Albemarle Corporation · NYSE:ALB
Albemarle — Q2 2019 Earnings Presentation
32 slides from Albemarle's earnings presentation, Aug 8, 2019
Slide 1: Second Quarter 2019 Earnings Conference Call/Webcast
Albemarle Corporation Second Quarter 2019 Earnings Conference Call/Webcast Thursday, August 8th, 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, production volumes, proposed joint ventures, market trends, pr
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: Second Quarter 2019 Financial Summary
Second Quarter 2019 Financial Summary (In millions, except per share amounts) Q2 2019 Q2 2018 Variance Net Sales $885 $854 4% Net income attributable to Albemarle Corporation1 $154 $302 -49% Adjusted EBITDA $262 $259 1% Diluted earnings per share1 $1.45 $2.73 -47% Non-operating pension and OPEB item
Slide 5: Second Quarter Key Messages
Second Quarter Key Messages Adjusted diluted EPS up 20% over 2018 excluding the impact of currency and raising full year EPS guidance to $6.25 - $6.65 Lithium and Bromine saw YOY pricing and volume improvement and Catalyst saw YOY pricing improvement Amended JV with MRL so that Albemarle will own 60
Slide 6: Second Quarter 2019 Financial Highlights
Second Quarter 2019 Financial Highlights Q2 2019 Results Q2 2018 vs Prior Year Net Sales $885 million $854 million +4% Net Sales ex FX1 $901 million +6% Adjusted $262 million $259 million +1% EBITDA $274 million +6% Adj. EBITDA ex FX1 Adjusted $1.55 $1.36 +14% Diluted EPS $1.63 +20% Adj. Diluted EPS
Slide 7: Previously Disclosed Plan for Wave I & II Conversion Capacity Plan
Previously Disclosed Plan for 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
Slide 8: Current Conversion Capacity Plan
Current Conversion Capacity Plan All figures in kt LCE and represent estimates of lithium nameplate conversion capacity 350 1, 2 Concentrated Resource Capacity Changes vs Q1 2019 300 • Reduce conversion capacity by 225 approximately 125 kt LCE and capital 250 expenditures by approximately $1.5 billi
Slide 9: Segment Quarterly Highlights
Segment Quarterly Highlights TTM1 Pro-forma Net Sales2 ($ in millions) TTM1 Pro-forma Adj. EBITDA2 and ($ in millions) Adj. EBITDA Margin2 $3,500 $1,100 35% $1,000 30% $900 $3,250 $800 25% $700 $600 20% $3,000 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Pro-forma Adjusted EBITDA 2 Pro-forma Ad
Slide 10: Second Quarter 2019 Adjusted EBITDA Bridge
Second Quarter 2019 Adjusted EBITDA Bridge Q2 2019: Adjusted EBITDA up $15 million, 6% YOY Net of FX ($ in millions) 14 8 262 259 $250 6 12 <1 $200 $150 Q2 2018 FX Impact Lithium Bromine Catalysts Corporate & Other Q2 2019 Specialties Net of FX Note: Bridge numbers may not reconcile due to rounding.
Slide 11: Lithium
Lithium Q2 2019 Performance Historical Trend (TTM) ($ in millions) Q2 2019 Q2 2018 ∆ $600 50% Net Sales $325 $318 2% $500 40% Net Sales ex FX1 $332 5% $400 Adj. EBITDA $142 $142 0% 30% $300 Adj. EBITDA ex FX1 $142 0% Adj. EBITDA Margin 44% 45% (94) Bps $200 20% 2Q18 3Q18 4Q18 1Q19 2Q19 Adj. EBITDA M
Slide 12: Bromine Specialties
Bromine Specialties Q2 2019 Performance Historical Trend (TTM) ($ in millions) Q2 2019 Q2 2018 ∆ 40% $300 Net Sales $255 $221 16% 30% Net Sales ex FX1 $259 17% $250 Adj. EBITDA $81 $69 17% 20% $200 Adj. EBITDA ex FX1 $83 20% Adj. EBITDA Margin 32% 31% 38 bps $150 10% 2Q18 3Q18 4Q18 1Q19 2Q19 Adj. EB
Slide 13: Catalysts
Catalysts Q2 2019 Performance Historical Trend (TTM) ($ in millions) Q2 2019 Q2 2018 ∆ $300 30% Net Sales $266 $285 -7% $250 25% Net Sales ex FX1 $272 -5% $200 Adj. EBITDA $67 $75 -11% 20% $150 Adj. EBITDA ex FX1 $69 -8% Adj. EBITDA Margin 25% 26% (124) bps $100 15% 2Q18 3Q18 4Q18 1Q19 2Q19 Adj. EBI
Slide 14: Cash Flow and Net Debt
Cash Flow and Net Debt Six Months Ended June 30 Selected Financial Metrics ($ in millions) ($ in millions) (as of 06/30/2019) 2019 2018 Dividends Paid (YTD): $74 Net Cash from Operations $199 $224 Dividend Growth (Y/Y)1: 10% Less: Capital Expenditures (416) (281) Cash Balance: $398 Add Back: Pension
Slide 15: Full Year 2019 Business Guidance vs 2018
