CHARLOTTE, N.C., Nov. 1, 2023
/PRNewswire/ -- Albemarle Corporation (NYSE: ALB), a global leader
in providing essential elements for mobility, energy, connectivity
and health, today announced its results for the third quarter ended
September 30, 2023.
Third-Quarter 2023 and Recent
Highlights
(Unless otherwise stated, all percentage
changes represent year-over-year comparisons)
- Net sales of $2.3 billion, an
increase of 10%
- Net income of $302.5 million, or
$2.57 per diluted share
- Adjusted diluted EPS of $2.74
- Adjusted EBITDA of $453.3
million
- Signed agreements with Caterpillar Inc. to collaborate on
solutions to support the full circular battery value chain and
sustainable mining operations
- Received $90 million critical
materials award from the U.S. Department of Defense to support
restart of Kings Mountain, NC
mine
- Completed the previously disclosed transaction to amend and
simplify the MARBL joint venture with Mineral Resources
Limited
- On track to achieve more than $170
million in productivity benefits in 2023
- 2023 net sales are now expected to increase approximately 30%
to 35% year-over-year and 2023 adjusted EBITDA is expected to be
flat to slightly down year-over-year
"Albemarle grew net sales by
10%, driven by higher volumes in our Energy Storage business," said
Albemarle CEO Kent Masters. "In the
third quarter, we formed new strategic partnerships and streamlined
our existing MARBL joint venture to better position Albemarle for long-term growth. Our
investments across the globe continue to progress, with the Meishan
project ahead of schedule for completion in early 2024. Through our
operating model, Albemarle Way of Excellence, we are on track to
achieve more than $170 million in
productivity benefits in 2023 and expect to achieve additional
benefits in 2024 as we continue to operate with a disciplined
approach."
2023 Corporate Outlook
The company's full-year
2023 outlook reflects expected financial performance assuming
recent lithium market pricing continues for the remainder of the
year, as consistent with our standard practice. Net sales are
expected to increase 30% to 35% over the prior year, primarily
driven by new mining and conversion capacity delivering 30% to 35%
volumetric growth in Energy Storage. Adjusted EBITDA is expected to
be flat to down 5% year over year, primarily due to lower Energy
Storage pricing as well as the realization of higher spodumene
pricing in costs of goods sold from our JV-owned mines. Net cash
from operations is expected to be in the range of $600 million to $800
million for the full year 2023. The company's capital
expenditures are expected to be between $1.9
billion and $2.1 billion for
2023.
|
FY 2023
Outlook
as of August 2,
2023
|
|
FY 2023
Outlook
as of November 1,
2023
|
Net sales
|
$10.4 - $11.5
billion
|
|
$9.5 - $9.8
billion
|
Adjusted
EBITDA(a)
|
$3.8 - $4.4
billion
|
|
$3.2 - $3.4
billion
|
Adjusted EBITDA
Margin(a)
|
37% - 38%
|
|
34% - 35%
|
Adjusted Diluted
EPS(a)
|
$25.00 -
$29.50
|
|
$21.50 -
$23.50
|
Net Cash from
Operations
|
$1.2 - $1.8
billion
|
|
$600 - $800
million
|
Capital
Expenditures
|
$1.9 - $2.1
billion
|
|
$1.9 - $2.1
billion
|
|
|
(a)
|
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. See "Additional Information
regarding Non-GAAP Measures" for more information.
|
Third Quarter 2023 Results
In millions, except
per share amounts
|
Q3
2023
|
|
Q3
2022
|
|
$
Change
|
|
%
Change
|
Net sales
|
$
2,310.6
|
|
$
2,091.8
|
|
$
218.8
|
|
10.5 %
|
Net income attributable
to Albemarle Corporation
|
$
302.5
|
|
$
897.2
|
|
$ (594.7)
|
|
(66.3) %
|
Adjusted
EBITDA(a)
|
$
453.3
|
|
$
1,190.0
|
|
$ (736.7)
|
|
(61.9) %
|
Diluted earnings per
share
|
$
2.57
|
|
$
7.61
|
|
$
(5.04)
|
|
(66.2) %
|
Non-operating pension and OPEB items(a)
|
—
|
|
(0.03)
|
|
|
|
|
Non-recurring and other unusual items(a)
|
0.17
|
|
(0.08)
|
|
|
|
|
Adjusted diluted
earnings per share(a)(b)
|
$
2.74
|
|
$
7.50
|
|
$
(4.76)
|
|
(63.5) %
|
|
|
(a)
|
See Non-GAAP
Reconciliations for further details.
