Investor Presentation KeyBanc Basic Materials Conference

Investor Presentation

KeyBanc Basic Materials Conference

September 11, 2013

Tony Parnell, Vice President, Global Sales & Supply ChainScott Tozier, Senior Vice President, Chief Financial Officer

Lorin Crenshaw, Director, Investor Relations

Forward-Looking Statements

Some of the information presented in this presentation and discussions that follow, including, without limitation,

statements with respect to product development, changes in productivity, market trends, price, volume and mix

changes, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, economic

trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that

actual results will not differ materially.

Factors that could cause actual results to differ materially include, without limitation: changes in economic and

business conditions; changes in financial and operating performance of our major customers, industries and markets

served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from

other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale

of our products; availability of raw materials; changes in the cost of raw materials and energy, and our ability to pass

through such increases; acquisitions and divestitures, and changes in performance of acquired companies; changes in

our markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting our

operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to

maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest

affecting the global economy, including adverse effects from terrorism or hostilities; political instability affecting our

manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our

global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization

programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary

policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the

performance of our pension fund investments and increase our pension expense and funding obligations; volatility and

substantial uncertainties in the debt and equity markets; technology or intellectual property infringement, including

cyber security breaches, and other innovation risks; decisions we may make in the future; and the other factors detailed

from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual

Report on Form 10-K and Quarterly Reports on Form 10-Q.

2

North

America

40%

W. Europe

20%

ROW

40%

Strong Positions in High Margin Businesses

Catalysts

• Leading supplier of top performance

catalysts and related services to the oil

refining and plastics industries

Bromine Derivatives

• Leading supplier of fire safety solutions

• Completion fluids, crop protection,

pollution control and food safety

• Robust bromine sourcing platform

Custom Manufacturing

• Leading custom mfr. within targeted ag,

renewable chemistry, specialty pharma

and electronic materials markets

(TT

M %

of

sale

s a

s o

f 2

Q1

3)

Competitively advantaged portfolio with strong leadership team, attractive growth

opportunities and customers that value performance-based technologies

3

Fine

Chemistry

29%

Polymer

Solutions

32%

Catalysts

39%

63%

37%

Fine Chemistry

North

America

53%

ROW

30%

W. Europe

17%

Performance

Chemicals

Fine Chemistry

Services

2Q13 TTM Financial Summary

Sales: $0.75B

Segment Income: $0.15B

Segment Margin: 19%

4

(TT

M %

of

sale

s a

s o

f 2

Q1

3)

Growth Drivers

• Resource Management

• Energy demand and increased deep water

spending driving completion fluids

• Clean air drives in developing markets

bolstering mercury control

• Population Growth & Rising Middle Class

• Aging populace supports APIs

• Higher protein diets will trigger improved food

safety standards

• Increased demand for ag actives and

intermediates to improve yields and efficiency

• Demand for rapid process R&D and

commercialization services

Competitive Advantages

• Technology / Product performance

• Access to robust bromine sourcing platform

• Speed to market

• Long history of performance and reliability

• Trade secrets related to bromine derivatives

China

Relative

Production

Capacity

(Total: ~675K MT)

Excellent Global Bromine Sourcing Position

0 2000 4000 6000 8000 10000

Dead Sea

Arkansas

India

China

Sea Water

ppm bromine

60-70 ppm

150-200 ppm

5000-6000 ppm

>10,000 ppm

Magnolia, AR

Safi, Jordan

Shandong, China

Gujarat, India

1500- 2500 ppm

5

73%

27%

Polymer Solutions

North

America

32% ROW

44%

W. Europe

24%

Fire Safety

Stabilizers &

Curatives


Sales: $0.86B


Segment Margin: 20%

6

(TT

M %

of

sale

s a

s o

f 2

Q1

3)

Growth Drivers

• Consumerism

• Rising global wealth driving demand for consumer

electronics, automotives and construction

• Prospect of fire safety standards in BRICs

• Technology

• Surging data traffic requires high-end servers


• Demand for eco-friendly products

• Energy-driven insulation demand



• Access to robust bromine sourcing platform

• Track record of reliable, safe, high-performing

products

• Trade secrets related to bromine derivatives

23%

77%

Catalysts

7


Sales: $1.01B


Segment Margin: 25%

North

America

37% ROW

44%

W. Europe

19%

Refinery

Catalysts

Performance Catalyst

Solutions

(TT

M %

of

sale

s a

s o

f 2

Q1

3)


