Good morning and welcome to The Brink's Company's Second Quarter 2020 Earnings Call. Brink's 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 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 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, Chad. Good morning, everyone and welcome to our call. Joining me today, our CEO, Doug Pertz; and CFO, Ron Domanico. This morning, we reported second quarter results in both the GAAP and -- on both the GAAP and non-GAAP basis. Non-GAAP results exclude a number of items, including our Venezuela operations, the impact of Argentina's highly inflationary accounting, reorganization and restructuring costs, items related to acquisitions and dispositions, costs related to an internal loss and costs related to certain accounting compliance matters. We also provided an analysis of 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 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. Finally, while we have not provided any specific guidance for 2020 or 2021, Page 3 of the press release does provide sensitive models that included range of potential revenue and adjusted EBITDA levels for both users based on recent trends and customer data. I'll now turn the call over to Doug.

Thanks, Ed, good morning and thank you for joining us. Given the challenges and uncertainties of the ongoing COVID-19 pandemic, our second quarter results were much better than expected when we reported our first quarter results on May 5, 2020. On a sequential basis, compared to the first quarter we delivered strong growth in operating profit adjusted EBITDA and EPS. We reported the operating profit of $73 million with a margin rate of 8.9%. Despite negative currency translation this impacted revenue by $86 million, and operating profit by $18 million. This negative FX impact on operating profit was more than offset by aggressive variable cost reductions in the quarter and the initial contribution from the G4S acquisition. Compared to 2019, our reported revenue, which includes the acquire G4S business operations in the quarter was down 10% and was flat versus last year on a constant currency basis. Like most companies our sequential and year-over-year results were heavily affected by the global pandemic, both in terms of reduced revenue and profit and added cost of operations. When we reflect on where we were in April, we're very encouraged by the progressively positive impact of our cost reduction actions and what they have had on implementation during the quarter. We are also encouraged by the strong revenue recovery we saw in June, as economies began to reopen. For example, total company revenue, including acquired G4S businesses were down 20% on a reported basis, versus last year's prior April, and revenue recovered to be up 3% in June. Excluding G4S businesses, which may be a better comparison for the market recovery. The April decline at the bottom was 29% compared to a 14% decline versus prior year in the month of June a 50% recovery. Looking at the U.S. alone, there was a…

Thanks, Doug and good day, everyone. Before I get into the results, I want to remind you that we disclose acquisitions separately for the first 12 months of ownership, at which time they are mostly integrated, and then they're included in organic results. In the second quarter 2020 acquisitions include G4Si for the entire quarter and a partial quarter for the G4S cash acquisitions in the Netherlands, Belgium, Ireland, Romania, the Czech Republic, Cyprus, Malaysia, Hong Kong, the Philippines and the Dominican Republic. Acquisitions in the second quarter also include balance innovations in the U.S., TVS in Colombia, a small CIT bolt-on in Brazil, minus the divestiture of a small monitoring business in France. As Doug mentioned, we experienced COVID-19 related volume reductions in our businesses beginning in Asia in February, Europe in early March, North America in mid-March, and Latin America by mid to late March. We implemented daily activity trackers, and as pandemic related shutdowns began, our organic revenue declined on average about 30% and in some countries by over 50%. Generally those reductions persisted throughout April. During May and June, as Doug said, we started to see improvements as countries began phase reopening. Those improvements appear to be holding and when combined with our aggressive cost realignment initiatives generated results better than we originally expected. Turning to our second quarter results on Slide 9. 2020 second quarter revenue in constant currency was flat, as pandemic related 17% organic decline was offset by acquisitions. The organic decline was realized across the globe. But as Doug mentioned, the recovery is underway, and the June organic decline was only 7%. Negative ForEx reduced revenue by $86 million or 9%, and was driven by the pandemic [induced ply] to the U.S. dollar. Reported revenues $826 million down 10% versus the second…

