Activist Investor Jeffrey Smith Sees More Potential In The Brink’s Company (BCO)

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The armored vehicle transportation, automated teller machines, and international transportation of valuable goods offered by Brink’s will always be in demand. And they are in demand indeed. The largest five markets Brink’s is currently operating in, which include the U.S., France, Mexico, Brazil, and Canada, generated 25% more profits over the second quarter of 2015 than the same quarter a year ago. However, there should be some activities and operations in which the company has not been doing so well thus far, otherwise, Starboard Value would not have channeled its capital towards acquiring the 9.0% ownership stake. Brink’s has been attempting to reorganize and restructure its activities since the end of 2014 so as to deliver $45 million to $50 million in cost savings year-over-year. This is probably where Starboard Value sees more potential in Brink’s. It’s quite obvious that the company should work more on its cost savings program, as its operating margins were at 3.7% in 2014. Some officials at Brink’s have already claimed that the company remains on track to deliver the cost savings figures mentioned above, but the fact that Jeffrey Smith’s firm has been stacking more shares after the company posted its financial results for the second quarter of the current year might indicate that something is not working according to the plan. Brink’s intends to improve its operating margins to a range of 5.3% to 5.8% by the end of the current year, but it’s not quite sure whether the company will be successful in reaching that goal. Only time will tell.

Meanwhile, let’s take a moment to look at the financial results Brink’s delivered in the second quarter of 2015. Brink’s posted revenues of $760 million compared to a figure of $859 million reported in the same quarter a year ago. Moreover, the company posted an operating loss of $15 million for the quarter, compared to an operating profit of $9 million reported a year ago. Finally, Brink’s posted a diluted loss per share from continuing operations of $0.26, compared to diluted earnings per share of $0.02 reported in the second quarter a year ago. All these figures have been impacted by persistent currency headwinds, as the majority of the company’s activities and operations are outside of the United States.

Considering the fact that Starboard Value has made money on 88% of its activist investments, it is highly likely that Brink’s will be successful in delivering greater shareholder value in the upcoming months and years. So keep a close eye on the following stock. Mario Gabelli’s GAMCO Investors is another activist firm that is bullish on The Brink’s Company (NYSE:BCO), holding an ownership stake of 3.46 million shares.

Disclosure: None

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