Q4 2023 The Brink's Company Earnings Call

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Operator: Good morning, and welcome to the Brinks Company fourth quarter and full year 2023 earnings call. This morning, Brinks issued a press release detailing its fourth quarter and full year 2023 results.

Good day and welcome to the <unk> company.

Quarter, and full year, 2000, and twenty-three earnings call.

This morning, Brank's issued a press release detailing its fourth quarter and full year 2000, and twenty-three very salt.

Operator: The company also filed an 8K 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.

The company also filed in H K that includes the release in the slides that will be used in today's call.

The release and slides are available and the Investor Relations section of the company's website at investors thought brings dot com.

At this time all participants are in a listen only mode of question and answer session will follow the presentation.

Operator: A question and answer session will follow the 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. However, actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is 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. Brinks assumes no obligation to update any forward-looking statement. This call is copyrighted and may not be used without written permission from Brinks. I will now turn the call over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.

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 informing.

Information regarding factors that could cause such differences are available in the footnotes of today's press release and and the company's most recent S. E C filings.

Information presented and discussed on this call is representative of today only.

Brinks assumes no obligation to update any forward looking statements.

Call is copyrighted and may not be used without written permission from Bronx.

I will now turn the call over to your host Jesse Jenkins, Vice President of Investor Relations.

Jesse Jenkins: Mister Jenkins you may begin.

Jesse Jenkins: Thanks and good morning. Joining me today are CEO Mark Eubanks and CFO Kurt McMaken. This morning, Brinks reported full-year 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 8k filing. I will now turn the call over to Brinks CEO Mark Eubanks. Thanks, Jesse.

Jesse Jenkins: Joining me today.

Jesse Jenkins: Kirk Mcmackin.

Jesse Jenkins: This morning, Bruce reported full year 2023 results on a gap.

Speaker Change: None yet.

Speaker Change: Encourage you basis.

Speaker Change: Most of our comments today will be focused.

Speaker Change: Results because we believe these results make it easier for investors to assess operating performance between periods.

Speaker Change: Silly ations of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation.

Speaker Change: This morning's 8-K filings I will now turn the call over to break C E O Marc Eubanks.

Richard Mark Eubanks: Good morning, and thanks for joining us. Starting with the fourth quarter on slide three, we delivered total growth of 5% with organic growth of 9%. The organic growth was driven by strong pricing discipline and 17% growth in AMS and DRS revenue. However, profit margins were impacted by geopolitical and economic pressures in certain markets and lower than expected growth in high-margin services in North America. Q4 operating profit was $190 million with a margin of 15.2% and adjusted EBITDA of $252 million with a margin of 20.2%.

Richard Mark Eubanks: Thanks, Jesse good morning, and thanks for joining us.

Richard Mark Eubanks: Starting with the fourth quarter on slide three we delivered total growth of 5% with organic growth of 9%.

Richard Mark Eubanks: Organic growth was driven by strong pricing discipline, and 17 per cent growth and a M S and D. R. S revenue.

Richard Mark Eubanks: Margins were impacted by geopolitical and economic pressures in certain markets and lower than expected growth and high margin services in North America.

Richard Mark Eubanks: Two four operating profit was $190 million with a margin of 15.2% and adjusted EBITDA of $252 million with a margin of 20.2% a P. S was up 31% to $2.76 per share.

Richard Mark Eubanks: EPS was up 31% to $2.76 per share, benefiting from a few unique items in the quarter that Kurt will discuss later in more detail. We also delivered another strong quarter of improvement in free cash flow on our way to a record year. Free cash flow was up 36% from the prior year with sustainable conversion improvement to a rate of 70% in the quarter.

Richard Mark Eubanks: Benefiting from a few unique items in the quarter that Kurt we'll discuss later in more detail.

Richard Mark Eubanks: We also delivered another strong quarter of improvement in free cash flow on our way to a record year free cash flow was at 36% from the prior year with sustainable conversion improvement to a rate of 70 per cent and a quarter.

Richard Mark Eubanks: Moving to the full year, revenue was in line with expectations, with 9% organic growth. Approximately 40% of that growth came from AMS DRS revenue, which was up 21% organically in the year. Adjusted EBITDA was $867 million, with a margin of 17.8%.

Maybe for the full year revenue was in line with expectations with 9% organic growth approximately 40% of that growth came from a M. S. D. R. S revenue, which was up 21% organically in a year.

Richard Mark Eubanks: Adjusted EBITDA was $867 million with a margin of 17.8% expansion of 40 basis points.

Richard Mark Eubanks: Expansion of 40 bases, Foyer EPS improved $1.36 to $7.35 per share. We delivered record free cash flow through record EBITDA, improved working capital, and a reduction in capex as a percentage of revenue, as well as lower cash taxes. For the full year, free cash flow nearly doubled to $393 million with a 45% cash conversion of adjusted EBITDA.

Richard Mark Eubanks: For your ABS improved $1.36 to $7.35 per share.

Richard Mark Eubanks: We covered record free cash flow through record EBITDA improve working capital and a reduction in capex as a percentage of revenue as well as lower cash taxes.

Richard Mark Eubanks: For the full year free cash flow it nearly doubled to $393 million with 45% cash conversion of adjusted EBITDA.

Richard Mark Eubanks: 2023 reflects consistent progress executing against our strategic initiative. We ended the year with over a billion dollars, or 21% of our revenue now represented by higher margin AMS and DRS offerings. This improved revenue mix and cost productivity across the business led to expanded profit margins for the full year. We delivered record free cash flow through increased focus and operational discipline at all levels of the organization. We also increased our financial flexibility by reducing leverage to 2.9x within our target range of 2-3x.

Richard Mark Eubanks: 20, twenty-three reflects consistent progress executing or against our strategic initiatives.

Richard Mark Eubanks: We ended twenty-three with over $1 billion or 21% of our revenue now represented by higher margin M S and Drs offerings.

Richard Mark Eubanks: This improved revenue mix and cost productivity across the business led to expand it profit margins for the full year, we delivered record free cash flow through increased focus and operational disciplined at all levels of the organization. We also increased our financial flexibility by reducing levers to 2.9 times within our target range of two to three times.

Richard Mark Eubanks: And finally, we returned over $200 million of capital to our shareholders through the repurchase of 2.3 million shares of common stock, as well as our dividend, which was increased 10% in May of 2020. As we look forward to 2024, our guidance represents continued progress on our key objectives. We expect revenue growth in the mid-single digits, with low to mid-teens organic growth, and another year of double-digit growth in AMS and DRS. We expect Adjusted EBITDA to be between $935 million and $985 million, with margin expansion of 80 basis points at the midpoint, driven by strong revenue growth, continued revenue mix improvement, and cost productivity initiatives. EPS is expected to be between $7.30 and $8 per share, and free cash flow is expected to grow to between $415 and $465 million, with conversion at the midpoint of approximately 46%. We'll provide more detail on the guidance later in the presentation.

And finally, we returned over $200 million of capital to our shareholders through the repurchase of 2.3 million shares of common stock as well as our dividend, which was increased 10% in may of 2023.

Richard Mark Eubanks: As we look forward to 2024, our guidance represents continued progress on our key objectives.

Richard Mark Eubanks: We expect revenue growth in the mid single digits with low to mid teens organic growth and another year of double digit growth and Amazon Drs.

Richard Mark Eubanks: We expect adjusted EBITDA to be between 935, and $985 million with margin expansion of 80 basis points at the midpoint driven by strong revenue growth continued revenue mix improvement and cost productivity initiatives.

Richard Mark Eubanks: C. B S is expected to be between $7.30 and $8 per share and free cash flow is expected to grow to between 415 and $465 million with converge at the midpoint of approximately 46%.

We'll provide more detail on the guidance later in the presentation.

Richard Mark Eubanks: Turning to slide four.

Richard Mark Eubanks: Our full year performance demonstrates good progress against our goals. Total revenue in 2023 was in line with our expectations, with 9% organic revenue growth and a 2% contribution from M&A, partially offset by a 4% headwind from FX. I'll go into much more detail on revenue and operating profit by segment on the next slide. Adjusted EBITDA was up about $80 million due to the flow-through of higher revenue, good pricing leverage, and cost productivity, which includes restructuring savings from the program that we announced late in 2022. Earnings per share was $7.35 per share, reflecting the flow through of higher net income and a reduced share count.

Richard Mark Eubanks: Our full your performance demonstrates good progress against our goals.

Richard Mark Eubanks: Little revenue in 2000 twenty-three was in line with our expectations with 9% organic revenue growth and a 2% contribution from M&A, partially offset by 4% headwind from F X.

I'll go into much more detail on revenue and operating profit by segment on the next slide.

