Slide 1: Albemarle Corporation Third Quarter 2020 Earnings
Albemarle Corporation Third Quarter 2020 Earnings Conference Call/Webcast Thursday, November 5, 2020 9:00am ET 1
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: Taking Action to Position Albemarle for the Present and the Future
Taking Action to Position Albemarle for the Present and the Future 01 Our priority is to protect the health and well-being of employees, customers and communities; sites able to operate without a material impact; building flexibility into our workplace 02 Q3 2020 net income of $98M or $0.92 per dilu
Slide 5: A Sustainable Approach to Managing Our World-Class Assets
A Sustainable Approach to Managing Our World-Class Assets Albemarle released Sustainability More than 50% of the Albemarle revenue comes from Report on 2019 activities products with a positive impact on reduction of GHG- Sustainable Sustainable emissions or an increase of resource efficiency Busines
Slide 6: Growth Capital Projects On Track for 2021 Completion
Growth Capital Projects On Track for 2021 Completion La Negra III / IV Kemerton New thermal evaporator significantly reduces fresh water intensity Kemerton site progress as of October 2020 • Conversion of low-cost, hiqh-quality Chilean brine • Conversion of low-cost, hiqh-quality Australian spodumen
Slide 7: Q3 2020 Financial Summary
Q3 2020 Financial Summary (in millions, except per share amounts) Q3 2020 Q3 2019 Variance Net Sales $747 $880 -15% Net Income Attributable to Albemarle Corporation $98 $155 -37% Adjusted EBITDA $216 $254 -15% Adjusted EBITDA Margin 29% 29% Diluted EPS $0.92 $1.46 -37% Non-operating Pension and OPEB
Slide 8: Q3 2020 Adjusted EBITDA Bridge
Q3 2020 Adjusted EBITDA1 Bridge ($ in millions) $300 18 254 $250 31 10 15 216 $200 30 $150 Q3 2019 FX Impact Lithium Bromine Catalysts Corporate & Q3 2020 Specialties Other 2 Net of FX 1 2 Note: Bridge numbers may not reconcile due to rounding. Corporate and Other includes Fine Chemistry Services (F
Slide 9: Strong Financial Position and Ample Liquidity
Strong Financial Position and Ample Liquidity (As of 9/30/20, $M) CAPITAL STRUCTURE TOTAL LIQUIDITY: $1.5B DEBT MATURITY TIMELINE • $702M cash and cash equivalents $390 • Repaid $250M drawn on revolver Commercial Paper $457 • Net debt to adjusted EBITDA is 3.2x $3.5B Total Debt $223 Other Credit Lin
Slide 10: Savings Initiatives Ahead of Plan
Savings Initiatives Ahead of Plan • Sustainable cost savings ahead of plan – ~$80M in 2020; $120M+ run rate by YE 2021 – Ahead of previous estimates for $50 to $70M in 2020; $100+ run rate by YE 2021 • On-going short-term cash management actions save ~$25 to $40M per quarter • FY 2020 CAPEX spending
Slide 11: Q4 2020 and Full Year 2020 Guidance
Q4 2020 and Full Year 2020 Guidance As of November 4, 2020 Q4 2020 FY 2020 Guidance Guidance Net Sales $830M – $880M $3.05B – $3.15B Adj. EBITDA $185M – $215M $780M – $810M Adj. EBITDA Margin 25% – 26% Adj. Diluted EPS $3.80 – $4.15 Net Cash from Operations $660M – $710M Capital Expenditures $850M –
Slide 12: End Markets Rebounding, Visibility Remains Challenging
End Markets Rebounding, Visibility Remains Challenging Lithium Bromine Catalysts 400 Regional Consumer Confidence2 Brent Price and Refinery Utilization2 Monthly EV Sales1 $80 100% 110% 350 (in thousands) September 300 100% China 75% 80% +90% yoy EU $60 250 90% S. Korea Japan $42 60% 200 US 80% $40 1
Slide 13: 2021 Directional Guidance vs 2020
2021 Directional Guidance vs 2020 As of November 4, 2020 Business FY21 vs Business Environment Unit FY20 • Volumes are expected to be flat year-over-year as plants are effectively sold out given volume constraints Lithium • Price expected to be down slightly year-over-year, primarily due to lower av
Slide 14: Lithium Overview
Lithium Overview As of November 4, 2020 YoY Q3 Performance Drivers Q3 2020 PERFORMANCE • Net sales down 20% (price -17%, volume -3%) and adjusted EBITDA down 23% • Lower pricing reflects previously agreed contract price adjustments, lower market prices ($M) Q3 2020 ΔQ3 2019 • Adjusted EBITDA unfavor
Slide 15: Bromine Specialties Overview
