Welcome to the Brinks Company's Second Quarter 2022 Earnings Call. Brinks issued a press release on second 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 the slides are available in the investor relations section of the company's website brinks.com. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. 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 the 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. Brinks assumes no obligation to update any forward-looking statements. This call is copyrighted and may not be used without written permission from Brinks. It is now my pleasure to introduce your host Ed Cunningham, Vice President of Investor Relations. Mr. Cunningham you may begin.

Thanks and good morning everyone. Joining me today are CEO Mark Eubanks and CFO Ron Domanico. This morning we reported second quarter results on both a 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 allowance 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 in the appendix of 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 Mark.

Thanks Ed and good morning everyone and thanks for joining us today. This morning we reported record second quarter results including double-digit organic growth in revenue, operating profit, adjusted EBITDA, and earnings per share. We achieved these results in a macro environment that continues to be challenging, demonstrating the resiliency of our business. We also affirmed our full year guidance which includes revenue growth of 8% to 11% and operating profit growth of 16% to 23%, reflecting approximately 100 basis points of margin expansion, driven by our lean cost initiatives and leverage from a lower fixed cost base. Our full year guidance is supported by our year-to-date results which are included in our appendix. Through the first half, we've achieved 9% revenue growth, 18% profit growth, 16% increase in EBITDA, and earnings per share growth of 26%. We delivered these results despite a slower-than-expected start to the year due to Omicron-related shutdowns in many of our markets. We expect this momentum to continue through the second half, which is historically much stronger than the first. Before moving on to the details behind our results, I want to touch on our sustainability efforts. In July, we issued our first corporate sustainability report, which shared more about our priorities and the United Nation's sustainable development goals that align with our operations. We're in the early stages, but sustainability is an important focus for us and we look forward to sharing more about our commitment, the targets we intend to achieve, and the progress in future quarters. Slide four summarizes the strong revenue and profit growth we achieved in the second quarter. Revenue was up 8% with organic growth of 13%, driven by double-digit organic growth in all four of our segments. Second quarter US dollar revenue recovered to 99% of proforma pre-pandemic levels, up from the 95% recovery we saw in the first quarter, reflecting steady sequential improvement from April to June. In fact, June revenue recovery reached 100%. On a local currency basis, excluding Argentina, revenue has now been at or above the pre-pandemic levels for two consecutive quarters. While our proforma revenue has fully recovered from the impact of COVID-19, many of our markets, particularly in Asia, are not back to pre-pandemic revenue levels, but we expect these markets to continue to recover. Operating profit was up 12%, with organic profit growth of 17% and acquisition-related growth of 1% partially offset by a 6% negative impact from foreign exchange. This profit growth was driven by strong year-over-year margin expansion in three of our four geographic segments. The exception was North America, where profits declined versus last year's very strong second quarter. This decline was related to various one-time adjustments that on a combined basis more than offset the second quarter margin improvement this year. On a sequential basis in 2022, the North American margin rate increased by 190 basis points over the first quarter rate, and we expect further improvement in the second half. In North America, our price increases continue to outpace our labor and other cost increases and labor availability continues to improve. Adjusted EBITDA was up 13% company-wide, and up 17% in constant currency, with a margin of 16.4%, up 60 basis points over the prior year. I'll now turn the call over to Ron, who will cover these results in more detail.

