Albemarle Corporation · NYSE:ALB
Albemarle — Q3 2023 Earnings Presentation
32 slides from Albemarle's earnings presentation, Nov 2, 2023
Slide 1: Albemarle Q3 2023 Earnings
WELCOME TO ALBEMARLE Albemarle Q3 2023 Earnings Nov 2, 2023 9:00am 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 (loss) income attributable to Albemarle Corporation, adjusted diluted earnings per share (“EPS”), non-operating pension and other post-employment benefit (“OPEB”) items per diluted share, non-recurring and other unusual items per diluted share,
Slide 4: Q3 and Recent Accomplishments Support Long-Term Growth
Q3 net sales of $2.3 billion, an increase of 10% Y/Y Q3 and Recent Signed agreements with Caterpillar Inc. to collaborate on solutions to support the full circular battery value chain and sustainable mining operations Accomplishments Support Long-Term Growth Received $90 million critical materials a
Slide 5: Q3 2023 Financial Summary
Q3 2023 Financial Summary 9M Ended 9M Ended (in millions, except per share amounts) Q3 2023 Q3 2022 Variance 9/30/2022 Variance 9/30/2023 Net Sales $2,311 $2,092 +10% $7,261 $4,699 +55% Net Income Attributable to Albemarle $303 $897 -66% $2,191 $1,557 +42% Corporation Adjusted EBITDA1 $453 $1,190 -6
Slide 6: Q3 2023 and YTD Adjusted EBITDA Bridge
Q3 2023 and YTD Adjusted EBITDA1 Bridge ($ in millions) Q3 YTD Note: Numbers may not reconcile due to rounding. 1 See appendix for non-GAAP reconciliations. 6
Slide 7: FY 2023 Outlook Reflects Recent Lithium Market Prices
FY 2023 Outlook Reflects Recent Lithium Market Prices ▪ Full-year 2023 outlook reflects Revised expectations of our financial Previous FY 2023 performance based on recent FY 2022 FY 2023 Outlook Outlook lithium market pricing, as of August 2, 2023 as of November 1, 2023 consistent with our standard
Slide 8: FY 2023 Outlook by Segment
FY 2023 Outlook by Segment STORAGE ▪ ENERGY STORAGE FY 2023 adj. EBITDA expected to be flat to slightly down Y/Y, as timing impacts of higher priced spodumene inventories more than offset higher net sales; decrease from previous outlook reflects recent lithium market prices ▪ FY 2023 realized price
Slide 9: Adapting to Changing Market Conditions While Maintaining Growth
Adapting to Changing Market Conditions While Maintaining Growth Capital Working Costs Production Expenditures Capital ▪ Reviewing project spend ▪ Implemented cost reduction ▪ Optimizing plant operations ▪ Accelerating collection of and sequencing to maintain programs across the to align with market
Slide 10: Our Operating Model: How We Execute & Accelerate Our Strategy
Our Operating Model: How We Execute & Accelerate Our Strategy Operational Discipline ▪ Embrace LEAN principles and continuous improvement ▪ Drive manufacturing, business and capital execution excellence On track to exceed $170M in productivity benefits in 2023: ▪ Manufacturing - target of $70M in 20
Slide 11: Contract Mix Reflects Changes in Lithium Market Prices
Contract Mix Reflects Changes in Lithium Market Prices Energy Storage Net Sales1 (by Contract Type) Leverage to Continued Strong Market Prices Spot ▪ Majority of volumes sold under long-term contracts (typically 2-5 years duration) with strategic customers Purchase order-based price negotiations, he
Slide 12: Maintaining Strategy to Deliver Volumetric Growth
Maintaining Strategy to Deliver Volumetric Growth ▪ Assumes ~2 years to ramp a Expected Lithium Sales Volumes1 new conversion plant 350 (kt LCE) ▪ Includes expansions at Silver MinRes Share Peak, La Negra, Kemerton, Potential Tolling 300 +/- Qinzhou, and Meishan Technical Grade Spodumene Lithium Car
Slide 13: Energy Storage Adjusted EBITDA Margin Bridge – 2022 vs 2023 forecast
Energy Storage Adjusted EBITDA Margin Bridge – 2022 vs 2023 forecast Talison JV Tax Impact 7% ~5% ~20% ~5% EBITDA Margin ~10% Pre-Tax Adj. ~5% 72% EBITDA Margin Pre-Tax Adj. 65% ~52% ~42% 2022 Adj. EBITDA Margin 1 Price Talison JV MARBL JV Acct'g 2 Other 2023 Adj. EBITDA Margin Spod Inventory Lag 20
Slide 14: Vertical Integration to Greenbushes a Significant Competitive Advantage
Vertical Integration to Greenbushes a Significant Competitive Advantage ▪ Through our Talison JV, ALB holds a 49% interest1 in Greenbushes, one of the world’s largest, highest grade lithium resources ▪ Albemarle receives equity income and cash dividends from Talison; Talison product also flows throu
Slide 15: Vertical Integration to Greenbushes a Significant Competitive Advantage
Vertical Integration to Greenbushes a Significant Competitive Advantage Talison Pricing¹ Talison Pricing + 6 months (ALB Inventory Cost)² 6 Causes of Talison JV Spod 2H margins Inventory Lag: 5 expected to compress as ▪ Talison pricing is reset quarterly based spodumene prices on the average of mark
