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    ALB
    Earnings call· Jun 2026(Q2 FY26)

    ALBEMARLE Q2 FY26 earnings call ALB

    Aug 6, 2026 Source

    Executive summary

    Albemarle Q2 FY26 — Strong Performance Driven by Energy Storage Pricing and Specialties Growth

    Albemarle delivered a robust second quarter, exceeding expectations with significant growth in net sales and adjusted EBITDA, primarily fueled by strong energy storage pricing and a re-accelerating specialties segment. The company is advancing its DLE technology at Salar de Atacama and optimizing capital allocation, while navigating supply chain disruptions and managing the impact of a plant fire, which slightly tempered energy storage volume outlook.

    Highlights

    5

    • Net sales increased 31% year-over-year to $1.7 billion, driven by higher pricing in energy storage and both higher pricing and volumes in specialties.

    • Adjusted EBITDA more than doubled to $858 million, with enterprise EBITDA margin expanding to 49%.

    • Generated $710 million of cash from operations, representing over 80% operating cash conversion, and $638 million of free cash flow.

    • On track to reach the high end of the $100 million to $150 million full year target for cost and productivity improvements.

    • Global lithium consumption was up 45% year-over-year through May, tracking above forecast, driven by strong stationary storage and improving EV growth.

    Concerns

    4

    • Energy storage sales volume outlook modestly lowered to 225,000 to 235,000 tons LCE (flat to down 4% YoY) due to a fire at the Greenbushes CGP3 plant.

    • Expected full run rate for Greenbushes CGP3 plant delayed to Q1 2027 from year-end.

    • Supply chain disruptions related to the Middle East situation are estimated to impact full-year cash flow by $70 million to $90 million on an unmitigated basis.

    • Cash flow impacted by $87.5 million of deferred revenue related to a 2025 customer prepayment and approximately $100 million of spend related to idling Kemerton Train 1.

    Guidance & targets

    12
    CategoryTargetConfidence
    Total Company Outlook
    High end of scenario ranges
    high materiality
    High
    Specialties Net Sales
    $1.4 billion to $1.6 billion
    medium materiality
    High
    Specialties Adjusted EBITDA
    $275 million to $325 million
    medium materiality
    High
    Capital Spending
    Reduced
    medium materiality
    Medium
    Cost and Productivity Improvements
    High end of $100 million to $150 million
    medium materiality
    High
    Energy Storage Sales Volumes
    225,000 to 235,000 tons LCE
    high materiality
    Medium
    Stationary Storage Battery Production
    900 to 1,100 gigawatt hours
    high materiality
    High
    Stationary Storage Battery Production
    1,500 to 2,000 gigawatt hours
    high materiality
    Medium
    Total Lithium Demand
    Low end raised by 100,000 tons
    high materiality
    Medium
    Greenbushes CGP3 Full Run Rate
    Q1 2027
    high materiality
    Medium
    Operating Cash Flow Conversion
    60% to 70%
    medium materiality
    High
    Energy Storage Volume
    240,000 to 260,000 tonnes LCE
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Energy Storage
    Driven by higher pricing. Realized price was below market due to dilutive impact of spodumene sales and 3-month pricing lag for long-term agreements. Margins expected to decrease sequentially due to timing of spodumene inventories.
    Sales volumes: 65,000 tons LCEAverage realized price: $20 per kilogram LCERealized price vs. market: 15% below market pricing
    		$1.276 billion78%—Adjusted EBITDA up 229%
    Specialties
    Solid performance due to higher pricing and volume and favorable product mix as a result of bromine market disruptions related to the situation in the Middle East. Second half outlook assumes stabilization of the bromine market and continued uncertainty in the Middle East.
    		$424 million20%—Adjusted EBITDA: $118 million, Adjusted EBITDA up 61%, Adjusted EBITDA margin: 28%, Adjusted EBITDA margin up 700 basis points

    Operational metrics

    23
    Net Sales
    $1.7 billionup 31% year-over-year
    Q2 FY26

    Driven by higher pricing in energy storage and both higher pricing and volumes in specialties.

