From the December-January 2009 issue of Treasury & Risk magazine

Safe, Secure and Sound

It wasn't unusual in the past for The Brink's Co. to walk away from attractive acquisitions because it refused to pay what it saw as inflated prices. "We follow a very disciplined approach to capital allocation," says Michael Cazer, vice president and CFO of the Richmond, Va.-based security business since May 2008. That approach has paid off. With a net cash position of $100 million, at a time when some competitors are flailing in a liquidity quagmire, Brink's can now buy businesses at bargain prices.--perhaps even some of those businesses it passed on before.

"We are in a great position to invest as asset values decline," says Cazer, who joined Brink's after 20 years in financial and operational jobs with General Electric Co. Brink's spun off its home security unit in late October as part of a streamlining plan that included the November sell-off of coal reserves to Massey Energy. Cazer credits the stringent application of Brink's economic value added (EVA) strategy for its impressive balance sheet. Executives and the heads of all 700 branches, are measured on EVA performance. EVA, as used at Brink's, measures the value created by a business, including the cost of capital deployed to generate its income. That's net operating profit after tax minus the cost of capital.

Brink's hopes to spend some of its reserve to expand in Asia and the BRIC (Brazil, Russia, India and China) countries. While 70 percent of revenue comes from outside the U.S., only 2 percent comes from Asia, he says. Even as Brinks expands its global reach, Cazer runs a decentralized shop. "We give managers challenging but achievable goals and let them be innovative in reacting to local markets."

Despite its ambitious growth plans, Brink's will not stray from its disciplined spending policy. It's now re-evaluating capital spending plans, even if it means canceling projects approved six to 12 months earlier. Available funds are going toward technology to improve controllership and financial efficiency--as well as enterprise risk management. "That's not really a discretionary item," Cazer says.

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