Als Ltd. · ASX:ALQ
Als — Investor Day (May 2016)
54 slides from Als's investor day presentation, May 31, 2016
Slide 1: Investor Day March 2016, Melbourne
For personal use only one ALS Life Sciences Commodities Industrial Investor Day March 2016 Melbourne Australia 31st May 2016 All figures stated in AUD unless otherwise stated 1 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 For personal use only 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 comp
Slide 3: ALS Business Streams
ALS Business Streams For personal use only Environmental FY2016 Revenue Food Pharmaceutical Life Sciences Consumer Products Geochemistry Minerals Mine Site Metallurgy Industrial Trade Inspection Asset Care Energy Environmental Food Tribology Pharmaceutical Consumer Products Geochemistry Mine Site Co
Slide 4: New Business – structure and end market focus
New Business – structure and end market focus How do our end markets want to interact with ALS? For personal use only •Environmental •Food •Pharmaceutical “One ALS” Project •Industrial Hygiene • promoting a broad range of services to an end Life Sciences •Consumer Products market • packaging service
Slide 5: FY 2016 Financial Summary
FY 2016 Financial Summary For personal use only FY15 Full Year FY16 ($mn) ($mn) Restructuring & Amortisation of Continuing Continuing Impairment Statutory Full year Underlying Underlying Charges other one off Intangibles Results items Revenue 1422.2 1364.9 1364.9 EBITDA 305.4 264.3 (317.9) (13.9) (6
Slide 6: Revenue Waterfall (AUD$ million)
Revenue Waterfall (AUD$ million) For personal use only +24 +1 -10 +5 +2 -9 -7 -3 -101 +52 flat flat Industrial Minerals performance performance strong -11 Life Sciences growth severe Oil & Gas contraction $1,422 million $1,365 million 6 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 7: ALS global locations – a strategic asset
ALS global locations – a strategic asset For personal use only Life Sciences Industrial Minerals Energy Revenue 7 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 8: Margin Strong at the Bottom of the Cycle
Margin Strong at the Bottom of the Cycle 1,500 30% For personal use only ALS Revenue AUD$ million 1,200 Core Labs 24% SGS Exova Bureau Veritas Intertek EBITDA Margin 900 Eurofins 18% Applus 600 12% Mistras 300 6% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ALS Financial Year Ending March
Slide 9: Group Taxable Earnings – franking capacity
Group Taxable Earnings – franking capacity For personal use only Australian versus Off-shore Taxable Profits Australian Profits Off-shore Profits 100% 80% 60% 40% 59% 20% 30% 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 9 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 10: Debt Metrics
Debt Metrics Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 For personal use only Statistics Gearing Ratio comfort 45% 29% 29% 34% 38% 27% Leverage (net debt/EBITDA) max 3.00 1.0 1.0 2.2 2.5 1.7 EBITDA interest cover min 3.75 23.9 21.0 12.2 9.1 7.7 Balance Sheet Measures Total Equity (AUD mn) 930 997 1,419 1,22
Slide 11: Cash Flow
Cash Flow FY15 FY16 Full year For personal use only AUD mn AUD mn Underlying operating profit (EBIT) 223.3 177.9 Depreciation & Amortisation 83.7 86.4 • Cash Flow Working capital 2.7 (6.3) CAPEX (76.5) (73.7) • free cash flow down $66.6mn Other(1) 22.8 5.1 • EBITDA cash conversion 97.1% Free cash fl
Slide 12: Strategic mix of revenue
Strategic mix of revenue For personal use only Revenue FY16 FY16 end-customer sector mix Cyclical Non-Cyclical Other Mineral Manufacturing 5% Exploration 8% 15% Engineering Inspection Government Metallurgy 7% Geochemistry Oil & Gas: Infrastructure exploration & Coal production Environmental & Proper
Slide 13: Strategic mix of revenue
Strategic mix of revenue Revenue For personal use only 1,600 $ millions 1,400 1,200 1,000 800 600 400 200 - FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Life Sciences Tribology Asset Care (downstream) Mineral Inspection Cyclicals • Multi-year strategy of growi
Slide 14: Life Sciences Division
Life Sciences Division Overview For personal use only • revenue and EBIT growth in all regions • Life Sciences revenue up by 14%, with Food/Pharma revenue up 34% • strong recovery in margin in Australia due to increased 2016 2015 Change market share and cost control initiatives • new chemistry hub i
