Arcadis Nv S/Adr

Hello and welcome to the Academy's second quarter and half year 2023 results. My name is Caroline and I'll be your coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen only mode. However, you'll have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star 0 and you'll be connected to an operator. I will now hand over the call to your host, Christine Disch, Head of Investor Relations, to begin today's conference. Thank you.

Thank you, Carolyn, and good afternoon and good morning, everyone on the call. Welcome to our webcast. My name is Christine Disch. I'm Investor Relations Director at Arcadis. We are here today to discuss Arcadis' second quarter and half-year results. which were released this morning. And with us on the call are Alan Brooks, our CEO, and Virginie Dubras, our CFO. We will start today with a presentation by Alan and Virginie, which will be followed by Q&A. And we would like to call to your attention to the fact that in today's session, management may reiterate forward-looking statements which were made in the press release today. Please note any of these risks related to these statements are more fully described in the press release, on the company's website, and at the end of today's presentation. With this out of the way, Alan, over to you.

Thank you, Christine. Good morning, good afternoon, everybody, and a very warm welcome to you all joining the call today. I'm really delighted to be hosting my first investor call as CEO of Arcadis, and I look forward to taking your questions shortly. My first few months as CEO have been incredibly busy and rewarding. Obviously, we've been focusing on our performance, whilst at the same time, I've taken the opportunity to visit our key clients and connect with our people. It's been enormously encouraging to see the opportunities and the scale of those opportunities and services that our clients are looking for us to address, and we see strong market need into the future. Our people and our clients never cease to amaze me, whether it's in executing a project to prevent the rising sea levels in lower Manhattan or designing a new 33-kilometre underground multi-level system of highways and tunnels in Sydney. The ingenuity of our people is truly inspiring. We are progressing well with the integration of Arcadis IBI and Arcadis DPS, and this provides us with further opportunities to broaden our services to a larger network of clients around the globe. as well as delivering more complex, value-adding projects across multiple client programs and geographies. Our new architecture and urbanism business, which combines the architecture and design expertise of IBI and Callison RTKL, is now ranked in the top five largest architecture practices in the world, significantly increasing our ability to deliver megaprojects from design to operation. I've also strengthened our leadership team. The executive team includes now the three GBA presidents within that team. This underlines my ambition to bring our GBA leaders even closer to the business and help better serve client needs. This also allows us to collaborate across the GBAs and get cross border efficiencies. With less than six months until the end of our three year strategic cycle, I am today confident we are on track to meet our targets that we set ourselves for the 21-23 strategic cycle. Now let me turn to the results of this last quarter. If we look across this, I'm delighted to report a solid set of results in our second quarter on the back of continued strong demand and operational discipline. We have achieved a record net revenue for the quarter of €945 million, which is up 30% year on year, with a strong organic growth of 9%. Our net backlog has increased to 3.2 billion, with an organic backlog growth of 5% year to date. These results have been driven by client demand for our expertise and services, particularly in the industrial manufacturing, environmental remediation, and innovative mobility solutions. Our operating margin improved to 9.8%. This is up from 9.3% in Q2 2022. These results confirm that the operating model we introduced last year and the strategic focus on high growth markets is now delivering. I'm also pleased to report that voluntary turnover is down from a high of 15.9% in 2022 to 12.6% this quarter. These improvements reflect the changes to the talent and people processes we implemented over the last 12 months and show month on month progression. I will touch on our four global business areas shortly. But first, I'd like to share with you some examples of our significant synergy wins this quarter, which showcase the successful integration of our acquisitions that we made last year. One of the key drivers for the acquisition of Arcadis RBI and Arcadis DPS was the complementary nature of both businesses and the opportunity to combine our offering and provide clients with a full asset lifecycle of services and solutions. By way of example, a recent appointment to provide full architectural and engineering design services is to support the creation of the largest solar ingot and wafer manufacturing facility in the US. This brings together capabilities from across places GBA, including from the new businesses in the form of our expanded architecture and urbanism group and our high tech industry engineering and construction management expertise into this multimillion dollar project, which will create 1500 new jobs and support the nationwide reduction of carbon emissions. Likewise, Arcadis' projects and construction management expertise and Arcadis DPS knowledge in process engineering is generating synergy opportunities with new technology clients. A good example would be to support the new facilities to design, manufacture and test semiconductors for a global leader in embedded processing chips. This market is a huge market for us as we look to the future. As I mentioned, we now have one of the top five largest architecture and urbanism businesses within our places GBA. This takes us from placemaking in major cities to supporting workplace and interior transformations for top retailers. The new business creates a wealth of opportunities to combine our expertise and services. A good example here is a project to expand a holiday village in the Caribbean. A five million dollar project is utilising master planning, architecture and also our master planning design skills from both IBI and Kalasnati KL in Los Angeles, Toronto, Boston, Miami, and Salt Lake City. So a really strong project for us. If we look at our resilience business, we continue to see very strong momentum. Net revenues were up 13% and order intake up 23% year on year, continuing to position us ahead of the competitors. In North America, client support for environmental restoration projects continue to soar. Innovative digital tools are also proving a real differentiator for us in this field. A good example here is the green metrics