Arcadis Nv · EURONEXT:ARCAD
Arcadis Nv — Investor Day (November 2023)
81 slides from Arcadis Nv's investor day presentation, Nov 16, 2023
Slide 1: Accelerating a planet positive future
Accelerating a planet positive future London, 16 November 2023 1
Slide 2: Disclaimer
Disclaimer Statements included in this presentation that are not The forward-looking statements are based upon our historical facts (including any statements concerning current expectations, plans, estimates, assumptions and investment objectives, other plans and objectives of beliefs that involve n
Slide 3: Creating a world-class fan experience at the Home of Cricket
Creating a world-class fan experience at the Home of Cricket The home of cricket ground - Largest in UK and one of most famous in world Client challenge = A 15-year multi-million-pound redevelopment program in a live sports environment. Client solution = Evidence-based assessments of cost, design ef
Slide 4: Speakers and Agenda
Speakers Alan Virginie Agenda Brookes Duperat- Chief Executive Vergne Officer Chief 1 Global leader in consultancy, design & engineering Financial Officer Alan Brookes 2 Delivery on our 2021 - 2023 Strategy: “Maximizing impact” Alan Brookes 3 Our 2024 - 2026 Strategy: “Accelerating a planet positive
Slide 5: Global leader in consultancy, design and engineering
PART 1 Global leader in consultancy, design and engineering Alan Brookes CEO 5
Slide 6: Global footprint offering sustainable solutions
Global footprint offering €3.7Bn 36K 135 sustainable Net Revenues Total Years of 2023 Q3 LTM employees serving history solutions Operating across 30 Platinum >80%1) Top 1% of companies of net revenues related countries globally to relevant SDGs 1) Reflecting Arcadis 2022 full year revenues excluding
Slide 7: Building on strong client relationships
Building on strong client Public and semi- public clients Private clients relationships 50%1) 50%1) Clients in: Clients in: Federal governments, Semiconductor, US states, municipalities, Life Sciences, Healthcare Automotive, Technology, defense, water boards. Real Estate, Financial. Client examples:
Slide 8: Through 4 Global Business Areas
Through 4 Global Business Areas Advising clients on all stages of their assets’ life cycle Intelligence Resilience Provide data-driven Protect, clean and insights and products to improve our natural optimize performance of environment and water built and natural assets resources Life cycle of built
Slide 9: Attractive client offerings
Attractive client offerings Strong demand for our foundational solutions. New Solutions to accelerate growth further Our GBAs1) Resilience | 36% Places | 40% Mobility | 22% Intelligence | 2% Energy Smart New Mobility & Intelligence transition sustainable transportation offerings Growth buildings hub
Slide 10: Leading globally in Nature Based solutions with >30 years experience
In end market Environmental Restoration how Arcadis differentiates Leading globally in Nature Based solutions with >30 years experience Client challenge = Extreme flooding and runoff, impacting water quality and habitats in Dutch rivers. Arcadis solution = Design and construction of new dykes, river
Slide 11: Shaping Net Zero programs, drive decarbonization
In end market Smart Sustainable Buildings how Arcadis differentiates Shaping Net Zero programs, drive decarbonization and net positive project strategies Client challenge = deliver net zero commitments across their asset portfolio. Arcadis solution = Decarbonization and emission calculations, offset
Slide 12: Bridge Health: using AI to optimize asset inspection
In end market Intelligent highways how Arcadis differentiates Bridge Health: using AI to optimize asset inspection Client challenge = bridges are complex assets to inspect with accuracy, clients face reactive and costly maintenance. Arcadis solution = Predictive asset management: AI and data-driven
Slide 13: Delivery on 2021-2023 Strategy: Maximizing impact
PART 2 Delivery on 2021 – 2023 Strategy: “Maximizing impact” Alan Brookes CEO 13
Slide 14: Delivered on targets set
Delivered on targets set Financial Targets Non-financial Targets Organic Net Revenue Growth1): mid-single digit Voluntary staff turnover1): <10% CAGR 7% 12.0% Operating EBITA Margin1): >10% in 2023 Staff engagement1): improving annually 10.1% Q3 2023 YtD +51 eNPS Net Working Capital <15% | DSO <75 d
