Slide 1: Third Quarter 2018 Earnings Conference Call/Webcast
Albemarle Corporation Third Quarter 2018 Earnings Conference Call/Webcast Thursday, November 8th, 2018 9:00am ET
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the earnings conference call and discussions that follow, including, without limitation, information related to product development, production capacity, committed volumes, market trends, pricing, expected growth, ear
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: Key Messages
Key Messages Continued double digit growth in adjusted diluted EPS and adjusted EBITDA Bromine Specialties grew adjusted EBITDA >20% Lithium positioned well long-term with significant portion of capacity committed Completed May 2018 accelerated share repurchase (ASR) program Expect August 2018 $250
Slide 5: Third Quarter 2018 Financial Summary
Third Quarter 2018 Financial Summary In millions, except per share amounts Q3 2018 Q3 2017 Variance Net Sales $778 $755 3% Net income attributable to Albemarle Corporation $130 $119 9% Adjusted EBITDA $235 $209 12% Diluted earnings per share $1.20 $1.06 13% Non-operating pension and OPEB items (0.02
Slide 6: Third Quarter 2018 Financial Highlights
Third Quarter 2018 Financial Highlights vs Prior Year Q3 2018 Results Pro-forma1 Net Sales $778 million +7% Adjusted $235 million +18% EBITDA Adjusted $1.31 +31% Diluted EPS 8th consecutive quarter of double digit adjusted EBITDA growth 1Year-over-year calculated against pro-forma Q3 2017, excludes
Slide 7: Segment Quarterly Highlights
Segment Quarterly Highlights TTM1 Pro-forma Net Sales2 ($ in millions) TTM1 Pro-forma Adj. EBITDA2 and ($ in millions) Adj. EBITDA Margin2 $3,500 $1,000 30% $900 29% $3,250 28% $800 $3,000 27% $700 26% $2,750 $600 25% $2,500 3Q17 4Q17 1Q18 2Q18 3Q18 2 3Q17 4Q17 1Q18 2Q18 3Q18 Pro-forma Adjusted EBIT
Slide 8: Third Quarter 2018 Adjusted EBITDA Bridge
Third Quarter 2018 Adjusted EBITDA Bridge Q3 2018: Adjusted EBITDA growth1 of $36 million, 18% YOY ($ in millions) $240 12 235 15 $220 209 15 $200 199 10 <1 5 $180 $160 Q3 2017 Divested Pro-Forma FX Impact Lithium Bromine Catalysts Corporate & Q3 2018 Business 1 Q3 2017 Specialties Other Note: Bridg
Slide 9: Lithium
Lithium Q3 2018 Performance Historical Trend (TTM) ($ in millions) Q3 2018 Q3 2017 ∆ $600 50% Net Sales $271 $269 1% $500 40% Net Sales ex FX1 $271 1% $400 Adj. EBITDA $114 $113 1% 30% $300 Adj. EBITDA ex FX1 $113 <1% Adj. EBITDA Margin 42% 42% (1) bps $200 20% 3Q17 4Q17 1Q18 2Q18 3Q18 Adj. EBITDA M
Slide 10: Bromine Specialties
Bromine Specialties Q3 2018 Performance Historical Trend (TTM) ($ in millions) Q3 2018 Q3 2017 ∆ $300 40% Net Sales $233 $213 9% $250 30% Net Sales ex FX1 $233 9% $200 Adj. EBITDA $79 $64 23% 20% $150 Adj. EBITDA ex FX1 $79 23% Adj. EBITDA Margin 34% 30% 376 bps $100 10% 3Q17 4Q17 1Q18 2Q18 3Q18 Adj
Slide 11: Catalysts
Catalysts Q3 2018 Performance Historical Trend (TTM) ∆ vs $300 40% ($ in millions) Pro-forma2 Pro-forma2 Q3 2018 Q3 2017 Q3 2017 Q3 2017 $250 Net Sales $251 $245 $218 15% 30% Net Sales ex FX1 $251 15% $200 Adj. EBITDA $63 $60 $50 25% 20% $150 Adj. EBITDA ex FX1 $65 29% Adj. EBITDA Margin 25% 25% 23%
Slide 12: Current State of Lithium Hydroxide Under Contract
Current State of Lithium Hydroxide Under Contract As of November 7th, 2018 180,000 160,000 140,000 120,000 Under Negotiation Metric Tons 100,000 80,000 Evergreen Contracts Nameplate 60,000 Right of First Refusal or Option 40,000 80% of Nameplate Committed Minimum Volume Secured 20,000 Long-term Agre
Slide 13: Current State of Lithium Carbonate Under Contract
Current State of Lithium Carbonate Under Contract As of November 7th, 2018 140,000 120,000 100,000 Nameplate Under Negotiation Metric Tons 80,000 Internal Downstream Applications 60,000 and Evergreen Contracts 87% of Right of First Refusal or Option 40,000 Nameplate Secured Committed Minimum Volume
Slide 14: Contract Definitions
Contract Definitions Committed Minimum Volume: The minimum volume that customer has committed to purchase under long-term agreement. Right of First Refusal (ROFR): If customer has demand above the Committed Minimum Volume, it must offer that volume to Albemarle. Albemarle has the option, but is not
Slide 15: Wave I On Track; Wave II Updated; Chile V / VI On Hold
