ALB - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Albemarle Corporation Earnings Conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Officer. Strategy Chief Norris, Eric Please proceed.

Eric W. Norris

you, welcome quarter to first and earnings Thank conference everyone XXXX call. Albemarle's Jasmine,

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

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

the note of the of some and forward-looking both results same that financial As in made items. this be and are of press performance during release our the the about call. presentation, exclude GAAP our reminder, from to a the applies the other numbers well posted appendix federal in which Please language constitute our today reconciliation call conference statements Please contained note, financial adjusted those our and demand website. cautionary non-operating, also future regarding of press meaning comments the our discussed this laws. statements within may unusual earnings or language today release, actions our on security statements of as about measures found that company as non-recurring lithium forward-looking may to

segmentation earnings with refer yet that and restatement Refining most consolidated as in Catalysts. Also the Finally, revenues provide XXXX been titled new a note in databases new earnings Catalyst, Solutions earnings and not third are that XXXX format. for updated filing prior quarter previously revenue estimates consensus reporting our in of during format. had this now X-K estimates as this new now the segment announced reporting to XX, segment is format. for their earnings March conference periods external segment have Please under consolidated of a which we Performance Lithium, call, with

over to Luke. turn the Now call I'll

Luke C. Kissam

generation pleased very execute of XXXX, balance expansions morning, growth in the capital Eric, Lithium highlights everyone. the our Thanks, with our successfully I'm of sheet ability which cash to strength our good to our and of strong portfolio, start our the and Lithium. our business,

net quarter growth by over EBITDA Bromine XX%, year. and and Lithium XX% adjusted prior the and XX% double-digit grew grew adjusted delivered First cash of results strong solid Catalysts by flow. sales EBITDA both with delivered

and per grew the to XX% closed sheet, Our efforts prior sum share strong we balance X. and catalysts of our earnings million business polyolefin the with Grace adjusted on April portfolio to compared $XXX for W.R. year. our maintain diluted by to components manage the a Consistent a the sale on of

of Our timing at Page lithium XXXX. spending and remain million deck X and of outlines for expansion capacity. million carbonate and presentation the projects plans planned track hydroxide conversion progression $XXX of on for earnings $XXX the between capital

early Let plan me lithium construction in plan the the phase We in for commission and provide China to II brief a update Xinyu expansion were in on hydroxide XXXX. project. the that

the expectations hydroxide capacity the metric we pumping reach new plant, which needed full first activities XXXX. for is by fourth commission to the quarter expansion. XXXX, La the rates expansion. the rate During XX,XXX Atacama, per Engineering to construction III nameplate La La to we on Negra still And XXXX. II relating to in reach in the to supply we from Negra of XXXX. end tons moved additional expect of to have a the Australia tie-ins Negra expect the for electrical second Negra run second, La IV XXX in XXXX, liters de commission to commenced expect in in is XXXX. Salar lithium half have rate to the the track carbonate lithium III, engineering make with of in Kemerton, We In

lithium During received In as XXX,XXX in Chile work lithium tons from capacity the increase to lithium the began in parallel, of quota to CORFO we enhancement yield project additional and our production metric as much past equivalent. quarter, the for feasibility Atacama in carbonate engineering carbonate for prime we approval conversion our progressed Chile.

at Now let's look lithium demand.

of electric past quarter, of tons global the behind result our view presentation we are Those by the assumptions on During our outlined assumptions XXX,XXX that XXXX. to in basis and deck. a page metric LCE we lithium growth on an of market vehicle expect X earnings over

to of see demand these validation continue assumptions. We

assumptions will past good These electric expect both investments for now being of they that billion. what's XXXX, their XXXX. their and to about convert XXX vehicle vehicles example, of of of months, vehicle the XXXX happening announcements million contract award electric XX is in significant market hours sales of share an auto to at the full billion lines. as illustration a production $X for billion announced lithium metric are Nevada XXX,XXX to the To between intensity to contracts global XXX-gigawatt-per-year gigawatt targeted to supply showed only soon. During by put producers meet electrical earnings of size X of commitment To to to for invest use year about in perspective, And Tesla's chain, on fleet tons. and billion have capacity OEM X capacity. million presentation the hours cell not contracts vehicles XXX Volkswagen new equates to XX in of another X few of of expected XXXX, XXX,XXX I'd Volkswagen lines which are equivalent lines. indicators recent are supply. our of also X chain. lithium is the Volkswagen. chain lines of for commitments to global supply deck, for expect total this gigawatt XXXX targeted demand of $XX approximately by about XX% Volkswagen's about Volkswagen $XX XXXX. Battery production by the to X for reach battery value and by That's gigawatts the throughout metric Using supply page invest two-thirds the factory plans made those but in rates. electrification of They Volkswagen announcement supply already Volvo this awarded an additional the had the capacity roughly per to about for Commitments supply along XXXX tons made like for and $XX timing. battery to this

