Loomis AB (publ)

Ladies and gentlemen, welcome to the Loomis Quarter 1, 2026 conference call. I'm Lorenzo, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conferences be recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. 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 first quarter of 2026 presentation for Loomis. My name is Aritz Larrea, and I'm the CEO of Loomis. And with me here today, I have our CFO, Johan Wilsby. and Jenny Bostrom, our head of sustainability and investor relations. I'll start by providing a quick summary of our first quarter before opening for questions. Let's start the presentation by turning to slide number two. We delivered a strong first quarter with revenues close to $7.5 billion through this corona, despite an 11.6% negative impact from changes in exchanges rates. Currency adjusted growth reached 9.7% sorry, 9.3%, with both strong organic growth and contribution from acquisitions. During the quarter, we saw very strong growth within the international and FXCS business lines, driven by increased demand for the movement of precious metals, partly due to geopolitical uncertainties. We also continued to deliver strong growth in our automated solutions business line. We increased our EBITDA margin by one percentage point year over year to 12.6%, This represents our highest first quarter margin to date, and I'm pleased to see that the restructuring and efficiency initiatives we have implemented support the margin expansion. We delivered another quarter of strong operating cash flow, with a cash conversion of 95 percent over the role in 12 months. On a quarterly basis, cash flow was slightly impacted by higher working capital, but remained at a solid level with 84 percent conversion. This robust cash flow enables us to continue investing in the business while also delivering attractive returns to our shareholders. I'm also proud that we have been the first in our industry to have our climate targets validated by the science-based target initiative. I will come back to this later in the presentation. Yesterday, the annual general meeting approved the ordinary dividend of 15 Swedish kronor per share and the extraordinary dividend of 5 Swedish kroner per share. This means we will distribute over 1.3 billion kroner to shareholders next week. I would also like to highlight that today is the ex-dividend date. Finally, earlier this week, we announced that we had entered into a share tender agreement with, among others, CBC Capital for their shares in Hermes Transportes Blindados, marking our entry into Peru. the transaction will be carried out through a public tender offer. I will spend some time on this acquisition after summarizing the first quarter performance. Turning to the next slide to go through Europe and Latin America. Our Europe and Latin American segment delivered a strong performance in the quarter with revenues of $3.6 billion through this corona. We achieved organic growth of 6.6%, which was particularly strong considering the communicated revenue decline in the ATM business line. The uncertain geopolitical climate has increased global demand for secure logistics and the management of physical assets such as precious metals. This has positively impacted both our international and FXDS business lines, with the international business line growing by over 30% in the quarter compared to prior year. We also achieved double-digit growth within our automated solutions. The operating margin increased close to one percentage point to 10.2%, demonstrating that our focus on operational efficiency yields positive results. Let's move on to the next slide to talk about the U.S. The U.S. segment delivered another strong quarter. Adjusting for currency impacts, the U.S. achieved record high revenues. Organic growth was 5.3%, and the acquisition of boroughs contributed positively to overall growth. The international business line, in particular, delivered strong performance, which was driven by an increased demand for cross-border movement of precious metals. As you know, we have had double-digit growth, organic growth, within automated solutions for many quarters in a row, and this trend continued also the first quarter, with an organic growth in the mid-teens. We also saw that price indexation related to higher fuel costs in March 2020 following developments in Iran, contributed positively to revenue in the first quarter. Despite significant currency headwinds of 15.2%, the business achieved record-high operating profit of over 700 million Swedish krona. The operating margin reached 17.9%, marking a new record for us. Our operational efficiency initiatives continue to deliver results, enabling us to grow the business without increasing headcount. At the same time, we have maintained a high service quality and strong customer satisfaction. The volume growth, combined with improved efficiency, contributed to the expansion of the operating margin. The precious metal storage facility in Canada, acquired at the end of 2025, has been successfully integrated during the quarter and contributed positively to profitability. In addition, the sale of a facility and relocation to a new leased site had a slightly positive and non-recurring impact on the margin. Let's turn to the next page and talk about SME pay. Revenues in the SME pay segment increased to 72 million Swedish kronor in the quarter. More than 45% of this revenue now comes from new small and medium-sized customers, demonstrating that our strategic focus on SMEs is driving both growth and improved