ALB - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Albemarle Corporation Earnings Conference Call. My name is Dave. I'll be your operator for today. At this time, all participants are in listen-only mode.

We will conduct a Q&A session towards the end of the conference. the being reminder, purposes. for a as call recorded is replay And would the turn like over I to call now to Mr. Vice Matt Relations. Executive President Strategy Corporate Juneau, and of Investor Please proceed, sir.

Matthew K. Juneau

Earnings welcome Third Dave. to you, And Quarter Thank XXXX Conference Call. Albemarle's

earnings the market and the albermarle.com. Investors earnings and section you'll close on posted release, yesterday, non-GAAP press at released reconciliations the our our Our were presentation of after find website under

Luke Raphael Kissam, Tozier, Joining President, Chairman Chief Advanced me today on Ghyoot, Scott Officer; the Materials. Executive and President, Silvio Chief Specialties; are Financial Solutions; John Crawford, call Bromine Officer; Refining Lithium and President, Mitchell, and

Securities and GAAP As the the Please language in cautionary earnings forward-looking of our over results future of Please and the the today constitute applies note some statements a the about our that press call. this contained of language made also Federal posted company to both comments same may found reminder, exclude note the be during regarding from website. are release. and Appendix that, our of may With our the adjusted on numbers Laws. unusual which about to financial performance other non-operating, to press within That forward-looking the this call turn statements our those in statements of today reconciliations presentation, measures discussed financial non-recurring I'll our items. Luke. release call meaning

Luke C. Kissam

everybody. Matt, and morning, good Thanks,

I third Hurricane dedication want during employees call results, and start outstanding aftermath. the their and thanking on their and quarter its Harvey commenting for Before our to by families the resilience

many needs our financial Pasadena need Houston plants at downtime support to the customers stepped minimize trying while and Albemarle. colleagues during our flooded the the and meet this time. in impact that I'd like to more Making on and production the outages. able also employees even of and impressive with in Albemarle their who up to fact Bayport were accomplished employees all to thank Our homes minimize quickly power this around resume of is dealt they the world both this

Turning to the third quarter.

just marks revenue grew grew XX%, This the businesses, of growth by quarter seventh XXXX. revenue or quarter or and third consecutive divested compared XX%, quarter EBITDA Excluding Bromine driven growth. double-digit on adjusted in our $XXX to over $XX this EBITDA in and million, fourth our of solid growth primarily of performance Lithium consecutive results basis continued and million, These strong Specialties. adjusted by were

Solutions Hurricane impacts negative Refining the about from PCS Excluding performed anticipated. and Harvey, as

X define of track to capacity is production announcement, for XXX,XXX increased on in annual request capital Looking lithium exploration that our beyond as new efforts from metric the metric and provide on growth a announced this XX,XXX technology we requested to increase In our could with brine increase the projects improvement Lithium tons yield need LCE an quota, pending. the tons allow our development targeted future, us about the Lithium any from that to projects In Wave to Chile remained XXXX. our still quarter, CORFO connection do to the basis Salar. Wave third that we X extraction resource without

build hydroxide. Western Permit we lithium development to plant for a in a spodumene Just a Talison Australia site Greenfield this convert filed week, of the to to Application world-scale

Antofalla our region spodumene Kings exploration in resource. our Argentina resource Mountain and opportunities, of continue We additional the including

that, accelerate Scott. that over I'll call variety new de-risk remain opportunities growth, addition the we Additionally, focused technology our on to of growth, lithium turn or a those strategy. in very could in in and resources, to us bring M&A are otherwise assessing organic active of With

Scott A. Tozier

Thanks, Luke.

divested XX% compared businesses. we $X.XX, increase per XXXX, excluding an of diluted of share, share third reported about For $X.XX adjusted the per or third quarter quarter, earnings to

the partially per delivered with A $X.XX. the of about $X.XX Solutions effective have impact gains operations most and of coming contributed Houston Harvey businesses that damage from per was were of of growth, negative of that customers in in sites. about about by Our tax which area. was both Refining Those share rate no Harvey Lithium. PCS, $X.XX lower Note offset and suppliers our most and from impact that of at significant There plant share. the Hurricane multiple

outages there XX.X%, that primarily more of reduction effective during tax alternatives. pension, the to Corporate items, down The downtime, and we Jordan have items, in special our equipment been from were tax, sales outlook so to repair, use rate, logistics costs and by operations were caused $XX.X factory third replacement increased bromine outlook. expensive expectations production to With forced reduced on and for full-year far expect costs our fourth based quarter. in excluding XX%. However, respect and country joint and by non-operating is especially and prior Strong OPEB current the XXXX us XXXX now the about our million our supplier be factor quarter. venture at in tax our important mix of an guidance

