BRINKS CO (BCO) FY 2021 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE BRINK’S COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AS OF DECEMBER 31, 2021 AND 2020

AND FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED DECEMBER 31, 2021

TABLE OF CONTENTS

The discussion of operating results and financial condition comparing 2020 versus 2019 can be found in Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 10-K"), starting on page 21.

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OPERATIONS

The Brink’s Company offers secure transportation and route-based logistics management services for cash and valuables throughout the world.  These services include:

•Cash-in-transit services – armored vehicle transportation of valuables

•Basic ATM services – replenishing and maintaining customers’ automated teller machines; providing network infrastructure services

•Global services – secure international transportation of valuables

•Cash management services

◦Money processing (e.g., counting, sorting, wrapping, checking condition of bills, etc.) and other cash management services

◦Digital cash payment services that provide advance credit for cash deposited in Brink’s-provided tech-enabled safe devices and other services related to deploying and servicing “intelligent” safes and safe control devices (including our patented CompuSafe® service)

◦Check imaging services

•Vaulting services – combines cash-in-transit services, cash management services, vaulting and electronic reporting technologies for banks

•ATM managed services – services for ATM management, including cash replenishment, replenishment forecasting, cash optimization, ATM remote monitoring, service call dispatching, transaction processing, installation services, and first and second line maintenance.

•Payment services – bill payment and collection services on behalf of utility companies and other billers at any of our Brink’s or Brink’s – operated payment locations in Latin America and Brink’s Money™ general purpose reloadable prepaid cards and corporate debit cards in the U.S.

•Commercial security systems services – design and installation of security systems in designated markets in Europe

•Guarding services – protection of airports, offices, and certain other locations in Europe, Rest of World and Latin America with or without electronic surveillance, access control, fire prevention and highly trained patrolling personnel

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,

•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.

We believe that Brink’s has significant competitive advantages including:

•brand name recognition

•reputation for a high level of service and security

•risk management and logistics expertise

•global network and customer base

•proven operational excellence, and

•high-quality insurance coverage and financial strength

We focus our time and resources on service quality, protecting and strengthening our brand, and addressing our risks.  Our marketing and sales efforts are enhanced by the “Brink’s” brand, so we seek to protect and build its value.  Because our services focus on handling, transporting, protecting and managing valuables, we strive to understand and manage risk.

In order to earn an adequate return on capital, we focus on the effective and efficient use of resources in addition to our pricing discipline.  We attempt to maximize the amount of business that flows through our branches, vehicles and systems in order to obtain the lowest costs possible without compromising safety, security or service.

Operating results may vary from period to period.  Because revenues are generated from charges per service performed or based on the value of goods transported, they can be affected by both the level of economic activity and the volume of business for specific customers.  We also periodically incur costs to change the scale of our operations when volumes increase or decrease.  Incremental costs incurred usually relate to increasing or decreasing the number of employees and increasing or decreasing branches or administrative facilities.  In addition, security costs can vary depending on performance, the cost of insurance coverage, and changes in crime rates (i.e., attacks and robberies).

Brink’s revenues and related operating profit are generally higher in the second half of the year, particularly in the fourth quarter, due to generally increased economic activity associated with the holiday season.

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RESULTS OF OPERATIONS

Analysis of Results

Consolidated Results

GAAP and Non-GAAP Financial Measures We provide an analysis of our operations below on both a generally accepted accounting principles (“GAAP”) and non-GAAP basis.  The purpose of the non-GAAP information is to report our operating profit, income from continuing operations and earnings per share without certain income and expense items that do not reflect the regular earnings of our operations.  The non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We do not consider these items to be reflective of our core operating performance.  The non-GAAP adjustments used to reconcile our GAAP results are described in detail on pages 28-30 and are reconciled to comparable GAAP measures on pages 35-37.

Definition of Organic Growth Organic growth represents the change in revenues or operating profit between the current and prior period excluding the effect of acquisitions for and dispositions for one year after the transaction and changes in currency exchange rates. See definitions on page 26.

(a)Amounts reported in this table are attributable to the shareholders of Brink’s and exclude earnings related to noncontrolling interests.

(b)Non-GAAP results are reconciled to the applicable GAAP results on pages 35–37.

GAAP Basis

Analysis of Consolidated Results: 2021 versus 2020

Consolidated Revenues  Revenues increased $509.3 million primarily due to the favorable impact of acquisitions ($315.4 million), organic increases in Latin America ($102.2 million), North America ($64.4 million), Europe ($15.4 million), and Rest of World ($8.6 million), and the favorable impact of currency exchange rates ($3.3 million). The currency impact was driven primarily by the euro, the Mexican peso, and most other currencies globally, partially offset by the Argentine peso and Brazilian real. Revenues increased 5% on an organic basis due to volume recovery versus prior year results which were more impacted by the COVID-19 pandemic, as well as price increases in the U.S. and Argentina. See above for our definition of “organic.”

Consolidated Costs and Expenses  Cost of revenues increased 12% to $3,235.8 million primarily due to the impact of acquisitions, higher labor and other operational costs from volume recovery, and currency exchange rates, partially offset by lower costs incurred related to restructuring actions. Selling, general and administrative costs increased 8% to $629.7 million due to the impact of corporate expenses and the operating impact of acquisitions, partially offset by lower costs incurred versus the prior year related to acquisitions (including integration) and on an internal loss in the U.S. global services operations.

Consolidated Operating Profit Operating profit increased $141.2 million due mainly to:

•organic increases in Latin America ($45.7 million), North America ($44.9 million), Europe ($28.1 million), and Rest of World ($2.5 million)

•the following items included in "Other items not allocated to segments":

◦income and lower charges related to an internal loss in the U.S. global services operations versus charges incurred in the prior year ($28.0 million),

◦lower charges related to reorganization and restructuring ($23.0 million), and

◦lower costs related to business acquisitions and dispositions ($10.6 million), including the impact of acquisition-related charges and intangible asset amortization in 2021,

•the favorable impact of business acquisitions ($29.6 million), excluding intangible amortization and acquisition-related charges,

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partially offset by:

•higher corporate expenses on an organic basis ($53.0 million),

•an estimated loss of $9.5 million in the third quarter of 2021 related to a potential fine for a Chile antitrust matter included in "Other items not allocated to segments", and

•unfavorable changes in currency exchange rates ($9.1 million) driven by the Argentine peso and Brazilian real and partially offset by lower foreign currency transaction losses as 2020 included a loss of $10.4 million from converting Argentine pesos into U.S. dollars, as well as a favorable impact from the Mexican peso, euro, and most other currencies globally.

Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts Income from continuing operations attributable to Brink’s shareholders increased $86.3 million to $103.1 million primarily due to the operating profit increase mentioned above, lower interest and other non-operating expense ($30.7 million), partially offset by higher income tax expense ($63.7 million), higher interest expense ($15.7 million), and higher income attributable to noncontrolling interests ($6.2 million). Diluted earnings per share from continuing operations was $2.06, up from $0.33 in 2020.

Non-GAAP Basis

Analysis of Consolidated Results: 2021 versus 2020

Non-GAAP Consolidated Revenues  Non-GAAP revenues increased $509.3 million primarily due to the favorable impact of acquisitions ($315.4 million), organic increases in Latin America ($102.2 million), North America ($64.4 million), Europe ($15.4 million), and Rest of World ($8.6 million), and the favorable impact of currency exchange rates ($3.3 million). The currency impact was driven primarily by the euro, the Mexican peso, and most other currencies globally, partially offset by the Argentine peso and Brazilian real. Revenues increased 5% on an organic basis due to volume recovery versus prior year results which were more impacted by the COVID-19 pandemic, as well as price increases in the U.S. and Argentina. See above for our definition of “organic.”

Non-GAAP Consolidated Operating Profit Non-GAAP operating profit increased $89.2 million due mainly to:

•organic increases in Latin America ($45.7 million), North America ($44.9 million), Europe ($28.1 million), and Rest of World ($2.5 million), and

•the favorable impact of business acquisitions ($29.6 million), excluding intangible amortization and acquisition-related charges,

partially offset by:

•higher corporate expenses on an organic basis ($53.0 million), and

•unfavorable changes in currency exchange rates ($8.6 million) driven by the Argentine peso and Brazilian real and partially offset by lower foreign currency transaction losses as third quarter of 2020 included a loss of $10.4 million from converting Argentine pesos into U.S. dollars, as well as a favorable impact from the Mexican peso, euro, and most other currencies globally.

