Add
BCO to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| BCO > SEC Filings for BCO > Form 10-Q on 27-Apr-2012 | All Recent SEC Filings |
27-Apr-2012
Quarterly Report
The Brink's Company offers transportation and logistics management services for
cash and valuables throughout the world. These services include:
ˇ armored car transportation, which we refer to as cash in transit ("CIT")
ˇ automated teller machine ("ATM") - replenishment and servicing, network infrastructure services
ˇ arranging secure transportation of valuables over long distances and around the world ("Global Services")
ˇ currency deposit processing and cash management services. Cash management services include cash logistics services ("Cash Logistics"), deploying and servicing safes and safe control devices (e.g., our patented CompuSafeŽ service), coin sorting and wrapping, integrated check and cash processing services ("Virtual Vault Services")
ˇ providing bill payment acceptance and processing services to utility companies and other billers ("Payment Services")
ˇ security and guarding services (including airport security)
We have four geographic operating segments: Latin America; Europe, Middle East, and Africa ("EMEA"); Asia Pacific; and North America, which are aggregated into two reportable segments: International and North America.
RESULTS OF OPERATIONS
Consolidated Review
Non-GAAP Results
Non-GAAP results described in this filing are financial measures that are not
required by, or presented in accordance with U.S. generally accepted accounting
principles ("GAAP"). The purpose of the non-GAAP results is to report financial
information without certain income and expense items and to adjust the quarterly
non-GAAP tax rates so that the non-GAAP tax rate in each of the quarters is
equal to the full-year non-GAAP tax rate. For 2012, a forecasted full-year tax
rate is used. The full year non-GAAP tax rate in both years excludes certain
pretax and tax income and expense amounts. The non-GAAP information provides
information to assist comparability and estimates of future performance. Brink's
believes these measures are helpful in assessing operations and estimating
future results and enable period-to-period comparability of financial
performance. Non-GAAP results should not be considered as an alternative to
revenue, income or earnings per share amounts determined in accordance with GAAP
and should be read in conjunction with their GAAP counterparts. The adjustments
are described in detail and are reconciled to our GAAP results on page 25.
Three months
Ended March 31, %
(In millions, except per share amounts) 2012 2011 Change
GAAP
Revenues $ 966.8 913.3 6
Segment operating profit (a) 66.7 52.0 28
Non-segment expense (24.3 ) (15.0 ) 62
Operating profit 42.4 37.0 15
Income from continuing operations (b) 17.0 18.9 (10 )
Diluted EPS from continuing operations (b) 0.35 0.39 (10 )
Non-GAAP (c)
Revenues $ 966.8 913.3 6
Segment operating profit (a) 69.7 52.7 32
Non-segment expense (9.6 ) (9.2 ) 4
Operating profit 60.1 43.5 38
Income from continuing operations (b) 27.9 18.8 48
Diluted EPS from continuing operations (b) 0.58 0.39 49
|
Amounts may not add due to rounding.
(a) Segment operating profit is a non-GAAP measure when presented in any context
other than prescribed by ASC Topic 280, Segment Reporting. The tables on
page 17 reconcile the measurement to operating profit, a GAAP
measure. Disclosure of total segment operating profit enables investors to
assess the total operating performance of Brink's excluding non-segment
income and expense. Forward-looking estimates related to total segment
operating profit and non-segment income (expense) for 2012 are provided on
page 24.
(b) Amounts reported in this table are attributable to the shareholders of Brink's and exclude earnings related to noncontrolling interests.
(c) Non-GAAP earnings information is contained on page 25, including reconciliation to amounts reported under GAAP.
Organic Growth
Organic growth represents the change in revenues or operating profit between the
current and prior period, excluding the effect of the following items:
acquisitions and dispositions, changes in currency exchange rates and the
remeasurement of net monetary assets in Venezuela under highly inflationary
accounting.
