Ladies and gentlemen, welcome to the Loomis Q3 2024 Report Conference Call. I am Shari, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and 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's my pleasure to hand over to Aritz Larrea, President and CEO. Please go ahead. Thank you very much. Good morning, everyone, and welcome to the Q3 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'll start by providing a quick summary of our Q3 business performance and outcomes before taking questions. Let's start the presentation by turning to slide number two. We had a strong quarter in terms of both revenue and operating income. We achieved revenues above SEK 7.6 million, with growth across our three reporting segments and most business lines. Acquisitions had a positive impact on our revenue, while the changes in currency rates had a negative impact, mainly due to the strengthening of the Swedish krona against the US dollar, euro, and Argentinian peso. We achieved an organic growth of 5.5%, despite continued cyclical headwinds in the international business line. The demand for cash handling automated solutions continues to be high, and we have double-digit growth for automated solutions in both the U.S. and Europe, even when excluding Cima. During the quarter, the company achieved a strong operating margin of 12.9%, reflecting margin expansion in both regions. The U.S. segment delivered a robust performance, driven by a combination of volume growth and continued margin improvement. In Europe and Latin America, the implementation of restructuring programs has encountered some delays. For example, industry-wide strikes in Germany have hindered progress on certain initiatives. While the company remains committed to actively addressing these challenges, these delays have made it more difficult to achieve the full year operating margin target of 12%-14%. The operating cash flow for the quarter was very strong. For the isolated quarter, the cash conversion rate was 134%. As we have mentioned in previous quarters, 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 very strong at 122%. In September, we issued our inaugural Eurobond of EUR 300 million under the EMTN program that was also linked to our updated sustainability-linked finance framework. As we announced during the quarter, we are strengthening our management team ahead of the upcoming strategic period, 2025-2027. Alejandro Corominas has been appointed President and CEO of Loomis Europe and Latin America as of January next year. Alejandro is currently the CEO of Loomis Spain and Regional Vice President for Spain, Latin America, and Turkey, where he has led the company's expansion and success in these regions. At the same time, our current Europe and Latin America president, Georges López, will take on the newly implemented role of Group COO, where he will drive operational excellence across the organization. I look forward to collaborating with both in their new positions. This quarter, we repurchased around about 593,000 shares for a value of SEK 200 million. Demonstrating our continued commitment to shareholder value, we announced yesterday a new share buyback program for the Q4. The board of directors has authorized the repurchase of up to SEK 200 million worth of shares during this period. Let's turn to the next page and address our reporting segments, beginning with Europe and Latin. The positive trend in revenue growth in Europe and Latin America continued, and we reached the highest quarterly revenue and EBITDA. Our operating margin increased to 12.4%, which is a solid margin, but as I touched upon earlier, we expected more from the region in this quarter. As you see as well, changes in exchange rates during the quarter had a negative impact on the total growth. If we adjust for the FX impact, all of our business lines showed growth apart from international. Our automated solutions with SafePoint and Recyclers had a double-digit growth on a standalone basis, and Cima, that has now been part of Loomis for a year, had a positive contribution to the business line. As we mentioned in connection with the Q2, we are reviewing our operations throughout the region to make sure we are best positioned for for future growth. The goal of this analysis is to pinpoint the optimal footprint, capacity, and competencies required for success. We have continued to execute the restructuring program, which is why you see restructuring charges in the quarter, but the benefits of the program in some countries have been delayed. Let's turn to the next page over to the U.S. We had yet another strong quarter for the U.S. Our organic growth was 4.4% and is largely driven by volume growth. Adjusted for the impact of the currency effect, 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 a double-digit growth for yet another quarter in a row, and we see a strong pipeline ahead. We reported a strong operating margin of 16.1%, up significantly from 14.2% in prior year. This is driven by a strong volume growth, in addition to our continued efforts to further optimize efficiencies in the organization. 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 quarter. Revenues amounted to thirty-four-- 32 million SEK, sorry, and transaction volumes surpassed 2 billion SEK. The Spanish POS provider that we acquired earlier this year, Hosteltáctil, has a positive contribution to the performance. 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. We have committed to the Science Based Targets initiative to set carbon reduction targets in line with climate science, and in July, we updated our sustainability-linked finance framework in accordance with this methodology. I'm proud that a second-party opinion provider has deemed our targets to be both very strong and highly ambitious. By continuing to integrate carbon emission reduction targets in our financing, we further strengthen our sustainability commitments. Keeping our employees safe and minimizing the risk of injuries continues to be one of our most important responsibilities. Therefore, I'm also pleased to see a continued reduction in the injury frequency rate compared to the Q3 in prior year. We will, of course, continue to strengthen our proactive measures for our employees' well-being. Let's turn to the income statement slide, where I will start by highlighting our revenue growth. The organic growth for the quarter was very solid, but as I've touched upon, the total revenue was impacted by the changes in exchange rates. I would like to highlight that the increase in net financial items is largely a result of the increased interest rates, where the majority of our financing is with variable rates. The net monetary losses have, however, decreased compared to prior year. We estimate that we will receive a tax credit related to EVs rollout in the U.S., and therefore, we see a lower effective tax rate in the quarter. On the bottom line, we therefore see a positive EPS trend as well. 