Brink's has good news in 4th quarter, CEO touts commercial business
RICHMOND, Va.--In a far-ranging conference call on Jan. 31, Michael Dan chief executive of The Brink's Company, received congratulations on "a fine quarter" from all nine analysts who spoke, including notably Jerome Lande of Millbrook Capital, one of the hedge funds that's been urging the company to do a tax-free spin off of one of its divisions.
Brink's announced higher fourth quarter earnings (up 85 cents per share over the same period last year) and higher full-year earnings. Fourth quarter income was up to $54.4 million, compared to $39.6 million one year ago. Fourth quarter revenue was up 18.5 percent; operating profit was up 40.2 percent.
Lande repeated the hedge fund position that they feel the stock, which on Feb. 6. closed at $62.38, is undervalued. The 52-week high and low range on that day was $68.47-$49.04.
He also mentioned, in the course of his questioning, that his hedge fund, which owns MMI, has met with the Monitor Group, as it had requested in a letter to Monitor Group in December. Monitor was hired to help Brink's assess its strategic alternatives.
Dan said he expects Brink's Home Security "revenues in profit growth in 2008 to continue to be at or above the 10 percent mark."
He discussed Brink's decision to "wind down" its multi-family business. Profits on the monitoring contracts in this sector are lower than single-family homes, he said. This decision, made two years ago, accounts for recent higher disconnect rates, which were not a surprise.
Asked if BHS considered getting into home video surveillance, he said the company is "building up those capabilities as we've built up our commercial capabilities within our existing infrastructure...but we are not targeting that [high-end home business.]"
He said "we think moving into the commercial side is much more attractive for us at the current time, because it's a bigger market."
He called the commercial market "very attractive." In terms of acquisitions, he said, "we have targets that we're interested in, in both areas that are bolt-on of existing business and new areas to enter."
The commercial market because of more cash up front and similar disconnect rates, "could end up being a more attractive model than our traditional residential model."
Notes taken by Security Systems News during the call were verified using a transcript from SeekingAlpha.com.