Earnings Call: Q3 2015

Nov 6, 2015

Welcome and good morning, everyone, to the Q3 report from Numis. Glad to see so many here this morning. And of course, also we have all our visitors here on the web. Before we go into the report and to the numbers, I'd like to start off like this. Deja Vu. And as it says in the encyclopedia, note this is not Google since I'm a bit older than using Google, but it is the phenomenon of having the strong cessation that an event or experience currently being experienced has already been experienced in the past. Well, with that said, without joking, I mean, since our previous CEO, Joao Dahlfors, has now left the company or to hunt some bugs or other things, kill bugs. I have temporarily stepped in as the CEO here for until there is a new long term CEO in place. And this is not a new situation for me. I know there are some new faces here, and I'd like to introduce myself shortly here. I was the CEO for Lumis in 2,008 when it was part of Securitas. And they went through the IPO, the successful turnaround. And in 2013, me and Jarl swapped jobs and I went to the U. S. And is now working there as running the U. S. Business, while Joal has been in this seat here for 2 years. So I'm quite familiar with the job here. And as said, I promise to do that for the coming period until there is a new CEO in place for Loomis Long Term Solution. But I think it's also important to point out that this company is a company with a decentralized organization. Our strength is really out there in the organization. We have since 2008, and that is one of the most fundamental things we did with the company is to push responsibility down into decisions to be made where the action is happening. I'm a firm believer that anyway, the best way to service the client in the service industry is to take the decisions very close to the client. So hence that, I think everyone should feel very good and confident about the financial targets which we have set here in 2014. And just to remind you about these, these are targets, and I will come back to and go through them later on, which everyone in Loomis feel very committed to. This is not the targets that was developed by Jaal and was solely for his benefit or for the company's benefit at that time. This is something which is really there for the long run. So I feel totally committed to these and so does the management team in Loomis and all the way down to all our 400 branches there. So with that said, let's move quickly into the report of today and the highlights. We're going to talk about the segments, of course, on finances. And at the end, we will have a question and answer session as well, and of course, also through the web. So what are the highlights then? Well, first of all, I think it's a very strong report with a good I mean, it's actually the best one which we ever done in Loomis. We have organic growth of 3%, which is mainly driven by U. S, 7% in organic growth and mainly driven then by CMS and Safewaynt. And it's also you have to take that into consideration that it's also adjusted 2% for fuel fees. And let me just briefly explain that how it works. I mean, it's in our contracts in the U. S. And in order to protect ourselves, already in 2,008, we implemented matrixes, which takes into consideration when the fuel goes up and saves us and helps us versus our clients. Unfortunately, it works the other way as well. So when the fuel prices go down, then also our revenue is going down. So the real underlying growth rate is actually 9% here in the Q3. And I could and also in September, we actually, for the first time ever, passed a 10% in organic growth. Our operating margin is 11.6% versus last year's 11.3%, of course, driven by the revenue, but the revenue is also causing some cost for us and the start up, not least in the U. S, where we have this growth rate, but also in U. K, where we have announced before that we have some significant contracts being rolled out in the second and third quarter here. But everywhere, we continue to do the efficiency work, and you will see that when we come to the branches and development of the profitability there. It's done in every single one of our branches. And again, that's the strength of this company. Earnings per share is up 18%, and we also announced after the closing of the quarter that we haven't made a minor acquisition in the U. S. Where we bought one of our competitors, Dunbar's, their global logistics service, which is a lot of it's a business which handles diamonds and jewelries, mainly inside the U. S, but it has a phenomenal link to our newly acquired operations in international. And it's further really strengthened that leg or that segment in LUMIX. And also, we have some new contracts for Safeway and I will come back and talk about that later when we get into the U. S. Segment. So the operating margin, as you can see from this slide, continues to develop very favorably. Had the opportunity yesterday to look upon and I can see that also from 2,008, it's actually having the same trend. And I think it's become even more obvious when you look upon it this way. And you can also here graphically see that this is the best quarter which we ever done. It's the best volume revenue. It's the best margin. And of course, it's through those 2 parameters is also the best absolute result which we ever done. So it's a good quarter for us. I said this already several times that this is the strength of Loomis is our branches and the branch managers out there who every day has a plan and a challenge which they should live up to. They are measured. They are incentivized to some extent also based upon the performance in each and every one of these branches. And they also have the mandate to take the right decisions in