10-Q 1 bco-20220331.htm 10-Q bco-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 001-09148
 
THE BRINK’S COMPANY
 
 (Exact name of registrant as specified in its charter) 
Virginia
 
54-1317776
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 Bayberry Court, Richmond, Virginia 23226-8100
(Address of principal executive offices) (Zip Code)
(804) 289-9600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareBCONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer    Accelerated Filer    Non-Accelerated Filer    Smaller Reporting Company   Emerging Growth Company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   No  
As of May 5, 2022, 47,023,128 shares of $1 par value common stock were outstanding.
1


Part I - Financial Information
Item 1.  Financial Statements
THE BRINK’S COMPANY
and subsidiaries

Condensed Consolidated Balance Sheets
(Unaudited)
(In millions, except for per share amounts)March 31, 2022December 31, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$733.0 710.3 
Restricted cash313.2 376.4 
Accounts receivable, net771.1 701.8 
Prepaid expenses and other266.6 211.0 
Total current assets2,083.9 1,999.5 
Right-of-use assets, net323.4 299.1 
Property and equipment, net870.1 865.6 
Goodwill1,423.2 1,411.7 
Other intangibles495.5 491.2 
Deferred tax assets, net292.3 239.4 
Other262.0 260.2 
Total assets$5,750.4 5,566.7 
LIABILITIES AND EQUITY  
Current liabilities:  
Short-term borrowings$13.1 9.8 
Current maturities of long-term debt119.9 115.2 
Accounts payable199.2 211.2 
Accrued liabilities882.0 877.3 
Restricted cash held for customers150.3 215.5 
Total current liabilities1,364.5 1,429.0 
Long-term debt2,961.4 2,841.7 
Accrued pension costs213.0 219.3 
Retirement benefits other than pensions322.2 322.2 
Lease liabilities263.4 241.8 
Deferred tax liabilities48.8 49.2 
Other207.3 210.9 
Total liabilities5,380.6 5,314.1 
Commitments and contingent liabilities (notes 4, 8 and 14)
Equity: 
The Brink's Company ("Brink's") shareholders:  
Common stock, par value $1 per share:
Shares authorized: 100.0
Shares issued and outstanding: 2022 - 47.6; 2021 - 47.4
47.6 47.4 
Capital in excess of par value674.7 670.6 
Retained earnings374.7 312.9 
Accumulated other comprehensive loss(857.0)(907.9)
Brink’s shareholders240.0 123.0 
Noncontrolling interests129.8 129.6 
Total equity369.8 252.6 
Total liabilities and equity$5,750.4 5,566.7 
See accompanying notes to condensed consolidated financial statements.
2


THE BRINK’S COMPANY
and subsidiaries
 
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months
Ended March 31,
(In millions, except for per share amounts)20222021
Revenues$1,074.0 977.7 
Costs and expenses:
Cost of revenues839.7 758.8 
Selling, general and administrative expenses171.6 154.3 
Total costs and expenses1,011.3 913.1 
Other operating income (expense)(0.3)(2.9)
Operating profit62.4 61.7 
Interest expense(27.9)(27.2)
Interest and other nonoperating income (expense)(1.3)(5.5)
Income from continuing operations before tax33.2 29.0 
Provision (benefit) for income taxes(41.1)13.6 
Income from continuing operations74.3 15.4 
Loss from discontinued operations, net of tax(0.1) 
Net income74.2 15.4 
Less net income attributable to noncontrolling interests2.9 2.7 
Net income attributable to Brink’s71.3 12.7 
Amounts attributable to Brink’s
Continuing operations71.4 12.7 
Discontinued operations(0.1) 
Net income attributable to Brink’s$71.3 12.7 
Income per share attributable to Brink’s common shareholders(a):
Basic:
Continuing operations$1.50 0.26 
Net income$1.49 0.26 
Diluted:
Continuing operations$1.48 0.25 
Net income$1.48 0.25 
Weighted-average shares
Basic47.8 49.8 
Diluted48.3 50.5 
Cash dividends paid per common share$0.20 0.15 
(a)   Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.

3


THE BRINK’S COMPANY
and subsidiaries
 
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months
Ended March 31,
(In millions)20222021
Net income$74.2 15.4 
Benefit plan adjustments:
Benefit plan actuarial gains (losses)10.5 (0.2)
Benefit plan prior service costs(1.3)(1.3)
Total benefit plan adjustments9.2 (1.5)
Foreign currency translation adjustments32.1 (46.0)
Unrealized net losses on available-for-sale securities(0.4) 
Gains on cash flow hedges13.4 7.2 
Other comprehensive income (loss) before tax54.3 (40.3)
Provision for income taxes4.9 2.5 
Other comprehensive income (loss)49.4 (42.8)
Comprehensive income (loss)123.6 (27.4)
Less comprehensive income attributable to noncontrolling interests1.4 0.6 
Comprehensive income (loss) attributable to Brink's$122.2 (28.0)
See accompanying notes to condensed consolidated financial statements.

