ALB - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the Fourth Quarter Albemarle Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would like to turn the call over to Meredith Bandy, Vice President of Investor Relations and Sustainability.

begin. may You

Meredith Bandy

Michelle. fourth Thanks, all, welcome and All XXXX Thank earnings Albemarle’s quarter conference to right. you call.

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

the are me Scott Chief and Kent Executive on Joining Chief Financial Masters, Officer; Tozier, Officer. call today

Our Q&A. for are also GBU Presidents, available Raphael Crawford, Netha Johnson and Eric Norris

of made company Please expansion federal during reminder, may reconciliation in this our statements to call, press measures performance some and call. language forward-looking guidance, of outlook, and securities cautionary earnings release found note a same to statements can timing presentation. presentation. As non-GAAP be and forward-looking release our about made Please this our That financial expected measures. refer projects of constitute contained earnings GAAP within note today to of including meaning in statements the financial A language that appendix the applies comments earnings the the the also laws. some of

the I’ll to over Now Kent. call turn

Kent Masters

Albemarle. for will and on financial our us objectives. update And priorities. Meredith, results, you our on was and walk and XXXX through all plans. results, I joining our XXXX details XXXX you thank call, successes today. On transformative recap expansion our capital allocation you provide will highlight for more Thanks, Scott today’s quarterly outlook year our finally, I’ll a

exceeded to effectively markets the to bromine and expectations. the lithium Our us of that capitalize global generate ability strategic strength enabled results and of the execution manage challenges the on pandemic and

to increased billion, sales June our million, Services in surpassing upper guidance. of guidance. our with which of our EBITDA in by business, the XX% For XXXX, which was Fine $X.X XXXX excluding XX% sold grew Chemistry the Adjusted previous $XXX line end was to in net we year,

for market and favorable outlook conditions improved based ahead, bromine. Looking XXXX lithium for our has primarily on

explore completion XX% with this capacity able versus we in the IV our of Services. signed to And XXXX, from Kemerton. construction quarter. this timeliness between first MARBL to increased first Negra are Train a the bringing mechanical of and XX% La continue of commercial adjusted investments. joint will project. driving The we reduced to EBITDA we in agreement and growth, is and In online To Chemistry efficiencies improve train be accelerated X experience team expansion realizing our sales dedicated excluding November, and the currently qualification start recently quickly second facility train, to we at expect expect We nonbinding we the leverage grow now is achieved and III Fine venture second with on to to from and risk. this letter optionality focused

have on the slide severe people goals our like our despite out strong introduced of productivity, to advantage also us focus our The what efforts. and Slide drove maximize last for around met stage deliver of the to to I the is Virtually teams of challenges the commitments. our opportunities X. sustainability. exceeded and Now year or our our XXXX weather, would advance invest These effects pandemic. the with set extraordinary take designed to issues all support underscores to our were this strategy, we ongoing to their We discipline grow to growth to lay chain the of to year to looking ability at the objectives related world and last early set for four thank ahead. supply year accomplishments pillars profitably,

the in to new a is but are continued way. of I’m dedication initiative just that see X. Albemarle. to one the in has for efforts Since my doing on doing very is CEO right I strong sustainability. being ESG what Sustainability thing growth pleased been externally, driving of not as it Slide recognized you became important I’m as proud ongoing values. improvement isn’t certainly main XXXX, Just priorities right increasingly these an also but it see

lithium significant the years. example, market For expected is demand in growth see to coming the

this As expect in the it to lithium a market of help standards be and goes production, sustainability an leader we example define as this in shift. through fundamental

tons, with are million more of to upwards once our our XX% current Based and lithium our than revising XXXX now lithium more demand lithium on X.X regular We and customers, demand data, trends our from Slide again. the approximately market turning EV X outlook. we up market Now outlook on estimates. interactions expect previous

end growth the to continued than easy for the By XXXX, EVs accelerating XXXX. account lithium ambitions clean of energy-conscious, is production over for year’s to automotive XXXX. see technology why global nearly more improves so EVs, EVs EV anticipate and as are parity six become In last industry’s and doubled to vehicles. consumers sales million of million we auto expectations rapid in at XXXX, from to expected by growth pricing close with look XX% incentivize demand approach three EV more Beyond to are When bullish. a internal governments rate demand of with tons you XX% sales. vehicles the decade, combustion nearly million energy, of it’s growth three transition

a be challenge. this will demand meeting However,

quarter Negra Turning the and in Salar Slide currently X. to qualification year. the de volumes Atacama which in anticipate for process. brine of III projects Chilean conversion II resource La the customer from this project incremental our contribution on is will and capacity revenue Wave We in our second IV, add this

While in in of any leadership We the Chilean the impacts to anticipate taking support Chile, political material to self-determination people’s there our not changes landscape the applaud right do business. that peaceful place country. we and are significant transition

building Our administration. with relationships incoming the already team begun has

the in year. remains begin second I As this the I in mechanical track II manufacturers completion reach sales the This battery must reached year of Europe, America lithium of industry completion growth, on Kemerton end is year. on last same. including first currently this the phase. North and the OEMs late in mechanical been The do us track and and commitments mentioned earlier, have half commissioning puts heavily in investing to and by Kemerton to

