to grow particularly in the retail segment. They did get good traction in 2015 in retail. The actions they took particularly in the middle of the year on cost we expect to help them going into 2016. They will continue to monitor the macro environment and take the necessary actions. But we’re expecting them to grow margin dollars in 2016 and to grow the top line. Expanding the margin rate will be incredibly difficult but we have a plan in place to increase the profitability of the business nominally.

And then, Joe, last follow-up question and then I’ll turn it over to others. So, in looking at your 2016 outlook, and I was just looking at page 25 of your slides. It looks to me like the incremental or detrimental operating margin assumption on your currency hit is -- it looks like somewhere between like let’s say 10% and 11%. Considering the floating -- we don’t know what the profitability of Argentina is, although I think you all have made some public comments about its importance in the non-Brazil, non-Mexico, LATAM segment. I would have thought that considering the floating currency and I think your assumption is 15 to 1 for the year, if I am not mistaken; I think that’s what you said at your Investor Day. I would have thought that the margin on the currency hit that you’re anticipating in 2016 would be a lot higher than 10% to 11%. Where am I wrong?

So, that your thought process is exactly right. Let me add some context. So, Argentina is far and away our most profitable country, particularly on the margin rate. Argentina has continued to perform exceptionally well in a high inflation environment. They expanded their margin rate. They grew local currency profit faster than the local currency inflation. They performed exceptionally well. You’re correct, we did back at our previous guidance at Investor Day, in the third quarter earnings release, we were expecting about 15 pesos to the dollar for 2016; given the devaluation that occurred in mid December, we have now adjusted that to be at about 17 by year-end. So, we’re coming on Argentina, continuing to devalue throughout the year. That’s the biggest driver of the revenue and the margin impact. What’s happening is we have other revenue impacts that they’re hitting us but they are in lower margin segments. And we’re not getting as much of a hit in those other business units that are having currency impacts from having the currency devaluations.

Okay. Because I mean just looking at my screen, the obvious ones particularly for the first half of 2016, the obvious headwinds are the real, the Mexican peso and the Argentine peso, and those are pretty darn profitable countries for you.

Right. There is another critical data point. So, when we translate Argentina’s results throughout the year, their local currency results, during 2015 we used the official rate. The official rate hovered between 8.5 pesos to 9.5 pesos during the year. Throughout the year, we repatriated cash from Argentina. And when we pulled cash out of Argentina, we actually paid something closer to the floating market rate, the blue-chip swap rate and that rate was closer to 14 to 14.5. So on a revenue line, you saw Argentina in U.S. dollars growing at deflation rate with very little exchange change. But at op profit and net income level, we were absorbing the hit of translating earnings at a 14ish rate because we were pulling the earnings out of the country by repatriating cash. So in 2015, we incurred cost to repatriate cash earnings from Argentina that was unfavorable FX. I’d have to go back and calculate kind of an effective rate on earnings but the effective rate in 2015 was much higher than 8 to 9.5 rate we translated revenue at.

Okay. That is definitely important point. And thank you very much for your time, as always.

Our next question will come from Ashish Sinha of Gabelli. Please go ahead.

Good morning. Thanks for taking my questions. I have two to begin with. Firstly, talking about the U.S. and the organic growth rate. Your peer this morning on their conference call suggested that the market growth is running roughly, they estimate around 3% to 4%. And if I look at your numbers, I just wanted to get a sense of what’s happening in terms of the market and whether the internal disruptions you have this year impacted your market share. So that’s my first question. And secondly on corporate expenses. So, good performance on that. But I wanted to understand how much of the reduction is sustainable, and if there are any one-time items in there, and whether 85 million would be a good ballpark to begin with as the base number for our estimates? And also if we think three to five years out, how much one-time costs for these special projects which you’re currently undertaking, how much of those costs are in the 85 million, which could probably go away over the three to five-year timeframe? Thank you.

Sure. So, let me just address the market and the growth in the U.S. We’re not losing market share in the U.S., it’s more about gaining additional outsourced business. So that’s the basis of our assumptions, Ashish. Relative to details on the corporate overhead, I’m going to let Joe. There are not a lot of one-time items in there, but I think it’s important Joe goes through the details with you.

