Albemarle Corporation · NYSE:ALB
Albemarle — Q4 2017 Earnings Presentation
32 slides from Albemarle's earnings presentation, Feb 28, 2018
Slide 1: Fourth Quarter 2017 Earnings and Non-GAAP Reconciliations
Albemarle Corporation Fourth Quarter 2017 Earnings and Non-GAAP Reconciliations Conference Call/Webcast Wednesday, February 28th, 2018 9:00am ET Proprietary Information of Albemarle Corporation.
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, changes in productivity, market trends, price, expected growth and earnings, input costs,
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 net income from continuing operations, Adjusted diluted earnings per share attributable to Albemarle Corporation, Adjusted diluted earnings per share from con
Slide 4: Key Messages
Key Messages Strong growth in Net Sales and adjusted EBITDA in 2017, led by Lithium, provides momentum going into 2018 2017 cash generation from Bromine Specialties and Refining Solutions as well as active portfolio management drive robust balance sheet to support Lithium investment Increasing outlo
Slide 5: 2017 Financial Highlights – Fourth Quarter and Full Year
2017 Financial Highlights – Fourth Quarter and Full Year ($ in millions TTM1 Pro-forma Net Sales3 4Q 2017 vs Prior FY 2017 vs Prior except EPS) $3,100 Results Year Results Year $2,900 Net Sales $858 23% $3,072 15% $2,700 $2,500 4Q16 1Q17 2Q17 3Q17 4Q17 Adjusted TTM1 Pro-forma Adjusted EBITDA2,3 $246
Slide 6: Fourth Quarter 2017 Adjusted EBITDA Bridge
Fourth Quarter 2017 Adjusted EBITDA1 Bridge 4Q 2017: Adjusted EBITDA1 growth of $58 million, 31% ($ in millions) $260 10 17 4 246 $240 4 26 $220 $200 5 187 $180 $160 4Q 2016 FX Translation Lithium PCS Bromine Refining Corporate & 4Q 2017 Impact Specialties Solutions Other 1 Non-GAAP measure. See Non
Slide 7: Full Year 2017 Adjusted EBITDA Bridge
Full Year 2017 Adjusted EBITDA1 Bridge Full Year 2017: Adj. EBITDA1 growth of $127 million, 17% ($ in millions) $1,000 32 161 $900 5 29 33 885 $800 2 758 $700 $600 $500 FY 2016 FX Translation Lithium PCS Bromine Refining Corporate & FY 2017 Impact Specialties Solutions Other 1 Non-GAAP measure. See
Slide 8: Lithium and Advanced Materials
Lithium and Advanced Materials 4Q and FY 2017 Performance Historical Trend (TTM) 4Q ∆ 4Q FY ∆ FY $600 45% ($ in millions) 2017 2016 2017 2016 Net Sales $362 30% $1,308 35% $500 40% Net Sales ex FX1 $359 29% $1,307 35% $400 35% Adj. EBITDA2 $136 32% $519 43% $300 30% Adj. EBITDA ex FX1 $133 30% $519
Slide 9: Lithium and Adv. Materials – Lithium and PCS detail
Lithium and Adv. Materials – Lithium and PCS detail Lithium – 4Q and FY 2017 Performance Lithium Historical Trends (TTM) 4Q ∆ 4Q FY ∆ FY ($ in millions) $500 50% 2017 2016 2017 2016 Net Sales $290 39% $1,019 52% $400 45% Net Sales ex FX1 $287 38% $1,018 52% Adj. EBITDA2 $119 33% $447 56% $300 40% Ad
Slide 10: Bromine Specialties
Bromine Specialties 4Q and FY 2017 Performance Historical Trend (TTM) 4Q ∆ 4Q FY ∆ FY $300 35% ($ in millions) 2017 2016 2017 2016 $219 13% $855 8% $250 30% Net Sales Net Sales ex FX1 $218 12% $855 8% $200 25% Adj. EBITDA2 $64 37% $259 14% $150 20% Adj. EBITDA ex FX 1 $64 35% $259 14% Adj. EBITDA Ma
Slide 11: Refining Solutions
Refining Solutions 4Q and FY 2017 Performance Historical Trend (TTM) 4Q ∆ 4Q FY ∆ FY $300 35% ($ in millions) 2017 2016 2017 2016 $250 30% Net Sales $238 23% $778 6% Net Sales ex FX1 $234 21% $776 6% $200 25% Adj. EBITDA2 $69 21% $212 (11%) $150 20% Adj. EBITDA ex FX 1 $68 18% $210 (12%) $100 15% Ad
Slide 12: Cash Flow and Net Debt
Cash Flow and Net Debt Twelve Months Ended December 31 Selected Financial Metrics ($ in millions) ($ in millions) (as of 12/31/2017) 2017 2016 Dividends Paid: $141 Net Cash from Operations $304 $736 Dividend Growth (Y/Y)3: 5% Cash Balance: $1,137 Less: Capital Expenditures (318) (197) Gross Debt4: $
Slide 13: Full Year 2018 Guidance
Full Year 2018 Guidance 2018 Guidance FY 2017 FY 2018 FY 2017 vs FY 2017 Pro Forma3 Guidance4 Pro-Forma3 Net Sales $3.07B $3.00B $3.2 – $3.4B 7% – 15% Adjusted EBITDA 1 $885M $859M $955 – $1,005M 11% – 17% Adjusted EBITDA Margin 1 29% 29% 29% – 30% 1 Adjusted Diluted EPS $4.59 $4.40 $5.00 – $5.40 14
Slide 14: Increasing EV Penetration Accelerates Lithium Investment
Increasing EV Penetration Accelerates Lithium Investment Higher 2025 EV1 Accelerated Investment Necessary to Penetration Outlook Supply Long-term Customer Commitments Lithium demand in kt lithium carbonate equivalent (LCE) 20% 12002018 2021 2025 Volume 2018 CAPEX (KT LCE) (million) Lithium CAGR ~18%
Slide 15: Full Year 2018 Business Guidance vs 2017
Full Year 2018 Business Guidance vs 2017 GBU Outlook Business Environment • FY 2018 Adj. EBITDA1 expected to increase by greater than 20% compared to 2017 • Favorable outlook driven by strong volume and price improvements, primarily in battery grade Lithium product portfolio • Wave I expansion proje
Slide 16: 2018 Tax Changes
2018 Tax Changes Tax Cuts and Jobs Act (TCJA) 2018 Effective Tax Rate Changes 2017 – $367 million net charges1 2017 Effective Tax Rate2 18.8% • $429 million expense recognized for transition tax, payable over 8 years • $62 million income recognized for Chile mining tax rate increase ↑ revaluation of
Slide 17: www.albemarle.com
www.albemarle.com Proprietary Information of Albemarle Corporation. 17
Slide 18: Appendix: Non-GAAP Reconciliations and Supplemental Information
Appendix Non-GAAP Reconciliations and Supplemental Information Proprietary Information of Albemarle Corporation.
