October 5, 2015

The Brinks Company

1801 Bayberry Court
Richmond, VA 23226
Attn: Thomas Schievelbein, Chief Executive Officer
cc:

Board of Directors
Joseph Dziedzic, Chief Financial Officer

Dear Tom,
We appreciated the opportunity to meet with you and several other members of the Board of
Directors (the Board) last week, as well as our interactions with you and Joe over the past several
months. As you know, Starboard Value LP, together with its affiliates (Starboard), is the
Companys largest shareholder and, after our recent increase, owns approximately 12.4% of the
common stock and equivalents of The Brinks Company (Brinks or the Company). As a
follow up to our meeting, we thought it would make sense to outline our views for the benefit of
the full Board as well as our fellow shareholders regarding opportunities to create value at Brinks.
We hope that this letter is helpful in addressing some of the questions that you asked during our
meeting while also further demonstrating the compelling opportunity at Brinks.
We believe that significant opportunities exist to create value for shareholders based on actions
within the control of management and the Board. Unfortunately, despite announcing a number of
strategy shifts, personnel changes, and restructurings over the past five years, Brinks has not
capitalized on those opportunities but has instead, as we discussed with you at our recent meeting
and as we detail below, repeatedly disappointed investors and underperformed its peers.
Last week, you asked us what shareholders will be looking to hear at Brinks upcoming analyst
day. First, management must be able to outline a credible turnaround plan with detailed financial
metrics that will bring Brinks performance in-line with its best-in-class peers in a reasonable time
frame. However, success requires not only sound strategy, but also solid execution. As such,
rather than simply hearing about another set of new targets, shareholders will instead be looking
for management to demonstrate why the outcome will be different this time versus the prior failed
turnaround attempts. We do not believe that shareholders will tolerate further missteps and delays.

Long Track Record of Poor Performance and Shareholder Frustration

Brinks has a strong brand presence, extremely valuable assets, and a rich history. Unfortunately,
shareholders have suffered through many years of missed expectations and dismal financial results.
At the same time, Brinks peers, who have faced similar challenges, have successfully adapted
their businesses to drive best-in-class performance. We believe that Brinks can learn from those
experiences while leveraging its best-in-class business mix to create substantial value for
shareholders.
Over the past decade, the cash logistics industry has experienced many changes, from the tools
and technology used to run routes, to the sources of revenue, which have shifted from almost all
Cash-in-Transit Services (CIT) to a mix of CIT and higher-value services such as Cash
Management Services (CMS). Over that time, competitors like Loomis AB (Loomis), Dunbar
Armored, Inc. (Dunbar), Prosegur Compania de Seguridad, S.A. (Prosegur), and G4S PLC
(G4S) have implemented technology such as handheld devices, route logistics software, and
other advanced technology, while at the same time reducing corporate costs and implementing
incentive programs designed to promote superior branch-level performance. These improvements
have led not only to significantly increased profitability, but also to better customer service and
more streamlined workflow for employees.
Unfortunately, Brinks has failed to implement meaningful operating improvements or adapt its
strategy to todays market. As a result, Brinks profitability and stock price performance have
lagged peers considerably. In fact, over the last five years the Company underperformed its closest
peer, Loomis, by 181%.
Five-Year Stock Price Chart
350%
300%
250%

+216%

200%
150%

181% underperformance

100%

+101%

50%

+66%
+34%

0%
(50%)
10/4/10

5/20/11

1/3/12

Brink's

8/18/12

Loomis

4/3/13

Russell 2000

11/17/13

7/3/14

2/16/15

10/2/15

Proxy peer group

Source: Capital IQ.

Note: As of October 2, 2015.
Proxy peer group performance excludes companies not publicly traded throughout entire period. Proxy peer group includes ABM, ADT, ADS, AVY, CSH, CLS, CTAS, CNW, DBD, GEO, GPN, HPY, HUBG, IRM,
MANT, OUTR, PAYX, PBI, R, UIS, URI, UTIW, WU.

This poor stock price performance has been largely driven by weak financial results, specifically
low and declining margins. Brinks margins are substantially below the margins of its peers.
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Because some of those peers are either not publicly traded or have other businesses that make a
direct comparison of consolidated margins less relevant, we believe it is perhaps most telling to
compare the financial performance of Brinks to Loomis, who is the closest pure-play public cash
logistics competitor and has a similar, although somewhat less favorable, business and geographic
mix. In recent years the EBITDA margin gap between Brinks and Loomis has increased to a
record 860 basis points.

