ALS Posts 16% Revenue Growth, Raises $350M for Lab Expansion

Strong FY25 Performance Amid Market Challenges

ALS Limited (ASX: ALQ) has delivered a solid financial performance for the fiscal year 2025, with underlying revenue climbing 16% to nearly $3 billion. This growth was primarily driven by the Life Sciences division, which posted a remarkable 27.4% increase in revenue, while the Commodities segment showed resilience despite softer market conditions. Underlying EBIT rose 4.7% to $515 million, reflecting operational strength, although underlying net profit after tax (NPAT) dipped slightly by 1.4%, impacted by foreign exchange headwinds and increased interest costs linked to recent acquisitions.

Strategic Equity Raising to Fuel Growth

To support its ambitious growth agenda, ALS announced a fully underwritten $350 million equity placement priced at $16.70 per share, representing a modest discount to recent trading levels. Proceeds will primarily fund a substantial $230 million capital expansion across key laboratory hubs in Minerals and Environmental testing sectors, including facilities in Lima, Sydney, Bangkok, and Prague. Additionally, $120 million will provide flexibility for further organic investments and potential mergers and acquisitions. Complementing this, a non-underwritten Share Purchase Plan aims to raise up to $40 million from existing shareholders.

Operational Highlights and Divisional Insights

The Commodities division maintained a stable revenue base with a slight 0.2% increase, supported by a 2.4% rise in sample volumes in the fourth quarter, signaling a recovery in exploration activity. Margins remained resilient, particularly in Minerals where the EBIT margin held above 30% for the fourth consecutive year. Industrial Materials within Commodities showed robust organic growth, notably in Coal and Oil & Lubricants.

Life Sciences continued to be the growth engine, with Environmental testing leading organic growth at 9.8%, driven by strong demand in EMEA, APAC, and Canada. The integration of recent acquisitions York and Wessling is progressing well, though these have temporarily diluted margins. The Nuvisan transformation program is ahead of schedule, delivering cost savings and returning to profitability, with a promising sales pipeline developing.

Capital Management and Future Outlook

ALS’s disciplined capital management is evident in its strong cash generation, with free cash flow up 13.1% to $590.6 million and EBITDA cash conversion improving to 95%. The company’s leverage ratio rose to 2.3x, reflecting acquisition investments but remains within targeted limits. The weighted average debt maturity now stands at 4.7 years, supported by recent refinancing efforts.

Looking ahead, ALS targets organic revenue growth of 5-7% in FY26 with margin expansion, underpinned by ongoing acquisition integration and capital investments. The company plans to relocate its operational headquarters from Houston to Madrid in July 2025, aligning leadership closer to its European workforce base. Despite regulatory challenges in Mexico affecting pharmaceutical testing, ALS remains confident in meeting its FY27 financial targets of $3.3 billion revenue and $600 million underlying EBIT.