Sodexo S.A. (SW) Earnings Call Transcript

Ladies and gentlemen, dear shareholders. Welcome to everybody. Welcome to the [ Hotel des Arts et Metiers ]. It's a great pleasure to meet you in this exceptional venue for this shareholders' meeting. I'm speaking to you today alongside Marc Rolland, our Chief Financial Officer; and Florence Negrel, Secretary of the Board of Directors, who is handling the General Meeting secretarial duties. I would also like to inform you of the presence of the General Meeting's 2 scrutineers; François-Xavier Bellon, who represents the holding company, Bellon SA; and Valérie Denis, who represents the FCPE Groupe Sodexo Peps, one of the mutual funds for Sodexo employees, who were the shareholders with the largest number of votes having accepted the role of scrutineer. Also present in the room, Didier Michaud-Daniel, Executive Chairman of Pluxee Board of Directors; and Aurélien Sonet, the CEO of Pluxee. I will now officially open this Shareholders' Meeting, of which I am the Chair, as Chairwoman of the Board of Directors and Chief Executive Officer. The members of the Board of Directors and the Sodexo leadership team who could attend or also present either physically in this room or remotely. I now hand the floor over to Florence Negrel, Meeting Secretary, who will present the agenda.

Thank you, Sophie. Hello, everybody. I'm delighted to be with you as Secretary for this meeting. First of all, I would like to remind you that this Shareholders' Meeting will be held in French and that simultaneous translation into English is available. As usual, this meeting is also accessible to the deaf or hard of hearing, thanks to sign language interpreters. I also remind you that this meeting is being broadcast live from our website, that is www.sodexo.com and will also be available for replay in the coming days. I inform you that the number of shares mentioned on the attendance sheet in the name of the shareholders present, represented or having voted by correspondents amounts to 121,516,693 shares, that is 82% of the shares bearing voting rights. Now, the legal quorum is 29,409,613 shares, and the Shareholders' Meeting, therefore, can validly deliberate. If latecomers come to Shareholders' Meeting before 10:45 a.m., this provisional quorum will be modified, and the final quorum will be taken into account when voting on resolutions. I have before me all the documents, which attest to the regularity of the convening and deliberation of this meeting and the documents that must be made available or communicated to shareholders have been made so under the legal conditions and deadlines. Please also be informed that a bailiff is present in the room. The agenda of the Shareholders' Meeting and the draft resolutions were presented in the preliminary Notice of Meeting published on December 18 in the French BALO Gazette as well as the correction on December 20, 2023 in the French BALO Gazette. The Final Notice of Meeting was published in the BALO and in the Journal of Legal Announcements on January 12, 2024. Please note that following the publication of the Preliminary Notice of the Meeting, no request for the inclusion of points or draft resolutions on the agenda has been submitted by the shareholders. As usual, in the interest of the debates, we propose that you exempt the Chairwoman from the exhaustive reading of the Board of Directors' report and the report on the exceptional in-kind distribution in the form of Pluxee shares. These reports are available on our company's website, that is, www.sodexo.com. I now give the floor to Sophie Bellon, Chairwoman of the Board of Directors.

