CHARLOTTE, N.C., Aug. 5, 2020 /PRNewswire/ -- Albemarle
Corporation (NYSE: ALB) today announced its results for the second
quarter ended June 30, 2020.
Second Quarter 2020 Highlights
(Unless otherwise stated, all percent changes are based on
year-over-year comparisons)
- Net income of $86 million, or
$0.80 per diluted share; Adjusted
diluted EPS of $0.86
- Net sales of $764 million
decreased by 14%, in-line with Q2 2020 outlook
- Adjusted EBITDA of $185 million
decreased by 29%, in-line with Q2 2020 outlook
- Our plants continue to operate without material impact from the
COVID-19 pandemic
- Maintained our quarterly dividend of $0.385 per share, an increase of approximately 5%
over the quarterly dividend paid in 2019
- Continued actions to bolster our balance sheet and enhance
financial flexibility include the previously announced covenant
amendment
- Cost savings initiatives remain on track: realization of
between $50 and $70 million of sustainable cost savings in 2020;
implementation of short-term cash management actions to save
between $25 and $40 million per quarter; and deferral of 2020
capital spending by about $150
million from plan
"We are pleased that our net sales and adjusted EBITDA were at
the upper range of our outlook this quarter. These results are due
in no small part to the diligence of our global teams who continue
to operate our businesses safely and efficiently," said Albemarle
CEO Kent Masters. "We remain
confident that we have the right strategy in place to deliver value
to our stakeholders by investing in and growing our Lithium
business. While our strategy has not materially changed, the
environment in which we operate has changed dramatically. Our
response must be to focus on operational discipline in terms of
manufacturing, business, and capital project excellence."
Outlook
Albemarle anticipates that its
third quarter 2020 performance will be lower year-over-year based
on reduced global economic activity due to the global pandemic. As
previously disclosed, we have withdrawn full-year 2020 outlook
given the uncertainty around the duration and economic impact of
the pandemic. We intend to reintroduce our full-year outlook as the
situation allows. In an effort to help investors better understand
our business, we have temporarily introduced a quarterly
outlook.
|
Q3 2020
Outlook
|
Net sales
|
$700 - $775
million
|
Adjusted
EBITDA
|
$140 - $190
million
|
COVID-19 Response
Albemarle's cross-functional
Global Response Team continues to meet weekly to assess the
situation and take necessary actions to address employee health and
safety and operational challenges. Protocols including restricted
travel, shift adjustments, increased hygiene, and social distancing
for the essential workers at our plants remain in place at all
locations. In some regions, including China, Australia, and Europe, our employees have returned to work.
Other regions, including most of North and South America, remain on work-from-home
protocols for non-essential personnel.
Second Quarter Results
In millions,
except per share amounts
|
Q2
2020
|
|
Q2
2019
|
|
$
Change
|
|
%
Change
|
Net sales
|
$
|
764.0
|
|
|
$
|
885.1
|
|
|
$
|
(121.0)
|
|
|
(13.7)
|
%
|
Net income
attributable to Albemarle Corporation
|
$
|
85.6
|
|
|
$
|
154.2
|
|
|
$
|
(68.6)
|
|
|
(44.5)
|
%
|
Adjusted
EBITDA(a)
|
$
|
185.2
|
|
|
$
|
261.9
|
|
|
$
|
(76.7)
|
|
|
(29.3)
|
%
|
Diluted earnings per
share
|
$
|
0.80
|
|
|
$
|
1.45
|
|
|
$
|
(0.65)
|
|
|
(44.8)
|
%
|
Non-operating pension and OPEB items(a)
|
(0.02)
|
|
|
(0.01)
|
|
|
|
|
|
Non-recurring and other unusual items(a)
|
0.07
|
|
|
0.10
|
|
|
|
|
|
Adjusted diluted
earnings per share(b)
|
$
|
0.86
|
|
|
$
|
1.55
|
|
|
$
|
(0.69)
|
|
|
(44.5)
|
%
|
(a) See Non-GAAP Reconciliations for further details.
(b) Totals may not add due to rounding.
Net sales of $764.0 million
decreased by $121.0 million compared
to the prior year quarter, primarily driven by the Catalysts and
Lithium business segments as discussed below.
Adjusted EBITDA of $185.2 million
decreased by $76.7 million from the
prior year quarter due to lower net sales, which were partially
offset by productivity and cost improvements. Similarly, net income
attributable to Albemarle of
$85.6 million decreased by
$68.6 million from the prior year.
Corporate costs including SG&A were down compared to the prior
year period as a result of cost savings initiatives.
The effective income tax rate for Q2 2020 was 17.5% compared to
18.2% in the same period in 2019. The difference is largely due to
a change in the geographic mix of earnings. On an adjusted basis,
the effective income tax rates were 18.9% and 18.4% for the second
quarter of 2020 and 2019, respectively.
Business Segment Results
Lithium
|
|
In
millions
|
Q2
2020
|
|
Q2
2019
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
|
283.7
|
|
|
$
|
324.8
|
|
|
$
|
(41.0)
|
|
|
(12.6)
|
%
|
Adjusted
EBITDA
|
$
|
94.5
|
|
|
$
|
141.8
|
|
|
$
|
(47.2)
|
|
|
(33.3)
|
%
|
Lithium net sales of $283.7
million declined $41.0 million
primarily due to lower market and contract pricing. Lower contract
pricing reflects 2020 battery-grade price adjustments that were
agreed to in late 2019. Adjusted EBITDA of $94.5 million declined by $47.2 million primarily due to reduced net sales
as well as reduced Talison equity income. The decline was partially
offset by cost savings initiatives and efficiency improvements.
