Ladies and gentlemen, welcome to the Loomis Q2 2024 Report Conference Call. I am Dobbin, the Chorus Call operator. I would like to remind you that all participants will be in the listen-only mode and that the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand this over to Mr. Aritz Larrea, President and CEO. Please go ahead. Thank you very much. Good morning, everyone, and welcome to the second quarter presentation for Loomis. My name is Aritz Larrea, and I'm the CEO of Loomis. With me here today, I have our CFO, Johan Wilsby, and Jenny Boström, our Head of Sustainability and Investor Relations. I will begin by giving a brief review of our business performance in the second quarter and an overview of our results before taking questions. Let's start by the presentation by turning to slide number 2. We had a record quarter in terms of both revenue and operating income. We achieved revenues above SEK 7.6 billion, with growth across our three segments and most business lines. Acquisitions had a positive impact on our revenue, while the changes in currency rates had a negative impact due to hyperinflation currencies. We achieved an organic growth of 7%, despite continued cyclical headwinds in the international business line. The demand for cash handling Automated Solutions continues to be high, and we have had double-digit growth for Automated Solutions in both the U.S. and Europe, even when excluding CIMA. Our operating margin increased to 11.6% in the quarter, with improved margins in both regions. The U.S. segment had a great performance with a combination of volume growth and continued focus on increasing operational efficiency, but I'm also pleased to see that our ongoing efforts to improve margins within the European and LatAm region are starting to yield positive results. Allow me to further address these drivers in more detail later when we run through our segments. The operating cash flow for the quarter was very strong. Keep in mind that we did have a positive effect of the timing effect from the first quarter in these numbers as well. Due to timing between the quarters, it is more relevant to look at this metric over a twelve-month basis, and then the cash conversion was a strong 92%. This quarter, we returned over SEK 1 billion to our shareholders through a combination of our annual dividend and our share repurchase program. We also permanently reduced the number of outstanding shares by canceling close to 4.3 million treasury shares. Demonstrating our continued commitment to shareholder value, we announced yesterday a new share buyback program for the third quarter. The board of directors has authorized the repurchase of up to SEK 200 million worth of shares during the period. Let's turn to the next page and address our reporting segments, beginning with Europe and LatAm. The positive trend in revenue growth in Europe and Latin America continued, and we reached our highest quarterly revenue. Our operating margin increased to 11%, which is a substantial increase, both compared to the first quarter and to the previous year. Price increases, as well as growth from emerging markets, were the main contributors to the organic growth. Our Automated Solutions with SafePoint and Recyclers had a double-digit growth on a standalone basis, and CIMA had a positive contribution to the business line performance as well. We're still seeing a continued decline for our international business. It's too early to say when this cyclical impact will trend back. However, we hope to see it reverse by the end of the year. We are actively examining our operations throughout the region to make sure we are best positioned for future growth. The goal of this analysis is to pinpoint the optimal footprint, capacity, and competencies required for success. As I mentioned earlier, we therefore booked additional restructuring charges in the quarter as part of this process. A key to reaching our margin target for 2024 is to recover our margin in Europe and Latin America. This would require both continued efficiency gains and restructuring strategies. Let's turn to the next page over to the U.S.. The U.S., that is more than 50% of our business, and we keep delivering strong performance in this market. The cash handling business in the U.S. is a growing market, and we are well positioned to increase our business. Revenue and operating income were our highest ever. Our organic growth was 5.9% and includes a robust volume growth. All business lines grew apart from international, which was down compared to prior year. I want to highlight that the Automated Solutions business with SafePoint achieved double-digit growth for yet another quarter in a row, and we see a strong pipeline ahead. We reported a strong operating margin of 15.2%, up significantly from 13.9% in prior year. This is driven by a strong volume growth in addition to our structured work on operational efficiency. Let's turn to the next page and talk about Loomis Pay. Also for Loomis Pay, we had a strong revenue growth in all markets compared to the previous year, and revenues amounted to SEK 28 million. Transaction volumes increased both compared to the same quarter last year and the first quarter, and reached more than SEK 1.8 billion. The Spanish POS provider that we acquired in the prior quarter has now been integrated into our Spanish operations. I would also like to share that we have a new partnership agreement for the Norwegian market. Let's turn to the next slide, where I will share a couple of highlights on our progress on our sustainability initiatives. We can see that our sustainability-related projects are moving forward, and we're clearly on track towards reaching our sustainability targets for the strategic period. Keeping our employees safe and minimizing the risk of injuries is one of our most important responsibilities. Therefore, I'm pleased to see a sharp drop in the injury frequency rate compared to prior year and quarter. We will, of course, continue to strengthen our proactive measures for our employees' well-being. Even with the strong organic growth, we continue to decrease our carbon emissions from fuel consumption and energy usage in absolute terms. In June, we committed to the Science Based Targets initiative to set science-based emission reduction targets in line