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AC

ALBEMARLE CORP (ALB)·Q2 2025 Earnings Summary

Executive Summary

  • Albemarle’s Q2 2025 net sales were $1.33B (down 7% YoY) and adjusted EBITDA was $336M (25.3% margin), with Energy Storage volumes +15% offset by lower pricing; adjusted EPS was $0.11, GAAP diluted EPS was -$0.16 .
  • Management maintained its full-year scenario-based outlook tied to ~$9/kg LCE pricing and reduced 2025 capex again to $650–$700M; now expects positive free cash flow in 2025 given cost actions and capex cuts .
  • Segment mix: Energy Storage revenue $718M (pricing -28% YoY; volumes +15%), Specialties improved volumes and EBITDA, Ketjen modestly softer on timing and input costs .
  • Key catalysts: maintained scenario guidance at the ~$9/kg case, full-year FCF turning positive, 100% run-rate achievement against the high end ($400M) of cost/productivity savings, and capex discipline—all supportive to sentiment in a low-price environment .

What Went Well and What Went Wrong

  • What Went Well
    • Cost and productivity execution: achieved a 100% run-rate against the high end of the $300–$400M target, six months early, improving margins and cash conversion .
    • Energy Storage operations: record production from the integrated conversion network; H1 Energy Storage EBITDA margin ~30% on favorable mix and lower input costs .
    • Cash/FCF: Reduced 2025 capex to $650–$700M and now expect positive full-year 2025 free cash flow; liquidity ~$3.4B with $1.8B cash and net debt/adj. EBITDA ~2.3x .
  • What Went Wrong
    • Pricing pressure: Company-wide revenue down 7% YoY and Energy Storage adjusted EBITDA down 22% YoY due to lower lithium prices (partly offset by cost cuts) .
    • Ketjen softness: lower volumes (-4%) and higher input costs led to a 24.5% YoY decline in Ketjen adjusted EBITDA in Q2 .
    • Elevated tax rate noise: Q2 reported ETR (380%) and adjusted ETR (159.9%) reflect geographic mix and valuation allowances in Australia/China, adding earnings volatility .

Financial Results

MetricQ2 2024Q1 2025Q2 2025S&P Global Consensus (Q2 2025)*
Revenue ($B)$1.43 $1.08 $1.33 $1.28*
GAAP Diluted EPS ($)-$1.96 -$0.00 -$0.16 -$0.88*
Adjusted Diluted EPS ($)$0.04 -$0.18 $0.11 —
Adjusted EBITDA ($M)$386.4 $267.1 $336.5 —
Adjusted EBITDA Margin (%)27.0% 24.8% 25.3% —
  • Q2 delivery vs S&P Global consensus: Revenue beat ($1.33B vs $1.28B*), GAAP EPS beat (-$0.16 vs -$0.88*). Adjusted metrics are company-defined and not directly comparable to S&P’s standardized figures .
  • Note: S&P Global “Primary EPS” actual may differ from company GAAP diluted EPS due to methodology; company reported -$0.16 while S&P shows -$0.19 for the reported quarter.*

Segment breakdown

SegmentQ2 2024 Net Sales ($M)Q1 2025 Net Sales ($M)Q2 2025 Net Sales ($M)Q2 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Energy Storage$830.1 $524.6 $717.7 $283.0 $186.4 $219.7
Specialties$334.6 $321.0 $351.6 $54.2 $58.7 $73.0
Ketjen$265.7 $231.3 $260.8 $37.8 $38.6 $28.6

KPIs and operating drivers

KPIQ2 2025Commentary
Energy Storage volumes YoY+15% Record production; reduced reliance on tolling
Energy Storage pricing YoY-28% Key drag on YoY results
Specialties volumes/price YoY+6% / -1% Demand strength + productivity
Ketjen volumes/price YoY-4% / +2% Timing and input costs pressured EBITDA
Energy Storage EBITDA margin (H1)~30% Favorable mix and lower input costs
Liquidity~$3.4B; cash $1.8B Revolver availability $1.5B; net debt/adj. EBITDA ~2.3x
Cash From Operations (H1)$538M Working capital/inventory actions; JV dividends timing
2025 Capex Guide$650–$700M Down ~60% YoY; prioritizing sustainment

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total net sales (scenario ~$9/kg)FY25$4.9–$5.2B $4.9–$5.2B Maintained
Adjusted EBITDA (scenario ~$9/kg)FY25$0.8–$1.0B $0.8–$1.0B Maintained
Energy Storage net sales (scenario ~$9/kg)FY25$2.5–$2.6B $2.5–$2.6B Maintained
Energy Storage adj. EBITDA (scenario ~$9/kg)FY25$0.6–$0.7B $0.6–$0.7B Maintained
ES equity income, net of tax (scenario ~$9/kg)FY25$0.2–$0.3B $0.2–$0.3B Maintained
Specialties net salesFY25$1.3–$1.5B $1.3–$1.5B Maintained
Specialties adj. EBITDAFY25$210–$280M $210–$280M Maintained
Ketjen net salesFY25$1.0–$1.1B $1.0–$1.1B Maintained
Ketjen adj. EBITDAFY25$120–$150M $120–$150M Maintained
CapexFY25$700–$800M $650–$700M Lowered
D&AFY25$630–$670M $630–$670M Maintained
Adjusted effective tax rateFY25(40%)–25% (40%)–25% Maintained
Corporate costsFY25$70–$100M $40–$70M Lowered
Interest & financingFY25$180–$210M $180–$210M Maintained
Diluted sharesFY25118M 118M Maintained
Dividend (declared)Next pay date$0.405/sh Q3 declaration (Feb/May cadence)$0.405/sh payable Oct 1, 2025 Maintained dividends

