Brink's Q1 2025 Earnings Report

Brink's EPS Results

• Actual EPS: $1.62
• Consensus EPS: $1.19
• Beat/Miss: Beat by +$0.43
• One Year Ago EPS: $1.52

Brink's Revenue Results

• Actual Revenue: $1.25 billion
• Expected Revenue: $1.21 billion
• Beat/Miss: Beat by +$34.01 million
• YoY Revenue Growth: +0.90%

Brink's Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 4:30PM ET

The Brink's (NYSE:BCO) Co. engages in providing cash management services, digital retail solutions, and ATM managed services. It operates through the following geographical segments: North America, Latin America, Europe, and Rest of World. The North America segment operates in the U.S. and Canada. The Latin America segment refers to the operations in Latin American countries. The Europe segment relates to operations in European countries. The Rest of World segment focuses on the operations in the Middle East, Africa, and Asia. The company was founded by Perry Brink and Fidelia Brink on May 5, 1859 and is headquartered in Richmond, VA.

Brink's Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Please note this event is being recorded. This call and the Q and A session will contain forward looking statements.

[Operator]

Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences are available in the footnotes of today's press release and in the company's most recent SEC filings. The information presented and discussed on this call is representative of today only. Brink's assumes no obligation to update any forward looking statements. The call is copyrighted and may not be used without written permission from Brink's.

[Operator]

I will now turn it over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.

[Jesse Jenkins, Vice President of Investor Relations at The Brink's Company]

Thanks and good afternoon. Here with me today are CEO, Mark Eubanks and CFO, Curt McMacken. This afternoon, Brink's reported first quarter twenty twenty five results on a GAAP, non GAAP and constant currency basis. Most of our comments today will be focused on our non GAAP results. These non GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented.

[Jesse Jenkins, Vice President of Investor Relations at The Brink's Company]

Our management believes these metrics are useful to investors as they allow investors to evaluate performance using the same metrics as management. Reconciliation of non GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation and in this afternoon's eight ks filing, all of which can be found on our website. I will now turn the call over to Brink's CEO, Mark Eubanks.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Thanks, Jesse, and good afternoon, and thank you all for joining us. Starting with slide three, Brink delivered total organic growth of 6% in the first quarter at the top end of our previous guidance. ATM Managed Services and Digital Retail Solutions or AMS DRS grew over 20% for the fourth consecutive quarter as we continue to build upon solid momentum in these higher margin recurring revenue businesses. We delivered solid year over year growth in our Global Services business, which particularly benefited our Rest of World segment. Record Q1 operating profits were up 40 basis points in the quarter with good productivity and favorable revenue mix from AMS DRS and Global Services.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Adjusted EBITDA was $215,000,000 with a margin of 17.2%. Earnings per share of $1.62 reflects the benefits of share repurchases as well as the planned increase in a year over year tax rate as we lap one time benefits from our prior year. Adjusted EBITDA and EPS exceeded the high end of our Q1 guidance due to strong execution and the timing impact of some expenses that we shifted into Q2. On a trailing twelve month basis, free cash flow and conversion of 40% came in as expected highlighted by continued progress on AR collections and customer payment terms. Strategically, we continue to focus on maximizing growth potential in AMS DRS, expanding our margins and executing our focused capital allocation framework.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

