Arcadis Aktie

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

At this time, I would like to turn the floor over to Ms. Sinem Baykaloz, IR Officer. Ma'am, you may proceed.

Good morning, good afternoon, everyone, and welcome to our 2026 third quarter trading update conference call. My name is Sinem Baykaloz, and I'm the Investor Relations Officer. Joining me on the call are our CEO, Heather Polinsky; and our CFO, Simon Crowe. As usual, we will start with the presentation, followed by Q&A.

Before we start, we would like to draw your attention to the fact that management may reiterate forward-looking statements made in today's press release. Please note the risks related to these statements, which are more fully described in the press release and on the company's website.

Now please over to you, Heather.

Thank you, Sinem, and hello, everyone. Welcome to our third quarter 2026 results. We delivered another strong quarter and continued to build momentum. Growth accelerated, margins expanded and backlog strengthened. Importantly, the pattern of our performance reflects the priorities we have been putting in place throughout the year. Focus. Growth is being driven by the markets where we have chosen to focus, including water, energy, semiconductors, life sciences and digital infrastructure.

Simplify. We are progressing our portfolio actions, simplifying our operating model and aligning capacity more closely with demand. Perform. Disciplined execution is translating into margin improvement, stronger billability and cash performance. Our strategy has one clear underlining objective: Continuing to get closer to our clients and converting our expertise into more consistent growth and profitability. The momentum that we have been building throughout the year reflects these strategic priorities and our focus on disciplined execution. We reaffirm our 2026 outlook and are using any headroom we have to; one, reinvest in; and two, transform the business.

Let me take you through the quarter in more detail. We have green arrows across the board. Net revenues increased 4.3% in the quarter, capitalizing on sustained client demand. More importantly, the pattern of growth matters. It is precisely in the markets we identified at our Capital Markets Day as strategic priorities. Margin improved year-on-year to 12.5%, driven by our operational actions, while we continue to invest in the capabilities needed to deliver sustainable profitable growth. Our backlog continued to grow, giving us confidence and greater visibility on our future trajectory, which I will expand on shortly. And all while voluntary turnover continued to reduce, reflecting that we are bringing our people along with us on our transformation.

Turning now to backlog. Backlog organic growth and rolling order intake have continually increased over the last 12 months. Backlog organic growth this quarter is at 7.9%. This was driven by continued order intake strength in water and resilience and major semiconductor wins in places. Our order intake in mobility reflects the timing of awards. Here, we remain focused on pipeline conversion, aligning our delivery capacity with expected workload and implementing our strategy. Consistent with this positive trend in backlog, organic revenue growth has also been accelerating throughout the year. This progression supports our confidence in the underlying momentum of the business and provides a stronger foundation as we move forward. A great example of this is a significant win in our Mobility business, an award from Irish Rail to deliver advisory and design services for their strategic rail review.

Let's now take a closer look at each of our business areas. Resilience remains a consistent performer with sustained growth in Q3, driven by water across the U.S., Netherlands and U.K., which includes Thames water, Wessex Water, United Utilities and the Environment Agency. In Germany, major grid expansion programs continue to support strong power growth. And in Brazil, mining and critical minerals is supporting growth. The momentum we have been building throughout the year reflects the strategic priorities we have been putting in place and our focus on disciplined execution. This impact is reflected by our sustained improvement in growth and margin. Environmental restoration continues to be a differentiator across our geographies. This quarter, we are proud to have secured a multiyear environmental remediation program with 3M in Belgium to address historical PFAS contamination.

Our teams continue to invest in capabilities and client relationships that support ongoing growth across our energy, water and environmental services. In Places our action to focus and invest where we see the greatest opportunity are paying off. This business is starting to turn the corner with positive organic growth of 1.2%. Underlying growth was even higher at 4.2% when excluding the Architecture business in China. This is consistent with the performance we expect from our retained portfolio. That was a good example of the value we will achieve by being more focused, directing talent and investment toward markets where we see sustained client demand and where we have the strongest opportunity to differentiate. This will support greater growth.

This quarter, growth was supported by life sciences and digital infrastructure across key geographies, and we expect to see continued momentum here. Book-to-bill was strong at 1.3x following major semiconductor awards. One example is the expansion of our engineering procurement and construction scope for a major semiconductor manufacturing program in the U.S. Going forward, we could continue to refocus our portfolio towards attractive growth markets, progressing the announced portfolio actions in China in architecture and directing talent and investment towards the areas of sustained client demand.

Turning now to Mobility. Organic growth was strong in the third quarter, supported by major transportation programs in Germany and Canada, as well as closing several contract variations. Order intake, however, reflected the timing of several pursuits. Our pipeline in Mobility remains healthy across key markets, and we remain focused on disciplined conversion. Our recent win is an example of this, where we are leveraging the capabilities of our recent acquisitions in Germany and Spain, to win a multidisciplinary project for a major rail hub on the Munich-Berlin network.

While major infrastructure programs remain central to our Mobility strategy, we are deliberately broadening the portfolio towards more programmatic, advisory and asset life cycle work. This creates deeper, long-term client relationships and a more balanced business alongside the inherently lumpy nature of our large design-build infrastructure awards. Capacity alignment is also important to how we execute our transportation strategy. These actions are intended to improve billability and project delivery, helping us deliver on our financial ambitions, while also reducing revenue variability quarter-on-quarter.

I'll now hand over to Simon to take you through the detailed financial performance of this quarter.

Thank you, Heather. In the third quarter, we continued to focus on our clients, simplify our operations and drive a performance culture. Our third quarter results show that our actions are starting to bear fruit. Our margin expansion has continued to 12.5%. The improvement reflects continued disciplined execution in Energy & Water in Resilience, progress in Places following the cost actions taken in the first half and growth in margin coming from contract variations in Mobility. Lower overhead staff costs and our continued cost control also contributed with growth and a more scalable cost base supporting operating leverage. At the same time, we're continuing to invest in the operating model, commercial capabilities, digital and AI. These investments are mostly funded out of operating cash flow and are important to future growth, but may impact the pattern of quarterly margin development.

We are reiterating today our margin guidance of 2026 of 11.7% to 12% EBITA. Third quarter cash development was solid year-on-year and supported by our laser focus on improved cash collection and billability. Our working capital percentage as a percentage of annualized gross revenues came in at 12.4%, well below last year's 14% and in line with seasonality. We remain focused on billing, collections and contract terms as we move towards year-end, and we're confident in our trajectory for the fourth quarter. The momentum we've been building throughout the year reflects the strategic priorities we have been putting in place and our focus on disciplined execution. This impact is reflected by our sustained improvement in our growth and margin.

For the divestment of our architecture business, we have preparations and separation planning underway, and we have progressed the implementation of our China operations exit, addressing the necessary execution requirements and legal documentation. On a year-to-date basis, the indicative positive impact of these divestments on performance is approximately 150 to 200 basis points for organic net revenue growth and is around 100 basis points for operating EBITA margin. While we anticipate more benefit from the growth created by Focus, these actions are consistent with our strategy to focus on higher growth and margin businesses. And we continue our rightsizing efforts and review of other noncore activities to further optimize our portfolio.

Turning to the actions supporting a simpler and more efficient organization. In the first 9 months, we recorded approximately EUR 42 million of restructuring costs and EUR 15 million of other nonoperating costs, reflecting the actions we are taking on rightsizing and implementation of our simplified client-centric model. Importantly, these actions are starting to translate into the operating performance of the business. We are building a lower and more agile cost base with greater accountability, improved billability and better alignment of resources with workload. As communicated previously, we expect the cost-out program to contribute approximately 40 to 50 basis points to our 2026 operating EBITA margin, but there is still work to do. In the fourth quarter, we will continue targeted business and overhead rightsizing and implementation of the simpler client-centric operating model.

Looking into 2027, as we set out at Capital Markets Day, we are targeting approximately 1,000 roles as part of overhead rightsizing while continuing to hire selectively in our growth areas. We expect the remaining reset measures to be completed by the end of 2027. The associated restructuring costs are expected to be approximately EUR 60 million to EUR 70 million in 2026 and approximately EUR 70 million in 2027. So this is not simply about reducing cost, it's about creating a more scalable organization, improving billability and accountability, and ensuring our resources are aligned with where we see the strongest client demand. Our ambition continues to be the EUR 1 billion of EBITA and this requires driving growth, simplification and our performance culture.

With that, let me hand back to Heather.

Thank you, Simon. Let me close by coming back to momentum. Because for me, this is about much more than the results of 1 quarter. Our simplification is designed around 1 objective, getting closer to clients and converting our expertise into more consistent growth and profitability. Over the last 9 months, we have built a renewed executive team, met with over 200 clients, developed and communicated a clear strategy, focused on immediate delivery and at the same time, reset the organization for a new way of working. And we have done that while continuing to invest in the business and deliver for our clients.

Growth has recovered faster than we initially expected. But that has taken investment, and we will continue to invest in the people, capabilities and transformation required to sustain that growth, and this may impact the pattern of margin development. Just as importantly, we have begun building the organization behind the strategy. And our client connections are giving us a sharper insight into where we can differentiate and where we need to improve to more consistently win. Capital Markets Day was another important step, but it was not the end point. Immediately afterwards, we brought together 160 leaders to begin taking the strategy through the organization. We are now moving from that leadership cascade to mobilizing 34,000 Arcadians around the same direction and priorities.

We are building a stronger cadence of execution, greater clarity on where we focus, simpler ways of working, clear accountability and a clear performance mindset. And that is why I see the momentum in our third quarter performance as important. It provides evidence that the actions we are taking are gaining traction and creates the opportunity for us to continue investing in long-term value creation.

With that, let's open the call for questions.

[Operator Instructions] Our first question today comes from Sangita Jain from KeyBanc Capital Markets.

So one, maybe on the net revenue growth for this year. Obviously, 3Q was very strong, and the order intake has been also very strong. So how should we think about 4Q? Should we think about the strength continuing and you may be getting to the high end of your low single-digit target range for this year?

Sangita, thanks for the question. We are confident in the direction that we're going. We're confident in our backlog. And you're right, we are seeing progress. As we've mentioned, not only have we been able to convert the backlog into net revenue, we are seeing that backlog grow. So we are confident in our fourth quarter performance.

Great. And then maybe a little bit detail, if I can get some on the strength in U.S. Water. The types of projects that you're seeing, the duration of the backlog and the sustainability of the growth?

Yes, absolutely. We are -- in our Water business, it is spread throughout the full U.S. and it's a strong contributor to our resilience growth. The order intake and the net revenue growth have been pretty consistent for not just this year but actually the last several years, as our team has really differentiated and focused on our ability to grow.

Last quarter, we recognized hundreds of wins that we've had within our Water business. Our Water business is also a pretty diversified business. We do everything from asset management to environmental permitting and planning to design and engineering and advisory services for our clients. So it does bring forward all the full capabilities of Arcadis. And we have both MSAs that we work under for our clients and large design build projects. So it's pretty diverse geographically as well as by subject area and service.

Our next question comes from Dirk Verbiesen from ING.

My first question is on the remark you made during this presentation on that growth is recovering faster than initially expected and requiring some investments. So how should we read this? As you also said, it may affect the margin development because there's still quite an intense headcount reduction program ongoing into 2027. So what kind of moving parts should one expect? And in what way would that affect the margins in maybe the upcoming quarters? That's my first question.

And the second question I have is on the order intake in the Mobility business. I do acknowledge that it can be quite lumpy on a quarter-to-quarter basis. But let's say, the 0.7 in this Q3 is quite a low point. What does the pipeline actually look like? And do you foresee an improvement in the upcoming quarters?

Dirk, it's Simon here. Yes, just on the growth. Yes, we've been really pleased with the change that we've had over the last 3 quarters, it's been very positive. Obviously, we started the year with a little bit of uncertainty, but we've built on the momentum that we've seen in the market. We've been focusing, as we said in the Capital Markets Day on those strong markets, and they've been doing very well for us.

So I think what we're just trying to do is to be very balanced and very measured. We are taking costs out. We're looking for that to drop down through to the margin, but we are making investments for growth. That's really key. We're hiring some great people in our strong markets, in semiconductors, in water, in pharma and in some of our other businesses in rail and road and power and energy as well. So we're making those investments. Those hires take time to bed in, they time to ramp up. They take time to really be fully utilized. So we're just being a little bit balanced and cautious, but we've had a good 3 quarters, and we continue to push on through to Q4 and into 2027. So that's how I would sum that up.

In terms of Mobility, your second question, and I'm sure Heather wants to come in here as well. But look, we've -- it is a lumpy business. We've had some really good projects. We continue to build on a very good pipeline that we have. Obviously, we're looking for those to convert. But it is lumpy. And if you look back over history over the last few years, it is a lumpy business. One thing we are doing is sort of focusing on some of the medium and smaller end, we don't want to rely on these large projects all of the time. We've got these large projects, and we really welcome the large projects. But ultimately, we have some great teams and great resources across the world that we deploy onto these projects. So we're looking to make sure that our strategy is very focused on winning big, but winning small and winning medium projects as well.

Heather, perhaps you've got something to add?