|
(b)
|
Totals may not add due
to rounding.
|
Net sales for the third quarter of 2023 were $2.3 billion compared to $2.1 billion for the prior-year quarter. The 10%
increase was driven by increased volumes in Energy Storage and
higher pricing in Ketjen. Net income attributable to Albemarle of $302.5
million decreased by $594.7
million and adjusted EBITDA of $453.3
million decreased by $736.7
million from the prior-year quarter primarily due to lower
lithium market pricing and higher spodumene pricing in costs of
goods sold being only partially offset by higher equity income due
to inventory timing.
The effective income tax rate for the third quarter of 2023 was
5.4% compared to 22.7% in the same period of 2022. On an adjusted
basis, the effective income tax rates were 3.1% and 23.2% for the
third quarter of 2023 and 2022, respectively, with the decrease
primarily due to changes in the geographic income mix.
Business Segment Results
Beginning January 1, 2023, the company re-segmented its
operating business units. The results from 2022 are recast to align
with the new structure.
Energy Storage Results
In
millions
|
Q3
2023
|
|
Q3
2022
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
1,697.2
|
|
$
1,414.1
|
|
$
283.1
|
|
20.0 %
|
Adjusted
EBITDA
|
$
407.5
|
|
$
1,084.6
|
|
$
(677.2)
|
|
(62.4) %
|
Energy Storage net sales for the third quarter of 2023 were
$1.7 billion, an increase of
$283.1 million (+20%) due to higher
volumes (+40%) related to the La Negra III/IV expansion in
Chile, production from our
processing plant in Qinzhou, China, and higher tolling volumes to meet
growing customer demand. Adjusted EBITDA of $407.5 million decreased $677.2 million as higher spodumene pricing in
costs of goods sold was only partially offset by higher equity
income due to inventory timing.
2023 Energy Storage Outlook
Energy Storage net sales
for the full year are estimated to range between $7.0 billion and $7.2
billion, below our previous outlook primarily due to lower
lithium market index pricing. Energy Storage volumes are projected
to increase 30% to 35% in 2023 compared to 2022. Full year realized
pricing increases are expected to range from 15% to 20% compared to
the prior year, assuming recent lithium market prices continue
through the remainder of 2023. Adjusted EBITDA is anticipated to be
between $2.9 billion and $3.0 billion, below our previous outlook due to
lower expected pricing and lower sales volumes at our Talison joint
venture.
In October, Albemarle finalized
simplified commercial arrangements related to its MARBL joint
venture. Under the revised agreements, Albemarle will take full ownership of the
Kemerton lithium processing facility and 50% ownership of the
Wodgina spodumene mine in Australia and will retain full ownership of
the Qinzhou and Meishan lithium processing facilities in
China.
Albemarle continues to expand
its global portfolio of lithium conversion capacity and world-class
resource portfolio with several notable developments in the third
quarter. In August, the company completed a $82 million investment in Patriot Battery Metals
and continues to assess potential high-return organic and inorganic
opportunities. In Chile, the Salar Yield Improvement Project
is ramping to capacity as expected. In China, the construction of Meishan is
progressing on-budget and ahead of schedule with mechanical
completion expected in early 2024.
Specialties Results
In
millions
|
Q3
2023
|
|
Q3
2022
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
352.7
|
|
$
441.9
|
|
$
(89.2)
|
|
(20.2) %
|
Adjusted
EBITDA
|
$
46.3
|
|
$
133.6
|
|
$
(87.3)
|
|
(65.3) %
|
Specialties net sales for the third quarter of 2023 were
$352.7 million, a decrease of
$89.2 million (-20%) primarily due to
lower volumes (-7%) and lower prices (-13%). Adjusted EBITDA of
$46.3 million decreased $87.3 million. Both volumes and prices were
impacted by weaker demand, particularly for consumer
electronics.
2023 Specialties Outlook
Albemarle is updating its 2023 outlook for
Specialties net sales to approximately $1.5
billion, with adjusted EBITDA estimated from $300 million to $320
million. Adjusted EBITDA 2023 margins are expected to be
down year-over-year primarily due to continued weakness in certain
end-use markets including consumer and industrial electronics and
elastomers partially offset by strong demand in other
end-markets, such as pharmaceuticals, agriculture and oilfield
services. We continue to monitor the impact of the ongoing
situation in the Middle East on
our operations. To date, Specialties operations continue as usual
without supply chain disruption.
