ALS Limited (ALQ) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to ALS Limited FY '24 Results Briefing Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Malcolm Deane, CEO and Managing Director. Please go ahead.

Thanks, Manny, and good morning, and thank you all for taking the time to join today's briefing. I am Malcolm Deane and I'm here with Stuart Hutton, CFO of ALS. Today, we will outline our results for the financial year ending in March 31, 2024, with a presentation that will run for approximately 30 minutes and we will follow up by a Q&A session. So I would like to start by thanking all of the colleagues in ALS for their continued support and collaboration underpinning our results today. In ALS, we have embedded a safety-first culture, and we see that it's driving strong safety results. For example, this last year, our TRIFR showed the lowest rates ever recorded by ALS, while our lost time injury frequency rate increase, we are leading the industry in this metric and remain focused on continuous improvements in our performance in the year ahead. At ALS, our purpose is to help make the world a better place through since, assurance and sustainability, a delivered strategic choice to integrate sustainability into our fundamentals, targets, developments and decision-making. I'm proud of the progress that we have made this year in line with our sustainability strategy pillars, people, planet, community and business practices. In fiscal year '24, we maintained carbon neutrality for scope 1 and scope 2 emissions, reduced plastic waste and expanded our use of solar energy. We extended our partnership with communities, charitable partners, diversity organizations and local suppliers, and we reaffirmed our commitment to a diverse, inclusive and safe work environment through dedicated programs and increased collaboration opportunities. We are committed to creating positive social and environmental value for communities while delivering operational and economic value for our clients and stakeholders. In ALS, we continue delivering on our objectives from revenue growth to leading industry margins and overall to shareholder return. Our business delivered overall revenue growth of 6.8%, with low single-digit organic growth despite a challenging market and slowdown in mining exploration and overall pharmaceutical activities. The latter two were primarily driven by a lack of funding for exploration and drug discovery. The company continues to deliver very solid besting sector margins, recording a 19% EBIT margin for fiscal year '24. This was supported by the strong performance of our leading environmental business as well as food and industrial materials and the resilient performance of the mineral business, which delivered an EBIT margin of 32%. Our cash generation, balance sheet and liquidity remains strong, supporting the implementation of capital framework and continued growth journey as we move forward. Overall, underlying net profit after taxes was $316.5 million. Reflecting the positive underlying NPAT results, the Board has declared a final year dividend of $0.196 per share, which equates to a payout of 60% of our underlying NPAT. current performance and confidence in the future have supported the Board's decision to approve dividends at the top of the range. Statutory impact was $12.9 million. The main delta to the underlying NPAT was the impact of the write-down and related restructuring cost of Nuvisan. Stuart will give you further details in this regard later in the presentation. So now moving to the highlights of each of the divisions for fiscal year '24. Starting with the Commodities division, in Minerals, we saw a modest revenue decline of 2.4% due to subdued conditions and under adverse FX impact in emerging markets. Margins in minerals continued to demonstrate their resilience staying above 30%. Industrial Materials performed strongly with substantial organic growth from a market share gain at 13.2% and margin improvements. Combined, the margin in the commodities business was down 103 basis points to 29.3%. In Life Sciences, environmental organic revenue was up 8.6% with growth outpacing the market and continued margin improvement supplemented by several bolt-on acquisitions. In food, organic revenue was up 6.5%, with continued volume and price recovery, supported by an improved mix of work and cost control measures. Pharmaceutical organic revenue decreased by 11.5%, impacted by reduced funding for discovery phase drug development, which resulted in margin compression. Excluding the impact of Nuvisan, pharmaceutical organic revenue decline was only 4.6%. Combined, the operating margin in the Life Sciences business was down 42 basis points to 15.1%. So I will now expand on our commodity distribution results, which demonstrates resilience in what continues to be a soft market. Total revenue for commodities was flat and the underlying EBIT margin declined to 29.3%. But pleasingly, the minerals margin was above 32%, reflecting reduced cyclicality, further market share expansion, flexibility of the cost base and increased uptake of newer, higher value-add services. We continue to strengthen our leading position in minerals and deliver stable margins despite the slowdown in exploration spending. During fiscal year '24, we increased market share and long-term growth and profitability is driven by our world-class hub-and-spoke model, excellent client service offering, increased uptake and penetration of our high-performance testing methods and the acceleration of our mine site operations. Global Electrifications continued to drive revenue growth opportunity in our Minerals Group. Reduced sample volumes were partially offset through dynamic pricing, cost management, capacity planning and downstream growth. After an incredible strong previous 3 semesters, metallurgy organic growth slowed down as projected in our November outlook statement, however, still delivering high single-digit organic growth and showing a solid pipeline with good growth opportunities in green metals connected services. And finally, industrial materials had a solid result, supported by strong global commodity trading and in our oil and lubricant business, we