Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Reportable Segments

Segment Information:

Our three reportable segments include Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. 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. This structure aligns with the markets and customers we serve through each of the segments. The 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.

The “All Other” category comprises operating segments that did not fit into any of our core businesses. During the first quarter of 2016, we completed the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals businesses. For additional information about these businesses, see Note 3, “Divestitures.” Following the sales of these businesses, the “All Other” category includes only the fine chemistry services business.

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, 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’s chief operating decision maker uses earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items such as acquisition and integration related costs, utilization of inventory markup, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items (“adjusted EBITDA”), in a balanced manner and on a segment basis to assess the ongoing performance of the Company’s business segments and to allocate resources. In addition, management uses adjusted EBITDA for business 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 transparency to investors and enables period-to-period comparability of financial performance. Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. 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, or any other financial measure reported in accordance with U.S. GAAP.

	Three Months Ended   March 31,
	2017			2016
	(In thousands)
Net sales:
Lithium and Advanced Materials	$	284,375		$	216,173
Bromine Specialties	219,191			196,553
Refining Solutions	185,412			170,579
All Other	32,419			72,089
Corporate	666			1,817
Total net sales	$	722,063		$	657,211
Adjusted EBITDA:
Lithium and Advanced Materials	$	120,022		$	86,474
Bromine Specialties	68,488			61,608
Refining Solutions	49,579			55,074
All Other	5,156			8,464
Corporate	(31,869		)	(19,587		)
Total adjusted EBITDA	$	211,376		$	192,033

See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from 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		Reportable Segments Total			All Other			Corporate			Consolidated Total
Three months ended March 31, 2017
Net income (loss) attributable to Albemarle Corporation	$	94,106		$	58,694	$	40,474	$	193,274		$	3,246		$	(145,307	)	$	51,213
Depreciation and amortization	22,743			9,794		9,105		41,642			1,910			1,518			45,070
Utilization of inventory markup(a)	10,606			—		—		10,606			—			—			10,606
Restructuring and other(b)	—			—		—		—			—			12,905			12,905
Gain on acquisition(c)	(7,433		)	—		—		(7,433		)	—			—			(7,433		)
Acquisition and integration related costs(d)	—			—		—		—			—			14,281			14,281
Interest and financing expenses(e)	—			—		—		—			—			68,513			68,513
Income tax expense	—			—		—		—			—			11,971			11,971
Non-operating pension and OPEB items	—			—		—		—			—			(1,063		)	(1,063		)
Other(f)	—			—		—		—			—			5,313			5,313
Adjusted EBITDA	$	120,022		$	68,488	$	49,579	$	238,089		$	5,156		$	(31,869	)	$	211,376
Three months ended March 31, 2016
Net income (loss) attributable to Albemarle Corporation	$	63,327		$	51,853	$	46,314	$	161,494		$	130,709		$	(64,017	)	$	228,186
Depreciation and amortization	23,147			9,755		8,760		41,662			612			1,335			43,609
(Gain) loss on sales of businesses, net(g)	—			—		—		—			(122,857		)	1,533			(121,324		)
Acquisition and integration related costs(d)	—			—		—		—			—			18,558			18,558
Interest and financing expenses	—			—		—		—			—			15,114			15,114
Income tax expense	—			—		—		—			—			25,485			25,485
Income from discontinued operations (net of tax)	—			—		—		—			—			(17,312		)	(17,312		)
Non-operating pension and OPEB items	—			—		—		—			—			(283		)	(283		)
Adjusted EBITDA	$	86,474		$	61,608	$	55,074	$	203,156		$	8,464		$	(19,587	)	$	192,033

(a) In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately $23.0 million. The inventory markup is being expensed over the estimated remaining selling period. For the three-month period ended March 31, 2017, $10.6 million was included in Cost of goods sold related to the utilization of the inventory markup.

(b) During the first quarter of 2017, we initiated action to reduce costs at several locations, primarily at our Lithium site in Germany. Based on the restructuring plans, we have recorded expenses of $2.9 million in Cost of goods sold, $4.2 million in Selling, general and administrative expenses and $5.8 million in Research and development expenses, primarily related to severance, expected to be incurred. The unpaid balance is recorded in Accrued expenses at March 31, 2017, with the expectation that the majority of this plan will be completed by the end of 2017.

(c) Gain recorded in Other (expenses) income, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” for additional information.

(d) See Note 2, “Acquisitions,” for additional information.

(e) Included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million. See Note 10, “Long-term Debt,” for additional information.

(f) Included in Other (expenses) income, net are $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle and a loss of $2.1 million associated with the previous disposal of a business.

(g) See Note 3, “Divestitures,” for additional information.