Prosegur Compañía de Seguridad S A : 9M 2020 Results Presentation

9M 2020

Results Presentation

Investor Relations Department

05 / November / 2020

COVID19

IMPACT & RESPONSE

Cash

• The negative effect of the pandemic remains in Ibero-Americaas Europe & APAC slowly recovers normality
• Temporary loss of volumes in the LatAm region due to business closedowns and confinements
• Partial maintenance of government initiatives to distribute aids to population

Security

• Positive evolution in Europe supported by COVID-Free solutions
• IberoAmerica highly affected by confinements and closures as well as legal restrictions on cost adjustments
• Security France sale completed

Alarms

• Movistar Prosegur Alarmas starts sales in Spain with strong growth in new additions
• The commercial stoppage is maintained in some Ibero-American countries due to confinements
• Slight improvement in Churn-rate as business activity recovers

Grupo

• Positive cashflow generation maintained in the period, despite the complexity of the current situation
• The Group prepares for an environment of great global uncertainty

2

RELEVANT	9M 20
INDICATORS
OF THE PERIOD

REVENUES		PROFITABILTY		CASH FLOW

• Total sales of 2,620 million	• Recurring EBITA of 201 million	•	Sustained improvement in
• Positive organic growth despite	excluding efficiency plans		operating cashflow
	the persistence of the crisis in Latin	• The structural improvement of	•	Excellent working capital
	America	margins in Security continues,		management
•	Strong accounting effect of	driven by new products.	• Good result of the cashflow
	divestments (France) and	• Covid19 Subsidies perceived: 15		protection measures
	currencies	million		• Capex reduction of more than
•	Movistar Prosegur Alarmas	• EBITA continues to be primarily		35% in the period
	(MPA) starts sales tripling the rate	affected by negative FX		• Reinforcement of collection
	of previous customer acquisition
				policies

LIQUIDITY

&

DEBT

• Stable outlook BBB rating confirmed by S&P
• Leverage ratio slightly affected by the treasury stock buy-backprogram, divestment in France, and temporary deterioration of results
• Dividend reinvestment program

3

P&L

		-15.4%
3,098	+0.7%
		-4.5%
			-11.6%	2,620
9M 2019	Org	Inorg	FX(1)	9M 2020

• Positive organic growth, despite the strong impact Covid19
• Revenues main deterioration cause is due to negative translational effect of currency
• EBITA of 176 million includes restructuring costs applied in Cash
• Temporary increase in tax rate due to mix change and hyperinflation effect

Consolidated Results	9M 2019		9M 2020 (2)	%
(€ millions)				Variación
Sales
3,098		2,620	-15.4%
EBITDA	378		292(3)	-22.7%
Margin	12.2%		11.2%
Depreciation	(129)		(116)
EBITA	249		176	-29.2%
Margin	8.0%		6.7%
Amortization of intangibles	(21)		(22)
EBIT
228		154	-32.5%
Margin	7.4%		5.9%
Financial result	(45)		(36)
Profit before tax
183		119	-35.2%
Margin	5.9%		4.5%
Tax	(65)		(63)
Tax rate	35.7%		53.3%
Net Profit	118		55	-52.9%
Minority Interest	35		10
Consolidated Net Profit	83		45	-45.6%

1. Includes exchange rate effect and IAS 21&29
2. Excluding extraordinary results in the period, mainly resulting from the exchange of participations between Prosegur and Telefónica and France Security

(3) Reported EBITDA is minored by €25mm of Cash efficiency programs and improved in €15mm of perceived Covid19 subsidies	4

CONSOLIDATED REVENUES BY BUSINESS & REGION

• Cash maintains positive growth in local currency, reflecting the gradual recovery that is being experienced, mainly in Europe
• Security shows the deconsolidation of France and negative effect of major LatAm currencies
• Alarms reflects the commercial stoppage during the confinements and the accounting deconsolidation of the Spanish connections
• Geographically, the largest reduction occurs in Europe, combining the slow market situation with the exit from France
• Ibero-America grows 7.2% in local currency. The result in euros is impaired, fundamentally, by negative FX
• RoW maintains positive growth, despite the deterioration suffered in the USA by Covid, supported by the incipient recovery in Australia