Historical EBITDA margins: Brinks vs. Loomis

18%

Loomis begins
turnaround

16%
13.3%

14%

12%

16.5%

15.3%

12.6%
130 basis
points
difference

11.3%

11.5%

14.5%

14.2%

Brinks 2nd
turnaround attempt

Brinks 1st
turnaround attempt

9.4%

9.8%

10%

16.5%

860 basis
points
difference

10.4%
8.7%

8%

7.9%

6%

2008

2009

2010

2011
Brink's

2012

2013

2014

Loomis

Source: Company filings, Bloomberg, and Starboard Value estimates.

Note: EBITDA estimates are calculated on a fully allocated basis including corporate expenses.

As detailed below, we do not believe there are structural reasons to explain why Brinks cannot
achieve margins at least in-line with Loomis. In fact, we believe Brinks has a better product and
geographic mix, as well as the benefit of greater scale and the best brand name in the industry. We
believe the only credible explanations for this massive and increasing margin gap are operational
miscues and lack of execution.
Brinks is now in the middle of its third turnaround attempt in the last five years (the 2014
Turnaround Plan), which includes promises to improve performance through a combination of
operational improvements specifically in the US and Mexico and global cost reductions through a
centralization effort and workforce reduction. However, we do not believe these actions, even if
successfully implemented, would sufficiently address the issue of Brinks margin gap. Even if
Brinks were to hit the targets outlined in this plan, this would only close ~40% of the 860 basis
points gap between Brinks and Loomis.

Current and target EBITDA margin comparison

18%

16.5%

15%

11.4%

12%

7.9%

9%
6%
3%
0%

Brink's 2014 results

Brink's 2016 target

(1)

Loomis

Source: Company filings and Starboard Value estimates.

(1) Assumes Brinks stated 6.7% 2016 operating profit margin goal and 4.7% of D&A as a % of sales.

Even if hitting these targets were an acceptable outcome, which it is not, it would be hard to have
confidence in the Companys ability to achieve them when, in each of the last three years, Brinks
profitability expectations have been repeatedly reduced, with the actual reported numbers coming
in far below original expectations.
Brinks actual adjusted EBITDA vs. original consensus estimate
4% shortfall
$450
$400

24% shortfall
$429

$386

32% shortfall
$414

$373

$350

$328

$300

$280

$250
$200
$150
$100
2012

2013
Original consensus estimate

2014
Actual adjusted EBITDA

Source: Bloomberg, Starboard Value estimates, and Company filings.

Much of Brinks poor past performance is due to Brinks underperformance in its five largest
markets. For example, a major component of the 2014 Turnaround Plan involves fixing its US
operations, Brinks largest market at approximately 20% of revenue. The 2014 Turnaround Plan
is not the first time Brinks has attempted to fix its US operations. Unfortunately, despite a
revolving door of organizational changes over the last three years, margins in the US have only
continued to decline, while competitors have continued to improve.

US Operations: History of Failed Initiatives and Missed Expectations

US EBITDA margin

Tom Schievelbein hired as CEO

Heavily invested in IT

Head of North American operations leaves and Mel Parker is hired to lead
Brinks North America

Hired new sales leader in North America

Hired Patty Watson as Chief Information Officer to lead technology

implementation

Announced goal of getting to 75% of performing branches by 2016 (the

Company has not updated its shareholders since)

Relocated experienced CFO from Europe to North America

"More highly focused than ever on aligning CIT cost structure with the market
and maximizing asset utilization. Tom Schievelbein, July 25, 2013

Named Christian Bert as new President of Brink's US

Mel Parker (head of Brinks North America since 2012) leaves

Mike Beech named EVP and President of five largest markets

Started to implement a route planning system, handhelds, and centralized

billing in July 2014

2012

2013

2014

Expect handhelds and route optimization to be rolled out in 2014 Stated in

July 2014

Expect handhelds and route optimization to be rolled out in 2015 Stated in

October 2014

8.8%

14.4%

5.9%

15.9%

6.5%

15.7%

Source: Company filings and Starboard Value estimates.

