Q3 2025 Brinks Co Earnings Call
Speaker #3: Good morning and welcome to the bank's third quarter 2020 earnings presentation . All participants will be in listen only mode . Should you need assistance , please signal a conference specialist by pressing the star key .
Speaker #3: Then zero on your telephone keypad . After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star then one on your telephone keypad .
Speaker #3: To withdraw your question , please press star . Then two . Please note this event is being recorded . This call and the Q&A session will contain forward looking statements .
Speaker #3: Actual results could differ materially from projected or estimated results . Information regarding factors that could cause such differences are available in today's press release and presentation , and in the company's SEC filings .
Speaker #3: The information presented and discussed on this call is representative of . Today only . Brinks Co assumes no obligation to update any forward looking statements .
Speaker #3: The call is copyrighted and may not be used without written permission from breaks . I will now turn turn it over to your host , Jesse Jenkins Vice President of Investor Relations , Mr. Jenkins , you may begin .
Speaker #4: Thanks , and good morning . Here with me today are CEO Mark Eubanks and CFO Kurt McMaken . This morning , reported third quarter 2020 results on a GAAP , non-GAAP and constant currency basis .
Speaker #4: 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 #4: We believe these measures allow investors to better compare performance over time and to evaluate our performance using the same metrics as management . Reconciliations of non-GAAP results to their most comparable GAAP results are provided in the press release .
Speaker #4: The appendix of the presentation and our 8-K filings , all of which can be found on our website . I will now turn the call over to Brinks Co CEO Mark Eubanks .
Speaker #5: Thanks , Jesse . And good morning , everyone . Starting on slide three , brings delivered another solid quarter of mid-single digit organic revenue growth .
Speaker #5: The 5% total company organic growth included an acceleration from Q2 to 19% for ATM managed services and digital retail solutions , or AMS doctors .
Speaker #5: As we continue to make progress expanding into large and growing markets, for the second consecutive quarter, we delivered record Q3 EBITDA and operating profit margins driven by strong productivity.
Speaker #5: The benefits of AMS doctors revenue mix and continued pricing discipline . Third quarter EBITDA margins were 19% , up 180 basis points from the prior year .
Speaker #5: The improvement was highlighted by 320 basis points of expansion in North America . As we make progress driving a balanced agenda around growth in AMS doctors and cost productivity with the drinks business system with AMS doctors now accounting for 28% of total revenue in the quarter and more productivity initiatives underway .
Speaker #5: We are expecting continued margin progress going forward . Cash generation also continues to improve in Q3 , we delivered $175 million of free cash flow a year over year increase of 30% .
Speaker #5: We continue to shorten our cash cycle and deliver capital efficiency across our asset base with vehicle counts down again , this quarter and Dsos improved by five days .
Speaker #5: Looking at the quarter in total , we delivered on our guidance commitments with performance exceeding the midpoint of our communicated ranges for the quarter .
Speaker #5: Organic growth remains healthy in the mid-single digits , with AMS doctors accelerating quarter over quarter . We continue to make steady progress , improving profitability as we drive lasting structural changes to the way we operate on both the front lines and in the back office , supported by this strong momentum , we are passing through our Q3 midpoint outperformance to the full year and affirming our previously increased full year framework .
Speaker #5: Kurt will have more details on the guidance at the end of the presentation . Turning to slide four . You can see how our year to date performance supports our value creation strategy .
Speaker #5: First , we're focused on delivering organic growth primarily from our higher margin subscription based services of AMS and doctors . We are tracking in line with our full year framework , with organic growth of 5% for the total company and 18% AMS doctors year to date .
Speaker #5: The revenue growth and the execution of productivity enhancements have driven EBITDA margin expansion of 40 basis points year to date , with acceleration in the second half .
Speaker #5: For the second consecutive quarter , we've achieved record EBITDA margins in both North America and Europe . Free cash flow conversion is also improving .
Speaker #5: Year to date free cash flow is increased 78% and trailing 12 month conversion has improved to 50% of adjusted EBITDA , supported by growth in AMS doctors .
Speaker #5: Acceptance in the marketplace . We are making structural changes in the business that we believe will continue to pay dividends for years to come .
