Ladies and gentlemen, welcome to the Loomis Q4 2024 report conference call. I'm Ladies and gentlemen, welcome to the Loomis Q4 2024 report conference call. I'm Moritz, the Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer 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 fourth quarter and full year 2024 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 Q4 and full year performance before taking questions. Let's start the presentation by turning on to slide number two. We had a strong finish to the year in Q4 in both revenue and operating income. We achieved revenues above SEK 7.9 billion, with growth across our three reporting segments and all business lines. Acquisitions had limited impact to the total growth, whereas currency effects had a negative impact. We achieved an organic growth of 8%. The demand for our solutions continues to be high, and we have had double-digit growth for the Automated Solutions, International, and Loomis Pay business lines. It is reassuring to see positive development for the International business line, which has had cyclical challenges over the past year. The situation with U.S. increasing tariffs has brought additional one-time volumes in the quarter. While we do not yet see that the business is back to where it was, it was a good quarter. It's also worth highlighting that this is the first quarter that CIMA is included in the organic growth, after having been with the group since October 2023. The operating income surpassed SEK 1 billion for the fourth quarter, which is our highest ever. We increased our operating margin to 12.9%, reflecting margin expansion in both regions. The U.S. segment delivered a robust performance driven by a combination of volume growth and an implicit increase in margin. In Europe and Latin America, we have continued with the implementation of restructuring programs, and I'm pleased to see progress in terms of margin recovery. I'm confident that we will see the effect of these initiatives as we move into 2025. The operating cash flow for the quarter was very strong. For the isolated quarter, the cash conversion rate was 123%. As we have mentioned in previous quarters, due to timing between the quarters, it is more relevant to look at this metric over a 12-month basis, and then the cash conversion was very strong at 112%. During the quarter, we repurchased about 590,000 shares for a value of SEK 200 million. In total, during 2024, we have repurchased close to 2.6 million shares for a value of SEK 800 million. The Board of Directors has proposed a record-high dividend of SEK 14 per share to the Annual General Meeting, corresponding to a value of SEK 959 million. This is a 12% increase compared to the dividend in the prior year. The proposed dividend amounts to 60% of the earnings per share for 2024, which is in the upper range of our dividend policy. In November, we held a Capital Markets Day and shared our strategic priorities and targets for 2025-2027. Our focus on revenue growth and operating margin remains crucial, while our commitment to reducing CO2 emissions and workplace injury rates aligns with broader sustainability goals. I will come back to our presented targets later during this presentation. Let's then turn to the next page and address our reporting segments, beginning with Europe and LATAM. The positive trend in revenue growth in Europe and LATAM continued, and we reached our highest quarterly revenue and EBITDA. We had a double-digit growth within the Automated Solutions and International business lines, which had a positive contribution to the bottom line. Our operating margin increased to 12.1%, which is a strong improvement compared to the prior year. As you may remember, the profitability in the prior year was impacted by currency headwinds, operational challenges within the FX line of business, as well as acquisition-related costs. Throughout the year, we have focused on increasing our profitability, and we remain motivated moving forward. We have taken actions for operational efficiency within our European segment and continue to execute on our communicated restructuring plan, which is why you see restructuring charges in the quarter. Some benefits are seen already in the fourth quarter, but we expect more to come in 2025. For the full year, the segment Europe and Latin America reported revenues of close to SEK 15 billion and an operating margin of 11.1%. Let's turn to the next page, over to the U.S. The U.S. segment delivered another strong quarter, reporting record revenues exceeding SEK 4 billion, with growth across all business lines. Organic growth reached 4.7%, driven primarily by volume increases, while price adjustments also contributed positively. All business lines experienced year-over-year growth. Notably, the Automated Solutions business, including SafePoint, achieved double-digit growth for yet another consecutive quarter, and we continue to see a robust pipeline ahead. The continued implementation of operational efficiency programs were positive drivers to the increase in operating margin compared to the previous year. These programs have resulted in higher service quality, allowing the segment to capture higher volumes without increased staffing needs, and the operating margin increased to 16.6%. The higher proportion of revenue coming from Automated Solutions has also contributed positively to the margin. For the full year, the U.S. segment reported record-high revenues of close to SEK 16 billion and an operating margin of 15.7%. Let's turn to the next page and talk about Loomis Pay. Loomis Pay delivered a strong performance in the fourth quarter, generating SEK 31 million in revenue and surpassing SEK 1.8 billion in transaction volumes. The acquisition of Hosteltáctil earlier this year, with its locally tailored POS solutions, has positively contributed to our growth. I'm confident that strengthening strategic partnerships is the right path forward. Our focus remains on leveraging these established POS solutions as the foundation for introducing Loomis' unique all-in-one payment solution in the new market. By partnering with or acquiring companies with a strong local offer and integrating them with our payment gateway and cash handling solutions, we are well positioned for scalable growth. From 2025, the segment Loomis Pay will be renamed segment SME Pay and will, in addition to revenue from Loomis Pay, also include revenue within other business lines from new SME customers. Loomis Pay will continue to be a reported business line within this segment. 