[LOGO] The Brink's Company
1801 Bayberry Court
P.O. Box 18100
Richmond, VA 23226-8100 USA
Tel. 804.289.9600
PRESS RELEASE Fax 804.289.9758
Contact: FOR IMMEDIATE RELEASE
Investor Relations
804.289.9709
The Brink's Company
Reports First Quarter Results
BAX Global Posts Solid Results;
Brink's, Incorporated Performance Trails Strong 2004 Quarter;
Brink's Home Security Maintains Strong Growth and Performance
RICHMOND, Va., (May 4, 2005) - The Brink's Company (NYSE: BCO) today
reported after-tax income from continuing operations for the first quarter of
2005 of $15.8 million or $0.28 per diluted share compared to $17.2 million or
$0.32 per diluted share in the prior-year period.
Revenue in the first quarter of 2005 was up 12% over last year's first
quarter to $1.2 billion, reflecting substantial increases from each of the
Company's business units. Revenues at Brink's, Incorporated and BAX Global
benefited from stronger European currencies relative to the U.S. dollar. The
effects of the weaker U.S. dollar contributed about two percentage points of the
increase in revenues.
The Company reported operating profit of $36.8 million for the quarter
ended March 31, 2005, a 9% increase from $33.7 million in the year earlier
period. Operating profit at both Brink's Home Security and BAX Global improved
in the current quarter versus the quarter a year earlier. Higher operating
profit from the Company's business segments was partially offset by an increase
in costs of former coal operations and higher corporate expenses. Income tax
expense was higher in the 2005 quarter primarily due to newly established tax
valuation allowances related to certain European operations.
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Net income for the first quarter of 2005 was $13.6 million, or $0.24 per
diluted share, including a loss from discontinued operations of $2.2 million, or
$0.04 per diluted share. In the first quarter a year ago, the Company reported
net income of $25.8 million, or $0.47 per diluted share, which included income
of $8.6 million, or $0.15 per diluted share, from discontinued operations
primarily relating to the sale of natural resources assets.
First Quarter Business Unit Performance
Brink's, Incorporated ("Brink's")
- ---------------------------------
Brink's revenue increased 11% to $509 million in the first quarter of 2005
from $458.0 million in the prior-year period. International revenue in the
quarter increased 16% over the year-ago quarter, 12% excluding the net benefit
of currency translation. The revenue growth was driven by an increase in
activity in Europe reflecting acquisitions in Greece, Luxembourg, Scotland and
Ireland, an increase in armored car business levels, especially in France, and
higher volumes in Brink's Global Services. Revenues were also up in South
America due largely to business growth and stable market conditions in
Venezuela. North American revenue increased 3% over the first quarter of 2004,
reflecting higher U.S. and Canadian revenues across all lines of service and the
positive impact of foreign currency exchange rates on Canadian operations.
Brink's operating profit in the quarter ended March 31, 2005, was $30.3
million, down from $32.8 million recorded in the first quarter of 2004.
Operating profit declined in both International and North American operations.
Internationally, better performance in South America was more than offset by a
decline in Europe as the operations in both the Netherlands and Belgium
experienced volume declines resulting in inefficient cost structures. Operating
profit in North America declined slightly year-over-year to $12.7 million from
$12.9 million mainly due to higher employee benefit costs in the United States.
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Brink's Home Security
- ---------------------
Revenue at Brink's Home Security increased 12% to $91.9 million in the
first quarter of 2005, as compared to the same period last year, due primarily
to continued growth in the subscriber base. Operating profit in the first
quarter was a record $22.5 million, 16% higher than in the prior year's first
quarter. The increase in operating profit from recurring services resulted
primarily from the growth of the subscriber base.
The annualized disconnect rate for the first quarter of 2005 improved to
5.8% from 6.4% in the year-ago quarter. Brink's Home Security installed 39,300
new subscribers during the quarter, a 15% increase over the number of new
subscribers added in the first quarter of 2004, and ended the quarter with
approximately 947,100 subscribers generating monthly recurring revenue of $26.9
million (see Non-GAAP Reconciliations for a reconciliation of monthly recurring
revenue to reported revenue).
