ALB earnings call transcript, November 4, 2026

And welcome to Albemarle Corporation's Q3 2026 earnings call. I will now hand it over to Meredith Bandy, Vice President of Investor Relations.

And sustainability.

Hello. We will now move into our Q&A portion. If you would like to ask a question, please press star five to raise your hand. As a reminder, that is star five to raise your hand. Also, please bear in mind this Q&A session is limited to one question and one follow-up per person.

Welcome to Albemarle Corporation's Q3. February 2026 earnings call.

And welcome to Albemarle Corporation's Q3 2026 earnings call. I will now hand it over to Meredith Bandy, Vice President of Investor Relations and Sustainability.

Thank you and welcome everyone to Albemarle's third quarter 2026 earnings conference call. Our earnings were released after market closed yesterday, and you'll find the press release and earnings presentation posted to our website under the Investors section at albemarle.com. Joining me on the call today are Kent Masters, Chairman and Chief Executive Officer, and Neil Charest, Chief Financial Officer. Eric Norris, Chief Commercial Officer, will also be available for Q&A. As a reminder, some of the statements made during this call, including our outlook, expected company performance, and strategic initiatives, may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation. That same language applies to this call. Please also note that some of our comments today refer to non-GAAP financial measures. You'll find reconciliations in our earnings materials. And now I'll turn the call over to Kent.

Thank you, Meredith.

Thank you, and welcome everyone to Albemarle's third quarter 2026 earnings conference call. Our earnings were released after market closed yesterday, and you'll find the press release and earnings presentation posted to our website under the investors section at albemarle.com. Joining me on the call today are... Kent Masters, Chairman and Chief Executive Officer, and Neil Charae, Chief Financial Officer, Eric Norris, Chief Commercial Officer, will also be available for Q&A. As a reminder, some of the statements made during this call, including our outlook, expected company performance, and strategic initiatives, may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation. That same language applies to this call. Please also note that some of our comments... ...today refer to non-GAAP financial measures. You'll find reconciliations in our earnings materials. And now I'll turn the call over to Kent.

Thank you, Meredith. Albemarle delivered another solid quarter, supported by disciplined execution across the enterprise. We reported third-quarter net sales of $1.6 billion and adjusted EBITDA of $646 million. Energy storage results were supported by higher lithium pricing year-over-year. And specialties outperform with both higher pricing and volumes. Both segments are benefiting from ongoing cost and productivity efforts. Year-to-date, our teams have delivered more than $150 million in run-rate cost and productivity improvements, achieving the high end of our full-year target. Importantly, we have converted those strong earnings into cash. Year-to-date, we've generated $1.5 billion of cash from operations and $1.2 billion of free cash flow. Our year-to-date operating cash conversion rate of 67% is at the high end of our benchmarking range. We are also improving our 2026 outlook considerations. We are increasing our adjusted EBITDA outlook for specialties based on strong year-to-date performance, steady market demand, and continued cost and productivity improvements. We are also reducing expected full-year capital expenditures through focus capital efficiency and the re-sequencing of some early-stage project spending. In-market fundamentals remain strong for both our businesses. Global lithium consumption increased 48% year-to-date, led by continued strong demand for energy storage systems and rebounding demand for electric vehicles. Lithium demand continues to outpace supply growth. Finally, at our world-class resources, the Greenbush's CGP3

Thank you, Kent, and good morning, everyone. I'll begin with our

Thank you, Kent.

Third quarter results on slide five. Net sales were $1.6 billion, up 19% year-over-year, driven primarily by higher pricing in energy storage and higher pricing in volumes and specialties. Adjusted EBITDA was $646 million, up 186%, reflecting improved market conditions and continued cost and productivity improvements in both segments. As a result, adjusted EBITDA margin expanded to 42%. Net income attributable to Albemarle was $297 million, or $2.15 per share. Adjusted earnings per share, which primarily excluded restructuring and other related charges, were $2.58 per share. Turning to slide 6. As usual, we provide the key drivers of our adjusted EBITDA growth year over year. Higher costs of goods sold primarily reflects the processing of higher-priced spodumene inventory and increased Chilean commission payments due to higher lithium pricing. As you see here, increased equity income from our Taliesin joint venture offset the impact of the higher spodumene pricing running through COGS. By segment, energy storage adjusted EBITDA increased 351% due to... ...higher lithium pricing. Specialties adjusted EBITDA increased 31% on higher pricing and volumes driven by increased demand for bromine products. In both segments, cost and productivity improvements help offset increased fuel and raw material costs driven by the conflict in the Middle East. Corporate and other declined primarily because the prior year period included EBITDA from the Ketchen

