Albemarle Corporation

Good day, and welcome to the fourth quarter 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 then 1 on your touchtone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Meredith Bambi, Vice President of Investor Relations and Sustainability. You may begin.

All right. Thanks, Michelle. Thank you all, and welcome to Albemarle's fourth quarter 2021 earnings conference call. Our earnings were released after close of market yesterday, and you'll find our press release and earnings presentation posted on our website under the Investors section at albemarle.com. Joining me on the call today are Kent Masters, Chief Executive Officer of and Scott Tozier, Chief Financial Officer. Our GBU presidents, Rafael Crawford, Netha Johnson, and Eric Norris, are also available for Q&A. As a reminder, some of the statements made during this call, including outlook, guidance, expected company performance, and timing of expansion projects, may constitute forward-looking statements within the meaning of federal securities laws. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation. That same language applies to this call. Please also note that some of the comments made today refer to non-GAAP financial measures. A reconciliation to GAAP financial measures can be found in our earnings release and the appendix of our earnings presentation. Now, I'll turn the call over to Kent.

Thanks, Meredith, and thank you all for joining us today. On today's call, I will highlight our quarterly results, recap our 2021 successes, and update you on our expansion plans. Scott will provide more details on our financial results, outlook, and capital allocation priorities. And finally, I'll walk you through our 2022 objectives. 2021 was a transformative year for Albemarle. Our strategic execution and ability to effectively manage the challenges of the global pandemic enabled us to capitalize on the strength of the lithium and bromine markets and generate results that exceeded expectations. For the year, excluding our fine chemistry services business, which was sold in June of 2021, we increased net sales by 11% to $3.3 billion, which was in line with our previous guidance. Adjusted EBITDA grew 13% in 2021 to $871 million, surpassing the upper end of our guidance. Looking ahead, our outlook for 2022 has improved. based primarily on favorable market conditions for lithium and bromine. We expect adjusted EBITDA to grow between 35 and 55 percent versus 2021, excluding fine chemistry services. To continue driving this growth, we are focused on quickly bringing capacity online with accelerated investments. La Negra 3 and 4 is currently in commercial qualification. and we expect to start realizing first sales from this facility in the second quarter. In November, we achieved mechanical completion of the first train at Kimberton. The construction team is now dedicated to the second train, and we will be able to leverage our experience from train one to improve efficiencies and timeliness of this project. And we recently signed a non-binding letter agreement to explore the expansion of our marble joint venture, with increased optionality and reduced risk. Now looking at slide five, we introduced this slide early last year to lay out our 2021 objectives designed to support the four pillars of our strategy, to grow profitably, to maximize productivity, to invest with discipline, and to advance sustainability. I would like to thank our teams for their extraordinary efforts. Virtually all the goals we set last year we were met or exceeded despite challenges related to severe weather, supply chain issues, and the ongoing effects of the pandemic. The focus of our people around the world is what drove our strong gear and underscores our ability to deliver on our commitments. These accomplishments have also set the stage for us to take advantage of the growth opportunities ahead. Just as important as driving growth is an ongoing dedication to strong ESG values. I'm very proud of what you see on slide six. Since I became CEO in 2020, one of my main priorities has been continued improvement in sustainability. I'm pleased to see that these efforts are increasingly being recognized externally, but it certainly isn't a new initiative for Albemarle. Sustainability is not just doing the right thing, but also doing it the right way. For example, The lithium market is expected to see significant demand growth in the coming years. As a leader in lithium production, we expect to be an example and help define the standards of sustainability in this market as it goes through this fundamental shift. Now turning to slide seven and more on the lithium market outlook. Based on our current market data, EV trends, and regular interactions with our customers, we are revising our lithium demand outlook upwards once again. We now expect 2025 lithium demand of approximately 1.5 million tons, up more than 30% from our previous estimates. Beyond 2025, we anticipate continued growth with lithium demand of more than 3 million tons by 2030. EV sales growth is accelerating as consumers become more energy conscious, governments incentivize clean energy, technology improves, and EVs approach pricing parity with internal combustion vehicles. In 2021, global EV production nearly doubled to over 6 million vehicles from 3 million in 2020. By the end of the decade, EVs are expected to account for close to 40% of automotive sales. When you look at last year's growth rate of nearly 50% and the auto industry's ambitions for a rapid transition to EVs, it's easy to see why demand expectations are so bullish. However, meeting this demand will be a challenge. Turning to our Wave 2 projects on Slide 8, La Negra 3 and 4, which will add conversion capacity for our Chilean brine resource in the Salar de Atacama, is currently in the customer qualification process. We anticipate incremental volumes and revenue contribution from this project in the second quarter of this year. While there are significant changes taking place to the political landscape in Chile, we do not anticipate any material impacts to our business. We support the Chilean people's right of self-determination and applaud the peaceful leadership transition in that country. Our team has already begun building relationships with the incoming administrations. As I mentioned earlier, Kimerton 1 reached mechanical completion late last year and is currently in the commissioning phase. This puts us on track to begin first sales in the second half of this year. Kimerton 2 remains on track to reach mechanical completion by the end of this year. The OEMs and battery manufacturers have been investing heavily in growth, including commitments in North America and Europe. and the lithium industry must do the same. Turning to slide nine, we provide an overview of how Albemarle is investing to support downstream growth. Since our investor day, we have accelerated and further defined our wave three projects, including the announcement of three strategic investments in China. This wave of investments will provide Albemarle with approximately 200,000 tons of additional capacity That's up from 150,000 tons of capacity originally planned for Wave 3. We've also continued to progress our growth options for Wave 4. Based on discussions with our customers, we are analyzing options to restart our Kings Mountain lithium mine and the potential to build conversion assets in North America and Europe. Our vertical integration, access to high-quality, low-cost resources, Years of experience bringing conversion capacity online and strong balance sheet provide us with considerable advantages. I'm on slide 10 now. In China, we expect to close the acquisition of the Chenzo conversion facility in the first half of this year. This transaction is progressing well, and we continue to work through the appropriate regulatory reviews. The Chinzo plant is currently being commissioned, and we have begun tolling our spodumene to assist with that process. We continue to progress the two greenfield lithium conversion projects in Meishan and Zhangjigang. We have started site clearing at Meishan and expect to break ground at Zhangjigang later this year. We expect mechanical completion of both projects by the end of 2024. The restart of one of three processing lines at the Wadjanah mine is going well, with first spodumene concentrate production now expected in the second quarter. At Greenbushes, Taliesin continues to ramp production from the CGP2 facility to meet design throughput and recovery rates. In addition, the tailings project at Taliesin is on track. Before I turn the call over to Scott, I'd like to highlight our bromine growth projects on slide 11. Our bromine business is investing in innovation and capital projects to take advantage of growth opportunities. We expect new products to make up more than 10% of annual bromine revenues by 2025, up from essentially a standing start. The first of these products to launch is Satex Alero, our next generation polymeric flame retardant. We first discussed Satex Alero at our investor day last year, and I'm excited to say that we have achieved first commercial sales in January and expect to scale production throughout the year. We've also invested in a resource expansion at the Smackover Formation in Arkansas, and we continue to grow our conversion and derivative capacity in both Arkansas and Jordan. With that as an overview, I'll turn the call over to Scott to discuss recent results and our outlook.