Q1 2025 The Brink's Co Earnings Call
Speaker Change: Good afternoon and welcome to the Brinks' first quarter 2025 earnings presentation.
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This call and the Q&A session will contain forward-looking statements.
Actual results could differ materially from projected or estimated results.
Speaker Change: Information regarding factors that could cause such differences are available in the footnotes of today's press release and in the company's most recent SEC filings.
Speaker Change: The information presented and discussed on this call is representative of today only.
Brinks assumes no obligation to update any forward-looking statements.
Speaker Change: The call is copyrighted and may not be used without written permission from Brinks.
Speaker Change: I will now turn it over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.
Speaker Change: Thanks and good afternoon. Here with me today are CEO Mark Eubanks and CFO Kurt McMaken. This afternoon, Brinks reported first quarter 2025 results on a gap, non-GAAP and constant currency basis.
Speaker Change: Most of our comments today will be focused on our non-GAAP results. These non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented.
Speaker Change: Our management believes these metrics are useful to investors as they allow investors to evaluate performance using the same metrics as management.
Speaker Change: Reconciliation of non-GAF results to their most comparable GAF results are provided in the press release, the appendix of the presentation, and in this afternoon's 8K filing, all of which can be found on our website. I will now turn the call over to Brinks CEO Mark Eubanks.
Mark Eubanks: Thanks Jesse, and good afternoon, and thank you all for joining us.
Mark Eubanks: Starting with slide three, Brink delivered total organic growth of 6% in the first quarter at the top end of our previous guidance.
Mark Eubanks: ATM Managed Services and Digital Retail Solutions, or AMS-DRS, grew over 20% for the fourth consecutive quarter as we continue to build upon solid momentum in these higher margin recurring revenue businesses.
Mark Eubanks: We delivered solid year-of-year growth in our global services business which particularly benefited our rest of world segment.
Mark Eubanks: Record Q1 operating profits were up 40 basis points in the quarter with good productivity and favorable revenue mix from AMS, DRS, and global services.
Mark Eubanks: Justice de Bada was $215 million with a margin of 17.2%, earnings per share of $1.62 reflects the benefits of share repurchases as well as the planned increase in a year-over-year tax rate as we lap one-time benefits for a prior year.
Mark Eubanks: Due to strong execution and the timing impact of some expenses that we shifted into Q2 on a trailing 12 month basis free cash flow and conversion of 40% came in as expected highlighted by continued progress on our collections and customer payment terms.
Mark Eubanks: Strategically we continue to focus on maximizing growth potential in a M. S. D. R S expanding our margins and executing our focused capital allocation framework a.
Mark Eubanks: Hey M. S. N D. R. S continue to gain momentum throughout the organization with solid growth across all segments.
Mark Eubanks: Now representing a quarter of our business. These recurring revenue offerings support performance consistency margin expansion and improved free cash flow, which is derived from improved working capital dynamics and lower capex intensity.
Mark Eubanks: I'll have much more on Ams Drs in a few slides.
Mark Eubanks: And our C. B M business growth was highlighted by strong performance in our global services business.
Mark Eubanks: As I'm sure you've seen the news precious metal movement was elevated during the quarter, which led to improved year over year growth.
Mark Eubanks: Our long term customer relationships, our global network, and our industry, leading capabilities position us well to continue to capture elevated demand that may arise going forward.
Mark Eubanks: We also continue to diligently execute against our capital allocation framework year to date, we repurchased one 3 million shares at an average price of $87 62 per share representing about 3% of the outstanding shares at year end 2024.
Mark Eubanks: Additionally, just last week, we announced the third consecutive annual increase to our quarterly dividend as we continue to focus our capital allocation on shareholder returns.
Mark Eubanks: With remaining repurchase capacity of over $180 million under our existing authorization, we are on track to meet or exceed our prior year share repurchase levels.
Mark Eubanks: Overall, it was a solid first quarter, we delivered solid organic growth in our key business lines expanded operating profit margins and we opportunistically increase the return of capital to shareholders.
Mark Eubanks: Supported by our strong Q1, we are affirming our full year framework of mid single digit organic growth.
Mark Eubanks: 30 to 50 basis points of EBITDA margin expansion and free cash flow conversion between 40 and 45%.
