Securitas AB (publ) (SECUB) Earnings Call Transcript

Hello, everyone, and thank you for joining us today. We are very excited to be at this point. We have closed the Stanley acquisition, and we are ready now to talk about how we are shaping the new Securitas, a company which is more focused on technology and solutions, stronger client offering and focused on creating increased shareholder value. And we are looking at the day-to-day a little bit like a mini version of a Capital Markets Day. But I'm very glad to be here today live from Stockholm together with our CFO, Andreas Lindback; and also joining us from the U.S., Tony Byerly, who is President of Securitas Technology. But it's been now a few years since we had the last Capital Markets Day. That was at the beginning of December in 2019, just a few weeks before the start of the pandemic. But we have not been sitting still. We have been driving extensive transformation, modernization and digitization of the business because we set out the objective to come out stronger, come what may, out of the pandemic. And our execution of the strategy is generating results. So when I look at Securitas today, we are operating at higher margins compared to the years before the pandemic. We also set out an objective back then in 2019 to double what we call solutions and electronic security. And with the closing of the Stanley acquisition, we are achieving and delivering on that ambition. But we also did quite a lot to sharpen the business. So we have exited 11 markets that were low performing and lower relevance for our strategy going forward. We have turned around the aviation business, and we have invested significant amounts in terms of strengthening our business ethics and compliance function and we have also accelerated our sustainability agenda. But we've also acquired and successfully integrated a number of technology businesses in the last couple of years. And then obviously, the main trigger for being here today is the fact that we closed the Stanley acquisition just 1 month ago. So what does this actually mean? Well, we are transforming the company, we are shaping the new Securitas, and we're positioning the company to be a company that is better positioned for higher value and higher growth in more valuable services in the years to come. So let us now look at the future, the strategy ahead and the type of company that we are creating. And with this acquisition, we are creating a unique company now in the security services industry. Standard security with leading capabilities in technology and also strong commercial competence in combination with Securitas, and we are creating a company which I said is unique. And we are positioning ourselves now to be the leading security solutions company with world-leading technology and expertise. And why is this important? Well, simply put, because technology is becoming more important. And this is for the security equation of tomorrow. So when we were building the strategy for the next phase, we were sitting down with the team and saying, what would be required to win in the security services industry of tomorrow. And we identified 3 main capabilities. The first capability is what we call presence. And that's essentially professional people that we have with expertise in security and safety who are able to protect, but who are also able to respond if something happens. The second capability that we consider very important is technology. So when we talk about technology, this is the ability then to be able to design and install serve and provide maintenance with connected technology, cameras, sensors and so forth. And third, and this is when it becomes really interesting, we also believe that you need to be good in terms of how you generate data, but also how you leverage data to enhance the security equation for the benefit of the client but also for driving innovation. And for a leading company, of course, the client should always be at the center and hence, the position in the middle of this simple illustration that we have here. So when you're looking at the future of Securitas that we are shaping, we will have a tremendous strength in terms of all 3 areas. Going forward, and this is really then the framework as well for what we are bringing to our clients in terms of the value proposition, bring more value to them in the areas of presence, technology and intelligent use of data. And based on this, we see very significant opportunities of growth across a number of different market segments in the security services industry. And with this page, we're illustrating in a fairly simplified way, the size, the growth and also the margin profiles of the different areas where we are now well positioned to play. And if we're starting with the first one, looking then at the security market is the guarding piece. This is obviously a large market. We believe this is growing in line with GDP, and the margin profile is typically in the single-digit range, but depending quite a lot -- depending on which market that you are in. The second area, what we call technology. This is then very much focused on the design, installation, service and maintenance. And this is a USD 70 billion market that we are expecting to grow around 5% per year. And even more interesting from a client value perspective, but also from a value and a margin generation perspective is the growing momentum in Solutions. And this -- for all of those who know us well, this is a business and market that we are really driving. And when we talk about solutions, this is when we're combining and integrating different protective services based on the client needs. And this is an area where we expect there is growth opportunity of 10% or above in the coming years. And I will explain a little bit more about that later on. But then if you're looking at the top right corner, there is a smaller circle, and that's something that we are defining as data-driven security-as-a-service. And this is the area where we're able to leverage data that we are generating third-party data to continuously enhance the security equation and the value that we bring to our clients and also where we have really interesting opportunities in terms of scalability through innovation. So when you're looking at the capabilities, what is required to win tomorrow with presence, technology and data. And when you're looking at the trends of the market, this combination with Stanley Security is really a catalyst for us to enhance our position in the value chain to higher value services in the next couple of years. So hence, the importance of creating a technology leader. And Tony will talk more about this later on. But I just wanted to share a few points here because we are creating Securitas Technology, a company which is going to be a leader in the industry with global strength and also local execution capability. We're looking at developing the leading propositions when you're looking at the complementarity of these 2 organizations and the opportunity to drive innovation. And that can be internally and also be in partnership with others. And then obviously, we're going to run Securitas Technology as a business, but with a combination here once again with standard, we are greatly enhancing our technology capability and we expect also significant value to our clients because we're enhancing the technology capability, which is so critical to our clients for the years to come. So when you're looking at this from a financial perspective, we're really now starting to shape and to change the profile of Securitas. And looking back a few years back to 2015 and where we are today, the investments that we are doing and the repositioning of Securitas is really starting to generate results. And the operating margin in the last 12 to 18 months is now significantly higher compared to levels where we have operated before. But the most important is where we are heading. So when you're looking at the combination with Stanley, already today, 50% of the operating result will come from technology and solutions. And looking at the coming 3 to 4 to 5 years, we are expecting around 2/3 of our profit contribution to come from technology and solutions and the higher growth in these areas. And based on this, we are excited and really glad to share our new financial targets. And the first target is focused on the growth that matters the most, and that is the growth in technology and solutions. And here, we target 8% to 10% annual average sales growth for the coming period. And we will achieve this based on the demands from the clients but also in combination then with the strength and the capabilities that we are building in our offering. And the margin target, which is perhaps the best reflection of the future profile of Securitas is to achieve 8% group operating margin by the end of 2025. But then also to transparently reflect our ambition and our expectation for the long term, we've also set a longer-term ambition to the 10% operating margin business. So with strong capabilities and disciplined execution, we will deliver strong shareholder value and growth in the coming years. So let me now in the next couple of minutes, just give you some flavor of how do we make this happen, and starting then with the growth in technology and solutions. And we have built considerable capability with technology and solutions with strong double-digit growth over the last 5 to 6 years. Today, this is a SEK 38 billion business with then when you are including Stanley Security. And looking ahead, we are expecting, like I said, annual average real sales growth of 8% to 10%, and this will then come from 2 main categories. Technology, where we're expecting to outperform the market, and this is then a market that we expect is going to grow around 5%, and solutions where we are really driving the development in the market, and we were expecting to grow 10% or more. M&A is not really going to be a focus in the near term. But once we have integrated Stanley and also deleverage, we will be in a really good position as well to do bolt-on acquisitions in a few years' time. And last then shift to the margin, where the strategy is also starting to generate results. And looking then at the period of 2010 to 2020, Securitas was roughly a 5% operating margin business. Starting about 18 months ago, we started to realize real improvements in the operating profit margin. And this is a result of strategy execution, first of all. We've been continuously shifting more of the business and the portfolio to technology and solution. We have a solid track record in terms of price/wage management, which is very important for the people-intensive part of our business. We have transformation programs and predominantly in North America that is now starting to really have a positive impact. And like I said at the beginning as well, we've also sharpened the businesses. This is also helping us to spend time and efforts and resources where it really matters. So we have good confidence and good momentum in that sense. And I just want to share a few drivers in terms of how do we go from the current kind of 6% level up to 8% by the end of 2025. First of all, the Stanley acquisition is margin accretive from day 1. But to achieve this percent, there are 2 main areas of improvement or 2 sources of improvement. The first one, we call taking the lead with technology and solutions. And the second one is enhancing our Guarding business. And we're going to share quite a lot more in the coming sections, but I want to highlight just a few of the margin-enhancing drivers here. So starting with technology and solutions. First of all, with the Stanley acquisition, we have identified cost synergies of roughly $50 million that we are confident to achieve. But on top of that, we also have strong commercial synergies. Secondly, it's -- the second driver is really mix related, and that is when we're continuously shifting more of the business to higher value technology and solutions. And the immediate focus is obviously now an integration, like I said, in value realization. But if you're looking a few years out, we will also be very well positioned to develop bolt-on acquisitions since we're now establishing real relevance in the technology business in a number of the key markets where -- or that are the most important to us and to our clients. And shifting then the focus to guarding, we are expecting margin enhancements from the business transformation programs, and we're already delivering above the expectation here with the North America program expecting as well further benefit there next year. Taking the lessons learned from that program for the programs that we are now running for Europe and Ibero-America. But with improved systems and applications, we're also enhancing the transparency that -- or how we're actually running the business. And the second major area for us is what we call active portfolio management. And this is going to be another important contributor to creating better quality and value to our clients, but also better profitability across the entire portfolio. So in essence, we are shifting more of the business towards more technology and solutions, and we are enhancing the quality and profitability of the Guarding portfolio. These are the 2 main drivers in terms of the margin journey to achieve 8% by the end of 2025. But also, as I commented at the beginning, we have also accelerated our sustainability agenda. And striving to be a good force in society has always been part of the securitized DNA. There is a number of areas we've been doing really good work over many, many years, but this is obviously an area which is extremely important now as well as we go forward. The work that we are doing is also being recognized. So really glad to see the AAA rating from Net Insight. And I was also very proud when we were the first major company in the security services industry to announcing our commitment to the science-based targets initiative. And this has been very well received by our clients. And I should also say that we're working with many of our leading clients as well in the areas of health and safety to make sure that we are enhancing the working conditions of hundreds of thousands of people around the world. When looking from a diversity perspective, we have a rich diversity in Securitas. But if you say there is one improvement area is to make sure that we are also reflecting that higher up in the organization in a more leading position. So that is something that we are working on. In the last 3 years, we have also spent significant effort in terms of strengthening our compliance work and business ethics and the work with what we are calling internally doing the right thing. And this is always about the promise of Securitas protecting our values and the foundation that we have. So when reflecting on the transformation of Securitas, we are in a really exciting journey now, and we have a clear direction and a clear wanted position. So to frame a little bit the coming parts that we're going to have in the session today, we are positioning ourselves now to deliver superior growth in higher-value businesses. And we're going to do that focused then on 4 main areas. First one, like I said, taking the lead with technology; second one is enhancing the quality and profitability of our Guarding operations; third one, positioning Securitas to be the leading choice for clients in terms of integrated solutions and the last area, which is very exciting and also important for the longer-term value creation is we're also building an innovation platform now, which is really strong, an ecosystem that we can leverage for the coming years. So we're going to talk more about this now over the next couple of minutes, Tony and myself. But before I hand over to Tony to kick off with the technology piece, I just wanted to mention as well that when we were joining forces now together with Stanley Security, we decided to also rebrand what we previously called Securitas Electronic Security to Securitas Technology. And we did that to also reflect that this is a new company with tremendous opportunities ahead. It's also a very forward-oriented team and business. And Tony is leading Securitas Technology, and he's going to give you more details now in terms of standard security but also how we are driving the development -- and shaping the technology business in the coming period. So glad to hand over now to you, Tony Byerly, in Ohio. And there you are, and welcome.

