Arcadis Second Quarter and Half Year Results 2023
Continued strong client demand and improved operational performance
SECOND QUARTER RESULTS:
* Record net revenue of EUR945 million, with strong organic growth of 9.0%(1))

  * Improved operating EBITA margin(2)) of 9.8% (Q2'22: 9.3%)
  * Integration of Arcadis IBI and Arcadis DPS on track, revenue and cost
    synergies materializing
  * Order intake of EUR976 million resulted in record net backlog of EUR3.2 billion.
    Organic backlog growth at 1.1% quarter-to-date (Q2'22: -0.9%)
  * Successfully placed EUR225 million sustainability linked Schuldschein,
    concluding refinancing
  * Free Cash Flow of EUR-26 million (Q2'22: EUR41m), Net Working Capital % of
    12.4%, (Q2'22: 13.3%)
  * On track to achieve strategic targets set for 2021-2023

Amsterdam, 27 July 2023 - Arcadis, the leading global Design & Consultancy
organization for natural and built assets, sees continued growing client demand
across all of its Global Business Areas, resulting in record Q2 Net Revenue of
EUR945 million with an organic growth of 9.0% and improved operating EBITA margin
of 9.8% (Q2'22: 9.3%).
Alan Brookes, CEO Arcadis, said: "Arcadis delivered another strong quarter
driven by high client demand particularly in industrial manufacturing,
environmental remediation, and innovative mobility solutions. The integration of
Arcadis IBI and Arcadis DPS is progressing well and will be finalized before
year end, with significant project wins from our combined complementary
expertise. Cost synergies are also expected to exceed our initial expectations.
The company's focus on digital innovation and operational discipline has led to
significant order intake and opportunities to further scale and standardize
ensuring we remain on track to meet our 2021 - 2023 strategic targets by the end
of this year. In my first two months as CEO, I have remained close to the
business and strengthened my executive leadership team by bringing in the GBA
leads. The need for sustainable and digitally enabled solutions remains high on
our clients' agenda, and I am convinced that with the talent and expertise
within the organization, we are well positioned to capitalize on these future
growth opportunities."
KEY FIGURES

 in EUR millions                           Half Year         Second quarter
 Period ended 30 June 2023           2023  2022  change   2023 2022 change

-------------------------------------------------------- -----------------
Net revenues 1,886 1,418 33% 945 729 30%
-------------------------------------------------------- -----------------
Organic growth (%)(1)) 10.6% 9.0%
-------------------------------------------------------- -----------------
Operating EBITDA(2)) 241 183 31% 120 94 27%
-------------------------------------------------------- -----------------
Operating EBITA(2)) 185 133 40% 93 68 36%
-------------------------------------------------------- -----------------
Operating EBITA margin (%) 9.8% 9.3% 9.8% 9.3%
-------------------------------------------------------- -----------------
Net Income 80 86 -8% 38 44 -13%
-------------------------------------------------------- -----------------
NIfO per share(3)) 1.15 1.04 10%
-------------------------------------------------------- -----------------
Net Working Capital (%) 12.4% 13.3%
-------------------------------------------------------- -----------------
Free Cash Flow -134 -10 -26 41
-------------------------------------------------------- -----------------
Net Debt 1,186 283 319%
-------------------------------------------------------- -----------------
Order intake 2,039 1,500 36% 976 716 36%
-------------------------------------------------------- -----------------
Backlog net revenues 3,249 2,331 39%
--------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 5.0% 3.6%
--------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 1.1% -0.9%
--------------------------------------------------------
Voluntary employee turnover(4)) 12.6% 15.9%
--------------------------------------------------------
(1) )Underlying growth excl. impact of FX, acquisitions, footprint reductions
(e.g. Middle East), winddowns or divestments
(2) )Excluding restructuring, integration, acquisition & divestment costs
(3) )Net income before non-recurring items (e.g. valuation changes of
acquisition-related provisions, acquisition & divestment costs, expected credit
loss on shareholder loans and corporate guarantees and one-off pension costs)
(4) )Voluntary turnover excludes Middle East as these operations are being wound
down
REVIEW OF THE SECOND QUARTER 2023
Net revenues totaled EUR945 million, increasing organically by 9.0%, driven by all
Global Business Areas (GBAs). Growth was particularly strong in America and UK &
Ireland, with Continental Europe and Australia also contributing, slightly
offset by a decline in the Greater China region, as a result of a continued
challenging business environment. A -2.6% currency impact was driven by a
weakening US and Canadian Dollar against the Euro. Operating EBITA improved to
9.8% (Q2'22: 9.3%).
Order intake increased by 36% year on year to EUR976 million, outperforming total
revenue growth of 30% and resulting in a Book to Bill of 1.03. The net revenue
organic backlog growth was 1.1% quarter to date, in line with the seasonal
pattern and well above last year's -0.9%.
REVIEW OF THE HALF YEAR 2023
Net revenues totaled EUR1,886 million, increasing organically by 10.6% (currency
impact -1.1%), driven by all GBAs. Non-operating costs were EUR16 million, driven
by restructuring costs from the wind-down of Middle East operations, integration
costs and the impact of a non-cash liquidation of assets sold last year. The
operating EBITA margin increased to 9.8% (HY'22: 9.3%) driven by a step up in
Resilience and Places. The effective income tax rate of 35% (HY'22: 28%) was
impacted by non-deductible items and de-recognition of deferred tax assets. The
weighted average annual income tax rate for the full financial year is expected
to be between 28% and 30%. Net finance expenses were EUR27 million (HY'22: EUR6
million), driven by a higher debt position. Net Income from Operations increased
by 11% to EUR103 million (HY'22: EUR93 million), or EUR1.15 per share (HY'22: EUR1.04),
driven by higher revenues.
Order intake increased by 36% year on year to a record level of EUR2,039 million,
outperforming total revenue growth of 33% and resulting in a Book to Bill of
1.08. The net revenue organic backlog growth of 5.0% year to date, is in line
with the seasonal pattern and well above last year's 3.6%.
OPERATIONAL HIGHLIGHTS
RESILIENCE
(36% of net revenues)

