ARCADIS DELIVERS GOOD FOURTH QUARTER AND STRONG YEAR
(Thomson Reuters ONE) -
* Annual gross revenues up +5%, net revenues +7% higher with organic growth at
+1%
* Operating EBITA up +8% leading to a full year operating margin of 10.1%
(2013: 10.0%)
* Net income from operations up +11% at ?123.6 million for the year
* ONEurope achieves target, generating 10.2% operating margin in Q4
* Free cash flow for the year of ?103.4 million, exceeds net income of ?91.6
million
* Net debt/EBITDA ratio at year-end was 2.0
* Dividend proposal ?0.60 per share, an increase of 5%
* Overall backlog up +41%, organic increase +7% well spread across all
business lines and regions
* Outlook: ARCADIS expects 2015 revenues and profit to increase significantly
from recent acquisitions, organic growth, and performance excellence
initiatives
February 19, 2015 - ARCADIS (EURONEXT: ARCAD), the leading global natural and
built asset design & consultancy firm, today announced that it has achieved net
revenue growth of +7% for the full year 2014, of which +1% was organic growth.
The company delivered +11% growth in net income from operations. With a good
finish for the year and some positive currency effects ARCADIS overachieved its
guidance on both metrics. The acquisitions of Hyder Consulting and Callison and
various smaller transactions completed during the year in review contributed 6%
to revenue growth for the year. Organic growth was strong in particular in the
Middle East and Asia, while the UK and Continental Europe were also on positive
trajectory, demonstrating the success of the investments in organic growth. As
anticipated, revenues declined in North America and Chile. The operating margin
improved to 10.1% (2013: 10.0%) helped by higher profitability in the UK and
especially Continental Europe (excluding Hyder), which at 10.2% reached its
fourth quarter target of 10% margin. Lower revenues weighed on the operating
margin in North America, while also margins in Emerging Markets declined due to
Latin America and Hyder. The overall backlog jumped +41%, reflecting the impact
of acquisitions, while the organic backlog growth was strong at +7%, with all
business lines and regions contributing. In line with last year, cash conversion
was good with free cash flow at ?103.4 million, exceeding net income of ?91.6
million.
Proposed dividend
ARCADIS proposes a 5% increase in dividend to ?0.60 per share. The proposed
dividend reflects a payout of 40% of net income from operations based on 82.0
million outstanding shares at year-end 2014. Shareholders will again be offered
the choice between receiving the dividend in cash or in shares.
ARCADIS CEO Neil McArthur said: "The positive development of revenues, margin,
cash flow and backlog indicate that we are on track with implementing our
strategy. 2014 was a year of investment in sustainable growth. We have completed
two major transactions - Hyder Consulting and Callison - thereby strengthening
our engineering and design capabilities. We have further expanded our core
business by niche acquisitions in Asia (inProjects) and Canada (Franz). We have
made significant investments to drive organic growth, including City Executives
in our Big Urban Clients program, Global Market Sector Leaders in our
Multinational Client program and Core Value Proposition leaders in our four
Global Business Lines. We have also completed the diagnostic phase of our global
performance excellence program and have launched initiatives to expand our
margin. With respect to collaboration, our pan-European operating model has
demonstrated its effectiveness, as we improved the operating margin from 3.2% to
10.2% in just 18 months. Meanwhile we have put in place regional operating
models in the UK, Middle East, Latin America, Asia and Australia Pacific. North
America has underperformed versus expectations during 2014, however, we have
started to implement a new market model, evolved the operating model, made
leadership changes and are confident to see a return to growth in 2015. With our
strong market positions, strategic progress, recent acquisitions, and record
backlog, we expect 2015 revenues and profit to increase significantly."
