Half Year 2025 ALS Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Purtell - Macquarie Group Limited - Analyst : Good morning, Malcom, Stuart, hope you're both well. Just had three questions if I could. Starting with Nuvisan there, nice to see it move to profit in the first half. Are you expecting further improvement in profitability in the second half versus the first, noting the timing of cost saves?

Question: John Purtell - Macquarie Group Limited - Analyst : Thanks, Stuart. And just a second one on FX. The impacts were quite large there. So there's obviously translation, but there's also some margin impacts that you've referenced there. So to better understand that, is that really more about margin mix? Or is there a revenue cost mismatch in terms of FX in Latin America, for example?

Question: John Purtell - Macquarie Group Limited - Analyst : Okay. Got it. Thank you. And last one, Malcolm, just in terms of what you're seeing on the minerals side, there, obviously, the business continues to be very resilient. But I suppose any recent indicators that you can comment on and maybe what your customers, any anecdotes there in terms of what they're thinking for calendar '25? I mean, we note that junior financings have picked up very recently, but still pretty early days. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2024 / 11:00PM, ALQ.AX - Half Year 2025 ALS Ltd Earnings Call

Question: John Purtell - Macquarie Group Limited - Analyst : Thank you.

Question: Jakob Cakarnis - Jarden Australia - Analyst : Hi, Malcom. Hi, Stuart. Just two for me, if I can. The first one for Stuart. Can you just help us understand how difficult it is to implement some of the benefits of the hub-and-spoke model that you guys have got whilst you're seeing volatility in those sampling flow volumes? Are we expecting that you're going to be better aligning the cost base with the volatility that you're seeing exiting the first half?

Question: Jakob Cakarnis - Jarden Australia - Analyst : Yeah. So one quarter really of that disciplined cost management, Stuart, and I guess, then you get maybe a continuation of that, like you say, into the second?

Question: Jakob Cakarnis - Jarden Australia - Analyst : Just while we're sticking on that minerals business, can you just give us an update of where turnaround times are currently, please? And then secondly, just that seniors, juniors mix, please?

Question: Jakob Cakarnis - Jarden Australia - Analyst : Okay. Thanks, Malcolm. And then just while you've got the microphone, I'm just wondering how you're seeing the portfolio balance at the moment in life sciences. Obviously, environment continues to perform strongly. You've given us the capital allocation framework. How do we think about pharma and food in the outlook going forward? Obviously, some of your peers are choosing to exit some of those other verticals. So just wondering how you guys are thinking about your portfolio mix, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2024 / 11:00PM, ALQ.AX - Half Year 2025 ALS Ltd Earnings Call

Question: Jakob Cakarnis - Jarden Australia - Analyst : One final one, just for Stuart. Those corporate costs are a little bit less than what you guys were thinking that you've maintained guidance there or thereabouts for the full year. Will those corporate costs drop away in '26 as you guys get confidence more around the turnaround of Nuvisan? Or are they going to hold these levels, do you think, moving forward?

Question: Rohan Sundram - MST Financial Services Pty Ltd - Analyst : Thank you. Hi, Malcolm. Hi, Stuart. Just a couple for me. Malcolm, at the start of the call, you talked about -- I think you mentioned lab capacity in just in the mineral sense. Can I just confirm -- given we're in a very slow environment, but if you do see improvement, how would you describe the capacity in the labs at the moment? Is it sufficient? Or would you feel the need to invest into more capacity at some point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 18, 2024 / 11:00PM, ALQ.AX - Half Year 2025 ALS Ltd Earnings Call

Question: Rohan Sundram - MST Financial Services Pty Ltd - Analyst : Thanks, Malcolm. That's helpful. And just the last one for me is encouraging to see the talk around improvement in markets for Nuvisan, also momentum in Europe. How can you describe what's driving that or just how you're seeing those markets at the moment? .

Question: Rohan Sundram - MST Financial Services Pty Ltd - Analyst : That's very good. Thanks, Malcolm.

Question: Nicholas Rawlinson - Morgans Financial Limited - Analyst : Hi, Malcolm, Stuart. Thanks for taking my question. Just on geochem, sample volumes were only down 0.5%. It feels like the industry is down much more. So is it safe to say you're taking a fair bit of market share? And if so, is that on site or offsite share?