• Local Currency Growth (1)
• Growth in Euros

9M 2019

9M 2020

Revenues

by

Business

Revenues

by

Region

+1.3%

-7.3%

-17.8%

-15.3%

-14.8%

1,555

	1,337		1,318			-26.3%
1,140
	205	151
	Cash	Security (2)	Alarms

-18.2%		+7.2%				+3.0%
			-18.2%			-15.7%
				1,535
1,316			1,293			+1.3%
1,077
									246	250
	Europe(3)	Ibero-		RoW
						America			5

Amounts in Millions of Euros - (1) Includes organic and acquisition growth - (2) Excludes CyberSecurity sales and France Security in 2020 - (3) Excludes France Security in 2020

CONSOLIDATED PROFITABILITY & CASH FLOW GENERATION

PROFITABILITY

CASH FLOW GENERATION

					+13.5%
	-19.1%				209
	-29.2%			184
8.0%	25				80.2%
249	6.7%	201	7.7%
	176	53.6%
9M 2019	9M 2020			9M 2019	9M 2020

• Recurrent EBITA Growth
• Reported EBITA Growth

EBITA Margin			% Cash/EBITDA(1)
CASH Efficiency Plans	Recurrent EBITA		Operating Cash Flow
Reported EBITA

Recurrent EBITA margin of 7.7% (excluding Cash restructuring costs) is close to that obtained in the same period in 2019

Temporary improvement in the generation of
operating cash flow continues. Driven by
efficiency in collections and cost containment
measures
Amounts in millions of Euros (1) Normalizing the impact of IAS16. Includes CASH efficiency plans and subsidies	6

Results by business line

Cash - Security - Alarms

PROSEGUR CASH

REVENUES		NEW PRODUCTS		PROFITABILITY

+200 pb

Recurrent EBITA Margin

6.4%

16.2%

11.8%

8.7%

18.2%

	-30.1%		Efficiency Plans
226			Reported EBITA
16.9%		158
		25
		13.8%	133	(2)

		-14.8%
1,337	+0.1%	+1.2%
			-16.0%
			1,140
9M 2019	Org	Inorg	FX(1) 9M 2020

• Flat organic growth, affected by comparable effect vs. additional non-recurringvolumes obtained in 3Q19
• Negative translational effect of currencies in both Argentina and Brazil
• The negative effect of COVID remains in IberoAmerica, while Europe & APAC initiate gradual and progressive recovery

FY 2016 FY 2017 FY 2018 FY 2019 9M 2020

• New Products represent 18.2% of total sales
• 15% "SmartCash" sales growth
• AVOS sales growth close to 9%
• Integrated ATM Management operations initiated in Australia

9M 2019

9M 2020

• Recurring EBITA (excluding efficiency plans) of 158 million
• Profitability deterioration explained by:
• • Lower volume and amounts transported
  • Translational impact of currency depreciation

8

Amounts in € Millions - (1) Includes exchange rate effect and IAS 21&29 - (2) Reported EBITA of €133 mm. includes efficiency programs

PROSEGUR SECURITY

REVENUES		NEW PRODUCTS		PROFITABILITY (3)

	-15.3%
1,555
-1.4%	-5.9%
	-8.0%	1,318
	(1)	(2)

17%

20%

+500 pb

34%

28%

23%

+0.4%		EBITA Margin
41	41	EBITA
	3.1%
2.6%

9M 2019 Org

Inorg FX

9M 2020

• Slight reduction in organic growth, affected by the general slowdown in all economies
• Deconsolidation effect of France in inorganic
• Incipient volume recovery in Spain and Brazil with profitability improvements in both geographies