Current Trends: We expect the impact of low OEM
automotive production to be felt more acutely in Q3 2020. At the
same time, we are seeing impacts of lower market prices, higher
inventory in the battery channel, and reduced demand in the glass
and ceramics markets. As a result, we expect Q3 2020 EBITDA to be
down about 10% to 20% compared to Q2 2020.
Bromine
Specialties
|
|
In
millions
|
Q2
2020
|
|
Q2
2019
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
|
232.8
|
|
|
$
|
255.4
|
|
|
$
|
(22.7)
|
|
|
(8.9)
|
%
|
Adjusted
EBITDA
|
$
|
73.0
|
|
|
$
|
81.3
|
|
|
$
|
(8.3)
|
|
|
(10.2)
|
%
|
Bromine net sales of $232.8
million declined $22.7 million
primarily due to lower volumes driven by COVID-19 related impacts.
Adjusted EBITDA of $73.0 million
declined $8.3 million due to lower
net sales, which were partially offset by cost savings
initiatives.
Current Trends: Third quarter 2020 EBITDA is
expected to be similar to Q2 2020. Due to our position in the
supply chain, the impact of COVID-19 related weakness began in Q2
2020 and is expected to continue into Q3 2020. Strong demand for
surfactants and stabilization in building and construction helps
offset weakness in other end use
markets.
Catalysts
|
|
In
millions
|
Q2
2020
|
|
Q2
2019
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
|
197.1
|
|
|
$
|
266.3
|
|
|
$
|
(69.2)
|
|
|
(26.0)
|
%
|
Adjusted
EBITDA
|
$
|
22.8
|
|
|
$
|
66.9
|
|
|
$
|
(44.1)
|
|
|
(65.9)
|
%
|
Catalysts net sales of $197.1
million declined $69.2 million
due primarily to lower volumes. Fluid Catalytic Cracking (FCC)
volume was down primarily from lower transportation fuel
consumption as a result of stay-at-home orders and travel
restrictions. Hydroprocessing Catalysts (HPC) volumes were also
down due to normal lumpiness of shipments and some softness related
to lower oil prices and reduced fuel demand. Adjusted EBITDA of
$22.8 million declined $44.1 million as a result of lower net sales and
a net $12 million correction of
out-of-period errors regarding inventory values and freight
accruals. The errors primarily relate to Q1 2020 results (see
note to the income statement). Adjusted EBITDA was favorably
impacted by cost savings initiatives and efficiency
improvements.
Current Trends: We expect FCC demand to partially
recover in H2 2020 as travel begins to increase and global gasoline
inventories deplete. Conversely, we expect that HPC will be
negatively impacted in H2 2020 as refiners defer spending into 2021
and 2022. As a result, Q3 2020 EBITDA is expected to remain down
about 50% to 60% from prior year.
All
Other
|
|
In
millions
|
Q2
2020
|
|
Q2
2019
|
|
$
Change
|
|
%
Change
|
Net Sales
|
$
|
50.5
|
|
|
$
|
38.6
|
|
|
$
|
11.9
|
|
|
31.0
|
%
|
Adjusted
EBITDA
|
$
|
18.6
|
|
|
$
|
11.2
|
|
|
$
|
7.4
|
|
|
65.5
|
%
|
Other operations represents our Fine Chemistry Services (FCS)
business. FCS net sales of $50.5
million increased $11.9
million and adjusted EBITDA of $18.6
million increased $7.4
million. The FCS business tends to be contract driven.
Recent contracts include life sciences products which are typically
anti-cyclical.
Balance Sheet and Liquidity
As of June 30, 2020, Albemarle had estimated liquidity of over
$1.5 billion, including $737 million of cash and equivalents,
$550 million remaining under our
$1 billion revolver, and $220 million on other available credit lines.
Total debt was $3.5 billion,
representing net debt to adjusted EBITDA of approximately 3.2
times.
As previously disclosed, we recently negotiated a covenant
amendment to ensure ongoing financial flexibility. The revised
covenant is based on net debt to adjusted EBITDA, with a maximum
ratio of 4.5 times for the third quarter 2020 through third quarter
2021, decreasing to 4.0 times in the fourth quarter of 2021, and
3.5 times thereafter.
Cash Flow and Capital Deployment
Cash from operations for the six months ended June 30, 2020, of $207.9
million, increased $8.6
million versus the prior year as reduced working capital
outflows in 2020 offset lower earnings. Capital expenditures of
$419.0 million were in-line with the
prior year as progress continued on our Lithium expansion
projects.
Our primary capital allocation priorities are to maintain our
investment grade rating and our quarterly dividend while preserving
our long-term growth profile.
In order to preserve cash and align with the current economic
environment, we have accelerated our previously announced cost
savings initiatives, implemented short-term cash management
tactics, and delayed capital expenditures. We continue to
anticipate realizing $50 to
$70 million of sustainable cost
savings in 2020. Expected full-year 2020 capital spending
remains approximately $850 to
$950 million.
In May, the board declared a quarterly dividend of $0.385 per share, an increase of approximately 5%
over the quarterly dividend paid in 2019. We expect 2020 to be our
26th consecutive year of dividend increase, and the company remains
committed to shareholder returns.
Our share repurchase authorization remains in place; however,
there are no near-term plans to execute share buybacks. Divestiture
activity is ongoing but has been slowed as travel restrictions have
delayed due diligence processes.
