Slide 1: Fourth Quarter 2020 Earnings Conference Call/Webcast
Albemarle Corporation Fourth Quarter 2020 Earnings Conference Call/Webcast Thursday, February 18, 2021 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: Recent Accomplishments Support Long-term Growth
Recent Accomplishments Support Long-term Growth Generated Q4/20 Net Sales of $879M and Adj. EBITDA of $221M, above previous outlook FY 2021 Net Sales of $3.2 – $3.3B and Adj. EBITDA of $810 – $860M, expected to improve YoY Completed $1.5B equity raise to accelerate high-return growth projects 4
Slide 5: Clear Strategy Drives Sustainable Growth
Clear Strategy Drives Sustainable Growth Grow • Pursue profitable growth to align with customer demand Profitably • Build capabilities to accelerate lower capital intensity, higher return projects Maximize • Optimize earnings and cash flow generation across all of our businesses Productivity • Drive
Slide 6: Strong Lithium Demand Driven by EVs
Strong Lithium Demand Driven by EVs Global EV Global EV Production / Lithium Demand Lithium Demand Sales by Year1 Market Penetration2 Projections3 by Application4 (mm units) (kt LCE) (kt LCE) Battery 2020 vs. 2019: 2020-2025 2020-2025 total: 3.0 2,000 CAGR: ~25% +45% CAGR: ~35% 92% 2,000 16.1% 2.5 1
Slide 7: Albemarle Lithium Demand Forecast Revised Upwards
Albemarle Lithium Demand Forecast Revised Upwards Lithium Demand by Application EV Penetration Battery Size 1,400 (ktpa LCE) (% of New Car Sales) (kWh per EV) 22% +31% >4x +28% 1,200 CAGR 1,140 20% 19% 60 18% 55 1,000 16% 50 14% 800 40 +47% 787 40 12% CAGR 600 10% 30 8% 400 20 292 6% 4.6% 113 4% 200
Slide 8: Investing to Align Capacity with Market Demand
Investing to Align Capacity with Market Demand Estimated Lithium Nameplate Conversion Capacity Wave 3 Potential Projects (3-5 years) Figures on ktpa LCE, 100% basis ~$1.5B CapEx • China (MARBL) Wave 3 & Wave 4 could more than ~125-175 ~450-500 • Silver Peak, Nevada Expected to increase double 2021E
Slide 9: Conversion Facilities on Track for 2021 Completion
Conversion Facilities on Track for 2021 Completion La Negra III / IV Kemerton I / II New thermal evaporator significantly reduces fresh water intensity Kemerton site progress as of December 2020 • Conversion of low-cost, high-quality Chilean brine • Conversion of low-cost, high-quality Australian sp
Slide 10: Reduced Capital Intensity to Achieve Higher Returns
Reduced Capital Intensity to Achieve Higher Returns Illustrative Lithium Capital Intensity Range (Cost/kg) Expected Key Drivers of Cost Reduction ✓ Leverage expertise in large-scale project construction ~40% lower ✓ Take advantage of brownfield economics ✓ Projects in lower-cost jurisdictions (e.g.,
Slide 11: Executed Plans During Challenges of 2020
Executed Plans During Challenges of 2020 2020 WHAT WE SAID IN 20191 ACCOMPLISHMENTS Continued operational excellence initiatives across our organization ✓ Ongoing Grow Capital projects on track for 2021 completion ✓ On track Profitably Lithium volumes projected to be up slightly ✓ FY down slightly;
Slide 12: Fourth Quarter and Full Year 2020 Financial Summary
Fourth Quarter and Full Year 2020 Financial Summary (in millions, except per share amounts) Q4 2020 Q4 2019 Variance FY 2020 FY 2019 Variance Net Sales $879 $993 -11% $3,129 $3,589 -13% Net income attributable to Albemarle Corporation $85 $90 -6% $376 $533 -30% Adjusted EBITDA $221 $295 -25% $819 $1
Slide 13: 2020 Adjusted EBITDA Bridge
2020 Adjusted EBITDA1 Bridge ($ in millions) Q4 2020 FY 2020 $325 $1,100 22 $300 295 $1,050 1,037 3 7 $1,000 $275 17 $950 $250 139 $900 6 $225 53 221 8 $850 43 819 $200 $800 138 $175 $750 $150 $700 Q4 2019 FX Impact Lithium Bromine Catalysts Corporate & Q4 2020 FY 2019 FX Impact Lithium Bromine Cata
Slide 14: Prioritizing Capital Allocation to Support Growth Strategy
Prioritizing Capital Allocation to Support Growth Strategy Invest to Grow Profitably Maintain Financial Flexibility • Prioritize investment in growth • Committed to Investment Grade rating • Strategically grow lithium capacity – near-term • Intention to retain long-term Net Debt to focus on conversi
Slide 15: Capital Raised for Growth Projects
Capital Raised for Growth Projects Capital Structure Net Debt / Adj. EBITDA3 $1.5B gross proceeds from equity raise 3.5x Incremental debt capacity to fund capital expenditure at final investment decision 1.5x Current Pro forma 12/31/20201 12/31/2020 1,2 Use of Proceeds Commentary ▪ Utilize cash and
Slide 16: 2021 Guidance vs 2020
