Good day, and thank you for standing by. Welcome to the Prosegur Q3 2022 results presentation. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one one on your telephone. You will, then, hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Antonio de Cárcer, Head of IR. Please go ahead.
Good afternoon, and welcome to the presentation of the Prosegur results for the first nine months of 2022. This presentation will last around 30 minutes, followed by an open Q&A session. This webcast will be hosted by our Group CFO, Maité Rodríguez, and myself. Prior to starting, I would like to remind you that this presentation has been pre-recorded, and that will also be available to download in our corporate webpage. I will now hand you over to our CFO, Maité Rodríguez.
Good afternoon, everyone, and thank you for attending this presentation. I am very pleased to inform you that the results we are presenting today reflect a solid and a steady continuation of the growth in revenue and profitability we have been delivering throughout the year. As we mentioned at our last presentation, we are continuing to bring about an extraordinary recovery from the pandemic situation, with improvements in our top line and profitability quarter-over-quarter, b enefiting from macro conditions and demonstrating the exceptional capability of our commercial teams and business model to cope and take advantage of the current environment. Let us start this presentation with a quick update on the most relevant highlights of the past three months.
Arguably, the most relevant fact pertaining to this third quarter is the extraordinary growth experienced by the company throughout the year. Building on the effort and results of previous quarters, Prosegur continues to improve its revenues and profitability. Revenues have grown by more than 24% in the nine months and close to 28% in the isolated Q3. Sales growth has been consistent throughout all regions and relevant business lines. Organic growth has had an excellent performance, with a 20% increase while taking advantage of the inflationary environment, which accelerates cash velocity in all countries. An excellent increase in price transfer to market has been achieved in record time this year, in line with our budget and with no dilutive effects. Profitability has followed the same path, increasing by 30%, also showing a quarter-over-quarter improvement, whereas net profit has grown by 35%, resulting in an increased earnings per share.
Finally, two additional milestones have been achieved this past quarter. Prosegur has renewed its investment grade rating for the 12th year in a row, maintaining the BBB stable qualification from S&P, proof of the solidity of our balance sheet. On the M&A side, we have closed the acquisition of one of the world's leading operators in the currency exchange industry, ChangeGroup. Let me give you some more details about this operation. ChangeGroup is the third global operator in the currency exchange industry, a benchmark in its sector, founded in 1991, serving more than 50 million customers and operating a network of nearly 100 points of sales in 37 cities across nine countries, mainly in Western Europe and Australia. It also manage a fleet of more than 300 ATMs and has a significant online presence besides its strong physical one.
Through this acquisition, we continue to advance the development of the new product area as a key element in our transformation strategy, which includes diversifying the portfolio and increasing our geographic presence. In fact, with a run rate revenue figure of around EUR 100 million in 2023, ChangeGroup will become one of the main contributors to our new product line. Additionally, ChangeGroup's current infrastructure will benefit from our international cash handling experience, which will help us to jointly develop new services and solutions for the large customer base of ChangeGroup. Thanks to this transaction, we are betting on a new segment that we believe has great potential and complements our product portfolio very well.
Our goal is to build an operation strongly based on the digital experience, both for product and development channels, and therefore covering customer needs anywhere in the world in a quick and efficient manner. Let's now move on to analyze in detail the income statement of this nine -months period. As in the previous quarters of this year, the fact that clearly stands out when observing both the accumulated nine months P&L and Q3 in isolation is the consistently high double-digit improvement in all lines.
Revenue growth of 22.4% compared to the same period in 2021. EBITDA growing by almost 24%, reaching EUR 346 million. May I remind you that this EBITDA figure does not include the additional EUR 8.7 million in income resulting from the reversal of a provision during the second quarter of 2022 due to a favorable ruling on a regulatory sanction imposed by the antitrust authorities in Spain back in 2016. Additionally, EBIT has grown by 33.3%, and net profit by 35%, a very remarkable profitability result, higher than revenues in all lines. This is clear evidence of capability to create value and to bring about a strong margin recovery. Also worth noting when analyzing the P&L is the increase in financial expenditure, mainly due to the accounting effect arising from FX differences in intercompany loans, which therefore does not have any impact whatsoever on the cash flow.
