ALB - Earnings call transcript Q4 2018

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Operator

Good day ladies and gentlemen and welcome to the Q4 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 and instructions will be given at that time. [Operator Instructions].

As a reminder, this conference may be recorded. to host like Mr. today's now would introduce for your conference, I Ryan, and Strategy President, Relations. David Corporate Investor Vice Sir, please go ahead.

David Ryan

Thank fourth you quarter Albemarle's XXXX earnings and conference call. welcome to

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

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

that a some of the reconciliation call. refer production GAAP. statements release. prepared forward-looking the As this call the meaning A also release to Please be proposed may made which measures including projects our and the in measures That federal performance, earnings both are website. same found contained language within venture lithium in measures appendix of expansion can of note statements cautionary company constitute securities conference to in language that financial on reminder, statements today Please press our during posted forward hydroxide presentation, applies of joint not about earnings of our GAAP this outlook, volumes, looking and expected to are our note our our financial of comments with these accordance some laws.

and segment. you Before in was I catalysts results turn on XXXX. we business closed that would remind of the the Luke, on of the part to to reported This call polyolefin components over April like our divestiture our catalyst I business X,

comparisons on see XXXX, that will excluding for our and pro results Please presentation and information from these comparison be results for earnings forma simplicity of a in results. For results adjusted basis, guidance excluded our stated divestiture. more on all

turn I over call to Luke. Now, will the

Luke Kissam

what sales prior on up Albemarle. The the EBITDA [indiscernible] XX%, XXXX, our net up forma XX% profitable the EBITDA of quarter a year-over-year EPS good ninth were up growth In and in year history the pro marked quarter of versus consecutive and was adjusted fourth ending most Dave Thanks year adjusted XX% basis.

contributing highlighting XXXX reported a segments EBITDA XX%, the our right the Day. we businesses. percentage step was XXXX four-pronged quality at our our in that Investor at also our double-digit year of of another margin adjusted laid All growth the each for with basis. on was EBITDA And out forward strategy delivering

to-date. in XX,XXX XX,XXX grade taking samples shipped completion metric expansion major operate this tons battery lithium see mechanical in debottlenecks to La commissioning the Lithium XXXX. metric at to hydroxide will focus progress and significant of our about total the make our rain of we on can that you to In produce lithium capital our commissioning addressed event presentation, increase which year track well to of the nameplate us of in close In on of year-over-year capacity in future. rates metric we Negra cost on ensure tons, Xinyu, As and earnings China, the annually. will are all delivered year, total spite X,XXX qualification lithium carbonate begin year-end. production Chile carbonate in we that each pages XX,XXX year China tons capacity near ton Salar Xinyu We areas. five this of we to in at La in lithium to in the II January and expect investments our into IV, de on XX,XXX continued some exceeded Atacama started will XXXX commissioning and occur La February team half. from XXXX, which and III and a remains Earlier during each Negra XXXX, and growth EBITDA growth able metric in by activities we remain has achieved metric the tons XX% six Negra adjusted continues first to that track of milestone in of

for While site site Talison to early, XXXX. lithium January, out, from work In spodumene goals it's the should meet world we Kemerton, be in lithium as to hydroxide hydroxide Australia. related will fully we largest still complex, a its began the production the expect Western complex the feedstock. this in use which built complex concentrate This when

capacity The start complex ability over time half The commissioning add the will two during of to and of XXXX continuing to additional market XX,XXX is to be site this tons the XXXX. if stages of demands such three in expected additional phase first trains second capacity. of each XX,XXX metric trains with into require the

an EBITDA joint in Finally, total commissioned venture pro That to percent spodumene fund flow us double-digit forma our capital Australia of profitably. be enable the in JBC will efficiently expansions expansion XXXX. will derivative Talison, the LCE and expansion production basis. tons sites. schedule on manage year-on-year LCE and result quarter and provides metric their remains which also provided share a to and in businesses maximized of our delivered on a adjusted allocation year growth with needed mid-year on The lithium. came XXXX. per Greenbushes, catalysts production on about tons the an our at Magnolia JBC Bromine metric in returns between expansion of cash second basis XXXX of Each XXX,XXX to low-cost basis in being XX,XXX expansion online in more Albemarle's run and tetrabrome other bromine rate production flexibility This annual the

tools and year-end of a processes. give be successfully we the us effective be much Additionally, This more fully ERP by will platform of to and on deployments implemented efficient four end-to-end our January will first global business new platform. X, in the implemented

be of brine resource and In lithium a in April, We components resource we to ownership sale in continue business the polyolefin opportunities. our asset Antofalla, to of catalysts exercised We December, an assess of potential In to on W.R. our portfolio largest other closed business lithium acquire the Argentina. million resource and we Argentina. this believe option $XX the to XXX% has Grace.

in rock Mountain, exclusive provides of Both future all spodumene pending the production will in to will fully transaction with based to rights signed a and our transaction combine development operational mining these available This program half and a marketing hydroxide site second definitive for the and XXXX. expertise. kept lithium completed Albemarle for expertise us the Also our we have MRL in lithium also the of with opportunity. of our lithium December, necessary the demand. in hydroxide an agreement Carolina, to marketing at allow be market more upon Kings close Limited. and We that by customers' venture venture. the assets to to will form under agreements increased continue made this joint characterize will our We a to hydroxide This Resources hard North for drilling market Albemarle expect regulatory capacity Mineral filings volumes channel produced and those to approvals with joint growth addition. effective for support long-term allow