Thanks, Mark and good day everyone. Turning to Slide 5. As Mark just mentioned, 2022 second quarter revenue versus prior year was up 13% in constant currency, almost entirely from organic growth. Foreign exchange had some significant swings throughout the quarter. While the Euro devalued 12%, other currencies such as the Mexican peso and Brazilian reais were not as negative. In aggregate, FX was a 5% headwind. Reported revenue was $1.134 billion, up $85 million or 8% versus the second quarter last year. Second quarter operating profit in constant currency was up 18% versus last year. Organic growth was 17% and acquisitions added another 1%. Negative foreign exchange was $6 million. Reported operating profit was $124 million and the operating profit margin of 10.9% was up 40 basis points versus the second quarter 2021. Moving to Slide 6. Second quarter interest expense was $32 million, up $4 million versus the same period last year, due to higher debt associated with the $200 million in share repurchases completed in the last 12 months and higher variable interest rates. Tax expense in the quarter was $31 million, in line with last year as higher income was mostly offset by a 110 basis point reduction in the effective tax rate. $124 million of second quarter 2022 operating profit, less interest expense taxes and $1 million in non-controlling interest in other, generated $62 million of income from continuing operations. This equates to $1.29 of earnings per share, up 12% on a reported basis and up 30% excluding the mark-to-market gain on the MoneyGram shares we held last year. Share repurchases reduced our weighted average diluted shares outstanding by $2.9 million shares, versus prior year or about 6% and accounted for about $0.06 increase in EPS. Second quarter 2022 adjusted EBITDA was $187 million, up $21 million or 13% versus a strong quarter last year. And as Mark mentioned, EBITDA as a percent of revenue was 16.4%, up 60 basis points versus the second quarter 2021. Turning to free cash flow on Slide 7. Our 2022 free cash flow range is unchanged from last quarter. It is estimated between $280 million and $315 million. Projected free cash flow is $77 million higher, when adjusted for $67 million in third quarter 2022 hedge monetization, which I'll discuss more in a moment and $10 million in 2020 payroll taxes that were deferred due to the pandemic. Adjusted EBITDA is expected to range between $755 million and $790 million and at the midpoint, would be about $90 million more than last year. We expect to use about $70 million of cash for working capital, restructuring and the $10 million in deferred tax payments. Cash taxes are estimated to be $110 million, up $26 million versus last year, due mostly to higher income as well as the timing of payments and refunds. Cash interest is expected around $115 million, an increase of $9 million versus 2021, due to the incremental debt associated with the previously mentioned share repurchases, the acquisition that closed on April 1 last year and higher variable interest rates. Net cash CapEx is targeted at $180 million. 2022 free cash flow conversion ratio is targeted to be about 40% of adjusted EBITDA and equates to approximately $6.15 per share. To slide eight. This slide illustrates our actual net debt and financial leverage at year-end 2021, at the end of the first half of 2022 and our estimate for year-end 2022. There was a $165 million increase in net debt from year-end 2021 to June 30th 2022. About half of that increase was due to a first quarter change in Mexico invoicing regulations that has temporarily increased accounts receivable and the balance was due to revenue growth and normal seasonality. We expect Mexico DSO to return to normal by year-end. The approximate $180 million decrease in net debt from year-end 2021 to 2022 is expected to be driven by free cash flow and $67 million in third quarter 2022 hedge monetization, partly offset by dividends, financing leases, and other strategy 2.0 device investments. While we have authorization for another $250 million in share repurchases, nothing has been built into this estimate. Dividing our estimated $2.1 billion 2022 year-end net debt by the midpoint of our expected EBITDA range should generate a net debt leverage ratio of 2.7 turns. Our credit facility has a covenant based on net secured leverage with a ratio maximum of 3.5 turns with a half turn increase if there's a material acquisition. Our 2021 secured leverage ratio was 2.0 turns and we expect that to decline to 1.5 to 1.6 turns by the end of 2022. The only other credit facility financial covenant is interest coverage, which must exceed 3 times. We have considerable room with both covenants, even in an economic downturn. Moving to our debt maturity profile on slide nine. In the second quarter 2022, we amended and extended our credit facility. We retained $1 billion revolving credit facility and we expanded our term loan A by $200 million to $1.4 billion. The amended facility reduced our used pricing grid by 25 basis points and is expected to provide significant interest expense savings going forward. Maturity was extended out five years and meaningfully expanded our capacity to make restricted payments, including share repurchases. On this slide, the light gray bars reflect our debt maturity before the amendment extension and the dark blue bars afterward. Our 5.5% senior notes mature in July 2025. And otherwise, we have no material debt retirement obligations until 2027. As I mentioned earlier, in July, we monetize a cross-currency interest rate swap on our $400 million 5.5% senior notes. We've received $67 million in cash and entered into new swaps to hedge similar exposure going forward. The cash proceeds reduced our net debt and associated leverage and increased our capital allocation flexibility. With that, I'll hand it back to Mark.