the supply the supply their to has supply a demonstrated volume an this chain electric by supply products. ability growth, the electric lock the derivative quality or able for Volkswagen ideal material fund partner of record, of the is up type track Others the raw global build makes of target, majors to Albemarle may but should point to to commitments supply Now, a supply of dynamic That facilities targeted benefit of for and have the hit consistently need have being provide this combined past. chain OEM record track may with high-purity ability This tried and enter in growth. us technical to chain. XXXX meet each companies illustration years that large-scale only our in vehicle-grade to reliable our critical and production OEM expertise chain. an for not this lithium To-date, operate lithium vehicle producers required come. to that

market our expansion lithium to gain. to emphasize call plans the about turn that I'd I like Scott, share not over are Before

we expansions implementation in market expect maintaining In result will of Albemarle fact, full its this our share. only capacity

our to to floor that price With shareholders. is provide return turn call to strategy to I'll economics Our our build up a long-term over the strong Scott. meet commitments capacity customers to with that,

Scott A. Tozier

corporate the everyone. driven share contributed compared by increase we million about adjusted XX% Lithium $XX of about of an morning, of and costs an favorable business. Thanks, $X.XX earnings exchange diluted In XXXX. Luke, per to reported first adjusted increase EBITDA was good our per from $X.XX foreign or and quarter quarter, share share. first $X.XX, of The the increase per Lower

increase continue during of business. reflecting ended capital XXXX. expenditures and to deployment expect lower fourth the sales, previously million items, trend Lithium quarter items, special tax of quarter toward our XX% in the XXXX at to the range during from excluding We were end pension, XXXX, of our XX.X% XX%. the $XXX OPEB Operating to will growth provided effective an ramp to the first quarter working capital Capital and non-operating of rate, continue

and finally, We expect first of than continue our to adjusted double million. and Net between range And million, million from expect XXXX cash results. ahead to exchange about $XXX XXXX tailwind still which operations full-year $XXX was $XXX and the $XXX between first to were XXXX CapEx we quarter. to rates end XX% to about in quarter currency $X million was a XXXX, EBITDA compared million, of $XXX more million

per $X.XX QX over about average Our averaged was just XXXX rate and XXXX euro $X.XX.

compared XX%, with sales XXXX pricing on contracted performance. increasing EBITDA by our XX% to demand business our quarter the and with improving was of moving to quarter from the by Lithium Now, first by XX%, Volume increased adjusted by first XX%. XX%, the EBITDA increased driven growth of for margins adjusted customers.

as quarter at of constraints of in to price and volumes decline conversion adjusted that respectively which million, we in in first million compared as both and quarter and of increases, cracking, and and by catalysts, was capacity X%. about EBITDA bring a hydroprocessing impacted costs to rates, partially and lower strong growth of to or freight up $XXX FCC of won't EBITDA at adjusted of quarter $XX were caused Catalysts million our catalytic $XX in materials continue electronics, moderate Sales XXXX. flame partially used first XX%. were the shortage negatively of $XX raw business All catalysts margins operating the which margins EBITDA gains of or offset in facilities and by around primarily The due were through maximum material just Adjusted by by for additional for HPC solid. elemental to QX and in market retardants, was The reported catalysts. online. adjusted million catalysts, are X%, Bromine, work construction, curatives remained lower volume sales net In bromine, Year-on-year XX%. the X% from million first EBITDA QX. price in components up volumes And included fluid expect was we adjusted a continue resulting EBITDA $XXX quarters. polyolefin reminder, driven future offset raw by sales automotive and

call over turn Now, I'll to Luke. the back

Luke C. Kissam

Scott. Thanks, Hey.