Earnings Call
Date:
|
Thursday, August 6,
2020
|
Time:
|
9:00 AM Eastern
time
|
Dial-in
(U.S.):
|
844-347-1034
|
Dial-in
(International):
|
209-905-5910
|
Passcode:
|
3673986
|
The Company's earnings presentation and supporting material are
available on Albemarle's website
at https://investors.albemarle.com.
About Albemarle
Albemarle Corporation (NYSE: ALB), headquartered in Charlotte, N.C., is a global specialty
chemicals company with leading positions in lithium, bromine and
refining catalysts. We think beyond business-as-usual to power the
potential of companies in many of the world's largest and most
critical industries, such as energy, electronics, and
transportation. We actively pursue a sustainable approach to
managing our diverse global footprint of world-class resources. In
conjunction with our highly experienced and talented global teams,
our deep-seated values, and our collaborative customer
relationships, we create value-added and performance-based
solutions that enable a safer and more sustainable future.
We regularly post information to
www.albemarle.com, including notification of events, news,
financial performance, investor presentations and webcasts,
non-GAAP reconciliations, SEC filings and other information
regarding our company, its businesses and the markets it
serves.
Forward-Looking Statements
Some of the information presented in this press release, the
conference call and discussions that follow, including, without
limitation, information related to product development, production
capacity, committed volumes, market trends, pricing, expected
growth, earnings and demand for our products, input costs,
surcharges, tax rates, stock repurchases, dividends, cash flow
generation, costs and cost synergies, capital projects, economic
trends, outlook and all other information relating to matters that
are not historical facts may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Actual results could differ materially from the views
expressed. Factors that could cause actual results to differ
materially from the outlook expressed or implied in any
forward-looking statement include, without limitation: changes in
economic and business conditions; changes in financial and
operating performance of our major customers and industries and
markets served by us; the timing of orders received from customers;
the gain or loss of significant customers; competition from other
manufacturers; changes in the demand for our products or the
end-user markets in which our products are sold; limitations or
prohibitions on the manufacture and sale of our products;
availability of raw materials; increases in the cost of raw
materials and energy, and our ability to pass through such
increases to our customers; changes in our markets in general;
fluctuations in foreign currencies; changes in laws and government
regulation impacting our operations or our products; the occurrence
of regulatory actions, proceedings, claims or litigation; the
occurrence of cyber-security breaches, terrorist attacks,
industrial accidents, natural disasters or climate change; the
inability to maintain current levels of product or premises
liability insurance or the denial of such coverage; political
unrest affecting the global economy, including adverse effects from
terrorism or hostilities; political instability affecting our
manufacturing operations or joint ventures; changes in accounting
standards; the inability to achieve results from our global
manufacturing cost reduction initiatives as well as our ongoing
continuous improvement and rationalization programs; changes in the
jurisdictional mix of our earnings and changes in tax laws and
rates; changes in monetary policies, inflation or interest rates
that may impact our ability to raise capital or increase our cost
of funds, impact the performance of our pension fund investments
and increase our pension expense and funding obligations;
volatility and uncertainties in the debt and equity markets;
technology or intellectual property infringement, including
cyber-security breaches, and other innovation risks; decisions we
may make in the future; the ability to successfully execute,
operate and integrate acquisitions and divestitures; uncertainties
as to the duration and impact of the coronavirus (COVID-19)
pandemic; and the other factors detailed from time to time in the
reports we file with the SEC, including those described under "Risk
Factors" in our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q. These forward-looking statements speak only
as of the date of this press release. We assume no obligation to
provide any revisions to any forward-looking statements should
circumstances change, except as otherwise required by securities
and other applicable laws.
Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
sales
|
$
|
764,049
|
|
|
$
|
885,052
|
|
|
$
|
1,502,894
|
|
|
$
|
1,717,116
|
|
Cost of goods
sold1
|
530,690
|
|
|
559,138
|
|
|
1,027,517
|
|
|
1,107,716
|
|
Gross
profit
|
233,359
|
|
|
325,914
|
|
|
475,377
|
|
|
609,400
|
|
Selling, general and
administrative expenses
|
106,949
|
|
|
126,715
|
|
|
208,826
|
|
|
240,070
|
|
Research and
development expenses
|
14,210
|
|
|
13,462
|
|
|
30,307
|
|
|
28,439
|
|
Operating
profit
|
112,200
|
|
|
185,737
|
|
|
236,244
|
|
|
340,891
|
|
Interest and
financing expenses
|
(17,852)
|
|
|
(11,601)
|
|
|
(34,737)
|
|
|
(24,187)
|
|
Other (expenses)
income, net
|
(6,273)
|
|
|
(7,065)
|
|
|
2,041
|
|
|
4,226
|
|
Income before income
taxes and equity in net income of unconsolidated
investments
|
88,075
|
|
|
167,071
|
|
|
203,548
|
|
|
320,930
|
|
Income tax
expense
|
15,431
|
|
|
30,411
|
|
|
33,873
|
|
|
67,925
|
|
Income before equity
in net income of unconsolidated investments
|
72,644
|
|
|
136,660
|
|
|
169,675
|
|
|
253,005
|
|
Equity in net income
of unconsolidated investments (net of tax)
|
31,114
|
|
|
38,310
|
|
|
57,718
|
|
|
73,491
|
|
Net income
|
103,758
|
|
|
174,970
|
|
|
227,393
|
|
|
326,496
|
|
Net income
attributable to noncontrolling interests
|
(18,134)
|
|
|
(20,772)
|
|
|
(34,565)
|
|
|
(38,729)
|
|
Net income
attributable to Albemarle Corporation
|
$
|
85,624
|
|
|
$
|
154,198
|
|
|
$
|
192,828
|
|
|
$
|
287,767
|
|
Basic earnings per
share
|
$
|
0.81
|
|
|
$
|
1.46
|
|
|
$
|
1.81
|
|
|
$
|
2.72
|
|
Diluted earnings per
share
|
$
|
0.80
|
|
|
$
|
1.45
|
|
|
$
|
1.81
|
|
|
$
|
2.71
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding – basic
|
106,329
|
|
|
105,961
|
|
|
106,278
|
|
|
105,880
|
|
Weighted-average
common shares outstanding – diluted
|
106,535
|
|
|
106,316
|
|
|
106,524
|
|
|
106,336
|
|
1 Cost of goods sold for the three-month period ended
June 30, 2020 includes a net expense
of $9.8 million for the correction of
out-of-period errors regarding understated cost of goods sold for
inventory values within the Catalysts segment and overstated
freight accruals primarily within the Lithium and Catalysts
segments.
Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)
|
June
30,
|
|
December
31,
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
736,696
|
|
|
$
|
613,110
|
|
Trade accounts
receivable
|
517,626
|
|
|
612,651
|
|
Other accounts
receivable
|
76,957
|
|
|
67,551
|
|
Inventories
|
851,256
|
|
|
768,984
|
|
Other current
assets
|
109,874
|
|
|
162,813
|
|
Total current
assets
|
2,292,409
|
|
|
2,225,109
|
|
Property, plant and
equipment
|
7,138,969
|
|
|
6,817,843
|
|
Less accumulated
depreciation and amortization
|
2,002,612
|
|
|
1,908,370
|
|
Net property, plant
and equipment
|
5,136,357
|
|
|
4,909,473
|
|
Investments
|
614,145
|
|
|
579,813
|
|
Other
assets
|
213,223
|
|
|
213,061
|
|
Goodwill
|
1,571,280
|
|
|
1,578,785
|
|
Other intangibles,
net of amortization
|
342,839
|
|
|
354,622
|
|
Total
assets
|
$
|
10,170,253
|
|
|
$
|
9,860,863
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
523,160
|
|
|
$
|
574,138
|
|
Accrued
expenses
|
399,456
|
|
|
553,160
|
|
Current portion of
long-term debt
|
406,201
|
|
|
187,336
|
|
Dividends
payable
|
40,728
|
|
|
38,764
|
|
Current operating
lease liability
|
21,808
|
|
|
23,137
|
|
Income taxes
payable
|
29,450
|
|
|
32,461
|
|
Total current
liabilities
|
1,420,803
|
|
|
1,408,996
|
|
Long-term
debt
|
3,132,191
|
|
|
2,862,921
|
|
Postretirement
benefits
|
50,362
|
|
|
50,899
|
|
Pension
benefits
|
284,480
|
|
|
292,073
|
|
Other noncurrent
liabilities
|
670,001
|
|
|
754,536
|
|
Deferred income
taxes
|
406,255
|
|
|
397,858
|
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Albemarle Corporation
shareholders' equity:
|
|
|
|
Common
stock
|
1,064
|
|
|
1,061
|
|
Additional paid-in
capital
|
1,400,105
|
|
|
1,383,446
|
|
Accumulated other
comprehensive loss
|
(431,131)
|
|
|
(395,735)
|
|
Retained
earnings
|
3,054,434
|
|
|
2,943,478
|
|
Total Albemarle
Corporation shareholders' equity
|
4,024,472
|
|
|
3,932,250
|
|
Noncontrolling
interests
|
181,689
|
|
|
161,330
|
|
Total
equity
|
4,206,161
|
|
|
4,093,580
|
|
Total liabilities and
equity
|
$
|
10,170,253
|
|
|
$
|
9,860,863
|
|
Albemarle Corporation and Subsidiaries
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)
|
Six Months
Ended June 30,
|
|
2020
|
|
2019
|
Cash and cash
equivalents at beginning of year
|
$
|
613,110
|
|
|
$
|
555,320
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
227,393
|
|
|
326,496
|
|
Adjustments to
reconcile net income to cash flows from operating
activities:
|
|
|
|
Depreciation and
amortization
|
111,535
|
|
|
102,231
|
|
Gain on sale of
property
|
—
|
|
|
(11,079)
|
|
Stock-based
compensation and other
|
9,765
|
|
|
10,136
|
|
Equity in net income
of unconsolidated investments (net of tax)
|
(57,718)
|
|
|
(73,491)
|
|
Dividends received
from unconsolidated investments and nonmarketable
securities
|
12,984
|
|
|
60,291
|
|
Pension and
postretirement (benefit) expense
|
(3,312)
|
|
|
1,055
|
|
Pension and
postretirement contributions
|
(6,692)
|
|
|
(7,778)
|
|
Unrealized gain on
investments in marketable securities
|
(1,278)
|
|
|
(577)
|
|
Deferred income
taxes
|
8,990
|
|
|
3,570
|
|
Working capital
changes
|
(156,579)
|
|
|
(223,238)
|
|
Other, net
|
62,829
|
|
|
11,672
|
|
Net cash provided by
operating activities
|
207,917
|
|
|
199,288
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions, net of
cash acquired
|
(22,572)
|
|
|
—
|
|
Capital
expenditures
|
(418,991)
|
|
|
(415,626)
|
|
Proceeds from sale of
property and equipment
|
—
|
|
|
10,356
|
|
Sales of marketable
securities, net
|
1,496
|
|
|
908
|
|
Investments in equity
and other corporate investments
|
(486)
|
|
|
(2,549)
|
|
Net cash used in
investing activities
|
(440,553)
|
|
|
(406,911)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings of credit agreements
|
452,163
|
|
|
—
|
|
Other borrowings,
net
|
12,956
|
|
|
183,052
|
|
Dividends paid to
shareholders
|
(79,909)
|
|
|
(74,313)
|
|