Question: Nicholas Rawlinson - Morgans Financial Limited - Analyst : Thanks, Malcolm. And just following on from Rohan's question on volume capacity in geochem. Could you give us a indication of how much spare capacity you have right now? Like could you give us a number like 20%, 15%?

Question: Nicholas Rawlinson - Morgans Financial Limited - Analyst : Okay. No worries. Just a last one from me. I know you've given guidance for an improvement in margins ex acquisitions for life sciences and you obviously delivered strongly on that in the first half. But how should we think about improvement in margins for the whole life sciences business? It sounds like Nuvisan's cost out is going well. You're converting slightly ahead of expectations. But if you could help us with sort of your expectations for margins in the whole life sciences business from here, that would be super helpful.

Question: Nicholas Rawlinson - Morgans Financial Limited - Analyst : Right. That's it for me. Thanks, guys.

Question: John Campbell - Jefferies Group LLC - Analyst : Sorry, guys, I think I had it on mute. Yes, just some minerals testing, have you ever really had any genuine forward visibility to sort of identify turning points in sample flow? I mean, like we understand why you're sort of cautious in talking it up. But do you ever get any genuine forward visibility?

Question: John Campbell - Jefferies Group LLC - Analyst : Yes. Okay. Thanks for that, Malcolm. And still on minerals testing, and you've already talked a bit about your mine site presence. But in terms of building out your penetration and the opportunity, if you like, in that subsector, how do you do that without creating excessive competitive pressures when you're seeking to dislodge incumbents?

Question: John Campbell - Jefferies Group LLC - Analyst : Yeah, okay. That's very helpful. Malcolm -- sorry, please go on.

Question: John Campbell - Jefferies Group LLC - Analyst : Yeah. Okay. Well, that was certainly where my question was directed towards, that this is going to be incremental without detrimental to margins, effectively. I mean, I'm putting words in your mouth, but yes. Okay. That's very good. Thanks for that. Last question from me. So core life sciences organic revenue growth of over 9% was obviously strong. Can you sort of split that out roughly by volume and by pricing?

Question: John Campbell - Jefferies Group LLC - Analyst : Yeah, very good. And just an observation, I'd be interested if you've got any comments. It seems like your major global peers sort of take the same approach, cost recovery, margin, slight margin accretion. It's not to say that everyone is acting in concert, but more that everyone's got a sort of a sensible commercial approach on the life sciences side.

Question: John Campbell - Jefferies Group LLC - Analyst : Yeah. Very good. Thank you, Malcolm. Thanks for the questions.

Question: Shaurya Visen - Bank of America Securities - Analyst : Good morning, Malcolm and Stuart. And thanks for taking the questions. Malcolm, first one for you just on PFAS. I'm just curious to get your thoughts on the food and the cosmetic end markets that you spoke about. Just curious, my understanding is, right now, your exposure to those markets is fairly limited. It's more environment. Could you give a sense of that? And as you move forward, right, given the opportunity, you spoke about if you need to break into those markets, what's your strategy? Do you reckon you can do that with your current setup? Or you think you would need some investments? Or how do you think about that? Thank you.

Question: Shaurya Visen - Bank of America Securities - Analyst : Yeah, thanks. Super helpful. Stuart, a quick one for you. Just on your guidance for the full year, right? I was talking about mid-single-digit organic growth. Just curious, could you help us with a few numbers around how should we think for the commodities in the life sciences?

Question: Shaurya Visen - Bank of America Securities - Analyst : Great. Thanks, Stuart. Thanks, Malcolm.

Question: Megan Kirby-Lewis - Barrenjoey Capital Partners - Analyst : Good morning. My first question is just on the pharmaceutical segment. There's a comment in the presentation about excluding the [reassignment] you saw margin compression. Just keen to understand the drivers there and how we should think about that margin outlook in the next, say, 12 months.

Question: Megan Kirby-Lewis - Barrenjoey Capital Partners - Analyst : Great. Thank you. And then just one for Stuart, just in terms of the comments about the focus on returning leverage to the midpoint of the range. Should we interpret that as meaning that there wouldn't be any more acquisitions until that happens?

Question: Megan Kirby-Lewis - Barrenjoey Capital Partners - Analyst : Great. That's clear. Thank you.

Question: Nathan Reilly - UBS Group AG - Analyst : Hi, morning. Just one question on the sample volumes for Minerals, down 0.5%. I was just wondering, can you talk to the growth rates you saw for both upstream and also downstream volumes that drove that net 0.5% decline, please?