ALB - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

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

Dave Ryan

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

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

Tozier, today Joining Luke Kissam, Scott the Officer; call are Chief on Officer. me Executive Financial Chief

Specialties; call. Bromine Eric President, the Catalysts; Netha Lithium also will Norris, We Raphael who President, President, have Crawford, Q&A Johnson, portion and participate in of the

As statements to performance, note the federal securities call. call production about conference cautionary applies some in constitute as a company commitments meaning about of our language release press and may reminder, within well same as of made during that the language forward-looking statements Please volumes expected laws. statements Lithium the our contained outlook, this demand this forward-looking

today not our Please to reconciliation also note our refer on earnings A found in with can of that prepared release measures be GAAP appendix both are in which financial GAAP. that earnings the of some our posted accordance of our website. and comments presentation, are

to Luke. Now I turn the call will over

Luke Kissam

to our an Thanks, give savings cost full we provide and will our on the call, XXXX will deliver and good address that Scott everybody. strategic on on guidance. vision. you the I Dave. ensure year And a financials, On focused program today's be accomplishments morning, our will recap of update XXXX XXXX our milestones

year. reflects results to market EBITDA revenues a address share quarter half our and Despite per ability across grew and year That we to over earnings adjusted back fourth businesses. solid a challenging year and our deliver adjusted of XXXX, dynamic full

cooperation XX%. vision. long achieved of addition, was EBITDA step strong our adjusted margin XXXX term another toward for the In we and

milestones. number see, of significant can As our on a strategic we on presentation, you of process made six slide earnings

in rate improvements rate XXXX. with significant reduces injury Importantly, our Bromine from we safety four injuries. lost no achieved surpassed years by in And injury made XX% recordable Lithium Catalyst years. lowest time program. its two

in puts quartile of top Our our us XXXX in injury OSHA rate peers. the

our marked increasing the are included And index. $X.XX XXX annualized select We dividend from group now that the in double to of companies XXXX. we consecutive increases. of dividend XXXX to S&P to cash commitment in $X.XX demonstrated year through shareholders XXth comprise in XXXX aristocrats return our

that and strategy into to strong to CAGR Albemarle That's a XX% for we assessment In commitment also in future. XXXX, come. identify a sustainability that support the topics we materiality execution position continue maintains the responsible decades of manner well conducted financial a a our ensure will and

eight the our community natural you you'll improvement. business In investor and of progress. see XXXX areas; term for As model. We can engagement from to focusing targets key forward resources, baselines you our presentation, people, on us four see updating establish look on page long we're sustainable and

and strong is both Performance Consistent businesses. with last process and announced manage Services Fine to intent balance going quarter to a sheet. the Catalyst the for maintain our efforts portfolio our well. businesses Chemistry divest We Solutions The

million sustainable we priority expect last is rate reach year savings first Also a deliver and quarter, debt. in of we by a XXXX. proceeds the to be program this from million to reduce annual program end underway, and Our these run well savings transactions use year $X will for capture announced savings. over of to in cost $XX This

support about growth his enable with last year implemented our Scott we session. in the provide plans. better will Lithium visibility system operations. real will ERP To new this of all time detail into The program our more program

capital We major XXXX. during projects continue on expansion to make progress

their XXXX reaching with China, We in hydroxide teams full exceeding operating Lithium less than II nameplate the months. and Xinyu targets XX successfully in and unit our operating commissioned rates startup

our production II carbonate La We also X%. by about I and in Negra Lithium increased

IV and in on quarter III expansion Negra La first Lithium XXXX. Chile commissioning carbonate The of is by schedule the for

unit commissioning XXXX. Lithium Western during Australia hydroxide Finally, half the of latter for targeted is the in Kemerton

class approximately continue the The to our quarter, also Talison Greenbushes the annual II LCE their tons chemical completed bringing We develop metric on grades for phase best venture expansion Lithium spodumene in resources. of in basis. an joint fourth capacity to XXX,XXX

rights that production. has to of half Albemarle

LCE our addition, an Albemarle grade the venture metric hydroxide. In have Wodgina ultimately XXX,XXX to battery the has of Lithium resources annually on joint MARBL joint access This through class spodumene produce tons venture. will conversion secured world basis mine and to assets

respond mind than demand less Keep XX the Lithium available gives of the our resources, using XX in quickly that growth to us to years. ability least the at next we XX% for are support to Lithium which currently

