Welcome to The Brink's Company's First Quarter 2020 Earnings Call. Brink's issued a press release on first quarter results this afternoon. The company also filed an 8-K that includes the release and the slides that will be used in today's call.

For those of you listening by phone, the release and slides are available on the Investor Relations section of the company's website brinks.com. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Now, for the company's Safe Harbor statement. This call and the Q&A Session will contain forward-looking statements. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today's press release and in the company's most recent SEC filings.

Information presented and discussed on this call is representative as of today only. Brink's assumes no obligation to update any forward-looking statements. The call is copyrighted and may not be used without written permission from Brink's.

It is now my pleasure to introduce your host, Ed Cunningham, Vice President of Investor Relations and Corporate Communications. Mr. Cunningham, you may begin..

Thanks, Grant. Good afternoon, everyone. On behalf of all of us at Brink's, I hope you and your families are safe and healthy in this difficult environment and I want to apologize for the delay in starting the call.

This afternoon, we – joining me on today's call are CEO, Doug Pertz; CFO, Ron Domanico; and Rohan Pal, our Chief Information Officer and Chief Digital Officer. This afternoon, we reported our first quarter results on both the GAAP and non-GAAP basis.

The non-GAAP results exclude a number of items, including our Venezuela operations, the impact of Argentina's highly inflationary accounting, reorganization and restructuring costs, items related to acquisitions and dispositions, costs related to an internal loss and costs related to certain accounting compliance matters.

We're also providing an analysis of our results on a constant currency basis, which eliminates changes in foreign currency rates from the prior year. We believe the non-GAAP results make it easier for investors to assess operating performance between periods.

Accordingly, our comments today, including those referring to our guidance will focus primarily on our non-GAAP results. Thank you and I'll now turn the call over to Doug..

one, protecting our employees and servicing our customers; two, preserving cash and optimizing profitability; and three, positioning Brink's to be stronger on the other side of the crisis. We're acting with a great sense of urgency and making great progress on each of these priorities.

Our continued and accelerating execution will ensure that we are positioned to deliver the kind of performance that our shareholders grew to – to be accustomed to before the pandemic. And it's such an impact on our – before the pandemic had such an impact on both our employees, our customers and our business.

While we're taking actions in line with our priorities, it's also important to understand that we have a large, stable, resilient customer base that it's comprised of many essential service providers, large institutions and global retailers with hundreds if not thousands of locations.

At the other end of the customer spectrum, we have limited exposure to dining restaurants and other small businesses that unfortunately maybe also devastated by this pandemic. Unfortunately, the pandemic forced us to postpone the Investor Day that we had scheduled for June 1st.

So today, we want to share with you a major theme that we've discussed in the past, but had planned to elaborate on during our Investor Day event. That's the first part of a significant opportunity we have with our Strategy 1.0 rollout – excuse me 2.0 rollout.

We see a huge unserved retail market opportunity comprised of large branded companies that represent a significant and untapped growth opportunity for Brink's, in fact, for really the large business, the CIT business in general. As I'll present later today, in the U.S. alone, there’re approximately 3.8 million retail locations.

And our entire management, cash management business, the CIT industry and Brink's, all of its competitors combine, provide services to only 10% of these locations.

In other words, the other 90% of unvended retail locations represent a significant growth opportunity for Brink's and are the primary target for our 2.0 strategy, more on this in a few minutes. During the pandemic period, many of us have heard claims that cash is less safe than plastic debit and credit cards or the cash payments are going away.

These claims are just wrong. The data we'll share in a few minutes to support the broad popularity of cash around the world and the drivers of cash usage that will be there after the pandemic. In fact, cash as a percent of all payments methods has historically increased during the recession as unemployment and credit card losses arise.

Our Strategy 2.0 offers a new and innovative service and the initial feedback from customers, including pilots that we're just getting out supports our belief that offering new and more competitive cash management services will be very attractive to retailers.

Starting with our current customers and expanding quickly with many large multi-location retailers that are unvended by our industry. In the near-term, it's impossible to predict the full impact and duration of the pandemic, including the timing of country level economic reopenings and the slowing of infection-related recovery curves.

Based on current information, we expect our second quarter results to be the low point of 2020 and a second quarter revenue decline of approximately 25%. As a result, we are targeting adjusted EBITDA for the quarter to be at least $45 million.

We expect to see a meaningful improvement in the second half of our cost reduction – as our cost reductions stake hold. And when revenue picks up from further customer openings, we should see even stronger profit and cash flow growth.

Together, with our global operating managers, Brink's is taking the near-term actions that are needed to assure, we make it through the crisis and to better position the company after the crisis with an improved cost and operating structure.

We believe these actions together with our new strategies and broader global reach from the G4S acquisition will position Brink's for long-term earnings growth. Please turn to Slide 4, our priorities. As I stated earlier, we are focused on three priorities.

The first and most important is to ensure the safety of our employees and their families and to service our customers. The second priority is to act decisively to protect our business by preserving cash and reducing variable and fixed expenses to align with cost structure – our cost structure with the new economic realities.

Unfortunately, doing so has required us to make some many difficult decisions, including employee layoffs, furloughs and salary reductions throughout our company globally. Our third priority is to position Brink's to be strong – a stronger company on the other side of the crisis.

In addition to rightsizing the business and capturing additional cost synergies through further restructuring, we are sharply focused on completing the acquisition integration of the G4S operations as well as the rollout of our Strategy 2.0 initiatives.

Priority one is the health and safety of our employees, and we've taken significant actions during these unprecedented times to protect them. We're working with country level public health authorities to respond to affected employees and implement contact tracing to minimize impacts to others.

While also aggressively cleaning branches this year, we remain operational. We're also implementing best practices and training for hygiene, sanitation, social distancing and daily temperature check for employees. We purchased and are distributing substantial quantities of personal protection equipment, including mask, gloves, and hand sanitizer.

We're procuring these items in requisite amounts and on a timely basis has been – although purchasing these items have been tough that I have to do on a timely basis has been a challenge for many other companies.

Fortunately, in the U.S., it appears that the infection curve has moderated, and thankfully in many cases, affected employees have returned to work. To ensure that the trend continues and we protect employees' health and our operations remain open, we've implemented health screening and temperature checks for all employees and visitors.

I want to take a moment to express my sympathy for those who have been affected as well as their families. I also offer my sincere gratitude to all of our front-line employees for their dedication to ensuring that the critical services we provide as a company remain available to our customers around the world.

On that note, I'll turn it over now to Ron..

Thanks, Doug, and good day, everyone. Before I start, I want to remind you that we disclosed acquisitions separately for 12 months, at which time they are mostly integrated and included an organic results.

