Albemarle (ALB) 8 Aug 182018 Q2 Earnings call transcript

Company Profile

Participants

David Ryan	Albemarle Corp.
Luke C. Kissam	Albemarle Corp.
Scott A. Tozier	Albemarle Corp.
Eric W. Norris	Albemarle Corp.
Raphael Crawford	Albemarle Corp.
Dylan Campbell	Goldman Sachs & Co. LLC
Scott Goldstein	Citigroup Global Markets, Inc.
John Roberts	UBS Securities LLC
Jeffrey J. Zekauskas	JPMorgan Securities LLC
David I. Begleiter	Deutsche Bank Securities, Inc.
Colin Rusch	Oppenheimer & Co., Inc.
Ian Bennett	Bank of America Merrill Lynch
Joel Jackson	BMO Capital Markets (Canada)
Kevin W. McCarthy	Vertical Research Partners LLC
Aleksey Yefremov	Nomura Instinet
Sebastian Bray	Joh. Berenberg, Gossler & Co. KG (United Kingdom)
Arun Viswanathan	RBC Capital Markets LLC
Michael J. Sison	KeyBanc Capital Markets, Inc.
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
Michael Joseph Harrison	Seaport Global Securities LLC
James Sheehan	SunTrust Robinson Humphrey, Inc.
Chris Kapsch	Loop Capital Markets LLC

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Quarter Two 2018 Albemarle Corporation Earnings Conference Call. My name is Kathy, and I will be your operator for today. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session towards the end of this conference.

As a reminder, this call is being recorded for replay purposes. turn over to Mr. like would the to call I Investor Corporate Dave President, and Relations. Ryan, Vice Strategy Please proceed, sir.

David Ryan

Thank second conference quarter and XXXX you, welcome earnings call. to the Albemarle's

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

Netha Specialties; Financial Joining Executive Officer; Chief Eric Kissam, Chairman Officer; Crawford, Lithium. me Raphael and on Bromine the call today Johnson, President, President, Norris, Catalysts; Tozier, and Luke Chief President, are Scott

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

Now, call to I the turn will Luke. over

Luke C. Kissam

and joining on us for the everyone, thanks Good today. morning, Thanks, Dave. call

as and significant well confident the excited Eric in I to very the their of execute shareholder bring value future. First, and roles. Norris, the for Netha Ryan our team into Specialties, each the the President very David new to and and about of welcome I'm to experience Johnson them leadership Raphael today team's ability deliver strategy team and want Bromine congratulate Crawford, to I'm

the results. strong turning quarter with Now, our pleased I'm second very quarter to performance.

the EBITDA to by per revenue the and businesses, grew of up by divested The pure the quarter diluted continues were compared earnings strengthens grew XX% our over second the be portfolio and further demand almost to of electric versus Lithium sales half up our three businesses vehicles. and are That XXXX. XXXX share of XXXX. our and All XX% for first EBITDA accelerating the double-digit adjusted performance XX%, and medium of for confidence XX% electric grew plug-in growth. about sales short, automobiles driven second year, adjusted of adjusted quarter Excluding long-term. by potential of prior through delivered the first half growth XXXX XX% by

growth battery half Recently, with experiencing customers first year-on-year to cathode XX% XX% the of data. are that major reported for and sales XXXX. consistent ranging Our manufacturers growth, have from

future model. or the incentives, charging our states their introduced sale continues in Vehicle global and new customers or and adoption another of to infrastructure. enacted infrastructure in placing the six have toward XXXX, countries to related States, with a build to billion form incentives vehicles legislation encourage proposed the manner consistent And invest growth is customers' EV either that Albemarle on customers the continue demand proposed Since bans for environment momentum. Our for beginning United have of rebates Zero-Emission with In or EV adoption. of gas-powered four EV the to California $X.X consumer the program

are All of track. projects our Lithium capital on

and remain last at schedule front-end told of tie-ins The the quarter the fourth the During II you we commissioning the during mechanical commissioned quarter, Negra of II backend expansion we and this the quarter. on second about for completion Xinyu that anticipate lithium La hydroxide we quarter.

market characterize flame Bromine pricing well retardants solid. of is demand market in Lastly, as the And derivatives continues for completion Specialties, under Overall bromine I way. fluids and hydroxide drilling. the design other that would what used lithium in conversion Kemerton clear deepwater are stage and the be remains for despite by continued we China. for higher pre-project In IMO anticipate Based softness work in the flow pricing from And than steady and should marine cash and on low-sulfur XXXX elemental position, catalyst or in normal the resource bromine and Bromine HPC local constrained demand. our construction excellent for cost other regulations supported Catalysts, and drive long-term. hydroprocessing to market the fuel conditions plant

already complex on propylene for In continued at producing global should refineries chemicals benefit addition, demand market. a a from certain the focus in more crude tight and FCC crude slate,

the Now, to over Scott. I'll call turn

Scott A. Tozier

Thanks, Luke.

