Prosegur Cash, S.A. (CASH) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Prosegur Cash Full Year 2022 Results Presentation Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today, Miguel Bandres, Head of IR. Please go ahead, Miguel.

Good morning to everyone, and thank you indeed for connecting to today's call. I'd like to welcome you to our 2022 Q4 results review that will be led by our CEO, Jose Antonio Santa; Javier Hergueta, our CFO; and myself. The presentation will last around 30 minutes in which we will review the main events that have taken place in the quarter and in the year as well as the actions that are behind our performance. We will as well revisit our performance of the region, our main financials, and we'll update on our ESG strategy. After the presentation, we'll hold a Q&A session to address all the questions you might have. Should we not get to respond all points today. We'll be pleased to answer those remaining on an individual basis. I again wish to thank you all for your attendance and remind you that this presentation has been prerecorded and is available via webcast on our corporate web page that you can find at www.prosegurcash.com. Now before leaving the floor to Jose Antonio, let me highlight some news regarding Cash that have lately appeared in the media. They range from the problems generated in Colombia by a collapse in key banking platforms to the race of cash spending in the U.K., the decline of bank card payments in the U.S. or the raise of the preference for cash in Spain. In the first news, which you can read on the upper left-hand part of the page, we refer to the collapse of banking platforms in Colombia on December 1 that happens to be payday in the country. On that day, several banking platforms broke and stopped working, provoking hundreds of thousands of Colombians to be unable to withdraw money from their ATMs, use their cards for the daily expenses in supermarkets, restaurants or gas stations or preventing them from performing operations in the bank branches or through their banking applications. This event once again highlights how important it is not to rely on electronic methods that can hamper economic activity due to technical reasons, as well as the relevance of having an alternative and reliable method always available as is the case of cash. In the second piece of news, we'll move to the U.S., where Payments Dive highlights the effect that economic headwinds are having on consumers, that be reflected in the deceleration of bank card volumes by around 4%, showing how under adverse economic conditions, consumers leave electronic payments on the side. This linked to some news we've shared in prior quarter result reviews where we highlighted how consumers shift towards cash to better manage their domestic budgets. The third news taken from Onda Cero, a major Spanish radio broadcaster, cites a survey led by social research consultancy, GAD3, where it highlights that cash has gained preference amongst the population. In fact, 46% of Spaniards prefer cash over any other method of payment, implying a very significant 5% increase over the one seen 1 year ago. It's interesting to see that despite living in a digital area, global shocks such as pandemics or higher inflationary environments, driven increasing people's preference for cash. And lastly, we can read on the Daily Telegraph. The cash spending has risen in the U.K. for the first time in more than a decade as we have seen as well in the above U.S.-related news. U.K. households are avoiding bank cards and turning to physical cash to better manage their finances. This again highlights the importance of cash to best handle domestic budgets, especially in the wake of economic turmoil. After this brief news update, I'll share today's agenda. First, Jose Antonio will review the highlights for the period. I'll then reflect on the key aspects of our performance by region, then Javier will review the main financials for the year. And lastly, Jose Antonio will first do an update on our ESG strategy and to finalize, he will review the key takeaways before opening the Q&A session. This being said, Jose Antonio, please share with us your view on these previous key highlights.