4


THE BRINK’S COMPANY
and subsidiaries
 
Condensed Consolidated Statements of Equity
(Unaudited)

Three Months ended March 31, 2022
(In millions)Shares
Common
Stock
Capital in Excess of Par Value
Retained
Earnings
AOCI*
Noncontrolling
Interests
Total
Balance as of December 31, 202147.4 $47.4 670.6 312.9 (907.9)129.6 252.6 
Net income— — — 71.3 — 2.9 74.2 
Other comprehensive income (loss)— — — — 50.9 (1.5)49.4 
Dividends to:       
Brink’s common shareholders ($0.20 per share)
— — — (9.5)— — (9.5)
Noncontrolling interests— — — — — (1.2)(1.2)
Share-based compensation:       
Stock awards and options:       
Compensation expense— — 7.1 — — — 7.1 
Other share-based benefit transactions0.2 0.2 (3.0)— — — (2.8)
Balance as of March 31, 202247.6 $47.6 674.7 374.7 (857.0)129.8 369.8 


Three Months ended March 31, 2021
(In millions)Shares
Common
Stock
Capital in Excess of Par Value
Retained
Earnings
AOCI*
Noncontrolling
Interests
Total
Balance as of December 31, 202049.5 $49.5 671.8 407.5 (1,000.0)73.7 202.5 
Cumulative effect of change in accounting principle(a)
— — — 0.5 — — 0.5 
Net income— — — 12.7 — 2.7 15.4 
Other comprehensive loss— — — — (40.7)(2.1)(42.8)
Dividends to:       
Brink’s common shareholders ($0.15 per share)
— — — (7.4)— — (7.4)
Noncontrolling interests— — — — — (0.4)(0.4)
Share-based compensation:       
Stock awards and options:       
Compensation expense— — 7.6 — — — 7.6 
Consideration from exercise of stock options— — 2.3 — — — 2.3 
Other share-based benefit transactions0.2 0.2 (4.2)— — — (4.0)
Acquisitions with noncontrolling interests— — — — — 51.4 51.4 
Balance as of March 31, 202149.7 $49.7 677.5 413.3 (1,040.7)125.3 225.1 

(a)Effective January 1, 2021, we adopted the provisions of ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. We recognized a cumulative effect adjustment to January 1, 2021 retained earnings as a result of adopting this standard. See Note 1 for further details.

* Accumulated other comprehensive income (loss)

See accompanying notes to condensed consolidated financial statements.
5


THE BRINK’S COMPANY
and subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months
Ended March 31,
(In millions)
20222021
Cash flows from operating activities:
 
 
Net income
$74.2 15.4 
Adjustments to reconcile net income to net cash used by operating activities:
Loss from discontinued operations, net of tax
0.1  
Depreciation and amortization
61.0 54.8 
Share-based compensation expense
7.1 7.6 
Deferred income taxes
(58.2)(1.8)
(Gain) loss on sale of property, equipment and marketable securities0.2 (1.9)
Impairment losses
2.1 1.2 
Retirement benefit funding (more) less than expense:
Pension
(0.3)2.1 
Other than pension
2.0 4.2 
Remeasurement losses due to Argentina currency devaluations
4.9 3.0 
Other operating
18.4 2.7 
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and income taxes receivable
(81.1)(24.6)
Accounts payable, income taxes payable and accrued liabilities
(4.8)(0.6)
Restricted cash held for customers(52.5)(66.4)
Customer obligations
(0.1)18.4 
Prepaid and other current assets
(48.4)(15.2)
Other
(0.9)(0.4)
Net cash used by operating activities
(76.3)(1.5)
Cash flows from investing activities:
 
