ALB - Earnings call 3 2023 | Albemarle Corporation

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Operator

Ladies and gentlemen, thank you for standing by. My name is Cherylle, and I will be your conference operator today. At this time, I would like to welcome everyone to Albemarle Corporation's Q3 2023 Earnings Call. [Operator Instructions]

I will now hand it over to Meredith Bandy, Vice President of Investor Relations and Sustainability.

Meredith Bandy

right. All and Third Cherylle, Conference to welcome you, Quarter Albemarle's Call. Thank

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

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

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

to now Kent. And call I'll turn the over

Jerry Masters

Thank Meredith. you,

thanking Neal's in his know this Albemarle's will to and join In begin, on into our I'm quarterly call company Before contributions company the transition. Vice in last with with maintained has since planet Chief Albemarle have and long-range to transitioning advice advanced join Scott and is for commitment Sheorey in while XX this CFO. provide you'll a become on over Scott Officer plans on will President Scott's sure roles that impact strategy Executive Neal also you past With we've we to growth Financial the operating leadership, the I strategic years. be hand as me November role, mind. our adviser Scott strategic will assist most X. XXXX. as of Scott his a people had be and new will to seen positive joined he

results macro growth volumetric quarter in performance operating reflect environment. third a challenging Our strong and continued

versus the year. the same were third period XX% sales quarter up net Our in last

from assets. softer timing was JV-owned our market adjusted EBITDA spodumene pricing to down and due However, lithium inventory impacts of

Based still advancing our in on more quarter, world We sales to XX% efforts. have third in about prices, and growth, long-term our enabling progress revised increase and these significant between an year-over-year. a deliver outlook, XX% value. which market resilient Albemarle's net role we remain our In we current XXXX enduring strategy made bullish contemplates the

we mining battery Caterpillar collaborate circular sustainable quarter, the on to and value signed During solutions agreements operations. with support the chain to full

American Mountain for Caterpillar partnership, will an our make the North lithium of and for part we produced use purchase available Kings As mining in all-electric fleet production. battery

also explore will With shared both customers opportunities battery the goals operations. sustainable pioneer on We and techniques. and this and each Caterpillar with we recycling other cell Caterpillar of will collaboration, to of to mining technology future of and technology with be R&D suppliers collaborate

in chain. full also lithium mine processing we to We purchase domestic to of of battery finalized facilities Meishan Defense Mountain Qinzhou ownership Earlier Resources. this of Mineral be XX% nation's help restart. of and facility will Albemarle month, spodumene in U.S. take supply lithium support the transaction the related simplified Australia the the revised of of in Under a production and full commercial our processing of for equipment ownership will of the joint Kemerton arrangements $XX venture received million fleet Wodgina the agreements, expansion support China. and with Department the ownership grant mining lithium The to and the mining used retain the grant from Kings

I'll financial now walk hand our it over to through to Scott results.

Scott Tozier

of was down primarily energy sales more storage our billion, were goods was Higher This mining Net to by our diluted quarter discuss $X.XX, conversion to last driven these EPS On approximately performance. everyone. the up increase to in timing hello, was XX% inventory X, timing, higher Thanks, Net to year. expansion income review Slide a year. compared impacts attributable third Kent, and higher cost due let's compared Similarly, were $X.X volumes, sales assets. and to I'll down of million, more net sold, XX% than and XX%. prior $XXX Albemarle offset by moment. thanks

year-to-date this and recent significant reflect results achieved Our lithium despite the we've strong pricing. growth performance year softer

and ended months XX% X income sales year-over-year, the For net up net up XX, are XX%. is September

at X. Slide Looking

down year-over-year, lower softness also million, Specialties primarily timing The $XXX was and pricing softer end XX% certain by to business Third in market of energy a decrease quarter and impacts spodumene continued adjusted volumes pricing storage. lithium driven EBITDA markets. to due and was of inventory related

For the billion, up adjusted Again, XX% than year-over-year. majority storage EBITDA XXXX, of first increase volumes $X up with X growth year. last reflects and both was more that against the prices quarters Energy of

we Kent total lowering On for mentioned, are our Slide X, as company outlook XXXX.

