Welcome to the Brink's Company's First Quarter 2023 Earnings Call. This morning, Brink's issued a press release detailing its first quarter 2023 results. The company also filed an 8-K that includes the release and the slides that will be used in today's call. The release and slides are available in the Investor Relations' section of the company's website at investors.brinks.com. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded and will be available for replay. This call and the Q&A session will contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences are available in the footnotes of today's press release and in the company's most recent SEC filings. Information presented and discussed on this call is representative 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. I will now turn the call over to your host, Jesse Jenkins, Vice President of Investor Relations, Mr. Jenkins you may begin.

Thanks and good morning. Joining me today are Brinks CEO, Mark Eubanks, and CFO, Kurt McMaken. This morning, we reported first quarter 2023 results on a GAAP, non-GAAP and constant-currency basis. Most of our comments today will be focused on our non-GAAP results, because we believe these results make it easier for investors to assess operating performance between periods. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation, and in this morning's 8-K filing. I'll now turn the call over to Brink's CEO, Mark Eubanks.

Thanks, Jesse. Good morning, everyone, and thanks for joining us. As you can see at the top of Slide 3, our 2023 is off to a strong start. Revenue was up 10%, including 13% organic growth. This includes about 30% organic growth in the focal areas of ATM Managed Services and Digital Retail Solutions. Productivity enhancements, improved revenue mix and continued strong pricing discipline drove 30 basis points of operating profit margin expansion and 70 basis points of adjusted EBITDA margin expansion. The higher revenue and productivity driven margin expansion led to the highest first quarter profit margins the company has seen since at least 2010. We also have meaningful progress towards our full-year free cash flow targets and a 38% improvement year-over-year in the first quarter. Kurt will have much more detail on the financial results in a few slides, but I'm pleased with the operational discipline of our teams and the strong quarter we delivered. With the momentum carried over from 2022 and this strong start to 2023, last week, our Board announced a 10% increase in our regular quarterly dividend. This dividend combined with our existing share repurchase program furthers our commitment to the return of excess capital to our shareholders. The results were aided by continued progress on the strategic priorities we discussed last quarter. AMS and DRS revenue grew 50% in the quarter as we continue to shift our revenue mix towards higher margin recurring revenue services that deliver an enhanced experience for our customers. Our growth, the improved revenue mix, continued productivity improvement, leveraging the Brink's business system and strong pricing discipline in the current inflationary environment were keys to the margin expansion in the quarter. We expect margins to continue to improve sequentially throughout the year as the benefits of these initiatives compound…

Thanks, Mark. Good morning, everyone. Starting on the left side of Slide 5, revenue versus the prior year was up 10% and up 16% in constant currency. With organic growth of 13% and acquisition growth of 3%, partially offset by a 6% negative impact from FX. Operating profit was up 14% and up 24% in constant currency, primarily from organic growth of 22%. Adjusted EBITDA was up 15% and up 23% in constant currency. We generated $1.16 of earnings per share. I'll provide more commentary on the drivers in the next few slides, but I'd like to point out that our operating profit margin of 10.7% and our adjusted EBITDA margin of 16.1% are the highest first quarter margins we've seen in over a decade and keep us squarely on track to deliver our full year targets. Let's turn to the next slide for more details on Q1 revenue and operating profit. Revenue was up 16% on a constant currency basis, primarily from organic growth of 13%, which benefited from AMS and DRS organic growth of over 30%, as well as volume growth in Brink's Global Services and price realization across all service lines and segments. All segments performed well with 9% organic growth in North America and double digit organic growth in Latin America, Europe and rest of world segments. Acquisitions added 3%, primarily related to the NoteMachine business. FX translation was a headwind of $60 million or 6% versus the prior year, in line with our expectations. Reported revenue was $1.2 billion, up 10% versus last year. First quarter operating profit in constant currency was up 24% versus last year with organic growth of 23% and acquisitions adding another 3%. FX was an 11% headwind resulting in reported operating profit of $127 million, up 14% versus last year.…

