Arcadis Stock

Ladies and gentlemen, thank you for standing by. I am Gillie, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the second quarter and first half 2026 results.

At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed.

Thank you, Gilie. Good day, everyone, and welcome to our Half Year and Second Quarter 2026 Results Conference Call. My name is Christine Disch, and I'm the Investor Relations Director here at Arcadis. With me on this call our CEO, Heather Polinsky; and our CFO, Simon Crowe.

We would like to start with the presentation. And as usual, this will be followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements, which were made in the press release. Please note that the risks to these statements are described on the press release itself and on the company's website.

Now let's start. Please, over to you, Heather.

Thank you, Christine, and hello, everyone. Welcome to our half year and second quarter 2026 results. You will have seen our results, medium-term guidance and rejection of the WSP proposal this morning. I will focus on our half year results and second quarter results in this presentation as well as our medium-term guidance, and we are happy to take questions on those.

As it relates to the rejection, we have elaborated on our Board's reasoning in our press release, and there is nothing more to say. So turning to the momentum we are creating through our results. We have delivered strong quarter results. The actions we have taken to improve performance together with our strategic investments are increasingly reflected in our results. We are seeing growth accelerate, order intake strengthen and margin improvement continue.

Given this progress and the momentum across the business, we have upgraded our 2026 growth outlook. We are also pleased to provide our midterm guidance and introduce our 2027 to 2029 strategy, setting out the next phase of value creation and growth for Arcadis, I'll take you through this shortly. But first, let me turn to the Q2 results. We are executing our strategic priorities at pace and seeing tangible results across the business. Net order intake increased 13.5% year-on-year, reflecting our renewed sales focus, capitalizing on strong client demand and accelerating growth momentum compared to Q1.

Margin improved year-on-year, driven by disciplined performance actions and a shift in business mix, while we continue to invest in the capabilities needed to deliver sustainable, profitable growth. Our strategy is gaining traction. We are winning where clients need us most and delivering with greater speed, consistency and impact, enabling us to create better outcomes and greater values for our clients and as a result, our shareholders.

Our first half results have been supported by sustained momentum that we built throughout Q2. Margin performance slightly improved to [ 11.2 ], reflecting the benefit of our operational focus while we continue to invest in growth and strategic priorities. Order intake is up more than 10% and resulting in record high backlog. We're proud to show green areas across the board. Our backlog also gives us confidence in our future trajectory. Our strong employee engagement and talent metrics further reinforce our confidence in the ability to execute and deliver on our strategy.

At Arcadis, our success comes through the knowledge, innovative spirit and passion of our people. It is critical we bring our people with us and we are proud to recognize that we score in the top 10% of professional services firms on employee satisfaction. As I said at the full year and Q1, we've only just begun. We are fully committed to unlocking further value and driving improved performance in the periods ahead.

Now let's take a closer look at our business areas. Resilience continues to be a strong star performer with sustained momentum in H1. There was notable strength in water in the U.S., where the business grew 15% year-on-year in the first half with record-breaking backlog. While we are also amping up our AMP programs in the U.K. Our German business delivered exceptional performance, double-digit year-on-year growth driven by large multiyear energy grid, biogas pipelines and substation projects with tenant Amprion and Gasunie.

In environmental restoration, order intake is improving across our geographies with key wins with large energy, mining and chemical companies. Now turning to places. There was some momentum improvement in the quarter, demonstrating progress against our strategic priorities. Data centers in U.S. Pharma continued to perform strongly, and we are reversing the decline in places with a strong book-to-bill.

We continue to expand our leading data center position in Europe with new hyperscaler wins. And as have we shared over the last 6 months, we are reshaping our Property and Investments business towards higher growth opportunities. This enables us to strengthen our portfolio and redeploy architectural resources to areas of sustained client demand, including transit, mission-critical facilities and workplace solutions. I'll return to how these actions support our longer-term growth strategy later in the presentation.

Mobility delivered sustained performance in the first half, supported by continued strength in rail and highways across Canada, the U.S., Germany and the Netherlands. In the U.K., we are seeing encouraging progress with improved order intake including a EUR 90 million commission for design and program management services for the new HS2 Washwood Heath Depot, helping us to offset the wind down of other large projects. major infrastructure programs remain critical to our strategy, and we continue to leverage our global expertise to secure important new wins.

A clear example is our appointment as the lead designer for Roberts Bank Terminal 2 in Vancouver. The win demonstrates the strength of our global expertise, bringing together teams from Canada and the Netherlands and building on decades of experience delivering complex port infrastructure around the world. We are encouraged by the strength of our pipeline in Germany and North America, which together with our backlog supports our confidence in stronger growth momentum in the second half.

As you've heard today, we are seeing the benefits of our management actions. Most importantly, we are seeing the impact in our order intake. Clients are increasingly choosing Arcadis for critical programs where our sector expertise integrated capabilities and innovation make a difference. Reflecting this progress and continued momentum, we are upgrading our 2026 growth outlook to low single digit while reaffirming our margin outlook of 11.7% to 12%.

Over to Simon for more details about the second quarter.

Thank you, Heather. Good morning and afternoon to you all. As you've just heard, we've achieved a strong first half with a step-up in growth margin, good cash collection and a very strong order intake. I'm pleased with the progress we're making this year. When we last spoke, we told you that we were focused on building a strong performance culture growing the sales capability and growing the top line. That started to come through with a growth acceleration. It's early days, but the momentum is there and the backlog is growing.

We continue to invest in growth through targeted recruitment and increased business development. It's about putting the client and our talented people at the center of everything we do. We are also continuing to cut nonbillable costs, tightly control what we spend and drive the high-performing teams to expand our margin. We have a laser focus on cash collection, and we've learned from the past, we are making growth margin expansion and cash collection, the rallying call for all Arcadians as we continue to deliver great work for great clients in a strong market.

As you will hear from Heather later, we've been really busy over the last few months, resetting our strategy, and I'm very excited that she's going to share some of the details today. This is key to rightsizing the cost base that is well underway and we're making good progress in cutting out unnecessary expenditure.

Everything that I've been talking to you about since my first earnings call at the back end of last year is starting to show signs of positive progress. We still have a long way to go, but we've recruited some great people, reorganized ourselves to differentiate Arcadis and focus on our growth sectors and services and simplified the way we work to ensure we get the margin accretion. Our teams are responding really well, and there is a palpable buzz in the air. We have upgraded our '26 growth guidance while maintaining our margin guidance as we continue to invest for growth.

I'll now expand on selected key highlights of our Q2 '26 and half 1 '26 performance. Order intake was strong for the quarter and has developed positively over the half year, with broad-based momentum across all business areas, supporting a 1.1x book-to-bill. Contributions from resilience in Germany and Brazil, mobility in the U.K. and Germany and data centers in places has helped us grow. The sales pipeline is healthy and continues to grow and is driven both by larger pursuits and project wins.

We're pivoting towards higher growth and higher value areas where we can differentiate and have a strong track record. Backlog represents a significant opportunity, and we're investing in our people, sales capacity and incentive programs needed to deliver it.

Turning now to resilience. We're very strong in resilience as evidenced by our Q2 performance, which was led by the U.S., Germany and Netherlands. We love this business and continue to invest and encourage our teams to excel in every way. We're increasingly focused on this market and concentrating our resources across key growth markets, where Arcadis has a strong track record, can deliver differentiated value and is a trusted adviser. Our clients are responding well.

Margin expansion reflects our progress in delivering our strategy with 90 basis points expansion year-on-year. Water remains particularly strong, driven by our leading position in the U.S. And we then [ unpaid ] and the U.K. finally ramping up as planned. delivering double-digit growth. Strong contributions are also seen from the energy transition in Germany and environmental restoration in Lat Am. Resilience is a business that is a key part of our strategy and is driving growth, margin expansion and good cash collection.

Turning now to places decline in net revenue is finally decelerating. The business is turning around. We've replaced the leadership and pivoted towards growth areas such as pharma and data centers. This is starting to slow the decline and ensure that we return to growth as soon as possible. Property and investment work continues to be a drag on places growth and margin performance and we're working hard to get back to growth and profitability by working on the attractive projects with the repositioning and rightsizing starting to kick in. A further 200 people left the business in Q2. Strong performance such as data centers are further stepping up growth.

Turning now to mobility. This delivered some growth while we were ramping up some major projects and working to convert our pipeline. Margin step-up was driven by pricing discipline, good margin on large infrastructure programs and GEC utilization, while partly being offset by the pursuit costs of major infrastructure opportunities in the U.S.

Order intake was strong, and our confidence in H2 is supported by pipeline and backlog. Some of the projects that we'll continue to deliver and step up in revenue H2, a Washwood Heath, Fraser River Tunnel, Torrance to Darlington and the Hudson tunnel.

Turning now to cash flow. Our half year cash flow was in line with seasonality, and we remain sharply focused on cash generation. Our working capital percentage as a percentage of annualized gross revenue came in at 12.2%, well below last year's 13.4%. We are confident on our trajectory as we move into the second half of the year.

On capital allocation, our framework remains consistent with previous cycles, focused on driving growth and investing in our key markets and delivering returns to our shareholders. First, we confirm our commitment to a dividend payout ratio of 30% to 40% of net income, complemented by additional shareholder returns where appropriate. Second, we will continue to strengthen our balance sheet, keeping our leverage within our target range of 1.5 to 2.5x and retaining our investment-grade credit rating. We are investing in our business, and we'll continue to pursue value-accretive M&A in line with our strategic priorities, while keeping CapEx spend light versus previous years.

That includes our recent acquisition of SATEL Iberia, which will strengthen our power infrastructure capabilities in one of Europe's fastest-growing markets. It also includes our investment in Nomic, an AI tool built specifically for engineering document workflows. Nomic will help us deliver better outcomes for our clients while further driving up our productivity. We'll continue to monitor and assess the opportunity for share buybacks.

Turning now to our margin levers and rightsizing measures that are supporting our objective to have an increasingly simple client-focused operating model. Rightsizing of people of under forming areas continues while investing in our key growth areas. Our cost-out program is progressing well, with corporate overhead reductions and operating expense reductions expected to contribute to 40 to 50 basis points margin uplift. Improved project margins through centralization, automation, and standardization in the GEC with the use of AI as well as strategic investments have also supported profitability. Taken together, these actions to continue to give us confidence in our ability to deliver the margin progression targeted to '26.

In summary, I'm pleased with the work we started at the end of last year. This is now starting to show in our results. we're just getting going, and I'm excited about the opportunities ahead for us to get closer to our clients, grow in our high-performing markets and move away from some of the less attractive areas. The strategy and work we have done makes it easier for us to do that, and I'm confident that our results will continue to come through. I'll now hand back to Heather to take you through the strategy update.

Thanks, Simon. Since the start of the year, I have been clear about where we're heading, focusing on growth markets, simplifying our business around our clients and building a high-performance culture that delivers stronger returns. We're making good progress. Our foundation is stronger. Momentum is building, and there is no reason to wait.

So let me take you through our strategy, the changes we're making and what they mean for the future growth and performance. We operate in a large changing market, underpinned by powerful trends, and we are tailoring our strategy to the trends we are seeing. From rapid investment in data centers and energy transition to urgent needs to modernize aging and inadequate infrastructure, demand for our expertise continues to grow. Clients are increasingly looking for trusted partners who can help them manage this complexity across the entire asset life cycle from planning and design through delivery, operation and renewal.

This is where Arcadis is uniquely positioned. In the last 6 months alone, my executive team and I have met with more than 80 clients. Their message has been clear. They value Arcadis for our technical expertise sector knowledge and ability to solve complex challenges. Increasingly, they are asking us to do more across more assets, programs and geographies. We see that as a strong endorsement of our strategy and a meaningful opportunity for future growth. Let me explain more.

Our strategy for 2027 to 2029 is built on 3 simple principles to drive profitable growth and lasting results. We are focusing on our strengths, reshaping our portfolio and investing in high-growth industries and sectors where we are best positioned to deliver for our clients. We are simplifying our model, including reducing management layers, overhead cost reduction through automation and back-office AI efficiencies, we are aligning our model to combine data, talent and the right delivery mechanisms to streamline how we work.

We are driving forward a performance culture, increasing commerciality and empowering our talent to own and deliver world-class outcomes. AI and digital underpin each of these pillars. Our investments are already helping us deliver greater client value, unlock the power of our local know-how and scale expertise across our global network to improve productivity. This is not just a future opportunity. It is something we are delivering today.

A great example is Nomic that Simon mentioned earlier. We aren't just talking about AI. For the last 6 months, we have been transforming knowledge gained through hundreds of projects into scalable data-driven insights on lump sum projects for our clients. We are confident that disciplined execution against these 3 strategic pillars supported by AI and digital will deliver profitable growth and lasting value for all of our clients, people and investors. We are bringing sharper discipline to our portfolio.

As we assessed our strengths, we have characterized our target industries into 3 distinct strategic buckets. One is core, and these are large, structurally growing low cyclicality markets where we already hold a leading position. Here, we will drive organic growth, implement select bolt-on M&A and expand our end-to-end services. Two, we'll accelerate. These are fast-growing sectors where we have a strong foothold.

Here, we will invest heavily in our people and brands, grow key global clients and increase our wallet share. The third bucket is optimized. These represent more cyclical businesses where we will participate selectively and only where we can do that profitably. Here, we will apply strict pricing hurdles maintain margin discipline and divert investment to higher-yield areas. Across all of our industries, our differentiation in environmental services is well recognized by our clients. scaling our environmental capabilities to meet client demand is where we will see and will remain a top priority for us.

To simplify how we work we are stepping away from our GBA model and organizing our business and focusing our people around end markets where our clients are to better align our organization with our clients' needs. These sectors will be structured within 4 industries: transportation, power and water, industrial manufacturing and tech and real estate and development. Transportation and power and water represent our largest industries where we have leading positions, and they are core strategic focuses for us.

Our accelerate efforts are on high-value sectors like digital infrastructure, data centers and semiconductor facilities. Life sciences and pharmaceuticals and general manufacturing. This is where we'll look to scale our position. Real estate and development fits into our optimized category, where we will follow a disciplined and selective pursuit of projects to ensure they meet our strict margin criteria. Across our 4 primary industries, our service offering will be centered around our clients.

We can provide a fully integrated offering. By managing the entire life cycle of an asset, we eliminate friction for our clients, drive higher-margin advisory work and secure long-term revenue streams. Our ability to offer end-to-end services as 1 integrated solution is what sets us apart. At the same time, we are being selective in where we offer these end-to-end solutions. Focusing on the sectors where we're best positioned to deliver for our clients.

Now turning to our people and driving a performance culture. We are embedding a more commercial performance-driven mindset across our people that is client-centric and entrepreneurial while also driving efficiencies. As you heard in our previous results, this is well underway. We have already conducted targeted leadership changes, strengthened our commercial discipline, and aligned our sales incentive with our priority clients, and this will continue. We are investing in our talent, sharpening our incentive structures around growth, margin and value. and resetting our talent strategy to attract and develop the next generation of Arcadians.

So why do our clients choose Arcadis? First, because experience matters. We bring a long heritage and deep expertise in some of the world's most complex sectors. When clients are making major investments, they want a partner who has done it before and can get it right. Second, because we are #1 globally in environmental services, it is not an add-on for us. Simply, environmental expertise is built into the way we work. Third, because the world is becoming more complex, not blast, clients need partners who can bring everything together and turn complexity into progress. That's where Arcadis is at its strongest. And finally, because we support clients across the entire asset life cycle from the earliest planning decisions to renewal and everything in between, We help clients maximize value at every stage rather than just solving for one moment in time. And crucially, all of this shows up in the numbers. 5% of our revenue comes from repeat clients. Very simply, our clients like us and they keep choosing Arcadis.

So let me hand it over to Simon to discuss our targets for '27 to '29.

Thanks, Heather. The combination of attractive market opportunities, the strength of our client relationships and the differentiated capabilities gives us confidence in the next phase of our strategy. For 2027 to 2029, we're targeting mid-single-digit organic net revenue growth, while also expanding profitability to our mid- to high teens operating EBITDA margin by 2029. To support that next stage of our evolution, we were also transitioning to operating EBITDA as our primary guidance metric from the first of January 2027.

Our mid-single-digit 2027 to 2029 organic growth outlook is underpinned by strategic prioritization to reshape our revenue mix around high-growth end markets. As Heather said, we're dropping the GBA from the first of January '27 and moving to 4 industries: power and water, transportation, industrial manufacturing and tech and real estate and development. This is how we will manage and report our financials going forward.

Our focus will result in us concentrating 85% of our revenues in the industries we've identified as core and accelerate by 2029 compared to 74% today. We're already seeing our targeted level of growth in our core and accelerate sectors. More focus will allow us to deliver this more consistently. As mentioned, we are reiterating our 2026 operating EBITDA margin guidance of 11.7% to 12%. This implies an operating EBITDA margin of 14.3% to 14.6%. By 2029, we expect to reach mid high teens operating EBITDA. This margin is underpinned by the 3 pillars of our strategy, focusing on our strengths, including reshaping the portfolio and driving operating leverage from growth as we can grow our top line faster than our overhead structure, simplifying our model around clients, including reducing management layers, overhead cost reduction through automation and back-office AI efficiencies and continuing to embed GECs into how we work to overall reduce the cost of delivery and raising the utilization rates. And thirdly, driving performance culture by aligning performance with incentives as well as investing in training as well as stimulating entrepreneurship and commercial acumen to drive growth and profits.

I'll now hand back to Heather just to wrap up.

Thanks, Simon. In conclusion, our H1 performance showcases the actions we are taking. We are focusing on our strengths, simplifying around our clients and driving a performance culture that is going to support our growth trajectory, and we are moving in the right direction. This gives us the confidence to upgrade our guidance for this year as well as present our medium-term financial objectives. We are staying focused on our strategy, focusing on what we can control and making strong progress in delivering on our top priorities.

And with that, I'll open it up for Q&A.

The first question is from the line of Martijn de Drijver with ABN AMRO.

Yes. Thank you, operator. Good afternoon, or good afternoon, Simon. My first question comes in 2 parts. If you'll allow me. What have you baked into your EBITDA margin guidance in the medium term? Because if I look at what WSP, Tetra Tech Stantec AECOM has for their current strategic period. It's roughly at 19%. If you take your midpoint, it's slightly lower. It's trailing that. Can you explain why that difference exists?

And my second part of the question is, you mentioned in the presentation that on 2026 on average, your EBITDA margin is 14.5%. If you exclude property and investments, it would already be 15%. Now is that included in that guidance? Is that portfolio management element also included in your guidance? That would be question one.