In the first quarter 2020, acquisitions include Balance Innovations in the U.S., TVS in Colombia, a small CIT bolt-on in Brazil, the divestiture of a small monitoring business in France and less than a month of the acquired G4Si secure logistics business.

As Doug mentioned, we experienced COVID-19 related volume reductions on our business beginning in Asia in February, Europe in early March, North America mid-March and Latin America by mid to late March. We implemented daily activity trackers.

And as a pandemic-related shutdowns began, our organic revenue declined on average about 30%, and in some countries by over 50%. Generally, those reductions persistent throughout April. At this time, we're just starting to see improvements as countries begin phased reopening.

We do not have a line of sight on the speed of recovery of business will return to pre-crisis levels. Turning to our first quarter consolidated results on Slide 6. 2020 first quarter constant currency revenue growth was 3%, with two-thirds driven by organic growth and one-third from acquisitions.

Revenue was reduced by $60 million or 7% by negative forex, more than we expected due to the pandemic induced flight to the US dollar. Reported revenue was $873 million, down 4% versus the first quarter last year. Versus prior year, first quarter constant currency operating profit declined 4%. Acquisitions added 1%.

A negative forex translation reduced operating profit by $18 million or 21%. As countries begin to reopen, we're seeing a strengthening of local currencies versus the US dollar, which will be favorable to our consolidated results.

We estimate that the negative impact of the coronavirus on our first quarter operating profit was around $13 million across all of our businesses. We are acting decisively to adjust our cost basis to align with pandemic related revenue declines, but with the execution costs, it will take some months to reflect that in our earnings.

Reported operating profit for the quarter was $63 million and the operating margin was 7.2%, down 220 bps from the first quarter of 2019. Adjusted EBITDA was down 8% in constant currency and down 23% reported due primarily to the reduced operating profit.

EPS of $0.36 per share, was down 33% versus prior year in constant currency and down 56% reported due to lower operating results combined with a much higher projected tax rate of 49.8%. COVID-19 was a perfect storm for our estimated 2020 effective tax rate.

So we expect our ETR to return to the low 30% range in 2021 if the pandemic is resolved later this year as we all hope. The 49.8% non-GAAP effective tax rate estimate is substantially higher than the 32% rate we guided to at the beginning of the year. The material increase is due primarily to COVID-19 related volume projected US taxable income.

This will reduce our ability to utilize US tax credits to offset foreign taxes and also reduce our ability to utilize tax credits for taxes paid by our foreign subsidiaries. Again, we view the inflated non-GAAP ETR as a pandemic induced aberration that should abate with the virus. Further details on our income tax are included in the appendix.

Moving to Slide 7. Here, we illustrate the forex and virus impact on first quarter operating profit versus prior year. Excluding the virus, operating profit and constant currency was $94 million, up 11% and the operating margin was 9.9%, up 50 bps versus the same period last year. Foreign exchange was negative $18 million, or 21%.

Our original guidance included approximately $14 million and negative forex in the first quarter. We attributed the additional $4 million in negative forex to material March devaluations that we interpreted, as I said previously, as a pandemic-related flight to the US dollar.

In addition, we conducted a comprehensive analysis by country, included and concluded that COVID-19 revenue declines were responsible for approximately $13 million in lost operating profit. After forex and the virus impact, reported operating profit was $63 million. Moving to Slide 8.

First quarter 2020 operating profit of $63 million was reduced by $19 million of interest, $2 million favorable versus last year, as higher debt was more than offset by lower rates. Tax expense also $19 million was flat with last year, as lower-income was offset by the higher effective tax rate I just discussed.

Minority interest and other was $6 million, which altogether generated $18 million of income from continuing operations. Dividing by $51.3 million, weighted average shares outstanding generated $0.36 of earnings per share, less than half of the year ago amount.

Depreciation and amortization was $37 million, interest expense and taxes were $39 million and non-cash share-based compensation was $7 million. In total, 2020 first quarter adjusted EBITDA was $101 million, down 8% in constant currency and down 23% reported as stated previously. Turning to Slide 9 to look at results by segment.

For the quarter, North America grew 2% organically and on a reported basis, and was up 3% in constant currency. Segment operating profit was down 25%, mostly due to an organic decrease of 24%. North America's operating profit margin decreased 270 bps from 10.1% to 7.4%.

In the US and Canada, we began experienced virus-related volume drops in mid-March that impacted our results for the quarter by $3 million to $4 million. Reduced volumes persisted in April and we've taken substantial actions to reduce our costs that I'll cover in more detail in a few slides.

Mexico continued its strong performance in Q1, but began to be impacted by lower COVID-19 business levels in April. Preliminary April results suggest that the commercial impact of the virus maybe relatively less than the impact in the US and Canada.

South America generated $198 million of revenue in the first quarter of 2020, reflecting organic growth of 8% and negative forex of 22%. Organic growth was driven by Argentina and was partly offset by decreases across the rest of the region.

Brink's Argentina had a strong quarter in local currency, inflation driven price increases, ad valorem and higher volume more than offset cost inflation, which increased margins. For the segment, first quarter operating profit was up 27% organically and down 3% in total as forex had a 31% negative impact.

South America, first quarter operating profit margin increased 230 bps from 18.7% to 21.0%. As noted before, we began to see the South America impact of the pandemic in mid-March and that dynamic continued in April. We estimate the COVID-19 impact in the segment was around negative $3 million in the first quarter.

Like everywhere else around the globe, we're taking steps in South America to align our costs with projected business volumes. Rest of the world first quarter revenue was down 4% with an organic decrease of 3% and negative forex of 2%. Volumes in Asia were the first to be impacted by the crisis with operations in Hong Kong, being the most impacted.

Europe was impacted a little later than Asia with France volumes down significantly in the second half of March, which continued into April. Operating profit was down 36% organically and 37% on a reported basis. Segment operating profit margin decreased 340 bps to 6.5%.

Results in France, the largest business in Rest of World, were significantly affected by the crisis, and our team there is aggressively managing costs and leveraging government assistance to mitigate the impact. The same be said for the rest of our businesses in Europe, the Middle East, Africa and Asia.

For the Rest of World segment, we estimate that the virus impact in the first quarter was around $6 million. Our BGS operations, which cut across all segments and are included in segment results were also impacted by reduced volumes in most areas of operation. Let's move to Slide 10, where I'll review our financial health and liquidity.

The bars on this chart represent the source of our liquidity, cash available in our business and capacity in our revolving credit facility. In each bar, below the cash, you can see our debt in our credit facility, both drawn and available.

The bars each represent a point in time at 2019 year-end at March 31, 2020, and at March 31, 2020, pro forma for the term loan A expansion and completion of the previously announced G4S cash acquisitions. At the end of 2019, we had approximately $1.2 billion of liquidity.