Thanks, Kurt. On Slide 10, you can see our foundational strategic pillars that we introduced last quarter. I'm encouraged with the early progress we've made on all of the pillars here in 2023. Growth in customer loyalty was highlighted by our strong growth in the quarter and our expectations for the rest of the year. We are making solid progress towards creating a consistent and exceptional customer experience across all service lines to continue to earn our customers' loyalty and trust. Deeper relationships with our customers will allow us to innovate right alongside of them. With the addition of our new Chief Experience Officer, our goal is to get deeper into the mindset of our prospective customers and deliver valuable solutions that take the friction out of cash management and ensure our leadership position in the broader cash ecosystem. Our focus on operational excellence through the Brink's Business System is allowing us to expand margins and drive efficiencies in key operational metrics throughout the business across the first quarter. We have good visibility into additional efficiencies as we strive to simply run the business better in all of our markets. And finally, we're well on our way to establishing a workplace and an employer brand that attracts, develops and empowers diverse talent, I'm excited about the recent additions of Laurent Borne, our Chief Experience Officer, focused on customer value drivers in the cash ecosystem and the previously announced Elizabeth Galloway, is our new CHRO, who will ensure that we have the best people, the most efficient operating model and effective development programs that allow our people to reach their potential. I'm confident continued progress in each of the pillars will drive revenue growth and margin improvement and position Brink's as the innovative business partner and partner of choice for our customers for years to come. I'll now turn it over to the operator for the Q&A session.

We will now begin the question-and-answer session. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. Our first question comes from George Tong with Goldman Sachs. Please go ahead.

All right, thanks, good morning. Your BRS and AMS revenues combined grew 31% organically and made up 18% of total revenues in the quarter. Can you talk about initiatives you have to further scale these offerings and how sustainable the growth rates are that you saw in the quarter?

Good morning, George. This is Mark. Yeah, for AMS and DRS, we've made conscious changes to our organization and I think you've seen some of the public announcements and the first being our Chief Experience Officer, Laurent Borne, which is where he will be significantly focused on really amplifying our early success here in DRS and making sure that we're able to go to the next level. This is something that we continue to see progress, not only in our core business around traditional retail stops around the world, but also starting to see more and more customers looking for more complicated and frankly more tech-enabled solutions. We talked about some previous wins with some European retailers. In fact, we have another big award in Q1 for an integrated POS and cash management solution, end-to-end cash logistics, over hundreds of locations for this multinational provider. The good news there, George, is this was a pilot that we started back in the second-half or early in the second half of last year, that has now been validated, confirmed for rollout and expect this to be a longer-term recurring revenue contract for many years to come. This is to be proof that we were able not only to deploy pilots, but now starting to starting to shrink some of that cycle time on getting to revenue. On the AMS side, we've also reorganized it somewhat in the company and elevated David Dove, who was previously responsible for the product line. Now, he has global responsibility for our AMS business to really enable some of that continued growth, as you mentioned, that leverages the global scale of the company and not just depending on local leaders to learn the business and extrapolate the strategy and translate it locally all on their own, gives us more opportunity to scale our platforms, both our knowledge, but also our technology stack.

Got it. That's helpful. You noted that you've seen no material change in demand as a result of the broader economic environment. Can you elaborate on the current sales environment, client sentiment and behaviors and then also describe how the business responded to past downturns.

Sure. Yes, I think we've talked about it traditionally, or historically about our organic revenue throughout cycles and although the slides are not in the deck this time, we've talked about it in previous quarters. Even in 2009 and during the great financial recession, we were down sort of less than 1%, of course in the pandemic, we were down high single digits, but that was again based on a phenomenon that we all know that had a contact that kept people from being out spending money. Before that, we feel like we've got a stable platform for organic growth that is in the mid-single digits, mid-to-high single digits on its own. And again, over that same period of time, have been able to improve margins along the way and I think Kirk highlighted some of that in his discussion. On the customer side, we've really seen very little change in customer behavior or any sort of widespread, let's say, store closings or retail consolidation. It's not to say it's not happening, but we just haven't seen it as being meaningful. In fact, maybe there's a little bit of the other side is what we foretold last quarter in our guidance about China reopening, COVID lapping a pretty tough COVID quarter last year with Southeast Asia, as well as parts of Europe as far as tourism and consumer activity. So we're seeing that come back and feel good about what we saw and I think you can see in the results around our organic growth.

Very helpful. Thank you.

Great. Thanks, George. Kurt, anything else you want to add on revenue.