Great questions, Martijn. I'll start, and I'm sure Heather will -- listen, we're not limiting our ambition here. We've set out our strategy and our guidance today, but we're not limiting our ambition at all. we're reshaping the portfolio. We've got operating leverage. We've got greater selectivity. We're reducing management layers. We've got overhead cost reduction, AI efficiencies -- we've got our GECs. We've got higher utilization rates embedded in those targets. So there's a massive amount that we're doing, and we've been talking about this for months, and you and I have talked about it during the investor meeting.

So this is just a natural extension. We're not limiting ourselves to what we've put out today. But obviously, we're coming from a place that we are today. We've seen some momentum with Q2. We've got a lot of positives that we've talked about, great backlog, great order intake, but we are definitely not limiting ourselves.

And Simon, in addition to that, we are also investing for growth for the future, and that's a key component of reshaping our portfolio and really pivoting towards larger projects and larger pursuits. And hiring people to really help us in changing the overall culture of the organization. In addition to that, investments in automation and standardization as well as additional sales capacity and incentive programs are part of our investment strategy.

This back a short follow-up because you didn't answer the question about is portfolio management included in targets?

We are absolutely looking at that portfolio. and that's included in our targets as we go forward.

Okay. Great. And my second question is with regards to mobility. You had very strong order intake in Q1 that did not fully materialize in organic growth in Q2. Would it be fair to say that delay in mobilization of large projects, which will probably occur in H2 hampered your EBITA margin a little bit because of lower utilization of those people that are waiting for those projects to start. Is that the right way to think about it?

Yes, absolutely. We are ramping up on several projects, and you know that there's a great benefit with some of the larger projects because they create a much more stable backlog for us. But sometimes, they take a little bit of time to, one, be selected and two, to ramp up on. But we feel confident about H2, yes.

The next question is from the line of Luuk Van Beek with Degroof Petercam.

Yes. Well, first of all, a question about your upgraded organic growth target in combination with the stable margin target. If I listen well to your presentation, then the additional revenues are mainly in, say, high-value types of projects, and there should be some operational leverage. So you don't raise your margin target. Is that because you do additional investments in future growth? And if so, in what areas?

And my second question is about the target percentage for real estate and development. Is that purely organic? Or also include divestments because if it's purely organic, then you would need to continue to adjust your capacity over the coming years because it implies an absolute decrease in revenues. So can you comment on that?

Yes. Luuk, we are investing in growth. That's absolutely right. So our organic growth targets, we've raised those today for 2026. We're maintaining our margin guidance that we gave out, and we are investing in the business. And obviously, we're very pleased with the growth, and we'll continue to invest in the growth.

Yes, on P&I, look, we're looking at the portfolio. We're looking at where we should invest and where we should not invest as we've laid out in our strategy, we're looking to optimize. So we are very focused on turning that business around. You've seen some positive signs of that business turning around already. We've changed a lot of the team there. We focus the markets that we actually delivering, and we have exited some people there, and that's showing its results already.

And Simon, we're not waiting until 2027 to start implementing this focus. So in 2026, the investments that we're making are very much focused around the core and accelerate industries that we've talked about so far.

The next question is from the line of Natasha Brilliant with UBS.

My first question is just thinking about your midterm organic growth guidance. So you're now targeting single-digit growth, whereas previously, it was mid- to high single-digit growth. having talked about kind of the structural drivers and the market. My question is really how fast do you expect the relevant underlying markets to grow just to give us some context to your growth? And why have you moderated your target down slightly versus the last strategic cycle?

And then my second question, which is partly related to that is just to talk about the pricing environment. How have you thought about the evolution of pricing versus volume within your top line guidance? I know previously, you've talked about historic pricing, perhaps not being as competitive or not being competitive enough. So is that changing? And how should we think about sort of AI and how that might impact pricing as well? So 2 big questions, but it's 2-part.

Let me start with the first one on the organic growth. We aren't limiting our ambitions here, but we are recognizing that, 2 things, as you point out, we have a strong momentum. We have strong markets, and we are continuing to drive that growth. But we also want to be realistic of where we've been, where we're coming from, and we want to make sure that we achieve our growth targets within these areas. So what we're proposing has really been achieved in many of the sectors that we have a strong right to win. And we have the strong ability to drive growth. Simon, anything else on the growth.

Yes. I mean we're focusing on the areas we can accelerate and our core to us and where we've been really successful. So Power and Water will naturally have higher growth rates than other areas, data centers, industrial manufacturing, our pharma business will have higher growth rates. Transport and mobility, again, will have higher growth rates. So we're investing in those business. We're pivoting to that. We want to gain market share, deepen our relationships with clients, deliver consistent the growth and improve our margin through better execution. And we can see that today. I mean our resilience business is doing brilliantly. It's absolutely fantastic. All of our my businesses were doing so like that. I'd be a happy guy. Unfortunately, they're not. There's some drag. We're looking to prune the portfolio.

And coming on to your second question, it's price and volume. Look, we're looking to drive the market, drive the volume, but also not at the expense of price. I think, we're getting better at pricing. We're getting better at commercial reality. We're getting better at sales. We're recruiting salespeople. We're training the salespeople. We've got some people in helping us who know about pricing, know about value pricing. We're looking for more lump some work where we can drive the efficiencies from AI from the GECs through into the margin. So that's all of the things that I've been talking about and Heather has been talking about for a couple of months now. So we're just continuing along that journey. We're telling you about that today. We've been working on it for many, many months, and it's all come together to drive that forward.

And Simon, this also gets with our performance metrics for our people being around both growth and profitability. So generating overall value is a really key component of that to make sure that we are really having profitable growth as we go forward. And also, I would say that what we're seeing is a real entrepreneurial shift in the culture of the organization, looking at more co-creation and really working with our clients to explore outcome-based contracts. Where we have a strong technical capability and where that makes sense.

And we're looking to move much closer to the clients. We were always close to the clients. We had relationships. But now it's about forecasting budgeting client by client, making sure we've got the account leads in place, and those accounts are driven by incentives. They've got training and they're driven to grow the business across all of our services, if appropriate, in that particular sector.

Yes. And part of that is what is behind the focus in the key sectors. So the closer and the more focus that we can get, the closer we can spend time with our clients. And the more we can truly get that intimate relationship to understand the pricing points, to understand the projects and to really be able to move into that trusted adviser status. Now Simon mentioned a couple of our businesses that are doing really well and part of the reason is that they fall into that category. They understand the market. They have the commerciality and they sit in a trusted adviser status. And we want to be really deliberate about where we make the investments to have those types of relationships and deliver that kind of results.

The next question is from the line of Simon Van Oppen with Kepler Cheuvreux.

I have a question, first of all, on CapEx. It seems to be quite a low level if you compare to prior years. And I was just wondering, why can you now to sustain lower CapEx levels? And what we -- what should we anticipate going forward? That's my first question.

Yes. I think the sort of EUR 20 million to EUR 30 million is around the right level. We've pruned our offices and our portfolio there. We've focused on our tech spend, and we're leasing the laptops. So we're not buying the laptops anymore. So that's spread over a few years. And we've got a real discipline on our office spend. So it's CapEx like going forward.

All right. That's helpful. And maybe secondly, you secured a roughly GBP 250 million U.K. government framework. I was wondering if it's already reflected in the order intake and backlog of today's results.

No, we do not book master services agreements until we have a specific order and a specific contract.

Okay. And maybe lastly on Germany, I noticed that the revenues increased by roughly 20% year-over-year. And that, of course, includes the 2 acquisitions done last year, but it's still seems, yes, quite strong -- quite a strong level of organic growth, and Germany seems now to be your fourth largest market. Can you please comment on your organic growth in Germany? And also curious to hear your M&A agenda here.

The infrastructure spend that we see in Germany is increasing. It's part of the reason that we made an acquisition last year of WSP's rail business. And it's also related to our energy-related services, another acquisition that we made gift of 2 years ago. is really helping us in capitalizing on that expenditure that we're seeing within Germany and specifically as it relates to the example I gave earlier on Tenet, Amprion and Gasunie and the work that we're doing there.

That's helpful. And on M&A, in Germany, any comments?

Well, we continue to look around all of our markets where we can see a complementary acquisition, a small bolt-on, -- of course, nothing too big. Just as we've done with SATEL. It's that kind of acquisition that we're looking for. So we'll continue to look in all of our markets.

Next question is from the line of Kristof Samoy with KBC Securities.

Yes. I have to, first, an operational question on resilience. We've seen a nice uptick in the second quarter growth. The quarterly order intake did not materially differ from the past 2 quarters. Is that the uptick in growth? Is that like proof of a lasting return of the profitable book and burn business that we saw in the past? Or is it mainly the result of a ramp-up of AMP in the U.K.? So that's the first. And then maybe we can go one by one.

Sure. The resilience growth is always low in Q2. Order intake is seasonal for us. And so that's where we tend to see that happen. So no, there's no structural changes or rationale for it other than that's typically the trends that we see.

But does that mean that -- I mean the uptick in the organic growth rates in the second quarter that we just reported, I mean they can become a base for the next quarters?

No, we don't anticipate that. The backlog is strong within resilience. So we do not see any risk in our Q3, Q4, if that's what you're asking.

It's a great business. Just to be clear, it's a really good business. It grows very mid-teens. It's very strong margins. And it's a book and burn business, as Heather said, it's you sort of -- you see it and you deliver it very quickly. So you don't build massive order books up. You just see it, deliver it and move on to the next quarter. I hope that's what you -- I think that's what you were asking.

Yes clear. And then secondly, I'm well aware of the comments that you made at the very beginning of this call, and that you're not going to comment on the proposals of your competitor. But there was a clear explicit reference in a communication about undervaluation of the proposal. I mean we are trading right now where we are trading significantly below the proposal. But I have not seen a concrete intention proposal or a plan to launch, for instance, a share buyback despite the devaluation. At the same time, during the presentation, you stressed made a lot of reference to the accelerated strategic bucket. The fact that you don't see a share buyback announcement, does that mean we can expect large transformational M&A in the short term because in the past few quarters, you made it clear, and I think that was Simon, that the primary focus would be on restructuring and optimizing the business.

We have a clear plan. We've laid out our reasons for rejecting the offer. They're very clear. We see a lot of intrinsic value in Arcadis. And obviously, the market value is it values us today. So we're very focused on the strategy, very focused on pivoting to the growth markets. our prospects over the coming years are very, very strong. Our markets are very strong, and we're very successful in a lot of those markets, and we intend to capitalize on that.

But you do not rule out the possibility for transformational M&A in the remainder of the year?

We always look open to industry consolidation. That's something that's out there. At the moment, we've got a really solid strategy, a really solid plan, and we believe our growth prospects are very strong. We do M&A, but it's really bolt-on. That's what we do. We're doing bolt-on M&As, and that's what we're focused on. Could you expect us to do more acquisitions like SATEL? Of course, you could. That's what we did last year. We did a couple last year, and we continue to focus on that.

The next question is from the line of Chase Coughlan with Van Lanschot Kempen.

Firstly, on the full year 2026 margin guide, I'm curious because the second half sort of implied step-up is pretty significant year-over-year even to meet the sort of bottom end of that guidance range. I'm just curious on, is that primarily coming just from sort of group level cost savings? Or is that also maybe driven by the places business, in particular? Is there one business unit that should drive most of that sort of sequential improvement? That's my first question.

Yes, it's a combination of everything, really. I mean it's the cost out that we continue to look at. It's the nonbillable people that we've identified in the business. We're looking to get those people more billable, which we're having some success. It's driving the GEC into the lump sum projects. It's using automation and AI. It's really making sure that our transformation delivers those cost savings and those efficiencies and that focus and that simplification and it's the growth in driving the top line.

And Simon, we've taken a lot of actions in the first half of the year that the run rate hasn't yet fully manifested itself. So we're confident on the trajectory for the second half of the year.

Yes. Okay. Very clear. And then my second question Simon, you just mentioned the acquisition feel in Spain. Could you give some indication as to revenue or EBITDA contribution from that deal?

It's small single-digit EBITDA from that. Obviously, we're hoping to grow that. But it's not huge, 250 people. You can do the math. But we love the market. We love the business. We love the prospects, and I think they love the fact that they're combining with Arcadis. And the cultures are very similar. The cultural fit is huge, and we think we can drive the growth out of that cultural alignment going forward.

The next question is from the line of Maarten Verbeek with The Idea.

It's Maarten Verbeek of The Idea. Simon, you mentioned the CapEx, some [ EUR 20 million, EUR 30 million ], but you also hinted that you will do more through leasing. So when we look at the indirect CapEx read the lease liabilities, how much do you expect that to be on an annual rate going forward?

I'm not sort of going to give specific guidance on that, but nothing much is changing. Going forward, if you're building a model, we are -- we moved to leasing our laptops. We reduced our CapEx from, I think, EUR 40 million, EUR 50 million to EUR 20 million to EUR 30 million. I think if you want to put that in your model, that's good. There's nothing anything significant else that we'll be doing. Same as it's been.

Okay. And we now look at the A is now sort of -- the depreciation of the some 250 basis points. With growing business, then it's likely that, that part as a portion of revenue is going to decrease in the years ahead.

I mean we've got about EUR 100 million to 2.5%, as you say, most of that comes from our property portfolio, the leasing and a bit comes from our sort of things that we put in the offices and laptops. So yes, if we grow our business, we'll have more laptops. If we open more offices, we'll have some more leases. But we're trying to get the operating leverage coming through and push that down. So we don't want to expand that.

And secondly, you made a net revenue split between your core and accelerated portfolios against the optimized. And the core meters like that should increase its contribution from [ 74 to 85 ], taking the 5% organic growth rate that suggests that these businesses will grow by some 8.5% on average in the years ahead. Is that a fair calculation looking at the bar chart? And do you expect that to be back-end loaded? Or do you expect a gradual or more or less stable organic growth from these businesses in the next 3 to 4 years?

Look, I think your math is not bad at all. So I think if you're modeling it out, that's not a bad set of numbers that you use. And we'd like to think we can accelerate that growth. But obviously, we're starting from where we're starting. So we acknowledge that. We need to build the trust and credibility. We think we're doing that a little bit. We need to continue to do that. So your math is pretty good.

But also, it will be a bit more back-end loaded?

Look, we're trying to get it -- get our growth as fast as possible.

Next question is a follow-up question from Martijn den Drijver with ABN AMRO.

Yes. Thank you, operator. Simon, I have a question as well. that needs a bit of math. So please correct me when necessary. You've reduced the employees in H1 with 400. I seem to recall that there was a bit of a redundancy exercise also in the latter part of 2025, 400 in H1, let's say, 200 in H2 2025, 600. We assume [ 75,000 ] an annual salary, you add 45% in social premiums and pensions. It gets to annualized savings of [ 64 ], meaning on a semiannual basis, [ 32 ]. You divide that by approximately EUR 1.9 billion. which is our net revenue for H2, roughly speaking. That gets me to 150 basis points tailwind on EBITDA, Yet in the presentation, you talk about 50 basis points. Where am I going wrong?

Yes. I mean it takes time for it to come through. I expect that all to come through very soon. So some of it is corporate overhead. Some of it's in the business. Your math isn't wrong, but it just takes time to fall to the bottom line. .

And are we talking about 6 months more? Or do you think it will take longer?

No, no, I think it's half 2. I think the actions we've taken will manifest themselves in quarter 3 and quarter 4, yes. So we're driving as fast as we can to show you those. And we've had a lot of success. I'm pleased. I started this 6 months ago or even 9 months ago now to drive that overhead down and our run rate is coming down really, really well.

And then going back to the share buyback, if there's some sort of net debt-to-EBITDA leverage level at which you think share buyback is really appropriate?

Look, I think we're constantly reviewing the share buyback. You saw us do one last, last year. I think we're a really interesting point in our cycle now we're pivoting into the growth areas, the core markets accelerators. We want to invest. We want to hire more salespeople. We want to hire more fantastic project managers. -- we've got lots of really interesting projects that we're bidding on. So we want to invest in AI as well. You've seen us invest in Nomic. That's really a key for us. So look, we'll keep an open mind. We discuss with the Board about our capital allocation all the time. And we're committed to that investment-grade rating as well.

Next question is from the line of Dirk Verbiesen with ING.

Yes. Some follow-up questions. also on the restructuring efforts you are making. Can you give us some guidance on what to expect and also for modeling purposes for the second half in terms of nonoperating -- if I listen to you what the -- let's say, the plans you mentioned previously, '25 and '26 headcount reductions. It looks like second half will also be quite substantial in terms of nonoperating costs. But any guidance would be helpful.

The second question I have is more on the AMP8 work in the U.K. I think you're mentioning that it's ramping up, and it looks quite encouraging. But what is the, let's say, what is the momentum that we look at? And also in terms of projects in hand in the backlog. Can you maybe share some more insights here on how this is going to develop second half and maybe even into because it's a long-term plan. There must be orders in the backlog, but in terms of actual impact for the U.K. business, that would be interesting.

Yes. In terms of -- I'll take the non-op one. In terms of non-op, I think we reported about around EUR 40 million for the half 1. We guided to around EUR 60 million. I think it's more likely to be EUR 60 million to EUR 70 million. We're making a lot of progress we're trying to accelerate that. So there might be a little bit more cost there towards the Q3 and Q4. So that's where we are on non-op. I'll hand over to Heather for AMP8.

Yes. As we've spoken about, we had several wins with AMP8 and we have announced those wins. And then on top of that, now we're starting to see the ramp-up come through. the projects that we have for AMP8. So we're feeling very positive. I think Simon mentioned about the double-digit growth in AMP8, and that should have a very positive impact on our U.K. business going forward. So obviously, that is outside of any political changes that occurs -- that occur, but we feel confident in our H2 as it relates to AMP8.

Big clients, we are working with a number of the water utilities and have large scale, both MSAs and one-off projects where we're supporting large construction schemes.

But if this model is running as planned and the work is coming through in terms of actual billable hours. Is there a few tens of millions per year that you can generate there or what?

EUR 40 million.

Yes, a year.

That's okay. That could be the run rate going forward.

Yes, could be.

Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Ms. Polinsky for any closing comments. Thank you.

Well, first of all, thank you all very much for your questions and your interest in Arcadis. We look forward to bringing the full passion. We have for Arcadis and giving you even more details and proof points as well as introducing you to several of our exceptional leaders at Capital Markets Day on the 29th of September. Thank you very much.

Ladies and gentlemen, thank you for standing by. I am Gilly, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the first quarter 2026 trading update. The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed.

Thank you, Gilly. Good day, everyone, and welcome to our 2026 first quarter trading update. My name is Christine Disch, and I'm the Investor Relations Director at Arcadis. With me on this call are our CEO Nominee, Heather Polinsky; and Simon Crowe, our CFO.

