Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

The Brink's Company (NYSE:BCO)

Q4 2008 Earnings Call

February 04, 2009 11:00 AM ET

Executives

Edward Cunningham - Investor Relations

Michael T. Dan - Chairman of the Board, President and Chief Executive Officer

Michael J. Cazer - Vice President, Chief Financial Officer

Analysts

Stephen Velgot - SIG Susquehanna

Clinton D Fendley - Davenport & Co. of Virginia, Inc.

Ian Zaffino - Oppenheimer & Co.

Christopher Marangi - Gabelli & Company

Michael Kim - Imperial Capital

Operator

Greetings and welcome to The Brink's Company Fourth Quarter Earnings Call. At this time all participants are in a listen-only mode, and a brief question-and-answer will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Ed Cunningham, Director of Investor Relations and Corporate Communications. Thank you Mr. Cunningham; you may now begin.

Edward Cunningham

Thank you Jackie. This is Ed Cunningham. Good morning and thanks for joining today's call, which will proceed as follows: CEO Michael Dan will review our financial results and outlook; CFO Mike Cazer will make some follow up comments before we open it up for questions.

An earnings release was issued this morning, and is available on our website at brinkscompany.com.. If you wish to have it faxed, you call 877-275-7488.

Now for our Safe Harbor statement. This call and the ensuing question-and-answer session may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from projected or estimated results. Information regarding factors that could cause such differences is available in today's press release and in our SEC filings, which include our most recent Form 10-Q and 10-K documents.

The information discussed this call is representative as of today only. The Brink's Company assumes no obligation to update any forward-looking statements made during the call. This call is copyrighted and may not be used by a third party without written permission from the company.

I will now turn the call over to Michael Dan.

Michael T. Dan

Thanks Ed. And good morning and good afternoon everyone.

This morning we reported strong earnings growth for both the fourth quarter and the full year. This was accomplished in a very difficult business environment that worsened as the year progressed. Earnings for the year rose 68% to $132 million or $2.82 per share, and were lead by strong results in Latin America and in global services, which more than offset a difficult year in North America.

Full year revenue increased 16% or 12% on a constant currency basis. The annual segment operating profit for Brink's, Inc. was 8.6%. Fourth quarter earnings rose 8% to 39 million or $0.83 per share. The $0.83 for the quarter includes a gain of $0.16 related to an asset sale. The charge of $0.10 related to a write down of investment assets. Mike Cazer will provide more details on these and several other items that affected earnings.

I'll now cover the fourth quarter operating results in more detail. Revenue was relatively flat at 760 million, so was up 10% on a constant currency basis. Segment profit at Brink's, Inc. fell 9%, 69 million versus 76 million in the 2007 quarter. The operating margin was 9.1% versus 10.1% in 2007.

Total operating profit rose 15% to 69 million due mainly the core asset sales and another solid performance in Latin America. Most of the revenue in profit variants was due to the strengthening of the U.S. dollar against global currencies.

Once again, results in Latin America were strong, but they were more than off set by a profit decline in Europe. North America showed improvement, which is encouraging given our efforts to turn this business around, a very difficult business environment.

European revenue declined 3% and was up 9% on a constant currency basis. Profits declined in Europe due to currency impact and lower operating results in several countries. Turnaround efforts in cost controls in these countries continue to be our primary focus.

Latin America delivered another strong quarter with revenue up 9% or 20% on a constant currency basis. Continued profit growth in Venezuela supplemented by continued improvement in surrounding countries.

None of the profit improvement was attributable to the currency conversion project in Venezuela, which is essentially complete. Project was a great success and a significant impact of 2008 financial results. This completion will make for a difficult comparison in 2009 especially the first half of the year.

As always, it is important to acknowledge that there has been a risk in Latin America in terms of safety, security, geopolitical issues and then try to currency devaluation. We've been managing these risks for over 50 years and we'll continue to do so.

