News

Albemarle Corporation Finishes 2021 Strong; Raises 2022 Outlook


February 16, 2022


CHARLOTTE, N.C., Feb. 16, 2022 /PRNewswire/ -- Albemarle Corporation (NYSE: ALB) today announced its results for the fourth quarter and full year ended December 31, 2021.

Fourth-Quarter 2021 and Recent Highlights
(Unless otherwise stated, all percent changes represent year-over-year comparisons)

  • Net sales of $894 million, an increase of 2%
  • Net loss of ($3.8) million, or ($0.03) per diluted share; Adjusted diluted EPS of $1.01
  • Adjusted EBITDA of $229 million, an increase of 3%
  • Improved full-year 2022 outlook based on anticipated ability to capitalize on favorable market conditions for lithium and bromine; adjusted EBITDA expected to be 35%-55% higher Y/Y excluding FCS
  • La Negra III/IV conversion plant is in commercial qualification
  • Kemerton I conversion plant is mechanically complete and in the commissioning phase; construction team now dedicated to Kemerton II
  • Signed non-binding letter agreement to explore expanding the MARBL JV to increase optionality and reduce risk

"Our team delivered a strong year that exceeded expectations by executing our strategy and effectively responding to a number of challenges in 2021. We increased our net sales and adjusted EBITDA by 11% and 13%, respectively, excluding FCS," said Albemarle CEO Kent Masters. "Our Lithium and Bromine businesses are performing well. With a firm focus on executing our growth strategy, we are well positioned for opportunities to deliver significant value to our shareholders. The strategic investments we've made in our Lithium business as well as the progress of several key projects will enable us to potentially double our nameplate capacity by the end of 2022 and accelerate our Wave 3 projects."  

Outlook

Albemarle expects that its full-year 2022 results across all business units will improve relative to full-year 2021. Capital expenditures are anticipated to be higher than previously planned as the company invests to accelerate conversion capacity additions and meet evolving industry standards, as well as continued inflationary pressures.




FY 2022 Guidance

Net sales



$4.2 - $4.5 billion

Adjusted EBITDA



$1.15 - $1.3 billion

Adjusted EBITDA Margin



27% - 29%

Adjusted Diluted EPS



$5.65 - $6.65

Net Cash from Operations



$400 - $500 million

Capital Expenditures



$1.3 - $1.5 billion

Fourth-Quarter Results

In millions, except per share amounts

Q4 2021


Q4 2020


$ Change


% Change

Net sales

$      894.2


$      879.1


$         15.1


1.7  %

Net (loss) income attributable to Albemarle Corporation

$         (3.8)


$        84.6


$        (88.4)


(104.5)  %

Adjusted EBITDA(a)

$      228.7


$      221.1


$           7.6


3.4  %

Diluted loss earnings per share

$       (0.03)


$        0.79


$        (0.82)


(103.8)  %

   Non-operating pension and OPEB items(a)

(0.41)


0.35





   Non-recurring and other unusual items(a)

1.45


0.03





Adjusted diluted earnings per share(a)(b)

$        1.01


$        1.17


$        (0.16)


(13.7)  %


(a)

See Non-GAAP Reconciliations for further details.

(b)

Totals may not add due to rounding.

Net sales of $894.2 million increased by $15.1 million compared to the prior-year quarter, primarily driven by an increase in sales from the company's Lithium and Bromine businesses, partially offset by the loss of revenue from its Fine Chemistry Services (FCS) business which was sold on June 1, 2021.

Adjusted EBITDA of $228.7 million increased by $7.6 million from the prior-year quarter primarily due to Lithium results, offset by the impact of the sale of FCS.

Net loss attributable to Albemarle of ($3.8) million decreased by $88.4 million from the prior-year quarter primarily due to a $132.4 million post-measurement period acquisition purchase price adjustment related to anticipated cost overruns from supply chain, labor and COVID-19 pandemic related issues at the Kemerton construction project. In addition, net income attributable to Albemarle was impacted by after-tax actuarial gains of $43.6 million realized in the fourth quarter of 2021 compared to after-tax actuarial losses of $40.9 million in the fourth quarter of 2020.

The effective income tax rate for the fourth quarter of 2021 was (186.4)% compared to (20.9)% in the same period in 2020. The difference is largely due to the geographic mix of earnings, including the impact of certain charges in countries with valuation allowances, and discrete tax items impacting the fourth quarter of 2021. On an adjusted basis, the effective income tax rates were 27.0% and 12.8% for the fourth quarter of 2021 and 2020, respectively. The difference is primarily due to geographic mix of earnings.