 
Capital expenditures
(37.0)(32.2)
Acquisitions, net of cash acquired(11.4)(108.1)
Marketable securities:
Purchases(0.5) 
Sales0.5 0.6 
Cash proceeds from sale of property and equipment1.2 1.9 
Net change in loans held for investment(4.8) 
Acquisition of customer contracts (0.7)
Net cash used by investing activities(52.0)(138.5)
Cash flows from financing activities:  
Borrowings (repayments) of debt:  
Short-term borrowings3.4 10.5 
Long-term revolving credit facilities:
Borrowings1,288.7 399.5 
Repayments(1,153.0)(283.3)
Other long-term debt:  
Borrowings3.9 2.6 
Repayments(30.6)(27.0)
Settlement of acquisition related contingencies 6.1 
Payment of acquisition-related obligation (2.9)
Dividends to:  
Shareholders of Brink’s(9.5)(7.4)
Noncontrolling interests in subsidiaries(1.2)(0.4)
Proceeds from exercise of stock options 2.3 
Tax withholdings associated with share-based compensation(3.8)(5.1)
Other0.9 0.5 
Net cash provided by financing activities98.8 95.4 
Effect of exchange rate changes on cash(11.0)(26.0)
Cash, cash equivalents and restricted cash:  
Decrease(40.5)(70.6)
Balance at beginning of period1,086.7 942.9 
Balance at end of period$1,046.2 872.3 

See accompanying notes to condensed consolidated financial statements.
6


THE BRINK’S COMPANY
and subsidiaries

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 - Basis of presentation

The Brink’s Company (along with its subsidiaries, “Brink’s”, the “Company”, “we”, “us” or “our”) has four operating segments:
North America
Latin America
Europe
Rest of World

Our unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates
In accordance with GAAP, we have made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements. Actual results could differ materially from these estimates. The most significant estimates are related to goodwill, intangibles and other long-lived assets, pension and other retirement benefit assets and obligations, legal contingencies, allowance for doubtful accounts, deferred tax assets and purchase price allocations.

In the first quarter of 2022, we further refined our global methodology of estimating the allowance for doubtful accounts. Our previous method to estimate currently expected credit losses in receivables (the allowance) was weighted significantly to a review of historical loss rates and specific identification of higher risk customer accounts. It also considered current and expected economic conditions, particularly the effects of the coronavirus (COVID-19) pandemic, in determining an appropriate allowance. As many of our regions begin to recover from the pandemic, we have re-assessed those earlier assumptions and estimates. Our updated method now also includes an estimated allowance for accounts receivable significantly past due in order to adjust for at-risk receivables not captured in our previous method. As part of the analysis under the updated estimation methodology, we noted an increase in accounts receivable significantly past due, particularly in the U.S., and we recorded an additional allowance of $16.7 million. Due to the fact that management has excluded this amount when evaluating internal performance, we have excluded it from segment results.

While some of our locations noted improved economics in 2021 and into the first quarter of 2022, our current estimates could be materially adversely affected in future periods by the COVID-19 pandemic, including as a result of new variants of the COVID-19 virus, such as the Delta and, more recently, Omicron variants. The COVID-19 pandemic began to have an adverse impact on our results of operations in the quarter ended March 31, 2020 as a result of reduced customer volumes, changes to our operating procedures and increases in our costs to provide services. We have taken and continue to take actions to adjust the way we operate and reduce our costs through restructuring activities and operational changes to address these impacts and align to future anticipated revenue levels.

We are continually assessing the impact that the COVID-19 pandemic, and the actions taken in response to it, will have on our employees, businesses and segments, customers and vendors and the industries that we serve. The full impact depends on many factors that are uncertain or not yet identifiable. We expect these factors will continue to impact our financial condition and our results of operations for a duration that is currently unknown. We will continue to monitor developments affecting our condensed consolidated financial statements, including indicators that goodwill or other long-lived assets may be impaired, increases in valuation allowances for doubtful accounts or deferred tax assets may be necessary or other accruals that may increase or be necessary resulting from actions taken to reduce our cost structure or conserve our liquidity. As noted above, we increased our allowance for doubtful accounts based on a re-assessment of our estimate and the aging of receivables in the wake of the pandemic.

Consolidation
The condensed consolidated financial statements include our controlled subsidiaries. Control is determined based on ownership rights or, when applicable, based on whether we are considered to be the primary beneficiary of a variable interest entity. See "Venezuela" section below for further information. For controlled subsidiaries that are not wholly-owned, the noncontrolling interests are included in net income and in total equity.

Investments in businesses that we do not control, but for which we have the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method and our proportionate share of income or loss is recorded in other operating income (expense). Investments in businesses for which we do not have the ability to exercise significant influence over operating and financial policies are accounted for at fair value, if readily determinable, with changes in fair value recognized in net income. For equity
7


investments that do not have a readily determinable fair value, we measure these investments at cost minus impairment, if any, plus or minus changes from observable price changes. All intercompany accounts and transactions have been eliminated in consolidation.

