Loomis AB (publ)

Thank you very much. Good morning, everyone, and welcome to the first quarter presentation for Loomis. As mentioned, I'm Patrick Andersson, CEO of Loomis, and with me here today, I have Christian Ackerby, CFO, and Anders Håker, who is the Chief Investor Relations Officer. I will give a short overview of the quarter and then open up for questions. So let's start the presentation and turn to the next page, and that is the disclaimer page. So let's quickly turn over to the next page. Usually, I do a couple of comments when it comes to the cash market, so I'm not going to go through all the points on this slide, but just a couple of comments from my side. Of course, we still see that cash in circulation continues to grow both in Europe, a lot in the US, as we have seen over the last quarters of years. The tragic war in Ukraine has increased the demand for cash in many countries. And we see that, for instance, the withdrawals from ATMs are increasing in several countries. And just to mention Sweden, as we're sitting in Sweden, withdrawals from ATM has increased by 30% in this country, and that goes for many countries across Europe. We also see an increasingly intense political discussion about the role of cash in society, and many politicians and lawmakers realize that it's important to protect cash in different aspects. And cash is important for many people around the globe, just not the vulnerable people, but everybody in the world. But most importantly, new opportunities open up, both in Europe and in the US. One very tangible example is Safepoint in the US. which grew by 21% in the quarter. But there are many more opportunities like this in all business line. And so we see over the last couple of years that cash has proven to be very resilient to the changes in the payment landscape. And being part of the cash industry, we are now stepping up a lot of activities to protect cash and give cash a voice in the payment landscape. So then we turn to the next page, which are the highlights of the quarter. But let me just start by emphasizing that when it comes to the revenue, this is the best quarter ever from, as I said, a revenue point of view, even though we had some impact from the pandemic in the quarter. During the quarter, revenue picked up very strongly by the end, so we see a gradual increase as restrictions were loosened up. That's number one. Number two, as some of you might have seen, we released a press release this morning, and we're going to continue to repurchase Lumishare up to 200 million until June 2022. and you should see that as a sign that we very much believe in the business and also the future prospects of Loomis. Now if I then go back to the slide and let's start from the beginning. We first of all have no business in Ukraine or Russia and therefore there is no direct impact on Loomis when it comes to business. However, we have supported the Ukrainian people with different supplies but also given a donation to the Red Cross in Ukraine. We have also now decided on a date when I step down and my successor Mr. Larria is taking over and that would be on the 23rd of May of this year, so in a couple of weeks. has made a really good job as a CEO of Loomis US, which has developed very strongly during the last couple of years. We have also set new targets. In March, we had a couple of market day, and I'm not gonna go through the targets, but also these targets reflect a very strong belief in the business of Loomis. We also have made the, sorry, when it comes to acquisition in Switzerland, This is the main driver for the acquired growth, and it's progressing very, very well. And as I've said many times, Switzerland will be one of the most important countries when it comes to business for Lumis in the coming years. Organic growth was at 15% in the quarter. We see that travel and tourism have not fully recovered, but we expect that to pick up, and that will, of course, positively affect volumes in all markets. And as some of you have been going to airports, you can see that for yourself that more people are traveling and then also using cash, of course, or our FX services. When it comes to the operating margin, that was on 10%, and we see, of course, that the increased volumes combined with all the efficiency measures we have done during The last couple of years is now paying off when it comes to the margin. Operating cash flow was at 34%, but then you should keep in mind that Q1 21 was positively impacted by lower activities when it comes to capital expenditure. So that's no major thing for us. Let's then turn to the next page. And then, here you see the slide showing a good illustration of how the margin has developed over time. We had a low point in Q2 2020, but we have then had a strong recovery after that. So, as I mentioned, excluding limits to pay, the margin was at 10% in Q1 2022. Let's turn to the next page. So, when it comes to the segment, let's start with Europe and LATAM. Overall, a strong quarter when it comes to both revenue and margin, I would say. When looking at the top line, real growth was at 21%, and as I mentioned, the acquisition in Switzerland is progressing very well. Organic growth was at 15%, so the positive growth, which started at the end or mid-21, continued quarter by quarter into the first quarter and expanded month by month, as I mentioned. We see that a very strong recovery in the main markets in Europe like France, Spain, etc. Organic revenue reached 91% of Q1 2019 levels, which then is an improvement with one percentage point. And as I said, the highest growth rate was reported in March. March was very strong, and so we see that it is a sequential improvement of the volumes during the month. Operating margin at 8.7%. So all the hard work we've done when it comes to cost and optimizing the infrastructure is now paying off as volumes are coming back. So we also see that the synergies from the acquisition in Switzerland also gives good positive results. Let's turn to the next page and over to the U.S. Overall, a very strong momentum in the U.S. business. Organic growth was at 15% in the quarter, and we are now at 121% of the Q1-19 levels. And we see that if you compare to Q4-21, that the level was at 114, so a strong momentum, as I said. All business lines are improving and expanding, and the positive trend is expected to continue. Safepoint, which is really important for us, of course, grew by 21%. And now accounts for 19% of the revenue in the US. When it comes to the operating margin, that was at 13% in the quarter. So we have, as I said a couple of times, some structural shortages of labor in the US market, which then temporarily reduces the margin. That has to do with increased overtime, increased salaries, and investment in people and personnel in the U.S. business. And you should see that as a sign that we are now getting ready for more growth in the U.S. and it's an investment into the business and people to be able to capture that growth and both grow organically and take market share. When it comes to price increases, I got a couple of questions on price increases yesterday. We are fully under control with price increases and compensate for all the cost increases we are receiving, and that is already done in the US market. Let's turn to the next page and talk a bit about Loomis Pay. We are moving ahead with Loomis Pay. We are now launched in Denmark, Sweden, Norway. We are building up the sales organization in these countries to see that volume is increasing day by day, week by week through our platform. The preparations for rollouts of Loomis Pay in one more major or in a major market in Europe is underway and the ambition is to launch in a quite a sizable market then in Q3 2022. And we are then investing quite a lot of money, time and effort into the platform of Women's Pay and I've seen it myself many times and it's really state of the art when it comes to both software and hardware and the customer reaction we get back is very positive. So next step for Loomis Pay is then to be launched in one country in Europe coming up. Let's turn to the next page, which is the P&L, which we have as a reference, and there are no points I'd like to add. I've been through it in my presentation. So let's then turn to the next page, which is Q&A. I'm through with my presentation. Operator, we now open up for questions, please.

Excuse me?

Yes. Yeah, we open up for questions now, please.