Speaker #5: Our cash cycle continues to shorten with year to date DSO improvement of five days . We are also improving capital efficiency as we reduce our CapEx needs and leverage our network more efficiently .
Speaker #5: And finally , we are focused on maximizing value for our shareholders through disciplined capital allocation . This year , capital has primarily been allocated to our share repurchase program , where we've utilized $154 million year to date to repurchase approximately 1.7 million shares at roughly $89 per share .
Speaker #5: Even with the share repurchases , we have moved our net debt to EBITDA leverage ratio to 2.9 times in the third quarter . Within our targeted range of 2 to 3 times .
Speaker #5: We expect to stay within the range through year end and remain on track to allocate at least 50% of our total free cash flow towards shareholder returns in the full year .
Speaker #5: So far , we have made meaningful progress against these value creation drivers . This year . Turning to slide five . You can see the progression of our revenue mix towards AMS and doctors over the last several years .
Speaker #5: As a reminder , we split our business into two main customer offerings cash and valuables management , or CVM and AMS doctors . Our CVM business includes the traditional parts of the business like point to point cash , logistics , money processing and our international shipping business .
Speaker #5: We call Global Services . While AMS includes revenue from our ATM managed services business as well as digital retail solutions with full year organic growth in AMS , doctors trending towards the high end of our mid to high teens growth framework , we are increasing our mix expectations to between 27 and 28% of total revenue by year end .
Speaker #5: While AMS doctors is now 27% of our total revenue on a trailing 12 month basis , we are still in the early stages of penetrating this large and growing total addressable market .
Speaker #5: As we've previously discussed , Unvented retail locations and ATM outsourcing opportunities represent a 2 to 3 times market expansion opportunity . Looking closer at each of the customer offerings , organic growth in CVM remained consistent with our expectations .
Speaker #5: Growth was driven by good pricing discipline and global services performing similarly to the second quarter . As a reminder , CVM Organic growth includes the conversion of existing customers over to AMS doctors , AMS doctors accelerated from 16% organic growth in Q2 to 19% this quarter .
Speaker #5: Acceleration occurred in both AMS and doctors individually , and was balanced across geographic segments . In doctors , our pipelines remain robust and we see consistent strength in verticals like pharmacies , gas stations .
Speaker #5: C-stores , quick serve restaurants , as well as fashion and jewelry verticals . In AMS , we have completed the onboarding of several key accounts and are at full revenue run rates with Cuti and Racetrack here in North America and Sainsbury's in Europe , with several additional customers set to be onboarded in the fourth quarter .
Speaker #5: In Latium and the Middle East . Turning to slide six , I thought it'd be helpful to show a map of our current AMS footprint .
Speaker #5: The highlighted 51 countries represent Brinks Co presence across the globe , with those in light blue representing countries with existing AMS agreements . We've also added a select few customer logos to illustrate our presence in these markets .
Speaker #5: This map had almost no AMS presence less than four years ago , leveraging our existing customer relationships with banks and retailers , as well as our acquired and organically built capabilities in AMS , we've been able to expand this market to what it is today .
Speaker #5: As we've previously said , this is just the beginning . While there are some impressive customers already in our portfolio , we are still in the early stages of this opportunity as we consistently deliver reliable service with a total lower cost of ownership for customers .
Speaker #5: We see penetration opportunities both in the countries we already serve , as well as the other geographies where we still have a presence .
Speaker #5: The current penetration rate for ATM outsourcing is still low , as we've previously discussed , there is an opportunity for the current addressable market to expand by 2 to 3 times as more financial institutions make the shift to this win win value proposition .
Speaker #5: This growing opportunity , coupled with an equally compelling retail backdrop in doctors , provides confidence in our strategy for years to come . On slide seven , I'll provide a quick update on our margin improvement journey in the Key North America segment .
Speaker #5: The margin progression begins on the top line , where we've improved the revenue quality shifting to higher margin . AMS doctors on a trailing 12 month basis , AMS doctors now represents 31% of revenue in this segment since 2022 .
Speaker #5: This business line has grown by 33% , with strong conversion rates and steady new customer growth . Driving continued market penetration . Other areas of margin enhancement include our pricing discipline and the deployment of waste elimination initiatives through the Brinks Co system .