Foreign Currency Translation
Our condensed consolidated financial statements are reported in U.S. dollars. Our foreign subsidiaries maintain their records primarily in the currency of the country in which they operate. The method of translating local currency financial information into U.S. dollars depends on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary or not. Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.

Assets and liabilities of foreign subsidiaries in non-highly inflationary economies are translated into U.S. dollars using rates of exchange at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss). Revenues and expenses are translated at rates of exchange in effect during the year. Transaction gains and losses are recorded in net income.

Foreign subsidiaries that operate in highly inflationary countries use the U.S. dollar as their functional currency. Local currency monetary assets and liabilities are remeasured into U.S. dollars using rates of exchange as of each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings. Other than nonmonetary equity securities, nonmonetary assets and liabilities do not fluctuate with changes in local currency exchange rates to the dollar. For nonmonetary equity securities traded in highly inflationary economies, the fair market value of the equity securities are remeasured at the current exchange rates to determine gain or loss to be recorded in net income. Revenues and expenses are translated at rates of exchange in effect during the year.

Argentina
We operate in Argentina through wholly owned subsidiaries and a smaller controlled subsidiary (together "Brink's Argentina"). Revenues from Brink's Argentina represented approximately 5% of our consolidated revenues for the first three months of 2022 and 4% of our consolidated revenues for the first three months of 2021.

The operating environment in Argentina continues to present business challenges, including ongoing devaluation of the Argentine peso and significant inflation. In the first three months of 2022 and 2021, the Argentine peso declined approximately 7% (from 103.1 to 111.1 pesos to the U.S. dollar) and approximately 8% (from 84.0 to 91.7 pesos to the U.S. dollar), respectively. For the year ended December 31, 2021, the Argentine peso declined approximately 19% (from 84.0 to 103.1 pesos to the U.S. dollar).

Beginning July 1, 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, we consolidated Brink's Argentina using our accounting policy for subsidiaries operating in highly inflationary economies beginning with the third quarter of 2018. Argentine peso-denominated monetary assets and liabilities are remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in earnings. In the first three months of 2022, we recognized a $4.9 million pretax remeasurement loss. In the first three months of 2021, we recognized a $3.0 million pretax remeasurement loss.

At March 31, 2022, Argentina's economy remains highly inflationary for accounting purposes. At March 31, 2022, we had net monetary assets denominated in Argentine pesos of $69.0 million (including cash of $62.7 million). At March 31, 2022, we had net nonmonetary assets of $154.0 million (including $99.8 million of goodwill, $7.8 million in equity securities denominated in Argentine pesos and $4.1 million in debt securities denominated in Argentine pesos).

At December 31, 2021, we had net monetary assets denominated in Argentine pesos of $60.1 million (including cash of $52.9 million) and net nonmonetary assets of $155.3 million (including $99.8 million of goodwill, $8.2 million in equity securities denominated in Argentine pesos and $4.3 million in debt securities denominated in Argentine pesos).

During September 2019, the Argentine government announced currency controls on both companies and individuals. The Argentine central bank issued details as to how the exchange control procedures would operate in practice. Under these procedures, central bank approval is required for many transactions, including dividend repatriation abroad.

We have previously elected to use other market mechanisms to convert Argentine pesos into U.S. dollars. Conversions under these other market mechanisms generally settle at rates that are less favorable than the rates at which we remeasure the financial statements of Brink’s Argentina. We did not have any such conversion losses in the three months ended March 31, 2022 or March 31, 2021.
Although the Argentine government has implemented currency controls, Brink’s management continues to provide guidance and strategic oversight, including budgeting and forecasting for Brink’s Argentina. We continue to control our Argentina business for purposes of consolidation of our financial statements and continue to monitor the situation in Argentina.
 
Venezuela
Our Venezuelan operations offer transportation and route-based logistics management services for cash and valuables throughout Venezuela. Currency exchange regulations, combined with other government regulations, such as price controls and strict labor laws, significantly limit our ability to make and execute operational decisions at our Venezuelan subsidiaries. As a result of these conditions, we do not meet the accounting criteria for control over our Venezuelan operations and, as a result, we report the results of our investment in our Venezuelan subsidiaries using the cost method of accounting, the basis of which approximates zero. Prior to the imposition of the U.S. government sanctions in 2019, we provided immaterial amounts of financial support to our Venezuela operations. We continue to monitor the situation in Venezuela, including the imposition of sanctions by the U.S. government targeting Venezuela.
8



Goodwill
Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. We review goodwill for impairment annually, as of October 1, and whenever events or circumstances in interim periods indicate that it is more likely than not that an impairment may have occurred. Impairment indicators were reviewed as of March 31, 2022 and we concluded that there were no indicators that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We will continue to monitor results in future periods to determine whether any indicators of impairment exist that would cause us to perform an impairment review.