are in an indices of sales of been the for XXXX a to XX% we XX% of volumes. billion practice, in has remainder decreased This to over the outlook increase of our energy be methodology, As storage $X.X as by recent billion. And year. sales. the constant lithium ramp year, net would sales net have the the prior $X.X assumes range range our company the range driven total net represents market result, this for price Under this

to to EBITDA expected the of be billion. $X.X XX% EBITDA XX%. full of range Our margins billion $X.X is implies outlook This to adjusted year in

outlook a adjusted $XX.XX. adjusted range XXXX $XX.XX Our of full also year to been to has EPS

operations net market prices cash Talison at EBITDA net range venture. joint of cash in expected in our our operations the from be $XXX to million. lower sales $XXX volumes lithium and expect We current to adjusted million decrease reflects from and The

second impacted to for half not their full allocation year, this elected of income the Talison, in at take period. partner the equity Our has this and our

revised billion completed agreements remains the XXX% with Resources. from guidance with as ownership billion, conversion line Mineral assets quarter, $X.X Our last forecasts previous reminder $X.X in which, our a CapEx at to with reflects of

quarter February. call our full We provide year expect outlook our to in XXXX on fourth

more slide next outlook our for segment. the detail on by to Turning

Assuming range adjusted to the higher offset of net recent impacts rest as energy of EBITDA market year billion timing billion to to than of constant and we through prices storage expect slightly flat be sales more spodumene the sales. net higher-priced $X lithium the in remain the year, on down XXXX $X.X

are storage that XX% of projecting to to full the year We XX% range range average increases growth pricing in realized the energy be in XX% year-over-year year-over-year. of and will XX% volume

production We QX a stronger volumes of result project to continue to as ramps. expect see

elastomers, EBITDA expect to full the offset in other be is due with approximately XXXX, XX% year. to EV to we down Kemerton, adjusted be expected and XX% year-over-year Qinzhou in to softness electronics the demand sales $X.X from as and and continued to Negra consumer is In demand production. in specialties net strong strength growth to anticipated billion, by markets, ramp partially oilfield. volume the end Specialties, including meet now expected continued for continue La This pharmaceuticals In

continue our geopolitical visibility Currently, to is any XXXX. market disruption in impacts usual JBC operating the uncertainties into Jordan. and at in business chain. without We monitor the Middle situation will to as operations in and Macroeconomic well impact this supply East our

as due now Ketjen's XXX% up to to well productivity expected to be volumes improvements. XXXX EBITDA as year full higher year-over-year is pricing and adjusted XXX%

by we saw During utilization. driven refinery higher the volumes quarter, high

saw which XXXX. into products through continue also is XXXX expected primarily and to of We benefits FCC higher pricing for contract

are Energy through moderating trend to expect to XXXX. inflation Material We costs and in and encouraged this see continue

review we On actions taking mindset, Slide profitability a flow. that are knows in of Maintaining that we to cash our of an X, growth have comprehensive a price team how operate support experienced environments. near-term will our variety disciplined and

we're the implementing and and cash. across project in done As our projects improvements business. our reviewing spend to cost sequencing of we've past, We're our preserve also efficiency

discretionary travel we've are and reduced For spending. reducing example, noncritical

of the operate. standard choose we Excellence Way Albemarle is Our which by to

to Slide goal utilization on our productivity our we XX additional as orient these XXXX, benefits. strategically back is manufacturing, in benefits office. increase made to provides and to overall material yield in targets to towards business in to We're are Lowering exceed and equipment manufacturing, growth. XXXX. targeting to success of In initiatives, in In across million procurement. pricing. expected exceed costs and to we update $XX track In raw benefits effectiveness procurement, we procurement manufacturing sustainable lower an $XXX capture million our critical improvements operational our improve expect to we've in the sourced

storage sold long-term As are of under energy our volumes with strategic customers. a reminder, most contracts

XXXX mix expected Our remains and from prices. market last quarter sales on unchanged lithium Slide reflects XX recent

to XX% driven to as storage range We XX% be execution is by new With and This in as well expect volumes CAGR nearly ramping between in of year-over-year beyond, than online assets still growth conversion we additional coming XXX,XXX to additional Albemarle XXXX. remain energy on volume our tolling. capacity to the successful we XXXX track XXXX. anticipate to and in volumes and And tons. now sales more XX% a triple in XX%

our year very rates EBITDA storage-adjusted Slide XX, from margins. expected the are we bridge the is for the energy in Full range XXXX saw normalize high to XX% in XXXX. margins updated

EBITDA equity EBITDA by after-tax basis, adjusted As always, our drag is on XX%. margins included to tax an in X% impacted Talison that income about

be by The other This had offsetting. impacts that is away JV MARBL year, other and/or a negative next small we on the Higher X% accounting items. this from XX% the chart We inventory lithium goes impact That pricing margins are offset relatively spodumene is the to leaves at and closure JV. can with of largest difficult to lag. forecast. impact MARBL the restructured year our complicated lag understand inventory

on So I little bit want more to that. spend a time

therefore, Albemarle of dividends. one of in Greenbushes is Talison and, high-grade best Talison We XX% and lithium low-cost equity access a our income Through share joint venture, recognize large, spodumene mine. the resources. to world's has cash the earnings

cost sales flows drive pricing. Our The often also market variations. XX% of through based offtake timing of margin inventories Talison goods of and on and sold short-term inventories can share

timing the today's market XX% at pricing to even spodumene. Excluding storage-adjusted energy lithium prevailing be we impacts, expect to in EBITDA range and margins XX%, for these of

profit product immediately. the joint Slide XX. of In period. takes Throughout from about EBITDA of the in associated to our partners' and realized than pricing we differences and our which our we sold XXXX, our of offtake Talison offtake million the offtake on Talison extract typically spodumene partner's Timing X converted with resulted profit our We that partner higher in the shipments the offtake during first recognized our on venture, $XXX own ground. months first profit between recognized when that to associated on when with benefit XXXX about is half recognition from Turning was shipments.