Overview
GAAP
Our revenues increased $54 million or 6% and our operating profit increased $5
million or 15% in 2012. Revenues increased due to organic growth in our
International segment, partially offset by unfavorable changes in currency
exchange rates. Operating profit increased primarily due to organic profit
improvement in our International segment ($18 million), partially offset by
increased U.S. retirement plan expenses ($10 million) and the negative impact of
changes in currency exchange rates ($2 million).
Our income from continuing operations in 2012 decreased 10% compared to 2011 primarily due to higher tax expense caused by a $2 million tax benefit in 2011 related to enacted tax legislation and audit settlements, as well as higher income attributable to noncontrolling interests ($2 million). These negative factors were partially offset by the higher operating profit mentioned above.
Our earnings per share from continuing operations was $0.35, down from $0.39 in 2011.
Non-GAAP
Non-GAAP results include the following adjustments:
Three Months
Ended March 31,
2012 2011
GAAP Diluted EPS $ 0.35 0.39
Exclude U.S. retirement plan expenses 0.22 0.09
Exclude gains on asset sales and acquisitions (0.02 ) (0.06 )
Exclude employee benefit settlement charge 0.01 -
Adjust quarterly tax rate to full-year average rate 0.02 (0.03 )
Non-GAAP Diluted EPS $ 0.58 0.39
|
Amounts may not add due to rounding. Non-GAAP results are reconciled in more detail to the applicable GAAP results on page 25.
The analysis of non-GAAP revenues is the same as the analysis of GAAP revenues. Operating profit increased $17 million or 38% in 2012 primarily due to organic improvement in our International segment ($18 million) partially offset by the negative impact of changes in currency exchange rates ($2 million).
Our income from continuing operations in 2012 increased 48% primarily due to higher operating profit, partially offset by higher income attributable to noncontrolling interests ($2 million).
Our earnings per share from continuing operations was $0.58, up from $0.39 in 2011.
Outlook for 2012
GAAP
Our organic revenue growth rate for 2012 is expected to be in the 5% to 8%
range, and our operating segment margin is expected to be approximately 7%. Our
assumptions behind the annual segment margin include continued strength in Latin
America and modestly better results in Europe. Our International organic revenue
growth rate for 2012 is expected to be in the 7% to 10% range, and our
International segment margin is expected to be in the 7.0% to 8.0% range. Our
North America organic revenue growth rate for 2012 is expected to be flat, and
our North America segment margin is expected to be in the 3.6% to 4.6% range.
Non-GAAP
Our outlook for non-GAAP revenues is the same as our outlook for GAAP revenues.
Our operating segment margin is expected to be approximately 7%. Our assumptions behind the annual segment margin include continued strength in Latin America and modestly better results in Europe. Our International segment margin is expected to be in the 7.0% to 8.0% range and our North America segment margin is expected to be in the 4.5% to 5.5% range.
See page 24 for a summary of our 2012 Outlook.
Segment Operating Results
Segment Review
First Quarter 2012 versus First Quarter 2011
GAAP
Organic Acquisitions / Currency % Change
(In millions) 1Q '11 Change Dispositions (b) (c) 1Q '12 Total Organic
Revenues:
International:
Latin America $ 332.3 68.8 - (14.8 ) 386.3 16 21
EMEA 307.1 11.9 0.3 (12.8 ) 306.5 - 4
Asia Pacific 34.9 3.1 - (0.4 ) 37.6 8 9
International 674.3 83.8 0.3 (28.0 ) 730.4 8 12
North America 239.0 (0.4 ) (1.3 ) (0.9 ) 236.4 (1 ) -
Total $ 913.3 83.4 (1.0 ) (28.9 ) 966.8 6 9
Operating
profit:
International $ 45.2 17.6 - (1.9 ) 60.9 35 39
North America 6.8 (1.1 ) 0.1 - 5.8 (15 ) (16 )
Segment
operating
profit 52.0 16.5 0.1 (1.9 ) 66.7 28 32
Non-segment
