News

Albemarle Reports Strong Second-Quarter Sales Growth, Raising Guidance


August 3, 2022


CHARLOTTE, N.C., Aug. 3, 2022 /PRNewswire/ -- Albemarle Corporation (NYSE: ALB) today announced its results for the second quarter ended June 30, 2022.

Second Quarter 2022 and Recent Highlights 
(Unless otherwise stated, all percentage changes represent year-over-year comparisons)

  • Net sales of $1.48 billion, an increase of 91%
  • Net income of $406.8 million, or $3.46 per diluted share; Adjusted diluted EPS of $3.45, an increase of 288%
  • Adjusted EBITDA of $610 million, an increase of 214%
  • Kemerton I lithium conversion plant in Western Australia achieved first product in July 2022
  • Announced plans to build integrated lithium operations in the United States, including the Kings Mountain, North Carolina, spodumene mine and a lithium conversion plant in the southeast
  • Guidance for 2022 further revised upward on successful Lithium contract renegotiations and increased prices in the Lithium and Bromine businesses
  • Expect significant growth in full-year 2022 results including net sales of $7.1 - $7.5 billion (>2x 2021) and adjusted EBITDA of $3.2 - $3.5 billion (>3x 2021)
  • With revised guidance, expect to be free cash flow positive in 2022

"We delivered another strong quarter throughout the current turbulent market environment, thanks to strong demand and pricing trends, particularly for Lithium and Bromine. Over the past year, we have shifted our Lithium contracting strategy to realize greater benefits from these strong market dynamics," said Albemarle CEO Kent Masters. "At the same time, we remain disciplined in executing our long-term strategy as we advance our growth projects in China, Australia, and the Americas."

Outlook 
Albemarle's outlook for 2022 has continued to improve based on expectations for ongoing demand strength and tightness in the markets it serves. Net sales guidance was revised upward primarily due to continued strength in pricing in its Lithium and Bromine businesses. Adjusted EBITDA guidance is also higher based on pricing expectations slightly offset by inflationary cost pressures, particularly for natural gas in Europe and raw materials. We now expect to be free cash flow positive in 2022.



FY 2022 Guidance

 as of May 23, 2022 

FY 2022 Guidance

Further Updated

Net sales


$5.8 - $6.2 billion

$7.1 - $7.5 billion

Adjusted EBITDA


$2.2 - $2.5 billion

$3.2 - $3.5 billion

Adjusted EBITDA Margin


38% - 40%

45% - 47%

Adjusted Diluted EPS


$12.30 - $15.00

$19.25 - $22.25

Net Cash from Operations


$550 - $850 million

$1.4 - $1.7 billion

Capital Expenditures


$1.3 - $1.5 billion

$1.3 - $1.5 billion

 

Second Quarter Results

In millions, except per share amounts

Q2 2022


Q2 2021


$ Change


% Change

Net sales

$    1,479.6


$       773.9


$       705.7


91.2 %

Net income attributable to Albemarle Corporation

$       406.8


$       424.6


$        (17.8)


(4.2) %

Adjusted EBITDA(a)

$       610.2


$       194.6


$       415.6


213.5 %

Diluted earnings per share

$         3.46


$         3.62


$        (0.16)


(4.4) %

   Non-operating pension and OPEB items(a)

(0.03)


(0.04)





   Non-recurring and other unusual items(a)

0.02


(2.69)





Adjusted diluted earnings per share(a)(b)

$         3.45


$         0.89


$         2.56


287.6 %


(a)    See Non-GAAP Reconciliations for further details.

(b)    Totals may not add due to rounding.

Net sales of $1.48 billion increased by $705.7 million compared to the prior-year quarter primarily due to increased pricing driven by strong demand from diverse end markets.

Net income attributable to Albemarle of $406.8 million decreased by $17.8 million from the prior-year quarter.  Note that prior-year net income attributable to Albemarle includes a $429.4 million ($331.6 million after discrete income taxes, or $2.87 per share) gain related to the sale of the FCS business which was sold on June 1, 2021.