Thanks, Ron. As I mentioned at the outset, our strong second quarter results were achieved in a challenging macroeconomic environment. Like most companies, Brinks is not immune to these challenges. However, we firmly believe that we are better positioned than most, due to the fact that the services we provide are critical to our customers and remain essential throughout economic cycles. Our largest cost by far is labor and we continue to offset rising wages with disciplined pricing actions. As previously discussed in prior quarters, we implemented several price increases in our US business that went into effect in the latter part of 2021 and the first half of 2022, both of which were well above our historical averages. These pricing actions have positioned us to more than offset labor cost increases in the current quarter. And as we move through the year, we expect pricing actions to continue to offset inflationary pressures, both here in the US and around the world. As a service business with locally sourced people and assets, we are far less vulnerable to global supply chain disruptions than many other industrial service businesses. And where necessary, we've secured long-term partnerships with global suppliers and made early purchases to avoid any potential disruptions. Rising fuel costs have also historically not had a material impact on our profitability, as most of our customer agreements have fuel surcharge clauses. We have a track record of relative stability during recessions and other times of crisis, due to an increase in cash usage and security concerns. This history combined with proactive pricing actions and our operational excellence initiatives gives us confidence that we will sustain our recent momentum and achieve our full year guidance. Moving on to the next slide, we're also seeing a great start in 2022 and on track to achieve revenue growth of 8% to 11%. Our full year guidance provided at the beginning of the year was based on FX rates at the end of last year. Since then, we've seen significant strengthening of the US dollar, especially against the Euro. Based on current rates versus last year, we expect to see some continued FX headwinds in the second half. Despite these FX moves which resulted in a 5% unfavorable impact in the quarter, we still delivered record results. We're also on track to achieve operating profit growth of 16% to 23%, reflecting a margin increase of approximately 100 basis points versus last year. And we also expect to deliver double-digit increases in EBITDA, free cash flow, and earnings per share. It's important to note that while our revenue has now recovered to 100% of proforma 2019 pre-pandemic levels, our full year 2022 revenue guidance exceeds our 2019 reported revenue by close to a billion dollars. Our operating margin is expected to expand by 150 basis points over the same period. In other words, today's Brinks is far larger and far more profitable than it's ever been. We achieve this through disciplined execution of a balanced growth strategy focused on both organic improvement and accretive acquisitions. We plan to drive additional organic growth and margin expansion by continuing to build a strong culture of continuous improvement and customer focus, by leveraging fixed cost reductions as volume grows, by aggressively managing our price-cost equation, and by further streamlining our operations. On the M&A front, we've demonstrated our ability to buy good assets, integrate them effectively, and improve the business mix with access to new markets and service offerings. For additional perspective, it's also important to note that our three-year targets are driven primarily by growth and continued operational improvements in our core business, which accounts for approximately 90% of our 2024 revenue target and 85% of our operating profit target. Conversely, our new ATM managed services and Brink's complete initiatives combined account for about 10% of our 2024 revenue target and 15% of our operating profit targets. Given our strong start to the year, the resiliency of our business in challenging environments, the ongoing reopening of global economies, and with our growth in productivity initiatives, I'm confident that we'll deliver our financial targets. Now, let's open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Tobey Sommer with Truist Securities. Please go ahead.

Hey, good morning. This is Jasper Bibb on for Tobey. Thanks for taking our questions. So I was just hoping you could update us on the Brink's complete deployments and how the sales activity is tracking there relative to your expectations.

Yeah. Sure. Thanks Jasper. Good morning. Yes. We're continuing to progress as planned and still continuing to see more customer interest in a total solution versus traditional CIT services. We talked about it last quarter, where globally our tech-enabled solutions that include our Brink's complete offering grew by more than 20% over the prior year in the quarter. This quarter we saw it grow over 28%. So continuing accelerating growth. In the US alone, as we mentioned that, this represented over 20% of our revenue in Q1. Now that's pushing up towards 26%. So we're really seeing the kind of penetration we would expect. Of course, the economy is still in transition and certainly as the looming recessions loom, while retail continues to see some bumpy reports from some of the big retailers, we are seeing in-person retail continuing to accelerate and you've seen the numbers I'm sure about the transition from online shopping back to in-person, which favors cash usage, where we still represent almost a third of all the payments for in-person charges. I think the other thing that's also changing in that environment is that as you look at – as people start to feel the squeeze and household incomes are being challenged with inflation, you're starting to see more people, more discount buyers, more discount retailers having success. Again, smaller transactions, smaller purchases, which lend themselves towards more cash transactions. So that's supporting both the interest not only in our core business but in our more technology-enabled offerings with Brink's complete.

Thanks. And I just wanted to ask about the high value services business. What's been the slope of recovery for your foreign exchange services, given what seems to be a relatively strong summer travel season so far?