Slide 15: Focused globalized operating model implemented
Focused globalized operating model implemented in form of Global Business Area structure. Invested in our Global Improving Focus Excellence Centers. Quality of and scale Life Strategic repositioning through portfolio optimization and M&A, with Arcadis IBI and Arcadis DPS fully integrated by end of 2
Slide 16: GBA Intelligence created in 2022
GBA Intelligence created in 2022. Suite of attractive digital Improving client propositions. Quality of Life Creation of Object Type Library to standardize and digitize our Design & Digital Engineering services. leadership 16
Slide 17: Sustainability Advisory and Energy Transition Practices
Sustainable solutions Creation of Sustainability Advisory and Energy Transition Practices. Improving Pioneer in Net Zero Quality of Life facilities and communities. Global leader in Sustainable Design & Engineering services. 17
Slide 18: Focusing on key geographies: Strengthening North American position
Focusing on key Net Revenues 2020 Q3 YTD, % Net Revenues 2023 Q3 YTD, % geographies: 6% 14% 5% Strengthening 6% Americas UK and Ireland 40% North American €1.9Bn 20% €2.8Bn 46% Continental Europe position 22% Australia Asia and Middle East 23% 18% 18
Slide 19: Strong platform to capture future opportunities
Strong platform to capture Leading positions Global business in key markets model Scalable GEC platform Complementary service offering Talented workforce future • Water, climate & environment • Developing and • 4 GBAs • Global connectivity • Global Excellence Centers • Digital delivery • Capabilitie
Slide 20: Our 2024-2026 Strategy: Accelerating a planet positive future
PART 3 Our 2024 – 2026 Strategy: “Accelerating a planet positive future” Alan Brookes CEO 20
Slide 21: Market drivers and investment needs
Climate Change $3.5T $0.5T & Decarbonisation of annual investment needed to meet of annual investment needed to meet Net Zero by 2050 Clean Water goals Urbanisation & Social Communities >$3.5T 600M Smart City investments Increase in global urban by 2030 population by 2030 Evolving Supply $150Bn €150
Slide 22: Our role with clients is evolving
Client challenges Increased cost of capital Making speed to market as Our role key delivery requirement. with clients Energy cost & decarbonization is evolving Driving increasing focus on asset performance optimization. Increasing project complexity Driving need for a trusted advisor and partner. 22
Slide 23: Accelerating a planet positive future
Accelerating a planet positive future Realizing our strategy through: Sustainable project choices Digital + human innovation Powered by our people 23
Slide 24: Sustainable project choices
Accelerating a planet positive future Sustainable project choices Deliberate focus on projects that 1 contribute to our strategic ambition • Project selection commitment towards planet positive, sustainability and economic criteria • Increasing robustness of our project selection process. 24
Slide 25: Sustainable project choices: Key client program 2.0
Accelerating a planet positive future Sustainable project choices 2 Key client program 2.0 • Growing our share of wallet within key clients and increase GBA cross collaboration • Expanding our program by 50% to targeting a broader group of clients and drive success in our growth markets • Introduce
Slide 26: Sustainable project choices: Evolving commercial models
Accelerating a planet positive future Sustainable project choices 3 Evolving our commercial models • Commercial models to gradually adapt to our changing role with clients • Value based pricing and incentive-based models, reflecting value we offer to clients • Developing models to incorporate increa
Slide 27: Digital + human innovation
Accelerating a planet positive future Digital + human innovation Leveraging our Digital capabilities 1 in client delivery • Continued investment in Intelligence products and services • Increased GBA cross collaboration with Intelligence • Accessing the significant asset performance opportunity and o
Slide 28: Digital + human innovation: internal capabilities
Accelerating a planet positive future Digital + human innovation 2 Leveraging our digital capabilities internally • Continued standardization of operating procedures allowing us to automate through bots and AI allowing our people to focus on higher value activities • Focus on automation of pursuit p