Lastly, we are also managing to gradually reduce our tax rate as a result of improving our results in all regions and individual entities. Continuing with the revenue breakdown analysis by nature and region, I would like to draw your attention to the extraordinary performance of our organic growth over the last six quarters. As shown in the charts on the right side of the slide, both Prosegur globally and the two largest business lines of the group, cash and security, show a strong, sustained acceleration quarter-on-quarter. This is solid proof of the excellent level of growth that the company is experiencing, based not only on the beneficial effects of inflation, but also on the capacity for innovation and generation of new solutions that ensure our company remains one of the preferred suppliers for most of its customers in any region.
As you may notice in the chart at the bottom left of the slide, in geographical terms, the growth in both local currency and euros has also been outstanding, reaching more than 9% in Europe, in line with year-on-year inflation levels and driven mainly by the positive evolution of cash in Germany and security in Spain. In the LatAm region, growth has been close to 35%, taking advantage of the present currency stability and strongly accelerated by the high inflationary environment in the region. Finally, in the rest of the world, we can also observe an excellent growth of 35.9%, obtained mainly by the security business in the U.S., which continues to maintain growth above 50%, as well as by the good results of our operations, mainly in Singapore, the Philippines, and South Africa.
Turning our attention to profitability, this shows the same trend of sustained improvement observed in sales levels. In terms of isolated quarters, we can see how cash maintains a strong rate of improvement in its profitability, which began at the beginning of 2021, surpassing the equivalent levels of previous years in absolute terms and strong improvement levels in relative terms, currently approaching pre-pandemic levels. Security, on the other hand, continues the gradual improvement in profitability observed over the last 12 months, offsetting the negative effect of the termination of the subsidies that had been provided by the American government during the pandemic. It is important to emphasize that this improvement in profitability occurs despite the strong investments in growth that are being made in the USA.
Regarding the alarm business, the respective Prosegur EBITDA levels remain stable in both units, temporarily affected by investments in commercial campaigns, coupled with the renewal of certain operational support infrastructures to the business that will be normalized over the next few quarters.
Moving on now to the consolidated cash flow statement. The most significant variation we can observe comes from the changes in working capital. This is obviously tightly linked to the strong sales growth we are delivering, as well as the increased inventory stockpiling in place in order to safeguard the supply chain. In isolated quarter terms, the operating cash flow generated in Q3 of 2022 has been 25% greater than the equivalent generated in Q3 of the previous year, EUR 75 million versus EUR 60 million, respectively. We expect to maintain this trend during the remaining months of the year, keeping our collections in line with previous years, DSO, in order to normalize cash generation during 2023 to levels similar to the group's historical ones.
On the other hand, infrastructure CapEx remains at around 2% of sales, and customer CapEx continues to increase as demand for security technology solution and cash product increases. Finally, variations under the caption tax on profit are directly related to the increase in results since it has a direct impact on the tax payments.
Looking now at the group balance sheet, I would like to comment on its sustained strength, endorsed for another year running by the renewal of our S&P credit quality rating that maintains the BBB stable rating for the entire group. Additionally, amid the current context of interest rate hikes, it is important to point out that, thanks to our prudent debt management policies, 86% of Prosegur's gross debt has fixed interest rates. Such rates were agreed before April 2022, and have very long-term maturities, most of them in 2026 and 2029. This brings about an added layer of assurance in the knowledge that the average cost of our debt over the next few years will remain at levels well below the market average, currently at 1.53%. These were all the comments to be made on my part for the time being.
I will now hand over the presentation to our Head of Investor Relations, Antonio de Cárcer, who will give you more detailed information on the development of the specific business areas, as well as some additional information on our ESG progress and achievements.
Thank you very much, Maite. Let's now have a look at the results of each activity line, covering the main performance indicators and the most relevant aspects of the period in each one. Starting with the cash business, the most relevant data of the period comes from the extraordinary sustained growth that this line of business has once again delivered quarter-over-quarter. Sales have grown by 31%, driven by the increase in cash volumes in circulation, accelerated by inflation, and with a noticeable improvement in organic growth in all regions. Profitability has also continued to accelerate its growth, exceeding the 61% increase compared to the same period in 2021, benefiting from our redesigned operating structure during the pandemic, now able to absorb growth efficiently without any increase in cost. Cash generation also improved compared to the previous quarter, despite the strong growth, especially in new products.
New products grew by more than 51% year-on-year, especially in the LatAm and Asia Pacific regions, in addition to its strong growth in Europe, where it already accounts for around 90% of the total sales of the business in the region. New products has further been strengthened by the incorporation of ChangeGroup through the recent M&A operation. ChangeGroup is one of the largest global operators in the currency exchange business, with a broad structure in Europe and Australia in a business of enormous growth potential and with great possibilities of exchanging knowledge and synergies with the rest of the cash areas.