Currently Turning to hydroxide and Lithium carbonate under grade volume our our long battery XX% term contracts. about of contract. is

on customers reductions for we price XXXX, carbonate being generally a percentage To-date, agreement concessions reduction hydroxide all grade reached in one and results which technical one of price compared but to lower. have higher XXXX, seen with our mid-teen battery year contracted and with

the term Otherwise, agreements basic structures remain long of unchanged. our

critical continue agreements to evolve customer to them. manage these with Each customer. to the unique drivers has of value our will that individual We needs are

value the low class customer. demand proposition processes deliver a We conversion growing each world resources to cost differentiated remain committed meet to to leveraging our and and

adapting our largely Investor As at remains aspects strategy Day execution, in our we December, the same: our while we outlined some of are slightly

and sustainable operational investments, focus generation Maximize Invest systems, cash cost in Bromine excellence. on and and earnings in the advantage growth smart in our savings processes Catalyst in cash position. resource and through investments Lithium and people, and through

and allocation portfolio to and lower a thoughtful assets for intensity. take or And capital businesses, flexibility. a preserving opportunities build at capital acquire approach divest non-core Lithium disciplined to our financial Assess conversion while

Albemarle A XXX of And $X billion X% should billion $X.X versus XX%, billion. year $X.X of annual Adjusted sustainable and revenue generate $X.X A of By X%. EBITDA of executing to growth cash free that X% adjusted CAGR basis the XXXX EBITDA CAGR XXX improvement. XX% between A by billion. $X.X flow. points margin billion in to strategy to to XXXX five range results to XX%.

the mini December, inputs cost our forecasts. of historical we factors. advancements, These OEM a technology also demand inputs In other use to model include number Lithium build projections, announcements, and we forecasted outlined and

the continue these We miles, some see to of exceeding EV is further The anxiety, advancements variables, exceed launch infrastructure parity. models to global cost models which adoption; to XXX range with expected XXX. of consumer new namely reduce scale average range impediments and wide

technology will also accelerating. there Europe improvements mobility EV public to scale expand, support charging the globally, million now and and in are are To and X And cost number through continue especially almost connections China.

per hour time New most costs the XXXX well the in battery period, ahead their pack The Bloomberg Finance to $XXX the that hour year of a milestone estimates of Energy kilowatt BEV Lithium just surveys, kilowatt In ion reported or range in two reach average recent for $XXX per XXXX. is XXXX a now in was within ago.

being the In timeframe. parody pulled forward into predictions fact purchase also XXXX are

trends are the in our us with model, consistent of projections leaving our of demand even All these expectations. more confident

has there hydroxide effectively grade resources carbonate over lithium. Lithium is very be five we support ability confident seize EV -- Albemarle's battery resources and will see and absolutely in will without world. four the the into no cost Converting years in three growth. to that critical opportunity. I next to those the revolution Remember, the in demand Albemarle market that to Lithium demand best remain

call that and detail With Scott on to I'll turn fourth provide performance year to over the quarter outlook. greater full

Scott Tozier

quarter, million the income to Luke. fourth $XX GAAP $XXX US Thanks, bringing full to everyone. income XXXX. compared net in net Albemarle morning million of $XXX good And during generated year XXXX unadjusted million,

for factor. acquisition charges MARBL the XXXX were during Increased a

XXXX creating difficult sale the polyolefins benefited million on gain However, of $XXX from components comparison. and business, a the

XXXX XX% diluted increase over forma share per of prior $X.XX year adjusted the on or were a an basis. XXXX earnings Full year pro $X.XX

of about $X.XX businesses share Our per delivered growth. that

tax favorable The a repurchase expense. impacts, and corporate rate offset higher were Lithium from in benefited share gains and also program. XXXX increased currency from our by partially depreciation XXXX

was the capital reduction versus prior just operations working rest businesses, in in improved XXXX, over of driven of $XXX the a of from increase across million and the capital company. cash by Lithium strength the an XX% working the year, Net

total expenditures in in timing. Capital $XXX ended after million invoice XXXX into $XX at expenditures approximately shifted XXXX on based million

our major will projects throughout continue growth update on progress remain and on all we you track, mentioned, their to Luke the As year.

of In maturity restructured and November XXXX, $X.X billion offerings the equivalent we we which payment about our MARBL used closed pay to the end on the of curve. cash note venture the joint short

reduce we debt As grade on X.X% of our annual by bond points the to by X.X. a costs our We to track a closed right investment interest average XXXX XX at to agencies. all three with get ratings able and are reaffirmed basis net EBITDA result offerings,

performance. let move on business the to Now, me

X% year at EBITDA $X over just a of sales Full-year and XX%, EBITDA delivered adjusted respectively. $XXX XX%. on and Bromine of million, strong year was of XXXX, During billion adjusted growth margin

automotive continued is and for weakness the flame retardants growth markets there prices. Bromine remained and volume supporting healthy Although elevated year-over-year derivatives the in other sector,

online Volume of competitors. growth continued to Chinese production that elemental mid-XXXX. the grown came by in by in was expansion void Jordan by constraint Placing supported be tetra Bromine

businesses. compared Full million, XXXX divested that adjusted excluding adjusted insurance EBITDA approximately XXXX. Refining excluding and Catalyst settlements mid-single year were Catalyst $XXX flat in provided growth, received sales were percent to onetime digit EBITDA billion was $X.X

