BCO
#Good morning, <UNK>.
Great.
Well, let's see if I can address those.
I think if you take a look at first of all, as we've alluded to and as Ron, I think, clearly laid out is with the balance sheet leveraged or unleveraged, as it is, we have the capacity to both manage and invest in what we think will be great returns in the margin improvement side and investment in fleet and other productivity and margin improvement investments.
So that's number one.
Second thing then in terms of the balance sheet, we'll give us the opportunity to do accretive acquisitions.
So let's talk a bit where those might be, or more specifically what the objectives around that.
And first of all, they would be first objective and priorities would be in our core business, because in our core business that gives us the ability to leverage the synergies and therefore get accretion associated with that.
So that's the first focus on it.
The second would be around that is related to our existing geographies first, before we go into new geographies and make sure that the new geographies we go into, if we do that, it would be something that would make sense and again we can gain some synergies associated with both the growth that we'd see in those marketplaces.
So we'd want them to be high growth markets as well as the ability to manage those would give us some synergies around management even though there would not be the typical type of synergy we'll be looking for with a business it would be purchased within an existing geography.
So that's kind of the waterfall, if you will, that we'd be looking for before we go into adjacent type of businesses, which should be far down in our list, at least, at this time.
With that said, we see there are - I would say, we have a number of existing geographies that we're in that we should be able to do acquisitions that we would find very compelling from the standpoint of expanding our market positions, as well as gaining significant synergies on the cost and operational side.
And we can go down the list probably in more detail, if you wish, in terms of an overview that we'll probably talk to in February in terms of our market positions, which then you can then extract from that if there might be or what type of regulatory issues there might be.
But there a number of countries and geographies that we have lots of room to move in.
No.
I think, in general, as I said in my comments, we're looking to fix businesses if we can, improve our businesses and not so.
Certainly, there may be some one or two minor guarding positions - guarding businesses that don't fit our core strategy or geographies that may not be core.
But in general, we're not looking to sell anything where there's nothing strategically that we're looking making changes on our divestiture front.
I'll just talk about the US first and then I'll pass it back to Ron in terms of your other question.
<UNK>, certainly the one contract that we talked about will start giving us some benefit of increased revenue in the fourth quarter.
And that's why I suggested that we'll see greater revenue growth in the fourth quarter in the US than what we've seen in the first three quarters of the year, based on that initial sale and installation of the recyclers, but that's just a revenue increase that it flows through.
The other impacts are starting to see some of the impacts associated with the IT implementations that we talked about and some of the benefits associated with that, as well as starting to see some of the benefits and just starting to see some of the benefits associated with some of the new trucks that we're beginning to be phased in and the benefits associated with both the transition, where we can to one person routes, as well as some of the beginnings that's why I call it momentum starting on the lower fleet cost on those.
Again, it will be relatively minimal in the fourth quarter, but that should start the management into next year and beyond, as we see the true impact of the number of trucks and the benefits associated with those.
<UNK>, addressing the first part of your questions, as I look at the way we discussed our performance in the past, I thought there was an overemphasis on our nine segments and the lack of attention on the performance of the entire business.
So what we were attempting to achieve is to discuss Brink's in total and then give the explanations for the drivers on each of the key metrics.
We also do have all that segment information in the press release, which is still there and in our queue, which will be filed later today will have the same level of detail.
In addition, if you look at the third quarter, we had $61 million of non-GAAP operating profit, which was 47% of our year-to-date operating profit.
So in one quarter, we had almost half of the profit for the three quarter set of a lap so far.
And seasonally the fourth quarter is generally higher.
We talked about Mexico, we can talk about US and so forth, so we're comfortable with that.
Yes, with the performance improvements that Doug mentioned about the US and the seasonality plus the impact of the price increases that <UNK> discussed on the first question, we do have a high degree of confidence in the range that we put out for our outlook.
<UNK>, this is Doug.
I honestly don't know about those labor reductions that you are talking about when it first happened or so.
I'm not assessing it based on what happened several years ago.
We're basing it based on where our current situation is and what the structure is in place today and where we can take that.
We talked about a stronger fourth quarter that we get us to a range of 6% operating income this year.
But we're suggesting based on our analysis that there's a fair amount of improvement that we think in margins that are capable over the next number of years through labor improvements and labor flexibility improvements.
And we'll share more of that as we get into our strategic plan review.
So, I guess, we can do a little bit of digging and need to talk to you later about what you might have heard before.
But I don't really know what that is.
We're just now looking at opportunities going forward.
All right.
Yes, absolutely, <UNK>, and there's a number of things that we're doing on this.
And part of it is the technology goes into the trucks that assures that we have protection for both our drivers messengers, as well as for the liability.
We also limit the liability on these trucks.
So that addresses a little bit of that issue.
And clearly, we're looking to make sure that we can map these appropriate with our routes associated with that.
So all of those things were probably a lot different than, again, I don't know what was happening before a lot different than what was happening in the past and are clearly pieces of what we need to get accomplish going forward.
And part of this is the ramping up of the percentage of the routes and optimizing those that we can use the one person trucks on going forward.
I'd like to also state though that our competitor uses one person trucks in the US and has done so successfully for a while.
So we're just catching up.
That's why I come back to.
This is not a structural issue that I can see.
This is one of - this is a good investment, doing it the right way, putting in trucks in place at lower cost and more efficient and more productive than we have in the past, which just gives us a better return on those investments, and then managing our labor and our routes in the most effective and efficient manner.
And again, if our competition is doing it out there, we should be able to do it and hopefully we can do it better.
Yes.
So we're kind of in the middle of that, if you will, in terms of both the development of it, as well as the implementation of it.
We've spoken in the past about where we are with the static optimization process with each of our branches and on our operating side.
And you've asked really two-pronged question there, one of it is on the operational side of optimization.
And we're in the process of taking the next level from what we've already talked about into assuring that we have that across the board, we have the right optimization software and taking a next step to be able to do that dynamically.
That will be an implementation that we see in 2017, and we'll hopefully materially improve our operational side of the business.
The other side of it, which I think you very astutely talked about was how we work with provide services around and package those services to our bank our FI, as well as our retail customers that is the management of cash and how we both manage the routes and maximize the service to our customers.
And we have that in place.
We talk with numerous customers with that now and we have those offerings.
Now we'll continue to improve on those package offerings.
And it's similar to what we talked about as the recent order that we received that is really a package of services.
So we're selling the equipment.
But more important is this five to six-year ongoing revenue streams of services, which include cash management projections and so forth managing and monitoring the equipment, as well as the traditional cash and transit services around that.
Yes, I think what we prefer to do is lay that out in our plan as well.
But I can tell you that it will be a very key piece of our plan going forward, both in the US and in other markets, and it is becoming much more of a focus in places like Mexico and Brazil.
And that plus more sophisticated systems like that are already in place in France, where I think we have probably the most sophisticated combination of both what we call smart safes and systems, as well as the rest of software and cash management services that go along with that.
Thank you.
Thank you, Keith, and go cubs.