Non-GAAP Consolidated Income from Continuing Operations Attributable to Brink’s and Related Per Share Amounts  Non-GAAP income from continuing operations attributable to Brink’s shareholders increased $47.1 million to $237.9 million due to the operating profit increase mentioned above and higher interest and other non-operating income ($15.8 million), partially offset by higher income tax expense ($34.8 million), higher interest expense ($16.3 million), and higher non-controlling interest ($6.8 million). Diluted earnings per share from continuing operations was $4.75, up from $3.76 in 2020.

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Revenues and Operating Profit by Segment

Amounts may not add due to rounding.

(a)Non-GAAP amounts include the impact of prior year comparable period results for acquired and disposed businesses. GAAP results also include the impact of acquisition-related intangible amortization, restructuring and other charges, and disposition related gains/losses.

(b)The amounts in the “Currency” column consist of the effects of Argentina devaluations under highly inflationary accounting and the sum of monthly currency changes. Monthly currency changes represent the accumulation throughout the year of the impact on current period results of changes in foreign currency rates from the prior year period.

(c)Segment revenues equal our total reported non-GAAP revenues.

(d)In the first quarter of 2021, North America operating profit benefited $12.3 million from a change in our method to calculate the allowance for doubtful accounts, with an offsetting higher expense at Corporate. There was no net impact on consolidated operating profit. See further discussion below in Analysis of Segment Results.

(e)Corporate expenses are not allocated to segment results.  Corporate expenses include salaries and other costs to manage the global business and to perform activities required by public companies.

(f)See pages 28–30 for more information.

Analysis of Segment Results: 2021 versus 2020

North America

Revenues increased 12% ($145.7 million) primarily due to the favorable impact of acquisitions ($72.4 million), a 5% organic increase ($64.4 million), and the favorable impact of currency exchange rates ($8.9 million) from the Canadian dollar. Organic revenue increased primarily due to price increases and global services volume growth in the U.S. and organic growth from PAI. Operating profit increased 62% ($56.7 million) primarily due to an organic increase ($44.9 million), the favorable impact of acquisitions ($11.6 million), and the favorable impact of currency exchange rates ($0.2 million). The organic profit increase was driven by the impact of bad debt expense versus the prior year, productivity initiatives in the U.S. and Canada, and revenue growth from U.S. global services and PAI. The increase was partially offset by higher labor costs due to wage increases in the U.S.

The change in bad debt expense was driven by a first quarter of 2021 change to the allowance for doubtful accounts calculation method for the segment’s U.S. business, which resulted in a $12.3 million operating profit increase, and which was offset by a $12.3 million increase to Corporate expense, resulting in no impact to consolidated operating profit for the first quarter. Historically, all Brink’s business units followed an internal Company policy for determining an allowance for doubtful accounts and the allowances were then reconciled to the required U.S. GAAP estimated consolidated allowance, with any differences reported as part of Corporate expense. Other than for the U.S. business, the reconciling differences were not significant. We changed the U.S. calculation of the allowance in order to more closely align it with the U.S. GAAP consolidated calculation and to minimize reconciling differences, resulting in the offsetting $12.3 million adjustments to align the methods.

Latin America

Revenues increased 5% ($54.1 million) primarily due to an organic increase of 10% ($102.2 million) and the favorable impact of acquisitions ($8.4 million), partially offset by the unfavorable impact of currency exchange rates ($56.5 million), primarily from the Argentine peso and Brazilian real and partially offset by the Mexican peso. The organic increase was due to organic growth in Argentina driven by inflation-based price increases and organic growth in Mexico from volume growth and price increases versus prior year results which were more impacted by the COVID-19 pandemic. Operating profit was up 10% ($23.7 million) primarily due to an organic increase of 20% ($45.7 million), including the benefit of labor and other operational cost saving actions, which includes those taken in response to the COVID-19 pandemic, and the favorable impact of acquisitions ($0.6 million), partially offset by unfavorable currency ($22.6 million). The organic increase was driven by Argentina and Mexico.

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Europe

Revenues increased 22% ($163.5 million) due to the favorable impact of acquisitions ($120.8 million) and currency exchange rates ($27.3 million), and a 2% organic increase ($15.4 million). The favorable currency impact was driven by the euro. The organic increase was primarily due to organic volume growth in France. Operating profit increased 75% ($38.6 million) due to an organic increase ($28.1 million), the favorable impact of acquisitions ($9.7 million) and currency exchange rates ($0.8 million). The organic increase was primarily driven by France due to higher volumes and the impact of labor and other operational cost saving actions, including those taken in response to the COVID-19 pandemic, partially offset by lower government assistance. Results were also helped by higher government COVID-19 assistance in several other countries.

Rest of World

Revenues increased 24% ($146.0 million) due to the favorable impact of acquisitions ($113.8 million), the favorable impact of currency exchange rates ($23.6 million), and a 1% organic increase ($8.6 million). The currency impact was driven by most currencies throughout the segment. Operating profit increased 12% ($14.4 million) due to the favorable impact of acquisitions ($7.7 million), the favorable impact of currency exchange rates ($4.2 million), driven by most currencies throughout the segment, and an organic increase ($2.5 million). The organic increase was primarily due to the impact of labor and other operational cost saving actions throughout the segment, including those taken in response to COVID-19, partially offset by lower government COVID-19 assistance in several countries.

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Income and Expense Not Allocated to Segments

Corporate Expenses

Corporate expenses include corporate headquarters costs, regional management costs, currency transaction gains and losses, costs related to global initiatives and adjustments to reconcile segment accounting policies to U.S. GAAP.

Corporate expenses in 2021 were $44.2 million higher than the prior year primarily driven by higher bad debt expense ($28.5 million) included in Corporate expense as part of the reconciliation of segment policies to U.S. GAAP, as discussed in more detail in the next paragraph below. Current year expense also increased as a result of higher costs related to development of new service offerings ($11.2 million), an increase in employee compensation, including share-based and other incentives ($9.5 million), and higher legal fees ($4.0 million). These increases were partially offset by lower foreign currency transaction losses in the current year period ($9.2 million).

Historically, all Brink’s business units followed an internal accounting policy for determining an allowance for doubtful accounts. The allowances were then reconciled to the required U.S. GAAP estimated consolidated allowance, with any differences reported as part of Corporate expense. In 2020, the Corporate reconciling adjustment was a reduction of Corporate expense of $11.0 million, to offset business unit allowances that were higher than U.S. GAAP required. In 2021, the adjustment was an increase of Corporate expense of $17.5 million. The 2021 increase was primarily from a change in the first quarter of 2021 to the allowance calculation method of the North America segment’s U.S. business. This change resulted in a $12.3 million increase to Corporate expense offset by a $12.3 million operating profit increase in the North America segment, resulting in no impact to consolidated operating profit for the first quarter of 2021. We changed the U.S. calculation of the allowance in order to more closely align it with the U.S. GAAP consolidated calculation and to minimize reconciling differences. Other than for the U.S. business, the reconciling differences were not significant. The bad debt expense increase excludes the impact of the internal loss in our U.S. global services operations described on the next page.

Other Items Not Allocated to Segments

2021 versus 2020

The impact of other items not allocated to segments on operating profit was a smaller loss ($115.8 million in 2021 versus $167.8 million in the prior year). The change was primarily due to lower reorganization and restructuring expenses, a reduction in net charges related to the internal loss matter and a decrease in costs related to acquisitions and dispositions. These favorable changes were partially offset by the Chile antitrust matter charge recognized in the current year period.

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Reorganization and Restructuring

Other Restructurings

Management periodically implements restructuring actions in targeted sections of our business. As a result of these actions, we recognized net costs of $28.8 million in 2019, primarily severance costs and charges related to the modification of share-based compensations awards in 2019. We recognized $66.6 million of net costs in operating profit and $0.6 million of costs in interest and other nonoperating income (expense) in 2020, primarily severance costs. We recognized $43.6 million of net costs in 2021, primarily severance costs. Substantially all of the costs from 2021 restructuring plans result from management initiatives to address the COVID-19 pandemic. When completed, the current restructuring actions will reduce our workforce by 1,600 to 1,800 positions and result in in annualized cost savings of $35 million to $40 million. For the current restructuring actions, we expect to incur additional costs between $1 million and $3 million in future periods.

Due to the unique circumstances around these charges, they have not been allocated to segment results and are excluded from non-GAAP results. Charges related to the employees, assets, leases and contracts impacted by these restructuring actions were excluded from the segments and corporate expenses as shown in the table below.

Acquisitions and dispositions  Part of our strategy is the pursuit of accretive business acquisitions. In 2021, we acquired business operations in the U.S. and we completed the remaining planned acquisitions from G4S. In 2020, we acquired multiple business operations from G4S at different times during the year. In 2019, we completed four business acquisitions in the U.S., Brazil and Colombia. 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 non-GAAP results. These items are described below:

2021 Acquisitions and Dispositions Items

•Amortization expense for acquisition-related intangible assets was $47.7 million in 2021.

