Albemarle Corporation · NYSE:ALB
Albemarle — RBC Capital Markets Global Industrials Virtual Conference 2020
43 slides from Albemarle's conference presentation, Sep 15, 2020
Slide 1: Investor Presentation and Non-GAAP Reconciliations
Albemarle Corporation Investor Presentation and Non-GAAP Reconciliations September 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation including, without limitation, statements with respect to product development, market trends, price, expected growth and earnings, demand for our products, capital projects, tax rates, stock repurchases, dividends, cas
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: Diversified Portfolio with Above-Market Margin
Diversified Portfolio with Above-Market Margin KEY STATS BUSINESS OVERVIEW 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 ~75 37% 28% 29% of Total of Total of Total Revenue Reve
Slide 6: 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; long term outlook unchanged Become best in class in the deployment of lithium • Deploy capital for lithium conv
Slide 7: Capital Allocation Priorities
Capital Allocation Priorities 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 investment gra
Slide 8: 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 9: Sustainable Cost Savings Initiatives Remain on Track
Sustainable Cost Savings Initiatives Remain on Track Sustainable cost Project Case Studies: savings with Lithium: Operational excellence • Executing sustainable 200+ projects and supply chain optimization cost savings initiative Project Savings ~ $11M/year • Projects identified in Catalysts: Direct
Slide 10: Executing Our Downturn Playbook for Short-Term Cash Management
Executing Our Downturn Playbook for Short-Term Cash Management Status • Aggressively pursue lower raw material pricing • Continue travel restrictions Variable Costs • Limit professional services Activated • Pursue economic incentives (e.g., stimulus plans/tax deferrals) • Reduced metric-based ince
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: Our Sustainability Framework
Our Sustainability Framework Financials Safety Sustainable Our People & Business Ethics & Business Model Regulatory Compliance Workplace Inclusive & Diverse Foster a sustainable Workplace Promote an inclusive and business model that creates Customers & diverse workplace for all long-term value for a
Slide 14: Our Products Contribute to Sustainability and Create Value
Our Products Contribute to Sustainability and Create Value Sustainable Business Model Automotive Grid Storage Electronics ENERGY STORAGE ~ 60% Lithium revenue from Energy Storage • “Clean miles” driven with electricvehicles Specialty Glass Grease Health • Efficient use of renewable energy through gr
Slide 15: Diverse and Dedicated Leadership Team
Diverse and Dedicated Leadership Team Our People & Workplace Kent Masters Scott Tozier Karen Narwold Chairman & CEO EVP & CFO EVP & CAO Experience: Experience: Experience: 30+ years 30+ years 30+ years Eric Norris Netha Johnson Raphael Crawford President, Lithium President, Bromine President, Cataly
Slide 16: Engaged, Diverse, and Accountable Board of Directors
Engaged, Diverse, and Accountable Board of Directors Our People & Workplace Glenda Minor Laurie Brlas CEO & Principal, Luke Kissam Silket Advisory Kent Masters Former EVP & CFO, FormerCEO, Services Chairman Newmont Mining Albemarle Former SVP & CFO, Evraz North America Directors bring targeted and J
Slide 17: Director Capabilities and Experience Support Our Long-term Vision
Director Capabilities and Experience Support Our Long-term Vision Our People & Workplace Global / Emerging Markets Experience 100% Relevant Industry Experience 90% P&L Experience 90% R&D / Innovation Experience 90% <5 yrs. Average Tenure Manufacturing / Operations Experience 80% 8 of 10 Supply Chain
Slide 18: Inclusion and Diversity in Our Workplace
Inclusion and Diversity in Our Workplace Our People & Workplace Employees hired in US in 20191 New 2020 Action Plan 3% – Hiring an inclusion and diversity leader to accelerate our inclusion and diversity roadmap 9% – Corporate leaders participating in conscious inclusion/unconscious bias training 31
Slide 19: Investing in Talent
Investing in Talent Our People & Workplace Online Learning – In 2019, employees averaged 30 hours of online training through Albemarle University, our internal learning management system – Course work included core values, code of conduct, IT security, and SAP skills Leadership Development ─ LAUNCH
Slide 20: Responsible Users of Water in Water-Scarce Areas
Responsible Users of Water in Water-Scarce Areas Case Study: Salar de Atacama Fresh Water Rights Natural Resource Management Albemarle 450 L/s We use solar energy to naturally concentrate the brine, and Passive Solar Energy represents ~78% do not use fresh water in lithium production process 2 of Al
Slide 21: Improving Operational Efficiency to Reduce Energy Usage and GHG
Improving Operational Efficiency to Reduce Energy Usage and Greenhouse Gases (GHG) Natural Resource Management • Passive solar energy is environmentally responsible as it avoids the use of fossil fuels and related GHG-emission and is used in Salar de Atacama (Chile) and Silver Peak (Nevada, USA) to
Slide 22: Foster Development of Local Communities; Case Study: Salar de Atacama
Foster Development of Local Communities and Jointly Promote Environmental Stewardship; Case Study: Salar de Atacama, Chile Community Engagement Joint Commitments for Sustainability Leader in Community Engagement • Atacameño People´s Council (CPA), represents 18 • Jointly monitor the brine and water
Slide 23: Focused on Growing the Good through our Albemarle Foundation
Focused on Growing the Good through our Albemarle Foundation Community Engagement OUR IMPACT • Created the foundation in 2007 with a mission to make a positive, sustainable difference in the communities where we live and operate • Since inception, we have granted over $39.5 million into our communit
Slide 24: Q2 2020 Overview: Bromine Specialties
Q2 2020 Overview: Bromine Specialties YoY Q2 Performance Drivers Q2 2020 PERFORMANCE • Net sales down 9% (volume -8%, price -1%) and adjusted EBITDA down 10% • Revenue and adjusted EBITDA decrease mainly driven by lower volume predominantly ($M) Q2 2020 ΔQ2 2019 due to the COVID-19 pandemic Net Sale
Slide 25: 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 ($M) Q2 2020 ΔQ2 2019 orders and travel restrictions Net Sale
Slide 26: Q2 2020 Overview: Lithium
Q2 2020 Overview: Lithium YoY Q2 Performance Drivers Q2 2020 PERFORMANCE • Net sales down 13% (price -14%, volume +1%) and adjusted EBITDA down 33% • Lower pricing reflects previously agreed contract price adjustments, lower market prices ($M) Q2 2020 ΔQ2 2019 • Adjusted EBITDA unfavorably impacted
Slide 27: Portfolio Comprises World-class Resources
Portfolio Comprises World-class Resources 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 27
Slide 28: Managing Resources Responsibly to Support Growth in a Sustainable Manner
Managing Resources Responsibly to Support Growth in a Sustainable Manner 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 Mountai
Slide 29: 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 300 MRL Lithium Hydroxide Albemarle Lithium Hydroxide
Slide 30: Upcoming Investor Events
Upcoming Investor Events Date Event – All Virtual September 9th UBS Global Chemicals September 15th RBC Capital Markets Early October ESG-focused Non-Deal Roadshows Meredith Bandy Sharon McGee Mark de Boer VP, Investor Relations & Sustainability VP, Investor Relations Director, Sustainability meredi
Slide 31: Appendix A: Non-GAAP Reconciliations and Supplemental Information
Appendix A Non-GAAP Reconciliations and Supplemental Information
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: www.albemarle.com
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