Dear shareholders, dear Board members, dear employees, dear friends of Sodexo and Pluxee, I'm delighted to be with you today for this Shareholders' Meeting, which marks a major turning point in the history of our group and a decisive strategic step forward. We are now in the final stage of a process that began 2 years ago, when we launched an in-depth strategic analysis to assess the opportunity of making Sodexo and our Benefits & Rewards Services activity 2 separate entities. We did this with the teams in Sodexo and in Pluxee. Following this work, on April 5, last, barely 10 months ago now, we announced a plan to spin off and list this business, which was renamed Pluxee in June. With your support, ladies and gentlemen, dear shareholders, the spinoff will be effective in 2 days' time, and Pluxee will be listed on the Stock Exchange. Pluxee's shares will be distributed on February 5. So we said it, and we did it. But rather than seeing this as the end of the journey, I see it as the beginning. As you know, the aim of this operation is to create 2 leading pure players in high-growth markets. The spin off will enable both Pluxee and Sodexo to have more focused strategies, autonomous governance, dedicated resources and very clear positioning in their respective markets. This is a unique opportunity to enable Pluxee and Sodexo to realize their full potential and to accelerate value creation for all of our stakeholders. I would also like to remind you that the Bellon family fully supports this project. Bellon SA, our family holding company, will remain the reference of core shareholders for both companies, guaranteeing a long-term vision. Four Board members will represent the Bellon family on Pluxee's Board of Directors. I often say that Pluxee is a jewel, with a unique positioning and a very specific model based on tech, which enable it to support companies and their employees in the context where expectations in this area are increasingly high, historically solid performance and strong sales momentum with organic revenue growth of 26.9% over the previous year. And a clear strategic plan, which was presented to the market at a Capital Markets Day on January 10 last and which will support Pluxee's profitable growth across an immense market potential. As Sodexo shareholders, you will shortly be able to vote on whether to receive 1 Pluxee share for each of your Sodexo shares. So this means you will share in the future success of both companies. That is a Sodexo refocused on its strategic priorities, which continues to rely on solid fundamentals to accelerate its transformation and build for the future and Pluxee, a particularly promising brand, in a rapidly expanding market. I would like to thank you for your trust. And I would also like to take this opportunity to extend my warmest thanks to the members of the Sodexo and Pluxee teams, who have been working tirelessly for several months to move this spin-off project forward. You can be proud of the work you've achieved to support this milestone in the life of our company. Many thanks also to Marc Rolland for his remarkable work. Marc has been behind this major operation from the very beginning and will continue to accompany it until its completion. I also want to very warmly thank Aurélien Sonet, CEO of Pluxee; and Didier Michaud-Daniel, Executive Chairman of Pluxee's Board of Directors. I'm fully confident in the success of Pluxee and its teams and wish them all the best. Now, I'd like to hand over to Didier Michaud-Daniel and Aurélien Sonet. Thank you.

Ladies and gentlemen, on the 1st of February, I will have the honor to become the Executive Chairman of the Pluxee Board of Directors. Sorry? You're right, yes, possibly. Aurélien is a bit taller than I am. I followed with great interest the development of Pluxee within the Sodexo Group, for which I always have had great admiration. Pluxee draws on the proud traditions of the Bellon family, and it embodies the outstanding Sodexo values of service spirit, team spirit and spirit of progress. We have a clear strategy for Pluxee to reinforce our leadership in the meal and food benefits and to augment further our employee benefits and engagement offer. We will execute this strategy in a disciplined manner, which will provide Pluxee a unique opportunity with the spinoff to strengthen its position to fully realize its potential. This past few months, I've had a great pleasure of working with CEO, Aurélien Sonet and his wider team as they prepare to execute Pluxee's strategic plan. Aurélien Sonet has played a key integral part in Pluxee's development over the past 6 years. The group is now a major global player in the employee benefits and engagement market. Aurélien and his team will lead us forward to create value for all of the stakeholders, including, of course, our shareholders. These last few months, we have also assembled a Board of Directors. These Directors bring diverse expertise and experience in areas such as payments, human resources and mobile communications, which will contribute to executing Pluxee's strategic plan. Each Director embodies in their own way the personality of Pluxee in their optimism, in their professionalism and relentlessness. I'm confident that this Board will effectively support the execution of Pluxee's strategic roadmap. I will now leave the floor to Aurélien, who will share with you his vision and ambition for the group. Thank you. Thank you for your attention.