•We incurred $10.5 million in integration costs, primarily related to G4S, in 2021.

•Transaction costs related to business acquisitions were $6.5 million in 2021.

•Restructuring costs related to acquisitions were $5.3 million in 2021.

•Compensation expense related to the retention of key PAI employees was $1.8 million in 2021.

2020 Acquisitions and Dispositions Items

•Amortization expense for acquisition-related intangible assets was $35.1 million in 2020.

•We incurred $23.5 million in integration costs related primarily to Dunbar and G4S in 2020.

•Transaction costs related to business acquisitions were $19.3 million in 2020.

•Restructuring costs related to acquisitions were $4.7 million in 2020.

2019 Acquisitions and Dispositions Items

•We incurred $43.1 million in integration costs related to Dunbar, Rodoban, TVS and COMEF in 2019.

•Amortization expense for acquisition-related intangible assets was $27.8 million in 2019.

•Transaction costs related to business acquisitions were $7.9 million in 2019.

•Restructuring costs related to acquisitions, primarily Rodoban and Dunbar, were $5.6 million in 2019.

•In 2019, we recognized $2.2 million in net charges, primarily asset impairment and severance costs, related to the exit from our top-up prepaid mobile phone business in Brazil.

•Compensation expense related to the retention of key Dunbar employees was $1.5 million in 2019.

Argentina highly inflationary impact Beginning in the third quarter of 2018, we designated Argentina's economy as highly inflationary for accounting purposes. As a result, Argentine peso-denominated monetary assets and liabilities are now remeasured at each balance sheet date to the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in earnings. In addition, nonmonetary assets retain a higher historical basis when the currency is devalued. The higher historical basis results in incremental expense being recognized when the nonmonetary assets are consumed. In 2019, we recognized $14.5 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $11.3 million. In 2020, we recognized $10.7 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $7.7 million. In 2021, we recognized $11.9 million in pretax charges related to highly inflationary accounting, including currency remeasurement losses of $9.0 million. These amounts are excluded from segment and non-GAAP results.

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Chile antitrust matter We recognized an estimated loss of $9.5 million in the third quarter of 2021 related to a potential fine. Due to the special nature of this matter, this charge has not been allocated to segment results and is excluded from non-GAAP results. See Note 23 for details.

Internal loss A former non-management employee in our U.S. global services operations embezzled funds from Brink's in prior years. Except for a small deductible amount, the amount of the internal loss related to the embezzlement of funds was covered by our insurance. In an effort to cover up the embezzlement, the former employee intentionally misstated the underlying accounts receivable subledger data. In 2019, we incurred $4.5 million in costs (primarily third party expenses) to reconstruct the accounts receivables subledger. In 2020, we incurred an additional $0.3 million in costs related to this activity.

In the third quarter of 2019, we were able to identify $4.0 million of revenues billed and collected in prior periods which had never been recorded in the general ledger. We also identified and recorded $0.3 million in bank fees, which had been incurred in prior periods. Based on the reconstructed subledger, we were able to analyze and quantify the uncollected receivables from prior periods. Although we planned to attempt to collect these receivables, we estimated an increase to bad debt expense of $13.7 million in the third quarter of 2019. The estimate of the allowance for doubtful accounts was adjusted in the fourth quarter of 2019 for an additional $6.4 million and again in 2020 for an additional $6.6 million. In 2021, we recognized a decrease in bad debt expense of $3.7 million, primarily related to collection of these receivables.  We also recognized $1.3 million of legal charges in 2021 as we attempted to collect additional insurance recoveries related to these receivables losses. In the fourth quarter of 2021, we successfully collected $18.8 million of insurance recoveries related to these internal losses.

We have defined accounts receivable impacted by the embezzlement as accounts receivable recorded as of and prior to the third quarter of 2019. In the fourth quarter of 2021, we wrote off the remaining accounts receivable of $8.1 million which had previously been fully reserved. Due to the unusual nature of this internal loss and the related errors in the subledger data, along with the fact that management has excluded these amounts when evaluating internal performance, we have excluded these amounts from segment and non-GAAP results.

Reporting compliance Certain compliance costs (primarily third party expenses) are excluded from segment and non-GAAP results. These costs relate to the implementation and January 1, 2019 adoption of the new lease accounting standard (amounts were not significant in 2021, $0.5 million in 2020 and $1.8 million in 2019). We also incurred $0.3 million in 2019 in costs related to mitigation of material weaknesses. We did not incur any such costs in 2020 or 2021.

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Other Operating Income and Expense

Amounts below represent consolidated other operating income and expense.

2021 versus 2020

We reported other operating income of $20.0 million in 2021 versus other operating expense of $15.6 million in the prior year. The change was primarily due to $18.8 million in insurance recoveries related to the internal loss in our U.S. global services operations. In addition, we recognized gains related to litigation in our Romania business and lower losses from foreign currency items in 2021 as compared to 2020. The foreign currency items above do not include business acquisition-related currency items which are reported in interest and other nonoperating income (expense).

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Nonoperating Income and Expense

Interest Expense

Interest expense was higher in 2021 primarily due to higher borrowing levels due to business acquisitions. See Note 15 for further information.

Interest and Other Nonoperating Income (Expense)

(a)The gain is primarily related to the market value increase of an investment in MoneyGram International, Inc. The investment was sold in 2021 and the gain was fully realized.

(b)Amounts in 2021 and 2020 primarily represent currency transaction gains and losses on contingent consideration payable related to G4S business acquisitions.

(c)Represents loss on foreign currency forward contracts related to acquisition of business operations from G4S.

(d)Adjustments to indemnification asset related to business operations acquired from G4S. This adjustment was recognized outside of the measurement period for the related business operations acquired from G4S.

(e)This amount includes a gain on settlement with G4S related to business operations acquired. The gain was partially offset by losses associated with the write off of indemnification assets related to income tax contingency reversals from businesses acquired in Brazil. These adjustments were recognized outside of the measurement periods for the related business operations acquired.

(f)Represents penalties and interest on non-income taxes that have not yet been paid.

(g)Related to an unfavorable court ruling in 2019 on a non-income tax claim in Colombia. The court ruled that Brink's must pay interest accruing from 2009 to the current date. The principal amount of the claim was less than $1 million and was recognized in selling, general and administrative expenses in 2019.

(h)Certain of our Latin American subsidiaries incur non-income taxes related to the billing of intercompany charges. These intercompany charges do not impact Latin America segment results and are eliminated in our consolidation.

(i)Charges incurred for providing financial support to Brink's Venezuelan subsidiaries after the June 30, 2018 deconsolidation. We do not expect any future funding of the Venezuela business, as long as current U.S. sanctions remain in effect.

(j)Gain on termination of a mining lease obligation related to former coal operations. We have no remaining mining leases.

(k)This gain is primarily related to the sale of our former French security services subsidiary in the first quarter of 2020.

(l)Represents interest on non-income tax credits related to our business operations in Brazil. In the third quarter of 2021, our Brazil operations received a favorable court decision related to non-income taxes paid in prior years and will be able to recover the overpayments, plus interest, by reducing payments on future tax obligations.

(m)Adjustment to the liability for contingent consideration pertaining to the 2019 Balance Innovations business acquisition.

(n)Related to a favorable court ruling in litigation with a customer of our Romania business. The court ruled that the customer must pay our subsidiary in Romania for services provided many years ago. The principal amount of the settlement is reported in operating income (expense). The penalties for years of non-payment are reported in interest and other nonoperating income (expense).

Interest and other nonoperating income (expense) was higher in 2021 compared to 2020 primarily due to higher interest income and gain on equity securities. Interest and other nonoperating income (expense) was higher in 2020 compared to 2019 primarily due to higher retirement benefit costs in 2019, mainly due to settlement charges in the U.S. frozen pension plan.

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Income Taxes

Summary Rate Reconciliation – GAAP

(a)In 2019, we recognized a benefit of $7.3 million related to a previously recognized $23.5 million current tax expense that accelerated U.S. taxable income in 2015.

Summary Rate Reconciliation – Non-GAAP(a)

(a)See pages 35–37 for a reconciliation of non-GAAP results to GAAP.

Overview

Our effective tax rate has varied in the past three years from the statutory U.S. federal rate due to various factors, including

•changes in judgment about the need for valuation allowances,

•changes in the geographical mix of earnings,

•changes in laws in the U.S., France, Mexico, and Argentina,

•U.S. tax on accelerated taxable income,

•timing of benefit recognition for uncertain tax positions,

•state income taxes, and

•tax benefit for distributions of share-based payments.