Given revenue, the our Total the year, second be working XX% was $XXX now updated X% to to view capital $XXX about of costs up operating are likely million. quarter. of XXXX the corporate million rest of from

was about return year. XX% spending the end of of our Capital guidance million. the to September through year-to-date of We revenue $XXX expect to level by

of This of excluding tax-related pension free adding represents cash third capital about Wave XXXX in and million end to Spending was synergy, with subtracting number lithium Our months flow $XXX million. we flow XXXX projects spending Through expect to XXXX. payment and six third X equipment into of continue $XXX fourth the total quarter further acquisition, Based quarter delivery, equal increase quarter, the spending from costs. first million. during of the ramp, our XXXX. and to will and operations, expenditures, cash contributions the terms now one-time almost $XXX the timing to adjusted but and post-retirement be on back

flow adjusted the now and For $XXX free cash $XXX million between million. full year, we of anticipate

be will even on Advanced will ability businesses, Catalyst, Solutions. impact there more markets, on move be PCS Before from adjusted move called in on team report its Bromine customers, new to Lithium and no XXXX, the The a inform Lithium to I GBU leadership enable should from a focused revenue be PCS will and combined GBU. the Catalyst. to and and EBITDA no This our performance. to of change you excellence of straightforward would to change Lithium effective model The your There'll form operations. Specialties be like that, Solutions PCS Refining into our Refining Materials business the will the businesses beginning & of management I

resulting volume adjusted EBITDA were percentage our the Advanced approximately about strong XX%. In $X in were up margin had by the EBITDA Harvey improvement. net of pricing $XXX improved & million impacts Adjusted of the compared with up EBIDA negative a down performed of result third quarter Moving the sales high-single XXXX, Net Lithium, of PCS to from Lithium consecutive pricing XX% on XX%. XXth growth quarter adjusted XX% in compared EBITDA flat of is to expectations, performance, digits the line Year-on-year, and excluding third products EBITDA $XXX of to XX% up adjusted Hurricane XX%. another Battery-grade in margins of net and XX%. all to quarter to was of XXXX. adjusted third and million. the XXXX. on XX% sales business PCS EBITDA adjusted grew of up adjusted EBITDA net and most Mostly very XX%, Harvey, be by Materials now year-on-year. full-year were quarter, quarter and million, EBITDA expected was the sales as third volume Compared with essentially mid basis drove over down XX%, margins quarter quarter with was the a adjusted of to sales versus and XXXX,

Solutions Chinese by of and Refining result with adjusted was Third catalysts, Adjusted million and and down Results by quarter Harvey, bromine mix, of third expected were lower XX% production $XXX XX% polypropylene about Fuels product volume, million, were due million, million up higher down year-on-year. as $XX as compared and the to products. net of sales EBITDA were Hurricane flat X% impacted $XXX respectively, companies. of compared demand quarter product of sales year-on-year, year-on-year continued volumes down HPC mix reported $X of Clean a $XX for retardants Fluid net products XX%, of third and or and America, catalysts, from Bromine quarter costs. product mix Net of third EBITDA solid for max flame sales higher-margin million, Technologies, XXXX or to by approximately driven driven Specialties XXXX. input sales in Net were to to lower volume. strength by by offset Cracking, quarter Catalytic compared partially XXXX FCC North VGO

the back year. I'll our Luke Now to update call of turn to the view

Luke C. Kissam

Thanks, year-over-year growth. to continued of its on our with to quarter Scott. Albemarle deliver commitments another stakeholders

progress addition, capital In significant we our and exploration projects. made on Lithium

EBITDA As in to in with by impacts growth now net quarter $XXX $XXX and million The and increasing billion. and $X of performance share. around Lithium between We EPS forecasting our the for versus XXXX Hurricane performance fourth XXXX EBITDA to per of largely guidance XX% expected quarter, sales negative from increased full-year year-to-date diluted a and at guidance billion driven to adjusted of Solutions. more $X.XX forecasting PCS Lithium range than full-year range result we're expectations our strong versus to expected $X.XX growth Bromine fourth some the estimated despite now EBITDA now adjusted and with Bromine, expect continued from now is Harvey adjusted $X.XX XXXX million, is Refining XXXX. Adjusted XX% in our

fourth risk the XXXX. Solutions slip year Refining HPC orders looks the and there's the for levels while solid, EBITDA always book forecasting into the quarter could a While order highest is that in

have we we another toward we year. believe company XXXX, positioned As the outstanding look for

greater stability strong and by budgeting Early specific it Our too supported very the suggest our for underway, in in is Specialties in indications growth to Bromine early is we're Catalyst. confident Lithium while another guidance, and than well XX% continued Business potential year. process provide

Matthew K. Juneau

do allows. questions But get the in would to one ready questions. feel queue two to remind so Operator, everyone per time time limit to free we so, everyone for back are proceed. person that to open the Then before for if I your a lines ask please Please follow-ups, at chance to Q&A. has you

Operator

of go at Please Arun line This Viswanathan the you. RBC comes ahead. Markets. Capital from Thank

Arun Viswanathan

Thanks. morning. Great. Good

Luke C. Kissam

Hey.