order to service the client quickly. There's no need to go to Stockholm or to Paris or Houston or whatever for decisions. Those could be made already in the branches in order to quickly service our client. Of course, not every decision can be made there, but enough to have a good service to the clients. And as you can see here, the profitability for our branches continuing to develop nicely. This is not a direct reflection of the P and L. This doesn't take into account the volume in those different branches. But it surely gives an indication and the trend that we are on the right way. I remember back in 2,008 when we set the target of 15% of the branches should be performing or should be underperforming, not more than 15%, should be underperforming. I think that we have revised that target now. I'm sure that we can get down to 10%, if not even lower. And of course, we have already achieved the financial target of 10% in 2014. So this is something which is on the agenda each and every day for all of our branch managers to drive their quality and to drive their profitability. Let's talk a bit about the different segments here. So in Europe, we have an organic growth of 1%. I think the thing there to talk about is really that the first time in 5, 6 years, we're seeing an organic growth in Spain. And you know all of you know what have happened in Spain and the issues which have been there, not least in the banking sector, where we have seen lots of bank branches being closed, banks and JAX merging together. And now it seems like the economy is recovering. It seems like the retail business is coming back. And as said, for the first time in a long period of time, we see organic growth in Spain. And even more positive, September was better than July. So we hope to see that to continue also into the Q4 and during next year. Nordic region is a story of itself. Coming back here now from the U. S, it's again, get surprised by the cash hostile environment, which you see here in the Nordic in Stockholm. And we continue to see that there is an underlying volume decrease there. And that is something which I think we just have to accept and we have to take the right measures to counter that. And that is by reducing numbers of operations, the staff, the whole numbers of vehicles, etcetera, etcetera. And most of the other countries, obviously, Turkey and Argentina, huge growth countries. They are heading to the 50% in organic growth, although it's a small basis, but it's still very healthy places to be from an organic growth of organic point of view. Most other countries in Europe, I would say, is pretty, as they expected, pretty flat now in maybe 1% to 2% organic growth. The real growth, as you can see, we also have the Cardtronics retail business and that it shouldn't be any surprise to anyone and get us to 3%. Operating margin is down slightly versus last year, and that is mainly because in U. K, where we are adding the Cartronis retail cash handling operations, that has a negative impact short term. But it's talk about deja vu, it's also the same. We all we continue to have issues in the U. K. And as being in half American now, I always call us we have opportunities in the U. K. And we can deliver 14.3% and still have an opportunity in U. K. Now we just need to figure out exactly what we're going to do about that. But there is a volume Tesco contracts which we've done, and we haven't been able yet to profit out of that. And of course, in all other European countries, we will see that there's actually an improved margin, which is related to as we don't have a lot of top line growth, it's related to more efficiency in our operations here. U. S, and I apologize, you're going to be a bit skewed towards U. S. For obvious reasons, this report here. First of all, because that's what I know best. That's my comfort zone right now. But it's also because that's where most of the action actually is in the company right now. That's where most of the things we already talked about the organic growth. And again, here it's driven by Safepoint, which has a phenomenal development. We have the CMS revenue, which is not a surprise by no means. I mean, it is mainly driven by a huge contract we took with Bank of America here in about a year ago, 18 months ago. Now during August, September, we actually rolled out a couple of really big ones, and we have one big contract or one big vault left in Atlanta, which will be or have been rolled out during October early November. And that's the end of that contract. But of course, we hope to have new opportunities with other big banks in the U. S. Again, the negative fuel surcharges is 2%. So the impressive 7% is actually 9%. And as I said before, for September, we saw for the first time, we saw crossing the 10% line. Operating margin is up significantly. The business mix is helping. The SafePoint, as we talked about many times in the past, I'm sure you all have done it as well, is a good line of business for us because we're managing the operations there. We don't have any particular times where we should pick up things. We can do the scheduling ourselves. It's long term, so we can make the right investment to get to take care of that volume in an efficient and in a profitable way. So SafePoint volumes are good for us. Likewise, CMS is also there. You have when you have your production up and running, when you have your vaults and your staff, then you can put a lot of volume into it and that becomes almost like an incremental business. The key here is, of course, not to do incremental pricing because that's the easiest way fool yourself. And we've been ridges about making sure that we don't do any incremental pricing in our operations here as we grow the way we do. But still, we are, to some