EBITDA remains an aggressive As to at XXXX, to the we of look adjusted on deliver least rest Lithium XX% growth XXXX. during path

good expect anticipate Lithium than We is due tie-ins. half with to we to our continue be quarter stronger than QX expect Negra QX QX. growth of Further, second half downtime the of equal In second needed second sequentially to Solutions La weaker business. we for Lithium, to in EBITDA the first Catalysts, Refining XXXX fairly quarter that EBITDA possibly the

to the $XX raw However, year. result pressure curatives which impact EBITDA a is million face could much full expected by for as unfavorably of material as as challenges,

well. our to basis. expected very EBITDA As to of we are for the of continue run a million remain a offset Hence, of the perspective, are capacity million mid-single undervalued. buy approved currently that completion a stock that to that long-term businesses, sheet, ample authorization, accelerated under current was Catalysts cost Bromine growth the expected in expect the recently board. raw our moderate action, we After our Albemarle anticipated expect Specialties our adjusted The take of Bromine percentage capital and plenty us the headroom to full-year additional we favorable flame leftover. low- action From elemental program operational result, ratios, We our of would And confidence combined this The higher currently the portion back first for to flow to and stock Pricing warranted. have growth approximately headwinds subject and from constraints conditions, some is the XX in program, distribution. curative upside share segment of deem still and on market Specialties. adjusted to firepower debt-to-EBITDA trends longer-term Catalysts. full-year in digits. we derivatives, the strength intend materials, is bromine to projects, efficiencies give half repurchase EBITDA now cash our our can that $XXX in mid-single execute we retardants continue via with to should the exception digits be maintain by for leaving to market freight balance with an The believe shares offset in operating plants

In such to additional corporate fact, around M&A or at as absent net would debt-to-EBITDA times. actions any buybacks, end stock X further expect ratio XXXX of a we

medium-, be to the Albemarle short-, in shareholder $X.XX value am between XXXX, long-term. for adjusted confident expect is this, now to Given of the all we full-year and EPS well-positioned and $X.XX. that maximize I

franchise, strong on margins execution on strategy, we cash sheet and and our have and the Bromine growth focus balance foreseeable flow leverage over Lithium We profitable clear from and We strong and believe grow straightforward people, capital returns to the a investments. flexibility, strong the drive the deliver have growth future. Catalysts, our and our

Eric W. Norris

concludes Q&A. that ready for prepared We're now Jasmine, our remarks.

Operator

And you. from the question line Bob with Thank Sachs. Koort our of first proceed. comes Please Goldman

Dylan Campbell

in I to morning. Good Dylan second EBITDA for Hi. presume what help And higher year? to you what guess, account This taking would the volumes on I the offset bridge volume XXXX, half flat is levels us guess, those be would especially first-half Could Lithium this relative two-half Campbell to Bob. of higher XXXX? XXXX is into in I

John Mitchell

This Dylan. is Yes. John Mitchell. Hi, Yeah.

year, of we terms our we have we also, of have I So, to for pricing second And the regard half the think of mean, with changed in on side, full-year high-single-digit pricing. baked guidance half into hasn't what effect the the price the production. second

see online, forward. adjust we we coming guidance capacity going As our and expectations more can

Dylan Campbell

your I plans in businesses, the April, into you. Catalysts PCS for of of guess, guess, how can you update strategic the strategic long-term plans Thank the then, And on, sale it. completing part Got and fit business? us strategic your Bromine and business or they consolidated your long-term after the I

Luke C. Kissam

is This Luke. Sure.

to of cash free be we piece the and find free As cash today puzzle see the growth we've itself the we business and we Lithium have. each in that doesn't need this in to Bromine talked Catalysts Lithium. how that the fits about able from investments flows of the capital of together, flow with

and it at look those pieces we fit So all together.

that a ongoing not we'll make there'll assessment could determine we basis. to We've future the we by an portfolio Now, path best drive drive be when shareholder higher value. is continually in hesitated and that assess if doing so, the point time that thought portfolio where adjustments continue shareholder to value we to would on in

Dylan Campbell

you. Got it. Thank

Operator

And our line with proceed. next P.J. question of from Citi. Juvekar comes the Please

Scott Goldstein

was just in than looking for P.J. to Goldstein you is pricing. how break competitors of Hi. XXXX for out a much This the morning. Good on XXXX? It seemed more you within expect realized. modest the Scott from and your little maybe for how color on what Can a change change and mix perhaps remainder I'm mix more growth of do that

John Mitchell

This is Hi. John.

think So, are are and the is on product in that fixated we our terms we of investments. on we're most an contracts, want that we're of on clear carbonate the the the of is We customers, value mix, have we But in our pricing on different to cathode in products customers. terms our volume with sure I differences return incremental what's guidance. visibility long-term risk-adjusted driving of sure And the the focus producers philosophy our who a pricing side. in really to taking fair selling certainly make companies Again, of difference the between battery have excellent additional world. the approach balanced and leading lithium making