Restricted Cash
In France and Malaysia, we offer services to certain of our customers where we manage some or all of their cash supply chains. In connection with these offerings, we take temporary title to certain customers' cash, which is included as restricted cash in our financial statements due to customer agreement or regulation. In addition, in accordance with a revolving credit facility, as of March 31, 2022, we are required to maintain a restricted cash reserve of $15.0 million (also $15.0 million at December 31, 2021) and, due to this contractual restriction, we have classified these amounts as restricted cash in our condensed consolidated balance sheet.

New Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 was effective for us on January 1, 2021. We recognized a cumulative-effect adjustment increasing retained earnings by $0.5 million on January 1, 2021.


9


Note 2 - Revenue from Contracts with Customers

Performance Obligations
We provide various services to meet the needs of our customers and we group these service offerings into three broad categories: Core Services, High-Value Services and Other Security Services.

Core Services
Cash-in-transit ("CIT") and basic ATM services are core services we provide to customers throughout the world. We charge customers per service performed or based on the value of goods transported. CIT services generally involve the secure transportation of cash, securities and other valuables between businesses, financial institutions and central banks. Basic ATM services are generally composed of management services, including cash replenishment and forecasting, remote monitoring, transaction processing, installation and maintenance.

High-Value Services
Our high-value services leverage our brand, global infrastructure and core services and include cash management services, global services, ATM managed services and payment services. We offer a variety of cash management services such as currency and coin counting and sorting, deposit preparation and reconciliation, and safe device installation and servicing (including our CompuSafe® service). Our global services business provides secure ground, sea and air transportation and storage of highly-valued commodities including diamonds, jewelry, precious metals and other valuables. We provide ATM managed services in North America and Europe for customers using Brink's-owned machines as well as machines owned by third parties. We also provide payment services which include bill payment and processing services on behalf of utility companies and other service providers plus general purpose reloadable prepaid cards and payroll cards.

Other Security Services
Our other security services feature the protection of airports, offices, warehouses, stores, and public venues in Europe, Rest of World and Latin America.

For performance obligations related to the services described above, we generally satisfy our obligations as each action to provide the service to the customer occurs. Because the customers simultaneously receive and consume the benefits from our services, these performance obligations are deemed to be satisfied over time. We use an output method, units of service provided, to recognize revenue because that is the best method to represent the transfer of our services to the customer at the agreed upon rate for each action.

Although not as significant as our service offerings, we also sell goods to customers from time to time, such as safe devices. In those transactions, we satisfy our performance obligation at a point in time. We recognize revenue when the goods are delivered to the customer as that is the point in time that best represents when control has transferred to the customer.

Our contracts with customers describe the services we can provide along with the fees for each action to provide the service. We typically send invoices to customers for all of the services we have provided within a monthly period and payments are generally due within 30 to 60 days of the invoice date.

Although our customer contracts specify the fees for each action to provide service, the majority of the services stated in our contracts do not have a defined quantity over the contract term. Accordingly, the transaction price is considered variable as there is an unknown volume of services that will be rendered over the course of the contract. We recognize revenue for these services in the period in which they are provided to the customer based on the contractual rate at which we have the right to invoice the customer for each action.

Some of our contracts with customers contain clauses that define the level of service that the customer will receive. The service level agreements (“SLA”) within those contracts contain specific calculations to determine whether the appropriate level of service has been met within a specific period, which is typically a month. We estimate SLA penalties and recognize the amounts as a reduction to revenue.

Taxes collected from customers and remitted to governmental authorities are not included in revenues in the condensed consolidated statements of operations.

10


Revenue Disaggregated by Reportable Segment and Type of Service
(In millions)
Core ServicesHigh-Value ServicesOther Security ServicesTotal
Three months ended March 31, 2022
Reportable Segments:
North America$185.6 183.2  368.8 
Latin America172.4 113.5 5.4 291.3 
Europe103.9 84.7 33.5 222.1 
Rest of World54.7 124.3 12.8 191.8 
Total reportable segments$516.6 505.7 51.7 1,074.0 
Three months ended March 31, 2021
Reportable Segments:
North America$179.4 137.7  317.1 
Latin America160.2 105.5 4.0 269.7 
Europe111.3 71.1 32.0 214.4 
Rest of World54.6 111.7 10.2 176.5 
Total reportable segments$505.5 426.0 46.2 977.7 

The majority of our revenues from contracts with customers are earned by providing services and these performance obligations are satisfied over time. Smaller amounts of revenues are earned from selling goods, such as safes, to customers where the performance obligations are satisfied at a point in time.