Before moving on to Asia Pacific and North America, I want to mention our recent acquisition of Sebival, a leading provider of cash-in-transit services in Brazil for around $50 million. Brazil is one of the fastest and largest growing cash service markets in the world. There is a growing need for security companies that are large, stable, and offers value added services.

The company brings a strong management team, a reputation for quality and about $60 million in additional revenue. It's an excellent fit for us, and we welcome our new employees in Brazil to the Brink's family.

Relative revenue in a relatively small Asia Pacific operations was about even with the year-ago quarter. Operating profit was down due to foreign exchange rate changes in a slowdown in the diamond and jewelry market. Volume and currency of precious metals was relatively strong. Our North American operations, which struggled throughout much of 2008 ended the year on an encouraging note.

Operating profit was up 6% and relatively flat revenue despite substantially lower activity in the diamond and jewelry segment of our global services unit. On a constant currency basis, operating profit in North America was up 10%. The operating margin improved to 9.1% in a very difficult market; things impart solid progress in our cost reduction efforts.

We all know that many banks and retailers are struggling and most of our customers are looking to cut costs. Our cash logistic business has a great opportunity, what we call solution selling in this weak economy. For example, in 2008, the installed base of our CompuSafe service grew 17% to almost 8,000 units and is poised for even stronger growth in 2009.

Our commitment to value added services like CompuSafe and same-day credit should drive revenue and higher margin growth overtime. Meantime, I can also assure you, we will continue to focus on improving near term efficiency, productivity, and profitability through targeted cost reductions throughout the entire company.

In summary, while it was another solid quarter for Brink's the outlook for 2009 remains somewhat unclear. One thing we can count on is that it will be a challenging time. In addition to the economic headwinds, our 2009 results will be affected by changing foreign exchange rates and the substantial increase in expenses related to post retirement plans.

Earning comparisons in 2009 will also be more difficult due to the successful completion of the 2008 monitory conversion project in Venezuela, which was a significant contributor to last year's profit, especially in the first half of the year.

But despite these obstacles, we currently see 2009 organic revenue growth in the mid to high single digit percentage range with a Brink's, Inc. operating profit margin close to 8%. As we move for the first half of the year, which is typically slower for Brink's in the second half, our visibility should improve and we will provide an updated outlook.

Our longer-term goals, which assume an eventual turnaround in the global economy have not changed. We target revenue growth for the high single digit percentage range and margin improvement of about 50 basis points per year. Our goals we eventually achieved a 10% margin is still realistic when the economic conditions improve.

I'll close by saying that even in these difficult economic times, I feel good about our people, our business, and our competitive position around the world. The economic crisis will continue to test us; it will also test our competitors. As a global leader in secured logistics, Brink's is well positioned to weather the storm.

Our competitive advantages are compelling. We are the world's premier security brand, a global footprint, industry's broadest array of value added services and the financial strength to address our challenges even as we pursue growth opportunities.

We are the best in what we do. We are also a very disciplined company. The cost reduction effort is in place throughout the world. I'm confident that we will navigate successfully through our current challenges and emerge an even stronger, competitive position than we have today.

I'll now turn it over to Mike Cazer. Mike?

Michael J. Cazer

Thank you Michael, and good morning every one.

As Michael said, it was another strong quarter, especially given the current business climate. Let me recap a couple of items for the full year. Brink's grew revenue 16% Brink's, Inc. increased its operating profit margin rate 40 basis points, 3.6% and the company grew earnings per share 69%.

We completed the spin off of our home security business and repurchased $57 million worth of our stock. Our Latin America and global services business teams delivered solid performances, and North America started turning around its performance in the fourth quarter.

Turning to our 2009, we are taking actions to lead the company through a difficult environment, but aren't doing so from strong position. We are focused and continuing to turnaround in North America, including operations in Europe, reducing SG&A costs, and executing smart acquisitions in key high growth markets. Lastly and most importantly, we are increasing our efforts to protect our people and our customers' assets.