extent, affected by start up cost in the U. S. And I like to illustrate that a bit since I'm talking more and more about U. S. Here. We're going to talk about Pansarken, which is a Vault, one of our biggest Vaults, Top 5, which is located outside Philadelphia and where we had a huge rollout of Bank of America Vault here in June July. And I'd just like to show you a couple of pictures. This is a cash vault and this is an operation. And what happens here is that we had it was a huge vault or a huge operation before we got the contract. But with the new contract, we had to expand. We had to do new installations. We had to expand the vault. We had to get new telestations up and so on. And this is not an operation which you just moved into the neighboring facility or you move it somewhere else. This is a high risk, high security designated area. So we just have to build it as we operate. And as you can imagine, this is not by far not an optimal way of operating. But this is how we have to operate while we built it before we can put the new volumes on. This is how it looks today, just 3 months later. And now is the time to take on the new volumes. We actually did that in June, July already. So, of course, that has an impact on the operation when you have to operate during those circumstances. I mean, there are a lot of construction people in a high security area. You need to strengthen your security. You have to make sure that you don't have any losses by no means. You have to make sure that you continue to operate in a high quality for the existing clients. Mean, we can never ever allow ourselves to drop quality because we get new volumes. They wouldn't no client would accept that and neither would we. So this is the and I tried to illustrate that also. This is the financial performance of PENSAKI. This is real numbers, although you don't see the numbers, but this is the real impact. And you can see here, so in June, when it looks as worst, that is May. And we rolled it out. We got the new volumes on board June, July here. But you can see the impact it has when we start hiring people, training people, building, having security people on board. You can see the impact that has on our operation. But the good thing is here, you can see that coming now into where we are right now, September is actually October there also in the last one, showing you that then the profitability comes back and it's even higher than what it was before. And we are by no means finished. Now starts the real nitty gritty things improving, how can we really structure this now to get more efficiency into it. But it is to because sometimes when we talk about this rollout cost, what is it really then? And then the so this was a CMS contract which we rolled out. And that's the easy one, if you should be honest, because that's when you have all the operation inside 4 walls. You can with a few steps, you can manage it. When we roll out a huge CIT contract, then you have the whole operation out on the streets. You say bye bye in the morning and they drive out and you hope they do the right thing during the day. But that takes longer time to make sure that we get everything in place. Just a way to illustrate to you the challenges which we have when we grow. But of course, I'd like to really emphasize that. I mean, growth is something positive. I mean, this is what we should be good at. And we are getting better and better. The first vaults, which fortunately were smaller, had much less much worse impact than the ones which we're working with today. Talking then about our hours. So CMS is one of the areas in the U. S. Which is extremely important. The other one is SafePoint and I already talked to you about the importance of it from a profitability point of view. And it's more from an operational scheduling point of view that we can manage these operations in a much more optimal way than when we have emergency cash or emergency drive outs to different ATMs and things like that. This is tightened, which is something which we launched in 1st September this year. It's a new box, but it's nothing more than a box. That's not going to revolutionize the industry by no means. It looks a little bit better. It's I call it as it's like a new model of a car. Smells probably a bit better. Got a couple of features, which is better. It's keyless. It's easier to handle, easier to manage. Better for our crew, you can download things straight into the safe from our operations in Houston. You don't have to go out there and change operations and so on. But still, it's a box. And what we're selling is a service, it's a concept. And that is the same as it was in the past, but it's a further development of it. And I think that some of the features or the benefits out of this is really something which the clients will appreciate. But the key thing for us is to spread the concept. I think I said at the Capital Market Day here a year ago that there is at least 300,000 points of sales in the U. S. Who would benefit from this. The real number is probably a couple of million, but who would from a cash volume and so on point of view, who would benefit from this? And today, we are talking about having installed about 13.5, 13,700 safes. There's a huge potential out there. So for us, it's not to oversell the box. It's to get the concept out there to different clients. And we were as we noted also in the first slide here, we have signed a couple of deals with more than 1,000 safes here in the Q3 or just after the Q3 and continue to have but that is not all, of course. I mean, these are the big deals, but the real volume is really coming from the small franchisees and different businesses. Today, overrepresented by quick service restaurants, but we're also looking into a lot