Als Ltd. · ASX:ALQ
Als — Non-Deal Roadshow (June 2020)
62 slides from Als's roadshow presentation, Jun 4, 2020
Slide 1: Investor presentation & appendix
Investor presentation & appendix FY20 results - international roadshow Raj Naran, Managing Director and CEO Luis Damasceno, Chief Financial Officer 4 June 2020 Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 2: Important notice and disclaimer
IMPORTANT NOTICE AND DISCLAIMER – This presentation has been prepared by ALS Limited, (ALS or the Company). It contains general information about the Company’s activities as at the date of the presentation. It is information given in summary form and does not purport to be complete. The distribution
Slide 3: Safety is a priority - ALS COVID-19 response
Safety is a priority - ALS COVID-19 response Safety guidance Equipment • Handwashing and sanitation information; • Additional sanitation products and PPE; • Hygiene and routine disinfection information • IT resources to enable virtual meetings and procedures; and remote working; • Screening for, and
Slide 4: FY20 results: Group performance
FY20 results Group performance Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 5: FY20 underlying NPAT of $188.8 million and statutory NPAT of $127.8 million
FY20 underlying NPAT of $188.8 million and statutory NPAT of $127.8 million Underlying performance from continuing operations below • Organic revenue growth of +5.1% (Life Sciences +5.9%, Commodities +0.6%, Industrial +15.2%) Revenue growth • Scope growth (acquisition and divestment) of +1.9% $1,832
Slide 6: Revenue growth components of diversified business streams
Revenue growth components of diversified business streams (at constant currency) % of revenue (3.0%) - 3.0% 6.0% 9.0% 12.0% 15.0% 18.0% Life Sciences: 51% Life Sciences 5.9% 3.3% Geochemistry (1.2%) Metallurgy (2.6%) Commodities: 35% Inspection 6.5% 8.9% Coal 12.1% Asset care 17.6% Industrial: 14% T
Slide 7: Underlying EBIT growth driven by Life Sciences
Underlying EBIT growth driven by Life Sciences (continuing operations) in $m +19 +3 (5) (0) 297.9 281.1 1 2 FY19 Life Sciences Commodities Industrial Others FY20 Margin 16.9% 15.3% 25.3% 9.7% 16.3% PCP +35 bps (172) bps (38) bps (63) bps 1. Corporate costs + FX 2. Underlying EBIT before applying AAS
Slide 8: Underlying EBIT growth driven by accretive acquisitions and FX gains
Underlying EBIT growth driven by accretive acquisitions and FX gains (continuing operations) in $m +16.3 +4.4 (4.0) 297.9 281.1 277.2 277.2 281.5 1 FY19 Organic Scope FX FY20 Margin 16.9% (1.2) pts +0.1 pts +0.5 pts 16.3% 1. EBIT before applying AASB 16 8 Investor Presentation. Full Year Results FY
Slide 9: FY20 financial summary
FY20 financial summary FY19 ($m) FY20 ($m) Full Year Underlying Underlying Restructuring Divestment & Impairment and Applying Discontinued Statutory Underlying* before after & other one- other business amortisation of AASB 16* operations Results AASB 16* AASB 16* off items closures intangibles Reven
Slide 10: Cash flow – strong cash conversion
Cash flow – strong cash conversation Full year ($m) FY19 FY20 Underlying operating EBIT (before AASB 16) 275.6 296.0 50 CASH FROM Depreciation & amortisation 73.3 81.2 million OPERATIONS EBITDA (before AASB 16) 348.9 377.2 Working capital (35.4) (17.9) 97.1% EBITDA Other 2.9 7.0 cash conversion* Cas
Slide 11: CAPEX by business – investing in growth
CAPEX by business – investing in growth in $m CAPEX as % of revenue FY20 FY19 Life Sciences 7.0% 8.3% Commodities 4.6% 5.0% Industrial 5.3% 4.0% 66 30 121 Group infrastructure 0.6% – Total Group 6.6% 6.5% Life Sciences: Green field and growth projects 14 Commodities: Maintenance and geographical exp
Slide 12: Debt metrics – strong balance sheet
Debt metrics – strong balance sheet Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 STATISTICS Gearing Ratio (target <45%) 27% 29% 31% 37% 42% Leverage (net debt/ EBITDA; max 3.25) 1.7 1.9 1.7 1.8 2.1 EBITDA interest cover (min 3.75) 7.7 9.2 11.3 10.5 11.0 BALANCE SHEET MEASURES Total Equity (in $m) 1,186 1,185
Slide 13: Prudent capital management strategy
Prudent capital management strategy Cash flow from operations Dividend Strong underlying EBITDA cash conversion of 97.1% (on-track to Final dividend of 6.1 cps (70% franked), with FY20 payout ratio of 45% achieve 100% cash conversion pre-COVID-19 impact). Reflects prudent capital management st
Slide 14: Strong liquidity in place
