Securitas (SECU) Q3 2024 earnings summary

Executive summary

• Achieved record-high Q3 operating margin of 7.5% (6.9%), driven by strong performance in security services, technology and solutions, and improved results in Europe.

• Organic sales growth was 5% in Q3, with technology and solutions real sales growth at 6%.

• Operating cash flow reached 115% of operating result, reducing leverage and strengthening the balance sheet.

• Integration of STANLEY Security is nearing completion, with focus shifting to commercial development and expanded technology offerings.

• Commitment to achieving 8% operating margin by end of 2025 reaffirmed.

Financial highlights

• Q3 sales were SEK 40,229M (40,047M); organic sales growth 5% (8%).

• Q3 operating income before amortization: SEK 3,006M (2,764M); operating margin 7.5% (6.9%).

• EPS before items affecting comparability increased to SEK 3.05 (2.66) in Q3.

• Free cash flow in Q3 was SEK 2,344M (1,525M), supported by improved operating cash flow and lower CapEx.

• Net debt to EBITDA improved to 2.7 (3.1), below the target of less than 3x.

Outlook and guidance

• Clear roadmap to achieve 8% operating margin by end of 2025, supported by technology and solutions growth, portfolio management, and cost efficiency.

• Focus on high single-digit organic sales growth and maintaining net debt/EBITDA below 3x.

• Technology margin pressure from integration costs is expected to ease as integration costs subside.

• IAC costs are guided to fall below SEK 550 million in 2025, with Stanley integration costs winding down.

• Majority of European margin gains are structural, though some seasonality in aviation will not repeat.