alb-20210217
false000091591300009159132021-02-172021-02-17

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
_________________________________
FORM 8-K
_________________________________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) February 17, 2021
 
_________________________________
ALBEMARLE CORPORATION
(Exact name of Registrant as specified in charter)
_________________________________

Virginia001-1265854-1692118
(State or other jurisdiction
of incorporation)
(Commission
file number)
(IRS employer
identification no.)
4250 Congress Street, Suite 900
Charlotte, North Carolina 28209
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
(980) 299-5700
Not applicable
(Former name or former address, if changed since last report)
_________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
COMMON STOCK, $.01 Par ValueALBNew York Stock Exchange




Section 2 - Financial Information

Item 2.02.    Results of Operations and Financial Condition.
On February 17, 2021, Albemarle Corporation (the “Company”) issued a press release reporting its results for the fourth quarter ended December 31, 2020. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on February 18, 2021, the Company will hold a teleconference for analysts and media to discuss results for the fourth quarter and fiscal year ended December 31, 2020. The teleconference will be webcast on the Company’s website at www.albemarle.com.
The press release includes presentations of adjusted net income attributable to Albemarle Corporation, adjusted diluted earnings per share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin. These are financial measures that are not required by, nor presented in accordance with, accounting principles generally accepted in the United States (“GAAP”), but are included to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance.
Our presentations of adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA and adjusted effective income tax rates should not be considered as alternatives to Net income attributable to Albemarle Corporation (“earnings”), diluted earnings per share and effective income tax rates as determined in accordance with GAAP. Further, EBITDA margin and adjusted EBITDA margin should not be considered as alternatives to earnings as a percentage of our consolidated net sales as would be determined in accordance with GAAP. The Company has included in the press release certain reconciliation information for these measures to their most directly comparable financial measures calculated and reported in accordance with GAAP.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Section 9 - Financial Statements and Exhibits

Item 9.01.    Financial Statements and Exhibits.

    (d) Exhibits.

Exhibit
NumberExhibit




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 17, 2021

ALBEMARLE CORPORATION

By:/s/ Karen G. Narwold
Karen G. Narwold
Executive Vice President, Chief Administrative Officer and General Counsel



Document

Exhibit 99.1
Contact:
Meredith Bandy980.999.5168

https://cdn.kscope.io/773fcc69c5b1fd31540aabd183a65c23-a4q19earningsreleasimage1a.jpg



Albemarle Reports Fourth Quarter and Full Year 2020 Results


CHARLOTTE, NC - Feb. 17, 2021 – Albemarle Corporation (NYSE: ALB) today announced its results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 and Recent Highlights
(Unless otherwise stated, all percent changes represent year-over-year comparisons)
Net income of $84.6 million, or $0.79 per diluted share; Adjusted diluted EPS of $1.17
Net sales of $879 million, which was at the high-end of previous outlook, a year-over-year decrease of 11%
Adjusted EBITDA of $221 million, which exceeded the high-end of previous outlook, a year-over-year decrease of 25%
Our plants continue to operate without material impact from the COVID-19 pandemic
Approximately $80 million of sustainable cost savings achieved in 2020
Maintained our quarterly dividend of $0.385 per share, an increase of approximately 5% over 2019
Completed $1.5 billion underwritten public equity offering to accelerate profitable growth

“Albemarle reported another solid quarter with Q4 2020 adjusted EBITDA exceeding outlook. This performance is due to the hard work and diligence of our operating teams who ran our businesses safely and efficiently throughout this challenging year,” said Albemarle CEO Kent Masters. “As we continue to rebound from last year’s pandemic-related lows, we are accelerating high-return growth in our Lithium and Bromine businesses and maintaining our focus on operational discipline to drive cost and efficiency improvements.”

Outlook

Albemarle anticipates that its full year 2021 operating performance will improve modestly relative to full year 2020 assuming continued recovery following reduced global economic activity due to the global pandemic.


