Second Quarter Results 2013 Neil McArthur, Chief Executive Officer Renier Vree, Chief Financial Officer Amsterdam, the Netherlands, 31 July 2013 Gardens by the Bay, Singapore. (photo courtesy of Gardens by the Bay Andy Kwek) Imagine the result
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. 2 31 July 2013
COFCO Joy City Tianjin, China Agenda ARCADIS NV Results Second Quarter and First Half 2013 Neil McArthur, CEO Q2/H1 overview Strategic progress Outlook Renier Vree, CFO Financial results Q2/H1-2013 Q&A Mathew Riley EC Harris ARCADIS in Sustainable Urban Development Q&A 31 July 2013 3
ARCADIS improves organic growth Organic net revenue growth at 4% in Q2, driven by all regions except Continental Europe Operating margin comparable to last year despite margin decline in Continental Europe Net income from operations up 2% in Q2 and 5% for H1, reflecting growth of revenues and margin in H1 US$90 million US private placement completed to replace maturing bank debt; average net debt to EBITDA ratio improved to 1.5 Project Europe achieved cost savings of 5.1 million in the first half year and is at annual run rate of 12.9 million with cost actions ahead of schedule 2013 outlook updated: a further increase of revenues, and a profit growth of 0% to 5%, barring unforeseen circumstances 4 31 July 2013
Strategic progress continues Merger with EC Harris and Langdon & Seah At 70 million, synergy wins H1 2013 equal FY 2012 Implementation new operating model Continental Europe on schedule Growth initiatives ongoing, backlog growth of 7% in H1 Cost actions accelerated Positive margin effect expected in H2 2013 Major wins include frameworks with multinational clients and Amsterdam Zuidas project and several multimillion dollar environmental projects for oil majors in the US Geohydrología and SENES integrations progressing as planned, first synergy results visible with growing pipeline M&A focus remains strengthening our market leadership positions 5 31 July 2013
Continental Europe: implementation on track Growth initiatives and process improvements underway, cost actions ahead of schedule Savings realized total 5.1 million, annual run rate at 12.9 million Restructuring charges year to date are 6.5 million EUR M 25 25.0 Cost savings EUR M 25 20.0 Restructuring charges 20 20 15 12.9 15 10 5 5.1 10 Target Realized 5 6.5 Target Realized 0 Savings target YTD Q2 2013 Annual run rate 0 Expected 2013/2014 YTD Q2 2013 6 31 July 2013
Examples European Collaboration BNP Paribas Fortis, New headquarters, in Brussels, Belgium (A.BE, A.FR, A.UK and A.NL) Flood risk assessment for logistics centers in Poland and recent flood support in Poland, Germany, Czech Republic (A.PL, A.SP, A.NL, A.DE) Site closure and remediation for major automotive manufacturer (A.UK, A.NV, A.NL, A.DE) Philips - New Build of Headquarters Hamburg, Germany (A.NV, A.NL, A.DE)
Strong organic growth, double digit in Emerging Markets Gross Revenue H1 (EUR M) CAGR 1 =+14% 1,225 1,240 CAGR 1) 12% 12% United Kingdom +108% 956 3% 24% 21% Continental Europe -5% 30% 46% 44% North America +3% 54% 13% 19% 24% Emerging Markets +55% H1 2011 H1 2012 H1 2013 1) Compound Annual Growth Rate 8 31 July 2013
making Emerging Markets our largest region by headcount Headcount at June 30 CAGR =+18% 21,300 10% 22,000 10% CAGR United Kingdom +83% 15,900 4% 27% 25% Continental Europe -2% 37% 29% 28% North America -1% 39% 35% 37% Emerging Markets +61% 20% 2011 2012 2013 9 31 July 2013
Second Quarter Results 2013 Renier Vree, Chief Financial Officer Amsterdam, the Netherlands, 31 July 2013 Gardens by the Bay, Singapore. (photo courtesy of Gardens by the Bay Andy Kwek) Imagine the result
Income Q2 2013 EUR 24.1 M, up 2% Currency effect: Gross revenue -/- 2%; Net revenue -/- 2%; EBITA -/- 3% Q2 2013 Q2 2012 1) Gross revenues 638 633 1% Net revenues 484 463 5% EBITA 36.8 32.8 12% Operating EBITA 43.4 42.3 3% Operating margin 9.0% 9.1% Net income from Ops 2) 24.1 23.6 2% EPS (in ) 2,3) 0.34 0.34 0% 1) Results 2012 adjusted for IFRS 2013 (deconsolidation of joint-ventures) 2) Before amortization and non-operational items 3) In 2013 based on 71.9 M shares outstanding (2012: 70.6 M) 11 31 July 2013