2021 Guidance vs 2020 As of February 17, 2021 2021 Guidance FY 2021 FY 2020 vs Guidance FY 2020 Net Sales $3.1B $3.2B – $3.3B +3% to +6% Adj. EBITDA $819M $810M – $860M -1% to +5% Adj. EBITDA Margin 26.2% 25% – 26% Adj. Diluted EPS $4.12 $3.25 – $3.65 Net Cash from Operations $799M $475M – $575M Cap
Slide 17: Expected 2021 Business Environment vs. 2020
Expected 2021 Business Environment vs. 2020 As of February 17, 2021 • Volumes up slightly due to North American restarts, efficiency improvements • Prices down, primarily due to anticipated lower average pricing for carbonate and technical grade • Higher costs related to project start-ups, partially
Slide 18: Well-Positioned to Drive Sustainable Growth
Well-Positioned to Drive Sustainable Growth 2021 OBJECTIVES Grow • Complete LAN III/IV (mid-2021) and Kemerton I/II (late-2021) Profitably • Investment decisions on new expansion projects in Lithium and Bromine • Achieve $75M productivity improvements versus 20201 Maximize • Preserve margins with be
Slide 19: Lithium Overview
Lithium Overview As of February 17, 2021 YoY Q4 Performance Drivers Q4 2020 PERFORMANCE • Net sales down 13% (price -20%, volume 7%); adjusted EBITDA down 13% ($M) Q4 2020 ΔQ4 2019 • Lower pricing due to contract price adjustments agreed in late 2019 Net Sales • Stronger volumes as customers held to
Slide 20: Bromine Specialties Overview
Bromine Specialties Overview As of February 17, 2021 YoY Q4 Performance Drivers Q4 2020 PERFORMANCE • Net sales up 8% (volume 4%, price 4%); adjusted EBITDA up 10% ($M) Q4 2020 ΔQ4 2019 • Continued sequential demand improvement from Q3; benefit of short-term supply- demand imbalances Net Sales $263
Slide 21: Catalysts Overview
Catalysts Overview As of February 17, 2021 YoY Q4 Performance Drivers Q4 2020 PERFORMANCE • Net sales down 31% (volume -31%, price 0%); adjusted EBITDA down 71% Q4 2020 ΔQ4 2019 • Continue to see refinery capacity taken offline in order to balance supply and demand ($M) • FCC volume down from lower
Slide 22: Upcoming Investor Events
Upcoming Investor Events First Quarter 2021 Investor Relations Events Date Event – All Virtual Mar 23rd Goldman Sachs New Orleans Chemical Intensity Days Mar 24th Spring Roadshow Meredith Bandy David Burke Jeffrey Nakayama VP, Investor Relations & Sustainability Director, Investor Relations Manager,
Slide 23: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 24: 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 25: 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. 25
Slide 26: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA See above for a reconciliation of EBITDA, adjusted EBITDA and 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. 26
Slide 27: Adjusted EBITDA - by Segment (three months ended)
Adjusted EBITDA - by Segment (three months ended) See above for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income attributable to Albemarle Corporation (“earnings”), the most directly comparable financial measure calculated and reporting in accorda
Slide 28: Adjusted EBITDA – Margin by Segment (three months ended)
Adjusted EBITDA – Margin by Segment (three months ended) See above for adjusted EBITDA margin, a non-GAAP financial measure defined as adjusted EBITDA divided by net sales. See previous slide for the related reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net
Slide 29: Adjusted EBITDA – (twelve months ended)
Adjusted EBITDA – (twelve months ended) See above for a reconciliation of adjusted EBITDA, 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. 29
Slide 30: Adjusted EBITDA – by Segment (twelve months ended)
Adjusted EBITDA – by Segment (twelve months ended) See above for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation (“earnings”), the most directly comparable financial measure calculated and reporting in accor
Slide 31: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 1 This supplemental is for net-debt-to-adjusted EBITDA ratio based on the bank covenant definition. 31
Slide 32: Diluted EPS
Diluted EPS 1Totals may not add due to rounding 32
Slide 33: Effective Tax Rate
Effective Tax Rate See above for a reconciliation of the adjusted effective income tax rate, the non-GAAP financial measure, to the effective income tax rate, the most directly comparable financial measure calculated and reporting in accordance with GAAP. 33
Slide 34: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest 34
Slide 35: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 35