Slide we progress to Mountain restart That’s in to downstream X. IV. our build planned an assets lithium investments tons conversion approximately including projects, and of for announcement of the of growth three provide analyzing our to have investing options originally growth. Wave continued Albemarle our potential in of We’ve additional XXX,XXX of further provide capacity. investments We is Based support This Wave Day, with are Investor we XXX,XXX China. Since our Wave III Turning mine Albemarle overview how from will options tons America and wave and Kings defined Europe. also up discussions accelerated with the to customers, our for capacity North III. to on strategic

well, have this with of high is we China, assist integration, XX facility conversion quality, on to close strong to year. in resources, the years currently experience we expect reviews. provide the the considerable cost half sheet advantages. balance low bringing vertical begun acquisition Qinzhou online now. I’m access continue regulatory through first and being work capacity plant This and Our to we of transaction and that process. Qinzhou is commissioned our In to Slide conversion The appropriate us tolling with of the spodumene progressing

greenfield Zhangjiagang. two Meishan the progress to lithium conversion continue projects and in We

site Meishan break started expect Zhangjiagang to We at this have later clearing year. at and ground

with XXXX. We spodumene continues is Talison the design the projects At concentrate mine the expect of three of Wodgina by from meet facility quarter. processing Greenbushes, first recovery both ramp mechanical at one well, going CGP completion of end now The of in production production and expected the X to restart throughput to rates. lines second

project Talison track. is the at on addition, In tailings

the Scott, growth over Slide highlight our I’d turn XX. call I to Before to projects on like bromine

opportunities. business Our bromine in take investing to advantage projects and capital innovation growth is of

XX% expect revenues new annual more bromine products a essentially up to We than up from XXXX, standing make start. by of

first formation launch we Day first our have in SAYTEX polymeric I’m to year. discussed expect retardant. ALERO and the sales to derivative in first achieved results overview, Jordan. throughout and excited next-generation I’ll continue to capacity The the to commercial discuss also ALERO, turn the scale an outlook. invested as Smackover to these the call and of recent our We is production that flame that at We’ve and Arkansas, say in to and With resource SAYTEX our and we conversion in Arkansas Scott both year, last grow at Investor January products our expansion over

Meredith Bandy

Scott?

Kent Masters

might be on you Scott, mute.

Scott Tozier

hear you me now? Can Hello?

Kent Masters

you. Yes. We hear

Scott Tozier

Okay.

morning, mute. on XX. was and on I that. Thanks, Kent, everyone. I’ll Slide good about begin Sorry

loss of in sales from Services driven bromine, is million, quarter, $XXX from compared of business, Fine by prior and our year the increase of XXXX. was generated sales the For sold by $XX fourth an June offset partially the we which lithium million quarter. This was net to higher Chemistry revenue which

quarter Albemarle attributable reflecting on XX%. revision. from $X.XX prior EPS anticipated we of grew chain plant Fourth FCS, Excluding to and Kemerton to estimate cost that cost the supply was down of loss The issues add-back adjusted EPS adjustment $X the quarter labor. by primary was diluted pandemic-related the The million, Kemerton hydroxide overruns an impact construct fourth XX% of lithium our $X.XX to due the increased from year. net to is

Slide XX to turn performance. adjusted EBITDA more on detail Let’s for

reflecting continue roughly higher as in well remained from repeating markets in the late adjusted strong as pricing. strong Lithium was as refinery quarter EBITDA XXXX. results one-time results up were rebound XX% quarter business higher performance and XXXX Catalyst to the it year-over-year, flat fourth in And FCS, saw and benefits fourth from items. improved the Bromine Excluding prior by year. driven volumes

Slide units into Our This to growth XXXX. following are both half the second expecting you flat a mid-XXXX. acceleration and half growth in On XX, continue pricing in the can growth of XX% volume expected relatively XXXX. is from all of of business our we sales grew three year, see first since

growth billion. expect between EPS four lower-cost EBITDA Adjusted all billion net in in the margin prices We and cash year, billion year-over-year. range This improve We several sold going quarter onetime and XX%. anticipation And also between to joint our to we of also included net inventory this EBITDA All produced expect in inflation. QX GBUs of is $X.XX which this partially well reasons. XXXX. of for that at in $X.X going healthy as to cost drive. benefit expected venture by strongest to a creates expected finally, quarters anticipate spodumene to raised from be partner $X.X an and initial transfer And lithium higher have from tax-impacted shipments adjusted in of are XX% forward, $X.X EBITDA adjusted the offset strong to three diluted EBITDA adjusted in operations and start-up billion sales at implies sales venture been increases our our our and be tax. income, joint has as the only material to EBITDA higher increase pricing first are a on of Talison In the margin after of benefit sales from Wodgina spodumene Talison quarter, are

the strength second, procurements in our catalysts; lastly, in plants to accelerate lithium to range Kent expected guidance performance CapEx to the at first, environment; solid lithium, continued As increase FCC our closing actions fourth, to and investments to third, pricing The or customer mentioned, acquisition markets $X.X lithium include, we end-use successful this demand. in $X.X execution solid exceed key is sold-out and our billion favorable inflation. as meet bromine increased this project billion and year to China; meet combat start-ups; of

by is XX% coming the XX%, pricing a XX% also Volumes concessions to to contracts Let’s turn legacy volume of taken from be we’ve the year market Slide customers up ongoing expected to variable in Lithium’s EBITDA new significantly as to Average We XX% contracts renegotiate work variable capacity well rolled as previous our the for rate primarily concessions EBITDA agreed the as XX% opportunity reverted to up as full expected natural as well outlook. improvement with compared to growth be cases, to due saying, details more expect expected to significant efficiency outlook, be overall raw for material pressures realized previous inflation. X% cost to refining grow high to year to due XX% is up XX%. XX expected markets increase Europe pricing. pricing now our strategic GBU. pricing to to And we’ve with with segments related more improving. been to originally to and as is with to late across pricing XXXX online now improvements. to strong expiration is In structures. higher This Catalyst pricing to in XXXX. these gas off, are some to below XXXX our

