Albemarle Corporation · NYSE:ALB
Albemarle — Virtual Fireside Chat with David Begleiter at Deutsche Bank (March 2020)
40 slides from Albemarle's conference presentation, Mar 24, 2020
Slide 1: Investor Presentation and Non-GAAP Reconciliations
Albemarle Corporation Investor Presentation and Non-GAAP Reconciliations Investor Presentation Mar 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation including, without limitation, information related to outlook and guidance, conversion capacity, production volumes, joint ventures, market trends, pricing, expected growth, earnings and demand for our products, tax ra
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: An Industry Leader with Significant Opportunity Ahead
An Industry Leader with Significant Opportunity Ahead 01 Industry-leading, competitively advantaged positions across our portfolio, which we believe will expand in the future 02 Strong secular trends support long-term growth 03 Focus on product quality, talent, low-cost operations, and effective man
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 38% 30% 28% of Total of Total of Total Revenue Reve
Slide 6: Agile, Long-term Strategy that Responds to Changing Market Conditions
Agile, Long-term Strategy that Responds to Changing Market Conditions • Demand outlook remains robust for Lithium Grow Invest in growth and focus on cash generation in Lithium • Continue to strengthen balance sheet to provide capacity for future options for lithium conversion assets needed to meet c
Slide 7: Results of Our Materiality Assessment Led to Our Sustainability Framework
Results of Our Materiality Assessment Led to 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 & di
Slide 8: 2020 Cost Savings Initiative Underway
2020 Cost Savings Initiative Underway Transforming Our Business Model • Identified 100+ discrete projects, assigned project ownership, and instituted a tracking dashboard • Top projects include Lithium site operational excellence and company-wide reductions in consulting and outside service costs Th
Slide 9: Coronavirus Update
Coronavirus Update As of March 23, 2020 Business Area Current Assessment • To date, sites are operating without a material impact • Actively managing situation to protect employees and communities; established protocols for site entries; suspended all non-essential travel (international & local); wo
Slide 10: Bromine Specialties Snapshot
Bromine Specialties Snapshot Financials | TTM 2019 Business Environment2 $1.0B $328M 33% Flame Retardants 5-year CAGR: 2% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 Clear Completion Fluids 5-year CAGR: 3% Segment Characteristics Strong Applications Demand Pharma/Ag • Mineral extraction and processin
Slide 11: Bromine Specialties: Stable Outlook with Industry-leading Margins
Bromine Specialties: Stable Outlook with Industry-leading Margins Key Takeaways • Market leader with proven ability to deliver results Access to highest quality Bromine resources in the world Low-cost position with diversified market portfolio to maintain industry-leading margins Operational e
Slide 12: Catalysts Snapshot
Catalysts Snapshot Financials | TTM 2019 including PCS Fluid Cracking Catalysts (FCC) FCC Catalysts $1.1B $271M 25% • Cracks oil feedstock into gasoline and chemicals • FCC market leadership in 1) Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 bottoms cracking; 2) olefins output; and 3) emerging markets
Slide 13: Catalysts: Sustained Growth in Strong Markets
Catalysts: Sustained Growth in Strong Markets Key Takeaways • Catalysts business upgrades oils into clean transportation fuels and high-value chemicals via differentiated services, technologies and partnerships • Well positioned to benefit from continued growth in demand for transportation fuels and
Slide 14: Lithium Snapshot
Lithium Snapshot Financials | TTM 2019 Applications $1.4B $525M 39% 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 Organometallics • Hi
