Cash management services provider Brink's (NYSE: BCO) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $1.25 billion. Its non-GAAP EPS of $1.62 per share was 38.1% above analysts’ consensus estimates.
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Brink's (BCO) Q1 CY2025 Highlights:
- Revenue: $1.25 billion (flat year on year)
- Adjusted EPS: $1.62 vs analyst estimates of $1.17 (38.1% beat)
- Adjusted Operating Income: $150.6 million vs analyst estimates of $132.7 million (12.1% margin, 13.5% beat)
- Revenue Guidance for Q2 CY2025 is $1.28 billion at the midpoint, above analyst estimates of $1.24 billion
- Adjusted EPS guidance for Q2 CY2025 is $1.45 at the midpoint, below analyst estimates of $1.62
- EBITDA guidance for Q2 CY2025 is $215 million at the midpoint, below analyst estimates of $221.8 million
- Operating Margin: 9.7%, in line with the same quarter last year
- Market Capitalization: $3.48 billion
StockStory’s Take
Brink's first quarter results reflected a continued focus on higher-margin, recurring revenue services, with management emphasizing growth in ATM Managed Services (AMS) and Digital Retail Solutions (DRS). CEO Mark Eubanks noted that AMS and DRS together achieved over 20% organic growth for the fourth consecutive quarter, now comprising roughly a quarter of the company's business. Eubanks attributed stable operating margins to productivity initiatives and a shift toward these service lines. In the Rest of World segment, an uptick in precious metals movement boosted results, while restructuring costs and lower interest income from Argentina partially offset gains. Management described ongoing efforts to onboard new customers, streamline operations, and maintain pricing discipline as contributors to the quarter’s performance.
Looking ahead, Brink's management expects AMS and DRS to remain central to its growth strategy, supported by a pipeline of new contracts and ongoing deployments in North America and Europe. CFO Kurt McMaken pointed out that margin expansion in the latter half of the year is anticipated as foreign exchange headwinds moderate and productivity initiatives take effect. Eubanks explained that AMS and DRS contracts are largely subscription-based, providing more predictable and resilient revenues compared to traditional cash-in-transit services, especially during economic uncertainty. Management also highlighted the onboarding of new customer accounts and continued expansion into emerging markets as key priorities. Risks discussed include currency fluctuations, restructuring expenses, and lower interest income from Argentina, which are expected to weigh on margins in the first half but ease in the second half of the year.
Key Insights from Management’s Remarks
Management highlighted the growing contribution of AMS and DRS, the impact of precious metals shipments, and discussed margin dynamics shaped by restructuring and foreign exchange movements.
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AMS and DRS Momentum: AMS and DRS, Brink's higher-margin, recurring revenue segments, saw over 20% organic growth for the fourth straight quarter. This momentum was fueled by new customer wins and device installations, particularly in North America and Europe, and is helping to shift the company’s revenue mix toward more predictable, contract-based services.
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Rest of World Precious Metals Activity: Elevated precious metals shipments, especially to North America, drove strong growth in the Rest of World segment. Management attributed this to temporary market volatility linked to tariff concerns, which led to an unusual spike in shipment volumes during the quarter.
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Operational Restructuring: Ongoing restructuring initiatives in Latin America and Europe are intended to streamline operations and support AMS/DRS adoption. Some cost savings originally planned for Q1 will be realized in Q2, contributing to short-term margin pressure but expected to benefit profitability over time.
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Currency and Interest Headwinds: Currency devaluation, particularly in Mexico and Argentina, negatively impacted reported results despite underlying organic growth. Additionally, lower interest income from Argentina, as inflation moderates, was cited as a headwind to margins, with management expecting this impact to diminish later in the year.
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Capital Allocation Priorities: The company accelerated share repurchases in early 2025 and announced a third consecutive annual dividend increase, underscoring its ongoing focus on shareholder returns while maintaining investment in organic growth and margin expansion.
Drivers of Future Performance
Management’s outlook for the next quarter and year centers on expanding AMS and DRS, mitigating margin headwinds, and leveraging productivity gains.
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AMS and DRS Expansion: Management expects continued double-digit growth in AMS and DRS through increased customer conversions and device deployments, particularly as large contracts in North America and Europe are onboarded. These recurring revenue streams are seen as more resilient to economic cycles and are expected to further improve margin consistency.
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Margin Recovery and Productivity: The company anticipates margin expansion in the second half of the year, driven by easing foreign exchange headwinds, reduced restructuring costs, and ongoing productivity initiatives such as improved routing, labor management, and network density across regions.
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Managing External Risks: Management is monitoring potential economic slowdowns, currency volatility, and fluctuations in precious metals activity. They believe the diversified business mix and locally sourced operations will help insulate margins, though risks from lower interest income in Argentina and restructuring expenses remain near-term concerns.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch for (1) sustained AMS and DRS momentum through new contract wins and device deployments, (2) signs of margin recovery as FX headwinds moderate and restructuring costs subside, and (3) the onboarding of major global and regional customers, particularly in North America and Europe. Progress on these fronts will be key to Brink's ability to deliver on its margin and cash flow objectives.
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