Arcadis Nv S/Adr

Ladies and gentlemen, thank you for standing by. I am Gayle, your chorus call operator. Welcome and thank you for joining the Arcadis conference call and live webcast to present and discuss the first quarter 2025 trading update. At this time, I would like to turn the conference over to Ms. Christine Dish, Investor Relations Director. Ms. Dish, you may now proceed.

Thank you and good day everyone. Welcome to our first quarter trading update. My name is Christine Dish and I'm the Investor Relations Director at Arcadis. With me on the call are Alan Brooks, our CEO, Virginie Dubras, our CFO, Willem Baars, Global Strategy, Financing and M&A Officer, and our incoming interim CFO starting the 1st of June. We will start with a presentation which will be followed by Q&A. And 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 the risks related to these statements, which are more fully described in the press release and on our website. And now, please, over to you, Alan.

Thank you, Christine, and good morning, good afternoon, everyone, and welcome to our trading update of the first quarter for 2025. Arcadis has delivered a robust quarter with continued backlog growth and margin expansion. This performance highlights the strength and resilience of our business model, even in the current environment of changing market dynamics and uncertainty across the world. Net revenues in the quarter were stable organically year on year, as we continue to be selective in the projects we pursue. At the same time, we increased our backlog to a record high of 3.7 billion euros, growing organically by 3% in the quarter. we have seen no significant cancellations, which I believe is a clear testament of the resiliency of our business model. With this growth, we further enhanced the medium to long-term visibility of future performance. We successfully delivered another quarter of margin expansion, while at the same time, we made strategic investments in standardization and automation, which will further drive the effectiveness of our project pursuit processes. Numerous investments were also made in our people. For instance, we continue to invest in our Arcadis Energy Transition Academy. We also invested in our employee share purchase program, an accessible and economic way for our employees to invest in the Arcadis stock, something that has been received very positively by our people. In addition, we again managed to increase the contributions from our global excellence centers, which is a proof point that we are well on track to build a lean, efficient, and data-driven organization. And lastly, we have selected a new location for our fourth center, mainly Bucharest in Romania, and we'll share further details in due course. Looking ahead, we remain fully committed to our 2026 strategic targets, with a robust operational foundation, a record-high backlog, on our strategic initiatives and actions well on track. We are therefore well positioned to continue delivering value to all our stakeholders. So now let me run through our performance across our global business areas. Firstly, our demand for our resilient solutions continues to remain strong with 10% backlog growth in the quarter, especially across key markets, Americas and Europe. In North America, we're experiencing sustained momentum for our water and climate solutions. This growth is fueled by evolving regulatory landscapes, increased funding for climate adaptation, and the growing urgency around water scarcity and infrastructure modernization. States like California are leading the change, opening up a wave of new pipeline opportunities. In the Netherlands, we continue to see strong order intake for climate adaptation solutions, highlighted by our recent win to support one of the Dutch water boards in gaining insights into water quality challenges and vulnerabilities in urban water systems due to climate change. In the US, state government agencies continue to invest in energy transition and distribution. We are advising a large energy client to decarbonize the grid through engineering, procurement and construction solutions that ensure increased energy storage capacity. Across Northern Europe, the energy transition shows no signs of slowing. In Germany, the recently approved 500 billion infrastructure fund represents a landmark investment that will modernize infrastructure and accelerate the transition to climate neutrality by 2045. We already have significant commissions underway with Tenet and Amprion, supporting the latter on the Rhine-Main link, a 500km underground cable that's a connection that will transport electricity from offshore wind farms in the North Sea to the Rhine-Main region. This quarter, our commission was extended to include advisory and design of underground cable segments that will deliver up to 8 gigawatts of renewable wind energy in Germany with completion targeted for 2033. In our places business, whilst we find some sectors remain challenging, we are well positioned to capitalize on recently announced global investments in technology, pharmaceuticals, and decarbonization efforts. This is particularly the case in Europe and North America, accounting for over 90% of our places business. The scale of opportunity is reflected in our pipeline and our backlog development was positive over the quarter. The current economic environment has caused some of our clients to take longer to make large capex decisions, impacting our revenue generation in the first quarter. This being partly offset by continued good results for data centers and public facilities. To highlight a recent success in industrial facilities and illustrating the ongoing activity in this sector, We recently secured a major contract to deliver design and management services for a large new automotive manufacturing facility in North America. This brings together expertise from our teams in North America, the UK and Germany. This project represents a major milestone for our clients in terms of delivering sustainable and innovative design to support its global expansion plans. Our mobility business delivered a strong performance in 2024, securing several significant multi-year projects that have strengthened our backlog. Following the slower start of the year, as clients took a bit longer to mobilize, we're now gaining momentum and entering the ramp-up phase on major projects like the Fraser River Tunnel in Canada. Our mobility pipeline is also expanding, particularly in the airport sector. with a major opportunity in North America, but also across Europe. In the UK and Australia, we continue to face headwinds, primarily due to wind down of major infrastructure projects, most notably HS2 in the UK. This has prompted us to reassess and reposition our capabilities, shifting focus toward the growing demand and increased investment in the US market, where we see greater long-term opportunities for future growth. A key example of these investments is for one of our large key clients, Amtrak. They plan to increase investments by 50% in 2025 to $7 billion. As they seek to leverage industry expertise to deliver quality assets and meet passenger demand, Arcadis is well positioned to capitalize on the opportunity as Amtrak has been one of our key clients for many years now. In continental Europe, the rail sector also remains buoyant, underpinned by government investments in both new infrastructure and also asset management. This is our largest market for mobility, accounting for over half of our mobility revenues. Germany in particular continues to be a standout performer. Rail investments in the region is projected to increase by another 150 billion euros. on top of the existing 85 billion euros of funding over 10 years. Our recent acquisition of WSP's rail business has doubled our presence and significantly strengthens our position in this critical market. Willem will share more on this shortly. Finally, in the north of England, our rail expertise was further recognised with a win on Network Rail's £300 million Development and Design Partnership Framework Running for five years, the framework supports major programs, including Northern Powerhouse Rail and Network North. Arcadis will deliver multidisciplinary advisory and engineering services, from early feasibility to detailed design, leveraging digital innovation expertise, and from major US and Australian projects to drive efficiency and value. Across our intelligence business, Enterprise Asset Management, or EAM, and Enterprise Decision Analytics, EDA, are intelligent asset management digital tools, continue to be strong performers, as there is an increasing need for project prioritisation and budget optimisation. This was highlighted by an EDA win this quarter with the City of Calgary. This enhances the management of the City's infrastructure portfolio and critical assets. While the backlog development for intelligence for this quarter is moderated, we do see EDA driving revenue and order intake in the other GBAs, as it is more and more seen as a powerful differentiator in securing these large-scale projects. A strong example is our work with a major multinational bank. Initially, we were engaged in developing a net zero strategy through our sustainability advisory team. we demonstrated the added value of EDA to expand the scope of the project. Our analysis identified over 1,000 actions to improve the efficiency across 360 properties in the bank's real estate portfolio. And this ultimately led to a larger assignment under the resilience GBA, showcasing how EDA can drive cross-GBA growth. And with that, I'll now hand over to Willem Baars, our incoming interim CFO, to take us through our acquisition successes in Q1.