Ketjen Results
In
millions
|
Q3
2023
|
|
Q3
2022
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
260.7
|
|
$
235.8
|
|
$
24.9
|
|
10.6 %
|
Adjusted
EBITDA
|
$
15.2
|
|
$
4.6
|
|
$
10.5
|
|
227.1 %
|
Ketjen net sales of $260.7 million
for the third quarter of 2023 were up 11% compared to the previous
year due to higher prices (+8%), primarily from fluid catalytic
cracking and clean fuel technologies. Adjusted EBITDA of
$15.2 million increased $10.5 million largely due to higher prices and
lower energy costs.
2023 Ketjen Outlook
Albemarle expects Ketjen net sales
of approximately $1.1 billion and an
adjusted EBITDA range of $100 million
to $120 million for 2023. The reduced
adjusted EBITDA outlook primarily reflects impacts from timing of
shipments and customer mix.
Cash Flow and Capital Deployment
Cash from operations
of $1.4 billion for the nine-months
ended September 30, 2023 increased
$467.9 million versus the prior year
period. This was driven by increased adjusted EBITDA and dividends
received from equity investments, partially offset by working
capital changes that were primarily due to the increase in
receivables and inventories from higher lithium prices. Capital
expenditures of $1.5 billion
increased by $649.3 million versus
the prior-year period as the company invested in Energy Storage and
Specialties capacity to support growth.
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
dividends.
Balance Sheet and Liquidity
As of September 30, 2023, Albemarle had estimated liquidity of
approximately $3.1 billion, including
$1.6 billion of cash and equivalents,
$1.3 billion available under its
revolver and $186.1 million available
under other credit lines. Total debt was $3.7 billion, representing our debt covenant net
debt to adjusted EBITDA of approximately 0.4 times.
Earnings Call
Date:
|
Thursday, November 2,
2023
|
Time:
|
9:00 AM Eastern
time
|
Dial-in
(U.S.):
|
1.888.330.2007
|
Dial-in
(International):
|
1.646.960.0105
|
Passcode:
|
5205664
|
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) 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. A reliable and high-quality
global supply of lithium and bromine allow us to deliver advanced
solutions for our customers. Learn more about how the people of
Albemarle are enabling a more
resilient world at albemarle.com and on Twitter @AlbemarleCorp.
Albemarle regularly posts
information to www.albemarle.com, including notification of events,
news, financial performance, investor presentations and webcasts,
non-GAAP reconciliations, Securities and Exchange Commission
("SEC") filings and other information regarding the company, its
businesses and the markets it serves.
Forward-Looking Statements
This press release contains
statements concerning our expectations, anticipations and beliefs
regarding the future, which constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements, which are based on
assumptions that we have made as of the date hereof and are subject
to known and unknown risks and uncertainties, often contain words
such as "anticipate," "believe," "estimate," "expect," "guidance,"
"intend," "may," "outlook," "should," "would," and "will".
Forward-looking statements may include statements regarding
expected: financial and operating results, production capacity,
volumes, and prices, demand for Albemarle's products, capital projects,
acquisition and divestiture transactions, market and economic
trends, and all other information relating to matters that are not
historical facts. Factors that could cause Albemarle's actual results to differ
materially from the outlook expressed or implied in any
forward-looking statement include: changes in economic and business
conditions; financial and operating performance of customers;
timing and magnitude of customer orders; fluctuations in lithium
market prices; production volume shortfalls; increased competition;
changes in product demand; availability and cost of raw materials
and energy; technological change and development; fluctuations in
foreign currencies; changes in laws and government regulation;
regulatory actions, proceedings, claims or litigation;
cyber-security breaches, terrorist attacks, industrial accidents or
natural disasters; political unrest and war, including the
situation in the Middle East and
military conflicts in Ukraine;
changes in inflation or interest rates; volatility in the debt and
equity markets; acquisition and divestiture transactions; timing
and success of projects; 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 and any subsequently filed Quarterly Reports on Form 10-Q,
which are filed with the SEC and available on the investor section
of Albemarle's website
(investors.albemarle.com) and on the SEC's website at www.sec.gov.