Richard Mark Eubanks: I just need EBITDA, what's up about $80 million due to the flow through of higher revenue good pricing leverage and cost productivity, which includes restructuring savings from the program that we announced late in 2022.

Richard Mark Eubanks: Earnings per share was $7.35 per share, reflecting the flow through of higher net income and reduce your account.

Richard Mark Eubanks: Our focus on free cash flow led to a $190 million increase year-over-year, reflecting improved working capital and lower cash taxes that more than offset the higher cash interest. Kurt will have more specifics on the free cash flow cadence and expectations into the next, [inaudible] I'd like to take a moment here to discuss the segment level performance in both the full year and fourth quarter. Starting with North America on the left side, organic revenue growth of 1% for the full year includes an organic decline of 2% in the fourth quarter. The quarter was impacted by the portfolio rationalization we discussed in Q2 and the lower volume growth from our global services revenue. There were also several large new DRS customers that delayed device installations from the Q4 peak retail season into 2024.

Richard Mark Eubanks: Our focus on free cash flow led to a 190 million dollar increase year over year, reflecting improved working capital and lower cash taxes that more than offset the higher cash interest Kurt will have more specifics on the free cash flow cadence and expectations into next year.

Richard Mark Eubanks: On the slide five.

Kurt: I'd like to take a moment here to discuss the segment level performance and both the full year and fourth quarter.

Kurt: Starting with North America on the left side organic revenue growth of all of 1% for the full year includes an organic decline of 2% in the fourth quarter.

Kurt: [noise] was impacted by the portfolio of rationalization, we discussed in Q2, and the lower volume growth from our global services revenue.

Kurt: There were also several large new drs customers the delay device installations from the queue for peak retail season and into 2024.

Richard Mark Eubanks: As we look ahead, we're well positioned to accelerate our DRS revenue in the North American market as we convert our backlog to revenue. We continue to make progress on a robust sales pipeline that's up over 50% year-on-year with a much more mature outlook than a year ago. Operating profit in North America was up 160 basis points on the year to a record of 11.6 percent.

Kurt: As we look at the year, we're well positioned to accelerate our Drs revenue in the North American market as we convert our backlog of revenue.

Kurt: We continue to make progress on a robust sales pipeline, that's up over 50% year on year with a much more mature outlook than a year ago.

Kurt: Operating profit in North America was up 160 basis points on a year to a record of 11.6%.

Richard Mark Eubanks: Good pricing efforts, portfolio rationalization, and cost productivity, especially in direct labor, were the main drivers of the margin expansion, despite the revenue mix headwinds that we saw in Q4. We also continue to make good progress on our safety and quality initiatives, with Q4 total recordable incidents at the lowest it's been in the last three years and quality scores that improved year over year again. In Latin America, strong organic revenue growth in Q4 and the full year was driven by our pricing efforts to offset inflation, as well as strong DRS and AMS revenue. Geopolitical and economic headwinds in several countries in South America, including the impact of the currency devaluation in Argentina, impacted profitability in the fourth quarter and the full year.

Kurt: Good pricing efforts portfolio rationalization and cost productivity, especially indirect labor, where the main drivers of the margin expansion. Despite the revenue mix headwinds that we saw in Q4.

Kurt: We also continue to make good progress on our safety and quality initiatives.

Kurt: With Q4 total recordable incidents at the lowest it's been in the last three years and quality scores that improve year over year again this quarter.

Kurt: In Latin America strong organic revenue growth in Q4, and the full year was driven by our pricing efforts to offset inflation as well as strong D. R. S and M S revenue growth.

Kurt: Geopolitical and economic headwinds in several countries in South America, including the impact of the currency devaluation in Argentina impacted profitability in the fourth quarter and a full year.

Richard Mark Eubanks: As we've discussed previously, we continue to experience economic headwinds in Brazil. However, the country is taking action to spur the economy, as evidenced by the five consecutive interest rate cuts, and we feel good about our outlook. Our local team is offsetting these impacts through our continued shift to AMS and DRS revenue, which were strong in Q4, and we continue to streamline our cost structure to match the demand shift. Looking at 2024, we have a strong business in Latin America, good momentum on DRS and AMS in the region, and are encouraged with our outlook despite a forecasted impact in Argentina from the recent devaluation. Europe performed well in 2023 as it had success with DRS and AMS early in the year and drove growth in both of these areas throughout the year. The strong growth in these higher-margin areas has helped profit margins expand by 40 basis points on the year despite the economic backdrop, with several new AMS contracts set to come online in early 2024. And similar to North America, a DRS pipeline that's up 50% year on year.

Kurt: As we've discussed previously we continued experience economic headwinds in Brazil.

Kurt: The country has taken action to spur the economy as evidenced by the five consecutive interest rate cuts and we feel good about our outlook.

Kurt: Our local team or offsetting these impacts through our continued shift two a M S and Drs revenue, which are strong and acute in queue for and we continue to streamline our cost structure to match the demand shifts.

Kurt: Looking at 2024, you have a strong business in Latin America, good momentum on D. R. S and M. S. In the region and are encouraged with our outlook. Despite a forecasted impact in Argentina from the recent devaluation.

Kurt: Europe has performed well in 2000 twenty-three as they had success with Drs, an HMS early in the year and have driven growth and both of these areas throughout the year.

Kurt: The strong growth and he's higher margin areas is help profit margins expand by 40 basis points on the year, despite the economic backdrop.

Kurt: With several new Ams contracts set to come online in early 2024.

And similar to North America D. R. S pipeline, that's up 50% year on year, we feel really good about the trajectory of the segment next year.

Richard Mark Eubanks: We feel really good about the trajectory of the segment next year. In the rest of the world segment, we realize modest growth and margin expansion this year. As we've previously discussed, our global services business, which represents more than half of the revenue in the segment, was impacted by the slowdown in the movement and storage of commodities worldwide. We're encouraged by the nice recovery we've seen in BGS late in the year, and we continue to see that here in Q1. DRS has done well, and the AMS pipeline in the region is very active with several ongoing pilots.

Kurt: And the rest of the World segment, we realize modest growth and margin expansion in the year.

As we previously discussed our global services business, which represents more than half of the revenue in the segment was impacted by the slowdown in in the movement and storage of commodities worldwide.

Kurt: We're encouraged by nice recovery, we've seen in Bgs late in the year and we continue to see that here in Q1.

Kurt: Drs has done well in the a M. S pipeline in the region is very active with several ongoing pilot with.

Richard Mark Eubanks: With the growth of the DRS base in 2023, we are targeting margin expansion in this segment next year. So far this year, we've seen a recovery in our BGS business outside of North America and an accelerating progress in DRS in all regions, highlighted by North America. I'm encouraged by the strong progress on our strategy, as evidenced by the growth we delivered in AMS and DRS in both the fourth quarter and full year. As we continue on this growth trajectory, our business will naturally shift to a larger base of predictable, higher-margin, recurring revenue businesses. As we exit 23, our AMSDRS revenue makes up 21% of our total revenue.

Kurt: With the growth of Drs base in 2000 twenty-three we are targeting margin expansion in the segment next year.

Kurt: So far this year, we've seen a recovery in our bgs business outside of North America.

Kurt: And an accelerating progress in Drs in all regions highlighted by North America I.

Kurt: I'm encouraged by the strong progress on our strategy as evidenced by the growth, we delivered and <unk> and D. R S and both the fourth quarter and full year.

Kurt: As soon as we continue on this growth trajectory, our business will naturally shift to a larger base of predictable higher margin recurring revenue business mix.

As we exit twenty-three R. A M S. Drs revenue makes up 21% of our total revenue.

Richard Mark Eubanks: Over the long term, we feel good about our ability to continue to increase that percentage going forward. On slide 6, you can see the EBITDA performance over time, including the midpoint of our 2024 guidance. The company has performed very consistently through challenging economic cycles.

Kurt: Over the long term, we feel good about our ability to continue to increase that percentage going forward.

Kurt: On slide six you can see the EBITDA performance over time, including the midpoint of our 2024 guidance. The company has performed very consistently through challenging economic cycles.

Richard Mark Eubanks: The 14% CAGR is well ahead of our revenue CAGR over the same period as we continue to make strides in increasing our margin profile. On average, EBITDA margins have expanded by more than 80 basis points annually, and that aligns with our expectations for next year. There are several drivers of margin expansion, starting with the work we've done to improve our revenues. Since 2020, we have nearly tripled the size of our AMS and DRS recurring revenue base, growing the business by over $600 million. In 2024, we expect another double-digit organic growth year in these higher-margin offerings as we continue to penetrate the retail market for DRS, as well as help financial institutions and independent ATM operators simplify their ATM ownership and operation through our AMS offering. Operationally, we continue to drive waste out of the system through the Brinks business. We're doing this by leveraging lean philosophies and sharing best practices across our global branch network as we continue to unlock savings opportunities.