polyolefin on net the quarter, $XXX on and of For per including sale X. components million of catalysts that second reported closed $X.XX the gain income we April share, the or diluted

other to impact year-on-year $X.XX, core earnings the $X.XX per second to to growth. repurchase an Excluding increase or segments in share Growth our adjusted compared our share $X.XX. an areas, reported about due one-time of increase results of about of a and XXXX of net and a tax compared boosted effective we that in other per of items, second XXXX. higher quarter Business XX% gain program by rate resulted primarily cost share by increase in were quarter offset

currently program. $XXX accelerated Based market performance company and X.X believe XXXX, a $XXX Hence, of under the strong program potential, We in of leave authorization. that of our to continue our to subject we we result long-term approximately million share accelerated completed to repurchase the the have share stock remaining about of initiate on current Albemarle This that will billion to another shares. conditions, stock equating intend million million repurchase $X.X almost total, X will undervalued. buybacks million growth buyback May. shares In second initiated is via in a in

count to about and second shares expected is count share all half be average our of XXX We to expect for million XXXX be XXX the for about our million. share

was our and on will were continue to million Lithium $XX million track in million. For flow cash the free $XXX half year was growth the Adjusted for reflecting first cash million net XXXX, $XXX to the first first between and Capital are year, of ramp business. half the from during expenditures operations during end capital deployment we million. and the $XXX half $XXX

$XXX We with decrease to XXXX year of XX% quarter the We full million the a continue operating from first a $XXX million. at ended and percent working between sales, of on capital basis. of to quarter expect CapEx sales range

and of range the the of tax of non-operating to from through we and the amortization currently our interest rate, currently OPEB reform, the guidance. million after XXXX. interest is in to we million XX%. the and items, to expense our items, of expected million As XXXX $XXX million $XX And XX% and U.S. $XXX Depreciation details special range toward $XX pension capitalization between expect work to provided effective CapEx previously to tax related trend excluding to range is expected middle

grew net in was Lithium increased by Now, moving business a on The adjusted performance. adjusted volume price. In EBITDA XX% XX% driven by increase margins the and second and XX%, year-over-year XX% to our increase a EBITDA XX%. with in growth adjusted by quarter, sales of EBITDA in

are All rates of maximize our to operating facilities work we production. at continue maximum and conversion

EBITDA We refinery with chain. XX%. million, adjusted quarter the million, In and year-on-year. collections in net million, sales of EBITDA during up business tolling EBITDA to see an by was this $XX XX%, The majeure XX% increase input also last $XXX quarter was Hurricane partially second $XXX $XX EBITDA half. adjusted pricing XX%. most expect by in EBITDA was Adjusted to strong exposed sold increased businesses. and to partially second crude foreign impacted volume and up to The margins some Adjusted of of is approximately and X% up our second about reported higher volumes XX%, in curatives, Bromine, The of favorable electronics at performance higher were Catalysts Catalysts' by be million increased quarter products million, construction quarter FCC the the compared unfavorably Adjusted catalysts were XXXX were the was contributed raw margins demand sales pricing by offset flame to $X offset driven excluding up oil results. Harvey in divested the results insurance net across material in quarter XXXX, second second exchange, million healthy. Of year. driven polyolefins costs. by related $XX force three volumes, retardants catalysts. continue Bromine businesses,

the partially the a We estimate $X now of million. $XX impact related impact of full have our able to expect year approximately force been majeure and unfavorable mitigate million, previous to down from

We also Harvey. year million of full $X a Hurricane benefit anticipate from favorable approximately related to insurance settlements

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

Luke C. Kissam

Hey, thanks, Scott.

of expect earnings The expect for tie-ins XQ year Our a for is strong another favorable mid-XX% the to the growth like second at positioned has second. on basis. lot Lithium, Albemarle. low- to year year currently benefit quarter similar third are as similar first now XQ continues full high La a we half full look EBITDA EBITDA with earnings and the adjusted the the in for conditions. half market Lithium, Negra to first We to year-over-year. half II schedule single-digits Therefore, in range now percentage XXXX first the In quarter. on growth Bromine anticipated from outstanding adjusted to XXXX

CFT reduced now divested EBITDA to reach to stronger in curatives year the fourth the the due the be Finally, is the from excluding the XXXX, expect and of Similar insurance third impact with force full to Harvey, favorable timing orders. quarter majeure high growth to segment the adjusted Catalysts we for related to settlements the businesses. impact of single-digits, forecasted than

with always the CFT, orders there slipping or one next. from is one As to related year risk some to quarter

$X.X increasing of all billion expect and EBITDA share. result of EPS between of XXXX per $X.XX XXXX. between billion, that, adjusted We $X.XX billion net $XXX million are of our a to $X.X and sales we $X.XX now adjusted for and between As guidance

As second expect believe initiate is earlier, stock to a currently Scott buyback. undervalued we and the stock mentioned

consistent the in this should our we for cash foreseeable our strategy businesses, initiated committed With drive operating in plenty in and confident that strength future. with the give still our we'll potential to As significant into capital maintain can our opportunities shareholder value the our us our to the have balance and May, that we ability sheet to action, long-term in We questions. way are the our was firepower growth leftover EBITDA execute of execute of strategy. it remain that the case our and up a that flow open strategy, that, confidence projects, take and with ratios of buyback

Operator

go line Bob the from Sachs of comes question Please Koort, sir. first Goldman ahead, Your

Dylan Campbell

Good on This Campbell Bob. Hi. for morning. Dylan is

recently, pricing remains seeing Chinese spot we're year-over-year in some the Albemarle. for lithium So, weakness prices strong but

the guess, laddering I structure to just forward also, half of pricing incremental your with then, contractor And from pricing the further growth could going you customers? when XXXX, some of So we contracts? XXXX expect and look second are your discussions how

Luke C. Kissam

Yeah.

shouldn't you always see a – our spot no contract because we've said, on If pricing at as has of China long-term pricing you and impact correlation. look our strategy,

really, I quarter, think and as this to spot up pricing the you're pricing is down year-over-year. China our that see beginning is

to think that's So, we will validation we a see continue that and that.

