Albemarle Corporation · NYSE:ALB
Albemarle — Investor Day (December 2019)
140 slides from Albemarle's investor day presentation, Dec 12, 2019
Slide 1: Albemarle Investor Day
Albemarle Investor Day Making the World Safe & Sustainable by Powering the Potential of People December 12, 2019
Slide 2: Welcome & Opening Remarks
Welcome & Dave Ryan Opening Remarks Vice President, Corporate Strategy & Investor Relations
Slide 3: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the investor day remarks, and discussions that follow, including, without limitation, information related to outlook and guidance, conversion capacity, production volumes, joint ventures, market trends, pricing, expec
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures It should be noted that Adj. net income attributable to Albemarle Corporation (“Adj. earnings”), Adj. diluted earnings per share attributable to Albemarle Corporation, Adj. effective income tax rates, segment operating profit, segment income, pro-forma net sales, net sale
Slide 5: Agenda
Agenda 08:30 am Welcome & Opening Remarks 10:20 am BREAK Dave Ryan, VP, Corporate Strategy & IR 08:35 am Update on Our Journey & Strategic Overview 10:30 am Lithium: Significant Long-term Growth Supported by Luke Kissam, CEO Increasing Adoption of Electric Vehicles Eric Norris, President | Dr. Glen
Slide 6: Update on Our Journey & Strategic Overview
Update on Our Journey Luke Kissam & Strategic Overview Chairman, President & CEO
Slide 7: An Industry Leader with Significant Opportunity Ahead
An Industry Leader with Significant Opportunity Ahead 01 Industry-leading, competitively advantaged positions across our portfolio, which will expand in the future 02 Strong secular trends support long-term growth to annual Adj. EBITDA of $1.5B - $1.8B and annual FCF of ~$1B by 2024 03 Focus on prod
Slide 8: Diversified Portfolio with Above-Market Margin
Diversified Portfolio with Above-Market Margin KEY STATS BUSINESS OVERVIEW5 1887 Making the World Safe and Sustainable by Powering the Potential of People Founded 132 years Lithium Catalysts Bromine Specialties Global Employees1 ~5,600 Countries ~100 40% 29% 31% of Total of Total of Total Revenue Re
Slide 9: Agile, Long-term Strategy that Responds to Changing Market Conditions
Agile, Long-term Strategy that Responds to Changing Market Conditions • Demand outlook remains robust for Lithium Grow Invest in growth and focus on cash generation in Lithium • Continue to strengthen balance sheet to provide capacity for future options for lithium conversion assets needed to meet c
Slide 10: Diverse and Dedicated Leadership Team
Diverse and Dedicated Leadership Team Focused on Delivering Shareholder Value through All Economic Scenarios Luke Kissam Scott Tozier Karen Narwold Chairman & CEO EVP & CFO EVP & CAO Industry Experience: 30 years 31 years 29 years Eric Norris Netha Johnson Raphael Crawford President, Lithium Preside
Slide 11: Engaged, Diverse, and Accountable Board of Directors
Engaged, Diverse, and Accountable Board of Directors Laurie Brlas Bill Hernandez Doug Maine Former EVP & CFO, Former SVP, Finance & CFO, Former CFO, Newmont Mining PPG Industries IBM and MCI Luke Kissam Chairman Kent Masters Glenda Minor James O’Brien Former CEO, CEO & Principal, Former Chairman & C
Slide 12: Director Capabilities and Experience Support Our Long-term Vision
Director Capabilities and Experience Support Our Long-term Vision Global / Emerging Markets Experience 100% Relevant Industry Experience 85% P&L Experience 85% Manufacturing / Operations Experience 69% <5 yrs. 69% Average Tenure R&D / Innovation Experience 12 of 13 Supply Chain / Logistics Experienc
Slide 13: Our Legacy: Executing Long-term Strategy
Our Legacy: Executing Long-term Strategy to Build Industry-leading Company with Growth-oriented Portfolio 1998 - 2004 2012 - 2016 2017 - 2019 Formed Jordan Bromine Co. JV (‘98) Acquired Rockwood (‘15) Developed new technology to NEW Completed Lithium Hydroxide Established global leadership position
Slide 14: On Track to Achieve 2021 Targets Announced at 2017 Investor Day
On Track to Achieve 2021 Targets Announced at 2017 Investor Day 2021 TARGETS AT 2017 ID 2019E RESULTS STATUS $3.75B $3.6B - $3.7B Revenue (7% - 10% 5-yr CAGR) (12% 3-yr CAGR) $1.2B $1.02B - $1.06B Adj. EBITDA1 (10% - 15% CAGR) (12% 3-yr CAGR) GBU Revenue CAGR Lithium 18% -20% +27% Bromine Down / Fla
Slide 15: Building on Our Capabilities to Further Strengthen Our Position
Building on Our Capabilities to Further Strengthen Our Competitively Advantaged Position OUR PEOPLE & BEST-IN-CLASS SUSTAINABLE ASSETS APPROACH ENABLERS OF OUTPERFORMANCE Support a clear strategy to further enhance our OPERATIONAL strong financial EXECUTION position TECHNICAL FOR EXPERTISE LOW COST
Slide 16: Engaging Employees through a Greater Purpose
Engaging Employees through a Greater Purpose Our People and Sustainable Approach Our Purpose Culture Survey Making the World Safe and • Conducted 4,000+ surveys in January 2019 with 75% response rate Sustainable by Powering the • Incorporating employee engagement surveys with a focus on increasing P
Slide 17: Our Products Form the Foundation and Contribute to Sustainability
Our Products Form the Foundation and Contribute to Sustainability Our People and Sustainable Approach LITHIUM CATALYSTS BROMINE ENABLES… ENABLES… ENABLES… • Growth of “clean miles” driven • Reduced SOx and NOx • Prevention of fires starting in with electric vehicles emissions through cleaner electro
Slide 18: Case Studies on Sustainability