Refinition Refinition Refinition Refinition. Finding Catalyst Solutions business that was divested in the first quarter of 2026. Turning to slide 7.

Thanks to our discipline execution, Albemarle's year-to-date results have trended toward the higher end of the $20 scenario. This is due to specialties outperformance, higher volumes at Wajina, and successful cost and productivity improvements. Year-to-date lithium market pricing has averaged a price. Approximately $20 per kilogram lithium carbonate equivalent, or LCE. Moving to slide 8. In specialties, geographic and end-market diversity has helped us manage through notable headwinds, such as the conflict in the Middle East. We are the only bromine producer with access to world-class reserves in both Jordan and the U.S., which has given us flexibility to meet dynamic customer needs. We are the only bromine producer with the U.S. and the U.S. and the U.S. and the U.S. As with most companies, we have seen higher costs related to the conflict, including select raw materials and logistics. At the same time, a tighter petrochemical supply chain has led to concerns around security of supply, supporting demand for our bromine products. In spite of the geopolitical volatility in the region, our Jordan Bromine Company joint venture achieved record quarterly production in the third quarter, which further enabled our ability to capture market growth. For the full year, we are increasing the specialty's adjusted EBITDA outlook to $350 to $375 million, reflecting strong year-to-date performance, our expectation of steady demand in the fourth quarter, and further focus on cost and productivity actions. Moving to energy storage on slide nine. Third quarter

We'll be right back. Revenues and adjusted EBITDA were up significantly year-over-year, primarily due to higher pricing. I'll note that last year's third quarter set a high bar for sales volumes, given the timing of spodumene shipments and inventory destocking. By comparison, third quarter 2026 shipments of 56,000 tons LCE were down year-over-year. This is in line with our full year volume expectations. Following the outage at CGP3 earlier this year. For the fourth quarter, we expect energy storage net sales and adjusted EBITDA to decrease sequentially, assuming today's lower market pricing persists for the remainder of the quarter, while volumes will be steady with the third quarter. Margins are also expected to decrease sequentially as higher priced spodumene from our Taliesin JV flows through inventory. and into production costs at a time when pricing is trending lower. Expected full-year sales volumes remain in the range of 225,000 to 235,000 tons LCE, as the outage at CGP3 earlier this year is mostly offset by higher production and sales at Wajina. Our contract versus spot mix for 2026 is also unchanged. changed. Slide 10 highlights our continued progress on cost and productivity improvements and cash management actions. Year to date, we have achieved more than $150 million in run rate cost and productivity improvements, reaching the high end of our full year target. The improvements span manufacturing cost, incremental volume and yield gains, and supply chain and back office initiatives.

Our focus on cash... ...cash conversion and generation continues to show through. Year to date, we have generated $1.5 billion in cash from operations, representing an operating cash flow conversion of 67%. Our conversion metric remains at the higher end of our benchmark target range of 60 to 70%. We continue to highlight our focus on cost, productivity, and cash, not only because... ...we believe it's prudent, but also because it bolsters our competitiveness and continues to provide us with financial flexibility. Turning to slide 11, we are reducing our expected 2026 total capital expenditures to $300 to $350 million from approximately $500 million. This is a meaningful reduction, and it is the result of purposeful analysis and focus that we have put on our work. We are capturing the benefits from our work to improve capital efficiency, including initiatives like best-cost country sourcing, third-party spend optimization, and streamlining our capital planning processes. The reduction reflects a mix of two things. First, capital efficiency improvements that benefit both growth and sustaining capital projects. And second, resequencing early stage project spending to better align with project timelines, which primarily impacts growth CapEx. To be clear, these improvements still prioritize the must-do capital for safety, critical maintenance, and regulatory purposes that our assets require. As a result of our efforts, we are now targeting less than $300 million of sustaining capital spending in 2026.