 in EUR millions                           Half Year         Second quarter
 Period ended 30 June 2023           2023  2022  change   2023  2022 change

-------------------------------------------------------- ------------------
Net revenues 678 589 15% 346 308 13%
-------------------------------------------------------- ------------------
Organic growth(1)) 12.6% 11.4%
-------------------------------------------------------- ------------------
Operating EBITA 76 60 27%
-------------------------------------------------------- ------------------
Operating EBITA margin (%)(2)) 11.2% 10.1%
-------------------------------------------------------- ------------------
Order intake 779 628 24% 356 290 23%
-------------------------------------------------------- ------------------
Net revenues in backlog 999 842 19%
--------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 10.9% 4.5%
--------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 0.8% -2.4%
--------------------------------------------------------
Resilience showed solid revenue and backlog growth driven by public and private
clients in all large markets. Strong client demand, especially in environmental
restoration, water optimization and energy transition, continued to drive a very
solid pipeline of opportunities. Our digital innovation and product offering
coupled with our focus on sustainability continued to differentiate Arcadis in
the market. A solid operating margin for the half year was driven by good
performance in North America. We continued to invest in digital products and
partnerships to tap the wide range of opportunities in the growing markets, such
as water optimization.
PLACES
(40% of net revenues)

 in EUR millions                           Half Year         Second quarter
 Period ended 30 June 2023           2023  2022  change   2023 2022 change

-------------------------------------------------------- -----------------
Net revenues 760 463 64% 372 235 58%
-------------------------------------------------------- -----------------
Organic growth (%)(1)) 5.0% 2.7%
-------------------------------------------------------- -----------------
Operating EBITA 70 41 69%
-------------------------------------------------------- -----------------
Operating EBITA margin (%)(2)) 9.2% 8.9%
-------------------------------------------------------- -----------------
Order intake 792 502 58% 385 243 59%
-------------------------------------------------------- -----------------
Net revenues in backlog 1,574 968 63%
--------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 2.2% 3.6%
--------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 0.9% -0.1%
--------------------------------------------------------
Good revenue and backlog growth in Places was driven by North America, UK and
Continental Europe, while we increased selectivity in project intake at Arcadis
DPS, and continued to refocus towards project, rather than cost, management in
China. Industrial manufacturing onshoring clients were supported from
construction through to the production phase, providing support in navigating
the complexities when planning, processes, people and plants come together. In
order to address the increased client demand for creating Net Zero Facilities
and Sustainable Communities, we engaged in ecosystem partnership opportunities,
especially on energy optimization. Margin improvement was driven by strong
performance of Arcadis IBI in North America and Industrial Manufacturing
performance in Continental Europe, while slightly hampered by the Middle East
performance. When excluding Middle East, Operating margin would have been 9.9%
for the first half year.
MOBILITY
(22% of net revenues)

 in EUR millions                           Half Year        Second quarter
 Period ended 30 June 2023           2023  2022 change   2023  2022 change