Certain of our high-value services involve the leasing of assets, such as safes, to our customers along with the regular servicing of those safe devices. Revenues related to the leasing of these assets are recognized in accordance with applicable lease guidance, but are included in the above table as the amounts are a small percentage of overall revenues.

Contract Balances
Contract Assets
Although payment terms and conditions can vary, for the majority of our customer contracts, we invoice for all of the services provided to the customer within a monthly period. For certain customer contracts, the timing of our performance may precede our right to invoice the customer for the total transaction price. For example, Brink's affiliates in certain countries, primarily in Latin America, negotiate annual price adjustments with certain customers and, once the price increases are finalized, the pricing changes are made retroactive to services provided in earlier periods. These retroactive pricing adjustments are estimated and recognized as revenue with a corresponding contract asset in the same period in which the related services are performed. As the estimate of the ultimate transaction price changes, we recognize a cumulative catch-up adjustment for the change in estimate. In our Rest of World segment, certain Brink's affiliates provide services to specific customers and, per contract, a portion of the consideration is retained by the customers until the contract is completed. The retention amounts are reported as contract assets until we have the right to bill the customer for these amounts. Contract assets expected to be collected within one year ($4.0 million at March 31, 2022) are included in prepaid expenses and other on the condensed consolidated balance sheet. Amounts not expected to be billed and collected within one year ($3.7 million at March 31, 2022) are reported in other assets on the condensed consolidated balance sheet.

Contract Liabilities
For other customer contracts, we may obtain the right to payment or receive customer payments prior to performing the related services under the contract. When the right to customer payments or receipt of payments precedes our performance, we recognize a contract liability, which is included in accrued liabilities on the condensed consolidated balance sheet.

The opening and closing balances of receivables, contract assets and contract liabilities related to contracts with customers are as follows:
(In millions) ReceivablesContract AssetsContract Liabilities
Opening (January 1, 2022)$701.8 6.3 17.9 
Closing (March 31, 2022)771.1 7.7 18.2 
Increase (decrease)$69.3 1.4 0.3 

The amount of revenue recognized in the three months ended March 31, 2022 that was included in the January 1, 2022 contract liabilities balance was $3.8 million. This revenue consists of services provided to customers who had prepaid for those services prior to the current year.

Revenue recognized in the three months ended March 31, 2022 from performance obligations satisfied in the prior year was not significant. This revenue is a result of changes in the transaction price of our contracts with customers.
11


Contract Costs
Sales commissions directly related to obtaining new contracts with customers are capitalized when incurred and are then amortized to expense ratably over the term of the contracts. At March 31, 2022, the net capitalized costs to obtain contracts was included in other assets on the condensed consolidated balance sheet. The capitalized amount at March 31, 2022 and December 31, 2021 were $2.1 million and $2.0 million, respectively. The amortization expense in the first three months of 2022 and 2021 was not significant in either period.

Practical Expedients
For the majority of our contracts with customers, we invoice a fixed amount for each unit of service we have provided. These contracts provide us with the right to invoice for an amount or rate that corresponds to the value we have delivered to our customers. The volume of services that will be provided to customers over the term is not known at inception of these contracts. Therefore, while the rate per unit of service is known, the transaction price itself is variable. For this reason, we recognize revenue from these contracts equal to the amount for which we have the contractual right to invoice the customers. Because we are not required to estimate variable consideration related to the transaction price in order to recognize revenue, we are also not required to estimate the variable consideration to provide certain disclosures. As a result, we have elected to use the optional exemption related to the disclosure of transaction prices, amounts allocated to remaining performance obligations and the future periods in which revenue will be recognized, sometimes referred to as backlog.

We have also elected to use the practical expedient for financing components related to our contract liabilities. We do not recognize interest expense on contracts for which the period between our receipt of customer payments and our service to the customer is one year or less.

