Albemarle Corporation

Good day, ladies and gentlemen. Welcome to Auburn Morrill's first quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If anyone should require operator assistance during the call, please press star then zero on your telephone keypad. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Dave Ryan, Vice President of Corporate Strategy and Investor Relations. Sir, you may begin.

Thank you, and welcome to Albemarle's first quarter 2019 earnings conference call. Our earnings were released after the close of the market yesterday, and you'll find our press release, earnings presentation, and non-gap reconciliations posted on our website under the Investors section at www.albemarle.com. Joining me on the call today are Luke Kassam, Chief Executive Officer, Scott Tozier, Chief Financial Officer, Raphael Crawford, President Catalyst, Netha Johnson, President Bromine Specialties, and Eric Norris, President Lithium. As a reminder, some of the statements made during this conference call, including about our outlook, expected company performance, production volumes, expansion projects, and our proposed lithium hydroxide joint venture may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our press release. That same language applies to this call. Please also note that some of our comments today refer to financial measures that are not prepared in accordance with GAAP. A reconciliation of these measures to GAAP financial measures can be found in our earnings release and in the appendix of our earnings presentation, both of which are posted on our website. Now I will turn the call over to Luke.

Hey, thanks, Dave, and good morning, everybody. In the first quarter, Albemarle delivered adjusted diluted EPS of $1.23. Lithium volume in the first quarter was negatively impacted primarily by the rain event in Chile and delayed customer qualifications. Importantly, however, lithium pricing in the quarter was up 3% versus prior year. Catalysts and bromine specialties grew adjusted EBITDA by 5% and 12% respectively, excluding divested businesses. Both businesses benefited from increases in volume and price. Turning to our strategic projects, we continue to make progress on our lithium hydroxide joint venture with Mineral Resources Limited. We have made the necessary regulatory filings and, based on the current feedback, continue to expect the transaction to close in the second half of 2019. During April, we signed an interim marketing agreement with MRL that allows Albemarle to market any spodumene concentrate that is produced at the site prior to the closing of the joint venture. Our new 20,000-met-ton Xenu-2 lithium hydroxide facility continues to ramp production according to our original schedule. We are shipping from this expansion to customers who have completed their qualification process and have additional qualifications underway. We are on track for full qualification of ZenU2 material by all targeted accounts by the end of the third quarter of this year and expect to achieve a nameplate capacity run rate by year end. In Chile, we expect to produce close to 40,000 metric tons of lithium carbonate from our two existing operating units in La Negra in 2019, despite the impact on production from the rain event in the Solar de Atacama, which occurred in the first quarter. Due to delays in the delivery of certain equipment, we now expect to commission the 40,000 metric ton lithium carbonate plant LINEGRA 3 and 4, late in the fourth quarter of 2020 or in the first quarter of 2021. This will be followed by a typical four- to six-month customer qualification process that would put the first meaningful sales volume around mid-year 2021. In spite of this slight delay, we are confident in being able to meet our volume commitments under our long-term agreements for lithium carbonate. In the solar diatacama, we have commenced a capital investment project, which is expected to improve our lithium yields in the solar. Major equipment has been ordered. Earthworks should commence during the second quarter, and we're on track to commission the project in the second half of 2021. This project will allow us to increase our lithium yields by as much as 30% without increasing the amount of brine being used. further ensuring the sustainability of the Solardi Atacama, and increasing the flexibility of our operations. In Kemerton, Western Australia, work has started on our lithium hydroxide complex. Earthworks are well underway, and contracts have been awarded for the major and long lead time equipment, as well as for the engineering, procurement, and construction management for the project. The first phase will encompass three trains of 20 to 25,000 metric tons capacity apiece and expected to be commissioned in stages during the second half of 2021 and continuing into 2022. Finally, the expansion of Taliesin, our spodumene joint venture in Greenbushes, Australia, remains on schedule to start up in June of this year. This expansion will result in the capability to produce about 160,000 metric tons on an LCE full year run rate basis with Albemarle's annual share being up to 80,000 metric tons. This spodumene will feed our China and Australia conversion plants. Taliesin will tailor operations to meet the raw material demands of its two partners. Turning to demand for lithium for a minute. During the first quarter, global sales of electric vehicles were up almost 60% compared to 2018. Full battery electric vehicles contributed outsized growth, increasing 75% year over year. All of this is against a backdrop where year-on-year global automotive sales declined by 6.5% during the same quarter. Reasonably, Europe set a record for EV sales in March, ending the quarter up 23% versus prior year, with most of that growth coming from the full electric segment. U.S. sales were up 11%. First quarter EV sales in China were more than double what they were during the same period of 2018. In addition, battery production remained strong. The Chinese National Bureau of Statistics reported reported that full year 2018 and first quarter 2019 lithium ion battery production increased 13 and 8% respectively compared to the prior year. Year-on-year, the production of NMC cathode batteries was up more than 25% during the month of March alone. Overall, these demand signals are in line with what we see from our customers under our long-term agreements, which support the continued secular growth in electric mobility and electric storage and the underlying strength of our businesses. With that, I'll turn the call over to Scott.