Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

Some of the information presented in this Quarterly Report on Form 10-Q, including the documents incorporated by reference herein, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on our current expectations, which are in turn based on assumptions that we believe are reasonable based on our current knowledge of our business and operations. We have used words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “would,” “will” and variations of such words and similar expressions to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. There can be no assurance that our actual results will not differ materially from the results and expectations expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation, information related to:

  • changes in economic and business conditions;

  • product development;

  • 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;

  • fluctuations in lithium market pricing, which could impact our revenues and profitability particularly due to our increased exposure to index-referenced and variable-priced contracts for battery grade lithium sales;

  • inflationary trends in our input costs, such as raw materials, transportation and energy, and their effects on our business and financial results;

  • changes with respect to contract renegotiations;

  • potential production volume shortfalls;

  • competition from other manufacturers;

  • changes in the demand for our products or the end-user markets in which our products are sold;

  • limitations or prohibitions on the manufacture and sale of our products;

  • availability of raw materials;

  • increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;

  • technological change and development;

  • 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 actions, proceedings, claims or litigation (including with respect to the U.S. Foreign Corrupt Practices Act and foreign anti-corruption laws);

  • the occurrence of cyber-security breaches, terrorist attacks, industrial accidents or natural disasters;

  • the effects of climate change, including any regulatory changes to which we might be subject;

  • hazards associated with chemicals manufacturing;

  • the inability to maintain current levels of insurance, including product or premises liability insurance, or the denial of such coverage;

  • political unrest affecting the global economy, including adverse effects from terrorism or hostilities;

  • 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 or interpretation;

  • changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations;

  • volatility and uncertainties in the debt and equity markets;

  • technology or intellectual property infringement, including cyber-security breaches, and other innovation risks;

  • decisions we may make in the future;

  • future acquisition and divestiture transactions, including the ability to successfully execute, operate and integrate acquisitions and divestitures and incurring additional indebtedness;

  • expected benefits and expenses related to our new operating structure and asset optimization activities;

  • timing of active and proposed restructuring and cost optimization projects;

  • impact of any future pandemics;

  • impacts of the situation in the Middle East and the military conflict between Russia and Ukraine, and the global response to it;

  • performance of our partners in joint ventures and other projects;

  • changes in credit ratings;

  • the inability to realize the benefits of our decision to retain our Ketjen business as a wholly-owned subsidiary; and

  • the other factors detailed from time to time in the reports we file with the Securities and Exchange Commission (“SEC”).

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. 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. The following discussion should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

The following is a discussion and analysis of our results of operations for the three-month and nine-month periods ended September 30, 2024 and 2023. A discussion of our consolidated financial condition and sources of additional capital is included under a separate heading, “Financial Condition and Liquidity.”

Overview

Albemarle is a world leader in transforming essential resources into critical ingredients for mobility, energy, connectivity, and health. Our purpose is to enable a more resilient world. We partner to pioneer new ways to move, power, connect, and protect. The end markets we serve include grid storage, automotive, aerospace, conventional energy, electronics, construction, agriculture and food, pharmaceuticals and medical devices. We believe that our world-class resources with reliable and consistent supply, our leading process chemistry, high-impact innovation, customer centricity and focus on people and planet will enable us to maintain a leading position in the industries in which we operate.

Secular trends favorably impacting demand within the end markets that we serve combined with our diverse product portfolio, broad geographic presence and customer-focused solutions will continue to be key drivers of our future earnings growth. We continue to build upon our existing green solutions portfolio and our ongoing mission to provide innovative, yet commercially viable, clean energy products and services to the marketplace to contribute to our sustainability-based revenue. For example, our Energy Storage business contributes to the growth of clean miles driven with electric vehicles and more efficient use of renewable energy through grid storage; Specialties enables the prevention of fires starting in electronic equipment, greater fuel efficiency from rubber tires and the reduction of emissions from coal fired power plants; and our Ketjen business enhances the efficiency of natural resources through more usable products from a single barrel of oil, enables safer, greener production of alkylates used to produce more environmentally-friendly fuels, and reduced emissions through cleaner transportation fuels. We believe our disciplined cost reduction efforts and ongoing productivity improvements, among other factors, position us well to take advantage of strengthening economic conditions as they occur, while softening the negative impact of the current challenging global economic environment.

Third Quarter 2024

During the third quarter of 2024:

  • Our board of directors declared a quarterly dividend of $0.405 per share on July 16, 2024, which was paid on October 1, 2024 to common shareholders of record at the close of business as of September 13, 2024.

  • We announced a comprehensive review of our cost and operating structure to maintain a competitive position, further generate long-term financial flexibility and drive long-term value creation. As part of this review, we concluded to stop construction of the Kemerton conversion plant Train 3 and placed Kemerton Train 2 into care and maintenance. Kemerton Train 1 will continue to operate and activity around it is currently focused on commercialization efforts.

  • We submitted several state and federal permit applications for the potential redevelopment of the Kings Mountain Mine, one of the few known hard-rock lithium deposits in the United States. Development of the mine is subject to the successful completion of permitting as well as a final investment decision prior to starting construction.

  • We announced a new operating structure, effective November 1, 2024, that will transition from two core global business units - Energy Storage and Specialties - to a fully integrated functional model (excluding Ketjen) designed to increase agility, deliver significant cost savings and maintain long-term competitiveness. Albemarle will continue to report results across its three existing operating segments: Energy Storage, Specialties and Ketjen.

Outlook

The current global business environment presents a diverse set of opportunities and challenges in the markets we serve. In particular, we believe that the market for lithium battery and energy storage, particularly for electric vehicles (“EV”), remains strong, providing the opportunity to continue to develop high quality and innovative products while managing the high cost of expanding capacity. The other markets we serve continue to present various opportunities for value and growth as we have positioned ourselves to manage the impact on our business of changing global conditions, such as slow and uneven global growth, currency exchange volatility, crude oil price fluctuation, a dynamic pricing environment, an ever-changing landscape in electronics, the continuous need for cutting edge catalysts and technology by our refinery customers and increasingly stringent environmental standards. During the course of 2023, lithium index pricing dropped significantly, and remained relatively steady at these lower levels during the first nine months of 2024. Amidst these dynamics, and despite recent downward lithium price pressure, we believe our business fundamentals are sound and that we are strategically well-positioned as we remain focused on increasing sales volumes, optimizing and improving the value of our portfolio primarily through pricing and product development, managing costs and delivering value to our customers and shareholders. We believe that our businesses remain well-positioned to capitalize on new business opportunities and long-term trends driving growth within our end markets and to respond quickly to changes in economic conditions in these markets.

However, in order to optimize our cost structure and strengthen our financial flexibility, we are taking proactive actions, including certain restructuring activities and reducing planned capital expenditures. As part of these actions, we announced a new operating structure, effective November 1, 2024, that will transition from two core global business units to a fully integrated functional model (excluding Ketjen) designed to increase agility, deliver significant cost savings and maintain long-term competitiveness. We will continue to report results across its three existing operating segments of Energy Storage, Specialties and Ketjen. If lithium index pricing trends further downward or remains at low levels for an extended time, we may need to take additional measures to support growth and financial flexibility, including further restructuring actions.

At this time, relating to the current situation in the Middle East, our business operations have continued as normal with some shipping and raw material delays. We are monitoring the situation and will continue to make efforts to protect the safety of our employees and the health of our business.

Energy Storage: We expect Energy Storage net sales and profitability to decrease year-over-year in 2024 as lithium market prices remain at lower levels compared to the prior year. Due to many of our contracts being index-referenced and variable-priced, our business is more aligned with changes in market and index pricing. The first part of 2023 saw record high lithium price levels which increased prior year results. As a result, increases or further decreases in lithium market pricing could have a material impact on our results. We do expect the lower pricing to be partially offset by higher sales volume driven primarily by additional capacity from La Negra, Chile, Meishan and Qinzhou, China, as well as additional tolling volume supported by increased spodumene production out of Australia. The Meishan, China lithium conversion plant achieved first commercial sales during the second quarter of 2024. During the fourth quarter of 2023, we recorded a $604 million charge to reduce the value of certain spodumene and finished goods to their net realizable value following the decline in lithium market pricing at the end of the year. We could record additional inventory valuation charges in 2024 if lithium prices continue to deteriorate during the projected period of conversion and sale. While we ramp up our new capacity, we will continue to utilize tolling arrangements to meet growing customer demand. Global EV sales are expected to continue to increase over the prior year, driving continued demand for lithium batteries.

As part of the above-mentioned actions to optimize our cost structure and strengthen our financial flexibility, we have stopped construction of the Kemerton Trains 3 and 4. In addition, we have put Kemerton Train 2 into care and maintenance. Kemerton Train 1 will continue to operate and activity around it is currently focused on commercialization efforts.

