The Brink’s Company 2021 Form 10-K Summary
Business context and reporting period
The filing covers the fiscal year ended December 31, 2021. Brink’s provides cash-in-transit, ATM, cash management, global valuables transportation, payment, guarding and related security services in more than 100 countries. Operations are managed through North America, Latin America, Europe and Rest of World segments. Approximately 70% of 2021 revenue was generated outside the United States.
Brink’s had approximately 74,500 employees, 1,279 facilities and 16,315 vehicles at year-end. Revenue is generally seasonally stronger in the second half, particularly the fourth quarter.
Key financial metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $4,200.2 million | $3,690.9 million | 14% increase |
| Operating profit | $354.7 million | $213.5 million | 66% increase |
| Operating margin | 8.4% | 5.8% | Improved |
| Income from continuing operations attributable to Brink’s | $103.1 million | $16.8 million | Significant increase |
| Diluted EPS from continuing operations | $2.06 | $0.33 | Significant increase |
| Non-GAAP operating profit | $470.5 million | $381.3 million | 23% increase |
| Non-GAAP diluted EPS | $4.75 | $3.76 | 26% increase |
| Cash flow from operating activities | $478.0 million | $317.7 million | $160.3 million increase |
| Capital expenditures | $167.9 million | $118.5 million | $49.4 million increase |
| Cash used for acquisitions | $313.2 million | $439.7 million | $126.5 million decrease |
| Cash and cash equivalents | $710.3 million | $620.9 million | $89.4 million increase |
| Total debt | $2,966.7 million | $2,485.7 million | $481.0 million increase |
| Net debt | $2,291.1 million | $1,883.9 million | $407.2 million increase |
Revenue mix in 2021 consisted of approximately 50% core services, 45% high-value services and 5% other security services. Segment revenue and operating profit were respectively: North America $1,407.1 million and $148.4 million; Latin America $1,126.0 million and $257.3 million; Europe $917.3 million and $89.8 million; and Rest of World $749.8 million and $131.5 million.
GAAP income from continuing operations before tax was $235.5 million, with income tax expense of $120.3 million and an effective tax rate of 51.1%. Interest expense was $112.2 million, compared with $96.5 million in 2020.
Material changes versus the prior comparable period
- Revenue increased 14%, including $315.4 million from acquisitions and 5% organic growth. Growth reflected volume recovery from pandemic-affected 2020 levels, pricing actions and acquired businesses.
- Operating profit increased primarily from organic improvement in all four segments, acquisition contributions, lower restructuring costs and favorable changes related to the prior internal loss matter.
- Brink’s completed remaining planned G4S transactions in Macau, Luxembourg and Kuwait and acquired PAI Midco, a U.S. ATM services provider, for approximately $215.5 million. Total consideration for G4S acquisitions was approximately $825.9 million.
- Restructuring costs declined to $43.6 million from $66.6 million. Remaining restructuring actions are expected to reduce the workforce by approximately 1,600 to 1,800 positions and produce annualized savings of $35 million to $40 million. Additional future costs are estimated at $1 million to $3 million.
- Debt increased primarily because of acquisition funding and working-capital needs. Debt represented 92% of capitalization in both 2021 and 2020.
- The company repurchased $200 million of common stock in 2021 and authorized a new $250 million repurchase program expiring December 31, 2023. Quarterly dividends increased to $0.20 per share during the last three quarters of 2021.
- Other comprehensive income attributable to Brink’s was $92.1 million, primarily reflecting benefit-plan actuarial gains, partially offset by foreign-currency translation losses.
Guidance, outlook, risks and unusual items
Management’s 2022–2024 strategic plan focuses on accelerating profitable organic growth, operational excellence, digital cash-payment solutions and ATM managed services. The filing does not provide a specific quantitative 2022 revenue or earnings forecast.
- Management expects to meet liquidity needs for more than the next twelve months using cash, operating cash flow and available borrowing capacity. The revolving credit facility had $505 million available at December 31, 2021.
- The senior secured credit facility matures in February 2024; senior unsecured notes mature in 2025 and 2027. The company was in compliance with debt covenants at year-end, but covenant breaches could accelerate repayment and restrict liquidity.
- COVID-19 continued to affect demand, labor availability, wage costs, operating procedures and restructuring activities. Labor shortages and inflationary wage pressures may reduce margins if not recovered through pricing.
- Foreign-exchange, political, regulatory and repatriation risks remain significant. Argentina is accounted for as highly inflationary, and the Argentine peso declined approximately 19% against the U.S. dollar in 2021. The company recorded $11.9 million of Argentina-related highly inflationary charges.
- The company recorded a $9.5 million charge related to a Chilean antitrust matter. Chilean authorities requested a potential fine of $30.5 million; Brink’s intends to defend the matter.
- The Department of Justice is investigating cross-border shipments of cash and valuables and anti-money-laundering compliance. The company cannot estimate the potential loss and has recorded no accrual for this investigation.
- Unusual 2021 items included an $18.8 million insurance recovery related to a prior internal embezzlement loss, a $16.0 million gain on equity securities, acquisition-related costs and amortization, restructuring costs, and the Chile antitrust charge.
- Legacy obligations include pension, retiree medical and black-lung liabilities. The company reported $524 million of actuarial losses in accumulated other comprehensive income at year-end, although no primary U.S. pension contribution is expected in the foreseeable future under current assumptions.
- Goodwill totaled $1,411.7 million and other intangible assets totaled $491.2 million. No goodwill impairment was recorded, but valuation depends on revenue growth, operating margins, discount rates and other estimates.
- Final foreign tax-credit regulations issued in January 2022 may reduce future U.S. foreign tax credits. The company is evaluating whether a valuation allowance on certain U.S. deferred tax assets may be released; the impact was not estimable at filing.
Most important facts for investors to verify
- Reconcile GAAP results with management’s non-GAAP measures, particularly the substantial difference between GAAP diluted EPS of $2.06 and non-GAAP diluted EPS of $4.75.
- Assess leverage, including $2.97 billion of total debt, $2.29 billion of net debt and significant maturities beginning in 2024.
- Monitor whether G4S and PAI integration produces the expected revenue, cost and margin benefits.
- Evaluate the sustainability of organic growth, restructuring savings and pricing actions amid labor inflation and competitive pricing pressure.
- Track the DOJ investigation and Chile antitrust proceeding, including potential fines, penalties and compliance costs.
- Review exposure to Argentina, foreign-currency movements, currency controls and the effect of a stronger U.S. dollar on reported results.
- Verify future pension, UMWA and black-lung cash requirements against the company’s actuarial assumptions.
- Consider the effect of share repurchases and dividends on liquidity, leverage and covenant capacity.
- Confirm that the internal-control conclusion remains applicable to the acquired Kuwait and PAI operations, which were excluded from management’s 2021 internal-control assessment and represented approximately 7% of total assets and 3% of revenue.