NYSE:ALB Albemarle Q2 2023 Earnings Report $83.73 -0.45 (-0.53%) As of 02:28 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Albemarle EPS ResultsActual EPS$7.33Consensus EPS $4.27Beat/MissBeat by +$3.06One Year Ago EPS$3.45Albemarle Revenue ResultsActual Revenue$2.37 billionExpected Revenue$2.42 billionBeat/MissMissed by -$46.83 millionYoY Revenue Growth+60.20%Albemarle Announcement DetailsQuarterQ2 2023Date8/3/2023TimeAfter Market ClosesConference Call DateThursday, August 3, 2023Conference Call Time9:00AM ETUpcoming EarningsAlbemarle's Q2 2025 earnings is scheduled for Wednesday, July 30, 2025, with a conference call scheduled on Thursday, July 31, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Albemarle Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 3, 2023 ShareLink copied to clipboard.Key Takeaways The company reported Q2 with net sales up 60%, EBITDA rising 69%, and adjusted EPS doubling year-over-year. Albemarle raised its 2023 guidance, now expecting $10.4–11.5 billion in net sales, $3.8–4.4 billion in adjusted EBITDA, and $25–29.50 in adjusted EPS. Signed a strategic agreement with Ford for over 100,000 metric tons of lithium hydroxide through 2030 and amended its Mineral Resources JV to gain 100% ownership of key conversion plants. The Specialties business outlook was cut as volumes and pricing fell in electronics and industrial markets, with full-year EBITDA now projected at $385–440 million. Full-year cash flow guidance was lowered to $1.2–1.8 billion, driven by higher working capital requirements and a $219 million DOJ settlement accrual. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallAlbemarle Q2 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 15 speakers on the call. Operator00:00:00And welcome to Albemarle Corporation's Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I will now hand it over to Meredith Bandy, Vice President of Investor Relations and Sustainability. Speaker 100:00:34Thank you, Asia, and welcome everyone to Albemarle's Q2 2023 earnings conference call. Our earnings released after the close of market yesterday, and you'll find the press release and earnings presentation posted to our website under the Investors section at albemoral.com. Joining me on the call today are Kent Masters, Chief Executive Officer and Scott Tozier, Chief Financial Officer Netha Johnson, President of Specialties and Eric Norris, President of Energy Storage are also available for Q and A. As a reminder, some of the statements made during this call, including our outlook, guidance, expected company performance and timing of expansion projects, may constitute forward looking statements. Please note the cautionary language about forward looking statements contained in our press release and earnings presentation, which also applies to this call. Speaker 100:01:24Please also note that some of our comments today refer to non GAAP financial measures. Reconciliations can be found in our earnings materials. Now, I'll turn the call over to Ken. Speaker 200:01:34Thank you, Meredith. Our second quarter results continued the positive trend from last quarter with net sales up 60% and EBITDA up 69% versus the same period last year. We have increased our energy storage outlook for 2023 based on current market prices. Of course, the long term shift to electric vehicles Is well established and growing. Automakers are planning ahead to accommodate that future growth. Speaker 200:02:03For example, we signed a strategic agreement with Ford to supply over 100,000 metric tons of lithium hydroxide over a 5 year period starting in 2026. One of the reasons our customers choose Albemarle is our commitment to sustainability. In June, our Salar de Atacama site became the 1st lithium resource in the world to complete an independent audit and have its audit report published by Irma, The initiative for responsible mining assurance. We achieved an IRMA 50 level of performance and a third party auditor verified that the Solar site Met 70% of over 400 rigorous Irma requirements covering topics such as water management, Human rights, greenhouse gas emissions, fair labor and terms of work. Also during the quarter, Albemarle's growth and impact on the energy transition were recognized by inclusion in the Fortune 500 rankings and in the TIME 100 Most Influential Companies list. Speaker 200:03:08We continue to invest in future capacity to meet long term demand. The Salar Yield Improvement Project reached mechanical completion on schedule and the Meishan project in China is ahead of schedule with mechanical completion now expected in early 2024. Last month, we announced agreements to simplify and amend our joint venture with Mineral Resources. I'll update you on these activities later in the presentation. And for now, I'll hand it over to Scott to walk you through our financial results. Speaker 300:03:40Thanks, Kenton. Hello, everyone. On Slide 5, let's review our 2nd quarter performance. Net sales were $2,400,000,000 up 60% compared to last year. This nearly $1,000,000,000 increase was driven by energy storage as a result of both higher market pricing and higher volumes, which were up almost 40%. Speaker 300:04:06Net income attributable to Albemarle was approximately $650,000,000 up 60% compared to the prior year. Diluted EPS was $5.52 also up almost 60%, And adjusted diluted EPS of $7.33 was more than double last year. At the end of July, we reached agreements in principle with the Department of Justice On a matter that we initially disclosed in 2018 related to conduct in our Ketchin business occurring prior to 2018. Our Q2 GAAP results include an approximately $219,000,000 accrual to resolve this matter. Looking at Slide number 6. Speaker 300:04:562nd quarter adjusted EBITDA was over $1,000,000,000 an increase of nearly 70% year over year, driven primarily by higher pricing as well as higher volumes in energy storage. Our specialties business was down year over year Due to lower volumes and pricing related to weakness in certain end markets such as electronics and Insurance claim receipts and lower energy costs. Let's look at the updated total company outlook on Slide 7. We are raising our 2023 guidance for net sales And adjusted EBITDA to reflect current lithium market prices. As has been our practice, this guidance Assumes recent lithium market price indices are constant for the remainder of the year. Speaker 300:05:51And as a result, we have increased the lower end of The range for net sales. We now expect 2023 total company net sales to be in the range of $10,400,000,000 to $11,500,000,000 We expect 3rd quarter net sales to be relatively flat sequentially, followed by an increase in 4th quarter net sales as we ramp energy storage volumes. We are increasing our adjusted EBITDA guidance to be in the range of $3,800,000,000 to $4,400,000,000 This implies full year EBITDA margins in the range of 37% to 38%, also up from previous guidance. Our full year 2023 adjusted diluted EPS guidance is also increasing to a range of $25 to $29.50 reflecting a year over year improvement of about 25% at the midpoint. We expect our net cash from operations to be in the range of $1,200,000,000 to $1,800,000,000 This is a decrease in outlook driven primarily by 2 factors. Speaker 300:06:591st, higher working capital related to the timing of our energy storage shipments. We now expect lithium sales volumes to be weighted towards the back half of the year, particularly in Q4 due to the timing of our growth projects and tolling volumes. This is expected to result in higher accounts receivable at year end, which will convert to cash in early 2024. 2nd, this outlook assumes that the DOJ payment of $219,000,000 is made by year end. Our CapEx guidance has increased to $1,900,000,000 to $2,100,000,000 This increase reflects the revised agreements with Mineral Resources. Speaker 300:07:46Following these revisions, Albemarle will maintain 100 percent ownership of the Kemerton, Qingzhou and Meishan Lithium processing plants. Apart from this change, capital spending is in line with previous forecasts. Turning to the next slide for more detail on our outlook by segment. We're increasing our full year 2023 energy storage net sales guidance to be in the range of $7,900,000,000 to $8,800,000,000 Energy storage volume growth Is expected to be at the higher end of the previous range of 30% to 40% year over year, thanks to increased tolling And successful project execution. We also project average realized pricing increases to be at the higher end of previous range of 20% to 30% year over year, assuming recent lithium market prices continue through the rest of 2023. Speaker 300:08:47Adjusted EBITDA for energy storage is expected to increase in the range of $3,500,000,000 to $3,900,000,000 This 15% to 30% increase is due to higher net sales, which we expect to more than offset the timing impacts of higher priced spodumene inventories. In specialties, we continue to see pressure in our end markets. Weakness in consumer and industrial electronics and elastomers is only partially offset by strong demand in other markets like pharmaceuticals, Agriculture and Oilfield Services. Similar to other specialty chemicals companies, We are reducing our outlook for the full year 2023. Net sales are now expected in the range of 1.5 to $1,600,000,000 and adjusted EBITDA is anticipated to be between $385,000,000 $440,000,000 Q2 is expected to be the weakest quarter of the year. Speaker 300:09:51We took advantage of the recent market slowdown to pull forward planned maintenance and reduce inventory to maximize efficiency and free cash flow in the second half of twenty twenty three. Ketchen's 2023 full year adjusted EBITDA is expected to be up 325 to 4 25% over the prior year. This increase in outlook is due primarily to insurance recoveries, which are not expected to recur, as well as ongoing recovery in refining prices and improved processing costs. As a reminder, most of our energy storage volumes are sold under long term contracts with strategic customers. On Slide 9, we've updated our expected 2023 net sales mix to reflect recent lithium market prices. Speaker 300:10:45Due to the recent rebound in lithium pricing, our full year 2023 net sales mix is now expected to be 80% index referenced Variable price contracts and 20% spot. There's been no other change to our contract philosophy or structure of these contracts. Our strategy to deliver long term growth remains on track. Turning to Slide 10, we continue to expect year over year energy storage volume growth in the range of 30% to 40% in 2023. We anticipate coming in at the higher end of that range, primarily driven by the La Negra 3.4 expansion, The acquisition of the Qingzhou conversion asset plus additional tolling. Speaker 300:11:34With additional conversion assets coming online in 2024, We still anticipate a 20% to 30% CAGR in Albemarle sales volumes between now and 2027. We remain on track to nearly triple sales volumes to more than 300,000 tons. Our revised energy storage outlook implies EBITDA margins of around 45% for 2023, up from the prior outlook based on higher market prices. As a reminder, year over year margins are expected to normalize from the very high levels seen in late 2022 early 2023, primarily related to spodumene inventory lags at our Talison joint venture. On average, it takes at least 6 months for spodumene to go from our mines through conversion to our customers. Speaker 300:12:31Last year, we saw dramatic increases in prices for lithium and spodumene. Due to the time lag on spodumene inventory, we realized higher lithium pricing faster than higher spodumene cost of goods sold. This year is the reverse. As prices decline, we are realizing lower lithium prices faster than lower spodumene costs. And we expect the majority of this impact is going to occur in the Q3. Speaker 300:13:03The next item affecting margins is the accounting treatment of the Marbled joint venture. Under the amended agreements with Mineral Resources, We expect to continue to market and toll Wodgina product during 2023. As a result, we will recognize 100% of the net sales from Marlboro, but only our share of EBITDA. The result is about a 5% lower reported margin for 2023. Finally, our reported EBITDA margins are impacted by tax expense Turning to Slide 12, we will continue to invest with discipline, Allocating our capital and cash flows to support our highest return growth opportunities. Speaker 300:14:03Our primary use of capital remains organic growth projects to leverage our low cost resources in Australia and the Americas. Beyond organic growth, we also consider a broad range of M and A opportunities