Welcome to the Brink's Company's First Quarter 2023 Earnings Call. This morning, Brink's issued a press release detailing its first quarter 2023 results. The company also filed an 8-K that includes the release and the slides that will be used in today's call. The release and slides are available in the Investor Relations' section of the company's website at investors.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 and will be available for replay. 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 are available in the footnotes of today's press release and in the company's most recent SEC filings. Information presented and discussed on this call is representative 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. I will now turn the call over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.

Thanks and good morning. Joining me today are Brink's CEO, Mark Eubanks, and CFO, Kurt McMaken. This morning, we reported first quarter 2023 results on a GAAP, non-GAAP and constant-currency basis. Most of our comments today will be focused on our non-GAAP results because we believe these results make it easier for investors to assess operating performance between periods. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation, and in this morning's 8-K filing. I'll now turn the call over to Brink's CEO, Mark Eubanks.

Thanks, Jesse. Good morning, everyone, and thanks for joining us. As you can see at the top of Slide 3, our 2023 is off to a strong start. Revenue was up 10%, including 13% organic growth. This includes about 30% organic growth in the focal areas of ATM Managed Services and Digital Retail Solutions. Productivity enhancements, improved revenue mix, and continued strong pricing discipline drove 30 basis points of operating profit margin expansion and 70 basis points of adjusted EBITDA margin expansion. The higher revenue and productivity-driven margin expansion led to the highest first-quarter profit margins the company has seen since at least 2010. We also have meaningful progress towards our full-year free cash flow targets and a 38% improvement year-over-year in the first quarter. Kurt will have much more detail on the financial results in a few slides, but I'm pleased with the operational discipline of our teams and the strong quarter we delivered. With the momentum carried over from 2022 and this strong start to 2023, last week, our Board announced a 10% increase in our regular quarterly dividend. This dividend combined with our existing share repurchase program furthers our commitment to the return of excess capital to our shareholders. The results were aided by continued progress on the strategic priorities we discussed last quarter. AMS and DRS revenue grew 50% in the quarter as we continue to shift our revenue mix towards higher margin recurring revenue services that deliver an enhanced experience for our customers. Our growth, the improved revenue mix, continued productivity improvement, leveraging the Brink's business system and strong pricing discipline in the current inflationary environment were keys to the margin expansion in the quarter. We expect margins to continue to improve sequentially throughout the year as the benefits of these initiatives compound in the coming quarters. While we have yet to see any material changes to demand within the business from the broader economic turbulence, we remain proactive in addressing our cost structure to protect and enhance our margins. In the first quarter, we identified additional permanent cost actions that pull forward future productivity resulting in improved profits in the back half of the year. The previously announced 2022 global restructuring plan has been updated to deliver permanent annualized savings of roughly $60 million with one-time implementation costs of approximately $45 million. These new improved actions close the program and represent an incremental $10 million of savings above the previous estimates that we discussed last quarter. Kirk will provide more color on our updated full-year 2023 guidance, but you can see at the bottom of the slide, we are affirming our revenue growth guidance for the full year while increasing our profit guidance due to the additional benefits from the global restructuring plan. Turning to Slide 4. I'd like to outline progress on our strategic priorities as we build a stronger Brink's. The cash and valuables management core of our business grew 9% organically in the quarter. We were able to deliver productivity across several expense lines, including a meaningful reduction in labor as a percent of revenue. This was especially true in the U.S. where additional employee engagement initiatives and improving labor availability are leading to better employee turnover rates. The development of more tenured employees is driving real improvements in route efficiency as well as improved customer service levels. These labor-related productivity enhancements, coupled with the benefits of the global restructuring plan, resulted in the North American segment posting 9.6% operating margins in the quarter. In addition to the strong productivity in our core business, we were again able to effectively cover cost inflation with pricing in all segments across the globe in the first quarter. We continue to see strategic pricing opportunities in the years to come as we improve service quality and expand into more value-added services. Turning to Digital Retail Solutions and ATM Managed Services, we delivered 31% organic growth in the quarter and 50% total growth, including the impact of acquisitions and foreign exchange. On a trailing 12-month basis, we now have 18% of our total revenue represented by these higher-margin, higher-growth customer offerings, compared to 16% at the end of Q4 2022. In DRS, our value proposition is resonating in the market. Our customer offering focuses on delivering safer and faster access to working capital and offers seamless technology integration with our customers' back office systems. An example of this is a recent customer win with a multinational retailer in Northern Europe, a conversion of a pilot project we started in the second half of 2022. We were able to secure a recurring revenue long-term agreement to deploy point-of-sale integrated cash management devices across hundreds of the company's owned locations in Europe. In the North American market, we were able to secure several new contracts in the quarter focused on the franchise quick-service restaurant space. To accelerate our growth, customer loyalty initiatives, and the innovation agenda of our strategy, we are adding Laurent Borne to the executive leadership team as our first Chief Experience Officer. With experience in product development and global deployment from prior stops at Stoneridge, Whirlpool, and Delphi, Laurent will help us drive our DRS strategy forward and develop improved technology-enabled customer experiences. In AMS, we continue to see solid results from the implementation of the ATM network for BPCE, the second-largest bank group in France. We're also making progress integrating the ATM expertise from the 2022 acquisition of NoteMachine across the global Brink's business. AMS introduces a new value-added customer offering that complements our existing services with additional monitoring and forecasting to simplify ATM management while letting financial institutions maintain their valuable customer touch points that ATM networks provide. We are uniquely positioned to provide cost savings to ATM operators by adding density to our existing logistics footprint and increasing volume leverage across our technology stack. We've built a robust global pipeline of opportunities by leveraging our existing relationships with customers, where we currently provide ATM replenishment services as well as engaging new entities that are searching for ways to improve their business. Our differentiated position, starting with the strength of our industry-leading brand, will open doors and support our right to win with customers as we develop new opportunities in both AMS and DRS customer offerings. I'm encouraged by our early progress in these focus areas and am confident we have the right plan in place that will deliver growth and profitability into the future. I will return with a few closing thoughts after Kurt takes us through the financial slides for the quarter.

