

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In thousands)
Net sales:
Lithium	$	270,928		$	269,238		$	886,523		$	729,288
Bromine Specialties	232,616			212,923			678,769			636,059
Catalysts	251,139			244,594			796,822			756,407
All Other	23,065			28,021			90,978			91,144
Corporate	—			90			159			1,289
Total net sales	$	777,748		$	754,866		$	2,453,251		$	2,214,187

Adjusted EBITDA:
Lithium	$	113,629		$	112,944		$	386,260		$	327,996
Bromine Specialties	78,585			63,936			217,921			194,499
Catalysts	62,602			60,394			205,534			197,570
All Other	3,968			306			7,729			7,906
Corporate	(23,702		)	(28,197		)	(75,082		)	(88,271		)
Total adjusted EBITDA	$	235,082		$	209,383		$	742,362		$	639,700

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



	Lithium			Bromine Specialties		Catalysts			Reportable Segments Total			All Other			Corporate			Consolidated Total
Three months ended September 30, 2018
Net income (loss) attributable to Albemarle Corporation	$	90,313		$	67,967	$	50,491		$	208,771		$	1,978		$	(81,004	)	$	129,745
Depreciation and amortization	23,370			10,618		12,111			46,099			1,990			1,618			49,707
Restructuring and other^(a)	—			—		—			—			—			3,724			3,724
Acquisition and integration related costs^(b)	—			—		—			—			—			4,305			4,305
Interest and financing expenses	—			—		—			—			—			12,988			12,988
Income tax expense	—			—		—			—			—			33,167			33,167
Non-operating pension and OPEB items	—			—		—			—			—			(2,195		)	(2,195		)
Legal accrual^(c)	—			—		—			—			—			(1,017		)	(1,017		)
Other^(d)	(54		)	—		—			(54		)	—			4,712			4,658
Adjusted EBITDA	$	113,629		$	78,585	$	62,602		$	254,816		$	3,968		$	(23,702	)	$	235,082
Three months ended September 30, 2017
Net income (loss) attributable to Albemarle Corporation	$	89,745		$	53,760	$	47,846		$	191,351		$	(1,776	)	$	(70,905	)	$	118,670
Depreciation and amortization	22,316			10,176		13,798			46,290			2,082			1,523			49,895
Utilization of inventory markup^(e)	568			—		—			568			—			—			568
Adjustment to gain on acquisition^(f)	1,408			—		—			1,408			—			—			1,408
Acquisition and integration related costs^(b)	—			—		—			—			—			5,635			5,635
Interest and financing expenses	—			—		—			—			—			15,792			15,792
Income tax expense	—			—		—			—			—			18,495			18,495
Non-operating pension and OPEB items	—			—		—			—			—			(1,028		)	(1,028		)
Multiemployer plan shortfall contributions^(g)	—			—		—			—			—			1,646			1,646
Other^(h)	(1,093		)	—		(1,250		)	(2,343		)	—			645			(1,698		)
Adjusted EBITDA	$	112,944		$	63,936	$	60,394		$	237,274		$	306		$	(28,197	)	$	209,383
Nine months ended September 30, 2018



Net income (loss) attributable to Albemarle Corporation	$	315,939		$	187,176	$	387,038		$	890,153		$	1,659	$	(327,846	)	$	563,966
Depreciation and amortization	71,760			30,745		37,201			139,706			6,070		4,735			150,511
Restructuring and other^(a)	—			—		—			—			—		3,724			3,724
Gain on sale of business⁽ⁱ⁾	—			—		(218,705		)	(218,705		)	—		—			(218,705		)
Acquisition and integration related costs^(b)	—			—		—			—			—		13,016			13,016
Interest and financing expenses	—			—		—			—			—		39,834			39,834
Income tax expense	—			—		—			—			—		133,630			133,630
Non-operating pension and OPEB items	—			—		—			—			—		(6,596		)	(6,596		)
Legal accrual^(c)	—			—		—			—			—		27,027			27,027
Albemarle Foundation contribution^(j)	—			—		—			—			—		15,000			15,000
Other^(d)	(1,439		)	—		—			(1,439		)	—		22,394			20,955
Adjusted EBITDA	$	386,260		$	217,921	$	205,534		$	809,715		$	7,729	$	(75,082	)	$	742,362
Nine months ended September 30, 2017
Net income (loss) attributable to Albemarle Corporation	$	249,178		$	164,193	$	158,806		$	572,177		$	1,622	$	(300,583	)	$	273,216
Depreciation and amortization	62,841			30,306		40,014			133,161			6,284		4,642			144,087
Utilization of inventory markup^(e)	23,095			—		—			23,095			—		—			23,095
Restructuring and other^(k)	—			—		—			—			—		17,141			17,141
Gain on acquisition^(f)	(6,025		)	—		—			(6,025		)	—		—			(6,025		)
Acquisition and integration related costs^(b)	—			—		—			—			—		26,395			26,395
Interest and financing expenses^(l)	—			—		—			—			—		98,895			98,895
Income tax expense	—			—		—			—			—		53,596			53,596
Non-operating pension and OPEB items	—			—		—			—			—		(3,144		)	(3,144		)
Multiemployer plan shortfall contributions^(g)	—			—		—			—			—		6,586			6,586
Other^(h)	(1,093		)	—		(1,250		)	(2,343		)	—		8,201			5,858
Adjusted EBITDA	$	327,996		$	194,499	$	197,570		$	720,065		$	7,906	$	(88,271	)	$	639,700


