Prosegur Compania De Seguridad SA (FRA:PRHA) Q3 2025 Earnings Call Highlights: Strong Financial ...

This article first appeared on GuruFocus.

Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Prosegur Compania De Seguridad SA (FRA:PRHA) reported a 47% increase in net income year over year, showcasing strong financial performance. The company's security business continues to be a growth engine, particularly in the US market, with a 17.5% increase in EBITDA. The alarms business achieved a milestone of 600,000 connections, indicating significant growth and market penetration. Prosegur successfully issued a EUR 300 million 5-year bond at a competitive rate of 3.38%, reflecting strong financial management. The company maintained a strong debt position with a net debt to EBITDA ratio of 2.3 times, indicating financial stability.

Negative Points

The cash business was negatively impacted by the depreciation of the dollar and economic instability in Latin America, affecting EBITDA and cash generation. Extraordinary severance costs from a cost-saving program in Latin America impacted EBITDA and cash flow negatively. Operating cash flow saw a reduction of EUR 22 million, partly due to extraordinary costs and delayed sales collections. The alarms business in Argentina faced challenges with a high churn rate due to economic stress, impacting growth. The company's organic sales growth was partially offset by adverse foreign exchange effects, particularly in Latin America.

Q & A Highlights

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Q: What has driven the strong improvement in profitability in the security business despite some deceleration in organic growth? A: The improvement is mainly due to the business performing well, particularly in the USA and Iberia, which have higher margins. The company has been increasing volumes, implementing efficiencies, and maintaining strict discipline in passing through inflation costs. Additionally, the technology business contributes by providing high-value services to customers. (Respondent: Unidentified_5)

Q: Considering the attractive valuation achieved by Verisure in its IPO, could Prosegur consider a potential partial disposal of the alarms business unit to crystallize value? A: Currently, there are no plans to crystallize the alarms business. The focus is on continuing growth and improving service margins to increase the value per connection. While it might be an option in the long term, it is not on the table for the short term or the upcoming investor day. (Respondent: Unidentified_5)

Story Continues

Q: Can you break down the significant increase in the EBITDA line for the PGA and others? A: The increase is mainly from PGA, which includes building rentals, trademark royalties, and service markups to other divisions. The rise in trademark royalties is due to an agreement with Spanish tax authorities, and building rentals have increased due to inflation in Argentina. Corporate expenses are also included in the margins of other business lines. (Respondent: Unidentified_5)

Q: When do you expect the alarms business, specifically MPA, to be free cash flow break-even post-growth? A: Details on when the alarms business will reach free cash flow break-even will be provided during the investor day on December 16th. (Respondent: Unidentified_5)

Q: What will be Prosegur's main financial objective for next year, and will M&A opportunities be considered? A: The main goal remains to decrease net debt. Decisions on capital allocation for next year, including potential M&A opportunities, will be finalized in the strategic plan to be approved in February. More guidance will be provided during the full-year results presentation. (Respondent: Unidentified_5)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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