Slide 1: Investor Presentation Half Year Results FY2020
Investor Presentation Half Year Results FY2020 Raj Naran, Managing Director and CEO, ALS Limited Luis Damasceno, Chief Financial Officer, ALS Limited 20 November 2019 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: H1 FY20 Results: Group Performance
H1 FY20 Results Group Performance Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 4: Half Year FY2020 underlying NPAT of $98.2 million and statutory NPAT of $135.6 million
Half Year FY2020 underlying NPAT of $98.2 million and statutory NPAT of $135.6 million Underlying performance from continuing operations below • Organic revenue growth of +7.3% (Life Sciences +10.2%) Revenue growth • Scope growth (net of acquisition growth and divestment) of +1.4% $919 m, +11.3% vs
Slide 5: Business Streams Revenue Growth Components (at constant currency)
Business Streams Revenue Growth Components (at constant currency) % of Revenue (5.0%) - 5.0% 10.0% 15.0% 20.0% 25.0% 51% Life Sciences 10.2% 2.1% Geochemistry (2.9%) Metallurgy 4.8% Commodities: 35% Inspection 1.6% 12.1% Coal 9.5% Asset Care 23.3% Industrial: 14% Tribology 12.5% 100% Total Group 7.3
Slide 6: Underlying EBIT - Continuing Operations
Underlying EBIT - Continuing Operations in $m +13 (2) +3 (2) 154.9 143.5 1 2 H1 FY19 Life Sciences Commodities Industrial Others H1 FY20 Margin 17.4% 15.8% 25.4% 12.2% 16.9% PCP +73 bps (126) bps +38 bps (50) bps 1. Corporate costs + Fx 2. Underlying EBIT before applying AASB 16 6 Investor Presentat
Slide 7: Underlying EBIT – Continuing Operations
Underlying EBIT – Continuing Operations in $m +2.3 +2.2 +6.9 152.6 154.9 150.4 143.5 143.5 1 H1 FY19 Organic Acquisition / Divestment Fx H1 FY20 Margin 17.4% (0.4) pts +0.1 pts (0.2) pts 16.9% 1. EBIT before applying AASB 16 7 Investor Presentation. Half Year Results FY2020 Right Solutions • Right P
Slide 8: H1 FY20 Financial Summary
H1 FY20 Financial Summary H1 FY19 ($m) H1 FY20 ($m) Half Year Underlying Underlying Restructuring Divestment & Applying Discontinued Amortisation Statutory Underlying* before after & other one- other business AASB 16* operations of Intangibles Results AASB 16* AASB 16* off items closures Revenue 826
Slide 9: Cash Flow
Cash Flow Full year ($m) H1 FY19 H1 FY20 6.2 Underlying operating EBIT (before AASB 16) 141.4 153.7 million Depreciation & Amortisation 35.8 39.2 EBITDA (before AASB 16) 177.2 192.9 Cash Flow (pre CAPEX) Working capital (43.7) (53.8) Other 0.3 0.9 Cash flow before CAPEX (before AASB 16) 133.8 140.0
Slide 10: CAPEX by Business
CAPEX by Business CAPEX as % of Revenue H1 FY20 H1 FY19 in $m Life Sciences 6.4% 7.1% 30 Commodities 4.4% 4.7% 52 14 Industrial 5.2% 3.9% Total Group 5.6% 5.8% Life Sciences: Green field and growth projects 7 Commodities: Maintenance and geographical expansion Industrial: Geographical expansion, gro
Slide 11: Acquisition strategy and ARJ
Acquisition strategy and ARJ 1 2 3 4 Expansion in strategic Focus on bolt-ons Consider establishing a green M&A governance Acquisition markets (such as food and and medium size field operation where multiples and process has strategy pharmaceutical) and deals are above target range been strengthened
Slide 12: Debt Metrics
Debt Metrics Mar-16 Mar-17 Mar-18 Mar-19 Sep -19 STATISTICS Gearing Ratio (target <45%) 27% 29% 31% 36% 38% Leverage (net debt/ EBITDA; max 3.25) 1.7 1.9 1.7 1.8 1.9 EBITDA interest cover (min 3.75) 7.7 9.2 11.3 10.9 10.8 BALANCE SHEET MEASURES Total Equity (in $m) 1,186 1,185 1,122 1,084 1,150 Net
Slide 13: Capital Management
Capital Management Capex Dividend $51.7 m in Capex (5.6% of revenue). Half year dividend 11.5 cents per share, up 4.5%, with underlying payout ratio of 56.5%. Continued investment in growth projects in Life Sciences and Industrial divisions. Existing dividend policy remains unchanged. Share
Slide 14: H1 FY20 Results: Review by Business Stream
H1 FY20 Results Review by Business Stream Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 15: Life Sciences. Overview
Life Sciences. Overview Underlying margin of 15.8%, +73 bps vs Organic revenue growth of 10% driven by USA business performing well with new pcp driven by process and productivity green fields and market share gains. management team, underlying margin improvement improvements across all region
Slide 16: Life Sciences. Evolution
Life Sciences. Evolution in $m 500 Environmental 20% Total Revenue Food / Pharmaceutical CAGR +10.1% Consumer / Electronics 19% Underlying EBIT Margin 400 18% 17% 300 16% 15% 200 14% 13% 100 12% 11% 0 10% H1 FY16 H1 FY17 H1 FY18 H1 FY19 H1 FY20 16 Investor Presentation. Half Year Results FY2020 Righ
Slide 17: Life Sciences. Outlook
Life Sciences. Outlook High single digit organic growth expected in FY20 with EBIT margin improvement of 50bps vs pcp. Strong organic growth in Environmental driven by LATAM, USA and APAC. Low organic growth in the UK Food and Pharmaceutical business due to Brexit. Price sensitivity in some mark
Slide 18: Commodities. Overview
Commodities. Overview Geochemistry Metallurgy Inspection Coal Organic revenue down 3% Revenue up 6% vs pcp. Revenue up 15% vs pcp. Revenue up 10% vs pcp. and sample volumes down 11% vs pcp. Pricing and volume outlook MARSS International (acquisition Continued change in mix improving. c
