Als Ltd. · ASX:ALQ
Als — Investor Day (November 2018)
50 slides from Als's investor day presentation, Nov 21, 2018
Slide 1: ALS Investor Day
For personal use only ALS Investor Day 21 November 2018 Perth, Australia Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 2: Content
Content For personal use only 1 ALS Industrial — Kristen Walsh 2 ALS Commodities — Wayne Williams 3 ALS Life Sciences — Tim Kilmister 4 ALS Limited — Raj Naran 5 Q&A 2 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 3: ALS Industrial
For personal use only ALS Industrial ALS Investor Day | 21 November 2018 Kristen Walsh, Group General Manager, Industrial Perth, Australia Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 4: Industrial. Overview
Industrial. Overview For personal use only Asset Care Tribology • Maintenance contracts wins in Australia generate • Revenue growth delivered in all regions – Australasia, increased revenues albeit this work is being North America and South America and strong undertaken in some cases at lower margin
Slide 5: Confidence in Assets
Confidence in Assets For personal use only Compliance — Performance: Assurance — adherence to • minimising maintenance cost providing confidence regulations • optimising production in safe operation • extending asset life HOLISTIC INTEGRITY & RELIABILITY ENGINEERING SERVICES Engineering Tribology As
Slide 6: Geographic Footprint
Geographic Footprint For personal use only 6 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 7: Revenue Mix
Revenue Mix For personal use only Revenue by Region Revenue by End Market 3 <1% 19% 27% 24% 4% 2% <1% 5% 73% 16% 14% Asia 13% Australiasia Mining EMENA Oil & Gas North America Power South America Welding / Construction Fleet OEMs Diversity in end markets Lubricant Manufacturers Other Positioned
Slide 8: Market Environment
Market Environment For personal use only Revenue Mix More effective monitoring drives asset performance Capex Opex Efficient decision making 17% Less inspection Reduce total cost of 83% ownership Improved access $8b global market Price sensitive Positioned for disruption Smarter monitoring 8 A
Slide 9: Strategy
Strategy For personal use only Grow market share Expand geographic reach Leverage technology – Reposition value proposition – Improve margins Drone Based Photogrammetry 9 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 10: ALS Commodities
For personal use only ALS Commodities ALS Investor Day | 21 November 2018 Wayne Williams, General Manager Geochemistry, APAC Region Perth, Australia Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 11: Commodities. Overview
Commodities. Overview For personal use only Geochemistry Metallurgy Inspection Coal Sample volumes Revenue up 63% pcp Revenue up 33% pcp Revenue up 13% pcp up 14% pcp Contribution margin Contribution margin up Contribution margin up Market share up from 6% to 22% from 18% to 30% from
Slide 12: Inspection
Inspection For personal use only H1 FY19 Highlights Strategic Focus Outlook Improved Financials Expansion Sample flow to remain buoyant UK Hub laboratory Systems Expansion continues Expansion Some headwinds in South Africa 12 ALS Investor Day | Half Year Results FY2019 Right Solution
Slide 13: Coal
Coal For personal use only H1 FY19 Highlights Strategic Focus Outlook Improved Financial Specialised sample handling Increasing demand equipment Client retention & growth Market share growth • Contracts Additional Mine-site laboratories • Market share Closure of underperforming • Mine
Slide 14: Metallurgy
Metallurgy For personal use only H1 FY19 Highlights Strategic Focus Outlook Financials Hub performance Solid pipeline of projects Hubs performing Cost base management Piloting increased Energy/Battery Metals projects Work Mix • Iron ore projects increased • Energy/Battery Metals 14 A
Slide 15: Geochemistry – Market
Geochemistry – Market For personal use only “The global nonferrous exploration budget has increased for the second time since 2012, by almost 20% year over year.” “We… expect the global exploration budget to increase again in 2019, although likely by a smaller percentage than this year.” 15 ALS Inve
Slide 16: Geochemistry – Market
Geochemistry – Market For personal use only Exploration Dollars – AUST Growth pcp (excl. Iron Ore and Coal) (i.e. quarter v equivalent quarter the previous year) Exploration budgets by Grassroots 2,509.8M (26.1%) stage of development, 2018 (US$M) Late stage 3,769.7M (39.2%) (1.651 companies budgetin
Slide 17: Geochemistry
Geochemistry For personal use only H1 FY19 Highlights Strategic Focus Outlook Financial performance Innovative Productivity H2 FY19 similar to H2 FY18 Growth in all regions Technical Development Growth at industry expected rate Increased sample volumes Cost base Mine site start ups
Slide 18: ALS Life Sciences
For personal use only ALS Life Sciences ALS Investor Day | 21 November 2018 Tim Kilmister, General Manager APAC Life Sciences Perth, Australia Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 19: Life Sciences. Overview
