Brink's signals AMS/DRS growth to reach up to 28% of revenue by year-end while reinforcing margin expansion

Earnings Call Insights: The Brink's Company (BCO) Q3 2025

MANAGEMENT VIEW

* CEO Richard Eubanks reported "another solid quarter of mid-single-digit organic revenue growth" and noted that "AMS/DRS now accounting for 28% of total revenue in the quarter and more productivity initiatives underway, we are expecting continued margin progress going forward." He highlighted a "record Q3 EBITDA and operating profit margins," with EBITDA margins at 19%, up 180 basis points year-over-year, and a 320 basis point expansion in North America.
* Eubanks emphasized the acceleration of AMS/DRS, with 19% organic growth for these segments and stated, "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 5 days."
* The CEO reaffirmed the commitment to return capital to shareholders, citing "$154 million year-to-date to repurchase approximately 1.7 million shares at roughly $89 per share" and keeping net debt-to-EBITDA leverage at 2.9x, within the 2x to 3x target range.
* CFO Kurt McMaken stated, "Revenue of over $1.3 billion, increased 6% with 5% organic growth and a 1% tailwind from foreign currency. Adjusted EBITDA was up 17% to $253 million, and operating profit was up 24%. Earnings per share of $2.08 was up 28%, driven by strong profit growth and the benefits of our share repurchase program."

OUTLOOK

* The company expects "revenue of $1.355 billion at the midpoint of our range" for Q4, "reflecting organic growth in the mid-single digits." AMS/DRS growth is expected "at the high end of our framework," with adjusted EBITDA guidance of between $267 million and $287 million, and Q4 EPS expected between $2.28 and $2.68.
* For the full year, Brink's maintains "mid-single-digit total organic growth, supported by mid to high teens organic growth for AMS/DRS." EBITDA margins are projected to expand "between 30 and 50 basis points with conversion of EBITDA to free cash flow of between 40% and 45%."

FINANCIAL RESULTS

* The company reported "record profit margins slightly ahead of our expectations were driven by productivity, AMS/DRS mix benefits, and pricing discipline." Free cash flow in Q3 reached $175 million, a 30% year-over-year increase.
* Year-to-date free cash flow conversion improved to 78%, and trailing 12-month conversion reached 50% of adjusted EBITDA.
* CapEx efficiency gains were noted, with a reduction in vehicle counts, while share repurchases continued to drive EPS accretion.

Q&A

* Keen Fai Tong, Goldman Sachs: "You increased your full year growth outlook for AMS/DRS to be in the high teens. Can you elaborate on the client traction you're seeing in both AMS and DRS that drove you to increase your outlook?" CEO Eubanks responded that both segments are "growing equally on their own right, and we'll continue to penetrate across all regions," noting an acceleration in DRS conversions from traditional customers and robust pipelines globally, especially in Latin America.
* Tong also asked about CVM performance and growth prospects. Eubanks explained, "the big thing there as we continue to convert, as I mentioned, to AMS/DRS, accelerating from 25% to basically 33%. That probably accounted for 2 to 3 points of organic headwind on the CVM business."
* Timothy Mulrooney, William Blair: Sought insight on AMS/DRS growth drivers. Eubanks highlighted expanded incentive plans "now to more than 1,000 people in the company...weighted higher than total revenue growth" and detailed new channel partner strategies and aligned sales incentives.
* Mulrooney further probed North America margin potential; Eubanks stated, "Our incremental margins are going to be anywhere from 20% to 30%...we don't think it's really an artificial ceiling here in front of us."
* Tobey Sommer, Truist: Asked about free cash conversion and DSO drivers. CFO McMaken attributed improvements to AMS/DRS mix, broad-based leadership incentives, and stronger collections, also noting a "less capital-intensive business".
* Sommer inquired about geographic growth trajectory. Eubanks replied, "I think we've got opportunities to continue at this pace in all regions," with particular potential in Latin America and a focus on "unvended retail markets."
* Sommer asked about bank consolidation impact; Eubanks said, "with our AMS solutions, this likely becomes an opportunity" to provide cost synergy to consolidators, suggesting long-term benefits despite short-term branch overlaps.

SENTIMENT ANALYSIS

* Analysts pressed for clarity on AMS/DRS traction, growth drivers, incentive strategies, margin potential, cash conversion, and the bank consolidation impact, reflecting a tone that was inquisitive and constructive, with underlying skepticism around sustainability and scalability.
* Management maintained a confident and optimistic tone in its responses and prepared remarks, emphasizing structural improvements, "record" results, and ongoing growth opportunities. CEO Eubanks repeatedly used language such as "confident we have the right team and strategy" and "excited for the future." Compared to the previous quarter, both analysts and management displayed increased confidence, with management highlighting expanded achievements and analysts focusing more on execution details.

QUARTER-OVER-QUARTER COMPARISON

* AMS/DRS organic growth accelerated from 16% in Q2 to 19% in Q3, and its share of total revenue increased.
* EBITDA margin improved from 17.8% in Q2 to 19% in Q3.
* Free cash flow rose sharply from $102 million in Q2 to $175 million in Q3, and cash cycle efficiency improved further (DSO improvement of 5 days this quarter versus 6 days year-to-date last quarter).
* Share repurchases increased, with 1.7 million shares repurchased year-to-date compared to 1.5 million in Q2.
* Guidance language shifted from "expecting an increase" in Q2 to "affirming our previously increased full year framework" in Q3, indicating more certainty.
* Analyst focus evolved from growth rate sustainability to incentive and channel strategies, while management's tone became more assertively positive.

RISKS AND CONCERNS

* Management flagged ongoing conversion of CVM customers to AMS/DRS as a headwind for CVM organic growth, but positioned it as a positive mix shift.
* Currency devaluation, especially from the Argentine peso, was noted as a partial offset to FX tailwinds.
* Bank consolidation creates potential for near-term overlaps in branch footprint but is seen as a long-term opportunity for AMS.
* Management outlined mitigation strategies focused on productivity, pricing discipline, capital allocation, and further back-office efficiency gains through globalizing support functions.

FINAL TAKEAWAY

Brink's delivered a quarter marked by accelerating growth in AMS/DRS, record margins, and robust cash generation, while executing on structural improvements and global expansion. Management reaffirmed its guidance with confidence, citing strong pipelines, particularly in subscription-based segments, and highlighted ongoing capital returns through share repurchases. The leadership team emphasized that structural changes, expanded incentive alignment, and evolving sales channels are expected to sustain growth and margin expansion, positioning the company for continued value creation in large and growing markets.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/bco/earnings/transcripts]

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