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    ARCAD   NL0006237562

ARCADIS NV

(ARCAD)
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Arcadis : Q2 and HY 2021 results press release

07/29/2021 | 01:37am EDT

PRESS RELEASE

Arcadis N.V.

Gustav Mahlerplein 97-103

P.O. Box 7895

1008 AB Amsterdam

The Netherlands

Tel +31 20 2011 011

www.arcadis.com

Arcadis reports 2021 second quarter and first half year results

Accelerated organic revenue growth, further margin and backlog improvement

  • Rebound of major economies creates positive business outlook
  • Further increased demand for Sustainable Solutions reinforces strategic choices

Second quarter results:

  • Organic net revenue growth of 5.7% to €644 million (Q2 2020: €628 million)
  • Operating EBITA +20% to €59 million, margin improved to 9.2% (Q2 2020: 7.8%)
  • Net working capital at 14.3% (Q2 2020: 17.7%); DSO at 74 days (Q2 2020: 87 days)
  • Solid free cash flow of €69 million (Q2 2020: €165 million)

First half-year results:

  • Organic net revenue growth of 3.0% to €1.3 billion (gross revenues of €1.7 billion)
  • Operating EBITA +21% to €117 million; margin improved to 9.2% (H1 2020: 7.6%)
  • Net income from operations per share +52% to €0.90 (H1 2020: €0.59)
  • Strong balance sheet with net debt/EBITDA ratio of 0.3x
  • Organic backlog growth year-over-year 7.2%, year-to-date 4.2%

Amsterdam, 29 July 2021 - Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy organization for natural and built assets, reports an organic net revenue growth of 5.7% and an operating EBITA margin of 9.2% for the second quarter. Organic net revenue growth for the first half year was 3.0% with an operating EBITA margin of 9.2%. Sustained good order intake is resulting in organic backlog growth of 7.2% year- over-year.

CEO STATEMENT

Peter Oosterveer, CEO comments: "I am pleased with both the increased organic revenue growth and the improved margin, as well as with the further growth of our backlog. Although we are still experiencing the impact of the pandemic, we see growing demand from our clients for Arcadis services, to enable them to mitigate the impact of climate change and create more sustainable assets and livable communities.

Responding to the pandemic over the past 18 months has led to an even greater focus on cross sector and cross regional collaboration within Arcadis. We were able to increase the leverage of our global expertise across our businesses, generating additional benefits for our clients. Our new strategy, launched in late 2020, is therefore proving to be a timely and prudent springboard for consistently delivering scalable sustainable solutions. We have leveraged our digital

1

leadership and focused on opportunities where we have the right to play and win. We are convinced that a more sustainable and equitable world can only be created if all involved are willing to maximize their collaboration and strive to deliver on aggressive targets.

The public stimulus programs have increased sustainable infrastructure funding in the US, the EU and the UK, as well as renewed focus by our clients on carbon reduction and environmental mitigation projects. Additionally, these programs have helped to secure new projects

and maintain a healthy pipeline of opportunities. We expect this to continue given the clear objectives of these programs and the continued severe impact of the extreme weather conditions we have experienced in various geographies.

Our acceleration of organic net revenue growth and improved margin, combined with a strong order backlog and a positive business outlook, gives us confidence in our ability to deliver the strategic targets we have set for 2023."

KEY FIGURES

  1. Adjusted EBITDA and Net debt are calculated according to bank covenants: lease liabilities are excluded
  2. Excluding acquisition, restructuring and integration-related costs

2

REVENUES BY SEGMENT

AMERICAS

(34% of net revenues)

North America continued to deliver very strong financial results. Organic net revenue growth increased in all business lines, despite two less working days in the first half year compared to 2020. The operating EBITA margin improved, driven by higher billability, higher quality of work and lower operating costs. Order intake remains robust, despite the pandemic. The Federal public stimulus plan, if passed, will create additional opportunities for further growth. Key priority is to retain and attract talent and to expand the usage of our Global Excellence Center to execute the work in the backlog.

In Latin America, the organic net revenue growth was excellent driven by infrastructure work in Brazil. The operating EBITA margin remained in line with last year.

EUROPE & MIDDLE EAST

(48% of net revenues)

Organic net revenue growth in EME was mainly driven by significant growth in the UK and several countries in Continental Europe, compensating for an expected and planned modest decline in the Middle East. The operating EBITA margin improved due to the revenue growth, improved portfolio of projects and lower operational expenses.

