ALB - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2019 Albemarle Corporation Earnings Conference Call. At this time all participants lines are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions] [Operator

like Dave conference Strategy, Ryan, Sir, may now speaker to Investor hand you Mr. today, Vice begin. to would over the your Relations. I President Corporate

David Ryan

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

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

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

a made expected call As federal reminder, and lithium this some production statements performance, constitute statements of commitments outlook, of during within our may laws. well meaning as the demand securities about volumes as conference company forward-looking the

GAAP. forward-looking in today in note are A our both language measures to press this that accordance Please our posted that applies can of comments cautionary appendix also call. which earnings on same Please earnings note our refer and our the be statements of contained of language presentation, are not the to reconciliation GAAP financial website. some release our about that prepared in with release, found

to Luke. I turn call the Now will over

Luke Kissam

long-term our made Thanks, decisions more provide third we're provide want strategic on the view. I'm quarterly my taking into morning, to of recent On performance, and that full-year the we've spend going Dave. position quarter Good performance. a Scott today's on detail call, time but everybody. how to quick recap support the and will bulk

by for favorable of With GBU let stage growth. across volume our adjusted contributed XX% and we that businesses XX%, by take to and and are growth. currency Bromine delivered set me year-on-year adjusted impact, a the that, back where diluted each today. year-over-year pricing step all Lithium in of impacts, by our currency Excluding grew excluding revenue earnings share per year-over-year, quarter and EBITDA Increased XX% third EBITDA

trends know dynamic. growth It offers very a you remain strong intact. and lithium As the market growth is fully opportunity future secular long-term the

will metric challenging strategic with late about term. our to up current will XXX,XXX and the take, However, are to the tons to have based conditions the significant decision business $X.X XXXX This of a financial path provides of several dynamics successfully capacity, XX announced five-year - the on and see. we for XX we flexibility only right we position Last of quarter with freeing for generate price be cash months announced take $X and months. actions to Since supply-demand opportunities capital on July, next any investment us our us dealing billion the billion free in plan. defer we market to we conversion enable work advantage is to the long

customer affect Importantly, this commitments. current not decision does

are the the position ability to We capacity on have in committed add market all current deliver to dynamics we contracts improve. and if

creates so As buy doing financial you access for lithium in diverse build quality, or we the stakeholders. cost high and resources our capacity future, value the know geographically flexibility conversion to low have to if

Investor at As will Day our discuss in advance. battery upcoming detail to continues December, we technology in

lithium to carbonate composition our leading remaining, or and be truly that deliver want world's investing, remain carbonate or customers much products, focused the we hard expertise differentiated rock and customer industry stronger. and proposition. conversion to expect we're have maintain our their on competitive the committed to to end, value demand a deliver bromine whether best and expect but access to to to grow, demand we producer, on We agnostic hydroxide continue To hydroxide Lithium other an needs,

week, To in our interest have investors of strengthen opportunities the announced long-term advantage that our accelerate growth completion majority we strategy our strategy. last of structure. investment billion hydroxide the we venture we that in ownership interest XX,XXX contribution MRL our Well, agreement of our shared All with Resources. of and Australia. currently Wodgina Mineral consist end, take told XX% to Kemerton, facility XX%, XX% of we mine a a When a construction XXXX, of a $X.X would in for joint we XX% of in, in Western that $XXX metric in cash million ton under payment

quality future further investment giving value. base and hard our We venture joint global access top tier support market, diversifying position we the The capacity, operating produce long-term Lithium a hydroxide. our long-term this growing rock by in will our and benefit new ability mine, market and strengthens substantial combined expertise the to us believe to to are of JV which the Lithium positioned Albemarle increase rapidly well source, named emphasizing Wodgina provides increasingly market MARBL resource our demand, is from with high in the to a MRL, knowledge

to JV the capital lithium will a The Wodgina healthy but be that of still joint on a the support made The idle XXX,XXX XX% decision to return cost of for capital. project venture production anticipate rate two hydroxide conditions met or our invested We this the producing at economics. the until times market our supports XX% of will is when roughly tons annually, long-term very attractive. we returns short mine production the in be term, view,

I contracts. pricing with Lithium, want Staying and to address

and our and pricing battery our preliminary long-term are conditions have experiencing under strategy in technical we're hailed. products. earnings in our announcement, on commented challenging Today, contracts grade current our pressures market pricing grade we China As

up despite As on conditions. you pages market year-over-year pricing significant year-over-year our and in XX decline can earnings third Albemarle's XX see a presentation, was Lithium of quarter slightly

range to $X China stabilized of kilo. appear the carbonate prices in have a reported Recently

and in is or of not marginal to at near the cost drop expect We do price China this prices production any expect carbonate way. that level material further

across at our kilo and a including long-term lithium $X pieces global However, variable pressure puts fixed pricing China portfolio, the carbonate on the under agreements.

focus. concern We interest, and know our agreements long-term great are that of

the broadly address me let matter here. So

sheer for on discussions involve we Albemarle have active with the we price, the been customers offers agreements, between supply, and customers' carbonate those allocations volume, of our discuss the volume product of expectations. and ability interests publicly. hydroxide length and past, the between security meet best contract needed in and negotiations As growth not hydroxide, flexibility in commercial value quality, obviously It discussions to carbon our are in the is to that of contract

with So to not do discussions going active These we are it. are moving pieces. many

you these better we intend our fair this and As our to settles the the at we'll we bring what for supply on outlook, assured negotiations, annual that these chain rest we give value capture a understand the dust means to discussions. share in look

talk little bit XXXX. and gears switch about me a let Now

part to our continue a we our business of strategy, As portfolio. assess

received multiple have Chemistry Catalyst We Solutions Performance Fine Services inquiries about and our businesses.

