Brink(US:BCO)2022-10-26 16:37Financial Data and Key Metrics Changes - The company reported strong third quarter results with double-digit organic growth in revenue, operating profit, adjusted EBITDA, and EPS [6][7] - Revenue increased by 6% year-over-year, with organic growth at 13%, driven by strong performance in North America, Latin America, and the rest of the world [22][25] - Adjusted EBITDA rose by 11%, with a margin of 16.6%, up 80 basis points from the previous year [23][28] - EPS increased by 18% year-over-year, with a notable gain from the sale of a position in NGI [23][29] Business Line Data and Key Metrics Changes - The Digital Retail Solutions segment grew organically by over 20% in the first nine months of the year, indicating strong customer acceptance [11] - The ATM Management Services (AMS) business experienced over 50% organic growth year-to-date, driven by successful agreements and acquisitions [13][18] - The company expects the recent acquisition of Note Machine to contribute approximately $5 million in operating profit and $0.04 per share in the fourth quarter [9][18] Market Data and Key Metrics Changes - Organic growth in Europe was about 8%, while North America and Latin America saw double-digit growth [22] - The company faced a 14% negative impact from foreign exchange translation, primarily due to the Argentine Peso and Euro [23][25] Company Strategy and Development Direction - The company announced a global restructuring plan expected to yield $40 million in savings in 2023, focusing on sustainable fixed cost reductions [10][19] - The strategy includes a shift towards higher-margin services such as ATM Managed Services and Digital Retail Solutions [19][36] - The company remains committed to achieving mid to high single-digit organic revenue growth and 100 basis points of margin improvement annually [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance despite macroeconomic challenges, citing the resilience of the business [37] - The company anticipates continued operational momentum in organic growth and profit expansion through the fourth quarter [8][10] - Management acknowledged the impact of inflation and currency devaluations but emphasized the ongoing need for cash management services [48][50] Other Important Information - The company is adjusting its full-year free cash flow target to approximately $255 million, reflecting changes in restructuring and working capital [32] - The acquisition of Note Machine is seen as a strategic move to enhance the company's capabilities in the ATM outsourcing market [18][36] Q&A Session Summary Question: What factors influenced revenue guidance beyond FX? - Management indicated that the organic growth model remains intact despite FX challenges, with Note Machine expected to contribute significantly in Q4 [40][44] Question: How does the company view margin targets in light of labor cost inflation? - Management expects to maintain pricing and cost inflation strategies while continuing to drive productivity and efficiency [41][42] Question: What is driving the strong performance in AMS compared to hardware companies? - The company highlighted differences in business models, with AMS benefiting from managed services while hardware companies face supply chain issues [45][46] Question: Is macro uncertainty affecting customer behavior? - Management noted that while inflation pressures exist, the fundamental need for cash management services remains strong [48][50] Question: What indicators would signal a customer pullback in a recession? - Management indicated that store closures or reduced service frequency would be key indicators, but no such trends have been observed yet [52][54] Question: How does pricing power compare to historical trends? - Management stated that pricing has remained consistent, with a balanced split between volume and pricing contributing to organic revenue growth [55][57]