Arun Viswanathan

Just a question QX. on

were potentially you little Is lingering give and the Refining of slightly midpoint that? us size the better PCS that So, just that the in hurricane to impact a does imply it impact. guidance, book? of Solutions the And maybe assume your order in take Lithium. bit can confidence of sequentially of and driving in timing if What's your then I results Thanks.

Luke C. Kissam

being and us jumped You you on able that. out in hear of to

looks like Lithium from that sequentially quarter. it right? everything, I Is think given we're flat you the fourth said that, third to in

Arun Viswanathan

No. third it Actually, you're I like from said quarter to looks quarter. Lithium up in sequentially fourth

Luke C. Kissam

I'm still I hear you. sorry. can't

Arun Viswanathan

I'm from sorry. XQ Are XQ up sequentially Lithium? to in you

Scott A. Tozier

Yeah. This is Scott.

maybe to flat effectively slightly up we're fourth in So, quarter. the

As about as we we resources, we increased will on see performance the that think we bit a better quarter, little spending do bit. revenue have a line, our but in offset sequentially, talked last that

So, I think great we're in shape for another quarter. good

Arun Viswanathan

a follow-up just as then And XXXX. for quick

Maybe You Lithium. bucket price volume. in just noted potential expectations and for your out for Thanks. XX% that into or growth more just

John Mitchell

This hi. is John. Yeah,

So, to minimum from add year. past per perspective, about tons metric as we've the to we a expect in guided volume XX,XXX continue

plan So next year. that's growth within our for

on pricing pricing additional digits XX,XXX So, to tons for incremental a guiding And capacity. from an perspective, metric mid-single of XXXX. we're

Arun Viswanathan

Thanks.

Operator

is question Markets. Thank line at next Please BMO you. the Joel The ahead. Capital go from Jackson of

Joel Jackson

Maybe maybe more give talk at the is innovation you new some to can you be give bit extract it appreciated. can Thanks. pond? a your Anything process lithium your about CapEx Atacama. more in technology investment is, little ability plant, color new Hi. little you Can Salar the from on the Good what de a or morning. will more is

John Mitchell

Hi. is John. This Yeah.

it's off, technology does more important understand any First to this require to that brine. us pump not

to does require that's as Chilean is big a Chilean does perspective, operation a probably more from it's really But talk XXX,XXX in government. us for a we to plus It the require government. much for to natural technology, know government details capital the really exciting And tons. it perspective, the exciting substantially proprietary it's a and us investment. works. about. up to technology. for allows least And Atacama so Chilean we've the going we're willing So, from And resource, which change It be also any grow not metric at very and in I'm it consuming piloted

Luke C. Kissam

And be add, just the to Salar, John, the the focused will not capital in operating in plant.

focused be correct? will the ponds, it So, in

John Mitchell

focused the be It'll operation. Luke. correct, That's mining in

Joel Jackson

on question was pricing. final Thank volume Bromine looks And you. in helpful. That's it It Bromine. like levels a are than better. more

pullback in And we about I the expect restarts in Chinese suggested earnings Bromine. think of stability a Would QX. Bromine in you a bit (XX:XX) talked some You've QX? for

step as to possible it well? is back So

Raphael Crawford

QX Raphael. this This with is at point. is I would expect consistent that relatively QX

trends that for in side the business as demand which the Chinese the think what pricing, we we're shutdowns into the Retardant an expect had I rest favorable some business on seeing usually Bromine QX. weaker well of slightly as is this to the been the both that year, On generally led the support in has to Flame And better QX. annual of in basis, QX than quarter. continue production

we for to I So, timing continue. it would of expect the QX. just that where depends on fall underlying order But trends think

Joel Jackson

Thank you.

