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Interim Report January-March 2022 Magnus Ahlqvist, President and CEO Andreas Lindback, CFO
Securitas Interim Report January-March 2022 2 A robust start to the year with continued margin improvement — 4 percent organic sales growth (0) — Driven by strong sales growth in Europe and Ibero-America — Increased market activity and good momentum in the business — 9 percent sales growth of security solutions and electronic security – now 23 percent (22) of total sales in the Group — Increased real operating result by 8 percent (30) and the highest first quarter operating margin, 5.1 percent (4.9), in more than a decade — Record levels in North America and Ibero-America — Price and wage balance kept on par — Well positioned to maintain this balance — Continued strong focus on profitability — Active portfolio management, transformations programs and general cost control
Securitas Interim Report January-March 2022 3 Security Services North America As expected, lower extra sales and contract terminations hit organic sales growth Organic sales growth -2% (3) Organic sales growth — Previously announced terminated contracts, lower corona-related extra sales main reasons for the decline 9% 7% — Installation business hampered by supply-chain issues and corona-related sick leave 5% 3% 1% -1% -3% Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 — Successful price increase campaigns in Guarding offset part of the decline as did Critical Infrastructure Services and Pinkerton
Securitas Interim Report January-March 2022 4 Security Services North America Strong margin uplift supported by all business units Operating margin 6.4% (5.9) Operating margin 8% — Solid performance in Guarding, despite lower level of corona-related extra sales and impact from labor pressure 7% 6% 5% — The finalized business transformation program supported 4% 3% — Electronic Security and Critical Infrastructure Services performed well 2% 1% 0% Q1 Q2 2020 Q3 2021 2022 Q4 — Pinkerton delivered a strong result
Securitas Interim Report January-March 2022 5 Security Services Europe Organic sales growth back on good levels Organic sales growth 8% (-1) Organic sales growth — Most countries contributed to the improvement 9% 7% — Good momentum in security solutions and electronic security 5% 3% — Strong price increases and continued post corona recovery supported 1% -1% -3% -5% -7% Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 — as did the high inflationary environment in Turkey
Securitas Interim Report January-March 2022 6 Security Services Europe Stable margin development despite strong negative impact from sickness costs Operating margin 5.0% (5.1) Operating margin 7% — Negative impact from higher corona-related sickness costs and increased costs related to labor shortage of approximately -0.4 percentage points 6% 5% 4% — Healthy underlying margin development, well ahead of last year 3% 2% — Support from previously implemented cost measures and cost leverage on the strong sales growth 1% 0% Q1 Q2 2020 Q3 2021 2022 Q4 — The previously acquired electronic security businesses also contributed
Securitas Interim Report January-March 2022 7 Security Services Ibero-America Organic sales growth driven by Spain Organic sales growth 12% (-2) Organic sales growth 13% — Spain had 10% organic sales growth with strong development across the business 9% — Latin-America improved mainly from price increases in Argentina 5% — Good momentum of security solutions and electronic security sales supported 1% Q1 2020 -3% Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 — as did the recovery in the airport security business
Securitas Interim Report January-March 2022 8 Security Services Ibero-America Strong margin development, driven by Spain Operating margin Operating margin 5.8% (5.2) 7% — The improvement mainly driven from strong performance in Spain 6% 5% 3% — Portugal and Colombia contributed, including recovery in the airport security business 2% — Argentina hampered 4% 1% 0% Q1 Q2 2020 Q3 2021 2022 Q4
Securitas 9 Financials Andreas Lindback CFO
Securitas Interim Report January-March 2022 10 A strong start to the year MSEK Q1 2022 Q1 2021 FY 2021 Sales 28 598 25 814 107 700 4 0 4 1 452 1 256 5 978 Operating margin, % 5.1 4.9 5.6 Amort. of acquisition-related intangible assets -61 -65 -290 Acquisition-related costs -10 -29 -122 -134 -136 -871 Organic sales growth, % Operating income before amort. Items affecting comparability Operating income after amortization 1 247 1 026 4 695 -95 -94 -364 Income before taxes 1 152 932 4 331 Tax, % 27.0 27.0 27.6 841 680 3 134 EPS, SEK 2.30 1.86 8.59 EPS, SEK before IAC 2.57 2.11 10.41 Financial income and expenses Net income for the period — Continued solid operating margin improvement — Reduced support from corona-related government grants and support: MSEK 37 (205) — Items affecting comparability of MSEK – 134, mainly related to the transformation programs in Europe and Ibero-America — Financial income and expenses flat to previous year, increased interest cost expected
Securitas Interim Report January-March 2022 Items affecting comparability - Three programs closed Q4 2021 with solid value realization ongoing - Europe and Ibero-America programs executing according to plan - Transaction and integration-related Stanley cost according to announced plan Transformation programs – Europe and Ibero-America, announced Q4 2020 Total program cost announced: MSEK -1 400 over the period 2021-2023 Q1 2022 Cloud computing: MSEK 250 CAPEX to IAC transfer (non-cash) over 2022-2023. No material historical impact Programs Stanley MSEK MSEK -121 -13 IAC MSEK -134 Total IAC Q1 2022: MSEK -121 Estimated IAC-range of MSEK -500 to -600 in FY 2022 Stanley Security acquisition, announced Q4 2021 Total MUSD -135 (app. BSEK -1.3) acquisition-related cost, majority in 2022-2023 Q1 2022: MSEK -13 Total cost since announcement: MSEK -75