XXXX, million we I of to and dividend allocation primarily in to $XXX We capital stayed in worth net year call a disciplined completed invested EBITDA that, over will still a We Scott. the times. stock, turn to pursuit growth With our our committed of $XXX in purchased ratio the CapEx, to debt plan Finally, of X.X billion lithium strategy. million. with $X.X increased our

Scott Tozier

joining for everyone you thank and the call Luke morning. this Thanks

full-year XXXX quarter, in the profitable fourth income XXXX was XXXX XXXX Albemarle net income growth of million of is Luke to This income divested that segments the forma growth. or volume Full-year delivering the up our reform. from for during We year. transition benefited $XXX share businesses. adjusted tax during per XX% XX% for $X.XX $X.XX by of the U.S. adjusted of growth business. our sale growth prior and XXXX, share net $XXX increase of per the the three to excluding million an As each earnings of negatively generated the businesses most $X.XX in impacted net XXXX quarter, history on We generated of $XX providing and U.S. from was the diluted components increase compared All business share, charge Net earnings fourth well, $X.XX and an XX% performed of said, to $X.XX or recordable and sales year of quarter million. related bringing diluted gain XXXX. of of unadjusted the polyolefins both were with pro price about the in per year. fourth GAAP tax over the

operations use growth Spending spodumene in sale China. and in on to lower of with cash lithium taxes the payment tax million share Net from expansion higher a of due of for nearly the lithium Capital track doubled ramp total in driven XXXX. to capital Our at in primarily earnings program we businesses right continued segment preparation in ended expected on XXXX $XXX The increase per II XXXX. when projects in Chemetall. quarter, $XXX with made to $XXX delivered XXXX, expenditures from startup the inventory reaching in continued cash the XXXX million during the share successful up was expenditures $XXX and Operating the cash rate on million, working capital compared about to about our total million $X.XX on contributed a be in fourth levels Xinyu increased of our repurchase by XXXX. $X.XX.

of and lithium fluids ended prior adjusted customers demand of strong in continued million for the adjusted the sales for growth slightly the for up prices of XX%. Overall, improved full-year compared Average XXXX be the demand business adjusted of materials. bromine adjusted an $XXX bromine margin In XX% million of XXXX than and to quarter of full-year and pricing EBITDA picked $XXX healthy market China. and were increase let growth specialties, Volume XX% in reported XX% year elemental and XX% XX% remains respectively, XXXX. million, $XXX higher to growth volume and Lithium billion EBITDA the with flat X%, EBITDA XX%. and was contracted The and Now sales fourth quarter driven and by fourth of respectively, $XXX the million EBITDA by margin $XX to battery full-year me and for was our net move sequentially. with fourth the for half. Full-year by increasing $X.XX grade supported the pricing compared to sequentially. EBITDA of by X% an X% retardants was quarter million. of quarter production was Fourth up second adjusted compared to of sales on XX%, of flame performance. strong clear XXXX constrained Catalysts completion

and catalysts Adjusted XXXX. from due strong Growth full-year XX% in Excluding $X.X was and to sales fluid divested transportation favorable cracking, by of XXXX. by demand mix FCC in billion to EBITDA also hydroprocessing catalyst catalytic catalysts compared fuels. was catalyst or XX% up result driven million, as growth products about of increased businesses, refining volume in pricing $XXX a for

last in to you vehicles the lithium updated our has quarter first Turning electric the of momentum on demand accelerate. Since around forecast XXXX, we to the continued future.

that by global were grown available electric announced the manufactures new next by mid-XXXX, automotive The plug-in almost models the over period. sales XXXX, over X% over Globally, quarter in for of announced new be available mid-XXXX. to number has sales that time by hybrids Although by and expected manufacturers same during years. battery even models almost more for rose XX% is dramatic. of U.S. XXXX increase XX% automotive In three the fourth slowed models announced since of auto vehicles the XX electric

XXXX, energy Annual subsidy sales not while shift will vehicles specific continue new the little to is indications around a all lithium. for there for has next the the the three Now battery years yet are has doubled good policy grown with European trend over China XXXX. new Likewise, then for and suggest in released to announced during for that to pure XX, And batteries, over a all electric. vehicles market, of China. targeted longer that additions China range, incentivize availability a their almost the double. models new XX And from is in number plan larger XX

to and and is now gigawatt is XXX These on based billion installations. announcements, support research just XXX our had a hours to which impact demand power multiple industry X.X target forecast, an chain with supply for in has We XXX auto XXXX targets buildings XXXX. reports customers. from by by the in see more batteries inputs our battery year for from have responded hours automotive and utilities, one are by about upward increasing also marked gigawatt the including beginning large-scale trend manufacturers, sources discussions trends To roughly outlook, OEM capacity the growing XXXX on than

in oversupply in demand XX As by EV may updated presentation, quality, In to battery capacity the the we China page outlook, to expected time be producers scale around by Australia spodumene expect and our XXXX steepened. sufficient feedstock. concentrate the to metric you to roughly will about have in XXX,XXX growth tons market in demand growing a major converters tons, be take current XXXX, brought a nonintegrated XX% that. see CAGR metric of LCE our XXX,XXX higher can is access EV we of the time a on but bring and has converters see around carbonate driven by view, about represented not base this grade shifted XXXX. for integrated These one up of demand. our need be This earnings term. will supply excess curve sources million new In will be XXXX, on out of primarily each XX%. demand likely meet largely on result short will carbonate, at The in capacity market of would could From to