On a longer-term basis, we believe that demand for lithium will continue to grow as new lithium applications advance and the use of plug-in hybrid EVs and full battery EVs increases. This demand for lithium is supported by a favorable backdrop of steadily declining lithium-ion battery costs, increasing battery performance, continuing significant investments in the battery and EV supply chain by cathode and battery producers and automotive OEMs and favorable global public policy toward e-mobility/renewable energy usage. Our outlook is also bolstered by long-term supply agreements with key strategic customers,

reflecting our standing as a preferred global lithium partner, highlighted by our scale, access to geographically diverse, low-cost resources and long-term track record of reliability of supply and operating execution.

Specialties: We expect both net sales and profitability to be lower in 2024 year-over-year as we recover from reduced customer demand in certain markets, including consumer and industrial electronics, and maintain strong demand in other end-markets, such as pharmaceuticals, agriculture and oilfield services. We have taken measures to reduce the negative impact of lower demand, which we expect to partially offset the lower results in 2024.

On a longer-term basis, we continue to believe that improving global standards of living, widespread digitization, increasing demand for data management capacity and the potential for increasingly stringent fire safety regulations in developing markets are likely to drive continued demand for fire safety, bromine and lithium specialties products. We are focused on profitably growing our globally competitive production networks to serve all major bromine and lithium specialties consuming products and markets. The combination of our solid, long-term business fundamentals, strong cost position, product innovations and effective management of raw material costs should enable us to manage our business through end-market challenges and to capitalize on opportunities that are expected with favorable market trends in select end markets.

Ketjen: Total Ketjen results in 2024 are expected to increase year-over-year due to higher revenue and favorable product mix. The fluidized catalytic cracking (“FCC”) market is expected to remain stable. Hydroprocessing catalysts (“HPC”) demand is project-driven, but we have seen increased demand as refineries are taking turnarounds.

On a longer-term basis, we believe increased global demand for transportation fuels, new refinery start-ups and ongoing adoption of cleaner fuels will be the primary drivers of growth in our Ketjen business. We believe delivering superior end-use performance continues to be the most effective way to create sustainable value in the refinery catalysts industry. We also believe our technologies continue to provide significant performance and financial benefits to refiners challenged to meet tighter regulations around the world.

Corporate: We continue to focus on cash generation, working capital management and process efficiencies. We expect our global effective tax rate will vary based on the locations in which income is actually earned and remains subject to potential volatility from changing legislation in the United States, such as the Inflation Reduction Act and the recently released Pillar Two Global Anti-Base Erosion Rules (“Pillar Two”) which became effective in early 2024, and other tax jurisdictions. In 2024, we have taken actions as part of an effort that will focus on preserving our world-class resource advantages, optimizing our global conversion network, improving our cost competitiveness and efficiency, reducing capital intensity and enhancing our financial flexibility. As part of these measures, we stopped construction or deferred spending on certain capital projects, such as the Kemerton conversion plant noted above. In addition, we will incur severance and other restructuring charges associated with the Company’s transition to a new fully integrated functional operating model.

From time to time, we may evaluate the merits of any opportunities that may arise for acquisitions or other business development activities that will complement our business footprint. Additional information regarding our products, markets and financial performance is provided at our website, www.albemarle.com. Our website is not a part of this document nor is it incorporated herein by reference.

Results of Operations

The following data and discussion provides an analysis of certain significant factors affecting our results of operations during the periods included in the accompanying consolidated statements of (loss) income. Certain percentage changes are considered not meaningful (“NM”).

Third Quarter 2024 Compared to Third Quarter 2023

Net Sales

In thousandsQ3 2024Q3 2023$ Change% Change
Net sales$1,354,692$2,310,596$(955,904)(41)%
•$1.2 billion decrease primarily attributable to lower lithium carbonate and hydroxide market pricing in Energy Storage •$261.4 million increase attributable to higher sales volume in Energy Storage and Specialties •$1.2 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies

Gross (Loss) Profit

In thousandsQ3 2024Q3 2023$ Change% Change
Gross (loss) profit$(104,034)$54,934$(158,968)(289)%
Gross (loss) profit margin(7.7)%2.4%
▪Unfavorable pricing impacts primarily in Energy Storage, including the recognition of gross profit on converted inventory originally purchased from the Windfield joint venture, that was sold to third-party customers. The higher cost of goods sold of inventory purchased from Windfield is offset in the equity in net income of unconsolidated investments in the period the converted inventory is sold to third-party customers. ▪Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies ▪Partially offset by higher sales volume in Energy Storage and decreased commission expenses in Chile resulting from the lower pricing

Selling, General and Administrative (“SG&A”) Expenses

In thousandsQ3 2024Q3 2023$ Change% Change
Selling, general and administrative expenses$154,253$172,109$(17,856)(10)%
Percentage of Net sales11.4%7.4%
▪Reduced expenses as part of announced cost reduction efforts, including outside services and travel and entertainment costs

Restructuring Charges and Asset Write-Offs

In thousandsQ3 2024Q3 2023$ Change% Change
Restructuring charges and asset write-offs$828,146$1,757$826,389NM
•Capital project asset write-offs and associated contract cancellation costs recorded primarily related to stopping construction of Kemerton Train 3. The Company determined that these assets will not provide future value or will require significant re-engineering if the related projects are restarted. •Severance and other restructuring costs associated with placing Kemerton Train 2 into care and maintenance

Research and Development Expenses

In thousandsQ3 2024Q3 2023$ Change% Change
Research and development expenses$22,397$21,082$1,3156%
Percentage of Net sales1.7%0.9%

Interest and Financing Expenses

In thousandsQ3 2024Q3 2023$ Change% Change
Interest and financing expenses$(47,760)$(29,332)$(18,428)63%
•Lower capitalized interest in 2024 as major projects are completed

Other (Expenses) Income, Net

In thousandsQ3 2024Q3 2023$ Change% Change
Other (expenses) income, net$(22,256)$11,182$(33,438)(299)%
•$56.6 million decrease attributable to foreign exchange impacts from losses recorded in 2024. Foreign exchange loss in 2024 includes a loss of $16.2 million due to the reclass from accumulated other comprehensive loss related to the dedesignation of cash flow hedge. •2024 included losses of $5.0 million related to the fair market value adjustment of equity securities in public companies compared to $26.4 million of net losses for similar fair value adjustments in 2023 •$9.0 million increase attributable to interest income from higher cash balances in 2024 •$7.2 million gain resulting from insurance proceeds related to a prior legal matter in 2023

Income Tax Expense (Benefit)

In thousandsQ3 2024Q3 2023$ Change% Change
Income tax expense (benefit)$110,853$(8,551)$119,404NM
Effective income tax rate(9.4)%5.4%
•Change in geographic mix of earnings, with lower 2024 earnings in various jurisdictions •2024 included the impact from the valuation allowance for losses in our consolidated Australian entities and certain China entities •2024 included the impact of the 15% global minimum tax under Pillar Two

Equity in Net Income of Unconsolidated Investments

In thousandsQ3 2024Q3 2023$ Change% Change
Equity in net income of unconsolidated investments$229,058$470,306$(241,248)(51)%
▪Decreased earnings primarily due to lower pricing from the Windfield joint venture in Energy Storage ▪$13.1 million increase attributable to unfavorable foreign exchange impacts from the Windfield joint venture

Net Income Attributable to Noncontrolling Interests

In thousandsQ3 2024Q3 2023$ Change% Change
Net income attributable to noncontrolling interests$(8,351)$(18,160)$9,809(54)%
▪Decrease in consolidated income related to our Jordan Bromine Company Limited (“JBC”) joint venture primarily due to lower pricing

Net (Loss) Income Attributable to Albemarle Corporation

In thousandsQ3 2024Q3 2023$ Change% Change
Net (loss) income attributable to Albemarle Corporation$(1,068,992)$302,533$(1,371,525)NM
Percentage of Net sales(78.9)%13.1%
Net (loss) income attributable to Albemarle Corporation common shareholders$(1,110,679)$302,533$(1,413,212)NM
Basic (loss) earnings per share attributable to common shareholders$(9.45)$2.58$(12.03)NM
Diluted (loss) earnings per share attributable to common shareholders$(9.45)$2.57$(12.02)NM
▪Decrease in 2024 results due to reasons noted above ▪Net (loss) income attributable to Albemarle Corporation common shareholders in 2024 includes $41.7 million reduction for mandatory convertible preferred stock dividends

Other Comprehensive Income (Loss), Net of Tax

In thousandsQ3 2024Q3 2023$ Change% Change
Other comprehensive income (loss), net of tax$167,939$(183,045)$350,984NM
▪Foreign currency translation and other$158,724$(143,957)$302,681NM
▪2024 included favorable movements in the Euro of approximately $153 million, the Japanese Yen of approximately $12 million, the Taiwanese Dollar of approximately $3 million and a net favorable variance in various other currencies of $4 million, partially offset by unfavorable movements in the Chinese Renminbi of approximately $12 million ▪2023 included unfavorable movements in the Euro of approximately $134 million, the Japanese Yen of approximately $4 million and a net unfavorable variance in various other currencies of $6 million
▪Cash flow hedge$9,215$(39,088)$48,303NM

Segment Information Overview. We have identified three reportable segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. Our reportable business segments consist of: (1) Energy Storage, (2) Specialties and (3) Ketjen.