Note: EBITDA estimates are calculated on a fully allocated basis including corporate expenses.

Not only did the changes made in 2012 and 2013 fail to produce any improvement, but since
announcing the 2014 Turnaround Plan, the gap between Brinks and Loomis margins has
continued to increase.
US EBITDA margin comparison

25%
19.5%

20%

19.5%

18.4%

17.1%

15.2%

14.9%

15%

8.4%

10%
5%

6.1%

7.8%

4.2%

2.8%

5.7%

0%
Q1 2014

Q2 2014

Q3 2014

Q4 2014

Brink's

Loomis

Q1 2015

Q2 2015

Performance since Brinks U.S. turnaround plan

Source: Company filings and Starboard Value estimates.

Digging one level deeper, individual branch performance can be an important measure to gauge
operational progress in a logistics company such as Brinks.1 Since Loomis started its operational

Performing branches are those that generate operating profits above breakeven on a fully loaded cost basis
(corporate overhead is usually measured as 5% of sales). Loomis similarly defines performing branches as those
that contribute to Loomis earnings when all costs have been allocated.
1

turnaround, it has consistently improved its number of performing branches to 85%. In contrast,
just 56% of Brinks branches were performing as of Brink's last disclosure. Brinks has not
updated its investors on the number of performing branches since 2013, despite frequent requests
from investors and analysts.
Loomis history of US performing branches
90%

85%

80%
70%

73%

74%

75%

77%

79%

70%

60%

56%

50%
2008

2009

2010

2011

2012

2013

2014

Brink's
(2013)

Source: Company filings.

Further, managements explanations for why Brinks is falling behind yet again suggest that
Brinks has not learned from past mistakes or the experiences of its peers. For example, on Brinks
Q2 2015 earnings call, management stated:
We are behind our previously communicated schedule for a variety of reasons, including the redeployment of
resources. Some of the projects have been more technologically challenging than anticipated.
- Joe Dziedzic, July 30, 2015

Brinks twice previously (2010 and 2012) attempted to roll out technology and route optimization
initiatives, and failed each time. Brinks is now in the middle of its third attempt to implement
this relatively straightforward and proven initiative. Based on Brinks past experience, it is hard
to understand why Brinks could not anticipate the challenges associated with the rollout. Further,
given that Brinks peers rolled out similar technology years ago, in some cases more than a decade,
we cannot understand why Brinks did not make an effort to learn from these experiences.

Comprehensive Operational Turnaround

We believe Brinks can massively improve the operational efficiency of its CIT and CMS
businesses, which would substantially improve margins, while also allowing Brinks to
accelerate revenue growth by serving its customers more effectively and consistently. A
comprehensive turnaround will include not only technology and route logistics improvements, but
also substantial reductions in overhead expenses, a more incentive-based compensation structure
for branch- and field-level employees, and a focus on eliminating the costs that do not drive value
for customers, such as corporate aircraft and multiple US headquarters. Implementing this plan,
however, will require substantial expertise as well as a concerted effort to learn from the successful
turnarounds implemented by Brinks peers, and from Brinks past mistakes.

We believe that successfully executing on a comprehensive operational improvement plan should

increase Brinks EBITDA by more than 60% over the next 12-18 months. We understand that
Brinks management may regard such a turnaround as a large departure from Brinks historical
pace of change, but it is hardly unprecedented in the cash logistics industry. Even the technology
and route logistics initiatives, which Brinks seems to find particularly daunting, have been
implemented successfully time and again in analogous situations. Loomis successfully
implemented these initiatives approximately five years ago; Prosegur successfully implemented
them approximately seven years ago; Dunbar successfully implemented them approximately ten
years ago; and other logistics companies, such as UPS and FedEx, implemented similar initiatives
decades ago.
Further, by comparing Brinks to its closest peer, Loomis, one can see that the goal of improving
EBITDA by 60% is actually conservative. For example, a simple calculation shows that if Brinks
performed like Loomis on a consolidated basis, Brinks estimated 2015E EBITDA of $309 million
would improve by approximately 70% to more than $500 million.
Illustrative margin improvement by performing similar to Loomis

Brink's consensus 2016E revenue

Loomis' EBITDA margin
Pro forma EBITDA
Current Brink's 2015E EBITDA
% upside from current EBITDA

$3,143
16.5%
$518
$309
67.9%

Loomis 2014
EBITDA margin
was 16.5%

Source: Company filings, Bloomberg, and Starboard Value estimates.

