Sign in

You're signed outSign in or to get full access.

BC

BRINKS CO (BCO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered 11% constant-currency organic revenue growth and $251M adjusted EBITDA, while reported revenue rose 1% to $1.264B; non-GAAP EPS was $2.12, down 23% year over year as FX and lapping 2023 marketable securities gains weighed .
  • AMS/DRS remained the growth engine: 23% organic growth in Q4 and 24% of full-year revenue; CVM grew 7% organically in Q4, with Global Services showing late-quarter stabilization and momentum into 2025 .
  • DOJ/FinCEN matter was fully resolved (total $42M over three years); BCO recorded $38M in Q4 charges ($45.7M for FY) reducing EPS by $0.86 in Q4 and $1.02 for FY—excluded from non-GAAP results; this removes a regulatory overhang going forward .
  • 2025 framework guides mid-single-digit organic revenue growth, 30–50bps EBITDA margin expansion, 40–45% FCF conversion; Q1 2025 guidance: revenue $1.20–$1.25B, adj. EBITDA $190–$210M, EPS $1.10–$1.40, with FX a ~6% headwind .
  • Potential stock reaction catalysts: continued AMS/DRS wins (e.g., BP and Western Union), Global Services rebound on precious metals volatility, and capital returns (61% of FY24 FCF returned) amid leverage at 2.8x .

What Went Well and What Went Wrong

What Went Well

  • AMS/DRS delivered 23% organic growth in Q4 and 23% for the year; mix shift to higher-margin offerings supports margin expansion over time. “AMS DRS now represents 24% of our total revenue…we’re targeting 25–27% by year-end” .
  • Free cash flow strength: $302M in Q4 with trailing-12-month FCF $400M (44% conversion); management emphasized working capital improvements, including a 7-day DSO reduction .
  • Operational productivity: North America direct labor as % of revenue improved 310bps over two years; route optimization and cloud migration initiatives on track to unlock further efficiencies by mid-2025 .

What Went Wrong

  • FX headwinds: ~10% reported headwind in Q4, concentrated in Latin America; despite 11% constant-currency EBITDA growth, total adjusted EBITDA margin fell ~30bps YoY on mix effects .
  • Non-GAAP EPS declined 23% YoY to $2.12 on lapping prior-year marketable securities gains and FX; GAAP EPS was $0.84 (press release/8-K) .
  • Higher interest expense ($60M in Q4; +$8M YoY) from DRS device financing and leases pressured EPS; 2025 tax rate expected to normalize to ~28%, limiting tax tailwinds vs 2024 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$1,246 $1,259 $1,264
Adjusted EBITDA ($USD Millions)$251.9 $217 $251.0
GAAP Operating Margin (%)8.2% 8.9% 8.3%
Non-GAAP Operating Margin (%)15.2% 12.0% 14.0%
GAAP EPS ($)-$0.13 $0.65 $0.84
Non-GAAP EPS ($)$2.76 $1.51 $2.12
Constant Currency Revenue Growth (%)—13% 11%

Segment breakdown (Q4):

SegmentQ4 2023 Revenue ($M)Q4 2024 Revenue ($M)Q4 2023 Operating Profit ($M)Q4 2024 Operating Profit ($M)
North America$404 $420 $62 $52
Latin America$343 $324 $80 $76
Europe$294 $311 $38 $40
Rest of World$204 $210 $43 $45

KPIs across recent quarters:

KPIQ2 2024Q3 2024Q4 2024
Constant Currency Revenue Growth (%)14% 13% 11%
AMS/DRS Organic Growth (%)26% 26% 23%
Adjusted EBITDA ($M)$226 $217 $251
Adjusted EBITDA Margin (%)12.4% 12.0% 19.9%
Non-GAAP EPS ($)$1.67 $1.51 $2.12
Free Cash Flow ($M)——$302

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2024$5.075–$5.225 $5.000–$5.050 Lowered
Adjusted EBITDA ($M)FY 2024$935–$985 $900–$920 Lowered
EPS (non-GAAP, $)FY 2024$7.30–$8.00 $6.50–$6.80 Lowered
FCF before dividends ($M)FY 2024$415–$465 $320–$360 Lowered
Actuals vs Updated GuidanceFY 2024—Revenue $5.012B; Adj. EBITDA $912M; EPS $7.17; FCF $399.9M Revenue/Adj. EBITDA/EPS/FCF all above updated ranges
Revenue ($B)Q1 2025—$1.200–$1.250 New (quarterly guidance introduced)
Adjusted EBITDA ($M)Q1 2025—$190–$210 New
EPS (non-GAAP, $)Q1 2025—$1.10–$1.40 New
FrameworkFY 2025—Mid-single-digit organic growth; AMS/DRS mid–high teens; +30–50bps EBITDA margin; 40–45% FCF conversion; ≥50% FCF to shareholders Established