We establish or reverse valuation allowances for deferred tax assets depending on all available information including historical and expected future operating performance of our subsidiaries.  Changes in judgment about the future realization of deferred tax assets can result in significant adjustments to the valuation allowances.  Based on our historical and future expected taxable earnings, we believe it is more-likely-than-not that we will realize the benefit of the deferred tax assets, net of valuation allowances.

Continuing Operations

2021 Compared to U.S. Statutory Rate

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

2020 Compared to U.S. Statutory Rate

The effective income tax rate on continuing operations in 2020 was greater than the 21% U.S. statutory tax rate primarily due to the geographical mix of earnings, book losses for which no tax benefit can be recorded, nondeductible expenses in Mexico, taxes on cross border payments and the characterization of a French business tax as an income tax, partially offset by the significant tax benefits related to the distribution of share-based payments.

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Noncontrolling Interests

Compared to 2020, the increase in net income attributable to noncontrolling interests to $12.1 million in 2021 is primarily due to the G4S acquisitions which closed in the first quarter of 2021 and higher operating results reported by some of our subsidiaries in 2021. Compared to 2019, the increase in net income attributable to noncontrolling interests to $5.9 million in 2020 is primarily due to the G4S acquisitions that closed in the second and third quarters of 2020.

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Non-GAAP Results Reconciled to GAAP

Non-GAAP results described in this filing are financial measures that are not required by or presented in accordance with GAAP. The purpose of the Non-GAAP results is to report financial information from the primary operations of our business by excluding the effects of certain income and expenses that do not reflect the ordinary earnings of our operations. The specific items excluded have not been allocated to segments, are described in detail on pages 28–30, and are reconciled to comparable GAAP measures below. The full-year Non-GAAP tax rate in each year excludes certain pretax and income tax amounts. Amounts reported for prior periods have been updated in this report to present information consistently for all periods presented.

The Non-GAAP financial measures are intended to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part of our core business. Additionally, non-GAAP results are utilized as performance measures in certain management incentive compensation plans.

Non-GAAP results should not be considered as an alternative to revenue, income or earnings per share amounts determined in accordance with GAAP and should be read in conjunction with their GAAP counterparts. Non-GAAP financial measures may not be comparable to Non-GAAP financial measures presented by other companies.

Amounts may not add due to rounding.

(a)From continuing operations.

(b)See “Other Items Not Allocated To Segments” on pages 28–30 for details.  We do not consider these items to be reflective of our operating performance as they result from events and circumstances that are not a part of our core business.

(c)Our U.S. retirement plans are frozen and costs related to these plans are excluded from non-GAAP results. Certain non-U.S. operations also have retirement plans. Settlement charges related to these non-U.S. plans are also excluded from non-GAAP results.

(d)The non-GAAP tax rate excludes the 2019 foreign tax benefits that resulted from the transaction that accelerated U.S. tax in 2015.

(e)There was a change in judgement resulting in a valuation allowance against certain tax attributes with a limited statutory carryforward period that are no longer more-likely-than-not to be realized due to lower than expected Canada operating results.

(f)Gain on termination of a mining lease obligation related to former coal operations. We have no remaining mining leases.

(g)Amounts in 2020 and 2019 primarily relate to interest incurred on a cross currency swap hedging foreign currency risk on the intercompany financing of the Rodoban acquisition.

(h)In addition to the items discussed in “Other Items Not Allocated To Segments” on pages 28–30, includes a $4.5 million gain on the sale of a French security services business in 2020, acquisition-related pretax currency transaction losses of $3.6 million in 2020 and acquisition-related pretax losses on foreign currency forward contracts of $7.0 million in 2020.

(i)Post-deconsolidation funding of ongoing costs related to our Venezuelan operations was $0.9 million in 2019 and was expensed as incurred and reported in interest and other nonoperating income (expense). We do not expect any future funding of the Venezuela business, as long as current U.S. sanctions remain in effect.

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Non-GAAP reconciled to GAAP

Amounts may not add due to rounding.

See page 35 for footnote explanations.

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Non-GAAP reconciled to GAAP

Amounts may not add due to rounding.

See page 35 for footnote explanations.

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Foreign Operations

We currently serve customers in more than 100 countries, including 53 countries where we operate subsidiaries.

We are subject to risks customarily associated with doing business in foreign countries, including labor and economic conditions, the imposition of international sanctions, including by the U.S. government, political instability, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. Changes in the political or economic environments in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations. The future effects, if any, of these risks are unknown. In April 2019, the U.S. government sanctioned the Venezuela central bank and, as a result, we have ceased support of our Venezuela business.

Our international operations conduct a majority of their business in local currencies. Because our financial results are reported in U.S. dollars, they are affected by changes in the value of various local currencies in relation to the U.S. dollar. Recent strengthening of the U.S. dollar relative to certain currencies has reduced our reported dollar revenues and operating profit, which may continue in 2022. See Application of Critical Accounting Policies—Foreign Currency Translation on pages 57–58 for a description of our accounting methods and assumptions used to include our Argentina operations in our consolidated financial statements, and a description of the accounting for subsidiaries operating in highly inflationary economies. See also Note 1 to the consolidated financial statements for a description of how we account for currency remeasurement for our Argentine subsidiaries, beginning July 1, 2018 under the heading, "Argentina".

At December 31, 2021, Argentina's economy remains highly inflationary for accounting purposes. At December 31, 2021, we had net monetary assets denominated in Argentine pesos of $60.1 million (including cash of $52.9 million) and nonmonetary net 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 pesos).

During September 2019, the Argentine government announced currency controls on both companies and individuals. Under the exchange procedures implemented by the central bank, approval is required for many transactions, including dividend repatriation abroad.

During the third quarter of 2020 and during the fourth quarter of 2019, we 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. As a result, we recognized $10.4 million in 2020 and $4.7 million in 2019 of such conversion losses when we converted Argentine pesos into U.S. dollars at rates that were approximately 100% and 25%, respectively, less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina. These conversion losses are classified in the consolidated statements of operations as other operating income (expense). We did not have any such conversion losses in 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.

Changes in exchange rates may also affect transactions which are denominated in currencies other than the functional currency of a given foreign entity. From time to time, we use short term foreign currency forward and swap contracts to hedge transactional risks associated with foreign currencies, as discussed in Item 7A on pages 59-60. At December 31, 2021, the notional value of our short term outstanding foreign currency forward and swap contracts was $614 million with average contract maturities of approximately one month. These short term foreign currency forward and swap contracts primarily offset exposures in the euro, the British pound and the Mexican peso. Additionally, these short term contracts are not designated as hedges for accounting purposes, and accordingly, changes in their fair value are recorded immediately in earnings.  At December 31, 2021, the fair value of our short term foreign currency contracts was a net asset of approximately $1.9 million, of which $3.4 million was included in prepaid expenses and other and $1.5 million was included in accrued liabilities on the consolidated balance sheet. At December 31, 2020, the fair value of these foreign currency contracts was a net asset of approximately $2.4 million, of which $3.5 million was included in prepaid expenses and other and $1.1 million was included in accrued liabilities on the consolidated balance sheet.

Amounts under these contracts were recognized in other operating income (expense) and in interest and other nonoperating income and expense as follows:

(a)Represents losses on foreign currency forward contracts related to acquisitions of business operations from G4S.

We also have a long term cross currency swap to hedge exposure in Brazilian real, which is designated as a cash flow hedge for accounting purposes. Accordingly, changes in the fair value of the cash flow hedge are initially recorded in the gains (losses) on cash flow hedges component of accumulated other comprehensive income (loss). We immediately reclassify from accumulated other comprehensive income

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(loss) to earnings an amount to offset the remeasurement recognized in earnings associated with the respective intercompany loan. Additionally, we reclassify amounts from accumulated other comprehensive income (loss) to interest expense amounts that are associated with the interest rate differential between a U.S. dollar denominated intercompany loan and a Brazilian real denominated intercompany loan.

At December 31, 2021, the notional value of this long term contract was $75 million with a weighted-average maturity of 1.3 years. At December 31, 2021, the fair value of the long term cross currency swap contract was a $26.3 million net asset, of which a $5.8 million asset is included in prepaid expenses and other assets and $20.5 million is included in other assets on the consolidated balance sheet. At December 31, 2020, the fair value of the long term cross currency swap contract was a $23.6 million net asset, of which a $3.2 million asset is included in prepaid expenses and other assets and a $20.4 million asset is included in other assets on the consolidated balance sheet.

