Arcadis delivers strong margin performance in third quarter 2015
(Thomson Reuters ONE) -
* Q3 gross and net revenues up +36% driven by acquisitions and currency
effects (YTD: +39%)
* Q3 organic net revenue growth -1% with slowing emerging markets (YTD: +1%)
* Q3 operating EBITA margin improves to 10.6% (2014: 10.4%)
* Q3 EBITA strongly up +48% to ?60 million
* Year-to-date operating EBITA up +28% through positive effects of Performance
Excellence program and acquisition synergies
* Working capital essentially flat compared with Q2
* Backlog up +2% due to currency effects, organic decline of -2%; reflecting
mixed market conditions
Outlook confirmed: Barring unforeseen circumstances, we expect full-year
revenues to benefit from acquisitions, positive currency effects and to a lesser
extent from organic growth. Also in the fourth quarter we expect operating EBITA
margin to be 10.5 - 11%, supported by increased contribution from our
Performance Excellence program and by actions to expand margins from the
acquired companies. As a consequence, Arcadis expects 2015 revenues to grow by
about 30% and anticipates net income from operations to increase by
approximately 20%, supported by the planned disposal of non-core energy assets.
We expect strong cash flow generation in the fourth quarter, supported by
working capital ending below last year's level of 18.8% of gross revenue.
October 22, 2015 - Arcadis (EURONEXT: ARCAD), the leading global Design &
Consultancy firm for natural and built assets, today announced a +39% year-on-
year increase in net revenues in the first nine months, ended September 30(th
)2015, mainly driven by acquisitions and favorable currency effects. Year-to-
date organic growth of net revenues was +1%, resulting from good growth in the
Middle East, UK, Continental Europe and lower growth in Asia. In Brazil,
representing 5% of total revenues, market conditions worsened as expected,
driving year-to-date net revenues down -21% organically. In North America, the
competitive environmental market weighed on organic growth (YTD -2%).
The year-to-date increase in operating EBITA was +28%. In the third quarter
operating EBITA was up +39%, while EBITA was strong at +48%, reflecting the
effects of measures taken to improve bottom line returns. In the third quarter
the operating EBITA margin rose to 10.6%, supported by the execution of the
Performance Excellence program.
Arcadis CEO Neil McArthur commented: "I am pleased with our margin improvement
resulting from the effects of our Performance Excellence program, the synergy
plans from recent acquisitions and the speed and agility with which we address
the challenging conditions in a number of our end markets. We are on track with
our goal to reduce working capital by year-end to below last year's levels, and
remain keen to bring this down further. For the remainder of 2015, we are
focusing on maximizing synergies with Hyder and Callison and on implementing our
Performance Excellence program, from which we expect an increasing contribution
for the full year. More time will be invested in addressing our position in
North America, where continuing difficult market conditions in Environment mean
we will not see a return to growth until 2016. As we deploy our Global
Excellence Centers to more geographies, the resulting stronger competitive
position will support our growth ambition."
Key figures
+-------------------------------------+-----------+------+--------------+------+
|Amounts in ? millions unless | Third |Change| Year to date |Change|
|otherwise stated | Quarter | | | |
|Period ended September 30 +-----+-----+------+--------+-----+------+
| |2015 |2014 | | 2015 |2014 | |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Gross revenues | 856 | 630 | +36% | 2,547 |1,827| +39% |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Organic gross revenue growth | +1% | | | +2% | | |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Net revenues | 646 | 475 | +36% | 1,962 |1,407| +39% |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Organic net revenue growth | -1% | | | +1% | | |
+-------------------------------------+-----+-----+------+--------+-----+------+
|EBITA |60.0 |40.5 | +48% | 149.1 |123.9| +20% |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Operating EBITA(1)) |68.6 |49.5 | +39% | 181.9 |142.2| +28% |
+-------------------------------------+-----+-----+------+--------+-----+------+
|Operating EBITA margin |10.6%|10.4%| |9.3%(2))|10.1%| |
+-------------------------------------+-----+-----+------+--------+-----+------+
(1) )Excluding acquisition, restructuring and integration-related costs
(2) )Excluding one-off cost overruns in H1, operating EBITA margin was 9.9%
Review of performance for the third quarter
Net revenue growth was +36% with acquisitions contributing +28%, and currency
effects +9%. Organic growth was -1% as the recession in Brazil deepened, North
American environmental activities take longer to recover, and growth slowed in
Emerging Markets. In Brazil, North America, and certain parts of our business in
China capacity adjustments were made to match market demand. Continental Europe,
UK and Australia Pacific grew strongly driven by private sector clients, and
good investment levels in transportation infrastructure and buildings.
