4th-Quarter Profits Up 43% at Brink;s Home Security


The Brink’s Co. has reported fourth-quarter income from continuing operations in last year’s fourth quarter. Brink’s Home Security (BHS) unit showed fourth-quarter improvement over prior-year results that were constrained by several factors including Hurricane Katrina and higher costs related to installations in new residential construction markets. For 2007, the company’s home security division hopes to achieve another year of 10-percent or better growth in revenue, profits and subscribers and improve the installation growth rate.

Fourth-quarter revenue at BHS rose 9.7 percent to $113 million, up from $103 million in 2005 due primarily to continued growth in the subscriber base. BHS ended the quarter with approximately 1,125,000 subscribers, up 10.4 percent from the year-ago level. Monthly recurring revenue rose 13.7 percent to $33.1 million.

Operating profit was $29 million, up 42.9 percent from $20.3 million in the fourth quarter of 2005. The strong profit improvement was due primarily to continued growth in the customer base and lower costs due to several factors including reduced activity in Brink’s Home Technologies and fewer disconnects. The fourth-quarter operating profit margin was 25.7 percent, up significantly from 19.7 percent last year. The full-year operating profit margin for 2006 was 22.8 percent vs. 22.3 percent in 2005.

BHS installed approximately 43,700 systems for new customers during the quarter, a year-over-year installation growth rate of 4.3 percent, and had approximately 17,100 disconnects. The resulting growth in the subscriber base during the quarter was approximately 26,600 customers, or 2.4 percent. Ongoing softness in the housing market was the primary cause of the lower-than-expected installation growth rate. The installation growth rate is expected to increase during 2007 due to improved marketing efforts and a potential recovery in existing home sales. Any recovery in new home starts is unlikely to have a significant near-term impact on installations in Home Technologies operations.

The annualized disconnect rate of 6.1 percent for the quarter improved over the year-ago rate of 8.2 percent. The disconnect rate in the fourth quarter of 2005 included a previously reported reduction of approximately 5,300 subscribers related to a reconciliation of subscriber accounts. The full-year disconnect rate in 2006 was 6.4 percent vs. 2005’s 7.2 percent, which was higher than normal due to the impact of Hurricane Katrina.

Fourth-quarter capital expenditures at BHS totaled $41 million, bringing full-year capital spending to $164 million. Total capital spending at BHS in 2007 is expected to range from $175 million to $185 million.

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