Yes. So, let me just add a point on the U.S. revenue. Our reported revenue in the U.S. was essentially flat 730 versus 728. We absorbed about 2 percentage point negative impact from fuel surcharge which I think our competitor who released earnings today referenced that as well. So we actually had a couple of percentage points of revenue growth but we passed through fuel increases and in this case decreases through to customers and that reduced revenue. So, if you think about a 3% to 4% industry growth, we were in the 2% range. We also had mid-year where we transitioned away a large profitable money processing contract that was a direct reduction of us than as increase for that other competitor who released today. So that negatively affected our second half results. But we’re still within $20 million or $30 million of revenue of that competitor in the U.S., so we’re about the same size today. With respect to corporate expenses, we have a number of things that occur in corporate expenses. I’ll start with year-over-year we improved and it was driven significantly by the restructuring and cost actions we took at the end of 2014 beginning of 2015. And we quantify that of around 50 million of the improvement. We have a number of different things in the corporate line items that relate to the operations of the business, namely our global insurance program where we -- each country takes a level of self insurance and then at the global level we take a level of self insurance for the whole company. And we performed very well in 2015 particularly against the 2014 results. And that benefit showed up significantly in the corporate expenses line. So part of our improvement year-over-year is corporate expenses. To specifically address your question about some of the corporate funded projects or programs, we continued to work on reducing those as part of our restructuring we announced at the end of 15, we’re taking more cost out of those programs. And you should expect for 2016 somewhere in the neighborhood of $85 million for corporate expenses. That was the guidance we provided at Investor day that’s still a good range. Over time, we will continue to work to reduce that as the businesses are able to start implement some of the projects we are working out at the global level. The corporate support will move away and the countries will take full ownership of that. So, there will be decreases over time; it’s unquantified at this time.

And our next question will come from Saliq Khan of Imperial Capital. Please go ahead. Mr. Khan, your line is open.

Hey Joe, a couple of quick questions for you, first one being as, in the U.S. Brink’s introduced a lot more vehicles, like you had noted, which require lower fuel and lower maintenance. What is the estimated cost that you’re seeing right now per vehicle -- estimated cost savings per vehicle in comparison to the legacy vehicles that you had?

We expect meaningful improvement in cost per mile operated. We’ve measured that down to maintenance and fuel, and the original acquisition cost particularly with the Transit Connect vehicles and the Ford 550s. It is significant and substantial. And as we introduce more of those vehicles into the fleet, we will be able to realize those savings. I’ll just highlight the 460 vehicles that we’re targeting for year-end 2016 that includes retrofits. There is a significant number of vehicles that are in our existing fleet that we are retrofitting to enable one-person crews. It’s a lot less expensive to retrofit an existing vehicle versus buy a new one. And so, we’re doing that as a way to realize the labor benefits, as quickly as possible.

And Joe, you noted the one-person truck crew and the savings that are associated with it on the labor cost side, what impact, if any at all, are you seeing to the overall efficiency of the business, as a result of one-person crew?

We’re seeing labor savings. We are paying the one-person on the crew more because they are doing more; they are responsible for more. So, they are getting a slightly higher wage. We are seeing that we are able to operate the route as efficiently as before mostly. There is a few steps in the process where we’re not as efficient. We’re continuing to work on those core processes to figure out how to do them as efficiently with one versus two. But by and large, if you think about the time driving between customers whether there is one or two people on the vehicle, it’s the same. It is a little more timely for one person to check-in in the branch in the mornings and check-out in the evenings because one crew remember operating both the vehicle and transferring the valuables takes a little bit more time. We’re working on that. And in some cases, premise time can be faster, but we’re working on those processes. But by and large, it is a meaningful savings. You don’t get 100% of the labor savings for removing the one headcount, but we’re getting a significant amount of it.

In regards to EMEA, things you noted earlier was that both organic revenue and the operating profit has been down and you noted it was largely because of the lower volume. How are you guys thinking about potential price increases or additional international cost reductions?

