ARCADIS delivers solid third quarter results; well positioned for growth with record backlog and recent acquisitions
(Thomson Reuters ONE) -
* Third quarter: small decline in organic net revenues -1% (YTD +1%);
excluding North America organic growth is 4% (YTD 5%), driven by Asia,
Middle East, UK and Continental Europe
* Third quarter operating EBITA margin strong at 10.4%, with YTD margin up 40
basis points at 10.1% (2013: 9.7%)
* First nine months free cash flow increased to YTD ?51.6 million (2013: ?12.3
million)
* Backlog reached record levels following a series of significant contract
wins
* Successful completion of acquisitions of Hyder, Callison and Franz, all
closed in October, to increase annual revenue run-rate by more than ?500
million
* Outlook: Based on the performance in the first three quarters, market
outlook, growth of backlog, and recent acquisitions, ARCADIS expects net
revenues in 2014 to be approximately 5% higher than in 2013. Net income
from operations in 2014 is expected to be approximately 10% higher than in
2013, to which current activities will contribute around 6% and recent
acquisitions will contribute around 4%
October 22, 2014 - ARCADIS (NYSE EURONEXT: ARCAD), the leading global natural
and built asset design & consultancy firm, today announced that in the third
quarter of 2014, ended September 30, the company delivered organic net revenue
decline of -1% on the back of weak North American environmental and water
markets and the slowdown of the Latin American mining industry. Outside North
America the combined organic growth amounted to 4% (YTD 5%), with Asia, the
Middle East, Continental Europe and the UK contributing to the increase.
Operating EBITA margin was strong in the quarter at 10.4%, supported by margin
improvements in Continental Europe and the UK, bringing the margin for the first
nine months of 2014 to 10.1% (2013: 9.7%).
Acquisitions
ARCADIS announced three acquisitions which were all closed shortly after the
quarter end. They include Hyder Consulting, a 4,600 people design and
engineering consultancy with activities in the UK, the Middle East, Germany,
Asia and Australia, active in infrastructure, water and buildings; Callison, a
1,000 people high level architectural and interior design consultancy with
offices in the United States, China, Europe, Middle East and Mexico; and Franz,
a 100 people environmental consultancy firm active in six locations throughout
Canada. Together these firms add more than ?500 million in gross revenues to
ARCADIS on an annual basis.
ARCADIS CEO Neil McArthur commented: "We see the benefit of our investments with
organic growth moving towards our three year target of above 5%, with the
exception of North America. Tough conditions in that region's environmental and
water markets continue to weigh on revenues, although strong order intake
provides confidence for a return to growth in 2015. Thanks to strong margin
management by the North American team and profit improvement in both Europe and
the UK, we were able to expand our firm wide year-to-date EBITA margin. Since
the quarter ended we completed two major strategic acquisitions, Hyder and
Callison which together with the acquisition of Franz in Canada create a unique
platform for growth as the leading global natural and built asset design &
consultancy firm with ?3 billion in gross revenues and 28,000+ talented people
across the globe. Overall I am confident that including the recent acquisitions,
we can increase net revenues by 5% and grow our 2014 net income from operations
by approximately 10% versus 2013."
Key figures
-----------------------------------------------------------------------------
Third First Nine
Amounts in ? millions unless otherwise stated Quarter Months
Period ended September 30
2014 2013 2014 2013
-----------------------------------------------------------------------------
Gross revenues 630 633 1,827 1,873
Organic gross revenue growth -1% 0%
Net revenues 475 475 1,407 1,425
Organic net revenue growth -1% 1%
EBITA 40.5 46.5 123.9 122.9
Operating EBITA (1) 49.5 51.8 142.2 138.0
Operating EBITA margin 10.4% 10.9% 10.1% 9.7%
-----------------------------------------------------------------------------
1. Excluding acquisition, restructuring and integration-related costs
Review of performance for the third quarter
Revenue pressure remained strong in North America, especially in the
environmental market and to a lesser extent in municipal water. Overall this led
to an organic net revenue decline in that region of 7%. This was however
mitigated by continuing growth in other regions especially Emerging Markets,
despite lower revenues in Latin America due to developments in the mining
sector. The currency effect was limited, while growth from acquisitions was 1%.
EBITA was ?40.5 million, lower than 2013 mostly due to acquisition costs of ?7.3
million in the quarter, related to the Callison and Hyder acquisitions.
Restructuring and integration charges were ?1.6 million (2013: ?5.3 million).
Operating EBITA margin at 10.4% was slightly below last year (10.9%) as improved
performance in Continental Europe and the UK could not fully compensate for
lower returns in North and Latin America.