our of our impact cathode this base do volume and top-tier price. to customer producers, long-term not contract strategy the our expect Given we situation and

our As with in as with We million capital secured pricing the hydroxide continues volume of over in both lithium. us expect $XXX dedicated demand our growth. remain assuming about under investment This can of already customer look long-term on Resources. expect discussed higher XXXX XXXX market schedule nameplate increase. of under long-term the in November, and and in total, we status to carbonate In in the agreements our ahead We at we we negotiation with we XXXX Mineral agreements would slightly or of XX% lithium spending our remain are to and floor of and range plans million goal capital to confidence gives having XXXX hydroxide. meet lithium volume of demand lithium lithium XX% you that to on capital to close XXXX, JV in that for $XXX

that a as cash $XXX confident plan. that have the this at for between is cash pro continue will businesses in level to million operations funds are We the and growth million XXXX, perform from needed our Net that forma our earnings may expected $XXX exceeding for to million of the XXXX. $XXX XXXX. on as Free final points XX to data note about cash same flow be additional page is expected some of modeling And helpful we provided remain deck, purposes. range

Luke. Now, I to will turn back the call over

Luke Kissam

evidence slowdown, has also there is Scott. chain some lived bromine messages The the XXXX. which Thanks have that It's heard now, calls through By is across the To-date, intensely. an you automotive businesses, bromine not most rely. customers the and customers our let the watching in we In up are our try have earliest we half of carefully. the lithium, who they outlook order XXXX With slowdown some that pattern do in me for have is slowdown so that no other EV experience Albemarle of a past is general fact has from matter from mind, a mixed that earnings fact story. a the a historically the XXXX. economic impact but the economic on business frame to uncertainty seen felt second volume our the no business supply indicate in on for probably about

under of production cost X,XXX our XXXX pond event and the will metric the contracts. internal expecting the from first Atacama dilution Our trends long-term metric tons in XXXX growth resulting a The customer XX,XXX from is mix. a to and XX,XXX from coming with to system pricing with production January almost that from coming we inflationary over of would significant tons production fully us during half but committed year, the in in about rain as XX,XXX expect February. of rest We to volume tolling. variant likely of was There see still are flat result any the

adjusted Chile adjusted in lithium year-over-year. event EBTIDA margin and increase could a be Xinyu customer with by from startup to Adjusted as little to and lithium increase qualify recover through rain EBITDA and more we to increased expect from than support Xinyu customers due the We hydroxide XX% Quarterly the EBITDA year XX% levels, demand costs ramp and II. exceed largely should II production sales. XXXX tolling volumes but will below related to

some derivatives For for despite bromine, out we caution performance coming second is electronics remain about stable to XXXX to expect compared half. for and other to flat bromine be automotive Demand retardants and of markets the flame the construction, XXXX. expected

half settlement the EBITDA mix, one-time We the line. of expected somewhat an to adjusted expect received excluding in from stronger growth, benefit solutions of in second mid about $X to and adjusted with utilization XXXX. to with single rates are product is our flat about FCC percentage the sales provide strong expected continue digit year-over-year catalysts demand, high Refinery EBITDA to be catalysts product propylene max million first. during improved increased than

large sales of $X.XX over When just range we XX%. also during XXXX. in in growth XXXX, X% pretreat in we solutions by all loss decline PCS expect Adjusted growth trend The a expected EBITDA to range distillates particularly refinery of $XX a contract pressures of forma in this which from billion units. contributed during due a in fuels should add pricing billion. is customer net FCC million and be to in We expect the largely similar to clean technologies $X together, XXXX and EBITDA in to about the up offset pro

rate and $X.XX $X.XX, corporate XX%. result diluted of $X.XX over a EBITDA of adjusted pro in would This to $X.XX per overall around expect growth between forma We of XXXX. share margins earnings adjusted

the the XXXX earnings quarter event weighted catalyst in first of lithium And second cadence rain new ramp expect back with the to of year the growth quarter the stronger year, half, weighted to to be we shipments through Salar first the capacity and to half the the to equal the currently expect first. the second the the in we the of half of With than XXXX. about

As fluctuations always, could normal in an quarterly business have results. our on impact

close, clear short, and are have we and simple term. well-positioned growth and we long in strategy As the for a we medium

plan decade from and We have in next outlined flow into our businesses. our the expansions lithium well and driven capacity other by steady profits growth cash

I the successfully And and deliver execute to execution. future. see have the of have returns the into flexibility potential about matter financial excited now and businesses the in for see our a and and I be our stakeholders. all employees it's believe the able and to we that tools more I the Now, stakeholder never opportunities people, been our well I

David Ryan

chance Operator, we if limit to so, for questions feel like everyone But to ensure would two to to remind proceed. time the lines person to all that Please back the into have Q&A. are allows. for a ask get open I ready questions. participants now please queue before doing per free to And to follow-ups,

Operator

our from Roberts comes from And Instructions]. first UBS. John question [Operator

line Your is open.