Thanks, Mark. Good morning, everyone. Starting on the left side of Slide 5, revenue versus the prior year was up 10% and up 16% in constant currency. With organic growth of 13% and acquisition growth of 3%, partially offset by a 6% negative impact from FX. Operating profit was up 14% and up 24% in constant currency, primarily from organic growth of 22%. Adjusted EBITDA was up 15% and up 23% in constant currency. We generated $1.16 of earnings per share. I'll provide more commentary on the drivers in the next few slides, but I'd like to point out that our operating profit margin of 10.7% and our adjusted EBITDA margin of 16.1% are the highest first quarter margins we've seen in over a decade and keep us squarely on track to deliver our full-year targets. Let's turn to the next slide for more details on Q1 revenue and operating profit. Revenue was up 16% on a constant currency basis, primarily from organic growth of 13%, which benefited from AMS and DRS organic growth of over 30%, as well as volume growth in Brink's Global Services and price realization across all service lines and segments. All segments performed well with 9% organic growth in North America and double-digit organic growth in Latin America, Europe, and rest of world segments. Acquisitions added 3%, primarily related to the NoteMachine business. FX translation was a headwind of $60 million or 6% versus the prior year, in line with our expectations. Reported revenue was $1.2 billion, up 10% versus last year. First quarter operating profit in constant currency was up 24% versus last year with organic growth of 23% and acquisitions adding another 3%. FX was an 11% headwind resulting in reported operating profit of $127 million, up 14% versus last year. As Mark mentioned, our growth, productivity, including from restructuring actions, improved revenue mix, and pricing discipline were the main drivers. I'd also like to note that this is our sixth consecutive quarter of double-digit constant-currency growth in revenue and profit. Now let's turn to Slide 7. Starting with our operating profit, I'm walking left to right, first quarter interest expense was $46 million, up $19 million versus last year, primarily due to higher interest rates on our floating-rate debt. Tax expense was $26 million, flat versus last year as lower profit before taxes was offset by slightly higher tax rate in the quarter. In total, $127 million of operating profit, less interest expense, taxes, and non-controlling interest and other, generated $55 million of income from continuing operations. This equates to $1.16 of earnings per share. The increased interest expense I mentioned earlier drove a $0.28 decrease in EPS in the quarter, which more than offset increased operating profit and lower outstanding shares as a result of our share repurchase program. Depreciation and amortization were $51 million, up $4 million versus the prior year due primarily to the NoteMachine acquisition. Interest and taxes were $46 million and $26 million respectively, and noncash stock-based compensation expense was $12 million, up $5 million versus last year, which was in line with our expectations. First quarter adjusted EBITDA of $191 million was up $25 million or 15% versus last year, primarily due to the flow-through of higher operating profit, and as I noted earlier, adjusted EBITDA as a percent of revenue was 16.1%, up 70 basis points versus Q1 of last year. Next, we'll turn to free cash flow on Slide 8. On this slide, I'll first turn your attention to the chart on the left-hand side, which has been adjusted to reflect the additional restructuring actions Mark discussed previously. Starting on the far left, adjusted EBITDA is expected to be approximately $890 million, $10 million higher than the midpoint of our prior target, reflecting additional cost savings from the restructuring that will impact the back half of the year. And we now expect to use $55 million of cash for working capital. This also reflects an increase of $10 million in one-time upfront restructuring cash payments in order to generate the $10 million in recurring benefits. These two adjustments offset each other and result in no change to our full-year free cash flow target of $325 million to $375 million, which would equate to almost $7.50 of free cash flow per share approximately $3 per share more than 2022. In the first quarter, we made meaningful progress towards our full-year free cash flow target with Q1 free cash flow improving by $23 million or 38% compared to last year. The increase was driven primarily by adjusted EBITDA growth and working capital improvements. We saw meaningful improvements in our accounts receivable collections in North America. In addition, our teams in Mexico have been working diligently and continue to make progress improvements after the regulatory change to invoicing requirements last year. Total DSO was roughly in line with year-end and Q1 of the prior year, and we're well-positioned to drive improvement over the balance of the year. As contemplated, adjusted EBITDA and working capital improvements were partly offset by higher cash interest from floating rate interest on our term loan. Below, free cash flow, we used $16 million of cash to purchase 247,422 shares, leaving $182 million in capacity under our existing share repurchase program. We also paid $9 million in dividends, returning a total of $25 million to shareholders in the quarter. As Mark mentioned earlier, we increased our quarterly dividend by 10%, which represents a modest $4 million annualized increase in expected cash dividend payments. The increase aligns with the capital allocation framework we discussed last quarter. We remain committed to driving long-term shareholder value by investing in growth initiatives, driving robust earnings, generating cash, and returning excess cash to our shareholders. And with the recent change in our annual incentive plan to include free cash flow as a meaningful component of compensation for our leaders, we're confident we'll make the progress on this important metric. Turning to leverage. We're on track to achieve our previously-stated target range of between two times and three times adjusted EBITDA by year-end 2023 with Q1 leverage of 3.2 times. By the end of 2023, we expect leverage to be between 2.6 times and 2.8 times adjusted EBITDA, contingent on our share repurchase activity. Next to Slide 9. The table on the left provides a summary of our updated guidance. In summary, we are affirming our revenue and free cash flow guidance and increasing our operating profit, adjusted EBITDA, and EPS guidance to reflect the additional $10 million in restructuring savings discussed earlier. We are expecting to realize the $10 million in savings in the back half of this year as the approved actions are completed. In 2023, we expect to achieve revenue growth of 6% to 9%, driven by organic growth of 7% to 11%. Operating profit growth of 14% to 23%, up from our previous guide of 12% to 21%, reflecting strong operating leverage and a margin increase of approximately 120 basis points, up from our previous guide of 100 basis points. We expect margins to continue to expand sequentially as the benefits of our initiatives take hold and compound in future periods. At the midpoint of our guidance, we also expect to deliver double-digit increases in adjusted EBITDA, free cash flow, and earnings per share, with free cash flow conversion of approximately 40%. Our financial framework of mid-to-high single-digit organic revenue growth and 100 basis points of annual operating margin improvement as well as free cash flow conversion approaching 50% by 2024 remains intact. Given our strong start to this year, along with our continuous improvement framework through the Brink's Business System and our growth strategy for ATM Managed Services and Digital Retail Solutions, I'm confident that we will deliver on our 2023 guidance and look forward to continued growth in 2024 and beyond.