Dividends paid to
noncontrolling interests
|
(14,286)
|
|
|
(38,962)
|
|
Proceeds from exercise
of stock options
|
10,809
|
|
|
3,205
|
|
Withholding taxes paid
on stock-based compensation award distributions
|
(4,019)
|
|
|
(10,570)
|
|
Debt financing
costs
|
(2,669)
|
|
|
—
|
|
Other
|
—
|
|
|
(445)
|
|
Net cash provided by
financing activities
|
375,045
|
|
|
61,967
|
|
Net effect of foreign
exchange on cash and cash equivalents
|
(18,823)
|
|
|
(11,481)
|
|
Increase (decrease)
in cash and cash equivalents
|
123,586
|
|
|
(157,137)
|
|
Cash and cash
equivalents at end of period
|
$
|
736,696
|
|
|
$
|
398,183
|
|
Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net
sales:
|
|
|
|
|
|
|
|
Lithium
|
$
|
283,722
|
|
|
$
|
324,758
|
|
|
$
|
520,540
|
|
|
$
|
616,644
|
|
Bromine
Specialties
|
232,779
|
|
|
255,433
|
|
|
464,371
|
|
|
504,485
|
|
Catalysts
|
197,053
|
|
|
266,301
|
|
|
404,260
|
|
|
517,949
|
|
All Other
|
50,495
|
|
|
38,560
|
|
|
113,723
|
|
|
78,038
|
|
Total net
sales
|
$
|
764,049
|
|
|
$
|
885,052
|
|
|
$
|
1,502,894
|
|
|
$
|
1,717,116
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
Lithium
|
$
|
94,536
|
|
|
$
|
141,779
|
|
|
$
|
173,173
|
|
|
$
|
257,395
|
|
Bromine
Specialties
|
73,041
|
|
|
81,332
|
|
|
156,303
|
|
|
159,929
|
|
Catalysts
|
22,777
|
|
|
66,875
|
|
|
70,247
|
|
|
126,946
|
|
All Other
|
18,598
|
|
|
11,240
|
|
|
41,422
|
|
|
18,483
|
|
Corporate
|
(23,759)
|
|
|
(39,326)
|
|
|
(59,587)
|
|
|
(74,986)
|
|
Total adjusted
EBITDA
|
$
|
185,193
|
|
|
$
|
261,900
|
|
|
$
|
381,558
|
|
|
$
|
487,767
|
|
See accompanying non-GAAP reconciliations below.
Additional Information
It should be noted that adjusted net income attributable to
Albemarle Corporation, adjusted diluted earnings per share,
non-operating pension and OPEB items per diluted share,
non-recurring and other unusual items per diluted share, adjusted
effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin
and adjusted EBITDA margin are financial measures that are not
required by, or presented in accordance with, accounting principles
generally accepted in the United
States, or GAAP. These non-GAAP measures should not be
considered as alternatives to Net income attributable to Albemarle
Corporation ("earnings"). These measures are presented here to
provide additional useful measurements to review our operations,
provide transparency to investors and enable period-to-period
comparability of financial performance. The Company's chief
operating decision maker uses these measures to assess the ongoing
performance of the Company and its segments, as well as for
business and enterprise planning purposes.
A description of other non-GAAP financial measures that we use
to evaluate our operations and financial performance, and
reconciliation of these non-GAAP financial measures to the most
directly comparable financial measures calculated and reported in
accordance with GAAP can be found on the following pages of this
press release, which is also is available on Albemarle's website at
https://investors.albemarle.com. The Company does not provide a
reconciliation of forward-looking non-GAAP financial measures to
the most directly comparable financial measures calculated and
reported in accordance with GAAP, as the Company is unable to
estimate significant non-recurring or unusual items without
unreasonable effort. The amounts and timing of these items are
uncertain and could be material to the Company's results calculated
in accordance with GAAP.
ALBEMARLE
CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited)
See below for a reconciliation of adjusted net income
attributable to Albemarle Corporation, EBITDA and adjusted EBITDA,
the non-GAAP financial measures, to Net income attributable to
Albemarle Corporation ("earnings"), the most directly comparable
financial measure calculated and reported in accordance with GAAP.