Mark Eubanks: As we look to the second quarter, we see similar mid single digit organic growth rates.
Mark Eubanks: EBITDA is expected to be between 205 and $225 million with earnings per share between $1 25, and $1 65 per share.
Mark Eubanks: Q2 topline guidance reflects our expectations for continued momentum in Ams Drs current FX rates and a stable economic conditions.
Mark Eubanks: The second quarter guidance aligns to our first half expectations, including a timing impact of some restructuring expenses shifting out of Q1 into the second quarter.
Mark Eubanks: Turning to slide four you can see their performance against prior year's constant currency and organic revenue growth, we're 6% with total revenue growth of 1%.
Mark Eubanks: Adjusted EBITDA was down $3 million with a $6 million increase in operating profit in spite of higher restructuring costs versus the prior year and less interest income from Argentina as inflation continues to moderate in the country.
Mark Eubanks: Earnings per share was up 13% on a constant currency basis and down <unk> <unk> per share year over year.
Mark Eubanks: Our outstanding average share count was down 4% with an expected increase in tax rate, which reduced EPS by <unk> 11.
Mark Eubanks: Free cash flow performance was as expected in the quarter in total free cash flow was down $14 million on a trailing 12 month basis and reflects the payment of a previously disclosed department of Justice and Finjan resolution.
Mark Eubanks: Excluding this item free cash flow would have been up $4 million year over year with conversion from EBITDA of 42%.
Mark Eubanks: On slide five you can see the performance by segment, starting with North America on the left constant currency growth of 4% and organic growth of 2% was consistent with the prior year with several new customer Onboarding just quarter Drs growth continues to be a highlight in North America.
Mark Eubanks: <unk> revenue was up organically year on year, primarily due to a slightly elevated global services volume.
Mark Eubanks: Record EBITDA margins included revenue mixed benefits good pricing discipline and continued productivity as we streamlined routing labor management and SG&A.
Mark Eubanks: With stable staffing and service levels in second half rally to improvements that remain on track, we are well positioned to continue to deliver growth and margin improvement over the balance of the year.
Mark Eubanks: And Latin America, 7% organic growth was more than offset by year over year currency devaluation, primarily in Mexico and Argentina.
Mark Eubanks: Normalizing for the impact of Argentina inflation moderation Latin America organic growth rates were stable sequentially.
Mark Eubanks: M. S N D. R. S mix increased to 18% of total revenue behind another strong quarter of growth in all countries.
Mark Eubanks: On the margin side as you remember from last quarter, we expected to take some restructuring actions in this segment to streamline operations behind our growing Ams Drs mix.
Mark Eubanks: While we executed a portion of that restructuring in Q1, we had some actions that will push into the second quarter.
Mark Eubanks: Our restructuring actions position us well to protect margins and realize the benefits of Ams Drs revenue model as we move forward in any economic scenario.
Mark Eubanks: Europe grew revenue by 5% organically in the first quarter, while a M. S. D. R. S mix increased by 2% sequentially to 42% of total revenue.
Mark Eubanks: We are making good progress converting and adding customers to drs in Europe, including the rollout of cash accepting self checkout devices in grocery and convenience stores.
Mark Eubanks: Europe remains a strong ams market due to the consolidated nature of the banking footprint and we continue to add new partners to our managed services network.
Mark Eubanks: We're making strong progress integrating the previously announced Sainsburys ATM estate into our U K business and we remain on track for full deployment by the middle of the year EBITDA.
Mark Eubanks: EBITDA was flat on a year on year basis, as we continue to take restructuring actions to optimize our operations and realize the benefits of accelerating a M. S N Drs growth.
Mark Eubanks: Normalized for these actions margins would have been up 40 basis points year over year.
Mark Eubanks: And the rest of World segment organic growth accelerated to 9% this quarter, primarily driven by the increased movement of precious metals that I mentioned earlier.
Mark Eubanks: Record first quarter EBITDA margins were up 130 basis points due to growth and mixed benefits of higher global services revenue.
Mark Eubanks: Turning to slide six.
Mark Eubanks: We have more detail by customer offering.
