Third Quarter 2019 Highlights
(Based on year-over-year comparisons unless otherwise noted)
- Net sales of
$879.7 million increased 14%, excluding foreign exchange impact of 1%, largely driven by strong volume and favorable pricing - Earnings were
$1.46 per diluted share, an increase of 22% - Adjusted EPS were
$1.53 per diluted share, an increase of 17% - Adjusted EBITDA was
$254.4 million , an increase of 8%
Notable Developments
- Completed previously announced lithium joint venture with
Mineral Resources Limited onOct. 31, 2019 ; funded Wodgina mine project and other general corporate projects with$1 billion , borrowed from new$1.2 billion unsecured credit facility - Previously announced Company's full year 2019 adjusted diluted EPS outlook is
$6.00 - $6.20 from$6.25 - $6.65 - Initiating cost management program targeting over
$100 million in savings over a two-year period
"During the third quarter, Albemarle grew net sales by 14%, adjusted EBITDA by 12%, and adjusted earnings per share by 22% over the prior year, excluding currency impacts, due to solid growth across all businesses," said
Third Quarter Results
In millions, except per share amounts |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Net sales |
$ |
879.7 |
$ |
777.7 |
$ |
102.0 |
13.1 |
% |
||||||
Net income attributable to Albemarle Corporation |
$ |
155.1 |
$ |
129.7 |
$ |
25.3 |
19.5 |
% |
||||||
Adjusted EBITDA(a) |
$ |
254.4 |
$ |
235.1 |
$ |
19.3 |
8.2 |
% |
||||||
Diluted earnings per share |
$ |
1.46 |
$ |
1.20 |
$ |
0.26 |
21.7 |
% |
||||||
Non-operating pension and OPEB items(a) |
(0.01) |
(0.02) |
||||||||||||
Non-recurring and other unusual items(a) |
0.08 |
0.13 |
||||||||||||
Adjusted diluted earnings per share(b) |
$ |
1.53 |
$ |
1.31 |
$ |
0.22 |
16.8 |
% |
(a) See Non-GAAP Reconciliations for further details.
(b) Totals may not add due to rounding.
- Net sales increased 14%, in constant currencies, due to increased volume in all reportable segments and favorable pricing in Lithium and Bromine Specialties.
- The Company's earnings increased as a result of earnings growth from each of the businesses, lower interest and financing expenses, and a lower effective tax rate. The increase was partially offset by unfavorable currency exchange, higher corporate costs for professional services, and increased depreciation and amortization due to increased capital projects put into service.
Third Quarter Business Segment Results
Lithium
In millions |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Net Sales |
$ |
330.4 |
$ |
270.9 |
$ |
59.5 |
21.9 |
% |
||||||
Adjusted EBITDA |
$ |
127.5 |
$ |
113.6 |
$ |
13.8 |
12.2 |
% |
- Net sales and adjusted EBITDA growth were driven by increased volume and slightly favorable pricing of 1%, which more than offset deferred shipments due to disruption caused by Typhoon Tapah in late September. As previously communicated, impacted volume is expected to be fully recovered in the fourth quarter.
- Net sales reflects unfavorable currency exchange of 1%. Adjusted EBITDA reflects favorable currency exchange of 4% resulting from a weaker Chilean Peso.
- Cost of goods sold increased, mainly due to higher tolling product costs to meet customer commitments and address operating issues in La Negra,
Chile . - Out-of-period non-cash expense of
$7.0 million recorded in the third quarter of 2019 in cost of goods sold was due to an adjustment of lithium carbonate inventory values from the second quarter of 2019. - Please see press release issued
Oct. 24, 2019 for additional information.
Bromine Specialties
In millions |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Net Sales |
$ |
256.3 |
$ |
232.6 |
$ |
23.7 |
10.2 |
% |
||||||
Adjusted EBITDA |
$ |
88.8 |
$ |
78.6 |
$ |
10.2 |
13.0 |
% |
- Net sales and adjusted EBITDA growth reflects favorable price impacts and increased volume, more than offsetting unfavorable currency exchange of 1%.
