Albemarle Corporation · NYSE:ALB
Albemarle — Deutsche Bank 2018 Lithium & Energy Storage Conference
35 slides from Albemarle's conference presentation, Nov 15, 2018
Slide 1: Investor Presentation and Non-GAAP Reconciliations
Albemarle Corporation Investor Presentation and Non-GAAP Reconciliations November 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the earnings conference call and discussions that follow, including, without limitation, information related to product development, production capacity, committed volumes, market trends, pricing, expected growth, ear
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: Albemarle Snapshot
Albemarle Snapshot Founded 1887 Financial Highlights4 Trailing Twelve Months Ended September 30, 2018 Global Employees ~5,400 Net Sales $3.3B Net Income5 $346M Countries1 ~100 Adj. EBITDA $988M Dividend Yield2 1.3% Adj. EBITDA Margin6 30% Net Sales by Segment4 Market Cap3 $10.9B Trailing Twelve Mont
Slide 5: Albemarle Path to Achieve Growth
Albemarle Path to Achieve Growth 2016 2021 Diversified Lithium Wave I & II: Expand current • 165,000 MT LCE annual capacity resources and BG conversion capacity specialty • New Lithium resources in chemical development with goal of 265,000 Lithium Wave III: Explore new resources MT LCE capacity mid-
Slide 6: Battery Markets Continue to Accelerate Lithium Demand
Battery Markets Continue to Accelerate Lithium Demand 2025 EV and Lithium Outlook1 Demand Buildup by Application 20% 2017 ’17 – ’25 2025 Applications Demand CAGR Demand Transportation 50 35% 550 ALB Outlook Consumer Electronics2 60 8% 110 15% EV Penetration All Other/Industrial 110 3 – 4% 140 Total
Slide 7: Current State of Lithium Hydroxide Under Contract
Current State of Lithium Hydroxide Under Contract As of November 7th, 2018 180,000 160,000 140,000 120,000 Under Negotiation Metric Tons 100,000 80,000 Evergreen Contracts Nameplate 60,000 Right of First Refusal or Option 40,000 80% of Nameplate Committed Minimum Volume Secured 20,000 Long-term Agre
Slide 8: Current State of Lithium Carbonate Under Contract
Current State of Lithium Carbonate Under Contract As of November 7th, 2018 140,000 120,000 100,000 Nameplate Under Negotiation Metric Tons 80,000 Internal Downstream Applications 60,000 and Evergreen Contracts 87% of Right of First Refusal or Option 40,000 Nameplate Secured Committed Minimum Volume
Slide 9: Wave I On Track; Wave II Updated; Chile V / VI On Hold
Wave I On Track; Wave II Updated; Chile V / VI On Hold All figures in kt LCE and represent only lithium nameplate conversion capacity On Hold Hydroxide 225 40 Hydroxide Lithium Hydroxide 165 Carbonate 20 Shift Forward 85 40 Lithium Carbonate Carbonate 85 40 Hydroxide Lithium 65 20 Hydroxide Lithium
Slide 10: Disciplined Capital Allocation Strategy – Our Priorities
Disciplined Capital Allocation Strategy – Our Priorities Invest for Invest for Maintain Fund Growth in Investment Dividend Growth, High Return Grade Rating Growth Maintain Projects • Long-term Net • Increase dividend Debt to Adjusted annually: 24 • Strategically grow Flexibility Lithium EBITDA1 Targ
Slide 11: Albemarle Is Well Positioned to Maximize Long-Term Shareholder Value Creation
Albemarle Is Well Positioned to Maximize Long-Term Shareholder Value Creation 1 Multi-year journey has resulted in a more focused and growth-oriented portfolio underpinned by energy efficiency macro drivers 2 Clear strategy with the people, cash generation and resources necessary to ….execute the st
Slide 12: www.albemarle.com
.\ ALBEMARLE’ NYSE www.albemarle.com 12
Slide 13: Appendix A
Appendix A GBU Summaries and Other Supporting Materials
Slide 14: Leadership Across Businesses Is Driven By Core Strengths
Leadership Across Businesses Is Driven By Core Strengths Lithium Bromine Specialties Catalysts2 Global Ranking #1 #2 #2 TTM Adj. EBITDA1 $505M $282M $292M TTM Adj. EBITDA Margin1 43% 31% 26% Key Competitors Globally Diversified, Low Leading Technology and Cost Resources; Leading Globally Diversified
Slide 15: Bromine Specialties Snapshot
Bromine Specialties Snapshot TTM Financials Characteristics Twelve Months Ended September 30, 2018 • Mineral extraction and processing Net Sales $898M • Low-cost position on global cost curve Adj. EBITDA $282M • Vertically integrated Adj. EBITDA Margin 31% • Stable and sustainable cash flow Applicat
Slide 16: Catalysts Snapshot
Catalysts Snapshot TTM Financials1 Characteristics Twelve Months Ended September 30, 2018 • Leading positions in FCC and HPC catalysts Net Sales $1,108M • Technology and applications knowledge Adj. EBITDA $292M • Focused on value creation for refiners • Long-term, collaborative customer relationship
Slide 17: Lithium Snapshot
Lithium Snapshot TTM Financials Characteristics Twelve Months Ended September 30, 2018 • Mining and specialty chemicals capability Net Sales $1,176M • Vertically integrated from natural resource to Adj. EBITDA $505M specialty performance products Adj. EBITDA Margin 43% • Low cost position globally A
Slide 18: Lithium Contract Definitions
Lithium Contract Definitions Committed Minimum Volume: The minimum volume that customer has committed to purchase under long-term agreement. Right of First Refusal (ROFR): If customer has demand above the Committed Minimum Volume, it must offer that volume to Albemarle. Albemarle has the option, but