Simon, I think you said it, we have won quite a few MSAs this year for our Mobility business. I think you're all aware, we do not book the MSAs. They're not counted in our order intake. And so therefore, that's one of the reasons we have such a strong belief in our pipeline because converting those, in some cases, we are a single awardee. And in other cases, there is a significant spend and just a few awardees and our teams are positioning for real projects that we see really coming to life to help us achieve the long-term growth and to implement this strategy.

Our next question comes from Martijn den Drijver from ABN AMRO.

I have 2 questions, and I'll do them one by one, please. Heather, can you talk a little bit about the behavior of clients split into public regulated and private clients in light of the higher interest rates on both sides of the Atlantic and the impact on governmental budgets?

Yes. So Martijn, thank you for the question. We have actually not been seeing a significant impact in our U.S. public markets as a result of this. As you're aware, the U.K. has been a challenge for us in some of the key areas. And in Europe, we are seeing projects continue to go forward because of the market drivers. So we're still seeing growth across the market. We've not seen delays or cancellations as a result of interest rates.

And on the private side, earlier this year, we had some concern from our teams that projects would be delayed, but we're not really seeing that. We're seeing the investment, the reshoring, the digital infrastructure continue to move forward with significant demand, and I think that's reflected in our order intake and our backlog.

Understood. My second question is for Simon. Simon, if the Q4 2026 free cash flow mimics anything like Q4 2025, and you seem to allude to that. I get to a net debt to EBITA at the end of this year, 1.1x. Absent M&A, does that meet the criteria of below optimal leverage that would allow Arcadis to opt for share buyback?

Great question, Martijn, and thank you for asking that one. I think we are pushing hard to collect the cash like we did in Q4 2025. You remember those days in Q3 and Q4 of 2025, and we had a big push, and we obviously delivered a record number for Q4 2025. So we'll continue to push hard, and we'll continue to evaluate the M&A spectrum. There's lots of really interesting bolt-ons out there. Our pipeline is pretty full, and we're evaluating things. And then obviously, as we get to Q4, we'll look at the opportunities to deploy the capital and our capital allocation in line with what we said at Capital Markets Day. So yes, we're positive about collecting the cash, positive about M&A and positive about looking at the capital allocation.

Our next question comes from Simon Van Oppen from Kepler Cheuvreux.

I have a question on margin development. So on Slide 14 of your presentation, you indicated that the cost-out program is expected to contribute roughly 40 to 50 basis points to the full year 2026 operating EBITA margin with a further reduction of, yes, 1,000 overhead planned for 2027. Could you please clarify how much of the 2026 benefit reflects the annualization of measures you implemented last year versus new savings realized this year? And how much additional margin improvement we should expect in 2027 from the annualization of the 2026 measures and the planned overhead reduction?

Thank you, Simon, for the question. Look, I would say a lot of the margin accretion, the 40, 50 has come from everything we've been doing sort of Q4 onwards from 2025. So it's really difficult to parse it out. A lot of -- the timing is not exact. Obviously, we announced the numbers to the market and then it takes time for things to work through. We have obviously guidelines, we have legislation in certain countries. We have timing to be considered. So we'll work hard.

And look, on the margin, we remain committed to our Capital Markets Day's targets. We're pushing and pulling every lever we can to get the growth and get the operating leverage to make sure we've got cost discipline. And we'll just keep doing that. We'll just keep doing that every day and keep driving forward. We've got good markets. So we're optimistic about growth. And then we've got good control and good discipline around costs and where we see we don't need those resources, we'll either try to redeploy them or ask -- see if we can exit those resources. But it's constant just really trying to pull the levers all the time and work on that Capital Markets Day.

Our next question comes from Kristof Samoy from KBC Securities.

I have a question on Mobility. You specifically made reference to the recognition of variation orders in the third quarter. I do not recall recent earnings calls with reference being made to this. Can we -- can you disclose the size of magnitude of the variation order recognized this quarter? And is this something that we can expect more going forward? Is it linked to the increased push towards commerciability? Or is it just a one-off thing? And then, yes. Maybe that's the first question for Simon.

Yes, Kristof. So look, it's a couple of million. It's not a huge number in terms of the variation which contributed to growth and margin expansion in Mobility. And as I said in the prepared remarks, it's lumpy. It's lumpy. We win large awards, and we have a lumpy profile in Mobility. We're looking to change that. So we've got more predictability of earnings and more predictability of resource allocations as we go. And a lot of our projects are large projects. They will have some one-off variations. Hopefully, they're all positive. Sometimes they're not, you know how our business is. But it was a couple of million in this case for this quarter.

Okay. And then just, I was wondering regarding your planned exits and disposals. Can you already give some indication about the accounting treatment for year end of these assets? Will they be treated as held-for-sale assets?

Yes, great question, Kristof. Look, we're accelerating as fast as we can to get to that position so that we've got a nice clean set of accounts that we can show you. I can't guarantee you year-end, but I'm really, really pushing. If we meet those criteria, you know what they are about immediately available and all the rest of it. We're working closely with KPMG and our internal accounting guys to just make sure that we meet those criteria as quickly as we can.

But as you appreciate, our Architecture business has spread it's tentacles throughout the business, and we've put a nice perimeter around that now. We've got advisers coming on board very soon. We've got about, I think, about 15 work streams set up to get that all sorted out. We've got a leadership team as well now appointed internally, which is really good, and they're highly motivated and excited about that. And the same goes for China. So both Architecture and China, we'll push as hard as we can, Kristof, to get to that held for sale. That's the question somebody was asking in the last few months, how can we get there quickly? So we've mandated the team to do that as fast as possible.

If you were to report them as of the fourth quarter as held for sale, so that means then by virtue of simple mechanical accounting treatments, your full year reported operating margin will grow by 100 basis points pro forma?

No. I mean we'll hold them for sale. We will give you the alternative performance measures which we've given today. So we gave you the growth and the margin impact by removing China and removing Architecture. We'll just keep those indicative until we've got a really tight handle on it, and it's held for sale. So that's -- that's how we're going to report it, I expect in the fourth quarter. And as soon as we meet the criteria, we'll make those proper disclosures so that you can review them as you should do. So we're going to be as transparent and as open as we need to be as we want to be and we will be as we did today.

Okay. And then just one last question. Resilience, there were some comments made to double-digit growth in U.S. Water. I mean the overall resilience organic growth is 5.6%. What type of activities in there pull down the U.S. water double-digit growth rate? If you could give some color there, please?

So just to give you a sense, the U.S. Water portion of our business in Resilience is about 25% of that business. And so just to keep it in context, as you look at the impact that had. Our Germany business is really strong and also growing significantly. There are some challenges that we've talked about in the past around the U.K., we're seeing a turn. As it relates to the Water program in the U.K. And we've also had some challenges that are related to our environment business, which has specifically in the U.S., which is the largest part of the business.

And that has been a focus of ours in our transformation to be able to more consistently elevate our environmental services across the entire business. What we're really excited about is that the areas that we've identified for focus, the water and power or energy work is really taking off and having strong performance. And while our U.S. Environment business has been a bit slow.

Our next question comes from Luuk Van Beek from Degroof Petercam.

I have a question about your margin guidance for the full year, because if I look at Q4 and I make an adjustment for the revenue adjustments you did last year, then you basically require roughly stable margin year-on-year, while Q3 showed a nice improvement driven by factors that should also continue in Q4. So I was wondering, are there any offsetting factors that you expect for Q4? And is that related to the -- say, the investments that you talked about? And can you elaborate a bit on those investments in a sense that can they suddenly hit in 1 quarter? Or will it be a more gradual process where you hire people and I see the costs increase ahead of the revenues temporarily?

Thank you for the question, Luuk. We continue to hire people in our strongly performing business areas. They do take time to ramp up. We also hired people in our services like advisory. We're building a really good business there. So we just want to make sure that we're measured, and we're very measured about the Q4. We've got good momentum in the first 3 quarters. So we're really just being careful about Q4. But we reiterate our guidance of 11.7% to 12% EBITA margin. That's where we're heading. And also, we reiterated the growth guidance as well.

So yes, we're on course, but we are transforming the business. As you know, we are turning the business around, and that does take time, and it's not a linear trajectory, but we're still building on the momentum and positivity of the first 3 quarters.

I think, Simon, what's really important here is that we aren't just in a simple cost reduction program. We are taking cost out to be able to invest in the commercial capacity of the business, in technology, in AI development, in making our systems simpler for our people. And also, as we've discussed, we're in the transformation program of both our operating model and our way of working, and that is examples of the specific investments that we are making.

Our next question comes from Natasha Brilliant from UBS.

I've got 2 questions. So the first is just thinking about organic growth across the different GBAs or industries. If you can give us any color on how that might split between volume and pricing in Q3, if there's been any changes in those dynamics or any color there?

And then my second question is, if we just take a step back and think about your growth versus the overall market and the current momentum that you're seeing, obviously, lots of moving parts across different industries, but how do you think you're faring versus competitors in the wider market? Is it that you're pivoting to better areas? Or are you winning more business? Semiconductors was an example that you called out. So is that just more projects that are up for grabs that's driving that growth? Or are you meaningfully taking share?

Maybe I'll start with the last one and then come to the first question. The market is strong, and we see more opportunity than the growth we're even reflecting today within the market. So I think we've spoken about that at Capital Markets Day. It's pretty consistent among our peers that they have been growing at a faster rate than we have. We're happy that we're seeing the momentum, but we're not there yet. We believe there is still opportunity for us to grow as we talked about in our strategy that we've set out for the next 3 years, which is why I've said there's still much work to do. We're proud of the momentum we've created, but we're not there.

The organic growth is supported primarily by strong underlying client demand and our focus on commerciality. What -- when we talk about focus, there's another number of elements to it. But part of it is to make sure that we put our best people and our strongest foot forward to be able to drive success in the areas that we have the right to win, and we know that we have differentiators to win, and that's what we're doing. So volume versus pricing, yes, I believe that there is opportunity for us within the market that we have not yet tapped into.

And from a commercial perspective, we are not buying projects to create this kind of opportunity. What we are doing is being really focused on where we pursue and how we can deliver value to our clients and outcomes. I'll just call your attention to one of the wins that we disclosed here in this conversation today, which was the semi win, which is also about our pedigree. It's about the skills we have and the client relationships that we have that are allowing us to grow and that was a pretty significant win for us in the quarter. And we are going to focus on doing more of that where we have the right skills, strong client relationships and investing more in those locations.

Our next question comes from Chase Coughlan from Kempen.

I actually just have one going back to the organic growth expectations for Q4. So as I see it, obviously, Q3 was very strong. It feels like it's accelerating. The order book looks solid. I'm trying to understand why the guidance -- I mean, even the 3% on the top end of that range, it feels quite conservative, I mean, especially if you consider the revenue sort of write-down that we saw in Q4 last year, making it quite an easy comp. Is there anything that I'm just forgetting or any other moving parts that I should be aware of that maybe as to why it might not exceed the low single-digit range?

No, you're not missing anything. I think you've probably got used to our measured and conservative views on forward-looking measures. So look, we're feeling good about where we are. As Heather said, we're not calling -- we're not there yet. We've got a lot of work to do, but you're not missing anything. We're just being measured and cautious about this quarter. But obviously, we're pushing hard on the growth and we're pushing hard on the margin, and you've seen that manifest itself over the last 3 quarters.

And Simon, we are trying to keep the focus within the organization and not get distracted towards the end of the year, and that's something that we've put a lot of energy in, especially given the volume of change that we're having in the organization. So just something to keep in mind.

Yes. No, very clear. And maybe one follow-up actually on, I guess, capital allocation. I think you already alluded earlier to the fact that Q4 free cash flow will still be quite strong. And just looking at the leverage, I'm curious as to if there's any major changes in how you're viewing potential M&A opportunities in the space since the CMD, how you're viewing a buyback, anything incremental there?

I think, look, we're not promising to beat the Q4 '25, but we're pushing hard on the cash flow. That was a record last year. We're pushing hard on that. There's no big changes in CMD. It was only a matter of weeks ago. But look, we are trying to accelerate on the bolt-ons. I see a lot of opportunity there to do some smaller bolt-ons like we've done in the past that can be integrated pretty quickly, and can either turbocharge a part of the world where we need to build on or a part of the sector mix or part of the service mix. SATEL was a great example of that.

So I have really, as I said, I've challenged the team and myself to really try and accelerate the number of things we're looking at. It doesn't mean to say we're going to do them all, but at least we get the pipeline moving and that should translate into things actually being executed on. So that's -- and then, of course, we'll keep a really good eye on leverage and the capital allocation as we discussed at CMD.

And we do have a follow-up question from Martijn den Drijver.

Heather, you just mentioned commerciality as one of the key drivers. You also mentioned the market is strong. Now you had Simon-Kucher, could help you with the pricing strategy. So can you help me understand what did you do on your rates and prices year-to-date? Or how should we think about that going forward? And then a similar type of question, well, let's do this one first.

Sure. Thanks for asking about Simon-Kucher activities. A couple of things. We have them engaged with 27 active bids or bids that are waiting for selection. We have had 2 of those bids come forward as about EUR 10 million in wins. So we're seeing the positive trajectory. We have trained hundreds of people through the efforts of Simon-Kucher to help us in really thinking about pricing in a different way and being more creative about how we look at value pricing. And creating a greater sophistication and how we price and manage our work, particularly understanding what our strength is in the market, the value we create for the client and their willingness to pay.