primarily across three areas: Lithium Resources, process technology for our core business and for new advanced materials And battery recycling. As previously disclosed in March, Albemarle submitted an indicative Proposal to acquire Liontown Resources, a preproduction spodumene resource in Australia. To date, the Liontown Board has not meaningfully engaged in progressing the transaction. Another example of our strategy is the acquisition of the Western Lithium subsidiary of Lithium Power International that we completed in July And a cash transaction of just over $20,000,000 This purchase provides Albemarle with Prospective exploration tenements near our Greenbushes spodumene mine regarded as one of the world's best hard rock lithium mines. Speaker 300:15:19And this week, we announced an investment in Patriot Battery Metals. This investment provides a 4.9% interest in a prospective spodumene deposit located in Northern Quebec. We intend to maintain our track record of a disciplined M and A process to accelerate higher return growth, while preserving financial flexibility and maintaining our investment grade Credit rating. Our balance sheet flexibility is a competitive advantage that allows us to grow both organically and through acquisition as well as support our dividend. And with that, I'll turn it back over to Kent for a market update and closing remarks. Speaker 200:16:06Thanks, Scott. One of the reasons we can report strong financial results is our disciplined operating model. We call it the Albemarle Way of Excellence. Our 4 operating pillars are high performance culture, competitive capabilities, Operational discipline and a sustainable approach. And these aren't just words, they are principles that guide our decision making. Speaker 200:16:31Today, I'll highlight operational discipline, which includes business, manufacturing and capital project excellence. Through initiatives and operational discipline, we've targeted $250,000,000 in productivity benefits over this year and the next, and we are on track to exceed that goal. Our goal in manufacturing excellence is to drive best in class discipline and operating efficiency with a target of $150,000,000 of savings over the next 2 years. Across our businesses, we've realized value in our manufacturing operations through yield improvement and better utilization of raw materials and energy. Through Project AI, which we call Albemarle Intelligence, We're leveraging machine learning to optimize our manufacturing processes. Speaker 200:17:21Our global procurement team is strategically sourcing to Pull purchasing and capture raw materials and logistics efficiency enhancements in real time. With continuous improvement, We are targeting $100,000,000 of productivity benefits this year. Another execution principle under Operational discipline is capital projects excellence. Our focus on capital project execution is paying off. With 4 global projects progressing on time and on budget, including the Salar Yield Improvement Project, Meishan, Richburg and Kings Mountain. Speaker 200:17:59As we continue to develop projects around the world, our objective is to build the structure, capabilities, Discipline and design approach that enable faster capacity growth at lower capital intensity. Turning to Slide 14 for an update on more of our capital projects. In Chile, I'm pleased to report that our project recently achieved mechanical completion on time and has transitioned into commissioning. In Australia, Kimmerton 1 continues to produce battery grade products subject to customer qualification. While there have been challenges, Particularly in light of the very tight labor market in Western Australia, we are proud of our Australian team as they commission that plant and deliver products to our customers. Speaker 200:18:47We are applying what we've learned to the construction of Kimmerton II and Kimmerton III and IV projects have recently gated into execution. In China, Zhengzhou is ramping up on budget and on schedule to nameplate capacity. And the construction of Meishan is progressing on budget and ahead of schedule with mechanical completion now expected in early 2020. As mentioned earlier in the call, we have agreed to amend the terms of the transaction signed earlier this year with Mineral Resources. Under the amended agreements, we will acquire 100 percent ownership of Kemerton and retain 100 percent ownership of Meishan and Chenzhou Lithium conversion assets. Speaker 200:19:32Other key aspects of the February 2023 agreement remain in effect, including a fifty-fifty ownership of the Wodgina mine and an April 2022 economic effective date. The transfer of 10% interest in Wodgina is exchanged for 25% interest in Kemerton. Upon closing, We expect to pay Mineral Resources $380,000,000 to $400,000,000 About half is related to the purchase of the remaining 15 percent ownership stake in Kimmerton and about half relates to economic effective date settlements and other transaction costs. This transaction is anticipated to close later this year after we receive Australian regulatory approvals. On Slide 15, EV sales over the last quarter indicate 2023 global electric vehicle sales are on track for 40% growth. Speaker 200:20:28After a slower start to the year, EV sales have picked up with global sales up 41% And China up 45% year over year through June. China has regained growth momentum with June representing Just monthly EV sales since last December. In Europe, easing supply chain issues have lifted sales by about 20% year to date. Despite mixed macroeconomic conditions, the outlook for global full year EV demand remains resilient, driven by the introduction of new models, new incentives and the expansion of charging infrastructure. Since May, we have seen a rebound in lithium market pricing driven by downstream restocking and strong EV and battery production. Speaker 200:21:17Customers are returning to the spot market after destocking to unsustainably low levels of inventory against the backdrop of growing demand. With lithium inventories decreasing in the supply chain over the last few months. Global lithium supply demand remains relatively balanced, driven by increased EV demand as well as challenges in bringing on new projects. As we continue to expand our lithium capacity, our scale, Global footprint and vertical integration positions Albemarle to sustainably meet growing customer demand. While we're pleased that the lithium market remains strong, we continue to focus on managing the things that are within Control for long term value creation. Speaker 200:22:06We're delivering growth in both sales and earnings. We anticipate 2023 sales To be up 40% to 55% over last year with healthy margins. While the EV market is clearly the star at the moment, We are a global leader in world class long term assets and a diversified product portfolio with broad opportunities in the mobility, Energy, Connectivity and Health markets. Our focus on sustainability is not only aligned to our values, It also aligns with our customers' values and creates an advantage for us in the marketplace. Our strategy is clear, Our markets are growing and our discipline in both how we operate and how we allocate capital gives us an edge across economic cycles. Speaker 200:22:54With that, I'd like to turn the call back over to the operator to begin the Q and A portion. Operator00:23:10Also bear in mind, this Q and A session is limited to 1 question per person and one follow-up. Your first question comes from the line of John Spector from UBS. Your line is open. Speaker 400:23:29Good morning, everybody. It's Chris Perrella on for Josh. Could you work through the timing and the cost impact Of the spodumene sales on the Q3 Q4? Speaker 500:23:44Thank you. Speaker 300:23:48Hey, Chris, thanks for this. This is Scott. So we expect the impact of the spodumene cost to be most Acute in the Q3, we'll see a similar headwind in the Q4 that's very similar to what we saw in the Q2. So again, it will be mostly in the Q3 and then it will start to abate in the Q4. Operator00:24:16Your next question comes from the line of Patrick Cunningham from Citi. Your line is open. Speaker 600:24:23Hi, good morning. Can you elaborate a little bit on the strategic rationale for the investments in early stage hard rock assets in Australia and Canada? Should we expect these regions to be the focus of resource M and A going forward? Or is there anything on the table maybe in South America or the U. S? Speaker 200:24:42Yes, I think, I mean, we've been talking about pivoting toward resources from an M and A strategy And then also going a little early stage, so we get in on these opportunities earlier when they're not as expensive. Now there's more risk in that. And so we but we're taking smaller stakes to get our foot in the door, so to speak. And then it allows us to get information and analyze the opportunity as it develops and then we'll have an opportunity later whether we participate in a bigger way or not. And I don't it's not look, the opportunities are where the resources and we look at those and we try and We'll look at the jurisdictions and where it's the most favorable for us to do business. Speaker 200:25:22So and really that's wherever the resource is, but North America, Canada, Western Australia, mining jurisdictions that we're very familiar with, we're used to it, geopolitical, Very stable. They're used to mining operations. So Canada a little bit more than North America and the U. S. In North America, but Those are favorable, but we'll look everywhere for where the resources are, including South America. Speaker 200:25:47And everywhere there's resources, we look, But we balance those geopolitical stability, are they used to mining, permitting, all of those issues when we make decisions. Operator00:26:02Your next question comes from the line of Christopher Parkinson From company, Mizzou, your line is open. Speaker 700:26:11Yes. How are you? Speaker 800:26:12This is Harris Fine on for Chris. So now that you've basically bought MINRAZ out of your downstream assets, you have the MegaFlex facility to be thinking about down the line. How do you feel about your current resource footprint? And maybe it would be helpful if you could do a quick walk through of how you're thinking about additions to your portfolio? Thanks. Speaker 200:26:37Yes. So look, we've a few years a couple of years ago, we were talking about Acquisition of conversion facilities, we did that at Chinsou and we've been building those out organically. And And we've been talking about pivoting toward resources as we feel like we starting to utilize our resource with the conversion facilities that we have. We need to Identify additional resources toward the end of the decade. So we're pretty much good to about the end of the decade or so, and we need additional resources beyond that. Speaker 200:27:08The lead time given to identify, qualify and then bring a resource on, we need that kind of time. So we feel Pretty balanced now. I mean, look at the difference between now that we bought MINRAZ out, we've got full control of those assets. Operationally, it's simpler, it's better, but it wasn't a huge move between we were probably a little short on conversion, now we're a little long, but that gives us Opportunities to if we find a resource, we can bring on quickly. We can process spodumene for our customers. Speaker 200:27:41So we have some customers that At SecuredSpa, Jimmy, we can process that and participate with them in that way. So I don't think it was a major shift and It's not a shift in our long term strategies. We're still we're looking for those resources. We're good pretty much on resource And conversion with the current build program we have close to the end of the decade, but after that we need more resources. Operator00:28:12Your next question comes from the line of Colin Rusch From Oppenheimer, your line is open. Speaker 900:28:19Guys, I have a 2 part question. 