Analyzing the result in more detail, we see that total sales in the nine months of 2022 reached EUR 1,417 million, with a pure organic growth of 26.8%, accompanied by a 4.8% of inorganic nature from the acquisitions made in LatAm and Europe in the first and third quarters of the year. Regarding new products, this area continues to expand its presence in cash customers, and recently accounts for 24.7% of total revenue. An excellent result underlined by the fact that its growth in each region has been higher than the growth of traditional cash management and logistic products, accelerating its penetration in the product mix and rising close to 63% year-on-year if we disregard the divestments of cash in AVOS in 2021. An excellent indicator of the high level of transformation of the cash business, capable of adapting quickly to new market requirements.
Finally, cash EBITDA grew by 61% to EUR 195 million, with a margin of 13.7%. This integrates a growth of 48% in the isolated quarter against Q3 in 2021. An outstanding result, continuing the margin acceleration trend initiated in 2021, showing the benefits of the operational restructuring put in place during the initial stages of the pandemic, and the positive effect that inflation has on volumes of cash in circulation.
Moving now to the security business, we can see how the growth dynamics observed during the first half of the year have been maintained during the past quarter, accelerating smoothly in both sales and profitability. Total sales have grown by 19%, with positive organic growth in all countries, driven mainly by the good performance of Iberia and the United States, where sales growth continues to remain above 50%.
Profitability also continues to improve gradually, despite the strong investments that are being made in the U.S. to develop a real global presence in the country with a view to accessing a greater market share. These investments are mainly in infrastructure and personnel, and we expect their cost to be absorbed by the growth of the business over the next year. The improvement in profitability is also due in part to the excellent price transfer campaign carried out by the security business, especially during the first half of the year, being accomplished with high level of success in all regions.
With regard to innovation and new products, these continue to increase their penetration, mainly in regions with mature economies such as the U.S. and Europe, but also with a noticeable participation in emerging economies, as the strong scalability of this type of solutions based on remote monitoring reaches greater density and lowers its cost of access to the client. Security sales in the period have reached EUR 1,550 million, 19.3% more than in 2021, with a pure organic growth of 16%. A positive exchange rate effect close to 3% due to the greater weight of the United States in the geographical mix. New product and technology sales continue to increase their penetration above the sales growth of traditional guarding services.
Currently, sales of new products, such as remote monitoring services from SOC, mobile guarding or remote aerial monitoring, have increased their sales by 20.6% compared to 2021. Those of basic security technology have increased by 27%, while traditional guarding has grown by 16.2%. A very interesting evolution accelerated by greater penetration in mature markets and an increased demand from all types of customers.
Finally, analyzing the profitability of the security business, we see that the reported EBITA has reached EUR 36 million, with a margin of 2.4%. This implies a sustained improvement with respect to previous quarters, although the security business has yet to compensate for the loss of the income generated by the assistance programs to maintain employment launched by the American government during the pandemic. It is important to note that if we isolate these effects from our margins of last year, the improvement in recurring EBITA is very high and visible, and this excellent trend allow us to be very positive about the recovery and advancement of the security business.
Analyzing now the alarms business, we see that the total contract base has continued to grow by 18% compared to last year, now exceeding 786,000 connections. As for Prosegur Alarms, during the last three months, there have been a total of 13,100 new registrations. This represents a strong increase of 37% of pure organic growth, thanks to the increase of our sales force. Whereas in Movistar Prosegur Alarmas, the number of registrations in the period has risen to almost 40,000, surpassing the same quarter of the previous year by about 6%, and maintaining a good growth rate despite the reduction in the classical summer season sales offers. In both units, there have been improvements in ARPU and churn rate compared to previous quarters.
In terms of profitability, the pre-SAC EBITDA decreases slightly as a result of greater one-off investments focused on adapting the technological support infrastructure to the new intelligent video detection services. Additional to the strong commercial effort that has been made in previous quarters. It is worth noting that the new video and alert management platform with intelligent image detection implemented at the beginning of the year has had such a high demand and acceptance rates that it has been necessary to expand the operational infrastructure to be able to absorb present and future demand while guaranteeing the best quality of service to our customers.
