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Edited Transcript of LOOM B.ST earnings conference call or presentation 1-Nov-19 8:00am GMT

Q3 2019 Loomis AB Earnings Call

Nov 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Loomis AB earnings conference call or presentation Friday, November 1, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anders Haker

Loomis AB (publ) - Chief IR Officer

* Kristian Ackeby

Loomis AB (publ) - CFO

* Patrik Andersson

Loomis AB (publ) - CEO, President & Director

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Conference Call Participants

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* Aymeric Poulain

Kepler Cheuvreux, Research Division - Head of Support Services Research

* Carina Elmgren

Handelsbanken Capital Markets AB, Research Division - Research Analyst

* Daniel Thorsson

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

* Henrik Mawby

Nordea Markets, Research Division - Senior Analyst

* Johan Dahl

Danske Bank Markets Equity Research - Analyst

* Matija Gergolet

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Mikael Löfdahl

Carnegie Investment Bank AB, Research Division - Research Analyst

* Peter Testa

One Investments S.A.G.L. - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Loomis Group Q3 '19 Report. (Operator Instructions) I must advise you the call is being recorded today, Friday, the 1st of November 2019.

I would now like to hand the conference over to your speaker today, Patrik Andersson. Please go ahead.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [2]

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Thank you very much. Good morning, everyone, and welcome to the third quarter presentation from Loomis. So I'm Patrik Andersson. I'm the CEO of Loomis. And with me here today I have Kristian Ackeby, who's our CFO; and Anders Haker, Chief Investor Relations Officer.

So let's start the presentation and turn to the next page, which is about the highlights. So these are the highlights of the quarter. We'll get back to some of the bullet points later in the presentation. But when we look at recent events, we consolidated Prosegur Cash that we bought in France as of July 22, 2019. We had also a Capital Markets Day in London some weeks ago. I'll get back to some comments around that in the next slide. We had in the quarter real growth of 6% versus 8% of last year, and there are 2 acquisitions actually in France, that's the CPoR acquisition, which is about foreign exchange and the French business of Prosegur Cash, which is then affecting these real growth numbers.

The organic growth was 3% in the quarter versus 2% last year and the European business is really performing on a high level, so does the U.S. where we had an expansion of the growth numbers compared to Q2 '19. And we also see that the market opportunities that we highlighted in the Capital Markets Day remain intact.

Operating margin reached 13.4%. So we see good momentum of the restructuring programs in Europe, but we also see that business mix and branch efficiency in U.S. is driving the margin. EPS was up 17% in the quarter and also operating cash flow was strong with 99% in the quarter.

So let's turn to next page, which are the highlights of the Capital Markets Day. So these are the key messages from the 5th of September. So we said that we're on our way to reach the 2021 targets and we sort of highlighted the different elements of those targets, but we also see other growth opportunities ahead of us, 2 areas, to just mention 2, is the physical foreign exchange, FX; and ATM-related services that we see will be important for our growth going forward. So if you look at the European FX market, it's -- we estimate it to be worth around SEK 10 billion, and we say that within the next couple of years, next 3 years, we can reach 10% of that market, reaching SEK 1 billion. The other element is then the ATM market where we see more and more banks and other independent players outsourcing more and more of the management of the ATM fleets. And here again, there is a possibility -- or the market opportunity of SEK 10 billion, and we estimate that we can take 20% market share of that, reaching SEK 2 billion over the next 5 years. The European ATM market is quite stable when it comes to the number of ATMs. It's about 350,000 ATMs in Europe. But we also talked about new payment systems where we can build on the strong base of our connections to retailers. We have direct connection to 400,000 retailers in Europe and here we're looking at different ways of consolidating other payment methods than cash and take a stronger position in the total payment system. That is still in the beginning and we are working very actively on this. So these are the highlights of that day and then let's turn to next page and look at the -- a bit the historical perspective of the performance in this quarter.

As you can see we reached 13.4%, which is together with the margin in 2017, the highest margin we've ever had in a single Q3, but those on absolute number, we are doing very good and making our best quarter ever.

