Q2 2019 Earnings Call
Well Imperial capital. Please go ahead.
Thank you.
I'm wondering if you talk about give a little bit more specific about the investments you are making.
In.
Going forward in cuts in technology and customer facing technologies and in improving some of the smaller.
Before the call SMB types of types of technologies.
I'm thinking of obviously comp you say things like that that would be that would be incremental to not just to the business, but to your ability to get your brand out there more.
Yeah, It's a great question and the real answer Jeff is I'll talk a little bit more what our strategy and our objective is but not necessarily specifics on it we're not prepared at this stage to talk about the specifics around that but you're exactly right. If you will in the way that you phrase the question as to what our objectives are another objective is to use technology. So that we end up with is a way to provide a complete solution that is more complete if you will versus what we have today or is out there today and be able to reach more customers and provide better value to our customers. As you know, we've really released our app, which is to bring SAP. It's called the 24, seven App, which allows customers to review where.
There were their services are that we provide to them on a real time basis.
Which is tied together in many countries with our track and trace technology or around that.
The VI acquisition that we spoke to that we just completed allows us to provide more of that especially in the cases, where the larger.
Retail operations, both on a branch and buys service basis as well as on an enterprise basis and all the way from.
The Pos system back through then link to our system and the technologies related to around that that provides in a complete view to the customer. So this is part of putting the pieces together anywhere from like you're suggesting that small customer with our technology is we'll be integrating to the larger customer on a total by store enterprise wide basis.
And all the way from the POS tail, if you will all the way through our operations to evolve the money processing to the vol. So that's the direction and we think that is adding greater value and providing the opportunity to provide that greater value to a wide variety of customers that we reach today as well as other customers that are on vendor or that we are the industry doesn't reach today. That's our challenge that's our objective and stay tune as we do more of this of development work and launch later this year targeting for benefits starting next year.
Okay.
Thank you.
I know you don't want to get into the specifics of the candidates business, but I'm thinking that since a portion of that is going to go into the.
Facilitated by global services and for a number of years global services was flat or down slightly because of well how much how many times and how many.
Other types of high end goods were being transported I'm wondering if you could speak a little bit too.
What you see as the role of global services and the value proposition that.
That may have been tarnished, but the fact that the global services really wasn't growing for a while.
What can you do doing increase the.
The use of global services since it's a high margin business for you.
So so let me Jeff couple of things Global services did grow last year your corrected from year to date year, we do see swings in the diamond and jewelry business and if there is not a.
Theres too much stability throughout the globe and precious metals and so forth. They don't grow as much as we do see those swings bgs did grow last year, So I'm not sure I would.
Painted as dire as you did.
On the other side of the the Bgs is a component of our overall offering that I think we're uniquely positioned to blend together with our cash management services.
Really nobody else I think in the industry can for the Canada business and particularly as you look at something like what we do with our partner in Canada.
And that is because there's significant transportation of both the raw product as well as the finished product on the distribution side, which we do with long haul.
Trucks that we're uniquely positioned to do in Canada, and so thats kind of unique from that standpoint, and then coupling that together with our cash management services. We can offer against great solution, That's Canada and that's been the primary focus so far as you probably know.
The State Banking Act is now Incented to.
Hearings.
And we hope we'll get.
An opportunity to see that being become realities over the federal laws will be.
I don't know what the right word is but set aside for those states that have have legalized.
Marijuana in the U.S. recreational purposes, which will then allow.
Federally chartered banks as well as then those that support that which would include us.
To be involved with the Canada's business in the us and we'd be able to put those same sorts of strong resources and capabilities that we have and apply it to the us.
We don't have that in Atlanta, we don't participate in that today.
And we comply with all the loss in the US, we'll see where that goes and we'll be ready certainly to do that.
Okay and one final one final question and Thats about Asia Asia Pac we know there's not been much discussion about it because it's a small portion of the company.
Is there a there are you have competition out there obviously in the in each in each and every country and the question is is.
What.
Essentially what is your long term view toward you've you've done a spectacular job in North America, and Mexico and obviously.
In South America, you are you are expanding and.
Youre expanding in Asia Pac that you've obviously had to.
Just your priorities to where you have to focus for investors.