And it is also helping us to be more selective in the work that we pursue and then looking at how we can differentiate that pricing by managing scope and being more commercial, not just in the pursuit process, but through the delivery process. And then the last piece is they're helping us on value-based and outcome-based pricing where appropriate. And that includes talking to our clients about it way before an RFP shows up, but also how we can propose alternative solutions to our clients in the bids.

Do you dare to put a number on what the effect has been year-to-date? Is that something that you can quantify?

I think that you can look at our backlog and our bookings and see that the steps that we're taking are helping us go in the right direction.

And then my final question is, one of your goals was to increase that hit ratio. You just mentioned commerciality again. Now is that more the stick accountability you're still going through a reduction of FTE phases? Or is it more the carrots, the incentives that you've provided to the team? Can you elaborate a little bit on that element?

Well, it has to be a little bit of both. I'd like to keep all the Arcadians that are at Arcadis today and to have a hit rate, win rate and backlog to be able to support all of them in everything we do. But that's really not what we've seen. And what Simon has mentioned, we've been targeted in how we've taken reductions across the organization to be disciplined in the places that we know that we have the capability of growing that we have that right position.

We've also talked about the incentives that we put in place for our teams. And really encouraging our teams to drive that. And then the third piece, which you didn't mention, which isn't a carrot or stick is about making it easier for our teams to do what they know is right for our clients and produce that value. And I think that's going to have the biggest impact, quite honestly versus a carrot or stick, because our people are motivated to deliver projects for our clients. That's what Arcadians -- why people are attracted to us is because of our mission of improving quality of life. We only do that when our clients put trust in us to be able to deliver. I'm really excited to remove some of the obstacles and the complexity we put around them to be able to continue to drive our win rate.

And we do have an additional follow-up from Dirk Verbiesen from ING.

A follow-up on the strong order intake in the places or the buildings activities. You do distinguish the facts on organic growth between the core and the noncore activities. But how does it balance in the core and noncore activities in terms of the book-to-bill. Was it particularly -- it looks like particularly strong in the core activities with semiconductors mentioned and healthcare, I think. But how do the noncore, let's say, the potential divestible businesses hold up in this market?

Yes. I mean we're turning a corner in places. We're still very -- the decision to sell architecture is the right decision for Arcadis. We think there's a much better natural owner of that business. We had strong wins, as we said, in semiconductors, which features in place. So that really helped the order intake. So I think it's sort of balanced -- it's a balanced outlook there -- a balanced view of what happened. So I think the semiconductor win really helped us. So that was very positive. And we're pursuing a lot more of those. So I'm hoping that we can convert a lot more of those semiconductor opportunities going forward.

And I think, just look at the 4.4% growth without China and Architecture gives you a sense and the 1.3x book-to-bill gives us good visibility on moving forward. We are believing and seeing the improvement is broader than any one individual award. It's really about growth in life sciences and digital infrastructure across the U.S., Europe, the U.K. and Ireland, and that's precisely the attractive sectors we identified in CMD.

But it's fair to say that the book-to-bill in the core must have been higher than 1.3x, I guess?

Yes, it's stronger, yes. It's stronger.

Ladies and gentlemen, with this final question will conclude our Q&A session. I'd like to turn the conference call over to Ms. Polinsky for closing comments. Thank you.

Thank you, everyone, for your questions and for joining us today. At Capital Markets Day, we said that the market and opportunity are there, and our job is execution. The momentum in Q3 provides early evidence that, that execution is improving. However, there is still much more to do, and we remain focused on delivering with pace. Thank you.

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

Good afternoon, ladies and gentlemen, and everyone who's following us online today. My name is Christine Disch, and it is my pleasure to welcome all of you here on the Capital Markets Day in the [indiscernible] building. Arcadis designers help shape this innovative approach to materials, energy and water, making this one of the most sustainable buildings in Europe. At Arcadis, every internal meeting begins with a health and safety moment, reflecting our commitment to a safe and healthy workplace. So we're doing the same today. So please familiarize yourself to the nearest emergency exits.

Let me turn to today's agenda and an investment case that we will set out for you. Today, we will tell you all about why clients choose Arcadis, where are we prioritizing growth? How a simpler operating model will strengthen execution and accountability? And how AI and digital will enhance productivity, scalability and client outcomes. We will explain to you how these actions will translate into higher quality revenue growth, margin expansion, strong cash generation and disciplined capital allocation, ultimately driving attractive shareholder returns.

Now who will we hear from today? Our executive team, Heather, Simon, Jana and Hans will set out strategic priorities, execution road map and the financial framework. We also have our industry leaders with us here today, and they will outline market opportunities, competitive positioning, strategic priorities, driving the real growth behind their businesses. And you will also hear from our clients through recorded testimonials, which will demonstrate how our capabilities translate into long-term partnerships.

And with that, let me hand it over to Heather.

Arcadis was founded in 1888, not to build things, to protect them. The founding engineers were asked to solve problems that had been defeating this country for centuries. How do you stop the land from flooding? How do you hold back the sea that is, by nature, always rising? For almost 140 years, that question has shaped everything we do. Not just in water, in the way we think about every project, every asset and every client challenge. What is the risk? What could fail and what needs to last?

Last year, our teams responded to about 50 climate-related events across 19 countries, wildfires in Canada, flooding in Central Europe and drought in the Southeast of the U.S. Over the last few decades, we have evolved into a much more diverse company, enabling the transport of goods and people, supporting energy, water and power assets, meeting demand for digital infrastructure and designing pharmaceutical facilities to manufacture weight loss drugs to just name a few.

In all of these instances, our clients chose us not because we were the largest firm available, but because they trusted us to care as much about the outcomes as they did. This is not a marketing line. It is a 138 years of proof. It is the foundation of everything you will hear today. We are not reinventing Arcadis. We are resetting it to be more focused, more consistent and more valuable without losing a single day of that heritage.

I'm Heather Polinsky, the CEO of Arcadis. Today, we are unpacking a new strategy, the reset of Arcadis, focused growth, sustainable value, a strategy our new leadership team and I are fully committed to and already delivering. We are here to explain what this means, how we will reset Arcadis and what needs to be done to drive value creation and attractive shareholder returns. The opportunity is huge. The demand is strong and the market drivers are clear. The challenge has not been the opportunity. It's been execution.

I've been with Arcadis for 27 years, and one thing has never changed. The greatest strength of Arcadis is our people. When we combine deep expertise with commitment to clients and communities, we do our best work. My career has been focused on three things: growth through establishing and expanding client relationships, performance through building winning teams and mobilizing and energizing their passions and talents to deliver and strategy implementation by making choices and the right investment decisions, all to drive value creation.

I joined Arcadis through an acquisition and understand how to drive value through successful integration. I have been central to driving the most successful parts of Arcadis. For example, as President of our Resilience business from 2021 to 2025, I was responsible for a net revenue CAGR of 8% and margin improvement of more than 350 basis points. I have seen what great looks like inside of Arcadis. Our opportunity is to make that the standard everywhere.

Now turning to my reflections more broadly on the Arcadis history. What have we learned and what have we already actioned? We have been looking carefully and recognizing what worked well, but also what needs to be done differently. Let me share the diagnosis. Some of our larger capital allocations and subsequent acquisition integrations have been poor and eroded value.

Our structure was too complex, causing inefficiencies through duplication. We had become too inwardly focused without clear accountability. We also lacked a consistent commercial mindset and lacked clear incentives to drive performance, reinforcing accountabilities and also recognizing results. Arcadis has never lacked heart. Now we must match it with greater focus, accountability and disciplined execution to deliver industry-leading results.

So what actions have we taken so far? We've assessed our portfolio, focusing on what we do well. This is already translating into growth and momentum. We are transforming our organization. This began at the end of 2025, a shift towards a more client-centric organization with a stronger commercial mindset, having successfully launched the model already in Australia in July and now completing the rollout across the rest of the business.

We have made significant remuneration changes to reinforce behaviors that we want to see, sharpened our organization, elevated client-facing leaders and empowered them by bringing them closer to decision-making. These actions are gaining traction. We are accelerating growth as reflected in our backlog, all of this with improved voluntary turnover and industry-leading satisfaction of our employees.

There is a strong and straightforward investment case for Arcadis. First, we operate in attractive markets where clients seek our expertise to solve complex challenges. Second, our ability to deliver is grounded in our status as a trusted adviser, underpinned by the quality of our people, our sector knowledge, client relationships and our heritage.

What differentiates us is not the markets that we serve, but our ability to win in them. This starts with over a century of experience. Our clients consistently tell me that they believe our people care as much or more about their problems as they do. We are taking this further, building deeper sector knowledge, getting closer to our clients and attracting new talent.

Third, we have a very attractive business model. Our business is capital-light, highly cash generative, and we have a strong balance sheet. And our client relationships and market positions support repeat, high-quality revenue growth. This means we can invest in our business. We can maintain shareholder distributions, and we can pursue bolt-on disciplined acquisitions that strengthen our competitive position.

We have not consistently converted the advantages that I just spoke to you about into the financial performance that they should produce. This reset is about closing that gap. And today, in line with the focus pillar of our strategy, we are announcing targeted portfolio actions to unlock value.

Focus means concentrating our capital, talent and resources on areas where we are differentiated, where we see strongest growth opportunities and where we can create the greatest value. We will exit activities that do not align with these priorities or do not generate the level of returns that we expect. Taken together, these assets that we are divesting represent 13% of our workforce, 10% of our net revenues, but very little margin.

First, we are divesting the majority of our architectural business, where we see limited synergies with our activities that are core. Second action that we're taking relates to our operations in China, where we will divest and enter into a local partnership with the local management.

Third, we are reviewing other activities that are not core to our strategy and where we see limited future opportunities. Importantly, this is not a onetime exercise. Portfolio discipline will remain a part of an ongoing way that we manage this business. As a result of these actions and our continued focus on efficiency, we expect to reduce overhead positions by 1,000 FTE.

Now on to our financial targets. We have a strong business, a clear strategy and some significant opportunities ahead. We are moving with urgency, and we are seeing strong growth momentum. The leadership team and I will deliver these targets, mid-single-digit growth to mid- to high-teen EBITDA margin through disciplined execution underpinned by relentless client focus and strong sector knowledge. Every action must and will translate into value creation, value for our shareholders, value for our clients and value for Arcadians.

With that, over to Simon to explain why the financial prospects of Arcadis are so compelling.

Thank you, Heather. It's a pleasure to be here today. Thank you, everybody, for coming. Let me briefly introduce myself. I joined Arcadis a year ago with a mission to deliver a step change in financial performance and a shift towards a culture of accountability. My background spans financial management and strategic leadership of both listed and private equity businesses.

And this is my fifth CFO role. I really love being a CFO. I brought that private equity mindset to Arcadis to transform the business with a firm focus on driving financial rigor, operational discipline whilst retaining the things that make Arcadis attractive to our customers and our employees. My name is Simon Crowe. I'm the Arcadis CFO. I'm here to get the commercial and financial muscles fit up.

So a lot has happened over the last year. It's been busy. It's been a reset year with changes in leadership, as Heather has mentioned, a focus on sales, cost control, transformation, capital allocation discipline. I've developed a very deep appreciation for our people, the strength of our client relationships and the realization that many of our businesses are already performing and outperforming the market.

We have a great team, many of them here today, and I'm determined to focus on value creation. I understand what drives value in our sector as much of my career has been focused on transformation and execution, helping organizations turn strategy into tangible, measurable, valued results. As a CFO, I am focused on disciplined capital allocation, balancing investment in talent and growth with delivering attractive returns for shareholders.

As Heather has said, we have a very clear strategy now, a strong market position and a well-defined road map to deliver on our ambitions. The people, the customers and the value creation, that's exactly what excites me about Arcadis today. Together with the executive team, my priority is very simple: drive consistent execution, improve performance and create long-term shareholder value.

As Heather said, we looked very carefully at the past, recognizing what worked well, but also what needed to be done differently. We have a clear diagnosis and have acted. She talked about the strategic elements, and I will talk about some of the financial elements.

First, a renewed focus. We've updated our strategy to focus on areas where we are strong, such as rail, highways, energy and water, investing in accelerating markets such as life sciences and digital infrastructure. And as we've announced today, we're divesting of noncore businesses in China and the majority of our architecture business and other noncore businesses. These businesses represent around 10% of net revenues, approximately EUR 400 million of net revenue with little or no associated EBITDA.

We expect China to complete early next year, and we'll provide a regular progress update on the disposal of our architecture business and reduction in associated overhead. Then simplifying the organization. We've already reduced complexity, removed layers and created a leaner -- a much leaner overhead that has allowed us to make decisions faster and operate more efficiently.

We're moving to a sector and service model. Profit will now follow the project, not the person. We are now budgeting by client for the first time in Arcadis's history. Finally, embedding a stronger performance culture and a consistent commercial mindset. We've rightsized some of the low billability areas, and we've taken actions that have impacted around 1,200 FTEs over the last 12 months. We will continue this rightsizing.