Great. Thank you very much, Magnus. I'm extremely excited to have the opportunity to share more about Stanley Security and, most importantly, about the combined Securitas Technology business. Over the past 4 weeks since the closing, I've had the to meet and engage several hundreds Stanley Security associates and leaders in person at several town hall meetings and multiple locations. The energy and the excitement is palatable. The Stanley team members are genuinely energized by the opportunity to become part of Securitas where we are focused on security and safety 24/7 the same as them. Leading up to the close and since the close, I've also had the privilege to speak with numerous clients. We're very positive about the acquisition and who are excited about our expanded coverage our increased capabilities and most importantly, about future opportunities to partner for their evolving security needs. These recent engagements have only strengthened my conviction about the Stanley Security acquisition and the opportunities that lie ahead for our business. As we consider the Stanley Security acquisition, we certainly know it's an important milestone in the acceleration of the technology business. However, we have been successfully accelerating our technology business through several strategic acquisitions over the past 6 years as reflected on this chart. In each of these acquisitions, we ran a very effective and proven-integration governance model. This disciplined approach in integrating these companies together with Securitas has yielded positive results, advancing our real sales double-digit growth and pre-COVID organic sales growth on average of 8%, ahead of the market rate. Core to that has been our increased market relevance in each of the respective countries where the acquisitions took place. Now Stanley more than doubles our technology business, positioning us globally as the second largest commercial technology provider, as well as strengthening, importantly our position in several key markets, which I will cover later. An important aspect of our acquisition strategy has been on the positive development of our recurring monthly revenue or RMR as the industry would refer to it, as a percentage of our total sales. Fundamental to our positive margin development has been an increasing RMR mix in our total sales. Stanley strengthens our RMR mix into these higher-margin revenue streams with approximately 40% of their sales being recurring revenue. Now as I see Stanley Security, it is truly a hand-in-glove fit, complementing and strengthening both our value proposition and our market position. The core of our business and the entire value chain is in a better place with the addition of Stanley in several of our markets across both North America and Europe. Think about it. We add almost 8,000 dedicated security professionals to the team. We're adding critically important field operations such as installation and service, increased capacity, expanded capabilities and technical resources, adding over 3,000 field technicians as part of this transaction. Stanley is also bringing over 500,000 clients to our portfolio and increases our opportunities to serve them across the entire portfolio of Securitas' Protective Services. We're adding a healthy base of recurring revenue, as I mentioned on the prior slide, and we are enhancing our focus on new innovation, and different technologies for our future expansion with our clients. This creates a powerful combination when you add this to our legacy Securitas Technology business. Now as we look at Stanley Security's performance, we see strong commercial momentum in orders growth, yielding a positive installation backlog growth of 33% and organic sales growth of 7% in 2021 and an adjusted an EBITDA of 11% in that same period. During the first 6 months of this year, the business has continued positive commercial momentum but has been facing temporary margin headwinds as reflected in the results. Now these temporary external headwinds are similar to those being faced by others in the technology space, such as the COVID resurgence that occurred at the first part of this year, which negatively impacted labor resources, client availability and scheduling stability. The continuing effects of supply chain disruption and component shortages continues to challenge the industry, but it will normalize over time. The third area that primarily impacted the margins in Stanley's North America business was their delayed response to effectively adjust price to offset the recent inflationary pressure. The legacy approach of updating prices on annual or even a semi-annual basis does not work anymore in this inflationary environment. The good news is, is that the Stanley leadership team started to take actions to address the pricing have been prior to the close, and that will continue to materialize in the results. If you think of it this way, as new pricing takes effect, it takes time to work its way through your installation backlog as your mix of legacy jobs is eventually replaced with the newer priced jobs. I'm also confident that we can get past this issue because we did not see a similar impact in our legacy Securitas Technology business in North America. We have a pricing rigor and tools that enable us to maintain current pricing as our suppliers and manufacturing partners update their pricing. In fact, during the same time period, we have seen our margins improve as we've been able to capture price adjustments. And it's for these reasons, I believe we will continue to see strengthening profitability in the coming quarters as we move out of these temporary headwinds, and we execute on our value creation plans. I get excited, and you can probably tell why on this next slide, because as we think about the overall growth opportunity we see with the Stanley acquisition, we're adding critical mass and market density in 11 of our key strategic markets, where we will now have an estimated top 3 market position, meaning we will have a #1, #2 or #3 market position in those countries. This local market strength and presence is a significant factor as we look at growth potential as it relates to market relevance to our existing and new potential clients. And our global technology presence, expanded intelligence services and enhanced capabilities lend themselves extremely well to filling out and addressing an industry void, which is in serving global clients in the technology space. I think it's important as we think about the commercial opportunities to grow the business faster than the market to really address it in these 4 key pillars. If you look at the first in global sales, we are more than going to triple the number of dedicated sales professionals in the technology space. We are also adding and bringing together our 2 global clients' programs between Stanley Securities and the former Stanley Technology -- or Securitas Technologies group to address that industry void to really serve global clients in an effective way. If you think about cross-selling opportunities, Stanley is bringing over 500,000 new clients, as I mentioned previously, truly as an opportunity where we can offer the entire holistic Securitas portfolio, increasing our share of wallet. And as Magnus mentioned, there is a significant opportunity to drive further innovation in new intelligence services to our clients through technology partnerships internally as well as increased purchasing power influence and working with key suppliers as we look at new innovation for the future. This is especially true in margin-rich services such as cloud and subscription-based offerings which further expands our RMR mix of sales. And although in the near term, we are fully focused on the successful integration of Stanley and achieving our business objectives, the highly fragmented industry creates a strong opportunity in the future to continue our successful bolt-on strategy in select markets. And that's collectively why we feel extremely confident in our ability to achieve our commercial synergies. Over the 8 months between signing and close, our integration efforts have been keenly focused on a smooth and seamless day 1 close for our clients, our associates and business continuity across both of our companies. Thanks to the collective efforts and the hard work of all of our team members in both Stanley Security as well as in the Securitas business, that has paid off, and we had a very good day 1 experience for all stakeholders without any disruption of business. Now during that same time period and in the months since closing, we have been able to plan and prepare for post-close activities. One of the first steps during the week of close was to name our newly combined executive team to lead the Securitas Technology business. This step has allowed us to move effectively and at a good pace since closing as we look at value creation activities, such as the cost synergies outlined on this slide, giving us confidence in our ability to not only achieve but to accelerate the synergy realization, which Andreas will outline in his remarks later. If you look at the synergy opportunities on the left side, we see a real opportunity to drive efficiencies through the combining of the 2 businesses, creating one common technology organization and eliminating duplicative cost structures. Optimizing a newly combined footprint will also be a key factor, such as consolidation of operational facilities and back-office support. And certainly, at the same time, protecting our client-facing commercial efforts and resources, such as field technicians and sales associates, as I mentioned previously. And an underpinning here is also our ability to leverage our strengthened purchasing power. If you think about it, we are virtually doubling our 2 businesses, providing us real strength in this regard. And while driving cost synergies, we also have the opportunity to drive margin accretion across the business through multiple levers. Just in the first item on the right side of the slide, we have the opportunity to leverage the client density between the 2 businesses in a market to improve our operational efficiency through reduced labor costs like driving down overtime, like driving down fuel costs, with improved scheduling and routing. Now what's best about that is we do that all while improving our client experience with better response times and more technical resources. The increasing recurring revenue streams not only provides us more stability but also better profitability through improved fixed cost absorption, which only improves as you reduce your cost structure. And having more intelligent services and expanded offerings allow us to not only strengthen our client value proposition, but improve our margin profile in the future. We have an experienced leadership team, a proven governance model and a structured integration process to identify and deliver on these synergies while strengthening our business commercially, which is why I'm confident in our ability to achieve the $50 million in cost synergies. And our last slide in my section is really a proof point to my prior comments. In 2020, we acquired Techco in Spain, which combined our existing technology business in Spain with our existing business, creating a market leader, virtually doubling both businesses size and scale giving us critical mass in the market, expanding our capabilities and technical resources affording us the opportunity to engage with former Techco clients about the holistic Securitas approach, giving us a strengthened position in front of our own clients and prospective clients with market relevancy, increasing our sales footprint and more. Virtually, all the things that you've heard through this presentation as to the benefits of the Stanley acquisition. And through a structured integration model and best practices, the leadership team in Spain did a great job and was able to achieve significant commercial and cost synergies, yielding today 10% organic sales growth and double-digit margins in technology. This example, along with the successful integration track record of the 5 Stanley Security countries we acquired in 2020, along with the successful integration of the other numerous acquisitions outlined on my first slide. In addition to my 30 years of experience in the industry gives me great confidence in our ability to successfully execute on our objectives and create the world's leading technology business. And with that, Magnus, I'll turn it back over to you.