of other areas where we think this is beneficial. So the segment and you see in this slide, we talked about that the impact of CMS. Part of the SafePoint is also CMS because we take care of the whole business there. So, the more Vaults and the more Safe Point we're selling, of course, this number is going to be driven up more and more. So enough said about U. S. Loomis International Service is new since I was here or coming back in this position is a new segment, which we have and a very exciting segment. One of our biggest competitors, I would say, is totally dominating the global market today in this segment, And we are absolutely determined that we will be a good competitor to our competitor here and going forward here. I mean, the acquisition, the small acquisition, which I talked about in the first slide here in U. S. In Denmark is further in strengthening this. We also, of course, look upon how can we get the synergies out of our operations, our footprints in the different European and the U. S. Operations, how can we make that benefit also for the Loomis International and vice versa? How can we locally benefit from the international, Loomis International? You can see here the organic growth is about 1%, but that is the General Cargo had a very rough Q2 this year. They have bounced back some of the volume working with sales, working with price increases, working with also cost cutting, of course. So they have bounced back and the operating margin is now 6.9%. We're significantly up from what it was in a year ago. But huge potential, particularly in the of course, in the Internet, the transport and the storage area of valuables. I think we've talked about most of the things here in the income statement, but again to emphasize organic growth is about 3% for the whole for the company still hampered to at least 1% from the fuel fees in U. S. Operating margin up 11.6%. That's the highest margin, which we have had at least as long as I've been with the company since we went through the IPO. We have a couple of in the financials here pluses and minuses. Most of them related to the U. K. Acquisition of Cardtronics. And then we had the overtime case in Spain in items affecting comparability where we have finalized that and relieved those reserves. And then also, we have the EPS, which is up by 18% versus last year. So let me finish off or run off with the financial targets here. And as I said initially that our the strength of our company is really out there in the branches and in our operations in the countries, in the branches, in the segments. And I can assure you that every one of us in the companies today is working towards these financial targets. And with the change of Joao leaving the company, it's not going to change that by no means. We have the full speed ahead to achieve these by the end of 2017. And I think you're familiar with them that we will have sales of 17,000,000,000 by 2017, we will have an EBIT margin 10% to 12% on an annual basis, a little bit depending on where we make the acquisitions and because we need to make some acquisitions to reach the SEK 17,000,000,000 And of course, we also have changed the net debt bearing from 2.5 to 3 just to give ourselves some space to do the acquisitions and the dividend remains the same as it was at the IPO. So concluding here, everyone is fully behind the targets. I think we had demonstrated that by the report which we released today. I think it's a very strong report, very proud of the organic growth, not least in the U. S, of course, but also of the earnings, which we presented here. So, thank you very much for this listening to this. And now let's see if there are some questions here from the floor. Just a question on the financial targets. I think what Joel basically was saying regarding the 10% to 12% EBITA margin target was that basically if we don't do any acquisitions, we will reach the 12%. Do you interpret it in the same way as he did? Yes. I mean, that is it's also yes, it's the short answer to it. But it's also I mean, we have 2 types of acquisitions. I mean, one of them is when we do acquisition in a country where we can just add it to existing operations. Normally, there's a lot of synergies, as I talked before with the CMS and so on. So of course, that drives margin. If we establish ourselves in a new country, like we did in Argentina, we did in Turkey some years ago, of course, that is not going to be such a boost to the EBITA margin then. So it's also a bit of where we do those. And I also had a question on the margin outlook for Europe. I understand that in the quarter, U. K. Was a clear negative due to the start up costs and acquisition. But my impression was that, I mean, the acquisition and the additional volume from the Tesco contract would be, Martin, accretive going forward. But it seemed like you were a bit cautious on the U. K. You had some challenges there. Could you describe those a bit more in detail? First one, let me just so we're on the same page here. I mean, I never said that we didn't make money in the U. K. We make money in U. K. It's negative versus the other countries in the group, mainly because I mean, we have one other challenge there is that our the CMS is only about 10% there, which makes that the CIT, which I also described, it's a lower margin business. So when you have 90% of that, of course, that is from a margin perspective, it's more challenging. I mean, we still have some operational challenges in the U. K. First of all, because we're doing the integration of the new volumes. But it's also I think we still have some even when that is done, I think there are some upside there. I would have hoped to see a more solid operation there, which I don't see today. And what is the reason for that? I think