Trading update third quarter 2014

Transcription

1 Trading update third quarter 2014 Neil McArthur, Chief Executive Officer Renier Vree, Chief Financial Officer Amsterdam, October 22, figures unaudited

2 DISCLAIMER Statements included in this presentation that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward looking statements. These statements are only predictions and are not guarantees. Actual events or the results of our operations could differ materially from those expressed or implied in the forward looking statements. Forward looking statements are typically identified by the use of terms such as may, will, should, expect, could, intend, plan, anticipate, estimate, believe, continue, predict, potential or the negative of such terms and other comparable terminology. The forward looking statements are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward looking statements October 2014

3 NGA HQ Virginia, M80 Ringroad USA upgrade Victoria, Australia The Wave, Queensland, AUS Agenda ARCADIS NV Trading update third quarter 2014 Neil McArthur, CEO Renier Vree, CFO Q&A 22 October

4 Solid third quarter results; well positioned for growth with record backlog and recent acquisitions Gross revenues ( million) 630 (Organic -1%) Net revenues ( million) 475 (Organic -1%) Small decline in organic net revenues -1%; excluding North America +4% Operating EBITA margin strong at 10.4%. Operating EBITA ( million) 49.5 (2013: 51.8) Free cash flow ( million) 64 (2013: 73) Operating margin (% net revenues) 10.4% (2013: 10.9%) Backlog (Organic in %) +2% Backlog up 2% organically reaching record levels following series of significant contract wins ONEurope on track to meet 10.0% operating margin target by Q Free Cash Flow strong at 64 million Successfully completed acquisitions of Hyder, Callison and Franz to increase annual revenue run-rate by more than 500 million 22 October

5 YTD: organic growth net revenue, margins ahead of last year Gross revenues ( billion) 1.8 (Organic 0%) Operating EBITA ( million) (2013: 138.0) Free cash flow ( million) Net revenues ( billion) 1.4 (Organic +1%) Operating margin (% net revenues) 10.1% (2013: 9.7%) Backlog (Organic in %) Gross revenues organically flat versus last year Organic net revenues +1%; excluding North America +5% Operating EBITA 10.1% (2013: 9.7%) First nine months free cash flow increased to YTD 52 million (2013: 12 million) Total backlog increase of 6% creating a record backlog level for the Company 52 (2013: 12) +6% 5 22 October 2014

6 Strategic highlights Q Acquisitions Three acquisitions now completed: Hyder Consulting PLC, Callison and Franz Acquisitions accelerate our sustainable growth performance collaboration strategy implementation Asia ONEAsia operating model defined Kenneth Poon appointed as CEO ARCADIS Asia as of 1/1/2015 Europe Operating margins further improved to 8.0% in the third quarter Erik Blokhuis appointed as CEO ARCADIS Continental Europe as of 1/1/ October 2014

7 Continental Europe on track Organic net revenue growth +2% in third quarter 2014, YTD +3%, driven by success with Multi-National Clients Operating margin 8.0%, YTD 7.8%, a significant improvement over 2013 YTD of 4.4% Progressed Performance Excellence initiative, further margin improvement expected for 2015 Higher NR backlog YTD +6% On track to meet our 10% operating margin target in the fourth quarter of October 2014

8 Acquisition of Hyder Consulting PLC 4,600 people design and engineering consultancy with activities in UK, Middle East, Germany, Asia and Australia Business update Third quarter record order book with strong order intake from Australia Middle East market remains good with significant infrastructure opportunities in Saudi Arabia UK performing well, particularly in rail Recent wins Design of the East West link project in Melbourne Upgrade of London Bridge station at 29 mln and Manchester s Victoria station at 20 mln Paddington Bridge, London, UK London Bridge Station, London, UK 8 22 October 2014

9 Acquisition of Callison 1,000 people high level architectural and interior design consultancy with offices in the United States, China, Europe, Middle East and Mexico Business update Revenue growth in Q3 driven by Asia Positive development of US commercial market Recent wins First Callison/RTKL synergy project: ~$3 mln to design expansion of the Swedish Neuro Institute at Swedish Medical Cherry Hill Campus Hyundai department Store Co., Cheon Ho, Korea, retail design project valued at $1 mln Porsche dealership, China The Pearl, Doha, Qatar 9 22 October 2014

10 Results third quarter October 2014

11 Organic net revenue growth in Q3-1%; excluding North America +4% Organic growth (NR) 6% 5% 4% 3% 2% 1% 0% -1% Q Q Q Q Q Q Q Q Q Q Q Q Q Q October 2014