And so guidance long-term baked what's our essentially into agreement. is pricing our

we So good pricing. terms our visibility in approach of have to

approach of The other of see down. risk our is going benefit terms terms don't pricing that in in we

trying And the pricing. expect of we the terms prices maybe spot in pricing at pricing visibility versus other a good terms approach market. of be down market have our to play volatile to in lithium in in and do have in terms stability to space different the we look others of So not ways of going

Scott Goldstein

you. And maybe Okay. follow-up. a just Thank

of volumes us just XX% contracts. you think lithium longer-term your for long-term your remind that I over more committed through more Can a are you changed maybe So contracts seeing currently? are negotiations has And how trend in the year? little demand than past

John Mitchell

really base long moved batteries to In from actually our volume strong of Yeah. we to XXX% leading We a is had pull of go the and grade customer but on. a agreements. providers an supply that make long-term their five-year cathodes meets say that see a rationale as of not that any just for of security of I'd the they as And battery XX-year Great for EV type specification question. supply. of XX-year of molecule, security agreements to is supply XXXX, and almost around And to contract. our three- can now warranty under security

together So they're cathode and I to in think working to the space, we great really have investments for and selected produce OEMs. EV-grade the batteries the plan and basket more lithium we're leading providers of planning cells capacity in for a battery

longer getting So we our long-term agreements XX toward see years.

Scott Goldstein

you. That's helpful. Thank

Operator

next question Deutsche with Begleiter And our Please the proceed. of David Bank. line from comes

David Huang

wanted David you hydroxide views versus this carbonate? on for to one here an the further with be Huang talk on other. guess, And Can you guess, if you integration you about the increasing and in in Hey, I there previously consolidation sector? first on views is also, updated both, Lithium. David. said your lithium vertical maybe any I but have is preference for

Luke C. Kissam

I the about talk I'll Okay. take let first John then and will consolidation.

John Mitchell

Luke. Thanks,

of regard producing both hydroxide, So, type to carbonate depending application, the for battery preference carbonate molecules. the demand and they for have they're cathode able and and specific to producers, a on the battery on hydroxide, forecast with they're again, and for of that both largest types

or Of terms hydroxide that producers the nickel-based high are to cathode energy metal-based to course, going in increasing density, of are order go to in materials. battery there many high

of acceleration hydroxide. and a have see hydroxide demand on and see basis, for in them, carbonate see, growth just for carbonate. agreements hydroxide. percentage higher a we demand We in an we decrease don't But So in both do our long-term

Luke C. Kissam

down look that think just out supply there the it in I gives that value people chain. a to lot about And scrambling and noise signal you they there's in order consolidation, tight need and And think I throughout a commitments to the the consolidations chain. marketplace to how that up of the Yeah. their are is get how if at make

So and in in our sit best world we're consistently the site Western we believe resources looking on Australia. the Atacama in and Salar de in we

We have dictates. we about hydroxide the feel the as for where balance, market well diversity the option resources where well Carolina brine as We untapped are we as in as great resources geographic or in carbonate Kings rock from go North Mountain, and can Argentina. as an

continual with and So I see suppliers. with resources raw we customers we're lining discussion contacts. about customer our there in up the their our material the going But suppliers to marketplace think you're in our out and love with spot

So an we to be our should like balance firepower in we're sheet before, could and that And strengthen partnered business. right take decisions opportunity, if said even further Lithium in portfolio change us feel the area. plenty I've as actions would of there those our gives

David Huang

curative Thank you. price incrementally increases? I is And are on impact, on Refining, traction FCC And you on also, the it? how ex mean more positive the

Luke C. Kissam

Silvio?

Silvio Ghyoot

Silvio. This question. Okay. Good the morning. for is Thanks

FCC As on trying you traction. still But holding. pressure the right we know, the to the are hand, can get the exercise. I value we now and finishing. it's the the It's hand, based facing. the that But right that One price prices the inflationary increase to that are confirm philosophy price are we're an getting offset for to is other ongoing providing are never on we the for refiner; efforts

Luke C. Kissam

Okay.