in a at similar we've the year-over-year, that. don't pricing, little pricing you and but good too a contracts from having said XXXX, conversations a standpoint, I look As volume early would full see standpoint think from range we're forward. a year, an any to from change be we standpoint, for standpoint, price to about a commitment talk and about from going extension It's

So, as everything we today. XXXX, looks start talking on more but that good about

Dylan Campbell

you. some a for to with provide through be kind implies to on of but movements? little XQ calling tie-in, the pricing curious Thank the said going flat you of I'm the you bit what of for it. XQ in sequential Got EBITDA, out EBITDA XQ, terms Can end more volume year trends is this between XQ. the And your Lithium items and and that one-time similar

Luke C. Kissam

Yeah.

talked from see we sequentially then I for You'll up will the third mean, a reasons volumetric down they'll be about fourth – quarter from standpoint. be third to quarter and

Eric W. Norris

third full Eric. tie-ins to This rates to is part just us allows Negra to up remember, the a of do the of quarter, potential. which we is La that, bring then the And add, in

And those production start so, high having in the fourth we'll the rates. of benefit quarter,

Dylan Campbell

All right. Thanks.

Operator

question from comes Citi. Juvekar, The you. next P.J. Thank

Scott Goldstein

Hi. on taking This for question. Scott P.J. Goldstein my Thanks is for

thinking we're range can three durations grade than longer-term I demand particularly other when or XX whether as a the some mentioned be your as So, it'd the seeing terms think where lithium, term you're I hydroxide was contracts, past, years. going long there you've guess, more five like I years Lithium, longer just about is grades? the in in with to for between wondering, carbonate, of

Luke C. Kissam

Go ahead, Eric.

Eric W. Norris

Great.

here. Eric it's Scott, So, yes,

specific expansion to we that, to hydroxide enter a contracts, So, planning. when product these specific capital between are seeing and beyond they're we And production our planning carbonate carbonate the and roughly, are just – they're hydroxide. our certainly split grade which mirrors and and they of

supply of range different we these XX are customers. have the and to We specs customers certain products unique them some to across of

allows plan accordingly. very specific us they're and So, to

As is hydroxide we've base. said times, lower couple a off coming of a

CAGR growing are split two. a on roughly demand yes, the basis, the between So, hydroxides faster, but is

Scott Goldstein

you. Okay. Thank

Another on Catalysts. question

I in early you at per five think year about at your X% years. Investor around over XXXX, growth Day talked the expected next

the maybe going expectation you – for With in how, could forward? of rollout change IMO guess growth does your that Catalysts about talk XXXX, the long-term I

Raphael Crawford

contaminant Propylene, this refineries. crude from FCC No, which Max we Scott, The sour, IMO standard, HPC, trend. for the contributor as is fuel, more technologies, as a from becoming of and the that removal to support well is specific that's heavy larger and have the slate Raphael. transportation toward contributes both sulfur business, technology, think other Catalysts growth. output a for as that'll really I trends Overall, which overall trend, favorable about And be chemicals our to that part growth.

of together, might from when you downside we increased believe be offsets So, combine EV all that trends. whatever efficiency that or there fuel

overall, So, positive. net

Luke C. Kissam

I'd the rise. Yeah. our And XXXX, other say the in IMO already is, was XXXX on thing

that that wouldn't as new that a model. have I treat in so didn't that's we And something revelation

so, make will it help it edge, won't along us the step change. And but a

Scott Goldstein

Okay. you Got much. very it. Thank

Operator

John The of comes from Roberts next question UBS.

John Roberts

the change price Lithium? was you tell what price include believe your us mix average And sequential in I Can you changes. selling in

how forward? do we as about think we and business that mix in go So, currently

Scott A. Tozier

Yeah. This is Scott.

That's there. strip are included other to and that out generally, that of types number. not up around we're the mix mix of customer in analytics, sequentially, There but a mix hard is bit So, product of X%. in

able a the reflecting the as towards to So, sequentially and results. as contracts support pure be us. from longer going But, trend it's behind basis a our as on get year-over-year about pricing number as you're price good traction to overall, as that's that well term from

John Roberts

And crude-to-chemicals on grow kind market? to refiners have able investment because be business maybe maybe investment on the would that Okay. investment into And capital envision either put secondly, back any made, would beyond go Catalysts, going then or might just more do XXXX do IMO not to you year? you next on of as you or investment And even see fast into the Catalysts? any that you the as

Luke C. Kissam

Yeah.

So, let's break down. it

would That'll always the little would but our be we've as or have impact would more year. they to encompassed HPC I technology catalysts. that. a a a per spend be, than from debottlenecks, that X% our look it, bit So the range fit at on basis within And about that IMO, in continuity else we capital changing to talked would investments, of more that best anything around we X% regular

we're see the is about If see price talking of you look at the at the FCC I seeing to the FCC catalysts. really matter the crude-to-chemicals, And today. fact today – prices you're we catalysts economics don't in today, reinvestment

as to those would a price – way meet able do working our for in be increase our plant. that. significant and would higher capital, pricing of other It us yield. demand, we capital. to but It be ways be get to see be reinvestment be it would part ways in to significant would We find but team's an another to the type need wouldn't It economics, unless to improvement those FCC debottlenecking. see a to So, on we continuity investment that

seeing on good we're traction FCC pricing. So

we economics So got get ways we to to justify but go may there. there, reinvestment to

John Roberts

Thank you.

