ALB - Earnings call transcript Q1 2022

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Operator

Hello, everyone, and thank you for joining the Q1 2022 Albemarle Corporation Earning Conference Call. My name is Terrence, and I'll be moderating your call today.

Before I hand over to your host Meredith Bandy, I’d like remind you [Operator Instructions]. I now have the pleasure of handing you over to Meredith Bandy, Vice President of Investor Relations and Sustainability. Please go ahead, Meredith.

Meredith Bandy

right. All welcome, First and Conference XXXX to Call. everyone, you, Quarter Albemarle's Earnings Thank

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

on Johnson, Kent our Joining Eric President, President, Officer; Bromine; the Chief Crawford, Raphael today Financial Lithium. Chief and Tozier, Officer; call President, Executive are me Masters, Scott Catalyst; Netha Norris,

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

Kent Masters

tight will generate and and team's increasingly growth to the before positions for our joining achievements with the will have and projects I lithium Albemarle's sustainability then all Meredith, you outlook generated quarter, in balance we call, results results, details and In execute results. enabled on to today. supply/demand pricing last ability serve. XXXX our Chemistry more This close $X.X has key prepared dive during an of compared us bromine sheet. provide remains us on we our This will our continued for on prior update in double first thank excluding the billion, EBITDA bromine today's in On I the remarks today's Thanks, leadership strength in recent lithium Scott to more The our will highlight comparison, strength enabled that questions. that's and we in our sold strong opening us and increase And quarter. our Fine in sales into balance based financial the to than of Scott us and which call elements up June year-over-year. year. significantly to our Services fundamental markets of outlook net later the year. presentation. outlook allowed XX% businesses.

the in joint quarter, In lithium terms of mine MARBL the our for our of well. progressing is operational Wodgina highlights restart venture

We've Train lithium Together, with assets expected lie. with trains X from our May. concentrate from concentrate accelerate can feed restart of around X the hydroxide. these partners is first XX,XXX X agreed in annual tons with train to spodumene that Train First, the spodumene of conversion capacity of

financials. the Scott turn call Now our I'll through to over walk to

Scott Tozier

Thanks, Kent, everyone. morning, on X. I'll and Slide good begin

from bromine diverse During the of well increased year-over-year FCS a $X.X last the lithium year. especially June end is to quarter, we generated driven business, businesses. as increase billion, by pricing strong we volumes XX%, net in which sales demand primarily higher as our This sold due of and for markets, including

On tax-related to quarter walk adjusted add-back primary $X.XX sales Adjusted property $X.XX. were was EBITDA. you on the through by Slide natural For gas net because on first includes adjustments a for earnings was net in year of our up the for items. quarter, prior The to This million, and $XXX add-back partially from sales, million of impact attributable first the our I'll X, for catalyst the business. Albemarle first $XXX the offset strong cost income prices inflationary quarter EPS diluted a $X.XX loss Europe pressures.

pricing market was material referenced favorable of pricing, in also year-over-year, driven onetime including primarily higher a sales stockpiled was expense variable driven was of conditions The price sale Lithium primary and to the the and and offset by index were prior inventories, relative market lastly, inflation. by was and that partially the freight of exchange uptick offset pricing. driver contracts EBITDA slight XXX% lower up the costs million, Bromine and by a For adjusted foreign difficulty] mostly raw corporate higher $XXX reflecting flat lower-cost to spodumene higher year-over-year. from down first volumes. was our tight the [Technical raw also by during year-over-year. move pricing. driven quarter, Wodgina. And Catalyst year, volumes That start-up material partially benefited by initial

Slide to X. Moving

primarily in discuss I'll just We our outlook XXXX have meaningfully continued strength business. in lithium in outlook greater moment. a our to reflect increased our lithium detail

EBITDA the we $X.XX of company, to be company in expected midpoint $X.X $X.XX to to updated XXXX the of be in EPS XX% total between in improvement of a to $X.X And the to about of to in range. is XX% sales implies year. range range compared XX%. expect now to translates This billion prior the margin the For this reflecting up billion, a at net Adjusted versus $XX.XX adjusted billion, year-over-year and $X billion diluted together, guidance XXX% of the XX% EBITDA $X.X total XXXX. XXXX range to

customer are billion $X.X lithium demand. maintaining CapEx we increased $X.X of billion forward our to to investments meet as we our Additionally, drive range guidance