They are profitable we initiated processes operating businesses pursue these to So, teams. strong two both opportunities. with have

to So we come a can able are continue pursue stakeholders, not businesses. best on events. we XXXX divestiture, be of will these valuation to if transactions to to both the believe be a these agreement valuation expect operate We interest we we in will to appropriate if we we that appropriate, that is secure our of feel or would

flat. are XXXX takes are and right our approximately terms to pricing to to today In we that is essentially growth. each, lower There and having Catalysts, and see but Fine be now, preliminary flat. some year-over-year to our Bromine be view how portfolio expect pressure Lithium businesses due versus the will performing assuming gives in new any significant no XXXX, overall in net portfolio conversion Services economic we across Chemistry volume drive slowdown, not should these capacity of

$XXX the million company savings program this structured across have two savings to a the sustainable We in initiated cost expect and sustainable deliver cost to over over next capture years. program

in all performance results be to than are this manner. long-term capture by we our swift around year XX%. the XXXX market that opportunity is full into challenges closing even we to year view XXXX that Taking XXXX and taking in actions the preliminary account, EBITDA navigate emerge lower growth our In a stronger profitable could see full

We best-in-class dynamic and for can and seek operations. will transform excellence in our nimble Catalysts and be in market we to capital changing management in we We to asset other and response to similar plan conditions. our be - businesses in strength Bromine manufacturing build will our continue ensure to conscientious will to to processes lithium, continue on and

With that over Scott. to call turn the I will

Scott Tozier

Luke, good everyone. morning Thanks, and

we were $X.XX, For share reported earnings $XXX of XXXX about an quarter, or net income or the third share. per increase per Adjusted million share XX% of $X.XX third $X.XX diluted quarter per growth. to compared

lithium Our businesses growth in per $X.XX both growth high double-digit of and and Bromine growth single-digit catalysts. earnings about delivered in with share

a X% higher $X.XX, Our XXXX. $X.XX contributed as by a $X.XX compared count and third lower of foreign to program share depreciation tax about a those unfavorable rate XXXX lower offset repurchase of were was partially gains which result and exchange, share about our quarter effective headwind contributed

sales reported adjusted of of business, $XXX million net our third Regarding Lithium performance million. and EBITDA quarter $XXX

of by were first million and be Shanghai we pricing, a sales pre-release. currency, up lithium Tapah, ports increased fourth Excluding quarter. EBITDA primarily impacted which Typhoon due to the and these And was the despite lithium volume unfavorable XX% This up a impacts our year-over-year. earnings as to the was communicated X% favorable due growth in we reminder, impact included, adjusted shipments which recovered shortfall, volume caused to from and EBITDA. about the expect to third October, delayed in into $XX be quarter in in fully was This this

customer to in commitments tollers EBITDA the rates reach address and on issues of improvements, of capacity, an million. Chile. is to technical now around continue customer fourth full Second, into resulted reduction quarter. reliability The given Chile enabled the expected team use operating to have $XX This which meet tolling focused has in operating commitments, in

inventory was corrected impacts out $X quarter Third lithium that process. identified million regarding close period third carbonate the also during and a adjustment of included values

increase X% prior an in finally, pricing And lithium versus overall year.

$X continuing lithium EBITDA our sales China impacted about by unfavorably However, expectations. versus million in on pressure price

been excluded $X impacts. and Finally, period reported we million, adjusted third million was sales net EBITDA XX% of would $XXX and currency year-over-year adjustments. of XX% adjusted XX% EBITDA have out if excluding up quarter unfavorable million $XX Bromine it margin of XX% and the

XX%, nearly a favorable price benefiting of and plant product higher were most high utilizations, products. Adjusted mix at EBITDA margins X% across strong volume basis geographies points up were and XX pricing, and favorable from our

we flame electronics drilling market fluids and So, for and sectors, retardant automotive to the construction in weakness remains strong. demand continue see the oilfield in

in lower offset benefited volumes FCC be by in in technology higher these and to We volumes mix. the delays units catalysts the up Clean-fuel sales or million, both EBITDA were new unfavorable excluding to Favorable was currency $XX Catalytic the were Cracking And X% Catalysts, in adjusted third net of EBITDA and XX%. $XXX Fluid and third million XXXX, operation adjusted catalysts of from customers units. product quarter compared currently a startup sales or of impacts. two pricing XXXX. due to expect FCC respectively hydroprocessing X% was margins favorable quarter