Thanks, Ron. As I said earlier in my remarks, predicting the future impact of the pandemic is very difficult and we acknowledge concerns about the resurgence of the virus in the U.S. and other countries. With that in mind, while we can't predict or guide to the timing or slope or recovery of revenue, we can’t provide adjusted EBITDA sensitivities around various future revenues. In the earnings release in slides, we provided modeling based on the expected results of the significant cost reductions made to-date and in progress this year. These aggressive actions that are ones that Brink’s can control. The 2020 sensitivity model for adjusted EBITDA since the second half 2020 revenue range of 85% to 100% of last year’s second half revenue. Since June 2020, revenue was 86% of 2019 comparable -- on a comparable level and re-openings have increased since June. We believe this is a reasonable revenue range for the second half. The blue portions of the bar represent actual first half revenue and EBITDA for both 2019 and 2020 and the variegated colored areas for organic acquisition and FX bars represent the 85% to 100% sensitivities to the second half of 2019 revenues. Starting on the left side, you can see that last year's full year revenue of $3.7 billion included $1.9 billion in the second half of the year, if we achieve 85% to 100% of the second half revenue, the adjusted organic growth, revenue from G4S acquisition and negative FX based on recent currency rates. And taking all this into consideration the bridge takes you to a 2020 potential range of $3.3 billion to $3.6 billion. The far right of the slide shows a corresponding EBITDA range of between $465 million and $515 million reflecting a margin rate of 14% to 14.5% driven…

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions]. At this time, we will pause momentarily to assemble our roster. And the first question will come from George Tong with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning.

Good morning George.

You have indicated that total legacy revenue is 86% of 2019 levels through the month of June. Can you detail how revenue trends have performed since June? So through the month of July, how the rate of improvement has progressed?

Yes, George, as we stated there's two indicators, we really don't have reported revenue for a period after June. That's why he provided the jumping off point for June. So if you kind of look at the June number and obviously in comparison to the April which was at the bottom of the pandemic, it would be effectively an average look for the month of June. We do have and we provided some look at that continued re-openings have continued since then which would suggest additional revenue increases, but we don't have specific revenue data associated with that.

Okay, got it. Well, any business activity data around the --

Well again, yes again additional re-openings, which suggests that in general and it depends -- I think, as Ron suggested a little bit it depends on by region. We've seen continued European strong re-openings since then, in the U.S., we've continued to see re-openings probably not as strong a clip, as we did in the month of June. And it's been about stable, I would suggest as a way to look at it in South America. Nothing has gone down as we've seen, but not necessarily at a faster clip.

Got it, that's helpful. And then, as a follow up, you indicated that you expect your 2020 cost actions to generate $85 million in annualized savings, can you elaborate on how much of this represents permanent versus temporary cost savings, and how these actions might change your long-term EBITDA margin target?

Well, that's why we provided our 2021 numbers and on Page 17, we provided the 2021 sensitivity model. And in that model, you can see the target that we've laid-out, which includes our sustainable, what we call sustainable fixed cost reductions. And our key focus of our priority 3 is exactly that to achieve sustainable, long-term fixed costs reductions, which are structurally different than where our business has been before, which gives us the upside margin leverage. So as revenue increases, just as we shown in this model, as revenue increases, will not only offset the fact of the FX negativity of what 1. -- 170 plus basis points that we currently project for 2021. But, we'll also obviously, gain additional margin. And as you can see on that page, you actually see some marginal leverage, which reinforces the point that in fact we’ve taken fixed cost out and therefore each additional incremental revenue dollar drops through at a higher margin percent than the prior and that's really what we are showing there. So at 100% you can see the margin is greater than 90. At 110% the margin percent is 50 basis points greater than the prior revenue. That's margin leverage which means that we are maintaining and sustaining our fixed cost reductions. And that's our whole objective.

And then any commentary on longer term EBITDA margin targets especially compared to competitors? I know in the past you have indicated EBITDA margins targets in the high teens or low 20s. So how did these cost savings affect those long term targets beyond 2021?

Well, we felt we are pretty aggressive in providing 2021 modeling for you. It's not guidance. It's modeling. But I think what we are suggesting here as we take these costs out depending what happens with effects you will see these types of margin and this leverage going forward. So if you were to project out that additional recovery in revenue whether it's organic growth, it's price growth, on a global basis or you see additional increases because of our strategies of 2.0 etc. that answer this, we will get improved margins with those alone. Let alone our additional strategies that we have already laid out on 1.0 wider and deeper initiatives or the cost take outs going forward. So we would anticipate although we are not going to provide guidance on it or modeling on it. We would anticipate that we will continue to see stronger margin leverage in the future than we had in the past based on the actions we have taken or will continue to taking.