Jan mentioned on this Q2 call something like, I hope the U. K. Business to be on a 10% run rate margin at the end of this year, but I hope so too. But I'm less optimistic that, that would happen. I mean, again, I think of we're running the company at roughly about a little bit more than 10% on the rolling 12%. And I don't see that U. K. With 90% of the CIT is going to be at that level. But looking at the earnings delta, I guess, it will be a quite clear improvement looking ahead at least for 2016? I hope so. I mean, those are the plans. But if I am less optimistic than you all was obviously in terms of U. K, we have some challenges there. But as I said, being American or half American, I think it's an opportunity. I mean, we can produce 11.6% and we still have one country where we have to improve. That is a strength, I think. But we have some but it's not like we don't know what to do. We just need to do it. And we have done the same thing in all of the countries. We have made it work, but we need to do it in the U. K. As well. Hi. Henrik Nielsen from Nordea. You mentioned a large Safewent contract of 1200 units in the U. S, which did you win that after the quarter closed or? Yes. I think we have one with Jack in the Box, which we published earlier, which was about 1,000 units. And then we have one for 1200, yes, yes, which is a big grocery chain, which don't want to use their name in the press release. Yes, I understand. Can you give us any guidance on the timing of start up of that contract? Both of those should be rolled out before the summer. I mean, they are rolled out rolling out as we speak. I think it's more a question of how fast can we get them into the ground, how fast can we produce them, how fast can we get them into the ground. But we I mean, the last one should be there by the end of before the summer. So should we expect a higher cost level in the U. S. In the coming No. No. I mean, we I don't see that. I mean, that is not related with a lot of when we do a CMS rollout, that's a lot of cost, as I tried to demonstrate it. But the safe point is that's something which is just rolling on. Okay. Thank you. And in International Services, I mean, Q2 was a disappointment. It looked, at least in my eyes, very weak on growth and on margins. And now are we out of the woods there? Or Yes. And I must be honest here. I mean, I'm not an expert on international service, certainly not the general cargo. I mean, that is a different business. It's a bit odd versus what we do in other places. So I don't have the real expertise in that. We had some real challenges in the Q2 where volumes dropped in, I think, in Brazil and also to the Swiss franc, which was Q1 and Q2 was devaluated. And of course, I mean, that has some impact. We have taken some measures against that. I hope we're out of the woods, but I'm not sure I understand the whole dynamics in the business. Thank you. And if I mean, organic growth of 9% underlying in the U. S, can you quantify how much of that is related to Bank of America? Yes, I'm sure I could do the math. I mean, we said with at some occasions that, that was roughly about $20,000,000 that contract when it's rolled out. But I need to do the math in terms of but it is not the majority of it. I'm sure it's significantly less than half of it. Okay. And one last question, if I may. On M and A, which markets are you mostly interested or looking at the most? That's probably one of the most frequently asked questions with her yet and it's well, I think it's a big difference. You have the same view as you all have. Yes. I mean, it's I think we're an industry where you don't have like 100 or 1000 of opportunities and you can pick and choose yourself where you want to be. It's a bit more opportunistic. I mean, when we bought the company in Argentina, there was well, we wanted to get into South America, but was Argentina just we were looking there? No, it was an opportunity there. So I would I mean, I don't have any strong preferences in that terms. I'm looking upon each and every one of the opportunities. I think it's also you need to think about this. It's not like you have any cross border fertilization between them. If we have an operation in Norway, it doesn't benefit from the Swedish operation. If we have a Turkish operation, it doesn't help you in any of the other neighboring countries there. But and I think so you can look upon it like individual countries because the regulations and the markets is so isolated to a country. So you can really look upon it here and there and there. I mean, if you ask from a short term profitability, again, if you like to do an acquisition in an existing market, that's the least challenging. It's the most short term profitable, but it doesn't give you the long term growth. So that's one perspective. The other one, as I said, if you want to really get into growth countries like we have done in Turkey and Argentina, I told you, we're about 50% organic growth there. And building for a long term for the future, that's where you need to get in there. And I really don't have any preference. We're going to be looking upon whatever comes across. And a short follow-up on that. If how likely would you say that a big deal with 1 of the 4 large global players is? Well, if the other I mean, if these smaller deals are they come when they come, that is even more difficult to I know there's a lot of speculations I also see in the U. S. And the whole industry in U. S. Talk about the letters which has been circulated and so on. I think it's speculations and we will see what happens. I don't have any timetable for that. Thank you. Hi, it's Stefan Oberberg from Handelsbanken Capital Markets. You've earlier guided that you get around $400 to $500 per save Point. But given