XX, a On the performance October transformative Albemarle suite Galexia our for platform. the greater of hydroprocessing industry the new potential specialty enhance Catalysts the innovation that front, helps together on value. and solutions extract launched and Mobile Exxon platform opportunities The refiners full operational client called realize refining analyzing identifying service and by of Catalysts and

quarter Corporate costs losses of period of in in the primarily currency unfavorable the over million $XX million, by approximately same third an were $XX driven increase XXXX, million. $XX

was due and $XXX from XXXX, of nine to period months operations million receivables. for certain payables primarily versus decrease of a approximately Our and the ended collection of the timing the end million at same of $XX the September the cash in

on X.X deal, Kemerton debt X.X around gross net were MRL full and La net lithium estimate $XXX At times was Capital EBITDA and quarter, the EBITDA Expenditures ratio XXXX our with for the between to and from adjusted expenditures $XXX the to we our times the debt track we Negra million. through now be remain expect CapEx to year and times to around end range to million close of the move to to million. carbonate $XXX lithium the adjusted debt X.X EBITDA hydroxide project X.X September, of times. expansion

have our credit approximately new facility. joint unsecured billion We funded payments $X under borrowing an the associated venture by with

long-term other debt may this We to attractive that be economics. activity borrowing along given funding ultimately with expect corporate converted

on to of $X.X to XX% $X.XX X% be to October growth. XX% forma expect Adjusted pre-release X% billion, EPS billion sales to to or $X.X to $X.XX our pro to equating EBITDA and net growth. billion in adjusted to XX, be communicated growth $X to XX% As XXXX we reflecting billion $X.XX X%

on businesses. the The second-quarter businesses, we year. continue its for now and will the that into Catalyst has low adjusted our we down bromine expected performance divested the digits growth Drilling business in excluding basis, outlook strong deliver be low-single percent a percentage and expect to improved double-digit EBITDA down since full

And adjusted is XX%. to margins the of digit Lithium full-year finally percent expected and EBITDA grow to low around mid-single range in EBITDA deliver

this in happy likely are wondering reports of are and our our our all are plants Chile moving of is on how report At and You've employees civil I'm affecting time, are this that operational operations. seen first, to And unrest safe. shipments schedule.

We will not since have production tons unrest materially financial results. impact but the our metric of approximately XXX lost it started,

will to very situation monitor continue We this closely. fluid

stakeholders. Based year-to-date year currently XXXX. effective performance at the part items, We in bromine more production leadership our our and Investor sharing to on look our mix New to on To York reduction a our be Day December in with City. our plants. structure in non-operating close, is rest at XX We strong sales, will This expectations times, forward measures of rate value of act full on we current pension geographic deliver you cost align tax excluding be details in cost about to operating XX%, our maintain reflection special for these to to and position expect challenging OPEB items. rate prudent our our

with call the to over I'll And back Dave. turn that,

David Ryan

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

Operator

Sachs. comes Thank Koort question Instructions] Bob first [Operator from you. Our from Goldman

line Your is open.

Dylan Campbell

that of kind decline the then, growth are of XX% the and and sense what you're of Give that of the guidance when terms just is Dylan This of Bromine volume at I a embedded for looking moving in pieces terms in businesses. we at for morning. in on growth, XXXX. Catalysts Bob. look rollover guess, lithium the for And Good us kind Campbell

Luke Kissam

is Yes, Luke. so, this

lithium you level, about me pricing. at year-over-year our down Albemarle that try has Let can and XX% to if on XX a quarter prices our, each you high up see look on lithium the year-over-year comparisons presentation, that on at page on earnings flat been is slightly

And the mover and we comes 'XX from to on that year, in those and we that that we they down big reductions. down much cost pricing to the so offset seeing profitability On can all lithium 'XX the for how catalysts, we're when look XXXX. - it next we'll with on year, HPC, FCC next time how of have how depends in probably roll half they volume catalysts second out bills into some its higher get of

pieces or additional to So and probably again be loads would there price FCC be a weaker, Catalysts a moving of there XXXX. but probably from those working and get bit HPC, but little some stronger we're hard standpoint and is bits in volume some

any bromine running additional right mean on we're then now allocating And we bromine, have every volume, and don't we flat have. I out molecule

see do actions. that's what comes do by pickup overall then the we a offset and it automotive, this And in from we an happens to what see What electronics, down see condition. hold. cost little pricing economic all So from we

the preliminary head those pieces will finish right So are this into next year. is head more quarter moving into we now, information have as obviously - big and we

we'll update So year-end at our on our earnings - that call.