Many thanks, Tony. And I'm glad the technology is working well here as well. Tony will come back and join us for the Q&A session that we have in a while. So I'm now going to take you through some of the key actions that we are driving in Guarding, in Solutions, and then also how we think about Innovation. And starting then with our Guarding business. We have a strong track record in our Guarding business in terms of the quality that we are delivering in terms of client retention in terms of price/wage management that we're continuously doing. And we are proud to serve many of the most admired brands in the world. And we count those as close clients, but also partners in our development. And when you look at a Guarding business, the Guardian business, be it on-site or mobile or remote, is an important part of the security equation of tomorrow. And it can also be a really good business when it's well managed, long-term client relationships, stability and resilience and also good cash generation. But if we are looking at ourselves and we have done that a few years ago, when I took over as the CEO, there were 2 areas that we felt we had to address. And one was that our Guarding business was quite a manual business. We were not operating in a digital way. And if you're not digital, it makes all the processes less efficient, and it's also difficult to really be able to scale with good profitability. The other area was that we also saw a number of parts of the portfolio that we had profitability that was not satisfactory. So we identified 2 important initiatives to strengthen the Guarding business. And the first one was extensive transformation programs. And there, we started the first ones with global IT and North America back in 2019. And the second area for us was then to take a much more active view in terms of portfolio management and a stronger grip. And with these measures, we're not only going to enhance the quality of our offering to our clients but also the profitability and the value that we are generating with the Guarding business in the years to come. So starting then with the transformation programs. And this is a slide that contains a lot of information, I'm aware of that, but we included here to provide comprehensive clarity as well regarding the objectives, the benefits that we have been seeking and also the expected financial returns. The global IT and the North America programs that we finished -- we started at the beginning of '19, we finished now towards the end of 2021. The Global IT program for just simple description, we essentially went from all local operations in 58-country presence that we had back then to 1 coherent IT organization. And this today is one strong platform that is serving the entire business. Shifting then to the North America transformation program. This was extensive work with extensive digitalization of the entire business. And when I say the entire business is essentially all the processes from recruitment all the way through to paying our people and invoicing our clients. And when looking at the North America program, we are operating the business with the transparency and the speed that we have never been close to in the past. And if you're looking then at the other 2 programs, Europe and Ibero-America, here the starting point is different, but we're leveraging a lot of the lessons [ down for ] North America and investments for the benefit also of these 2 programs. Europe is also rather comprehensive. And here, one of the -- or 2 of the differences, I should say, is that here, we're also leveraging this program to harmonize how we are working across all the different markets in Europe, but also how we're harmonizing all critical systems and applications to support the business in the best possible way. The other objective with the European program is also to help and shift the revenue mix towards more Technology and Solutions. And if you look in then at the financial benefit, we have achieved the targeted savings with the global IT program. If you look at the North America program, we have already achieved a 50 basis point improvement that we set out and are expecting more in 2023. For those who follow us closely, you will also see that the Ibero-America margins were almost at the levels now of the 2024 target. And here, this is not related to the transformation programs, but just general improvements in the business that has happened faster than we anticipated. And with Europe, we are on track to achieve the targets that we set out and communicated last year. By going forward, with the introduction now of the group level operating margin target, that will replace these divisional targets. So that is one area, the transformation programs. So let me now shift then to the other one, which is about active portfolio management. And with this work, we started more actively a little bit more than 2 years ago in the Aviation business, and we have now expanded that to the entire portfolio. Because with improving systems, we're enhancing the transparency and understanding of true profitability down to individual branch or client location. So what does this mean in practice then in terms of active portfolio management? Well, first of all, is we establish transparency in terms of profitability of the entire portfolio. But secondly, then taking a much stronger and more disciplined approach in terms of margin hurdles for the new business, but also then defining with clarity, what does good business look like for the current and the ongoing portfolio that we have. And for simplicity, we have categorized this into 3 different categories on this slide. And if you're looking at one of the client contract examples then with the green dots, that essentially represents healthy business. And here, the focus for us is to make sure that we continuously enhance the value and the value proposition to those clients all the time. If it's yellow or if it's red, it means that it might be close to or it might even be under the margin threshold. And here then we are applying much higher frequency checks on these clients and then actively working to make sure that we are achieving one of preferred two different outcomes. First outcome is that we just renegotiate the terms with the clients because it's not a sustainable business. Secondly, we have the opportunity to convert an on-site guarding client to an integrated solution. And typically, when we leverage technology, we're enhancing value but also maintaining cost levels for the clients, which is usually quite attractive. If the first 2 are not possible in those cases, we would then work to actively exit that contract, but we would do that at the end of the contract period. And we made continuous assessment of the profitability of all parts of the business, and we do that with the portfolio as well. And if you ask the question, well, how much do you have left to do. Well, we believe that over the next 12 to 24 months, we're going to be through those parts of the portfolio that are not operating at a satisfactory margin level. And one message that I just want to make sure is that any nonperforming business will be at risk. And this is important because we are investing. We are very confident in the value that we bring. Our customers also recognize that. But if you think about even the current context, it doesn't make any sense for us to be doing a lot of volume unless we can protect the value. In the current labor market, for example, there is labor scarcity. It's a known problem for most industries, including for us. But -- so I think that is important and also and even more important to be very firm about this. But the other reason as well is that we always have an option that we can offer to our clients with a conversion to an integrated solution. And solutions is the next focus of the coming section. So here, I'm just going to talk a little bit about client demands, about the growth trajectory and also a client reference in terms of an integrated solution. So as I highlighted earlier, we have a large client base and together with Stanley hundreds of thousands of clients that are ranging from SME clients to large global clients. And when we're engaging with a client, we always start with the risk analysis to understand the risk and to understand the needs of the client. And when we talk about the solution, we leverage the different protective services that