Albemarle Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 Albemarle Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your presenter today, Ms. Meredith Bandy, Vice President of Investor Relations. Thank you. Please go ahead, Madam.

All right. Thanks, Marcus. And welcome to Albemarle's third quarter 2020 earnings conference call. Our earnings were released after the close of the market yesterday, and you'll find our press release, presentation, and non-GAFA conciliations posted to our website in the Investor Relations section at albemarle.com. Joining me on the call today are Kent Masters, Chief Executive Officer, and Scott Tozier, Chief Financial Officer. Raphael Crawford, President Catalyst, Nessa Johnson, President Bromian Specialties, and Eric Norris, President Lithium, are also available for Q&A. As a reminder, some of the statements made during this conference call, including our outlook, expected company performance, expected impacts of the COVID-19 pandemic, and proposed expansion projects, may constitute forward-looking statements within the meeting of federal securities laws. Please note the cautionary language about forward-looking statements in our press release, and that same language applies to this call. Please also note that some of our comments today may refer to financial measures that are not prepared in accordance with U.S. GAAP. A reconciliation of these measures to GAAP financial measures can be found in our earnings release and the appendix of our presentation, both of which are posted on the website. Now I'll turn the call over to Kat.

Thank you, Meredith, and good morning, everyone. On the call today, I will cover a high-level overview of results and strategy and highlight additional actions we're taking to improve the sustainability of and to grow our business. Scott will then review third-quarter financials, provide updates on our balance sheet and cost savings initiatives, and review our outlook. At Albemarle, our first priority is the safety and well-being of our employees, customers, and communities. Thanks to the courage and dedication of our employees, we've been able to safely operate our facilities throughout the pandemic to meet customer needs. Our cross-functional global response team continues to meet regularly to assess pandemic-related risk and adapt protocols as necessary. Protocols including restricted travel, shift adjustments, increased hygiene, and social distancing remain in place at all locations. Our recent focus has shifted from managing the immediate crisis to building in flexibility to adjust for regional differences and changing conditions. Today, looking at our non-essential workers around the globe, most of North America remains on work-from-home status. Asia and Australia have returned to work sites. Most of Europe returned to work sites over the summer but have now gone back to work-from-home given rising COVID-19 cases and rates. And finally, in Chile, improving COVID-19 rates and falling cases have allowed us to trial a soft reopening approach at a worksite at reduced capacity. As we all know, the situation is challenging and continues to evolve. I'm grateful to our team for their continued vigilance and commitment to working safely and productively. Turning to recent results. Yesterday, we released third-quarter financials, including net income of $98 million, or 92 cents per share, and adjusted EBITDA of $216 million, down 15% from prior year. Our adjusted EBITDA results surpassed the high end of our Q3 outlook by 14%, thanks to better-than-expected performance in lithium and bromine and the exceptional cost-saving results across our businesses. We currently expect full-year 2020 adjusted EBITDA of between $780 and $810 million, lower year-over-year based on reduced global economic activity due to the global pandemic and reduced lithium pricing as expected going into the year. Scott will go into more detail on our outlook for the rest of this year and talk directionally about next year. In late 2019, we launched an initiative to achieve sustainable cost savings of over $100 million per year by the end of 2021, with about half of that, or $50 million, to be achieved in 2020. Earlier this year, with the onset of the pandemic-related economic slowdown, we accelerated those initiatives, giving us line of sight to $50 million to $70 million savings in 2020. Implementation has been even more successful than we expected, and we are on track to deliver about $80 million in savings this year and to reach a run rate of more than $120 million by the end of 2021. We plan to turn this two-year project into an ongoing culture of operating discipline and continuous improvement with additional cost and efficiency targets. Our strategic approach to sustainability is another facet of this operational discipline and a key area of focus for Albemarle. Since we spoke last quarter, we have published our Enhanced Sustainability Report, which expands on the four key quadrants of our sustainability framework and sets the baseline for our environmental performance and increased disclosures. Now we are working to establish sustainability goals and targets and continue to make progress in each quadrant. This week we also published our Global Labor Policy Report, in alignment with international label organization conventions and our human rights and global community relations and indigenous peoples policies, both consistent with UN guiding principles. These policies will be available on the sustainability section of our website. I'm proud to say that Albemarle generates more than 50% of our revenues from products that help reduce greenhouse gas emissions or promote greater resource efficiency. As our lithium business grows, an even larger proportion of our business will contribute to global sustainability. In summary, we are concentrating our efforts where they matter most so we can continue to create sustainable value for our customers, investors, and stakeholders. Our growth projects at La Negra and Kimberton are key to increasing our battery-grade lithium conversion capacity in line with long-term customer demand. La Negra 3 and 4 – is an expansion of our lithium carbonate capacity in Chile. The project is expected to reach mechanical completion in mid-2021, followed by a six-month commissioning and qualification process. La Negra 3 and 4 allows us to add carbonate capacity at the very low end of the cost curve. Kimmerton, our new lithium hydroxide conversion plant in Western Australia, is on track to reach mechanical completion by late 21 with a six-month commissioning and qualification process to follow. Kimberton is core to growing our hydroxide capacity in line with expected strong long-term market demand. And with that update, I'll turn it over to Scott for more detail on our recent results. Thank you, Kent.