Case Studies on Sustainability Our People and Sustainable Approach Environmental Social Governance Executing the Next Level of Impact CASE STUDY: Feed Flow Control of VESPA CASE STUDY: Salar de Atacama, Chile Lithium CASE STUDY: ALB Code of Conduct Product Drying Equipment Plant - Preservation of In
Slide 19: Materiality Assessment and Sustainability Framework
Results of Our Materiality Assessment Led to Our Sustainability Framework Our People and Sustainable Approach Financials Safety Sustainable Our People & Business Ethics & Business Model Regulatory Compliance Workplace Inclusive & Diverse Foster a sustainable Workplace Promote an inclusive and busine
Slide 20: Portfolio Comprises World-class Resources
Portfolio Comprises World-class Resources Best-in-Class Assets SALAR DE ATACAMA, CHILE GREENBUSHES, AUSTRALIA JBC, JORDAN MAGNOLIA, AR, USA SILVER PEAK, NV, USA WODGINA, AUSTRALIA Geographically Diverse High Quality Large Scale Low Cost KINGS MOUNTAIN, NC, USA ANTOFALLA, ARGENTINA 20
Slide 21: Large-scale Manufacturing Footprint Serving the Globe
Large-scale Manufacturing Footprint Serving the Globe Best-in-Class Assets World-class Resources with High Concentration Levels Geographic Diversity Proximity to Customers Twinsburg, Niihama, OH, U.S. Japan Kings Mountain, Taichung, NC, U.S. Taiwan Silver Peak, Meishan, NV, U.S. China Magnolia
Slide 22: Long-term Growth Capture Supported by Technical Expertise
Long-term Growth Capture Supported by Technical Expertise Technical Expertise Extensive Application Know-How Strong Process Engineering Growing and Technical Service Expertise External Ecosystem • Lithium: Working with customers on • Continuous improvement focus • Keeping an eye on the future throug
Slide 23: Significant Opportunity to Deliver Value through Low-cost Operational Execution
Significant Opportunity to Deliver Value through Low-cost Operational Execution Operational Execution for Low-cost Aggressively Fostering Focusing on Driving Accelerating Best-in-Class Competitive Commercial Operational Customer Advantage Excellence Excellence Experience Top talent / high Lean / low
Slide 24: Invest with Us
Invest with Us Leadership position with unparalleled, geographically diverse, and low-cost 01 resources in Bromine and Lithium Building a stronger organization through talent development and 02 operational excellence World-class process technology, chemical engineering expertise, and 03 deep long-te
Slide 25: Bromine Specialties
Bromine Netha Johnson President Specialties
Slide 26: What You'll Hear Today…
What You’ll Hear Today… 01 Strong cash flow yield 02 Global Bromine footprint with advantaged resources 03 Leader in industry segments served 04 GDP-type growth with sustainable margins 26
Slide 27: Bromine Specialties Snapshot
Bromine Specialties Snapshot Financials | TTM Q3 2019 Business Environment2 $1.0B $319M 32% Flame Retardants 5-year CAGR: 2% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 Clear Completion Fluids 5-year CAGR: 3% Segment Characteristics Strong Applications Demand Pharma/Ag • Mineral extraction and proces
Slide 28: What We Said in 2017 and How We're Doing
What We Said in 2017 and How We’re Doing WHAT WE SAID WHAT WE DID STATUS GBU Revenue / • >10% EBITDA growth1 by capturing share of • Consistent, stable GDP-type growth Adj. EBITDA1 Margin China supply opportunity Maintain Low-cost Leadership • Debottlenecking key assets Position; Focus on • Reduce c
Slide 29: Transforming the Bromine Molecule to Benefit Society
Transforming the Bromine Molecule to Benefit Society: Estimated Global Market $2.6B in Revenue Brine Source Bromine Plant Derivatives Plant AR, U.S. Dead Sea, Jordan BROMINE IN OUR WORLD Appliances Automotive Buildings Telecom / 5G / Servers Oilfield PET Plastic Ag / Pharma Circuit Boards Tires Insu
Slide 30: Major Bromine End Markets Support GDP Growth
Major Bromine End Markets Support GDP Growth Brominated Flame Retardants Offshore Oilfield Industry Polyester (PET) Industries • Diversified markets drive stable • Continued offshore investment • Textile and packaging market driving demand growth since 2016 lows PET demand • New technology trends li
Slide 31: Bromine Strategy: Continue to Generate Cash
Bromine Strategy: Continue to Generate Cash through Strong Client Value Proposition and Increased Focus on Efficiency Profitable Growth and Low-cost Customer Sustained Producer Intimacy Cash Generation • Manage world-class, sustainable • Business model focused on the • Structurally reduce costs thro
Slide 32: Access to High Concentration of Bromine is a Low-cost Advantage
Access to High Concentration of Bromine is a Low-cost Advantage 1 Jordan Bromine Company (JBC) 2 Arkansas, U.S. JV with Arab Potash Highly integrated Company (APC) - operated and specialty focused - and marketed by Albemarle drives product flexibility and profitability Bromine Concentration Industri
Slide 33: Why Customers Buy from Us
Why Customers Buy from Us OUR INTEGRATED OPERATION BROMINE-FOCUSED WITH IS A KEY ENABLER DEDICATED RESOURCES Single stream of bromine can generate Recognized market leader 16 different products for our customers Manufacturing Expertise Customer focused 45% of production in Magnolia, AR is fr
Slide 34: Profitable Growth and Sustained Strong Cash Generation
Profitable Growth and Sustained Strong Cash Generation Capital Digital Solutions Drive Sustainability Deployment Continued Efficiency Industry-leading cost position supported Embracing digital solutions to power Reducing our environmental footprint by capital investments in continuous our business a