I am going to provide more detail about several items that affected earnings for the quarter, and may impact future results. These include foreign exchange, non-occurring items, corporate expenses, taxes, debt and borrowing capacity and some key details regarding pension and post retirement obligations.

Let's start with foreign exchange. Since international operations account for more than 70% of our annual revenue and profit. During the quarter, the U.S. dollar continue to strengthen against most currencies. This fluctuation in exchange rates reduced revenues by $70 million and operating profit by $6 million compared to the fourth quarter of 2007.

For all 2008, the impact on revenues and operating profit were increases of $98 million, $4 million respectively. For the most part, both our revenues and expenses are in the currency of the country in which they are generated. So in effect, our operations are naturally hedge to a large degree.

Also, we have significant presence in the U.S. and in countries, which currencies are currently affecting the U.S. dollar. This should to help to at least partially offset the FX impact if the U.S. dollar continues to strengthen.

Fourth quarter results were impacted by two partially offsetting one-time items. The first was a $12 million gain from the sale of coal assets. The sale, which was announced in November also generated $10 million of cash for us.

The $12 million gain is reflected in the other operating income line of our income statement and increased earnings per share by $0.16 in quarter. Approximately $4 million additional gains are expected to be recognized during in 2009 as liabilities are formerly transferred to the buyer.

The second item is a $7 million charge or write-down of assets related to future pension obligations. These plans don't qualify for FAS 87 accounting treatment, so asset declines that are deemed to be other than temporary are immediately reflected in the income statement.

This charge, which is shown in the other income and expense line of our income statement reduced earnings per share by $0.10 in the fourth quarter.

Corporate expenses for the quarter were $12 million, down about $0.5 million versus last year. This quarter's expense include nearly $3 million of foreign exchange transaction loses related to the strengthening U.S. dollar.

In the quarter, corporate expenses included about $1 million of revenue income from Brink's Home Security. We expect to receive between 6 and $7 million in royalty income from BHS in 2009.

Full year cooperate expense in 2008 was $55 million and includes a variety of recurring and non-recurring items. There is a table page 14 of the press release that provides the details and demonstrates the basic G&A expanses are trending down. We are taking actions to continue to lower our corporate expanse.

We are eliminating discretionary expenditures, reducing fees paid to vendors, and have eliminated more than 15% of the positions in our headquarters, and frozen the salaries of our top executives.

Looking ahead, based on cost reduction actions already underway in non-recurrence of certain 2008 expenses, and factoring in a full year of BHS royalties, we expect corporate expense to decline by more than one third in 2009.

Fourth quarter income was helped by a 3.3 reduction in our effective tax rate from 28.3% to 25%. Lower rate was due to mainly due to reduction of valuation allowances as a result of improved performances in several countries. The effective tax rate for the year declined 13.4 points from 37% to 23.6%. Also these rates exclude BHS results, which are now classified as discontinued operations. For 2009, we currently see an effective tax rate of between 30 and 33%. As the year end falls, we'll update this estimate.

Let's look at cash resources and liquidity. We ended the year with 62 million net cash position. Our net cash position is comprised of $251 million of cash, less $89 million of debt. Net cash declined $32 million during the quarter driven by our $50 million cash injection into BHS during its spin off.

At year-end, we had a $400 million committed revolver and access to smaller uncommitted credit facilities. We have used 106 of the $140 million revolver and therefore have available committed capacity of $294 million. Young committed credit facilities also have available capacity of $45 million.

Let's take a quick look at cash flow items. CapEx for the fourth quarter was $46 million and $165 million for the year. We expect to spend between 165 and $175 million on CapEx in 2009. Depreciation and amortization for 2008 was $122 million, and should be about $135 million in 2009.

Now let's turn to post-retirement, pension... post-retirement benefit and pension plans. As we all know, pension obligations and our underlying assets have been a source much discussion lately as asset values have declined. I want to update you on the status of our pension and retiree obligations and their expected impact in 2009 and beyond.

