The Brink's Company (NYSE:BCO) is a security services firm based in Richmond, Virginia that mainly provides armored car transport for cash, jewelry, and/or other valuables as well as home security devices to commercial entities and personal homeowners, respectively. All of their services are grounded in the use of proprietary software and during fiscal 2007 BCO began a major expansion of software geared towards the digitization and processing of checks that will continue into fiscal 2008 and will increase total revenues as more banks take advantage of this service. Globally, Brink’s Company has 492 branches operating in 37 countries and 57,000 total employees with more than 60% of their total revenue derived from overseas sales.
In 2008, Brink's will split its two main segments, Brink's Inc. and Brink's Home Security, into two independent publicly traded companies. The spin-off is expected to be completed in the fourth quarter of 2008 and shareholders will receive a tax free distribution of stock at its completion. Additionally, the Global Services division of Brink's Inc. will be building newer and more technologically advanced versions of their distribution centers around the world during the 2008 fiscal year that will be aimed at improving Brink's secure transport services. Distribution centers play a large role in shaping the global logistical network of the Brink's Company by serving as nodes where specific services such as diamond transport are offered and the status of ongoing tasks are monitored. This new version will increase capacity to handle the complex logistics associated with the transport of large quantities of valuable items through multiple countries, provide customers with greater ability to monitor their items, and reduce the overhead costs as certain monitoring and order intake tasks are automated.  Overall, in fiscal 2007, close to $141.6 million was allocated towards accomplishing this end and Brink's has already budgeted up to $195 million dollars in fiscal 2008 for this expansion.
The Brink's Company offers its services under two independent brands: Brink's Inc. and Brink's Home Security. During the 2007 fiscal year, total revenues exceeded $3 billion and total net profit amounted to $337.5 million From 2005 to 2007, Brink's Company saw a 38.4% increase in revenue from overseas with most of the growth occurring in the fast growing emerging economies in the Latin America region. This positive economic growth lead to a large increase in the volume of services demanded which increased profits for fiscal 2007. During the 2007 fiscal year, overseas revenue accounted for 68% of their total revenues. 
Brink's Inc. provides armored car transportation, ATM servicing, currency and coin processing, and other related services to both commercial and governmental agencies around the world. It has an infrastructure and logistical network that is made up of almost 10,000 vehicles and 800 facilities all dedicated to providing its clients with a wide array of services ranging from cash-in-transit (CIT) armored car service, ATM replenishment and servicing, and global services which involves the the secure transportation of valuables. 
Brink's Home Security (BHS) is the second-largest provider of security systems for residential and commercial properties. The primary consumers of BHS are residents of a single-family home and this cohort makes up more than 90% of BHS's customer base. On February 25, 2008, as a result of a review of strategic options that began in November of 2007, Brink's announced that it will be spinning off this sector of its business into a separate publicly traded company.  Investors will receive a tax free distribution of stock as the deal is finalized in the fourth quarter of this year.
During the 2007 fiscal year, more than 60% of Brink's revenue was obtained from its overseas operations with a significant amount coming from Latin America, 22%, and the Eurpean, Middle East, and Africa (EMEA) region. As a result of a declining dollar during the 2007 fiscal year, revenue was higher by $142.6 million and net income was higher by $39.7 million. If the dollar continues to decline in fiscal 2008, Brink's annual revenue will be driven higher.
Brink's Inc. continued expansion of its proprietary software in fiscal 2008 will increase total revenue
One area of focus that has determined past growth and will play a key role in the future is Brink's ability to create and expand upon its proprietary cash processing and information systems. Specifically, in the second quarter of 2007 Brink's introduced a software system dedicated to the imaging and processing of checks that, by the first quarter of 2008, was handling and clearing more than 1 million checks a month. From a technical stand point, this software is meant to help banks cut transportation costs by digitizing the process of clearing checks as they are deposited at a bank. By the end of the 2008 fiscal year, Brink's expects to be able to service six to ten of the top 25 banks in the United States. This service is offered in a bundled package that includes such things as real-time bank vault cash inventory software which contributed, in fiscal 2007, to 16% of Brink's revenue or $434 million dollars. 
The perception of violence and crime has long been positively correlated with business growth for security firms
In 2006, there was close to 10 million property related crimes such as theft and burglary. In 2007, robberies in metropolitan cities, where BHS has most of its clients, decreased at a rate of .6%.  However, research has shown that perceived levels of crime are consistently much higher than actual levels which causes excess numbers of consumers to flock towards home security devices as a form of protection. 
BHS was able to capitalize on the strong US housing market in 2005 by building formative relationships with home builders and subsequently increasing their rate of growth in new installations and decrease subscriber disconnect. While revenue and profits have grown at a steady pace, there has been a decline in the customer base during the 2007 fiscal year that, if continued will have a negative effect on future revenue streams. Not only has there been an absolute decrease in the customer base but there was also a simultaneous increase in the customer disconnect rate, a ratio comparing the number of customers who cancel during the period with the total number of customers, to 7% which is a .6% increase over the previous period.  However, more than 50% of customers who do disconnect do so as a result of business or residential relocations, which lie outside of Brink's control. That being said, even though Brink's screens potential clients on the basis of credit up to 30% of the customer disconnects that occur in a given year are financially motivated. 
During the first quarter of 2008, the contracting housing market has lead BHS to have slower rates of customer base growth, increased rates of customer disconnect,and greater payment delinquency. These factors have all affected the bottom line of their operations but analysts still expect Brink's to post earnings of .79 per share in the first quarter of 2008, a .17 increase over first quarter results from 2007.
The competitive landscape within the security and protection service industry is highly fragmented with numerous regional and local players. The standard consumer in this market is the single family home owner who seeks an extra layer of protection for their home. Therefore, the rate at which firms are able to retain customers or prevent customers from disconnecting their service will directly correlate with net income.
|The Brink's Company||7.0%|
|Protection One||8.6% |
|Monitronics International||12.2% |
The market for the global transportation of valuables and cash management is dominated by multinational organizations that can be differentiated by the number of facilities and vehicles that they are able to employ for their operations. This metric indicates the breadth of a firm's logistical network which will dictate its ability to provide clients with an integrated delivery of services.
|The Brink's Company||799||9,065|
|Group 4 Securicor ||500||9,000|
|Securitas AB ||274||N/A|
|Garda World Corporation ||287||2,000|
The security and protection services industry is comprised of more than 40 publicly traded companies with a combined market cap of $22.5B. Brink's is among the top five leading firms within this sector and a brief comparison is given below.
|L-3 Communications Holdings (LLL)||$13.7B||18.7|
|The Brink's Company||$3.2B||22.80|
|L-1 Identity Solutions||$1.0B||56.68|