Thank you, Miguel, and good morning to everyone. It is a pleasure for me to share with everyone the final result of a phenomenal year in which we've been able to clearly show how capable we are of delivering upon our strategy. Delivery, I would say, is the cornerstone of 2022. In a nutshell, I would summarize that this year has been a year in which loyal to our strategy, we have both performed in terms of growth, profitability and cash flow generation while we have transformed in terms of new sales penetration as our plan is stated. If we first turn to the top line, we'll see that our sales have grown on a full-year basis by 23.3%, reaching EUR 1,872 million and especially remarkable is the fact that our organic growth raised by 28.4%, given an idea of how solid the fundamentals of our business are. On a stand-alone basis, I want to remark the performance of the fourth quarter, which has grown by a very healthy 32.4% in organic terms despite being affected by foreign exchange that drives overall growth to 4.2%. As mentioned quarterly organic growth results in the highest ever and record growth for last quarter and as well closes our more core set of 7 periods growing quarter-after-quarter, both in organic and local terms. Next, if we look at the growth of new products in 2022, we have climbed by an outstanding 47.5% in the year, reaching 25.6% of total sales. This implies an increased penetration of 420 basis points. This is particularly important for us if we take into account that only 5 years ago, this product family was literally nonexistent and now it accounts for EUR 1 out of every EUR 4 we sell. This reflects a rate transformed and poised for growth company. I would like to highlight here the welcoming of the foreign exchange business into our product offering. Next, and very important to transform portion of our strategy, I want to highlight the results of our continuous strive to improve the profitability of our platform. It has enabled us to increase our EBITDA margin by 26.8% in the year, reaching 13.9% of total sales. If we look at the quarter standalone, this improvement is even more remarkable, having reached 14.3% of sales. That is within the target we set ourselves for 2023 in our 2021 Capital Markets Day. It is as well noteworthy that we have improved our relative profitability quarter-after-quarter in this year 2022 as well when compared to last year on a like-for-like basis. The improvement of relative profitability reaches 170 basis points. Continuing with the delivery of our performance strategy, cash flow continued to be an absolute priority for our management. Despite financing the substantial 28.4% organic growth of our business, as we highlighted earlier, our cost and discipline and focus on cash has enabled us to generate EUR 148 million of free cash flow in the year, EUR 40 million of those million in the last quarter. This strict approach to cash flow generation has allowed us to further lower our leverage to 2x EBITDA, well below the 2.2x we reported 1 year ago after having continued to invest in our company to best prepare it for the future. And very important for us with regards to our continuous commitment to ESG and besides other initiatives, we will later review on this front, we have been able to offset 38,000 tons of CO2 equivalent making our environment a better one to live in. In Page 5, we can see the development of sales in terms of local growth and margins that have anticipated by 1 year at our Capital Markets Day targets set for 2023. We can see that local growth has reached an impressive 33.6% versus the prior year. This growth has been the result of a combination of both a favorable environment for our business with generally increased inflation in all geographies together with a targeted and sharp commercial strategy. We foresee that the environment in which we conduct business will continue to be positive for us in coming fourth quarters since inflation, we believe, will remain at considerable levels. When we look at local growth by region, the health of this growth is present across all regions, with both Europe and Asia-Pacific growing well above 20% and LatAm almost reaching twice that growth. This shows that everyone is contributing strongly to the growth of our underlying business. It is as well worth noting that the comeback of cash has continued quarter-after-quarter showing the resilience it has as a mean of payment trusted by consumers across the world. Turning now to profitability margins. We can see that underlying EBITDA has climbed year-on-year by 40.7% showing how effectively we've been able to absorb the increasing volumes, improved margins by 170 basis points. The efforts made company-wide on the efficiency side have enabled reaching such a result. It is as well important to underline that despite costs having increased in an inflationary environment, we have not only worked on efficiency in operating terms, but as well, we have been able to effectively pass on cost increases to our customer base. As well as stated earlier, I want to underline the consistency of our profitability improvement on relative terms quarter-after-quarter throughout 2022. Going now to Page 6, I'm very proud to share with you the continuous acceleration of our transformation strategy that has as well reached our Capital Markets Day target 1 year in advance. The growth of new products reached 47.5% in the year. If we now exclude the divestments materialized in early 2021, that growth reaches 55%. Such a growth takes the overall revenue for this category to EUR 480 million, the highest ever, accounting for 25.6% of total sales. And if we look at the quarter on a stand-alone basis, we have reached 130 million of new products in the period, a figure that we are particularly fond of. Not to say that in relative terms, our quarterly transformation ratio reached 28.7% of total sales. As I said earlier, the goal we set ourselves in the 2021 Capital Markets Day was reaching 25% of growth initiatives over total sales for 2023 and we saw anticipated to 2022. Overall, in the year, new product penetration has improved by 420 basis points and by 500 basis points should we exclude divestments, our best improvement ever. I would like as well to highlight that all regions, as we will see later on individually, have contributed very positively to the increase of new product penetration. And a special mention is to be made to a particularly good performance of our solution Cash Today, Corban or Forex, showing all of them that our customers are receiving them in a very warm manner. In this front, I would like to highlight the extraordinary performance of foreign exchange, the latest solution that has joined our new product portfolio, mainly in Europe. This is a resolution we have been pursuing for quite some time that we finally were able to incorporate to our family, as you know, earlier in Q3. As well, I would like to remember the acquisition of Facilito this year, which significantly strengthens our Corban offering in LatAm. We are confident the best in the transformation front is still to come, and all of the solutions have still allowed to say. With this review, I hand it over to Miguel. So he can share our development on a regional basis.

