Bureau Veritas Sa

Welcome to the Bureau Veritas Q1 2025 Revenue Conference call. My name is Alan and I will be your coordinator for today's event. 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 will be connected to an operator. I will now hand you over to your host, Inda Garbi, CEO, to begin today's conference. Thank you.

Thank you. Thank you, Alan. Good morning, good afternoon, and good evening to everyone. Welcome to Bureau Veritas' first quarter 2025 revenue presentation. I'm joined on this call by François Chabat, our group CFO. Vero Veritas delivered a robust quarter, leveraging the group's resilient business and geographical mix while navigating and monitoring the current macroeconomic environment. I'd like to thank our colleagues for all their contributions to our results around the world. Starting with our revenue performance, I'm pleased to report that our revenue reached $1.6 billion in the first quarter of 2025, reflecting an 8.3% increase compared to the same period last year. our organic revenue growth progressed by a healthy 7.3%. This performance demonstrates resilience, clear business plans, and shows strong execution. CapEx activities benefited from a solid backlog, while OpEx services were derived from sustained and recurring customer spending. Additionally, we continue to advance our LEAP 28 active portfolio strategy through targeted acquisitions, accounting for 3%. which then net of divestment contributed 1.4% to our revenue. This enables us to further pivot our portfolio. Finally, as the euro remains strong against most currencies, the currency impact was a negative 0.4% for the quarter. Bureau Veritas continues to build on its promising opportunities pipeline with strong mid- to long-term market fundamentals. Leveraging its backlog and building on these trends, the group maintains its financial outlook for 2025 unchanged. We are confident in the resilience of our business model and want to capitalize on the current share price level. To that effect, Bureau Veritas will implement a new €200 million share-by-back program set to be completed by the end of June 2025. Now, looking from a divisional and regional standpoint, let's start with the divisions. Three of our core businesses representing almost 40% of our portfolio, industry, marine and offshore, and certification grew double-digit organically. Agri-food and commodities reported a mid-single-digit increase of 6%, while both consumer products, services, and buildings and infrastructure recorded low single-digit organic growth. Regionally, we recorded organic growth across the board. The Middle East and Africa region led the way with a 25% organic revenue increase derived from strong activity in energy and in buildings and infrastructure. The Asia-Pacific region grew 7.5% organically, led by robust performance in China, Australia, and in the broader South and Southeast Asian markets. The Americas grew 6.4% organically with high single-digit increase for the United States business. Finally, Europe grew 3% on an organic basis with strong expansions in buildings and infrastructure in Southern Europe and in certification activities across the region. In the current environment, it is important to highlight why our portfolio is well positioned to navigate the ongoing volatility. Let me elaborate on the key factors that contribute to our group resilience. Our portfolio is currently well balanced between three types of services. First, around 37% of our business is composed of recurring OPEX and systems-related services. This part of our operations is by essence resilient, as it addresses regulatory and voluntary requirements that are essential for our clients' business continuity. These services are not discretionary, and they provide a stable and recurring revenue stream. Second, more than a third of our portfolio is focused on products. This business is built on long-term partnership and long-established contractual framework with our clients. These offer us good visibility to plan and anticipate movements in the market. Finally, the CapEx side of our portfolio, which represents 26% of our revenue, we benefit from a solid backlog of projects. In the last decade, we have diversified our CapEx portfolio and de-cyclicalized it. We believe our balanced and diversified portfolio gives us a high level of resilience and capacity to anticipate the current business environment. Now let me provide you with an update on our inorganic growth. Over the past quarter, we have completed two strategic bolt-on acquisitions. These transactions added 38 million euros in annualized revenue to our top line and are fully aligned with the strategic imperatives of LEAP28. First in January, we announced the acquisition of Contech, an Italy-based provider of services in the construction and infrastructure markets. Contech counts public authorities, infrastructure operators, and private manufacturing companies as customers. This acquisition is fully in line with our infrastructure growth plan. Today, infrastructure for the B&I division represents 20% of its revenue. Additionally, we have also reinforced our presence in the copper testing industry through the acquisition of GeoSA, completed this past March. This transaction strengthens our leadership in metals and minerals in Chile, the world's largest copper producing country. This past quarter, we have progressed with the divestment of our non-core food testing business, and we expect to conclude the divestment of our last subsidiaries in Australia and Latin America in the second quarter of this year. We're now deriving a significantly higher proportion of our revenue from acquisitions compared to our previous strategic plans. While small bolt-on acquisitions allow us to fill critical gaps in our portfolio, we might consider very selectively medium-sized bolt-on deals. These are targets with revenues between 100 and 500 million euros. Our M&A program exists within a disciplined framework that balances strategic fit with well-defined returns expectations. I will now hand over to Francois for the financial review of our first quarter revenues.

Thank you, Inda. Good afternoon to everyone. So let's look at the revenue. This quarter, we delivered 1.5 billion euros in revenue, representing a total growth of 8.3% compared to the same period last year. If we break this down, organic growth stand at 7.3. In addition, we have a positive scope effect of 1.4% in the quarter. It reflects the accelerated pace of our acquisition program with multiple Bolton deals as a realized mature. They contribute around 3% to our top line, and this was partially offset by the pivot that Indah has been talking about on the disposal we've executed, so accounting for minus 1.6%, so total 1.4%. So when it comes finally to foreign exchange, the impact is less significant than in 2024 and the last quarter of that year, as we register only a slightly negative 0.4% in the quarter. If we take now a closer look at the revenue dynamics of our different business lines in this quarter, while we post an overall organic growth of 7.3 and an inorganic growth limited to 1.4, I wanted to spend a bit of time to illustrate the reshaping of the portfolio, which starts to materialize when we have a look at the business time level. Indeed, divestment and investments are concentrated on different segments in order to execute a pivot of the Buotas portfolio as has been presented to the market back in March 2024. The inorganic Q1 revenue increase reflects three main areas of investment aligned with the LIB28 strategy. First, on CPS, the diversification in services and geography contribute to 4.4 percent inorganically at the division level, complementing the 3.4 organic growth of the quarter. Second area investment, cyber compliance and supply chain sustainability under certification had 3.7 percent inorganically to an already strong organic component above 10 percent. And finally, the investment in B&I infrastructure under the B&I division has 5.2% at the division level. Simultaneously, the divestment is concentrated on one single division, agri-food and community, and reduces the segments by almost 6%, which is kind of offset by the organic growth of the division. So as you see, we are over on track with our plans to combine both a an organic growth momentum, and being able to build a more resilient portfolio. A word on capital allocation now. Today, we have a healthy balance sheet that gives us flexibility to execute our M&A strategy, to allocate capex, and to provide steady return to shareholders. We aim to operate within a depth leverage of one time to two times, so it provides us with a sound financial structure and the right financial flexibility. So we maintain a disciplined and prudent framework when it comes to how we deploy your capital. This includes the sound and unchanged cash dividend policy, as well as a well-managed capex spend targeting 2.5% to 3% of our revenue. Second, we are executing our M&A program, focusing on small Bolton acquisitions, and we will be opportunistic and consider very selectively medium-sized Bolton deals revenue in the range of 100 to 500 million euros. Finally, we consider it an opportune time to initiate a new share buyback program. Given our confidence in the resilience of our business model and the current level of our share price, we are implementing a 200 million euro share buyback to be completed by the end of June 2025. Let me now hand over to Inda for the portfolio business highlights.