Brink(US:BCO)2023-11-06 16:00Financial Performance - Revenues for Q3 2023 increased by $90.7 million to $1,227.4 million, representing an 8% growth compared to Q3 2022, driven by organic increases in Latin America and Europe [186]. - Operating profit for Q3 2023 rose by $78.2 million to $137.7 million, a significant increase attributed to organic growth in Latin America, North America, and Europe [188]. - Non-GAAP operating profit for Q3 2023 increased by $39.5 million to $166.3 million, reflecting strong performance across various segments [194]. - Income from continuing operations attributable to Brink's shareholders for Q3 2023 was $45.7 million, up from $19.2 million in Q3 2022, with diluted EPS increasing to $0.97 from $0.41 [189]. - Revenues for the first nine months of 2023 increased by $284.4 million to $3,629.0 million, with a 9% organic growth primarily due to inflation-based price increases [190]. - Non-GAAP income from continuing operations for the first nine months of 2023 rose by $15.4 million to $202.2 million, with EPS increasing to $4.27 from $3.90 [196]. - For the nine months ended September 30, 2023, total revenues increased by 9% ($292.5 million) with a 9% organic increase, while operating profit rose by 48% ($123.3 million) [207]. - GAAP operating profit for the three months ended September 30, 2023, was $137.7 million, compared to $59.5 million in the same period of 2022, representing a significant increase of 131.4% [251]. - GAAP net income for the nine months ended September 30, 2023, was $91.1 million, compared to a loss of $85.3 million in the same period of 2022 [251]. - Non-GAAP income from continuing operations for the nine months ended September 30, 2023, was $303.7 million, compared to $281.5 million in the same period of 2022, reflecting a growth of 7.0% [249]. Revenue Breakdown - North America revenues decreased by 1% ($2.5 million) due to a 1% organic decrease and unfavorable currency impacts, while operating profit increased by 24% ($9.3 million) driven by a 23% organic increase [201]. - Latin America revenues increased by 13% ($38.5 million) primarily due to a 24% organic increase, with operating profit up 2% ($1.6 million) driven by a 31% organic increase [202]. - Europe revenues increased by 31% ($67.8 million) due to the NoteMachine acquisition and a 6% organic increase, with operating profit rising by 38% ($9.9 million) [203]. - Rest of World revenues decreased by 6% ($13.1 million) due to a 4% organic decrease, with operating profit down 12% ($5.7 million) [204]. - North America revenues for the nine months increased by 2% ($26.4 million) driven by a 2% organic increase, with operating profit up 28% ($26.9 million) [209]. - Latin America revenues for the nine months increased by 10% ($90.3 million) primarily due to a 21% organic increase, with operating profit up 3% ($6.4 million) [210]. - Europe revenues for the nine months increased by 26% ($173.6 million) due to the NoteMachine acquisition and an 8% organic increase, with operating profit up 38% ($24.0 million) [211]. Expenses and Costs - Cost of revenues for Q3 2023 increased by 5% to $921.0 million, primarily due to higher revenue and acquisition impacts [187]. - Selling, general and administrative expenses decreased by 6% to $170.0 million in Q3 2023, attributed to lower share-based compensation and restructuring costs [187]. - Corporate expenses decreased by 47% ($24.4 million) in Q3 2023 compared to Q3 2022, reflecting cost management efforts [212]. - Corporate expenses for the first nine months of 2023 decreased by $5.0 million compared to the prior year, primarily due to lower net compensation costs of $18.3 million and an increase in foreign currency transaction gains of $5.9 million [213]. - The company incurred $57.3 million in costs related to acquisitions and dispositions for the nine months ended September 30, 2023, down from $63.1 million in the same period of 2022 [249]. Currency and Foreign Exchange - The unfavorable currency impact on revenues was $15.4 million, primarily driven by the Argentine peso, affecting overall performance [187]. - Foreign currency transaction gains increased by 50% in Q3 2023 compared to Q3 2022, contributing positively to overall financial performance [212]. - The company recognized $30.3 million in pretax charges related to highly inflationary accounting in Argentina, including currency remeasurement losses of $23.9 million [220]. - The fair value of cross currency swap contracts as of September 30, 2023, was a net liability of $17.3 million, up from $11.7 million at December 31, 2022 [235]. - The company entered into a zero cost foreign exchange collar contract with a notional amount of $215 million in July 2023 to manage foreign exchange risk [234]. Taxation - The provision for income taxes for the three months ended September 30, 2023, was $37.3 million, with an effective tax rate of 43.0%, compared to 27.3% in 2022 [241]. - The company recorded a $7.0 million tax expense in the provision for income taxes for the nine-month period ended September 30, 2023, due to changes in Brazilian tax law [243]. - The effective income tax rate for non-GAAP results was 30.0% for the nine months ended September 30, 2023, slightly down from 30.3% in the same period of 2022 [249]. Cash Flow and Investments - Non-GAAP cash flows from operating activities improved by $142.5 million in the first nine months of 2023, totaling $343.4 million compared to $200.9 million in the same period of 2022 [256]. - Cash flows from operating activities under GAAP increased by $92.5 million in the first nine months of 2023, reaching $293.0 million compared to $200.5 million in 2022 [258]. - Cash used in investing activities increased by $35.8 million in the first nine months of 2023, totaling $(147.9) million compared to $(112.1) million in 2022 [261]. - Capital expenditures for the first nine months of 2023 were $133.1 million, slightly higher than $131.5 million in the same period of 2022 [263]. - Cash flows from financing activities decreased by $499.3 million year over year, resulting in a net cash used of $207.4 million in the first nine months of 2023 compared to a net cash provided of $291.9 million in the same period of 2022 [266]. Shareholder Returns - The company repurchased 1,453,573 shares of common stock for a total of $105.7 million at an average price of $72.72 per share during the first nine months of 2023 [275]. - Dividends paid to Brink's shareholders increased to $29.7 million in the first nine months of 2023, up from $28.3 million in the same period of 2022, reflecting a dividend of $0.64 per share compared to $0.60 per share previously [267]. Debt and Liquidity - Total debt as of September 30, 2023, was $3,419.1 million, slightly up from $3,402.8 million at the end of 2022 [269]. - Net debt increased by $63 million to $2,579.2 million as of September 30, 2023, primarily due to borrowings to support increased provisional credit and fund the share repurchase program [270]. - As of September 30, 2023, $437 million was available under the Revolving Credit Facility to meet liquidity needs [271]. Pension and Retirement Plans - The company did not make cash contributions to the primary U.S. pension plan in 2022 or the first nine months of 2023, with no expected contributions until 2026 [278]. - The funded status of the primary U.S. pension plan improved to $(12.7) million as of September 30, 2023, from $(24.0) million at the end of 2022 [277]. - The primary U.S. pension plan reported an actual expense of $(1.9) million in 2022 and $(10.2) million for the nine months of 2023, with a projected expense of $(8.7) million for 2024 [281]. Market Risks - The company operates in over 100 countries, exposing it to various market risks, including interest rate and foreign currency exchange rate fluctuations [285]. - The risk management program aims to mitigate the adverse effects of market volatility on operating results, with no material changes in market risk exposures reported for the nine months ended September 30, 2023 [285].