Thank you very much, Jose Antonio. I would like to start with our main region, Latin America, which accounts for 66% of the company's total revenue. It's important to underline that in 2022, organic growth here reached 35%, showing how important cash is for these country's economies. Total sales climbed up to EUR 1,236 million for the full year, implying a 22% overall growth versus 2021. It is well important to underline that we have suffered an unfavorable exchange impact that has increased towards the end of the year. We're confident that the inflationary environment in which we have developed our activity this year will catch up with the devaluation in coming quarters. The acquisition front added 3.5% to total sales and as well helped improve the transformation of the region where new product sales increased by 44% and reached EUR 344 million in the year, increasing its penetration by 420 basis points to 27.8% of total sales. In terms of profitability, we reached an EBITA of EUR 252 million, implying profitability in relative terms of 20.4% of sales. These being the best one in the last 3 years. If we now look at Europe, sales in the region have grown by 25%, accounting organic growth for 13.8%. This clearly shows that cash has continued to come back at a very healthy rate in the region where inflationary trends clearly favor our business. Inorganic growth accounts for an additional 10.9% growth and combines a good mix of both strategic acquisitions in Eastern Germany to strengthen our footprint, together with the transformational incorporation of The Change group to the Prosegur Cash family. Total sales in the full year reached EUR 499 million, almost EUR 0.5 billion and close to 2019 levels. When looking at the quarter, revenue reached EUR 139 million, the second highest ever. If we look at the second graph in the page, we can see how transformation has phenomenally advanced with sales of new products climbing by 57% to reach EUR 106 million in the closing 12 months. The penetration of new products over total sales has increased like-for-like by an astounding 780 basis points. In terms of profitability, we can see as well a very favorable evolution of the underlying EBITA that has improved by EUR 13 million, reaching EUR 15 million in the year and representing 3% of sales. Turning lastly to the Asia Pacific region that represents 7% of total sales. We've seen a very positive organic growth of 20.8% year-on-year. This growth consolidates a consistent trend of quarter-on-quarter improvements. Total sales have improved by 25%, reaching EUR 137 million with foreign exchange having a positive impact in the region of 4% for the total year. It is very important to underline the fantastic improvement that new products have experienced in the region, having increased by 54% and reaching an absolute figure of $30 million and a penetration over total sales of 21.9%, a very significant jump of 400 basis points when compared to 1 year ago. Another aspect to highlight when looking at the last graph regards to profitability. In this front, we've achieved a very significant loss reduction of 49.8% with losses for the entire year totaling EUR 7 million that compare very positively to 2021 EUR 15 million loss. This implies a very relevant improvement in margin over total sales of 800 basis points in the closing year and a good proof of the progress experienced in the activity levels and the major efficiency measures taken when managing the region. With this, I conclude a review of our regional performance, and I hand it over to Javier so he can share our key financials with you.

