Brink’s reports fourth-quarter results
Richmond, va.--(business wire)--the brink’s company (nyse: bco), a global leader in security-related services, reported fourth-quarter earnings and full-year 2011 earnings. fourth-quarter highlights gaap: revenue $997 million, up 13% (9% organic growth), eps: $.36 vs. $.40 segment profit $72 million, up 1% (margin 7.3% vs. 8.2%) international margin 8.9% vs. 8.3%, north america 2.3% vs. 7.7% non-gaap: revenue $997 million, up 13% (9% organic growth), eps: $.56 vs. $.80 segment profit $74 million, down 13% (margin 7.4% vs. 9.6%) international margin 8.9% vs. 10.4%, north america 2.6% vs. 7.5% u.s. retirement costs excluded from non-gaap results other: management reiterates strategy and 2012 outlook mexico acquisition profitable, on track for continued improvement 2012 u.s. pension plan contribution to be funded with company stock tom schievelbein, interim president and chief executive officer, said: “fourth-quarter results reflect continued strong growth in latin america that was more than offset by the persistence of disappointing results in north america and europe, both of which continue to face difficult market conditions. our near-term goal is to improve profits by demonstrating meaningful progress against our three primary strategic objectives-- growing high-value services, investing in emerging markets, and maximizing profits in north america and europe. page 1 “we’re confident that continued expansion of our global services business will drive growth in high-value services, and our mexico acquisition is on track to contribute to continued profit growth in latin america. “in north america, we’ve taken steps to reduce costs and improve efficiency and customer service. these and other actions should boost profits by $10 million to $20 million on an annualized basis. similar actions in europe should lead to a slight improvement in 2012, with additional improvement in 2013 and later years. we are committed to creating value for shareholders, and will accelerate efforts to deliver on this commitment. in 2012, we expect our segment margin rate to be in a range between 6.5% and 7.0%. annual organic revenue growth should be 5% to 8% and we anticipate unfavorable currency impact of 3% to 5%.” *non-gaap results are reconciled to the applicable gaap results in more detail on pages 13 - 17. amounts may not add due to rounding. gaap % % non-gaap (c) % % segment operating profit is a non-gaap measure that is reconciled to operating profit, a gaap measure, on pages 8 and 9. disclosure of segment operating profit enables investors to assess operating performance excluding non-segment income and expense. non-gaap results are reconciled to gaap results on pages 13 – 17. page 2 segment overview – fourth quarter fourth-quarter revenue increased 13% (9% organic), reflecting organic growth in all regions except north america. the 13% decline in non-gaap segment profit reflects a segment margin of 7.4%, down from 9.6% in 2010. the primary driver of the decline was higher security costs, which affected all regions. security costs were exceptionally low in 2010, but were more in line with historical norms in 2011. latin america, which now represents 38% of total revenue and is the company’s fastest growing segment, generated a 34% revenue increase to $393 million. this increase included the mexico acquisition and 23% organic growth, which was driven by retroactive price increases in venezuela and additional price and volume increases in other countries. profit was up 26% due mainly to organic growth in venezuela, mexico and argentina. mexico operations were profitable for the quarter and year, and slightly ahead of expectations. north america profit declined sharply in the fourth quarter, from $18 million to $6 million, due to higher security costs and the continuation of price and volume pressure, especially in the u.s. the non-gaap segment margin was 2.6%, down from 7.5% in the year-ago quarter. brink’s is continuing to resist pricing at levels that it feels are inconsistent with its commitment to provide the highest levels of service in the industry. brink’s has lost and may continue to lose volume as a result of this strategy, but is accelerating actions to reduce costs, improve efficiency and add new business. these and other actions are expected to lift annual profits by $10 million to $20 million. revenue in north america rose 5% to $244 million due to the canadian acquisition last year, which was slightly profitable in its first year as part of brink’s. profit from the emea region improved slightly over a year-ago quarter that included a $13 million charge related to the exit of the cit business in belgium. non-gaap profit fell by $13 million due mainly to higher security costs. revenue improved slightly to $320 million. in asia-pacific, revenue grew 3% to $40 million while profit fell slightly due to higher security costs. non-segment expenses non-segment expenses declined from $25 million to $21 million. the 2010 results included a mexico acquisition-related loss ($9 