These steps demonstrate our focused and more disciplined approach to capital allocation, driving value creation. And we will continue to carefully analyze the most value-accretive use of excess cash, including proactive approach to share buybacks. These actions are delivering results. In the first half of '26, we improved margin, net working capital and increased our growth guidance for the year of 2026. This reinforces our confidence that we are moving in the right direction.

And with that, I'll hand back to Heather.

Thanks, Simon. Now let's take a step back and explain what Arcadis does in a simplified way, who we work for, what services we provide and how our business model enables us to generate strong revenue streams. We are a global design, engineering and consultancy company focused on improving quality of life through our clients and in support of the communities. 90% of our revenues are generated in North America and Europe.

We are the #1 design and engineering firm in Europe with 34,000 employees worldwide. Our services are complex, and our skilled technical specialists advise clients across the full asset life cycle. We help determine what should be built, secure approvals and funding, ensure compliance and in many cases, improve asset performance and lifespan for years afterwards. We are recognized leaders in environmental restoration, consistently reducing liability and allowing for safe reuse of properties.

We do not build assets ourselves, and we do not take on construction risk. We have an asset-light relationship-based business model and are highly cash generative. What do we mean by asset life cycle? Let's take a transmission line project in Germany, for example. We help clients identify the need, manage the environmental constraints, secure permits and design the route for cables. We support delivery, oversee construction and help clients operate and optimize the line over its life.

When the transmission line reaches the end of its life, we help repurpose, retrofit or decommission it responsibly. Our opportunity does not end when the asset is built. The most value is created over the decades that follow. Cost to maintain infrastructure far outweighs the construction cost by 20% to 40%. That is where Arcadis' life cycle expertise creates value for clients and growth for our business.

We are a well-diversified business with a balanced project portfolio, delivering around 40,000 projects a year with limited revenue concentration. Public and private clients are equally represented and 65% of our work is for key clients, at least in 2025, and we see that growing. Those are where we have larger, more profitable and repeat work. A few of these you'll see on the slides today.

Our contract structures are balanced between fixed price and time and materials. And equally important, our people are fully engaged in our journey and our mission as is evidenced by our employee engagement and our Sustainalytics statistics.

Now let's move from who we are and what we do to how I, alongside 34,000 Arcadians, create value for our clients. The engineering and consulting industry creates significant value to society and the impact that we leave is massive. We don't just deliver projects. We help clients across their entire portfolio, reducing risk, designing fit-for-purpose infrastructure, improving safety and environmental outcomes, meeting regulatory requirements, ensuring projects are on budget and on time and making better long-term investment decisions.

We support our clients on their assets from planning and construction through to operation, improving performance and extending the asset's life. Examples of our work include the repair and replacement of aging water infrastructures in the Chicago area, improving access to safe drinking water for 5 million people. In another case, using our enterprise decision analytics capabilities, we have assessed more than 150 capital projects and helped unlock over $52 million in funding for critical infrastructure upgrades.

We also reduced water loss for utilities by 20% to 50%. That is impact beyond engineering. It's accelerating infrastructure renewal. It's delivering client missions and it's improving quality of life for communities. We focus on the natural and built assets across transportation, energy, water, life sciences and digital infrastructure. This includes rail networks, highways, electrical grids, water and wastewater systems, pharmaceutical facilities and data centers.

Our markets are growing by powerful change, driven by trends that are shaping where our clients and how they invest. But that investment is becoming more complex. Clients need to navigate permitting, regulation, capital prioritization and increasing costs while still delivering at pace. That creates greater demand for integrated partners who can help them make the right investment decisions and then deliver across that life cycle. That's where our strategy is designed. We designed it around our clients and where Arcadis is uniquely positioned to win. I'm excited that our global industry executives are here today with you and we'll bring this to life shortly.

So why do clients choose Arcadis? And how do we differentiate? First, experience matters. We bring heritage and deep engineering expertise, strong sector and asset knowledge in some of the world's most complex infrastructure and environmental challenges. When clients make major infrastructure investments, they choose partners with proven experience, a track record of delivery and the knowledge and foresight to anticipate their needs with innovative and efficient solutions. This is what Arcadis does.

Second, we are the #1 global leader in environmental services. Environment and climate expertise are part of our DNA, reducing client risk, building resilience, protecting their right to operate and protecting their supply chains. This is part of who we are.

Third, because we bring the right expertise across the full asset life cycle that I've talked about, utilizing the best global and local talent. As I said, our clients consistently tell me that they believe our people care as much or more about their problems as they do.

Our client base is broad, and we serve 9,000 clients every year, with 95% of our revenues coming from repeat clients. Since the beginning of 2026, my team and I have met over 200 key clients, and they tell us they choose Arcadis because when the stakes are at their highest, our expertise and more importantly, our commitment to them is what they trust.

I'd like you to hear directly from our clients and see our strategy is aligned to their needs and how they view us is a critical part of their future.

[Presentation]

I get a lot of pride from hearing from our clients and a big thanks to them for putting their trust in Arcadis. It was honestly hard to select just a few.

Now for the details of our strategic plan for 2027 to 2029. We are delivering a reset for Arcadis. First, we are focusing on our strengths to bring sharper discipline to our portfolio. At our second quarter results, we have set out how we have segmented our industries into 3 distinct buckets, without similarly thinking not just where do we want to invest. It's about where will we create the greatest value for our clients and best differentiate Arcadis to drive market growth.

First is core. And these are large, structurally growing, low cyclicality markets where we already hold a leading position. Here, we will drive organic growth by expanding our services to capture both CapEx and OpEx spending from our key clients, grow our share of wallet and expand our leading position in key geographies.

Second is accelerate. These are fast-growing sectors where we already have a strong foothold. Here, we will invest heavily in our people, capabilities, innovation and brand to grow global key clients and expand our delivery. This includes targeted capability building and upskilling programs. And for both Core and Accelerate, we will implement select bolt-on M&A.

The third bucket is optimize. These represent more cyclical businesses where we participate selectively and only where we can do so profitably. China and the majority of our architecture business fall in this industry. And they will -- as we mentioned, they will be divested. Here, we will focus on the services we provide already today. We will maintain strict pricing discipline and margin discipline, and we will redirect M&A to higher return opportunities.

We are moving away from our solution-based model, in other words, moving away from the places, mobility and resilience business areas and aligning our organization around the clients we serve, bringing us closer to their needs and closer to our clients. Transportation, Energy and Water are in core with Transportation expected to deliver mid- to high single-digit growth and Energy and Water to deliver high single-digit growth. Industrial manufacturing and technology sit in accelerate and will grow at a mid- to high single-digit rate.

And our fourth industry, real estate and development is optimize. This is where we will focus on margin improvement and taking decisive action. Our industries include sectors reflecting how our clients operate. This will allow us to leverage experience, best practices and trends from one client to another inside each sector. It will also create greater transparency, accountability and discipline, which Simon will talk about shortly.

With that, we are also simplifying around our clients. When we say simplify, we don't mean offering less. We mean making more of Arcadis easier for our clients to benefit from. Our ability to support the full asset life cycle as one integrated solution is one of the things that sets us apart and drives value. Delivering this effectively requires a different way of working.

We will increasingly staff projects with a combination of local, global and global excellence center talent, bringing the right expertise regardless of location. This will also allow a shift of revenue follows the individual model, as Simon mentioned, to revenue follows the client and project model. This incentivizes our leaders to consistently deploy the best talent across Arcadis to deliver the greatest value for Arcadis and for our clients.

We are being selective in where we will deliver our integrated service offering, focusing on core and accelerate industries where we are best positioned to drive value. While all of these capabilities are critical, I want to highlight one specifically, our environmental services. It remains one of our strongest differentiators.

We integrate environmental expertise across the asset life cycle from land use planning to permitting and compliance, PFAS solutions, risk management, remediation and long-term stewardship. PFAS or forever chemicals is a powerful example of our leadership. For more than 20 years, we have helped hundreds of clients address complex PFAS challenges through a combination of proprietary solutions and technologies, deep scientific expertise and delivery capacity and capability.

This enables clients to navigate complex regulatory situations, manage risk and accelerate critical investment decisions. Our environmental services is a capability unmatched in the industry and one we are going to continue to scale to meet growing client demand. As mentioned, we are already empowering our organization to deliver the strategy. So what have we changed?

Increased transparency is going to allow us to accelerate our growth and more efficiently manage our teams, creating more agile deployment of resources, better collaboration and a more seamless client experience. Specifically, we are moving to a client-led operating model to better share sector knowledge and leverage best practices. It will also increase accountability, transparency and visibility of profitability across our accounts.

We've also created one global delivery team organized to replace our past solution-based staffing. We are also assigning one accountable team per client called client success teams. And they will bring together sales and delivery, creating a single point of contact for our clients and a single point of responsibility for Arcadis.

We will continue to improve delivery through scaling, automation and standardization and our global excellence centers will move from an outsourced model to an integrated part of our services, freeing our local experts to spend more time with clients to strengthen relationship and co-create solutions. Third, we are driving forward a performance culture to bring out the potential for our deep technical expertise and client relationships.

And I'm really happy to hand it over to Jana to explain more about this.

Thank you, Heather. 30 years of transformation has taught me one simple truth. Structures don't move a business. It's leaders that set standards of excellence every day that do. It's cultures where performance feels normal every day, they do. And people who turn ambition into results, they do. I spent my career in value creation in listed and last 12 years in private equity environment. I've learned to be impatient with 2 things: speed of decision-making and the link between effort and impact.

I've learned that transformation only matter when they show up in results and that results can only last when they build into culture that sustain them. And that's the lens that I bring to Arcadis today. I've been here almost 6 weeks, long enough to see what's real and short enough to still call it out plainly. On my first day, I met with the AI team and the CEO of Nomic, our AI partner. And I asked him why did he choose Arcadis to partner with? And he gave me 2 reasons: the strength of connection between theirs and our engineers and Arcadis leadership that was ready to back up the partnership all the way.

This story reveals two significant strengths to me, three, trusted client relationships. Heather referred to it in her speech, 40,000 projects in 36 countries. What struck me when I go through the organization is that people don't talk about accounts. They talk about clients, they talk about their partnerships that they've held for decades.

Arcadis is #2 firm for engagement in our entire industry. And when you join, you really see why. From day 1, I've experienced people that are passionate about what they do. They are generous with sharing their knowledge, and they are quite open to new ideas and new ways. Almost 0.25 million years of combined engineering experience. Our engineers choose to stay with Arcadis because they are surrounded by people they learn from and who help them grow.

I also see some of the things that are holding Arcadis back, too many layers, narrow span of controls, decisions that sometimes take longer than they should and sometimes accountability that is a little hard to pinpoint. So why does it matter now? Performance culture is becoming a competitive advantage. Arcadis already has a strong people culture. The next step is sharper accountability, clearer priorities and faster execution.

High-performing culture is not harder or colder. It's fairer, clearer and much more focused on driving impact. It requires leaders who create clarity, make timely decisions and translate strategy into execution. It also requires honesty and transparency with our people about what's changing and how they fit into our future. By getting this right, our people agenda becomes a driver of growth, margin and client impact. In other words, high-performance culture.

High-performance culture in my vast experience is built around 3 core principles. First, clarity. We've moved to a simpler operating model with clear focus and P&L ownership. Complexity always has a cost attached to it. Every extra lawyer -- layer slows decisions and blurs accountability in the organization. The new model brings decisions closer to clients and makes us much more entrepreneurial. We've also appointed more than 200 leaders close to clients and to drive growth.

Secondly, accountability. We've aligned our objectives to our strategy. We've launched sales incentives and increased reward upside for overperformance by 25%. And we will continue to invest in developing accountable leaders that can help us turn strategy into execution every single day. We are saying out loud that exceptional work is worth more and that accountability turns both ways, high standards matched with genuine care for the people delivering them.

Finally, consistency. Our job is to make excellence the standards. We've rightsized the management from 6,000 to 4,000 and reduced overhead. Next comes the capability to sustain it, performance scorecard, strategic workforce planning and AI and data literacy embedded across and throughout Arcadis. And we are also building skills for tomorrow. We've launched a data center growth lab funded by Lovinklaan, connecting skill building directly to client impact. We've also launched succession programs for the next generation of Arcadis leaders.

Arcadis has always invested in its people, and that does not change. It sharpens more mobility, more pathways and more opportunities to build great careers. And that's how we will continue to unlock the talent and the imagination of all Arcadians. We have tremendous assets, talented people, deep expertise and sense of purpose.

That is the heart, and we don't plan to change it. It is something you cannot manufacture, though many competitors would like to. What we will build on top is a sharper focus on clarity, accountability and consistent execution. It is far easier to build a performance muscle than to grow a heart and a soul. So we build the muscle and we keep the heart.

One last point. performance isn't just financial. How we support people contribute to our communities and reduce our environmental footprint is part of the same scorecard. It is not a separate conversation. Our nonfinancial targets, which are behind me, make those commitments measurable with clear accountability for delivering them. Heather, back to you to talk about AI.

