Prosegur Compania de Seguridad

Good day and thank you for standing by. Welcome to the ProceGur Q1 2026 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cristina Casado. Please go ahead.

Good afternoon and welcome to the Prosegur first quarter 2026 results presentation webcast. Before we start, I would like to remind you that this presentation has been pre-recorded and that it will be available on our corporate website. I will now hand you over to our CFO, Maite Rodríguez.

Good afternoon and thank you all for your presence. We are pleased to present a strong first quarter with our main financial and operational indicators showing year-over-year increase and enhancement. This is clearly evident in our cash generation throughout the period. A special highlight to the performance of our security business is needed. as it continues to outperform and contributing to both results and cash generation. With this good start, we are confident that we are on the right track to comply with our main objective of generating value for our shareholders. Now, with all this in mind, let's deep dive into the most significant aspects of the period. Our top line grew by 1.5% compared to the same period of last year, and as it has been the case for some time now, was fully driven by organic growth. Indeed, the latter went up to 8% without considering the negative effects impact mainly stemming the Argentinian peso and the US dollar. As per the sustainability of the metric, it can be seen that all regions grew with a special highlight in the APAC region, where cash volumes continue to increase at very healthy levels. The same is true for the USA, country where our security business is currently focused. As for profitability, EBITDA stood at 87 million euros, pretty much in line with the previous year. As we shall later see, this is entirely due to cash business, which was negatively impacted by the macroeconomic environment and country-mixed dynamics. Our security business for its part outperformed last year's results, marking a 12.7% increase in EBITDA, driven by best-in-class operational execution and a clear commitment to geographic diversification. For our alarms business, as we will see, we are strategically focused on enhancing the profitability of new customer acquisitions. As outlined at the Alarms Capital Market Day, we have shifted our growth strategy towards quality growth, prioritizing lower churn and faster payback on acquisition costs. Thanks to an efficient working capital management and keeping infrastructure topics under control, operating cash flow totals 8 million euros, compared with the negative 19 million euros that we generated last year. It's good to highlight that the 27 million euros of additional cash were generated with virtually the same EBITDA, demonstrating the strong commitment of all business units to cash generation in order to reduce debt. As always, our main premise is to continue growing but always be mindful of leverage. Not only will reduce 28 million euros in total net debt, but our leverage ratio stands at a healthy 2.4 times level relative to EBITDA. Besides, our financial debt is both well-structured in the long run and cheap. We are confident that going forward, our leverage ratio should continue to go down, considering the seasonality of our cash generation throughout the year. I would like to mention a few relevant highlights in the period. From a debt perspective, the 600 million euros cash business bond was fully paid and amortized. At the same time, we entered into a 60 million euros loan agreement with European Investment Bank to finance specific initiatives related to digitalization of our operations. With this latest transaction, our debt is refinanced for the coming years. with more than 60% at fixed rates, providing balance sheet stability and resilience against potential and forcing impacts extending from the current geopolitical environment. Finally, for your awareness, we have decided to integrate our cyber business into our security business. We believe this is a natural step as the former will help expand the latter's current product suite. Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Discounting for the FX defect, almost the entire growth was organic, evidencing our strict policy when it comes to passing through inflation to prices. At the same time, volumes continue to grow, both in our most traditional businesses without exception, and most importantly, in our transformation products. Turning to geographic sales diversification, rest of the world continues to be the main growth driver. which is a natural outcome given the inclusion of both the US and other regions. As this trend continues to consolidate and we see no factors that should hinder it, it is expected to have a positive impact on the overall sustainability of the group. Latin American performance was primarily affected by the impact of currency devaluation and its effect on the geographic mix. Moving on to profitability, EBITDA reached 87 million euros, broadly in line with last year. The EBITDA margin remained stable at 6.8%. Let's now turn to our full P&L that, as it can be seen, showed a remarkable increase compared to last year. The performance all the way down to EBIT will be thoroughly explained when we discuss the performance of its business. However, as it can be seen, the drivers of the net income enhancement are both financial results and accrued taxes. As for the former, the increase is mainly explained by better FX results compared to the previous year. Going further down to accrued taxes, the astonishing close to 480 basis points reduction in the effective rate should be highlighted. The rationale behind this reduction is twofold. On the one hand, we have better results in all individual geographies, and on the other, negative results extending from hyperinflation, accounting and dividend upstreaming were significantly reduced. All the above led to a consolidated net profit of 33 million euros, achieving a 15.2% higher year over year. Let's now turn to cash generation during the period. As it can be seen, following the historical seasonality of the business, free cash flow reduced in negative 32 million euros that is 22 million euros higher with respect to the previous year. As mentioned earlier, after adjusting for volume sold, our cash generation capacity can be considered stronger than in 2025. This is evident when we take a closer look to the working capital requirements line. Indeed, compared to last year, it decreased by 23 million euros, driven primarily by our efforts to reduce BSO. Net financial debt reached 1.4 billion euros, resulting in a total net debt to EBITDA ratio of 2.4 times. It's worth highlighting that both the terms and the structure of our debt is very healthy, with an average cost at 2.9%, with a high percentage of our debt at fixed rates, providing protection against any macroeconomic uncertainty for the coming years. I would like to remark the 28 million euros reduction in net debt, achieved despite the typical first quarter seasonality, underscoring our strong commitment to deliver aging. We expect this positive trend to continue throughout 2026. That's all from me for now. I will now turn the presentation over to our Head of Investor Relations, Juan Ignacio Galliano, who will give you more detailed information on the development of the specific business areas.