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Lithium pricing scenarioIntroduced/maintained multi-scenario including ~$9/kg LCE; maintained into Q1 Maintained; ~$9/kg remains the operative case for 2025 given basket methodology Stable
ES contract vs spot mix~50% of volumes under LTAs with floors; mix to weigh on Q2 margins Heavier LTA draw in H1; more spot in Q3; stronger LTA in Q4; FY mid-20% margin at ~$9/kg Normalizing mix
Cost/productivityExiting 2024 at >50% run-rate; ~90% run-rate vs midpoint by Apr Achieved 100% run-rate vs high end ($400M) Accelerating
Capex disciplineCut to $700–$800M for 2025 Cut again to $650–$700M Tightening
Tariffs/macroMinimal direct ES impact; ~$30–$40M unmitigated headwind mostly in Specialties/Ketjen Minimal direct impacts; operations in Jordan uninterrupted; OBBB/45X support Largely unchanged
Regional demandChina/Europe strong; NA uncertain China BEVs +44%, Europe firm; NA outlook uncertain Stable (NA softer)
FCF outlookBreakeven line-of-sight in 2025 Now expecting positive FCF in 2025 Improved

Management Commentary

  • “We delivered strong second quarter results and are maintaining our previous outlook considerations assuming current lithium market pricing persists… we now expect to generate positive free cash flow for the year.” — Kent Masters, CEO .
  • “Our approximately $9 per kg scenario is based on Q2 average market pricing… we are maintaining our outlook consideration ranges.” — Neal Sheorey, CFO .
  • “This year, we realized a strong first half energy storage EBITDA margin of about 30%… we continue to expect the full year EBITDA margin to average in the mid 20% range assuming our $9 per kg price scenario.” — Neal Sheorey, CFO .
  • “We are reducing our full-year 2025 capital expenditure outlook to between $650 and $700 million.” — Company release .

Q&A Highlights

  • Pricing and assumptions: Management reiterated use of a basket of indices across regions/products; effectively ~$9/kg YTD and for 2H in the base case .
  • Mix dynamics: H1 saw heavier LTA demand; expect more spot mix in Q3 and stronger LTA pull in Q4; some spodumene sales slipped from June to July .
  • Margins and inventory flow-through: Higher-cost spodumene working through mostly in Q3; mix and cost timing weigh on 2H margins vs H1 .
  • Balance sheet and deleveraging: Liquidity $3.4B; plan to repay €440M bonds with cash at November maturity; deleveraging is a top capital allocation priority .
  • Contract renewals: One or two LTAs rolling off late 2026; discussions underway; structures remain market-indexed with protections .
  • Working capital: Expect working capital to be a tailwind in H2 given seasonality and lower pricing .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Revenue $1.33B vs $1.28B* (beat) and GAAP EPS -$0.16 vs -$0.88* (beat) . Adjusted metrics are not directly comparable to S&P standardized measures. Company adjusted EBITDA was $336M, while S&P “EBITDA” series reflects a different definition and showed a lower actual for the period; use company’s non-GAAP reconciliations when benchmarking operational performance .
  • Forward estimates: Street models embed low-price conditions through 2025 with gradual improvement in 2026; management commentary around 2H mix (more spot in Q3; stronger contracts in Q4) and mid-20% ES EBITDA margins at ~$9/kg suggest potential estimate refinements around quarterly cadence rather than full-year ranges .

Note: *Values retrieved from S&P Global.

Other Q2 2025 Period Press Releases

  • Dividend: Declared $0.405/share quarterly dividend payable Oct 1, 2025; annualized $1.62 .
  • Governance: Promoted Ander Krupa to EVP, General Counsel, Corporate Secretary & CCO .
  • Post-quarter (organizational design): Enhanced operating structure with a new COO role integrating resources, manufacturing, capital and supply chain (Aug 11) to bolster agility and efficiency .

Key Takeaways for Investors

  • Albemarle is executing on cost and capital discipline: 100% run-rate at the high end of the $400M program and capex cut to $650–$700M underpin a shift from breakeven to positive FCF in 2025 at ~$9/kg pricing .
  • Energy Storage operational momentum continues: record integrated production, improved fixed cost absorption, and H1 margin ~30%—though 2H mix/flow-through moderates to mid-20% for FY at base pricing .
  • Scenario-based guide maintained: total company $4.9–$5.2B revenue and $0.8–$1.0B adjusted EBITDA anchored to ~$9/kg; segments unchanged—credibility enhanced by sequential EBITDA improvement and consistent delivery vs scenarios .
  • Balance sheet resilience: $3.4B liquidity, plan to retire upcoming bonds with cash, net leverage ~2.3x—supports staying invested through a low-price part of the cycle .
  • Watch near-term: Q3 margin cadence (higher spot mix, inventory costs), Specialty/Ketjen throughput and input costs, and any incremental tariff/regulatory impacts by region .
  • Medium term: As pricing normalizes and JV capex winds down, dividend capacity and deleveraging should improve; contract renewal discussions for 2026 and U.S. policy (45X) remain potential positives .

Sources: Q2 2025 press release and 8-K (incl. exhibit), Q2 2025 earnings call, Q1 2025 and Q4 2024 press releases; additional July press releases for dividend and governance .