Slide 35: Stable Outlook for Bromine Specialties
Stable Outlook for Bromine Specialties FLAME RETARDANTS OILFIELD CLEAR BRINE FLUIDS OPERATIONAL EFFICIENCIES / LEAN 5-YEAR OUTLOOK Expect mature, stable market that will continue Expect to see incremental growth over the next Continue to work on efficiencies to provide BUSINESS to base load and gene
Slide 36: Key Takeaways
Key Takeaways Market leader with proven ability to deliver results 01 Access to highest quality Bromine resources in the world Low-cost position with diversified market portfolio to maintain industry-leading margins Operational excellence and superior service Core competencies provide the foun
Slide 37: Catalysts
Catalysts Raphael Crawford President 37
Slide 38: What You'll Hear Today…
What You’ll Hear Today… Positioned to benefit from continued growth in demand for transportation fuels and 01 chemicals, enhanced by tightening fuel specifications and growing prosperity in developing geographies 02 Innovation and technical services differentiate our offerings 03 Resilient business
Slide 39: Catalysts Snapshot
Catalysts Snapshot Financials | TTM Q3 2019 Fluid Cracking Catalysts (FCC) FCC Catalysts $911M $250M 28% • Cracks oil feedstock into gasoline and chemicals • Albemarle is a leader in the FCC Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 market in 1) bottoms cracking; 2) olefins output; and 3) emerging
Slide 40: What We Said in 2017 and How We're Doing
What We Said in 2017 and How We’re Doing WHAT WE SAID WHAT WE DID STATUS GBU Revenue / • 5-year Revenue CAGR of 3%+ • 7%+ average annual Revenue growth Adj. EBITDA1 Margin • Adj. EBITDA Margin 28% - 32% • Lower-end of margin range • Extended position in FCC max-olefin catalysts Leadership Position •
Slide 41: Strategically Positioned Network of Assets Enable Growth
Strategically Positioned Network of Assets Enable Growth • 2T miles driven per year on clean transportation fuels Amsterdam, powered by our Netherlands Plant catalysts (equivalent to 80M times around Bayport, U.S.A. Plant the world) • Two thirds of the 600+ worldwide refineries use our catalysts • S
Slide 42: Catalysts Used to Produce Clean Transportation Fuels and Chemicals
Our Catalysts Are Used to Produce Clean Transportation Fuels and Chemicals, and Are Integral to Refinery Profitability Gasoline / Petrochemicals Distillates HPC Kerosene 83M Diesel bpd *Reforming, isomerization not shown Crude Oil Feedstock Pretreatment Hydrocracking (HCPT) (HC) ~600 Atmospheric Die
Slide 43: Deep Dive into Our Catalysts
Deep Dive into Our Catalysts Fluid Cracking Catalysts Hydroprocessing Catalysts (FCC) (HPC) $2.6B • Mature business with moderate growth outlook $2.1B • Mature business with moderate growth outlook FCC Market1 HPC Market1 • FCC catalysts are continuously fed into FCC • Customers exchange HPC catalys
Slide 44: Macroeconomic Trends Drive Growth for Albemarle Catalysts
Macroeconomic Trends in Refineries, Fuels, and Consumerism Drive Growth for Albemarle Catalysts Growing global car pool of Increasing refinery complexity Environmental legislation Demand for durable plastics more than 1 billion vehicles, as well as shifting crude slates, leading to stricter fuel imp
Slide 45: FCC Units Produce More Clean Gasoline and Olefins
FCC Units Produce More Clean Gasoline and Olefins with Our Catalysts Our FCC Catalysts Create Value for Customers through Higher Product Yields and Lower Feedstock Costs Gasoline $ FCC feedstock (VGO or Resid) Propylene FCC $ Polypropylene unit Other FCC Catalyst Gasoline Demand Flattens Off in 2030
Slide 46: Emerging Oil-to-Chemicals Refineries Use FCC-type Technologies
Emerging Oil-to-Chemicals Refineries Use FCC-type Technologies for which Albemarle Leads in Innovation Petrochemicals Demand & New Crude Oil to Chemicals Technologies Will Drive FCC Industry Growth Beyond “Peak Gasoline” Traditional Refinery Traditional Oil Refinery Existing Product Slate Gas + Chem
Slide 47: HPC Units Produce Cleaner Transportation Fuels
HPC Units Produce Cleaner Transportation Fuels with Our Catalysts, and the Demand for Low-sulfur Fuels in Emerging Markets is Increasing Our HPC Catalysts Create Value for Customers through Better Yields and Lower Cost in Use HPC unit Distillates Clean gasoline, jet fuel, Cat A diesel (ULSD) $ High
Slide 48: Global Fuel Sulfur Standards Drive HPC Catalyst Demand
Global Fuel Sulfur Standards Drive HPC Catalyst Demand, and We Are Well Positioned to Win in the Markets for Distillates Global Proliferation of ULSD Standards Leads to Fuel Oil Standards [IMO 2020] Lead to Higher Distillate HPC Demand1 Higher Resid and Distillate HPC Demand2 Maximum Sulfur Limits i
Slide 49: Catalysts Strategy: Build Upon Technology and Geographic Strengths
Catalysts Strategy: Build Upon Technology and Geographic Strengths in Order to Expand Leadership in Growth Markets Presence Build on Best-in-Class in Growth Our Strengths Operations Markets Enhancing Customer Value Proposition Expanding Presence in Growth Areas, such as Talent • Improving refinery m
Slide 50: Case Study: Creating Long-term Value for Customers
Case Study: Creating Long-term Value for Customers through Collaboration and Continuous Innovation Additional Value Created by Improved Catalyst Performance at Asian Customer 40 $38M Annual Additional Value ($M) 30 $28M $20M 20 2019+ Customer extends 10 contract because of continuous innovation 0 20
Slide 51: Alliance with Industry Leaders to Develop Market-leading Products