Adjusted EBITDA of $610.2 million increased by $415.6 million from the prior-year quarter primarily due to higher net sales, partially offset by inflationary cost pressures including natural gas prices in Europe and raw materials.

The effective income tax rate for the second quarter of 2022 was 22.2% compared to 20.0% in the same period of 2021. The difference is largely due to global intangible low-taxed income and the geographic mix of earnings. On an adjusted basis, the effective income tax rates were 26.3% and 17.5% for the second quarter of 2022 and 2021, respectively.

Business Segment Results

Lithium Results

In millions

Q2 2022


Q2 2021


$ Change


% Change

Net Sales

$           891.5


$           320.3


$           571.2


178.3 %

Adjusted EBITDA

$           495.2


$           109.4


$           385.8


352.5 %

Lithium net sales of $891.5 million increased $571.2 million (+178%) due to higher pricing net of FX (+160%) related to renegotiated contracts and increased market pricing. Volume was also higher (+18%) related to the La Negra III/IV expansion in Chile and higher tolling volumes to meet growing customer demand. Adjusted EBITDA of $495.2 million increased $385.8 million as higher pricing and volumes more than offset higher costs.

Lithium Outlook

Adjusted EBITDA for the full year 2022 is expected to grow approximately 500-550% year over year, up from the previous outlook of +300%. Average realized pricing is now expected to be up 225-250% year-over-year resulting from the renegotiated contracts and increased market pricing. Full-year 2022 volume is expected to be up 20-30% year over year primarily due to new capacity coming online as well as higher tolling volumes. The revised outlook assumes the company's expected third quarter realized selling price remains constant for the remainder of the year. There is potential upside if market pricing remains near current levels, if contract renegotiations result in additional price improvements, or with additional tolled volumes. There is potential downside in the event of a material correction in lithium market pricing or potential volume shortfalls (e.g., delays in acquisitions or expansion projects).

Albemarle continues to progress the expansion of its global portfolio of conversion capacity and utilization of its world-class resource portfolio:

Chile

–      La Negra III/IV conversion plant is in commercial qualification and running as expected 
–      The Salar Yield Improvement Project is on schedule for mechanical completion by the middle of next year 

Australia 

–      Kemerton I conversion plant achieved first product in July 2022
–      Kemerton II conversion plant remains on track for mechanical completion in the second half of 2022 
–      Production of spodumene concentrate from the first and second trains at Wodgina were achieved in May and July, respectively

China 

–     The acquisition of the Qinzhou lithium conversion plant in Guangxi China is expected to close H2 2022 
–      Construction is underway at the Meishan greenfield project 
–      Zhangjiagang greenfield project has been deferred as we continue to fine tune the carbonate engineering design

United States

–      New wells and expansion projects at Silver Peak continue to progress ahead of schedule

Bromine Results

In millions

Q2 2022


Q2 2021


$ Change


% Change

Net Sales

$           377.8


$           279.7


$             98.0


35.0 %

Adjusted EBITDA

$           135.7


$             92.6


$             43.0


46.5 %

Bromine net sales of $377.8 million increased $98.0 million (+35%) primarily due to increased pricing net of FX (+31%) and slightly higher volumes (+4%). Tight market conditions continue to drive strong demand and favorable pricing across the product portfolio. Adjusted EBITDA of $135.7 million increased $43.0 million as higher net sales were partially offset by higher costs for raw materials and freight.

Bromine Outlook

Adjusted EBITDA for the full year 2022 is expected to grow approximately 25-30% from 2021 based on higher pricing resulting from strong demand in diverse end-markets including fire safety solutions and clear completion fluids for offshore new well drilling. Successful execution of growth projects in 2021 is expected to contribute to a 5-10% volume increase in full-year 2022. Bromine's ongoing cost savings initiatives and favorable pricing are expected to offset higher freight and raw material costs.  