Slide 15: Industrial Division
Industrial Division Overview For personal use only • solid organic tribology growth across all regions • Tribolab acquisition in Brazil performed in line with expectation for first six months of ownership • Maverick integration complete and new site opened in 2016 2015 Change Louisiana to expand Gul
Slide 16: Minerals Division
Minerals Division Overview: For personal use only • Geochemistry underlying EBIT margin 19% • Metallurgy Markets challenging in all regions • Inspection EBIT margin improved to 27% - some price pressure realised in H2 • Mine Site pipeline continued to grow however project 2016 2015 Change timeline e
Slide 17: Global Mineral Exploration Market
Global Mineral Exploration Market Market Trends Analytical Spend Drivers For personal use only value USD$ billion 400 20 Expenditure rebased to 100 350 DOLLARS 300 15 250 200 10 price 18% 150 generic innovative SERVICE 100 5 50 0 0 • ALS continued investment to maintain technical capabilities and fe
Slide 18: Global Exploration Market
Global Exploration Market For personal use only SNL Data • calendar years 2014 and 2015 • ten best intersections reported for gold, copper, lead, zinc, silver and nickel per quarter • 387 reported intersections analysed • ALS estimate of analyzing laboratory for 18% each reported intersection • numb
Slide 19: Energy Division
Energy Division Overview – Oil & Gas For personal use only • global Oil & Gas markets remain volatile • pricing pressure and delayed projects • new products introduced and gaining market acceptance • Cedar Turbine • QuickCapture V2 2016 2015 Change • Houston laboratory fully commissioned and gaining
Slide 20: Life Sciences Division
Life Sciences Division For personal use only Lima Singapore Raj Naran Bangkok Group General Manager Life Sciences 20 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 21: Our Market Sectors
Our Market Sectors TIC - Available Market 2016 For personal use only Testing Inspection Consumer Goods Metals & Minerals 5% Certification 10% Environmental 6% Business Systems Food 6% 4% Oil, Gas & Chemicals (upstream) 5% ALS Strategic Focus Industrial Services Automotive 17% 23% Agro-commodities Ma
Slide 22: Key Dynamics - driving growth in TIC Industry
Key Dynamics - driving growth in TIC Industry •increasing sophistication and automation of TIC programs combined with a shortage of skilled For personal use only outsourcing of non- professionals and stricter regulations, has caused companies to outsource non-core activities •companies looking for 3
Slide 23: Life Sciences Markets – poised for continued growth
Life Sciences Markets – poised for continued growth Commentary For personal use only increasing regulations and complexity of testing functions have made outsourcing more appealing concentration on core competencies with a greater focus on efficient use of capital time to market – outsourcing
Slide 24: Life Sciences Markets – poised for continued growth
Life Sciences Markets – poised for continued growth For personal use only Strong emerging middle class growth driving global trade – Asia Pacific leading the way Middle Class Population by Geography 2009 2020 664 703 338 333 525 1,740 181 251 12% 4% 1% (0%) Source: Brookings Institution Growth CAGR
Slide 25: End Markets and Market Drivers - ALS positioned to benefit
End Markets and Market Drivers - ALS positioned to benefit For personal use only • Environmental • Food Safety and Water Specialized Increased and and Complex Enforced Testing Regulations Public Infrastructure Awareness and and Population Consumer Growth Concern • Consumer Products • Pharmaceutical
Slide 26: Global Life Sciences TIC Market – ALS perspective
Global Life Sciences TIC Market – ALS perspective For personal use only Environmental Food Safety Global Market – US$ 7bn Pharmaceutical Growth +6% p.a. Global Market Addressable Market – US$ 11bn Consumer – US$ 4bn Growth +7% p.a. Global Market Products - US$ 20 bn ALS market share Addressable Mark
Slide 27: Life Sciences Division