Business Segment Results

Lithium Results

In millions

Q4 2021


Q4 2020


$ Change


% Change

Net Sales

$           404.7


$           358.6


$             46.2


12.9        %

Adjusted EBITDA

$           138.2


$           122.1


$             16.1


13.2        %

Lithium net sales of $404.7 million increased $46.2 million (+12.9%) due to higher pricing (+18%), partially offset by lower volumes (-5%). Lower volumes were primarily related to the timing of shipments and a more even distribution of customer demand through the year. Adjusted EBITDA of $138.2 million increased by $16.1 million primarily due to increased net sales.

Lithium Outlook
Full-year 2022 adjusted EBITDA is expected to grow 65-85% year over year, up from previous outlook. Volume growth for full-year 2022 is expected to be 20-30% with added capacity from La Negra III/IV, Kemerton I, and the expected acquisition of the Qinzhou plant in China. Tolling is expected to be flat year over year. Average realized pricing is expected to increase 40-45% reflecting tight market conditions and the implementation of variable price structures on long-term contracts.

The Company continues to advance its global project portfolio of conversion capacity:
Chile
–   La Negra III/IV conversion plant is in commercial qualification
Australia 
–      Kemerton I conversion plant reached mechanical completion and commissioning is underway
–      Kemerton II conversion plant remains on track for mechanical completion in the second half of 2022
–      Restart of spodumene processing at Wodgina is well underway
China 
–      Acquisition of Tianyuan, which owns a conversion plant in Qinzhou, is expected to close in the first half of this year
–      Construction is planned to begin on two greenfield sites (Meishan and Zhangjiagang) later this year
United States
–      New wells and expansion projects at Silver Peak are progressing ahead of schedule

Bromine Results

In millions

Q4 2021


Q4 2020


$ Change


% Change

Net Sales

$           290.4


$           263.4


$             27.0


10.2        %

Adjusted EBITDA

$             87.4


$             87.9


$              (0.5)


(0.5)       %

Bromine net sales of $290.4 million increased $27.0 million (+10.2%) primarily due to strong pricing (+16%) while volume decreased (-6%). Tight market conditions continue to drive strong demand and favorable pricing across the product portfolio. Adjusted EBITDA of $87.4 million decreased $0.5 million as higher net sales were offset by higher costs for raw materials and freight. While sales increased during the quarter, a force majeure declaration by the company's chlorine supplier and the lack of inventory limited the company's ability to capitalize on strong demand strength and increased brine production capacity.

Bromine Outlook
Albemarle expects full-year 2022 adjusted EBITDA to increase by 5%-10%, up slightly from previous outlook. Year-over-year improved expectations are based on higher volume and pricing due to strength in demand for flame retardants in diverse end markets. Successful execution of growth projects in 2021 is expected to contribute to higher volumes in full-year 2022. Bromine's ongoing cost savings initiatives and favorable pricing are expected to offset higher freight and raw material costs.

The company is progressing growth investments in high-return brownfield projects in Magnolia, Arkansas. The second phase of a tetrabrom debottleneck project at the Jordan Bromine Company JV (JBC) is expected to be complete in 2022.

Catalysts Results

In millions

Q4 2021


Q4 2020


$ Change


% Change

Net Sales

$           199.1


$           195.7


$               3.4


1.7  %

Adjusted EBITDA

$             27.2


$             22.1


$               5.2


23.6  %

Catalysts net sales of $199.1 million increased $3.4 million (+1.7%) compared to the previous year, primarily due to higher pricing and FX (+3%), partially offset by decreased volume (-1%). Adjusted EBITDA of $27.2 million increased $5.2 million mostly due to higher sales, partially offset by cost pressures.

Catalyst Outlook 
Albemarle expects full-year 2022 adjusted EBITDA to increase by 5%-15%, down from previous outlook in part due to higher input costs, particularly for natural gas.  Year-over-year results are expected to continue to improve with overall refining markets and as travel lock-down conditions abate. Volumes are expected to grow across all segments. The company expects pricing to also increase to offset inflationary pressures in freight and input costs. The company continues to expect volumes to return to pre-pandemic levels in late 2022 or 2023.

The strategic review of the Catalysts business is ongoing. The company expects to provide an update in the first half of the year. 

All Other

In millions

Q4 2021


Q4 2020


$ Change


% Change

Net Sales

$                —


$             61.4


$            (61.4)


(100.0)           %

Adjusted EBITDA

$                —


$             18.4


$            (18.4)


(100.0)           %

Other operations represent the FCS business which was sold on June 1, 2021.