higher prices to recognized reverse of decreased, this lower and we income. prices cost effect as market equity spodumene As we priced spodumene in and expect sold goods

this assuming adjusted storage, energy to be EBITDA adjusted of XX%. to prices range temporary, EBITDA expect Again, in impact steady market we to at timing-related margins we no XX% today's the to expect market constant, are However, with prices. impact held average

priorities allocation company's high-return our continue organic flexibility dividends. to maintaining first, unchanged: and capital Albemarle's across progress growth funding financial the remain to lastly, volumetric rating; global deliver Turning investing investment-grade XX. growth; to Planned second, Slide our expansions portfolio. and credit inorganic in and

Although, mentioned of sequence level our market, in as I softer spending CapEx a we are hard the taking before, of our at the and projects. look this

relates offer. it Liontown few As purchase decided a not a opportunities, to we withdrew to to and we agreement that ago nonbinding weeks inorganic formally binding announced pursue our

engagement our approach. learn and This and that disciplined best productive with was forward M&A reflects not more, this we had moving we While at acquisition decided allocation in with we as Albemarle's time capital the Liontown interest.

to As of range we continue look a forward, M&A broad opportunities. evaluate we

across we have for of materials recycling. And the opportunities technology as new areas: many battery the lithium core advanced X environment, those resources, business our scale in and current are However, available process and big. options for not

Slide XX. to Turning

advantage Our shareholder and balance sheet returns. organically support both acquisition grow competitive flexibility us allows that through is as a well as to

expect leverage X.Xx As of we ratio to debt-to-EBITDA. our be year-end net XXXX, X.Xx to

with Kent it back remarks. And for market that, and update I'll over a closing to turn

Jerry Masters

long-term sales our and year-on-year Slide EV be end on Thanks, the EV Scott. growth September, through resilient. growth track we XX, On growth opportunity. in for market XX% show continued sales Year-to-date remain highlight that to reinforces demand

growth EV related EV only 'XX production Europe total higher see rates. and those challenges to 'XX, we While up in near make the X/X interest about of in and potential and term, economic softness regions for U.S.

any at the end the to of monitoring are EV We economic seasonal acceleration the impacts year. in sales

not only adoption Our across long-term view of supported health. the of to EVs, energy, and but secular growth be mobility, by connectivity transformations continues

to destocking inventories Both cathode value levels view higher-cost of a have lithium upstream Cuts lithium provides producers, the merchant production. as XX, continued lepidolite and low inventory have across continued and producers Slide chain. some downstream with very at converters reduced have supply producers. of

investments XX% the sales XX% Turning have the pricing year-over-year. and to challenges. This to continued portfolio now achieve We that enabled remain track near-term up reflects to our overcome Slide us on growth to strong our strength XX. net growth of

an in positioned global allocate disciplined both and product economic assets a supply capital operate edge key we to and with how diversified sectors. We growth a providing across how world-class cycles. we leader is Albemarle are portfolio

a We assets needs. and advanced customers' advantage our competitive with have integrated meet innovative solutions vertically to designed

we and took our Caterpillar, advantage. including of help remain actions with the this of in end The our restructuring markets on the MARBL venture this growth trajectory strong simplification build long-term us quarter, and electric vehicles. including collaboration continued growth joint The

Our strategy clear advanced to profitable model operating accelerate growth is a opportunity innovate, and this sustainability. capitalize scale with on and disciplined to

With to Q&A the begin the operator that, to turn the I'd call to like over back portion.

Operator

Patrick first Cunningham Your with Citi. line Instructions] the from [Operator question of comes

Patrick Cunningham

volume And do its risk full still allocation? do your of production of is stockpile? one concentrated in to any the see JV your first full not quarter, cuts And Greenbushes. So taking you at perhaps take you plan the allocation partners

Jerry Masters

-- to quarter fourth we decisions they've quarter, first our partner, the So the into made yet. not

wait we'll at allocation and that, we'll make see a So and time well. our as later

So it's we what we'll as allocation. on at are think decide do that -- I our look we changing. And things inventories,

see it the ours. have we'll back we pull something could mine, that's their So to our partners decide make but that we we with allocation on when be when

Patrick Cunningham

and started regions, given That's your curious back of weakness those on thinking How of recent headlines, how spending investments and change project EV then detail dialing targets, just going just some trajectory I'm projects? helpful. sequencing on growth about on And forward. price you're more thinking has to the

Jerry Masters

Yes.