we have outlined on this page to an integrated solution, which is then based on the client needs. In many cases, we also then deliver stand-alone protective services. So it could be guarding, it could be corporate risk management technology, but we also see that the highest value is typically for the client when we are combining different services into an integrated solution. And why is that? Well, because we are matching very closely with the needs. We're optimizing the value for money for the client. And with a close relationship, we're also in a great position to continuously also develop and enhance the services that we provide to them. And we have spent years building expertise in solutions, leveraging our different protective services. And with the combination with Stanley, we are now greatly enhancing our technology capability. And that is, as I mentioned before, one of the key drivers and -- in needs that are increasing also from our client base. So in this overview, when you're looking at this page, this is referring to the different protective services that we have. And what you see here is that most of the protective services are relevant for all clients. But if you're looking at corporate risk management and on-site guarding, that -- those tend to be more skewing towards larger clients in our segments or even global clients for that matter. And this strategy is working. So when you're looking then at the growth, which we're outlining here, over the last 6 years to 7 years, with the exception of the pandemic, we have demonstrated great growth but also then the opportunity that we have ahead. I'm also really happy about the growth that we have in the first half of 2022 with 13% because we had a couple of years with the pandemic and it was difficult to access client premises and to really drive the momentum. But now we're coming back strong, and this is an important focus area for us to drive. And if you think about the contribution here, so we have announced today a target of 8% to 10% growth in Technology Solutions and solutions is going to be a key contributor here. And which are then the key accelerators? Well, first of all, the client needs. That is one primary driver of this. It's not only Securitas driving it's also clients are demanding more of integrated turnkey solutions from us. Labor scarcity is another important driver. But then obviously, the technology capability with Stanley also enables us to offer more technology capability to more of our clients, partly from Stanley but also from Securitas. We've also been driving focused investment, and we continue to invest in this space with dedicated solutions organizations to help and make this important work happen. And then obviously, there is also cross-sell opportunities that are critical. And if you then take that and say, okay, how does this actually look from a client perspective? I just want to share one client, which is a fairly new client of Securitas, but it's a client that we are proud to consider a client and also a partner of our business over the last couple of years. And this is Puma, so the athletic and casual clothing and apparels company. And this is a good reference case because it represents many other similar types of clients or similar client needs, I should say. Puma were looking, when we sat down, for a full service solutions partner. They had a global view of what they wanted, but they also had a need of local execution. And this is a great case how we are leveraging presence and how we're leveraging technology and increasingly also then how we're leveraging data to enhance the service delivery to them. So in this case, we are providing video, access control, intrusion, everything is connected to the Securitas operations center. And I'll highlight this because the data connectivity is important for us to gather insights and to continuously enhance how we are driving the business and the solutions going forward. So this is a good case because it's as a service, it provides corporate oversight for Puma and is helping them as well to raise the standards in terms of the security equation across their retail footprint. So their message to us was, "You are the experts, help us and take care of this." And this is what we are doing now. And we've started with some stores, but then with a fairly significant ramp-up plan for the next couple of periods. And this is one example, but we are selling thousands of integrated solutions today to our clients. And this is really one cornerstone of Securitas of the future as more technology and solutions-oriented company. And I mentioned connected technology, and I mentioned data. And I just wanted to then link now into the last part of the presentation from my side, and that is how we think about innovation. So let me share just a few points here. Of course, this is when it starts to become really interesting as well because with the presence, technology and data, we have a foundation now to drive new data-driven and enhanced solutions. And with Stanley, we are enhancing the vertical strength and the geographic presence, but also the digital presence in many key markets. We're also getting access to data sets from Stanley that we are able to combine with those from Securitas. And this gives us a very powerful platform to be able to drive innovation for the next phase and to develop new solutions. And for that, a couple of months ago, we also announced that we have put together a new and dedicated team which is called Securitas Digital, and they are tasked with leading this effort with the different businesses to make sure that we are really enhancing now our work in terms of innovation, and also, I should say, very important for the longer-term ambition with our 10% target because this is an area where we have very promising opportunities in terms of the development over the next 3 to 5 years. So let me share just a few examples of what we have done and also a few things that we have in the pipeline. So we've invested, from a Securitas perspective, quite a lot in what we call intelligent services in the last couple of years. We have built a platform through digitization, through machine learning and AI, understanding the business, piloting and testing quite a number of different areas. And we now have a few areas where this is really starting to build traction in the real business. And I may want to mention 2. First one is risk prediction, and this is something that we've talked a little bit about before as well. Here, we're leveraging own and also third-party data to better predict risk. Today, we are receiving prediction levels of 80% or above. What does that mean? Well, it enables us to essentially optimize the security equation. A related service of that is what we call Mobile Patrol 2.0. This is a digital tool. It's AI-based. And here, if you're a Mobile Patrol client of Securitas, you can also get the information close to real time in terms of nearby events, for example. But you're also getting predictions in terms of the coming 30 days, which then enables you as a client as well to opt in and to say, yes, I want that enhanced type of service. So that we also have now brought into the real business, and we have significantly more in the pipeline. But when you're thinking about this, digitalization that we are driving at Securitas and the combination with Stanley, we are building now a tremendous platform to develop new solutions and to drive innovation. And when you compare or contrast this to some of the people-related services, this is not only interesting from a client perspective because we can bring significantly better knowledge. There is also completely different type of scalability here, because here we innovate, we are able to deploy digitally with impact on thousands, if not tens of thousands of clients. So the scalability is also really, really attractive, obviously from our perspective, from a value-generation perspective. But then also when you're looking at Securitas versus most of the competitors, it will be difficult as well for the competitors to match this type of capability, thanks to the assets that we have and the work that we are doing. So I hope that gives a decent picture now and some context of the 4 areas. And glad now to welcome our CFO, Andreas Lindback, to share some more details about the financials, and then we're going to open up for the Q&A. Welcome, Andreas.