Thank you, Miguel. I would like to start with our profit and loss statement. Looking at the revenue line, we can see that we've reached sales of EUR 1,872 million for the full year 2022, which means a 23.3% improvement over that line 1 year ago. I would like to draw your attention to the graph on the top right, where we can see the breakdown of that growth. It is particularly important to underline the performance of our organic growth that accounted for 28.4% of sales versus 2021. This means the highest organic growth in yearly terms of all our history. It reflects how solid our business is and how our customers are demanding our services. To that, we add a 5.2% increase on inorganic, fundamentally invested in transforming our business and getting it more ready than ever for the future. As well, we have to account for a negative impact of currencies totaling 10.3% of total sales. If we now look at profitability, we see that we have reached EBITA of EUR 260 million in 2022, which implies a growth of 26.8% versus the same period in 2021. When looking at the graph on the lower right-hand side of the page, we can see that in terms of underlying profitability evolution, this has risen by 41% if we exclude the divestments made early in 2021 and what is even more relevant, it shows a substantial improvement of relative profitability by 170 basis points, reaching a total percentage over sales of 13.9%. In terms both of sales and relative margin contribution, we can proudly share, as Jose Antonio did earlier, that we have anticipated by 1 year our goals announced in the 2021 Capital Markets Day. Another consecutive quarter, this improvement in relative profitability shows that our continued efforts on efficiency have paid back when observing growing volumes. I will now move below EBITA, where we can see how amortization of intangibles have reached EUR 24 million in the year, which is a substantial reduction versus EUR 39 million 1 year ago when we had some special impairment adjustments. These results on our EBIT improving by 42.3% to EUR 236 million, which is a 12.6% of sales, representing a 170 basis points improvement over 1 year ago. In the financial results line, we observed that the total amount reaches EUR 51 million, which is EUR 8 million lower than the figure shown 1 year ago with lower Forex impact and all this in a context of higher interest rates. This results in an earnings before taxes of EUR 185 million, a very relevant 72% improvement over the same figure in 2021 and a margin over sales of 9.9%, which is a 280 basis point improvement over last year. On the tax line, we can see an expense of EUR 90 million, representing an effective tax rate of 49% over sales, which results in a substantial improvement over last year's tax rate of 69.2%. We are confident that this tax rate will continue to reduce in coming quarters as we stabilize all operations. With this, we reached a net profit of EUR 94 million, 5% over sales, an improvement of 280 basis points and almost 3x higher in absolute terms than last year's EUR 33 million. In the following page, we can see the evolution of our cash flow statement, which, as you all know is particularly important to us. Departing from an EBITDA for the period of EUR 363 million, we reached a free cash flow for the full year of 2022 of EUR 148 million, a significant figure, especially taking into account that it includes the impact of financing the strong 28.4% organic growth we've seen earlier in our presentation. Free cash flow for the last quarter of the year totaled EUR 40 million with a remarkable positive impact of EUR 24 million in terms of working capital variation. Provisions and other items totaled minus EUR 13 million, which is a reduction of over EUR 9 million versus 1 year ago, while income tax accounted for EUR 91 million, basically due to the fact that we had no advanced recoveries like had been the case 1 year ago. CapEx reached EUR 77 million, EUR 10 million more than 1 year ago, but reduced separate proportion of total sales. And in terms of working capital, the investment reached EUR 33 million as said to finance the close to 30% organic growth. Our free cash flow reflects a conversion over EBITDA of 79%, which is an improvement of 1% point versus last year's figure. Interest payments for the full year totaled EUR 2 million, a very relevant improvement of EUR 11 million versus the same figure back in 2021, benefiting from higher returns on our cash positions, while M&A payments increased from EUR 33 million to EUR 44 million, driven by the continued acquisitive initiatives. Dividends and treasury stock in this year accounted for an outflow of EUR 43 million, down from EUR 71 million in the same period last year, whilst others totaled EUR 9 million, which means EUR 3 million more than 1 year ago. Bottom line results in a total net cash flow of EUR 51 million, 38% better than last year after having invested in growing the company in transforming it and in recognizing our shareholder support. If we now look at the chart on the right-hand side of the page, we can see that our free cash flow yield was standing at 10% for another year, which makes our stock a very attractive and solid investment option with a very positive upward potential. Turning now to Page 14, I will review the evolution of our total net debt, made up fundamentally of our net financial position, deferred payments, IFRS 16 debt and treasury stock. Our total net debt at year closed reached EUR 729 million, which reflects a reduction of EUR 27 million from that shown 3 months ago. If we compare this figure to that of 1 year ago, we can see a net variance of EUR 57 million being the result of a reduction in the net financial position of EUR 40 million and an increase in deferred payments and IFRS 16 debt, both due to our acquisitive activity. In any case, when we look at our total net debt-to-EBITDA ratio, we can see that this has reduced from 2.2x 1 year ago to 2x now, well below our internal threshold of 2.5x, giving a clear sign of our product leverage management as well as the soundness of our balance sheet that assures us we are best prepared for the future. In terms of our main debt maturities, there are no significant changes, and we expect no relevant maturities until 2026. Along these lines, I want to remind that most of our debt portfolio is mainly at fixed rates. With this, I finish our financial review and I hand over to Jose Antonio to conclude with our ESG update and final remarks.