That's very helpful. Thank you.

Jeff Kessler with Imperial Capital. Please go ahead.

Thank you. The timing of the G4S acquisition as you said at the beginning may have not been the best but the other hand talking to other companies I've just reported looking at the human [indiscernible] of recovery it appears that both Europe and Southeast Asia have done a far better job than United States in dealing with the coronavirus and is it fair to say and we take a look back at those -- at that chart in which you showed the potential of the -- of that relative to what you have been earning that in terms of revenue that the recovery that you've been receiving in the second quarter has been a little bit skewed toward those areas, let's call it the rest of the world, particularly Southeast Asia and Europe, relative to the United States?

Well, so I think Jeff, you stated -- did stated, well, that the recoveries that we've seen since the downturn or since the re-openings, and they have started at different times, but since the re-openings, have been probably stronger in Europe, and probably parts of Asia as well, although in some cases, they didn't start until later. So I think you got to keep that in mind. In some cases, it really didn't start until June. And therefore, it has been a faster slope than these markets. So, I do agree with that. We are pleased with that. The data we provided on Page 6, though, was in comparison to legacy versus legacy. So it’s comparable data and it is not trying to skew it one way or the other is trying to provide, as best we can a jumping off point, if you will for revenue recovery, so that you can determine and your modeling investors can determine and your modeling the types of revenue recoveries that you want to take in that but. But in general, we are very pleased with the recoveries that we've seen. And there's probably been a little bit better as you suggested in those markets. I think our point was that if we wouldn't have not had the pandemic, and we would have had growth on top of the numbers that we purchased, at the time, we closed on the deal it would be a much better picture than we have today. But that's true about not everything. We are very pleased and excited about the management team, the performance to-date with our different countries and businesses with G4S. And we have also implemented, I think, fairly aggressive and timely actions to help continue to drive stronger and sustainable cost structures in those countries just as we are in the rest of the Brink’s business, and we're very pleased with those actions as well. So I think all of that together bodes well for a very strong combined business going forward as we all get through this.

Second question is, given what you know about the U.S. because obviously, you're here, and a lot of investors seem to focus on what's going on in the U.S. unless there's something blow-- unless something blows up internationally. And how have you in talking with your people on the ground your operations people with regard to your -- let's call it your market share and not just your market share, but your value proposition position within the United States has their -- has anything changed during the last quarter or two, that would give you more optimism or less optimism relative to the rest of the market against your competitors. Who may or may not have the same ability to take down cost as much as you've been able to take down cost, since they a lot of them had to be lean and mean to begin with, you can only get so much leaner, you probably have a further ways to go by doing that you could probably in a sense offer a lot more incentives to customers to come back to you or to stay with you or to get into new programs such as 2.0 with you that others can't. So the question is, how do you view yourself in the U.S. relative to your competition given what you've seen in this -- the turnover in the pandemic, realizing, I do realize that you had to focus on yourself first and get to your cost structures first, but in terms of providing service and getting market share. How have you been doing in the last, let's say quarter and a half?

Yes, I think the best answer to that is, I think our market share and our position with customers has been good. We've not -- our opinion lost anything. And we think that our focus has been to service our customers make sure we do that in a way that helps them restart. Our customers in general and I think this is true in the marketplace. They've been focusing on their restarts, they're opening, they're continuing to make it through the crisis period and the more we can do to help support them on that better. As I mentioned in my brief comments on the 2.0 Brink’s Complete in many cases, the customers wanted to focus not necessarily on a new solution or a better solution for them that we think it provides more value, but on restarting and focusing on making sure their operations were in line and cost they weren't focused on anything except getting going again. On the other hand, we do think that and many of our customers said and that fits and meets a lot of our objectives and our concerns especially in a post pandemic world that are better than what the offerings were in the past. And therefore, they like the value and the features associated with the Brink’s Complete and that will be enhancing, and I think will catch on pretty quickly and be something that others -- other competitors don't have. We certainly had a financial strength, we have the operational strength, and but we're not looking to view this as a time to not strengthen our margins and our cost position as well.