Speaker #5: These improvements are coming through the PNL with less direct labor expenses and lower fuel consumption . Even with the healthy top line growth , we are seeing consistent vehicle and employee count reductions and our safety performance continues to improve .
Speaker #5: To record levels . In fact , since 2023 , our total recordable incident rate or IR , is down 33% . There are many studies that indicate positive correlation between higher safety records and improved shareholder returns .
Speaker #5: These returns happened because a safer work environment enables higher employee engagement , resulting in higher labor productivity , better service quality results in higher customer satisfaction , which all ultimately leads to higher growth and profits .
Speaker #5: As we continue to shift to AMS doctors and increased productivity , we are targeting to be at least 20% EBITDA margin in this segment over the mid-term .
Speaker #5: Before I hand it over to Kurt to go through the details of the quarter , I want to thank our team for executing against our strategy .
Speaker #5: We delivered another solid quarter while meeting our commitments and advancing our strategy growth in the AMS . Doctors business lines accelerated our profit margins , expanded at record highs , and our cash generation continues to improve , supported by large and growing markets .
Speaker #5: Ample productivity opportunities , and consistent execution . I remain confident we have the right team and strategy in place . I'm excited for the future and encouraged about how far we've come .
Speaker #5: And with that , I'll hand it to Kurt to discuss the financials and I'll come back for Q&A . Kurt .
Speaker #6: Thanks , Mark . I'll begin on slide nine with a look at the quarter revenue of over $1.3 billion , increased 6% , with 5% organic growth and a 1% tailwind from foreign currency .
Speaker #6: Adjusted EBITDA was up 17% to 253 million , and operating profit was up 24% . Record profit margins slightly ahead of our expectations , were driven by productivity .
Speaker #6: AMS mix benefits and pricing discipline . Earnings per share of $2.08 was up 28% , driven by strong profit growth and the benefits of our share repurchase program .
Speaker #6: As Mark mentioned earlier , free cash flow was strong this quarter with improvement in the cash cycle on accounts receivable , accounts payable and improved capital efficiency .
Speaker #6: As we continue to shift our business to less capital intensive AMS doctors offerings . Trailing 12 month free cash flow is up over 200 million , with conversion of 50% .
Speaker #6: We've been more balanced in our pacing of cash generation compared to the prior year , and are still expecting to deliver our full year framework target of between 40 and 45% conversion on slide ten .
Speaker #6: Organic revenue growth was 59 million , with most of the growth coming from higher margin subscription based AMS and DRS . It's important to note that CVM growth was and will continue to reflect AMS and customer conversions in Q3 .
Speaker #6: We estimate this to be roughly 2 to 3 points of growth in CVM . Moving to the right side of the page . Organic revenue growth of 59 million became EBITDA .
Speaker #6: Growth of 34 million for an incremental margin of 58% . Currency changes increased revenue by 1% or $13 million , with favorability in the lower margin .
Speaker #6: Euro and British pound , partially offset by currency devaluation from the Argentine peso . The FX flow through to EBITDA was approximately 7.5% due to the geographic mix of currency .
Speaker #6: Despite this , we are pleased with our performance in the quarter , with our total incremental profit conversion of 47% . Moving to slide 11 .
Speaker #6: Starting on the left, operating profit was up $37 million to $188 million, with a record margin of 14.1% on strong productivity and line of business revenue mix.
Speaker #6: Interest expense was flat year over year at 63 million , which is also roughly in line with our expectation for Q4 . Tax expense was 35 million in the quarter , representing an effective tax rate of just under 28% , slightly lower than the Q2 rate .
Speaker #6: Income from continuing operations was $88 million. Walking back up to adjusted EBITDA, depreciation and amortization was $62 million, primarily reflecting increased depreciation from growth in AMS and DRS equipment.
Speaker #6: Stock Comp and other was 6 million in the quarter and we still expect a slight decrease to stock based compensation over the full year to below $30 million in total .
Speaker #6: Third quarter adjusted EBITDA of 253 million and margin of 19% was above the midpoint of our guidance for the quarter , with strong execution on AMS growth and productivity .
Speaker #6: Let's move to slide 12 to discuss our capital allocation framework . We have a healthy menu of organic opex investments that we are making to drive AMS and ERS growth .
