Executive Summary / Key Takeaways

• The AMS/DRS Transformation Is Driving a Margin Inflection: Brink's is successfully pivoting from a capital-intensive cash-in-transit business to a high-margin, subscription-based technology services model, with AMS/DRS now representing 28% of revenue and growing 19% organically in Q3 2025, fueling record EBITDA margins of 19% and 58% incremental margins.

• Capital Efficiency Creates Compelling Shareholder Returns: The shift to less capital-intensive services has reduced CapEx to under 3.5% of revenue, improved free cash flow conversion to 50% of EBITDA, and enabled $154 million in year-to-date share repurchases while maintaining leverage within the target 2-3x range.

• Geographic Execution Balances Growth and Volatility: North America delivers 320 basis points of margin expansion through productivity and mix shift, Europe provides a stable conversion market with 42% AMS/DRS mix, while Latin America faces FX headwinds but demonstrates pricing power and double-digit AMS growth.

• Key Risks Center on External Pressures, Not Strategy: The primary threats are Argentine hyperinflation (25% peso devaluation in 2025), Mexican peso weakness creating FX headwinds, and elevated debt levels (2.9x leverage), though management's hedging and restructuring actions partially mitigate these exposures.

Setting the Scene: From Armored Trucks to Digital Cash Ecosystems

The Brink's Company, founded in 1859 and headquartered in Richmond, Virginia, has spent 165 years building the most trusted brand in physical asset security. For most of its history, that meant armored trucks, vaults, and cash-in-transit services—the unglamorous but essential infrastructure of commerce. This legacy created an unmatched global network spanning 100+ countries, deep relationships with financial institutions and retailers, and a brand that commands premium pricing and customer loyalty.

The cash logistics industry, valued at approximately $28 billion, sits at an inflection point. Traditional cash handling faces secular headwinds from digital payments, while demand for technology-enabled cash management solutions explodes. Brink's recognized this shift around 2020, initiating a strategic pivot toward ATM Managed Services (AMS) and Digital Retail Solutions (DRS)—subscription-based offerings that transform Brink's from a logistics provider into a technology partner. This isn't a defensive move; it's an offensive expansion into a total addressable market that management estimates is 2-3x larger than the traditional cash logistics space.

Brink's competitive moat rests on three pillars: an iconic brand that reduces customer acquisition costs, a dense global network that creates route economies of scale, and proprietary technology that embeds the company deeper into customer operations. While competitors like Loomis AB (LS) and Prosegur (PSGS) compete on price and regional density, Brink's competes on value, commanding higher margins and stickier relationships. The question for investors is whether this transformation can deliver sustainable margin expansion and capital returns while navigating currency volatility and debt leverage.

Technology, Products, and Strategic Differentiation: The AMS/DRS Flywheel

AMS and DRS represent fundamentally different economics than traditional cash-in-transit. These services generate recurring revenue, require less capital equipment, and deliver accretive margins that lift the entire enterprise. DRS, led by patented Brink's Complete™ and CompuSafe™ intelligent safes, digitizes cash transactions at the point of sale, providing retailers with provisional credit similar to card payments but at lower cost. For Brink's, this eliminates fixed collection schedules, enabling dynamic routing that improves labor and vehicle utilization.

AMS offers comprehensive ATM outsourcing—cash forecasting, remote monitoring, service dispatch, and transaction processing—allowing banks to eliminate fixed costs and convert capital expenditures into operating expenses. The strategic investment in KAL, a hardware-independent ATM software provider, advances Brink's capabilities and creates differentiation against competitors locked into proprietary systems. This positions Brink's as the Switzerland of ATM management, able to service any hardware while competitors remain tethered to specific manufacturers.

The market opportunity is substantial. Management estimates that unvended retail locations and outsourced ATM networks represent a 2-3x expansion of Brink's addressable market. The conversion dynamic is already visible: one-third of global DRS signings now come from existing CIT customers, creating an organic headwind for the legacy business but a powerful mix shift toward higher-margin revenue. This trade-off is intentional and accretive—each point of CVM growth sacrificed generates multiple points of AMS/DRS growth and margin expansion.

The Brink's Business System (BBS) drives productivity improvements across the network. Route optimization technology, on track for full implementation by mid-2025, centralizes planning and improves messenger routing efficiency. This isn't just cost-cutting; it's enabling the flexible scheduling model that makes AMS/DRS economically superior. The system delivered 310 basis points of direct labor cost reduction in North America over two years while improving safety and service metrics.