Operator

Deutsche at Thank Bank. ahead, you. line next the Go please. Begleiter David question is The from of

David Huang

Begleiter. Can Chinese operating out also, question for discuss of growth we the what first of and QX? what drove assets assume what I for kind This And David guess those two are you the David Hi. in for strong Huang Lithium. volume operating rates Lithium the is assets? on here efficiency should

John Mitchell

is John. This

the performed China XXXX. assets, off, excellent First in they've

almost perform QX look continue said expectations, in maybe for perspective operating to well little extra With regard into They're like from been they've operating right Scott at lot now We to at very volume and to QX. going capacity extremely volume capacities XXXX. EBITDA earlier, expect full a expect them high to of an you bit can QX, a as most XXXX.

David Huang

how besides drove performance down are and hurricane? back in business And you issues year-to-date Thanks. to trajectory? you Do the think Refining the transitory? QX what get in growth do Refining, your this all And

Silvio Ghyoot

is morning. David, good This Silvio.

an for Fluid But is and and good results. business As unforeseen in macro Cracking. you HPC had mentioned, on take effect you're strong I the the picture, shape correct if hurricane that is the both Refining demand

the and were holding a quarter that risk We're to book we that, However, large strong on know lower as before, we be last primarily may by guided there's order expecting a out. the for things followed already for volume then slipping HPC, you but quarter. still

macro a shows lump petrochemicals. and business particular and for this strong a haul the industry for the on extraordinary fuels year we lower is this market quarter remains this quarter comfortable feel into a and I And that our fact bit based Catalyst from So in demands longer that demand show three in big four. refining is strong perspective, and the the that of

David Huang

Okay. you. Thank

Operator

you. the next question from P.J. Citi. ahead, Thank line of The at Go is Juvekar please.

P.J. Juvekar

Yes. Hi. Good morning. Thank you.

on Talison, you explained be what (XX:XX) new know you the as be As CapEx? you the do the would Thank new plant, total what building the And would and you. conversion are terms? the mines

Luke C. Kissam

Talison So, look you joint Talison, a at is if venture.

There be conversion own the the the expansion capital call that fund Talison met will borrowing. own any already spodumene and the of XXXX. So, will venture we of to fund without the where call online we will additional that's tons bringing our expected either and Then, about fund from hydroxide. talked shareholders. it They capital their cash in to concentrate lithium flow capital no by able convert partners. will additional joint to And be XXX,XXX capacity, from the operating that take we

P.J. Juvekar

you you be Thank you. M&A? Chile a would happy stake, you as secondly, then for still And are a or minority production increase Okay. Australia, have And controlling stake? to would you in want your and with looking

Luke C. Kissam

M&A. strategy. believe strategy we necessary accelerate anything We've would flex certainly de-risk a that are got or sheet, as and at balance Yeah, can that we looking we our for great our

of to through. doesn't the of a stake be at the get We come to like, it not got a deal speculation. until until M&A just those invested today return we sense. in that or what a looking the what about have like, also or it that really stake talk (XX:XX) that satisfy and until Whether capital. would strategy, you that financials see And able got look accelerates active see any our is looks criteria, minority criteria and are what you opportunities be we've you see how on very one in They've to majority have or

it a So, talk sense doesn't lot to of it. about make

we those like out and to record sheet right the candidate have So, of and finding a be we the active acquisitions incorporating good feel very are track make that balance there opportunity. the us have

P.J. Juvekar

you. Thank

Operator

from line you. next the is SunTrust. go of question Thank Please The Sheehan Jim at ahead.

James Sheehan

uncertainty that Thank some Solutions. about your curious you. Are running be will this of XXXX. quarter? whether there's as facilities orders Refining say hurricane? little I'm to occur And enough still after now, Do have to on of you Quick slip orders, might all a those your the not just clarification today, of Catalyst visibility up and them able regarding possibly why in into

Luke C. Kissam

Luke. Yeah. this Hey, is

the the then Let me let about one the have plants. Silvio second take one, and I'll

but orders, got at always look orders slip. you the If can the we've orders,

You have opposed December, as want you've January in next issue can slides to have they a – logistics late could you if it or a got can schedule, have the refineries decide a it that you take to to taking in quarter. over it

not (XX:XX) get of the talk Silvio, our operations it's you a if a matter the for about revenue. it's we you matter order, of want a recognize So, second? when to

Silvio Ghyoot

Sure, before, on extremely Thanks. how through Well, are have storm. we as gone the Luke. we satisfied mentioned Luke

deal the Our being bringing the in And hurt. material down extraordinary obviously, out the was of roads started during beginning XX week not done people event. the one plants we We they ports the have after safe and material We at the about we Nobody some the our week. the an end, into the for running. have then, got at our did flooded, plants cetera, at got job because et with plants HPC an cetera. next time, job made FCC And get keep which then, getting et hours, to were the the had aftermath, extraordinary got plants. with to the not on plants on damage at

So, the But in comes the issues customers effect the first a quarter. on financial right operating the impact having from We're from not solved their standstill refineries. being at orders primarily all out time, around not Harvey getting third is and now.

an we quarter, remnants fourth effect As little expecting also quarter are the mentioned, in and still Scott on one. maybe

Luke C. Kissam

But everybody's operational today, Jim.

