Brink's Reports Improved Second-Quarter Results

RICHMOND, Va., July 26, 2012 /PRNewswire/ -- The Brink's Company (NYSE: BCO), a global leader in security-related services, today reported second-quarter earnings.

Second-Quarter Highlights

GAAP:

• Revenue down 1% (7% organic growth), EPS: $.63 vs. $.11
• Segment profit up 31% (44% organic growth), margin 4.9% vs. 3.7%
• International margin 5.0% vs. 3.6%
• North America margin 4.8% vs. 4.2%
• $.43 EPS tax benefit related to a change in retiree health care funding strategy

Non-GAAP:

• Revenue down 1% (7% organic growth), EPS: $.40 vs. $.35
• Segment profit up 4% (14% organic growth), margin 5.2% vs. 5.0%
• International profit down slightly, margin 5.0% vs. 5.1%; lower profit in Latin America due to Venezuela and negative currency offset EMEA improvement from operations and a commercial settlement
• North America cost reductions drive profit improvement; margin 5.7% vs. 4.5%

Other:

• Full-year outlook unchanged: organic revenue growth between 5% and 8%, segment margin approximately 7%
• Future pension contributions to be funded with cash
• Near-term pension contributions reduced by recent legislation
• First-half capital spending down $20 million; full-year estimate below 2011 spend
• 2Q12 includes $.04 charge related to the appointment of permanent CEO
  

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Tom Schievelbein, chairman, president and chief executive officer, said: "Second-quarter earnings outpaced year-ago results due primarily to higher profits in North America and EMEA.  Cost and productivity actions drove the improvement in North America.  EMEA profits reflect operating improvements in France and the Netherlands, where profit growth was supplemented by a commercial settlement.  Profits in Latin America declined due to higher than expected costs related to wage increases and changes in government regulations in certain countries.  We expect to offset these costs and resume profit growth in the second half of 2012.  Our full-year outlook continues to call for organic revenue growth in the 5% to 8% range, with a segment margin rate of about 7%.

"I am excited to begin my new role as CEO at Brink's, and our management team is working to improve near-term results and build meaningful value for shareholders.  We made the July pension payment in cash and plan to use cash going forward in lieu of equity.  We also completed a detailed review of our capital spending and have reduced it below last year's level.  Finally, we are changing to be a more customer-centric, focused organization.

"Brink's has many strengths including an iconic brand, an unmatched global infrastructure, and superior operating expertise.  Our strategy is to leverage these strengths to drive profit turnarounds in North America and EMEA, support continued strong growth in Latin America, and deliver higher-value solutions to our customers.  I am committed to accelerating the execution of this strategy, and to achieving our goal to deliver a 10% segment margin in 2015." 

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Non-Segment Expenses
Non-segment expenses increased from $16 million to $21 million due to increased retirement plan expenses ($4 million) and compensation charges related to the appointment of a permanent CEO, partially offset by an acquisition gain ($1 million).  On a non-GAAP basis, these expenses increased from $10 million to $12 million due to the appointment of a permanent CEO.

Capital Expenditures and Capital Leases
Year-to-date capital expenditures and capital lease additions were $82 versus $101 million in the year-ago period.  The reduction was driven primarily by a $9 million decline in North America.  Full-year fixed asset acquisitions are expected to be approximately $235 million versus $239 million in 2011.

Income Taxes
On a GAAP basis, Brink's recorded a second-quarter tax benefit of $10 million (negative effective rate of 46%) due primarily to a $21 million non-cash tax benefit related to a change in retiree health care funding strategy.  Tax expense in the year-ago quarter was $6 million (effective rate of 36%).  The effective GAAP tax rate for 2012 is expected to be between 26% and 29%.  Non-GAAP earnings for the second quarter reflect an effective tax rate of 38.5%, which is the midpoint of the estimated non-GAAP full-year range of 37% to 40%.  Non-GAAP results for both periods exclude the aforementioned tax benefit.

Pension
On July 12, Brink's contributed $7.4 million in cash to its primary U.S. pension plan.  Management intends to use cash to fund future contributions to the plan.  Near-term pension contributions will be reduced by recent legislation while the total liability is unchanged.  The new contribution amounts will be determined upon issuance of additional regulatory clarification on the new legislation.

Conference Call
Brink's will host a conference call on July 26 at 11:00 a.m. Eastern Time to review second-quarter results.  Interested parties can listen by calling (800) 860-2442 (domestic), (412) 858-4600 (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 August 9, 2012, by calling (877) 344-7529 (domestic) or + (412) 317-0088 (international).  The conference account number is 10015390.  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.

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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.  For 2012, a forecasted full-year tax rate is used.  The full year non-GAAP tax rate in both years excludes certain pretax and tax income and expense amounts.  The non-GAAP results provide 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.  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, cost reduction and productivity measures and future results in Europe, North America and Latin America, including our operations in Mexico, anticipated 2012 acquisitions of fixed assets, our continued investment in Latin America, the anticipated annual effective tax rate for 2012, future pension contributions, the expected source of funding for future pension contributions, projected currency impact on revenue, 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 and 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 and the impact of recent legislation titled Moving Ahead for Progress in the 21^st Century thereon, 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, 2011 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.

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Contact:
Investor Relations
804.289.9709

SOURCE The Brink's Company