Alliance with Industry Leaders to Develop Unique, Market-leading Products 2001 2006 2010 2015 2019 Nebula® Dedicated Bulk Start of Celestia™ First use of Launch of Celestia Developed Catalyst plant discovery Celestia in outside ExxonMobil ExxonMobil Typical Example of Industry Alliance with Albemarl
Slide 52: Low-cost Operational Excellence in Albemarle Catalysts
Low-cost Operational Excellence in Albemarle Catalysts Enables Quality Margins Commercial Supply Chain Financial Best-in-industry technical sales Continuous improvement model Organizational focus on FCF metrics Refinery modeling and value capture Strategy sourcing expertise Strict capita
Slide 53: Continued Growth in Strong Markets for Catalysts
Continued Growth in Strong Markets for Catalysts FCC HPC 5-YEAR OUTLOOK • Increasing mobility in non-OECD countries drives gasoline demand • Increasing transportation fuels demand in developing areas as well as BUSINESS • Global FCC-sourced propylene demand growth in emerging markets tightening sulf
Slide 54: Key Takeaways
Key Takeaways Our Catalysts business upgrades oils into clean transportation fuels and high- 01 value chemicals via differentiated services, technologies, and partnerships Well positioned to benefit from continued growth in demand for transportation fuels and chemicals, 02 enhanced by tightening fue
Slide 55: Q&A
Q&A
Slide 56: Break
Break
Slide 57: Lithium
Lithium Eric Norris GBU Overview President
Slide 58: What You'll Hear Today…
What You’ll Hear Today… 01 Broadest range of resources, manufacturing capabilities, products, and customer relationships in the lithium industry 02 Global lithium industry demand is on track to reach 1 million MT LCE by 2025, a 20%+ CAGR driven by EV penetration of new car sales 03 We anticipate tha
Slide 59: Lithium Snapshot
Lithium Snapshot Financials | TTM Q3 2019 Applications $1.3B $529M 41% 20% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 20% 60% Segment Characteristics Business Environment • Leading market positions in Hydroxide, Carbonate, • Volume growth driven by energy storage Lithium Metal, and Organometallics •
Slide 60: Access to the World's Most Highly Concentrated Resources
Albemarle has Access to the World’s Most Highly Concentrated Resources Lithium Brine Operations: Lithium Rock Operations: Li Concentrations Li Concentrations & Reserve Size Concentration Concentration Reserve Size Li Concentration (mg/L Li) 1800 3 8,000 Li2O Grade (% Li2O) kT LCE Reserve 1600 7,000
Slide 61: Integrated Global Footprint for Lithium Chemical Conversion
Integrated Global Footprint for Lithium Chemical Conversion R C Conversion to Battery S Resources Specialties and Technical Grade HQ Kings Mountain, C C Langelsheim, NC, U.S. S S Germany Silver Peak, C S Taichung, NV, U.S. R Taiwan New Johnsonville, TN, U.S. S R Wodgina, Australia R C C C R Salar de
Slide 62: ~650 Customers within Multiple End Markets in 60 Countries
Lithium Powers the Potential of Customers Across Multiple Markets ~650 Customers within Multiple End Markets in 60 Countries AUTOMOTIVE ENERGY ELECTRONICS SPECIALTY GLASS GREASE HEALTH AUTOMOTIVE PHARMA AGRICULTURE EFFICIENCY Phones / Pads Cooktop Stoves Machinery Vitamins Tires HIV Fungicides EV /
Slide 63: What We Said in 2017 and How We're Doing
What We Said in 2017 and How We’re Doing WHAT WE SAID WHAT WE DID STATUS GBU Revenue Growth and • +24% average annual EBITDA growth with above 40% • Double-digit growth and EBITDA Adj. EBITDA1 Margins margins of 38% - 44% margins • Lithium Carbonate: La Negra I / II production rate increased from 24
Slide 64: Key Changes to Our View of the Market Since 2017
Key Changes to Our View of the Market Since 2017 2025 Demand Outlook Supply Customers Price Cycle Stronger than we Industry projects have Customer base is Auto OEMs are earlier projected1 cost more than shifting from cathode pressing for more projected; Australian producers to battery visibility on
Slide 65: Lithium: Technology and Growth
Lithium Dr. Glen Merfeld Technology and Growth GBU CTO
Slide 66: Technology Innovation: Spanning from Minerals to Market
Technology Innovation: Spanning from Minerals to Market Resources Conversion Derivatization Hydrogeology Process Chemistry Protect Environment & Optimize Utilization & Sustain Resource Tailor Product Quality Extraction Advanced Materials Maximize Lithium Create Customer Solutions & Recovery & Purity
Slide 67: Creating Differentiation through Data Science
Creating Differentiation through Data Science Proprietary models built on internal intelligence and external, third–party data DEMAND TECHNOLOGY SUPPLY KEY OUTPUTS • OEM projections • What products • Expansive global database • Consumer trends • When and how much • Resource type and quality Material
Slide 68: Energy Storage Continues to Drive Lithium Demand
Energy Storage Continues to Drive Lithium Demand Demand by Application 2018 2019 ’19 – ’25 2025 Total Lithium Market Demand (kT LCE) Estimate Estimate CAGR Forecast 1,400 kT LCE Albemarle Estimates Electric Vehicles 59 93 38% 650 Other Mobility 25 26 7% 40 1,200 Consumer Electronics 36 38 11% 70 201
Slide 69: Lithium-ion Battery - Reversible Storage of Electrical Energy
Lithium-ion Battery - Reversible Storage of Electrical Energy ̶ High-Energy State Low-Energy State + (charged) Li° Li (discharged) Separator allows ions but not electrons Lithium Ions Anode Cathode hosts Li in high- hosts Li in low- potential state potential state (e.g., graphite) (e.g., m
Slide 70: Lithium Battery Technology Progression