Slide 29: Powered by our people
Accelerating a planet positive future Powered by our people 1 Investing in a Skills Powered Organization • People training for the skills of tomorrow: e.g. Energy Transition Academy • Flexible global workforce planning deploying the best skills for the project • Increased career opportunities and ta
Slide 30: Powered by our people: Global Excellence Centers
Accelerating a planet positive future Powered by our people 2 Expanding Global Excellence Centers • Building on the experience and skills in our Global Excellence Centers • Doubling contribution of Global Excellence Centers in client projects • Exploring options for additional Global Excellence Cent
Slide 31: ESG at Arcadis: sustainability is in our DNA
PART 4 ESG at Arcadis: sustainability is in our DNA Alan Brookes CEO 31
Slide 32: Sustainability is in our DNA
Sustainability is in our DNA Partnerships and recognitions Delivery on targets and achievements Client Solutions Scope 1&2 market- based GHG emissions Own Operations -65% 2022 from a base year 20191) Employee Net Diversity Promoter Score Women in workforce People & Communities +51 39% vs. +27 in 202
Slide 33: Advancing net zero and nature positive outcomes
Client Solutions Advancing Whole of Life Carbon to deliver a Net-Zero future net zero Operational carbon Embodied carbon and nature positive PRODUCT Raw material CONSTRUCTION Manufacturing & USE Maintenance END OF LIFE Deconstruction Waste processing outcomes in Manufacturing Operations supply const
Slide 34: Fostering net zero and biodiversity in our value chain
Own Operations Fostering Arcadis Scope 1, 2 & 3 targets mtCO2e net zero and 35,000 30,000 100% 600,000 100% 500,000 biodiversity 25,000 400,000 -45% in our value 20,000 15,000 -70% 300,000 chain 10,000 -90% 200,000 100,000 -90% 5,000 - - 2019 2026 2035 2019 2029 2035 Arcadis commits to reaching net-
Slide 35: Investing in our people and local communities
People & Communities We will Investing in future focused skills continue to invest in our ENERGY TRANSITION ACADEMY people and Skills-powered Digital sustainability Grow to 2,500 energy local organization platform launch in 2024 training program transition professionals communities 2026 target 2026
Slide 36: Global Business Areas' Strategy
PART 5 Global Business Areas’ Strategy Global Business Area Presidents Heather Polinsky Greg Steele Resilience Mobility Mark Cowlard Juud Tempelman Places Intelligence 36
Slide 37: Four GBAs
And we service our clients in these markets through our Four GBAs 37
Slide 38: Resilience
Resilience The Resilience GBA protects, adapts and improves our natural environment and water resources, while sustainably powering our world for future generations. Client offering Environmental Water Climate Sustainable Energy restoration optimization adaptation operations transition 38
Slide 39: Resilience leading positions in the world
Resilience leading positions in the world UK & Ireland North America 14% TOTAL NET REVENUE 57% TOTAL NET REVENUE Environmental Energy Climate Water restoration transition adaptation optimization Environmental Water Climate restoration optimization adaptation Latin America Australia 12% TOTAL NET REV
Slide 40: Resilience well positioned for growth
Resilience well positioned for growth Client offering Market drivers Key growth opportunities European Green Deal Lead Service Line help propel Replacement Water optimization Water $15Bn >€1.8T expand digital offering through data driven decision making. annual clean energy optimization for US Water
Slide 41: Water optimization
Key growth opportunity 1 Improving our business through: Key differentiators: • Grow Digital twins offering, Water creating recurring revenue through alternative optimization business models and product sales Expand digital • Water solutions for capex & opex management offering through together with
Slide 42: Global leader in PFAS and emerging contaminants
Key growth opportunity 2 Improving our business through: Key differentiators: • Building on global • Patented PFAS Sampler Global leader position, reputation and expertise • Patented HRX WellR • Exclusive licensing rights in PFAS • Being at forefront of to foam fractionation with regulatory, technic