AMS and DRS continue to gain momentum throughout the organization with solid growth across all segments. Now representing a quarter of our business, these recurring revenue offerings support performance consistency, margin expansion and improved free cash flow, which is derived from improved working capital dynamics and lower CapEx intensity. I'll have much more on AMS DRS in a few slides. In our CVM business, growth was highlighted by strong performance in our Global Services business. As I'm sure you've seen in the news, precious metal movement was elevated during the quarter, which led to improved year over year growth.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Our long term customer relationships, our global network and our industry leading capabilities position us well to continue to capture elevated demand that may arise going forward. We also continue to diligently execute against our capital allocation framework. Year to date, we repurchased 1,300,000.0 shares at an average price of $87.62 per share, representing about three percent of the outstanding shares at year end 2024. Additionally, just last week, we announced the third consecutive annual increase to our quarterly dividend as we continue to focus our capital allocation on shareholder returns. With remaining repurchase capacity of over $180,000,000 under our existing authorization, we are on track to meet or exceed our prior year share repurchase levels.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Overall, it was a solid first quarter. We delivered solid organic growth in our key business lines, expanded operating profit margins and we opportunistically increased the return of capital to shareholders. Supported by our strong Q1, we are affirming our full year framework of mid single digit organic growth, 30 to 50 basis points of EBITDA margin expansion and free cash flow conversion between 4045%. As we look to the second quarter, we see similar mid single digit organic growth rates. EBITDA is expected to be between $2.00 $5,000,000 and $225,000,000 with earnings per share between $1.25 and $1.65 per share.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Q2 top line guidance reflects our expectations for continued momentum in AMS DRS, current FX rates and stable economic conditions. The second quarter guidance aligns to our first half expectations, including the timing impact of some restructuring expenses shifting out of Q1 into the second quarter. Turning to slide four, you can see the performance against prior years. Constant currency and organic revenue growth were 6% with total revenue growth of 1%. Adjusted EBITDA was down $3,000,000 with a $6,000,000 increase in operating profit in spite of higher restructuring costs versus the prior year and less interest income from Argentina as inflation continues to moderate in the country.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Earnings per share was up 13% on a constant currency basis and down $03 per share year over year. Our outstanding average share count was down 4% with an expected increase in tax rate, which reduced EPS by $0.11 Free cash flow performance was as expected in the quarter. In total, free cash flow was down $14,000,000 on a trailing twelve month basis and reflects the payment of a previously disclosed Department of Justice and FinCEN resolution. Excluding this item, free cash flow would have been up $4,000,000 year over year with conversion from EBITDA of 42%. On Slide five, you can see the performance by segment.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Starting with North America on the left, constant currency growth of 4% and organic growth of 2% was consistent with the prior year. With several new customer onboarding this quarter, DRS growth continues to be a highlight in North America. CVM revenue was up organically year on year, primarily due to a slightly elevated global services volume. Record EBITDA margins included revenue mix benefits, good pricing discipline and continued productivity as we streamline routing, labor management and SG and A. With stable staffing and service levels and second half routing improvements that remain on track, we are well positioned to continue to deliver growth and margin improvement over the balance of the year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In Latin America, 7 Percent organic growth was more than offset by year over year currency devaluation primarily in Mexico and Argentina. Normalizing for the impact of Argentina inflation moderation, Latin America organic growth rates were stable sequentially. AMS and DRS mix increased to 18% of total revenue behind another strong quarter of growth in all countries. On the margin side, as you remember from last quarter, we expected to take some restructuring actions in the segment to streamline operations behind a growing AMS DRS mix. While we executed a portion of that restructuring in Q1, we had some actions that will push into the second quarter.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Our restructuring actions position us well to protect margins and realize the benefits of AMS DRS revenue model as we move forward in any economic scenario. Europe grew revenue by 5% organically in the first quarter, while AMS DRS mix increased by 2% sequentially to 42% of total revenue. We are making good progress converting and adding customers to DRS in Europe, including the rollout of cash accepting self checkout devices in grocery and convenience stores. Europe remains a strong AMS market due to the consolidated nature of the banking footprint and we continue to add new partners to our managed services network. We're making strong progress integrating the previously Sainsbury's ATM estate into our UK business and we remain on track for full deployment by the middle of the year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