Mark Eubanks: Cash and valuables management grew 1% organically and accelerated sequentially when netting the impact of Argentina currency as I mentioned earlier global services was up sequentially and year over year with additional volume from gold and silver shipments.
Mark Eubanks: Primarily in the rest of World segment.
Mark Eubanks: Shipments continued to grow throughout the quarter before peaking at mid March.
Mark Eubanks: Early in the second quarter movement moderated, but remains ahead of prior year.
Mark Eubanks: As we mentioned last quarter dynamics, and our global services business shift quickly and our ability to leverage existing infrastructure and customer relationships remain the keys to our success in this line of business.
Mark Eubanks: Given the slowing growth in early Q2, we remain cautious in our outlook on this business line for both the second quarter and the rest of the year, but remain as always well positioned to capitalize on any opportunities as they occur.
Mark Eubanks: In our more traditional cash in transit and money processing business. We are pleased to announce a new partnership with a leading financial institution in North America.
Mark Eubanks: After a competitive process, we were awarded full cash in transit money processing and cash vaulting services across both the U S and Canada.
Mark Eubanks: We plan to onboard this new business over the coming months, while ensuring a smooth transition and maintaining our high customer service levels.
Mark Eubanks: Fortunately as with any new CDN business, we will look to expand relationships with new retail customers and additional ATM as states as we use these as entry points into a M. S N Drs moving forward.
Mark Eubanks: And Drs, we delivered another strong quarter of growth in all markets momentum continues as we win new accounts and convert existing customers in North America, we delivered our best quarter of Drs growth since 2022 with new installations in the quarter from a leading auto parts store and additional momentum in the restaurant in <unk>.
Mark Eubanks: Space.
Mark Eubanks: In Latin America, Mexico had a good month of installations as well with ads in the wholesale and C store markets.
Mark Eubanks: Conversion from traditional it to Drs accelerated in both North America, and especially Europe, driving improved revenue mix and record first quarter EBITDA margins in North America.
Mark Eubanks: Looking ahead, we expect to see an impact on growth rates in the second quarter as we lapped. The previously mentioned equipment sales from last year, we feel good about the rest of the year and Drs as we work from an increased base of business install a larger backlog and work to close a strong pipeline of opportunities.
Mark Eubanks: On the EMS side, we continue our efforts on Onboarding large customers that we discussed in previous quarters in both Europe, and North America as I mentioned earlier Sainsbury.
Mark Eubanks: Sainsburys Onboarding remains well on track in the U S. We're making good progress deploying services into gas stations and convenience store customers that we won in previous quarters.
Mark Eubanks: As discussed previously due to the size of Ams deals growth in this line of business is not expected to be as linear as Drs has been.
With deployments on track, we expect Ams growth to begin to accelerate into the second half of 2025, we continue to make progress building, both the quality and size of our pipeline leading to improving win rates in this offering.
Mark Eubanks: Now, let's turn to slide seven.
Mark Eubanks: Before I hand, it off to Curt to talk to the specifics of the quarter and our guidance I thought it'd be helpful to frame, how the current market dynamics may impact us it breaks.
Mark Eubanks: While we have yet to experience any significant disruption in our business uncertainty has increased in many of the economies, where we serve including the U S.
Curt: On the left side of the slide you can see our organic growth rates over the last 18 years as you can see we have a history of performing well across many market conditions and business cycles.
Curt: Our growth rates have been consistently in the mid single digit range outside of the pandemic when retail establishments were completely shut down and the great financial crisis in 2009.
Curt: With a much larger base of business now in Ams Drs and a more diversified global footprint, we expect to be even more resilient going forward.
Curt: Our customer diversity in retail and financial institutions helped mitigate challenges in any one sector and we're closely monitoring any potential increase in bankruptcies or store closures in the markets we serve.
Curt: With the geographic footprint that serves customers in over 100 countries and our global services business that has historically performed well in downturns, we are well positioned and adequately diversified if economic conditions deteriorate.
Curt: As a service based business, we expect to be mostly insulated from direct tariff exposure more than half of our costs are labor, including fleet and shipping expenses. Most of our cost is variable, allowing us to protect our margins if volume slow in the future.
Curt: With a base of locally manage operations in 51 countries materials and labor are primarily sourced by our local teams in local currency and we have a long history of managing inflationary pressures pressures with price discipline and productivity.