Dylan Campbell

of of upside, you. some preserve, again, fact considering considering thank your helpful. the the I are you market contracting I the guess do that, Okay, type going if, through That's assuming once and how then tightens guess, situation, that the structure? your majority And volumes

Luke Kissam

the percentage volumes a under we the we certain have in to Well, of on that structures, contracting just raise price ability those have past. like -

we be pricing if that to actions would, take those tightened, we'll conditions raise at So can certainly looking we prices. the

Dylan Campbell

you. thank Okay,

Operator

you. Thank

Byrne from from Stephen comes question of America. Bank next Our

open. line Your is

Matt DeYoe

companies, to consumer for DeYoe want of consumer ban a think retardants to percent adopt if demand electronics from what potential this to Matt kind you new is the market? they standard globally? Steve. display industry little you bit So, the broadly in that and - about I the electronics talk Do more to on applications, into certain fallout and of you goes flame can proposal EU

Luke Kissam

then I'll to specific tell we Yes, the I you level let where are. and then into go a at high and start Netha will I'll

Netha Johnson

minimal Yes, we've goes looked going in XXXX, business but we expect our that on and past have forward make will we substitutions our alternative into effect we looked impact at there to and have it that starting we've looked it some when business. to customers at and that alternate think replace there

David Ryan

Tosca been look level, you US, high Regulations we've you at if at globally. the, the if look the So some a with at of in European dealing

we're done really Albemarle been moving XXXX retirements of under we've molecule, it's evolving from we products able if - the that for, larger a the joined the meet review in smaller And to since harder to job away our so a have we've flame have. formed we constantly All that all. and so getting are at of be technology bio-cumulate of these some needs done good I customers

controlled you a see today, meet and really it's we piece small to needed flame and market believe innovate issue to in the it's retardants. sense, to Europe, to products what related bring continue what's a we is to that in serious So

retardants, an a - to I won't it's provide in will and XXXX, that innovate And really long-term maybe small the so anything effect around continue think need. to have that edges the it if our needed effect customers flame

Matt DeYoe

All touch And can on right, thank I the you. then contract. if

like stipulated like like could find [ph] the - renegotiated discussions both and past in be terms could customers think contract product like I So quality and that if quantity.

specs? the Or just As the four softened five and Is producers? EVs a now supply kind producers that you're of more technology seeing here. the savvy what's tech same to are market market proliferation more or such incumbent from happening hit seeing of for slowdown and can demand different you

David Ryan

producers takes some all in $X about below I It's is of sell in have of talking think oversupply four, then it, savvy the you're at some a the China converters. - conversion five seeing I carbonates those is cash there the those for today what talked about you're market now sufficient and probably volume. right kilo costs that's an China Well,

on have grade would The marginal getting of is any it's I term, or is ultimately long are regular to volume. not the other technological there with lower consistent producers producers, you're those some out comfortable in you're they're to four being a So spec other and price those not, and specs see going not EV is for advance - grade the battery those that's uses, big the with. is that impression that able you're seeing able been. those tighter five basis meet in technology other where specs the to a lower the specs is it be come where lower There and volume - that seeing you EV for should by technical at some going it's producers there to

Matt DeYoe

you. All right, thank

Operator

Thank you.

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

Your line is open.

Joel Jackson

I non-contract very and Good of this average like you between next similar. break down looks down color, Do across - non-contracted I non-contracted? lithium, price you Thanks. it decline guide think, both or base? contracted your small drop, price to massive be contracted XX%. year your your decline is and to contract base in take is EBITDA a XX% Can and base morning. declines you're a down XX% if little it we how going more to in do very, your a So million If give $XXX the guiding a maybe

Luke Kissam

we're good. so and contract I'm because to not as the specific middle negotiation that about do discussions going Yes, any then said, us get into of in I

you'll So, understand I hope that.

across technical say that in a coming is me but there most back portfolio. pressure and let having pricing carbonate, across So at portfolio. pressure high a The in effect the is grade China, level, particularly and ripple the in is just up

going according that's that's you're the as see it comfortable that said, market, about to we're of and you discussions. of - much as So that into, going about middle to products but it price fact movement, different different I given levels according end as am the to in

Joel Jackson

that. Appreciate

Kemerton. on question Second

the carbonate, at if it looks Greenbushes - in to - So there, support at run Does enough makes for enough you XXXX it hydroxide next supply for tons, that spodumene marginal the to mean low XX,XXX. have external the beyond quite very mean at like it sense spodumene seem you and extra operational I you get will to look like there. just it Kemerton that Greenbushes, rates the looks improvements restart XX,XXX doesn't in almost maybe wave source not Wodgina,

Luke Kissam

Yes, stakeholders. because spodumene us from from buying Albemarle of us the sufficient can't parties around have to need whatever carbonate geographic is our from do a gives anything. diversity other - standpoint do see back we we'll we source source from We'll supply that to we'll spodumene what to do highest do that a to so have I net the and globe, the carbonate our

and all we see are So producers you but not we'll we at we that where sourcing are have. where right have the flexibility other market in are - for out time, in shakes that point that

Joel Jackson

you. Thank

Operator

you. Thank

from UBS. next John Roberts question from comes Our

Your line is open.

Matt Skowronski

XXXX, this impact you prices average John. Hi, in lower throughout from your be? level what million the the where remain Skowronski level $X this on move Matt at China - prices hit remained pre-announcement, In the in would and quarter, prices this XQ EBITDA is third if if were mentioned for

Luke Kissam

Ask you. that following I'm one sure question I'm more time please. not

Matt Skowronski

million were level. that a EBITDA you So to mentioned that Chinese $X prices where from lower prices moved pricing, hit

lower they are or And higher than they So XQ then... 'XX?