Speaker #6: These high return investments remain our first call for capital . Next , we reduced leverage at quarter end to 2.9 times net debt to EBITDA within our targeted range of 2 to 3 times and slightly ahead of our expectations for the quarter .
Speaker #6: Our main use of capital this year continues to be shareholder returns , primarily through our share repurchase program . We have repurchased approximately 1.7 million shares year to date at an average price of just over $89 per share .
Speaker #6: We plan to remain active through the end of the year , and we remain on track to return at least 50% of our full year free cash flow to shareholders .
Speaker #6: We have been pleased with the results of our share repurchase program , which delivered EPs accretion of $0.08 in the quarter and $0.33 year to date .
Speaker #6: And finally , on M&A , our posture on deals is consistent . We have a full pipeline and continue to explore accretive opportunities that have a strong strategic fit , attractive returns , and align with our broader capital allocation framework .
Speaker #6: Potential deals would most likely help us further penetrate the large and growing addressable AMS and doctors markets . An example of this was the deal we discussed last quarter .
Speaker #6: By following this framework, we are committed to allocating capital in ways that will compound cash flow in the future and ultimately enhance long-term shareholder value.
Speaker #6: Moving to the guidance on slide 13 , in the fourth quarter , we expect revenue of 1.355 billion at the midpoint of our range .
Speaker #6: Reflecting organic growth in the mid-single digits . Using current spot rates , FX is expected to be a year on year tailwind of 1 to 2 points .
Speaker #6: The organic revenue guidance assumes AMS growth at the high end of our framework . Adjusted EBITDA is expected to be between 267 and $287 million , and EPs is expected to be between $2.28 and $2.68 , next to this Q4 guidance , you can see what this implies for the full year relative to our full year framework .
Speaker #6: On the right side of the slide , our organic growth framework remains consistent from the beginning of the year . We are still expecting to deliver mid-single digit total organic growth , supported by mid to high teens organic growth for AMS dress EBITDA margins are expected to expand between 30 and 50 basis points , with conversion of EBITDA to free cash flow of between 40 and 45% .
Speaker #6: We remain on track to return more than half of that free cash flow to our shareholders through our share repurchase plan and dividend , supported by the growth and margin expansion we have already seen year to date .
Speaker #6: We are confident in our outlook for the balance of the year, and with that, we're happy to now take your questions.
Speaker #6: Operator please open the line .
Speaker #3: We will now begin the question and answer session . To ask a question , you may press star , then one on your telephone keypad .
Speaker #3: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your question has been addressed and you would like to withdraw it , please press star then two .
Speaker #3: At this time we will pause momentarily to assemble our roster . Our first question today comes from George Tong of Goldman Sachs . Please go ahead .
Speaker #7: Hi . Thanks . Good morning . You increased your full year growth outlook for AMS to be in the high teens . Can you elaborate on the client traction you're seeing in both AMS and doctors that drove you to to increase your outlook ?
Speaker #5: Sure . Good morning . George , this is Mark . Yeah , we we had a good quarter this year . This quarter not just on sales .
Speaker #5: As you can see , the progression continue , but also in the pipeline . And that gives us good visibility into Q4 . And really into first half of next year .
Speaker #5: We're seeing it both in AMS and doctors , both are growing equally on their in their own right . And we'll continue to penetrate across all regions .
Speaker #5: I think you can see in the in the deck this quarter , we showed just sort of a brief overview of our AMS footprint and we're certainly not fully penetrated in those markets .
Speaker #5: But as you can see , we've got green shoots all over the globe across almost all of our footprint today with with more opportunities to go on , the doctors side , that pipeline continues to be very healthy .
Speaker #5: And one of the things that we talked about last quarter was the amount of conversions from city and retail to doctors . Last quarter , we were about about a quarter of our signings were in growth , were coming from conversions of our city customers .
Speaker #5: That is actually accelerated in the Q3 . About a third of our global doctors signings are coming from from traditional customers . So we like the progress that not only we're seeing with our existing customer base , but also we continue to tap the markets as we think about sort of going around the globe , though this , I'd say this growth is becoming more even as we're seeing good progress both in North America as well as the other three regions .
Speaker #5: And you can see our even our penetration in Europe is relatively high compared to the other regions . We continue to see good growth .
Speaker #5: There . We'll we'll see Latin America and rest of the world continue to pick up pace as well , particularly when you look in Latin America .