Catalysts
In millions |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Net Sales |
$ |
261.3 |
$ |
251.1 |
$ |
10.2 |
4.1 |
% |
||||||
Adjusted EBITDA |
$ |
66.9 |
$ |
62.6 |
$ |
4.3 |
6.9 |
% |
- Favorable pricing in Fluid Catalytic Cracking (FCC) Catalysts was offset by lower volumes related to delays in the start-up of new FCC units.
- Clean
Fuel Technology , or HPC, benefited from higher sales volume and a favorable product mix. - Net sales reflects unfavorable currency exchange of 1%.
- Results also reflect a partial insurance claim reimbursement of
$2.2 million received in 2018.
All Other
In millions |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Net Sales |
$ |
31.7 |
$ |
23.1 |
$ |
8.7 |
37.6 |
% |
||||||
Adjusted EBITDA |
$ |
10.4 |
$ |
4.0 |
$ |
6.5 |
163.3 |
% |
- Net sales growth reflects increased sales volume of
$9.3 million in our fine chemistry services business. - Results also reflect a
$4.4 million decrease from the re-measurement of the fair value of our investment in private equity securities.
Corporate Results
In millions |
Q3 2019 |
Q3 2018 |
$ Change |
% Change |
||||||||||
Adjusted EBITDA |
$ |
(39.3) |
$ |
(23.7) |
$ |
(15.6) |
65.9 |
% |
||||||
- Results reflect higher selling, general and administrative spending for professional services and
$11.3 million of unfavorable currency exchange impacts.
Income Taxes
The effective income tax rate for the third quarter of 2019 was 15.5% compared to 21.5% in the same period in 2018, largely due to change in geographic earnings mix. On an adjusted basis, the effective income tax rates were 15.0% and 18.9% for the third quarter of 2019 and 2018, respectively.
Cash Flow and Capital Deployment
Cash from operations was
Capital expenditures were
During the nine months ended Sept. 30, 2019, Albemarle deployed dividends to shareholders totaling
Cash and cash equivalents were
Full Year 2019 Outlook
As previously announced on
As a result, Albemarle is reaffirming its full year 2019 guidance as follows:
Current Outlook |
vs Pro Forma Full Year 2018(a) |
||
Net sales |
$3.6 - $3.7 billion |
7% - 10% |
|
Adjusted EBITDA |
$1.02 - $1.06 billion |
2% - 6% |
|
Adjusted EPS (per diluted share) |
$6.00 - $6.20 |
10% - 14% |
(a) Pro forma excludes the impact of the polyolefin catalysts and components business sold on
Additionally, the Company expects its full year 2019 income tax rate to be between 18% and 19%.
Earnings Call
Date: |
Thursday, Nov. 7, 2019 |
Time: |
9:00 AM Eastern time |
Dial-in (U.S.): |
844-347-1034 |
Dial-in (International): |
209-905-5910 |
Passcode: |
6199517 |
The Company's earnings presentation and supporting material is available on Albemarle's website at https://investors.albemarle.com.