Strong liquidity in place Liquidity Cautious approach in the uncertain economic environment, to build business resilience in the short-term while capitalising on growth opportunities in the medium and long-term. Total liquidity available as at 31 March 2020: ~$450m Increase in debt facilities:
Slide 15: Next generation TIC, innovation and technology
Next generation TIC, innovation and technology Life Sciences - Development and roll-out of COVID-19 testing services for humans and surfaces - Robotics in laboratories to improve efficiency. - Artificial intelligence driving data review and reporting. - Web and mobile apps for clients to view their
Slide 16: FY20 results: Review by business stream
FY20 results Review by business stream Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 17: Life Sciences overview – organic and acquisition growth
Life Sciences overview – organic and acquisition growth Total revenue growth of 13.0%, organic Underlying margin of 15.3%, +35 bps vs pcp, driven by All regions delivered organic growth and growth of 5.9%, scope growth of 3.3% productivity improvements – on track to deliver +50bps margin impro
Slide 18: Life Sciences – portfolio and margin evolution
Life Sciences – portfolio and margin evolution in $m 1,000 Environmental 19% Total revenue Food / Pharmaceutical CAGR +10.3% 900 Consumer / Electronics 18% Underlying EBIT Margin 800 700 17% 600 16% 500 15% 400 300 14% 200 13% 100 0 12% FY16 FY17 FY18 FY19 FY20 18 Investor Presentation. Full Year Re
Slide 19: Recent acquisitions performing well
Recent acquisitions performing well ARJ ~$30 m ANNUAL REVENUE • Acquired in August 2019, based in Mexico. • Founded in 1967, annual revenue of ~$30m, 500 employees. • Largest private pharmaceutical testing laboratory in Latin America. • Strong performance since acquisition. Aquimisa ~$35 m ANNUAL RE
Slide 20: Life Sciences outlook – managing cost base and new product development
Life Sciences outlook – managing cost base and new product development Leverage ‘hub and spoke’ model to manage cost base across all businesses and geographies. Ongoing focus on productivity improvement and efficiencies from innovation including data analytics from production management platform
Slide 21: Commodities overview – organic growth despite Geochemistry sample flow decline
Commodities overview – organic growth despite Geochemistry sample flow decline Geochemistry Metallurgy Inspection Coal Sample volumes down 9% vs Revenue decline of 2.6% vs pcp due Revenue growth of 18.6% vs pcp, Revenue growth with increasing pcp primarily driven by lack to strong prior peri
Slide 22: Geochemistry – early signs of growth in mining activity
Geochemistry – early signs of growth in mining activity before impact of COVID-19 400,000 ALS Global mineral sample flow (trailing 52 week running average) and global exploration spend 24 350,000 21 Average Weekly Sample Flow Global Exploration Spend USD bn 300,000 18 Relative Gold Price in USD 250,
Slide 23: Geochemistry – sample flow growth before impact of COVID-19 pandemic
Geochemistry – sample flow growth before impact of COVID-19 pandemic ALS Global mineral sample flow (two week growth trend) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 '20 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Jan-
Slide 24: Junior and intermediate fund raisings and pipeline activity showing some improvement
Junior and intermediate fund raisings and pipeline activity showing some improvement Junior and intermediate financings, March 2018 – April 2020 Project drilling activity by commodity, March 2018 – April 2020 Amount raised Gold financings Number of Number of distinct projects drilled Number of repor
Slide 25: Commodities – long-term strategy unchanged
Commodities – long-term strategy unchanged Geochemistry using ‘hub and spoke’ model aligning cost base with client demand. Long-term strategy remains unchanged with growth through new opportunities (including mine sites) and innovation. Metallurgy continues to see solid ongoing demand for gold,
Slide 26: Industrial overview – organic growth in FY20 with challenging market ahead
Industrial overview – organic growth in FY20 with challenging market ahead Asset Care Tribology Total revenue growth of 19.4%, with strong organic growth of 17.6% Total revenue growth of 12.9%, organic revenue growth of 9.1%. Australia growth driven by maintenance revenue from energy and Aus
Slide 27: Industrial outlook – rationalisation and leveraging innovation