Kurt: The 14% <unk> is well ahead of our revenue keg over the same period as we continue to make strides increasing our margin profile.

Kurt: On average EBITDA margins have expanded by more than 80 basis points annually and that aligns with our expectations for next year.

Kurt: There are several drivers a margin expansion starting with the work we've done to improve our revenue mix.

Kurt: Since 2020, we have nearly tripled the size of R. A M S and Drs recurring revenue base growing the business by over $600 million incrementally.

Kurt: In 2024, we expect another double digit organic growth year in these higher margin offerings as we continued to convert and penetrate the retail market for D. R. S as well as help financial institutions and intimate independent ATM operators simplify their ATM ownership and operation through our IMS offering.

Kurt: Operationally, we continue to drive waste out of the system to the brink business system. We were doing this by leveraging lean philosophies and sharing best practices across across our global branch network as we continue to unlock savings opportunities.

Richard Mark Eubanks: We've also recently started a transformation of our North American business that we expect to eventually scale globally. The transformation is focused on commercial and operational excellence, as well as support function optimization. Even with record margin performance in North America, we realize we have significant room to continue to expand our margin. The transformation supports our margin expansion efforts in 2024, as well as the years beyond. We remain focused on our midterm goal of approximately 20% EBITDA margins across the business and believe we have a clear path to continued margin expansion. Turning to slide 7, I'd like to take a moment to touch on the development for each of the customers. Starting with cash and valuables management, we saw good growth in the fourth quarter driven by disciplined pricing efforts, which more than covered our inflation in all segments.

Kurt: We've also recently started a transformation of our North American business there'll be expect to eventually scaled globally.

Kurt: The transformation is focus on commercial and operational excellence as well as support function optimization.

Even with the record margin performance in North America, we realize we have significant room to continue and expand our margins.

Kurt: Transformation supports our margin expansion efforts in 2024 as well as the years beyond.

Kurt: We remain focused on our mid term goal of approximately 20 per cent EBITDA margins across the business and believe we have a clear path to continued margin expansion.

Kurt: Turning the slides seven I'd like to take a moment to touch on the development each of the customer offerings.

Kurt: Starting with cash and valuables management, we saw good growth in the fourth quarter, driven by disciplined pricing efforts, which more than covered or inflation in all segments.

Richard Mark Eubanks: As I mentioned earlier, we did experience headwinds in our BGS business due to elevated interest rates and market trends globally. However, we've made good progress and are still in a culture of lean into our operations and are driving cost productivity throughout the organization and across the network. DRS was up sequentially from the third quarter on strong growth in Europe due to the onboarding of several new customers in the quarter. North America was up sequentially as well, despite the impact of several larger customers delaying installations out of Q4 into 2024. I'm encouraged by the improvement in the pace of installations earlier this year, with several days setting record highs, and the month of February has been our best on record.

Kurt: I mentioned earlier, we did experience headwinds in our Bgs business do do elevated interest rates and market trends globally.

Kurt: We've made good progress in still in a culture of lean into our operations and are driving cost productivity throughout the organization and across the network.

Kurt: D. R. S was up sequentially from the third quarter on strong growth in Europe do the onboarding of several new customers in the quarter.

Kurt: North America was up sequentially as well despite the impact of several larger customers delay and installations out of Q4 into 2024.

Kurt: I'm encouraged by the improvement and the pace of installations early this year with several days setting record highs in the month of February has been our best on record.

Richard Mark Eubanks: Our sales pipelines in all regions are up approximately 50% versus the same time last year. AMS also had a successful year of progress as we established our global team and increased our visibility with customers. Over the year, we developed several key wins in both Latin America and Europe as we continue to build, scale, and improve our service levels in AMS. I'm encouraged that we remain on the right path when I see the size of our pipeline and the various pilot programs we have going on across the globe.

Kurt: Our sales pipelines are in all regions are approximately 50% versus the same time last year.

Kurt: M. S. Also had a successful your progress as we established our global team and increased our visibility with customers.

Kurt: Over the year, we developed several key wins in both Latin America, and Europe, as we continue to build scale and improve our service levels and M. S.

Kurt: I'm encouraged that we remain on the right path when I see the size of our pipeline and the various pilot programs, we have going on across the globe.

Kurt: And you can see from the chart on the left side of the slide M. S and Drs are now 21% of our total revenue.

Kurt B. McMaken: As you can see from the chart on the left side of the slide, AMS and DRS are now 21% of our total revenue. As I mentioned, we expect to see at least double-digit organic growth in these offerings next year. I believe we're still in the early stages of the transition to these high-margin recurring revenue offerings, and I'm excited about the opportunities that remain in front of us. With that, I'd like to turn it over to Kurt to talk through the quarter and provide more color on our guidance. I'll return with some closing thoughts before we open up for Q&A. Kurt?

Kurt: As I mentioned, we expect to see at least double digit organic growth in these offerings next year.

Kurt: I believe we're still in the early stages of the transition to these high margin recurring revenue offerings and I'm excited about the opportunities that remain in front of us.

Kurt: With that I'd like to turn it over to Kirk to talk through the quarter and provide more color on our guidance assumptions I'll return with some closing thoughts before we open up for Q&A Kurt.

Kirk: Thanks, Mark looking at our fourth quarter results on slide eight 9% organic revenue growth was offset by 4% translational FX primarily in Argentina.

Adjusted EBITDA was up 5 million to $252 million and a margin of 20.2%.

Kurt B. McMaken: Thanks, Mark. Looking at our fourth-quarter results on slide 8, 9% organic revenue growth was offset by 4% translational effects, primarily in Argentina. Adjusted EBITDA was up $5 million to $252 million and a margin of 20.2%. EPS was up 31% and included a $0.48 benefit from gains on the sale of marketable securities. These were primarily in Argentina as we monetized certain investments that protected our assets from devaluation during the uncertain geopolitical backdrop in the country. DPS also benefited from a lower than expected foreign tax expense relating primarily to higher tax deductible inflation adjustments in Argentina. We have not included additional benefits from these items in our 2024 outlook.

Speaker Change: EPS was up 31% and includes a 48% benefit from gains on the sale of marketable securities.

Speaker Change: These were primarily in Argentina, as we monetize certain investments that protected our assets from devaluation during the uncertain geopolitical backdrop in the country.

Speaker Change: EPS also benefited from a lower than expected foreign tax expense relating primarily to higher tax deductible inflation adjustments in Argentina. We've.

Speaker Change: We have not included additional benefits.

Speaker Change: From these items in our 2024 outlook free.

Speaker Change: Free cash flow in the fourth quarter was $177 million and converted at a 70% right from our EBITDA, representing strong improvement year over year as we continue to stress the importance of free cash flow across our business.

Speaker Change: Realizing the heightened interest of this metric by our investors we plan to present, a trailing 12 month view of this metric when we share quarterly performance going forward.

Speaker Change: On slide nine you can see that roughly 40% of our organic growth in the quarter came from a M. S. N. Drs in total 102 million and organic revenue produced $31 million of organic operating profit for an incremental margin of around 30%.

Kurt B. McMaken: Free cash flow in the fourth quarter was $177 million and converted at a 70% rate from our EBITDA, representing a strong improvement year over year, as we continue to stress the importance of free cash flow across our business. Realizing the heightened interest in this metric by our investors, we plan to present a trailing 12-month view of this metric when we share quarterly performance going forward. On Slide 9, you can see that roughly 40% of our organic growth in the quarter came from AMS and DRS. In total, $102 million in organic revenue produced $31 million of organic operating profit for an incremental margin of around 30%. Translational FX reduced revenue by 46 million and operating profit by 29 million with higher margin Argentina currency devaluation offset by favorability and relatively lower margin euro denominated. On slide 10, I would like to walk you from Operating Profit to Adjusted EBITDA. Starting on the left, interest expense was up $9 million year-over-year to $52 million. The increase is related to higher interest rates and higher debt needed to fund DRS growth. Tax expenses were $42 million in the fourth quarter and $118 million for the full year.

Speaker Change: Translational FX reduced revenue by $46 million, an operating profit by $29 million with higher margin, Argentina currency devaluation, offset by favorability and relatively lower margin euro denominated countries.

Speaker Change: On slide 10 would like to walk you from operating profit to adjusted EBITDA Star.

Speaker Change: Starting on the less interest expense was up $9 million a year over year to $52 million the increases related to higher interest rates and higher that needed to fund Drs growth.

Speaker Change: Tax expenses were $42 million in the fourth quarter and $118 million for the full year or.

