Albemarle Corporation · NYSE:ALB
Albemarle — Q2 2024 Earnings Presentation
36 slides from Albemarle's earnings presentation, Aug 1, 2024
Slide 1: Q2 2024 Earnings
Q2 2024 Earnings August 1, 2024 8:00am ET
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation, conference call and discussions that follow contain statements concerning our expectations, anticipations and beliefs regarding the future, which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act o
Slide 3: Non-GAAP Measures
Non-GAAP Measures It should be noted that adjusted net income attributable to Albemarle Corporation common shareholders, adjusted diluted earnings per share attributable to common shareholders (“EPS”), non-operating pension and other post-employment benefit (“OPEB”) items per diluted share, non-recu
Slide 4: Q2 2024 net sales of $1.4B, with Energy Storage volume growth of 37%
Solid progress demonstrated by Q2 results: ▪ Q2 2024 net sales of $1.4B, with Energy Storage volume growth of 37% Y/Y ▪ Adj. EBITDA1 of $386M, up Q/Q across all three businesses ▪ Cash from ops. of $363M, an increase of $289M Y/Y; oper. cash conversion of 94%2 ▪ Net debt to adjusted EBITDA of 2.1x,
Slide 5: Q2 2024 Financial Summary
Q2 2024 Financial Summary (in millions, except per share amounts) Q2 2024 Q2 2023 Variance Net Sales $1,430 $2,370 -40% Net (Loss) Income Attributable to Albemarle Corporation ($188) $650 NM Adjusted EBITDA1 $386 $1,266 -69% Adjusted EBITDA Margin1 27% 53% -2600 bps Diluted EPS Attributable to Commo
Slide 6: Q2 Y/Y and Sequential Adjusted EBITDA Bridge
Q2 Y/Y and Sequential Adjusted EBITDA1 Bridge ($ in millions) Q2 2024 vs 2023 ▪ Higher sales volumes (+31%) more Y/Y than offset by lower prices and reduced equity earnings due to soft $1,266 market fundamentals, particularly in the lithium value chain $386 ($1,510) Q2 2023 Q2 2024 Q2 vs Q1 2024 Seq
Slide 7: Maintaining Total Company 2024E Outlook Considerations
Maintaining Total Company 2024E Outlook Considerations1 The $15/kg scenario is expected to apply even assuming lower July market prices persist for the balance Recent pricing Q4 2023 avg. H2 2023 avg. Observed Lithium Market Price Scenarios: of the year due to: (US$/kg LCE)2 $12-15 $20 $25 ▪ Enterpr
Slide 8: Financial and Operational Actions Provide Flexibility to Navigate Dynamic Business Conditions
Our Financial and Operational Actions Have Provided the Flexibility to Navigate Dynamic Business Conditions Capital Structure Total Liquidity: $3.5B $140 Other Credit Lines ▪ ~$1.8B of cash & cash equivalents1 $3,520 Total Debt ▪ Full commercial paper capacity available for liquidity ($1.5B) $1,500
Slide 9: Improved Operating Cash Flow Considerations
Improved Operating Cash Flow Considerations Operating Cash Flow ▪ Cash conversion in 2024 now expected to be ~50%, at the high end of historical average1 Conversion ▪ Q2 operating cash flow conversion of 94% due to higher 94% Talison dividends ▪ Improvements to operating cash flow driven by: 1. High
Slide 10: Initiating Comprehensive Review of Our Cost and Operating Structure
Q2 2024 Earnings Initiating Comprehensive Review of Our Cost and Operating Structure 10
Slide 11: Near-Term Market Conditions Remain Dynamic, Requiring Operational Agility
Near-Term Market Conditions Remain Dynamic, Requiring Operational Agility Dynamic Market Conditions Increasing Geopolitical Uncertainty Demand Global landscape • EV registrations +22% Y/Y YTD1; strong growth in China • Elections in >60 countries + EU partly offset by slower expansion in U.S. and W.
