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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________________________________ 
FORM 10-Q
_________________________________________________ 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 1-12658
_________________________________________________ 

ALBEMARLE CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________ 
Virginia 54-1692118
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
4250 Congress Street, Suite 900
Charlotte, North Carolina 28209
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code - (980) 299-5700
_________________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☒Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
COMMON STOCK, $.01 Par ValueALBNew York Stock Exchange
Number of shares of common stock, $.01 par value, outstanding as of July 31, 2020: 106,357,989

Table of Contents
ALBEMARLE CORPORATION
INDEX – FORM 10-Q
 
  Page
Number(s)
8-26
27-46
EXHIBITS
2
Table of Contents
PART I. FINANCIAL INFORMATION
 
Item 1.Financial Statements (Unaudited).
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
Net sales$764,049  $885,052  $1,502,894  $1,717,116  
Cost of goods sold530,690  559,138  1,027,517  1,107,716  
Gross profit233,359  325,914  475,377  609,400  
Selling, general and administrative expenses106,949  126,715  208,826  240,070  
Research and development expenses14,210  13,462  30,307  28,439  
Operating profit112,200  185,737  236,244  340,891  
Interest and financing expenses(17,852) (11,601) (34,737) (24,187) 
Other (expenses) income, net(6,273) (7,065) 2,041  4,226  
Income before income taxes and equity in net income of unconsolidated investments88,075  167,071  203,548  320,930  
Income tax expense15,431  30,411  33,873  67,925  
Income before equity in net income of unconsolidated investments72,644  136,660  169,675  253,005  
Equity in net income of unconsolidated investments (net of tax)31,114  38,310  57,718  73,491  
Net income103,758  174,970  227,393  326,496  
Net income attributable to noncontrolling interests(18,134) (20,772) (34,565) (38,729) 
Net income attributable to Albemarle Corporation$85,624  $154,198  $192,828  $287,767  
Basic earnings per share$0.81  $1.46  $1.81  $2.72  
Diluted earnings per share$0.80  $1.45  $1.81  $2.71  
Weighted-average common shares outstanding – basic106,329  105,961  106,278  105,880  
Weighted-average common shares outstanding – diluted106,535  106,316  106,524  106,336  
See accompanying Notes to the Condensed Consolidated Financial Statements.
3
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
Net income $103,758  $174,970  $227,393  $326,496  
Other comprehensive income (loss), net of tax:
Foreign currency translation62,847  10,544  (19,139) (311) 
Pension and postretirement benefits8  6  17  13  
Net investment hedge(5,756) (3,037) (3,675) 267  
Cash flow hedge37,645  —  (13,815) —  
Interest rate swap648  641  1,296  1,282  
Total other comprehensive income (loss), net of tax95,392  8,154  (35,316) 1,251  
Comprehensive income199,150  183,124  192,077  327,747  
Comprehensive income attributable to noncontrolling interests(18,168) (20,799) (34,645) (38,709) 
Comprehensive income attributable to Albemarle Corporation$180,982  $162,325  $157,432  $289,038  
See accompanying Notes to the Condensed Consolidated Financial Statements.
4
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
June 30,December 31,
20202019
Assets
Current assets:
Cash and cash equivalents
$736,696  $613,110  
Trade accounts receivable, less allowance for doubtful accounts (2020 – $2,563; 2019 – $3,711)
517,626  612,651  
Other accounts receivable76,957  67,551  
Inventories851,256  768,984  
Other current assets109,874  162,813  
Total current assets2,292,409  2,225,109  
Property, plant and equipment, at cost7,138,969  6,817,843  
Less accumulated depreciation and amortization2,002,612  1,908,370  
Net property, plant and equipment5,136,357  4,909,473  
Investments614,145  579,813  
Other assets213,223  213,061  
Goodwill1,571,280  1,578,785  
Other intangibles, net of amortization342,839  354,622  
Total assets$10,170,253  $9,860,863  
Liabilities And Equity
Current liabilities:
Accounts payable$523,160  $574,138  
Accrued expenses399,456  553,160  
Current portion of long-term debt406,201  187,336  
Dividends payable40,728  38,764  
Current operating lease liability21,808  23,137  
Income taxes payable29,450  32,461  
Total current liabilities1,420,803  1,408,996  
Long-term debt3,132,191  2,862,921  
Postretirement benefits50,362  50,899  
Pension benefits284,480  292,073  
Other noncurrent liabilities670,001  754,536  
Deferred income taxes406,255  397,858  
Commitments and contingencies (Note 9)
Equity:
Albemarle Corporation shareholders’ equity:
Common stock, $.01 par value, issued and outstanding – 106,337 in 2020 and 106,040 in 2019
1,064  1,061  
Additional paid-in capital1,400,105  1,383,446  
Accumulated other comprehensive loss(431,131) (395,735) 
Retained earnings3,054,434  2,943,478  
Total Albemarle Corporation shareholders’ equity4,024,472  3,932,250  
Noncontrolling interests181,689  161,330  
Total equity4,206,161  4,093,580  
Total liabilities and equity$10,170,253  $9,860,863  
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In Thousands, Except Share Data)Additional
Paid-in Capital		Accumulated Other
Comprehensive Loss		Retained EarningsTotal Albemarle
Shareholders’ Equity		Noncontrolling
Interests		Total Equity
Common Stock
SharesAmounts
Balance at March 31, 2020106,318,614  $1,063  $1,393,681  $(526,489) $3,009,749  $3,878,004  $163,521  $4,041,525  
Net income85,624  85,624  18,134  103,758  
Other comprehensive income95,358  95,358  34  95,392  
Cash dividends declared, $0.385 per common share
(40,939) (40,939) —  (40,939) 
Stock-based compensation6,005  6,005  6,005  
Exercise of stock options10,940  —  614  614  614  
Issuance of common stock, net13,250  1  (1) —  —  
Shares withheld for withholding taxes associated with common stock issuances(5,822) —  (194) (194) (194) 
Balance at June 30, 2020106,336,982  $1,064  $1,400,105  $(431,131) $3,054,434  $4,024,472  $181,689  $4,206,161  
Balance at March 31, 2019105,950,011  $1,059  $1,368,069  $(357,538) $2,660,684  $3,672,274  $191,765  $3,864,039  
Net income154,198  154,198  20,772  174,970  
Other comprehensive income8,127  8,127  27  8,154  
Cash dividends declared, $0.3675 per common share
(38,942) (38,942) (38,962) (77,904) 
Stock-based compensation4,930  4,930  4,930  
Exercise of stock options11,781  —  529  529  529  
Issuance of common stock, net16,713  —  —  —  —  
Shares withheld for withholding taxes associated with common stock issuances(7,041) —  (315) (315) (315) 
Balance at June 30, 2019105,971,464  $1,059  $1,373,213  $(349,411) $2,775,940  $3,800,801  $173,602  $3,974,403  
Balance at January 1, 2020106,040,215  $1,061  $1,383,446  $(395,735) $2,943,478  $3,932,250  $161,330  $4,093,580  
Net income192,828  192,828  34,565  227,393  
Other comprehensive (loss) income(35,396) (35,396) 80  (35,316) 
Cash dividends declared, $0.77 per common share
(81,872) (81,872) (14,286) (96,158) 
Stock-based compensation9,872  9,872  9,872  
Exercise of stock options204,477  2  10,807  10,809  10,809  
Issuance of common stock, net145,570  2  (2) —  —  
Shares withheld for withholding taxes associated with common stock issuances(53,280) (1) (4,018) (4,019) (4,019) 
Balance at June 30, 2020106,336,982  $1,064  $1,400,105  $(431,131) $3,054,434  $4,024,472  $181,689  $4,206,161  
Balance at January 1, 2019105,616,028  $1,056  $1,368,897  $(350,682) $2,566,050  $3,585,321  $173,787  $3,759,108  
Net income287,767  287,767  38,729  326,496  
Other comprehensive income (loss)1,271  1,271  (20) 1,251  
Cash dividends declared, $0.735 per common share
(77,877) (77,877) (38,962) (116,839) 
Stock-based compensation12,197  12,197  12,197  
Exercise of stock options125,909  1  3,204  3,205  3,205  
Issuance of common stock, net356,824  3  (3) —  —  
Increase in ownership interest of noncontrolling interest(513) (513) 68  (445) 
Shares withheld for withholding taxes associated with common stock issuances(127,297) (1) (10,569) (10,570) (10,570) 
Balance at June 30, 2019105,971,464  $1,059  $1,373,213  $(349,411) $2,775,940  $3,800,801  $173,602  $3,974,403  
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
Table of Contents
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
20202019
Cash and cash equivalents at beginning of year$613,110  $555,320  
Cash flows from operating activities:
Net income 227,393  326,496  
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization111,535  102,231  
Gain on sale of property—  (11,079) 
Stock-based compensation and other9,765  10,136  
Equity in net income of unconsolidated investments (net of tax)(57,718) (73,491) 
Dividends received from unconsolidated investments and nonmarketable securities12,984  60,291  
Pension and postretirement (benefit) expense(3,312) 1,055  
Pension and postretirement contributions(6,692) (7,778) 
Unrealized gain on investments in marketable securities(1,278) (577) 
Deferred income taxes8,990  3,570  
Working capital changes(156,579) (223,238) 
Other, net62,829  11,672  
Net cash provided by operating activities207,917  199,288  
Cash flows from investing activities:
Acquisitions, net of cash acquired(22,572) —  
Capital expenditures(418,991) (415,626) 
Proceeds from sale of property and equipment—  10,356  
Sales of marketable securities, net1,496  908  
Investments in equity and other corporate investments(486) (2,549) 