be pre-pandemic or volumes to flame above by already macro raw see on to digitalization cost And but Volumes FCC lagging. to discussed, as expected material the volumes to and trends, and there, in strong our we pricing are EBITDA based X% began XXXX volumes demand are supported continue improvements expansions levels is returning Bromine higher outlook previous are HPC electrification. We expected on costs. to slightly late XXXX. higher XX%, to up efficiency as increase and are such expected ongoing freight and XXXX. in offset retardant based

that Negra Now growth. see I expected ramp expect in this tons virtually which conversion II. lithium Slide We includes with metric This carbonate Kings year. a color and Xinyu, Silver turning the you to split provide production La additional complete XX/XX XX, Chengdu on is And from Mountain, this I’ll Peak, volume to volume XXXX, slide begin XX,XXX can the some facilities and shows of and year new lithium hydroxide. of production baseload a the we

output projects and to As take early plant, six full capacity commissioning we it including our for to reach Therefore, our Wave ramp II to qualification. of tons about conversion expect come full production hydroxide. speaking, begin we favor approximately conversion a to to XXXX. new by years Generally will online, XXX,XXX at months two expect

on turn to I’ll back update do our I’d to you Slide to allocation Before and it priorities, I turn that. like Kent, to XX capital

remain capital Our allocation the same. priorities

levers portfolio to and profitable and growth. flexibility focus particularly financial important in primary opportunities, bromine. this is Our are Strategic for invest support to maintaining growth lithium management

us example, have reallocated of review bolster acquisition noncore The is the growth assets. to and announcement top-tier opportunities, or we funds of and like make is organic well acquisitions inorganic the like plant. bolt-on of to progressing this our the growth for also first of continue track For year. to businesses of and on in outcome We’ll FCS to expected divested an the evaluate accelerate Qinzhou strategic portfolio Catalyst half

As always, are future Board to dividends subject approval. and share repurchases

to support to we However, expect dividend. continue our

share Given in foreseeable to anticipate repurchases that, in we see Kent. the growth outsized opportunities don’t turn we it the And with back lithium, I’ll future.

Kent Masters

XX, strategy. Scott. objectives long-term on prepared our aligned end with XXXX remarks Thanks, our I’ll outlining our Slide

completing starting will on conversion our we expansions grow First, to grow those continue to and also facilities. progressing focus means safely II profitably. and lithium We’ll Wave expansions III capacity This efficiency up Wave and volumes.

in materials. and continue is will we Next, this productivity, with environment to rising maximize raw cost important even for more today’s

leverage our inflation will offset excellence, operational principles and and improve discipline to through manufacturing HSE, We lean cost, to implementing quality. embracing smart technology reliability

manufacturing offsetting and of initiatives projects EBITDA will adjusted cost-saving and XX%. cost key between materials XX% procurement be as we achieve work to Our raw excellence higher to freight margin and

with invest discipline. will We

rating portfolio continue credit As focus management a will our Scott priority and us are discussed, for both in investment-grade and be to XXXX. high maintaining

on Importantly, set later to value plan enabling growth. which we catalyst while complete up for success review us and to focus will maximize strategic that the this year, business

sustainability. additional advance to greenhouse targets. driving fresh of to chain cycles. lithium sustainability and sustainability work our goals Scope water assessments completing certifications, improve setting emissions gas by life also use That will with for means continue product greenhouse site our and the analyzing Finally, supply X and our gas customers we We’ll mine progress toward the

I’d turn like for that, to I’ll call back Michelle. questions, with and to it the So open

Operator

Cowen. with from [Operator Deckelbaum Instructions] David question first comes Our

open. is line Your

David Deckelbaum

a Good lithium curious little pricing morning I guys. could was Thanks bit for if outlook. taking the my you questions. talk about

exposure price raised think You XXXX? you do we see about your in that, we would on increases think When you about about contracts, based that, how XX% to renegotiating to increase outlook pricing would your XXXX. XXXX guess, spot your you to and And XX% conjunction today? talked head fixed into that I in fluctuations further your as expect with market outlook into you now

Eric Norris

this morning, Good David, is Eric Norris.

let – composition, So outlook see our XXXX. pricing first the in what start with me we

Minerals, are what upwards XX% contracts more Scott to an a in to component remarks, Those Those to and We be see. and a structures and ceiling. China. such Markets based is of moved see be close our a you battery-grade have, of the variable. point, going have as publicly upon prepared indices our are indicated so The About business global like. to pricing not variable in existing that available Fast Benchmark is the XX% Kent And index spot would in exposed rest is with what to as indices, our remaining the price China, of indices this largely, at you fixed.

more considering as continue and in are asking we Scott customers approach then them our volumes add and we discussions expansions, indicated, they as their to moving them as those Although variable seek to through to well. to with