Speaker #5: Both Brazil and Mexico continue to to really perform for us , that's that's something that , as you can see , it's one of our least penetrated regions .
Speaker #5: But has some of the biggest opportunities , very cash intensive economies , large ATM networks , large bank footprints , but also a very , very large , small retail distribution as well for the Unvented market .
Speaker #5: This is where we see this 2 to 3 x tam continuing to to be an opportunity into the future .
Speaker #7: Got it . That's very helpful . And then turning to your CVM business , the revenue performance relatively flat organically in the quarter .
Speaker #7: And it slowed a bit from about 1% growth in the in the prior quarter . Can you talk more about trends you're seeing here and factors that can either drive a re-acceleration in CVM growth or perhaps further moderation in organic performance ?
Speaker #5: Sure . Certainly . The big thing there , as we continue to convert , as I mentioned , to AMS doctors accelerating from 25% to to 30 , basically 33% .
Speaker #5: That's that probably accounted for 2 to 3 points of organic headwind on the CVM business . And and the only other piece of the CVM business really is our global services business , which really continued to perform in line with Q2 globally , which is sort of mid-single digits .
Speaker #7: Got it . Very helpful . Thank you .
Speaker #5: Great . Thanks , George .
Speaker #3: Our next question comes from Tim Mulrooney of William Blair . Please go ahead .
Speaker #8: Mark Kirk , good morning .
Speaker #5: Hey good morning Tim .
Speaker #6: Tim .
Speaker #8: Yeah , thanks for taking my questions . Just first of all , on AMS doctors , I'm wondering if you could talk about some of the things that you're doing internally to drive continued growth in that business , which is growing faster than what we were expecting .
Speaker #8: This year . And I know you're winning new programs , but but any details you could provide ? I guess without getting into competitive issues around maybe like , are you are you adding additional channels ?
Speaker #8: Mark any like adjustments to incentives either in the field or at the corporate side . Like what's really helping drive this next leg of growth , I guess , is what I'm asking .
Speaker #8: .
Speaker #5: Yeah , good . Good question . Tim . I you know , we've talked briefly around this historically about how we changed our incentive comp plan , and we did that really two years ago .
Speaker #5: We changed our incentive comp plan for our maybe top , let's say , 100 people in the company that had a big part of their annual incentive plan were tied to doctors .
Speaker #5: AMS revenue growth . We've actually expanded that now to , you know , more than a thousand people in the company , basically anyone who's got a management incentive bonus is tied to AMS doctors growth rate .
Speaker #5: Actually , we haven't weighted higher than total revenue growth to make sure that everyone understands the focus . I think that's sort of at the at the top level .
Speaker #5: I think that's what's helping us in our leadership team across the globe . Really execute the strategy that that we want , which is , you know , again , more AMS doctors , more flexible network , leveraging kind of the full capacity , using technology to be able to do that on the on the ground , though , it's also important that our sales teams have a similar incentives .
Speaker #5: And so we think about incentive comp plan for local sales people . You know that that has been , let's say traditionally for Brinks Co , you know , a very local decision .
Speaker #5: And something that local management was sort of left to do . We've we've started to globally align those sales incentive plans across the globe to focus predominantly on AMS doctors and helping our customers through this journey from traditional sit , whether it's the banking or retail segments to move to this more managed services environment .
Speaker #5: So that's been helping us make progress . This year . We're going to take another step there and further align more specificity across all of our incentive comp plans for our sales teams globally to focus on those two things .
Speaker #5: In fact , we have some some leadership , local leadership that has taken this even to a to a higher level . We have some regions where our leadership team has made the decision to either discount commission plans or not even provide commission plans for salespeople that aren't selling doctors .
Speaker #5: AMS that might be selling traditional services . And again , not being punitive , but more leading our teams to help lead our customers to this value accretive value proposition for both customers and for Brinks Co .
Speaker #5: I think the last thing you asked about was channels . This is an area that is a big change for Brinks Co . Historically , we've sold direct with all of our salespeople being direct employees , selling directly to financial institutions , and retailers .
Speaker #5: And so forth . We've actually begun to to evolve that , to work with channel partners . And this is , you know , evolving in all regions .