Thank you very much Maite. Let's now have a look at the results of each business line covering the main performance indicators and most relevant aspects of the period. Starting with our cash business, I would like to reinforce the 3.2% of organic growth that we achieved during the first quarter. This increase comes not only as a result of rapidly passing through costs increased to prices, but more importantly volumes continue to grow, albeit at different paces depending on the region. That is why our diverse geographic footprint plays an outstanding role. Indeed, in the APAC region, volumes are growing at a healthy pace, compensating more mature countries where volumes remain quite stable. Compania de Seguridad Compania de Seguridad Compania de Seguridad It's worth remembering that the comparable base is especially demanding this quarter as the first quarter of 2025 results in Argentina were developed under a context favored by the tax amnesty. At a cash flow level, operating cash flow reached 18 million euros, 6 million euros higher than last year. This increase is mainly explained by working capital requirements as PSO were reduced. It is also worth noting that CapEx remained under strict control. Transformation products continue to favorably evolve, evidenced in the 36.4% of actual share of total sales. We are certainly benefiting from all CapEx deployed in both Cash Today and the Forex business. Needless to say, increasing the percentage in the context of higher sales deserves even more credit. Let's now turn to our security business, which continues to show a solid and positive evolution over time. Total revenues reached 685 million euros with the organic share reaching 9.6%. This is mainly driven by our volume-based strategy that leads to operating leverage, our capacity to pass through inflation to prices, and the outstanding performance of the operation in the U.S. The U.S. indeed has become the second largest country by revenue in the first quarter, and although pricing still needs to be reviewed in other markets, this is a positive indicator of its growth potential. All the above, coupled with enhanced efficiencies, absenteeism management and operating leverage resulted in total EBITDA reaching 19 million euros, 13% higher compared to the same period of last year. This is by every means impressive considering the volume-led nature of the business. Margins, for their part, continue to increase reaching 2.8% during the first quarter. However, the increase will be less significant over the course of the year. Nevertheless, Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Let's now turn to the alarm business where, in line with what we anticipated our last investor day, we are pursuing a strict control with the new clients that we are incorporating with the only objective of increasing returns and thus reducing paybacks. Let me go through the strategy in detail as it has a direct impact on the operating indicators in the quarter. The first thing we've decided to do is to increase the acquisition price. This is the amount that every new client must pay to partially cover the acquisition cost, namely materials and labor. The idea behind this is twofold. On the one hand, to reduce the net acquisition cost, which has, as you can tell, a direct and positive correlation with payback. On the other hand, the acquisition price is significant and relevant variable when explaining churn rate. Indeed, the more the client pay up front, the less inclined the churn he or she will be, other things equal. This naturally has another relevant impact in reducing payback periods. The other thing that we've done has to do with internal process, but it's worth explaining it as it accounts for the increase in churn rate, at least in row. Indeed, we've reduced by 30 the number of days of late payments after which a client is deemed at risk, triggering the cancellation of the service. This led to an increase in what we call involuntary churn, with growth, the total churn rate to 13%. Having explained the new business model, let's now deep dive into the performance of the main financial and operational indicators. Our client base totaled 1.1 million, marking an 8.9% increase year over year. In our raw business, the reduction in the number of new clients is mainly due to the increase in the acquisition price, as we already mentioned. ARPU in raw was negatively impacted by the depreciation of the Argentinian peso and by the fact that last year we anticipated much of the yearly price increase into the first quarter. Compania de Seguridad following a push strategy sets the virtuous cycle in motion leading to a multiplication effect. At the same time, in the case of Rowe, it is also true that following our already mentioned strategy, the number of new clients were reduced, thus impacting in our ability to dilute fixed costs. Let's now turn to the following slide to see how all these indicators merge into recurring cash flow. In the charts above, what we are showing is the 12-month rolling recurring cash flow of both Procedura Alarms and NPF. Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Thank you all for your attention. I will now hand the microphone back to our CFO, Maite Rodriguez, for her closing remarks.