Lithium Battery Technology Progression - Safer, Higher Energy, Faster Charge Legacy Advanced Next Frontier multi- solid lithium high cobalt microporous graphite higher nickel ceramic graphite valance separator metal compositions polymer compositions coatings thinner + silicon pre- LCO SEPARATOR lith
Slide 71: Albemarle Innovation on Both Sides of the Battery
Albemarle Innovation on Both Sides of the Battery Cathode Anode SEPARATOR CATHODE Advancements Advancements ANODE • Increased quality and purity • Novel pre-lithiation chemistry • Tuned particle size and morphology • New precursors for solid separators • Tailored electrolyte additives • Revolutionar
Slide 72: Lithium Use Evolves with Battery Technology Progression
Lithium Use Evolves with Battery Technology Progression Lithium Use-Intensity LITHIUM MATERIALS by Battery Component Legacy Advanced Next Frontier LiOH LiCl Anode Li2CO3 LiBr Electrolyte or Separator Li Metal Li2S Cathode First principle chemical models 2 ● ● used to estimate lithium use by Total Li
Slide 73: Lithium Product Demand Mapped to Technology Forecast
Lithium Product Demand Mapped to Technology Forecast Technology Forecast Product Forecast Technology Scenarios cathode & anode advancements Cathode Advancements 1,000 Delayed Technology Maturation Advanced 800 Demand (kT LCE) 48 / 52 Legacy Today 600 25 / 75 LiOH Base Case + 400 Anode Advancements 6
Slide 74: Lithium: Supply, Price and Strategy
Lithium Eric Norris Supply, Price and Strategy President
Slide 75: Lithium Supply Expected to Grow 3x from 2019 to 2025
Lithium Supply Expected to Grow 3x from 2019 to 2025 BY RESOURCE ORIGIN BY PRODUCT kT LCE 2019E 2025F kT LCE 2019E 2025F Total Brine 145 400 Carbonate 195 410 Total Rock1,2 180 640 Hydroxide 70 525 Specialties2 60 105 Total Supply 325 1,040 Total Supply 325 1,040 2019 2025 2019 2025 18% 10% 45% 38%
Slide 76: In 2019, Lithium Supply Capacity Grew Faster than Demand
In 2019, Lithium Supply Capacity Grew Faster than Demand Rock Carbonate Hydroxide Brine Albemarle Li2CO3 LiOH Demand Demand Cash Cost ($/kg LCE) Cash Cost ($/kg LCE) Greenbushes Atacama Greenbushes Potential Volume (kT LCE) Potential Volume (kT LCE) Albemarle Well Positioned in Over-Supplied Market
Slide 77: 2019 Brine Supply Chain
2019 Brine Supply Chain: 45% of Projected LCEs and Largely Carbonate *LCE Basis 2019E Total Production of Resource Chemical Carbonate to Lithium 325 kT LCE Production1 Conversion Hydroxide Product Albemarle Hydroxide Atacama-ALB 45% 40 kT 25 kT 55% Brine Rock Supply / Flows Atacama-SQM SQM 47 kT 145
Slide 78: 2019 Rock Supply Chain
2019 Rock Supply Chain: 55% of Projected LCEs and Lower Total Utilization *LCE Basis 2019E Total Production of Resource Chemical Conversion Lithium Product 325 kT LCE Production1 180 kT 180 kT Albemarle2,3 Hydroxide Talison 50-55 kT 45 kT 45% 55% Brine Brine Rock Rock Tianqi2,3 50-55 kT Supply / Flo
Slide 79: By 2025, Market Tightens to Undersupplied
By 2025, Market Tightens to Undersupplied Rock Brine Carbonate Hydroxide LiOH Albemarle Demand Li2CO3 Delayed and Accelerated Technology Demand Accelerated Maturation Scenarios Stress Range of Delayed Technology Adoption of Low Cobalt Cathodes Accelerated Delayed Technology Maturation1 using LiOH Te
Slide 80: 2025 Brine Supply Chain
2025 Brine Supply Chain: Grows 2.7x with Continued Carbonate Alignment *LCE Basis 2025F Total of Resource Chemical Carbonate to Lithium 1,040 kT LCE Production1 Conversion Hydroxide Product Deltas vs. 2019 Hydroxide Chile Chile 70 kT 45 38% Brine 62% 205 Rock kT118 Supply / Flows 400 kT Brine from
Slide 81: 2025 Rock Supply Chain
2025 Rock Supply Chain: Grows 3.6x with Strong Hydroxide Focus *LCE Basis 2025F Total of Resource Chemical Conversion Lithium Product 1,040 kT LCE Production1 640 kT 640 kT Deltas vs. 2019 Hydroxide 38% Brine 62% 2019 2019 Producers2,3 455 kT 408 Rock Producers 535 kT 355 Supply / Flows 640 kT Min
Slide 82: The Lithium Price Cycle is Moving Towards a New Trough Level
The Lithium Price Cycle is Moving Towards a New Trough Level 25 Asia Spot Prices • First major cycle in lithium since the EV era began Source: Benchmark Minerals • Growth acceleration is driving the need for new sources 20 of supply with higher marginal cash costs • Today, cash cost of the marginal
Slide 83: Lithium Strategy: Strong Foundation / Resilient to Market Dynamics
Lithium Strategy: Strong Foundation / Resilient to Market Dynamics Manage Expand Drive Cost and Sustain World’s Best Capacity with Operational Premium Value Resources Discipline Excellence Proposition • 270 kTa LCE of spodumene • Reduced capital intensity • Lean, low-cost manufacturing • Long-term c
Slide 84: Large and Diverse Resources Positioned for the Next Decade
Large and Diverse Resources Positioned for at Least the Next Decade 2019 Operating Available Resource % Albemarle Resource Capacity Capability Utilization (kTa LCE) (kTa LCE) Atacama CORFO Lease 40 100 40% 50% Greenbushes Interest1 40 120 33% Wodgina2 0 100 0% Silver Peak 5 10 50% Kings Mountain - 5
Slide 85: Disciplined and Measured Plan to Expanding Conversion Capacity
Disciplined and Measured Plan to Expanding Conversion Capacity Our plan through 2024 would only utilize ~60% of available resources All figures in kT LCE and represent estimates of lithium nameplate conversion capacity Reducing Capital Intensity 350 • Deploying standard process flow and 300 equipmen
Slide 86: Driving Operational Excellence to Become World Class and Low Cost