with the Paris Climate Agreement. I look forward to sharing these targets with you once they have been submitted and validated by the SBTi. Let's turn to the income statement slide, where I will start by highlighting the strong growth, where a real growth, excluding currency, is close to 10%. As I mentioned, we have further restructuring costs with the restructuring plan in Europe and Latin America. We have also made the provision for the administrative fine that our Swedish subsidiary received from the SFSA. But I would also like to highlight that the increase in net financial items is largely a result of increased interest rates, where the majority of our financing, as we mentioned before, is with variable rates. Moving on to the next slide, I just wanted to highlight our performance in relation to our history. As you can see, also on a rolling 12-month basis, we have achieved record revenues and with a continued improvement in our margins. Remember that the rolling 12 months includes the non-recurring items that occurred in the third quarter. While we have a way to go towards closing the gap for our margin target, we are working hard towards getting there. Moving on to the next slide, to summarize our performance, we continue to see a solid organic growth for the group. It is important to remember that when we announced our growth target for the strategic period, we always stated that growth would be higher at the beginning of the period with the COVID recovery. Thanks to growing revenues and dedicated work on improving our operational efficiency, our margin increased in both the U.S. and Europe. We will continue to work towards reaching our margin target at the end of the year. Cash conversion ratio, both for the quarter and on a rolling twelve-month basis, was strong, and we have the capacity to continue to make both strategic and value-creating acquisitions and distribute return to our shareholders. Our capital allocation priorities remain, and we aim to use our capital in the best way to generate returns and create value for our shareholders. In the second quarter, we distributed more than SEK 1 billion to shareholders via the annual dividend and share repurchases. Additionally, we canceled close to 4.3 million treasury shares. The board of directors has decided to continue with share repurchases in the third quarter for the amount of up to SEK 200 million. As I mentioned before, keeping our employees safe and minimizing the risk of injuries is one of our most important responsibilities. While we are seeing our efforts having the desired effect, we can never be done here, and we will continue to strengthen our proactive measures for our employees' safety. Our investments in a lighter and more technologically advanced vehicle fleet is thus twofold. With new innovations and higher security features, we can both further improve the safety of our coworkers while also reducing emissions. As we further work on optimizing our routes, we are decreasing our emissions from transportation, even as we grow our business volumes. Our commitment to the Science Based Targets initiative shows our dedication to keep reducing our carbon emissions. With that, I'm done with my summary of the second quarter of 2024, so let's turn to Q&A. Operator, we are now open to questions, please. Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Viktor Lindeberg with Carnegie. Please go ahead. Thank you. Looking at your cash flow statement, I was just curious to see if you could elaborate a bit on the CapEx levels in the quarter and if you see—think this is a new steady state level relative to where you've been in the, in the past year or so, or if there's something around the corner that we should be mindful of when that may pick up again? Second, looking at Sweden, you record negative organic development now after a quite strong period, but we know that the Bankomat contract will end at some point in the coming 12 months. Maybe if you could quantify the timing and the quantum of how that should affect your Swedish business, and maybe put that in a group perspective as well, starting on those two: CapEx and Sweden? Hi, Viktor. This is Johan. On CapEx levels, we typically don't plan on quarterly levels. So yes, we're slightly down in the quarter. I would expect over time that we keep optimizing this item, especially in relation to revenue. So it's in the right direction, but we, you know, we don't guide by quarter. Okay. Hello, Viktor. This is Aritz, going now to your question around Sweden and Bankomat. As you know, we never comment on specifics around our relationship and contracts with customers. But we constantly adapt our operations to changing market conditions, and in Sweden, we will optimize the resources that we use to make the operations efficient. The important thing is that we remain committed to the Swedish market, and our role in ensuring that cash is available and that the flows of cash are functioning in society. And we see it as positive that the Swedish banks want to support cash in society as well. Although it is important to also have in mind that the total revenues in Sweden amount for approximately 3% of the group's total revenues. Okay, thank you. Maybe following up, I'm- I was a minute late into the call, so excuse me if you already touched upon this, but you mentioned in your, in your CEO letter, Aritz, about, consolidation of, branches and, and the cost associated with that. Can you, can you give us a bit more granularity on, on country level? And if this is- is this Swedish related to or, or more European broad-based? I can start by saying that it's not Swedish, and we don't go into specifics when we talk about the country. So we're taking a broad approach across the whole European and Latin region. So as I said, I mean, we're actively examining our operations throughout the region just to make sure that we are best positioned to for future growth. The goal of all this analysis is to pinpoint, as I said, the optimal footprint, capacity, and competencies required for success. But again, it's not focused on Sweden, it's focused on all the European countries. Okay, that's clear. One final from me before I get back in line on Europe and profitability, I think now you seem to be in a better position to have a better match on cost