So I guess the question is what is.
What is your priority or what is your strategic.
The opportunity that you see over there.
Well I think Asia Pac is a great market for both cash and for Bgs, we have a strong bgs business in Asia Pac.
We have a limited number of countries.
That we are in currently on the ground.
In the cash business in Asia, but we think it's a great market with the opportunity for strong cash usage and growth in those markets. If we have the opportunity to grow either through acquisition our domestically through organic growth. We will do that so we think it's a great platform, we like to do more there.
I personally love the area as well so.
I think hopefully, we'll see more with that but it's certainly not one that we are focused on other is at the exclusion of Asia Pacific. Okay. Finally, one quick question on the on on the new chassis that you have out there.
The new cabin chassis.
Are there any new integrations that you are looking at coming out with that we'll take it you want to call. It you want to call a cab chassis to two two data or something like that.
Yes, well I think I think there's two things associated with it one of them is the potential for additional suppliers in other countries in particular that will help us sure that we have local content, but with a similar sort of design and intend to an objective for that design similar to what we started out with you us.
That will then facilitate the reduction of potential manning in those additional countries whether that be.
Canada, which we have already done or Mexico or in other countries.
So thats one piece the second piece to it is the continued technology additions to that including in the U.S., but other locations as well and we are.
Developing additional technology working with some other technology partners to drive new technology that will provide us better video better capabilities with AI associated with that.
I want to end up with a safer environment for our employees, our messengers and drivers.
And hopefully for our customers as well so both of those things we continue to really push forward on and will be part of our next strategic plan, which I call wider and deeper obviously that will give us the ability to.
Not only reduce costs, but improve our efficiency and improve our safety going forward.
Yes. Thank you very much I appreciate it.
Thanks, Jeff.
The next question comes from Sam, England, a barren Burke. Please go ahead.
Good morning, guys. A couple from me the Leopard slide shows it's now around modeling a billion dollars in acquisitions is that something thats just in a strategic just trying to see the impact that billion dollars acquisitions with half or would you actually be comfortable spending that much and levering up close to three times.
Well, Sam I think we've had the question from many investors as what our leverage would be in the future. We've done $1.1 billion in acquisitions. Since we started about two and half years ago and so this is illustrative of doing something similar to that going forward and we picked her around billion dollar type of number.
But I think we are comfortable in going up to 2.9 turns, especially if you turn around and and look at the pace that Ron suggested over the course of the year that gets back down to that.
We have a nice strong free cash flow generated from this business.
And.
Those things combined we're interested in improving shareholder returns and we don't feel that three to three turns on our balance sheet is something.
That will be negative with that strong free cash flow and with very judicious spending of acquisitions.
Thanks, and then the second one was just on the balance innovations acquisition is that is that something you are expecting to cross sell widely amongst the customer base and does that replace an existing platform that you already have and then if I didnt generate any revenues a timeline or is it just the.
Layers on top of all kind of stuff.
It generates revenue in its own right as a business the returns on its own right. It.
Is a technology that expands our technology that integrates well into our technologies and our systems.
With a base of 11000 locations in the us already it clearly opens up doors.
To something broader than we have today. So it's a great platform for it and doesn't did negatively impact anything that we do today it expands that and gives us the platform for part of our 2.0 strategy going forward, both in terms of customers and technology going forward.
Hi, great. Thanks very much.
And now our final question for today comes from Marlene Pedro with Bank of America. Please go ahead.
Hi, Thank you for taking my questions most of them have been answered.
One quick follow up question on the leverage side would you.
He willing to go above three times for the right deal.
Well I think we wanted to show an illustration that we would go up to this level. We spent 1.1 billion as I said before in the last two years I don't really want to project that we're going to spend more than that again, but we're suggesting if we spent that yet again doubling what we spent to date this would get us in that three range.
And not more and it allows us with our free cash flow to pay that down over a reasonable period of time. Therefore, I think we're reasonably comfortable with that speculate that we're going to go substantially higher than that I don't know that is worth while this time.
Fair enough. Thank you.
And ladies and gentlemen, this will conclude our question and answer session and also conclude our conference call for today. We thank you for attending the Brink's Company second quarter 2019 conference call and at this time you may disconnect your lines.