Earnings call transcript: Prosegur Q2 2025 reveals strong growth amid stock dip

Prosegur, the global security services provider, reported robust financial results for the second quarter of 2025, showcasing significant growth across key business segments. The company, which maintains an impressive 90.55% gross profit margin according to InvestingPro data, has demonstrated strong financial health with revenue growth of 13.8% over the last twelve months. Despite these positive earnings results, the company’s stock saw a decline of 5.51% in the immediate aftermath of the earnings announcement.

Key Takeaways

• Prosegur’s total sales increased by 5.1% to €2.5 billion.
• The company achieved an 80% surge in net income, reaching €64 million.
• EBITDA rose by 15.9% year-over-year to €170 million.
• The stock price fell by 5.51% following the earnings call.
• Prosegur anticipates continued improvement in security business margins.

Company Performance

Prosegur delivered a solid performance in Q2 2025, with total sales rising by 5.1% to €2.5 billion. The company’s net income saw a remarkable increase of 80%, reaching €64 million, while EBITDA grew by 15.9% year-over-year to €170 million. These results reflect the company’s strong operational efficiencies and strategic initiatives across its business lines.

Financial Highlights

• Revenue: €2.5 billion, up 5.1% year-over-year
• Net income: €64 million, up 80% year-over-year
• EBITDA: €170 million, up 15.9% year-over-year
• Net financial debt: €1.4 billion with a net debt to EBITDA ratio of 2.3x

Earnings vs. Forecast

Prosegur did not provide specific earnings per share or revenue forecasts for the quarter; however, the company reported strong financial results with significant year-over-year growth in key metrics. This performance aligns with the company’s strategic focus on enhancing operational efficiencies and expanding its market presence.

Market Reaction

Despite the strong earnings results, Prosegur’s stock price fell by 5.51% immediately following the earnings announcement. The stock’s decline contrasts with its solid financial performance and may reflect broader market trends or investor concerns about future growth prospects. The stock is currently trading closer to its 52-week low of 1.65, down from a high of 3.085.

Outlook & Guidance

Prosegur remains optimistic about its future prospects, projecting continued positive trends in security business margins and cash flow generation of €33 million. The company plans to invest further in marketing and product improvements for its alarm business, aiming to enhance its competitive position and drive long-term growth.

Executive Commentary

Maite Rodriguez, CFO, highlighted the company’s achievements, stating, "We reported a strong first half of the year, paving the way for achieving the objective set for 2025." Juan Garcia Galliano, Head of IR, emphasized the importance of Prosegur’s geographic footprint and commitment to transformation products as key strengths in navigating a challenging environment.

Risks and Challenges

• Macroeconomic pressures: Potential economic instability in key markets could impact growth.
• Inflationary pressures: Rising costs may affect margins if not managed effectively.
• Competitive landscape: Increased competition in the security services sector may pressure market share.
• Regulatory changes: Shifts in industry regulations could pose compliance challenges.
• Supply chain disruptions: Any disruptions could impact operational efficiency and cost structures.

Prosegur’s Q2 2025 earnings call highlighted the company’s strong financial performance and strategic initiatives. With a P/E ratio of 16.35 and an "GREAT" financial health score from InvestingPro, the company demonstrates solid fundamentals. Despite the stock’s decline, the company remains focused on leveraging its strengths to drive future growth and improve margins across its business units. Discover more detailed metrics and analysis with InvestingPro’s comprehensive research tools and Pro Research Report, available for over 1,400 US stocks.

Full transcript - Prosegur (PSG) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Prosegur Q2 twenty twenty five Results Presentation. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Juan Garcia Galliano, Head of IR. Please go ahead.

Juan Garcia Galliano, Head of Investor Relations, Prosegur: Good afternoon, and welcome to Prosegur First Half twenty twenty five Results Presentation Webcast. Before we start, I would like to remind you that this presentation has been prerecorded and that it will be available on our corporate website. I will now hand you over to our CFO, Maite Rodriguez.