Speaker Change: Effective tax rate was 24.8%.

Speaker Change: Lower than are expected 30 per cent target due to an increase in tax deductible inflation adjustments associated with Argentina's currency devaluation in mid December.

Speaker Change: We expect these rates to normalize back to slightly below 30% in 2024.

Speaker Change: You can also see the $29 million and marketable securities gains that I mentioned earlier.

Speaker Change: Income from continuing operations was $127 million, along with a reduced diluted average share count of 45.9 million shares equates to $2.76 per share an increase of 31%.

Speaker Change: With approximately 2.3 million shares purchased in 2023, we ended the year with 44.5 million shares outstanding a reduction of approximately 4% from the prior year.

Kurt B. McMaken: Our effective tax rate was 24.8%, lower than our expected 30% target due to an increase in tax-deductible inflation adjustments associated with Argentina's currency devaluation in mid-December. We expect these rates to normalize back to slightly below 30% in 2024. You can also see the $29 million in marketable securities gains that I mentioned earlier. Income from continuing operations was $127 million, along with a reduced diluted average share count of 45.9 million shares, which equates to $2.76 per share, an increase of 31%, with approximately 2.3 million shares purchased in 2023. We ended the year with 44.5 million shares outstanding, a reduction of approximately 4% from the prior year.

Speaker Change: Working back to adjusted EBITDA, you can see where we remove the marketable security gains to eight cut pair ability to past and future periods.

Speaker Change: In total EBITDA was up $5 million to $252 million.

Speaker Change: On slide 11, I'd like to talk you through one of our more significant successes of the year free cash flow generation.

Speaker Change: We delivered a record $393 million in free cash flow in 2023 of 93% over last year.

Speaker Change: And the charge on the top right. We have provided three year trends on the major components driving free cash flow <unk>.

Speaker Change: Record EBITDA was up approximately $80 million in 2023 and at the midpoint of guidance is expected to increase by another $90 million in 2024, we.

Speaker Change: We made considerable improvements year over year in working capital as we worked our way back from a challenging 2022.

Speaker Change: Improvements were mostly driven by meaningful gains in DSO across all of our segments.

Kurt B. McMaken: Working back to adjusted EBITDA, you can see where we remove the marketable security gains to aid comparability to past and future periods. In total, EBITDA was up $5 million to $252 million. On slide 11, I'd like to talk you through one of our more significant successes of the year, Freecastle Generations. We delivered a record $393 million in free cash flow in 2023, up 93% over last year. In the chart on the right, we have provided three-year trends on the major components driving free cash flow. Record EBITDA was up approximately $80 million in 2023, and at the midpoint of guidance, it is expected to increase by another $90 million in 2024. We made considerable improvements year over year in working capital as we worked our way back from a challenging 2022. These improvements were mostly driven by meaningful gains in DSO across all of our segments.

Speaker Change: Change in our annual incentive plans to include free cash flow for our top 300 leaders is engaged in motivated our leadership to drive results.

Speaker Change: Looking to 2024, we expect to see slight working capital usage as we left the strong improvements made in 2023.

Speaker Change: Dash taxes were lower in 2023, primarily due to lower foreign tax driven by higher inflation adjustments.

Speaker Change: We expect cash taxes to increase in 2024 as these benefits are expected to lessen going forward.

Speaker Change: Cash interest is expected to rise in 2024 due to higher floating rates early in the year and increases in the least debt and provisional capital to fund our plan Drs growth.

Capex was down as a percentage of revenue in 2023, and we expect to continue this trend in 2024, as we make progress reducing capital intensity through growth in a M S and Drs.

Speaker Change: For 2024, we expect total free cash flow to grow by approximately $50 million and conversion to be about 46% at the midpoint of our guidance.

Speaker Change: Turning to slide 12, you'll see a familiar slide that displays are capital allocation framework and short we're not planning any major changes to our fame framework going forward starting at the top we haven't attracted many of organic investments that will increase revenue growth profitability and ultimately future free cash flow.

Kurt B. McMaken: The change in our annual incentive plans to include free cash flow for our top 300 leaders has engaged and motivated our leadership to drive results. Looking to 2024, we expect to see slight working capital usage as we continue to lap the strong improvements made in 2023. Cash taxes were lower in 2023, primarily due to lower foreign tax driven by higher inflation.

Speaker Change: These investments are primarily opex related and fit within our broader profit guidance.

Speaker Change: I'm happy to report that we have successfully reduced our leverage below three times do within our target range.

Kurt B. McMaken: We expect cash taxes to increase in 2024 as these benefits are expected to decrease going forward. Cash interest is expected to rise in 2024 due to higher floating rates early in the year and increases in leased debt and provisional capital to fund our planned DRS growth. CapEx was down as a percentage of revenue in 2023, and we expect to continue this trend in 2024 as we make progress reducing capital intensity through growth in AMS and DRF. For 2024, we expect total free cash flow to grow by approximately 50 million, and conversion to be about 46% at the midpoint of our guidance. Turning to slide 12, you'll see a familiar slide that displays our capital allocation framework.

Speaker Change: As expected this reduction came largely through EBITDA growth, although we continue to shift our debt by paying down our revolver to offset growth and leases and provisional capital needed to fund our Drs growth.

Speaker Change: With leverage now within the targeted range, we have increased our financial flexibility to pursue additional capital returns and accretive M&A.

Speaker Change: Shifting to capital returns in 2023, we completed $170 million of share repurchases, reducing outstanding share count at year end by approximately 4%.

Speaker Change: Looking forward, we have $500 million of capacity available on a new share repurchase program that expires at the end of 2025, we.

Speaker Change: We continue to see share repurchases at our current valuation is attractive and we plan to be active in the market through a combination of systematic and opportunistic purchases.

Speaker Change: On the M&A side, our philosophy remains consistent or.

Pipeline is robust with most of our targets prioritized in the a M S and Drs space.

Speaker Change: Any of our potential M&A opportunities require attractive returns and a strong strategic fit and need to fit within our current capital allocation framework.

Kurt B. McMaken: Starting at the top, we have an attractive menu of organic investments that will increase revenue growth, profitability, and ultimately, future free cash flow. These investments are primarily OPEX-related and fit within our broader profit guidance. I'm happy to report that we have successfully reduced our leverage below three times to within our target range.

Speaker Change: We remain focused on accretive capital allocation that will drive profitable growth and increased cash generation and our businesses.

Speaker Change: Are disciplined capital allocation framework is designed to maximize shareholder value for years to come and I'm encouraged by the strong year, we delivered 2023.

Speaker Change: On Slide 13, you can see our 2024 guidance, we expect total revenue growth to be in the mid single digits.

Speaker Change: Organic growth is expected in the low to mid teens offset by translational effects, primarily in Argentina <unk>.

Kurt B. McMaken: As expected, this reduction came largely through EBITDA growth, although we continue to shift our debt by paying down our revolver to offset growth in leases and provisional capital needed to fund our DRS growth. With leverage now within the targeted range, we have increased our financial flexibility to pursue additional capital returns and accretive M&A. Shifting to capital returns, in 2023, we completed $170 million of share repurchases, reducing the outstanding share count at year-end by approximately 4%.

Speaker Change: None of US ex we expect mid single digit growth in 2024.

Speaker Change: Even though we split between high margin Ams's Drs offerings and growth in our cash and valuables management businesses.

Speaker Change: Justin EBITDA is expected to grow about twice as fast as revenue due to revenue growth and mixed benefits as well as expected productivity and our core operations led by the brakes business system.

Speaker Change: As as our normal practice this guidance factors and FX expectations for Argentina, which we expect to be more pronounced in the first half of the year all other currencies reflect rates as of December 31 2023.

Kurt B. McMaken: Looking forward, we have $500 million of capacity available and a new share repurchase program that expires at the end of 2025. We continue to see share repurchases at our current valuation as a path, and we plan to be active in the market through a combination of systematic and opportunistic purchasing. On the M&A side, our philosophy remains consistent. Our pipeline is robust with most of our targets prioritized in the AMS and

Speaker Change: Free cash flow is expected between 415 and $465 million with conversion from adjusted EBITDA of approximately 46% at the mid point.

Speaker Change: E. B S is expected to be between 730 and $8 per share <unk>.

Speaker Change: Dps growth is partially muted due to the lapping of higher marketable securities gains in 2023 that we have not factored into our guidance for 2024.

Speaker Change: Also expect a return to more normalized effective tax rate slightly better than 30%.

Speaker Change: Interest expense expectations reflect market assumptions for interest rate reductions in the back half of 2024 and are based on our current capital structure.

