Slide 1: Third Quarter 2019 Earnings Conference Call/Webcast
Albemarle Corporation Third Quarter 2019 Earnings Conference Call/Webcast Thursday, November 7, 2019 9:00am ET
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the conference call and discussions that follow, including, without limitation, statements with respect to product development, market trends, price, expected growth and earnings, demand for our products, capital proj
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures It should be noted that Adjusted net income attributable to Albemarle Corporation (“Adjusted earnings”), Adjusted diluted earnings per share attributable to Albemarle Corporation, Adjusted effective income tax rates, segment operating profit, segment income, pro-forma net
Slide 4: Third Quarter 2019 Financial Summary
Third Quarter 2019 Financial Summary (In millions, except per share amounts) Q3 2019 Q3 2018 Variance Net Sales $880 $778 13% Net income attributable to Albemarle Corporation $155 $130 20% Adjusted EBITDA $254 $235 8% Diluted EPS $1.46 $1.20 22% Non-operating pension and OPEB items (0.01) (0.02) Non
Slide 5: Third Quarter Key Messages
Third Quarter Key Messages Delivered Solid Third Quarter • YoY growth in adjusted EBITDA across all segments • Reaffirming full year 2019 Adj. EPS of $6.00 to $6.20 for total pro Full year 2019 forma growth of 10% – 14% • In Q2 2019, announced capex reduction of $1.5 billion over next five Continued
Slide 6: Third Quarter 2019 Financial Highlights
Third Quarter 2019 Financial Highlights Q3 2019 Results Q3 2018 vs Prior Year Net Sales $880 million $778 million +13% Net Sales ex FX1 $888 million +14% Adjusted $254 million $235 million +8% EBITDA $263 million +12% Adj. EBITDA ex FX1 Adjusted $1.53 $1.31 +17% Diluted EPS $1.60 +22% Adj. Diluted E
Slide 7: Update on 60/40 JV between ALB and MRL
Update on 60/40 JV between ALB and MRL • Announced close on October 31, 2019 on JV called MARBL Lithium • Access to high-quality spodumene source, strengthening our long-term asset position by increasing capacity to support future demand • $1.3 billion investment • Cash payment of $820 million for 6
Slide 8: Q3 2019 Segment Quarterly Highlights
Q3 2019 Segment Quarterly Highlights TTM1 Pro-forma Net Sales2 ($ in millions) TTM1 Pro-forma Adj. EBITDA2 and ($ in millions) Adj. EBITDA Margin2 $3,600 $1,020 35% $990 30% $3,400 $960 25% $3,200 $930 20% $3,000 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Pro-forma Adjusted EBITDA 2 Pro-forma
Slide 9: Third Quarter 2019 Adjusted EBITDA Bridge
Third Quarter 2019 Adjusted EBITDA Bridge 12% YOY Net of FX ($ in millions) 2 254 5 $250 11 235 10 9 $200 $150 Q3 2018 FX Impact Lithium 1 Bromine Catalysts Corporate & Other Q3 2019 Specialties Net of FX Note: Bridge numbers may not reconcile due to rounding. 9 1Includes the unfavorable out-of-peri
Slide 10: Lithium
Lithium Q3 2019 Performance Historical Trend (TTM) ($ in millions) Q3 2019 Q3 2018 ∆ $600 50% Net Sales $330 $271 22% $500 40% Net Sales ex FX1 $333 23% $400 Adj. EBITDA $127 $114 12% 30% $300 Adj. EBITDA ex FX1 $123 9% Adj. EBITDA Margin 39% 42% (336) bps $200 20% 3Q18 4Q18 1Q19 2Q19 3Q19 Adj. EBIT
Slide 11: Global Lithium Salts Market Price Summary
Global Lithium Salts Market Price Summary High Q3 2018 Q3 2019 Y-o-Y change Q2 2019 Q3 2019 Q-o-Q change $24.45 Carbonate $14.96 $10.75 -30% $12.55 $10.75 -14% (Q4 2017) Asian Metal $22.53 Hydroxide $18.22 $12.21 -33% $14.30 $12.21 -15% (Q4 2017) $16.48 Benchmark Carbonate $14.96 $10.61 -30% $11.93
Slide 12: Bromine Specialties
Bromine Specialties Q3 2019 Performance Historical Trend (TTM) ($ in millions) Q3 2019 Q3 2018 ∆ 40% $300 Net Sales $256 $233 10% 30% Net Sales ex FX1 $258 11% $250 Adj. EBITDA $89 $79 13% 20% $200 Adj. EBITDA ex FX1 $89 14% Adj. EBITDA Margin 35% 34% 87 bps $150 10% 3Q18 4Q18 1Q19 2Q19 3Q19 Adj. EB
Slide 13: Catalysts
Catalysts Q3 2019 Performance Historical Trend (TTM) ($ in millions) Q3 2019 Q3 2018 ∆ $300 30% Net Sales $261 $251 4% $250 25% Net Sales ex FX1 $265 5% $200 Adj. EBITDA $67 $63 7% 20% $150 Adj. EBITDA ex FX1 $68 8% Adj. EBITDA Margin 26% 25% 69 bps $100 15% 3Q18 4Q18 1Q19 2Q19 3Q19 Adj. EBITDA Marg