Operator

line comes JPMorgan. live. next your is of Jeff, The Jeff Zekauskas question from of line now the

Jeffrey J. Zekauskas

lithium say, staying tighter next When is that. same, the supply look balance today, over or the think the market you you XX looser becoming the Sorry do about months? or demand at

Eric W. Norris

here. Eric Jeff. Hey,

pretty challenging balanced It is to it's changed same. much. view It growth about produce and area. hasn't be battery where the our grade the to in the is, continues is So, which

same, expanding You have pretty we time the to the that to about included, balanced. ourselves on, it the to as that. see meet being But bring that corresponds majors, demand,

Luke C. Kissam

the see over it at lot whole change. XX I look Jeff, you months, if And a next don't

at from we what where look about some saying, are at bringing customers out and we're on and to today forecasted be still are tolling. you online, our position going growth, what you relying If sold our a we're look

now. look at where next from But different where see a one is about a we're hydroxide would material alone. – it's and In little the versus impact. a seeing not XX and have tighter that story there a So, don't months it bit you a anything carbonate can little from one in buckets, pricing standpoint, being standpoint, demand being anticipate I

Jeffrey J. Zekauskas

Okay.

over your Albemarle And as base volume growth, of assume really benefit we... financial from longer you as to and so, that base business, where going period of prices a do you the a to come time a when from case, are model case, neutral that returns the Lithium

Luke C. Kissam

at had years taken Absolutely. right able to philosophy When investments, these years. we we are now the what ought more for which growth model volume a Jeff our been we a story – But long-term us. we than But to consistent price minimum on Where volume few a and achieve way you a a for returns, want contracts, we've is saying in contracts, minimum do guarantee a But, that. to look to we model it, so what price it, massive couple it with on yeah, we is the next price, we've for long-term will story will be the the we do, those it have it got volume. so.

Jeffrey J. Zekauskas

so much. Thank Good. you Okay.

Operator

David The Begleiter next of question from you. comes Thank Bank. Deutsche

David I. Begleiter

morning. is Scott, in the year, pricing still XXXX, full for single-digits high Lithium on Good you. just and your up guidance Thank year-on-year? Luke

Scott A. Tozier

where are year we with right what we actually David. and correct, on right on That's of tracking entered track thought. Yeah. We're the

would Lithium, year-over-year high comps we remember, half into higher on year the get a as expecting and difficult. in those the declining basis into go So second single-digit pricing came it as we if first be the half you in more

David I. Begleiter

Lithium on are still track for in XX,XXX ton year-over-year just And Very Lithium? good. you also volumes, on increase

Scott A. Tozier

Yes.

David I. Begleiter

very much. you Thank

Operator

you Colin Thank Oppenheimer. your for from comes The Rusch of question. question next

Colin Rusch

much. so Thanks

seeing are pace meet specs? chemistry particularly the really battery vehicles, quickly tweak on evolution, you the of customer formulations how Given to concentrates rapid to for the need

Eric W. Norris

Colin, of evolution, here, our serve happening say Officer, continual manufacturers tell Glen Chief by would or an he that what's you that right? it's I a is producers If them effort this ongoing were Technology Eric. is cathode would lithium density to battery the Merfeld, that's opportunity or get of used There's and get cell. out greater more cell. there's certain the to amount lithium a not of density more the get out energy XX% – X%, in per XX%, cell

so, looking at – are And that anode innovations the anode slight there incremental the are to doping of that changes on. are potentially going

this cellphone are side EV those will of the side, but often on on happen the happens it ongoing. Some before

the what cathode definitely you'll energy cathodes. density from the it of some safety some terms innovations In in engineering is a we cathode to evolution has same may other often but chemistry. XXX and today go talked cathodes. higher use application. NMC In towards its means in nickel standpoint, the trend of that around cases, cases, see high NMC is of lot therefore, XXX the see effectiveness for about, a still and market cost

terms to it but of requires ongoing in So, of effort an both chemistry. is we be ideas us terms cathode also have, with that formulation in responsive,

Colin Rusch

programs? or of understand fluidity terms much just into vehicle how that you within And And to most in extend weight of extend OEMs life this terms insight talking get that are requirements those weight requirements, really customers' I but the seeing years, in – fluidity just as vehicle evolution Okay. were given vehicle to seven five of the lower very is lifespan your trying you chemistry being some try as about? lower are much customers, That's programs how then, and range and vehicle helpful. expecting to you

Eric W. Norris

second Well, it's for separate was Maybe to question me hard your kind of interrelated. from your they're your first that intent. because

manipulate terms think five as the – a are it's I locked a for is OEM out certain – of producer go on based lot would to battery certain I in plan number that are year the some cases, There hit with is some manipulate that down and – that the vehicle that, of a targets energy in is of of chemistries target. you to vendors model. So, there year materials, flexibility five to, manufacturer there cell for expected said, say

the period vehicle guess of in but terms some there much tend time. per I long locked there's of fluidity there, how the And get in they over down so, targets more to range be a

Colin Rusch

much, Okay. so Thanks guys.