Kurt B. McMaken: Any of our potential M&A opportunities require attractive returns and a strong strategic fit and need to fit within our current capital allocation framework. We remain focused on accretive capital allocation that will drive profitable growth and increase cash generation in our business. Our Disciplined Capital Allocation Framework is designed to maximize shareholder value for years to come, and I am encouraged by the strong year we delivered in 2020. On slide 13, you can see our 2024 guide.

Speaker Change: You may notice that we are not providing guidance to operating profit as we have historically.

Speaker Change: We have found the EBITDA as the preferred valuation and profitability metric of our analysts and shareholders and we believe guiding adjusted EBITDA maintains the same amount of visibility into the expected future performance.

Speaker Change: With that I'll turn it back over to Mark for some closing comments.

Mark: Thanks, Kurt before we turn to Q&A I thought it would be helpful to investors to provide a comparison of 2024 guidance against the targets that we set out in our 2021 Investor day.

Mark: Through the first two years of his three year framework.

Kurt B. McMaken: We expect total revenue growth to be in the mid-single digits. Organic growth is expected to be in the low to mid-teens, offset by translational effects primarily in Argentina. Net of effects, we expect mid-single digit growth in 2024. Even when we split between high-margin AMS DRS offerings and growth in our cash and valuables management business. Just as EBITDA is expected to grow about twice as fast as revenue due to revenue growth and mixed benefits, as well as expected productivity in our core operations led by the Brinks business. As is our normal practice, this guidance factors in FX expectations for Argentina, which we expect to be more pronounced in the first half of the year. All other currencies reflect rates as of December 31st, 2020.

Mark: We've outperform those investigate targets when considering the effects and interest rate headwinds as.

Mark: As a reminder are targets were given on a constant currency basis and excluded the impacts of F X over the multiyear period.

Mark: While reported revenue was a little short of the number we communicated over two years ago. There has already been over $400 million of currency headwinds to revenue.

Mark: Strategically we also communicated growth plan that focused on acceleration of our higher margin businesses.

And Drs, which we called strategy 2.0 at the time.

Our commitment what to deliver an incremental $500 million over the three year period.

Mark: And we've already delivered $482 million over the first two years.

Mark: With our 2024 guidance, we expect to deliver over $600 million in total and outperformance over $100 million of revenue.

Kurt B. McMaken: Free cash flow is expected between $415 and $465 million, with a conversion from adjusted EBITDA of approximately 46% at the midpoint. EPS is expected to be between $7.30 and $8 per share. DPS growth is partially muted due to the lapping of higher marketable securities gains in 2023 that we have not factored into our guidance for 2024. We also expect a return to a more normalized effective tax rate, slightly better than 30%. Interest expense expectations reflect market assumptions for interest rate reductions in the back half of 2024 and are based on our current capital structure. You may notice that we are not providing guidance to operating profit as we have historically We have found that EBITDA is the preferred valuation and profitability metric of our analysts and shareholders, and we believe guiding adjusted EBITDA maintains the same amount of visibility into the expected future. With that, I'll turn it back over to Mark for some closing comments. Thanks, Kurt.

Mark: R 2024 guidance has margins of 18.6% the midpoint driven by the improved revenue mix exceeding or 18.5% target we sat back in 2021.

Mark: Looking at the EBITDA dollars, we expect to deliver $960 million of the mid 0.8.

Mark: $80 million higher than our original target when taking into account the $120 million of negative effects, we've already experienced in the first two years.

Mark: Looking at free cash flow, we've seen a rapid rise of interest rates over the last two and a half years that has moved the assume rates on our debt from only basis points to over $5 to five per cent today.

Mark: Free cash flow conversion is higher than our original expectations when factoring in the impact of $130 million largely from higher interest rates.

Mark: Over the last couple of years, we've also sharpened our focus on value creating capital allocation.

Mark: We completed the note machine acquisition in 2022 to bolster our global capabilities and the ATM managed services market.

Mark: We've also returned significant capital to shareholders approximately $300 million in share repurchases in dividends over the last few years.

Richard Mark Eubanks: Before we turn to Q&A, I thought it would be helpful to investors to provide a comparison of our 2024 guidance against the targets that we set out in our 2021 investor presentation, through their first two years of this three-year framework. We've outperformed those investor day targets when considering the FX and interest rate headwinds. As a reminder, our targets were given on a constant currency basis and excluded the impacts of FX over the multi-year period.

Mark: In addition, we recently announced a two year half a billion dollars share repurchase authorization.

Mark: Even with these investments over.

Mark: Over the past few years, we were still able to reduce our leverage by half a turn to 2.9 times.

And I look back over the strategy period, I'm confident the progress we've made and remain committed to our strategic direction.

Mark: The future growth prospects for <unk> remains strong and the demand for our essential services remains high.

Mark: With the increased financial flexibility and improve operating model. We built over the last few years, we will continue to grow our business and create additional shareholder value during 2024 and beyond.

Richard Mark Eubanks: While reported revenue is a little short of the number we communicated over two years ago, there has already been over $400 million of currency headwinds to revenue. Strategically, we also communicated a growth plan that focused on the acceleration of our higher-margin businesses of AMS and DRS, which we called Strategy 2.0 at the time. Our commitment was to deliver an incremental $500 million over the three-year period, and we've already delivered $482 million over the first two years. With our 2024 guidance, we expect to deliver over $600 million in total and outperform by over $100 million in revenue. Our 2024 guidance has margins of 18.6% at the midpoint, driven by the improved revenue mix, exceeding our 18.5% target we set back in 2021.

Speaker Change: Now, let's open the line for questions operator.

Speaker Change: Thank you we will now begin the question and answer session. You ask a question you May press star one on your touch tone sad.

Speaker Change: If you are using a speaker phone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please.

Speaker Change: Please press Star then too.

Speaker Change: Again, it is star and then one to ask a question.

Speaker Change: Our first question today will come from George Tom of Goldman Sachs. Please go ahead.

George Tom: Hi, Thanks, good morning.

George Tom: Hi, good morning, Jordache and.

George Tom: Alright, your cash and valuables management business had organic revenue growth of seven per cent in the corner, which was quite strong a part of the script reflects improved price realisation.

Richard Mark Eubanks: Looking at EBITDA dollars, we expect to deliver $960 million in the mid- $80 million higher than our original target when taking into account the $120 million of negative effects we've already experienced in the first two years. Looking at free cash flow, we've seen a rapid rise in interest rates over the last two and a half years that has moved the assumed rates on our debt from only basis points to over 5.25% today. Free cash flow conversion is higher than our original expectations when factoring in the impact of $130 million, largely from higher interest rates.

George Tom: And then how much pricing games drove the growth and how sustainable the price increases are looking at.

Speaker Change: Yeah. Thanks George.

Speaker Change: As we as we look at the business just sort of global and maybe I'll just spin around the regions a little bit because it's there's some different so unique.

Speaker Change: <unk> around we're seeing strong pricing continue George relative to inflation, although we've seen inflation subside in in most regions. We continue to see pricing that exceeds inflation, that's allowing us to continue to maintain our margins, particularly in North America, we've seen one.

Richard Mark Eubanks: Over the last couple of years, we've also sharpened our focus on value-creating capital allocation. We completed the note machine acquisition in 2022 to bolster our global capabilities in the ATM managed services market. We've also returned significant capital to shareholders, approximately $300 million in share repurchases and dividends over the last two years. In addition, we recently announced a two-year, half-a-billion-dollar share repurchase authorization, even with these investments. Over the past two years, we were still able to reduce our leverage by half a turn to 2.9 times.

Speaker Change: Inflation has has subsided.

Speaker Change: Still and you'll see the numbers today I'm sure I haven't seen the the PCE number yet, but will still continue to see local inflation here for the workforce, which is putting pressure on wages and we're continuing to push that through you know I I I think that the demand side, though is really.

Operator: If I look back over the strategy period, I'm confident in the progress we've made and remain committed to our strategic direction. The future growth prospects for AMS and DRS remain strong, and the demand for our essential services remains high. With the increased financial flexibility and improved operating model that we've built over the last two years, we will continue to grow our business and create additional shareholder value in 2024 and beyond. Now, let's open the line for questions. Operator.

Speaker Change: Not we have not seen the demand impact, though from that price pressure, particularly as we shift our business model. Drs. This is an area, where we continue to see a lot of success, particularly not only in bookings, but also in a growing pipeline I mentioned that prepared comments.

Speaker Change: Pipelines up 50% year on year for sales opportunities by the way. That's we're also seeing that around the globe.

Speaker Change: And the other regions, we moved to Latin America again.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Quite a few different things going on down there.

Speaker Change: Some geopolitical uncertainty of course in Argentina, and really continue to see the market and the economy in Brazil, B light and so <unk>.