inflation and price adjustments now coming through, especially compared to last year when inflation was running high. How do you look upon the second half of this year on European prospects to defend and actually expand your margins now for the remainder? I mean, what, besides from what we already know about Germany and the recovery in the cycle, cyclically sensitive business in the international segment, is sort of driving this, if you think you will be accomplishing that? Maybe just to pinpoint a few words on profitability there in Europe. Again, without going into specifics when it comes to countries, I mean, we keep analyzing what needs to be done, sorry, and the needed adjustments. I think you've seen some restructuring charges in items affecting comparability this quarter. I do expect to have additional restructuring charges in the following quarters as well. But as a summary, we do expect those savings to be around 30%-40% higher than the cost going into the program, so that will mean a margin expansion in the following quarters. Okay, thank you. I'll get back in line. Thank you. The next question comes from K.J. Bonnevier with DNB Markets. Please go ahead. Yes, good morning, Aritz, Johan, and Jenny. First of all, congratulations to solid progress in Q2. And, looking at one of the challenges you have still, international operations, do you feel that that's now stable on the low level, or how do you see that business developing? Yeah, I think it's still stable on the low level. I mean, we've seen a slight improvement versus Q1 in Q2, but, but a very low increase, and we still don't have the full visibility on when it's gonna be fully back, but I don't expect it going down more than it has done already. You mentioned in your initial comments that you see volume growth in quite a few segments. Could you elaborate a little on that? Where do you take market share, where you grow with the market or some accounts and similar things? I think, I mean, the most important one is when you see the Automated Solutions in both regions, I mean, with double-digit growth, that is clear. The main difference is that when you talk about the U.S., you're talking about new customers coming in, and when you talk about Europe, you might be cannibalizing some CIT and CMS business. So you do see in Europe, CIT, CMS, a little bit down, and Automated Solutions being up. While in the U.S., the main driver of growth is Automated Solutions. Excellent. And Johan, maybe you can help me with some housekeeping question. Looking at the financial net, how large is the IAS 29 impact and the IFRS 16 impact on that? I don't have that in front of me right now, KJ, so I can get back on that. But there's no big changes really, depending on the interest rate in the quarter. So- I'll get back in line. You know, I'll get back as soon as I looked it up, okay? Excellent. No problem. I also see that you mentioned now in the presentation, lower effective tax rate. What should we calculate with for this year, and how, how do you see that developing going forward? I see it compared to the beginning of the year now with a refreshed forecast, and obviously there are different movements in different countries. I see the tax rate coming down slightly, and you see a result of that in the quarter compared to Q1. So, further than that, I can't sort of guide on right now. But, 25% or lower, that, that should be a good proxy, at least. No, no, not 20. We're 28 in the quarter, right? So not 20. No, but okay, I'm adjusting for all the IIC to get to the underlying tax rate, so. Okay. Now, but you should think about the effective tax rate of a 28%. That's a good proxy for right now. Excellent. Thank you. All the best out there. Thank you very much, KJ. Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. We have a follow-up question from Viktor Lindeberg from Carnegie. Please go ahead. Yes, thank you. Coming into the shorter term trading and, maybe Q2 ended for you, and how you see Q3 evolving so far, even though it's early days. It is a seasonally very important quarter for you, so maybe June could provide some insights on how we are trending now in the tourist season. Starting on that point. Thanks. Yeah, I mean, it's so that we've already informed about all the, all the challenges and, and we talked about the cyclical parts of business, hopefully coming back at the end of the year. But, we shouldn't expect anything different to the normal seasonality that we had in, in previous years when it comes to the European and, and LatAm region, no? So there's nothing that indicates that Q3 will not follow that seasonality pattern in Europe and LatAm. Okay, good. And on Loomis Pay, I think the acquisition contribution was a bit bigger than I anticipated in the quarter. So can you elaborate a bit on what- i s there one-off deviation on the growth coming from this acquired company, or is it simply just trending strongly when looking at the growth that this acquisition has on its own organic merits? I mean, Hosteltáctil, that's the POS that we acquired in Spain. They had annual revenues in 2023 of SEK 1.5 million. Of course, it's marginally critical compared to our Loomis Pay business line. I don't know if you need anything else or you're asking for something else. We have a strong performance there in Spain. Things are looking good, but still early stages, still, and we have just integrated them, so it's a bit early to say how about. Okay, yeah. I was just looking at that. I think you had about, what? SEK 8 million of contribution on top line from that acquisition, and just wondering if that is something we should annualize. Because then it suggests more like EUR 3 million of revenue run rate than the 1.5 you mentioned. One additional thing on Hosteltáctil is that we integrated them, you know, in Q2, and we did that from first of March, so we actually have four months into the quarter. Okay. Well, then that explains part of it. Yeah. Okay. Thank you. Thank you, Viktor. Thank you. There are no further questions at this time. Members of the management, would you like to add any final comments? Yes. Thank you very much all of you for listening in. Please reach out if you have any follow-up questions. Wish you all a happy summer vacations. Bye-bye. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.