Thank you very much, Juan Ignacio. To finish today's presentation, let me go through some relevant news that I want to share with you. Indeed, we continue to deliver on our strategic priorities across both sustainability and innovation. The recent upgrades in our MSCI and EcoBuddies rating highlight our progressive track record increasing ESG maturity and reinforce our commitment. As mentioned before, in parallel, we have bolstered our capital structure through a 60 million euros fixed rate loan from the European Investment Bank, marking our second partnership with the institution. These funds are strictly earned market to drive our digital transformation and R&D and I projects, ensuring we remain at the forefront of the industry while meeting the highest international standards. To conclude, the first quarter confirms the strength and resilience of our business model. We deliver solid operations performance, maintaining a stable profitability despite macroeconomic headwinds, with growth-based growth across regions and particularly a strong momentum in security. At the same time, tax generation has significantly improved, allowing us to reduce net debt even in a seasonally weaker quarter, clearly demonstrating the group's enhanced focus on tax discipline and balance sheet strength. Our financial position remains robust, Compania de Seguridad and advancing our transformation through technology and digitalization. The integration of cyber into security is a clear step in this direction, strengthening our value proposition and unlocking additional synergies. Looking ahead, we remain firmly focused on disciplined growth, Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad

to ask a question, please press star one one on your telephone and wait for your name to be announced. To answer your question, please press star one and one again. We will now take our first question from the line of Manuel Lorente from Santander. Please go ahead.

Yes. Hello. Good morning. So probably my first question is regarding the ¿Puedes darnos un poco más de información sobre el despliegue geográfico o el despliegue de volumen versus precios o incluso el crecimiento subyacente excluyendo And my second question is whether you can explain again this, let's say, momentary increase in churn rates from these involuntary churn new policies.

Thank you Manuel. In relation to your first question about the growth of security, I think that the most remarkable growth is coming from USA. It's also doing very well in Spain, but in USA we are growing double digit, so it's mainly coming from there. In terms of volume and prices, now Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad and in terms of how much is coming from cyber security, it's zero. So the EBITDA of cyber this quarter was zero. But we are very happy of how security is evolving, not just because of the double digit growth of USA, but also because of the cost pass through into prices that we are also doing very well. Compania de Seguridad Compania de Seguridad Compania de Seguridad And we will continue on this same track, and that's also a very, very positive thing. And also, the cash generation, that is the first time that in the first quarter, although we didn't pass 100% of the cost into prices, we are in a break even in zero. So that's a very good news. And in relation to your second question about the increase in the involuntary chance rate, Juan Ignacio explained it in the presentation but I'm going to explain it a little bit again just in case someone didn't get it and that's why I appreciate your question Manuel because here we have changed our strategy. From one side, we have increased the acquisition price has increased. So that means that the more the client pays us from, the less inclined to turn will be. So that is going to, in the future, is going to reduce our turn rate and it's going to improve our payback but now we are in the, let's say in the worst scenario because we will have to wait to have a very good quality of portfolio in the future with that good churn rate that will come because of increasing the acquisition cost, the acquisition prices, sorry. But we also have changed the involuntary term policy. So what we have done is we have decreased 30 days of late payment after which a client is considered at risk, triggering the cancellation of the service. So that means that we are going to have a higher term than expected and that's why if we compare it even with the guidance that we did in the Capital Market Day, we are higher in terms of turn rate, but mainly it's coming because of that, because of changing this policy, trying to be more strict in what we internally consider risk BTC. So in this sense, What we think is that for year-end, we are not going to have a higher term than the one that we have now, so we will just have good news in that sense. But now we have just adapted the new policy, so we have this kind of one-off in the BTC. And that's why the term has also been increased.

So, let's say that the trend rate has increased because a combination of two things. First, is this technical thing, so to speak, at the base of clients as we have diminished by 30 days. And then we have the strategic shift, let's say, from a more premium type of client and increasing the upfront payments, blah, blah, blah, blah. So, Let's say that the technical churn increase, I agree with you that it might be something that might last for a shorter period of time. But let's say the more a strategical shift on the policy of the company, you also believe that it might end up the year with a similar churn rate in the rest of the world band in 2025? Is that soon or we might see some, let's say, we might need a little bit more time to adjust the combination of those two factors.