FCC help single increases FCC in sales in and Strong lower HPC low volumes digit price volumes. offset to

XXXX. up were the to XX% volumes of lithium quarter, fourth the quarter compared fourth During

in quarter, and customer adjusted Increased flat tolling mix about negative customer in XX%. of resulted fell the X%. customer commitments was mix pricing to margins the and Average by meet EBITDA

year, EBITDA and million adjusted about $XXX of XXXX. And Adjusted For Lithium about down XX%. X% was full was increase margin generated year billion, full $X.XX then sales to of compared EBITDA the XX%. net the by

the by XXXX, grew prior Lithium LCE XX% year. During we volume versus

flat XX% remained year-on-year of to customer under XX% Our down an structure. our the average backdrop being of industry strength relationships prices and contract prices demonstrating a overall

in lithium mentioned the than Day, As has our we we volatile Investor more expected. been market

our adjusting So we're approach.

and access to lithium. cost lowest bromine the both resources have world's We in

as succeed to a business to low But have volatile and operations we processes well. in need cost marketplace,

savings earlier, Luke is program sustainable our well underway. As mentioned cost

We've in a million discrete of $XX XXXX our over savings identified come guidance. the sustainable have and tracking project ownership About will administrative included anticipated We of savings selling XX costs. projects, XX% and assigned instituted from dashboard.

spending will of achieve of and factory can we million the have outside come $XX example, that operational from than we savings more through efficiency. XX% identified For reduced services. About also reduction

at this XX% an come will operational generate $X last one year. expected $X chain of million supply logistics. our million in activities, to procurement And facilities production and to of from project example, excellence is For the savings savings like

For of that the freight we program across the consolidate globe. number forwarders example, will one use

XXXX of end XXXX. million the We targeted are rate run this by ability achieve $XXX reach and our in in to our milestone confident of

focus in on of provide due timing our Execution than XXXX we'll projects XXXX, And from spending to previously to updates anticipated. a the year. XXXX push periodic that the capital higher throughout our be payments capital be continues of in will progress

dedicated between total billion $X $X.X You XX% can that expect over with of Lithium growth. of to and CapEx billion

We that needed to businesses are certain continue plan. growth level perform at that a our for this the cash generates will

expected and as up between range to Net lower $XXX capital. same XXXX is expected from cash remain to from cash million due is in modestly flow million the XXXX, XXXX. Free operations $XXX to about working

Note models. of that doing when on earnings provided points your our some page that additional we may deck, forecasts be our XX have helpful data on you're

me turn for XXXX. unit outlook let our Now business to

and begin to from going I'm the that. impacts Coronavirus the with

the by Our have been thoughts families, this who are impacted virus. with

our cases employees. For had Albemarle, among we've confirmed zero

our are agency recommendations are managing all situation and and and health government the requirements. We protect to with and diligently local the complying employees communities

to occupy conversion China. across in several facilities addition offices in Xinyu we Chengdu, lithium cities hydroxide our In Chinese and

expected offices a these capacity our a week on resume to been offices production continue next and Lithium, the are in cooperation determining steps in normal our and operate local operations. In the reduced return have we at limited from but are at to government working with Employees home sites, to safely, basis. next

from to date, minimal we've experienced to produce needed orders. fulfill reductions To quantities customers and able our order the have been

experiencing delays. is logistics However, businesses each

an remains The effects. materials deliveries of and Lithium, OEM raw China customers to our In to have the on slowdown of that our automotive there's concern. potential a risk area will facilities impact in deliveries ripple

in later potential on conversion in example, us inventory Western Australia And impact relies building year. up source hydroxide For the at Cameron China. our lithium in battery from of the construction the at plant part equipment manufacturers could

transportation restricted. construction plant has the of uncertainty To as within FCC start-up The expected. largest given that export risk customers project date, deliveries. the the experience be is sales equipment Chinese proceeding to continues lower delays to our Catalyst, fuel though for into could to degree China been China, who In

