Prosegur Cash SA Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manuel Lorente Ortega - Santander - Analyst : Hi, good morning. 2024 has been a year complicated in order to to address meaningful trends regarding the base effects on Argentina inflation on December last year. So I would really appreciate whether you can give us some indication of the 18% of organic growth that you delivered this year. Which one is coming from pricing, volumes and some indication regarding regions will be also great. Unidentified_6 Hello. Manuel, thank you very much for. I think 2024 has been a good year as you were saying. The growth has come as you said, 18%, and the growth has come mainly from 2/3, 1/3, we could say of a volume and [price, no. ]So I think we are going to deliver in 2025. I think we have a a a good outlook also for growth, I think we are going to keep delivering an important growth in the next year. I think it's going to be a very much driven by a strong core, which is going to be very close to To GDP growth and a very high things growth on the new products. So I think it's we are on the right trend to keep the growth. So I think the overall growth is going to be mixing the digit and EBITDA above that. Okay.

Question: Manuel Lorente Ortega - Santander - Analyst : Okay and then my final question on Asia Pacific, again things are evolving on the positive direction margins as deliver close to 2% on a yearly basis. Which is which is your long-term expectations from this business? This is something similar to Europe margins to Latin margins somewhere midway. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:30AM, CASHP.MC - Q4 2024 Prosegur Cash SA Earnings Call Unidentified_6 I think on that one, I think it's been this year has been a milestone. Because it's the first year we've been positive. I think it's something that is going to stay. I think in the very short time they are going to come to midway as you were saying not above in Europe and below Latin America. Hopefully in the midterm, we are able to improve them but I think in the very short term we are going to see, a very strong performance on Asia. I think sales are strong and EBITDA margin is going to be very, we are going to see a very step, a very steep improvement in the short term.

Question: Francisco Ruiz - BNP Para Exane - Analyst : Hi, good morning. I have 3 questions. The first one is on the use of cash and you have had a very good development on the pre-cash flow on that the last quarter, but for the whole year as well you have slightly increased your dividend but I mean if the cash flow generation continues in 2025 or theoretically would be a more normalized idea where you could deliver better growth. You are going to get, below the 2 times a week more or less. So what is the policy in terms of use of cash? Can we see the company will return to a more active and money role or it's just focus on trying to increase dividends and buybacks? The second question is in Europe. What should be with the current situation and geopolitical risk, etc. What should be the normalized margin for European business, not '25 but mid run for you. And last one is just kind of follow up on previous questions on the mind because we appreciate the the data that you give on the transformation initiatives. We see that new products are weighed more and more on on your sales but there is no major reflection in the margins. So I don't know how we should think on this transformation process. It's just a way to keeping sales growing with no profitability. It wins or or the profitability will come in the in the coming years. Thank you. Unidentified_6 Thank you about on the first question. I think our short term focus is to reduce [de] .We are going to have a very strong focus on reducing our debt levels in the coming, I think in the coming years. I don't think we're going to see more and I think in the core business there is no more important acquisition that could be very value enhancing for us. We already have the capabilities we wanted to have in the pros space. I think we have built strong capabilities on Forex and Corbana. I think now we still have a lot of organic growth to come from those capabilities and expanding on those capabilities. So I see a stronger focus on debt reduction and at the same time I'm trying to maintain a good. Determination for shareholder. I think this year we have grown 18%. I don't know if it's, sustainable to have a 18% growth year on year but we're going to, we are going to, put a cash on to it. But you ask me what is our primary focus is going to be debt reduction. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:30AM, CASHP.MC - Q4 2024 Prosegur Cash SA Earnings Call On the second question Europe. I think, Europe now is pretty much affected by two things. One was the German the German strike, I think we are putting the basis to have a stronger Germany. Which is our our largest country in Europe. And the second thing is where most of our Forex business is as we said we we've been investing a lot this year in trying to expand the business. We have, open more than 100 locations more or less 2 per week. So it's a very strong growth and has affected our profitability and that's pretty much a link to your third question. I think we wanted to pretty much capture in the opportunities that we saw in the market and now we should extract value of the growth we have done in. Mainly in Forex in Corban as well, I think Corban is going to improve profitability in in 2025 and I think Forex business should bring us some high, higher profit and we should see and it should impact the whole group on that front. I think all the investments that we are doing internally in the Forex business and one should give returns in the coming years that we should see an improvement of profitability in 2025 but mostly in 2026, 2020 and the years to come. I think we, the Forex business is a business that we have put a lot of money in 2024. We will put some in 2025. But in a much less in in a much less way, and we should see improvements of the results of this investment in 2025 and mostly in 2026. And the core of business should bring. Next we have signed two or three contracts, very important in Latin America in which we should we should see the important the important returns in mainly in 2026, but I think in 2025 we are going to we are going to see positive or earnings enhancing. Effects on the group at group level, so we should see some profitability uplifting on the margin side.

