Albemarle Corporation Q4 FY2025 earnings call

• Fourth quarter and full-year 2025 financial results: Net sales and adjusted EBITDA were strong, with double-digit volume growth and cost and productivity improvements. - Updated lithium demand outlook: Global 2030 lithium demand estimate increased 10% due to stronger stationary storage demand. - 2026 outlook: Ranges based on lithium market price scenarios, targeting $100 to $150,000,000 in additional cost and productivity improvements and stable capital spending in 2026, expecting positive free cash flow at current lithium pricing. - 2025 achievements: Achieved approximately $450,000,000 in run-rate cost and productivity improvements and reduced CapEx spend by 65% year over year. Closed sale of stake in Eurecat joint venture and expected sale of majority stake in Ketjen in Q1 2026, generating ~$660,000,000 in pretax proceeds. - Kemerton plant: Idled operations to improve financials, expected to be accretive to adjusted EBITDA from Q2 with no impact on sales volumes. - Segment operations: Ketjen had strong Q4 and full-year results, Specialties had Q1 production interruption due to flooding and 2026 outlook provided, Energy Storage had full-year volume growth and Q4 net sales and adjusted EBITDA growth.

For the fourth quarter, net sales were $1,400,000,000, up 16% year over year with double-digit volume growth, and adjusted EBITDA was $269,000,000, up 7% year over year. For the full year, net sales were $5,100,000,000 and adjusted EBITDA was $1,100,000,000. In terms of segments: Energy Storage had 17% volume growth in the fourth quarter; Ketjen had net sales up 14% year over year and adjusted EBITDA grew 39%; Specialties had net sales up 5% year over year but adjusted EBITDA declined 6% due to margin compression, particularly in the lithium specialties business where pricing moved lower from previous peaks. Revenue contribution: Energy Storage, Ketjen, and Specialties each contributed to the overall sales and EBITDA, with Energy Storage and Ketjen showing growth drivers.

Guidance

• 2026 outlook is based on lithium market price scenarios, including $10, $20, and $30 per kilogram LCE cases, with ranges for Energy Storage and enterprise performance.
• Targets an additional $100 to $150 million in cost and productivity improvements in 2026 and stable capital spending.
• Anticipates positive free cash flow at current lithium pricing.
• 2025 achieved ~$450 million in cost and productivity savings and reduced CapEx by 65% year over year.
• Expected to close sale of majority stake in Ketjen in Q1 2026, generating ~$660 million in pretax proceeds.

• Lithium price volatility: Can impact revenue and profitability. - Chinese lithium capacity changes: Regulatory and market dynamics in China can affect lithium supply and pricing. - Kemerton plant: Ongoing costs to keep the idled capacity ready and uncertainty around restart based on market conditions. - Specialties market: Soft demand in oil and gas and elastomers markets can impact Specialties business performance.

Q: How should we think about volume growth beyond 2027 in the 2027, 2028, 2029 timeframe?

A: We grew faster than anticipated, had headwinds from pulling inventories down, but have growth opportunities at Greenbushes, Wodgina, Kings Mountain, and Salar de Atacama, and will continue on a growth profile after 2027 with opportunities based on market conditions.

Q: How much higher cost is the Kemerton asset than Chinese conversion assets and what lithium price would be needed to restart Kemerton?

A: There is a gap in costs between China and Kemerton, likely $4 to $5 per kilogram, and need differentiated prices to cover Western costs, but no specific lithium price mentioned for restart without support.

Q: Can you comment on how much Chinese lithium capacity you think was closed down from about 2025 today, because of various actions? And do you think that the Chinese government or steps the Chinese government took were key to that capacity coming offline?

A: About 30,000 to 50,000 tons of capacity came off in 2025, Chinese government had some influence with environmental regulations and permitting, but not all driven by that, with demand growth also playing a role.

Q: What is behind the decrease in Specialties adjusted EBITDA for 2026?

A: Lack of demand growth in certain markets like oil and gas and elastomers, and lithium prices, particularly in lithium specialties where long-term contracts based on high prices have come off, affecting margins.