Slide 16: Disciplined Capital Allocation to Support Growth Strategy
Disciplined Capital Allocation to Support Growth Strategy Invest in Portfolio Maintain Financial Dividends & Share High-Return Growth Management Flexibility Repurchases ▪ Growth remains the primary ▪ Actively assess portfolio; ▪ Committed to Investment ▪ Continue to support our capital allocation pr
Slide 17: Committed to Maintaining Investment Grade Credit Rating
Committed to Maintaining Investment Grade Credit Rating1 NET CASH FROM CAPITAL EXPENDITURES OPERATIONS ($M) LEVERAGE3 (x) ($M) $4,000 As of Q3 2023: $3,000 $1.9B - $2.1B • $1.6B cash and cash equivalents $2,000 • $3.7B total debt (99% fixed rate) 1.2x - 1.3x • 3.7% weighted average interest $1,000 $
Slide 18: Global EV Demand Growth On-Track Amid Weaker Sentiment
Global EV Demand Growth On-Track Amid Weaker Sentiment ‘20-’23 Global EV Sales: Cumulative YTD1 Global EV Sales: Monthly Actuals1 (in millions) (in millions) 2023 LEV 1.5 15 14.9M Production2 10 10.5M 1.0 6.4M 5 0.5 2.9M 0 0.0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2020 2021 2022 2023 2020
Slide 19: Downstream Inventories Drawn to Historic Lows
Downstream Inventories Drawn to Historic Lows China Li2CO3 Inventories China LiOH Inventories 60 (in days) 60 (in days) 50 Downstream Inventories Cathode Producers 50 40 Upstream Inventories 40 Lithium Converters 30 30 20 20 Hydroxide inventory data Upstream Inventories unavailable prior to 2023 Dow
Slide 20: Key Takeaways
Continuing to expect growth in 2023, updating outlook with net sales +30-35% Y/Y A global leader with vertical integration to world-class assets and a diversified product portfolio; long-term supply with reliable, consistent quality Key Capitalizing on tremendous growth opportunities in electric veh
Slide 21: Q4 2023 Investor Relations Events
Q4 2023 Investor Relations Events Nov 8 Baird Global Industrial Conference Meredith Bandy, CFA VP, Investor Relations & Sustainability meredith.bandy@albemarle.com +1 980.999.5168 Nov 9 UBS Toronto Chemicals Conference Eran del Castillo Senior Manager, Investor Relations Dec 5 BMO Growth & ESG Confe
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Slide 23: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations
Slide 24: 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. Adjusted Diluted EPS Diluted EPS before non-recurring, other unusual and non-operating pension an
Slide 25: Adjusted Net Income
Adjusted Net Income T ee o t s E e i e o t sE e Yea E e Se tembe 30 Se tembe 30 De embe 3 2023 2022 2023 2022 2022 Net income attributable to Albemarle Corporation 0 ,5 97, 15 ,191,15 1,557, 71 , 9, 1 Add back: Non operating pension and OPEB items (net of tax) ( ,9 ) 1,1 1 (1 ,0 1) ( ,1 9) Non recur
Slide 26: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA T ee o t s E e i e o t sE e Yea E e Se tembe 30 Se tembe 30 De embe 3 2023 2022 2023 2022 2022 o et o et o et o et o et sales sales sales sales sales Net income attributable to Albemarle Corporation 0 ,5 1 .1 97, 15 .9 ,191,15 0. 1,557, 71 .1 , 9, 1 .7 Add back: nterest an
Slide 27: Adjusted EBITDA – Continuing Operations (twelve months ended)
Adjusted EBITDA – Continuing Operations (twelve months ended) T elve o t sE e Se 30 2022 De 3 2022 a 3 2023 u 30 2023 Se 30 2023 Net income attributable to Albemarle Corporation 1,55 ,5 7 , 9, 1 , 75,01 ,91 , , , 01 epreciation and amorti ation ,515 00, 1 1,5 , 0 71, Non recurring and other unusual
Slide 28: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 T elve o t s E e T ee o t s E e Se 30 2023 Se 30 2023 u 30 2023 a 3 2023 De 3 2022 uste E TD 32 02 32 032 2 2 3 2 Net income attributable to noncontrolling interests 11 ,0 0 1 ,1 0 , 9 ,1 9, 1 Equity in net income of unconsolidated investments (net of tax) (1,7 0, ) ( 7
Slide 29: Diluted EPS
Diluted EPS T ee o t sE e i e o t sE e Se tembe 30 Se tembe 30 2023 2022 2023 2022 iluted earnings per share attributable to Albemarle Corporation .57 7. 1 1 . 0 1 . Add back: Non operating pension and OPEB items (net of tax) (0.0 ) 0.01 (0.10) Non recurring and other unusual items (net of tax) Acqu
Slide 30: Effective Tax Rate
Effective Tax Rate ome be o e i ome ta es a e uit i et i ome o u o soli ate E e tive i ome ta i vestme ts ome ta e e se ate T ee mo t s e e Se tembe 30 2023 As reported (15 ,1 ) ( ,551) 5. Non recurring, other unusual and non operating pension and OPEB items ,5 , As adjusted (1 , ) ( ,0 ) .1 T ee mo
Slide 31: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest T ee o t sE e Se tembe 30 2023 2022 o o t olli o o t olli E uit ome te est E uit ome te est Energy Storage 0,517 , 9 Specialties (1 ,15 ) ( ,0 ) etjen , 51 ,7 Corporate 5, (7) 15,700 51 Total Company 70, 0 (1 ,1 0) 5 , ( ,991) Note: Corporate equity income r
Slide 32: www.albemarle.com
NYSE www.albemarle.com \ Albemarle®