Luke Kissam

that most that the over of at look that lot see a year-over-year, you quarter. accelerated you decline the will third seen page in in we've if of XX, it Yes, price

and some year-over-year. of the third third was you that the So about see was overall saw were half of XX% price down was those an acceleration saw you of it it market down decline If in for products in you for of quarter lithium they quarter. XX% the - -

you going So want prices Eric, fourth into details? quarter. decelerate continued do to to talk the some have about

Eric Norris

question, looking price you and three price talking months in asking at talking just but or $X that would talking we $X talked - now price. about were about in ago, offer an have price would a if are we're $X about to that we I China,

right China, is the So it's that's there. part, our on that's a of impact your business, In but had our it difference small the and part P&L.

Matt Skowronski

Thanks are these a comment that expected assets then bromine volumes, off you going higher just operating of you And that. noted are normalized kind levels than made, a now? for at just your of

Luke Kissam

that from Yes, I will think to expansion and that rates we'll capability some a be get but do do we've did the in enabled enhancement we forward, going increases us expected very run always year, that little increased in utilization JBC get our plan to our to bit than confident been when rights we to, able place, new we're out run last enhancements. it rate productivity that's we and volumes higher continue get and nice those to we in manufacturing the and set manufacturing

Matt Skowronski

Thank you.

Operator

Thank you.

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

Your line is open.

Arun Viswanathan

stabilizing see potentially are into just kind Good it looking what or things I the look or that or maybe growth? of or mean, supply next is else some what think environment. watching is are disruptions year, you of if as anything even you ask Do are else? Or EV morning. the macroeconomic demand for turning you us around, I I just drivers, lithium to guess, about wanted to you're

Eric Norris

Hey, Arun, it's Eric here.

global fundamentally that about the EV growth a that's our remains demand. I not we've us necessarily We a big China, pause intact. for long-term are think in feel the while pause view seen drivers for and

And The exceed not in believe put assessment. focus new channel. - is is inventory and a new this enough on our let's There supply growth. the demand supply or lot, the on way. it we our coming So in there supply there's will not not that's

six inventory? price in still then more There three XXXX. into months and times So to the that's is probably how effect two you're inventory, maybe is much drag we so product now probably is have, that see the you at having should question inventory, of level on least an an the

Arun Viswanathan

I'm on the rates long to oversupply work that that the think the even on especially and an it been little note, you bit such battery side. of in And that, through grade surprised guess, tech technical kind just in with would I a there lithium impact how do has EV take

there So maybe the why you is we're can just impact understand and what seeing help that? us

Luke Kissam

about is We - hey, we Yes, Eric that this included well what didn't just was grade technical battery grade. talking as overall was Luke. don't as

is the derivatives months XX we overall. XX about - view there in take there for think the time that's prepared trying So going to it's to supply that's all, to for and is we overhang I And remarks at of looking today. conditions we're said is of months our market at an lithium we what think think the work think we people chain

Arun Viswanathan

other - it's And accelerate lastly any shutdowns to aware industry or that guess been there in potential do, destocking. Thanks. can you the I just, is of anything that of reductions else process Have production?

Luke Kissam

going we to tell Yes, doing is we're we're of what I can take can't you can you comment control I on what other people - doing. are thinking what control. about

market anymore the MRL venture idle in right to the can joint conditions. see to made close, you with those need So spodumene assets, we deal because we bring when the don't market this decision to

what to standpoint ensure we can from control. that actions we're Secondly, internally going will we to a cost control, take

Arun Viswanathan

Okay, thanks.

Operator

you. Thank

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

is Your line open.

Michael Harrison

Hi, good morning.

to the your relative like we about I'm Just looking on you in and can kind levels. building questions at just talk the contribution XXXX should Talison the about much areas wondering, around spodumene there from the supply. too operations at Talison how maybe think inventory It is of where XXXX? is and of seems one And

Luke Kissam

take grade into converted raw to that perspective Talison that well a that in 'XX, our Albemarle 'XX we are a assets in relative Yes, from does - to both CNG grade as is converters. as perspective GIC as contribution Talison from remember material in and our and total a supplier so that's technical it rock battery and really

up a on similar essentially client new be what going I expect XXXX. we saw volume would So so be and Tianqi's to bring to it's to than will slightly that, or be based higher in that slightly it

Michael Harrison

to be surprised and I next, could go your for of back And what catalyst HPC Catalyst IMO, of impact in over - view 'XX? the was on growth your to was the 'XX maybe, bit expected then the I right. on what Can that maybe lower expectations discuss hear the the and of All it's you have little bit updated side on guess, little XXXX. we in a say XXXX half are here second HPC that business, on and a doing

Luke Kissam

Go ahead, Raphael.