So we're moment. that at going through the

without next So prepared there. guidance look for impacting a long-term the not plan, that but give out really are we we're taking Everything trajectory that. capital really can do but year's to cut we've the developed we growth growth at to or projects capital,

we'll changing be that. some be So in and really doing out to slightly and we'll that's the put call. projects we're profile give now, to around that long-term sequencing on guidance there's the that some flexibility without for And able work February the able

Operator

Spector question comes of Josh next with Your UBS. from line the

Joshua Spector

XX% less $XX cost I wanted in just the spot Albemarle. to pricing happens for lithium other I mean? specifically a kilogram. terms But talked the kind guess, where of thinking What goes pricing than kind scenario first, I and to And the $XX, about say, of per realized In what contracts? high does above ask on floors, indicated or really at about your what end of you've the of that scenario, of guess, You've that realize pricing? curve. there does Albemarle that so

Eric Norris

Josh, Eric. it's

for let you precise and As guidance overall to some portfolio. try give know, you we around this. But me price perspective don't help our give

China. translate a a There different would other price is the pricing First and at most from you price, realized will -- look that the considerations obviously, world. of outside China, or market a transactional off, supply that oftentimes look in higher they're as lot around the of supply of China, comes VAT to spot

XX% of our index floors our We on have reference contracts.

to continue growth of We us that, near we sustain and the continue floors. that well, to margins capital was don't a designed the talking protection variety can but We to about. so it's in give disclose that to pursue have operate different Scott term

importantly, low-cost other the off, as our comfortable higher-cost I in give bit as forward mean, would are great the we down. prevail. projects, are and where for to see double-digit These fact, why a come And I'd growth From levels be the We plan number us expect forward, have we that's we have protection -- or seen have should and is. look price supply it we of year. to perspective, that next be though, to expect going a is to off, have supply other we come perplexed position our projects our of with resources contracts portfolio. We'd feel potentially growth a slowed in

Joshua Spector

I margin And Scott. I that just the guess on up made, wanted follow Yes. to comments you

environment. guess couple you you in a believe difference? you So if the at ago, that plus. said the maintain mean, I different what range has right talked years know about lower anything for And changed, or but I I if margins go than I'm it's price that could you I you gave, remembering a XX% don't those back time, accounts of

Scott Tozier

Yes.

difference, think a XX% comments, kind we of mid about were I of is when those the Josh, thinking mid-cycle made pricing. that we type

to at prices XX% of this come going that's which is we to lower up the to XX% or constant prices. it's down. margins as distort look As prices as based on our I go that opposed prevailing today, commented at some either today's volatility, higher as And really again, on pricing

Operator

Markets. of Jackson comes Your Capital BMO line with next Joel question the from

Joel Jackson

were So have to LCE. you come I Eric, think here, low prices down XXs you low maybe said how just perplexed

economics. you said So you're considering reinvestment

you do could is they it have it still lepidolite? something So Everyone you why where African there? spodumene? you Is to down about Is think Is maybe talk it are? prices gone What think? else?

Difficulty] [Technical

Eric Norris

Okay.

Joel's Joel, for what So continue I'm I'll apologize answer so happened. the interruption. sure not to I question.

Joel Jackson

we from I Can didn't Eric, if anyway. okay? beginning, it hear the that's start

Eric Norris

Yes.

we the is you So demand. mid-XXs supply been know was chain, year, if work look has what is look last And inventory which I what that you capacity happened has our industries us to we describing and supply supply a supply operating year, for or at moment, utilization year, at this remove a correction model year, lot if over demand by reckoning the rate. do of about a next this in an

you And wouldn't So market, levels, in fall it any at like see that's that's perplexing. pricing the other those part has.

behind of one the inventory Now its the at year. and largely the would market this year. to occur be we level or of in further in supply had the Any course, least us balance slides It's you. be cathode the inventory correction chain, largest at expect with balance that's run this we or certainly behind an the us have world, in correction on shared in we

we we to are they so prices see they as fall forward, don't because are why where And look rationale would reinvestment economics. for a below

said our serve to concern we've needs be be of many market. times, there amount capacity a to the end towards the that of As would decade the sufficient EV

Here with we at healthy operating utilization are. are relatively they -- a prices where supply-demand healthy

how levels. very position well industry that case, our just for go-to-market positioned it's obviously, our be to strategy weather to the and Joel, the storm. It's to but at explain -- it's these with cost So that's challenging difficult going we're