And drivers, to risk duration into that caused people the bromine, related to our we requirements but restrictions secondary virus In inventory the second of risk shortage on primary a is depends we containment. is have cover and raw from source quarter. well movement China, currently logistics on that materials by of to manage the sufficient

depending a Overall, we XXXX the operations of pivotal in year China. expect further on and negatively quarter a the could severity continued And will be weak first be impacted. outbreak, length Lithium. for our

is targets. XXXX at by and to Growth wide in to accelerate XXXX. Europe uncertain. return reduction driven the the growth to expected is begin We saw of EV end in fleet growth expect in market China COX stabilize still

as tons anticipate tighten inventories on go total year year. measure However, lithium the a impact we the by play XX,XXX and how increase metric adds corona of uncertainty virus begin to the from to out. the demand to the We through will about

be X% in and Negra have Lithium in will XXXX, I we be commission growth XXXX. La volume covenant expansion will about the until III Our limited early

reached As our and all one we contracted on battery are out mentioned Luke customers have but with agreement grade materials. sold of

the in pricing as will operating our tolling and savings prices additional XXXX, Chile, and put higher we partially has royalties of offset costs the availability cost inventory Unfavorable Although supply pressure impact market lower of on and reduced that be XXXX buildup pricing by for stabilized. our volumes, pricing rates, program. versus believe lower a result prior

year we decline EBITDA in Consequently, XX%. of expect over year a adjusted about

flat retardants EBITDA other compared XXXX. remain performance bromine we is be to and Bromine, to flame derivatives expect stable. For XXXX to for down Demand expected slightly adjusted to

put However, could slightly half. pressure second on price increased in the across the the industry supply business

up We volume with have position, price make are operating meaning little headroom out in a degradation sold we growth. any to to no

will the continue provide with highest we However, into margins. our optimize that to us sales markets

to year, stronger We to first. flat somewhat the slightly be second than on with expect the Catalyst year EBITDA up half adjusted

expected mix. FCC to strong and demand Catalysts are from benefit product improved an

full units ability upside. capacity, volume also are from at to operating FCC our additional However, limiting benefit our

these Fuels out Clean and our excellence Lithium the outs. and we incumbency and utilization and be expected will at based can productivity to turnarounds FCC operating Since we'll improvements assets. a from to most Technologies disservice be is Catalyst on on operational Hydro rates, or teams for Catalysts reliability Processing sold down slightly lower year be change focused Bromine, mix, get our

our in single Lithium the all low pressure the high and assets. pricing modest by Driven manufacturing in Bromine, divisions and digit volume of utilization growth

expect to billion. We net billion XXXX $X.XX be sales $X.XX to

with around this Adjusted between of EBITDA overall should range $XXX margin adjusted million between and $X.XX. EBITDA result corporate In total, share earnings per and is to $X.XX million, an an diluted XX%. $XXX expected adjusted in

to XX% year. first global be to half the of cadence from the sales lithium part of to be as shipments to EBITDA our of and With to to while could waited adjusted lower earnings Due in estimated XX% half, Lithium year-over-year. up Catalyst HPC on second and and below down first businesses currently each as expect XX% much QX the through ramp on XX% adjustments, make XXXX coronavirus customers the we the the impact half volumes is our inventory logistics the

flow. and In confidence be in on goals actions closing, heading -- savings, notable as we deliver we achieve us and growth into actively cash head taken sustainable Lithium the into sustainability report free volume XXXX, that we've to give support are positive we our will 'XX positioned

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

Dave Ryan

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

Operator

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

open. is line Your

Bob Koort

to I Thanks every that as Can very guess repricing to maybe opposed talk there wanted about characterized concession Luke, you I is avenue in maybe ask approach. XXXX. took just a much. contracting onetime you about you the year? why

talked other a of some developing talk gaining suggest and trend hydroxide years? Thanks. would secondly, news been next you then range, the couple see you types more but LFP cathode about about some seem think momentum. to Can you maybe how which some And again just about that I there's towards over

Luke Kissam

take call to a to I'll bit over Yeah, first I'm versus, LFP They it that here, a with I'll assuming about draw Tesla it about long talked the turn plan -- about talking Eric And range thinking you're little CATL. sorry. with one. the side announced talk I'm the -- I'm LRP. the about LFP

address. that to that will next So That there's change I the to a believe four the that that we years. occurring want means contract on three we is think is over situation contract. But the that today a dynamic idea long-term

us and make six we that got think here doesn't it for or a short demand. we've five for sense term to when So any disconnect years reset contract supply between

best So our we concerns to customers they had keep contracts of yet in interest the thought address those overall it where was the structure the are. today, that

say plan Now, you term. this long long-term that's our why the the a is not have modifications We contract. But might of not see contracts. of

prices. set term short You We've those it a term. We got short address issue.

goes then We'll contract to back have the we the XXXX. to do thing the renegotiate again. in it way wasn't same And

we opposed the as doesn't it to us price -- market's that So low. approach set took just set any do why when that's good Bob, the to

at that sense mean, I any all. doesn't make

the agreements there's that integrity short we trying those time while preserve that that see So the we for the short for to window adjusting were of to marketplace issue. an

turn about to little a on bit LFP. talk to I'll that. Eric over your the question With it