And also to mention that on the rolling 12-month basis, we're now above 12% margin, which is our long-term target for 2021.

So let's turn to the next page and look at Europe. So we had a real growth of 10%, which, again, is driven by France acquisitions. We are now starting the integration of, especially, Prosegur Cash in France and France is now going to be a 2-player market, which we see in many of the European markets as well. We are now starting the work with the integration. I think that what we see or what we -- what we see is that, that's progressing according to plan. Organic growth was 3% in the quarter, and from my perspective, very strong number. We have strong growth contribution from many of the countries, but I'd like to highlight Spain, Belgium, Turkey and Latin America driving margin -- driving top line, but I also see contribution coming from other countries. I'd like to mention France in this case where we had some issues last year, but that business is now growing top line as well. Operating margin reached 14.9% and we see positive impacts from the restructuring programs we have been doing in both France and Sweden. And we can also see that further effects will be realized in the coming quarter. We also see that the efficiency programs we're constantly driving in countries to have a positive effect. And we also see positive effects coming from the acquisition we made in France when it comes to FX. But of course, as we bought Prosegur Cash in France, that has a negative short-term effect on the margin. As I said, we are now working with integration and that we should see effects by the end of 2020 when it comes to those 2 businesses.

When it comes to Germany, that has a diluting effect on the margin and we are now waiting for information from the German competition authorities. When it comes to the second acquisition we did in Germany, the Ziemann acquisition, we expect some kind of feedback from the competition authorities during Q4. So again, very good momentum in Europe with both when it comes to top and bottom line.

So let's turn to the next page, which is then U.S. And also as with Europe, a very strong quarter for the U.S. business, in my view at least. We had an organic growth of 4%. CMS is now 35% of the total revenue, and we also had a 17% revenue growth when it comes to SafePoint. So SafePoint is now approximately 15% of the total revenue. So in total, CMS and SafePoint is 40% of the business, which is driving, of course, also the margin in the right direction. We have a very strong pipeline when it comes to SafePoint, and we hope to realize many of these installations in the coming quarters.

The margin was strong, 13.6%. We continued to focus on the branches and drive efficiency in these branches. That's a constant work we're doing every day. But also as I mentioned, CMS and SafePoint is driving the margin in a positive direction. We have also a positive impact on the bottom line when it comes to the restructuring process we had with the international business in the U.S. and that's been very successful. So that's about United States.

Let's turn to next page and just highlight some of the important parts of the P&L. As I said, the margin is now on a rolling 12 basis, above 12%, which is a long-term target. We also on the 12-month rolling basis are doing more than SEK 2.5 billion in EBITA. And in absolute terms, as I mentioned, the quarter is very strong, SEK 737 million EBITA coming from the business.

So let's turn to the next page and then go to Q&A. And operator, we now open up for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will now take our first question.

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Peter Testa, One Investments S.A.G.L. - Analyst [2]

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It's Peter Testa. Two questions, please. One is, just if we could talk a bit about on SafePoint as your organizational changes to sort of build up a better pipeline. If you could give some sort of thoughts on how that pipeline is building and maybe also extend that to CMS and views on depth and timing to convert out of pipeline, please, in North America.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [3]

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Yes, that's right. I think that as we have now -- we have almost 30,000 SafePoint installed and it's very, very important, of course, to keep these customers happy. So we have invested much more in a service organization and people focusing on the retention of these. After 5 years, as you know, then the contract expires and it's very important to keep these customers. So that's a bit of a new game for us. We're doing that very well. We estimate that we have a very, very high retention rate. So that's working out fine.

We also see that still that there is a lot of interest from customers on the SafePoint. So I don't see any change in the sort of the market development in that sense, but it's a more complex business to run because we have a much higher installed base. When it comes to CMS, there is a great potential as we mentioned on the Capital Markets Day. We hope for more outsourcing coming to the market. We would like to see more contracts up for grab, but that is coming sooner or later. So we don't see any change when it comes to the market possibilities.