Adjusted earnings is defined as earnings before the non-recurring,
other unusual and non-operating pension and OPEB items as listed
below. EBITDA is defined as earnings before interest and financing
expenses, income taxes, and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA and the non-recurring, other unusual
and non-operating pension and OPEB items as listed below.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
In thousands, except
percentages and per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to Albemarle Corporation
|
$
|
85,624
|
|
|
$
|
154,198
|
|
|
$
|
192,828
|
|
|
$
|
287,767
|
|
Add back:
|
|
|
|
|
|
|
|
Non-operating pension
and OPEB items (net of tax)
|
(2,299)
|
|
|
(693)
|
|
|
(4,610)
|
|
|
(1,262)
|
|
Non-recurring and
other unusual items (net of tax)
|
7,907
|
|
|
10,754
|
|
|
9,400
|
|
|
8,742
|
|
Adjusted net income
attributable to Albemarle Corporation
|
$
|
91,232
|
|
|
$
|
164,259
|
|
|
$
|
197,618
|
|
|
$
|
295,247
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share
|
$
|
0.86
|
|
|
$
|
1.55
|
|
|
$
|
1.86
|
|
|
$
|
2.78
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding – diluted
|
106,535
|
|
|
106,316
|
|
|
106,524
|
|
|
106,336
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Albemarle Corporation
|
$
|
85,624
|
|
|
$
|
154,198
|
|
|
$
|
192,828
|
|
|
$
|
287,767
|
|
Add back:
|
|
|
|
|
|
|
|
Interest and financing
expenses
|
17,852
|
|
|
11,601
|
|
|
34,737
|
|
|
24,187
|
|
Income tax
expense
|
15,431
|
|
|
30,411
|
|
|
33,873
|
|
|
67,925
|
|
Depreciation and
amortization
|
57,841
|
|
|
52,948
|
|
|
111,535
|
|
|
102,231
|
|
EBITDA
|
176,748
|
|
|
249,158
|
|
|
372,973
|
|
|
482,110
|
|
Non-operating pension
and OPEB items
|
(2,895)
|
|
|
(676)
|
|
|
(5,803)
|
|
|
(1,259)
|
|
Non-recurring and
other unusual items
|
11,340
|
|
|
13,418
|
|
|
14,388
|
|
|
6,916
|
|
Adjusted
EBITDA
|
$
|
185,193
|
|
|
$
|
261,900
|
|
|
$
|
381,558
|
|
|
$
|
487,767
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
764,049
|
|
|
$
|
885,052
|
|
|
$
|
1,502,894
|
|
|
$
|
1,717,116
|
|
EBITDA
margin
|
23.1
|
%
|
|
28.2
|
%
|
|
24.8
|
%
|
|
28.1
|
%
|
Adjusted EBITDA
margin
|
24.2
|
%
|
|
29.6
|
%
|
|
25.4
|
%
|
|
28.4
|
%
|
See below for a reconciliation of adjusted EBITDA on a segment
basis, the non-GAAP financial measure, to Net income attributable
to Albemarle Corporation, the most directly comparable financial
measure calculated and reported in accordance with GAAP (in
thousands, except percentages).
|
Lithium
|
|
Bromine
Specialties
|
|
Catalysts
|
|
Reportable
Segments
Total
|
|
All
Other
|
|
Corporate
|
|
Consolidated
Total
|
|
% of
Net
Sales
|
Three months ended
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Albemarle Corporation
|
$
|
66,038
|
|
|
$
|
60,692
|
|
|
$
|
10,702
|
|
|
$
|
137,432
|
|
|
$
|
16,425
|
|
|
$
|
(68,233)
|
|
|
$
|
85,624
|
|
|
11.2
|
%
|
Depreciation and
amortization
|
28,498
|
|
|
12,349
|
|
|
12,075
|
|
|
52,922
|
|
|
2,173
|
|
|
2,746
|
|
|
57,841
|
|
|
7.6
|
%
|
Non-recurring and
other unusual items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,340
|
|
|
11,340
|
|
|
1.5
|
%
|
Interest and financing
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,852
|
|
|
17,852
|
|
|
2.3
|
%
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,431
|
|
|
15,431
|
|
|
2.0
|
%
|
Non-operating pension
and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,895)
|
|
|
(2,895)
|
|
|
(0.4)
|
%
|
Adjusted
EBITDA
|
$
|
94,536
|
|
|
$
|
73,041
|
|
|
$
|
22,777
|
|
|
$
|
190,354
|
|
|
$
|
18,598
|
|
|
$
|
(23,759)
|
|
|
$
|
185,193
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Albemarle Corporation
|
$
|
117,303
|
|
|
$
|
69,616
|
|
|
$
|
54,124
|
|
|
$
|
241,043
|
|
|
$
|
9,118
|
|
|
$
|
(95,963)
|
|
|
$
|
154,198
|
|
|
17.4
|
%
|
Depreciation and
amortization
|
24,365
|
|
|
11,716
|
|
|
12,751
|
|
|
48,832
|
|
|
2,122
|
|
|
1,994
|
|
|
52,948
|
|
|
6.0
|
%
|
Non-recurring and
other unusual items
|
111
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
13,307
|
|
|
13,418
|
|
|
1.5
|
%
|
Interest and financing
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,601
|
|
|
11,601
|
|
|
1.3
|
%
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,411
|
|
|
30,411
|
|
|
3.5
|
%
|
Non-operating pension
and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(676)
|
|
|
(676)
|
|
|
(0.1)
|
%
|
Adjusted
EBITDA
|
$
|
141,779
|
|
|
$
|
81,332
|
|
|
$
|
66,875
|
|
|
$
|
289,986
|
|
|
$
|
11,240
|
|
|
$
|
(39,326)
|
|
|
$
|
261,900
|
|
|
29.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Albemarle Corporation
|
$
|
119,278
|
|
|
$
|
132,357
|
|
|
$
|
45,594
|
|
|
$
|
297,229
|
|
|
$
|
37,271
|
|
|
$
|
(141,672)
|
|
|
$
|
192,828
|
|
|
12.8
|
%
|
Depreciation and
amortization
|
53,895
|
|
|
23,946
|
|
|
24,653
|
|
|
102,494
|
|
|
4,151
|
|
|
4,890
|
|
|
111,535
|
|
|
7.4
|
%
|
Non-recurring and
other unusual items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,388
|
|
|
14,388
|
|
|
1.0
|
%
|