Looking now at the business key performance indicators of both units, the most remarkable facts we observe are the combined install base of MPA and Prosegur has grown by 12.2%, and it has now reached 431,000 and 355,000 active customers, respectively. As we mentioned earlier, both ARPU and churn rate have improved in both units.
In the case of Prosegur Alarms, the expansion in ARPU is very strong, increasing to almost 19% compared to the end of 2021 and reaching 38 EUR per client. This improvement is strong evidence of the alarms business capability to pass inflationary costs to prices with little deterioration on the customer base. In fact, the churn rate of Prosegur Alarms continues to improve by more than 1% compared to 2021, despite the strong update of ARPU. MPA, on the other hand, also improves ARPU and churn indicators with respect to previous quarters. Although it is still under dilutive effects of the enormous growth of the installed base generated through aggressive commercial campaigns, that will be gradually offset as the promotional periods of new customers come to an end and they begin paying the amounts contracted in full years.
Additionally, operating cash flow generation in Prosegur Alarms has grown, reflecting the increased client base. The same has been the case with the accumulated subscriber acquisition cost, which has remained stable at unitary client level. As mentioned earlier, the total number of new clients has increased by 37%, and EBITDA has increased by more than 27% in Prosegur and close to 24% in MPA.
Finally, looking at revenues on Prosegur Alarms only, we can see a very solid 23% organic growth, affected by a still present negative inorganic growth resulting from the sale to MPA of the commercial unit, Prosegur Soluciones, coupled with a negative FX impact of 5.2%, since 2/3 of the alarms belonging to Prosegur Alarms are in Latin.
Now, to conclude this analysis of results by businesses, we will examine the areas of Cipher and AVOS, whose performance in the first nine months of the year has been as follows. AVOS has increased its sales by almost 39%, reaching EUR 63 million. This growth comes mainly from the contribution of its technological unit, AVOS Tech, which has generated a strong result above budget, especially in its specific application of the management of insurance companies, SISnet, a very unique platform subject to high demand from premium insurance companies in Spain and LatAm. Gross profit in AVOS also grew by an excellent 28.3%, mitigating the negative effect caused by the Omicron in the first month of the year, mainly in the more labor-intensive part of the traditional BPO business.
However, gross margin is still slightly under par, standing at 26.1%, although with good prospects of recovery as witnessed in recent quarters. Cipher, on the other hand, is still undergoing a process of remodeling its commercial offering, which seeks to develop products and services of higher customer recurrence rate, as opposed to the current portfolio of services more focused on one-off contracts. Therefore, both its sales and profitability are being temporarily affected by those changes, maintaining a flat profile with no noteworthy positive changes.
This concludes our analysis of the performance of each business line in these first nine months. As is customary, I would like to briefly comment on our latest ESG performance and improvements. Prosegur has just published a new version of its Code of Ethics and Conduct, a series of updated guidelines for behavior, principles, and values for the entire workforce, which are based on the evolution in recent years of the company's commitments. All Prosegur businesses and departments have been involved in its development.
Prosegur views its Code of Ethics as a living document, updated over time to reflect the changes taking place in the company and in society as a whole. This year, a new version has been launched, which integrates new content in accordance with the present situation of the company and its outlook for the future. We are speaking of a profound renovation reflecting the new social context of recent years, marked by a phenomena of such significance as digital transformation and the boom of technologies like big data and artificial intelligence.
It also reflects the global momentum of ESG criteria, as well as the impact of increasingly comprehensive regulation on these aspects. A new framework that requires greater efforts to be made in regard to compliance, ethics, and transparency. Thus, the content modifications made to the Code are designed to reflect the evolution of the company, the market, and the society. On the one hand, it reflects the brand DNA reflected in our values and principles, and at the same time, it adapts to the development of the business and the new management of the company in recent times, in addition to the regulatory changes and best practices of the global private security market.
Other aspects refer to the application of the Code across all areas of the company, as well as its dissemination through all possible channels to ensure a maximum degree of awareness, leading to the utmost degree of compliance. Thank you for your attention. I will now hand the microphone back to our CFO, Maite Rodríguez, for her closing remarks.
Thank you very much, Antonio. Let me now share with you my final conclusions and key takeaways for this nine months result presentation. First of all, I would like to emphasize once again the excellent pace of growth that both our sales and our profitability continue to show for the sixth consecutive quarter. Our core business lines in terms of contribution and all our regions have continued to deliver incremental improvements quarter over quarter, and we remain optimistic that we can sustain this excellent rate of growth in the future. Cash leads the recovery, benefiting from a resilient business model, able to take advantage of inflationary environments, coupled with the additional boost of current exchange rate stability.
