Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, welcome to the Albemarle Corporation Q4 2022 Earnings Call. My name is Glenn, and I’ll be the moderator for today's call. [Operator Instructions]

I will now hand you over to your host, Meredith Bandy, Vice President of Investor Relations and Sustainability. Meredith, please go ahead.

Meredith Bandy

right. All and earnings Albemarle's conference Glenn, full quarter everyone, XXXX year call. welcome, you, fourth to and Thank

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

also and President and Joining on are of Energy Johnson, of Specialties; Officer Ketjen; Norris, today Chief President Financial Storage Masters, Chief are Netha for me Tozier, Kent Officer, Eric of call Executive the Q&A. Scott available Raphael Crawford, President

note that will is in-depth webcast The call just updates today's minutes ago. shorter be that an XX I'll since available limited on than update held quarterly weeks of to about our three our website. usual replay we

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

that, turn over the to call Ken. With I'll

Kent Masters

from growth. go the the that the sales fourth results rising we saw net to year. were results, for up more quarter also will Thanks, Meredith. close same quarter lithium And than into Good volume start triple morning, pricing increased EBITDA XXX% contributed and XXXX thank details and and the while you our adjusted year-over-year. financial significant these I'll by exceptional for joining period us highlighting today. to in with the Scott

net elements We equally anticipate of are that to XXXX. confident ability and essential opportunity of our opportunity. in to We growth XX% market for sales of seize confident our the for XX% assessment our

our to and on to both Storage to just capacity maintain happen. Energy we not that Our strategy global to and innovation leadership Specialties, make but build both is continue in and in invest

I'll now for Scott to And over turn it details.

Scott Tozier

Thanks, Great. and everyone. morning, Kent, good

slide but we review quickly for to XXXX for year, income the from our closed $X.X start the was at as fourth billion, quarter. Let's billion was EPS driven the in was Albemarle. a increases fourth performance. to saw record for XXX% up bromine Lithium well. attributable approximately Net quarter fourth Net for primarily Albemarle $X.XX, last on quarter the fourth Diluted segment, by sales $X.X quarter X which

our in In previous fact, full easily $X.XX record beat EPS year back of it XXXX.

Turning to $X X.X prices and slide increase year-over-year. quarter X. This almost increased EBITDA billion $X.X adjusted over driven by times higher up primarily Fourth was lithium was volumes. billion,

our contributed to As full see results this increase slide, of on adjusted you can XXX%. also nearly high heavily EBITDA quarterly year in the

due Our were our in higher in segment plant came freeze a lower Bromine shutdown in by pricing segment favorable offset winter as up slightly. was December. quarter volumes Catalyst and And sales to Texas as in the the expected,

strategic our January. update unchanged in XXXX year Full from guidance is

remember, assumed We sequential continue XXXX. XXXX have XXXX. flat strong in to expect And growth sales year-end pricing throughout lithium we

be XXXX, in We with businesses. positive than to three all higher our XX% EBITDA approximately adjusted expect XX% to trends

after cash means investments. year cash XX% net this from Additionally, to even And we expect XXXX. this rise increasing we flow expect operations growth positive our and XX% free to over between remain

in will a be that come adjusted result, EBITDA that the net we project rates I'll will progress that and we margin increase X, expect we And evenly quarter-to-quarter, up. moment. slide our the sequentially year, back On to the first ramp anticipate and year. between halves as our split through sales second to volumes as of We moderate see as a

at looking a growth we've are what our healthy of are our lot All in detailed Since gotten during the our segments the margins rates webcast event. we around January, January reiterating year capital three expenditures. questions in of business and

So and Kent market a color provide items, those then some time update. I'll two will on additional provide and

Storage go Most to So It decline in point XX lower to And spodumene takes around of margins were and for inventory, lags. turn of then slide EBITDA our let's about X. spodumene XX% XXXX. of XXXX normalize percentage increased expected mines XX% Energy to conversion six through to is inventory due impact our a margins to to in impact JVs XX%. roughly from is our our months customers. that spodumene XXXX, to

saw to pricing we than for realized And year, faster from particularly half. higher customers higher our result, spodumene spodumene. and lag the lithium as second on And unusually in margins pricing spodumene inventory, we dramatic Last a costs. had due strong we XXXX, in in increases time that lithium

the margins the treatment The venture. is accounting of next item affecting MARBL joint

resulting in of a portion that We net margin share reported our expect XXX% only to the report lower EBITDA, sales, of of on but business.

