Albemarle Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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👉 More detailed insights
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👉 Clear answers to your questions
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $12.34b | Revenue (TTM) = $5.91b
Market Cap = $12.34b | Estimated Revenue = $6.17b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $12.59b | Revenue (TTM) = $5.91b
Enterprise Value = $12.59b | Forward Revenue = $6.17b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🧮 Calculation
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders or uses to reduce debt relative to its market capitalization. It goes beyond dividend yield by also including share buybacks and debt reduction.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. Companies can also return capital through share buybacks, while reducing debt can strengthen the balance sheet. Shareholder Yield combines all three components into one metric, giving investors a broader view of how a company uses its capital.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield generally indicates more capital being returned to shareholders or used to reduce debt.
- The mix matters: dividends, buybacks, and debt reduction can affect shareholders in different ways.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends, buybacks, and debt reduction are sustainable over time.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Albemarle Stock Analysis
Analyst Opinions
27 Analysts have issued a Albemarle forecast:
Analyst Opinions
27 Analysts have issued a Albemarle forecast:
Albemarle Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
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MAY
7
Q1 2026 Earnings Call
5 months ago
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FEB
12
Q4 2025 Earnings Call
8 months ago
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NOV
6
Q3 2025 Earnings Call
11 months ago
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StocksGuide Free
Albemarle — Q2 2026 Earnings Call
1. Management Discussion
Hello, and welcome to Albemarle Corporation's Q2 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 Second Quarter 2026 Earnings Conference Call. Our earnings were released after market close 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, Chief Executive Officer; Neal Sheorey, Chief Financial Officer; Mark Mummert, Chief Operations Officer; and Eric Norris, Chief Commercial Officer, are also available for Q&A. As a reminder, some of the statements made during this call, including outlook, guidance, 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 may refer to non-GAAP financial measures. You can find reconciliations in our earnings materials.
And now I'll turn the call over to Kent.
Thank you, Meredith. Our strong start to 2026 continued in the second quarter, supported by disciplined execution and improving conditions across our key markets.
Second quarter net sales of $1.7 billion increased 31% year-over-year, driven by higher pricing in energy storage and both higher pricing and volumes in specialties. Adjusted EBITDA more than doubled to $858 million, with our enterprise EBITDA margin expanding to 49%. Importantly, we converted that performance into cash. We generated $710 million of cash from operations, representing a more than 80% operating cash conversion and $638 million of free cash flow in the quarter. We are also on track to reach the high end of our $100 million to $150 million full year target for cost and productivity improvements. These results reflect a deliberate focus on operational excellence and cost discipline.
We also benefit from globally diverse and resilient key end markets. Global lithium consumption was up 45% year-over-year through May, tracking above our forecasted range, driven by continued strength in stationary storage and improving growth in electric vehicles. Needed supply increases are coming to market slower than demand growth due to limited spodumene availability, temporary disruptions in shipments from Africa and slower-than-expected ramp-up of Chinese lepidolite mines. And as a result, inventories are low and the physical lithium market remains tight.
We are improving our 2026 outlook considerations, including raising our specialty sales and EBITDA outlooks due to a strong year-to-date performance and reducing expected capital spending, thanks to ongoing capital efficiency efforts. Beyond our 2026 outlook, we are also advancing resource options that can support sustainable growth through the cycle.
On today's call, I'll focus on our efforts at the Salar de Atacama, where we're leveraging decades of brine processing expertise to advance direct lithium extraction. We also have opportunities at our Australian hard-rock joint ventures. Wodgina is outperforming on better-than-planned ore availability and recoveries. This is helping offset the impact of a fire at Greenbushes CGP3 plant, which occurred on June 9. CGP3 restarted on August 1.
Now I'll turn it over to Neal to discuss recent results and outlook. I will then cover recent market trends and give more detail on our resources before we open the call for Q&A.
Thank you, Kent, and good morning, everyone. I'll begin with our second quarter results on Slide 5. Second quarter net sales were $1.7 billion, driven by energy storage pricing, up 73%, while specialties pricing and volumes were up 11% and 8%, respectively. Adjusted EBITDA for the quarter was $858 million, up 155% year-over-year, reflecting higher net sales and our ongoing cost and productivity improvements. Both segments contributed to this strong growth with energy storage adjusted EBITDA up 229% and specialties up 61%. Net income attributable to Albemarle was $480 million, and we reported diluted earnings per share of $3.52.
Turning to Slide 6. I'll walk through the key drivers of our year-over-year EBITDA performance. As I mentioned, second quarter adjusted EBITDA increased primarily due to higher pricing in both segments. Due to higher lithium pricing, our cost of goods sold reflects increased Chilean commission payments and higher-priced spodumene inventory. The impact of higher spodumene pricing is offset by increased equity income from our Talison joint venture versus the prior year. Across both segments, cost and productivity improvements helped offset raw material and supply chain cost increases related to the situation in the Middle East.
Corporate and All Other reflects a reduction in adjusted EBITDA due to the Ketjen Refining Solutions divestiture, partially offset by favorable foreign exchange impacts.
Turning to Slide 7. We are maintaining our total company outlook ranges and expect to come in at the high end of the scenario ranges due to strong year-to-date performance and an increased specialties outlook. These factors offset modestly lower expected energy storage sales volume due to the fire at the CGP3 plant at the Talison joint venture. Our outlook ranges continue to reflect the expected impact of supply chain disruptions related to the situation in the Middle East, which we still estimate at approximately $70 million to $90 million on an unmitigated basis for the full year. In Specialties, we are increasing our outlook due to higher pricing and volumes, which I will cover in more detail on the next slide.
The Specialties segment delivered another strong quarter. Net sales were $424 million, up 20% year-over-year, and adjusted EBITDA was $118 million, up 61% year-over-year. Adjusted EBITDA margin was 28%, up 700 basis points from the prior year period. The solid performance in the second quarter was primarily due to higher pricing and volume and favorable product mix as a result of bromine market disruptions related to the situation in the Middle East. As a result, we are increasing our full year outlook ranges, raising net sales to $1.4 billion to $1.6 billion and adjusted EBITDA to $275 million to $325 million. This increase reflects strong year-to-date performance as our teams have worked to capture the upside of increased bromine pricing while mitigating Middle East-related supply chain disruptions through proactive cost management.
Our second half outlook assumes stabilization of the bromine market as we've seen pricing normalize since reaching a peak in April, and it reflects continued uncertainty in the Middle East. As such, we expect third quarter net sales and EBITDA to be lower sequentially. Long term, we continue to see margin upside for the Specialties segment as our business and asset diversity continues to deliver positives. Specialties benefits from diverse end markets, including electronics and semiconductors, building and construction, oil and gas and pharmaceuticals. Geographic diversity also complements the platform's end market diversity and adds resilience against regional volatility.
Turning to Energy storage on Slide 9. Net sales increased 78% year-over-year and adjusted EBITDA increased 229%, both driven by higher pricing. Second quarter sales volumes were 65,000 tons lithium carbonate equivalent, or LCE, with an average realized price of approximately $20 per kilogram LCE. Realized price was approximately 15% below market pricing due to the dilutive impact of spodumene sales on an LCE basis and the 3-month pricing lag for our long-term agreements. See Slide 24 in the appendix for additional information.
For the third quarter, net sales and adjusted EBITDA are expected to decrease sequentially due to lower sales volumes and assuming that pricing is lower sequentially for the quarter as it stands today. Additionally, energy storage margins are expected to decrease sequentially due to the timing of spodumene inventories and also assuming that today's pricing continues for the quarter.
As a reminder, it takes approximately 4 months to ship and process spodumene purchased from the Talison joint venture. In a rising price environment, this creates a margin tailwind as we process lower cost inventory while benefiting from higher selling prices. In a declining price environment, that timing effect reverses and is dilutive to margins. For the full year, energy storage sales volumes are now expected to be in the range of 225,000 to 235,000 tons LCE or flat to down 4% year-over-year. This reflects the delay in the CGP3 ramp following the June 9 fire, partially offset by better-than-planned production at Wodgina. As Kent mentioned, CGP3 restarted last weekend and is now ramping back up.
Turning to Slide 10. We continue to focus on converting earnings into cash as evidenced by our performance over the last 3 years. First half operating cash flow conversion is at the high end of our long-term target range of 60% to 70%. In the second quarter, we benefited from increased Talison dividends and nonrecurring working capital reductions driven by favorable inventory and accounts receivable.
On a full year basis, we still expect cash flow to be impacted by $87.5 million of deferred revenue related to our 2025 customer prepayment, which benefits EBITDA but does not contribute cash and approximately $100 million of spend related to idling Kemerton Train 1.
Slide 11 highlights our continued focus on cost and productivity. Thus far, we have achieved approximately $100 million of run rate savings year-to-date. This performance puts us on track to reach the high end of our $100 million to $150 million full year target. Across these gross improvements, roughly 40% has been driven by supply chain and back-office initiatives. The remaining 60% includes manufacturing cost out and incremental volumes and yield. Examples of these productivity improvements include debottlenecking projects at La Negra, JBC and our lithium conversion sites in China. Importantly, these improvements continue to help us offset the supply chain disruptions and cost inflation related to the situation in the Middle East.
With that, I'll turn it back over to Kent to discuss the market outlook.
First, let me highlight the breadth of Albemarle's end markets and why we are generally seeing resilient demand trends. Our portfolio serves key markets across mobility, energy, connectivity and health, and that diversity strengthens our resilience through the cycle. Electric vehicles and stationary storage remain significant long-term growth drivers. Together, these 2 end markets make up about 50% to 60% of Albemarle's total net sales last year.
We'll talk in more detail on both these markets in a moment. In specialties, electronics and semiconductors, building and construction and oil and gas remain key market segments. AI-related demand continues to support electronics and semiconductor applications. In oil and gas, clear brine fluid demand has remained stable in the Middle East, while geopolitical uncertainty has incentivized demand in other regions such as the Americas and Europe. We can serve all these geographies from our global asset network, creating resilience in volatile environments like we face today.
Let's now turn to a deeper dive into EV and stationary storage markets. Turning to Slide 13. Lithium demand is up 45% through May, primarily driven by continued strength in stationary storage. We are increasing our 2026 and 2030 stationary storage forecast ranges due to that strong demand. We now expect stationary storage battery production of 900 to 1,100 gigawatt hours in 2026, up 11% or 100 gigawatt hours from our prior forecast.
We are also raising the low end of our 2030 stationary storage range to between 1,500 and 2,000 gigawatt hours, up approximately 9% from our prior forecast. As a result of this change, we are also raising the low end of our 2030 forecast for total lithium demand by 100,000 tons. Lithium demand growth continues to outstrip supply growth. As a result, we exited the second quarter near record lows in terms of days of lithium salt inventory. Based on mass balance calculations, we also estimate spodumene inventories are at near historic lows and some conversion sites in China have reportedly shut down or reduced production due to the lack of spodumene availability. Lithium demand continues to diversify by application and geography as stationary storage gained share.
Slide 14 highlights the strength of stationary storage demand. Global stationary storage production has nearly doubled year-over-year with broad support across most geographic regions. Long-term demand remains supported by multiple secular trends. First, global electricity demand growth is accelerating, led by urbanization, AI and data centers and EVs. With grid upgrades taking multiple years, stationary storage is the fastest and most cost-effective way to support grid reliability. Also, policy support in regions like China, Europe and Australia improves project economics for stationary storage and renewables. We now expect stationary storage to make up about 30% of 2026 global lithium market demand, nearing parity with light-duty EVs.
Turning to Slide 15. Year-to-date, global EV sales are up 10% year-over-year. EV sales growth inflected in the second quarter, up 16% versus prior year. European EV demand remains strong, up 31% year-to-date, driven by policy support in key markets like the U.K., Germany, France and others. Europe also benefits from increased model availability and affordability as Chinese OEMs have increased exports and domestic production for the region. In China, growing EV exports and larger battery sizes have helped offset weaker domestic EV unit sales. The rest of the world was the fastest-growing region in the first half, up 90% year-over-year and has overtaken North America as the third largest market, led by growth in Brazil, Australia, India and South Korea.
Turning to Slide 16 for an update on our Australian joint ventures. As previously mentioned, Greenbushes' CGP3 plant restarted on August 1. We had previously expected the plant to reach full run rate by year-end. Prior to this incident, the plant was ramping ahead of schedule. However, to ensure adequate contingency for our downstream operations, we've assumed CGP3 reaches full run rate in the first quarter of 2027. Greenbushes is in the middle of a multiyear transformation. Mine optimization studies are progressing well, and we anticipate operational improvements and further brownfield expansion projects. Our primary focus remains on operating the mine safely, and we have good alignment with all partners towards that goal.
At Wodgina, operations are performing well, supported by better-than-planned ore availability and recoveries. All 3 processing trains are now operating. Ore quality is expected to remain consistent next quarter before improving later this year as the availability of clean ore increases. As we have highlighted before, these hard rock assets are an important part of our long-term resource position and provide near-term brownfield growth opportunities.
Moving to Slide 17. Albemarle has decades of brine processing expertise at Magnolia and Silver Peak in the United States, the Salar de Atacama and La Negra in Chile and JBC in Jordan. That foundational experience informs how we are advancing DLE technology at the Salar de Atacama. Our dedicated team of scientists, engineers and operators have a deep understanding of DLE fundamentals based on more than 10 years of research and innovation. Over that time, we've evaluated dozens of DLE technologies, including both proprietary and third-party solutions.
Our highest and best opportunity to leverage DLE is in the Salar de Atacama based on the large scale and high grade of that world-class asset. At the Salar, we have progressed from scientific research and lab scale work to pilot validation and integrated pilot testing. In March of 2026, we submitted an environmental assessment permit for a DLE project at the Salar de Atacama. Our phased approach to DLE is intended to support future growth and sustainability while leveraging Albemarle's existing infrastructure and process chemistry expertise. We intend to advance this project prudently, subject to regulatory approvals, community consultation and technology validation.
On Slide 18, we show our phased DLE concept at the Salar de Atacama. Our current environmental permit submission seeks authorization for up to 6 trains. The planned investment will start with 1 train as we prove the technology at a commercial scale. Under this scenario, lithium-rich brine would be extracted from the Salar through pumping wells and sent in parallel to the existing evaporation ponds and the proposed DLE plant. The concentrated lithium solution from the DLE plant would be combined in the final solar evaporation ponds and further concentrated before being converted at La Negra into battery-grade lithium carbonate.
Our proposed DLE plant does not use solvent extraction, meaning that we retain the option to reincorporate the lithium depleted brine back into the Salar through dedicated wells. The Atacama integrated pilot plant has operated for more than a year, or over 3,000 operating hours, giving us valuable data and confidence in our process design and scale-up capability. Recoveries are critical to efficiency and sustainability, particularly in brine deposits. This is something we've worked on for years. A conventional pond system recovers about 30% to 40% of the lithium in extracted brine.
With Albemarle's Salar yield improvement technology, we've been able to increase recoveries to 50% to 60%. Our DLE pilot plant has demonstrated recoveries of over 90%, allowing us to extract more lithium with a smaller footprint and more fully utilize this world-class resource. Our team is also focused on minimizing water footprint in Chile. Approximately 85% of processed water is recycled at the current DLE pilot plant. Our DLE project is consistent with our broader strategy, leverage our world-class resources, technical expertise and existing infrastructure to create durable long-term value while improving sustainability outcomes.
In summary, Albemarle delivered another strong quarter, including net sales of $1.7 billion and cash from operations of $710 million. We are improving our 2026 outlook considerations by increasing specialties outlook, optimizing capital expenditure spend and tracking toward the high end of our cost and productivity target. We are also capitalizing on long-term secular growth opportunities in energy transition and energy resilience, including strong global grid storage demand. Finally, we remain focused on execution and disciplined capital allocation to enable us to grow ratably through the cycle.
With that, I'll turn the call over to the operator for Q&A.
[Operator Instructions] Our first question comes from David Begleiter with Deutsche Bank Securities.
2. Question Answer
Kent and Neal, can you just clarify your comments on guidance coming at the top end of the scenario ranges? Which one are you referring to total company or energy storage? Just some clarification, that would be great.
David, this is Neal. It's really both, and maybe I can clarify that a little bit. So we were referring to the $20 per kg LCE scenario. And actually, if you -- there's a couple of reasons why we say that we're towards the top end. First of all, if you look at market pricing so far this year in the first half of the year, it has trended actually on average a little bit higher than $20. So naturally, that pushes us towards the higher end of the $20 range. Then in addition to that, obviously, we've had a little bit better volume performance in the first half of the year. We've been working on our cost and productivity improvement. And at least at an enterprise level, you had the very strong performance from specialties, particularly in the second quarter. So for all of those reasons, at an enterprise level, if pricing had been at that $20, we would be towards the upper end of that range in the first half of the year. And then the same would be true for the Energy Storage segment as well.
Very helpful. And Kent, just on a potential government funding for lithium, there's been an increasing talk about the government focused on critical mineral supply chain and shoring that up in the U.S. Can you talk about where you stand on those discussions.
Okay. So look, there has been a lot of talk about it in discussions, and we've talked to the government quite a bit. So we've been involved in that process for quite some time. We don't have anything to tell you about today that involves that. So -- but it continues around critical minerals. Lithium is probably not the highest priority across all those critical minerals, and you probably see that for the projects that they've announced. But we have conversations, we're talking to them, but we have nothing to tell you about today.
Our next question comes from Patrick Cunningham with Citi.
This is Rachel on for Patrick. So you've noted lithium demand is accelerating higher than expectations and growing faster than supply. So curious to hear kind of your latest thoughts on the supply side of the equation and if the market requires higher pricing levels to support new investments.
Okay. So you kind of said it. So demand is a little stronger than we were anticipating. It is strong. There's a bit -- it was -- EVs were weak in the first quarter, but they kind of trended back in the second quarter and then energy storage demand is kind of off the charts. And that -- and so with EVs coming back, there is strong demand. Supply is a little behind that. So when we look out, say, for the year, there is supply coming on and you always need that supply to come on because this market is growing. It's a little -- it's behind demand. So that's probably why you see inventories getting down to levels which we haven't seen for a while.
So the inventories of the physical market is very tight. And then you'll see -- there are projects on the board. We expect investments to come. You need that to keep up with supply. And then your question about is pricing driving that. I don't mean we're in a range where good projects will -- people will invest in good projects and more speculative projects, probably not. So it's not a bad place from a pricing perspective. I don't think it's driving projects that weren't planned, and it's not taking projects that were planned off the books. So it's not a bad place to be.
Got it. And you've raised both the 2026 and 2030 stationary storage demand forecast. So curious to hear if anything changed specifically in your customer discussions or project pipeline visibility to give you the confidence to increase the longer-term outlook.
Yes. Look, I think it's just the confidence that we see in the projects that are happening, the supply chain that's getting built out and all the activity. Eric, maybe you want to talk about any specific customer discussions that give us more confidence.
Well, most of the chemistry in question that we're talking about that's driving this is driving our demand is iron phosphate chemistry comes out of China. So our customer discussions there indicate a market that is tight and struggling to keep up with installation demand. Installations are exceeding actual battery production. We can track sort of about a 1-year lag between when lithium is sold and when it goes into an installation. And the latter the installation number that's been announced, is larger than what's being produced today. And that drives a healthy market, and we're seeing that in our customer base in China right now.
Our next question comes from John Roberts with Mizuho.
Could you talk a little bit about the constrained supply out of both Africa and China, lepidolite. How long would you expect that to last?
Yes. So that's been the story over the last year, I would say, and it's starting to move. So you see that starting to move, and that will go into the back half of the year of a bit of additional supply. I think it's a little different. Africa is moving a little faster. Lepidolite, I think we've seen one mine come back on and start to ramp up. So that will add capacity. But as we said, the market is pretty tight. Inventories are low. We kind of need that capacity.
And then what's the sequential price assumed for bromine in the specialties guidance?
John, this is Neal. So look, it's hard to give you a specific price on bromine in the -- for the third quarter, mainly because as we've shown you before, there is a bromine index in China, but only about 1/3 of our volume tracks that bromine index. One thing I will say about the Chinese bromine index, which you can observe is that index hit a peak back in the second quarter and has come back down to levels today that are probably closer to where we started the year. So that's one data point.
