Albemarle reports 10% growth in first quarter 2017 net sales

CHARLOTTE, N.C., May 3, 2017 /PRNewswire/ --

First quarter 2017 highlights:

• First quarter earnings were $51.2 million, or $0.45 per diluted share
• First quarter adjusted EBITDA was $211.4 million, an increase of 10% over the prior year; adjusted diluted earnings per share from continuing operations of $1.05, an increase of 11% over the prior year
• Repaid approximately $750 million in long-term debt
• Initiated $250 million accelerated share repurchase program, retiring approximately 1.9 million shares in the first quarter

Albemarle Corporation (NYSE: ALB) reported first quarter 2017 net sales of $722.1 million, net income from continuing operations of $62.7 million and adjusted EBITDA of $211.4 million.

"Our first quarter results clearly demonstrate the increased growth profile of Albemarle following the changes to our business portfolio over the last few years," said Luke Kissam, Albemarle's Chairman, President and CEO.  "Excluding currency exchange impacts and divested businesses, both revenue and adjusted EBITDA grew by double digits, 15% and 14%, respectively, compared to first quarter 2016. Our industry-leading Lithium business lead that growth, with an adjusted EBITDA increase of 56%."

Outlook

Our strong start to 2017 in Lithium and Bromine Specialties, and continued favorable outlooks in both businesses have made us more optimistic about full year 2017. Based on this we are raising our annual guidance as follows:

Results

First quarter 2017 earnings were $51.2 million, or $0.45 per diluted share, compared to $228.2 million, or $2.02 per diluted share in the first quarter 2016. The decrease in 2017 was primarily related to a loss on the early extinguishment of debt of $0.34 per diluted share in 2017, as well as a gain on the sales of businesses of $1.02 per diluted share, income from discontinued operations of $0.15 per diluted share and a lower tax rate in 2016. This was partially offset by increased net sales in each of our reportable segments. First quarter 2017 adjusted EBITDA increased by $19.3 million compared to the prior year. First quarter 2017 adjusted net income from continuing operations was $119.0 million, or $1.05 per diluted share, compared to $107.2 million, or $0.95 per diluted share, for first quarter 2016. See notes to the condensed consolidated financial information for further details. The Company reported net sales of $722.1 million in first quarter 2017, up from net sales of $657.2 million in the first quarter of 2016, driven by the favorable impact of higher sales volumes in our three reportable segments, partially offset by the impact of the divestiture of the minerals-based flame retardants and specialty chemicals business and unfavorable currency exchange impacts.

Quarterly Segment Results

Lithium and Advanced Materials reported net sales of $284.4 million in the first quarter of 2017, an increase of 31.5% from first quarter 2016 net sales of $216.2 million. The $68.2 million increase in net sales as compared to prior year was primarily due to favorable pricing impacts and increased sales volumes, partially offset by $2.2 million of unfavorable currency exchange impacts. Adjusted EBITDA for Lithium and Advanced Materials was $120.0 million, an increase of 38.8% from first quarter 2016 results of $86.5 million. The $33.5 million increase in adjusted EBITDA as compared to the prior year was primarily due to increased sales volumes and favorable pricing impacts, partially offset by higher selling, general and administrative costs and $1.6 million of unfavorable currency exchange impacts.

Bromine Specialties reported net sales of $219.2 million in the first quarter of 2017, an increase of 11.5% from first quarter 2016 net sales of $196.6 million. The $22.6 million increase in net sales as compared to the prior year was primarily due to higher sales volumes. Adjusted EBITDA for Bromine Specialties was $68.5 million, an increase of 11.2% from first quarter 2016 results of $61.6 million. The $6.9 million increase in adjusted EBITDA as compared to the prior year was primarily due to higher sales volumes, partially offset by increased selling, general and administrative costs.

Refining Solutions reported net sales of $185.4 million in the first quarter of 2017, an increase of 8.7% from net sales of $170.6 million in the first quarter of 2016. The $14.8 million increase in net sales as compared to the prior year was primarily due to higher sales volumes, partially offset by unfavorable impacts due to customer and product mix, and $1.5 million of unfavorable currency exchange impacts. Adjusted EBITDA for Refining Solutions was $49.6 million in the first quarter of 2017, a decrease of 10.0% from first quarter 2016 results of $55.1 million. The $5.5 million decrease in adjusted EBITDA as compared to the prior year was primarily due to unfavorable mix impacts and higher costs, partially offset by $1.1 million of favorable currency exchange impacts.

All Other net sales were $32.4 million in the first quarter of 2017, a decrease of 55.0% from net sales of $72.1 million in the first quarter of 2016. The $39.7 million decrease in net sales as compared to the prior year was primarily due to the impact of the divestiture of the minerals-based flame retardants and specialty chemicals business of $26.1 million, as well as lower sales volumes and a change in the pricing contract formula for the fine chemistry services business. All Other adjusted EBITDA was $5.2 million in the first quarter of 2017, a decrease of 39.1% from first quarter 2016 results of $8.5 million. The $3.3 million decrease in adjusted EBITDA as compared to the prior year was primarily due to the impact of the divestiture of $2.1 million and lower overall sales for fine chemistry services.