The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension and OPEB service cost (which represents the benefits earned by active employees during the period) and amortization of prior service cost or benefit are allocated to the reportable segments and Corporate, whereas the remaining components of pension and OPEB benefits cost or credit (“Non-operating pension and OPEB items”) are included in Corporate. Segment data includes intersegment transfers of raw materials at cost and allocations for certain corporate costs.

Our chief operating decision maker uses adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’s business segments and to allocate resources. Effective January 1, 2024, the Company changed its definition of adjusted EBITDA for financial accounting purposes. The updated definition includes Albemarle’s share of the pre-tax earnings of the Windfield joint venture, whereas the prior definition included Albemarle’s share of Windfield earnings net of tax. This calculation is consistent with the definition of adjusted EBITDA used in the leverage financial covenant calculation in the February 9, 2024 amendment to our revolving, unsecured amended and restated credit agreement dated October 28, 2022 (as so amended, the 2022 Credit Agreement”), which is a material agreement for the Company and aligns the information presented to various stakeholders. This presentation more closely represents the materiality and financial contribution of the strategic investment in Windfield to the Company’s earnings, and more closely represents a measure of EBITDA. The Company’s updated definition of adjusted EBITDA is earnings before interest and financing expenses, income tax expenses, the proportionate share of Windfield income tax expense, depreciation and amortization, as adjusted on a consistent basis for certain non-operating, non-recurring or unusual items in a balanced manner and on a segment basis. These non-operating, non-recurring or unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, certain litigation and arbitration costs and charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA for business and enterprise planning purposes and as a significant component in the calculation of performance-based compensation for management and other employees. The Company has reported adjusted EBITDA because management believes it provides additional useful measurements to review the Company’s operations, provides transparency to investors and enables period-to-period comparability of financial performance. Total adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Total adjusted EBITDA should not be considered as an alternative to Net (loss) income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP. Adjusted EBITDA for the prior period has been recast to conform to the current year presentation.

Three Months Ended September 30,Percentage Change
2024%2023%2024 vs 2023
(In thousands, except percentages)
Net sales:
Energy Storage$767,29156.6%$1,697,16373.4%(55)%
Specialties342,37625.3%352,72215.3%(3)%
Ketjen245,02518.1%260,71111.3%(6)%
Total net sales$1,354,692100.0%$2,310,596100.0%(41)%
Adjusted EBITDA:
Energy Storage$142,88767.5%$604,94892.7%(76)%
Specialties56,27326.6%46,3077.1%22%
Ketjen35,47316.8%15,1592.3%134%
Total segment adjusted EBITDA234,633110.9%666,414102.1%(65)%
Corporate(23,135)(10.9)%(13,442)(2.1)%72%
Total adjusted EBITDA$211,498100.0%$652,972100.0%(68)%

See below for a reconciliation of total segment adjusted EBITDA to consolidated Net (loss) income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):

Three Months Ended September 30,
20242023
Total segment adjusted EBITDA$234,633$666,414
Corporate expenses, net(23,135)(13,442)
Depreciation and amortization(163,502)(105,445)
Interest and financing expenses(47,760)(29,332)
Income tax (expense) benefit(110,853)8,551
Proportionate share of Windfield income tax expense(a)(99,523)(199,685)
Acquisition and integration related costs(b)(439)(10,043)
Restructuring charges and asset write-offs(c)(860,864)(1,757)
Non-operating pension and OPEB items331(620)
Loss in fair value of public equity securities(d)(4,983)(26,445)
Other(e)7,10314,337
Net (loss) income attributable to Albemarle Corporation$(1,068,992)$302,533

(a)Albemarle’s 49% ownership interest in the reported income tax expense of the Windfield joint venture.

(b)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A.

(c)See Note 9, “Restructuring Charges and Asset Write-offs,” to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details.

(d)Loss of $5.0 million and $26.4 million recorded in Other (expenses) income, net for the three months ended September 30, 2024 and 2023, respectively, resulting from the net change in fair value of investments in public equity securities.

(e)Included amounts for the three months ended September 30, 2024 recorded in:

  • SG&A - $0.1 million of expenses related to certain historical legal matters.

  • Other (expenses) income, net - $9.2 million of income from PIK dividends of preferred equity in a W.R. Grace & Co. (“Grace”) subsidiary, partially offset by a $2.0 million loss resulting from the adjustment of indemnification related to a previously disposed business.

Included amounts for the three months ended September 30, 2023 recorded in:

  • SG&A - $0.7 million of facility closure expenses related to offices in Germany and $0.3 million of a loss from the sale of legacy properties not part of our operations.

  • Other (expenses) income, net - $8.2 million gain in the fair value of preferred equity of a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds related to a prior legal matter.

Energy Storage

In thousandsQ3 2024Q3 2023$ Change% Change
Net sales$767,291$1,697,163$(929,872)(55)%
•$1.2 billion decrease attributable to unfavorable pricing impacts, primarily in battery- and tech-grade carbonate and hydroxide sold under index-referenced and variable-priced contracts, and mix •$267.6 million increase attributable to higher sales volume, primarily driven by the La Negra III/IV expansion in Chile, as well as sales of chemical-grade spodumene to meet growing customer demand
Adjusted EBITDA$142,887$604,948$(462,061)(76)%
•Unfavorable pricing impacts in lithium carbonate and hydroxide •Decreased equity in net income from the Windfield joint venture, driven by lower spodumene pricing •Higher sales volume •Savings from designed restructuring and productivity improvements •Decreased commission expenses in Chile resulting from the lower pricing •$23.9 million increase attributable to favorable currency translation resulting from the weaker U.S. Dollar against various currencies

Specialties

In thousandsQ3 2024Q3 2023$ Change% Change
Net sales$342,376$352,722$(10,346)(3)%
•$22.6 million decrease attributable to unfavorable pricing impacts •$13.8 million increase attributable to higher sales volumes related to increased demand across all products •$1.5 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$56,273$46,307$9,96622%
•Unfavorable pricing impacts •Higher sales volume related to increased demand across all products •Decreased manufacturing costs resulting from higher production volume and productivity initiatives •$1.0 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies

Ketjen

In thousandsQ3 2024Q3 2023$ Change% Change
Net sales$245,025$260,711$(15,686)(6)%
•$20.0 million decrease attributable to lower sales volume, primarily due to the timing of sales •$4.9 million increase attributable to favorable pricing impacts due to the product mix
Adjusted EBITDA$35,473$15,159$20,314134%
•Favorable product mix, primarily in the clean fuel technologies (“CFT”) business •Lower manufacturing input and fixed costs

Corporate

In thousandsQ3 2024Q3 2023$ Change% Change
Adjusted EBITDA$(23,135)$(13,442)$(9,693)72%
▪$27.3 million decrease attributable to unfavorable currency exchange impacts, net of a $13.1 million increase in foreign exchange impacts from our Windfield joint venture ▪Reduced expenses as part of announced cost reduction efforts, including outside services and travel and entertainment costs

First Nine Months 2024 Compared to First Nine Months 2023

Net Sales

In thousandsYTD 2024YTD 2023$ Change% Change
Net sales$4,145,813$7,261,038$(3,115,225)(43)%
•$4.7 billion decrease primarily attributable to lower lithium carbonate and hydroxide market pricing in Energy Storage •$1.6 billion increase attributable to higher sales volume in all businesses, primarily Energy Storage •$37.5 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies

Gross (Loss) Profit

In thousandsYTD 2024YTD 2023$ Change% Change
Gross (loss) profit$(75,674)$1,889,961$(1,965,635)NM
Gross (loss) profit margin(1.8)%26.0%
▪Unfavorable pricing impacts primarily in Energy Storage, including the recognition of gross profit on converted inventory originally purchased from the Windfield joint venture, that was sold to third-party customers. The higher cost of goods sold of inventory purchased from Windfield is offset in the equity in net income of unconsolidated investments in the period the converted inventory is sold to third-party customers. ▪Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies ▪Higher sales volume in Energy Storage and decreased commission expenses in Chile resulting from the lower pricing

Selling, General and Administrative Expenses

In thousandsYTD 2024YTD 2023$ Change% Change
Selling, general and administrative expenses$482,052$716,046$(233,994)(33)%
Percentage of Net sales11.6%9.9%
▪2023 included a $218.5 million legal accrual recorded for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP ▪Reduced expenses as part of announced cost reduction efforts, including outside services and travel and entertainment costs ▪Higher compensation-related expenses across Corporate and each business

Restructuring Charges and Asset Write-Offs

In thousandsYTD 2024YTD 2023$ Change% Change
Restructuring charges and asset write-offs$1,156,522$9,196$1,147,326NM
▪Capital project asset write-offs and associated contract cancellation costs recorded in 2024 primarily related to stopping construction of Kemerton Trains 3 and 4. The Company determined that these assets will not provide future value or will require significant re-engineering if the related projects are restarted. ▪Severance and other restructuring costs associated with placing Kemerton Train 2 into care and maintenance in 2024 ▪2023 included separation and other severance costs to employees in Corporate and the Ketjen business

