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Albemarle’s Lithium and Advanced Materials Segment in 2Q16

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Aug. 12 2016, Updated 9:05 a.m. ET

Revenue for Albemarle’s Lithium and Advanced Materials segment

In 2Q16, Albemarle’s (ALB) Lithium and Advanced Materials segment reported revenue of $233.4 million, representing 34.9% of Albemarle’s total revenue. The segment is ALB’s largest revenue generator. On a year-over-year basis, its revenue increased 9.6%, or $20.4 million.

During 2Q16, the segment posted adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $82.7 million compared to $80 million in 2Q15. This implies an increase in adjusted EBITDA of 3.4% on a year-over-year basis.

In terms of margins, the Lithium and Advanced Materials segment recorded an adjusted EBITDA margin of 35.4% in 2Q16 compared to 37.6% in 2Q15. This implies that its adjusted EBITDA margin declined 2.2 percentage points on a year-over-year basis.

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Highlights of the Lithium and Advanced Materials segment

  • Favorable foreign exchange translations impacted revenue by $2.3 million, or 1.1%.
  • An increase in sales due to lithium sales volumes and favorable pricing impacted the segment’s revenue positively by $18.1 million, or 8.5%.
  • Favorable foreign currency impacted adjusted EBITDA by $1.3 million, or 1.6%.
  • Higher sales volume and pricing impacted adjusted EBITDA by $1.4 million, or 1.8%.

Albemarle’s outlook

  • Albemarle expects strong growth to continue for the rest of 2016, driven by the demand of lithium in battery applications.
  • ALB estimates its Performance Catalyst Solutions and Curatives business to maintain a profitability level similar to 2015.
  • ALB expects the bankruptcy filing by one of its customers to negatively impact its income from continuing operations by $15 million in the rest of 2016.

Investors can indirectly hold Albemarle by investing in the Materials Select Sector SPDR ETF (XLB). It held 1.7% of its portfolio in Albemarle as of August 9, 2016. The top holdings of XLB include Dow Chemical (DOW), Monsanto (MON), and Praxair (PX), with weights of 10.9%, 8.5%, and 6.0%, respectively.

In the next part, we’ll look into ALB’s Bromine Specialties segment.

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