Interest and financing
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,737
|
|
|
34,737
|
|
|
2.3
|
%
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,873
|
|
|
33,873
|
|
|
2.3
|
%
|
Non-operating pension
and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,803)
|
|
|
(5,803)
|
|
|
(0.4)
|
%
|
Adjusted
EBITDA
|
$
|
173,173
|
|
|
$
|
156,303
|
|
|
$
|
70,247
|
|
|
$
|
399,723
|
|
|
$
|
41,422
|
|
|
$
|
(59,587)
|
|
|
$
|
381,558
|
|
|
25.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Albemarle Corporation
|
$
|
210,472
|
|
|
$
|
137,096
|
|
|
$
|
101,983
|
|
|
$
|
449,551
|
|
|
$
|
14,324
|
|
|
$
|
(176,108)
|
|
|
$
|
287,767
|
|
|
16.8
|
%
|
Depreciation and
amortization
|
46,457
|
|
|
22,833
|
|
|
24,963
|
|
|
94,253
|
|
|
4,159
|
|
|
3,819
|
|
|
102,231
|
|
|
5.9
|
%
|
Non-recurring and
other unusual items
|
466
|
|
|
—
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
6,450
|
|
|
6,916
|
|
|
0.4
|
%
|
Interest and financing
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,187
|
|
|
24,187
|
|
|
1.4
|
%
|
Income tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,925
|
|
|
67,925
|
|
|
4.0
|
%
|
Non-operating pension
and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,259)
|
|
|
(1,259)
|
|
|
(0.1)
|
%
|
Adjusted
EBITDA
|
$
|
257,395
|
|
|
$
|
159,929
|
|
|
$
|
126,946
|
|
|
$
|
544,270
|
|
|
$
|
18,483
|
|
|
$
|
(74,986)
|
|
|
$
|
487,767
|
|
|
28.4
|
%
|
Non-operating pension and OPEB items, consisting of
mark-to-market actuarial gains/losses, settlements/curtailments,
interest cost and expected return on assets, are not allocated to
our operating segments and are included in the Corporate category.
In addition, we believe that these components of pension cost are
mainly driven by market performance, and we manage these separately
from the operational performance of our businesses. In accordance
with GAAP, these non-operating pension and OPEB items are included
in Other (expenses) income, net. Non-operating pension and OPEB
items were as follows (in thousands):
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Interest
cost
|
$
|
7,133
|
|
|
$
|
8,769
|
|
|
$
|
14,288
|
|
|
$
|
17,638
|
|
Expected return on
assets
|
(10,028)
|
|
|
(9,445)
|
|
|
(20,091)
|
|
|
(18,897)
|
|
Total
|
$
|
(2,895)
|
|
|
$
|
(676)
|
|
|
$
|
(5,803)
|
|
|
$
|
(1,259)
|
|
In addition to the non-operating pension and OPEB items
disclosed above, we have identified certain other items and
excluded them from our adjusted net income calculation for the
periods presented. A listing of these items, as well as a detailed
description of each follows below (per diluted share):
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Restructuring and
other(1)
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
$
|
0.06
|
|
|
$
|
0.05
|
|
Acquisition and
integration related costs(2)
|
0.04
|
|
|
0.04
|
|
|
0.06
|
|
|
0.07
|
|
Gain on sale of
property(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.08)
|
|
Other(4)
|
(0.01)
|
|
|
0.03
|
|
|
(0.02)
|
|
|
0.02
|
|
Discrete tax
items(5)
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
0.02
|
|
Total non-recurring
and other unusual items
|
$
|
0.07
|
|
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
|
|
(1)
|
Severance expenses of
$6.7 million ($4.7 million after income taxes, or $0.04 per share)
included in Selling, general and administrative expenses for the
three months ended June 30, 2020. In addition, we recorded
severance expenses in Cost of goods sold, Selling, general and
administrative expenses and Net income attributable to
noncontrolling interest for the six months ended June 30, 2020 of
$0.7 million, $8.2 million and a $0.3 million gain ($6.2 million
after income taxes, or $0.06 per share), respectively. These
severance expenses are part of a business reorganization plan,
primarily within our Lithium business in Germany, as well in our
Bromine Specialties business in 2020. The balance of unpaid
severance is recorded in Accrued expenses and is expected to
primarily be paid through the first quarter of 2021. During the
three and six months ended June 30, 2019, severance expenses
of $4.8 million ($4.4 million after income taxes, or $0.04 per
share) and $5.3 million ($4.9 million after income taxes, or
$0.05 per share), respectively, were recorded in Selling, general
and administrative expenses as part of a business reorganization
plan primarily in Catalysts, Lithium and Corporate.
|
|
|
(2)
|
Costs related to the
acquisition, integration and potential divestitures for various
significant projects, recorded in Selling, general and
administrative expenses for the three and six months ended June 30,
2020 of $5.5 million and $8.4 million ($4.2 million and $6.5
million after income taxes, or $0.04 and $0.06 per share),
respectively, and for the three and six months ended June 30, 2019
of $5.0 million and $10.3 million ($3.8 million and $7.9 million
after income taxes, or $0.04 and $0.07 per share),
respectively.