Amounts under this contract were recognized in other operating income (expense) to offset transaction gains or losses and in interest expense as follows:

In the second quarter of 2021, we entered into ten cross currency swaps to hedge a portion of our net investments in certain of our subsidiaries with euro functional currencies. As net investment hedges for accounting purposes, we elected to use the spot method to assess effectiveness for these derivatives that are designated as net investment hedges. Accordingly, changes in fair value attributable to changes in the undiscounted spot rates are recorded in the foreign currency translation adjustments component of accumulated other comprehensive income (loss) and will remain there until the hedged net investments are sold or substantially liquidated. We have elected to exclude the spot-forward difference from the assessment of hedge effectiveness and are amortizing this amount separately on a straight-line basis over the term of these cross currency swaps.

At December 31, 2021, the notional value of these cross currency swap contracts was $400 million with a remaining weighted average maturity of 6.2 years. At December 31, 2021, the fair value of these currency swaps was a net asset of $28.5 million, of which $6.0 million was included in prepaid expenses and other and $22.5 million was included in other assets on the consolidated balance sheet. The effect of the amortization of the spot-forward difference on the net investment hedges cross currency swaps is included in interest

expense as follows:

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LIQUIDITY AND CAPITAL RESOURCES

Overview

The discussion of liquidity and capital resources comparing 2020 versus 2019 can be found in Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations of our 2020 10-K, starting on page 43.

Over the last three years, we used cash generated from our operations and borrowings to

•acquire new business operations ($952 million),

•invest in the infrastructure of our business (new facilities, cash sorting and other equipment for our cash management services operations, armored trucks, CompuSafe® units, and information technology) ($451 million),

•repurchase shares of Brink's common stock ($250 million), and

•pay dividends to Brink’s shareholders ($97 million).

Cash flows from operating activities increased by $160.3 million in 2021 as compared to the prior year primarily due to higher operating profit, working capital changes, lower amounts paid for G4S intercompany payments, and changes in customer obligations related to certain of our secure cash management services operations (certain customer obligations increased by $15.7 million in 2021 compared to a decrease of $6.5 million in 2020), partially offset by $56.1 million decrease in restricted cash held for customers and higher amounts paid for interest. Cash used for investing activities decreased by $110.7 million in 2021 due to higher amounts paid for business acquisitions in 2020. Cash also decreased $50.8 million in 2021 as a result of the strengthening of the U.S. dollar in 2021, primarily against the euro. We financed our liquidity needs in 2021 with debt and cash flows from operations.

Operating Activities

(a)To adjust for the change in the balance of customer obligations related to cash received and processed in certain of our secure cash management services operations. The title to this cash transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources.

Non-GAAP cash flows from operating activities is a supplemental financial measure that is not required by, or presented in accordance with, GAAP. The purpose of this non-GAAP measure is to report financial information excluding cash flows from restricted cash held for customers, the impact of cash received and processed in certain of our secure cash management services operations and the impact of payments made to G4S for net intercompany receivables from the acquired subsidiaries. We believe this measure is helpful in assessing cash flows from operations, enables period-to-period comparability and is useful in predicting future operating cash flows. This non-GAAP measure should not be considered as an alternative to cash flows from operating activities determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.

2021 versus 2020

GAAP

Operating cash flows increased by $160.3 million in 2021 compared to 2020. The increase was primarily due to higher operating profit, working capital changes, lower amounts paid for G4S intercompany payments, and changes in customer obligations related to certain of our secure cash management services operations (certain customer obligations increased by $15.7 million in 2021 compared to a decrease of $6.5 million in 2020), partially offset by $56.1 million decrease in restricted cash held for customers and higher amounts paid for interest (we had $107.7 million in cash payments for interest in 2021 as compared to $80.4 million in 2020).

Non-GAAP

Non-GAAP cash flows from operating activities increased by $85.7 million in 2021 as compared to 2020. The increase was primarily due to higher operating profit and working capital changes, partially offset by higher amounts paid for interest.

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Investing Activities

Cash used by investing activities decreased by $110.7 million in 2021 as compared to 2020. The decrease was primarily due to decreased payments related to the G4S acquisition in 2021 compared to 2020, offset by an increase in payments related to the PAI acquisition.

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Capital expenditures and depreciation and amortization were as follows:

(a)Incremental depreciation related to highly inflationary accounting in Argentina, accelerated depreciation related to restructuring activities and acquisition-related integration activities, and amortization of acquisition-related intangible assets have also been excluded from non-GAAP amounts.

(b)Represents the amount of property and equipment acquired using financing leases. Because the assets are acquired without using cash, the acquisitions are not reflected in the consolidated statements of cash flows. Amounts are provided here to assist in the comparison of assets acquired in the current year versus prior years.

Non-GAAP capital expenditures and non-GAAP depreciation and amortization are supplemental financial measures that are not required by, or presented in accordance with GAAP. The purpose of these non-GAAP measures is to report financial information excluding incremental depreciation resulting from highly inflationary accounting in Argentina, accelerated depreciation from restructuring activities and acquisition-related integration activities, and amortization of acquisition-related intangible assets. We believe these measures are helpful in assessing capital expenditures and depreciation and amortization, enable period-to-period comparability and are useful in predicting future investing cash flows. These non-GAAP measures should not be considered as alternatives to capital expenditures and depreciation and amortization determined in accordance with GAAP and should be read in conjunction with our consolidated statements of cash flows.

Our reinvestment ratio, which we define as the annual amount of property and equipment acquired during the year divided by the annual amount of depreciation, was 1.3 in 2021, 0.9 in 2020, and 1.5 in 2019.

Capital expenditures in 2021 for our operating units were primarily for machinery and equipment, armored vehicles, buildings and information technology.  Capital expenditures in 2021 were $49.4 million higher compared to 2020.  Total property and equipment acquired in 2021 was $103.9 million higher than the prior year. These increases were primarily due to the impacts of the G4S acquisition, investments in cash devices and lower spending in 2020 due to the COVID-19 pandemic.

Corporate capital expenditures in the last three years were primarily for investing in information technology.

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Financing Activities

2021 versus 2020

Cash flows from financing activities decreased by $512.4 million in 2021 compared to 2020 as net borrowings decreased compared to the prior year period. There was also a $150 million increase in cash used to repurchase shares of our common stock in 2021, compared to the prior period.

Dividends

We paid dividends to Brink’s shareholders of $0.20 per share in each of the last three quarters in 2021 and paid $0.15 per share in each of the nine quarters prior.  Future dividends are dependent on our earnings, financial condition, shareholders’ equity levels, our cash flow and business requirements, as determined by the Board.

Effect of Exchange Rate Changes on Cash and Cash Equivalents

Changes in currency exchange rates decreased the amount of cash and cash equivalents by $50.8 million during 2021, compared to an increase of $37.9 million in 2020 and a reduction of $8.1 million in 2019.  The decrease in 2021 was due to the strengthening of the U.S. dollar in 2021, primarily against the euro.

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Capitalization

We use a combination of debt, leases and equity to capitalize our operations.

As of December 31, 2021, debt as a percentage of capitalization (defined as total debt and equity) was 92%, which is consistent with 92% at December 31, 2020. Our debt in 2021 increased primarily from the borrowings under the senior secured revolving credit facility partially offset by repayment of the senior secured term loan A. Our equity increased in 2021 primarily due to the increase in reported net income, acquired noncontrolling interest related to the G4S acquisition and stock-based compensation, partially offset by share repurchases and dividends payments to Brink's shareholders.

Summary of Debt, Equity and Other Liquidity Information

(a)In addition to cash borrowings and repayments, the change in the debt balance also includes changes in currency exchange rates.

Reconciliation of Net Debt to U.S. GAAP Measures

(a)Title to cash received and processed in certain of our secure Cash Management Services operations transfers to us for a short period of time. The cash is generally credited to customers’ accounts the following day and we do not consider it as available for general corporate purposes in the management of our liquidity and capital resources and in our computation of Net Debt.

(b)Included within Net Debt is net cash from our Argentina operations of $54 million at December 31, 2021 and $25 million at December 31, 2020 (see Note 1 to the consolidated financial statements for a discussion of currency controls in Argentina).

Net Debt is a supplemental non-GAAP financial measure that is not required by, or presented in accordance with GAAP. We use Net Debt as a measure of our financial leverage. We believe that investors also may find Net Debt to be helpful in evaluating our financial leverage.  Net Debt should not be considered as an alternative to Debt determined in accordance with GAAP and should be reviewed in conjunction with our consolidated balance sheets. Set forth above is a reconciliation of Net Debt, a non-GAAP financial measure, to Debt, which is the most directly comparable financial measure calculated and reported in accordance with GAAP, as of December 31, 2021, and December 31, 2020.