Slide 14: Cash Flow and Net Debt
Cash Flow and Net Debt Nine Months Ended 9/30/19 Selected Financial Metrics ($ in millions) ($ in millions) (as of 9/30/2019) 2019 2018 Dividends Paid (YTD) $113 Net Cash from Operations $346 $377 Dividend Growth (Y/Y)1 10% Less: Capital Expenditures (608) (472) Cash Balance $318 Add Back: Pension C
Slide 15: Full Year 2019 Business Guidance vs 2018
Full Year 2019 Business Guidance vs 2018 As of November 6, 2019 Business Updated Business Environment Unit Outlook • Adj. EBITDA growth expected to be in the low to mid single digits Lithium • Favorable outlook driven by volume growth and flat to slightly upward pricing • Expect adj. EBITDA margins
Slide 16: Full Year 2019 Guidance vs 2018
Full Year 2019 Guidance vs 2018 As of November 6, 2019 2019 Guidance FY 2018 FY 2019 FY 2018 vs Pro-forma1 Guidance FY 2018 Pro-Forma1 Net Sales $3.37B $3.35B $3.6B – $3.7B 7% – 10% Adj. EBITDA $1,007M $996M $1,020M – $1,060M 2% – 6% Adj. EBITDA Margin 30% 30% 28% – 29% Adj. Diluted EPS $5.48 $5.43
Slide 17: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 17
Slide 18: Appendix: Non-GAAP Reconciliations and Supplemental Information
Appendix Non-GAAP Reconciliations and Supplemental Information
Slide 19: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 20: Adjusted Net Income
Adjusted Net Income Three Months Ended September 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 155,070 $ 129,745 Add back: Non-operating pension and OPEB items (net of tax) (543) (1,856) Non-recurring and other unusual items (net of tax) 8,497 13,568 Adjusted net
Slide 21: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended September 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 155,070 $ 129,745 Add back: Interest and financing expenses 11,108 12,988 Income tax expense 25,341 33,167 Depreciation and amortization 54,487 49,707 EBITDA 246,
Slide 22: Adjusted EBITDA - by Segment (three months ended September 30)
Adjusted EBITDA - by Segment (three months ended September 30) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended September 30, 2019: Net income (loss) attributable to Albemarle Corporation $ 102,136 $ 75,224 $ 5
Slide 23: Adjusted EBITDA - Margin by Segment (three months ended September 30)
Adjusted EBITDA - Margin by Segment (three months ended September 30) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended September 30, 2019: Net sales $ 330,386 $ 256,267 $ 261,346 $ 847,999 $ 31,748 $ 879,747 Net income (
Slide 24: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Continuing Operations Net income attributable to Albemarle Corporation $ 345,600 $ 693,562 $ 695,371 $ 547,108 $ 572,433 Depreciation an
Slide 25: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Lithium Net income attributable to Albemarle Corporation $ 409,753 $ 428,212 $ 413,047 $ 413,058 $ 424,881 Depreciation and amortization 96,798 95,
Slide 26: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Sep 30, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Adjusted EBITDA $ 1,006,420 $ 254,351 $ 261,900 $ 225,867 $ 264,302 Net income attributable to noncontrolling interests 71,730 16,548 20,772 17,957 1
Slide 27: Diluted EPS
Diluted EPS Three Months Ended September 30, 2019 2018 Diluted earnings per share attributable to Albemarle Corporation $ 1.46 $ 1.20 Add back: Non-operating pension and OPEB items (net of tax) (0.01) (0.02) Non-recurring and other unusual items (net of tax) Restructuring and other — 0.04 Acquisitio
Slide 28: Effective Tax Rate
Effective Tax Rate Income before income taxes and equity in net income of ($ in thousands) unconsolidated investments Income tax expense Effective income tax rate Three months ended September 30, 2019: As reported $ 163,723 $ 25,341 15.5% Non-recurring, other unusual and non-operating pension and OP
Slide 29: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended September 30, 2019 2018 Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Lithium $ 31,603 $ — $ 17,901 $ — Bromine Specialties — (16,492) — (13,717) Catalysts 1,633 — 4,180 — Corporate — (56) — (
Slide 30: www.albemarle.com
‘\ALBEMARLE’ NYSE www.albemarle.com