Curt: We have a pipeline of productivity initiatives working through the brinks business system that will continue to support margins.
Curt: And as we continue to shift our business to a M. S. N D. R. S. We're increasing network density and improving routing flexibility, providing more certainty on our profit margin expansion plans over the balance of the year and for years to come.
Curt: Overall, I'm pleased with the first quarter and the outlook for the rest of the year, our business remains stable and well positioned to execute our strategy.
Curt: Our growing base of Ams and Drs line of sight to productivity initiatives in the second half than a first quarter above expectations provide a strong foundation to continue our organic growth and margin expansion journey for the rest of the year.
Curt: And now I'd like to turn it over to Curt to discuss the details of the quarter and more specifics on our outlook.
Curt: Kurt.
Curt: Thanks, Mark and good afternoon, everyone.
Curt: Turning on slide eight organic revenue grew $69 million with 80% of that growth coming from higher margin Ams Drs services.
Curt: $13 million of CV EM growth included the impact of Ams Drs customer conversions.
Currency headwinds amounted to $66 million or 5% in the period, primarily from the Mexican peso Argentine peso and the Brazilian real.
Curt: The organic revenue mix benefits flow through generating 30% incremental operating profit, while organic adjusted EBITDA grew $14 million or 6%.
Curt: Total adjusted EBITDA margins were down 50 basis points from the prior year negatively impacted by the regional revenue mix of FX as well as less Argentina interest income.
On slide nine starting on the left operating profit was up 4% to $151 million with a margin of 12, 1% on strong productivity and line of business revenue mix.
Curt: Interest expense was up $2 million year over year to $58 million.
Curt: We are still expecting interest expense to be roughly flat to the prior year.
Curt: Tax expenses were $28 million in the quarter, representing an effective tax rate of 27, 8% an increase from the 23, 2% we saw in the prior year.
Curt: As a reminder, this tax rate increase is primarily related to the lapping impact of inflation adjustments in Argentina on the prior year that is not expected to repeat in 2025.
Curt: Interest income was $11 million in the quarter down $5 million year over year with inflation rates moderating in Argentina. We expect 2025 interest income to continue to decelerate as we move through the rest of the year.
Curt: Income from continuing operations was $70 million.
Curt: Walking back up to adjusted EBITDA, depreciation and amortization was $54 million, we still expect total DNA to rise modestly in 2025, primarily reflecting increased depreciation from Ams and Drs equipment.
Curt: And the stock comp and other category stock based compensation was down $4 million year over year in Q1 and for the full year, we expect stock comp to decrease slightly to between 30 and $35 million.
Curt: Moving to slide 10.
Curt: We continue to diligently execute our unchanged capital allocation framework as always we strive to allocate capital prioritizing long term shareholder value or.
Curt: Our framework is designed to compound free cash flow in future years by investing first in organic growth and margin enhancing opportunities in the business.
Curt: We are targeting capex as a percentage of revenue around three 5% and plan to continue to drive capital efficiency as we shift our mix to Ams and Drs.
Curt: In the first quarter, our leverage increased to 3.06 times just over our target range as we accelerated share repurchases into the early part of the year to Opportunistically take advantage of attractive pricing.
Curt: We remain on target to be within our leverage range by year end.
Curt: Our primary use of capital over the last few years has been share repurchases and we continued the trend in the first quarter through.
Curt: Through may 9th we have repurchased over one 3 million shares or four 3% of the outstanding share count at year end.
Curt: In total we have spent over 110 million year to date and have approximately $180 million and available capacity remaining in our current authorization.
Curt: With respect to dividend just last week, our board authorized a third consecutive annual increase to our quarterly dividend.
Curt: We plan to follow a similar consistent dividend policy going forward.
Curt: And finally on M&A, our posture on deals is consistent.
Curt: Have a full pipeline and continue to explore accretive opportunities that have a strong strategic fit attractive returns and align with our current leverage targets and broader capital allocation framework.
Curt: Moving to the guidance on slide 11.
Curt: With a strong first quarter behind us our full year framework for 2025 remains unchanged. We expect mid single digit organic growth to include mid to high teens organic growth in Ams Drs.
