Hello, and welcome to The Brink's Company's First Quarter 2022 Earnings Call. Brink's issued a press release on first quarter results this morning. The company also filed an 8-K that includes the release and the slides that will be used in today's call. For those of you listening by phone, the release and slides are available in the Investor Relations section of the company's website. Now for the company's Safe Harbor statement. This call and the Q&A session will contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today's press release and in the company's most recent SEC filings. Information presented and discussed on this call is representative as of today only. Brink's assumes no obligation to update any forward-looking statements. The call is copyrighted and may not be used without written permission from Brink's. It is now my pleasure to introduce your host, Ed Cunningham, Vice President of Investor Relations and Corporate Communications. Mr. Cunningham, you may begin.

Thanks, and good morning, everyone. Joining us today are Executive Chairman, Doug Pertz; CEO, Mark Eubanks; and our CFO, Ron Domanico. This morning we reported first quarter results on both the GAAP and non-GAAP basis. The non-GAAP results exclude a number of items, including the impact of Argentina’s highly inflationary accounting, reorganization and restructuring costs, items related to acquisitions and dispositions, valuation allowances on tax credits, and changes in certain allowance estimates. We’re also providing our results on a constant currency basis which eliminates changes in foreign currency exchange rates from the prior year. We believe the non-GAAP results make it easier for investors to assess operating performance between periods. Accordingly, our comments today will focus primarily on the non-GAAP results. Reconciliations are provided in the press release and the appendix to the slides we're using today, and in this morning's 8-K filing, all of which can be found on our website. I'll now turn the call over to Doug Pertz.

Thanks, Ed. And good morning, everyone and thanks for joining us today. This morning, we reported record first quarter results with revenue growth of 10%, a strong start to the year, despite a slower than expected start in the quarter due to Omicron-related shutdowns in many of our markets. Revenue continued to recover versus pre-COVID 2019 levels, as we progressed through the quarter, starting at 92% in January and ending with 97% in March. And preliminary April revenue suggests continued momentum. We also achieved record operating profit, EBITDA, and EPS with operating profit up 24%, reflecting a 120 basis point margin improvement. Adjusted EBITDA up 21% to $165 million and EPS up 46%. We are affirming our full-year guidance, which includes revenue growth of 8% to 11% and EPS growth of 16% to 26%. We expect continued momentum throughout the year to propel full-year 2022 organic revenue to at least pre-COVID levels supported by continued recovery from the pandemic, organic volume growth, price increases, and accelerating contributions from our Strategy 2.0 digital solutions. Reported full-year revenue is also expected to include more than $900 million from acquisitions completed since 2019. We anticipate operating profit growth of 16% to 23%, reflecting about 100 basis points of margin expansion driven by our lean cost initiatives and leverage from our lower fixed cost base. Despite our slower than expected start to the year due to Omicron, our full-year guidance is clearly supported by our first-quarter results: 10% revenue growth, 24% operating profit growth, and 46% EPS growth. Mark and Ron will review our first quarter results and full-year guidance in more detail in a few moments. During the pandemic, there was much speculation about its potential impact on retailers and consumers and their spending habits. Many investors were concerned that there would be a permanent shift of retail sales moving online, and that the new normal would be that e-commerce sales would eventually be greater than in-person retail sales. That just didn't happen. U.S. in-person retail sales are higher now than they were in 2019. And eCommerce sales as a percent of total retail sales are close to pre-pandemic levels, and we're just starting to come out of the pandemic. The graph on Slide 4 shows recent quarterly trend for both eCommerce and in-person retail sales in the United States. The blue bars on the graph show that the size of in-person retail sales in total dollars is much larger than it was before the pandemic growing from $1.2 trillion in the fourth quarter of 2019 to $1.5 trillion in the fourth quarter of 2021, a substantial increase of 20%. It's important to note that while eCommerce sales accelerated in 2020 during the pandemic, this growth has since slowed materially. In the second quarter of 2020 mid-pandemic, eCommerce moved to 15.7% of total retail sales. Since then, eCommerce sales has slowed considerably as shown by the dotted line while in-person sales growth has picked up as shown by the solid line with eCommerce dropping to 12.9% of total retail sales in the fourth quarter of 2021. This 12.9% eCommerce percentage is close to the levels we saw before the onset of the pandemic. Furthermore, the most recent estimates for eCommerce penetration in 2025 have been materially revised downward from 24% to 20% of total retail sales. This means that in 2025, about 80% of retail transactions will still be in-person where cash is a preferred payment method. The data suggests that the in-person retail market is even larger than we expected and would be post-pandemic. More importantly, the permanent shift of retail sales moving online that many expected just didn't happen. According to MasterCard, eCommerce sales in March were down 3% versus the prior year, while in-person sales were up 11%. The stock market, which always looks forward, is finally factoring in at least one part of this equation. Just look at the long list of stocks that benefited from projections of a pandemic, new normal in their businesses only to see in recent months as the pandemic impacts started to recede and these realities were not really the new normals. Valuations for many of these companies are now reverting back to pre-pandemic levels. Conversely, the long-term forecast for in-person retail sales remains strong and should support an increased growth company valuation for Brink's post-pandemic.