Slide 19: Global Mining Capital Expenditure Outlook
Global Mining Capital Expenditure Outlook Strength in global capital expenditure on metals and mining projects expected to continue Growth in Global Mining Capital Expenditure Expected Green field Capital Expenditure at Low Levels but Expected to Grow as to Continue Commodity Prices Stabilise Mining
Slide 20: Geochemistry – subdued H1 FY20, gradual improvement expected in H2 FY20
Geochemistry – subdued H1 FY20, gradual improvement expected in H2 FY20 0,000 24 ALS Global Mineral Sample Flow (trailing 52 week running average) and Global Exploration Spend 0,000 21 Average Weekly Sample Flow 0,000 18 Global Exploration Spend USD bn Relative Gold Price in USD 0,000 15 0,000 12 20
Slide 21: Geochemistry – subdued H1 FY20, gradual improvement expected in H2 FY20
Geochemistry – subdued H1 FY20, gradual improvement expected in H2 FY20 100% 90% ALS Global Mineral Sample Flow 80% (two week growth trend) 70% 60% 50% 40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 30% 20% 10% 0% Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct
Slide 22: Commodities. Outlook
Commodities. Outlook Low single digit revenue growth for FY20 despite sample flow volumes in Geochemistry, as Metallurgy, Inspection and Coal continue to grow. Geochemistry mid-cycle pause: gradual improvement in sample flows expected in H2 FY20, but anticipated to be slightly lower than pcp. Co
Slide 23: Industrial. Overview
Industrial. Overview Asset Care Tribology Strong organic revenue growth in Australia and USA markets with new Revenue growth primarily driven by high single-digit or low double- business wins. Productivity improvements drove margin increase. digit organic growth across all regions. Australia g
Slide 24: Industrial. Outlook
Industrial. Outlook Continue to be well positioned to support mining, oil and gas, and power generation maintenance programs in Australia and expand in the USA. Continue to invest in the expansion of Asset Care and Tribology businesses (green field and focused business development). Laboratory a
Slide 25: H1 FY20 Results: Innovation and Strategic Priorities
H1 FY20 Results Innovation and Strategic Priorities Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 26: Next Generation TIC, Innovation and Technology
Next Generation TIC, Innovation and Technology Life Sciences - Robotics in laboratories to improve efficiency. - Artificial intelligence driving data review and reporting. - Web and mobile apps for clients to view their data. Technology and innovation are a Commodities key focus in our - Market-lead
Slide 27: Strategic Priorities
Strategic Priorities Strategic priorities Focus (Testing is our core) Brand recognition Operational excellence One ALS Client focused Leverage services across business streams Cost-based management and automation Strategic Achieving FY2022 Technology and LIMS focus financial targets Talent and staff
Slide 28: H1 FY20 performance vs strategic priorities
H1 FY20 performance vs strategic priorities Shorter term strategic priorities H1 FY20 performance Life Sciences • 10.2% organic growth Strong organic growth and margin expansion (pre AASB 16 impact) across all regions • +73 bps margin improvement vs H1 FY19 Improve USA performance with new managemen
Slide 29: FY20 underlying NPAT guidance
FY20 underlying NPAT guidance NPAT ($m) 200 FY20 underlying NPAT guidance $185-195 m 180 FY20 underlying NPAT guidance of $185 m – $195 m based on current market trends, reflecting the seasonality of the business 160 and subject to no material changes in the operating or economic environment includi
Slide 30: H1 FY20 Results: Appendix
H1 FY20 Results Appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 31: One-Offs – H1 FY20
One-Offs – H1 FY20 Divestment & other in $m Startup Restructuring Acquisition Other one-off Items business closures Total Commodities - (0.5) - - (0.5) Life Sciences (3.0) (0.9) - - (3.9) Industrial (0.6) - - - (0.6) Corporate - - (1.6) (3.1) (4.7) Discontinued - - (2.0) 51.7 49.7 Total (3.6) (1.4)
Slide 32: Corporate Cost Evolution
Corporate Cost Evolution H1 FY18 H2 FY18 H1 FY19 H2 FY19 H1 FY20 Corporate Cost * 12.4 14.1 18.2 18.8 19.7 Revenue 721.6 725.3 826.1 838.7 919.1 Corporate Cost % on Revenue 1.7% 1.9% 2.2% 2.2% 2.1% * exclude net foreign exchange gain or loss. • H1 FY20 absolute cost increase mainly driven by increas
Slide 33: Underlying Effective Tax Rate Movement
Underlying Effective Tax Rate Movement H1 FY20 Change in $m After AASB 16 H1 FY19 YoY Underlying Profit before Tax (from continuing operations) 137.5 128.3 7.2% Tax (39.3) (35.0) 12.3% Underlying Effective Tax Rate (ETR) 28.6% 27.3% 1.3 pts H1 FY20 vs H1 FY19 • Increase in underlying ETR driven by c
Slide 34: Net Debt Evolution
Net Debt Evolution 750 8 700 56 650 28 600 22 84 59 707 67 56 550 630 500 450 31st Mar 2019 Free Cash Flow Acquisitions Divestments Dividends paid Issued capital Fx Interest and Tax Restructuring 30th Sep 2019 Net Debt bought back costs Net Debt 34 Investor Presentation. Half Year Results FY2020 Rig
Slide 35: alsglobal.com
Right Solutions • Right Partner alsglobal.com Right Solutions • Right Partner