About Albemarle
Discovering and implementing new and better performance-based sustainable solutions is what motivates all of us. We think beyond business-as-usual to drive innovations that create lasting value. Albemarle employs approximately 5,600 people and serves customers in approximately 100 countries. We regularly post information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations,
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 form terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations; volatility and uncertainties in the debt and equity markets; technology or intellectual property infringement, including cyber-security breaches, and other innovation risks; decisions we may make in the future; the ability to successfully execute, operate and integrate acquisitions and divestitures; and the other factors detailed from time to time in the reports we file with the
Consolidated Statements of Income
(In Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net sales |
$ |
879,747 |
$ |
777,748 |
$ |
2,596,863 |
$ |
2,453,251 |
|||||||
Cost of goods sold |
569,880 |
497,211 |
1,677,596 |
1,556,379 |
|||||||||||
Gross profit |
309,867 |
280,537 |
919,267 |
896,872 |
|||||||||||
Selling, general and administrative expenses |
108,135 |
100,167 |
348,205 |
325,174 |
|||||||||||
Research and development expenses |
15,585 |
16,610 |
44,024 |
53,670 |
|||||||||||
Gain on sale of business |
— |
— |
— |
(218,705) |
|||||||||||
Operating profit |
186,147 |
163,760 |
527,038 |
736,733 |
|||||||||||
Interest and financing expenses |
(11,108) |
(12,988) |
(35,295) |
(39,834) |
|||||||||||
Other (expenses) income, net |
(11,316) |
3,793 |
(7,090) |
(31,906) |
|||||||||||
Income before income taxes and equity in net income of |
163,723 |
154,565 |
484,653 |
664,993 |
|||||||||||
Income tax expense |
25,341 |
33,167 |
93,266 |
133,630 |
|||||||||||
Income before equity in net income of unconsolidated |
138,382 |
121,398 |
391,387 |
531,363 |
|||||||||||
Equity in net income of unconsolidated investments (net of |
33,236 |
22,081 |
106,727 |
61,727 |
|||||||||||
Net income |
171,618 |
143,479 |
498,114 |
593,090 |
|||||||||||
Net income attributable to noncontrolling interests |
(16,548) |
(13,734) |
(55,277) |
(29,124) |
|||||||||||
Net income attributable to Albemarle Corporation |
$ |
155,070 |
$ |
129,745 |
$ |
442,837 |
$ |
563,966 |
|||||||
Basic earnings per share |
$ |
1.46 |
$ |
1.21 |
$ |
4.18 |
$ |
5.16 |
|||||||
Diluted earnings per share |
$ |
1.46 |
$ |
1.20 |
$ |
4.16 |
$ |
5.11 |
|||||||
Weighted-average common shares outstanding – basic |
105,999 |
107,315 |
105,920 |
109,223 |
|||||||||||
Weighted-average common shares outstanding – diluted |
106,299 |
108,302 |
106,324 |
110,276 |
Condensed Consolidated Balance Sheets
(In Thousands) (Unaudited)
September 30, |
December 31, |
||||||
2019 |
2018 |
||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
317,823 |
$ |
555,320 |
|||
Trade accounts receivable |
637,037 |
605,712 |
|||||
Other accounts receivable |
86,556 |
52,059 |
|||||
Inventories |
802,434 |
700,540 |
|||||
Other current assets |
125,902 |
84,790 |
|||||
Total current assets |
1,969,752 |
1,998,421 |
|||||
Property, plant and equipment |
5,406,123 |
4,799,063 |
|||||
Less accumulated depreciation and amortization |
1,882,086 |
1,777,979 |
|||||
Net property, plant and equipment |
3,524,037 |
3,021,084 |
|||||
Investments |
551,657 |
528,722 |
|||||
Other assets |
200,858 |
80,135 |
|||||
Goodwill |
1,534,241 |
1,567,169 |
|||||
Other intangibles, net of amortization |
361,058 |
386,143 |
|||||
Total assets |
$ |
8,141,603 |
$ |
7,581,674 |
|||