FY 2016 FY 2017 FY 2018 FY 2019 9M 2020

• Increased penetration of Integrated Security Solutions up to 34% of sales
• Strong demand for "COVID Free" Solutions that facilitates the entry of new security monitoring solutions in customers

9M 2019

9M 2020

• Excellent Profitability improvement driven by:
• • Increase in sales of solutions with greater added value and technological components, mainly in Europe
  • Good execution in transferring inflation rise to market
  • Effect of operating cost adjustment measures, supported by government aids

9

Amounts in € Millions - (1)Includes Currency Effect and IAS 21&29 - (2)Excludes Cybersecurity 2020 & Security France 2020 - (3) Excludes Overhead Costs, Cybersecurity 2020 & Security France 2020

PROSEGUR ALARMS

TOTAL INSTALLED BASE		REVENUES		ARPU

		547	578	585
	499
424
				354
2016	2017	2018	2019	9M 2020

• Total Contract Base improves due to MPA growth.
• Growth ex-Spain recovers gradually, despite the persistence of confinements in some regions
• Business activity is gradually returning to pre- Covid19 productivity levels

		-26.3%
205	+13.9%	-31.7%
			-8.5%	151
9M 2019	Org	Inorg	FX(1)	9M 2020

• Excellent organic growth of more than 13% despite the remains of commercial stoppage in various geographies
• Volume reduction mainly explained by the deconsolidation of Spain and negative FX in Latin America

38 36 38 36

39

32

2016

2017

2018

2019

9M 2020

• ARPU decreases slightly to € 32, once Spain is deconsolidated, affected by COVID crisis and the adverse currency effect
• Movistar Prosegur Alarmas maintains their ARPU above € 39
• Churn improvement in the quarter, as activity in unbanked small business and residential clients recovers

10

Amounts in € Millions - BTC (Total Contract Base) in thousands of connections- ARPU in € per month - (1)Includes exchange rate effect and IAS 21&29

Financial

Information

Cashflow - Financial Position - Balance Sheet

CONSOLIDATED

CASH FLOW

	Amounts in € millions	9M 2019		9M 2020(1)
Operating Cash Flow by quarters (accumulated)	EBITDA	378	292

2017			351 343	Provisions and other non-cash items	4	33
2018			330	Tax on profit (ordinary)	(83)	(84)
2019
2020				Changes in working capital	(103)	(14)
	143			Interests payments	(11)	(20)
	98			Operating Cash Flow	184	209
24 40	81	82		Acquisition of property, plant & equipment	(143)	(92)
22				Payments for acquisitions of subsidiaries	(124)	(131)
6				Dividend payments	(82)	(49)
Q1	6M	9M	FY

				Treasury stock & Others	13		(156)
				Cash flow from investing / financing	(336)		(427)
				Total net cash flow	(151)		(218)
	• Continued improvement in cash flow despite
	Initial net financial debt	(425)		(649)
	adverse FX, thanks to:
	• Adequate management of working capital			Net increase / (decrease) in cash	(151)		(218)
	• Positive temporary effect of tax deferral			Exchange rate	(27)		(52)
	• Capex containment and dividend reinvestment			Net Financial Debt (2)	(603)		(920)
	programs		(1) Excluding extraordinary results of the exercise, mainly resulting from the exchange of participations between Prosegur and Telefónica and Security France	12

1. Excludes IAS 16 related debt

FINANCIAL POSITION

BBB stable

!

• Temporary increase in net financial debt derived mainly from the shares buy-backprogram, divestment in France, and temporary deterioration of results
• Confirmation of BBB Stable Outlook rating by S&P (October 2020)
• Average cost of corporate debt: Reduction of 25 basis points compared to the same period of fiscal year 2019 (1.13% vs. 1.38%)

2.3x

1.3x

1.38%	1.36%	1.23%	1.16%	1.13%
		146	107	89
109	116
603	649	839	844	920

				132				132
									120						95
													97
							-112	-102		-96	-132
	-15
				Sep. 2019	Dic. 2019	Mar. 2020	Jun. 2020	Sep. 2020
				Average Cost of Debt		Deferred Payments				Net Financial Debt			IAS16 Debt		Treasury Sotck (1)
(1)	Treasury stock of Prosegur and Prosegur Cash at closing market price of the period										13
(2)	Includes IAS 16 debt and excludes extraordinary effects in EBITDA and Security France