Slide 15: Recent Lithium Mining and Conversion Delays
Recent Lithium Mining and Conversion Delays Covalent Lithium JV: SQM & Wesfarmers deferred investment decision to 20211 Galaxy Lithium: Announced slowdown of mining operations and lower output2 Tianqi: Announced slower ramp of Kwinana Stage 1 and deferred spend on Stage 23 SQM: Announced completion
Slide 16: Energy Storage Continues to Drive Lithium Demand
Energy Storage Continues to Drive Lithium Demand Demand by Application 2018 2019 ’19 – ’25 2025 Total Lithium Market Demand (kT LCE) Estimate Estimate CAGR Forecast 1,400 kT LCE Albemarle Estimates Electric Vehicles 59 93 38% 650 Other Mobility 25 26 7% 40 1,200 Consumer Electronics 36 38 11% 70 201
Slide 17: Lithium Strategy: Strong Foundation / Resilient to Market Dynamics
Lithium Strategy: Strong Foundation / Resilient to Market Dynamics Manage Expand Drive Cost and Sustain World’s Best Capacity with Operational Premium Value Resources Discipline Excellence Proposition • 270 kTa LCE of spodumene • Reduced capital intensity • Lean, low-cost manufacturing • Long-term c
Slide 18: Integrated Global Footprint for Lithium Chemical Conversion
Integrated Global Footprint for Lithium Chemical Conversion HQ Kings Mountain, C C Langelsheim, NC, U.S. S S Germany Silver Peak, C S Taichung, NV, U.S. R Taiwan New Johnsonville, TN, U.S. S R Wodgina, Australia R C C C R R Resources C Conversion to Battery and Technical Grade S Specialties Salar de
Slide 19: Albemarle has Access to the World's Most Highly Concentrated Resources
Albemarle has Access to the World’s Most Highly Concentrated Resources Lithium Brine Operations: Lithium Rock Operations: Li Concentrations Li Concentrations & Reserve Size Concentration Concentration Reserve Size Li Concentration (mg/L Li) 1800 3 8,000 Li2O Grade (% Li2O) kT LCE Reserve 1600 7,000
Slide 20: Large and Diverse Resources Positioned for at Least the Next Decade
Large and Diverse Resources Positioned for at Least the Next Decade 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 21: Disciplined and Measured Plan to Expanding Conversion Capacity
Disciplined and Measured Plan to Expanding Conversion Capacity Our plan through 2024 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 equipment in e
Slide 22: Our Growth Engine
Our Growth Engine Key Takeaways • ALB has the broadest range of resources, manufacturing capabilities, products, and customer relationships in the Lithium industry • Global Lithium demand is on track to reach 1 million MT LCE by 2025, a 20%+ CAGR driven by EV penetration of new car sales • We antici
Slide 23: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation Grow Dividend 1 2 Maintain Financial Flexibility • 25 years of consecutive dividend increases • Maintain Investment Grade rating • Targeting median specialty chemical payout ratio • Shorter-term Net Debt to Adj. EBITDA Target: 1.0x - 1.5x to increase growth fl
Slide 24: Strong Financial Position Results in Strategic Flexibility
Strong Financial Position Results in Strategic Flexibility Credit Ratings1 Maturity Profile ($M) (Estimated Y/E 2019) S&P Baa2 Stable $550 $550 Moody’s BBB Stable Fitch BBB Stable $444 $422 $346 • Committed to maintaining midpoint Investment Grade credit rating $300 • ~$1.3B liquidity $200 • 2019 Ne
Slide 25: Cash Flow and Net Debt
Cash Flow and Net Debt Twelve Months Ended 12/31/19 Selected Financial Metrics ($ in millions) ($ in millions) (as of 12/31/2019) 2019 2018 Dividends Paid (YTD) $152 Net Cash from Operations $719 $546 Dividend Growth (Y/Y)1 10% Less: Capital Expenditures (852) (700) Cash Balance $613 Add Back: Pensi
Slide 26: Upcoming Investor Events
Upcoming Investor Events First Quarter 2020 Investor Relations Events Date Event Location March 10th J.P. Morgan Industrials Conference New York City March 24th 2020 Goldman Sachs Chemicals Intensity Days Conference New Orleans March 26th New York Non-Deal Roadshow New York City March 27th Boston No
