Albemarle Corporation · NYSE:ALB
Albemarle — Investor Presentation (December 2022)
50 slides from Albemarle's investor presentation, December 2022
Slide 1: Albemarle Investor Presentation
Albemarle Investor Presentation Dec. 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, the press release, the conference call and discussions that follow, including, without limitation, information related to the timing of active and proposed projects, production capacity, committed volumes, pricing, fi
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: Diverse Portfolio Generating Significant Cash
Diverse Portfolio Generating Significant Cash Business Overview Global ~5,600 Employees1, 2 Lithium Bromine Catalysts Countries1 ~70 Dividend 28th consecutive year Increases ~60% ~25% ~15% Financial Highlights3 of Net Sales 3 of Net Sales 3 of Net Sales 3 Net Sales $5.6B Net Income4 $1.6B A global m
Slide 5: Global Footprint – Strong Presence in Major Markets
Global Footprint1 – Strong Presence in Major Markets Amsterdam, Pasadena, TX, Kings Mountain, Netherlands U.S. NC, U.S. Langelsheim, Silver Peak, Magnolia, Germany S NV, U.S. AR, U.S. Zhangjiagang, Chengdu, China China Safi, Meishan, Xinyu, Jordan JV China China JV Business Unit: Niihama, Japan Lith
Slide 6: Diverse and Dedicated Leadership Team Focused on Delivering Shareholder Value
Diverse and Dedicated Leadership Team Focused on Delivering Shareholder Value Kent Masters Scott Tozier Karen Narwold Kristin Coleman Sean O’Hollaren Chairman & CEO CFO Chief Administrative Officer General Counsel Chief External Affairs Officer Experience: 30+ years Experience: 30+ years Experience:
Slide 7: Engaged, Diverse, and Accountable Board of Directors
Engaged, Diverse, and Accountable Board of Directors Racial Diversity Black White 20% 70% Hispanic 10% Laurie Brlas Glenda Minor Ralf Cramer Diarmuid O’Connell Kent Masters Former EVP & CFO, Former SVP & CFO, Former President and CEO, Former VP, Corp & Chairman & CEO, Newmont Mining Evraz North Amer
Slide 8: Sustainability Is Core to Our Long-term Strategy
Sustainability Is Core to Our Long-term Strategy GROW ▪ Strategically grow lithium and bromine capacity PROFITABLY ▪ Maintain capital discipline and operational excellence MAXIMIZE ▪ Optimize earnings, cash flow and cost structure across all our businesses PRODUCTIVITY ▪ Deploy operating model to bu
Slide 9: Strategic Execution and the Albemarle Way of Excellence (AWE)
Strategic Execution and the Albemarle Way of Excellence (AWE) Purpose Making the world safe and sustainable by powering potential Operating Model: Values AWE How We Care • Curiosity • Courage • Collaboration Execute & Humility • Integrity & Transparency Accelerate Our Strategy Strategy Grow • Maximi
Slide 10: Strong Financial Position and Ample Liquidity
Strong Financial Position and Ample Liquidity (As of 9/30/22, $M) FY 2022E NET CASH FROM CAPITAL EXPENDITURES OPERATIONS $1.45-1.65B LEVERAGE1 (x) ($M) $4,000 2.3x • Committed to maintaining Investment $1.3 - $1.4B Grade credit rating $3,000 • $1.7B debt issuance strengthens liquidity and reduces re
Slide 11: Continued Growth in a Turbulent Macro Environment
Continued Growth in a Turbulent Economic Conditions Vary By Segment Macro Environment Lithium • Expect continued secular growth related to the shift to clean transportation supported by OEM EV investments and public policy 2022E Forecast Cost • Key economic indicators include global EV production Br
Slide 12: Prioritizing Capital Allocation to Support Growth Strategy
Prioritizing Capital Allocation to Support Growth Strategy Invest to Grow Portfolio Maintain Financial Dividends & Share Profitably Management Flexibility Repurchases • Strategically grow lithium • Actively assess portfolio; • Committed to • Continue to support our and bromine capacity to reinvest p
Slide 13: Catalysts Strategic Review Decision & Reshaping Core Portfolio