Maite Rodriguez, CFO, Prosegur: Good afternoon, and thank you all for your presence. We are pleased to present Prosegur’s results for the 2025. As we shall see throughout the presentation, operating results continue to follow a strong path, showing good performance when compared to last year. From a financial standpoint, net income marked an impressive 80% increase year on year, evidencing a strong performance not only at an operational level, but also from a treasury and tax perspective. For all the above, we are confident that we continue to be on the right track to comply with our main objective of generating value for our shareholders.

All our commercial and financial teams are working side by side that goal, and we expect the second half of the year to be marked by cash flow generation and further deleveraging of the company. Now with all this in mind, let’s take a deep dive into the most significant aspects of the period. Our top line grew by 5.1% compared to the same period of last year, mainly driven by organic growth. Every region where we operate increased with a special highlight in The United States and the APAC region. As we shall later see, in the former region, our Security business continued to experience a strong growth, while in the later, cash volumes continued to increase at very healthy levels.

As for profitability, EBITDA stood at €170,000,000 15.9% higher year over year, mainly explained by the strong performance of our Security business. Indeed, volume growth jointly with an agile commercial strategy to pass through cost to prices explained the result. Our cash business showed good operating performance in all major geographies. However, results were somehow impacted by the devaluation of the dollar, which tend to trigger devaluation throughout Latin American currencies and by the implementation of an aggressive cost saving program. We will explain this in detail later.

But for now, in mind that it resulted in high severance costs. For our Alarm business, as we will see, operational performance was clearly enhanced, reflected in better and healthier indicators. In this framework, it is remarkable the fact that we have achieved 1,000,000 connections. Thanks to an efficient working capital management and keeping infrastructure CapEx under control, the higher achieved profitability rebounded in higher cash generation. Overall, net debt stands at 2.3x relative to EBITDA despite our typical seasonality in the first half of the period.

Let me remind you that our debt is not only very well structured in the long run, but also very cheap, with an average cost of 2.4%. A few words on Argentina are worth of mention. While the economy continues to normalize from a macroeconomic perspective, as inflation rate continues to reduce on a monthly basis, FX has recently shown some relative volatility. This has more to do with the upcoming midterm elections rather than to deep fundamentals. On the growth side, the sharp recovery that the economy experienced throughout the first half of the year is already behind us, and now growth rates have normalized to more sustainable levels.

Let’s now turn to Slide two, where I would like to deep dive into our sales and EBITDA figures. As said, total sales during the first quarter increased by 5.1% over last year, reaching EUR 2,500,000,000.0. Discounting for the FX effect, almost the entire growth was organic, evidencing our strict policy when it comes to passing through inflation to prices. At the same time, volumes continue to grow both in our most traditional businesses without exception and most importantly, in our transformation product. As for geographic sales diversification, it should be noted that Roe continues to be the driver.

Both U. A. And APAC region continue to grow at higher than average rates. We foresee to see the exact same trend for the upcoming years positively affecting the sustainability of the entire company. Moving now to further review profitability.

EBITDA reached EUR 170,000,000, marking a healthy 15.9% increase compared to last year. Our cash business registered an EBITDA of EUR 112,000,000, in line with the previous year. This includes the extraordinary expenses incurred due to the implementation of the cost saving program coming from reorganizing the distribution of our stocks. If excluded, EBITDA amount to EUR 117,000,000, marking a 3.7% increase year over year. Turning now to our Security business.

EBITDA amounted to EUR 38,000,000, 12.1% higher compared to the 2024. Healthy volume growth, coupled with a strict discipline on cost, explained the enhanced performance. Technology sales further contributed to the good results. As we always explained, our ability to provide high end tech solutions is one of our main competitive advantages and constitutes one of our main pillars. Lastly, our Alarm business continues to be on good track, and good proof of this is the evolution of main financial indicators such as service margin and churn rate.

Let’s now turn to our full P and L that as it can be seen showed a remarkable increase compared to last year. The better performance on financial results has a lot to do with the normalization of the Argentine economy. As explained, inflation rates are going down quite rapidly, resulting in a minor impact due to the inflation accounting. At the same time, the abrupt narrowing of the FX caps further contributed as dividend upstreaming became cheaper. Going further down to accrued taxes, the two seventy nine basis point reduction in the effective rate should be highlighted.