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 twelve-month basis, we have achieved record revenues and a strong continued improvement in our margins. Even while the operating margin has improved, we'll find it challenging to meet the operating margin target that we set for the strategic period. This is mainly due to the slightly lower than expected profitability in the European and Latin American region in this quarter, caused by delays in some of our restructuring activities. 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, sorry. 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 on bringing the margins up in the European and Latin American region. The 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 Q3, we repurchased shares for 200 million SEK, and the board of directors has decided to continue with the share repurchases for the same amount also in the Q4. Our commitment to reducing emissions is unwavering, and we are dedicated to find new ways to improve. That is why we are investing in new vehicles with advanced safety features and technology. This upgrade not only protects our employees, but also helps us reduce our environmental impact. Before turning to Q&A, I want to remind you all of the Capital Markets Day that we will be hosting in London in two weeks, where the group management team will join me in presenting our future strategic direction and targets for 2025-2027. We will, at the venue, be showcasing our automated solutions and digital offer. Please don't forget to register if you intend to attend the event in person. The Capital Markets Day will also be live-streamed, so you can follow online. I look forward to seeing as many of you as possible on November thirteenth. With that, I'm done with my summary of the Q3 of twenty twenty-four. So let's turn to Q&A. Operator, we are now open to questions, please. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. Question comes from the line of Simon Jönsson, ABG. Please go ahead. Hello, and good morning, everyone, so I have a few questions on the margin in Europe and Latin. You mentioned some delays in the restructure initiatives, but did you still see an incremental improvement from the initiatives you made in Q2, or how should we view that? And also, are you saying that you expected to, you know, be able to achieve the margin target if it wasn't for the delays? And lastly, given the delays, when do you see the full impact of the initiatives you have taken so far? ... Okay, so, starting, can you repeat the first question? Sorry, I just forgot about the first one. Yeah. If you did see an incremental improvement from the initiatives you took in Q2 here in Q3? I think you can also see that. You can already see that. I mean, despite the seasonality that we have in the Europe and Latin American region, we have had an improvement there. The issue, as I've said, is that we have some delays in the restructuring. We expect to see part of those coming end of this last Q4 of the year and then at the beginning of twenty twenty-five. Okay, cool, and can you maybe give an indication of the sort of size? How much of that have you seen so far, and how much can we expect to see coming quarters of the total effect? We've seen very little so far, so we still have to wait and see the rest. Okay. And in terms of the margin targets, do you feel that you would have been able to achieve the range, at least the low end of the range, if it wasn't for the delays? We're still within potentially reaching that range. We find it more difficult and more challenging, but we haven't said... We're not saying that we're not gonna reach it. It's obviously more difficult, no? Okay. When you look at the quarter versus last year, for example, when you make the comparisons, I mean, this Q4, this coming Q4 should be a bit different. I think the momentum we have, the strong momentum we have with growth in the US should make a change in the US. We communicated last year that we had several challenges coming from Germany, issues in the FX business as well. And then we've done some of the restructuring, and we expect to see more effects of that in Q4. So, it's still within reach, but it's very challenging, to be honest. Okay, got it. Thank you. That's all for me. Thank you. Next question comes from the line of Karl-Johan Bonnevier, DNB Markets. Please go ahead. Yes. Good morning, Johan and Jenny. Congratulations to fantastic cash flow in the quarter. And just to start on that, is there any temporary effects there, Johan, that we should be aware of? Or is it just a catch up that we see in this quarter? In general, you know, we see long-term positive trends when it comes to our cash generation from EBITDA, right? And in this quarter, you saw that coming from accounts receivable, we had lower investments in CapEx, et cetera. I do see that there's some temporary effect that we see typically around Q4 anyhow when it comes to accruals of employee expenses in the one or two of the regions. So that there will be a bit of a swing back, but not material, I would say. But again, as we always say, don't look at a quarterly cash flow conversion, look at rolling twelve. It's still very solid. No doubt, still very solid. And then it's looking at the European operation, it seems like you were back to more of a normal kind of FX distribution kind of operation in this quarter. Or is there more to come in that area, you feel? What area? Sorry, I didn't catch that. Yeah, sorry, the FX distribution area. It seems to be back to more of its normal strength, looking at, I guess, it being a seasonally strong quarter for that kind of operation in Q3. Do you feel there is more opportunities in that area for getting it back to where it should be? There