As usual, we will start with a presentation, which will be followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements, which were made in the press release. Please note that the risks are more fully described in the press release and on the company's website.

Now please over to you, Heather.

Thank you, Christine, and good day, everyone. Welcome to our first quarter 2026 trading update. When I spoke to you at the full year results in February, I set out a clear plan focused on 3 priorities in 2026. In 2026, we are building a simple future-proof model. We are focusing on growth, directing capital and talent to water, energy and power, technology and major infrastructure projects where demand provides long-term visibility.

Our executive leadership team has continued to meet regularly with our key clients who value Arcadis and tell us they want to do more with us. Deepening those relationships and expanding our share of wallet with existing clients remains our clearest pathway to stronger growth. We have continued our restructuring program and our rigorous overhead cost-out program is well underway, improving our competitiveness. Simon will talk about this later in the call.

As I said in February, 2026 is about execution, and that is exactly what we are doing. Since publishing our full year results, we have made good progress in implementing our plan. And while there is still more to do, we have positive momentum. We are mobilizing and energizing every Arcadian in the same direction. This progress allows us to bring forward our Capital Markets Day to the 29th of September 2026, where we will provide a comprehensive update on our strategy and medium-term financial targets.

Turning now to our first quarter results. We have delivered a positive start to the year with strong order intake and margin expansion. Performance was positive in Mobility and Resilience, while Places remains challenging. Our net revenues were EUR 93 million with organic growth of 0.8%. The order intake was EUR 1.1 billion with organic growth of 7.3%. Net revenue growth was driven by our key markets in the U.S., Canada and Europe, partly offset by ongoing challenges in Property and investment, particularly in Canada and China.

In Mobility, the acceleration of work on large projects positively impacted our performance. Operating EBITDA margin was 11%, up 10 basis points year-on-year, demonstrating that our focus on cost discipline and operational improvement is starting to take effect. We are systematically executing our strategic plan to drive growth and profitability, and our actions are on track.

Moving on to backlog growth and order intake developments in the quarter. Our backlog organic growth in the quarter was 4.6%, and this step-up was driven by all of our GBAs. Resilience backlog grew 5.1% quarter-to-date with a book-to-bill of 1.16. Order intake was driven by Water and Climate in the U.S. and Netherlands and environmental programs in Brazil. We are also seeing good pipeline opportunities building in water and energy in the U.K.

In Places, we saw backlog growth of 3.1% quarter-to-date with a book-to-bill of 1.18. Data centers in the U.K. and U.S. continue to be strong drivers of order intake, and we are seeing good momentum with government clients across the U.S. and Europe. Property and investment in Canada remains challenging, and we are continuing to address that directly.

In Mobility, we had a backlog growth of 6.9% quarter-to-date with a strong book-to-bill of 1.25 with order intake in the quarter driven by project extensions in the U.S., Canada and U.K. Metrolinx in Canada, where we secured a EUR 39 million 3-year extension to our contract and California High-speed Rail are good examples of the client relationships driving that momentum. The pipeline of significant opportunities in the U.S., Canada and Germany also continues to grow.

Resilience has benefited from strong tailwinds and a clear right to win in the market. There are considerable opportunities for us, and we are focused on continuing to drive growth and profitability in the solutions where we've historically been strong and on gaining traction through building a stronger pipeline and growing our team in alignment with our backlog growth.

Water in the U.S. remains a star performer with 15% growth in the first quarter. One win this quarter is a 5-year contract encompassing 3 key stormwater initiatives for the city of Los Angeles through their clean water program, replenishing groundwater, alleviating and mitigating flooding and improving water quality.

In energy transition and advisory, we continue to grow strong in Europe and the Netherlands, where we were awarded a contract to deliver construction design for grid operator tenant. In the U.K., we have improved visibility in our water and energy projects with AMP8 related water work moving forward now. In addition, strong nuclear new builds are creating significant pipeline opportunities.

In environmental restoration, a large U.S. contract continues to wind down as planned. Encouragingly, larger opportunities are progressing through the U.S. pipeline, and we are working to strengthen our backlog in our target sectors of power, energy and government. We are also seeing an increase in PFAS-related opportunities.

Finally, we have invested in strengthened account leadership to reinforce sales with targeted hires. We've also introduced account leader training across our key client accounts. Places had an organic revenue decline of 6% in the quarter, and we are addressing the underperformance in property and investment. We have taken strong action in Canada to refocus the business towards growth markets and reduce headcount to preserve margin while investing in areas of stronger demand.

With improved backlog and billing, we recorded strong order intake in almost all markets outside of property investment in Canada and China. Our discipline is translating into stronger delivery cadence and improved pricing and pursuit quality. To give some examples of the prioritized actions we've taken, we have exited around 150 people since January. We have reorganized toward growing markets.

For example, we have 4 new senior leaders joining us to drive sales in high-growth technology and manufacturing sectors. And in March, we launched a recruitment campaign with referral incentives to fill over 1,000 roles in key markets such as data centers and life sciences. We have scaled our global excellence centers and are embedding fast starts for recent wins to support our Q2 performance. Industrial manufacturing showed good performance this quarter, driven by U.S. pharma, supported by government onshoring investments.

In technology, our data center business delivered 36% growth year-on-year, while our semiconductor solutions were impacted by large contract wind-downs. In government and public facilities, we are seeing good growth in the U.K. and have been awarded a GBP 250 million framework in the quarter.

Mobility was our strongest performing GBA this quarter, delivering 6.5% organic growth. This result was driven by an acceleration of large projects and continuation awards on large contracts, including Metrolinx in Canada, California High-Speed Rail and Westport in Australia. At the same time, continuous focus on improved profitability through strong project management and discipline produced a very positive project performance.

Major infrastructure projects are critical to our strategy. We have worked to get a greater line of sight on backlog phasing and execution. We are using this visibility to confidently invest in large opportunities in the U.S. and Canada, diversify in locations like Australia and continue to capture performance in the U.K. to replace project wind-downs of HS2. An example of our commission to deliver an end-to-end program, risk and construction management for the TransPennine route upgrade, a GBP 50 million framework over 5 years to modernize major rail corridors in the U.K.

In Europe, both the Netherlands and Germany delivered strong growth in the quarter, and our continued relationship with ProRail led us to an award to deliver safer and more efficient train services in the Netherlands. Going forward, we will continue to focus on diversifying our business in Australia while hiring in the U.S. and Canada to support our backlog and pipeline demand for major infrastructure projects.

Building on the momentum you've seen across the business, this next example shows where we're gaining real traction, delivering tangible results in a key growth market. In water and climate, we are combining market focus, AI at scale and measurable client outcomes. Across our water sector, we are deploying digital solutions such as enterprise data analytics in a partnership with Voda.ai, now live across 22 utilities in the U.S. By applying AI to risk prioritization and field execution, we are delivering 50% to 60% reductions in excavation costs while accelerating regulatory compliance for our clients.

At the same time, the Climate Risk Nexus platform uses AI-driven hydrologic modeling to assess risks across large asset portfolios. For a major North American freight rail operator, this has shown that just 2% of assets drive around 80% of total risks, enabling targeted investments and informing asset management, insurance and long-term resilience planning. Alongside this, we are supporting clients in shaping their AI data strategies with over 50 workshops delivered since mid-2025, mainly directly with utility C-suite.

All of this translates into growth, specifically around $100 million in water project revenue where AI-enabled advisory and solutions have been applied. This is not experimentation. This is scaled delivery. And it is a clear example of how AI is enhancing how we work, strengthening our differentiation and sharpening our competitive edge. Excluding I spoke earlier about the 3 strategic priorities.

Let me now walk you through our progress and how we'll execute our plan in 2026. In Q1, our focus was on high-growth markets. We moved decisively to invest where we win. That includes targeted hiring in priority markets, strengthening leadership and launching the AI studio, a dedicated capability that brings together data, digital and domain expertise, develop scalable client-facing AI solutions that enhance productivity, insight and delivery for our clients. Initial use cases were focused on environmental planning and permitting, including stormwater programs such as the City of Los Angeles' Clean Water program.

At the same time, we have completed detailed pricing diagnostics and are now advancing a more disciplined value-based pricing strategy, ensuring we move both win rate and early qualities forward. Our account leadership model is now fully in place with over 60 leaders actively building pipelines, and we are continuing to strengthen our position in high-market growth sectors, including recent senior hires in water, technology and life sciences.

Looking ahead to the rest of 2026, our focus is clear: complete a portfolio review, concentrate investment in high-growth areas, scale digitally enabled services and embed pricing as a core commercial capability. Second, we are creating a simple and future-proof operation. We are reshaping the business to improve agility, efficiency and client closeness. We have made progress in Q1 on rightsizing, simplifying our decision authorities while also transforming core processes to include our project pursuit workflows through AI and automation.

We are now starting to see the first benefits from restructuring and cost-out actions that we began last year. This quarter, we exited another 250 roles, and we are continuing to proactively address underutilization across the business while intensifying our cost-out actions. As we move through 2026, we are reorienting the organization around sectors with a new sector leadership team now in place. Alongside this, we are simplifying how we operate and accelerating digitization of the processes to drive productivity.

Third, driving cultural change. Cultural is a personal priority for me. And in Q1, we began embedding a more commercial performance-driven mindset across the organization. This includes targeted leadership changes, strengthened commercial discipline and controls and more focused sales incentives aligned to our priority clients. In addition, we have launched a new short-term leadership incentive program for our top 2,000 leaders, directly aligned to individual contributions, commercial outcomes and performance.

Looking ahead, we will continue to invest in talent, sharpen incentives and performance management and empower leaders to operate with greater accountability, entrepreneurial focus and a client-centric mindset. So as you have all heard, we have clear priorities, we are taking decisive action and execution is firmly underway.

I will now hand over to Simon to take you through the financial results.

Thank you. As Heather outlined, Arcadis has delivered a positive start for the year reflecting early momentum from actions taken, including leadership changes, improved incentive alignment, targeted restructuring and disciplined control of operating expenses. We feel positive about the potential, supported by the strength of our talent, relationships with our clients and pipeline of work that we see. But we recognize that the macro environment remains volatile, and 2026 is a transition year for our business with further changes in execution underway.

Let me now take you through our financial results for the first quarter. Organic growth was 0.8%, with strong growth in Resilience and Mobility, driven by U.S., Canada and Europe. This was offset by Places where we are continuing to address the ongoing challenges in Property and Investment in Canada, where we changed some of the finance leadership team to improve the quality of reviews and controls in this area of the business. Excluding Property and Investment, organic growth was 2.3%, a step-up from the 0.6% in Q4 last year, demonstrating the underlying momentum in the rest of the business.

Operating EBITDA margin was 11%, up 10 basis points year-on-year, supported by our ongoing rightsizing actions and cost discipline. We have put additional controls in place across all areas of the business, and that scrutiny will continue throughout the year. Our nonoperating costs of EUR 15 million in the quarter reflect these actions, which affect approximately 150 roles in underperforming areas and approximately 85 roles in overhead functions.

Turning now to cash and the balance sheet. Free cash flow was negative EUR 149 million in the first quarter, which is in line with seasonality. And as usual, payables are normalizing following the strong cash performance we delivered at the end of last year. DSO was 64 days in Q1 '26, again, in line with seasonality and improved when comparing to the first quarter of 2025 at 67 days. Net working capital as a percentage of annualized gross revenues was 12.1%, down from a peak of 14% in Q3 of 2025. This is within the expected range and reflects the progress we're making on cash collection.

Our net debt at the end of Q1 was EUR 974 million, with leverage at 1.9x, comfortably within our strategic range of 1.5 to 2.5x. Our BBB- investment grade from S&P has been recently reaffirmed. Now turning to margin and the levers through which we'll deliver our guidance of 11.7% to 12% operating EBITDA margin for the full year. First, our cost-out program, which we expect to contribute 40 to 50 basis points. This will come through corporate restructuring, where we've already reduced headcount in the fourth quarter of last year and continued reductions this quarter.

We have also maintained our disciplined OpEx management, where we've reduced travel and advisory costs. Secondly, the rightsizing of the business. We are systematically working through each market and function to address roles where billability is not where it needs to be, ensuring we have the right people in the right Places. The third margin lever is the continued utilization of our global excellence centers as well as greater automation, scalability of our delivery model and more selectivity in the projects we pursue.

Taken together, these actions give us confidence in our ability to deliver the margin progression targeted through 2026. In summary, in the first quarter, we've continued to execute on the strategic actions we outlined in our full year results and are fully focused on driving these forward through the rest of the year. We have a clear plan to focus on growth and margin expansion as well as continuing to streamline our operations.

I'll now hand back to Heather for her closing remarks.

Thank you, Simon. Let me now bring together the key themes from today before we open for questions. The message I want to leave you with is we know what needs to change, and we are changing it. We are also moving at pace. We have strong positions in water, energy, technology and major infrastructure, and those businesses are performing. Where performance has fallen short, we are taking direct action by reducing overheads, rightsizing the business, scaling our global excellence centers and applying greater discipline to project selection.

And we continue to invest in digital and AI, building on our deep asset knowledge and long-standing client relationships. These actions are already making a difference. We have had an encouraging start to the year. Macroeconomic uncertainty, however, has increased, and 2026 remains a transition year focused on repositioning the business. The actions we are taking give us confidence.

In February, I said you should hold me and Simon accountable for delivering this change. That commitment stands and the actions we have taken this quarter are the first proof points of that. We have a clear line of sight to where the business is going, and we are continuously repositioning the portfolio towards the high-growth opportunities. Our Capital Markets Day on 29th September in Amsterdam is where we will set out our next strategic chapter in full.

With that, Simon and I are happy to open it up for questions.

[Operator Instructions] The first question is from the line of Sangita Jain with KeyBanc Capital Markets.

So Heather, maybe I can start with, can you share your observations since you took the lead on what has positively surprised you in implementing your core priorities and where you think you may need more work than you had anticipated?

Could you repeat the question? Your line is a little bit fuzzy.

I'm sorry. I just was wondering if Heather could share her observations since you took the lead and what has positively surprised her in implementing her core priorities and where she may think more work is needed.

Yes. Thank you very much. Well, I'm pleased with the momentum that we're seeing across the business. We have been able to move with clear discipline in transitioning some of our staff and pivoting in some of the areas that have been a challenge. But we are -- our markets are strong. And the work that we're doing and the feedback that I'm getting directly from clients and our team is outstanding. And so I think we're on the right path. I believe in the actions that we're taking. And as we mentioned in February, it will take a little bit of time, but we're making the progress that we indicated.

Great. And I know you're early in this process, but can you share your thoughts on how you think further M&A or buybacks could be included in your strategy?

Yes, I'll take that one. M&A, look, we're continuously looking around in the market. Obviously, our multiple is where it is. So we're not looking at large acquisitions, but there are small bolt-on acquisitions or team takeouts that can improve and accelerate some of our sectors or some of our services. So we continue to be active in the scanning of those opportunities and continue to evaluate those and where appropriate, we will make offers for small opportunities.

But they will be very, very small at this point and just help us turbocharge some of our services or sectors. And share buybacks, we obviously executed one last year and into the early part of this year. But it's early in the year for us. It's a negative cash flow quarter. As you know, that's the seasonality that we have. Obviously, we're focused on investing in the business at the moment, and we'll keep that under review as we move towards the Capital Markets Day.

The next question is from the line of Martijn den Drijver with ODDO ABN AMRO.

My first question, despite all the explanations on some of the tailwinds from cost savings, I was wondering, if you look back at what you did in 2025, you reduced headcount by over 1,000 of which a significant portion in the second half. You had faster-than-expected positive organic growth, yet that EBITA margin only went up 10 basis points. While normally getting all those savings and that operational leverage, you would expect a slightly higher uptick. What is keeping that back? And is it the type of level of improvement we should count on going forward? That's question one.

Yes, Martijn, I'll take that. It's Simon here. Look, we did make a lot of progress in Q4. I'd love to see that flowing through to margin expansion much more quickly. It takes time for that -- those run rate savings to drop through to the bottom line. Yes, we did grow the top line, but it's not a huge amount of growth there. So the operating leverage is not going to really kick in until you get more and higher growth.

So look, we're attacking underperformance. We're attacking excess cost. We've put controls in place in the business. It takes time for the run rate to come through. It's -- as I see it, the overhead run rate is coming down. It's not coming down fast enough. We're working harder to get that run rate. But it will take some time for it to manifest itself out. But we're going to keep going. We're going to keep going. We're going to keep moving forward.

We've got a good rhythm and good cadence. We can see areas of low billability that we're attacking. We're trying to move those people on to work. The order intake is good. So that's good for billability as well, and that should move up. We also focus on the multiplier as well, and we want to see that move up along with our capture rate. So all of these things work in tandem, as you know, very well.

But it just does take a little bit of time for it to fall through into that margin expansion. But we'll push on towards the 11.7% and 12%, as I outlined in the slide that I talked through earlier.

Got it. Understood. My second question is for Heather, and it is with regards to the guidance. You mentioned the macroeconomic uncertainty. What have you seen since the start of March? You travel all around. You speak to a lot of clients. What have you seen in terms of delays, cancellations that you are, in my opinion, slightly cautious on, for example, the EBITDA margin guidance that you see from clients?

Yes, absolutely. So I've been able to meet over 50 clients along with our executive team members over the past few months. And we've seen no signs of changing client behavior yet. The fundamental demand across our markets remains intact, and it's underpinned by long-term structural drivers related to asset integrity, for example. And those don't seem to be sensitive to short-term macro volatility. But the increase in energy prices, that can typically have impact in both directions.

So we're seeing an ongoing structural shift by clients to reduce their dependence on fossil fuels, which is helping us and driving demand for energy security and asset optimization services. But we continue to monitor the situation very closely because it's important for us to understand how our clients are being impacted. While it might not have a direct impact to us, we are cautious about that.

The situation is volatile, and we're just cognizant that the prolonged period of uncertainty combined with things like budget deficits and rising debt levels and political uncertainty in key markets might impact client demand and some of the larger projects we have...

The next question is from the line of David Kerstens with Jefferies.

I've got 2 questions, please. First of all, you highlighted several new orders in the U.K., and it also seems the business confidence in the U.K. has recovered somewhat. Are you seeing improving revenue momentum in the U.K. after the 8% decline last year? And how do you see the outlook for the business in the U.K. for the remainder of the year?

Well, we're very positive and optimistic based on what we've been seeing and the opportunities that have been in place. But as I mentioned before, that macroeconomic environment is one that makes us cautious. So we are seeing some movement. For example, I mentioned on AMP8 and we are having success outside of the HS2 drawdown. Our backlog is up, and that's what gives us that confidence. So while our net revenue was still impacted slightly by some of the slowdowns or cancellations of projects, our -- specifically HS2, our backlog is what gives us that confidence up at 6%.