Slide 43: Advancing Energy Transition
Key growth opportunity 3 Improving our business through: Key differentiators: • Building industry • Offshore renewable Advancing leading teams: energy transmission - Reskilling through • Energy Hub Digital Twins Energy Arcadis Energy • Leading position Germany Transition Academy large scale projects
Slide 44: Energy transmission station for TenneT
Key growth opportunity 3 Arcadis case study: Energy Energy Arcadis transition transmission station for TenneT Accelerating renewable energy production by connecting offshore wind farms in the North Sea with the onshore grid network in the Netherlands. Driving affordable, reliable and sustainable ene
Slide 45: Places
Places The Places GBA designs, delivers and optimizes sustainable, safe and smart buildings and places with a focus on advanced industries, transport hubs, retail and government facilities. Client offering Advanced Public Retrofitting & Architecture Smart Sustainable Industrial Facilities Facilities
Slide 46: Places leading position in the world
Places leading position in the world UK & Ireland North America 27% TOTAL NET REVENUE 39% TOTAL NET REVENUE Advanced Public Retrofitting & Architecture Industrial facilities Repurposing & Urbanism Facilities Advanced Public Architecture Industrial Facilities & Urbanism Facilities Continental Europe
Slide 47: Places well positioned for growth
Places well positioned for growth Client offering Market drivers Key growth opportunities CHIPS act / funds US: $39Bn Global leader in Advanced Advanced Industrial EU: €43Bn Industrial Facilities. Facilities (>2024) z By 2050 68% Architecture & Urbanism Multi-disciplinary architecture leader Archite
Slide 48: Advanced Industrial Facilities
Key growth opportunity 1 Improving our business through: Key differentiators: • Focus on leading positions • One of few global players Global leader in in Life Sciences, with complementary set Semiconductor, Data of services, able to bid on Advanced Centers and Automotive large projects (EV and Batt
Slide 49: Strong market opportunities in Advanced Industrial Facilities
Strong market opportunities in Advanced Industrial Facilities North America Europe Key Investments Key Investments $452Bn CAPITAL PROJECT SPEND 2022-20271) $213Bn CAPITAL PROJECT SPEND 2022-2027 Examples of recently announced investments in Advanced Industrial Facilities1) Arcadis Advanced Industria
Slide 50: Architecture & Urbanism
Key growth opportunity 2 Improving our business through: Key differentiators: • Bringing integrated • Top 5 global practice Architecture service offerings in collaboration with in world • Unique and compelling & Urbanism Industrial Facilities: master planning for offering: architecture, planning, ur
Slide 51: A new Toronto neighborhood
Key growth opportunity 2 Arcadis case study: Architecture A new Arcadis Toronto & Urbanism solutions neighborhood CityPlace is one of the largest new developments in Toronto. Arcadis was responsible for master-planning and architectural services for 20 mixed-use towers, integrating retail, hospitali
Slide 52: Smart Sustainable Buildings
Key growth opportunity 3 Improving our business through: Key differentiators: • Built asset portfolio • 20+ years experience in Smart decarbonization - stepped approach that meets the Net Zero buildings, retrofit and sustainability Sustainable client's stage of readiness certification • ESG planning
Slide 53: Mobility
Mobility The Mobility GBA creates thriving and connected cities and communities around the world. We serve as a green enabler, helping organizations accelerate their net zero transitions through our solutions for highways, airports, rail and new mobility technologies. Client offering New Mobility &
Slide 54: Mobility leading positions in the world
Mobility leading positions in the world UK & Ireland North America 33% TOTAL NET REVENUE 22% TOTAL NET REVENUE Connected Intelligent New Mobility & Highways Rail & Transit Transportation Hubs Connected Intelligent Highways Rail & Transit Continental Europe Australia 27% TOTAL NET REVENUE 18% TOTAL N
Slide 55: Mobility well positioned for growth
Mobility well positioned for growth Client offering Market drivers Key growth opportunities Global asset management Connecting Europe Facility market is to reach program to fund Become leading advisor in global shift to decarbonize & digitize Intelligent Rail Connected $76B $30Bn transport. & Transi