saw volume and price growth in the major markets we operate in, APAC, North and Latin America. Moving now to the Life Sciences portfolio, which saw double-digit revenue growth. The total revenue for the Life Sciences grew by 12.4%, and the underlying EBIT margin was 15.1%. Our Life Sciences business are aligned with the industry mega-trends, including increased regulation enforcement and outsourcing, emerging contaminants such as PFAS and a greater focus on health and nutrition. Strong performance by the environmental and food business were offset by challenging market conditions for the pharmaceutical business, both from a lack of funding for discovery phase research and some efficiencies issues, which impacted revenue and margins of the wider portfolio. As you know, the TIC market continues consolidating and adding less, we have deployed inorganic growth capital to strategically support our portfolio development either geographically or from a service standpoint. During fiscal year '24, we made 8 strategic acquisitions for a total consideration of EUR 76 million, which are expected to generate an additional $152 million in the following fiscal year. Roughly half of the capital deployed was towards the environmental portfolio. While most of these acquisitions are smaller bolt-ons, they are aligned with our strategy and expanding our global reach in the environmental business as well as further adding to regional strength of our Pharmaceutical business. Growth capital is being allocated in line with our recent refreshed capital allocation framework, which I will also outline later in the presentation. Post reporting period, we also made 2 additional acquisitions of environmental business, Europe and Wessling, which either adds to our presence in existing geographies with New York in the Northeast U.S., complementing our existing footprint or Wessling, which enables us to enter new geographies and capabilities in Europe, specifically Germany, France and Switzerland. Our focus is now embedding in the recent acquisitions and the Nuvisan transformation program where integration is already underway. And this gives me the seque to touch on the Nuvisan transformation plan in more detail. ALS took full control and ownership of Nuvisan on the 31st of March 2024, acquiring the remaining 51% stake for new cost. The transformation program commenced immediately following. We are targeting cost reduction of approximately EUR 25 million per annum over a 2-year period with associated cost to implement of approximately EUR 20 million. Our new ALS management team has been established and is in place to oversee the transformation program. The immediate priorities are directed towards driving operational improvements, footprint and headcount, distance development and marketing efforts. We are pleased to see some green shoots on the CRO market recovery. Biotech appear to be moving back into favor within capital markets with biotech funding improving significantly in the first quarter of 2024. We are optimistic that the long-term industry fundamentals for discovery-based drug development remain intact. There also continues to be an increased interest in further outsourcing to third parties to advance their programs and speed to market, which provides further opportunities for ALS. And now I will provide a short update on the integrations of the 2 additional acquisitions we made post the fiscal year '24 financial year. As we informed, York accelerates the ALS expansion into the Northeast U.S. environmental market, particularly in PFAS testing. The acquisition was effected from the 1st of April 2024 and the integration and transition of York to the ALS Way is progressing well with a focus on standardized methods, equipment and systems. There is a good early collaboration in sharing best practices between the ALS and Yorkies. Client service and relationships are being consolidated as appropriate at all sites. Second, Wessling provides an immediate pathway and footprint into the large German and French environmental and pharmaceutical markets. Regulatory approvals of acquisitions are progressing as planned and integration planning is underway. The acquisition of Wessling remains on track to close in June 2024. In the short term, we are focused on embedding the recent acquisition to best align with ALS Way. And now I want to take a few moments to summarize what has been delivered in relation to the fiscal year '24 objectives across each of the business strings that were communicated to you in November 2023. Despite the mixed market conditions in fiscal year '24, we have delivered a solid result with most businesses delivering on their objectives presented to the market. We continue to be a global market leader in mineral testing and to grow our market share across the total value chain. We are seeing sustained client demand for additional high-value services, including the high-performing methods. Metallurgy recorded high single-digit organic growth and margin improvements, and we are pleased with the resilience and reduced cyclicality now built into the minerals portfolio. As mentioned earlier, margin has been maintained above 30% since fiscal year '22. Further details about the business resilience have been included in the appendix of this presentation. Industrial Materials, inspection and core volumes continue to improve year-on-year, and there's a solid organic market share growth and margin improvements in oil and lubricants. The environmental business has delivered solid organic growth and market share expansion in key geographies, both organic and through acquisitions. Margins have expanded in environmental and disciplined price management is resulting in improved efficiencies. Food also saw mid- to high single-digit organic growth and margin expansion with further consolidation of our operating model in the leading regional business, while still facing a challenging market, pharmaceutical improved in the second half of fiscal year '24 compared to the first half with volume and margin improvement record. So with that, I will now hand it over to Stuart, who will take you through the financial performance of the business during the year. Stuart?