So U.K. was still down in the first quarter?

Slightly.

Okay. My second question is for Simon about the phasing of free cash flow and working capital. Do you expect it to be similar to last year with a strong reversal in the fourth quarter? Or will it be more equally spread throughout the year?

Yes. Look, I think if you look back and we provided a slide in the appendix, you can see our seasonality over the last couple of years. So look, we're pushing hard on that. But ultimately, this is the pattern that Arcadis is used to. What we are doing is monitoring it very, very closely. We don't want to have the experience we had in Q3 last year or take our eye off the ball as it seemed like we did in Q2 into Q3.

So we're pushing hard, pushing hard on the DRO, pushing hard to get bills out, pushing hard to collect the cash. And I have a monthly call now with the bottom 5 performers. They're dragged into see myself and some of my finance colleagues, and we drum into them the need to really be on this. So got dashboards, everyone gets their weekly billing and accounts receivable numbers, and there's no excuse. There's absolutely no excuse and there's no way to hide.

The next question is from the line of Kristof Samoy with KBC Securities.

The first question I have is on mobility. We see that order intake benefit.

Mr. Samoy, this is the operator. I'm sorry to interrupt. Can you please speak a little closer to your microphone because I'm not sure management can hear you.

I have a first question on mobility and the order intake there, which benefited from program extensions. Could you disclose the ballpark size of these expansions in terms of euro value? And are these merely extensions? Or do they also have a wider scope than before? And when will this project extensions be converted into revenues? That would be first, please.

So first of all, the mobility backlog growth was 6.9%, and that is -- that includes those extensions that we've seen on some of the major projects that I mentioned. And it includes rail in the U.K. as well as U.S. extensions in Canada for Metro Links and California High-Speed Rail. And yes, we see ourselves being able to roll into those projects right away and continue. It's a nice part of them being extensions and continuations of the existing projects. We already have the teams in place and continue to hire, as I mentioned, to meet that increased backlog to be able to drive net revenue into Q2 and through the rest of the year.

Okay. And then a second question, if I may, once more on the guidance. So I mean, what happened since mid-February when you reported fourth quarter numbers and you indicated that '26 got off to a weak start. And now it turns out that the first quarter was okay. You even described it as encouraging. And then we still see an unchanged guidance. What arguments besides spillover effects from the Iran conflict, can you bring to the table for not upgrading your guidance?

First of all, I'll start and Simon can add in here. We're pleased with the start of the year, and it's really early signs that our strategic efforts are materializing. As I mentioned, we had strong growth in mobility in North America and some of our key clients. Our order intake and revenue conversion is particularly strong due to some of these extensions, especially seeing our work in Australia be able to manifest itself a little bit faster.

And some of the underperforming parts of our business are still underperforming, and we're in a correction mode on those. We're repositioning them. And so 2026 is still a transition year for us. It requires us to invest, and we want to make sure that we have the capacity to be able to do that for long-term value creation.

Yes. I mean I'd just echo that really we're being cautious. There's macro headwinds out there. we've got a transition year. We're busy repositioning the business. We're busy focusing on cost out. We're busy focusing on the growth. As Heather said, some of our parts of our business are not performing and working really hard to turn those around. So yes, we're cautious and we feel good about where we are, but we want to take one step at a time.

The next question is from the line of Natasha Brilliant with UBS.

My first question is just around the pricing environment. And if you can just talk about how pricing for your projects have developed year-to-date and any thoughts for the full year? I'm just thinking about the slightly better top line growth, but perhaps slightly softer margins. Is there any sort of trade-off there? That's my first question.

So thank you very much for the question, and it's an area that we've been focused on is making sure that we are strategically pricing and that our pricing matches the environment of each one of the sectors as well as having that differentiation. We've been pleased to see the progress that we've been making on pricing and strategically pricing. As you may know, about 60% of our work is lump sum and 40% time and materials.

And we're pushing to do more of that work -- more of the work on the lump sum space for us and really drive our performance through all the things that we talked about earlier like AI, our global excellence centers, et cetera. So that's all part of our pricing strategy. And we do believe that the backlog growth is related to us really having greater commerciality.

It's not just pricing, but it's being closer to our clients, understanding what their real needs are and producing proposals and pricing that matches those needs as well as when we execute, executing with strong delivery teams and strong commercial controls.

And I'd just add everyone is sort of -- everyone is a salesperson at Arcadis. So we have account leads. We've nominated all of those. They've got incentives. They've got new incentives that got exciting incentives. We know each and every one of those account leads and account executives now for all of our key and emerging clients. They're incentivized to grow, but all of our teams are in the clients' offices every day and the best time to sell something to a client is when a project is going really well and you're going to go and try and fix the next problem for them.

So we've had some help as well from outside organizations. They're helping us on some major bids, looking to differentiate, looking to make sure we've got the right risk profiles and the right scope when we go into bid and then hopefully expanding that opportunity with those clients. And Heather and I have met a lot of clients over the last couple of weeks, and we hear really good things from them, and we just want to build on that.

Got it. And then my second question is just around utilization rates. And you said there is under utilization at the moment. Can you just give us a bit of a flavor of sort of what level of utilization you're seeing at the moment and where you think that can get to?

No, I'd like to see an expansion of a couple of percentage points. That would be ideal of utilization. We are -- I am starting to see a sort of slow -- I focus on these quite a lot. I'm a sort of multiplier of the utilization focused guy. And I'm starting to see sort of a little bit of a turn there as we are taking out some of the underutilized people or reassigning them. So yes, a couple of percentage points would be great. That takes time and it's hard yards, but we are focused on that now, and that's coming into the daily discussions that we have, the dashboards that obviously, everyone can look at, the team leaders and the business leaders are focusing on that. And we're working hard to improve that...

The next question is from the line of Dirk Verbiesen with ING.

Two questions from my side. First, on the situation in Canada and the property and investment activities. So what have you actually now implemented to turn that around also with regards to the reporting issues, which you recognized last year. That's on the Property and Investment. And following that, now also China is weakening. Is that a new kind of weak spot that has popped up? And what are the expectations there going forward?

And the second question I have is the contribution from improved project margins. So what is the what is the potential that you actually see there? And how should that change by what measures you have implemented to really turn that structurally in a more positive way? It is a small bracket in the overview Simon gave on the improvement points in terms of margin increases. But how should we see that moving forward?

Yes, a lot to unpack that. I'll take China first. It's a tiny part of our business. It's not particularly -- it's not material for us at all. So it's not something that overly concerns us. In Property Investment, look, we've acted very quickly from last year. We have now taken out people that have not been billing. We continue to look at the billability in the projects. We've changed out some of the leadership there. We put one of some of our best finance people in there. We crawled over pretty much all of the projects, every single project. So we know exactly what they're doing, those projects.

We're pivoting away from the Places -- sorry, the condo market in Canada, in particular, which obviously declined last year quite substantially, and we're pivoting towards transit. We're pivoting towards senior living and student living. So we've got new people joining us both in the finance function and in the leadership function in property and investment. We launched a big recruitment campaign in Places around data centers and life sciences, and we're pivoting some of our property investment people to those high-growth growth areas, and we've obviously continued to utilize our global excellence centers where it's necessary.

But I've got confidence that we've got a good team in there now who's called over all of those projects. We did do an independent review, as you know. And so we are, I think, making really good progress to sort everything out there. Just maybe you could just repeat your -- the last piece of your question. There was quite a lot to unpack there.

Yes. Thanks for that, Simon. The second question I had is on the, let's say, the upside you see in the project margins. There's a slide in the presentation on the margin improvement profile this year and the different contributions on the cost savings. But you also mentioned project margins. And how should we see that moving forward? And what kind of measures do you implement to really structurally improve the overall project margins apart from the positive impact from your cost measures because it sounds like an operating improvement instead of a financial impact from savings left or right.

Yes. No, I think you're right. I think there's a savings part of it. But really what it is driving top line. It's driving the billability, driving the top line, driving the right project choices, driving the right DEC contribution and driving the right cost structure. It's making sure our project leaders are more entrepreneurial. I think Heather mentioned earlier, sort of the commerciality. So we're introducing some training where we're introducing third parties to help us -- and we're really focusing on the pursuit to project as well.

We've implemented a new bid book process, which is simpler, easier to use, uses AI to write proposals and helps our teams really find out where the value is and where they can maximize the margin. So there's a lot going on. It's not a simple one thing fixes all, but there's multiple parts of the business that we're working hard on. Heather?

Yes. It's also a cultural -- part of our cultural change. So performance management and holding our teams accountable being really clear what their objectives and goals are is really a key component of that so that they embrace the new ways of working and they embrace the commerciality and really see how this makes their lives easier and increases their client relationships. A well-run project actually tends to have the best client relationships and produces the greatest profitability. So we're really focused on the cultural change of really creating those incentives that I spoke about to align and reinforce the behaviors that we want from our teams.

The next question is from the line of Simon Van Oppen with Kepler Cheuvreux.

I have one on the 40 to 50 basis points cost-out benefit. That assumes that no roles are replaced. But given you are simultaneously hiring in data centers, life sciences, water and the U.S. environmental restoration sales force, what is the net FTE trajectory for the year? And how confident are you that the cost savings are not being fully offset by new hires? And yes, secondly, Places declined by 6% organically in Q1, measured against a restated and therefore, easier comparative base of minus 2.8%. That means actually that the underlying deterioration is worse than the headline number suggests. Could you please elaborate on what the realistic time line is for Places returning to positive organic growth?

Yes. Let me take the margin, the cost out, the net FTE question. I mean, we're looking at the overhead. We're looking at automating as much as we can. We're looking at reducing our overhead FTEs. We're going to be hiring like crazy in data centers and pharma and water and semiconductors. We can see a lot of opportunity there. So we're going to be hiring. I would hope and think and it would be great if our net FTE was up for the year in the business. I hope it will be down in the overhead as we automate, as we find efficiencies, as we get better at doing things quicker.

So there's 2 stories there. There's one about the overhead and there's one about the business. And the business needs more people and needs that high billability and we continue to monitor that. I think your second question, and I'm sorry, we might have to repeat some of it, but was around when the Places coming back. I don't want to call it, but it's some positive signs. We're making some progress. We've got the right people there. We've got the right reviews going on. We're pivoting away from certain areas that aren't as profitable as others. We're finding areas for those people to go and work on the data centers and things like that.

So I'm confident that we are moving forward at pace to sort out the property investment. And look, all of Places is not a bad business at all. It just happens to be property investment got caught out last year, and we didn't move quickly enough. shame on us. We are now moving quickly in property and investment to pivot away. So look, too early to tell. And of course, there are macro headwinds out there. There are governments with big deficits. So there's a complicated world out there, but we're doing everything we can within our control to move our business forward and to turn the corner.

And Simon, just to reiterate, the areas that we're seeing backlog growth of 3% in the quarter was driven by data centers in the U.K. and the U.S. It was driven by government clients in the U.S. and Europe. So that's showing a positive trajectory, and it's reinforcing our focus to pivot these resources to the growth markets.

Our next question is from the line of Derric Marcon with Bernstein.

One question for me about Mobility. I was wondering if you could help us to understand what the -- in the Q1 performance, the 6.5% organic growth you recorded. What is coming from comparison basis, favorable comparison basis, one-off that surprised you in Q1? You said accelerated on large projects or revenue recognition on large projects. And what is sustainable in this 6.5% we saw in Q1 for the coming quarters?

So first of all, our backlog has been strong in mobility. While we talked about it having high variability, the team was really able to drive forward some specific deliverables at a faster rate and generate revenue earlier in the year than what we had originally anticipated. And I think this is also an example of the shift in the culture change of a high-performing team, which is do the work when we can do the work so that we create space for the next project and the next growth. So we're actually feeling very positive about Australia, the U.K. and U.S.'s ability to speed up that backlog generation to create the net revenue growth.

And this is what we're pushing all of our teams to do. Once we win that work, let's speed up fast, let's deliver, let's get ramped up and let's deliver it so that we can show our clients that we have additional capacity to take on more responsibilities and continue to grow. This is how we get back to growth. This is an example of how we get back to growth, which is winning projects, executing them well at speed and being ready for the next win.

It means that the good surprise you had in Q1 does not necessarily mean that you will not repeat in Q2 because the backlog is, as you said, quite nicely on a sequential basis. But at the same time, you accelerated revenue recognition in Q1. Am I correct?

Well, we have a good pipeline. We have a really good strong pipeline of business. That's converting into order intake. That's converting into backlog, that's converting into revenue. So we continue the performance culture change. We're rewarding culture, we're holding people accountable. And that seems to be starting to show some very early signs, but we have to balance that with the world and what's going on out there. So we don't want to get ahead of ourselves, but we have a strong pipeline.

The next question is from the line of Martijn den Drijver with ODDO AMR.

My first question is on price again. Sweco actually mentioned quite a beneficial pricing environment stating that the hourly average hourly rate was up quite significantly. Can you tell us what the average hourly rate increase in Q1 was? And how should we think about the rest of the year given the higher inflationary environment in COVID, you've shown to be able to very well cope with that type of environment? So that would be question one.

No, we don't -- we're not really disclosing Martin, our hourly rate and where we are on that. But look, things have -- we have pass-throughs in our projects. if inflation is up, then we look to pass that through our contractual structure. I think we all learned from COVID that the entire industry learned that things can come along and shock. So we have learned from that, and we'll have the mechanisms to build those increases in. We have a healthy fixed price element of our contracts versus time and material. So we seek to continue to balance that and optimize that where we can. So all I can say is that if prices go up, we'll seek to pass those on and make sure that inflation is passed on to our clients.

And Simon, part of the pricing diagnostics that we've done is very much about understanding the markets where we can have increased rates and increased prices and those that are feeling a little bit more pressure and being much more strategic about how we price based on what's going on and the value that we're creating in that pricing. So we'll elaborate more on this, I can imagine, in our CMD.

Yes. All right. And my second question goes back to that net delta, if you will, in terms of employees. So back to that question, I think it was from Kepler. Last year, you said we -- this is for Simon. And you said, well, we've reduced the employees roughly by 1,000, and we're aiming for a similar number again in 2026. Is that number out still the same? So I'm not talking about net, but that number of underperformers and overhead that 1,000 that you mentioned, is that still applicable or not?

Yes, absolutely. Absolutely. No, that's still -- sorry if I was not clear that we said we do about 1,100 people left the business as a result of our actions last year, and we are looking for a similar number to leave the business this year. It's about cost out as well. So that number may fluctuate a little bit, but we'd like to achieve the same amount of cost out.

And we're simplifying the business. We're becoming more agile. We're employing AI. We're employing automation. So some of those roles will naturally not be needed. But yes, very clearly, we're looking for that same number that I said, 1,100 people this year.

And Simon, we started at the beginning of this year with senior roles and being very strategic as to the roles that we have been removing.

Yes, exactly. Some of the senior leaders who are the highest cost, obviously, we asked to exit. So yes, it's absolutely.

And if the operator allows, could I ask for one, please?

Sure. Go ahead, Martijn. You're on a roll, go for it.

In terms of free cash flow phasing, almost all of the OpCos are now on Oracle in the cloud, which should give you much better control and visibility. Should we, therefore, still think about phasing the same way as we did in previous quarters? So again, positive as of Q2, positive in Q3 and the massive positive in Q4? Or is there a bit more better division between the quarters?

Yes. Look, it's always -- it's fairly similar. I've got a slide in front of me going back 3 or 4 years, and it's always sort of exhibited that negative Q1 sort of a flat Q2 and then starts to uptick in Q3 and a really strong finish in Q4. It's the seasonality of our business. It's the nature of our contracts. People want to get their budget spent. We have a lot of government work. They want to get their budget spent by the end of the year. That's kind of what happens to a lot of our contracts and a push for the year-end.

So yes, look, we do have visibility. The Oracle system and systems give us that. We've got increased visibility and increased pressure on the WIP and on the AR. So we'll continue to push, Martin, but we can't control some of our clients.

The next question is from the line of Maarten Verbeek with The Idea.

It's Maarten of The Idea. Two questions for me. Simon, last year, you divided Arcadis into 3 buckets and high-growth area, about 1/3 growing slightly over 10% and other performance bucket growing -- declining by almost 10%. Did those buckets and growth rates differ much in the first quarter of this year?

Yes, I think similar-ish, things started to improve in certain areas. We had some successes. We've got a portfolio. It's a portfolio business. So there are lots of different -- U.K. started to improve. Australia started to improve. So we saw some green shoots there. Perhaps we were pleasantly surprised at. So it is a portfolio. There will always be bits that are slightly slower than others, but it seems like some of those underperformers are starting to perform. And you heard us talk about the U.K. earlier. Let's not get too excited, but let's celebrate some success in the U.K.

You mentioned that you might do some bolt-on acquisitions. But on the other hand, you are now analyzing and monitoring the underperformance bucket quite in depth. Have you also more or less concluded that part of this underperforming bucket is something which will not be part of Arcadis in the near future?

No, we are doing a portfolio review. We continue to study very hard some of the parts of the business that we're in and whether an exit makes sense, absolutely. And we'll continue to look at very small bolt-ons. So as and when we've reached that conclusion, we'll let you know when it's appropriate to disclose that. But yes, we are looking at every part of the business with fresh eyes.

Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Ms. Polinsky for any closing comments. Thank you.

Thank you all for your comments and your interest in Arcadis. I'd like to leave you with just this. We know what needs to change, and we're changing it. We are moving at pace and where we have strong positions, the business is performing. Where performance has fallen short, Simon and I are directly involved in taking action. And these actions are starting to make a difference. We've had an encouraging start to the year and are looking forward to 2026.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant day.

Ladies and gentlemen, thank you for standing by. I am Gailey, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the fourth quarter and full year 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed.

Thank you. Good day, everyone, and welcome to our 2025 full year and fourth quarter results conference call. My name is Christine Disch, and I'm the Investor Relations Director at Arcadis. With me on this call are Alan Brookes, our CEO; Simon Crowe, CFO; and our CEO nominee, Heather Polinsky. As usual, we will start with the presentation followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements, which were made in the press release. Please note the risks related to these statements are more fully described on the company's website.

Now please, over to you, Alan.

Thank you, Christine. Good morning and good afternoon, everyone, and welcome to our full year and fourth quarter results call. As Christine said, I'm joined by our CFO, Simon Crowe, who will outline the steps taken to address Arcadis' performance; and by Heather Polinsky, our CEO nominee, who will talk about her priorities for the future. Heather, who has been with Arcadis for 26 years and most recently run Resilience, the most profitable part of the business, assumes the role on March 1. Heather is an exceptional leader, and I am confident she will position Arcadis for success.