Catalysts Strategic Review Decision & Reshaping Core Portfolio Catalysts Update New Core Portfolio Segmentation ▪ Strategic review concluded ▪ Reshaping core portfolio with a stronger ▪ Albemarle to retain the business as a focus on multiple growth opportunities wholly owned subsidiary ▪ Combination
Slide 14: Sustainability Framework Aligns with Strategy
Sustainability Framework Aligns with Strategy Energy & Natural Resource Greenhouse Safety People, Workplace Management Gases & Community Diversity, Equity Responsibly manage & Inclusion Build an inclusive and diverse Water our use of resources workplace focused on safety, and materials mutual respec
Slide 15: Our Initial Environmental Targets
Our Initial Environmental Targets Next two years 2030 2050 Build Reduce Grow Achieve the infrastructure to the carbon-intensity of the intensity of our Lithium business net zero carbon assess, measure and our Catalysts and freshwater usage by in a carbon-intensity emissions by 2050 track progress to
Slide 16: Committed to Industry-leading Sustainability Performance
Committed to Industry-leading Sustainability Performance New in 2021 Sustainability Report Next Steps • Full (scored) CDP disclosure in 2022 • Report progress on existing GHG & freshwater targets • TCFD to be completed this year, publish in 2023 Natural Resource • Initial Scope 3 GHG assessment • Ad
Slide 17: Lithium: Enabling the EV Revolution
Lithium: Enabling the EV Revolution
Slide 18: Lithium: Well-positioned to Remain a Leader as Growth Accelerates
Lithium: Well-positioned to Remain a Leader as Growth Accelerates TTM Q3 2022 $3.3B $2.1B 61% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 GBU Characteristics Business Environment ▪ Large, world-class resource base; vertically integrated ▪ Volume growth driven by energy storage Net Sales by Applicatio
Slide 19: Established Processes for Conventional Resources
Established Processes for Conventional Resources Continuous improvement through optimization, efficiency, technology advancements Resource Extraction Lithium Conversion Lithium Products Battery and Technical Grade Hard Rock 6% Li2O Concentrate Lithium Hydroxide 0.5- 2.5% Li2O Xinyu, Chengdu, Qinzhou
Slide 20: Pressure From Auto Industry to Accelerate Lithium Supply Growth
Pressure From Auto Industry to Accelerate Lithium Supply Growth Global EV Lithium Demand Cumulative Sales by Year1 Production / ALB Projections3 by Application3 (M units) Market Penetration2 (Mt LCE) (Mt LCE) 2021 vs. 2020: 2020-2025 CAGR: ~45% 3.5 2020-2025 6.0 +111% 3.2Mt 39.0% CAGR: ~25% 3.0 3.2M
Slide 21: Lithium Contracts Offer Leverage to Strong Market Prices
Lithium Contracts Offer Leverage to Strong Market Prices Battery Grade Revenues Contracting Approach Continues to Evolve 2 ▪ ~15% spot (at the time of purchase order) ▪ Majority of volumes sold under long-term contracts (typically 2-5 years duration) with strategic customers ▪ ~65% index-referenced,
Slide 22: Executing Our Strategy to Deliver Volumetric Growth
Executing Our Strategy to Deliver Volumetric Growth 250 Potential Tolling Technical Grade Spodumene +/- Lithium Carbonate ▪ Volume increases reflect 200 Lithium Hydroxide +/- expansions at Silver Peak, La 2022 volume +/- Negra, Kemerton, and Qinzhou +20-30% Y/Y 150 ▪ Technical-grade spodumene sales
Slide 23: Current Expansions Support Long-term Growth Strategy
Current Expansions Support Long-term Growth Strategy Expanding global lithium conversion capacity… Australia/Asia Resource & Conversion ▪ Qinzhou acquisition closed Oct 2022; designed to produce 25ktpa Resource LCE with expansion potential Conversion ▪ Kemerton I expected to produce qualification sa
Slide 24: Expanding Our Western Footprint to Address Growing Demand
Expanding Our Western Footprint to Address Growing Demand Kings Mountain, North Carolina Lithium Resource Southeastern U.S.-based Lithium Conversion Facility (location: TBD) + • Mine operated 1940s-1980s • Site selection & design efforts in progress for a Mega-Flex site: • 700-acre site atop a top t