LIABILITIES AND EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
527,052 |
$ |
522,516 |
|||
Accrued expenses |
273,709 |
257,323 |
|||||
Current portion of long-term debt |
539,960 |
307,294 |
|||||
Dividends payable |
38,678 |
35,169 |
|||||
Current operating lease liability |
24,606 |
— |
|||||
Income taxes payable |
17,238 |
60,871 |
|||||
Total current liabilities |
1,421,243 |
1,183,173 |
|||||
Long-term debt |
1,381,984 |
1,397,916 |
|||||
Postretirement benefits |
45,752 |
46,157 |
|||||
Pension benefits |
272,345 |
285,396 |
|||||
Other noncurrent liabilities |
618,822 |
526,942 |
|||||
Deferred income taxes |
393,120 |
382,982 |
|||||
Commitments and contingencies |
|||||||
Equity: |
|||||||
Albemarle Corporation shareholders' equity: |
|||||||
Common stock |
1,060 |
1,056 |
|||||
Additional paid-in capital |
1,379,419 |
1,368,897 |
|||||
Accumulated other comprehensive loss |
(435,977) |
(350,682) |
|||||
Retained earnings |
2,892,057 |
2,566,050 |
|||||
Total Albemarle Corporation shareholders' equity |
3,836,559 |
3,585,321 |
|||||
Noncontrolling interests |
171,778 |
173,787 |
|||||
Total equity |
4,008,337 |
3,759,108 |
|||||
Total liabilities and equity |
$ |
8,141,603 |
$ |
7,581,674 |
Selected Consolidated Cash Flow Data
(In Thousands) (Unaudited)
Nine Months Ended September 30, |
|||||||
2019 |
2018 |
||||||
Cash and cash equivalents at beginning of year |
$ |
555,320 |
$ |
1,137,303 |
|||
Cash flows from operating activities: |
|||||||
Net income |
498,114 |
593,090 |
|||||
Adjustments to reconcile net income to cash flows from operating activities: |
|||||||
Depreciation and amortization |
156,718 |
150,511 |
|||||
Gain on sale of business |
— |
(218,705) |
|||||
Gain on sale of property |
(11,079) |
— |
|||||
Stock-based compensation and other |
15,169 |
11,785 |
|||||
Equity in net income of unconsolidated investments (net of tax) |
(106,727) |
(61,727) |
|||||
Dividends received from unconsolidated investments and nonmarketable |
62,982 |
32,794 |
|||||
Pension and postretirement expense (benefit) |
1,641 |
(2,708) |
|||||
Pension and postretirement contributions |
(10,728) |
(11,068) |
|||||
Unrealized gain on investments in marketable securities |
(1,701) |
(1,615) |
|||||
Deferred income taxes |
7,726 |
43,400 |
|||||
Working capital changes |
(289,587) |
(131,813) |
|||||
Other, net |
23,110 |
(27,003) |
|||||
Net cash provided by operating activities |
345,638 |
376,941 |
|||||
Cash flows from investing activities: |
|||||||
Acquisitions, net of cash acquired |
— |
(11,403) |
|||||
Capital expenditures |
(608,456) |
(471,675) |
|||||
Cash proceeds from divestitures, net |
— |
413,479 |
|||||
Proceeds from sale of property and equipment |
10,356 |
— |
|||||
Sales of (investments in) marketable securities, net |
1,177 |
(761) |
|||||
Investments in equity and other corporate investments |
(2,569) |
(5,346) |
|||||
Net cash used in investing activities |
(599,492) |
(75,706) |
|||||
Cash flows from financing activities: |
|||||||
Other borrowings (repayments), net |
232,183 |
(134,505) |
|||||
Dividends paid to shareholders |
(113,321) |
(108,922) |
|||||
Dividends paid to noncontrolling interests |
(57,212) |
(14,756) |
|||||
Repurchases of common stock |
— |
(500,000) |
|||||
Proceeds from exercise of stock options |
4,814 |
2,302 |
|||||
Withholding taxes paid on stock-based compensation award distributions |
(10,774) |
(17,047) |
|||||
Other |
(445) |
— |
|||||
Net cash provided by (used in) financing activities |
55,245 |
(772,928) |
|||||
Net effect of foreign exchange on cash and cash equivalents |
(38,888) |
(24,384) |
|||||
