The Brink's Company 2026 Q2 Earnings Call

Thanks. Good morning. Joining me are CEO Mark Eubanks and CFO Kurt McMaken. Today, Brink's reported second quarter results on a GAAP, non-GAAP, and constant currency basis. Most of our commentary today will be focused on our non-GAAP results. These non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. We believe these measures allow investors to better compare performance over time and to evaluate our performance using the same metrics as management. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in SEC filings, which can be found on our website. We will also have commentary on the status of our pending acquisition of NCR Atleos. As a reminder, this transaction remains subject to the completion of customary closing conditions and additional regulatory approvals.

Other details, including risk factors related to the transaction, can be found in the pertinent SEC filings. I will now turn the call over to Brink's CEO, Mark Eubanks.

Thanks, Jesse. Good morning, everyone. Starting on slide three, we delivered a strong second quarter with organic growth of 4% and ATM Managed Services and Digital Retail Solutions, or AMS-DRS, growing 14%. This marks the 14th consecutive quarter of mid-teens or better organic revenue growth in AMS-DRS, more than doubling in total revenue over the same period of time to over $1.5 billion. We continue to focus our strategic efforts on growing these valuable lines of business and have good line of sight into continued growth in the second half, supported by some recent customer wins, which I'll talk about later. Cash and Valuables Management, or CVM, performance was highlighted by continued strong growth in our Global Services business as we drive incremental revenue in the volatile precious metals markets. Supported by a favorable revenue mix and widespread productivity initiatives, we delivered record second quarter operating and EBITDA margins.

EBITDA margins were 18.5% in the quarter, up 70 basis points year-over-year, with expansion across each of our operating segments. Cash flow continues to grow, with year-to-date and trailing 12-month free cash flow up $32 million over the prior periods. Total free cash flow generated over the last four quarters was $468 million, with conversion from EBITDA of 46%, above our full-year framework. Year-to-date, our results are slightly ahead of our original expectations. With EBITDA above the midpoint of our prior guidance, we're raising our full-year profit expectations. As you'll see from our Q3 guidance in a few minutes, I'm confident in this team's ability to continue to improve the business, accelerate organic growth, and drive higher margins and free cash flow over the balance of the year.

We remain well-positioned to deliver against our full-year 2026 framework of mid-single-digit organic revenue growth with EBITDA margin expansion of 30 to 50 basis points. Turning to slide four. I'd like to provide an update on the NCR Atleos acquisition. Over the last few months, we've made considerable progress on many fronts and have moved our estimated closing timeline forward to early in the first quarter. Since our last public comments, we received overwhelming support from both NCR Atleos and Brink's shareholders, with more than 99% of the votes cast in favor of the transaction. That endorsement reflects the confidence in the strategic merits of the combined companies. We also have satisfied several outstanding regulatory requirements. During the quarter, we were granted an early termination by the U.S. antitrust regulators.

This clearance represents a meaningful step forward, with the U.S. representing the largest concentration of combined company pro forma revenue of almost 40%. Other recent antitrust clearances include Brazil, India, Turkey, Colombia, and we continue to work constructively with the remaining other jurisdictions. We're also making meaningful progress with foreign direct investment regulators, having received clearance across the majority of the Eurozone footprint, including France, Germany, Spain, Italy, and the U.K. Money transmitter licensing requirements with the U.S. regulators are also moving forward with urgency. We've achieved clearance in more than 80% of the necessary jurisdictions and remain well on track in the remaining markets. Over the next several months until closing, we will stay focused on the standalone commitments of both companies while accelerating integration planning.

Although we'll continue to operate independently until closing, our dedicated integration teams will work closely to ensure that we capture the strategic benefits of the combined businesses. As I continue to engage with the NCR Atleos team, I'm increasingly encouraged by the potential of the combination. With deep expertise and strong performers across both organizations, I'm confident we'll be able to deliver the solutions to our customers' most important challenges. I look forward to closing the acquisition and moving forward as one team as quickly as possible. Now shifting back to the quarter on slide five, I'll provide some commentary on performance by line of business. Starting with CVM, organic growth was slightly positive in the quarter, with strong Global Services volume and good pricing discipline offset by AMS/DRS conversions. As we discussed last quarter, our Global Services business remains strong through the first half of the year.

Moving to AMS/DRS, revenue grew organically $50 million in the quarter at a rate of 14%. Late in the quarter, we saw several large installations and customer wins moving to the second half, primarily reflecting customer-driven timing decisions. In the AMS business, we were recently awarded a full ATM outsourcing agreement for a network consortium of banks in Europe that will come online over the second half of the year. In DRS, we continue to deploy our solution across the Paradies footprint that we discussed last quarter, and I'll talk more about another key win in North America on the next slide. AMS/DRS remains compelling outside of the more penetrated North America and Europe segments, with strong growth in both Latin America and rest of world.

These recent wins and solid deployment schedules in the second half give us confidence in our ability to deliver organic growth towards the top end of our full-year framework of mid-to-high teens for the balance of the year. As we said last quarter, the visibility into our pipeline and backlog continues to support accelerated growth in the second half of the year. Stepping back and looking at total revenue trends for the quarter, we delivered a second quarter in line with our organic revenue expectations and customer engagement with our solutions remains very high. As you'll see in our Q3 guidance, we expect a slight acceleration in organic growth in the second half and remain on track to deliver against our organic growth framework for the full year. Moving on to slide six, you can see a few details on a new DRS win in North America.

We recently signed an enterprise agreement with a large retail chain to provide a full DRS solution. We are nearly doubling our share of wallet with this customer by providing our tech-enabled solutions at over 5,000 retail locations across a broad U.S. footprint. This customer will enjoy the security and reliability of Brink's solutions, the integration of physical to digital payments, working capital transparency, and simplified cash handling. This in-store process simplification will unlock management time for more value-add activities across the entire retail environment, like employee training, customer assistance, and other in-store operational efficiency measures. While the customer benefits of DRS are clear, Brink's will also see meaningful productivity opportunities from this win as we increase density by adding a network that complements our existing footprint while optimizing the routes that already exist in most of our geographic locations.

As I've said before, DRS is a true win-win in the marketplace, and we continue to have meaningful conversations with customers of all sizes in all of our markets. As we continue to improve our go-to-market approach in highly under-penetrated verticals, we expect to continue to deliver these kinds of wins that will set the foundation for future growth and margin accretion for years to come. One other important point before we move to the next page relates to NCR's own U.S. ATM network, Allpoint, which has ATMs in all of these locations. This is an example of the opportunities that will create significant routing synergies and improve service levels as we increase network density. This optimization creates significant benefits for our DRS value proposition while also reducing service costs for an owned ATM network in the combined company.

As we look at the next several years post-acquisition, we see meaningful additional opportunities to drive operating efficiencies, enhance service levels, and create value through the expanded network of the combined company. Now on to slide seven. You can see detail on a recent AMS win in a key Southeast Asia financial institution market. We recently won an AMS deal with Mandiri Bank in Indonesia, servicing more than a third of their entire estate. Mandiri is the largest national bank in Indonesia, operating over 13,000 total ATMs. Southeast Asia remains an attractive market for AMS as we add Mandiri to the previously discussed wins in Indonesia and more recently, the Security Bank win in the Philippines. These end markets have favorable cash usage trends and remain attractive for outsourcing as banks look to optimize costs and better serve their customers.