Net cash used in investing activities(440,553) (406,911) 
Cash flows from financing activities:
Proceeds from borrowings of credit agreements452,163  —  
Other borrowings, net12,956  183,052  
Dividends paid to shareholders(79,909) (74,313) 
Dividends paid to noncontrolling interests(14,286) (38,962) 
Proceeds from exercise of stock options10,809  3,205  
Withholding taxes paid on stock-based compensation award distributions(4,019) (10,570) 
Debt financing costs(2,669) —  
Other—  (445) 
Net cash provided by financing activities375,045  61,967  
Net effect of foreign exchange on cash and cash equivalents(18,823) (11,481) 
Increase (decrease) in cash and cash equivalents123,586  (157,137) 
Cash and cash equivalents at end of period$736,696  $398,183  
See accompanying Notes to the Condensed Consolidated Financial Statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1—Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Albemarle Corporation and our wholly-owned, majority-owned and controlled subsidiaries (collectively, “Albemarle,” “we,” “us,” “our” or “the Company”) contain all adjustments necessary for a fair statement, in all material respects, of our condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, our consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of changes in equity for the three-month and six-month periods ended June 30, 2020 and 2019 and our condensed consolidated statements of cash flows for the six-month periods ended June 30, 2020 and 2019. Cost of goods sold for the three-month period ended June 30, 2020 includes a net expense of $9.8 million for the correction of out-of-period errors regarding understated cost of goods sold for inventory values within the Catalysts segment and overstated freight accruals primarily within the Lithium and Catalysts segments. These errors understated (overstated) Income before income taxes and equity in net income of unconsolidated investments for the fiscal year ended December 31, 2019 and the three-month period ended March 31, 2020 by $0.5 million and ($10.3) million, respectively. The Company does not believe these adjustments are material to the consolidated financial statements for any of the prior periods presented or to the three-month period ended June 30, 2020 in which they were corrected. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020. The December 31, 2019 condensed consolidated balance sheet data herein was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). The results of operations for the three-month and six-month periods ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year.
The current novel coronavirus (“COVID-19”) pandemic is having an impact on overall global economic conditions. While we have not seen a material impact to our operations to date, the ultimate impact on our business will depend on the length and severity of the outbreak throughout the world. The Company has taken, and plans to continue to take, certain measures to maintain financial flexibility, including delaying certain capital expenditure projects and accelerating our cost savings initiative, while still protecting our employees and customers. In addition, on May 11, 2020, the Company amended its revolving, unsecured credit agreement dated as of June 21, 2018, as amended on August 14, 2019 (the “2018 Credit Agreement”) and unsecured credit facility entered into on August 14, 2019 (the “2019 Credit Facility”) (together “the Credit Agreements”) to modify its financial covenant based on the Company’s current expectations. As of June 30, 2020, the Company is in compliance with its financial covenant under its Credit Agreements and expects to be in compliance with its financial covenant for at least one year from the issuance of these interim financial statements. If conditions caused by the COVID-19 pandemic worsen and the Company’s earnings and cash flow from operations do not start to recover as contemplated in the Company's current plans, the Company may not be able to maintain compliance with its amended financial covenant and could have a material adverse effect on the Company. See Note 8, “Long-Term Debt,” for further discussion of covenant amendment.
In addition, as of June 30, 2020, we assessed other accounting estimates based on forecasted financial information, including, but not limited to, our allowance for credit losses, the carrying value of our goodwill, intangible assets, and other long-lived assets. At this time we cannot predict the ultimate financial impact of the COVID-19 pandemic on our business, and to what extent economic and operating conditions recover on a sustainable basis globally. Accordingly, if the impact is more severe or longer in duration than we have assumed, such impact could potentially result in impairments and increases in credit allowances.

