RESULTS PRESENTATION. FIRST QUARTER 2019
Cash in the media The great return of Sweden to cash. Venezuela's power outage. Cash to the rescue. In 2018, cash in circulation grew by 7.23% In an attempt to improve its economy, the compared to the previous year. Among the Venezuelan government decided, in February reasons that could explain this phenomenon we 2018, to move away from paper bills by prioritizing highlight: (i) The change in the recommendation of digital payments and, since then, has relied the authorities, which has been able to encourage heavily on electronic payments. Unfortunately, consumers to return to cash; (ii) The need for a during crisis, this mean of payment is not up to the minimum amount of cash in the society; (iii) resilience that characterices cash, which resists Renewal of coins and notes by the Central Bank. systems failures and power cuts. Source: Riksbank Source: Bloomberg The ECCB performed a pilot test of digital Amazon says go cash. currency but maintained the cash. Steve Kessel, Senior Vice Presicent of physical The bank has no intention to erase the use of cash stores, announced last April that Amazon noting its convenience and the important role it Go stores will accept cash alongside its cashier- plays in the economy. ECCB also state that small less technology. businesses face real constraints as they are It is a business shift worth celebrating over as it required to pay as much as 3.5% on credit card signifies the importance of financial inclusion and payments which removes its incentives to the role cash plays in a continuously digitising offer electronic options. economy. Source: Eastern Caribbean Central Bank Source: CNBC 2
Agenda 1. Highlights of the period 2. Regional dynamics 3. Financial results 4. Conclusions 5. Annex
1. Main themes Highlights of the period 1 • Strong currency depreciation vs. 1Q 2018 Macro Environment • In addition, hyperinflation in Argentina (IAS 21 & 29) since Q3 2018 2 • Local currency growth accelerating to 15.0% (1) Agility • EBIT margin improving in constant currency. In euro terms, EBIT margin was impacted by forex, indirect costs and Australia and France 3 • 3 acquisitions made during the year (2 in LatAm and 1 in AOA) Consolidation • Agreement to divest our French operations (to be closed during 3Q 2019) 4 • New products reached 15.0% of total sales Transformation • NNPP sales grew 37% in euros fueled by Smart Cash, AVOS and ATMS 5 • Free Cash Flow amounted to 29 M€ Cash Flow Generation • Higher investment in Smart Cash solutions (+30%). Solid WC performance 4 (1) Includes organic and inorganic growth
1. Agility Highlights of the period Local (1) growth evolution by quarter 15.0% 13.1% 12.9% 11.3% 10.5% 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Both our growth and our EBIT margin improved in constant currency 5 (1) Includes organic and inorganic growth
1. Consolidation Highlights of the period 3 transactions closed in 2019 (2 in LatAm and 1 in AOA) We strengthen our footprint and product portfolio Agreement to sell our operations in France (expected to be completed during 3Q 2019) Annual target of M&A investment for 2019 between 50M€ - 150 M€ 6
1. Transformation Highlights of the period New Products sales reached 65 M€ in 1Q 2019 (vs. 47 M€ in 1Q 2018) Growth rate of 37% (>50% at constant currency) NNPP now representing 15% of total sales (vs. 10.5% in 1Q 2018) Positive overall performance of SmartCash solutions, AVOS and ATMs 7
Agenda 1. Highlights of the period 2. Regional dynamics 3. Financial results 4. Conclusions 5. Annex
2. LatAm Regional dynamics Sales (M€) 65% of Total Prosegur Cash sales -10% in 1Q 2019 (1) (70% in 1Q 2018) Org: +10.2% 314 283 Inorg: +6.7% FX (2) : (26.9)% Major countries growth slowed down as a consequence of macroeconomic and political environment 1Q 2018 1Q 2019 Greater inorganic contribution due New Products (M€) to new geographies and bolt-on acquisitions +46% Over sales: 41 Adverse currency impact vs. 1Q 1Q 18: 9.0% 2018 (3) 1Q 19: 14.6% 28 Positive momentum of SmartCash solutions and AVOS 1Q 2018 1Q 2019 9 (1) 2019 figures according to IAS 21 & 29 (hyperinflation accounting); (2) Includes FX and IAS 21 & 29 impact; (3) Includes IAS 21 & 29