The UK's strong performance in the first quarter continued in the second quarter with excellent organic net revenue growth driven by key clients in all business lines. We are well positioned and are benefitting from our strong market position and long-term plans such as the UK Government's "Build Back Better" stimulus program, as well as a range of 'green' policy initiatives to accelerate the decarbonization agenda in the country.

In Continental Europe we experienced steady organic net revenue growth in Belgium, Poland, and France combined with stable performance in the Netherlands. Our presence in several

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major countries positions us well for opportunities presented by government spending on infrastructure, energy transition and the released European Union Green Deal programs.

Revenues in the Middle East showed a planned decline, driven by our decision to reduce our footprint in the region.

ASIA PACIFIC

(12% of net revenues)

Net revenues in Asia declined due to a return to lockdowns in Malaysia, Singapore, Thailand and Vietnam, and its impact on the commercial development business. China performed relatively well with revenues in line with last year. The operating EBITA margin was negatively impacted by lower revenue and losses on a few projects.

Australia's operating EBITA continued to be strong, despite modest organic revenue decline year-on-year. Our focus continues to be on seizing major infrastructure opportunities in Sydney and Melbourne.

CALLISONRTKL

(6% of net revenues)

Organic net revenues are still under pressure due to COVID-19, affecting mainly retail and commercial sectors, especially in Asia. Order intake in the US is improving, driving a book-to-bill ratio greater than one.

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REVIEW OF HALF YEAR PERFORMANCE 2021

Operating EBITA increased by 21% to €117 million (H1 2020: €97 million). Operating EBITA

margin improved to 9.2% (H1 2020: 7.6%); driven by strong performance in the Americas and in EME compensating for lower margins in Asia Pacific and CallisonRTKL. Non-operating costs were lower at €3 million (H1 2020: €5 million).

The effective income tax rate (income taxes divided by profit before income tax, excluding total result from investments accounted for using the equity method and total result from former investment in ALEN) for the six-month period ended 30 June 2021 is 21.0% (H1 2020:

34.3%). The tax rate was impacted by, amongst other things, non-deductible expenses, updates to tax positions from previous years and changes in recognized deferred tax assets.

Net finance expense decreased to €13 million (H1 2020: €16 million). The interest expense on

loans and borrowings of €7 million (H1 2020: €11 million) was reduced due to lower average gross debt and lower interest rates.

Net income from operations increased by 53% to €81 million or €0.90 per share, compared to €53 million or €0.59 per share in the first half of 2020.

REVIEW OF PERFORMANCE FOR THE SECOND QUARTER

Net revenues increased by 2.6% to €644 million for the second quarter, with an organic growth of 5.7% and a foreign exchange impact of -3.1%, mainly related to the weakening of the US Dollar. Operating EBITA increased by 20% to €59 million and operating EBITA margin improved to 9.2% (Q2 2020: 7.8%), driven by strong performance across most regions.

CASH FLOW AND WORKING CAPITAL

Free cash flow for the first half year was solid at €30 million (H1 2020: €81 million). In 2020, the first half year free cash flow was exceptionally strong due to the cash program undertaken and a significant improvement in the invoicing process in the US following the Oracle implementation.

Net working capital as a percentage of gross revenues improved to 14.3% (H1 2020: 17.7%)

and Days Sales Outstanding decreased to 74 days (H1 2020: 87 days), resulting from our ongoing focus on timely cash collection.

Net debt was €107 million and significantly lower than H1 2020 (€316 million), driven by

the strong cash collection in the last 12 months. Moreover, Arcadis invested €62 million in share buy back and distributed €31 million in dividend. The leverage ratio further improved to 0.3x.

In May 2021, €36.0 million of floating rate Schuldschein loans were repaid early, free of an interest penalty. In June 2021, the US Private Placement note of $110.0 million at 5.1% was fully reimbursed in accordance with the expected repayment schedule.

ORDER INTAKE AND BACKLOG

Order intake in the first half year was €1.4 billion leading to a book-to-bill of 1.07. The book-to- bill ratio was greater than 1 in all regions, except for the Middle East, driven by our decision to reduce our footprint. Organic backlog increased by 7.2% year-over-year, and 4.2% year-to- date to €2.1 billion representing 10 months of net revenues. There were no material project cancellations in the quarter.

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This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Arcadis NV published this content on 29 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2021 05:36:12 UTC.


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