So that's availability to investment transition in support industry. our across the greater supply concern the is future and

best probably terms the moment. you the we view can that's in So our tell of at

Joel Jackson

Okay. can If them. up, on follow I

I think plan. ago, it it going at so look maybe was look like growth slow in your your [indiscernible] changing few bit sequencing, you're longer-term minutes slightly, a down a little little not anything plans, but ratcheting to back

to up if what but time free So lithium you on volume prices and over you're are time for ends your right market go being for and risk driving going and enough cash price How the if as here you're aren't market balance this growth, long sure needed? view not good with full a and of what the share? negative are about supplying team the as of you do lower not overspending making returns a you and lot ahead maintaining think your

Jerry Masters

Yes.

with capital and again, is growth balance, changing we're the So saying that. -- going overall we protects cost right? it's but -- us our we're strategy and we not what look around And our back can. that's where programs, at to cut position I think our

returns really market down. that it's the projects given more the is the the So it's we investing see, capital while what on not we're about but

and those we then in time we're that right sure timing So layer just pricing. that, we'll around adjusting the over make we're as back cautious to be on

Operator

question -- the comes Fargo from with Wells Securities. Our Michael next line of call

Michael Sison

working or last been great it's you Scott over so. the decade with

do do that XX% So could KTs you to I for you to to? margin? XX% support expect you're you still do, XXXX, expecting these to at of demand do expand if can or EBITDA pricing you sort still guess, levels, XXX,XXX that And

Eric Norris

topic, of of I speaking. is an get our on Why important I'll Scott. demand then to comment and couple facts don't over to first? just it business A think I Eric the turn today. flavor a it's This

our markets to the media sort performing. There's sell are able of All around We're into manufacturers marketplace. XX%. contracts the certain product It sentiment of negative be broadly happens to for in announcements. around that of a maybe spot lot

I continuing the producers think fact bigger healthy markets, that's grow the driving space, in sight demand. the you their are the are output, of can't that lose EV to bigger and China,

for growth. new It that production XX% this underperformed is standpoint production need year from is probably demand a true -- the the

to So inventory not and XX% we occurs. seen closer the has market looking at there's of growing where once but EV a see inventory and/or have the even that's a running correction to the because forward, normalcy its trend that restocking is consumption market potentially growth for sustainable XX%, been year-on-year, that's or -- a course, is return

we happening to look a will very I what for year double-digit capacity have. we bringing determinant are not certainly feel as good we those road we'll against XXXX. that about but out allow as contracts, well, -- on us to another now is in And what's XXXX, So growth performing bumps, put growth see long-term said, we the be

As I'll Scott let for margins, comment.

Scott Tozier

Eric. Thanks, Yes.

I spodumene some our level to us be that half, way about And of think kind continue by see going that to this then in of normalized to affecting we'll about. first next Slide lag the on XX% inventory year. we've the of XX% XX kind of is the deck, of So think we're should you illustrated the talked I half range in second

So likely the than that. be lower full year is to

we However, second of we'll remain And half see through assuming causes period. price prices and that volatility if the these constant by margins Again, don't ups downs. get to normalized year. the that the

Michael Sison

is restock? in the right, do say Would year for mid-XXs, next last at if think to does so? continue let's pricing in happen pricing? Stability grow year. in And the prices been case, demand rise there hasn't is mean again I quick then the folks and I if industry guess, that running you or just for potential the a

Jerry Masters

in it's -- industry early -- say. industry, so this to it's is difficult this still the look, So

cycle, So anticipating but this out of the that in volatility some coming happen. were really didn't we

anticipate So it comes time is, say But out. that how and it it volatility to. back is to difficult time? goes quick We question over and of that is highs where the period lows what responds, in exactly the where it coming

Operator

next JPMorgan. Our comes with from question the of Jeff line

Jeffrey Zekauskas

through expecting billion X negative of flow flow is the or and was cash months negative Why X%? make first in you're $XXX fourth cash Is $XXX it $X.XX that? the the do Your that million. Is for you cash year to onetime? the quarter, X% flow million ongoing? And what

Scott Tozier

Thanks, Jeff, for the question.

couple So things that. I are think a doing of

quarter. Of we've lower course, fourth EBITDA got the in

As sales loaded back-end we look in at we're our patterns, the quarter.

some we increased of have cash and operating we've DOJ capital we items, flow. the flows did that. including result So then working that that onetime SEC And through as a settlement got our

on key was And are the third those quarter. the right as now, about CapEx track to same drivers. is in then So be our what it the

the fourth kind flow for So cash in moving the quarter. pieces are our those of

Jeffrey Zekauskas

to percentage your was being what of margin Second, timing than was business these your XX you that because X by just said points EBITDA penalized about differences. lithium

quarter, storage, equity in you at If the was about of income, EBITDA XX. energy look the excluding negative it

so of million. $XXX $X.X the billion, And XX% storage revenues you take that's another energy of if

out, that's million. netted You $XXX

your is looks the it on about excluding So businesses, margin like EBITDA X%. Talison

and changes the I the do are inventories? in what on missing? in excluding What I am Talison what am And so the your doing why -- So math? the business, then wrong returns