James Sheehan

royalty filing expect CORFO And the Okay. that rates a as you. filing? royalty CORFO. Do Do change think lithium that for quota regarding you then, your take your to will increase the a Thank they with higher result of lithium? you on

Luke C. Kissam

I'm CORFO with going to Jim, with So, discussions going that's CORFO. not to margin we negotiate going We that forward. our told is regard you having going to any change our expect way. going the profile There's nothing that's over We're to with Application be happen in margin telephone. what to

James Sheehan

Thank you.

Operator

And next you. line ahead, Go Goldman Thank question Koort is the at Robert please. the from of Sachs.

Dylan Campbell

Thanks curious carbonate chemistries, Bob. for question. how like for XXX. on based Campbell on of out that demand are my play taking versus or different Dylan will cathode for what XXX expectations is This hydroxide your Hi. and I'm growth

John Mitchell

is producers than look like are This hydroxide. with battery customers. of different one a carbonate producers and the between investments, others we're on would at Wave battery The where we've they it's our producers X in chemistry different fairly whether And best want that only Right you each and where now, to really on to utilize bit industry, and world. this that when has little take the John. our they producers agreements hydroxide. long-term a is those carbonate balanced cathodes battery selected negotiate and hi. Yeah, cathode Albemarle in and based we customers investing view

be it's we the to they and the carbonate, do increase heavily weighted customers to to the our willing capability If want more to if have hydroxide, However, able long-term to ability resources have hydroxide. agreements are full and that. we sign

sure is right process commitment our really long-term other approach our molecule. have get team and customers So, to to to a a they the the long-term to planning with make market each into and

Dylan Campbell

hydroxide carbonate, your or across your And make it. across is equal base? you money Got mix, fairly it on pricing or contract do more

John Mitchell

we're are each customer you a is define get this on are commodities really different. little into different. is little we the contract individual a what requirements and need customer is not bit what prices since value bit the market, based a Their So adding. and for that And the asking requirements how to

to where not we And there so, more assured where can we're commodities make and rest It's that more understand in that and make market. appropriately. pricing just in we we the And bringing customer certain the are cases cases carbonate. a value hydroxide you other we're

Dylan Campbell

Thank you.

Operator

Nomura Thank you. go next question of Aleksey at from line the ahead. Please The Instinet. Yefremov is

Matthew Skowronski

Aleksey. on Morning. is for Skowronski This Matt

conversion capacity new us this the drove remind Greenfield then will can spodumene of logistics decision? conversion something what site else? it how many using? And Regarding you're lack available cost, currently you how site, converters or Was this And much capacity have?

Luke C. Kissam

John But let I'll details. of part into plan. always Hey. the the was get this Yeah.

back If of we're earlier additional I of spodumene a and you you look easier our we'll year, strategy. XX,XXX so finished going met tons, determined. the have is And around matter Talison but Presentation was it to conversion this with to don't Western Australia bring all said much, as product. to moving move we this standpoint; at be to consistent a be from the trucking is go Day think, Investor that there In

the be do And to to be We also the from we've producer that. us like in feel marketplace. able gives capability need we the it So, some flexibility low-cost engineering to got site with something have over acquisition that capital a and project of to outside the going China there China the well. Australia in on expand as and standpoint else Western have we

spodumene into not for area customers that at in servicing all. ability a of the what It's expanding Investor our totally Presentation. said Day consistent Talison lithium world. change at with continue to Lithium And you'll hydroxide the had to is convert we see this So,

Matthew Skowronski

continue if capture Thank are out then talk Chinese share being producers just any to And with you able pricing the beyond you to you. maybe expect market Thank can and you. if on about XXXX? Bromine, you

Raphael Crawford

This is Raphael.

other major I have said, suppliers. to market. we to business been has the the is global Chinese share So, think That relatively the small captured relative compared that being our

production Chinese contributes down, the forward. more as So into of higher we're about which Chinese to Chinese being That sell were at going our opportunity, that said, take we cautiously able was optimistic favorably prices, to prices advantage results. market

looks look for higher we'll continue prices. or true, it opportunity far, to as a positive for like And So price as holds of volume. trend long that

fundamental strategy term flow maintain the the Our long is cycles. to this of cash business throughout for