So, exposure using think where pricing much to indices, contracts China you need largely the to upside, our indices the the not are we’re globally. – bottom that higher we the or increased but than have line me, you do that indices, see we in global price market I excuse consider the China you

that going down I So global sort of the it It to are in lead, tip indices does. half, the we some expect that the outlook is in comes globally. prices. follow pricing the indices China forward, I cases, mean, would goes, China of of spear. – of the current say really Those about terms Where what

one We could they – in probably could speculate indices, go there’s they but room only are where there’s those know. go. they with go would to in don’t what So prices down? China, And

– of our So some that’s variability be there’ll XX% China. that there’s business always in on

David Deckelbaum

a more bit impact just like see relative original color just China. some the million some of to year conversion your when give there. you that? sounds to for of do Could around volumetric accelerating Thanks outlook? expect little assets on And the a in raise, you the color is increase the this to My that’s It follow-up Appreciate budget. that. the $XXX capital

Kent Masters

Okay.

sure, not talking I’m see so our impact that... volumetric III Is expansions Wave when coming volumes we So on? you’re about those –

David Deckelbaum

now Wave It accelerated sounds like III. has that the timing around

if were the with assets? per your to original vision that Day, time I at million you laid pulling that the are – much how So, you additional your forward look Investor at guess out around conversion based on it you $XXX

Kent Masters

Yes.

So, of acquisition forward brought the Meishan, Zhangjiagang. – it Zhangjiagang we because the

then. hoping – we comments The have acquisition. to So did when we didn’t not were the and down that an we nailed hadn’t made the raise equity that, was do at the – plan that

the So that increased And Wave. brought in we’ve it forward. that tons about capacity XX,XXX

bit and then has we’ve And So that XXXX. increased tons. forward acquisition, think we’ve pulled by said on confirmed timeframe we the greenfields been the be that as we end because will of a by the Wave XX,XXX two before,

David Deckelbaum

you Thank all.

Operator

Goldman next with question Koort Our from comes Sachs. Bob

line Your open. is

Bob Koort

you. customers contracting volume your think market. I in to very you have ensure volume there growing on about your about your Thank obligations? as a Kent you to or deliverability? want you morning. wondering Do tight not How possible can Is that? to Eric, approach get if much and all strategy an as Good was talk could customers contract to do fixed

Kent Masters

Yes.

– think just I on of detail give projects. Eric talked we’ve little it. at portfolio But and you high across We more range I’ll the a a level, have want to can So about it. a those

volume do fixed not element tying on all becoming have want up a that a contracts. it. bigger part. probably But we’re of So, It’s to we the long-term

fighting it. the probably portfolio to make we way envision sure the We’re we that keep

Eric Norris

have to add, don’t Bob. I Yes. much

a can a long-term as customers Strategy have be we and to spot to to the the floors their play business of David’s that’s just us in up the ceilings that that add fixed. and of to question on bit our gives on customers I a that seek still how seen well. And grow flex for and the you variable supply. as excess an security we rest our have, And half some amount those price capacity, very We’ve partner answered important influence to still remains in then becoming strive topic, they contract some a sort of grow has that we as and mix. spot an markets. and heard before this with that market to You to partnerships growth,

Bob Koort

was the What follow-up? And are what ramifications changing the of MARBL a ask agreement? reason? I Can your

Kent Masters

Yes.

I – mean that. the we’re in So middle we’re of

that giving don’t joint see mitigating with mean I we’re that some of the So, with really it a us marketplace it’s it’s partner. our to by I venture want we it having discussions in to expanding – really about the more the partner. and But sharing front reach run risks

Bob Koort

Kent. Thanks you. Got

Operator

next question from JPMorgan. Zekauskas comes Our Jeff with

Your line open. is

Jeff Zekauskas

production at Thanks XXXX. very very direction? you to much. Does your what cost change LCE much your When look from and your lithium now in ton per carbonate,

Eric Norris

Jeff, morning, as this off. good – first is described Kent Well, Eric,

As in of Wave cost spodumene-based III hydroxide-based production Chile. Scott production higher described, carbonate regard. that’s that are of out and – is Those than a

average goes of resource out So the generally hydroxide cost mix. of produce slightly. product a function But because to brine, carbonate and speaking, higher that’s cost up versus of the

portfolio a We the continue productivity at drive to the conversion of low have. cost to to ensure that throughout good we’re we resources operating take advantage

Jeff Zekauskas

of think would that highest the given the production greater that is much would in total be that the Scott first have second said Why lithium I quarter would half? XXXX have year. – And EBITDA the the of

Kent Masters

a are couple dynamics there happening there. of So

hit through. aggressive has our out inflation actually first coming quarter, inventory we’ve cost we’re where not selling is, the inflation yet. given base So And in around pricing first that of been

across that’s of and – true So all our businesses.

to and already So pricing. implemented the inflation the up half in us that of year, back we’ve catches

to because tax-affected lithium, interest, that from a the income. after-tax shifts XXXX, prices In in though on minority added in which was in have gets basis. costs. on was selling those P&L. from those minority our an being then it’s first EBITDA we’re spodumene inventories, increases And Because JV going about, from but peer the come it we’re protected interest prices even where answer becomes up, dramatically. Scott have And our the really of that gone but it’s And which dynamic talking EBITDA, that. spodumene EBITDA on So businesses, there’s all cost particularly across same the up through lull quarter, out That’s XXXX the lithium.

level. really for why those two quarter highest first the are the EBITDA the drivers – is So the

Jeff Zekauskas

Thank much. Great. so you

Operator

Our next from with question P.J. comes Citi. Juvekar

is line Your open.