Raphael Crawford

Mike, this sure. is Yes, Raphael.

at, think look IMO demand low IMO specifications be of have impact we on tightening So mid-single you picture, than world, the around I think HPC really an more and the so overall look the will but do for business, you when sulfur when that favorable. at to will catalyst which back you our it's digits, step

around what but As Luke of demand, industry. various is weakness customer feel like indication sulfur are in in down us overall IMO push that up the things the business the more the of in the as timing onset that of business refills, of world. in the regulations mentioned any customers the or we not could year and tightening specific given the timing at for included with there call our favorable

Luke Kissam

time. - the fills going is product are any do Luke, you the have to simply mix, one to just what is as a be mix HPC, what of as period well in customer lumpy what that this Yes, business and the

of a issue, expect It's that's the So say down. just the overall fields with reason matter a to we got It's it simply market demand, not I that not issue. today. be only do a price could share nothing

XXXX Now, 'XX. expected XXXX, we more - got we we than in in in were did sitting here fills if we

little bit HPC little is So some to better it's what looks the today. to working, be may indication are or so a bit is from team still an ask be like is yet we up. but is to where down move be a mix, early going people orders able little up bit and FCC we It Thanks. get a going

Michael Harrison

it. Got very Thanks much.

Operator

Thank you.

comes Begleiter Our Bank. question from David from next Deutsche

is line Your open.

David Begleiter

growth Luke Thank lithium your volumes what there'll you. volumes just on in do lithium in in and be, you do XXXX? Good think any you XXXX, Eric sales morning. and expect

Luke Kissam

the or sorry? I'm Hey, is there. market your David, - question outlook.

David Begleiter

in sales your 'XX? potentially On volumes and 'XX

Luke Kissam

'XX. So our sales volumes in

prior XX,XXX from third so the so as year is versus it's and rates, from - year, plants, as Xiniya of three Xiniya - - is so big our well that first the the the that's run is running wanted there this a coming growth we half what which growth. for of we'll about And one from - is remainder quarter. the ramp full though coming in be of we you're the Negra haven't from both - So II, year, ramping, to that, quarters is up part at now year-on La Negra but growth full coming ton like La

or favorable We of during expect couple a the for the growth year-on-year of fourth thousand so quarter to tonnes X,XXX, show year.

Eric Norris

we October and we probably you growth, rates rates, - another So, if assumes first the that did of that rate at The XXXX in we X,XXX look maybe run. Negra they've way volume tons to to I percolating ought that's expect there, would we'd they at from run point at quarter. is have get brands don't ran have La ever growth in be highest it the [ph] down stand the way like additional a David, X,XXX metric and

all Now year. Xinyu what XXXX. year that And then ran into from we've we'll of a to we sustain this got full get II

the get So about X,XXX X,XXX to or to that's met I the tons. X,XXX how

Okay?

David Begleiter

be $XXX between segments Luke, million much breakdown those cost next $XXX Very what's the on of three just and helpful. savings, million? the the year And how will realized of

Luke Kissam

to in Yes, is bit of going much little how it I next don't it's time. to take don't - some I we're of because year, know going a get -

Day, So at out more will we'll Investor quarter we we we call, earnings our in roll update, David. update then give fourth the you into information will have you December, and will more

David Begleiter

you. Thank

Operator

Thank you.

from question Sheehan comes Jim SunTrust. next from Our

is open. line Your

Jim Sheehan

morning. good Thanks,

and close you color now La And issues what I Negra in be given said have going won't you can operational to was third track produce on XX,XXX give that think carbonate gives tons these of to out confidence in shortfall the number that some XXXX. they cause the What repeat? you on La Negra is repeatedly just quarter. metric lithium to what

Luke Kissam

talk And we've company about the Yes, at year. tons on, and XX,XXX for done over one around La taken debottlenecks about running Catalysts from one Negra the things me some of that process we're then this like best Eric? so do and La Negra things been we've right, is Eric some met of Between Bromine let some the XX,XXX, months and chemistry helping they've fine we first with some down best the engineers, class, and last of in is have that from details the and from XX,XXX couple about services in that.

not that not not rain and hit have with the because the we'll to able Bromine the where things have we are, I'm So as that. of rain build struggles have be - the event - next such from the year confident

in making. So, about where that I we feel are good progress the we're

Eric Norris

in So and than the about of beyond plant, of issue this just third Jim, and year, add. during the we in quarter rain, expected the we I'll more had. talked that Bromine terms reliability uptime we've reliability but enough I'll more uptime move

all out, point point out. Let me this first at it's sold of

So we everything we make, can sell.

where is and and to is where issue So we with can why if to our we're - tollers. do going that's there impact, time we're have so qualified backfilling an

that to Now way world we've a said, plant in but is and but an Luke we've has organization. ever outside brought journey, had October it's we're class, this on operationally business, got and excellent from ever Lithium skills operational it's the our a within as month new a the there, sustain so had people not operation, of also the talent we're measure or there It's building yet. we're of we right, from aim in that, We've the said, that to October. to been that due best the earlier month large we upskilling had being be

Jim Sheehan

specifications Do told explained Very some kind and and is based you price meet Chile. spodumene toll not, a helpful. concession tolling of how offer products? they you've product explain have volumes you works to the brine toll if with based how Negra And big quality grade mean it carbonate thus, from about you Our meet producer difficult those Luke in in and do specs La could the five carbonate for past process to commitments product? coming battery or the lower given also lot the

Luke Kissam

questions. of lot a That's

a and else we take don't until one we So let else it to don't anybody give toll any Overall, them brine at time. me to our brine address try for anybody us. from

use slowdown internal a metric customers. a generally little but different, or lose So in hydroxide mainly carbonate sell if it XXXX downstream carbonate a China for supply consumption told spodumene at party directly totally we X,XXX previously, have if might tons. specialty party we to go at to in our our we we Negra bit XXXX, We carbonate what third our least and and in Talison La take to from to have that been is businesses, either into continue generally and we have third to a

Jim Sheehan

Thank you.