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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
sales
|
$ 2,310,596
|
|
$ 2,091,805
|
|
$ 7,261,038
|
|
$ 4,699,126
|
Cost of goods
sold
|
2,255,662
|
|
1,047,991
|
|
5,371,077
|
|
2,625,858
|
Gross
profit
|
54,934
|
|
1,043,814
|
|
1,889,961
|
|
2,073,268
|
Selling, general and
administrative expenses
|
173,866
|
|
134,479
|
|
725,242
|
|
375,989
|
Research and
development expenses
|
21,082
|
|
18,358
|
|
62,972
|
|
51,827
|
Loss on sale of
interest in properties
|
—
|
|
—
|
|
—
|
|
8,400
|
Operating (loss)
profit
|
(140,014)
|
|
890,977
|
|
1,101,747
|
|
1,637,052
|
Interest and financing
expenses
|
(29,332)
|
|
(29,691)
|
|
(81,686)
|
|
(98,934)
|
Other income,
net
|
11,182
|
|
7,974
|
|
147,628
|
|
32,237
|
(Loss) income before
income taxes and equity in net
income of unconsolidated investments
|
(158,164)
|
|
869,260
|
|
1,167,689
|
|
1,570,355
|
Income tax
expense
|
(8,551)
|
|
196,938
|
|
311,399
|
|
366,486
|
(Loss) income before
equity in net income of
unconsolidated investments
|
(149,613)
|
|
672,322
|
|
856,290
|
|
1,203,869
|
Equity in net income of
unconsolidated investments (net
of tax)
|
470,306
|
|
258,884
|
|
1,417,545
|
|
449,476
|
Net income
|
320,693
|
|
931,206
|
|
2,273,835
|
|
1,653,345
|
Net income attributable
to noncontrolling interests
|
(18,160)
|
|
(33,991)
|
|
(82,679)
|
|
(95,974)
|
Net income attributable
to Albemarle Corporation
|
$
302,533
|
|
$
897,215
|
|
$ 2,191,156
|
|
$ 1,557,371
|
Basic earnings per
share
|
$
2.58
|
|
$
7.66
|
|
$
18.68
|
|
$
13.30
|
Diluted earnings per
share
|
$
2.57
|
|
$
7.61
|
|
$
18.60
|
|
$
13.23
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding – basic
|
117,349
|
|
117,136
|
|
117,304
|
|
117,106
|
Weighted-average common
shares outstanding – diluted
|
117,783
|
|
117,869
|
|
117,797
|
|
117,749
|
Albemarle Corporation and
Subsidiaries
Condensed Consolidated
Balance Sheets
(In Thousands)
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,601,668
|
|
$
1,499,142
|
Trade accounts
receivable
|
1,179,012
|
|
1,190,970
|
Other accounts
receivable
|
528,744
|
|
185,819
|
Inventories
|
3,404,212
|
|
2,076,031
|
Other current
assets
|
411,926
|
|
234,955
|
Total current
assets
|
7,125,562
|
|
5,186,917
|
Property, plant and
equipment
|
10,929,150
|
|
9,354,330
|
Less accumulated
depreciation and amortization
|
2,620,535
|
|
2,391,333
|
Net property, plant
and equipment
|
8,308,615
|
|
6,962,997
|
Investments
|
1,254,041
|
|
1,150,553
|
Other assets
|
328,518
|
|
250,558
|
Goodwill
|
1,606,077
|
|
1,617,627
|
Other intangibles, net
of amortization
|
260,541
|
|
287,870
|
Total
assets
|
$ 18,883,354
|
|
$ 15,456,522
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable to
third parties
|
$
1,812,168
|
|
$
1,533,624
|
Accounts payable to
related parties
|
795,088
|
|
518,377
|
Accrued
expenses
|
689,106
|
|
505,894
|
Current portion of
long-term debt
|
162,351
|
|
2,128
|
Dividends
payable
|
46,661
|
|
46,116
|
Income taxes
payable
|
436,238
|
|
134,876
|
Total current
liabilities
|
3,941,612
|
|
2,741,015
|
Long-term
debt
|
3,495,971
|
|
3,214,972
|
Postretirement
benefits
|
32,797
|
|
32,751
|
Pension
benefits
|
153,955
|
|
159,571
|
Other noncurrent
liabilities
|
807,051
|
|
636,596
|
Deferred income
taxes
|
289,529
|
|
480,770
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Albemarle Corporation
shareholders' equity:
|
|
|
|
Common
stock
|
1,174
|
|
1,172
|
Additional paid-in
capital
|
2,945,975
|
|
2,940,840
|
Accumulated other
comprehensive loss
|
(700,972)
|
|
(560,662)
|
Retained
earnings
|
7,651,638
|
|
5,601,277
|
Total Albemarle
Corporation shareholders' equity
|
9,897,815
|
|
7,982,627
|
Noncontrolling
