Press Releases

Albemarle Reports First-Quarter Sales Growth of 36%, Raising Guidance

May 4, 2022

CHARLOTTE, N.C., May 4, 2022 /PRNewswire/ -- Albemarle Corporation (NYSE: ALB) today announced its results for the first quarter ended March 31, 2022.

First-Quarter 2022 and Recent Highlights
(Unless otherwise stated, all percentage changes represent year-over-year comparisons)

  • Net sales of $1.13 billion, an increase of 36%; Net sales increased 44% excluding Fine Chemistry Services (FCS) business sold in June 2021
  • Net income of $253.4 million, or $2.15 per diluted share; Adjusted diluted EPS of $2.38, an increase of 116%
  • Adjusted EBITDA of $432 million, an increase of 88%; Adjusted EBITDA increased 107% excluding FCS business sold in June 2021
  • MARBL Lithium Joint Venture (MARBL) to start operation of the second train at MARBL Wodgina Lithium mine with first spodumene concentrate production expected in July 2022
  • Guidance for 2022 revised upward on increased prices in Lithium and Bromine businesses; Net sales are now expected to increase approximately 60-70% year over year and adjusted EBITDA now expected to increase approximately 100-140% year over year

"We achieved a strong start to the year by focusing on execution and building on the momentum we created in the second half of 2021," said Albemarle CEO Kent Masters. "Many of the end markets we serve are critical for transitioning to greener energy and advancing electrification and digitalization. Our ongoing investments capitalize on the rapid growth and strong pricing trends in these markets. We continue to explore sustainable options to expand our conversion capacity and resources, including opportunities in North America and Europe."

Outlook

Albemarle's outlook for 2022 has improved based on expectations of continued demand growth and tightness in the markets it serves. Net sales guidance was revised upward primarily due to continued strength in pricing in its Lithium and Bromine businesses. Adjusted EBITDA guidance is higher based on pricing expectations partially offset by inflationary cost pressures, particularly for natural gas in Europe.








FY 2022 Guidance


Net sales










$5.2 - $5.6 billion


Adjusted EBITDA










$1.7 - $2.0 billion


Adjusted EBITDA Margin










33% - 36%


Adjusted Diluted EPS










$9.25 - $12.25


Net Cash from Operations










$500 - $800 million


Capital Expenditures










$1.3 - $1.5 billion


First-Quarter Results

In millions, except per share amounts



Q1 2022


Q1 2021


$ Change


% Change

Net sales



$    1,127.7


$       829.3


$       298.4


36.0%

Net income attributable to Albemarle Corporation



$       253.4


$         95.7


$       157.7


164.8%

Adjusted EBITDA(a)



$       431.9


$       230.1


$       201.9


87.8%

Diluted earnings per share



$         2.15


$         0.84


$         1.31


156.0%

   Non-operating pension and OPEB items(a)



(0.04)


(0.04)





   Non-recurring and other unusual items(a)



0.26


0.29





Adjusted diluted earnings per share(a)(b)



$         2.38


$         1.10


$         1.28


116.4%

(a)    See Non-GAAP Reconciliations for further details.

(b)    Totals may not add due to rounding.

Net sales of $1.13 billion increased by $298.4 million compared to the prior-year quarter primarily due to increased pricing across Albemarle's business segments driven by strong demand from diverse end markets.

Net income attributable to Albemarle of $253.4 million increased by $157.7 million from the prior-year quarter primarily due to higher net sales, partially offset by inflationary cost pressures including natural gas prices in Europe.

Adjusted EBITDA of $431.9 million increased by $201.9 million from the prior-year quarter primarily due to higher net sales, partially offset by inflationary cost pressures including natural gas prices in Europe.

The effective income tax rate for the first quarter of 2022 was 26.9% compared to 17.9% in the same period of 2021. The difference is largely due to global intangible low-taxed income and the geographic mix of earnings. On an adjusted basis, the effective income tax rates were 18.9% and 17.5% for the first quarter of 2022 and 2021, respectively.