Catalysts Results

In millions

Q2 2022


Q2 2021


$ Change


% Change

Net Sales

$           210.3


$           148.3


$             62.0


41.8 %

Adjusted EBITDA

$               9.8


$             21.2


$            (11.4)


(53.7) %

Catalysts net sales of $210.3 million increased $62.0 million (+42%) compared to the previous year due to higher volumes (+37%) and higher pricing net of FX (+5%). Adjusted EBITDA of $9.8 million declined $11.4 million as higher sales were more than offset by continued cost pressures from increasing natural gas prices and raw materials.

Catalysts Outlook 

Albemarle expects full-year 2022 adjusted EBITDA to be down 25-65% year-over-year, down from the previous outlook due to continued volatility of raw materials costs and natural gas pricing in Europe related to the war in Ukraine, partially offset by higher pricing.

The strategic review of the Catalysts business is ongoing. The company expects to provide an update as soon as circumstances warrant.

All Other

In millions

Q2 2022


Q2 2021


$ Change


% Change

Net Sales

$                —


$             25.5


$            (25.5)


(100.0) %

Adjusted EBITDA

$                —


$               8.4


$              (8.4)


(100.0) %

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

Balance Sheet and Liquidity

As of June 30, 2022, Albemarle had estimated liquidity of approximately $2.6 billion, including $930.6 million of cash and equivalents, the full $1 billion under its revolver, $500 million remaining under its amended delayed draw term loan and $200.7 million on other available credit lines. Total debt was $3.5 billion, representing net debt to adjusted EBITDA of approximately 1.7 times.

Cash Flow and Capital Deployment

Cash from operations of $60.3 million decreased $325.5 million for the six months ended June 30, 2022, versus the prior year driven by working capital changes, primarily the increase in receivables and inventories from higher lithium pricing, as well as a $332.5 million litigation settlement payment, partially offset by increased adjusted EBITDA. Capital expenditures of $502.6 million increased by $105.7 million versus the prior year as the company nears completion of its Wave 2 Lithium expansion projects and progresses the next wave of growth 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, August 4, 2022

Time:

9:00 AM Eastern time

Dial-in (U.S.):

844-200-6205

Dial-in (International):

929-526-1599

Passcode:

446425

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 Albemarle's 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; fluctuations in lithium market pricing, which could impact our revenues and profitability particularly due to our increased exposure to index-referenced and variable-priced contracts for battery grade lithium sales; changes with respect to contract renegotiations; potential production volume shortfalls; 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 its customers; technological change and development, 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 (including with respect to the U.S. Foreign Corrupt Practices Act and foreign anti-corruption laws); the occurrence of cyber-security breaches, terrorist attacks, industrial accidents or natural disasters; the effect of climate change, including any regulatory changes to which it might be subject; hazards associated with chemicals manufacturing; the inability to maintain current levels of insurance, including 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 or interpretation; 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; future acquisition and divestiture transactions, including the ability to successfully execute, operate and integrate acquisitions and divestitures and incurring additional indebtedness; continuing uncertainties as to the duration and impact of the coronavirus (COVID-19) pandemic; performance of Albemarle's partners in joint ventures and other projects; changes in credit ratings; 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


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021

Net sales

$ 1,479,593


$   773,896


$ 2,607,321


$ 1,603,187

Cost of goods sold

899,169


525,479


1,577,867


1,091,083

Gross profit

580,424


248,417


1,029,454


512,104

Selling, general and administrative expenses

128,942


121,516


241,510


214,703

Research and development expenses

17,386


13,976


33,469


28,612

(Gain) loss on sale of business/interest in properties


(429,408)


8,400


(429,408)

Operating profit

434,096


542,333


746,075


698,197

Interest and financing expenses

(41,409)


(7,152)


(69,243)


(51,034)

Other income, net

8,767


14


24,263


11,326

Income before income taxes and equity in net income of unconsolidated investments

401,454


535,195


701,095


658,489

Income tax expense

89,018


106,985


169,548


129,092

Income before equity in net income of unconsolidated investments

312,436


428,210


531,547


529,397

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

128,156


17,998


190,592


34,509

Net income

440,592


446,208


722,139


563,906

Net income attributable to noncontrolling interests

(33,819)


(21,608)


(61,983)


(43,629)