joint this will ramp this As increase. to continues venture accounting up, impact

discussions We on MARBL to joint active this and news are in expect venture the soon. partner about restructuring with have our

tax Finally, our basis. EBITDA included an Talison expense is on our our in margins joint venture. income after-tax are at Talison EBITDA impacted by

about X% If higher XX% XXXX. this, adjust results would Talison to to you margins exclude in be

on expenditures XX. to outlook slide our turn Let's capital

in are mind. investing three goals We with

diversification relates $X.X for demand capital to billion about to billion increase conversion in to battery to invest $X First, support conversion meet these to geographic to second, $X.X To integrated; $X.X XXXX third, lithium product and and in About and investment customer vertically supply. expect advances; technology XXXX. goals, new we capital add regional about billion world-class and support in in our maintain from the to increase base. to billion to expense resource to capacity remain half build

in other EV parts XXXX, In in invest. we're our continue capacity to in the as we in the Meishan investing conversion market develops of world, Qinzhou. will And

are we in double. to investments than For intensity planning we Europe, more America where North capital example, and estimate be

us lastly, expected generate invest to in more technology invest strong These linked development. new Across materials next-generation while resource significant X% in to returns, capital to to our to we is existing produce are expect batteries. including to to to allowing flow. to storage sustainability, energy invest customers and we improvements mid-decade, our by spending, cash support about free expect advanced generating continue additional Second, investments And for facilities.

With turn it a to that, and update closing over I'll Kent for remarks. brief market

Kent Masters

Okay. Thanks, Scott.

with reopens, expect demand moderation we China As robust. in short-lived to be EV demand and remaining long-term medium

nearly China vehicles. sales to continue to million year-over-year, increase X in We an of EV XX% grow expect

in believe a on have demand. phasing continued support rolled of declines off the sales, Year. in subsidies the limited out are outlook China sales seasonally As strong for the will only chart preferences schedule have EV around EVs. XXXX on impact with demand you incentives can and see consumer New We latest right, the on Lunar since in municipal weak brief subsidies

Our cathode both sign contract are expectation a inventory customers, year decreasing, are their patterns listening the customers we'll slowing for battery be sales. progresses. good not watching our that continue inventory China in which data, early so indications the lithium as down and ordering we'll and are and is our to to We're adjust

opportunity tremendous managing front biggest that us. of Our in is is growth the challenge

to durable our conversion. continue global disciplined scaling we our like comes to competitive build leveraging know-how portfolio are leadership resources, technical about absolutely and asset particularly We lithium being we production our when our how and are position, to world-class grow. And it advantages

profitably needs. with growth in We intend align and accelerate ways customer to that

our that just continue primary done we confident future and be a also Albemarle a on production We vehicles will energy are recognize electric clean the electrification than more is future, toward built than to pathway that but for more capacity.

world. give us we our As sustainability that essential in as four in a our said as into to key leadership essential outstanding more work health. opportunities resource in update, future capacity areas: our energy, our and mobility, We strength know are enabling of we our strategic to transforming purpose connectivity fulfill innovations and as elements customer-focused resources resilient

going now we'll moderate Glenn, that. move And to So, you're Q&A. to

Operator

[Operator Instructions] you. P.J., Our question from Citi comes Thank your now from P.J. is Juvekar open. line first

P.J. Juvekar

Yes. everyone. good Hi, morning

question. long-term a Just

or community has As engagement And process a can you. outreach say, to years, IRA, Kings terms out site gotten lay of in the do But I easier? and milestones for in, you after know permitting any the today. potentially Mountain us you let's restart doing Thank the ready of lot for think get you're four you five process.

Kent Masters

Okay.

interesting. right, all So,

So, I It's of a we're outreach. of kind we just business not It's we process. permitting lot go this. community are how project when mean the like so doing a much doing about about

and -- So, that we life we other to sites and throughout do mines of and other mine expect the as the that well. do to as continue

not. But sites we outreach. whether So, Lithium a the business, continue changing had that see we're to we're to little other do that and our apply we that, from -- just well, bit or in we've of there we're mining as some success how that we'll learning

since permitting there's tension the -- IRA, I easier the process On the has it. think a gotten on

it little on yet. my you a permitting, may bit that We but and to Eric, that are view. be way hopeful easier can't can't that? then milestones we in do gotten And I of -- That's it's say the some want that comment streamlined,

Eric Norris

good P.J., guess, I morning.