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Net Debt at the end of 2021 increased by $407 million when compared to Net Debt at the end of 2020 primarily due to the funding of business acquisitions and other working capital needs.

Liquidity Needs

Our operating liquidity needs are typically financed by cash from operations, short-term borrowings and the available borrowing capacity under our revolving credit facility (our debt facilities are described in more detail in Note 15 to the consolidated financial statements, including certain limitations and considerations related to the cash and borrowing capacity). As of December 31, 2021, $505 million was available under the revolving credit facility. Based on our current cash on hand, amounts available under our credit facilities and current projections of cash flows from operations, we believe that we will be able to meet our liquidity needs for more than the next twelve months.

Limitations on dividends from foreign subsidiaries. A significant portion of our operations are outside the U.S. which may make it difficult to or costly to repatriate additional cash for use in the U.S.  See Item 1A., Risk Factors, for more information on the risks associated with having businesses outside the U.S.

Our conclusion that we will be able to fund our cash requirements for the next 12 months by using existing capital resources, cash on hand, and cash generated from operations does not take into account any potential material worsening of economic conditions as a result of the ongoing COVID-19 pandemic that would adversely affect our business. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if events, including economic disruptions, arising from the ongoing COVID-19 pandemic worsen, or if other economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our business, including material negative changes in the health and welfare of our employees or changes in the condition of our customers or suppliers, and the operating performance or financial results of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs. Our ability to raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:

•our future profitability;

•the quality of our accounts receivable;

•our relative levels of debt and equity;

•the volatility and overall condition of the capital markets; and

•the market prices of our securities.

Cash and Cash Equivalents

At December 31, 2021, we had $710.3 million in cash and cash equivalents, compared to $620.9 million at December 31, 2020. We plan to use the current cash and cash equivalents for working capital needs, capital expenditures, acquisitions and other general corporate purposes.

Equity

Common Stock

At December 31, 2021, we had 100 million shares of common stock authorized and 47.4 million shares issued and outstanding.

Preferred Stock

At December 31, 2021, we had the authority to issue up to 2 million shares of preferred stock, par value $10 per share.

Share Repurchase Program

On October 27, 2021, we announced that the Board authorized a $250 million share repurchase program that expires on December 31, 2023 (the "2021 Repurchase Program"). This authorization replaces our previous $250 million repurchase program, authorized by the Board in February 2020 (the "2020 Repurchase Program"), which expired on December 31, 2021, with no amount remaining available.

Under the 2021 Repurchase Program, we are not obligated to repurchase any specific dollar amount or number of shares. The timing and volume of share repurchases may be executed at the discretion of management on an opportunistic basis, or pursuant to trading plans or other arrangements. Share repurchases under this program may be made in the open market, in privately negotiated transactions, or otherwise. At December 31, 2021, $250 million remains available under the 2021 Repurchase Program.

Under the 2020 Repurchase Program, we entered into three accelerated share repurchase arrangements ("ASR") with a financial institution. In each case, in exchange for an upfront payment at the beginning of each purchase period, the financial institution delivered to us shares of our common stock. The shares received were retired in the period they were delivered to us, and the upfront payment was accounted for as a reduction to shareholders' equity in the consolidated balance sheet. For purposes of calculating earnings per share, we reported each ASR as a repurchase of our common stock and as a forward contract indexed to our common stock. Each ASR met the applicable criteria for equity classification, and, as a result, none were accounted for as a derivative instrument.

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Below is a summary of each ASR entered into under the 2020 Repurchase Program:

(a)We received 1,742,160 shares in early November 2021. Under this ASR, the purchase period has a scheduled termination date of June 1, 2022, although the financial institution is eligible to early terminate the ASR after January 31, 2022. At termination, either additional shares will be delivered to us or we will need to issue new shares of our common stock to the financial institution.

Off Balance Sheet Arrangements

We have certain operating leases that are considered short term and are not capitalized to the balance sheet. We use operating leases both on and off balance sheet to lower our cost of financings.  We believe that operating leases are an important component of our capital structure.

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U.S. Retirement Liabilities

Assumptions for U.S. Retirement Obligations

Funding Relief

The American Rescue Plan Act ("ARPA") signed into law in March, 2021, provides funding relief for single-employer defined benefit pension plans. The ARPA provisions result in significant reduction in, and deferral of, minimum funding requirements. Because of the significant impact the ARPA provisions have on our primary U.S. pension plan's estimated future funding requirements, we have updated the assumptions used to calculate the estimated future payments from Brink's and the estimated future expenses in the tables below. Based on these revised assumptions, no cash payments to the plan are needed in the foreseeable future.

We have made various assumptions to estimate the amount of payments to be made in the future.  The most significant assumptions include:

•Changing discount rates and other assumptions in effect at measurement dates (normally December 31)

•Investment returns on plan assets

•Addition of new claimants (historically immaterial due to freezing of pension benefits and exit from coal business)

•Mortality rates

•Change in laws

Funded Status of U.S. Retirement Plans

(a)Excludes amounts reclassified from accumulated other comprehensive income (loss).

Primary U.S. Pension Plan

Pension benefits provided to eligible U.S. employees were frozen on December 31, 2005, and benefits are not provided to employees hired after 2005 or to those covered by a collective bargaining agreement.  We did not make cash contributions to the primary U.S. pension plan in 2021. There are approximately 10,800 beneficiaries in the plan.

Based on our current assumptions, we do not expect to make contributions in the foreseeable future.

UMWA Plan

Retirement benefits related to former coal operations include medical benefits provided by the Pittston Coal Group Companies Employee Benefit Plan for UMWA Represented Employees.  There are approximately 2,700 beneficiaries in the UMWA plans. The company does not expect to make contributions to these plans until 2032, based on our actuarial assumptions.

Black Lung

Under the Federal Black Lung Benefits Act of 1972, Brink’s is responsible for paying lifetime black lung benefits to miners and their dependents for claims filed and approved after June 30, 1973.  There are approximately 800 black lung beneficiaries as of December 31, 2021.

Non-U.S. defined-benefit pension plans. We have various defined-benefit pension plans covering eligible current and former employees of some of our international operations. See Note 4 to the consolidated financial statements for information about these non-U.S. plans' benefit obligation and estimated future benefit payments over the next 10 years.

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Summary of Total Expenses Related to All U.S. Retirement Liabilities

This table summarizes actual and projected expense (income) related to U.S. retirement liabilities.  These expenses are not allocated to segment results.

Summary of Total Payments from U.S. Plans to Participants

This table summarizes actual and estimated payments from the plans to participants.

Summary of Projected Payments from Brink’s to U.S. Plans

This table summarizes estimated payments from Brink’s to U.S. retirement plans.

The amounts in the tables above are based on a variety of estimates, including actuarial assumptions as of December 31, 2021.  The estimated amounts will change in the future to reflect payments made, investment returns, actuarial revaluations, and other changes in estimates.  Actual amounts could differ materially from the estimated amounts.

Contingent Matters

In August 2020, the Company received a subpoena issued in connection with an investigation being conducted by the U.S. Department of Justice (the “DOJ”). The Company is fully cooperating with the investigation and responding to requests from the DOJ for documents and other information, primarily related to cross-border shipments of cash and things of value and anti-money laundering compliance. Given that the investigation is still ongoing and that no civil or criminal claims have been brought to date, the Company cannot predict the outcome of the investigation, the timing of the ultimate resolution of the matter, or reasonably estimate the possible range of loss, if any, that may result from this matter. Accordingly, no accruals have been made with respect to this matter.

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At the end of the fourth quarter of 2018, we became aware of an investigation initiated by the Chilean Fiscalía Nacional Económica (the Chilean antitrust agency) (“FNE”) related to potential anti-competitive practices among competitors in the cash logistics industry in Chile. In October 2021, the FNE filed a complaint before the Chilean antitrust court alleging that Brink’s Chile (as well as competitor companies) engaged in collusion in 2017 and 2018 and requested that the court approve a fine of $30.5 million. The Company is seeking access to the FNE’s investigative file and the evidence supporting the allegations against it, and intends to vigorously defend itself against the FNE’s complaint. Based on available information to date, the Company has recorded a charge of $9.5 million in connection with this matter.

In addition, we are involved in various other lawsuits and claims in the ordinary course of business. We are not able to estimate the loss or range of losses for some of these matters. We have recorded accruals for losses that are considered probable and reasonably estimable. Except as otherwise noted, we do not believe that it is reasonably possible the ultimate disposition of any of the lawsuits currently pending against the Company could have a material adverse effect on our liquidity, financial position or results of operations.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES

The application of accounting principles requires the use of assumptions, estimates and judgments.  We make assumptions, estimates and judgments based on, among other things, knowledge of operations, markets, historical trends and likely future changes, similarly situated businesses and, when appropriate, the opinions of advisors with relevant knowledge and experience.  Reported results could have been materially different had we used a different set of assumptions, estimates and judgments.