Industrial outlook – rationalisation and leveraging innovation Asset Care Cost reduction and rationalisation initiatives to protect margin. Concentrate business development efforts on markets not significantly impacted by COVID-19 pandemic. Tribology Continue to execute on global business deve
Slide 28: Group FY20 performance vs strategic priorities
Group FY20 performance vs strategic priorities Shorter-term strategic priorities FY20 performance Life Sciences • 5.9% organic growth. Strong organic growth and margin expansion (pre AASB 16 impact) • +35 bps margin improvement vs FY19 (on track to deliver +50bps pre-COVID-19). across all regions •
Slide 29: History of ALS revenue mix – increasing diversity
History of ALS revenue mix (from continuing operations) – increasing diversity 2.00 Total revenue CAGR +12.9% 1.80 CAGR +23.2% 1.60 1.40 1.20 $ billion 1.00 0.80 0.60 0.40 0.20 0.00 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Commodities Life sciences Industri
Slide 30: FY20 results: Managing through COVID-19
FY20 results Managing through COVID-19 Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 31: Managing through COVID-19
Managing through COVID-19 Industry-leading safety performance. Strong balance sheet with ~$650 million of liquidity available including ~$200 million increase to existing facilities agreed with bank debt providers. Swift action taken by management to align cost base with client demand while main
Slide 32: Managing through COVID-19
Managing through COVID-19 Decision to impair Latin American Life Sciences business reflects enhanced risk profile of market, particularly in Brazil and Peru, due to ongoing socioeconomic issues, prolonged impact from COVID-19 and material devaluation of currencies. Impairment to Industrial divisio
Slide 33: FY20 results: Financial appendix
FY20 results Financial appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 34: One-offs, amortisation and impairment of intangibles – FY20
One-offs, amortisation and impairment of intangibles – FY20 Restructuring and Other One-Off Items Amortisation and Divestment & Impairment of Other One- in $m Start up Restructure Acquisition Other Business Total Intangibles off Items Closures Commodities - (0.9) (0.1) (1.1) - (2.0) Life Sciences (6
Slide 35: Corporate cost evolution
Corporate cost evolution H1 FY18 H2 FY18 H1 FY19 H2 FY19 H1 FY20 H2 FY20 Corporate costs* 12.4 14.1 18.2 18.8 19.7 19.4 Revenue 721.6 725.3 826.1 838.7 919.1 912.8 Corporate costs % on revenue 1.7% 1.9% 2.2% 2.2% 2.1% 2.1% * exclude net foreign exchange gain or loss. • FY20 absolute cost increase ma
Slide 36: Underlying effective tax rate movement
Underlying effective tax rate movement FY20 Change $m After AASB 16 FY19 YoY Underlying profit before tax (from continuing operations) 264.5 249.1 6.2% Tax (74.0) (67.1) 10.3% Underlying effective tax rate (ETR) 28.0% 27.0% 1.0 pts FY20 vs FY19 • Increase in underlying ETR driven by changes to the a
Slide 37: Net debt evolution
Net debt evolution 14 800 129 700 88 800 600 22 500 246 112 629 67 119 400 300 200 31 Mar 2019 Net Free cash Flow Acquisitions Divestments Dividends paid Issued capital FX Interest and Tax Restructuring 31 March 2020 Debt bought back costs Net Debt 37 Investor Presentation. Full Year Results FY 2020
Slide 38: Sustainability program – FY20 achievements
Sustainability program – FY20 achievements Health & Safety Innovation & Technology People Safety is a Priority Embracing innovation 11% improvement in total recordable injury frequency rate and technology (record low injury rate). Diversity & equality Improved employee satisfaction survey result
Slide 39: Appendix
Appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 40: Contents
Contents 1 Industry and company background 2 Life Sciences 3 Commodities and Industrial 4 Strategy and priorities 40 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 41: Industry – Testing, Inspection and Certification (TIC)
Industry – Testing, Inspection and Certification (TIC) 41 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 42: TIC industry – market drivers
TIC industry – market drivers Growing trend of outsourcing TIC services to third party providers. 8% Increasing number of new regulations and standards to ensure the quality and safety of products. 6% Global manufacturing and trading of products requiring greater scrutiny across increasingly c
Slide 43: Company history