Balance Sheet and Liquidity

As of December 31, 2021, Albemarle had estimated liquidity of over $2.0 billion, including $439 million of cash and equivalents, $612 million remaining under its $1 billion revolver, $750 million remaining under our amended delayed draw term loan and $211 million on other available credit lines. Total debt was $2.4 billion, representing net debt to adjusted EBITDA of approximately 2.3 times.

Cash Flow and Capital Deployment

Cash from operations for the year ended December 31, 2021, of $344.3 million decreased $454.7 million versus the prior year driven by working capital inflows and higher revenues in the company's Lithium and Bromine segments. Capital expenditures of $953.7 million increased by $103.2 million versus the prior year as the company nears completion of its Wave 2 Lithium expansion projects.

Albemarle's primary capital allocation priorities are to invest in organic and inorganic opportunities to drive profitable growth, maintain its financial flexibility and Investment Grade credit rating, and fund its dividend.

Earnings Call

Date:

Thursday, February 17, 2022

Time:

9:00 AM Eastern time

Dial-in (U.S.):

844-347-1034

Dial-in (International):

209-905-5910

Passcode:

3389287

The company's earnings presentation and supporting material are available on Albemarle's website at https://investors.albemarle.com.

About Albemarle

Albemarle Corporation (NYSE: ALB) is a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts. Albemarle thinks beyond business as usual to power the potential of companies in many of the world's largest and most critical industries, such as energy, electronics, and transportation. Albemarle actively pursues a sustainable approach to managing its diverse global footprint of world-class resources. In conjunction with Albemarle's highly experienced and talented global teams, its deep-seated values, and its collaborative customer relationships, Albemarle creates value-added and performance-based solutions that enable a safer and more sustainable future.

Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations, SEC filings and other information regarding the company, its businesses, and the markets it serves.

Forward-Looking Statements

Some of the information presented in this 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, financial flexibility, expected growth, anticipated return on opportunities, earnings and demand for our products, productivity improvements, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, capital projects, future acquisition and divestiture transactions including statements with respect to timing, expected benefits from proposed transactions, market and economic trends, statements with respect to 2022 outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the views expressed. Factors that could cause Albemarle's actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation: changes in economic and business conditions; changes in financial and operating performance of its major customers and industries and markets served by it; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for its products or the end-user markets in which its products are sold; limitations or prohibitions on the manufacture and sale of its products; availability of raw materials; increases in the cost of raw materials and energy, and its ability to pass through such increases to our customers; changes in its markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting its operations or its products; the occurrence of regulatory actions, proceedings, claims or litigation; the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change; hazards associated with chemicals manufacturing; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest affecting the global economy, including adverse effects from terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from its global manufacturing cost reduction initiatives as well as its ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of its earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates that may impact its ability to raise capital or increase its cost of funds, impact the performance of its pension fund investments and increase its pension expense and funding obligations; volatility and uncertainties in the debt and equity markets; technology or intellectual property infringement, including cyber-security breaches, and other innovation risks; decisions it may make in the future; the ability to successfully execute, operate and integrate acquisitions and divestitures; uncertainties as to the duration and impact of the coronavirus (COVID-19) pandemic; and the other factors detailed from time to time in the reports Albemarle files with the SEC, including those described under "Risk Factors" in Albemarle's most recent Annual Report on Form 10-K any subsequently filed Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. Albemarle assumes no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands Except Per Share Amounts) (Unaudited)



Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020

Net sales

$   894,204


$   879,147


$ 3,327,957


$ 3,128,909

Cost of goods sold

657,610


613,727


2,329,986


2,134,056

Gross profit

236,594


265,420


997,971


994,853

Selling, general and administrative expenses

123,302


124,909


441,482


429,827

Research and development expenses

12,125


15,375


54,026


59,214

Loss (gain) on sale of business/interest in properties, net

132,453



(295,971)


Operating profit

(31,286)


125,136


798,434


505,812

Interest and financing expenses

(5,306)


(19,152)


(61,476)


(73,116)

Other income (expenses), net

28,530


(57,557)


(603,340)


(59,177)

Income (loss) before income taxes and equity in net income of unconsolidated investments

(8,062)


48,427


133,618


373,519

Income tax expense (benefit)

15,024


(10,101)


29,446


54,425

Income before equity in net income of unconsolidated investments

(23,086)


58,528


104,172


319,094

Equity in net income of unconsolidated investments (net of tax)

33,555


43,649


95,770


127,521

Net income

10,469


102,177


199,942


446,615

Net income attributable to noncontrolling interests

(14,293)


(17,542)


(76,270)


(70,851)

Net (loss) income attributable to Albemarle Corporation

$      (3,824)


