Arcadis Nv S/Adr

Hello and welcome to the archive this MV Q3 trading update call. My name is Laura and I will 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. However, you will 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 question. If you require assistance at any point, Please press star zero and you will be connected to an operator. I will now hand you over to your host, Christine Disch, Investor Relations Director, to begin today's conference. Thank you.

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

Thank you, Christine. And good morning, good afternoon, and a very warm welcome to everyone joining us on the call today. Arcadis has delivered another strong quarter. This is driven by continued client demand, particularly in environmental remediation, energy transition, and innovative mobility solutions. We have achieved record net revenue for the quarter of $932 million, up 26% year on year, and with strong organic growth of 9%. Growth was driven by increased use of digital solutions, serving our recurring client base and leveraging our global expertise. Our operating margin increased to 10.6% for the quarter. This is up from 10.3% in Q3 2022. On a year-to-date basis, our operating margin now stands at 10.1%. This fully meets our strategic target of above 10%. This target was set for ourselves in the current strategy cycle, which is to be delivered by the end of this year. Our results confirm that the operating model we introduced last year and our strategic focus on high growth markets is indeed delivering. and we are on track to achieve our financial strategic targets for the year. In addition, voluntary turnover is down from 15.4% in 2022 to 12% this quarter. This continues to move in the right direction. We see the benefits of the measures we undertook a year ago across our talent and people processes, and this is starting to really bring the benefits that we hoped for. If we then turn to our GBAs, we can start with resilience. We continue to see strong momentum. Net revenues were up 11.2% organically and our net backlog grew 12% organically. This compared to Q3 last year. The market remains very strong with continued high demand for our solutions on climate adaptation, PFAS and energy transition. Tightening regulations in wastewater treatment, both in the US and the UK, are driving further demand in water optimization with multiple opportunities in our pipeline. In environmental remediation, which is an area Arcadis has long had a successful history, client demand continues to soar and leveraging our leadership position is driving very strong growth across our portfolio. We see multiple opportunities that play towards cleaning sites from PFAS, which are concentrated around PFAS manufacturers and firefighting for petrochemical industries, federal and aviation clients. And energy transition is an area we continue to grow our expertise, being ideally placed to support our clients in delivering complex and large-scale projects. These include gas extraction site restoration, hydrogen and CO2 transport lines, wind farms, and power grids. One such project as an example is our work for transmission system operator Amprion in Germany, where we were recently commissioned to undertake the initial conceptual phases of route planning for the 500-kilometer-long Rhein-Main-Link energy route. This is one of Germany's key grid expansion projects. and aims to supply the country with climate neutral energy by 2045. Energy transition is a very important priority sector for Arcadis, and projects like this are game changing when it comes to accelerating the transition to a net zero future. If we now turn to our places business, here we saw mixed market conditions. With good performance in North America and across continental Europe, offset by weaker conditions, mostly in China and in the UK, resulting in flat organic growth overall for the quarter. We continue to shift our places portfolio towards industrial manufacturing, where indeed we do see high demand with clients having to deal with increasing complexities. Our leading position in this market with a complimentary offering and global expertise empowers us to capitalize on this opportunity. For example, in the US, we recently supported a major educational institution in New York State in completing the design build of a semiconductor fabrication complex. The facility will be used to train the next generation of semiconductor technicians and experts for R&D for major semiconductor manufacturers and for pilot scale production. This draws on the IRA stimulus. Our pipeline remains resilient. with opportunities partly driven by government stimulus packages. However, visibility is somewhat lower of the timing of some awards, which we expect to see more of in 2024. We have already started to see the early benefits of the CHIPS Act in the U.S. market. First round of funding from the U.S. Department of Commerce has just been released and is targeted at large investments of some of our key clients. It will also have material impact in European markets starting from next year. We are well positioned to benefit from the tailwinds in semiconductor markets with the combined capabilities of Arcadis and Arcadis DPS. We continue to expand and leverage our global service offering with additional capabilities and skills from within architecture and urbanism and Arcadis DPS, which proved very successful with clients. particularly those with facilities and projects in multiple geographies. We have a healthy backlog for architecture and urbanism. The public sector is looking positive across health, education and housing. I'd like to highlight our recent work in smart, sustainable buildings in Cornwall, UK, where we are named the council's sole provider for multidisciplinary services, driving their development and regeneration of assets by delivering new infrastructure and urban planning, which includes housing, environmental projects and educational buildings. Through the provision of an embedded programme management office in the council, we will support them in achieving their objective of a carbon neutral Cornwall. This new contract aligns with our places strategy to obtain more strategic partnerships with local governments and builds on our work across the South West. If next we look towards mobility, organic growth was very strong in the quarter at 14.6% year-on-year, while we managed to increase the net backlog by 4.8%, driven by the US and Europe, and in particular Germany. Increasing complexities and demand for electrification and decarbonisation solutions continue to drive growth for our connected highways and intelligent rail solutions. where our digital innovations represent a clear differentiator. A notable example is Bridge Health, a new digital tool for bridge inspections, which we launched in this quarter. Our solution for inspection and monitoring will make the maintenance process far more efficient, safer, and less disruptive. Through this, we are bringing an innovative and scalable solution to many asset management challenges worldwide. Record immigrants in Canada this year drive need for updated infrastructure, which results in numerous projects for which our mobility and architecture and urbanism teams work closely together to provide master planning. One good example for mobility and intelligence collaboration is our work with Atlanta Regional Commission in the US. We were appointed to provide program management services for Georgia Commute Options Program. This aims to reduce the number of single occupant vehicles and improve air quality in the Atlanta region. To achieve this, we are drawing on our global experience in transportation demand management and leveraging the digital dashboarding capabilities of Intelligence GBA, using their data software product to analyze the journeys. So now if we turn to the Intelligence GBA, our newest and fourth area of business, Here again, we saw strong performance across regions, in particular in North America and the UK, with pro forma organic growth of 22.8% year on year, and net backlog growth of 14.2%. Enterprise software spend is expected to accelerate and indeed be at a peak next year in 2024, and our strong market proposition positions as well. Strong GBA collaboration supports our comprehensive digital solution offering. And through our client partnerships, we develop new solutions. Through this, we have already delivered numerous key client wins. In North America, for example, our collaboration with Mobility led to important wins in enterprise decision analytics, or as we call it, EDA. We also have multiple opportunities in our pipeline for digital water solutions. Our clients are increasingly turning to data and digital tools to build efficiencies and improve the performance of their asset portfolios. We work in partnership with them to embed these tools, which include our EDA tool, but it's already been successfully utilized by clients globally. I am really delighted by the success of EDA, which only recently was recognized as one of the market leaders in an asset investment planning space. by Verdantix and received top scores for its technical and functional capabilities. This quarter, we were awarded a five-year EDA contract with Infrastructure Ontario to support their asset management goals. The project commenced in September, and we look forward to building on our industry-leading expertise in this area to support Infrastructure Ontario with this innovative solution. It is a great example of how Arcadis is combining digital and human intelligence to consistently deliver value to our clients. With this, I will now hand over to Virginie to talk through the financial results in a little more detail.