FY 2021 Outlook
Net sales$3.2 - $3.3 billion
Adjusted EBITDA$810 - $860 million
Adjusted EBITDA Margin25% - 26%
Adj. Diluted EPS$3.25 - $3.65
Net Cash from Operations$475 - $575 million
Capital Expenditures$850 - $950 million

COVID-19 Response

Albemarle’s cross-functional Global Response Team continues to meet biweekly to assess the situation and take necessary actions to address employee health and safety and operational challenges. Our first priority is always
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the health and well-being of our employees, customers, and communities. Beyond that, our focus has shifted from managing an immediate crisis to building in the flexibility needed to adjust for regional differences and changing conditions. Protocols including restricted travel, shift adjustments, increased hygiene, and social distancing for the essential workers at our plants remain in place at all locations.

Fourth Quarter Results
In millions, except per share amountsQ4 2020Q4 2019$ Change% Change
Net sales$879.1 $992.6 $(113.5)(11.4)%
Net income attributable to Albemarle Corporation$84.6 $90.4 $(5.8)(6.4)%
Adjusted EBITDA(a)
$221.1 $294.7 $(73.6)(25.0)%
Diluted earnings per share$0.79 $0.85 $(0.06)(7.1)%
   Non-operating pension and OPEB items(a)
0.35 0.19 
   Non-recurring and other unusual items(a)
0.03 0.69 
Adjusted diluted earnings per share(b)
$1.17 $1.73 $(0.56)(32.4)%

(a)    See Non-GAAP Reconciliations for further details.
(b)    Totals may not add due to rounding.

Net sales of $879.1 million decreased by $113.5 million compared to the prior year quarter, driven by lower results in the Catalysts and Lithium business segments partially offset by improvement in Bromine and other business segments as discussed below.

Adjusted EBITDA of $221.1 million decreased by $73.6 million from the prior year quarter due to lower net sales, which was offset by productivity and cost improvements. Similarly, net income attributable to Albemarle of $84.6 million decreased by $5.8 million from the prior year. Corporate costs including SG&A were down compared to the prior year period as a result of sustainable cost savings initiatives and short-term austerity measures.

We have increased our sustainable cost savings and achieved approximately $80 million of sustainable savings in 2020. We expect these savings to reach a run-rate of more than $120 million by year-end 2021. We also took short-term cash management measures and delayed capital expenditures. Short-term savings averaged approximately $25 to $40 million per quarter in 2020. Some of the expenses related to these short-term savings are expected to come back later in 2021, for example assuming increased travel expenses later in the year. Full-year 2020 capital spending was $850 million, in-line with the low-end of previous outlook.

The effective income tax rate for Q4 2020 was (20.9)% compared to (6.5)% in the same period in 2019. The difference is largely due to a change in the geographic mix of earnings. Q4 2020 includes discrete tax benefits for uncertain tax positions for statute of limitation expirations, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments. Q4 2019 includes a $19 million tax benefit for uncertain tax positions primarily related to seeking treaty relief from the competent authority to prevent double taxation. On an adjusted basis, the effective income tax rates were 12.8% and 18.4% for the fourth quarter of 2020 and 2019, respectively.

Cash Flow and Capital Deployment

Cash from operations for the year ended December 31, 2020, of $798.9 million, increased $79.5 million versus the prior year as reduced working capital outflows, deferred tax payments as allowed by various jurisdictions during the pandemic and cost savings more than offset lower revenues. Capital expenditures of $850.5 million were in-line with the prior year as progress continued on our Lithium expansion projects.

Our primary capital allocation priorities are to grow profitably, fund our dividend, and maintain financial flexibility and our investment grade credit rating.

In February 2021, we raised $1.5 billion in an equity offering to fund growth capital projects, focused on accelerating high return growth projects in Lithium and Bromine. In the short-term, the use of proceeds include funding growth capital expenditures, debt repayment and other general corporate purposes.

Our share repurchase authorization remains in place; however, there are no near-term plans to execute share buybacks. Divestiture activity is proceeding despite on-going travel restrictions.

