Brink(US:BCO)2020-07-29 20:48Financial Data and Key Metrics Changes - The company reported a second quarter operating profit of $73 million, with an operating margin of 8.9%, down from 9.7% in the previous year, primarily due to a negative currency translation impact of $18 million [9][20][34] - Revenue for the second quarter was $826 million, a decline of 10% year-over-year, but flat on a constant currency basis, with organic revenue down 17% [19][33] - Adjusted EBITDA fell 6% to $125 million, reflecting a margin rate of 15.2%, which is an increase of 60 basis points compared to the same quarter last year [20][34] Business Line Data and Key Metrics Changes - The G4S acquisition contributed positively to the second quarter results, with $20 million of annualized synergies expected to be fully realized in 2021 [11][51] - The company experienced a 50% recovery in revenue from April to June, with total company revenue down 20% in April and up 3% in June [10][22] - U.S. revenue improved from a 24% decline in April to an 11% decline in June, indicating a strong recovery trend [10][24] Market Data and Key Metrics Changes - The company noted that cash in circulation has increased sharply since the onset of the pandemic, with annual growth rates between 5% and 7%, which is higher than historical rates [29][30] - The recovery in revenue was more pronounced in Europe and parts of Asia compared to the U.S., with European markets showing stronger recovery trends [66][68] Company Strategy and Development Direction - The company is focused on three priorities during the COVID-19 crisis: ensuring employee safety, protecting the business through cost reductions, and positioning for stronger growth post-crisis [16][18] - The company aims to achieve sustainable fixed cost reductions that will enhance margin leverage as revenue increases, with a target EBITDA margin improvement in 2021 [62][64] - The rollout of the company's strategy 2.0 initiatives is expected to provide additional revenue and margin growth opportunities [54][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the revenue recovery, projecting that full-year 2021 revenue could recover to around 100% of 2019 levels or potentially higher [15][51] - The company acknowledged uncertainties regarding the pandemic's impact but emphasized that aggressive cost reductions and the G4S acquisition would support future profitability [47][52] - Management highlighted the stability of their customer base, particularly in financial institutions and essential retail, which has limited downside exposure during the pandemic [13][14] Other Important Information - The company expanded its liquidity to over $1.3 billion and amended debt covenants through the first quarter of 2024 to address investor concerns [11][45] - The company expects to maintain its quarterly dividends and has a strong credit rating, indicating resilience during the pandemic [45][46] Q&A Session Summary Question: Revenue trends since June - Management indicated that while specific revenue data post-June is not available, continued re-openings suggest additional revenue increases [57][58] Question: Cost actions and their impact on long-term EBITDA margins - Management elaborated that the $85 million in annualized savings includes sustainable fixed cost reductions, which will enhance long-term EBITDA margins [60][62] Question: Comparison of recovery in different regions - Management acknowledged that recovery has been stronger in Europe and parts of Asia compared to the U.S., but emphasized the overall positive trend in revenue recovery [66][68]