million) and 2011 included the former ceo’s retirement costs ($4 million). on a non-gaap basis, these expenses were relatively flat at $11 million. capital expenditures fourth-quarter capital expenditures were $78 million versus $46 million in 2010. during the quarter, brink’s entered into capital lease agreements for new assets of $3 million versus $14 million in 2010. full-year 2011 capital expenditures were $196 million versus $149 million in 2010. during 2011, the company entered into capital lease agreements for new assets of $43 million versus $34 million in 2010. page 3 capital expenditures in 2012 are expected to be between $210 million and $220 million, including approximately $30 million in mexico. capital lease agreements for new assets are expected to be between $30 million and $40 million. income taxes on a gaap basis, fourth-quarter tax expense was $22 million versus $21 million in 2010 (45% effective rate in both years). the full-year 2011 tax expense was $59 million (38% effective rate) versus $67 million in 2010 (48% effective rate). the full-year 2011 effective rate was favorably affected by an $8 million valuation allowance release in the u.s., partially offset by tax expense resulting from repatriation and the mix of earnings. the full-year 2010 effective rate was unfavorably affected by a $9 million non-deductible charge on the mexico acquisition and a $14 million tax charge related to u.s. healthcare legislation. on a non-gaap basis, the full-year 2011 rate was 39% versus the 2010 rate of 36%. the lower 2010 non-gaap rate was primarily due to an income tax benefit related to a tax settlement. the full-year rate in 2012 is expected to be between 37% and 40%. pension plan contribution brink’s plans to fund its 2012 contribution to its u.s. pension fund with company stock, and is considering using stock to fund additional contributions in future years. the company expects to file a shelf registration statement for $150 million of common stock in the first quarter. conference call brink’s will host a conference call on february 2 at 11:00 a.m. eastern time to review fourth-quarter results. interested parties can listen by calling (877) 407-8031 (domestic) or + (201) 689-8031 (international), or via live webcast at www.brinks.com. please call in at least five minutes prior to the start of the call. a replay will be available through february 16, 2012, by calling (877) 660-6853 (domestic) or + (201) 612-7415 (international). the conference account number is 286 and the conference id for the replay is 386287. 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. page 4 non-gaap results non-gaap results described in this earnings 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 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 operation and provides an alternative for valuing our legacy liabilities. 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. forward-looking statements this release contains both historical and forward-looking information. words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “may,” “should” and similar expressions may identify forward-looking information. forward-looking information in this release includes, but is not limited to, future performance for the brink’s company and its global operations, including organic revenue growth and segment operating profit margin in 2012, growth of high-value services, including our global services business, the performance of investments in emerging markets, including mexico, maximizing profits in north american and europe, including the effects of actions taken to reduce costs and improve efficiency and customer service, the effects of our pricing strategy in north america, anticipated 2012 capital expenditures and capital lease agreements, the anticipated annual effective tax rate for 2012, a planned stock contribution to the u.s. pension fund and shelf registration statement in connection with possible future contributions, projected non-segment expense and interest expense, projected net income attributable to noncontrolling interests, and depreciation and amortization for 2012. the forward-looking information in this release is subject to known and unknown risks, uncertainties and contingencies, 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 mexico and the rest of latin america, our ability to maintain or improve volumes at favorable pricing levels and increase cost efficiencies in the united states, the effect of current macro-economic uncertainty on our operations in europe, investments in information technology and value-added services and their impact on revenue and profit growth, the strength of the u.s. dollar relative to foreign currencies and foreign currency exchange rates, the implementation of high-value solutions, the 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, the willingness of our customers to absorb fuel surcharges and other future price increases, the actions of competitors, our ability to identify acquisitions and other strategic opportunities in emerging