Operator

line proceed. Stanley. question Vincent Please our Morgan with of comes from the And Andrews next

Vincent Stephen Andrews

everyone. and you morning, Thank good

costs. don't this versus up margins ask question because you expect size all. came full it quarter's. if I be clarifying I but is to those maybe last Lithium just a us La I assume do XQ year out for know at answer yes, it relates slide can the for the of XX%? quarter's Just Negra still And you and the to

Luke C. Kissam

some that XX% Lithium a year at in we going above not we're come that margin what From third margin quarter, from that a but are opportunity an do believe point and still to we'll Yeah. full site standpoint. in overall We've to need costs make that have to in out we tie-ins laid time. standpoint, for be the

have full makes in to prepared in ahead now, and that so sense brine. able tie-in remarks, at it the for that fourth us pump We rates go up, full later those to XXXX to we're have the whenever won't when quarter. at during pumping get As this think do to make it filled we I start full said or brine XXXX we'll my be we rates, ponds going

quarter that. to quarters. movement weaker believe between just going fourth any the impact the but year we to do It's It's way, prudent could it So it's in third a quarter. than not make

we know brought you and Vincent. that's guys up So, about why it let it,

Vincent Stephen Andrews

tenure different sensitive, Very that anything follow-up different know now you have, about versus helpful. about but on just a is All the And longer or and terms guess, price contracts is take-or-pay I And I contracts? any longer the you contracts anything there right. this like adjust there different share? anything ability that to about existing is to of or the in your that particular, can anything sort component these –

Luke C. Kissam

Yeah. lot Philosophically, is, we've whole kept that a on we the contracts, it's same difference bigger the more have approach volume.

Vincent Stephen Andrews

you Thank Okay. much. very

Operator

Jefferies. Please question our And Alexander of comes line from with next Laurence proceed. the

Daniel Rizzo

Hi, you? for Dan How guys. Rizzo This are Laurence. is on

Luke C. Kissam

Well.

Daniel Rizzo

So, in impact business? refinery wondering how will much the to have I due refinery standards on was of fuel change the the catalysts of marine the – activity in terms

Luke C. Kissam

Silvio.

Silvio Ghyoot

the Are referring to you Okay. standards? gasoline

Daniel Rizzo

marine... The Correct. Yes.

Silvio Ghyoot

Okay.

Daniel Rizzo

Marine.

Silvio Ghyoot

one. standards is used the oil which to coming of in this. that fuel There XXXX anymore I'll try Oh, address on large are stay when brief boats install fuel. scrubbers to that amount overnight. a those different cannot and you could have you in that not tracks on the be be are marine there Well, could One

of fuel, of of hydrotreated get there blended amount the marine the a to on That's requirement of fuel, the sailing the ways pool years there. or to dilute to being So of pure heavy one not necessarily on specs this to but next mid-distillates be added is have couple boat and that diesel firm so will diesel be, for fuels. sudden an maybe amount clean address tell it the period a required but infrastructure to in be that around there the be additional is said, us I to future Like the and specification. will XXXX-XXXX can which big fuels that change boat. year thereafter of on other ultimately The an will will one we the direction additional the

Luke C. Kissam

the you high diesel the the Silvio So, standpoint, regulation tightens that from level, our business. time part answer. there's specifications of At any detailed it gave a benefits a up a hydrotreating

So fuels. and we our business clean HPC for news would expect positive be to that

Daniel Rizzo

Thank And you would be lot of is CapEx for on you're spending that you're you those well? two mentioned of Catalysts clarification. it Lithium That businesses, just business Bromine going just that for maintenance. spend you how there, to grow or to really of then, kind wondering yearly Okay. before the And I to what part to generate to suggest doing guess spending not cash I really and maintain growth. much you're as was if have more a

Luke C. Kissam

Yeah.

if been those of those able as you a at between we've business, CapEx. X% businesses, and run both X% look that of historically, revenue to businesses So,

some them in new to wells those to necessary. or de-bottlenecks online that There'll our customers. capacity allow continue that Sometimes to There'll need projects be get us pops be improvement certainly serve or it allow and pops that yield, (XX:XX) have that pay able up may always below, really extra do cost down little projects that to will invest to we'll de-bottleneck back. to that. continuing something will edge. to to are a sometimes we it competitive And be drilled businesses There'll we're small maintain bring additional We our FCC be to are their And necessary. de-bottlenecks below.

organic because great continue in to blessed to and capital businesses Lithium. with our they strong businesses good but we're margins, that So we're put of able and we're EBITDA they're the keep it harvest that those in requirements, to do growth low cash going fact that high margins, have to

Daniel Rizzo

much. very you Thank

Operator

John question next our And Please of proceed. UBS. Roberts with line the from comes

John Roberts

Thank you. me? you Can hear

Eric W. Norris

Yeah.

Luke C. Kissam

can We you now, John. here Yeah.