It's going to take time. For example, in the second queue, you will see that the churn is not going to decrease, but in the third and fourth queue, it will decrease because the sales force also needs to be used to try to sell now at the beginning remember that we used to sell in some countries at zero cost and now we have increased that as front amount so that needs to change they need to be adapted to this new commercial strategy and that's why first queue and second queue are going to be hard in that sense Compania de Seguridad and in the case of MPA between nine and 10, something like that.

Okay, very clear. Thank you.

Thank you. We will now take the next question from the line of Alvaro Bernal from Alantra. Please go ahead.

Hi, thank you for taking my question. I have a couple. The first one is in security. I'm sorry to go back again. I just want to confirm if you see the organic growth levels being maintained throughout the year. Because if so, logically, the FX hit will be lower from now on, especially when comparing the U.S., and therefore growth rates... should be significantly higher and I just wanted to confirm that and then also in security I was surprised by the comment that Juan Ignacio made that you expect the EBITDA growth to be less significant throughout the year if you can develop on this it would be very helpful that's my first question and then The second one is just if you can give us a bit more disclosure on the others. EBITDA line last year, by differences, we could see 8 million. This year, it has been 12 million. And I just wanted to know the breakdown a bit better. I'm guessing it's alarms that has been driving the improvement, but a bit of disclosure would be helpful. Thank you.

Thank you, Álvaro, for your questions. In relation to security business, now the growth was 9.6%. For the year-end, I think that it's going to be slightly smaller than that figure, but we will Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad

let us know what has driven the improvement when you compare year on year because it has gone from 8 to 12 and I just want to know if it's being driven by the PGA which we saw that it was volatile last year and there was a rebalancing in Q4 and basically I want to be able to know if this is going to be the same this year or if there is an underlying improvement in some other place, for example, alarms.

Okay, understood, Alvaro, thank you. No, it's mainly coming from NPA because the service margin has improved. So that has made, I do not have exactly the figure of NPA, but I know that it has been improved Thank you.

Thank you. We will now take the next question from the line of Carlos Torres from CaixaBank BPI. Please go ahead.

Hi, good morning. Thanks for taking my questions. I've got three, if I may. First, could you share the cause of the 60 million financing secured with the European Investment Bank, or at least indicate whether it's above or below your current average cause of debt? I think it was 2.9%. I mean, just to clarify, I don't see it booked in balance sheet yet. Should we think of it as an incremental debt? or as a refinancing of the prior 50 million facility once it goes into the ownership. That is the first one. Second, on cash flow, you mentioned the leverage ratio of 2.4 that should decline throughout the year. Do you have a target in mind, perhaps closer to two times or alternatively in absolute terms after the roughly 36 million increase in net debt this quarter, Should we expect positive free cash flow by year end? Third one, also follow up on alarms. Last year you mentioned that acquisition costs should normalize or even decrease in 2026. Now you mentioned higher marketing expenses. So how should we think of this going forward?

Thank you Carlos.

In relation to your first question about the refinancing debt that we have with the European Investment Banking, the cost is 3.2% and it's done for the next six years. In relation to, and it's not new debt, it's refinancing with a higher amount. In terms of the second question of the cash flow, we are now in 2.4 times. For year end, we do not expect in absolute terms to decrease it, but yes, in relative terms. What I mean is that that 2.4 should decrease. Because the cash flow, the business cash flow for this year should be higher than last year, much higher than last year, mainly coming because the BFO, we are really doing well. That's why even these first few, you could observe Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad Compania de Seguridad in the volume of security, that now security is a very good cash contributor for the group. But if we grow a lot in the last two, three months of the year, sometimes because of the volume, we also have an impact in our working capital. But it should be a much better cash flow than last year, with a very good management in working capital. and that's why in relative terms should decrease. And in terms of the subscribing acquisition cost of the alarms, we are investing in marketing. We are increasing a lot that expense. And again, with this new strategy, we are growing less. So we have less scalability in our sack. So that's why the stock is also increasing from one side because we are not having that scalability and from the other one because we are keeping the marketing investment.

Thank you. As a reminder, to ask a question, please press star 1 and 1. That's star 1 and 1 to ask a question. There are no further questions at this time. I will now let down the coffers back to Maite Rodriguez for closing remarks.

Thank you very much for attending this presentation. If you need further information, please contact our Investment Relations Department, who is open to talk to you at any time. Have a nice day.

This concludes today's conference call. Thank you for participating. You may now disconnect.