Yes, Jasper. We certainly saw that business subside and in some cases retract significantly during the pandemic. And as you can imagine in that high-value services area for us in our global services business, we saw a shift toward more precious metals moving around the globe. We’re obviously a large player in that market, but as we've seen things shift back to travel, we have seen more bank note movements. Now this is certainly due to foreign exchange and due to travel, and we've seen some of the Euro control data that's out there showing that tourism continues to recover—travelers continue to recover, particularly into Europe. But we're still seeing Southeast Asia slow to recover, although our segment results continue to improve in that region. But there's still some recovery going on. I think the other thing of note is that the FX markets between central banks and governments have been volatile, which drives a lot of bank note transmission globally.

Got it. And then you mentioned the relative weakness in AsiaPac but the rest of the world segment overall looks pretty strong here. So what are some of the markets that might be lagging on a relative basis versus the overall segment?

Sure. Hong Kong and Macau continue to have some pretty significant restrictions relative to travel in and out, which has restricted not only tourism but business commerce. The gaming industry is seeing quite a bit of fits and starts in Macau, which is a big travel area and a market we serve. The other big markets that we serve, Singapore, Malaysia, and the Philippines continue to exit their pandemic restrictions and are gaining momentum each month as we go through the summer season.

Last question for me. There have been some media reports about a large potential third quarter loss on a high-value shipment in California. Can you just clarify how you're approaching that item in your guidance?

Yeah, sure. Maybe just to clarify what happened and to set the record straight from our side here. The robbery is still under investigation, and we can't really comment on the specifics of what happened or the details. What we can say is that the amount of the loss would be less than $10 million at the worst case, which is contrary to some media reports suggesting amounts of $100 million to $150 million. So I want to make sure that's clear. Our guidance on an ongoing basis routinely includes estimates for losses. This is part of our business. We use historical data to do that. While this is quantified and has received media attention, the impact of this loss should not be material to our results.

Appreciate the color there. Thanks for taking the questions, guys.

Sure.

The next question comes from George Tong with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning. Could you talk a little bit about what macro assumptions you are including in guidance? And how you're expecting the economy to impact performance in the second half of the year?

Yes, George. We're not building in any significant contraction in our business. In fact, we're not seeing any slowing in the velocity of our business. The results we have so far have been as we expected. As I mentioned in the prepared remarks, historically, even with recessions—whether it's a technical recession or a mild recession or something more protracted—we tend to be really resilient. People tend to return to cash in many cases and with more cash usage becomes more opportunity for attracting new customers. So that's sort of the macro view on the recession. We don't have any large step function changes built in, of course. So we'll operate the business flexibly and make adjustments either way, but nothing big in front of us that we've seen or are hearing from our customers, in fact whether they be retailers or our financial institution partners.

Got it. That's helpful. And then with respect to margins, could you discuss some of the latest initiatives you have that you're deploying to continue to close the gap in EBITDA margins relative to peers and when you might expect that gap over the medium term to close?

Sure. George, we feel very good about where our guidance is right now. Our three-year targets are set at a hundred basis points a year. We expect that to continue and have line of sight to that this year as we've embedded that into our guidance at the start of the year and don't see us coming off of that. The only thing I'd say is, we have a mix of businesses around the globe that have different margins. Our North American business particularly is one that we recognize has lagged some of our peers. That's something that we're addressing directly and are already starting to see the fruits of those improvement activities. We've also recently made a leadership change there. Danny Castillo leads our North American segment, a seasoned executive who's really going to be able to identify some areas of improvement that maybe we recognized, but certainly now we're taking action on. I think this is something we expect to drive continuous improvement quarter to quarter. We saw good improvement from quarter one to quarter two already, about 28% sequential earnings leverage from Q1 to start the year, and expect—if you look forward in our results from prior year—listen, expect us to continue delivering good improvements quarter on quarter for the rest of the year. This is an area that will obviously help, not only in one of the largest segments, but will help us close the gap significantly, not just in North America, but in the global portfolio. And again, as I think about peers, I don't just think about peers in the logistics space. We consider peers across all investment categories. We're all competing for investors against all peers, and we believe that our growth rates, both in our EBITDA and free cash flow, compare with any.

Got it. Very helpful. Thank you.

[Operator Instructions] This concludes our question-and-answer session and the conference call. Thank you for attending today's presentation. You may now disconnect.