Company history Established as Campbell Australian Laboratory Services (ALS) began as a Following rapid growth and Brothers in 1863, a small small geochemistry laboratory in 1976 in diversification across Australia in the chemical company in Brisbane (Australia) to service mineral 1980s, ALS expande
Slide 44: ALS service offering
ALS service offering OVERALL CAPABILITIES SCOPE 44 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 45: ALS products and services
ALS products and services 45 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 46: ALS current business streams revenue split
ALS current business streams revenue split LIFE SCIENCES COMMODITIES & INDUSTRIAL Environmental Geochemistry Food Metallurgy Pharmaceutical Trade Inspection Consumer Products Coal Asset Care Tribology 46 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 47: ALS global operations by revenue (FY20)
ALS global operations by revenue (FY20) 65+ EMENA Countries 4,500 staff 350+ Locations $442m 40+ Years of strong performance $694m APAC 15,000+ 4,500 staff Staff worldwide $654m $47m AFRICA 500 staff AMERICAS 40+ million 5,600 staff Processed samples per year $1.8+ billion Global revenue 47 Investor
Slide 48: Life Sciences
Life Sciences Main business streams: Environmental testing | Food safety and quality | Pharmaceutical Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 49: Life Sciences
Life Sciences Key drivers Life Sciences ($m) • Increasing regulation, complexity and $1,000 specialisation of testing requirements. $900 • Increased outsourcing allowing companies to focus on core $800 competencies. $700 • Focus on high level of quality brand protection, particularly for food and $6
Slide 50: Life Sciences global locations
Life Sciences global locations 90 55 21 58 50 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 51: Commodities and Industrial
Commodities and Industrial Commodities: Geochemistry | Metallurgy | Commodity trade and inspection | Coal quality Industrial: Asset Care | Tribology Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 52: Commodities
Commodities Key drivers Commodities ($m) • Commodity pricing cycle. $800 • Mining capital expenditure by major miners and $600 exploration by junior miners. • Junior miner’s exploration generally driven by equity $400 market activity (particularly in the Australian and Canadian markets). $200 Strate
Slide 53: Commodities global locations
Commodities global locations 29 29 47 23 19 53 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 54: Geochemistry 'hub and spoke' model
Geochemistry ‘hub and spoke’ model • 5 global hubs provide capacity, supported by smaller regional ‘spokes’ • ‘Spoke’ operations are scaled up or down to match client demand and ensure effective use of hub capacity • Technology platform also supports efficient allocation of sample flow 54 Investor P
Slide 55: Industrial
Industrial Key drivers Industrial ($m) Support asset owners, operators and constructors to: $300 • Comply with codes and regulations. • Provide confidence in safe operations. $250 • Optimise production and maintenance. Strategy $200 • Grow market share and geographic reach. • Diversify service offer
Slide 56: Industrial global locations
Industrial global locations 1 14 19 3 56 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 57: Industrial – confidence in assets
Industrial – confidence in assets ENGINEERING-LED INTEGRITY AND RELIABILITY SERVICES Engineering Tribology assessment Mechanical testing Integrated condition Fitness for service / monitoring Non-destructive remaining life assessment testing (NDT) Maintenance Training academy planning and review Qual
Slide 58: Strategy and priorities
Strategy and priorities Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 59: Strategic roadmap
Strategic roadmap 59 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 60: Business priorities
Business priorities ▪ Integrated to cost based operational model ▪ Procurement leverage Organic growth projects ▪ ▪ Strong cash conversion Technology and efficiency projects ▪ ▪ Improve earnings per share Focus on ROCE ▪ ▪ Analytics for operations Capital Capital management strategy ▪ Finance ▪ Stan
Slide 61: Selection of our 2,000 different clients
Selection of our 2,000 different clients 61 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner
Slide 62: alsglobal.com
Right Solutions • Right Partner alsglobal.com 62 Investor Presentation. Full Year Results FY 2020. Right Solutions • Right Partner