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Peter Testa, One Investments S.A.G.L. - Analyst [4]

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But on CMS, when you look at sort of pipeline and timing to convert, do you have any sense as to whether there's any change in that pattern one way -- in one direction or another?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [5]

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No. No change.

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Peter Testa, One Investments S.A.G.L. - Analyst [6]

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Okay. And then just a question on cash flow and CapEx. The cash flow conversion is really quite strong all year and as you noted, your CapEx has lifted to in relation to depreciation slightly higher. Where is the capital investment going into? I mean what is the opportunity that you're finding to put capital behind?

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Kristian Ackeby, Loomis AB (publ) - CFO [7]

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Yes. So thanks. Kristian here. So the cash flow and the CapEx we see in this quarter, it's more a timing impact. You can see that we had lower CapEx earlier this year and now we are catching up partly here. So if you look year-to-date, we are slightly higher than prior year in relation to depreciation, but not that much as we have in this specific quarter. When you look into how it's spread, it's to support the growth mainly. So we see countries where we have strong organic growth. We also continue to make investments. There is no significant change in how it's distributed among different categories. So for example, trucks continue to be one of the biggest spend for us.

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Peter Testa, One Investments S.A.G.L. - Analyst [8]

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Right. And then last question, just short one on France. As France now starts to lap the comp from the previous year with a contract loss, can you give a sense as to whether you think France will continue to grow in, say, Q4?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [9]

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I should be a bit careful on Q4, but we see a very -- we see -- we are very positive when it comes to France. We see now that the effects of the restructuring we did some time ago is paying off. Top line is growing, margin is growing. On top of that, we have the CPoR, which will add both profit, but also when we're done the integration, that will be strong business. And then on top of that, we now have Prosegur Cash that we integrate. So we're quite -- and again, it's a 2-player market. So we're quite optimistic about France going forward.

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Operator [10]

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We will now take our next question.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [11]

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It's Daniel from ABG. So a question on Germany. Are you loss-making or breakeven in Germany at the current stage?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [12]

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We're making -- at the current stage, we're making a loss. Yes. And that's due to the fact that we haven't started really to, let me say, massage, if you like, the German business that much. We're waiting for the feedback from the competition authorities. We don't want to start that journey before. So that's actually, as I said, diluting the margins with a couple of tens of a percent.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [13]

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Okay. Yes, that makes sense. Can you say something about the magnitude?

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Kristian Ackeby, Loomis AB (publ) - CFO [14]

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A couple of tenths of percentage points. Yes.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [15]

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Yes, okay, on the European margin. Okay.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [16]

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Yes.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [17]

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Okay. And then a question on the U.S. CIT business. Can you say something about the margin development in that business in the U.S. during 2019? Is that turning upwards or downwards or flattish?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [18]

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It's going up. There is not a very -- I mean, the growth is not that significant in CIT because -- simply because we don't chase those contracts. We are putting all our focus on CMS and SafePoint, but there is a small growth and the profitability is increasing in -- and of course, also due to price increases in that field, but profitability is going up.

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Daniel Thorsson, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [19]

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Okay. That's good. And then the final one, just to confirm the SafePoint net installations in the quarter was around 700, right, if I heard it correct.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [20]

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That's correct, yes.

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Operator [21]

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We will now take our next question.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [22]

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It's Johan of Danske. Can you just talk about the contribution from South America to sort of European organic growth?

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Kristian Ackeby, Loomis AB (publ) - CFO [23]

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Yes. We don't disclose the specific details, but first to start with highlights, I mean, Latin America is still a small part of the European business. So around -- sales in South America is around EUR 50 million, EUR 60 million per year. So that's the starting point. But it's a good organic growth in this quarter. And if we look into Argentina, for example, even if we calculate that in hard currency, so to say, it's a very good organic growth.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [24]

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But you shouldn't sort of think that all the European growth is coming from Latin America, that's not the case. It's a very solid growth for many of the countries. And we have a very strong growth in, for instance, in Spain, which is a more mature country. So the big effect is from the continental Europe, if you like.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [25]

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All right. And then just on the efficiencies in Europe that you talked about. I mean the easy comps, I guess, will be gone here after Q4. And I think Patrik, you said that you expect a couple of quarters more sort of seeing this positive effect. Is that -- should we read into this that this -- these sort of benefits continue into 2020 first half or...

