Albemarle Corporation · NYSE:ALB
Albemarle — Q1 2020 Earnings Presentation
29 slides from Albemarle's earnings presentation, May 7, 2020
Slide 1: Albemarle Corporation First Quarter 2020 Earnings
Albemarle Corporation First Quarter 2020 Earnings Conference Call/Webcast Thursday, May 7, 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; actions to address COVID-19 implemented; sites are operating without a material impact 02 Q1 2020 net income of $107 million or $1.01 pe
Slide 5: Protect Employees, Customers, Suppliers and Communities
COVID-19 RESPONSE Protect Employees, Customers, Suppliers and Communities Communication Actions Taken Albemarle Executive Leadership Employees Business Partners Team meeting multiple times per week: • Protocols to decrease risk for our • Frequent communications with team, partners and communities cu
Slide 6: Adjusting Capital Allocation Priorities
Adjusting 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 • M
Slide 7: Q1 2020 Financial Summary
Q1 2020 Financial Summary (in millions, except per share amounts) Q1 2020 Q1 2019 Variance Net Sales $739 $832 -11% Net Income Attributable to Albemarle Corporation $107 $134 -20% Adjusted EBITDA $196 $226 -13% Diluted EPS $1.01 $1.26 -20% Non-operating Pension and OPEB items (0.02) (0.01) Non-recur
Slide 8: Q1 2020 Adjusted EBITDA Bridge
Q1 2020 Adjusted EBITDA1 Bridge ($ in millions) $250 226 4 $200 21 196 5 40 11 $150 Q1 2019 FX Impact Lithium Bromine Catalysts Corporate & Q1 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 (FCS). Pr
Slide 9: Strong Financial Position and Ample Liquidity (As of 3/31/20, $M)
Strong Financial Position and Ample Liquidity (As of 3/31/20, $M) CAPITAL STRUCTURE TOTAL LIQUIDITY: $1.7B DEBT MATURITY TIMELINE • $553M cash and cash equivalents $250 • $250M drawn on revolver $285 Revolver and $190 Other Credit Lines Commercial Paper • Net debt to adjusted EBITDA is 2.7x $552 $55
Slide 10: Accelerating 2020 Sustainable Cost Savings Initiative
Accelerating 2020 Sustainable Cost Savings Initiative Three Buckets of Identified Cost Savings • Executing on existing cost Factory Spend and Supply Sales & Administration management project Operational Efficiency Chain and IBO identified in 2019 totaling a • Raw material yield and • Logistics optim
Slide 11: Q2 2020 Outlook and Assumptions
Q2 2020 Outlook and Assumptions Q2 2020 Outlook Net sales $700 - $775 million Adjusted EBITDA $140 - $190 million Lithium • Q2 2020 adjusted EBITDA expected to be down YoY, but up slightly sequentially • Stable Q2 energy storage orders as cathode and battery producers fill order backlogs; weaker spe
Slide 12: Executing Our Downturn Playbook for Short-Term Cash Management
Executing Our Downturn Playbook for Short-Term Cash Management Status • Aggressively pursue lower raw material pricing • Continue travel restrictions Variable Costs • Limit professional services Activated • Pursue economic incentives (e.g., stimulus plans/tax deferrals) • Reduced metric-based ince
Slide 13: Q1 2020 Overview: Lithium
Q1 2020 Overview: Lithium Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down 19% and adjusted EBITDA down 32% • Lower contract pricing (reflecting 2020 price adjustments) and reduced volume ($M) Q1 2020 ΔQ1 2019 as customer took excess volume in Q4 2019 Net Sales $237 -19% • Partially offse
Slide 14: Q1 2020 Overview: Bromine Specialties
Q1 2020 Overview: Bromine Specialties Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down 7% due primarily to logistics challenges that shifted some orders into Q2, partially offset by higher pricing ($M) Q1 2020 ΔQ1 2019 • Adjusted EBITDA up 6% due to cost saving initiatives and lower minor
Slide 15: Q1 2020 Overview: Catalysts
Q1 2020 Overview: Catalysts Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down by 18% and adjusted EBITDA down by 21% • FCC volume was down from lower transportation fuel consumption as a result ($M) Q1 2020 ΔQ1 2019 of stay-at-home orders and travel restrictions Net Sales $207 -18% • HPC v
Slide 16: Upcoming Investor Events
Upcoming Investor Events Second Quarter 2020 Investor Relations Events Date Event – All Virtual May 26 Non-Deal Roadshow May 29 Bernstein Strategic Decisions Conference June 1 – 4 Non-Deal Roadshow June 9 Deutsche Bank Conference Meredith Bandy Sharon McGee Mark de Boer VP, Investor Relations & Sust
Slide 17: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 18: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures NON-GAAP MEASURE DESCRIPTION Adjusted Net Income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma Adjusted Net Income Net income attributable to Albemarle Corporation before non-recurri
Slide 19: Adjusted Net Income
Adjusted Net Income Three Months Ended March 31, ($ in thousands) 2020 2019 Net income attributable to Albemarle Corporation $ 107,204 $ 133,569 Add back: Non-operating pension and OPEB items (net of tax) (2,311) (569) Non-recurring and other unusual items (net of tax) 1,493 (2,012) Adjusted net inc
Slide 20: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended March 31, ($ in thousands) 2020 2019 Net income attributable to Albemarle Corporation $ 107,204 $ 133,569 Add back: Interest and financing expenses 16,885 12,586 Income tax expense 18,442 37,514 Depreciation and amortization 53,694 49,283 EBITDA 196,225
Slide 21: Adjusted EBITDA - by Segment (three months ended March 31)
Adjusted EBITDA - by Segment (three months ended March 31) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended March 31, 2020 Net income (loss) attributable to Albemarle Corporation $ 53,240 $ 71,665 $ 34,892 $ 15
Slide 22: Adjusted EBITDA - Margin by Segment (three months ended March 31)
Adjusted EBITDA - Margin by Segment (three months ended March 31) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended March 31, 2020 Net sales $ 236,818 $ 231,592 $ 207,207 $ 675,617 $ 63,228 $ 738,845 Net income (loss) att
Slide 23: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Net income attributable to Albemarle Corporation $ 695,371 $ 547,108 $ 572,433 $ 533,228 $ 506,863 Depreciation and amortization 199,651
Slide 24: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Lithium Net income attributable to Albemarle Corporation $ 413,047 $ 413,058 $ 424,881 $ 341,766 $ 301,837 Depreciation and amortization 93,220 93,
Slide 25: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Mar 31, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Adjusted EBITDA $ 1,007,279 $ 196,365 $ 294,663 $ 254,351 $ 261,900 Net income attributable to noncontrolling interests 69,603 16,431 15,852 16,548 2
Slide 26: Diluted EPS
Diluted EPS Three Months Ended March 31, 2020 2019 Diluted earnings per share attributable to Albemarle Corporation $ 1.01 $ 1.26 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 0.01 — Acquisition an
Slide 27: 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 March 31, 2020 As reported $ 115,473 $ 18,442 16.0% Non-recurring, other unusual and non-operating pension and OPEB it
Slide 28: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended March 31, 2020 2019 Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Lithium $ 33,507 $ — $ 29,370 $ — Bromine Specialties — (16,433) — (17,939) Catalysts 5,662 — 5,811 — Corporate (12,565) 2 — (
Slide 29: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 29