Albemarle Corporation · NYSE:ALB
Albemarle — Q4 2018 Earnings Presentation
34 slides from Albemarle's earnings presentation, Feb 21, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call/Webcast
Albemarle Corporation Fourth Quarter 2018 Earnings Conference Call/Webcast Thursday, February 21st, 2019 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 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: Fourth Quarter and Full Year 2018 Financial Summary
Fourth Quarter and Full Year 2018 Financial Summary (In millions, except per share amounts) Q4 2018 Q4 2017 Variance FY 2018 FY 2017 Variance Net Sales $922 $858 7% $3,375 $3,072 10% Net income (loss) attributable to Albemarle Corporation $130 ($218) $694 $55 Adjusted EBITDA $264 $246 8% $1,007 $885
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 • $145 million in divi
Slide 7: 2018 Financial Highlights – Fourth Quarter and Full Year
2018 Financial Highlights – Fourth Quarter and Full Year ($ in millions except EPS) TTM2 Pro-forma1 Net Sales ($ in millions) 4Q vs Prior FY FY vs Prior $3,500 2018 Year 2018 2018 Year (Pro-forma1) (Pro-forma1) (Pro-forma1) $3,250 $3,000 Net Sales $922 11% $3,375 $3,348 13% $2,750 $2,500 4Q17 1Q18 2
Slide 8: Fourth Quarter 2018 Adjusted EBITDA Bridge
Fourth Quarter 2018 Adjusted EBITDA Bridge Q4 2018: Adjusted EBITDA growth1 of $28 million, 12% YOY ($ in millions) $300 4 7 264 24 8 $250 246 236 2 10 $200 $150 Q4 2017 PO Catalysts Pro Forma1 FX Impact Lithium Bromine Catalysts Corporate & Q4 2018 as reported & Q4 2017 Specialties Other 1 Componen
Slide 9: Full Year 2018 Adjusted EBITDA Bridge
Full Year 2018 Adjusted EBITDA Bridge FY 2018: Adjusted EBITDA growth1 of $147 million, 17% YOY ($ in millions) $1,100 996 11 1,007 $1,000 31 7 24 80 $900 885 848 6 37 $800 $700 $600 $500 FY 2017 PO Catalysts Pro Forma 1 FX Impact Lithium Bromine Catalysts Corporate & Pro Forma 1 PO Catalysts FY 201
Slide 10: Lithium
Lithium Q4 and FY 2018 Performance Historical Trend (TTM) 4Q ∆ 4Q FY ∆ FY $600 45% ($ in millions) 2018 2017 2018 2017 Net Sales $342 18% $1,228 21% 40% $500 Net Sales ex FX1 $343 18% $1,211 19% 35% Adj. EBITDA $145 22% $531 19% $400 30% Adj. EBITDA ex FX1 $143 20% $527 18% Adj. EBITDA Margin 42% 13
Slide 11: Bromine Specialties
Bromine Specialties Q4 and FY 2018 Performance Historical Trend (TTM) 4Q ∆ 4Q FY ∆ FY $300 40% ($ in millions) 2018 2017 2018 2017 Net Sales $239 9% $918 7% $250 30% Net Sales ex FX1 $240 10% $912 7% Adj. EBITDA $70 9% $288 11% $200 20% Adj. EBITDA ex FX1 $71 11% $283 9% Adj. EBITDA Margin 29% (4) b
Slide 12: Catalysts
Catalysts Q4 and FY 2018 Performance Historical Trend (TTM) 4Q ∆ 4Q FY FY ∆ FY $300 40% ($ in millions) 2018 2017 2018 2018 2017 2 2 2 Pro-forma Pro-forma Pro-forma Net Sales $305 7% $1,102 $1,074 11% $250 30% Net Sales ex FX1 $306 7% $1,094 $1,067 10% Adj. EBITDA $79 3% $284 $273 11% $200 20% Adj.
Slide 13: Cash Flow and Net Debt
Cash Flow and Net Debt Twelve Months Ended December 31 Selected Financial Metrics ($ 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 14: 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 15: 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 16: 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 – $1,140M 7% – 14% Adjusted EBITDA Margin 30% 30% 29% – 31% Adjusted Diluted
Slide 17: www.albemarle.com
.\ ALBEMARLE’ NYSE www.albemarle.com 17
Slide 18: Appendix
Appendix Non-GAAP Reconciliations and Supplemental Information
Slide 19: Additional Inputs for 2019 Plan
Additional Inputs for 2019 Plan ($ 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 – $120 YoY increase due to low bonus payout in 2
Slide 20: Wave I & II Conversion Capacity Plan
Wave I & II Conversion Capacity Plan All figures in kt LCE and represent estimates of lithium nameplate conversion capacity 350 325 - 350 MRL Lithium Hydroxide3 300 Hydroxide 50 Hydroxide 40 - 50 250 Hydroxide 25 Hydroxide 25 Lithium 200 Hydroxide Hydroxide 165 - 175 20 - 25 190 - 215 150 40 - 50 Li
Slide 21: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 22: Net Income (loss)
Net Income (loss) Three Months Ended Year Ended December 31, December 31, ($ 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 23: 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 24: EBITDA - by Segment (three months ended December 31)
EBITDA - by Segment (three months ended December 31) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended December 31, 2018: Net income (loss) attributable to Albemarle Corporation $ 112,273 $ 59,333 $ 58,566 $ 230
Slide 25: EBITDA - Margin by Segment (three months ended December 31)
EBITDA - Margin by Segment (three months ended December 31) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Consolidated Total Three months ended December 31, 2018: Net sales $ 341,648 $ 239,111 $ 304,732 $ 885,491 $ 36,208 $ 921,699 Net income (loss) attri
Slide 26: 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 27: 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 28: EBITDA - (Twelve Months Ended)
EBITDA - (Twelve Months Ended) Twelve Months Ended ($ in thousands) Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Net income attributable to Albemarle Corporation $ 693,562 $ 345,600 $ 334,525 $ 135,397 $ 54,850 Depreciation and amortization 200,698 203,352 203,540 202,188 196,928
Slide 29: EBITDA - by Segment (Twelve Months Ended)
EBITDA - by Segment (Twelve Months Ended) Twelve Months Ended ($ in thousands) Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Lithium Net income attributable to Albemarle Corporation $ 428,212 $ 409,753 $ 409,185 $ 373,712 $ 342,992 Depreciation and amortization 95,193 96,798 95,74
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
.\ ALBEMARLE’ NYSE www.albemarle.com 34