Securitas Interim Report January-March 2022 12 Tailwind from FX in the first quarter FX SEK END-RATES Change Q1 2021 % USD 9.29 8.73 6.4 MSEK Q1 2022 Q1 2021 Sales 28 598 25 814 11 5 EUR 10.33 10.24 0.9 Operating income 1 452 1 256 16 8 ARS 0.08 0.10 -20.0 EPS, SEK 2.30 1.86 24 15 EPS, SEK, before IAC 2.57 2.11 22 13 * Including acquisitions and adjusted FX Real*, % Q1 2022 Total, %
Securitas Interim Report January-March 2022 13 Weak cash flow on exceptionally strong comparables MSEK Operating income before amortization Q1 2022 1 452 Q1 2021 1 256 FY 2021 5 978 Net investments in non-current assets -43 5 -120 Change in accounts receivable -448 140 117 Change in other operating capital employed -1 090 -118 -399 Cash flow from operating activities -129 1 283 5 576 Cash flow from operating activities, % -9 102 93 Financial income and expenses paid -236 -242 -312 Current taxes paid -322 -245 -1 265 Free cash flow -687 796 3 999 — The first quarter of the year is traditionally weak regarding cash flow – Q1 2021 exception — Q1 2022 cash flow negatively impacted by solid organic sales growth and increased DSO, from a low level at year-end 2021. DSO improved compared to Q1 2021 — Q1 last year impacted positively by positive payroll timing in North America and the Netherlands with approximately MSEK 600 — Remaining approximately MSEK 600 corona-related government payment relief measures in North America from 2020 to be paid in Q4 2022 — Net investments of -43 MSEK in Q1 — CAPEX of MSEK –727 and reversal of depreciation of MSEK 684 — CAPEX 3% of Group sales annually
Securitas Interim Report January-March 2022 14 Stable net debt to EBITDA-ratio MSEK Net debt Jan 1, 2022 -14 551 20 000 -687 18 000 -7 16 000 IAC -267 14 000 Lease liabilities -202 Free cash flow Acquisitions/Divestitures Change in net debt Revaluation Translation Net debt March 31, 2022 Net debt to EBITDA-ratio MSEK -1 163 -7 -338 -16 059 12 000 10 000 8 000 6 000 4 000 2 000 2.3 2.2 2.1 1.9 2.0 FY2018 FY2019 FY2020 FY2021 Q1 2022 0 Net debt EBITDA ratio before IFRS 16 ratio after IFRS 16
Securitas Interim Report January-March 2022 15 Solid financing in place, preparing for Stanley Security closing Committed funding maturity profile, excluding bridge facility — — — — — Solid financing in place, no financial covenants Good liquidity at end Q1: BSEK 3.7 RCF extended to 2027* (in April) and is fully undrawn 2022 MEUR 350 maturity and refinanced in Q1 Bridge facility connected to the BUSD 3.2 Stanley Security transaction signed with SEB. The facility was subsequently syndicated among another 7 core relationship banks — Bridge to be refinanced after completion (assumed close in Q2 2022) by a mix of equity and long-term debt, including a rights issue of approx. USD 915 million — S&P BBB rating from Standard & Poor's. CreditWatch Negative on announced acquisition of Stanley Security — Remain committed to investment grade rating MSEK 12 000 10 000 8 000 6 000 4 000 2 000 0 2022 EUR bond 2023 USD PP 2024 2025 2026 RCF (undrawn) 2026 2027 EUR PP 2028 SEK PP * Debt maturity chart shows Q1 end position
Securitas 16 Accelerating our leadership in the industry
Securitas Interim Report January-March 2022 17 Solid progress with the transformation programs The first three programs closed at the end of 2021 Targeted impacts MODERNIZING GLOBAL IS/IT SSNA BUSINESS TRANSFORMATION Modernization and efficiency Group: MSEK 300 savings upon completion by 2022 SSNA: Up to 0.5% margin benefit by 2022, gradual improvement in 2021 C-19: 2 year pay-back period C-19 COST SAVINGS AND 11 MARKET EXITS Exit: Focus and less complexity SSEU & SSIA BUSINESS TRANSFORMATION SSEU: Around 6.5% OPM by 2024. First impact 2022 SSIA: Around 6.0% OPM by 2024 2019 2021 2023
Securitas 18 Transforming the profile of Securitas
Securitas Interim Report January-March 2022 19 Securitas and Stanley Security – forming a winning team — Transforms Securitas’ position, with initially over 50% of the profit contribution generated from security solutions and electronic security — Strong commercial opportunity, enhancing the client proposition, unlocking growth and transforming the margin profile by an acquisition with a strong cultural fit — Very well received by our clients – very positive feedback relating to the future opportunities of the combination — Strong value creation in a highly synergistic combination, with EPS accretion in the first full year post completion (excluding items affecting comparability and costs associated with the transaction) — Closing process progresses according to plan with estimated closing towards the end of Q2 2022 — Integration and value creation planning well advanced and on track — Together with ongoing initiatives will enable substantial operating margin improvement over time
Securitas Interim Report January-March 2022 20 We continue to execute on our strategy, and it is generating results — Increased real operating result by 8 percent (30) and the highest first quarter operating margin, 5.1 percent (4.9), in more than a decade — Record levels in North America and Ibero-America — Improving sales of security solutions and electronic security across all segments — Continued strong focus on profitability — Active portfolio management, transformations programs and general cost control — Price and wage balance kept on par — Well positioned to maintain this balance
Securitas To insert Background picture in this layout -Right click on the background -choose Format -Picture or texture fill and Insert a picture from file. MSEK Q1 2022 Q1 2021 FY 2021 Sales 28 598 25 814 107 700 Organic sales growth, % 4 0 4 Operating income before amort. 1 452 1 256 5 978 Operating margin, % 5.1 4.9 5.6
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