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AC

ALBEMARLE CORP (ALB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.08B with adjusted EBITDA of $267M; adjusted diluted EPS was ($0.18). Results reflected lower lithium pricing offset by cost actions and Specialties volume growth; FY25 outlook ranges were maintained despite newly announced tariffs .
  • Versus Wall Street consensus (S&P Global), ALB missed revenue but delivered a meaningful EPS and EBITDA beat: revenue $1.08B vs $1.16B*, adjusted EPS ($0.18) vs ($0.68), and adjusted EBITDA $267M vs $206M; Q1 EBITDA margin expanded to 24.8% from 20.4% in Q4 .
  • Energy Storage net sales fell 35% YoY on pricing (-34%), but Q1 EBITDA margin reached 36% on lower input costs and long-term contracts; management expects Q2 margins to be lower on mix, with H1 and FY25 averaging mid-20% assuming $9/kg LCE .
  • Cash from operations was $545M (204% OCF conversion); excluding a $350M customer prepayment, conversion was 73% and free cash flow was slightly positive; liquidity was ~$3.1B and net debt/adj. EBITDA at ~2.4x .
  • Board declared a $0.405/share quarterly dividend (annualized $1.62), marking the 126th consecutive dividend; payable July 1, 2025 to holders as of June 13, 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • “Our business continues to perform in line with our outlook…first-quarter adjusted EBITDA of $267 million with strong year-over-year improvements in Specialties and Ketjen” — CEO Kent Masters .
    • Reached ~90% run-rate against midpoint of $350M cost/productivity target; identified opportunities to reach the high end of the $300–$400M range .
    • Energy Storage EBITDA margin was 36% in Q1, supported by lower input costs and a higher proportion of long-term contracts with floors .

  • What Went Wrong

    • Net sales declined 21% YoY to $1.08B, driven by lower lithium pricing in Energy Storage; segment net sales fell 35% YoY .
    • Management guided Q2 Energy Storage margins below Q1 as mix shifts to more spot/market-priced volumes; H1/FY25 expected to average mid-20% margins at $9/kg LCE .
    • JV equity income declined YoY; corporate EBITDA impacted by FX loss versus last year’s gain .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,354.7 $1,231.7 $1,076.9
Adjusted EBITDA ($USD Millions)$211.5 $250.7 $267.1
Adjusted EBITDA Margin (%)15.6% 20.4% 24.8%
Adjusted Diluted EPS ($USD)($1.55) ($1.09) ($0.18)

Q1 2025 Actual vs S&P Global Consensus (Wall Street):

MetricQ4 2024 ActualQ4 2024 Consensus*Q1 2025 ActualQ1 2025 Consensus*
Revenue ($USD Millions)$1,231.7 $1,335.8*$1,076.9 $1,164.4*
Adjusted EBITDA ($USD Millions)$250.7 $195.6*$267.1 $205.7*
Adjusted Diluted EPS ($USD)($1.09) ($0.669)*($0.18) ($0.680)*

Values marked with * retrieved from S&P Global.

Segment Performance

SegmentQ3 2024 Net Sales ($MM)Q4 2024 Net Sales ($MM)Q1 2025 Net Sales ($MM)Q3 2024 Adj. EBITDA ($MM)Q4 2024 Adj. EBITDA ($MM)Q1 2025 Adj. EBITDA ($MM)
Energy Storage$767.3 $616.8 $524.6 $142.9 $133.7 $186.4
Specialties$342.4 $332.9 $321.0 $56.3 $72.9 $58.7
Ketjen$245.0 $281.9 $231.3 $35.5 $35.8 $38.6

Key KPIs

KPIQ3 2024Q4 2024Q1 2025
Operating Cash Flow ($MM)$241 $702 (FY 2024) $545
OCF Conversion (%)>100% 62% (FY 2024) 204%; 73% ex. prepayment
Capital Expenditures ($MM)$1,300 YTD $1,685 (FY 2024) $183
Liquidity ($B)$3.4 (as of 9/30/24) $2.8 (as of 12/31/24) ~$3.1 (as of 3/31/25)
Total Debt ($B)$3.6 (as of 9/30/24) $3.5 (as of 12/31/24) $3.5 (as of 3/31/25)
Net Debt / Adj. EBITDA (x)~3.5x (9/30/24) ~2.6x (12/31/24) ~2.4x (3/31/25)
Energy Storage EBITDA Margin (%)——36%
Energy Storage Production (kt)——~40 kt in Q1

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Total Net Sales ($B)FY 2025 (Observed $9/kg LCE)$4.9–$5.2 $4.9–$5.2 Maintained
Total Adjusted EBITDA ($B)FY 2025 (Observed $9/kg LCE)$0.8–$1.0 $0.8–$1.0 Maintained
Energy Storage Net Sales ($B)FY 2025 (Observed $9/kg LCE)$2.5–$2.6 $2.5–$2.6 Maintained
Energy Storage Adjusted EBITDA ($B)FY 2025 (Observed $9/kg LCE)$0.6–$0.7 $0.6–$0.7 Maintained
Energy Storage Equity Income ($B, net of tax)FY 2025 (Observed $9/kg LCE)$0.2–$0.3 $0.2–$0.3 Maintained
Capital Expenditures ($MM)FY 2025$700–$800 $700–$800 Maintained
D&A ($MM)FY 2025$630–$670 $630–$670 Maintained
Adjusted Effective Tax Rate (%)FY 2025(40%)–25% (40%)–25% Maintained
Corporate Costs ($MM)FY 2025$70–$100 $70–$100 Maintained
Interest & Financing Expenses ($MM)FY 2025$180–$210 $180–$210 Maintained
Weighted-Average Diluted Shares (MM)FY 2025118 118 Maintained
Dividend per Share ($/quarter)Current$0.405 (announced 5/6/25) $0.405 (announced 5/6/25) Maintained