Curt: Over the last quarter FX rates have moved in our favor using today's rates, we would expect about a two 5% or $125 million FX improvement to our initial full year estimate.
Curt: This 125 million in FX improvement was primarily due to the euro and pound shifting our geographic mix of revenue more towards our Europe segment.
Curt: So despite the good EBITDA performance, we saw in the first quarter, we are maintaining our margin expansion targets of 30% to 50 basis points for the full year.
Curt: Theres been no change to our expectations for free cash flow conversion and as I mentioned on the last slide we opportunistically pulled forward share repurchases into the early part of the year and for the full year remain on track with shareholder returns that meet or exceed 2024 levels.
Curt: In the second quarter, we expect revenue between one five and $1 3 billion, reflecting organic growth in the mid single digits using.
Curt: Using today's rates FX is expected to be a headwind of around three to three 5% as we lap last year's Q2 steep devaluation of the Mexican peso before moderating in Q3.
Curt: The organic revenue guidance assumes strong continued growth in Ams Drs and current trends in the global services business.
Curt: Adjusted EBITDA is expected to be between 205 and $225 million.
Curt: This adjusted EBITDA guidance reflects the flow through of revenue growth.
Curt: <unk> impact of restructuring actions that shifted from Q1 to Q2, the impact of currency mix on margins and lower interest income.
Curt: <unk> is expected to be between $1 25.
Curt: And $1 65.
Mark Eubanks: And now I'll hand, it back to Mark for closing comments before we start Q&A.
Speaker Change: Kurt point 25 is off to a solid start in Q1, we delivered the fourth consecutive quarter of over 20% organic growth in our key verticals of Ams and Drs.
Speaker Change: Supported by a strong pipeline and the Onboarding of several new customer accounts in the second half I am encouraged by our momentum.
Speaker Change: And C. B M. We remain well positioned to generate growth with a major new North America banking partnership coming in the second half and our global services business remains poised to capture the available growth opportunities.
Speaker Change: EBITDA margins are expected to expand in the back half of the year behind the strong growth and our ongoing productivity efforts.
Speaker Change: Supported by our historical performance our differentiated business model is built for success in the uncertain macroeconomic environment ahead of us.
Speaker Change: I'm confident we are sustainably improving the business building a business that will deliver a more consistent growth margin improvement and free cash flow generation profile for years to come.
Speaker Change: And with that we're happy to take your questions. Operator, Please open the line.
Speaker Change: Suddenly.
Speaker Change: Well now begin the question and answer session.
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Speaker Change: At this time, we will pause momentarily to assemble our roster.
The first question comes from George Tong with Goldman Sachs. Please go ahead.
George Tong: Hi, Thanks, good afternoon.
George Tong: Can you talk a little bit more about your tariff exposure specifically how much of your hardware is imported measured as either percentage of revenue or percentage of cost what your country exposures are and what average effective tariff rate across your country exposures is assumed in your guidance.
George Tong: Sure. Thanks, George for the question we.
First first and foremost we talked a little bit about it in the prepared remarks, but we don't really expect frankly.
George Tong: Frankly, any direct exposure from tariffs as you know most of our costs and our revenues are all in the same currency and we don't import export much of our services, obviously, our global services business a little bit different.
George Tong: And I think that's why you saw some of the activities in Q1, there were some concerns about precious metals, which caused a lot of shipments from around the world frankly that showed up in our rest of World segment. As you know really a step up in revenue, bringing precious metals, particularly to the U S.
George Tong: <unk>.
George Tong: Eventually was sorted out as you're probably aware in those commodities were exempted from any tariffs. So today, we really don't see any of that even as we think about like.
George Tong: Trucks are parts and so forth most of those are locally sourced in region or in lease inside of trade unions and so.
George Tong: We don't really have any impact I think the issue, where we where we would see impact to our business like any business would be any sort of moderation to growth global growth that occurred or any local let's say cost of living increases or inflation and of course and in those cases, we do all we can.
George Tong: And manage those costs with productivity, but also we will remain disciplined obviously in the in our pricing posture as we go to market.
George Tong: Got it that's helpful context.
George Tong: And then switching gears looking at your Latin America business organic growth was 7% in the quarter, but the FX drag was negative 16% in past quarters. Your organic growth was able to match. Your FX trends. So can you talk about pricing trends, you're seeing in the region and if you're able to use pricing to fully offset.