Thank you, Jana. Let me explain now how we're embedding AI and digital across Arcadis to enable our strategy of focus, simplify and perform. It will help strengthen our role as trusted advisers to clients while becoming more efficient and effective as an organization, winning more and focusing on the outcomes that we deliver. Our industry has always evolved through technology, allowing us to accomplish more and create greater value.

What is different today is the speed, at which new tools are becoming available, the important role of data, the leadership play -- the role that leadership plays in this transition. When we bring the human together with the technology, these developments enable us to solve more client challenges faster and better. This matters because today's infrastructure, environmental and societal challenges far exceed the capital that's available or the resources, meaning engineering talent, capabilities that are available.

We believe that AI helps us close that gap. For us, AI is creating value across 5 dimensions: helping us know more, operate better, win more work, deliver more efficiently and grow by opening up more uses for our skills and data. Ultimately, AI will allow us to solve more client challenges from enabling better decisions through data to operating more efficiently and effectively, winning more and delivering with greater quality and creating new opportunities. But the key to all of that is leadership and scaling.

Now, we do not believe AI is a scale game in the traditional sense. AI creates value when organizations can effectively scale proven workflows and deploy them consistently across their businesses. That is why our focus is on structured data, partnerships, building in-house capabilities and disciplined scaling. These are the foundations that will allow us to scale the best ideas across projects, sectors and clients.

Let me show you what this looks like for our clients and in practice. In water, it means finding the highest risk lead service line without digging everywhere, helping reduce excavation costs by up to 50%. In highways and roads, it means helping clients inspect up to 10x more highway kilometers per day while reducing inspection costs by 25% to 30%. And in data centers, it means reducing campus planning from 12 weeks to 3 days, helping clients assess more options and move faster from concept to decision.

It provides greater visibility of options, risks and trade-offs and identifies them early, helping clients to reduce development risks, get projects to construction faster and bring critical infrastructure online sooner. You would have seen some of the showcases outside before this event. And if not, please stop by. They're worth seeing after the Q&A session. This is how we approach AI, solving real problems, proving real value and scaling the best solutions across our sectors and services.

We are embedding AI directly into how we deliver projects, how we win work and how we operate the business. Here are 3 examples of how value is being created. One, our partnership with Nomic, our AI partner that is purpose-built for engineering. More than 400 engineers across 17 countries are now using over 700 automated engineer-built workflows to analyze drawings and specifications and process complex project information. The power of this is scale.

Once an engineer captures how they conduct a review, that expertise can be applied anywhere. Increasingly, engineering standards sit in the workflow, not in one country, not in one office, not in one head. Nomic connects directly to the tools and the teams are already using, improving quality, creating greater consistency and supporting our productivity on our lump sum projects. It has already supported $50 million in project wins and is being deployed across our pursuits, representing approximately $450 million in our pipeline.

Another example of how we are scaling AI is our industry-leading partnership with Autodesk, embedding it directly into the design and engineering workflows that a majority of our people are already using. We combine Autodesk technology with Arcadis' data, knowledge and engineering expertise to improve productivity and most importantly, quality, ultimately delivering better outcomes for our clients.

This is not about replacing technical expertise. It is about helping our people do more of what they do best, reducing internal activities like RFP reviews and pursuit preparation and allowing our teams to spend more time with our clients, delivering better outcomes.

I'm excited to turn the conversation over to Hans Dekker, our Chief Operating Officer, to facilitate our industry deep dive session with our industry executives who will bring our strategy, focus, simplify and perform to life.

Thank you, Heather. I'm Hans Dekker, Chief Operating Officer of Arcadis. And coming in, you would have seen that our brand says, imagination is how. My role is the how, turning strategy into results for our clients and our shareholders. I'm an engineer from Delft and for more than 30 years, I've led large businesses, global businesses and complex projects from the Dutch high-speed rail line, San Francisco Oakland Bay Bridge up to offshore wind farms in the U.K.

I've lived and worked across Europe, the Middle East, Australia and North America. I've grown Fluor's global infrastructure business by more than 30% and have transformed Lendlease's $6 million operations into a more scalable and profitable one and led recovery for a $2 billion fixed price project. Along the way, I've learned that strategy only creates value when it's executed well and backed up by the right controls.

Today, I'm responsible for how Arcadis delivers our services and capabilities, sales and marketing, technology, data and the AI that supports them. My focus is simple, excellent in execution, transforming delivery and building the global capabilities that allow Arcadis to grow. That's what I'm accountable for, and that's what you should hold to me. So what's driving that focus that I mentioned? And how are we going to execute brilliantly to tap into those opportunities. I'd like to invite Ramin first to bring that to life.

Thank you, Hans, and good afternoon, everybody. My career has spanned more than 30 years in transportation. I serve on the Board of Intelligent Transportation Society of America, where I also had served as Chair and have led some of the most innovative and complex projects deploying sensored-enabled asset management solutions.

Clients trust Arcadis to deliver some of the world's largest projects and integrate advanced technologies that optimize critical infrastructure performance, generating repeatable revenue and expanded margins. My name is Ramin Massoumi, and I lead transportation globally for Arcadis.

Transportation at Arcadis is a EUR 1 billion business and a core industry for us, making up approximately 27% of our revenue. We are seen as a top-tier trusted adviser, designer and integrator by many clients, as you see here on the diagrams, such as Georgia Department of Transportation in the United States, Metrolinx in Canada and Deutsche Bahn in Germany.

These relationships with the world's largest and leading infrastructure organizations give us a focused platform to grow with purpose. So where do we see the market growth? In North America, growth is about infrastructure expansion and modernization. In the U.S., owners and operators are adding capacity through major capital programs and public-private partnerships, which require a one connected system approach.

Canada is seeing massive investment in high-speed rail trade corridors and ports through their nation-building programs. In Europe, the story is about renewal. Networks are aging and face rising demand and climate stress. Germany, for example, is making record investment in transportation infrastructure. Defense is also creating infrastructure demand as moving heavy equipment depends on roads, bridges, rail and ports.

Clients need to modernize, add capacity and unlock more value from existing assets, all at the same time. Transportation is one connected system, creating opportunities for services throughout the asset life cycle. Arcadis is one of the few firms that can really credibly work across that full life cycle. We work on some of the most complex projects across the globe. Fraser River in Canada, high-speed rail in the United States and work we do locally here at Zuidasdok.

Through these, we have developed repeatable delivery playbook that can be scaled effectively with local deep expertise to optimize, replace and modernize critical infrastructure in high-growth sectors. So how are we taking that a step further? We are prioritizing high-growth geographies where we are strong in, such as U.S., Canada and Germany and moving beyond single projects to long-term programs with significant revenue and margin expansion potential.

The opportunities to expand our client base are in rail and highways, where we have the largest scale today, expanding our leadership in modernization and optimization programs. On Hudson Tunnel in New York, our delivery partnership was extended by nearly EUR 100 million, drawing on our Dutch tunneling expertise and global major programs delivery capabilities.

Ports is one of our fastest-growing sectors for us, where we see double-digit growth. Arcadis is the lead designer of Canada's largest container terminal project, providing multidisciplinary services, including design and environmental. Once completed, it will increase capacity at the Port of Vancouver by over 50%. In addition to focusing on high-growth markets, we will grow our margins through increased integrated selling, expanding our portfolio towards the full life cycle and higher-value services.

This is further enhanced by targeted bolt-on acquisitions, such as the one we did in Germany, where we have added 160 rail specialists with experience in prequalifications with Deutsche Bahn. And we are focused on accelerating innovation through key hires and partnerships to strengthen our work in the OpEx space, which has proven to create higher-margin revenue.

In the Netherlands, here locally, we won ProRail's EUR 12 million rail traffic management system modernization project. Our connections with clients are deep. We offer a wider life cycle set of services across traditional and innovative solutions, and we have a proven delivery platform. I am confident in our ability to execute our strategy, focus on growth and sustainable value. I stand committed to delivering mid- to high single-digit growth.

Thank you, Ramin. Some strong opportunities across our major programs, many where we already have a leading position. I'd like now to invite Karin, who I've had conversations with about this being a generational moment. And Karin, where are we seeing how connected these challenges are and how does that put Arcadis in a strong position given our experience?

Thank you, Hans, and thank you, Ramin. And I will start leaning into what Ramin just shared about integrated selling. Nothing gets built, made, moved or computed without power and water. In more than 20 years with Arcadis, I've learned that this is an industry that is critical to and connects across all the industries on stage today. And during my 30 years of professional experience, leading teams across Latin America to deliver iconic projects in that industry from green hydrogen to transmission lines, water infrastructure to climate adaptation programs from sustainable mining to remediation work. I've been leading on boards with our clients. And through this, I have brought new thinking to how we create commercial and generational value in these critical industries. That approach has been recognized in awards like Women in Global Energy Transition and BuiltWorlds Global Innovator.

I am Karin Formigoni, and I proudly lead Energy & Water, our core industry. Energy & Water is already a EUR 1 billion growth engine, representing 26% of Arcadis net revenue. It brings together 4 connected sectors with major key clients across all. We entered the next strategy cycle, building with a strong track record of organic growth and significant margin step-up with growth driven by U.S. water, sustainable mining and German grid expansion.

For decades, this industry has talked about cycles, but the opportunity in front of us is structural, not cyclical. The figures on the screen show the scale, sustained investment in global power, major water needs in the U.S., the energy transition in Europe and data center electricity demand that is expected to double in 2030.

But the real point is not the size of each one of the market in isolation. As Heather mentioned, AI, electrification, energy and water security, industrial investment and climate pressure are pulling these systems harder at the same time. Power depends on water. Water depends on power and energy-intensive developments only move when land, grid capacity, water, permitting and climate resilience all line up together.

That is our powered land proposition where we see opportunities across all industries. That is why integration at the interfaces is becoming valuable, and this is why Arcadis is well positioned to capture that value. This is one connected client problem we bring our imagination to solve and that fuels our focused profitable growth. And this is what excites me most about our industry.

So now you should be asking why Arcadis in such structural sectors? First, our differentiation starts with scale and relevance. We are embedded in the world's most important water systems, touching 100% of the U.S. water supply in all 22 watersheds, and we work in 9 out of 11 water companies in U.K., giving us unmatched data insights into the challenges facing utilities, regulators and investors. And we take that further to protect coastlines, communities and economies.

In New York, we are protecting Manhattan's shore lines and critical infrastructure from climate impacts, combining climate risk analysis and resilience planning, engineering and design and environmental expertise at scale. Together with our deep technical expertise and intelligent solutions, this enables us not only to design assets, but to help clients make better investment, regulatory and operational decisions throughout the life cycle.

Second, our decades of experience in critical power infrastructure, long-standing relationships and multiyear frameworks with some of the world's leading energy investors and operators such as TenneT, National Grid and international energy companies. Through global account relationships and local delivery excellence, we help clients modernize grids, expand capacity and build the secure and resilient energy systems needed for the future, positioning us for our clients' most strategic decisions rather than simply delivering individual projects.

Third, our integrated model allows us to enter earlier and stay longer. With clients like Amprion and many water utilities, we engage when investment decisions are still being shaped, bringing together engineering, sustainability, environmental and digital expertise to improve outcomes, enhance competitiveness and unlock greater long-term value. That is what integrated selling means for us.

So our focus is clear: to maintain high single-digit growth and continuous performance improvement. We will pursue that through three priorities: being excellent in the places where we have the strongest client relationships. First, strengthen our leading water position by moving further upstream into advisory and further downstream into operations and asset management.

In the second quarter, our water teams won 373 projects globally. This is amazing. The priority now is to convert that reach into more life cycle work, recurring revenue while accelerating digital solutions.

Second, expand power capability globally through specialized talent and selective investment, such as through the preparation of our professionals in Arcadis Energy Transition Academy and our recent acquisition of SATEL in Spain. In the U.S., we will accelerate recruitment selectively where our existing client relationships and ability to integrate complex infrastructure give us an edge.

Third, cross-sell power and water into energy-intensive industries. In sustainable mining, critical minerals are a key resource for the energy transition and the AI boom. For example, at Vale's Ponta da Madeira in the Northeast of Brazil, our environmental and sustainability capabilities open the door through permitting, water management, decarbonization, biodiversity, social legacy and closure plans. And innovation underpins all 3 priorities to ensure speed, consistency and scalability.

We combine expert judgment with AI tools, co-creating with clients like we are doing in our AI for water innovation challenge, where we received over 40 innovation ideas, 5 of which we have co-funded and are piloting with our clients. We are now scaling this to the energy space. So focus also mean choices. We are not pursuing heavy EPC exposure.

We concentrate on high-value consulting engineering, environmental and program work, scaling delivery through our global excellence centers, which carried 14.4% of hours in the first half of this year, up from 10.5% 3 years ago. With this discipline, we are creating repeatable, profitable growth. So the market is structural. Our differentiation is proven. And we are investing in the people, innovation and capabilities to deliver high single-digit growth and generational impact. That is the opportunity and the execution standard I am committed to.

Thanks, Karin. The delivery standard is indeed critical. Once we standardize how we work, we can automate it and scale it through our global excellence centers. AI-supported technical reviews are already up to 70% faster. This is freeing our senior experts to take those opportunities you mentioned further with our clients, as Heather mentioned.