EBITDA was flat on a year over year basis as we continue to take restructuring actions to optimize our operations and realize the benefits of accelerating AMS and DRS growth. Normalized for these actions, margins would have been up 40 basis points year over year. In the Rest of World segment, organic growth accelerated to 9% this quarter, primarily driven by the increased movement of precious metals that I mentioned earlier. Record first quarter EBITDA margins were up 130 basis points due to growth and mix benefits of the higher Global Services revenue. Turning to slide six, we have more detail by customer offering.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Cash and Valuables Management grew 1% organically and accelerated sequentially when netting the impact of Argentina currency. As I mentioned earlier, Global Services was up sequentially and year over year with additional volume from gold and silver shipments seen primarily in the Rest of World segment. Shipments continued to grow throughout the quarter before peaking in mid March. Early in the second quarter, movement moderated but remains ahead of prior year. As we mentioned last quarter, dynamics in our Global Services business shift quickly and our ability to leverage existing infrastructure and customer relationships remain the keys to our success in this line of business.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Given the slowing growth in early Q2, we remain cautious in our outlook on this business line for both the second quarter and the rest of the year, but remain as always well positioned to capitalize on any opportunities as they occur. In our more traditional cash in transit and money processing business, we are pleased to announce a new partnership with a leading financial institution in North America. After a competitive process, we were awarded full cash in transit, money processing and cash vaulting services across both The U. S. And Canada.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We plan to onboard this new business over the coming months, while ensuring a smooth transition and maintaining our high customer service levels. Importantly, as with any new CVM business, we will look to expand relationships with new retail customers and additional ATM estates as we use these as entry points into AMS and DRS moving forward. In DRS, we delivered another strong quarter of growth in all markets. Momentum continues as we win new accounts and convert existing customers. In North America, we delivered our best quarter of DRS growth since 2022 with new installations in the quarter from a leading auto parts store and additional momentum in the restaurant and QSR space.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In Latin America, Mexico had a good month of installations as well with adds in the wholesale and C store markets. Conversions from traditional CIT to DRS accelerated in both North America and especially Europe driving improved revenue mix and record first quarter EBITDA margins in North America. Looking ahead, we expect to see an impact on growth rates in the second quarter as we lap the previously mentioned equipment sales from last year. We feel good about the rest of the year in DRS as we work from an increased base of business, install a larger backlog and work to close a strong pipeline of opportunities. On the AMS side, we continue our efforts on onboarding large customers that we discussed in previous quarters in both Europe and North America.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

As I mentioned earlier, Sainsbury's onboarding remains well on track. In The U. S, we're making good progress deploying services into gas stations and convenience store customers that we won in previous quarters. As discussed previously, due to the size of AMS deals, growth in this line of business is not expected to be as linear as DRS has been. With deployments on track, we expect AMS growth to begin to accelerate into the second half of twenty twenty five.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We continue to make progress building both the quality and size of our pipeline leading to improving win rates in this offering. Now let's turn to slide seven. Before I hand it off to Kurt to talk to the specifics of the quarter and our guidance, I thought it'd be helpful to frame how the current market dynamics may impact us at Brink's. While we've yet to experience any significant disruption in our business, uncertainty has increased in many of the economies where we serve, including The U. S.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

On the left side of the slide, you can see our organic growth rates over the last eighteen years. As you can see, we have a history of performing well across many market conditions and business cycles. Our growth rates have been consistently in the mid single digit range outside of the pandemic when retail establishments were completely shut down and the great financial crisis in 02/2009. With a much larger base of business now in AMS DRS and a more diversified global footprint, we expect to be even more resilient going forward. Our customer diversity in retail and financial institutions help mitigate challenges in any one sector and we're closely monitoring any potential increase in bankruptcies or store closures in the markets we serve.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

With the geographic footprint that serves customers in over 100 countries and a global services business that has historically performed well in downturns, we are well positioned and adequately diversified if economic conditions deteriorate. As a service based business, we expect to be mostly insulated from direct tariff exposure. More than half of our costs are labor, including fleet and shipping expenses, most of our cost is variable, allowing us to protect our margins if volumes slow in the future. With a base of locally managed operations in 51 countries, materials and labor are primarily sourced by our local teams in local currency and we have a long history of managing inflationary pressures with price discipline and productivity. We have a pipeline of productivity initiatives working through the Brink's business system that will continue to support margins.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And as we continue to shift our business to AMS and DRS, we are increasing network density and improving routing flexibility, providing more certainty on our profit margin expansion plans over the balance of the year and for years to come. Overall, I'm pleased with the first quarter and the outlook for the rest of the year. Our business remains stable and well positioned to execute our strategy. A growing base of AMS and DRS, line of sight to productivity initiatives in the second half and a first quarter above expectations provide a strong foundation to continue our organic growth and margin expansion journey for the rest of the year. And now, I'd like to turn it over to Kurt to discuss the details of the quarter and more specifics on our outlook.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Kurt?