Business Segment Results

Lithium Results

In millions

Q1 2022


Q1 2021


$ Change


% Change

Net Sales

$           550.3


$           279.0


$           271.3


97.2%

Adjusted EBITDA

$           308.6


$           106.4


$           202.2


190.0%

Lithium net sales of $550.3 million increased $271.3 million (+97%) due to higher pricing net of FX (+66%) and a one-time sale of spodumene produced during the initial startup of the MARBL Lithium Wodgina mine. Volume was higher (+31%) from tolling to help meet growing customer demand. Adjusted EBITDA of $308.6 million increased $202.2 million primarily due to increased pricing from renegotiated variable price contracts as well as the sale of lower cost inventory.

Lithium Outlook

Adjusted EBITDA for the full year 2022 is expected to grow approximately 200-225% year over year, up from the previous outlook. Average realized pricing is now expected to be up approximately 100% year over year resulting from the renegotiated index-referenced variable price contracts and increased market pricing. Full-year 2022 volume is expected to be up +20-30% year over year (unchanged) primarily due to new capacity coming online. The revised outlook assumes the company's Q2 realized selling price remains constant for the remainder of the year. There is potential upside if market pricing remains at historically strong levels or if current contract renegotiations result in additional index-referenced, variable pricing. There is potential downside in the event of a material correction in lithium market pricing or potential volume shortfalls (e.g., delays in acquisitions or expansion projects).

Albemarle continues to progress the expansion of its global portfolio of conversion capacity and utilization of its world-class resource portfolio:

Chile

  • La Negra III/IV conversion plant started up and is in commercial qualification; operations are progressing to plan

Australia

  • Kemerton I conversion plant is in commissioning and is expected to achieve first product in May
  • Kemerton II conversion plant remains on track for mechanical completion in the second half of 2022
  • First production of spodumene concentrate from the first train at the MARBL Lithium Wodgina mine expected in May
  • The start of the second train at Wodgina has been accelerated with first production of spodumene concentrate expected in July

China

  • Acquisition of Qinzhou conversion plant continues to progress through the regulatory approval process and now is expected to close in the second half of this year
  • Site preparation and early construction works have started at the Meishan greenfield project site, ahead of schedule
  • Zhangjiagang greenfield project is in the engineering phase

United States

  • New wells and expansion projects at Silver Peak continue to progress ahead of schedule

Bromine Results

In millions

Q1 2022


Q1 2021


$ Change


% Change

Net Sales

$           359.6


$           280.4


$             79.1


28.2%

Adjusted EBITDA

$           129.2


$             94.6


$             34.6


36.6%

Bromine net sales of $359.6 million increased $79.1 million (+28%) primarily due to increased pricing net of FX (+25%) and slightly higher volumes (+3%). Tight market conditions continue to drive strong demand and favorable pricing across the product portfolio. Adjusted EBITDA of $129.2 million increased $34.6 million as higher net sales were partially offset by higher costs for raw materials and freight.

Bromine Outlook

Adjusted EBITDA for the full year 2022 is expected to grow approximately 15-20% from 2021 based on higher volumes and pricing as a result of strength in demand for fire safety solutions in diverse end markets. Successful execution of growth projects in 2021 is expected to contribute to higher volumes in full-year 2022. Bromine's ongoing cost savings initiatives and favorable pricing are expected to offset higher freight and raw material costs.  

Catalysts Results

In millions

Q1 2022


Q1 2021


$ Change


% Change

Net Sales

$           217.9


$           220.2


$              (2.4)


(1.1)%

Adjusted EBITDA

$             16.9


$             25.4


$              (8.5)


(33.5)%

Catalysts net sales of $217.9 million decreased by $2.4 million (-1%) compared to the previous year due to lower volumes (-2%), partially offset by slightly higher pricing net of FX (+1%). Adjusted EBITDA of $16.9 million declined $8.5 million as higher sales were offset by cost pressures from increasing natural gas prices and raw materials.

Catalysts Outlook 

Albemarle expects full-year 2022 adjusted EBITDA to be flat to down 65% year over year, down from the previous outlook due to continued volatility of natural gas pricing in Europe related to the war in Ukraine, partially offset by higher pricing.

The strategic review of the Catalysts business is ongoing. The company expects to provide an update in the second quarter.

All Other

In millions

Q1 2022


Q1 2021


$ Change


% Change

Net Sales

$                —


$             49.6


$            (49.6)


(100.0)%

Adjusted EBITDA

$                —


$             21.5


$            (21.5)


(100.0)%

Other operations represent the FCS business which was sold on June 1, 2021.

