Albemarle Corporation (ALB) Earnings

Management highlights

### Overall Financial and Operational Performance - Q2 2026 total net sales reached $1.7 billion, a 31% year-over-year increase. Adjusted EBITDA more than doubled to $858 million, with an enterprise EBITDA margin of 49%. - Generated $710 million in operating cash flow with 80% operating cash conversion, and $638 million in free cash flow. - The company is on track to hit the high end of its $100 to $150 million full-year 2026 cost and productivity improvement target, with $100 million in run-rate savings achieved year-to-date. ### Market Demand Trends - Global lithium consumption grew 45% year-over-year through May 2026, outperforming prior forecasts, driven by strong stationary storage demand and recovering electric vehicle (EV) growth. - Stationary storage demand has nearly doubled year-over-year, and is now expected to make up ~30% of 2026 global lithium demand, nearing parity with light-duty EVs. Long-term growth is supported by accelerating electricity demand from urbanization, AI/data centers, and grid reliability needs, plus policy support across major regions. - EV sales inflected to 16% year-over-year growth in Q2 2026, with strong growth in Europe, the rest of the world led by Brazil, Australia, India, and South Korea, and offsetting weaker domestic Chinese sales via growing Chinese EV exports. - AI demand supports end market growth for the specialty segment, and clear brine fluid demand for oil and gas remains stable, with geographic diversification supporting resilience amid Middle East uncertainty. ### Operational Updates - The Greenbushes CGP3 plant, damaged by a June 2026 fire, restarted on August 1 and is now expected to reach full run rate in Q1 2027 (previously expected full year 2026). - The Wajana joint venture operation is outperforming expectations, with better-than-planned ore availability and recoveries, which has offset the CGP3 production disruption. All three processing trains are operational, with further ore quality improvements expected late 2026. - The company is advancing phased direct lithium extraction (DLE) development at the Salar de Atacama in Chile, leveraging 10+ years of DLE research. An environmental assessment permit for up to six commercial trains has been submitted, with a pilot plant having operated for over 3,000 hours, demonstrating over 90% lithium recovery (compared to 30-60% for conventional processes) and 85% processed water recycling.

Guidance

- Total company 2026 guidance ranges are maintained, with management expecting full year results to come in at the high end of existing ranges, driven by strong year-to-date performance and an upgraded specialty segment outlook that offsets modestly lower energy storage volumes from the CGP3 fire. - Full year 2026 specialty segment guidance is raised: net sales are now expected to be $1.4 to $1.6 billion, and adjusted EBITDA is now expected to be $275 to $325 million, reflecting stronger year-to-date pricing, volume, and cost mitigation of Middle East supply chain disruptions. Q3 2026 specialty segment net sales and EBITDA are expected to decline sequentially as bromine pricing normalizes from its Q2 peak. - Full year 2026 energy storage sales volumes are now guided to 225,000 to 235,000 tons LCE (flat to down 4% year-over-year), reflecting the CGP3 ramp delay offset by better Wajana performance. Q3 2026 energy storage net sales, adjusted EBITDA, and margins are expected to decline sequentially due to lower volumes, current pricing trends, and the reversal of the spodumene inventory timing margin tailwind. - 2026 global stationary storage battery production forecast is raised by 100 GWh to 900 to 1,100 GWh. The low end of the 2030 stationary storage forecast is raised to 1,500 to 2,000 GWh, and the low end of 2030 total lithium demand forecast is raised by 100,000 tons LCE. - 2027 energy storage sales volumes are guided to a range of 240,000 to 260,000 tons LCE, with growth coming from the full ramp of CGP3 after its Q1 2027 full production target.

Segment performance

1. Energy Storage Segment: Q2 2026 net sales increased 78% year-over-year, driven by a 73% increase in pricing. Q2 sales volumes hit 65,000 tons lithium carbonate equivalent (LCE), with an average realized price of ~$20 per kilogram LCE. Adjusted EBITDA increased 229% year-over-year. This segment contributed approximately 75% of total Q2 net sales. 2. Specialty Segment: Q2 2026 net sales were $424 million, up 20% year-over-year, with 11% higher pricing and 8% higher volumes driving growth. Adjusted EBITDA was $118 million, up 61% year-over-year, with an adjusted EBITDA margin of 28% (up 700 basis points year-over-year). This segment contributed approximately 25% of total Q2 net sales.