You the QX pricing backdrop our to of cost the inventory. low-cost our And macro due the sales EBITDA, of widened primarily and we turbulent quarter in be we sold quarterly goods year, call, noticed the that environment. pricing sales sales, of inflation reflect last of higher progression regarding on for and to strongest expected our of outlook for of that a range indicated prudently against may volatility to we and have greater

to total and now our about Given the rising XX% of results pricing continued the be strong we expect second year. half volumes,

a year-over-year, for up XXXX XX%. growth XXX% next to from outlook. lithium EBITDA our for to be is around prices. full our average up to move previous on more in the to contracts be significant to referenced outlook increase year. price our expect about Turning of detail XXX% is Lithium's expected slide efforts We This of double year variable last selling index and realized result index the our price toward now

the market also existing We up of indices fixed to year. upside transition at rest contracts level the There would to year. today, for additional be also strong If have XX% if be historically remain the of of to selling there we full balance this that and current XXX%. could expected from the guidance. of upside levels year, between price are price additional variable in year pricing. prices also the that to the From sight QX remains better line at our beginning for the We're assuming

no we However, to IV range pricing Kemerton the if to as our for shortfalls, there in to X. We volume outlook III XX% or particularly declines expect would lithium La from we material the of see XX% downside new guidance. still year-over-year growth assets, current conversion There's be bring this year. and market volume and on change volume Negra

are fire digitalization macro raising year to and XX%. year-over-year full with electrification. our strong bromine, higher supported XXXX trends guidance related demand, a expectations EBITDA This to such by improvement pricing reflects safety as For we revised of XX%

expansion We last also expect in year following successful volumes our Jordan. higher

related year-over-year. offset is raw to to materials range and down Catalyst reflects For lack to war our The to Ukraine. gas particularly flat freight, in XX% partially prior pricing. by to Catalysts, below certain increased EBITDA large related Europe XXXX be for volatility visibility, natural This and is pressures due significant outlook higher expected in primarily outlook and the cost of

gas oil changes and resulting the in circumstances to to seeking pricing is aggressively gas higher and extraordinary natural the through Given customers. the business its markets, pass

discussed, maximize a the be strategic X to enabling for later on value our I lithium contracts previously and will is position Slide on review to business now we success business this Catalyst while pricing. to As completed The to turn the dive quarter. expect intended review continue deeper and us for a focus of growth. to

With the see market to guidance, now you change in indices. exposure have changing we more can

allowing purchase to revenues be to on orders time. to contracts with split are fixed lag; investments. and XX% gives X-month upside mechanisms, XX% to returns remaining XXXX pricing also be from are typically XXXX the price of approach for segmented fixed to variable slide higher XX% revenues, short-term preserve now to from growth expected from reflects expected indexed pricing; make of the of customers more a opener is have our mechanisms X- over while about half prices Battery-grade its updated revenues change XX% contracts pricing. to expected up still is and our with These This price expected on contracts. which reference Albemarle current our Our to flexibility

could are well. provide reference ongoing outlook transition We these to If for contracts are continue upside successful, we Lithium this work These business. to our with pricing. to to progressing the and negotiations current with variable additional index customers

I we call, to provide questions received on earnings regarding Slide lot margins, our last pieces additional a expected so of wanted our moving color the Following on XX. some lithium

We pricing, we expect in higher under our Chile driven improve by by commissions contract. progressive margins CORFO to the partially offset pay in XXXX lithium

Kemerton ramps Another fixed our on Chenzhou impact Negra production. as double to item of to plan. are mine margins the impact are Over such the lithium conversion absorbed. These consider costs of to startup expected as ramp the time, and costs and potential and diminish conversion costs related our Wodgina fixed and than higher facilities production as more our the acquisition is plants La the from as the assets well new of will

income reminder, much Albemarle from because impact of basis. joint tax by conversion. from This transfer calculates higher it equity including on the fully spodumene simply the EBITDA our venture than mine, result item meaningful pricing has This year, As a is to our the integrated this past. Greenbushes after-tax statement. a where hits remains income resource Albemarle of line more been in an tax is

Silver we to our highlights between new margins conversion spodumene China, in are EBITDA completely lithium Chile. Kings XX% conversion pay and are XXXX. converted and XX in Xinyu metric Negra higher Slide lithium and in On XX,XXX expected completed. including ourselves volume LCE Chengdu So and year, as expected ramp pretax at Peak effectively, La II XX% pricing. I our Mountain, a basis, facilities we tons this and Last be

take to new the in the of process together, and this qualification. are plus plant. ramp conversion typically six to tolling dynamics to plus on achieve any and technical-grade per of full Total [Technical Tying additional Difficulty]. months two depending We La doubling we year, expected it year, and this roughly expect years expansions at are Negra than to higher acquisition to at lithium plan, including capacity customer period. that, Kemerton, all [Technical the with during of per for build a about Shinzo than capacity including of tons We about conversion anywhere of more volumes spodumene, buy or XX,XXX market capacity the expect sales volumes tons XX,XXX be X Difficulty] between spodumene we the

to Finally, balance let's our turn Slide look sheet and at XX strong flow. to cash

flow at related income, revised volumes see higher guidance higher flow the can million working to XXXX partially and higher of Relative inventories. and higher back capital cash depreciation. is you pricing, the plus by midpoint. XXXX, Our raw materials driven This $XXX operating net higher by incremental is offset cash sales adding to cost

sales. As net of a working reminder, capital typically about XX% averages

Our rising volumes, or balance times. shape times, pricing our EBITDA and approximately X $XXX of to remain to and adjusted with in net cash with target X.X liquidity below sheet is range Current to expect billion. higher EBITDA of almost at million great is debt leverage from $X we of X.X

our Our balance growing the to lithium CapEx demand. for customer investments sheet supports meet

the as Following capital of needed year, projects. last to our equity with repaid intention we fund debt offering early relevering

just are We actively do options that. evaluating to

to an this We remain avenue market debt committed additional capital. maintaining acquiring be I'll projects the update our if and planning on our to markets We quarter conditions are for With favorable. it the a turn XX. back favorable market debt investment-grade that, are Slide credit to provide on rating, of in Kent