Slide 27: Appendix A: Non-GAAP Reconciliations and Supplemental Information
Appendix A Non-GAAP Reconciliations and Supplemental Information
Slide 28: Adjusted Net Income
Adjusted Net Income Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2019 2018 2019 2018 Net income attributable to Albemarle Corporation $ 90,391 $ 129,596 $ 533,228 $ 693,562 Add back: Non-operating pension and OPEB items (net of tax) 20,453 8,829 18,648 3,234 Non-recurring
Slide 29: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2019 2018 2019 2018 Net income attributable to Albemarle Corporation $ 90,391 $ 129,596 $ 533,228 $ 693,562 Add back: Interest and financing expenses 22,400 12,571 57,695 52,405 Income tax (benefit) e
Slide 30: Adjusted EBITDA - by Segment (three months ended Dec 31)
Adjusted EBITDA - by Segment (three months ended Dec 31) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended December 31, 2019: Net income (loss) attributable to Albemarle Corporation $ 29,158 $ 67,625 $ 63,358 $
Slide 31: Adjusted EBITDA - Margin by Segment (three months ended Dec 31)
Adjusted EBITDA - Margin by Segment (three months ended Dec 31) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Consolidated Total Three months ended December 31, 2019: Net sales $ 411,140 $ 243,464 $ 282,522 $ 937,126 $ 55,438 $ 992,564 Net income (loss) a
Slide 32: EBITDA - by Segment (twelve months ended Dec 31)
EBITDA - by Segment (twelve months ended Dec 31) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Corporate Total Year ended December 31, 2019: Net income (loss) attributable to Albemarle Corporation $ 341,767 $ 279,945 $ 219,686 $ 841,398 $ 41,
Slide 33: EBITDA - Margin by Segment (twelve months ended Dec 31)
EBITDA - Margin by Segment (twelve months ended Dec 31) Bromine Reportable Consolidated ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Total Year ended December 31, 2019: Net sales $ 1,358,170 $ 1,004,216 $ 1,061,817 $ 3,424,203 $ 165,224 $ 3,589,427 Net income (loss) attrib
Slide 34: Adjusted EBITDA - (twelve months ended)
Adjusted EBITDA - (twelve months ended) Twelve Months Ended ($ in thousands) Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Net income attributable to Albemarle Corporation $ 533,228 $ 572,433 $ 547,108 $ 695,371 $ 693,562 Depreciation and amortization 213,484 206,905 202,125 199,6
Slide 35: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Lithium Net income attributable to Albemarle Corporation $ 341,766 $ 424,881 $ 413,058 $ 413,047 $ 428,212 Depreciation and amortization 99,424 95,
Slide 36: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Adjusted EBITDA $ 1,036,781 $ 294,663 $ 254,351 $ 261,900 $ 225,867 Net income attributable to noncontrolling interests 71,129 15,852 16,548 20,772 1
Slide 37: Diluted EPS
Diluted EPS Three Months Ended Year Ended December 31, December 31, 2019 2018 2019 2018 Diluted earnings per share $ 0.85 $ 1.21 $ 5.02 $ 6.34 Add back: Non-operating pension and OPEB items (net of tax) 0.19 0.08 0.18 0.03 Non-recurring and other unusual items (net of tax) Restructuring and other —
Slide 38: Effective Tax Rate
Effective Tax Rate Income before income taxes and equity in net income of Income tax (benefit) ($ in thousands) unconsolidated investments expense Effective income tax rate Three months ended December 31, 2019: As reported $ 78,297 $ (5,105) (6.5)% Non-recurring, other unusual and non-operating pens
Slide 39: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Noncontrolling Noncontrolling Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Equity Income Interest Equity Income Interest Lithium $ 14,
Slide 40: www.albemarle.com
\ ALBEMARLE’ NYSE www.albemarle.com 40
Albemarle — Virtual Fireside Chat with David Begleiter at Deutsche Bank (March 2020) on 6ix