1, can you speak to How you're handling volumes that are going to fairly large OEMs in the U. S. And Europe that are a little bit slow on their EV ramps, Where those volumes are ending up? And then the second question is around the viability of a pressure leaching process. Speaker 900:28:35How you guys see that as a potential way to simplify Supply chain and logistics as you move into areas that have a little bit more intense environmental considerations from a compliance perspective. Speaker 200:28:49Yes. Okay. Colin, can you just clarify the second comment? I'm not I didn't really pick up the technology you referenced. Speaker 900:28:57The potential for pressure leaching processes rather than basically eliminating asset from the Processed. Yes, Speaker 200:29:04okay. Auto play. Yes. Speaker 700:29:08Do you want to take the OEM question? Sure, Colin. This is Eric. With regard to OEM volumes, just first comment I would make is that the Vast majority of OEM contracted volumes today are future based. They're from mid decade onwards, more of the supply chain for their lithium needs is secured today Through battery producers, we've seen through the middle of the year very strong demand, over 40% demand growth in Registered EV sale through June, early data from China on July looks promising as well. Speaker 700:29:45So we're not seeing any pressure. We've certainly seen headlines that certain EV models in the U. S. Potentially may be slower, But I would caution you that that's a small part of the market. The rest of the market and the demand we're seeing is quite strong. Speaker 700:30:06That's the second question. I don't know if you want to address that, Ken. Speaker 200:30:09Yes. I think we have a lot of effort On R and D development, particularly around process chemistry and extraction around that, that I think the autoclave processes is 1 of the ones we're investigating and I think the industry is looking at, but it's down the road. So we're focused on not only kind of Near term what we're operating today because we think there are significant productivity gains that we get out of our existing facilities as we Develop more sophisticated processes around that in the years to come. For the new plants we're bringing up today, we see a big productivity opportunities Going forward for the next, well, 10 years probably and probably beyond that as we get better and better at the process chemistry, it's Still early technology. It's been operating for quite some time, but at scale, it's still early technology. Speaker 200:31:00And then New technologies around that with different leaching agents and different techniques like pressure with an autoclave is something that we're looking at, but it's not something that's going to Be in scale production in the next year or 2. Perfect. Thanks so much, Vince. Operator00:31:20Your next question is from the line of David Deckelman from TD Cowen. Your line is open. Speaker 1000:31:28Hey, Ken, Scott. Thanks for the time this morning. I wanted to just ask post the Mineral Resources Restructuring in the Marlboro JV, you're obviously allocating more capital to conversion assets that you're building out In theory, together in the future, that puts the burden more on CapEx this year and presumably at some point next year. Does that in any way change how you're thinking about the trajectory of your growth investments as you manage the balance sheet over the next couple of years? Speaker 200:32:02Yeah. I don't I mean, it doesn't I mean, look, it is we're spending a little more capital A little than we had originally anticipated, but it's not it doesn't change it dramatically. But we do have to watch Balance sheet carefully and be disciplined as we invest, but we need to make sure that we're balanced as we go forward, but we don't give up opportunity. So you see us looking for those resources and investing in those and the opportunities that are public and the ones we've just closed. So it's a combination of getting Resources that are near term to the market and then investing for the long term as well. Speaker 200:32:39And we look, We're trying to be very disciplined about this. We watch our balance sheet. We're very serious about that, but we don't want to miss opportunities as they come up. Speaker 300:32:51And David, I'd just add, I mean, this is a huge competitive advantage for Albemarle. Like if you look across the competitive set, There just is not a big balance sheet out there at many of our competitors that gives us that just gives us the flexibility to handle The ups and downs in the market, but then the opportunities that Kent talked about. Speaker 1000:33:14It does, Scott. Maybe just a little bit more granular on tolling volumes. Can you give a sense of magnitude of tolling volumes expected in the back half of the year versus the beginning of the year? And was there a point, I suppose, in the Q1 where you might have been withholding toll volumes just based on market conditions at the time? Speaker 700:33:39This is Eric speaking. So our tolling volumes overall This year will be about twice what we did last year. And it is largely for two reasons. One, because it takes a while to Qualify and find the right tollers and partners as we grow that volume and that's so there's a lag in that that pushes it into the second half of the year as well as spodumene availability It's also back end loaded in the 2nd year. And then finally, you referenced a market phenomenon. Speaker 700:34:07We were in a weak market in January, February, where You're quite right. We were not aggressively going after incremental volumes because of the state of the market. As we sit here today, the market is quite strong. We've seen this growth I referenced in the earlier comment around over 40% growth in EV sales, see strong demand for Product in all regions and as it comes as it pertains to tolling in China, it will be back end loaded both because the demand is there, but also because We have the available supply and relationships in place. Speaker 200:34:41And there's a balance here between, I mean, we're building large conversion assets and ramping those up. We're expanding mines and resources, bringing those on, some with different techniques around that. So tolling is a way that we can balance We've been able to leverage that effectively. Yes. Speaker 700:34:58I might also add that to your earlier question that another individual asked around Some of the additional conversion capacity coming on the MIN RES deal, that's now volume that we can self produce as opposed to toll as well. And so while if you look at the next 18 months, we are probably still long Resource versus conversion, adding more conversion in near term means we can do less tolling and bring it in self produced. And that's really how we look at our tolling business. There's always some amount we do. It will vary as we bring on assets, and it allows us to continue to have a large And growing footprint in the market, it's a part of why we are going to be at the higher end of our 30% to 40% growth range in volume year over year. Speaker 700:35:44But then our strategy is to self produce, and we certainly have the ability more so than the other producers we talked about to build that capacity both inside and outside of China to meet that demand growth. Operator00:36:01Your next question comes from the line of Matthew Deo from Bank of America. Your line is open. Speaker 1100:36:09Good morning. Thank you. It seems like your inventory keeps building quarter over quarter here. And I assume maybe some of that's going to get fed in Camerton, but it seems to imply like a pretty significant amount of tonnage is sitting on the books. What else is going on here? Speaker 1100:36:28How should we think about the way that turns to cash if it does? Speaker 300:36:33Yes. So it's a good question. So we continue to see our inventory balances grow. It's really being driven by 2 things, volume, Balance has grown. It's really being driven by 2 things: volume, as we've been ramping capacity, tolling as we talked about, Eric talked about. Speaker 300:36:47But the second thing to keep in mind is that spodumene prices are going up in that cycle. So That's an impact on our inventory balance. If you actually look at it on a days basis, so days of inventory, it's very consistent. It's really just driven by the volumetric growth and those pricing impacts ultimately. So it's really not a Over we're not over indexed on inventory. Speaker 300:37:13We're not under kind of right in line with what we expect to Speaker 200:37:16be. Okay. Speaker 1100:37:20And your partner at Marvel made some comments on the earnings call around Questions for trade relationships between China and Australia and where it makes sense to have conversion assets or not. I mean, Do you think that they're wrong? And I guess does it make sense to look to secure Hard Rock in a country that maybe has better trade relationships With Australia over time as you think about the sustainability of feedstock to your China conversion network. Speaker 200:37:54Yes. I'm not sure what exactly what Mineral Resources said on their call, but we have different views of The geopolitical risk between Australia and China, they're Australian company or a U. S. Company and we The lithium business is significant business in China and we've got significant footprint there and our customers all operate there For the most part and then we've been very we've been public about our pivot to the West. So we plan to serve the Chinese market, but also pivot and invest West So we can localize the supply chain in the West for both. Speaker 200:38:32And we'll continue to look for resource where we can find it. Australia is a I mean, it's a stable economy. There's geopolitical risk is minimal And they it's a mining district. They understand mining. They understand tailings. Speaker 200:38:46They it's just it's a good location to Operating from a mining standpoint, so we won't be shying away from that standpoint. We'd love to diversify our resource base, geographically more, But lithium is tight and where you find the good resources where you end up going and then you end up having to manage the geopolitical aspects of that. Speaker 700:39:08And Kent, just to reiterate, just clarify that our resource base is in Australia, Western Australia, North America now with Kings Mountain, certainly Silver Peak. We have this investment now in Patriot And then South America, largely Chile, obviously. So our resources and those would be the areas that we continue to focus on as being the favorable jurisdiction with So the low cost 1st quartile cost position resources. So that's what and what we do in China is conversion. And there's a great there's a large market for demand and demand in China and certainly a growing one in as we could at West. Speaker 200:39:46Yes. And that's I think that is the most diverse resource network within the industry and we would like to continue to build that. Operator00:39:57Your next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is open. Speaker 500:40:07Great. Thanks. Just had a question, I guess, on the guidance construct and the pricing. Obviously, when you move to more index based contracts, last year definitely was a positive from the cash So in balance sheet statement point of view and Scott, you just kind of reiterated some of those benefits and competitive advantages. But obviously, we've also experienced quite a bit of volatility on the lithium price front. Speaker 500:40:38So I know it's not necessarily easy to forecast prices there, but that is a little bit more Part of the Albemarle operating model now at this point, the lithium spot price environment. So I mean, is that an accurate statement? And How do you feel about providing guidance now with this volatility that we've experienced? So, I guess, my concern would be Prices again go back down to that $25,000 to $30,000 per ton level. Would you be required to kind of lower your guidance at that point? Speaker 500:41:16How do you just think about philosophically about the guidance construct at this point? Thanks. Speaker 200:41:24Right. So I mean, there's a couple of things in there. 