Bureau Veritas Sa

Welcome to the Bureau Veritas Q3 2024 Revenue Conference Call. My name is Alan and I'll be your coordinator for today's event. Today we will be hosted by Indah Garbi, CEO, and Honsua Shaba, Group CFO. Please note, this call is being recorded and for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star 1 on your telephone keypad. If you require assistance at any time, please press star 0 and you'll be connected to an operator. I'll now hand you over to your host, Indra Garbi, to begin today's conference. Thank you.

Thank you, Alan. Good morning, good afternoon, and good evening to everyone. Thank you for joining us today on the webcast and on the call. I'm here with François Chabat, our group CFO. We'll be presenting our Q3 2024 revenue update, and we will then take some questions. In the third quarter, we continued our growth momentum, delivering strong top-line growth while actively managing our portfolio in line with our LEAP 28 strategy. I'm grateful to our colleagues around the world for their work, efforts, and dedication in delivering these results. First, starting with our revenue performance. Revenue for the quarter was 1.55 billion euros, up 8.8% year-on-year. The organic increase was 13%, exceeding expectations for some businesses and confirming the associated underlying market trend. This resulted in a 10.5% organic growth on a year-to-date basis. It is key to mention that the growth was driven by the entire portfolio. The scope effect was a positive 0.5%, reflecting a higher contribution of 1.1% from recent Bolton acquisitions, partly offset by the impact of small targeted divestments. Forex had a negative impact of 4.7% in Q3 due to the appreciation of the euro against most currency. Excluding foreign exchange, our growth was up 13.5%. In light of our resilient nine-month performance, our robust backlog, and our focused operational execution, we are upgrading our 2024 revenue outlook for the second time this year. Looking at the mix this quarter by business and by geography, our diversified portfolio delivered across the board with all business lines and regions posting high growth continued our growth momentum from previous quarters. Our third quarter performance also confirms customers' high demand for sustainability and energy transition services. This underpins to a large extent the double-digit organic increase in marine and offshore industry and certification. Additionally, consumer products, buildings and infrastructure, and agri-food and commodities all achieved solid high single-digit organic growth. From a geographical standpoint, all regions performed well with the fastest growth recorded in the Middle East and Africa as well as in the Americas. This broad-based growth underscores the strength of our business model and the successful execution of our strategic priorities. Turning now to our CSR commitments. Our organization is executing CSR programs across our operations in line with our 2028 commitment. In these first nine months, our CSR performance indicators progressed as planned through well-defined actions across our different businesses. Our governance programs are notable for the high impact they have as they ensure we have well-trained, independent, and an impartial workforce. I'm proud to report that our sustainability efforts have been recognized by leading non-financial rating agencies like the SNP, MSCI, and EcoVadis. These ratings are a testament to the dedication of our global teams as they embed sustainability practices within our operations and in our daily tasks. In this quarterly call, I would like to share an update on our focused portfolio progress. I'll specifically comment on our M&A program actions so far this year. Year to date, we have completed or entered into agreements for the acquisition of seven companies expected to add around 80 million in annualized revenue. These acquisitions fall into two key streams. First, companies that will help us expand our leadership in sectors where Bureau Veritas is already a leader, Second, companies that will allow us to build new strongholds in fast-growing markets. In parallel, we have divested or entered into agreements to sell two businesses, representing around 165 million in annualized revenue. Both divestments will help strengthen our balance sheet and will support our M&A plan. The first divestment announced in half one results was a B&I technical construction supervision business in China And the second concerns our subscale food testing operations, which I will detail in subsequent slides. Now, let me share details about some of our recent Q3 transactions. Starting with our expand leadership and existing stronghold stream. As a reminder, this stream involves businesses where we want to strengthen our existing leading market position through market share gains and services expansion. This ambition will be achieved through a combination of rapid organic scaling, and acquisitions that broaden our business portfolio capabilities or geographical coverage. Our recent acquisitions are for our buildings and infrastructure portfolio. Our key priorities for this business involve building a comprehensive CapEx platform for both buildings and infrastructure projects, and then developing new positions in OPEX services. In October, we announced one transaction aligned with these objectives, and we expect others to be completed in the near future. We acquired the IDP Group. This company is a leading independent provider of building information modeling, project management assistance, and digital twin services for the public and private sector in Spain. This acquisition brings key digital enablers that will enhance our services and operational capabilities in BNI. With this acquisition and others in our pipeline, we are reinforcing our leadership in the building and infrastructure sector. This will enable us to better serve our clients and to capture growth opportunities across this large and dynamic market. Moving now to our Create New Stronghold stream, we intend here to develop the small businesses we currently have in markets where customer demand is very high. These markets are mostly driven by sustainability, energy transition, cybersecurity, and digitalization and connectivity. In half 1.24, we completed four acquisitions. Three were for our consumer technology testing business to augment our capabilities in Asia, and one was for our cybersecurity business to develop our North America services platform. As we execute our well-defined acquisitions roadmap in this new stronghold stream, we have completed this quarter two new strategic acquisitions. First, we acquired Aligned Incentives, a U.S.-based provider of sustainability solutions. This acquisition augments our capability in the rapidly expanding sustainability transition services market, as I will detail in the following slide. In the second one, we acquired ArcVera Renewables, a leading player in the U.S. new energy space, This transaction enriches our capability to support renewable energy projects and to complete our offering for this fast-growing market. Let me now spend a few minutes on our most recent acquisition, Alliant Incentives. This addition is a good example of what we aim to do as part of our LEAP 28 strategy. This company will help us complete our portfolio of transition services in the fast-growing market of digitally enabled and AI-powered sustainability solutions. When it comes to sustainability reporting, the market demand is shifting from a model relying on high-level estimates at corporate levels today towards more transparency and granularity in footprint assessment. It will rely on more accurate custom lifecycle-based data, taking into account not only the emissions footprint, but also the impact on many other resources, like water, for example, for every product across a corporate portfolio. Aligned Incentives is an innovative US-based provider of AI-powered enterprise sustainability planning solutions. They bring deep expertise in areas like greenhouse gas accounting, climate risk, and ESG data management. By integrating this technology-augmented solution into our portfolio, the group will be able to bring differentiated solutions to help our clients measure, manage, and report on their environmental, social, and governance impacts with unprecedented accuracy and speed. Moving now to the third stream in our focused portfolio strategy pillar, optimize value and impact. In line with our LEAP28 strategy, we have been assessing the progress of the businesses classified under this stream to ensure that they are performing as planned. Earlier this month, we entered into an agreement to sell our food testing business to Merieux Nutrition, a global leader in the food testing business. Our food testing global operation generated 133 million euros in revenue in 2023, and employs over 1,900 experts across 34 labs worldwide. Post-closing, this divestment will be accretive to our margin and will have a neutral impact on our adjusted earnings per share by 2025. To summarize now this strategy update around our focused portfolio, I'd like to emphasize that we have clear, granular, and defined plans for every business in our portfolio and we are working diligently to execute those plans. In the coming weeks and months, you will see more progress, particularly on the M&A front. I will now hand over to François for the financial review.