markets, regulatory and labor issues in many of our global operations and security threats worldwide, the impact of turnaround actions responding to current conditions in europe and our productivity and cost control efforts in that region, the stability of the venezuelan economy and changes in venezuelan policy regarding exchange rates, fluctuations in value of the venezuelan bolivar fuerte, 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, changes in insurance costs, the outcome of pending and future claims and litigation, 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, 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 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, access to the capital and credit markets, seasonality, pricing and other competitive industry factors. 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, 2010 and in our other public filings with the securities and exchange commission. readers are urged to review and consider carefully the disclosures we make in our filings with the securities and exchange commission. the information included in this release is representative only as of the date of this release, and the brink’s company undertakes no obligation to update any information contained in this release. page 5 financial statements and selected information page 7 8 9 10 11 11 12 13 page 6 (in millions) 89 net income attributable to noncontrolling interests to eliminate costs related to the retirement of the former ceo. page 7 (in millions) segment results – gaap segment results - non-gaap includes income and expense not allocated to segments (see page 11 for details). revenue and segment operating profit: the “currency” amount in the table is the summation of the monthly currency changes, plus (minus) the u.s. dollar amount of remeasurement currency gains (losses) of bolivar fuerte-denominated net monetary assets recorded under highly inflationary accounting rules related to the venezuelan operations. the monthly currency change is equal to the revenue or operating profit for the month in local currency, on a country-by-country basis, multiplied by the difference in rates used to translate the current period amounts to u.s. dollars versus the translation rates used in the year-ago month. the functional currency in venezuela is the u.s. dollar under highly inflationary accounting rules. remeasurement gains and losses under these rules are recorded in u.s. dollars but these gains and losses are not recorded in local currency. local currency revenue and operating profit used in the calculation of monthly currency change for venezuela have been derived from the u.s. dollar results of the venezuelan operations under u.s. gaap (excluding remeasurement gains and losses) using current period currency exchange rates. page 8 (in millions) total segment results – non-gaap amounts may not add due to rounding. see page 8 for footnote explanations. page 9 the brink’s company and subsidiaries condensed consolidated statements of income (unaudited) (in millions, except per share amounts) (a) earnings per share may not add due to rounding. page 10 the brink’s company and subsidiaries supplemental financial information (unaudited) (in millions) non-segment income (expense) (a) includes segment and non-segment other operating income and expense. page 11 (in millions) (a) represents the amount of property and equipment acquired using capital leases. since the assets are acquired without using cash, the amounts are not included in the consolidated cash flow statement. amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years. page 12 (in millions, except for per share amounts) gaap basis see page 14 for notes. page 13 (in millions, except for per share amounts) gaap basis amounts may not add due to rounding. to eliminate employee benefit settlement loss related to mexico. portions of brink’s mexican subsidiaries’ accrued employee termination benefit were paid in the second and third quarters of 2011. the employee termination benefit is accounted for under fasb asc topic 715, compensation – retirement benefits. accordingly, the severance payments resulted in settlement losses. page 14 (in millions, except for per share amounts) gaapbasis remeasurevenezuelannetmonetaryassets (a) royalty(b) exitbelgiumcitbusiness(c) mexicoacquisition(d) non-segmentassetsales (e) u.s.retirementplans (f) u.s.healthcarelegislationtax charge(g) adjustincometaxrate (h) non-gaapbasis see page 16 for notes. page 15 (in millions, except for per share amounts) gaapbasis remeasurevenezuelannetmonetaryassets (a) royalty(b) exitbelgiumcitbusiness(c) mexicoacquisition(d) non-segmentassetsales (e) u.s.retirementplans (f) u.s.healthcarelegislationtax charge(g) adjustincometaxrate (h) non-gaapbasis amounts may not add due to rounding. page 16 (in millions, except for per share amounts) gaap basis venezuelan currency losses (b) acquisition gain (c) royalty (d) non-segment asset sales (e) page 17 (in millions) page 18 (in millions) primary u.s. pension plan (b) umwa plans (c) other unfunded u.s. plans page 19