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Balance Sheet and Liquidity

As of December 31, 2020, Albemarle had estimated liquidity of over $2.1 billion, including $747 million of cash and equivalents, $675 million remaining under our $1 billion revolver, $500 million remaining under our delayed draw term loan and $196 million on other available credit lines. Total debt was $3.6 billion, representing net debt to adjusted EBITDA of approximately 3.4 times.

Business Segment Results

Lithium
In millionsQ4 2020Q4 2019$ Change% Change
Net Sales$358.6 $411.1 $(52.5)(12.8)%
Adjusted EBITDA$122.1 $140.1 $(17.9)(12.8)%

Lithium net sales of $358.6 million declined $52.5 million primarily due to lower contract and market pricing. Lower contract pricing reflects 2020 battery-grade price adjustments that were agreed to in late 2019. Adjusted EBITDA of $122.1 million declined by $17.9 million primarily due to reduced net sales. Stronger volumes, as customers held to contractual commitments, partially offset price declines.

Current Trends: We anticipate FY 2021 volumes to be higher due to North American restarts and efficiency improvements. We expect mechanical completion of our La Negra and Kemerton expansion projects in 2021 and expect to see increased sales volumes from these projects beginning in 2022. We expect FY 2021 pricing to be down slightly, primarily due to anticipated lower average realized pricing for carbonate and technical grade products. Longer-term, we expect lithium demand to grow in line with greater EV adoption. We are accelerating our lithium growth projects to capitalize on this trend and generate strong investment returns.

Bromine Specialties
In millionsQ4 2020Q4 2019$ Change% Change
Net Sales$263.4 $243.5 $19.9 8.2 %
Adjusted EBITDA$87.9 $79.7 $8.1 10.2 %

Bromine net sales of $263.4 million increased $19.9 million primarily due to a rebound in demand following the recent economic downturn related to the COVID-19 pandemic. Adjusted EBITDA of $87.9 million increased $8.1 million due to higher net sales volume and pricing, partially offset by higher input costs related to the higher sales volume.

Current Trends: We expect FY 2021 results to improve modestly year-over-year assuming continued economic recovery following the pandemic. Further recovery and positive long-term trends in electronics and automotive end markets are expected to continue to drive demand across our product portfolio.

Catalysts
In millionsQ4 2020Q4 2019$ Change% Change
Net Sales$195.7 $282.5 $(86.8)(30.7)%
Adjusted EBITDA$22.1 $76.7 $(54.7)(71.3)%

Catalysts net sales of $195.7 million declined $86.8 million due primarily to lower volumes. Fluid Catalytic Cracking (FCC) volume improved sequentially, but remains below prior year due to lower transportation fuel consumption as a result of travel restrictions. Lower Hydroprocessing Catalysts (HPC) volume reflects normal lumpiness of shipments and reduced fuel demand. Adjusted EBITDA of $22.1 million declined $54.7 million as a result of lower net sales offset by cost savings initiatives and efficiency improvements.

Current Trends: We expect total Catalysts to be flat year-over-year, with PCS improving from 2020 levels. We expect lower year-over-year refining catalysts volumes resulting from a recent change in customer order patterns in North America, with Q1 expected to be the strongest quarter of the year. Strategically, we continue to position the Catalysts business to take advantage of growth in emerging markets, renewable fuels, and crude-to-chemicals.
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All Other
In millionsQ4 2020Q4 2019$ Change% Change
Net Sales$61.4 $55.4 $6.0 10.8 %
Adjusted EBITDA$18.4 $20.7 $(2.3)(11.0)%

Other operations represent our Fine Chemistry Services (FCS) business. FCS net sales of $61.4 million increased $6.0 million and adjusted EBITDA of $18.4 million decreased $2.3 million. The FCS business tends to be contract driven. Recent contracts include life sciences products, which are typically anti-cyclical.