I'd now like to invite David, who leads industrial, manufacturing and technology, our accelerate industry to show how we are helping clients build their plants, fabs and data centers behind AI and new medicine.

Thank you, Hans. Good afternoon, everybody. So my 30 years' global experience designing and delivering complex manufacturing facilities has really taught me how the specialist expertise sets you apart. It creates sustainable growth. I am David Aimable-Lina. I've built my career in some of the world's most demanding industrial manufacturing facilities and infrastructure environments across the U.S., Europe, Latin America, Japan, South Africa, to name a few.

So while my foundation is within engineering, my career has really been about leadership, building capability, delivering results in complex environments. I lead the manufacturing and technology, our accelerate industry. So it's part of our business that plans and designs and delivers facilities from pharmaceutical to semiconductor fabs to data centers and advanced manufacturing facility.

The sector is about 21% of our net revenue, and it's driven by three things. First, clients are looking for a single trusted adviser across their program with a deep understanding of their business, with the capacity and the capability to deliver at speed and with certainty. Second, they are all highly regulated and they have complex manufacturing and production requirements. Thirdly, specialist expertise. It's a common thread across all three sectors.

So what's driving accelerated growth that we are seeing? AI is driving digital infrastructure. And with that, semiconductors are crucial. Medicine is moving towards advanced therapies. Manufacturing is invested in automation and technology-enabled services. The numbers on this slide show the scale. The important point here is to understand what sits behind them. We are seeing significant client investment in CapEx. And now we're also seeing significant client investment in OpEx simultaneously.

We are also seeing a greater dependence on our core industry that Karin touched upon earlier, water for cooling and power to fuel these energy-intensive solutions sustainably. That's a massive integrated selling opportunity, and it makes this a capacity race as well as a market race. So why do clients choose Arcadis? All of these require scarce expertise, which we have from process engineering and clean rooms to commissioning and validation, then add the utilities and those challenges around power and water.

We really encourage sector movement of our insights and knowledge from our subject matter experts. And also, we combine that with advisory, with engineering and digital capability, which we already see within Arcadis. It all fits together. And the real important point here is one sector's innovation becomes another sector's standard operating procedure. This is how and why we scale and why we transfer our capabilities from one sector to the other.

It's also enabled by some of the proprietary digital tools that Heather mentioned earlier. We also have deliberately invested in bolt-on acquisitions, acquisitions such as KUA, which have really strengthened our data center planning, our engineering and our permitting capability. And it's with all these moves that we're now seen as an industry leader within the industry.

So let me now touch on how we'll accelerate growth within the next strategic cycle. First, we're going to start simultaneously upskilling and investing in talent to scale our capability. As Jana said earlier, we've recently launched a data center growth lab funded by the Lovinklaan Foundation, which will equip over 1,500 of the Arcadis engineers over the next 3 years.

Second, we're going to start expanding our work beyond CapEx, advisory, asset intelligence. That's going to help clients decide where and how to invest. Also, we're then going to look into commissioning, operational readiness, asset performance and optimization. We're doing this already.

So at Lilly at [indiscernible], we're already continuing through to commissioning. We're looking at validation. We do qualification. We supported their start-up and their first batch drugs. So we don't end at design and we don't stop at project handover. We continue into the OpEx element of the project. That's integrating selling, integrated selling, building the client relationship beyond the capital program and into the operating life of the asset.

Revenue growth will come from expanding our project work through long-term client relationships, not one-off projects. We won more than 280 data center projects with large-scale clients globally over the last year. So our strategy is really focused on bringing services to those clients, expanding our share of the wallet with them.

And then finally, we're also partnering with some of the world's leading companies within life science, digital infrastructure with hyperscale and then on to semiconductors, helping them shape their programs. So we have some really strong opportunities. We're invested in strong expertise, and I'm personally committed to accelerating growth within these two sectors. Thank you very much.

Thank you, David. Our transformation is what takes that expertise globally. We're already moving capacity to stronger markets and into priority programs. One global delivery team, fully integrated excellence centers that are home to 15% of our people.

I'd like now to invite Bill to share how we are creating greater focus and being deliberate about the choices we make in real estate and development.

Well, good afternoon, everybody. I'm Bill Teberg, Global Industry Executive for Real Estate and Development. I joined Arcadis approximately 18 months ago, having spent around 35 years in the real estate industry, both working for owners and service providers. The story I'd like to leave you with is a simple one. As you heard from Heather, we are making deliberate choices about where we compete, where we divest, where we optimize for greater portfolio performance.

This is exciting for me because I have experienced the divestiture of a noncore service and understand how this success helps create business focus, optimization, improves margins and at the end of the day, creates better value for your clients. So let me start with the business itself.

Real estate and development is 26% of the net revenues in 2025. Within our portfolio optimization, let me focus on how we create the strongest business across our three key markets: Defense and security, public and institutional and then property investors and occupiers. These markets are all experiencing different dynamics, but they have one thing in common, and capital is becoming more selective.

Clients and investors are placing greater emphasis on resilience, performance and long-term value creation. We are concentrating where the market is growing, where Arcadis already has a credible path to pursue and remain involved across the asset life cycle that can create higher value and repeatable growth.

The figures on this slide are not simply indicators of market size. They point to areas where capital investment is increasing and where we believe Arcadis capabilities will create value for our clients. Taken together, defense spending across Europe, the U.K. and Ireland for public and regional properties and global commercial estate market creates attractive opportunities for sustainable growth.

As an example, defense spending in the Western world is on track for the biggest surge since the cold war. Many companies that we work with see record funding in defense-related manufacturing, engineering and research facilities. Approximately 61% of this is in North America and approximately 34% in Europe. This will include delivering integrated services with our industrial manufacturing industry to bring One Arcadis to our common clients.

So what gives us confidence how we have differentiated our offering with many long-term clients supporting their portfolio cycle. We are involved earlier. We're helping shape investment decisions before capital is committed. And through a strategic advisory group, we help define the problem and the investment approach for our clients.

That early involvement allows us to remain relevant, supporting clients across their life cycle of assets rather than just through isolated projects. In the U.K., we have a strategic partnership with Cornwall Council, which is a single provider partnership and arrangement that is collaborative. Our relationship here has spanned over 20 years, providing program management and site supervision.

So the overarching priority for real estate and development industry is very straightforward. We're going to optimize the core business. We're going to grow through disciplined account growth, and we're going to create stronger execution. The three priorities on this slide show how we're going to do that.

First, defense and security. As I shared earlier, we see the strongest alignment here between client demand, market investment and Arcadis capabilities. We're expanding our position in the U.S. federal military facilities. We're growing our U.K. Ministry of Defense presence, and we're building a broader NATO portfolio. We already have a strong foundation supporting the United States Army Corps of Engineers across nearly 30 districts in the U.S. and in Europe.

And we continue to see opportunities to expand long-standing relationships into broader mandates and services. Another example is our continued environmental work with the Department of Defense, deploying our HRX Well Technology, which is cleaning up contaminated water on military installations.

Second, our public and institutional. Here, advisory is our gateway to growth, particularly in the Americas. Government and public bodies are increasingly looking for partners who can help them prioritize investment, modernize aging estates and improve resilience. Our objective is to secure more of those advisory positions and convert them into downstream planning, design, engineering and program delivery work.

And finally, property investors and occupiers. Our focus is scaling integrated mandates rather than individual services. We're expanding our transaction and independent advisory capabilities in the U.S. We're expanding full-service design opportunities. We're divesting noncore services, and we're strengthening our position across -- with investors across Europe and Australia.

So in closing, the opportunity isn't simply winning new work. It's expanding trusted relationships into broader long-term mandates. Growth in real estate development isn't dependent on any single market, client or capability. I'm committed to creating focus and multiple pathways to sustainable growth across the portfolio.

Thanks, Karin, Bill, David, Ramin. So what I'm hearing is that we're bringing together stronger client relationships, differentiated expertise and more disciplined delivery. That combination helps us win the right opportunities and create value for our clients and shareholders. I'm now handing it over to Simon to talk about the financial performance.

Thanks, Hans. Well, how do you follow that? That was incredible. All four of them. Thank you. Another round of applause for those four guys. And thanks to Hans and the whole team for bringing that -- the strategy to life. They really brought it to life, I think, for us today.

So look, I know this is the bit you've all been waiting for or some of you anyway. We are fully focused on delivering attractive shareholder returns through a focused strategy incorporating mid-single top line growth, margin expansion, disciplined capital allocation. And I'll now step you through each of those elements.

Turning now to the top line. We'll deliver our mid-single-digit target by focusing investment and capital on our strongest markets, shown here as core and accelerate. We expect each of these to deliver mid- and high single-digit organic growth, as you've heard from some of my colleagues, with further inorganic growth from bolt-on M&A.

In our core transportation market, we're increasingly involved in larger and more complex programs. Today, we're pursuing several large multimillion euro opportunities in North America, supporting our expected high single-digit growth outlook. Our Energy team, as you've heard, is successfully expanding our business portfolio, particularly in Europe and is evident in high single-digit to low teens growth this business has shown recently. We're now looking to expand further within the U.S.

In Water, we've consistently outperformed, particularly in the U.S. with mid-teens growth for the last couple of years. Within Accelerate, we see significant opportunities to increase market share by adding new large pursuits to our portfolio, driving mid- to high single-digit organic growth. And in Industrial Manufacturing and Technology, we already have sectors performing at high growth rates.

For example, in digital infrastructure or data centers, we already have 40% plus growth rates, representing net revenues of over EUR 200 million. And in our Life Sciences sector, we come from a lower growth base last year, but are now seeing improving momentum through strong order intake with our U.S. pharma client base. And in the semiconductor sector, we anticipate a step-up in revenues from opportunities with both new and existing clients. Together, these trends will give us confidence in the growth outlook for our Core and Accelerate industries.

In Optimize, the growth trajectory will be a balance of disciplined investments, as you heard from Bill, in growth areas as we outlined in the industry discussion. This will be offset by the noncore disposals that we have announced today. We will continue to review our portfolio for underperforming sectors. And as Heather mentioned, we continue to review the portfolio and to take very decisive action to turn around or dispose of assets where appropriate. Overall, we will significantly increase our exposure to higher-growth sectors from 74% of net revenue to 85% by 2029.

Turning now to our target margin. We confirmed at our Q2 results that we're moving away from reporting operating EBITA to operating EBITDA from 2027. This is in line with industry norms and hopefully is not confusing. We are focused on margin expansion with a clear pathway towards our mid-high teens target. And let me walk you through the key levers to deliver on this ambition.

First, we're focusing on the portfolio, reducing exposure to lower margin sectors by either selling or winding down some of our noncore businesses. And this includes around a pro forma 1% margin step-up from the divestments announced today. I'm sure that as we rightsize the associated overhead, we will see additional benefits.

Second, we'll continue to drive top line growth and operating leverage by focusing on our strengths. Our goals here include improving our win rates by operating a new simplified model based on sector and service. We'll have 10 to 15 sectors and provide 6 services to our customers. It becomes very simple. This will make it easier to track our sales performance by client and drive billability by service. In addition, the majority of our clients currently take only one of our six services, and we aim to improve cross-selling.

We're also applying more targeted sales incentives as well as differentiated pricing. We're driving improved billability by optimizing resource allocation supported by our new sector service model, must be a client. We are changing from profit following people to profit following projects. This will mean that project managers are incentivized to use the best and the most cost-effective resources wherever they are. We're incentivizing our service teams to improve our billability, and we're targeting a 2 to 3 percentage point increase in the coming quarters.

Third, our cost-cutting program has already removed layers in the organization. We have an ongoing program to reduce overhead relating to around 1,000 FTEs. And fourthly, our investment -- disciplined investment program, which I'll outline in the next slide. These levers enable us to achieve our mid-high teens 2029 margin target. And I want to emphasize, this is not a cap on our ambition.

And we anticipate nonoperating costs to achieve our reset strategy of around EUR 75 million to EUR 85 million in 2026 and EUR 70 million in 2027, EUR 40 million to EUR 50 million of that associated with exit and the balance associated with transformation and investment in the business. We expect to complete our reset by the end of 2027.

So over this period, we'll make disciplined investments. In people, we're implementing a performance framework and scorecards. We're hiring top talent, which takes time to ramp up and become billable. We're being very mindful about nonbillable time and how this is directed into business development activity to improve our win rates. And we're simplifying our operating model.

As Heather mentioned, we will continue to scale delivery through automation, standardization on our GECs, freeing up our people to deliver more value. This includes driving value-based pricing and bringing a sharper commercial focus, using globally recognized pricing consultants and implementing strategic workforce planning.

In Digital and AI, we are being very mindful about where we're investing by improving the quality, speed and client outcomes such as through our new Autodesk partnership. Driving efficiency in our support functions, growing faster by using our in-house AI studio to develop new services and build new capabilities.

Strong cash generation and growing EPS are core components of delivering attractive shareholder returns, and our model delivers high cash conversion. By excluding nonoperating costs, we can examine normalized performance of our business. We typically expect approximately 50% of our operating EBITDA to convert to net income and 95% of that converts to free cash flow. So we're capital-light and highly cash generative. We've got to defined priorities for how we deploy that cash through our disciplined capital allocation approach.