BAX Global
- ----------
Revenue at BAX Global increased 12% to $623.5 million in the first quarter
of 2005 compared to the prior-year period. In the Americas region, revenue
increased 11% over last year's first quarter. The increase reflected higher fuel
surcharges and an overall 5% improvement in U.S. shipping volumes including
strong growth in BAX Global's freight forwarder service and higher export
activity. Volumes for higher priced expedited freight were down as the effects
of higher fuel prices contributed to a shift by customers to deferred services.
International revenue increased 15% (11% excluding the benefit of foreign
currency translation) versus the prior year period, reflecting robust
Asia-Pacific activity and modest improvement in Europe.
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Operating profit at BAX Global improved to $8.2 million for the first
quarter of 2005 compared to $3.1 million for the same period in 2004. The
current quarter's performance reflects higher volume and improved margins in
Asia-Pacific from logistics and freight forwarding activities and improvement in
operating profit in Europe, partially offset by lower operating profit in the
Americas due to a shift in product mix.
Other Costs and Expenses
The Company's costs of former coal operations, which consist primarily of
costs for Company-sponsored medical plans for former miners and their
dependents, increased to $13.2 million in the first quarter of 2005 from $12.5
million in the prior-year period. Gains from the sale of residual property and
equipment, which are deducted from the total of ongoing expenses, were
approximately $1 million lower in the 2005 quarter versus a year ago.
Corporate expenses increased in the quarter ended March 31, 2005, to $11.0
million from $9.1 million in the prior-year period primarily due to higher
incentive compensation costs and audit-related expense.
Interest and other income, net, in the first quarter of 2004 included the
recognition of a one-time $4.4 million gain. At that time, the Company
designated its Voluntary Employees' Beneficiary Association trust to pay
benefits under the postretirement medical plans of the Company.
Summary
"Overall, we posted a good quarter despite some challenges at Brink's from
competitive pressures in Europe," said Michael T. Dan, Chairman, President and
Chief Executive Officer of The Brink's Company. "BAX Global had a solid start to
the year, with continued growth in Asia-Pacific results, an increase in domestic
shipping volumes, particularly at the end of the quarter, and growth in
logistics services. Brink's, Incorporated maintained favorable revenue growth
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especially in its international operations, but operating profit was impacted by
reduced volumes in certain European operations. Brink's Home Security maintained
its excellent record of growth and profitability. The performance of each of our
businesses during the first quarter should be a solid step toward achieving our
targets for 2005," added Mr. Dan.
This release contains both historical and forward-looking information. Words
such as "anticipates," "estimates," "expects," "projects," "intends," "plans,"
"believes," "may," "should" and similar expressions may identify forward-looking
information. Forward-looking information in this document includes, but is not
limited to, statements regarding the achievement of targets in 2005. The
forward-looking information in this document is subject to known and unknown
risks, uncertainties and contingencies that could cause actual results to differ
materially from those that are anticipated.
These risks, uncertainties and contingencies, many of which are beyond the
control of The Brink's Company and its subsidiaries, include, but are not
limited to, the ability of the businesses to meet demand appropriately, the
ability of Brink's Home Security to continue to maintain its subscriber growth
and low disconnect rate, the demand for overnight shipping, the ability to
identify and execute cost and operational improvements in the core businesses,
IT costs and costs associated with ongoing contractual obligations, pension plan
and other employee obligations, labor relations, safety and security
performance, overall domestic and international economic, political, social and
business conditions, capital markets performance, the strength of the U.S.
dollar relative to foreign currencies, interest rates, inflation, new government
regulations and legislative initiatives (including local initiatives relating to
police response to alarms), domestic and international demand for services of
the subsidiaries of The Brink's Company, pricing and other competitive factors,
fuel prices, variations in costs or expenses and performance delays of any
public or private sector supplier, service provider or customer. The information
included in this release is representative only as of the date of this release,
and The Brink's Company undertakes no obligation to update any information
contained in this release.