Full Year 2019 Business Guidance vs 2018 As of August 7, 2019 Business Prior Updated Business Environment Unit Outlook Outlook • Adj. EBITDA growth expected to be in the mid to high teens vs prior year Lithium • Favorable outlook driven by volume growth and flat to slightly upward pricing • Expect a
Slide 16: Full Year 2019 Guidance vs 2018
Full Year 2019 Guidance vs 2018 As of August 7, 2019 2019 Guidance FY 2018 FY 2019 Change from FY 2018 vs Pro-forma1 Guidance Prior Guidance FY 2018 Pro-Forma1 Net Sales $3.37B $3.35B $3.65B – $3.85B 9% – 15% Adjusted EBITDA $1,007M $996M $1,070M – $1,140M 7% – 14% Adjusted EBITDA 30% 30% 29% – 31%
Slide 17: Additional Inputs for Full Year 2019 Guidance
Additional Inputs for Full Year 2019 Guidance As of August 7, 2019 ($ in millions) FY 2019 Estimate Depreciation and amortization $207 – $213 Adjusted effective income tax rate 20% – 22% Corporate Costs $130 – $140 Interest and financing expenses $45 – $50 Weighted-average common shares outstanding
Slide 18: www.albemarle.com
.\ ALBEMARLE’ NYSE www.albemarle.com 18
Slide 19: Appendix: Non-GAAP Reconciliations and Supplemental Information
Appendix Non-GAAP Reconciliations and Supplemental Information
Slide 20: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 21: Adjusted Net Income
Adjusted Net Income Three Months Ended June 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 154,198 $ 302,461 Add back: Non-operating pension and OPEB items (net of tax) (693) (1,873) Non-recurring and other unusual items (net of tax) 10,754 (150,618) Adjusted net i
Slide 22: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended June 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 154,198 $ 302,461 Add back: Interest and financing expenses 11,601 13,308 Income tax expense 30,411 80,102 Depreciation and amortization 52,948 50,474 EBITDA 249,158 4
Slide 23: Adjusted EBITDA - by Segment (three months ended June 30)
Adjusted EBITDA - by Segment (three months ended June 30) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended June 30, 2019: Net income (loss) attributable to Albemarle Corporation $ 117,303 $ 69,616 $ 54,124 $ 24
Slide 24: Adjusted EBITDA - Margin by Segment (three months ended June 30)
Adjusted EBITDA - Margin by Segment (three months ended June 30) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended June 30, 2019: Net sales $ 324,758 $ 255,433 $ 266,301 $ 846,492 $ 38,560 $ 885,052 Net income (loss) attr
Slide 25: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Continuing Operations Net income attributable to Albemarle Corporation $ 334,525 $ 345,600 $ 693,562 $ 695,371 $ 547,108 Depreciation an
Slide 26: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Lithium Net income attributable to Albemarle Corporation $ 409,185 $ 409,753 $ 428,212 $ 413,047 $ 413,058 Depreciation and amortization 95,744 96,
Slide 27: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Jun 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Adjusted EBITDA $ 987,151 $ 261,900 $ 225,867 $ 264,302 $ 235,082 Net income attributable to noncontrolling interests 68,916 20,772 17,957 16,453 13,
Slide 28: Diluted EPS
Diluted EPS Three Months Ended June 30, 2019 2018 Diluted earnings per share attributable to Albemarle Corporation $ 1.45 $ 2.73 Add back: Non-operating pension and OPEB items (net of tax) (0.01) (0.02) Non-recurring and other unusual items (net of tax) Acquisition and integration related costs 0.04
Slide 29: 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 June 30, 2019: As reported $ 167,071 $ 30,411 18.2% Non-recurring, other unusual and non-operating pension and OPEB it
Slide 30: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended June 30, 2019 2018 Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Lithium $ 32,203 $ — $ 14,728 $ — Bromine Specialties — (20,775) — (8,207) Catalysts 6,107 — 4,241 — Corporate — 3 — (18) Total
Slide 31: Adjusted EPS - Continuing Operations (twelve months ended)
Adjusted EPS - Continuing Operations (twelve months ended) Twelve Months ($ in thousands) Ended Three Months Ended Jun 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Net income attributable to Albemarle Corporation $ 547,108 $ 154,198 $ 133,569 $ 129,596 $ 129,745 Add back: Non-operati
Slide 32: www.albemarle.com
‘\ALBEMARLE” NYSE www.albemarle.com