Slide 25: Building Conversion Capacity to Leverage World-class Resources
Building Conversion Capacity to Leverage World-class Resources 450-500 ktpa Estimated Lithium Nameplate Conversion Capacity1 100% basis, Carbonate figures on ktpa LCE basis, hydroxide figures on ktpa LiOH basis Zhangjiagang Other APAC Expansions North American Conversion EU Conversion Meishan I/II K
Slide 26: Albemarle Well-Positioned to Provide US Lithium Supply
Albemarle Well-Positioned to Provide US Lithium Supply 2030 US EV Li Demand Inflation Reduction Act (IRA) @50% EV Penetration1 encourages domestic EV 600 supply chain investment ▪ Credits for sourcing of critical minerals extracted or processed in 400kt U.S. / Free Trade Agreement (“FTA”) 400 US Meg
Slide 27: The Atacama Basin: Saline Interphase
Responsible Water Management The Atacama Basin: Saline Interphase Case Study: Salar de Atacama At the saline interphase: Albemarle uses <1% of the freshwater rights1 in the Salar de Atacama ▪ Naturally occurring, low permeability sediments act as a barrier between the groundwater and the brine Albe
Slide 28: Lithium Overview
Lithium Overview Q3 2022 Performance Y/Y Q3 Performance Drivers • Net sales up 318% (price1 +298%, volume +20%); adjusted EBITDA +786% (in millions) Q3 2022 Y/Y • Increased sales due to renegotiated fixed and index-referenced variable price contracts Net Sales $1,501 +318% and increased market prici
Slide 29: Bromine: Providing Critical Materials for Electrification and Digitization
Bromine: Providing Critical Materials for Electrification and Digitization
Slide 30: Bromine: A Leader Across Diverse End-Use Markets
Bromine: A Leader Across Diverse End-Use Markets TTM Q3 2022 $1.4B $459M 33% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 GBU Characteristics Business Environment ▪ Access to world-class natural resources with low- ▪ Diversified and growing end-market applications Net Sales by Applications2 cost posit
Slide 31: Access to Highly Concentrated Bromine is a Low-Cost Advantage
Access to Highly Concentrated Bromine is a Low-Cost Advantage Bromine Concentration2 Albemarle Operates from Two (ppm) World-Class Bromine Resources: Dead Sea Concentrate Arkansas India Concentrate Dead Sea, Jordan China Seawater Jordan Bromine Company1 (JBC) - operated 0 1000 2000 3000 4000 5000 60
Slide 32: Leveraging Bromine Capital Project Excellence to Capture Growth
Leveraging Bromine Capital Project Excellence to Capture Growth Expansions driven by new product innovation, process development, and application testing facility in Baton Rouge, LA Twinsburg, OH ▪ +10% of annual revenue anticipated to be generated from new products by 2026 ▪ First commercial sales
Slide 33: Expanding Markets in Core and New Businesses to Accelerate Growth
Expanding Markets in Core and New Businesses to Accelerate Growth BROMINE IN OUR WORLD Consumer Telecom Buildings Electronics Automotive Energy Ag / Pharma Polymers Wiring Insulation Circuit Boards Tires Oilfield PET Disinfectants Connectors Wiring Enclosures Seats Completion Textiles Pharmaceutical
Slide 34: Automotive Use is Accelerating with Trend to EVs
Automotive Use is Accelerating with Trend to EVs ▪ Solid existing market for flame retardants used in ICE vehicles Displays ▪ New and accelerating utilization with trend to EVs and growing sensors usage High Voltage Wiring Charging Stations Wiring Harness EV Applications Battery Casing EV/ ICE Appli
Slide 35: Sustainable Approach: Improving Productivity and Sustainability
Sustainable Approach: Improving Productivity and Sustainability Natural Resources Management Sustainability program examples: Material reduction targets by 2025 Waste heat integration projects at JBC (on an intensity basis, per mt Br2) Waste evaporation pond elimination at JBC Jordan Bromine Company
Slide 36: Bromine Overview
