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 Arcadies conference call and live webcast to present and discuss the fourth quarter and full year 2025 financial results. 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. Good day, everyone, and welcome to our 2025 full year and fourth quarter results conference call. My name is Christina Dees, and I'm the Investor Relations Director at Arcadis. With me on this call are Alan Brooks, our CEO, Simon Crowe, CFO, and our CEO nominee, Heather Polinski. As usual, we will start with a presentation, followed by Q&A. We would like to draw 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 are more fully described on the company's website. Now, please, over to you, Alan.

Thank you, Christine. Good morning and good afternoon, everyone, and welcome to our full year and fourth quarter results call. As Christine said, I'm joined by our CFO, Simon Crowe, who will outline the steps taken to address Arcadis performance, and by Heather Polinski, our CEO nominee, who will talk about her priorities for the future. Heather, who has been with Arcadis for 26 years and most recently run Resilience, the most profitable part of the business, assumes the role on March 1st. Heather is an exceptional leader and I am confident she will position Arcadis for success. Our end of year results are mixed and disappointing, reflecting what has been a challenging year. In light of those challenges, we have taken right-sizing and cost-reduction actions to improve performance. We will continue these actions in 2026, with Simon commenting further shortly. Our net revenues total €3.8 billion, supported by a strong resilience portfolio and pockets of success in mobility, offset by weaker places performance. In turn, we delivered record cash performance, generating 288 million euros for the year, predominantly supported by a series of measures introduced in the fourth quarter to strengthen billing and collection discipline. The backlog was up 3% to 3.6 billion, driven by resilience and places. When taking a closer look at our 2025 revenue performance, you can see that our total revenue declined by half a percentage point, reflecting growth in resilience and mobility offset by weak places performance. We will lay out the actions we have taken this year to address the underperformers and for the high growth areas, the investments we have made to leverage our leading positions. Starting with the underperforming areas. First, environmental restoration, which makes up 13% of our total net revenues and is part of resilience. This declined by 5% over the year. Excluding environmental restoration, our resilience business grew 7%, and there are a few drivers for this underperformance. As a result of client restructuring impacting a substantial project, plus the successful completion of a large incident response project in North America, we saw revenues come down. In addition, shifts in the U.S. federal government policies, changing funding priorities, and the longest government shutdown in history in Q4 caused delays to a portion of our pipeline for clients, such as the Department of Defense. To address the underperformance, we have made senior management changes and replaced 25% of our account leads. We reduced headcount with 150 people leaving the business, while maintaining our margin performance levels year on year. Moreover, we are repositioning towards growth markets, including energy clients' asset retirement obligations and critical minerals. Property and investment. This accounts for 8% of our total net revenues and is part of places. Here, organic net revenue growth was down 17%. Our P&I solutions are mostly offered in Canada, China and the UK. And in these areas, the residential real estate sector has been under considerable cyclical market pressure. During the fourth quarter, we did an extensive P&I portfolio review in Canada, which resulted in changes to revenue assumptions taken earlier in the year. Simon will provide you with the details in his section shortly. As a response to this, we have significantly right-sized the business, with 400 people leaving, corresponding to 4% of the place's headcount, while we made leadership changes in places. We are taking further steps in the first quarter of 2026 with an additional reduction of 150 people. While we are moving away from residential real estate and increasingly now focusing on rental, student and senior housing markets where we see opportunities. The third underperforming area was mobility in the UK and Australia. This reflects 11% of total net revenues and declined 8% over the year. In the UK and Australia, the winding down of large projects such as HS2, Melbourne Metro and Westgate Tunnel, combined with large project award delays, resulted in revenue pressure. To address this, we have right-sized our mobility workforce with a reduction of 350 people, corresponding to 5% of the mobility headcount. We have redeployed our excess UK resources to take advantage of emerging opportunities in other countries. And we have seen our order intake increase in the second half of the year, driving backlog growth as projects were awarded following the UK Spending Review last June. In Australia, with the market still constrained and lower infrastructure momentum, we are focused on pivoting towards new markets, particularly to energy and environment. Turning now to the high growth areas. Starting with the solutions within our resilience business, water optimization, energy transition and climate adaptation, which are part of resilience and together delivered 12% organic net revenue growth. The performance of water optimization was driven by the strong US market. Germany has seen successes in energy transition with the award of large multi-year contracts for grid expansion and maintenance. Central to this is the continued work for Amprion, performing route planning for a 500 kilometer long transmission line. Our growing project portfolio in power was underpinned by nuclear winds in the UK and the Netherlands. Our second growth area is technology, which accounted for 6% of net revenues and is part of places. Our acquisition last year of Coor Group in Germany has expanded our capabilities in this area. Our data center performance was strong, whilst our semiconductor business faced pressure from the wind down of one large contract. Overall, the resulting technology growth was 3%. Arcadis reported over 150 million euros of revenues in 2025 for its data center services, with an operating EBITDA margin of almost 20%. and we currently are involved in 280 data center projects. Finally, the third high performing area is in mobility, specifically in North America, the Netherlands and Germany, which taken together delivered organic net revenue growth of 16%. Major awards in 2025 have underpinned that high performance. In British Columbia, our work on the design of the Fraser River Tunnel project has ramped up in 2025. Other large projects that supported our results were ProRail in the Netherlands and Deutsche Bahn in Germany, where we have further strengthened our position through the WSP rail acquisition. We continue to see a strong pipeline of large multi-year project opportunities in North America. To summarize, We acknowledge our challenges and are actively addressing our underperforming areas through restructuring and cost measures. We are also focusing on those areas where we see opportunities to accelerate our growth. Heather will provide further details on this approach, looking ahead for this year and beyond. But first, I will now hand over to Simon, who will take you through our results and the steps taken to address performance.