Albemarle Corporation · NYSE:ALB
Albemarle — 2019 Bank of America Merrill Lynch Global Agriculture and Materials Conference
34 slides from Albemarle's conference presentation, Feb 27, 2019
Slide 1: Albemarle Corporation Investor Presentation
Albemarle Corporation Investor Presentation February 2019
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 outlook and guidance, conversion capacity, acquisitions and joint ventures market trends, pricing, expect
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: Albemarle Snapshot
Albemarle Snapshot Founded 1887 Financial Highlights4 Twelve Months Ended December 31, 2018 Global Employees ~5,600 Net Sales $3.4B Net Income5 $694M Countries1 ~100 Adj. EBITDA $1,007M Dividend Yield2 1.6% Adj. EBITDA Margin 30% Net Sales by Segment4 Market Cap3 $9.4B Twelve Months Ended December 3
Slide 5: 2018 was another step towards strategy announced in 2017
1 Grow 2 Maintain 3 Assess 4 Invest 2018 was another step towards strategy announced in 2017 Grow Maintain Invest in Lithium to meet market demand Strengthen and make the most of Bromine, • Lithium grew adj. EBITDA 19% Catalysts and other mature businesses • La Negra III / IV expansion on track for
Slide 6: 2018 was another step towards strategy announced in 2017
1 Grow 2 Maintain 3 Assess 4 Invest 2018 was another step towards strategy announced in 2017 Assess Invest Active and continuous assessment of our Maintain a disciplined approach to capital portfolio of businesses allocation • Completed sale of Polyolefin Catalyst & Components • $145 million in divi
Slide 7: Leadership Across Businesses Is Driven By Core Strengths
Leadership Across Businesses Is Driven By Core Strengths Lithium Bromine Specialties Catalysts2 Global Ranking #1 #2 #2 Adj. EBITDA1 $531M $288M $273M Adj. EBITDA Margin1 43% 31% 25% Key Competitors Globally Diversified, Low Leading Technology and Cost Resources; Leading Globally Diversified, Low Ap
Slide 8: Bromine Specialties Snapshot
Bromine Specialties Snapshot Annual Financials Characteristics Twelve Months Ended December 31, 2018 • Mineral extraction and processing Net Sales $918M • Low-cost position on global cost curve Adj. EBITDA $288M • Vertically integrated Adj. EBITDA Margin 31% • Stable and sustainable cash flow Applic
Slide 9: Catalysts Snapshot
Catalysts Snapshot Annual Financials1 Characteristics Twelve Months Ended December 31, 2018 • Leading positions in FCC and HPC catalysts Net Sales $1,074M • Technology and applications knowledge Adj. EBITDA $273M • Focused on value creation for refiners • Long-term, collaborative customer relationsh
Slide 10: Lithium Snapshot
Lithium Snapshot Annual Financials Characteristics Twelve Months Ended December 31, 2018 • Mining and specialty chemicals capability Net Sales $1,228M • Vertically integrated from natural resource to Adj. EBITDA $531M specialty performance products Adj. EBITDA Margin 43% • Low cost position globally
Slide 11: Energy Storage Continues to Drive Lithium Demand
Energy Storage Continues to Drive Lithium Demand Demand by Application 2018 ’18 – ’25 2025 kT LCE Total Lithium Market Demand (kT LCE) Estimate CAGR Forecast Albemarle Estimates 1,400 Electric Vehicles 70 36% 610 BEV & PHEV Other Mobility e-buses, e-trucks & other Energy 25 22% 100 1,200 Storage 201
Slide 12: Lithium Hydroxide Under Contract
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 Agreement Categories
Slide 13: Lithium Carbonate Under Contract
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 20,000 Long-term
Slide 14: Lithium Contract Definitions
Lithium 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
Slide 15: 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 16: Wave I & II Conversion Capacity Plan
Wave I & II Conversion Capacity Plan All figures in kt LCE and represent estimates of lithium nameplate conversion capacity 350 325 - 350 MRL Lithium Hydroxide3 300 Hydroxide 50 Hydroxide 40 - 50 250 Hydroxide 25 Hydroxide 25 Lithium 200 Hydroxide Hydroxide 165 - 175 20 - 25 190 - 215 150 40 - 50 Li
Slide 17: Cash Flow and Net Debt
Cash Flow and Net Debt Twelve Months Ended December 31 Selected Financial Metrics ($ in millions) ($ in millions) (as of 12/31/2018) 2018 2017 Dividends Paid: $145 Net Cash from Operations $546 $304 Dividend Growth (Y/Y)2: 5% Less: Capital Expenditures (700) (318) Cash Balance: $555 Add Back: Pensio