Slide 56: Become leading advisors in decarbonizing and digitizing transport
Key growth opportunity 1 Improving our business through: Key differentiators: • Fleet EV combining advisory • >10 years of experience in Become leading with infrastructure design EV advisory and management advisors in • Strong position in fleet • Expand technical advisory electrification in the UK t
Slide 57: Leverage strong Design & Engineering expertise
Key growth opportunity 2 Improving our business through: Key differentiators: • Leverage strong capabilities • Assured and Data Led Leverage strong from Europe and Australia to North America approach to Standardization and Design & • Resource agility and Automation optimization through global • Leve
Slide 58: Asset and Mobility Management
Key growth opportunity 3 Improving our business through: Key differentiators: Leveraging our viable digital • Strong track record with Becoming a solutions: government clients global leader in • Bridge Health • GEC capabilities • Intelligence products • Intelligence-Mobility Asset and • Digital twin
Slide 59: Data driven asset management
Key growth opportunity 3 Arcadis case study: Data driven Arcadis Global leader asset in Asset and management Mobility Management Through the use of Digital Twin applications, we can more efficiently manage traffic flow through the tunnel, better maintain the structure and closely monitor air and env
Slide 60: Intelligence
Intelligence Our new GBA fuses human creativity with digital intelligence, allowing us to provide direct-to-market data services and digital products, delivering innovation to clients worldwide. Client offering Smart Asset & Digital Intelligent Building Analytics Transportation Operations Technologi
Slide 61: Intelligence to capitalize on GBA collaboration and key clients
Intelligence to capitalize on GBA collaboration and key clients UK & Ireland North America 19% TOTAL NET REVENUE 73% TOTAL NET REVENUE Smart Asset Digital Intelligent & Building Transportation Operations Smart Asset Digital Intelligent Analytics Technologies & Building Transportation Operations Anal
Slide 62: Bringing together GBA expertise with advisory analytics and technology
Bringing together strong GBA expertise and client reach with advisory analytics and technology Resilience | Places | Mobility Suite of products • Domain expertise Enterprise Decision Analytics • Strong global market positioning • Strong Key Client program. Enterprise Asset Management Tolling Platfor
Slide 63: Intelligence well positioned for growth
Intelligence well positioned for growth Client offering Market drivers Key growth opportunities Global market in IoT for Smart Cities Enterprise Enterprise Decision Asset Smart Asset & $310Bn Analytics Management Building Analytics by 2026 Intelligent Transportation Systems market to reach Digital T
Slide 64: Enterprise Decision Analytics
Key growth opportunity 1 Improving our business through: Key differentiators: • Growth into real estate • Strong reputation with Enterprise portfolios with Places large US and UK transportation and • Grow water utilities clients Decision together with Resilience’s utilities clients Water Optimizatio
Slide 65: Enterprise Decision Analytics: Infrastructure Ontario
Arcadis EDA product for: Key growth opportunity 1 Deep Enterprise understanding, Arcadis total asset Decision Analytics portfolio performance In preparation of an asset portfolio expansion, we are supporting Infrastructure Ontario in collecting condition- assessment data across its entire portfolio
Slide 66: Travel-IQ
Key growth opportunity 2 Improving our business through: Key differentiators: • Leverage deep market • Real-time information Travel-IQ access through Arcadis Mobility client directly provided by the Depts. of Transportation Expand and grow relationships. • Sophisticated congestion, incident, roadwor
Slide 67: Intelligence of the future
Intelligence of the future 36,000 people strong Our journey • Significant growth to be Enterprise Decision & Asset Analytics captured across GBAs • One Arcadis go-to market Tolling Platform • Further strengthen product portfolio Application / use cases Clear approach to portfolio development • Devel