So, while on our cash we're plants. advantage of a related taking efficiency flow. long-term on opportunities at China, to volume impact we and work projects and meaningful our price productivity continue to And that should have on

Matthew Skowronski

you. Thank

Operator

Thank is Vincent next the go line at Stanley. Andrews question Please you. The ahead. Morgan from of

Neel Kumar

Good Hi. you Kumar what costs Neel exploration discuss XQ levels? morning. impact increased in the type This is calling Lithium, on have of On Vincent. margin for had can

Scott A. Tozier

Yeah. Scott. This is

Chile. XXX points points So, impact costs in due and paid resource basis costs to to a we as about of points – combination down community basis we had couple as of the basis that the XXX of well royalties

Neel Kumar

next new you do in this Would the the kind the continue level, several expect to quarters? that margin over And XX%s? of be low

Scott A. Tozier

Yeah, explorations. the going our delivers that that depending is amount terms business on vary mix spending both of and margins are in of north Lithium we're It's doing to XX%. of that expectation the product

time. the that develops the of second is see is over And of this normal. expectation that Our we'll kind year how half

Neel Kumar

Great. Thanks.

Operator

from go is ahead. question Oppenheimer. line The Thank Please at you. next of Rusch Colin the

Colin Rusch

production you any in brine new Can seeing changes downstream technology the Thanks the on processing guys much. might be carbonate for configuration processing insight efficiencies a that so bit and facility? you and us the give of

John Mitchell

John. exactly change is I of to that technology investment in Atacama, mine Yeah. just because be Chile disclose answered but gives as couple more utilizing good proprietary same efficiencies is certainly pumping the of does it Hi. technology them going terms advantage, the of in it sustainable really the the world-class today. value mine. the that people what it's north ago to require is also the XX%. create to the us moments question and in it of capital This great doing a not we it and nature push And a Because It going the more it the fact in in we're a brine and is Atacama. of for publicly process regarding by we're the we're allows a

we're value great adds refineries, good the customers. amount good more for country. there as at a regard and and refineries us getting processing it's it's to the efficient It always of the for improving our to With and So, tremendous the it's region well. for the

Luke as mentioned, lowest-cost that As care we're the with as part And are laser-focused is way we molecule position taking that the that on of of sure a in are maintaining make the industry. to efficient we it in possible. being

operation so, gone going technology La is well. refinery in improvements And and efficiencies Negra as for part us of improve on And what the on has allow in to well to that's extremely us.

Luke C. Kissam

similar resource. way to Yeah, if I is new a bringing this is very is on I at this the add, this could look

over cost talking somewhere bring it that and we bringing with resource this Brownfield resource metric enhancement could this better were the cost Suffice be XX,XXX new bring metric you're that that world when what you understand and are if what announcements about the XX,XXX technology So, coming look of a there, entrants, would we online about get a another yield around the on on in a potential on enhancement. tons brand-new bringing it another to returns it less the to on resource. yield we with world. Brownfield is on it understand the Salar tons, we much bring if would new invested be say if in this will And than the to else is than capital-intensive the capital much to

Colin Rusch

specs and how of you around Can we're point? the of cathode little of of Thanks, around with in customers and activity lot at rate a they're then perspective. what that guys. from a Okay. customers you're seeing change the getting seeing changing about And activity from adjustments. amount your those cathode this a talk just the a looking dynamics working bit fair that's terms diverse And material at

John Mitchell

John. is This

right? And cars, years battery around significant. so, XX batteries off, more need XX of is that to First electric this are the or years than into most warranty issues material last going

so, management quality And and but really just not whole to the standards the system and increase the quality the quality product. produce the of continue the actually each to we have material, year, way

area. that's So one big

that molecule have partner it understand evolve. We – could have characteristics. physical is customers can a how that modification. chemical a to with It could property be continue could long-term molecule physical characteristics. molecule to And sign It be agreements to going It change. our

leaders market molecule individual we with tailor And in so performance the have battery others on. can and focused we're our sure working what that we're again, So, a that cathode can in market. make better their that's to than batteries

Colin Rusch

All take it offline. right. the rest Great. I'll Thanks. of

Operator

you. Research. of Dmitry Longbow go is next from at line question ahead. Thank Please The Silversteyn the

Dmitry Silversteyn

Good you poke of I the taking to little around catalyst refining question. business. morning. bit a wanted around for the Thank my part

or First they're pretty then, more these typical should to will dealing of and words, looks and with going something like your in the quarters are in an a here? other quarter all, significant shipments quarter. of impact on the HPC expected timing how downdraft the first quarter the shipments either and this fourth XXXX? this for for think How about XXXX? in cycle Or business in change-outs growth back of else terms get was In low to HPC you abnormally your we we

Luke C. Kissam

Silvio?

