Brink's Reports Second-Quarter Results

RICHMOND, Va., July 24, 2014 /PRNewswire/ -- The Brink's Company (NYSE: BCO), a global leader in security-related services, today reported second-quarter earnings.

Second-Quarter Highlights

GAAP:

• Revenue down 7% (11% organic growth)
• Segment profit down 52% (16% organic decrease) due to lower profit in Venezuela and Mexico, margin 2.9% vs. 5.6%
• Latin America loss $2 million vs. $24 million profit due primarily to impact of Venezuela currency devaluation and lower profit in Mexico
• EMEA profit $17 million vs. $19 million due primarily to lower profit in France
• North America profit flat at $6 million

Non-GAAP:

• Revenue down 7% (11% organic growth)
• Segment profit down 31% (15% organic decrease), margin 4.4% vs. 6%
• Latin America profit $11 million vs. $25 million due primarily to lower profit in Mexico
• EMEA profit $18 million vs. $19 million due primarily to lower profit in France
• North America profit $7 million vs. $9 million

Tom Schievelbein, chairman, president and chief executive officer, said: "The decline in second-quarter earnings was due primarily to lower operating results in Mexico and France.  Negative currency translation also had a substantial impact on year-over-year comparisons due mainly to the devaluation of the Venezuelan bolivar earlier this year.

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"The 2014 guidance we provided in April for each region and the company as a whole has not changed.  We are forecasting considerable profit growth in the second half as we expect operational improvements will begin to have an impact on several fronts, especially in the U.S. and Mexico.   We continue to expect our 2014 overall segment margin rate to be around 6.5% on revenue of about $3.7 billion.  Our longer-term goal is to achieve a full-year segment margin rate of 8% by the end of 2016, which should result in $290 to $330 million in segment operating profit and earnings of $2.50 to $3.00 per share on a non-GAAP basis."

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Non-Segment Expenses
Non-segment expenses declined $6 million due to lower U.S. pension charges in 2014.  On a non-GAAP basis, these expenses declined $2 million due to the timing of annual equity incentive grants.  The full-year estimate for non-segment expenses remains at approximately $45 million (non-GAAP).

Capital Expenditures and Capital Leases
Year-to-date capital expenditures and capital lease additions were $58 million compared to $79 million in both periods.  Full-year fixed asset acquisitions are expected to be approximately $175 million to $185 million.

Cash Payments to Primary U.S. Pension Plan
Brink's expects to make the 2015 and 2016 required cash payments of $61 million to the primary U.S. pension plan in 2014 to further de-risk the pension plan investment allocation and lower the PBGC premiums.  These payments will be made with available cash and existing credit facilities.

Income Taxes
On a GAAP basis, second-quarter tax expense was $5 million (effective rate 87%) versus $11 million (effective rate of 39%) in the year-ago quarter.  Due to the significant Venezuela remeasurement write-down, which is non-deductible, the resulting full-year GAAP tax expense is projected to exceed pre-tax income, resulting in a tax rate in excess of 100%.

Non-GAAP earnings for the second quarter reflect an effective tax rate of 36.5%, which is the midpoint of the estimated non-GAAP full-year range of 35% to 38%. Non-GAAP results exclude the aforementioned nondeductible remeasurement charge.

Conference Call
Brink's will host a conference call on July 24 at 11:00 a.m. Eastern Time to review second-quarter results.  Interested parties can listen by calling (877) 870-4263 (in the U.S.) or (412) 317-0790 (international) Participants should call in at least five minutes prior to the start of the call.  Participants can pre-register at http://dpregister.com/10048399  to receive a direct dial-in number for the call.  The call also will be accessible via live webcast at www.Brinks.com.  A replay of the call will be available through August 8, 2014, at (877) 344-7529 (in the U.S.) or (412) 317-0088 (international).  The conference number is 10048399.  A webcast replay will also be available at www.Brinks.com.

About The Brink's Company
The Brink's Company (NYSE:BCO) is the world's premier provider of secure transportation and cash management services.  For more information, please visit The Brink's Company website at www.Brinks.com or call 804-289-9709.

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Non-GAAP and Adjusted Non-GAAP Results
Non-GAAP and Adjusted Non-GAAP results described in this press release are financial measures that are not required by or presented in accordance with U.S. generally accepted accounting principles ("GAAP").  The purpose of the Non-GAAP results is to report financial information without certain income and expense items and adjust the quarterly Non-GAAP tax rates so that the Non-GAAP tax rate in each of the quarters is equal to the full-year Non-GAAP tax rate.  The full year Non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts.  The purpose of Adjusted Non-GAAP results is to report historical Non-GAAP financial information assuming that our Venezuelan operations had been remeasured using a rate of 50 bolivars to the U.S. dollar.