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [26]

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When you say -- are you pointing at France or in general or...

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [27]

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Yes, France, Sweden restructuring mainly.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [28]

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I think that the Swedish restructuring with the sort of the big actions we've taken in Sweden, that's more over. So we still should see some effects, of course. But the big things, both in France and Sweden are over. What we should see in France is the positive effects from the integration of, especially Prosegur Cash. That's what we're going to see during next year.

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Johan Dahl, Danske Bank Markets Equity Research - Analyst [29]

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That's very clear. Also, I mean, you're giving a date here, end of 2020 completed integration. Can you please give us any more details with regards to sort of numbers that [cost out] activities, integration benefits?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [30]

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No, we cannot at this stage. It's still early days, but we have a restructuring plan. But as you know, in France, there are a lot of discussions going on with the unions. You never know exactly where those discussions end up. But of course, we want to drive very much the efficiency when it comes to that. This is a pure efficiency, a scale case, but exact numbers, I don't want to reveal today. No.

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Operator [31]

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We'll now take our next question.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [32]

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Henrik Mawby from Nordea. If I understood it correctly, you are mainly targeting Europe with the ATM and FX strategy that you highlighted on your Capital Markets Day. Can you elaborate on why you are not seeing or not choosing to address the same opportunity in the U.S. as well, please?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [33]

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When it comes to FX, to drive a strong FX business, there needs to be different currencies. And that's the fact in Europe. You have some effect between Latin America and U.S., but that's not that significant. So that's the reason why we're focusing on Europe when it comes to FX. ATM, I think that we start in Europe, where I think the outsourcing trends from banks and others are more developed than in U.S., but I see that opportunity also in a couple of years coming to the U.S., that more and more banks and others stay outsourced more around ATMs. That will come also in Europe -- in U.S., but that's a bit further down the road, I would say.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [34]

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Okay. And just for us to better understand the phasing of acquisition-driven growth in Europe, is it possible for you to specify the contribution of growth from Prosegur Cash versus CPoR in the quarter?

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Kristian Ackeby, Loomis AB (publ) - CFO [35]

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No, I think what we -- it's relatively evenly spread. And we -- I mean, both companies have sales of approximately EUR 40 million on a rolling-12 basis. I think that can be a good approximation.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [36]

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Okay. And 2 more questions, if I may? In Europe, you still have the large contribution from -- or a contribution from the large SafePoint contract you won a couple of quarters back. Can you -- how big contribution is that giving to organic growth in Europe? And when does that contribution phase out? And secondly, on Prosegur Cash in France, was that geographical overlapping or was it sort of a complementary region in France, please?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [37]

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So let's start with the second question. There is an overlap. We strengthen in some areas, but in general, it's an overlap and that's why it's so attractive to us that we can build it on the same platform. So I think that's going to be an excellent synergy case. It will take some time and then that will support the French business. But when it comes to the first question, I think that -- what you're aiming at is the SafePoint's contract we got with Speedway 2018 in the U.S., is that correct? It was not in Europe.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [38]

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I might have to check my details. I think you mentioned that you've won a large contract of 400 units in Sweden as well a couple of...