Life Sciences. Overview For personal use only Environmental Food & Pharma Revenue growth (in AUD) Margin improvements in Revenue growth (in AUD) 10% Europe and Canada offset by 17% declines in USA and Asia Ongoing cost controls and Acquisition of Truesdail (US) and procurement synergies
Slide 20: 1H FY2019 high level numbers
1H FY2019 high level numbers For personal use only Revenue of Global headcount CAPEX investment AU$ 406 mn 8,200 people circa AU$ 34mn Moderate acquisition spend of Continuing OPEX spend on AU$ 17mn laboratory workflow software (ramp up expected in 2nd half) $ 2mn Long wave market drivers Increasi
Slide 21: Growth story - Environmental
5 year growth story - Environmental For personal use only Revenue AUD$ millions 200 ALS 150 Environmental 100 50 0 Jun-14 Jun-16 Jun-17 Jun-18 Dec-13 Mar-14 Sep-14 Jun-15 Dec-14 Mar-15 Sep-15 Dec-15 Mar-16 Sep-16 Dec-16 Mar-17 Sep-17 Dec-17 Mar-18 Sep-18 2018 1H FY2019 Revenue growth 39 10% countrie
Slide 22: Growth story – Food/Pharmaceutical
5 year growth story – Food/Pharmaceutical LABFOR and For personal use only Revenue AUD$ millions Truesdail 50 Marshfield 40 AlControl ALS Microlab ControlVet Food/Pharma 30 20 10 0 Jun-14 Jun-15 Jun-17 Jun-18 Dec-13 Mar-14 Sep-14 Dec-14 Mar-15 Sep-15 Jun-16 Dec-15 Mar-16 Sep-16 Dec-16 Mar-17 Sep-17
Slide 23: Pharmaceutical sector commitments
Pharmaceutical sector commitments For personal use only Large market (est. AU$20 bn) with strong growth drivers Global presence, trusted brand, and commitments to quality and service a value to clients Solid acquisition pipeline and financing availability Prospecting for a beachhead acquisition in E
Slide 24: 1H FY2019 CAPEX Investment
1H FY2019 CAPEX Investment For personal use only CAPEX spending at 8% of revenue across the Life Science portfolio CAPEX allocation reflecting organic growth Replacement commitments CAPEX excludes acquisitions, which are largely Process focussed on the EMEA and Americas regions Automation Capa
Slide 25: Systems and solutions activities
Systems and solutions activities For personal use only Progressing commitments towards harmonised global systems - Laboratory Information Management Systems (LIMS) - Office365 suite of products - Regional quality systems - Client management tools (eg CRM, e-mail blast, webinars) Improving the cl
Slide 26: ALS Limited
For personal use only ALS Limited ALS Investor Day | 21 November 2018 Raj Naran, Managing Director and CEO, ALS Limited Perth, Australia Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 27: 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 For personal use only activities as at the date of the presentation. It is information given in summary form and does not purport to be comp
Slide 28: Global Operations Map
Global Operations Map For personal use only 70+ 350+ 40+ 14,000+ 20+ million $1.6+ billion Countries Locations Years of strong Staff worldwide Processed samples Global revenue (annualized) business per year performance 28 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 29: Business streams
Business streams For personal use only 29 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 30: Sustainability Program
Sustainability Program People For personal use only Health & Safety Training & 53% female new hires Safety as a Priority development Record Low Injury Rates investing in talent development Diversity & equality Respecting differences Global employee survey completed Human rights Worker’s rights
Slide 31: Half Year FY19 Financial Summary
Half Year FY19 Financial Summary Underlying performance from continuing operations NPAT (guidance exceeded) For personal use only $93.3m NPAT growth 29.8% EBITDA growth 21.9% Revenue growth 15.2% EPS growth 33.6% Share buyback progress $121.7m Full year guidance NPAT $170m to $175m 31 ALS Investor D
Slide 32: ALS Segments and Business Streams Revenue split
ALS Segments and Business Streams Revenue split For personal use only COMMODITIES & LIFE SCIENCES INDUSTRIAL Environmental Geochemistry Food Metallurgy Pharmaceutical Trade Inspection Consumer Products Coal Asset Care Tribology 32 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right P
Slide 33: Revenue waterfall H1 FY18 vs H1 FY19
Revenue waterfall H1 FY18 vs H1 FY19 – continuing operations For personal use only Strong Life Sciences Flat $716.8 million growth Industrial $826.1 million performance Strong Commodities performance Environmental Mineral Inspection Asset Care Tribology Geochemistry Metallurgy Consumer Products H1 F
Slide 34: Cash Flow
Cash Flow H1 FY18 H1 FY19 Half year AUD mn AUD mn Underlying operating profit (EBIT) 110.5 141.4 For personal use only Depreciation & Amortisation 38.1 35.8 24.6 million EBITDA 148.6 177.2 Working capital (50.3) (43.7) FREE CASH FLOW CAPEX (39.2) (45.8) Other 4.3 0.3 Free cash flow 63.4 88.0 CAPEX A