Thank you, Javier. I would like to now share with you our ESG efforts that are particularly important to us. There are many initiatives we have worked on in 2022. But if I were to choose, I would underline several. The first and for me most important is the fact that ESG is firmly ingrained in our corporate culture in our way of doing business. This is not only our intention on our view, but that of expert external parties. S&P has recognized us with its global ratings ESG grade. And as well, our commitment to the highest level of governance has been recognized by AENOR (G++) rating. On the environment side, we have continued with multiple initiatives to reduce the impact on our environment, making our fleet more efficient, investing in recycling plastics or strengthening energy efficiency projects in Spain, Portugal and Brazil. All in all, we managed to offset 38,000 tons of CO2 in 2022. With regards to social, we as well invested heavily in training with a number of hours dedicated to that matter, increasing by 26%, especially relevant with regards to safety is the fact that the number of hours dedicated to health and safety training climbed by 40%. On the governance front, multiple initiatives were taken regarding party we adopt the Women's Empowerment Principles established by the UN Women & UN Global Compact. And on policy, we review and implemented a new code of ethics that increases our focus on sustainability, transparency and innovation. We adopted a new anticorruption policy to assure no gray areas are left behind. And to complement the above, we make training in compliance matters compulsory for new hirings and over 4,000 people in the company received training in compliance matters. At the same time, I'm being aware of the importance of dealing with all ESG-related stakeholders to properly share our initiatives and advancement. We have maintained active and bidirectional communication with an increasing number of leading players as you can review on the right-hand side of the page, and we have also taken part in several alliances with global institutions. Turning now to the following page and to conclude, I would like to share with you my key takeaways for 2022. This has been the year of delivery. It has been a year where we have proved our commitment to our strategy, which has clearly paid off. On the back of a strong business growth, we've been able to confirm the transformation of our business model whilst never losing sight of profitability and cash flow generation. Looking at the top line growth, we reached almost EUR 1.9 billion, a 23.3% improvement over last year benefiting from the trust of our customers on our service and inflationary environment, which plays in our favor and that will likely remain for coming years. Next, when we look at our new product performance, we see that we continue to transform at an outstanding space or relentless commitment to having a better positioned company for the future has made us reached EUR 480 million sales in new products, which implies a 55% improvement over 2021 on a like-for-like basis. These 2 elements, as we have stated earlier, anticipate by 1 year achieving our 2021 Capital Markets Day targets. Now not only we have rapidly growing a more transformed company and loyal to our performance strategy have a more profitable venture. All the efforts we made in improving the efficiency of our platform resulted in an EBITDA margin of 13.9%, which is, as said, a very significant improvement of 170 basis points versus only 1 year ago. Next, critical to performing is generating path. On this front, our free cash flow for 2022 reached EUR 148 million, EUR 40 of them alone in the last quarter of the year. Our devoted management of cash flow and our financial discipline resulted in a total net debt-to-EBITDA ratio of 2x, always, well below our internal thresholds and in the lowest level of the last years. And lastly, we have already remarked ESG is always present in our strategy, our policy and our management priorities. In that line, we have worked on the 3 sides of it, health and safety, governance and environment. Training hours have increased substantially by 26%. We have reviewed and relaunched several policies such as a new code of ethics, the corruption guidelines and have improved our environment by amongst others offsetting 38,000 tons of CO2 in the year. As the figures show, we are committed to delivering today while at the same time, assuring the proper transformation to the best prepared in the future. Thank you all for your attention, and we can now open the Q&A session.