Slide 18: Disciplined Capital Allocation Strategy – Our Priorities
Disciplined Capital Allocation Strategy – Our Priorities Invest for Invest for Maintain Fund Growth in Investment Dividend Growth, High Return Grade Rating Growth Maintain Projects • Long-term Net • Increase dividend Debt to Adjusted annually: 24 • Strategically grow Flexibility Lithium EBITDA1 Targ
Slide 19: Albemarle Is Well Positioned to Maximize Long-Term Shareholder Value Creation
Albemarle Is Well Positioned to Maximize Long- Term Shareholder Value Creation 1 Multi-year journey has resulted in a more focused and growth-oriented portfolio underpinned by energy efficiency macro drivers 2 Clear strategy with the people, cash generation and resources necessary to ….execute the s
Slide 20: Appendix A
Appendix A Guidance as per Q4 2018 Earnings Released February 20, 2019
Slide 21: Full Year 2019 Business Guidance vs 2018
Full Year 2019 Business Guidance vs 2018 As of February 20, 2019 Business Outlook Business Environment Unit • Adj. EBITDA expected to increase slightly more than 20% vs prior year • Favorable outlook driven by volume growth and flat to inflationary price increases Lithium • Increased costs related t
Slide 22: Full Year 2019 Guidance vs 2018
Full Year 2019 Guidance vs 2018 As of February 20, 2019 2019 Guidance FY 2018 FY 2019 FY 2018 vs Pro-forma1 Guidance FY 2018 Pro-Forma1 Net Sales $3.37B $3.35B $3.65B – $3.85B 9% – 15% Adjusted EBITDA $1,007M $996M $1,070M – $1,140M 7% – 14% Adjusted EBITDA Margin 30% 30% 29% – 31% Adjusted Diluted
Slide 23: Additional Inputs for 2019 Plan
Additional Inputs for 2019 Plan ($ in millions) FY 2019 FY 2018 Comments Estimate Depreciation and amortization $201 $210 – $215 Adjusted effective income tax rate 21.6% 22% – 24% Geographic mix results in higher tax rate YoY Corporate Costs $112 $115 – $120 YoY increase due to low bonus payout in 2
Slide 24: Appendix B
Appendix B Non-GAAP Reconciliations and Supplemental Information
Slide 25: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 26: Net Income (loss)
Net Income (loss) Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2018 2017 2018 2017 Net income (loss) attributable to Albemarle Corporation $ 129,596 $ (218,366) $ 693,562 $ 54,850 Add back: Non-operating pension and OPEB items (net of tax) 8,829 (8,455) 3,234 (10,548) Non
Slide 27: EBITDA
EBITDA Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2018 2017 2018 2017 Net income (loss) attributable to Albemarle Corporation $ 129,596 $ (218,366) $ 693,562 $ 54,850 Add back: Interest and financing expenses 12,571 16,455 52,405 115,350 Income tax expense 11,196 378,22
Slide 28: EBITDA - by Segment (twelve-months ended Dec 31)
EBITDA - by Segment (twelve-months ended Dec 31) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Corporate Total Year ended December 31, 2018: Net income (loss) attributable to Albemarle Corporation $ 428,212 $ 246,509 $ 445,604 $ 1,120,325 $ 6
Slide 29: EBITDA - Margin by Segment (twelve-months ended Dec 31)
EBITDA - Margin by Segment (twelve-months ended Dec 31) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Total Year ended December 31, 2018: Net sales $ 1,228,171 $ 917,880 $ 1,101,554 $ 3,247,605 $ 127,186 $ 3,374,950 Net income (loss) attribut
Slide 30: EBITDA supplemental
EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Dec 31, 2018 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Adjusted EBITDA $ 1,006,664 $ 264,302 $ 235,082 $ 258,562 $ 248,718 Net income attributable to noncontrolling interests 45,577 16,453 13,734 8,225 7,165 Equit
Slide 31: Diluted EPS
Diluted EPS Three Months Ended Year Ended December 31, December 31, 2018 2017 2018 2017 Diluted earnings (loss) per share $ 1.21 $ (1.95) $ 6.34 $ 0.49 Add back: Non-operating pension and OPEB items(a) 0.08 (0.08) 0.03 (0.09) Non-recurring and other unusual items (net of tax) Utilization of inventor
Slide 32: 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 December 31, 2018: As reported $ 129,708 $ 11,196 8.6% Non-recurring, other unusual and non-operating pension and OPEB
Slide 33: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended December 31, Year Ended December 31, 2018 2017 2018 2017 Noncontrolling Noncontrolling Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Equity Income Interest Equity Income Interest Lithium $ 22,
Slide 34: www.albemarle.com
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