Our end of year results are mixed and disappointing, reflecting what has been a challenging year. In light of those challenges, we have taken rightsizing and cost reduction actions to improve performance. We will continue these actions in 2026 with Simon -- sorry, with Simon commenting further shortly. Our net revenues totaled EUR 3.8 billion, supported by a strong resilience portfolio and pockets of success in mobility, offset by weaker places performance.

In turn, we delivered record cash performance, generating EUR 288 million for the year, predominantly supported by a series of measures introduced in the fourth quarter to strengthen billing and collection discipline. The backlog was up 3% to EUR 3.6 billion, driven by Resilience and Places. When taking a closer look at our 2025 revenue performance, you can see that our total revenue declined by 0.5 percentage point, reflecting growth in Resilience and Mobility offset by weak Places performance.

We will lay out the actions we have taken this year to address the underperformers and for the high-growth areas, the investments we have made to leverage our leading positions. Starting with the underperforming areas. First, environmental restoration, which makes up 13% of our total net revenues and is part of Resilience. This declined by 5% over the year. Excluding environmental restoration, our Resilience business grew 7%, and there are a few drivers for this underperformance.

First, as a result of client restructuring impacting a substantial project, plus the successful completion of a large incident response project in North America, we saw revenues come down. In addition, shifts in the U.S. federal government policies, changing funding priorities and the longest government shutdown in history in Q4 caused delays to a portion of our pipeline for clients such as the Department of Defense.

To address the underperformance, we have made senior management changes and replaced 25% of our account leads. We reduced headcount with 150 people leaving the business, while maintaining our margin performance levels year-on-year. Moreover, we are repositioning towards growth markets, including energy clients asset retirement obligations and critical minerals.

Next, Property and Investment. This accounts for 8% of our total net revenues and is part of Places. Here, organic net revenue growth was down 17%. Our P&I solutions are mostly offered in Canada, China and the U.K. And in these areas, the residential real estate sector has been under considerable cyclical market pressure. During the fourth quarter, we did an extensive P&I portfolio review in Canada, which resulted in changes to revenue assumptions taken earlier in the year. Simon will provide you with the details in his section shortly.

As a response to this, we have significantly rightsized the business with 400 people leaving corresponding to 4% of the places headcount, while we made leadership changes in places. We are taking further steps in the first quarter of 2026 with an additional reduction of 150 people. While we are moving away from residential real estate and increasingly now focusing on rental, student and senior housing markets where we see opportunities.

The third underperforming area was mobility in the U.K. and Australia. This reflects 11% of total net revenues and declined 8% over the year. In the U.K. and Australia, the winding down of large projects such as HS2, Melbourne Metro and West Gate Tunnel, combined with large project award delays resulted in revenue pressure. To address this, we have rightsized our mobility workforce with a reduction of 350 people, corresponding to 5% of the mobility headcount.

We have redeployed our excess U.K. resources to take advantage of emerging opportunities in other countries. And we have seen our order intake increase in the second half of the year, driving backlog growth as projects were awarded following the U.K. spending review last June. In Australia, with the market still constrained and lower infrastructure momentum, we are focused on pivoting towards new markets, particularly to energy and environment.

Turning now to the high-growth areas. Starting with the solutions within our Resilience business, water optimization, energy transition and climate adaptation, which are part of Resilience and together delivered 12% organic net revenue growth. The performance of water optimization was driven by the strong U.S. market. Germany has seen successes in energy transition with the award of large multiyear contracts for grid expansion and maintenance.

Central to this is the continued work for Amprion, performing route planning for a 500-kilometer long transmission line. Our growing project portfolio in power was underpinned by nuclear wins in the U.K. and the Netherlands. Our second growth area is technology, which accounted for 6% of net revenues and is part of Places. Our acquisition last year of KUA Group in Germany has expanded our capabilities in this area. Our data center performance was strong, whilst our semiconductor business faced pressure from the wind down of one large contract.

Overall, the resulting technology growth was 3%. Arcadis reported over EUR 150 million of revenues in 2025 for its data center services, with an operating EBITDA margin of almost 20%. And we currently are involved in 280 data center projects. Finally, the third high-performing area is in mobility, specifically in North America, the Netherlands and Germany, which taken together delivered organic net revenue growth of 16%. Major awards in 2025 have underpinned that high performance. In British Columbia, our work on the design of the Fraser River Tunnel project has ramped up in 2025.

Other large projects that supported our results were ProRail in the Netherlands and Deutsche Bahn in Germany, where we have further strengthened our position through the WSP Rail acquisition. We continue to see a strong pipeline of large multiyear project opportunities in North America.

To summarize, we acknowledge our challenges and are actively addressing our underperforming areas through restructuring and cost measures. We are also focusing on those areas where we see opportunities to accelerate our growth. Heather will provide further details on this approach, looking ahead for this year and beyond.

But first, I will now hand over to Simon, who will take you through our results and the steps taken to address performance.

Thank you, Alan, and good day to you all. Let me start with our full year performance. As Alan outlined, Arcadis delivered mixed results, ending the year with EUR 3.8 billion of revenue. Excluding our Property and Investment performance, we delivered 1.3% organic growth. I'll provide more details around our P&I performance and actions taken shortly. Our operating margin was 11.1% with a significant negative impact from places, largely driven by P&I. This was offset by good margin expansion in both resilient and mobility. Excluding P&I, the margin would have been 11.6% for the year. Overall, we've taken significant rightsizing actions, which were accelerated towards the end of the year. We reduced our headcount by 1,100 people, which equates to roughly 3% of our total workforce, driving most of the EUR 77 million of nonoperating costs. Furthermore, we continue to invest in our strategic initiatives.

Turning now to our fourth quarter results. These showed an organic net revenue decline, which was driven by Property and Investment. The operating margin was 13.5%, excluding P&I. Resilience performed well as we focused on high-margin areas such as our energy transition and mobility -- and mobility also performed well as we optimized our global workforce allocation, including increased utilization of the GECs. We recorded record free cash flow in the fourth quarter, and I'll come back to this later.

Turning now to P&I. Part of our Places business, a number of issues went against us during last year. First, we experienced a weak market, particularly in Canadian residential real estate market with significant project delays, and we were unable to adjust quickly enough. In addition to that, the Oracle ERP system implementation in Canada caused some operational distraction. As a result, we took -- we undertook a comprehensive analysis of our project revenue positions in the fourth quarter for our P&I portfolio in Canada, which resulted in changes to revenue assumptions taken earlier in the year.

This analysis resulted in a total revenue reduction of EUR 22 million taken in the fourth quarter, and that also impacted EBITDA by EUR 22 million. As well as working on the usual year-end audit with KPMG, we also conducted an independent review with another big 4 accounting firm. This portfolio assessment is now behind us. We rightsized the business in 2025 with a reduction of 400 people and have made changes to the senior management team. We're continuing to rightsize in Canada with an additional 150 people reduction in Q1 2026. We are rebalancing away from the depressed residential real estate market and focusing on the rental, student and senior housing markets as well as the hospitality and transit markets where we see faster growth.

Let me spend a minute on the strategic progress we've made in the last quarter. Firstly, we stepped up our focus and discipline on cash and implemented various working capital measures, which resulted in a record cash in of EUR 344 million for the quarter. We've also reinvigorated our sales force, hiring new people to upgrade our teams, while we've introduced sales and performance-driven incentives, which are now being rolled out. We will continue to prioritize investment in our sales teams. And as part of our go-to-market strategy, we are reviewing our value-based pricing approach.

We continue to invest in automation and AI for our core processes, particularly to strengthen the effectiveness of our pursuits, our workforce planning and our forecasting process. We aim to increase our win rates and free up billable time as well as foster a performance culture and more accountability within Arcadis. Finally, we continue to take rightsizing and cost reduction actions to strengthen performance, including a workforce reduction program addressing more than 600 people in the fourth quarter.

Turning now to our rightsizing measures. In 2025, we acted to take cost out of the business, and this resulted in total nonoperating costs of EUR 77 million, including EUR 39 million in Q4. Total people-related costs represented EUR 53 million for over 1,100 people, comprising operating personnel of around 1,000 people and corporate overhead reduction of around 100 people with an expected 30 basis point impact on the 2026 margin from savings. Other nonoperating costs included integration and M&A costs as well as minor goodwill write-offs.

For 2026, we will continue to rightsize the business and overhead staff. This will be in line with measures taken in 2025. So we could expect a similar number of people to leave the business in 2026. We are simplifying how we work and are refocusing on clients. Our cost reduction plan continues to focus on automation and removing unnecessary expenditures. Turning now to backlog performance. Good order intake in the fourth quarter ensured that we closed the year with organic backlog growth of 2.7% for the year. Throughout the year, we saw strong data center order intake.

Our fourth quarter order intake was particularly strong for environmental restoration and pharmaceutical clients in the U.S. These multiyear large contract wins will be supportive to our revenue generation in the second half of 2026 as they take time to ramp up. This was offset by a weaker mobility market in the U.K. and Australia and challenges in our semiconductor business.

Turning now to the GBAs and resilience. This delivered 3% organic growth following strong performance in the U.S., Germany and the Netherlands, driven by strong demand for our water, energy grid and climate solutions. Revenues were impacted by slower progression of secured AMP8 projects with start dates being pushed out. Margin was strong as we focused on our high-growth, high-value propositions, fully in line with our strategy of project selectivity. And order intake in the quarter was also strong, resulting in an 8% organic backlog growth, driven by U.S. water and environmental restoration in Brazil.

Turning now to Places. Places is a tough market now, as we've outlined, including property and investment in particular, seeing low demand, which has been -- had a big impact on margin. Excluding this impact, organic growth was 1.3% for the year. As I mentioned, in response to this softness, we're continuing to reduce headcount in P&I and actively focusing on higher-growth markets, which drove strong order intake this quarter. This order intake included data centers as well as pharma in the U.S. and we're confident about our pharma awards, but it will take time before this converts into revenue.

Looking now at Mobility. We continue to see stable results where strength in North America, the Netherlands and Germany are fully offsetting weaknesses in the U.K. and Australia. We showed solid margin progression driven by optimization of global workforce allocation, including the use of GECs, ultimately driving improved billability. The softer order intake in the second half was partly a result of changing dynamics in the U.S. industry, where we experienced slower procurement processes and regulatory reviews on the back of policy uncertainty. These effects resulted in project award delays and some challenge for near-term revenue delivery.

Finally, Intelligence. This delivered strong growth in Q4 and despite a slower start to the year, achieved 6% organic growth overall. The business is increasingly supporting our largest projects across other global business areas, reinforcing its strategic value. As a result, we have decided to formally integrate Intelligence mostly into mobility, and it will no longer be reported as a separate segment going forward.

Turning to cash. As I mentioned earlier, cash flow is at record levels. We have driven cash collection through relentless management focus, putting in place clear systems and personal billability dashboards, and this has paid off with net working capital at 8% this year. We expect to maintain healthy levels of net working capital in 2026, and we are likely to see net working capital close to 11% as a sustainable percentage over time. Growth and free cash flow remain key priorities for us going forward.

Finally, turning to our balanced capital allocation framework. Last year, we continued to invest in the business and returned significant capital to shareholders. In September, we launched a EUR 175 million share buyback program with EUR 136 million spent through to the end of December, and we concluded the program in January. We returned EUR 89 million through our dividend, returning a total of around EUR 225 million to shareholders. Furthermore, we made 2 acquisitions in Germany, namely KUA and WSP Infrastructure Engineering, and we will continue to look at M&A opportunities where they make sense and fit into our strategic goals.

For 2025, we're proposing a dividend of EUR 1.05 per share to our shareholders, an increase of 5% year-on-year and well within our 30% to 40% payout ratio range. Going forward, we will continue to evaluate strategic investment opportunities to grow the business and return capital to shareholders.

In summary, 2025 was a tough year, and we expect the first half of this year to be challenging, especially in places. We are rightsizing the business, focusing on top line growth, especially in pharma, tech, energy, water and major infrastructure projects. We have the people, the knowledge, the drive, the determination and the client demand to make this business much more successful.

I will now hand over to Heather to provide her thoughts for the future.

Thank you, Simon. Good afternoon and good morning to those joining from around the world. Before I share my perspective, I want to thank Alan for his leadership. He has guided Arcadis through both the good and challenging times with integrity and clarity, and we are grateful for his dedication to our people, our clients and the company. As Alan and Simon have said, 2025 has been a challenging year for Arcadis. We are under no illusion about the amount of work ahead of us. But as you have heard, we are taking action to return to growth.

Having spent more than 26 years at Arcadis, I personally know the strength of this business, defined by deep expertise, global reach, local delivery and trusted client relationships. What gives me confidence is the platform we are building from and the scale of the opportunity ahead. Across Arcadis, we hold leadership positions in markets that matter from firsthand experience in leading both our resilience and mobility GBAs. These are sectors shaped by demand, long-term investment and increasing complexity for clients. These are not future bets. They are markets where we already lead, and we'll extend that leadership through disciplined execution.

Let me spend a few minutes on some key areas. In Water, as a top 4 designer delivering double-digit organic growth and over a century of experience in water services, we lead in engineering, coastal resilience and emerging contaminants such as PFAS with flagship programs, including Sao Paulo's largest wastewater treatment plant and the $1.7 billion Lower Manhattan Coastal Resiliency program. In Energy & Resources, the U.S. requires up to $1.4 trillion in power investment by 2030, while Europe is accelerating its energy sovereignty and critical minerals development.

Our strong market positions, #3 in transmission and distribution and a leading position in mining is reflected in recent wins, including 2 new nuclear plants in the Netherlands and Australia's first renewable energy zone. In Technology and Life Sciences, nearly 100 gigawatts of new data center capacity will be added by 2030, alongside major semiconductor and advanced manufacturing investment. Arcadis as #1 in life sciences and semiconductors and top 3 in data centers, we are well positioned to capitalize on these trends and grow our business in these areas. On major infrastructure projects, our clients increasingly demand certainty on cost, schedule and outcomes. Through integrity and integrated delivery, intelligent infrastructure and asset advisory, Arcadis is the partner that clients rely on.

This is reflected in projects such as the redevelopment of Amsterdam's Central Station. Taken together, these positions give me real confidence. We are aligned to powerful market tailwinds. We are focused on where we have a clear right to win to drive growth. Looking ahead, leadership today is not just about where you compete. It's about how. We build on our market positions by partnering with clients and embedding human expertise with AI and digital solutions to help our clients plan smarter, move faster and deliver with confidence.

Across water, energy, data centers and rail, we combine engineering with advanced analytics to optimize performance and drive faster evidence-based decisions for our clients. Our partnership with VODA.ai is supporting water clients to predict lead service lines before they become a problem, so they can prioritize capital expenditures and accelerate compliance. Climate Risk Nexus takes predictive climate analytics and combines them with asset-level insight guiding resilience planning. In just 1 year, it's grown from 2 pilots to 20 projects, including a statewide assessment across 64 campuses of SUNY, the State University of New York.

In technology, our NVIDIA Omniverse partnership lets clients model and optimize data center assets before construction even begins, cutting risk, cost and delivery time. And in rail, our integrated EAM solution brings digital products, analytics and advisory together into one seamless offering, earning recognition from Verdantix as best-in-class. These digital capabilities aren't just tools, they're central to our strategy. They create higher value outcomes for our clients, strengthen our market leadership and define exactly how we compete in a changing world. The priority now is clear, converting these strengths into consistent, profitable growth.

My focus is anchored in 3 priorities. First, refocus the business on high-growth markets. We are directing capital and talent to sectors where we have the right to win, water, energy and power, technology and large infrastructure projects where demand provides long-term visibility. One of our greatest growth engines sits within our existing client base. In recent months, our executive leadership team has met more than 50 key clients and the message was consistent. They value and want to do more with Arcadis.

Deepening these relationships and expanding our wallet share provides a clear path to stronger organic growth. Second, simplify to accelerate performance. We are removing complexity, reducing layers in the business and enabling faster decisions closer to our clients. Alongside this, we are advancing automation and taking disciplined cost action to improve our competitiveness. The outcomes are straightforward: higher productivity, stronger margins and better backlog conversion.

Third, we need to drive cultural change through a truly client-led model. We are sharpening sector focus, aligning ownership with accountability and ensuring incentives, reward, personal and team performance. We are expanding client coverage, including over 60 new account leaders appointed this week, and the scaling of GECs will enhance delivery while maintaining cost discipline. Execution is underway, but let me be candid. As you have heard, there is a lot more work to unlock the full potential of Arcadis.

Turning to our outlook. We expect net revenue organic growth to be flat with a weak start to the year. This reflects the reality of repositioning the business for stronger performance. As I said, demand in water, climate and energy is robust. Environmental restoration is also showing recovery for us in the U.S. Key geographies continue to perform well, and our pipeline is healthy. However, uncertainty in places and the timing variability in large mobility programs means that demand will not fully translate into near-term revenue in these areas. We will also be very focused on the areas where we have control, namely productivity, efficiency, cost control, GEC contribution and disciplined project selection.

As a result, we expect our operating EBITDA margin to reach 11.7% to 12%. Arcadis is stronger than our current trajectory suggests, but strength alone does not create value. Consistent delivery does. Let me close with this. We are resetting the foundations of our next phase of profitable growth. And we have already begun. We have reinstated cash discipline, strengthened our sales force in markets that matter most, aligned incentivization with performance and accelerated restructuring where change was required.

Now in 2026, it is about execution. It is about performance and growth, a simpler and more agile business and greater accountability. We are sharpening client centricity and aligning rewards with outcomes. We will continue rightsizing underperforming areas, and we are simplifying how we will operate and deliver so we move faster, make better decisions and compete more effectively. There is work to do, and I want to be explicit about that. But the priorities are clear, the actions are defined and execution is underway. You should hold me and Simon accountable for delivering this change. That accountability is understood, and it is embraced.

I am confident in the steps we are taking, confident in the markets we serve and fully committed to restoring Arcadis to sustainable and profitable growth. Looking ahead, we will host a Capital Markets Day in November 2026. There, we will set out our next 3-year strategy, including our strategic ambitions, go-to-market model, portfolio optimization, human and digital ambitions and strategy and medium-term financial and nonfinancial targets. 2026 is a reset year, but it is also a launch pad for us. We are strengthening the core, embedding agility in how we operate, raising expectations across the entire business and positioning Arcadis to deliver stronger and more profitable growth.

With that, I'll hand over to the operator for the Q&A session.

[Operator Instructions] The first question is from the line of David Kerstens with Jefferies.

I've got 2 questions, please. First of all, you talked about the underperformance and the high-growth areas in the business. I think combined around 2/3 of the total. Can you also explain what happened in the remaining 34% of the business, which I think saw an organic decline of around 5% to get to the organic revenue decline for the group of 0.5%?

