Albemarle Corporation · NYSE:ALB
Albemarle — Investor Day (January 2023)
56 slides from Albemarle's investor day presentation, Jan 23, 2023
Slide 1: 2023 Strategic Update
2023 Strategic Update Transforming Essential Resources January 23, 2023
Slide 2: 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 3: Forward-Looking Statements
Forward-Looking Statements Some of the information presented in this presentation, conference call and discussions that follow, including, without limitation, preliminary results for the three months and year- ended Dec. 31, 2022, Albemarle 2023 and five-year (“2027”) outlooks, information related t
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial 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 dilut
Slide 5: 2023 Strategic Update Agenda
2023 Strategic Update Agenda 09:00 am Welcome & Opening Remarks Meredith Bandy VP, Investor Relations & Sustainability Critical Ingredients for Growth Kent Masters Chairman & CEO Growth Through Innovation Netha Johnson President, Specialties Powering Clean Energy Eric Norris President, Energy Storag
Slide 6: Critical Ingredients for Growth
Critical Ingredients for Growth Kent Masters – Chairman & CEO January 23, 2023
Slide 7: Albemarle leads the world in transforming essential resources
Albemarle leads the world in transforming essential resources into critical ingredients for mobility, energy, connectivity and health. We partner to pioneer new ways to move, power, connect and protect with people and planet in mind. We are committed to building a more resilient world.
Slide 8: Diverse and Dedicated Leadership Team Focused on Delivering Shareholder Value
Diverse and Dedicated Leadership Team Focused on Delivering Shareholder Value Kent Masters Scott Tozier Eric Norris Netha Johnson Raphael Crawford Chairman & CEO Chief Financial Officer President, Energy Storage President, Specialties President, Ketjen Experience: 30+ years Experience: 30+ years Exp
Slide 9: Durable Competitive Advantages Differentiate Albemarle as an Industry Leader
Durable Competitive Advantages Differentiate Albemarle as an Industry Leader DEVELOPING Customer-centric R&D expertise for next collaboration generation materials Capital project Enhanced sustainability Comprehensive operating model execution expertise performance to achieve operational excellence D
Slide 10: Accelerating Growth to Meet Customer Needs
Accelerating Growth to Meet Customer Needs ~$7.3B $17.6-19.3B ~$3.5B $7.2-8.4B 2022E NET SALES1 2027E NET SALES 2022E ADJ. EBITDA1, 2 2027E ADJ. EBITDA 2022E Net Sales1 Ketjen ▪ A global leader with durable competitive advantages 12% ▪ Track record of strong financial and operating performance Albem
Slide 11: Improved Operating Cash Flow Allows Investment to Support Accelerated Growth
Improved Operating Cash Flow Allows Investment to Support Accelerated Growth Free cash flow positive in 2022, 2 years ahead of expectations Net Sales Adj. EBITDA1 Operating Cash Flows $17.6-19.3B $7.2-8.4B $6.6-7.1B ~$3.5B ~$7.3B ~$1.9B $3.3B $1B $0.3B ‘21A ’22E2 ’26E ’27E ‘21A ’22E2 ’26E ’27E ‘21A
Slide 12: Transforming Essential Resources to Better Serve People and Planet
Transforming Essential Resources to Better Serve People and Planet Our Operating Model Purpose To enable a more resilient world The Albemarle Strategy Grow • Maximize • Invest • Sustain Way of Excellence Colleagues, Customers, People Company, Community 12
Slide 13: Clear Strategy to Deliver Enduring Value