$     84,635


$   123,672


$   375,764

Basic (loss) earnings per share:

$        (0.03)


$         0.79


$         1.07


$         3.53

Diluted (loss) earnings per share:

$        (0.03)


$         0.79


$         1.06


$         3.52









Weighted-average common shares outstanding – basic

116,999


106,665


115,841


106,402

Weighted-average common shares outstanding – diluted

116,999


107,312


116,536


106,808

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)



December 31,


December 31,


2021


2020

ASSETS




Current assets:




  Cash and cash equivalents

$           439,272


$           746,724

  Trade accounts receivable

556,922


530,838

  Other accounts receivable

66,184


61,958

  Inventories

812,920


750,237

  Other current assets

132,683


116,427

Total current assets

2,007,981


2,206,184

Property, plant and equipment

8,074,746


7,427,641

Less accumulated depreciation and amortization

2,165,130


2,073,016

Net property, plant and equipment

5,909,616


5,354,625

Investments

897,708


656,244

Other assets

252,239


219,268

Goodwill

1,597,627


1,665,520

Other intangibles, net of amortization

308,947


349,105

Total assets

$      10,974,118


$      10,450,946

LIABILITIES AND EQUITY




Current liabilities:




  Accounts payable

$           647,986


$           483,221

  Accrued expenses

763,293


440,763

  Current portion of long-term debt

389,920


804,677

  Dividends payable

45,469


40,937

  Income taxes payable

27,667


32,251

Total current liabilities

1,874,335


1,801,849

Long-term debt

2,004,319


2,767,381

Postretirement benefits

43,693


48,075

Pension benefits

229,187


340,818

Other noncurrent liabilities

663,698


629,377

Deferred income taxes

353,279


394,852

Commitments and contingencies




Equity:




Albemarle Corporation shareholders' equity:




  Common stock

1,170


1,069

  Additional paid-in-capital

2,920,007


1,438,038

  Accumulated other comprehensive loss

(392,450)


(326,132)

  Retained earnings

3,096,539


3,155,252

Total Albemarle Corporation shareholders' equity

5,625,266


4,268,227

Noncontrolling interests

180,341


200,367

Total equity

5,805,607


4,468,594

Total liabilities and equity

$      10,974,118


$      10,450,946

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)



Year Ended


December 31,


2021


2020

Cash and cash equivalents at beginning of year

$     746,724


$     613,110

Cash flows from operating activities:




Net income

199,942


446,615

Adjustments to reconcile net income to cash flows from operating activities:




Depreciation and amortization

254,000


231,984

Gain on sale of business/interest in properties, net

(295,971)


(7,168)

Stock-based compensation and other

20,120


22,837

Equity in net income of unconsolidated investments (net of tax)

(95,770)


(127,521)

Dividends received from unconsolidated investments and nonmarketable securities

78,391


88,161

Pension and postretirement (benefit) expense

(74,010)


45,658

Pension and postretirement contributions

(30,253)


(16,434)

Unrealized gain on investments in marketable securities

(3,818)


(4,635)

Loss on early extinguishment of debt

28,955


Deferred income taxes

(38,500)


(1,976)

Changes in current assets and liabilities, net of effects of acquisitions and divestitures:




  (Increase) decrease in accounts receivable

(49,295)


100,118

  (Increase) decrease in inventories

(127,401)


51,978

     Decrease in other current assets

17,411


7,902

  Increase (decrease) in accounts payable

143,939


(31,519)

     Increase (decrease) in accrued expenses and income taxes payable

127,068


(215,011)

Non-cash transfer of 40% value of construction in progress of Kemerton plant to MRL

135,928


179,437

Other, net

53,521


28,488

Net cash provided by operating activities

344,257


798,914

Cash flows from investing activities:




Acquisitions, net of cash acquired


(22,572)

Capital expenditures

(953,667)


(850,477)

Cash proceeds from divestitures, net

289,791


Proceeds from sale of joint venture


11,000

Sales of marketable securities, net

3,774


903

Investments in equity and other corporate investments

(6,488)


(2,427)

Net cash used in investing activities

(666,590)


(863,573)

Cash flows from financing activities:




Proceeds from issuance of common stock

1,453,888


Proceeds from borrowings of credit agreements


452,163

Repayments of long-term debt and credit agreements

(1,173,823)


(250,000)

Other borrowings, net

60,991


137,635

Fees related to early extinguishment of debt

(24,877)


Dividends paid to shareholders

(177,853)


(161,818)

Dividends paid to noncontrolling interests

(96,136)


(32,061)

Proceeds from exercise of stock options

18,392


40,437

Withholding taxes paid on stock-based compensation award distributions

(8,140)