All right. Thanks Doug. And good morning, everyone. Our non-GAAP results include first-quarter revenue growth of 10%, operating profit growth of 24%, adjusted EBITDA growth of 21%, and EPS growth of 46%. The operating profit margin for the quarter was up 10.4%, up 120 basis points over last year. The adjusted EBITDA margin was 15.4% up 140 basis points over last year. Excluding the prior year gain of $0.05 related to our equity investment in MoneyGram, EPS grew 55% to a $1.15 per share. Ron would cover more details on our record quarter in a few minutes, but these results put us squarely back on track to deliver our 2022 guidance. Now turning to slide 7. Slide 7 shows the steady revenue recovery we saw in each quarter of 2021 through the first quarter of 2022, by segment and in aggregate versus pre-COVID 2019 levels. It includes comparisons on both the U.S. dollar and local currency basis. The strong local currency recovery rates demonstrate the underlying resiliency of our business, while the U.S. dollar recovery rates factor in the impact of foreign currency translation, which is how we ultimately report our results. On the right-hand side of the slide, you can see that the first-quarter revenue of the total company recovered to 95% of 2019 pre-COVID levels, a continuation of the improvement we saw in 2021. Looking over on the left-hand side of the slide with North America, you can see the sequential improvement last year from 93% to a 100% from the first to the fourth quarter and an increase in the current quarter to a 102%. Moving to the right, Latin America local currency recovery has been significantly stronger than other regions. Excluding Argentina Q1 local currency recovery was at 102% of pre-pandemic levels, largely on the strength of our business in Mexico. This was a sequential improvement of 4% versus Q4 of 2021, even with a significant impact of Omicron on January and February volumes in Brazil, Colombia, and Chile. In Europe, sequential improvement this quarter versus Q4 of 2021 was flat on a local currency basis at 95%. Many European countries are continuing to relax their restrictions and we expect consumer spending and retail markets there to continue to improve throughout 2022. After nearing full recovery in Q4 of 2021, revenue recovery in our Rest of World segment jumped above the full recovery this quarter, at 101%. This was driven by growth in our global services business. Reopenings still remain delayed in a few of our key markets, primarily in Asia-Pacific. In aggregate, our U.S. dollar revenue versus pre-pandemic levels recovered to 95% in the first quarter of 2022, which was flat versus the prior quarter, despite the lingering impact of the pandemic in the first half of the quarter.

