results third quarter 2006 harrie noy, ceo analyst conference call, november 15, 2006...
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Results Third Quarter 2006Harrie Noy, CEO Analyst Conference Call, November 15, 2006
Infrastructure, environment, facilities
Excellent third quarter 2006
Gross revenue 32% higher, strong organic growth at 12%
Net income from operations 63% higher
Strong results across the board, geographic and per service area
Expected increase net income from operations raised to 40 to 45%
Margin considerably higher at 9.6% compared to 8.0% last year
Target margin increased to 10% (was 8%)
ARCADIS is now operating higher in the value chain
Gross revenue
Ebita
Ebita recurring
Net income
Net income per share 2)
Net income from operations1)
Ditto per share 1,2)
1) Before amortization and non-operational items
2) In 2006 based on 20.2 million shares outstanding (2005: 20.2 million)
2006
311
19.6
19.6
10.7
0.53
12.3
0.61
2005
236
13.1
13.1
6.3
0.31
7.5
0.37
_ _
32%
50%
50%
70%
70%
63%
63%
Income third quarter 2006: € 12.3 million
Gross revenue
Ebita
Ebita recurring
Net income
Net income per share 2)
Net income from operations 1)
Ditto per share 1,2)
1) Before amortization and non-operational items
2) In 2006 based on 20.2 million shares outstanding (2005: 20.2 million)
2006
892
54.9
54.9
30.3
1.50
33.5
1.65
2005
692
38.5
36.4
20.8
1.03
20.8
1.02
_ _
29%
43%
51%
46%
46%
61%
61%
Income first nine months 2006: € 33.5 million
Main developmentsFigures refer to first nine months 2006
Strong organic growth in the Netherlands: >10%– Considerable contribution from facility management contract DSM/Sabic
– Significant investment in rail infrastructure renewal/maintenance
– More PPP initiatives; outsourcing by Ministry Public Works
– Strong demand for project management and cost consultancy
Continued growth in the U.S. and Brazil– Organically in U.S. 12%; in Brazil >20%
Strong contributions from recent acquisitions– Especially BBL (U.S.) and AYH (U.K.)
After delays, start up of major infrastructure projects in Poland
Integration of BBL is progressing well
0%
5%
10%
15%
20%
25%
30%
2004 2005 Q1 2006 Q2 2006 Q3 2006 Q3 YTD2006
Organic
Acquisitions
Total (excl.Currency effect)
Currency -3% +1% 5% 1% -1% 2%
Selling prices +1% -0% 0% 0% 0% 0%
Growth accelerates
33%
Considerable growth of EbitaFirst nine months 51% on recurring basis
0 5 10 15 20 25 30 35 40 45 50 55 60
EBITA 9M 2006
Organic
Acquisitions/divestments
Currency
Recurring EBITA 9M2005
Non-recurring
EBITA 9M 2005
In € million
35%
2%
14%
38.5
54.9
36.4
Organic increase mainly from U.S., Brazil and Netherlands
Acquisitions to strengthen portfolio
Acquisitions 2006
• Environment NL
• Water Germany
• Management services UK
• Environment Belgium
• Walloon Belgium
• Management services US
Total
In Situ Technieken
Dresdner Grundwasser
Berkeley Consulting
Ecolas
BCT
PinnacleOne
Staff
10
20
100
60
65
230
485
GR in €
1.5
1.5
10
6
6
28
53
Cons. from
1.4.06
1.7.06
1.8.06
1.10.06
1.10.06
1.11.06
The service areas InfrastructureEnvironment Facilities
Strong organic growth in all service areasFigures relate to first nine months 2006; (..) = organic growth
Facilities +29% (+17%)
0
100
200
300
400
2003 2004 2005 2006
Infrastructure +5% (+8%)
0
100
200
300
400
2003 2004 2005 2006
Environment +77% (+8%)
0
100
200
300
400
2003 2004 2005 2006
Infrastructure45%
Facilities17%
Environment38%
• Organic growth strong at 8%• In Q3 accelerated growth in Netherlands and U.S. • Higher investment levels in Dutch market: rail, PPP, highways • U.S.: decline land development compensated by transportation
and water markets• Continued growth in Brazil: mining and energy
Infrastructure +5% (+8%)
Rail renewal market strong
• Overall revenue growth mainly coming from acquisitions (BBL)• Main contribution to organic growth of 8% from U.S. (GRiP®)• Softening in Q3 due to Poland and less subcontracting in U.S. • Good synergy from BBL & Greystone, inside + outside U.S.• U.K. and Netherlands strongest growth in Europe
Environment +77% (+8%)
GRiP® continues growth
ARCADIS Worldwide Project Consulting launched
• Facility management DSM/Sabic drives organic increase• Organic growth net revenue at 8%• Acquisition AYH strong growth contributor• Good demand for project management in NL, U.K. and Germany • Higher activity level in Belgium and France
Facilities +29% (+17%)
New Margin Targets
Target margin was exceeded in 2005: 8.2%
In 2000 margin target set at 8%
Strong margin improvement 2000-2005
From 6.0% to 8.2%, almost 40%
Portfolio changes & focus added value: structurally higher margin
So: evaluation of margins
Internal and external benchmarking
Improved consistency of margin calculation
Margin definition is unchanged (Ebita as a % of net revenue)
New margin target for ARCADIS set at 10%
Targets per service area Adjusted Margin target
margin 2005
Infrastructure 7.1% 8% - 9%
Environment 11.0% 12% - 13%
Facilities 7.0% 10% - 11%
Total 8.2% 10%
When portfolio changes, margins to be reviewed again
Focus remains on productivity improvements and higher value added
Reaching targets also depends on market conditions
Outlook
Outlook per service area
Infrastructure• Economic growth creates room for project funding • More PPP initiatives attract private sector investment• Demand for flood protection work is increasing
Environment • Growing interest in environment and sustainability• Synergy with BBL offers opportunities with multinationals • GRiP® continues to drive growth
Facilities• Economic growth drives project management demand• Facility management benefits from outsourcing trend• AWwPC launched for international real estate investors
Outlook for full year 2006 improved
ARCADIS is well positioned in markets that offer opportunity
Synergy contributes to growth
Integration BBL brought to conclusion in coming months
Integration BBL and SOX 404: approx. € 5 million out of pocket costs
Acquisition policy continued
Expected increase net income from operations raised to 40% to 45% (barring unforeseen circumstances)
ARCADIS is well on track
Thank you
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