In summary, total net sales were $722.1 million in the first quarter of 2017, an increase of $64.9 million, or 9.9%, from first quarter 2016 net sales of $657.2 million. The increase in net sales as compared to prior year was primarily due to higher sales volumes in our three reportable segments, partially offset by the divestiture of the minerals-based flame retardants and specialty chemicals business of $26.1 million and unfavorable currency exchange impacts of $3.8 million. Total adjusted EBITDA was $211.4 million in the first quarter of 2017, an increase of $19.3 million, or 10.1%, from first quarter 2016 adjusted EBITDA of $192.0 million. The increase in adjusted EBITDA as compared to prior year was primarily due to the impact of higher sales volumes, partially offset by higher selling, general and administrative costs, the divestiture of the minerals-based flame retardants and specialty chemicals business of $2.1 million and unfavorable currency impacts of $0.6 million.

Corporate Results

Corporate adjusted EBITDA was a loss of $31.9 million in the first quarter of 2017 compared to a loss of $19.6 million in the first quarter of 2016. The decrease in Corporate adjusted EBITDA was primarily due to unfavorable currency impacts of $4.8 million and increased compensation costs.

Income Taxes

Our effective income tax rates for the first quarter of 2017 and 2016 of 22.4% and 11.2%, respectively, are influenced by non-recurring, other unusual and non-operating pension and OPEB items (see notes to the condensed consolidated financial information). Our adjusted effective income tax rates, which exclude non-recurring, other unusual and non-operating pension and OPEB items, were 22.4% and 21.0% for the first quarter of 2017 and 2016, respectively, and continue to be influenced by the level and geographic mix of income. The effective tax rate in 2016 was driven down by a variety of factors, primarily low tax gains from the sale of the minerals-based flame retardant business, as well as a favorable mix of earnings in lower tax jurisdictions.

Cash Flow

Our cash flow from operations was approximately $82.6 million for the three months ended March 31, 2017, down 52% versus the same period in 2016 primarily due to changes in working capital. We had $1.25 billion in cash and cash equivalents at March 31, 2017, as compared to $2.27 billion at December 31, 2016. During the first quarter of 2017, cash on hand, cash provided by operations and net borrowings funded $751.2 million of debt repayments, primarily related to the senior notes, $54.1 million of capital expenditures for plant, machinery and equipment, dividends to shareholders of $34.3 million and a $250.0 million accelerated share repurchase program, of which we received and retired approximately 1.9 million shares of our common stock during the first quarter. Any remaining shares to be delivered under the accelerated share repurchase program will be received and retired by the end of the second quarter of 2017.

Earnings Call

The Company's performance for the first quarter ended March 31, 2017 will be discussed on a conference call at 9:00 AM Eastern time on May 4, 2017. The call can be accessed by dialing 888-713-4218 (International Dial-In # 617-213-4870), and entering conference ID 25856118. The Company's earnings presentation and supporting material can be accessed through Albemarle's website under Investors at www.albemarle.com.

About Albemarle

Albemarle Corporation (NYSE: ALB), headquartered in Charlotte, NC, is a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts. We power the potential of companies in many of the world's largest and most critical industries, from energy and communications to transportation and electronics. Working side-by-side with our customers, we develop value-added, customized solutions that make them more competitive. Our solutions combine the finest technology and ingredients with the knowledge and know-how of our highly experienced and talented team of operators, scientists and engineers.

Discovering and implementing new and better performance-based sustainable solutions is what motivates all of us. We think beyond business-as-usual to drive innovations that create lasting value. Albemarle employs approximately 4,500 people and serves customers in approximately 100 countries. We regularly post information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations, SEC filings and other information regarding our company, its businesses and the markets it serves.

Forward-Looking Statements

Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, product development, changes in productivity, market trends, price, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, cash flow generation, costs and cost synergies, portfolio diversification, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ materially include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy; changes in our markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of regulatory proceedings, claims or litigation; the occurrence of cybersecurity breaches, terrorist attacks, industrial accidents, natural disasters or climate change; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest affecting the global economy; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement; decisions we may make in the future; the ability to successfully execute, operate and integrate acquisitions and divestitures; and the other factors detailed from time to time in the reports we file with the SEC, including those described under "Risk Factors" in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

Additional Information

It should be noted that adjusted net income from continuing operations, adjusted diluted earnings per share attributable to Albemarle Corporation, adjusted diluted earnings per share from continuing operations, non-operating pension and OPEB items per diluted share, non-recurring and other unusual items per diluted share, adjusted effective income tax rates, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These non-GAAP measures should not be considered as alternatives to net income attributable to Albemarle Corporation ("earnings"). These measures are presented here to provide additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance. The Company's chief operating decision maker uses these measures to assess the ongoing performance of the Company and its segments, as well as for business and enterprise planning purposes.

A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investors section of our website at www.albemarle.com, under "Non-GAAP Reconciliations" under "Financials." Also, see below for supplemental reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP. The Company does not provide a reconciliation of forward looking non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, as the Company is unable to estimate significant non-recurring or unusual items without unreasonable effort. The amounts and timing of these items are uncertain and could be material to the Company's results calculated in accordance with GAAP.

See below for a reconciliation of adjusted EBITDA on a segment basis, the non-GAAP financial measure, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reporting in accordance with GAAP.

See below for a reconciliation of the adjusted effective income tax rate, the non-GAAP financial measure, to the effective income tax rate, the most directly comparable financial measure calculated and reporting in accordance with GAAP.

SOURCE Albemarle Corporation

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