Speaker #5: And whether this is a commission sales force or it's a value added reseller or another channel partner , we have white label agreements with , with some banks to sell doctors to the retail customers .
Speaker #5: So we really are trying to evolve this process to , again , help everyone in the channel make the cash ecosystem more efficient and feel a lot more inclusive in the rest of the payments ecosystem , whether that's at POS or in the , you know , cash distribution and deposit networks .
Speaker #8: That's good . Good detail . Thanks for for outlining the incentives and the channels helping drive that good growth . The other thing I wanted to ask you about was the North America margins .
Speaker #8: I mean , just incredible this quarter . I mean , you're up 300 plus bips . I wonder how to think about that .
Speaker #8: I guess from a longer-term perspective, like what the margin potential is in that business, because I see some of your other segments and where they are.
Speaker #8: But I don't actually know if that's comparable because, you know, Latin America has some pretty different dynamics, and so does the rest of the world with the BGS business.
Speaker #8: So how how would you have investors ? How would you frame for investors the margin potential that business in North America ? I would ask incremental margins , because that's always an easy way for analysts to kind of level set .
Speaker #8: But you're capitalizing the business . So I don't even know if that's the right way to think about it . Incremental . So I'll just I'll leave it there .
Speaker #8: But you know , curious how to frame the the margin either from a medium term or longer term perspective in North America , given the momentum that you're seeing right now ?
Speaker #5: Sure . That's a good question , Tim . I would say if you think look at the margin progression , let's just say Q3 .
Speaker #5: First of all , yeah , it prints 370 Bips . If you remember , we had a a 330 Bips if you remember , we had a loss last year during this time frame .
Speaker #5: That makes it a little bit of a an easier comp , but still great performance , you know , from a margin expansion perspective , particularly when you look across the years .
Speaker #5: So if you look at this chart , you can see sort of steady upward progression in the business . And this is driven by really three big things .
Speaker #5: The first and foremost has been our AMS doctors mix improvement across the business . That's certainly been helpful . There's a creative margins and certainly allow us , as you mentioned , to be the business and make the business , you know , more dynamic .
Speaker #5: The second has been a more disciplined pricing posture that we've taken that maybe historically , we we had not and we've been very disciplined since , you know , since coming out of the pandemic , frankly , to , to to make sure that that we're not only covering our costs , but but also improving our margins and , and getting the right value , you know , with customers on both sides .
Speaker #5: And then lastly , really has been our operational execution . And I have to applaud our North America team that really has been working hard and showing real improvements operationally , both in service quality , service timeliness , and then , of course , I mentioned safety .
Speaker #5: And anytime you see safety improvements , thats an indicative measure of how well we're running the business or how well our business is being run .
Speaker #5: Let's say . And we think that that that's a good , good one for investors to understand that we've got a good foundation to continue to go forward .
Speaker #5: Our incremental margins are going to be anywhere from , you know , 20 to 30% . Tim . That's kind of how we think about it going forward .
Speaker #5: But there's not really a we don't think there's really an artificial ceiling here in front of us . And we think there's still more room to go .
Speaker #5: I mentioned the 20% EBITDA margins in the mid-term . To me , that's just an interim checkpoint of where we want to take the business , because if you you know this and it's not without you know , it's in the public domain .
Speaker #5: You know, we actually have a gap in North America with one of our other traditional competitors, which gives me lots of confidence that we've still got room to go and still run the business better.
Speaker #5: Much less with this new business model on top . That is capitalized . That's more flexible , more dynamic , and more value accretive for customers .
Speaker #8: Got it . Thanks , Mark .
Speaker #5: Great . Thanks , Tim .
Speaker #3: Our next question comes from Tobi Summer of Truist . Please go ahead .
Speaker #9: Thanks . Wanted to ask about cash conversion . What are your thoughts on mid-term goals for free cash conversion from EBITDA and as part of your answer , could you describe the DSO Improvement drivers ?
Speaker #9: Maybe mix shift versus other more discrete actions that you've undertaken ?
Speaker #6: Yeah . Hey , Tobi , it's Kurt . Why don't I take this one , just kind of walk through it a little bit .
Speaker #6: First of all , you know , we feel good about our framework in terms of conversion 40 to 45% , not only in the near term , but , you know , going forward .