interests
|
264,624
|
|
208,220
|
Total
equity
|
10,162,439
|
|
8,190,847
|
Total liabilities and
equity
|
$ 18,883,354
|
|
$ 15,456,522
|
Albemarle Corporation and
Subsidiaries
Selected Consolidated
Cash Flow Data
(In Thousands)
(Unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
Cash and cash
equivalents at beginning of year
|
$
1,499,142
|
|
$ 439,272
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
2,273,835
|
|
1,653,345
|
Adjustments to
reconcile net income to cash flows from operating
activities:
|
|
|
|
Depreciation and
amortization
|
285,801
|
|
215,280
|
Loss on sale of
interest in properties
|
—
|
|
8,400
|
Stock-based
compensation and other
|
29,465
|
|
24,649
|
Equity in net income
of unconsolidated investments (net of tax)
|
(1,417,545)
|
|
(449,476)
|
Dividends received
from unconsolidated investments and nonmarketable
securities
|
1,939,225
|
|
350,895
|
Pension and
postretirement benefit
|
5,925
|
|
(12,299)
|
Pension and
postretirement contributions
|
(12,243)
|
|
(10,929)
|
Unrealized (gain) loss
on investments in marketable securities
|
(36,740)
|
|
3,864
|
Loss on early
extinguishment of debt
|
—
|
|
19,219
|
Deferred income
taxes
|
(182,764)
|
|
77,968
|
Working capital
changes
|
(1,332,042)
|
|
(1,004,236)
|
Non-cash transfer of
40% value of construction in progress of Kemerton plant
to MRL
|
17,132
|
|
115,969
|
Other, net
|
(146,509)
|
|
(37,047)
|
Net cash provided by
operating activities
|
1,423,540
|
|
955,602
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions, net of
cash acquired
|
(43,207)
|
|
—
|
Capital
expenditures
|
(1,465,193)
|
|
(815,934)
|
(Purchases) sales of
marketable securities, net
|
(205,952)
|
|
3,132
|
Investments in equity
investments and nonmarketable securities
|
(1,279)
|
|
(507)
|
Net cash used in
investing activities
|
(1,715,631)
|
|
(813,309)
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
long-term debt and credit agreements
|
—
|
|
(455,000)
|
Proceeds from
borrowings of long-term debt and credit agreements
|
300,000
|
|
1,964,216
|
Other debt repayments,
net
|
172,791
|
|
(391,067)
|
Fees related to early
extinguishment of debt
|
—
|
|
(9,767)
|
Dividends paid to
shareholders
|
(140,251)
|
|
(138,165)
|
Dividends paid to
noncontrolling interests
|
(79,393)
|
|
(44,208)
|
Proceeds from exercise
of stock options
|
117
|
|
1,590
|
Withholding taxes paid
on stock-based compensation award distributions
|
(26,166)
|
|
(12,150)
|
Other
|
(191)
|
|
(4,198)
|
Net cash provided by
financing activities
|
226,907
|
|
911,251
|
Net effect of foreign
exchange on cash and cash equivalents
|
167,710
|
|
(110,013)
|
Increase in cash and
cash equivalents
|
102,526
|
|
943,531
|
Cash and cash
equivalents at end of period
|
$
1,601,668
|
|
$
1,382,803
|
Albemarle Corporation and
Subsidiaries
Consolidated Summary of
Segment Results
(In Thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
sales:
|
|
|
|
|
|
|
|
Energy
Storage
|
$ 1,697,163
|
|
$ 1,414,053
|
|
$ 5,403,910
|
|
$ 2,680,150
|
Specialties
|
352,722
|
|
441,928
|
|
1,142,802
|
|
1,354,950
|
Ketjen
|
260,711
|
|
235,824
|
|
714,326
|
|
664,026
|
Total net
sales
|
$ 2,310,596
|
|
$ 2,091,805
|
|
$ 7,261,038
|
|
$ 4,699,126
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
Energy
Storage
|
$
407,476
|
|
$ 1,084,643
|
|
$ 2,745,680
|
|
$ 1,853,407
|
Specialties
|
46,307
|
|
133,558
|
|
268,665
|
|
433,534
|
Ketjen
|
15,159
|
|
4,635
|
|
72,584
|
|
31,337
|
Total segment adjusted
EBITDA
|
468,942
|
|
1,222,836
|
|
3,086,929
|
|
2,318,278
|
Corporate
|
(15,655)
|
|
(32,870)
|
|
(5,657)
|
|
(86,173)
|
Total adjusted
EBITDA
|
$
453,287
|
|
$ 1,189,966
|
|
$ 3,081,272
|
|
$ 2,232,105
|
See accompanying non-GAAP reconciliations below.