All right. Thanks, Malcolm, and good morning, everyone. I will now present the highlights of our FY '24 financial performance. In short, ALS delivered solid financial results amid mixed market conditions. The group maintained a market-leading operating margin of 19%, which is in line with the group's targeted floor margin. This represents a decline of 125 basis points from the prior year, which is both a mix issue from softness in minerals volumes and efficiency issues in the farm. Underlying EBIT was $492 million, which is in line with the prior year, and underlying NPAT was $316.5 million, which is also consistent with the prior year and the revised guidance range communicated at the end of March 2024. Statutory NPAT decreased to $12.9 million primarily due to the write-down of restructuring costs associated with Nuvisan and other one-off items, including the ongoing ERP implementation program. Moving to revenue. Total revenue for the business reached $2.6 billion, a 6.8% increase compared to FY '23, of which 2.2% was organic, 2.2% was from acquisitions and 2.4% was from positive FX impact largely from currencies in our larger markets, strengthening against the Australian dollar. Organic growth resulted from sustained global demand for government services, further demand for value add services and growth of mine site production testing in the Minerals business, growth and recovery of the food business and improved conditions with the Industrial Materials business. These were partially offset by macroeconomic challenges impacting client funding for mining exploration and discovery phase pharma research and the related slowing -- slowed discovery phase productive development in pharmaceutical. Scope growth of 2.2% was supported by prioritizing risk-weighted capital to protect, extend and expand the portfolio. Shifting now to operating margins on Slide 16. As noted early, the group margin declined by 125 basis points to 19%. Underlying group margins contracted by 81 basis points at constant currency, reflecting the underperformance of pharmaceutical, the expected dilution from some acquisitions, which are early in their integration phase, increased corporate costs and lower volumes in minerals. Life Sciences and commodity tradings are contracted by 43 points and 45 points, respectively. The group FX impact of 44 points was based largely due to unfavorable currency impacts in emerging markets within the commodity business. Moving to cash flow on Slide 17. Net working capital proportionally increased with revenue growth to $58 million in FY '24. Some of the increase in working capital related to timing issues associated with customers taking advantage of deferring payments to us to April with each per falling line at the end of March. This is a timing difference, which will reverse in FY '25. Capital expenditure increased to $152 million with approximately $100 million of its amount directed to our ongoing investment in organic growth and efficiency in line with our value creation framework. Free cash flow increased by 5.7% to $286.5 million. And while still at a healthy level, EBITDA cash conversion declined to 93%, but remained above the group target of 90%. Moving to the next slide, which is on capital allocation discipline, which is Slide 18. This chart aims to illustrate how the balance sheet and targeted leverage range has supported the growth of the business as well as return to shareholders over the last 5 years. The group continued to demonstrate disciplined and proactive approach to capital allocation, in line with the refreshed value creation framework, which Malcolm will outline shortly. Through this framework, the group has successfully deployed growth capital, both organic and through acquisitions. With the exception of the investment in Nuvisan in 2022, the majority of growth capital has been allocated to our core businesses, environmental and minerals. The group has consistently returned capital to shareholders with dividends at the top of the 50% or 60% payout range. In addition, the Board has reactivated the dividend reinvestment plan with these results providing future capital flexibility for the business. Leverage is currently at the midpoint of the target range of between 1.7 to 2.3x. We think with the cash generation ability of the business, this leverage range continues to be appropriate. After completing the acquisition of the 2 environmental businesses York and Wesslink, leverage will be at the top of the targeted range. The group is committed to reducing leverage to the midpoint of the target gearing range over the next 12 to 18 months. So the balance sheet on Slide 19, through 31 March '24, the balance sheet remains strong with a leverage ratio of 2x with over $530 million of available liquidity, including $346 million or $350 million of approximately of undrawn bank facilities. In April '24, the group entered into a new additional 3-year bilateral revolving bank facilities totaling USD 300 million or a roughly $450 million. These new facilities will be used to refi as current bank debt maturing in May and also fund the acquisitions of York and Wessling. This refinancing will increase overall liquidity and remove any near-term refinance risk. The slide shows the company's debt maturity profile pre and post refining -- pre and post the refinancing as of May '24. The weighted average debt maturity will increase to 5 years post refinance with the average cost of approximately 4.3%. And post acquisition of Wessling, available undrawn bank facilities will be approximately $375 million. Now moving to corporate costs and how leases have evolved. As noted earlier, the group recorded an increase in corporate costs in FY '24 to $54 million. This increase was primarily driven by higher people costs associated with wage increases in line with CPI, the investment in alerting and development of our talented people and long-term incentives for key staff. There's also been some expanded investment in functional support in key areas such as strategy, clients and procurement, which will partially offset in FY '24 by lower sustainability-related costs due to the timing of purchase of carbon credits in FY '23, which were 0 in FY '24. Corporate costs are expected to be around 2.25% of revenue as you move forward and sustainability costs normalize and resources are added to support integration and other key functions provided by the corporate center. With that, I will now pass back to Malcolm.

