I’ve followed this board since the post count was in the hundreds, now in the tens of thousands. I’ve not read every post, but I have read a lot of them. I have nothing but gratitude for Saul and many of the other folks who generously share their knowledge. I have benefitted greatly, both in terms of knowledge gained as well as financially.
While I’ve posted my thoughts about various topics, I’ve never posted information specific to a new investment opportunity before now. I felt I had little new information to add. Not all, but almost all my investments have come from this board. My portfolio does not mimic Saul’s or any other individual’s, yet, other than a few tiny, speculative positions everything I’m invested has been extensively covered on this board.
So, here’s my first venture at introducing a company I don’t recall anyone else ever posting about. I welcome comments and critique. I’ve opened a starter position in Brinks.
Brinks Company, founded in 1838 has its Headquarters in Richmond, VA. It’s hardly a start up. They brought new executive management on board a little over a year ago. At least three of the new executives have worked together at a different company prior to employment at Brinks. I believe they are shaking up this venerable, sleepy company and turning it into an earnings juggernaut.
I assume just about everyone knows the name and has an idea about what they do. They are best known for securely moving cash. In fact, they offer a whole host of services devoted to cash management; cash-in-transit is just one of them. They securely move all kinds of valuables for their customers including gems and jewelry, precious metals, securities, high-tech devices, electronics, pharmaceuticals, etc. They service ATMs, provide in-person and electronic perimeter security and guarding services and so forth. Pretty much all things related to managing cash and providing security.
Before I go any further, here are some numbers from the last 8 quarters. All numbers are non-GAAP as reported by Brinks. The %+/- is with respect to the same quarter, one year prior (as their business displays a lot of seasonality, Q/Q % don’t tell much of a story):
Here are some highlights from the 2nd quarter conference call (fiscal year ends 12/31):
2Q17 Earnings call transcript: https://seekingalpha.com/article/4090727-brinks-bco-ceo-doug…
Highlights of 8/17 2Q17 Meeting
CEO & CFO joined Brinks about a year ago
Brinks___$2.9B_____108_________EMEA, LA, NA, Asia Pacific
G4S_____$1.6B______48_________Europe, LA, Asia, Africa, NA
Prosegur_$1.9B______15__________LA, Europe, Africa, Asia, Australia
Expected CAGR: Revenue ~8%, Non-GAAP Profit ~27%, Non-GAAP EPS ~28%
Growth strategy: acquisitions and organic (2 quarters into a 12 quarter strategic plan)
EPS Guidance: 2016 Actual $2.05, 2017: $2.95 - $3.05 (raised $0.40 from 1Q17), 2019: $4.25
Total debt: $420.9M, Cash & equivalents: $173.7M
Operations in 40 countries, 1,000 facilities, 11,900 vehicles, 60,700 employees
Top 6 Markets: US, France, Mexico, Brazil, Canada, Argentina
Primary customers: Financial Institutions, Retail, Government
Core Services: Cash-in-transit, ATM services
High Value Services: Brink’s Global Services, Money processing, Vault outsourcing, Compusafe & retail services, Payments
Cash accounts for ~85% of global consumer transactions. Global cash market $17.9B. Worldwide cash growth in value and volume is ~5%/yr.
Operating profit of $60 million was up 52% over last year’s second quarter. The operating margin of 7.9% represents an improvement of 240 basis points and that’s on top of a similar year-over-year increase in the first quarter. Adjusted EBITDA for the quarter increased 31% and earnings came in at $0.64 a share which is a 64% increase versus last year.
For the first six months of 2017 versus the first half of 2016 organic revenue was up 7%, operating profit of $113 million was up 57%, while the operating profit margin of 7.5% was up 240 bps. Adjusted EBITDA was $174 million up 32% and the EBITDA margin was 11.6%. Earnings per share of $1.21 was up 73% versus $0.70 per share in the first six months of last year.
Here’s some more numbers from Yahoo Finance:
Market cap = $3.96B
Float: 49.9M, Avg Daily Vol: 400K, 16.8% insider held
Stock price: 9/1/2016 $36.54 8/31/2017 $78.45 (+$42 – 115%)
Cash/Share (mrq) = $4.10
P/E (ttm): 55.5