    Adjusted EBITDA
    $858 millionup 155% year-over-year
    Q2 FY26

    Enterprise EBITDA margin expanded to 49%.

    Diluted Earnings Per Share
    $3.52
    Q2 FY26
    Cost and Productivity Improvements (Run Rate Savings)
    $100 million
    Year-to-date

    Achieved year-to-date, putting the company on track for the high end of its $100M-$150M full year target.

    Global Lithium Consumption Growth
    45%
    Year-over-year through May

    Tracking above forecasted range, driven by continued strength in stationary storage and improving growth in electric vehicles.

    EV Sales Growth
    10%year-over-year
    Year-to-date

    Global EV sales growth inflected in the second quarter.

    EV Sales Growth
    31%year-over-year
    Year-to-date

    Driven by policy support in key markets and increased model availability/affordability.

    EV Sales Growth
    90%year-over-year
    First half

    Fastest-growing region, overtaking North America as third largest market, led by Brazil, Australia, India, and South Korea.

    Stationary Storage Share of Lithium Demand
    30%
    2026 forecast

    Nearing parity with light-duty EVs.

    Global Stationary Storage Production Growth
    nearly doubled
    Year-over-year

    With broad support across most geographic regions, driven by accelerating electricity demand, AI, data centers, EVs, and policy support.

    Lithium Salt Inventory
    near record lows
    End of Q2 FY26

    Based on mass balance calculations, indicating a very tight physical market.

    Spodumene Inventory
    near historic lows
    End of Q2 FY26

    Based on mass balance calculations, with some Chinese conversion sites reportedly shutting down or reducing production due to lack of availability.

    Lithium Carbonate Inventory
    under 3 weeks
    Current

    Illustrates a very tight market.

    Lithium Hydroxide Inventory
    under a month
    Current

    Illustrates a very tight market.

    Albemarle Inventory
    19% of saleslower than normal (typical 25% of sales)
    End of Q2 FY26

    Historically on the low side, consumed due to strong demand and CGP3 fire.

    Spodumene Processing Lag
    4 months
    Current

    Time it takes for spodumene purchased from Talison JV to ship and process through inventory system.

    Average Market Spodumene Price
    $2,500
    Q2 FY26

    Used to explain the higher-priced spodumene rolling through income statement in Q3.

    Current Market Spodumene Price
    $2,000
    Current

    Approximate current market price, lower than Q2 average.

    Bromine Index (China) Trend
    hit a peak in Q2 and came back down to levels closer to start of year
    Q2 FY26

    Indicates normalization of bromine pricing, though situation in Middle East remains dynamic.

    DLE Recoveries
    30% to 40%
    Current

    Recovery of lithium in extracted brine using conventional methods.

    DLE Recoveries
    50% to 60%
    Current

    Increased recoveries using Albemarle's proprietary technology.

    DLE Recoveries
    over 90%
    Current

    Demonstrated by the DLE pilot plant, allowing more lithium extraction with smaller footprint.

    Water Recycling Rate
    85%
    Current

    Approximately 85% of processed water is recycled at the current DLE pilot plant.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price splitEnergy Storage: 73% pricing, Specialties: 11% pricing, 8% volumes%
    Productivity cost savings program$100 millionUSD

    Capital programs

    2
    Greenbushes CGP3 Plant Ramp-upramping back up

    Plant restarted on August 1, 2026, after a fire on June 9. Previously expected to reach full run rate by year-end, now Q1 2027 for adequate contingency.

    Salar de Atacama DLE Projectadvancing

    Benefit: Increased lithium extraction with smaller footprint and over 90% recoveries

    Environmental assessment permit submitted in March 2026 for up to 6 trains. Planned investment starts with 1 train. Utilizes a hybrid approach with existing evaporation ponds. DLE pilot plant operated over 3,000 hours.

    Risks & headwinds

    4
    Supply chain disruptions related to the situation in the Middle EastFull Year 2026

    $70 million to $90 million on an unmitigated basis for the full year

    Mitigation: Proactive cost management and cost and productivity improvements helped offset.