are still more opportunities, but what I see even more is in the international business. I mean, the international business, we're starting to see some of the stores business coming back, but the still shipments are still below what we expected. Now, we don't see a big change in that trend at the end of the year, before the end of the year, but we do hope that it, that it starts to change at the beginning of 2025. Excellent. And looking at the U.S., do you feel that you are through the issues with, say, labor accessibility and getting to adjust and getting the operation to run smoothly? I think we have shown that in this Q3. I mean, with less people, we're capable of growing the business. We have no issues as we had in the past on hiring people. Got people in the pipeline. Nevertheless, in the U.S., things change from one day to another, but today we can say that we've gone through those issues that we had in the past. Excellent, and looking at in general on the outlook for 2025, how do you feel about the price adjustment opportunity compared to the cost inflation you see? I mean, price increase program has been very important this year. The problem is when you are reviewing prices to customers every year at a high level, there's a moment where customers don't want to spend as much money, and they start looking at other options. I think inflation should go down. That would also help. I mean, we're constantly driving our business and trying to be more efficient to reduce the cost for our customers as well. I see no issues on us transferring the costs to the customers via price increase, but I do expect price increases to be lower than what they've been these last years. Makes full sense, and looking at the geographical footprint in Europe during Q3, it seems like you are back to basically growth in all the big countries, including the UK. Is there a seasonal impact to that, or do you feel that that is sustainable going into Q4 as well? ... So Q3, obviously, as you're stating, has a seasonal effect, but I do see a lot of progress being made in countries where we're gaining contracts. So I do see an upside in Q4 as well. Excellent. Thank you very much, and looking forward to the event in London in two weeks time. Thank you very much. See you there. Thank you. As a reminder, for questions, please press Star and One. The next question comes from the line of Viktor Lindeberg, Carnegie. Please go ahead. Morning. Thank you. Following up on the European restructuring, the one-off items are coming up now in the past two quarters, and maybe we should expect that also to linger into Q4. Can you comment a bit on how much of a restructuring you anticipate here, and maybe a total figure that you have in mind, and also the payback period on this investment? Second, looking at your financial net, Johan, I think it trended up quite a lot sequentially, despite the interest rate environment being more favorable. So interest costs up, but interest income down quite a lot, so a bit of a mismatch there. Can you help us understand the dynamics and how we should think about this going into the next coming quarters as well? So starting off on those, those two, and then I have a few more follow-ups. Thank you. Thank you, Viktor. So when we talk about the restructuring costs, I mean, there may be additional costs in the coming quarters, but we already estimate the majority that have already been taken. That's one. When we talk about savings expected from those restructuring plans, we expect savings to be around 30%-40% higher than the costs that go into the programs. And we do expect around 70% to be seen more in 2025. All right, Viktor, let's go to your question about the finance net. So, yes, we had a couple of non-recurring items in the quarter, which bumped it up, you know, contrary to the interest rate trend, partly due to our bond issue and some early amortization of a number of facilities that caused some commitment fees. We had some FX losses in the quarter, which were somewhat material. And we also were up, actually, sequentially in terms of monetary loss, which is outside the core, but still in the total. Around the finance income piece that you asked about, it has to do with some unrealized income in Argentina, which is a like a difficult market right now. So we'll be back on that. In terms of setting expectation for next quarter, I do expect next quarter to be more in the range that we were or you were expecting for Q3. So it will be coming down. All right. That's clear. And question there, Aritz, on the restructuring savings, the let's say 30%-40% higher expected higher savings from the cost of the program. Can you pinpoint a bit more exactly where you expect this to land? Is it predominantly an uptick in German profitability? Is it FX related, or more broad-ranged? Just so we understand the bits and pieces here in the bridge. You know that we don't give info around specific countries, but I think obviously, Germany is one, as you stated, and the FX business is another one. Okay. Thank you. And finally, before I get back in line, also to set the scene going into next year, you have a sizable contract in Sweden that will be insourced. Can you, so we don't end up being disappointed going into twenty twenty-five, can you sort of give us a hint on the size of this contract and the timing when this is sort of starting to become a headwind for your organic growth prospects for that specific year? You're talking about the Bankomat contract. Our expectation is to transfer the services, let's say, mid-year, around June, July. And the impact that that can have is, Bankomat is like 30% of the Swedish business. Perfect. And you anticipate you will be able to be cost neutral, so take out cost in line with, with revenue here? Or how do you anticipate that will impact the European segment, if anything? It will be cost neutral, as it has always been. We keep adapting constantly all our countries to the business, to the volumes norm, so it would be cost neutral. Okay, perfect. Thank you so much. I'll get back in line. Once again, to ask a question, please press Star and One on your telephone. There are no more questions at this time. Thank you very much for listening in. Please reach out if you have any follow-up questions. Thank you. Bye-bye. 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.