With that... I'll turn the call back to Kent to discuss demand and our resource position.

Thanks, Neil.

We will now move into our Q&A portion. If you would like to ask a question, please press star 5 to raise your hand. As a reminder, that is star 5 to raise your hand. Also, please bear in mind this Q&A session is limited to one question and one follow-up per person. We'll take our first question from Patrick Cunningham with Citi. Your line is now open.

Hi, good morning.

This is Alex on for Patrick. I guess, you know, it seems like there's an increasingly strong focus on the cost discipline and the specialty side. Can you maybe walk us through some of the actions you're taking there and how much incremental benefit we should expect in 27?

Okay, so let me, I'll start with that. So I would, first comment would be it's across the whole organization, not just specialties. So we're trying to get very focused, make us kind of a leaner organization. And that's kind of across everything, both operations, productions. I think you saw in the comments, we had a record production quarter, third quarter at JBC, in spite of kind of the disruptions happening in the region. So there's a lot of focus on operating costs, on productivity, on efficiency throughout the enterprise. So, and it goes back office, supply chain, we're getting pretty focused and have been on that path for the last, I would say, three years. And we're getting better at it. You see the doing the same thing on capital. That's a big program that we have of getting much more focused, particularly on sustaining capital, looking at benchmarks, trying to be best in class around how we maintain our assets, and looking significantly a different way between growth capital and sustaining capital. So a lot of focus on. But looking at them different ways and benchmarking sustaining capital against other manufacturing organizations that we think are similar and world-class. So it's not just specialties, but there is a focus on specialties, but I think it goes across the enterprise.

Great. And then just as a follow-up, I think pricing was higher quarter-and-quarter despite some declines in the spot market. I'm just curious, you know, was there less spot volume or spot demand volume still sequentially?

Yeah.

Hi there, Alex.

This is Neil. I can take a little bit of this. So remember that, you know, our pricing in a particular quarter can be above the market for, you know, reasons actually different than what you mentioned with regards to mix. I mean, yes, mix is one part, but also remember that our contract volume has a three-month. lag to it. So, actually, for some of that contract volume that came through in the third quarter, what we actually saw was pricing that was more indicative of the second quarter. And so, there are things like that that also come through in our numbers, which would drive our pricing at times to be above the market.

Our next question comes from Josh Sector with UBS. Your line is now open.

Our next question comes from John Roberts with Mazuho. Your line is now open.

Our next question comes from Ben Isaacson with Scotiabank. Your line is now open.

Our next question comes from David with Deutsche Bank. Your line is now open.

Our next question comes from Alexi Yefremov with Barclays. Your line is now open.

Our next question comes from Joel Jackson with BMO. Your line is now open.

The first question is if you don't have money to, if you're not really going to spend capital the next while, would you buy back stock or how are you going to use that money? And then, and then the energy storage question. Yeah. So let me, let me do, I'll do energy storage because I was kind of starting on that. So. I don't think we've learned anything about that. I think the, the point we were making in the prepared remarks is the economics on these in use projects are good for a variety of reasons. Part of it is because the efficiency of the cost of lithium ion technology has come down for the technology curve. Lithium is some of that, but not the biggest piece of it. So the fact that I don't think it changes the economics at 25,000 versus 15, the, the learning curve, the experience curve and the scale. That automotive scale has given to lithium ion technologies now being applied across fixed stories. So I think that's the benefit there. So the, the other question conviction, I look, I think we can execute on these brownfield projects. We feel pretty good about that. They're in, again, I said it before in jurisdictions, we know, uh, in resources that we know with and, uh, and partners that we have been working with for quite some time. So we feel like we. Can execute those. We've done those projects already, right? So it's not the first time we've done projects at Wajana, at Greenbushes, or this Florida Atacama. So it's probably as good as you get from a project execution perspective and our confidence and conviction. Uh, so I, I feel I'm, I have strong confidence in executing projects like that. Uh, and then, and then the question is really about how does that, uh, layer in, how does capital get spent? What's that profile and what does price look like? Right?