The market value of the assets that support our U.S. pension plans as well as our post retirement medical obligation has declined along with the equity markets in recent months. As a result, the funded status of these risk plan declined during 2008 by $456 million. This increase in liability for these obligations resulted in a decrease in equity of approximately $450 million during the year.

Based on current assumptions 2009 expenses related to the U.S. plans are estimated to be $29 million, an increase of 36 million over a credit of 7 million in 2008. About $32 million of this increase will be incurred in our former operations, remaining cost increase of $4 million will be absorbed by North American operations.

Based on these year end 2008 assumptions, the expenses for U.S. retirement obligations would be $40 million in 2010, $46 million in 2011, $51 million in 2012. Regarding the U.S. plan funding requirements, we are not required to contribute to U.S. pension plan in 2009.

However based on the 1/231/08 actuarial assumptions, we would expect to be acquired to contribute $42 million in 2010, and approximately $70 million annually from 2011 through 2014. Please note that the $42 million estimate for 2010 is $33 million lower than the $75 million estimate disclosed in our third quarter 10-Q. Also, it is important to note that these required contributions are subject to change based on fluctuating asset values discount rates, assumed rates returns and potential legislative actions.

Finally, we'll not require to do so. We may elect to make a discretionary contribution in 2009 to our U.S. pension plan. They would produce future expected contributions. While on the potential contributions in 2010 and beyond are large, we believe that we have the financial capacity to contempt if required and continue to grow our business. Additional details on asset values, expense estimates, and other relevant assumptions will be disclosed in our 10-K filing, which is scheduled for later this month.

That's it for now. Jackie, we are ready to open the call for questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions). Thank you. Our first question is coming from Steve Velgot of SIG.

Stephen Velgot - SIG Susquehanna

Yes. Just a couple of clarifications; the foreign exchange transaction gains and loses that shows up being a corporate expense. How is that or what is that as compared to the normal translation impact that you get that shows up in the international segment?

Michael Cazer

Sure. Steve, this is Mike. What that represents... those are transactions, where there are currency movements between our operating and our businesses and corporate that have to get revalued as the currency changes. And so in fourth quarter, as the dollar strengthen, we had say for example dividend receivables from various operating entities to corporate. As the dollar strengthened, those who worth less in U.S. dollars and the impact of those over the course of the quarter was a little bit less $3 million dollars.

Stephen Velgot - SIG Susquehanna

Okay. And then the guidance that you gave on corporate expense that was a third left and the as reported corporate expense meaning that included little over $8 million of FX losses and included almost $5 million of strategic review, but only a million of a growth income from BHS. I know you are... you talked about getting 6 to 7 million of royalty income?

Michael Cazer

Correct.

Stephen Velgot - SIG Susquehanna

But I think is that guidance that you about one-third less really just talked about corporate expenses as a gross measure. And then we could make our assumption. And take it as... it's not assuming any further foreign exchange gains or losses et cetera?

Michael Cazer

Steve, that's right. The guidance of more than a third less reflects reduction from the total number, which is about 55 million in 2008. And all the items that you mentioned would be factors in impacting that number in 2009. On top of the cost reduction that we are doing kind of the base SG&A.

Stephen Velgot - SIG Susquehanna

Okay. And then just one quick follow up: are we expecting a further garrulity in the reporting when you come out with your 10-K in terms of business segments or are you keeping things just North America and keeping things geographic?

Michael Cazer

What we are going to do Steve is we are going to continue to display the international and North America operations for revenue and profit. For further clarity, we're going to... we're working on spiting out some of the product-lines such as CIT, high value segments and security services. And we would do that at the revenue line basis; I'm not going top of it.

Stephen Velgot - SIG Susquehanna

Okay. Thank you.

Operator

Thank you. Our next question coming from Clint Fendley of Davenport & Co.

Clinton Fendley - Davenport & Co. of Virginia, Inc.

Good morning gentlemen.

Michael Dan

Good morning.

Clinton Fendley - Davenport & Co. of Virginia, Inc.

