2020 Q2 & HY Results
Solid results and excellent free cash flow
Next generation thinking | Sustainable delivery
Audiocast, 28 July 2020
Peter Oosterveer (CEO) & Jurgen Pullens (Director IR)
FIRST HALF YEAR RESULTS 2020
Disclaimer
Statements included in this presentation 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 there to) 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.
28 July 2020 2
FIRST HALF YEAR RESULTS 2020
Solid results and excellent free cash flow in the second quarter
- Sustained focus on resilience: keeping our people safe and supporting our clients
- Measures to reduce costs and improve cash collection paying off
- Solid operating EBITA of €49 million despite modest revenue decline
- Operating margin 7.8% (Q2'19: 7.7%), year to date: 7.6% (H1'19: 7.7%)
-
Excellent free cash flow of €165 million (Q2'19: €60 million), year to date at €81 million (H1'19: €8 million)
• Significant reduction of working capital and improved invoicing efficiency US - Demonstrated ability to adapt to current challenges, stable backlog and well diversified portfolio
28 July 2020 3
FIRST HALF YEAR RESULTS 2020
Immediate and significant action to protect our people and secure business continuity
Eight COVID-19 workstreams established early March:
People | Client Care | GEC/GSSC | Communications | |||
Travel | Financial Impact | Systems | Recover and | |||
Continuity & IT | Re-imagine | |||||
90% of our people work from home, supporting our clients using digital platforms
28 July 2020 4
FIRST HALF YEAR RESULTS 2020
COVID-19: Resilience to recovery
In our work with private and public sector clients we focus on the
following five principles for enhancing resilience:
PeopleDesignPlanning
Digital Sustainability
"Our thinking about resilience is evolving, and it closely links to the sustainability agenda. Ultimately, becoming more sustainable will make our global society more resilient"
28 July 2020 5
UNITED KINGDOM
Integral part in HS2, one of Britain's largest infrastructural projects
Jurgen Pullens
Director IR
FIRST HALF YEAR RESULTS 2020
Ensuring continuity of work, with increased cash collection efforts
First half year | |||
In € millions | H1'20 | H1'19 | Change |
Gross revenues | 1,703 | 1,707 | 0% |
Net revenues | 1,286 | 1,275 | 1% |
Organic growth % | 0% | 2% | |
EBITDA | 154 | 149 | 3% |
EBITDA margin | 12.0% | 11.7% | |
Adjusted EBITDA1 | 113 | 112 | 1% |
Operating EBITA2 | 97 | 98 | -1% |
Operating EBITA margin % | 7.6% | 7.7% | |
Free cash flow | 81 | 8 | |
Net working capital (%) | 17.7% | 16.2% | |
Net debt | 316 | 378 | |
Leverage ratio | 1.3x | 1.6x | |
Backlog net revenues (billions) | 2.0 | 2.1 | |
Backlog organic growth (year to date) | 2% | 3% |
- Excluding IFRS 16 impact, used for net debt/EBITDA and FCF calculation
- Excluding restructuring, acquisition and divestment costs
7.6%
Operating EBITA %
€81M
Free Cash Flow
1.3x
Leverage ratio
28 July 2020 7
FIRST HALF YEAR RESULTS 2020
Solid Q2 results despite modest revenue decline, significant reduction of working capital
Net Revenues and organic growth | Operating EBITA (margin) |
€ millions, % | € millions, % | ||||||||||
2% | 2% | 3% | 5% | 3% | 8.4% | 9.2% | |||||
-3% | 7.6% | 7.7% | 7.8% | ||||||||
7.2% | |||||||||||
647 | 642 | 660 | 658 | 54 | 61 | ||||||
628 | 628 | 48 | 50 | 48 | 49 | ||||||
Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 |
Net Working Capital
% | |||||
17.4% | 19.1% | 19.2% | 17.7% | ||
16.2% | 16.6% | ||||
576 | 569 | 639 | 616 | 671 | 588 |
Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 |
Days Sales Outstanding
Days
95 | 95 | ||||||||||||||||||||
86 | 88 | 87 | |||||||||||||||||||
82 | |||||||||||||||||||||
Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 |
28 July 2020 8
FIRST HALF YEAR RESULTS 2020
Improved income from operations
First half year | |||
In € millions | H1'20 | H1'19 | Change |
EBITA | 92 | 91 | 1% |
Amortization & impairment | -8 | -8 | 0% |
EBIT | 84 | 83 | 2% |
Net finance expense
Taxes on income
Normalized income tax rate1
Expected credit loss on shareholder loans & corp. guarantees
Minority interest
Net income
Net income from operations2
NIfO per share (in €)3
-16-19 -16%
-24-22 -24%
34% 35% n/a
17-5n/a
0-1n/a
6237 68%
534614%
0.59 0.53 11%