1, so we have pivoted to be more index based. I mean, we still have typically long term contracts, but they're referenced to a Market index. So we're going to move with the market. Speaker 200:41:35And so with that move, we decided to do our guidance By not forecasting lithium prices, but by basically take the whatever the market is today and we forecast it for the balance of the year. And That's the methodology that we're going to use for the foreseeable future, the near term. I mean, ultimately, our goal is that we get to where we can forecast lithium price and we feel Confident in that. We don't feel confident in that today. So it feels prudent to, we tried to give You the tools to adjust based on your view of that market and that's kind of how we do guidance at the moment. Speaker 200:42:14Ultimately, We would like to be able to forecast and feel good about that, but that's not in the near term. Speaker 300:42:25The other thing just to remember is given our low cost resources, our low cost operations, It allows us to earn throughout the cycle. So we're going to have reasonable margins throughout the cycle no matter where that price goes. And so I think that gives us more confidence in being able to take this guidance approach as well. Speaker 500:42:47Great. And just you made the investment in Patriot. There was obviously some other moves that you've approached on the M and A side. What else should we expect there? Continued partnerships, How do you feel about the integration level backwards into Resource at this point? Speaker 500:43:08And are there any larger investments that you're still Thinking about or contemplating? Thanks. Speaker 200:43:17I think if the question about Integrating into the resource, I mean, that's fundamental to our strategy to be integrated from resource and conversion all the way to the customers. And we can Guarantee the quality and the production because of the quality of the resource and then we actually do the conversion. So as Requirements become more sophisticated and the lithium products become more sophisticated, we expect to be on the leading edge of that. So that's fundamental to our strategy. And from a resource standpoint, as we said, we think we're pretty good until the end of the decade. Speaker 200:43:50But given the time it takes to develop resources, We need to be identifying and bringing and owning additional resources. We're working on that now. And you see us I mean, that's some of the activity that you see from us out there and that will we'll continue to do that. Operator00:44:09Your next Question is from the line of Kevin McCarthy from Vertical Research Partners. Your line is open. Speaker 1200:44:17Yes, good morning. A Two part question on marble, if I may. Scott, would you comment on how margins Might change as you execute on the second version of the restructuring of that joint venture. In other words, does the 5% drag that you Reference on Slide 11 go away completely or partially. And then in that same press release 2 weeks ago, You also indicated an acceleration of the Nishan project and wondering why that's the case. Speaker 1200:44:53Is it, For lack of a better term, related to an experience curve where you now have greater capability to bring on conversion capacity More quickly than was the case in the past. Thank you. Speaker 200:45:08We'll do the margin. I'll cover capital. Speaker 300:45:09Yes, I'll take The marble question and the impact on margin. So as part of the restructuring of that joint venture, we've agreed for a period of time To continue to toll volumes out of the Wodgina mine on behalf of, MIN RES. And so for a period of time, I believe it goes through the middle of next year, we'll continue to have that margin headwind. Once that period is over, We'll end up improving our margin rate ultimately. We won't change the dollars because the EBITDA dollars will be the same, but The margin rate will certainly improve by that 5 percentage points. Speaker 200:45:54And then on the Meishan being early, look, it's good old fashioned project execution. We're getting better at it. And it is also that there's a the capability China is significant to execute these large projects. We don't have the labor issues there that we had in Australia. So there's a number of things. Speaker 200:46:15Part of it is our capability is getting significantly better. We're learning every time we do a project. Part of it's about just the capability in China and then the biggest piece, one of the bigger pieces is We have labor availability there that we didn't have in Australia. Speaker 1200:46:32I see. And as a brief follow-up, if I may, How is that experience at Meishan similar or different to what you would envision for Kemerton 34 In terms of capital cost and speed of execution? Speaker 200:46:52Well, I think, I mean, for well, it was not just 3, 4, but let's say all the projects that we're working on. I think we're getting We're building a significant capability. It is materially different now than it was 3 or 4 years ago. And we think we can execute projects around the world On budget and on schedule. That said, those schedules and those budgets will be different depending on where you're executing. Speaker 200:47:15So Europe Will be different than Western Australia and North America is different and China is different. So I wouldn't Use Mei Xiang capital numbers and apply those around the world. That's not how it works. We've executed very good project. We're Still executing. Speaker 200:47:34It's not complete yet, but we're getting there at Meishan. We think it's going to be a great project and we're We feel like the capability we built is world class in this industry in particular, but you can't take Meishan Operator00:47:57Your next question comes from the line of Mike Sison from Wells Fargo. Your line is open. Speaker 500:48:03Hey, good morning. Just curious on energy storage. When I think about 2024, which I understand is so far away, but If you think about volume growth next year, you should still be in that 20%, 25%. If I keep how do I sort of calibrate Where EBITDA could be from these levels, meaning does EBITDA just go up with volume growth next year? And then how do you sort of change or give us sort of a variable for pricing as we think about 24 for energy storage? Speaker 300:48:43Yes, Mike, that's a little far out. It's certainly given the way that we're giving guidance, It's going to be a volume story next year. Of course, pricing is going to be a question mark that we would have, and it's all based on the Contract structures, we're not anticipating to have any big changes in the contract structures. So as that pricing moves, we'd expect to see that Trailing kind of 3 month lag to what those indices are. I think scale becomes an important part of the story as well. Speaker 300:49:16So that will help on our fixed Costs, so you'll see a little bit of improvement there. The operating margins will improve based on productivity. Kent talked about what we're seeing with our, the Albemarle Way of Excellence and how that's And how that's translating into results, so we expect that to play a role in all of our businesses ultimately. Eric, you have something maybe. I was just Speaker 700:49:37going to say as it pertains to price, we it's as Ken said, we don't have the confidence to know exactly Ourselves, what price is going to do, but we do know this, we believe that the market will continue to be quite tight next year as well. There'll be significant demand growth in the market And indeed there will be more supply growth as well, but those 2 will be fairly matched, right, it will be fairly tight market. So That much we foresee how that plays out from a price standpoint to be determined. Speaker 500:50:08Got it. And just a quick follow-up, as you add Capacity through 27 or you scale up these projects. Your fixed costs, I think you sort of mentioned, do they go down as we get to the end of the decade. Speaker 300:50:26Well, fixed costs on a unit basis will go down. Obviously, fixed costs will go up as you're adding plants on an absolute basis. But on a unit basis, meaning per ton, yes, they'll go down. Operator00:50:41Your next question is from the line of Ben Isaacson from Scotiabank. Your line is open. Speaker 1300:50:47Thank you very much and good morning. Just in terms of the seasonality of EV sales, since we typically see a bit of weakness In Q1, someone suggested that that could lead to kind of seasonal pullbacks in the lithium price. I just wanted to get your thoughts on that. And then just as a follow-up, you give some specifics on the Salar yield improvement? What is the volume lift and what is the shape or the timing of that? Speaker 1300:51:14Thank you. Speaker 700:51:17So Ben, this is Eric. On seasonality, indeed, whether it's ICE vehicles or Electric vehicles is a crescendo in the year. It gets the demand is stronger in the second half seasonally than in the first. However, I would be careful to say that we had weakness in the 1st part of the year. We had a weak January, Particularly in China, the market did, but that's really China and the timing of the New Year. Speaker 700:51:45What happened with price And why we talked about price coming down and the inventory correction was inventory correction was not demand growth. Demand growth has remained strong And it strengthened as the year has gone on. U. S. Up over 50%, China up 45% through the middle part of the year. Speaker 700:52:06The only market that hasn't been as strong up in the 20s percent range is Europe. And I think that has a lot to do with Some of the macro and other headwinds that we all know about in Europe. But if as we look across here, we still see a 40% growth in the marketplace. There are certainly lots of macro headwinds we can talk about. But despite these, we still see that secular shift supported by Incentives in China, grid storage has also been a big growth in China recently as well, and continued growth outside of China for EVs. Speaker 700:52:41So I guess I'd say on the demand front, be careful to assume that we had a weak Q1. It was not bad when it ended, Pretty strong actually. The next question I think to use was Ben, what was your second question? Please repeat it. So our yield. Speaker 700:53:03So our yield. Thank you. Speaker 200:53:05So we've reached mechanical completion and we now We're in the process of commissioning that. So that is an efficiency. So we are able to recover more lithium for Every gallon of brine that we pump, but one but we have to it has to work its way through the solar system. So there's a 18 month lead time before that those products start hitting the sales register, so to speak. So we still use the We still use the PON system to concentrate that. Speaker 200:53:37And I don't I'm not sure the uplift, what would you Estimate that out when we get there? Yes, let's look. I mean, it's Speaker 700:53:45a so our yield is going to allow us to get to Nameplate capacity over the next couple of years at La Negra, which is 85,000 tons. And once we start loading brine from the Solario project into the ponds, it's actually we're able to Slightly more conservative, it's about closer to 6 months. So within 6 months, so starting next year, we'll start to see the benefit of that uplift. Operator00:54:15And our last question will be coming from the line of David Begleiter from Deutsche Bank, your line is open. Speaker 1400:54:23Thank you. Good morning. First on the ANGI storage full year guidance increase, Can you just bridge us from the roughly $3,000,000,000 of prior guidance midpoint to now the $3,700,000,000 of current guidance? Speaker 300:54:40Yes, David, it's really all price. I mean, we got a little bit of extra volume, but it's all just driven by the price indices Where they're sitting right now, obviously, they've recovered off the lows that happened in April and have improved. And As we've mentioned in the prepared remarks, we've held them flat in our guidance as of the end of June. Speaker 1400:55:08Interest in Arkansas, lithium production, potentially what are your current thoughts as to accessing Your assets down that region? Speaker 200:55:21Yes. So we I mean, we have plans to Exploit that, so we have access to the lithium in the Smackover at Magnolia. So basically everything we pump for Romy, today we would kind of an easy answer is that we process that for lithium. It requires different technology, DLE based, absorption based, which we have been working on. We have proprietary technology around that. Speaker 200:55:45We're doing we're building pilot plants at the moment And we'll be able and we plan to execute projects around that, but we want to run pilot It is a new technology and we're going to make sure that we do it right, but we have access to the brines. We've got the infrastructure at Magnolia. We're well positioned to take advantage of that. Speaker 1400:56:07Thank Speaker 100:56:09you. Thank you. That's all the time Operator00:56:11we have for questions. I will now pass it back to Kent Masters for closing remarks. Speaker 200:56:17Okay. Thank you, Ayesha, and thank you all for joining us today. We are confident in the market opportunity and our disciplined strategy to achieve both short term and long term results. We are a global leader in minerals that are critical to a mobile, connected, Healthy and sustainable future. We continue to work to be the partner of choice for our customers and investment of choice for both the present and the future. Speaker 200:56:43Thank you for joining us. Operator00:56:47This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Albemarle Earnings HeadlinesWells Fargo Increases PT on Albemarle Corporation (ALB) from $60 to $75; Maintains ‘Equal Weight’ Rating1 hour ago | msn.comAlbemarle Announces Quarterly Common Stock DividendJuly 22 at 4:15 PM | prnewswire.comThe End of Elon Musk…?The End of Elon Musk? Don't make him laugh. Jeff Brown has been hearing this same tired story for years, and he's been proven right time and time again. And now, while the media focuses on Tesla's "demise," he's uncovered an AI breakthrough that's about to make Elon's doubters eat their words yet again. According to his research, if you listen to the media and miss out on Elon's newest breakthrough, it's going to cost you the fortune of a lifetime.July 25 at 2:00 AM | Brownstone Research (Ad)What’s Behind Albemarle’s Recent Stock Surge?July 21, 2025 | msn.comAlbemarle: Was A Cyclical Lithium Bottom Reached In June?July 21, 2025 | seekingalpha.comFive S&P 500 Stocks' Earnings Poised To Plunge Any Day NowJuly 16, 2025 | investors.comSee More Albemarle Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Albemarle? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Albemarle and other key companies, straight to your email. Email Address About AlbemarleAlbemarle (NYSE:ALB) develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services. The Specialties segment provides bromine-based specialty chemicals, including elemental bromine, alkyl and inorganic bromides, brominated powdered activated carbon, and other bromine fine chemicals; lithium specialties, such as butyllithium and lithium aluminum hydride; develops and manufactures cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications that include airbag initiators. The Ketjen segment offers clean fuels technologies (CFT), which is composed of hydroprocessing catalysts (HPC) together with isomerization and akylation catalysts; fluidized catalytic cracking (FCC) catalysts and additives; and performance catalyst solutions (PCS), which is composed of organometallics and curatives. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets. 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There are 15 speakers on the call. Operator00:00:00And welcome to Albemarle Corporation's Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I will now hand it over to Meredith Bandy, Vice President of Investor Relations and Sustainability. Speaker 100:00:34Thank you, Asia, and welcome everyone to Albemarle's Q2 2023 earnings conference call. Our earnings released after the close of market yesterday, and you'll find the press release and earnings presentation posted to our website under the Investors section at albemoral.com. Joining me on the call today are Kent Masters, Chief Executive Officer and Scott Tozier, Chief Financial Officer Netha Johnson, President of Specialties and Eric Norris, President of Energy Storage are also available for Q and A. As a reminder, some of the statements made during this call, including our outlook, guidance, expected company performance and timing of expansion projects, may constitute forward looking statements. Please note the cautionary language about forward looking statements contained in our press release and earnings presentation, which also applies to this call. Speaker 100:01:24Please also note that some of our comments today refer to non GAAP financial measures. Reconciliations can be found in our earnings materials. Now, I'll turn the call over to Ken. Speaker 200:01:34Thank you, Meredith. Our second quarter results continued the positive trend from last quarter with net sales up 60% and EBITDA up 69% versus the same period last year. We have increased our energy storage outlook for 2023 based on current market prices. Of course, the long term shift to electric vehicles Is well established and growing. Automakers are planning ahead to accommodate that future growth. Speaker 200:02:03For example, we signed a strategic agreement with Ford to supply over 100,000 metric tons of lithium hydroxide over a 5 year period starting in 2026. One of the reasons our customers choose Albemarle is our commitment to sustainability. In June, our Salar de Atacama site became the 1st lithium resource in the world to complete an independent audit and have its audit report published by Irma, The initiative for responsible mining assurance. We achieved an IRMA 50 level of performance and a third party auditor verified that the Solar site Met 70% of over 400 rigorous Irma requirements covering topics such as water management, Human rights, greenhouse gas emissions, fair labor and terms of work. Also during the quarter, Albemarle's growth and impact on the energy transition were recognized by inclusion in the Fortune 500 rankings and in the TIME 100 Most Influential Companies list. Speaker 200:03:08We continue to invest in future capacity to meet long term demand. The Salar Yield Improvement Project reached mechanical completion on schedule and the Meishan project in China is ahead of schedule with mechanical completion now expected in early 2024. Last month, we announced agreements to simplify and amend our joint venture with Mineral Resources. I'll update you on these activities later in the presentation. And for now, I'll hand it over to Scott to walk you through our financial results. Speaker 300:03:40Thanks, Kenton. Hello, everyone. On Slide 5, let's review our 2nd quarter performance. Net sales were $2,400,000,000 up 60% compared to last year. This nearly $1,000,000,000 increase was driven by energy storage as a result of both higher market pricing and higher volumes, which were up almost 40%. Speaker 300:04:06Net income attributable to Albemarle was approximately $650,000,000 up 60% compared to the prior year. Diluted EPS was $5.52 also up almost 60%, And adjusted diluted EPS of $7.33 was more than double last year. At the end of July, we reached agreements in principle with the Department of Justice On a matter that we initially disclosed in 2018 related to conduct in our Ketchin business occurring prior to 2018. Our Q2 GAAP results include an approximately $219,000,000 accrual to resolve this matter. Looking at Slide number 6. Speaker 300:04:562nd quarter adjusted EBITDA was over $1,000,000,000 an increase of nearly 70% year over year, driven primarily by higher pricing as well as higher volumes in energy storage. Our specialties business was down year over year Due to lower volumes and pricing related to weakness in certain end markets such as electronics and Insurance claim receipts and lower energy costs. Let's look at the updated total company outlook on Slide 7. We are raising our 2023 guidance for net sales And adjusted EBITDA to reflect current lithium market prices. As has been our practice, this guidance Assumes recent lithium market price indices are constant for the remainder of the year. Speaker 300:05:51And as a result, we have increased the lower end of The range for net sales. We now expect 2023 total company net sales to be in the range of $10,400,000,000 to $11,500,000,000 We expect 3rd quarter net sales to be relatively flat sequentially, followed by an increase in 4th quarter net sales as we ramp energy storage volumes. We are increasing our adjusted EBITDA guidance to be in the range of $3,800,000,000 to $4,400,000,000 This implies full year EBITDA margins in the range of 37% to 38%, also up from previous guidance. Our full year 2023 adjusted diluted EPS guidance is also increasing to a range of $25 to $29.50 reflecting a year over year improvement of about 25% at the midpoint. We expect our net cash from operations to be in the range of $1,200,000,000 to $1,800,000,000 This is a decrease in outlook driven primarily by 2 factors. Speaker 300:06:591st, higher working capital related to the timing of our energy storage shipments. We now expect lithium sales volumes to be weighted towards the back half of the year, particularly in Q4 due to the timing of our growth projects and tolling volumes. This is expected to result in higher accounts receivable at year end, which will convert to cash in early 2024. 2nd, this outlook assumes that the DOJ payment of $219,000,000 is made by year end. Our CapEx guidance has increased to $1,900,000,000 to $2,100,000,000 This increase reflects the revised agreements with Mineral Resources. Speaker 300:07:46Following these revisions, Albemarle will maintain 100 percent ownership of the Kemerton, Qingzhou and Meishan Lithium processing plants. Apart from this change, capital spending is in line with previous forecasts. Turning to the next slide for more detail on our outlook by segment. We're increasing our full year 2023 energy storage net sales guidance to be in the range of $7,900,000,000 to $8,800,000,000 Energy storage volume growth Is expected to be at the higher end of the previous range of 30% to 40% year over year, thanks to increased tolling And successful project execution. We also project average realized pricing increases to be at the higher end of previous range of 20% to 30% year over year, assuming recent lithium market prices continue through the rest of 2023. Speaker 300:08:47Adjusted EBITDA for energy storage is expected to increase in the range of $3,500,000,000 to $3,900,000,000 This 15% to 30% increase is due to higher net sales, which we expect to more than offset the timing impacts of higher priced spodumene inventories. In specialties, we continue to see pressure in our end markets. Weakness in consumer and industrial electronics and elastomers is only partially offset by strong demand in other markets like pharmaceuticals, Agriculture and Oilfield Services. Similar to other specialty chemicals companies, We are reducing our outlook for the full year 2023. Net sales are now expected in the range of 1.5 to $1,600,000,000 and adjusted EBITDA is anticipated to be between $385,000,000 $440,000,000 Q2 is expected to be the weakest quarter of the year. Speaker 300:09:51We took advantage of the recent market slowdown to pull forward planned maintenance and reduce inventory to maximize efficiency and free cash flow in the second half of twenty twenty three. Ketchen's 2023 full year adjusted EBITDA is expected to be up 325 to 4 25% over the prior year. This increase in outlook is due primarily to insurance recoveries, which are not expected to recur, as well as ongoing recovery in refining prices and improved processing costs. As a reminder, most of our energy storage volumes are sold under long term contracts with strategic customers. On Slide 9, we've updated our expected 2023 net sales mix to reflect recent lithium market prices. Speaker 300:10:45Due to the recent rebound in lithium pricing, our full year 2023 net sales mix is now expected to be 80% index referenced Variable price contracts and 20% spot. There's been no other change to our contract philosophy or structure of these contracts. Our strategy to deliver long term growth remains on track. Turning to Slide 10, we continue to expect year over year energy storage volume growth in the range of 30% to 40% in 2023. We anticipate coming in at the higher end of that range, primarily driven by the La Negra 3.4 expansion, The acquisition of the Qingzhou conversion asset plus additional tolling. Speaker 300:11:34With additional conversion assets coming online in 2024, We still anticipate a 20% to 30% CAGR in Albemarle sales volumes between now and 2027. We remain on track to nearly triple sales volumes to more than 300,000 tons. Our revised energy storage outlook implies EBITDA margins of around 45% for 2023, up from the prior outlook based on higher market prices. As a reminder, year over year margins are expected to normalize from the very high levels seen in late 2022 early 2023, primarily related to spodumene inventory lags at our Talison joint venture. On average, it takes at least 6 months for spodumene to go from our mines through conversion to our customers. Speaker 300:12:31Last year, we saw dramatic increases in prices for lithium and spodumene. Due to the time lag on spodumene inventory, we realized higher lithium pricing faster than higher spodumene cost of goods sold. This year is the reverse. As prices decline, we are realizing lower lithium prices faster than lower spodumene costs. And we expect the majority of this impact is going to occur in the Q3. Speaker 300:13:03The next item affecting margins is the accounting treatment of the Marbled joint venture. Under the amended agreements with Mineral Resources, We expect to continue to market and toll Wodgina product during 2023. As a result, we will recognize 100% of the net sales from Marlboro, but only our share of EBITDA. The result is about a 5% lower reported margin for 2023. Finally, our reported EBITDA margins are impacted by tax expense Turning to Slide 12, we will continue to invest with discipline, Allocating our capital and cash flows to support our highest return growth opportunities. Speaker 