John Roberts

you. Thank

is completed does to they be left be that that work could Mineral for stage done the to spending just remind legal one? you capital And there that, will needs Resources to two the is any likely this it On sequential to overlap? stage it and Are related come just points just Or financing again, JV, closing Wodgina us year? sticking there? later

Luke Kissam

Luke. is This Hi.

had regulatory Australia two have filings in one made, got in China. we We one that and

a that's closing, approvals, those but We a condition expect John. of to always get

phase come So, the It phase that's item. Wodgina would one. would it an would I be the sequential. expect open after And that two,

John Roberts

in China things pretty here overall EV the bullish is near-term us couple choppy any there I guidance slide, recent through your don't but on you if give market period automotive transition EV You is been can in the anecdotal have the market months. And in Okay. market? here. know on next going the over short-term years quite are any China

Eric Norris

is John, Eric. this Hi.

subsidy see well, we expect, the higher range, changes for set saw for last what referenced, Chinese of to creating government We And incentives continue that's next longer happen year. this we as as to this energy, year batteries. density Scott and in

drive continue has the place lot that are the out. choppy. been continue as You government of has global has market Scott grow and consumption. is other choppy. been been to putting It's Chinese incentives right. we a the in of market kind The The to drive automotive range believe on lithium will hand, down, that the But pointed EVs will

look have have, it would will at chart you we and our to four a That If us demand in you battery in battery is incentive PHE beneficial industry. see has presentations, amount range the longer the a to to times lithium right. the BEV of that

John Roberts

Thank you. Okay.

Operator

Thank you.

Koort Our Robert next question from from Goldman comes Sachs.

Your line is open.

Robert Koort

wonder challenges conversion Luke I Thanks. or business produce have could I why differentiate and but capacity Scott, qualifying. parties peripheral you Good And morning. these about to because might a not able expand in pressure you that maybe that of China if talked they help you qualified think some get are the maybe Xinyu? out maybe your have you what of harder time?

Luke Kissam

the Well, concentrate with and are all, a first the it spodumene in. are have feedstock world taking of we because the we best got starting which is in rock, dialed Talison we better

with also have globe from process that within business. We have history around operating a engineers lithium the the the

know-how design there. since and improvements of how purchased with develop the So an have starts we the advantage it Xinyu. we we rolls as into the have as we feedstock the have it But made well

Robert Koort

spodumene? if tollers Luke, with will spodumene it sold into that merchant are or Wodgina this the converted or you share year, deal Will that closes they be markets? start Where what your producing do of to later placed? and And by by going the be you

Luke Kissam

marketing got with are that plan now. working have right we a We

the And of clear MRL. other be in I work that about Some to with thing just strategic we marketplace. one of share want you is, toll. place will it talked obviously And will volume to converters the

of rights marketing XXX% to that. We have

the portion it. We will a just not all of spodumene, market of

Robert Koort

it. much. very Got Thanks

Operator

you. Thank

comes question from Our next Alexander from Laurence Jefferies.

Your line is open.

Laurence Alexander

the was is, QX, One QX what expect lithium and swinging you impact that bit Good to can we just you to not two And just it's you get for much talk morning. prices the prices, mix can pricing the sense how clarify a realized in so on business little flat, you secondly, embedded you when in of about contracts? issues? what Could reported mention in the expect be is results? just that be a clear,

Eric Norris

first to some So, the I going clarification need second. Lawrence, am the is answer on this question. Eric. I will

rates As far an volume for the may QX, XX% as troubles versus hydroxide as China, in The in ran is consistently time. get Chile, us from mix, the running very were to operations very well, ran those carbonate. reasons standpoint Chile which to and in only a QX, of in recall, in close you has we months very We plants and sequential do which might did QX for of thing QX plants is happened time. different ramping is operating the had that that be increase period strong Negra largely that all in different results La slightly and with La saw both or The for well. Chilean of up each capacity that II during three The there. reason design everything we Negra well through China we

had disruption balanced mix, fairly there. there It startup, bottom we line. a slight successful So the was a was but is a

in we the into event. going rain Luke year, look as quarter challenged you to carbonate this the because As you forward of are mentioned, first on see, are

will. through volume in gradually its ramp that a with up growth to Although we will Xinyu if the is year. hydroxide of the standpoint contribution you year the staircase, steps portions II necessarily mix up half weakest of not hydroxide, from see It because a to first a shift

The That's what to carbonate. tolling. going largely other thing to toll. is more are we That's lot we mostly going benefit a see

shift would in towards that the parts, in on So depressive maybe might of have, mix and effect see half a year. the earlier first a you carbonate the

complicated a factors. those but it's are the story, So

repeat please, of second Your the here? us of all it for benefit you could question,

Laurence Alexander

is And wanted there I be pricing there It's was quarterly mix a get the up I the pertains lithium What comment remarks market? comment the that the about pricing business just across EV prepared report reported calls, the that will will was absent flat to in to the you your out clarify embedded industrial on pricing is about effects. that lithium to with the to including part grade. a of in comment business entire your trying how not contracted that

Scott Tozier

Lawrence, Scott. this Hi is

related it business. is So the gave is pricing segment. our just contracted just guidance And our across to the related grade nor to lithium that business not battery we it's

So is it across to be business. the intended

Laurence Alexander

Perfect. Thanks.

Operator

Thank you.