(5,143)

Other

(2,230)


(3,952)

Net cash provided by financing activities

50,212


177,261

Net effect of foreign exchange on cash and cash equivalents

(35,331)


21,012

(Decrease) increase in cash and cash equivalents

(307,452)


133,614

Cash and cash equivalents at end of period

$     439,272


$     746,724

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited) 



Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020

Net sales:








Lithium

$   404,745


$   358,592


$ 1,363,284


$ 1,144,778

Bromine

290,365


263,398


1,128,343


964,962

Catalysts

199,094


195,735


761,235


797,914

All Other


61,422


75,095


221,255

Total net sales

$   894,204


$   879,147


$ 3,327,957


$ 3,128,909









Adjusted EBITDA:








Lithium

$   138,245


$   122,131


$   479,538


$   393,093

Bromine

87,384


87,854


360,682


323,605

Catalysts

27,247


22,053


106,941


130,134

All Other


18,414


29,858


84,821

Corporate

(24,153)


(29,327)


(106,045)


(112,915)

Total adjusted EBITDA

$   228,723


$   221,125


$   870,974


$   818,738

See accompanying non-GAAP reconciliations below.

Additional Information

It should be noted that adjusted net income attributable to Albemarle Corporation, adjusted diluted earnings per share, non-operating pension and OPEB items per diluted share, non-recurring and other unusual items per diluted share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These non-GAAP measures should not be considered as alternatives to Net income attributable to Albemarle Corporation ("earnings") or other comparable measures calculated and reported in accordance with GAAP. These measures are presented here to provide additional useful measurements to review the company's operations, provide transparency to investors and enable period-to-period comparability of financial performance. The company's chief operating decision maker uses these measures to assess the ongoing performance of the company and its segments, as well as for business and enterprise planning purposes.

A description of other non-GAAP financial measures that Albemarle uses to evaluate its operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found on the following pages of this press release, which is also is available on Albemarle's website at https://investors.albemarle.com. The company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, as the company is unable to estimate significant non-recurring or unusual items without unreasonable effort. The amounts and timing of these items are uncertain and could be material to the company's results calculated in accordance with GAAP.

ALBEMARLE CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited)

See below for a reconciliation of adjusted net income attributable to Albemarle Corporation, EBITDA and adjusted EBITDA, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation ("earnings"), the most directly comparable financial measure calculated and reported in accordance with GAAP. Adjusted net income attributable to Albemarle Corporation is defined as net income before the non-recurring, other unusual and non-operating pension and other post-employment benefit (OPEB) items as listed below. The non-recurring and unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, certain litigation and arbitration costs and charges, and other significant non-recurring items. EBITDA is defined as net income attributable to Albemarle Corporation before interest and financing expenses, income tax expense, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus the non-recurring, other unusual and non-operating pension and OPEB items as listed below.


Three Months Ended


Year Ended


December 31,


December 31,

In thousands, except percentages and per share amounts

2021


2020


2021


2020

Net (loss) income attributable to Albemarle Corporation

$         (3,824)


$        84,635


$      123,672


$      375,764

Add back:








Non-operating pension and OPEB items (net of tax)

(47,848)


37,572


(60,659)


30,668

Non-recurring and other unusual items (net of tax)

170,180


3,409


407,337


33,087

Adjusted net income attributable to Albemarle Corporation

$      118,508


$      125,616


$      470,350


$      439,519









Adjusted diluted earnings per share

$            1.01


$            1.17


$            4.04


$            4.12









Weighted-average common shares outstanding – diluted

116,999


107,312


116,536


106,808









Net (loss) income attributable to Albemarle Corporation

$         (3,824)


$        84,635


$      123,672


$      375,764

Add back:








Interest and financing expenses

5,306


19,152


61,476


73,116

Income tax expense (benefit)

15,024


(10,101)


29,446


54,425

Depreciation and amortization

68,235


61,770


254,000


231,984

EBITDA

84,741


155,456


468,594


735,289

Non-operating pension and OPEB items

(62,407)


49,372


(78,814)


40,668

Non-recurring and other unusual items (excluding items associated with interest expense)

206,389


16,297


481,194


42,781

Adjusted EBITDA

$      228,723


$      221,125


$      870,974


$      818,738









Net sales

$      894,204


$      879,147


$     3,327,957


$   3,128,909

EBITDA margin

9.5     %


17.7 %


14.1 %


23.5 %

Adjusted EBITDA margin

25.6 %


25.2 %


26.2 %


26.2 %

See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP (in thousands, except percentages).