Net income attributable to Albemarle Corporation

$   406,773


$   424,600


$   660,156


$   520,277

Basic earnings per share

$         3.47


$         3.63


$         5.64


$         4.54

Diluted earnings per share

$         3.46


$         3.62


$         5.61


$         4.51









Weighted-average common shares outstanding – basic

117,116


116,809


117,091


114,700

Weighted-average common shares outstanding – diluted

117,724


117,436


117,689


115,383

 

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)



June 30,


December 31,


2022


2021

ASSETS




Current assets:




Cash and cash equivalents

$           930,596


$           439,272

Trade accounts receivable

962,215


556,922

Other accounts receivable

124,409


66,184

Inventories

1,216,213


812,920

Other current assets

116,671


132,683

Total current assets

3,350,104


2,007,981

Property, plant and equipment

8,465,403


8,074,746

Less accumulated depreciation and amortization

2,257,379


2,165,130

Net property, plant and equipment

6,208,024


5,909,616

Investments

903,861


897,708

Other assets

230,346


252,239

Goodwill

1,542,767


1,597,627

Other intangibles, net of amortization

285,303


308,947

Total assets

$      12,520,405


$      10,974,118

LIABILITIES AND EQUITY




Current liabilities:




Accounts payable

$        1,091,583


$           647,986

Accrued expenses

330,941


763,293

Current portion of long-term debt

251,304


389,920

Dividends payable

46,097


45,469

Income taxes payable

61,837


27,667

Total current liabilities

1,781,762


1,874,335

Long-term debt

3,205,730


2,004,319

Postretirement benefits

43,079


43,693

Pension benefits

205,890


229,187

Other noncurrent liabilities

591,021


663,698

Deferred income taxes

391,948


353,279

Commitments and contingencies




Equity:




Albemarle Corporation shareholders' equity:




Common stock

1,171


1,170

Additional paid-in capital

2,927,086


2,920,007

Accumulated other comprehensive loss

(507,138)


(392,450)

Retained earnings

3,664,172


3,096,539

Total Albemarle Corporation shareholders' equity

6,085,291


5,625,266

Noncontrolling interests

215,684


180,341

Total equity

6,300,975


5,805,607

Total liabilities and equity

$      12,520,405


$      10,974,118

 

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)



Six Months Ended

June 30,


2022


2021

Cash and cash equivalents at beginning of year

$     439,272


$      746,724

Cash flows from operating activities:




Net income

722,139


563,906

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




Depreciation and amortization

137,567


123,683

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

8,400


(429,408)

Stock-based compensation and other

15,232


8,425

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

(190,592)


(34,509)

Dividends received from unconsolidated investments and nonmarketable securities

156,964


27,420

Pension and postretirement benefit

(8,273)


(8,465)

Pension and postretirement contributions

(7,685)


(20,266)

Unrealized gain on investments in marketable securities

3,061


(2,384)

Loss on early extinguishment of debt

19,219


28,955

Deferred income taxes

39,476


27,708

Working capital changes

(888,036)


7,942

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

96,314


96,185

Other, net

(43,475)


(3,339)

Net cash provided by operating activities

60,311


385,853

Cash flows from investing activities:




Capital expenditures

(502,607)


(396,915)

Cash proceeds from divestitures, net


290,467

Sales of marketable securities, net

3,402


4,553

Investments in equity and other corporate investments

(767)


(286)

Net cash used in investing activities

(499,972)


(102,181)

Cash flows from financing activities:




Proceeds from issuance of common stock


1,453,888

Repayments of long-term debt and credit agreements

(455,000)


(1,173,823)

Proceeds from borrowings of credit agreements

1,964,216


Other debt repayments, net

(390,601)


(325,316)

Fees related to early extinguishment of debt

(9,767)


(24,877)

Dividends paid to shareholders

(91,894)


(86,637)

Dividends paid to noncontrolling interests

(26,525)


(43,698)

Proceeds from exercise of stock options

855


14,335

Withholding taxes paid on stock-based compensation award distributions

(10,583)


(7,047)