12 Q3: revenues flat amounts in millions, unless otherwise stated Q Q Gross revenues Organic gross revenue growth -1% Net revenues Organic net revenue growth -1% EBITA Operating EBITA 1) Operating margin 10.4% 10.9% 1) Excluding restructuring, integration and acquisition-related costs Currency effect: Gross revenue 0%; Net revenue 0%; EBITA 0% Restructuring and integration costs: 1.6 million mainly in Europe (Q3 2013: 5.3 million) Acquisition-related costs: 7.3 million (Q3 2013: 0.0 million) October 2014

13 EBITA affected by the America s M Operating EBITA Q Currency 0.2 Acquisitions 0.3 Organic (2.8) Operating EBITA Q Limited currency effect from stronger GBP Acquisitions relate to inprojects Organic EBITA mostly impacted by lower returns in North and Latin America, which could not be fully compensated by improvements in Continental Europe and the UK October 2014

14 YTD: operating EBITA improved amounts in millions, unless otherwise stated Q3 YTD 2014 Q3 YTD 2013 Gross revenues 1,827 1,873 Organic gross revenue growth 0% Net revenues 1,407 1,425 Organic net revenue growth +1% EBITA Operating EBITA 1) Operating margin 10.1% 9.7% 1) Excluding restructuring, integration and acquisition-related costs Currency effect: Gross revenue -2%; Net revenue -3%; EBITA -3% Restructuring and integration costs: 7.1 million (Q3 2013: 14.0 million) Acquisition-related costs: 11.2 million (Q3 2013: 1.1 million) October 2014

15 YTD: strong EBITA performance M Operating EBITA Q3 YTD Currency (4.0) Acquisitions 0.0 Organic 8.2 Operating EBITA Q3 YTD Currency effect -3% from weaker Brazilian real and US dollar Acquisitions relate to inprojects, Geohidrología & Senes Organic EBITA growth driven by Continental Europe and the UK October 2014

16 RAINBOW CITY Kunming, China Operating margin remains strong Operating margin¹ ) Q1 8.8% 9.2% 9.6% Q2 9.1% 9.0% 10.3% Q3 9.9% 10.9% 10.4% Q4 12.1% 2) 10.8 % year 10.0% 10.0% 1) Operating margin: EBITA as % of net revenues, adjusted for restructuring, integration and acquisition-related costs 2) Excluding impact tax benefit from EC Harris partnership structure related to Q1/Q3, margin in 12Q4 would have been 11.1%. 16 Greening master plan, Hong Kong 22 October

17 Cash flow significantly stronger millions Sep. 30, 2014 Sep. 30, 2013 Net Working Capital % 19.0% 17.9% Free cash flow YTD Working capital up due to mining and oil & gas clients; Continental Europe improved 20% Net working capital as % of gross revenues 15% 10% 5% 0% Q Q Q Q Q Q Q Q Q October 2014

18 Balance sheet 2,0 1,5 1,0 0,5 1,4 Average Net debt / EBITDA 1) 1,5 1,4 1, ,1 Net debt increased to 333 million in Q3 due to the acquisition of Hyder shares of 94 million Q net debt/ebitda is 1.5 Q average net debt/ebitda: 1.4 (Q3 2013: 1.4) 0, Q ) Calculated using bank covenants methodology Maturity Profile of Committed Facilities M Term Loans USD 357m & EUR 24m RCFs EUR 175m USPP USD 200m Hyder Bridge GBP 296m Well diversified sources of funding Good spread of loan maturities Bridge loan agreed for Hyder acquisition, to be refinanced within months (optional 6 month extension) October

19 Business lines INFRASTRUCTURE WATER ENVIRONMENT BUILDINGS October 2014

20 Infrastructure Infrastructure World class intelligent and integrated road and rail transport solutions Specialties: stations, ports, airports, tunnels, bridges, large projects Paddington Bridge, Rotterdam Central Station October 2014 London, Tower Bridge, UK London, UK The Netherlands

21 Infrastructure Strong backlog growth (24% of YTD gross revenues) Current developments Positive developments in the Middle East, UK and Continental Europe offset by decline in mining Latin America Growth in North America Backlog up 9% Recent wins California High-Speed Rail Authority, up to $72 million - 5 year contract overseeing design and construction $60 million mine expansion contract for Ferrous Resources in Brazil as a 60% consortium partner Two Latin American aviation contracts of in total $23 million, including expansion of the international airport of Lima, Peru Sydney Harbour Bridge, Sydney, Australia California High-Speed Rail, Los Angeles San Francisco, US October 2014