------------------------------------------------------- ------------------
Net revenues 403 366 10% 204 187 9%
------------------------------------------------------- ------------------
Organic growth(1)) 13.5% 11.3%
------------------------------------------------------- ------------------
Operating EBITA 38 35 9%
------------------------------------------------------- ------------------
Operating EBITA margin (%)(2)) 9.4% 9.5%
------------------------------------------------------- ------------------
Order intake 423 370 14% 212 183 16%
------------------------------------------------------- ------------------
Net revenues in backlog 560 521 7%
-------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 3.9% 2.0%
-------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 2.1% 0.3%
-------------------------------------------------------
Revenue growth continued to be very strong driven by North America, UK and
Continental Europe. Highways and Rail clients increasingly looked for data-
driven solutions as the infrastructure market was marked by growing innovation
and complexity. The demand for New Mobility services accelerated as clients
benefitted from federal funding, especially in North America and Australia. GBA
cross-selling and revenue synergies materialized. The margin was strong in North
America, Continental Europe and Australia, while the year-on-year margin decline
was driven by losses related to the winding down of activities in the Middle
East. When excluding Middle East, Operating margin would have been 10.3% for the
first half year.
INTELLIGENCE

  (2% of net revenues)
  in EUR millions                         Half Year   Q2
  Period ended 30 June 2023                  2023

-------------------------------------------------------
Net revenues 45 23
-------------------------------------------------------
Operating EBITA 4
-------------------------------------------------------
Operating EBITA margin (%)(2)) 9.6%
-------------------------------------------------------
Order intake (millions) 45 23
-------------------------------------------------------
Net revenues in backlog (millions) 115
-------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 0.2%
-------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 0.2%
-------------------------------------------------------
Good revenue growth was complemented by new order intake from large, key
clients, mostly in North America and the UK. Mature software products in traffic
and travel management, such as TravelIQ combined with emerging transit software
products CurbIQ and HotSpot resulted in good revenues from key clients in major
US cities. Enterprise Decision Analytics products drove synergy wins in
combination with existing GBA's for port authorities, urban utilities and other
infrastructure sectors. Our priority remained investing in product development,
integration and organizational set-up. This resulted in an improved margin of
9.6% versus 2022 year-end of 9.1%.
BALANCE SHEET & CASH FLOW
Net working capital as a percentage of annualized gross revenues improved
to 12.4% (Q2 2022: 13.3%) and Days Sales Outstanding (DSO) was 66 days (Q2
2022: 69 days), as a result of disciplined working capital management - both
well within the strategic targets set for 2021-2023. A EUR225 million
sustainability linked Schuldschein loan was successfully placed in July,
completing the refinancing process of the bridge loan. Net debt increased to
EUR1,186 million, leading to a Net Debt / Pro Forma Operating EBITDA ratio of
2.4x and for full year within the strategic target range of 1.5-2.5x. Free cash
flow was EUR-134 million for the first half year (Q2'22: EUR-10 million), in line
with seasonality, and impacted by a EUR-74 million cash out related to a change in
US tax law. The Free Cash Flow in the second quarter of EUR-26 million, was fully
in line with last year's EUR41 million, excluding this tax cash out.
INTEGRATION ON TRACK WITH COST SYNERGIES IDENTIFIED AND ACTIONED
The Integration of Arcadis IBI and Arcadis DPS is on track with both cost and
revenue synergies wins materializing. EUR20 million in cost synergies have already
been identified, exceeding our initial target of EUR18 million, to be delivered by
end 2024. We expect to deliver EUR4 million by the end of 2023 to be generated
through the integration and rationalisation in workplace; IT integration and
platform improvements within technology; as well as the rationalisation of
overheads, insurance and support driving operational synergies.
MATERIAL EVENTS
Schuldschein loan
Arcadis successfully placed a EUR225 million sustainability linked Schuldschein
loan to be used towards repaying the outstanding bridge loan of 2022. The
facility has a maturity of three years with two tranches: EUR40 million at a fixed
interest rate of 5.1% and EUR185 million at a floating interest rate at six-month
Euribor with a margin of 135bps. p.a. Refinancing process of the bridge loan,
initially placed at EUR750 million for the acquisitions of Arcadis IBI and Arcadis
DPS, is therefore completed, following the successful issuance of an inaugural
Eurobond of EUR500 million in February 2023.
Change in US Tax and Jobs Act Section 174
In 2022, the US Tax Cuts and Jobs Act of 2017 eliminated the option to deduct
expense research and development expenditures immediately in the year incurred
and requires taxpayers to amortize such expenditures over five years for tax
purposes. Total cash out in full year 2023 will approximately be EUR97 million.
DETAILED FINANCIAL TABLES