Decrease in cash and cash equivalents |
(237,497) |
(496,077) |
|||||
Cash and cash equivalents at end of period |
$ |
317,823 |
$ |
641,226 |
Consolidated Summary of Segment Results
(In Thousands) (Unaudited)
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net sales: |
|||||||||||||||
Lithium |
$ |
330,386 |
$ |
270,928 |
$ |
947,030 |
$ |
886,523 |
|||||||
Bromine Specialties |
256,267 |
232,616 |
760,752 |
678,769 |
|||||||||||
Catalysts |
261,346 |
251,139 |
779,295 |
796,822 |
|||||||||||
All Other |
31,748 |
23,065 |
109,786 |
90,978 |
|||||||||||
Corporate |
— |
— |
— |
159 |
|||||||||||
Total net sales |
$ |
879,747 |
$ |
777,748 |
$ |
2,596,863 |
$ |
2,453,251 |
|||||||
Adjusted EBITDA: |
|||||||||||||||
Lithium |
$ |
127,459 |
$ |
113,629 |
$ |
384,854 |
$ |
386,260 |
|||||||
Bromine Specialties |
88,814 |
78,585 |
248,743 |
217,921 |
|||||||||||
Catalysts |
66,944 |
62,602 |
193,890 |
205,534 |
|||||||||||
All Other |
10,448 |
3,968 |
28,931 |
7,729 |
|||||||||||
Corporate |
(39,314) |
(23,702) |
(114,300) |
(75,082) |
|||||||||||
Total adjusted EBITDA |
$ |
254,351 |
$ |
235,082 |
$ |
742,118 |
$ |
742,362 |
See accompanying non-GAAP reconciliations below.
Additional Information
It should be noted that adjusted net income attributable to
A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found on the following pages of this press release, which is also is available on Albemarle's website at https://investors.albemarle.com. The Company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, as the Company is unable to estimate significant non-recurring or unusual items without unreasonable effort. The amounts and timing of these items are uncertain and could be material to the Company's results calculated in accordance with GAAP.
ALBEMARLE CORPORATION AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited)
See below for a reconciliation of adjusted net income attributable to
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
In thousands, except percentages and per share amounts |
2019 |
2018 |
2019 |
2018 |
|||||||||||
Net income attributable to Albemarle Corporation |
$ |
155,070 |
$ |
129,745 |
$ |
442,837 |
$ |
563,966 |
|||||||
Add back: |
|||||||||||||||
Non-operating pension and OPEB items (net of tax) |
(543) |
(1,856) |
(1,805) |
(5,595) |
|||||||||||
Non-recurring and other unusual items (net of tax) |
8,497 |
13,568 |
17,239 |
(121,731) |
|||||||||||
Adjusted net income attributable to Albemarle Corporation |
$ |
163,024 |
$ |
141,457 |
$ |
458,271 |
$ |
436,640 |
|||||||
Adjusted diluted earnings per share |
$ |
1.53 |
$ |
1.31 |
$ |
4.31 |
$ |
3.96 |
|||||||
Weighted-average common shares outstanding – diluted |
106,299 |
108,302 |
106,324 |
110,276 |
|||||||||||
Net income attributable to Albemarle Corporation |
$ |
155,070 |
$ |
129,745 |
$ |
442,837 |
$ |
563,966 |
|||||||
Add back: |
|||||||||||||||
Interest and financing expenses |
11,108 |
12,988 |
35,295 |
39,834 |
|||||||||||
Income tax expense |
25,341 |
33,167 |
93,266 |
133,630 |
|||||||||||
Depreciation and amortization |
54,487 |
49,707 |
156,718 |
150,511 |
|||||||||||
EBITDA |
246,006 |
225,607 |
728,116 |
887,941 |
|||||||||||
Non-operating pension and OPEB items |
(551) |
(2,195) |
(1,810) |
(6,596) |
|||||||||||
Non-recurring and other unusual items |
8,896 |
11,670 |
15,812 |
(138,983) |
|||||||||||
Adjusted EBITDA |
$ |
254,351 |
$ |
235,082 |
$ |
742,118 |
$ |
742,362 |
|||||||
Net sales |
$ |
879,747 |
$ |
777,748 |
$ |
2,596,863 |
$ |
2,453,251 |
|||||||
EBITDA margin |
28.0 |
% |
29.0 |
% |
28.0 |
% |
36.2 |
% |
|||||||
Adjusted EBITDA margin |
28.9 |
% |
30.2 |
% |
28.6 |
% |
30.3 |
% |