12


Note 3 - Segment information

We identify our operating segments based on how our chief operating decision maker (“CODM”) allocates resources, assesses performance and makes decisions. Our CODM is our President and Chief Executive Officer. Our CODM evaluates performance and allocates resources to each operating segment based on a profit or loss measure which, at the reportable segment level, excludes the following:
Corporate expenses - include corporate headquarters costs, regional management costs, currency transaction gains and losses, adjustments to reconcile segment accounting policies to GAAP, and costs related to global initiatives.
Other items not allocated to segments - certain significant items such as reorganization and restructuring actions that are evaluated on an individual basis by management and are not considered part of the ongoing activities of the business are excluded from segment results. We also exclude certain costs, gains and losses related to acquisitions and dispositions of assets and of businesses. Brink's Argentina is consolidated using our accounting policy for subsidiaries operating in highly inflationary economies. We have excluded from our segment results the impact of highly inflationary accounting in Argentina, including currency remeasurement losses. Net charges related to a change in the methodology for estimating the allowance for doubtful accounts have been excluded from segment results. We have also excluded from our segment results net charges related to an internal loss in our U.S. global services operations. The net impact of the internal losses has included estimated bad debt expense for uncollectible receivables as well as legal costs to recover losses from insurance. The charges related to the internal losses have been offset by collections of previously reserved receivables and insurance recoveries.

We manage our business in the following four segments:

North America – operations in the U.S. and Canada, including the Brink’s Global Services ("BGS") line of business,
Latin America – operations in Latin American countries where we have an ownership interest, including the BGS line of business. This segment includes operations in Mexico, which was previously reported in the North America segment,
Europe – total operations in European countries that primarily provide services outside of the BGS line of business, and
Rest of World – operations in the Middle East, Africa and Asia. This segment also includes total operations in European countries that primarily provide BGS services and BGS activity in Latin American countries where we do not have an ownership interest.

Prior to 2021, all business units within the operating segments followed an internal Brink's accounting policy for determining an allowance for doubtful accounts and recognizing bad debt expense. The allowance amounts reported by the operating segments were then reconciled to the required U.S. GAAP estimated consolidated allowance amount, and any differences were reported as part of Corporate expenses. During the first quarter of 2021, we changed the allowance calculation method of the U.S. business within the North America operating segment, in order to more closely align it with U.S. GAAP requirements. Differences between U.S. GAAP and existing internal policy were not significant for all other business units within the operating segments, and so no other changes were made, and reconciling amounts for those units will continue to be reported as part of Corporate expense. For the North America segment, the impact of this change in reporting was to reduce the segment allowance and to increase segment operating profit by $12.3 million in the first quarter of 2021. There was no net impact to condensed consolidated results, as a corresponding offsetting adjustment occurred on Corporate expenses.


13


The following table summarizes our revenues and segment profit for each of our reportable segments and reconciles these amounts to consolidated revenues and operating profit:
Revenues
Operating Profit
Three Months Ended March 31,Three Months Ended March 31,
(In millions)
2022202120222021
Reportable Segments:
 
 
 
 
North America
$368.8 317.1 24.4 32.3 
Latin America
291.3 269.7 63.0 58.7 
Europe222.1 214.4 14.8 10.6 
Rest of World
191.8 176.5 33.1 30.4 
Total reportable segments
1,074.0 977.7 135.3 132.0 
Reconciling Items:
Corporate expenses:
General, administrative and other expenses
— — (28.5)(30.1)
Foreign currency transaction gains (losses)
— — 2.4 0.1 
Reconciliation of segment policies to GAAP(a)
— — 2.9 (11.9)
Other items not allocated to segments:
Reorganization and Restructuring(b)
— — (11.7)(6.6)
Acquisitions and dispositions(c)
  (15.2)(18.7)
Argentina highly inflationary impact(d)
— — (6.1)(3.9)
Change in allowance estimate(e)
— — (16.7)— 
Internal loss(f)
   0.8 
Total
$1,074.0 977.7 $62.4 61.7 

(a)This line item includes adjustments to bad debt expense and a Mexico profit sharing plan accrual reported by the segments to the estimated consolidated amounts required by U.S. GAAP.
(b)Management periodically implements restructuring actions in targeted sections of our business. Due to the unique circumstances around the charges related to these actions, they have not been allocated to segment results.
(c)Certain acquisition and disposition items that are not considered part of the ongoing activities of the business and are special in nature are consistently excluded from segment results. These items include amortization expense for acquisition-related intangible assets and integration, transaction and restructuring costs related to business acquisitions.
(d)We have designated Argentina's economy as highly inflationary for accounting purposes. Currency remeasurement gains and losses related to peso-denominated monetary assets and liabilities as well as incremental expense related to nonmonetary assets are excluded from segment results.
(e)Represents charge related to a change in our methodology to estimate our allowance for doubtful accounts recognized in the first quarter of 2022. See Note 1 for further details.
(f)Represents net credits related to an internal loss in our U.S. global services operations. The credits result from collection of previously reserved accounts receivable.