Other

(4,172)


(1,359)

Net cash provided by (used in) financing activities

976,529


(194,534)

Net effect of foreign exchange on cash and cash equivalents

(45,544)


(12,290)

Increase in cash and cash equivalents

491,324


76,848

Cash and cash equivalents at end of period

$     930,596


$      823,572

 

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited) 



Three Months Ended


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021

Net sales:








Lithium

$   891,516


$   320,334


$ 1,441,788


$   599,310

Bromine

377,752


279,748


737,331


560,195

Catalysts

210,325


148,344


428,202


368,587

All Other


25,470



75,095

Total net sales

$ 1,479,593


$   773,896


$ 2,607,321


$ 1,603,187









Adjusted EBITDA:








Lithium

$   495,208


$   109,441


$   803,823


$   215,877

Bromine

135,683


92,646


264,917


187,286

Catalysts

9,792


21,164


26,702


46,591

All Other


8,379



29,858

Corporate

(30,474)


(37,002)


(53,303)


(54,930)

Total adjusted EBITDA

$   610,209


$   194,628


$ 1,042,139


$   424,682

 

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


Six Months Ended


June 30,


June 30,

In thousands, except percentages and per share amounts

2022


2021


2022


2021

Net income attributable to Albemarle Corporation

$      406,773


$      424,600


$      660,156


$      520,277

Add back:








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

(3,946)


(4,273)


(8,085)


(8,540)

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

2,909


(315,996)


33,812


(283,235)

Adjusted net income attributable to Albemarle Corporation

$      405,736


$      104,331


$      685,883


$      228,502









Adjusted diluted earnings per share

$            3.45


$            0.89


$            5.83


$            1.98









Weighted-average common shares outstanding – diluted

117,724


117,436


117,689


115,383









Net income attributable to Albemarle Corporation

$      406,773


$      424,600


$      660,156


$      520,277

Add back:








Interest and financing expenses

41,409


7,152


69,243


51,034

Income tax expense

89,018


106,985


169,548


129,092

Depreciation and amortization

70,993


61,423


137,567


123,683

EBITDA

608,193


600,160


1,036,514


824,086

Non-operating pension and OPEB items

(5,038)


(5,471)


(10,318)


(10,936)

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

7,054


(400,061)


15,943


(388,468)

Adjusted EBITDA

$      610,209


$      194,628


$   1,042,139


$      424,682









Net sales

$   1,479,593


$      773,896


$   2,607,321


$   1,603,187

EBITDA margin

41.1 %


77.6 %


39.8 %


51.4 %

Adjusted EBITDA margin

41.2 %


25.1 %


40.0 %


26.5 %

 

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 June 30, 2022
















Net income (loss) attributable to Albemarle Corporation

$ 452,099


$ 122,461


$    (3,383)


$ 571,177


$       —


$ (164,404)


$  406,773


27.5 %

Depreciation and amortization

42,502


13,222


13,175


68,899



2,094


70,993


4.8 %

Non-recurring and other unusual items

607




607



6,447


7,054


0.5 %

Interest and financing expenses






41,409


41,409


2.8 %

Income tax expense






89,018


89,018


6.0 %

Non-operating pension and OPEB items






(5,038)


(5,038)


(0.3) %

Adjusted EBITDA

$ 495,208


$ 135,683


$     9,792


$ 640,683


$       —


$  (30,474)


$  610,209


41.2 %

















Three months ended June 30, 2021
















Net income (loss) attributable to Albemarle Corporation

$  74,593


$  80,148


$     8,446


$ 163,187


$  7,972


$  253,441


$  424,600


54.9 %

Depreciation and amortization

33,497


12,498


12,718


58,713


407


2,303


61,423


7.9 %

Non-recurring and other unusual items

1,351




1,351



(401,412)


(400,061)


(51.7) %

Interest and financing expenses






7,152


7,152


0.9 %

Income tax expense






106,985


106,985


13.8 %

Non-operating pension and OPEB items






(5,471)


(5,471)