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 initiatives are moving forward. During 2024, work has been ongoing to prepare the organization for the Corporate Sustainability Reporting Directive. Our double-materiality analysis has provided insight to the focus areas and targets for the upcoming strategic period. With a well-defined sustainability agenda, we are committed to leading the way in sustainability within the industry. 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 fourth quarter in the prior year. We will, of course, continue to strengthen our proactive measures for our employees' well-being. As we mentioned earlier this year, we have committed to the Science Based Targets initiative to set carbon reduction targets in line with climate science. Our CO2 reduction targets for 2027 within Scope 1 and 2 have been developed in accordance with this methodology. We are in progress of setting our Scope 3 targets, and we'll communicate these once we have submitted and validated by the SBTi. Let's turn to the income statement slide, where I will start by highlighting our revenue growth. The growth for the quarter was very solid, with growth across all segments and business lines. We have costs classified as items affecting comparability in the quarter, which relate to impairments of goodwill and intangible assets, a provision for a communicated legal case in Denmark, as well as costs related to the ongoing restructuring in Europe and Latin America. We can see that the financial net is largely in line with the level in the previous year. While our financial expenses have decreased as a result of declining interest rates, we similarly see a decline in our interest income as well. It is worth reminding you that while the majority of our financing has variable rates, our leasing liabilities tend to have fixed interest rates. The monetary losses from hyperinflationary economies have also increased in the fourth quarter compared to the prior year. For the full year 2024, our effective tax rate is lower compared to the previous year. A key driver of this decrease is a tax credit related to the EVs rollout in the U.S., which we expect to be non-recurring. Moving on to the next slide, I just wanted to highlight our performance in relation to our history. Looking at our results in a longer perspective, you can see that we have consistently delivered a strong financial performance over time, except for the impact of COVID-19 in 2020 and 2021. As you can see, we have a stable business model that has shown to be resilient over time. In 2024, we've generated above SEK 30 billion in revenue, and we reached 12% in operating margin. Over a 10-year period, we have generated a revenue CAGR of close to 9%. Looking ahead, we will continue to drive our growth by prioritizing recurring revenues and increasing margins by a structured approach to gain operational efficiencies. Moving on to the next slide to summarize our performance in relation to our committed targets, we have made significant progress in the last three years, and I'm proud to conclude that we have achieved all four of our strategic targets for the strategic period 2022-2024. Following our strong performance in the fourth quarter, we have exceeded our growth expectations, where our revenue CAGR, currently adjusted over the past three years, is 11.8%. On the operating margin side, just a couple of months ago at our Capital Markets Day, we highlighted that while the margin target was within reach, achieving it would be highly challenging. With a strong finish to the year and solid Q4 results, we closed 2024 within our operating margin target range, achieving an operating margin of 12%. It's also encouraging to see the solid progress we've made on our ESG targets. Regarding the reduction of emissions, we have exceeded our target by achieving a 20% reduction despite the strong growth of our business. And lastly, keeping our employees safe is a top priority, and we are proud to have significantly reduced workplace injury rates over the past three years by 23%. After wrapping up a successful 2024 strategic period, I'm excited about the journey ahead. I would like to remind you of the targets we presented at our Capital Markets Day a couple of months ago. Our four strategic targets for the 2025-2027 strategic period are an average compound annual growth rate of 5%-7%, an EBITDA margin of 12%-14%, being at the top mid-range at the end of the strategic period, a reduction of 32% of CO2 emissions compared to 2019, and a reduction of 10% of work injury rates compared to 2024. I remain confident in our business and that we are well positioned to deliver on our strategic priorities and targets for 2025 to 2027. Before heading to Q&A, I would like to summarize our year and the fantastic performance we have had. We continue to see a solid organic growth for the group in 2024, driven by both increased volumes and price increases. Thanks to growing revenues and strong focus on operational efficiency, our