Als Ltd. · ASX:ALQ
Als — Non-Deal Roadshow (December 2019)
62 slides from Als's roadshow presentation, Dec 4, 2019
Slide 1: Investor Presentation & Appendix – International Roadshow
For personal use only Investor Presentation & Appendix International Roadshow Raj Naran, Managing Director and CEO, ALS Limited Luis Damasceno, Chief Financial Officer, ALS Limited 4 December 2019 Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER For personal use only – 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 comp
Slide 3: H1 FY20 Results: Group Performance
For personal use only H1 FY20 Results Group Performance Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 4: Half Year FY2020 results highlights
Half Year FY2020 underlying NPAT of $98.2 million and statutory NPAT of $135.6 million Underlying performance from continuing operations below For personal use only • Organic revenue growth of +7.3% (Life Sciences +10.2%) Revenue growth • Scope growth (net of acquisition growth and divestment) of +1
Slide 5: Business Streams Revenue Growth Components
Business Streams Revenue Growth Components (at constant currency) For personal use only % 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
Slide 6: Underlying EBIT - Continuing Operations
Underlying EBIT - Continuing Operations For personal use only 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 1
Slide 7: Underlying EBIT – Continuing Operations
Underlying EBIT – Continuing Operations For personal use only in $m +2.3 +2.2 +6.9 152.6 154.9 150.4 143.5 143.5 1 H1 FY19 Organic Acquisition / Divestment Fx H1 FY20 Margin 17.4% (0.4) pts +0.1 pts (0.2) pts 16.9% 1. EBIT before applying AASB 16 7 Investor Presentation. Half Year Results FY2020 Rig
Slide 8: H1 FY20 Financial Summary
H1 FY20 Financial Summary For personal use only H1 FY19 ($m) H1 FY20 ($m) Half Year Underlying Underlying Restructuring Divestment & Applying Discontinued Amortisation Statutory Underlying* before after & other one- other business AASB 16* operations of Intangibles Results AASB 16* AASB 16* off item
Slide 9: Cash Flow
Cash Flow For personal use only Full year ($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
Slide 10: CAPEX by Business
CAPEX by Business For personal use only 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: Geogr
Slide 11: Acquisition strategy and ARJ
Acquisition strategy and ARJ For personal use only 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 r
Slide 12: Debt Metrics
Debt Metrics Mar-16 Mar-17 Mar-18 Mar-19 Sep -19 For personal use only 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
Slide 13: Capital Management
Capital Management For personal use only 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 rem
Slide 14: H1 FY20 Results: Review by Business Stream
For personal use only 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 For personal use only 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 improvem
Slide 16: Life Sciences. Evolution
Life Sciences. Evolution in $m For personal use only 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 Ye
Slide 17: Life Sciences. Outlook
Life Sciences. Outlook For personal use only 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 se
Slide 18: Commodities. Overview
Commodities. Overview Geochemistry Metallurgy Inspection Coal For personal use only 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 chan
Slide 19: Global Mining Capital Expenditure Outlook
Global Mining Capital Expenditure Outlook For personal use only 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 P
Slide 20: Geochemistry – subdued H1 FY20, gradual improvement expected in H2
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 For personal use only 0,000 21 Average Weekly Sample Flow 0,000 18 Global Exploration Spend USD bn Relative Gold Price in US
Slide 21: Geochemistry – subdued H1 FY20, gradual improvement expected in H2
Geochemistry – subdued H1 FY20, gradual improvement expected in H2 FY20 100% For personal use only 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 Oc
Slide 22: Commodities. Outlook
Commodities. Outlook For personal use only 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 sligh
Slide 23: Industrial. Overview
Industrial. Overview Asset Care Tribology For personal use only 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
Slide 24: Industrial. Outlook
Industrial. Outlook For personal use only 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 deve
Slide 25: H1 FY20 Results: Innovation and Strategic Priorities
For personal use only 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 For personal use only 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 focu
Slide 27: Strategic Priorities
Strategic Priorities For personal use only 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 ta
Slide 28: H1 FY20 performance vs strategic priorities
H1 FY20 performance vs strategic priorities Shorter term strategic priorities H1 FY20 performance For personal use only 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 performa
Slide 29: FY20 underlying NPAT guidance
FY20 underlying NPAT guidance NPAT ($m) For personal use only 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 econom
Slide 30: H1 FY20 Results: Financial Appendix
For personal use only H1 FY20 Results Financial Appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 31: One-Offs – H1 FY20
One-Offs – H1 FY20 For personal use only 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 4
Slide 32: Corporate Cost Evolution
Corporate Cost Evolution For personal use only 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 ma
Slide 33: Underlying Effective Tax Rate Movement
Underlying Effective Tax Rate Movement For personal use only 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 unde
Slide 34: Net Debt Evolution
Net Debt Evolution For personal use only 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 Y
Slide 35: Appendix