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2/Q3)Current Period (Q4)Trend
AMS/DRS growth and mixAMS/DRS organic +26% (Q2/Q3); mix >23% of revenue +23% in Q4; 24% of FY revenue; target 25–27% in 2025 Sustained high-teens growth; rising mix
North America productivity360bps margin expansion in Q2; portfolio rationalization 310bps labor efficiency improvement over two years; route optimization/ cloud migration by mid-2025 Improving; further gains expected H2 2025
FX and ArgentinaStrengthening USD created headwinds (Q3); Argentina highly inflationary accounting charges ~10% FX headwind in Q4; 2025 tax/interest normalization as inflation moderates; Latin America restructuring early 2025 FX headwinds near term; structural actions underway
Global ServicesSofter over last few quarters (Q3) Late-Q4 rebound; precious metals volatility beneficial into early 2025 Improving
Capital allocationRepurchases and dividend increases (Q2/Q3) 61% of FY24 FCF returned; net leverage 2.8x Shareholder returns elevated
Regulatory/legalDOJ investigation disclosed; accruals in Q3 DOJ/FinCEN resolved; $38M Q4 charge; total $45.7M FY; excluded from non-GAAP Overhang resolved

Management Commentary

  • “We delivered total organic growth of 11% in the fourth quarter and 12% in the full year…AMS/DRS grew 23% organically…This marks the 12th consecutive quarter of double-digit growth rates” (CEO) .
  • “We delivered $400 million of free cash flow…reduced our net leverage in 2024 to 2.8x EBITDA while returning approximately $250 million to our shareholders” (CEO) .
  • “Direct labor as a percent of revenue was down an impressive 310 basis points over the last 2 years…route optimization technology…fully implemented by midyear this year” (CEO) .
  • “Interest expense was up $8 million year-over-year to $60 million…Tax expense…full year effective tax rate of 23%…expect…normalize to 28%” (CFO) .
  • “Our new approach to guidance…provide quarterly guidance…revenue of $1.225 billion at the midpoint…currency…headwind of around 6%” (CEO) .

Q&A Highlights

  • North America margin path: Management reiterated “20% EBITDA…in line of sight” via route optimization and tech debt reduction; benefits targeted in H2 2025 .
  • Growth mix: CVM expected low-single-digit growth, with conversion impact as customers shift to AMS/DRS; Global Services expected to flip positive in 2025 .
  • AMS/DRS wins: New AMS deployments at BP and DRS partnership with Western Union across hundreds of locations; rollouts underway through Q3/Q1 respectively .
  • FX/FCF: FX headwinds could pressure conversion, offset by interest rate reductions and AMS/DRS capital efficiency (fleet -300 vehicles; ~35 fewer branches) .
  • Tariffs/precious metals: Gold/silver movements “beneficial for our global services business” given fixed infrastructure and relationships .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to S&P daily request limits; therefore, estimate comparison is not included. Values would normally be retrieved from S&P Global.
  • Implications: Given non-GAAP EPS of $2.12 and constant-currency growth, estimate models should incorporate FX sensitivity (Latin America), tax normalization (~28% FY25), and Global Services upside from precious metals volatility .

Key Takeaways for Investors

  • AMS/DRS remains the core secular growth driver; backlog and new logos support sustained mid–high-teens growth, with mix moving toward 25–27% in 2025 .
  • FX remains the principal near-term headwind; constant-currency trends are solid, and restructuring in Latin America plus tax rate normalization should be factored into 2025 models .
  • Free cash flow generation is robust (TTM $400M; Q4 $302M); with leverage at 2.8x, elevated buybacks and dividend growth are likely to continue, supporting TSR .
  • Operational initiatives (route optimization, cloud migration) are credible margin catalysts for H2 2025, especially in North America, moving toward the 20% EBITDA margin target .
  • DOJ/FinCEN resolution removes a regulatory overhang; charges were excluded from non-GAAP and do not affect the 2025 framework—a positive for risk perception .
  • Global Services exposure to precious metals volatility is now a tailwind; watch for continued momentum in early 2025 .
  • Near-term trading: Currency prints and metals volatility are key drivers; medium-term thesis rests on AMS/DRS mix shift, margin expansion, and capital return discipline .