NOTE 2—Acquisitions:
On October 31, 2019 (the “Acquisition Closing Date”), we completed the previously announced acquisition of a 60% interest in Mineral Resources Limited’s (“MRL”) Wodgina hard rock lithium mine project (“Wodgina Project”) for a total purchase price of approximately $1.3 billion. The purchase price is comprised of $820 million in cash and the transfer of 40% interest in certain lithium hydroxide conversion assets being built by Albemarle in Kemerton, Western Australia, valued at $480 million. The cash consideration was initially funded by the 2019 Credit Facility entered into on August 14, 2019. In addition, during the first six months of 2020, we paid $22.6 million of agreed upon purchase price adjustments. The stamp duty levied on the assets purchased of $61.5 million, originally recorded as an expense during the year ended December 31, 2019, was paid in the second quarter of 2020 and is included in Change in working capital on the condensed consolidated statement of cash flows.
In addition, we have formed an unincorporated joint venture with MRL, MARBL, for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina Project
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
and for the operation of the Kemerton assets. We are entitled to a pro rata portion of 60% of all minerals (other than iron ore and tantalum) recovered from the tenements and produced by the joint venture. The joint venture is unincorporated with each investor holding an undivided interest in each asset and proportionately liable for each liability; therefore, our proportionate share of assets, liabilities, revenue and expenses are included in the appropriate classifications in the consolidated financial statements. As part of this acquisition, MARBL Lithium Operations Pty. Ltd. (the “Manager”), an incorporated joint venture, has been formed to manage the Wodgina Project. We consolidate our 60% ownership interest in the Manager in our consolidated financial statements.
This acquisition provides access to a high-quality hard rock lithium source, further diversifying our global lithium resource base, and strengthens our position by increasing capacity to support future market demand. In connection with the acquisition, we idled production of the Wodgina spodumene mine until demand supports bringing the mine back to production.
The results of our 60% ownership interest in MARBL are reported within the Lithium segment. Included in Net income attributable to Albemarle Corporation for the three-month and six-month periods ended June 30, 2020 is a loss of approximately $5.2 million and $9.9 million, respectively, attributable to the joint venture. There were no net sales attributable to the joint venture during this period. Included in Selling, general and administrative expenses on our consolidated statements of income for the three-month and six-month periods ended June 30, 2020 is $0.4 million and $0.8 million, respectively, of costs directly related to this acquisition, primarily consisting of professional services and advisory fees. Pro forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the Net Sales and Net Income of the Wodgina Project on our consolidated statements of income.
Preliminary Purchase Price Allocation
The aggregate purchase price noted above was allocated to the major categories of assets and liabilities acquired based upon their estimated fair values at the Acquisition Closing Date, which were based, in part, upon third-party appraisals for certain assets. The excess of the purchase price over the preliminary estimated fair value of the net assets acquired was approximately $18.8 million and was recorded as Goodwill.
The following table summarizes the consideration paid for the joint venture and the amounts of the assets acquired and liabilities assumed as of the acquisition date, which have been allocated on a preliminary basis (in thousands):
Total purchase price:
Cash paid
$820,000  
Fair value of 40% interest in Kemerton assets
480,000  
Purchase agreement completion adjustment and other adjustments
22,566  
Total purchase price
$1,322,566  
Net assets acquired:
Inventories
$33,900  
Other current assets
11,280  
Property, plant and equipment:
Land improvements
2,912  
Buildings and improvements
19,268  
Machinery and equipment
163,808  
Mineral rights and reserves
1,058,700  
Construction in progress
103,700  
Current liabilities
(10,695) 
Long-term debt(a)
(55,806) 
Other noncurrent liabilities
(23,296) 
Total identifiable net assets
1,303,771  
Goodwill
18,795  
Total net assets acquired
$1,322,566  
(a)  Represents 60% ownership interest in finance lease acquired. See Note 10, “Leases,” for further information on the Company’s leases.
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to Goodwill, is based upon preliminary information and is subject to change within the measurement-period (up to one year from the acquisition date) as additional information concerning final asset and liability valuations is obtained. Significant changes in our purchase price allocation since our initial preliminary estimates reported in the fourth quarter of 2019 were primarily related to an increase in the estimated fair values of mineral rights and reserves, which resulted in a decrease to recognized goodwill of approximately $13.0 million. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of Mineral rights and reserves and Goodwill. The fair value of the assets acquired and liabilities assumed were based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. The fair value of the mineral reserves of $1,025.9 million was determined using an excess earnings approach, which requires management to estimate future cash flows, net of capital investments in the specific operation. Management’s cash flow projections involved the use of significant estimates and assumptions with respect to the expected production of the mine over the estimated time period, sales prices, shipment volumes, and expected profit margins. The present value of the projected net cash flows represents the preliminary fair value assigned to mineral reserves. The discount rate is a significant assumption used in the valuation model. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could be subject to possible impairment.
Goodwill arising from the acquisition consists largely of anticipated synergies and economies of scale from the combined companies and overall strategic importance of the acquired businesses to Albemarle. The goodwill attributable to the acquisition will not be amortizable or deductible for tax purposes.

NOTE 3—Goodwill and Other Intangibles:

The following table summarizes the changes in goodwill by reportable segment for the six months ended June 30, 2020 (in thousands):
LithiumBromine SpecialtiesCatalystsAll OtherTotal
Balance at December 31, 2019$1,370,846  $20,319  $181,034  $6,586  $1,578,785