Why ALS Limited Is Raising A$350 Million to Transform Its Global Labs

Strategic Capital Raise to Support Growth

ALS Limited, a global leader in testing, inspection, and certification services, has launched a fully underwritten institutional placement to raise A$350 million. The equity raise, priced at A$16.70 per share, represents a 5.3% discount to the company's last traded price and approximately 4.3% of existing shares on issue. This capital injection is designed to fund a significant organic investment of A$230 million to upgrade four major hub laboratories located in Sydney, Australia; Lima, Peru; Bangkok, Thailand; and Prague, Czech Republic.

Alongside the placement, ALS is offering eligible shareholders the opportunity to participate in a non-underwritten share purchase plan (SPP) to raise up to A$40 million. The SPP allows shareholders to acquire up to A$30,000 worth of new shares, providing a pathway for existing investors to maintain or increase their holdings.

Upgrading Global Laboratory Network

The A$230 million investment will be deployed over several years to expand and modernize ALS’s laboratory infrastructure. The upgrades aim to double the floor space of these key hubs, enhance automation, and improve operational efficiencies. These laboratories serve critical roles in the minerals and environmental segments, sectors where ALS holds strong market positions and expects sustained growth driven by industry megatrends such as increasing regulation, energy transition, and digitalization.

Each laboratory upgrade is targeted for commissioning between FY27 and FY30, with expected run-rate earnings contributing to mid single-digit EPS accretion on a pro forma FY25 basis. The investment aligns with ALS’s disciplined capital allocation framework, targeting a minimum 15% return on capital employed (ROCE) in the first full year post-commissioning.

Financial Position and Growth Outlook

Post-placement, ALS expects to maintain a robust balance sheet with a pro forma leverage ratio comfortably within its target range of 1.7 to 2.3 times EBITDA. The company projects A$677 million in undrawn bank capacity immediately after the equity raise, providing flexibility to support future growth initiatives and manage transaction costs.

Beyond the organic investment, ALS plans to deploy remaining proceeds to pursue value-accretive mergers and acquisitions, particularly in the minerals and environmental sectors. The company has a strong pipeline of M&A opportunities in highly fragmented markets, aiming to expand geographic reach and service offerings.

Navigating Risks Amid Global Uncertainties

ALS acknowledges a range of risks that could impact its operations and financial performance. These include macroeconomic challenges such as inflation and geopolitical tensions, regulatory compliance complexities across multiple jurisdictions, and ongoing litigation risks related to its coal superintending and certification unit. The company emphasizes its commitment to rigorous risk management and governance to mitigate these factors.

Investors should also consider the execution risks associated with the multi-year laboratory upgrade projects and the integration of future acquisitions. While ALS has a proven track record of shareholder value creation, the realization of projected returns depends on successful project delivery and market conditions.

Positioned for Long-Term Industry Leadership

With a diversified portfolio spanning commodities, life sciences, environmental, food, pharmaceutical, and industrial materials testing, ALS is strategically positioned to capitalize on multi-decade industry megatrends. Its global hub-and-spoke laboratory model and data-driven innovation culture underpin its growth ambitions and operational excellence.

The equity raise and planned investments reinforce ALS’s vision to be the global leader in scientific analysis, supporting sustainable growth and shareholder returns in a complex and evolving market landscape.