Historically, we used cash in the first quarter with the seasonality of working capital. And we invested over $100 million in CapEx in the G4Si acquisition. On March 31, 2020, we had $0.9 billion in liquidity.

On April 1, we closed a $590 million expansion of a term loan A with our bank group with the same L plus 175 rate in terms and conditions as the existing credit facility. After March 31, we closed acquisitions of nine G4S cash operations, and we have eight more to go.

In total, we expect to pay approximately $835 million for G4Si plus cash operations in 17 countries. Upon completion, we expect to have about $0.8 billion in liquidity, which we believe will be ample to continue execution of our SP2 strategic plan.

Importantly, other than the 5% annual amortization of our term loan A, we have no significant debt maturities before 2024. We plan to maintain our quarterly dividend but have decided to suspend share repurchases until further notice.

Our credit rating remains strong, and we have the capacity to weather this crisis, even if the impact turns out to be worse than we currently anticipate. Let's look at our cash CapEx on Slide 11. Our original guidance for cash CapEx for 2020 was $165 million, which included $140 million for operating CapEx and $25 million to purchase cash devices.

Since the start of the crisis, we have frozen CapEx. We'll only acquire assets that are essential to our business operations safety and security. We have cut the Brink's cash CapEx target by more than 50%, down to $80 million.

We also expect to spend an additional $20 million related to the G4S acquisition, bringing our total cash target for 2020 on CapEx to $100 million. We will monitor the severity and duration of the pandemic and may revisit our cash CapEx target later in the year. Turning to cash flow on Slide 12.

Given the uncertainty around the COVID-19 impact, we withdrew our 2020 guidance, including our free cash flow target of $230 million. Cash flow from operating activities is comprised of adjusted EBITDA reduced by working capital and severance, cash interest and cash taxes.

Free cash flow equals cash flow from operating activities less cash capital expenditures. In 2019, adjusted EBITDA was $564 million. Cash flow from operating activities was $334 million and less $165 million in cash CapEx produced free cash flow of $159 million. In 2020, we are not providing adjusted EBITDA guidance.

But we have provided targets for other items where we have better ability to estimate annual amounts. These targets include the estimated impact of the G4S acquisitions. Working capital and restructuring charges totaled $127 million in 2019, and we're targeting a range of $120 million to $150 million for 2020.

Based on pandemic hardship to some customers and despite our diligent efforts, our assumption includes an increase in accounts receivable days outstanding. We continue to incur restructuring charges related to previous acquisitions we'll have additional charges this year in response to COVID-19 and as we integrate the G4S cash businesses.

Cash taxes, which totaled $24 million in 2019 are targeted at $65 million this year. In 2019, we received significant tax refunds and accelerated payments that are not anticipated to repeat this year. The $65 million in estimated cash taxes this year is $20 million less than our withdrawal guidance due primarily to lower projected earnings.

We are targeting cash interest to be around $95 million, up from $80 million due to incremental debt associated with the G4S acquisition. Cash CapEx, as we just reviewed, is targeted at $100 million.

The estimated 2020 total of increased working capital, cash restructuring, cash taxes, cash interest and cash CapEx is in the range of $380 million to $410 million. Offsetting that 2020 depreciation, amortization and other noncash items are estimated at $185 million.

That implies 2020 operating profit will have to exceed $195 million to $225 million for Brink's to be free cash flow positive this year. With all the uncertainty surrounding the pandemic, we're targeting that we will generate positive free cash flow in 2020 and have ample liquidity to execute our strategies.

Now let's move to Slide 13 to review our cost structure and many of the decisive actions that we've taken in response to the pandemic to protect our profitability and cash flow. On the left of this slide, we've illustrated our global cost structure. Labor accounts were 60% of our costs and fleet and freight is an additional 15%.

And generally, direct labor and fleet and freight are variable based on volume. Hourly workers are only paid for the hours they work. Vehicles consume fuel, oil, tires and routine maintenance based on the miles they drive. This gives us considerable ability to flex our costs with our revenue.

But during the pandemic, with the rapid change in our businesses, it was not enough to just flex. We've taken decisive actions to align our costs to go COVID-19 business levels. While maintaining the capability to be able to serve our customers when volume levels return.

We've reduced the rest and indirect labor cost by executing headcount reductions, either through severance or temporary furloughs and we are aggressively managing overtime. We instituted hiring, merit increase and travel freezes, and we've taken temporary salary and benefit reductions across our global footprint.

Some of these actions have been slowed by government mandates on employees or agreements we have with labor organizations. In some instances, we're able to take advantage of government programs to offset a portion of our labor costs, but these benefits are limited.

With fleet and freight costs, we're optimizing CIT routes, utilizing our most efficient vehicles and rationalizing maintenance to reduce costs. Our 2020 fleet replacements have been mostly put on hold.

SG&A and other represents 20% of our costs and we are taking actions to reduce discretionary spending at all levels, including headcount, facilities, professional fees and travel. Non-cash costs, which include depreciation and stock compensation represent about 5%.

In summary, we are targeting to fully align our cost basis to match pandemic level revenues as we move into the second half of 2020. This will give us material operating leverage when revenues begin to return to the new normal. Now let's look at Slide 14 to review what we're doing, specifically in the United States.

As I mentioned before, we began seeing the effect of the crisis in the U.S. in mid-March, the impact was rapid and reduced our volume, especially in retail CIT. versus pre-COVID-19 levels. In April, we estimate that Brink's U.S. total volume was down 30% to 35%, but volumes of notes processed was down only 5%.

We estimate that April revenue was down 25% to 30%, and we expect that that will be the low point of the crisis in the U.S. Retail was disproportionately disrupted versus financial institutions. Our U.S.

management team has implemented many of the cost reduction measures, I just discussed in our global response, that included 20% to 25% headcount reductions in both operations and SG&A. 10% salary reductions for management level employees were recently implemented. Hiring merit increases in the 401(k) match have all been frozen.

To manage fleet costs, we're rationalizing and optimizing CIT routes, deploying the best of our fleet and ensuring maintenance costs are incurred only when necessary. We're scrutinizing facilities requirements and professional fees and have reduced travel to the lowest level required to run our operations.

To date, we have not identified any significant government programs that would benefit us, but we continue to explore every possibility. With that, I'll turn it over to Doug to review our global customer base, our views on the use of cash and continued execution of our strategy.

Doug?.

financial institutions, or FIs, as we call them, retail customers and a smaller category called government and other. We've provided a similar breakdown for each of our top five countries, which account for about 72% of our total revenue and as you can see, our U.S. operations have a breakdown quite similar to the consolidated revenue.