Additional Information regarding Non-GAAP Measures
It should be noted that adjusted net income attributable to
Albemarle Corporation, adjusted diluted earnings per share,
non-operating pension and other post-employment benefit ("OPEB")
items per diluted share, non-recurring and other unusual items per
diluted share, adjusted effective income tax rates, EBITDA,
adjusted EBITDA (on a consolidated basis), 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
(on a consolidated basis), which are 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. Reconciliation of adjusted EBITDA
on a segment basis is also provided. 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
In thousands, except
percentages and per
share amounts
|
$
|
|
% of
net
sales
|
|
$
|
|
% of
net
sales
|
|
$
|
|
% of
net
sales
|
|
$
|
|
% of
net
sales
|
Net income attributable
to Albemarle
Corporation
|
$ 302,533
|
|
|
|
$ 897,215
|
|
|
|
$
2,191,156
|
|
|
|
$
1,557,371
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating pension
and OPEB items
(net of tax)
|
386
|
|
|
|
(3,936)
|
|
|
|
1,141
|
|
|
|
(12,021)
|
|
|
Non-recurring and
other unusual items
(net of tax)
|
19,674
|
|
|
|
(9,789)
|
|
|
|
210,094
|
|
|
|
24,023
|
|
|
Adjusted net income
attributable to
Albemarle Corporation
|
$ 322,593
|
|
|
|
$ 883,490
|
|
|
|
$
2,402,391
|
|
|
|
$
1,569,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share
|
$ 2.74
|
|
|
|
$ 7.50
|
|
|
|
$
20.39
|
|
|
|
$
13.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares
outstanding – diluted
|
117,783
|
|
|
|
117,869
|
|
|
|
117,797
|
|
|
|
117,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Albemarle
Corporation
|
$ 302,533
|
|
13.1 %
|
|
$ 897,215
|
|
42.9 %
|
|
$
2,191,156
|
|
30.2 %
|
|
$
1,557,371
|
|
33.1 %
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and financing
expenses
|
29,332
|
|
1.3 %
|
|
29,691
|
|
1.4 %
|
|
81,686
|
|
1.1 %
|
|
98,934
|
|
2.1 %
|
Income tax
expense
|
(8,551)
|
|
(0.4) %
|
|
196,938
|
|
9.4 %
|
|
311,399
|
|
4.3 %
|
|
366,486
|
|
7.8 %
|
Depreciation and
amortization
|
105,445
|
|
4.6 %
|
|
77,713
|
|
3.7 %
|
|
285,801
|
|
3.9 %
|
|
215,280
|
|
4.6 %
|
EBITDA
|
428,759
|
|
18.6 %
|
|
1,201,557
|
|
57.4 %
|
|
2,870,042
|
|
39.5 %
|
|
2,238,071
|
|
47.6 %
|
Non-operating pension
and OPEB items
|
620
|
|
— %
|
|
(5,027)
|
|
(0.2) %
|
|
1,833
|
|
— %
|
|
(15,345)
|
|
(0.3) %
|
Non-recurring and
other unusual items
|
23,908
|
|
1.0 %
|
|
(6,564)
|
|
(0.3) %
|
|
209,397
|
|
2.9 %
|
|
9,379
|
|
0.2 %
|
Adjusted
EBITDA
|
$ 453,287
|
|
19.6 %
|
|
$
1,189,966
|
|
56.9 %
|
|
$
3,081,272
|
|
42.4 %
|
|
$
2,232,105
|
|
47.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
2,310,596
|
|
|
|
$
2,091,805
|
|
|
|
$
7,261,038
|
|
|
|
$
4,699,126
|
|
|
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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Interest
cost
|
$
9,054
|
|
$
5,857
|
|
$ 27,091
|
|
$ 17,683
|
Expected return on
assets
|
(8,434)
|
|
(10,884)
|
|
(25,258)
|
|
(33,028)
|
Total
|
$
620
|
|
$ (5,027)
|
|
$
1,833
|
|
$
(15,345)
|
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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Acquisition and
integration related costs(1)
|
$
0.07
|
|
$
0.01
|
|
$
0.14
|
|
$
0.06
|
Loss on sale of
interest in properties(2)
|
—
|
|
—
|
|
—
|
|
0.07
|
Loss on early
extinguishment of debt(3)
|
—
|
|
—
|
|
—
|
|
0.13
|
Mark-to-market loss
(gain) on public equity securities(4)
|
0.17
|
|
(0.07)
|
|
(0.21)
|
|
(0.07)