Clear Strategy to Deliver Enduring Value Grow Maximize Invest Advance Profitably Productivity with Discipline Sustainability ▪ Expand capacity to ▪ Deploy operating ▪ Allocate capital and ▪ Build competitive meet customer needs model to build a manage portfolio to advantage through and generate valu
Slide 14: Providing Critical Ingredients for Mobility, Energy, Connectivity and Health
Providing Critical Ingredients for Mobility, Energy, Connectivity and Health Advancing the future of movement by being the leading provider Powering the energy transition to meet the rising needs so we MOBILITY of materials that make mobility better and cleaner. ENERGY can ensure the world has criti
Slide 15: Committed to Building a More Resilient World
Committed to Building a More Resilient World CEO Water Mandate New New New New in 2022 IRMA third-party audit at in 2022 CDP Reporting: in 2022 Eight Responsible Care in 2022 Signatory Salar de Atacama; First year scored Awards, including two Self-assessments at Climate (B) and Water (C) Sustainabil
Slide 16: Key Takeaways
A global leader with world-class assets and a diversified product portfolio; long-term supply with reliable, consistent quality Transformational growth: expected 2027 net sales ~2.5X 2022 and adj. EBITDA >2X 2022 Key Capitalizing on tremendous growth opportunities in electric vehicles and Takeaways
Slide 17: Growth Through Innovation
Growth Through Innovation Netha Johnson – President, Specialties January 23, 2023
Slide 18: Industry-Leading Customer Experience and Innovation
Industry-Leading Customer Experience and Innovation ~$1.8B $2.2-2.3B ~$0.5B $0.7-0.8B 2022E NET SALES1 2027E NET SALES 2022E ADJ. EBITDA1 2027E ADJ. EBITDA Net Sales from New Product Launches ▪ Net sales growth of 2X+ GDP through 2027; improved outlook driven primarily by capital projects execution
Slide 19: Albemarle Specialties – Strong Presence in Major Markets
Albemarle Specialties – Strong Presence in Major Markets1 Langelsheim, Germany Twinsburg, OH Safi, Jordan (Joint Venture) Magnolia, AR Taichung, Taiwan New Johnsonville, TN Baton Rouge, LA (Research Facility) = Production = Resource 1 Map is representative of Albemarle’s global reach; not inclusive
Slide 20: Strategy to Grow Specialties Across Diverse End-Markets
Strategy to Grow Specialties Across Diverse End-Markets Grow Maximize Invest Advance Profitably Productivity with Discipline Sustainability ▪ Expand our low-cost ▪ Improve operational ▪ Allocate capital to ▪ Minimize natural resources and efficiency and continue track record environmental global pro
Slide 21: Transforming Essential Resources to Better Serve People and Planet
Transforming Essential Resources to Better Serve People and Planet Batteries Casing & Powertrain, Lightweight Interior, Coatings, Renewable Energy Infrastructure, EV Charging, Power Plants, MOBILITY Airbags, High Performance Tires ENERGY Fuel Cells, Wells Completion, Energy Efficient Buildings Medic
Slide 22: Operational Discipline: Manufacturing Excellence & Capital Project Execution
Operational Discipline: Track Record of Delivering Manufacturing Excellence & Innovative Expansion Capital Project Execution 2022 Plant Expansion - Magnolia, AR ▪ On-time and on-budget expansion of the flagship fire safety ▪ Dedicated Manufacturing Excellence solutions product line program (higher v
Slide 23: Competitive Capabilities: Diverse and Healthy New Product Pipeline
Competitive Capabilities: Diverse and Healthy New Product Pipeline Research & Technology MercLok™ ▪ Remediates mercury in contaminated soils and sediments New Product Innovation ▪ Large market opportunity (~$200M in the US alone) ▪ Multiple field pilots completed ▪ Market research driven ▪ Commercia