Kent Masters

Thanks, Scott.

to Pacific. base. leverage close this process First, let's in of resource The We regulatory Qinzhou transaction global to to The X approvals. as in of the commissioning our second forward progressing of now bring was our an to to look through well. is a conversion XX,XXX Albemarle lithium tons this of year conversion acquisition few is facility the look focused expansions to lithium additional capacity at we expected Kemerton at the half work continue low-cost closing expanding Asia on market.

XX,XXX facility. month. into Kemerton spodumene expect to the on ton our we introduced that track later process, a have this expansions, the end by to to have and conversion year. China expand product first There options remains hydroxide year At We greenfield completion mechanical broken of achieve ground the Meishan facility. are construct per II at we for also

and options China is we to second engineering either are in or at carbonate the phase, The produce at hydroxide. looking currently Zhangjiaghang project greenfield

Importantly these to lithium our Greenbushes spodumene access ownership cost and conversion have Wodgina with low facilities. we stakes mines, at already to feed

mentioned continue to market the we'll mine MARBL lithium of we I and information. restart JV we venture. negotiate well to the the the when by partner the As expand more joint and Resources, update restructure is Mineral Wodgina have previously, our And going agreements

of a stake also Greenbushes, quality of the and Talison XX% at to We that's one and this highest resources joint up CGPX later expected has the venture The in ramping have world. approved construction is lithium begin CGPX year.

plan. during and of plant was construction the progressing to the tailings retreatment completed is addition, In quarter commissioning

are just lithium portion defined growing global and focused to the the on resources if Asia Australia, toll we we near globally rent resources in is capacity to sell United the world or growing intention conversion The case diverse of conversion to elect our expansions net leverage lithium We in Chile have our class long we spodumene in Australia spodumene. States. In demand. assets. of in customer may and be projects could so term, advance Our a remain meet which to

Our lithium that tonnes projects of provide should XXX,XXX originally with XXX,XXX additional we Wave Albemarle planned. than capacity, higher approximately is which X tons the conversion

assets our is North and Kings XXX,XXX continued continue of This restart growth America options Wave conversion in X, mine to Europe. build of which evaluation additional bring and we XX,XXX progress our capacity. an lithium expected for to Additionally, includes options Mountain to tons to

Our future. and vertical to foreseeable capacity Years cost of online access experience high sheet low bringing balance resources. degree integration, quality, provide considerable of strong conversion for high a the advantages

you the at see, all pipeline is can slide robust around as world. Looking executing of now Albemarle XX, a projects

project cost the In utilizing to pumping markets and like Brian recovery, production our and projects to bromine United knowhow return pursuing automotive. electronics, technical leverage expected Chile, sustainability. incremental telecom, resources Yield support lithium increase diverse and allow growing These is the high Improvement Jordan progressing business low increasing improve customers in in in technology and us to to is is Salar Our proprietary expansions States. our without and efficiency, rates, our

to expansions to a on scale lithium In this called steady We work We also with exploration later have after Antofalla necessary permits. to Australia, efficiency resource restarting all designs. we Argentina, in access anticipate year of and continue Antofalla. greater progress securing repeatable Kemerton leverage

we're with growth to brines and balance our to robust evaluate several United the Silver expansion in in our pre-feasibility lithium. in production. on first States, production. restarting a evaluating expand bromine extract and In Carolina, track U.S. process Finally, carbonate knowledge our facility mind Peak This industry the Magnolia study coupled for Arkansas, is leverage pipeline, Albemarle. is begun to facility of then our the significant to provides This technologies Kings Nevada of North we've to double sheet lithium strong options the Mountain opportunities

sustainability on our own value proud company we efforts. to on our I'm continue sustainable progress our and that requires what to to achieving on front. shareholder initiatives And creating sustainability drive on Moving ESG are of slide XX,

report XXXX gas will will report, reductions on see freshwater and towards work In emissions strong our you our We publish progress corporate June greenhouse usage. sustainability hitting X. our in and target that

lifecycle products. emissions assessment Scope X initial our full for lithium assessment and first Our

definition diversity targets our of further including see You also inclusion. and will sustainability related

next party new goals you will sustainability full CDP IRMA we And disclosures and steps, Salar join report, June disclosure we in. de listen webcast with In XX. that addition the TCFD presentation to to and third at our Atacama. publishing assessments In including a I host will will on hope discuss

accomplished to are a we have committed see, continue we progress. can deal that and great you As

prepared now So remarks. this we call the concludes Q&A. our will And open for

Operator

[Operator Juvekar Instructions] ahead, Citi. Our from go P.J. first Please question comes from P.J.