Life Sciences Division For personal use only Overview • key growth focused: • substantial addressable market in Life Sciences growing at 7-10% p.a. 2016 2015 Change • strong market position Revenue $634mn $557mn +14% • revenue grew 75% since 2012 achieved EBITDA $145mn $130mn +12% through both organ
Slide 28: Life Sciences growth 2007 to 2016
Life Sciences growth 2007 to 2016 For personal use only FY07 FY16 LOCATIONS REVENUE EBITDA EBITDA% LOCATIONS REVENUE EBITDA EBITDA % 34 $165mn $37mn 22% 155 $634mn $145mn 23% End Markets Revenue 16% CAGR over 9 years Environmental Consumer Testing Food/Pharma 28 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 29: 2007 – 2016 Life Sciences
2007 – 2016 Life Sciences For personal use only Life Sciences Revenue 700 35% 600 30% Revenue (AU$ million) 500 25% 400 20% EBITDA 300 15% 200 10% 100 5% 0 0% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Life Sciences Revenue EBITDA % 29 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 30: ALS Market Share – food & environmental
ALS Market Share – food & environmental For personal use only Europe 10% 5% Asia Pacific Americas 25% 15% Note – Company estimates 30 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 31: ALS Value Proposition
ALS Value Proposition continued For personal use only highly trusted and investment in client commitment to experienced management Client Service company systems well established market leading IT track record of reputation for and LIMS growth superior quality 15% well diversified lean and focused e
Slide 32: Current Opportunity
Current Opportunity Life Sciences EBITDA % by Country For personal use only bubble size = revenue Opportunity 60% increase market share 55% 50% Opportunity improve margin 45% 40% EBITDA percentage 35% 30% 25% ALS minimum target 20% 15% 10% 5% 0% by Country 32 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 33: Environmental Business Stream
Environmental Business Stream For personal use only Rayong Beijing Andreas Jonsson General Manager Life Sciences – Europe Houston 33 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 34: Environmental Market Overview
Environmental Market Overview For personal use only Total contestable market is estimated to be in excess of AU$ 5.5 billion global environmental • rise in contamination and pollution issues testing market • progress in research has identified more compounds as toxic • increasing demand by citizens
Slide 35: Market Drivers
Market Drivers For personal use only Regulations Infrastructure Public Emerging Awareness Markets Population Social Growth Responsibility 35 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 36: Market Expectations
Market Expectations For personal use only brand and value-based ease of use geographic safety and risk pricing footprint management 36 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 37: ALS' Commitment to the Environmental Sector
ALS’ Commitment to the Environmental Sector For personal use only ALS serves all the main environmental testing state-of-the-art laboratory markets infrastructure technical and quality expertise best practice sharing testing of all sample matrix types water: drinking-, ground-, wastewater test
Slide 38: Historical – Environmental in 2006
Historical – Environmental in 2006 For personal use only SITES REVENUE EBITDA 25 $80 mn $17 mn 38 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 39: Historical – Environmental in 2011
Historical – Environmental in 2011 For personal use only SITES REVENUE EBITDA SITES REVENUE EBITDA 25 $80 mn $17 mn 90 $306 mn $82 mn 39 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 40: Today – Environmental 2016
Today – Environmental 2016 For personal use only SITES REVENUE EBITDA SITES REVENUE EBITDA SITES REVENUE EBITDA 25 $80 mn $17 mn 90 $306 mn $82 mn 125 $522 mn $121 mn 40 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 41: Environmental – FY2016 overview by numbers
Environmental – FY2016 overview by numbers For personal use only 1 largest provider of environmental analytical services 522 million AU$ Revenue 11 % year on year growth 23 % EBITDA Margin 125 locations globally 4500 staff 25 million AU$ CAPEX (excl. acquisition and facilities) >50,000 sqm lab space
Slide 42: Significant events from FY2016