Slide 68: Financial framework and capital allocation
PART 6 Financial framework and capital allocation Virginie Duperat-Vergne CFO 68
Slide 69: Strong organic topline growth delivered
Strong organic topline growth delivered • Success of Key Client program • Implementation of GBA structure • Repositioning of portfolio • Revenue synergies Net Revenues Order intake from acquisitions and organic growth • Solid client demand in key € billions, % € billions end markets. Organic Net Rev
Slide 70: Well positioned for continued mid-high single digit organic growth
Well positioned for continued mid–high single • Strong tailwinds • GBA cross sell potential digit organic growth • Growth accelerators: − Energy Transition and Net Revenues Sustainable Operations € billions, % − Smart Sustainable Buildings − New Mobility Mid – High Single Digit Achieved Organic €2.8
Slide 71: Consistent margin improvement to meet strategic target
Consistent margin improvement to meet • Successful roll out of our strategic initiatives: strategic target − Increased contribution from Global Excellence Centres Operating EBITA Margin Development − Reduction of voluntary attrition % − Office footprint reduced by 35%1) − Repositioning of Places, in
Slide 72: Using our strategic priorities to create margin levers
Using our strategic priorities to create margin levers Operating EBITA margin % 12.5% 10.1% 2023 Q3 Organic Sustainable Digital + Powered by 2026 YtD Growth Project Human our people Choices Innovation 72
Slide 73: Margin levers: Organic Growth
Organic Growth Using our strategic priorities • Full implementation of Arcadis to create margin levers IBI and Arcadis DPS synergies • Finalise unwind of Middle East activities Operating EBITA margin • Operating leverage from organic growth. % 12.5% 10.1% 2023 Q3 Organic Sustainable Digital + Powere
Slide 74: Margin levers: Sustainable Project Choices
Sustainable Project Choices Using our strategic priorities • Deliberate bidding choices to create margin levers reflecting our values and economic criteria • Increasing robustness of our project selection process Operating EBITA margin • Key Client Program 2.0 % − Larger projects − Repeat opportunit
Slide 75: Margin levers: Digital + Human Innovation
Digital + Human Innovation Using our strategic priorities • Increased contribution of to create margin levers Intelligence: − Partly offset by investment in products and scaling of organization Operating EBITA margin • Standardization & Automation: % − Automation of pursuit process − Use of bots, AI
Slide 76: Margin levers: Powered by our people
Powered by our people Using our strategic priorities • Driving workforce efficiency to create margin levers through: − Resource planning − Skill Powered Organization Operating EBITA margin • Double contribution of Global % Excellence Centers in client delivery1): − Exploring options for new Global E
Slide 77: Strong cash generation used to return capital and invest in growth
Strong cash generation used to return capital to shareholders • Strong cash flow generation: - 65% cash conversion on EBITA and invest in inorganic growth on back of strong cash collection - DRO improved from 82 to 68 Cash flow from operations (€ million) days • Returned €291 million to shareholders
Slide 78: Balanced capital allocation framework
Balanced capital allocation framework • Dividend payout of 30 – 40% of Net Return to shareholders Income from Operations • Additional returns when appropriate. Free • Leverage target range of Cash Further strengthening 1.5 – 2.5x Net Debt / Operating EBITDA ` balance sheet • Retain Investment Grade
Slide 79: Our Targets for 2026
Our Targets for 2026 Financial Non-financial Targets Targets Organic Net Revenue Growth Net Zero objective Strategic Focus Areas Mid – High Single Digit Scope 1 and 2 reduction of over the cycle 70% GHG emissions by 2026 Sustainable project choices Operating EBITA Margin Net Zero objective 12.5% in
Slide 80: Glossary
Glossary • Organic Net Revenue growth: • Return on net working capital: Underlying growth excludes impact of FX, Operating EBITA / Net Working Capital: acquisitions, winddowns or divestments 40-50%, result is average over 2021-2022 • Operating EBITA: • Net debt / EBITDA Excludes acquisition, restruc
Slide 81: Arcadis. Improving quality of life.
Arcadis. Improving quality of life.