(a)	Expected severance payments as part of a business reorganization plan, recorded in Selling, general and administrative expenses. The unpaid balance is recorded in Accrued expenses at September 30, 2018, and is expected to be paid out by the end of 2018.

(b)

Included amounts for the three-month and nine-month periods ended September 30, 2018 recorded in (1) Cost of goods sold of $0.9 million and $2.9 million, respectively; and (2) Selling, general and administrative expenses of $3.4 million and $10.2 million, respectively, relating to various significant projects. Included amounts for the three-month and nine-month periods ended September 30, 2017 recorded in (1) Cost of goods sold of $1.8 million and $12.5 million, respectively; and (2) Selling, general and administrative expenses of $3.8 million and $13.9 million, respectively, relating to various significant projects, including the Jiangxi Jiangli New Materials Science and Technology Co. Ltd. (“Jiangli New Materials”) acquisition, which contains unusual compensation related costs negotiated specifically as a result of this acquisition that are outside of the Company’s normal compensation arrangements.


(c)	Included in Other income (expenses), net. See Note 9, “Commitments and Contingencies,” for additional information.


(d)	Included amounts for the three months ended September 30, 2018 recorded in:


▪	Cost of goods sold - $3.8 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪

Selling, general and administrative expenses - $0.1 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.


▪	Other income (expenses), net - $0.2 million gain related to the revision of previously recorded expenses of disposed businesses.

Included amounts for the nine months ended September 30, 2018 recorded in:


▪	Cost of goods sold - $4.9 million for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture.

▪

Selling, general and administrative expenses - $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year, partially offset by a $1.2 million contribution, using a portion of the proceeds received from Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community.


▪	Other income (expenses), net - $15.6 million of environmental charges related to a site formerly owned by Albemarle and $0.8 million related to the revision of previously recorded expenses of disposed businesses.

(e)

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 $23.1 million. The inventory markup was expensed over the estimated remaining selling period. For the three-month and nine-month periods ended September 30, 2017, $0.6 million and $23.1 million, respectively, was included in Cost of goods sold related to the utilization of the inventory markup.


(f)	Gain recorded in Other income (expenses), net related to the acquisition of the remaining 50% interest in the Sales de Magnesio Ltda. joint venture in Chile.


(g)	Included shortfall contributions for our multiemployer plan financial improvement plan. See Note 11, “Pension Plans and Other Postretirement Benefits,” for additional information.


(h)	Included amounts for the three-month period ended September 30, 2017 recorded in:


▪	Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.


▪	Other income (expenses), net - $1.1 million related to a reversal of a liability associated with the previous disposal of a property, partially offset by the revision of tax indemnification expenses of $0.7 million primarily related to the filing of tax returns for a previously disposed business.

Included amounts for the nine-month period ended September 30, 2017 recorded in:


▪	Cost of goods sold - $1.3 million reversal of deferred income related to an abandoned project at an unconsolidated investment.


▪	Selling, general and administrative expenses - $1.0 million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.

▪

Other income (expenses), net - $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of $4.1 million associated with the previous disposal of businesses and the revision of tax indemnification expenses of $1.9 million primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business. This is partially offset by $1.1 million related to a reversal of a liability associated with the previous disposal of a property.


(i)	See Note 2, “Divestitures,” for additional information.

(j)

Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the normal annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.

(k)

During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of $2.9 million in Cost of goods sold, $8.4 million in Selling, general and administrative expenses and $5.8 million in Research and development expenses for the nine-month period ended September 30, 2017, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at September 30, 2018, with the expectation that the majority of these plans will be completed by the end of 2018.

(l)

During the first quarter of 2017, we repaid the 3.00% Senior notes in full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50% Senior notes, as well as related tender premiums of $45.2 million. As a result, included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million, representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of these senior notes.