Segment Information

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Reportable Segments

Segment Information:

Effective January 1, 2016, our former Performance Chemicals reportable segment was split into two separate reportable segments: (1) Lithium and Advanced Materials and (2) Bromine Specialties. As a result, our four reportable segments include Lithium and Advanced Materials, Bromine Specialties, Refining Solutions and Chemetall^® Surface Treatment. Each segment has a dedicated team of sales, research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution through greater asset and market focus, agility and responsiveness. The new business structure aligns with the markets and customers we serve through each of the segments. The new structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner in which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions.

Summarized financial information concerning our reportable segments is shown in the following tables. Results for 2015 have been recast to reflect the change in segments noted above.

The “All Other” category is comprised of three operating segments that do not fit into any of our core businesses subsequent to the acquisition of Rockwood: minerals-based flame retardants and specialty chemicals, fine chemistry services and metal sulfides. During the first quarter of 2016, we completed the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals business. For additional information about these businesses, see Note 3, “Divestitures.”

The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the reportable 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, All Other, 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.

The Company uses earnings before interest, taxes, depreciation and amortization, as adjusted for certain non-recurring or unusual items such as restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items (“adjusted EBITDA”), on a segment basis to assess the ongoing performance of the Company’s business segments. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. The Company has reported adjusted EBITDA because management believes it provides transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA should not be considered as an alternative to Net income (loss) attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP.

	Three Months Ended   March 31,
	2016			2015
	(In thousands)
Net sales:
Lithium and Advanced Materials	$	216,173		$	198,774
Bromine Specialties	196,553			189,592
Refining Solutions	170,579			179,166
Chemetall Surface Treatment	208,187			192,091
All Other	72,089			122,369
Corporate	1,817			2,412
Total net sales	$	865,398		$	884,404
Adjusted EBITDA:
Lithium and Advanced Materials	$	86,474		$	77,595
Bromine Specialties	61,608			52,933
Refining Solutions	55,074			42,193
Chemetall Surface Treatment	52,522			46,004
All Other	8,464			13,564
Corporate	(19,166		)	33,339
Total adjusted EBITDA	$	244,976		$	265,628

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

	Lithium and Advanced Materials			Bromine Specialties			Refining Solutions			Chemetall Surface Treatment			Reportable Segments Total			All Other			Corporate			Consolidated Total
Three months ended March 31, 2016
Adjusted EBITDA	$	86,474		$	61,608		$	55,074		$	52,522		$	255,678		$	8,464		$	(19,166	)	$	244,976
Depreciation and amortization	(23,147		)	(9,755		)	(8,760		)	(16,942		)	(58,604		)	(612		)	(1,336		)	(60,552		)
Utilization of inventory markup(a)	—			—			—			(154		)	(154		)	—			—			(154		)
Gain (loss) on sales of businesses, net(b)	—			—			—			—			—			122,857			(1,533		)	121,324
Acquisition and integration related costs(c)	—			—			—			—			—			—			(21,356		)	(21,356		)
Interest and financing expenses	—			—			—			—			—			—			(25,251		)	(25,251		)
Income tax expense	—			—			—			—			—			—			(30,985		)	(30,985		)
Non-operating pension and OPEB items	—			—			—			—			—			—			184			184
Net income (loss) attributable to Albemarle Corporation	$	63,327		$	51,853		$	46,314		$	35,426		$	196,920		$	130,709		$	(99,443	)	$	228,186
Three months ended March 31, 2015
Adjusted EBITDA	$	77,595		$	52,933		$	42,193		$	46,004		$	218,725		$	13,564		$	33,339		$	265,628
Depreciation and amortization	(21,822		)	(8,461		)	(8,110		)	(18,196		)	(56,589		)	(5,498		)	(1,899		)	(63,986		)
Utilization of inventory markup(a)	(28,582		)	—			—			(16,953		)	(45,535		)	(2,651		)	—			(48,186		)
Acquisition and integration related costs(c)	—			—			—			—			—			—			(59,523		)	(59,523		)
Interest and financing expenses	—			—			—			—			—			—			(35,746		)	(35,746		)
Income tax expense	—			—			—			—			—			—			(14,140		)	(14,140		)
Non-operating pension and OPEB items	—			—			—			—			—			—			3,509			3,509
Other(d)	—			—			—			—			—			—			(4,441		)	(4,441		)
Net income (loss) attributable to Albemarle Corporation	$	27,191		$	44,472		$	34,083		$	10,855		$	116,601		$	5,415		$	(78,901	)	$	43,115

(a) In connection with the acquisition of Rockwood, the Company valued Rockwood’s existing inventory at fair value as of the Acquisition Closing Date, which resulted in a markup of the underlying net book value of the inventory totaling approximately $103 million. The inventory markup was expensed over the estimated remaining selling period. For the three-month period ended March 31, 2016, $0.2 million was included in Cost of goods sold related to the utilization of the inventory markup as a result of a measurement-period adjustment. For the three-month period ended March 31, 2015, $40.3 million was included in Cost of goods sold, and Equity in net income of unconsolidated investments was reduced by $7.9 million, respectively, related to the utilization of the inventory markup.

(b) See Note 3, “Divestitures.”

(c) See Note 2, “Acquisitions.”

(d) Financing-related fees expensed in connection with the acquisition of Rockwood.