Thank you, Didier. Good morning, everyone. We are experiencing today a unique moment for Pluxee, its employees and all of our stakeholders, including our shareholders. I'm very happy to be with you to introduce Pluxee and share our vision, our strategy and our growth ambition. Our business started in the 1970s under the name Sodexo Benefits & Rewards Services. Over the last 45 years, we have gradually grown our business through our core meal and food offerings. Today, we have a presence in 31 countries, and we are #1 in 17 of them. We've also expanded to other employee benefits such as gift and mobility and entered the wider employee engagement, reward and recognition universe to capture growth beyond meal and food benefits. Since 2018, we have, in parallel, undergone a significant digital transformation. And I'm proud to say that today, Pluxee is a truly digital company with over 90% of our business volumes being now digital. We are a team of over 5,000 people, united under a distinctive modern consumer-facing brands, which we launched last June and which we have deployed today around the world. The Pluxee brand embodies our positioning as a trusted HR partner and helps us create greater value for all of our stakeholders, including, of course, for our shareholders. The spin-off from Sodexo and listing of Pluxee is the next phase of our journey and the beginning of a new chapter as a major player in employee benefits and engagement. To fulfill our mission, we are constantly evolving our range of solutions to meet the changing needs of clients and consumers. At the core of our offering is meal and food. This is an area with a well-established regulatory framework that provide key advantages for both employers and employees. We also offer a wide range of lifestyle benefits, namely gift, health and well-being, holiday and culture and mobility. These employee benefits activities represent most of our business today, i.e., 83% of fiscal year 2023 revenues. And more recently, we have taken our offerings even further with the global leader in public benefits, supporting over 12 million citizens through this activity, mostly in European countries. I suggest this reflects a wealth full of opportunities [indiscernible] accumulate promotions, delight yourself. With those around you, whom you like and love and take even more advantage of these benefits, take care of yourselves and others, change your lifestyle, improve your well-being, engage in more sustainability. It contributed 18% of our fiscal 2023 revenue. Our combination of global scale and local footprint represents a clear competitive advantage for Pluxee, especially when it comes to acting as a multi-country partner to our clients and taking advantage of some global macro trends. Over the past 5 years, we have also moved from a decentralized organization to a truly global one. This has allowed us to drive our strategy while consistently deploying our product roadmap as well as our digital and data capabilities worldwide. We operate a highly interconnected and tech-enabled ecosystem of clients, consumers and merchants that handles 4.8 million transactions every day. Our relentless focus on delivering added value to each of these stakeholders has allowed us to sustain profitable growth over time. Our best-in-class offering supports our clients in attracting and retaining talent while lowering their cost. Our consumers enjoy an enhanced employee experience and flexibility of choice, which are delivered through our high-performance consumer apps. And finally, we create value for merchants by driving more traffic to their stores, be they online or physical and by increasing engagement with a massive consumer base and by providing them value-added services. This B2B2C ecosystem is the foundation of our cash generative and highly scalable business model. Pluxee operates in a vast under-penetrated and growing market with huge potential. Beyond macroeconomic factors, it is driven by the need of employers to evolve in line with the shift in employees' expectations to a new model of work. The employee benefits and engagement market is currently estimated at over EUR 1 trillion. The direct market should continue to experience with 7% to 9% in the coming years. This is for Pluxee a tremendous opportunity to capture. Our strategy is twofold. Number one, to reinforce our leadership in meal and food; and number two, to augment our wider employee benefits and engagement offer. These ambitions are interlinked as success in one fuel success in the other, serving the same ecosystem of clients, consumers and merchants. This strategy will be enabled by our digitally skilled, diverse and highly engaged talents, our best-in-class, scalable tech and data platform. And finally, a targeted and disciplined approach to merger and acquisitions. We will drive the execution of this strategy through 6 key initiatives, which will allow us to improve our value propositions for clients, for consumers and for merchants to sustain our revenue growth and to lead to further margin improvement. By executing this strategy, we will continue to deliver a robust financial performance. Over the next 3 years, we expect to deliver a low double-digit revenue growth every year. And thanks to our operating leverage, we'll continue to improve our margin and maintain high cash conversion levels. We are confident that we will successfully execute our strategic roadmap, and hence, deliver on our targets. A page turns, and a new story begins today in this very room. This 30th of January marks a historic milestone of an adventure, which started in 1970s. It signifies for Pluxee and its teams the accomplishment of several months of the spin-off process led step by step. For nearly 45 years, Pluxee has grown side-by-side with Sodexo, sharing common values that are now part of our DNA. Because humanities are the core of our business activity and because employee engagement is central to our mission, we will continue to uphold these values. With these fundamentals at heart, we are ready to take the next step to continue strengthening our positions in the market, seizing the opportunities ahead and realizing our full potential. Over the past 6 years, I've had the privilege of supporting the transformation of the business. Today, I'm very proud to forge ahead on a new path accompanied and supported by Didier Michaud-Daniel and the members of the future Board of Directors as supported by the commitment of the management team of Pluxee and surrounded by the enthusiasm of over 5,000 talents. I am confident that I can count on the Bellon family, which will be a guarantee of stability for Pluxee. Finally, I would like to thank Sophie Bellon and the Sodexo Board of Directors for the trust they have showed me and for the audacity and boldness to lead this highly value-creating project for our shareholders and for all of our stakeholders. Thank you for all for supporting us in this new project.