The other data point is that, look, I think supply-demand fundamentals were quite a bit tighter in the first half of the year due to the situation in the Middle East and as some supply chains were reorienting. So right now, what we're assuming is that there's a little bit more normalized kind of supply-demand fundamental in the back half of the year. But I will admit, we're watching this closely because obviously, the situation in the Middle East hasn't gone away. So generally speaking, we're assuming that pricing kind of holds where it is today, but it is a live situation.
Next question comes from Arun Viswanathan with RBC.
I guess, first off, I just wanted to ask about the volume picture. So maybe we should get some initial expectations for volume for next year. I guess you will be facing maybe some limitations this year just given the fire, but then that could be offset by Wodgina extra production. So do you expect to grow volumes next year and maybe kind of in the low single-digit range? Or how should we think about how volumes evolve from here for energy storage?
Yes. So I'll start with that. But I would say, I mean, this year is -- I think we'll get close to offsetting the fire at Talison with extra performance at Wodgina. So we were kind of tight there. We kind of pulled back on our volume estimates a little bit, but we think we can cover that for the most part. And that will make us kind of flat year-over-year just because of our capacity. We will have growth into next year as CGP3 ramps. So we'll get -- we won't get the full year of it probably next year, I mean close. And we're saying we get close to full production in the first quarter, then you'd see that annualizing as we go forward. So we'll have room for growth next year. It will be -- I mean you can do the math on what that looks like. So it's high single digits.
Yes, Arun, and maybe I can point you back to, this is a slide that we put out, gosh, I think it might have been 2 quarters ago. So I don't expect you to remember this. But if you follow our 15% CAGR volume growth that we've said we're doing from '22 to '27, that would put 2027 in the range of 240,000 to 260,000 tons LCE. And I would say now that CGP3 is back and ramping back up, we're back on that trajectory. So that's maybe a way to think about 2027.
Okay. Great. Appreciate it. And then just as a follow-up, just on the pricing outlook, you guys had mentioned that the market is relatively tight, energy storage demand is very robust. But we have seen anticipatory -- would you agree that we've seen anticipatory price declines ahead of new supply coming back online, specifically the lepidolite as well as the Zimbabwe tons. Do you expect that decline -- the recent price declines to kind of plateau and moderate as you go into the second half? Or do you see continued price declines possible, especially given the low inventory levels that you mentioned. So why have prices, I guess, been going down? And do you expect that to stop?
Yes. So we're not going to tell you what we think the price is in the quarter. So we've not been very good at predicting that. But it's a very speculative market, driven by traders in China for the most part with the inventories tight, the demand that we've seen, you do have a forecasting volumes coming back on. But again, with the growth rates we see, we need that. Otherwise, you're going to get into a more difficult problem. But price, it was up, it has come back.
But it's kind of, I'd say, consolidating, right, around the price where it is right now, which is around $20 or so, which is not -- that's not a bad price as we've talked about. So I can't speculate as to what it's going to do. It's very heavily driven by trading and someone's view of volumes coming on. We do see those volumes coming on, but we need that with the growth rate with the 45% growth, you're going to have to have supply coming on or you're going to -- it's going to get very, very tight.
Our next question comes from Laurence Alexander with Jefferies.
So given your progress with the DLE at the Atacama, can you give your perspective on the attractiveness or not of projects elsewhere in Chile? What would you need to see for those to move up your priority list?
Well, I would look, DLE, we've done a lot of work over time, and we've kind of prioritized the Salar de Atacama for that. So that's our focus. We still got technology development work to do, but we feel pretty good about it enough that we've submitted the permit, and we've kind of built a plan around that. So I think I want to execute on that project first and then see where that goes against other resources in Chile or in other places in South America or wherever. I think the -- we're getting more confidence in DLE and brine resources. And -- but we want to execute against the project in the Salar de Atacama, and then we'll be able to talk about that.
Our next question comes from Joel Jackson with BMO.
It's Evan on for Joel. Your cash buildup has been quite large recently, and some of your peers have announced restarts and project go ahead. When would we expect you to go ahead with some of your brownfield projects or shorter of that? How does the company want to use your extra cash?
Okay. So let me start with projects. So I mean, we are kind of -- we're executing against that now. So you see CGP3, that we would consider that one of those. It's online now and ramping up after we had some issues there. And then the other projects, we have not gone through an FID. We've not agreed those projects with our partners either. But there's potential for doing projects both in Wodgina and at Talison additional. But we need to ramp CGP3 before we take that on. Again, we'll have to agree with our partners and get to FID. So that's going to take us a little bit of time, but that would be our next phase of growth.
And then further out, the Salar de Atacama project that we're talking about is another. And then we have Kings Mountain. And then further, further out, we have Antofalla. Those are all resources we own. So there's -- potential there could be other resources that become available. So we expect your cash question. So we want to have a strong balance sheet and we've been doing that. We've used it for that. These growth projects are a big opportunity for us to invest. And we think given brownfield nature in jurisdictions that we know with partners that we know, with technology that we know, we feel that those are low-risk, good return projects. But that said, we're always evaluating projects against all alternatives for the use of capital, and we do that every time we look at a big investment.
Great. And would you mind providing an update on the revamp of CGP3? Just any color you could give on the revamp.
Well, it's been up about -- back on about 5 days now. And it's operating at reduced rates, but it's operating, I think, reasonably well as what we would have expected to be 5 days in from a restart.
Our next question comes from Vincent Andrews with Morgan Stanley.
Neal, can I ask you on Specialties, just to give us a little bit of help bridging things into '27 sort of all else equal. How do we think about the normalization of the bromine price versus the incremental cost, the $70 million to $90 million, which I assume is largely in Specialties. It would seem like for the year that the higher price has offset the $70 million to $90 million. But will that $70 million to $90 million go away in 2027, assuming this resolution of the conflict by then? And then within the non-Chinese index business, has there been any benefit to you from the disruption caused by Iran in terms of you gained any market share? Have your prices gone up in that part of the business? Or is that -- we're really just talking about the Chinese index volume that we need to think about?
Okay. A lot in there, Vincent. Let me answer maybe the first half starting there, and then I'll pass it over to Eric to talk about the market piece of things in the back half of the year or in the back half of your question. Look, with regards to Specialties and probably too early for me to say what's going to happen to that $70 million to $90 million impact. I would just be guessing at the situation in the Middle East. Obviously, if things resolved there. Certainly, we would hope that some of that cost escalation would go away or some of those supply chains will get back to kind of a normal position. So that would be helpful to us.
But I would say the team has done a really, really great job of managing through the situation in the Middle East so far in the front end of this year. And so that $70 million to $90 million, we didn't really see a lot of that impact yet in the first half of the year. But again, the situation is still a live dynamic. And so that's why we continue to say we still think that there's this potential through the year.
With regards to margins in 2027, you're right that the bromine pricing has really increased here in the first half of the year due to some exogenous factors that has pushed our margin up pretty considerably. We're using this moment right now to continue to focus on cost and productivity, specifically in the specialties business to get the profitability of that business back into a better place than where it has been in the last year or 2.
So I think even though you might have pricing kind of coming off maybe potentially as we go through 2027, certainly not as strong as we've seen in 2026. I do think -- I do expect that some of the cost and productivity that we're working on is going to shine through. And so net-net, I think that's why we continue to say we're on this multiyear journey of improving margins in Specialties. And we'll have more to say, I think, as we go through this year and start preparing for 2027.
Maybe with that, I'll pass it over to Eric to talk about the market.
Vincent, you may or may not know this, this is a fairly diverse business. The upstream part of the business, which is elemental bromine and HBr, that's the part that is traded in the China market and -- or you see a price index rather, I should say, in the China market, the SunSirs Index. That's well less than 1/3 of our business. And so any -- and certainly, that skyrocketed up, that provided some opportunities and there was a benefit to that. But the vast majority of our business is downstream. It's the derivatives we sell downstream. And those have localized to their markets, pricing dynamics, in some cases, limited competition where we have a differentiation play.
And in other cases, a regional play where we have a regional ability to supply that others can't, particularly in a volatile market. We're able to take advantage of that, both from a volumetric basis and in a few cases, price based. But the balloon, if you will, of pricing you're referring to is a pretty isolated part of our cost structure. The other thing we do across this business is it goes to the $70 million to $90 million, it's a second pricing mechanism. It's the pass-through of higher raw material costs. That obviously ebbs and flows with what those raw material costs will do over a period of time. That's separate and apart from what you saw in the upstream part of the business in China.
I don't know if that helps, but I think it's a more diverse business. And as we go forward, I just want to emphasize we are looking at how we significantly improve the productivity and cost in this business and optimize some of those profitabilities in what is a pretty complex downstream set of derivatives with some good opportunities to do that, that we help -- that we expect to frame a more improved profitability going forward.
Our next question comes from Joshua Spector with UBS.
I was wondering if you could share some of your thoughts around some of the China battery tax breaks and how that might impact lithium demand, if at all? And if that has any ability on an ability to pay for lithium into that market. Just curious how you'd see that play out.
I'm sorry. Could you repeat the question again, I'm sorry. It was with regard to China, could you repeat it?
China tax breaks specifically on batteries, how you see that impacting China demand, if at all, and how that potentially impacts the ability to pay for lithium?
Yes. I would say what we are seeing in the market, particularly on the grid storage side is that any changes in tax, there's been a consumption tax change. There's been a rollback of VAT on exported batteries that's phased in has been overwhelmed by demand. Yes, there have been moments of time where I think people are trying to get orders in before certain things expire, but the demand has been so strong that it has offset really any impacts we're seeing there that are of significance.
And so -- and that's on the stationary storage side. There have been changes on the EV side as well, and that has led to a change in incentive regime. That has pushed actually towards higher energy density batteries, which has helped increase the gigawatt hours even as unit sales have been lower this year, although now recovering after a pull forward demand into last year in that incentive regime.
That's helpful. And if I could just ask on volume growth into next year, I mean, given that's out of Australia, should we assume that, that's primarily spot volumes, so your mix will shift that way. Or are there any other conversations happening on the rest of your volumes to perhaps get more of that back into the contract type structure?
It's a -- well, it's kind of hard to say, but it's probably a mix across the portfolio, right? So it'd be more -- there will be probably more spot than some of our contract volumes. So I wouldn't assume it all goes spot, but it would -- it's probably the same mix of our normal portfolio.
Yes. Well, I would say there are 2 things. I think that might be the right -- the answer to your immediate question maybe gives an opportunity to make a broader point, which is there are 2 things that are driving our mix that are going to result in a higher proportion of volume. It's either spot or sold under shorter duration contracts. One is China is growing faster than the rest of the world. And the other is that generally, spodumene is done not on long-term contracts. It's done on a market base or shorter term.
We do have some longer term, but they're not done under this sort of floor ceiling basis. They're done on a market basis. So as a result, that percentage of contracts that we have that are under -- that we refer to as long-term agreements with floors and ceilings has become slightly smaller because of those 2 mix phenomenon that's going on in the market.
Our next question comes from Matthew DeYoe with Bank of America.
I have 2. So first, Eric, global lithium demand tracking 45%, clearly very strong. And I know this is no easy task. But when you look at the initial range given on the year, particularly the plus 15%, I mean, where do you think you were most strong or overly cautious? And is that still like a looming threat as it relates to potential deceleration? Or do you think that has been debunked?
And then on the DLE plant, just conceptually, is the goal to increase concentrations of lithium before it hits the brine ponds where you're removing magnesium? Like can the DLE plant operate independent of the brine ponds? Or is it just an added part of the loop? And if it's the latter, what's like the net economic benefit between added OpEx and added recoveries?
I can answer the first question, and I'll let Kent answer the second one. So with regard to where we were most wrong, look, I think we're honest when we gave guidance at the beginning of the year and told you where we think we could be wrong, which was the growth in grid storage. We've come off a year that, frankly, surprised us in the prior year, 2025. We didn't -- the rate of growth, somewhat driven by AI, also driven by grid reliability and finally driven by renewables growth was incredibly strong last year. And we were redoubling our efforts to better get underneath the hood of that. This is a market that's new. It's supplied largely, as you know, LFP out of China. So there was some effort on our part to get our hands around that, and that put that range on that. The upper end of that range was, if you will, sort of a sustained momentum coming out of '25 and the lower end of the range was a pullback. The pullback didn't happen.
And I think what -- another factor you have to remember is the policy plays a role here, incentives, tariffs, geopolitical aspects, those were unknowns to us as well. And for the prior question about did any tax headwinds slow down demand, they did not. Those were things we needed to see in the market before we could get comfortable with the higher end of the range. Grid storage or stationary storage in general, at a point where it's going to start to become as big a part of this market potentially as light-duty vehicles, EVs. So it's we have a higher degree of confidence around that now, I would say.
Do you want to answer the DLE question, Kent?
Yes. So I mean you see from the chart we put out. So it's a hybrid approach that we're taking. So we're still trying to leverage the solar evaporation in the pond system and the assets that we have, but we'll take a side stream from the normal pond system, run that through DLE, concentrate it and then put it back into the pond system to kind of finish it. So it's a hybrid system. It's a new approach. It's not full DLE. You could run full DLE technically, but we have those assets. And for the efficiency, I mean the solar evaporation is a very efficient way of doing this, and we're kind of kicking that. We're trying to leverage both the solar evaporation and the technology to get us more volumes and lower pumping rates, which allows us to get those more volumes.
Our next question comes from Kevin McCarthy with Vertical Research Partners.
My first question is on inventories. Can you provide an update on where your own inventories are on a unit basis relative to what you would consider to be optimal. And then externally, would welcome any thoughts that you have on inventory levels throughout the supply chain.
Kevin, this is Neal. I'll start on the first part, and then I'll pass it over to Eric to talk about what he's seeing in the overall supply chain. Look, our inventories, we certainly ended the quarter lower than normal. You probably have done the calculation around our working capital. We tend to think about our working capital running at about 25% of sales, but we ended the second quarter more like 19% of sales. And a good bit of that is because we ran into our inventory or we consumed some of our inventory in the quarter, part of that being because of the strong demand that we saw, part of that being because of the CGP3 fire that happened at the beginning of June. And so we were able to pivot into our inventories to be able to supply the market. So where I would put our current inventories are probably historically on the low side, and we'll need to build that back up, obviously, to be able to navigate the back half of the year, but then also be prepared for 2027 as well.
Maybe I'll pass it over to Eric then to talk about the market inventories.
This follows the -- on the market side, follows the narrative that Kent said earlier and what is physically a very tight market. On the carbonate side, in particular, it's under 3 weeks of inventory in the upstream sort of converter cathode arena. And in hydroxide, it's under a month. Those are levels that at a month, we would -- for both either of those, we would have declared a tight market. Now we're under that. So it's an illustration of a market that is quite tight at the moment.
As you move downstream, we have indication. It's a little more opaque, but we -- our take would be that battery inventories are also not that high either. That would make sense if you pick that with the comments I made on stationary storage earlier where installations are exceeding battery production. Basically, the material as soon as it's made is going out into an installation. And similarly, while EVs has been weak, I mean, the main part of this market now is particularly out of China has become the LFP market, and that's being driven by this -- very much by the stationary storage dynamic. So net-net, a very tight market.
It's very helpful. And maybe a good segue to my second question, Eric, on energy storage. I appreciate the detail you set forth on Slides 13 and 14. If I did my math correctly, the new 2030 range, after the doubling, let's say, this year, it implies, I don't know, a mid-teens sort of a CAGR, which strikes me as relatively conservative. Just curious as to what kind of visibility or how conservative you think that medium- to long-term glide path is on the energy storage side.
Look, I mean, I'll pair your question with an earlier question, Kevin, that focused on how we were cautious at the beginning of this year. I think we've gotten to a point where we're confident -- we've gotten more comfortable with our demand projections for this market in the next couple of years. As for the next 5 years, I think we're going to have to spend more time working on that. This is a market that -- the trend is favorable in that the market is proving stronger than we thought throughout. I don't know that that's going to be the case for sure. This is our best estimate at the moment.
Our next question comes from Chris Parkinson with Wolfe Research.
This is Harris Fein on for Chris. Just with the EBITDA bridge on Slide 6, it looks like COGS were about a $150 million headwind. And that includes the spodumene price flow through the Chilean royalties and the productivity. Are you able to parse out those 3 components? And how should we be thinking about the quantum of the sequential spodumene inventory impact into the second half?
Yes. Look, I won't give you exact numbers around what drove COGS around all 3 of those items. But you can imagine that the spodumene lag or the spodumene inventory impact is the largest portion of the COGS driver that usually is the case for us. In terms of where -- how to think about maybe the spodumene cost lag as you go into the third quarter, look, the average market spodumene price in the second quarter was about $2,500, somewhere around there per ton thereabouts. And I think right now, we're probably in the $2,000 a range kind of case. So -- and again, remember that it takes about 4 months for spodumene to move through our inventory system and eventually get into salt and then to the customer. So take all of that into consideration that you will see this higher-priced spodumene rolling through our income statement in the third quarter. And that's just naturally because of where market prices were in the second quarter.
That's helpful. And I'll take another shot at the question someone asked earlier. Just CapEx is coming down, but it looks like the supply-demand gap is actually widening -- you're generating a healthy amount of cash. The balance sheet is pretty clean. So in terms of incremental uses of cash, are we still thinking debt pay down? Is it more build cash and preserve optionality? How should we be thinking about that?
Yes. I think -- I mean, I said it before, so you're probably going to get the same answer, but we want to have a conservative balance sheet. We do at the moment. So there's not a whole lot of debt to pay down right now at the moment. We do have growth projects. So capital is coming down. I think of that more as capital efficiency. We're getting more and more focused on trying to drive efficiency in that, and we've been on that now for a couple of years. And we're -- I think we're getting better at that. But then there'll be growth projects that we layer. We've talked about brownfield projects. So there's a couple of brownfield projects we've got.
We've talked about the Salar de Atacama. You know about Kings Mountain. So we have a portfolio of growth projects in the queue, we've just not really kicked off any of those at the moment. So we're not spending heavily against that. But there is -- we do have good growth projects. Again, as I said before, in jurisdictions we know in technology, we know and with partners that we know. So it is -- we feel pretty good about those projects going forward. So that's going to be where you see our focus. But again, we'll compare that against everything else, all the other alternatives, including our own shares. And we always look at that when we do a big investment, but that doesn't change.
Our last question comes from Mazahir Mammadli with Rothschild & Co.
Just wanted to ask about lithium production. The Wodgina production surprise, should we take it as a bit of a one-off? Or is it a structural uplift in the production in ore quality? And on CGP3, basically, the Q1 '27 ramp-up timelines, it looks like it doesn't represent a massive slip versus the pre-fire expectations. Does that mean before the fire, you were kind of running ahead of the schedule on the ramp-up?
Yes. So okay, Greenbushes first. You may have to remind me of the other question. But we were running a little bit ahead. And now this is our risk-adjusted view of that. So it's basically -- we just slipped the schedule from where we were by the outage. So the outage period, we've kind of shifted to that. That gets us to the first quarter. As we said, we've been up 5 days now. The restart, all that is going well. We're running at reduced rates. So we're back on a ramp schedule. And we -- that's our best guess is that first quarter. That's kind of all I can say.
And sorry, can you remind me of your -- oh, Wodgina.
Yes.
Yes. Look, that's -- we were working toward better ore, and we -- so that was in the plan. We just got there a little sooner. We're a little bit more efficient in getting there. We still got to work through some of that, and we expect later to get even better quality ore. So it was the plan. We got there a little early, and it's fortunate that it was at a time when it offset the fire at Greenbushes.
All right. And maybe if I could get your view on the supply-demand balance, specifically, what's your thinking of the impact of production restarts projects such as Bald Hill that has been restarted recently. Do you think that's enough to make a dent in the supply-demand balance?