P.J. Juvekar

initiatives. Yes, good Good pricing morning.

your downstream? that a Or into it's a potentially in Would right real advantage you more you going you recycling? Given those from is consider XX,XXX-foot down getting leverage view M&A would view? for options now. or lithium How substantially,

Kent Masters

has think always don’t we're So our I looking changed. a view think M&A we've on basis, really I PJ, I at mean, regular

And on want basis in do a We assets and acquisition, for at to working be in look have recycling the business. being as We're conversion look regular we we feel like toward resources a plan. we So recycling. we well. at

a than not strategy now those But our focused firepower strategy has We we is So we're changed. And more in may little pretty the areas. [Technical the on past. have Difficulty] the think did I same areas.

P.J. Juvekar

or could Antofalla are environmental you projects concerns region? the the impacted other Mountain, Argentina, are remaining Kings there, before hurdles what permits proceed? that some in what Thank similar which in And you. be in for has Also

Kent Masters

just high all we it's mean, the permits I I'll so level. a Yes, need. comment at that

think we're Eric can North closer talk Kings in are and early Carolina. more details But in we're about I there. in Mountain. in we process But the Argentina,

Eric Norris

would These There work. site been are started are studies, a greenfield PJ, not ever classical you before. mined pre-feasibility and do the here has is site, that Antofalla for any

there a In onwards achieved. progress So brownfield then this a site. that different permits would have is are environmental we of from case And would And the that to host from be are underway. Kings of there. those Mountain,

brownfield and And groundwater has we’ve much be work engage on to also a in we're testing on did also community that And very doing process. -- testing, And them it's earlier so said, Kent a environmental. lot sites. with of this the done. quarter, the work but of to There's that's so participate as little early similarly earlier on

like trajectory than So it'll say, a slightly have site different greenfield a Antofalla.

P.J. Juvekar

you. Thank

Operator

please Jeff comes question next go from JP ahead, Jeff. Zekauskas Morgan, from Our

Jeff Zekauskas

Thanks much. very

expenditures years. five What's $X.X a execute You $X.X the the the you trajectory capacity of very clear expansions idea level? to capital next billion of have from over to billion wish

Kent Masters

mean five you the -- years? over past sure next Not

Jeff Zekauskas

your do over period? change capital to exactly you Yes, expect expenditures that right. How

Kent Masters

what them range, opportunities. we the the forward. over probably expect going it five-year you're period. I next think be I in to on right Yes, mean, And that depends over on

had baseline our we think if I change if to But acquire in would investor or capital that additional identify that. next resource additional profile our change over that resource kind five-year that can resources, the in is out So period. laid that able we've were range day we of

Jeff Zekauskas

Great.

what moved to brings? seems can price there do manufacturers you cathode have or manufacturers battery what the we'll to just absorb? Or, Or are really know any lithium limits see see ceilings? market you So and up

Kent Masters

call you to the to think to factors what come is And difficult are look of is lithium it's of to a small it that see we starts at components I that overall economic a cost Well, it's become think that little of the market going bit I bring. the a when there, go cost. so to going mean, a do, have vehicle, percentage but But market in material, into overall there's I play. still there lot

is like come they So view off of I -- moving, down that in market recently our mean, bit issues. a the suspect that's because because related have prices little is demand is just COVID China

softened about to while. trying it we're our for this has We've a recently. structure contracts. But So talked

with move market. the we So

to market in we're down up not the a either So dislocated market an either or market. in up

Jeff Zekauskas

Okay, so great. you much. Thank

Operator

comes Deckelbaum go David ahead, question David. next Cowen. from Our Please from

David Deckelbaum

[indiscernible] the low your with Silver there be should any you Mountain Mountain? and at, around building for with of discussed would projects to base any expansion facility we conversion of mine looking projects? an out Kings do side? anticipate interest? to America, the facilities part these be and than is there your North resource in and filing my U.S. some That second Peak, growing the out upstream greater obviously, would expect then operations. Think restarting financing the activity about be accelerating sort the applications cost And Kings Magnolia that One, Or in look you on at growth some Albemarle and loan

Kent Masters

questions Okay, there. so there in were a couple

the can our interested I that, I mean, out think do want own, And in than local locally, loans I looking interested would definitely to loans, be then we capacity visa-vis we So we resource battery I think our think customers resource in first, and buyable on local And we're question that conversion if would we economically we'd us supply build -- be better can local help build chain conversion, conversion your outsized capacity. North have. be the America. to conversion get

do probably work well. way then we as from to to convert local product, product have have considering we'll And make this, outside time. the sure with recycling U.S. that coming supplement got the to we the over product that But we've we see want out we're So we it, to local but as

in that. U.S., So And as we States to have facility coming for from resources integrated only we as that recycling but well. lithium virgin capacity that outside and United want the the the not does see an