Wonder if you could comment on the relative weakness that you are seeing within Europe and what the competitive environment is like there currently, and also a comment on pricing would be appreciated.

Michael Dan

Europe is slowing down even faster than some of it you see going on here in United States, and started about six months ago, and of course you read about it in the paper all the time. They are not so big consumer as how are. So we are feeling across the board in Europe; this is not unexpected.

Pricing environment is always tougher in Europe in this year, because it's very difficult to shed labor, shed people in Europe. So people in our business, any labor intensive business tend to pressure on pricing whether we have to face redundancy cost in Europe, and we're feeling all of that. We've been through before, and we'll deal with it. And if we have to step up and do reductions in force, we'll take those in due course.

Clinton Fendley - Davenport & Co. of Virginia, Inc.

Are there any particular geography that had been weaker than others there?

Michael Dan

No, it's pretty much across the board. I would say it was a little bit of a delay in the UK, but it's catching up there pretty quick. Things are really slowing down; and France is tough, Germany is tough, Belgium is very difficult; Holland maybe is a little bit better than the others.

Clinton Fendley - Davenport & Co. of Virginia, Inc.

Okay, thanks. And then final question: are you able to give any kind of thoughts on the impacts that you've seen from store closures within your retail segment?

Michael Dan

So far hasn't been a real big issue for us. Our next year plans obviously is taking a lot of factors including increased bad debt as we grow our value added services or retail business. But we tend to be the high cost provider. So most of the retailers that are in serious management difficulties moved away from us in the last year or two. So we haven't had a real bad debt issues of any magnitude at all.

And of course the basis of our business is still the financial institutions. And to date around the globe, the governments have come to the rescue of financial institutions. I don't see an issue there for us.

Clinton Fendley - Davenport & Co. of Virginia, Inc.

Thank you Michael.

Operator

Thank you. Our next is coming from Ian Zaffino of Oppenheimer & Company.

Ian Zaffino - Oppenheimer & Co.

Great, thank you. Two questions: the first would be, can you just... I don't know if you can break this out for us, but maybe help us understand this. The breakdown between pricing and volume in North America. The kind of what contribute to each piece; and then on the acquisition front, anything you're looking at now, how much do you intend to deploy et cetera? Thanks.

Michael Dan

All right. First of all, North America, most of what you've seen in the fourth quarter for volume increases, not price increases. Although we had an aggressive price increase program that we've introduced in the... effective toward 2009, which by the way is going very well. And the competitive situation in United States is allowing for that. And quite frankly, we need to raise prices, because our offering results are below par.

And as far as the acquisition pipeline goes, it's full. Asset prices are more reasonable. And we've announced recently a small acquisition in Russia. We announced the Brazilian acquisition, and we have a couple of startups going on. So we're pleased about the opportunities we have to grow the business organically around the world.

Ian Zaffino - Oppenheimer & Co.

Okay. And then as far as you mentioned aggressive pricing; and second on double-digit pricing is that...

Michael Dan

Well, that's all over and that depends on the customer that I'd be sure glad (ph) to get price increases in United States, which has been very difficult over the last couple of years. But the competitive environment is allowing that today, because of service failures and people, who are carrying incredible debt loans, which we don't have to face.

Ian Zaffino - Oppenheimer & Co.

All right, great. Thank you very much.

Operator

Thank you. Our next question is coming from Chris Marangi of Gabelli & Company.

Christopher Marangi - Gabelli & Company

Hi, good morning. Two questions; first: has the economic dislocation in the U.S. accelerated or decelerated tax move to outsourcing of cash logistics? And secondly, give any outlook for the cost of risk in '09 and how that came out in '08.

Michael Dan

The cost of risk in '08 was deteriorating as the year went on, which is to be expected with the deteriorated economic situation all over the world. Simply said, external tax and internal problems increased. We expect that to further increase in 2009 with difficult economic environments. And one of the things we have to do is raise our defenses during these times to protect our people, all of which we are doing.

And what was the first question?