Thank you. And really good to meet all of you here today. We will then go into the financial section here. Over the last years, we have been focusing on modernizing and digitalizing Securitas and developing our Technology and Solutions business to become a more future-proof company and also driving the margins upwards. We have also managed a challenging pandemic where all of our people working at Securitas has done a truly fantastic job. Combined with this, we have also managed to deliver on our financial targets in a good way with solid EPS growth and solid cash flows. We have, up until recently, kept our leverage below our target of 2.5, and together with Stanley, we are now also achieving our strategic target of doubling our Technology and Solutions business. It has also been important to see that we have been able to drive our margins really well after the pandemic showing that our strategy is paying off. So together with Stanley, we are now in a solid position to continue the transformation of Securitas, both strategically and financially. And this is also reflected in our new financial targets. The first one is related to growth, where our ambition is to have 8% to 10% average annual real sales growth in Technology and Solutions. We have a strong track record of growing well here, and we expect, going forward to outperform the market in the technology space, to continue to grow our solutions business double digit going forward and also, over time, continue with our bolt-on M&A acquisition strategy in Technology and Solutions. We are also introducing an operating margin target for the group at 8% by the end of 2025. And here, the 2 key drivers are our shift into the high-margin Technology and Solutions and a strong focus on improving the margin in our Guarding business. Looking at the cash flow. Here, we will remain with the existing target of an average operating cash flow of 70% to 80% of operating income before amortization. Related to capital structure then next. Here, we remain with a net debt-to-EBITDA target and the new targets for the net debt to EBITDA is to be less than 3x to ensure a solid and stable capital structure. Here, our target before was an average of 2.5, and we have also communicated in the past that the ambition was to be between 2 and 3. So in essence, there is no major change here. The dividend policy in the range of 50% to 60% of annual net income is left unchanged. I should also say here that previously we had an EPS target, and that is now replaced with the new growth and the new margin target. And when we are executing and delivering well on these 2 targets, we will also deliver solid EPS growth also going forward. Looking then a bit further into the financial reporting going forward. So we will now consolidate Stanley as for July 22, and we will start reporting them into our existing geographical segments that we have in place already today. However, we are also preparing to additional disclosures for you so you will be able then to also see the sales and the operating income for the combined Technology and Solutions business and the Guarding business separately. And this is something that we target to start in the beginning of next year. Looking at this structure with 2021 as a base, also including Stanley, you see that our Technology and Solutions business was 31% of total sales. We have had strong historical real sales growth here with approximately 13% on average. And together with Stanley, the margin in this business is indicative around 9% to 11%. So with a target of 8% to 10% real sales growth going forward, we will have a strong contribution to the group's overall operating margin from Technology and Solutions. Our Guarding business has been growing less in the past and also have a lower margin. We are a leading Guarding company. We have really strong presence, and we have the strongest offering to our clients. And the key for us here is to continue to modernize the business and digitalizing the business also going forward. And together with that, we will also be strict when it comes to our margin management both when it comes to new contracts as well as our existing portfolio. So when we are executing these 2 areas well, we will also then be able to deliver on our 8% operating margin target by the end of 2025. We're moving then to cash flow. We are a high cash flow generating company, and we will remain so also going forward. Over the last 7 years, we have generated over 80% of operating cash flow, which has also been translated into strong free cash flows as well. We are in a low cyclical industry. We have a solid business model with long-term client relationships and high recurring revenue. This generates a stable and resilient cash flow profile over time. Now we are also integrating Stanley, and looking then into Stanley here, the need for CapEx is generally fairly low in the Stanley business and has been less than 2% of sales, not taking into account any effects from IFRS 16. And this is similar to our own CapEx levels in Securitas, also there taking out IFRS 16. And from a net working capital perspective, Stanley's installation business is approximately 60% of sales. This part of the business is a project-based installation business, where the working capital is driven by efficient project management by efficient inventory management and solid and frequent invoicing patterns to the clients. The other 40% is related to the monitoring and maintenance part of the business and is a recurring revenue business, which normally have a strong cash flow profile as many of the clients are paying either in advance or with short payment terms. All in all, the net working capital profile for Stanley is around 20% of sales. So we have -- I should also say, we have really strong best practices when it comes to net working capital management in Securitas but also in our own technology business. And we will now, together with Stanley, start to work of also implementing that with Stanley to ensure that we are fine-tuning their net working capital model going forward and that will also support our growth journey in the technology space. So based on this, we expect solid cash flows from Stanley, and we are in a good position to continue delivering strong cash flows as a group and meet our targets. Looking then at capital allocation and our priorities there. Our strong free cash flow generation have made it possible for us to both invest into our strategy and to give solid returns to our shareholders. Historically, we have allocated approximately 50% of the free cash flow to dividend and the other 50% we have invested into our strategy, building our technology and solutions position through M&A. And we're also going forward and intend to have solid returns to the shareholders confirmed by the dividend policy remaining in place. Over the coming 18 to 24 months, we will shift focus though from investing into M&A to make sure that we can pay down our debt and also reduce our leverage. And we will also finance our previous [indiscernible] transformation programs and the Stanley transaction costs. And I should say also here that there are new programs related to our IT except the ones that we have already communicated around. So -- and then in the next phase, when we have deleveraged to satisfy and position, we will then, of course, continue with our bolt-on acquisition strategy in the Technology and Solutions space. and also consider other capital allocation options available to us or continue to pay down debt. If we then have a look at our leverage profile, as I said before here, we have -- with our strong cash flows and with the shift in capital allocation priorities in the near term, will support deleveraging of the Stanley transaction. As you know, we have had a lower net debt to EBITDA than our target for many years to be ready, there would be a major opportunity such as Stanley. We are now increasing the leverage with Stanley where the net debt to EBITDA is 4.2 looking at this pro forma Q2 2022. Our focus in the near term is deleveraging, and we estimate to be in our target range related to net debt to EBITDA in 2024. Important to mention here as well is that we have no financial covenants in any of our facilities, and we remain committed to our investment-grade rating. If we then look further into some details related to the Stanley transaction and Stanley's financials, here as you all know, we have now closed the transaction as of the 22nd of July, and that is also the date when we are consolidating Stanley into our books. The purchase price was USD 3.2 billion, and that was also done on a debt and cash-free basis. We have financed the transaction through a bridge loan, and this bridge loan will be refinanced through a mix of debt and equity. And here, we will launch the rights issue in September as we have previously also said and the amount is approximately USD 950 million. More information related to the rights issue will come over the coming weeks here. If we then look into the cost synergy of the transaction. And here, we announced USD 50 million of synergies in December, and that remains very much in place. Now we have also had a good 8 months to prepare ourselves here. And thanks to that time, we have also been able to make really solid plans on how we're going to execute on these synergies which also makes us confident we can do this faster than we told you here in December, and we expect now that we will be able to execute this -- most of these synergies over 2023 and 2024. Then if we move on to the -- partly related and transaction, restructuring and integration costs, we expect here a total cost of USD 135 million, unchanged to what we said also previously here. And the majority will be recognized over 2022 and 2023. Moving on then finally here to some further financials related to the Stanley business in itself. First of all, we have now an estimated tax rate here for the Stanley business, which is 28%. And that can be compared then to our own forecast tax rate for the Securitas stand-alone group this year of 27%. Looking at IFRS 16. And I should say that this is then mainly related to leasing related to cars and buildings, here, we expect a net debt impact of USD 100 million from IFRS 16 and USD 40 million increased depreciation, and that also means a reduced operating expense. And important to say here is that there will be no material impact to the net income bottom line. We also, in the second quarter, disclosed numbers related to our purchase price allocation. Here, we estimate the PPA to be around USD 500 million, and that is then mainly related to customer portfolio that will be amortized over 15 years. And that means, on average, an amortization cost of USD 35 million per year. So with that, I hand over to -- back to you, Magnus.