Thanks, Kurt. On Slide 10, you can see our foundational strategic pillars that we introduced last quarter. I'm encouraged with the early progress we've made on all of the pillars here in 2023. Growth in customer loyalty was highlighted by our strong growth in the quarter and our expectations for the rest of the year. We are making solid progress towards creating a consistent and exceptional customer experience across all service lines to continue to earn our customers' loyalty and trust. Deeper relationships with our customers will allow us to innovate right alongside them. With the addition of our new Chief Experience Officer, our goal is to get deeper into the mindset of our prospective customers and deliver valuable solutions that take the friction out of cash management and ensure our leadership position in the broader cash ecosystem. Our focus on operational excellence through the Brink's Business System is allowing us to expand margins and drive efficiencies in key operational metrics throughout the business across the first quarter. We have good visibility into additional efficiencies as we strive to simply run the business better in all of our markets. And finally, we're well on our way to establishing a workplace and an employer brand that attracts, develops and empowers diverse talent. I'm excited about the recent additions of Laurent Borne, our Chief Experience Officer, focused on customer value drivers in the cash ecosystem and the previously announced Elizabeth Galloway, our new CHRO, who will ensure that we have the best people, the most efficient operating model, and effective development programs that allow our people to reach their potential. I'm confident continued progress in each of the pillars will drive revenue growth and margin improvement and position Brink's as the innovative business partner and partner of choice for our customers for years to come. I'll now turn it over to the operator for the Q&A session.