    Fire at Greenbushes CGP3 plantFull Year 2026

    Modestly lower expected energy storage sales volume (225,000 to 235,000 tons LCE, flat to down 4% YoY)

    Mitigation: Partially offset by better-than-planned production at Wodgina; plant restarted August 1, 2026, ramping back up.

    Dilutive impact of spodumene inventory timing in a declining price environmentQ3 FY26

    Energy storage margins expected to decrease sequentially in Q3

    Mitigation: Management is aware of the 4-month lag for spodumene to ship and process.

    Cash flow impact from deferred revenue and idling costsFull Year 2026

    $87.5 million of deferred revenue (2025 customer prepayment) and approximately $100 million of spend related to idling Kemerton Train 1

    What to watch in Q3 FY26

    5

    Greenbushes CGP3 Plant Ramp-up

    Q1 2027
    CurrentRamping up, operating at reduced rates
    TargetReaches full run rate

    Why it matters

    Critical for energy storage volume growth and meeting demand, as it was delayed by a fire.

    However, to ensure adequate contingency for our downstream operations, we've assumed CGP3 reaches full run rate in the first quarter of 2027.

    Q&A highlights

    6

    Clarify if "high end of scenario ranges" refers to total company or energy storage, and the reasons behind it.

    Neal Sheorey clarified it refers to both, attributing it to higher market pricing in H1 (above $20/unit), better H1 volume performance, cost/productivity improvements, and strong specialties performance.

    “It's really both. And maybe I can clarify that a little bit. So we were referring to the $20 per scenario. And actually, if you -- there's a couple of reasons why we say that we're towards the top end. First of all, if you look at market pricing so far this year in the first half of the year, it has trended actually, on average, a little bit higher than $20.”

    asked by David Begleiter · answered by Neal Sheorey

    2 min read5 chapters

    Detailed Narrative

    01

    Lithium Market Dynamics

    Global lithium consumption surged 45% year-over-year through May, primarily driven by robust stationary storage demand and improving electric vehicle sales. Despite this, supply growth lags demand, leading to near-record low lithium salt and spodumene inventories, with some Chinese conversion sites reportedly reducing production due to limited spodumene availability. The physical lithium market remains exceptionally tight, indicating a need for continued supply expansion to meet escalating demand.

    02

    Strategic Capital Allocation and Growth Projects

    Albemarle is prioritizing capital efficiency, evidenced by reduced capital spending and a focus on low-risk, high-return brownfield projects in known jurisdictions with established partners. While no new major projects have reached Final Investment Decision (FID) yet, the company has a portfolio of growth opportunities, including potential expansions at Wodgina and Talison, the Salar de Atacama DLE project, and Kings Mountain, signaling future investment avenues once current projects like CGP3 ramp up.

    03

    Direct Lithium Extraction (DLE) Advancement

    The company is leveraging decades of brine processing expertise to advance DLE technology at the Salar de Atacama, having submitted an environmental assessment permit for a phased DLE project with up to six trains. The initial investment will focus on one train to prove commercial scale, utilizing a hybrid system that combines DLE with existing solar evaporation ponds. The DLE pilot plant has demonstrated over 90% recoveries and recycles approximately 85% of processed water, showcasing significant efficiency and sustainability improvements over conventional methods.

    04

    Specialties Segment Resilience

    The Specialties segment delivered strong performance with net sales up 20% and adjusted EBITDA up 61% year-over-year, driven by higher pricing, increased volumes, and a favorable product mix amidst bromine market disruption🌐s. The company increased its full-year outlook for Specialties, reflecting successful mitigation of supply chain issues and proactive cost management. The segment benefits from diverse end markets like electronics, semiconductors, building & construction, and oil & gas, along with geographic diversity, enhancing its resilience.

    05

    Operational Challenges and Mitigations

    Albemarle faced operational challenges, including a fire at the Greenbushes CGP3 plant, which delayed its full run rate to Q1 2027, and ongoing supply chain disruption🌐s from the Middle East impacting cash flow. However, better-than-planned production at Wodgina partially offset the CGP3 impact, and the company's cost and productivity initiatives are on track to meet the high end of its full-year target, helping to mitigate these headwinds.

    AI-generated summary of the company’s earnings call. Not investment advice.