I it's would We've latter say And to fact permit. this the side permitting leverage a beginning towards environmental all side a to of get I'd for details permitting we permitting on but that half site. step can think the the apply sustainability the that be that brownfield prepare been and feasibility year. the in first towards on work have that as strategy latter for here, is

history, review. we're said, as its particular tension brownfield process rapid on there's that and we'll mine, there's even attention Kent that So, hopefully have a this optimistic permitting -- though given the

that and we'll closely So, monitor update accordingly. to continue you

Kent Masters

I'm doing gathering that that the data around -- report though even time, not get necessary for two think, permits we've quite on on to I data this But year, years, Yes. those exactly but history almost permits, to for the permits. everything for been some the filing sure process for we're that's we're have you not long, for how work

on time. of process filed a even working it's little And yet, a formally So, takes we we've been couple a for though that years. that haven't

P.J. Juvekar

pass I'll you. along. it Thank

Operator

Thank you, P.J.

open. line David question comes next David, is Deutsche Bank. Your from Begleiter from your now

David Begleiter

just morning. in Thank of not lithium Good spot focus it's Eric, China, price a major ours. you. on

We continued weeks. the few What softening that? make over last you seen have do of

Eric Norris

that do exceeded in his remarks. of to Lunar happened of of virus remarkable New a economy weak and at what seasonally, Year. did We've because and anyway decision would staff demand a a has then expectations rapidly, and pace going Kent the of it consumer of in pretty XXXX to described course, was EV at you what reopen in growth, was the time the -- the heady it know off lot come production thereafter. I mean of period quite terms a and I was when David, with it out taken time when say spread

about the several off, but made been rolling years. been much have subsidies as off there's for well think I rolling those

of level extended state Some have at provincial of the the and subsidies them been anyway. at the local and more meaningful are some level,

issue, in So demand after think before that a and years a don't we've have that, comes that's a the a demand. off, subsidy drop big and in rebound spike comes certainly prior we in immediately off in then demand initially right it seen

Our that's our growth that view close into in year, projection second In in is period their inventories see quite venturing the because in bringing bringing term. XX%. and particularly this their that in but uncertainty and meantime, the not buying very we're with some still low, under to customers' near projected China, people spot the contracts, are of -- market the half, post-holiday this we'll down

year. be We to expect later with this the that though demand rebound short-lived

David Begleiter

EBITDA? Scott, the Very on for half full And the thank QX versus second guidance, year you thoughts in just half, the QX Any split. helpful. split on further first

Scott Tozier

be quarter into we're carry strong expect by than quarter. would the Yes, the quarter, that fourth lag in stronger seeing the Again, ultimately well really inventory prices as ultimately. first I would that it's as QX driven second that the that

I first is a think than ultimately, second So, bit the the quarter quarter. stronger

David Begleiter

very Thank much. Excellent. you

Operator

Thank you, David.

now next our comes JPMorgan. Jeff from is line your We open. have Jeff, question Zekauskas from

Jeff Zekauskas

that move XXXX, is making If XXX the to [ph] And or there spodumene as income Talison Talison much. and the is as level case would that all remain flat your XXXX? in make it through in lithium at is way prices much XXXX? from it very up XXXX can Thanks remain room it equity for

Scott Tozier

question. the Yes, I'll can equity you income take maybe, and Eric, production the take question

income lithium expect to equity the we'd if So prices flat, stay increase. Talison expect actually we'd out of --

least shifted If out historically you three-month now price a, on to six-month lag. is the at a Talison a lag. remember, of transfer on It's been

And first that happened increases so have XXXX. start the through will last -- to that year of in half flow the

do Eric, higher. be about talk to to it you expect I'd want So production?

