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Albemarle (ALB) Q3 Earnings Surpass Estimates, Revenues Lag

Albemarle Corporation ALB logged a profit of $897.2 million or $7.61 per share in the third quarter of 2022 compared with a loss of $392.8 million or $3.36 per share a year ago.

Adjusted earnings in the reported quarter were $7.50 per share, topping the Zacks Consensus Estimate of $6.84.

Revenues climbed roughly 152% year over year to $2,091.8 million in the quarter, However, it trailed the Zacks Consensus Estimate of $2,118 million. The top line was driven by higher pricing on the back of strong demand from diverse end markets.

 

Albemarle Corporation Price, Consensus and EPS Surprise

 

Albemarle Corporation Price, Consensus and EPS Surprise
Albemarle Corporation Price, Consensus and EPS Surprise

Albemarle Corporation price-consensus-eps-surprise-chart | Albemarle Corporation Quote

 

Segment Highlights

Sales from the Lithium unit surged 318% year over year to $1,501.1 million. Sales were driven by higher pricing (up 298% net of currency) associated with renegotiated contracts and higher market pricing. Volumes rose 20% in the quarter on the back of the La Negra III/IV expansion in Chile and increased tolling volumes to meet rising customer demand.

The Bromine Specialties segment recorded sales of $354.9 million, up 28% year over year. Sales were supported by an 18% (net of currency) rise in pricing and 10% higher volume. Tight market conditions led to strong demand and favorable pricing.

The Catalysts unit recorded revenues of $235.8 million in the reported quarter, up 22% year over year. Volumes rose 17% while pricing increased 5% (net of currency).

Financial Position

Albemarle ended the quarter with cash and cash equivalents of roughly $1,382.8 million, up around 132% year over year. Long-term debt was $3,118.8 million, up around 54% year over year.

Cash flow from operations was $955.6 million for the nine months ended Sep 30, 2022, up around 95% year over year.

Outlook

Albemarle tightened its net sales guidance for 2022 to the band of $7.1-$7.4 billion. It sees strength in lithium pricing and end markets to offset modestly lower expectations due to bromine-related softness in major end markets, including consumer and industrial electronics and building & construction. Adjusted EBITDA for the year is now forecast to be $3.3-$3.5 billion.

Albemarle also sees adjusted earnings per share for 2022 in the band of $19.75-$21.75, compared with $19.25-$22.25 it expected earlier.

The company anticipates capital expenditures of $1.3-1.4 billion for 2022. Net cash from operations is projected to be $1.45-$1.65 billion. The company also expects to be free cash flow positive in 2022.

Price Performance

Shares of Albemarle are down 2.3% in the past year compared with a 14.3% decline of the industry.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

Albemarle currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include Sociedad Quimica y Minera de Chile S.A. SQM, Ryerson Holding Corporation RYI and Reliance Steel & Aluminum Co. RS.

Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 38% in a year. The company currently carries a Zacks Rank #1.

Ryerson Holding, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.

Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 15% over a year.

Reliance Steel, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 29.7% for the current year. The Zacks Consensus Estimate for RS's current-year earnings has been revised 0.1% upward in the past 60 days.

Reliance Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13.6%, on average. RS has gained around 24% in a year.


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