that the Jack in the Box deal would indicate around $300 and you are currently rolling out the new version of SafePoint. What would you say the rough estimate of the revenue per SafePoint is within 1 year? Well, the $400,000,000 to $4.50, that's per month, the revenue per month per safe. That average, I don't think, is going to change a lot. The big deals, which we are which we have been announcing and also the other one, which we didn't talk about, that is something which is a smaller safe from the outset, but it's also less frequently visited by us or we pick up cash less frequently. And those are the parameters which is then driving the average fee per month for those things. So it's if when you look upon it and normally those big deals, which goes across the big franchisees or big quick service restaurants, those are normally lower than what the bigger safes are because you normally don't buy 1,000 of hour really when you add coins and cash exchange dispensers and other things because there is a modular, you can add things to them. So it's really a question of looking upon the mix of it. And I don't see that that is changing a lot. And it's certainly not a question of that it's cheaper or that we have a lower pricing when it's a huge deal like that. I mean, that is we have a standard pricing and we're pretty adamant about getting that price there. Okay. And you state that once again you see negative organic growth in the Nordics despite likely higher volumes from new builds being rolled out. What would you say the underlying organic growth is in the Nordics? And do you see that accelerating going forward? First of all, the effect of the new builds, we haven't seen yet. That is coming due next year. I mean, in I think it's in October where we start to see the 100s and the 500s being rolled out and that's when the real volume. The rest is that's what's loading into the ATM. So that's the real volume of the new build. So we're going to see that second part of next year. What do I see in terms of I mean, it's difficult to quote a number. I'm not that close to it, but I mean, if you look upon it, somewhere around the 5%, negative 5% in general for the Nordic market. That is what I think. I don't see that accelerating, at least not what I've been following in the last period of time. But I'm sure that, I mean, there are others who are better on guessing what that would be. I mean, we just have to relate to that. I mean, it's nothing we can really do about that market. What I think is dangerous to do is to extrapolate that out on the global market. I mean, we as I said, in many other countries, we don't see anything of that. I mean, where I come from right now is that is not even on the agenda. It's not even thought about. So it's a sometimes we are we extrapolate things here and say that's probably how it's going to be everywhere. Well, maybe, but we don't see that yet. And just a short follow-up on the newbuilds in 2016. What kind of volumes do you see from them being rolled out? I don't think we should overestimate the impact of it. I can't quote the number to you, but it's I mean, it's nothing which is going to have a dramatic impact on our P and L or our revenue. I think that's the best I can guess at this moment. But you haven't seen any of the effect yet, and it's going to take until at least until the summer before you start to see any positive effects of that. Okay. And then finally, what about divesting the general cargo operation you've got through Via Maths? Is that likely? I mean, it is a business which is different from the other things which we are dealing with. Right now, it's an integrated part of the company we bought. There's a lot of synergies between those two companies. And that's the way we operate it right now. I mean, what is in the future? I mean, there's nothing which we will have happening this year or so, but I don't I mean, it's also a question for the person coming after me, really, I think, to take those long term strategic decisions. Hi, Karl Johan Bonnier, DNB Markets. Congratulations on fantastic development in North America. I can understand why you choose to be want to be over there. If you look at North America, obviously, Bank of America has created a lot of noise in the whole market, if you put it live by them outsourcing. What kind of level of outsourcing do you see in North America at this stage? Yes. It's not like everything is changing. I mean, this is a process, but it's a pretty slow process. We see the interest in the market from it, but it's really you have to earn it. I mean, in the U. S, there is a lot about security and then I don't necessarily mean physical security, but it's the way how you treat everything from cyber risk or transfer of files and other things. And you really have to earn the respect and the trust from the banks in order for them to let you manage their cash and their you really manage their brand. So for us, one of the key things is to demonstrate that quality. That has been the key thing for us is to really be able to make them trust us to not being a transport company. We're really a bank colleague to a bank. And that is the better we get on that, Lumis, of course, but also the whole industry, the faster I think this will go. But it's not like we're seeing an exponential development by no means. But there are every week, there's new boards coming up for tenders or questions and so on. When you look at the case you showed us in Philadelphia, when you do that kind of upgrade on a facility, how much of excess capacity, if you put it like that, you have to take on other local clients? That's a very good question, and that's what we wrestle all the time. How big do you do this now? How are we going to rebuild for the next vault? So