Keen Fai Tong: If at any time your question has been answered and you would like to withdraw your question, please press star, then two. Again, it is star and then one to ask a question. Our first question today will come from George Tong of Goldman Sachs. Please go ahead. Hi, thanks, good morning.

Speaker Change: A lot of pricing in those markets.

Speaker Change:

Speaker Change: As we continue to push through I'd say in the in the rest of Latin America really pretty stable that pricing continues to follow that.

Speaker Change: A little bit higher than 50, 50 mix of price to volume, but we continued to see that we expect that to continue to normalize as we move into 24 that we've we've already seen that be the case, both in Latin America as well as North America moving onto Europe, you think things again there.

Richard Mark Eubanks: Hi George, your cash and valuables management business had organic revenue growth of 7% in the quarter, which was quite strong. Part of this growth reflects improved price realization. Can you elaborate on how much pricing gains drove the growth and how sustainable these pricing increases are looking ahead?

Speaker Change: Pretty stable.

Speaker Change: We are seen.

Richard Mark Eubanks: As we look at the business, just sort of globally, maybe I'll just spin around the regions a little bit, because there are some different some unique aspects around. We're seeing strong pricing continue, George, relative to inflation, although we've seen inflation subside. And in most regions, we continue to see pricing that exceeds inflation, which is allowing us to continue to maintain our margin. Particularly in North America, we've seen while inflation has subsided, and you'll see the numbers today. I'm sure we haven't seen the PCE number yet, but we'll still continue to see local inflation here for the workforce, which is putting pressure on wages.

Speaker Change: Good Drs and Amex pick up and you can see that in the numbers. We also have good pipeline of opportunities that we've signed in bulk of it we'll see come online in Europe, particularly on the HMS side.

Speaker Change: Move on the rest of the world rest of the World is predominantly our bgs business a lot of <unk> a lot of the global services business is there in that segment, we saw that return and continued to pick up <unk>.

Speaker Change: Sequentially Q3, Q for if you remember we had a bit of.

Speaker Change: Softness in Q3 globally with our global services business particular on commodities in bank notes.

Speaker Change: Movements, we've seen that pick back up sequentially in queue for predominantly in rest of World segment, We did see some softness there and bgs in North America, which you can see coming through on the volume side, but but all in all the pricing environment stays pretty consistent.

Richard Mark Eubanks: And we're continuing to push that through. You know, I think that the demand side, though, has really not seen the demand impact from that price pressure, particularly as we shift our business model to DRS. This is an area where we continue to see a lot of success, particularly not only in bookings but also in a growing pipeline. I mentioned the prepared comments. Our pipeline is up 50 percent year-on-year for sales opportunities. By the way, we're also seeing that around the globe in other regions. If we move to Latin America again, there are quite a few different things going on down there. Some geopolitical uncertainty, of course, in Argentina and, you know, really continue to see the market and the economy in Brazil be weak, and so a lot of pricing in those markets, you know, as we continue to push through.

With twenty-three as we have been to 24, levelize and a little bit closer to the 50 50.

Speaker Change: Got it very helpful. And then you know the expectations of double digit organic revenue growth for D. R. S. M. A R minutes and 2024 can you talk about how much growth you're specifically incorporating into the guide and how do you expect the road grocery it's a D. R S and M S.

Speaker Change: Compared to each other into your head.

Speaker Change: Sure well.

Richard Mark Eubanks: I'd say in the rest of Latin America, you know, really stable that pricing continues to follow that, a little bit higher than the 50-50 mix of price to volume, but we continue to see that. We expect that to continue to normalize as we move into 2024. We've already seen that be the case, both in Latin America as well as North America. Moving on to Europe, you think things are again pretty stable.

Speaker Change: Well, we talked we actually had a similar look last year, although maybe it's a little bit more but about 50 per cent of our organic growth, we're anticipating <unk> that.

Speaker Change: That's an expectation last year, we wrote about the same age we were a little bit less of the organic growth, but going forward will be a little more than I think is the business becomes a larger percentage of the base. You know as you know we exited the year at 21% of total revenue from Ams's Drs is that base continues to get bigger and the organic.

Richard Mark Eubanks: We are seeing good DRS and AMS pick-up, and you can see that in the numbers. We also have a good pipeline of opportunities that we've signed and booked that we'll see come online in Europe, particularly on the AMS side. Moving on to Rest of the World, you know, Rest of the World is predominantly our BGS business. A lot of our global services business is in that segment. We've seen that return and continue to pick up sequentially from Q3 to Q4. If you remember, we had a bit of softness in Q3 globally with our global services business, particularly around commodities and banknote movements. We've seen that, you know, pick back up sequentially in Q4, predominantly in the Rest of the World segment. We did see some softness there in BGS in North America, which you can see coming through on the volume side.

Speaker Change: Both rates are higher than the <unk> business, where he continued to see that maybe 50 50 split of organic.

Speaker Change: Growth of Ams's Drs, two of the rest of the business, probably accelerated a little bit maybe be a little more than 50% so for us.

Speaker Change: We.

Speaker Change: That's what's embedded in our guide now that obviously excludes the Argentina impact to organic growth, but that mid single digit organic growth that we we would expect.

Speaker Change: Would be about like I said about half of that would be.

Speaker Change: Drs.

Speaker Change: Got it very helpful. Thank you.

Speaker Change: Sure.

Speaker Change: Our next question today will come from Toby Kilmer with tourists Securities. Please go ahead.

Richard Mark Eubanks: But all in all, the pricing environment, you know, stays pretty consistent with 23 as we ebb into 24, levelizing a little bit closer to 50-50. Got it. Very helpful. And then you noted expectations of double-digit organic revenue growth for DRS and AMS in 2024. Can you talk about how much growth you're specifically incorporating into the guide and how you expect the growth rates of DRS and AMS to compare to each other in the year ahead? Sure. Well, you know, we talked. We actually had a similar look last year, although maybe it's a little bit more. But about 50% of our organic growth is anticipated to be in DRS and AMS. That's an expectation. Last year, we were about the same.

Toby Kilmer: Thanks, I I wanted to ask a question about free cash flow and conversion your guiding for about 440 million I guess, and if I assume low forties and and dividend that's about $400 million left.

Toby Kilmer: If you just let it sit there you know the the leverage would be lower than what you stated target is.

Toby Kilmer: So without without paying any that down maybe 2.6 times if my math is right.

Toby Kilmer: Do you attend mostly to do share repurchase would that cash because that could be an excessive.

Toby Kilmer: 10% of the stock.

Occurred: Yeah, Hey, Toby it's occurred I think.

Toby Kilmer: As we mentioned in the in the remarks, we continue on an active program for share repurchases and I think the way you can think about.

Richard Mark Eubanks: Maybe we're a little bit less of an organic growth, but going forward, we'll be a little more. And I think as the business becomes a larger percentage of the base, you know, as we exited the year at 21% of total revenue from AMS DRS. As that base continues to get bigger, and the organic growth rates are higher than the CBM business, we'll continue to see that maybe 50-50 split of organic growth of AMS DRS compared to the rest of the business, probably accelerate a little bit, maybe be a little more than So for us, that's, you know, we that's what's embedded in our guide. Now, that obviously excludes the Argentina impact on organic growth, but you know, that mid single-digit organic growth that we would expect would be about, like I said, about half of that would be AMS DRS. I got it.

Toby Kilmer: Share repurchases in 24, because if you look at our free cash flow and take about half of that which is what we.

Toby Kilmer: Pretty much did in twenty-three than that kind of gets you to the you know pretty close to.

Toby Kilmer: The amount of share repurchases were initially thinking about for 24.

Toby Kilmer: Of course will be opportunistic and depending what happens in the market but.

Speaker Change: Think that's a good way to think about it.

Speaker Change: And is that embedded in the E. P S guidance already.

Speaker Change: Yes, Okay, yes [noise].

Speaker Change: Could you talk about a M S and D. R. S <unk> through a different lens than the earlier part of the call. It talk about it in terms of.

Richard Mark Eubanks: Very helpful. Thank you. True. Our next question today will come from Tobey Sommer with Truist Securities. Please go ahead.

Speaker Change: The extent to which you're participating in our market trend versus driving a market trend or or taking share because it is a little bit hard externally with all of your international exposures to understand where you're you know kind of a head are lagging on an E. M S perspective.

Tobey O'Brien Sommer: Thanks. I wanted to ask a question about free cash flow and conversion. You're guiding for about $440 million, I guess, and if I assume the low 40s in dividend, that's about $400 million left. If you were to just let it sit there, the leverage would be lower than what your stated target is. So without paying any debt down, maybe 2.6 times, if my math is right.