The rationale behind this reduction is twofold. On the one hand, we had better results in all individual geographies. And on the other, as just explained, negative results stemming from hyperinflation accounting and dividend upstreaming were significantly reduced. All of the above led to a net income of €64,000,000 achieving an astonishing 80% higher year over year. Let’s now turn to cash generation during the period.

As it can be seen, following the historical seasonality of the business, free cash flow resulted in negative EUR 36,000,000, EUR 8,000,000 higher compared to the previous year. This is naturally explained by a higher EBITDA, but also as a result of a strict discipline on DSO, resulting in less consumption out of working capital requirements and by lower CapEx. Net financial debt reached €1,400,000,000 resulting in a total net debt to EBITDA ratio of 2.3 times. It’s worth highlighting that both the terms and the structure of our debt is very healthy, with an average cost at 2.4% and over 65% at fixed rate maturing between 2026 and 2029. As already explained in the previous quarter, Persegur cash bond matures in 2026, which has been recorded as short term on our balance sheet, but we have practically completed the refinancing, while the new loans will mature between the next three to five years.

That’s all for me for now. I will now turn the presentation over to our Head of Investor Relations, Juan Ignacio Galliano, who will give you more detailed information on the development of the specific business areas.

Juan Garcia Galliano, Head of Investor Relations, Prosegur: Thank you very much, Maite. Let’s now have a look at the results of each business line, covering the main performance indicators and most relevant aspects of the period. Starting with our cash business, I would like to reinforce the almost 10% organic growth that we achieved during the first half of the year. This is a good testament to not only an effective commercial strategy, but also, and perhaps more relevant, to healthy volume growth. As we always stress, our diverse geographic footprint, coupled with our commitment to transformation products, are cornerstones to cope with a more challenging environment in developed countries.

As for the latter, sales already exceed 34%, marking an impressive increase year over year. Cash to days are definitely driving this growth, which leads me to the cost savings program that we implemented. The truth is that not only cash to days constitute an additional source of revenue and profit, but it also allows us to enhance the logistics of our traditional business. In particular, we can reorganize the distribution of our stops, enabling us to make a better and more efficient use of our fleet and to reduce workforce. At the same time, we’ve made several enhancements to the distribution of the routes, which combined with the normalization of the Argentinian economy that we already referred to allow us to further reduce stops.

This will naturally redone in better margins in the months to come, but it negatively impacted second quarter’s result as we had to incur insignificant severance costs. It’s worth mentioning that we estimate a one point five year payback on this cost savings program. As it is shown in the mid graph, once these costs are fully excluded, EBITDA increased by 3.7% year on year, while EBITDA margin goes from 11.3% to 11.7%. Let’s move now to our Security business, which continues to favorably evolve. Total revenues reached EUR 1,300,000,000.0 with the organic share reaching 16%.

As usual, this is mainly driven by our volume based strategy that leads to operating leverage, our capacity to pass through inflation to prices and the outstanding performance of the operation in the main countries. The latter also explains the negative FX impact as the dollar continued to depreciate against the euro during the quarter. All the above, coupled with enhanced efficiencies and operating leverage, resulted in total EBITDA reaching EUR 38,000,000, 12% higher compared to the same period last year. Margins for the part continued to increase, reaching 2.94% during the first half of the year. Even though all geographies performed, results were mainly driven by our operations in Spain and The USA.

As we have explained in past results, macroeconomic stability in Argentina, evidenced by the significant reduction in inflation rate, is very positive for the business. As for The USA, it continues to be a very important driver, and we are confident that it will continue to be so as we plan to further expand operations there. Operating cash flow resulted in EUR 16,000,000 compared to the negative EUR 20,000,000 registered in the first half of last year. This is by every means impressive and marks a new standard for the business. Indeed, we’ve already reached volumes and margins that imply positive cash flows no matter how aggressive we are in sales growth.

In fact, operating cash flow includes an €11,000,000 working capital impact resulting from higher volumes. This is definitely a very important milestone for the company as now all main businesses will contribute to our deleveraging strategy. Let’s now turn to the alarm business where we reached another important milestone. Indeed, our client base surpassed the million connections, marking a 13.1 increase year over year. As we always highlight, growing in BTC is crucial for the business.

