The Brink’s Co. :BCO-US: Earnings Analysis: Q3, 2017 By the Numbers : October 27, 2017

The Brink’s Co. reports financial results for the quarter ended September 30, 2017.


  • Summary numbers: Revenues of USD 849.50 million, Net Earnings of USD 19.90 million.
  • Gross margins widened from 20.30% to 21.55% compared to the same period last year, operating (EBITDA) margins now 12.58% from 11.43%.
  • Change in operating cash flow of -65.83% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from 7.14% to 8.12%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 849.5 805.9 788.4 803.5 755.8
Revenue Growth (%YOY) 12.4 8.98 9.23 4.92 -0.45
Earnings (mil) 19.9 14.3 34.7 14.5 24.5
Earnings Growth (%YOY) -18.78 4666.67 1219.35 553.13 218.18
Net Margin (%) 2.34 1.77 4.4 1.8 3.24
EPS 0.38 0.28 0.67 0.25 0.48
Return on Equity (%) 4.31 3.31 8.94 3.88 6.53
Return on Assets (%) 3.19 2.57 6.68 2.89 4.89

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, BCO-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if BCO-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 5.41% and earnings by 39.16% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 20.30% to 21.55%, while operating margins improved from 11.43% to 12.58% over this period. For comparison, gross margins were 21.96% and EBITDA margins 11.02% in the immediate last period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

BCO-US’s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days are now 19.96 days compared to 23.67 days for the same period last year.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

BCO-US’s year-on-year change in operating cash flow of -65.83% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.


Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from 7.14% to 8.12%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 6.01% to 4.41%.

EBIT Margin History
PreTax Margin History

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Company Profile

The Brink’s Co. provides secure transportation and cash management services. Its logistics and security solutions include cash-in-transit; ATM replenishment & maintenance; and cash management & payment services, such as vault outsourcing, money processing, intelligent safe services, and international transportation of valuables. The Brink’s customers include financial institutions, retailers, government agencies, mints and jewelers. The company was founded by Perry Brink and Fidelia Brink on May 5, 1859 and is headquartered in Richmond, VA.

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