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [39]

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Oh, yes. Okay, yes, yes, that's right. That was with the -- yes, some of the bigger convenience retailers in Sweden. That's right. That's correct. That's rolled out to a larger extent. Actually, quite a number of Swedish retailers that they are using SafePoint, but that's rolled out and that's helping both the top line, but also the bottom line in countries like Sweden. That's correct. But that's rolled out.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [40]

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Okay. So it's not contributing to organic growth currently or it's -- the rollout is completed you mean, so it's still contributing to growth, right?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [41]

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Yes. It's contributing to growth, it does, but it's all rolled out, yes.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [42]

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Okay. Okay. And one on that note, can I just ask also, how is your pipeline of SafePoint contract developing in Europe now?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [43]

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Very positively. Many of the countries are -- in Europe are -- now have built up their sales force, they have the technology in place, the service organization and so on and so forth. So we're very optimistic. We're doing very well, but especially also optimistic for next year when it comes to SafePoint in Europe that, that will continue to grow. Now the base, installed base is not the same, of course, like in U.S., but we will see a continued growth coming from SafePoint in Europe in the coming years.

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Operator [44]

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We will now take our next question. Are you on mute?

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [45]

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Yes. Sorry, this was Mikael at Carnegie in Stockholm. Actually my questions have already been answered. Thanks.

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Operator [46]

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We will take our next question.

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Aymeric Poulain, Kepler Cheuvreux, Research Division - Head of Support Services Research [47]

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It's Aymeric Poulain from Kepler. Most of my questions have been answered, but I was wondering given the fact that pretty much all the lights look green at this stage. What keeps management awake at night? And in particular, I was wondering if the competitive situation in America, if you see any changes. We obviously have the rollout of CASH360 in the big-box retailers going on. So I was wondering if you see an impact on your business coming in terms of the CIT business and possibility of some of the competitors reacting also with perhaps more price pressure to keep their market share? And what typically the implication for margin in your view would be in these scenarios?

And secondly, on Europe, you, obviously, have been very acquisitive. That's the core of your strategy. However, I was wondering in terms of the management capabilities, you clearly invested in compliance to deal with this situation in Denmark. But it seems that you may have -- there may be a question in terms of the capabilities and the need to hire more executive players -- people to execute on this M&A program. So is there also here an investment to be made in terms of staffing to execute this strategy?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [48]

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Good questions. I'll start with the last one because that's easy to remember. But the thing is that, I think that what we see now more, more and more is that our core business will be more and more under sort of surveillance from authorities. But also, as we're moving into FX and to new payments and so on, there would be much higher pressure on us to follow certain rules and laws and regulations. So I think that we need to strengthen the organization. However, I would like to say that when it comes to CPoR and FX, we have a very strong organization in France that we will build on. I think there are close to 15 people working in compliance in France. On that organization, we will build. I don't think we will add a lot of people on compliance, maybe a few, but we will build on the existing base we have. But you're right, we will be much more under scrutiny from the authorities. But we have a good plan. I don't think we will see a lot of cost coming into that area, some will come.

When it comes to what keeps us awake at night, I don't think that -- we sleep quite well during night, but in the U.S., I think we have a very strong team. We have a good plan. Of course, now when we have close to 30,000 installed SafePoint, that requires a different way of working. And of course, our competitors also want to take part of that installed base. So when -- as soon as contracts expire and so on and so forth, there are -- of course, there are many that are chasing that -- those contracts. But I think that we keep most of those contracts. So the losses are -- there are some losses, but they are not very high. So I don't see -- it's more complex, but it's not in any way that we -- that keeps us awake during nights. So no, I see -- as we mentioned on Capital Markets Day, there are lot of opportunities, both in the core business, but also as we mentioned, in the adjacent categories and new categories to further drive growth.

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Operator [49]

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(Operator Instructions) We will now take our next question.

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Matija Gergolet, Goldman Sachs Group Inc., Research Division - Equity Analyst [50]

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It's Matija Gergolet from Goldman Sachs. Three questions for me. The first one is regarding the U.S. I think I remember at the full year results, you hinted that you're going to have a bit more overhead costs in the U.S. and perhaps at least I interpreted that as a little bit more, say, prudent on the margin in the U.S. Now you're doing 80 basis points of margin expansion in the U.S., okay, IFRS 16 maybe is [20], still a very good sizable margin expansion in the U.S. So my question would be, what is going better-than-expected in the U.S.?