Okay.

I hope that answers much of that.

Yes.

We did talk about some of our invoicing and so forth in the quarter. I think that's something to take hard look at we'll see how that washes out over the following quarters.

And just quickly, are your people on the ground in Texas, Florida and California evidencing any concern about business there as it stands today given those places seem to be hotspots?

No, I -- we aren't seeing any specific retrenching necessarily. Most of what we've seen is re-openings as we said in the comments have been around reopening of retail establishments. And I think what some of the retrenching are more that we're hearing a lot is dine-in restaurants, entertainment locations, theaters and so forth, which haven't seen as much of the re-openings to the extent that retail locations have. I think that's a bigger --

Thank you. Thank you very much.

Thank you.

And our next question will be from Tobey Sommer with SunTrust. Please go ahead.

Good morning, Tobey.

Good morning. Just to start I’ve just kind of a broad question of the many items and themes and today's quarterly update. To you what -- what's the most surprising aspect of the businesses performance compared to where you stood in the prior quarter results and call? What’s the biggest delta?

Well, when you -- we would suggest you lay that out in two ways. One of them is that we didn't know what was going to happen, what timeframe and what that recovery curve of our customers coming back of the revenue impact and so forth when we were laying that out. We had some idea. We tried to lay that out as best we could as what the bottom would be and we laid that out. So that's the #1 thing. So I think that to see a recovery back to the 86%, if you will, in June revenue numbers and continued re-openings actually beyond that, that's the first thing. So at least gives us all at least a footing a foundation, a jumping off point for where I think it's reasonable to see suggest where things could go into the future. So I think that's the first thing and that's a footing that we didn't any of us know or see. And it was a big unknown out there. Second, I think that our cost reductions that we've talked about that we talked about in terms of general terms of both being the focus in the short-term related to variable cost reductions to address the near-term revenue reductions at the bottom were very important, but weren't quantified and were just being implemented in the April and May timeframe particularly in the U.S. and then supplemented with that without quantification related to our longer term fixed cost reductions providing the sustainable margin leverage going forward. Those weren't necessarily quantified as much either. We've now quantified a lot of those. We provided some guidance on the things that we can control, which is the cost reduction, which are those activities, which is substantial amount of restructuring charges that Ron went…

Thanks. With respect to Brink’s Complete, could you give us a little bit more color on progress and pilots or betas, and at this point the extent to which you see sort of the transition of your book of traditional legacy CompuSafe business towards that complete solution?

Yes. As I said, I think it's a tale of two different sets of customers, as we start the rollout, particularly in the U.S. One set that is very interested in what we have to offer, the benefits of that, the value equation and so forth with existing customers. But at the same time, it's something they don't necessarily want to focus on at this point. They want to get up and running, worry about their business and making it through. And another set of customers is pretty exciting. And the other side is that even with existing customers and new customers that they see the value, and they're starting to roll up on that and many of them are jumping on the value proposition and starting up with it rather than waiting. And so I think as we see this evolve and the re-openings become much clearer and stronger and get a little bit of time under, we'll get even more traction around it that we -- and proof if you will of the value equation going forward.

I appreciate. I just wanted to follow up on and I think you touched on, but maybe ask it a different way. With respect to the Company's position in the marketplace from a competitive perspective and opportunity to take share, how would you describe it on a geographic place basis where maybe there are some markets with more mom and pops and is that where there's more opportunity or is it markets with larger firms that may have stumbled for another reason -- for one reason or another? Thanks.

So are you talking about 2.1 and our complete solution or just in general?

In general. Thank you.