So moving on to that capital allocation approach. These priorities for me are very, very clear. We're focused on driving growth, investing in our business and key markets and delivering returns to our shareholders. We'll deploy this capital to drive growth to provide an attractive return for our shareholders in the following framework.

First -- the first priority, as I just outlined, we'll invest in our business. Much of this investment is in operating expense and is embedded in our operating margin objectives. Our model is capital light, as you can see here on the slide, at EUR 20 million to EUR 30 million per year.

Second, we're committed to a progressive dividend for our shareholders. We aim to pay out 30% to 40% of our net income from operations annually, well above our peer average. Through this, we've been able to deliver an annually increasing dividend per share to our shareholders at around 12% CAGR over the last 3 years. Third, we'll continue to invest in value-accretive bolt-ons, bolt-on acquisitions that support our strategy like the acquisition last year of KUA and a rail business in Germany last year.

Lastly, whilst we will -- whilst maintaining our investment-grade rating profile, we'll proactively look to return any surplus capital to shareholders. We'll update our cash generation, including the opportunity for share buybacks at our full year results in February. Our balance sheet is healthy at a net debt to operating EBITDA ratio of 2x as of second quarter, and we remain committed to keeping our leverage within our target range of 1.5 to 2.5x and retaining our investment-grade credit rating.

So let me close. We've acted with urgency, and we continue to do so. We've reduced costs. We've strengthened cash discipline. We've resized the business and embedded a relentless focus on capital allocation. And we have a clear strategy with clear targets to drive growth, margin expansion and cash generation. We're targeting mid-single-digit organic net revenue growth through the cycle and an operating EBITDA margin in the mid- to high teens.

In the near term, we remain on track to deliver our 2026 guidance of low single-digit organic growth and an operating EBITA margin of 11.7% to 12%. Today, I'm also setting out an ambition beyond our 2029 strategic targets. We believe Arcadis has the potential to more than double EBITDA over the next 5 years. We will achieve that through sustainable growth, margin expansion, strong cash generation and disciplined capital allocation.

Ultimately, success for us is simple, delivering attractive shareholder returns through consistent growth, improving profitability, strong cash conversion and disciplined deployment of capital. We stand at the start of a new era for Arcadis. The world needs solutions we provide. Our clients need the expertise we bring, and our people are ready to deliver. So today is more than a presentation. It's a call to believe in our strategy, in our capabilities, in our people and in our future because we are convinced that the best of Arcadis is still to come.

And with that, I'll hand back over to Heather.

I'm standing here today 7 months into my role as CEO. And in those 7 months, we haven't waited for today. We have already acted. We have already made hard portfolio choices. We have simplified the organization. We have put new leaders in place, and we have aligned our leadership team around a clear strategy and clear accountabilities. We are building a more focused and simplified company that will deliver for our shareholders, for our people, and for our clients. And by the end of this year, every Arcadian will understand where we are going, what matters most, and their role in delivering it.

When you align 34,000 talented people behind the same clients, the same priorities, the same ambition, and they bring their imagination to clients, that is incredibly powerful. And what unites us is something that is already here, our culture, our commitment to our clients, and the pride we share in being Arcadian. One Arcadis, 34,000 people moving in the same direction. That makes us stronger. We are a powerful organization, and we are just getting started. That makes us unstoppable. And with that, I'll hand it back to Christine for your questions.

So we'd like to open up for Q&A. And I would like to invite the analysts in the room to raise some questions. Tina will come over with the mic. Please limit yourself to 2 questions. No A, B, C, Ds. Martijn, please.

Martijn den Drijver, ABN AMRO. The words focus, accountability, they've been mentioned a number of times. But for us to track your performance, it would also be nice if you actually introduced metrics like billability, tariffs and the likes. Are you -- do you intend to do so? And if not, why not?

I think you raised great questions. We look to our peers. We look to see what the market norms are, and we look to disclose as much as we can, and we feel is appropriate. So we obviously track all those metrics internally. Our new model will make life very much easier to do that and much simpler for us.

So we just want to make sure that we're reporting along the lines of our peers. That's exactly what we'll do. And we've obviously studied that. We see some people do some slightly different things, but we will consistently report along the lines of our peers.

Okay. You talked about your new executive leadership team, fresh blood, new ideas, more energy. But I can't help but see that in line with the previous organization, your -- the new leaders of the divisions are spread out over the world. How do you think about that span of control relative to the issues that you previously had and how to solve that now going forward?

Yes, I can speak to that. So our full executive leadership team is located here in Amsterdam. So Jana, Hans, Barbara, Simon, and I are spending time in a corner. We'd love you to come and see us over at the CubeHouse just down the street. And we believe, one, we're having a lot of fun; and two, it's a lot better way to run the business.

The second part about our industry executives, Bill is located in the U.S., David has relocated to the U.S., Karin is also relocating to the East Coast of the U.S., all 3, and Ramin is on the West Coast of the U.S. So all of our leaders are representing the largest regions that we have.

I apologize. I looked at LinkedIn. This is a good explanation.

Next question. Dirk, go ahead.

Yes. Dirk Verbiesen, ING. On the growth ambitions, we now have some more input on the different, let's say, the key segments. But adding those up, and of course, we're here to challenge you a bit on the new ambitions. But the -- let's say, arriving -- adding the key growth areas, I think you arrive at 6%, 7% on the group level in the new composition with 10% of revenues to be sold.

The presentation on the property business didn't sound like a shrinking business, at least for the business that will stay within Arcadis. So the 5% group ambition, so the mid-single-digit organic growth is -- that could be at least before the 5%? Or is it -- am I missing something in adding the ingredients?

So first of all, Simon mentioned this on the EBITDA that we don't see this as a cap. So we're absolutely not stopping our leaders from growing and driving growth. We talked about transportation being mid- to high. We talked about water and energy being high single digit. We talked about industrial manufacturing being mid- to high because we have a way to go there.

And we talked about real estate and -- we didn't talk about real estate and development, but you can imagine that what we're really doing is focusing on margin there, and we're going to be really selective. So we'd like to see some growth on that side, but we're not committing to it right now.

And we're being quite measured about it. It's all around our new strategy, around focus, simplify and perform. So you heard from the 4 leaders. There's nothing stopping them, but it is making sure that we allocate our capital, allocate the talent to a bolt-on in the right sector and in the right service. So we're not limiting ourselves. You can do the math either way, and I don't disagree with your math at all. But we've been quite measured in our proposals today.

Yes. And just to -- each one of these industries is made up of multiple sectors. Some will have greater growth than others. And I think you probably heard that tone in Bill's presentation as well.

Yes. And on the -- let's say, on the timing and on the through the cycle mid-single digit, maybe on the pipeline and also the conversion we've seen so far, which is actually looking very encouraging in the first 2 quarters...

Yes. We had over 7% backlog growth.

So when, let's say, on '27, '28, '29, what is the path that we, analysts, should model, let's say, in terms of -- and still staying a bit cautious maybe, but is it 3%, 4%, 7%, 4%, 5%, 6%?

We would love to think, Dirk, about on a linear path, but life is not linear. We've got a great pipeline, as you say, a great backlog. Some of that pipeline doesn't necessarily -- or backlog doesn't convert in a linear way because it's a large rail project or a large road project, so it can be lumpy. But we see a good positive trajectory in front of us. I'm sorry, I can't write your model for you, but I think you're going in the right direction.

Yes. And last question on -- because you mentioned Lovinklaan in the press release, are they going to play a different role going forward because they were, I think, already involved in educational or, let's say, training purposes within the group?

Well, first of all, we don't speak for Lovinklaan. But we engage with Lovinklaan on making investments that are aligned with the strategy. So we have these conversations all the time. We're having the discussions we talked about the data center lab that was just launched. We -- you may have seen on the [indiscernible] stock when you came along for those of you who took a train, our brand launch.

You saw the video here today. Lovinklaan helped us with that. So they will continue to be a part of the discussions of our strategy development, and they represent in our employee organization, and that will continue.

David, go ahead.

It's David Kerstens from Jefferies in London. Two questions, please. First, on your rightsizing. You indicate now another 1,000 people for 2027. I think that brings the total to over 3,000, around 10% of your workforce. What is the impact on your top line growth and on the potential for margins? The potential for margin seems quite high, right, based on that. And to what extent will it be offset by new hiring?

Top line growth just -- it's mainly overhead and non-billable folks. So it's not really anyone cash who's generating billable hours, and we're trying to encourage them to do more as the client demands that. So yes, and if you sort of do the math, the margin could be quite interesting as you say. However, it does take time. You have hiring going on, you have other investments going on. So it's not always one for one.

But yes, the ambition is to have all of that overhead saving drop through to the margin and to drop through the bottom line. But you know, David, it doesn't quite work like that and the timing is off, and it does get, sometimes, get overtaken by some of the investments that we're making in -- maybe we're hiring top talent that's not billable in data centers or in pharma, and it just takes a bit longer for those people to get billable.

And Simon, just -- as we divest certain parts of the business, we want to make sure we don't have stranded costs. And so part of those 1,000 are really looking at that as well.

Yes.

And maybe a second question on the potential for cross-selling. You highlight most customers only take one of your services. What is the maximum number they can take, not all 6, I assume. What are the most important ones?

All 6. Yes. We work through the entire life cycle, and we do have projects that take all 6. It's going to be a lot more transparent for us now to see how we can bring our best capabilities to our leaders. But environment planning, design and engineering, we want to be able to, as our leaders talked about, get in, get with our clients, they trust us and let's support them across that complex situation they're dealing with, with their full asset life cycle.

Yes. So I think you heard from David and Karin around sort of data centers, power and water and industrial manufacturing and pharma and semi. Everything we do speaks to the life cycle, as Heather said. So there's -- we think there's -- now we've got a clearer structure, clearer incentives, clearer focus. It's clear what we actually do. And I think there will be a really good opportunity to cross-sell.

For me, it's really about that focus, simplify and performance culture. All of that is going to encourage our account leadership as well as the transparency Simon just spoke about to bring the full capability to our clients for each one of our people and make it simpler to do that. And that's what we're really excited about, is being able to do that. And then also have a line of sight. It is something that we haven't set a specific target on, but we will be able to talk to you about the progress that we're making in that area.

Next question. Kristof, please.

I think we only got one question.

Kristof Samoy, KBC Securities. You've talked quite a bit about the opportunities. And to echo Heather, you said it's not about the opportunity, it's about the execution. So I can only second what my colleague said. We heard a lot of talk about driving billability. It would be great if you could share that with the analyst community.

And then secondly, on the divestments, could you disclose how far along you are in the process? Did I understand correctly during the part of Simon that you aim to close by end '27 with the divestments? And there's quite a sizable amount of goodwill on your balance sheet. Is there any -- can you disclose how much goodwill or carrying value is associated with the activities that you intend to divest?

So look, on billability, understood. We hear you. Thank you for that. On the divestments, so let me just say a couple of things. China, we've signed some terms with our management for a partnership. We are moving that along. China, as you know, has various regulatory hurdles to jump over and hoops to jump through. So that will take us some time. But I'm optimistic by the end of this year, early next year, we'll get a resolution there.

And our architecture business, we're just really getting going now. As you can imagine, it's had a number of years to spread its tentacles through the organization. We're gathering the data, gathering the information. We're mandating some advisers to help us to do that. So that will take us a little bit of time, but we thought it was absolutely the right thing to make the announcement today.

It's our intention. It's stating a clear decision, a clear break with the past, a clear intention to move forward with that divestiture. So I will commit to updating you very regularly on progress there, and we will step through that as quickly as we can. As you heard from all of us, there's an urgency to put those things behind us and move forward.

I can't disclose to you the goodwill today. Again, we'll update you there. We are aware of what went on in the past and all the goodwill on our balance sheet, and we'll do a full analysis and work with our accountants and our advisers and update you as and when. But I think when you think about goodwill, you sort of think about, well, what went on in the past.

And we've acknowledged, and as Heather and I and others have said today, we've diagnosed that past, we faced up to that past, and we've admitted that some of those capital allocation decisions were, quite frankly, not the best capital allocation decisions that one could have made. And we're sorry for that, but we've determined not to make those mistakes again. We're determined to make the divestments and move forward.

And Simon, just bringing that back to our strategy, the reason for doing this is to allow for focus. So it does have an immediate potential benefit or an immediate benefit to our profitability, but it also has the opportunity for us to not be distracted by something that is -- got strong talent, strong opportunity, and we just aren't the natural owner for it. It doesn't connect in with the integrated services across all of our industries.

And for that reason, that's the reason that we are looking to divest it, to really allow us to focus on those areas of strength. And we also were clear, while it's a majority of the architecture business, there are pieces that do get highly connected to some of our industries and those we're looking to retain. And that's part of the complicating factor of just going through that now.

Simon from Kepler, go ahead.

Simon Van Oppen, Kepler Cheuvreux. I have a question on one accountable team per client. Can you please explain how that works on a global scale? And how does it work when you are servicing an internationally operating client? And who is ultimately accountable and where is accountability embedded in the organization?