Secondly, can you give us a bit of color about your current M&A pipeline? Is there anything major that you're potentially looking at or not really? And thirdly, just a question on the numbers. Sorry, it's a little bit detailed, but when I look at your operating cash flow, you have basically the last line, which is the one called change in other capital employed and other items. I wouldn't usually ask, but in this case, roughly 10% of your cash flow from operations comes from this last line. What is it? Is it anything structural? Or is it just something that is happening, say, this year?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [51]

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All right. I'll take the 2 first ones and then I hand over to Kristian on the third one. So what's going better in the U.S.? I think that what we see is the efficiency -- so 2 elements. One is of course the mix. So now 35% CMS of the total business and 15% SafePoint that is driving, of course, the margin in the positive direction. The second element I would say is the efficiency work at the branches. So we've taken another steps in terms of processes, procedures, efficiency, how to use technology to optimize routes, et cetera, et cetera. So I think that for me -- from my side, these are the 2 elements that I think that is driving margin.

And the second one is more prominent than I thought, to be honest, so the efficiency work on a daily basis is going better than I expected at least. So I would say these are the 2 points. When it comes to the M&A pipeline, we have a good and solid pipeline. We think that the consolidation of this industry is continuing. So more family-owned business, bank-owned business will come out for sale in different regions. We are part of all those relevant discussions going on. We have a pipeline, which sort of accumulates return of around SEK 10 billion. All of that will not happen, of course, but some of it will happen. So I think that we will see a further consolidation in the industry going forward and we will take a very active part in that consolidation for sure.

And now maybe the third question, Kristian.

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Kristian Ackeby, Loomis AB (publ) - CFO [52]

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Yes. When it relates to cash flow on the line for the other items, it's mainly related to the timing impact. And the largest impact on this line is when we had movements in the cash stock, salary payments and accounts payable. So partly it's related to also, of course, the increase in operations and increase in our accounts payable, but otherwise it's mainly related to timing and timing impact. So I think also to clarify, maybe, also to say, I mean, we have said earlier, that we believe that we will be in line with our historical average for cash conversion when you look at it in a longer period of time, which has been between 80% to 90% or around 85% or so.

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Matija Gergolet, Goldman Sachs Group Inc., Research Division - Equity Analyst [53]

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But you mentioned, there's also an element of stock payments in that line. I'm just trying to understand whether that line should theoretically going forward be closer to 0? Or should we expect structurally like a small positive number?

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Kristian Ackeby, Loomis AB (publ) - CFO [54]

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I think structurally, it will be positive if accounts payable increase. It will not be structurally positive due to that we have changes in our cash stock because cash stock is timing impact when we buy and sell, for example, foreign currencies.

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Operator [55]

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We will now take our next question.

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Carina Elmgren, Handelsbanken Capital Markets AB, Research Division - Research Analyst [56]

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This is Carina Elmgren at Handelsbanken. Can you hear?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [57]

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Yes, we can hear you.

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Carina Elmgren, Handelsbanken Capital Markets AB, Research Division - Research Analyst [58]

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Okay. Great. I was just wondering the number of SafePoint that you installed in the quarter, could you give us that?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [59]

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Yes, it's 700.

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Carina Elmgren, Handelsbanken Capital Markets AB, Research Division - Research Analyst [60]

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Okay. And going forward, I mean, what is the reason for the decline versus the last quarter? And do you feel that the ambition for 2021 is maybe too high?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [61]

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So I think that the potential for SafePoint is there. It's no change in how we see the market. As we communicated on the Capital Markets Day, it varies a bit from quarter-to-quarter. We believe that we will be between 4,000 and 5,000 safes this year. If it's a good quarter next quarter, it will be closer to 5,000 maybe and so on. So we don't see any -- maybe it's the only thing we don't see is the bigger really, really big contracts coming out. I think that 10,000 was a number we gave in 2017. I think that what we see now and that's why we have -- we have explained that it's a more complex business now to keep the installed base because if we start to lose out on the installed base, there will be quite a big erosion. So we're spending quite a lot of time on keeping the installed base and then adding safes. I think that the 10,000 number we gave some years ago was maybe a bit optimistic, on the optimistic side, but we will continue to grow on the SafePoint and maybe and why not, if there is a bigger contract, we can get closer to 10,000. But we will see continued growth when it comes to SafePoint.