Earnings Call

Date:Thursday, Feb. 18, 2020
Time:9:00 AM Eastern time
Dial-in (U.S.):844-347-1034
Dial-in (International):209-905-5910
Passcode:6989169

The Company’s earnings presentation and supporting material is 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
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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.
5


Albemarle Corporation and Subsidiaries
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)

Three Months EndedYear Ended
December 31,December 31,
2020201920202019
Net sales$879,147 $992,564 $3,128,909 $3,589,427 
Cost of goods sold613,727 654,053 2,134,056 2,331,649 
Gross profit
265,420 338,511 994,853 1,257,778 
Selling, general and administrative expenses124,909 185,163 429,827 533,368 
Research and development expenses15,375 14,263 59,214 58,287 
Operating profit
125,136 139,085 505,812 666,123 
Interest and financing expenses(19,152)(22,400)(73,116)(57,695)
Other expenses, net(57,557)(38,388)(59,177)(45,478)
Income before income taxes and equity in net income of unconsolidated investments48,427 78,297 373,519 562,950 
Income tax (benefit) expense(10,101)(5,105)54,425 88,161 
Income before equity in net income of unconsolidated investments58,528 83,402 319,094 474,789 
Equity in net income of unconsolidated investments (net of tax)43,649 22,841 127,521 129,568 
Net income102,177 106,243 446,615 604,357 
Net income attributable to noncontrolling interests(17,542)(15,852)(70,851)(71,129)
Net income attributable to Albemarle Corporation$84,635 $90,391 $375,764 $533,228 
Basic earnings per share:$0.79 $0.85 $3.53 $5.03 
Diluted earnings per share:$0.79 $0.85 $3.52 $5.02 
Weighted-average common shares outstanding – basic106,665 106,037 106,402 105,949 
Weighted-average common shares outstanding – diluted107,312 106,314 106,808 106,321 

6


Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)

December 31,December 31,
20202019
ASSETS
Current assets:
  Cash and cash equivalents$746,724 $613,110 
  Trade accounts receivable530,838 612,651 
  Other accounts receivable61,958 67,551 
  Inventories750,237 768,984 
  Other current assets116,427 162,813 
Total current assets
2,206,184 2,225,109 
Property, plant and equipment7,427,641 6,817,843 
Less accumulated depreciation and amortization2,073,016 1,908,370 
Net property, plant and equipment
5,354,625 4,909,473 
Investments656,244 579,813 
Other assets219,268 213,061 
Goodwill1,665,520 1,578,785 
Other intangibles, net of amortization349,105 354,622 
Total assets
$10,450,946 $9,860,863 
LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable$483,221 $574,138 
  Accrued expenses440,763 576,297 
  Current portion of long-term debt804,677 187,336 
  Dividends payable40,937 38,764 
  Income taxes payable32,251 32,461 
Total current liabilities
1,801,849 1,408,996 
Long-term debt2,767,381 2,862,921 
Postretirement benefits48,075 50,899 
Pension benefits340,818 292,073 
Other noncurrent liabilities629,377 754,536 
Deferred income taxes394,852 397,858 
Commitments and contingencies
Equity:
Albemarle Corporation shareholders’ equity:
  Common stock1,069 1,061 
  Additional paid-in-capital1,438,038 1,383,446 
  Accumulated other comprehensive loss(326,132)(395,735)
  Retained earnings3,155,252 2,943,478 
Total Albemarle Corporation shareholders’ equity
4,268,227 3,932,250 
Noncontrolling interests200,367 161,330 
Total equity
4,468,594 4,093,580 
Total liabilities and equity$10,450,946 $9,860,863 

7


Albemarle Corporation and Subsidiaries
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)