George Tong: C devaluations or FX headwinds going forward, yes, yes. Good question George So two things the two types of.
Two types. The two parts of that question, let's say the first is pricing for the highly inflationary.
George Tong: A market like Argentina, where the where the currency was devalued rapidly and yes, we continue to maintain that same posture.
George Tong: As inflation.
George Tong: The hyperinflation comes through we're pricing for that in the local market.
George Tong: In the Latin America basket in total the largest part of the FX impact is the Mexican peso, which is really just a year on year impact of the devaluation that occurred last year in the end of June and so we'll see.
George Tong: Well continue to see FX headwinds from Mexico, and Brazil, frankly for the really for the first half when the when the big devaluation happened late June we'll see that moderate in the back half of the year Q2 should be similar.
George Tong: In total growth.
George Tong:
George Tong: U S Q1 so.
George Tong: We feel.
George Tong: Good where we are and in fact.
George Tong: Quarter came in about as we expected.
George Tong: Got it very helpful. Thank you.
George Tong: Sure.
Speaker Change: Our next question comes from Tim Mulrooney with William Blair. Please go ahead.
George Tong: Yeah.
Mark Eubanks: Mark good afternoon.
George Tong: Tim how are you Tim.
Tim Mulrooney: Well. Thank you so I have a few here first on your second quarter.
George Tong: Margin.
George Tong: Youre looking at about.
George Tong: $16, 9%, I think which is down.
George Tong: On a year over year basis for the second quarter of last year down a little more than a 100 basis points. I think you can you just walk me through the puts and takes here and also with the margins being down year over year in the first half but.
George Tong: Full year guidance anticipating 30 to 50 basis points of margin expansion can you help us bridge that gap between first half margins in second half margins.
George Tong: Yeah, Hey, Tim It's Curt let me kind of walk you through first on first half I think some of the biggest drivers are really going to be around two main things one is FX and the mix of the FX, particularly from the Mexican peso and how that impacts our margins and the second is around the <unk>.
George Tong: Tina interest income.
George Tong: Because that rolls off has rolled off year over year and has a significant impact. So those two are big drivers of ultimately.
George Tong: Are the margins. There is also a bit of restructuring in there we have more restructuring this year than last year.
George Tong: In the in the first half so those are your three big big items.
George Tong: When you think about the first half and even the second quarter.
George Tong: If you look at the second half and how things are ramping.
George Tong: Again, you have some FX impacts on that number one.
George Tong: The Mexican peso starts to roll off so that.
George Tong: <unk> impact in the second half is quite a bit more muted.
George Tong: And then you have the normal seasonality for us so we ramp in the second half our organic they actually if you look at the organic growth in the second half, it's pretty consistent with the first half, but because the FX is moderating your growth. Your total growth is actually quite a bit higher so.
George Tong: If you look at the flow through on that it's pretty much as we would expect and in fact him FX.
George Tong: If you just run the math out the company.
George Tong: Almost a tailwind in Q4, just given the year on year, where the Mexican peso is today and where it was in Q4.
George Tong: The only other reminder, two in the third quarter, we had a.
George Tong: Pretty significant security loss event last year, and so we're lapping that in the third quarter. So theres, a pretty big expansion in the third quarter in terms of margins because of that.
Speaker Change: Okay that was very comprehensive thanks. Thank you so FX.
George Tong: Restructuring the interest income and.
Speaker Change: And the lapping of that security loss. Thank you.
George Tong: On the interest income.
George Tong: I know that.
George Tong: Plus interest income from Argentina negatively impacted margins in the first quarter.
Speaker Change: How much of a headwind do you expect us to be to EBITDA for the full year.
George Tong: So.
George Tong: We it.
George Tong: It's a meaningful [laughter].
George Tong: It runs.
George Tong: Maybe a way to think about it is.
George Tong:
George Tong: Yes.
George Tong: Trying to bucket ties it in a way that's.
George Tong: I think you can think about it as.
George Tong: $4 million to $5 million a quarter.
George Tong: Is.
George Tong: The way to think about.
George Tong: Okay.
George Tong: That's helpful.