The Non-GAAP and Adjusted Non-GAAP information provides information to assist comparability and estimates of future performance.  Brink's believes these measures are helpful in assessing operations and estimating future results and enable period-to-period comparability of financial performance.  In addition, Brink's believes the measures will help investors assess the ongoing operations.  Non-GAAP and Adjusted Non-GAAP results should not be considered as an alternative to revenue, income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts. Amounts reported for prior periods have been updated in this report to present information consistently for all periods presented.

Consolidated non-GAAP targets for 2016 (including segment margin, segment operating profit and EPS) are not reconciled to GAAP counterparts because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable effort.

Forward-Looking Statements
This release contains both historical and forward-looking information. Words such as "anticipates," "assumes," "estimates," "expects," "projects," "predicts," "intends," "plans," "believes," "potential," "may," "should" and similar expressions may identify forward-looking information. Forward-looking information in this release includes, but is not limited to, anticipated revenue, organic revenue growth, currency impact on revenue, segment margin, non-segment expense, interest expense, income tax rate, interest and other income, non-controlling interest expense, tax expense, fixed asset acquisitions, capital expenditures, capital leases, depreciation and amortization for 2014; profit growth in the second half of 2014 and the impact of operational improvements; and 2016 non-GAAP segment margin, non-GAAP segment operating profit and earnings per share. Forward-looking information in this document is subject to known and unknown risks, uncertainties and contingencies, which are difficult to predict or quantify, and which could cause actual results, performance or achievements to differ materially from those that are anticipated.

These risks, uncertainties and contingencies, many of which are beyond our control, include, but are not limited to:

• continuing market volatility and commodity price fluctuations and their impact on the demand for our services;
• our ability to continue profit growth in Latin America;
• our ability to maintain or improve volumes at favorable pricing levels and increase cost and productivity efficiencies, particularly in the United States and Mexico;
• investments in information technology and value-added services and their impact on revenue and profit growth;
• our ability to develop and implement solutions for our customers and gain market acceptance of those solutions;
• our ability to maintain an effective IT infrastructure and safeguard confidential information;
• risks customarily associated with operating in foreign countries including changing labor and economic conditions, currency devaluations, safety and security issues, political instability, restrictions on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive government actions;
• the strength of the U.S. dollar relative to foreign currencies and foreign currency exchange rates;
• the stability of the Venezuelan economy, changes in Venezuelan policy regarding foreign-owned businesses;
• changes in currency restrictions and in foreign exchange rates, including fluctuations in value of the Venezuelan bolivar;
• regulatory and labor issues in many of our global operations, including negotiations with organized labor and the possibility of work stoppages;
• our ability to identify and execute further cost and operational improvements and efficiencies in our core businesses;
• our ability to integrate successfully recently acquired companies and improve their operating profit margins;
• costs related to dispositions and market exits;
• our ability to identify evaluate and pursue acquisitions and other strategic opportunities including those in the home security industry and emerging markets;
• the willingness of our customers to absorb fuel surcharges and other future price increases;
• our ability to obtain necessary information technology and other services at favorable pricing levels from third party service providers;
• variations in costs or expenses and performance delays of any public or private sector supplier, service provider or customer;
• our ability to obtain appropriate insurance coverage, positions taken by insurers with respect to claims made and the financial condition of insurers, safety and security performance, our loss experience, and changes in insurance costs;
• security threats worldwide and losses of customer valuables;
• costs associated with the purchase and implementation of cash processing and security equipment;
• employee and environmental liabilities in connection with our former coal operations, black lung claims incidence;
• the impact of the Patient Protection and Affordable Care Act on black lung liability and the Company's ongoing operations;
• changes to estimated liabilities and assets in actuarial assumptions due to payments made, investment returns, interest rates and annual actuarial revaluations, the funding requirements, accounting treatment, investment performance and costs and expenses of our pension plans, the VEBA and other employee benefits, mandatory or voluntary pension plan contributions;
• the nature of our hedging relationships;
• changes in estimates and assumptions underlying our critical accounting policies;
• our ability to realize deferred tax assets;
• the outcome of pending and future claims, litigation, and administrative proceedings;
• public perception of the Company's business and reputation;
• access to the capital and credit markets;
• seasonality, pricing and other competitive industry factors; and
• the promulgation and adoption of new accounting standards and interpretations, new government regulations and interpretation of existing regulations.

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This list of risks, uncertainties and contingencies is not intended to be exhaustive. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2013, and in our other public filings with the Securities and Exchange Commission. The forward-looking information included in this document is representative only as of the date of this document and The Brink's Company undertakes no obligation to update any information contained in this document.

Contact:
Investor Relations
804.289.9709

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See page 14 for notes.

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Non-GAAP cash flows from operating activities is a supplemental financial measure that is not required by, or presented in accordance with GAAP. The purpose of the Non-GAAP cash flows from operating activities is to report financial information excluding the impact of cash received and processed in certain of our secure Cash Management Service operations and without cash flows from discontinued operations.  Brink's believes these measures are helpful in assessing cash flows from operations, enable period-to-period comparability and are useful in predicting future operating cash flows. Non-GAAP cash flows from operating activities should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.

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SOURCE The Brink's Company