300:14:03Our primary use of capital remains organic growth projects to leverage our low cost resources in Australia and the Americas. Beyond organic growth, we also consider a broad range of M and A opportunities primarily across three areas: Lithium Resources, process technology for our core business and for new advanced materials And battery recycling. As previously disclosed in March, Albemarle submitted an indicative Proposal to acquire Liontown Resources, a preproduction spodumene resource in Australia. To date, the Liontown Board has not meaningfully engaged in progressing the transaction. Another example of our strategy is the acquisition of the Western Lithium subsidiary of Lithium Power International that we completed in July And a cash transaction of just over $20,000,000 This purchase provides Albemarle with Prospective exploration tenements near our Greenbushes spodumene mine regarded as one of the world's best hard rock lithium mines. Speaker 300:15:19And this week, we announced an investment in Patriot Battery Metals. This investment provides a 4.9% interest in a prospective spodumene deposit located in Northern Quebec. We intend to maintain our track record of a disciplined M and A process to accelerate higher return growth, while preserving financial flexibility and maintaining our investment grade Credit rating. Our balance sheet flexibility is a competitive advantage that allows us to grow both organically and through acquisition as well as support our dividend. And with that, I'll turn it back over to Kent for a market update and closing remarks. Speaker 200:16:06Thanks, Scott. One of the reasons we can report strong financial results is our disciplined operating model. We call it the Albemarle Way of Excellence. Our 4 operating pillars are high performance culture, competitive capabilities, Operational discipline and a sustainable approach. And these aren't just words, they are principles that guide our decision making. Speaker 200:16:31Today, I'll highlight operational discipline, which includes business, manufacturing and capital project excellence. Through initiatives and operational discipline, we've targeted $250,000,000 in productivity benefits over this year and the next, and we are on track to exceed that goal. Our goal in manufacturing excellence is to drive best in class discipline and operating efficiency with a target of $150,000,000 of savings over the next 2 years. Across our businesses, we've realized value in our manufacturing operations through yield improvement and better utilization of raw materials and energy. Through Project AI, which we call Albemarle Intelligence, We're leveraging machine learning to optimize our manufacturing processes. Speaker 200:17:21Our global procurement team is strategically sourcing to Pull purchasing and capture raw materials and logistics efficiency enhancements in real time. With continuous improvement, We are targeting $100,000,000 of productivity benefits this year. Another execution principle under Operational discipline is capital projects excellence. Our focus on capital project execution is paying off. With 4 global projects progressing on time and on budget, including the Salar Yield Improvement Project, Meishan, Richburg and Kings Mountain. Speaker 200:17:59As we continue to develop projects around the world, our objective is to build the structure, capabilities, Discipline and design approach that enable faster capacity growth at lower capital intensity. Turning to Slide 14 for an update on more of our capital projects. In Chile, I'm pleased to report that our project recently achieved mechanical completion on time and has transitioned into commissioning. In Australia, Kimmerton 1 continues to produce battery grade products subject to customer qualification. While there have been challenges, Particularly in light of the very tight labor market in Western Australia, we are proud of our Australian team as they commission that plant and deliver products to our customers. Speaker 200:18:47We are applying what we've learned to the construction of Kimmerton II and Kimmerton III and IV projects have recently gated into execution. In China, Zhengzhou is ramping up on budget and on schedule to nameplate capacity. And the construction of Meishan is progressing on budget and ahead of schedule with mechanical completion now expected in early 2020. As mentioned earlier in the call, we have agreed to amend the terms of the transaction signed earlier this year with Mineral Resources. Under the amended agreements, we will acquire 100 percent ownership of Kemerton and retain 100 percent ownership of Meishan and Chenzhou Lithium conversion assets. Speaker 200:19:32Other key aspects of the February 2023 agreement remain in effect, including a fifty-fifty ownership of the Wodgina mine and an April 2022 economic effective date. The transfer of 10% interest in Wodgina is exchanged for 25% interest in Kemerton. Upon closing, We expect to pay Mineral Resources $380,000,000 to $400,000,000 About half is related to the purchase of the remaining 15 percent ownership stake in Kimmerton and about half relates to economic effective date settlements and other transaction costs. This transaction is anticipated to close later this year after we receive Australian regulatory approvals. On Slide 15, EV sales over the last quarter indicate 2023 global electric vehicle sales are on track for 40% growth. Speaker 200:20:28After a slower start to the year, EV sales have picked up with global sales up 41% And China up 45% year over year through June. China has regained growth momentum with June representing Just monthly EV sales since last December. In Europe, easing supply chain issues have lifted sales by about 20% year to date. Despite mixed macroeconomic conditions, the outlook for global full year EV demand remains resilient, driven by the introduction of new models, new incentives and the expansion of charging infrastructure. Since May, we have seen a rebound in lithium market pricing driven by downstream restocking and strong EV and battery production. Speaker 200:21:17Customers are returning to the spot market after destocking to unsustainably low levels of inventory against the backdrop of growing demand. With lithium inventories decreasing in the supply chain over the last few months. Global lithium supply demand remains relatively balanced, driven by increased EV demand as well as challenges in bringing on new projects. As we continue to expand our lithium capacity, our scale, Global footprint and vertical integration positions Albemarle to sustainably meet growing customer demand. While we're pleased that the lithium market remains strong, we continue to focus on managing the things that are within Control for long term value creation. Speaker 200:22:06We're delivering growth in both sales and earnings. We anticipate 2023 sales To be up 40% to 55% over last year with healthy margins. While the EV market is clearly the star at the moment, We are a global leader in world class long term assets and a diversified product portfolio with broad opportunities in the mobility, Energy, Connectivity and Health markets. Our focus on sustainability is not only aligned to our values, It also aligns with our customers' values and creates an advantage for us in the marketplace. Our strategy is clear, Our markets are growing and our discipline in both how we operate and how we allocate capital gives us an edge across economic cycles. Speaker 200:22:54With that, I'd like to turn the call back over to the operator to begin the Q and A portion. Operator00:23:10Also bear in mind, this Q and A session is limited to 1 question per person and one follow-up. Your first question comes from the line of John Spector from UBS. Your line is open. Speaker 400:23:29Good morning, everybody. It's Chris Perrella on for Josh. Could you work through the timing and the cost impact Of the spodumene sales on the Q3 Q4? Speaker 500:23:44Thank you. Speaker 300:23:48Hey, Chris, thanks for this. This is Scott. So we expect the impact of the spodumene cost to be most Acute in the Q3, we'll see a similar headwind in the Q4 that's very similar to what we saw in the Q2. So again, it will be mostly in the Q3 and then it will start to abate in the Q4. Operator00:24:16Your next question comes from the line of Patrick Cunningham from Citi. Your line is open. Speaker 600:24:23Hi, good morning. Can you elaborate a little bit on the strategic rationale for the investments in early stage hard rock assets in Australia and Canada? Should we expect these regions to be the focus of resource M and A going forward? Or is there anything on the table maybe in South America or the U. S? Speaker 200:24:42Yes, I think, I mean, we've been talking about pivoting toward resources from an M and A strategy And then also going a little early stage, so we get in on these opportunities earlier when they're not as expensive. Now there's more risk in that. And so we but we're taking smaller stakes to get our foot in the door, so to speak. And then it allows us to get information and analyze the opportunity as it develops and then we'll have an opportunity later whether we participate in a bigger way or not. And I don't it's not look, the opportunities are where the resources and we look at those and we try and We'll look at the jurisdictions and where it's the most favorable for us to do business. Speaker 200:25:22So and really that's wherever the resource is, but North America, Canada, Western Australia, mining jurisdictions that we're very familiar with, we're used to it, geopolitical, Very stable. They're used to mining operations. So Canada a little bit more than North America and the U. S. In North America, but Those are favorable, but we'll look everywhere for where the resources are, including South America. Speaker 200:25:47And everywhere there's resources, we look, But we balance those geopolitical stability, are they used to mining, permitting, all of those issues when we make decisions. Operator00:26:02Your next question comes from the line of Christopher Parkinson From company, Mizzou, your line is open. Speaker 700:26:11Yes. How are you? Speaker 800:26:12This is Harris Fine on for Chris. So now that you've basically bought MINRAZ out of your downstream assets, you have the MegaFlex facility to be thinking about down the line. How do you feel about your current resource footprint? And maybe it would be helpful if you could do a quick walk through of how you're thinking about additions to your portfolio? Thanks. Speaker 200:26:37Yes. So look, we've a few years a couple of years ago, we were talking about Acquisition of conversion facilities, we did that at Chinsou and we've been building those out organically. And And we've been talking about pivoting toward resources as we feel like we starting to utilize our resource with the conversion facilities that we have. We need to Identify additional resources toward the end of the decade. So we're pretty much good to about the end of the decade or so, and we need additional resources beyond that. Speaker 200:27:08The lead time given to identify, qualify and then bring a resource on, we need that kind of time. So we feel Pretty balanced now. I mean, look at the difference between now that we bought MINRAZ out, we've got full control of those assets. Operationally, it's simpler, it's better, but it wasn't a huge move between we were probably a little short on conversion, now we're a little long, but that gives us Opportunities to if we find a resource, we can bring on quickly. We can process spodumene for our customers. Speaker 200:27:41So we have some customers that At SecuredSpa, Jimmy, we can process that and participate with them in that way. So I don't think it was a major shift and It's not a shift in our long term strategies. We're still we're looking for those resources. We're good pretty much on resource And conversion with the current build program we have close to the end of the decade, but after that we need more resources. Operator00:28:12Your next question comes from the line of Colin Rusch From Oppenheimer, your line is open. Speaker 900:28:19Guys, I have a 2 part question. 