Christopher Marangi - Gabelli & Company

When did the economic dislocation has caused banks and the other customers to outsource more?

Michael Dan

Yeah, the whole solution selling process we have and same day credit is becoming more and more attractive especially to the retail segment. Obviously they want to move funds and get one or two days faster credit for their money.

So our CompuSafe product, which we commented on, which grew the strongest than it has been many years last year. It's going to really be stronger in 2009, and we're excited about that, because that was sort of some of our higher value services. But I don't know is something how bad is the retail environment is going to get, and how that's going to affect us. We'd have to be stepped up a little bit on our bad debt reserves in our 2009 planning. But as you know, it's pretty difficult to see what the next six months looks like and all the cost wins we are experiencing.

Christopher Marangi - Gabelli & Company

Okay, thanks.

Operator

Thank you. Our next question is coming from Michael Kim of Imperial Capital.

Michael Kim - Imperial Capital

Hi good morning guys.

Michael Dan

Good morning.

Michael Kim - Imperial Capital

So for fiscal '09, North America; are you essentially assuming cash-in-transit toward hold the line here maybe turns a little bit better and then most of the growth being driven by the solution side, the cash logistic side with CompuSafe and other solutions?

Michael Dan

Yeah, I am actually more bullish on the North American side than I am anywhere else. We do have a credit further foreign currency exchange issues in Latin America, you have to slow that. North America has been through a tough couple of years, and we've made some strong investments in the sales market solution side for the last couple of years. And they are the part of those expenses. And we are starting to see benefits from those investments that come through, and once again we have some competitive advantages in the United States, but I think we'll benefit from in 2009. So, I feel a little more confident about North America than I do other parts of our business.

Michael Kim - Imperial Capital

Okay. And then taking a step back for fiscal '09, do you have an estimate of what's the foreign exchange impact number it looks like at current rate.

Michael Dan

I do... I'll be working on foreign exchange desk.

Michael Kim - Imperial Capital

Sure. I guess and give a plug number we can work with just to frame with that currency impact it looks like.

Michael Cazer

No, we all discuss... I was saying my headlines and trends. And so, we have... in our internal planning, we've got some things factored in. But it's not something that's probably appropriate to share externally.

Michael Kim - Imperial Capital

Okay. And then how about restructuring charges in '09 just in aggregate?

Michael Dan

It all depends... the biggest risk would be in Europe to continue how the economy goes there. But we've always been very, very disciplined about stepping up and taking actions as required. And we will continue to do so as we go forward as you witness us in the past.

Michael Kim - Imperial Capital

Great. Thank you very much.

Operator

(Operator Instructions).

Michael Dan

We're ready for the next question as some people waiting.

Operator

Thank you. Our next question is coming from Michael Isenberg of Gusting Chapman Associates (ph).

Unidentified Analyst

Good morning gentlemen.

Michael Dan

Good morning

Michael Cazer

Good morning.

Unidentified Analyst

Congratulations on a good quarter. I just wanted to ask you with respect to your guidance for organic revenue growth and your comments specifically with respect to the U.S. how is this into the year financial... dislocation in the financial markets and your end market. And one would assume that that's part of the process, but the government is going to initiate, there is going to be consolidation in the industry and nationalization of credit. Such that will see fewer banks coming out of this, and then over the next two to three years. And fewer especially fewer smaller regional banks, and such growth in franchise will probably flow and ATMs as well. I understand that you have an international business as well. It remains to be seen what happens in Europe. But can you just explain to me how that's going to play out for your business? Because I had several hard time believing that it's not going to impact your end market significantly.

Michael Dan

Well, we've been growing through bank consolidations in United States for 20 years. I do think there will be an acceleration doing the factors that you outlined. And at end of the day, end points are end points. And it's a... Chase taken over Washington Mutual, where there is overlap in some of their markets, some end point dislocations, but most of that was new territories. So sort of depends on how that plays out. If people are taking overlapping areas, there could be an impact; if they're taking adjacent areas, there will be no impact.

