ALS raising $350m to expand 'at capacity' testing hubs globally and push revenue to $3.3b

Diversified testing service provider ALS Limited (ASX: ALQ) is raising $350 million to fund an expansion of its testing hubs globally over the next five years as the group edges closer to achieving revenue of $3.3 billion by FY27.

The Brisbane-headquartered company, which delivers testing, inspection, certification and verification services from more than 370 sites in 65 countries, posted a 16 per cent increase in revenue to $3 billion for the 12 months to the end of March.

The result was driven by solid growth in its Life Sciences division which offset softer growth in Commodities due to lower mineral exploration activity globally.

ALS has announced plans to raise $350 million through an institutional placement and a further $40 million via a share purchase plan for existing shareholders to drive growth over the next five years.

The company plans to apply $230 million of the planned capital raising to fund organic investment in its laboratory network over the next five years and $120 million for growth initiatives, including potential mergers and acquisitions.

ALS has four key hub laboratories globally that the company says are reaching capacity. These comprise the Minerals hub in Lima and Environmental hubs in Sydney, Bangkok and Prague, all of which were approved in the second half of FY25 for the major brownfield capital investment.

The capital raise is priced at $16.70 per share, or a 5.3 per cent discount to yesterday’s closing share price of $17.64.

ALS posted underlying EBIT of $515 million in FY25, up 4.7 per cent and driven by improved margins, but underlying NPAT of $312.1 million is down 1.4 per cent, largely due to the “fluctuating exploration environment” hitting its Commodities business, as well as unfavourable foreign exchange impacts and higher interest costs linked to recent acquisitions.

The most recent acquisitions comprised US-based York Analytical Laboratories and Germany’s Wessling Holding GmbH & Co, which helped drive ALS revenue to $3 billion in FY25. ALS has previously set a target of achieving $3.3 billion in revenue by FY27.

ALS Limited CEO Malcolm Deane describes the FY25 performance as a “solid result” with Commodities showing resilience in a recovering market and robust performance from the Life Sciences businesses.

“While organic growth faced subdued volumes and market pricing pressures through the year, these abated late in Q4 as volumes improved,” says Deane.

“Both high performance methods and mine site testing continue to grow at accelerated rates. Industrial Materials delivered strong results across all businesses, in particular Oil & Lubricants and Coal.

“Within Life Sciences, Environmental again delivered leading organic growth of 9.8 per cent reflecting the continued strength, operating scale and successful strategy execution of the business.”

Deane notes that the newly acquired York and Wessling businesses are performing well, although they are proving to be margin-dilutive in the short term.

From July this year, ALS plans to shift its operational headquarters from Houston in Texas to Europe, where about 40 per cent of its workforce is based. That will see Deane and CFO Stuart Hutton relocate to Madrid in Spain.