(a) (15.0 ) (9.3 ) - - (24.3 ) 62 62
Total $ 37.0 7.2 0.1 (1.9 ) 42.4 15 19
Segment
operating
margin:
International 6.7 % 8.3 %
North America 2.8 % 2.5 %
Segment
operating
margin 5.7 % 6.9 %
Non-GAAP
Organic Acquisitions / Currency % Change
(In millions) 1Q '11 Change Dispositions (b) (c) 1Q '12 Total Organic
Revenues:
International:
Latin America $ 332.3 68.8 - (14.8 ) 386.3 16 21
EMEA 307.1 11.9 0.3 (12.8 ) 306.5 - 4
Asia Pacific 34.9 3.1 - (0.4 ) 37.6 8 9
International 674.3 83.8 0.3 (28.0 ) 730.4 8 12
North America 239.0 (0.4 ) (1.3 ) (0.9 ) 236.4 (1 ) -
Total $ 913.3 83.4 (1.0 ) (28.9 ) 966.8 6 9
Operating
profit:
International $ 45.2 18.4 - (1.9 ) 61.7 37 41
North America 7.5 0.4 0.1 - 8.0 7 5
Segment
operating
profit 52.7 18.8 0.1 (1.9 ) 69.7 32 36
Non-segment (a) (9.2 ) (0.4 ) - - (9.6 ) 4 4
Total $ 43.5 18.4 0.1 (1.9 ) 60.1 38 42
Segment
operating
margin:
International 6.7 % 8.4 %
North America 3.1 % 3.4 %
Segment
operating
margin 5.8 % 7.2 %
|
(a) Includes income and expense not allocated to segments (see page 20 for details).
(b) Includes operating results and gains/losses on acquisitions, sales and exits of businesses.
(c) Revenue and Segment Operating Profit: The "Currency" amount in the table is the summation of the monthly currency changes, plus (minus) the U.S. dollar amount of remeasurement currency gains (losses) of bolivar fuerte-denominated net monetary assets recorded under highly inflationary accounting rules related to the Venezuelan operations. The monthly currency change is equal to the Revenue or Operating Profit for the month in local currency, on a country-by-country basis, multiplied by the difference in rates used to translate the current period amounts to U.S. dollars versus the translation rates used in the year-ago month. The functional currency in Venezuela is the U.S. dollar under highly inflationary accounting rules. Remeasurement gains and losses under these rules are recorded in U.S. dollars but these gains and losses are not recorded in local currency. Local currency Revenue and Operating Profit used in the calculation of monthly currency change for Venezuela have been derived from the U.S. dollar results of the Venezuelan operations under U.S. GAAP (excluding remeasurement gains and losses) using current period currency exchange rates.
Amounts may not add due to rounding.
Segment Review First Quarter 2012 versus First Quarter 2011
GAAP
Revenue increased 6% to $967 million due primarily to organic growth in our
International segment partially offset by unfavorable changes in currency
exchange rates. Organic revenue growth of 9% was mainly due to improvements in
our International segment.
Segment operating profit increased 28% ($15 million) reflecting improvement in Latin America and Europe, which more than offset a slight decline in North America.
Non-GAAP
The analysis of non-GAAP revenue is the same as the analysis of GAAP revenue.
Segment operating profit increased 32% ($17 million) reflecting improvement in Latin America.
Overview
GAAP
Revenues in the first quarter of 2012 for our International segment were 8%
higher ($56 million) than the same period of 2011 as:
ˇ revenues in Latin America were 16% higher ($54 million)
ˇ revenues in EMEA were flat, and
ˇ revenues in Asia Pacific were 8% higher ($3 million).
Operating profit in our International segment increased 35% ($16 million) due to improved profits in Latin America.
Non-GAAP
The analysis of non-GAAP International segment revenues is the same as the
analysis of GAAP International segment revenues.
Operating profit in our International segment increased 37% ($17 million) due to improved profits in Latin America.
Latin America
GAAP
Revenue in Latin America increased 16% ($54 million) due to:
ˇ organic growth of 21% ($69 million) driven by inflation-based price increases
across the region, partially offset by
ˇ an unfavorable currency impact ($15 million).
