Albemarle Q1 Earnings Call Highlights

Key Points

• Albemarle posted a much stronger first quarter, with net sales up 33% year over year to $1.4 billion and adjusted EBITDA more than doubling to $664 million. Management said the improvement came from higher lithium pricing, stronger volumes, and cost/productivity gains.
• Energy storage was the biggest driver of growth, as segment pricing rose 51% and volumes increased 14%, boosting adjusted EBITDA by 196%. The company expects second-quarter sales and EBITDA to rise sequentially, though margins may be pressured by inventory timing and supply chain costs.
• The balance sheet and outlook improved after Albemarle repaid $1.3 billion of debt and ended the quarter with 1x net debt-to-EBITDA leverage. It also raised its full-year specialties forecast and said lithium demand remains solid, with major projects like Greenbushes CGP3 and Wodgina progressing as planned.

Albemarle NYSE: ALB reported a sharply stronger start to 2026, with management citing higher lithium pricing, increased volumes and cost improvements across its energy storage and specialties businesses.

On the company’s first-quarter earnings call, Chief Executive Officer Kent Masters said Albemarle generated net sales of $1.4 billion, up 33% from a year earlier. Adjusted EBITDA was $664 million, more than double the prior-year period, reflecting “higher pricing and volume in both energy storage and specialties, as well as cost and productivity improvements.”

Chief Financial Officer Neal Sheorey said adjusted EBITDA increased 148% year over year, while adjusted EBITDA margin rose by more than 20 percentage points compared with the prior-year quarter. The company reported diluted earnings of $2.34 per share.

Energy Storage Drives Results

Albemarle’s energy storage segment delivered the largest earnings increase in the quarter. Sheorey said energy storage pricing rose 51%, while volumes increased 14%. Segment adjusted EBITDA rose 196% year over year, driven by higher lithium market pricing and increased volumes.

First-quarter energy storage sales volumes were 53,000 tons of lithium carbonate equivalent, or LCE, with an average realized price of approximately $17 per kilogram. Sheorey said the gap between Albemarle’s realized price and the market price was mainly due to a one-quarter pricing lag in long-term contracts and sales of spodumene, which dilute realized price on an LCE basis.

For the second quarter, Albemarle expects energy storage net sales and EBITDA to increase sequentially, assuming flat lithium market pricing, due to higher volumes and pricing lags in its long-term contracts. However, Sheorey said EBITDA margin is expected to decline sequentially because of the timing of spodumene inventory consumption and higher costs tied to supply chain disruptions related to the Middle East.

During the question-and-answer portion of the call, Masters said the lithium market remains strong, but Albemarle’s ability to capture additional demand this year is more dependent on product availability than market demand. Sheorey said the company is maintaining its flat year-over-year volume guidance, with expansion tied to the ramp of Greenbushes CGP3 and improvements at Wodgina.

Specialties Outlook Raised

Albemarle raised its full-year outlook for its specialties segment after a stronger-than-expected first quarter. Sheorey said specialties net sales rose 12% year over year, while adjusted EBITDA increased 30%, primarily due to higher pricing, favorable product mix and cost and productivity improvements.

The company now expects full-year specialties net sales of $1.3 billion to $1.5 billion and adjusted EBITDA of $225 million to $275 million, with EBITDA margin in the high teens. Masters said the increase reflects “higher pricing and volumes” in the specialties business.

Sheorey said second-quarter specialties sales are expected to rise sequentially because of higher pricing for bromine specialties. EBITDA is expected to increase modestly, as favorable price and volume mix are partly offset by higher costs from supply chain disruptions.

Management also said operations at the Jordan Bromine Company joint venture have fully recovered from a flooding event in late December 2025 and continue to operate despite geopolitical tensions and disruptions in the region.

Debt Reduction and Cash Generation

Albemarle also emphasized its balance sheet progress. Following the sale of its Eurecat joint venture and controlling stake in Ketjen, the company repaid $1.3 billion of debt during the quarter.

Sheorey said the repayment reduced Albemarle’s weighted average interest rate to about 3.1% and lowered annual interest expense by approximately $60 million. The company ended the quarter with a net debt-to-EBITDA leverage ratio of 1x and has no major maturities due until late 2028.

Albemarle generated $346 million of operating cash flow and $248 million of free cash flow in the first quarter. Capital expenditures were $99 million, and the company continues to expect full-year capital spending of $550 million to $600 million.

The company has achieved $40 million in cost and productivity improvements year to date and remains on track for $100 million to $150 million for the full year. Sheorey said the savings were primarily related to manufacturing and supply chain, including debottlenecking projects and ramping new assets.

Lithium Demand Outlook Holds Steady

Masters said global lithium demand is tracking in line with Albemarle’s forecast. Year-to-date lithium consumption is up 37%, toward the upper end of the company’s 2026 forecast range of 15% to 40% growth. Albemarle is maintaining that outlook, in part because of geopolitical uncertainty.

Masters said lithium demand continues to diversify across energy storage and electric vehicles. He noted that strong growth in energy storage more than offset weak EV unit sales in the first quarter. Global EV sales were down 6% on a unit basis but up 3% year over year on a gigawatt-hour basis because of larger average battery sizes, particularly in China.

Eric Norris, Albemarle’s chief commercial officer, said battery-company customers, particularly in Asia, have full order books “from now through the beginning of 2027” for energy storage applications. He cited grid reliability, renewable energy, artificial intelligence and behind-the-meter storage as favorable demand drivers.

Masters said the company remains on track to achieve a five-year compound annual growth rate of 15% in energy storage volume. Albemarle achieved a 25% CAGR over the first three years and expects more moderate growth in 2026 and 2027 as large projects complete their ramp.

Project Updates and Market Questions

Masters said operations at Wodgina and Greenbushes are in line with expectations. At Wodgina, Albemarle expects ore quality to decline slightly over the next two quarters before improving in the December quarter. At Greenbushes, the CGP3 investment is operational and ramping as planned, he said.

In response to analyst questions about Greenbushes, Masters said the mine is operating according to Albemarle’s plan and that the CGP3 ramp remains on schedule. He also said Albemarle is not satisfied with the safety position at the mine but believes improvement plans are on the right track.

At the Salar de Atacama in Chile, Albemarle has started the environmental permitting process for a commercial direct lithium extraction project. Masters said the permit evaluates up to six DLE trains, but investments would be phased and contingent on approvals and investment decisions. He said the La Negra pilot plant has operated for more than a year and achieved quality and recovery targets, including greater than 94% lithium recovery.

At Kings Mountain in the U.S., Albemarle is pursuing required permits and conducting pre-development evaluations before any final investment decision. Masters said the project recently received federal mining permits and that the company continues to seek local and state approvals.

Management said Albemarle is maintaining its full-company 2026 outlook across lithium price scenarios despite Middle East-related supply chain disruptions. Sheorey estimated the unmitigated full-year cost impact of those disruptions at $70 million to $90 million, but said the company expects to offset the impact through lower interest expense and stronger specialties pricing and volumes.

About Albemarle NYSE: ALB

Albemarle Corporation is a leading global specialty chemicals company primarily engaged in the production and distribution of lithium, bromine, and catalysts. Its lithium segment supplies key components used in rechargeable batteries for electric vehicles, portable electronics, and grid storage systems. The company's bromine specialty products serve a wide range of industries, including oil and gas drilling fluids, fire safety solutions, and water treatment. In its catalysts division, Albemarle provides products for petroleum refining, chemical processing and emissions control.

Founded in 1994 as a spin-off from Ethyl Corporation, Albemarle has grown through strategic acquisitions and capacity expansions to become one of the world's foremost chemical producers.

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