Segment Information

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Reportable Segments

Segment 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 inter-segment 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.

	Three Months Ended March 31,
	2020			2019
	(In thousands)
Net sales:
Lithium	$	236,818		$	291,886
Bromine Specialties	231,592			249,052
Catalysts	207,207			251,648
All Other	63,228			39,478
Total net sales	$	738,845		$	832,064
Adjusted EBITDA:
Lithium	$	78,637		$	115,616
Bromine Specialties	83,262			78,597
Catalysts	47,470			60,071
All Other	22,824			7,243
Corporate	(35,828		)	(35,660		)
Total adjusted EBITDA	$	196,365		$	225,867

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 March 31, 2020
Net income (loss) attributable to Albemarle Corporation	$	53,240	$	71,665	$	34,892	$	159,797	$	20,846	$	(73,439	)	$	107,204
Depreciation and amortization	25,397		11,597		12,578		49,572		1,978		2,144			53,694
Restructuring and other(a)	—		—		—		—		—		1,847			1,847
Acquisition and integration related costs(b)	—		—		—		—		—		2,951			2,951
Interest and financing expenses	—		—		—		—		—		16,885			16,885
Income tax expense	—		—		—		—		—		18,442			18,442
Non-operating pension and OPEB items	—		—		—		—		—		(2,908		)	(2,908		)
Other(c)	—		—		—		—		—		(1,750		)	(1,750		)
Adjusted EBITDA	$	78,637	$	83,262	$	47,470	$	209,369	$	22,824	$	(35,828	)	$	196,365
Three months ended March 31, 2019
Net income (loss) attributable to Albemarle Corporation	$	93,169	$	67,480	$	47,859	$	208,508	$	5,206	$	(80,145	)	$	133,569
Depreciation and amortization	22,092		11,117		12,212		45,421		2,037		1,825			49,283
Acquisition and integration related costs(b)	—		—		—		—		—		5,285			5,285
Gain on sale of property(d)	—		—		—		—		—		(11,079		)	(11,079		)
Interest and financing expenses	—		—		—		—		—		12,586			12,586
Income tax expense	—		—		—		—		—		37,514			37,514
Non-operating pension and OPEB items	—		—		—		—		—		(583		)	(583		)
Other(e)	355		—		—		355		—		(1,063		)	(708		)
Adjusted EBITDA	$	115,616	$	78,597	$	60,071	$	254,284	$	7,243	$	(35,660	)	$	225,867

(a) Severance payments as part of a business reorganization plan, $0.7 million recorded in Cost of goods sold, $1.5 million recorded in Selling, general and administrative expenses and a $0.3 million gain recorded in Net income attributable to noncontrolling interest for the portion of severance expense allocated to our Jordanian joint venture partner.

(b) Included acquisition and integration related costs relating to various significant projects. For the three-month periods ended March 31, 2020 and 2019, $3.0 million and $5.3 million was recorded in Selling, general and administrative expenses, respectively.

(c) Included amounts for the three months ended March 31, 2020 recorded in:

▪ Other income, net - $2.6 million gain resulting from the settlement of a legal matter related to a business sold, partially offset by a $0.8 million loss resulting from the adjustment of indemnifications related to previously disposed businesses.

(d) Gain recorded in Other income, net related to the sale of land in Pasadena, Texas not used as part of our operations.

(e) Included amounts for the three months ended March 31, 2019 recorded in:

▪ Cost of goods sold - $0.4 million related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.

▪ Selling, general and administrative expenses - Severance payments as part of a business reorganization plan of $0.5 million.

▪

Other income, net - $1.6 million of a net gain resulting from the adjustment of indemnifications and other liabilities related to previously disposed businesses.