• More stringent air quality mandates being

implemented globally

• Population Growth & Rising Middle Class

• Rising fuel consumption in developing economies

• Rising per capita plastics consumption

• Infrastructure spending

• Technology

• High purity metal organics for LED market

• Prospective PE/PP capacity additions in NA

Growth Drivers



• History of innovation and new investments

• Technical Service / Customer knowledge

• Complex chemistry & materials handling

• Structurally advantaged cost position (TMA)

• Trade Secrets / Patents

20132005

Forces of Globalization & Mega Trends Play to our Strengths

North

America 40%

W. Europe

20%

ROW

40%

(TT

M %

of

sale

s a

s o

f 2

Q1

3)

North

America 43%

W. Europe

32%

ROW

25%

Mega Trends and Strategic Investments Expected to Continue

Shifting Revenue Toward Faster-Growing Markets

8

Asia: Organization in Place to Support Growth in Highly

Complex Market

9

Meaningful critical mass

Local distributors key

channel to market

$342 Million

2005

Over 500 people focused

on building Asia

4 key manufacturing

assets

Opened first office in

Shanghai

$590 Million

2010Dramatic expansion (Korea

and China) advances

plastics and electronics

market positions

New HQ will expand and

better integrate sales,

business, R&D and tech

service efforts

Establishing robust supply

chain infrastructure to

serve and deliver

Satellite offices in Beijing

& Guangzhou

$637 Million

2013 8% CAGR

2005 - 2013

(Revenue in millions)

2013 revenue reflects TTM through 6/30/13

Middle East & India: Huge Growth Opportunities in

Supporting Downstream Integration

10

$34 Million

2005

Regional office in Dubai to

service Arabian Gulf & India

Dramatic growth to support

refining shift

Established Saudi JV to

support petrochemical

growth

Gulf begins to establish

broader petrochemicals base

$171 Million

2010 Saudi JV operational;

drives leadership in

organometallics to meet

growing regional demand

and supply security needs

Strategic expansion of

bromine sourcing

platform complete

(Jordan)

Doubled size of Dubai

office

$241 Million

2013 28% CAGR

2005 – 2013



Sales handled remotely

from Europe

World-class Jordan

bromine base established

Latin America: Opportunity for Refinery Catalysts

11

FCCSA joint venture with

Petrobras

$21 Million

2005

Established critical mass of

employee base

Miami office base

$56 Million

2010Brazil office creates

regional hub and platform

for growth

Increased technology

exchange/ collaboration

with Petrobras

Development of new core

business in region

Well-positioned to support

the eventual exploration

and production of reserves

$76 Million

2013 18% CAGR

2005 - 2013



12

FCC: Performance-Based Sale with Tremendous Value in Use

Value Drivers:

• Crude Slate (today favors

ALB technology)

• Maximize Diesel Yield

• Maximize Propylene Yield

• Maximize Gasoline Yield

• Octane Enhancement

FCC Cost Per Barrel of Crude Refined: Minimal

Value

Per Unit

Cost Per Unit

Exceptional Value Proposition

Estimated 5 to 10x Return on Catalyst Investment by the Customer

13

Bromine Value Creation

Value Drivers:

• Few Economic Product

Substitutes

• Excellent Adhesion to Rubber

• Minimal Air Permeability

• Fast Cure Rate = Maximum Throughput

Cost Per Radial Tire Manufactured: ~$0.015

Value

Per Unit

Cost Per Unit

Another Example of a Niche Specialty Chemical Value Play

Albemarle Sales Force: Diverse, Trained, Connected

14

Multi-Cultural Experienced

Sales force has an average of 20 years

of specialty chemical experience

~60% of sales force has experience in multiple product

markets

Highly Trained

94% of sales force holds a college

degree

All are graduates of ALB Negotiation

Training

Asia

31%

EU & ME

37%

Americas

32%

Pension

$0.2

M&A

$0.03

Share

Buyback

$0.8 CAPEX

$0.7

Dividends

$0.2

Disciplined Capital Allocation

• Cash from operations of $500 - 550M

• CAPEX around $175M

• Strategic M&A

• Maintain investment grade credit rating

• 20% dividend increase in 1Q13

• Expect to buyback 10% of shares by year end

• No pension contributions in 2013

• Working capital target of 20% of sales

($ in billions)

2013 Outlook

Capital Allocation (2010 – Q2 2013)

15

Targeting 1.0x Leverage Ratio (Net Debt-to-EBITDA)

www.albemarle.com

16

Investor Presentation KeyBanc Basic Materials Conference

Documents

Transcript of Investor Presentation KeyBanc Basic Materials Conference