From Nasdaq: 2025-02-13 13:45:12

Albemarle (NYSE: ALB) held its Q4 2024 earnings call on Feb 13, 2025. The company reported net sales of $1.2 billion and an adjusted EBITDA of $251 million for the quarter. Full-year 2024 adjusted EBITDA was $1.1 billion, with a 26% year-over-year increase in sales volumes in the energy storage segment. They also announced new measures to optimize their global conversion network. The company has improved its outlook for 2025 and expects to achieve break-even free cash flow. The full-year 2024 net sales were $5.4 billion, marking a year-over-year decrease primarily due to lower lithium pricing.

For the full year 2024, Albemarle reported net sales of $5.4 billion and an adjusted EBITDA of $1.1 billion. The fourth-quarter adjusted EBITDA was $251 million, driven by improvements across all three business segments. The company’s outlook for 2025 has been improved, with a decreased full-year capex outlook by an additional $100 million. They expect to achieve break-even free cash flow in 2025. Albemarle’s Q4 adjusted EBITDA surpassed last year’s results due to higher volumes, productivity, and lower COGS, with improvements across all three business segments. Albemarle has provided ranges of outcomes for its energy storage business based on recent lithium market pricing, including year-end 2024 market pricing of about $9 per kilogram LCE. The company anticipates slightly higher energy storage volumes year over year. Corporate costs are expected to decrease in 2025, with net sales projections for specialties and Ketjen. Additionally, Albemarle expects cost and productivity improvements to offset reduced equity earnings related to lithium market pricing. The company also anticipates a modest volume-led recovery in specialties and improved results in Ketjen for 2025.

At the conclusion of the fourth quarter, Albemarle had available liquidity of $2.8 billion, primarily consisting of cash and cash equivalents. The company has focused on execution and converting earnings into cash, with operating cash flow conversion exceeding expectations for 2024. Albemarle expects operating cash flow conversion to exceed 80% in 2025 due to ongoing working capital improvements and a $350 million customer prepayment. The company is also evaluating options for managing an upcoming maturity of 372 million Euro notes due in November of this year.

Albemarle is in the process of updating its longer-term supply-demand forecast for the lithium market in light of recent policy and market developments. The company expects to provide a more comprehensive update with its first-quarter results. The global energy transition is progressing, with a 25% increase in electric vehicle registrations in 2024. Battery costs have fallen below $100 per kilowatt hour, boosting EV affordability. Grid storage demand grew by nearly 50% in 2024, now constituting nearly 20% of global lithium demand. China’s demand was the key driver, representing about 65% of the market. Albemarle is implementing cost-saving measures to remain competitive, aiming to achieve breakeven free cash flow this year. The company is optimizing its conversion network and focusing on low-cost resources to maintain its competitive advantage in the lithium market. Albemarle’s core business sees growth opportunities in mobility, energy, connectivity, and health, including energy transition and electrification. Their industry-leading resources and customer-centric approach position them well for success. The company is focused on innovation, operational efficiency, and sustainability. They are committed to long-term value creation and maintaining a competitive position in dynamic markets. Despite strategic framework remaining unchanged, execution has adapted to enhance operational efficiency and agility. Albemarle continues to invest in research and development, focusing on cutting-edge technologies and sustainable practices to drive growth and innovation. Livent Corporation’s decision to cut capex and place Chengdu under care and maintenance may not significantly influence the market due to market conditions and product mix. The company plans to shift product from hydroxide to carbonate at Qinzhou to compensate. The wide range in the tax guide for 2025 is due to different scenarios and the impact of lithium prices on pre-tax income. Livent aims to achieve free cash flow breakeven in 2025 by executing its plan with aggressive actions. The company does not foresee the need for a capital raise in 2025. In Q4, roughly 25% of global lithium supply is considered underwater, with about half curtailed or shut down.

Livent Corporation aims to be free cash flow positive throughout 2025 without the need for an equity raise. The company does not disclose the difference in spread between spot and contract lithium sales. Approximately 25% of global lithium supply is underwater, with about half curtailed or shut down. Livent’s energy storage adjusted EBITDA ranges based on observed market prices and assumptions. The company assumes spodumene market pricing averages 10% of the LCE price. The assumption is that all partners at Talison are taking their full allocation of sales volumes. Spodumene prices average 10% of LCE price, but can fluctuate. CGP 2 expansion at Talison is not expected until the end of the year, with growth coming from Chile’s Salar yield project. Sustaining capex targets 4-6% of sales, aiming for mid-cycle pricing. Contracts are adjusted over time, not renegotiated annually. A quarter of lithium supplies are underwater, with some rational behavior observed in the market. Albemarle is focused on cost competitiveness during the cycle downturn. Company executives discussed their financial outlook for 2025 and 2026, including a 80% cash conversion rate and the absence of a $350 million cash flow boost in 2026 due to the completion of an investment program. The company also addressed inventory value adjustments and provided increased disclosure on working capital. Additionally, executives shared aspirations to reach maintenance capital levels in 2026 and discussed the progress of a key project, CGP 3. In terms of market outlook, executives highlighted growth in grid storage and their strong presence in the LFP market for both EVs and grid storage. Kent Masters, Chairman, President, and CEO of Albemarle, discusses managing the company amidst evolving tariff regimes. While the direct impact on Albemarle is minimal due to limited shipping from China to the U.S., the focus is on the knock-on effect on customers. Energy storage accounts for 50% of Albemarle’s capacity under long-term contracts, with the remainder based on spot pricing. Plans to convert capacity to carbonate at Qinzhou reflect a stronger demand for carbonate over hydroxide. The decision allows for flexibility in response to market trends, with tolling capacity available in China to support future growth. Prices of EVs are declining despite increased demand and reduced capacity utilization, with a growing recycling industry in China. Albemarle’s CEO discusses the impact of market dynamics on pricing, highlighting shifts in capacity and recycling trends. The company received a prepayment with no further investment requirements, showcasing strong customer relationships. Analysts inquire about CATL’s restart and 2025 lithium volume breakdown, with a focus on spodumene vs. lithium salts sales. Albemarle emphasizes operational excellence and strategic positioning for long-term growth. The call concludes with a commitment to value creation and stakeholder satisfaction in navigating market challenges. 1. The Motley Fool reports on rising unemployment rates in the US, with a current rate of 6.7%. This marks an increase from the previous month’s rate of 6.5%, highlighting ongoing economic challenges.

2. In the tech sector, Apple announces a new partnership with Hyundai to produce self-driving electric cars. This collaboration aims to compete with industry leaders like Tesla and accelerate the development of autonomous vehicles.

3. Nasdaq closes at a record high, reaching 13,202 points due to positive economic data and strong performances from tech stocks. This milestone reflects investor confidence in the market’s resilience amidst ongoing global uncertainties.



Read more at Nasdaq: Albemarle (ALB) Q4 2024 Earnings Call Transcript