So you see that you've got 45% growth, right, in demand. So you need some supply to keep up with it. So what we see right now, we're well -- we're behind that curve at this part of the year, which is why I think you see inventories being tight. Some of those coming on, lepidolite, the African stuff, will make a bit of a dent in that, but you need 45% to stand still, and it's hard to see getting 45%.
That's all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Thank you, operator, and thank you, everyone, for joining us today. Let me leave you with this. We continue to execute with discipline. Our end markets are strong, growing and increasingly diverse, and we are progressing growth options focused on our world-class low-cost resources. We remain focused on operational excellence, disciplined capital allocation and the durable competitive strength that set Albemarle apart. I look forward to sharing more milestones and successes with you in the coming quarters. Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Albemarle — Q2 2026 Earnings Call
Albemarle — Q2 2026 Earnings Call
Strong Q2: sales and adjusted EBITDA surged, cash conversion high, lithium market tight; DLE pilot advances and CGP3 restarted.
📊 Quarter at a Glance
- Net sales: $1.7B (+31% YoY)
- Adjusted EBITDA: $858M (+155% YoY)
- EBITDA margin: 49% (enterprise margin)
- Cash flow: $710M from operations; $638M free cash flow
- Energy storage: 65,000 t LCE in Q2; avg realized price ≈ $20/kg LCE
🎯 What Management Says
- DLE focus: progressing direct lithium extraction at Salar de Atacama—pilot >3,000 hours and an environmental permit submitted for up to 6 trains, first train to prove commercial scale.
- Brownfield growth: Wodgina outperforming on ore/recoveries; Greenbushes CGP3 restarted Aug 1 and will ramp toward full run rate by Q1 2027 (risk-adjusted).
- Operational discipline: on track for high end of $100–150M cost/productivity target and reducing capex via capital efficiency.
🔭 Outlook & Guidance
- Company view: maintaining full-year ranges but guiding toward the high end on current pricing and strong YTD performance.
- Specialties: raised full-year net sales to $1.4–1.6B and adjusted EBITDA to $275–325M.
- Energy storage: 2026 sales volumes now 225,000–235,000 t LCE (flat to -4% YoY); Q3 expected sequential decline in sales/EBITDA; realized price scenario centered near $20/kg LCE.
- Risks: ~$70–90M estimated unmitigated Middle East supply-chain impact for the year; CGP3 fire reduced near-term volume but restart underway.
❓ Analyst Q&A
- Market tightness: lithium demand +45% YTD through May, driven by stationary storage; inventories and spodumene supply at near-historic lows.
- Supply constraints: Africa shipments and lepidolite ramping slowly; management expects more supply but says current prices are sufficient for planned projects, not speculative ones.
- Capital allocation: strong cash build; priorities are conservative balance sheet, brownfield growth (Wodgina/Greenbushes), DLE at Atacama and evaluation of FIDs versus share buybacks/other uses; govt funding discussions ongoing but no commitments.
⚡ Bottom Line
Albemarle delivered robust Q2 earnings and cash generation while navigating tight lithium markets and a temporary CGP3 outage. Key upside is sustained pricing and resource-led growth (DLE and brownfield expansions); main risks are price volatility and Middle East supply-chain disruption. Execution and cash discipline keep optionality for shareholders.
Albemarle — Q1 2026 Earnings Call
1. Management Discussion
Hello, and welcome to Albemarle Corporation's Q1 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 First 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, Chief Executive Officer; Neal Sheorey, Chief Financial Officer. Mark Mummert, Chief Operations Officer; and Eric Norris, Chief Commercial Officer, are also available for Q&A.
As a reminder, some of the statements made during this call, including our outlook, guidance, 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 also applies to this call.
Please also note that some of our comments today may refer to non-GAAP financial measures. Reconciliations can be found in our earnings materials.
And now I'll turn the call over to Kent.
Thank you, Meredith. I'm pleased to report that Albemarle's performance is off to a strong start for 2026. For the first quarter, we reported net sales of $1.4 billion, up 33% year-over-year. We also delivered adjusted EBITDA of $664 million, more than double the same period last year, reflecting higher pricing and volume in both Energy Storage and Specialties, as well as cost and productivity improvements.
We continue to see strong end market demand, which I will discuss in greater detail as we get into the presentation. Our business is well positioned in resilient end markets. We are maintaining our outlook for strong lithium market growth led by energy storage demand, which is up 117% year-over-year. We remain focused on the areas within our control and made progress during the quarter, enhancing operational excellence, focusing on cost and productivity discipline and driving cash generation to enable long-term volume and earnings growth. In the first quarter, following the successful sales of our Eurecat joint venture and the controlling stake in Ketjen, we repaid $1.3 billion of debt, further strengthening our balance sheet and reducing interest expense.
As Neal will share shortly, we are raising our 2026 outlook for Specialties net sales between $1.3 billion and $1.5 billion and adjusted EBITDA outlook between $225 million and $275 million, reflecting higher pricing and volumes in our Specialties business. Moreover, year-to-date, we've delivered $40 million in cost and productivity improvements and remain on track to hit our full year target of $100 million to $150 million. We're able to maintain our corporate outlook scenarios as these improvements offset supply chain disruptions.
Now I'll turn it over to Neal to discuss recent results and outlook. I will then cover recent market trends and growth projects before we open the call for Q&A.
Thank you, Kent, and good morning, everyone. I will begin with first quarter performance on Slide 5. First quarter net sales were $1.4 billion, up 33% year-over-year, driven by higher volumes and pricing in both segments. Energy Storage pricing increased 51%. Volumes for Energy Storage and Specialties were up 14% and 7%, respectively. Adjusted EBITDA for the quarter was $664 million, up $397 million year-over-year, reflecting higher volumes and price as well as ongoing cost and productivity improvements in both segments. Both segments also saw strong adjusted EBITDA growth with Energy Storage up 196% and Specialties up 30%. Our adjusted EBITDA margin increased by more than 20 percentage points compared to the prior year quarter due to higher pricing and our continued focus on cost and productivity improvements. We reported diluted earnings of $2.34 per share.
Turning to Slide 6. I'll go over the key drivers of our year-over-year EBITDA performance. Q1 adjusted EBITDA increased by 148%, primarily due to higher pricing and volume in both Energy Storage and Specialties segments. In addition, cost of goods sold benefited year-over-year from cost and productivity improvements in both segments. By segment, Specialties EBITDA increased 30% year-over-year due to higher pricing and favorable product mix. Energy Storage EBITDA increased 196%, driven by higher lithium market pricing and increased volumes. Both segments' results were bolstered by cost and productivity improvements as well. The corporate EBITDA change reflects favorable foreign exchange impacts and the fully consolidated results of Ketjen prior to the divestiture.
Turning to Slide 7 and our outlook. As usual, we provide total company outlook considerations based on recently observed lithium market pricing scenarios. We are maintaining our total company outlook for 2026 across all 3 price scenarios despite global supply chain disruptions related to the Middle East. We estimate that the unmitigated full year cost impact of these supply chain disruptions would be approximately $70 million to $90 million, and expect it to be offset by the following: Reduced interest expense following our debt reduction actions in Q1, and stronger-than-expected pricing and volumes in the Specialties business, which gives us the confidence to increase our full year Specialties outlook, which I will cover on Slide 8.
The Specialties segment had a stronger-than-expected quarter. Net sales increased 12% year-over-year and adjusted EBITDA increased 30%, primarily due to higher pricing, favorable product mix and cost and productivity improvements. For the second quarter, we expect net sales to increase sequentially due to higher pricing for bromine specialties. EBITDA is also expected to increase modestly as favorable price and volume mix are partially offset by higher costs due to supply chain disruptions. Additionally, operations at the Jordan Bromine Company joint venture have fully recovered from the flooding event in late December 2025, and continue to operate despite geopolitical tensions and disruptions in the region.
Looking ahead and taking all these factors into consideration, we are increasing the range of our full year outlook considerations for the Specialties segment. We are raising our guidance for net sales to $1.3 billion to $1.5 billion, and for adjusted EBITDA to $225 million to $275 million, and we now expect EBITDA margin in the high teens. While outlooks for end markets such as petrochemicals and oil and gas remain volatile due to geopolitical tensions, this increase in outlook reflects bromine price and volume opportunities that we see, coupled with our strong operational execution and the success of our cost and productivity improvements.
Moving to Energy Storage on Slide 9. First quarter sales volumes were 53,000 tons lithium carbonate equivalent, or LCE, with an average realized price of approximately $17 per kilogram. The gap between our average realized price and market price is primarily driven by 2 factors: the 1 quarter pricing lag in our long-term contracts and sales of spodumene, which dilute our realized price on an LCE basis. First quarter net sales increased 70% year-over-year due to higher pricing and volumes. Adjusted EBITDA nearly tripled, supported by the same price and volume factors as well as the timing of consumption of spodumene inventories.
For the second quarter, net sales and EBITDA are expected to be up sequentially, assuming flat lithium market pricing due to increased volumes and pricing lags in our long-term contracts. EBITDA margin is expected to decrease sequentially due to the timing of spodumene inventory consumption and higher costs due to supply chain disruptions related to the Middle East. On a full year basis, we are maintaining our Energy Storage outlook scenario ranges even after including the impacts of cost increases due to geopolitical tensions in the Middle East. Our volume guidance also remains unchanged.
Turning to Slide 10. We continue to be successful in driving productivity improvements and converting earnings to cash. We are on track to deliver our full year 2026 cost and productivity improvements of $100 million to $150 million. Year-to-date, we have achieved $40 million in savings, primarily related to manufacturing and supply chain, including debottlenecking projects such as increasing spodumene utilization at our lithium conversion facilities in China and ramping new assets to their full production capability. We generated $346 million of operating cash flow and $248 million of free cash flow in the first quarter.
Capital expenditures were $99 million in the quarter. We continue to expect full year CapEx of $550 million to $600 million. At the $20 per kilogram lithium price scenario, full year operating cash flow conversion is expected to be within our long-term target range of 60% to 70%. As previously noted, there are select headwinds to our cash metrics this year, including recognizing deferred revenue related to the customer prepayment we entered in 2025, which will benefit EBITDA, but not contribute cash, and cash costs related to idling Kemerton Train 1, of which approximately $25 million occurred in the first quarter.
Turning to Slide 11. We took advantage of our successful cash and portfolio management actions to pay down debt and further strengthen our balance sheet and financial flexibility. During the quarter, we repaid $1.3 billion of debt, reducing our weighted average interest rate to about 3.1% and lowering our annual interest expense by approximately $60 million. We ended the first quarter with a net debt-to-EBITDA leverage ratio of 1x. And from a debt profile standpoint, we have no major maturities due until late 2028. Together, these factors offer us substantial flexibility and resilience to navigate the current environment.
I will now turn the call back over to Kent to detail our market outlook.
Thanks, Neal. Turning to Slide 12. Before we dive into the details of the lithium markets, I wanted to take a moment to look at the company more holistically. Our overall portfolio is well positioned in resilient end markets, and that gives us confidence in the long-term outlook for our business, even with the current geopolitical uncertainties. As a market leader with globally diverse operations, we can pivot to meet dynamic market needs. More than half of our net sales are in new energy end markets like electric vehicles and energy storage with strong secular growth trends. Both Energy Storage and the Specialties segment benefit from these trends.
Our Specialties segment end markets are diverse, including electronics, semiconductors, building and construction, and energy. AI demand strength continues to drive strong electronics demand, particularly in Asia and the Americas. Building and construction demand continues in line with our forecasts. While less than 5% of our net sales are in oil and gas markets, we anticipate near-term demand growth as investments shift away from the Middle East towards other regional markets.
Now turning to Slide 13. Global lithium demand is tracking in line with our forecast. So far this year, lithium consumption is up 37%, towards the upper range of our 2026 forecast of 15% to 40%. We are holding our outlook steady due in part to geopolitical uncertainties. That said, our early estimates suggest that lithium demand will be relatively resilient to the situation in the Middle East. For example, demand could be slightly up due to greater emphasis on energy storage or electric vehicles, or slightly down due to broader supply chain disruptions. Either of these scenarios falls within our 2026 forecast range. Importantly, lithium demand continues to diversify with 2 key end markets, energy storage and electric vehicles.
Now turning to Slide 14. Strong growth in the energy storage sector more than compensated for weak EV sales volumes during the first quarter. In China, seasonal weakness during the Lunar New Year and prebuying in December ahead of subsidy changes led to reduced EV sales in the first quarter. 2026 Chinese subsidies have shifted support to premium vehicle segments in Q1 leading to a 20% increase in average Chinese battery size and increased demand for lithium hydroxide. Due to the increased average battery size, global EV sales were up 3% year-over-year on a gigawatt hour basis despite a 6% drop in unit sales.
In the United States, EV sales were lower year-over-year, largely attributed to reduced incentives. However, I'll note that the U.S. market now represents less than 10% of the global EV market. Developing markets in other regions such as Brazil, India and Australia have collectively grown 74% year-over-year as EV penetration continues to diversify globally. European EV sales continue to show robust growth as well, driven by greater policy support, particularly in Germany, France and the U.K. Overall, we remain on track to hit our 5-year CAGR for energy storage volume growth of 15%. We achieved 25% CAGR over the first 3 years and expect to deliver moderate growth over 2026 and 2027 as our large projects complete their ramp. It's important to note that completing this phase of growth requires little to no additional CapEx. Our scaled, low-cost, world-class resources are performing well today with capital-efficient brownfield opportunities to fuel future growth.
Turning to our joint ventures on Slide 16. Operations at both Wodgina and Greenbushes are operating well and in line with our expectations. At Wodgina, we have a clear line of sight to operate all 3 trains at full capacity. Ore quality is expected to drop slightly over the next 2 quarters before improving in the December quarter as the Stage 3 pit deepens and availability of higher quality ore increases. Greenbushes is a world-class asset, and we are confident in the path forward and strategic direction. The CGP3 investment there is operational and ramping as planned. Our team is working closely with Talison's management team on value optimization studies to unlock the additional value as part of a multiyear transformation.
As a result of these studies, the team has identified productivity improvements, including lower waste movements and a smaller truck fleet operating at higher utilization, helping to reduce the impact of fuel price increases. To date, neither operation has been disrupted by global fuel supply interruptions, with good visibility of ongoing supply. Having access to both of these high-quality hard rock resources plus our low-cost brine position at the Salar de Atacama positions Albemarle well for global growth.
Slide 17 shows our progress as our longer-term projects at the Salar de Atacama in Chile and Kings Mountain in the United States. At the Salar de Atacama, we have initiated the environmental permitting process for a commercial DLE project. While the permit evaluates up to 6 trains of DLE, I want to stress that these investments would be phased in a prudent manner, contingent on approvals and investment decisions. Our pilot plant at La Negra has now operated for over a year and has achieved quality and recovery targets, including greater than 94% lithium recovery. We are evaluating numerous adsorbents and membranes, including proprietary and third-party technologies, and we've been able to incorporate findings from the pilot operation into our early engineering for the commercial plant.
At Kings Mountain, we are currently obtaining the required permits and conducting comprehensive economic and environmental predevelopment evaluations prior to making a final investment decision. The project recently received federal mining permits, a meaningful milestone, and we continue to engage with local and state entities to obtain their respective approvals. As we continue drilling and engineering work, the more we learn about Kings Mountain, the more confident we are in the long-term strategic value of this asset. We look forward to sharing our progress as there are further developments.
To summarize, we're off to a strong start in 2026 as we continue to demonstrate operational excellence and capitalize on the secular growth opportunities supported by our end markets across mobility, energy, connectivity and health, including the global need for long-term energy security. We are continuing to take disciplined actions to enhance our long-term competitive advantage and leveraging our strengths, including our world-class resources, expertise and innovation to position us for sustainable growth and value creation over the long term.
With that, I'll turn it over to the operator to take your questions.
[Operator Instructions] Our first question comes from David Begleiter with Deutsche Bank.
2. Question Answer
Kent, have you seen any -- at this higher level of lithium pricing, have you seen any change in buyer behavior either getting ahead of or whatever else to deal with the higher pricing in the lithium market?
Thanks, David. So I don't know that we've seen a real change in behavior. I mean, it is evolving. So we have to -- it's only been a few months, right, since price has changed. And I wouldn't say we've seen a change. The conversations may be a little different. Eric is a little closer to it. So maybe you can comment.
Yes. David, I would say that -- I'd substantiate what Kent said. It's fairly new. Most of the growth has been on the ESS side, as we described in the call here. There's a lot of interest in the sort of the carbonate supply chain. That contrasts with EVs outside of China, which are a little weaker on the hydroxide side in terms of sentiment. All in all, though, we've got a pipeline of customers who are very interested in talking with us about certainly spot bids, but also contracts, and we're being very cautious as we look at that in terms of how we think about where we want to take that contract mix over time.
Very good. And just on the DLE opportunity in Chile, any early thoughts on potential cost improvements or benefits from this route versus your traditional solar evaporation route?
Yes. So it's more about being able to access more lithium in the Salar at the cost position we're at rather than trying to do -- it's not really a cost improvement program, it's about being able to access more lithium in the Salar under kind of the environmental conditions there.
Our next question comes from Patrick Cunningham with Citi.
Kent, you seem to hint the broader deployment of renewables as a result of the crisis could be a potential positive for lithium demand. I guess, is that anything that you've seen already? And how would you expect the market to respond to higher embedded risk premium in oil, concerns around energy security?
Yes. So there's a lot there, and it's difficult to see that in the market. I mean, we think that may have an impact on both EVs, but also Energy Storage segment, as we're calling that now. It's difficult to see. But I would say energy security and grid resiliency is probably one of the bigger drivers around that. I'm not sure that's about the Middle East crisis, but it's clear that's a big driver around the world.
Got it. And then just on Greenbushes, I think one of your JV partners noted some issues around grade recoveries and production stability, maybe even suggesting that they're more systemic. I guess, is this in line with your assessment? And how does it affect the ramp-up at Greenbushes?
So look, Greenbushes is operating in line with our expectations and the outlook considerations that we put forward. So every year, we look at all of our assets, and we make a risk-adjusted forecast around that, and we're fully in line with that. And the ramp of CGP3, so we started that up at the end of the year, and we expect it to ramp through this year. And I would say that ramp is on schedule. So it's fully in line with our expectations and our plan.
Our next question comes from Mike Sison with Wells Fargo.
This is Abigail on for Mike. So as you look further ahead to your brownfield projects, what are the hurdle rates for these? Is there any scenario which any of these don't happen? And then how much capacity do you think these would add beyond 2027?
So look, we look at it as -- so we are now kind of ramping investments that we've made that gets us through that profile that we showed you there. So it slows down a little bit of growth into '27. That's ramping the kind of bigger investments that we've made over time. The next phase would be those brownfield investments, and we think that gets us somewhere in the high single-digit growth rate maybe for that period of time. And those are at existing assets. So that would be, for example, Greenbushes, Wodgina, and at the Salar de Atacama.
And we think of over time, after that, we think there are more significant investments we could make on resources that we own, Kings Mountain, for example, and then further trains at the Salar de Atacama. So we have a pretty good line of sight for growth. But the first tranche of that would be those brownfields. The returns would be -- I mean, it's hard to say what the -- we would look for hurdle rates. It would be traditionally the way we look at that, and we'll make those decisions at the time depending on how we see the market growth, pricing, what the costs look like from those assets.
Okay. Got it. And then for the 2026, 2027 projects, you're talking about requiring minimal additional CapEx. Can you just give us a feel for size there? Any color you can give would be helpful.
Yes. Well, I think for '26 and '27, it's really just ramping up the projects that we've built and done. Probably the most significant one there would be the full ramp of Greenbushes, CGP3, and then getting Wodgina operating on 3 full trains. We're operating 3 trains today, but we anticipate working through a more difficult part of the mine. So the quality of the resource is not as good. We expect that to improve in the fourth quarter. That's the thinking around that. And that's kind of where those incremental volumes come from, plus just the normal productivity things that we do with better recoveries, Salar yield at Salar de Atacama, for example, the project we've invested in, and we're still working to get more and more out of that.
Our next question comes from Josh Spector with UBS.
