Brinks Co
NYSE:BCO
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Brinks Co
Earnings Call Analysis
Q3-2024 Analysis
Brinks Co
In the third quarter of 2024, Brink's achieved a commendable 13% organic revenue growth, with ATM managed services (AMS) and digital retail solutions (DRS) posting a remarkable 26% growth. This strong performance is largely attributed to high-margin services, which now account for about 42% of the company's overall growth. Despite certain headwinds in the global services segment, the company continues to capitalize on its strong position in AMS and DRS, indicating a robust demand for its tech-enabled services across various market segments.
The strengthening of the U.S. dollar posed an 11% revenue headwind in the third quarter, translating to approximately $131 million. This currency fluctuation, especially the sharp devaluation of the Mexican peso, is anticipated to further impact revenues, with a total expected currency impact of around $100 million for the full year. Although this poses challenges, the company remains committed to addressing these concerns as it moves forward.
Brink's reported an adjusted EBITDA of $217 million for the quarter, which reflects a slight decline from the previous year, largely due to a $10 million increase in security losses and changes in revenue mix. The EBITDA margin was 18%, a decrease of 80 basis points compared to last year. These declines are attributed to the impact of currency on higher-margin Latin American operations and delayed productivity in North America due to the ongoing deployment of new routing technology.
Looking ahead, Brink's anticipates total revenue growth of approximately 3% for 2024, despite these currency challenges. The company expects organic growth in AMS and DRS to continue in the double digits, driving stronger overall performance. For adjusted EBITDA, guidance has been revised to between $900 million and $920 million, reflecting the impacts of currency fluctuations and lower contributions from global services. Furthermore, free cash flow is now anticipated to be between $320 million and $360 million.
Brink's is making significant investments to enhance its operational efficiency and higher-margin service offerings. Recent leadership changes, including the appointment of Nader Antar as the leader of Global Services, are expected to drive the company’s focus on capturing new growth opportunities while improving operations. This strategic shift accompanies ongoing efforts to strengthen compliance and build a strong talent foundation within the company.
Despite some short-term challenges, Brink's generated $135 million in free cash flow in the third quarter. The company's emphasis on cash generation and capital efficiency reflects its commitment to maximizing shareholder value through ongoing share repurchases, having already returned $157 million through buybacks and dividends this year. The company maintains a solid leverage target below 3x, reinforcing its financial stability.
As Brink's looks towards 2025, the company has set ambitious goals, aiming for mid-single-digit organic growth without Argentina's inflation impact. The strong backlog and demand for AMS and DRS can be leveraged to ensure sustained growth and profitability. Additionally, the company anticipates a continued expansion of operating profit margins while improving cash conversion from EBITDA, aiming for a longer-term target of near 50%.
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Welcome to The Brink's Company's Third Quarter 2024 Earnings Call. This morning Brink's issued a press release detailing its third quarter 2024 results. The company also filed an 8-K that includes the release and the slides that will be used in today's call. The release and slides are available in the Investor Relations section of the company's website at investors.brinks.com.
[Operator Instructions] As a reminder, this conference is being recorded and will be available for replay.
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 are available in the footnotes of today's press release and in the company's most recent SEC filings.
Information presented and discussed on this call is representative 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.
I will now turn it over to your host, Jesse Jenkins, Vice President of Investor Relations. Mr. Jenkins, you may begin.
Thanks and good morning. Joining me today are CEO, Mark Eubanks; and CFO, Kurt McMaken. This morning Brink's reported third quarter 2024 results on a GAAP, non-GAAP and constant currency basis. Most of our comments today will be focused on our non-GAAP results. These 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. Reconciliations of non-GAAP results to their most comparable GAAP results are provided in the press release, the appendix of the presentation and in this morning's 8-K filing, all of which can be found on our website.
I will now turn the call over to Brink's CEO, Mark Eubanks.
Thanks Jesse and good morning. Thanks for joining us. Starting on Slide 3, we delivered total organic growth of 13% in the quarter. ATM managed services and digital retail solutions, or AMS and DRS grew 26% organically, marking another quarter of growth ahead of our expectations with double-digit organic growth in AMS and DRS in every regional segment. With healthy backlogs and a good pipeline of future opportunities, we continue to build momentum in these important growth areas.