|
|
|
(3)
|
Included in Other
(expenses) income, net, for the six months ended June 30, 2019 is a
gain of $11.1 million ($8.5 million after income taxes, or $0.08
per share) related to the sale of land in Pasadena, Texas not used
as part of our operations.
|
|
|
(4)
|
Other adjustments for
the three months ended June 30, 2020 included amounts recorded
in:
|
|
•
|
Other (expenses)
income, net - $0.9 million ($0.6 million after income taxes,
or $0.01 per share) net gain primarily relating to the sale of idle
properties in Germany.
|
|
|
|
Other adjustments for
the six months ended June 30, 2020 included amounts recorded
in:
|
|
•
|
Other (expenses)
income, net - $2.7 million gain resulting from the settlement of a
legal matter related to a business sold and $0.8 million net gain
primarily relating to the sale of idle properties in Germany,
partially offset by a $0.8 million loss resulting from the
adjustment of indemnifications related to previously disposed
businesses.
|
|
After income taxes,
this net gain totaled $1.7 million, or $0.02 per share.
|
|
|
|
Other adjustments for
the three months ended June 30, 2019 included amounts recorded
in:
|
|
•
|
Cost of goods sold -
$0.1 million related to non-routine labor and compensation related
costs in Chile that are outside normal compensation
arrangements.
|
|
•
|
Selling, general and
administrative expenses - $4.8 million related to severance
payments as part of a business reorganization plan and $1.0 million
of shortfall contributions for our multiemployer plan financial
improvement plan.
|
|
|
Other (expenses)
income, net - $2.5 million of a net loss primarily resulting from
the revision of indemnifications related to previously disposed
businesses.
|
|
After income taxes,
these charges totaled $3.3 million, or $0.03 per share.
|
|
|
|
Other adjustments for
the six months ended June 30, 2019 included amounts recorded
in:
|
|
•
|
Cost of goods sold -
$0.5 million related to non-routine labor and compensation related
costs in Chile that are outside normal compensation
arrangements.
|
|
•
|
Selling, general and
administrative expenses - $5.3 million related to severance
payments as part of a business reorganization plan and $1.0 million
of shortfall contributions for our multiemployer plan financial
improvement plan.
|
|
•
|
Other (expenses)
income, net - $0.9 million of a net loss primarily resulting from
the revision of indemnifications and other liabilities related to
previously disposed businesses.
|
|
After income taxes,
these charges totaled $2.0 million or $0.02 per share.
|
|
|
(5)
|
Included in Income
tax expense for the three and six months ended June 30, 2020 are
discrete net tax benefits of $0.5 million, or less than $0.01 per
share, and $1.6 million, or $0.01 per share, respectively. The net
benefit for the three months is primarily related to lapses in
statute of limitations. The net benefit for the six months is
primarily related to excess tax benefits realized from stock-based
compensation arrangements.
|
|
|
|
Included in Income
tax expense for the three and six months ended June 30, 2019 are
discrete net tax benefits of $0.8 million, or $0.01 per share, and
expenses of $2.4 million, or $0.02 per share, respectively. The net
benefit for the three months is primarily related to foreign return
to accrual adjustments. The net expense for the six months is
primarily related to expenses for uncertain tax positions and
foreign return to accrual adjustments, partially offset by a
benefit for excess tax benefits realized from stock-based
compensation arrangements.
|
See below for a reconciliation of the adjusted effective income
tax rate, the non-GAAP financial measure, to the effective income
tax rate, the most directly comparable financial measure calculated
and reported in accordance with GAAP (in thousands, except
percentages).
|
Income before
income taxes and
equity in net income
of unconsolidated
investments
|
|
Income tax
expense
|
|
Effective income
tax
rate
|
Three months ended
June 30, 2020
|
|
|
|
|
|
As
reported
|
$
|
88,075
|
|
|
$
|
15,431
|
|
|
17.5
|
%
|
Non-recurring, other
unusual and non-operating pension and OPEB items
|
8,445
|
|
|
2,837
|
|
|
|
As
adjusted
|
$
|
96,520
|
|
|
$
|
18,268
|
|
|
18.9
|
%
|
|
|
|
|
|
|
Three months ended
June 30, 2019
|
|
|
|
|
|
As
reported
|
$
|
167,071
|
|
|
$
|
30,411
|
|
|
18.2
|
%
|
Non-recurring, other
unusual and non-operating pension and OPEB items
|
12,742
|
|
|
2,681
|
|
|
|
As
adjusted
|
$
|
179,813
|
|
|
$
|
33,092
|
|
|
18.4
|
%
|
|
|
|
|
|
|
Six months ended
June 30, 2020
|
|
|
|
|
|
As
reported
|
$
|
203,548
|
|
|
$
|
33,873
|
|
|
16.6
|
%
|
Non-recurring, other
unusual and non-operating pension and OPEB items
|
8,906
|
|
|
3,795
|
|
|
|
As
adjusted
|
$
|
212,454
|
|
|
$
|
37,668
|
|
|
17.7
|
%
|
|
|
|
|
|
|
Six months ended
June 30, 2019
|
|
|
|
|
|
As
reported
|
$
|
320,930
|
|
|
$
|
67,925
|
|
|
21.2
|
%
|
Non-recurring, other
unusual and non-operating pension and OPEB items
|
5,657
|
|
|
(1,823)
|
|
|
|
As
adjusted
|
$
|
326,587
|
|
|
$
|
66,102
|
|
|
20.2
|
%
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/albemarle-reports-second-quarter-results-301106965.html
SOURCE Albemarle Corporation