It's Chris Perrella on for Josh. Can you unpack the puts and takes to the 1Q energy storage margin? Given the $20 a kilogram spot price you guys experienced in the first quarter, I would have thought margins would be closer to 50%. So just kind of why were they so much better?
Yes. Chris, this is Neal. Sure, I can take that. Really, the main driver of that is the traditional lag that we see in spodumene costs and how we consume spodumene through our supply chain. So really, there was a small uplift in margin because essentially, we're consuming spodumene that we purchased from our mines in the fourth quarter, which was obviously a lower price than what you saw in the first quarter. But it's minimal.
I think you see that our full year outlook, if you assume kind of flat pricing across the year, we've guided to Energy Storage potentially being in that mid-50% range. So there was a little bit of an uplift in the first quarter due to that. But obviously, that will start to normalize as we go through the year, assuming pricing stays consistent for the rest of the year. And that's why we gave you guidance that we expect margins to come in a little bit in the second quarter as, all things being equal, assuming that, that normalizes.
All right. And then just as a follow-up there, the Specialties outlook, you did $75 million, $76 million in the first quarter EBITDA, higher in the second quarter. What's causing that to drop off in your outlook in the back half of the year?
Yes, I can start with that, Chris, again. It is really, at this point, just the uncertainty that Kent mentioned in the opening remarks. Right now, the visibility that we have is at least through the middle of the year, and we are driving some price and volume initiatives that give us that confidence around the second quarter. I think we'll continue to give you updates as we go through the year. There's obviously a lot of uncertainty around the world, of course, stemming from the situation in the Middle East, and we're just watching that very closely.
Our next question comes from Vincent Andrews with Morgan Stanley.
Just wanted to follow up a bit on the brownfield opportunity and just color a few things in. Kent, were you saying that these assets could potentially start up as early as 2028, or would the timeline on that be a bit longer? If you could just help us understand what the lead time would be?
Yes. So well, none of the projects are finalized. So there are opportunities now. So I'm not sure we even call them projects. But there are things that we've talked about and discussed over time and we'll bring those on when we think it's the right time, right? And obviously, a couple of those are with our joint venture projects, so we need to align with our joint venture partners as well. So somewhere in that -- it's definitely clearly after '27, in that time frame, but we think that is the next leg of growth for us in that phase. And we say that because the bigger investments and bigger projects like Kings Mountain would be after that, right? So it fills the gap in between those two.
Okay. And Neal, can I just ask you, on Slide 10, you talk about it, at $20/kg, the free cash flow or the operating cash flow conversion would be 60% to 70%. As prices ramp higher than that, how much of that drops down to cash flow versus how much would go up to working capital? So would we stick with the 60% to 70% range? Would it be higher than that? Would it be in the lower end of the range? How should we think about it?
Yes, Vince, look, I think it, of course, always matters in the shape of how that pricing moves up. If it's a very sudden move up in pricing, particularly if it's towards the end of the year, then I would expect that our cash conversion will compress in the immediate just because of how sharply the working capital runs up and how quickly we can get that back in terms of cash. If it's a little bit more gradual, look, I still think that 60% to 70%, when we've done our benchmarking and our modeling, that seems to be the right place for us to be from a steady-state perspective. So if it is a little bit more of a ratable kind of movement up, I would expect us to be able to still be in that range.
Our next question comes from Arun Viswanathan with RBC Capital Markets.
Congrats on the strong results. And apologies if this was asked earlier, but did you discuss the reduction of output at Greenbushes? It looks like it's about 10% to 15%, and how that affects kind of your own operations?
Okay. So we had said that in an earlier question. So Greenbushes is operating in line with the plan that we have, right? And as we look at that every year, we build our plans, we look at all of our resource assets and we risk adjust those. And so what we've built in our plan for Greenbushes this year, the mine is operating to those plans, including the ramp of CGP3. So we're on our plan for the ramp of CGP3. And we started that project, first ore at the end of '25, and we felt like we could ramp it throughout the year. And then it's a schedule according to that ramp, but we should be at full capacity by the end, and we think we're on that schedule.
Okay. And then you noted that ESS demand could be a little bit stronger, I guess, and we did notice kind of stronger EV demand also in the last month versus the first few months of the year. So are you seeing demand improvement? And obviously, I think you're still guiding to about flattish volumes. So is there any way you can address that upside on demand, if there is any? Or would that be unlikely this year and potentially likely next year? How should we think about your opportunities to capture some of that extra demand, if there is any?
Yes. Eric can talk about maybe a little bit more detail. But I would just say, look, the market is growing, it is strong, but we're working through the seasonality, right? The early part of the year is always difficult to figure out what exactly is going to happen with the Lunar New Year, China is such a big market. That has a big impact, and we're off of that now. Demand is strong, but I'm not sure we're ready to kind of say it's at a different level.
Yes. So this is just to add, on a demand basis, our customers, the battery companies around the world, particularly in Asia, who produce for this market, their order books are full from now through the beginning of '27. So demand is very strong in Energy Storage, driven by the factors of grid reliability, renewables in various parts of the world, as well as AI and behind-the-meter storage. So there's very favorable trends that are driving that kind of an outlook.
And Arun, this is Neal. I think you had asked about our demand forecast -- sorry, our volume growth forecast for this year, which is flat with last year. Look, underneath that volume forecast was an assumption, as Kent highlighted, about how we see our resources ramping through the year. That's one part CGP3 and the other one being the improvements that are getting driven at Wodgina. Everything is going according to our plan, which is why we're still holding on to that volume outlook. But obviously, as we go through the year, if we start to see upside, we'll continue to give you updates. I think our volume growth potential this year, in particular, is really driven by how well those resources continue to move in their capacity expansion.
Yes, it's about availability of product from our perspective rather than market. Market is pretty strong.
Our next question comes from Laurence Alexander with Jefferies.
Two questions. First, can you talk a little bit about whether there's any advantages or disadvantages for you if the LFP producers need to switch to yellow phosphorus to reduce their sulfur consumption, and also how higher sulfur prices are affecting your economics versus your peers? And then secondly, just longer term, if you do undertake something like Kings Mountain, what would you see as like the desirable range for your balance sheet? And what balance sheet metrics would you use as boundary conditions?
Okay. So maybe, Eric, you can talk about the LFP chemistries a little bit, because...
Yes. So you might have to expand a little bit on your question, Laurence. Let me answer the part of it that is clear to me and I think is important to understand. We talked in the call about raw material costs rising $70 million to $90 million across the enterprise, and we have a variety of ways we're mitigating that. One of those drivers, a fairly big driver, is sulfuric acid. I don't think we are advantaged or disadvantaged versus anybody who buys sulfuric acid around the world, particularly in Asia, where a lot of the conversion activity happens for hard rock conversion. So that's a cost that's affecting supply. In fact, frankly, any acid roast and leaching process is going to be impacted by that. Your first question was not clear to me, maybe you could restate it.
So my understanding was that one way to offset the cost on sulfuric acid for the LFP producers is for them to switch to yellow phosphorus. And that if they did, I was curious as to whether there's any issues with the contaminant profiles of the lithium from different mines. Like I mean, my understanding is you have an advantage in terms of being able to reformulate your product. But maybe I'm just overthinking kind of the dynamics there.
Well, I think one of the advantages of those LFP producers, the cathode producers who reside almost entirely in China that they have is their upstream capabilities to access phosphorus in various forms of it. I've had some discussions with some of these companies about how they do that. I understand any trade-offs are not impacting their ability to deliver quality. And that's, at the moment, the best I could say. If we learn more, we'll certainly share more.
And then, Laurence, this is Neal. Maybe I can start with your question on Kings Mountain. Look, what I would say, as you can see as a company, because of the extreme volatility that we've seen over the last 5 years, we are obviously in a position of balance sheet strength. And we are on purpose taking a conservative stance right now just because of the volatility we've seen in general. But as we look at Kings Mountain, and I want to highlight, we're nowhere near a final investment decision.
Our next question comes from Joel Jackson with BMO Capital.
The first question is, you're talking about Q2 margins guidance or commentary as if spot prices hold Q1 levels. Our prices or market prices are actually higher in Q2 than Q1. So can you talk about that? I mean what quarter-over-quarter price increase would you need to hold Q1 margins? Or how would you frame it?
So I think -- let me start, Neal, and then you can talk a little bit more detail. But I mean, look, there is -- a portion of our volume is on contracts or about 40% on contracts, and there's a lag on that, right? There's typically a 3-month lag on how pricing moves through that. So that will move up slightly just as we go through the quarter if prices stay where they are. So we're not forecasting prices, but that's just a function of the way our contracts work. So it will move up, and that will impact margin as we move forward through the quarter. Then it becomes more steady state as it will catch up as long as prices are flat.
Yes. Just to add to that, look, if you hold everything flat, essentially to get to that higher margin that you're assuming, basically, from our $20 scenario to our $30 scenario, everything basically scales linearly. So to get to the higher margin, you have to make an assumption around just a higher price realization in the second quarter, all other things being equal. So it really comes down to pricing.
Okay. And Kent and team, if I circle back to the Greenbushes question, which is, I've heard your answer a couple of times now on what you're saying about Greenbushes being the plan. But one of your JV partners really went public the other week and talked about safety, and it was in the prepared remarks, and it was very aggressive in wanting to call out to the public what they feel should be happening or is happening at Greenbushes. It is a different commentary that you're giving today. Why do you think your JV partner is wanting to do that? Is this just about negotiating how the mine plan should go forward, production, throughput, concentrate grades, and you have different interest being a customer of the spodumene as well? Like why do you think your partner is so aggressive in the market talking about safety and Greenbushes issues?
Yes. So I guess I would -- look, I'm not going to comment on their perspective of what they're doing. I would say they're our partner's partner, right? So as we go through that -- but we do have -- we're not happy with the safety position at the mine. We've had lots of conversations with the management team and our partners around that. We have a plan, and it's improving, and we're working toward that. Safety is not something that you move overnight. It's a long-term program. We feel that we're on the right track there. But the mine is operating to the plan that we thought they would during the year, and we don't see exceptions to that. So the way we view it is that we are on plan. The CGP3 project started up last year, and it is ramping through the year, and we're on that ramp plan. So we don't see a variance in our plan, and I can't comment on what our partner is thinking when they talk publicly.
Our next question comes from Colin Rusch with Oppenheimer & Co.
As we look at some of the NDA compliance deadlines coming up at the start of 2028, I'm just curious about how you're planning to meet those and what we can think about from a CapEx perspective if there is any to meet some of those requirements?
I'm not sure I understand that question. Can you just say that again?
Yes, so NDA requirements for military batteries. We're looking at having to have entire supply chains in North America to meet some of those requirements. I'm just curious about your ability to meet those volumes and any CapEx plans that you have here over the next 2 years to be in line with them.
Okay. Look, that's a segment of the market that we would want to serve. We actually have probably the only lithium produced today in the United States comes from Silver Peak and processed at Kings Mountain. So that's the only kind of pure lithium processed in the U.S. today. We have that. It's a pretty small volume. It's not a big piece of the market, but we can serve that through other locations with allied countries like Chile as well. So I mean, it is an opportunity for us. And as we look going forward to make investments, obviously, Kings Mountain, the mine itself would be one of the opportunities to serve that particular volume. Look, I would say we're not over-indexed on it. We think about the total market overall, but military applications in the U.S. is definitely an opportunity for us.
Great. And then as you look at the European demand for EVs and seeing that grow, is there any concern that there's new regulations coming out of Europe in terms of compliance around supply not being able to come from China for any of those OEMs or through the EU properly from a regulatory perspective?
Yes. Look, so there is a lot of conversation going now around critical minerals. And when we hear that, we think lithium, and around diverse supply chains, global supply chains, allied countries, that's going to move a lot over time. From our standpoint, we have a diverse portfolio, so around the world, so both brine and hard rock, but in a variety of different countries, and we think we'll be able to satisfy that one way or the other. So if it's tighter regulation, it just makes a different opportunity for us. If it's not as tight, we have our full portfolio to work with. So we see it as an opportunity, not a concern. And then we have to wait and see exactly how it plays out.
Our next question comes from John Roberts with Mizuho.
I have just one. Assuming this year plays out according to plan, where do you think your debt level should be this time next year? What would be a targeted debt level?
Yes, John, this is Neal. Look, I mean, I guess there's a lot of estimating and forecasting to get to that number. But look, if you -- I'm sure you're doing this math on your side, if you just take flat pricing from where we are today and just run that across the end of the year, we exited first quarter at 1x net debt-to-EBITDA. And you can imagine that at these kind of prices, we'll probably trend down from there below 1x. So obviously, like I had said before, our stance right now is to be in a little bit more conservative balance sheet position and for all the volatility and uncertainty that we see in the world, and that's our posture for the year.
Yes. I would add to that. Look, we've brought ourselves through a tough period, and we clearly want to be a little more conservative as we go through that. We haven't worked out all the details around that, but we're trying to -- our overall goal, we're building a company that will be able to work through the cycle regardless of where it goes and that we would still be -- can be opportunistic at the bottom of the cycle. That's what we're trying to do. The balance sheet is definitely a part of that strategy.
Our next question comes from Kevin McCarthy with Vertical Research Partners.
I was wondering if you could speak to the quarterly cadence of your lithium sales volumes. You're guiding flat for the year. I think in the first quarter, you had 53 kilotons, which was up appreciably. It looks like your comps are a little tougher in the back half. So maybe you could speak to how you would foresee that flowing through in the second quarter and the balance of the year?
Yes. Kevin, this is Neal. I'm very happy to start. So the first quarter is typically our softest quarter, of course, because of Chinese New Year and just general seasonality. You should expect volumes to pick up here in the second quarter and the third quarter. I would not expect our fourth quarter volumes to be as strong as they were last year, mainly because we had inventory reductions that we did at the end of the year, as we saw that kind of strength in demand come through in the fourth quarter. And so that's the reason why we've been guiding to this overall sort of flat volume year-over-year. It's exactly what you said. We have tougher comps on a year-over-year basis as we go through the year. And so that's why you saw some volume growth here in the first quarter. That was the easiest of all the comps. Those will get tougher as we go through the year just because of the elevated sales volumes that we had last year.
Very good. And then I'm tempted to ask, does Albemarle have any visibility at all into whether your lithium molecules end up in an EV versus an energy storage system? And if you do have any visibility, do you care? In other words, is there any strategic or commercial effort to influence your mix in one direction or the other? How do you think about that?
So I mean we do see where it goes. I mean it's not 100% transparent, because a lot of times it's the same customers, but we have those discussions. We know where they're going. We understand order books and one versus the other, because they have different profiles. So I think it is important that we understand that. We think we have pretty good visibility of it. It's not perfect, because it is the same customer base, but it relies on customer conversations and their transparency with us. But we feel like we have a pretty good handle on that. Eric, do you want to comment on that further?
No, I think that's right. I think that's right. Clearly, someone buying carbonate for LFP production, that could go EV or ESS, but it comes down to the knowledge we have on the ground to be able to ascertain the difference. And to the second part of your question, it does matter in that we want to make sure we're close to understanding what's driving growth, so we can plan our own capacities and approaches to the market accordingly.
Our next question comes from Mazahir Mammadli from Rothschild.
I just wanted to ask about the lithium market. So if we assume that the current market conditions persist, what kind of supply response would you expect over the coming year or so? And particularly, would you say that the current price is high enough for some of the unconventional supply that we saw in 2022, 2023 to come online?
So I guess, first, I would say, it takes time almost for anything to come back, right? So if you've idled capacity and you've kept it in the right shape, condition, you can bring it back in pretty short order. But if you really put it in care and maintenance, it's going to take some time. And when you talk about mines, you have to think about things like yellow equipment and all of that, which is not sitting on the shelf. And even brownfield mines, it's a couple of years. And if it's greenfield, it's further than that.
And then some of the unconventional. I don't know that we're at prices where things get a little crazy. I think also people learned a lesson in the last cycle about the nature of the market. I don't think we're going to see a massive supply adjustment to this, at least that's not how we're thinking about it at prices where we are now. If you think about a lot of the projects that were on the books and maybe even still happening, we're now getting to the point where their financial forecasts are in the market, so to speak. It's not that we've gone way above them, that we're just getting back to the numbers they were using to justify projects. So I don't think you see a huge supply response.
And just a follow-up on the specialties business. So the bromine price in China, if you look at the current prices, almost as high as the peak in 2022. And in 2022, this segment generated EBITDA of over $0.5 billion. Is that a trajectory we should expect if the bromine price stays at this level? Or are there other moving parts that we should think about?
Yes. So there's a bit in there. So prices, they did peak. They've actually come off fairly quickly recently, but they were at a higher level, and we're below the performance level we were. But we recognize that we have some operational cost issues we need to address around that, and we're working on that. We've got projects around that. And I guess the other piece, and Eric can talk about this, but that bromine price you see, there's a small amount of our bromine that we sell on that basis. But it is the most visible index that you can see. So I understand why you watch it. We watch it as well, and it's indicative in the market, but it's actually a very small part of our bromine that we sell on that index.
Yes. Just to add to Kent's comment, this is Eric speaking. As you look at our overall Specialties sales, which, of course, includes lithium specialties and bromine specialties, it's 20% or less of our sales that are exposed to that kind of index, which is prevalent in China for upstream bromine. If you go around the world, regional markets behave differently. If you go down our value chain into derivatives, there you're going to get more of a specialty chemical type approach to pricing. So it does vary.
And the pricing this year has been driven, we believe, by what has been a lot of anxiety at the beginning of the year around supply. But we had our own issues at JBC, which we resolved quickly. You have the Middle East crisis, which has created anxiety. In the midst of that, we've been able to position ourselves as a very reliable and diversified global supplier. That's helped us on the one hand. But on the other, as the Chinese seasonal production comes on, that has led to some price easing in China, too. So this all comes back to the question on the second half of the year and our visibility that Neal answered the question on earlier. So this is why we're a little cautious, but those are the factors that have contributed to what we're seeing right now in bromine.
Our next question comes from Rock Hoffman with Bank of America.
I understand not wanting to take a view on near-term market pricing. But just with current Chinese spot near $27/kg, is there upside to that $20/kg market scenario guide if pricing stays at current levels? And maybe just on the other side of the market balance equation, how would you assess any near-term supply shocks either in Zimbabwe, Jiangxi province or elsewhere?
Yes. So I guess -- I think the first one, if I understood the question, it's a pretty easy answer. If the Chinese price stays at $27, there's upside to our $20 forecast. I think the answer to that is yes. There's not a lot -- I don't think I'm taking a lot of risk in saying that. And the supply, I mean, what's happening, look, there's in and out moving. I think you're always going to have that in supply in the lithium when you're coming, there's African resources. Zimbabwe, we don't see that as a supply that comes off long term. I think that's a short-term issue, probably, call it, a negotiating position, if you will. So it has taken some product off the market, but we see it coming back in months or quarters as part of that.
The lepidolite in China is a little more difficult to call. Some of those have been offline, and offline for quite some time, almost going on a year for the CATL mine, I think we understand that to be more about permitting rather than operations, but then that still has to play out. I don't think we can answer that, but I don't think this is like an extraordinary thing. This is going to happen in the lithium world where supply comes in and out on a regular basis. The market is big enough now to where 5 years ago, a mine coming off like Zimbabwe or a couple of mines would have been massive. The market is big enough now to where it influences, but it's not a huge supply shock.
Understood. And just as a follow-up, any updated views on the 2 major contracts, which roll off at the end of this year? And more broadly, how should we think about potential shifts of that product mix from the current 60% spot, 40% contracted?
Yes. So we don't have anything to update on those. I mean -- and this is kind of business as usual as we've done these. We have conversations with our customers, and then we tend to adjust as we go through the year. But we have no update on those particular contracts at the moment. Eric, anything?
No, business as usual, we continue to evaluate a path forward with those customers. We also have a pipeline of many others who are prospective contract customers, and we're evaluating the terms and whether those meet our objectives, and we'll update you when we have a better view of that towards the end of the year.
Yes. And we're always talking about contracts with our customers. And you can imagine the conversations are different today than they were a year ago just because of where the market is. But we continue to talk to them, and we don't have any updates on that, but we will provide them once we have some clarity.