Our from next Capital question Markets. Arun comes from Viswanathan RBC

line open. is Your

Arun Viswanathan

less EV the million Thanks. wanted be I just that's Good on it the as It or an be battery comment XXX a be standpoint? are grade X.XX long-term that? it about coming demand maybe be than around a to a Thanks. from industry see own what your Would ton supply ask And furthermore, provided question you Great. morning. have range in you XXXX XXX tons as far XXX lithium provided XXX that you and in seems to you to million balanced range? the I million would seeing guess, that position million outlook. like to, in in million million. from And lithium XXX you XXX to being do side. million Would of then of capacity X.XX would also capacity supply of of

Luke Kissam

Yes. out raise What so, another over that issued you this, have announcements A would month last have say look been lot around and the if is I we of as it's always questions. at look it's to go more to little thing a said, It's thing difficult online. to one to capacity and release, this a do issue it. money. harder It's press bring or

to they ones online the it have the expand will Ganfengs, that the players, how the going to those of continue customers big to going meet it do see with big is, timeframe the the to think to see that's can Albemarles, meet volume you this you with there out are to bring do long-run what going the know-how demand. capacity to to and in Tianqi, So that the I are the the SQMs, are

going is believe some there and We market could going overhang little meet to will bit XXXX. look like if go demand, into is new spodumene come we XXXX, it's some what carbonate overhang. talked in be got was, There and when out what up. research instances, to And and technology they And going that a every tightens of and And rock look of but to what the be the going you I up, to to see. the you belief. off. see As going long-term, And And steeper. be be a tighten higher back forecast going demand, you some came I new that's going tight. our you continue market marketplace. That's enough to burn year in of to every are got some is on be applications think it about look the always to in demand did to curve is are the in technologies we long out there's new at

I think realistic but that there. conservative we have outlook demand got out overly probably

got if demand capital resources why we to we fairly tight. bring out be, the So control, just balance so for the the That's run, can execute we If sheet are we important for the additional there. I don't, us long we on it's to have to the that market future. going we think see in it to that resources

Arun Viswanathan

driving just a maybe that Thanks. impacted your on get And spodumene, quick if as and in down by pricing view that issue. fair I a the for overall that why spodumene your flat up Prices are all? amount to just what's prices at to be your lower resource portfolio, year-over-year. And wanted own thoughts wouldn't follow-up on

Eric Norris

simple pretty Well, this is Eric. It's a answer. supply, right. It's

coming unproven all of know into very publicly been point As published, supply new market. out that though spodumene that quality, the a is right. has there's I we or

of that demands work prices. some converge think somewhat I effect will the than on in presence more creating supply So others coming has that more meeting supply had of and the China. better lower the But inside

Luke Kissam

the I agreements that when like what to would point long-term strategy play have you we is And really today. the have on into situation of a comes

what our to is model confident for We in very XXXX. pricing be are going

demand. We are confident very in the

produce can prices. the to in being customers XXXX with in place confident very agreements we are under that We long-term able at volume set

Arun Viswanathan

Okay. Thanks.

Operator

Thank you.

Lynch. Bennett comes from of Merrill Our from question Bank Ian next America

is line open. Your

Ian Bennett

Hi. Thank you.

midpoint for only would have calls up which guidance million, what close less $XXX $XXX around Your to million, up is at is thought. than little sales to a EBITDA be I the but bit

the could Just EBITDA in outline this on you as know be helpful. year? margins there we we or on forward stable? volumes and And of will increasing should some be increasing that context occurring lithium, look price some are costs So given lithium time, your

Scott Tozier

are driver us Ian, is Hi on is a seeing that tolling the lithium. Scott. mix year-over-year this we in The big for basis

lower as to that coming on bit a So result it tolling. all internal XX% quite And will It's about production. of is not of of our tolling be remainder are and based that, a internal be normal than from XX% growth our internal the margins will the margins.

as well that XXXX, mix tolling change, as in XX%. be creep we we will do will in start will Longer the what to margin that term, up see drive that likely will So mix we change as that you time. It over margins of expect below maintain customer north had XXXX.

Ian Bennett

if market, shift we relative about your And in chain, seen the nickel given position mix any supply having talking effect players of the industry hydroxide. to have I XXX. cathodes in the on hydroxide some that NMC same seeing Okay. slower if and carbonate your of slower wondering, and a you was that's are And higher adoption

Eric Norris

Yes, this Eric here. is speaking

of that, consumer hydroxide, and right. is So on would our consumer of NCA I potential XXX out a point hydroxide that is

level. not in The require looking it incorporating XXX% are by course, driven versus challenged. And seeing to The growth hydroxide has XXX other level, hydroxide, NCA XXX. but does or straight in but commercial several of manufacturers The process, to XXX, been times are calcined there difficult who poster hydroxide-based an So, a at is a a is we being as be safety company proving having experimental a for automobile it chemistry. from is chemistry. to Tesla, And that NCA is move technology standpoint. well. that are NCA. it's It's on yes, On interesting rapid

Ian Bennett

much. very you Thank

Operator

Thank you.

next Rusch Colin question Oppenheimer. from Our from comes

open. is line Your

Colin Rusch

you of OEMs, about coming of the XX% about so the is half the Thanks constituting point? of purchasing are this the back and two-thirds in about guys the seasonality China's with little much. given demand from battery Could EV at demand PHEV overall a year talk bit they that battery and

Eric Norris

an really know that don't there's I again. demand. buying Eric is seasonality There's in This ever-increasing patterns.

do of making increase So is the demand outside the time solar But in some of course. that with Year We in year could February the New that, that's Lunar our that being seasonality. producers, at point larger in do brine But There seasonality, China to see in ever the each carbonate of of outside of other have we brine, as to going the frame to only do production festivals, through year. seasonality has with to you go the business. effects are we second half are see evaporation. January, certainly a as no that, there in

Colin Rusch

then with little talk it content bit of anode to Or a lithium? the lithium kWh, in just terms you Great. a opportunities little more a is the near-term Okay. total something bit per start layers about opportunity? And can longer-term? that doping Is

Eric Norris

hydroxide. with to efforts happening our carbonate not But built Well, that enable trying it's base for that of carbonate R&D gradual longer the is increasing coming say large of the would seven It's and happening. forecast. our the And phenomenon. of a directed to point, are And producers at state over your us. grail our demand is solid five and into to driver holy customer forward the many that a as the What for of is solid to seeing, that we Eric equivalents current amount It's of doping again. anode happen. big lithium years. I it lithium state, increasing go are it's term we represent

Colin Rusch

much,, so Thanks Great. guys.