Thank you very much, Didier. Thank you, Aurélien, for your messages focused on the future. Ladies and gentlemen, I now suggest that we open the Q&A session, the question-and-answer session. Obviously, Didier, Aurélien and Marc will be here to answer the questions along with myself. Before we take questions from the floor, I'd just like to inform you that the company has not received written questions from shareholders. And it seems to me that we didn't receive questions through the webcast either. Well, they may come in a little bit later on during the Q&A session. It was explained so well that no questions because it was also clear perhaps.

Well, there's a question of -- there's a gentleman here, microphone #1, perhaps first. Thank you.

Yes. I have a question. I'm not English speaker. I have no command on English. I looked into the [indiscernible] dictionary what spin-off is, and I didn't find it. What does it mean?

It means separation. [Foreign Language] in French. So it's a rather technical term, perhaps, spin off -- [Foreign Language] in French, but it means the separation, [Foreign Language]. Pluxee was part of our group, and in the future, we will have Sodexo on the one hand and Pluxee on the other hand. They will be separated. It's the word [Foreign Language] in French that could be used. Thank you for asking this question. You have quite a point. It's a common sense question. Thank you for asking it. We'll now move to the left over there. There's a gentleman with the question, if he can be given the microphone. Thank you.

My name is [indiscernible], an individual shareholder. I have 2 questions. Pluxee has a lot of cash. Can you confirm this and give us the total cash position for Pluxee? Will there be an impact for Sodexo on the back of the spin-off, which is the word I like, despite being French. I have another question. When I looked at your presentation to the Anglo American investors, you spoke about a low double-digit growth, which you don't have in the French. Did your numbers changed between the French -- between the presentation to the English world to -- from -- until today?

Thank you for these questions. For the first one, I'll let Marc give you an answer, and I'll take the -- well, I'll give the floor to Aurélien for the second question. But Marc, first, please.

So the net cash position of Pluxee is EUR 865 million, which indeed is a lot of cash, but there are a number of angles to look at Pluxee's cash position based on the flows from volumes from customers before the money is paid back. So it is a cash-rich business for sure. With respect to the utilization of this cash, I will let Aurélien speak about it. Now, with respect to Sodexo, we separated gross debt of Sodexo. Part of the debt was transferred onto Pluxee in the amount of EUR 610 million. And the debt remaining in Sodexo is quite bearable because we consider maintaining our rating level, jointly with the rating agencies we are working with, and this is work in progress. Aurélien?

Thank you, Marc. This is Aurélien. Well, to come back to your question on the guidance we presented to the market, the answer is no. We did not change our target. The target is low double-digit target. This is a double-digit growth target that we have for our total revenue that is in the lower part of the range. With respect to utilization of our cash, this is what we explained on the 10th of January last into some more detail, jointly with the Pluxee teams. Now the first way to utilize this cash is on the back of some of our capital expenditures and investments in technology-related assets. We mentioned it a few minutes ago. We want to invest some 10% of our revenues into capital expenditures to continue providing the best possible proposition of value for all of our stakeholders. This is the first way to utilize our cash. The second way to utilize our cash will be to carry out acquisition transactions if and as we find the right targets, of course. And we're committed to embarking on both targeting a disciplined approach in this external growth strategy. And the third way to utilize our cash will be to pay out dividends. And in this respect, we put forward a dividend payout policy, which is at least 25% of the net income of Pluxee.

Thank you very much, Aurélien. We have another question over there towards the back of the room.

Hello. My name is [ Jean Claude Laurent ]. I'm an individual shareholder. Will the Pluxee stock be able to be bought as part of the savings plan?

The answer is yes. If you have Sodexo shares and you get Pluxee shares, you can keep them in a personal employee shareholding plan.