We're losing head office here, a head office there; but if we don't service revenue at head offices, we do transportations in ATM. So what's going also that also is the competitive situation in United States, where we have some competitors, we're in financial difficulty starting with high debt loads. And the customers are very, very nervous about buyability of some of those companies. So I think all that plays out to relatively even term at the current time.

Unidentified Analyst

Thank you.

Operator

Thank you. Our next question is coming from David Kaiser of Robert & Co. (ph)

Unidentified Analyst

Hi, good morning guys.

Michael Dan

Good morning.

Unidentified Analyst

Two questions; one is how much flexibility do you have on CapEx, how much is maintenance, how much is trying to expand the business?

Michael Dan

I always think that CapEx is basically three major pools, the biggest pool being vehicle expenditures, second being our facility expenditures, and the third being our IT expenditures. The facilities is not much you can do about. When you need new facility, you need new facility is through growth or because of at lease expiring, and we have to vacate. And IT expenditures is the difference here that Brink's has, so we're not going to touch either of those.

Another we have to pull is on vehicles in some parts of the world, where we can delay truck replacement costs. And I would say that probably you can think about 70% of CapEx being maintenance and 30% being growth related; I don't know what our growth rate is as we go forward.

Now the steps that we've taken internally is to basically say that first half is already done, we've already ordered the trucks; they're being built around the world. We're not sure how this economic crisis continue to payout, so we're being very, very cautious on our second half capital expenditure approvals around the world.

And our management is all over this, and we'll see our things going through first three to months of this year before make a decision on where our CapEx will be. But we do have that lever on the truck side is a biggest lever we can hold.

Unidentified Analyst

Okay and thank you. And the second question is you mentioned several times that some of your competitors have higher debt loads and customer are concerned, are you seeing customers migrate to you or is that something you are anticipating?

Michael Cazer

Yes, it is happening. And that's why you saw the revenue growth in North America for the first time. And we are seeing more of that as things go-forward, because customers are very nervous.

Unidentified Analyst

Thank you very much.

Operator

Thank you and our last question is coming from Gary Orion (ph) of BlackRock Incorporated.

Unidentified Analyst

Hi. I want to see if you could just touch on the competitive situation in some of the various countries in Europe particularly the ones that has been or problematic in the past?

Michael Dan

Well, competition in Europe, as I said earlier in my comments is always difficult because of the inability to shed labor in a timely or in a less expensive fashion than elsewhere around the world.

In France, it's a difficult situation; Belgium is difficult; Germany is starting to ease for the first time, Belgium is pretty stable. So at the end of the day, Europe is always going to be difficult. There is so much regulation in Europe that people would rather cut costs and maintain share and not shed employment, and that's just part of doing business there, and we're good at it. And it puts pressure on our margins, but we've got a good management team on top of it. And I think we'll stare our way through as best we can.

Unidentified Analyst

And just secondly, can you just help remind me on as Venezuela to the extent you can size the significance of it for you guys, and I am curios off to better understand, I guess the improved results that you showed and now that you are in Peru, the currency conversion projects on that.

Michael Dan

Venezuela is our major operation in Latin America. And we had a fantastic year in 2008 because of the currency conversion, which was very profitable for us mostly in the first half of 2008. Of course that's going away as we mentioned in our previous comments. But the economy down there is under some pressure, because oil prices are down. But we are doing well, and we are worried about the evaluation taking place down there, but we've been through it before. We're operating in those types of environments for over 50 years.

We've been successful in passing through price increases, but there is a substantial devaluation, its affect in our U.S. reported dollar earnings will be felt. We expect probably sometime in the second quarter to see devaluation, but you'd never know in Venezuela.

Unidentified Analyst

Okay, thank you.

Operator

Thank you. Ladies and gentlemen discuss conclude today's conference. I'd like thank you for your participation. You may disconnect your lines for at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: The Brink's Company Q4 2008 Earnings Call Transcript
This Transcript
All Transcripts