The driver for EMEA on a year-over-year basis is we had a very profitable guarding contract in Germany and it was profitable only in the year 2014. It wasn’t just profitable in the prior years; it was a kind of an unusual situation that allowed us to generate significant margin in one additional year added to the contract. And that contract went away at the end of 2014, which we expected. So that’s the single biggest driver on the profitability in Europe. We also have a few countries, one particular one that’s very small that unfortunately has sustained some significant deteriorations in its operations and we are working to remedy that this year.

And lastly on my end guys, as you take a look at your current overall capital structure, do you find that it is adequate to ensure both the growth and profitability measures that you have in place right now for 2016, but also to go ahead and look at potential acquisitions? Thank you.

We are very comfortable with our capital structure today. We paid down debt in 2015. Particularly in the fourth quarter, we generated free cash flow in 2015 which was a nice change in trajectory. We have ample liquidity to invest into business, both organically and inorganically. We don’t feel that we’re limited in any way in making necessary investments to grow the business.

Our next question will be a follow-up from Jamie Clement of Macquarie. Please go ahead.

Joe, given the second half performance in the U.S., you went through I think in a lot of detail how you can get to U.S. margin target in 2016. But, if I could ask you to look out two, three, four years, what are the next steps in getting that upto 8% to 10%. And can that even be done in a marketplace that your competitor’s maybe plus 3% to 4%, others might said GDP at best; is that kind of growth environment?

Let me start with reference to our competitor’s margin. I think looking at their margins is a great thing for us because it proves the level of profitability that this industry can deliver in a very mature developed market like the U.S. There is plenty of currency in circulation to allow us to continue to improve our business and grow. I think you see all the competitors growing at some level. In 2015, our revenues were 730 million; our most profitable competitor was only slightly larger than that. They grew a little more than that, largely because of a contract we transitioned away to them. But at the end of the day what we need to focus on is what we can control in our business. And we can move our margins from the 2% we’re at to industry level profitability. Our focus right now is on helping our frontline employees run the business better. We need to help our frontline employees in managing the core processes in the business, we need to equip them with efficient process, well documented process, train them, give them the tools that they need to run the business whether it’s the handheld scanners or optimize routes, or most importantly the visibility to how they’re performing. If our frontline employees don’t know how they’re performing relative to the goals we’re setting, it’s difficult for them to know what success looks like. And that’s a huge focus of the management team. Arguably one of the most important things Mike Beech has brought to the U.S. as the leader of the large five, is a focus on core process improvement, breaking down what we do in the business at the most fundamental level, measuring it, and putting resources in place and tools in place to allow the frontline employees to better manage it. I think we’re making the necessary changes in the business to allow us to do that and the projects that we’re implementing are going to deliver that.

Jamie, the other thing is that clearly continuous process improvement and improving the efficiency is a key to getting our margins up but at the same time we are working really hard and having some success in terms of higher value services and getting customers to transition to more outsourcing. So, you have two things that will work to our advantage in terms of getting the margin rate up. First thing we have to work on real hard is the efficiency and then secondly is to transition to more higher value services that still use cash and transit but that add additional margin opportunity.

And one follow-up, if I may. You all didn’t discuss it much in 2015 but clearly the diamond market in 2015, it was not what it’s been over the last couple of years. It’s hard for me to know exactly what the right metrics are to look at in terms of what drives your business. But can you talk a little bit just conceptually about diamond market, what you saw this year? And if you can quantify what kind of hit you might have taken on the P&L because of diamonds or not; any increased visibility would great.

Jamie, the diamond market was down, diamond and jewelry market was down. We typically look at that and look at it from a portfolio perspective with the currency as well as precious metals. And so that’s you saw the improvement in the margin for through rest of the world which is fundamentally that. So, diamonds and jewelry were just down, they’ve been down for a couple of years now. We’re hoping for a rebound in diamonds and jewelry. I did see where De Beers had a good end of the year sale. So, we’re hoping…

Holidays

Yes. We’re hoping that that transitions to a better market going forward.

It sounds to me like manageable is what you’re telling.

Yes, it’s manageable.

[Operator Instructions] And in showing no questions at this time, we will conclude the question-and-answer session. The Brink’s Company fourth quarter earnings conference call has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.