2. Europe Regional dynamics Sales (M€) 29% of Total Prosegur Cash sales +7% Org: +4.7% in 1Q 2019 (26% in 1Q 2018) 124 116 Inorg: +2.3% FX: 0.0% Healthy organic growth impacted by one-offs 1Q 2018 1Q 2019 Inorganic growth in new services New Products (M€) complementing our traditional business +30% Over sales: France exit scheduled for second 22 1Q 18: 14.7% half 2019 (3Q) 17 1Q 19: 17.9% Development of AVOS and SmartCash solutions on track 1Q 2018 1Q 2019 10
2. AOA Regional dynamics Sales (M€) 6% of Total Prosegur Cash sales +30% Org: (9.8)% in 1Q 2019 (4% en 1Q 2018) 25 Inorg: +41.9% 20 FX: (1.7)% Tough comparison vs. 1Q 2018 in Australia 1Q 2018 1Q 2019 Higher inorganic growth coming New Products (M€) from the Philippines -37% Over sales: Negative forex impact , although to 2 1Q 18: 10.8% a lesser extent than in 2018 1Q 19: 5.2% 1 NNPP lowered by the decrease in ATM services 1Q 2018 1Q 2019 11
Agenda 1. Highlights of the period 2. Regional dynamics 3. Financial results 4. Conclusions 5. Annex
3. Profit and loss account Financial results 1Q 2019 (1) Million Euros 1Q 2018 % VAR 432 -3.9% Sales 450 86 EBITDA 105 -18.1% Margin 23.3% 19.9% (20) Depreciation (13) 56.2% % EBIT margin evolution 66 -28.5% EBITA 92 Margin 20.5% 15.2% (4) Amortization of intangibles (4) 11.5% EBIT 88 61 -30.2% Margin 19.6% 14.2% 19.6 16.3 14.2 13.5 (10) 11.9 6 -276.0% Financial result 51 94 -45.7% EBT 1Q 2Q 3Q 4Q 1Q Margin 20.9% 11.8% 2018 2018 2018 2018 2019 Taxes (32) (20) -37.4% Tax rate 33.6% 38.7% According to Net Profit from IAS 21 & 29 31 62 -49.8% continuing operations Margin 13.9% 7.2% Net Consolidated Profit 31 62 -49.5% Margin 13.8% 7.2% 13 (1) 2019 figures according to IAS 21 & 29 (hyperinflation accounting) and IAS 16 (leasings), in force since 3Q 2018 and 1Q 2019, respectively.
3. Cash Flow Financial results 1Q 2019 (1) Million Euros 1Q 2018 Provisions and other non-cash 86 EBITDA 105 affected by cut- off dates (18M€) 12 Provisions and other non-cash items 17 (27) Income tax (26) (18) Acquisition of PP&E (19) SmartCash capex increased +30% Changes in working capital (30) (24) 29 Free Cash Flow 47 % Conversion (2) 82% 79% Working capital improvement (8) Interest payments (6) (19) Payments for acquisitions of subsidiaries (7) (29) Eurobond and RCF Dividend payment (21) interest expenses payment - Restructuring operations 18 Others - - (29) Total Net Cash Flow 30 M&A investment in LatAm (491) Net financial position (BoP) (424) (29) Net increase / (decrease) in cash 30 Second instalment of dividend (4) Exchange rate (6) disbursed (25% vs. 20% in 2018) (524) Net financial position (EoP) (400) 14 (1) 2019 figures according to IAS 21 & 29 (hyperinflation accounting) and IAS 16 (leasings), in force since 3Q 2018 and 1Q 2019, respectively; (2) Conversion ratio: (EBITDA - Capex) / EBITDA
3. Total Net Debt Financial results Total net debt reconciliation (Mar’19) 71 699 524 -2 Cost of debt reduction • 1.80% en 1Q 2019 (2.1% en 1Q 2018) 106 ∆ Debt Net financial Deferred Treasury Total IAS 16 position payments stock net debt Mar’19 Mar’19 Higher leverage ratio Total net debt to LTM EBITDA (4) 2.2x • Total net debt variation (Dec’18 vs Mar’19) 32 4 699 29 547 8 -29 S&P rating unchanged (October 2018) • Rating BBB, outlook stable 106 ∆ Debt Total Free Cash Interest Dividend M&A & Others (3) Total IAS 16 net debt Flow payments payments Deferred net debt Dec’18 Mar’19 payments (2) (1) 2018 Total net debt ( 547 M€) include 491 M€ of net financial position, 58 M€ of deferred payments and 2M€ of treasury stock; (2) Include M&A cash outflow and the variation of deferred payments between 2018 and 2019; (3) Include the fx rate 15 impact and the treasury stock variation; (4) Ratio considers (i) Total net debt as of March 2019 (699) and (ii) LTM EBITDA (321) defined as FY 2018 EBITDA (as reported) – 1Q 2018 EBITDA (as reported) + 1Q 2019 EBITDA (as reported)
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