For our global key clients, which we have put in 2 buckets, Tier 1, Tier 2, those have an account executive associated with them. And there is a team that comes together just under that account executive to execute the work for that client. So one leader leading one team, where the clients are local and they purchase locally, then we have teams that are present locally to be able to support those clients on the ground.

Those can be project managers. They could be specific account leaders for portions of an organization, but it's one team focused on sharing across that sector going forward.

So the sector leader will have the P&L. He or she will be pulling in the account team in his or her sector for semiconductors. I don't know, let's just imagine we have 10 to 15 clients. So 10 to 15 account leaders because they're all probably pretty big. And they will be pulling in the work into the sector leader and the services will feed into the sector P&L and provide the supply of talent that the sector leader says -- the project manager says they need going forward to do the project.

So the accountability is then ultimately centralized on a global scale per sector?

It's a sector leader, which would be regional as well. So you might have an American semiconductor sector leader, which we do, and that he or she would be responsible for that P&L in the U.S., let's say.

Yes. For wherever the global key client is headquartered.

Okay. Next question for Sangita, KeyBanc.

So I just wanted to ask in the context of cross-selling and the use of digital AI, how do you see a portion of fixed price project evolve beyond the 60% that you provided currently? And which sectors will that be most pronounced in?

Really great question. So we've actually been progressing in moving to more of a lump sum or fixed price and fixed scope work over the last few years. Karin described the GEC growth, and that was critical for us to see the value come through on a GEC perspective. So right now, 60-40 is appropriate for the work we have.

The work that we pursue on a time and materials basis is usually because there's some risk associated with it or uncertainty associated with the work. So we're paid for the hours that we execute. We want to move more and more towards outcome-based contracts, which would be more lump sum or unit priced with potential gain shares associated with the value that we create for our clients.

We haven't set a target because we don't want to force our teams to drive for a certain outcome. What we want to do is find the best solution, the best contract terms for the type of project. But what I have been seeing is that some of our teams are actually creating hybrid contracts with our clients now. Instead of making the whole thing, time and materials, we're saying, well, this is the part that has the uncertainty associated with it and breaking down tasks that can be time and materials where we can have lump sum on other parts of the project.

So we're actually encouraging the creativity, but we want it to be fit for purpose. I don't want to incentivize our teams to drive more lump sum work if that's not the right thing from a risk perspective.

And I'll just add, we're trying to drive the commercial muscle into the organization. We're trying to keep the culture and the heart and all the heritage, but we're trying to drive that commercial muscle. So we're trying to drive the fixed price contracts to protect maybe some of the AI gains that we can see, the efficiency gains.

But in terms of risk, we've got 40,000 projects around the world, 60-40. So we're comfortable no single project is going to really move the needle for us at the moment. Hopefully, we will win some that really do. But no single project is -- it's not a case of concentrating the risk on fixed price contracts. So we're comfortable with that kind of risk-reward profile.

And also, we're using our data, our performance data to inform how we go forward. So we now have much clarity. I talked about us knowing more. One of the elements of us knowing more with our data is about our internal data and our financial performance on projects. So we'll know which clients that we are able to manage fixed price projects with and which we're not. And then those teams will be encouraged to continue to go forward.

Simon, I'm not quite sure, and maybe you can clarify, if the guidance is pro forma for the sale of the 10% of revenue? Or should we wait for the sale to conclude?

I think you should wait for the sale to conclude. We haven't sort of extracted anything. We're sticking to our guidance from Q2. So nothing has changed from Q2. We're reaffirming that guidance.

Okay. So that could potentially take you to high-single digit...

Could take us to different places, yes, for sure. And I gave you that 1% of pro forma taking out the disposals. But we can -- we'll update you in a couple of weeks.

Okay. Next up, Chase from Kempen.

This is Chase from Kempen. My first question would be around the share buybacks. So I think you've made it quite clear that the priorities are indeed internal reinvestment and potential bolt-ons, dividend and buybacks. I wonder why you decide to, let's say, review that at the sort of end of the fiscal year or the full year results rather than being more optimistic throughout the year.

For example, I think the management team as a whole has been quite vocal that the WSP bid still undervalues the business. So for example, why would there not be a share buyback today at this valuation?

I mean I think it's not static. We've committed to the capital allocation framework. We're committed to continuously reviewing that. Let's see what the divestitures yield. Let's see what the opportunities for investment and bolt-ons as we implement and continue to implement a new strategy. So I just think we just want to be -- we want to maintain our investment grade.

So there's a whole stack of things that we want to do, which we really think drive value in the business over and above a share buyback. But we are constantly being asked by the investment community quite rightly so about share buybacks, and we're committed to that.

I sort of laid out a framework today that we're sort of going to look at consistently annually. But if there's an opportunity and it arises, let's say, we disposed of something and there's some proceeds and we haven't got something to do, then that's compelling for us internally or bolt-on, then absolutely, we would look at that.

Yes. Okay. No, the framework is very helpful. And second question, regarding the 1,000 FTE cut, I think, in 2027, should we expect that phased gradually throughout the year, more first half weighted, second half weighted? When should the real, let's say, impact of the labor be?

I'd love to think the first 6 months. But as you know, some parts of the world, it's more difficult to make the changes. We respect, obviously, the laws and regulations and the governance there. So we'll move as efficiently and as quickly as we can. And some of that timing would be in association with some of the divestitures as well. So obviously, if architecture moves out, let's say, second quarter next year, I'm just making that up, just as an illustration, then obviously, we'd look to accelerate some of the associated stranded costs or overhead.

Quirijn Mulder from ING. And I see a very good presentation, but also a very dynamic and even athletic management team for me. Thank you. What -- I would like to limit myself to one question because I have more, but I would like to limit myself to one.

So I'm covering this name for 28 years, I think. And so I have seen a lot of positive things from Arcadis, but also a couple of crises in the past, as you might know and certainly, Heather knows them. And then you see, let me say, some halving of the share price and a lot of mistrust. And we also see then a change of management, and then the new management comes with new plans, new ideas and how to make better of it.

So my question is, if you're looking further than 4, 5 years, is this still the management here? And are we still seeing some consistency in the plans which have been presented now and that we are reaching this 1 -- the famous [ EUR 1 billion ] EBITDA by maybe 2033 or something like that?

Well, I plan on being here. So that's the first thing, absolutely. And we can't really speak to the decisions that were made in the past. But what I will talk about is the fact that we're committed to taking that heart and building the performance muscle.

And as Jana said, the heart is the hardest thing to build. And the strategy implementation really requires us to have that accountability and discipline. And I told Simon, before we put up our ambition, that he's not allowed to go anywhere until we achieve it. So absolutely, I am excited for that, and we're committed to achieving that results and not going anywhere.

And you already believe us when we deliver.

That's correct.

So it's all about performing, perform, perform, perform. We have amazing markets as you know, out there. You've heard all of the opportunities out there, even in areas where we're divesting, there's a fantastic opportunity. We have a great set of people who are highly talented. We have AI helping us do even more amazing things.

So we think the market is there. We think it's up to us now to go and capture that opportunity and to prove to you consistently, quarter-on-quarter, that we can build a great business and a great margin and a great growth rate going forward.

And just one other point. For 34,000 people, yes, the leadership is important, but we're 34,000 people. Once we create that momentum, we want to make sure that it continues.

Luuk Van Beek, Petercam. Well, a question about the GECs has played a smaller role in this presentation than in the past, and you always presented it as a way to handle the scarcity of engineers. Obviously, in the meantime, AI can -- well, partly also alleviate that problem. So how do you look at the new role basically in this environment for GECs and the interaction with AI?

Yes. Our new model on the simplify is about being able to bring the best parts of Arcadis forward as easily as possible. And that's the reason that you didn't hear a separate conversation. So thank you for picking it up, about our GECs, because they are part of our global delivery capability. And when we staff projects, it won't be an outsourced model.

It will be a best talent model for the solutions that our clients are asking us for. And that is a fully integrated approach. So that's part one of your question. It's a critical part of our business and our business going forward. The reason we didn't put a lot of emphasis to it because I didn't talk about our capabilities in other parts of the world either. They're all going to be considered capable.

The second question that you asked, I think, was embedded in that, is how does AI replace some of the maybe more routine things that we have traditionally asked our GEC colleagues to bring -- to support us with. And actually, I think it helps us because what I said is that scale is so important. And what we've been able to do by bringing our capabilities forward to centralize many of them in the GEC is standardized how we do that work.

And those individuals are bringing solutions forward to us to be able to accomplish even more. And so we don't see AI fundamentally changing how we operate as a business from a standpoint of being able to do more, yes, but not needing our global excellence centers now.

Just to add, just very simply, our structure, our new structure will encourage top talent to gravitate to our best projects. Our project managers will draw the talent that they see as the most cost effective and the best talent into their projects. They will be incentivized to do that, whereas before is a bit more of a push.

And technology.

And my second question is about the scaling up of industrial manufacturing and technology. You want to do that organically and through bolt-on acquisitions. What is the reason for not including bigger acquisitions there? Is it because they are not available or because you have the experience that it's more difficult to integrate them and...

This is one of Simon's favorite question.

Let's just prove to you we can bolt a few things on. We can do them well. We can integrate them well. We can drive value through those. Our multiple is not great at the moment, as you know, even with the increase in the last couple of months. Some of these opportunities may be out of our reach. // We want you to say that's a sensible thing to do. We want to prove to you that we can allocate our capital sensibly. And then let's move forward. So that's the reason we don't talk about big acquisitions or transformational acquisitions today because I think we need to earn that right.

And Simon, just taking a step back on the acquisition strategy for us. We talk about bolt-on M&A, but we haven't really said what does that mean and how do we get there. So we have a funnel of acquisition targets that we are looking at, but they come from our business. They come from our people that are closest to the sector.

And what we're doing is looking at where do they add capability or key technical discipline, where do we already work with a great company that we know how our clients view their productivity and their outputs, and where do we work with companies that if we bring them in, we know that the culture is going to fit our culture because we're already working together. And that's the kind of acquisition that we've made so far, whether it was with Giftge or it's with KUA or the rail business in Germany or SATEL.

They all have that dynamic to them where the leadership is also looking to use a bigger platform to take their skills a little broader and to be able to accomplish more. And that's how our M&A strategy will come to life on a bolt-on perspective. If through that, something amazing comes up that we think is just the right thing for us and we can afford it and defend it, then we'll bring it to you. But we're focused on bolt-on right now.

And I'm determined to accelerate that. I'm looking at you there.

Okay. Also conscious of time. We would like to do one last round for Maarten Verbeek from The Idea.

Maarten Verbeek, The Idea. I'll restrict myself to 2 questions. First of all, you have a target of operating EBITDA. The operating is always a bit arguable. It's been growing lately. First of all, what would you like to include in that nonrecurring? And how much of -- in absolute terms or percentage of sales, how much do you expect this nonrecurring to be in '28, '29?

That's a great question, and something that the team and I debate all the time, and I'm determined to try and move beyond that because it's a sort of a recurring theme at Arcadis that comes up. I mean our non-operating [ '27 ] is mainly around exits, around people exits. There are some obviously costs associated with disposal. There's some investment which may or may not be non-operating.

But I'm determined to try to get out of this constant cycle, which I think you're absolutely alluding to of non-operating because I know you just -- you all add it back, and that's fair with your analysis. So determined to do as much as we can to move away from that.

And secondly, I've heard more than once, clear accountability. WSP had made an offer of EUR 51.5 of which you have stated that is strongly undervaluing our company, suggesting that at least you believe it's worth EUR 55, or even much more. Has this been incorporated in your remuneration together with the Supervisory Board?

Well, first of all, I would say that we're committed to our stand-alone strategy, and we're committed to creating value that represents that. And we addressed the details of the bid through the press releases. So there's not much more to say there. The Supervisory Board is taking that into consideration. So as we move into 2027, the Remuneration Committee is looking into how we best incentivize both Simon and myself and the rest of our leadership team.

Will that, for example, be linked to what WSP has offered you or what you have clearly stated what you believe your company is worth?

We think, obviously, the RemCo will take its own decisions. We're all ears. We know risk reward. We are up for that. So it's up to the Supervisory Board, the RemCo to make the proposals. As Heather said, we believe in the stand-alone value of Arcadis.

Maybe Jana wants to add a few words to that.

[indiscernible]. Yes, absolutely. The Supervisory Board is currently looking at the remuneration, looking at both competitiveness, and looking at the link between reward and pay. They will be talking and spending some time with shareholders, but also other stakeholders to evaluate the options in Q4 and Q1. And then as you know, if there is any change, it needs to be proposed for the AGM meeting in 2027 and will be.

With that, we would like to conclude the Q&A. Thank you, Heather and Simon. And I think this is a couple of last words from my side. So thank you very much for your questions. There's still analysts here. Thank you all for your attendance. As you've heard from our presenters today, we have a clear strategy. We have a sharper focus and a different client approach and a new way of organizing ourselves. This is a clear turning point for Arcadis, a moment of change and a moment of reset, with a consistent focus on execution, client centricity and shareholder value.

I'd like to thank you all, both here and also virtually, I think we have almost 400 people on the call, for your attendance today. For those in person, please join us for the drinks where you have more opportunity to raise questions to the leadership or to ourselves. And we still have the showcases up for you. So thank you very much.

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.