Bromine Specialties Overview As of November 4, 2020 YoY Q3 Performance Drivers Q3 2020 PERFORMANCE • Net sales down 7% (volume -5%, price -2%) and adjusted EBITDA down 11% • Revenue and adjusted EBITDA decrease mainly driven by lower volume predominantly ($M) Q3 2020 ΔQ3 2019 due to the COVID-19 pan
Slide 16: Catalysts Overview
Catalysts Overview As of November 4, 2020 YoY Q3 Performance Drivers Q3 2020 PERFORMANCE • Net sales down 24% (volume -23%, price -1%) and adjusted EBITDA down 43% • FCC volume down from lower transportation fuel consumption related to travel ($M) Q3 2020 ΔQ3 2019 restrictions Net Sales $198 -24% •
Slide 17: Our Strategy Has Not Changed, But The Focus Is Different
Our Strategy Has Not Changed, But The Focus Is Different Invest in growth and be a leader in the lithium • Lithium demand has been pushed out by COVID approximately one Grow industry year, but the long term outlook is intact Become best in class in the deployment of lithium • Deploy capital for lith
Slide 18: Capital Allocation Priorities
Capital Allocation Priorities Adapting to Current Environment Fund the Dividend 01 • 26th year of consecutive dividend increases Committed to shareholder returns • Targeting long-term median specialty chemical payout ratio Maintain Financial Flexibility Committed to investment grade 02 • Maintain in
Slide 19: Upcoming Investor Events
Upcoming Investor Events Fourth Quarter 2020 Investor Relations Events Date Event – All Virtual Nov 10th Baird Global Industrials Conference Nov 17th Deutsche Bank Lithium Supply Chain & Energy Storage Dec 1st Citi Basic Materials Conference Dec 8th Boston Investor Meetings Meredith Bandy Sharon McG
Slide 20: Appendix
Appendix Non-GAAP Reconciliations
Slide 21: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures NON-GAAP MEASURE DESCRIPTION Adjusted Net Income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma Adjusted Net Income Net income attributable to Albemarle Corporation before non-recurri
Slide 22: Adjusted Net Income
Adjusted Net Income See above for a reconciliation of adjusted net income, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP. 22
Slide 23: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended September 30, ($ in thousands) 2020 2019 Net income attributable to Albemarle Corporation $ 98,301 $ 155,070 Add back: Interest and financing expenses 19,227 11,108 Income tax expense 30,653 25,341 Depreciation and amortization 58,679 54,487 EBITDA 206,8
Slide 24: Adjusted EBITDA - by Segment (three months ended)
Adjusted EBITDA - by Segment (three months ended) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Corporate Total Three months ended September 30, 2020 Net income (loss) attributable to Albemarle Corporation $ 69,102 $ 66,548 $ 25,176 $ 160,826
Slide 25: Adjusted EBITDA - Margin by Segment (three months ended)
Adjusted EBITDA - Margin by Segment (three months ended) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended September 30, 2020 Net sales $ 265,646 $ 237,193 $ 197,919 $ 700,758 $ 46,110 $ 746,868 Net income (loss) attribut
Slide 26: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Net income attributable to Albemarle Corporation $ 572,433 $ 533,228 $ 506,863 $ 438,289 $ 381,520 Depreciation and amortization 206,905
Slide 27: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Lithium Net income attributable to Albemarle Corporation $ 424,881 $ 341,766 $ 301,837 $ 250,572 $ 217,538 Depreciation and amortization 95,102 99,
Slide 28: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Sep 30, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Adjusted EBITDA $ 892,276 $ 216,055 $ 185,193 $ 196,365 $ 294,663 Net income attributable to noncontrolling interests 69,161 18,744 18,134 16,431 15,
Slide 29: Diluted EPS
Diluted EPS 1Totals may not add due to rounding 29
Slide 30: Effective Tax Rate
Effective Tax Rate Income before income taxes and equity in net income of unconsolidated Effective income tax ($ in thousands) investments Income tax expense rate Three months ended September 30, 2020 As reported $ 121,544 $ 30,653 25.2 % Non-recurring, other unusual and non-operating pension and OP
Slide 31: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Note: Corporate equity income relates to foreign exchange gains or losses of our Windfield Holdings joint venture. 31
Slide 32: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 32