Research and Development Expenses

In thousandsYTD 2024YTD 2023$ Change% Change
Research and development expenses$66,699$62,972$3,7276%
Percentage of Net sales1.6%0.9%

Interest and Financing Expenses

In thousandsYTD 2024YTD 2023$ Change% Change
Interest and financing expenses$(120,916)$(81,686)$(39,230)48%
▪Increased debt balance outstanding during the first nine months of 2024, primarily in variable-rate commercial paper paid off in March 2024 ▪Lower capitalized interest in 2024 •Increased amortization of debt discounts in 2024 primarily from interest-free loan entered into in the second quarter of 2023

Other Income, Net

In thousandsYTD 2024YTD 2023$ Change% Change
Other income, net$61,311$147,628$(86,317)(58)%
•2024 included losses of $65.9 million related to the sale and fair market value adjustment of equity securities in public companies compared to $34.4 million of net gains for similar fair value adjustments in 2023 •$35.8 million decrease attributable to foreign exchange gains in 2024 compared to 2023. Foreign exchange gains in 2024 are net of a loss of $21.5 million due to the reclass from accumulated other comprehensive loss related to the dedesignation of cash flow hedge. •$17.3 million gain primarily from the sale of assets at a site not part of our operations in 2024 •$15.9 million increase of income from PIK dividends of preferred equity in a Grace subsidiary in 2024

Income Tax Expense

In thousandsYTD 2024YTD 2023$ Change% Change
Income tax expense$76,472$311,399$(234,927)(75)%
Effective income tax rate(4.2)%26.7%
•Change in geographic mix of earnings, with lower 2024 earnings in various jurisdictions •2024 included the impact of the valuation allowance for losses in our consolidated Australian entities and certain entities in China •2024 included the impact of the 15% global minimum tax under Pillar Two •2023 included tax impact of a non-deductible $218.5 million legal accrual recorded for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP

Equity in Net Income of Unconsolidated Investments

In thousandsYTD 2024YTD 2023$ Change% Change
Equity in net income of unconsolidated investments$696,436$1,417,545$(721,109)(51)%
▪Decreased earnings from lower pricing from the Windfield joint venture in Energy Storage

Net Income Attributable to Noncontrolling Interests

In thousandsYTD 2024YTD 2023$ Change% Change
Net income attributable to noncontrolling interests$(34,154)$(82,679)$48,525(59)%
▪Decrease in consolidated income related to our JBC joint venture primarily due to lower pricing

Net (Loss) Income Attributable to Albemarle Corporation

In thousandsYTD 2024YTD 2023$ Change% Change
Net (loss) income attributable to Albemarle Corporation$(1,254,742)$2,191,156$(3,445,898)NM
Percentage of Net sales(30.3)%30.2%
Net (loss) income attributable to Albemarle Corporation common shareholders$(1,349,701)$2,191,156$(3,540,857)NM
Basic (loss) earnings per share$(11.49)$18.68$(30.17)NM
Diluted (loss) earnings per share$(11.49)$18.60$(30.09)NM
▪Decrease in 2024 results due to reasons noted above ▪Net (loss) income attributable to Albemarle Corporation common shareholders in 2024 includes $95.0 million reduction for mandatory convertible preferred stock dividends

Other Comprehensive Income (Loss), Net of Tax

In thousandsYTD 2024YTD 2023$ Change% Change
Other comprehensive income (loss), net of tax$58,925$(140,337)$199,262NM
▪Foreign currency translation and other$61,753$(103,376)$165,129NM
▪2024 included favorable movements in the Euro of approximately $79 million, partially offset by unfavorable movements in the Brazilian Real of approximately $8 million, the Chinese Renminbi of approximately $3 million, the Taiwanese Dollar of approximately $3 million and a net unfavorable variance in various other currencies of $4 million ▪2023 included unfavorable movements in the Euro of approximately $90 million, the Japanese Yen of approximately $13 million, partially offset by a net favorable variance in various other currencies of less than $1 million
▪Cash flow hedge$(2,828)$(36,961)$34,133NM

Segment Information Overview. Summarized financial information concerning our reportable segments is shown in the following tables.

Nine Months Ended September 30,Percentage Change
2024%2023%2024 vs 2023
(In thousands, except percentages)
Net sales:
Energy Storage$2,398,29957.8%$5,403,91074.5%(56)%
Specialties993,04124.0%1,142,80215.7%(13)%
Ketjen754,47318.2%714,3269.8%6%
Total net sales$4,145,813100.0%$7,261,038100.0%(43)%
Adjusted EBITDA:
Energy Storage$623,86270.2%$3,337,72090.7%(81)%
Specialties155,62917.5%268,6657.3%(42)%
Ketjen95,28810.7%72,5842.0%31%
Total segment adjusted EBITDA874,77998.4%3,678,969100.0%(76)%
Corporate14,3151.6%1,949—%NM
Total adjusted EBITDA$889,094100.0%$3,680,918100.0%(76)%

See below for a reconciliation of total segment adjusted EBITDA to consolidated Net (loss) income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):

Nine Months Ended September 30,
20242023
Total segment adjusted EBITDA$874,779$3,678,969
Corporate expenses, net14,3151,949
Depreciation and amortization(425,532)(285,801)
Interest and financing expenses(120,916)(81,686)
Income tax expense(76,472)(311,399)
Proportionate share of Windfield income tax expense(a)(292,992)(599,646)
Acquisition and integration related costs(b)(3,927)(21,653)
Restructuring charges and asset write-offs(c)(1,194,614)(9,196)
Non-operating pension and OPEB items993(1,833)
(Loss) gain in fair value on public equity securities(d)(65,922)34,401
Legal accrual(e)—(218,510)
Other(f)35,5465,561
Net (loss) income attributable to Albemarle Corporation$(1,254,742)$2,191,156

(a)Albemarle’s 49% ownership interest in the reported income tax expense of the Windfield joint venture.

(b)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A.

(c)See Note 9, “Restructuring Charges and Asset Write-offs,” to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details.

(d)Loss of $33.7 million recorded in Other income, net for the nine months ended September 30, 2024 resulting from the sale of investments in public equity securities and a (loss) gain of ($32.2) million and $34.4 million recorded in Other income, net for the nine months ended September 30, 2024 and 2023, respectively, resulting from the net change in fair value of investments in public equity securities.

(e)Accrual recorded in SG&A representing for the agreements in principle to resolve a previously disclosed legal matter with the DOJ and SEC. This matter was settled in the third quarter of 2023.

(f)Included amounts for the nine months ended September 30, 2024 recorded in:

  • Cost of goods sold - $1.4 million of expenses related to non-routine labor and compensation related costs that are outside normal compensation arrangements.

  • SG&A - $5.3 million of expenses related to certain historical legal and environmental matters.

  • Other income, net - $26.8 million of income from PIK dividends of preferred equity in a Grace subsidiary, a $17.3 million gain primarily from the sale of assets at a site not part of our operations, a $0.6 million gain from an updated cost estimate of an environmental reserve at a site not part of our operations and a $0.4 million net gain primarily resulting from the adjustment of

indemnification related to previously disposed businesses, partially offset by $2.9 million of charges for asset retirement obligations at a site not part of our operations.

Included amounts for the nine months ended September 30, 2023 recorded in:

  • SG&A - $2.1 million of facility closure expenses related to offices in Germany, $1.9 million of charges primarily for environmental reserves at sites not part of our operations and $1.0 million primarily related to shortfall contributions for a multiemployer plan financial improvement plan.

  • Other income, net - $10.9 million gain in the fair value of preferred equity of a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds of a prior legal matter, partially offset by $3.9 million of a loss resulting from the adjustment of indemnification related to previously disposed businesses and $3.6 million of charges for asset retirement obligations at a site not part of our operations.