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Thanks Mark and good afternoon everyone. Starting on slide eight, organic revenue grew $69,000,000 with 80% of that growth coming from higher margin AMS and DRS services. Dollars 13,000,000 of CVM growth included the impact of AMS and DRS customer conversions. Currency headwinds amounted to $66,000,000 or 5% in the period primarily from the Mexican peso, Argentine peso and the Brazilian real. The organic revenue mix benefits flow through generating 30% incremental operating profit, while organic adjusted EBITDA grew $14,000,000 or 6%.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Total adjusted EBITDA margins were down 50 basis points from the prior year negatively impacted by the regional revenue mix of FX as well as less Argentina interest income. On Slide nine, starting on the left, operating profit was up 4% to $151,000,000 with a margin of 12.1% on strong productivity and line of business revenue mix. Interest expense was up $2,000,000 year over year to $58,000,000 We are still expecting interest expense to be roughly flat to the prior year. Tax expenses were $28,000,000 in the quarter representing an effective tax rate of 27.8% an increase from the 23.2% we saw in the prior year. As a reminder, this tax rate increase is primarily related to the lapping impact of inflation adjustments in Argentina on the prior year that is not expected to repeat in 2025.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Interest income was $11,000,000 in the quarter, down $5,000,000 year over year. With inflation rates moderating in Argentina, we expect 2025 interest income to continue to decelerate as we move through the rest of the year. Income from continuing operations was $70,000,000 Walking back up to adjusted EBITDA, depreciation and amortization was $54,000,000 We still expect total D and A to rise modestly in 2025, primarily reflecting increased depreciation from AMS and DRS equipment. In the stock comp and other category, stock based compensation was down $4,000,000 year over year in Q1 and for the full year we expect stock comp to decrease slightly to between 30,000,000 and $35,000,000 Moving to slide 10. We continue to diligently execute our unchanged capital allocation framework.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

As always, we strive to allocate capital prioritizing long term shareholder value. Our framework is designed to compound free cash flow in future years by investing first in organic growth and margin enhancing opportunities in the business. We are targeting CapEx as a percentage of revenue around 3.5% and plan to continue to drive capital efficiency as we shift our mix to AMS and DRS. In the first quarter, our leverage increased to 3.06 times, just over our target range as we accelerated share repurchases into the early part of the year opportunistically take advantage of attractive pricing. We remain on target to be within our leverage range by year end.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Our primary use of capital over the last few years has been share repurchases and we continue the trend in the first quarter. Through May 9, we have repurchased over 1,300,000.0 shares, a full 3% of the outstanding share count at year end. In total, we have spent over $110,000,000 year to date and have approximately 180,000,000 in available capacity remaining in our current authorization. With respect to dividends, just last week, our Board authorized the third consecutive annual increase to our quarterly dividend. We plan to follow a similar consistent dividend policy going forward.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

And finally, on M and A, our posture on deals is consistent. We have a full pipeline and continue to explore accretive opportunities that have a strong strategic fit, attractive returns and align with our current leverage targets and broader capital allocation framework. Moving to the guidance on slide 11. With a strong first quarter behind us, our full year framework for 2025 remains unchanged. We expect mid single digit organic growth to include mid to high teens organic growth in AMS DRS.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Over the last quarter, FX rates have moved in our favor. Using today's rates, we would expect about a 2.5% or $125,000,000 FX improvement to our initial full year estimate. This $125,000,000 FX improvement was primarily due to the euro and pound, shifting our geographic mix of revenue more towards our Europe segment. So despite the good EBITDA performance we saw in the first quarter, we are maintaining our margin expansion targets of 30 to 50 basis points for the full year. There has been no change to our expectations for free cash flow conversion.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

And as I mentioned on the last slide, we opportunistically pulled forward share repurchases into the early part of the year. And for the full year remain on track with shareholder returns that meet or exceed twenty twenty four levels. In the second quarter, we expect revenue between 1,250,000,000.00 and $1,300,000,000 reflecting organic growth in the mid single digits. Using today's rates, FX is expected to be a headwind of around 3% to 3.5% as we lap last year's Q2 steep devaluation of the Mexican peso before moderating in Q3. The organic revenue guidance assumes strong continued growth in AMS DRS and current trends in the global services business.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Adjusted EBITDA is expected to be between $2.00 5,000,000 and $225,000,000 This adjusted EBITDA guidance reflects the flow through of revenue growth, the timing impact of restructuring actions that shifted from Q1 to Q2, the impact of currency mix on margins and lower interest income. EPS is expected to be between $1.25 and $1.65 And now, I'll hand it back to Mark for closing comments before we start Q and A.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Thanks, Kurt. Twenty twenty five is off to a solid start. In Q1, we delivered the fourth consecutive quarter of over 20% organic growth in our key verticals of AMS and DRS. Supported by a strong pipeline and the onboarding of several new customer accounts in the second half, I am encouraged by our momentum. In CVM, we remain well positioned to generate growth with a major new North America banking partnership coming in the second half and our Global Services business remains poised to capture the available growth opportunities.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