About The Brink's Company
The Brink's Company (NYSE: BCO) is a global leader in business and security
services. The Company's three businesses are Brink's, Incorporated, the world's
premier provider of secure transportation and cash management services; Brink's
Home Security, one of the largest and most successful residential alarm
companies in North America; and BAX Global, an industry leader in freight
transportation and global supply chain management solutions. For more
information, please visit The Brink's Company website at www.brinkscompany.com,
or call toll free 877-275-7488.
Conference Call
The Company will host a conference call today, May 4, at 11:00 a.m. eastern time
to discuss this press release. Interested parties can listen to the conference
call by dialing 800-392-9565 within North America or 706-634-5450 from outside
North America, or via live webcast at www.brinkscompany.com. Please dial in at
least five minutes prior to the start of the call. Dial-in replay will be
available through May 21, 2005, by calling 800-642-1687 within North America or
706-645-9291 outside North America. The conference ID for the replay is 5671400.
A webcast replay will also be available at www.brinkscompany.com.
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The Brink's Company
and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
Three Months
Ended March 31,
2005 2004
- ------------------------------------------------------------------------------------------
Revenues $ 1,224.6 1,094.5
Expenses:
Operating expenses 1,052.1 929.9
Selling, general and administrative expenses 138.8 134.4
- ------------------------------------------------------------------------------------------
Total expenses 1,190.9 1,064.3
Other operating income, net 3.1 3.5
- ------------------------------------------------------------------------------------------
Operating profit 36.8 33.7
Interest expense (4.6) (5.8)
Interest and other income, net 0.7 4.4
Minority interest (3.8) (3.3)
- ------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 29.1 29.0
Provision for income taxes 13.3 11.8
- ------------------------------------------------------------------------------------------
Income from continuing operations 15.8 17.2
Income (loss) from discontinued operations, net of tax (2.2) 8.6
- ------------------------------------------------------------------------------------------
Net income $ 13.6 25.8
==========================================================================================
Basic net income (loss) per common share:
Continuing operations $ 0.28 0.32
Discontinued operations (0.04) 0.16
- ------------------------------------------------------------------------------------------
$ 0.24 0.48
==========================================================================================
Diluted net income (loss) per common share:
Continuing operations $ 0.28 0.32
Discontinued operations (0.04) 0.15
- ------------------------------------------------------------------------------------------
$ 0.24 0.47
==========================================================================================
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THE BRINK'S COMPANY
and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
March 31, December 31,
2005 2004
- --------------------------------------------------------------------------------
(Unaudited)
Assets
Cash $ 136.6 169.0
Other current assets 952.7 923.6
Property and equipment, net 944.0 914.0
Goodwill, net 275.2 259.6
Other assets 428.1 412.0
- --------------------------------------------------------------------------------
Total assets $ 2,736.6 2,678.2
================================================================================
Liabilities and Shareholders' Equity
Current debt $ 84.5 62.6
Other current liabilities 945.0 969.5
Long-term debt 195.4 181.6
Accrued pension costs 126.3 117.0
Other postretirement benefits 327.6 331.2
Other liabilities 378.2 342.3
- --------------------------------------------------------------------------------
Total liabilities 2,057.0 2,004.2
Shareholders' equity 679.6 674.0
- --------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,736.6 2,678.2
================================================================================
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THE BRINK'S COMPANY
and Subsidiaries
Segment Information
(In millions)
(Unaudited)
Three Months
Ended March 31,
2005 2004
- --------------------------------------------------------------------------------
Revenues:
Brink's $ 509.2 458.0
Brink's Home Security 91.9 82.0
BAX Global 623.5 554.5
- --------------------------------------------------------------------------------
Revenues $ 1,224.6 1,094.5
================================================================================
Operating profit:
Brink's $ 30.3 32.8
Brink's Home Security 22.5 19.4
BAX Global 8.2 3.1
- --------------------------------------------------------------------------------
Business segments 61.0 55.3
Former coal operations (13.2) (12.5)
Corporate (11.0) (9.1)
- --------------------------------------------------------------------------------
Operating profit $ 36.8 33.7