P.J. Juvekar

quickly Good And morning. Wave in available Wave III? Wodgina conversion what in the North IV, conversion then How and American/European take to And your see capacity limited to capacities it China? Australia ramp-up? capacity, move Yes. does by talking potential you about conversion do it is that

Kent Masters

the and take mean of then – question to definition talk second first. first are Eric projects. define going probably to – so we Waves But just the the I’m are I – for those our what really

is So III, going exactly to going IV. move III we’re into Wave nothing remain It’s IV. But because well to projects but still change. now. not execution Wave accelerate in on look else defining North still – is we those America those, we to they’ll would right we from IV in we’re and will And what to do defined,

Eric Norris

question Kent venture Wodgina, as conversion XX,XXX partner look only We in the on ramping the your hydroxide tons output capacity for of little first And from excuse the – spodumene, described III basis. me, tons are over our on first that that joint consumer a train material. about up China, and we P.J., the LCE the an XX,XXX X% with of Wodgina Wave growth with at or

A different chemical ramp spodumene years. six two which side a conversion tends months. of – to kind quickly. pretty within on spodumene come It’s a up than plant can operation plan As come over to note, conversion a plant, tends

Kent Masters

trains those are Plus already built.

Eric Norris

they’re being and just Plus restarted. fair trains are trains, the yes, Plus built point.

train yet we’d talked to we’d as the in it for to expansion no we expect and but support the continue put out would and assets Wave of activities, we about and made would growth us other the tolling giving our so speak, at down as that on midyear powder, from into for to we Wodgina, road. down the that see capacity. plenty and And be third We’ve to conversion the balance, progress road, flowing those by looking build III. continue spodumene III we Wave consider decisions look then balance. So, second to the dry at And

P.J. Juvekar

But volume so XX% you growth capacity where is second And is to of half I and to much lithium in which Great. first in online XX%, have new the growing. line think guided coming XXXX, industry would half. with you

I would your faster volumes than industry. grow thought have that industry? So, than not the faster reason why Any would growing it’s the

Eric Norris

like that capacity in to that. And are continue position the industry. and the of practical limitation. certainly, underneath this were doing our guidance, maintain of you’re right, industry Well, we the we’d realities to growth But with growth

the give guidance you we’ve we first – plants speaks – P.J., that think So and qualification of will online. we when We to we given, dates first come standpoint. these have

get. We have That and ramp two-year that. the you calculate six-month a before have growth of be XX,XXX you fixed we it about then math, tons can ramp our When qualified, a base on period back year. increment to that that’s is last

So as it it’s market expansion. correspond our capacity happens to to but growth, going as fast we can on

P.J. Juvekar

you. Thank Understood.

Operator

with question Parkinson comes next Mizuho. Christopher Our from

Your open. is line

Christopher Parkinson

much. Great. you very Thank

questions. quick two Just

say, first the EV would let’s the be Western front. for in all OEMs, the Just on

the will color would intermediate perceptions your Thank supply Any marketplace or be regarding own assessment ultra, helpful. their will let’s competitor how some what’s Just you. near additions of not just term? and of the potentially that say, in newer to the in be product accepted

Eric Norris

morning, Good Chris. Yes.

Western capacity of by a supply big market view coming the competitors who So this, referring view into to of market. I to concern to security you’re trying OEMs’ very say the have ask that, I lithium very, to will on are think new mean, market. you’d in I things. bring their Look, is

prices a higher of that’s that year they to magnitude see order a any folks spot you market are think in It’s in why ago. price. than were I get like China, trying pure supplied at

given investments. OEMs that as particularly as well, same U.S., sentiment China is prices, big true, those Western certainly but in is true in that the So in Europe here or underwrite

looking it. are they lithium they for can So wherever get

and think part resources. our the offering is dialogue them that the Albemarle is I we of have brings with

capability, we’re bringing execution reliable the supply. and on have We in

referenced, attractive for North to partner capacity, an the we as we’re and dialogues, on we this into in and Kent in Europe. and bring future particularly as them on we’re all the look capacity future America in of So, capacity those as to localize new middle discussions bring look now those

Christopher Parkinson

just a And helpful. follow-up. quick That’s

thought just energy Just you latest front, battery On be technologies, what of the on things. a process? terms would demand just few in But hit density. your already

Just on of high-nickel color helpful. That and you. any what cathode in be you’ve chemistries? advancing seen launches Thank new terms potentially very would model

Eric Norris

Yes.

still battery vehicles, be period engines lower-cost of only internal hydroxide. clear a LFP that this But double-digit would in it this XX-year way, – innovations characterized We see And XX- that we coming our prelithiation and remain through that cost-effectiveness side parity view market, combustion percentage time, chemistry further see for still that sorry, period. nickel of the is XX-month energy energy to view and the the allow lower-range for And see pretty deck. on will further we’ve charts segment our most That and show vehicles nickel growth more the XXXX but electric period. percentage in – it’s or key a five- to range. low high in earnings within lower in being said, of that to will and over over put on those now, technologies growth double-digit nickel to density of double-digit XX-year vehicles, and the density being for with of XXXX market. we it’s projections a not but and over higher I’ll anode So chemistries a new another percentage the the that going

Christopher Parkinson

you much. very Thank

Operator

Yefremov comes next Our question KeyBanc. with from Alex

line Your open. is

Alex Yefremov

everyone. you. Good morning Thank

to If I I EBITDA lithium guidance high being very as maybe a ends was your XX% as and that the of least, inflation, and get XXXX? anything guidance I at ton. cost for high or it Talison at up cost should even segment, your that look dynamics you in keep pricing level cost already model, Is assume some of very EPS strong. more spodumene there my as to number on for else per beyond that based in described we mind terms think