David Deckelbaum

woes reiterated up the around on then outlook situation, my that do shipping friction China? And progressing Appreciate impacts? outlook you you could if you the Are concentrate Are volumes increase then how And any of the some and we have little just that the hear, characterize see color getting and around into your that pricing. experienced follow China or I year? your that. obviously converters throughout kind just China? seeing anticipating of guess, in moving quickly, situation you maybe into you you getting from product into spodumene the

Kent Masters

that I businesses. all our we Well, mean, of see in

other say been it. don't in chain, business. We're news, really Today, but we've we've through you and China we you out. guess with finding you can't So we're little but as could issues, in comment able it. supply and every we and But finding Netha have Spodumene or hear manage around it through the a the see Eric, what I specifically, guys in maybe managed on to bit

to relative lithium business. the So and China

an are an well exporter, we as that importer. as recall Just

a chunk spodumene vision, from a And So highly Asia of production out and and well. operations. that outside countries that in make Australia those goes goes bringing as you as lot China surrounding hydroxide point the support and then market we to we're

we've customer impacts. not have -- We experienced some

any we coast logistics, it thousands to contracts are customers, haven't material COVID The of of able, and We comes ships to haven't so or time down it's crisis on with we so we’ll can and to to our revenues due had hit impact these been certain to But our lines. seaboard and for active various across Eastern China is ports products. -- those chain managing in find team way very a Coast the East to the supply constantly the that out right of just a manage there task in have basis. China, challenge But, to variety be it, far. a there of and being we definitely to has how not it’s continue challenging, it that the expect -- and but managed day-to-day China small material very made sitting so impact this how manage no

Netha Johnson

a manage And for in part are excited And an challenge. China, we’re allow of us with team impact, container in leader, us in us logistics very challenge But and America. got importer, the Albemarle issue. is East. the We've that That's seeing containers brand-new team material the so up supply movement our in us. in and I chain that's to facilities about for think macro And Middle same supply bromine, material on to back and chain a we’ve probably doing we getting great But a this getting from world. for return extreme what a bigger managing around China great also here no net to they're load for difficulty. the the the Eric, they’re got well end we're again,

David Deckelbaum

Kent. thanks And Eric. Thanks

Operator

from Vince. Andrews comes next Morgan go ahead, Please from Vincent Stanley. Our question

Vincent Andrews

capital working it Thank just related. much the Scott, increase was if guidance wondering I price in given you could the was and a works, give on how color of you. bit so just us more

the receivables time is Or question a these prices of going well. spike side through? on as just of are it’s for inventory going to So anything there flow period as

Kent Masters

Vince, Yes, I you've think nailed it.

company, up, obviously XX receivables months XX generally between go you go as of and receivables have prices two basically that. impact a days of and total as So the up averaging the we’re so

So that's a driver.

The second rising on one inventory is inflation. and

quantities obviously costs same, our we saw what as seeing were though little a year. last bit go the up the even actually lower, from inventory about are well We’re

what's inventory, the on. are of offset in drivers. those little that's to but a the going that We see benefit payables So bit two

Vincent Andrews

just And a Okay. follow-up. as

you rough that's that mix You off or your idea variable. in what might least that be X of could discussion? of mentioned renegotiated for a be Do that percentage contracts some to of midyear have at

Scott Tozier

Yes.

actually chart makeup in revenue, in our breaks our you the if the contract right about look fix XX% So presentation of those now. those are the are we revenue. down And battery at that ones discussions that put grade that

would So successful, guidance. additional be to the we'll see. there upside If we’re

variable this pricing. we move As to

Vincent Andrews

But the subset XX% it’s of it. all

Kent Masters

you do addition there. some detail Eric, provide want

Eric Norris

Yes. would come down I we have the subset, could zero. just I is still go it But knowing of percentage XX% double-digit mix -- would when say now and there, business a we have it so to we if prevail. from

Vincent Andrews

Okay. help. and Thanks I appreciate the

Operator

Our next question Capital comes BMO from Joe Please ahead. Markets. go Jackson, from

Joe Jackson

suddenly, your the And only now, pricing, Hi, and with it's it's wanted ago, morning February working contracts it's three lot a into quarter to a business I everyone. just different what good different. way it's is lot that and story are into the really you, question, and your index you the obviously look would peers, ask higher not QX. margin, thought pricing but months be pricing in margins better

so what in be the rest can quickly to change months, how base you flat could if your three I really So And changed. the case pricing confident stay things of want for year? ask can