Year Ended
December 31,
20202019
Cash and cash equivalents at beginning of year
$613,110 $555,320 
Cash flows from operating activities:
Net income
446,615 604,357 
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization
231,984 213,484 
Gain on sale of joint venture(7,168)— 
Gain on sale of property
— (14,411)
Stock-based compensation and other
22,837 19,680 
Equity in net income of unconsolidated investments (net of tax)
(127,521)(129,568)
Dividends received from unconsolidated investments and nonmarketable securities
88,161 71,746 
Pension and postretirement expense
45,658 31,515 
Pension and postretirement contributions
(16,434)(16,478)
Unrealized gain on investments in marketable securities
(4,635)(2,809)
Loss on early extinguishment of debt
— 4,829 
Deferred income taxes
(1,976)14,394 
Changes in current assets and liabilities, net of effects of acquisitions and divestitures:
  Decrease (increase) in accounts receivable100,118 (18,220)
  Decrease (increase) in inventories51,978 (46,304)
     Decrease (increase) in other current assets7,902 (32,941)
  (Decrease) in accounts payable(31,519)(12,234)
     (Decrease) in accrued expenses and income taxes payable
(215,011)(4,640)
Other, net
207,925 36,974 
Net cash provided by operating activities
798,914 719,374 
Cash flows from investing activities:
Acquisitions, net of cash acquired
(22,572)(820,000)
Capital expenditures
(850,477)(851,796)
Proceeds from sale of joint venture11,000 — 
Proceeds from sale of property and equipment
— 10,356 
Sales of marketable securities, net903 384 
Investments in equity and other corporate investments
(2,427)(2,569)
Net cash used in investing activities
(863,573)(1,663,625)
Cash flows from financing activities:
Proceeds from borrowings of other long-term debt
452,163 1,597,807 
Repayments of long-term debt
(250,000)(175,215)
Other borrowings (repayments), net137,635 (126,364)
Fees related to early extinguishment of debt
— (4,419)
Dividends paid to shareholders
(161,818)(152,204)
Dividends paid to noncontrolling interests
(32,061)(83,187)
Proceeds from exercise of stock options
40,437 4,814 
Withholding taxes paid on stock-based compensation award distributions
(5,143)(11,031)
Debt financing costs
(3,952)(7,514)
Net cash provided by (used in) financing activities
177,261 1,042,687 
Net effect of foreign exchange on cash and cash equivalents
21,012 (40,646)
Increase in cash and cash equivalents133,614 57,790 
Cash and cash equivalents at end of period
$746,724 $613,110 

8


Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)

Three Months EndedYear Ended
December 31,December 31,
2020201920202019
Net sales:
Lithium$358,592 $411,140 $1,144,778 $1,358,170 
Bromine Specialties263,398 243,464 964,962 1,004,216 
Catalysts195,735 282,522 797,914 1,061,817 
All Other61,422 55,438 221,255 165,224 
Total net sales$879,147 $992,564 $3,128,909 $3,589,427 
Adjusted EBITDA:
Lithium$122,131 $140,080 $393,093 $524,934 
Bromine Specialties87,854 79,714 323,605 328,457 
Catalysts22,053 76,734 130,134 270,624 
All Other18,414 20,697 84,821 49,628 
Corporate(29,327)(22,562)(112,915)(136,862)
Total adjusted EBITDA$221,125 $294,663 $818,738 $1,036,781 

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.
9


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 EndedYear Ended

December 31,December 31,
In thousands, except percentages and per share amounts
2020201920202019
Net income attributable to Albemarle Corporation
$84,635 

$90,391 

$375,764 

$533,228 
Add back:
Non-operating pension and OPEB items (net of tax)
37,572 20,453 30,668 18,648 
Non-recurring and other unusual items (net of tax)
3,409 73,430 33,087 90,669 
Adjusted net income attributable to Albemarle Corporation
$125,616 

$184,274 

$439,519 

$642,545 








Adjusted diluted earnings per share
$1.17 

$1.73 

$4.12 

$6.04 








Weighted-average common shares outstanding – diluted
107,312 106,314 106,808 106,321 








Net income attributable to Albemarle Corporation
$84,635 

$90,391 

$375,764 

$533,228 
Add back:







Interest and financing expenses
19,152 22,400 73,116 57,695 
Income tax (benefit) expense
(10,101)(5,105)54,425 88,161 
Depreciation and amortization
61,770 56,766 231,984 213,484 
EBITDA
155,456 

164,452 

735,289 

892,568 
Non-operating pension and OPEB items
49,372 28,780 40,668 26,970 
Non-recurring and other unusual items (excluding items associated with interest expense)
16,297 101,431 42,781 117,243 
Adjusted EBITDA
$221,125 