Slide 24: Key Takeaways
A global market leader with world-class resources and a diversified product portfolio Growth business with upside and attractive returns: projected 5-year net sales CAGR ~5% and adj. EBITDA margins 32-36% by 2027 Key Capitalizing on macro growth trends in mobility, energy, connectivity, and Takeaway
Slide 25: Powering Clean Energy
Powering Clean Energy Eric Norris – President, Energy Storage January 23, 2023 2 5
Slide 26: Maintaining Albemarle's Lithium Leadership as Growth Accelerates
Maintaining Albemarle’s Lithium Leadership as Growth Accelerates ~$4.7B $14.3-15.7B ~$3.0B $6.4-7.5B 2022E NET SALES1 2027E NET SALES FY 2022E ADJ. EBITDA1 FY 2027E ADJ. EBITDA Lithium Conversion Nameplate Capacity (ktpa LCE) 500-600 ▪ Energy Storage business leverages competitive advantages in our
Slide 27: Power the World's Transformation to Sustainable Energy
Power the World’s Transformation to Sustainable Energy Through Reliable, High-Performance Lithium Grow Maximize Invest Advance Profitably Productivity with Discipline Sustainability ▪ Lead the energy ▪ Operate and improve ▪ Improve capital ▪ Drive standard of storage revolution with sites to safely
Slide 28: Expanding Global Footprint – Strong Presence in Major Markets
Expanding Global Footprint – Strong Presence in Major Markets1 Chengdu, China Kings Mountain, NC, U.S. Silver Peak, Meishan, Xinyu, NV, U.S. China Magnolia, China AR, U.S. EU Mega-Flex, TBD Qinzhou, US Mega-Flex, China TBD APAC Conversion, TBD La Negra, Chile Salar de Wodgina, Atacama, Chile Austral
Slide 29: Transforming Essential Resources to Better Serve People and Planet
Transforming Essential Resources to Better Serve People and Planet MOBILITY Stationary Grid Storage, Residential Behind-the-Meter, EV Charging BEV/PHEV, eTrucks, eBuses, eScooters, Aircraft Alloys, Greases ENERGY Stations, Renewable Grid Balancing CONNECTIVITY Mobile Phones, Laptops, Data Centers, G
Slide 30: Increasing Our Lithium Market Demand Outlook: 5x Growth by 2030
Increasing Our Lithium Market Demand Outlook: 5x Growth by 2030 Global EV Lithium Demand Cumulative Sales by Year1 Production / ALB Projections3 by Application3 (M units) Market Penetration2 (MMt LCE) (MMt LCE) 10.0 2022 vs. 2021: 2022-2027 2022-2027 +72% CAGR: 25-30% 3.7MMt CAGR: 25-30% 9.0 4.0 203
Slide 31: Lithium: Essential for Clean Transportation and the Fight Against Climate Change
Lithium: Essential for Clean Transportation and the Fight Against Climate Change GHG Emissions Annual Fleet Emissions (g/mile) EV GHGs 6 5 2.6 Gigatons CO2e (Gt CO2e) < 50%1 4 per year 3 Vehicle Operation — avoided via EV growth of fleet share by 20502 2 2020 2030 2040 2050 Well to Pump — For every
Slide 32: Leveraging Our Low-Cost Resources as Projects Trend Towards Higher Cost
Leveraging Our Low-Cost Resources as 2030E Mined Supply 2030E Demand Projects Trend Towards Higher Cost 2.9 MMT LCE 3.7 MMT LCE ~$20/kg 800 kt Supply Deficit Net of Recycling 20% of Demand Cost1 ALB Average 2030E Cost Cumulative Supply (kT LCE) Prices >$20/kg required over next decade to support >10
Slide 33: Lower Grade, Higher Cost Projects Required to Fill Growing Demand Gap
Lower Grade, Higher Cost Projects Required to Fill Growing Demand Gap Lithium Rock Operations1 Lithium Brine Operations1 2.5 2500 Li Concentration (mg/L Li) 2,150 1.95 2 2000 Li Grade (% Li2O) 1.5 1500 0.9 – 1.2 0.6 – 1.0 1 1000 300 - 600 400 - 450 0.5 500 0 0 Greenbushes Operating2 New Projects 3 A
Slide 34: Bringing on New Capacity Requires Extensive Time and Resources
