Albemarle Corporation (NYSE: ALB) today announced its results for the fourth quarter and full year ended December 31, 2021.

Fourth-Quarter 2021 and Recent Highlights
(Unless otherwise stated, all percent changes represent year-over-year comparisons)

• Net sales of $894 million, an increase of 2%
• Net loss of ($3.8) million, or ($0.03) per diluted share; Adjusted diluted EPS of $1.01
• Adjusted EBITDA of $229 million, an increase of 3%
• Improved full-year 2022 outlook based on anticipated ability to capitalize on favorable market conditions for lithium and bromine; adjusted EBITDA expected to be 35%-55% higher Y/Y excluding FCS
• La Negra III/IV conversion plant is in commercial qualification
• Kemerton I conversion plant is mechanically complete and in the commissioning phase; construction team now dedicated to Kemerton II
• Signed non-binding letter agreement to explore expanding the MARBL JV to increase optionality and reduce risk

"Our team delivered a strong year that exceeded expectations by executing our strategy and effectively responding to a number of challenges in 2021. We increased our net sales and adjusted EBITDA by 11% and 13%, respectively, excluding FCS," said Albemarle CEO Kent Masters. "Our Lithium and Bromine businesses are performing well. With a firm focus on executing our growth strategy, we are well positioned for opportunities to deliver significant value to our shareholders. The strategic investments we've made in our Lithium business as well as the progress of several key projects will enable us to potentially double our nameplate capacity by the end of 2022 and accelerate our Wave 3 projects."  

Outlook

Albemarle expects that its full-year 2022 results across all business units will improve relative to full-year 2021. Capital expenditures are anticipated to be higher than previously planned as the company invests to accelerate conversion capacity additions and meet evolving industry standards, as well as continued inflationary pressures.

Fourth-Quarter Results

Net sales of $894.2 million increased by $15.1 million compared to the prior-year quarter, primarily driven by an increase in sales from the company's Lithium and Bromine businesses, partially offset by the loss of revenue from its Fine Chemistry Services (FCS) business which was sold on June 1, 2021.

Adjusted EBITDA of $228.7 million increased by $7.6 million from the prior-year quarter primarily due to Lithium results, offset by the impact of the sale of FCS.

Net loss attributable to Albemarle of ($3.8) million decreased by $88.4 million from the prior-year quarter primarily due to a $132.4 million post-measurement period acquisition purchase price adjustment related to anticipated cost overruns from supply chain, labor and COVID-19 pandemic related issues at the Kemerton construction project. In addition, net income attributable to Albemarle was impacted by after-tax actuarial gains of $43.6 million realized in the fourth quarter of 2021 compared to after-tax actuarial losses of $40.9 million in the fourth quarter of 2020.

The effective income tax rate for the fourth quarter of 2021 was (186.4)% compared to (20.9)% in the same period in 2020. The difference is largely due to the geographic mix of earnings, including the impact of certain charges in countries with valuation allowances, and discrete tax items impacting the fourth quarter of 2021. On an adjusted basis, the effective income tax rates were 27.0% and 12.8% for the fourth quarter of 2021 and 2020, respectively. The difference is primarily due to geographic mix of earnings.

Business Segment Results

Lithium Results

Lithium net sales of $404.7 million increased $46.2 million (+12.9%) due to higher pricing (+18%), partially offset by lower volumes (-5%). Lower volumes were primarily related to the timing of shipments and a more even distribution of customer demand through the year. Adjusted EBITDA of $138.2 million increased by $16.1 million primarily due to increased net sales.

Lithium Outlook
Full-year 2022 adjusted EBITDA is expected to grow 65-85% year over year, up from previous outlook. Volume growth for full-year 2022 is expected to be 20-30% with added capacity from La Negra III/IV, Kemerton I, and the expected acquisition of the Qinzhou plant in China. Tolling is expected to be flat year over year. Average realized pricing is expected to increase 40-45% reflecting tight market conditions and the implementation of variable price structures on long-term contracts.

The Company continues to advance its global project portfolio of conversion capacity:
Chile
– La Negra III/IV conversion plant is in commercial qualification
Australia 
– Kemerton I conversion plant reached mechanical completion and commissioning is underway
– Kemerton II conversion plant remains on track for mechanical completion in the second half of 2022
– Restart of spodumene processing at Wodgina is well underway
China 
– Acquisition of Tianyuan, which owns a conversion plant in Qinzhou, is expected to close in the first half of this year
– Construction is planned to begin on two greenfield sites (Meishan and Zhangjiagang) later this year
United States
– New wells and expansion projects at Silver Peak are progressing ahead of schedule

Bromine Results

Bromine net sales of $290.4 million increased $27.0 million (+10.2%) primarily due to strong pricing (+16%) while volume decreased (-6%). Tight market conditions continue to drive strong demand and favorable pricing across the product portfolio. Adjusted EBITDA of $87.4 million decreased $0.5 million as higher net sales were offset by higher costs for raw materials and freight. While sales increased during the quarter, a force majeure declaration by the company's chlorine supplier and the lack of inventory limited the company's ability to capitalize on strong demand strength and increased brine production capacity.

Bromine Outlook

Albemarle expects full-year 2022 adjusted EBITDA to increase by 5%-10%, up slightly from previous outlook. Year-over-year improved expectations are based on higher volume and pricing due to strength in demand for flame retardants 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.

The company is progressing growth investments in high-return brownfield projects in Magnolia, Arkansas. The second phase of a tetrabrom debottleneck project at the Jordan Bromine Company JV (JBC) is expected to be complete in 2022.

Catalysts Results

Catalysts net sales of $199.1 million increased $3.4 million (+1.7%) compared to the previous year, primarily due to higher pricing and FX (+3%), partially offset by decreased volume (-1%). Adjusted EBITDA of $27.2 million increased $5.2 million mostly due to higher sales, partially offset by cost pressures.

Catalyst Outlook 

Albemarle expects full-year 2022 adjusted EBITDA to increase by 5%-15%, down from previous outlook in part due to higher input costs, particularly for natural gas.  Year-over-year results are expected to continue to improve with overall refining markets and as travel lock-down conditions abate. Volumes are expected to grow across all segments. The company expects pricing to also increase to offset inflationary pressures in freight and input costs. The company continues to expect volumes to return to pre-pandemic levels in late 2022 or 2023.

The strategic review of the Catalysts business is ongoing. The company expects to provide an update in the first half of the year. 

All Other

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

Balance Sheet and Liquidity

As of December 31, 2021, Albemarle had estimated liquidity of over $2.0 billion, including $439 million of cash and equivalents, $612 million remaining under its $1 billion revolver, $750 million remaining under our amended delayed draw term loan and $211 million on other available credit lines. Total debt was $2.4 billion, representing net debt to adjusted EBITDA of approximately 2.3 times.

Cash Flow and Capital Deployment

Cash from operations for the year ended December 31, 2021, of $344.3 million decreased $454.7 million versus the prior year driven by working capital inflows and higher revenues in the company's Lithium and Bromine segments. Capital expenditures of $953.7 million increased by $103.2 million versus the prior year as the company nears completion of its Wave 2 Lithium expansion 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.

Earnings Call

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 our 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; 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 our customers; 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; the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change; hazards associated with chemicals manufacturing; 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 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; 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; 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 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.

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.

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).

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):

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):

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).