$294,663 

$818,738 

$1,036,781 








Net sales
$879,147 $992,564 $3,128,909$3,589,427 
EBITDA margin
17.7 %

16.6 %

23.5 %

24.9 %
Adjusted EBITDA margin
25.2 %

29.7 %

26.2 %

28.9 %

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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 reporting in accordance with GAAP (in thousands, except percentages).
LithiumBromine SpecialtiesCatalystsReportable Segments TotalAll OtherCorporateConsolidated Total% of Net Sales
Three months ended December 31, 2020:
Net income (loss) attributable to Albemarle Corporation$89,331 $75,590 $9,379 $174,300 $16,254 $(105,919)$84,635 9.6 %
Depreciation and amortization30,272 13,464 12,674 56,410 2,160 3,200 61,770 7.0 %
Non-recurring and other unusual items2,528 (1,200)— 1,328 — 14,969 16,297 1.9 %
Interest and financing expenses— — — — — 19,152 19,152 2.2 %
Income tax benefit— — — — — (10,101)(10,101)(1.1)%
Non-operating pension and OPEB items— — — — — 49,372 49,372 5.6 %
Adjusted EBITDA$122,131 $87,854 $22,053 $232,038 $18,414 $(29,327)$221,125 25.2 %
Three months ended December 31, 2019:
Net income (loss) attributable to Albemarle Corporation$29,158 $67,625 $63,358 $160,141 $18,559 $(88,309)$90,391 9.1 %
Depreciation and amortization27,755 12,330 12,582 52,667 2,138 1,961 56,766 5.7 %
Non-recurring and other unusual items (excluding items associated with interest expense)83,167 (241)794 83,720 — 17,711 101,431 10.2 %
Interest and financing expenses— — — — — 22,400 22,400 2.3 %
Income tax benefit— — — — — (5,105)(5,105)(0.5)%
Non-operating pension and OPEB items— — — — — 28,780 28,780 2.9 %
Adjusted EBITDA$140,080 $79,714 $76,734 $296,528 $20,697 $(22,562)$294,663 29.7 %
Year ended December 31, 2020:
Net income (loss) attributable to Albemarle Corporation$277,711 $274,495 $80,149 $632,355 $76,323 $(332,914)$375,764 12.0 %
Depreciation and amortization112,854 50,310 49,985 213,149 8,498 10,337 231,984 7.4 %
Non-recurring and other unusual items2,528 (1,200)— 1,328 — 41,453 42,781 1.4 %
Interest and financing expenses— — — — — 73,116 73,116 2.3 %
Income tax expense— — — — — 54,425 54,425 1.7 %
Non-operating pension and OPEB items— — — — — 40,668 40,668 1.3 %
Adjusted EBITDA$393,093 $323,605 $130,134 $846,832 $84,821 $(112,915)$818,738 26.2 %
Year ended December 31, 2019:
Net income (loss) attributable to Albemarle Corporation$341,767 $279,945 $219,686 $841,398 $41,188 $(349,358)$533,228 14.9 %
Depreciation and amortization99,424 47,611 50,144 197,179 8,440 7,865 213,484 5.9 %
Non-recurring and other unusual items (excluding items associated with interest expense)83,743 901 794 85,438 — 31,805 117,243 3.3 %
Interest and financing expenses— — — — — 57,695 57,695 1.6 %
Income tax expense— — — — — 88,161 88,161 2.5 %
Non-operating pension and OPEB items— — — — — 26,970 26,970 0.8 %
Adjusted EBITDA$524,934 $328,457 $270,624 $1,124,015 $49,628 $(136,862)$1,036,781 28.9 %

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):
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Three Months EndedYear Ended
December 31,December 31,
2020201920202019
MTM actuarial loss$52,269 $29,339 $52,269 $29,339 
Interest cost7,178 8,893 28,630 35,394 
Expected return on assets(10,075)(9,452)(40,231)(37,763)
Total$49,372 $28,780 $40,668 $26,970 