================================================================================
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The Brink's Company
and Subsidiaries
Supplemental Financial Information
(In millions)
(Unaudited)
Three Months
Ended March 31,
2005 2004
- --------------------------------------------------------------------------------
Brink's:
Revenues:
North America $ 186.0 180.1
International 323.2 277.9
- --------------------------------------------------------------------------------
Revenues $ 509.2 458.0
================================================================================
Operating profit:
North America $ 12.7 12.9
International 17.6 19.9
- --------------------------------------------------------------------------------
Operating profit $ 30.3 32.8
================================================================================
Brink's Home Security:
Revenues $ 91.9 82.0
================================================================================
Operating profit:
Recurring services $ 41.5 35.1
Investment in new subscribers (19.0) (15.7)
- --------------------------------------------------------------------------------
Operating profit $ 22.5 19.4
================================================================================
Monthly recurring revenues (a) $ 26.9 24.0
Annualized disconnect rate 5.8% 6.4%
Number of subscribers (in thousands):
Beginning of period 921.4 833.5
Installations 39.3 34.1
Disconnects (13.6) (13.5)
- --------------------------------------------------------------------------------
End of period 947.1 854.1
Average number of subscribers 933.6 843.5
================================================================================
(a) See "Non-GAAP Reconciliations" below.
BAX Global:
Revenues:
Americas $ 293.4 264.7
International 354.7 309.1
Eliminations (24.6) (19.3)
- --------------------------------------------------------------------------------
Revenues $ 623.5 554.5
================================================================================
Operating profit (loss):
Americas $ (3.4) (1.9)
International 14.2 8.7
Corporate and other (2.6) (3.7)
- --------------------------------------------------------------------------------
Operating profit $ 8.2 3.1
================================================================================
Intra-America revenue $ 135.8 125.1
Worldwide expedited freight services:
Revenues $ 465.3 415.6
Weight in pounds 431.3 418.0
================================================================================
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The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
COSTS OF FORMER COAL OPERATIONS INCLUDED IN CONTINUING OPERATIONS
Three Months
Ended March 31,
2005 2004
- --------------------------------------------------------------------------------------
Company-sponsored postretirement benefits other than pensions $ 9.4 9.4
Black lung 1.2 1.5
Pension 1.0 0.6
Administrative, legal and other expenses, net 2.1 2.5
Idle and closed mine expense 0.2 0.2
Gains on sale of property and equipment and other income (0.7) (1.7)
- --------------------------------------------------------------------------------------
$ 13.2 12.5
======================================================================================
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
Three Months
Ended March 31,
2005 2004
- --------------------------------------------------------------------------------------
Gain (loss) on sales of:
Timber $ - 18.8
Gold - (0.9)
Results from operations:
Timber - (0.5)
Gold - (1.2)
Adjustments to contingent liabilities of former operations (3.4) (2.9)
- --------------------------------------------------------------------------------------
Income (loss) from discontinued operations before income taxes (3.4) 13.3
Income tax benefit (expense) 1.2 (4.7)
- --------------------------------------------------------------------------------------
Income (loss) from discontinued operations $ (2.2) 8.6
======================================================================================
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The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
SELECTED CASH FLOW INFORMATION
Three Months
Ended March 31,
2005 2004
- -----------------------------------------------------------------------------------------------
Depreciation and amortization:
Brink's $ 21.2 19.1
Brink's Home Security 13.9 12.5
BAX Global 10.1 10.7
Corporate 0.2 0.4
- -----------------------------------------------------------------------------------------------
Depreciation and amortization $ 45.4 42.7
===============================================================================================
Capital expenditures:
Brink's $ 31.4 16.1
Brink's Home Security (a) 43.2 26.7
BAX Global 17.1 6.9
Corporate 0.1 0.3
- -----------------------------------------------------------------------------------------------
Capital expenditures $ 91.8 50.0
===============================================================================================
(a) Includes $10.2 million for the purchase of BHS's headquarters.
The facility was previously leased.