Operator

comes Merrill next Thank from Bank America you. Ian of Lynch. Bennett, The question

Ian Bennett

key on no reading the much it, the I in on Thank beginning deck longer track the but of you. expansions messages Wave into slide too perhaps this is there. And quarter, I'm X noticed

it, was capacity. perhaps So, for that La regions reading related much in too comment, into to And on you're you are maybe I'm of given wondering two still then, question, if the you expanding where Negra. track could I

First, articles CORFO, that at if Comments with oversight of Thank damage ability way dispute news to all if respond production know date, slow effect And mineral impact about any financial to be they're changing potential Chile, you. Australia, I at your And Global claiming? that any would all? the that having country. on the the in trial having helpful. in on – that region that in what that's the that's and to then, being in they're Advanced Metals and increase

Luke C. Kissam

is this Luke. Hey, Yeah.

everything the too the to we've deliver – deliver said customers. way that's We're said what to on and on what right said script. You're track. that reading our message. we the that track to key we And Street much We're everything the into in we'll

So, you rolling that. along. right assume not We're change to ought any

similar. we in about comments impact. We needs It's in a that it I to if any La our public a don't And would issue I that – run our past today, to in Australia, ability As get that what Chile to very agreement position. term don't our having that facilities Lithium. having would don't with compliance the of partner, is has any legal see in every Tianqi, confident we've would Negra see throughout we're an it dispute in it are and see we Talison. say with it get related that of dispute From their to impact. not, with the it think And our is the resolved, GAM term been we every be That and the I dispute against tomorrow signed talked brine about If to Chile, agreement. relates will.

Ian Bennett

Thanks. And another you've follow-up, as a accelerated repurchase. share

couple low You relationships Albemarle undervalued. the you of if made importance you greater customers between about comments about months, Thanks. the this last and on during could being how like of consolidation stock also, in the looks wondering declines their many I It junior was think companies have experienced value. with cost industry relative update assets. equity and in

Luke C. Kissam

Yeah.

think price that your it. first how drive to is drive assets, supply going have customers all, the you and your And your relationships position. once cost that with I of to be then, low-cost what your going you're move

decent but both. have And not you have think subject other, you have to business, to and one a the got I you're if may you So, whim.

what resources have geographic the cathode low-cost with So, agreements, long-term major producers around globe. the that are diverse is with we

best feel to that. we as the we seat So, – we're like in look in the really catbird

our of us. going Any we're and cost the it us and that execute what de-risk see to front what what's that. and ability we what's what acquisition valuations in look may we be capability we do time the capital can of the be be our still that see that doing return to on look seize of to that have better to what's front the going capital invest, those If do our to we the us takes needs to disciplined be, than we're opportunities, at balance able in on, accelerates, I us, that have and – so. other there's that As that front provides is a what to have but we of juniors the one upon return and with a difference sheet execute of we in to in for

Operator

next BMO comes The Joel Jackson, Thank you. Markets. question from Capital

Joel Jackson

morning. Good Hi.

expecting in One bromine your them the of spoke QX. second earned about lower bromine the larger competitors They're for of half earnings year. over

to QX be half little Anything You like for happening Can bit little more your a to It the the up flat a in of more modeling that? color year. stronger. earnings business. seem second to you in Bromine doesn't on seem give

Luke C. Kissam

Yeah.

look range. remain the if operate may run to about conditions execute in what that standpoint. But range. I assets don't move run. relatively in our but our ability don't see us second the it our to that what don't better, is you If a appears happened to our flat and similar, honestly, those what assets one of competitors, run little they know versus and – at had may of Bromine we're second half now bottom-line as half a do, sold how of I it's which with it's from anything. if half, at to all market comes looking first to it well, it If to our amount down, bit If we're the upside able us, – because we're the move all us all the the to side out lower product get out we And of it's sites.

Joel Jackson

but, but you've data. apologize content that good the was Eric, is I content And asked see Luke, if you the in carbonate question information Chinese question falling. weekly, about a Can the this maybe we all there There's daily, comment any next any prices this, – the spot earlier, data in of informational some on contract monthly is points what in your and in would there those that? you the between that data? see really pricing answered connection Is how

Luke C. Kissam

the – I relevant because the me it. somebody them customers us mean invest really you willing to up the guys whenever I the gives price gives the look What's bring what's they're pay ask to our we the don't is that for us and makes have to what at time value it's that irrelevant. capital. is Chinese ask that it to cost return need done only I I has go spot it and about

in pricing and, I'm wrong China it. So, because look or the else I talk spot anything relative never I – at about it's guy to just well,

Joel Jackson

Thanks.

Operator

Research Kevin from Vertical question next Partners. The McCarthy,

Kevin W. McCarthy

Good on Yes. with could the with manufacturers. if cathode was update you progress I morning. your wondering contract provide negotiations an

past, still could I customer XXXX. how you quarter that of features Is had by expressed contract the and the you're been goal think seeking about first perhaps the elaborate on the the received And various in you of by contracts your the converting XX% base? that's that case? of

Eric W. Norris

Yeah. Eric. Kevin, this is

the contract others saying. maturing, and an what just customers, for to think production. indicated other, or contracts where this that so important we that's or us to one longer was We proactively approaching ourselves us repeat wanted I that that beneficial either to us, year naturally – we term. maturing, had recall we obviously can some I weren't for because for plan extended And party be,

going? have to are contract, how indicated of the terms few we've the think, a moving So, by We to that's more out we and that's five past, we've five in I more closed. large. but that three years. moving contracts It the next go, to middle depends we're Yet, whereas years, decade, have Those by still the beyond – right.

the that our a results that customers, are after-tax and of expect we we're right progress that price great clearly will important forward. seeing, refusal a this making of return, that gives There's aren't a right. of far. going bidding, see thus (XX:XX:XX) floor not an growth, indicated year to we a first to based openers terms in volumes basis. from similar price, and cost additional different what an think be progress on continue return The on and components of capital we're customers' And what before, we, I than minimum described volume Xx a these upon that's the

elements on those the are and all matters. thorough by What's the are length the of that the in fourth volumes well. getting those those all of larger obviously, in more going year, update as our So, quarter changing term is give really call in beginning the still play. to a And for XXXX of therefore, customers end likely, we'll, of