Thanks, Stuart. So let me spend some time talking about our progress towards our long-term vision, how we are placing in relation to meeting the fiscal year '27 targets and what we are focused on in fiscal year '25. Our innovative data-driven approach has provided and continues to provide growth opportunities. Three standout areas of our operations are supporting this journey and helping us build and refine our approach to supporting our clients. First, our industry leading and in many cases, provisory testing the parities that provides our clients to the unique service offering. Second, the advanced global systems we have developed and deployed including our leads that provides our clients with unique and valuable data insights. And third, our focus on innovative technology and reliable data has been supported by our development of AI and machine learning capabilities, both organically and through targeted acquisitions. So having made significant strength in the execution of our strategy, we are well positioned to invest in and shape the business for the future. This includes reshaping the portfolio through a rationalization to ensure we are prioritizing the key components that will support our long-term growth and including both organic and inorganic growth capital to capture opportunities, complete acquisitions and drive continuous implementation of the ALS Way. Our fiscal year '27 strategy has served us well. However, with a growth and improvement focused mindset, we have determined that it was time to refresh our approach with a view into refining what has delivered success while at the same time, fine-tuning some elements to drive the business forward. With that in mind, our new framework is supported by a newly formed executive team that joins together both long-term and new leaders. Our ongoing focus to improve integration of acquisitions, enhancements to our operating model that will see us extract margin improvements from some underperforming businesses and some margin uplift on already industry-leading margins. A consistent approach to marketing to clients, which includes dynamic pricing, scaling distances in minerals and environmental and regionally strong businesses in Life Sciences to deliver solid organic growth and an updated approach to capital allocation or as we refer to it the value creation framework, which I will explain shortly. Going forward, we are replacing, providing specific underlying NPAT guidance with providing building costs through a combination of annual and multiyear target metric. This is similar to the approach of our peers and many ASX-listed companies. When we are changing our approach to guidance, it is important to reiterate that our existing financial targets for fiscal year '27 remains unchanged, and we are on track to achieve them. So now moving to the next slide, which outlines our first value question framework is Slide 24. We believe this framework provides the fundamental basis to help us deliver on our ambition of top parts and shareholders return in the medium term. The first layer at the top explains a refocused and new risk-weighted approach to growth capital allocation. The capital allocation compresses organic, including ongoing implementation of the ALS Way and investments in innovation and inorganic. We expect our portfolio to unlock additional value and maximize return for our shareholders. Investments close to the quarter will be giving preference with higher returns expectations on many investments that are investments just outside or adjacent to the core. Overall, we are targeting that discipline and successful implementation of the refresh strategy will support mid- to high single-digit organic revenue growth and steady improvements in terms of margin as we leverage our scale and deliver benefits from the ALS way, which