Thank you, Inda. Good afternoon to everyone. Taking now a closer look at the revenue bridge. In the third quarter, we delivered 1.55 billion euros in revenue, representing a strong organic growth of 17%. And this performance demonstrates our continued execution capacity and the benefits of our circular growth trends. This marked the ninth quarter of organic revenue growth at or above 8% over the last 11 quarters, so very close to over the last three years. Accelerated acquisition realized over the last 12 months added 1.1% to the group's revenue. and 0.5% on a net-code basis, as it was partially offset, as Indah mentioned, by the disposal of our non-core Chinese construction business in July this year, and a small automotive divestment the year before. For your information, the deconsolidation of our food testing business will occur early next year, most probably. When it comes to forex impact, it represents a drag of minus 4.7%. leading to a total growth of 8.8% on a reported basis. This is mainly attributed to the strength of the euro versus several emerging market currencies. In Q4, we expect the FX to remain a headwind, although we expect it to ease sequentially. On a nine-month basis, the Bureau of Etats delivered €4.5 billion of revenue. We achieved 10.7% growth at constant currency, with organic revenue growth increasing by 10.5%. while the acquisition net of disposals contribute to 0.2. The strong organic performance highlights the strong momentum around the secular growth drivers, and Forex Impact represents a drag of 5.1%. When it comes to the performance of the different businesses in the third quarter of the year and for the first nine months, you see both numbers, first third quarter in the middle and year-to-date numbers on the right. I'm pleased to say that both the third quarter and the nine months are pretty much comparable. All businesses delivered good growth. Visually, three activities led the growth, marine offshore, industry, and certification. They all delivered double-digit organic growth in nine months, including the third quarter. On the back of continued momentum in sustainability-driven services, including marine decarbonization, renewable energy, and certification schemes. Agri-food and commodities and building infrastructure both recorded mid-single-digit organic revenue growth in the first nine months, with an improvement in the third quarter of high single-digit organically, as both benefited from improving trends in the U.S. markets. It will be noted as well that B&I benefited from favorable comparables in Q3. Finally, consumer product services continued to recover at a high single-digit base for both Q3 and 9 months, benefiting from new product launches and stabilization of the technology business in the sub-bottom. From a scope point of view, which is in light gray, the contribution is mainly concentrated on CPS, where M&A took place earlier this year. The various acquisitions that have been described a few minutes ago will start to impact our P&L as the year progresses. but they aren't yet to be seen from a P&S point of view. So we expect the next quarter to start materializing those, especially on B&I, on certification, and on industry. And the divestment of our lab testing business will impact the Agri-Food Committee Division, as I mentioned, most probably in Q1 or starting Q1 next year. And I'll pass it back to Hida for the in-depth business review.