Wave I On Track; Wave II Updated; Chile V / VI On Hold All figures in kt LCE and represent only lithium nameplate conversion capacity On Hold Hydroxide 225 40 Hydroxide Lithium Hydroxide 165 Carbonate 20 Shift Forward 85 40 Lithium Carbonate Carbonate 85 40 Hydroxide Lithium 65 20 Hydroxide Lithium
Slide 16: Chile Regulatory Environment and Status
Chile Regulatory Environment and Status Chile Environmental Chile’s Economic Development The Chilean Nuclear Energy Superintendent Agency Commission (SMA) (CORFO) (CCHEN) Regulatory Authority Enforces operating permit that Authorizes production of lithium Authorizes sales of lithium defines brine pu
Slide 17: Cash Flow and Net Debt
Cash Flow and Net Debt Nine Months Ended September 30 Selected Financial Metrics ($ in millions) ($ in millions) (as of 09/30/2018) 2018 2017 Dividends Paid: $109 Net Cash from Operations $377 $75 Dividend Growth (Y/Y)2: 5% Less: Capital Expenditures (472) (188) Cash Balance: $641 Gross Debt3: $1,69
Slide 18: Full Year 2018 Business Guidance vs 2017
Full Year 2018 Business Guidance vs 2017 Business Outlook Business Environment Unit • FY 2018 Adj. EBITDA expected to increase low 20’s on % basis vs prior year Lithium • Favorable outlook driven by strong volume and price improvements, primarily in battery grade product portfolio • FY 2018 Adj. EBI
Slide 19: Full Year 2018 Guidance On Track
Full Year 2018 Guidance On Track 2018 Guidance FY 2017 FY 2018 FY 2017 vs Pro Forma3 Guidance4 FY 2017 Pro-Forma3 Net Sales $3.07B $3.00B $3.3 – $3.5B 10% – 17% Adjusted EBITDA 1 $885M $859M $990 – $1,020M 15% – 19% Adjusted EBITDA Margin 1 29% 29% 29% – 30% 1 Adjusted Diluted EPS $4.59 $4.40 $5.30
Slide 20: www.albemarle.com
.\ ALBEMARLE’ NYSE www.albemarle.com 20
Slide 21: Appendix
Appendix Non-GAAP Reconciliations and Supplemental Information
Slide 22: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 23: Adjusted Net Income - Pro-forma
Adjusted Net Income - Pro-forma Three Months Ended September 30, ($ in thousands) 2018 2017 Net income attributable to Albemarle Corporation $ 129,745 $ 118,670 Add back: Non-operating pension and OPEB items (net of tax) (1,856) (694) Non-recurring and other unusual items (net of tax) 13,568 2,575 A
Slide 24: EBITDA and Adjusted EBITDA - Pro-forma
EBITDA and Adjusted EBITDA - Pro-forma Three Months Ended September 30, ($ in thousands) 2018 2017 Net income attributable to Albemarle Corporation $ 129,745 $ 118,670 Add back: Interest and financing expenses 12,988 15,792 Income tax expense 33,167 18,495 Depreciation and amortization 49,707 49,895
Slide 25: 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, 2018: Net income (loss) attributable to Albemarle Corporation $ 90,313 $ 67,967 $ 50
Slide 26: 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, 2018: Net sales $ 270,928 $ 232,616 $ 251,139 $ 754,683 $ 23,065 $ 777,748 Net income (
Slide 27: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Continuing Operations Net income attributable to Albemarle Corporation $ 875,306 $ 54,850 $ 135,397 $ 334,525 $ 345,600 Depreciation and
Slide 28: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Lithium Net income attributable to Albemarle Corporation $ 314,707 $ 342,992 $ 373,712 $ 409,185 $ 409,753 Depreciation and amortization 86,409 87,
Slide 29: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Sep 30, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Adjusted EBITDA $ 988,142 $ 235,082 $ 258,562 $ 248,718 $ 245,780 Net income attributable to noncontrolling interests 40,419 13,734 8,225 7,165 11,29
Slide 30: Diluted EPS
Diluted EPS Three Months Ended September 30, 2018 2017 Diluted earnings per share attributable to Albemarle Corporation $ 1.20 $ 1.06 Add back: Non-operating pension and OPEB items (net of tax) (0.02) (0.01) Non-recurring and other unusual items (net of tax) Restructuring and other 0.04 — Acquisitio
Slide 31: 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, 2018: As reported $ 154,565 $ 33,167 21.5% Non-recurring, other unusual and non-operating pension and OP
Slide 32: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Noncontrolling Noncontrolling Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Equity Income Interest Equity Income Interest Lith
Slide 33: www.albemarle.com
.\ ALBEMARLE’ NYSE www.albemarle.com 33