Thanks Mark. Good day, everyone. On slide 11, please remember that we disclose acquisitions separately for the first 12 months of ownership. After 12 months they're mostly integrated and then included in organic results. Acquisitions for this quarter are primarily PAI and about 2% of the former G4S cash businesses. Please also remember that our business is seasonal. Historically our revenue and margins increase each quarter throughout the year. 2022 first quarter revenue was up 13% in constant currency with 9% organic growth versus last year and 4% from acquisitions. Foreign exchange was a 3% headwind. Reported revenue was $1.74 billion, up $96 million or 10% versus the first quarter last year. First quarter operating profit in constant currency was up 29% versus last year. Organic growth was 21% and acquisitions added 8%, each increased at least twice the revenue growth rate reflecting strong operating leverage. Negative foreign exchange was $4 million. Reported operating profit was $112 million and the operating profit margin of 10.4% was up 120 basis points versus the first quarter 2021.

To address our main cost input, labor, we are continuing to take a disciplined and in many cases higher than historical pricing actions to offset the rising wage costs we've seen globally. In addition to pricing, we continue to drive our lean cost productivity programs to maintain our profit improvement trajectory. We implemented several price increases in our U.S. business that went into effect in 2021 and the beginning of 2022, both of which were well above our historical annual averages. As we move through the year, we expect further pricing actions to continue to offset any inflationary pressures. Our businesses have not been significantly impacted by the Ukrainian-Russian conflict as we don't have any operations in Ukraine and less than 1% of our revenue was generated in Russia in 2021. Throughout our Eastern European markets, though, we saw a significant increase in demand for cash through increased ATM usage. This shows cash continues to play a crucial role in society that consumers turn to in times of uncertainty.

Thanks Ron. Slide 16 summarizes our three-year strategic plan. Strategy 1.0, the bottom layer, is our organic growth and operational excellence and our base cash logistics business. This accounts for three quarters of our expected organic growth in 2022 coming from higher volumes, pricing, and additional recovery from the pandemic. We're improving our margins with our wider and deeper program by executing this breakthrough initiative globally in a more transparent and systemic way across the company. This is supported for our continuous improvement culture and dedicated lean experts in each country. We're also continuing to sustain the improved cost structure we implemented over the last few years to capture even more margin leverage as revenue continues to grow.

So let me go back if I can just very quickly to one of the earlier questions that both Tobey and George related to the revenue progression. If you look at a recession and the impact it could have, Mark addressed that very well, but what's more important is that what we saw in the progression and the openings of countries throughout the quarter gives us a strong, comfortable position for achieving the revenue numbers that Mark has gone through. The first quarter historically has always been our slowest quarter throughout the year with growth throughout as we progress through the year. The Omicron and countries were closed in January and February as Mark laid out. So I think that's the key to look at our progression, our revenue, and then the support for our guidance for the year.

Yes, thank you. [Operator Instructions] And the first question comes from Tobey Sommer with Truist Securities.

Thank you. I wanted to ask a couple of questions about Brink's Complete. What kind of metrics do you think you're going to provide to us on a sort of a regular basis so that we can track and understand going forward? And then I was curious of the goal for this year. What is the proportion of sort of Greenfield tapping previously unvended customers versus transitioning prior retail customers? Thanks.

Thanks Tobey. You are breaking up a little bit, but I think what you were asking was metrics we're going to track Brink's Complete progress, as well as what does the mix look like between sort of converted customers versus the unvended market? So maybe I'll address that a little bit. The first question we continue to provide as much information as we can to make sure everyone understands that we are making progress and where we're making progress. I think this quarter we talked a little bit about the revenue contributions, and again, as we think about a three-year strategic plan between Brink's Complete and ATM managed services. We'd like them both to be $0.5 billion, but likely would target sort of 50% contribution from both of those. I'd say let's move into the sort of vented unvended. Our current examples we've given I think in the past five below was one where we talked about specifically a completely unvended customer that gave us more than 1,000 locations and really proved out the business model and the value proposition we think for Brink's Complete. But that being said, we're also seeing customers that are currently vented that appreciate the flexibility and faster access to their cash. Our goals internally as we set is we're looking at sort of 50/50 there as well on conversions of our existing CIT customers, whether they're ours or a competitor's. And then on the other side would be tapping into that unvended market. That's sort of how we think about it.

