On July 31, 2024, Albemarle Corp (ALB, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Albemarle, one of the world's largest lithium producers, reported significant declines in net sales and earnings, primarily due to lower lithium prices.
Company Overview
Albemarle Corp (ALB, Financial) is a global leader in lithium production, with operations spanning salt brine deposits in Chile and the US, and hard rock mines in Australia. The company also operates lithium refining plants in Chile, the US, Australia, and China. Additionally, Albemarle is a major producer of bromine and oil refining catalysts.
Performance and Challenges
Albemarle reported net sales of $1.4 billion for Q2 2024, a 39.7% decrease from $2.37 billion in Q2 2023. The company posted a net loss of $188 million, or ($1.96) per diluted share, compared to a net income of $650 million, or $5.52 per diluted share, in the same period last year. The adjusted diluted EPS was $0.04, significantly below the analyst estimate of $0.53.
Key challenges included a substantial decline in lithium prices, which impacted the company's revenue and profitability. The net loss also included an after-tax charge of $215 million related to capital project asset write-offs and associated contract cancellation costs.
Financial Achievements
Despite the challenges, Albemarle achieved several financial milestones. The company reported adjusted EBITDA of $386 million, driven by higher equity income from increased Talison JV sales volumes. Cash from operations increased by $289 million year-over-year to $363 million, supported by higher Talison JV dividends and working capital improvements.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Sales | $1.4 billion | $2.37 billion | -39.7% |
| Net (Loss) Income | ($188 million) | $650 million | -129.0% |
| Adjusted EBITDA | $386 million | $1.27 billion | -69.5% |
| Adjusted Diluted EPS | $0.04 | $7.33 | -99.5% |
Segment Performance
Energy Storage net sales for Q2 2024 were $830 million, a 52.9% decrease from $1.76 billion in Q2 2023. Adjusted EBITDA for this segment was $283 million, down 75.7% from $1.17 billion in the prior-year quarter. The decline was primarily due to lower lithium prices, which offset higher volumes from new lithium projects.
Specialties net sales were $335 million, down 10% year-over-year, while adjusted EBITDA decreased by $6 million to $54 million. The Ketjen segment saw net sales increase by 13% to $266 million, with adjusted EBITDA decreasing by $5 million to $38 million.
Cash Flow and Capital Deployment
Albemarle reported cash from operations of $363 million for Q2 2024, an increase of $289 million from the prior year. Year-to-date cash from operations was $461 million, a decrease of $334 million compared to the same period last year. Capital expenditures for the full year are expected to be at the high end of $1.7 billion to $1.8 billion.
Balance Sheet and Liquidity
As of June 30, 2024, Albemarle had estimated liquidity of approximately $3.5 billion, including $1.8 billion in cash and cash equivalents. Total debt stood at $3.5 billion, with a debt covenant net debt to adjusted EBITDA ratio of approximately 2.1 times.
Analysis
Albemarle's Q2 2024 results highlight the significant impact of lower lithium prices on its financial performance. While the company has made strides in operational efficiency and productivity, the challenging market conditions have weighed heavily on its earnings. The ongoing review of its cost and operating structure aims to maintain its competitive position and navigate the current market realities.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Albemarle Corp for further details.