22 Water World class water supply and waste water treatment system consultancy and design, also for industry Leading heritage in water management The big U, flood protection New York, US October 2014

23 Water modest decline (14% of gross revenues) Current developments Strong growth in Emerging Markets, particularly Latin America Growth offset by decrease in North America due to limited spending by municipalities Backlog growth 1%; all regions contributing except North America Recent wins Study into flood barriers in the Swedish city of Gothenburg Water project management database for Middle Eastern public client Shenzhen River, China Kahramaa Mega Reservoirs, Qatar October 2014

24 Environment World class remediation consulting and technologies Compliance management, impact assessments, climate adaptation 24 Murray Darling Basin, Australia 22 October 2014 Mining remediation Canada

25 Environment decline in revenues (31% of YTD gross revenues) Current developments Revenues down due to tough market conditions in the US and the UK Increased competition due to fewer project opportunities in the public sector Higher revenues in Continental Europe from projects with multi-national clients Backlog growth of 4%, which includes only 10% of recently won large US remediation contracts Recent wins Vandenberg Air Force Base, $125 million performance based fixed price contract $82 million contract for the environmental restoration of 104 sites at Joint Base McGuire-Dix-Lakehurst, NJ Environmental assessment, Stannon Lake, Cornwall, UK In-situ remediation at former Spellmann site in Orlando, Florida October 2014

26 Buildings Burj Khalifa, Dubai Retail for schools London, UK Plan, design, create, operate and regenerate buildings 26 Sustainability 22 October 2014 by 2014 Design, ARCADIS Built Asset Consultancy, large scale Program, Project and Cost Management

27 Buildings strong growth (31% of YTD gross revenues) Current developments Revenue growth in all regions Strong growth in Middle East on high levels of capital expenditure Growth in Europe from business advisory for multi-national clients UK growth from new developments, also outside London Asia and North America, strong growth also in architectural solutions Backlog growth: 7% Recent wins Managing and coordinating the handling of earthquake damage repair for NAM, contract worth 20 to 25 million a year for over 5 years in the Netherlands Ala Moana Center, Honolulu, Hawaii, masterplanning, branding and landscape design Lotte Center, Hanoi, Vietnam Burberry flagship store, Chicago, Illinois, US October 2014

28 ARCADIS: positioned for sustainable growth October 2014

29 Hyder & Callison accelerate our strategy Exceptional & Sustainable Outcomes Expand the core SUSTAINABLE GROWTH PERFORMANCE COLLABORATION Focused growth Focused growth priorities Hyder Callison Expand the core Emerging markets Big urban clients Natural resources Environment and water for industry M&A Program management Business advisory Design October 2014

30 creating the leading natural and built asset design & consultancy firm Gross Revenues by Region ( B) Gross Revenues by GBL ( B) +18% +18% 3.0 3% % 29% 14% 52% % 21% 23% 44% 14% 19% 26% 38% % 38% 16% 28% % 33% 15% 24% 31% 29% 14% 26% Pro-forma Pro-forma North America Continental Europe Australia Infrastructure Water Environment Buildings Emerging Markets United Kingdom October 2014

31 with 28,000 talented professionals and true global reach Europe North America ~6800 UK ~3600 Continental Europe ~5200 Middle East ~2200 Asia ~6000 Latin America ~3600 AUS ~ October 2014

32 Outlook October 2014

33 2014 leadership priorities - updated Complete ONEurope transformation and deliver 10% operating margin in Q4 Invest for increased organic growth Drive performance excellence and culture of continuous improvement to raise margins and cash flow Strengthen collaboration by evolving operating model, business steering and culture (Focus M&A on expanding our core and 7 growth priorities) Initiate North American performance excellence program Commence combination of Hyder and Callison with ARCADIS October 2014

34 2014 Outlook Third quarter backlog up 2% organically, +6% year-to-date, creating a record backlog level for the Company 2014 net revenues to be approximately 5% higher than in 2013 Net Income from Operations in 2014 expected to be approximately 10% higher than in 2013, barring unforeseen circumstances. Current activities will contribute around 6% and recent acquisitions will contribute around 4% October 2014

35 Imagine the result October 2014