George Tong: Dave a little bit.
Tim Mulrooney: Tim I was just going to say is because it does obviously depend a lot on what happens.
Tim Mulrooney: In country, but that's kind of our current thinking on it.
Tim Mulrooney: Got it yeah I know this is a very dynamic situation, especially lately so.
Tim Mulrooney: And by the way that's what's in our that's what's in our outlook in our in our guide for the quarter Jim Yep.
Tim Mulrooney: Got it okay, maybe we could shift to growth here really quick.
Speaker Change: I know youre expecting 3% to 6% organic growth in the second quarter.
Speaker Change: What would that be excluding the equipment sales from last year.
Speaker Change: Oh for Drs, Ams that what youre, asking excluding equipment sales yeah yeah.
Speaker Change: Yes, so yes, we are.
Speaker Change: We're expecting so so last year just as a reminder, we had $88 million worth of Drs.
Speaker Change: Sales that were equipment sales, one time that we talked about.
Speaker Change: Where we left the quarter or a little over 20%.
Speaker Change: In Q1, Q2, we'll have a little bit I've made a couple of points of headwind on an organic growth basis, but on a dollar basis. We expect to continue the same kind of trajectory, Tim and don't expect it to be outside of our guide or even kind of the recent continued efforts.
Speaker Change: Okay got it that's good news.
Speaker Change: One just sorry, just one clarification on that I mentioned in the prepared comments about <unk>.
Speaker Change: Ams Drs and little bit of the differences in maybe.
Speaker Change: The growth characteristics, where drs is usually.
Speaker Change: <unk>.
Speaker Change: Maybe smaller more gradual growth is more maybe more consistent where ams can be lumpy.
Speaker Change: Contracts might be bigger and in fact in the quarter we.
Speaker Change: We had a pretty good quarter not just on revenue, but on awards, we actually.
Speaker Change: We've got two new awards down in South East Asia.
Speaker Change: From from Bank ATM outsourcing agreements pretty significant one in the Philippines, one in Indonesia, those will come on likely in the second half into early Q1 next year, we're still Onboarding Sainsburys right now is as we as I mentioned, which is a significant undertaking that will provide a lot of.
Speaker Change: Support for the back half organic growth as well as several other large convenience store chains here in North America. They were also onboarding. So really good progress there the pipeline continues to grow and not only is the pipeline growing but the quality of the pipelines growing and what I mean by that is.
Speaker Change: More.
Speaker Change: Higher close rate more fidelity.
Speaker Change: Less let's say time dragging out in some of these deals and then on the DRA side very similar.
Speaker Change: As I look at the end of the first quarter.
Speaker Change: Drs worldwide device count was up 5% over the.
Speaker Change: December 31 year end rates, so making meaningful deployment improvements back in North America, we installed.
Speaker Change: A record number of devices.
Speaker Change: In our history in March and had really good momentum in April as well with with installs of our backlog. So it's a really good good momentum and then I'd just say the rest of the Drs portfolio.
Speaker Change: You can see our numbers good high penetration in Europe accelerating penetration in North America.
Speaker Change: But if you look at Latin America, and rest of World. We're also now starting to see.
Speaker Change: Pickup in growth there both.
Speaker Change: Mexico, Brazil, Chile. These are the big markets for US we do continue to see that and then also and as I mentioned in Indonesia on the Ams side, they're also doing well on the DRA side, we'd even.
Speaker Change: A nice agreement.
Speaker Change: With a smaller business of ours in the UAE. So we're really starting to see some some good trends for not just the conversions, but but really more of the <unk> customers. When you get into these emerging economies.
Speaker Change: That's really good color Mark, but I mean, my last question was going to be if you could remind us why you would expect your Ams drs business to be more resilient to macro softness maybe relative to the traditional <unk> business, but I think maybe you just answered it as the answer just that.
Speaker Change: <unk> opportunity is so significant is it just.
Speaker Change: The growth opportunity in the white space is so significant that you see growth there, regardless or is there something inherent.
Speaker Change: About the Drs Ams business model that lends itself to less cyclicality.
Tim Mulrooney: Yes, I'd say there is two things there Tim the first is absolutely the white space is much larger which means.
Tim Mulrooney: If the white spaces five X the existing.