Speaker #6: We think that's a good thing to look towards the , you know , the the reality is we're we've been working hard on making sure that we're creating cash throughout the year .
Speaker #6: And focusing on all aspects of that generation throughout the year . So specifically to your DSO question , there's a couple of things to really , I think , focus in on .
Speaker #6: One is the mix of the business where if you look at AMS doctors , those are both subscription based business models and they absolutely have a very favorable DSO profile for us .
Speaker #6: So as we continue to grow that that that is a , a real positive for our DSO . Improvement . We were better by five days .
Speaker #6: As we mentioned . I mean , the other is again we this gets back to a comment Mark made on incentives . You know , we really have a broad based incentive now across our , our leadership base focusing on free cash flow delivery .
Speaker #6: And so therefore that that delivery really , really is spread out around the world . And people focused on it . So that's number two .
Speaker #6: The third I'd say is just , you know , maybe really work in collections harder than . Traditionally has been done , just , you know , getting in and grinding through it , I think is also a factor .
Speaker #6: The other thing I'd mention too , you didn't mention accounts payable DPO , but that has also been a real focus for us .
Speaker #6: You know , we were better improved by four days at the end of the third quarter as well . So that's that's the .
Speaker #6: Second piece . And then finally I'd say on the CapEx and the capital intensity side of things , you know , the AMS and doctors is less capital intensive .
Speaker #6: Business . We've been capitalizing , you , taking trucks out for for example , Mark has mentioned that in the past . So all these levers are really working towards the flow generation conversion factor , supporting it .
Speaker #9: Thanks . Geographic growth was pretty well balanced organically in the quarter . On a year over year basis . What what geos may have higher or lower trajectories going forward .
Speaker #9: Thanks . Geographic growth was
Speaker #9: .
Speaker #5: Yeah , sure . I , in fact , I don't I don't think that's the case , Tobi . I think we've free cash got opportunities to continue at this pace in all regions .
Speaker #5: Of course , there's going to be opportunities up and down . You know , you think about the rest of the world segment , particularly given the fact that half of it is BGS .
Speaker #5: There could , you know , volatility obviously , in that part of the world , you know , makes a big difference . And so that's why you saw , you know , 9% in Q1 and sort of , you know , mid-single digits .
Speaker #5: You know , moderating hearing two and three . So maybe maybe that's one area . But but to be honest , we still feel like we've got , you know , good runway with all of the regions , particularly when you consider the unvented retail markets in one vein .
Speaker #5: And the second is the installed base of the banks. And so, as our outlook, we think about the outlook for AMS.
Speaker #5: And we think about bank outsourcing . There's no region that is over penetrated or , you know , has already matured in that way .
Speaker #5: And we think our ability to capture that when those markets are turned up over the next few years , we think there's good opportunity again in a big Tam over the next , you know , for , well , for or good organic growth across all four regions , you know , I think we think about sort of looking forward into the year , maybe in the shorter term , there's nothing we've seen , you know , from a customer in perspective that would change our mind on the organic outlook .
Speaker #5: We think this framework , you know , obviously we'll we'll put our guidance out in at the after Q4 . But there's nothing that says we wouldn't be able to continue this same framework of mid-single digit organic growth is mid to high teens AMS doctors , 30 to 50 Bips of EBITDA margin .
Speaker #5: And , you know , just thinking about what's happened this year and your relative to the to FX and H1 , we had a big headwind , and a slight tailwind in H2 .
Speaker #5: Probably going to see something similar . If you look forward into 21 , you know , a little more of a benefit early in the year and H1 .
Speaker #5: And then obviously not much benefit if you snap today's snap the line on today's FX rates . You know , in H2 . So we feel like we've got a pretty good setup for next year .
Speaker #5: And again healthy pipelines . As I mentioned , both in AMS doctors that continue to accelerate as we shift our incentives , as we improve our execution , as we build out more product offerings for our customers , and then ultimately , you know , how we execute in the field that that continues to improve and get better .
Speaker #5: And , you know , just expanding with more channel partners and more at bats , with more customers is just going to fuel this opportunity .
Speaker #5: So, yeah, nothing that I would say would slow down the organic opportunity. Kurt, anything maybe about 26 or anything else?