1, can you speak to How you're handling volumes that are going to fairly large OEMs in the U. S. And Europe that are a little bit slow on their EV ramps, Where those volumes are ending up? And then the second question is around the viability of a pressure leaching process. Speaker 900:28:35How you guys see that as a potential way to simplify Supply chain and logistics as you move into areas that have a little bit more intense environmental considerations from a compliance perspective. Speaker 200:28:49Yes. Okay. Colin, can you just clarify the second comment? I'm not I didn't really pick up the technology you referenced. Speaker 900:28:57The potential for pressure leaching processes rather than basically eliminating asset from the Processed. Yes, Speaker 200:29:04okay. Auto play. Yes. Speaker 700:29:08Do you want to take the OEM question? Sure, Colin. This is Eric. With regard to OEM volumes, just first comment I would make is that the Vast majority of OEM contracted volumes today are future based. They're from mid decade onwards, more of the supply chain for their lithium needs is secured today Through battery producers, we've seen through the middle of the year very strong demand, over 40% demand growth in Registered EV sale through June, early data from China on July looks promising as well. Speaker 700:29:45So we're not seeing any pressure. We've certainly seen headlines that certain EV models in the U. S. Potentially may be slower, But I would caution you that that's a small part of the market. The rest of the market and the demand we're seeing is quite strong. Speaker 700:30:06That's the second question. I don't know if you want to address that, Ken. Speaker 200:30:09Yes. I think we have a lot of effort On R and D development, particularly around process chemistry and extraction around that, that I think the autoclave processes is 1 of the ones we're investigating and I think the industry is looking at, but it's down the road. So we're focused on not only kind of Near term what we're operating today because we think there are significant productivity gains that we get out of our existing facilities as we Develop more sophisticated processes around that in the years to come. For the new plants we're bringing up today, we see a big productivity opportunities Going forward for the next, well, 10 years probably and probably beyond that as we get better and better at the process chemistry, it's Still early technology. It's been operating for quite some time, but at scale, it's still early technology. Speaker 200:31:00And then New technologies around that with different leaching agents and different techniques like pressure with an autoclave is something that we're looking at, but it's not something that's going to Be in scale production in the next year or 2. Perfect. Thanks so much, Vince. Operator00:31:20Your next question is from the line of David Deckelman from TD Cowen. Your line is open. Speaker 1000:31:28Hey, Ken, Scott. Thanks for the time this morning. I wanted to just ask post the Mineral Resources Restructuring in the Marlboro JV, you're obviously allocating more capital to conversion assets that you're building out In theory, together in the future, that puts the burden more on CapEx this year and presumably at some point next year. Does that in any way change how you're thinking about the trajectory of your growth investments as you manage the balance sheet over the next couple of years? Speaker 200:32:02Yeah. I don't I mean, it doesn't I mean, look, it is we're spending a little more capital A little than we had originally anticipated, but it's not it doesn't change it dramatically. But we do have to watch Balance sheet carefully and be disciplined as we invest, but we need to make sure that we're balanced as we go forward, but we don't give up opportunity. So you see us looking for those resources and investing in those and the opportunities that are public and the ones we've just closed. So it's a combination of getting Resources that are near term to the market and then investing for the long term as well. Speaker 200:32:39And we look, We're trying to be very disciplined about this. We watch our balance sheet. We're very serious about that, but we don't want to miss opportunities as they come up. Speaker 300:32:51And David, I'd just add, I mean, this is a huge competitive advantage for Albemarle. Like if you look across the competitive set, There just is not a big balance sheet out there at many of our competitors that gives us that just gives us the flexibility to handle The ups and downs in the market, but then the opportunities that Kent talked about. Speaker 1000:33:14It does, Scott. Maybe just a little bit more granular on tolling volumes. Can you give a sense of magnitude of tolling volumes expected in the back half of the year versus the beginning of the year? And was there a point, I suppose, in the Q1 where you might have been withholding toll volumes just based on market conditions at the time? Speaker 700:33:39This is Eric speaking. So our tolling volumes overall This year will be about twice what we did last year. And it is largely for two reasons. One, because it takes a while to Qualify and find the right tollers and partners as we grow that volume and that's so there's a lag in that that pushes it into the second half of the year as well as spodumene availability It's also back end loaded in the 2nd year. And then finally, you referenced a market phenomenon. Speaker 700:34:07We were in a weak market in January, February, where You're quite right. We were not aggressively going after incremental volumes because of the state of the market. As we sit here today, the market is quite strong. We've seen this growth I referenced in the earlier comment around over 40% growth in EV sales, see strong demand for Product in all regions and as it comes as it pertains to tolling in China, it will be back end loaded both because the demand is there, but also because We have the available supply and relationships in place. Speaker 200:34:41And there's a balance here between, I mean, we're building large conversion assets and ramping those up. We're expanding mines and resources, bringing those on, some with different techniques around that. So tolling is a way that we can balance We've been able to leverage that effectively. Yes. Speaker 700:34:58I might also add that to your earlier question that another individual asked around Some of the additional conversion capacity coming on the MIN RES deal, that's now volume that we can self produce as opposed to toll as well. And so while if you look at the next 18 months, we are probably still long Resource versus conversion, adding more conversion in near term means we can do less tolling and bring it in self produced. And that's really how we look at our tolling business. There's always some amount we do. It will vary as we bring on assets, and it allows us to continue to have a large And growing footprint in the market, it's a part of why we are going to be at the higher end of our 30% to 40% growth range in volume year over year. Speaker 700:35:44But then our strategy is to self produce, and we certainly have the ability more so than the other producers we talked about to build that capacity both inside and outside of China to meet that demand growth. Operator00:36:01Your next question comes from the line of Matthew Deo from Bank of America. Your line is open. Speaker 1100:36:09Good morning. Thank you. It seems like your inventory keeps building quarter over quarter here. And I assume maybe some of that's going to get fed in Camerton, but it seems to imply like a pretty significant amount of tonnage is sitting on the books. What else is going on here? Speaker 1100:36:28How should we think about the way that turns to cash if it does? Speaker 300:36:33Yes. So it's a good question. So we continue to see our inventory balances grow. It's really being driven by 2 things, volume, Balance has grown. It's really being driven by 2 things: volume, as we've been ramping capacity, tolling as we talked about, Eric talked about. Speaker 300:36:47But the second thing to keep in mind is that spodumene prices are going up in that cycle. So That's an impact on our inventory balance. If you actually look at it on a days basis, so days of inventory, it's very consistent. It's really just driven by the volumetric growth and those pricing impacts ultimately. So it's really not a Over we're not over indexed on inventory. Speaker 300:37:13We're not under kind of right in line with what we expect to Speaker 200:37:16be. Okay. Speaker 1100:37:20And your partner at Marvel made some comments on the earnings call around Questions for trade relationships between China and Australia and where it makes sense to have conversion assets or not. I mean, Do you think that they're wrong? And I guess does it make sense to look to secure Hard Rock in a country that maybe has better trade relationships With Australia over time as you think about the sustainability of feedstock to your China conversion network. Speaker 200:37:54Yes. I'm not sure what exactly what Mineral Resources said on their call, but we have different views of The geopolitical risk between Australia and China, they're Australian company or a U. S. Company and we The lithium business is significant business in China and we've got significant footprint there and our customers all operate there For the most part and then we've been very we've been public about our pivot to the West. So we plan to serve the Chinese market, but also pivot and invest West So we can localize the supply chain in the West for both. Speaker 200:38:32And we'll continue to look for resource where we can find it. Australia is a I mean, it's a stable economy. There's geopolitical risk is minimal And they it's a mining district. They understand mining. They understand tailings. Speaker 200:38:46They it's just it's a good location to Operating from a mining standpoint, so we won't be shying away from that standpoint. We'd love to diversify our resource base, geographically more, But lithium is tight and where you find the good resources where you end up going and then you end up having to manage the geopolitical aspects of that. Speaker 700:39:08And Kent, just to reiterate, just clarify that our resource base is in Australia, Western Australia, North America now with Kings Mountain, certainly Silver Peak. We have this investment now in Patriot And then South America, largely Chile, obviously. So our resources and those would be the areas that we continue to focus on as being the favorable jurisdiction with So the low cost 1st quartile cost position resources. So that's what and what we do in China is conversion. And there's a great there's a large market for demand and demand in China and certainly a growing one in as we could at West. Speaker 200:39:46Yes. And that's I think that is the most diverse resource network within the industry and we would like to continue to build that. Operator00:39:57Your next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is open. Speaker 500:40:07Great. Thanks. Just had a question, I guess, on the guidance construct and the pricing. Obviously, when you move to more index based contracts, last year definitely was a positive from the cash So in balance sheet statement point of view and Scott, you just kind of reiterated some of those benefits and competitive advantages. But obviously, we've also experienced quite a bit of volatility on the lithium price front. Speaker 500:40:38So I know it's not necessarily easy to forecast prices there, but that is a little bit more Part of the Albemarle operating model now at this point, the lithium spot price environment. So I mean, is that an accurate statement? And How do you feel about providing guidance now with this volatility that we've experienced? So, I guess, my concern would be Prices again go back down to that $25,000 to $30,000 per ton level. Would you be required to kind of lower your guidance at that point? Speaker 500:41:16How do you just think about philosophically about the guidance construct at this point? Thanks. Speaker 200:41:24Right. So I mean, there's a couple of things in there. 