Financial Performance & Segment Dynamics: Margin Inflection in Action

Q3 2025 results validate the transformation thesis. Total revenue grew 6% with 5% organic growth, but the composition tells the real story: AMS/DRS accelerated to 19% organic growth from 16% in Q2, while CVM growth slowed to 1% due to intentional customer conversions. This mix shift powered a 17% increase in adjusted EBITDA to $253 million and record margins of 14.1% operating and 19% EBITDA. The 58% incremental margin on organic revenue growth demonstrates operating leverage that traditional logistics could never achieve.

North America exemplifies the model's potential. Segment revenue grew 5% organically, but operating profit surged 37% and EBITDA margins expanded 320 basis points. AMS/DRS now represents 31% of trailing twelve-month revenue, up 33% since 2022. Management targets at least 20% EBITDA margins in the midterm, a level that would place North American operations among the most profitable in the industry. The path is clear: continued mix shift to AMS/DRS and productivity gains from BBS.

Europe provides a blueprint for successful conversion. The region grew 7% organically in 2024 with AMS/DRS reaching 42% of revenue in Q1 2025. Record Q2 EBITDA margins reflect the mix benefit of higher subscription revenue. The Sainsbury's (SBRY.L) ATM estate integration, expected to complete by mid-2025, demonstrates Brink's ability to onboard large, complex customers while maintaining service excellence. Europe's consolidated banking footprint makes it an ideal market for AMS penetration.

Latin America presents a more nuanced story. Organic revenue grew 5% in Q3, but operating profit declined 2% due to a $4.2 million FX headwind from Argentine peso devaluation and a security loss. Despite these pressures, AMS/DRS mix increased to 18% of revenue, and pricing discipline across Brazil, Mexico, and Argentina offset volume softness. Management expects meaningful FX headwinds in 2025, particularly in the first half, but restructuring actions planned for early 2025 aim to protect margins and right-size operations. The region's high-margin profile remains intact, with currency volatility creating temporary earnings noise rather than structural deterioration.

Rest of World delivered 7% organic operating profit growth on just 2% revenue growth, demonstrating the power of mix shift. The segment benefited from elevated precious metals movement in Q1 2025, a trend that moderates but remains supportive. New AMS awards in Southeast Asia (Philippines, Indonesia) position the segment for accelerated growth in 2026, with onboarding expected in late 2025 and early 2026.

Capital allocation reflects management's confidence. The company repurchased $154 million of stock year-to-date at an average price near $89, reducing share count by 3% while maintaining net debt-to-EBITDA at 2.9x—within the 2-3x target range. Free cash flow conversion improved to 50% of EBITDA in Q3, up from 44% in 2024, driven by working capital efficiencies and lower capital intensity. Days sales outstanding improved by 5 days year-to-date, while fleet reductions of several hundred vehicles demonstrate the capital-light nature of the AMS/DRS model.

Outlook, Management Guidance, and Execution Risk

Management's 2025 framework projects mid-single-digit total organic growth, supported by mid-to-high teens AMS/DRS expansion and 30-50 basis points of EBITDA margin improvement. This guidance appears conservative given Q3's 320 basis points of margin expansion in North America and record margins across multiple segments. The key assumption is that AMS/DRS growth remains at the high end of the framework, which seems achievable given robust pipelines in retail verticals and the channel partner strategy just beginning to scale.

Foreign exchange remains the primary execution variable. While the Mexican peso and Argentine peso created headwinds in the first half, management expects FX impact to moderate in the second half and potentially become a slight tailwind in 2026. Latin America represents a high-margin region where currency volatility can mask underlying operational strength. The company's natural hedging through local operations and pricing power in inflationary markets provides partial mitigation, but investors should expect continued earnings noise.

The tax rate increase to 28% in 2025, driven by the lapping of Argentine inflation adjustments and the OBBBA impact, represents a headwind of approximately $0.11 per share. However, this is a known, quantifiable drag rather than an operational surprise. Interest expense is expected to remain flat around $61-63 million quarterly, with two anticipated rate cuts already priced into guidance.

Incremental margins of 20-30% provide a clear pathway to earnings growth. Management explicitly states there is "not really an artificial ceiling here in front of us" and "still room to go" beyond the 20% North America target. This confidence stems from the early-stage penetration of the AMS/DRS market—less than 4 years ago, the global AMS footprint was negligible. Today, Brink's has built a platform that can scale across 51 countries with minimal incremental capital.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is execution failure in scaling AMS/DRS. While the technology and market opportunity are compelling, the transition requires retraining sales forces, integrating acquisitions like KAL, and converting CIT customers without disrupting service. If growth in AMS/DRS decelerates below the mid-teens framework, the margin expansion story collapses. The early success with Sainsbury's, QT, and RaceTrac is encouraging, but these are large, sophisticated customers. Penetrating the long tail of unvended retail locations may prove more challenging.