Cash and valuables management, or CVM was up 9% organically with pricing execution offsetting market softness in our global services business. The strengthening U.S. dollar caused an 11% FX headwind in the period. The FX headwind was more than we originally expected, primarily due to the devaluation of the Mexican peso.
Adjusted EBITDA of $217 million was impacted by the timing of a $10 million increase in security losses in the quarter. Adjusting for this item, EBITDA margins were 18% in the quarter, down 80 basis points for the same quarter last year. The margin declines included a headwind from dollar strengthening in our high-margin Latin America businesses, revenue mix related to our global services business as well as the impact of a delay in productivity in North America, as we deploy a new routing system.
I'll have more details on North America performance in a few slides. We generated $135 million in free cash flow, with better asset efficiency and working capital improvements primarily related to DSOs and AR management, being offset by the impact of lower EBITDA and the currency impact of our FX hedging portfolio. Kurt will have more on our free cash flow performance and outlook later in the call.
We made 2 key additions to our executive team in the quarter. Josh Teteak is leading our Brink's Business System efforts and I've tasked him with delivering cost productivity across the P&L, as we continue to standardize and simplify operations worldwide. Josh's background at GE and Eaton and deep experience in lean and continuous improvement make him the ideal person to help us unlock additional opportunities, as we continue to expand our EBITDA margins.
We recently appointed Nader Antar as the Global Leader of Brink's Global Services. Nader joins us with global experience with companies like Honeywell, United Technologies and Otis Elevators. Nader will be focused on identifying and capturing new growth opportunities across our total addressable market. He'll also focus on improving our operational cadence as well as strengthening our compliance culture and then finally developing our global talent agenda for our Brink's Global Services business.
Despite the near-term market headwinds caused by record high gold and silver prices, we have a leading market presence and are leveraging a large global footprint that makes us the logical choice for customers when these markets return to form. Operationally, we continue to advance our AMS and DRS businesses. We are increasing our organic growth expectations for the remainder of the year to more than 20% and we now expect AMS, DRS revenues to exceed the high end of our original mix expectations of 23%.
Our customers appreciate the value proposition of these services and our teams continue to embrace the power of shifting our business to these higher-margin, faster-growing businesses. With a robust backlog of devices to install in the fourth quarter, we have increasing confidence in our revenue trajectory for the balance of the year.
And with a full pipeline, we're off to a strong start towards achieving our 2025 targets, of mid-to-high-teens organic revenue growth.
We also continue to execute on our capital allocation framework, maintaining our leverage target below 3x and returning capital to shareholders by purchasing $125 million in shares year-to-date through the third quarter. In total, we've reduced our share count by 5% year-over-year and continue to target more than $200 million of repurchases in 2024, as we work through the remaining $375 million worth of authorization that runs through 2025.
At the bottom of the page, you can see our updated full year 2024 guidance. Revenue over $5 billion reflects the impact of approximately $100 million in currency headwinds, primarily from the Mexican peso and to a lesser extent some market softness in our Global Services business. Adjusted EBITDA of $910 million at the midpoint reflects the mix impact of lower revenue and high-margin geographies and lines of business.
Free cash flow reflects the EBITDA change as well as higher cash taxes from geographic mix of income and the impact of currency fluctuation in the quarter. While our quarter and the balance of the year fell short of our initial expectations, we continue to make good progress executed against our strategy and transforming our operations.
We are seeing strong demand in our higher growth tech-enabled solutions and we believe we're turning the corner on our routing processes that will help us further operationalize the margin benefits of AMS and DRS and we have clear line of sight to the productivity actions and growth initiatives into 2025.
I'm confident we're making the right investments in the business to improve predictability in our results and remain very encouraged by the opportunity still in front of us.
Turning to Slide 4. I'll move quickly through the headline results of Q3, as Kurt will discuss these in detail in a few slides. Organic growth of 13% was partially offset by an 11% impact from translational FX. Adjusted EBITDA declined $4 million year-over-year when adjusted for the previous mentioned loss event in the quarter.