11%
NIfO per share growth
- Excluding Expected Credit Loss relating to ALEN and investments in associates and JV's
- Corrected for non-recurring items (e.g. acquisition & restructuring costs, expected credit loss and impairment)
- Average number of shares 2020: 89.2 million (2019: 87.9 million)
28 July 2020 9
FIRST HALF YEAR RESULTS 2020
Measures to improve billing and collection process paying off
First half year | ||
In € millions | H1'20 | H1'19 |
EBITDA | 154 | 149 |
Lease expenses | -41 | -37 |
Adjusted EBITDA1 | 113 | 112 |
Changes in net working capital | +16 | -45 |
Changes in other working capital | +2 | -9 |
Tax paid | -22 | -20 |
Net interest paid | -13 | -13 |
Other | +1 | +3 |
Cash flow from operating activities | 97 | 28 |
Capital expenditures | -16 | -20 |
Free cash flow | 81 | 8 |
- Net working capital improved from additional measures and increased invoicing efficiency in the US
- Other working capital includes:
- Engineering software license renewal (-€24 million in Q1)
- COVID-19VAT and wage tax deferral (~€33 million in Q2)
- Excluding IFRS 16 impact, used for net debt/EBITDA and FCF calculation
28 July 2020 10
FIRST HALF YEAR RESULTS 2020
Significant catch-up in trade receivables and WIP
€ millions | Jun-19 | % for GR | Dec-19 | % for GR | Jun-20 | % for GR | ||
Gross receivables | 597 | 662 | 601 | |||||
Provisions | -57 | -60 | -55 | |||||
Provisions % | 9% | 9% | 9% | |||||
Trade receivables1 | 541 | 15% | 602 | 16% | 546 | 16% | ||
Contract assets | 613 | 670 | 616 | |||||
Contract liabilities | -259 | -285 | -274 | |||||
Prov. onerous contracts | -98 | -91 | -93 | |||||
Net Work in Progress | 256 | 7% | 294 | 8% | 249 | 7% | ||
Accounts Payables | -228 | -6% | -280 | -8% | -208 | -6% | ||
Net Working Capital (%)2 | 569 | 16.2% | 616 | 16.6% | 588 | 17.7% | ||
597 | 662 | 601 | ||||||
111 | ||||||||
103 | 100 | |||||||
>120 | 67 | |||||||
83 | 79 | |||||||
102 | ||||||||
89 | 89 | |||||||
31-120 | ||||||||
0-30 | 323 | 381 | 333 | |||||
Not past due | ||||||||
Jun-19 | Dec-19 | Jun-20 |
- Excluding receivables from associates
- Based on annualized Q2 Gross Revenues
- Strong cash collection in Q2
- Catch up in WIP compared to Y/E from improved invoicing efficiency US
- Accounts Payables reduced
- Receivables and ageing in line with June '19
28 July 2020 11
FIRST HALF YEAR RESULTS 2020
Strong financial flexibility leads to further improved balance sheet
Adjusted EBITDA Margin1
€ millions, % | ||||
8.2% | 8.5% | 8.8% | 9.5% | 8.8% |
100 | 104 | 112 | 123 | 113 |
H1'18 | H2'18 | H1'19 | H2'19 | H1'20 |
Free Cash Flow
€ millions
149 | 97 | |||||||||
81 | ||||||||||
8 | ||||||||||
- | 6 | |||||||||
H1'18 | FY'18 | H1'19 | FY'19 | H1'20 |
Net Debt1
€ millions
468 | 378 | |||
342 | 310 | 316 | ||
H1'18 | FY'18 | H1'19 | FY'19 | H1'20 |
Average net debt / adjusted EBITDA1
Calculated using bank covenant methodology
2.2 | 2.0 | 1.6 | ||
1.4 | ||||
1.3 | ||||
H1'18 | FY'18 | H1'19 | FY'19 | H1'20 |
- Based on IAS 17: average net debt / adjusted EBITDA calculated according to bank covenants (interest bearing debt minus all cash and cash equivalents, lease liabilities excluded)
28 July 2020 12
GERMANY
Supporting TenneT in Germany's energy
transition
Peter Oosterveer
CEO
FIRST HALF YEAR RESULTS 2020
Americas: continued growth and margin improvement
First half year | |||
35% of net revenues | 2020 | 2019 | Change |
Gross revenues | 712 | 679 | 5% |
Net revenues | 452 | 426 | 6% |
Organic growth (%) | 4% | ||
Operating EBITA | 41 | 37 | 11% |
Operating EBITA margin | 9.0% | 8.8% | |
Second quarter | 2020 | 2019 | Change |
Gross revenues | 350 | 360 | -3% |
Net revenues | 226 | 222 | 2% |
Organic growth (%) | 1% |
▪ North America: operational performance and margin improved
- Environment: solid performance despite revenue decline from COVID-19
- Water: sound organic growth and strong pipeline of opportunities
- Infrastructure: significant growth due to long-term public projects
- Latin America: stable margins, continued organic growth and strong backlog driven by Infrastructure in Brazil
Galveston, USA
Technical support for the U.S. Army Corps of Engineers on multiple projects along Texas coast
28 July 2020 14
FIRST HALF YEAR RESULTS 2020