Risks & headwinds

- Geopolitical uncertainty and supply chain disruptions from the ongoing situation in the Middle East are expected to create an unmitigated $70 to $90 million impact to full year 2026 results, with continued uncertainty affecting the specialty bromine market even after partial pricing normalization. Costs of raw materials and supply chain operations remain elevated due to this situation. - Global lithium supply growth is slower than demand growth, due to limited spodumene availability, temporary African shipment disruptions, and slower-than-expected ramp-up of Chinese lepidolite mines, leading to near-historic low inventory levels across the supply chain. - Spot lithium pricing is heavily driven by speculative trading activity, primarily in China, creating near-term price volatility that is difficult to forecast. - DLE project progression at Salar de Atacama is subject to regulatory approval, community consultation, and full commercial-scale technology validation, creating execution uncertainty.

Analyst Q&A

• Q: Clarify whether the guidance being at the high end of scenario ranges refers to total company or just the energy storage segment. Could you also update on discussions about US government critical mineral supply chain funding? /

  A: Management confirms that results tracking toward the high end applies to both the total company and the energy storage segment. This is driven by year-to-date average market prices slightly above the $20/kg LCE baseline, stronger first half volume, better cost productivity, and strong specialty segment performance in Q2. Albemarle has been in ongoing discussions with the US government about critical mineral supply chain support, but there are no updates to announce at this time, and lithium is not the highest priority for currently announced funding programs.

• Q: Lithium demand is outpacing supply growth; do you expect higher prices will be needed to incentivize new investment, and what drove the increase in your long-term stationary storage forecast? /

  A: Current lithium prices are high enough to support investment in viable projects, though more speculative projects remain uneconomical, so the current price level is not discouraging planned projects or driving unplanned new projects. The forecast upgrade reflects higher confidence from observed on-the-ground project activity, built-out supply chains, and customer discussions that confirm strong installation demand for stationary storage (especially iron phosphate LFP storage in China) that is outpacing current battery production, supporting sustained strong demand.

• Q: What is your 2027 energy storage volume outlook, and have recent lithium price declines started to moderate amid low inventory levels? /

  A: 2027 energy storage volumes are expected to reach 240,000 to 260,000 tons LCE, as CGP3 ramps to full production in Q1 2027 and annualizes through the year, delivering volume growth after flat 2026 volumes from the fire disruption. Spot prices have declined from recent highs but are currently consolidating around $20/kg LCE; near-term prices are driven by speculative Chinese trading, but the 45% annual demand growth requires all planned new supply to come online to avoid even greater market tightness.

• Q: What is the status of DLE development at Atacama, how does the proposed hybrid DLE system work, and what is the net economic benefit? /

  A: The proposed design is a hybrid system that leverages existing lower-cost solar evaporation pond infrastructure: DLE is used to process a side stream of brine to concentrate lithium before it returns to the evaporation ponds for final processing, rather than replacing the ponds entirely. The core benefit is a major increase in lithium recovery (to over 90% from 30-60% for conventional systems), enabling higher production from the existing resource with a smaller footprint and lower pumping requirements, leveraging existing capital infrastructure. Management will execute on this first project before prioritizing other DLE projects in Chile or other regions.

• Q: What are the company's plans for excess cash generation, and when will new brownfield growth projects be approved? /

  A: The company already maintains a strong conservative balance sheet with limited debt to pay down, so excess cash will be prioritized for low-risk, high-return brownfield growth projects that are already in the company's pipeline. Next potential projects after CGP3 ramp are additional expansion at Wajana and Greenbushes, which require partner alignment and a final investment decision, so they will not move forward until CGP3 is fully ramped. Longer-term pipeline projects include the Atacama DLE project and Kings Mountain. Management will evaluate all capital alternatives including share repurchases when evaluating project approvals.