Operator

you. Thank

from from next Bank. Our comes David question Begleiter Deutsche

line Your open. is

David Begleiter

Luke, Thank lithium you sales XXXX? what comment what in can Good think And your be you. in you on morning. will it volume was XXXX?

Luke Kissam

Yes.

what in XXXX. Somebody's volume the looking was at

to XXXX that I we tons base. volume going think at XX,XXX from our around metric in least is XXXX XX,XXX be said up tons, what metric is

David Begleiter

have don't the you if And XXXX base, that? do you have

Luke Kissam

XX,XXX I Scott? XX,XXX, that right, Is to It's around think.

Scott Tozier

Yes.

Luke Kissam

Yes. That's right.

XX,XXX XX,XXX production of the ought tons at and internal tolling. about in and around from to coming that to we to from XX,XXX it XX,XXX be of rest metric least XXXX, up coming XX,XXX So

David Begleiter

and that Scott and sales of maybe And impacted about Eric, the production and impact of tons Luke $XX $XX in million rain EBITDA? the of Great. of million Chile, is X,XXX

Luke Kissam

to you will put it in because you carbonate Well, carbonate, sales X,XXX. that have whatever multiply price be all by have out got as your lithium

You it's overall our revenue margins, whatever from what you will are. then for got our margins not get have number a dissimilar and

get number. the EBTIDA you would that So to

you off. not probably So are far

David Begleiter

Thank very much. you

Operator

Thank you.

question Yefremov next Our Nomura from comes from Instinet. Aleksey

Your line is open.

Aleksey Yefremov

Good versus everyone. related you. and about accelerate in Negra IV would XXXX? that, Thank ramp morning in XX think the And How growth of XXXX overall volume your La XXXX? we III the should kiloton to

Luke Kissam

Yes.

you are that activities. a ramp wouldn't think significant ramp, starting commissioning XXXX, in a much I not because of that see XXXX we

you and So XXXX III in what see a from would and would bigger commissioning ramp there IV. XXXX in be La Negra see

I run able are flat-out Xinyu now. And would Negra us just year that to at able to expect XX,XXX, to XX,XXX, that. through not rates, be we I going this are to see would What this that is, it. qualifications XX,XXX you get where we ought and at commissioning Let because level, we or kind of La next and something full and run be rates give see right year about comes certainly II full will us which doing II year like

Xinyu. a III, expect, get an will nameplate year. next additional, And through see the ramp. will but then get you not us some Negra But let would significant for out So I we year La at

IV Let we more timing of completion III us middle the get and to of and you more towards have commissioning the the end year. the will on mechanical data and to

Aleksey Yefremov

of on contracts on update the been able and long-term? you Have could hydroxide future give around to lithium you extend Luke. Great. the And carbonate Thank of the contract fixed your you over a your us a portion business state price? quick

Luke Kissam

Yes.

We change quarter. It's what the we up from and seen significant change. what a talked in haven't we a presented third slight about

as to material But it update. discussions that that on, I an more no you time. of gave going we think would been was It's additional What are was volume then. I that new what there signed. at say than contracts November. relatively had is We have on similar

Aleksey Yefremov

Thank you.

Operator

Thank you.

Kapsch Loop from Markets. Our Capital question comes next from Chris

Your line is open.

Chris Kapsch

Yes. Good morning.

So about impact kind on tolling touched I partial XXXX. and volumes on on follow-up of in but and margins, question is guess, reliance the you mix the the this,

for would is right volumes in addressing to production So assume it non-battery-grade that be applications? tolling those

Eric Norris

here. is this Chris, Hi Eric Norris

tolled case. And internal uses. of our the the use now, carbonate. applications, battery-grade the It's tolled we And in carbonate of then consumption non-battery agreements destination of material. that for some So low-end the some fulfilling third is been past, has in using increasingly of are our that been downstream material

Chris Kapsch

ended other Okay. Jiangli. is in And am wondering may of of the that you years just just quality I the on capability toller Or existing you with think then ago conversion expanding terms strategy your the about have that up is sort relationship is resulting Jiangxi totally in acquisition if that And toll converters your have? of capabilities focused that? that conversion there

Luke Kissam

a We out was have decision. laid build-or-buy on That Kemerton. plan a

what move that to a opposed decision to to converter. Western that attempting with for saw us was Australia time we in So in it at forward the we made point better acquire as

de-risk see better accelerate, what looked to would options drive to we continue we return. that will have So we that. a and And do strategy always our

Chris Kapsch

Thanks.