Europe & Middle East: solid performance in larger markets
First half year | |||
44% of net revenues | 2020 | 2019 | Change |
Gross revenues | 676 | 692 | -2% |
Net revenues | 573 | 574 | 0% |
Organic growth (%) | -1% | ||
Operating EBITA | 40 | 38 | 5% |
Operating EBITA margin | 7.0% | 6.7% | |
Second quarter | 2020 | 2019 | Change |
Gross revenues | 324 | 345 | -6% |
Net revenues | 271 | 283 | -4% |
Organic growth (%) | -4% |
▪ Continental Europe: solid performance in the Netherlands, higher order intake public clients; revenue growth in Germany; modest revenue decline in other countries
- UK: marginal revenue growth, major project wins in Infrastructure and Water and some decline in Buildings
- Middle East: modest revenue decline due to COVID-19 and impact low oil price
Leiden, the Netherlands
Redevelopment of Leiden Central Station area
28 July 2020 15
FIRST HALF YEAR RESULTS 2020
Asia Pacific: Asia on path to recovery, excellent performance in Australia
First half year | |||
13% of net revenues | 2020 | 2019 | Change |
Gross revenues | 182 | 188 | -3% |
Net revenues | 164 | 165 | -1% |
Organic growth (%) | 2% | ||
Operating EBITA | 10 | 13 | -22% |
Operating EBITA margin | 6.0% | 7.6% | |
Second quarter | 2020 | 2019 | Change |
Gross revenues | 94 | 98 | -4% |
Net revenues | 84 | 86 | -2% |
Organic growth (%) | 2% |
▪ Greater China has returned to more normalized situation, but COVID-19 impact remains in some smaller countries in Asia
- Australia: excellent revenue growth and operating EBITA margins due to work for major infrastructure projects
Hangzhou, China
Supporting Alibaba in creating their new high-tech campus
28 July 2020 16
FIRST HALF YEAR RESULTS 2020
CallisonRTKL: COVID-19 severely impacting sector
First half year | |||
8% of net revenues | 2020 | 2019 | Change |
Gross revenues | 133 | 148 | -11% |
Net revenues | 98 | 111 | -12% |
Organic growth (%) | -13% | ||
Operating EBITA | 7 | 10 | -30% |
Operating EBITA margin | 6.8% | 8.6% | |
Second quarter | 2020 | 2019 | Change |
Gross revenues | 63 | 76 | -17% |
Net revenues | 47 | 57 | -18% |
Organic growth (%) | -18% |
▪ Retail sector most affected, business in China on path to recovery
- Cost control measures taken to mitigate the impact of COVID-19
Texas, USA
Architectural design for largest military medical facility in the US
28 July 2020 17
FIRST HALF YEAR RESULTS 2020
New unit Arcadis Gen delivers first operational product to clients
Recently launched product: Universal Visual Optimizer
- Our first Software as a Service (SaaS) web app: powerful, fast and simple. Setup in days, results in hours
- Helps organizations optimize and visualize investment priorities and project portfolios
- Created at pace based on client requests for an investment planning tool to support post-pandemic recovery
Clients
Dublin airport authority
Icon Water, Australia
- Arcadis entity focused on rapid development of scalable digital products. Accelerating our digital transformation and client propositions
- Sectors: Aviation, Buildings, Energy, Highways, Rail, Water
- Footprint: UK, Europe, Australia, North America, Asia
- 215 FTE
- Products and solutions across the asset lifecycle:
- Plan: Asset investment planning and decision support analytics
- Deliver: Program management and cost control solutions
- Operate & Maintain: Enterprise asset management solutions
28 July 2020 18
FIRST HALF YEAR RESULTS 2020
Strong ability to adapt to COVID-19 reality
- Actions implemented to secure business continuity, reduce cost and preserve cash have paid off
- COVID-19impact underscores importance for societies to invest in resilience and sustainability
- Embracing resiliency thinking as an opportunity for change
- Continue investments in our people, sustainable solutions and digital offerings
- Demonstrated ability to adapt to COVID-19, created solid results in H1, provides confidence for our performance in H2
- Future position strong due to quality of our people, well diversified portfolio for public and private clients, and strong financial position
28 July 2020 19
Arcadis.
Improving quality of life.
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Arcadis NV published this content on 28 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2020 07:55:05 UTC