Earnings per share was down $0.40 year-over-year, due to higher interest expense and the lapping of a prior year marketable security gain. Trailing 12-month free cash flow was $262 million, with conversion from trailing 12-month EBITDA of 29%.
Turning to Slide 5, you'll recognize an update to a slide we shared last quarter. On the left you can see, we continue to make meaningful progress expanding margins in North America, up 120 basis points from the end of the year and delivering EBITDA growth at a 15% CAGR since 2018.
In the quarter, we accelerated technology and systems investments that we expect to enable better planning and routing processes across our network as well as migration of our legacy on-premise data center to the cloud, for improved security and global scalability. We've also moved local logistics plan activities into a centralized control tower, equipped with industry-leading smart algorithms to better optimize our routes.
With the accelerating growth in our AMS and DRS business, it's vital that we have a best-in-class system and process to fully realize the benefits of the additional capacity from the reduction of stops that the operating model delivers. During the rollout of the system, we experienced system integration issues that caused us to slow the planned deployment to better ensure operational stability and performance.
We have planned this initial investment to be offset by approximately $8 million to $10 million in labor and fleet productivity that we did not realize in the quarter. We are being very deliberate in our continued deployment, as we work through these issues during the quarter, in several pilot markets in large U.S. Metropolitan cities.
While the results are early, we are seeing meaningful improvements in key metrics, like service quality and stops per worked hour that we believe will ultimately translate into labor and fleet productivity across the entire network. We now expect these productivity benefits to ramp over the next few quarters and hit full maturity in the first half of 2025.
Turning to Slide 6, I'll provide some detail on revenue by customer offering. In cash and valuables management, we saw organic growth of 9% in our core cash management business. Volumes remain stable in most geographies, despite the uncertain retail environment and geopolitical backdrop, particularly here in the U.S. as well as other countries around the world.
This growth was also supported by strong price realization, but was partially offset by BGS market softness, with the movement of precious metals and commodities. The Global Services softness had a negative revenue and profit impact against our expectations in every segment including the Americas.
With gold and silver prices consistently rising throughout the year with limited volatility, the demand for movement and storage of precious metals from mining operations to refineries and financial institutions slowed. Supported by a new dedicated leader in Global Services, we plan to expand into new growth avenues that further leverage our existing infrastructure.
The DRS business continues to exceed our expectations. Favorable demand patterns are driving double-digit growth in all segments as we continue to penetrate a large unvented market and convert our existing legacy cash and transit customers to more tech-enabled solutions.
Customers are reacting favorably to the value proposition of these services as they look for ways to maximize working capital, reduce bank fees and simplify the day-to-day operations for employees during a changing retail backdrop, especially here in the U.S. We've built a backlog that supports our fourth quarter forecast and we continue to expand our pipeline of potential DRS customers into next year.
We've had several key wins that we closed here in the quarter, including a large U.S. nationwide auto parts dealer, a national pharmacy chain in a Latin American country and a hypermarket chain in Asia-Pacific.
AMS delivered the third consecutive quarter of accelerating organic growth as we continue to educate financial institutions on the benefits of outsourcing as well as place new ATMs into retail operations. With several new customers set to onboard in early 2025, we have significant momentum.
We have many new early stage opportunities that we're just beginning to explore and an increasing number of opportunities that have already moved into the pilot phase. Our global pipeline is vast and maturing in quality and we're very excited about several key wins in the period.
Beyond the previously announced Sainsbury's partnership, which I'll touch on in a moment, we signed an outsourcing agreement with a major grocery store chain in Europe as well as several ATM outsourcing service agreements with both retailers and financial institutions here in the U.S.
Turning to Slide 7, I'd like to take a second to highlight a key AMS win from the third quarter. On September 25, we announced an agreement to provide full ATM managed services for Sainsbury's, one of the largest grocery and convenience store chains in the U.K. As part of the agreement, Sainsbury's ATMs will fully transition to our network and we will provide all services associated with the ATM ownership.