BALANCE SHEET

• Comfortable level of liquidity and firepower
• Excellent long-term debt maturity profile, exceeding 85% of total debt
• Acquisition of treasury shares
• Security France considered Available for Sale. Effective sale October 2020

In € Millions	FY 2019		9M 2020
Non-current assets	1,990		2,141
Tangible fixed assets and real estate investments	881		724
Intangible assets	984		888
Others	125		528
Current assets	1,986		2,138
Inventory	65		49
Customer and other receivables	1,071		846
Assets available for sale	-		67
Cash and equivalents and other financial assets	850		1,176
TOTAL ASSETS	3,976		4,278
Net equity	898		789
Share capital	36		36
Treasury shares	(108)		(176)
Retained earnings and other reserves	898		886
Minority interest	72		42
Non-current liabilities	1,751		2,279
Bank borrowings and other financial liabilities	1,452		1,959
Other non-current liabilities	299		320
Current liabilities	1,327		1,210
Bank borrowings and other financial liabilities	302		328
Liabilities available for sale	-		53
Trade payables and other current liabilities	1,025		830
TOTAL NET EQUITY AND LIABILITIES	3,976		4,278

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ESG Commitment

• Cash target to reduce CO2 emissions (1.5% in 2020)
• • New armored hybrid / electric fleet and light fleet carsharing model in Spain, to mitigate carbon footprint
  • Reduction on consumption of operating plastics, and agreements for the recycling of tires.

• During the pandemic we have reinforced our priorities
• • Employees: Protection and teleworking
  • Clients: Business continuity
  • Communities: Logistical support

• Granting of new functions to the Board and creation of the Sustainability and Good Governance Commission (CSGNR)
• • Publication of the new Human Rights Policy.
  • Workplan. Update Code of Ethics

Significant SDGs

for Prosegur

15

FINAL

REMARKS

1. • We are still under the negative effects of the pandemic, that is reducing its impact in Europe but still maintains it in
     IberoAmerica
2. • The behavior of the different business lines is showing a great capacity for resistance and adaptation
3. • We remain cautious upon the high volatility of the environment, although confident in PROSEGUR's ability to face what future may bring
   • Security takes advantage of the high demand for COVID-Freesolutions to increase sales of new products and improve its profitability.
4. • Cash has not suffered organic deterioration, despite the sharp reductions in volume transported during the pandemic
5. • Alarms quickly recovers business activity, even in still confined geographies. Growth rate triples in Spain

	• Profitability improves significantly in Security and Alarms, while
		in Cash it is still under the combined temporary effects of the
3		translational currency impact and the reduction of commercial
	activity in Ibero-America
	•	We maintain active all the spending containment measures to
		support the profitability of the businesses, as well as the
		commitment to investments for digital transformation
	•	The Group maintains an excellent liquidity profile and cash
		generation capacity
4	• BBB Stable credit rating renewed by Standard & Poor's
•	Commitment with Sustainability that is now supervised by a
		specific committee of the Board
	•	Financial solidness and strength of the business model, to face
		the post-pandemic global recovery period

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This document may contain projections or estimates concerning the future performance and results of Prosegur's business.

These estimates derive from expectations and opinions of Prosegur and, therefore, are subject to and qualified by risks, uncertainties, changes in circumstances and other factors that may result in actual results differing

significantly from forecasts or estimates. Prosegur assumes no liability nor obligation to update or review its estimates, forecasts, opinions or expectations.

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Any decision to purchase or invest in shares must be taken based on the information contained in the brochures filled out by Prosegur from

Antonio de Cárcer	Cristina Casado
Director of Investor Relations	Investor Relations
Tel: [phone]	Tel: [phone]

[e-mail]

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