Albemarle Reports Third Quarter 2024 Results
CHARLOTTE, N.C., Nov. 6, 2024 /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, 2024.
Third-Quarter 2024 and Recent Highlights(Unless otherwise stated, all percentage changes represent year-over-year comparisons)
Net sales of $1.4 billion, with volumes in Energy Storage and Specialties up 16% and 4%, respectively
Net loss of ($1.1) billion, or ($9.45) per diluted share attributable to common shareholders, which included pre-tax charges of $861 million primarily related to previously announced capital project asset write-offs
Adjusted diluted loss per share attributable to common shareholders of ($1.55)
Adjusted EBITDA of $211 million; Specialties adjusted EBITDA up 22% year-over-year and Ketjen adjusted EBITDA up 134% year-over-year
Cash from operations of $241 million, representing >100% operating cash flow conversion(a), driven by favorable working capital management
Maintaining full-year 2024 outlook considerations due to productivity and cost improvements, higher volumes, and the performance of long-term contracts
Progressed comprehensive review of cost and operating structure; additional details include:
Implementing new operating structure to maintain long-term competitiveness, streamlining organization to an integrated functional model
Driving additional cost and productivity improvements of $300 million to $400 million expected per year encompassing broad-based actions that include workforce reductions and manufacturing improvements
Reducing global workforce by an expected 6-7%, representing approximately 15% of non-manufacturing workforce
Decreasing FY 2025 capital expenditures by approximately 50% versus FY 2024 to an anticipated range of $800 million to $900 million
(a)
Defined as Operating Cash Flow divided by Adj. EBITDA
"Our steadfast focus on execution allowed us to deliver solid third-quarter results and maintain our full-year 2024 corporate outlook considerations as cost improvements, higher volumes, and the performance of our long-term contracts offset lower market pricing," said Kent Masters, Albemarle's chairman and CEO.
Masters continued, "Through our strategic review of Albemarle's cost and operating structure, we have identified significant opportunities to reduce cost, improve productivity and decrease capital spending while ensuring we efficiently serve customers and our end-markets. These actions are designed to increase Albemarle's financial flexibility, strengthen our core capabilities and position the company to maintain its leadership position long-term."
Additional Actions in Connection with Comprehensive Review of Cost and Operating Structure
During the third quarter, Albemarle progressed the previously announced comprehensive review of its cost and operating structure, building on the actions announced with the company's second quarter 2024 earnings release. Effective November 1, 2024, Albemarle implemented a new operating structure, which included transitioning to an integrated functional model designed to increase agility, deliver significant cost savings and maintain long-term competitiveness. The company is also announcing today a global workforce reduction expected to impact 6-7% of total headcount to drive significant cost-out and productivity actions.
The annual run-rate cost savings of actions in connection with the comprehensive review is expected to be in the range of $300 million to $400 million driven by elimination of redundancies, reduced management layers, productivity benefits and optimized manufacturing costs.
These savings are in addition to cost savings of over $100 million announced and executed this year. During the fourth quarter of 2024, the company expects to record a charge primarily related to severance and related benefit costs.
Full-year 2025 capital expenditures are expected to be in the range of $800 million to $900 million, with the majority of that spend aligned with sustaining existing assets and resources and the remainder allocated to select growth projects and high-return, quick payback improvements.
Total Corporate Outlook Considerations
The company is maintaining its prior full-year 2024 outlook considerations, which are based on observed lithium market price scenarios. The previously published $12-15/kg range is expected to apply even when assuming recent market pricing persists for the remainder of the year, due to enterprise-wide cost improvements, strong volume growth, and Energy Storage contract performance. Total company full-year 2024 net sales are expected to be at the lower-end of that range due to lower recent market pricing. Full-year adjusted EBITDA is expected to be towards the middle of that range, driven by productivity and cost benefits and higher equity income.
All other corporate outlook considerations are unchanged.
Total Corporate FY 2024E
Including Energy Storage Scenarios
Observed market price case(a)
Recent pricing
Q4 2023 average
H2 2023 average
Average lithium market price ($/kg LCE)(a)
$12-15
~$20
~$25
Net sales
$5.5 - $6.2 billion
$6.1 - $6.8 billion
$6.9 - $7.6 billion
Adjusted EBITDA(b)(c)
$0.9 - $1.2 billion
$1.6 - $1.8 billion
$2.3 - $2.6 billion
Weighted-average common shares outstanding (diluted)(d)
~118 million
~118 million
135 - 139 million
(a)
Price represents blend of relevant Asia and China market indices for the periods referenced.