Lithium


Bromine


Catalysts


Reportable Segments Total


All Other


Corporate


Consolidated Total


% of Net Sales

Three months ended December 31, 2021:
















Net income (loss) attributable to Albemarle Corporation

$  (45,049)


$  73,831


$  13,952


$    42,734


$        —


$  (46,558)


$     (3,824)


(0.4)       %

Depreciation and amortization

39,213


13,553


13,295


66,061



2,174


68,235


7.6      %

Non-recurring and other unusual items

144,081




144,081



62,308


206,389


23.1        %

Interest and financing expenses






5,306


5,306


0.6      %

Income tax benefit






15,024


15,024


1.7      %

Non-operating pension and OPEB items






(62,407)


(62,407)


(7.0)       %

Adjusted EBITDA

$ 138,245


$  87,384


$  27,247


$   252,876


$        —


$  (24,153)


$  228,723


25.6        %

















Three months ended December 31, 2020:
















Net income (loss) attributable to Albemarle Corporation

$  89,331


$  75,590


$    9,379


$   174,300


$ 16,254


$  (105,919)


$    84,635


9.6      %

Depreciation and amortization

30,272


13,464


12,674


56,410


2,160


3,200


61,770


7.0      %

Non-recurring and other unusual items

2,528


(1,200)



1,328



14,969


16,297


1.9      %

Interest and financing expenses






19,152


19,152


2.2      %

Income tax benefit






(10,101)


(10,101)


(1.1)       %

Non-operating pension and OPEB items






49,372


49,372


5.6      %

Adjusted EBITDA

$ 122,131


$  87,854


$  22,053


$   232,038


$ 18,414


$  (29,327)


$  221,125


25.2        %

















Year ended December 31, 2021:
















Net income (loss) attributable to Albemarle Corporation

$ 192,244


$  309,501


$  55,353


$   557,098


$ 27,988


$  (461,414)


$  123,672


3.7      %

Depreciation and amortization

138,772


51,181


51,588


241,541


1,870


10,589


254,000


7.6      %

Non-recurring and other unusual items (excluding items associated with interest expense)

148,522




148,522



332,672


481,194


14.5        %

Interest and financing expenses






61,476


61,476


1.8      %

Income tax expense






29,446


29,446


0.9      %

Non-operating pension and OPEB items






(78,814)


(78,814)


(2.4)       %

Adjusted EBITDA

$ 479,538


$  360,682


$  106,941


$   947,161


$ 29,858


$  (106,045)


$  870,974


26.2        %

















Year ended December 31, 2020:
















Net income (loss) attributable to Albemarle Corporation

$ 277,711


$  274,495


$  80,149


$   632,355


$ 76,323


$  (332,914)


$  375,764


12.0        %

Depreciation and amortization

112,854


50,310


49,985


213,149


8,498


10,337


231,984


7.4      %

Non-recurring and other unusual items

2,528


(1,200)



1,328



41,453


42,781


1.4      %

Interest and financing expenses






73,116


73,116


2.3      %

Income tax expense






54,425


54,425


1.7      %

Non-operating pension and OPEB items






40,668


40,668


1.3      %

Adjusted EBITDA

$ 393,093


$  323,605


$  130,134


$   846,832


$ 84,821


$  (112,915)


$  818,738


26.2        %

Non-operating pension and OPEB items, consisting of mark-to-market actuarial gains/losses, settlements/curtailments, interest cost and expected return on assets, are not allocated to Albemarle's operating segments and are included in the Corporate category. In addition, the company believes that these components of pension cost are mainly driven by market performance, and the company manages these separately from the operational performance of the company's businesses. In accordance with GAAP, these non-operating pension and OPEB items are included in Other income (expenses), net. Non-operating pension and OPEB items were as follows (in thousands):


Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020

MTM actuarial (gain) loss

$    (56,919)


$     52,269


$    (56,919)


$     52,269

Interest cost

7,390


7,178


21,670


28,630

Expected return on assets

(10,878)


(10,075)


(43,565)


(40,231)

Total

$    (60,407)


$     49,372


$    (78,814)


$     40,668

In addition to the non-operating pension and OPEB items disclosed above, the company has identified certain other items and excluded them from Albemarle's adjusted net income calculation for the periods presented. A listing of these items, as well as a detailed description of each follows below (per diluted share):


Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020

Restructuring and other(1)

$            —


$         0.08


$         0.02


$         0.15

Acquisition and integration related costs(2)

0.05


0.02


0.06


0.13

Loss (gain) on sale of business/interest in properties, net(3)

1.13



(1.70)


Albemarle Foundation contribution(4)