EBITDA margins are expected to expand in the back half of the year behind the strong growth and our ongoing productivity efforts. Supported by our historical performance, our differentiated business model is built for success in the uncertain macroeconomic environment ahead of us. I am confident we are sustainably improving the business, building a business that will deliver a more consistent growth, margin improvement and free cash flow generation profile for years to come. And with that, we're happy to take your questions. Operator, please open the line.

[Operator]

Certainly. We will now begin the question and answer session. The first question comes from George Tong with Goldman Sachs. Please go ahead.

[George Tong, Analyst at Goldman Sachs]

Hi, thanks. Good afternoon. Can you talk a little bit more about your tariff exposure, specifically how much of your hardware is imported measured as either percentage of revenue or percentage of cost? What your country exposures are and what average effective tariff rate across your country exposures is assumed in your guidance?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure. Thanks George for the question. First and foremost, we talked a little bit about it in the prepared remarks, but we don't really expect frankly any direct exposure from tariffs. As you know most of our costs and our revenues are all in the same currency and we don't importexport much of our services. Obviously, our Global Services business a little bit different, and I think that's why you saw some of the activities in Q1.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

There were some concerns about precious metals, which caused a lot of shipments from around the world. Frankly, that showed up in our Rest of World segment as really a step up in revenue bringing precious metals particularly to The U. S. That eventually was sorted out as you're probably aware and those commodities were exempted from any tariffs. So today we really don't see any of that.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Even as we think about like trucks, parts and so forth, most of those are locally sourced in region or in at least inside of trade unions. And so, we don't really have any impact. I think that the issue where we would see impact to our business like any business would be any sort of moderation to growth, global growth that occurred or any local, let's say cost of living increases or inflation. And of course in those cases we do all we can to manage those costs with productivity, but also we'll remain disciplined obviously in our pricing posture as we go to market.

[George Tong, Analyst at Goldman Sachs]

Got it. That's helpful context. And then switching gears looking at your Latin America business organic growth was 7% in the quarter but the FX drag was negative 16%. In past quarters your organic growth was able to match your FX trends. So can you talk about pricing trends you're seeing in the region and if you're able to use pricing to fully offset currency devaluations or FX headwinds going forward?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Good question George. So two things, two types of types two parts of that question let's say. The first is pricing for the highly inflationary market like Argentina where the currency was devaluing rapidly. And yes, we continue to maintain that same posture as inflation the hyperinflation comes through we're pricing for that in the local market. In the Latin America basket in total the largest part of the FX impact is the Mexican peso which is really just a year on year impact of the devaluation that occurred last year in the June.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And so we'll see we'll continue to see FX headwinds from Mexico and Brazil frankly for the really for the first half when big devaluation happened late June. We'll see that moderate in the back half of the year. Q2 should be similar in total growth as Q1. So we feel good where we are and in fact, the quarter came in about as we expected.

[George Tong, Analyst at Goldman Sachs]

Got it. Very helpful. Thank you.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Sure.

[Operator]

Our next question comes from Tim Mulrooney with William Blair. Please go ahead.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Mark, Kurt, good afternoon.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Hey, Tim. How are you?

[Tim Mulrooney, Group Head–Global Services at William Blair]

Hi, Tim. Doing well. Thank you. So I have a few here. First on your second quarter margin guide, you're looking at about 16.9%, I think, which is down on a year over year basis for the second quarter of last year, down a little more than 100 basis points, I think.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Can you just walk me through the puts and takes here? And also with margins being down year over year in the first half, but full year guidance anticipating 30 to 50 basis points of margin expansion, can you help us bridge that gap between first half margins and second half margins?

