Brink(BCO)2023-02-28 16:00Financial Performance - Consolidated revenues for 2022 increased by $335.3 million to $4,535.5 million, representing an 8% increase compared to 2021, driven by organic growth in Latin America, North America, Rest of World, and Europe[131] - Non-GAAP operating profit rose by $79.8 million to $550.3 million, reflecting organic increases across all regions and the favorable impact of business acquisitions[136] - Income from continuing operations attributable to Brink's shareholders increased by $70.4 million to $173.5 million, with diluted earnings per share rising to $3.63 from $2.06 in 2021[135] - Non-GAAP diluted earnings per share from continuing operations increased to $5.99, up from $4.75 in 2021, marking a 26% increase[137] - Total operating profit increased by 11% to $699.1 million, with a non-GAAP operating profit of $550.3 million, reflecting a 17% increase[139] - The company reported a net income from continuing operations of $173.5 million for 2022, significantly higher than $103.1 million in 2021[190] - The non-GAAP margin improved to 12.1% in 2022, up from 11.2% in 2021[187] - The diluted EPS for 2022 was $5.99, compared to $4.75 in 2021, indicating a 26% increase year-over-year[190] Revenue Growth by Region - North America revenues increased by 13% to $1,584.1 million, driven by a 10% organic growth of $140.2 million and acquisitions contributing $41.6 million[139] - Latin America revenues rose by 8% to $1,210.6 million, with a significant 15% organic increase of $163.8 million, despite a negative currency impact of $82.1 million[139] - Europe revenues grew by 2% to $931.4 million, supported by a 9% organic increase of $85.1 million and acquisitions adding $43.1 million, offset by a currency impact of $114.1 million[139] - Rest of World revenues increased by 8% to $809.4 million, with a 14% organic growth of $104.5 million, despite a currency impact of $51.2 million[139] Costs and Expenses - The cost of revenues increased by 7% to $3,461.9 million, primarily due to higher labor and operational costs, partially offset by currency exchange impacts[132] - Selling, general, and administrative expenses rose by 9% to $687.0 million, influenced by organic labor increases and restructuring costs[132] - Corporate expenses decreased by $7.7 million to $148.8 million, primarily due to lower bad debt expenses and higher foreign currency transaction gains[150] Currency Impact - The unfavorable impact of currency exchange rates was $252.2 million, primarily driven by the euro and the Argentine peso[132] - The company recognized $41.7 million in pretax charges related to highly inflationary accounting in Argentina in 2022, including $37.6 million in currency remeasurement losses[158] - The Argentine peso declined approximately 42% against the U.S. dollar in 2022, following a 19% decline in 2021 and a 29% decline in 2020[301] - In 2022, the company recognized $37.6 million in pretax remeasurement losses due to currency fluctuations in Argentina, compared to $9.0 million in 2021 and $7.7 million in 2020[302] Strategic Initiatives - The company aims to enhance customer experience and operational excellence as part of its growth strategy, focusing on four strategic pillars: Growth and Customer Loyalty, Innovation, Operational Excellence, and Talent[125] - The company initiated a global restructuring plan expected to reduce workforce by 2,300 to 3,000 positions, aiming for annualized cost savings of $45 million to $55 million[153] - The company recognized $22.2 million in restructuring charges in 2022, primarily for severance costs, as part of its efforts to enable growth and reduce costs[153] Debt and Equity - As of December 31, 2022, total debt was $616.0 million, an increase of $436.1 million from the previous year[224] - Total equity increased to $570.2 million, up $317.6 million from 2021, primarily due to higher comprehensive income[224] - Debt as a percentage of capitalization decreased to 86% in 2022 from 92% in 2021, despite an increase in total debt[223] Cash Flow and Investments - Cash flows from operating activities increased by $1.9 million in 2022, primarily due to higher operating profit and an increase of $50 million in customer obligations[206] - Cash used for investing activities decreased by $123.5 million in 2022, primarily due to lower payments related to acquisitions compared to 2021[211] - Capital expenditures in 2022 amounted to $(182.6) million, an increase of $(14.7) million compared to 2021[211] Pension and Retirement Plans - The primary U.S. pension plan's ending funded status was $(24.0) million for 2022, with projected statuses of $(25.0) million in 2023 and $(24.8) million in 2024[240] - The company does not expect to make contributions to the primary U.S. pension plan until 2026[242] - The total projected payments from Brink's to U.S. retirement plans are estimated to be $401.8 million from 2023 to 2037, with $206.8 million allocated to UMWA plans and $124.3 million to Black Lung plans[248] Taxation - The effective income tax rate on continuing operations decreased to 18.3% in 2022 from 51.1% in 2021[174] - Non-GAAP effective tax rate for continuing operations was 30.3% in 2022, down from 33.6% in 2021[175] - The company recognized a $41.4 million income tax expense on a pre-tax income of $226.2 million in 2022, resulting in an effective tax rate of 18.3%[184] Acquisitions and Goodwill - The company has completed multiple business acquisitions, applying the acquisition method to allocate purchase prices based on estimated fair values[262] - Goodwill was not impaired as of October 1, 2022, with the fair value of each reporting unit exceeding its carrying value[268]