Driving Operational Excellence to Become World Class and Low Cost HSE 2022 • Drive Operational Injury and Illness rate (OII) from 1.0 in 2018, to less than 0.5 in 2019 and 0.2 by 2022, implementing recognized best practices Albemarle Lithium will be at world-class standards LEAN MANUFACTURING by 202
Slide 87: Creating Value via a Differentiated Experience for Our Customer
Creating Value via a Differentiated Experience for Our Customer WHAT CUSTOMERS VALUE ALB OFFERING TODAY ALB FUTURE OFFERINGS Continue to meet customers’ needs and provide Secure supply / competitive price LTAs with floor price appropriate returns to Albemarle 5 Carbonate plants / 5 Hydroxide plant
Slide 88: Outlook for Lithium
Outlook for Lithium ENERGY STORAGE INDUSTRIAL SPECIALTIES 5-YEAR OUTLOOK • Pricing environment expected to improve as • Remains a GDP market and prices driven by • Pricing based on value in use supply becomes more balanced in the mid- Energy Storage • Growth above GDP due to favorable macro- BUSINES
Slide 89: Key Takeaways
Key Takeaways ALB has the broadest range of resources, manufacturing capabilities, 01 products, and customer relationships in the Lithium industry Global Lithium demand is on track to reach 1 million MT LCE by 2025, 02 a 20%+ CAGR driven by EV penetration of new car sales We anticipate that the curr
Slide 90: Maintaining Our Financial Flexibility
Maintaining Our Scott Tozier Financial Flexibility EVP, CFO
Slide 91: What You'll Hear Today…
What You’ll Hear Today… 01 Strong history of execution and investment in high-return projects 02 Significant growth in cash generation; committed to generate free cash in 2021 03 Stronger organization through operational excellence and talent development 04 Disciplined capital allocation: reinvestme
Slide 92: History of Strong Financial Performance
History of Strong Financial Performance Net Sales1 ($B) Adj. EBITDA ($B) & Margin1,2 FCF1 ($B) $2.00 45% $1.5 - $1.8 $1.80 40% $4.7 - $5.3 $1.60 35% $0.8 - $1.0 28% - 29% 30% $1.40 28% 29% 32% $3.6 - $3.7 26% 30% $3.7 - $3.4 $1.20 36% $0.6 $3.1 $1.0 - $1.1 $1.0 25% $1.0 $2.7 $1.00 $0.9 20% $0.2 $0.8
Slide 93: Financials on a Pro Forma Basis
Financials on a Pro Forma Basis Net Sales1 ($B) Adj. EBITDA ($B) & Margin1,2 Focused Portfolio $2.00 45% • Strong margin businesses: 5-year $1.5 - $1.8 Target: $1.80 40% $4.4 - $5.0 ̶ Lithium 40% - 45% $1.60 35% 30% 30% 28% - ̶ Bromine 28% - 32% 30% 32% $1.40 29% 27% 30% $3.3 - $3.4 - ̶ Catalysts 26
Slide 94: Reaffirming Full Year 2019 Guidance
Reaffirming Full Year 2019 Guidance FY 2019 2019 Guidance vs. 2020 Outlook Guidance FY 2018 Pro-Forma Company • EBITDA down around 10% Net Sales $3.6B - $3.7B 7% - 10% Lithium • Mid single-digit volume growth and cost productivity; price Adj. EBITDA1 $1.02B - $1.06B 2% - 6% decline pushes EBITDA dow
Slide 95: Two-Year Cost Savings Initiative Underway
Two-Year Cost Savings Initiative Underway Project to Transform Our Business Model by the End of 2021 • Structural cost improvement task force assembled and led by Netha Johnson • Cross-functional expertise focused on all cost elements • Business segment assessments underway • Targeting best-in-class
Slide 96: Significant Enabler of Operational Excellence: Global ERP System
Significant Enabler of Operational Excellence: Global ERP System Rollout will be Complete in January 2020 ► From a multitude of systems to one globally integrated system ► Improved governance, compliance, and controls ► Easy access to real time data ► Enhanced financial management and flexibility AR
Slide 97: Poised to Generate Significant Cash Growth from Lithium Expansions
Poised to Generate Significant Cash Growth from Lithium Expansions Cash Flow1 ($B) Highlights • Positive FCF beginning 2021 $1.0 - $1.2 even if prices stay depressed • Lithium volume growth $0.7 $0.7 - $0.8 $0.8 - $0.9 $0.5 $0.8 - • Lower CAPEX $1.0 $0.1 - $0.4 $0.6 $0.3 • Net Cash from Operations $
Slide 98: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation Grow Dividend 1 2 Maintain Financial Flexibility • 25 years of consecutive dividend increases • Maintain Investment Grade rating • Targeting median specialty chemical payout ratio • Long-term Net Debt to Adj. EBITDA Target: 2.0x - 2.5x Capital • Shorter-term N
Slide 99: 25 Years of Consecutive Dividend Growth
25 Years of Consecutive Dividend Growth Dividends per Share ($) 1.60 Dividend Cash from Ops $1.47 Payout Ratio1 Payout Ratio2 1.20 ALB 25% 29% Specialty 38% - 40% 20% - 23% Chemicals 0.80 0.40 $0.10 0.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 100: Strong Financial Position Results in Strategic Flexibility
Strong Financial Position Results in Strategic Flexibility Credit Ratings Maturity Profile ($M) (Estimated Y/E 2019) S&P Baa2 Stable $550 $550 Moody’s BBB Stable Fitch BBB Stable $444 $422 $346 • Committed to maintaining midpoint Investment Grade credit rating $300 • ~$1.3B liquidity $200 • 2019 Net
Slide 101: Measured Growth Capex Drives Significant Growth in EBITDA
Measured Growth Capex Drives Significant Growth in EBITDA • Jordan Bromine: Commissioned Tetrabrom (Q3 2018) Estimated Annual EBITDA Improvement • 24 kT capacity expansion Projects added between 2015 - 2024, • China: Completed Acquisition of Jiangxi Jiangli CAPEX of ~ $2.1B - $2.4B (Q4 2016) and Com
Slide 102: Measured Approach to Inorganic Growth: M&A & JVs
Measured Approach to Inorganic Growth: M&A & JVs STRATEGIC FILTERS OUR PHILOSOPHY Lithium conversion assets • Enough resources for the next decade Assets, businesses to fill out portfolio • Limited interest in cash-only partnerships given our Specialized, next gen technology and / or materials stron