analytics tool. This tool calculates the carbon emissions generated in each phase of a project. The results are then visualized in an interactive dashboard. The gaps are then identified and more suitable alternatives generated. This information can be used to drive a strategy that limits environmental impact and maximizes socioeconomic benefits in any project. In response also to the US Environment Protection Agency's new lead and copper rule, we are seeing increased federal funding for water infrastructure to improve the quality of clean water supply. This helps to drive the demand for our water optimization solutions. We also continue to see strong growth for our energy transition related initiatives, highlighted by a win to support the national grid in the UK to decarbonize its infrastructure. As the one and a half degree Paris target draws closer, the energy transition market will increasingly become one of our greatest opportunities. To meet demand, we are launching an energy transition academy This will create new talent, capacity and capability to address the future skills needed to advance this transition. Whether it's restoring brownfield sites or helping to increase the supply of renewable energy, we are committed to improving quality of life for communities where we operate. In the Netherlands, one area that highlights this commitment is biodiversity. Our 150 strong team, the largest in the Netherlands, is supporting a variety of clients, including the Dutch Water Authority and municipal governments to restore flora and fauna in the waterways. One such project in Zuidpolder Park, south of Rotterdam, where we have our landscape architects designing the master plan for a new 130 hectare park, which has just been awarded a European Garden Award. If we next look to our places business, we see excellent results with both net revenues and order intake up over 50%. This has been driven by growth in the industrial manufacturing sector, as well as increased investments in carbon management and the need to meet net zero targets. As we continue to focus on the strategic repositioning of our portfolio following last year's acquisitions and the integration of the new businesses, we see high growth markets in North America and Europe and these remain key drivers for our success. Government stimulus packages have also presented an emerging mix of both new business opportunities and entrance to the market. Legislation, including the US Inflation Reduction Act, have created a favourable investment market, and increasingly we are working with newcomers to capitalise on opportunities for profitable growth. The need to reduce carbon emissions also remains an ongoing concern for all our clients. Across the entire value chain, we are now looking for ways to improve what we do. This started recently with an ecosystem partnership with Honeywell. Together, we provide the tools and services that help optimize energy use and carbon emissions in commercial buildings. These are highly geared towards supporting clients on their journey to net zero. This will remain a priority as we continue to develop intelligent digital solutions We will help our clients accelerate their efforts to reduce carbon impact across their portfolios. Next, if we look at mobility, order intake is up 16% for the quarter, net revenue growth of 9%. New technologies and digital innovations have been critical to the growth. Within our connected highways and intelligent rail solutions, we see this particularly underpinning the growing demand that we have. New government stimulus packages are also contributing to the strength of our mobility business, notably in the US and Australia, where federal funding has been key for supporting clients looking to advance the capabilities in new mobility services, such as electric vehicle infrastructure. We are developing new solutions in emerging growth areas such as Advanced Air Mobility, or AAM. Highly automated and electric aircraft are used for transporting both people and goods, AAM can mean a faster, more affordable and emission-free way of getting around. But to become commercially viable, it must be integrated with existing mobility options and other emerging technologies. As a result, we are seeing urban air mobility ecosystems being formed in several major global cities. Thanks to our local knowledge and global expertise across technology, planning, engineering and sustainability, we are ideally positioned to take advantage of the opportunities this new area presents. A good example of this is our work with San Diego Association of Governments. We have been appointed to develop policy and technical resources to help shape the AAM strategy. We will be combining our expertise in the traditional aviation sector with digital tools to support policy and market analysis, as well as educational and public outreach to identify locations for AAM facilities that are accessible to all. The work has the potential to transform future transportation systems, and I am excited that Arcadis is at the cutting edge of these new developments. And so to our fourth and newest global business area, intelligence. This will support the growth of our innovation capabilities, particularly the way in which we embed smart digital solutions across our whole business. Demand has been driven particularly by traffic, transit and travel solutions, notably in North America, where synergies between mobility and intelligence business areas are translating into exciting new wins and opportunities for further revenue growth. A very good example here is where we have combined the two leading intelligence products, Hotspot and CurbIQ. This new application means that important mobility clients can look at CurbIQ, digitizing the curbside data to help cities monitor their curb parking and logistics, while Hotspot is integrating the mobility platform that users can easily track travel expenses and make parking and public transport payments all in one place. Now, by bringing both CurbIQ inventory of the Curb space together with the payment aspects of hotspots, we can give users real-time payment information, as well as direct customers to available parking spots. Combining these tools has been central to new opportunities in cities across Canada and the US. We now have approximately 1 million users in 2023. Our enterprise decision analytics tool, also part of intelligence, helps clients better understand their asset portfolios. It predicts and models assets, prioritizes complex decisions, and we've seen this really working already in Infrastructure Ontario in Canada to access their public building portfolio. In addition, we're seeing new growth opportunities emerge for our mobility and resilience businesses in Amtrak, a longstanding client of intelligence who use the EDA tool. With that, I'd like to hand you over to Virginie to talk through in more detail our financial results.