EBITA at ?60.0 million was strongly up +48% including the impact of acquisitions
and currency effects. Excluding acquisition, restructuring and integration
costs, operating EBITA rose by +39%. The operating EBITA margin of 10.6% (2014:
10.4%) reflects the effects of Performance Excellence and the cost synergies
from integrating Hyder and Callison.
Review of year to date performance
Year-to-date net revenue growth was +39%, of which acquisitions +28%, currency
effects +12% and organic growth +1%.
EBITA was up +20%, while operating EBITA rose +28%. The operating EBITA margin
of 9.3% (2014: 10.1%) reflects the lower contribution from Hyder and the effect
of the US project cost overruns reported in the second quarter. Without these
project cost overruns, operating EBITA margin would have been 9.9%.
Developments by business line
(relates to gross revenues in the first nine months of the year unless otherwise
stated)
* Infrastructure (25% of gross revenues)
Infrastructure benefited from strong growth in the Hyder activities across the
UK and Middle East, supported by synergy wins, while Australia Pacific also grew
strongly. In Continental Europe our improved offering is expanding our market
share, North America delivered good growth, while Latin America experienced
strong declines due to deteriorating market conditions in Brazil.
* Water (14% of gross revenues)
Growth in water was driven by the addition of Hyder and synergy effects. Organic
development was driven by growth in North America and a number of markets in
Continental Europe, the UK was essentially flat. Latin America experienced a
decline on the back of strong spending reductions due to client funding issues.
* Environment (24% of gross revenues)
Slowing decline in North America reflecting strong competition while our new
market approach takes hold. The UK grew organically driven by impact assessment
work related to infrastructure investments. Market conditions in Brazil were
slow resulting in organic decline and Continental Europe was essentially flat.
* Buildings (37% of gross revenues)
In Buildings, overall revenue growth is supported by the addition of Hyder and
Callison. Good organic growth was achieved with Continental Europe, Middle East
and UK doing particularly well. Private sector growth from multinational clients
was strong. In China decline in architecture and a slowdown in some regions
necessitated capacity adjustments.
Backlog
Currency effects pushed backlog up by +2% YTD. At constant exchange rates
backlog was down -2% versus year-end 2014. Positive developments were recorded
in Continental Europe and UK. North America was flat while Emerging Markets were
somewhat down.
Working capital
Working capital was 20.4% of gross revenues, essentially flat with Q2 levels,
and in line with the usual seasonal pattern. Improvements were achieved in the
Arcadis legacy business where reductions in billed and unbilled receivables
brought down working capital from 19.0% last year to 18.3% this year. We
introduced process changes related to new contracts, change orders and billing
in the acquired companies which are beginning to take hold. With this we are on
our way to reach our target of working capital reduction and expect to end the
year below last year's level of 18.8% of gross revenue.
Refinancing
Arcadis successfully raised USD 128 million in early October by way of a second
Schuldschein issuance in 2015. All proceeds were used to partially refinance a
term loan maturing in June 2016. The loans have 5, 7 and 8 year tranches with
attractive pricing.
# # #
Conference Call
Arcadis will hold a conference call to discuss its trading update for the third
quarter of 2015 on October 22, 2015. The call will begin at 15.00 Amsterdam,
09.00 New York, 14.00 London. The conference call also will be webcast live, and
can be accessed via the investors section on the company's 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 Design & Consultancy firm for natural and built
assets. Applying our deep market sector insights and collective design,
consultancy, engineering, project and management services we work in partnership
with our clients to deliver exceptional and sustainable outcomes throughout the
lifecycle of their natural and built assets. We are 28,000 people active in over
70 countries that generate more than ?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. www.arcadis.com.
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,"
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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 strong margin performance in third quarter 2015 :
http://hugin.info/132839/R/1960686/714815.pdf
Arcadis third quarter 2015 analyst presentation :
http://hugin.info/132839/R/1960686/714816.pdf
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[HUG#1960686]
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Datum: 22.10.2015 - 07:00 Uhr
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