Energy Storage

In thousandsYTD 2024YTD 2023$ Change% Change
Net sales$2,398,299$5,403,910$(3,005,611)(56)%
•$4.5 billion decrease attributable to unfavorable pricing impacts, primarily in battery- and tech-grade carbonate and hydroxide sold under index-referenced and variable-priced contracts, and mix •$1.5 billion increase attributable to higher sales volume, primarily driven by the La Negra III/IV expansion in Chile, as well as sales of chemical-grade spodumene to meet growing customer demand •$30.3 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$623,862$3,337,720$(2,713,858)(81)%
•Unfavorable pricing impacts in lithium carbonate and hydroxide •Decreased equity in net income from the Windfield joint venture, driven by lower spodumene pricing •Higher sales volume •Decreased commission expenses in Chile resulting from the lower pricing •Savings from designed restructuring and productivity improvements •$66.9 million increase attributable to favorable currency translation resulting from the weaker U.S. Dollar against various currencies

Specialties

In thousandsYTD 2024YTD 2023$ Change% Change
Net sales$993,041$1,142,802$(149,761)(13)%
•$167.2 million decrease attributable to unfavorable pricing impacts •$24.0 million increase attributable to higher sales volume related to increased demand across all products •$6.5 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$155,629$268,665$(113,036)(42)%
•Unfavorable pricing impacts •Decreased manufacturing costs resulting from higher production volume and productivity initiatives •Higher sales volume related to increased demand across all products •Decrease in noncontrolling interests to JBC joint venture resulting from lower pricing •$6.4 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies

Ketjen

In thousandsYTD 2024YTD 2023$ Change% Change
Net sales$754,473$714,326$40,1476%
•$33.0 million increase attributable to higher sales volume, primarily in the CFT division •$7.9 million increase attributable to favorable product mix, primarily in the CFT division
Adjusted EBITDA$95,288$72,584$22,70431%
•Higher sales volume and favorable product mix, primarily in the CFT division •Increased manufacturing input costs •2023 included a $24 million gain recorded for insurance claim receipts

Corporate

In thousandsYTD 2024YTD 2023$ Change% Change
Adjusted EBITDA$14,315$1,949$12,366NM
▪Reduced expenses as part of announced cost reduction efforts, including outside services and travel and entertainment costs ▪$18.6 million decrease attributable to unfavorable currency exchange impacts

Financial Condition and Liquidity

Overview

The principal uses of cash in our business generally have been capital investments and resource development costs, funding working capital, and service of debt. We also make contributions to our defined benefit pension plans, pay dividends to our shareholders and have the ability to repurchase shares of our common stock. Historically, cash to fund the needs of our business has been principally provided by cash from operations, debt financing and equity issuances.

We are continually focused on working capital efficiency particularly in the areas of accounts receivable, payables and inventory. We anticipate that cash on hand, cash provided by operating activities, proceeds from divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund capital expenditures and other investing activities, fund pension contributions and pay dividends for the foreseeable future.

Cash Flow

During the first nine months of 2024, cash on hand, cash provided by operations and net proceeds from the issuance of mandatory convertible preferred stock of $2.2 billion funded the repayment of a net balance of $620.0 million of commercial paper, $1.3 billion of capital expenditures for plant, machinery and equipment, dividends to common shareholders of $140.9 million and dividends to mandatory convertible preferred shareholders of $81.1 million. Our operations provided $701.4 million of cash flows during the first nine months of 2024, as compared to $1.4 billion for the first nine months of 2023. The change compared to prior year was primarily due to decreased earnings from the Energy Storage segment, driven by lower lithium market prices, and lower dividends received from unconsolidated investments, partially offset by positive working capital changes year-over-year of $2.2 billion. The inflow from working capital in 2024 was primarily driven by the impact of lower lithium pricing in inventories and accounts receivable. This was partially offset by lower accounts payable driven by similar lower lithium pricing. Overall, our cash and cash equivalents increased by $774.6 million to $1.7 billion at September 30, 2024 from $889.9 million at December 31, 2023.

Capital expenditures for the nine-month period ended September 30, 2024 of $1.3 billion were primarily associated with plant, machinery and equipment. We expect our capital expenditures to be at the lower-end of $1.7 billion to $1.8 billion in 2024, primarily for Energy Storage growth and capacity increases, including in Chile, China and the U.S., as well as productivity and continuity of operations projects in all segments. Capital expenditures in 2024 also include spending for construction of Kemerton Trains 3 and 4 and certain other capital projects, which were stopped as part of our announced comprehensive review of our cost and operating structure.

In addition, in stopping construction of Kemerton Trains 3 and 4, and putting Kemerton Train 2 on care and maintenance, the Company incurred $72.7 million of related contract cancellation costs and required charges under take or pay contracts, as well as $27.4 million of severance charges. The Company’s actions regarding Kemerton are part of a broader effort that will focus on preserving its world-class resource advantages, optimizing its global conversion network, improving the Company’s cost competitiveness and efficiency, reducing capital intensity and enhancing the Company’s financial flexibility. As part of this effort, on October 7, 2024, the Company announced it will transition to a new operating structure effective November 1, 2024. The new operating structure will transition to a fully integrated functional model (excluding Ketjen) from a global business unit model. As a result, the Company expects to record severance and employee benefits of approximately $30 million to $50 million and other restructuring costs of approximately $25 million to $30 million associated with these actions in the fourth quarter of 2024.

In January 2024, the Company sold equity securities of a public company for proceeds of approximately $81.5 million. As a result of the sale, the Company realized a loss of $33.7 million in the nine months ended September 30, 2024.

On March 8, 2024, the Company issued 46,000,000 depositary shares, each representing a 1/20th interest in a share of Preferred Stock. The 2,300,000 shares of Mandatory Convertible Preferred Stock issued had a $1,000 per share liquidation preference. As a result of this transaction, the Company received cash proceeds of approximately $2.2 billion, net of underwriting fees and offering costs. The Company intends to use the proceeds for general corporate purposes, which may

include, among other uses, funding growth capital expenditures, such as the construction and expansion of lithium operations in Australia and China that are significantly progressed or near completion, following the repayment of commercial paper using a portion of the proceeds in the first quarter of 2024. See Note 8, “Equity,” for additional information.

Net current assets were $2.8 billion and $1.7 billion at September 30, 2024 and December 31, 2023, respectively. The increase is primarily due to the increased cash and cash equivalents balance as a result of the $2.2 billion of net proceeds from the issuance of Mandatory Convertible Preferred Stock in March 2024, and the resulting paydown of commercial paper. In addition, accounts receivable, inventory and accounts payable balances all decreased from December 31, 2023 due to the lower lithium market prices. Additional changes in the components of net current assets are primarily due to the timing of the sale of goods and other ordinary transactions leading up to the balance sheet dates. The additional changes are not the result of any policy changes by the Company, and do not reflect any change in either the quality of our net current assets or our expectation of success in converting net working capital to cash in the ordinary course of business.

On July 16, 2024, our board of directors declared a cash dividend of $0.405, which was paid on October 1, 2024 to shareholders of record at the close of business as of September 13, 2024.

At September 30, 2024 and December 31, 2023, our cash and cash equivalents included $980.8 million and $857.6 million, respectively, held by our foreign subsidiaries. The majority of these foreign cash balances are associated with earnings that we have asserted are indefinitely reinvested and which we plan to use to support our continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, research, operating expenses or other similar cash needs of our foreign operations. From time to time, we repatriate cash associated with earnings from our foreign subsidiaries to the U.S. for normal operating needs through intercompany dividends, but only from subsidiaries whose earnings we have not asserted to be indefinitely reinvested or whose earnings qualify as “previously taxed income” as defined by the Internal Revenue Code. During the first nine months of 2024 and 2023, we repatriated $28.8 million and $3.0 million, respectively, of cash as part of these foreign earnings cash repatriation activities.

While we continue to closely monitor our cash generation, working capital management and capital spending in light of continuing uncertainties in the global economy, we believe that we will continue to have the financial flexibility and capability to opportunistically fund future growth initiatives. Additionally, we anticipate that future capital spending, including business acquisitions and other cash outlays, should be financed primarily with cash flow provided by operations, cash on hand and additional issuances of debt or equity securities, as needed.

Long-Term Debt

We currently have the following notes outstanding:

Issue Month/YearPrincipal (in millions)Interest RateInterest Payment DatesMaturity Date
November 2019€377.11.125%November 25November 25, 2025
May 2022(a)$650.04.65%June 1 and December 1June 1, 2027
November 2019€500.01.625%November 25November 25, 2028
November 2019(a)$171.63.45%May 15 and November 15November 15, 2029
May 2022(a)$600.05.05%June 1 and December 1June 1, 2032
November 2014(a)$350.05.45%June 1 and December 1December 1, 2044
May 2022(a)$450.05.65%June 1 and December 1June 1, 2052

(a) Denotes senior notes.

Our senior notes are senior unsecured obligations and rank equally with all our other senior unsecured indebtedness from time to time outstanding. The notes are effectively subordinated to all of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries. As is customary for such long-term debt instruments, each series of notes outstanding has terms that allow us to redeem the notes before maturity, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of these notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis using the comparable government rate (as defined in the indentures governing these notes) plus between 25 and 40 basis points, depending on the series of notes, plus, in each case, accrued interest thereon to the date of redemption. Holders may require us to purchase such notes at 101% upon a change of control triggering event, as defined in the indentures. These notes are subject to typical events of default, including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness of $40 million or more caused by a nonpayment default.

Our Euro notes issued in 2019 are unsecured and unsubordinated obligations and rank equally in right of payment to all our other unsecured senior obligations. The Euro notes are effectively subordinated to all of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries. As is customary for such long-term debt instruments, each series of notes outstanding has terms that allow us to redeem the notes before their maturity, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal thereof and interest thereon (exclusive of interest accrued to, but excluding, the date of redemption) discounted to the redemption date on an annual basis using the bond rate (as defined in the indentures governing these notes) plus between 25 and 35 basis points, depending on the series of notes, plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of redemption. Holders may require us to purchase such notes at 101% upon a change of control triggering event, as defined in the indentures. These notes are subject to typical events of default, including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness exceeding $100 million caused by a nonpayment default.