Thank you. That's all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Thank you, operator, and thank you, everyone, for joining us today. We've managed through a challenging period and actively positioned the company for future growth and resilience. As we look ahead, I'm deeply optimistic about our company's trajectory. Our team is dedicated to delivering operational excellence and sustainable growth, and our efforts are bearing fruit. Together, we will continue to leverage our competitive strengths and world-class resources and process chemistry expertise to capitalize on the opportunities created by the energy transition. I look forward to sharing more milestones and successes with you in the coming quarters. Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Albemarle — Q1 2026 Earnings Call
Albemarle — Q1 2026 Earnings Call
Solid start to 2026 with revenue and EBITDA growth, plus debt reduction and a higher Specialties outlook.
📊 Quarter at a Glance
- Net sales: $1.4B (+33% YoY)
- Adjusted EBITDA: $664M (+148% YoY)
- EPS: Diluted $2.34
- Debt/Leverage: repaid $1.3B; net debt-to-EBITDA ≈ 1x
- Specialties outlook: net sales $1.3–$1.5B; EBITDA $225–$275M; margin in the high teens
🎯 What Management Says
- Strategic momentum: strong start to 2026, with ongoing cost and productivity improvements fueling cash generation and earnings growth.
- Outlook shift: raised 2026 Specialties guidance on bromine price and favorable mix, while keeping company-wide targets amid geopolitical headwinds.
- Portfolio execution: disciplined capital allocation and progress on Key lithium assets (CGP3 ramp, Wodgina) to capture energy-transition growth.
🔭 Outlook & Guidance
- Outlook: Specialties net sales $1.3–$1.5B; EBITDA $225–$275M; high-teens margin. Energy Storage outlook unchanged; full-year guidance maintained across three lithium price scenarios.
- Headwinds: Middle East disruptions add $70–$90M annual cost, offset by debt reduction and stronger pricing/volumes.
- Q2 cadence: Specialties net sales up sequentially; EBITDA up modestly; CapEx guidance $550–$600M.
❓ Analyst Q&A
- Lithium pricing & contracts: buyer activity is evident; pricing contracts lag by ~3 months, so Q2 margins may rise if price levels persist.
- Greenbushes & safety: ramp of CGP3 on plan; safety issues are being addressed, with no change to the ramp schedule.
- Capital allocation: Kings Mountain remains under evaluation with no final investment decision; balance sheet remains conservative to weather volatility.
⚡ Bottom Line
Albemarle’s Q1 underscores a durable, multi-market lithium strategy with meaningful cash generation and a stronger balance sheet. The higher Specialties outlook supports long-term value, but near-term visibility remains tempered by geopolitical and supply-chain risks as the company continues to scale its lithium assets and broader end-markets.
Albemarle — Q4 2025 Earnings Call
1. Management Discussion
Hello, and welcome to Albemarle Corporation's Q4 2025 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 Fourth Quarter 2025 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, Chief Executive Officer; and Neal Sheorey, Chief Financial Officer; Mark Mummert, Chief Operations Officer; and Eric Norris, Chief Commercial Officer, are also available for Q&A.
As a reminder, some of the statements made during this call, including our outlook, guidance, expected company performance and strategic initiatives may constitute forward-looking statements. Please note the cautionary language around forward-looking statements contained in our press release and earnings presentation that same language also applies to this call. Please also note that some of our comments today refer to non-GAAP financial measures. Reconciliations can be found in our earnings materials.
And now I'll turn the call over to Kent.
Thank you, Meredith. For the fourth quarter, we reported net sales of $1.4 billion, up 16% year-over-year with double-digit volume growth. We also delivered adjusted EBITDA of $269 million, up 7% year-over-year, reflecting strong growth in energy storage and significant cost and productivity improvements.
Turning to the full year. We achieved net sales of $5.1 billion and adjusted EBITDA of $1.1 billion. As expected, these results were at or above our previous outlook considerations. Significant cost and productivity improvements, volume growth and sales channel mix contributed meaningfully to our full year performance. We are providing an update to our lithium demand outlook to incorporate stronger lithium demand growth for stationary storage. As a result, our estimated range for global 2030 lithium demand is up 10% versus our previous forecast.
That brings me to our new full year 2026 outlook. We are using the same methodology as we have the past 2 years, providing outlook ranges for various lithium market price scenarios. This year, those earnings reflect both our operational improvements and higher lithium pricing. We are also targeting additional cost and productivity improvements of $100 million to $150 million and stable capital spending in 2026. As a result, we see the potential for meaningful positive free cash flow at current lithium pricing.
Since 2024, we have successfully executed actions to reduce costs and capital intensity, generate cash and enhance financial flexibility. In 2025, we achieved approximately $450 million in run rate cost and productivity improvements and reduced CapEx spend by 65% year-over-year.
In January 2026, we closed the sale of our stake in the Eurecat joint venture. We now expect to close the sale of a majority stake of Ketjen to KPS Capital Partners in the first quarter, slightly ahead of our initial schedule. Together, these transactions are expected to generate approximately $660 million in pretax proceeds, improving financial flexibility, streamlining our operations and enhancing focus on our core businesses.
As we turn to Slide 5, yesterday, we announced the difficult but necessary decision to idle operations at our Kemerton lithium hydroxide plant to improve financial flexibility and preserve optionality. Unfortunately, recent lithium price improvements alone are not enough to offset the challenges facing Western hard-rock lithium conversion operations. This action is expected to be accretive to adjusted EBITDA beginning in the second quarter with no impact to sales volumes.
Our investments in top-tier mining resources at Greenbushes and Wodgina and our exploration interest in Western Australia remain important components of Albemarle's strategy and are not impacted by the decision to idle operations at Kemerton.
Now I'll turn it over to Neal to discuss recent results and outlook. I will then cover recent market trends and growth before we open the call for Q&A.
Thank you, Kent, and good morning, everyone. I will begin with our financial results for the fourth quarter as presented on Slide 6. Net sales for the quarter of $1.4 billion increased from the prior year, primarily driven by higher volumes across all segments, particularly Energy Storage and Ketjen, which grew 17% and 13%, respectively. Adjusted EBITDA for the fourth quarter was $269 million, up 7% versus the prior year. This improvement was driven by higher lithium market pricing and increased Ketjen in sales volumes.
Our adjusted EBITDA margin decreased by approximately 150 basis points compared to last year, driven by less favorable FX and lower specialties margins, partially offset by higher margins in Energy Storage and Ketjen. We reported a net loss of $3.87 per diluted share. Excluding charges, the largest of which included tax-related items and a noncash impairment related to the expected Ketjen transaction, our adjusted diluted loss per share was $0.53.
Moving on to Slide 7 and the factors influencing our year-over-year adjusted EBITDA performance. We reported sales volume growth across all segments and higher pricing for Energy Storage. Equity income, net of foreign exchange impacts, decreased year-over-year due to the Greenbushes inventory lag.
Turning to other segments. Ketjen delivered solid year-over-year adjusted EBITDA growth of 39% due primarily to higher sales volumes. Specialties' EBITDA decreased slightly due to margin compression, notably in our lithium specialties business, where prices began to adjust lower from previous peak pricing. The corporate adjusted EBITDA change primarily reflects unfavorable foreign exchange hedging impacts, largely driven by the strengthening of the Australian dollar and Chinese yuan.
Turning to Slide 8. We are introducing our outlook considerations for 2026. As usual, we provide ranges of outcomes for our Energy Storage business as well as the enterprise based on recently observed lithium market pricing. This year, we've updated our ranges to be inclusive of recent pricing trends. We've defined our scenarios using the following 3 observed market price cases.
Full year 2025 average market pricing of about $10 per kilogram lithium carbonate equivalent, or LCE, January 2026 average pricing of about $20 per kilogram LCE and the 2021 to 2025 5-year average price of about $30 per kilogram LCE. Within each scenario, we have provided ranges based on expected volume and product mix. All 3 scenarios assume flat market pricing across the year in conjunction with Energy Storage's current book of business, of which we expect about 40% of lithium salts volume to be sold through our long-term agreements.
Production volumes are expected to increase year-over-year due to growth from [ CGP3 ] and Salar yield improvement, offset by inventory drawdowns, which increased sales in 2025. As a result, we anticipate that Energy Storage sales volumes will be roughly flat year-over-year.
In addition to the metrics we have shown historically, this year, we have included our expected average realized price for consolidated salts and spodumene sales for each scenario. This realized price is simply our net sales range divided by our sales volume expectation, particularly in the $20 and $30 scenarios, you will notice a difference between market price and our average realized price. This is primarily due to product mix. For example, spodumene sales, which are growing dilute our average realized price on an LCE basis. These scenarios also clearly demonstrate the impact of the cost and productivity improvements we made over the course of 2025 and remain focused on going forward. As illustrated in the $10 scenario, if lithium market pricing were flat from 2025 to 2026, we expect our energy storage adjusted EBITDA margin to improve year-over-year into the low 30% range from the 25% margin achieved in 2025.
Turning to Slide 9. We provide Albemarle's comprehensive company roll-up for each energy storage market price scenario. This outlook assumes the Ketjen transaction closes in Q1 2026 which all else being equal, reduces full year net sales and EBITDA versus the prior year. Here, once again, you will see that for the $10 scenario, we expect to deliver a slight improvement to our overall adjusted EBITDA margin due to improved energy storage margins and our focus on cost and productivity.
As Kent mentioned, we achieved $450 million of cost and productivity savings in 2025, a significant portion of which was delivered in the year as you see in our metrics. Going forward, a small portion of this savings run rate will carry over into 2026. This benefit is reflected in our scenarios. And of course, we also have significant upside potential as market pricing improves with total company margins lifting to the low 40% and mid-50% range for the $20 and $30 scenarios, respectively.
Turning to Slide 10 for commentary by segment, starting with Ketjen. In January, we closed the sale of our stake in the Eurecat joint venture. We expect to close the sale of a controlling stake in Ketjen in the first quarter. Together, these actions are projected to bring in about $660 million in pretax proceeds, and we expect minimal tax leakage on the transactions. As we've said before, we intend to utilize the proceeds for deleveraging and other corporate purposes.
Operationally, Ketjen closed the year with a strong fourth quarter. Net sales were up 14% year-over-year and adjusted EBITDA grew 39%, driven by CFT shipment timing and higher FCC volumes. Full year results also reflected year-over-year improvements, including adjusted EBITDA up 15%. I am pleased to highlight that 2025 represented the third consecutive year of adjusted EBITDA improvements at Ketjen as part of our multiyear turnaround plan for the business. Looking ahead, once the transaction closes, earnings for our remaining share of the refining catalyst business will be classified as equity income. Our share of the refining catalyst business and the retained PCS business will both be reported in corporate. We expect the contribution from these businesses to be relatively immaterial to equity income and adjusted EBITDA going forward.
Moving to Slide 11 for an overview of the specialties business results. In the fourth quarter, net sales increased 5% year-over-year. Adjusted EBITDA declined 6%, primarily due to margin compression in our lithium specialties business where we began to see pricing move lower following previous peak conditions. For the first quarter, we expect lower sequential sales and EBITDA due to a temporary production interruption at our JBC joint venture in Jordan, following a major flooding event, which resulted in an estimated $10 million to $15 million in lost revenue. The site is now back to full operating rates.
Looking ahead to 2026, we are introducing full year outlook considerations for the Specialties business, including: net sales of $1.2 billion to $1.4 billion, adjusted EBITDA of $170 million to $230 million and EBITDA margins in the mid-teens. Bromine Specialties volumes are expected to be flat to slightly down, reflecting the early year disruption at JBC. Adjusted EBITDA is expected to fall year-over-year due to product mix impacts driven by soft demand from the oil and gas and elastomers markets and lower pricing in lithium specialties.
Moving to Energy Storage on Slide 12. Full year volumes reached 235,000 tons LCE, up 14% year-over-year, exceeding the high end of our outlook of 10% growth. This was driven by record integrated production, strong spodumene sales and inventory reductions. Q4 net sales increased 23% year-over-year. Adjusted EBITDA was up 25%, supported by higher lithium pricing and ongoing cost and productivity improvements. While we expect first quarter volumes to be lower sequentially due to typical seasonality during the Lunar New Year, we expect both net sales and EBITDA to increase year-over-year, assuming current pricing persists for the remainder of the quarter.
As Kent mentioned, idling Kemerton Train 1 will have no impact on volumes. We expect to meet customer demand for lithium hydroxide via our other conversion plants or [ tolling ]. The Kemerton action will benefit adjusted EBITDA beginning in Q2. Regarding sales channel mix, we expect approximately 40% of our 2026 salt's volumes to be sold under our long-term agreements.
Turning to Slide 13 and some new disclosure we will provide going forward. This table documents quarterly metrics for the Energy Storage business, including average lithium market price observed, our net sales, our sales volumes and our average realized price, which is defined simply as our net sales divided by our consolidated salts and spodumene sales volumes on an LCE basis. Going forward, this table will be included in the appendix of our earnings deck for easy reference. As you review this data, I will again remind you of the impact of spodumene sales in our mix which dilutes our average realized price on an LCE basis.
Slide 14 highlights our success in turning earnings into cash. We ended 2025 with an EBITDA to operating cash conversion of 117%, driven by our actions to manage working capital, and receipt of a customer prepayment in January of last year. Even after adjusting for the onetime benefits, we still estimate our underlying 2025 cash conversion to be at or above the top end of our long-term range of 60% to 70%. Additionally, we generated significant positive free cash flow of nearly $700 million due to our solid cash conversion and our rightsized capital expenditures, which declined 65% year-over-year.
Looking ahead to our cash generation and conversion in 2026, we are focused on our underlying cash improvements. But want to note select headwinds to our cash metrics in the year, including recognizing $88 million in deferred revenue related to the customer prepayment we entered in 2025 which will benefit EBITDA but not contribute cash; and approximately $100 million in cash costs related to idling Kemerton Train 1 and placing it in care and maintenance. Of course, pricing has a large impact on our ability to generate cash, and we expect measurably positive full year free cash flow potential if current lithium pricing persists.
I will now turn the call back over to Kent to detail our updated lithium demand forecast, capital allocation priorities and our growth outlook.
Thanks, Neal. Slide 15 shows our global lithium demand expectations. We are seeing a diversification of lithium end markets with stationary storage becoming an increasingly significant demand driver for lithium, in addition to strong electric vehicle demand growth, most notably in Asia and Europe.
2025 global lithium demand was 1.6 million tons, up more than 30% year-over-year and in line with the midpoint of our previous forecast range. 2025 lithium demand growth outpaced supply growth, leading to tighter inventories and increased pricing by year-end. Now we are introducing 2026 global lithium demand expectations of 1.8 million to 2.2 million tons, up 15% to 40% year-over-year, driven by stationary storage and electric vehicle demand growth. We are also increasing our 2030 global lithium demand outlook to 2.8 million to 3.6 million tons, up about 10% from our previous range. This increase is driven by higher expected demand from stationary storage.
Turning to Slide 16. Let's take a closer look at each of these end markets, starting with EVs. We continue to see EV demand growth globally in line with our expectations, with sales up 21% year-over-year, with the highest growth in Europe, up 34%. European EV demand was driven by continued policy support for electrification, which we expect to continue to drive similar growth in 2026. As expected, U.S. EV demand slowed in the fourth quarter following the removal of the 30D consumer tax credits. However, the U.S. is also the smallest of the regional markets with just 10% of global EV sales. China remains the largest EV market with 60% of global EV sales and growth continues on trend as EV penetration reached approximately 50% during 2025.
Slide 17 expands on the fast-growing stationary storage demand trends, up more than 80% in 2025 with strong growth across all geographies. China represented 40% of ESS shipments in 2025, growing 60% year-over-year with demand driven by policy support and strong economics for stationary storage projects. North America saw a 90% increase in shipments in 2025 to support grid stability as energy demand rises in part due to increased demand from data centers and AI.
European shipments more than doubled in 2025 to support renewables as an alternative to energy imports. Stationary storage demand continues to diversify globally. Demand outside of the 3 major regions represented more than 20% of stationary storage shipments and grew 120% year-over-year. This growth is due to strong demand across Southeast Asia, the Middle East and Australia, driven by policy support, the need for energy resilience and growing international battery supply chains.
Turning to Slide 18. Thanks to our own disciplined cost and capital actions as well as improving underlying markets, we closed the year with $1.6 billion in cash. In addition, in the first quarter, we expect to receive approximately $660 million in combined proceeds from the recently closed Eurecat transaction and the soon-to-close Ketjen transaction.
We repaid our $440 million Eurobond in November and are committed to maintaining our investment-grade credit profile. We continue to evaluate additional opportunities to delever, return capital to shareholders through our quarterly cash dividends and make disciplined organic growth investments.
Now turning to Slide 19. We've reset the baseline for lower sustaining capital through capital efficiency, project selectivity and scoping. Our 2026 sustaining capital is essentially flat year-over-year after assuming the sale of Ketjen in the first quarter. We're confident we'll be able to maintain these lower levels of spend while also prioritizing health safety and environmental, continuity and productivity projects. Cost reductions, portfolio simplification and capital discipline also allow for targeted growth spending on our world-class resources including investments in early-stage development at the Salar de Atacama and Kings Mountain. We are committed to being disciplined in our approach to value enhancing growth while preserving optionality and solidifying our competitive position.
As we look ahead on Slide 20, we are on track to deliver a 5-year CAGR of 15% for Energy Storage sales volumes with minimal additional investment. This includes a 25% CAGR over the past 4 years, with growth expected to moderate as large projects complete ramp up. Over the next 2 years, several projects provide growth with minimal incremental capital spending going forward.
At the Greenbushes spodumene mine in Australia, the JV is currently ramping the CGP 3 expansion, which adds about 35,000 tons per year to our capacity on an LCE basis. We also see multiple opportunities to continue productivity initiatives at the Salar de Atacama based on results of the Salar yield improvement project. Finally, at Wodgina, the JV is currently operating about 2 to 2.5 trains on average and could potentially operate 3 full trains as ore availability continues to improve. We will also continue to evaluate longer-term growth opportunities to leverage our global footprint of world-class resources.
Turning to Slide 21. Albemarle has a strong and differentiated competitive position, led by a growing lithium and long-lived bromine resources. The figures shown on the slide summarizes the changes made to our mineral resources, inclusive of mineral reserves as part of our annual [ SK-1300 ] report included in our 10-K filing.
Our bromine resources decreased slightly year-over-year. At JBC, this was due primarily to updated modeling and sampling. Our JBC operations continue to produce some of the lowest cost bromine in the world with significant long-term expansion options. Magnolia resources are down slightly due to reduced pumping rates. Albemarle benefits from large, low-cost bromine resources with resource lives in the multi-decade or even multi-century range.
Our lithium mineral resources were up 10% year-over-year, led by improvement at Greenbushes. At Greenbushes, we increased our reserves and resources due to mine design improvements and the inclusion of underground resource. At the Salar de Atacama resource growth was mainly attributed to expanded hydro geological drilling activities. We anticipate further enhancements in reserves and resources at this site.
The DLE [indiscernible] plant has been fully commissioned and is now operational, yielding promising data for scale-up purposes. Additionally, by next year, the Salar yield improvement project is expected to have enough operating history to support upgraded mineral resource and reserves estimates. At Wodgina, our updated NPV materially increased, driven primarily by yield improvements. Kings Mountain just completed a successful drilling campaign with potential for updated resource next year.
On Slide 22, I will summarize the actions we have taken to enhance our position and maintain our competitive edge to capitalize on the growth trends I've discussed. In terms of optimizing our conversion network, as I mentioned, we delivered strong full year '25 Energy Storage volume growth and record production, and we made the important decision to idle Kemerton. Looking ahead, we will continue to maximize the value of our resources and adjust product mix through conversion and tolling networks.
We continue to improve cost and efficiency in 2025 with greater than 100% adjusted EBITDA to operating cash flow conversion. We are targeting an additional $100 million to $150 million in cost and productivity improvements in 2026 from a combination of projects across manufacturing, supply chain and corporate. We see further opportunities for cost and productivity improvements as we simplify our processes and continue to embed technology and AI across our organization.