Balance Sheet and Liquidity

As of March 31, 2022, Albemarle had estimated liquidity of approximately $1.9 billion, including $463.3 million of cash and equivalents, $777.6 million remaining under its $1 billion revolver, $500 million remaining under its amended delayed draw term loan, and $176.9 million on other available credit lines. Total debt was $2.5 billion, representing net debt to adjusted EBITDA of approximately 1.9 times.

Cash Flow and Capital Deployment

Cash from operations for the three months ended March 31, 2022, of $206.2 million increased $48.2 million versus the prior year driven by higher adjusted EBITDA partially offset by working capital changes. Capital expenditures of $231.7 million increased by $52.0 million versus the prior year as the company nears completion of its Wave 2 Lithium expansion projects and progresses the next wave of projects.

Albemarle's primary capital allocation priorities are to invest in organic and inorganic opportunities to drive profitable growth, maintain its financial flexibility and Investment Grade credit rating, and fund its dividend.

The company expects to publish its 2021 sustainability report on June 2, 2022, and will hold a conference call on June 28, 2022, to discuss highlights from the report, including progress on current sustainability-related targets, new targets, and our initial assessment of scope 3 greenhouse gas emissions.

Earnings Call

Date:

Thursday, May 5, 2022

Time:

9:00 AM Eastern time

Dial-in (U.S.):

844-200-6205

Dial-in (International):

929-526-1599

Passcode:

277103

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) is a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts. Albemarle thinks 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. Albemarle actively pursues a sustainable approach to managing its diverse global footprint of world-class resources. In conjunction with Albemarle's highly experienced and talented global teams, its deep-seated values, and its collaborative customer relationships, Albemarle creates value-added and performance-based solutions that enable a safer and more sustainable future.

Albemarle regularly posts 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 the 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 the timing of active and proposed projects, production capacity, committed volumes, pricing, financial flexibility, expected growth, anticipated return on opportunities, earnings and demand for its products, productivity improvements, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, capital projects, future acquisition and divestiture transactions including statements with respect to timing, expected benefits from proposed transactions, market and economic trends, statements with respect to 2022 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 Albemarle's 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 its major customers and industries and markets served by it; the timing of orders received from customers; the gain or loss of significant customers; market correction in lithium market pricing; changes with respect to contract renegotiations; potential production volume shortfalls; competition from other manufacturers; changes in the demand for its products or the end-user markets in which its products are sold; limitations or prohibitions on the manufacture and sale of its products; availability of raw materials; increases in the cost of raw materials and energy, and its ability to pass through such increases to its customers; technological change and development, changes in its markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting its operations or its products; the occurrence of regulatory actions, proceedings, claims or litigation (including with respect to the U.S. Foreign Corrupt Practices Act and foreign anti-corruption laws); the occurrence of cyber-security breaches, terrorist attacks, industrial accidents or natural disasters, the effect of climate change, including any regulatory changes to which it might be subject; hazards associated with chemicals manufacturing; the inability to maintain current levels of insurance, including 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 its global manufacturing cost reduction initiatives as well as its ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of its earnings and changes in tax laws and rates or interpretation; changes in monetary policies, inflation or interest rates that may impact its ability to raise capital or increase its cost of funds, impact the performance of its pension fund investments and increase its 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 it may make in the future; future acquisition and divestiture transactions, including the ability to successfully execute, operate and integrate acquisitions and divestitures and incurring additional indebtedness; continuing uncertainties as to the duration and impact of the coronavirus (COVID-19) pandemic; performance of Albemarle's partners in joint ventures and other projects; changes in credit ratings; and the other factors detailed from time to time in the reports Albemarle files with the SEC, including those described under "Risk Factors" in Albemarle's most recent Annual Report on Form 10-K any subsequently filed Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. Albemarle assumes 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


March 31,


2022


2021

Net sales

$ 1,127,728


$   829,291

Cost of goods sold

678,698


565,604

     Gross profit

449,030


263,687

Selling, general and administrative expenses

112,568


93,187

Research and development expenses

16,083


14,636

Loss on sale of interest in properties

8,400


     Operating profit

311,979


155,864

Interest and financing expenses

(27,834)


(43,882)

Other expense, net

15,496


11,312

Income before income taxes and equity in net income of unconsolidated investments