Eric Norris

can that CGPX know There recent may years a ramp on it run you now possibility in production, to ramping rates. past could the result it is and I productivity been last is slightly running mean, rates. -- tailings the the there's regard in slightly, And a CGPX, upside came to activities with bottlenecking first would It's the run to make Jeff, be And reprocess that not being -- it there's better added. Yes. is in the at has from close for at running that's to for is additional although capacity. that, line possible that lithium some max year. then

higher year-on-year, there's successful. if So and slightly it's those are productivity for higher initiatives potential be

Jeff Zekauskas

EBITDA comparable. Okay. half Great. second And of your spoke as being lithium first you half and

second the would of Given be more that be there's so Chile. the Why much XXXX? that Shouldn't coming volumes your in out case? stronger half of production

Scott Tozier

on of there. of and the will but the additional the of then the And also the just They'll Talison. be basis talked about Eric Chile, ramping be Yes. up stronger. out volume that conversion definitely with production It lodging

impacts are we're I the prices prices the got layer you flat the on course, have up, throughout cost about on talked that to year but assuming then off call. XXXX. how exited Of we And of based

that So itself spodumene year. this corrects inventory you've got lag the

rate got the report and we half impact Wodgina up, You've XXX% margin that you a ramps the as of the to that due revenue a EBITDA. just have fact of there only

Jeff Zekauskas

Okay. Great. so Thank much. you

Operator

With Richardson ISI. next your from Thank Evercore from line our comes you, Jeff. question now Stephen open. is Stephen,

Stephen Richardson

could seems was Western about bit greenfield doing in how the more comes see bit are conversion it Could a is you this in would on really early, -- this it's And China, we you're to US, supplying dig capacity. And acquired envision of an Hi. yourself wondering clearly, little on you've It from Good little Kings about morning. you looks material thinking or Europe strategy. built of you it European the then the evolves? in at terms and bring like either area I a how or if things do Australia? where in talk but Mountain. a I you know continent? Chile partnering as centered

Kent Masters

with in start that. little Eric I'll bit. a So fill can

you part of think I question. I you're answered -- So mean, the

Europe. We've a So -- we we'll a have We we're we're have similar program we North moving -- America. from base China. in don't in and resource America, investing North for the program be got North have strategy and that there in America. resource Europe

can with going Australia. Eric, sustainable economically strategy moment. we strategy on the ground bringing at in some And to we it just So in talk the the be most bring of that because in, we'd -- and we combination the assets got at bases of Australia, Western how local big out And the are likely bringing the most resource, the in to which from to we it's some the and put about have that a and the like that's way work don't moment, that some we form. be Chile that's going most about and resource partnering. can, resource where then to be

Eric Norris

Yes.

is greenfield Stephen, to a such plant in be I are America yet in here be plant say done process really America, variety down haven't we very it So a would it after make able today. site modeled or be to what would different that or as do intentionally selection we've say publicly said, for a an being that a should -- But to North capacity it. North no about feedstocks. further that around we've process want and at of would And site in anything Europe a enough that close announcement brownfield looked through to numerous gone countries drawn and there sites

the can't spodumene producers that a very spodumene OEM be that coming ability opportunity That feed has We we we we one to of process how that of but chain be from put would to intend And to underway effort lithium closed Australia can we the production virgin in being the partner remains of the derivative don't terms an having carbonate mention might Chile. continent. I the Europe that's in other partner, whether or anything supply region. on about say also much to that addition a or into of about bring an strategy kind have an loop in sort or and view battery that that, further for in recycling. the have

Stephen Richardson

Thanks. outlook. appreciate CapEx the terms color. just If comments one Appreciate of I in in put could off the I top the follow-up, the

XXXX you going fielded think the at or we the is this clear pricing function is this it's looking environment of questions that of outlook year-end used I that current One environment your on a – forward. CapEx for

So obligated on in CapEx spend in to you're of that project I the point guess, this not CapEx Q for looking Project based Thank is realize clarification XXXX, is, at, that you're $X.X of to that peak XXXX. you. spend? one this down important based that XXXX cadence billion a the on like come

Kent Masters

Yeah.

would committed you're So not to – say We're yeah, mean, it. I right. I

will we put there. So be go, things we'd doing years. of out best view what a that's and look, our as view. plan – the evolve over best best We five-year That's our five view

So a that way will we'll pretty any able to XXXX – to in be And that it's long XXXX be for capital investing be market. from but XXXX, here. predict

years' time that's for around in any XXXX, we or the frame know than time today. do looks is to want depends So just it's forecast it like, what It past and could level we that mean, I – market But a there. XXXX whatever that. put that go we is we'll in don't on five-year spending off. more XXXX lot five we're out the capital

we've that, oriented. been and mean, more be balanced we in into program And time – I more conversion because will get will conversion important the it be resource as resource. between it's it's resource the frame. then It near-term, CapEx that out had our becomes to note

Stephen Richardson

Thank you.