Kent Masters

gotten at structure market EV end moved been about of a the position China. that into same Yes, coming The last What's has indices over so stronger an that to year. I the beginning year. demand price mean, toward mean, last of the most we've up, from variable changed in of happened the the I And standpoint discussions year, contracts contract the in the year. happened tightened. have were changed we particularly we're basically of with that year, end Most talking at is The pricing. and moving these our market has for

contracts. and the strong, prices move really, was a tight is were there -- the Well, think, -- on other it followed we that's an imbalance, there. it’s Those market to how what's And it's supply tight. It's our first I I demand and mean stays driven So prices a that. little are but I mean, it have that's the bit driver. the pricing. and lags

like in quarter were we to the tight, feel What it's is That's over the why the it it it's see good. we And because does market the is demand we year. we see forward balance for after it's going very holding understand what second the difficult, giving dramatically. soft, of still COVID second the gotten a it for issues. guidance comfortable off we pricing, little don't So call dropping difficult that, China quarter

down, shut were lower plants they're backup are EV at the of Some mostly rates. they but now,

bit the a slower, see happening how mean quickly. is has I hard market bit. off it hard demand and down to which in a but very little to a that comes that see is pricing pause time, It's can, So over little caused come it's

Joe Jackson

If follow on I up Okay. that.

are do than quarter? volatile more for business month in past. you that look risks, lot can you how variable much is more plan How that with more exposed are the said, if to lithium, have it? And around manage not price because your but quarter to way how So, change and a How business they're the you at surged, month, handle you you they obviously working view now, a your like change may as which going comfy fixed were of leverage, you change be spot with change level, the view so things, it now and just you you pricing could business? it's you spot to Because moving that capital, what a now like right or does that How how month have more. does seems two. in how how to

Kent Masters

I not contracts, mean, Yes, so they're all spot. our

contracts So that these have. are we

category. shorter are the variable term in Some

index better term to to short with market, have term the but and tend have to them collars Some contracts, floors we the longer that our the market, index ceilings. are on with

So that that out. takes variability some of

So it's an strategy evolution of pricing. around our

invest can pricing position. volume think position them. this capital up the We indexed confidence a move But ago. that to for And We cost in that to a are business with year our good the more -- I will today that still think we it and resource by we down. market and we And know were Definitely. growth than grow we in the very in have we have confident cost then and we're have will but design. was base

Operator

question Yefremov ahead, from Please from comes go next KeyBanc. Alex Alex. Our

Alex Yefremov

morning, Good And on the Question volumes. contracts. on everyone. congrats Thanks. renegotiating

goals year. overall Wodgina same lithium? are of And for going year. kind in Could this on your You're your production the this you volume raising assumptions your yet what's about with for volumes explain

Scott Tozier

XX. toll Good and year's we already -- the follow or coming possibilities some smoothly, conversion to thanks Alex, above this you words. of and indicated XX% Wodgina could of possible there's we strategy our to look come until year. contemplated capacity that some our won't sell that remarks. Wodgina guided indicated of X on page We second about to form be volume And that Kent growth. XX,XXX. the had as growth. that to XX% in that X is have an some last support the we goes described The be to half that That’s morning, will our volumes resource guidance used in There's on numbers during having for your it chart upsides of prepared So excess there to would the if potentially

would access was production. range be XX% that to the which that the our certainly So is internal XX% an

Alex Yefremov

Okay, the battery understood. grade indicate for question on effect to your of revenues. half pricing. mean, second months a lag three And I you Thanks lot. six

today. up quarter, take given stay that are right fourth imply for and indices that we third expectation your if go logic price then they these Does we price that pricing, perhaps flat So, sequentially? lags? second for quarter kind assume be Would second these of example, that and quarter where quarter

Scott Tozier

said, they Yes, But lags, see, stay because prices market of three if upside. only months lags. out the of the clearly nature these clear, as where are, Kent there's we given upside. can there's yes, Very

I decline be And decline. market has material prices. to does material in think in of seen China's that we a what past the our couple represent in in said weeks guidance a we've not

before decline have impact on So that downward has significant there a much be would our guidance. to more

Alex Yefremov

lot. a thanks Great,

Operator

Matthew. Our go next Matthew from Please DeYoe question of from comes ahead, America. Bank

Matthew DeYoe

morning, everyone. Good

Wodgina? One, business MinRes Is a well? is for XX-XX, MARBL the that that that what decision to paid pace? as questions run that tax they So joint whom joint that accounting to yet? on decision? controls MinRes have move then you you? Two, for XX% to Is going after And venture? the at And you when stake establish

Kent Masters

to So that I trying take that.

and the not for concept, a paid at that that So And they moment. it's us anything. we're negotiating

XX-XX operating at structure a we're So that had we previously.

we're that. and the we've discussions, which conclude we that's none it to until got would the all XX-XX be that But I will would and So move Wodgina. change final under that to conclude and And get say document. of of expanding negotiations around at JV discussions that expansion

to I'll that Scott, you. the So counting, leave

Scott Tozier

counting. Yes, so I mean,

Some on how negotiate. depends this of those

some control a XX-XX and evaluate once are venture, rules with to there. there's joint through that that those go So accounting complex we'll have agreements around

options potential So just books it which a two minority our tax to One what impact is with consolidated equity run venture no create on through asked there. and JBC, joint income, about. or similar with that it'll that is control, do we would there's then you with that

and come So on out. how on the final contract more depends negotiations all to the that, comes

Matthew DeYoe

That's helpful. -- XXXX? you you it that for spodumene XXXX, up? assumptions is second that impact, I transfers? what sizing the still were internal If do at are have Or half moved what And looking then

Kent Masters

almost It's that. that's no, No, doubled up. from moved

Eric, So I have you think that. it's do

Eric Norris

will It double.