0.13


Loss on extinguishment of debt(5)



0.20


Legacy Rockwood legal matter(6)

0.03



4.36


Indemnification adjustments(7)

0.34



0.34


Other(8)

0.19


0.06


0.34


0.07

Discrete tax items(9)

(0.29)


(0.13)


(0.25)


(0.04)

Total non-recurring and other unusual items

$         1.45


$         0.03


$         3.50


$         0.31

 

(1)

During the three months and year ended December 31, 2021, Albemarle recorded facility closure costs related to offices in Germany, and severance expenses in Germany and Belgium, in Selling, general and administrative expenses of $0.7 million and $3.0 million ($0.5 million and $2.1 million after income taxes, or less than $0.01 and $0.02 per share), respectively. In 2020, Albemarle recorded severance expenses as part of business reorganization plans, impacting each of its businesses and Corporate, primarily in the U.S., Germany and with its Jordanian joint venture partner. During the three months ended December 31, 2020, the company recorded expenses of $8.6 million ($8.4 million after income taxes, or $0.08 per share) in Selling, general and administrative expenses. During the year ended December 31, 2020, the company recorded severance expenses in Cost of goods sold, Selling, general and administrative expenses and Net income attributable to noncontrolling interest of $0.7 million, $19.2 million and a $0.3 million gain ($16.3 million after income taxes, or $0.15 per share), respectively. The balance of unpaid restructuring expenses and severance is recorded in Accrued expenses and is expected to primarily be paid through 2022.



(2)

Costs related to the acquisition, integration and divestitures for various significant projects, recorded in Selling, general and administrative expenses for the three months and year ended December 31, 2021 of $6.9 million and $12.7 million ($5.4 million and $7.4 million after income taxes, or $0.05 and $0.06 per share), respectively, and for the three months and year ended December 31, 2020 of $2.9 million and $17.3 million ($2.3 million and $13.4 million after income taxes, or $0.02 and $0.13 per share), respectively.



(3)

Included in Loss (gain) on sale of business/interest in properties, net for the year ended December 31, 2021 is $428.4 million ($330.8 million after discrete income taxes, or $2.84 per share) related to the sale of the FCS business. This is partially offset by an expense of $132.4 million ($1.13 per share after no income tax impact) post-measurement period Wodgina acquisition purchase price adjustment recorded in the fourth quarter of 2021, for a revised estimate of the obligation to construct the lithium hydroxide conversion assets in Kemerton due to anticipated cost overruns from supply chain, labor and COVID-19 pandemic related issues.



(4)

Included in Selling, general and administrative expenses for the year ended December 31, 2021 is a charitable contribution of $20.0 million ($15.5 million after income taxes, or $0.13 per share), using a portion of the proceeds received from the FCS divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where Albemarle's employees live and the company operates. This contribution is in addition to the normal annual contribution made to the Albemarle Foundation by the company, and is significant in size and nature in that it is intended to provide more long-term benefits in these communities.



(5)

Included in Interest and financing expenses for the year ended December 31, 2021 is a loss on early extinguishment of debt of $29.0 million ($23.8 million after income taxes, or $0.20 per share) related to tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of $1.5 billion in debt using the proceeds from the issuance of common stock.



(6)

Included in Other expense, net for the year ended December 31, 2021 is a $657.4 million ($508.5 million after income taxes, or $4.36 per share) charge related to an arbitration decision on a dispute regarding Huntsman Corporation's acquisition of Rockwood's Pigments & Additives business in 2014. The Huntsman-Rockwood dispute is a legacy dispute that Albemarle inherited when it purchased all outstanding equity of Rockwood Holdings, Inc. in 2015, acquiring its lithium and other business lines unrelated to the dispute. The three months ended December 31, 2021 includes an adjustment to income taxes from this charge of $4.0 million ($0.03 per share).



(7)

Included in Other expenses, net for the three months and year ended December 31, 2021 are expenses of $39.4 million ($39.4 million after income taxes, or $0.34 per share), to revise an indemnification estimate for an ongoing tax-related matter of a previously disposed business in Germany.



(8)

Other adjustments for the three months ended December 31, 2021 included amounts recorded in:


•   Cost of goods sold - $10.5 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.


•   Selling, general and administrative expenses - $11.5 million of legal fees related to a legacy Rockwood legal matter noted above and $2.2 million of charges for environmental reserves at sites not part of the company's operations.


After income taxes, these charges totaled $22.6 million, or $0.19 per share.

 


Other adjustments for the year ended December 31, 2021 included amounts recorded in:


•   Cost of goods sold - $10.5 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.