Question: Alvaro Lenze - Alantra Equities - Analyst : Hi, thank you for taking my questions. It has been partially responded already, but I'd like to deep dive in Argentina specifically. If you can tell us more about how the situation is there, how are you seeing volumes and how well are you being able to trespass prices and controlling costs. That would be my first question. And then regarding the second one you have talked about focus on debt level reduction. Is there a specific leverage you have in mind? And or an absolute net that number you're looking at. Thank you. Unidentified_6 And in the other situation. It's a situation, Economic situation which they are sizing now, right now, their inflation rate now is more or less 2% per month. And the evaluation is more or less. 1.5% per month. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:30AM, CASHP.MC - Q4 2024 Prosegur Cash SA Earnings Call That range to 2%, 1.5%. So We are seeing a reactive reactivation of the economy. It was very, stale last year because of the hard measures that the government, the government took of the economy in order to stop inflation. In order to minimize as much as possible inflation. And now it's starting to activate the economy. So we should see a better, growth of the economy and that should help our business. Volumes I think they are going to be more positive this year. In in the world of the economy because the economy is going to be in a better situation. On the price part of it, I think we will follow inflation. I think the prices are pretty much linked to. To label the tariffs and the labor tariffs are pretty much willing to inflation issue that the lay government now is very Is intervening a lot in the current negotiations, so they all negotiations are private between the unions and the companies but the government has to ratify them and sometimes the new government is putting them down even after an agreement has been reached between the companies and the unions and that's the a way to curb the inflation of the country. So but I think in 2025 it's going to be pretty much linked to inflation. And it's true that it's hard work that we have to do every, almost every month. And last year we had a monthly the price increase. And I think this year it's going to be 9 to 10 price increases that we're going to have, but I'm confident that we'll be able to. And get those or achieve that transfer of a labor cost increases to our customers. That's about Argentina about the debt levels. I think, our short term milestone is going to get below 2 times, and I think we, that's going to be a focus that we have to balance with the short focus of ovation but that's going to be our short term or our primary focus then. We have said that we would like to be more or less closer to 1.5 times. That would be more ideal for us in the midterm.

Question: Manuel Lorente Ortega - Santander - Analyst : Yes, sorry for the follow up. I mean, I think that that you mentioned consensus, that you were comfortable with consensus estimate for this year. Consensus is something difficult to track sometimes but I'm seeing right now that consensus is expecting a 2% top line growth for this year. And roughly 420 million of EBITDA. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:30AM, CASHP.MC - Q4 2024 Prosegur Cash SA Earnings Call That, especially on the revenue sites might look a little bit soft regarding what you have mentioned. On the underlying trends. Where you can add something about top line growth expectations for this year. Because I believe that you also have mentioned several. Moving parts in terms of, profitability improvement. Unidentified_6 Okay, thank you. Yes, it will be a bit higher on the safe side, I think we are going to grow much faster than than a number or 2%. As we said missing on, I was more on the EBITDA front I think we are going to be a little bit about what is in the, on the consensus and where I think we are going to be pretty much. On the spot is more on the net profit on a bit above the 100 million net profit, we are going to it's around 110 or something like that I think we should be around that.