Note: EBITDA estimates are calculated on a fully allocated basis including corporate expenses.

Looking more closely at Brinks and Loomis businesses, we can see that Loomis superior
margins can only be explained by superior operational execution, since Brinks has greater scale,
a better product mix, and a better geographic mix than Loomis.
39% of Brink's revenue is from its high margin Global Services and CMS businesses, while only
30% Loomis revenue is from CMS and a minimal amount is from its new International Services
business. Further, Brinks Global Services business should garner higher margins than even a
well-performing CMS business. In fact, if one adjusts for differences in business mix, the margin
opportunity at Brinks is even greater.

Illustrative margin improvement by product mix

2016E Brink's
revenue split
Cash-in-transit

Margin target
Low

High

Median
target
EBITDA

$1,634

10.5%

12.5%

$188

Cash Management Services

$660

22.5%

25.0%

$157

Global Services

$566

27.5%

30.0%

$163

Security Services

$283

6.0%

8.0%

$20

Pro forma EBITDA

$527

Current Brink's 2015E EBITDA

$309

% upside from current EBITDA

70.9%

Source: Company filings, Bloomberg, and Starboard Value estimates.

Note: EBITDA estimates are calculated on a fully allocated basis including corporate expenses.
Assumes 21% of sales from CMS and 18% of sales in Global Services.

In addition, Brinks has greater exposure to geographies with better margin profiles than Loomis.
More than 35% of Brinks revenue is from Latin America, where industry margins are significantly
higher than in the US and Europe, while Loomis is mostly in the US and Europe.
2014 revenue breakdown by geography

High-margin
geography
7% 20%
16%
14%

38%

Total revenue:

5%

US
France
Canada
Latin America
EMEA
(1)
Other

7%
36%

$3.5 billion

Europe

US

57%

International
services

SEK 13.5 billion

(~$2.0 billion)

Source: Company filings.

(1) Includes revenue from Asia and Payment Services.

We believe a well-run Latin American cash logistics business should produce approximately 250500 basis points better EBITDA margins than the more developed North American and European
markets. Further, Latin America is a higher-growth market, so this advantage will only increase
over time. In addition, Brinks has meaningful exposure to other developing markets in Africa,
the Middle East, and Asia, which we would also expect to be higher margin and higher growth
than developed markets. In fact, if one adjusts for differences in regional margin profiles, the
margin opportunity at Brinks is greater still.

Illustrative margin improvement by well-performing geographic split

Brink's 2016E

Target EBITDA
margin

revenue split (1)

Target
EBITDA

Rationale:

US
France
Mexico
Brazil
Canada
Five largest markets

$642
$456
$342
$321
$159
$1,921

15.7%
17.2%
22.5%
20.0%
15.7%
18.0%

$101
$79
$77
$64
$25
$346

Loomis US margin.
Loomis Europe margin less 150 bps due to recent difficulties in France.
Discount to GSI, the primary competitor, who generates ~25-30% margins.
Estimate for Prosegur's Latin America Cash Services margin.
Loomis US margin.

Latin America
EMEA
Asia
Global markets

$523
$491
$123
$1,137

20.0%
18.7%
17.1%
19.1%

$105
$92
$21
$217

Estimate for Prosegur's Latin America Cash Services margin.

Loomis Europe margin.
Brink's current Asia margin.

$85

0.0%
17.9%

$0
$563

Payment services
Pro forma EBITDA
Current Brink's 2015E EBITDA

$309

% upside from current EBITDA

82.6%

Assumes Payment Services is breakeven.

Source: Company filings, Bloomberg, and Starboard Value estimates.

Note: EBITDA estimates are calculated on a fully allocated basis including corporate expenses.
(1) Assumes 2016E consensus revenue split based on 2014 actual geographic revenue splits.