1, so we have pivoted to be more index based. I mean, we still have typically long term contracts, but they're referenced to a Market index. So we're going to move with the market. Speaker 200:41:35And so with that move, we decided to do our guidance By not forecasting lithium prices, but by basically take the whatever the market is today and we forecast it for the balance of the year. And That's the methodology that we're going to use for the foreseeable future, the near term. I mean, ultimately, our goal is that we get to where we can forecast lithium price and we feel Confident in that. We don't feel confident in that today. So it feels prudent to, we tried to give You the tools to adjust based on your view of that market and that's kind of how we do guidance at the moment. Speaker 200:42:14Ultimately, We would like to be able to forecast and feel good about that, but that's not in the near term. Speaker 300:42:25The other thing just to remember is given our low cost resources, our low cost operations, It allows us to earn throughout the cycle. So we're going to have reasonable margins throughout the cycle no matter where that price goes. And so I think that gives us more confidence in being able to take this guidance approach as well. Speaker 500:42:47Great. And just you made the investment in Patriot. There was obviously some other moves that you've approached on the M and A side. What else should we expect there? Continued partnerships, How do you feel about the integration level backwards into Resource at this point? Speaker 500:43:08And are there any larger investments that you're still Thinking about or contemplating? Thanks. Speaker 200:43:17I think if the question about Integrating into the resource, I mean, that's fundamental to our strategy to be integrated from resource and conversion all the way to the customers. And we can Guarantee the quality and the production because of the quality of the resource and then we actually do the conversion. So as Requirements become more sophisticated and the lithium products become more sophisticated, we expect to be on the leading edge of that. So that's fundamental to our strategy. And from a resource standpoint, as we said, we think we're pretty good until the end of the decade. Speaker 200:43:50But given the time it takes to develop resources, We need to be identifying and bringing and owning additional resources. We're working on that now. And you see us I mean, that's some of the activity that you see from us out there and that will we'll continue to do that. Operator00:44:09Your next Question is from the line of Kevin McCarthy from Vertical Research Partners. Your line is open. Speaker 1200:44:17Yes, good morning. A Two part question on marble, if I may. Scott, would you comment on how margins Might change as you execute on the second version of the restructuring of that joint venture. In other words, does the 5% drag that you Reference on Slide 11 go away completely or partially. And then in that same press release 2 weeks ago, You also indicated an acceleration of the Nishan project and wondering why that's the case. Speaker 1200:44:53Is it, For lack of a better term, related to an experience curve where you now have greater capability to bring on conversion capacity More quickly than was the case in the past. Thank you. Speaker 200:45:08We'll do the margin. I'll cover capital. Speaker 300:45:09Yes, I'll take The marble question and the impact on margin. So as part of the restructuring of that joint venture, we've agreed for a period of time To continue to toll volumes out of the Wodgina mine on behalf of, MIN RES. And so for a period of time, I believe it goes through the middle of next year, we'll continue to have that margin headwind. Once that period is over, We'll end up improving our margin rate ultimately. We won't change the dollars because the EBITDA dollars will be the same, but The margin rate will certainly improve by that 5 percentage points. Speaker 200:45:54And then on the Meishan being early, look, it's good old fashioned project execution. We're getting better at it. And it is also that there's a the capability China is significant to execute these large projects. We don't have the labor issues there that we had in Australia. So there's a number of things. Speaker 200:46:15Part of it is our capability is getting significantly better. We're learning every time we do a project. Part of it's about just the capability in China and then the biggest piece, one of the bigger pieces is We have labor availability there that we didn't have in Australia. Speaker 1200:46:32I see. And as a brief follow-up, if I may, How is that experience at Meishan similar or different to what you would envision for Kemerton 34 In terms of capital cost and speed of execution? Speaker 200:46:52Well, I think, I mean, for well, it was not just 3, 4, but let's say all the projects that we're working on. I think we're getting We're building a significant capability. It is materially different now than it was 3 or 4 years ago. And we think we can execute projects around the world On budget and on schedule. That said, those schedules and those budgets will be different depending on where you're executing. Speaker 200:47:15So Europe Will be different than Western Australia and North America is different and China is different. So I wouldn't Use Mei Xiang capital numbers and apply those around the world. That's not how it works. We've executed very good project. We're Still executing. Speaker 200:47:34It's not complete yet, but we're getting there at Meishan. We think it's going to be a great project and we're We feel like the capability we built is world class in this industry in particular, but you can't take Meishan Operator00:47:57Your next question comes from the line of Mike Sison from Wells Fargo. Your line is open. Speaker 500:48:03Hey, good morning. Just curious on energy storage. When I think about 2024, which I understand is so far away, but If you think about volume growth next year, you should still be in that 20%, 25%. If I keep how do I sort of calibrate Where EBITDA could be from these levels, meaning does EBITDA just go up with volume growth next year? And then how do you sort of change or give us sort of a variable for pricing as we think about 24 for energy storage? Speaker 300:48:43Yes, Mike, that's a little far out. It's certainly given the way that we're giving guidance, It's going to be a volume story next year. Of course, pricing is going to be a question mark that we would have, and it's all based on the Contract structures, we're not anticipating to have any big changes in the contract structures. So as that pricing moves, we'd expect to see that Trailing kind of 3 month lag to what those indices are. I think scale becomes an important part of the story as well. Speaker 300:49:16So that will help on our fixed Costs, so you'll see a little bit of improvement there. The operating margins will improve based on productivity. Kent talked about what we're seeing with our, the Albemarle Way of Excellence and how that's And how that's translating into results, so we expect that to play a role in all of our businesses ultimately. Eric, you have something maybe. I was just Speaker 700:49:37going to say as it pertains to price, we it's as Ken said, we don't have the confidence to know exactly Ourselves, what price is going to do, but we do know this, we believe that the market will continue to be quite tight next year as well. There'll be significant demand growth in the market And indeed there will be more supply growth as well, but those 2 will be fairly matched, right, it will be fairly tight market. So That much we foresee how that plays out from a price standpoint to be determined. Speaker 500:50:08Got it. And just a quick follow-up, as you add Capacity through 27 or you scale up these projects. Your fixed costs, I think you sort of mentioned, do they go down as we get to the end of the decade. Speaker 300:50:26Well, fixed costs on a unit basis will go down. Obviously, fixed costs will go up as you're adding plants on an absolute basis. But on a unit basis, meaning per ton, yes, they'll go down. Operator00:50:41Your next question is from the line of Ben Isaacson from Scotiabank. Your line is open. Speaker 1300:50:47Thank you very much and good morning. Just in terms of the seasonality of EV sales, since we typically see a bit of weakness In Q1, someone suggested that that could lead to kind of seasonal pullbacks in the lithium price. I just wanted to get your thoughts on that. And then just as a follow-up, you give some specifics on the Salar yield improvement? What is the volume lift and what is the shape or the timing of that? Speaker 1300:51:14Thank you. Speaker 700:51:17So Ben, this is Eric. On seasonality, indeed, whether it's ICE vehicles or Electric vehicles is a crescendo in the year. It gets the demand is stronger in the second half seasonally than in the first. However, I would be careful to say that we had weakness in the 1st part of the year. We had a weak January, Particularly in China, the market did, but that's really China and the timing of the New Year. Speaker 700:51:45What happened with price And why we talked about price coming down and the inventory correction was inventory correction was not demand growth. Demand growth has remained strong And it strengthened as the year has gone on. U. S. Up over 50%, China up 45% through the middle part of the year. Speaker 700:52:06The only market that hasn't been as strong up in the 20s percent range is Europe. And I think that has a lot to do with Some of the macro and other headwinds that we all know about in Europe. But if as we look across here, we still see a 40% growth in the marketplace. There are certainly lots of macro headwinds we can talk about. But despite these, we still see that secular shift supported by Incentives in China, grid storage has also been a big growth in China recently as well, and continued growth outside of China for EVs. Speaker 700:52:41So I guess I'd say on the demand front, be careful to assume that we had a weak Q1. It was not bad when it ended, Pretty strong actually. The next question I think to use was Ben, what was your second question? Please repeat it. So our yield. Speaker 700:53:03So our yield. Thank you. Speaker 200:53:05So we've reached mechanical completion and we now We're in the process of commissioning that. So that is an efficiency. So we are able to recover more lithium for Every gallon of brine that we pump, but one but we have to it has to work its way through the solar system. So there's a 18 month lead time before that those products start hitting the sales register, so to speak. So we still use the We still use the PON system to concentrate that. Speaker 200:53:37And I don't I'm not sure the uplift, what would you Estimate that out when we get there? Yes, let's look. I mean, it's Speaker 700:53:45a so our yield is going to allow us to get to Nameplate capacity over the next couple of years at La Negra, which is 85,000 tons. And once we start loading brine from the Solario project into the ponds, it's actually we're able to Slightly more conservative, it's about closer to 6 months. So within 6 months, so starting next year, we'll start to see the benefit of that uplift. Operator00:54:15And our last question will be coming from the line of David Begleiter from Deutsche Bank, your line is open. Speaker 1400:54:23Thank you. Good morning. First on the ANGI storage full year guidance increase, Can you just bridge us from the roughly $3,000,000,000 of prior guidance midpoint to now the $3,700,000,000 of current guidance? Speaker 300:54:40Yes, David, it's really all price. I mean, we got a little bit of extra volume, but it's all just driven by the price indices Where they're sitting right now, obviously, they've recovered off the lows that happened in April and have improved. And As we've mentioned in the prepared remarks, we've held them flat in our guidance as of the end of June. Speaker 1400:55:08Interest in Arkansas, lithium production, potentially what are your current thoughts as to accessing Your assets down that region? Speaker 200:55:21Yes. So we I mean, we have plans to Exploit that, so we have access to the lithium in the Smackover at Magnolia. So basically everything we pump for Romy, today we would kind of an easy answer is that we process that for lithium. It requires different technology, DLE based, absorption based, which we have been working on. We have proprietary technology around that. Speaker 200:55:45We're doing we're building pilot plants at the moment And we'll be able and we plan to execute projects around that, but we want to run pilot It is a new technology and we're going to make sure that we do it right, but we have access to the brines. We've got the infrastructure at Magnolia. We're well positioned to take advantage of that. Speaker 1400:56:07Thank Speaker 100:56:09you. Thank you. That's all the time Operator00:56:11we have for questions. I will now pass it back to Kent Masters for closing remarks. Speaker 200:56:17Okay. Thank you, Ayesha, and thank you all for joining us today. We are confident in the market opportunity and our disciplined strategy to achieve both short term and long term results. We are a global leader in minerals that are critical to a mobile, connected, Healthy and sustainable future. We continue to work to be the partner of choice for our customers and investment of choice for both the present and the future. Speaker 200:56:43Thank you for joining us. Operator00:56:47This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by