Bringing on New Capacity Requires Extensive Time and Resources1 Early Target Engineering & Initial Mine Exploration Testing Economic Studies Production Operation Increasing level of detail Approvals, permitting, financing CLOSURE AND REHABILITATION 1,000s of Targets 100s of Discoveries 10s of projec
Slide 35: Recent Projects Took Up to 10 Years for Mines, Longer for Integrated Projects
Recent Projects Took Up to 10 Years for Mines, Longer for Integrated Projects Type Region Source Project Start Time to Production USA Spodumene 2010 16 years CAN Spodumene 2009 15 years AUS Spodumene 2007 10 years AUS Spodumene 2015 9 years Mines Only AUS Spodumene 2015 9 years AUS Spodumene 2010 8
Slide 36: Diversified Portfolio of World-Class Resources in Multiple Jurisdictions
Diversified Portfolio of World-Class Resources in Multiple Jurisdictions Estimated Lithium Resource, Nameplate Capacity1 Highlights 100% basis, ktpa LCE basis ~400-650 ▪ Strong resource position enables ktpa capital-efficient expansions, profitability through cycle ▪ Greenbushes has significant long
Slide 37: Potential to Triple Lithium Conversion Capacity by 2030
Potential to Triple Lithium Conversion Capacity by 2030 Estimated Lithium Conversion Nameplate Capacity1 Highlights 100% basis, ktpa LCE basis 500-600 ▪ Globally diversified portfolio of ktpa vertically integrated lithium Magnolia conversion assets EU Mega-Flex La Negra Expansion ▪ Building from Alb
Slide 38: Executing Our Strategy to Deliver Volumetric Growth
Executing Our Strategy to Deliver Volumetric Growth Higher sales volumes from tolling and Meishan; conversion capacity to achieve > 300 kt sales in Expected Lithium Sales Volumes 2027 ▪ Assumes ~2 years to ramp a new 350 (kt LCE) conversion plant Potential Tolling 300 Technical Grade Spodumene ▪ Inc
Slide 39: Evolving Energy Storage Customer Partnerships and Contract Pricing
Evolving Energy Storage Customer Partnerships and Contract Pricing Energy Storage Net Sales1 Leverage to Continued Strong Market Prices (by Contract Type) ▪ Majority of volumes sold under long-term contracts (typically 2-5 years duration) with strategic customers Spot Purchase order-based ▪ Partners
Slide 40: Industry-Leading Technology Innovations from Mine to Market
Industry-Leading Technology Innovations from Mine to Market Resource and Conversion Battery Materials Customer Alignment ▪ Maximizing recovery at the ▪ Developing differentiated lithium ▪ Breakthrough OEM opportunities wellhead, pond, and conversion for safer, higher performance for >50% more EV ran
Slide 41: Key Takeaways
Albemarle has a broad range of resources, manufacturing capabilities, products, and customer relationships Global lithium demand is on track to reach 3.7 million MT LCE by 2030, a ~20%+ CAGR1 Key Well-positioned to capitalize on growing market: 2027E net sales ~3x 2022E Takeaways and adjusted EBITDA
Slide 42: Accelerating High-Return Growth
Accelerating High-Return Growth Scott Tozier – Chief Financial Officer January 23, 2023
Slide 43: Strong Track Record of Financial Performance
Strong Track Record of Financial Performance Deliberate, transformational steps to position for substantial earnings growth Committed to Maintaining Financials on a Pro-forma Basis (in billions) Investment Grade Credit Net Sales Adj. EBITDA & Margin1 Ratings: $17.6 - $19.3 ~47% S&P BBB Stable $10.00
Slide 44: FY 2022 Financial Performance Expected In-Line with Guidance