Deferred Tax Asset Valuation Allowance

Deferred tax assets result primarily from net operating losses, tax credit carryforwards, and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes, as determined under enacted tax laws and rates.

Accounting Policy

We establish valuation allowances, in accordance with the Financial Accounting Standards Board ("FASB") ASC Topic 740, Income Taxes, when we estimate it is not more likely than not that a deferred tax asset will be realized.  We decide to record valuation allowances primarily based on an assessment of positive and negative evidence including historical earnings and future taxable income that incorporates prudent, feasible tax-planning strategies.  We assess deferred tax assets on an individual jurisdiction basis.  Changes in tax statutes, the timing of deductibility of expenses or expectations for future performance could result in material adjustments to our valuation allowances, which would increase or decrease tax expense.  Our valuation allowances are as follows.

Valuation Allowances

Application of Accounting Policy

U.S. Deferred Tax Assets

We had $190 million of net deferred tax assets at December 31, 2021, of which $176 million related to U.S. jurisdictions.

In 2021, we concluded that we were not more-likely-than-not to realize assets related to certain attributes with a limited statutory carryforward and we recorded a $1 million valuation allowance through income from continuing operations.

In 2020, we concluded that we were not more-likely-than-not to realize assets related to certain attributes with a limited statutory carryforward and we recorded a $4 million valuation allowance through income from continuing operations.

We used various estimates and assumptions to evaluate the need for the valuation allowance in the U.S.  These included

•projected revenues and operating income for our U.S. entities,

•projected royalties and management fees paid to U.S. entities from subsidiaries outside the U.S.,

•projected Global Intangible Low-Taxed Income ("GILTI") inclusion in our U.S. taxable income,

•estimated required contributions to our U.S. retirement plans,

•the estimated impact of U.S. tax reform, and

•interest rates on projected U.S. borrowings.

Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S.  Had we used different assumptions, we might have made different conclusions about the need for valuation allowances.  For example, if we did not have growth in either the U.S. or non-U.S. jurisdictions with respect to the GILTI inclusions or using different assumptions, we might have concluded that we require a full valuation allowance offsetting our U.S. deferred tax assets.

Non-U.S. Deferred Tax Assets

In 2021, we recognized a tax expense of $9 million through income from continuing operations from a change in judgment about the need for valuation allowances for deferred tax assets related mainly to Canada and in certain other non-U.S. jurisdictions. In 2020, we recognized a tax benefit of $2 million through income from continuing operations from a change in judgment about the need for valuation allowances for deferred tax assets in certain non-U.S. jurisdictions.

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Business Acquisitions

Accounting Policy

In the three years ended December 31, 2021, we have completed multiple business acquisitions. When we acquire a controlling interest in an entity that is determined to meet the definition of a business, we apply the acquisition method described in FASB ASC Topic 805, Business Combinations.  Using the acquisition method, we allocate the total purchase price to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date. Any excess purchase price over the fair value of the assets acquired and the liabilities assumed is recognized as goodwill.

Application of Accounting Policy

The purchase price allocation process requires us to make significant estimates and assumptions, primarily related to intangible assets. The allocation of the purchase consideration transferred may be subject to revision based on the final determination of fair values during the measurement period. We use all available information to make these fair value determinations and, for material business acquisitions, we engage an outside valuation specialist to assist in the fair value determination of the acquired intangible assets.

We typically use an income method to estimate the fair value of intangible assets, which is based primarily on future cash flow projections. The forecasted cash flows also reflect significant assumptions related to expected customer attrition rates, revenue growth rates, market participant synergies and discount rates applied to the cash flows. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions. The estimated fair values assigned to assets acquired and liabilities assumed in a purchase price allocation can have a significant effect on future results of operations. For example, a higher fair value assigned to intangible assets results in higher amortization expense, which results in lower net income.

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Goodwill, Other Intangible Assets and Property and Equipment Valuations

Accounting Policy

At December 31, 2021, we had property and equipment of $865.6 million, goodwill of $1,411.7 million and other intangible assets of $491.2 million, net of accumulated depreciation and amortization.  We review these assets for possible impairment using the guidance in FASB ASC Topic 350, Intangibles - Goodwill and Other, for goodwill and other intangible assets and FASB ASC Topic 360, Property, Plant and Equipment, for property and equipment.  Our review for impairment requires the use of significant judgments about the future performance of our operating subsidiaries. Due to the many variables inherent in the estimates of the fair value of these assets, differences in assumptions could have a material effect on the impairment analyses.

Goodwill

We review goodwill for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit.

Under U.S. GAAP, the annual impairment test may be either a quantitative test or a qualitative assessment. The qualitative assessment can be performed in order to determine whether facts and circumstances support a determination that reporting unit fair values are greater than their carrying values.

We performed a goodwill impairment test on these reporting units as of October 1, 2021 and elected to forego the optional qualitative assessment and performed a quantitative goodwill impairment assessment instead. We estimated the fair value of each reporting unit using a weighting of two valuation methodologies: the Income Approach and the Public Company Market Multiple Method, with greatest weight placed on the Income Approach. The resulting reporting unit fair values were compared to each reporting unit's carrying value. As a result of the evaluation, we concluded that goodwill was not impaired, and the fair value of each reporting unit exceeded its carrying value for all reporting units.

Finite-lived Intangible Assets and Property and Equipment

We review finite-lived intangible assets and property and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets.  To determine whether impairment has occurred, we compare estimates of the future undiscounted net cash flows of groups of assets to their carrying value.

Estimates of Future Cash Flows

We made significant assumptions when preparing financial projections of cash flow used in our impairment analyses, including assumptions of future results of operations including revenue growth rate and operating income over the forecast period, capital requirements, income taxes, long-term growth rates for determining terminal value, and discount rates. Our projections assumed continued growth of our revenues and operating profit both in the U.S. and outside the U.S.  Our conclusions regarding asset impairment may have been different if we had used different assumptions.

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Retirement and Post employment Benefit Obligations

We provide benefits through defined benefit pension plans and retiree medical benefit plans and under statutory requirements.

Accounting Policy

We account for pension and other retirement benefit obligations under FASB ASC Topic 715, Compensation – Retirement Benefits.  We account for post employment benefit obligations, including workers’ compensation obligations, under FASB ASC Topic 712, Compensation – Non retirement Post employment Benefits.

To account for these benefits, we make assumptions of expected return on assets, discount rates, inflation, demographic factors and changes in the laws and regulations covering the benefit obligations.  Because of the inherent volatility of these items and because the obligations are significant, changes in the assumptions could have a material effect on our liabilities and expenses related to these benefits.

Our most significant retirement plans include our primary U.S. pension plan and the retiree medical plans of our former coal business that were collectively bargained with the United Mine Workers of America (the “UMWA”).  The critical accounting estimates that determine the carrying values of liabilities and the resulting annual expense are discussed below.

Application of Accounting Policy

Discount Rate Assumptions

For plans accounted under FASB ASC Topic 715, we discount estimated future payments using discount rates based on market conditions at the end of the year.  In general, our liability changes in an inverse relationship to interest rates.  That is, the lower the discount rate, the higher the associated plan obligation.

U.S. Plans

For our largest retirement plans, including the primary U.S. pension and UMWA plans and Black Lung obligations, we derive the discount rates used to measure the present value of benefit obligations using the cash flow matching method.  Under this method, we compare the plan’s projected payment obligations by year with the corresponding yields on a Mercer yield curve.  Each year’s projected cash flows are then discounted back to their present value at the measurement date and an overall discount rate is determined.  The overall discount rate is then rounded to the nearest tenth of a percentage point.

We used Mercer’s Above-Mean Curve to determine the discount rates for retirement cost and the year-end benefit obligation. To derive the Above-Mean Curve, Mercer uses only those bonds with a yield higher than the mean yield of the same portfolio of high quality bonds.  The Above-Mean Curve reflects the way an active investment manager would select high-quality bonds to match the cash flows of the plan.

Non-U.S. Plans

We use the same cash flow matching method to derive the discount rates for our major non-U.S. retirement plans.  Where the cash flow matching method is not possible, rates of local high-quality long-term government bonds are used to estimate the discount rate.