|
Legal
accrual(5)
|
—
|
|
—
|
|
1.82
|
|
—
|
Other(6)
|
(0.08)
|
|
0.01
|
|
0.03
|
|
—
|
Tax related
items(7)
|
0.01
|
|
(0.03)
|
|
—
|
|
0.01
|
Total non-recurring
and other unusual items
|
$
0.17
|
|
$
(0.08)
|
|
$
1.78
|
|
$
0.20
|
|
|
(1)
|
Costs related to the
acquisition, integration and divestitures for various significant
projects, recorded in Selling, general and administrative expenses
for the three and nine months ended September 30, 2023 were $10.0
million and $21.7 million ($7.8 million and $16.8 million after
income taxes, or $0.07 and $0.14 per share), respectively, and for
the three and nine months ended September 30, 2022 were $2.1
million and $9.2 million ($1.7 million and $7.2 million after
income taxes, or $0.01 and $0.06 per share),
respectively.
|
|
|
(2)
|
Included in Loss on
sale of interest in properties for the nine months ended September
30, 2022 is an expense of $8.4 million ($0.07 per share after no
income tax impact) related to a 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 cost overruns from supply chain, labor and COVID-19
pandemic related issues.
|
|
|
(3)
|
Included in Interest
and financing expenses for the nine months ended September 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.
|
|
|
(4)
|
Loss (gain) of $26.4
million and ($34.4) million ($20.5 million and ($25.2) million
after income taxes, or $0.17 and ($0.21) per share) recorded in
Other income, net for the three and nine months ended September 30,
2023, respectively, resulting from the net change in fair value of
investments in public equity securities. The three and nine months
ended September 30, 2022 included a gain of $10.6 million ($8.4
million, or $0.07 per share) for these changes in fair value of
investments in public equity securities.
|
|
|
(5)
|
Accrual of $218.5
million ($214.9 million after income taxes, or $1.82 per share)
recorded in Selling, general and administrative expenses resulting
from agreements in principle to resolve a previously disclosed
legal matter with the U.S. Department of Justice and the SEC
related to conduct in our Ketjen business prior to
2018.
|
|
|
(6)
|
Other adjustments for
the three months ended September 30, 2023 included amounts recorded
in:
|
|
- Selling, general
and administrative expenses - $1.8 million of separation and other
severance costs to employees in Corporate and the Ketjen
business which are primarily expected to be paid out during 2023,
$0.7 million of facility closure expenses related to offices
in Germany and $0.3 million of a loss from the sale of legacy
properties not part of Albemarle's operations.
- Other income, net -
$8.2 million gain in the fair value of preferred equity from a
Grace subsidiary and a $7.2 million gain resulting from insurance
proceeds of a prior legal matter.
|
|
After income taxes,
these net gains totaled $9.9 million, or $0.08 per
share.
|
|
|
|
Other adjustments for
the nine months ended September 30, 2023 included amounts recorded
in:
|
|
- Selling, general
and administrative expenses - $9.2 million of separation and other
severance costs to employees in Corporate and the Ketjen
business which are primarily expected to be paid out during 2023,
$2.1 million of facility closure expenses related to offices
in Germany, $1.9 million of charges primarily for
environmental reserves at sites not part of our operations and
$1.0 million primarily related to shortfall contributions for
a multiemployer plan financial improvement plan.