Kent Masters

it's on with basis authorities a And a the different purposes. JV several with the we've and has to Will double. market, have of fared. lagging It's for based agreed Australia to tax in formula then spodumene based prices indices upon royalty the agreed how in

order see talked average the about rising going you spodumene that as what price probably is where well, with, that, it's on that on prices earlier, certainly we soft been. of based would So be double prices

Matthew DeYoe

Yes, understood.

Okay. Thank you.

Operator

from Christopher Mizuho. Chris. next Our comes Please Parkinson go ahead, from question

Unidentified Analyst

fine Hi, taking question. on for thanks Chris, is for this my Harris

been competitors lithium and contracts there of the have the to that more has acknowledgment So that in in a will into been customer’s be an world years. willingness discussing your short your coming noticeable change enter step

what what you pricing, to able was that that XXXX wondering I seeing. based would for on expect levels? know on these you're perspective I could give for And be how if your the it maintain to So setup it's that early reasonable implies you is but

Eric Norris

is and add. maybe I'll this others start Eric, So, will Harris

the quickly big industry making a commitment significant the fundamental very security with supply, might concern that's that had is a concern it. high, demand. towards partnership a unfortunately, brings term as regard. EVs And market in it's with the excitement falls meet discussions, just are at long currently revenues and the impacted our about So in indices, is of partners the them now, to strategy There's up does. spool whether the it And rapid to them a ability leveraging price world manufacturers commitment that the X% can to which there for certainly right we're concern leading and going the that that and that enough in one with as the partnering of to comfort for be is, -- Price -- spot long-term security why what market partner the automotive market the measure be battery class a that with so to discussed our supply. length regard, revenue by to that in well with we've is around for years this are that to squarely of be execute our large ease right is resources, that picking happens that of call that's is them our what well, function concern going give that we've a

on sorts partners. will with there So structures be of these we take

earlier we'll As long price market. be have Ken either going to from And a term a of and on coloring function these to commitment for side is customers be is, based them. us of to some that buy probably in index where supply the said,

So that now. hard right to call

Unidentified Analyst

us normalized sort the looking margin the with change been any bit looks long-term, a about margin like few going long-term there into be XXXX. could outlook, are and also framework XQ bit how it's lithium your off startup helpful? if would But to XX% a setup a next in really years, And that costs little And to that, Got current piggybacking EBITDA an is for helping price you you're it. of bogey play that anomaly. the in past, at given of talk seeing, you've a meaningful for up over quantifying higher that come

Kent Masters

Yes, so say year in the mid-cycle at as would in our day long-term I our pricing. laid mid-XXs view the out business lithium that investor was for we last

we this better pricing outlooks. that. And as point to, we would through at that we'll changed say need the I So to cycle. in long term our time, the hasn't view as continue just understand really evaluate And

because a go mentioned, It's you going the you operating percentage, next time, of forward be our we're our do as part smaller activities. to have plant normal as our capacity smaller an and impact today, on bigger course, startups just of doubling is in and eventually Of be that. part increment just versus

Operator

Capital question next Arun RBC Markets, ahead. Our comes from please Viswanathan from go

Arun Viswanathan

I mean, wanted I the pricing to to off, just guess, first go back discussion.

that thing I we have some, some regime. you signal potentially some capacity and as we and are in others, some majors that announced, new know, new some confidence of kind announcements, think, So, price would had in a

I'm this space can level you pricing, and think for I what the is, your off to as you trough the say lithium build into of now? taken right guidance think, up, just of, new You've year. do 'XX. full also you at mean, curious you're move peak that you

Kent Masters

So going we've going not what call mean, I structured we're is our pricing done lithium we've to part forward. contract. of --

in So for see tight our where they going forward coming we capacity us part the move visibility with a gives the stability, from the goes been look the to 'XX, market mean, to little it's is do ourselves what and given is have years. do, the as some on we we customers we as say you market, bit as of EVs visibility we've and on same When the tight. we our it it and that's price time. for for and demand of And at is think relative plan market so what lithium, the market difficult demand of

which least at it I call our through period, for So, planning five would years.

we So pretty it being tight. see

Now periods quickly. catches there's the very growth but some there'll it oversupply, the be where in up market,

for not 'XX. but the to is So we're call going we prices think lithium market tight,

Arun Viswanathan

yet. bromine about asked really haven't we guess, I then And Understood.

upward provide there I can more a So what's expect momentum standpoint? continued details Maybe maybe your Do quickly you outlook, there. ask just the I'll couple a guess you thoughts just there. price demand on and from