 in EUR millions                             Half Year          Second quarter
 Period ended 30 June 2023             2023  2022  change   2023  2022  change

---------------------------------------------------------- -------------------
Gross revenues 2,477 1,847 34% 1,260 968 30%
---------------------------------------------------------- -------------------
Net revenues 1,886 1,418 33% 945 729 30%
---------------------------------------------------------- -------------------
Organic growth (%)(1)) 10.6% 9.0%
---------------------------------------------------------- -------------------
Operating EBITDA(2)) 241 183 31% 120 94 27%
---------------------------------------------------------- -------------------
Operating EBITDA margin (%) 12.8% 12.9% 12.7% 12.9%
---------------------------------------------------------- -------------------
EBITA 169 130 29% 82 65 26%
---------------------------------------------------------- -------------------
EBITA margin (%) 8.9% 9.2% 8.7% 8.9%
---------------------------------------------------------- -------------------
Operating EBITA(2)) 185 133 40% 93 68 36%
---------------------------------------------------------- -------------------
Operating EBITA margin (%) 9.8% 9.3% 9.8% 9.3%
---------------------------------------------------------- -------------------
Net Income 80 86 -8% 38 44 -13%
---------------------------------------------------------- -------------------
Net Income from Operations (NIfO)(3)) 103 93 11% 53 47 12%
---------------------------------------------------------- -------------------
NIfO per share 1.15 1.04 10%
---------------------------------------------------------- -------------------
Avg. number of shares (millions) 89.7 89.2 1% 89.8 89.2 1%
---------------------------------------------------------- -------------------
Net Working Capital (%) 12.4% 13.3%
---------------------------------------------------------- -------------------
Days Sales Outstanding (days) 66 69
---------------------------------------------------------- -------------------
Free Cash Flow -134 -10 -26 41 -164%
---------------------------------------------------------- -------------------
Net Debt 1,186 283 319%
---------------------------------------------------------- -------------------
Order intake 2,039 1,500 36% 976 716 36%
---------------------------------------------------------- -------------------
Backlog net revenues 3,249 2,331 39%
----------------------------------------------------------
Backlog organic growth (%, ytd)(1)) 5.0% 3.6%
----------------------------------------------------------
Backlog organic growth (%, qtd)(1)) 1.1% -0.9%
----------------------------------------------------------
Voluntary employee turnover(4)) 12.6% 15.9%
----------------------------------------------------------
FINANCIAL CALENDAR

  * 16 October 2023, 2023 Q3 Trading Update
  * 16 November 2023, Capital Markets Day
  * 22 February 2024, 2023 Q4 & Full Year Results

ARCADIS INVESTOR RELATIONS
Christine Disch | +31 6 15376020 | christine.disch@arcadis.com
(mailto:christine.disch@arcadis.com)
ARCADIS CORPORATE COMMUNICATIONS
Tanno Massar | +31 6 11589121 | tanno.massar@arcadis.com (mailto:tanno.massar@arcadis.com)
ANALYST WEBCAST
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ABOUT ARCADIS
Arcadis is a leading global Design & Consultancy organization 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 36,000 people, active in
over 70 countries that generate EUR4.0 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 (http://www.arcadis.com).
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