(b)
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.
(c)
Presented under updated adjusted EBITDA definition as of 2024. FY23 adjusted EBITDA under updated definition would be $3.5B. See Non-GAAP Reconciliations for further details.
(d)
Each quarter, Albemarle will report the more dilutive of either: 1) adding the underlying shares in the mandatory to the share count or 2) reducing Albemarle's net income to common shareholders by the mandatory dividend. The 20-day volume-weighted average common share price will be used in determining the underlying shares to be added to the share count.
Third Quarter 2024 Results
In millions, except per share amounts
Q3 2024
Q3 2023
$ Change
% Change
Net sales
$ 1,354.7
$ 2,310.6
$ (955.9)
(41.4) %
Net (loss) income attributable to Albemarle Corporation
$ (1,069.0)
$ 302.5
$ (1,371.5)
(453.4) %
Adjusted EBITDA(a)(b)
$ 211.5
$ 653.0
$ (441.5)
(67.6) %
Diluted (loss) earnings per share attributable to common shareholders
$ (9.45)
$ 2.57
$ (12.02)
(467.7) %
Non-recurring and other unusual items(a)
7.90
0.17
Adjusted diluted (loss) earnings per share attributable to common shareholders(a)(c)
$ (1.55)
$ 2.74
$ (4.29)
(156.6) %
(a)
See Non-GAAP Reconciliations for further details.
(b)
For comparability, 2023 figures presented under adjusted EBITDA definition that the company adopted beginning in 2024.
(c)
Totals may not add due to rounding.
Net sales for the third quarter of 2024 were $1.4 billion compared to $2.3 billion for the prior-year quarter, a year-over-year decline of 41% driven primarily by lower pricing in Energy Storage, partially offset by higher volumes in Energy Storage (+16%) and Specialties (+4%). Net loss attributable to Albemarle of ($1.1) billion decreased year-over-year by $1.4 billion. During the third quarter of 2024, the company recorded pre-tax charges totaling $861 million related to restructuring charges and asset write-offs. Adjusted EBITDA of $211 million declined by $441 million from the prior-year quarter primarily due to margin compression and reduced equity earnings as a result of lower pricing in the lithium value chain, which more than offset favorable volume growth and cost and productivity benefits.
The effective income tax rate for the third quarter of 2024 was (9.4)% compared to 5.4% in the same period of 2023. On an adjusted basis, the effective income tax rates were (12.9)% and 3.1% for the third quarters of 2024 and 2023, respectively, with the decrease primarily due to changes in geographic income mix and the impact of valuation allowances for losses in consolidated entities in Australia and certain entities in China.
Energy Storage Results
In millions
Q3 2024
Q3 2023
$ Change
% Change
Net Sales
$ 767.3
$ 1,697.2
$ (929.9)
(54.8) %
Adjusted EBITDA
$ 142.9
$ 604.9
$ (462.1)
(76.4) %
Energy Storage net sales for the third quarter of 2024 were $767 million, a decrease of $930 million, or 55%, due to lower pricing (-71%), which more than offset higher volumes (+16%) related to the ramp of lithium projects, including the La Negra expansion in Chile and processing plants in Qinzhou and Meishan in China, and sales of chemical-grade spodumene. Adjusted EBITDA of $143 million decreased $462 million, driven by margin compression from lower lithium market pricing and reduced equity earnings, which more than offset favorable volume growth.
Specialties Results
In millions
Q3 2024
Q3 2023
$ Change
% Change
Net Sales
$ 342.4
$ 352.7
$ (10.3)
(2.9) %
Adjusted EBITDA
$ 56.3
$ 46.3
$ 10.0
21.5 %
Specialties net sales for the third quarter of 2024 were $342 million, a decrease of $10 million, or 3%, primarily due to lower prices (-6%), which more than offset higher volumes (+4%). Adjusted EBITDA of $56 million increased $10 million versus the year-ago quarter. Net sales and adjusted EBITDA were sequentially higher as well, driven by productivity benefits and improved end-market demand.