We will now begin the question-and-answer session. At this time, we will pause momentarily to assemble our roster. Our first question comes from George Tong with Goldman Sachs. Please go ahead.

All right, thanks, good morning. Your BRS and AMS revenues combined grew 31% organically and made up 18% of total revenues in the quarter. Can you talk about initiatives you have to further scale these offerings and how sustainable the growth rates are that you saw in the quarter?

Good morning, George. This is Mark. Yeah, for AMS and DRS, we've made conscious changes to our organization and I think you've seen some of the public announcements. The first being our Chief Experience Officer, Laurent Borne, which is where he will be significantly focused on really amplifying our early success here in DRS and ensuring that we're able to go to the next level. This is something that we continue to see progress in our core business around traditional retail stops around the world, but also starting to see more customers looking for more complicated and frankly more tech-enabled solutions. We talked about some previous wins with some European retailers. In fact, we have another big award in Q1 for an integrated POS and cash management solution, end-to-end cash logistics, over hundreds of locations for this multinational provider. The good news there, George, is this was a pilot that we started back in the second half of last year that has now been validated, confirmed for rollout, and expect this to be a longer-term recurring revenue contract for many years to come. This serves as proof that we were able not only to deploy pilots but now starting to shorten some of that cycle time on getting to revenue. On the AMS side, we've also reorganized it somewhat in the company and elevated David Dove, who was previously responsible for the product line. Now, he has global responsibility for our AMS business to really enable some of that continued growth, as you mentioned, that leverages the global scale of the company and not just depending on local leaders to learn the business and extrapolate the strategy and translate it locally all on their own, thus giving us more opportunity to scale our platforms, both our knowledge and our technology stack.

Got it. That's helpful. You noted that you've seen no material change in demand as a result of the broader economic environment. Can you elaborate on the current sales environment, client sentiment, and behaviors, and then also describe how the business responded to past downturns?

Sure. Yes, I think we've talked about it traditionally, or historically about our organic revenue throughout cycles. Although the slides are not in the deck this time, we've talked about it in previous quarters. Even in 2009 and during the great financial recession, we were down less than 1%. Of course, in the pandemic, we were down high single digits, but that was again based on a phenomenon that we all know that had an impact and kept people from being out spending money. Before that, we feel like we've got a stable platform for organic growth that is in the mid-single digits to mid-to-high single digits on its own. And again, over that same period of time, we have been able to improve margins along the way and I think Kirk highlighted some of that in his discussion. On the customer side, we've really seen very little change in customer behavior or any sort of widespread store closings or retail consolidation. It's not to say it's not happening, but we just haven't seen it as being meaningful. In fact, maybe there's a little bit of the other side is what we foretold last quarter in our guidance about China reopening and COVID lapping a pretty tough COVID quarter last year with Southeast Asia, as well as parts of Europe as far as tourism and consumer activity. So, we're seeing that come back and feel good about what we saw, and I think you can see in the results around our organic growth.

Very helpful. Thank you.

Great. Thanks, George. Kurt, anything else you want to add on revenue?