Then the second question -- can you explain the cut to your full year '26 guidance compared to what you indicated on October 30? I think you said then that you expected organic net revenues to gradually build up towards 5% in 2026. Now you're guiding for flat revenues. Does that also mean you expect it to build up gradually towards flat for the year? And also, I think last quarter, you still indicated you were on track to reach the 12.5% EBITDA margin target as your strategic objective. What drives that reduction to 11.7% to 12% now despite all the measures you have taken in terms of rightsizing, adding 30 basis points to margins and all the earlier investments in productivity and standardization improvements?

Yes. David, it's Simon here. I'll take the first question, and then we'll take the other questions after that. So the other part of the business that we didn't talk about, I think has declined about 1.6% based on our internal calculations. And obviously, there's a mix of things going on there. So we've had some strength and some weakness. So I think it's -- we could dive into each of the pieces, but it's just part of the business that we didn't highlight in this conference call. So we've had some government clients in there, which have been affected by the U.S. slowdown. Obviously, the policies that flip flop with Trump. So we just haven't got the momentum in that part of the business that we'd like.

Dave, do you want to talk about your -- the growth for 2026? Obviously, Heather and I have had a really good chance to do a lot of reviews and a lot of dives into where we are. And we feel that 2026 is a reset year. We think the first half based on some of the things we're seeing in mobility based on places will be slower than we expected, and we expect that to hopefully increase in the latter half of the year. So we're looking forward to a slow ramp-up during the year, but Heather and I felt it was right to take a really good look and reset expectations. And I hope we've been really clear with you.

We've been really clear with what we're expecting for the year. We're expecting flat. That's our judgment at the moment. And we're expecting that margin at 11.7% to 12%. Obviously, we're taking more rightsizing measures. Obviously, we're looking for more growth. obviously looking to increase that margin over and above where we're guiding to you today. But we thought it was just sensible to give you some clear expectations.

The next question is from the line of Sangita Jain with KeyBanc.

Could you possibly elaborate on the go-to-market strategy that you're discussing on some of these end market pivots? I'm trying to understand how you think you're competitively placed versus your peers, especially since you're bringing in new businesses and sales teams at the same time? And then I have a follow-up.

So we talked specifically about our ability to grow in several key markets, water, energy and power, technology and semiconductors and life sciences as well as data centers and large infrastructure projects. And we've had success in doing this in the past. In fact, many of those businesses are already on a growth trajectory. So we know that we have the right to win. We have looked at and conducted a pricing review to look at strategic pricing so we can make sure that we are competitive, and we're bringing the innovation that I spoke about, whether it's the AI tools or it is our digital intelligence projects, combined with our human and technical expertise and asset knowledge to win in those sectors.

Got it. And then I understand that the Capital Markets Day doesn't come until much later in the year. But in the meantime, can you help us understand if the strategy review could possibly include further reducing the number of geographies you're in or possibly cutting end markets to get back on a path of growth?

Yes. Look, we will continue to review our strategy. We're not going to sit still. We're in a hurry. We continue to review our geographies, our sectors, our services and where we think it is appropriate, we'll make changes and where it is appropriate, we'll grow and where we have a right to win, we'll invest in heavily. So everything is up for review for us. Heather and I are looking very carefully at where we're strong, where we're not so strong, and we will obviously communicate with the market in due course. But we're very confident we have a right to win in the sectors that we outlined, and we're going to go and win there.

The next question is from the line of Martijn Denreiver with ODDO ABN AMRO.

I'll start off with a question for Simon, if I may. The 1,100 people charges of EUR 50 million, am I right in assuming roughly that you would pay 6 months salary severance, meaning that you could expect EUR 50 million saving in 2026 from that element. If you do another EUR 1,100 million in 2026, assuming that you're going to do that relatively early in the year from the same analogy, you would get another EUR 50 million in savings. All in all, back of an envelope that would add EUR 100 million in savings, which represents 2.3% on flat revenue. So I have a bit of a trouble getting to that 11.7% to 12.0% EBITA margin given these restructuring measures. Can you help me understand that?

Yes. Obviously, I think your math is pretty reasonable. Obviously, it depends on the jurisdictions and the timing, as you say. But look, we've got wage inflation. We've got to give people a pay rise in certain jurisdictions throughout the year. We've got 35,000, 34,000 people. So we'll be doing that. We're obviously going to invest in the business in the top line growth in go-to-market, in pricing and all of those things that we talked about, we're going to invest in those markets. So yes, there's going to be some savings, and we're looking to protect our margin. We're looking to grow our margin, but also we've got to continue to back our people, attract talent and grow the top line. So there's going to be some investment there.

Got it. My second question is on net working capital. The 8.3%, very strong. Even if you adjust for the factoring, it would end up at roughly 8.8%. So still well below the target that you set yourself of 11%. But did I understand you correctly that you were saying that around 11% would be a healthy level of net working capital going forward?

Yes, that's right. That's sort of our typical trend over the last couple of years. Obviously, I've started to drive very hard there, as you've seen. I made the promise back in Q3. We've delivered on that promise. It was a record level of cash intake, but we'll drive hard to get that below 11%. But look, the business has some cyclicality around it, has seasonality. We will drive hard. We've started some new initiatives internally on the back of our success in the last quarter. So we'll continue to drive that down. And -- but I think 11% is a good thing for your model, yes.

The next question is from the line of Chase Coughlan with Van Lanschot Kempen.

I just have 2 and maybe starting with the portfolio review. You mentioned you had the reductions in the P&I business in the fourth quarter. Are there any other areas of the portfolio in 2026 that, let's say, could be a risk of a further revenue reduction that you're looking at? Or how is that process being conducted?

No. We -- as I said, we did a review of our Canadian business. We did the normal audit review with KPMG. We brought in a third party. I myself conducted daily calls over the last quarter to review that business, and we've drawn a line under that, and that's behind us. And there's no -- there's nothing to indicate anything else like that is happening in Arcadis. So no is the answer to your question.

Okay. Perfect. And then my second question, just going back again to the sort of organic sales growth guidance. I'm struggling to understand sort of why we imply a worsening in the first half. I mean a lot of the sort of commentary you provided about you're starting your sales incentivization changes in January, more salespeople in the business. The book-to-bill even in places looks decent. So could you please maybe just sort of help me understand exactly why you expect even a worsening environment at the beginning of the year at least?

Yes. And as you mentioned, we expect net revenue organic growth to be flat across the year with a weak start. This reflects the reality of us repositioning the business for stronger performance. And it also -- while you point out, we have strong backlog in Mobility and Places. Mobility has experienced some delays, and those are driven by some of the market dynamics as well as the lumpiness of the awards that we see. Places also remain strong, but those large projects take a little bit of time to ramp up from the permitting phase into the heavier design phases for us. So really looking at that phasing and the quality of our backlog, we expect to see the positive improvement through the year, but to have a weak start.

Okay. So it's really timing and then repositioning. All right. And if I may just squeeze in a third one on capital allocation. So of course, your balance sheet remains very healthy from a leverage standpoint. Could you give any indication on what your sort of capital allocation options are? I mean you're obviously repositioning the business yourself, as you said, I'm not sure if M&A is appropriate at this time, but even for sort of another buyback potential, what -- how are your thoughts about that from a management standpoint?

Look, we'll look at all of that. Of course, we will continue to discuss M&A opportunities. We did a couple of small ones last year. It'd be great to think we could do some similar things this year. They were excellent additions to our business. Of course, we'll look at buybacks. Of course, we'll look at capital allocation across the piece. So it's just the normal course of what we discuss all the time in the business. So that's what we'll be doing. And I'm confident we, as you say, got a very strong balance sheet and good cash collection. So we have a lot of optionality.

The next question is from the line of Natasha Brilliant with UBS.

I've got a couple of questions. My first one is just thinking about more the midterm growth profile of Arcadis. I realize you'll do your Capital Markets Day in November. But once we get through this transition year, do you feel confident that Arcadis can get back to being a mid- to high single-digit growth business again? And then my second question is a broader question around AI, where we're seeing a lot of investor interest, but also market volatility. And you've talked about how you're using AI to drive efficiencies internally. Are you having any discussions with customers who might be pushing back on the use of AI or asking to share on some of those efficiencies with you? Just trying to understand how we should think about pricing and profitability for your business going forward given the sort of AI overlay.

Yes. First of all, let me take the first question on Capital Markets Day and our projections going forward. It is our intent to return to the same market level performance as our competitors. And we see no reason why with the strong technical capability and strong client relationships that we have when we take the other actions that we put in place that we won't get there. So we are confident we'll get to that same market performance.

On the AI question, yes, AI is something that is continuing to be in the conversations with our clients. And in fact, we are already delivering projects with AI integrated in them. There's 3 parts to the AI discussion. One is our internal efficiencies, as you've talked about and Simon mentioned [Audio Gap] we do it in a way that is really reflective of the local markets and client needs as well as the transparency of where it's able to add value. And then we are engaging on discussions with our clients about new revenue lines and how we can help them in different ways and new ways. And in fact, I don't know if you have seen, but we launched an AI for water challenge, and we'll be also launching one on energy specifically going forward, where we're co-creating with our clients AI solutions to support them.

The next question is from the line of Kristof Samoy with KBC Securities.

A lot of them have already been addressed. But press release mentioned that you're working on value.

Samoy, I apologize for interrupting you. Can you please speak a little closer to your microphone because I'm not sure that management can hear you.

Okay. Is it better now?

Yes. Please proceed.

I have one left. It's on value-based pricing. In the press release, you mentioned that you're working on that. And obviously, there's a lot to do on AI and the impact it has on the billable hours model. Can you give like a tangible example on how you want to go at implementing more value-based pricing? And secondly, can you give some insight into your breakdown of your revenues in terms of cost plus pricing time and material and lump sum and how you see this composition change over time?

Let me start with the last part of that discussion first. It's about 60% fixed price and the remaining time materials or cost plus. And as it relates to value-based pricing, we're already using value-based pricing with some of our clients and testing it out. And we've had some great success in co-creating solutions with our clients and then working through the value-based pricing approaches with them. And as Simon mentioned in the presentation, we have initiated a strategic pricing review and also working to support our teams and more effectively bidding so that we can win more with our clients.

And just to say, we brought in an external pricing specialist to help us with that review. So we're not just relying on our own knowledge, but we're really excited about the initial findings, but we've got a lot more work to do there.

The next question is from the line of Dirk Verbiesen with ING.

I have a question on the headcount reduction. The 1,100 roles that you took out, 100 of those are in overhead and your plans for 2026, you already announced 150 further reductions in the property and investments. And I am aware of the sensitivity, but can you share a bit more on what your further plans are? And is this, let's say, overhead versus billable people 1 in 10 like we've seen in '25. Is that the same magnitude as you foresee for 2026?

Look, we're going to take a really good look at this and Heather and I have started to look at this. In fact, I shared a list with her the other day. It's nonbillable, nonclient-focused people that we're just trying to work out where can we find some efficiencies and where can we find automation. We are -- I think the ratio will be different this year than it was last year. As you said, it was 1 in 10. I'd expect to find more efficiencies from our nonbillable and non-client focused areas. That's not to say that these functions are not important. They are important. We've got some great people doing some great work, but I think it's just -- it's incumbent upon us to take a really really hard look at what we're doing.

And obviously, we're going to leverage AI. We're really excited about the opportunities there with the efficiencies that AI can bring to us. And hopefully, we can divert a lot of these folks on to billable work. That's really the key here. We think the markets are really, really exciting and really strong for us in the areas that Heather mentioned. And if we can move people from nonbillable and nonclient-focused work into billable and client-facing work, then that's the real opportunity we have because these people understand and know how Arcadis works. So a lot to do, and we're going to do it quickly.

Following up on the previous questions also from Martijn on the impact of these headcount reductions. If you say, let's say, the 1,000 billable people, yes, you've lost around EUR 110 million potential revenues taking them out and maybe also a significant number in '26. I think we understand that, that flat revenues guidance comes largely from that and maybe some delays in projects. But let's say, a return also the remark from Heather to peer average organic growth, yes, I think most peers say 6%, maybe even 6% to 8%. Let's say, how long do you think you need to really recoup the momentum there towards that ambition?

Look, I mean, Heather, your math may be right. It's -- and if you're modeling it out, obviously, we're taking some heads out. Some of those are billable, but we are looking at increasing the billability and looking to return to that growth. So I think, look, we're looking for second half. We're very excited. first half is slow as we've indicated. We've been very clear on our guidance. The markets are there for us. We're going to be very selective on how we take out cost, but it's all about focusing on billable and client-facing people who will drive that recovery into the second half.

And Simon, if I can add, we are going to be taking some restructuring costs associated with those reductions, but we are making investments. We are going to shift our portfolio towards those high-growth markets and make hires in those areas. So it's really about the shift and the rebalancing towards the growth markets in the areas we have the right to win.

The next question comes from the line of Sabahat Khan with RBC Capital Management.

I guess just maybe just taking a lot of the questions from earlier around the cuts and the sort of commentary on outlook together. With these sort of restructuring initiatives, do you feel like you've gone deep enough to sort of position the company on the right path? And then secondly, just in terms of '26 being a transition year, is the confidence there really that it will be a matter of time to cycle through maybe some of the not so favorable projects? Or just -- what gives you the confidence that this will be sort of a transition year and that you sort of cut deep enough? Just more of a high-level perspective, not looking for sort of guidance or anything.

No, I mean I'll start and Heather, I'm sure will add to that. We're not holding back. So look, we're going to do -- we're going to continue to do the reviews. We're going to continue to see what makes sense. We're going to continue to invest in the business where we see the growth and the value, but we won't hold back on those slow growth or no growth areas that potentially need looking at.

Yes. Some of the additional elements is the market is there for us. And so specifically, the market in these areas that we've identified the right to win, we believe that by making those strategic investments by changing our incentivization and improving and adding to our sales force that we'll be able to use that strategic pricing we talked about and even the automation of our pursuit process will start to come into play. So quite a few factors coming forward to help drive us towards that growth.

Great. And then just quickly a follow-up. I guess, as you put new leaders in place, put some new folks in place, restructured other things, how are you ensuring that the sales folks and the project managers during that transition are still sort of filling the backlog to ensure '27 and onwards gets to the right range that you want to get to?

Look, we've -- Heather will comment as well, but we've incentivized a lot of people to really focus on driving sales now. It's about performance culture. We're really excited. We're shifting to that performance culture. Q1 and Q2 also a massive, massive focus for us, and we've been repeating that message and incentivizing people to drive the growth into Q1 and Q2. So the message is out there, and people are excited about it, and they're grabbing the opportunity.

Yes. And Arcadis' mission of improving quality of life is done through the delivery of our projects. and through the passion of our people. So our job as leadership is to mobilize and energize that passion. We also have a really high employee engagement score. So even though we've taken these cuts over the last year, our Net Promoter Score remains in the top 10% of professional services. So in addition to the expectations we've set for our people, we've got a great foundation to grow from.

The next question comes from the line of Luuk Van Beek with Banque Degroof Petercam.

First of all, a question about the -- your ability to predict the timing of when your backlog converts into revenues. It was an issue last year. Have you taken any measures to improve the process? And if so, what kind of measures?

Yes. We've -- I've been looking at that amongst other things. And that's one of the key issues for us to ensure that we give the training, we show people how they can phase their backlog more easily, make sure the systems are easy to access. And that's certainly something in terms of the transformation. And I call it the sort of 10 commitments that we've got. One of those is to phase your backlog. And we're obviously monitoring it. I've got a dashboard that I can look at every day, and we are getting that message out there that phasing the backlog is really helpful for knowing who to put on a job and who we can put on another job and also forecasting as we go forward. But it's going to take time. We've got over 30,000 projects. We've got a lot of project managers out there. So the time -- it will take us some time. But yes, it's on the list.

And you mentioned in the presentation that you target cost reduction to drive competitiveness. Does that mean that you have the impression that you sometimes lose projects against competitors because of your pricing?

I'll let Heather add to this. But we think we -- obviously, we lose some bids because of pricing. But I don't think that's it. Obviously, we work with competitors. So we can see -- often can see what the pricing and we're in partnerships. We're in joint ventures, so we can see that. I think we're just so -- actually, we're so good at what we do. We bring that complete project sometimes. And often, the customer just maybe just want something slightly less. And that's part of our pricing review, part of the value pricing that we're working on. We're so good at delivering and so enthusiastic that sometimes I think we may get carried away. But Heather, maybe you want to talk to that.

Yes. Just on our cost base, I think that what's important for us to recognize is that efficiency isn't always just in the cost. It's in how quickly we're able to make decisions in the organization. So reducing layers within our, say, overhead structure or enabling function will allow us to be more responsive to our clients and allow us to win at a faster rate and allow our people more entrepreneurship and flexibility so that we can both protect Arcadis, but also deliver to our clients more effectively.

The next question is from the line of Simon Van Oppen with Kepler Cheuvreux.

I have one remaining question left, and you mentioned the independent auditor review. I was just wondering to what extent has impairment testing be done in Q4 on each of your individual divisions? And should we expect any further impairments in 2026?

No. I mean we've done all the necessary reviews. No more -- no, you shouldn't expect anything like that.

Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Mr. Brookes for any closing comments. Thank you.

Thank you, and thank you, everybody, for your questions. As we said at the start, it has been a challenging year for Arcadis. But as I hand over to Heather as CEO, I do so with full confidence in her leadership. She has a clear mandate, as you've heard today, to strengthen performance, simplify the business and accelerate delivery. These actions are already underway, and the priorities are well defined. So thank you again for your time and engagement over the last 3 years and for indeed your continued support for Arcadis under Heather's leadership. Thank you all very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant day.

Ladies and gentlemen, thank you for standing by. I am [ Charise ], your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the third quarter 2025 trading update. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed.

Thank you, and good day, everyone, and welcome to our 2025 third quarter trading update. My name is Christina Disch, and I am the Investor Relations Director. With me on this call are Alan Brookes, Arcadis' CEO; and Simon Crowe, our CFO. We will start with the presentation to be followed by Q&A.

We would like to call your attention to the fact that in today's session, management may reiterate forward-looking statements from the press release. Please note, the risks related to these statements are more fully described in the press release and on the company's website. Now please over to you, Alan.

Thank you, Christine. Hello, and welcome, everybody, to our trading update for the third quarter of 2025. I'm delighted to welcome our new Chief Financial Officer, Simon Crowe, to Arcadis. Simon joined us on September 15, bringing more than 30 years of international experience as a group CFO across the New York Stock Exchange listed and private equity-backed businesses. You'll hear more from Simon later in the call.