John Roberts

Yeah.

maybe average I chart. Sorry, electrics, a on slide because jumped But little correlation in Or correlation driving penetration there. comment is the Lithium, with bit in that that there's also Is obviously that can on size HEV penetration? battery no of assumptions or in but full late. different on different more for it obviously, the what's there's you variation, EV assumptions no

Eric W. Norris

John, electric slide this content, also the comes dispersion analyst The question, believe amount estimates it differences comes penetration those the that models. mean, battery it depending between comes Eric I or full speaking. lithium as providing yes, some cases, electric, right? and unfortunately, hybrid and to at from shown the answer from the versus your looked is The in we've on on is of not. plug-in that, from firm sizes that's

So it does come based three. for reasons Does the we believe to of that this from built think I you one put know of important the John? answer we basis it's are platform-by-platform, which out on your up. because assumptions the That's are is slide all a OEM-by-OEM question? that

Operator

John line has disconnected.

Eric W. Norris

Jasmine. move Okay. on the to Thank caller. you, We'll next

Operator

And with next line comes welcome. Please proceed. You're our question the from of Arun Viswanathan RBC Capital Markets.

Arun Viswanathan

update update can on the you us and an on appreciate you that just on an from in on Thanks. well. and your you just There Latin weather demand you're America on seeing update as the what Maybe us what as Chile maybe – morning. side Good with as Was this give some earlier And can were Thanks. just update supply secondarily, well you're competitors. seeing guys not? or effective year issues negative Argentina. maybe for then, give projects and

John Mitchell

Okay. no the to event taken particularly weather also Thanks. with This some is mitigation in the there Atacama. John. comment, regard to operations any We've Albemarle events, impact With XXXX. rain on steps added far in in weather are so as the regard

the dynamic regard marketplace, With XXXX, well-prepared. projects as it's overall expected, in in track all supply to we're the think I the around as we So the world.

Going forward, supply-demand our beyond nothing changes XXXX, that outlook. new

we there issues going Even of oversupply, with leaders the are to market terms we dynamic, affect dynamic, for not if have forward. are in that contracted any and that us hydroxide, our gives performance through XXXX materials see the are customers feel supply materials, carbonate at supply-demand with and in EV look Albemarle agreements as long-term of we we that does increase in in required cetera. et which market were concerns any remains As oversupply balance regard terms its that own don't grade, the

you're supply-demand to impact see pricing. going Albemarle's So not in regarding dynamic any

Arun Viswanathan

as recently follow-up, Great. pricings. a carbonate it looks has plateauing like Thanks. there been in some And

So, so, you that impacts maybe we that I pricing? guess, describe think the shouldn't right read what resulted just you. is Thanks. And between assume carbonate even and hydroxide from

Luke C. Kissam

to hydroxide, of terms has of been given the the differences new into cost at is the different, marketplace going natural carbonate the price, vary. going producers their product every is make as change. a between of the refine around the structure resources, build-up Because to sold to higher resource versus carbonate. cost the world the cost around different and cost specialty hydroxide world, write a the always to (XX:XX), the cost extract, In and hydroxide products mine, are cost Certainly, to will and to

of of conditions based value, the think in in any looking models of a and of contraction kind specific our bit is certainly agreements. and and in to pricing to to bringing more alluding hydroxide be more We forward I we're also So, norms faulty the terms carbonate see capacity. go terms And on don't we terms I are long-term price. pricing it. and pricing – if on and know that going back again, don't don't little you're terms as historical to there's our

Arun Viswanathan

Thanks.

Operator

comes the from next question Nomura. Yefremov of Please with line proceed. Aleksey our And

Aleksey Yefremov

morning, you. Good everyone. Thank

earnings increase quarter price fourth changed Has were any in the for lithium about during think this you way? talking I call, XXXX. high-single-digit expectations

Luke C. Kissam

the as we're year-over-year quarter, go lower year, first What changed. you seeing, the in higher comparison. it'll No. be a on It's through you're not but

the would. where we thought we about So year we'll end

Aleksey Yefremov

middle XXXX, we a And contribution in hydroxide by period by it II rate? commissioning at EBITDA Luke. is of full think practical Thank there or the Is XX-Kt in period? XXXX? you, a how Xinyu ramp the terms, of end should a qualification So, about XXXX,

John Mitchell

is This John. Yeah. Yeah.

that period a qualification You Xinyu should II. there for think is

and start our quality, commissioning to we as at we facility. to have qualify that So, have production producing to shift product to going and then quantities they're customers

terms getting And rates. I at look mid-XXXX you full so think the should in of

Aleksey Yefremov

you. Thank

Operator

with our Please the comes question And Colin Oppenheimer. line next of proceed. from Rusch