It needs to be done in a healthy manner in order to be able to translate the growth into long term value creation. In that end, it’s clear from the graph that we achieved that as every relevant KPI moved in the right direction, churn rate stayed in line in Proseguro alarms and was reduced by 1% in Movistar Proseguro Alarmas, reaching the sweet spot of 10%. ARPU and consequently, the service margins for their part increased, reaching 20 and €22 per BTC for procedure alarms and NPA, respectively, evidencing a strict discipline of our commercial team when it comes to passing through costs to prices. As for acquisition costs, the increase in both cases has to do with a deliberate strategy of increasing marketing expenses, while at the same time, we continue to invest in product enhancements. Let’s now turn to the following slide to see how all these indicators flow into recurring cash flow.

The combination of higher service margin coupled with either stable or lower churn rate naturally implies an increase in recurring cash flow. That is the resulting cash after the clients that churn are fully reacquired. In the charts above, what we are showing is the twelve month rolling recurring cash flow of both Proseura alarms and NPA. The one on the right side clearly indicates that the generating cash flow capacity of the two businesses combined for Proseguro stands at EUR 76,000,000, 25% higher year over year. This concludes our analysis of the performance of each business line for the first half of the year.

Thank you all for your attention. I will now hand the microphone back to our CFO, Maite Rodriguez, for closing remarks.

Maite Rodriguez, CFO, Prosegur: Thank you very much, Juan Ignacio. Let me now share with you my closing thoughts on the most relevant conclusions of this results presentation. Overall, as we have seen during the presentation, all businesses reported enhanced operating efficiencies and strong results. On a consolidated basis, total sales increased 5% despite the adverse effect of depreciated currencies. EBITDA margin reached 16%, while net income increased by a remarkable 80%, thanks to the good performance of all our business lines.

In our cash business, the organic sales increased by 10%, while we put in place an extraordinary cost saving program, thanks to reorganizing the distribution of our stocks that will allow us to increase EBITDA margins in the future. Turning to our Security business. Sales volumes increased by 8% compared to the previous year, and we achieved higher margins, thanks not only to its scalability, but also to our robust client portfolio and efficient price pass through. Even more important is the fact that the business will start to structurally contribute with positive cash flows from now on, probably excluding the first quarter due to seasonality. This is definitely, as mentioned before, a very important milestone for the company as now all main businesses will contribute to our deleveraging strategy.

Lastly, our Alarm business demonstrated very solid growth, surpassing the 1,000,000 connections. This growth is accompanied by a strong result in key management indicators. We have seen improvements in churn, service margin and ARPU. This strong performance translates into a rolling recurring cash flow of EUR 76,000,000 implying a 26% year over year increase and pointing to a robust cash generation. As said at the beginning of the presentation, we reported a strong first half of the year, paving the way for achieving the objective set for 2025.

This was all on my side for this results presentation. I would like to thank you all once again, and we are now open for Q and A.

Conference Operator: And Thank We We will now take the first question from the line of Alvaro Bernal from Alantra. Please go ahead.

Alvaro Bernal, Analyst, Alantra: Hello. Thank you for taking my question. I have two. The first one is regarding the EBITDA from corporates. I’m seeing in your accounts that for the first half, it has yielded 20,000,000 If you can shed more color there, what is driving this result.

I think something similar happened already in Q1, but it’s repeated once again in Q2. If you can just refresh me, what that was. And, the second question is regarding, security stand alone in Q2. We have seen growth, when it comes to this, to sales. But in terms of margin, when we look at it stand alone q two versus last year, it has fallen.

If you can, again, shed some color on the product mix here, it would be amazing. Thank you.

Maite Rodriguez, CFO, Prosegur: Thank you, Alvaro, for your questions. In relation to the first one, coming from what’s happening with the overhead, why we have a 30,000,000 positive overhead. It’s mainly because there are, like, three reasons here. The first one is coming because we are also booking there all the revenues coming from the rent of our buildings. As you know, we have real estate that amount more than €300,000,000, and part of it, around €70,000,000, is allocated in Argentina in in some towers that we have in a very prime areas.