For personal use only Appendix Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 36: Contents
Contents For personal use only 1 Industry and Company Background 2 Life Sciences 3 Commodities and Industrial 4 Strategy and Priorities 5 Financial Summary and Sustainability 36 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 37: Industry – Testing, Inspection and Certification (TIC)
Industry – Testing, Inspection and Certification (TIC) For personal use only 37 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 38: TIC Industry – Market Drivers
TIC Industry – Market Drivers For personal use only 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
Slide 39: Company History
Company History For personal use only 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 mine
Slide 40: History of ALS Revenue Mix – Increasing Diversity
History of ALS Revenue Mix (from continuing operations) – Increasing Diversity For personal use only 1.80 1.60 1.40 Total Revenue 1.20 CAGR +22.5% 1.00 $ billion 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 Commodities Life sciences Industr
Slide 41: ALS Service Offering
ALS Service Offering For personal use only OVERALL CAPABILITIES SCOPE 41 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 42: ALS Products and Services
ALS Products and Services For personal use only 42 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 43: ALS Current Business Streams Revenue Split (FY19)
ALS Current Business Streams Revenue Split (FY19) For personal use only LIFE SCIENCES COMMODITIES & INDUSTRIAL Environmental Geochemistry Food Metallurgy Pharmaceutical Trade Inspection Consumer Products Coal Asset Care Tribology 43 Investor Presentation. Half Year Results FY2020 Right Solutions • R
Slide 44: ALS Global Operations by Revenue (FY19)
ALS Global Operations by Revenue (FY19) For personal use only 65+ EMENA Countries 4,200 staff 350+ Locations $398m 40+ Years of strong performance $598m APAC 15,000+ 4,400 staff Staff worldwide $622m $54m AFRICA 1,000 staff AMERICAS 40+ million 4,900 staff Processed samples per year $1.6+ billion Gl
Slide 45: Life Sciences
For personal use only Life Sciences Main business streams: Environmental testing | Food safety and quality | Pharmaceutical Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 46: Life Sciences
Life Sciences Key drivers Life Sciences ($m) For personal use only 1. Increasing regulation, complexity and $500 20% specialisation of testing requirements. $400 16% 2. Increased outsourcing allowing companies to focus on core $300 12% competencies. $200 8% 3. Focus on high level of quality brand pr
Slide 47: Life Sciences Global Locations
Life Sciences Global Locations For personal use only 88 54 22 72 47 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 48: Commodities and Industrial
For personal use only Commodities and Industrial Commodities: Geochemistry | Metallurgy | Commodity trade and inspection | Coal quality Industrial: Asset Care | Tribology Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 49: Commodities
Commodities Key drivers Commodities ($m) For personal use only 1. Commodity pricing cycle. $400 30% 25% 2. Mining capital expenditure by major miners and $300 exploration by junior miners. 20% 3. Junior miner’s exploration generally driven by equity 15% $200 market activity (particularly in the Aust
Slide 50: Commodities Global Locations
Commodities Global Locations For personal use only 23 29 48 27 16 50 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 51: Geochemistry Hub and Spoke Model
Geochemistry Hub and Spoke Model For personal use only • 5 global hubs provide capacity, supported by smaller regional ‘spokes’ • ‘Spoke’ operations are scaled up or down to match client demand and ensure effective use of hub capacity • Technology platform also supports efficient allocation of sampl
Slide 52: Industrial
Industrial Key drivers For personal use only Industrial ($m) Support asset owners, operators and constructors to: $140 30% 1. Comply with codes and regulations. 2. Provide confidence in safe operations. $120 25% 3. Optimise production and maintenance. $100 20% Strategy 1. Grow market share and geogr
Slide 53: Industrial Global Locations
Industrial Global Locations For personal use only 1 19 34 3 53 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 54: Industrial – Confidence in Assets
Industrial – Confidence in Assets For personal use only 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 Pl
Slide 55: Strategy and Priorities
For personal use only Strategy and Priorities Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 56: Strategic Roadmap
Strategic Roadmap For personal use only 56 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 57: Business Priorities
Business Priorities For personal use only ▪ 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 str
Slide 58: Selection of Our 2,000 Different Customers
Selection of Our 2,000 Different Customers For personal use only 58 Investor Presentation. Half Year Results FY2020 Right Solutions • Right Partner
Slide 59: Financial Summary and Sustainability
For personal use only Financial Summary and Sustainability Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
Slide 60: Year Financial Summary
10 Year Financial Summary In millions of AUD 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (a) Following the issue of For personal use only Sales Revenue 825.5 1,108.3 1,405.6 1,499.3 1,503.4 1,492.7 1,364.9 1,365.6 1,495.1 1,672.5 49,633,430 shares Funds Employed (including 1:6 rights issue in
Slide 61: Sustainability Program – FY19 achievements
Sustainability Program – FY19 achievements People For personal use only Health & Safety Innovation & Technology New Executive Development sessions delivered Safety is a Priority Embracing innovation and technology Equal Pay Pledge Diversity & equality Improved employee satisfaction survey resu
Slide 62: For personal use only
For personal use only Right Solutions • Right Partner alsglobal.com Right Solutions • Right Partner