We differentiated ourselves during this competitive process by our ability to be a single provider across the entire value stream, everything from cash in transit, first and second line maintenance to cash forecasting and transaction processing. The addition of Sainsbury's will increase our network of ATMs by about 15% in the U.K., providing increased route density, increased processing volume and increased scale, while leveraging back office and network infrastructure at higher incremental margins.
We're excited about the relationship with a great partner and are working diligently on the transition plan, which we expect to be completed through the first half of next year. Overall, I'm pleased with the progress in both AMS and DRS so far this year. We continue to build momentum and strengthen our operating cadence.
We're improving our go-to-market tactics through solution-based selling and aligning our incentives to drive the right behaviors locally. We've increased our performance expectations this year and into 2025 and I look forward to a continued shift of our business over the next several years.
And with that, I'll turn it over to Kurt to discuss the financials, free cash flow, capital allocation and our updated guidance. I'll return with some closing thoughts before we open the lines for Q&A. Kurt?
Thanks, Mark. Starting on Slide 8, organic revenue grew $156 million, with about 42% of that growth coming from higher-margin AMS and DRS services. The U.S. dollar strengthened significantly in the third quarter, representing $131 million revenue headwind year-over-year.
Moving to the right side of the slide, you can see how the revenue converts to EBITDA. Q3 organic incremental margins were impacted by revenue mix, especially in Global Services, a $10 million security loss and delayed productivity in North America from the deployment of the routing technology that Mark discussed previously.
Excluding the security loss, organic growth represents an incremental margin of 29% in the period. Incremental margins on FX were almost 40%, as the majority of the currency impact came in our higher-margin Latin American countries.
On Slide 9, we bridge operating profit to adjusted EBITDA. Starting on the left, interest expense was up $9 million year-over-year to $63 million. The increase is related to higher interest rates, slightly higher debt balances and the one-time impact of the early repayment of our 2025 bonds.
Tax expenses were $28 million in the quarter, with an effective tax rate of approximately 28%, as we expected. The other category was $7 million, $12 million lower than prior year, primarily from the lapping impact of marketable security gains in Argentina in 2023 that did not repeat. Income from continuing operations was $68 million and our diluted share count was down 2.3 million shares or 5%.
Our earnings per share in the period was $1.51 per share. To help with modeling a few of these components in the fourth quarter, we expect full year interest expense to be between $235 million and $240 million. We are forecasting a full year tax rate in line or slightly better than the 28% we posted in the third quarter.
Stock-based compensation is expected to be roughly flat in dollars compared to 2023 and total corporate expenses are expected to be flat to prior year as a percentage of revenue.
On Slide 10, you can see the components of our updated free cash flow outlook. Starting on the left, the $50 million reduction in EBITDA reflects the flow through of approximately $100 million in currency impact, mostly in high-margin Latin American countries in addition to a lower contribution from Global Services.
The operational cash flow components of the business, primarily working capital and CapEx, are performing as expected. Cash taxes are trending $15 million higher than expected, primarily due to the geographic mix of income between segments. We are also now expecting to see an approximately $35 million impact as a result of currency devaluation.
Like most multinational companies, we utilize centralized cash pooling activities to efficiently manage cash from around the world. These flows require foreign exchange forward contracts to limit volatility from foreign exchange movements on existing cash balances.
In the third quarter, we saw a material devaluation in the Mexican peso which resulted in an approximately $20 million cash settlement in the period and these flows are reflected in operating cash. The second component is higher cash interest due to the compounding effect of less cash generation throughout the year, largely driven by foreign exchange headwinds.
Overall, free cash flow is now expected to be about $100 million lower than the prior outlook, with more than half of the reduction coming from the sudden currency devaluation in the Mexican peso. Stepping back from the movements expected in the second half of the year, our free cash flow potential remains strong.
While the quarter was not up to our expectations, the true operational components of these flows are resilient. We believe there are many opportunities for us to continue to improve the cash generation profile of the business, as we expand margins through the growth of AMS and DRS, improve our capital efficiency and continue to make progress improving days sales outstanding through heightened management attention.