Kevin W. McCarthy

might that you a observe might driving toward how be of demand and that that carbonate? be well? Is how peers One as for a your so, what mix to shift versus then contrast follow-up, sustainable and as judgment? something if in you compare And be hydroxide. it your And seeing hydroxide seems would

Eric W. Norris

Well, both I'll given right. say, the have, we size in our to serve position opportunity and markets, our carbonate,

maybe that's of where peers. we So some our differ by

are building and and even we're significant building more have significant a a hydroxide have capacity. and – an We carbonate

capacity also we're therefore Albemarle know, and starting Kevin, the base. hydroxide The smaller market building for the off you base. that of is that's is demand for smaller plan growth a and growing As overall market. more true from And of a hydroxide because building outside the has smaller going forward us carbonate than is capacity

as terms of I what's happening seeing at for we're customer, In in both. indicated the question, an earlier demand

it and said, the between infrastructure contract the to EV they're even the a Now, And or in move depend therefore we infrastructure, place. being is the have to go carbonate hydroxide. about for seeing we question And cathode does the see an needs one in other. EV but are manufacturers' Chinese their this they hydroxide what China, decade where on we're uptick – into that putting – likely that place and out nickel pretty a very on chemistry. for have clear really vehicles had they in – in it's have process commitments balanced the But what's next China and or in we and battery policy, that certainly we preference are all know-how going we'll

Kevin W. McCarthy

It's helpful. Thank you.

Operator

Aleksey next Nomura Yefremov Instinet. The question from comes of

Aleksey Yefremov

Thank Good morning. you.

exposure don't that that EV they implications in come for demand sales that recognize Lithium? us chain? spot that the therefore back whole you has can of anything lithium-to-EV on lithium and is going to China see for value what to in China view offer there Is you global Sorry but question. to I your market, China have

Luke C. Kissam

that a a standard finding regulations longer longer Really, the won't in to China drive meet that because Yeah. Chinese that for and at battery new only a hypothesize China. having regulations the EV there I thing time in time the are the could is you that that carbonate look that's some marketplace tough for longer when grade place storage under moving lower it a in is

in So can I have impact it's to all to think spot That's and at business. any don't best find it's a our of less offer I the going value trying somebody's you. for.

Aleksey Yefremov

Xinyu the what think Got that you It. level this year? have staying tolling the Luke. next of you of have Thank this you, volume in II, as could be just on of China offsetting some Should year? volume ramp then, tolling will benefit to of II we next in And or be Xinyu terms the the year that incremental

Luke C. Kissam

It's be going to incremental.

basis. full and met on tons be out start to would I can think tons an rates, annual expect up run metric and sell at way. XX,XXX that don't we XX,XXX it it so, And

to operations I but better of like they may be that call, the a XX,XXX – year, something my be would plant do or started would handle would we'll that. next be around going and it be assuming hope I hope. – is the get second would on the something That out during fourth that to that we'd end next be good stretch, quarter, commissioned that of back that around able have the get So, a expectations but to

Aleksey Yefremov

Understood. Thank you.

Operator

Okay. question Bray The next of Berenberg. from Sebastian comes

Sebastian Bray

Good thank three, taking you please. have questions. my morning I would for and

out The the coverage the an this longer-term what for of volumes first your your by give are you extent contracts. with booked longer-term target, years is two the contracts? please percentage of Could memory, think to I of XX% was the of on volumes year. from of next three end idea with about

business this would This XXX demand say, by, Do this more enough is grow year. have be say percent expect or Lithium to in market of question on Catalysts. absolute kilotons? development kilotons about XXX terms? visibility one Would to more let's the now the even to is, And a second you on lastly, The XX% potentially you question. growth business a mentioned it typically of some think, IMO has grown I please in as XX% pleasingly it of been has this ahead single-digit the has bit a has it as People Could Is grown this for. low pre-stocking you Suddenly, why legislation? in were thinking effect? elaborate catch-up on Is previous by volumes. over QX?

Luke C. Kissam

Okay.

take Let me the first me let one.

the our two produce. probably to can we the next three XX%-plus be that's on going to long-term what from On over coverage agreements years,

on we tolling Next rely as we're have to well. said, year, as to going

tolling. selling relying than still we're on can we're because we produce more So internally

long-term sometime if assume. until get you right be look, around XX%, there Our decade, to but won't I is next would goal early we the

you do want to solve that, little Eric, about demand, please? the bit a (XX:XX:XX) On

Eric W. Norris

Yes.

maybe I past, is of I sort the So, remember said forward. mean, in neighborhood industry it's growth think often that – prognosticators of sort I'm what the of XX% so but what in year-on-year say, trying that's a going expectation to we

Now, referenced see, doubling percentage year I we that in tell the places basis. e-buses. coming industrial you applications growth, coming even from from can his There's like strong than There's that script coming it's demand near a this demand. EV from economy. Luke looks global stronger demand that's a what And with on other of – demand a

approach So, could we estimates, year-over-year we're to that metric a indicated, on was demand that, XX,XXX market tons. last tons XXX,XXX seeing year, close by our metric

So have that's a stronger year. the beginning growth thought than we the would at of

Luke C. Kissam

get looking you year-over-year to if and you you basis, then, this growth, to would at you're Catalysts back I down have XXXX. And been full year would Catalysts, at – when it year-over-year. we go at XXXX look if And a look from view got it back

than XXXX XXXX. was So, weaker

maybe we we XXXX, we're little or catch bit a or So, high down. bit a back up, little if ahead single-digits,

market catalysts, mix, are where based we've mix turn in lumpy on product customer is is as different FCC talked business. turnaround more around, consistent. and this cycle. on you have hydroprocessing that overall, So, a they about, costs in you whenever The CFT based and

the this up is that growth five to that Overall, X% where of of we're a XX years, it when be you down to it CAGR course over basis. look I So, on still would year after a end up happens last year year. at kind expect we'd

Sebastian Bray

you Thank very right. All much.