299,641


123,294

Income tax expense

80,530


22,107

Income before equity in net income of unconsolidated investments

219,111


101,187

Equity in net income of unconsolidated investments (net of tax)

62,436


16,511

Net income

281,547


117,698

Net income attributable to noncontrolling interests

(28,164)


(22,021)

Net income attributable to Albemarle Corporation

$   253,383


$     95,677

Basic earnings per share

$         2.16


$         0.85

Diluted earnings per share

$         2.15


$         0.84





Weighted-average common shares outstanding – basic

117,066


112,592

Weighted-average common shares outstanding – diluted

117,653


113,330

 

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)



March 31,


December 31,


2022


2021

ASSETS




Current assets:




     Cash and cash equivalents

$           463,325


$           439,272

     Trade accounts receivable

658,733


556,922

     Other accounts receivable

71,225


66,184

     Inventories

1,013,793


812,920

     Other current assets

129,407


132,683

          Total current assets

2,336,483


2,007,981

Property, plant and equipment

8,238,317


8,074,746

Less accumulated depreciation and amortization

2,209,664


2,165,130

          Net property, plant and equipment

6,028,653


5,909,616

Investments

937,619


897,708

Other assets

240,279


252,239

Goodwill

1,575,617


1,597,627

Other intangibles, net of amortization

297,407


308,947

          Total assets

$      11,416,058


$      10,974,118

LIABILITIES AND EQUITY




Current liabilities:




     Accounts payable

$           845,710


$           647,986

     Accrued expenses

667,610


763,293

     Current portion of long-term debt

503,795


389,920

     Dividends payable

46,091


45,469

     Income taxes payable

40,132


27,667

          Total current liabilities

2,103,338


1,874,335

Long-term debt

1,985,696


2,004,319

Postretirement benefits

43,397


43,693

Pension benefits

217,820


229,187

Other noncurrent liabilities

649,878


663,698

Deferred income taxes

380,877


353,279

Commitments and contingencies




Equity:




Albemarle Corporation shareholders' equity:




     Common stock

1,171


1,170

     Additional paid-in capital

2,915,387


2,920,007

     Accumulated other comprehensive loss

(393,619)


(392,450)

     Retained earnings

3,303,661


3,096,539

          Total Albemarle Corporation shareholders' equity

5,826,600


5,625,266

Noncontrolling interests

208,452


180,341

          Total equity

6,035,052


5,805,607

Total liabilities and equity

$      11,416,058


$      10,974,118

 

Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)



Three Months Ended

March 31,


2022


2021

Cash and cash equivalents at beginning of year

$     439,272


$      746,724

Cash flows from operating activities:




Net income

281,547


117,698

Adjustments to reconcile net income to cash flows from operating activities:




     Depreciation and amortization

66,574


62,260

     Loss on sale of interest in properties

8,400


     Stock-based compensation and other

4,245


2,560

     Equity in net income of unconsolidated investments (net of tax)

(62,436)


(16,511)

     Dividends received from unconsolidated investments and nonmarketable
     securities

39,168


4,950

     Pension and postretirement benefit

(4,250)


(4,226)

     Pension and postretirement contributions

(3,890)


(15,329)

     Unrealized gain on investments in marketable securities

1,469


(1,762)

     Loss on early extinguishment of debt


27,798

     Deferred income taxes

27,747


(19,384)

     Working capital changes

(219,397)


(49,185)

     Non-cash transfer of 40% value of construction in progress of Kemerton plant
     to MRL

65,100


43,223

     Other, net

1,899


5,857

          Net cash provided by operating activities

206,176


157,949

Cash flows from investing activities:




     Capital expenditures

(231,698)


(179,683)

     Sales of marketable securities, net

3,751


5,245

     Investments in equity and other corporate investments

(146)


(286)

          Net cash used in investing activities

(228,093)


(174,724)

Cash flows from financing activities:




     Proceeds from issuance of common stock


1,453,888

     Repayments of long-term debt and credit agreements


(1,174,980)

     Proceeds from borrowings of credit agreements

280,000


     Other debt repayments, net

(166,615)


(325,159)

     Fees related to early extinguishment of debt


(23,719)

     Dividends paid to shareholders

(45,637)


(41,130)

     Dividends paid to noncontrolling interests


(26,219)