Speaker #6: I just want to be clear on the FX. Tobi, I think the mark's comment there, I mean, if you snap the line today using rates today, you would expect to see a slight tailwind in 2026.
Speaker #6: And for the year . And then more weighted towards the first half is what Mark was just to be clear on that . But the other thing I'd say is , is that , you know , as we look at and Mark was talking about opportunities , if we think about how we're really trying to run the business , you definitely continue to see we see opportunities in the area of getting a lot more efficient in our SG&A area .
Speaker #6: So , you know , you know , we're continuing to work at this , and we'll , you know , continue to make progress .
Speaker #6: But as Mark has described how we're running the business differently than how we have in the past , we expect that we're going to continue to really find efficiencies to support our margin expansion .
Speaker #5: Yeah , I think this is part of just globalizing the business . Toby . And , you know , as you think about our strategy , it's it's multi-pronged and certainly it's it's around growth and customer loyalty .
Speaker #5: It's around innovation around technology and customer offerings . Operational excellence and people . But part and parcel to all of that is sort of how we run the business day to day in the back office as well , whether that's across the big functions and finance .
Speaker #5: It , HR , sourcing , procurement , real estate , those are all things that historically for 165 years , the company has run sort of independently and , you know , disparate around the world .
Speaker #5: We've been evolving that we certainly have a strategy around doing more things similar . And we think there's still more back office sort of fixed cost productivity left in the business that we plan to start getting after in , you know , more so in 26 and beyond .
Speaker #5: So , you know , there's yes there's good organic growth . Yes , there's good product mix . But we think we've still got , you know , some some good productivity left in sort of the fixed base of the business that that we can wring out .
Speaker #9: Thanks . I'd like to sneak one more in . And just because I'm not asking about AMC doesn't mean I don't like the growth , the bank consolidation .
Speaker #9: What's your view on it here? On a net basis, I'm sure there are puts and takes on either side, but approvals from regulators are the fastest they've been since 1990, at four months in some deals that have started to be announced.
Speaker #9: So, if this ends up being something that lasts for a few years, how should investors think about that in its implications for your business?
Speaker #5: Yeah , good question Tobi . Something we obviously are watching very closely . And you know , these most recent announcements have certainly been in our customer base .
Speaker #5: And so trying to see where those things land , we think with our AMS solutions this likely becomes an opportunity just given the fact that we have the we have the ability to first and foremost provide an offering that is unique .
Speaker #5: We think in the marketplace it's not it's not commoditized . And we have a unique offering and a unique value proposition to do that .
Speaker #5: The second is for those consolidators we we provide them an opportunity to create real cost synergy as well as they think about streamlining their network , their branch footprint , their infrastructure to again , help through that synergy to sort of wring out the cost and productivity that that exists .
Speaker #5: And we've talked about this previously about AMS in general . The you know , we have seen earlier in early years , the last few years , we've seen more opportunities outside of North America around AMS , just given the fact that the banking footprints were already consolidated and that this an ATM network , productivity opportunity really was pretty high on the list of , you know , of improving profit margins .
Speaker #5: Whereas in the US , more bank consolidation and sort of redundant public company costs were or infrastructure and compliance costs were more of the the productivity lever , we actually are starting to see the AMS discussions .
Speaker #5: You know , more frequently in North America . I don't know if the two things are tied to this consolidation or or not , but we certainly think there's going to be opportunities for us .
Speaker #5: You know , you know , there I think in the short term , there is certainly footprint consolidations that would happen to our traditional business , potentially , where , you know , if a bank buys another bank , they've got two branches on the same corner .
Speaker #5: You know , maybe we lose a location there that certainly could happen . But , you know , as we think we're well back up , we are thinking about this strategically and making sure that we're also partnered with the right .
Speaker #5: Consolidators and and making sure that we're serving those , being consolidated also in a healthy way that allows us to maintain those customer relationships in the event there is a merger .
Speaker #5: So , you know , I'd say net net , Tobi , we think this probably is good just based on the AMS opportunity long term .
Speaker #9: Thank you very much .
Speaker #5: Sure . Great . Well , listen , thanks for joining us everyone . We appreciate your continued interest in Brinks Co . And we look forward to speaking with you all soon .
Speaker #5: Whether on the phone or on the road . Have a great day .