Colin Rusch

terms of terms volume kind Thanks quarters so much. of ago? just for customers? flattish, ago versus What quarter of an increase, two decrease, or the are lithium you of in customers number of you Are in a potential seeing seeing

Luke C. Kissam

the been months. that dealing hasn't there material over Yeah. into production. number new XX the definitely It's stand of and changed about the – have players cathode with from same big entrants We're customers last a it

Colin Rusch

Okay. one you any customer not regular are the volumes And to volumes basis? folks movement volumes a taking terms or of customer all in then, customers from incremental another taking contracts on their moving volumes, or seeing versus for and around asking

Luke C. Kissam

of all It's the Yeah. math.

As our seen we've saying committed. what we not want are a who's saying more. customer we All want general we a rule, customers don't haven't

Colin Rusch

it I'll Great. rest offline. Okay. the take of

Operator

of BMO line with And question Please comes Markets. our proceed. the Capital from Joel Jackson next

Joel Jackson

Hi. Good morning.

been of derivatives bromine today (XX:XX-XX:XX) signing talked competitors your for contracts about one-year they've [Technical at Difficulty] bromine One that and elemental digits. double for the

Eric W. Norris

lost. have We

Luke C. Kissam

don't Jasmine. Maybe lost, next him add question. we I into you whether just not want know or (XX:XX). the go think I may to

Eric W. Norris

back Yeah. the in Put him queue.

Operator

Thank you. Research. And of our line comes next proceed. from question Please the McCarthy Kevin Vertical with

Kevin W. McCarthy

to Yes. that? mean the solid-state in be potential for Good would wondering I importantly, you. it lithium battery what on what associated timing might of your uplift If Do if technology. demand? and, level the market some shift in anticipate morning. an you for provide confidence a the and so, was Thank you could thoughts

John Mitchell

is density. lithium yes, an This John. demand, in it more question technology battery uplift molecules solid-state technology. has to regard lithium to in increase because With Great battery solid-state regarding energy

in as solid-state. And so, demand to the see market would we lithium yes, goes an uplift

solid-state. see regarding seeing we're a of activity although X-year in and timelines, R&D product as terms development increase more in Regarding it horizon to commercial application, activity, an we XX-year

Kevin W. McCarthy

your a sequential looks then, from from you And quarter like it it basis level on of notwithstanding your at XXX fourth of I in about I that basis, EBITDA on points smaller If improved question And price. XXXX. managed good. a Lithium a what contribution posted you XX.X% Very look the had margin.

And so shift explain help I that could was a that? wondering helped mix or there. parts moving if cost some you considerations of understand there us Was to in the

John Mitchell

There's Yeah. mix going things there's products, mean, certainly, mix in Well, are of I pricing. few there are of there's and mix a issue. always Lithium business. on customers that a the

on operations side, that certain are the you costs the a But cost of to line. on always natural the be we you structure. are that so terms have elements. there the there projects, of One Also, costs capitalized working we the efforts, exploration start also are ongoing where there different engineering do then resource again and that have on take improvements and cannot you on as We expense productivity drop are in them have developing to capitalization. the to different early-stage as are and to you assets, Refinery costs certain versus the line couple expense

as range, on to number that fluctuation averaging we've out margins the XXs. lower are low- moving should in So of from we'll And in said, you see but us pieces. there in time-to-time the mid-XX a count

Kevin W. McCarthy

you Thank much. very

Operator

back And on have Mr. Markets. with Capital Joel we line Please do proceed. BMO Jackson the

Joel Jackson

Hi. Do me now? hear you

Eric W. Norris

Yeah.

Luke C. Kissam

you hear can fine, We Yes. Joel.

Joel Jackson

All Great. right.

