Business Update USPP Conference – Miami Luis Damasceno – Group CFO Michael Williams – Group Finance Director & Treasurer 23 - 25 January 2019 Right Solutions • Right Partner www.alsglobal.com Right Solutions • Right Partner
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 of this presentation in jurisdictions outside Australia may be restricted by law, and you should observe any such restrictions. – This presentation is not, and nothing in it should be construed as, an offer, invitation or recommendation in respect of securities, or an offer, invitation or recommendation to sell, or a solicitation of an offer to buy, securities in any jurisdiction. Neither this document nor anything in it shall form the basis of any contract or commitment. This presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. – The Company has prepared this presentation based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. – This presentation includes forward-looking statements within the meaning of securities laws. Any forward-looking statements involve known and unknown risks and uncertainties, many of which are outside the control of the Company and its representatives. Forward-looking statements may also be based on estimates and assumptions with respect to future business decisions, which are subject to change. Any statements, assumptions, opinions or conclusions as to future matters may prove to be incorrect, and actual results, performance or achievement may vary materially from any projections and forward-looking statements. – Due care and attention should be undertaken when considering and analysing the financial performance of the Company. – All references to dollars are to Australian currency unless otherwise stated. Right Solutions • Right Partner 2 2019 USPP Conference – Investor Update
ALS Segments and Business Streams Revenue split COMMODITIES & LIFE SCIENCES INDUSTRIAL Environmental Geochemistry Food Metallurgy Pharmaceutical Trade Inspection Consumer Products Coal Asset Care Tribology Right Solutions • Right Partner 3 2019 USPP Conference – Investor Update
Geographic Revenue and People Split $424m $363m EMENA 4.200 staff NORTH ASIA AMERICA 1.400 staff 3.200 staff $90m AFRICA $47m $103m 1.000 staff SOUTH $468m AMERICA 1.700 staff AUSTRALIA & NZ 3.000 staff 70+ 350+ 40+ 14,000+ 20+ million $1.6+ billion Countries Locations Years of strong Staff worldwide Processed samples Global revenue (annualized) performance per year Total FY18 Global Revenue – $1,495m 4 te Right Solutions • Right Partner 4 2019 USPP Conference – Investor Update
Strategic Priorities Unchanged Strategic priorities Focus (Testing as our Core) Brand recognition Operational excellence One ALS Client focused Leverage services across business streams Existing market share growth Target: non-resource Balanced business to be > 50% New business streams of the company EBIT at portfolio Geographic expansion the top of the mineral cycle through: Bolt-on acquisitions Cost base management and automation Strategic Technology and LIMS Achieving FY2022 focus financial targets Talent and staff development Integrated business services across all business streams Right Solutions • Right Partner 5 2019 USPP Conference – Investor Update
Strategic Roadmap Organic growth projects… +5% of Integrated to cost based revenues operational model Technology and efficiency Procurement leverage projects Strong cash conversion Focus on ROCE Improve earnings Capital management per share Capital strategy Finance Analytics for operations Allocation Standardized systems and processes Expansion into new geographies (Asia, Internal talent Talent and Americas, Europe) development to support Acquisition the growth of the Leadership New business streams Criteria business with testing at their core Development Executive Development Scale and leverage for Program existing businesses Transparency and talent New capabilities within exchange across business business streams streams New technology Focus on bolt-on and strategic acquisitions with ROCE minimum 15% Right Solutions • Right Partner 6 2019 USPP Conference – Investor Update
Half Year FY19 Financial Summary Underlying performance from continuing operations NPAT (guidance exceeded) $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 Right Solutions • Right Partner 7 2019 USPP Conference – Investor Update
Cash Flow H1 FY18 H1 FY19 Half year AUD mn AUD mn Underlying operating profit (EBIT) 110.5 141.4 Depreciation & Amortisation 38.1 35.8 24.6 EBITDA 148.6 177.2 million 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 Acquisitions (17.9) (17.1) million = 5.5 % of 45.8 17 % Divestments 79.5 - revenue on H1 FY18 Dividends paid (40.3) (44.5) Issued capital bought back - (14.9) SHARES Borrowings - movement - (0.4) BOUGHT BACK Interest and Tax (34.0) (39.8) 14.9 million ON MARKET H1 FY19 Restructuring costs (6.7) (6.1) Net increase/(decrease) in cash 44.0 (34.8) Opening net cash 248.9 187.2 Effect of FX on cash held 0.4 0.5 Analysis includes both continuing and discontinued operations Closing net cash 293.3 152.9 Right Solutions • Right Partner 8 2019 USPP Conference – Investor Update
Capital management Share Buyback Dividend Buyback Progress Balance Sheet Program 17.5 million Company retains strong Buyback extended Half Year balance sheet and flexibility for 12 months to underlying shares to pursue opportunities a total of payout ratio (representing 3.5% of (leverage 1.8 times $225 million 57.4% the original base) at 30 September 2018) through to (interim dividend have been bought December 2019 11.0c per share) back on-market for Positive market an overall environment will support Existing dividend consideration of generation of additional policy remains $121.7 million free cash flow to fund the unchanged buy-back The Company will continue to use its Company will also pursue existing cash its growth agenda through balances and free bolt-on targeted cash flow to fund the acquisitions buy-back program New 3 year USD300 million revolving multi-currency bank facilities finalised in October provide funding liquidity and flexibility Right Solutions • Right Partner 9 2019 USPP Conference – Investor Update
Life Sciences. Overview Environmental Food & Pharma Revenue growth (in AUD) Margin improvements in Revenue growth (in AUD) 17% 10% Europe and Canada offset by Acquisition of Truesdail (US) and declines in USA and Asia Ongoing cost controls and Labfor (Brazil) increase platform procurement synergies Organic revenue growth within the Americas for further introduced in the Americas remains strong throughout the expansion in the sector improving H1 FY19 ROS Australian, Asian and Canadian markets and new contract wins in Latin America Underlying results (AUD) H1 FY19 H1 FY18 Change Revenue $406.0 mn $365.7 mn +11.0 % EBITDA $81.7 mn $74.9 mn +9.1 % EBITDA Margin 20.1 % 20.5 % -40 bps EBIT $61.2 mn $55.9 mn +9.5 % Right Solutions • Right Partner 10 2019 USPP Conference – Investor Update
Life Sciences. Strategy Continued focus on bolt on acquisitions for food business ($17m spent YTD). Solid pipeline Food strategy on target to deliver $200m in revenue this fiscal year New unique service offerings to provide market differentiator Global strategy now focused on building pharmaceutical business New greenfield start ups globally in food, pharmaceutical and environmental Right Solutions • Right Partner 11 2019 USPP Conference – Investor Update
5 year growth story – Food/Pharmaceutical LABFOR and Revenue AUD$ millions Truesdail 50 Marshfield 40 AlControl ALS Microlab ControlVet Food/Pharma 30 20 10 0 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 2018 1H FY2019 Revenue growth 17% 2013 FY2019 Revenue target AUD 200m Right Solutions • Right Partner 12 2019 USPP Conference – Investor Update
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