Given current economic conditions, specifically around the market pricing of lithium, and the related impact on the Company’s future earnings, on October 31, 2024, we further amended the 2022 Credit Agreement, which provides for borrowings of up to $1.5 billion and matures on October 28, 2027. Borrowings under the 2022 Credit Agreement bear interest at variable rates based on a benchmark rate depending on the currency in which the loans are denominated, plus an applicable margin which ranges from 0.910% to 1.375%, depending on the Company’s credit rating from Standard & Poor’s Ratings Services LLC (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Inc. (“Fitch”). With respect to loans denominated in U.S. dollars, interest is calculated using the term Secured Overnight Financing Rate (“SOFR”) plus a term SOFR adjustment of 0.10%, plus the applicable margin. The applicable margin on the facility was 1.20% as of September 30, 2024. As of September 30, 2024 there were no borrowings outstanding under the 2022 Credit Agreement.

Borrowings under the 2022 Credit Agreement are conditioned upon satisfaction of certain customary conditions precedent, including the absence of defaults. The October 2024 amendment was entered into to modify the financial covenants under the 2022 Credit Agreement to avoid a potential covenant violation over the following 18 months given the current market pricing of lithium. The amended 2022 Credit Agreement subjects the Company to two financial covenants, as well as customary affirmative and negative covenants. The amended first financial covenant requires that the ratio of (a) (i) the Company’s consolidated net funded debt plus a proportionate amount of Windfield’s net funded debt less (ii) the Company’s unrestricted cash and cash equivalents plus a proportionate amount of Windfield’s unrestricted cash and cash equivalents (up to a specified amount) to (b) consolidated Windfield-Adjusted EBITDA (as such terms are defined in the 2022 Credit Agreement) be less than or equal to (i) 5.50:1.0 as of the end of the third quarter of 2024, (ii) 4.00:1.0 as of the end of the fourth quarter of 2024, (iii) 4.75:1.0 as of the end of the first quarter of 2025, (iv) 5.75:1.0 as of the end of the second quarter of 2025, (v) 5.50:1.0 as of the end of the third quarter of 2025, (vi) 5.00:1.0 as of the end of fourth quarter of 2025, (vii) 4.75:1.0 as of the end of each of first and second quarter of 2026, and (viii) 3.50:1.0 as of the end of the third quarter of 2026 and each fiscal quarter thereafter through the third quarter of 2027. The maximum permitted leverage ratios described above are subject to adjustment in accordance with the terms of the 2022 Credit Agreement upon the consummation of an acquisition after June 30, 2026 if the consideration includes cash proceeds from the issuance of funded debt in excess of $500 million.

Beginning in the fourth quarter of 2024, the amended second financial covenant requires that the ratio of the Company’s consolidated EBITDA to consolidated interest charges (as such terms are defined in the 2022 Credit Agreement) be no less than (i) 1.00:1.0 for fiscal quarters through June 30, 2025, (ii) 2.00:1 for the third quarter of 2025, (iii) 2.50:1 for the fourth quarter of 2025, and (iv) 3.00:1.0 for all fiscal quarters thereafter. The 2022 Credit Agreement also contains customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults to other material indebtedness. The occurrence of an event of default under the 2022 Credit Agreement could result in all loans and other obligations becoming immediately due and payable and the commitments under the 2022 Credit Agreement being terminated. Following the $2.2 billion issuance of mandatory convertible preferred stock in March 2024 and the amendments to the financial covenants, the Company expects to maintain compliance with the amended financial covenants in the near future. However, a significant downturn in lithium market prices or demand could impact the Company’s ability to maintain compliance with its amended financial covenants and it could require the Company to seek additional amendments to the 2022 Credit Agreement and/or issue debt or equity securities to fund its activities and maintain financial flexibility. If the Company were unable to obtain such necessary additional amendments, this could lead to an event of default and its lenders could require the Company to repay its outstanding debt. In that situation, the Company may not be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay the lenders.

On May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecured commercial paper notes (the “Commercial Paper Notes”) from time-to-time. On May 17, 2023, we entered into definitive documentation to increase the size of our existing commercial paper program. The maximum aggregate face amount of Commercial Paper Notes outstanding at any time is $1.5 billion (up from $750 million prior to the increase). The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate

purposes, including the repayment of other debt of the Company. The 2022 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstanding under the 2022 Credit Agreement and the Commercial Paper Notes will not exceed the $1.5 billion current maximum amount available under the 2022 Credit Agreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be sold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The maturities of the Commercial Paper Notes will vary but may not exceed 397 days from the date of issue. The definitive documents relating to the commercial paper program contain customary representations, warranties, default and indemnification provisions. During the nine months ended September 30, 2024, we repaid a net amount of $620.0 million of commercial paper notes using the net proceeds received from the issuance of mandatory convertible preferred stock.

In the second quarter of 2023, the Company received a loan of $300.0 million to be repaid in five equal annual installments beginning on December 31, 2026. This interest-free loan was discounted using an imputed interest rate of 5.5% and the Company will amortize that discount through Interest and financing expenses over the term of the loan.

When constructing new facilities or making major enhancements to existing facilities, we may have the opportunity to enter into incentive agreements with local government agencies in order to reduce certain state and local tax expenditures. Under these agreements, we transfer the related assets to various local government entities and receive bonds. We immediately lease the facilities from the local government entities and have an option to repurchase the facilities for a nominal amount upon tendering the bonds to the local government entities at various predetermined dates. The bonds and the associated obligations for the leases of the facilities offset, and the underlying assets are recorded in property, plant and equipment. We currently have the ability to transfer up to $540 million in assets under these arrangements. At September 30, 2024 and December 31, 2023, there were $74.5 million and $14.3 million, respectively, of bonds outstanding under these arrangements.

The non-current portion of our long-term debt amounted to $3.57 billion at September 30, 2024, compared to $3.54 billion at December 31, 2023. In addition, at September 30, 2024, we had the ability to borrow $1.5 billion under our commercial paper program and the 2022 Credit Agreement, and $222.8 million under other existing lines of credit, subject to various financial covenants under the 2022 Credit Agreement. We have the ability and intent to refinance our borrowings under our other existing lines of credit with borrowings under the 2022 Credit Agreement, as applicable. Therefore, the amounts outstanding under those lines of credit, if any, are classified as long-term debt. We believe that at September 30, 2024 we were, and currently are, in compliance with all of our debt covenants.

Off-Balance Sheet Arrangements

In the ordinary course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, including bank guarantees and letters of credit, which totaled approximately $126.0 million at September 30, 2024. None of these off-balance sheet arrangements has, or is likely to have, a material effect on our current or future financial condition, results of operations, liquidity or capital resources.

Other Obligations

Our contractual obligations have not significantly changed, based on our ordinary business activities and projected capital expenditures noted above, from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2023.

Total expected 2024 contributions to our domestic and foreign qualified and nonqualified pension plans, including the Albemarle Corporation Supplemental Executive Retirement Plan, are expected to approximate $14 million. We may choose to make additional pension contributions in excess of this amount. We have made contributions of $11.9 million to our domestic and foreign pension plans (both qualified and nonqualified) during the nine-month period ended September 30, 2024.

The liability related to uncertain tax positions, including interest and penalties, recorded in Other noncurrent liabilities totaled $240.1 million at September 30, 2024 and $220.6 million at December 31, 2023. Related assets for corresponding offsetting benefits recorded in Other assets totaled $74.4 million at September 30, 2024 and $73.0 million at December 31, 2023. We cannot estimate the amounts of any cash payments associated with these liabilities for the remainder of 2024 or the next twelve months, and we are unable to estimate the timing of any such cash payments in the future at this time.

We are subject to federal, state, local and foreign requirements regulating the handling, manufacture and use of materials (some of which may be classified as hazardous or toxic by one or more regulatory agencies), the discharge of materials into the environment and the protection of the environment. To our knowledge, we are currently complying, and expect to continue to comply, in all material respects with applicable environmental laws, regulations, statutes and ordinances. Compliance with existing federal, state, local and foreign environmental protection laws is not expected to have a material effect on capital expenditures, earnings or our competitive position, but the costs associated with increased legal or regulatory requirements could have an adverse effect on our operating results.

Among other environmental requirements, we are subject to the federal Superfund law, and similar state laws, under which we may be designated as a potentially responsible party (“PRP”), and may be liable for a share of the costs associated with cleaning up various hazardous waste sites. Management believes that in cases in which we may have liability as a PRP, our liability for our share of cleanup is de minimis. Further, almost all such sites represent environmental issues that are quite mature and have been investigated, studied and in many cases settled. In de minimis situations, our policy generally is to negotiate a consent decree and to pay any apportioned settlement, enabling us to be effectively relieved of any further liability as a PRP, except for remote contingencies. In other than de minimis PRP matters, our records indicate that unresolved PRP exposures should be immaterial. We accrue and expense our proportionate share of PRP costs. Because management has been actively involved in evaluating environmental matters, we are able to conclude that the outstanding environmental liabilities for unresolved PRP sites should not have a material adverse effect upon our results of operations or financial condition.