As does Brazil, whereas Mexico and France are more heavier weighted to retail or the yellow shaded areas on the chart. Some retailers are getting lots of negative attention from investors and the media during this pandemic. So let's drill down into the retail customer base. Given that the U.S.

is by far our largest market and roughly mirrors the revenue breakdown of our global business, let's use the U.S. to demonstrate our high quality customer base. Turning to Slide 17, here are the three big takeaways from this slide. Our U.S. retail customers are large, diverse and in many cases, essential and provide a strong base of recurring revenue.

As you can see on the left hand side of the slide, 44% of our U.S. retail revenue is from customers deemed essential, which means they are up and running today and they've been since the beginning of the pandemic. Examples include many supermarkets, pharmacies, gas stations, superstores and convenience stores.

On the other hand, we have more limited exposure to the businesses facing the most significant challenge. In fact, only 7% of U.S.

retail revenue was derived from dining restaurants, and many of those customers are large national and international restaurant chains that should be back up and running after the pandemic subsides and we have seen re-openings. Another 8% of U.S. retail revenue comes from fast food restaurant chains. Many of these are at least partially open.

Most of the time and are expected to be fully reopened. Regardless of what businesses they in, our U.S. retail customers are generally heavily weighted toward extremely large enterprises, in fact, 20% of U.S. retail revenue is from customers with more than 1,000 locations and another 30% come from customers with between 100 and 1000 locations.

It's interesting to note that, and we'll discuss this point in a few minutes, there are a significant number of large retailers that are deemed as essential and are open and they have over 1,000 locations each, but Brink's or anybody in the CIT industry in the U.S. does not service or provide any minimal service to these customers.

Finally, about a third of the U.S. retail revenue on the right hand side of this page is from CompuSafe customers. The revenue is characterized by long-term contracts and recurring revenue streams.

Brink's base of retail customers, which is characterized by large, heavily essential customers suggest that we do not have a broad exposure to a large portion of at-risk retailers. In fact, you'll see in a moment, we believe the retail market in the U.S.

is far larger than most people perceive it to be and because by far the majority of the retailers do not use cash management services or anything from the CIT industry. This also offers a great opportunity for growth if Brink's can provide the value that customers are looking for with our new 2.0 offerings.

Turning to the next page, in addition to the high quality of our retail customer base, our U.S. financial institution customers offering more resilient recurring base of revenue. Our FI customers’ base is comprised primarily of large stable companies that are open and operating. In fact, 66% of our FI revenue is from FI – at least 50 locations each.

And the top 25 Tier 1 banks make up about half of our FI revenue in the U.S. The next largest group is FIs in the 10 to 49 locations, again, a very significant portion of our FI revenue.

Both our large FI customers, as well as our smaller banks, present us actually with a great opportunity for future outsourcing, especially in the post-pandemic world where they will be looking to reduce costs and focus on their core banking businesses.

Together, our FI and retail customers form a very stable base that we believe will prove to be resilient both through much of the pandemic, but as we've come out of it as well. Slide 19, the next subject that we feel is foundational to discuss today is the continued strength of cash usage worldwide.

These charts show that cash in circulation both in value and number of notes continues to grow in the U.S. and in Europe at annual rates from 5% to 7%. And this growth has been consistent for the last 20-plus years at a compound annual growth rate at these similar levels.

These rates are well ahead of GDP growth rates, offering a strong underpinning for our business, and growth in cash circulation historically has increased during times of recession. While some may counter the increases in U.S. cash are heavily driven by criminal activities or the cannabis industry, which is not banked in the U.S.

The consistent year-after-year increases of over 5% suggests that this is just not the case. In emerging markets, such as those in LatAm, Eastern Europe, and Asia-Pacific, growth rates in cash and circulations or even at a higher level. Page 20.

Turning to Slide 20, you can see that the cash is by far the most widely used payment instrument, accounting for 75% of global transaction.

It's important to understand the drivers of cash usage to understand why cash is so important, even in developed economies like the U.S., and we think that these drivers will not only not change, but they will continue to be strong drivers after the pandemic. For example, one out of every four Americans is either under-banked or completely unbanked.

That means 25% of the U.S. households rely on cash as their primary method of payment and in some cases, potentially their only method of payment. And that is one of the most developed nations, at least, we think so in the world. As you move from the developed to the developing, that percent of under-bank or under-banked grow significantly.

Additionally, cash is used by all demographic groups in the U.S., including all ages and all income levels. In fact, a recent study by the Fed suggested people in the lower age group actually use cash at a higher percent of transactions than even in older groups. Cash offers privacy for consumers and it cannot be hacked.

It offers anonymity unlike credit card that can be tracked for all of your purchases. Cash is accessible to all without hidden fees or required personal accounts that are needed to back up credit cards, phones or other apps.

And finally, cash is the go-to payments method during times of crisis, when the power goes out or in the event of a cyber-attack on financial institutions. During periods of uncertainties, such as the ones that we're in, people also gravitate toward holding physical cash as their primary store of value.

Looking ahead, like I said, looking again at our five largest markets on the right hand side of this page, cash has a substantial payment share in each one of these, and it represents the majority of transactions in Mexico, France and Argentina.

Cash usage drivers are similar during a recession and we are most probably entering into recession in the U.S. and globally.

As you can see on Page 21, the data clearly shows at the top left hand – on the top left on chart, the cash payments as a percent of all payments grew dramatically during the last great recession by almost 50% from the pre-recession cash usage levels.

This was driven by increased government stimulus, significantly increased unemployment, and the resultant drop in consumer credit. The result was reduced to the result of reduced credit, including credit and debit cards or any account backing – accounts backing for other forms of payments and, therefore, it translates into a higher use of cash.

The more subtle conclusion here, though, also from the same chart is that there has been a recent – in the recent years when there has been a lot of talk about the death of cash, that is just – the facts are just counter to that.

If you look back to 2008, you can see that in 2008, prior to the last great recession, cash usage was at the 21% range of all transactions, and it materially increased since then, countering the normal often argument that cash continues on a downward tracking.

Today it's 26% of all transactions and, in fact, 32% of in-person retail transactions with trillions of dollars in government stimulus and now record levels of unemployment. The drivers of cash usage will have an impact on our economy as it reopens. During the last recession from 2008 to 2010, the organic growth rate of Brink's U.S.

was only minimally affected dipping slightly at the bottom by about 4% and then recovering the next year to be flat on a compound annual growth rate basis throughout the three years recession period.

It's important to note that even during a time of recession when some retailers have lots – have a lot less cash to manage due to their lower sales, our services are still needed, and our revenue is generally not drive based on cash volume but on the services performed.

