What Drove Albemarle’s Better-than-Expected Q2 Earnings?

Albemarle’s Q2 2018 revenue

Albemarle (ALB) reported its Q2 2018 earnings after the market closed on August 7. It reported revenue of $853.9 million for Q2 2018, reflecting growth of 15.8% over Q2 2017. The company easily beat Wall Street analysts’ estimate of $798.2 million. Higher volumes, better pricing, and favorable foreign currency influenced ALB’s revenue growth and offset the divestiture effect of its polyolefin catalysts and components business to W.R. Grace (GRA). All three of ALB’s reporting segments witnessed revenue growth. On a year-over-year basis, the Lithium segment led the revenue growth with 30.2% growth, followed by the Catalysts segment with 10.3% growth, and the Bromine segment with 8.1% growth.

What Drove Albemarle’s Better-than-Expected Q2 Earnings?

Albemarle’s adjusted EPS

Albemarle reported adjusted earnings per share of $1.36, reflecting an increase of 20.4% on a year-over-year basis. In Q2 2017, Albemarle reported adjusted EPS of $1.13. The adjusted EPS exclude non-recurring and other unusual items amounting to $1.36 per share and $0.02 per share related to pension. The earnings per share growth was driven by higher volume, price increases, favorable foreign currency, improved selling, general, and administrative expenses as a percentage of revenue and share buybacks.

Outlook and stock reaction

Albemarle made an upward revision to its adjusted EPS for fiscal 2018. ALB now expects its fiscal 2018 adjusted EPS in the range of $5.30–$5.50 versus the earlier guidance of $5.10–$5.40. ALB increased the revenue guidance to $3.3 billion–$3.5 billion as against the previous guidance of $3.2 billion–$3.4 billion.

ALB was up by 4.6% in the pre-market session. FMC (FMC) was down by 1.25%, while Sociedad Química y Minera de Chile (SQM) was up 0.8%. We’ll release detailed insights into Caterpillar’s Q2 2018 earnings soon, so stay tuned.

Investors can indirectly hold Albemarle by investing in the Lithium ETF (LIT), which invests 5.4% of its portfolio in Albemarle.