In addition, cash is reinforcing its new products strategy with the expansion to new business lines and new regions through the recent acquisition of one of the largest European operators of currency exchange services, an acquisition with enormous potential for growth and development. Security, on the other hand, continues to improve its profitability, relying on a very efficient strategy of passing prices to the market while maintaining an aggressive growth stance in the United States to capture greater market share, which requires a strong level of investment both in CapEx and OpEx. Alarms maintains the improvement of its operational indicators, both in MPA and Prosegur, while continuing to increase its client base, which is already close to 800,000 customers. Finally, our efficient financial discipline ensures very high firepower, with an assured fixed cost for the coming years, well below current cost of capital.
We remain very optimistic regarding the progress of our business towards the end of the year, and we expect to be able to maintain similar levels of development during 2023. That was all from me. I would like to thank you once again for attending this presentation. Now, I will be happy to answer all your questions. Thank you very much.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Once again, that's star one and one, if you wish to ask a question. We will now take the first question. It comes from the line of Enrique Yáguez from Bestinver. Please go ahead. Your line is open.
Good afternoon, Maite and Antonio. Thank you for the presentation. I have several questions regarding the profitability of the security business and the shareholder remuneration. On the security margins of the security business, in the previous call, you mentioned that you expected them to approach levels of 3%-4% this year, sequentially improving quarter-on-quarter, but they have been almost flat this quarter-on-quarter. What do you think explains this evolution, and what are your expectations for next year? If you still expect to reach the target of 4.1%-5.1% targeted in your Capital Markets Day for next year.
Secondly, on the shareholder remuneration, if you could please clarify if the new DPS to be proposed in December is just an advance payment. What do you think it will be a fair estimate of the total DPS to be accurate this year, if it will be in line with last year, fair accurate. Secondly, what sense does it make to extend the share buyback in Prosegur Cash and not to implement a share buyback in Prosegur parent company? Thank you.
Thank you, Enrique, and happy birthday. Regarding the first question, the profitability of security business, we are having a very good tendency. We are very positive. If you can observe, we are growing quarter by quarter, and we expect to continue growing for the last Q of the year. In isolated terms, we should achieve that 3 point something percent , as mentioned, and in accumulative terms, we should be also around that 3%. For next year, we are also very optimistic. We are doing very well in technology, also in traditional guarding. We are achieving a lot of market share in technology, mainly in Spain and also in U.S.A. We are very positive, and we expect to continue this same growing tendency, not just in sales, but also in profitability.
Regarding the second question about the dividend, we have decided to anticipate our 2022 dividend, as we have very strong reserves available. We believe it is good for our stakeholders, and it's, as I mentioned, an advance of next year. In the next board meeting, we will decide which is going to be the rest part of the dividend paid in 2023. In relation to your last question about the share buyback program in Prosegur, we didn't do it. We did it for cash, but we didn't do it for Prosegur because we now do not have too much liquidity. Even we wanted to be conservative on our debt. We will see what happens for 2023, but for 2022, it's not going to be done.
Thank you very much, Maite.
Thank you. We will now take the next question. It comes from the line of Pedro Alves from CaixaBank. Please go ahead. Your line is open.
Hi, Maite. Good morning. Three questions, please. The first one, I'm not sure if you could split, or please give the details of organic growth in real terms, perhaps across your three main divisions, or if that's not possible at the group level, so splitting between price and volume growth from your organic growth headline figures.
Then the second question regarding margins in the cash division. There was again a good year-on-year improvement in the quarter, but was less strong than the improvement in the previous quarter. I was just wondering if there is any explanation for the slowdown in this improvement, or if it is just a natural phasing of contract repricing or even the comparison base, which probably was easier in the first half, and whether you expect to see a margin improvement in Q4 in the same magnitude of Q3. The last question regarding consensus EBIT of over EUR 450 million for this year, whether you think this could be a conservative number considering the nine-month performance. Thank you very much.
Thank you, Pedro. In relation to your first question, now, we are transferring prices in a very good way. The organic growth, if we have to split it between price and volumes, now we are more or less 45% price, 55% volume. But as you know, in general, for year-end, we generally would finish in 50%-50%, something like that. But for this 3Q, it's as I mentioned, 45% price, 55% volume. Moving to the second question, I think that you were speaking about cash, but we didn't get it if it was cash or security.