margin increased in both the U.S. and Europe. We remain committed to further enhancing margins in the European and Latin American region. Our strong quarterly performance resulted in record-high revenue and operating income for the full year 2024. Revenue for the year surpassed SEK 30 billion with an operating margin of 12%, and we met all of our four financial targets for the strategic period ending in 2024. The cash flow from operating activities was more than SEK 4 billion for the year, which in relation to the operating income was 112%. As we mentioned at our Capital Markets Day, we are confident that we should be able to maintain an operating cash flow in relation to EBITDA of above 90% during the upcoming strategic period on an annualized basis. Our strong cash conversion gives us the capacity to both invest in our business and distribute returns to our shareholders. During 2024, we distributed more than SEK 1.6 billion to shareholders through the annual dividend and share purchases. The Board of Directors has also announced a proposed dividend of SEK 14 per share, which amounts to a record SEK 959 million to be distributed to shareholders in May. Our capital allocation priorities remain, and we aim to use our capital in the best way to generate returns. This includes making the needed investments in our business, distributing 40%-60% of our net income to shareholders annually through the annual dividend, and also making value-driven acquisitions. If we have excess funds or do not see the acquisition opportunities in the short term arise, we aim to continue to distribute additional funds to shareholders through share repurchases. During the year, we reduced our workplace injuries by 14% compared to the previous year, and we also reduced our CO2 emissions by 3%. Our commitment to be leading within sustainability in our industry is unwavering, and we are dedicated to finding new ways to improve our CO2 emission reductions. That is why we're 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. We had a strong finish to the year and our strategic period. I look forward to the next three years to deliver on our communicated strategic priorities and targets for 2025 to 2027. With that, I'm done with my summary for the fourth quarter and full year of 2024, so let's turn to Q&A. Operator, we are now open to questions, please. Ladies and gentlemen, we are now beginning 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. One moment for the first question, please. And the first question comes from Simon Jönsson from ABG Sundal Collier. Please go ahead. Thank you and good morning, all. So first, on the margins and in the U.S., how much of the improvements would you say is related to general efficiency gains, and how much is the product mix, i.e., more Automated Solutions? I think all the efficiency projects that we're doing there have a bigger weight than just increasing the weight of the Automated Solutions within all our revenue. All right, thank you. And turning to Europe, I guess the question is how much of the profitability initiatives have come through so far. I mean, have you sort of taken the low-hanging fruit here, or should we expect more gains in the coming quarters? We talked about this in the past. I mean, we're expecting more to come in 2025. We talked about a 30% increase comparing to what the costs have been coming in 2025, 70% of that coming in 2025. So we do expect the margins to improve during this year. Okay, so you stick to that 70%-30% split? Yes. Yeah, thank you. Can you also maybe explain a bit more about the different moving parts in organic growth in Europe and LATAM? You talked about the tariff one-off in International. How much was that? And you also mentioned growth in emerging markets. How much of that was inflation-driven, you would say? I mean, we don't disclose the hyperinflation countries, although those are small countries. We're talking about Argentina there. But if we look at the growth, I mean, we had double-digit growth in Automated Solutions. It is true that CIMA is now considered as organic since we incorporated them in October 2023, but we still had a double-digit growth in Automated Solutions. And then the rest was International business, as we already spoke. All right, thank you. One last from me, and you talked about it a bit here in the call, but can you add some more flavor on the capital allocation decisions, mainly regarding buybacks and acquisitions, how we should think about that near-term here? Sounds like the base case is that you will not do any more buybacks here. No, that's not right. I mean, what we're saying is that our capital allocation strategy remains the same. We're going to keep investing in the business. We have our dividend policy. We are very active. We're going to be active on the M&A side. And if that M&A doesn't come up really near-term, we will continue doing share buybacks. All right. And near-term, do you mean in the coming like three to six months, or how should we think about potential acquisitions in that regard? Yeah, that's right. Three- six months. Okay. Great. Thank you. That's all from me. Thank you. And the next question comes from Suhasini Varanasi from Goldman Sachs. Please go ahead. Hi, good morning. Thank you for taking my questions. Just a couple from me, please. I think in your prepared remarks, you talked about some one-time benefits from tariffs. Can you maybe provide some more color on what happened, and can you help quantify the level of the benefits that you saw on growth in Q4? The second one is on margins. It came in quite strong in Q4, especially in Europe. How should we think about group margins in 1Q and for the full year? Can we expect continued improvement year over year? And maybe just if I have the time, working