This historical data we think clearly supports our contention that Brink's is an essential services provider and is resilient in the time of economic stress. Moving to slide 22. We've also taken some data-driven approach to address a few common misperceptions that have recently arisen related to cash safety.

As you can see on the left hand side of this page, in general, cash carries fewer germs than a door handle or a park bench or even plastic credit cards. And in fact, as you can see from the chart on the right hand side, the data that is specific to COVID-19 shows that the virus survives more than three times longer on plastic than it does on cash.

Similarly, the virus survives on steel about the same time as it does on plastic cards, that's three times longer than cash. So it's much less safe to open the door or touch a plastic credit card, even if you touch it for contact purposes than it is to use cash.

In summary, based on available data, and backed by virus various sources, like the European Central Bank and the World Health Organization, both of which have made a point to go on record in response to many of the articles representing cash. We think cash is a safe of as if not safer than other forms of payment.

Let me transition now to some of the key themes that we've talked about earlier in related to the large opportunity we see in the U.S. retail market and globally for that matter, as we think it is an extraordinary offering opportunity for Brink's and we are set to focus on that with our Strategy 2.0.

We think we have the right – we think with the right management cash – with the right cash management solution, we think retail customers that are underserved or unserved today by our industry will welcome a solution and we think our Strategy 2.0 will offer the step change solution to those customers.

As you can see on Slide 23, the retail market in the U.S. is a large $5.5 trillion in size. At the end of last year, nearly 89% of purchases at retail in the U.S. were in person, physical sales at point of sale.

This percent of online sales about 11% for all of 2019 has clearly increased during the COVID-19 economy shut down, and we may see a significant increase in online sales as a [indiscernible] of all retail sales as we come out of the shutdown period.

But as you can see on the next slide, even with the percentage of in-person retail sales transaction as it reduces or if it does reduce, it would still represent a tremendous opportunity. Last year, 32% of those in-person purchases were in cash payments.

So quite simply, there is an enormous opportunity of cash being transmitted in retail – transactions in retail. And while these ratios or percentages may change after the crisis, the magnitude of this opportunity does not, it's still very large.

Remarkably, the cash management industry and Brink's for that matter, historically, has had very low penetration of the total U.S. retail market for the total retail locations. Now let's turn to the next slide to go a bit deeper.

In fact, 90% of retail locations are not currently served by cash management or the CIT business, they are what we call underserved. Of the 10% retail locations that are vended or served by our industry, we estimate that Brink's service about a third of these.

So to state, obviously, there is significant market share opportunities available to us today. As long as we present a compelling model through our unvended community that have not purchased services from the industry in the past.

The other very interesting fact and potential opportunity at these are not just smaller mom and pop single stores that are unvended. The unvended includes significant numbers of large retail chains that use little or no cash management services from our industry.

These are large brand name change that have thousands of stores, yet they've yet to see the value of using our industry services. In fact, as you can see in the lower right-hand corner of the slide, most of these retailers use the services of card companies to process credit card payments. And frankly, at a very high price to these retailers.

In the slide, we have also illustrated a small portion of the large unvended market by the blue stripes slice in the chart that we think are key – is a key target for our new services. This slice alone of large multi-location retailers could potentially increase our current U.S. retail revenue by over 50%. Turning to the next page.

So as we've outlined in the prior slides, cash is popular and needed form of payment for retailers and will continue to be we think post the crisis for all the reasons and drivers we've cited.

However, it is our belief that the cash management industry, including Brink's has historically approach the market with maybe a one size fits all approach, and in fact, did not meet or fit the needs, they're required to meet the needs of those unvended customers.

Customers have received cash management as expensive, inconvenient and unnecessary and maybe even carrying some risk as opposed with credit cards. So the challenge for Brink's is to design a complete cash management solution, and do so at a lower cost than what retailers pay for credit services.

I'd like to say that we need to offer retailers a cash payment solution that at least is complete, easy to use and hassle-free as credit cards, but at a much lower cost.

We believe our customers need a way to convert cash into digital, optimize working capital with daily deposits into their bank, reduce the risk and cost of both in-store and external losses, reduced store labor costs associated with managing and depositing cash including eliminated daily trips to their local banks and the ability to consolidate numerous local bank accounts into a single bank account that is credited through the service, and have the complete service all from one source, including all their cash banking – cash management banking needs.

Let's turn to the next page. And at this time, I'd like to introduce, again, Rohan Pal, our Chief Information Officer and Chief Digital Officer and Head of our Product Technology and Marketing Group to tell you a little bit about how we at Brink's will use tech-enabled services to adjust – address these needs of our unvended customers..

Thank you, Doug, and good afternoon to everyone on the call today. As Doug pointed out, Strategy 2.0 was built on the foundation of changing the customer experience for cash management to better appeal to that large unvended segment of walk to bank customers. The solution needed to be easy to use.

Holistic to include both deposits and ordering change, non-intrusive and customer friendly and yet provide the same or better working capital benefit to the customer. So we built a solution that we call Brink's Complete to change the prevailing customer experience in our industry.

It consists of a digital app, a low cost device tailored to the needs of the business, next day advanced credit for cash deposits and change ordered and delivered to the stores, all for a well published single subscription price that is targeted to be less than 1% of the value of the customers cash transactions. Next slide, please.

Here's how it works. Customers use the 24/7 app to make a deposit, order change or track their requests. They then put their cash in a specialty provided Brink's bag and scan and drop it into the device. Brink's take custody for the deposit and provides advanced credit to the customers' bank account the next day.

And Brink's continuously monitors the device and schedules a pickup when the device reaches capacity. Now there are two key customer experience changes that I'd like to highlight. First, this is an all digital process to create a deposit. No more time spend counting cash and writing up paper deposits.

Second, the deposit is made and credit is received at the customers' convenience, and the benefits to the customer are clear. No more walking to the bank and waiting in line. No more distractions from serving your customers when a Brink's truck arrives to empty the device.

All this at a price point that is affordable and provides more value to the retailer than their current solution. Next slide.

So how does this solution apply today? As Doug and I have both indicated, there are more than 1 million retail locations that have not adopted the conventional industry solutions for cash management, because they just didn't see the value in it. So we designed a solution to change their minds about the ease and the cost of cash management solutions.

And now with COVID-19, this solution is so much more relevant for our retail customers. With bank branches closing, social distancing in bank lobbies and reduced staffing in retail stores, customers that used to take the time each day to walk to the bank to make a deposit are struggling.

They can ill afford their managers to be out of the store for hours just to keep their working capital flowing. This is where Brink's Complete fits in, use an app to create a deposit, put your cash in a bag, scan and drop it into our device and receive advanced credit for it next day.