Other Brink's Home Security cash flow information:
Impairment charges from subscriber disconnects $ 8.8 8.7
Amortization of deferred revenue (6.5) (6.1)
Deferral of subscriber acquisition costs (current year payments) (5.0) (4.7)
Deferral of revenue from new subscribers (current year receipts) 9.6 8.1
===============================================================================================
Weighted-Average Share information
Three Months
Ended March 31,
2005 2004
- -----------------------------------------------------------------------------------------------
Weighted-average common shares outstanding:
Basic 55.7 53.9
Diluted 56.5 54.4
===============================================================================================
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The Brink's Company
and Subsidiaries
Supplemental Financial Information (continued)
(In millions)
(Unaudited)
NON-GAAP RECONCILIATIONS
Monthly Recurring Revenues
A reconciliation of monthly recurring revenues to reported Brink's Home Security
revenues follows:
Three Months
Ended March 31,
2005 2004
- --------------------------------------------------------------------------------
March:
Monthly recurring revenues ("MRR") (a) $ 26.9 24.0
Amounts excluded from MRR:
Amortization of deferred revenue 2.3 2.1
Other revenues (b) 2.2 1.8
- --------------------------------------------------------------------------------
Revenues on a GAAP basis 31.4 27.9
================================================================================
Revenues (GAAP basis):
March 31.4 27.9
January - February 60.5 54.1
- --------------------------------------------------------------------------------
January - March $ 91.9 82.0
================================================================================
(a) MRR is calculated based on the number of subscribers at period end
multiplied by the average fee per subscriber received in the last month of
the period for contracted monitoring and maintenance services.
(b) Revenues that are not pursuant to monthly contractual billings.
The Company believes the presentation of MRR is useful to investors because the
measure is widely used in the industry to assess the amount of recurring
revenues from subscriber fees that a monitored security service business
produces.
Net Debt and Net Financings
March 31, December 31,
2005 2004
- --------------------------------------------------------------------------------
Short-term debt and current maturities of long-term debt $ 84.5 62.6
Long-term debt 195.4 181.6
- --------------------------------------------------------------------------------
Debt 279.9 244.2
Less cash and cash equivalents (136.6) (169.0)
- --------------------------------------------------------------------------------
Net Debt 143.3 75.2
Securitization facility 63.0 25.0
- --------------------------------------------------------------------------------
Net Financings $ 206.3 100.2
================================================================================
The Company believes that Net Debt and Net Financings are useful measures of the
Company's financial leverage.
12
The Brink's Company
and Subsidiaries
OTHER
Value-added taxes and customs duties
During 2004, the Company determined that one of its non-U.S. Brink's,
Incorporated business units had not paid foreign customs duties and value-added
taxes with respect to the importation of certain goods and services. The Company
has been advised that there could be civil and criminal penalties asserted for
the non-payment of these customs duties and value-added taxes. The business unit
has commenced discussions with the appropriate governmental authorities in the
affected jurisdiction regarding this matter. To date no penalties have been
asserted.
As a result of its investigation, the Company recorded charges in 2004 of $1.1
million to operating profit and $0.7 million to interest expense.
The Company evaluates many factors to determine whether it should recognize or
disclose a loss contingency, including the probability of an unfavorable outcome
and the ability to make a reasonable estimate of the amount of loss. The Company
believes that the range of probable penalties related to unpaid value-added
taxes is between $0.4 million and $3 million and that no amount within that
range is a better estimate than any other amount within the range. Accordingly,
the Company has accrued $0.4 million for these penalties.
The Company has concluded that a loss related to penalties on unpaid customs
duties is not probable. The Company believes that the range of reasonably
possible losses related to customs duties penalties is between $0 and
approximately $35 million. The Company believes that the assertion of these
penalties would be excessive and would vigorously defend against any such
assertion.
The Company intends to diligently pursue the timely resolution of this matter
and, accordingly, the Company's estimate of the potential losses could change
materially in future periods. The assertion of potential penalties may be
material to the Company's financial position and results of operations. These
penalties could be asserted at any time. Although the Company has accrued $0.7
million of interest on the unpaid value-added taxes and customs duties, the
Company does not expect to be assessed interest charges in connection with any
penalties that may be asserted.
# # #
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