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Yes. Hey, Tim, it's Kurt. Let me kind of walk you through. First on first half, I think some of the biggest drivers are really going to be around two main things. One is FX and the mix of the FX particularly from the Mexican peso and how that impacts our margins.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

And the second is around Argentina interest income because that rolls off has rolled off year over year and has a significant impact. So those two are big drivers of ultimately, the margins. There's also a bit of restructuring in there. We have more restructuring this year than last year in the first half. So those are your three big items when you think about the first half and even the second quarter.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

If you look at the second half and how things are ramping, again, you have some FX impacts on that. Number one, you don't the Mexican peso starts to roll off. So FX impact in the second half is quite a bit more muted. And then you have normal seasonality for us. So we ramp in the second half our organic.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Actually, you look at the organic growth in the second half, it's pretty consistent with the first half. But because the FX is moderating your growth, your total growth is actually quite a bit higher. And then if you look at the flow through on that, it's pretty much as we would expect.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

In fact, Tim, FX, if you just run the math out, becomes almost a tailwind in Q4, just given the year on year of where the Mexican peso is today and where it was in Q4.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

The only other reminder too in the third quarter, we had a pretty significant security loss event last year. And so we're lapping that in the third quarter. So there's a pretty big expansion in the third quarter in terms of margins because of that.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Okay. That was very comprehensive. Thank you. So FX, the restructuring, the interest income and the lapping of that security loss. Thank you.

[Tim Mulrooney, Group Head–Global Services at William Blair]

On the interest income, I know that less interest income from Argentina negatively impacted margins in the first quarter. How much of a headwind do you expect this to be to EBITDA for the full year?

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

So we it's meaningful. I mean, it runs maybe a way to think about it is yes, I'm trying to bucketize it in a way that's I think you can think about it as 4,000,000 to $5,000,000 a quarter is the way to think about it.

[Tim Mulrooney, Group Head–Global Services at William Blair]

That's helpful. Thanks. Yes.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

The reason

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

I'm going say a little bit yes, Tim, I was just going to say is because it does obviously depend a lot on what happens in country, but that's kind of our current thinking on it.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Got it. Yes, I know this is a very dynamic situation, especially lately. And

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

by the way,

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

that's what's in our outlook and our guide for the quarter, Tim.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

Yes.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Got it. Okay. Maybe we can shift to growth here really quick. I know you're expecting 3% to 6% organic growth in the second quarter. What would that be excluding the equipment sales from last year?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

For DRS AMS, is that what you're asking, excluding equipment sales? Yes. Yes. So yes, are expecting so last year just as a reminder we had $8,000,000 worth of DRS sales that were equipment sales one time that we talked about. We left the quarter a little over 20% in Q1.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Q2 will have a little bit maybe a couple of points of headwind on an organic growth basis but on a dollar basis we expect to continue the same kind of trajectory Tim and don't expect it to be outside of our guide or even kind of the recent continued efforts.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Okay, got it. That's good news.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

One more Sorry, just one clarification on that. I mentioned in the prepared comments about AMS and DRS a little bit of the differences in maybe their growth characteristics where DRS is usually lots of maybe smaller, more gradual growth, it's more maybe more consistent, where AMS can be lumpy. Contracts might be bigger and in fact in the quarter, we had a pretty good quarter, not just on revenue, but on awards. We actually got two new awards down in Southeast Asia from banks, ATM outsourcing agreements, pretty significant one in The Philippines, One in Indonesia. Those will come on likely in the second half into early Q1 next year.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

We're still onboarding Sainsbury's right now as we as I mentioned, which is a significant undertaking that will provide a lot of support for the back half organic growth as well as several other large convenience store chains here in North America that we're also onboarding. So really good progress there. The pipeline continues to grow and not only is the pipeline growing, but the quality of the pipeline is growing. And what I mean by that is more higher close rate, more fidelity, less, let's say time dragging out in some of these deals. And then on the DRS side, very similar.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

As I look at the end of the first quarter, our DRS worldwide device count was up 5% over the December 31 kind of year end rate. So making meaningful deployment improvements. In fact, in North America, we installed a record number of devices in our history in March and had really good momentum in April as well with installs of our backlog. So really good momentum. And then I just say the rest of the DRS portfolio, you can see our numbers, good high penetration in Europe, accelerating penetration in North America.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

But if you look at Latin America and rest of world, we're also now starting to see pickup in growth there, both Mexico, Brazil, Chile, these are the big markets for us. We do continue to see that. And then also, as I mentioned, Indonesia on the AMS side, they're also doing well on the DRS side. We've even signed a nice agreement with a smaller business of ours in The UAE. So we're really starting to see some good trends for not just the conversions, but really more of the unvended customers when you get into these emerging economies.