[Operator Instructions] We will now take the first question. It comes from the line of Miguel Gonzalez Toquero from JB Capital Markets.

I got 3, if I may. First on Argentina, I guess most of the FX intent relates to Argentina. So I wonder if you could share maybe the top line evolution in Argentina this quarter. Just to see if volumes fully offset the FX or you registered a negative top line growth in this region. And also related to this, maybe you could share your view on how you think election this year might affect operating activity in this country. Secondly, on tax rate, you registered a high effective rate recently. So maybe you could provide some indication on the tax rate we soon expect for the next year? And finally, on Change Group, I believe you registered about EUR 25 million contribution this year. So I wonder if we can assume already like a EUR 100 million run rate sales for the next year.

Thank you, Miguel. From the first question on Argentina, we don't provide sales per country. As you mentioned, we've been hit by Forex in the last quarter, and it's been -- I think it's been mainly in all countries in Latin America or most countries in Latin America. Argentina for us is a strong country, so it's been also hit. But I think it's been across the board. More, I think, if we look at the Brazilian real. I think when the dollar -- U.S. dollar appreciates against euro, there is one movement and when they devaluate it's more or less hit us the same. So at the end of the day, it's about the whole region. But Argentina, especially as we have seen in the last few weeks. What is our perspective on Argentina? I think Argentina's elections are going to be at the end of this year. We have the PASO elections in August, which are a good proxy of what is going to happen at the end of the year. We'd have new president next year. Normally, election year are good for us. So it should be a good year for us in 2023. Second one -- second question was about the tax rate. Tax rate was -- has been this year 49%. And we -- as you know, we are very conservative in terms of tax rate because we don't capitalize any losses that we have in any given country. So our -- it has been an improvement compared to last year, and our next target should be approaching to 40% as soon as possible. I don't know if it's going to be next year, but we are aiming to get closer to 40%. It's going to depend pretty much on 2 or 3 things that could happen in this year. And the last one is about Change Group. We are very happy of incorporating this new business for us. It's been a good year, first year. I think it all depends on the team, and the team has been fantastic. The integration has been quite good and we really are maintaining what we said during the acquisition call. We believe it's going to be above a EUR 100 million of sales next year.

We will now take the next question. It comes from the line of Francisco Ruiz Martin from BNP Paribas Exane.

So I have 3 questions. The first one is, it's on the margin in Europe with a particularly record -- sales with a strong organic growth. The margin is still at very low levels of 3%. It's true that it has improved quite substantially from last year, but at 3%, it looks quite low. What are your expectations for the coming quarters, years on this margin? And what is the level that you think you could achieve? The second one is again on taxes because traditionally, you will have a different impact between the taxes in the P&L and the cash tax. But this year, the difference is quite small. I mean could we see that this P&L cash -- sorry, P&L taxes could be the cash tax as well in the coming years. And last question is on Australia, so could you give us an update on this. And I think that you have already deconsolidated, pardon me if I'm wrong on the annual accounts. So that means that you think that the likelihood of their deals to go through its higher now.