Okay.

double-digit right those. of similar that some some I as signing now your elemental offsets. on both on Maybe about competitors price derivatives. indicated contracts? bromine of on they're some bromine one pick-up talk increases and your seeing And morning seeing cost bromine contracts, you one-year they're So, this on guess of pricing could there's Are you

Raphael Crawford

We increase do the Hey, year. customers that Joel. prior our have Crawford. is see Raphael contracts with our of versus This an number we in

with we So, bromine, increase of amount but also get are namely because terms raise necessarily derivatives, piece depends on flame very market. situation actually The retardants, but really increases. type where of contracts contract price, tighter of small customers. on on a price with been the have the more the signing to portfolio, In the volume been elemental not under in specific favorable. more we price market and, product our able our bromine, specific the possible, it these get But situations, has more favorable

Joel Jackson

question. is greater But second XXXX in you're changed nitpicky. This many tons. number. talked about any Again, being It's nitpicky. a prior is demand tons about than But a reason bit your why wording, XXX,XXX from that a presentation you saying this had lithium It's estimate? and that now I XXX,XXX now. you years big

Luke C. Kissam

mean, XXX,XXX that every in just you all, to metric of okay? on presentation, have understands XXX,XXX every into range tell don't at I is, the read or can page any so or shareholder when so adoption words it's another can into around we're X we going that. can, the of it's can't early that then over we I we're within make out range judgment metric our it anything the And so to It's that analyst what split is, We add if giving the don't where as the the we information these you – S-curve come we're we Yeah. and taking and we all believe tons, what or are. I around what's Our that that it'll think about and that. of own tons. different range your is that be It's in do early numbers, so we with in approach it in because be best nothing but read that's there's our or numbers, to year be

Joel Jackson

Thanks.

Operator

comes question next Loop our Chris Capital of Please And with proceed. the Markets. line Kapsch from

Chris Kapsch

conversion Yeah. Good follow-up as and discussion, the hydroxide CapEx your of capacity. out morning. in I on your had plans you the carbonate a context versus really build

agreements, take your batteries that For demand And do they with I latitude you have plans? more you capacity their have to your designs the think assume to room they And longer-term in wondering how room to then, wiggle customers these build-out want. or shift that? wiggle specify shift just do conversion what hydroxide, contract models their do they shift? towards those example, grades much So, have I'm if going much for when adjust how to they're they

Luke C. Kissam

carbonate we've look tons and page at hydroxide X you met of our XX,XXX look presentation on of if of XXXX. at earnings XXXX, deck, said, XX,XXX about by the about tons out you'll see met you and Well, to we're

much and they hydroxide well carbonate. us want. The much on want and hydroxide So, they – how how that gives we're balanced very carbonate contracts specify

do you build able to for once a carbonate So, if to going advance. hydroxide planning plant need versus have you're plant, they in because a that know you build do to purposes, that, to

to trying for and customers, we're there. So the in five to that going three But planning they're build some are years models out. be flexibility

what or they amount of of visibility they time don't their a a And problem whether So for hydroxide. good product. to carbonate the period use specific that they're they telling is time, demand going for that have be in going expect for to us have

Chris Kapsch

saying, years we'd and to and additional then in shifting as to The And understanding to saying, want market's ones Okay. notion are it XX call X developing X have years? long are this how we extend it terms of to a these XX-year, and battery years a for coming years, is X that hey, or same the just hey, that we from, those it, agreements customers contracted follow-up. that XX as the are change better of like to some are

Luke C. Kissam

same edge. same one There As I the are extending general be their customers But, rule, customers. or said, as it's a around two it's that generally new contracts. may ones the the

Chris Kapsch

update then of technology? efficacy And on last Okay. one. one extraction brine the Any your new

Luke C. Kissam

we that continue Yeah. project well. it. pursuing We're that's anticipated going that meeting the a and meeting. And viable It's still metrics we'll believe we

Chris Kapsch

Thank you.

Operator

Please SunTrust. And Sheehan proceed. question of the with line from Jim final our comes

Peter Osterland

Good the impacted curatives? speaking, in morning. main And, buyers the involved raw are What of shortage products? This who is the Pete Osterland for on for the broadly material Jim. is

Silvio Ghyoot

Silvio. is This morning. Good

diamine, If are pretty shortage all of you do the see and figure easy facilities. changes curatives – out manufacturing to major the are is producers of handful shortage upstream has to the It this the caused our a it's toluene what major that so there the over based and is. material in by turnaround on world

that So basis. earnings have is are it's something it expecting we we like yearly effect million-ish that call, in have And $XX of temporary. an our will on

Peter Osterland

you. Thank

Eric W. Norris

the that all we have Jasmine, in queue? is

Operator

at are sir. this questions no further Yes, time. There

Eric W. Norris

we the visiting of We many look over everyone. to Jasmine, end you quarter. you, with now. Thank appreciate the questions Okay. call can the and coming forward

Operator

gentlemen, you. Thank conference. you today's and Thank for your Ladies that concludes participation.

You may disconnect. now

You all have a great day.

Albemarle (ALB) 10 May 182018 Q1 Earnings call transcript