includes ongoing investments in innovation. The second level explains how the new strategy approach connects with the capital allocation of the company. When assessing work to invest in our portfolio, we have used the lenses of market attractiveness, competitive position and growth potential, and it became clear that parts of our portfolio has benefited from market leadership positions in key markets, either globally or regionally. In this regard, we have identified 4 growth pillars of offices. First, protecting and extending leadership positions in key dustiness through a combination of rapid organic growth and inorganic expansion. Second, expanding our service offering and market share in selected global and regionally high-growth markets to create leadership positions where the business already benefits from a strong presence. Third, we will selectively invest appetite into markets through organic growth and M&A that can expand our scaler capabilities. And lastly, we will seek to optimize value from underperforming businesses, consistent with how capital is allocated to extract maximum returns. In terms of returns with this new capital allocation strategy, we are targeting a return on capital employed of 15%. This is measured as EBIT over average capital employed in the third and fifth full year post investment for organic and inorganic capital, respectively. And finally, on the third level, this section explains the company's overall growth profile and shareholders return. Through a combination of returns on organic growth and continuous improvements of the existing asset base and improving returns from integrations from any M&A activity, we are expecting ROE in the high teens or abate to continue the midterm. As mentioned, we are targeting that the refresh strategy will support mid- to high single-digit organic revenue growth, net improvements in terms of margin and strong ongoing cash generation. When combined with a sensitive targeted gearing range of between 1.7 and 2.3x, ALS will have the balance sheet power to invest to deliver on its growth ambitions and also returns to shareholders. So now moving to the perspective for the upcoming fiscal year on Slide 25. ALS remains well positioned to capture positive long-term industry mega-trends with strong confidence to execute on near-term growth conditions and operational improvements. reflecting the strength of the ALS portfolio, the group is targeting mid-single-digit organic revenue growth in mix market conditions. This is supported to ongoing uncertainty in global markets in which ALS operates. On operating margins, the group is expecting modest improvements in margin for the wider Life Sciences division, excluding the initial impact of the York and Wessling acquisitions, which as noted earlier, on a combined basis with adversely impact margins. Continued margin resilience in minerals and environmental is expected. Bolstering of some corporate functions and the sustainability agenda will see increase in corporate costs, but still expect them to operate at approximately 2% of revenue. On capital allocation and in line with the value creation framework, risk-weighted growth will be prioritized for the environmental and Mineral business. Our focus for the short term is on the integration of recent acquisitions and the new vision transformation program. As Stuart noted, leverage will be at the top of the targeted range cost and completion of the Wessling acquisition. There will be a period of consolidation in fiscal year '25, and we are focused on returning leverage to midpoint of the targeted range of 1.7 to 2.3x. So before I open the discussion for questions, I would like to thank the entire team of ALS for their support over the year. And with that, I will now open the floor for discussion and questions. Thank you very much.