Income H1 2013 EUR 49.5 M, up 5% Currency effect: Gross revenue -/- 2%; Net revenue -/- 2%; EBITA -/- 3% Q2 2013 Q2 2012 1) Gross revenues 1,240 1,225 1% Net revenues 950 906 5% EBITA 76.4 70.6 8% Operating EBITA 86.2 81.5 6% Operating margin 9.1% 9.0% Net income from Ops 2) 49.5 47.2 5% EPS (in ) 2,3) 0.69 0.68 2% 1) Results 2012 adjusted for IFRS 2013 (deconsolidation of joint-ventures) 2) Before amortization and non-operational items 3) In 2013 based on 71.5 M shares outstanding (2012: 69.7 M) 12 31 July 2013
Organic growth net revenue +4% with strong growth in Environment and Buildings Organic growth (NR) 25% 20% 15% 10% 5% 0% -5% -10% -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 Infrastructure Water Environment Buildings Total 13 31 July 2013
Operating EBITA Q2 2013, up 3% In EUR M 35 37 39 41 43 45 Operating EBITA Q2 2012 42.3 Currency -3% Acquisitions +5% Organic +1% Operating EBITA Q2 2013 43.4 Higher profit contributions from acquisitions and Emerging Markets Restructuring and integration charges EUR 5.6 M (Q2 2012: EUR 5.2 M) Acquisition related charges EUR 1.1 M (Q2 2012: EUR 4.2 M) 14 31 July 2013
Operating EBITA H1 2013, up 6% In EUR M 60 65 70 75 80 85 90 Operating EBITA H1 2012 81.5 Currency -3% Acquisitions +9% Organic 0% Operating EBITA H1 2013 86.2 Restructuring and integration charges EUR 8.7 M (H1 2012: EUR 6.7 M) Acquisition related charges EUR 1.1 M (H1 2012: EUR 4.2 M) Higher profit contributions from acquisitions, UK and Emerging Markets Continental Europe weighs on profitability 15 31 July 2013
Margin in H1 excluding Continental Europe 10.8% 2011 1) 2012 1) 2013 Q1 9.4% 8.8% 9.2% Q2 9.6% 9.1% 9.0% Q3 10.0% 9.9% Q4 10.8% 12.1% 2) year 9.7% 10.0% Operating margin: EBITA as % of net revenue, adjusted for reorganization & integration charges 1) Operating margin 2011 and 2012 adjusted for IFRS 2013 (deconsolidation of joint-ventures.) 2) Excluding impact lower overhead costs EC Harris related to Q1/Q3, margin in Q4 would have been 11.1%. 16 31 July 2013
Net income from operations up 5% First Half Year 60 1.2 50 1 40 30 0.54 0.54 0.56 0.68 0.69 0.8 0.6 Net Income from Ops (in EUR M) EPS (in EUR) 20 0.4 10 0.2 0 2009 2010 2011 2012 2013 Increase Net income from +3% +9% +4% +28% +5% operations 0 17 31 July 2013
Seasonal cash flow lower EUR M 2013 2012 Profit for the period 20.2 16.5 Depreciation & amortization 11.7 11.7 Working Capital (4.6) 24.5 Other 4.9 3.7 Net cash from Operations 32.2 56.4 Net working capital as % of gross revenue: 18.4% (Q2 2012: 17.9%). Improvement from 19.9% of first quarter. Cash flow affected by timing differences in salary and tax payments and payment of obligations related to prior year acquisitions Working capital reduction program continues 18 31 July 2013
EUR millions Balance sheet remains healthy 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Net Debt / EBITDA 1) 1,4 1,4 1,5 1,5 1,0 2009 2010 2011 2012 Q2 2013 Net debt EUR 401 M (year-end 2012: EUR 283 M) Net debt/ebitda: 1.5 (year-end 2012: 1.5) 1) Average Net Debt Dec & June, conform bank covenants 300 250 200 150 100 50 0 19 Maturity Profile of Committed Facilities Facility EUR 25m USPP USD 90m USPP USD 110m RCF EUR 150m Term Loans USD 270m 2013 2014 2015 2016 2018 2021 31 July 2013 Diversified sources of funding Improved spread of maturity of loans $90 million US private placement completed to replace maturing bank debt
Business lines INFRASTRUCTURE WATER ENVIRONMENT BUILDINGS 20 31 July 2013
Growth across all business lines Gross Revenue H1 (EUR M) CAGR 1 =+14% 1,225 1,240 CAGR 1 956 25% 27% Buildings +42% 18% 33% 33% Environment +6% 38% 17% 14% 15% Water +8% 28% 27% 25% Infrastructure +7% 2011 2012 2013 1) Compound Annual Growth Rate 21 31 July 2013
Infrastructure World class intelligent and integrated road and rail transport solutions Specialties: ports, airports, tunnels, bridges, large projects Metro line expansion 22 Santiago, 31 July 2013 Chile
Infrastructure (25% of revenues) 400 350 300 250 200 150 100 50 0 Q2 Gross revenues YTD in EUR M 2009 2010 2011 2012 2013 2013 Gross revenue 1) -8% Organic -5% Acquisitions 0% Currency - 3% Net revenue 1) 0% Organic 3% Lower subcontracting in Continental Europe Emerging Markets and UK largest contributors to growth Also achieved growth in North America for transport planning Margin at 7.0%, below 2012 due to fierce competition in Continental Europe Won Zuidas project in Amsterdam, the Netherlands Los Angeles County Metro project, US Backlog 2) +4% 23 1) Rounding and reclassifications may impact totals 2) Organic development compared to year-end 2012 31 July 2013