Operator

you. Thank

from comes from Buckingham question next Our Research. Dmitry Silversteyn

Your open. line is

Dmitry Silversteyn

just closure you to Good the my call. just couple about over may, outlook from questions added taking I you've get that you incremental want I that going the understand XXXX, A right? talked took outlined morning. line the and the still through that's the growth second of you're for you without go slide. that $X.X billion Thank in Wodgina done volume ups that still for in mean, on impact outlined of ramp doesn't sort slide quarter of XXXX to but terms of capacity if in you've going CapEx down this capacity additions as of capacity of the carbonate hydroxide expectation, mine, it you've in progression I it sort XXXX the capacity when to

Luke Kissam

Dmitry. That's exactly right,

Dmitry Silversteyn

I guess getting And you're been the obviously on the while. chemistry a the inquiries Catalyst the fine the interesting I sort divestitures, it on Okay. if on around of market, found fine business for in chemistry then business that has

or side, the would interest. of include business? be that curatives still Catalyst strictly subject forma mentioned pro FCC, the Does the Catalyst you Catalyst that HPC kind the On being of and organometallics

Luke Kissam

Dmitry. me It and organometallics is the that right, the clear, so is Catalysts, Yes, of is not have which the is, the HPC, not it business, are been refining FCC are inquiries it curatives. for the it and let portion be not PCS you

Dmitry Silversteyn

not basically of a as to of at okay, or Okay, of you look - - necessarily with yet you help catalysts sort requirements refining way bromine used businesses, contemplating you that, I you're would what the lithium? call you're in orphan the possibility capital some being looking - looking

Luke Kissam

asking the which call I of capital. and they teams I good like my better favorable, would for quality have they businesses but orphan one are capital Dmitry, all. competition me say children them that can a an business, operating if that with with I are wouldn't much additional just and focus love do

they're just We it. to going have, not get

value needs for for better stakeholders it divestiture. it's is our and creation If, be. the only valuation a if, where to So

I look okay. that's So how it, at

Dmitry Silversteyn

Luke. you Thank sense perfect much. Makes very

Operator

Thank you.

question Juvekar from PJ next comes Our from Citi.

line open. Your is

Prashant Juvekar

Luke. morning, good hi, Yes,

and to of shutdown. Can marginal the So the about Wodgina you you what's in Wodgina your what looking - light producer spodumene signals are again? of fall and curve, cost start cost looking whereas of for talk the Wodgina there,

Luke Kissam

is Well, follow in purity and follow foreign curve, the rock with the spodumene best from Talison and there lack world. if rock cost position of cost of you the world the is the in the substances premier Talison you the in

low Wodgina the a quality the with producers there from cost going monitor to to from the there to then position able we're cost the from curve the resource, Talison linked up picture resource, on that you the If the get. able that out we'll right of be is cost take of out be size from

a between material in for the sense So, standpoint it joint treat quality to is Talison to from way the same to the we we sell MRL. Remember, treat hydroxide standpoint. at convert cost use we and to it market look raw that a as and in today, a we're source top limited it for weren't when a we think it Albemarle venture us, from MARBL makes lithium today tier Wodgina to going spodumene, we resource planning

So completion we'll online get in sometime that XXXX. Kemerton start and bright we'll mechanical

we'll to with have where look period we a source Kemerton. to then time Wodgina have of runs We qualification and have

run how need extent that us bring whatever we demand Wodgina the the on it hydroxide. of operate for will bring makes will the meet for day open one, on it wide capacity and hydroxide for to dictate that lithium amount for on To to We capacity we'll mine. to market to sense conditions lithium bring don't us makes

Prashant Juvekar

goal refining catalyst then business Albemarle fund for divest, just in you're become Thank the for pure generative to to you. cash a you and business company the Catalyst bromine of Sure, that's or and were lithium is the the if Performance that. Is can Lithium. thank Chemistry that the growth business. So you long-term Fine And dip keep portfolio? it to

Luke Kissam

lithium, to we that had kind 'XX think you is I Yes, but of cash lithium we'll look to When it's in and be catalysts we business, if that, solid time at good back drive to frame for allows we today, portfolio like service and to fund value. debt, right and business. inclusive positive look if XXXX, it, margins flow EBITDA and of start things, able us cash use high the that bromine harvest goal our shareholder see our now, and Lithium

look will two have we we a but consistently always our we as the future, for these divestitures. like at So after foreseeable we are portfolio, where

Prashant Juvekar

Thank you.

Operator

Thank you.