Many thanks, Andreas. So I think you can stay here. I'm just going to make a few concluding remarks. So when you're looking at this, I believe you can see that we are really transforming the company, creating the new Securitas, Securitas which is well positioned to deliver superior growth and higher margins during the next phase. And to achieve this, we focus on 4 main areas. So taking the lead with technology, enhancing our Guarding business in terms of quality and profitability, accelerating the solutions leadership in this industry and also leveraging the strong platform to drive innovation. So that concludes the presentation for now. And we are now happy to open up for the Q&A session. So I think we should then also connect our friend Tony here again from the U.S. And I would also appreciate for the Q&A, if you limit your questions to 1, maximum 2, questions to make it a little bit easier for us to keep track and make sure that we have a good session here. And I should also say we have roughly until the top of the hour [indiscernible] so we dedicated quite a lot of time depending then on the interest and the questions that you might have. So I think with that, I hand over to the operator.

[Operator Instructions] The next question comes from Johan Eliason from Kepler Cheuvreux.

This is Johan from Kepler Cheuvreux. Just 2 questions then, if I may. You mentioned the growth target being on the Technology business and obviously mentioned not too much about the ambitions on the top line for the Guarding business. But can you sort of quantify to some extent what share of guarding is sort of marked red or at risk, so we can sort of get a feel for where you -- where that top line could develop in the coming years? And then secondly, just on the -- a bit weaker margins in Stanley Security in the first half this year. Were there any specific incentives in place during this interregnum period? Or was it -- was that missing basically? I suppose, a lot of managers were thinking where they were going rather than focusing on the profitability in the shorter term. Can you say anything about what you had in place and what you have now put in place over the last month?

Thank you, Johan. So on the first question, I mean, we deliberately decided to put a growth target on the growth that matters the most, and that is Technology and Solutions. I think understanding your question, we have been driving and taking a fairly strong approach in terms of active portfolio management over the last couple of years. We still have, like I said, another 12 to 24 months that we need to work through. What is important here, though, is that when you're looking at the totality of Securitas, the business that we are bringing in this year, is essentially on the new business is higher margin than what we did last year, and that margin last year was also higher compared to 2020. So I mean, we don't have a mission in itself to say what -- we're going to actually decrease the business. That has not happened. And -- but the important thing is that it's profitability first. So we then also have to see that we treat a little bit as a consequence as well with clear profitability thresholds than what is the kind of the residual growth on the Guarding business. But in terms of the time line, the next 12 to 24 months, we're starting with better systems and better applications to get a much better grip now in terms of the business. And that's really the time line that we are expecting to be able to work through the remaining contracts that we have. If you're looking at the incentives, Tony, in terms of Stanley Security, do you want to maybe comment on that question?

Sure, Magnus. The main incentives are really focused around retention of key talent and the focus on the transition of the business, obviously, leading up to our closing. So -- with respect to the incentives on the Stanley side, they had normal performance incentives leading up to the close.