Tim Mulrooney: Addressable market it could be down 50%, we still have a huge market to go to go catch so that is certainly part of it.
Speaker Change: Okay, it's not.
Speaker Change: It's not all easy business, our known customers. So we've got to develop new channels to market, which we're doing so that is occurring and it's providing obviously tailwind to growth even in a headwind of an economy. The other side of that though is also in our traditional <unk> business.
Speaker Change: The the revenues were more activity based more volume based and in fact ended up being.
Speaker Change: Much less or much less.
Speaker Change: Predictable in AR.
Speaker Change: From a month to month quarter to quarter. We are the <unk> agreements are largely subscription based service agreements that have longer term more and more.
Speaker Change: Distant revenues, they don't have much variability baked.
Speaker Change: Baked into transactions volumes our values.
Speaker Change: Got it thanks for all the color.
Tim Mulrooney: Yeah, great. Thanks, Tim.
Speaker Change: Our next question comes from Tobey Sommer with Truest. Please go ahead.
Tyler: Good afternoon. This is Tyler bearish on for Tobey.
Tyler: Markets were quite volatile post deal and can you just maybe describe some of the trends in the bgs second quarter to date.
Tyler: Yes sure.
Tyler: Certainly what we saw in Q1 was was very unusual.
Tyler: The tariff.
Tyler: Scare or tariff concerns around.
Tyler: Being able to get precious metals into North America is certainly drove a lot of shipment volume.
Tyler: Volatility in the markets, but a lot of shipment volumes for us and you saw that in our rest of world segment as they really had a great quarter fulfilling customer needs.
Tyler: Keith.
Keith: What we thought might be keep functions markets functioning around precious metals, particularly in North America.
Tyler: We don't see that.
Tyler: That same level of activity in April and in fact, we would say it's really been slowing throughout April into.
Tyler: Into the rest of the quarter and probably would look more alike.
Tyler: What we would have seen within the other.
Tyler: Regions around mid single digit organic growth I think our guide right now reflects that current trend.
Tyler: Baked into that and we think we feel pretty good about where that is.
Tyler: Yeah.
Tyler: It makes sense.
Tyler: The Mes Drs mix is quite wide across different segments can you just talk about some of the initiatives you could take to maybe raise that mix in Latin America, and the rest of the world.
Tyler: Sure.
Tyler: In fact, we are working through that now I think part of what's happening in Latin America and rest of World is.
Tyler: They already.
Tyler: We have pretty significant businesses there already that have been.
Tyler: Rich cash are.
Tyler: Cash heavy economies, let's say and in many cases some of our early Drs solutions may not have been able to accommodate that we've expanded our product portfolio major investments with our product management organization working with suppliers to develop solutions that are capable of dealing with much higher cash <unk>.
Tyler: <unk> and we see those.
Tyler: Those solutions resonating with some of our existing customers on the new customers. It's actually been the other way it's required us to really become more.
Tyler: Maybe more nimble and lower our cost to serve with maybe smaller.
Tyler: Solution smaller devices that are able to really.
Tyler: Attack that segment of the market that is much smaller retailers not large store footprints that you might see in our traditional business. So as we do that obviously, we've had to develop not only our own sales teams capabilities, but also developing other channel partners whether that's.
Tyler: Partnering with banks and other financial services companies.
Tyler: Or even other.
Tyler: Let's say.
Tyler: Retail.
Tyler: Pos payments types of companies to help us get access to those markets.
Tyler: Okay.
Tyler: You can see in the growth rates to Tyler I mean, the both rest of World then.
Tyler: Latam grew by.
Tyler: 25% Ams Drs.
Tyler: In the quarter so.
Tyler: Thank you.
Tyler: Thank you.
Tyler: This concludes our question and answer session.
Speaker Change: I would like to turn the conference back over to Mark Eubanks for any closing remarks.
Mark Eubanks: Yes. Thank you all for joining us. This afternoon. We appreciate your continued interest in Brink's and look forward to speaking to you soon and maybe seeing you in person when we hear on the road.
Speaker Change: Have a great night.
Speaker Change: Yeah.
Speaker Change: The conference has now concluded.
Speaker Change: Thank you for attending today's presentation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].