Developments by business line
(relates to gross revenue in the first nine months of the year unless otherwise
stated)
* Infrastructure (24% of revenues)
Organic revenue growth in Infrastructure was essentially flat, as positive
developments and increased infrastructure spending by big urban clients in the
Middle East, UK and Continental Europe were offset by a decline in Latin
America, caused by the reduction in capital investments by mining clients. North
American activities also grew organically. Backlog was up strongly by 9% helped
by significant wins in the Americas.
* Water (14% of revenues)
Water activities saw a modest decline as the strong growth in Emerging Markets,
particularly Latin America, was offset by decreases in North America as a result
of limited municipal spending on water issues. Backlog grew by 1% with all
regions contributing, except North America.
* Environment (31% of revenues)
Environmental revenues were down due to tough market conditions in the US as
competition in the private sector remained strong due to fewer project
opportunities in the public sector. Market conditions were also challenging in
the UK, leading to a decline. Organically, Continental Europe posted higher
revenues from projects with multi-national clients. Backlog is up 4%, and takes
into account only 10% of recently won large remediation contracts (combined
value exceeding ?160 million).
* Buildings (31% of revenues)
In Buildings revenues organically grew in all regions. Strong growth rates were
achieved in the Middle East due to high levels of capital expenditure and in
Continental Europe on the back of increased spending in business advisory for
multinational clients. In the UK growth was realized in new developments. Asia
and North America delivered strong growth, also in architectural solutions.
Strong order intake drove up backlog by 7%.
ONEurope progress update
In Continental Europe, net revenues grew organically by 2% in the third quarter,
3% YTD. Operating EBITA margins in Continental Europe in the third quarter were
8.0%, YTD 7.8% and a significant improvement over 2013 YTD of 4.4%. We are on
track to meet our 10% operating margin target in the fourth quarter of 2014.
North America performance excellence program
In response to continued difficult market conditions in North America, ARCADIS
has initiated a performance excellence program to evolve its operating model and
core processes to capture growth while continuing to maintain its strong margin
performance.
Backlog
While usually order intake slows down in the third quarter, backlog this year
was up 2% organically, bringing the total increase in backlog to 6% year-to-date
and creating a record backlog level for the Company.
As previously indicated, a number of large project wins were announced during
the third quarter, including more than $200 million in US Air Force remediation
contracts, a $70 million US rail infrastructure contract and a $36 million EPCM
contract in mining in Brazil.
Outlook
Based on the performance in the first three quarters, market outlook, growth of
backlog, and recent acquisitions, ARCADIS expects net revenues in 2014 to be
approximately 5% higher than in 2013. Barring unforeseen circumstances, net
income from operations in 2014 is expected to be approximately 10% higher than
in 2013, to which current activities will contribute around 6% and recent
acquisitions will contribute around 4%.
# # #
Conference Call
ARCADIS will hold a conference call to discuss its trading update for the third
quarter of 2014 on October 22, 2014. The call will begin at 15.00 Amsterdam,
09.00 New York, 14.00 London. The dial in numbers are: Netherlands: +31 (0)20
716 8296 / 0800 020 2577 (free phone); United Kingdom: +44 (0)20 3427 1919 /
0800 279 4841 (free phone); United States: +1 718 971 5738 / 1877 280 2342 (free
phone) , the call ID number is 9392872#. The conference call also will be
webcast live, and can be accessed on the company's IR website at
www.arcadis.com. A replay of the webcast will be available on the site
approximately two hours after the end of the live call.
For more information, please contact Joost Slooten of ARCADIS at +31-202011083
or outside office hours at +31-627061880 or e-mail joost.slooten(at)arcadis.com.
About ARCADIS: ARCADIS is the leading global natural and built asset design &
consultancy firm working in partnership with our clients to deliver exceptional
and sustainable outcomes through the application of design, consultancy,
engineering, project and management services. ARCADIS differentiates through its
talented and passionate people and its unique combination of capabilities
covering the whole asset life cycle, its deep market sector insights and its
ability to integrate health & safety and sustainability into the design and
delivery of solutions across the globe. We are 28,000 people that generate ?3
billion in revenues. We support UN-Habitat with knowledge and expertise to
improve the quality of life in rapidly growing cities around the world. Please
visit: www.arcadis.com
Statements included in this press release that are not historical facts
(including any statements concerning investment objectives, other plans and
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Although we believe that the expectations reflected in such forward looking
statements are based on reasonable assumptions, our actual results and
performance could differ materially from those set forth in the forward looking
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ARCADIS delivers solid third quarter results:
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[HUG#1864685]
Unternehmensinformation / Kurzprofil:
Datum: 22.10.2014 - 07:02 Uhr
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News-ID 345894
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