As a reminder, we are targeting flat CapEx as compared to 2025 with a focus on disciplined investment that enhance our optionality and provide fast returns. And finally, we will continue to enhance our flexibility, building on the Ketjen asset sales in 2025 and strong free cash flow achieved during the year. Importantly, the actions we have taken and continue to take to optimize our portfolio, reduce cost, improve capital efficiency and enhanced financial flexibility are all geared towards preserving long-term growth optionality and supporting our strong competitive position.
In summary, on Slide 23, Albemarle delivered strong fourth quarter and full year 2025 results, thanks to the actions we have taken to optimize our asset portfolio, reduce costs and strengthen our financial flexibility. Looking ahead for 2026, these efforts are expected to continue to drive year-over-year margin improvement, independent of price changes. Our durable competitive strengths, including our assets, expertise and innovation, combined with the long-term secular growth opportunities around energy resilience position us well for sustainable growth and value creation over the long term. We have the team and discipline to execute well and realize that potential.
With that, I'll turn it over to the operator to take your questions.
[Operator Instructions] Our first question is from David Begleiter with Deutsche Bank.
2. Question Answer
First, thank you for the additional disclosure, it's very helpful. Kent, on your lithium volumes, they'll be flat this year in '26, how should we think about volume growth beyond '27 -- in the '27, '28, '29 time frame?
Yes. Thanks. So I would say we probably grew a little faster than we had anticipated. It's Kind of why we're running into a flat spot this year. That, and I think the headwinds from pulling inventories down [indiscernible] were able to sell those last year and not this year. And then -- and we still have growth opportunities at Greenbushes, at Wodgina, and then we have longer-term growth from Kings Mountain and then the Salar de Atacama. So I think we'll continue on a growth profile. We pulled back on our capital spending. So we're -- it's not as prolific as it once was.
But I think we still continue that growth profile after '27, and we'll have to start investing once we see how the market looks for that. But we have we have opportunities. We have the fundamentals for it, the resources that we have, the technology basis we have for that, it's just a matter of executing against that.
Understood. And just on Kemerton, Kent, how much higher cost is that asset than your Chinese conversion assets? And what lithium price would you need to see to restart Kemerton?
Yes. So in the Ketjen, I think -- I mean your point, I think you made it, as we've idled the asset, not a shutdown, its idle. So we keep it in a position where we can restart it if we get into those conditions. But the cost structure between China and, say, Western supply, but particularly Western Australia, I mean it's across the industry. It's across areas like reactant tailings disposal, it's a big difference. It's a big industry in China that kind of works through tailings, and we don't have that in the West. We've made progress in Australia with government support around taking those costs down, but it's still significantly different. Labor is higher power.
So there's a -- there is a gap there between China and the West and Australia, it's probably $4 or $5, something like that. And that's going to have to be addressed if you're going to build out a western supply chain. We either need differentiated prices to cover those costs from the West, and we've not been able to get that support so far.
Your next question will come from Jeffrey Zekauskas with JPMorgan.
Can you comment on how much Chinese lithium capacity you think was closed down from about the middle of 2025 today because of various actions? And do you think that the Chinese government or steps that the Chinese government took were key to that capacity coming off-line?
So I'm going to let Eric get into some of the specifics around maybe the mines or the capacity that comes around it. But I think there is -- I mean the Chinese government has been paying attention to this. So I think it has had something to do with that. It's not all driven there. So you've had some capacity come on. We've also been surprised to the upside on demand, particularly the fixed storage applications have been much stronger. So if we're demand didn't grow -- I mean supply did not grow as much as we had anticipated, it did still growing, but it's not as much as we've anticipated and demand grew more than we thought. So that's where it's gotten -- it's getting tighter. And I think the Chinese government looking at environmental regulations and some of the permitting, they're getting a little bit tighter on it, and it's had, I would say, some influence. Eric?
Yes. So Jeff, we would say that just a bit an update. There are about 7 lepidolite mines that continue to operate even while they await permits. So it's not that lepidolite capacity in China has completely disappeared. There's still a good amount that is online. The one large facility you may have heard about is owned and operated by CATL, that is still off-line. In total, we think about 30,000 to 50,000 tons of capacity came off in 2025. We'd expect that that's possible to come back on at some point in the coming year. Effectively, we've modeled that.
So we -- now your question about the regulatory environment, there is an increased oversight on waste, tailings, generation and general environmental operating conditions in China is probably too early to say how that will play out. Safe to say if implemented, it would affect all operators and the [indiscernible] all operators because it hits all elements of how to manage, handle and dispose of mine tailings and environmental waste.
Great. And then, I guess, on Slide 27, you have your forecast of Specialties adjusted EBITDA for 2026 which you put in a range of $170 million to $230 million versus $276 million. What's behind that decrease?
Just to clarify, Jeff, this is Eric again. Your question is what's behind the decrease in Specialties here on your earnings?
Yes, for 2026.
Indeed. Okay. So a couple of things that are there. Number one, as Kent described in the call, we're not getting much of a lift from demand growth year-on-year, so that's not a helpful tailwind. Just to clarify that, the issues there are that in certain markets such as process chemical industries, oil and gas elastomers, that's a part of your coverage universe. You know that that's an industry that's not particularly healthy and that's impacting our demand growth in those areas. There's some offsets, pharma, semiconductors, those are performing well. I think the big driver is lithium prices, lithium specialties prices in particular.
This is a business that does not contract or move like the Energy Storage. It's not very commoditized, it's Specialty, but it does echo the price curve of LCE over time. And we were successful in the past years of getting long-term contracts based upon very high LCE prices at that time, and those have now come off. And we saw a step down of that a little bit in the fourth quarter. Neal mentioned that in his comments, and we're going to see more of that to come this year. Obviously, now that's turned, but it's too early for the turn in LCE prices to affect a subsequent series of contracts. We just have to wait and see.
Your next question will come from Josh Spector with UBS.
I wanted to ask on just your approach on how you're thinking about investing in this cycle. You guys did a lot of work over the last couple of years to get free cash flow to where it was last year. So how long do prices need to stay at the 20-kilogram plus level before you think about started spending? Or are you going to harvest cash for longer than what you might have in a prior cycle, just given what we've learned here?
Yes. So we probably will be a bit more conservative than we -- than you've seen us be in the past around that. But we have -- we do have projects. I mean we've been mindful as we've cut capital -- we've taken out some of the big pieces. We've tried to get our sustaining capital in a place where we think we can hold it and we're investing in our assets, but not over-investing. But also looking for incremental projects, smaller capital, quick returns. You've heard us talk about that in the past and over the down cycle, particularly focused on that.
And then the growth programs are more -- they are a little more incremental, like we said before, you can see us ramping up CGP 3 at Greenbushes, for example, at Wodgina, we've got a third train there that when we get to better ore, we can operate that without significant capital and then we can build Salar de Atacama. Salar yield project is still ramping, but it's going very well. It's generating good data. So we think that's going to really help our efficiencies and recoveries as we go forward. So we have the opportunity to make smaller investments and still get some growth.
The bigger ones are to come, Kings Mountain, from other projects, DLE, for example, in the Salar that would give us additional volumes are bigger investments, those are -- they're not right in front of us, so we'll have the opportunity to see how the market responds before we make commitments on things like that.
Okay. So just quickly on Kemerton. I mean you talked about the $100 million shutdown costs. Can you just go through other pieces? I guess, how quickly is the payback on that cost? And then are there any ongoing basically costs to keep the capacity idle?
So there are ongoing costs to keep it in the state -- in a ready state, so to speak, idled. And they're not dramatic, but they are a significant cost, and it's something we can do for a period of time. We don't want to -- we can't keep it here forever, but we can keep it here long enough to see if we can bring it back, the market changes. And really, the change we're looking for is probably a bifurcation where Western prices are different than prices in China. That's really what we're looking for and to see that that's sustainable over time to cover those costs. And so -- and the payback on that, I mean I don't want to -- I'm not going to tell you exactly what the savings is around that, but it's a reasonable payback.
Your next question will come from John Roberts with Mizuho.
Could you talk about the differences between China and ex China lithium market pricing? I know you don't want to discuss your own contracts, but what's the market doing ex China?
Well, I'll take -- I'll make a broad comment, Eric, you could jump on that if you want. But I don't -- there's not a big difference, right? For the most part, everyone wants the China price. There are some circumstances where you can get that a little bit of a differentiation. But for the most part and the way it's been for the last several years, it's more or less the same price. There is -- there are some incentives in the U.S. where some of that will flow through to lithium from resources outside of China or material outside of China, but it's not -- it doesn't characterize the whole market, I would say.
John, yes, this is Eric, just adding. There are -- so structurally, you would know that in the past there's -- when China has been a big and has been a big producer of lithium, the general difference has been a 13% VAT, so price has been about 13% higher outside versus in. That's just a structural difference. I think, though, however, what Ken is alluding to is important. The market is dynamic and it's changing. The growth and maturity of the [indiscernible] [ Futures Exchange ] is increasingly becoming the benchmark. There's a -- given that it's traded every day, there's great transparency to that number or one can see it very clearly. And outside of China, people have tended even our contracts -- contract relationships that tend to rely on PRA's, price reporting agencies. And with the dynamic change of what's going on with the [indiscernible], if the challenge is are the PRAs keeping up with that rate of change. So I think it's getting -- the -- there's a structural difference, is my first point. Second point is there are some difficult -- maybe some inefficiencies because of that dynamic with the [indiscernible] going on.
Okay. And then I think you said you modeled CATL capacity coming back this year. Could you share when you've modeled that back online?
I mean, I think we've probably -- we've taken an assumption to [indiscernible] in slowly. Again, John, we're talking about 30,000 to 50,000 tons. You look at the scheme of what -- of the demand growth, the supply-demand balance and where inventory levels are, I don't think it's going to make that much of a difference.
Your next question will come from Laurence Alexander with Jefferies.
First of all, can you discuss the -- whether there's any material difference in contract structures developing between [indiscernible] storage and automotive in terms of the [indiscernible] degree of emphasis on reliability of supply or consistency of quality control or products formulation?
Yes. So for us, the material goes through the same supply chain, right? So we're selling it into the same supply chain that we do for automotive and we do for fixed storage. Probably the biggest difference is, by definition, all the fixed storage is carbonate. And we tend -- hydroxide tends to be go to the West. So those tend to be where our long-term contracts are. Carbonate tends to be more on the spot market and the China price. So that's the biggest difference, but it's really driven by the product mix that goes into fixed storage versus -- there's a combination for the EV market, and it's pretty much all carbonate and LFP for fixed storage.
And just a couple of characteristics add to that, that make it important, maybe to get at the root of your question, Laurence. On -- fixed storage is largely carbonate, that's largely LFP, and that's almost entirely China. And carbonate has a pretty harmonized spec, it's closer to being like a classic commodity and hydroxide. Hydroxide has a lot more requirements that the automotive producers put on it for the life of battery and the safety they're looking to get. And there's -- as a result, given the challenges of making consistent grade hydroxide, there's much more of a variation across producers. So it's a more detailed qualification process. Some of it is the user. Some of it is the chemistry, I guess, at the point.
And then just on the -- in terms of how you think about the lessons learned about balance sheet management against strategic [indiscernible] longer term, how are you thinking about the development of solid state as a solution in the battery market and the potential competitive threats from sodium ion batteries?
Yes. So okay, 2 ends of the spectrum there. So look, on solid state -- I mean it's still -- it's lithium, and we still -- the driver will be EVs. So the intent that the lithium intensity for solid state goes up a little bit, it gives us a kicker, but it's really driven by the EV penetration and that growth in that. So that things -- from our standpoint, it's just -- it's a positive. It's going to grow that a little bit. But we're going to -- again, we've got time because we don't see it becoming mass market immediately. So we have time to understand, allow the market to mature. So we're early in the cycle, probably earlier than we'd anticipated from lithium. We just -- we think we've just been through the second cycle since the advent of EVs. So that's still immature from a commodity cycle perspective. So we're still watching that and learning and making sure we understand that.
On fixed storage and sodium ion, look, we think it's going to be relevant. It will be a technical player in the market, but it still has to develop technically, and it has to scale. So it's not impacting us, we don't think much this year. And our forecast, as we kind of build out the forecast, I think we built early on 10% sodium ion fixed storage and that growing to 15% maybe toward the end of the decade.
Just again, to add some context. I think it's important. One, as Kent said, solid state, a good news story, a solid-state battery as 2x the amount of lithium in it that a cell would for lithium-ion battery. There's some different tech involved. There's a different supply chain involved. So it's going to take a while. Similarly, sodium is going to take a while as well, and that's obviously a drawback. And it's part of the reason we have such a variation in our ESS forecast in the deck that we presented is because there are some things that have to happen.
Sodium Energy has to get more energy dense to be cost competitive with LFP. At the range of prices we shared in these scenarios, LFP is always more cost competitive today than is sodium ion battery. So there has to be innovation. We expect innovation to happen. The second is scale that Kent said. And then the third is it will be limited because in the end, it will never have the volumetric energy density that lithium would, whether that's lithium iron phosphate or lithium metal. So it's limited in storage spaces to where space is not an issue. So think a corn field versus New York City. New York City is going to work so well. Corn field will work out in Iowa. And then obviously, [indiscernible] has the same limitation, volumetric energy density is critical for EV. So we see very limited penetration there. So it's 2 different ends of the spectrum, as Kent said, those are all the drivers.
Our next question will come from Vincent Andrews with Morgan Stanley.
Just thinking through sort of shipments versus consumption, early in the cycle, there tends to be sort of a reload that helps prices move higher. And ESS, obviously, is a big driver. And some of the data would show that ESS shipments are moving kind of a 2x the level of ESS installations, which, to a certain extent, makes sense, right? It's a very growing part of the market. So as it grows, inventory needs to grow in between. But how do you assess sort of where customer inventory levels are and where customer behavior is sort of as prices have gone up and then maybe come off the bottom as you think about what actual demand or consumption is going to be in 2026?
So look, there's a couple of different supply chains you have to think through. But I mean a kind of across the board, we think inventories are at a pretty low level, particularly from a lithium side that's sitting in batteries everywhere, the inventory levels are pretty low. Now we're in the Lunar New Year period. And we -- as we come out of that, that's where we'll get information to see exactly what demand is going to look like this year, but everything seems to be pointing in the right direction.
And we see installations on fixed storage kind of continuing the trend and keeping up. We follow that versus what goes in. So we're -- the batteries are probably where -- we ship probably 6 months ahead of where it gets shipped to the -- an installation -- 6 months to a year before an installation happens. And we see that reasonably balanced. So it looks pretty real from our standpoint.
That's very helpful. Neal, could I ask you to fill us in on some of the other cash flow statement items on working capital. Just thinking through, you got higher prices, your inventory is at low levels. But what should the makings of AP, AR inventories look like in 2026 just given what's happening from a price perspective, both for your revenue and your spodumene costs?
Yes. Vincent, thanks for that question. So maybe I won't go through every line of working capital. But I will say, first of all, on inventory, Obviously, we saw very strong demand at the end of the year of last year, and we capitalized on that and we're able to bring down our inventories a little bit. As you can expect in 2026, our production levels are up, some of that will go towards restocking our inventories and making sure that we have the right amount of inventory to supply the demand. But in a rising price environment, you do bring up a good point that in a rising price environment, working capital could be a short-term cash flow headwind. The way we think about it is, generally speaking, for the company, our working capital balance sits at about 25% of sales. That's usually a pretty good rule of thumb. So maybe that is helpful as you think about in a rising price environment, how to model the working capital piece.
Your next question will come from Joel Jackson with BMO Capital Markets.
I just want to follow up on slide, I think, it's 8. So you talked about your sensitivities and your margins. And if you look at Q1, you're talking -- $20,000 a tonne, [indiscernible] the spot price and you say [indiscernible] price is. So should you be delivering mid-50s EBITDA margins in Energy Storage in Q1?
So well, you have to consider the lag on the way our contracts work. So we'll get the benefit of the current market price on the spot business we do, but our contract volumes all kind of have about somewhere a couple of months lag, usually 3 months lag that works through that. So we have to have the opportunity for that to work through our P&L. Otherwise, once we get that, that should be the case.
Okay. Just following up on that then. So you should have been -- if spot price stays exactly where it is, you should be achieving mid-50s EBITDA margins in Energy Storage in Q2? [indiscernible] question. And also, just clarifying, Kent, you talk about $4 to $5 a kilo of conversion costs now in Kemerton. Were you talking about [indiscernible] your absolute costs you see that conversion costs were in Ketjen or Western Australia? Are you saying that $4 to $5 a kilo was how much higher the costs are in Ketjen versus China? It's just a 2-part second question.
Yes. So it wasn't a Kemerton answer. It was a general broader answer, and it was like a $4 to $5 difference between China and or, I would say, to be clear.
Your next question will come from Kevin McCarthy with Vertical Research Partners.
Kent, I'd welcome your latest thoughts on potential to acquire lithium capacity versus build it? It seems to me you've delevered the balance sheet quite a bit. You've got more cash coming in from Ketjen. We're talking about price recovery and positive revisions to ESS demand. So if we zoom out the lens and just think about where you are financially and where we are fundamentally in the cycle, might we see more inorganic growth from Albemarle in the years to come?
Yes. So I mean we'd be talking down the road if you're thinking from that perspective because we still have -- but one, we want to make sure we're in -- we've got really good footing, understand where the market is going as we go forward because we -- price has moved up. We just want to make sure that, that consolidates, so to speak. And we also have pretty good opportunities within the portfolio for, I'd say, it's incremental growth. It's lower capital than building greenfield facilities, and it's mostly around resources, but -- and it's the incremental capacity at our conversion facilities, whether that's at [indiscernible] or our conversion facilities in China. And then we also have tolling opportunities as well.
So we're -- I think we've got good organic growth opportunities, but we'll look at acquisitions as they come up, but that's not our focus. And we would have to see the right opportunities for that. The right fit at the right price, it would -- we would look at it. But that's not really our focus at this point in the cycle.
Your next question will come from Colin Rusch with Oppenheimer.
I wanted to just follow up on the cash question. You're really in a fundamentally different place from a balance sheet perspective. And I'm curious about rather than acquiring new assets, looking at optimizing your cost of capital on the balance sheet, in some of the instruments that you have if there's real opportunities to streamline things?
Colin, thanks for that question. This is Neal. So yes, I think one of the key things that we're focused on is making sure that we have the right kind of headroom to navigate through the cycle. And you saw in our capital allocation slide today that in addition to making sure that we meet our dividends, we are also focused on ensuring that we have a strong balance sheet, which is deleveraging opportunities. So we're going to continue to look at that.
If you're looking at other parts of the capital structure, look, the best thing I would say is we evaluate where is the best economic place for us to delever and strengthen our financial profile. And I think our comments today really highlight where we see the best opportunities. I really think the best opportunities are in the deleveraging space. But we do look at all of our options. And certainly, with our cash position where it is today, those are -- that's kind of our first and foremost priority right now.
Okay. That's super helpful. And then for Eric, I'm really curious about customer behavior here. I mean getting to deposit is a pretty big signal to the market about where folks see overall supply-demand balance on a multiyear basis. As you look at EV versus stationary storage and increasingly robotics, end customers, can you talk a little bit about the different behavior and concerns around regional nuances, tariffs and security of supply and supply chains between those 3 buckets of customers?
Sure. Happy to, Colin. It is a very dynamic time to be sure. And I think so much has happened so fast. It's going to be hard to draw hard conclusions right now at this moment. I would say that when it comes to the EV market, it depends on who you're talking to. If you have someone whose market is largely in the United States, it's a very different picture than someone whose picture is or view is Europe or China. When it comes to grid storage unanimously, that's an area of interest. Remember though that in some levels, it's the same customer for us, depending on [indiscernible] the supply chain. Obviously, we do have some contracts with OEMs, the balance of our contracts with battery producers. We do some -- a lot of spot business with [indiscernible].