Brinks is also almost twice the size of Loomis in terms of total revenue, which should provide a
scale advantage and allow it to better leverage overhead costs. Therefore, it is hard to see any
reason that Brinks should not be able to achieve margins in-line with or better than Loomis, which
calls into question the significantly lower profitability targets outlined in Brinks 2014 Turnaround
Plan, which is already behind schedule.
There also remains a large disparity between the revenue per employee of Brinks and Loomis.
Even after Brinks most recent restructuring, Loomis (which has less revenue) still generates
approximately 1.7x more revenue per employee than Brinks. Again, Brinks has more scale
without the benefit.
Revenue per employee comparison

2014 Revenue
Employees
Revenue / employee

$1,973
20,536
$96,082

2014 Revenue
Employees
Revenue / employee

$3,562
62,400
$57,088

Degree of Loomis' efficiency vs. Brink's = 1.68x

Source: Company filings and Bloomberg.
Note: $ in USD.
Brinks employees count includes the current effort to reduce the workforce by 1,700 employees.

Valuation Considerations
Along with a significant improvement in Brinks profitability and returns on capital, we believe
that with better execution the market is likely to re-rate Brinks to a multiple that is more in-line
with peers. As shown below, Brinks currently trades at a substantial discount to its peers, which
9

we believe is largely due to its record of repeated operational missteps. As Brinks improves its
operations and re-establishes credibility with the investment community, Brinks multiple should
return to a more appropriate level, amplifying the value creation opportunity.
2016 EV / EBITDA multiple disparity between Brinks and its peers
10.0x
8.9x

9.0x
8.0x

7.6x

7.3x
7.0x

6.6x

6.0x
5.0x

5.0x
4.0x

Peer
average
Source: Company filings and Bloomberg.
Note: As of October 2, 2015 and assumes consensus estimates for EBITDA.

As shown in the table below, if Brinks can achieve margins in-line with peers and rebuild
credibility with investors by setting appropriate goals and meeting expectations, there is a
tremendous opportunity for shareholder value creation.
Indicative valuation for Brinks
Brink's current
multiple
Pro forma EBITDA (assumes Loomis' margins)

Implied value per share for Brink's

% upside from current price

Peer average
multiple

$518

$518

$518

5.0x

6.2x

7.3x

7.6x

$2,590

$3,186

$3,781

$3,937

($358)

($358)

($358)

($358)

$2,232

$2,828

$3,423

$3,579

$45.69

$57.89

$70.08

$73.26

61%

104%

147%

158%

Brink's net debt

Implied Brink's equity value

Loomis'
multiple

$518

Multiple
Implied enterprise value

"Halfway to
Loomis"
multiple

(1)

Source: Company filings, Bloomberg, and Starboard Value estimates.

(1) As of October 2, 2015.

Next Steps
Brink's is a great company with a best-in-class brand and a bright future. The missteps of the past
cannot be repeated. Management and the Board have a difficult road ahead and must evaluate all
10

options to create value for the benefit of shareholders. Although we are confident that a standalone
turnaround of Brink's is achievable, it has proven elusive under current direction. We therefore
believe that while management and the Board continue to work on standalone improvements, the
Board needs to evaluate whether more value can be created for shareholders by pursuing a strategic
combination with another global cash logistics company. Such a combination would bring (i)
substantial synergies, given the critical importance of scale and route density in a logistics business
like CIT; (ii) a track record of successful execution, including experience in implementing some
of the very same initiatives that are needed at Brinks, and (iii) a premium trading multiple that
more appropriately reflects the quality of the combined business, allowing that company to offer
a substantial premium to Brinks shareholders while also creating meaningful value for its own
shareholders. We believe there are several companies that would bring all three of these elements
to a combination with Brinks, and it is incumbent upon the Board to fully explore those options.
Only then can the Board accurately determine whether the best risk- and time-weighted outcome
for Brinks shareholders will come from a strategic combination or a substantial standalone
restructuring.
We thank you for considering the points outlined in this letter. Now is a critical time for Brinks.
After years of missed opportunities and false starts, Brinks must effect a step change that will put
it on the path to long-term value creation for shareholders the current trajectory is simply not
acceptable. We believe this value creation opportunity is well within the control of management
and the Board. We look forward to attending your analyst day as we have an open mind about the
path forward for Brinks. We will be looking to hear and understand why this time will be
different.
We have appreciated our open and constructive dialog with you thus far, and we look forward to
continuing a constructive relationship. We hope to be able to work with you to ensure that real
change is implemented and real value is created at Brinks.

Best Regards,

Jeffrey C. Smith
Managing Member
Starboard Value LP

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