Argentine hyperinflation remains a persistent threat. The peso devalued 25% in the first nine months of 2025, creating $16.2 million in remeasurement losses. While management has navigated this environment since 2018, a more severe currency crisis could overwhelm pricing actions and create operational disruptions. The OBBBA tax legislation adds another layer of complexity, creating an $18.7 million valuation allowance on U.S. tax credits that may not reverse until 2027.

Debt leverage at 2.9x EBITDA, while within the target range, limits financial flexibility. Net debt of approximately $2 billion creates interest expense of $63 million quarterly, consuming roughly 25% of EBITDA. In a rising rate environment or if EBITDA growth stalls, refinancing risk could pressure the balance sheet. Competitors like Loomis maintain investment-grade BBB ratings with lower leverage, giving them a cost-of-capital advantage for acquisitions.

Bank consolidation presents a double-edged sword. While management frames it as an AMS opportunity—providing cost synergies to acquirers through ATM network optimization—the near-term reality is potential branch closures and reduced CIT volumes. If consolidation accelerates faster than AMS adoption, revenue could face unexpected headwinds. Brink's must ensure it's partnered with the winning consolidators and that its AMS value proposition is compelling enough to offset lost CIT routes.

On the upside, the market expansion opportunity is larger than management's conservative 2-3x estimate. If Brink's can capture just 10% of the unvended retail market and 15% of outsourced ATM networks, AMS/DRS could grow to 50% of revenue within five years, driving EBITDA margins toward 25%. The channel partner strategy, still in its infancy, could accelerate adoption by leveraging third-party sales forces. Additionally, precious metals volatility—driven by geopolitical uncertainty—could provide recurring Global Services tailwinds that management's guidance conservatively excludes.

Valuation Context: Pricing a Transformation

At $116.69 per share, Brink's trades at 9.90x EV/EBITDA and 11.64x price-to-free-cash-flow, a discount to its historical multiple during growth phases despite accelerating AMS/DRS adoption. The P/E ratio of 29.69x appears elevated but reflects the earnings drag from Argentine remeasurement and restructuring costs that should normalize by 2026. On a constant-currency basis, adjusted EBITDA grew 11% in 2024 and is tracking higher in 2025, suggesting the underlying business commands a more reasonable multiple.

Comparing to peers provides context. Loomis AB trades at a similar EV/EBITDA but generates lower organic growth (3.9% vs. Brink's 5%) and operates with less margin expansion potential due to its focus on traditional CIT. Prosegur's higher leverage (3-4x) and slower growth (2.5%) justify its discount, while GardaWorld's private status and estimated 6x leverage reflect a more leveraged, less flexible capital structure. Brink's 44.40% ROE and 25.36% gross margin exceed all direct competitors, indicating superior capital efficiency.

The key valuation driver is the sustainability of margin expansion. If Brink's achieves its 20% North America EBITDA target and expands AMS/DRS to 35% of consolidated revenue by 2026, EBITDA could approach $1.1 billion, placing the stock at 7.1x forward EV/EBITDA—a compelling multiple for a business with 15-20% earnings growth potential. Conversely, if FX headwinds persist and AMS/DRS growth decelerates to 10%, margins stall and the multiple compresses toward peer levels of 8-9x, implying limited upside.

Conclusion: A 165-Year-Old Startup

Brink's is executing a rare feat: transforming a mature industrial business into a growth-oriented technology platform while maintaining profitability and returning capital to shareholders. The AMS/DRS strategy addresses the existential threat of cash digitization by capturing value from the inefficiencies of the legacy cash ecosystem. Each percentage point of revenue mix shift drives margin expansion and reduces capital intensity, creating a self-reinforcing cycle of higher returns on invested capital.

The investment thesis hinges on two variables: the pace of AMS/DRS adoption and management's ability to navigate FX volatility. The robust pipeline, early success with channel partners, and 33% conversion rate from CIT customers suggest adoption will meet or exceed the high end of guidance. FX headwinds, while material, are manageable through pricing discipline and natural hedging, with potential tailwinds emerging in 2026.

For investors, Brink's offers an asymmetric risk/reward profile. Downside is limited by the resilient CVM business, disciplined capital allocation, and a 0.87% dividend yield with a history of double-digit increases. Upside is driven by a margin inflection that could drive 20-30% earnings growth over the next three years as AMS/DRS scales and productivity initiatives mature. The market has yet to fully price the transformation, leaving opportunity for those who recognize that a 165-year-old company can indeed learn new tricks.