Brink's (BCO) Tops Q2 EPS by 5c; 2018 guidance revised for negative currency translation

Brink's (NYSE: BCO) reported Q2 EPS of $0.74, $0.05 better than the analyst estimate of $0.69. Revenue for the quarter came in at $850 million versus the consensus estimate of $783.85 million.

Doug Pertz, president and chief executive officer, said: “Second-quarter reported non-GAAP results were very strong, with 8% revenue growth and a 25% increase in operating profit driven by significant improvement in the U.S., Mexico and throughout South America, which more than offset $16 million of negative currency translation. Excluding the impact of foreign exchange, constant currency revenue and operating profit rose 13% and 52%, respectively. On an organic basis, which excludes both currency translation and acquisitions, operating profit rose 38%. These results clearly demonstrate strong operating leverage from internal improvement initiatives and acquisitions, which enabled our profit momentum to continue irrespective of currency rate movements. Reported non-GAAP earnings per share rose 12% for the second consecutive quarter. As in the first quarter, earnings were affected by a higher tax rate and higher net interest costs, two negative factors that should be substantially mitigated in 2019 after the Dunbar acquisition is completed. As a result, future earnings should be more consistent with growth in operating income.”

The negative currency impact is related primarily to the company’s South America segment, where the Argentine peso declined 32% and the Brazilian real declined 11% versus last year’s second quarter. Despite these currency declines, South America operating profit increased 27% on revenue growth of 14%. North America operating profit increased 55% on 4% revenue growth. Profits in the company’s Rest of World segment were relatively flat. See pages 4-5 for more information on second-quarter and full-year segment results, including the impact of currency translation and acquisitions.

Pertz added: “On a constant currency basis, our year-to-date non-GAAP operating profit increased 47%, reflecting continued organic growth and margin expansion that would have put us on track to exceed our prior non-GAAP operating profit guidance range of $365 million to $385 million by approximately $20 million.

However, our new full-year 2018 non-GAAP operating profit range is between $340 million and $360 million. This assumes a negative currency impact of $59 million versus prior year (at July 23 rates) and an additional $5 million impact related to the delayed closing of Rodoban, partly offset by higher organic growth and margin expansion. At the mid-point, this revised 2018 guidance represents a 25% increase over 2017. Our revised 2018 non-GAAP guidance also includes organic revenue growth of 7%, adjusted EBITDA between $490 million and $510 million, and EPS of $3.35 to $3.55 per share.

"Our 2019 adjusted EBITDA target of $685 million, as disclosed on May 31, will be updated when we have more information on the impact of currency fluctuations, operational performance and the timing of acquisitions.”

For earnings history and earnings-related data on Brink's (BCO) click here.

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