operating results. The reduction in the operating loss compared to the previous year is in line with the segment's strategic priorities. The migration to new POS platforms enables Loomis Pay to focus on larger SME customers across additional verticals. As part of this process, Loomis Pay has chosen not to migrate non-profitable customers, which has some impact on settled transaction volumes. Let's now move to the next slide where I'll share a few updates on our sustainability progress. We continue to make solid progress against our carbon emissions reduction plan. During the first quarter, our use of biofuel HVO increased by 10 percent compared to the same period last year. Today, 40 percent of the group's total electricity consumption comes from renewable sources, reflecting our ongoing efforts to transition to cleaner energy. Year over year, our combined Scope 1 and Scope 2 emissions have increased slightly, primarily due to the acquisitions completed in 2025. However, when compared to the fourth quarter of 2025, we have achieved a meaningful reduction, with scope one and two emissions down by 3%. Safety remains an equally important priority for Loomis. We have set a target to reduce our recordable work-related injury rates by 10% by 2027, compared to 2024 levels. On a rolling 12-month basis, we're performing slightly better than this target level. Protecting our employees and further reducing workplace injuries remain key priority for the company, and we will continue to maintain strong focus on both safety and continuous improvement. Let's move to the next slide, where I'm pleased to share that the Science-Based Target Initiative has validated our new emissions reduction targets. Our new targets address both our direct emissions and indirect emissions across our valley chain, reflecting a comprehensive and responsible approach to climate action. With this, we cement our role as the industry leader within sustainability, showing that it is possible to reduce our environmental footprint and deliver critical infrastructure at the same time. We are now taking a leading role in transforming the industry towards a more sustainable future. Now let's turn to the income statement slide, where I'll begin by noting that despite the significant negative impact from exchange rate headwinds, we achieved both strong currency adjusted growth and organic growth. Our net financial items have improved compared to the previous year, driven by lower financial expenses as interest rates have declined. Our strong performance has resulted in record high earnings per share, despite the currency headwinds. I would also like to highlight that our net debt to EBITDA ratio is stable and well below our target of staying under two times. With the acquisition of Hermes, net debt to EBITDA is expected to temporarily exceed two times following completion. However, this increase is short-term, and leverage is expected to come down within six months. We remain fully committed to maintaining our investment-grade credit rate Now, let's move on to the next slide to review our performance in a historical context. As we can see, we have a stable and resilient business model that continues to deliver. Looking at the rolling 12 months, we have achieved a record high operating margin of 12.9%. Despite significant currency headwinds, we have maintained revenues at 30 billion Swedish krona. Currency-adjusted growth for the rolling 12 months was 7.2%. slightly above our growth target for the strategic period. Moving to the next slide, before opening for Q&A, I want to spend some time on the intended acquisition of Hermes Transportes Blindados. Earlier this week, we announced the intention to acquire Hermes, marking our entry into Peru. For many years, Lumis has operated in Argentina and Chile, and we have continuously explored opportunities to expand our business in Latin America. As you know, this is one of the strategic priorities we presented at our Capital Markets Day in 2024. And Peru is one of the countries we have been closely monitoring. It's an attractive market for Loomis, one of the fastest growing economies in the region with high cash usage and a stable macroeconomic framework. Hermes is a market leader in secure transportation and cash management in Peru with around 50% market share and a diversified base of approximately 1,000 clients and about 3,200 employees. The transaction values the business at an enterprise value of 1,450 million Peruvian soles, with an adjusted EBITDA multiple of 6.6 times. We have entered into a tender offer agreement with CVC Capital Partners and other minority shareholders who together hold 99.5% of the share capital. Loomis will conduct a public tender offer to acquire up to 100% of the company's shares. We expect to launch the tender offer during Q2 or Q3 with closing of the acquisition during Q3. From an earnings perspective, the acquisition is expected to be immediately accretive to earnings per share. Overall, this acquisition strengthens our position in Latin America and is a strong strategic fit for Loomis. It aligns well with our growth ambitions within both automated solutions and the international business line. This concludes my summary of the quarter. Operator, we are now ready for questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered in the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioner on the phone, I request to disable the low speaker 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 Johnson Simon from ABG Sandal Collier. Please go ahead.