No hassle, no walking, no unnecessary contact with others in the bank and working capital acceleration for your stores. We are in pilot today with two large customers that used to walk to the bank to make their cash deposits. And we have received interest from many of our existing customers in this Brink's Complete solution.

We believe that the Brink's Complete cash management solution addresses a critical market need today and easily extends into the new normal environment of tomorrow that will most likely emphasize social distancing, no touch services and the digital focus. Now, let me turn it – turn the call back over to Doug to sum-up.

Doug?.

Thanks, Rohan. I'm pretty excited. I'd like to close today focusing and summarizing on our third priority, which is a position Brink's to emerge from this crisis stronger than ever and poised for additional future earnings and revenue growth.

Now and during this crisis period, we are continuing to aggressively pursue a new cost structure that it's aligned with the economic realities of the pandemic.

But at the same time, the key to emerging from the crisis is positioned for the longer-term growth is to be and it's continuing to execute and be better positioned to execute all three layers of our strategy. Our Strategy 1.0, which we introduced at our Investor Day three years ago was focused on internal organic profit growth initiatives.

Our successful execution of these initiatives drove much of the profit growth we saw during our first three-year strategic plan period, and they form a foundation for continued improvement going forward.

We now call it 1.0 wider and deeper WD, which simply means that we will accelerate and we are accelerating our execution of internal growth initiatives as well as our right-sizing measures throughout more countries and our goal of a network, which now includes 14 more new countries with G4S.

But as part of the priority three, we are also restructuring and resizing our businesses in many countries to better match our revenue during the crisis and to better leverage for greater margins and stronger earnings as revenue growth gradually returns and hopefully exceeds prior levels, if revenue levels return at a slower pace will be positioned for better profitability at these levels.

These actions include accelerating building on already developed restructuring and integration plans and accelerating acquisition synergy plans that have been put in place and expanding on those. We've now completed the acquisition of G4S operations in nine out of 17 markets, which are now on board and operating as part of Brink's.

We're on track to close the eight additional markets before the end of 2020. So far we're very pleased with the quality of our new G4S management teams who understand the importance of achieving their targeted cost synergies and are excited about our growth opportunities, including the new Brink's 2.0 strategies.

We also have said, we believe Brink's Complete is the right service at the right time for retailers who want new cash management solutions and to be safe, easy to use and provide a complete service solution. Our marketing efforts begin with our existing customers, who are the logical ones and key to expanding our retail market positions.

And these services should work just as well for existing CIT customers only with better value. We are also placing initial pilots, as Rohan mentioned, with select groups of well-known large multi-location national retailers that currently we either serve only partially or are totally unvended.

We're continuing to roll out additional service as part of our 2.0 Strategy on top of our direct retail, including ATM network management and cash recyclers. Turning to our last page, I'll conclude with a summary of our outlook on Slide 31. In the near term, we are laser-focused on reducing costs as we weather the current market uncertainties.

We believe the second quarter will be our low point in 2020, with steady improvement in subsequent quarters. While there continues to be tremendous uncertainty about the reopening of economies, how our customers will ramp up their operations and the impact of global economic recovery.

In quarter two, we are targeting to generate at least $45 million in adjusted EBITDA, and we're targeting positive operating cash flow for the full year. As Ron discussed, we're comfortable with our balance sheet and we think we have more than adequate liquidity.

As we look forward, beyond this year into 2021, we're highly confident we'll emerge from this crisis stronger than ever by leveraging the strong foundation we've built over the last three years.

We're continuing to expand upon and the new global network that we are adding with G4S are aligned new cost structure and strategies and our 2.0 Strategy initiatives. More importantly, the skills and the dedication of our complete and our entire workforce will help support us through the crisis and beyond. Please turn to the last page.

As you can see, this is a shutdown, a very lonely street in Paris, but you can see the Brink's truck there. The world counts on Brink's. We'll open up now for questions. Operator? Grant? Thank you..

We will now begin the question-and-answer session. [Operator Instructions].

Any questions?.

Our first question will come from George Tong with Goldman Sachs. Please go ahead..

Hi, thanks, good afternoon..

Hi, George..

Hello. You indicated that organic revenue declines persisted through the month of April, but that you're starting to see some improvement.

Can you talk about what weekly revenue trends in April look like by geography?.

George, I'm struggling a little because it's awfully hard to tell you weekly. What we have seen and it varies by the countries.

That's why we're trying to give at least a little bit of background as to when we saw the various regions at least how the way we call it went through with starting with Asia, where we did see, obviously, it have a earlier impact in Hong Kong, but then starting to see some of the improvements in the latter weeks of this month, really leveling out in the first weeks of this month in Hong Kong, and then starting to see some improvements.

But that's kind of more in the forefront other markets. And as we said, as it went through Europe, we saw in this – probably about the second week or so in March, the starting of the impacts with the shutdowns of the various countries and the economies.

And in some cases, we've not seen it come back in some countries because of the still continued shutdowns. In others like the U.S. over the last week-and-a-half or so, we've just started to see customers and the economy start to open back up again..

Got it. That's helpful. And then as it relates to Brink's Complete, very helpful overview.

Can you elaborate on your broader rollout strategy of this new product, if you need to partner with the bank in this product work and how you would frame the longer-term revenue opportunity?.

Yes. So we are being a little bit cautious on how we let it roll and lay everything out. We have already partnered with what we call a single partner bank, at least for the regions that we are starting the pilots and rolling out so far.

The partner with that bank provides us the ability to provide the working capital management and optimization, in other words, the daily credit on an ACH transfer basis directly to our customers’ banks that they’re choosing.

So it allows us in partnership with that bank, but through us in an off-balance sheet method, it allows us as Brink’s through one of our Brink’s subsidiaries. Again, an off-balance sheet method, it allows us to provide the credit to those customers.

So if we consolidate several hundred, let’s say, store locations for a retailer that are in multi states and that use – historically have used multi-local banks, it effectively allows the ability to eliminate all those and provide an ACH transfer in the next morning to a single bank of the customers choosing..

Great, thank you..

Our next question will come from Tobey Sommer with SunTrust. Please go ahead..

Thanks. If we think about your rightsizing of the organization and making it leaner for the market that will be here post COVID-19 kind of thinking of next year, not the balance of this year.

What are you building for if you take January and February or maybe last year’s fourth quarter as 100%, are you building it for 95% next year, 85%? How do we think about that?.

It’s a very, very savvy and good question, and it’s one that our management team are working with all of our country managers and our functional teams to really drive. And Tobey, I’m not going to answer it specifically with a specific target, although we do have specific targets that we’re providing to each country.

But I think that the – your point is well taken. Your concept is really what we’re driving to.