Yes. In general, it varies dramatically by country and where we are. Our objective over the last quarter has not been to go out and take market share. It's been to improve our cost structure, but more importantly, to service our customers, help them get back, service our customers, and make sure we provide the service levels we transition with our costs and structures going forward, we service our customers. We think that will take care of things. We're not looking to reduce price and go out and get more other issues and take share as a result of price and not at all. We're looking to service our customers based on our value equation to gain more business. And we think we're in both the strongest financial position, as well as our operational position. And then on top of that, we are starting some of our other actions of ATM outsourcing such as the announcements were made in Ireland. And we will see more of that going forward. More outsourcing from banks that we're starting to see as well, even financial institutions in the U.S. where we're seeing more outsourcing of vaults. We'll see more of that going forward. So all of that will be great opportunities and not necessarily to take competitive share, but to grow through that additional outsourcing with customers, as well as we see the opportunity, especially with our unique value propositions going forward to grow in the unvented space as well. Customers, I think, as a result of the pandemic will not go and say we don't want more help in cash, whether it be retail or FIs, they're going to be saying just the opposite. We want more help. We want you to find a better solution. And that's what we started to see that the customers retail customers as an example that are only partially vended today, I think they're going to become a lot more vended, because we have a better solution for them. I think with banks have suggested whether it be ATMs or vaulting is currently done in-house that will be outsourced. So those present growth opportunities as we go forward as well as taking market share, but that's not our focus on competition at this stage.

Thank you.

The next question will be from Sam England with Berenberg. Please go ahead.

Hi, guys. Just a couple for me. The first one, could you talk a bit about your expectations for South America and particularly Brazil in the second half. It was obviously a region that was later to be impacted by the pandemic. Brazil clearly held up very strongly in Q2 given that didn't enter full lockdown. So I was just wondering how you're thinking about that region for the second half.?

I’ll answer it. So then I'll hit Ron answer it as well. Look, I think South America is holding up very well under the circumstances. We -- I think I'd first say that we have seen more of our people and our employees impacted health wise by COVID and we are concerned and take more focus on that. On a business side, we think that Brazil, South America in general is -- has more than flattened out and we may not see the curve be as steep coming back or as fast and coming back as Europe, which I think we said earlier is probably the fastest that we've seen coming back and that's what I think I've seen in the economies as well. But we do think it has flatten out. The numbers suggests that Brazil and particularly that you mentioned, has performed extremely well financially during this timeframe. And we think it will continue to improve probably not just as fast and improvement as some of our other markets.

If you look at Slide six, you can see that Mexico declined the least. That's basically because the country didn't shut down. And as Doug mentioned, the business toll was probably the lowest, but the human toll was the highest within Brink’s. So we're concerned about that. You say South America, but it's really country-by-country as I mentioned in my remarks. I would say, Mexico was the least responsive and then followed by Brazil. I would say Argentina has been the most disciplined with the incredible lockdown followed by Colombia. So it really is on a country-by-country basis. We continue to monitor. It's not day-by-day in all cases, but certainly on a weekly basis we have war room meetings with every country to determine what's happening and how we can respond. But, again, on a case-by-case basis, you see that Mexico was the least impacted and it's starting to be impacted now just because of measures the country did not put in place.

Great. Thanks. And then the second one was, I was wondering what you're seeing on consumer credit availability at the moment and whether we're seeing the usual recession or shift into higher cash usage. I suppose how much of a benefit do you think the cash market seeing from stimulus checks here in the U.S., but also actions in other countries to support unemployed people?

I think it's more with re-openings than it is with actual cash in circulation. I mean, there's all the statistics that show cash is increasing, that show availability to credit is declining. But if people are not leaving their homes and going into establishments to spend anything, whether it's cash or credit, you're going to see a delay in reaction. But as Doug mentioned in his comments, we are not compensated on the volume of cash or compensated in other ways whether it's a number of stops, fixed monthly buildings, subscription fees, things like that. So we'll see the revenue increase as customers reopen. And that's more of a driver than actual growth of cash.

But with that said, you can see the growth in cash. And it's certainly contrary to what many have suggested or predicted. And if you take a look at where credit card companies are projecting and banks have reserved, in fact, I saw something in the news the other day that banks are suggesting that their losses on credit cards and consumers related to that will be greater than what we saw -- what they saw in 2008 and 2009. And that suggests and portends that in fact, consumers will maybe not get the credit and credit cards and there'll be a lot to tap to then revert back to which is the typical cycle in a recession like this use more cash and cash will become a greater payment method. That's what we suggest and we think and certainly the numbers are starting to show that.

Great. Thanks very much, guys.

Thanks, Sam.

Ladies and gentlemen, this will conclude our question and answer session. And we'll also conclude our conference call for today. We thank you for attending the Brink’s Company's second quarter 2020 conference call. And at this time, you may disconnect your lines.