Operator

Thank you, Stephen.

have Mizuho. open. line Parkinson is now our comes We your Christopher, Christopher next from question from

Christopher Parkinson

Thank and you the whether optionalities, especially or States the through much. bit capacity a about additional more at incremental we of Qinzhou, be updated not so and both the decade? little thought ramps on just the Great. Can in on balance information just you. your should there's brief process you Thank thinking how give any very Kemerton United

Kent Masters

Okay.

Qinzhou I and – up. it is will I guess, mean, operating, So ramp and

do – we there. there to are have do to So make we have rights

So even additional that's make have there's that volume, potential get but Qinzhou we're the to it take project to as we're expand operating well, and today, a at we'll down rights those do to to not at executing moment. a

So that's and today, kind – ramp the which we is – we capacity, around year, and XX,XXX want will to but it the speed I we'll the operating, operating capacity, get think, full probably to it's over up target tons. acquisition – up next at of

because Kemerton from need but is today, in we our not product get product making customers. the to selling we're qualification

and the labor was because train So then Kemerton. we we to at the we're during that, struggled ramp struggle execute Kemerton at frankly, strategy We've And that with simultaneously. strategy – where over are. the labor – – that's and both bifurcated will we've originally, time still, – with pandemic

the commissioning sequencing we're So and implementation.

of a capacity think we're part probably I ramp Train to And six X not, is following. projects, we operating I We've making and question? the Train still two-year then Train ramp those projects months another thumb ramp X, full the those that is it's say. time. start-up -- over always to will and X that's would rule And of So that behind And over said, we there planned probably from period. the is product.

Christopher Parkinson

Yeah.

updated can that the Just any specifically over Thank Just thoughts? US additional you. years? on in process next your few That's all. projects the updated thought you any assess

Kent Masters

Yeah.

the new call So few a weeks probably ago. since nothing

conversion that it's rate. the or bit still looking selection operating facility Mountain to a higher ramp-up Kings it's at to expansion operating rate, Peak, site convert but at and Peak, So we've that Silver little we're at do for at the a Silver maybe more expanded

is FID we've little that then off standpoint a And and progress or other making further it we're Magnolia but not and planning the kicked out, yet. project, but would that be bit an from there --

Christopher Parkinson

Very much. helpful. Thank so you

Operator

And Suisse. from our from is line Christopher. question your last you, Roberts John open. Thank comes Credit John, now

John Roberts

Thank you.

I price, a of the just equity equity on and price through rising the to clarify, I remaining income is that want think within lags recovered. for XXst the on quarter is then realized the your income the guidance first but lag quarters because flat December has based price based XXXX, that after guidance of the

Scott Tozier

actually actually first -- first goes It's the half, through on it the in half. the income, equity up

-- we'll see increases out and well. as volumetric So that of then

actually increases year the it sequentially. through So

John Roberts

negotiations JV? on then Mineral with on And the update the Resources Okay. any MARBL

Kent Masters

real partners today. a be soon, not comments had talk in expect to and update. continue but to to So nothing Scott our announce we with his said we that for that able something

John Roberts

you. Thank Okay.

Operator

remarks. time John. and I gentlemen, questions. pass the all you, Ken back for Thank Ladies will to floor Master have now that's we for closing the

Kent Masters

Okay. Thank you.

heard during today to and and the opportunity have operating grow to you model people into our well feel the today manage strategy, the we As our future. successfully right business meet the and and January webcast, we this

you joining Albemarle. in call thank you. and for your interest So Thank our

Operator

Ladies call. and concludes you Thank this you. gentlemen, joining. Thank for today's

lines. may disconnect now You your

Albemarle (ALB) 16 Feb 232022 Q4 Earnings call transcript