Liquidity Outlook

We anticipate that cash on hand and cash provided by operating activities, divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund any capital expenditures, make acquisitions, make pension contributions and pay dividends for the foreseeable future. We also could issue additional debt or equity securities to fund these activities in an effort to maintain our financial flexibility. Our main focus in the short-term, during the continued uncertainty surrounding the global economy, including lithium market pricing and recent inflationary trends, is to continue to maintain financial flexibility by continuing our cost savings initiative, while still protecting our employees and customers, committing to shareholder returns and maintaining an investment grade rating. Over the next three years, in terms of uses of cash, we will continue to invest in growth of the businesses and return value to shareholders. Additionally, we will continue to evaluate the merits of any opportunities that may arise for acquisitions of businesses or assets, which may require additional liquidity. Financing the purchase price of any such acquisitions could involve borrowing under existing or new credit facilities and/or the issuance of debt or equity securities, in addition to cash on hand.

We expect 2024 capital expenditures to be down from 2023 levels. In January 2024, we announced an intentional re-phasing of larger projects to focus on those that are significantly progressed, near completion and in start up. At that time, we also announced actions to optimize our cost structure by reducing costs primarily related to sales, general and administrative expenses, including a reduction in headcount and lower spending on contracted services. During the nine months ended September 30, 2024, the Company stopped construction of Kemerton Trains 3 and 4, as well as put the Kemerton Train 2 on care and maintenance. Kemerton Train 1 will continue to operate and is currently focusing on commercialization efforts. As part of the comprehensive review of our cost and operating structure, we are planning to reduce capital expenditures by approximately 50% versus 2024 to a range of $800 million to $900 million.

The Company’s actions regarding Kemerton are part of a broader effort that will focus on preserving its world-class resource advantages, optimizing its global conversion network, improving the Company’s cost competitiveness and efficiency, reducing capital intensity and enhancing the Company’s financial flexibility. As part of this effort, on October 7, 2024, the Company announced it will transition to a new operating structure effective November 1, 2024. The new operating structure will transition to a fully integrated functional model (excluding Ketjen) from a global business unit model. As a result, the Company expects to record severance and employee benefits of approximately $30 million to $50 million and other restructuring costs of approximately $25 million to $30 million associated with these actions in the fourth quarter of 2024. We expect the comprehensive review of our cost and operating structure to drive additional cost and productivity improvements of $300 million to $400 million per year.

In 2024, we entered into a Master Receivables Purchase Agreement under which we may sell up to $250.0 million of available and eligible outstanding customer accounts receivable generated by sales to two specified customers. This agreement is uncommitted and has initial terms that expire on April 25, 2025, unless earlier terminated by the purchaser. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the consolidated balance sheets at the time of the sales transaction. As of September 30, 2024, there were no accounts receivable sold under this Master Receivables Purchase Agreement.

In October 2022, we announced we had been awarded a nearly $150 million grant from the U.S. Department of Energy to expand domestic manufacturing of batteries for EVs and the electrical grid and for materials and components currently imported from other countries. The grant funding is intended to support a portion of the anticipated cost to construct a new, commercial-scale U.S.-based lithium concentrator facility at our Kings Mountain, North Carolina, location. We expect the concentrator facility to create hundreds of construction and full-time jobs and to produce approximately 420,000 tons of spodumene concentrate annually. To further support the restart of the Kings Mountain mine, in August 2023, we announced a $90 million critical materials award from the U.S. Department of Defense.

Our cash flows from operations may be negatively affected by adverse consequences to our customers and the markets in which we compete as a result of moderating global economic conditions, continuing inflationary trends and reduced capital

availability. We have experienced, and may continue to experience, volatility and increases in the price of certain raw materials and in transportation and energy costs as a result of global market and supply chain disruptions and the broader inflationary environment. As a result, we are planning for various economic scenarios and actively monitoring our balance sheet to maintain the financial flexibility needed.

Although we maintain business relationships with a diverse group of financial institutions as sources of financing, an adverse change in their credit standing could lead them to not honor their contractual credit commitments to us, decline funding under our existing but uncommitted lines of credit with them, not renew their extensions of credit or not provide new financing to us. While the global corporate bond and bank loan markets remain strong, periods of elevated uncertainty related to the stability of the banking system, future pandemics or global economic and/or geopolitical concerns may limit efficient access to such markets for extended periods of time. If such concerns heighten, we may incur increased borrowing costs and reduced credit capacity as our various credit facilities mature. If the U.S. Federal Reserve or similar national reserve banks in other countries decide to continue tightening the monetary supply, we may incur increased borrowing costs (as interest rates increase on our variable rate credit facilities, as our various credit facilities mature or as we refinance any maturing fixed rate debt obligations), although these cost increases would be partially offset by increased income rates on portions of our cash deposits.

Overall, with generally strong cash-generative businesses and no significant long-term debt maturities before the fourth quarter of 2025, we believe we have, and will be able to maintain, a solid liquidity position.

We had cash and cash equivalents totaling $1.7 billion at September 30, 2024, of which $980.8 million is held by our foreign subsidiaries. This cash represents an important source of our liquidity and is invested in bank accounts or money market investments with no limitations on access. The cash held by our foreign subsidiaries is intended for use outside of the U.S. We anticipate that any needs for liquidity within the U.S. in excess of our cash held in the U.S. can be readily satisfied with borrowings under our existing U.S. credit facilities or our commercial paper program.

Guarantor Financial Information

Albemarle Wodgina Pty Ltd Issued Notes

Albemarle Wodgina Pty Ltd (the “Issuer”), a wholly-owned subsidiary of Albemarle Corporation, issued $300.0 million aggregate principal amount of 3.45% Senior Notes due 2029 (the “3.45% Senior Notes”) in November 2019. The 3.45% Senior Notes are fully and unconditionally guaranteed (the “Guarantee”) on a senior unsecured basis by Albemarle Corporation (the “Parent Guarantor”). No direct or indirect subsidiaries of the Parent Guarantor guarantee the 3.45% Senior Notes (such subsidiaries are referred to as the “Non-Guarantors”).

In 2019, we completed the acquisition of a 60% interest in MRL’s Wodgina hard rock lithium mine project (“Wodgina Project”) in Western Australia and formed an unincorporated joint venture with MRL, named MARBL Lithium Joint Venture, for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina spodumene mine and for the operation of the Kemerton assets in Western Australia. We participate in the Wodgina Project through our ownership interest in the Issuer. On October 18, 2023, we amended the joint venture agreements, resulting in a decrease of our ownership interest in the MARBL joint venture and the Wodgina Project to 50%.

Prior to January 1, 2024, the Parent Guarantor conducted its U.S. Specialties and Ketjen operations directly, and conducted its other operations (other than operations conducted through the Issuer) through the Non-Guarantors. Effective January 1, 2024, the Company split its U.S. Ketjen operations to a separate non-guarantor subsidiary and its results are no longer included within the summarized Parent Guarantor and Issuer financial information below for the 2024 periods presented.

The 3.45% Senior Notes are the Issuer’s senior unsecured obligations and rank equally in right of payment to the senior indebtedness of the Issuer, effectively subordinated to all of the secured indebtedness of the Issuer, to the extent of the value of the assets securing that indebtedness, and structurally subordinated to all indebtedness and other liabilities of its subsidiaries. The Guarantee is the senior unsecured obligation of the Parent Guarantor and ranks equally in right of payment to the senior indebtedness of the Parent Guarantor, effectively subordinated to the secured debt of the Parent Guarantor to the extent of the value of the assets securing the indebtedness and structurally subordinated to all indebtedness and other liabilities of its subsidiaries.

For cash management purposes, the Parent Guarantor transfers cash among itself, the Issuer and the Non-Guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Issuer and/or the Parent Guarantor’s outstanding debt, common stock dividends and common stock repurchases. There are no significant restrictions on the ability of the Issuer or the Parent Guarantor to obtain funds from subsidiaries by dividend or loan.

The following tables present summarized financial information for the Parent Guarantor and the Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the Issuer and the Parent Guarantor and (ii) equity in earnings from and investments in any subsidiary that is a Non-Guarantor. Each entity in the combined financial information follows the same accounting policies as described herein and in our Annual Report on Form 10-K for the year ended December 31, 2023.

Summarized Statement of Operations

$ in thousandsNine Months Ended September 30, 2024Year Ended December 31, 2023
Net sales(a)$682,926$2,392,057
Gross profit(45,271)802,653
Income before income taxes and equity in net income of unconsolidated investments(b)(438,926)254,066
Net income attributable to the Parent Guarantor and the Issuer(349,152)(216,033)

(a) Includes net sales to Non-Guarantors of $371.3 million and $1.5 billion for the nine months ended September 30, 2024 and year ended December 31, 2023, respectively.