And that is to take a look at our fourth quarter as a jumping off point for 2021 and the future, and say in the fourth quarter this year, how is that new business size? How are we sizing that business at a reduced level of revenue in the fourth quarter, but an improved margin.

So it may not be improved margin dollars, but at least an improved margin percentage than we would have seen in the prior year. And that’s a challenge. So if you use an example on the – that Ron used as part of the review of U.S.

that CIT labor, that’s the direct labor associated is down about 25%, relatively in line, aggressively in line, I guess, I should say, in line with the expected revenue at the bottom in the second quarter. That is a true takeout of headcount. These are layoffs and furloughs. That have been taken – the action has been taken to take that cost out.

And then you jump over on that page as well, 20% of SG&A has been taken out as well. And we can continue. That’s resizing the business model. And if you have 20% of SG&A, and you can maintain that as a cost structure going into the fourth quarter, we don’t – we hope. We don’t know, but we hope that our fourth quarter revenues will not be down that much.

And I’m not trying to speculate or suggest one way or the other, but I’m suggesting that we don’t think that our – as we see a recovery, however, gradual, wherever that slope might be, that our revenue should be stronger than that. As compared to prior year, not down as much.

But if we see a cost structure and a business model that puts us effectively with SG&A at those types of levels, will have leverage to the upside. And the challenge, the opportunity is to use that leverage going forward.

And then layer on top of that, our new strategies to get us additional organic growth that will continue, again, to leverage that cost structure even more going forward. That’s why we think we’re going to be very well positioned. It’s tough. It’s not easy as we go through this period of time.

It’s not easy on the people that are not part of us as a team anymore, but it should be great for the other people that are left. And that’s the majority by a long shot.

And taking the decisive actions now will put us in a much better position for the future, not only in the fourth quarter of this year, hopefully, but that is a jumping off point for 2021 and beyond..

Right. Well, one other question from me, and I’ll hop back in the queue. In my coverage, your stock is down the most year-to-date. I know everybody on the phone and your team is acutely aware of that.

Are there other strategic things that you can do? Or have you been sort of approached by anybody because we’ve seen private equity transactions at substantially higher multiples and you’ve got innovative strategies that not everybody in the market has..

Well, that’s one of the reasons, Tobey that we wanted to lay out some of what I consider the basic fundamentals of our business. I firmly believe and I hope, after we – our conversation today that the reasons for people using cash are not going – in fact, they’re going to go just the opposite direction.

I think that the myopic view that we’ve seen and maybe some of the misinformation we’ve seen about cash and cash usage, both in the U.S. and on a global basis have really skewed some of this, skewed maybe our valuation. The reliance on retail that maybe many of misperceptions about us have maybe skewed that as well.

The perception, if you walk down Second Avenue in New York. This is one of my favorite. You look down second in all the restaurants and the dry cleaners and other stores are closed. And you say, well, this must be impacting Brink’s. Well, the fact is we only service less than 10% of those customers because of our vended nature that we pointed out.

Which is – means that we aren’t as reliant on own. In fact, most of those are smaller stores, smaller operations, smaller retail operations that we do not serve. And they aren’t impacting our business now. That’s why 44% being essential is really a key number that I think was misunderstood.

And the biggest misunderstanding of that is our potential opportunity because there’s 90% and if you think that there’s going to be more online sales going forward than there have been historically, which I do agree with. Maybe you cut that number by 10%, 15%, 20%.

It’s still a large, large opportunity that if we implement it correctly, if we roll out our strategy properly, we should see substantial opportunity for growth in a unique fashion, in a step change fashion of services we provide to the customer that offer us greater profitability and greater growth.

I can’t answer your other question, have we been approached by somebody to bias..

Thank you very much..

Our next question will from Jeff Kessler with Imperial Capital. Please go ahead..

Thank you for taking my questions. Hi guys, how you are doing? Realizing that there’s probably some of your competition on the phone. I’ll ask this very carefully this question.

Coming out of the last recession, you folks lost share because that 10 – that’s 10, 12 years ago, because the value proposition of Brink’s probably was not – was overstated at the time. They’re charging too much. And you lost share for various reasons.

Does what we are seeing – those are what we’re seeing now, such as Brink’s complete, do you believe you have you are putting out there as you come out of a recession or even in the middle of recession, the type of tool that can take back some of that lost share, particularly on the financial services side, type of things that you didn’t have back then when you were a high-priced company, you’re now as high-priced or as low priced as anybody else.

The question is, do you think you have the value proposition to change the market share with the new – do you want to call it, Brink’s 2.0 and 2.01 and 2.03 as it gets introduced over the course of the next two years..

Well, first of all, Jeff, you’re worse than me with numbers, 2.1, 2.03 and so forth. I get criticized for that. But setting that aside, I think we should keep this in perspective. We set aside the 2.0 and the new solutions that we will be offering, and I’ll talk about that in a moment.

What’s important is that as a company over the last three years, I think we have materially improved our service levels, our value proposition, our customer focus to our customers in the U.S. that we haven’t lost market share that I can think of, of any consequence over the last three years. We made lots of accounts from here and there.

But in general, we haven’t lost, we probably gained, if anything, some market share. In the FI as an example, one or two large accounts that we’ve gained at least account share with. So I think I can’t speak for what happened in 2010 or 2011. I can speak for when I came in 3.5 years ago that we weren’t doing as well as we should have.

We weren’t servicing our customers as well as we should.

And I think we’ve made significant progress in better strategies investing more in the business, providing better service, being more customer focused, et cetera, that has gotten us to a position that will see us through in our core business, in our core offerings, in our core offerings versus what our customers – or excuse me, our competitors offer to our customers.

I think we’ll continue to see that will see us through and position as well through this recession. What we’re adding on top of that is something that not only should improve the service offering to our existing customers. And we have a name for that as well.

But offering the new service to our existing customers that will be much more complete and a better servicing offering – offer at a better value to those customers.

But more importantly, will be something that we think will be of great value and of interest to a new range of customers that’s clearly the old Brink’s and our competition has not been able to sell those customers on. That’s the challenge. So this isn’t just about to try and see us through a recession or to take existing customer share from customers.

We’re going to do that. We’re going to continue to improve on our core business. We’re going to continue to improve our profitability in our core business. That’s 1.0 wider and deeper.

But we’re going to layer on top of that new strategies that provide us the opportunity to further grow our organic growth with new and other un-vended customers with existing and new unvended customers out there on top of that as well. I hope that given answers..

Yes, it does. And one quick follow-up, that is on your global services business. You mentioned that that’s – you’ve done some integration there already. It also felt the pain of the recession.

But what I’m interested in is as this recession moves on and you implement some of these new value-added operations that you hopefully will get that provide you more value-added.