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 EndedYear Ended
December 31,December 31,
2020201920202019
Restructuring and other(1)
$0.08 $— $0.15 $0.05 
Acquisition and integration related costs(2)
0.02 0.05 0.13 0.15 
Gain on sale of property(3)
— (0.02)— (0.10)
Stamp duty(4)
— 0.61 — 0.61 
Windfield tax settlement(5)
— 0.16 — 0.16 
Loss on extinguishment of debt(6)
— 0.04 — 0.04 
Other(7)
0.06 0.13 0.07 0.20 
Discrete tax items(8)
(0.13)(0.28)(0.04)(0.26)
Total non-recurring and other unusual items
$0.03 $0.69 $0.31 $0.85 

(1)In 2020, we recorded severance expenses as part of business reorganization plans, impacting each of our businesses and Corporate, primarily in the U.S., Belgium, Germany and with our Jordanian joint venture partner. The balance of unpaid severance is recorded in Accrued expenses and is primarily expected to be paid through 2021. During the year ended December 31, 2019, severance expenses were recorded as part of a business reorganization plan primarily in Catalysts, Lithium and Corporate. Restructuring and other expenses are included in the consolidated statements of income as follows (in millions, except per share amounts):

Three Months EndedYear Ended
December 31,December 31,
2020201920202019
Restructuring and other:
Cost of goods sold$— $— $0.7 $— 
Selling, general and administrative expenses8.6 0.6 19.2 5.9 
Net income attributable to noncontrolling interests— — (0.3)— 
Total$8.6 $0.6 $19.6 $5.9 
Total restructuring and other, after income taxes$8.4 $0.4 $16.3 $5.4 
Total restructuring and other, per diluted share$0.08 $— $0.15 $0.05 
    
(2)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in Selling, general and administrative expenses for the three months and year ended December 31, 2020 of $2.9 million and $17.3 million ($2.3 million and $13.4 million after income taxes, or $0.02 and $0.13 per share), respectively, and for the three months and year ended December 31, 2019 of $6.3 million and $20.7 million ($5.1 million and $16.1 million after income taxes, or $0.05 and $0.15 per share), respectively.

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(3)Included in Selling, general and administrative expenses for the three months and year ended December 31, 2019 is a gain of $3.3 million ($2.4 million after income taxes, or $0.02 per share) related to the release of liabilities as part of the sale of a property. In addition, included in Other expenses, net, for the year ended December 31, 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)Included in Selling, general and administrative expenses for the three months and year ended December 31, 2019 is $64.8 million (or $0.61 per share as there was no income tax impact) resulting from stamp duties levied on assets purchased related to the Wodgina Project, with the unpaid balance recorded in Accrued expenses as of December 31, 2019.

(5)Included in Equity in net income of unconsolidated investments (net of tax) for the three months and year ended December 31, 2019 is $17.3 million (or $0.16 per share) representing our 49% share of a tax settlement between our Windfield joint venture and an Australian taxing authority. This adjustment is offset by a discrete tax benefit from a competent tax authority agreement. See below for a discussion of discrete tax items.

(6)Included in Interest and financing expenses for the three months and year ended December 31, 2019 is a loss on early extinguishment of debt of $4.8 million ($3.7 million after income taxes, or $0.04 per share) related to tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of the 4.50% senior notes due in 2020.

(7)Other adjustments for the three months ended December 31, 2020 included amounts recorded in:
Cost of goods sold - $1.3 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.
Selling, general and administrative expenses - $3.1 million of shortfall contributions for our multiemployer plan financial improvement plan.
Other expenses, net - $8.8 million of losses resulting from the adjustment of indemnifications related to previously disposed businesses and $1.2 million of expenses related to other costs outside of our regular operations, offset by a $7.2 million gain related to the sale of our ownership percentage in the Saudi Organometallic Chemicals Company LLC (“SOCC”) joint venture and $2.8 million of gains primarily relating to the sale of intangible assets in our Bromine business and property in Germany not used as part of our operations.
After income taxes, these charges totaled $6.4 million, or $0.06 per share.