(0.7) %

Adjusted EBITDA

$ 109,441


$  92,646


$   21,164


$ 223,251


$  8,379


$  (37,002)


$  194,628


25.1 %

















Six months ended June 30, 2022
















Net income (loss) attributable to Albemarle Corporation

$ 713,788


$ 239,022


$        606


$ 953,416


$       —


$ (293,260)


$  660,156


25.3 %

Depreciation and amortization

81,028


25,895


26,096


133,019



4,548


137,567


5.3 %

Non-recurring and other unusual items

9,007




9,007



6,936


15,943


0.6 %

Interest and financing expenses






69,243


69,243


2.7 %

Income tax expense






169,548


169,548


6.5 %

Non-operating pension and OPEB items






(10,318)


(10,318)


(0.4) %

Adjusted EBITDA

$ 803,823


$ 264,917


$   26,702


$  1,095,442


$       —


$  (53,303)


$  1,042,139


40.0 %

















Six months ended June 30, 2021
















Net income (loss) attributable to Albemarle Corporation

$ 144,965


$ 162,261


$   21,362


$ 328,588


$  27,988


$  163,701


$  520,277


32.5 %

Depreciation and amortization

65,303


25,025


25,229


115,557


1,870


6,256


123,683


7.7 %

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

5,609




5,609



(394,077)


(388,468)


(24.2) %

Interest and financing expenses






51,034


51,034


3.2 %

Income tax expense






129,092


129,092


8.1 %

Non-operating pension and OPEB items






(10,936)


(10,936)


(0.7) %

Adjusted EBITDA

$ 215,877


$ 187,286


$   46,591


$ 449,754


$  29,858


$  (54,930)


$  424,682


26.5 %

 

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


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021

Interest cost

$       5,894


$       5,430


$     11,826


$     10,858

Expected return on assets

(10,932)


(10,901)


(22,144)


(21,794)

Total

$      (5,038)


$      (5,471)


$    (10,318)


$    (10,936)

 

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


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021

Restructuring and other(1)

$            —


$            —


$            —


$         0.01

Acquisition and integration related costs(2)

0.03


0.01


0.05


0.03

Albemarle Foundation contribution(3)


0.13



0.13

Loss (gain) on sale of business/interest in properties(4)


(2.82)


0.07


(2.87)

Loss on early extinguishment of debt(5)

0.13


0.01


0.13


0.21

Other(6)

0.01


0.04



0.10

Tax related items(7)

(0.15)


(0.06)


0.04


(0.06)

Total non-recurring and other unusual items

$         0.02


$        (2.69)


$         0.29


$        (2.45)

 

(1)

During the three and six months ended June 30, 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 $0.8 million and $1.5 million ($0.5 million and $1.1 million after income taxes, or less than $0.01 and $0.01 per share), respectively.



(2)

Costs related to the acquisition, integration and divestitures for various significant projects, recorded in Selling, general and administrative expenses for the three and six months ended June 30, 2022 were $5.4 million and $7.1 million ($4.2 million and $5.5 million after income taxes, or $0.03 and $0.05 per share), respectively, and for the three and six months ended June 30, 2021 were $1.9 million and $4.1 million ($1.5 million and $3.2 million after income taxes, or $0.01 and $0.03 per share), respectively.



(3)

Included in Selling, general and administrative expenses for the three and six months ended June 30, 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 nonprofit 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.



(4)

Included in (Gain) loss on sale of business/interest in properties for the six months ended June 30, 2022 is an expense of $8.4 million ($0.07 per share after no income tax impact) related to post-measurement period Wodgina acquisition purchase price adjustment 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. The three and six months ended June 30, 2021 include a gain of $429.4 million ($331.6 million after discrete income taxes, or $2.87 per share) related to the sale of the FCS business.



(5)

Included in Interest and financing expenses for the three and six months ended June 30, 2022 is a loss on early extinguishment of debt of $19.2 million ($14.9 million after income taxes, or $0.13 per share), representing the tender premiums, fees, unamortized discounts, unamortized deferred financing costs and accelerated amortization of associated interest rate swap from the redemption of the $425 million senior notes originally due in 2024 using the proceeds from the issuance of $1.7 billion in senior notes in May 2022.




