Albemarle Corporation · NYSE:ALB
Albemarle — Benchmark Minerals Electric Vehicle Supply Chain Festival 2020
26 slides from Albemarle's conference presentation, May 28, 2020
Slide 1: Albemarle Corporation
Albemarle Corporation Making the World Safe & Sustainable by Powering the Potential of People Lithium Ion Battery Materials and Electric Vehicle Supply Chain Benchmark Minerals Eric Norris May 28, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the webcast and discussions that follow, including, without limitation, statements with respect to product development, market trends, price, expected growth and earnings, demand for our products, capital projects, ta
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: 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% 29% 28% of Total of Total of Total Revenue Reve
Slide 5: Lithium Snapshot
Lithium Snapshot Financials | Trailing 12-months Applications $1.3B $488M 37% 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 Organometa
Slide 6: Lithium Strategy: Strong Foundation / Resilient to Market Dynamics
Lithium Strategy: Strong Foundation / Resilient to Market Dynamics III: Drive Cost I. Manage II. Expand IV: Sustain and World’s Best Capacity with Premium Value Operational Resources Discipline Proposition Excellence • 270 kTa LCE of spodumene • Reduced capital intensity • Lean, low-cost manufacturi
Slide 7: I. Large Diverse Resources with Highly Concentrated Lithium Content
I. Large Diverse Resources with Highly Concentrated Lithium Content 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 8: II. Disciplined and Measured Plan to Expanding Conversion Capacity
II. 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 equi
Slide 9: III. Driving Operational Excellence to Become World Class and Low Cost
III. 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 b
Slide 10: IV. Creating Value via a Differentiated Experience for Our Customer
IV. 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 p
Slide 11: Lithium Battery Technology Progression Minimally Impacted in Current Environment
Lithium Battery Technology Progression Minimally Impacted in Current Environment Legacy Advanced Next Frontier high cobalt/iron multi- solid lithium microporous graphite higher nickel ceramic graphite valance separator metal phosphate thinner + silicon polymer compositions coatings compositions pre-
Slide 12: Driving the Need to New Forms of Lithium Over Next Decade
Driving the Need to New Forms of Lithium Over Next Decade 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
Slide 13: Putting Sustainability to Work in Lithium
Putting Sustainability to Work in Lithium Financials Safety Sustainable Our People & Business Ethics & Business Model Regulatory Compliance Workplace • R&D recycle Lithium from Inclusive & Diverse Workplace • Strong focus on health and batteries Customers & safety with KPI’s • R&D innovative materia
Slide 14: Sustainability Case Study: Brine versus Fresh Water
Sustainability Case Study: Brine versus Fresh Water Albemarle Other Lithium 23.5 L/s Sustainability in the Salar Salinity (TDS) Extraction 450 L/s • We make up 0.5% of the total fresh water rights; we only use less than half of our allotted water rights FRESH WATER 5 Fresh • Brine cannot be used for
Slide 15: Strong Cash Generation Allows ALB to Invest for Growth Throughout the Cycle
Strong Cash Generation Allows ALB to Invest for Growth Throughout the Cycle 01 Opportunity: Long-term secular EV growth trend intact Near-term: Flexible balance sheet and ability to generate operating cash allow Albemarle to invest for growth through the bottom of the cycle to provide returns for sh
Slide 16: Appendix A
Appendix A Supplemental Information
Slide 17: Agile, Long-term Strategy that Responds to Changing Market Conditions
Agile, Long-term Strategy that Responds to Changing Market Conditions Grow Invest in growth and focus on cash generation in • Long-term secular demand outlook remains robust for Lithium Lithium • Continue to build out conversion assets to align with demand • Reduce overall spend by $100M+ by 2021 in
Slide 18: Q1 2020 Overview: Lithium
Q1 2020 Overview: Lithium Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down 19% and adjusted EBITDA down 32% • Lower contract pricing (reflecting 2020 price adjustments) and reduced volume ($M) Q1 2020 ΔQ1 2019 as customer took excess volume in Q4 2019 Net Sales $237 -19% • Partially offse
Slide 19: Q1 2020 Overview: Bromine Specialties
Q1 2020 Overview: Bromine Specialties Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down 7% due primarily to logistics challenges that shifted some orders into Q2, partially offset by higher pricing ($M) Q1 2020 ΔQ1 2019 • Adjusted EBITDA up 6% due to cost saving initiatives and lower minor
Slide 20: Q1 2020 Overview: Catalysts
Q1 2020 Overview: Catalysts Q1 Performance Drivers Q1 2020 PERFORMANCE • Net sales down by 18% and adjusted EBITDA down by 21% • FCC volume was down from lower transportation fuel consumption as a result ($M) Q1 2020 ΔQ1 2019 of stay-at-home orders and travel restrictions Net Sales $207 -18% • HPC v
Slide 21: Accelerating 2020 Sustainable Cost Savings Initiative and Taking Short-Term Cash Management Actions
Accelerating 2020 Sustainable Cost Savings Initiative and Taking Short-Term Cash Management Actions Three Buckets of Identified Cost Savings Albemarle Factory Spend and Supply Sales & Administration • $100M+ run rate YE 2021, Operational Efficiency Chain and IBO $50-$70 M in 2020 • Raw material yiel
Slide 22: Appendix B
Appendix B Non-GAAP Reconciliations and Supplemental Information
Slide 23: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 24: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Net income attributable to Albemarle Corporation $ 695,371 $ 547,108 $ 572,433 $ 533,228 $ 506,863 Depreciation and amortization 199,651
Slide 25: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Lithium Net income attributable to Albemarle Corporation $ 413,047 $ 413,058 $ 424,881 $ 341,766 $ 301,837 Depreciation and amortization 93,220 93,
Slide 26: www.albemarle.com
NYSE www.albemarle.com A\A\NALBEMARLE’
Albemarle — Benchmark Minerals Electric Vehicle Supply Chain Festival 2020 on 6ix