you give yourself a bit of it, but there is no rule of thumb. It's not like I say we have to build percent more capacity. We try to look upon what is the potential, how much market share do we have, what is the competitors, what is the climate there. Some parts of U. S. Is more interested in outsourcing than others. So it's a mixture, but we really try to figure out. But when there comes like a big vault like the ones we talked about here or I mean some other, then that's you can never have that capacity available. You can never have that. Then you have to do a rebuild. And in some cases, we even built new facilities. In Baltimore, we built total brand new. So we have we still have to move there, of course, but then it's not as messy as it was in this occasion. When you look at the North American opportunity, obviously, other side of that coin is what kind of promise have you made to the Board when it comes to your current position as taking on the helm of the whole company rather than focusing on North America? No, I'm in U. S. I'll stay in the U. S. And there will be a new person here and a new CEO for Loomis AB. And that is that's never been discussed anything else. And do you have any idea about the time frame from your new call? No. That's something which the Chairman has to answer to. Good luck out there. Thank you. Okay. Let's okay. We have one more from the floor here. Sorry, just on Q2, you said that the CMS cost in U. S. Or you didn't say, but Jan said that it hit the P and L by roughly $800,000 Can you quantify that for Q3? Did you say that? You did. Okay. No, I cannot quantify that. But I mean, I can say that it's less during the Q3 than it was in the Q2. I mean, Q2, as I tried to demonstrate here, you have a lot of the cost before the rollouts and most of the big rollouts was really in this one was July, but then we have in August Baltimore. We have Atlanta now October. So there was more in the Q2 than it was in Q3. Okay. And then perhaps a nitty gritty question. You said 10% September organic growth U. S, right? We crossed 10%, yes, including the fuels Okay. The impact fuel impact. Thanks. Okay. Let's move to the telephone. Do we have operator? Do we have any questions? Yes. Thank you. Yes, we have one question. And your first one comes from the line of Daria Fomina. Please go ahead. Yes. Hello. Looks like I'm the only one on the line. I have two questions, if I may. First one on your cash conversion. I noticed that in the Q3, your cash conversion declined year on year and it seems to be happening on the back of a stronger seasonality of working capital. Can you give a bit of color on that? Why is it happening? And do you expect it to reverse to the full extent in the Q4? And also a question on cash generation as well and CapEx specifically. Do you expect pickup in CapEx on the back of the safe point investments that you're doing, you said that it's not going to impact your cost base much, but would there be impact on CapEx? And my last question is on the general cargo business. Are you still looking to dispose those operations given that they stand out so much from the rest of the business? And if so, is there some time line for that? Thank you. Okay. Let's fortunately, I was clever enough to get Anders Harker, our CFO, with us here. So I'm going to ask him to answer the first question. But before I do that, let me deal with the 2 other ones. I think I already answered the question about the general cargo from the floor here. I mean, it is you are correct that it is a different business than what we do, but it's also very much integrated into the ViaMart company, which we bought. So at the moment and again, I think that there is something that's a strategic decision for someone coming after me here to take, whether that should be part of Loomis long term or not. It is right now. We treat it like that. We enjoy the synergies with the Loomis International, and we go forward like that right now. The other one was the CapEx around SafePoint. And yes, with I would call the success and the dramatic development in terms of safes utilized, we are looking upon other ways of financing the Safepoint. Up to now, we've been buying Safepoints. And of course, that has impacted our CapEx. Again, we are certainly for the beginning of next year, if not by the end of this year, we will find some other ways of financing our safe points. And I cannot even remember the first question. I'm sure Anders can, so. I am on the line. It wasn't working capital. Okay. I think I mean you're correct when you say that we have been building up working capital in Q3 compared to the previous quarters and as well to last year. And most of that is related to the organic growth, basically that we're building up accounts receivable, both in the U. S, but also in the U. K. And that's basically the effect you get. But most of the cash conversion, I think we came up a little bit higher than 70% during the quarter is actually related to the CapEx programs as Lars has been discussing and primarily from the build out at facilities like the one in Pemsakken, but there are many more of those. And as well the safe point, so it's actually good CapEx with spending. But it has, of course, a temporarily negative effect on the cash conversion. And previously, we have guided that we should be around 85% or preferably higher. But that's getting more and more stretched obviously as we are expanding. So it's but all in, it's actually good CapEx that we will harvest over time. Okay. Thank you, Anders. Thank you. Any more questions from the operator? There are no further questions on the line. Please continue. Okay. Thank you. Okay. I don't think we have any other questions from the floor either. So thank you very much. Thanks for coming here.