Loomis AB (publ)

Ladies and gentlemen, welcome to the Loomis Q3 2026 Report Conference Call. I'm Moritz, the Chorus Call Operator. I would like to remind you that all participants will be in the 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 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, sir.

Thank you very much, and good morning, everyone. Welcome to Loomis' third quarter 2026 presentation. My name is Aritz Larrea, President and CEO of Loomis. Joining me here today are Tobias Hagglov, who took over as our CFO in September, and Jenny Bostrom, our Head of Sustainability and Investor Relations. I'll start with the highlights of the quarter and then take you through our segments and financial performance before we open the line for questions. We delivered a very strong third quarter with record high revenue, operating income, and operating margin. Revenue exceeded 8.1 billion Swedish kroner with currency adjusted growth of 6.6%. Our international business line had another strong quarter supported by continued demand for transportation and storage of precious metals and other valuables. We also delivered another quarter of double-digit growth in automated solutions as retailers continue to automate and outsource more of their cash handling. The strong development in international and automated solutions over several quarters is also gradually changing our business mix. These businesses are becoming a larger part of the group and increasing our diversification. This is very much in line with our strategic priorities. We increased our EBITDA margin by almost two percentage points year-over-year to about 15%. This represents the highest margin in our history, and I'm pleased to see that the execution of our strategic priorities and the efficiency initiatives we have implemented continue to support margin expansion. On a rolling 12-month basis, our operating cash conversion was 84%. In the quarter, cash conversion was lower, mainly due to higher working capital as we grow, particularly in automated solutions, as well as some timing effects. Moving on, I would like to highlight our recent acquisitions, strengthening our footprint in Latin America, a region characterized by high cash usage and attractive long-term growth opportunities, which we highlighted at our Capital Markets Day. In July, we doubled our operations in the Argentina by acquiring Transportadora del Interior. We have now a presence in the Argentina's three largest and economically strongest regions. The acquisition has already had a positive impact on LUMI's Argentina's performance in the quarter. Most importantly, in October we completed the acquisition of Hermes Transportes Blindados, the most significant acquisition in LUMI's history. Hermes is the market leader in secure transportation and cash management in Peru. It has around 1,000 customers and more than 3,000 employees. In 2025, Hermes had a revenue of approximately 1.2 billion Swedish kronor. The enterprise value of 4 billion corresponds to 6.6 times adjusted EBITDA multiple for 2025. With that, let me turn to Europe and Latin America. Europe and Latin America delivered another solid quarter, with a revenue of almost 3.8 billion Swedish kronor and currency-adjusted growth of 3.8%. International was the main growth driver, up more than 25% compared with last year, as demand for transportation and storage of precious metals remained strong. We also saw good growth in automated solutions, while APM returned to growth. However, our foreign exchange business slowed following a very strong third quarter last year. EBITDA increased to 510 million Swedish kronor and the margin improved to 13.4%, reflecting a favorable business mix and continued efficiency improvements. Let me now turn to the U.S. The U.S. delivered another very strong quarter. Revenue reached a record 4.3 billion Swedish krona, with currency-adjusted growth of 8.4%, and the organic growth was 8.1%. All business lines grew compared with last year, with particularly strong development in international and automated solutions. Higher fuel prices and the related price indexation also had a positive impact on the organic growth. International benefited from continued demand for cross-border transportation of precious metals, and automated solutions delivered another quarter of double-digit growth. A good example of this momentum is our partnership with a large U.S. retailer which plans to deploy LumiSafePoint SmartSafe across its network of stores. Installations are already underway. This partnership illustrates the broader opportunity we see as large retailers increasingly automate and outsource their cash handling. The operating income increased to 834 million Swedish kronor, reflecting revenue growth, a favorable business mix and the continued effects of our efficiency initiatives. The EBITDA margin was above 19%, a new record for us. Now let me move to the SME and pay segment. Revenue in SME pay increased to 100 million Swedish kronor in the quarter. Thank you very much. The broader SME business is developing well. We are growing our customer base and seeing increasing interest in our combined cash and digital payment offering, including areas such as sport arenas and healthcare. I'm confident that our strategy to focus on SMEs is the right one, and we continue our work to scale the business and improve profitability. Let me now turn to sustainability. We are advancing our sustainability initiatives. Our new branch in Bordeaux is a good example of how sustainability and operational efficiency can go hand in hand. By bringing previously separate operations together, we have improved both operational efficiency and optimized our routes. The facility also incorporates renewable energy, electricity, HPO-powered vehicles, and a water recycling system. Looking at our targets, we continue to reduce our Scope 1 and Scope 2 emissions despite business growth. On a rolling 12-month basis, they were almost 28% below our 2019 baseline. A key driver is the switch to biofuel, where HBO now accounts for close to 8% of our total fuel consumption. On health and safety, we have made progress towards our targets, but of course, this is an area where we are never done. Employee safety is our highest priority and remains top of mind. Lastly, strong governance is fundamental to being a sustainable company. During the quarter, we updated our anti-bribery and corruption policy, further strengthening our work in this important area. With that, let me turn to the income statement, where I'll begin by highlighting that we delivered both strong currency-adjusted and organic growth and continue to improve profitability. This resulted in record high earnings per share of more than 10 Swedish krona, which is up 32% compared with the third quarter last year. During the quarter, we had restructuring costs related to efficiency measures in Europe. As we have discussed before, we continue to review our European branch network and see further opportunities to improve the efficiency of the organization. This work is ongoing and we expect additional restructuring activity in the fourth quarter. Let me also briefly explain the timing effect from the Hermès acquisition. We issued a €300 million bond in September, which means the additional financing cost was already included in the third quarter. However, we did not complete the acquisition until October, so at the end of September we were still holding the proceeds in cash. This is why our net debt to EBITDA was at 1.52 times at quarter end. Following the acquisition, leverage and financing costs will increase, but we expect to be leveraged relatively quickly back below two times net debt to EBITDA. Maintaining our investment-grade credit profile remains a key priority. With that, let's turn to the longer-term development. Looking at the longer-term development, We're making good progress against our strategic priorities. Growth has been strong and profitability has improved. We continue to position ourselves for long-term profitable growth, both organically and through acquisitions. On a rolling 12-month basis, our EBITDA margin is 13.7% in the upper part of our 12% to 14% target range. We expect to remain there for the rest of the strategic period, which ends 2027. At the same time, we should not extrapolate the margin expansion of individual quarters. As you know, business mix will vary and international, which has been particularly strong, is a more cyclical business. We also see a competitive pricing environment with customers becoming more price conscious and the broader social and economic environment could lead to some cost pressure, including on labor costs. On the positive side, RMS will be included in our reporting for the fourth quarter and will contribute to both revenue and profitability. Overall, we're very pleased with the performance and the progress we're making. We're delivering on the strategic priorities we set at our Capital Markets Day in 2024. I'm confident in our strategy and our ability to keep delivering profitable growth. This concludes my summary of the third quarter. Operator, we are now ready to take questions.

Ladies and gentlemen, 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 the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. And the first question comes from Jonsson Simon from HBG, Sondre Collier. Please go ahead.