See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income attributable to
Lithium |
Bromine |
Catalysts |
Reportable |
All Other |
Corporate |
Consolidated |
% of |
|||||||||||||||||||||||
Three months ended September 30, 2019: |
||||||||||||||||||||||||||||||
Net income (loss) attributable to Albemarle |
$ |
102,136 |
$ |
75,224 |
$ |
54,345 |
$ |
231,705 |
$ |
8,305 |
$ |
(84,940) |
$ |
155,070 |
17.6 |
% |
||||||||||||||
Depreciation and amortization |
25,212 |
12,448 |
12,599 |
50,259 |
2,143 |
2,085 |
54,487 |
6.2 |
% |
|||||||||||||||||||||
Non-recurring and other unusual items |
111 |
1,142 |
— |
1,253 |
— |
7,643 |
8,896 |
1.0 |
% |
|||||||||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
11,108 |
11,108 |
1.3 |
% |
|||||||||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
25,341 |
25,341 |
2.9 |
% |
|||||||||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
(551) |
(551) |
(0.1) |
% |
|||||||||||||||||||||
Adjusted EBITDA |
$ |
127,459 |
$ |
88,814 |
$ |
66,944 |
$ |
283,217 |
$ |
10,448 |
$ |
(39,314) |
$ |
254,351 |
28.9 |
% |
||||||||||||||
Three months ended September 30, 2018: |
||||||||||||||||||||||||||||||
Net income (loss) attributable to Albemarle |
$ |
90,313 |
$ |
67,967 |
$ |
50,491 |
$ |
208,771 |
$ |
1,978 |
$ |
(81,004) |
$ |
129,745 |
16.7 |
% |
||||||||||||||
Depreciation and amortization |
23,370 |
10,618 |
12,111 |
46,099 |
1,990 |
1,618 |
49,707 |
6.4 |
% |
|||||||||||||||||||||
Non-recurring and other unusual items |
(54) |
— |
— |
(54) |
— |
11,724 |
11,670 |
1.5 |
% |
|||||||||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
12,988 |
12,988 |
1.7 |
% |
|||||||||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
33,167 |
33,167 |
4.2 |
% |
|||||||||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
(2,195) |
(2,195) |
(0.3) |
% |
|||||||||||||||||||||
Adjusted EBITDA |
$ |
113,629 |
$ |
78,585 |
$ |
62,602 |
$ |
254,816 |
$ |
3,968 |
$ |
(23,702) |
$ |
235,082 |
30.2 |
% |
||||||||||||||
Nine months ended September 30, 2019: |
||||||||||||||||||||||||||||||
Net income (loss) attributable to Albemarle |
$ |
312,609 |
$ |
212,320 |
$ |
156,328 |
$ |
681,257 |
$ |
22,629 |
$ |
(261,049) |
$ |
442,837 |
17.1 |
% |
||||||||||||||
Depreciation and amortization |
71,669 |
35,281 |
37,562 |
144,512 |
6,302 |
5,904 |
156,718 |
6.0 |
% |
|||||||||||||||||||||
Non-recurring and other unusual items |
576 |
1,142 |
— |
1,718 |
— |
14,094 |
15,812 |
0.6 |
% |
|||||||||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
35,295 |
35,295 |
1.4 |
% |
|||||||||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
93,266 |
93,266 |
3.6 |
% |
|||||||||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
(1,810) |
(1,810) |
(0.1) |
% |
|||||||||||||||||||||
Adjusted EBITDA |
$ |
384,854 |
$ |
248,743 |
$ |
193,890 |
$ |
827,487 |
$ |
28,931 |
$ |
(114,300) |
$ |
742,118 |
28.6 |
% |
||||||||||||||
Nine months ended September 30, 2018: |
||||||||||||||||||||||||||||||
Net income (loss) attributable to Albemarle |
$ |
315,939 |
$ |
187,176 |
$ |
387,038 |
$ |
890,153 |
$ |
1,659 |
$ |
(327,846) |
$ |
563,966 |
23.0 |
% |
||||||||||||||
Depreciation and amortization |
71,760 |
30,745 |
37,201 |
139,706 |
6,070 |
4,735 |
150,511 |
6.2 |
% |
|||||||||||||||||||||
Non-recurring and other unusual items |
(1,439) |
— |
(218,705) |
(220,144) |
— |
81,161 |
(138,983) |
(5.7) |
% |
|||||||||||||||||||||
Interest and financing expenses |
— |
— |
— |
— |
— |
39,834 |
39,834 |
1.6 |
% |
|||||||||||||||||||||
Income tax expense |
— |
— |
— |
— |
— |
133,630 |
133,630 |
5.5 |
% |
|||||||||||||||||||||
Non-operating pension and OPEB items |
— |
— |
— |
— |