Speaker Change: Active and then Drs I'm curious about the growth coming from kind of transitioning legacy retail customers into the new line of business versus Ah Ah kind of actual net growth of new customers in Greenfield stuff.

Kurt B. McMaken: Do you intend mostly to do share repurchases with that cash? Because that could be in excess of, you know, 10% of the stock. Yeah, hey, Toby, it's Kurt.

Speaker Change: Sure Yeah. Thanks Toby.

Speaker Change: Maybe I'll take Drs first and second.

Kurt B. McMaken: I think, you know, we're, as we mentioned in the remarks, we continue on an active program for share repurchases. And I think the way you can think about Jerry purchases in 24 is because if you look at our free cash flow and take about half of that, which is what we pretty much did in 23, then that kind of gets you to the, you know, pretty close to the amount of share repurchases we were initially thinking about for 24. Of course, we'll be, you know, opportunistic. And it depends on what happens in the market, but I think that's a good way to think about it. And is that already embedded in the EPS guidance? Or, yes, it'll be okay.

Speaker Change: On the Drs side.

Speaker Change: The single kind of one to one customer one location simple retail shop.

Speaker Change: Of <unk>.

Speaker Change: Remote deposits provisional Capitol digital transparency integration with pass systems.

Speaker Change: I I think that has been an evolution and and some of the larger markets.

Speaker Change: We have some obviously hasn't differentiation that we're leading with but I'd say that is largely us.

With the other.

Participants, let's say moving that market and driving that market probably.

Kurt B. McMaken: Yes. Could you talk about AMS and DRS through, I think, a different lens than the earlier part of the call? Talk about it in terms of the extent to which you're participating in a market trend versus driving a market trend or taking share, because it is a little bit hard externally with all of your international exposures to understand where you're kind of ahead or lagging on an AMS perspective. And then DRS, I'm curious about the growth coming from kind of transitioning legacy retail customers into the new line of business versus kind of actual net growth Sure. Thanks, Toby. Maybe I'll take DRS first and then AMS second.

Speaker Change: Let's say or not orchestrated.

Speaker Change: Concerted wait it's a clear value proposition for for customers.

Speaker Change: I think the other thing that I would say our Drs is extended and this is where I think we're leading we'd be it as we're looking to close put a closed loop on the cash ecosystem inside of the retail stores, particularly larger higher cash.

Speaker Change:

Speaker Change: Usage doors.

Speaker Change: In all regions and that and that's been demonstrated and we've released some examples of that and what we've done in Europe, particularly where we developed an integrated cash recycling electronic payments.

Richard Mark Eubanks: On the DRS side, the single one customer, one location, simple retail shop of, Remote Deposits, Provisional Capital, Digital Transparency, Integration with POS Systems. You know, I think that that has been an evolution. And, you know, in some of the larger markets, you know, we have some obviously have some differentiation that we're leading with, but I'd say that is largely us, with the other participants, let's say moving that market and driving that market probably in a, I think the other thing that I would say our DRS is extended, and this is where I think we're leading, would be as we're looking to put a closed loop on the cash ecosystem inside of retail stores, particularly larger, higher cash, usage stores in all regions, and that's been demonstrated and we've released some examples of that in what we've done in Europe, particularly where we've developed and integrated cash recycling, electronic payments, a fully managed service for a fully outsourced solution that allows a retailer to outsource basically their entire POS experience, not just on the electronic side like you might see with the traditional POS providers, but providing a full closed loop service, both physical and the digital integration in the stores.

Speaker Change: Fully managed service for a for a fully outsource solution that allows a retailer to outsource basically their entire pass experience not just on the electronic side like you might see in the with the traditional P. O S providers, but providing a full closed loop service, both physical and the digital integration in the store.

Speaker Change: Wars, and I'd say in that area, where leading Ah because.

Speaker Change: I'd say, we're leading as many of our discussions with customers are one to one discussions that were collaborating together.

Speaker Change: And evolving a solution developing a solution providing the integration providing Frederick program management and then of course, all I manage services you know post installation and that's really been I'd say a next level relationship for us that we've been able to develop because of our full visibility and access to the to the cash ecosystem.

Speaker Change: On the HMS side.

And again globally speaking globally I.

Speaker Change: I think we're still are in the early innings I mean, we love where we are we love the you know the the.

Speaker Change: The customers we've signed the contracts we have the networks we've deployed.

Speaker Change: But honestly we're in a very it's a very nascent market. There is still many years of opportunity for a.

Richard Mark Eubanks: And I'd say in that area we're leading because, and the way I'd say we're leading is that many of our discussions with customers are one-to-one discussions where we're collaborating together and evolving a solution, developing a solution, providing the integration, providing program management, and then, of course, all the managed services post-installation. And that's really been, I'd say, a next-level relationship for us that we've been able to develop because of our full visibility and access to the cash ecosystem. On the AMS side... again, globally, speaking globally. I think we're still in the early innings. I mean, we love where we are. We love them, you know, the.

Speaker Change: <unk> for a T M owners, particularly financial institutions to outsource.

Speaker Change: <unk> this infrastructure of the systems. These networks and I think this is where again.

Speaker Change: We're having.

Speaker Change: Conversations with customers that of course involve competition in many cases, but in many cases, we're also having one on one conversations with customers to develop a solution and again our unique value proposition is that we're able to continue to close the entire loop and.

Speaker Change: And provide the most cinergy of the full value stream and the reason for that and we've talked about this before is we.

Richard Mark Eubanks: The customers we've signed, the contracts we've had, the networks we've deployed. But honestly, we're in a very, it's a very nascent market. There are still many years of opportunity for ATM owners, particularly financial institutions, to outsource this infrastructure, these systems, these networks. And I think this is where, again, we're having conversations with customers that, of course, involve competition in many cases, but in many cases, we're also having one-on-one conversations with customers to develop a solution. And again, our unique value proposition is that we're able to continue to close the entire loop and provide the most synergy of the full value stream. And the reason for that, and we've talked about this before, is that we occupy and control the largest cost base in the value chain of managing an ATM.

Speaker Change: Hockey Pie and control the largest cost base in the value chain of.

Speaker Change: Managing an ATM and that really is the physical logistics and processing of the physical cash and so that that's an area, where we think we can continue to innovate leveraging the technology developed but also continue to show customers that not only are we are we the cash logistics provider, but we're also able to provide a more fulsome <unk>.

Speaker Change: <unk> and provide a closed loop.

Speaker Change: Answer to their entire ATM network.

Speaker Change: I I really appreciate that that was helpful could you describe the.

Speaker Change: The the sales process in links and am S. Because I think you mentioned pilots and it would be interesting to hear you talk about that to understand the visibility you have into the ongoing momentum.

Richard Mark Eubanks: And that really is the physical logistics and processing of the physical cash. And so that's an area where we think we can continue to innovate, leveraging the technology we've developed, but also continue to show customers that not only are we the cash logistics provider, but we're also able to provide a more comprehensive solution and provide a closed loop answer to their entire ATM network. I really appreciate that. That was very helpful. Could you describe the...

Speaker Change: Sure.

Speaker Change: So our pipeline globally as a continues to grow and the <unk> how does how 'bout pipeline evolves is typically.

Speaker Change: They are an outbound from from our team in a local market with our relationships or.

Speaker Change: You know an inbound from one of our customers asking for <unk>, Hey, what do you think you know could you help us with this and.

Richard Mark Eubanks: The sales process in length in AMS, because I think you mentioned pilots, and it'd be interesting to hear you talk about that, to understand the visibility you have into the ongoing momentum. Sure. So our pipeline globally continues to grow. And how that pipeline evolves is typically.., either an outbound, you know, from from our team, you know, in a local market with our relationships, or from one of our customers asking for, hey, what do you think? that evolves in many different ways, but the really big [inaudible] point that a customer, you know, either says yes or no to any and all parts of our offering. But predominantly what they do is move to a pilot phase. And that might feel like.

Speaker Change: That evolves in many different ways, but the really big.

Speaker Change: Decision that a customer makes us when they step into this discovery phase and that's where we really sit down and put pen to paper both from a financial perspective, but from a technology perspective, and operations logistics perspective, and and build out the the proposed solution with the customer and from from that point.

Speaker Change: The customer you know either says, yes, or no to any and all parts of our offering.

Speaker Change: But predominantly what they do is move to to a pilot phase and that might feel like.