     Proceeds from exercise of stock options

419


1,183

     Withholding taxes paid on stock-based compensation award distributions

(10,422)


(6,860)

     Other

(126)


(253)

          Net cash provided by (used in) financing activities

57,619


(143,249)

Net effect of foreign exchange on cash and cash equivalents

(11,649)


(16,841)

Increase (decrease) in cash and cash equivalents

24,053


(176,865)

Cash and cash equivalents at end of period

$     463,325


$      569,859

 

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited) 



Three Months Ended


March 31,


2022


2021

Net sales:




     Lithium

$   550,272


$   278,976

     Bromine

359,579


280,447

     Catalysts

217,877


220,243

     All Other


49,625

          Total net sales

$ 1,127,728


$   829,291





Adjusted EBITDA:




     Lithium

$   308,615


$   106,436

     Bromine

129,234


94,640

     Catalysts

16,910


25,427

     All Other


21,479

     Corporate

(22,829)


(17,928)

          Total adjusted EBITDA

$   431,930


$   230,054

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") or other comparable measures calculated and reported in accordance with GAAP. These measures are presented here to provide additional useful measurements to review the company's 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 Albemarle uses to evaluate its 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 net income attributable to Albemarle Corporation is defined as net income before the non-recurring, other unusual and non-operating pension and other post-employment benefit (OPEB) items as listed below. The non-recurring and unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, certain litigation and arbitration costs and charges, and other significant non-recurring items. EBITDA is defined as net income attributable to Albemarle Corporation before interest and financing expenses, income tax expense, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus or minus the non-recurring, other unusual and non-operating pension and OPEB items as listed below.


Three Months Ended


March 31,

In thousands, except percentages and per share amounts

2022


2021

Net income attributable to Albemarle Corporation

$      253,383


$        95,677

Add back:




     Non-operating pension and OPEB items (net of tax)

(4,139)


(4,267)

     Non-recurring and other unusual items (net of tax)

30,903


32,761

Adjusted net income attributable to Albemarle Corporation

$      280,147


$      124,171





Adjusted diluted earnings per share

$            2.38


$            1.10





Weighted-average common shares outstanding – diluted

117,653


113,330





Net income attributable to Albemarle Corporation

$      253,383


$        95,677

Add back:




     Interest and financing expenses

27,834


43,882

     Income tax expense

80,530


22,107

     Depreciation and amortization

66,574


62,260

EBITDA

428,321


223,926

     Non-operating pension and OPEB items

(5,280)


(5,465)

     Non-recurring and other unusual items (excluding items associated with interest expense)

8,889


11,593

Adjusted EBITDA

$      431,930


$      230,054





Net sales

$   1,127,728


$      829,291

EBITDA margin

38.0%


27.0%

Adjusted EBITDA margin

38.3%


27.7%

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


Catalysts


Reportable
Segments
Total


All
Other


Corporate


Consolidated
Total


% of
Net
Sales

Three months ended March 31, 2022
















Net income (loss) attributable to Albemarle
Corporation

$ 261,689


$ 116,561


$     3,989


$ 382,239


$         —


$ (128,856)


$ 253,383


22.5%

     Depreciation and amortization

38,526


12,673


12,921


64,120



2,454


66,574


5.9%

     Non-recurring and other unusual items

8,400




8,400



489


8,889


0.8%

     Interest and financing expenses






27,834


27,834


2.5%

     Income tax expense






80,530


80,530


7.1%

     Non-operating pension and OPEB items






(5,280)


(5,280)


(0.5)%

Adjusted EBITDA

$ 308,615


$ 129,234


$   16,910


$ 454,759


$         —


$  (22,829)


$ 431,930


38.3%

















Three months ended March 31, 2021
















Net income (loss) attributable to Albemarle
Corporation

$  74,630


$  82,113


$   12,916


$ 169,659


$  20,016


$  (93,998)


$  95,677


11.5%

     Depreciation and amortization

31,806


12,527


12,511


56,844


1,463


3,953


62,260


7.5%

     Non-recurring and other unusual items
     (excluding items associated with interest
     expense)






11,593


11,593


1.4%

     Interest and financing expenses






43,882


43,882


5.3%

     Income tax expense






22,107


22,107


2.7%

     Non-operating pension and OPEB items






(5,465)


(5,465)


