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Insights into Albemarle's Strong 3Q17 Returns

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Part 2
Insights into Albemarle's Strong 3Q17 Returns PART 2 OF 6

Albemarle’s 3Q17 Revenue Rises on Lithium Segment Growth

Albemarle’s 3Q17 revenues

Albemarle (ALB) reported revenues of $754.9 million in 3Q17, a rise of 15.4% on a year-over-year basis. In 3Q16, its revenues were $654 million. The reported revenues are on a continuing business operations basis.

Albemarle&#8217;s 3Q17 Revenue Rises on Lithium Segment Growth

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The increase in ALB’s revenue was primarily driven by higher growth in its Lithium and Advanced Materials segment and in its Bromine Specialties segment. We’ll look at each of these reporting segments in detail in the coming parts of this series. Revenue growth was helped by higher pricing and higher volumes in both of these segments. A weakness in the dollar also resulted in favorable foreign currency translations, which boosted revenue. The company’s revenues would have been better without the adverse impact of Hurricane Harvey.

Luther Kissam, Albemarle’s chair, president, and CEO (chief executive officer), said, “In the third quarter, we delivered the seventh consecutive quarter of year over year revenue growth excluding divested businesses. Our revenue, adjusted EBITDA and adjusted diluted EPS grew by 15%, 11% and 19%, respectively, compared to third quarter of 2016. Lithium led the way and is now forecasted to grow adjusted EBITDA by over 50% versus 2016. Our Wave 1 expansion projects in lithium remain on schedule, and our work related to lithium yield improvements and exploration of new resources is producing preliminary results meeting our expectations.”

Outlook and guidance

Albemarle, with its new technology and expansion plans, is set to increase its production capacity to meet the growing demand for lithium. On the back of its strong 3Q17 performance, Albemarle made an upward revision to the lower end of its revenues for 2017. It now expects revenues to be $3.0 billion–$3.05 billion against its earlier guidance of $2.9 billion–$3.05 billion.

Investors can invest in the Guggenheim S&P 500 Equal Weight Materials ETF (RTM) for an indirect exposure to Albemarle. RTM has 3% of its portfolio invested in ALB. The fund also provides exposure to Mosaic (MOS), Air Products & Chemicals (APD), and DowDuPont (DWDP) with weights of 5.9%, 3.8%, and 4.1%, respectively, as of November 9, 2017.

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