Slide 12: Long-Term Lithium Demand Drivers Remain Intact
Long-Term Lithium Lithium-ion Battery Pack Price1 Lithium Demand Demand Drivers ($/kilowatt-hour, real 2023) by Application2 (MMt LCE) Remain Intact 2015-2030 2024-2030 500 Demand 450 3.3 ▪ Projected lithium demand CAGR 400 of 15-20% from 2024 to 2030 350 ▪ Battery technology evolving for Global avg
Slide 13: Taking Further Actions to Maintain Long-Term Competitive Position
Taking Further Actions to Maintain Long-Term Competitive Position Optimizing Improving Reducing Enhancing Conversion Network Costs and Efficiency Capital Expenditures Financial Flexibility Previously • Ramping in-flight projects to deliver • In January, announced proactive • Re-phased capex to maint
Slide 14: Optimizing our Global Conversion Network
Optimizing our Global Conversion Network Project Developments Adjusting Australian LiOH Leveraging High Quality Flexible Global Portfolio of Conversion Footprint Resource Base Conversion Assets Focusing on optimizing and ramping Ramping production of high-quality low Extensive tolling network provid
Slide 15: Building a Culture of Continuous Improvement
Building a Culture of Continuous Improvement Restructuring & Productivity - delivered more than $150M in benefits in Q2; on track to exceed initial targets by 50%: ▪ Manufacturing ($80M target) - Yield, rate, and availability improvements at La Negra, Qinzhou, and Xinyu ▪ Procurement ($150M target)
Slide 16: Potential Further Reductions in Capital Expenditures Going Forward
Potential Further Reductions in Capital Expenditures Going Forward FY 2024E capital expenditures include: ▪ Continuing critical health, safety, environmental Capital Expenditures and site maintenance projects $2.5 ($ billions) ▪ Commissioning the Meishan, China lithium $2.1B Conversion conversion fa
Slide 17: Maintaining Our Competitive Position and Driving Long-term Value Creation
Q2 2024 Earnings Maintaining Our Competitive Position and Driving Long-term Value Creation 17
Slide 18: Albemarle's Strategic Framework
Albemarle’s Strategic Framework Albemarle leads the world in transforming essential resources into the critical ingredients for modern living with people and planet in mind. Defining Our Performance Ambition Lead with Impact Purpose-Driven Growth Partner of Choice Stakeholder Value Providing Essenti
Slide 19: Harnessing Our Resilient Competitive Strengths to Navigate Market Conditions
Harnessing Our Resilient Competitive Strengths to Navigate Market Conditions ▪ Diverse global portfolio of world-class resources, with vertical integration World-Class Resources ▪ Access to multiple large-scale, high-grade lithium and bromine resources ▪ Deep technical and operational know-how to tr
Slide 20: Solid Q2 results, strengthening competitive position and financial flexibility
Solid Q2 results, including Adj. EBITDA1 of $386M, up Q/Q across all three businesses; cash from ops. of $363M, an increase of $289M Y/Y Maintaining FY 2024 total company outlook considerations due in part to Strengthening our enterprise-wide cost improvements, higher volumes project ramps, and cont
Slide 21: Q3 2024 Investor Relations Events
Q3 2024 Investor Relations Events Sep 4 Jefferies Industrials Conference Meredith Bandy, CFA VP, Investor Relations & Sustainability meredith.bandy@albemarle.com +1 980.999.5168 Sep 5 UBS Global Materials Conference Eran del Castillo Senior Manager, Investor Relations Sep 9-12 US NDR eran.delcastill
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Slide 23: Appendix
\ Albemarle*® Appendix
Slide 24: Specialties, Ketjen and Corporate Outlook Considerations
Specialties, Ketjen and Corporate Outlook Considerations FY 2024E Change vs Segments as of July 31, 2024 Previous Outlook Specialties Net Sales $1.3B – $1.5B ▬ Specialties Adj. EBITDA $210M – $260M ▼ Higher logistics costs Ketjen Net Sales $1.0B – $1.2B ▬ Ketjen Adj. EBITDA $130M – $150M ▬ Other Cor
