Segment and Geographic Area Information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment and Geographic Area Information

Segment and Geographic Area Information:

Our three reportable segments include: (1) Lithium; (2) Bromine Specialties; and (3) Catalysts. 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 business structure aligns with the markets and customers we serve through each of the segments. This 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 includes only the fine chemistry services business that does not fit into any of our core businesses.

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 adjusted EBITDA (as defined below) to assess the ongoing performance of the Company’s business segments and to allocate resources. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual items may include acquisition and

integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, non-operating pension and OPEB items and other significant non-recurring items. 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 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.

	Year Ended December 31,
	2019			2018			2017
	(In thousands)
Net sales:
Lithium	$	1,358,170		$	1,228,171		$	1,018,885
Bromine Specialties	1,004,216			917,880			855,143
Catalysts	1,061,817			1,101,554			1,067,572
All Other	165,224			127,186			128,914
Corporate	—			159			1,462
Total net sales	$	3,589,427		$	3,374,950		$	3,071,976
Adjusted EBITDA:
Lithium	$	524,934		$	530,773		$	446,652
Bromine Specialties	328,457			288,116			258,901
Catalysts	270,624			284,307			283,883
All Other	49,628			14,091			13,878
Corporate	(136,862		)	(110,623		)	(117,834		)
Total adjusted EBITDA	$	1,036,781		$	1,006,664		$	885,480

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
2019
Net income (loss) attributable to Albemarle Corporation	$	341,767		$	279,945	$	219,686		$	841,398		$	41,188	$	(349,358	)	$	533,228
Depreciation and amortization	99,424			47,611		50,144			197,179			8,440		7,865			213,484
Restructuring and other(a)	—			—		—			—			—		5,877			5,877
Acquisition and integration related costs(b)	—			—		—			—			—		20,684			20,684
Gain on sale of property(c)	—			—		—			—			—		(14,411		)	(14,411		)
Interest and financing expenses(d)	—			—		—			—			—		57,695			57,695
Income tax expense	—			—		—			—			—		88,161			88,161
Non-operating pension and OPEB items	—			—		—			—			—		26,970			26,970
Stamp duty(b)	64,766			—		—			64,766			—		—			64,766
Windfield tax settlement(e)	17,292			—		—			17,292			—		—			17,292
Other(f)	1,685			901		794			3,380			—		19,655			23,035
Adjusted EBITDA	$	524,934		$	328,457	$	270,624		$	1,124,015		$	49,628	$	(136,862	)	$	1,036,781
2018
Net income (loss) attributable to Albemarle Corporation	$	428,212		$	246,509	$	445,604		$	1,120,325		$	6,018	$	(432,781	)	$	693,562
Depreciation and amortization	95,193			41,607		49,131			185,931			8,073		6,694			200,698
Restructuring and other(a)	—			—		—			—			—		3,838			3,838
Gain on sale of business(g)	—			—		(210,428		)	(210,428		)	—		—			(210,428		)
Acquisition and integration related costs(b)	—			—		—			—			—		19,377			19,377
Interest and financing expenses	—			—		—			—			—		52,405			52,405
Income tax expense	—			—		—			—			—		144,826			144,826
Non-operating pension and OPEB items	—			—		—			—			—		5,285			5,285
Legal accrual(h)	—			—		—			—			—		27,027			27,027
Environmental accrual(i)	—			—		—			—			—		15,597			15,597
Albemarle Foundation contribution(j)	—			—		—			—			—		15,000			15,000
Indemnification adjustments(k)	—			—		—			—			—		25,240			25,240
Other(l)	7,368			—		—			7,368			—		6,869			14,237
Adjusted EBITDA	$	530,773		$	288,116	$	284,307		$	1,103,196		$	14,091	$	(110,623	)	$	1,006,664
2017
Net income (loss) attributable to Albemarle Corporation	$	342,992		$	218,839	$	230,665		$	792,496		$	5,521	$	(743,167	)	$	54,850
Depreciation and amortization	87,879			40,062		54,468			182,409			8,357		6,162			196,928
Utilization of inventory markup(m)	23,095			—		—			23,095			—		—			23,095
Restructuring and other(n)	—			—		—			—			—		17,056			17,056
Gain on acquisition(o)	(6,221		)	—		—			(6,221		)	—		—			(6,221		)
Acquisition and integration related costs(b)	—			—		—			—			—		33,954			33,954
Interest and financing expenses(p)	—			—		—			—			—		115,350			115,350
Income tax expense	—			—		—			—			—		431,817			431,817
Non-operating pension and OPEB items	—			—		—			—			—		(16,125		)	(16,125		)
Note receivable reserve(q)	—			—		—			—			—		28,730			28,730
Other(r)	(1,093		)	—		(1,250		)	(2,343		)	—		8,389			6,046
Adjusted EBITDA	$	446,652		$	258,901	$	283,883		$	989,436		$	13,878	$	(117,834	)	$	885,480

(a) Severance payments as part of a business reorganization plan, $5.9 million recorded in Selling, general and administrative expenses for the year ended December 31, 2019 and $0.1 million and $3.7 million recorded in Cost of goods sold and Selling, general and administrative expenses, respectively, for the year ended December 31, 2018.

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

(c) Gain of $3.3 million recorded in Selling, general and administrative expenses related to the release of liabilities as part of the sale of a property and $11.1 million gain recorded in Other expenses, net related to the sale of land in Pasadena, Texas not used as part of our operations.

(d) Included in Interest and financing expenses is a loss on early extinguishment of debt of $4.8 million. See Note 14, “Long-Term Debt,” for additional information.

