Albemarle Corporation has announced that it expects third quarter 2019 diluted earnings per share to be approximately $1.46 and adjusted earnings per share to be $1.53 on net income of approximately $155 million and adjusted EBITDA of approximately $254 million.
Albemarle Corporation has extensive brine production and chemical processing facilities in Columbia and Union counties.
The Lithium business performance was impacted by discrete items, which more than offset solid results from both the Bromine and Catalysts businesses
For the third quarter 2019, the Lithium business is expected to deliver revenue of $330 million, up $59 million or 22 percent, and adjusted EBITDA of $128 million, up $14 million or 12 percent year-over-year. Factors impacting Lithium during the quarter include:
-- Sales volume was lower than expected primarily from Typhoon Tapah, in late September, that caused lithium shipments from ports in Shanghai to be delayed into October. The volume shortfall impacted the third quarter by approximately $15 million in EBITDA but is expected to be fully recovered in the fourth quarter.
-- Use of tollers to meet customer commitments and address operating issues in La Negra, Chile, resulted in an EBITDA reduction of around $10 million. The technical team in Chile has focused on reliability improvements which have enabled operating rates to now reach full capacity. Given customer commitments, tolling is expected to continue into the fourth quarter.
-- An out-of-period adjustment regarding Lithium carbonate inventory values was identified and corrected during the third quarter close process and resulted in a $7 million non-cash charge in the third quarter.
-- Overall lithium pricing was flat to slightly up in the third quarter versus prior year; however, continuing price pressure on lithium sales in China unfavorably impacted EBITDA by about $5 million.
Price pressure, combined with the need to utilize more tolled volume to meet customer commitments, will result in fourth quarter 2019 Lithium performance being lower than previously forecast. While the company currently expects slight upside in Bromine and Catalysts in the fourth quarter, it will not offset the impact from Lithium.
Based on expectations for continued Lithium price pressure and no new Albemarle lithium capacity coming online, the company expects full-year 2020 EBITDA performance to be lower than full-year 2019 results. The company will provide an update on 2020 performance on its third quarter 2019 conference call scheduled for November 7, 2019 and provide formal full year 2020 guidance on its fourth quarter and full year 2019 conference call scheduled for the end of February 2020.
As previously announced, the company reduced its multi-year capital expenditure plan from approximately $5 billion to approximately $3.5 billion over the next five years. This adjustment reflects the company's commitment to generating free cash flow in 2021 and investing capital where customer volume and price commitments provide an attractive return.
"Despite one-time items impacting our third quarter results and challenging market conditions heading into 2020, we remain confident in the long-term growth prospects of lithium. We believe we have built a competitively advantaged position that will enable us to grow well into the future," said Luke Kissam, Albemarle's CEO. "While disappointed by third quarter performance in an otherwise strong year, we continue to put more robust processes in place to ensure greater operational rigor. To that end, we are initiating a program aimed at capturing significant and sustainable cost savings over the next two years."
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