Scott Tozier

see those think onto are terms in Arun, continue We're and stable to we come growing applications digitalization, can the pricing. the fortunate pretty should faster that that grow, than pretty Yes, pricing, of supply applications slightly and market. I electrification

So supplied similar under fall, or our five for day, we saw we planning to last investor period. fundamentally the in to market expect what next be our this years

capacity. So and adding we're

stay pricing the strong expect to we relatively future. So for foreseeable this

Operator

Next question go please Kallo ahead. is Baird, from from Ben

Ben Kallo

to morning, all. Good

two questions. Just

two, get carbonate? to hydroxide Mexico on where headline out in that countries nationalizing that. how Argentina in the geopolitical invested that questions you a about First, Chile, decide investment on And look risk, there just you we was the a as then as making make and you to lithium versus of do about their lot investment resource, but yesterday

how guys. And thanks, So about do you think going that forward?

Eric Norris

myself is Kent or can this Ben, the geopolitical response. take and Eric, address hydroxide can the I

increasingly to The that supply. is wish around of there's this geopolitical it, to long-term it. they and to was the and firmly the the towards desire partnership relate want a making localization us also that And in to carbonate. supply. versus hydroxide and a the a their of commitment on side commitment things, about of concern customer first, have partnerships question the does risk where of that approach there's trend leverage So prior form to also and product benefits discussion We they one security

these the always for an Kent maybe we the get continue just market. the how on we those you That's seeing that current to carefully. to our that do view, risk currently risk? to XX% we are carbonate chemistries comment XX% in or about is added about maybe want leveraged LSP, think regional to So two risk issues, commitments comment two, got the product risk we're and as down the trying some contracts, are narrow of we monitor

Kent Masters

a we us, investment. would say country, where macro kind and new deeper we it that. and for mean, we I by Yes, monitor get deeper But important it [Technical at Difficulty] of we I at a make at so the and for locations level, look of look particularly kind as given we

that Argentina, you have at and lot that monitoring happening these we that we focus there, sure those, make and on our as with sure right to on, the a have Australia those have investments China's of risks about that calls to another but issue, before try risk assessments and make monitor we're combine we talked it in we'll looking active Chile, know, thing as an So the sure we we're on making we doing make we less area relations government in country.

to So that we're can't others a that good as as we're necessarily value bringing seeing well, them actor, bring. and

So the of that's a big geographies. mitigate part of those how risk some and we feel that we

Operator

Our next Please go from from question is ahead, Colin Rusch Oppenheimer. Colin.

Colin Rusch

the you a of of CapEx? the so some then talk about capacity, strategies a grow guys are worrying to alternative Thanks Can deposits funded incremental little finance? and just much You spending for ton guys. or bit about potential money customer for customer

Kent Masters

Yes, Colin a it's I good question. think

environment a think, type pre there's like customers, our different supply of options, concern Eric we're things sorts the of talked that of given there. from payments, the exploring options, partnership variety we're around in, about all and I

are of incremental types do key could what versus those I to is on that agreements own. us return, the for giving think we that us ensure our

it. a So capacity get look returns, clearly, our our incremental take give strong balance plenty sheet, and strong on can support of do own. investors But it to from build us if we'll we at

Colin Rusch

are materials given like willingness and work customers, enough and guys some then in about cathode vertical that you could Okay, Obviously, you I'm guys you expertise the your with want have you it in do real around to seems your have that interested don't additional space? but that compete integration. just wondering formulation, expertise

Kent Masters

capital just a CapEx that or Is question question? a

Colin Rusch

wanted Yes. CapEx, vertical hear I integration there. to

Kent Masters

Yes.

that material I it at customer’s sure standpoint, mean, the is producing we're we in the different but chemistry we're to our we cathodes right that processes. So look at batteries developing and from, into go look, a and look options, interest from our make

we're to to an the the supplier have and that be business, looking to makers cathode the technology. interest battery OEMs those looking cathode be the but So excellent we're cathode in not and in a vested

Eric Norris

understand that as a say, can doing it. ways of so forms application but part to forward we a still with at, look very Yes, but I determine currently, be the at want material lithium, And area. supplying? of there's play to that integrate we customers again, that -- question and advanced chemistries, look state lot though, other part doing the expand well, looking and variety partners player, into able to and would play being future. note, what you Colin exactly we we in are at just area I that we're material solid work as And also of in we're that at different And not how we'll look of as as

Colin Rusch

That's it guys. Thanks, for all.

Operator

session. Q&A going Master to final the all we ahead. for you remarks. Please to now That's time back any hand for I'm go today's have Kent

Kent Masters

right. call Terrence. thank And our all Thank you, All today. again participation you on for your

way thanks Our of for with all our drive stakeholders success in profitable combined a by in confident experiencing positions us. strongly to ability the for you XXXX by momentum and joining lead and for team's our in Thank example. accelerating in to we growth. sustainable are us 'XX our value I'm growth

Operator

today’s joining. you Thank conclude This call. for

You may your disconnect now lines.

Albemarle (ALB) 5 May 222022 Q1 Earnings call transcript