Scott Tozier

Yes.

make be all business. throughout to chemical producer. this the integrated going the important money we're conversion the through strategy is an That means because Jeff, the is mine So chain way our the salts into to from

is being on year, the just focus those Talison, commented we're processed and half happening JV high-cost driven Wodgina. Given are inventory our where actually joint operating losses second that is is of as how in a China, we'll spodumene this making inventories that amount The they conversion. of the and the the seeing timing And being just but primarily same venture, the prices really and as the on today significant spodumene at making, in the by That's of JV dropped, quarter processed. being you income.

and If rate you again, as in you were business normalize see both and joint as in flat margins environment, the well normal core would ultimately. flat price venture a the to

And again, inventory you look that we've think been the happening. I about geography the that's spodumene at our of lag so P&L, talking with effect as that

Operator

Your of question next KeyBanc with Markets. Aleksey the line Capital comes from

Aleksey Yefremov

sort a lithium. between On take If fourth margin and impact I Slide for to expected $XXX segment million I XX to difference guidance your get the at of quarter this your just timing your of you about the impact sound of this for look expected fourth your quarter margin XX%. normalized the about this right Does fourth difference million EBITDA in quarter. $XXX as dollar for phenomenon? and

Scott Tozier

Aleksey. close, pretty That's Yes.

Aleksey Yefremov

in talk in equity Great. -- because can the of you impact also lower about size And And in quarter? another you fourth that you general about Can impact income maybe QX. you about directly, equity mentioned chose can take of your your question if is the the income the it partner not talk to expectations their allocation. speak full

Eric Norris

of it's itself, But time. $XXX would point million that Aleksey, curve the million Eric it's sort million XX, it of in Slide at in Norris. quarter fourth referenced because on range. $XXX obviously that $XXX vary over to any It you

Operator

next question David Your from Bank. of with comes the line Deutsche

David Begleiter

You referenced is nonintegrated to producers. shutdowns maybe China down some occur? producers spodumene shutting or your well see as producers lepidolite as start how And did shut you being down in When view? in some much

Eric Norris

Eric It's again.

One, buying prices a similar going merchant the you quarter current if as there when they're may to that has with when and phenomenon And spodumene in of their and it the when actually, during -- on. took first cost spodumene to same refer get the they mid-XXs first margins starting producers, dip. get China. well at start -- -- the we into converting you you levels, price we factors are as get upside certainly start -- Their saw recall are to the the producers start on in so market, those So you down. less, probably a couple

around illustration what on would the answered in negative nonintegrated an pointed producer In us dealing nonconsolidated Scott fact, were just the margins prior for basis, quarter a are comment out with. of that a the that be

get at So on down they they can unless prices have hands shut their to, or those they lower-cost spodumene.

has pivot down, obviously, currently environmental has -- a and shut is depends is material negative. with spread had much a but on rate. been and to It's at spodumene, the that Spodumene question, is basically been down to when higher bit a The start-up of [indiscernible] been when produce different of or Lepidolite coming cost they what same point down the big that coming hasn't story. challenges. has

So there's of lepidolite well of in prices. capacity I the as the the are similar the a been a buy margin a producers and lepidolite these both over reasons same for it at just moderation loss those market seeing reason who referenced. for convert moderation capacity Unintegrated as of year course

you lepidolite If they more peak at the of in to started months, in which about it's few the the of now, come earlier the off reduction look has the about producers year. part some year from beginning where of came XX% a recent from XX% offline

course. Obviously, that are China So of price driving could recovers, within at they those are the closures various come factors back, these prices.

David Begleiter

be to up you term? XX% were XX% a energy That guiding did range? you Eric, 'XX mention it. storage longer volumes around Got in to should between that

Eric Norris

similar given next you'd the earlier we've were we during consumption. clipped It had demand as forecast it's This believe. a going sure that year on a I know rate that year. in a XXs we don't but well by multiyear by gave inventory the we the growth see the if -- I mean growth we fully clipped that next But into for lithium was year little correction take projected bit guidance you was for bit the that you little rate a year, yet. year's into this saw year, for

Operator

question of with the next comes TD Your from line David Cowen.

David Deckelbaum

I or business wanted of a strategically of under maybe Considering time right to the divesting were it balance seems the in energy a this fairly part year it related a quarter. rebound or that I'd just is business. And question, concern? nonlithium business. of I We've is for going putting the the outlook guys should catch in the ask as say, robust like of storage guess, at this potentially seen with think a now, the fourth perhaps ago, that you that we review strategic side looking upwards divesting

Jerry Masters

we the I get and we process year went a for So think catching thinking ago were couldn't through that about. value that

that's it. part of we So it think forward a But treating in would go overall subsidiary, term part know as the and I don't rebranded term, we strategy. that of long it the the near wholly that's owned as We're kind for plan. the of the about moment.