Oppenheimer & Company. Our comes next from from question Rusch Colin

open. is line Your

Colin Rusch

Thanks so much guys.

battery your sort that maybe of Can you about manufacturers to As consolidation talk in distressed at you're you expect of situation? strategy. landscape industry, looking handle how considering the folks and that the and

Eric Norris

So, hey, Colin, this is Eric.

getting a about and is some around continues a is of talked battery more used and the battery before power decision-making in it I've battery OEM Lithium and manufacturers materials shift sales cases and seeing, are in engaged. to we what the So in

we're we value the And how group with we Cathode group cathode going already. in that's that and the producers. to at contract see there form at fragmentation OEMs, that a we across so relationships battery occur, have a dynamic those players will is look you pretty I three the time with, a balanced when and there but deep of is the deal or parties, of is consolidation some partner group, more with but that's forward, pace as there, producers, say where see we a relationships stress that's that speak would prepared think it's more what well business all lot hard great do chain, over our balance we and

Colin Rusch

in second a China of you side, then and you the China in particularly in the are it if a obviously has What anything? this - this perspective stimulus for on policy from the on for hearing through of been And situation point, major vehicles for half in terms is Great. sell at disappointment, potential year.

Luke Kissam

in What - the on a intent is of grand as a to China. policies pause, part that an development it's interpret industry plan it's shift - for is going a of the what we right, is

go So and where want we have are no to doubt about and hearing. they we what intent Chinese

Specifically, to density battery go. drive of is the is the electric that want aim towards vehicles where higher energy they and batteries full

we So little we - will recognize that, in couple it's that road been it's slow, been that view today. of in seeing certainly EV a in pause the but the pause, we're as significant the what Europe past months of growth, simply a and be space a global natural in

Colin Rusch

guys. thanks so much Great,

Operator

Thank you.

G. from [ph] Our Joseph comes from question next Research.

open. is line Your

Unidentified Analyst

or responded delaying going softening dynamic going prices sitting expansions, chain, fall canceling morning, everyone. to be with has be you but in industry industry price and with capacity forward supply needs that concerned, lithium you Are to more there's consumed. room others amount of lithium destocks? carbonate Obviously, for the the Good as both to the to

Luke Kissam

kilo $X than as that's conversion lower cash have hard we think about a of China we price in seen a on said, right think you much got the their time I kind I is, them call, where whether of much, now, We, cost - that. going

Unidentified Analyst

$XXX and high between fairly the price you're kilogram to expect carbonate shift nickel range? to widen, seeing year, steadily, it slow. to it's the lithium two you the $X Do seems Okay. spread And this in like the growth as the accelerates cathodes tracked

Luke Kissam

Albemarle's I'll of couple which six that both. workhorse of advantages, producer is outlook carbonate plays the that things made much hydroxide for say. ability only remains with for play to industry the chemistry, is strong, has carbonate, four demand the Today, One a demand the hydroxide is growth two we that Well, to to stronger. we're

would I future, tight, hydroxide the don't major today, spreads because we see that two. the between of the getting change market growth to in know we forecast we any see in but As the hydroxide,

Unidentified Analyst

Okay, thank you.

Operator

Thank you.

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

is open. Your line

Kevin McCarthy

this your a Luke, of week. industry Yes, contract peers one with new announced earlier LG, good morning.

lithium Or perhaps you given look disinclined are has long-term that As new to there prices consider you are contracts? that isolated all opportunities with attractive? transpired contract your generally strategy enter

Luke Kissam

so, both under Yes, Kevin. We're we're long-term as and everybody to existing long-term with the OEMs, additional - new both I in talking our as for agreements, in producers. said, with well negotiations as battery agreements

kilo negotiations for is we that, there a parts companies tells and from like and - that is we're Albemarle pieces will moving discussions me security knows So with what are ability a of and not - sense in, do carbonate, not we going is a at don't a in us market move and a supply make a is need there we because into in for everybody of to lot the it is price to today that not it long-term contract, for any up. a happen, enter it, $X think lot of we're do to going

we're we customers will bring, we that well I know value stakeholders. I best the we So our the to agreements into know value the know inclined think way the drive as That's value to it. that bring enter describe and for

Kevin McCarthy

EBITDA with or of And second, point that fair midyear aggregate a included is related in a a Okay, how characterize your or guidance as comments level amounts divestitures, regard contemplating the EBITDA of XXXX then to you And decrement enough. step are there? potential your down of divestiture? would clarification to you

Scott Tozier

Scott. is this Kevin,

this not in the do in if - talked not, time. don't we by million the get to point if we just if to - those if, we we to million process the expect and up end those that for about started we'll We our guidance we we'll then So in need we'll we going is them $XX and value $XX that we're have of if see kind businesses transacting. combined as - EBITDA we the assumed range, sell businesses at hold

Kevin McCarthy

Scott. Okay. Thank you,

Operator

remarks. that Thank to conference. the today's you. conference Dave to closing back Ryan And any I'd now for over question-and-answer does session turn like conclude the for

David Ryan

thank questions for and I'd for us everyone like your participation. to joining morning this and

Albemarle's always, As interest. your appreciate earnings quarter we call. third This Thank concludes you.

Operator

and program have Everyone disconnect. all does a you thank you conference. gentlemen, may wonderful today's and participating the day. This Ladies conclude in for

Albemarle (ALB) 7 Nov 192019 Q3 Earnings call transcript