And if you're looking at the business going forward, I mean, the way that we structure incentives, there is some margin components. So you're looking at the relative margin but we're also then looking at the growth in the operating results. So those are the critical ones. But you also mentioned retention, and, there, happy to just reiterate what Tony mentioned before as well. I mean, Tony announced a new leadership team immediately after the closure of the transaction. We have a strong team, lot of complementarity between Stanley leaders and Securitas leaders that are now coming together to lead Securitas Technology. And -- to my knowledge, there is no one who we didn't want to be on that team who is not there today. I mean, the team that we have is a strong one and that is going to lead, and now getting started here over the last 30 days.

Okay. Excellent. I think the 8% margin target is really ambitious. It will be really interesting to see if you can get there already by 2025, obviously, but I wish you very much good luck with the journey.

The next question comes from Kate Carpenter from Bank of America.

Could you just clarify whether the 8% to 10% revenue growth target includes the contribution of Stanley Security or if this is off of the combined 2021 revenue? And then also, how much visibility do you have into the 8% to 10% growth target from the existing sales backlog? And how much of that backlog covers that? I'll leave it there.

I can take the first question here. So Stanley, when we are saying that we are going to grow 8% to 10% real growth, that includes Stanley in the base. But we are not including Stanley as a growth number already, so to say as well. So when we're looking at this, we're having our own business, our own Technology and Solutions business, we're adding Stanley on top of that, and that base together is going to grow 8% to 10% in the coming years.

And Kate, could you repeat the second question? I think that, that was related to the backlog, but I didn't catch that properly, maybe for us to comment on that as well, please?

Yes, definitely. I'm just wondering how much visibility you have into that 8% to 10% growth target? And then how much of that is covered by the current kind of existing sales backlog? And how much is kind of unknown business that you have to generate in the future?

Okay, clear. So then I understand the question. So like Tony highlighted, I mean, we have a strong backlog position when you're looking at the Electronic Security business. And -- that is from Stanley where there is a record backlog, but also from the Securitas legacy business as well. But this target is obviously a multiyear target. So this is until the '25, '26 time frame, which means that they will also have to be new business created, of course, but it does help to start with a healthy backlog, no doubt.

The next question comes from Allen Wells from Jefferies.

Just a couple for me, please. You obviously split the difference between your Guarding and the Tech Solutions business, but obviously, a lot of the growth comes in the solutions and data driven, is it possible you can maybe talk a little bit about how much of the technology side is solutions and data-driven versus technology? I'm just thinking technology grows at 5%, the other divisions grow much faster just to understand what the base is there. And then the second question, just I'd like to go back to kind of the deal financing and deal terms. Is it possible you can maybe provide an update on timing for refinancing the bridging loan expected rates here, et cetera. And I'm just mindful of the fact, obviously, since the deal was announced back in December, we've now obviously got new targets, but we're mindful of -- obviously, we're now closing $900 million of equity at Securitas share price that's 25% lower and bond yields are, what, 200, 250 basis points higher. Maybe you can provide a bit of a comment around that refinancing and how you see deal economics as well on these new targets.

Thank you, Allen. So to provide some more flavor in terms of the growth, when you look at the technology business, just to clarify that, I mean, that's what we define as the design, installation, service and maintenance activity. We expect that market to grow around 5% per year over this period. And we are expecting to grow faster than that based on the reasons that we outlined before in terms of the strength of our offering, the complementarity, the relevance in the market. So that is the first point. If you're looking at what we call solutions, what we define as solutions, I mean there we are integrating different protective services could be a mix of on-site guarding and technology corporate risk management, fire and safety integrated into one solution for the client. There, we are expecting to grow 10% plus. So that has a different growth expectation and profile in this period. If you're looking at the data driven, we have deliberately kept those fairly small because those are not really the main drivers of top line. At this point in time, they are more enhancing the offers that we are having in -- specifically in solutions, but it could also be in stand-alone services, but where we expect that contribution to top line, but specifically also to bottom line with a better scalability profile, that is going to be significantly larger in the mid to long term. So I would say looking at Technology and Solutions growth, really focus on the growth in technology, as I outlined and the growth in integrated solutions.

Related to the bridge loan here. So we will -- as we have said here, we will go out with the rights issue now in September, and that takes approximately a month or so to also execute upon. And the amount there is USD 950 million that we have denominated it in USD. Then thereafter, we will go out as soon as possible to refinance the remaining purchase price in the debt markets. So that's really the ambition to do that as fast as possible. Of course, taking market timing and other factors into consideration here as well. And of course, I should say, since December, interest rate has gone up. But then where we will land here in terms of cost of the debt part of the financing, we will see further on when we get -- when we're actually starting the execution, given also the volatility in the markets we see today.

Okay. So there's no guidance at this stage in terms of how to think about interest costs sort of pro forma...

No way. I mean, in the end, I also don't know where the markets will be at that point in time. But of course, then we also have outstanding bonds that are traded in the secondary market as well, which might be a good reference point for you to look at as well.

The next question comes from Viktor Lindeberg from Carnegie.

Looking at the synergies and integration, how should we understand and think about this journey? Is it a big bang or more of a gradual takeout with management layers country by country to sort of learn the dos and don'ts, sharing of best practices? Or will this be a speedy sort of ripping the bandage of [indiscernible] at once? That's my first question. Then relating to the order book that you have. I understand part of it or most of it may be fixed price, and that is I guess, short term hampering the margins as you can't really raise the prices on the back book. But can you share sort of what speed is this order book or backlog being worked out and replaced and then sort of improved from a price and cost productive, I'll stop with those 2.

Thank you, Viktor. Tony, are you following well, so you pick those 2 up? First question was about how we should think about synergies and integration. Maybe you want to comment on that one first?

Yes. We have deployed our good governance model with respect to the integration. And in fact, we're calling it the creation management office. And if you were to think about it, it -- we have a global level, we have a divisional level, and we have an individual country level. So we can effectively look at all cost structures, look at all commercial opportunities and also how the business will operate in the future as a combined business. And we're using a very disciplined approach as we continue to execute in learning and evaluating and then moving into the execution phase. However, I will say that, obviously, on day 1, we already have realized some synergies with respect to some immediate actions with respect to placing in our new executive team and having that team in place today. As far as the -- and I think Andreas also mentioned previously, just to clarify, the synergies we are planning to have most of those realized between 2023 and 2024. As far as the fixed price and how we should think about how that installation backlog develops on the second question. If you think about it this way, you have sold jobs to a client. Those are in your backlog, you're working those through the process. Now that backlog will turn at a variety of levels depending on the specific client, the specific job. And certainly, when you look at things such as, is the site ready, is it a construction project or is it an existing structure, the complexity, the size of the job, so that backlog turns at a different pace. But as we suggested, I think you'll see that continued improvement over the next subsequent quarters.

I think it's important to also add on here that when it comes to the existing backlog, it's still possible to raise prices in that backlog, and that's the work that we are now doing. So we will not have to wait until new business are coming in to start to have new pricing. It's exactly the work that Tony was actually describing before that we are having a really strong process to manage also within the existing backlog.

[Operator Instructions]

Sylvia Barker, JPMorgan.

Sylvia, we can hear you.

Not sure if you can hear me.

Yes, we can hear you now, Sylvia. Thank you.