— |
(6,596) |
(6,596) |
(0.3) |
% |
|||||||||||||||||||||
Adjusted EBITDA |
$ |
386,260 |
$ |
217,921 |
$ |
205,534 |
$ |
809,715 |
$ |
7,729 |
$ |
(75,082) |
$ |
742,362 |
30.3 |
% |
Non-operating pension and OPEB items, consisting of mark-to-market actuarial gains/losses, settlements/curtailments, interest cost and expected return on assets, are not allocated to our operating segments and are included in the Corporate category. In addition, we believe that these components of pension cost are mainly driven by market performance, and we manage these separately from the operational performance of our businesses. In accordance with GAAP, these non-operating pension and OPEB items are included in Other (expenses) income, net. Non-operating pension and OPEB items were as follows (in thousands):
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Interest cost |
$ |
8,863 |
$ |
8,509 |
$ |
26,501 |
$ |
25,636 |
|||||||
Expected return on assets |
(9,414) |
(10,704) |
(28,311) |
(32,232) |
|||||||||||
Total |
$ |
(551) |
$ |
(2,195) |
$ |
(1,810) |
$ |
(6,596) |
In addition to the non-operating pension and OPEB items disclosed above, we have identified certain other items and excluded them from our adjusted net income calculation for the periods presented. A listing of these items, as well as a detailed description of each follows below (per diluted share):
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Restructuring and other(1) |
$ |
— |
$ |
0.04 |
$ |
— |
$ |
0.04 |
|||||||
Acquisition and integration related costs(2) |
0.03 |
0.03 |
0.10 |
0.10 |
|||||||||||
Albemarle Foundation contribution(3) |
— |
— |
— |
0.10 |
|||||||||||
Gain on sale of business(4) |
— |
— |
— |
(1.60) |
|||||||||||
Gain on sale of property(5) |
— |
— |
(0.08) |
— |
|||||||||||
Legal accrual(6) |
— |
0.02 |
— |
0.21 |
|||||||||||
Environmental accrual(7) |
— |
— |
— |
0.11 |
|||||||||||
Other(8) |
0.05 |
0.04 |
0.12 |
0.05 |
|||||||||||
Discrete tax items(9) |
— |
— |
0.02 |
(0.11) |
|||||||||||
Total non-recurring and other unusual items |
$ |
0.08 |
$ |
0.13 |
$ |
0.16 |
$ |
(1.10) |
|||||||
(1) Included in Selling, general and administrative expenses for the three and nine months ended
(2) Acquisition and integration related costs for the three and nine months ended
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Acquisition and integration related costs: |
|||||||||||||||
Cost of goods sold |
$ |
— |
$ |
0.9 |
$ |
— |
$ |
2.9 |
|||||||
Selling, general and administrative expenses |
4.1 |
3.4 |
14.4 |
10.2 |
|||||||||||
Total |
$ |
4.1 |
$ |
4.3 |
$ |
14.4 |
$ |
13.1 |
|||||||
Total acquisition and integration related costs, |
$ |
3.2 |
$ |
3.5 |
$ |
11.1 |
$ |
10.7 |
|||||||
Total acquisition and integration related costs, |
$ |
0.03 |
$ |
0.03 |
$ |
0.10 |
$ |
0.10 |
(3) Included in Selling, general and administrative expenses for the nine months ended
(4) Included in Gain on sale of business, for the nine months ended
(5) Included in Other (expenses) income, net, for the nine months ended
(6) Included in Other (expenses) income, net, for the three and nine months ended
(7) Increase in environmental reserve of
(8) Other adjustments for the three months ended
- Cost of goods sold -
$0.1 million related to non-routine labor and compensation related costs inChile that are outside normal compensation arrangements. - Selling, general and administrative expenses -
$1.1 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment. - Other (expenses) income, net -
$3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, as well as a net loss of$0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting.