Silvio Ghyoot

Silvio. Hi. is This Good morning.

XXXX XXXX I expectations demand. our As the I go not to market, to the fundamentals of are strong tried and a tried explain for any to shows different. And back earlier,

sitting the coincidentally, our with And end to that the deals risk lower. those more and up or somewhat do in I there change-outs was Luke you middle be get the are to do not. the much orders, I deliveries changes secured some was hiccups order occurring with, saying, not of are trials orders were so picking picture or do and for lines expected Albemarle's which last-minute as It's and are at year's look the shipping year, we the up of larger explained having is with lumping customer. with year. were we at not has industrial of The in before, – which refiners, which that this certain already as of some in the change-out that, causing demand some extraordinary something If business to

is orders out when I'm pattern forward this a change-outs, will But will discretion it figure this There said, make expecting to and when they regular accept and they a all refiners show being it's on when why the year. XXXX, extraordinary more of deliveries. similar indication would they the pattern. Going no for as need

skewed it And do not delivery So, not any market cause order change, to patterns. do both wrap next FCC up HPC for fundamentals the would to of answer ongoing question, and demand for foresee for a the solid I year. expect and that event and also your

Dmitry Silversteyn

and question, is Okay. then so (XX:XX) molly so as at follow-up up just but Silvio, And cobalt going price pretty nickel my that's in my is so as looking helpful. material and and Lithium earths. question, rare so second significantly, just are is costs. obviously is raw

surcharges? So, starting So to put how your side, is FCC your the response escalating business, Refining pressures? material in going with both raw getting time? to Catalyst dealing costs? input in on Are in what's pricing and you these side HPC Are pass-throughs on the you the

Silvio Ghyoot

Thanks. Okay.

up. efforts All nothing materials Metals up. that at reinforces continuing Going the And looking or becoming Let raw me in forward, we than in that of already our back were increase today, with that, other take in are going And the price I all (XX:XX) have going metals XXXX, were recall up at all an price that step and the in we materials of has seeing changed, fact for basis time, said. situation the raw the of other it's middle prices. and a adjusting increases. bit started we are uptick somewhere that at those general, are or a the ramping most that the increases worse. also

we with to we prices have also basis and passing pass of the typically, with cost overall, up, the is corrections each individual of on, customer. the inflationary metal prices are passing we to that the part terms on customers. price because same are those I'm cases the typically, the escalated deals, most In Which going gradually our The pressure HPC formula at have make the which means basis beyond an customer. the trying to you're on see delay, on the of you that, prices. is to pricing with in some FCC, the earth pricing, of some metal some saying this rare in pricing. the But fixed

Dmitry Silversteyn

you very Thank much. Okay.

Operator

line question from the ahead. is Thank at go The Please next of Roberts John UBS. you.

John Roberts

about Hi for bit little there. Are markets of And those getting Lithium? how a customers talk Could products? you want? some in the non-battery volume they all the price is those trending

John Mitchell

and largest guess make lithium going Certainly, is comments, any need to space. the customers pricing that's for Hi. as I the long-term customer, that where overall it. battery in sure battery we're in in seeing in John. get Yes, we're whatever appreciation, space, supplies form our Scott contracted materials, This mentioned they pricing the customer,

as types the discussed synthesis, where ag we they're priced different chem, areas other molecules, already in in we've So, of value. to the before, have

in substitution seeing you So, molecules, risk, could you're some cetera. of because appreciation much in against, not other et run up terms price in cases, types of

lot we GDP creating. of product. on But is have sure we're based going that they're like those In to GDP-plus contract, cases, value make molecules long-term and not to segments, to growth willing markets, of a they or exciting the storage. energy sign kind that right customer any the So, are price a the but for high-growth up that those

John Roberts

Thank you.