Arcadis has returned to organic growth this quarter as we committed in our half year results and has delivered a steady margin improvement quarter-by-quarter, reflecting consistent stable performance. We have increased our net revenues year-on-year by 1%, driven by continued strong demand for our services in North America and Continental Europe, with Germany and the Netherlands delivering particularly strong results. Leading positions in high-growth markets such as energy, water, climate, and technology continued to perform well with a continuous shift of our portfolio to these solutions, while revenues were still somewhat impacted by softer market conditions in the U.K. and Australia.

Our net backlog totaled EUR 3.5 billion with organic growth of 2% year-on-year. This was driven by strong order intake from water, energy, government, and technology clients, compensating for the winding down of some large projects in environmental restoration in the U.S., industrial manufacturing in Europe, and mobility in the U.K. We saw some positive order intake in the U.K. during the quarter, hinting at early signs of recovery. Our backlog quality has been reinforced by our discipline and project selectivity at the pursuit stage with an increased focus on key clients, margin-accretive solutions, and high-growth markets.

Margin this quarter was again strong, expanding year-on-year as a result of improved solutions from strategic initiatives as well as earlier rightsizing actions, while we continue to invest strategically to support future growth and drive additional cost efficiencies, investing in AI and GEC resources to support delivery.

Now let's focus on our global business areas. First, Resilience. We saw continued positive momentum with 7% backlog growth year-on-year, driven by our leading market positions in water, climate, and energy. We have continued considerable demand in North America, Germany, and the Netherlands. The water market continued to deliver strong performance, most notably in the U.S. In water in the U.S., we were awarded a contract to develop a management system for the New York City's water and sewer operations, which includes managing data on installations, maintenance and identification of water service lines across the entire water distribution system. In the U.K., the AMP8 cycle is ramping up slowly, while we have secured additional notable wins that I will touch on later.

In energy, our well-recognized expertise in grid reinforcement and expansion is delivering multiple sizable wins from electricity transmission and distribution clients. These include TenneT in the Netherlands, [ PGEC ] in the U.S., and National Grid in the U.K. Building on an already significant backlog, largely driven by Germany, our global efforts are now delivering further wins across our key markets. We are well positioned to capture growing opportunities in nuclear. This currently remains relatively small share of our portfolio.

The environmental restoration portfolio was affected by some contracts phasing down in the U.S. However, we expect to see recovery by H1 in 2026 as large projects for existing key clients have recently entered the pipeline. Overall, the solutions mix and composition of our backlog has materially improved over the last year. And as a result, we have strengthened our position in strategic growth sectors and are driving a higher-margin project portfolio.

Turning now to Places. In Places, we have continued to pivot towards the higher growth markets and delivered 5% year-on-year backlog growth. Our integrated design and engineering solutions have seen their share of backlog expand to 16% for technology clients. For our government and public facilities, we have witnessed signs of gradual recovery in the U.K. and strong health care wins across the portfolio. Pivoting to the growth areas, these have helped us to offset slowdown in industrial manufacturing that has been driven mostly by European clients taking longer to finalize large CapEx decisions alongside overall softness in the property and investment markets in Canada and the U.K.

In industrial manufacturing, we are positioned to take advantage of a major opportunity in the life sciences sector in the U.S. And additionally, in Ireland, we have secured a significant life sciences project in Dublin, reflecting our growing track record in biotech and pharmaceutical facilities. The EUR 14 million award covers the commissioning, qualification, and validation scope for a major site upgrade and expansion. This builds on the recent EUR 5 million design and data construction management success at the same site.

Momentum in data center remains strong, resulting in steady increase in technology client share in our total backlog. Globally, we are now involved in 225 data center projects, delivering 15 gigawatts of energy. The total data center market is estimated to be worth around EUR 300 billion. The design and engineering firms typically taking 10% to 15% of the investments, which translates to around a multibillion market for us. This is a clear demonstration of the buoyancy of this market and the bespoke solutions we are pioneering and why we are now adding sales capability to this important sector.

The public sector continued to deliver steady results, driven by sustained demand in health care and education. The contract with the U.K. government to deliver their prisons estate expansion program is also ramping up. We have also seen notable success with a large oil and gas client as we have been appointed to lead the architecture and design services across their global real estate portfolio covering EMEA, the Americas, and Asia Pacific. This strategic focus on high potential sectors is driving steady progress in our Places performance despite the ongoing headwinds.

Turning now to Mobility. The market here remains strong with increased policy clarity driving some investments and pipeline opportunities for us. The negative backlog development of minus 9% was driven by a very strong order intake in the third quarter last year. At that time, we secured a number of major multiyear project wins, such as the Hudson Tunnel in New York and the Fraser River in Canada, leading to a significant step-up in our total backlog at that time. Furthermore, the mobility order intake is typically showing some lumpiness over the quarters with the first and last quarters typically being the strongest.

Looking at our global portfolio, some major infrastructure projects in the U.K. and Australia have been ramping down, while we have significantly invested in our positions in North America and Germany. During this last quarter, we have seen substantial opportunities with clients such as Deutsche Bahn and multiple U.S. Departments of Transportation entering a growing pipeline. At the same time, we invested in resource alignment earlier in the year and continuous GEC expansion, which has given us the right foundation for further growth expansion in the years to come.

One major project in highways was in Belgium, where we have been commissioned to carry out the full study assessment to improve the transport infrastructure between the Port of Antwerp and the R2 motorway north of the city, with the goal of stimulating economic growth, mobility, and quality of life in the region.

In Germany, we were appointed to lead the electrification and modernization of the Marschbahn line between Hamburg and Seeth as well as providing geotechnical and tunnel construction consulting services for approximately 30 kilometers of tunnel route in Berlin as well as installing digital signal boxes on the [indiscernible] network. These successes demonstrate the value the increased capability of our enhanced rail business in Germany provides.

Another sector showing renewed momentum is aviation, where our backlog has doubled in the past year from a modest base. Arcadis is supporting CapEx and transformation programs across major airports through a cross GBA collaboration approach. We are particularly well positioned in the U.K., where we are working with 3 of London's major airports, including the Gatwick expansion project. And we also see projects across Continental Europe.

Turning to our Intelligence business. Our digital solutions in Intelligence underpin all the GBAs and enhance our propositions to our clients. These continue to drive solid revenue growth. Enterprise Asset Management continued to see strong demand in both the U.S. and the U.K., although we saw a decline in backlog due to the timing of new contract awards. Our digital capabilities were highlighted by a significant win in the U.S., where we were appointed to deliver a technology blueprint for the Georgia Department of Transportation. There, we will evaluate, prioritize, fund, and deploy innovative technologies aimed at enhancing safety, operational efficiency, and workforce development. The 2-year project will focus on addressing key challenges, including developing an adaptive strategy for the client to identify and adopt current and emerging technologies.

Demand for our Travel IQ in North America remains strong. EDA Lite continued to gain traction across the water, government, technology, and property and investment sectors. And last week, we launched Climate Risk Nexus, a digital platform that helps organizations move beyond exposure analysis to plan, prioritize, and invest in climate resiliency. Our resilience focused digital solutions, including Climate Risk Nexus and Net Zero Catalyst are seeing growing demand with our clients. We continue to enhance the value we deliver to clients through our expanding digital product suite. These are not standalone capabilities, but a core component part of our wider offer across our GBAs and continue to evolve as part of how we deliver smarter integrated solutions for our clients.

Turning now to the U.K. and Ireland. Last quarter, I spoke about the state of the U.K. market and how, in particular, the freeing up of funds for public spending has slowed as the government finalized its spending review in June. Since then, we are seeing good order intake developments and a gradual increase in activity starting to take place with a number of projects in rail and public transport, housing, nuclear, highways, and healthcare all coming to the market. However, despite these promising shoots of recovery, we remain cautious on the outlook given the economic uncertainty the U.K. continues to experience.

The impact of the U.K. slowdown on the business is significant, a 2% reduction on total global Arcadis net revenue organic growth. Healthcare is one of the sectors where we are starting to see considerable demand for our services, and we secured a wide range of successes in hospitals. The AMP8 cycle is another funding stream that is now gradually starting to accelerate. We have secured 2 major wins with Thames Water and Scottish and Southern Electric. Across the U.K., we are carrying out projects with 11 water companies, enabling the delivery of a record-breaking AMP8 investment cycle of some GBP 96 billion, evidence of our range of expert services across the sector.

Our U.K. business advisory team is playing an increasingly important role in some of the U.K.'s most significant infrastructure projects, advising on major nuclear projects such as Sizewell C and other national programs in addition to our work with the U.K. Atomic Energy Authority. These projects reflect a stabilizing policy environment in the U.K. and a gradual increase in public sector investment. We are winning work, but continue to be cautious about the U.K. outlook. With the annual budget approaching and broader economic conditions remaining subdued, we expect that most of the revenue will be realized later in 2026.

With that, I would now like to hand over to Simon, our CFO, to take us through the financial results from Q3.

Thank you, Alan. Good morning and good afternoon to everyone. I'm pleased to be joining for my first trading update as CFO of Arcadis. I look forward to building on the financial foundation established here, and I'd like to thank Virginie and Willem.

Clearly, we've had a very adverse reaction to the quarterly results that we announced this morning. I want to talk to you about the key actions that we are taking to address our challenges. So let me first take you through our third quarter performance, after which I will share my observations and talk about our action plan.

So starting with the third quarter. We've returned to organic growth of 1%, reflecting good demand across key geographies, particularly in North America, Germany, and the Netherlands. This quarter, we saw a sizable negative FX impact of about EUR 40 million, driven by the translation of our U.S. dollar results.

Our operating EBITDA margin expanded further to 11.6%, up 20 basis points from Q3 last year, demonstrating some cost discipline, the benefits of rightsizing measures implemented earlier in the year and a focus on more disciplined project selectivity. We have continued to invest in strategic initiatives such as standardization, the global excellence centers, and the key client program.

Free cash flow for the quarter was EUR 80 million, which was below last year, driven by a higher working capital position. This was caused by 2 things. Firstly, some projects awaiting key milestones before we can build. And secondly, the further rollout of the Oracle ERP system in North America causing delays…

[Technical Difficulty]

Ladies and gentlemen, we apologize for the pause. Please hold your lines. Ladies and gentlemen, thank you for holding. We're to resume our conference. Thank you.

Management, you may proceed. Thank you.

Thanks. Apologies, everyone. I think we -- our line dropped out. I'll just go back to, our free cash flow for the quarter was EUR 80 million, which was below last year, driven by a higher working capital position, and this was caused by 2 things. Firstly, some projects awaiting key milestones before we can build. And secondly, the further rollout of the Oracle ERP system in North America, causing delays in billings of project invoices. As a result, days sales outstanding rose to 73 days, up from 67 days last year. This is a temporary issue, and it's not where we want to be. I'm very disappointed. I'm driving the business to get our net working capital down towards 11% as soon as possible.

Over the past 2 weeks, I've spoken to over 200 senior sales, operations, and finance personnel to drive billing and cash collection. We've identified areas where our billing discipline has not been at the level where it needs to be, particularly in some geographies. I've made this a personal priority and have been engaging directly across the organization to reinforce the importance of timely invoicing and collections. I'm looking to bring our working capital levels back to where they should be by the end of the year.

Our net debt position remains well within our target range at 1.8x, reflecting our ongoing focus on cash generation and disciplined capital allocation with our share buyback progressing as planned. Net debt has increased by approximately EUR 240 million since the year-end, and this is due to payments of the dividend, 2 small acquisitions, and our free cash flow.

Turning now to the GBA performance. We continue to see momentum in several of our core markets, though some areas remain more challenging. Our Resilience business delivered organic net revenue growth of 3.8% for the quarter. Demand remains healthy, particularly in North America, Germany, and the Netherlands with continued service expansion and momentum in our water, energy, and climate solutions. We're also seeing high demand for our water and energy solutions in the data center sector, which is contributing to growth. In the U.S., large environmental restoration projects are phasing out as planned in Q4 and are expected to be substantially complete by the end of 2025. We are expecting to see a recovery in H1 2026 as large projects with existing key clients have recently entered the pipeline.

Places saw a continued decline of 3%, largely driven by ongoing softness in the property and investment markets in Canada and the U.K. In Industrial Manufacturing, while we are well positioned in the life sciences sector in the U.S., which is contributing to backlog growth, our European clients have deferred some of their large capital investment decisions. That said, we're making good progress in areas such as data centers and revenue growth from the KUA acquisition that is now materializing. This enables expanded service offerings in Germany and unlocks additional revenue opportunities at attractive margins.

Mobility grew its net revenue organically by 1.9%, with large projects in the U.S. and Canada ramping up as planned. Recent wins in the U.K. helped offset the impact of large project wind-downs in that market, whereas the Australian market remains subdued.

Intelligence delivered strong organic net revenue growth of 10.8%, driven by Enterprise Asset Management, Travel IQ, and Hotspot solutions, particularly in North America and the U.K. While backlog was impacted by the timing of certain awards, our EDA Lite solution is gaining traction, and we remain confident in the pipeline ahead.

In summary, while we continue to see good demand and growth in key areas, we are also proactively managing volatility in certain markets. Our diversified portfolio and disciplined approach position us well to navigate these dynamics and drive sustainable growth and margin expansion.

Turning to the next slide. Having just arrived and with some experience delivering value creation plans, I'm taking a fresh look at Arcadis and see many opportunities to energize our organization. I'm not yet ready to outline the costs and benefits, but I do see positive upside potential. I've already started focusing on top line growth and taking cost out, and I'll present the impact of these at the full year results in early '26. The global market for our services is there, and we should rightfully be taking our share of the opportunities.

On the growth side, we're looking to sharpen our commercial approach. We plan to increase the number of key client sales professionals and put the right incentivization structures in place to drive cross-selling and upsell with our most important clients. We can do so much more for these clients. We're investing in automation to improve our win rates by using AI to help us with our pursuit and bid processes, and we're ramping this up as we speak in order to capitalize on the significant numbers of opportunities.

I want us to get better at cross-border sharing of resources. We need to better incentivize this going forward. We have a deep talent pool and want our clients to benefit from that, wherever they are. I am also focused on billability, which is a big opportunity as a margin enhancer. People are now receiving regular updates on the individual billability scores, and our delivery teams are driving this hard. Equally important is our focus on cost and cash discipline. I want to make sure we move delivery and support functions to the global excellence centers where we can, cutting complexity and streamlining processes globally to drive out more costs.

We're also investing in our people, ensuring top talent is rewarded and retained through the improved performance management and recognition of those who deliver results. All of this is designed to sustain strong cash flow generation, disciplined capital allocation, and maximize shareholder value as we deliver sustainable, profitable growth for our stakeholders.

And with that, let me now hand back to Alan to wrap up our trading presentation.

Thank you, Simon. Let me wrap up with a few takeaways from today's update. First, our solid performance this quarter reaffirms the fundamental strength of our business. We've returned to organic growth, expanded our margins year-on-year even with the modest growth, and we have done this whilst continuing to invest in the capabilities that will drive our future performance.

Second, we're seeing continued strong performance in the high-growth sectors where we hold leading positions, energy, water, climate, and technology. Our disciplined approach to portfolio repositioning is working, and our strategic initiatives are driving further operational efficiencies and a sharper, more client-focused sales approach.

Finally, supported by the actions discussed today, we are making solid progress, and we remain focused on adding attractive projects to our pipeline, driving high-quality backlog, executing in a disciplined way, getting our cash in and investing in our people and technology, positioning us well for profitable growth.

And with that, I'll now hand back to the operator for any questions.

[Operator Instructions] The first question is from the line of David Kerstens with Jefferies.

Two questions from me, please. First on the U.K. Why have you become more cautious on the U.K.? You have seen more order intake in the third quarter, but it seems your revenue is still down around 8%, right, in line with the first half. And this has now pushed back this revenue recovery towards 2026. What is driving that more cautious stance on the U.K. outlook, please?

Thanks, David. Let me take that one. I think we're only saying really that we do see signs of recovery now, both in terms of all the contracts that we've won following the spending review and there are many, whether they be in rail, health, the prisons, and we've won, obviously, the contracts through AMP8. Why we just say we're cautious is the U.K. annual budget is next month, and we're just waiting to see the outcome there. And therefore, it's just our sort of view that there'll be a slow buildup still through into next year. And that's why we're just highlighting some cautious approach there. So we'd rather be cautious than sort of gunko, if you like, in terms of our outlook. So that's the reason we referenced caution. But the actual wins are significant across the board actually and across all our GBAs.

And that brings me to the second question. When you look at the order intake in the quarter, it was obviously down against a tough comparative, but also down sequentially, I think, below the EUR 1 billion mark on average over the last 3 quarters. What is driving that sequential decline in order intake with the U.K. actually going up?

Yes. I think when you look at our order intake, some of it can be quite lumpy, like if you look at mobility, for example, the mobility GBA, typically, there's a good pipeline of large projects, but I call them lumpy because they land in a very significant. Normally, for the mobility GBA, it's Q1 and Q4 when those land. I think also what we're seeing is in places across the world, we're waiting on a number of contracts. We see good pipeline coming through, particularly in Life Sciences now, and we've seen other pipeline converting most recently.

But again, what we're seeing is some of the clients are pushing out some of the contracts, like I mentioned in Europe with the sort of semiconductor industrial manufacturing. We're just waiting on those to land. So it's more of a timing issue for us across the GBAs. The outlook for us remains positive. And I think we want to see now the conversion coming through, but it mainly is driven by the lumpiness in mobility.

The next question is from the line of Natasha Brilliant with UBS.

My first one is just on the working capital. And you talked about some projects waiting on key milestones. Is that just a timing issue of like 1 or 2 weeks? Or why is that an issue in this quarter rather than other quarters given the sort of project nature of your business? And then linked to that on the ERP rollout point, can you just give us a bit more color on the changes that you're making and when you think that billing process will be back to normal? Is it Q4? Or is that a 2026 point?

And then my second question -- sorry, do that one first, then I'll do my second one on…

Sorry, Natasha. Sorry. Simon here. Thank you for your question. All of these are temporary issues. Look, there are some big projects that are just waiting for some milestones to be reached. I think that's very soon. We're driving very hard to get those milestones and get those bills out. So that's the first thing. Yes, I mean, we've got a diverse portfolio across the world, across different service lines, across different customers, across different contracts. So we've just seen that lumpiness in Q3.

In terms of ERP, yes, we've been rolling out various versions of Oracle. We've had some -- we made some changes, and that's just caused some delays. People have had their eyes on getting their hours into Oracle from other systems and making the change. And they haven't had their eyes on the ball, which is billing and collecting the cash. So as I said in my prepared remarks, this is a temporary issue. This should resolve itself in Q4. We're pushing really, really hard. I've spoken to over 200 of our key people. They have obviously spoken to all of their people. I think we've got a call tomorrow with 4,000 of our project managers or a cross-section of those, certainly, where we'll be pushing that message as well.