[Operator Instructions] The first question comes from Jakob Cakarnis of Jarden Australia.

Malcolm, Stuart, just wanted to skip to Slide 42, if I could, where you've got the sampling flow performance for us. It sounds as though the second half obviously much better than the first in terms of sampling flows. If I look at the chart on the 2-week growth trend, it looks like it turned positive as you exited the end of FY '24. Can you just talk to some of the dynamics that you saw of the sample flow trends just through the second half, please?

We made an effort to put it at the end of the presentation, but what's the first question so thank you. And yes, I think your comment is right. We've seen some improvement at the end of the fiscal year, whether that's enough for us to call a trend, I think it's too early. In ALS, in the mineral business, we are focusing, as we said during the presentation, capturing market share, and we were able to expand market share both in exploration and downstream. We believe that, that will continue creating resilience in terms of margins for the New York and Asia. So to your point, to your question, yes, we have seen that same volume slowly improving, but it's not something that we can call whether the trend has changed or not. What we can tell to the market that we are working towards continued receiving it in terms of margin for that overall Minerals Group.

And just one for Stuart, please. Slide 19, you've given us what looks to be a bridge of net interest costs into FY '25. You've said $55 million from FY '24 and add on the interest cost associated with York and Wessling. York is an obvious one because you get that at the start of a new fiscal period, but it sounds like Wessling might be a little bit delayed. Am I right in thinking that York and Wessling combined would be around $9 million to $10 million incremental interest costs? Or do I need to consider timing there, please?

Jakob, look, I think, yes, I mean, you're right. We've set out to try and help you and it sounds like you've read the release perfectly. On Wessling, we expect that transaction to complete at the end of June, which is what we said when we announced it. I think that not perhaps alluded to that the good news is we have already got some of the approvals from the German authorities. We've still got the French authorities to go, but we would expect to get those in early June, and therefore, we will conclude the transaction at the end of June. And as I said, your math is there little bit correct.

Our next question comes from Rohan Sundram from MST Financials.

Malcolm and Stuart, just one question for me around where do you see the best opportunities for operational improvement and efficiencies just within the core business outside of Nuvisan.

Thanks, Rohan. Great question. So let me start with the core businesses, we always see space for improving margins and operating leverage in those businesses. And I think that a clear example of that has been the environmental business that during the years where we've been building the global business and connecting the business into the regional hub-and-spoke model, we've been able to extract better margins every year. And we expect that to continue in the medium term. Outside the core, clearly, we signal that the food and the Industrial Materials divisions have shown very positive margin improvements within the industrial materials or the divisions were positive. And I would say that the oil and lubricants is showing a similar sign for this year as well. And outside those divisions, clearly, the area of focus of margin improvement is the what we call the underlying pharmaceutical divisions that they faced during last year, a little bit of the slowdown after COVID and it impacted, especially in the first half, we've seen margin improvement -- sorry, volumes improvements on the second half. That's why we call that, that division had a negative organic growth of around mid to low single digits. And a big area of focus is how we continue improving the margins of that division that is starting already on the second half of the year. I don't know Rohan, if that answers your question or you have a follow-up.

That's very helpful.

Thanks for the question.

[Operator Instructions] Our next question, we have John Purtell of Macquarie.

Malcolm and Stuart, just a couple of ones I can. Just -- you've obviously guided for mid-single-digit organic revenue growth for the year ahead versus the 2% in '24. What are the key drivers, Malcolm, as that sort of stronger -- slightly stronger expected growth? And would it be fair to say that, that guidance for mid-single digit is broadly spread across -- or evenly spread across Life Sciences and commodities.

Thanks, John, for the question. I was hoping that you address the question for Stuart, but I think it seems that I have to answer it. So what we're expecting is a continued momentum of the core divisions. Obviously, there's higher revenue growth expectations in the Life Sciences division with ongoing momentum of environmental and food and the recovery of the pharma business that started in the second half. In terms of minerals, it's hard for us to really forecast revenue growth and the -- where are we in terms of the exploration funding. Our efforts is to continue expanding downstream. And I think one of the stats that we included in the package shows that right now, the non-exploration activities in Minerals represents 25%, and that's a growth from the last couple of years. but also the resilience of the margin since 2020 onwards that were higher than 27% in distinctive where the cycle was. To your question on organic growth, clearly, the big areas of focus are life sciences and within the industrial materials, we have very positive momentum in inspection, and we are very pleased on seeing the performance of the oil and lubricant division as well.