So we see the whole supply chain -- different eyes. And the further up you go, the more bullish you get because it [indiscernible] focused on any specific end market. We have seen a lot of customer dialogues come forward with the rise in prices, but it's way too early to say where that's going to go. I mean at this point, again, depending on who you're talking to, they have a very different view of their needs. And so we're just going to have to see how that plays out over the long term in terms of our contracts. But right now, it's just too early to call.
Thank you. That's all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Thank you, operator. In closing, I want to thank you all for your continued support and trust in Albemarle. Our strong results this quarter improved outlook for 2026, and ongoing focus on operational excellence position us well for the future. With our world-class resources, strong track record of cost and productivity improvements, leading process chemistry and commitment to customer success, we're confident in our ability to create lasting value for our shareholders and sees opportunities ahead. We appreciate your partnership and look forward to connecting at our upcoming events. Stay safe and take care. Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Albemarle — Q4 2025 Earnings Call
Albemarle — Q3 2025 Earnings Call
1. Management Discussion
Hello, and welcome to Albemarle Corporation's Q3 2025 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 2025 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, Chief Executive Officer; Neal Sheorey, Chief Financial Officer; Mark Mummert, Chief Operations Officer; and Eric Norris, Chief Commercial Officer, are also available for Q&A. As a reminder, some of the statements made during this call, including our outlook, guidance, 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 also applies to this call. Please also note that some of our comments today refer to non-GAAP financial measures. Reconciliations can be found in our earnings materials.
And now I'll turn the call over to Kent.
Thank you, Meredith. In the third quarter, we reported net sales of $1.3 billion, including another record production period from our integrated lithium conversion network. Adjusted EBITDA reached $226 million representing a 7% increase as cost and efficiency improvements more than compensated for lower year-over-year lithium pricing.
We generated $356 million in cash from operations during the third quarter, marking a 57% year-over-year increase, driven by higher EBITDA and disciplined cash management. We are enhancing our 2025 outlook considerations. Based on our year-to-date financial performance, prevailing lithium market pricing and stronger-than-expected energy storage sales volumes, we now anticipate full year 2025 corporate results to be toward the upper end of the previously published $9 per kilogram scenario ranges.
Overall demand for lithium remains robust, up more than 30% year-to-date, supported by the energy transition and rising global demand for electric vehicles and grid storage. Notably, global EV sales have increased 30% year-to-date led by China and EU battery electric vehicles. Grid storage growth was even more pronounced, climbing 105% year-to-date, with strong growth across all major markets globally. Additionally, we have made significant progress implementing cost and productivity improvements while reducing capital expenditures.
Capital expenditures for the year are now projected to be approximately $600 million. We expect to achieve full year cost and productivity improvements of around $450 million, surpassing the upper limit of our initial targets. Considering these factors, we now project positive free cash flow of $300 million to $400 million in 2025.
Turning to Slide 5. Recent portfolio actions further demonstrate our commitment to long-term value creation and enhanced financial flexibility. We recently announced 2 transactions. First, a definitive agreement with KPS Capital Partners to sell a controlling 51% stake in Ketjen's refining catalyst business; second, an agreement to sell Ketjen's interest in the Urca joint venture to Oxone. Both transactions are expected to close during the first half of 2026. Together, these transactions are expected to generate approximately $660 million in pretax cash proceeds giving us greater ability to delever while also retaining exposure to future potential gains in the refining catalyst business.
This new structure positions the refining catalyst business to leverage KPS' manufacturing expertise and access to capital to accelerate its growth opportunities. At the same time, we will be able to shift our attention to our core businesses, energy storage and specialties to set Albemarle up for long-term success. This transaction reinforces our commitment to boosting shareholder value. improving financial flexibility and maintaining Albermarle's strong competitive position.
Neal will now provide additional details regarding financial performance and outlook.
Thank you, Kent, and good morning, everyone. I will begin with our financial results for the third quarter as presented on Slide 6. Net sales for the quarter totaled $1.3 billion, a decrease from the prior year, primarily driven by lower lithium market prices. This decline was partially offset by higher volumes in both Ketjen and energy storage.
Adjusted EBITDA for the third quarter was $226 million, representing a 7% increase year-over-year. This improvement was driven by disciplined cost management and productivity actions which more than offset lower lithium market pricing. Our adjusted EBITDA margin improved by approximately 150 basis points compared to last year. We reported a net loss of $1.72 per diluted share. Excluding charges, the largest of which was the noncash goodwill impairment related to Ketjen. Our adjusted diluted loss per share was $0.19.
Turning to Slide 7. I'll cover the drivers of our adjusted EBITDA performance year-over-year. We saw solid growth in sales volumes in both our energy storage and Ketjen businesses and our consistent focus on cost discipline and productivity yielded positive results. By focusing on the actions in our control, we were able to offset lower pricing for lithium and spodumene.
Turning to other segments. The Specialties team delivered an impressive 35% increase in adjusted EBITDA, largely due to cost improvements across the board in raw materials, manufacturing and freight. On the corporate side, we benefited from cost savings and favorable year-over-year foreign exchange movements.
Turning to Slide 8. As usual, we're sharing outlook scenarios based on recently observed lithium market prices. This slide shows a full company summary for each price scenario. Our outlook ranges remain the same as last quarter. but we've updated a few key points. Specifically, we now anticipate our full year 2025 results will approach the upper end of the $9 per kilogram lithium price scenario for total company sales and EBITDA. This reflects our strong performance so far this year, including cost controls, productivity gains and slightly better market pricing. We expect lithium market pricing to average about $9.50 per kilogram this year based on year-to-date actuals and assuming current pricing persists for the remainder of November and December.
Turning to Slide 9 for additional commentary by segment. First, in energy storage, sales volume growth is expected to be up 10% or more year-over-year, thanks to record integrated production, higher spodumene sales and reduced inventories. We are seeing most of that volume upside coming from a strong demand environment in China, where sales are at local market prices and not on long-term agreements. As a result, we now expect approximately 45% of our 2025 lithium salt volumes to be sold on long-term agreements with floors, primarily due to the mix impact of stronger-than-expected volumes in China.
Our long-term contracts continue to perform in line with our forecast. Q4 EBITDA for energy storage is expected to be slightly higher sequentially. First, in terms of product mix, Q4 will have a greater proportion of higher-margin lithium salt sales versus spodumene sales. Second, Q4 is expected to benefit from current higher spodumene prices in JV equity earnings. In specialties, we continue to expect modest volume growth year-over-year. Q4 net sales are expected to be similar to Q3, but EBITDA is expected to be lower primarily due to weaker demand in oil and gas applications.
Finally, at Ketjen, we continue to expect a stronger Q4 due to higher CFT and FCC volumes. Please refer to our appendix slides for additional modeling considerations across the enterprise.
Slide 10 highlights our focus on running the business efficiently and converting earnings into cash. Year-to-date through Q3, our EBITDA to operating cash flow conversion has been over 100%. In Q3, conversion was strong due mainly to inventory reductions along with a modest sequential uptick in dividends from the Talison joint venture. We continue to expect our full year cash conversion to average over 80%. The implication of that is that we expect Q4 conversion will be lower, mainly due to the timing of interest payments and higher working capital needs from increased revenues.
Our strong cash conversion performance and reduced capital expenditures forecast mean that we now expect to be well into positive free cash flow territory this year, between $300 million and $400 million.
Slide 11 provides a comprehensive overview of our cash position and capital allocation plans in the near term. We closed the quarter with $1.9 billion in cash. Moving forward, we intend to repay with cash on hand, our euro bond debt that matures later this month. Based on our free cash flow outlook, we expect modestly negative free cash flow in Q4.
Moving into 2026. We expect to receive approximately $660 million of gross proceeds from the 2 transactions related to our catch in business. Considering these major cash items, we expect to have approximately $1.4 billion available for deployment across a set of disciplined and focused priorities as shown on the slide.
With that, I'll turn it back to Kent to discuss the market outlook and provide updates on our operational execution.
Thanks, Neal. The 2025 global lithium supply-demand balance has started to tighten with global lithium consumption growth up over 30% year-to-date, driven by robust demand from both EVs and grid storage, while supply growth has slowed in part due to recent lipid-like curtailments in China.
On Slide 12, EV demand growth for 2025 continues led by China and Europe. China EV sales are up 31% year-over-year, even after reaching over 50% market penetration driven by strong growth in BEVs due to incentive supporting low-cost options. Europe is also up over 30%, supported by EU emissions targets. North America posted 11% growth, supported by prebuying ahead of the 30 tax credit expiration.
Turning to Slide 13. Global battery demand for stationary storage is up 105% year-to-date. China remains the largest market for stationary storage installations with 60% growth year-to-date and further policy support announced in the 15th 5-year plan. Europe has shown similar policy support as the commitment to decarbonization drives demand for renewables paired with storage. North America is the fastest-growing region for stationary storage, up almost 150% year-to-date.
As rising data center and AI investment in the United States increases the demand for electricity and grid stability. Globally, data center electricity use is expected to more than double by 2030. With the increasing need for grid resiliency, LFP batteries are well positioned to continue meeting ESS demand, thanks to their low-cost energy density and established manufacturing base. As a result, we expect lithium demand for stationary storage application to increase more than 2.5x by 2030.
Advancing to Slide 14. I want to provide an update on our initiatives to sustain our competitive advantages through market cycles. First, on optimizing our conversion network. We set an energy storage sales volume growth target of 0% to 10% at the start of the year. We now expect to finish at or above the high end of that range with record production across our integrated conversion network, increased spodumene sales and inventory reductions.
Second, our cost and productivity programs continue to deliver. We began the year with a goal of $300 million to $400 million in improvements. Today, we've achieved a $450 million run rate, exceeding the high end of our initial target. Recent projects have further reduced manufacturing costs and improved supply chain efficiency.
Third, at the start of the year, we targeted a 50% year-over-year reduction in 2025 capital expenditures by focusing on high return, quick payback projects and optimizing existing scope, we now expect 2025 CapEx of about $600 million, reflecting a 65% reduction year-over-year.
Finally, our announced asset sales are expected to generate approximately $660 million in cash, providing significant additional financial flexibility. We continue to adapt in a dynamic environment, adding new measures as needed. We're building a culture of continuous improvement and the mindset to identify opportunities to achieve savings and efficiencies.
These actions are contributed to positive financial results, as shown on Slide 15. Our commitment to cost discipline is clearly reflected in our financials. Sales, administrative and R&D expenses are down $166 million or 22% since last year. Cash flow has strengthened driven by targeted cost and capital reductions and strong cash management. As of Q3 2025, we're generating positive free cash flow year-to-date, and we expect $300 million to $400 million for the full year. Our efforts have allowed us to shore up and maintain healthy corporate EBITDA margins in the 20% range even as lithium prices declined. Thanks to these focused actions, we are well positioned to expand margins further as the market recovers, with potential for adjusted EBITDA margins reaching 30% or more at $15 per kilogram lithium pricing.
In summary, on Slide 16, Albemarle delivered strong third quarter performance while continuing to act decisively to maintain the company's industry-leading position through the cycle and capture upside as markets stabilize or improve. We are maintaining our full year 2025 company outlook considerations with notable enhancements to energy storage volume growth improve cost and capital savings and strong free cash flow generation. With our world-class resources, process chemistry expertise and a strong balance sheet, we are well positioned to generate shareholder value through the cycle. I'm confident we're making the right moves to stay ahead and capitalize on long-term growth opportunities.
With that, I'll turn it over to the operator to take your questions.
[Operator Instructions] Our first question will come from Aleksey Yefremov from KeyBanc.
2. Question Answer
I wanted to ask you about Dynamics at Alison, you mentioned you'll have better profitability because of higher spodumen prices. But how do you think this would evolve in maybe first half of '26, would you see higher spodumene costs? Would that be again offset by higher equity income or not. If you could mark us through that dynamic for your lithium margins?
So maybe I'll start, Neal, you can a little bit of color to that. But we're not going to -- we won't predict the price. So for lithium for salt or spodumene -- but I mean the market is tightening. It is tight. It has moved up a little bit.
So we're optimistic about that, but we don't plan on that. And I don't -- from a spodumene standpoint, I mean it all depends whether if prices move up, the margin will either stay with salt or it moves over to spodumene. And we're a bit indifferent because of the integrated network that we operate. So I don't know that there is a big difference between the 2 recently in the recent past when prices move, most of the margin moves to the resource of spodumene. And then I think the other part is a little bit about the Talison and inventories and the way that, that gets cost. Neil?
Yes. Aleksey, I think you're thinking about it right, that in a rising spodumene price environment, we get 1 immediate benefit, which is obviously any sales or that Talison makes to our partner. We get some of that benefit immediately through our equity earnings. But then, of course, our portion of the profit does go into inventory and it comes out over time as we consume the spodumene.
So you're right, there will be some lag. It's usually 6 to 9 months that some of that comes through in our cost of sales. But whether it leads to margin compression or margin improvement really depends on what happens with salt prices 6 months from now. But I think you're thinking about it right. There is 1 component that we realize right away. And then there's another component that has to flow through our inventory.
Our next question will come from Jeffrey Zekauskas with JPMorgan.
You used the price as a reference point. In China today, are we closer to 11 -- 10 or 11?
So yes, you're probably closer to 10% today. But as we look at it on a full year basis, it's kind of a 900, 950, something like that.
Are you giving any consideration to starting up any of your plants where you've paused production or mothball the plant.
So no, no, I wouldn't say so. So we haven't bought that back. So we're just forecasting to the end of the year. So that's couple of months. So -- and it would take us longer to bring those back on. So they're not in that scenario. And it would depend on the market and how that works. So that that's not really the plan as we think about it for next year either.
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Our next question will come from Colin Rusch with Oppenheimer.
It looks like we are having some technical difficulties with Colin. Your next question will come from Vincent Andrews with Morgan Stanley.
Just a quick question. When you talk about the full year adjusted EBITDA margin potential of 30% or greater, at $15 a kg. Are you speaking of the energy storage segment or the company overall?
The overall company.
And then if I could ask on the capital allocation slide, you talked about with the $1.4 billion paying down or deleveraging, but then there's also some other language about liability management opportunity. What does that refer to?
Yes, Vincent, I can cover that. I don't have specifics to share today, but we are obviously looking at a combination of things. not just growth delevering, but also anything else that we can do with our debt towers just across our entire debt stack. So that's what is meant by liability management. It might not always be gross debt deleveraging, but it might be actually just thinking about our debt towers and being responsible with that.
Our next question will come from John Roberts with Mizuho.
This is Elan Wabag for John. So when you look at EV demand, do you have a good sense of how much is energy storage versus EV? And how do you see those percentages move in over the medium term?
So yes, we do -- we have a pretty good view and those are reported independently. So we're so -- and the numbers that we're showing are independent of those. So -- we think that -- I mean, there is some mix because it is kind of the base -- it's the same base technology that goes into both. But we feel like we understand where it's going and what the markets are doing.
So it's -- I think energy -- the fixed storage is about 1/4 of the market today, and it's growing at a couple of times the rate, but it's -- we still see it probably being long term, the market is more EV oriented than fixed storage, but that's the dynamic, and you just look at the math, right? If it's 1/4 of the market, maybe it gets to half, I'm not sure. And over time, -- it will depend a little bit on substitute technologies. I think fixed storage is more exposed to substitutes than BEVs. So I think that has to play out over the next decade to see where that really ends up.
Our next question will come from David Begletter with Deutsche Bank.
Kent, for you and Eric, on Chinese Lepidolite, how much supply do you think are being currently curtailed and versus the high opiate production, how much is the production down today versus that high?
So Eric can give us some details on it. Look, overall, it's not been a huge impact. There has been some impact. They've come out of the market and come back in. That's probably been the bigger piece -- there are a number of plants that are looking for permits, but they are operating through that. That's our understanding of that they need to get new permits. They've applied for those, and they're allowed to operate through that. So Eric, maybe you can give some numbers or some the scope of what has come out and not come back on.
Yes. I think since the middle of the year, David, about 1/3 of the production was impacted to a repermitting exercise and/or as idle for a period of time. Some of that is -- we don't know all the causes for that. I mean there's a lot of discussion about what's happening in China around policy. But nonetheless, that's what we've observed. It's about different petalite operations, including the largest, which is CATL. That's a reduction of about 30,000 tons annually. But I think the question is how long they remain down as they go through permitting it's -- in the scheme of the market, if they -- should they come back, you're only talking about a couple of percent of supply over the course of a year.
So it's a minor blip, and we'll continue to watch it carefully.
Very good. And just on lithium demand. You didn't include -- you did not include your slide from last time looking demand forecast. So 2030, has there been any change to your looking demand outlook if it hasn't been, as the buys moved to the upper end of that range, i.e., 3 million tons or above 3 million tons or above, given what you've seen in the last maybe 6 to 9 months here?
Yes. So actually, we didn't show that. I would say it hasn't really changed, but it has probably moved up a little bit within that range. If you recall, we had a pretty big range because of some of the uncertainties. And then I think the both on both EV and on fixed storage. It's probably more demand. I think it is a demand story and that's higher than we were thinking about at the beginning of the year. So it's been a positive surprise. The range stays the same. It's well within that range, but I would say it has moved up a little bit.
Our next question will come from Josh Spector with UBS.
It's Chris Perella on for Josh. As I think about the ramp of the extra training Greenbushes and your production in La Negra, how much could your resource production be up in 2026 with just the scheduling of those ramps? And then also, do you have a first right of refusal on Wagina -- and are you guys discussing the future of that asset and the ownership with your partner down there.
Okay. So first, just on the asset. So La Negra is pretty much ramped at capacity today. We have some marginal improvement. We can do that as a result of Salar yield has that worked its way through the process in the Salar. So we'll see better feedstock at Lenegra, and that will give us a little more capacity, but it's incremental compared to the overall ramp that we've been through the last couple of years. And then at Talison will start up at the end of this year, and then we've got a kind of plan to ramp through next year.
So it's kind of a ramp through the year. It will depend on how well we execute on that, and that's how fast it comes up. But we kind of -- we tend to straight line it through the year to kind of more or less full capacity by the end of the year and then you can do the math to see what that gets you throughout the year.
So you're asking about lag. So look, I'm not going to comment on the process that's happening down there. You probably -- you can read about it in the Australian press that's doing that or what's happening there. So we -- we talk to our partner, we're aware of what they're doing. So we'll see. We'll let that -- that has to play out.
Think another feature to bear in mind as we look to next year, Chris, is that a good part of our growth this year, as referenced in the prepared remarks, has been that we've taken a lot of inventory out of our supply chain this year. And that would largely be spot inventory in the case of energy storage. -- that has fed growth that is onetime in nature. And so we don't get the benefit of the inventory reduction next year.
So the factors that have been described are going to help to offset that. It's important to keep in mind as you think about next year.
Your next question will come from Christopher Parkinson with Wolfe Research.
This is Harris Fein on for Chris. Just curious maybe if we could talk about the stronger volumes this quarter. How much of that was just you being opportunistic on spot sales because of price volatility and I guess dovetailing off the last question, how should we be thinking about the impact on volume growth next year versus the higher baseline?
Yes. So look, it's -- I mean there is some us being opportunistic Eric just described that inventory reduction. So that's part of our cash management initiatives. We were doing to drive that, but it did give us a little extra growth this year, and we won't have that opportunity next year because we've driven inventories down. But the market has been -- the market is strong, right? But demand and pricing is a little stronger than it has been. So we're optimistic about that. We're not counting on it, but we're optimistic about that. And it's been a bit of a demand story I think over the last quarter or it may be even a little bit longer, but it's stronger in both and that's both EVs as well as fixed storage. Fixed storage has been the big upside surprise this year and it's been very strong, and we see that continuing.
Great. And -- also I just wanted to touch on. There's been a lot of news flow about critical minerals support. We saw what happened with Lithium Americas. Just curious to hear what the latest you're hearing is and in the event we start to see maybe the government engage a little bit more concretely on the localized energy storage infrastructure. Maybe just some thoughts on the scenario planning you're doing in terms of how that might shift your strategy either way.
Right. So I would say, look, we're very happy to see the government focused on critical minerals, the U.S. government, but other governments around the world, we think that's important. We've been saying that for years, that it's important to build out a globally diverse competitive lithium supply chain and to see governments focused on that is fantastic.