•   Selling, general and administrative expenses - $11.5 million of legal fees related to a legacy Rockwood legal matter noted above, $9.8 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements, a $4.0 million loss resulting from the sale of property, plant and equipment and $3.8 million of charges for an environmental reserve at a site not part of the company's operations.


•   Other income (expense), net - $4.8 million of expenses primarily related to asset retirement obligation charges to update an estimate at a site formerly owned by Albemarle.


After income taxes, these charges totaled $38.5 million, or $0.34 per share.

 


Other adjustments for the three months ended December 31, 2020 included amounts recorded in:


•   Cost of goods sold - $1.3 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.


•   Selling, general and administrative expenses - $3.1 million of shortfall contributions for our multiemployer plan financial improvement plan.


•   Other expenses, net - $8.8 million of losses resulting from the adjustment of indemnifications related to previously disposed businesses and $1.2 million of expenses related to other costs outside of our regular operations, offset by a $7.2 million gain related to the sale of our ownership percentage in the Saudi Organometallic Chemicals Company LLC ("SOCC") joint venture and $2.8 million of gains primarily relating to the sale of intangible assets in our Bromine business and property in Germany not used as part of our operations.


After income taxes, these charges totaled $6.4 million, or $0.06 per share.

 


Other adjustments for the year ended December 31, 2020 included amounts recorded in:


•   Cost of goods sold - $1.3 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.


•   Selling, general and administrative expenses - $3.1 million of shortfall contributions for our multiemployer plan financial improvement plan and $3.8 million of a net expense primarily relating to the increase of environmental reserves at non-operating businesses we have previously divested.


•   Other expenses, net - $7.2 million gain related to the sale of our ownership percentage in the SOCC joint venture, $3.6 million of a net gain primarily relating to the sale of intangible assets in our Bromine business and property in Germany not used as part of our operations and a $2.5 million net gain resulting from the settlement of legal matters related to a business sold or a site in the process of being sold, partially offset by $9.6 million of losses resulting from the adjustment of indemnifications related to previously disposed businesses and $1.2 million of expenses related to other costs outside of our regular operations.


After income taxes, these charges totaled $7.5 million, or $0.07 per share.



(9)

Included in Income tax expense (benefit) for the three months and year ended December 31, 2021 are discrete net tax benefits of $34.3 million, or $0.29 per share, and $29.4 million, or $0.25 per share, respectively. The net benefit for the three months is primarily related to benefits for the ongoing tax-related matter of a previously disposed business in Germany noted above, benefits for uncertain tax positions for statute of limitation expirations, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments. The net benefit for the full year 2021 is primarily related to benefits for the ongoing tax-related matter of a previously disposed business in Germany noted above, the release of valuation allowance related to foreign operations, changes to uncertain tax positions, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments.




Included in Income tax expense (benefit) for the three months and year ended December 31, 2020 are discrete net tax benefits of $13.9 million, or $0.13 per share, and $4.3 million, or $0.04 per share, respectively. The net benefit for the three months is primarily related to benefits for uncertain tax positions for statute of limitation expirations, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments. The net benefit for the full year 2020 is primarily related to changes to uncertain tax positions, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments.

 

See below for a reconciliation of the adjusted effective income tax rate, the non-GAAP financial measure, to the effective income tax rate, the most directly comparable financial measure calculated and reporting in accordance with GAAP (in thousands, except percentages).


(Loss) income before
income taxes and
equity in net income
of unconsolidated
investments


Income tax expense (benefit)


Effective income
tax rate

Three months ended December 31, 2021:






As reported

$                       (8,062)


$                      15,024


(186.4) %

Non-recurring, other unusual and non-operating pension and OPEB items

143,982


21,650



As adjusted

$                    135,920


$                      36,674


27.0 %







Three months ended December 31, 2020:






As reported

$                      48,427


$                     (10,101)


(20.9) %

Non-recurring, other unusual and non-operating pension and OPEB items

65,669


24,688



As adjusted

$                    114,096


$                      14,587


12.8 %







Year ended December 31, 2021:






As reported

$                    133,618


$                      29,446


22.0 %

Non-recurring, other unusual and non-operating pension and OPEB items

431,327


84,649



As adjusted

$                    564,945


$                    114,095


20.2 %







Year ended December 31, 2020:






As reported

$                    373,519


$                      54,425


14.6 %

Non-recurring, other unusual and non-operating pension and OPEB items

83,770


19,694



As adjusted

$                    457,289


$                      74,119


16.2 %

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/albemarle-corporation-finishes-2021-strong-raises-2022-outlook-301484121.html

SOURCE Albemarle Corporation

David Burke 980.299.5533



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