Yes. Well, it certainly should help. I think as we think about things that we're doing now to offset wage pressure and labor tightness, there is price increases we've talked about, but the other is really driving our lean productivity initiatives. And again, at a heightened sense of urgency, given the challenges that we have in the business, we expect to maintain that level of urgency and that's leadership's job to do, to continue to drive productivity, even in the face of flatter or lower wages. There is a cost benefit in other areas besides just recruiting and onboarding, but it's also the lack of productivity in training. And we've hired someone; it takes us several weeks to get them up to speed and get them trained and fully productive. And of course, when they are more productive or have more experience, it enables us to again drive our lean culture to benefit the bottom line.

To slide 14, this slide illustrates our actual net debt and financial leverage at year-end 2021 at the end of the first quarter 2022 and our estimate for year-end 2022. The approximate $150 million decrease in net debt from year-end 2021 to 2022 is expected to be driven by free cash, partly offset by dividends, financing leases, and other investments. While we have authorization for another $250 million in share purchases, nothing has been built into this estimate. Dividing our estimated $2.15 billion, 2022 year-end net debt by the midpoint of our expected EBITDA range should generate a net debt leverage ratio of 2.8 turns. Our bank covenants include a secured leverage ratio maximum of 3.5 turns more than twice our year-end estimate.

Thank you. [Operator Instructions] And the next question comes from George Tong with Goldman Sachs.

Hi. Thanks. Good morning. You mentioned that you do expect to offset inflationary pressures with pricing increases. Can you elaborate on whether you expect to see a timing gap between the impact of cost inflation and when your pricing increases will actually be implemented? And then quantify the extent of pricing and input cost inflation that you're seeing in the business?

Sure. Thanks for the question, George. Typically, our pricing does have a lag, maybe a quarter. I think last year in the third quarter we got a little further behind. It took us to the end of the year to get caught up, but we got out in front of that in Q1 as well as now in Q2 to ensure that we don't let that slip any further. I think the one other piece of input cost, other than labor, is fuel. As I mentioned, we have clauses in our contracts. Usually those are backward-looking and either lagged by a month or even lagged by a quarter, so there can be some catch-up. And we would expect to see that in Q2 and Q3 as we come out of the first quarters. I'd mention again, a little bit of labor pressure as well as fuel. To quantify that, it varies, and I'd say it's U.S. and globally it varies, let's say mid-single digits kind of pressure we'd see on average that we would expect to mid-to-high-single digits as we would see back in the marketplaces as prices increase as well.

We have not assumed some big macro slowdown that would impact our business. And I think part of my comments – prepared remarks were addressing what we've seen in some of these recessionary times in the event that we did see a recession, where we actually see people become more dependent on cash and lose access to credit, especially in a rising interest rate environment. So let's put that there for one second. The big macro lift for us, we believe, is again, the recovery back to pre-COVID activity in both retail markets and also travel. We continue to see the summer travel numbers; I think everyone has seen all the bookings, whether it's airlines or cruise lines or hotels increasing, this will have a direct impact on our business, certainly in a positive way.

I was hoping you could give us a comment about how your business is doing in Europe, particularly Eastern Europe in light of the Russia-Ukraine war? Just kind of want to see if there is any canary in the coal mine about economic slowness in those geographies.

Yes, I briefly touched on it in the prepared comments, but we've certainly seen; I mean, the first instance we saw of the disruption was a positive for us as people were really using ATMs at an accelerated rate in those border countries, both in the Baltics and Czech Republic. But we really haven't seen a slowdown per se in the other European markets. Predominantly this slowness that we saw maybe in the end of the year or early in the quarter was related to the pandemic still. So this is something that I think is we continue to see progress and don't really see any large disruption there.

Well, it certainly should help. I think as we think about the things that we are doing now to offset wage pressure and labor tightness, there is price increase we've talked about, but the other is really driving our lean productivity initiatives. And again, at a heightened sense of urgency. This may help us to continue driving productivity, even in the face of, let's say, flattening or lower wages.

So that concludes both the question session and the event. Thank you so much for participating today. You may now disconnect your lines.