(e) Represents our 49% share of a tax settlement between our Windfield joint venture and an Australian taxing authority, recorded in Equity in net income of unconsolidated investments (net of tax). This is offset in Income tax expense by a discrete tax benefit related to seeking treaty relief from the competent authority to prevent double taxation.

(f) Included amounts for the year ended December 31, 2019 recorded in:

• Cost of goods sold - $0.7 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

• Selling, general and administrative expenses - $1.8 million of shortfall contributions for our multiemployer plan financial improvement plan, $0.9 million of a write-off of uncollectable accounts receivable from a terminated distributor in the Bromine Specialties segment, $1.0 million related to the settlement of terminated agreements, primarily in the Catalysts segment, and $0.8 million related to the settlement of an ongoing audit in the Lithium segment.

• Other expenses, net - $3.1 million of unrecoverable vendor costs outside the operations of the business related to the construction of the future Kemerton production facility, $9.8 million of a net loss primarily resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses or purchase accounting, $3.6 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, and $1.2 million of non-operating pension costs from our 50% interest in JBC.

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

(h) Included in Other expenses, net. See Note 17, “Commitments and Contingencies,” for additional information.

(i) Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.

(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) Included in Other expenses, net is $19.7 million related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and $5.5 million related to the adjustment of indemnifications previously recorded from disposed businesses.

(l) Included amounts for the year ended December 31, 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 and $8.8 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

• Selling, general and administrative expenses - $2.3 million of shortfall contributions for our multiemployer plan financial improvement plan and 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. This was partially offset by a $1.5 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year.

• Other expenses, net - $1.5 million gain related to the reversal of previously recorded liabilities of disposed businesses.

(m) In connection with the acquisition of Jiangli New Materials, completed on December 31, 2016, 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 utilization of this inventory markup was included in Costs of goods sold during the year ended December 31, 2017, the estimated remaining selling period.

(n) 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 $5.7 million in Research and development expenses, primarily related to expected severance payments.

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

(p) 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.

(q) Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.

(r) Included amounts for the year ended December 31, 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 - $3.3 million of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by $1.0 million related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.

• Other expenses, net - $3.2 million of asset retirement obligation charges related to the update of an estimate at a site formerly owned by Albemarle, losses of $8.7 million related to adjustments of settlements and indemnifications of previously disposed businesses, the adjustment of tax indemnification expenses of $3.7 million primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and $1.0 million related to the settlement of a legal claim. This is partially offset by gains of $10.6 million and $1.1 million related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition and the previous disposal of a property, respectively.

	December 31,
	2019		2018		2017
			(In thousands)
Identifiable assets:
Lithium(a)	$	6,570,791	$	4,605,070	$	3,979,615
Bromine Specialties	799,456		753,157		745,007
Catalysts	1,163,590		1,134,975		1,332,599
All Other	146,211		128,185		126,486
Corporate(b)	1,180,815		960,287		1,567,065
Total identifiable assets	$	9,860,863	$	7,581,674	$	7,750,772

(a) Increase in Lithium identifiable assets at December 31, 2019 primarily due to the acquisition of 60% interest in MRL’s Wodgina Project assets, as well as capital expenditures for growth and capacity increases.

(b) Decrease in Corporate identifiable assets at December 31, 2018 primarily due to the net use of cash and cash equivalents for items such as capital expenditures, share repurchases and commercial paper repayments.

	Year Ended December 31,
	2019		2018		2017
			(In thousands)
Depreciation and amortization:
Lithium	$	99,424	$	95,193	$	87,879
Bromine Specialties	47,611		41,607		40,062
Catalysts	50,144		49,131		54,468
All Other	8,440		8,073		8,357
Corporate	7,865		6,694		6,162
Total depreciation and amortization	$	213,484	$	200,698	$	196,928
Capital expenditures:
Lithium	$	665,585	$	500,849	$	192,318
Bromine Specialties	82,208		79,357		46,427
Catalysts	57,939		52,019		46,808
All Other	7,309		5,232		3,657
Corporate	38,755		62,534		28,493
Total capital expenditures	$	851,796	$	699,991	$	317,703

	Year Ended December 31,
	2019		2018		2017
			(In thousands)
Net Sales(a):
United States	$	858,084	$	887,416	$	840,589
Foreign(b)	2,731,343		2,487,534		2,231,387
Total	$	3,589,427	$	3,374,950	$	3,071,976

(a) Net sales are attributed to countries based upon shipments to final destination.

(b) In 2019, net sales to Korea, China and Japan represented 17%, 13%, and 12%, respectively, of total net sales. In 2018, net sales to Korea, China and Japan represented 13%, 12%, and 10%, respectively, of total net sales. In 2017, net sales to China represented 15% of total net sales. No net sales in any other foreign country exceed 10% of total net sales.

	As of December 31,
	2019		2018		2017
			(In thousands)
Long-Lived Assets(a):
United States	$	1,003,496	$	929,291	$	833,002
Australia	1,981,642		407,141		364,624
Chile	1,687,090		1,406,478		1,069,859
Jordan	256,363		254,800		242,626
Netherlands	165,782		166,853		171,980
China	109,235		91,160		50,532
Germany	89,568		101,168		115,305
France	44,936		43,698		40,852
Brazil	37,165		40,464		47,255
Other foreign countries	68,499		65,937		60,626
Total	$	5,443,776	$	3,506,990	$	2,996,661

(a)

Long-lived assets are comprised of the Company’s Property, plant and equipment and joint ventures included in Investments.