14


Note 4 - Retirement benefits

Pension plans

We have various defined-benefit pension plans covering eligible current and former employees.  Benefits under most plans are based on salary and years of service.

The components of net periodic pension cost for our pension plans were as follows:
U.S. PlansNon-U.S. PlansTotal
(In millions)202220212022202120222021
Three months ended March 31,      
Service cost$  2.1 2.2 2.1 2.2 
Interest cost on projected benefit obligation5.7 5.3 3.3 2.9 9.0 8.2 
Return on assets – expected(12.1)(11.8)(2.9)(3.1)(15.0)(14.9)
Amortization of losses5.8 8.4 0.5 1.6 6.3 10.0 
Settlement loss  0.4 0.4 0.4 0.4 
Net periodic pension cost$(0.6)1.9 3.4 4.0 2.8 5.9 
We did not make cash contributions to the primary U.S. pension plan in 2021 or the first three months of 2022. Based on current assumptions described in our Annual Report on Form 10-K for the year ended December 31, 2021, we do not expect to make contributions to the primary U.S. pension plan in the foreseeable future.

Retirement benefits other than pensions
We provide retirement healthcare benefits for eligible current and former U.S., Canadian, and Brazilian employees. Retirement benefits related to our former U.S. coal operations include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for United Mine Workers of America Represented Employees (the “UMWA plans”) as well as costs related to Black Lung obligations.

The components of net periodic postretirement cost related to retirement benefits other than pensions were as follows:
UMWA PlansBlack Lung and Other PlansTotal
(In millions)202220212022202120222021
Three months ended March 31,      
Interest cost on accumulated postretirement benefit obligations$2.7 2.5 0.9 0.8 3.6 3.3 
Return on assets – expected(3.3)(3.1)  (3.3)(3.1)
Amortization of losses3.1 4.8 1.9 2.1 5.0 6.9 
Amortization of prior service cost(1.2)(1.2)  (1.2)(1.2)
Net periodic postretirement cost$1.3 3.0 2.8 2.9 4.1 5.9 
The components of net periodic pension cost and net periodic postretirement cost other than the service cost component are included in interest and other nonoperating income (expense) in the condensed consolidated statements of operations.

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Note 5 - Income taxes
Three Months Ended March 31,
 20222021
Continuing operations  
Provision (benefit) for income taxes (in millions)$(41.1)13.6 
Effective tax rate(123.8 %)46.9 %

Valuation Allowance-Tax Credits
In the first quarter of 2022, we concluded that it is more likely than not that a substantial amount of the U.S. deferred tax assets for U.S. foreign tax credit and general business credit carryforwards that previously required a valuation allowance would be realized. Our conclusion was based upon an analysis of the final foreign tax credit regulations that the U.S. Treasury published in the Federal Register on January 4, 2022. Based upon this analysis, we determined a significant amount of the post-2021 foreign withholding taxes will now be ineligible for U.S. foreign income tax credit treatment and therefore we are forecasting that our U.S. operations will no longer annually be generating new foreign tax credits in excess of its annual foreign tax credit utilization limit. As a result, we expect to be able to utilize a substantial amount of our foreign tax credit and general business tax credit carryforwards to offset future tax prior to their expiration. Accordingly, we reversed a substantial amount of our valuation allowance on our net U.S. deferred tax assets, resulting in a $58.3 million benefit in our provision for income taxes. This benefit was recorded in the first quarter of 2022. Due to the novel approach that the final regulations impose, it is possible that further developments in foreign country or U.S. tax laws could occur and may require us to change our assessment of the ultimate amounts we consider more-likely-than-not to be realized.

2022 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in the first three months of 2022 was less than the 21% U.S. statutory rate primarily due to the release of valuation allowances on U.S. tax credits deemed realizable as a result of the issuance of U.S. final foreign tax credit regulations, offset by the geographical mix of earnings, the seasonality of book losses for which no tax benefit can be recorded, nondeductible expenses in Mexico, taxes on cross border payments and U.S. taxable income limitations, and the characterization of a French business tax as an income tax.

2021 Compared to U.S. Statutory Rate
The effective income tax rate on continuing operations in the first three months of 2021was greater than the 21% U.S. statutory rate primarily due to the geographical mix of earnings, the seasonality of book losses for which no tax benefit can be recorded, nondeductible expenses in Mexico, taxes on cross border payments and U.S. taxable income limitations, and the characterization of a French business tax as an income tax.
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Note 6 -