Morningstar | ALS Limited's Earnings Building Momentum on Commodities and Life Sciences Acquisitions.
ALS is one of the world's largest and most profitable testing companies. Its strong brand, skilled and experienced staff, scalability across markets, and strong relationships with large clients are key competitive advantages. We expect consolidation to further strengthen this position, leveraging brand and knowledge across various testing and inspection markets. However capital outlays in establishing a global network of operations and laboratories during the resources boom mean ALS is barely earning its cost of capital on an adjusted basis, and if goodwill is included, returns do not currently meet the cost of capital. This precludes the company from attaining a moat. Historically, about 60% of earnings were tied to volatile commodity markets, but the end of the resources boom and expansion into segments including industrial, environmental, food testing, and asset maintenance reduces this to 30%-35%.ALS is a testing services provider. Co. operates four testing service divisions: Minerals, which provides assaying and analytical testing services and metallurgical services for mining and mineral exploration companies; Life Sciences, which provides analytical testing data to assist consulting and engineering firms, industry, and governments; Energy, which provides services to the black coal and oil and gas industries such as coal sampling, analysis and certification, hydrocarbon formation evaluation services, well services and related analytical testing; and Industrial, which provides the energy, resources and infrastructure sectors with testing, inspection and asset care services.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
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