Brink's Home Security to become independent business unit

Investors to choose between home security business and armored-transport company


"We've got some pretty desperate competitors out there," he told IBD. Dan will not always try to match low-ball rivals. "There's a point you have to say "no' and walk away," he said.

Brink's did just that with Washington Mutual. The struggling bank had demanded lower prices from Brink's, said Dan. Brink's declined. It was a good decision. Last month, regulators seized the troubled bank and arranged its sale at a cut-rate price to JPMorgan Chase.

But in dangerous areas overseas, Brink's has a better grip on pricing. "The more dangerous the area of the world, the higher the margins," said Dan. And why is that? "People appreciate security," he replied.

Brink's has a major presence in Latin America -- in Brazil, Colombia, Venezuela, Chile and Argentina. It has long been ensconced in India and is building a footprint in China. And with "all that wealth pouring in," Dan sees opportunity in Islamic countries.

Apart from armored transport, the core Brink's business has been expanding its offerings of value-added services. Brink's, for example, offers customers computerized on-site vaults. Instead of hauling cash to the bank every day, a retail customer can simply deposit the day's proceeds in an on-site vault. The vault communicates with the retailer's bank. Same-day credit is given for deposits. "The money could still be in the store, and you're getting credit for it," said Cunningham.

Housing Slump

To this point, Brink's Home Security has weathered the housing meltdown. A slowdown in housing sales usually means fewer new alarm systems. But that can also be a plus. Typically, Brink's loses money on new installations. Profit is made on the recurring monthly payments. So fewer alarms installed mean less up-front loss for Brink's, at least in the short run.

Meanwhile, with fewer people leaving their homes, fewer are shutting off Brink's service. Brink's reports its disconnect rate has actually fallen from 8% a year ago to 7.1% in the second quarter. "When the growth rate slows, the margins improve," summed Dan.

Brink's Home Security will only be allowed to use the Brink's moniker for three years. Hence, it will be spending during that period to "re-brand" under a new name.

And for five years, the two companies must honor a noncompete agreement. After that, Dan hints, Brink's may choose to compete with the spinoff, especially for commercial customers. But it may not be in the U.S. "I'm more excited about opportunities in the commercial alarm business in Latin America and Asia," he said.