Kent Masters

new mean, And we’re to – on, So multiple I you I think plants. bringing them not they’re doing there’s doing appreciate facilities of So, when lot we’re a have that. bring right? on loaded, we

been the mean, other and done with But pretty portfolio pretty that lower about less movements bit. moved So than there’s quite aggressive pricing our are I We’ve a fixed or we’ve and high costs more consistent. talking volumes. that, that. We’ve that, associated

in exposed bringing than the more new that in that cost been I But the we fixed to mind past. have not about to are loaded. piece keep think facilities we’re have market you on So,

Alex Yefremov

I reset Okay. guidance sort volume bound have pricing your any could you on Appreciate year? guidance? the these XX% – wanted And your end upper indices lithium indices, it. price then above And I during these the of up approximately the guess, of would to of given follow-up XX% of side.

Eric Norris

If business high, we be that the floor, It’s Eric. indices your the of – move. these well say. are the continue sort – that. spear know. can tip in a year. we being are three price. think months. ceiling is remain spot – have. on goes was I answer market past question they large part based China hit very fixed prices the And long-term, downward through to definitely don’t are If prices, to China which If however for It’s our of they the part the I the range I China recent to higher. of spot think below has our about all could of are indices those higher Again, of of variable It’s those upward movement been The mean, the end there that we prices. fixed on volumes Where correction I in is significantly hard spot sort prices, the will the

aren’t. Those – can the market year. of they during So move that move the

Alex Yefremov

a lot. Thanks Understand.

Operator

from comes Evercore. Richardson Our question next Steve with

open. Your is line

Steve Richardson

your you’re terms I addressed and on tease the cost any that would with little process-related terms is of versus appreciate volumes again, variable? more this is a is costs this the lot out, in pull-forward? how you just terms it of these in much of color unit in inflation dealing the terms fixed project the on starts. of versus back just Scott, us of at you previous fixed maybe cost, I come Hi, versus least give just of piece. mismatch that just up to kind cost with a how could and general that wondering, then bit but terms seeing new capital good process on what in conversations associated was cost piece, helpful. earlier, between you costs continues much And in be our of some question, in appreciate of But could morning. something you’re I

Kent Masters

Yes.

me let about talk So take conversion and and the then to of first your piece margin the Scott, question, Scott part over costs. I’ll kick the to

mean in and executing mean a And inflation – ago. there Australia kicking we’ve have year pandemic in also off our it’s us, forecast, the been well as half we extending acceleration. we that. I on So additional costs looking projects has had at Western see projects that capital I is as now impacting that additional cost the the at least during change for we’re didn’t projects a challenge had we the see

and kick we it’s the but So Scott, and half to margin And half inflation can – associated it’s be costs how around question. probably accurate probably that, pandemic I’ll with for additional acceleration cost. you

Scott Tozier

between cost that’s $XXX sales, on of then changing also basis, into the spodumene at Steve, of of and start-ups not that’s cost north in of impact increasing increasing $XXX that range. going at income the going And somewhere this year, year, plant two the and look our factors Hi, million prices lithium an our being but And up equity capacity. the margins the as drag so these the after-tax sales million. in are full dynamic probably probably you

movers So as of margin. two at biggest the lithium those look you are kind the

Steve Richardson

how projects outlook million the number the the your limiting Or a $X in side. terms out? the demand well. huge billion And see $X.X supply relative appreciate up the industry’s that clarity. address had we I from one The as view, factor additional hit And been, is just I on a the if we ever market to number? bring number obviously this I is Eric, just like Do have demand this where at XXXX and on of to the to higher the does the to incentive side. on Can huge Thanks. Great. here hit logic follow-up, end play you to lithium bear? do may, perspective marginal seeing for and ability price a least certainly, supply side’s in ability

Eric Norris

it’s say, a that Okay. competition everybody order run, to I take hard milestones our meet that being and Steve, going to going being would ourselves that right? take supply. It’s successful it’s in – provide to at their to hitting

to So it’s there. an all-out effort get

the – is tight doesn’t is view so takes while – because industry a So it’s think I a expected. it. it’s it it as the always It’s sugarcoat as to and want it’s don’t go reason there’s I and –

I don’t predicted In price, ball. have I price. never a terms crystal of $XX – would don’t have carbonate a I

I future. So that slog and to to, I about the up referred would to I execute think everybody’s that think, to reflect step order where does know in just It demand. don’t hard that how got well go meet in that

Steve Richardson

much. Thank you very

Operator

with Our question comes Capital. next Joel BMO from Jackson

Your line is open.

