Albemarle(ALB) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights Albemarle reported strong Q2 results, expects positive 2025 free cash flow, and reduced capital expenditure outlook through cost management - CEO Kent Masters highlighted strong Q2 results and expects to generate positive free cash flow for the full year 2025, assuming current lithium market pricing persists, due to proactive cost and capital management[2] - The company achieved a 100% run-rate against its $400 million cost and productivity improvement target[4] - Full-year 2025 capital expenditure outlook has been reduced to a range of $650 million to $700 million[4][18] - Cash from operations for the first half of 2025 was $538 million, an increase of $73 million compared to the same period last year[4][20] Q2 2025 Financial Performance Q2 2025 saw net sales decline 7% to $1.3 billion due to lower pricing, but net income improved significantly to $23 million from a prior-year loss Consolidated Results Q2 2025 consolidated net sales decreased 7% to $1.33 billion, while net income significantly recovered to $22.9 million from a prior-year loss Q2 2025 Consolidated Financial Results (in millions, except per share amounts) | In millions, except per share amounts | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,330.0 | $1,430.4 | (7.0)% | | Net income (loss) attributable to Albemarle | $22.9 | $(188.2) | 112.2% | | Adjusted EBITDA | $336.5 | $386.4 | (12.9)% | | Diluted loss per share | $(0.16) | $(1.96) | 91.8% | | Adjusted diluted EPS | $0.11 | $0.04 | 175.0% | - The year-over-year increase in net income was primarily due to a prior-year after-tax charge of $215 million related to capital project asset write-offs and contract cancellation costs[5] Segment Performance Energy Storage sales declined 14% due to lower pricing, while Specialties sales grew 5% and Ketjen sales slightly decreased Q2 2025 Segment Performance (in millions) | Segment | Net Sales Q2 2025 | Net Sales Q2 2024 | % Change | Adjusted EBITDA Q2 2025 | Adjusted EBITDA Q2 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Energy Storage | $717.7 | $830.1 | (13.5)% | $219.7 | $283.0 | (22.4)% | | Specialties | $351.6 | $334.6 | 5.1% | $73.0 | $54.2 | 34.7% | | Ketjen | $260.8 | $265.7 | (1.8)% | $28.6 | $37.8 | (24.5)% | - Energy Storage performance was impacted by lower pricing (-28%), which was partially offset by record production volumes (+15%) from its integrated conversion network[7] - Specialties' growth was driven by higher volumes (+6%) and decreased manufacturing costs from productivity initiatives[8] 2025 Full-Year Outlook Albemarle maintains its 2025 full-year outlook, projecting sales of $4.9-$5.2 billion and adjusted EBITDA of $0.8-$1.0 billion under current lithium prices, with reduced capital expenditures Corporate Outlook Scenarios The 2025 full-year outlook presents net sales and adjusted EBITDA scenarios contingent on varying lithium market prices, with a base case at ~$9/kg LCE Total Corporate FY 2025 Outlook Scenarios | Observed market price case | Average lithium market price ($/kg LCE) | Net sales | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Q2 2025 average | ~$9 | $4.9 - $5.2 billion | $0.8 - $1.0 billion | | H1 2024 range | $12-15 | $5.3 - $6.1 billion | $1.2 - $1.8 billion | | Q4 2023 average | ~$20 | $6.5 - $7.0 billion | $2.5 - $2.7 billion | - The outlook assumes spodumene pricing averages 10% of the lithium carbonate equivalent (LCE) price, while other costs are held constant[11] Segment Outlook FY2025 segment outlook projects Specialties net sales of $1.3-$1.5 billion and Ketjen net sales of $1.0-$1.1 billion, with Energy Storage outlook tied to lithium prices Specialties and Ketjen FY 2025 Outlook | Segment | FY 2025E Net Sales | FY 2025E Adjusted EBITDA | | :--- | :--- | :--- | | Specialties | $1.3 - $1.5 billion | $210 - $280 million | | Ketjen | $1.0 - $1.1 billion | $120 - $150 million | Energy Storage FY 2025 Outlook Scenarios | Average lithium market price ($/kg LCE) | Net sales | Adjusted EBITDA | | :--- | :--- | :--- | | ~$9 | $2.5 - $2.6 billion | $0.6 - $0.7 billion | | $12-15 | $2.9 - $3.5 billion | $1.0 - $1.5 billion | | ~$20 | $4.2 - $4.5 billion | $2.2 - $2.4 billion | Other Corporate Outlook Albemarle significantly reduced its 2025 capital expenditure forecast to $650-$700 million, a 60% decrease from 2024, with a variable adjusted effective tax rate Other Corporate FY 2025 Outlook | Metric | FY 2025E Outlook | | :--- | :--- | | Capital expenditures | $650 - $700 million | | Depreciation and amortization | $630 - $670 million | | Adjusted effective tax rate | (40)% - 25% | | Corporate costs | $40 - $70 million | | Interest and financing expenses | $180 - $210 million | - The 2025 capital expenditure forecast is down approximately 60% from the $1.7 billion spent in 2024[18] Cash Flow, Balance Sheet, and Liquidity Albemarle generated $538 million in H1 2025 operating cash flow, expects positive full-year free cash flow, and maintains strong liquidity of $3.4 billion - The company now expects to achieve positive free cash flow for the full year 2025, assuming current lithium market pricing persists[20] - Capital expenditures for the first half of 2025 were $302 million, a decrease of $732 million from the prior-year period[20][21] Liquidity Position as of June 30, 2025 | Metric | Amount (approx.) | | :--- | :--- | | Total Liquidity | $3.4 billion | | Cash and cash equivalents | $1.8 billion | | Available under revolver | $1.5 billion | | Total Debt | $3.6 billion | | Net Debt to Adj. EBITDA Ratio | 2.3x | Appendix: Financial Statements This appendix provides unaudited consolidated GAAP financial statements, including income, balance sheet, and cash flow data for Q2 and H1 2025 - The Consolidated Statements of Income show a net loss attributable to common shareholders of $19.1 million for the first six months of 2025, a significant improvement from a loss of $239.0 million in the first six months of 2024[27] - The Condensed Consolidated Balance Sheet shows total assets of $17.3 billion and total equity of $10.5 billion as of June 30, 2025[28] - The Selected Consolidated Cash Flow Data shows net cash provided by operating activities for the first six months of 2025 was $538.2 million, compared to $465.1 million in the prior-year period[29] Consolidated Statements of Income (Loss) This section details revenues, costs, and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025 Selected Consolidated Cash Flow Data This section details cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Appendix: Non-GAAP Reconciliations This appendix provides detailed reconciliations of non-GAAP financial measures, including Adjusted EBITDA and adjusted net income, to their GAAP equivalents Reconciliation of Adjusted Net Income and Adjusted EBITDA This table reconciles GAAP Net Income to non-GAAP Adjusted Net Income and Adjusted EBITDA, detailing adjustments for Q2 2025 Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | Net income (loss) attributable to Albemarle | $22,897 | | Add back: Interest and financing expenses | $49,939 | | Add back: Income tax expense (benefit) | $34,094 | | Add back: Depreciation and amortization | $168,731 | | EBITDA | $275,661 | | Add back: Adjustments for non-recurring items, etc. | $60,814 | | Adjusted EBITDA | $336,475 | Details of Non-Recurring and Other Unusual Items This section details specific non-recurring and unusual items excluded from adjusted net income, such as a $38.0 million loss from preferred equity redemption - Key non-recurring items in Q2 2025 included a $38.0 million loss from the redemption of preferred equity in a Grace subsidiary[42] - Restructuring and asset write-off charges for Q2 2025 were $4.4 million, primarily related to placing the Chengdu, China conversion plant into care and maintenance[36] Reconciliation of Adjusted Effective Tax Rate This table reconciles the GAAP effective income tax rate to the non-GAAP adjusted effective income tax rate for Q2 2025 Q2 2025 Effective Tax Rate Reconciliation | Description | Effective income tax rate | | :--- | :--- | | As reported (GAAP) | (380.0)% | | Non-recurring, other unusual and non-operating pension and OPEB items | N/A | | As adjusted (Non-GAAP) | 159.9% |