Ranges explicitly include direct tariff impacts announced as of April 29, 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Cost & productivity programAnnounced $300–$400M annual savings; >50% run-rate by year-end; operating model transition ~90% run-rate vs $350M midpoint; targeting high end of $300–$400M Strengthening execution
Capex disciplineFY25 capex reduced to $700–$800M; >50% YoY reduction Capex maintained at $700–$800M; focus on sustaining assets Maintained
Tariffs/macroCovenant waiver extended; balancing market dynamics Direct tariff impact ~$30–$40M (mostly Specialties/Ketjen); Energy Storage effectively 0; mitigations underway Managed/limited direct impact
Energy Storage margins & mixRecovery from Q4 2023 LCM charges; cost tailwinds Q1 margin 36%; Q2 lower on mix; H1/FY mid-20% at $9/kg LCE Near-term mix headwind
Contracting strategyLong-term agreements with floors; volumes up 26% FY24 ~50% 2025 lithium salts under LTAs with floors; no major renewals in 2025; floors holding Stable
Supply/demandVolume ramps at La Negra, Qinzhou, Meishan Lithium demand +15%–40% in 2025; ~40% capacity at/below breakeven; incentives require higher prices Cautious optimism
Grid/fixed storage & AI—Fixed storage near ~20% of lithium demand; AI data centers driving grid stability applications Growing end market
Bromine—Short-term industry tightness moved prices to $5.14/kg then back to $3–$3.29/kg Normalizing

Management Commentary

  • “We continue to focus on what we can control—reducing costs, optimizing our lithium conversion network and increasing efficiencies to preserve our long-term competitive position…we are maintaining our full year 2025 outlook considerations.” — Kent Masters, CEO .
  • “We estimate the direct impact of the tariffs in 2025 to be relatively modest at approximately $30–$40 million…direct impact on our Energy Storage business is expected to be effectively 0…current exemptions for critical minerals such as lithium salts and spodumene.” — Neal Sheorey, CFO .
  • “We realized a strong first quarter Energy Storage EBITDA margin of 36% thanks to lower input costs and a greater proportion of lithium salts sold under long-term agreements.” — Neal Sheorey, CFO .
  • “We anticipate global lithium demand growth in the 15% to 40% range in 2025…longer term, demand more than doubling from 2024 to 2030.” — Kent Masters, CEO .

Q&A Highlights

  • Tariffs: Unmitigated direct impact ~$30–$40M (mostly Specialties/Ketjen); mitigations expected to lower impact; Energy Storage direct impact effectively 0 .
  • Energy Storage margin trajectory: Q2 margin guided lower on mix as volumes shift to more market-priced sales; H1/FY mid-20% at $9/kg LCE .
  • Contract integrity: Floors holding; selective renegotiations as markets evolve; ~50% of 2025 volumes under LTAs .
  • Capex “maintenance” level: Target ~6% of revenue at mid-cycle ($15/kg LCE); sustaining capex ~$400–$500M over time .
  • Supply side: Non-integrated hard rock conversion is pressured; some high-cost assets have curtailed; ~40% of capacity at/below breakeven .
  • Grid storage: Fixed storage ~20% of lithium demand and growing; AI data centers a new driver of grid stability applications .
  • Bromine pricing: Spiked to $5.14/kg on shortage, then normalized to $3–$3.29/kg range .

Estimates Context

  • Q1 2025: Revenue $1.077B vs $1.164B consensus* (miss); adjusted EBITDA $267M vs $206M consensus* (beat); adjusted EPS ($0.18) vs ($0.68) consensus* (beat). This mix suggests estimate models underappreciated cost tailwinds and contract floors while overestimating pricing/volume in Energy Storage. Values retrieved from S&P Global.
  • Near-term (Q2–Q3): Consensus revenue ~$1.33B for Q3 and ~$1.32B for Q4*, and EPS losses narrowing*, consistent with mid-20% margin guidance and volume ramps; however, management flagged Q2 Energy Storage margin compression on mix. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of earnings improved: EBITDA margin up to 24.8% with strong Specialties/Ketjen performance and cost actions; expect near-term Energy Storage margin moderation on mix, but mid-20% margins for H1/FY at $9/kg LCE .
  • FY25 outlook intact despite tariffs: Company maintained revenue/EBITDA ranges and segment outlooks; direct tariff impact modest and mitigable, Energy Storage largely insulated .
  • Cash discipline: OCF conversion strong even ex-prepayment; capex tightly managed at $700–$800M; breakeven FCF feasible at current pricing .
  • Contracts provide floor support: ~50% 2025 lithium salts under LTAs with floors; no major renewals in 2025, aiding margin durability through the cycle .
  • Watch Q2 mix effects: Expect Energy Storage margins to step down sequentially as volumes shift to market-priced sales; reassess into H2 as ramp and mix stabilize .
  • Structural cost savings: Run-rate approaching the top end of $300–$400M target; further supply chain and volume efficiency opportunities identified .
  • Dividend continuity: $0.405/share quarterly dividend (126th consecutive) underscores balanced capital allocation amidst cyclical trough .