Joel Jackson

good everyone. morning Hi,

make over cycle. ago, XX% about course you being the years Some as of lithium for you the EBITDA kind talked guys had of think of kind it margin I a what

margin. loaded every three and We’re you to fully pricing how that now over range about talk may plants different at last And affect XX%, scenarios year. years XX% the much now

plants You’re going ramping of course, long to a indefinitely for time. or be, on

thinking this margin this right the for as be going as should forward, right about of lithium? we forward the base base So kind cost going

Kent Masters

by term past what in think I we’ve is we that. said stand long the in the

one of because of the our EBITDA understand is the prices So go up, as things I JV. spodumene to of the that nature margin think got you impacts we’ve have

becomes effectively won’t Talison. going because will EBITDA different that degree the to product tax-affected from of with And MARBL some we that be forward. – and So purchased

the fully EBITDA bottom that the line. through it has an impact on still get P&L So to flows the pure but margin, once you

guidance of it’s think in stand range. kind question, to still long the we the provided that in We by still that your I we’ve term. So think answer

Joel Jackson

next new new supply, million not there’s got technology, for if X The resources, XXXX. million-ton never it’s got a we’re there get have You’ve let’s you DLE for But X forecast not demand out supply years is, going going great to There’s tons, we’re to there. to question there. lithium be whatever. have for to honest, right? Even to eight in have get

of You have to strange places, that aren’t feedstocks. have of now new in lots assets producing lots

So it we’re to get agree plan? what’s that mean have does acceleration million that? to has got if the with EV do OEMs down, wrong? you going tons. that’s case, change to So the happen? come have And going to never Or Would your I X to

Kent Masters

that it’s slog, it said before, a Eric it’s but doable.

that combination some technology stretch, be resources. those on bringing these does and it’s industry experienced is and And where and we’re it resource – industry places think anyone of – and and facilities new as it’s But some at not of pains. I execute you’re new conversion growing lithium think getting I impossible. has a as but It to think in that, of aggressive require a some but hasn’t done We the conversion to and capacity. operating some historically, has large that the probably well. seeing doing through we’re

Joel Jackson

you. Thank

Operator

comes from question next Our Andrews Vincent with Morgan Stanley.

is line Your open.

Vincent Andrews

us. wondering Thank CapEx the, III just total for you mark you the everyone. Wave if morning could Kent, good and

I of maybe think down. indeed related like and you But transitory of it think calms the I seems mentioned if that was it XXXX said originally half billion, COVID you for was $X.X to inflation. at increase some

tell you about III would Wave us how to versus the So think original billion? now $X.X

Kent Masters

mean stretched I accelerated bit and – a because little it’s had it we’ve inflation. Well, has Yes. we’ve

because goes inflation is projects couple doesn’t years that next building in years. if away So the of – three it the in matter we’re

some So on there is impact that.

So that. with accelerated it’s additional – capacity there’s because we’ve associated

So other is that inflationary. and the half is half difference of the

the Western – not that be the capital going mean, goes two. be And equipment next to and that you and it’s year we in inflation our going in that see but Australia, it to still says if I necessarily – and we’re So buying in on. even to – forecasting there’s got away, add we’re –

Vincent Andrews

a thought billion $X.X So if now be that $X.X number? like was instead billion of we something a billion, to good to ballpark going $X is like for it of

Kent Masters

Yes.

think definitely billion. I acceleration. the $X.X to be. I want the turn is estimating from what to going out projects it’s Part are that of to start up But

overall, that’s not bad But inflation the part. probably kind focused on a estimate. So I’m of

Vincent Andrews

are it? just to you. technology you’ll on left so Thank be the that to you’d you just be hit what confident that can talk on de Atacama about to Salar us Okay. milestones And execute able that projects,

Kent Masters

Yes.

going complicated real project getting particular – as into it’s phase a as execution of don’t just not conversion I that facility. the but know we’re that a So project,

So I on executing good feel about we pretty think that.

We are of – in we bit but we’ve a had little the the it. float that’s lost schedule,

that a schedule have the on had and but bit contingency standpoint plan we time from on we the little that still in. a had, of originally We’re lost we built

Vincent Andrews

Thank answers. good. Appreciate the very you. Okay,

Operator

Our comes from Kevin Research. McCarthy question Vertical next with

is open. line Your

Kevin McCarthy

of couple business. catalyst A your morning. good on questions Yes,

had ongoing the some And you regard update to regard January. increases price level I think confidence flow-through increases? strategic any to realization early on you magnitude about the and the talk with related those of Can First, your in announced to catalysts, with review? also of

Kent Masters

Raphael. Sorry,

Let me on the and you then strategic review about touch let talk pricing.

answer that. by had going it on So said, year. really process, of we I through too much and we’ll that or front-run to beyond And mean Raphael? it we think well. The we’re have I the going timing don’t comment an want it’s middle

Raphael Crawford

gas. price – saw, natural this really announced we’ve a in we offset inflation help in the you January. That’s that we as seen around to XXXX second the increase of year, Thanks, Kent. Sure. half starting Yes. Kevin, particularly as into

building that’s So momentum.

Again, So we’ll seen forecast. I pricing north raw materials. of worth that’s offset $XX of on really what in our million think see we’ve to

know, products. Kevin, – produce are performance we As you we

We we’ll our deliver covered some and shared material as be time, the So headwinds justified. pricing catalyst business lot said, sold-out will a our customers. long-term we FCC is of where we that said. We what for create for to in being our mostly confidence think lot got All It’s position right a what raw Investor now. be of over Day. the a we’ve with on of forecast near value we’re think at track price in around we

Kevin McCarthy

effort remarks for rewrite you I Chile. in the that administration to politically, talk about has potential mind moving you changed La And an how Thank Negra III you in be And you What suppose same? also the Kent, changes? to in your Australia, what prepared country, remain I then relationships with ongoing begun Can mentioned forward but in that. versus may beyond second, incoming in you’ve fixed of some have through in U.S. will you China, the your build What there’s think you or or are it countries? allocation terms in are alternatives in of capital other thinking terms watching constitution. country

Kent Masters

Okay.