[Tim Mulrooney, Group Head–Global Services at William Blair]

That's really good color Mark. I mean my last question was going to be if you could remind us why you'd expect your AMS DRS business to be more resilient to macro softness maybe relative to the traditional CIT business. But I think maybe you just answered it. Is the answer just that the penetration opportunity is so significant? Is it just that the growth opportunity in the white space is so significant that you see growth there regardless?

[Tim Mulrooney, Group Head–Global Services at William Blair]

Or is there something inherent about the DRS AMS business model that lends itself to less cyclicality?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes. I'd say there's two things there Tim. The first is absolutely the white space is much larger which means if the white space is 5x the existing addressable market, it could be down 50%. We'd still have a huge market to go catch. So that is certainly part of it.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Okay, it's not all easy business or known customers. So we've got to develop new channels to market which we're doing. So that is occurring and it's providing obviously tailwinds to growth even in the headwind of an economy. The other side of that though is also in our traditional CIT business, the revenues were more activity based, more volume based and in fact ended up being much less or are much less predictable in a from a month to month quarter to quarter, where the DRS AMS agreements are largely subscription based service agreements that have longer term more consistent revenues that don't have much variability baked into transactions volumes or values.

[Tim Mulrooney, Group Head–Global Services at William Blair]

Got it. Thanks for all the color.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes, great. Thanks, Tim.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Our next question comes from Tobey Sommer with Truist. Please go ahead. Good afternoon. This is Tyler Barish on for Tobey. Markets were quite volatile post Q1.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Can just maybe describe some of the trends in the BGS segment quarter to date?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes, sure. Certainly what we saw in Q1 was very unusual. The tariff scare or tariff concerns around being able to get precious metals into North America certainly drove a lot of shipment volatility in the markets, but a lot of shipment volumes for us. And you saw that in our Rest of World segment, as they really had great quarter fulfilling customer needs to keep what we thought might be to keep functions markets functioning around precious metals particularly in North America. We don't see that same level of activity in April.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And in fact, we would say it's really been slowing throughout April into the rest of the quarter and probably would look more like what we would have seen within the other regions around mid single digit organic growth. I think our guide right now reflects that current trend baked into that and we think we feel pretty good about where that is.

[Tyler Barishaw, Equity Research Associate at Truist Securities]

Makes sense. AMS DRS mix is quite wide across different segments. Can you just talk about some of the initiatives you can take to maybe raise that mix in Latin America and the rest of the world?

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes, sure. In fact, we are we're working through that now. I think part of what's happening in Latin America and rest of world is they already we have pretty significant businesses there already that have been in rich cash or cash heavy economies, let's say. And in many cases, some of our early DRS solutions may not have been able to accommodate that. We've expanded our product portfolio, made some investments with our product management organization, working with suppliers to develop solutions that are capable of dealing with much higher cash volumes.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

And we see those solutions resonating with some of our existing customers. On the new customers, it's actually been the other way. It's required us to really become maybe more nimble and lower our cost to serve with maybe smaller solutions, smaller devices that are able to really attack that segment of the market that is much smaller retailers, not large store footprints that you might see in our traditional business. So as we do that, obviously, we've had to develop not only our own sales teams capabilities, but also developing other channel partners, whether that's partnering with banks, other financial services companies or even other, let's say, retail POS payments types of companies to help us get access to those markets.

[Kurt McMaken, Executive VP & CFO at The Brink's Company]

You can see in the growth rates too Tyler. I mean both Rest of World and LatAm grew about 25% AMSDRS in the quarter.

[Operator]

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mark Eubanks for any closing remarks.

[Mark Eubanks, President and Chief Executive Officer at The Brink's Company]

Yes. Thank you all for joining us this afternoon. We appreciate your continued interest in Brink's and look forward to speaking to you soon and maybe seeing you in person when we're here on the road. Have a great night.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Jesse Jenkins, Vice President of Investor Relations
• Mark Eubanks, President and Chief Executive Officer
• Kurt McMaken, Executive VP & CFO

Analysts

• George Tong, Analyst at Goldman Sachs
• Tim Mulrooney, Group Head–Global Services at William Blair
• Tyler Barishaw, Equity Research Associate at Truist Securities