Moving to Slide 11, we remain committed to our capital allocation framework and we continue to focus on maximizing long-term shareholder value through cash allocation that will continue to compound free cash flow generation, well beyond the volatility we might see quarter-to-quarter.
First, we plan to continue to make organic investments in our operations to enable sustainable profitable growth. Examples of this include investments in data center migration, cybersecurity upgrades and the North American routing system. These investments have long-term benefits to the growth and margin trajectory of the business and will increase EBITDA and will generate more stable and consistent cash flow in the years to come.
Second, our leverage remains stable below 3x and we remain comfortable that the targeted range of 2 to 3x is the appropriate level given the strong cash flow profile of our business. This year, the majority of our free cash flow has gone towards shareholder returns. Year-to-date, we have returned $157 million in the form of share repurchases and dividends. We believe share repurchases continue to be an attractive investment given current valuations.
With $375 million of available capacity under our current authorization, we plan to remain active in the fourth quarter. And finally on the M&A side, we continue to explore accretive opportunities that have a strong strategic fit, attractive returns and align with our current leverage targets and broader capital allocation framework.
Despite the near-term FX impact to 2024 cash generation, we remain disciplined in our approach to capital allocation and are confident that our framework will maximize shareholder value over the long-term.
On Slide 12, you can see our updated 2024 guidance. We now expect total revenue growth to be approximately 3% with over 20% AMS and DRS organic growth driving total organic growth into the double-digits. The strong organic growth is expected to be offset by accelerating currency headwinds, above our original expectations led by the Mexican peso. As a reminder, outside of Argentina, our FX guidance utilizes rates as of the end of the quarter September 30 and does not attempt to predict future movement in currencies.
Adjusted EBITDA is now expected to be between $900 million and $920 million, reflecting the flow through of currency and Global Services headwinds, partially offset by mixed benefits from more AMS, DRS revenue. As I walked through a few slides back, we now expect free cash flow between $320 million and $360 million, with a conversion from adjusted EBITDA of approximately 37% at the midpoint.
I will now hand it back to Mark for some closing remarks and Q&A. Mark?
Thanks, Kurt. As we close a challenging second half of the year, I can't help but reflect on the transformation progress we delivered and be encouraged about the future. We are committed to improving the foundation elements of our business to methodically progress the business towards our long-term operating margin and free cash flow expectations.
Despite the temporary impact of currency fluctuations and market softness in our Global Services business, we remain resolute in making the necessary investments to fully realize the addressable market expansion opportunities of AMS and DRS. So far in 2024, execution of our strategy has proven we have a right to win in AMS and DRS. Our customers have recognized the value proposition of our offerings and our Brink's team has executed operationally.
As we begin to plan for 2025, nothing in the second half of 2024 limits us from continuing the financial framework we set in 2021. We still expect mid-single-digit organic growth when excluding the impact from Argentina inflation, driven by continued strong AMS and DRS organic growth, as we capitalize on the momentum from 2024 and realize the benefits of a growing opportunity and backlog.
We still expect to generate 100 basis points of operating profit expansion and we continue to see many operational levers in free cash flow to continue to improve our cash conversion from EBITDA. I am confident we're building the right team and the right culture to capture the opportunity in front of us.
Operator, please open the line for questions.
[Operator Instructions] And the first question will be from Tobey Sommer from Truist Securities.
This is Jasper Bibb on for Tobey. Looks like the organic guide for this year is rise to low teens versus I think low- to mid-teens last quarter. Just on the organic side, could you outline the relative impact of softer Global Services demand versus what sounded like an increase in your AMS and DRS assumptions?
Yes, sure. Yes, the Global Services business, yes, was a headwind in the quarter relative to our expectations and I again want to make sure we couch it the right way. Full year we expect, still expect some growth from the business and have seen that, albeit we saw probably the most impact in North America where it actually had some declines in the quarter.
The total organic though we expect to continue to be kind of low-single-digits for the year. This business for us is a really good business. It's a place where we have a lot of high market share, margins are good, but at the same time the incremental profit flow through both on the upside and the downside are quite high. We have a high fixed cost in that market.