So it's very much a temporary issue. I'm disappointed. It's not where we want to be. I'm not satisfied. Obviously, as the new CFO, that's a great present for me coming in on my first few weeks here. I'm determined to sort it out and drive that down to that 11%. So we're totally on it, totally focused, and that's where we are.

And then my second question probably also for you is on capital allocation. Obviously, the share buyback announced has been a change in strategy to what's been talked about year-to-date. So just to give us a bit more color on the thinking behind that. Obviously, the low share price contributes, I'm sure. But also does that change your stance on M&A and the types of deals that you might be looking at?

Yes. Thanks, Natasha. No, it hasn't changed our stance on M&A. I'd say as the new person, capital allocation is really important. We saw an opportunity to do a buyback. That made a lot of sense to us, given, as you said, the price and the valuation of our shares. It's a modest buyback. That's going very well. We'll continue to do that. But we'll continue to look at opportunistic M&A. We're very aware of our multiple and things and sectors and places where we should and shouldn't be looking. But things come in all the time. We analyze them, we evaluate them. I could -- I would hope that we could do some bolt-ons, some more bolt-ons like KUA and WSP, smaller things. But again, I'm not you committing -- I'm not committing us to anything. It will be very much driven by the business, where do we need to add to our service lines, where do we need to add to certain geographies and just be very cautious and very disciplined as we think about those acquisitions.

But I think it's an important part of our strategy and nothing has really changed there. We just saw an opportunity to do a share buyback, but we'll continue to evaluate and assess acquisitions and opportunities as they come up and be very disciplined.

The next question is from the line of Martijn den Drijver with ODDO ABN AMRO.

My first question is for Simon again on the net working capital. You mentioned we'll get them where they should be at year-end. I assume that the 11% is a target for 2026. But what level do you think it should be at year-end? That would be question one. And linked to that, just a small follow-up. I know that the current Oracle implementation regarded mainly IBI. There is still the second part, which is DPS, which was currently planned for this coming quarter or next one. Maybe a bit of color on the DPS change. And then I'll get to my second question later.

Sure. Thank you very much for those questions. Yes, look, I'm -- we're driving down towards that 11% target by the year-end. We're determined to -- we're monitoring it almost on a daily basis now. As I said, I've made it a personal priority. So we continue to push everyone to get billing, to get collecting, to look at overdue and to get the cash in the door. So I'm feeling confident about getting down towards that 11% target. We're pushing on every button that we can, and we are monitoring it very, very regularly. So I'm confident on that.

On Oracle, look, I'm probably going to take a little bit of time, days and weeks, not months, but I want to look at Oracle and how we're using it, how we've rolled it out in the past, some of the lessons learned. I did do an Oracle -- yes, I did -- thank you. I did an Oracle implementation at my last company -- and that was very successful. We did that in about 8 months to 2,500 people, and we got paid and we were able to pay people. So I'm going to try and bring some of the lessons learned there in terms of making sure we've got the right people. We've got the right training. We've got the right discipline. We've got the right backfill. So that people can focus on what they need to focus on and not try and do implementations off the side of their desk.

I'm not saying that's what we're doing here at all. I'm just being very clear that I'm learning from the past. And hopefully, we can improve the way that we do implement Oracle here, which means that people can keep their eyes on the prize, which is collecting the cash, sending the bills out, winning the work, delivering the work and don't get distracted by ultimately what is the system and a tool that should be helping us and serve our customers.

Yes. Maybe I can just add something to that, Martijn, if you don't mind. And that is, for us, it's important that we do get the business on Oracle, not just the financial management to be able to understand the whole business readily and quickly, but also a number of the other areas that we're looking at, such as the resource management and the better resource management that Simon referred to in his speech, that relies on the Oracle system.

And you touched on DPS, but that was always planned later in the year. We want to conclude IBI before we went to impact the sort of APM part of our business, which is actually smaller and relatively more straightforward, but we'll take all the lessons learned into that rollout.

Yes. Thanks, Alan.

And my second question is for you, Alan. Going into -- going back to the Q2 analyst call, you basically gave a phasing for the second half, which was a strengthening in Q3 over Q2, Q4 a strengthening versus Q3, an exit that would actually go towards the mid-single digit that you were at that time expecting for 2026. Does that expectation still stand? And if not, what is the more reasonable assessment today?

Thanks, Martijn. My easy and quick answer to that is, yes, it still stands. So -- but let me just explain. I think what we're looking at, we said we would continue to build up through modest growth in Q3 and into Q4, and that's what we expect. Obviously, Simon outlined a number of actions that we've started now and will continue to drive, and that really will take us into 2026, where we still expect to see that sort of mid-single-digit growth building through the year in 2026. So that's still our intention going forward.

The next question is from the line of Luuk Van Beek with Degroof Petercam.

So first, on the attitude of the customers, you mentioned that for some new awards, they are more hesitant, but also do you also see a change in the stance towards, say, the small fill-in orders that you can use to optimize your utilization?

And my second question is about the margin expansion. You mentioned 2 positive, one negative factor. So positive mix effect and the rightsizing and negative the investments that you're doing into the business. Can you give a rough indication about the size of these 3 elements?

Could you repeat the first question? We -- sorry, we just -- you were breaking up a little bit. So if you could repeat the first question, we'd appreciate that.

Yes. So the first question is about the attitude of customers towards, say, the small fill-in orders that you can use to optimize your efficiency, if they are also more hesitant on that or if that's…

Yes. I think on the smaller orders, what we're doing at the moment is maximizing our framework agreements. We have quite a lot of, if you like, the MSAs and frameworks that we use to fill in. And what we've been doing on this is really starting to look at those frameworks, which we don't book until the orders come in. But what we've done is by increasing our focus on the sales and the sales force, we're actually going in and actively pursuing into these frameworks. And that provides us going forward, a much greater degree of filling the orders there.

So that's the approach that we've been taking. All our GBAs have been looking at this, but most notably in places, but also in some of the mobility areas to try and balance these big projects that we've got as we build up to them. So I think that will -- I think -- just on your second question…

Could you repeat again?

Yes. That broke up to us again. I'm awfully sorry, but I didn't quite catch it. Would you just -- you asked for about a breakdown, I think, on something, but we didn't catch the 3 areas.

Yes. On the margin expansion, you mentioned 2 positive factors, so the mix and the rightsizing and one, say, negative effect of the investments. So can you roughly indicate how big these 3 elements are compared to each other?

Yes. I'm not sure we're going to get into that sort of level of detail. I think we're good on the mix and the right size. I'm going to be taking a look at the investments and making sure that they're absolutely appropriate to the growth that we need and the margin that we need. So I think we're focused on mix. We're focused on rightsizing, and we will make sure that investments are there, but I really do want to take a good hard look at those.

And just one thing on the investments, I would say is, remember, what we've always said, and we have continued to do this is the big investments we were making. And I'll just remind you, we said about the standardization and automation, the AI that we are investing in over 1,000 people looking at AI, the new GEC, these are areas that, obviously, we've been investing in this year. That's why we feel when we get into 2026, it won't be the same level of investment. And that's the other side of what Simon is looking at now is the level that we need to make next year, which will be materially lower. And hence, we will not only get the payback, but we will have a lower level of investment next year.

The next question is from the line of Quirijn Mulder with ING.

I have 2 questions from my side. First, with regard to the resilience business. How much of your organic growth was hit by the wind down? Can you give me some sort of breakdown in that activity and how to look at it forward when it is ended? Are we going to see over mid-single digits, for example?

My second question is with regard to the industrial, let me say, manufacturing, et cetera. It looks like there's some weakness there if you look underlying. Can you maybe give an idea about how you're going to grow that business again, given the fact that you have put such a large bets on it on this activity to grow that rapidly in the coming years?

Okay. Thank you, Quirijn. On the resilience, the wind down is simply we had some big projects coming through for some major clients, particularly in the U.S. They're just rolling off now, but we've already found with the clients that there is a good pipeline coming on into next year. So actually, with the pipeline, we're expecting to see a pickup in H1 again next year, and the resilience business is very firm on that with their key client relationships.

And on the industrial manufacturing, I guess there's a number of things. We've been pleased to see a slow but significant pickup for us in the automotive sector, and we expect to see that to continue. Now the automotive sector is getting clear on its production. And then with the sort of APM facilities where we saw the industrial manufacturing not being as clear in terms of the semiconductors, we've been redeploying and realigning the workforce there into the data centers and the pharmaceutical markets, and we've been reskilling upskilling them into those markets. So actually, we've got a broader base of clients to work with and actually extend those skills. And that's actually creating more flexibility for us and more benefit than ever before. So very, very good, I think, for us going forward.

And just to say as a new boy here, I'm quite excited about the whole data center pivot that we're making. It's across GBA, which is really interesting. We can bring a lot of our skills to bear across the services that we have, across the GBAs that we have. So obviously, it's early days. There's a lot of talk about it, but we're certainly realigning ourselves to that market and chasing that hard.

The next question is from the line of Kristof Samoy with KBC Securities.

I just want to come back again on the outlook for the second year half and 2026. So it was already touched upon earlier in the call. At the time of the second quarter release, you guided for moderate growth in the second year half. If I look at the guidance, which is company compiled consensus, so you're well aware of it. For the remainder of the year, this implies fourth quarter growth organically of 4.5%. Did I understand correctly earlier in the call because there were quite some technical hiccups that you only expect to go back to mid-single-digit organic growth in the course of 2026?

Look, I think obviously, we made some statements back in the Capital Markets Day a number of years ago. I think we've returned to growth this quarter, which is positive. It's small, but we have returned to growth. Two out of our GBAs are growing, which is good, and that's made a lot of progress. We'd obviously like to see them all. We're all firing on all cylinders. And we're realigning our places to data and health and life sciences, and we're doing all the right things and taking all the right actions.

We're in the middle of our budget setting at the moment for next year. Obviously, we're optimistic about our pipeline, our backlog and executing well through the year. So I think it's difficult to sort of put a pin in it and actually nail it down, but we're looking for that growth. We're looking for that margin expansion as we discussed at the Capital Markets Day. So look, you can see the consensus is out there. You can read that and make your own view. But we're driving hard for growth. We're driving hard for that margin expansion.

The next question is from the line of Simon Van Oppen with Kepler Cheuvreux.

I would like to extend on the large projects awaiting milestone completion. Could you provide more detail on what kind of projects they are? And maybe as an extension to that, has there been any change in strategy towards taking on larger projects, which could potentially also increase risk? And it will be helpful to get a better sense of the dynamic and the underlying drivers.

Yes. I mean most of those -- thanks for the question. Most of those large projects in Mobility. There's no change in our strategy there. They're larger projects. They have bigger milestones. And we know there's no change in the risk profile there either. We like the larger projects. They typically come from our key clients. As you know, we've got a lot of couple of hundred key clients, and they account for quite a large part of our revenue. We're looking to cross-sell to those clients other services. So no change in the strategy.

Just there's a couple of -- as Alan said earlier, Mobility tends to have big lumpy projects that come along and you have to sometimes wait for those milestone payments. But there's nothing particularly unusual. It's just hit us when we're doing some other things in Oracle. So that's just created this issue on WIP and cash collection. So that's where we are.

So you would say that it's more due to the ERP implementation rather than the projects awaiting milestone completion? So it is related to that factor?

It's both. It's both. Look, I've said it, I'll say it again. It's both of those things. The messages have gone out. The whole organization is focused on making sure we build. The whole organization is making sure we collect our cash. I'm watching that on a daily basis and tracking that and making sure we do that. Not where we want to be at all, not the greatest thing for me as a new CFO to have to deal with, but we're dealing with it. We're on it. We're absolutely addressing it, and we'll get back to normal levels and drive down to that 11% by the end of the year.

Our next question comes from the line of Chase Coughlan with Van Lanschot Kempen.

I have 2. Firstly, Simon, you spoke about some of the growth drivers you identified as well as some potential cost saving areas. Given that, for example, increasing sales professionals might increase OpEx next year, but you have some cost savings there as well. How should we view the 2026 EBITA margin target? Is that still intact? Or should that also be, let's say, updated as of full year results?

Look, we want to try and do this cost neutral or top line positive, EBITDA positive. So I'm acutely aware that if we spend more money, we need to find it from somewhere. And I'm confident there are cost savings across the business that we can use to fund the investment in sales and some of the other actions that I highlighted.

I'm not quite ready yet to come out with the costs and the benefits. But I can tell you one thing, we're driving our margin up. We're not driving it down. We're driving it up. We need to get that margin up. We need to focus on those better projects, which we have been doing. We need to focus on cost efficiency. So I'm not in the business of spending money just for the sake of it. I'm in the business of spending money to get the growth and get the margin up, but it's a bit early to say.

Maybe just to add to that, I would just say we're very acutely aware in monitoring our sort of pipeline and backlog to make sure that the margins are increasing there. And with the cost out, this gives us the confidence that we will achieve our Capital Markets Day targets. So yes, it's about sales because we can get the operational leverage by doing that, but we are clearly focused on what we said at the start of our Capital Markets Day strategy, which was being selective on our projects and making sure that we acquire projects that have the right margin to start with going forward, which is why you can see even with the relatively modest growth, we still increase our margin.

And then my second question, you also highlighted that you would like to drive win rate through automation, I guess, particularly regarding the bidding processes. I know several peers of yours are also pursuing this, particularly in North America. So I'm just curious on, yes, do you think you've lost potentially market share based on the lack of automation in this bidding process? Or how do you compare currently to some of your competitors' processes, if you have any sort of indication on that at all?

Yes. I mean -- Simon. I'll take that initially and then hand it over to Alan because he's far more experienced. But I think, no, we're driving automation. We're hoping to get AI to help us drive some of our bids. We've been working on a pursuit to project module, which we're hoping to roll out as we speak. We think that will help us -- the win rate, I'd love to drive that up previous companies, we focused on that a lot. I think we need to get sharper on that win rate on that cross-sell and on the whole sales organization, hence, the reason we want to strengthen that organization going forward.

But I don't think we've -- I don't think we're any particularly different from our competitors. Probably we're all at it. We're all -- we're trying to do the same sort of things, and there's no secret or any magic there. But we are doing it. We are getting on with it. We are taking the actions. So that's the important thing, and we're trying to optimize. We're trying to get the efficiencies. We're trying to -- bids take -- some of our bids take a long time to put together. So if we can get a little bit more efficient, that helps us free up time and hopefully get more people billing. Alan?

Yes. I think the only thing to add to that is it's our most senior people that get involved in bidding, which is why we started at the start of this year, looking at the standardization, automation of our bid process, the use of AI in the bid process. Obviously, competitors and peers talk. And I would say we are probably as good, if not right at the top of the tree in terms of leading on this because we know exactly where we are and what we're doing. So we expect to roll this out in a very comprehensive way through -- from the start of next year.

The next question is from the line of David Kerstens with Jefferies.

I just had a follow-up question about the U.S. market, please. Do you see any impact on your organic growth in the fourth quarter from the current shutdown? And I think there's also some noise on the Hudson tunnel project that you referenced that might have been canceled. What is the impact on that? I understand it's a multiyear project, 5, 10 years. When is your work taking place, please?

A quick one on the shutdown from me before I hand over to Alan for the difficult one on Hudson. I'm not only kidding. No, the impact from the U.S. shutdown is minimal for us. We've got -- we work with states, and it's a minimal impact. We've had a look at it, and we're not seeing any material impact from that. And obviously, we'll be on it and collect anything that we do when they get back to work, but minimal impact.

Yes. And just on the Hudson tunnel in particular, it is a major project for us, but just to give you the update on that. I think the Gateway has significant financial resources from the states as well as cash on hand. There was a recent payment in of $665 million, which is funding this. So we don't see any issues with that. The Gateway said it intends to respond to the government's request for assurances that the companies there are complying with all Federal laws in terms of hiring and promotion practices. We've already been audited on that and cleared. So we don't see any issues there. And we expect the administrative review actually to be completed swiftly and not impact the project schedule or interrupt the operations. In fact, the U.S. Department of Transport Secretary, Sean Duffy, clearly stated recently that the administration did not want to interrupt the Hudson tunnel project. So we remain confident on that project.

The next question is from Martijn den Drijver with ODDO ABN AMRO.

Just building on that question on the U.S., I had exactly the same question, but I'm going to expand it a little because you said most of the projects that we do are not federally funded, state municipal. But sometimes these municipal projects and state projects do have a Federal funding component. So how confident are you about your backlog? Do you really see this shutdown and the Trump directives lashing out as a temporary issue? Or should we worry a little bit more?

And the second question that I had, the non-operating cost in this quarter, the EUR 7 million, you mentioned that it was related to Australia and the U.K. If my memory serves me right, there were material non-operating costs in Q2 exactly for that same purpose. I thought they were completed. Is that the wrong impression?

Okay. Martijn, just on the first one then. On the Federal side, our work is at state level. And I think probably what you may be thinking about and we are watching is the shutdown for us, as Simon said, has no material impact. However, we are conscious and cautious around monitoring any delay there might be in decision-making, for example, because some of the decisions might come through the Federal Government agencies. So we need to just be careful on that. But at the moment, there's no material shutdown.

In fact, I mentioned in my speech, many of the departments of transportation across the different states are doing very well, and we're picking up a lot of work from them. We're finding the states actually very active at the moment, and it's good news for us. I would say one of our biggest growth potentials right now is the U.S. market itself. And maybe, Simon, I'll turn to you for the other question.

Yes. Thank you. Yes. Look, the non-operating costs mainly in Q2, Q3 relate to redundancy, relate to cost out. If I see, as I do at the moment, more opportunity for cost out, then we'll see some more non-op costs. I'm afraid, that's just how it is. But we're doing it because we believe it's the right thing to do for the business. It will make the business more efficient and ultimately, we will increase our top line and reduce our costs. look, we're moving to the GEC. That takes time and it takes effort, and we'll have to do the right thing. So you may see some more coming through in non-operating. And as I complete my review of the business, that's what we'll see.

Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Mr. Brookes for any closing comments. Thank you.

Thank you very much. And I just want to thank you all for your questions today, so we can drive into the clarity of the performance of Arcadis. We believe we delivered a solid performance this quarter, reaffirming the strength of our business because we've managed both modest growth. We've been continuing our investment, and we've actually really focused on doubling down on our growth markets there.

I want to close today by reiterating our confidence and continued focus on consistent execution of our strategy to accelerate profitable growth, supported by improving growth trends that we see, a growing backlog and pipeline of opportunity, and we will continue to expand our margin. Thank you all very much for joining us.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.