Included in Interest and financing expenses for the three and six months ended June 30, 2021 is a loss on early extinguishment of debt of $1.2 million and $29.0 million ($0.8 million and $23.8 million after income taxes, or $0.01 and $0.21 per share), respectively, representing the 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)

 

Other adjustments for the three months ended June 30, 2022 included amounts recorded in:

  • Cost of goods sold - $0.5 million of expense related to the settlement of a legal matter resulting from a prior acquisition.
  • Selling, general and administrative expenses - $1.1 million primarily related to facility closure expenses of offices in Germany.

After income taxes, these charges totaled $1.2 million, or $0.01 per share.

Other adjustments for the six months ended June 30, 2022 included amounts recorded in:

  • Cost of goods sold - $0.5 million of expense related to the settlement of a legal matter resulting from a prior acquisition.
  • Selling, general and administrative expenses - $4.3 million of gains from the sale of legacy properties not part of our operations, partially offset by $2.8 million of charges for environmental reserves at sites not part of our operations and $1.1 million primarily related to facility closure expenses of offices in Germany.
  • Other income, net - $0.6 million gain related to a settlement received from a legal matter in a prior period.

Other adjustments for the three months ended June 30, 2021 included amounts recorded in:

  • Selling, general and administrative expenses - $4.0 million of a loss resulting from the sale of property, plant and equipment, $1.6 million of charges for an environmental reserve at a site not part of the company's operations and $1.4 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements.
  • Other income, net - $0.3 million of a gain resulting from the adjustment of indemnification obligations related to previously disposed businesses.

After income taxes, these charges totaled $0.3 million, or less than $0.01 per share.

 



(7)

Included in Income tax expense for the three and six months ended June 30, 2022 are discrete net tax benefits of $17.3 million, or $0.15 per share and net tax expense of $4.7 million ,or $0.04 per share, respectively. The net benefit for the three months was primarily related to a benefit from global intangible low-taxed income, partially offset by net discrete tax expenses related to withholding taxes and foreign return to provisions. The discrete net expense for the six months was primarily related to withholding taxes and foreign return to provisions, partially offset by a benefit for excess tax benefits realized from stock-based compensation arrangements.




Included in Income tax expense for the three and six months ended June 30, 2021 are discrete net tax benefits of $7.6 million, or $0.06 per share and $6.6 million, or $0.06 per share, respectively. The net benefit for the three months is primarily related to excess tax benefits realized from stock-based compensation arrangements and the revaluation of deferred taxes due to tax rate changes. The net benefit for the six months is primarily related to the release of a foreign valuation allowance, excess tax benefits realized from stock-based compensation arrangements, and the revaluation of deferred taxes due to tax rate changes, partially offset by tax expense due to an out-of-period adjustment regarding an overstated deferred tax liability for the three-month period ended December 31, 2017.

 

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 reported in accordance with GAAP (in thousands, except percentages).


Income before
income taxes
and equity in
net income of
unconsolidated
investments


Income tax
expense


Effective
income
tax rate

Three months ended June 30, 2022






As reported

$                    401,454


$                      89,018


22.2 %

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

21,235


22,272



As adjusted

$                    422,689


$                    111,290


26.3 %







Three months ended June 30, 2021






As reported

$                    535,195


$                    106,985


20.0 %

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

(404,383)


(84,114)



As adjusted

$                    130,812


$                      22,871


17.5 %







Six months ended June 30, 2022






As reported

$                    701,095


$                    169,548


24.2 %

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

24,844


(883)



As adjusted

$                    725,939


$                    168,665


23.2 %







Six months ended June 30, 2021






As reported

$                    658,489


$                    129,092


19.6 %

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

(370,457)


(78,682)



As adjusted

$                    288,032


$                      50,410


17.5 %

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/albemarle-reports-strong-second-quarter-sales-growth-raising-guidance-301599429.html

SOURCE Albemarle Corporation

Brook Wootton, 980.299.5700



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