Slide 1: Second Quarter 2020 Earnings Conference Call/Webcast
Albemarle Corporation Second Quarter 2020 Earnings Conference Call/Webcast Thursday, August 6, 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; implemented actions to address COVID-19; sites able to operate without a material impact 02 Q2 2020 net income of $86 million or $0.80 p
Slide 5: 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 6: A Sustainable Approach to Managing Our World-Class Assets
A Sustainable Approach to Managing Our World-Class Assets SOx Emissions Reduction Promoting an Inclusive and Diverse Workplace Sustainable Our People Business Model & Workplace In 2019, use of our Diverse, Engaged, and refinery catalysts Accountable Board of Committed to increasing prevented about 1
Slide 7: Q2 2020 Financial Summary
Q2 2020 Financial Summary (in millions, except per share amounts) Q2 2020 Q2 2019 Variance Net Sales $764 $885 -14% Net Income Attributable to Albemarle Corporation $86 $154 -44% Adjusted EBITDA $185 $262 -29% Adjusted EBITDA Margin 24% 30% Diluted EPS $0.80 $1.45 -45% Non-operating Pension and OPEB
Slide 8: Q2 2020 Adjusted EBITDA Bridge
Q2 2020 Adjusted EBITDA1 Bridge ($ in millions) $300 10 262 $250 50 8 $200 15 185 44 $150 Q2 2019 FX Impact Lithium Bromine Catalysts Corporate & Q2 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 (FC
Slide 9: Strong Financial Position and Ample Liquidity
Strong Financial Position and Ample Liquidity (As of 6/30/20, $M) CAPITAL STRUCTURE TOTAL LIQUIDITY: $1.5B DEBT MATURITY TIMELINE • $737M cash and cash equivalents $450 Revolver and $250 Commercial Paper $206 • Net debt to adjusted EBITDA is 3.2x • Weighted average interest of 2.4% $561 $561 $3.5B $
Slide 10: Savings Initiatives Remain on Track
Savings Initiatives Remain on Track • Executing sustainable cost Sustainable cost Project Case Studies: savings initiative savings with Lithium: Operational excellence 200+ projects and supply chain optimization • Projects identified in 2019 totaling a $100M+ run rate Project Savings ~ $11M/year by
Slide 11: Q3 2020 Outlook and Assumptions
Q3 2020 Outlook and Assumptions Q3 2020 Outlook Net sales $700 - $775 million Adjusted EBITDA $140 - $190 million Lithium • Q3 2020 adjusted EBITDA expected to be down 10-20% sequentially • Impact of low OEM automotive production to be felt more acutely in Q3 2020; lower market prices and higher inv
Slide 12: Some End Markets Rebounding, All Remain Below Pre-COVID Levels
Some End Markets Rebounding, All Remain Below Pre-COVID Levels US Miles Driven1 IHS Markit Global Auto Production2 (in millions miles per day) (in millions) End Market Segments 10,000 2019A 2020F Pre-COVID 2021F Pre-COVID Based on Revenue 2020F 2021F 9,000 89 5.9 79 8,000 69 4.1 5.2 7,000 Transporta
Slide 13: Q2 2020 Overview: Lithium
Q2 2020 Overview: Lithium YoY Q2 Performance Drivers Q2 2020 PERFORMANCE • Net sales down 13% (price -14%, volume +1%) and adjusted EBITDA down 33% • Lower pricing reflects previously agreed contract price adjustments, lower market prices ($M) Q2 2020 ΔQ2 2019 • Adjusted EBITDA unfavorably impacted
Slide 14: Q2 2020 Overview: Bromine Specialties
Q2 2020 Overview: Bromine Specialties YoY Q2 Performance Drivers Q2 2020 PERFORMANCE • Net sales down 9% (volume -8%, price -1%) and adjusted EBITDA down 10% • Revenue and adjusted EBITDA decrease mainly driven by lower volume predominantly ($M) Q2 2020 ΔQ2 2019 due to the COVID-19 pandemic Net Sale
Slide 15: Q2 2020 Overview: Catalysts
Q2 2020 Overview: Catalysts YoY Q2 Performance Drivers Q2 2020 PERFORMANCE • Net sales down 26% (volume -22%, price -4%) and adjusted EBITDA down 66% • FCC volume down from lower transportation fuel consumption as a result of stay-at-home ($M) Q2 2020 ΔQ2 2019 orders and travel restrictions Net Sale
Slide 16: 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 17: Upcoming Investor Events
Upcoming Investor Events Third Quarter 2020 Investor Relations Events Date Event – All Virtual September 9th UBS Global Chemicals September 15 -16th RBC Capital Markets Early October Non-Deal Roadshow Meredith Bandy Sharon McGee Mark de Boer VP, Investor Relations & Sustainability VP, Investor Relat
Slide 18: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 19: 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 20: Adjusted Net Income
Adjusted Net Income Three Months Ended June 30, ($ in thousands) 2020 2019 Net income attributable to Albemarle Corporation $ 85,624 $ 154,198 Add back: Non-operating pension and OPEB items (net of tax) (2,299) (693) Non-recurring and other unusual items (net of tax) 7,907 10,754 Adjusted net income
Slide 21: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended June 30, ($ in thousands) 2020 2019 Net income attributable to Albemarle Corporation $ 85,624 $ 154,198 Add back: Interest and financing expenses 17,852 11,601 Income tax expense 15,431 30,411 Depreciation and amortization 57,841 52,948 EBITDA 176,748 24
Slide 22: Adjusted EBITDA - by Segment (three months ended June 30)
Adjusted EBITDA - by Segment (three months ended June 30) Reportable Bromine Segments Consolidated ($ in thousands) Lithium Specialties Catalysts Total All Other Corporate Total Three months ended June 30, 2020 Net income (loss) attributable to Albemarle Corporation $ 66,038 $ 60,692 $ 10,702 $ 137,
Slide 23: Adjusted EBITDA - Margin by Segment (three months ended June 30)
Adjusted EBITDA - Margin by Segment (three months ended June 30) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Total Three months ended June 30, 2020 Net sales $ 283,722 $ 232,779 $ 197,053 $ 713,554 $ 50,495 $ 764,049 Net income (loss) attri
Slide 24: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Net income attributable to Albemarle Corporation $ 547,108 $ 572,433 $ 533,228 $ 506,863 $ 438,289 Depreciation and amortization 202,125
Slide 25: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Lithium Net income attributable to Albemarle Corporation $ 413,058 $ 424,881 $ 341,766 $ 301,837 $ 250,572 Depreciation and amortization 93,260 95,
Slide 26: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve ($ in thousands) Months Ended Three Months Ended Jun 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Adjusted EBITDA $ 930,572 $ 185,193 $ 196,365 $ 294,663 $ 254,351 Net income attributable to noncontrolling interests 66,965 18,134 16,431 15,852 16,
Slide 27: Diluted EPS
Diluted EPS Three Months Ended June 30, 2020 2019 Diluted earnings per share attributable to Albemarle Corporation $ 0.80 $ 1.45 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 0.04 0.04 Acquisition
Slide 28: 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 June 30, 2020 As reported $ 88,075 $ 15,431 17.5 % Non-recurring, other unusual and non-operating pension and OPEB ite
Slide 29: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended June 30, 2020 2019 Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Lithium $ 12,628 $ — $ 32,203 $ — Bromine Specialties — (18,146) — (20,775) Catalysts 7,007 — 6,107 — Corporate 11,479 12 — 3 T
Slide 30: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 30