(0.7)%

Adjusted EBITDA

$ 106,436


$  94,640


$   25,427


$ 226,503


$  21,479


$  (17,928)


$ 230,054


27.7%

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 Albemarle's operating segments and are included in the Corporate category. In addition, the company believes that these components of pension cost are mainly driven by market performance, and the company manages these separately from the operational performance of the company's businesses. In accordance with GAAP, these non-operating pension and OPEB items are included in Other income (expenses), net. Non-operating pension and OPEB items were as follows (in thousands):


Three Months Ended


March 31,


2022


2021

Interest cost

$       5,932


$       5,428

Expected return on assets

(11,212)


(10,893)

     Total

$      (5,280)


$      (5,465)

In addition to the non-operating pension and OPEB items disclosed above, the company has identified certain other items and excluded them from Albemarle's 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


March 31,


2022


2021

Acquisition and integration related costs(1)

$         0.01


$         0.02

Loss on sale of interest in properties(2)

0.07


Loss on early extinguishment of debt(3)


0.20

Other(4)

(0.01)


0.06

Tax related items(5)

0.19


0.01

     Total non-recurring and other unusual items

$         0.26


$         0.29

 

(1)

Costs related to the acquisition, integration and divestitures for various significant projects, recorded in Selling, general and administrative expenses for the three months ended March 31, 2022 and 2021 were $1.7 million and $2.2 million ($1.3 million and $1.7 million after income taxes, or $0.01 and $0.02 per share), respectively.



(2)

Included in Loss on sale of interest in properties for the three months ended March 31, 2022 is an expense of $8.4 million ($0.07 per share after no income tax impact) related to post-measurement period Wodgina acquisition purchase price adjustment for a revised estimate of the obligation to construct the lithium hydroxide conversion assets in Kemerton due to anticipated cost overruns from supply chain, labor and COVID-19 pandemic related issues.



(3)

Included in Interest and financing expenses for the three months ended March 31, 2021 is a loss on early extinguishment of debt of $27.8 million ($23.0 million after income taxes, or $0.20 per share), representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of $1.5 billion in debt using the proceeds from the issuance of common stock.



(4)

Other adjustments for the three months ended March 31, 2022 included amounts recorded in:


• Selling, general and administrative expenses - $4.3 million of gains from the sale of legacy properties not part of our operations, partially offset by $2.8 million of charges for environmental reserves at sites not part of our operations and $0.7 million of facility closure expenses related to offices in Germany.


• Other income, net - $0.6 million gain related to a settlement received from a legal matter in a prior period.
After income taxes, these charges totaled $(0.9) million, or $0.01 per share.




Other adjustments for the three months ended March 31, 2021 included amounts recorded in:


• Selling, general and administrative expenses - $5.5 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements.


• Other income, net - $3.9 million of expenses primarily related to asset retirement obligation charges to update of an estimate at a site formerly owned by Albemarle.
After income taxes, these net gains totaled $7.1 million, or $0.06 per share.



(5)

Included in Income tax expense for the three months ended March 31, 2022 is an expense of $20.4 million ($0.18 per share) related to global intangible low-taxed income associated with the payment due in 2022 to Huntsman Corporation for the settlement of a legacy legal matter. In addition, Income tax expense included discrete net tax expenses of $1.6 million, or $0.01 per share. The discrete net expense was primarily related to foreign return to provisions, partially offset by a benefit for excess tax benefits realized from stock-based compensation arrangements.




Included in Income tax expense for the three months ended March 31, 2021 are discrete net tax expenses of $1.0 million, or $0.01 per share. The net expense was primarily related to an out-of-period adjustment regarding an overstated deferred tax liability for the three-month period ended December 31, 2017, offset by a benefit due to the release of a foreign valuation allowance and 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 March 31, 2022






As reported

$                    299,641


$                      80,530


26.9%

Non-recurring, other unusual and non-operating pension and OPEB
items

3,609


(23,155)



As adjusted

$                    303,250


$                      57,375


18.9%







Three months ended March 31, 2021






As reported

$                    123,294


$                      22,107


17.9%

Non-recurring, other unusual and non-operating pension and OPEB
items

33,926


5,432



As adjusted

$                    157,220


$                      27,539


17.5%

 

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SOURCE Albemarle Corporation

Meredith Bandy, 980.999.5168