Slide 103: MARBL JV Adds Hard Rock Assets to Support Lithium Hydroxide Growth
MARBL JV Adds Hard Rock Assets to Support Lithium Hydroxide Growth • Partnered with Mineral Resources - world-class Australian mining services company • Access to high-quality spodumene source strengthens our long-term asset position to support future demand growth • Cash payment of $820M for 60% in
Slide 104: Assessing Strategic Alternatives of FCS and PCS Businesses
Assessing Strategic Alternatives of FCS and PCS Businesses WHY PURSUE ALTERNATIVES Fine Chemistry Polymer Catalysts • Active interest from prospective buyers Services Solutions • Profitable businesses with strong operating teams (FCS) (PCS) • The right buyer would extend their track record of indust
Slide 105: 2024 Long-term Financial Targets
2024 Long-term Financial Targets 5-Year Targets LITHIUM BROMINE CATALYSTS2 TOTAL ALB Assumptions Revenue CAGR 12% - 17% 1.5% - 2.5% 3% - 5% 6% - 9% • 5% annual dividend growth • $100M run-rate productivity savings by Adj. EBITDA Margin1 40% - 45% 28% - 32% 26% - 28% 32% - 36% 2021 • 20% effective ta
Slide 106: Key Takeaways
Key Takeaways 01 Reaffirming 2021 financial targets and introducing 2024 outlook Confident in our ability to deliver value given investment in technology, talent 02 and operational excellence Committed to achieving cost savings of $100M and positive cash flow in 2021 – 03 we will get to $1B FCF by 2
Slide 107: Closing Remarks
Closing Luke Kissam Chairman, President & CEO Remarks
Slide 108: An Industry Leader with Significant Opportunity Ahead
An Industry Leader with Significant Opportunity Ahead 01 Industry-leading, competitively advantaged positions across our portfolio, which will expand in the future 02 Strong secular trends support long-term growth to annual Adj. EBITDA of $1.5B - $1.8B and annual FCF of ~$1B by 2024 03 Focus on prod
Slide 109: Q&A
Q&A
Slide 110: Leadership Bios
te" = Ef FF ‘~/ " ” ‘ ey . ] yy eo : Z . e* | ie ~ L Leadership Bios
Slide 111: Luke Kissam | Chairman & CEO
Luke Kissam | Chairman & CEO Luke Kissam is Chairman, President & Chief Executive Officer. Kissam was named Chief Executive Officer of Albemarle Corporation in September 2011. He was elected to the company’s board of directors in November 2011 and named chairman of the board in November 2016. Kissam
Slide 112: Scott Tozier | EVP & CFO
Scott Tozier | EVP & CFO Scott Tozier is Executive Vice President and Chief Financial Officer. In this role, he is responsible for all financial and fiscal management aspects of the company’s operations. He sets internal controls within the organization to protect the financial interest of stakehold
Slide 113: Eric Norris | President, Lithium
Eric Norris | President, Lithium Eric Norris is President of Albemarle’s Lithium global business unit. Norris joined Albemarle in January 2018 as Chief Strategy Officer. In this role, he managed the company’s strategic planning, M&A, and corporate business development programs as well as its investo
Slide 114: Dr. Glen Merfeld | VP, Lithium CTO
Dr. Glen Merfeld | VP, Lithium CTO Dr. Glen Merfeld is Chief Technical Officer for the Lithium business. In this role, he leads all Lithium research and development in the areas of hydrogeology, extraction technology, energy storage, specialty materials, battery recycling and data science. Prior to
Slide 115: Netha Johnson | President, Bromine Specialties
Netha Johnson | President, Bromine Specialties Netha Johnson is President of Albemarle’s Bromine Specialties global business unit. Johnson joined Albemarle in 2018 as President of Bromine Specialties after more than 20 years of diverse leadership experience, both domestically and internationally. He
Slide 116: Raphael Crawford | President, Catalysts
Raphael Crawford | President, Catalysts Raphael Crawford is President of Albemarle’s Refining Catalysts global business unit. Crawford joined Albemarle in 2012 as Vice President of the Performance Catalyst Solutions division. In 2015, he was appointed Vice President of the Synthesis and Polymer Solu
Slide 117: Dave Ryan | VP, Corporate Strategy & IR
Dave Ryan | VP, Corporate Strategy & IR Dave Ryan serves as Albemarle’s Vice President, Corporate Strategy and Investor Relations. In this role, he manages the company’s strategic planning, M&A, and corporate business development programs, as well as its investor relations efforts. Ryan joined Albem
Slide 118: Karen Narwold | EVP & CAO
Karen Narwold | EVP & CAO Karen Narwold serves as Albemarle’s Executive Vice President, Chief Administrative Officer and General Counsel. In this role, she leads the company's legal, ethics and compliance, government and regulatory affairs, and communications groups. Narwold joined Albemarle in Sept
Slide 119: DeeAnne Marlow | Chief Human Resources Officer
DeeAnne Marlow | Chief Human Resources Officer DeeAnne Marlow serves as Albemarle’s Chief Human Resources Officer. In this role, she is responsible for leading the execution of the Human Resources’ strategic plan and key initiatives with an emphasis on business partnerships, talent acquisition and d
Slide 120: Tom Thomas | VP, Integrated Business Operations
Tom Thomas | VP, Integrated Business Operations Tom Thomas serves as Albemarle’s Vice President of Integrated Business Operations. Thomas joined Albemarle in 2011 as Division Vice President, Fine Chemistry Services. In 2013, he was appointed Division Vice President, Stabilizers and Curatives and was