capital has probably been quite strong for two years now, despite the strong top line. How should we understand the movements in working capital linked to different verticals and business lines that strengthen Automated Solutions help you achieve better working capital in the cash flow statement? Thank you. Let's see if I can start. I mean, there were several questions there. Let's see if I can recap, and then I'll pass along to Johan so that he can talk about the working capital. But when it comes to International, I mean, the situation with the U.S. increasing tariffs has brought additional one-time volumes in the quarter. We also have a new facility in the U.S., mainly dedicated to our storage business. So although international is not back yet, it has been a good quarter. So we do see light in the tunnel. Hopefully, this business line will have better business climate in 2025. You had a question regarding the margins as well. Yes, just margins. How should we think about it for 1Q and FY 2025 full year? Yeah. Yeah, we talked about this two months ago, and no change has been made there. I mean, we talked that during the strategic period, we were going to be between 12% and 14%, and we stick to that. On an annual basis, we will be within that range and then end up at the mid-upper part at the end of the strategic period. So we stick to that when it comes to 2025 as well. Thank you. All right. Hi, Johan here. You asked about working capital. First, I do want to highlight that the most important piece around our cash flow is actually how we were able to increase our operating result and that we're continuing to rationalize our CapEx spend. But then within working capital, I mean, there's no major movements right now, and I see further opportunities to keep that in control. We just don't have the typical things about receivables and payables and inventory. We also have a bit of a cash stock in this business that we can optimize. Thank you. Then the next question comes from KJ Bonnevier from DNB Markets. Please go ahead. Yes, good morning, Aritz, Johan, and Jenny. Congratulations to solid finish to 2024, no doubt. Thank you very much. And a couple of questions from me. And first, looking at all these one-offs that came through in the quarter, if you just could detail your thinking about what you did in Loomis Pay, what you did in the U.K. with the goodwill write-down, and similar kind of things, the business logic, so to say, that you see between the different. All right. So as Aritz alluded to in explaining the quarter in his summary, I mean, the U.K. goodwill topic is part of our annual impairment testing, so that's normal business, I would say. And then you had the. I can step into the LDS one. So as we explained in the Capital Markets Day, one of the changes that we've done in our Loomis Pay strategy is not to continue developing ourselves, the POS side of the business. And it's more about reaching out, having partnerships, or even being active in the M&A on that side, which would allow us to adapt locally to the different local requirements in the countries where we would expand. And maybe the last one is around the legal case in Denmark that has been ongoing for a number of years. And what happened in the quarter was that we were granted a leave when it comes to the appeal to the Supreme Court for a part of that claim, but not the other one. And then hence, we decided to come up with a starting estimate for that claim that we did not get a leave for in terms of appeal. Did that explain the one-off items? Excellent. Makes full sense. And on the new SME Pay part of it, is there any revenues that are to be restated from the other business segment into Loomis Pay SME as you go forward, or is this just forward-looking kind of change? Not really as we see it right now, because what we're going to do is that we're going to allocate new sales to SMEs towards that segment and not restating prior year sales. Okay? Excellent. And you mentioned, Aritz, that good progress in the U.S., no doubt, when you're looking at it. Do you see that it's the market that is driving this when you see growth in all the different verticals for the moment, or is it you taking market share? As we explained in previous quarters, we still keep taking market share. And that's the same situation this quarter as well. No changes there. Excellent. And looking at Europe last term, you mentioned getting back towards historical kind of performance. What are the main building blocks? Obviously, a couple of years back, that operation were up towards 14% margins, so there's still a big gap to get back to that level. Is that a relevant level to start with? And then what are the building blocks, basically? That's a relevant level. The building blocks, I mean, one of them is all the work that we've been already doing on looking into these efficiency programs in the different countries. After that, it's going to be, as we talked in the Capital Markets Day, a strategy around where we should be or where we should not be, where we can be profitable or not. And based on that, we will try to drive to the margins that we had in the past. Excellent. And Johan, you mentioned the tax rates obviously had a positive impact on the EV part in the U.S. What would be your guidance for this year? And maybe also on CapEx, what would be your guidance? It's obviously hard to say. It depends a bit around what happens to these EV initiatives under Trump's leadership, etc. But obviously, we expect it to be slightly higher than where we ended the year. So let's say mid-range, mid-28 something. I think is a good starting point. In terms of CapEx, obviously, it can vary by quarter, but as we talked about in the Capital Markets Day, we expect this to be at 5% of sales or