No. I think maybe, George, just something to think about as we look at the revenues for the year. As Mark said, I mean a couple of things maybe to add to your first question and the second. The pipeline really remains robust for us both on the AMS and DRS side, and we're seeing healthy demand globally as it relates to our businesses. The one thing you want to keep in mind as we go forward is that as we move through the year, we are going to lap our pricing initiatives. This is fully expected, on plan, but as you look forward, that becomes a reality. So as you get into the second half, while we're still expecting robust growth to support our guidance and we're fully where we want to be, that's something you want to think about.

Got it. Thank you.

Thanks, George.

The next question is from Tobey Sommer with Truist Securities. Please go ahead.

Hey, good morning. This is Jasper Bibb on for Tobey. You've done a really nice job continuing to take cost out of the business and it looks like you're at or ahead of plan with respect to the 2024 targets at this point. So any update on how you're thinking about long-term margins for the business or where EBITDA margins might be exiting 2023, inclusive of some of the efficiencies you discussed earlier?

Sure, and thanks, Jasper, good morning. We obviously feel good about the 2023 number and are starting to really work through the restructuring benefits that you've laid out. We think those are obviously structural changes in the business, not just temporary capacity changes, so that's helpful and builds a base going forward. The other is the growth in the AMS and DRS as we see the mix change there continue to enhance our long-term margins as we exit and we talked about this last quarter. Our total organic growth for the full year looks to be about 50% of that organic growth will come from AMS, DRS and 50% would come from the core business, the cash and valuables management. And so those enhanced margins will continue, we think, to support not only better profitability but frankly, a lower capital intensity as we go forward as well. So that feels good. As we think about the framework, we've talked about the mid-to-high single digits and 100 basis points of OP margin improvement year-on-year. Again, you can see we're guiding to exceed that this year and as you think forward beyond 18.3%, another 100 basis points next year, 19.3% that doesn't seem so far. We think we can start to get to the 20% or above 20% EBITDA margins as we look forward.

Thanks for that. And then you mentioned the labor productivity savings in North America. I guess, earlier in the earning season, some other route-based services companies have mentioned, I think they're going to get better operating leverage in the second half of the year as you kind of get the benefit of labor costs moderating versus pricing that's already been locked-in at higher inflation rates. Would you say that's how you're thinking about it too or are there potential offsets to consider?

No, we definitely would see the same. I think the labor market stability, but I'd say also some of the operational changes and structural changes we've made in restructuring have also enabled us to reinvest in some areas to continue to be driving more efficiency. We saw a significant year-on-year turnover improvement in our labor force, which has been well chronicled since I've been here, almost 40% improvement year-on-year. So we're starting to really see the productivity benefits of having a longer tenure of our employees that allow us to continue to again drive sustainable improvements. I think the other thing as you think through the year from just a margin perspective, we definitely will see not only the restructuring as we talked about the incremental we've announced this quarter, but also just the productivity improvements and programs that we're putting in place that are starting to drive meaningful benefit likely take hold and we see more leverage there in the second half, Q3 and Q4 particularly. So as I think about sort of how the year would look, we would expect to have similar sequential margin expansion this year in the first half as we had last year and more meaningful expansion in Q3 and Q4 as we exit the year.

Thanks. Last one for me is I was hoping you could comment on what you're seeing in the pipeline for FI outsourcing opportunities, and has your ability to sell that solution and get in front of customers has been impacted by the most recent round of banking turmoil at all?

I'll address the second question first. We have not noticed any change in customer willingness to engage in discussions about outsourcing in light of the current banking issues. In fact, it seems that banks may actually benefit from looking to increase their productivity, which is a significant cost-saving opportunity for them, and we believe this trend of resilience will persist. On a global scale, we continue to see our pipeline expand, and there is increasing activity. As we enhance our portfolio with more experience and networks, we're seeing a snowball effect, not just in local markets where we are succeeding, but globally with the Brink's brand. Our discussions are not just theoretical; our teams are achieving meaningful wins that customers are now inquiring about and wanting to know how these successes can be applied in their markets.

I appreciate the detail there. Thanks for taking the questions, guys.

Yeah, thanks, Jasper.

This concludes our question and answer session and our conference. Thank you for attending today’s presentation. You may now disconnect.