The discount rates for the primary U.S. pension plan, UMWA retiree medical plans and Black Lung obligations were:

Sensitivity Analysis

The discount rate we select at year end materially affects the valuations of plan obligations at year end and the calculations of net periodic expenses for the following year.  The tables below compare hypothetical plan obligation valuations for our largest plans as of December 31, 2021, actual expenses for 2021 and projected expenses for 2022 assuming we had used discount rates that were one percentage point lower or higher.

Plan Obligations at December 31, 2021

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Actual 2021 and Projected 2022 Expense (Income)

Expected-Return-on-Assets Assumption

Our expected-return-on-assets assumption, which materially affects our net periodic benefit cost, reflects the long-term average rate of return we expect the plan assets to earn. We select the expected-return-on-assets assumption using advice from our investment advisor considering each plan’s asset allocation targets and expected overall investment manager performance and a review of the most recent long-term historical average compounded rates of return, as applicable. We selected 7.00% as the expected-return-on-assets assumption for our primary U.S. pension plan and 8.00% for our UMWA retiree medical plans for actual 2021 expense. We selected 7.00% as the expected-return-on-assets assumption for our primary U.S. pension plan and 8.00% for our UMWA retiree medical plans for projected 2022 expense.

The twenty to thirty year compound annual return of our primary U.S. pension plan has averaged from 7.5% to 8.7%.

Sensitivity Analysis

Effect of using different expected-rate-of-return assumptions. Our 2021 and projected 2022 expense would have been different if we had used different expected-rate-of-return assumptions. For every hypothetical change of one percentage point in the assumed long-term rate of return on plan assets (and holding other assumptions constant), our actual 2021 and projected 2022 expense would be as follows:

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Effect of improving or deteriorating actual future market returns.  Our funded status at December 31, 2022, and our 2023 expense will be different from currently projected amounts if our projected 2022 returns are better or worse than the returns we have assumed for each plan.

(a)Actual future returns on investments will not affect our earnings until 2023 since the earnings in 2022 will be based on the "expected return on assets" assumption.

Effect of using fair market value of assets to determine expense.  For our defined-benefit pension plans, we calculate expected investment returns by applying the expected long-term rate of return to the market-related value of plan assets.  In addition, our plan asset actuarial gains and losses that are subject to amortization are based on the market-related value.

The market-related value of the plan assets is different from the actual or fair market value of the assets.  The actual or fair market value is, at a point in time, the value of the assets that is available to make payments to pensioners and to cover any transaction costs.  The market-related value recognizes changes in fair value from the expected value on a straight-line basis over five years.  This recognition method spreads the effects of year-over-year volatility in the financial markets over several years.

Our expenses related to our primary U.S. pension plan would have been different if our accounting policy were to use the fair market value of plan assets instead of the market-related value to recognize investment gains and losses.

(a)Assumes that our accounting policy was to use the fair market value of assets instead of the market-related value of assets to determine our expense related to our primary U.S. pension plan.

For our UMWA plans, we calculate expected investment returns by applying the expected long-term rate of return to the fair market value of the assets at the beginning of the year.  This method is likely to cause the expected return on assets, which is recorded in earnings, to fluctuate more than had we used the accounting methodology of our defined-benefit pension plans.

Medical Inflation Assumption

We estimate the trend in healthcare cost inflation to predict future cash flows related to our retiree medical plans. Our assumption is based on recent plan experience and industry trends.

For the UMWA plans, our largest retiree medical plans, we have assumed a medical inflation rate of 5.8% for 2022, and we project this rate to decline to 5% in 2030 and hold at 5% thereafter.  Our overall medical inflation rate assumption, including the assumption that medical inflation rates will gradually decline over the next nine years and hold at 5%, is based on macroeconomic assumptions of gross domestic growth rates, the excess of national health expenditures over other goods and services, and population growth. Our assumption of a medical inflation rate of 5.8% for 2022 is based on our recent actual experience. The average annual medical inflation rate of the Company over the last five to eleven years ranged from 0.3% to 4.3%.

If we had assumed that medical inflation rates were one percentage point higher in each future year, the plan obligation for these plans at December 31, 2021, would have been approximately $45.3 million higher and the expense for 2021 would have been $1.1 million higher.  If we had assumed that the medical inflation rates were one percentage point lower, the plan obligation at December 31, 2021, would have been approximately $38.8 million lower and the related 2021 expenses would have been $0.9 million lower.

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Workers’ Compensation

Besides the effects of changes in medical costs, worker’s compensation costs are affected by the severity and types of injuries, changes in state and federal regulations and their application and the quality of programs which assist an employee’s return to work.  Our liability for future payments for workers’ compensation claims is evaluated annually with the assistance of an actuary.

Numbers of Participants

Mortality tables.  We use the Society of Actuaries base mortality tables for private sector plans, Pri-2012, and the Mercer modified MP-2021 projection scale, with a Blue Collar adjustment factor for the majority of our U.S. retirement plans and a White Collar adjustment factor for our nonqualified U.S. pension plan.

2019 Annuity Contract Buy-out

On October 8, 2019, we purchased a single premium group annuity contract from an insurance company to provide for the payment of pension benefits to approximately 2,600 primary U.S. pension plan participants. We purchased the contract with $53 million of plan assets. The insurance company took over the payments of these benefits starting January 1, 2020. This transaction settled $54 million of our primary U.S. pension plan obligation. As a result, we recognized a settlement charge of $19.3 million in the fourth quarter of 2019.

Number of participants. The number of participants by major plan in the past five years is as follows:

Because we are no longer operating in the coal industry, we anticipate that the number of participants in the UMWA retirement medical plan will decline over time due to mortality.  Because the U.S. pension plan has been frozen, the number of its participants will also decline over time.

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Foreign Currency Translation

The majority of our subsidiaries outside the U.S. conduct business in their local currencies.  Our financial results are reported in U.S. dollars, which include the results of these subsidiaries.

Accounting Policy

Our accounting policy for foreign currency translation is different depending on whether the economy in which our foreign subsidiary operates has been designated as highly inflationary.  Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.  Subsequent reductions in cumulative inflation rates below 100% do not change the method of translation unless the reduction is deemed to be other than temporary.

Non-Highly Inflationary Economies

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.

Highly Inflationary Economies

Foreign subsidiaries that operate in highly inflationary countries must use the reporting currency (the U.S. dollar) as the functional currency.  Local-currency monetary assets and liabilities are remeasured into dollars each balance sheet date, with remeasurement adjustments and other transaction gains and losses recognized in earnings.  Other than nonmonetary equity and available for sale debt 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. For nonmonetary available for sale debt securities traded in highly inflationary economies, the fair market value of these debt securities are remeasured at the current exchange rates, with changes recorded in the gains (losses) on marketable securities component of accumulated other comprehensive income (loss). We reclassify amounts from accumulated other comprehensive income (loss) into earnings when these debt securities are sold.

Application of Accounting Policy

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 4% of our consolidated revenues for the year ended December 31, 2021 and 5% and 6% of our consolidated revenues for the years ended December 31, 2020 and 2019, respectively.

The operating environment in Argentina continues to present business challenges, including ongoing devaluation of the Argentine peso and significant inflation. For the year ended December 31, 2019, the Argentine peso declined by approximately 37% (from 37.6 to 59.9 pesos to the U.S. dollar). For the year ended December 31, 2020, the Argentine peso declined by approximately 29% (from 59.9 to 84.0 pesos to the U.S. dollar). 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 now remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in earnings. In 2021, we recognized $9.0 million pretax remeasurement losses. In 2020 and in 2019, we recognized $7.7 million and $11.3 million pretax remeasurement losses, respectively.

At December 31, 2021, Argentina's economy remained highly inflationary for accounting purposes. At December 31, 2021, we had net monetary assets denominated in Argentine pesos of $60.1 million, including cash of $52.9 million. At December 31, 2021, we had 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.

At December 31, 2020, we had net monetary assets denominated in Argentine pesos of $31.3 million (including cash of $24.4 million) and net nonmonetary assets of $146.2 million (including $99.8 million of goodwill). At December 31, 2020, we had minimal equity securities denominated in Argentine pesos.

During September 2019, the Argentine government announced currency controls on both companies and individuals. Under the exchange procedures implemented by the central bank, approval is required for many transactions, including dividend repatriation abroad.

During the third quarter of 2020 and during the fourth quarter of 2019, we 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. As a result, we recognized $10.4 million in 2020 and $4.7 million in 2019 of such conversion losses when we converted Argentine pesos into U.S. dollars at rates that were approximately 100% and 25% less favorable than the rates at which we remeasured the financial statements of Brink’s Argentina. These conversion losses are classified in the consolidated statements of operations as other operating income (expense). We did not have any such conversion losses in 2021.

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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.

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