Other adjustments for the year ended December 31, 2020 included amounts recorded in:
Cost of goods sold - $1.3 million of expense related to a legal matter as part of a prior acquisition in our Lithium business.
Selling, general and administrative expenses - $3.1 million of shortfall contributions for our multiemployer plan financial improvement plan and $3.8 million of a net expense primarily relating to the increase of environmental reserves at non-operating businesses we have previously divested.
Other expenses, net - $7.2 million gain related to the sale of our ownership percentage in the SOCC joint venture, $3.6 million of a net gain primarily relating to the sale of intangible assets in our Bromine business and property in Germany not used as part of our operations and a $2.5 million net gain resulting from the settlement of legal matters related to a business sold or a site in the process of being sold, partially offset by $9.6 million of losses resulting from the adjustment of indemnifications related to previously disposed businesses and $1.2 million of expenses related to other costs outside of our regular operations.
After income taxes, these charges totaled $7.5 million, or $0.07 per share.

Other adjustments for the three months ended December 31, 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 - $0.8 million of shortfall contributions for our multiemployer pension plan financial improvement plan, $0.8 million related to the settlement of terminated agreements, primarily in the Catalysts segment, and $0.8 million related to the settlement of an ongoing audit in the Lithium segment.
Other expenses, net - $8.5 million of a net loss resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses, $3.6 million of asset retirement
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obligation charges related to the update of an estimate at a site formerly owned by Albemarle, and $1.2 million of non-operating pension costs from our 50% interest in JBC.
After income taxes, these charges totaled $14.3 million, or $0.13 per share.

Other adjustments for the year ended December 31, 2019 included amounts recorded in:
Cost of goods sold - $0.7 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
Selling, general and administrative expenses - $1.8 million of shortfall contributions for our multiemployer pension plan financial improvement plan, $0.9 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment, $1.0 million related to the settlement of terminated agreements, primarily in the Catalysts segment, and $0.8 million related to the settlement of an ongoing audit in the Lithium segment.
Other expenses, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, $9.8 million of a net loss primarily resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses or purchase accounting, $3.6 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, and $1.2 million of non-operating pension costs from our 50% interest in JBC.
After income taxes, these charges totaled $21.7 million, or $0.20 per share.

(8)    Included in Income tax (benefit) expense for the three months and year ended December 31, 2020 are discrete net tax benefits of $13.9 million, or $0.13 per share, and $4.3 million, or $0.04 per share, respectively. The net benefit for the three months is primarily related to benefits for uncertain tax positions for statute of limitation expirations, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments. The net benefit for the full year 2020 is primarily related to changes to uncertain tax positions, excess tax benefits realized from stock-based compensation arrangements, and return to accrual adjustments.

    Included in Income tax (benefit) expense for the three months and year ended December 31, 2019 are discrete net tax benefits of $29.8 million, or $0.28 per share, and $27.4 million, or $0.26 per share, respectively. This net benefit is primarily related to benefits for uncertain tax positions primarily related to seeking treaty relief from the competent authority to prevent double taxation, and state rate changes.

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 reporting in accordance with GAAP (in thousands, except percentages).

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Income before income taxes and equity in net income of unconsolidated investmentsIncome tax (benefit) expenseEffective income tax rate
Three months ended December 31, 2020:
As reported$48,427 $(10,101)(20.9)%
Non-recurring, other unusual and non-operating pension and OPEB items65,669 24,688 
As adjusted$114,096 $14,587 12.8 %
Three months ended December 31, 2019:
As reported$78,297 $(5,105)(6.5)%
Non-recurring, other unusual and non-operating pension and OPEB items117,748 41,157 
As adjusted$196,045 $36,052 18.4 %
Year ended December 31, 2020:
As reported$373,519 $54,425 14.6 %
Non-recurring, other unusual and non-operating pension and OPEB items83,770 19,694 
As adjusted$457,289 $74,119 16.2 %
Year ended December 31, 2019:
As reported$562,950 $88,161 15.7 %
Non-recurring, other unusual and non-operating pension and OPEB items131,750 39,725 
As adjusted$694,700 $127,886 18.4 %

15