Operator

Capital. the go next Thanks. The Kapsch is Please Loop question line ahead. of from Chris at

Chris Kapsch

follow-up Yeah. Catalyst margins. a Good discussion this I had around and morning. on

based for there's timing quarters understand margin If and first But, XXXX. you and been you the about of wondering each deliver. value increasing some the least three your look, pricing. to of could progressively materials. mix it's it comment like I And raw more if the looks entitlement gotten competitors and FCC, issues performance there's the comparisons talked talking just in like actual for looks than pricing understand And get have negative pricing more I year-over-year at of that about on But you your I'm more products have it that. some on

very can have to the handicap follow key industry's on in you your traction increase. And price Thanks. the at narrative a of pricing, intentions Do some getting of FCCs? of just competitors just explicit prospects you One positive additional that? announced least actually getting more some

Luke C. Kissam

Yeah.

and our we're rates at time So, are some the you running talking facing utilization pressure. plants same I assume high about at inflationary FCC

continue in is extract deliver we communicated for push we for And prices going on we're value a past, value effort. This unit-by-unit higher to the that to the customer. we've added the to customer-by-customer always As the we can.

we So, we're value that going look anywhere certainly to can. extract

I of at compared FCC the max XXXX. look sales be the from have more market. an Because octane in we market, propylene some think to into seeing trials of got careful as we're at our standpoint, on you've going on our XXXX business what's in some standards, to and to be VGO will which overall going down,

highest margin the because Our to in max that propylene, highest refineries. value brings the products

decline be So, of it's for bit little lower-margin replace with you see us lower-margin when you because but volume give us. it tests, us to VGO, going that excellent see a margins, product going Still these product. that's to

strongest is on If distillates we you product the experience we HPC product our held highest-margin offering. is look the the the and most have side, where because that have cut traditionally

had and resid that resid of some market markets this been you're more online. more year, seeing in coming that If you've we've the seen builds they've because

that that combination mix for price. you're comparison than losing on more a So, overall seeing is of anything anybody so think what I

Chris Kapsch

comments. apples-to-apples Okay. your just Thank on for follow-up, just as basis in to you. more handicap, the That's the an sales? about Appreciate But mix ability, and base get on the a industry you maybe customer pricing FCCs the FCC fair. you could talk affirmative

Luke C. Kissam

Yeah.

said. think this increased consistent what I to can is value. get provide value always the Where we refinery, we with we've So,

is a value proposition. it So,

don't show to a increase our for we're yields, So, In expensive areas the in customer. get that need areas of get it's we're win-win It's catalysts where that catalyst because so them they customer able they to can that the areas both can't enhancement a don't provide able that about price that get contributing to yield, price by by use the bringing and increased or value all of need yield us. we're through. they a to using they we're value the because that can their where to more value less where you the then passed

Operator

Please next is question Thank of the at go ahead. you. JPMorgan. line The Jeff from Zekauskas

Jeffrey J. Zekauskas

very much. Thanks

million. income equity your months, nine the know, don't for was $XX Is, about think of I that I Talison? XX%

Scott A. Tozier

right. about That's Jeff. Yeah,

Jeffrey J. Zekauskas

your the was maybe Okay. there's for because a million million. months cash $XX tax And flow of I And $XXX drawdown payments. nine guess

Scott A. Tozier

correct. That's

Jeffrey J. Zekauskas

working capital $XXX million. overall Your negative was

really talk a cash working drain unusual cash normally over expansionary operating throw off, there's expect don't like I per in Albemarle the level? is capital year? your a on because $XXX you million, to Or normal year. multi-year know, I of a And would So, Can flow? period? What's $XXX about plans, million, this

Scott A. Tozier

two and this on The to as – of $XXX both Chemetall flow trends. at we the there's components them. you tax was first half at you million. think look hit in sale One cash I that Yeah, of look of made on touched That operating year. payment the our

that's flow. So operating a drag cash on our

an Lithium, particularly in working the second quarter. with in growth capital increase revenue, The one third in our is, we're with the seeing

ready getting Specifically, as talked also for Refining increase capital big that they're about. in in Solutions we working we've an saw this quarter fourth

see efforts we'll cash But, on in drag and out. grow range, working to expecting range that in to that several think capital slow that rate. a we're we're shipments quarter to start in be the next place until continue as offset see to as ever to growth in to work going seeing is capital. down. that to to continued drag come do able I starts reducing We the the do working from those have coming capital go a not working But see certainly, years we're our going down to We are capital. fourth working we XX% from going

Jeffrey J. Zekauskas

are that million dividends for come in investments were reflective And increased of the versus dividends you? million there the $XX $XX unconsolidated investment the that the joint period within so received Is to and nine fewer months. year-ago from venture back the Talison

Scott A. Tozier

right. exactly That's it. got You

in going that you're investing with their up proportionately not income. to their they're as go the see expansions, So, will equity dividend

Jeffrey J. Zekauskas

much. you Great. Okay. so Thank

Operator

concludes Thank your you, in so the today's very for a may conference. and good Have ladies questions disconnect. participation for now This presentation, and joining. day. Thanks gentlemen, you

Albemarle (ALB) 9 Nov 172017 Q3 Earnings call transcript