A lot of vaults, hubs, people all over the world that really form that network. For us historically -- with historic precious metals, highs and precious metals, particularly gold and silver and we even saw some more today actually, this is -- this volatility or lack of volatility, let's say in the last 3 quarters has not helped our business because when volatility occurs we tend to move metals.
When prices are really high, there tends to be less demand with no volatility. So for us what we're seeing today in the markets already hopefully provides some lift for Q4, but we're not expecting any large bounce-back, or large decline going into fourth quarter and the rest of the year.
That makes sense. And then free cash conversion looks like it's going to be high 30s through the year. I think at the end of the prepared remarks you mentioned getting back to the long-term framework. To clarify, do you think approaching, I think the near 50% long-term free cash conversion target could still be achievable in 2025, or would that component potentially take a little bit more time?
Yes. It's Kurt. I'd say we still think it's intact to eventually reach that, but we wouldn't put a timing on that. We continue to march towards that conversion.
Okay. That makes sense. Last question from me. You mentioned the FX headwinds. Obviously we're looking at a pretty big move in the dollar this morning. Should we think about what we're seeing this morning as potentially an incremental headwind versus 4Q, I guess absolute revenue guidance if the FX move holds?
Yes, we would. This is obviously a unprecedented move here this morning, but obviously it's also tied to the election and we think likely investors in foreign currencies are repositioning portfolios and so let's see where this -- where it lands.
But I would say a good way to think about it is, as we think about the rates that we have built into the guide, that was a couple -- weeks ago, right when the -- at the end of the quarter. So it's not gotten better since then. In fact, it's got a little worse. But let's see after these things settle out.
[Operator Instructions] The next question is from Tim Mulrooney from William Blair.
I just want to build off of the conversation you're having with Jasper there real quick on foreign currency. I think before end of second quarter you were expecting a $65 million or so incremental headwind, correct me if I'm wrong, relative to your original guidance for the second half of the year. So can you help me understand just exactly, okay, what that incremental headwind was for the third quarter and now what you're expecting for the fourth quarter?
Sure. So in total we're expecting $100 million impact to the guide we had at the end of the quarter in the last quarter. That incremental into the back half of the year is basically broken out between sort of -- let's say 2 things, $50 million year-to-date through Q3 and another $50 million in Q4. And that's the net numbers, Tim, based on kind of the ups and downs in the first half of the year.
Yes, that's perfect.
[Indiscernible]. We were a little bit positive in Q1. Now -- and again, as we think about this, it's largely the Mexican peso that we've seen and we saw it an end of -- or in June with the election there when it moved sharply, which we talked about quite a bit last quarter. But again, today's volatility sort of is everywhere. And so I would not read into that so much more focused on like I said, on what we know and kind of where we see the rest of the quarter based on that.
Remember, Mexico is in -- it's in our Latin American segment, very profitable. So the flow through is pretty high, similar to what you'd see in the segment margins. I think the thing to remember, particularly about Mexico, is really still strong in Latin America frankly, but strong operational performance that we had in the quarter, really year-to-date in those markets. So they're still good businesses. Just this macro backdrop has become a bit troublesome here in the second half relative to currency.
Understood. And just last question on FX before we get to, like, the fundamental parts of your business, Kurt, the -- just so that I understand what your guide is based off of, is it still based off that traditional framework? I think you even said this in your prepared remarks, basically where you roll forward the foreign currency rates as of the end of the third quarter so you're not prognosticating?
Yes, that's right. That's right. So at the end of the third quarter, that's where we snapped the line on the rates. And the only one that we don't treat that way is Argentina. But everything else is based on that end of Q3 rates.
And maybe, Tim, a way to think about that is, what we have in the guide is probably the low end of the FX impact, just given what we've seen today.
That's where I was going with it. I mean, you already know today or yesterday, even before the election results, I mean, you already know that the rates have appreciated since then. I just want to make sure you're doing September 30, of like 21.9% and...
That's right.
Okay. I have got it. We already know that there's a more of a headwind than the midpoint. Okay. That's enough. Beat that to death. Getting on to AMS and DRS, organic growth 26% in the quarter again, it was above what we were expecting. You guys consistently outperformed expectations all year here.