And just a follow-up in relation to Nuvisan, the EBIT was essentially breakeven for the year. It looked like it was similar to the first half. Was that sort of in line with your expectations? Or is that better? And just the outlook there for Nuvisan in '25? I know you referenced some improvement in funding markets in biotech?

So I will start. I think that Nuvisan was in line with the expectations. And last year, when we did the strategic assessment, it gave us a very good view of the business and a better understanding of the areas of opportunities. The focus right now, journeys both on the business development and revenue growth of that business. I think is a high-quality business for the German market is highly regarded with a very high sensitive value. In terms of biotech funding, we have seen an improvement in how fast that money is being deployed is still to be seen. But it was not a surprise that we said it was in line with expectations. Stuart, do you want to complement?

Yes. I think the only other thing I'll add, John, is we've been quite public with the expectations we have for our transformation program on Nuvisan. I think what we just ask is we will keep the market at home, just give us a bit of time. So I think we'll give you a numeric update at the half year at the AGM and be more qualitative rather than a quantitative update just because some of these things take a little bit of time. But I think what I'd say is perhaps to show a little bit of that, we've started off on track with where we expect it to be. So at this point, it's looking in line with where we sit. So that's a good start.

And John, just a final comment on that you couldn't expect I think it has always been a very open and transparent communications in line with the transformation plans, the integrations of the 2 acquisitions that we announced and how we progress with that. So following what Stuart said, you can continue expecting a very open communication with us -- from us with the market in regard of those transformation plans and integration plans.

Our next question comes from Peter Drew of Carter Bar Securities.

Malcolm and Stuart, just with respect to the commodities business, you've guided to resilient margins for the FY '25. I'm just wondering what your revenue growth assumptions are to achieve that? And also you also flagged a higher mix of senior clients within geochem. I'm just wondering how that plays into the margin mix as well for FY '25?

So let me try to answer that question, Peter. Thanks for the question. I don't want to be repeating and some worry, but it's hard for us to really forecast and give a clear number expectations in Minerals. I think you pointed out very well that the resilience of that business, it's not something that we take lightly bigger because that's come with a couple of things that we want to highlight again. First was I think we pointed out in the presentation what's the year with the fastest market share growth, both in exploration and downstream. Clearly, the conditions were subdued, as we pointed out in March, and we've seen with sample volumes that we included on the slide deck. But that shows how strong the service aspects of the business and how we can be leaders of the business in a very volatile environment. So for us, the resilience of the business is something that really helps put us hoping into the performance of the business. In terms of mix, clearly, we've seen an increase of majors compared to juniors and we've seen the funding of juniors not being necessarily green last year, and we were slower. And I think that we've seen some of that data also on the last Q of the previous fiscal year. But majors continue bringing new services. We continue having very healthy windows ratio. In terms of the mix of elements, we've seen that the mix is still in line with what we present in fact in November that is gold and battery metals being at a similar percentage. Obviously, that's very a little bit month by month. But overall, a similar mix in terms of elements. The biggest change in terms of mix is from a client perspective that we've seen that majors uptake, especially of the high-performer methods and the new manager methods that we just recently released. Stuart, do you want to complement?

No, nothing else.

And just my follow-up question, just in terms of the cost out of Nuvisan. I'm assuming that, that $25 million year 2 is a run rate into year 3. Is that correct?

Yes, Peter, that is right. That is -- well, we expect those -- I mean that won't happen this way, but in terms of trying to help you populate model, assume that it will happen progressively or evenly for a 2-year period, and that $25 million would be the fee impact rate into year 2.

Thank you. This concludes the Q&A session. I will now hand back for -- to Malcolm for closing remarks.

Thanks, Manny. And I want to thank again to the colleagues of ALS for their continued support, the continued support of the Board of Directors and obviously for the shareholders. And all of you that attended the call. Thank you very much, and see you next time.

This concludes today's conference call. Thank you all for participating. You may now disconnect.