Is Lithium Miner Albemarle Staging a Comeback?

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Albemarle Corp. (NYSE: ALB), the world’s largest producer of lithium, reported fourth-quarter and full-year 2018 results after markets closed Wednesday. The company posted adjusted diluted earnings per share (EPS) of $1.53 on revenue of $921.7 million for the quarter. In the year-ago period, EPS came in at $1.34 on sales of $857.8 million. Analysts had been looking for adjusted EPS of $1.47 and revenue of $894.83 million.

For the full year, EPS totaled $5.48 on sales of $3.37 billion, compared with EPS of $4.59 and sales of $3.07 billion in 2017. Analysts had estimates of $5.42 in EPS and $3.37 billion in revenues.

Lithium sales totaled $341.6 million in the quarter, an increase of 18% compared with the fourth quarter of last year. The company said that increased sales volume and favorable pricing paced the increase while currency exchange effects knocked $1.4 million off the total. Lithium contributed just over 50% of the company’s adjusted EBITDA, driven by 10% volume growth and 9% pricing compared to 2017.

Albemarle stock hit a high of around $141 in October of 2017 before dropping to below $87 last May. Since then the stock has bounced around in a relatively narrow range that topped out at about $108 on October 29. Over the past 12 months, the shares are down 27% compared to a gain of about 3% for the S&P 500.

Earlier this month, another lithium producer, Livent Corp. (NASDAQ: LTHM), reported results that matched expectations, but the company had some negative things to say about sales to China, the world’s largest market for lithium.

In its outlook for 2019, Albemarle said it expects net sales to range from $3.65 billion to $3.85 billion, representing growth of about 8% to 14%, with adjusted EBITDA between $1.07 billion and $1.140 billion, up approximately 6% to 13%. Adjusted diluted earnings per share are forecast in a range of $6.10 and $6.50, up 11% to 19% compared with 2018. Analysts had an EPS estimate of $6.14 and a revenue estimate of $3.64 billion.

Albemarle has to raise production. CEO Luke Kissam commented:

2018 was a successful year for Albemarle on many fronts. Excluding divested businesses, we delivered full year, total company adjusted EBITDA growth of 17%, adjusted diluted EPS growth of 23% and we finished the year strong as all of our reportable segments delivered growth in the fourth quarter. In addition, we returned significant value to shareholders through increased dividends of $145 million and $500 million in share repurchases, while continuing significant growth investment in our Lithium platform.

Shares traded up more than 7% in Thursday’s premarket session to $88.84, in a 52-week range of $71.89 to $118.83. The 12-month consensus price target was $109.25 before the report was released.

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