Water Strong World class water water supply supply and waste and waste water water treatment treatment system system know-how, consultancy also for and industry design, also for industry Excellent and growing heritage in water management Leading heritage in water management Water for industry program 31 July 2013 24
Water (15% of revenues) 250 200 150 100 50 0 Q2 Gross revenues YTD in EUR M 2009 2010 2011 2012 2013 2013 Gross revenue 1) +5% Organic -2% Acquisitions +6% Currency -1% Net revenue 1) +6% Organic -2% Acquisition ETEP in Brazil drives most of the revenue increase Organic growth in UK Austerity impacts business environment in Continental Europe Margins at 8.3% lower due to lower utilization Texas General Land Office: first water management project in Texas São Lourenço Water System for PPP client in Sao Paulo Backlog 2) -5% 25 1) Rounding and reclassifications may impact totals 2) Organic development compared to year-end 2012 31 July 2013
Environment World class remediation consulting and technologies Compliance management, impact assessments, climate adaptation Climate change 26 adaptation 31 July 2013 consulting
Environment (33% of revenues) 450 400 350 300 250 200 150 100 50 0 Q2 Gross revenues YTD in EUR M 2009 2010 2011 2012 2013 2013 Gross revenue 1) +1% Organic -1% Acquisitions +3% Currency -1% Net revenue 1) +5% Organic +3% Backlog 2) 0% Reduced subcontracting in the US impacts gross revenue Growth in Emerging Markets and parts of Continental Europe Organic net revenue growth improved versus the prior year Acquisitions of SENES and BMG also contributed to growth Margin at 11.8% flat with last year. Down in North America, up in Emerging markets Global frameworks won for BP Several multimillion dollar remediation projects won in US 27 1) Rounding and reclassifications may impact totals 2) Organic development compared to year-end 2012 31 July 2013
Buildings Design, Plan, design, plan, create, operate and regenerate buildings Sustainability by Design, Built Asset Consultancy, focus large scale on positive Program, outcomes Project and Cost Management Hospital design, 28 Middle 31 July East 2013
Buildings (27% of revenues) Q2 Gross revenues YTD in EUR M 400 350 300 250 200 150 100 29 50 0 2009 2010 2011 2012 2013 2013 Gross revenue 1) +10% Organic +4% Acquisitions +9% Currency -1% Net revenue 1) +9% Organic +2% Backlog 2) +12% 1) Rounding and reclassifications may impact totals 2) Organic development compared to year-end 2012 31 July 2013 Strong revenue growth in Emerging Markets RTKL improved commercial revenues in North America and Asia Declines in Continental Europe and the US Acquisition growth is Langdon & Seah in Q1 Margin improved to 8.8% especially in Emerging Markets and at EC Harris Multiple large education projects won in UK Expansion King Faisal hospital project - KSA
Priorities and Outlook 30 31 July 2013
Leadership priorities for 2013 Implement pan-european operating model, accelerate cost actions Stimulate improved organic growth and capture revenue synergies from recent acquisitions Evolve performance culture: margin improvement; working capital; project management Acquisitions to strengthen our positions both in emerging and selected mature markets Strategic review and target setting for 2014-2016 period 31 31 July 2013
32 Outlook per business line Infrastructure growth continues Good potential Emerging Markets; public spending up in North America and UK Europe will stabilize; Chile to decline Water improvement anticipated North America to pick up; growth in Emerging Markets; launched in Asia Continental Europe lower, flood opportunities; Water for Industry with MNC clients Environment maintain momentum Driven by private sector demand, especially MNC clients Mining opportunities - pipeline SENES; N America, UK and Emerging Markets up Buildings solid organic growth BAC creates global growth, synergy sales 70 million Growth in Emerging Markets and UK, further decline in Continental Europe Overall Backlog flat despite higher revenues and up 5% since year-end 2012 Higher margin from cost improvements Continental Europe and rate increases North America Outlook 2013: further increase of revenues and profit up 0% - 5% (barring unforeseen circumstances) 31 July 2013
Imagine the result 33 31 July 2013