I just kind of wanted to -- I guess I was level set on a mid-teens or a high-teens organic growth rate for these businesses as we entered the year. Is that still where we -- where the investment community should be anchored as we think about growth going forward, or are you feeling really good about that 20%-plus growth rate given the performance year-to-date and the white space opportunities you got ahead of you?
Yes, great. That's -- appreciate it, Tim. Yes. So we are surprised as we mentioned, this kind of mid to high-teens was what we thought it would be. It's better than that. Really started in Q2. We saw it again in Q3, which we had some nice wins and things we brought online. And it wasn't just big things, it was a lot of little things that our teams globally are delivering.
We talked about equipment sales being kind of a outsized impact in Q2. That wasn't the case in Q3. We had some, of course, but that wasn't what the driver was. It really was just continued penetration of white space and conversions. As we think about kind of the roll forward on 4 quarters, these are largely recurring revenue businesses. No reason to believe that one quarter of '25 to another of '26 wouldn't continue for 2 more quarters.
We've got a good backlog certainly in Q3 of signings, feel good about what we see in Q4. So maybe the first half of the year, there's no reason we shouldn't think that shouldn't continue. And so we are more optimistic. I think the 15% to 18% is sort of was our long-term -- our medium-term view of the next couple of years. We thought we had runway to do that.
It's proving that we're -- maybe the value proposition is resonating with customers more. Our right to win and our ability to execute on those opportunities is also getting better. And frankly, we're I think starting to get better at collapsing our time to revenue from bookings and signings with customers as well.
Well, all the FX conversation aside, that is incredibly exciting. And just one more from me that the equipment sales that you mentioned, would that impact that 26%, does that drag it down to 25%, 24% --
No, not...
-- or not impactful?
Yes, not impactful at all this quarter in fact on a year-on-year basis.
[Operator Instructions] And the next question is from George Tong from Goldman Sachs.
In your Global Services business -- going back to your Global Services business, can you talk a little bit more about how new leadership there could improve performance above and beyond what external market conditions might imply and what the timing for when improved performance might look like?
Sure, yes. Again, we've talked about this business largely depends on kind of the global macro world around precious metals and currency and banknotes. But I think the other thing to think about is, it's not -- we're not helpless in improving our results and we're not waiting for this to happen to us. I think the new leader, Nader that just joined us, really I think we'll have an opportunity to take a fresh look at the business.
Take a fresh look at the end markets, take a fresh look at how we attack those end markets and how we cover customers, how we expand services. And I think that this is always healthy in businesses with leadership changes. I also think as we think about strengthening our operating cadence around these services as well as the predictability around the future guidance and forecast we think will help as well.
Nader brings a pretty strong background from his past in really being able to set a strong agenda and really being able to create a high say do relative to forecast and outlook. So again, we're excited about that. I think the other is, I mentioned it in my prepared remarks. Nader also comes from other global companies as well that can really help continue 2 big things really focus on improving our talent agenda and making sure that we're attracting the best people into the industry as well as strengthen our compliance culture.
And this is something that we've talked about in the -- previously around making sure that we're doing business right and setting the right tone, not only with our employees, but with our customers and the rest of the market. And I know he's committed to doing that and has done that in a prior -- his prior life.
Got it. That's helpful. And then separately, can you talk a little bit more about the $10 million in security losses that you saw in the third quarter?
Sure. We had a theft, George, that is ongoing investigation. Can't really talk about the specifics, but it's a timing issue between Q3 and Q4, similar to what we saw publicly in Canada last year with the gold theft. This was not that, but it was in -- it was actually in Latin America.
This is part of our business, part of our risk management profile and as we talked about in the past, we got to this sort of deductible if you will on our insurance coverage and our self-funding. And so we wouldn't expect any more impact for the rest of the year.
And ladies and gentlemen, this concludes our question-and-answer session. I would like to return the conference to Mark Eubanks for any closing remarks.
Thank you all for joining us today. We appreciate all your support and we look forward to speaking with you soon in the fourth quarter.
Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.