David Deckelbaum

Eric. I maybe a And for guess question just

talked fourth Do your storage doing energy electing Talison advocating the here. shipments JV quarter other building quarter. of you inventory the assets in the down in the in in at other about and to of the not take peers or Australia? anticipate any partner or any slowing inventory We've fourth side, On some incremental you for assets of your that seen stocking

Eric Norris

conversion, partners our downstream unique and best are The at that situation way rate answer and then addition the of year. that Meishan facilities perhaps than look continuing in the capacity in When challenges world, run to issues and every Talison our for we next in of our at a the ] full different and Chengdu and has situation have Qinzhou that, supplier that that II for up [ at later includes and different Kemerton Jinhu to coming year at ours. part and right, they you're look includes capacity and I up ramping coming

that obviously growth. for demand serve see to We more spodumene

growth what time. guidance type spodumene. a in a I volume demand as that it's has said, We'll again, earlier, precise But for X double-digit year. think that given on haven't months' is growth expecting we're I We do which on next

in to this efficiently support is to right, environment, preservation mandate cash our critical. is growth because run Our

a in capital into going of not we're working frame. aren't convert -- So cash mode trying to time put into a carry to reasonable in we that

number strategy building guidance of all than is in And a production on less match conversion we'll the inventories So of to again, ramping months. downstream. demand of that give a more

David Deckelbaum

you January going market you sounds earnings. February like to should that guys to like aren't wait did until the coming It back with with last fourth an be we update, quarter the

Jerry Masters

be Yes, normal the that in we'll moment at course do February the the that earnings. thinking is to

Operator

Research from of question of line Vertical the McCarthy next Kevin comes Your Partners.

Kevin McCarthy

realized to apply might change that question year. $XX indicate a a to as for you thumb Or indices of equate is, XXXX XX, Slide your this sort would $X of per My kilogram would market pricing change On of in well? in kilogram that different? $X rule be per to it

Scott Tozier

Kevin, that on apply. should basis. so Yes. a full And a just as that's reminder, year

got track to into because full a range kind and little harder a forward XXXX. $XX carries year we that moves to year it that by like this it's [indiscernible] of ratio full over X% did But move of to little that up that impact X% that. So it bit confusing and bit the year down make through then has

Jerry Masters

Yes.

that I were only -- say the contract the would you from forward, Yes. into except correct? get if to is So

that is higher So was number, that floors. we a of kind -- near number out wasn't anywhere when put the there, it

Kevin McCarthy

tempted differently think progressing? Scott, might would digest to margin XX Slide the difficult you the expense point? first spodumene, put quarter how this it Or And next quarter Or second be then inventory maybe the as spodumene year, be of coming see do the of at and trough ask, the subject to which of flow-through to it is pattern back quarter? quarterly the you concentrate you the do tell margin

Scott Tozier

Yes.

of as and can in you where you fourth trough XXXX. be chart, this the look lines think that quarter converge those I that kind of see start to at would

first look you the impact as course, quarter. some going you're to Of have that, at in

quarter. year So from trough I impact that that in would next as be the you in the think look XXXX first at the

Operator

line of Morgan Vincent question from Andrews Stanley. Your the next with comes

Vincent Andrews

balance deck, you're and couple on sheet acquisition. case slide can you price, I Liontown, recall I with back the I If in months debt a going the outcomes think you the philosophically? about to a was we bare And correctly ask of of finance XX,XXX. that Kent, if range think had on

the I'm -- think your things So for do I or push CapEx plans? growth M&A about versus also the -- you or change earlier Because comments how from sheet about balance how forth. you using you think guess so that do And just I'm you sequencing thinking might your organic come of years, do flow And next leverage what debt acquired free up willing growth? wondering, the need couple positive? bit Or are about less you the as versus to little you cash that's a if let are financing, growth interested to you in think be about happens?