Slide 35: Capital management
Capital management For personal use only Share Buyback Buyback extended for 12 months to a total of $225 million through to Program December 2019 17.5 million shares (representing 3.5% of the original base) have been bought back on-market for an overall consideration of $121.7 million Buyback Progre
Slide 36: Life Sciences. Overview
Life Sciences. Overview For personal use only Environmental Food & Pharma Revenue growth (in AUD) Margin improvements in Revenue growth (in AUD) 10% Europe and Canada offset by 17% declines in USA and Asia Ongoing cost controls and Acquisition of Truesdail (US) and procurement synergies
Slide 37: Life Sciences. Outlook
Life Sciences. Outlook For personal use only Focus on operational efficiency is ongoing with workflow consolidation through Hub and Spoke effort to improve future margins Food safety and pharmaceutical acquisition strategy will continue with pipeline of opportunities identified Environmental bus
Slide 38: Life Sciences. Strategy
Life Sciences. Strategy For personal use only Continued focus on bolt on acquisitions for food business ($17m spent YTD). Solid pipeline Food strategy on target to deliver $200m in revenue this fiscal year New unique service offerings to provide market differentiator Global strategy now focu
Slide 39: Commodities. Overview
Commodities. Overview For personal use only Geochemistry Metallurgy Inspection Coal Sample volumes Revenue up 63% pcp Revenue up 33% pcp Revenue up 13% pcp up 14% pcp Contribution margin Contribution margin up Contribution margin up Market share up from 6% to 22% from 18% to 30% from
Slide 40: Global Mineral Exploration Market
Global Mineral Exploration Market Market Activity Analytical Spend Drivers For personal use only 18% • Global spend on exploration activities continues to rebound across a broad base of commodities both traditional and non- traditional (i.e. rare earths) • ALS’ focus on systems, productivity and inn
Slide 41: Geochemistry sample flow and exploration spend
50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 0 For personal use only Jan-06 41 -50% -40% -30% -20% -10% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Apr-06 Jan-06 Jul-06 Apr-06 2006 Oct-06 Jul-06 Jan-07 2006 Oct-06 Apr-07 Jan-07 Jul-07 Apr-07 2007 Oct-07 Jul-07 Jan-08 2007 Oct-07 Ap
Slide 42: Commodities. Outlook
Commodities. Outlook For personal use only Geochemistry expects current market conditions to continue with growth levels on pcp basis to slightly moderate Geochemistry market share gains to translate into improved FY19 performance Metallurgy experiencing strong increases in activity in traditi
Slide 43: Industrial. Overview
Industrial. Overview For personal use only Asset Care Tribology • Maintenance contracts wins in Australia generate • Revenue growth delivered in all regions – Australasia, increased revenues albeit this work is being North America and South America and strong undertaken in some cases at lower margin
Slide 44: Industrial. Outlook
Industrial. Outlook For personal use only Well positioned to support mining, oil & gas and power generation maintenance programs in Australia Construction projects and recently introduced maintenance-related service lines in the US to drive organic growth Increasing client interest in online m
Slide 45: Next generation TIC, Innovation and Technology
Next generation TIC, Innovation and Technology For personal use only Robotics Client Software Platforms Artificial Intelligence and Deep Learning Deeper Supply Chain Engagement Global ERP 45 ALS Investor Day | Half Year Results FY2019 Right Solutions • Right Partner
Slide 46: Half Year FY19 Financial Summary
Half Year FY19 Financial Summary Underlying performance from continuing operations NPAT (guidance exceeded) For personal use only $93.3m NPAT growth 29.8% EBITDA growth 21.9% Revenue growth 15.2% EPS growth 33.6% Share buyback progress $121.7m Full year guidance NPAT $170m to $175m 46 ALS Investor D
Slide 47: H1 FY2019 results Financial appendix
For personal use only H1 FY2019 results Financial appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 48: Half Year FY19 Financial Summary
Half Year FY19 Financial Summary For personal use only FY18** Half Year FY19 ($mn) ($mn) Half Year Divestment & Restructuring Discontinued Amortisation Statutory Underlying* Underlying* Impairment & other one Operations of Intangibles Results Charges off items Revenue 716.8 826.1 4.0 - - - 830.1 EBI
Slide 49: Debt Metrics
Debt Metrics For personal use only Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 STATISTICS Gearing Ratio (comfort 45%) 38% 27% 29% 31% 35% Leverage (net debt/ EBITDA; max 3.00) 2.5 1.7 1.9 1.7 1.8 EBITDA interest cover (min 3.75) 9.1 7.7 9.2 11.3 11.6 BALANCE SHEET MEASURES Total Equity (AUD mn) 1228 1186 118
Slide 50: Questions & Discussion
For personal use only Questions & Discussion Right Solutions • Right Partner