Key figures fourth quarter
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Fourth quarter
Amounts in ? millions unless otherwise stated
2014 2013 Change
------------------------------------------------------------------------------
Gross revenues 808 643 +26%
Organic gross revenue growth -1%
Net revenues 609 468 +30%
Organic net revenue growth +1%
EBITA 50.6 44.9 +13%
Operating EBITA(1) 60.7 50.5 +20%
Operating EBITA margin 10.0% 10.8%
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(1) Excluding acquisition, restructuring and integration-related costs
Review of performance for the fourth quarter
Acquisitions contributed 21% to the 26% increase in gross revenues, while
currencies had a positive effect of +5%, driven by the depreciation of the euro
against the US dollar and other currencies. The slight decline in organic gross
revenue growth (-1%) versus the prior year period can be primarily attributed to
North America, as all the other regions posted improved revenues. Net revenue
growth was +30%, of which +24% from acquisitions, and a positive currency effect
of +5%. Organic growth was +1%. The Middle East, Asia and the UK reported the
strongest performance, while organic growth in Continental Europe was +3%. In
North America, the organic net revenue decline resulting from continued tough
market conditions was -7%. Overall organic growth of net revenues excluding
North America was +5%.
Reported EBITA increased by +13% to ?50.6 million including the impact of
acquisitions and positive currency effects. Reported EBITA includes ?2.1 million
of costs related to the Hyder acquisition completed in October 2014 as well as
restructuring and integration charges of ?8.0 million (Q4 2013: ?5.6 million).
Operating EBITA grew by +20% to ?60.7 million and was primarily driven by
Continental Europe and acquisitions. The operating EBITA margin in the fourth
quarter was 10.0% (Q4 2013: 10.8%), diluted by Hyder and costs related to our
global performance excellence initiatives.
Key figures full year
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Full year
Amounts in ? millions unless otherwise stated
2014 2013 Change
---------------------------------------------------------------------------
Gross revenues 2,635 2,516 +5%
Organic gross revenue growth 0%
Net revenues 2,016 1,893 +7%
Organic net revenue growth +1%
EBITA 174.5 167.7 +4%
Operating EBITA(1) 202.9 188.4 +8%
Operating EBITA margin 10.1% 10.0%
Net income 91.6 96.6 -5%
Net income per share (in ?) 1.23 1.34 -8%
Net income from operations(2) 123.6 111.1 +11%
Net income from operations per share (in ?)(2) 1.66 1.54 +8%
Average number of outstanding shares (millions) 74.5 72.2 +3%
Free cash flow(3) 103.4 109.0
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(1) Excluding acquisition, restructuring and integration-related costs
(2) Before amortization of identifiable intangible assets and acquisition-
related costs (net of income taxes)
(3) Cash flow from operating activities minus investments in (in)tangible assets
Review of performance for the full year
Full year gross revenues increased +5% of which +6% from acquisitions including
SENES (Canada), inProjects (Asia), Franz (Canada), and Hyder and Callison,
offset by a slight decline caused by currency effects, organic development was
flat. Net revenues increased by +7%, of which +6% from acquisitions. There was a
slightly negative currency effect, while organic growth was +1% resulting from
increases in Continental Europe, which together with Emerging Markets and the UK
helped offset a -5% decline in North America. Organic growth outside North
America was +5%. Within Emerging Markets, good growth was achieved in the Middle
East and Asia, while Latin America declined, mainly due to reduced capex spend
in the mining sector.
Reported EBITA increased +4% year-on-year to ?174.5 million. The currency effect
was limited at -1%. Excluding restructuring and integration charges of ?15.1
million (2013: ?19.6 million) and acquisition-related costs of ?13.3 million
(2013: ?1.1 million), operating EBITA increased +8% to ?202.9 million (2013:
?188.4 million). The operating margin slightly improved to 10.1% (2013: 10.0%)
aided by the strong margin performance in Continental Europe and the UK, but
offset by margin declines in especially North America, dilution from Hyder and
costs related to our global performance excellence program.