Ketjen Results
In millions
Q3 2024
Q3 2023
$ Change
% Change
Net Sales
$ 245.0
$ 260.7
$ (15.7)
(6.0) %
Adjusted EBITDA
$ 35.5
$ 15.2
$ 20.3
134.0 %
Ketjen net sales for the third quarter of 2024 were $245 million, down 6% compared to the prior-year quarter as higher prices (+2%) were more than offset by lower volumes (-8%), primarily in fluid catalytic cracking. Adjusted EBITDA of $35 million increased $20 million, driven by higher volume in clean fuels technology and lower materials and utilities costs.
Cash Flow and Capital Deployment
Year-to-date cash from operations of $701 million decreased $722 million versus the prior-year period, driven by lower adjusted EBITDA and reduced dividends received from equity investments, partially offset by inflows from working capital.
Year-to-date capital expenditures of $1.3 billion decreased by $135 million versus the prior-year period reflecting the impacts of decisions that have stopped or slowed spending. Capital expenditures for the full-year 2024 are now expected to be at the lower-end of the prior outlook range of $1.7 billion to $1.8 billion. The company announced today that it expects capital expenditures for the full-year 2025 to be in the range of $800 million to $900 million, down approximately 50% year-over-year.
Balance Sheet and Liquidity
As of September 30, 2024, Albemarle had estimated liquidity of approximately $3.4 billion, including $1.7 billion of cash and cash equivalents, $1.5 billion available under its revolver and $223 million available under other credit lines. Total debt was $3.6 billion, representing a debt covenant net debt to adjusted EBITDA of approximately 3.5 times. On October 31, 2024, Albemarle proactively extended and re-shaped its existing debt covenant waiver through the second quarter of 2026 to bolster its financial flexibility while the company pursues its operating structure and cost-out actions and navigates current market conditions.
Earnings Call
Date:
Thursday, November 7, 2024
Time:
8:00 AM Eastern time
Dial-in (U.S.):
1-800-590-8290
Dial-in (International):
1-240-690-8800
Conference ID:
ALBQ3
The company's earnings presentation and supporting material are available on Albemarle's website at https://investors.albemarle.com.
About AlbemarleAlbemarle Corporation (NYSE:ALB) is a global leader 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 X (formerly Twitter)
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 StatementsThis 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," "scenario," "should," "would," and "will". Forward-looking statements may include statements regarding: our 2024 company and segment outlooks, including expected market pricing of lithium and spodumene and other underlying assumptions and outlook considerations; expected capital expenditure amounts and the corresponding impact on cash flow; market pricing of lithium carbonate equivalent and spodumene; plans and expectations regarding other projects and activities, cost reductions and accounting charges, 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; 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 (Loss) Income
(In Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net sales
$ 1,354,692
$ 2,310,596
$ 4,145,813
$ 7,261,038
Cost of goods sold
1,458,726
2,255,662
4,221,487
5,371,077
Gross (loss) profit
(104,034)
54,934
(75,674)
1,889,961
Selling, general and administrative expenses
154,253
172,109
482,052
716,046
Restructuring charges and asset write-offs
828,146
1,757
1,156,522
9,196
Research and development expenses
22,397
21,082
66,699
62,972
Operating (loss) profit
(1,108,830)
(140,014)
(1,780,947)
1,101,747
Interest and financing expenses
(47,760)
(29,332)
(120,916)
(81,686)
Other (expenses) income, net
(22,256)
11,182
61,311
147,628
(Loss) income before income taxes and equity in net income of unconsolidated
investments
(1,178,846)
(158,164)
(1,840,552)
1,167,689
Income tax expense (benefit)
110,853
(8,551)
76,472
311,399
(Loss) income before equity in net income of unconsolidated investments
(1,289,699)
(149,613)
(1,917,024)
856,290
Equity in net income of unconsolidated investments (net of tax)
229,058
470,306
696,436
1,417,545
Net (loss) income
(1,060,641)
320,693
(1,220,588)
2,273,835
Net income attributable to noncontrolling interests
(8,351)
(18,160)
(34,154)
(82,679)
Net (loss) income attributable to Albemarle Corporation
(1,068,992)
302,533
(1,254,742)
2,191,156
Mandatory convertible preferred stock dividends
(41,687)
—
(94,959)
—
Net (loss) income attributable to Albemarle Corporation common shareholders
$ (1,110,679)
$ 302,533
$ (1,349,701)
$ 2,191,156
Basic (loss) earnings per share attributable to common shareholders
$ (9.45)