Operator

Thank you.

from Our Capital next Jackson BMO Markets. question comes from Joel

line is open. Your

Joel Jackson

Hi. Wodgina. this coming XXXX your none talked it? Resources tons Good contents they of have spodumene of night Mineral any into XX,XXX about XX,XXX to in baked numbers of LCE from Do morning. some you or last expect of of year guidance this out

Luke Kissam

deal in the baked yet. we closed not haven't because It's

Joel Jackson

of incremental, your projections the you follow-up do mean the as knowing billion baked have expense $X.X a numbers, interest And to second that, half? would then your debt, for into that about that

Scott Tozier

Joel, this is Scott.

We have not Mineral deal. closing in the baked Resources anything on

at upside point purchase this volume or the debt time. So no in

Joel Jackson

on in initial the spodumene Would XXXX some you deferred some of sales XXXX? payments be owed LCE in

Scott Tozier

your I am follow questions. I sure not

Joel Jackson

you spodumene payment? to sell to If a the Wodgina on starts will closes, deal be later before owed

Scott Tozier

accrues all That does No. to That Resources. Mineral not.

are we Although, that. marketing

Joel Jackson

Okay. Thank you.

Operator

Thank you.

Our PJ next from Citi. question from Juvekar comes

Your open. line is

Scott Goldstein

for question. Hi, given at PJ. to this outlook Thanks I taking for take XXXX. tax the want your rate Scott on is a just for look my

year. to mix geographic push in it shift might higher the that mentioned You compared last

about lithium Given that appears is And geographic shifting responsible more it to be to of you most countries driving most are to? talk is mix what is, that the safe in growth that it lithium you products of XXXX, for if can lithium say shift?

Scott Tozier

Yes. this Tozier. is Scott Scott,

Chile, are is that So of as course, in as we seeing the well China. geographically growth

And so tax got you XX%. those are both have of cases, above in rates that

will the is would So as U.S. you going got we in in tax out, that those from through effects guilty in updated you point hopefully that up. reform time. the do of and pressure But stabilized regulations at say, XXXX natural end as taxes flow tax because get beat have and until the to the we are some rate I settled in final get other so rules areas, finalized June. factor to the the called grow you have we rules and in see those don't get have keep

Scott Goldstein

not year expansion reflect your cost timeframe? own until one, Okay. capacity conversion does your Got Talison impact the increased up tolling to belabor XXXX, tolling And guess starting But I it. start XXXX And up? mean given into I from that the persist cost does don't here. this headwind point tolling may that the

Luke Kissam

Yes.

carbonate that When we toll So that to got to up up. nothing actual it. to and have that the lithium volume have Scott, conversion take we customers. the And promised our Talison. with and is, the we do tolled What is hydroxide cost this it's are after is meet having spodumene by to concentrate first to capacity, demand we are amount is, saying the and don't that what charged we have the of we look to Talison of all, lithium we being convert is toller

our you through more move as volume downward puts on So pressure that. that margins

Scott Goldstein

you. Thank Okay.

Operator

you. Thank

comes question from Partners. Kevin next Our from Research Vertical McCarthy

open. is line Your

Kevin McCarthy

position year. kick for your in With morning. I and think the pending to you put volume price you XXXX HPC relates on into can regard perhaps in are wondering got Yes. have a if business, regulations to side? distillates. strong that next it was guidance outlook catalyst I your what on And as you IMO baking you context comment the into Good could

Raphael Crawford

Crawford. Raphael is Hi, Kevin. This

increase So we in for catalysts price HPC XXXX. volume expecting are in nominal for increase and a

in strength are pretreat Luke start, we is of mentioned As side. more our driving in as the had and profitable segments. FCC relatively the distillates And distillates one volume at more

that's increase us. generally to contributing for With the positive as price for also a to demand catalysts diesel oil the So high-sulfur IMO, those that's for IMO conversion meet substitute regard oil fuel going fuel mix for to trend to need a a low-sulfur effect. increases it's specifications. for and the of

expect we total, mid So, HPC single in demand digit increase for catalysts.

Kevin McCarthy

slide second wondering lithium. you if demand near-term Okay. considerations. And I then on could on detail the was XX. appreciate the speak supply I briefly to

Chile. rain event You in mentioned the

I a How contract in characterize in to in have those short-term to of enough think engage half? or would long-term dynamics willingness any customer's the events Argentina. your few cited you first have similar either pricing Is discussions? competitors that impact on market

Raphael Crawford

under the about could about market, speculate but let Well, me All one committed. contract. Kevin, all are volumes It's us. talk

it because to manage we out. makes sold this for difficult us are So

are so to to it we the because no demand. has price we meet And issue, But on have really, contracted. manage

Kevin McCarthy

broader I market. guess the I future thinking or Understood. in with line discussions contract was tightness in the more

Luke Kissam

Yes.

of one that to to listened rock the early spodumene questions, is going you the into China in if going Kevin, think I short-term, converted carbonate. lithium into be probably

tons see don't across, met to soaked X,XXX X,XXX will I be it So up.

Somebody will it. be supply able to

at it have But with long-term there number short-term we interested to impact look people who who could. going those an long-term conversations don't for it on some of those on agreements. short-term, And still agreements. are customers could at way. we move trying For a have So We price? in that impact see any. on are look us, it We carbonate the our out don't

XXXX don't is impacting So I be produce able it story. to all at the got just have as see well. that to We because volume volume a

toll get that range replace to margins the toll mean provided push and still that we But we volume, believe a within we and produce we to could the which overall, all got it you to have little it today. that's and it our lower if can't margins bit. produce down be estimates of the slough, got to have may we So in have a

Kevin McCarthy

much. All so right. Thank you

Operator

Thank you.

comes Our Jim SunTrust. Sheehan next from question from

is line Your open.