In relation to cash division, the answer in relation to how we are going to grow and what we expect for the Q4 is that we should continue growing as we have done during this Q3. Same level, same tendency, and similar is going to happen in security business. Coming back to your last question about the EBITDA, we are close to the consensus even, so your figures should be quite right.
Thank you.
Thank you. We will now take the next question. It comes from the line of Francisco Ruiz from BNP Paribas Exane. Please go ahead. Your line is open.
Hello, good morning. Two questions from me. The first one is on labor cost negotiations for next year. Can you give us an update on how they are going, and if you could give some color by regions? The second one is, if you could give a little bit more precise on the breakdown of your margin in security by region. What we should understand is that Brazil, U.S., and probably the rest of the business is doing? Thank you.
Thank you, Paco. In terms of labor cost, we are transferring all the... As you know, we have quite seasonality in this sense. All the bargaining collective agreements are signed at the first part of the year. Some of them in the case of Brazil at the end of the year. We have what we always say, the retrospective effect. We are transferring perfectly to our customers 100% of those costs, and as always, we always try to achieve a little bit of extra benefit from there. We are really very happy and we are really doing very well in all the countries, without exception.
In relation to your second question, the margins of security, you know that here sometimes we can split it between developed or undeveloped countries. We have the highest gross margins in developed countries, and the lowest one in undeveloped countries. But in terms of Brazil and Argentina that are the ones that, I guess that you are the ones that have a higher amount of sales. In the case of Brazil, the results and the profits are evolving very positively. Even this year over year, and we've seen that we are going to have a very positive result so that we can tell you in the next presentation.
Argentina is, as you know, with the hyperinflation that we have in this country, we are increasing our labor cost close to every quarter, even sometimes every two months. But we are transferring prices with no problems. We are also doing very well there, coming mainly from those from transferring prices.
Perfect.
Thank you. As a reminder, if you wish to ask a question, please press star one and one on your telephone. We will now take the next question. It comes from the line of Álvaro Lence from Alantra Equities. Please go ahead. Your line is open.
Hi. Thanks for taking my questions. I wanted to know since we do not have the breakdown of operating profits beyond security and cash, we see that there has been an increase this quarter in terms of the total losses related to alarms plus AVOS plus Cipher plus corporate costs. If you could provide us some detail whether this is due to any specific cost in one of the divisions, or whether you have seen an increase in corporate costs for whatever reason. That would be my first question.
The second question would be more regarding your prospects for security in Brazil going into 2023. You are now seeing a solid improvement in operating performance, but you have some regulatory tailwinds. How do you see this evolving into 2023? Maybe if the changes in government could have an impact there?
Lastly on M&A, you are investing, of course. You have recently announced the acquisition of the ChangeGroup. The question would be whether you would expect to step up M&A investments, because it seems that you are falling a bit short compared to your historical investment levels. I don't know if this is due to that you're not finding sufficiently appealing valuations or whether it's due to much uncertainty or balance sheet constraints. If you could provide some guidance on the budget that you expect to deploy for M&A in the coming years. Thanks.
Thank you, Álvaro. In relation to your first question, you have to consider there that we also have the overhead that if you just try to see our profits and just try to analyze them by business, you have to also consider the overheads coming from security, alarms, Cipher and AVOS. They are in line. Even I think that it's quite exactly the same figure as we had last year. In relation to the second question about Brazil, we are very positive for 2023. We think that we can continue having the same trend that we have had during this 2022.
In terms of how the movement in the presidential could affect us, we already have been there before with Lula, so we do not expect big changes in even until 2024 if we don't think that there should be any significant labor or tax reforms. Nothing to be pointed out in that regard. Regarding M&A, it depends on the opportunities. We have a huge pipeline. We are analyzing a lot of countries. We are really working hard on M&A, but it always depends on a lot of factors, no? Not just the price, but also the type of a company and well, on the vendor, no?
We are analyzing a lot of things, but M&A is like, it depends on so many factors that is difficult to say if we are going to close more deals next year or not. What I can tell you is that we are working hard on this capital allocation, and we will see how it evolves. We are really working harder.
Thank you.
Thank you.
There are no further questions at this time. I would like to hand back over to Maite Rodríguez for final remarks.
Thank you very much for your attention to this presentation, and if you need further information, please we are [audio distortion] department, who is open to help you at any time, definkitely.
That does conclude our conference for today. Thank you for participating. You may all disconnect.