Slide 19: Chile Regulatory Environment and Status
Chile Regulatory Environment and Status Chile Environmental Chile’s Economic Development The Chilean Nuclear Energy Superintendent Agency Commission (SMA) (CORFO) (CCHEN) Regulatory Authority Enforces operating permit that Authorizes production of lithium Authorizes sales of lithium defines brine pu
Slide 20: Cash Flow and Net Debt
Cash Flow and Net Debt Nine Months Ended September 30 Selected Financial Metrics ($ in millions) ($ in millions) (as of 09/30/2018) 2018 2017 Dividends Paid: $109 Net Cash from Operations $377 $75 Dividend Growth (Y/Y)2: 5% Less: Capital Expenditures (472) (188) Cash Balance: $641 Gross Debt3: $1,69
Slide 21: Appendix B
Appendix B Guidance as per Q3 2018 Earnings Released November 7th, 2018
Slide 22: Full Year 2018 Business Guidance vs 2017
Full Year 2018 Business Guidance vs 2017 Business Outlook Business Environment Unit • FY 2018 Adj. EBITDA expected to increase low 20’s on % basis vs prior year Lithium • Favorable outlook driven by strong volume and price improvements, primarily in battery grade product portfolio • FY 2018 Adj. EBI
Slide 23: Full Year 2018 Guidance On Track
Full Year 2018 Guidance On Track 2018 Guidance FY 2017 FY 2018 FY 2017 vs Pro Forma3 Guidance4 FY 2017 Pro-Forma3 Net Sales $3.07B $3.00B $3.3 – $3.5B 10% – 17% Adjusted EBITDA 1 $885M $859M $990 – $1,020M 15% – 19% Adjusted EBITDA Margin 1 29% 29% 29% – 30% 1 Adjusted Diluted EPS $4.59 $4.40 $5.30
Slide 24: Appendix C
Appendix C Non-GAAP Reconciliations and Supplemental Information
Slide 25: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Non-GAAP Measure Description Adjusted net income Net income attributable to Albemarle Corporation before non-recurring, other unusual and non-operating pension and OPEB. Pro-forma adjusted net income Net income attributable to Albemarle Corporation before non-recurri
Slide 26: Adjusted Net Income - Pro-forma
Adjusted Net Income - Pro-forma Three Months Ended September 30, ($ in thousands) 2018 2017 Net income attributable to Albemarle Corporation $ 129,745 $ 118,670 Add back: Non-operating pension and OPEB items (net of tax) (1,856) (694) Non-recurring and other unusual items (net of tax) 13,568 2,575 A
Slide 27: EBITDA and Adjusted EBITDA - Pro-forma
EBITDA and Adjusted EBITDA - Pro-forma Three Months Ended September 30, ($ in thousands) 2018 2017 Net income attributable to Albemarle Corporation $ 129,745 $ 118,670 Add back: Interest and financing expenses 12,988 15,792 Income tax expense 33,167 18,495 Depreciation and amortization 49,707 49,895
Slide 28: Adjusted EBITDA - by Segment (three months ended September 30)
Adjusted EBITDA - by Segment (three months ended September 30) Reportable ($ in thousands) Lithium Bromine Specialties Catalysts Segments Total All Other Corporate Consolidated Total Three months ended September 30, 2018: Net income (loss) attributable to Albemarle Corporation $ 90,313 $ 67,967 $ 50
Slide 29: Adjusted EBITDA - Margin by Segment (three months ended September 30)
Adjusted EBITDA - Margin by Segment (three months ended September 30) Bromine Reportable ($ in thousands) Lithium Specialties Catalysts Segments Total All Other Consolidated Total Three months ended September 30, 2018: Net sales $ 270,928 $ 232,616 $ 251,139 $ 754,683 $ 23,065 $ 777,748 Net income (
Slide 30: Adjusted EBITDA - Continuing Operations (twelve months ended)
Adjusted EBITDA - Continuing Operations (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Continuing Operations Net income attributable to Albemarle Corporation $ 875,306 $ 54,850 $ 135,397 $ 334,525 $ 345,600 Depreciation and
Slide 31: Adjusted EBITDA - by Segment (twelve months ended)
Adjusted EBITDA - by Segment (twelve months ended) Twelve Months Ended ($ in thousands) Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Lithium Net income attributable to Albemarle Corporation $ 314,707 $ 342,992 $ 373,712 $ 409,185 $ 409,753 Depreciation and amortization 86,409 87,
Slide 32: Adjusted EBITDA supplemental
Adjusted EBITDA supplemental1 Twelve Months ($ in thousands) Ended Three Months Ended Sep 30, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Adjusted EBITDA $ 988,142 $ 235,082 $ 258,562 $ 248,718 $ 245,780 Net income attributable to noncontrolling interests 40,419 13,734 8,225 7,165 11,29
Slide 33: Effective Tax Rate
Effective Tax Rate Income before income taxes and equity in net income of ($ in thousands) unconsolidated investments Income tax expense Effective income tax rate Three months ended September 30, 2018: As reported $ 154,565 $ 33,167 21.5% Non-recurring, other unusual and non-operating pension and OP
Slide 34: Equity Income and Noncontrolling Interest
Equity Income and Noncontrolling Interest Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Noncontrolling Noncontrolling Noncontrolling Noncontrolling ($ in thousands) Equity Income Interest Equity Income Interest Equity Income Interest Equity Income Interest Lith
Slide 35: www.albemarle.com
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