No. I think maybe, George, just something to think about as we look at the revenues for the year. As Mark said, I mean a couple of things maybe to add to your first question and the second. The pipeline really remains robust for us both on the AMS and DRS side and we're seeing in healthy demand globally as it relates to our businesses. The one thing you want to keep in mind as we go forward is that as we move through the year, we are going to lap our pricing initiatives. This is fully expected, on plan, but as you look forward, that becomes a reality. So as you get into the second half, while we're still expecting robust growth to support our guidance and we're fully where we want to be, that's something you want to think about.

Got it. Thank you.

Thanks, George.

The next question is from Tobey Sommer with Truist Securities. Please go ahead.

Hey, good morning. This is Jasper Bibb on for Tobey. You've done a really nice job continuing to take cost out of the business and it looks like you're at or ahead of plan with respect to the 2024 targets at this point. So any update on how you're thinking about long-term margins for the business or where EBITDA margins might be exiting 2023, inclusive of some of the efficiencies you discussed earlier?

Sure, and thanks, Jasper, good morning. We obviously feel good about the 2023 number and are starting to really work through the restructuring benefits that you've laid out. We think those are obviously structural changes in the business, not just temporary capacity changes, so that's helpful and build a base going forward. The other is the growth in the AMS, DRS as we see the mix change there continue to enhance our long-term margins as we exit and we talked about this last quarter. Our total organic growth for the full year looks to be about 50% of that organic growth will come from AMS, DRS and 50% would come from the core business, the cash and valuables management. And so those enhanced margins will continue we think to support not only better profitability, but frankly, a lower capital intensity as we go forward as well. So that feels good. As we think about the framework, we've talked about the mid-to-high single digits and 100 basis points of OP margin improvement year-on-year. Again, you can see, we're guiding to exceed that this year and as you think forward beyond 18.3%, another 100 basis points next year, 19.3% that doesn't seem so far. We think we can starting to get to the 20% or above 20% EBITDA margins as we look forward.

Thanks for that. And then you mentioned the labor productivity savings in North America. I guess, earlier in earning season some other route-based services companies have mentioned, I think they're going to get better operating leverage in the second half of the year as you kind of get the benefit of labor costs moderating versus pricing that's already been locked-in at higher inflation rates. Would you say that's how you're thinking about it too or are there potential offsets to consider?

No, we definitely would see the same. I think the labor market stability, but I'd say also some of the operational changes and structural changes we've made in restructuring has also enabled us to reinvest in some areas to continue to be driving more efficiency. We saw a significant year-on-year turnover improvement in our labor force, which has been well chronicled since I've been here, almost 40% improvement year-on-year. So we're starting to really see the productivity benefits of having a longer tenure of our employees that allow us to continue to again drive sustainable improvements. I think the other thing as you think through the year from just a margin perspective, we definitely will see not only the restructuring as we talked about the incremental we've announced this quarter, but also just the productivity improvements and programs that we're putting in place that are starting to drive meaningful benefit likely take hold and we see more leverage there in the second half, Q3 and Q4 particularly. So as I think about sort of how the year would look. We would expect to have similar sequential margin expansion this year in the first half as we had last year and more meaningful expansion in Q3 and in Q4 as we exit the year.

Thanks. Last one for me is was hoping you could comment on what you're seeing in the pipeline for FI outsourcing opportunities, and has your ability to sell that solution and get in front of customers has been impacted by the most recent round of banking turmoil at all?

I'll answer the second first. We haven't seen any impact relative to customer willingness to talk or to think about outsourcing relative to the banking issues today. In fact, I don't -- it feels like there could be a benefit there as banks are looking to drive more productivity. This is a pretty significant cost lever for them and we think that that resiliency will continue. Globally, though. I think we continue to see the pipeline grow and I think more activity as we are not only putting more experience and let's say more networks into our portfolio, we're seeing that snowball effect, not only in the local markets where we're having success, but more globally across with the Brink's brand. Not only -- as we're talking about it, our people are talking about it, but now we've got meaningful wins that our teams are pointing to. Our customers are asking us about our meaningful wins, and how can we apply it into their markets.

I appreciate the detail there. Thanks for taking the questions, guys.

Yeah, thanks, Jasper.

This concludes our question and answer session and our conference. Thank you for attending today’s presentation. You may now disconnect.