Thank you, Francisco. Coming to Europe, this quarter has been hit by the change integration, mainly and also we had a strike in Germany. I think our aim is to improve it, and we foresee then the coming quarters are going to be higher. We are aiming to more healthy margins and we are seeing that in F3, they are much healthier. So on that front, I think we are going to deliver. On taxes, I think you are right. In the past few years, we had some cash returns from advanced payments we made to government. But this year, the profit was pretty much in line or was better than what was at banks to government. So at the end of the day, we have the same outflow as all these P&L. We foresee that in the coming years, it's going to be more or less the same because we believe we are going to improve our margin. So if we keep improving our margins, our cash flow up flow and our P&L impact will be quite similar. And then in Australia, is this still consolidating in the P&L. What is -- I think we are improving our numbers or our operation in Australia. But for us, our main plan is to go for this merger with our competitor. We are in the process that we cannot comment much on it, but we foresee that it's going to be -- we are going to have a final resolution before first half of this year. Hopefully, it will be at the beginning of second quarter. And yes, I mean, in Australia, I think it's improving because of volumes and because of all the actions we have taken, but we keep our strategy of the merger because we believe this is the best outcome for the future.

One follow-up, I mean if I saw your balance sheet on the annual accounts, there is a EUR 120 million asset for sale, this is Australia.

Yes. Javier, is it going to come into.

Let me take this one. Yes, this is more of a technical thing. I mean it's Australia. It's accounted for available for sale. So technically, we need to put that aside in the balance sheet in a separated caption. So that's why you see assets and liabilities available for sale. This refers exactly to Australia. But that's just on a balance sheet issue. So when you look at the P&L, you have 100% of the results have been consolidated.

What's the impact on your net debt of this accounting issue?

Well, as of today, I mean, it's not really affecting us because it's part of the balance sheet still there. It means it's just that it's under a different caption. So as of today, you should see no impact come from that.

We will now take the next question. It comes from the line of Enrique Yaguez from Bestinver Securities.

I have 3 questions. First of all, as you said in the presentation, you have already fulfilled in 2022, the strategic targets provided in your Capital Market Day. Could you provide an update about what will be these targets this year? Or at least do you plan to provide an update throughout the year. Secondly, the parent company Prosegur said that one of its target for this year is to review financial leverage to which extent this aim could affect your M&A optionality or your -- yes, your ability for further M&A? And finally, a last question regarding a follow-up question regarding the Australia. If I'm not from Australia has a syndicated loan of roughly $70 million in the country. Is it still on your book?

Thank you, Enrique. Yes, you are right. We have achieved what the Capital Markets Day targets had for 2023, 1 year in advance. We believe our current environment is very favorable to us. So we are aiming to beat current consensus with sales above EUR 2 billion and the margin within the Counter Markets Day guidance. Debt, yes, I think in the current environment, we are very conscious of financial discipline, and we are going to be -- I think we are going to be very careful about it. But at the same time, we believe that very good opportunities in terms of M&A may come. So I think we are going to be very conscious to what could be acquisitions at, we could say, at average multiples, but we are going to be very agile if there is an opportunity that comes around. So I would say, in a normalized world we would be very financially disciplined, and we are going to be very financial discipline in terms of CapEx and in terms of our outflows. But if we find any opportunity, which we believe is in it's a good opportunity that is not going to be around. For some time, we'll jump at it. And the third one on the Australian debt is still in our balance sheet and is in Australia. In Australia overseas whenever we -- if we make the transaction, we'll have to refinance it.

We will now take the next question. It comes from the line of Manuel Lorente from Mirabaud.

My first question is on the FX headwinds in this last part of the year seeing the underlying evolution of the best of the business, sorry, and with the FX headwinds in Q4, shall we expect a significant bounce back in revenues throughout the next quarters in order to adjust prices to the FX environment.

Thank you, Manuel. I believe that in 2023, what we are forecasting is inflation more or less similar to devaluation. And this is what we are expecting, and this is what we have been talking to some of our experts. But if there is, I mean, the Forex plays an important role on our operations, so it could go either way. But what we are forecasting and what we have been talking to too many experts that our best estimate could be inflation similar to devaluation for 2023.