in that range. And yes, we were a bit higher in Q4, but again, we don't measure this on a quarterly basis. We will continue to rationalize. Excellent. Thank you very much, and all the best out there. Thank you very much. As a reminder, anyone who wishes to ask a question may press star and one at this time. And the next question comes from Viktor Lindeberg from Carnegie Investment Bank. Please go ahead. Yes. Good morning. Thank you. Starting on Europe, I noticed you had quite solid growth across most countries, both Sweden, France, looking at Spain. But one country that actually stands out is the U.K. According to my guesstimates here, you grew by about 20% organically in that country. So first question here, what is behind this growth? And second, looking at the impact from Turkey and Argentina as having an impact on the entire segment growth, could you single out the impact from those high inflation countries together with the U.K.? I'll take the U.K. one and leave the hyperinflation countries to Johan. But on the U.K. side, I mean, it's just new customers coming in. We had important customers coming in in that country, and that has brought the revenues up. They've been very active on the sales side in that case. That's clear. Just before, Johan, so that may be creating a good contract portfolio for the coming 12 months then in the U.K., thinking about the run rate and growth. It was not. Okay. Yep. Correct. Yeah, that's correct. On the hyperinflation question, typically, we don't report the figures excluding hyperinflation because this keeps varying depending on the inflationary development in a couple of these countries, etc. Certainly, it has an impact, less on the group level and slightly more on the EUL level. But I'm not going to call out a number because it keeps varying between quarters. Okay. Just Just to clarify, I think you were pretty straightforward, Aritz, on the buyback and why or why not. More formally, you have in the past been issuing press releases when you intend to do buybacks for the coming quarter. I'm not sure that's a regulatory requirement, more of a FYI, nice to know. But if you were to continue to buy back shares going forward, will you continue to do these press releases, or would you also consider just to do it ad hoc without sort of letting the market? We will continue doing the press releases. Super. Okay. Looking at the U.S., zooming in on Cash in T ransit, according to my numbers, you are now zero growth in the quarter. So FX suggested it seems that you're flattening out after having been at 1%-2% in the recent quarters. So just to understand, is this end market volume being flattish, competition, or perhaps cannibalization within your business lines as you're growing faster in some of the other segments in the U.S.? So just to understand the flattish development there. I think it's a mix of all the things that you just mentioned. But I mean, the comps are getting more complicated. I mean, we're all-time high all the time, and the comparables are very difficult. I think there's still room to grow, but you do have a certain part of the business moving into Automated Solutions as well. So it's a mix of all the things you mentioned. Okay. I'm looking at the net debt evolution. It was up sequentially compared to Q3, and your leasing assets are growing by 25% also sequentially, whereas your cash flow was obviously strong. But just to single out, how come the leasing assets grow this much? And obviously, then, is that the main driver for the net debt being up despite solid cash flows in the quarter? It is true that it is increasing. As you know, we have quite a bit of our lease debt in the U.S. And given the exchange rate development, we get quite a big impact from that at year-end. So almost half of that is related to FX, actually. The other one is actually more driven by a catch-up effect around our lease schedules in the U.S. Okay. Thank you. Finally from my side, you had some goodwill impairments, but you're also, and this is not the first time you have goodwill impairments, although not being sizable. But you're also talking about M&A going forward now, maybe more active than what it has been in the past two, three years. Just to understand the rationale for this impairment, is this a reflection of the end market growth outlook, maybe operational performance, or just simply discount factor that led to this goodwill impairment? Good to know, just to understand the M&A potential also going forward or the risks associated with that. I think related to the U.K., it's a pretty standard exercise that we're doing. And obviously, all of the effects that you explained here around the WACC, etc., have contributed to that impairment from a U.K. goodwill perspective. On the Loomis Pay side, it's different, right, and more aligned to what Aritz was explaining about the strategic change around how we develop or not the POS ourselves. Yeah. Okay. And should that lesser internal development of R&D and maybe R&D depreciation now in Loomis Pay suggest better bottom-line development, just statically from this impairment and the change of your strategy? That is correct. Yeah, you're right. Is there any quantification on this, call it static impairment, that we could elaborate on? Tens of millions or just minor single-digit millions per quarter that we should be mindful of here? I don't have any numbers right with me here, Viktor. We can follow up that offline. All right. Thank you. Ladies and gentlemen, this was the last question. And now I would like to turn the conference back over to Aritz Larrea for any closing remarks. Thank you very much all for listening in. Please reach out if you have any follow-up questions. Bye-bye. Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye. Goodbye.