Slide 121: Jac Fourie | VP, Engineering & Project Execution
Jac Fourie | VP, Engineering & Project Execution Jac Fourie serves as Albemarle’s Vice President, Engineering and Project Execution. Fourie joined Albemarle in January 2019 as Vice President, Engineering and Project Execution. In this role he is responsible for Albemarle’s engineering, project devel
Slide 122: Michael Brown | VP, Global HSE & Operational Excellence
Michael Brown | VP, Global HSE & Operational Excellence Michael Brown serves as Albemarle’s Vice President of Global HSE & Operational Excellence. In this role, he is responsible for overseeing the company’s health and safety initiatives designed to protect our people, assets, environment and commun
Slide 123: Appendix
Appendix Non-GAAP Reconciliations and Glossary
Slide 124: Adj. Net Income
Adj. Net Income Three Months Ended September 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 155,070 $ 129,745 Add back: Non-operating pension and OPEB items (net of tax) (543) (1,856) Non-recurring and other unusual items (net of tax) 8,497 13,568 Adj. net income a
Slide 125: Net Income (Loss)
Net Income (Loss) Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2018 2017 2018 2017 Net income (loss) attributable to Albemarle Corporation $ 129,596 $ (218,366) $ 693,562 $ 54,850 Add back: Non-operating pension and OPEB items (net of tax) 8,829 (8,455) 3,234 (10,548) Non
Slide 126: EBITDA and Adj. EBITDA
EBITDA and Adj. EBITDA Three Months Ended September 30, ($ in thousands) 2019 2018 Net income attributable to Albemarle Corporation $ 155,070 $ 129,745 Add back: Interest and financing expenses 11,108 12,988 Income tax expense 25,341 33,167 Depreciation and amortization 54,487 49,707 EBITDA 246,006
Slide 127: EBITDA
EBITDA Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2018 2017 2018 2017 Net income (loss) attributable to Albemarle Corporation $ 129,596 $ (218,366) $ 693,562 $ 54,850 Add back: Interest and financing expenses 12,571 16,455 52,405 115,350 Income tax expense 11,196 378,22
Slide 128: Adj. EBITDA - by Segment (3 Months ended September 30)
Adj. EBITDA - by Segment (3 Months ended September 30) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended September 30, 2019: Net income (loss) attributable to Albemarle Corporation $ 102,136 $ 75,224 $ 54,345 $
Slide 129: Adj. EBITDA - Margin by Segment (3 Months ended September 30)
Adj. EBITDA - Margin by Segment (3 Months ended September 30) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended September 30, 2019: Net sales $ 330,386 $ 256,267 $ 261,346 $ 847,999 $ 31,748 $ 879,747 Net income (loss) at
Slide 130: Adj. EBITDA - Continuing Operations (12 Months Ended)
Adj. EBITDA - Continuing Operations (12 Months Ended) 12 Months Ended ($ in thousands) Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Continuing Operations Net income attributable to Albemarle Corporation $ 345,600 $ 693,562 $ 695,371 $ 547,108 $ 572,433 Depreciation and amortizati
Slide 131: Adj. EBITDA - by Segment (12 Months Ended)
Adj. EBITDA - by Segment (12 Months Ended) 12 Months Ended ($ in thousands) Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Lithium Net income attributable to Albemarle Corporation $ 409,753 $ 428,212 $ 413,047 $ 413,058 $ 424,881 Depreciation and amortization 96,798 95,193 93,220 9
Slide 132: Adj. EBITDA Supplemental
Adj. EBITDA Supplemental1 ($ in thousands) 12 Months Ended Three Months Ended Sep 30, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Adj. EBITDA $ 1,006,420 $ 254,351 $ 261,900 $ 225,867 $ 264,302 Net income attributable to noncontrolling interests 71,730 16,548 20,772 17,957 16,453 Equity
Slide 133: Diluted EPS
Diluted EPS Three Months Ended September 30, 2019 2018 Diluted earnings per share attributable to Albemarle Corporation $ 1.46 $ 1.20 Add back: Non-operating pension and OPEB items (net of tax) (0.01) (0.02) Non-recurring and other unusual items (net of tax) Restructuring and other — 0.04 Acquisitio
Slide 134: Diluted EPS
Diluted EPS Three Months Ended Year Ended December 31, December 31, 2018 2017 2018 2017 Diluted earnings (loss) per share $ 1.21 $ (1.95) $ 6.34 $ 0.49 Add back: Non-operating pension and OPEB items(a) 0.08 (0.08) 0.03 (0.09) Non-recurring and other unusual items (net of tax) Utilization of inventor
Slide 135: 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 September 30, 2019: As reported $ 163,723 $ 25,341 15.5% Non-recurring, other unusual and non-operating pension and OP
Slide 136: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended September 30, 2019 2018 Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Lithium $ 31,603 $ — $ 17,901 $ — Bromine Specialties — (16,492) — (13,717) Catalysts 1,633 — 4,180 — Corporate — (56) — (
Slide 137: Glossary
=f re | ~~ Cat ~ Glossary
Slide 138: Glossary
Glossary General Bromine Specialties Catalyst • GBU: Global Business Unit • CCF: Clear Completion Fluid • FCC: Fluid Cracking Catalysts • OPEB: Other Postemployment Benefits • PTA: Purified Terephthalic Acid • CFT: Clean Fuels Technology • MT: Metric Tons • PET: Polyethylene Terephthalate • HPC: Hyd
Slide 139: Glossary Continued
Glossary Continued Lithium • Li: Lithium • OII: Occupational Illness and Injury, OSHA standard - injuries per 200,000 hours worked • LiCl: Lithium Chloride • LiO2: Lithium Oxide • Li2CO3: Lithium Carbonate • TG: Technical Grade • LCE: Lithium Carbonate Equivalent • LDV: Light Duty Vehicles • BEV: Ba
Slide 140: www.albemarle.com
NYSE www.albemarle.com A\ALBEMARLE’ 40