Richard Mark Eubanks: 10 ATMs, 25 ATMs, 100 ATMs, depending on how big the pilot is and how big their estate is. And we typically bring those online; it's a fee, you know; it's not a charity event. But we developed this solution at arm's length to develop a proof of concept in a, and frankly prove to them that the solution can deliver all of what we've committed to. From that, customers tell that it can take Toby anywhere from 90 days to a year. And what we have found is the AMS pipeline and AMS contracts are typically longer lead times than DRS. And maybe if you have a continuum of time from initial contact to revenue, you know, that might be, you know, for DRS on the single ice cream shop or deli, that might be as short as 90 days, where an AMS contract could be as long as a year, two years. And so it just varies.

Speaker Change: 10, atm's twenty-five atm's 100, atm's, depending on how big the pilot is and how big their estate is.

Speaker Change: And and we typically bring those online it's a it's a four fee.

Speaker Change: Not a a charity event.

Speaker Change: But we we developed a solution arm's length to develop a a proof of concept and Ah.

Speaker Change: And frankly prove to them that the solution can deliver all of what we've committed to.

Speaker Change: From that customers that can take Toby anywhere from.

Speaker Change: 90 days.

Speaker Change: Two a year and what we have found is the <unk> pipeline and HMS contracts are typically longer lead time decisions.

Speaker Change: Then the Drs and maybe if you have a continuum of time on.

Speaker Change: You know initial contact to to revenue.

Speaker Change: You know for Drs on the single you know ice.

Speaker Change: Ice cream shop, or Delhi that that might be.

Speaker Change: You know as short as 90 days, where in a M. S contract could be as long as a year or two years and so it just varies and I I think it. It also varies with where we are in that market and so where we have existing networks in a market that we're able to already demonstrate to a cut.

Richard Mark Eubanks: And I think it also varies with where we are in that market. And so where we have existing networks in a market that we're able to already demonstrate to a customer, you know, we're helping, you know, another customer, it's easier and faster to bring them online. Where, you know, we're pioneering in a particular market, it's a little more difficult, it takes a little more time. And I, you know, I used the example of a small country, I mentioned it before in Jordan. It took us a while to get the first ATM network.

Speaker Change: <unk>, we're helping another customer it's easier and faster to bring them online where if we have.

Speaker Change: Pioneering in a particular market.

Speaker Change: It's a little more difficult it takes a little more time.

Speaker Change: I've used it example of of a small country I've mentioned, it before and Jordan took us a while to get the first ATM network, but once we did we now have four more banks that have.

Richard Mark Eubanks: But once we did, we now have four more banks that have signed on and are part of our managed services network in the country. And so that's a good example of how once we have a success, we can parlay that into more success and, frankly, more value for the incremental customers. Thank you very much.

Speaker Change: Signed on in our part of our manage services network in the country and so that's a a good example of how once we get a success, we can parlay that into more success and frankly more value for the incremental customers.

Speaker Change: Thank you very much and last question for me could you talk about free cashflow conversion from EBITDA in two.

Tobey O'Brien Sommer: Last question for me. Could you talk about free cash flow conversion from EBITDA in 2024? What are the sort of puts and takes with your guidance number?

Speaker Change: 2024, what are the sort of.

Speaker Change: Puts and takes with your with your guidance number and where do you think that lands <unk> little bit longer term, how much how much more opportunity to increase that percentage do you have and what are the main levers.

Kurt B. McMaken: And where do you think that lands a little bit longer term? How much more opportunity do you have to increase that percentage do you have? And what are the main levers?

Kurt B. McMaken: Sure. Yeah, Tobey, let me kind of walk you through that process a little bit. I mean, if you kind of look at how you would think about a bridge from 23 to 24 free cash flow, obviously growth and profitability, so the EBITDA expansion is going to be your major item that's increasing cash flow. And then off of that, we'll pull off some higher interest and higher taxes, both cash interest and cash tax. And then, you know, the remainder will be a little bit left related to working capital and other items. So a little bit on working capital as we grow. So that's kind of the walk.

Speaker Change: Sure Yeah, Toby let me, let me kind of walk you through that thinking a little bit I mean, if you if you.

Speaker Change: Kind of looking at how you would think about a bridge from 23 to 24 free cash flow, obviously to growth and profitability. So the EBITDA expansion is going to be your major item, that's increasing cash flow and then after that.

Speaker Change: Pull off some higher interest and higher taxes, both cash interest in cash tax and then the remainder will be a little bit left related to working capital and other items, so little bit I'm working capital as we grow so that that's kind of the the work I think with conversion.

Kurt B. McMaken: I think, you know, with conversion. At 46%, about 46% in 24, we don't see any reason why we shouldn't be getting, you know, 50% and higher, you know, as we look out. There's nothing really structurally that would hold that back as we grow EBITDA, and we continue to get, you know, more efficient with our capital and more efficient with our working capital. The one thing I didn't mention was CapEx because we, you know, we continue to see that as kind of a flat number. So, you know, all of those things will help continue to drive that conversion. And I think there continues to be opportunity in our taxes. Our tax planning, we've, you know, continued to work in that area as well.

Speaker Change: At 46% about 46% and 24, we don't see any reason why we shouldn't be getting <unk>.

Speaker Change: 50% and higher.

Speaker Change: As we look out now there's nothing really structurally that would hold that back as we grow EBITDA, we continue to get.

Speaker Change: More efficient with our capital and more efficient with our working capital. The one thing I didn't mention was capex because we we continue to see that is kind of a flat number.

Speaker Change: So you know the all of those things will help continue to drive that conversion and I think there continues to be opportunity in our in our taxes are tax planning, we've continued to work in that area as well.

Speaker Change: And if I could sneak one last one and it from a a.

Kurt B. McMaken: And if I could sneak one last one in, from a DRS perspective, I presume that you're seeing most of your success in the U.S., but maybe you could enlighten us on that, and wherever you are seeing the most progress in DRS, on a micro level within that country, are you seeing more of a positive influence, holding down CapEx, because of better density and utilization of the fleet? Yes, absolutely. And I'd say, while North America is the biggest, and we are happy with the progress, as I mentioned, that pipeline of activity is the same in the other two regions, Latin America and Europe. And if I think about Europe, if I think about those areas, specifically, from a CapEx perspective, you know, our CapEx was largely flat in the last two years.

Speaker Change: D R S perspective.

Speaker Change: I presume that you're seeing most of your success in the U S. But maybe you could enlighten us on that and wherever you are seeing the most progress in Drs Alan <unk>.

Speaker Change: Micro level within that country are you seeing them more of a positive influence in terms of holding down capex because of you know better density and utilization of the fleet.

Speaker Change: Yes, absolutely and I would say well, while North America is the biggest and we are happy with the progress as I mentioned that pipeline of activity is the same in in the other two regions like Latin America and in Europe, and I, If I think about Europe, if I think by those are.

Speaker Change: He is specifically from a capex perspective are capex was largely flat. The last two years, we don't expect that to be much different.

Richard Mark Eubanks: We don't expect that to be much different, you know, in 2024. We'd love to be in a position where we have so much DRS that we need more infrastructure. But I think where we sit today... DRS and AMS both give us the opportunity to continue to leverage off our existing asset base And be, you know, more productive. Obviously, the more DRS we have, the more opportunity we have to, you know, control our own destiny in our network and frequency. I believe that this is going to continue to be an opportunity for us in the future, and there's no reason why we don't think That can't I think customers also view this more and more as a value proposition as well. And so, as we hear from existing customers that are converting or new customers that maybe, you know, I passed on the service previously. You know, the idea of them not being responsible to us for appointments and for scheduled pickups and, you know, fixed logistics networks.

Speaker Change: In 24.

Speaker Change: We'd love to be in a position, where we have so much drs that we need more infrastructure, but I think where we sit today dear.

Speaker Change: Drs NMS, both give us the opportunity to continue to leverage off our existing asset base and be more productive obviously the more drs. We have the more opportunity we have to control our own network and frequency.

Speaker Change: I I I I believe that this is going to continue to be an opportunity for us in the future and there is no reason why we don't think that can't happen I. You know I think customers also view this as more and more as a value proposition as well and so.

Speaker Change: We hear from existing customers that are converting or new customers that maybe I passed on the service previously.

Speaker Change: The idea of them not being responsible to us for appointments and for schedule pickups and fixed logistics networks. I think is also very appealing.

Richard Mark Eubanks: I think it is also very appealing. Thank you very much. This will conclude our question and answer session. I would like to turn the conference back over to Mark Eubanks for any closing remarks. Yes, good morning. Thank you everyone for joining us today. We appreciate your support, and we look forward to speaking with each of you soon. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect your line.

Speaker Change: Thank you very much.

Speaker Change: This will conclude our question and answer session I would like to turn the conference back half or to Mark Eubanks for any closing remarks.

Richard Mark Eubanks: Yeah. Good morning. Thank you everyone for joining us today, we appreciate your support and we look forward to speaking with each each of you soon.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.