Eric Norris

hey, Eric. it's Bob, So

regard and lithium to or LFP with phosphate So cathode. iron

that of supply a chain developed used a has years now. know, well variety may workhorse China. China is some for that you in applications market as As And the for

which nickel, of chemistries, driving also shift nickel to a about higher density the get high think, for energy from talked carbonate ranges. high tends development know driven iron range technology using As that you to phosphate predominantly be high which is would we've hydroxide provide to I

And also it global range of Tesla. What compromise phosphate most of provide a established that's a large Tesla's releases to of recently be appears China, from phenomenon with for prominent iron working press is outside And with that automotive a the appears reduced costs. OEMs. adoption lower announced to the

for market Europe, consideration view That we're that countries developed we range rates US and is other important believe that today. in a an being China and matter, for the adoption We market seeing. the still like Japan in

value we've a both carbonate But the reason in opportunities. we and talked about the play can as have we is player, hydroxide both that

think LFP. the to I changes Chinese strengthen changes maybe the subsidy reduction has or substantive movement the of

Because Tesla a I potentially it's characteristics incentive consumer think market I lower higher a the not helps. think premium of And range. to it support, vehicle, sees. a that giving -- lower move Chinese that's range, an It's putting not to the and cost

Luke Kissam

Yes, this Luke. is

one Just other thing.

go talking in from about about If XX back and to you XXXX, going to going XXX, we between and and production were XXX. did XX from presentation Day about now our we to Investor hydroxide December, look carbonate still doubling

is carbonate the think But to in have going we going go hydroxide. believe continue growth either a we way. So, to flexibility to to higher be grow. We there's do

is. operator not some can quite phones. scraping to you to on next the seems And question. There I'm go that we'll be please? But what check on sure the that

Operator

you. Thank

question Citi. PJ Juvekar comes from next Our from

is open. line check your is Please line Your mute. on if

PJ Juvekar

after -- these The [technical you from that? We Just back to levels? negotiations terms happens go in [technical what talked difficulty]? difficulty] one timing It the seems year of about. current price concessions

Luke Kissam

one a amendment. it's So, year

it go to XXXX, have you the But agreement. back some from we The to we and before will. took during there negotiate instances, original discussions place to and back the in if the coronavirus. agreements original So in go

PJ Juvekar

question Right. one on Bromine. And quick just

mentioned because half, you're there some on be supply. you impact of some that, elaborate could increased pricing Can sort You seeing of -- in second just that?

Luke Kissam

to going I'm handle please. that, Netha let Yes,

Netha Johnson

year. people import there's more what see have can China, who that are in last importing to bromine look very into you clearly we at China If supply you of from the data the going data than

into expect trend continue that some we that which supply we'll to on see pressure and increase market, put will So, that pricing.

PJ Juvekar

you. Thank

Operator

you. Thank

John Our UBS. from next question comes from Roberts

Your line is open.

John Roberts

ask, get good you and you covenant know divestments Thank the with quarterly Luke, your more could thank service. I issues if call at coming and have you one off? I And you any do you your treatments Okay. for luck have but don't least

Luke Kissam

We're be be even but carefully, given now monitoring outlook risk given okay. Scott, that will or our higher our scenario of and lower type coronavirus, will risk with okay.

John Roberts

recently reaching where And a been material? to there's storage. start actually stationary could point news of then become that Okay. an we Are inflection lot about

Eric Norris

Eric. is this John,

would about of I part talked reference presentation. the It's the Investor small picture. the demand still So, there. rapidly. growing It's We Day that's demand a

news these said, see of the same about I That towards continued you being see push installations. sorts

still But view we closely. we contracts growth that volume have the it we the quite see capacity our watching as with for and mover and we're So, don't that driving customers. strategy being the our

-- still equation It that look us. really in doesn't drives for that it's that EVs

John Roberts

you. Thank

Operator

you. Thank

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

line Your is open.

Joel Jackson

morning. Good Hi.

the thank you second around for corona how China. you were may all your the sales understand in uncertainties virus from half on guidance what business. first one assume in be When OEMs year? your my set here half you questions especially and Thanks. impacts first are corona did XXXX, I for the two for virus the year, impacting So update auto

Luke Kissam

Yeah.

out it a the terms is there getting is So going I how to is day know think it out. point to is in new play really Joel, getting data exactly difficult of, big point that's is there's it this that worse, Every better?

get and back to how long that's to work going China's take. to trying

to So it's difficult know.

at look certainly half, our you component there's that's built as a corona of first that. think virus into I

EBITDA Lithium XX% business. overall coronavirus, of XX%, part down inventory that's of that's part of So happening the and adjustments the particularly quarter being in first with the expectation between within

just in get we keep updated. continue you further out adjust to to and the So, have we'll year, as