Slide 25: Energy Storage Market Price Scenarios, FY 2024E
Energy Storage Market Price Scenarios, FY 2024E1 FY 2024E Assumptions: Avg Lithium Market Price (US$/kg LCE)2 Energy Storage ranges based Recent pricing Q4 2023 avg. H2 2023 avg. on projected volume increase of $12-15 $20 $25 10 to 20% Y/Y in 2024 Net Sales $3.2B - $3.4B $3.8B - $4.1B $4.5B - $4.9B
Slide 26: 2024 Commentary by Segment
2024 Commentary by Segment1 ▪ Q2 sales volumes of 53 kT LCE STORAGE ▪ ~2/3 of 2024E salts volumes sold on index referenced, variable priced contracts; average 2-5 years duration; typically 3-month lag, some with floors and ceilings, specifics vary by contract ▪ ~1/3 of 2024E salts volumes sold on sh
Slide 27: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures NON-GAAP MEASURE DESCRIPTION Adjusted Net Income Attributable to Net income after mandatory convertible preferred stock dividends before non-recurring, other unusual and non-operating pension and OPEB. Common Shareholders Adjusted Diluted EPS Attributable to Diluted
Slide 28: 2024 Adj. EBITDA Definition
2024 Adj. EBITDA Definition ear e e ecember As A ste As e orte e i itio Net income attributable to Albemarle Corporation 1,5 ,4 1,5 ,4 Depreciation and amorti ation 429,944 429,944 Interest and financing expenses 11 ,0 2 11 ,0 2 Income tax expense 4 0,2 4 0,2 Proportionate share of indfield oldings
Slide 29: Adjusted Net Income
Adjusted Net Income ree o t s e e Net (loss) income attributable to Albemarle Corporation (188,198) 50,04 Add back: Non operating pension and OPEB items (net of tax) ( ) 81 Non recurring and other unusual items (net of tax) 2 4,498 21 ,194 Adjusted net income attributable to Albemarle Corporation 45
Slide 30: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA ree o t s e ear e e ecember o et o et o et sales sales sales Net income attributable to Albemarle Corporation (188,198) (1 .2) 50,04 2 .4 1,5 ,4 1 .4 Add back: Interest and financing expenses 5,18 2.5 25,5 1.1 11 ,0 2 1.2 Income tax (benefit) expense ( 0, 0) (2.1) 42,98 1.
Slide 31: Adjusted EBITDA – Continuing Operations (twelve months ended)
Adjusted EBITDA – Continuing Operations (twelve months ended) wel e o t s e Se ec ar Net income attributable to Albemarle Corporation ,918,28 , 2 , 01 1,5 ,4 , 44 (500,89 ) Depreciation and amorti ation 4 , 0 1, 2 429,944 4 ,424 511, 18 Proportionate share of indfield oldings income tax expense 4 ,1
Slide 32: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 wel e o t s e ree o t s e ar ec Se A ste A Equity in net income of non indfield oldings unconsolidated investments (net of tax) (22,200) ( ,88 ) ( ,821) (2,121) (4, 5) Dividends received from non indfield oldings unconsolidated investments 2 , 99 9,4 0 1, 5 5,28 ,18 o s
Slide 33: Diluted EPS
Diluted EPS ree o t s e e Diluted (loss) earnings per share attributable to Albemarle Corporation common shareholders (1.9 ) 5.52 Add back: Non operating pension and OPEB items (net of tax) Non recurring and other unusual items (net of tax) Restructuring and other 0.02 0.05 Acquisition and integrati
Slide 34: Effective Tax Rate
Effective Tax Rate oss come be ore i come ta es a e it i et i come o co soli ate come ta be e it ecti e i come ta i estme ts e e se rate ree mo t s e e e As reported (494,1 2) ( 0, 0) .2 Non recurring, other unusual and non operating pension and OPEB items 11,9 2 ,810 As adjusted (182,1 0) 4 ,150 (2
Slide 35: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest ree o t s e e o co trolli g o co trolli g it come terest it come terest Energy Storage 2 ,0 54 , 98 Specialties (11,890) (2 , 54) etjen ,88 5,108 Corporate 2,958 28 2,145 (42) Total Company 28 ,8 8 (11, 04) 551,051 (2 , 9 ) Note: Corporate equity income rela
Slide 36: www.albemarle.com
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