Operator

Arun RBC comes question Viswanathan, Capital from next Markets. The

Arun Viswanathan

morning. Good Thanks. cost seen about do material in over ask mean, to you characterize the I outlook those to over costs you changes rising the the next you would and and cost for the the you're have last Lithium. I over yourself year? experiencing just year see curve wanted How your Great. any cash next what's year?

Scott A. Tozier

our then cost brine similarly our at inflationary doesn't – cost carbonate, change. in left-hand cost look cost with rock at We're and that on impacts, position productivity cash mean, and for more with and position competitive combination are at plants, curves of cost curve look at I broadly look year-on-year if side you but there for to curve relative still the and the the set, If hydroxide. competitors always of the the you

consider, royalty see royalties the also results have going also structure, what cost you're structure. – affects which is our to you our Now, to in

the high that volume very of current royalty So, prices, at high the now at at tier. – end we're we're or – end curve

or a will all that comparison our costs on basis, – of see you similar other So, to are previous. because as components times high are component, but where largely expected

Arun Viswanathan

And That's helpful. more Okay. just ones. two quick

further kind more for year does be price would see kind you it high when you where average through, pricing, that more on line first bring So, still or that do rollovers in drive single-digit pricing this price the have go should of your gains increase year? of next

Luke C. Kissam

see you question, And as really, more story. – as we'll this about story. talked a I opportunity for opportunity but line capital year I it I see Yeah. we bring it'll It's what we've are, when these is fine the but that's rollovers, some is I of in with is story it's line, line. – really a – what still renew, next thing We've some in this only price, characterize than with would think but is – in wouldn't volume mean there contracts more Zekauskas' adjustments be still we was got a but price, characterize few in volume not a you some see new where price

Arun Viswanathan

announced one spodumene just production last increase bit they're And in that Thanks. Great. more investing to Australia. Tianqi recently little some a is

we offtake I a that get that, or for is market guys? think by it's grow not look Would or that XXXX. like further to could you from you you any for million or X.X so that something in, is tons

Scott A. Tozier

No.

we announcement. So, It's it's Wave but we And chart get capacity half Tianqi. it get partner. other is And deck, and Lithium conversion Talison bylaws Wave certainly the have not we of expanding we made in current is that that X in was Tianqi enabling our growth what's have, increase in the this actually plan Tianqi in under we've The relationship the any the not the have earnings described. Talison, part website. half. our and the of X. offtake, and

there'll X So, that enables X plan expansions as Wave goes capacity us go Wave to it doesn't and to a towards and continued be market. It well.

Arun Viswanathan

Okay. Thanks.

Operator

The Mike next have KeyBanc. from question is Sison of we

Michael J. Sison

and a on Hey, on bit Luke, Can think you increased demand positively quarter. little update at a be you should year what to you on lot And outlook maybe since it the you your us more Nice of of just beginning call. guys. the the of beginning Has highlights for what had again opened nice of up talked and kind EVs. degree? Lithium? the

Luke C. Kissam

that, a XXX,XXX – Yeah. of XXX,XXX tons, Transportation talked saying seminars got metric No, amount all tons. what if we've total our our earlier. of tons. demand XXX,XXX some been other And XXXX, one around consistent we've you uses look, we've about about to, that metric remains that at with the of would you electronics, industrial online some of and XXX,XXX in consumer metric at our and we previous in calls of we're tons that, model if demand used remember metric our and to fairly decks

that by our So, trying from is year. with all what we that we model early to we've that the capital committing consistent haven't in changed steps the the data taken demand is our customers, customers' customers that, although out I was to seen, demand out laid point this

of in growth between So, confident that model confident during course we gotten year, anticipate and we've the and more more demand even even XXXX. now this in our the

Michael J. Sison

over your significantly to a time. see as scenario pricing pricing seems still over contract next Lithium couple significantly could some fall years? where you that fall there can a of be Then, Do the quick follow-up, concern Great.

Luke C. Kissam

No.

Michael J. Sison

you. Thank Great.

Operator

Thank Morgan Vincent you. comes Andrews The next question of from Stanley.

Vincent Stephen Andrews

and you, everyone. morning, Thank good

Scott, high even about flat, stayed what's Is capital there? in a took and raw end guidance this up. operations the such materials. quick from of the ones. cash comments and working story the release build some Just or EBITDA, flow did you though, the see the end bottom a just couple I

Scott A. Tozier

Obviously, – we up flow. as primarily is by so this revenues that's of bit on Yes. a going bit our Vincent, be given more have a cash driven a our working well, capital. our to drag earnings up,

all that's really it So, reflects.