Scott Tozier

now to a making full talking to with. is fast it to were the be not weaker. it suffice It's projecting about we're But that a weaker. is on already weaker is say But delay. what year. to begin causing coronavirus we're an half We It impact have the for first at it it looking

Joel Jackson

Okay.

my just can So follow a up. second first question be was

it sounds all to the what is first and year you're the it year. you're then come like saying to half back of like expecting month sounds then So second in impacting of the

inventory for my and closures right would for for feed of right for now be, in looking or and conversion what question stock Thanks. the China? you of second How's the plants And are situation of chemicals. for Albemarle curtailments both the industry? it then some the seeing terms And now, spodumene players, some in

Luke Kissam

Well, Lithium are about specifically talking or across you portfolio? our

Joel Jackson

for both both talking Lithium for I'm the feedstock, and technical for about industry Albemarle spodumene also things.

Luke Kissam

we able quarter. the an input secure first been us. on materials raw need that to run materials the raw So in have we We've the for date to not to seen

than referenced As in had lower our run calls, for on we had Lithium. our China we we've anticipated rates

date it other materials our hadn't businesses. But been an issue of in to getting raw

companies about calls the in listen you I know to materials. ability a you number talking chemical you have, industries, We -- seen raw some the have if of and seen get to

outside of China. of automotive them don't batteries that the at issues -- But we're look not talking coronavirus. well I some now. know on that we material in raw today, as about think the one of that a but about We issue from as right you the inside see some we standpoint OEM, timeframes and the are okay are do they're don't running from for today, pretty the running is, where are of both an if

in OEMs is be soak in for some year to enough year a the the the is kind or seen ripple our put going of we remains Lithium fast would on levels to that. year would to to what later run over going that expect year be which inventory effect So automotive pressure the there the up full full downward are that

and significant volumes, we is one to keep year. our and product of ramp Lithium ramp really don't is of We've our particularly things that in eyes chains, on either we're be that's got only course products a not the Bromine expect what it as the on real to but end supply going down our impact, these in a risk. during But up contracted on the OEMs or so

the the And we'll not face. further -- don't we're issue unknown We're in chain. that supplier. That's tier we're one a to the sell biggest not back -- we

that causes even more. effect So a ripple be to

Joel Jackson

hydroxide do think and the in inventories for industry? of you right now the Thanks. What spodumene carbon

Eric Norris

Overall would across say Eric. months we Joel that, about six supply we're the inventory chain. Hey, its

you that, it's closer And the months months excess for lithium. spodumene. so probably to as look is at additional refined four And couple

it not at spodumene in that's It's to excess current The economic not at great be cost a inventory it's not prices. deal X%. grade now, of prices. current to at Meaning effectively at is converted spot the able be

-- tons. this what it's we'll XX,XXX is that right? So, expect growth We very carefully demand watch year,

already So, as the to an overhang it's been going be for year. your question has Supply growth you referenced curtailed. in

to and we the we to means the going those give supply for you XX as the be approach year of little the to very that over growth stocks think that year later updates we'll look And for year. XXXX. as drawdown stabilization. next over be stocks pricing see It's would in important months and We that what

Joel Jackson

much. Thank you very

Operator

Thank you.

question David Deutsche from next Bank. Begleiter comes Our from

is line open. Your

David Begleiter

agreed morning. not expectation those you. How large the one Luke, Thank Good in to for customer down that the customer you Lithium. had is negotiations? and mentioned XX% that what's

Luke Kissam

into conversation specific you a not know that to Dave, customer. get going answer about So a to question. the I'm

we've a not and if Our we're is enforceable and our meets going our needs meet expectations. find position that expectation, got obviously to a battle contract. customer resolution And meets that is

David Begleiter

the expectations grade non-tech, And grade, Understood. lithium, technical your for on what's versus XXXX? non-battery pricing XXXX in

Luke Kissam

lithium? grade technical For

David Begleiter

Correct.

Luke Kissam

Yes.

I than be that will that. down we the down carbonate technical said on than said It both remarks. you talked more more as carbonate I prepared if as call and about, mid-teens our So, at in look grade is average the that

David Begleiter

non-battery I should grade mention lithium?

Luke Kissam

to over Oh, I'll my Eric. turn apologies. it

Eric Norris

Yes.

summarize going we're think to it. I

side, So, down as is the products the technical battery. bit than Luke hydroxide. carbonate all more battery said, are probably more little grade than down grade on a side, on grade And technical

input the be very as in mixed. not And does -- area are it a price. and an effective. effect sensitive there that on input lithium That have lithium would so mixed, least in materials mild price Specialties It's there is business although the

David Begleiter

Thank you.