(b) Includes intergroup expenses to Non-Guarantors of $21.4 million and $70.2 million for the nine months ended September 30, 2024 and year ended December 31, 2023, respectively.

Summarized Balance Sheet

$ in thousandsSeptember 30, 2024December 31, 2023
Current assets(a)$1,108,833$723,518
Net property, plant and equipment1,995,9192,246,404
Other noncurrent assets(b)2,981,3532,619,575
Current liabilities(c)$2,254,752$2,374,074
Long-term debt2,254,3872,252,540
Other noncurrent liabilities(d)7,088,2837,409,175

(a) Includes receivables from Non-Guarantors of $196.1 million and $293.8 million at September 30, 2024 and December 31, 2023, respectively.

(b) Includes noncurrent receivables from Non-Guarantors of $2.4 billion and $2.0 billion at September 30, 2024 and December 31, 2023, respectively.

(c) Includes current payables to Non-Guarantors of $1.8 billion and $1.0 billion at September 30, 2024 and December 31, 2023, respectively.

(d) Includes noncurrent payables to Non-Guarantors of $6.7 billion and $6.9 billion at September 30, 2024 and December 31, 2023, respectively.

The 3.45% Senior Notes are structurally subordinated to the indebtedness and other liabilities of the Non-Guarantors. The Non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the 3.45% Senior Notes or the Indenture under which the 3.45% Senior Notes were issued, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that the Parent Guarantor has to receive any assets of any of the Non-Guarantors upon the liquidation or reorganization of any Non-Guarantor, and the consequent rights of holders of the 3.45% Senior Notes to realize proceeds from the sale of any of a Non-Guarantor’s assets, would be effectively subordinated to the claims of such Non-Guarantor’s creditors, including trade creditors and holders of preferred equity interests, if any, of such Non-Guarantor. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Non-Guarantors, the Non-Guarantors will pay the holders of their debts, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to the Parent Guarantor.

The 3.45% Senior Notes are obligations of the Issuer. The Issuer’s cash flow and ability to make payments on the 3.45% Senior Notes could be dependent upon the earnings it derives from the production from MARBL for the Wodgina Project. Absent income received from sales of its share of production from MARBL, the Issuer’s ability to service the 3.45% Senior Notes could be dependent upon the earnings of the Parent Guarantor’s subsidiaries and other joint ventures and the payment of those earnings to the Issuer in the form of equity, loans or advances and through repayment of loans or advances from the Issuer.

The Issuer’s obligations in respect of MARBL are guaranteed by the Parent Guarantor. Further, under MARBL pursuant to a deed of cross security between the Issuer, the joint venture partner and the manager of the project (the “Manager”), each of the Issuer, and the joint venture partner have granted security to each other and the Manager for the obligations each of the Issuer and the joint venture partner have to each other and to the Manager. The claims of the joint venture partner, the Manager and other secured creditors of the Issuer will have priority as to the assets of the Issuer over the claims of holders of the 3.45% Senior Notes.

Albemarle Corporation Issued Notes

In March 2021, Albemarle New Holding GmbH (the “Subsidiary Guarantor”), a wholly-owned subsidiary of Albemarle Corporation, added a full and unconditional guarantee (the “Upstream Guarantee”) to all securities of Albemarle Corporation (the “Parent Issuer”) issued and outstanding as of such date and, subject to the terms of the applicable amendment or supplement, securities issuable by the Parent Issuer pursuant to the Indenture, dated as of January 20, 2005, as amended and supplemented from time to time (the “Indenture”). No other direct or indirect subsidiaries of the Parent Issuer guarantee these securities (such subsidiaries are referred to as the “Upstream Non-Guarantors”). See Long-term debt section above for a description of the securities issued by the Parent Issuer.

The current securities outstanding under the Indenture are the Parent Issuer’s unsecured and unsubordinated obligations and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Parent Issuer. All securities currently outstanding under the Indenture are effectively subordinated to the Parent Issuer’s existing and future secured indebtedness to the extent of the value of the assets securing that indebtedness. With respect to any series of securities issued under the Indenture that is subject to the Upstream Guarantee (which series of securities does not include the 2022 Notes), the Upstream Guarantee is, and will be, an unsecured and unsubordinated obligation of the Subsidiary Guarantor, ranking pari passu with all other existing and future unsubordinated and unsecured indebtedness of the Subsidiary Guarantor. All securities currently outstanding under the Indenture (other than the 2022 Notes) are effectively subordinated to all existing and future indebtedness and other liabilities of the Parent’s Subsidiaries other than the Subsidiary Guarantor. The 2022 Notes are effectively subordinated to all existing and future indebtedness and other liabilities of the Parent’s Subsidiaries, including the Subsidiary Guarantor.

For cash management purposes, the Parent Issuer transfers cash among itself, the Subsidiary Guarantor and the Upstream Non-Guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Parent Issuer and/or the Subsidiary Guarantor’s outstanding debt, common stock dividends and common stock repurchases. There are no significant restrictions on the ability of the Parent Issuer or the Subsidiary Guarantor to obtain funds from subsidiaries by dividend or loan.

The following tables present summarized financial information for the Subsidiary Guarantor and the Parent Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Issuer and the Subsidiary Guarantor and (ii) equity in earnings from and investments in any subsidiary that is an Upstream Non-Guarantor. Each entity in the combined financial information follows the same accounting policies as described herein and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Summarized Statement of Operations

$ in thousandsNine Months Ended September 30, 2024Year Ended December 31, 2023
Net sales(a)$501,236$1,297,308
Gross profit(24,758)68,743
Loss before income taxes and equity in net income of unconsolidated investments(b)(299,159)(444,249)
Loss attributable to the Subsidiary Guarantor and the Parent Issuer(220,205)(697,911)

(a) Includes net sales to Non-Guarantors of $189.6 million and $482.0 million for the nine months ended September 30, 2024 and year ended December 31, 2023, respectively.

(b) Includes intergroup income to Non-Guarantors of $117.2 million and $146.0 million for the nine months ended September 30, 2024 and year ended December 31, 2023, respectively.

Summarized Balance Sheet

$ in thousandsSeptember 30, 2024December 31, 2023
Current assets(a)$1,325,256$872,571
Net property, plant and equipment778,1641,090,112
Other non-current assets(b)2,097,8991,731,960
Current liabilities(c)$1,968,665$2,024,190
Long-term debt3,005,1652,994,732
Other noncurrent liabilities(d)6,305,3256,828,262

(a) Includes receivables from Non-Guarantors of $473.0 million and $472.5 million at September 30, 2024 and December 31, 2023, respectively.

(b) Includes noncurrent receivables from Non-Guarantors of $1.5 billion and $1.1 billion at September 30, 2024 and December 31, 2023, respectively.

(c) Includes current payables to Non-Guarantors of $1.6 billion and $1.0 billion at September 30, 2024 and December 31, 2023, respectively.

(d) Includes noncurrent payables to Non-Guarantors of $5.9 billion and $6.4 billion at September 30, 2024 and December 31, 2023, respectively.

These securities are structurally subordinated to the indebtedness and other liabilities of the Upstream Non-Guarantors. The Upstream Non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to these securities or the Indenture under which these securities were issued, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that the Subsidiary Guarantor has to receive any assets of any of the Upstream Non-Guarantors upon the liquidation or reorganization of any Upstream Non-Guarantors, and the consequent rights of holders of these securities to realize proceeds from the sale of any of an Upstream Non-Guarantor’s assets, would be effectively subordinated to the claims of such Upstream Non-Guarantor’s creditors, including trade creditors and holders of preferred equity interests, if any, of such Upstream Non-Guarantor. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Upstream Non-Guarantors, the Upstream Non-Guarantors will pay the holders of their debts, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to the Subsidiary Guarantor.

Summary of Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2023. However, we are expanding the description of our property, plant and equipment critical accounting policy and estimates as follows.

Property, Plant and Equipment. We assign the useful lives of our property, plant and equipment based upon our internal engineering estimates, which are reviewed periodically. The estimated useful lives of our property, plant and equipment range from two to sixty years and depreciation is recorded on the straight-line method, with the exception of our mineral rights and reserves, which are depleted on a units-of-production method. We evaluate the recovery of our property, plant and equipment annually and when events or changes in circumstances indicate that its carrying amount may not be recoverable. Events that may trigger a test for recoverability include, but are not limited to, significant adverse changes to projected revenues, costs, or capital plans or changes to government regulations that may adversely impact our current or future operations. An impairment is determined to exist if the total projected future cash flows on an undiscounted basis are not recoverable or are less than the carrying amount of a long-lived asset group. We estimate future cash flows based on numerous assumptions, which are consistent or reasonable in relation to internal budgets and projections, and actual future cash flows may be significantly different than the estimates. Significant estimates used include, but are not limited to, market pricing (including lithium index pricing), customer demand, operating and production costs, and the timing and capital costs of expansion and sustaining projects. Significant management judgment is involved in estimating these variables and they include inherent uncertainties since they are forecasting future events.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Item 1 Financial Statements – Note 19, “Recently Issued Accounting Pronouncements” to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

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