Vincent Stephen Andrews

just BHP then all? is maybe that reading things for something others, and been I've And some but strikes – Okay. at concerned in more Chile, you're that workers' about about

Luke C. Kissam

all. not at We're concerned

In we all just years. another fact, three of recently our negotiated union for contracts

we're of in La So, activity shape. working Negra. wonderful Santiago Salar, a relationship both great lot Have we and like employees, There's there feel with a in in the right our down now.

lot with from together the both a and those working great So, took employees' contracts them to leadership of renewed, unions side ours. get on the

guys. kudos all those to So,

Vincent Stephen Andrews

Thanks hear. Good very Okay. guys. to much,

Operator

The next Global Mike Harrison Securities. of question Seaport comes from

Michael Joseph Harrison

Hi. Good morning.

right the prices FCC seeing little little mentioned in and FCC rates pricing what FCC more detail utilization the now? You that just a Can had environment your in bit on you're Catalysts give moved a bit in us higher. you

Raphael Crawford

seen products have actually value good technical customers. also This We've customers. we're deliver trending the FCC, of And Mike. it's good rates, producers. to Raphael. sell Sure, That's for in a utilization just for a pricing. solutions good by high. utilization But established upward markets. market to in utilization I – those players, think favorable China, right that's overall, our They're is not most to high very of you utilization can and your Pricing the And but Chinese is function sign. been FCC our help it's people major it's pricing fortunate a now. technical to are for is. for In fairly where is given FCC lowered rates

Michael Joseph Harrison

could hoping, that HPC? growth rates What year-on-year growth was you Catalysts. were the the in break Thank for FCC that volume you out XX% Raphael, separate saw versus also you. volume I

Scott A. Tozier

It's Yeah. Scott.

those businesses. Mike, volume in So, don't out, we but both normally growth saw we split

Michael Joseph Harrison

you. Thank

Operator

SunTrust. of comes question next The from Jim Sheehan

James Sheehan

of the Thanks year. in we You for about and Lithium moving Could about morning. margins cadence throughout next should How Good say, think quarter-by-quarter? over have taking you or shifting the margins parts the – XXXX? talk seasonality my question.

Luke C. Kissam

shut if see – normally got two it a week for plant We that's you This XX,XXX we look Yeah. a and change. is down got tons weeks annual you two it a running at for an because or basis or you on metric Luke. can a something, –

what always would we've said. say I is So, what

an We margins basis well quarter, that XX% to were was XX%, we these of I on roughly hold of we look we'll expect margins overall If our last to be year, round. XX% a XX%. the quarter And believe kind able look first year, it EBITDA it future. think to Lithium at be north if was into XX% I this on second and

where on right of we've said kind going to be. we're we're So,

full we I'll as out the I margins. we saw similar we first think, quarter. similar margins see overall, get year, the type And in you'll that in expect, see for would XXXX,

James Sheehan

this fuel Great. regulation fuels, is marine is to something implemented? impact any or standards slowly on in the business And you early, on ramp for your that going pricing, IMO any the or demand seeing are that over time is impact as

Raphael Crawford

just a seen trend Jim, – overall in time. the And of we this fuel, around haven't think is yet. haven't over slowly to an but your industry seen in ramp. but it's slow ramp it'll Raphael, world, the towards transportation marine, I impact not we any point, lower It's that sulfur

James Sheehan

you. Thank

Operator

The next Capital Chris comes of Kapsch from question Markets. Loop

Chris Kapsch

acquisition think, activity and indeed, was a the tolling Yeah. around the questions with always relationship tollers. tolling the are has guess, in which with it increased Jiangli, probably one of morning. to what part follow-ups Jiangxi converters I the Good best led at been time mix My China. was I of ultimately the

effect of a totally tollers volume any that your on of And those are conversion on that the in have and are expand house, influence you're part back and battery-grade are, comfortable currently? margins with tolling with products one, more capacity now, the couple pounds then, lithium given And of mix, outlook? shift it that dampening specs? having questions will are in-house the they these is focused hitting that's working margin on you're the things, that if So them you these of case, as an sort

Eric W. Norris

is This Eric. Chris. Hey,

use working getting we So know of with All not tollers. used and right? they we it battery-grade we're right lot being spend products, right with have in We regard relationships for the We product as that is folks said, time have. make the believe customer working this lines technical-grade know, a to in we or quality. sure tolling, largely you and qualify our that

lack we'll quarters couple swing over little of continue to to ourselves past you're that's – on volume off bit of we a capacity having business, bring And and lower-margin We because at expect on right. It it coming support Negra. the La as we said does a of because effect. tie-in we've often have seeing is and quarter, of a Negra offsetting out La plants tolling we're bring have As otherwise a the little that in we of would margin-dampening use had coming years, some as right? will volumes that a have the and

swing that bring you'll being is we to – expectation because the our buffer capacity see yeah, more So, a impact that phenomenon, from tolling sales than Negra probably with La impact goes a from margin on of the what on of situation.

Chris Kapsch

helpful. as opposed to are converter is And just conversion relationships to as then assume on then build most be battery these capacity considering follow-up. organic That's mean, grades, that a focused of fair out that not maybe strategy will given in-house I another the acquisition? to the it

Luke C. Kissam

of We that we on the invest have would at is, what upon upon comes. and it invested is, depends be, in toller the what the depends what depends there. will look it capabilities capital it that upon it what would timing and And to return as

within that, we've importance got And about a look China acquisition, an where at lithium So, of from has for hydroxide just right service we we at non-recoverable given we we to return's it look because the we organic. within are China. China to can our obviously, effectively And the as XX% be and any but export and us assets want well, of outside outside talked sure do VAT. and of having inside of of as customers efficiently to China China an be

Chris Kapsch

you. helpful. That's Thank

Operator

Thank you, gentlemen. That and the presentation. ladies concludes

joining, for you a disconnect. have now day. good may Thank and You

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