After income taxes, these charges totaled
Other adjustments for the nine months ended
- Cost of goods sold -
$0.6 million related to non-routine labor and compensation related costs inChile that are outside normal compensation arrangements. - Selling, general and administrative expenses - Expected severance payments to be made in 2019 as part of a business reorganization plan of
$5.3 million , with the unpaid balance recorded in Accrued expenses,$1.0 million of shortfall contributions for our multiemployer plan financial improvement plan, and$1.1 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment. - Other (expenses) income, net -
$3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, a net loss of$0.4 million primarily resulting from the settlement of legal matters related to previously disposed businesses or recorded in purchase accounting, and$0.9 million of a net loss primarily resulting from the revision of indemnifications and other liabilities related to previously disposed businesses.
After income taxes, these charges totaled
Other adjustments for the three months ended
- Cost of goods sold -
$3.8 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture. - Selling, general and administrative expenses -
$0.1 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a$1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state ofLouisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in theLouisiana community. - Other (expenses) income, net -
$0.2 million gain related to the revision of previously recorded expenses of disposed businesses.
After income taxes, these charges totaled
Other adjustments for the nine months ended
- Cost of goods sold -
$4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture. - Selling, general and administrative expenses -
$1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a$1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state ofLouisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in theLouisiana community. - Other (expenses) income, net -
$0.8 million related to the revision of previously recorded expenses of disposed businesses.
After income taxes, these charges totaled
(9) Included in Income tax expense for the nine months ended
Included in Income tax expense for the three and nine months ended
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 tax expense |
Effective income tax |
||||||||
Three months ended September 30, 2019: |
||||||||||
As reported |
$ |
163,723 |
$ |
25,341 |
15.5 |
% |
||||
Non-recurring, other unusual and non-operating pension and OPEB |
8,345 |
391 |
||||||||
As adjusted |
$ |
172,068 |
$ |
25,732 |
15.0 |
% |
||||
Three months ended September 30, 2018: |
||||||||||
As reported |
$ |
154,565 |
$ |
33,167 |
21.5 |
% |
||||
Non-recurring, other unusual and non-operating pension and OPEB |
9,475 |
(2,237) |
||||||||
As adjusted |
$ |
164,040 |
$ |
30,930 |
18.9 |
% |
||||
Nine months ended September 30, 2019: |
||||||||||
As reported |
$ |
484,653 |
$ |
93,266 |
19.2 |
% |
||||
Non-recurring, other unusual and non-operating pension and OPEB |
14,002 |
(1,432) |
||||||||
As adjusted |
$ |
498,655 |
$ |
91,834 |
18.4 |
% |
||||
Nine months ended September 30, 2018: |
||||||||||
As reported |
$ |
664,993 |
$ |
133,630 |
20.1 |
% |
||||
Non-recurring, other unusual and non-operating pension and OPEB |
(145,579) |
(18,253) |
||||||||
As adjusted |
$ |
519,414 |
$ |
115,377 |
22.2 |
% |
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SOURCE
Dave Ryan, 980.299.5641