Slide 19: Net Income
Net Income Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2017 2016 2017 2016 Net (loss) income attributable to Albemarle Corporation $ (218,366) $ 602,090 $ 54,850 $ 643,675 Add back: Income from discontinued operations (net of tax) — (559,974) — (202,131) Earnings from co
Slide 20: EBITDA
EBITDA Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2017 2016 2017 2016 Net (loss) income attributable to Albemarle Corporation $ (218,366) $ 602,090 $ 54,850 $ 643,675 Add back: Income from discontinued operations (net of tax) — (559,974) — (202,131) Interest and financi
Slide 21: EBITDA - by Segment (three months ended December 31)
EBITDA - by Segment (three months ended December 31) Lithium and Reportable ($ in thousands) Advanced Materials Bromine Specialties Refining Solutions Segments Total All Other Corporate Consolidated Total Three months ended December 31, 2017: Net income (loss) attributable to Albemarle Corporation $
Slide 22: EBITDA - Margin by Segment (three months ended December 31)
EBITDA - Margin by Segment (three months ended December 31) Lithium and Reportable ($ in thousands) Advanced Materials Bromine Specialties Refining Solutions Segments Total All Other Consolidated Total Three months ended December 31, 2017: Net sales $ 362,362 $ 219,084 $ 238,400 $ 819,846 $ 37,770 $
Slide 23: EBITDA - by Segment (twelve-months ended Dec 31)
EBITDA - by Segment (twelve-months ended Dec 31) Lithium and Advanced Bromine Refining Reportable Consolidated ($ in thousands) Materials Specialties Solutions Segments Total All Other Corporate Total Year ended December 31, 2017: Net income (loss) attributable to Albemarle Corporation $ 400,360 $ 2
Slide 24: EBITDA - Margin by Segment (twelve-months ended Dec 31)
EBITDA - Margin by Segment (twelve-months ended Dec 31) Lithium and Advanced Bromine Refining Reportable Consolidated ($ in thousands) Materials Specialties Solutions Segments Total All Other Total Year ended December 31, 2017: Net sales $ 1,308,153 $ 855,143 $ 778,304 $ 2,941,600 $ 128,914 $ 3,071,
Slide 25: EBITDA - Continuing Operations (Twelve Months Ended)
EBITDA - Continuing Operations (Twelve Months Ended) Twelve Months Ended ($ in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Continuing Operations Net income attributable to Albemarle Corporation $ 54,850 $ 875,306 $ 884,856 $ 466,702 $ 643,675 Depreciation and amortiza
Slide 26: EBITDA - Lithium & Adv. Materials (Twelve Months Ended)
EBITDA - Lithium & Adv. Materials (Twelve Months Ended) Twelve Months Ended ($ in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Lithium and Advanced Materials Net income attributable to Albemarle Corporation $ 400,360 $ 367,676 $ 330,643 $ 292,173 $ 261,394 Depreciation
Slide 27: EBITDA - Bromine Specialties & Refining Solutions (Twelve Months Ended)
EBITDA - Bromine Specialties & Refining Solutions (Twelve Months Ended) Twelve Months Ended ($ in thousands) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Bromine Specialties Net income attributable to Albemarle Corporation $ 218,839 $ 201,336 $ 189,197 $ 194,205 $ 187,364 Depreci
Slide 28: EBITDA supplemental
EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Dec 31, 2017 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Adjusted EBITDA $ 885,480 $ 245,780 $ 209,383 $ 218,941 $ 211,376 Net income attributable to noncontrolling interests 44,618 11,295 11,523 10,356 11,444 Equit
Slide 29: Diluted EPS
Diluted EPS Three Months Ended Year Ended December 31, December 31, 2017 2016 2017 2016 Diluted (loss) earnings per share attributable to Albemarle Corporation $ (1.95) $ 5.30 $ 0.49 $ 5.68 Add back: Non-operating pension and OPEB items (0.08) 0.16 (0.09) 0.16 Non-recurring and other unusual items f
Slide 30: Effective Tax Rate
Effective Tax Rate Income from continuing operations before income taxes and equity in net income of unconsolidated ($ in thousands) investments Income tax expense Effective income tax rate Three months ended December 31, 2017: As reported $ 141,926 $ 378,221 266.5% Non-recurring, other unusual and
Slide 31: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Noncontrolling Noncontrolling Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Equity Income Interest Equity Income Interest Lithium and A
Slide 32: www.albemarle.com
www.albemarle.com Proprietary Information of Albemarle Corporation. 32