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Carina Elmgren, Handelsbanken Capital Markets AB, Research Division - Research Analyst [62]

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Okay. Then a couple of questions more on Ziemann, the acquisition in Germany. What is the reason for the postponement of this process? And second question would be, were there any timing effects in cash flow this quarter?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [63]

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So when it comes to Ziemann, it's a -- the competition authorities in Germany have done a very thorough job or is doing a very thorough job. They are now looking into the overlap of the 2 businesses to see where the overlap is and which customers -- or potential customers could be affected, and that is taking a bit more time than we expected. We expect still that we will get some kind of feedback on that process during this quarter, but this is not in our hands. But at least, we're getting closer and closer to some kind of decision or some kind of feedback.

And then on the last question, I hand it over to Kristian.

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Kristian Ackeby, Loomis AB (publ) - CFO [64]

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Yes. So on the cash flow, on the timing side, you have positive timing impact on the line for other working capital. And then you have a negative, you could say in the quarter, related to CapEx since CapEx is build up during the second half of the year. So year-to-date that should be relatively in line. Then you have the negative impact on tax, and that negative impact on tax is mainly related also to payments relating to last year. So if you look into the cash flow last year and the tax, that is much, much lower than the income tax. So there you will find that explanation.

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Operator [65]

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(Operator Instructions) We will now take our next question.

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Henrik Mawby, Nordea Markets, Research Division - Senior Analyst [66]

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Henrik Mawby from Nordea, again. One last question here. Of the pipeline of SEK 10 billion that you highlight, how large share of that is in market consolidation versus entering new markets or adjacent markets?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [67]

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I think that you can split that SEK 10 billion into 3 areas. One, the biggest, I would say, is in-market consolidation. So in the markets we're present, there would be further consolidation. That -- the biggest part is, I don't know exactly, but just to give you a number, 50%, 60% something like that. And then there is one part, which is new markets. There is no secret that we want to expand in Latin America to give you one example. And then -- the third element is more tech companies, new payment/tech companies that can support our growth from a more technical area, move us into new areas. So that's the smallest part, I would say, but the biggest part is still within consolidation.

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Operator [68]

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We will now take the next question.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [69]

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Yes, it's Mikael at Carnegie, again. On -- just a follow-up on SafePoint. Is it possible to sort of break down the growth -- the year-on-year growth in the quarter? So what is organic revenue growth? And also how much comes from price and new installations? So how much is recurring and how much is from new installations? And what is the organic revenue growth?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [70]

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We cannot give you that number. I think that most of it is from new organic growth, I would say. It's new installations we've done some quarters back, which we're pushing up the -- I don't think that there is that much price effect to be honest. It's -- we have a fairly stable price model or constant price model, if you like. So I think it's basically installations that -- new installations is driving the growth, I would say. I am looking at my 2 gentlemen here, but maybe they have a different view. No? They don't.

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Anders Haker, Loomis AB (publ) - Chief IR Officer [71]

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No.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [72]

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No.

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Mikael Löfdahl, Carnegie Investment Bank AB, Research Division - Research Analyst [73]

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And just to be clear, the 17% growth year-on-year in revenue from SafePoint, is that organic?

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [74]

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Yes.

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Operator [75]

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(Operator Instructions) There are no further questions. Please continue.

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Patrik Andersson, Loomis AB (publ) - CEO, President & Director [76]

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So then, thank you very much for listening in and all good questions. I wish you all a very nice weekend. Thank you very much. Bye-bye.

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Operator [77]

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Thank you very much. That does conclude the conference for today. Thanks for participating. You may all disconnect.