FY 2022 Financial Performance Expected In-Line with Guidance FY 2022E3 FY 2021A Variance (in millions, except per share amounts) Net Sales $7,290 - $7,350 $3,328 +119% - 121% Net income attributable to Albemarle Corporation $2,650 - $2,712 $124 +2037% - 2087% Adjusted EBITDA1 $3,440 - $3,490 $871 +2
Slide 45: Introducing Full Year 2023 Guidance: Strong Growth Expected to Continue
Introducing Full Year 2023 Guidance: Strong Growth Expected to Continue New FY 2023 Guidance FY 2022E2 FY 2023 Guidance vs. FY 2022E As of Jan 23, 2023 Net Sales ~$7.3B $11.3B – $12.9B +55% - 75% Adjusted EBITDA ~$3.5B1 $4.2B – $5.1B +20% - 45% Adjusted EBITDA Margin ~47%1 37% – 40% Adjusted Diluted
Slide 46: Energy Storage Outlook and Targets
Energy Storage Outlook and Targets (in billions) Assumptions: • Global accelerated EV adoption supported Net Sales1 Adj. EBITDA & Margin1 by regulation and technological improvements ~65% $14.3 - $15.7 • Steady, GDP/GDP+ growth for non-EV 45% – 47% 45% – 47% businesses 40% 35% • FY 2023 volume expec
Slide 47: Specialties Outlook and Targets
Specialties Outlook and Targets (in billions) Assumptions: • Diverse end markets – ability to divert Net Sales1 Adj. EBITDA & Margin1 product to highest margin operations $2.00 • Cost discipline and selective investment for growth $1.80 32% - 36% 33% o Delivering volumetric growth $2.2 - $2.3 ~30% 2
Slide 48: Ketjen Outlook and Targets
Ketjen Outlook and Targets (in billions) Assumptions: • Continued shift toward sustainable energy Net Sales Adj. EBITDA & Margin products by refineries $0.70 • Continued adoption of lower sulfur fuel standards globally $0.60 • Executing turnaround plan 20% - 26% $1.1 - $1.3 $0.50 16% Business Enviro
Slide 49: Significant Operating Cash Flow to Fund Accelerated Growth Investments
Significant Operating Cash Flow to Fund Accelerated Growth Investments Cash Flow1 $6.6 - $7.1 (billions) Highlights Net Cash from Ops Capital Expenditures 28-30% CAGR • Net Cash from Operations 2022E-2027E improving on revenue growth Free Cash Flow $2.6 - $2.7 • Cash flow generation growing $2.1 - $
Slide 50: Prioritizing Capital Allocation to Support Growth Strategy
Prioritizing 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 p
Slide 51: Financial Flexibility to Execute Growth Strategy
Financial Flexibility to Execute Growth Strategy High-return organic growth and potential M&A to complement existing portfolio ▪ Build and maintain world-class resource base ▪ Specialized, next-gen technology and/or materials ▪ Customer partnerships to accelerate growth, improve sustainability, and
Slide 52: Key Takeaways
Key Preliminary FY 2022 results1 in-line with full-year outlook, exceeding previous 5-yr targets Takeaways Strong growth expected in 2023: net sales +55-75% YoY, adj. EBITDA +20-45% YoY Transformational growth targeted by 2027: revenue ~2.5X 2022, adj. EBITDA >2X 2022, FCF ~4X 2022 Significant opera
Slide 53: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations
Slide 54: Adjusted Net Income
Adjusted Net Income Three Months Ended ear Ended ecember ecember et income (loss) attributable to Albemarle Corporation 1,09 1,1 7 ( ) 2,6 0 2,712 12 Add back: on operating pension and OPEB items (net of tax) (30) ( ) ( 2) (61) on recurring and other unusual items (net of tax) ( 2) (9 ) 170 ( ) (70)
Slide 55: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA Three Months Ended ear Ended ecember ecember et income (loss) attributable to Albemarle Corporation 1,09 1,1 7 ( ) 2,6 0 2,712 12 Add back: Interest and financing expenses 2 123 61 Income tax expense (benefit) 2 1 391 29 Depreciation and amorti ation 6 6 301 2 E IT A 1,229
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