Operator

Thank you.

comes Robinson Humphrey. Sheehan question from next from Our Jim SunTrust

open. line is Your

Jim Sheehan

outlook underlying business, Thank what for you. having? what what also, is in XXXX earnings and Catalyst, outlook your is pricing for flattish your In is in impact excluding the IMO growth in seeing XXXX XXXX. that you XXXX? IMO regulation Can describe FCC the you're And

Raphael Crawford

Hey, Jim. is Raphael. This

Day you on FCC have give smaller our that, fairly reason they happened Scott explained as HPC Catalyst. Catalyst on for a to change The Luke HPC for that XXXX Catalyst, and expecting in outs view we're as outs, So about year than XXXX. is a mean in and weaker strong change distillates year and the in be to slightly were I indicated, is a Investor

area strength will for that's tailwind. the our And an industry IMO business. XXXX Overall, as see a of

our higher For be to of the is able favorable. to business sulfur diesel specs production meet to blend

for others. areas because the might It favorable our it the that from resid. business as it be XXXX. benefit others is more as it resid not will positive IMO weighted positive be will distillate as towards not is for could it be And most is than Again, towards is perhaps

long Catalysts in But and the are the have a that trends favorable distillate specialty industry processing the and we strong in for in very in overall for business hydro term business.

little pricing. it's you -- FCC on early a As bit too

XXXX. been. to positive say they have a are XXXX. Crack than little have narrower in in did It's too We spreads pricing early

for could about customers. business But that an is impact. our have that creation value So our

creation we we and can do pricing for We value to value will. get continue that where that

Jim Sheehan

be how you. in Thank by $XX XXXX. savings under just for Could discuss cost will the segment? you cloth And realized savings million

Scott Tozier

is Scott. Jim, Yes, this

going XX% out, to Bromine; and So roughly about get this savings split of out going in in how kind and remainder at will is as you're thirds that is about in in business; the Lithium Catalyst you corporate of to a it two be functions XXXX. look play the

Jim Sheehan

Thank you much. very

Operator

you. Thank

Jeff Our question Zekauskas Morgan. JP from next comes from

open. is Your line

Jeff Zekauskas

Thank much. you very

component imply big fast XX,XXX you or calculate electric you in about would You a tied tons And said to XX,XXX lithium do electric that think XXXX the how tons in XXXX? that demand How And vehicles thought for you vehicles? grow global wouldn't grew it? million incremental do about is it how XXXX.

Eric Norris

XX,XXX This year we is rate a lot Yes, lot a excess of year. The inventory. and of supply was pounds a growth had the last of issue Eric. last excess growth Jeff. Hey, similar was

didn't buy. of a our lot So customers

a their -- order people They buy their a of market magnitude. drew in in actually of buy the that didn't actually same down But that volume. didn't They lot instead. consumption was lot real inventories

looking forward does vehicles. significant a us and electric For growth a growth in we yeah, imply then it

to be to that electric looking -- view go to vehicles. was X Our it to that X.X million -- XXXX was was million And close number about production million. X.X up we're for on

electric million automotive going vehicles over growth. out be it's in So the producers. of Most producers, European that's to of driven

Jeff Zekauskas

business equity to financials, $XX What's going from see the income And income Talison your Lithium the in Okay. million. $XX million in then on so And sharply? in you do your for drops that equity rough maybe XXXX? sequentially how is such that dropping

Luke Kissam

Jeff. Yeah,

in been the and by both that income the that's equity Albemarle driven to I fourth is by Talison think you're venture. largely joint quarter. Tianqi Lithium either or business for taken the volume referring And the

as reduced shipments fourth flat flat down going into roughly slightly the in will to Tianqi primarily as roughly we did see to XXXX be overall. into And -- Expecting go quarter. we we go so that

Jeff Zekauskas

previous down So versus fourth from or quarter the that’s flat year-over-year to the year?

Luke Kissam

Year-over-year.

Jeff Zekauskas

Thank good. you Okay, so much.

Operator

Thank you.

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

is Your open. line

Mike Harrison

morning. Hi, good

additional seeing building Can conversion conversion the capacity? box Slide the Moving X on as you Assess opposed Lithium on give acquire assets, update us to opportunities that to an there. you're

a about versus thinking how ago? you build you're at that buy quarters have how it Maybe today might looking versus few been strategy