Not going to speculate on what could happen with the governments. We're talking to governments all over the world, all the time everywhere that we operate. But there won't be 1 solution. So it will be a mix of things that will help help the market in the West get to reinvestment levels. So tax incentives, trade policy, direct investment may be. I mean, I think it will be a mix, and there'll have to be a combination of some public private partnerships to drive this because it's a big problem, but we've been talking about it for a couple of years now, and we're happy to see governments focused on it.
Next question will come from Laurence Alexander with Jefferies.
So as you look at the way policy is shifting both in Latin America and in the U.S. What do you see as kind of the appropriate return hurdles for you to engage in new projects as opposed to just focus on your existing assets and/or opening up Kings Mountain.
Yes, I don't think our return criteria has changed, right? We've been pretty consistent about that. the issue has been with the pricing that we see in the market, we can't get those returns, which is why you don't see us investing.
So we -- and we've been focused on kind of balance sheet cash driving cost out of the business so we can compete at that lower level. And look, our view is -- and we've said this, we don't -- we're not able to predict the lithium price, and we're not going to depend on that. So we have to be able to compete through the bottom of the cycle, which is why you've seen us so focused on cost and cash and getting our business in a position to do that.
We're getting there. We still have room to go. And if the market -- our view is we plan for the bottom of the cycle, but stay agile so we can pivot when the market gives us that opportunity to invest. We still have good investment opportunities. You mentioned Kings Mountain -- we have very good resources that we can still leverage as we go forward. And conversion is still a possibility, but the economics are -- they're still not there today for Western economic. For conversion -- Western conversion economics.
And is your cost structure at the point where if prices do not improve next year, your cash flow -- your free cash flow positive?
So we're not forecasting next year yet. So we'll do that next quarter. But we are in a -- look, we've driven cost out. We -- I feel pretty good that we built a cost-out mentality. -- around productivity, particularly in our operations. I think we can be better at it from an overhead and back office, but we're working on that.
We've made good strides around that. and we'll continue to drive that. So we'll continue to drive cost and work on our cost position. it's still a new market, and it's going to be volatile and dynamic, and we have to be able to ride that on -- to capture the upside but work our way through the downside. So I don't want to forecast -- we're not going to forecast next year. Today, but we're continuing to stay focused on that cost out, and that will drive the results for next year and years going forward. But I think you should think of our business as that we make sure that we can ride through the down cycles and then take advantage of the up cycles.
Your next question will come from Patrick Cunningham with Citi.
Just a couple of related follow-ups to your last comments. I guess anything else you're looking at in terms of productivity savings program into next year? And what would be the size of sort of the incremental carryover? I know you reached run rate sometime in the middle of the year.
Yes. So Neal can talk about the run rate carryover, but we're going to -- we continue to have productivity programs. and they go across the breadth of our business. We are -- our programs around operations are the most mature and it's not surprising given our legacy as a specialty chemical company, but we are that's pretty mature, and we go down the range.
Our supply chain is a little less mature. Back office is even less mature than that. But we're building the capability and leveraging off of the program we have in manufacturing. So you'll always see it have productivity programs and goals. Even if the market is hot and on fire, we're still going to be pushing to take cost and productivity out of the business. That's just -- I think that's just going to be a feature of our business, and that should be a feature of a healthy business.
Yes. And Patrick, maybe the other thing I can add is just to reiterate. So we see line of sight to a $450 million run rate in cost and productivity savings this year. Obviously, we'll have to see how we finish up the year in terms of the actual savings, but you're already seeing those savings come through in our S&A line and our R&D line and so on. But obviously, some of those will continue to roll into 2026, and we'll give you an update on that with the next quarter once we finish the year. But let me give you an example of what you can expect to hear as you get into 2026.
Just a small example, though, is that we continue to ramp our facilities to full rates. That's a perfect example of the productivity measures that we're really working on. Ken kind of highlighted that in Chile. We're almost to the kind of top end of what we could do with La Negra. Our Mason facility in China is, I think, about a year ahead of schedule in terms of its ramp and it's getting almost up to full rates as well.
So you can expect that kind of continuing to sweat the assets as kind of a key theme in our productivity on top of any other additional cost actions that we can take as well.
Got it. That's helpful. And then maybe just a quick one on amen. It seems like there's some strong demand there in areas like electronics, but maybe some offsets that have pulled performance down and seen some normalization in prices how sort of the promine supply and demand trended throughout the balance of the year? And what sort of outlook are you seeing for the fourth quarter?
Yes. So this is Eric. First, on the demand side, you're right. We still a mixed market, reflecting probably many of the GDP-oriented markets, growth markets that we serve. So for instance, you mentioned electronics, Pharmaceutical, those have been stronger markets. weaker markets have been building construction and oil and gas of late, stronger in the earlier in the year, but with a drop in the price of oil, a little weaker in the second half of the year.
We saw -- if you look at the supply side and the tightness or balance of supply and demand middle of the year, we saw some tightness you may have seen if you follow bromine bromine prices, particularly out of China, there's an index you can follow you've seen that price rise, now starting to come down again as the market has become more balanced. On the 1 hand, on the other hand, we were headed in the time of the year where seasonally production, some seasonal production in India and in China that comes offline due to the winter months. And as that happens, I don't think we're going to get to a tight situation, but we'll remain fairly balanced.
So we -- we're not looking at this as being supremely oversupplied or undersupplied therefore, dynamic from a price standpoint on elemental bromine at the moment, fairly balanced as we go into the end of the year.
Your next question will come from Rock Hoffman with Bank of America Securities.
I guess does the energy storage volume be contain the pull forward? And just given the stronger near-term volume assumptions, where would you expect the contract spot mix to shift in 4Q and thereafter?
Yes. So the -- so pull forward, as you described that's mostly inventory, right? So we had inventory that we were able to use that. The market is strong. So we're selling into a strong market. but it's not we're pulling next quarter's volume forward, but we are bringing to some degree, capacity forward by selling inventories that we had. It's also just us being leaner on cash and inventory Yes. So us being leaner and operating around that, that's the piece. The other piece, I guess, we saw from a pull forward would be the expiration of the 3D tax credits in the U.S. So -- there was a bit of a rush for people to buy EVs in the U.S. It's 10% of the market.
So it's not going to be dramatic overall. But that is one where demand did get pulled forward a little bit.
Understood. And just as a follow-up. And Rock I'm sorry, Rock, I think you had asked about contract spot mix going forward. I just wanted to add 1 point, which is Look, I think Kent had mentioned in the prepared remarks that our contracts continue to perform. We don't have any major contracts that are rolling off until you get towards the end of 2026.
But look, the demand has been so strong in China, in particular, where we don't sell volume on long-term contracts. So if that trend continues into 2026, just based on mix alone, you can probably expect that our 45% that we're at this year will tick down just because of where the product is going and the fact that it's not going on these long-term contracts. But it's not a shift in our long-term contracts. It's really more about geographic mix of sales.
Makes sense. Just as a quick follow-up. Any preliminary thoughts on 2026 CapEx? And I guess, more broadly, when you would need to turn on CapEx, in order to incentivize any meaningful volume growth after 2026?
Yes. So I think, I mean, look, we've been -- we've worked our CapEx down, and we I'd be very thoughtful about that. So we would anticipate, unless we pivot to do some investments we're not -- I'm not thinking of right now. We will continue at that run rate or maybe a little bit lower. We'll continue to work on that to get it down. we don't think we're shorting our assets with the cuts that we've made.
We're just getting -- we're getting more efficient at it, but we're being thoughtful and careful. That's why we lagged down slowly, I would say, particularly on maintenance capital. And so without forecasting -- not forecasting some investment that we might make as a result of the market taking off you see us in a range where we are maybe another leg down. But the legs are incremental now, we're not going to make 50% reductions within -- that's not in the cards that there may be 10%, something like that.
Next question comes from Arun Viswanathan with RBC Capital Markets.
I guess I'm just curious to get your thoughts on spodumene and the impact on pricing. So it looks like prices are -- for both carbonate and hydroxide are kind of settling out at marginal cost levels. Would you agree with that? And would it take spot maybe to go up to 1,200 or 1,500 to see some more robust activity in lithium salt pricing. And if so, what would drive that? -- spodumene, do you feel that supply/demand is balanced or tight or loose or maybe you can just comment on that relationship.
Right. So we commented on it just a little bit earlier, but I think you're probably right. So conversion right now is at basically marginal cost of conversion and in China. And then when you see price move, most of the value and the price movement the conversion stays at that cost -- that marginal cost and it moves to the resource, the margin moves to the resource.
So that's kind of what we've seen in, I guess, for at least a year now. Most of the value moves to the resource because you have overcapacity for conversion in China primarily. It's a little bit different when you start talking outside of China, but the majority of the market is in China. And -- but the market is getting a little tight. And I think that's why you see prices move up. It's probably a bit more is a demand story, but supply has not kept up demand stronger than we thought and supply growth is less than we thought and that's tightening it. Inventories are coming down in both Salt and in spodumene in the system. -- throughout the system.
So I think it's a demand story. I guess maybe it's both because supply has not been as strong as we were originally thinking and demand has been stronger. So the market is tightening. So it's a supply-demand piece, but all the value at the moment does move to spodumene.
Great. And then could you also comment on your potential commercialization in the energy storage market. What are you seeing there? And what do you kind of expect over the next few years from a demand standpoint?
Well, it's the same supply chain and value chain as it is for batteries for EVs for the most part. I mean there are people specializing in that and the core technology, pretty much the same thing from our standpoint, it's about the same. We sell the same material. It's just a thing which value chain it goes to.
Many cases -- in most cases, it's the same customer. That's playing in both energy storage and the electric vehicle market. But the growth has been very strong. A lot of that is grid stability. Well, it's about renewables and storage to go with it in Europe and China to some degree. But it's also about grid stability and data centers, you could say, artificial intelligence -- but that system is what's driving it, particularly in North America. So it's a pretty dynamic market. you always get the question or you think about it is lithium-ion technology, the right technology for that? I mean it's what's available today at scale. Supply chain has been built out. and it still has a significant cost advantage over other technology like sodium ion. So they don't have scale at sodium ion yet, and the cost is still significantly higher.
So I think in the near term, it's going to be mostly LFP technology. Long term, you probably see sodium coming into the mix. But I think we're kind of forecasting about 80% of that stays with lithium-ion technology.
Your next question will come from Joel Jackson with BMO Capital Markets.
Kent, you talked about for a while and today about really being able to ride out the cycle here. What do you think Abema is going forward? If you're not really doing any growth beyond CGP 3 and some conversion in China and you're looking at taking CapEx gone down a level economics don't justify new builds or new capacity. What is in this growing rising sector, EV and ESS -- what will Albermalbe? Are you worried about not growing proportionately with the industry?
Yes. So look, we -- a lot of the work that we're doing is to preserve that growth optionality as we go forward. But we need to see good business cases in order to do it. So my view is we're being disciplined.
Look, we probably are risking some of the upside by being taking the approach that we have, but we are making sure we can go through the bottom of the cycle and then take advantage of that uptick. So we will capture growth. We have opportunities. We think resource is the key to that, and we have some of the best resources on the planet. So it is about optionality. And we're having -- and we have to manage our balance sheet and the market opportunity out there, and we don't want to get caught flat-footed. But I think we're -- what we're trying to build is a business that is agile, and we'll be able to pivot to do those investment projects when we see the right economics.
Okay. And the second question is maybe a little strange. But I mean, we've seen a lot of good data, a lot of the industry sources about the acceleration in growth rates in ESS. Can you talk about on the ground, what you're actually seeing is the high real? Is it being exaggerated? How much tangible evidence do you have of accelerating growth rates in DSS you can share?
Well, Eric can comment on that. I think the most tangible is the volumes that we see going into it. I mean, that is not -- I mean they are shipping and going into battery. So that's not forecast, that's legitimate. That's real. So -- and some I think -- I mean that market is there, Eric, you can comment on more specifics?
Yes. It's a kin Joel to the last question that came up around where what's going on in this market? Is it a different channel? It's not. It's the same big battery names that are in the EV space. And I guess there are a couple of things we see certainly in China, which is the largest market and where and really the home of LFP technology, we're seeing a lot of -- in all of our discussions with both cathode, particularly LFP cathode and battery producers in China, those cell lines are at full utilization now to meet the demand, both domestically in China and abroad.
The interesting thing about the grid storage market is it looks a little different from a global perspective in the EV market, meaning it's not all just about Europe China and the U.S., it's the rest of the world and the grid demand, grid stability, renewable power are important, whereas in North America, of course, the big driver is more about AI data centers -- and even now pivoting to the U.S., we have a great number of battery partners -- partner with OEMs here in the U.S. who are taking those same facilities and looking to retrofit them to make ESS technology, whether that's moving to a lower nickel technology or to an LFP technology, and then finally, we're seeing a big uptick, and this is both an EV driver and an ESS driver amongst all cathode produced, certainly in China metros, but now outside of China, the Koreans the Japanese, they're all aggressively pursuing their own LFP in-house technology programs. And it's both EVs, but probably more importantly of late, that's ticked up because of ESS.
So those are a little bit of on-the-ground commentary of what's driving this enthusiasm for the space.
Your next question will come from Abigail Ebert with Wells Fargo.
I understand you're not guiding to 2026, obviously, but I was just wondering about your expectations for underlying EV demand as we look to next year.
We're curious about underlying EV demand for next year. I think we continue to have. Go ahead. Sorry, that I could.
Okay. This is a part and parcel of the long-term forecast. We did not put in the slide deck we have in prior decks. It's a growth in the market. We see it 2.5x between now and 2030 of the total market consumption for lithium. And while we've spent -- in the last question, a lot of time talking about AI, data centers and grid storage demand, that's about 25% of demand. The well over close to 70% of demand in the space or more for lithium is driven by EVs, weaken China continues to be strong. The unrest thing about China is that it is now over 50%. It is well below the tipping point from a cost standpoint.
So the pack costs are well below $100, and in some cases, half that level. And so that's producing a car that's now more competitive than an internal combustion engine with an incredible amount of vehicle choice to consumers there and healthy demand for both battery electric and plug-in hybrid vehicles.
Now that market gets bigger, the percent growth rate obviously gets smaller because it's just the law of large numbers, if you will, the growth is still -- the penetration, we still expect to continue. We're encouraged most recently and expect the continuance into next year in Europe. Europe has -- there's a lot of discussion about the long-range emission targets, and we have to just remain vigilant as to what the policy decision there is.
In the short term, there's been a commitment to the next step in that CO2 reduction across the fleet on average. And while some benefit was given to go slower this year, they still have to an average 3-year target, which means they're going to have to go faster from a supply side to produce such vehicles in the coming years.
Probably our most -- not questionable, but difficult to predict market wood for EVs would be the U.S. All of those technology trends that I described should be favorable to cost and adoption. Even here in the U.S., we're at that tipping point on pack costs. However, policy and other things are -- may not be supportive of that. So we just have to wait and see. However, that is the smallest of the 3 major markets. It's only about 10% of the lithium or EV -- or lithium demand are that right EVs are in the U.S. So that outlook we see flowing into next year as well.
Your next question will come from David Deckelbaum with TD Cowen.
I did want to follow up and maybe with Neal, just post-ocean Ketjen partial monetization, obviously, a significant amount of capital coming in. One, I'm trying to think about how much capital you'd be saving on the CapEx side, $26 million just from divesting those assets. But more importantly, once the proceeds come in, in the first half of '26. I think you've talked about increasing your ability to delever. What do you see doing with those proceeds near term? Or has this just become a cash hoard to opportunistically look at the balance sheet?
David. So let me -- if I hit all your questions here. I think in terms of -- I think you were asking what is the CapEx from Ketjen. I think on a going-forward basis, you should think about roughly 10% of our CapEx is related to catch-on, and that will be what would potentially come off as we get into next year.
Now we obviously have to see when the transaction will close. So there might be a little bit of Ketjen CapEx in our numbers next year, but maybe just for the first half of the year. This year, Ketjen CapEx admittedly was a little bit higher than that. That was mainly because Ketjen was finishing its own growth investment called DSM 5. That project is done. But we did have a little bit higher CapEx through the year related to Ketjen. In terms of -- I think the second part of your question is sort of what are we going to do with that cash?
Look, I think we have always said that delevering is 1 of our top priorities as a company, and we're at that point now. We obviously have enough cash on hand to take out or repay the debt that's coming due here in a few weeks. That will happen in the normal course. And I think what you can expect is that once we have line of sight to getting to the proceeds around Ketjen.
Look, I think that's when we'll get a lot more serious about acting with that cash. We're not going to necessarily let it sit on the balance sheet for too long. And we have some thoughts around how we want to do that with regards to delevering as well as the other capital priorities that we have on our slide in the deck.
So I can't give you any more specifics around timing, but obviously, we're developing our plans now.
Appreciate that. And maybe just a second 1 for Neal or Kent. Obviously, super commendable job this year, just getting the free cash neutrality. I know part of the benefit was -- or you did have some help from a customer prepayment, but albeit at the bottom of the pricing cycle here. As we go into '26, I know a lot of people have asked about the free cash outlook, but I guess, in isolation, one tailwind that I am curious on is just the outlook for dividends from Talison, which, I guess, as I think about CGPI completing and coming online. Should that be a credible tailwinds going into '26 in your view?
Yes, David, I can start on that. So we kind of covered that a little bit earlier in the Q&A. Just to go back to that is that is basically in the tail end of the investment part of things, and it will start to ramp as we go through 2026.
But you should think about kind of the majority of 2026 really being the ramp period for that facility. So 2 big things, I think that the Talison dividends will be dependent on is obviously, number one, how well or quickly that unit ramps up, and we're working with the JV right now to understand what that's going to look like as they tip over into start-up.
But then the other part, of course, is pricing. And so it's a little early for me. We never do try to call pricing. It's early for me to call pricing for spodumene across the balance of 2026. We're also working with the JV also through their budgeting to understand the levers that the JV has as well. All the partners are very interested in dividends out of the JV, especially as we get through this investment phase.
Thank you. That is all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Thank you, operator. In closing, I want to thank you all for your continued support and trust in Albemarle. Our strong results this quarter enhanced outlook for 2025 and ongoing focus on operational excellence position us well for the future. With our world-class resources, leading process chemistry and commitment to customer success, we're confident in our ability to create lasting value for our shareholders and seize opportunities ahead. We appreciate your partnership and look forward to connecting in our upcoming events. Stay safe, and thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Albemarle — Q3 2025 Earnings Call
Financial data from Albemarle
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 5,908 5,908 |
18%
18%
100%
|
|
| - Direct Costs | 4,496 4,496 |
2%
2%
76%
|
|
| Gross Profit | 1,412 1,412 |
264%
264%
24%
|
|
| - Selling and Administrative Expenses | 539 539 |
2%
2%
9%
|
|
| - Research and Development Expense | 38 38 |
45%
45%
1%
|
|
| EBITDA | 1,477 1,477 |
247%
247%
25%
|
|
| - Depreciation and Amortization | 642 642 |
2%
2%
11%
|
|
| EBIT (Operating Income) EBIT | 835 835 |
462%
462%
14%
|
|
| Net Profit | 57 57 |
105%
105%
1%
|
|
In millions USD.
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Albemarle Stock News
Company Profile
Albemarle Corp. is a specialty company, which engages in developing, manufacturing, and marketing of chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, transportation, pharmaceuticals, crop production, food-safety, and custom chemistry services. It operates through the following segments: Lithium, Bromine Specialties, and Catalysts. The Lithium segment engages in developing and manufacture of basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties and reagents. The Bromine Specialties segment consists of bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Catalysts segment contain two product lines: clean fuels technologies, which is primarily composed of hydro processing catalysts, and heavy oil upgrading that comprises of fluidized catalytic cracking catalysts and additives. The company was founded in 1993 and is headquartered in Charlotte, NC.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Masters |
| Employees | 7,800 |
| Founded | 1993 |
| Website | www.albemarle.com |