Latin America operating profit increased 55% due to:
ˇ 60% organic growth, primarily in Mexico, Venezuela, Argentina and Brazil,
ˇ a 2011 tax on equity in Colombia which did not recur in 2012, and
ˇ higher labor agreement expenses in the prior year quarter;
partially offset by unfavorable currency impact ($2 million).
Non-GAAP
The analysis of Latin America non-GAAP revenues is the same as the analysis of
GAAP revenues.
Latin America operating profit increased 58% due primarily to:
ˇ 63% organic growth, primarily in Mexico, Venezuela, Argentina and Brazil,
ˇ a 2011 tax on equity in Colombia which did not recur in 2012, and
ˇ higher labor agreement expenses in the prior year quarter;
partially offset by unfavorable currency impact ($2 million).
EMEA
EMEA revenues remained flat during the 2012 quarter compared to the 2011
quarter. Unfavorable currency impact ($13 million) was offset by organic revenue
growth of 4% ($12 million). Organic growth was driven by increased volumes in
France, the Netherlands, emerging markets and Global Services, partially offset
by a special project in Germany in 2011 that did not reoccur in 2012.
EMEA operating profit increased slightly due primarily to organic improvements in France, the Netherlands and emerging markets partially offset by a special project in Germany in 2011 that did not recur in 2012.
Asia Pacific
Revenue in Asia Pacific increased 8% ($3 million) due mainly to organic growth
in China and India.
Operating profit decreased slightly.
GAAP
Revenues in North America decreased 1% ($3 million) due to unfavorable currency
impact ($1 million) and the loss of revenue associated with the sale of the U.S.
document destruction business in 2011 ($1 million). Revenues in North America
remained flat on an organic basis.
Operating profit decreased $1 million due to increased U.S. retirement charges ($2 million) and lower CIT demand and continued pricing pressure in the U.S.
Non-GAAP
The analysis of North America non-GAAP revenues is the same as the analysis of
North America GAAP revenues
Operating profit remained flat on lower CIT demand and continued pricing pressure in the U.S.
Most of the armored vehicles used by our U.S. operations are accounted for as operating leases. The cost related to these leases is recognized as rental expense in the Consolidated Statements of Income. Since March 2009, we have acquired armored vehicles in the U.S. either by purchasing or by leasing under agreements that we have accounted for as capital leases. We currently expect to continue acquiring new vehicles in the U.S. with capital leases. The cost of vehicles under capital lease is recognized as depreciation and interest expense. Because of the shift in the way we acquire vehicles in the U.S., our depreciation and interest related to the U.S. fleet is higher and our rental expense is lower compared to earlier periods and we expect this trend to continue.
Non-segment Income (Expense)
GAAP Three Months
Ended March 31, %
(In millions) 2012 2011 change
General and administrative $ (10.2 ) (9.5 ) 7
Retirement costs (primarily former operations) (14.7 ) (6.2 ) unfav
Royalty income 0.6 0.3 100
Business acquisitions and dispositions -
remeasurement of previously held ownership
interest to fair value - 0.4 (100 )
Non-segment income (expense) $ (24.3 ) (15.0 ) 62
|
Non-segment expenses in the first quarter of 2012 were $9 million higher than 2011 mainly due to increased retirement costs ($9 million). Retirement costs in the first quarter of 2012 included a $4 million settlement loss related to the payment of pension benefits.
Outlook for 2012
We believe that non-segment expenses will be approximately $89 million in 2012,
up from $60 million in 2011 because of an increase in costs related to
retirement plans. See page 24 for a summary of our 2012 Outlook.
Non-GAAP Three Months
Ended March 31, %
(In millions) 2012 2011 change
General and administrative $ (10.2 ) (9.5 ) 7
Royalty income 0.6 0.3 100
Non-segment income (expense) $ (9.6 ) (9.2 ) 4
|
Non-segment expenses on a non-GAAP basis in the first quarter of 2012 were consistent with the prior year quarter.
Outlook for 2012
We estimate that non-segment expenses on a non-GAAP basis will be approximately
$41 million in 2012, which is the same as 2011. See page 24 for a summary of our
2012 Outlook.
Foreign Operations
We currently serve customers in more than 100 countries, including approximately 50 countries where we operate subsidiaries.