Significant events from FY2016 For personal use only expanded new greenfield UK growth South America European locations water major footprint contracts remediation project North America Asia Pacific growth expanded air LIMS through testing ALS Experience harmonization industry direct footprint road
Slide 43: Outlook
Outlook For personal use only segment geographic diversification diversification further in existing development of through the hub-and-spoke acquisitions and geographies by greenfield start-ups leveraging the model existing network LIMS harmonization implementation of a single global to improve int
Slide 44: Food Business Stream
Food Business Stream For personal use only Chatteris Singapore Tim Kilmister General Manager Life Sciences – Asia Pacific Sydney 44 RIGHT SOLUTIONS · RIGHT PARTNER
Slide 45: Key Dynamics - driving growth in the Food Sector
Key Dynamics - driving growth in the Food Sector For personal use only Market Long-wave Increased Evolving Client Macros Total Market Outsourcing Testing Profile •Global Food Safety and Growth •Increased outsourcing to Requirements •Government regulatory Food Quality market is increase proportion of
Slide 46: Key Dynamics – ALS perspective
Key Dynamics – ALS perspective For personal use only Common Hub and Diverse range Value Added Elements Spoke Model of testing Service Model •ability to leverage capabilities existing Environmental •providing local reach, •high functionality •microbiological locations in target Food economies of scal
Slide 47: FY2016 ALS overview by numbers
FY2016 ALS overview by numbers For personal use only • revenue AU$ 105mn • global headcount 1,200 • EBITDA Margin 22% • CAPEX AU$ 7mn (excl. acquisition and facilities) • investment in LIMS/client portal AU$ 2.5mn • new geographies entered; Portugal, Spain, Norway, Denmark and Poland 47 RIGHT SOLUTI
Slide 48: ALS Journey in the Food Sector
ALS Journey in the Food Sector ALS Global Food/Pharma by Quarter For personal use only Millions 28 FY2006 0.24 revenue 24 $1.9mn 0.21 20 EBITDA margin 0.18 Revenue AU$ 16 0.15 FY2011 0.12 revenue 12 $17mn 0.09 8 0.06 4 0.03 FY2016 revenue - 0 $105mn Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Dec-14 J
Slide 49: Market Share Commentary
Market Share Commentary Region Country ALS Position and Comments For personal use only Singapore market leader with significant brand presence and reputation strong market position and brand awareness, with significant additional Thailand organic growth opportunities Asia Malaysia market leader, wit
Slide 50: Significant events from FY2016
Significant events from FY2016 For personal use only • expanded European footprint through acquisition – ControlVet; Portugal, Spain and Poland, OMM Lab; Norway and Mikrolab; Slovakia • new greenfield locations in Asia – Songkhla (Thailand), Sentul (Indonesia) • consolidation of market position in I
Slide 51: Significant events from FY2016 (cont.)
Significant events from FY2016 (cont.) For personal use only • enhanced capabilities to meet emerging market opportunities – Pesticides and Allergens • development of on-line audit tool, Food Consultancy services, client training workshops (part of right solution model) • >5,000 active clients using
Slide 52: Eclipse Scientific acquisition in UK food sector
Eclipse Scientific was acquired by ALS in April 2012 as an entry point into the UK food sector Since acquisition the business has established For personal use only itself as a market leader for service and quality, providing ALS with a strong brand presence •staff engagement and management inputs •c
Slide 53: Outlook
Outlook For personal use only • exciting Future growth trajectory of the sector, driven by increasing consumer awareness, Current ALS regulation and outsourcing Revenue • quantum of total market opportunity in ‘new’ Opportunity in Current ALS geographies for ALS Geographies New • continued organic g
Slide 54: Panel Discussion – Vision Statement, Food Sector
Panel Discussion For personal use only Vision Statement – Food Sector “ “ The ALS Food & Pharmaceutical Division will be a global leader in customer service and ease of use. Providing customers with competitive pricing through leveraging best practice testing processes and data tools that add value