Securitas (SECU) Q2 2024 earnings summary

Executive summary

• Achieved 5% organic sales growth in Q2 2024, with Technology Solutions delivering 8% organic growth excluding Argentina divestment and recurring monthly revenue surpassing SEK 1.25 billion.

• Operating margin improved to 6.9% from 6.6% year-over-year, driven by all business segments, with Europe showing the largest improvement.

• Integration of Stanley Security largely complete, making the company the second-largest player in the global electronic security market and supporting margin gains.

• Over $50 million in synergy takeout achieved from the STANLEY Security acquisition.

• Recurring high-margin revenue and commercial focus are driving performance, with technology and solutions accounting for 33% of group sales in Q2.

Financial highlights

• Q2 2024 sales reached SEK 40,638M, up from SEK 39,909M in Q2 2023; H1 2024 sales at SEK 79,898M.

• Operating income before amortization was SEK 2,801M; net income for Q2 2024 was SEK 1,310M, with EPS at SEK 2.28.

• Operating cash flow improved to 60% in Q2, supported by improved ERP and transformation program execution.

• Free cash flow was SEK 429 million in Q2, impacted by tax and interest payments; H1 free cash flow was MSEK -930.

• Net debt at SEK 41.9 billion, up SEK 4.3 billion from the start of the year due to dividend, negative free cash flow, and FX effects; net debt/EBITDA stable at 2.9.

Outlook and guidance

• Full-year 2024 operating cash flow expected within 70%-80% target, with strong margin expansion anticipated.

• Operating margin target of 8% by end of 2025 remains, with clear focus on technology and solutions growth and portfolio management.

• Items affecting comparability for FY 2024 expected to be SEK -0.70 to -0.75B, a significant reduction from FY 2023.

• CAPEX expected to remain below 3% of Group sales annually; dividend payout policy remains at 50-60% of net income.

• One-off costs (IC) expected to decline further in 2025 and beyond.