- Other income, net -
$10.9 million gain in the fair value of preferred equity of a Grace
subsidiary and a $7.2 million gain resulting from insurance
proceeds of a prior legal matter, partially offset by $3.9 million
of a loss resulting from the adjustment of indemnification related
to previously disposed businesses and $3.6 million of charges for
asset retirement obligations at a site not part of our
operations.
|
|
After income taxes,
these net charges totaled $3.3 million, or $0.03 per
share.
|
|
|
|
Other adjustments for
the three months ended September 30, 2022 included amounts recorded
in:
|
|
- Cost of goods sold
- $2.7 million of expense related to one-time retention payments
for certain employees during the Ketjen strategic review and
business unit realignment.
- Selling, general
and administrative expenses - $1.9 million of expense primarily
related to one-time retention payments for certain employees during
the Catalysts strategic review and business unit realignment and
$1.4 million primarily related to facility closure expenses of
offices in Germany.
- Other income, net -
$3.0 million gain from the reversal of a liability related to a
previous divestiture and a $1.1 million gain resulting from the
adjustment of indemnification related to previously disposed
businesses.
|
|
|
After income taxes,
these net charges totaled $1.0 million, or $0.01 per
share.
|
|
|
|
Other adjustments for
the nine months ended September 30, 2022 included amounts recorded
in:
|
|
- Cost of goods sold
- $2.7 million of expense related to one-time retention payments
for certain employees during the Ketjen strategic review and
business unit realignment and $0.5 million of expense related to
the settlement of a legal matter resulting from a prior
acquisition.
- Selling, general
and administrative expenses - $3.4 million primarily related to
facility closure expenses related to offices in Germany, $2.8
million of charges for environmental reserves at sites not part of
our operations and $1.9 million of expense related to one-time
retention payments for certain employees during the Catalysts
strategic review and business unit realignment, partially offset by
$4.3 million of gains from the sale of legacy properties not part
of our operations.
- Other income, net -
$3.0 million gain from the reversal of a liability related to a
previous divestiture, a $1.1 million gain resulting from the
adjustment of indemnification related to previously disposed
businesses and a $0.6 million gain related to a settlement received
from a legal matter in a prior period.
|
|
|
|
After income taxes,
these net charges totaled $1.3 million, or less than $0.01 per
share.
|
|
|
(7)
|
Included in Income tax
expense for the three and nine months ended September 30, 2023 are
discrete net tax expense of $1.3 million, or $0.01 per share and
net tax benefits of $0.3 million, or less than $0.01 per share,
respectively. The net expense primarily related to foreign return
to provisions offset by excess tax benefits realized from
stock-based compensation arrangements.
|
|
|
|
Included in Income tax
expense for the three and nine months ended September 30, 2022 are
discrete net tax benefits of $4.1 million, or $0.03 per share and
net tax expense of $0.7 million, or $0.01 per share, respectively.
The net benefit for the three months was primarily related to a tax
benefit for global intangible low-taxed income and net discrete tax
benefits related to excess tax benefits realized from stock-based
compensation arrangements and foreign return to provisions. The
discrete net expense for the nine 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.
|
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
September 30, 2023
|
|
|
|
|
|
As reported
|
$
(158,164)
|
|
$
(8,551)
|
|
5.4 %
|
Non-recurring, other
unusual and non-operating pension and OPEB
items
|
24,528
|
|
4,468
|
|
|
As adjusted
|
$
(133,636)
|
|
$
(4,083)
|
|
3.1 %
|
|
|
|
|
|
|
Three months ended
September 30, 2022
|
|
|
|
|
|
As reported
|
$
869,260
|
|
$
196,938
|
|
22.7 %
|
Non-recurring, other
unusual and non-operating pension and OPEB
items
|
(11,592)
|
|
2,133
|
|
|
As adjusted
|
$
857,668
|
|
$
199,071
|
|
23.2 %
|
|
|
|
|
|
|
Nine months ended
September 30, 2023
|
|
|
|
|
|
As reported
|
$
1,167,689
|
|
$
311,399
|
|
26.7 %
|
Non-recurring, other
unusual and non-operating pension and OPEB
items
|
211,230
|
|
(5)
|
|
|
As adjusted
|
$
1,378,919
|
|
$
311,394
|
|
22.6 %
|
|
|
|
|
|
|
Nine months ended
September 30, 2022
|
|
|
|
|
|
As reported
|
$
1,570,355
|
|
$
366,486
|
|
23.3 %
|
Non-recurring, other
unusual and non-operating pension and OPEB
items
|
13,252
|
|
1,250
|
|
|
As adjusted
|
$
1,583,607
|
|
$
367,736
|
|
23.2 %
|
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SOURCE Albemarle Corporation