Bromine Overview Y/Y Q3 Performance Drivers Q3 2022 Performance Q3 2022 Y/Y • Net sales up 28% (price1 +18%, volume +10%); adjusted EBITDA +24% (in millions) • Favorable pricing driven by robust demand and tight market conditions Net Sales $355 +28% • Increase in net sales partially offset by higher
Slide 37: Catalysts: Positioning to Execute on Long-term Opportunities
Catalysts: Positioning to Execute on Long- term Opportunities
Slide 38: Catalysts: A Leader in Refining and Petrochemical Catalysts
Catalysts: A Leader in Refining and Petrochemical Catalysts TTM Q3 2022 $863M $59M 7% Net Sales Adj. EBITDA1 Adj. EBITDA Margin1 GBU Characteristics Business Environment Net Sales by Applications2 • Portfolio of global best-in-class assets • FCC: Refinery output expected to shift from fuels • Extens
Slide 39: Aligning Growth Opportunities with Major Macrotrends
Aligning Growth Opportunities with Major Macrotrends Refining capacity continues to expand in emerging markets Demand for renewables and recycling applications is like India and SE Asia increasing, led by North America SE Asia & India Demand Diesel Renewable Diesel Demand (million bpd) Jet fuel (mil
Slide 40: Leveraging Our Core Skills in Growth Markets
Petrochemicals Demand & New Crude-to-Chemicals Leveraging Our Core Skills in Growth Technologies Drive FCC Industry Growth Beyond Markets “Peak Gasoline” Outlook: Traditional Refinery Crude Oil-to-Chemicals Product Slate Refinery Product Slate ▪ Emerging Growth Regions: Anticipate demand Chemicals g
Slide 41: Accelerating Renewables Platform: HVO & Pyrolysis
Accelerating Renewables Platform: HVO & Partnering with leaders on Pyrolysis – Both Relate to Sustainability renewables 20-year relationship with Neste, a front runner in renewable fuels Outlook: research and manufacturing ▪ Hydrotreated Vegetable Oil (HVO): Continued Partnered in the developmen
Slide 42: Catalysts Overview
Catalysts Overview Y/Y Q3 Performance Drivers Q3 2022 Performance Q3 2022 Y/Y • Net sales up 22% (price1 5%, volume 17%); adjusted EBITDA down 86% (in millions) • Adjusted EBITDA declined as increased sales were offset by cost pressures Net Sales $236 +22% including natural gas and raw materials Net
Slide 43: Investor Relations Contacts
Investor Relations Contacts Meredith Bandy, CFA Brook Wootton, IRC Eran del Castillo Vice President Senior Director Manager Investor Relations and Sustainability Investor Relations Investor Relations Meredith.Bandy@albemarle.com Brook.Wootton@albemarle.com Eran.delCastillo@albemarle.com +1 980-999-5
Slide 44: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations 44
Slide 45: 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 46: Production Facilities
Production Facilities Location Business Segment Principal Use Owned/Leased Greenbushes, Australia Lithium Production of lithium spodumene minerals and lithium concentrate Owned(c) Guangxi, China Lithium Production of lithium carbonate and technical and battery-grade lithium hydroxide Owned (a) Kemer
Slide 47: Adjusted EBITDA (twelve months ended)
Adjusted EBITDA Adjusted EBITDA (twelve months ended) - Continuing Operations (twelve months ended) See above for a reconciliation of adjusted EBITDA and pro-forma adjusted EBITDA, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation, the most directly comparable fina
Slide 48: Adjusted EBITDA – by Segment
Adjusted EBITDA Adjusted EBITDA – by Segment - by Segment (twelve (twelve months ended) months ended) See above for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measures, to Net income attributable 48 to Albemarle Corporation (“earnings”), the most directly comparab
Slide 49: Adjusted EBITDA supplemental
Adjusted EBITDA Adjusted EBITDA supplemental supplemental1 1 1 This supplemental is for net-debt-to-adjusted EBITDA ratio based on the bank covenant 49 definition.
Slide 50: www.albemarle.com
NYSE www.albemarle.com A\ALBEMARLE’