So a couple of questions from me as well. I guess one was before the deal closed, you promised you would tell us why, I guess, the Stanley organic growth has been flattish to slightly negative. Can you maybe talk us through kind of the reasons for that? And again, what are the key reasons why that will change? And maybe you can give us some detail around kind of the installation versus the maintenance piece or any client specificities around it? And then secondly, just interest, again, on the solutions piece. So obviously, that will carry a lot of the growth going forward. How much of that growth will be, I guess, cannibalizing your existing portfolio or at least you'll be converting your existing portfolio, just going back to that, that was a big driver of the solutions growth in the past. So how should we think about you converting existing guarding contracts to solutions contract as opposed to winning new solutions work?

Thank you, Sylvia. So on the -- and I will open for you, Tony, as well to comment. But a few perspectives. I mean, we've been following Stanley Security for many, many years. And we were also rather surprised, I would say, to see that the growth -- I mean, the company seem to be moving sideways for a number of years between the kind of period 2013 to 2019. And that was also a discussion that we had together with the Stanley team. And I think that there are a couple of different reasons because we didn't understand. So we were seeing ourselves how the market was growing. We're seeing our own business growing at really a pace like Tony outlined before. I think the main reason is that with all due respect to Stanley Black & Decker as a group, the security business was never core focus of the group. So it was always somewhat on the side. And if you want to build something successful, you need to really to be focused, and you need to be living and breathing that all the time. So I think that is one. But then we also saw that there was a shift going back to the 2018, 2019 period, when I believe also the Stanley team realized that we need to stabilize the management, we cannot change the strategies too often, we then need to build more kind of a technology-focused strategy for the next phase. And they successfully started to do that as well. And that's also the reason that you're seeing 7% organic sales growth last year, for example, which is quite the healthy number and also then a strong backlog now because they have been building commercial momentum. But then obviously, there's also been a period of pandemic here that has been hurting the entire industry, including Stanley as well, up until just a few months ago. So I think that it's -- we saw a company that had been moving sideways for the reasons that I mentioned, but also a company that was really starting to be more focused and also starting to be a better quality business with better focus. And that is also something that we have been able to validate as well after Stanley has become fully part of Securitas going back 1 year. So I think that's the perspective that I would say in terms of the growth profile. And before I go to the next question, Tony, any additional comments from your side to Sylvia's first question?

No, just probably 2 points, Magnus. And I would tell you that I think that's why you see the enthusiasm and the energy in the Stanley associates and leaders because they really now feel that they're at a home, they're really understands their business and obviously can talk their language and it's really focused on what they do 24/7. So I think we can -- that's a very important piece to underpin with as far as the energy and the psyche of the employee set. The second piece I would just tell you is they've also refocused in that same time period that Magnus was talking about around higher growth areas such as building up competency in serving clients that are in the tech sector with respect to like such as data centers and such. So I think they've also refocused the business in a good way and that stability in their leadership has helped them have that organic growth that Magnus mentioned previously.

But I mean, it also goes without saying, we are in the industry. We're talking to people. We talk to clients. And I mean, we're getting many, many reference points in terms of Stanley as a partner and quite a lot of similarity in terms of the quality perception and the professionalism. So I think when you look at this combination, we are absolutely confident that we're going to be able to grow the business at a faster pace than the market, thanks to the team and the leadership, but also the capabilities that we have in this combination. Addressing then your second question, Sylvia, about solutions. Yes, in the first -- if you look in the last 5, 6 years, I mean, we've been actively working also to convert existing on-site guarding portfolio to integrated solutions. So that has been one important focus. And then once you have done that for a while, that also means that potentially that on-site guarding portfolio is going to be a little bit smaller. But as you know, I mean, we've also grown our Guarding business quite a lot, and it continues to be an important source as well based on client needs and client realities to also make that type of shift. But what is promising now when you're looking ahead as well, is that we have more and more clients that are coming to Securitas with the similar messages that Puma shared with us, for example, in the brief reference case that I shared before, where they are saying, "You are the experts, this is too complicated for us. We need the depth of expertise that you have." But they also need and they realize that they need a combination of presence with our people, but also knowledge of technology and how we are putting solutions and designing solutions together based on their needs. And so I would also say that if you're looking at new sales and not only then converting, that will be a growing part of the business also based on the fact that we are now much better in terms of also bringing this, and we have many, many strong reference examples as well. So we're able to also bring more turnkey solutions to our clients which they find very attractive. So I think when we have the extensive Capital Markets Day next year, I mean then we should also share many more client examples as well because there is -- Puma is just one case, but it's a great reference point because they have a lot of similarity in needs, but also similarity in terms of how we go about actually addressing those needs successfully for their benefit and also for ours.

Okay. And maybe just on the Stanley point, I guess it would be interesting just to -- yes, just to get a bit of background in terms of whether the installation versus kind of maintenance and pieces have done differently over time or whether there's a particular piece of that, which is -- which has underperformed relative to where you expected it from the outside and where you'll be focusing your efforts now?

Tony, do you want to comment on that? So -- Sylvia's question in terms of that the mix over time of Stanley between installations and service and maintenance.

I think the mix that we mentioned earlier in the presentation with the installation and the one-time project-based business being about 60% of their business with the recurring revenue streams being about 40% of the business, which actually gave them some resiliency during the COVID piece with respect to having that 40% of their business in those recurring revenue streams. And that piece is obviously an area that we are continuing to focus on and continuing to develop and focus on building out that recurring revenue. As far as historically, for the company when you have 60% tied to the installation project business, obviously, if you're not having good sales or if your sales are a little sluggish [indiscernible] that would have caused, obviously, an inability to grow the business with having 60% tied to that. But they've had healthy orders growth developing, as we mentioned, which has built the backlog. So really the focus of the team over the last 3 years has positioned the company in a good spot.

The next question comes from Karl-Johan Bonnevier from DNB Markets.

Yes. Magnus, Andreas and Tony, looking at the targets -- some of the -- your targets you're putting out today and obviously giving us an EBITDA margin target for end of '25, do you see it more as a hockey stick to reach that? Or is it more of a continuous process to reach that target? And also on that target, how important do you think the M&A component is to reach both, say, the margin target and the growth target coming out towards the end of the period?

Thank you, Karl-Johan. So I think you know us quite well. We are not the hockey stick type of a company. We typically build everything for long-term value creation. So the plan that we have is obviously when you're looking at legacy Securitas, if we can call it that. I mean, we are in a positive curve. The combination becomes tremendously powerful. I think we presented some of the context here today in terms of when we're combining these technology businesses into something really, really strong. And we also have transformation programs that would then affect and value realization. So that -- I would say that's more of a gradual process, is clearly our ambition when you're looking at the margin development. And then on the acquisitions themselves, I mean, this is obviously a very significant undertaking. We have a lot of experience in terms of acquiring and integrating businesses. The main difference now is that now there is a number of different in 12 different markets at the same time. So this is going to be our full focus now for the next 18, 24 months. bringing this into a really powerful business. But then obviously, we will be in a really attractive position also with strong platforms to do bolt-on acquisitions after that. And that is clearly an ambition, but it's not for the immediate near term, it's more for the kind of the [ mid-band ] perspective. that we target to do that.