And the rent that we are receiving from there, they have also increased. So we have an increase coming from them, from the real estate. The other one, as I also mentioned in the first Q, is coming from the trademark, mainly because the security business is is achieving better results. So we are receiving a better income coming from trademark, but also because we we have we have agreed with the Spanish tax authority a new brand royalty and the one that is higher in comparison to previous years, and that’s why it also has increased. The rest of the amount are related to the markup that we charge to the rest of the businesses coming from the support areas.

In relation to the second question about the stand the stand alone margin of security, you have to consider here, as we mentioned also on the first Q, that the we there was the pass through in as you know, we we are all year passing through prices during the year, and the first queue really has a very, very good result because we taking because we did it in advance. More or less, a 5% was done in advance. So that’s why you have that difference. But we already even we mentioned it in our first q result presentation that it was not going to be it we were not going to have such a big margin and such a big increase in the rest of the of the years, but it was mainly because of that. Because the the low inflation helps us also passing through prices quicker, and we are really doing very well this year.

And it’s one of the keys why we are still continuing having that good margin also in this second half because, as you know, seasonality is one of our main impact that we have coming from from this passing through inflation depressors.

Alvaro Bernal, Analyst, Alantra: Perfect. And, a follow-up to both questions, if I may, regarding forward looking statement on how we should view, on the one hand, the PGA and unallocated EBITDA going forward, we should expect this to be recurrent. And in terms of security, the margins when looking at them for the whole year. Thank you.

Maite Rodriguez, CFO, Prosegur: Alvaro, in relation to PGA, yes. For the rest of the year, the trend is going to be the same one. It’s going to be positive. Yeah. And even I can tell you that it’s going to be like that from now on.

Also, for the even for the budget that we are doing for 2026 is is also positive. And the second one, in relation to what’s going our our what we expect in the security margins for year end, We are going to keep this trend. As you know, as I always says say, security business is a volume business. So the the the improvements happen little by little based on our strict discipline in passing through inflation, in the control in in the absenteeism, in the scalability, and so on. So we will have a positive trend if we are going to have better margins than last year.

And I think that the the the most significant milestone for this year is going to be that the cash flow is going to be at least they are going to generate €33,000,000, and we expect that even if it’s going to be more. So that’s going to be an important milestone for the year because from now on, all the business units that Prosecco has are going to contribute positively on our on our delivery team strategy. So that’s a very positive thing, and that’s why, we we we are also positive on the on the deleveraging for year end.

Alvaro Bernal, Analyst, Alantra: Thank you.

Conference Operator: Thank you. There are no further questions at this time. I would like to hand back one moment, please. We have another question from the line of Joaquin Garcia Quiroz from JB Capital. Please go ahead.

Joaquin Garcia Quiroz, Analyst, JB Capital: Yes. Hello. Thank you for taking my question. Just a very quick one. So the Alarm continues to grow at a very good rate.

It continues to add lots of new clients, but at the cost of increasing the acquisition cost, it has increased quite significantly in both regions. Should are these levels where you feel comfortable that you can maintain them at least for the next few years? And when can we expect the acquisition cost to to go down, if ever? Thank you.

Maite Rodriguez, CFO, Prosegur: Thank you, Joaquin, for your question. In relation to the acquisition cost of alarms, as you know now, we are investing a lot in marketing, in publicity, and in in the product improvement. So that’s why you you are, observing that increase. During this year, 2025, it’s going to keep it like that. I don’t expect any decrease in terms of acquisition cost.

But for the 2026, for sure that there will be a a decrease. But this year, no, because we as you know, we are changing our marketing and publicity strategy, and this implies a higher investment in publicity, and so that’s why it’s increasing. But, it’s not going to be for the long run.

Joaquin Garcia Quiroz, Analyst, JB Capital: Perfect. Thank you.

Conference Operator: You. There are no further questions at this time. I would now like to turn the conference back to Maite Rodriguez for closing remarks.

Maite Rodriguez, CFO, Prosegur: Thank you very much for attending this presentation. If you need further information, please contact our Investor Relations department, who is open to help you at any time. Have a nice day.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.