relationships – new there’s And lot So we’re in so on going team a there. our really trying that yes, out Chile. place. not in our And to build with But front is administration in of those the if local going not all across last the discussions – constitution been and rewriting about on a multiple for of discussions industries been have The been have there have them. mining six year. months, happening royalties

there’s a been lot discussion. of So

to with there’ll around a forward Most on particularly the is with the to businesses, industries, stay that opposed goes that of government as anticipate be change changes. trying the don’t it. government, we’re new you relationships build going existing look to be but we on think in direction lithium. respect We to to existing, close do as wholesale So extractive

is existing business Chile pay. done So the our in the or that wholesale way royalties we we see lithium don’t a is – that in change

for Chile. become example, lithium that an hold very in in extractive will the maybe we some progressive, As highest the industries an and in that, of think world resource-based probably industry. on they’re And even for probably sure other the and we think example

Yield capital standpoint, and Negra money that the up. we’re we’re now done, La We’ve a I IV the got III our and project really there Chile. Salar – in in allocation the From So project. we optimistic is process mean, about position we’re on have pretty of ramping spending

won’t need to really capital allocation for a we Chile vis-à-vis a while. make So decision

road administration, and have before there. Chile the we’ll view the make the what’s we they’re a happening rules decision are of what new significant a to in going and So allocation capital better much have what that the direction of

Kevin McCarthy

very Perfect. you much. Thank

Operator

Market. comes from Loop question with Capital Kapsch Our final Chris

open. line Your is

Chris Kapsch

you. morning. Good Thank

concept, on of times. security then that So more and supply the something a pricing of slightly follow-up also nuanced the couple Eric mentioned

out million juxtaposed theme, it’s increasingly scenarios ton against important morning, X.X the by obviously, these So XXXX XXXX. demand think. and million scenarios really that put you demand is I this new X and this the And an

increased of That’s at you sorry, or from your demand experience looks – you steepening. even ramp tons. tons, the to it’s So that. it – forward industry about XX,XXX how going XXXX, demand September, be metric would Analyst now I even your III, curve you’re XXX,XXX talking like. only the as the pulling industry’s And will you’re portfolio, just But about Day Wave metric say in cost own XX% talked to

of about to increasingly we terms these their just prices. think in at of ability security customers So supply, source concerned are lithium reasonable

color the the order pricing that to I around really that question Just more supply. they are be higher Albemarle coming going different well-established in to Thanks. you’re that. there’s appreciated. pendulum given like kind a swinging how of tough floor you’ve to that willing costs more to ensure I other in structure. it that my considering? contracts acute more shaping I ways. they’d induce be like for be to as is gone pay of be something of know and supplier of of shortage is and just reliable potential concept prices a this couple being those from only was back a do to is towards – think, and Anyway, this So to any sort big like, answer this higher of and wondering a up to And – saying going fixed scenario, variable is, supply. integrated be asking to But would seems more is But kind would motivated

Kent Masters

Yes.

you is So I’m of key get And in we our And security proposition. the can fill of shot thought if else thing unlike has of in having has a geopolitical cost a been base But brine, anyone value base, some portfolio it the key industry. going deserved locations, always is our Eric, first supply from resource, always miss that – I view, that. attention built points. in rock the to our guess it of the and that’s the the conversion, And everything. I different a of that supply on security resources, part take both we in in didn’t Albemarle We’ve past. first the supply. multiple diversification

and the least the a portfolio but that paying with we’ve more a couple structures. there because is of manufacturers, make now balance hold industry. And than different been they And able I to trough. structural really one They’re they So attention. deficit continue or may But else, prices started to do of on that we’ve having probably anything align at most we’re that we’ve said, industry, done it evolve. didn’t with have players. is lasts for reliable now sure we – more want think want people. that getting the be to conversations the probably the not contracts battery more put and something structure renegotiate the low are years to that that. seeing different probably at shifted conversations OEMs we will now, The our is In went OEMs attention ago, when just we shift the it They’re about pricing that a the that to the so

deliver it those in changes are what going ability quality structures there do. security you and and lot of suspect I projects to come to to supply say based a be of So and and you’re the will on bring on

Chris Kapsch

sell add The to But I also want thought the market. for – if, that like, just And hydroxide, your elected would you you conversion be decision it – that know to you’ve but I Eric, had just don’t have just explained in into to the on to, sell spodumene, of some past one the sounds that, opportunistically, because Thanks. that. on follow-up. now to spodumene I captive

Kent Masters

it. years just that’s It’s had the just inventory because wouldn’t into in opportunity a we made an read it been was I our and a was was of sitting. into ago and And we that opportunistic. opportunity, Yes. that opportunistic, – sitting took was to advantage market several that that in change the we and had that, took there strategy. It product had just sell

that, shouldn’t that read selling into spodumene view the in changed You our on market. we’ve

Operator

scheduled to today’s I’d turn over the Masters the time Kent we to for have for remarks. That’s call. all call closing like back

Kent Masters

your thank call and you Michelle, you, our all on Thank Okay. today. for participation

our markets drive that our accelerating this I’m in by way us all Our about strength in successes team’s year of execution. ability confident example. our a to sustainable coming in to XXXX capitalize positioned stakeholders the growth well business And industry and Thank the have by for serve. of we on lead to the you. in is the value

Operator

This concludes the program.

a have great You day. may Everyone, now disconnect.

Albemarle (ALB) 17 Feb 222021 Q4 Earnings call transcript