And inflation similar to devaluation, assuming the delta of the new devaluation or the ones that you have already consolidated in your '22 numbers.

The one that is consolidated.

Okay. So my second question then is on the impact of the new products whether you can give us an indication of the margin impact because it looks like they are growing 2x above underlying revenues. However, we are not seeing that significant impact on profitability. So either they are not meaningful as scale yet or they are not significantly accretive margin-wise. That's the third way of seeing these new products or am I missing something.

Yes. Coming to the new products, I think, as we said on a general basis, they have more or less the same possibility than the core business, and this is what we have seen. So what is doing is maintaining current profitability in relative terms. It's true that they are very different in nature. So there are some products which are more profitable and products which are less profitable. But if we look at the profitability of the whole P&L of all the new products it's very similar to current profitability. It's improving. It's improving, yes. It's improving. We have some leverage, operating leverage. We should be extracting it in the coming years.

And then my final question is on the provision and others line of your free cash flow statement in the sense that, that line was EUR 10 million positive at the end of 9 months and now it's EUR 13 million negative at the end of the year, which implies some EUR 23 million consumption of provision? Or my point is, is there any extraordinary issue to mention regarding the profitability of the full quarter standalone because of this EUR 23 million consumption of provisions or other issues that are included in this line.

No, I think it is the normal seasonality that we have in our P&L that way sometimes is quite seasonal and it's very similar to what happened last year. But I don't know how Javier you know that something on this one.

Yes, I think it is exactly as Jose Antonio is saying, it's seasonal in nature. So if you look at last year, we had a consumption of $17 million in Q4, and we are having a consumption of EUR 24 million in Q4 this year. The only difference to highlight maybe is just that we are under a more normalized tax payments right now than we had 1 year ago, so that makes a bit of a difference and can explain the variance between the 17% and 24%, but it's essentially seasonal in nature. So that's basically that's what Antonio's point.

We will now take the next question. It comes from the line of Alvaro Lenze from Alantra Equities.

The first one would be if you could provide some update on how the trends in the different -- or at the group level are going in the first few months of 2023. Last year, you started a very strong footing, but this was partly due to a very easy comparison base, not a comparison basis, a little bit more challenging. Just wanted to get a sense of whether you're continuing to maintain the strong organic growth and whether you are outgrowing currency depreciation, unlike what we have seen in Q4. My second question would be regarding capital allocation and whether you could consider maybe slowing down a little bit on M&A and making higher dividend payments or further share buybacks? And the last question is with the current treasury stock that you have, whether you are going to cancel it and if you are canceling it when should we expect this to happen.

Thank you, Omar. On the first one, on the update of 2023, we are -- the tax is not closed February yet, but January has been quite strong in all -- by all means. I think the business is performing very well because of the current environment in terms of inflation, interest rate, which makes our service more important. Then capital allocation, we are -- we have announced some -- we have our AGM has approved 33% increase in dividend payments, and we also go to some share buyback. Our current program ends up in December of 2023. So we have almost a year to know if we are going to lengthen our program or what we'll do. Our current initiative -- or our current way of thinking is -- if we don't find any opportunistic M&A, as we said, normal M&A is an M&A that we believe we can do next year we'll postpone it. If it's not something that we find opportunistic or a very good multi-personal. And our current thinking is that if we don't do any M&A, we'll increase our share buyback program. So that's what we would like to propose to our board.

And regarding the cancellation of shares?

Yes, that's partly done. It can only be done after the program is finished, and the program is finished in December. So we'll see what we are going to do after.

There are no further questions at this time. I would like to hand back over to the speakers for final remarks.

So thank you very much to all of you for your attention. I would like to conclude by thanking everyone's attendance and by putting the ascent on the continuous positive evolution, our resilience of our business model in what is a favorable environment when we continue to transform to best position the company for the future, really. Thank you again. As always, our IR team is available for any queries you might have. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may all disconnect.