At 29.0% the effective tax rate was slightly lower than last year (2013:
29.4%), resulting from changes in the geographic mix. Despite higher debt levels
related to acquisitions we were able to reduce financing charges to ?17.4
million (2013: ?18.1 million) helped by improved financing conditions. Income
from associated companies was a small loss attributable to the energy assets in
Brazil versus a considerable gain last year (2013: ?5.5 million).
Due to acquisition-related charges, net income declined -5% to ?91.6 million or
-8% to ?1.23 per share compared to ?96.6 million or ?1.34 per share in 2013. Net
income from operations, which excludes amortization of identifiable intangible
assets and acquisition-related costs (net of income taxes), increased +11% to
?123.6 million or +8% to ?1.66 per share (2013: ?111.1 million or ?1.54 per
share).
Cash flow, investments and Balance sheet
At ?139 million, cash flow from operating activities was stable. Working capital
at year-end was 18.8% of gross revenues, compared to 15.7% for year-end 2013.
The main reason for the increase was the higher working capital needs of Hyder
and Callison, while working capital was also impacted by a slowdown in payments
from clients in the natural resources sector. Free cash flow amounted to ?103.4
million (2013: ?109.0 million).
Acquisitions and currency related effects resulted in an increase of balance
sheet total to ?2,608 million (2013: ?1,680 million) and of net debt (interest-
bearing debt minus Cash and cash equivalents) to ?522.4 (2013: ?194.8 million).
In November, ARCADIS issued new shares and raised ?171.3 million (net proceeds)
to partially refinance the bridge facility that was arranged for the Hyder
acquisition. Balance sheet ratios remained strong: the net debt to EBITDA ratio
at the end of the year was 2.0 (2013: 1.1), while the interest coverage ratio
was 9 (2013: 10). Return on invested capital, excluding the impact of
acquisitions made during the year, was 13.7% (2013: 13.3%).
Developments by business line
Figures below are for full year 2014 compared to the same period last year,
unless otherwise stated
Infrastructure Water Environment Buildings
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Gross revenue growth(1) +7% 0% -8% +21%
Of which:
* Organic 0% -5% -8% +11%
* Acquisitions +10% +2% +2% +9%
* Currency impact -2% -1% 0% +1%
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Net revenue growth(1) +7% +3% -7% +20%
Of which:
* Organic -1% -1% -7% +10%
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Backlog development(2) +5% +7% +4% +10%
-----------------------------------------------------------------------------
(1) Rounding and reclassifications may impact totals
(2) Organic development compared to year-end 2013
* Infrastructure (25% of gross revenues)
Infrastructure benefited from the acquisition of Hyder which drove growth in the
UK, Continental Europe, Asia, the Middle East and Australia Pacific. Organic net
revenue growth in Infrastructure was essentially flat, with the UK, Continental
Europe and North America generating growth, while Latin America suffered from
lower levels of capital investment by mining clients.
* Water (14% of gross revenues)
Very strong organic growth in Latin America was the main driver behind the
overall performance in Water. During the year no improvement in demand was seen
in the municipal market in North America, while revenues were slightly down in
Continental Europe and flat in the UK. Hyder contributed to growth in the UK and
Middle East.
* Environment (29% of gross revenues)
Despite the contract wins in the third and fourth quarter, revenues in North
America declined, as market conditions in the US federal market remained soft
and competition in private sector remained strong. Continental Europe was
relatively stable, however in the UK revenues declined. As a result of strong
growth in Latin America, Emerging Markets performed well.
* Buildings (32% of gross revenues)
In Buildings, Callison, Hyder, and inProjects, contributed to overall revenue
growth. Strong organic growth was achieved in the Emerging Markets. Good growth
was also achieved in Continental Europe and in the UK, where growth outside of
London increased, while demand in the capital held up. In North America, good
organic growth was also achieved in architecture where revenues in commercial,
healthcare and workplace picked up.
ONEurope progress update
The introduction of the pan-European operating model in 2013 has proven to be
very successful. In 2014, we achieved organic net revenue growth in Europe of
+3% and we achieved 10.2% operating margin in the fourth quarter, reaching our
target of 10%.