Right? So look, buybacks are something that we look at. We will look at it on a regular basis, but we have these big projects. We think that's better investment for us longterm. But if, if the timing is not right, we, we will look at buybacks. And that's definitely part of our capital allocation strategy. Prices are moving down right now. We want to see where this, where we are in this particular cycle, uh, before we commit. Uh, but, uh, it's part of our thinking.

Our next question.

Yeah, great.

Thanks for taking my question.

Um, congrats on the strong results. I guess first question is just, uh, could you comment on, um, you know, maybe the Zimbabwe, uh, export, uh, and apologies if this is asked before, but, um, it seems like, uh, you know, those restrictions will return again in 27 and that should add some tightness in the market, but, um, it doesn't appear that. uh, pricing and, and, and customers are acting that way. So maybe I can just get your thoughts on, on, um, you know, those dynamics. Thanks. Yeah. So maybe Eric can, he can come back. We talked about it a little bit already. So they've, the, the band's been reaffirmed now they could change their mind. Uh, and, and there are people working to, uh, do sulfate projects and, and so they can, we'll be able to export within that band. Uh, our understanding is that. And very few of those are ready to go on January one. So, uh, we think there's going to be a disconnect there. The government could change that perspective and give them more time. We, we don't know. Uh, but it, it feels like, as I said before, there's more downside to upside on that supply, uh, particularly coming from Africa. Eric, do you have more detail? No, I mean, I think that covers it. Arun, the second part of your question talked about what our customers think. And I, I think it's an important question to ask and something, uh, I'm glad you did. It goes back to Kent's earlier comments around physically, this is a strong market futures wise. It's, it's not showing that on price that, that, that is a reflection of any conversation I have with a customer. They have the same confusion that you do. And that we do as to why there'd be a disconnect. Uh, they see the market as strong. Their order books are strong. Yes. There's parts of the market that are stronger than others. Uh, but nonetheless, on the whole, um, it is perplexing to them.

Um, and of course to our customers, what, uh, you know, you might argue they always like low prices, of course, but, but they all, what they hate more than anything is the volatility. Um, and they don't understand this level of volatility. And so bring that back to Africa. I mean, I think we have to be careful about taking every supply announcement, including what you see in Zimbabwe on face value. There are a host of things that are proven over time to make it harder than it's the announcement says it's going to be. And what Ken just described, Zimbabwe is one example of that. Thanks a lot. And then if I could just ask one follow up. You know, how has that impacted or maybe even some of the other

announcements? You know, you know what you're seeing on the return side. So does do you think that your cost of capital is still relatively high for many of the producers and they're still operating in a lot? It just doesn't really square with, you know, high levels of capital or high levels of cost of capital to bring on supply at $14,000 LTE. It's just a little unusual. But have you seen, you know, maybe reductions in the cost of capital or are those producers operating in a loss? Thanks. Look, there's a wide range of different. Different players in the space. And you see some are speculating, you know, and they're willing to make investments around that. If they've got startups that have been funded, they're going to do their project as long as they have money to do it. But it's a big range, you know, between how we think about it and how some of the other players in the market think about it. So it's hard to – there's not one answer to that. It is a wide range. I don't think the cost of capital is changing for any of these players, getting higher. Anything, but doesn't seem to change their perspective on investment or restarting assets that are – would be marginal in this price structure, unless they're betting on the price going up, which a lot are. Yeah, I think some of that might be that people saw the price recovering, a little surprised by how quickly now it's come back down again.

That's a catch-22 for anybody that's on a high end of the cost curve. Yeah, but you can't move on a dime on these projects. These are big, big projects that take a lot of planning. You just can't start and stop on a dime.

Our next question comes from Vincent Andrews with Morgan Stanley. Your line is now open.

It comes from Kevin McCarthy with Vertical Research Partners. Your line is now open.

Hi, this is Matt.

Thank you, operator.

This concludes today's conference call.

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