Luke Kissam

pricing. matter the it's Yeah, of

seen reduced a and is base. material brought down we've I get some a the capital supply us raw has of marketplace have price of prices some spodumene think you rock the the to lower to could level in appears the carbonate a it inability that that to

lot And own in build the sooner. if market you your then be would you a

you? modifying to where So all meet to carbonate at have it HSE for is what our either a necessary or from at when price all standpoints which converting of acquiring, comes us, down in and you there cost hydroxide look

for that it able close the versus return to you a mathematical that got on equation negotiate we lay it for return and and out as building? How What's be timing on to us. capital? It's And well. what's capital

opportunities there So that there our at how that's relationships out because are familiar it. with And tolling many. we're looking of we're

are in we evaluations. active So

Mike Harrison

year? was about quarter. some get demand Lithium get maybe in talk customer we then as All that fourth that additional growth. terms something something mentioned negative plays the hydroxides right. mix, you that how the of we that Is you in And a Maybe that later XXXX. improves Can out is during in -- mixed

Eric Norris

going out have Eric, Well, moving of in amount we hey, In say [indiscernible] Michael, La would lot hydroxide. XXXX a have of for equal to production had of it. we're and parts out XXXX to Negra it's, growth an -- I of it's

the we a And same marketplace. reduction time, at big into turbines in sell the

As constants. out swings to endeavor of period-to-period. we've Scott We X% year contract don't said, each have keep mix to from our business. fairly Luke We try said, the

of matter at produce of the that end is carbonate to a the we beginning. tend fact the The simple lot and is, more year

factors. some So mix there's sometimes product

be know And to probably if some throughout it. try year. similar don't But customers it will the factors. we again, manage I

swings So I be fairly cause can. these think it best But we doesn't it'll as similar.

Mike Harrison

very much. Thanks

Operator

Thank you.

next Our from Oppenheimer. comes Rusch from Colin question

is line open. Your

Colin Rusch

getting potential guys. you in with so on XXXX, terms move going consolidation that what's Can about production into Thanks XXXX, customers but in your just with OEMs? and much, as the schedules that, about you talk XXXX of think how from the of not you're some you

Luke Kissam

assuming way that cathode essence from talking we to OEM. the to all the you're moving is I'm seen the What the about at, looking you're Lithium the then battery some we've battery decisions and producers. and said producers If producers the

that certain of making decisions. battery and towards seen of of allocating it some the as directed purchasing be volume then from those that producers big volume cathode the decisions then to we've And in-house production So some producer. and the

we're So decision a try the will makers And seeing these that number. purchasing we lower about then you to effect, it decisions. down that, are and can in consolidate

see as you're think of consolidation further going long to spectrum, a the you term even look across I battery producers.

You're and Chinese the be to the to typical going and into seen going this of in is different. to I any bigger you think have a -- going consolidate producers. the are other bit not and do what That's Japanese Koreans industries

Colin Rusch

modulate a schedules about this the CapEx there's to as various we're in manufacturing on production your then, terms the in with into little amount getting process. year see spend bit variability Can those fair OEMs ramping a different because talk of plans challenges production ability there? of up seeing a And adjust, and and EVs year you early Okay. you it's next obviously

Luke Kissam

Yes.

got look at spending and IV. online quarter will first is That's carbonate, I be of already done. and we've come own III So think Negra XXXX La commissioned. you carbonate, if the by to going of that Most

we to have hard kind of at ability, do further Negra La Negra. kind be it's there it sorry I'm we the could necessary, But the we a La if X where plans La of on to plan. at carbonate anything the on would Negra, for So expand process have X-year that.

you Kemerton at of looking second are for XXXX. half the track we're If standpoint. hydroxide, a believe, from We on

cost of there. back much, For start-up, that it rattle in got because the we've will be difficult to

be if lower anything is build intensity. And to else a we going capital

build why area an in that's looking a like versus China. So buy we're

years. China from done to in You X about in get can finish start it probably

and have and we working at on opportunities have our operating in and We designs costs, a are the plans building taking lower lower intensity what our that right teams now capital engineering looking the a there.

we conversion standpoint. that hydroxide asset next from a the build So

operate drive the efficiently, with we today. more have We more that cost will and down. build continually ones got it effectively We than cost to lower

I that, you there hydroxide. carbonate to and -- addition as you you take lithium take know convert can know it In to

cost looking the that effective also goes at way, is teams market cost We way? what is the have If the way. what most most effective

convert that is that convert of that? And else? to do to way somewhere a our the at. carbonate carbonate build idea close Would we're that What best that looking in the we the is facilities? Will modularizing concept -- we

that get it But to market the a and would and is to we to probably, be on the year when need built, capital and building the to permitted in of running. it for it up probably take the pull trigger probably you're that you XX% if timing calls China of it prepared that. if and get get Again,

Colin Rusch

guys. Thanks, Excellent.

Operator

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

Dave Ryan

Albemarle's to Just This as everybody questions. appreciate you. today participation your earnings quarter concludes their and fourth like for And always, your we interest. for Thank thank call.

Operator

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

Albemarle (ALB) 20 Feb 202019 Q4 Earnings call transcript