North America
Given the continued tough market conditions, particularly in environment and
water, ARCADIS announced it has started a two-year improvement program for its
North American business, the region that represents 35% of its 2014 net revenues
and 39% of its profits. The main goals of the program are a return to growth,
while improving margins.
The program comprises three strategic levers for change. The first is to
continue implementation of a new market approach which was formulated in 2014
and has already delivered results in the form of backlog improvements.
Secondly, performance excellence will focus on implementing best practices
across five performance drivers: resource optimization, use of global design
centers, project management, procurement and workplace & collaboration.
Thirdly, the operating model for our North American operations will be fully
aligned with ARCADIS' global model to help drive organic growth. Strengthening
the leadership team and renewed focus on people development is an essential part
of the program.
Record backlog, +41%
Backlog increased organically by +1% in the fourth quarter, with water and
buildings leading the increase. The full year backlog increase amounts to +41%
including +11% from currency effects, +7% organic backlog growth while the
remaining increase comes from acquisitions. All business lines and regions
achieved organic backlog increases in the year.
Outlook by business line
In the Infrastructure market, strong overall growth is expected. Activities in
the UK, Middle East, Continental Europe, Asia and Australia Pacific will benefit
from growth through the Hyder acquisition. In Latin America, we expect the
mining sector to remain soft. In North America we expect growth. For the UK we
foresee increased government spending, while Continental Europe may see
increased infrastructure spending.
In Water we expect to achieve growth in all regions. In Latin America we have a
strong backlog, mostly in municipal water work. In North America we expect a
return to low growth as municipal spending picks up and from water related work
by Big Urban Clients. In Continental Europe we expect low growth, and in the
Middle East/UK we expect to benefit from the addition of Hyder's water
capabilities.
In the Environmental market, we expect a return to low growth. For North America
we expect a return to low growth later in the year, aided by the backlog that
was built up over 2014. In Latin America our strategic environmental consulting
value proposition creates additional growth opportunities. In the UK and
Continental Europe, we expect to achieve growth.
In the Buildings market, strong growth is expected to continue, in Asia and the
UK resulting from strong capital expenditure by Big Urban Clients. In
architecture we expect an increase in demand in North America, helped by
Callison. Also in Continental Europe we expect to see good growth driven by the
private sector and business advisory. Given the uncertainties regarding oil
prices, in the Middle East, growth will be country specific, but opportunities
remain favorable.
Outlook
With our strong market positions, strategic progress, recent acquisitions, and
record backlog, we expect 2015 revenues and profit to increase significantly,
barring unforeseen circumstances.
# # #
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
The condensed full year 2014 numbers are derived from the 2014 financial
statements. The financial statements have not yet been published and still have
to be adopted by the Annual General Meeting. KPMG Accountants N.V. has issued an
unqualified auditor's opinion on these financial statements. The financial
statements will be published on 9 March 2015. The figures for the fourth quarter
are unaudited.
Statements included in this press release that are not historical facts
(including any statements concerning investment objectives, other plans and
objectives of management for future operations or economic performance, or
assumptions or forecasts related thereto) are forward looking statements. These
statements are only predictions and are not guarantees. Actual events or the
results of our operations could differ materially from those expressed or
implied in the forward looking statements. Forward looking statements are
typically identified by the use of terms such as "may," "will," "should,"
"expect," "could," "intend," "plan," "anticipate," "estimate," "believe,"
"continue," "predict," "potential" or the negative of such terms and other
comparable terminology. The forward looking statements are based upon our
current expectations, plans, estimates, assumptions and beliefs that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
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
statements.
ARCADIS DELIVERS GOOD FOURTH QUARTER AND STRONG YEAR:
http://hugin.info/132839/R/1895680/672332.pdf
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originality of the information contained therein.
Source: ARCADIS N.V. via GlobeNewswire
[HUG#1895680]
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Datum: 19.02.2015 - 07:01 Uhr
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