Jim Sheehan

of you for with your Corfo local clarify, establish market recent you how discuss Good And also over in around could expect Could details you Chile? in if the cathode morning. manufacturers would time? Some agreement that terms to that?

Luke Kissam

is We would did the This reach price Yes. agreement it an And related it how be Luke. the and to calculated. with terms, Corfo.

an we agreement. And have got so

any our our analysis market, our It's or short, into and the figured and are change long it We doesn't comfortable forecast profitability in way. medium it. of and Chile with view term

Jim Sheehan

in any pressures. seen yet And how talked are pressure. from bromine Thanks. has you you this not macro seeing the such about then impact But segment, really historically, segment

in enforcement frame could be? pollution the you So of you downside changes could Chinese standards? think also you what do see And any

Netha Johnson

Hi Johnson. Jim. is Netha This

to we did in We flexibility a we time, in our and have this and production concerns. don't couple us As look business our that allows customers XXXX. change incorporate out, express At that. from guidance model a see

we In on the that have, pressure terms a which they environmental continued the current Chinese regulators, of standards see the bromine manufacturers. of enforcement Chinese

Luke Kissam

right, today, pressure. the changes see course because downside earnings. feels bromine year is the we the of included we business during that To you in we normally the extent are first Any piece Yes. that that have that it the of downside the have that

update We will obviously everybody.

Jim Sheehan

Thank you.

Operator

Thank you.

Mike from Securities. Harrison Global Seaport comes question from next Our

line Your is open.

Mike Harrison

contract bit solid seeing little refinery what be business. in am that's business? a you detail wondering an morning. more going to overall quite us PCS and are otherwise growth in loss that It catalyst I give the sounds Good in the can offset you just business Hi. customer to like the if about

Raphael Crawford

is this Mike, Raphael. Yes.

there at ways operate are is and the being fill future. of that continue are liberty make we in some on that efficiently, and We PCS volume pressure we the But business on not for a business the to are circumstance this customer. gap dealing said, to to But taking the of That consequence is specifics it up pricing that. disclose action looking a to that with. is

continue is did XXXX. well into the do well, will doing to well On whole, in refining very solutions XXXX,

Mike Harrison

in business China. question lithium a your then about And

to EV to competitors potential subsidies. related uncertainty your of some changes One referred in

longer-term some Just to so, your have Chinese how contracts? And that wondering customers reluctance sign have you if among responded if seen you to trend?

Eric Norris

Mike, Eric. this is

So, That's of we of some that had a value quality the it's account today, commit time also still our reflection outside it's of type And because in customers a longer-term play we said true EV I chain. business the for and Chinese have of both to most of into, the demand is based to reluctant from think been fact agreements. China perspective.

changing is subsidies subsidies, macroeconomic manufacturing, as So opposed advantage China in is for periods of them. in market which hydroxide-based, certainly necessarily time when to there's carbonate-based uncertainty local weakness largely home there which uncertainty it their in don't and been creates and

partnering doubt note don't longer-term long-term trend have for seen it's we that that. of and preference I terms But part their So certainly we also of in a on contracts.

Mike Harrison

All right. very Thanks much.

Operator

next comes from you. Sebastian Berenberg. Thank our And from question Bray

Your line is open.

Sebastian Bray

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

out set of you forecast at the is that first start evolution the presentation. The on of lithium your the demand

call online? this is this guidance case, last proven broadly late have upward think in the the and supply. delevering I over is larger demand supply increases easier, joint And last imbalanced, on the one bring my matched venture the it after Where profile has if Wodgina second that year first to been imply would my has this for years the manufacturers for the is is market That's exactly out laid the to which acquisition. question. two the why by that from lithium coming revisions been

million you the CapEx memory, me going the to of X.X you which I annum, about to of rate If are times X.X-ish, through delevering from guided, you. per $XXX it's spend about have Thank Could step getting parts? moving post-XXXX. difficulty is,

Eric Norris

China, years supply. for Eric. that first higher and The benefit about knowing know-how five in nickelate in not time integrated Ganfeng Livent, increasingly will growth SQM and of call, companies secondarily in chemistries. These Luke and from but coming what the batteries, from, terms a this referenced capabilities of growth answer conversion the quality both also how only ourselves, have they to to names integrated way hydroxide, financial to then expansions their being Tianqi. resource earlier, I over from based processing majors. us. It's hy- one is and EV tune most significant And we cases, assets in and capital we the largely year in use markets. see to resources. prior This fund required the whatever meet and their on their years finally, growth specific future met, There's is an

see likely increasing So demand companies are demand. being that that the that Scott? provide we these the into meeting are ones that And will future. the

Scott Tozier

assuming around spodumene it. X question, we Yes. And Wodgina of a close fourth the Sebastian, ratio have deleveraging quarter, in the there's to components One to that we of the because immediately you the Wodgina JV on sales. to the on produce X.X EBITDA deleveraging, would net deal start think is times. the to will expect about as to debt earnings two

that as our So is this just that of company the part And helps. deleveraging. a amount second significant to drives then growth a overall

debt to no that earnings So in X.X growth that we level, as to in are into XXXX. with down change you about look referenced X.X at drop you times our

Operator

call. and conclude for a you you. thank that Ladies gentlemen, participating day. question Thank and for conference. session great does today's today's in And our answer Everyone have

Albemarle (ALB) 22 Feb 192018 Q4 Earnings call transcript