Jerry Masters

Yes.

be kind and we play question, a we to a make ceiling on a have -- that. kind things have things kind lot -- or and we sure it of -- to fundamentally, investment that we we of there's of I that X.Xx set we to depends want in work guess grade, a around kind the of mean target out. I want So a that about is how

be obviously, stress that's -- So under to we want and period.

stay We So preserve make want we've that have to to want we organic for growth because we our that, resources will we to below that, adjustments and plan to that. right? do got have

frankly have Our months been it's same areas. at of couple the going looking be we to at at M&A, focused were X look acquisitions different scale on a We'll but ago. still not that

Vincent Andrews

off. Chinese some of spodumene prices this would go earlier them if converters and are Eric, prices, then, down on you most least profitable. calculations, nonintegrated Kind referenced could quite our quite spodumene converters? And be or still I of could spodumene at on producers Okay. current backing At that ask still the the substantially

customers won't that obvious there to can So me? reason generate so make keep is those dynamic not and there to something cash? operating Or why in is that just that's lower market a price producers spodumene that that sales their they won't happen

Eric Norris

being the I what's the not it counter some potentially mine down we right? as -- that I is the the I broader other is And the give -- as That's see other turn there trade, that hand, But off, to demand with spodumene the stock market now and to market in there's obviously. point, theory, too being are think demand that lithium the I the it's for the there's market which you're markets, Well, come things mean, price, will to in not is global then on while down margin not at around, way salts think market, not from come the capacity met, for little that weak spodumene is particularly producer. about effect room on a generally demand So speaking, the amount markets equation, right. portrayed prices as but mean, of China. required. in demand, and the is a would

a of reminder, of world's XX% So as about or that EVs. -- is as and consumption the production in China,

exactly hard demand will keep that your it's it's to factor -- them know the where think know on further on we to don't spodumene would up. back to I relative predict go prices I factor So be demand that But prices. we the when there's point, stimulus spodumene pulls mitigating a because

Vincent Andrews

on I all years. your retirement. Scott, appreciate help Congratulations, over the

Scott Tozier

Vincent. Thanks,

Operator

comes question next Colin Your Oppenheimer. from with

Colin Rusch

is lower like what balances out It With they supply production from terms around plans. at your address industry around expectation the some some concerns customers a also you OEM And on normalizes you're new days in of as supply the longer-term where levels, EV awfully if of chains. running lean adjust hearing at of this security of could that terms the inventory variety point. hanging your of then their of seems we're inventory? in What's number of some seeing

Eric Norris

side. mine popular question, of today, because any Colin, to be which than takes product on if don't Eric. chain, cathode week, look at it On that is know enough. I that less to our go a at supply one answer disruption first not this understandably have going And in if question are X particularly your X perpetually is asked our have and it's that inventory reason levels good supply It's of cathode lag at this operated, you is for the we contrast producers supply that -- chain the there's So, popular a is we being it's from the with months days producer to most and that. Chinese a

feel doesn't able but way throughout it the year. operate So been that to sustainable, they've

to what be purposes. question got got to is, some would marks at operate know I it's believe for downstream are think higher it have to a responsible some I it sustainable supply as we there So and what's we I point chain way than security that exactly company be. about And don't but just could a your

companies or OEMs the in terms announced concern it to true. in you there on There supply, interest that now keeping the their isn't have some necessarily larger some producers that But to concerns are of in expressed Those whether about to I are output announcing continue their if their that, think they're EV space, is on offtakes mind Yes, increase and letup the out players that going sort their securing pushing some OEM they're targets. targets. and China they're without larger and then continuing or demand in because Europe long-term no global cannot security investments And OEMs fulfill to who from changes of the vehicles downstream are they're supply. at they look supply is making they the realize large electric in security in or lithium. here in

I with still there the So -- think that demand dynamic that is OEMs.

Operator

with Stephen America. Our Bank final the of of comes question from line

Steve Byrne

at technologies in extract see more of bolster way in technologies in could any could a be would you're development out you I you lower the just reinvestment any the wanted to new more looking -- whether production your to that capital-efficient potentially are lithium ask these think that you you at Argentina, economics? anything brand deposits of there

Jerry Masters

Yes.

Atacama Magnolia That's around the would resource have the it's It very focused variety and part of de lithium the So the it the a like also and but apply brine and brine on extracting nature, any to and direct just converting resources. the is But as have variety de we but broad a technologies. Magnolia, lithium tends Atacama. brine. or program, the that. to a in -- technologies to would of in on in a which -- be around for program have I sounds big mean, look, we and other focused kind program extraction, that. materials Argentina each of to unique the one moment, we we salt Salar thing, broad particularly From lithium is it's not work R&D Salar at referencing you're And of It's Arkansas. well is what that be -- particular

Operator

have time the for to the over turn back Kent. questions. all was we like call to That I would

Jerry Masters

and today, technical Thank for Thank Okay. for difficulties. you. apologize the joining all I you us

got we've for line of the apologize time. speaker muted the for that. think I a side I period on

with for strategy living our mind. people We're results. the leads confident the both long-term world essential to disciplined ingredients into in in planted and transforming and market short-term modern Albemarle the in critical achieve opportunity resources and

joining be us the future. We partner of the and customers today. choice and work Thank you of to our for the present to for continue the both for investment choice

Operator

Ladies and gentlemen, for that concludes today's call. conference your Thank you participation.

You may disconnect. now

Albemarle (ALB) 2 Nov 232023 Q3 Earnings call transcript