We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations. The future effects, if any, of these risks are unknown.
Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars, they are affected by changes in the value of various local currencies in relation to the U.S. dollar. Brink's Venezuela is subject to local laws and regulatory interpretations that determine the exchange rate at which repatriating dividends may be converted and Brink's Argentina may in the future be subject to similar restrictions.
From time to time, we use foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies. At March 31, 2012, the notional value of our outstanding foreign currency contracts was $38.1 million with average contract maturities of one month. The foreign currency contracts primarily offset exposures in the Mexican peso. These contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in earnings. We recognized losses of $0.1 million on our foreign currency contracts in the first quarter of 2012. At March 31, 2012, the fair value of these outstanding contracts was an asset of $0.2 million which was included in prepaid and other on the consolidated balance sheet.
Venezuelan operations
Our Venezuelan operations constitute a material portion of our overall
consolidated operations, and accounted for $74.3 million or 8% of total Brink's
revenues in the three months ended March 31, 2012. Our operating margins in
Venezuela have varied depending on the mix of business during any year and have
been up to three times our overall International segment operating margin rate.
Beginning January 1, 2010, we designated Venezuela's economy as highly inflationary for accounting purposes, and we consolidated our Venezuelan results using our accounting policy for subsidiaries operating in highly inflationary economies.
The Venezuelan government has established an exchange process that requires each transaction be approved by the government's central bank (the "SITME" rate). On a daily basis, the central bank publishes ranges of prices at which it may approve transactions to purchase dollar-denominated bonds, resulting in an exchange rate range of 4.3 to 5.3 bolivar fuertes to the U.S. dollar. To date, approved transactions have been at the upper end of the range. To the extent we need to obtain U.S. dollars, we currently expect our U.S. dollar-denominated transactions to be settled at a rate of 5.3 bolivar fuertes to the U.S. dollar. We have used this rate to remeasure our bolivar fuerte-denominated monetary assets and liabilities into U.S. dollars at March 31, 2012, resulting in bolivar fuerte-denominated net monetary assets at March 31, 2012, of $68.8 million. For the three months ended March 31, 2012, we did not recognize any remeasurement gains or losses as the SITME rate did not change.
Under the SITME process, approved transactions may not exceed $350,000 per legal entity per month. We have obtained sufficient U.S. dollars to purchase imported supplies and fixed assets to operate our business in Venezuela but our continued ability to do this is less certain. We believe the repatriation of cash invested in Venezuela will be limited in the future. We have also been successful at converting some bolivar fuertes to U.S. dollars through other legal channels, at a rate not as favorable as the SITME rate.
At March 31, 2012, our Venezuelan subsidiaries held $1.2 million of cash and short-term investments denominated in U.S. dollars and $20.9 million of cash denominated in bolivar fuertes. On an equity-method basis, we had investments in our Venezuelan operations of $84.7 million at March 31, 2012.
]
Other Operating Income (Expense)
Other operating income (expense) includes segment and non-segment other
operating income and expense.
Three Months
Ended March 31, %
(In millions) 2012 2011 change
Share in earnings of equity affiliates $ 1.2 0.9 33
Business acquisitions and dispositions -
remeasurement of previously held ownership
interest to fair value - 0.4 (100 )
Gains (losses) on sale of property and other
assets 0.2 (0.4 ) fav
Royalty income 0.6 0.3 100
Foreign currency items:
Transaction gains 0.4 1.0 (60 )
Hedge losses (0.1 ) - unfav
Other (0.1 ) 0.8 unfav
Other operating income (expense) $ 2.2 3.0 (27 )
|
Nonoperating Income and Expense
Interest expense
Three Months
Ended March 31, %
(In millions) 2012 2011 change
Interest expense $ 6.3 5.8 9
Outlook for full-year 2012
We expect our interest expense to be between $23 million and $26 million in
2012. See page 24 for a summary of our 2012 outlook.
. . .
|
|