Is there a role for global services to play a part of let’s call it, the new overview that you’ve just been talking about for about the last 15 to 20 minutes?.

Well, I may be missing something here. But the global services piece is really not related. We see a lot of other strategies for global services, but that’s not really related to how we’re servicing larger or vended or under-vended retailer….

No. And that’s – I’m sorry, and I miss – maybe I misspoke. I was specific to global services, the types of new services that you can offer with them to basically just not just improve share, improve service and get even better margins out of that business..

Yes. We are working on a range of plans and new services for that.

And certainly, the combination of the, what, eight weeks ago now or six weeks ago, we completed the acquisition of FI the combination of that, the two-thirds of the synergies that we’ve outlined for the G4S acquisition are coming from that business, and that positions us extremely well. To maintain the position and hopefully grow our positions there.

So we’ll be looking at how we can add additional services as a part of that..

Great, thank you very much. Appreciate it..

Thank you..

Our next question will come from [indiscernible] Advisory. Please go ahead..

Hey, good afternoon, gentlemen. Thanks a lot for taking my questions..

Yes, yes..

So Doug, as one thinks about the new retail cash solution versus your legacy CompuSafe model.

Is there a customer size in terms of cash needs and volume where they have to be a CompuSafe customer? Or is this scalable up almost as high as it needs to be? And then sort of the follow-up question there is, over time, are we really going to be seeing kind of one Brink’s retail cash management solution and really the only difference from customer to customer is just going to be the size of the device.

How should we think about this longer-term?.

Yes. So I’ll answer it in two ways, and I also want to be a little bit cognizant of competition. So one way is kind of – this is getting back to what Jeff just said. Our 2.1 strategy is really around anything related to any size of CompuSafe or smaller or even a little bit larger.

But a type of customer that has a reasonable amount of cash, but not overly so. That has a reasonable number of point-of-sale positions, but not a large number. And the reason I say that, that’s why we call it 2.1, and I’m getting back to Jeff. There’s another version that is 2.2.

That is our focus on recyclers, which will be the next level up and that is for larger, much more higher volumes of cash that go through – that have more POS systems that need to manage and control that because there’s so much cash that’s going through that. It’s large supermarkets like Kroger, or Costco, or Walmart, and so forth.

Those should be probably using a solution that includes not only a recycler, but then the complete managed services around that recycler as well as in other systems that help track and manage and provide enterprise-wide formation to that customer..

Forecast taken all that stuff..

Yes, exactly, exactly. Yes, so that will be the larger customer. But anything below that and down to the very small mom-and-pops type stores, we think this solution is really the right and best solution. And it provides it for what’s interesting. We initially started this, looking for that smaller unvended.

And what we really come up with, we think this is actually as good, if not a better solution that is really applicable to a lot of much larger retail operations that aren’t using a cash management solution or only have a partial one.

They have multiple locations, multiple stores and use multiple banks and therefore, they have to track and manage and reconcile all that, pay all the fees that they don’t even know what they are, do the cash management, et cetera, around that. And that can be consolidated all into one.

Eliminating local banks, eliminating all the reconciliation and cost around that. The difference between that and CompuSafe or Smart Safe in the marketplace today is those are always provided by – excuse me, the services around those are provided by the bank.

The next day services, the next day credit is provided by the bank that the customer has to go against their separated services. And so this is combining that service. It’s eliminating those hidden fees and all the other costs around that and putting it into one. I don’t know, if we lost you..

Thank you very much. That was good. Thanks a lot for your time. Appreciate it..

All right, thank you..

Our last question will come from Sam England with Berenberg..

Hi guys, just a couple for me.

The first one, on Brink’s complete, can you give us an idea of how you’re thinking about pricing the offering and whether you think it will be better margin than core businesses at the moment?.

It will be better margins than our core business..

Okay, sure..

And it will be competitively priced because it offers a complete solution. Now the challenge in this – and this is pretty straightforward. The challenge in this, it’s a value proposition, and the value that we offered, we think, will be far superior versus all of the cost and the related value that is being lost by the customer today.

But if they don’t take all those costs into consideration, what’s the cost of your working capital? What sort of the losses that they may be seeing internally or externally? What’s the cost of walking to a bank, the time it takes for that branch or the store manager to do that.

All of those things, if they don’t take that consideration, then it may be viewed as more than just a $25 CIT pickup.

But if they take the real cost that they’re seeing, both the hard and the soft cost, but mostly just the hard costs that they’re seeing today, this will be a very attractive, complete solution, and it will provide better margins for us as well..

Okay, great, thanks. And then maybe one for Ron if you could just give us an idea of what you’re putting on hold by cutting the CapEx by 50%.

So what projects you’re putting off? And I suppose, how quickly can you restart them when you sort of get that down the line?.

Yes, Sam, a lot of it has to do with the fleet. We have a lot of body builders around the world have been shut down with the virus. So it really was easy for us to postpone that CapEx. And again, the fleet is an upgrade for us. We’re going to the removable chassis body solution. We’re going to the one-man operation solution.

So these have cost advantages, both in labor and maintenance and fuel. And so they’re incrementally good returns, again, over 20% IRR. But the return that we would get versus the CapEx putting out in an environment where we’re really focused on cash and cash preservation, made all the sense in the world to postpone the fleet upgrades.

And quite frankly, I don’t know if we would be able to continue them with a lot of these body builders being shut for the time being..

Yes. It’s not a natural based on the other things that are happening related to this. There’s one other piece that comes into this as well. As we start transitioning into and hopefully selling more of our 2.1 or our 2.0 solution that we’re talking about the Brink’s complete, that there could be a natural evolution to fewer stops anyway.

We’ll be able to manage when those stops are, and we should not need nearly as many stops, which means that our future requirements for trucks may be reduced.

Over lining, and it also means that, again, as Rohan pointed out, we don’t need to have for like a typical CIT stop, the customer doesn’t have to wait for us at 10:30 every Tuesday morning and every Thursday morning to drop off the bag in person to one of our CIT messengers.

Instead, we can come anytime because we are the only people that can open up the Brink’s device that we provide to that customer as part of our service. And so it’s – from the standpoint of cash and handling of cash, there’s much reduced time and handling of cash and the labor and so forth associated with that.

And once the cash is put into our device using our cloud-based app, it then is magically appears – and is converted to digital and appears in the customer’s bank account. So he doesn’t need to worry about it any other way at any time. And that’s much different than before or the way that business is done today.

And it’s actually much better for us in terms of optimization of routes. Number of stops and costs associated with them..

Okay, great. Thanks very much..

Any other questions? I think, George, did you have one more?.

It looks like this will conclude our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation..