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ALBEMARLE CORP - Quarter Report: 2023 September (Form 10-Q)

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 September 30, 2023
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
_________________________________________________ 
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
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  ☒
Number of shares of common stock, $.01 par value, outstanding as of October 25, 2023: 117,353,272

Table of Contents
ALBEMARLE CORPORATION
INDEX – FORM 10-Q
 
  Page
Number(s)
Item 5.
Other Information
EXHIBITS
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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
September 30,		Nine Months Ended
September 30,
 2023202220232022
Net sales$2,310,596 $2,091,805 $7,261,038 $4,699,126 
Cost of goods sold2,255,662 1,047,991 5,371,077 2,625,858 
Gross profit54,934 1,043,814 1,889,961 2,073,268 
Selling, general and administrative expenses173,866 134,479 725,242 375,989 
Research and development expenses21,082 18,358 62,972 51,827 
Loss on sale of interest in properties— — — 8,400 
Operating (loss) profit(140,014)890,977 1,101,747 1,637,052 
Interest and financing expenses(29,332)(29,691)(81,686)(98,934)
Other income, net11,182 7,974 147,628 32,237 
(Loss) income before income taxes and equity in net income of unconsolidated investments(158,164)869,260 1,167,689 1,570,355 
Income tax (benefit) expense(8,551)196,938 311,399 366,486 
(Loss) income before equity in net income of unconsolidated investments(149,613)672,322 856,290 1,203,869 
Equity in net income of unconsolidated investments (net of tax)470,306 258,884 1,417,545 449,476 
Net income320,693 931,206 2,273,835 1,653,345 
Net income attributable to noncontrolling interests(18,160)(33,991)(82,679)(95,974)
Net income attributable to Albemarle Corporation$302,533 $897,215 $2,191,156 $1,557,371 
Basic earnings per share$2.58 $7.66 $18.68 $13.30 
Diluted earnings per share$2.57 $7.61 $18.60 $13.23 
Weighted-average common shares outstanding – basic117,349 117,136 117,304 117,106 
Weighted-average common shares outstanding – diluted117,783 117,869 117,797 117,749 
See accompanying Notes to the Condensed Consolidated Financial Statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands)
(Unaudited)

 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Net income$320,693 $931,206 $2,273,835 $1,653,345 
Other comprehensive (loss) income, net of tax:
Foreign currency translation and other(143,957)(200,520)(103,376)(324,230)
Cash flow hedge(39,088)(9,652)(36,961)(8,144)
Interest rate swap— — — 7,399 
Total other comprehensive loss, net of tax(183,045)(210,172)(140,337)(324,975)
Comprehensive income137,648 721,034 2,133,498 1,328,370 
Comprehensive income attributable to noncontrolling interests(18,141)(33,990)(82,652)(95,858)
Comprehensive income attributable to Albemarle Corporation$119,507 $687,044 $2,050,846 $1,232,512 
See accompanying Notes to the Condensed Consolidated Financial Statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
September 30,December 31,
20232022
Assets
Current assets:
Cash and cash equivalents
$1,601,668 $1,499,142 
Trade accounts receivable, less allowance for doubtful accounts (2023 – $2,992; 2022 – $2,534)
1,179,012 1,190,970 
Other accounts receivable528,744 185,819 
Inventories3,404,212 2,076,031 
Other current assets411,926 234,955 
Total current assets7,125,562 5,186,917 
Property, plant and equipment, at cost10,929,150 9,354,330 
Less accumulated depreciation and amortization2,620,535 2,391,333 
Net property, plant and equipment8,308,615 6,962,997 
Investments1,254,041 1,150,553 
Other assets328,518 250,558 
Goodwill1,606,077 1,617,627 
Other intangibles, net of amortization260,541 287,870 
Total assets$18,883,354 $15,456,522 
Liabilities And Equity
Current liabilities:
Accounts payable to third parties$1,812,168 $1,533,624 
Accounts payable to related parties795,088 518,377 
Accrued expenses689,106 505,894 
Current portion of long-term debt162,351 2,128 
Dividends payable46,661 46,116 
Income taxes payable436,238 134,876 
Total current liabilities3,941,612 2,741,015 
Long-term debt3,495,971 3,214,972 
Postretirement benefits32,797 32,751 
Pension benefits153,955 159,571 
Other noncurrent liabilities807,051 636,596 
Deferred income taxes289,529 480,770 
Commitments and contingencies (Note 9)
Equity:
Albemarle Corporation shareholders’ equity:
Common stock, $.01 par value, issued and outstanding – 117,352 in 2023 and 117,168 in 2022
1,174 1,172 
Additional paid-in capital2,945,975 2,940,840 
Accumulated other comprehensive loss(700,972)(560,662)
Retained earnings7,651,638 5,601,277 
Total Albemarle Corporation shareholders’ equity9,897,815 7,982,627 
Noncontrolling interests264,624 208,220 
Total equity10,162,439 8,190,847 
Total liabilities and equity$18,883,354 $15,456,522 
See accompanying Notes to the Condensed Consolidated Financial Statements.
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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 June 30, 2023117,339,879 $1,174 $2,936,036 $(517,946)$7,396,045 $9,815,309 $272,731 $10,088,040 
Net income302,533 302,533 18,160 320,693 
Other comprehensive loss(183,026)(183,026)(19)(183,045)
Cash dividends declared, $0.40 per common share
(46,940)(46,940)(26,248)(73,188)
Stock-based compensation11,159 11,159 11,159 
Exercise of stock options592 — 36 36 36 
Issuance of common stock, net17,031 — — — — 
Withholding taxes paid on stock-based compensation award distributions(5,785)— (1,256)(1,256)(1,256)
Balance at September 30, 2023117,351,717 $1,174 $2,945,975 $(700,972)$7,651,638 $9,897,815 $264,624 $10,162,439 
Balance at June 30, 2022117,121,748 $1,171 $2,927,086 $(507,138)$3,664,172 $6,085,291 $215,684 $6,300,975 
Net income897,215 897,215 33,991 931,206 
Other comprehensive loss(210,171)(210,171)(1)(210,172)
Cash dividends declared, $0.395 per common share
(46,272)(46,272)(17,683)(63,955)
Stock-based compensation7,405 7,405 7,405 
Exercise of stock options8,377 — 735 735 735 
Issuance of common stock, net21,597 — — — — 
Withholding taxes paid on stock-based compensation award distributions(6,358)— (1,567)(1,567)(1,567)
Balance at September 30, 2022117,145,364 $1,171 $2,933,659 $(717,309)$4,515,115 $6,732,636 $231,991 $6,964,627 
Balance at December 31, 2022117,168,366 $1,172 $2,940,840 $(560,662)$5,601,277 $7,982,627 $208,220 $8,190,847 
Net income2,191,156 2,191,156 82,679 2,273,835 
Other comprehensive loss(140,310)(140,310)(27)(140,337)
Cash dividends declared, $1.20 per common share
(140,795)(140,795)(26,248)(167,043)
Stock-based compensation31,186 31,186 31,186 
Exercise of stock options1,812 — 117 117 117 
Issuance of common stock, net293,891 3 (3)— — 
Withholding taxes paid on stock-based compensation award distributions(112,352)(1)(26,165)(26,166)(26,166)
Balance at September 30, 2023117,351,717 $1,174 $2,945,975 $(700,972)$7,651,638 $9,897,815 $264,624 $10,162,439 
Balance at December 31, 2021117,015,333 $1,170 $2,920,007 $(392,450)$3,096,539 $5,625,266 $180,341 $5,805,607 
Net income1,557,371 1,557,371 95,974 1,653,345 
Other comprehensive loss(324,859)(324,859)(116)(324,975)
Cash dividends declared, $1.185 per common share
(138,795)(138,795)(44,208)(183,003)
Stock-based compensation24,213 24,213 24,213 
Exercise of stock options16,166 — 1,203 1,203 1,203 
Issuance of common stock, net176,293 2 385 387 387 
Withholding taxes paid on stock-based compensation award distributions(62,428)(1)(12,149)(12,150)(12,150)
Balance at September 30, 2022117,145,364 $1,171 $2,933,659 $(717,309)$4,515,115 $6,732,636 $231,991 $6,964,627 
See accompanying Notes to the Condensed Consolidated Financial Statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
20232022
Cash and cash equivalents at beginning of year$1,499,142 $439,272 
Cash flows from operating activities:
Net income 2,273,835 1,653,345 
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization285,801 215,280 
Loss on sale of investment in properties— 8,400 
Stock-based compensation and other29,465 24,649 
Equity in net income of unconsolidated investments (net of tax)(1,417,545)(449,476)
Dividends received from unconsolidated investments and nonmarketable securities1,939,225 350,895 
Pension and postretirement benefit5,925 (12,299)
Pension and postretirement contributions(12,243)(10,929)
Unrealized (gain) loss on investments in marketable securities(36,740)3,864 
Loss on early extinguishment of debt— 19,219 
Deferred income taxes(182,764)77,968 
Working capital changes(1,332,042)(1,004,236)
Non-cash transfer of 40% value of construction in progress of Kemerton plant to MRL17,132 115,969 
Other, net(146,509)(37,047)
Net cash provided by operating activities1,423,540 955,602 
Cash flows from investing activities:
Acquisitions, net of cash acquired(43,207)— 
Capital expenditures(1,465,193)(815,934)
(Purchases) sales of marketable securities, net(205,952)3,132 
Investments in equity investments and nonmarketable securities(1,279)(507)
Net cash used in investing activities(1,715,631)(813,309)
Cash flows from financing activities:
Repayments of long-term debt and credit agreements— (455,000)
Proceeds from borrowings of long-term debt and credit agreements300,000 1,964,216 
Other debt borrowings (repayments), net172,791 (391,067)
Fees related to early extinguishment of debt— (9,767)
Dividends paid to shareholders(140,251)(138,165)
Dividends paid to noncontrolling interests(79,393)(44,208)
Proceeds from exercise of stock options117 1,590 
Withholding taxes paid on stock-based compensation award distributions(26,166)(12,150)
Other(191)(4,198)
Net cash provided by financing activities226,907 911,251 
Net effect of foreign exchange on cash and cash equivalents167,710 (110,013)
Increase in cash and cash equivalents102,526 943,531 
Cash and cash equivalents at end of period$1,601,668 $1,382,803 
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 consolidated balance sheets as of September 30, 2023 and December 31, 2022, our consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of changes in equity for the three- and nine- month periods ended September 30, 2023 and 2022 and our condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 2022. 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, 2022, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 15, 2023. The December 31, 2022 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- and nine-month periods ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

NOTE 2—Acquisitions:
Guangxi Tianyuan New Energy Materials Acquisition
On October 25, 2022, the Company completed the acquisition of all of the outstanding equity of Guangxi Tianyuan New Energy Materials Co., Ltd. (“Qinzhou”) for approximately $200 million in cash, which included the deferral of approximately $29 million. The full amount of the deferral, net of working capital adjustments, was paid in installments ending in July 2023. Qinzhou's operations include a lithium processing plant strategically positioned near the Port of Qinzhou in Guangxi, which began commercial production in the first half of 2022. The plant has designed annual conversion capacity of up to 25,000 metric tons of lithium carbonate equivalent (“LCE”) and is capable of producing battery-grade lithium carbonate and lithium hydroxide.
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 fair value of the assets and liabilities was primarily related to Property, plant and equipment of $106.6 million, Other intangibles of $16.3 million, net current liabilities of $5.5 million, and long-term liabilities of $7.1 million. The excess of the purchase price over the fair value of the net assets acquired was $76.8 million and was recorded as Goodwill.
The allocation of the purchase price was finalized in the third quarter of 2023. The fair value of the assets acquired and liabilities assumed was 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 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 was recorded within the Energy Storage segment and 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—Income Taxes:
The effective income tax rate for the three-month and nine-month period ended September 30, 2023 was 5.4% and 26.7%, respectively, compared to 22.7% and 23.3% for the three-month and nine-month periods ended September 30, 2022, respectively. The three-month period ended September 30, 2023 included tax expense related to an uncertain tax position in Chile offset by the geographic mix of earnings. The Company’s effective income tax rate fluctuates based on, among other factors, the amount and location of income. The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three-month and nine-month periods ended September 30, 2023 was impacted by a variety of factors, primarily the location in which income was earned, foreign-derived intangible income and an uncertain tax position recorded in Chile. During the nine-month period ended September 30, 2023, the effective tax rate was also impacted by a non-deductible accrual for the agreements in principle to resolve a previously disclosed legal matter with the U.S. Department of Justice (“DOJ”), the SEC, and the Dutch Public Prosecutor (“DPP”) (see Note 9, “Commitments and Contingencies,” for further information). The difference between the U.S. federal statutory income tax rate and our effective income tax rate for the three-
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
month and nine-month periods ended September 30, 2022 was impacted by a variety of factors, primarily global intangible low-taxed income and the location in which income was earned.

NOTE 4—Earnings Per Share:
Basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2023 and 2022 are calculated as follows (in thousands, except per share amounts):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Basic earnings per share
Numerator:
Net income attributable to Albemarle Corporation$302,533 $897,215 $2,191,156 $1,557,371 
Denominator:
Weighted-average common shares for basic earnings per share117,349 117,136 117,304 117,106 
Basic earnings per share$2.58 $7.66 $18.68 $13.30 
Diluted earnings per share
Numerator:
Net income attributable to Albemarle Corporation$302,533 $897,215 $2,191,156 $1,557,371 
Denominator:
Weighted-average common shares for basic earnings per share117,349 117,136 117,304 117,106 
Incremental shares under stock compensation plans434 733 493 643 
Weighted-average common shares for diluted earnings per share117,783 117,869 117,797 117,749 
Diluted earnings per share$2.57 $7.61 $18.60 $13.23 
At September 30, 2023 there were 103,916 common stock equivalents not included in the computation of diluted earnings per share because their effect would have been anti-dilutive.
On July 18, 2023, the Company declared a cash dividend of $0.40, an increase from the prior year regular quarterly dividend. This dividend was paid on October 2, 2023 to shareholders of record at the close of business as of September 15, 2023. On October 23, 2023, the Company declared a cash dividend of $0.40 per share, which is payable on January 2, 2024 to shareholders of record at the close of business as of December 15, 2023.
NOTE 5—Inventories:
The following table provides a breakdown of inventories at September 30, 2023 and December 31, 2022 (in thousands):
September 30,December 31,
20232022
Finished goods$2,916,284 $1,679,473 
Raw materials and work in process(a)
359,887 296,998 
Stores, supplies and other128,041 99,560 
Total$3,404,212 $2,076,031 

(a)Includes $194.4 million and $133.2 million at September 30, 2023 and December 31, 2022, respectively, of work in process in our Energy Storage segment.
The Company eliminates the balance of intra-entity profits from its equity method investments to the Company to Inventories, specifically finished goods. The balance of intra-entity profits on inventory purchased from equity method investments in Inventories totaled $729.4 million and $332.3 million at September 30, 2023 and December 31, 2022, respectively.

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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 6—Investments:
MARBL Joint Venture Agreement Restructuring
On October 18, 2023, the Company closed on the restructuring of the MARBL lithium joint venture in Australia (“MARBL”) with Mineral Resources Limited (“MRL”). This updated structure is intended to significantly simplify the commercial operation agreements previously entered into, retain full control of downstream conversion assets and to provide greater strategic opportunities for each company based on their global operations and the evolving lithium market.
Under the amended agreements, Albemarle acquired the remaining 40% ownership of the Kemerton lithium hydroxide processing facility in Australia that was jointly owned with Mineral Resources through the MARBL joint venture. Following this restructuring, Albemarle and MRL each own 50% of the Wodgina Lithium Mine Project (“Wodgina”), and MRL operates the Wodgina mine on behalf of the joint venture. Albemarle expects to pay MRL between an estimated $380 million to $400 million in cash, which includes the $180 million of consideration for the remaining ownership of Kemerton as well as a payment for the economic effective date of the transaction being retroactive to April 1, 2022.
As a result of this transaction, the Company expects to record a gain on the consolidated statement of income during the fourth quarter of 2023.
Variable Interest Entities
The Company holds a 49% equity interest in Windfield Holdings Pty. Ltd. (“Talison”), where the ownership parties share risks and benefits disproportionate to their voting interests. As a result, the Company considers Talison to be a variable interest entity (“VIE”), however this investment is not consolidated as the Company is not the primary beneficiary. The carrying amount of the Company’s 49% equity interest in Windfield, which is the Company’s most significant VIE, was $524.9 million and $694.5 million at September 30, 2023 and December 31, 2022, respectively. The Company’s unconsolidated VIEs are reported in Investments on the consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to, these entities, and its maximum exposure to loss in connection with its continuing involvement with these entities is limited to the carrying value of the investments.
The following table summarizes the unaudited results of operations for the Talison joint venture, which met the significant subsidiary test for subsidiaries not consolidated or 50% or less owned persons under Rule 10-01 of Regulation S-X, for the three-month and nine-month periods ended September 30, 2023 and 2022 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net sales$1,478,430 $1,295,161 $5,756,748 $2,314,686 
Gross profit1,410,698 1,245,340 5,556,634 2,167,442 
Income before income taxes1,353,249 1,169,655 5,289,278 1,915,577 
Net income947,275 818,758 3,702,503 1,340,908 
Other
As part of the proceeds from the sale of the fine chemistry services (“FCS”) business on June 1, 2021, W.R. Grace & Co. (“Grace”) issued Albemarle preferred equity of a Grace subsidiary having an aggregate stated value of $270 million. The preferred equity can be redeemed at Grace’s option under certain conditions and began accruing PIK dividends at an annual rate of 12% on June 1, 2023. In addition, the preferred equity can be redeemed by Albemarle when the accumulated balance reaches 200% of the original value. This preferred equity had a fair value of $280.9 million and $260.1 million at September 30, 2023 and December 31, 2022, respectively, which is reported in Investments in the consolidated balance sheets.


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 7—Goodwill and Other Intangibles:

The following table summarizes the changes in goodwill by reportable segment for the nine-month period ended September 30, 2023 (in thousands):
Energy StorageSpecialtiesKetjenTotal
Balance at December 31, 2022
$1,424,275 $20,319 $173,033 $1,617,627 
   Acquisitions(a)
742 — — 742 
   Segment realignment(b)
(12,316)12,316 — — 
   Foreign currency translation adjustments and other(11,358)— (934)(12,292)
Balance at September 30, 2023$1,401,343 $32,635 $172,099 $1,606,077 
(a)    Represents final purchase price adjustments for the Qinzhou acquisition. See Note 2, “Acquisitions,” for additional information.
(b)    Effective January 1, 2023, the Company realigned its Lithium and Bromine reportable segments into the Energy Storage and Specialties reportable segments. See Note 11, “Segment Information,” for additional details. As a result, the Company transferred goodwill from its legacy Lithium segment to the new Specialties reportable segment during the nine-month period ended September 30, 2023.

The following table summarizes the changes in other intangibles and related accumulated amortization for the nine-month period ended September 30, 2023 (in thousands):
Customer Lists and Relationships
Trade Names and Trademarks(a)
Patents and TechnologyOtherTotal
Gross Asset Value
  Balance at December 31, 2022
$412,670 $13,161 $46,399 $35,186 $507,416 
Foreign currency translation adjustments and other(6,467)(88)(1,417)(1,201)(9,173)
  Balance at September 30, 2023
$406,203 $13,073 $44,982 $33,985 $498,243 
Accumulated Amortization
  Balance at December 31, 2022
$(177,627)$(3,587)$(23,790)$(14,542)$(219,546)
Amortization(19,529)— (1,937)(725)(22,191)
Foreign currency translation adjustments and other3,084 14 469 468 4,035 
  Balance at September 30, 2023
$(194,072)$(3,573)$(25,258)$(14,799)$(237,702)
Net Book Value at December 31, 2022
$235,043 $9,574 $22,609 $20,644 $287,870 
Net Book Value at September 30, 2023
$212,131 $9,500 $19,724 $19,186 $260,541 
(a)    Net Book Value includes only indefinite-lived intangible assets.


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 8—Long-Term Debt:
Long-term debt at September 30, 2023 and December 31, 2022 consisted of the following (in thousands):
September 30,December 31,
20232022
1.125% notes due 2025
$398,701 $401,265 
1.625% notes due 2028
528,600 532,000 
3.45% Senior notes due 2029
171,612 171,612 
4.65% Senior notes due 2027
650,000 650,000 
5.05% Senior notes due 2032
600,000 600,000 
5.45% Senior notes due 2044
350,000 350,000 
5.65% Senior notes due 2052
450,000 450,000 
Commercial paper notes156,500 — 
Interest-free loan300,000 — 
Variable-rate foreign bank loans20,125 2,997 
Finance lease obligations120,844 76,537 
Other11,773 11,378 
Unamortized discount and debt issuance costs(99,833)(28,689)
Total long-term debt3,658,322 3,217,100 
Less amounts due within one year162,351 2,128 
Long-term debt, less current portion$3,495,971 $3,214,972 
Current portion of long-term debt at September 30, 2023 consisted primarily of commercial paper notes with a weighted-average interest rate of approximately 5.52% and a weighted-average maturity of 3 days.
In the second quarter of 2023 the Company received a loan of $300.0 million to be repaid in five equal annual installments beginning on December 31, 2026. This interest-free loan was discounted using an imputed interest rate of 5.53% and the Company will amortize that discount through Interest and financing expenses over the term of the loan.

NOTE 9—Commitments and Contingencies:
Environmental
The following activity was recorded in environmental liabilities for the nine months ended September 30, 2023 (in thousands):
Beginning balance at December 31, 2022
$38,245 
Expenditures(3,006)
Accretion of discount865 
Additions and changes in estimates1,869 
Foreign currency translation adjustments and other(137)
Ending balance at September 30, 2023
37,836 
Less amounts reported in Accrued expenses10,946 
Amounts reported in Other noncurrent liabilities$26,890 
Environmental remediation liabilities included discounted liabilities of $30.5 million and $30.1 million at September 30, 2023 and December 31, 2022, respectively, discounted at rates with a weighted-average of 3.6% and 3.4%, respectively, and with the undiscounted amount totaling $58.4 million and $57.5 million at September 30, 2023 and December 31, 2022, respectively. For certain locations where the Company is operating groundwater monitoring and/or remediation systems, prior owners or insurers have assumed all or most of the responsibility.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The amounts recorded represent our future remediation and other anticipated environmental liabilities. These liabilities typically arise during the normal course of our operational and environmental management activities or at the time of acquisition of the site, and are based on internal analysis as well as input from outside consultants. As evaluations proceed at each relevant site, changes in risk assessment practices, remediation techniques and regulatory requirements can occur, therefore such liability estimates may be adjusted accordingly. The timing and duration of remediation activities at these sites will be determined when evaluations are completed. Although it is difficult to quantify the potential financial impact of these remediation liabilities, management estimates (based on the latest available information) that there is a reasonable possibility that future environmental remediation costs associated with our past operations could represent an additional $16 million before income taxes, in excess of amounts already recorded.
We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis although any such sum could have a material adverse impact on our results of operations, financial condition or cash flows in a particular quarterly reporting period.
Litigation
We are involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedings seeking remediation under environmental laws, such as the federal Comprehensive Environmental Response, Compensation and Liability Act, commonly known as CERCLA or Superfund, products liability, breach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintain insurance to mitigate certain of such risks. Costs for legal services are generally expensed as incurred.
As first reported in 2018, following receipt of information regarding potential improper payments being made by third-party sales representatives of our Refining Solutions business, within what is now the Ketjen segment, we investigated and voluntarily self-reported potential violations of the U.S. Foreign Corrupt Practices Act to the DOJ and SEC, and also reported this conduct to the DPP. Since reporting these matters to the DOJ, SEC, and DPP, Albemarle has cooperated with these agencies in their investigations of this historical conduct. We have implemented appropriate remedial measures and strengthened our compliance program and related internal controls.
In September 2023, the Company finalized agreements to resolve these matters with the DOJ and SEC. The DPP has confirmed it will not pursue action in this matter. In connection with this resolution, which relates to conduct prior to 2018, we entered into a non-prosecution agreement with the DOJ and an administrative resolution with the SEC, pursuant to which we paid a total of $218.5 million in aggregate fines, disgorgement, and prejudgment interest to the DOJ and SEC. The resolution does not include a compliance monitorship, although the Company has agreed to certain ongoing compliance reporting obligations.
During the second quarter of 2023, the Company recorded a charge of $218.5 million in Selling, General and Administrative Expenses in its consolidated statement of operations and accrued a corresponding liability on its consolidated balance sheet for these agreements. The agreed upon amounts were paid to the DOJ and SEC in October 2023, with this matter considered finalized and no future financial obligations expected.
Indemnities
We are indemnified by third parties in connection with certain matters related to acquired and divested businesses. Although we believe that the financial condition of those parties who may have indemnification obligations to the Company is generally sound, in the event the Company seeks indemnity under any of these agreements or through other means, there can be no assurance that any party who may have obligations to indemnify us will adhere to their obligations and we may have to resort to legal action to enforce our rights under the indemnities.
The Company may be subject to indemnity claims relating to properties or businesses it divested, including properties or businesses of acquired businesses that were divested prior to the completion of the acquisition. In the opinion of management, and based upon information currently available, the ultimate resolution of any indemnification obligations owed to the Company or by the Company is not expected to have a material effect on the Company’s financial condition, results of operations or cash flows. The Company had approximately $28.6 million and $66.1 million at September 30, 2023 and December 31, 2022, respectively, recorded in Other noncurrent liabilities, primarily related to the indemnification of certain income and non-income tax liabilities associated with the Chemetall Surface Treatment entities sold in 2017.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Other
We have contracts with certain of our customers which serve as guarantees on product delivery and performance according to customer specifications that can cover both shipments on an individual basis, as well as blanket coverage of multiple shipments under certain customer supply contracts. The financial coverage provided by these guarantees is typically based on a percentage of net sales value.

NOTE 10—Leases:
We lease certain office space, buildings, transportation and equipment in various countries. The initial lease terms generally range from 1 to 30 years for real estate leases, and from 2 to 15 years for non-real estate leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term.
Many leases include options to terminate or renew, with renewal terms that can extend the lease term from 1 to 50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table provides details of our lease contracts for the three-month and nine-month periods ended September 30, 2023 and 2022 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Operating lease cost$11,307 $11,456 $37,369 $32,657 
Finance lease cost:
Amortization of right of use assets1,686 952 4,466 2,354 
Interest on lease liabilities1,616 826 4,310 2,519 
Total finance lease cost3,302 1,778 8,776 4,873 
Short-term lease cost4,826 4,171 14,746 10,141 
Variable lease cost7,560 3,179 15,835 5,810 
Total lease cost$26,995 $20,584 $76,726 $53,481 
Supplemental cash flow information related to our lease contracts for the nine-month periods ended September 30, 2023 and 2022 is as follows (in thousands):
Nine Months Ended
September 30,
20232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$35,364 $27,201 
Operating cash flows from finance leases3,593 2,360 
Financing cash flows from finance leases1,627 999 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases43,907 8,378 
Finance leases46,773 — 


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Supplemental balance sheet information related to our lease contracts, including the location on balance sheet, at September 30, 2023 and December 31, 2022 is as follows (in thousands, except as noted):
September 30, 2023December 31, 2022
Operating leases:
Other assets$140,691 $128,173 
Accrued expenses34,159 35,515 
Other noncurrent liabilities115,619 99,269 
Total operating lease liabilities149,778 134,784 
Finance leases:
Net property, plant and equipment123,146 81,356 
Current portion of long-term debt(a)
9,450 4,995 
Long-term debt114,993 74,409 
Total finance lease liabilities124,443 79,404 
Weighted average remaining lease term (in years):
Operating leases12.213.3
Finance leases21.422.8
Weighted average discount rate (%):
Operating leases4.58 %3.60 %
Finance leases4.65 %4.41 %
(a)    Balance includes accrued interest of finance lease recorded in Accrued expenses.
Maturities of lease liabilities at September 30, 2023 were as follows (in thousands):
Operating LeasesFinance Leases
Remainder of 2023$13,143 $4,997 
202432,787 12,879 
202527,622 9,795 
202619,039 9,160 
202714,726 9,160 
Thereafter112,850 148,497 
Total lease payments220,167 194,488 
Less imputed interest70,389 70,045 
Total$149,778 $124,443 

NOTE 11—Segment Information:
Effective January 1, 2023, the Company realigned its Lithium and Bromine global business units into a new corporate structure designed to better meet customer needs and foster talent required to deliver in a competitive global environment. In addition, the Company announced its decision to retain its Catalysts business under a separate, wholly-owned subsidiary renamed Ketjen. As a result, the Company’s three reportable segments include: (1) Energy Storage; (2) Specialties; and (3) Ketjen. 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
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
to evaluate performance and make resource allocation decisions. The segment information for the prior year period been recast to conform to the current year presentation.
The Corporate category is not considered to be a segment and includes corporate-related items not allocated to the operating segments. Pension and other post-employment benefit (“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 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 and financing expenses, income tax expenses, depreciation and amortization, as adjusted on a consistent basis for certain non-operating, non-recurring or unusual items in a balanced manner and on a segment basis. These non-operating, non-recurring or unusual items may include acquisition and integration related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, certain litigation and arbitration costs and charges, non-operating pension and OPEB items and other significant non-recurring items. In addition, management uses adjusted EBITDA for business and enterprise 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 additional useful measurements to review the Company’s operations, provides transparency to investors and enables period-to-period comparability of financial performance. Total adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, U.S. GAAP. Total adjusted EBITDA should not be considered as an alternative to Net (loss) 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.
Segment information for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows (in thousands). Prior period amounts have been recast to reflect the current segment structure.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net sales:
Energy Storage$1,697,163 $1,414,053 $5,403,910 $2,680,150 
Specialties352,722 441,928 1,142,802 1,354,950 
Ketjen260,711 235,824 714,326 664,026 
Total net sales$2,310,596 $2,091,805 $7,261,038 $4,699,126 
Adjusted EBITDA:
Energy Storage$407,476 $1,084,643 $2,745,680 $1,853,407 
Specialties46,307 133,558 268,665 433,534 
Ketjen15,159 4,635 72,584 31,337 
Total segment adjusted EBITDA468,942 1,222,836 3,086,929 2,318,278 
Corporate(15,655)(32,870)(5,657)(86,173)
Total adjusted EBITDA$453,287 $1,189,966 $3,081,272 $2,232,105 
Depreciation and amortization:
Energy Storage$67,323 $44,591 $176,025 $118,451 
Specialties22,699 16,939 63,890 50,002 
Ketjen13,259 12,689 39,486 38,785 
Corporate2,164 3,494 6,400 8,042 
Total depreciation and amortization$105,445 $77,713 $285,801 $215,280 

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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
See below for a reconciliation of total segment adjusted EBITDA to the companies consolidated Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Total segment adjusted EBITDA$468,942 $1,222,836 $3,086,929 $2,318,278 
Corporate expenses, net(15,655)(32,870)(5,657)(86,173)
Depreciation and amortization(105,445)(77,713)(285,801)(215,280)
Interest and financing expenses(a)
(29,332)(29,691)(81,686)(98,934)
Income tax expense8,551 (196,938)(311,399)(366,486)
Loss on sale of interest in properties, net(b)
— — — (8,400)
Acquisition and integration related costs(c)
(10,043)(2,145)(21,653)(9,244)
Non-operating pension and OPEB items(620)5,027 (1,833)15,345 
Mark-to-market gain on public equity securities(d)
(26,445)10,626 34,401 10,626 
Legal accrual(e)
— — (218,510)— 
Other(f)
12,580 (1,917)(3,635)(2,361)
Net income attributable to Albemarle Corporation$302,533 $897,215 $2,191,156 $1,557,371 
(a)Included in Interest and financing expenses for the nine-month period ended September 30, 2022 was a loss on early extinguishment of debt of $19.2 million following the May 2022 repayment of Senior Notes due in 2024. In addition, included in Interest and financing expenses for the nine-month period ended September 30, 2022 is the correction of an out of period error of $17.5 million related to the overstatement of capitalized interest in prior periods.
(b)Expense recorded as a result of revised estimates of the obligation to construct certain lithium hydroxide conversion assets in Kemerton, Western Australia, due to cost overruns from supply chain, labor and COVID-19 pandemic related issues. The corresponding obligation was recorded in Accrued liabilities to be transferred to MRL, which maintains a 40% ownership interest in these Kemerton assets.
(c)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in Selling, general and administrative expenses (“SG&A”).
(d)(Loss) gain recorded in Other income, net for the three-month and nine-month periods ended September 30, 2023, resulting from the change in fair value of investments in public equity securities.
(e)Accrual recorded in SG&A for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP. See Note 9, “Commitments and Contingencies,” for further details.
(f)Included amounts for the three-month period ended September 30, 2023 recorded in:
•SG&A - $1.8 million of separation and other severance costs to employees in Corporate and the Ketjen business which are primarily expected to be paid out during 2023, $0.7 million of facility closure expenses related to offices in Germany and $0.3 million of a loss from the sale of legacy properties not part of Albemarle’s operations.
•Other income, net - $8.2 million gain from PIK dividends of preferred equity in a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds of a prior legal matter.
Included amounts for the three-month period ended September 30, 2022 recorded in:
•Cost of goods sold - $2.7 million of expense related to one-time retention payments for certain employees during the Ketjen strategic review and business unit realignment.
•SG&A - $1.9 million of expense primarily related to one-time retention payments for certain employees during the Catalysts strategic review and business unit realignment and $1.4 million primarily related to facility closure expenses of offices in Germany.
•Other income, net - $3.0 million gain from the reversal of a liability related to a previous divestiture and a $1.1 million gain resulting from the adjustment of indemnification related to previously disposed businesses.
Included amounts for the nine-month period ended September 30, 2023 recorded in:
•SG&A - $9.2 million of separation and other severance costs to employees in Corporate and the Ketjen business which are primarily expected to be paid out during 2023, $2.1 million of facility closure expenses related to offices in Germany, $1.9 million of charges primarily for environmental reserves at sites not part of our operations and $1.0 million primarily related to shortfall contributions for a multiemployer plan financial improvement plan.
•Other income, net - $10.9 million gain from PIK dividends of preferred equity in a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds of a prior legal matter, partially offset by $3.9 million of a loss resulting from the adjustment of indemnification related to previously disposed businesses and $3.6 million of charges for asset retirement obligations at a site not part of our operations.
Included amounts for the nine-month period ended September 30, 2022 recorded in:
•Cost of goods sold - $2.7 million of expense related to one-time retention payments for certain employees during the Ketjen strategic review and business unit realignment and $0.5 million of expense related to the settlement of a legal matter resulting from a prior acquisition.
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
•SG&A - $3.4 million primarily related to facility closure expenses related to offices in Germany, $2.8 million of charges for environmental reserves at sites not part of our operations and $1.9 million of expense related to one-time retention payments for certain employees during the Catalysts strategic review and business unit realignment, partially offset by $4.3 million of gains from the sale of legacy properties not part of our operations.
•Other income, net - $3.0 million gain from the reversal of a liability related to a previous divestiture, a $1.1 million gain resulting from the adjustment of indemnification related to previously disposed businesses and a $0.6 million gain related to a settlement received from a legal matter in a prior period.

NOTE 12—Pension Plans and Other Postretirement Benefits:
The components of pension and postretirement benefits cost (credit) for the three-month and nine-month periods ended September 30, 2023 and 2022 were as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Pension Benefits Cost (Credit):
Service cost$1,340 $959 $3,995 $2,914 
Interest cost8,587 5,530 25,687 16,703 
Expected return on assets(8,434)(10,884)(25,258)(33,028)
Amortization of prior service benefit20 21 61 68 
Total net pension benefits cost (credit)$1,513 $(4,374)$4,485 $(13,343)
Postretirement Benefits Cost:
Service cost$12 $21 $36 $64 
Interest cost467 327 1,404 980 
Total net postretirement benefits cost$479 $348 $1,440 $1,044 
Total net pension and postretirement benefits cost (credit)$1,992 $(4,026)$5,925 $(12,299)
All components of net benefit cost (credit), other than service cost, are included in Other income, net on the consolidated statements of income.
During the three-month and nine-month periods ended September 30, 2023, the Company made contributions of $3.6 million and $12.2 million, respectively, to its qualified and nonqualified pension plans and the U.S. postretirement benefit plan. During the three-month and nine-month periods ended September 30, 2022 the Company made contributions of $3.2 million and $10.9 million, respectively, to its qualified and nonqualified pension plans and the U.S. postretirement benefit plan.

NOTE 13—Fair Value of Financial Instruments:
In assessing the fair value of financial instruments, we use methods and assumptions that are based on market conditions and other risk factors existing at the time of assessment. Fair value information for our financial instruments is as follows:
Long-Term Debt—the fair values of our notes are estimated using Level 1 inputs and account for the difference between the recorded amount and fair value of our long-term debt. The carrying value of our remaining long-term debt reported in the accompanying consolidated balance sheets approximates fair value as substantially all of such debt bears interest based on prevailing variable market rates currently available in the countries in which we have borrowings.
September 30, 2023December 31, 2022
Recorded
Amount		Fair ValueRecorded
Amount		Fair Value
(In thousands)
Long-term debt$3,678,744 $3,348,090 $3,239,853 $2,993,027 
Foreign Currency Forward Contracts—during the fourth quarter of 2019, we entered into a foreign currency forward contract to hedge the cash flow exposure of non-functional currency purchases during the construction of the Kemerton plant in Australia. This derivative financial instrument is used to manage risk and is not used for trading or other speculative purposes. This foreign currency forward contract has been designated as a hedging instrument under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. We had outstanding designated foreign currency forward contracts with notional values totaling the equivalent of $1.1 billion and $64.5 million at September 30, 2023 and December 31, 2022, respectively.
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
We also enter into foreign currency forward contracts in connection with our risk management strategies that have not been designated as hedging instruments under ASC 815, Derivatives and Hedging, in an attempt to minimize the financial impact of changes in foreign currency exchange rates. These derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. The fair values of our non-designated foreign currency forward contracts are estimated based on current settlement values. At September 30, 2023 and December 31, 2022, we had outstanding non-designated foreign currency forward contracts with notional values totaling $7.6 billion and $2.8 billion, respectively, hedging our exposure to various currencies including the Chinese Renminbi, Euro, Australian Dollar, Chilean Peso and Japanese Yen.
The following table summarizes the fair value of our foreign currency forward contracts included in the consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands):
September 30, 2023December 31, 2022
AssetsLiabilitiesAssetsLiabilities
Designated as hedging instruments
Accrued expenses$— $9,694 $— $3,159 
Other noncurrent liabilities— 25,660 — — 
Total designated as hedging instruments— 35,354 — 3,159 
Not designated as hedging instruments
Other current assets785 — 6,016 — 
Accrued expenses— 6,830 — 85 
Total not designated as hedging instruments785 6,830 6,016 85 
Total$785 $42,184 $6,016 $3,244 
The following table summarizes the net gains (losses) recognized for our foreign currency forward contracts during the three-month and nine-month periods ended September 30, 2023 and 2022 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Designated as hedging instruments
Loss recognized in Other comprehensive income$(39,020)$(9,653)$(36,893)$(8,144)
Not designated as hedging instruments
(Loss) income recognized in Other income, net(a)
$(59,241)$(9,056)$184,166 $(36,326)
(a)    Fluctuations in the value of our foreign currency forward contracts not designated as hedging instruments are generally expected to be offset by changes in the value of the underlying exposures being hedged, which are also reported in Other income, net.
In addition, for the nine-month periods ended September 30, 2023 and 2022, we recorded net cash receipts (settlements) of $192.8 million and ($38.6) million, respectively, in Other, net, in our condensed consolidated statements of cash flows.
Unrealized gains and losses related to the cash flow hedges will be reclassified to earnings over the life of the related assets when settled and the related assets are placed into service.
The counterparties to our foreign currency forward contracts are major financial institutions with which we generally have other financial relationships. We are exposed to credit loss in the event of nonperformance by these counterparties. However, we do not anticipate nonperformance by the counterparties.


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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 14—Fair Value Measurement:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:
Level 1Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3Unobservable inputs for the asset or liability
We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):
September 30, 2023Quoted Prices in Active Markets for Identical Items (Level 1)Quoted Prices in Active Markets for Similar Items (Level 2)Unobservable Inputs (Level 3)
Assets:
Available for sale debt securities(a)
$280,881 $— $— $280,881 
Investments under executive deferred compensation plan(b)
$32,126 $32,126 $— $— 
Public equity securities(c)
$243,149 $243,149 $— $— 
Private equity securities measured at net asset value(d)(e)
$6,377 $— $— $— 
Foreign currency forward contracts(f)
$785 $— $785 $— 
Liabilities:
Obligations under executive deferred compensation plan(b)
$32,126 $32,126 $— $— 
Foreign currency forward contracts(f)
$42,184 $— $42,184 $— 
December 31, 2022Quoted Prices in Active Markets for Identical Items (Level 1)Quoted Prices in Active Markets for Similar Items (Level 2)Unobservable Inputs (Level 3)
Assets:
Available for sale debt securities(a)
$260,139 $— $— $260,139 
Investments under executive deferred compensation plan(b)
$27,270 $27,270 $— $— 
Public equity securities(c)
$5,890 $5,890 $— $— 
Private equity securities measured at net asset value(d)(e)
$6,375 $— $— $— 
Foreign currency forward contracts(f)
$6,016 $— $6,016 $— 
Liabilities:
Obligations under executive deferred compensation plan(b)
$27,270 $27,270 $— $— 
Foreign currency forward contracts(f)
$3,244 $— $3,244 $— 
(a)Preferred equity of a Grace subsidiary acquired as a portion of the proceeds of the FCS sale on June 1, 2021. A third-party estimate of the fair value was prepared using expected future cash flows over the period up to when the asset is likely to be redeemed, applying a discount rate that appropriately captures a market participant's view of the risk associated with the investment. These are considered to be Level 3 inputs.
(b)We maintain an Executive Deferred Compensation Plan (“EDCP”) that was adopted in 2001 and subsequently amended. The purpose of the EDCP is to provide current tax planning opportunities as well as supplemental funds upon the retirement or death of certain of our employees. The EDCP is intended to aid in attracting and retaining employees of exceptional ability by providing them with these
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
benefits. We also maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of the EDCP, subject to the claims of our creditors in the event of our insolvency. Assets of the Trust are consolidated in accordance with authoritative guidance. The assets of the Trust consist primarily of mutual fund investments (which are accounted for as trading securities and are marked-to-market on a monthly basis through the consolidated statements of income) and cash and cash equivalents. As such, these assets and obligations are classified within Level 1.
(c)Holdings in equity securities of public companies reported in Investments in the consolidated balance sheets. The fair value is measured using publicly available share prices of the investments, with any changes reported in Other income, net in our consolidated statements of income. During the nine-month period ended September 30, 2023, the Company purchased approximately $203.4 million of shares in publicly-traded companies. In addition, the Company recorded a mark-to-market (loss) gain of ($26.4) million and $34.4 million on all public equity securities during the three- and nine-month periods ended September 30, 2023 in Other income, net.
(d)Primarily consists of private equity securities reported in Investments in the consolidated balance sheets. The changes in fair value are reported in Other income, net in our consolidated statements of income.
(e)Holdings in certain private equity securities are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy.
(f)As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign currency exchange rates which may adversely affect our operating results and financial position. When deemed appropriate, we minimize our risks from foreign currency exchange rate fluctuations through the use of foreign currency forward contracts. The foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within Level 2. See Note 13, “Fair Value of Financial Instruments,” for further details about our foreign currency forward contracts.

The following tables set forth the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements (in thousands):
Available for Sale Debt Securities
Beginning balance at December 31, 2022
$260,139 
Fair value adjustment15,436 
Accretion of discount5,306 
Ending balance at September 30, 2023
$280,881 


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 15—Accumulated Other Comprehensive (Loss) Income:
The components and activity in Accumulated other comprehensive (loss) income (net of deferred income taxes) consisted of the following during the periods indicated below (in thousands):
Foreign Currency Translation and Other
Cash Flow Hedge(a)
Interest Rate Swap(b)
Total
Three months ended September 30, 2023
Balance at June 30, 2023$(522,297)$4,351 $— $(517,946)
Other comprehensive loss before reclassifications(143,974)(39,021)— (182,995)
Amounts reclassified from accumulated other comprehensive loss17 (67)— (50)
Other comprehensive loss, net of tax(143,957)(39,088)— (183,045)
Other comprehensive income attributable to noncontrolling interests19 — — 19 
Balance at September 30, 2023$(666,235)$(34,737)$— $(700,972)
Three months ended September 30, 2022
Balance at June 30, 2022$(515,269)$8,131 $— $(507,138)
Other comprehensive loss before reclassifications(200,538)(9,652)— (210,190)
Amounts reclassified from accumulated other comprehensive loss18 — — 18 
Other comprehensive loss, net of tax(200,520)(9,652)— (210,172)
Other comprehensive loss attributable to noncontrolling interests1 — — 1 
Balance at September 30, 2022$(715,788)$(1,521)$— $(717,309)
Nine months ended September 30, 2023
Balance at December 31, 2022$(562,886)$2,224 $— $(560,662)
Other comprehensive loss before reclassifications(103,426)(36,894)— (140,320)
Amounts reclassified from accumulated other comprehensive loss50 (67)— (17)
Other comprehensive loss, net of tax(103,376)(36,961)— (140,337)
Other comprehensive income attributable to noncontrolling interests27 — — 27 
Balance at September 30, 2023$(666,235)$(34,737)$— $(700,972)
Nine months ended September 30, 2022
Balance at December 31, 2021$(391,674)$6,623 $(7,399)$(392,450)
Other comprehensive loss before reclassifications(324,287)(8,144)— (332,431)
Amounts reclassified from accumulated other comprehensive loss57 — 7,399 7,456 
Other comprehensive (loss) income, net of tax(324,230)(8,144)7,399 (324,975)
Other comprehensive income attributable to noncontrolling interests116 — — 116 
Balance at September 30, 2022$(715,788)$(1,521)$— $(717,309)
(a)We entered into a foreign currency forward contract, which was designated and accounted for as a cash flow hedge under ASC 815, Derivatives and Hedging. See Note 14, “Fair Value of Financial Instruments,” for additional information.
(b)The pre-tax portion of amounts reclassified from accumulated other comprehensive loss is included in interest expense. The balance of this interest rate swap was being amortized to Interest and financing expenses over the life of the 4.15% senior notes originally due in 2024. In the second quarter of 2022, the Company repaid these notes, and as a result, reclassified the remaining balance of this interest rate swap to interest expense during the same period as part of an early extinguishment of debt.


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The amount of income tax expense allocated to each component of Other comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2023 and 2022 is provided in the following tables (in thousands):
Foreign Currency Translation and OtherCash Flow HedgeInterest Rate SwapTotal
Three months ended September 30, 2023
Other comprehensive (loss) income, before tax$(143,954)$(39,088)$— $(183,042)
Income tax expense(3)— — (3)
Other comprehensive (loss) income, net of tax$(143,957)$(39,088)$— $(183,045)
Three months ended September 30, 2022
Other comprehensive (loss) income, before tax$(198,888)$(9,652)$— $(208,540)
Income tax expense(1,632)— — (1,632)
Other comprehensive (loss) income, net of tax$(200,520)$(9,652)$— $(210,172)
Nine months ended September 30, 2023
Other comprehensive income, before tax$(103,607)$(36,961)$— $(140,568)
Income tax benefit231 — — 231 
Other comprehensive income, net of tax$(103,376)$(36,961)$— $(140,337)
Nine months ended September 30, 2022
Other comprehensive (loss) income, before tax$(323,777)$(8,144)$9,739 $(322,182)
Income tax expense(453)— (2,340)(2,793)
Other comprehensive (loss) income, net of tax$(324,230)$(8,144)$7,399 $(324,975)

NOTE 16—Related Party Transactions:
Our consolidated statements of income include sales to and purchases from unconsolidated affiliates in the ordinary course of business as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Sales to unconsolidated affiliates$4,070 $9,490 $14,843 $24,359 
Purchases from unconsolidated affiliates(a)(b)
$884,886 $614,889 $3,072,374 $1,146,329 
(a)Purchases from unconsolidated affiliates primarily relate to spodumene purchased from the Company’s Windfield joint venture.
(b)Cost of goods sold on the consolidated statements of income included purchases from related unconsolidated affiliates of $634.7 million and $214.0 million during the three-month periods ended September 30, 2023 and 2022, respectively, and $1.4 billion and $372.6 million for the nine-month periods ended September 30, 2023 and 2022, respectively.

Our consolidated balance sheets include accounts receivable due from and payable to unconsolidated affiliates in the ordinary course of business as follows (in thousands):
September 30, 2023December 31, 2022
Receivables from unconsolidated affiliates$2,419 $21,495 
Payables to unconsolidated affiliates(a)
$795,088 $518,377 
(a)Payables to unconsolidated affiliates primarily relate spodumene purchased from the Company’s Windfield joint venture under normal payment terms.


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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 17—Supplemental Cash Flow Information:
Supplemental information related to the condensed consolidated statements of cash flows is as follows (in thousands):
Nine Months Ended
September 30,
20232022
Supplemental non-cash disclosure related to investing and financing activities:
Capital expenditures included in Accounts payable$434,882 $253,183 
Promissory note issued for capital expenditures(a)
$— $10,876 
(a)During 2022, the Company issued a promissory note with a present value of $10.9 million for land purchased in Kings Mountain, NC. The promissory note is payable in equal annual installments from the years 2027 to 2048.
As part of the purchase price paid for the acquisition of a 60% interest in the MRL Wodgina Project, the Company transferred $17.1 million and $116.0 million of its construction in progress of the designated Kemerton assets during the nine-month periods ended September 30, 2023 and 2022, respectively, representing MRL’s 40% interest in the assets. The cash outflow for these assets was recorded in Capital expenditures within Cash flows from investing activities on the condensed consolidated statements of cash flows. The non-cash transfer of these assets is recorded in Non-cash transfer of 40% value of construction in progress of the Kemerton plant to MRL within Cash flows from operating activities on the consolidated statements of cash flows.
Other, net within Cash flows from operating activities on the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 2022 included $64.4 million and $42.5 million, respectively, representing the reclassification of the current portion of the one-time transition tax resulting from the enactment of the U.S. Tax Cuts and Jobs Act, from Other noncurrent liabilities to Income taxes payable within current liabilities.

NOTE 18—Recently Issued Accounting Pronouncements:
In March 2020, the Financial Accounting Standards Board (“FASB”) issued accounting guidance that provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The guidance applies only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued additional accounting guidance which clarifies that certain optional expedients and exceptions apply to derivatives that are affected by the discounting transition. The guidance under both FASB issuances was originally effective March 12, 2020 through December 31, 2022. However, in December 2022, the FASB issued an update to defer the sunset date of this guidance to December 31, 2024. The Company currently does not expect this guidance to have a significant impact on its consolidated financial statements.
In October 2021, the FASB issued guidance on how to recognize and measure acquired contract assets and liabilities from revenue contracts in a business combination, which requires the acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers as if it had originated the contracts. This guidance is effective for financial statements issued for annual periods beginning after December 15, 2022, including interim periods within those annual periods. This guidance does not currently, nor is it expected to, have a significant impact on its consolidated financial statements.
In March 2022, the FASB issued accounting guidance that expands the Company’s abilities to hedge the benchmark interest rate risk of portfolios of financial assets or beneficial interests in a fair value hedge. This guidance expands the use of the portfolio layer method to allow multiple hedges of a single closed portfolio of assets using spot starting, forward starting, and amortizing-notional swaps. This also permits both prepayable and non prepayable financial assets to be included in the closed portfolio of assets hedged in a portfolio layer hedge. In addition, this guidance requires that basis adjustments not be allocated to individual assets for active portfolio layer method hedges, but rather be maintained on the closed portfolio of assets as a whole. This guidance is effective for financial statements issued for annual periods beginning after December 15, 2022, including interim periods within those annual periods. This guidance does not currently, nor is it expected to, have a significant impact on its consolidated financial statements.
In March 2023, the FASB issued guidance which requires the Company to amortize leasehold improvements associated with common control leases over the asset’s useful life to the common control group regardless of the lease term. This guidance
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ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
is effective for financial statements issued for annual periods beginning after December 15, 2023, including interim periods within those annual periods. The Company currently does not expect this guidance to have a significant impact on its consolidated financial statements.
In August 2023, the FASB issued guidance which will require a joint venture to recognize and initially measure its assets, including goodwill, and liabilities using a new basis of accounting upon formation. Initial measurement of a joint venture’s total net assets will be equal to the fair value of one hundred percent of the joint venture’s equity. In addition, a joint venture will be permitted to apply the measurement period guidance of ASC 805-10 if the initial accounting for the the joint venture formation is incomplete by the end of the reporting period in which the formation occurs. This guidance is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. The Company currently does not expect this guidance to have a significant impact on its consolidated financial statements.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Some of the information presented in this Quarterly Report on Form 10-Q, including the documents incorporated by reference herein, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on our current expectations, which are in turn based on assumptions that we believe are reasonable based on our current knowledge of our business and operations. We have used words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “would,” “will” and variations of such words and similar expressions to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. There can be no assurance that our actual results will not differ materially from the results and expectations expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation, information related to:
•changes in economic and business conditions;
•product development;
•changes in financial and operating performance of our major customers and industries and markets served by us;
•the timing of orders received from customers;
•the gain or loss of significant customers;
•fluctuations in lithium market pricing, which could impact our revenues and profitability particularly due to our increased exposure to index-referenced and variable-priced contracts for battery grade lithium sales;
•inflationary trends in our input costs, such as raw materials, transportation and energy, and their effects on our business and financial results;
•changes with respect to contract renegotiations;
•potential production volume shortfalls;
•competition from other manufacturers;
•changes in the demand for our products or the end-user markets in which our products are sold;
•limitations or prohibitions on the manufacture and sale of our products;
•availability of raw materials;
•increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;
•technological change and development;
•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 regulatory actions, proceedings, claims or litigation (including with respect to the U.S. Foreign Corrupt Practices Act and foreign anti-corruption laws);
•the occurrence of cyber-security breaches, terrorist attacks, industrial accidents or natural disasters;
•the effects of climate change, including any regulatory changes to which we might be subject;
•hazards associated with chemicals manufacturing;
•the inability to maintain current levels of insurance, including 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 or interpretation;
•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;
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•volatility and 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;
•future acquisition and divestiture transactions, including the ability to successfully execute, operate and integrate acquisitions and divestitures and incurring additional indebtedness;
•expected benefits from proposed transactions;
•timing of active and proposed projects;
•impact of any future pandemics;
•impacts of the situation in the Middle East and the military conflict between Russia and Ukraine, and the global response to it;
•performance of our partners in joint ventures and other projects;
•changes in credit ratings;
•the inability to realize the benefits of our decision to retain our Ketjen business as a wholly-owned subsidiary and to realign our Lithium and Bromine global business units into a new corporate structure, including Energy Storage and Specialties business units; and
•the other factors detailed from time to time in the reports we file with the Securities and Exchange Commission (“SEC”).
These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws. The following discussion should be read together with our condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.
The following is a discussion and analysis of our results of operations for the three-month and nine-month periods ended September 30, 2023 and 2022. A discussion of our consolidated financial condition and sources of additional capital is included under a separate heading “Financial Condition and Liquidity.”
Overview
We are a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals that are designed to meet our customers’ needs across a diverse range of end markets. Our corporate purpose is making the world safe and sustainable by powering the potential of people. The end markets we serve include energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals and crop protection. We believe that our commercial and geographic diversity, technical expertise, access to high-quality resources, innovative capability, flexible, low-cost global manufacturing base, experienced management team and strategic focus on our core base technologies will enable us to maintain leading positions in those areas of the specialty chemicals industry in which we operate.
Secular trends favorably impacting demand within the end markets that we serve combined with our diverse product portfolio, broad geographic presence and customer-focused solutions will continue to be key drivers of our future earnings growth. We continue to build upon our existing green solutions portfolio and our ongoing mission to provide innovative, yet commercially viable, clean energy products and services to the marketplace to contribute to our sustainable revenue. For example, our Energy Storage business contributes to the growth of clean miles driven with electric vehicles and more efficient use of renewable energy through grid storage; Specialties enables the prevention of fires starting in electronic equipment, greater fuel efficiency from rubber tires and the reduction of emissions from coal fired power plants; and our Ketjen business creates efficiency of natural resources through more usable products from a single barrel of oil, enables safer, greener production of alkylates used to produce more environmentally-friendly fuels, and reduced emissions through cleaner transportation fuels. We believe our disciplined cost reduction efforts and ongoing productivity improvements, among other factors, position us well to take advantage of strengthening economic conditions as they occur, while softening the negative impact of the current challenging global economic environment.
Third Quarter 2023
Effective on November 6, 2023, our Executive Vice President and Chief Financial Officer, Scott Tozier, will transition from his role to become a strategic advisor to the Chief Executive Officer. On that date, Neal Sheorey will join Albemarle as its new Executive Vice President and Chief Financial Officer.

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In addition, during the third quarter of 2023:
•Our board of directors declared a quarterly dividend of $0.40 per share on July 18, 2023, which was paid on October 2, 2023 to shareholders of record at the close of business as of September 15, 2023.
•We agreed to amend the MARBL lithium joint venture with Mineral Resources Limited (“MRL”). Under the new agreements, we acquired the remaining 40% ownership of the Kemerton lithium hydroxide processing facility in Australia that was jointly owned with MRL through the MARBL joint venture. In exchange, we agreed to pay cash and sell 10% of our interest in the Wodgina Lithium Mine Project (“Wodgina”) to MRL. The transactions pursuant to the amended agreements were completed on October 18, 2023.
•We announced a $90 million critical materials award from the U.S. Department of Defense to support the restart of Kings Mountain, N.C. mine.
•We signed agreements with Caterpillar Inc. to collaborate on solutions to support the full circular battery value chain and sustainable mining operations. The collaboration aims to support our effort to establish Kings Mountain, N.C. as the first-ever zero-emissions lithium mine site in North America. It also makes our North-American-produced lithium available for use in Caterpillar battery production.
•Our net sales for the quarter were $2.3 billion, an increase of 10% compared to net sales of $2.1 billion in the third quarter of 2022.
•Diluted earnings per share was $2.57 in the third quarter of 2023.

Outlook
The current global business environment presents a diverse set of opportunities and challenges in the markets we serve. In particular, the market for lithium battery and energy storage, particularly for electric vehicles (“EV”), remains strong, providing the opportunity to continue to develop high quality and innovative products while managing the high cost of expanding capacity. The other markets we serve continue to present various opportunities for value and growth as we have positioned ourselves to manage the impact on our business of changing global conditions, such as slow and uneven global growth, currency exchange volatility, crude oil price fluctuation, a dynamic pricing environment, an ever-changing landscape in electronics, the continuous need for cutting edge catalysts and technology by our refinery customers and increasingly stringent environmental standards. During the course of 2023, lithium index pricing has dropped significantly. Amidst these dynamics, and despite recent downward lithium price pressure, we believe our business fundamentals are sound and that we are strategically well-positioned as we remain focused on increasing sales volumes, optimizing and improving the value of our portfolio primarily through pricing and product development, managing costs and delivering value to our customers and shareholders. We believe that our businesses remain well-positioned to capitalize on new business opportunities and long-term trends driving growth within our end markets and to respond quickly to changes in economic conditions in these markets. In addition, at this time, the current situation in the Middle East has not impacted our business operations or supply chain. A disruption could cause a financial impact to our business, however we are monitoring the situation and will continue to make efforts to protect the safety of our employees and the health of our business.
Beginning in the first quarter of 2023, the chief operating decision maker began evaluating performance, forecasting and making resource allocation decisions based on our previously announced realignment of the Lithium and Bromine global business units. The new corporate structure was designed to better meet customer needs and foster talent required to deliver in a competitive global environment. The realignment resulted in the following three reportable segments: (1) Energy Storage; (2) Specialties; and (3) Ketjen.
Energy Storage: We expect Energy Storage revenue to increase year-over-year in 2023, mainly due to increased pricing for the year, despite recent lower lithium market index pricing, as well as higher sales volume. Year-over-year earnings are expected to be flat or lower due to higher variable costs, primarily due to the higher market pricing of salts and spodumene being realized during the year. The increased market pricing for the year reflects tight market conditions, primarily in battery- and tech-grade carbonate and hydroxide, as well as renegotiations of certain of our long-term agreements. Some of our renegotiated contracts include higher prices on existing long-term agreements that are more reflective of current market conditions. In other cases, we have moved from previous fixed-price, long-term agreements towards index-referenced and variable-priced contracts. As a result, our Energy Storage business is more aligned with changes in market and index pricing than it has been in the past. Lithium pricing continues to fluctuate during 2023, and any further decrease could negatively impact results during the remainder of the year as well as on our outlook. The increased sales volume is primarily expected from new capacity coming on line from La Negra, Chile, Kemerton, Western Australia, and Qinzhou, China, as well as additional tolling volume supported by increased spodumene production out of Australia. While we ramp up our new capacity, we will continue to utilize tolling arrangements to meet growing customer demand. EV sales are expected to continue to increase over the prior year as the lithium battery market remains strong.
In 2022, we announced agreements for a strategic investment in China with plans to build a battery grade lithium conversion plant in Meishan initially targeting 50,000 metric tons of LCE per year. Construction of the Meishan facility is
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currently underway and is expected to be completed in 2024. In addition, we completed the amendment of the MARBL joint venture in Australia. The restructured agreements, among other things, increase our interest in the first two conversion trains of the Kemerton processing plant from 60% to 100% in exchange for 10% of our ownership interest in the Wodgina Lithium Mine Project and cash. Following the transaction, we hold a 50% ownership interest in the Wodgina Lithium Mine Project.
On a longer-term basis, we believe that demand for lithium will continue to grow as new lithium applications advance and the use of plug-in hybrid EVs and full battery EVs increases. This demand for lithium is supported by a favorable backdrop of steadily declining lithium-ion battery costs, increasing battery performance, continuing significant investments in the battery and EV supply chain by cathode and battery producers and automotive OEMs and favorable global public policy toward e-mobility/renewable energy usage. Our outlook is also bolstered by long-term supply agreements with key strategic customers, reflecting our standing as a preferred global lithium partner, highlighted by our scale, access to geographically diverse, low-cost resources and long-term track record of reliability of supply and operating execution.
Specialties: We expect both net sales and profitability to be lower in 2023 due to reduced customer demand in certain markets including consumer and industrial electronics and elastomers partially offset by strong demand in other end-markets, such as pharmaceuticals, agriculture and oilfield services. We have taken measures to reduce the negative impact of lower demand throughout the year. One anticipated contributor to future growth is the December 2022 launch of MercLok, a groundbreaking new bromine-based product that sequesters elemental and ionic mercury in the environment.
On a longer-term basis, we continue to believe that improving global standards of living, widespread digitization, increasing demand for data management capacity and the potential for increasingly stringent fire safety regulations in developing markets are likely to drive continued demand for fire safety, bromine and lithium specialties products. We are focused on profitably growing our globally competitive production networks to serve all major bromine and lithium specialties consuming products and markets. The combination of our solid, long-term business fundamentals, strong cost position, product innovations and effective management of raw material costs should enable us to manage our business through end-market challenges and to capitalize on opportunities that are expected with favorable market trends in select end markets.
Ketjen: Total Ketjen results in 2023 are expected to increase year-over-year due to higher pricing, while raw material and energy costs have stabilized, which is expected to continue for the remainder of 2023. In addition, volume is expected to grow across each of the Ketjen businesses. The fluidized catalytic cracking (“FCC”) market has recovered from the COVID-19 pandemic as a result of increased travel and depletion of global gasoline inventories. Hydroprocessing catalysts (“HPC”) demand tends to be lumpier than FCC demand, but we have seen increased demand as refineries are taking turnarounds. Additionally, we have signed an agreement to supply unique technologies to new markets, such as the hydrotreated vegetable oil market, which supports the energy transition for sustainable aviation fuels and supports our business growth. Our decision to retain this business as a separate, wholly-owned subsidiary is intended to better meet customer needs and foster talent required to deliver in a competitive global environment.
On a longer-term basis, we believe increased global demand for transportation fuels, new refinery start-ups and ongoing adoption of cleaner fuels will be the primary drivers of growth in our Ketjen business. We believe delivering superior end-use performance continues to be the most effective way to create sustainable value in the refinery catalysts industry. We also believe our technologies continue to provide significant performance and financial benefits to refiners challenged to meet tighter regulations around the world, including those managing new contaminants present in North America tight oil, and those in the Middle East and Asia seeking to use heavier feedstock while pushing for higher propylene yields. Longer-term, we believe that the global crude supply will get heavier and more sour, a trend that bodes well for our catalysts portfolio. With superior technology and production capacities, and expected growth in end market demand, we believe that Ketjen remains well-positioned for the future. In performance catalyst solutions (“PCS”), we expect growth on a longer-term basis in our organometallics business due to growing global demand for plastics driven by rising standards of living and infrastructure spending.
Corporate: In the first quarter of 2023, we increased our quarterly dividend rate to $0.40 per share. We continue to focus on cash generation, working capital management and process efficiencies. We expect our global effective tax rate will vary based on the locales in which income is actually earned and remains subject to potential volatility from changing legislation in the United States, such as the Inflation Reduction Act and the CHIPS and Science Act of 2022, and other tax jurisdictions. During the fourth quarter of 2023, the share price of one our public equity security investments (fair value of $180.5 million as of September 30, 2023) has decreased by approximately 45% since the balance sheet date of September 30, 2023 and could result in a mark-to-market loss during the fourth quarter if the share price remains at a lower level through the end of the year.
We remain committed to evaluating the merits of any opportunities that may arise for acquisitions or other business development activities that will complement our business footprint. Additional information regarding our products, markets and
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financial performance is provided at our website, www.albemarle.com. Our website is not a part of this document nor is it incorporated herein by reference.

Results of Operations

The following data and discussion provides an analysis of certain significant factors affecting our results of operations during the periods included in the accompanying consolidated statements of income.


Third Quarter 2023 Compared to Third Quarter 2022

Net Sales
In thousandsQ3 2023Q3 2022$ Change% Change
Net sales$2,310,596 $2,091,805 $218,791 10 %
•$540.3 million increase attributable to higher sales volume primarily in Energy Storage, partially offset by lower sales volume in Specialties
•$285.4 million decrease attributable to decreased pricing primarily from our Energy Storage and Specialties businesses
•$36.2 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Gross Profit
In thousandsQ3 2023Q3 2022$ Change% Change
Gross profit$54,934 $1,043,814 $(988,880)(95)%
Gross profit margin2.4 %49.9 %
▪Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
▪Unfavorable pricing impacts in Energy Storage and Specialties
▪Increased utility and material costs in Energy Storage and Specialties
▪Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies
▪Partially offset by higher sales volume in Energy Storage
Selling, General and Administrative (“SG&A”) Expenses
In thousandsQ3 2023Q3 2022$ Change% Change
Selling, general and administrative expenses$173,866 $134,479 $39,387 29 %
Percentage of Net sales7.5 %6.4 %
▪Higher compensation expenses across all businesses and Corporate
▪Higher spending to support business growth, primarily in Energy Storage

Research and Development Expenses
In thousandsQ3 2023Q3 2022$ Change% Change
Research and development expenses$21,082 $18,358 $2,724 15 %
Percentage of Net sales0.9 %0.9 %
Interest and Financing Expenses
In thousandsQ3 2023Q3 2022$ Change% Change
Interest and financing expenses$(29,332)$(29,691)$359 (1)%

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Other Income, Net
In thousandsQ3 2023Q3 2022$ Change% Change
Other income, net$11,182 $7,974 $3,208 40 %
•$26.0 million increase attributable to foreign exchange impacts from gains recorded in 2023
•$11.7 million increase attributable to interest income from higher cash balances in 2023
•$8.2 million gain from PIK dividends of preferred equity in a W.R. Grace & Co. (“Grace”) subsidiary in 2023
•$7.2 million of gain resulting from insurance proceeds of a prior legal matter in 2023
•Partially offset by $37.0 million of a decrease related to the fair value adjustment of equity securities in public companies
•$5.6 million increase in expense related to non-operating pension and OPEB items
Income Tax (Benefit) Expense
In thousandsQ3 2023Q3 2022$ Change% Change
Income tax (benefit) expense$(8,551)$196,938 $(205,489)(104)%
Effective income tax rate5.4 %22.7 %
•2023 included a tax reserve related to an uncertain tax position in Chile
•2022 included a benefit from global intangible low-taxed income associated with a payment made in 2022 to settle a legacy legal matter
•Change in geographic mix of earnings
Equity in Net Income of Unconsolidated Investments
In thousandsQ3 2023Q3 2022$ Change% Change
Equity in net income of unconsolidated investments$470,306 $258,884 $211,422 82 %
▪Increased earnings from volume increases from the Windfield Holdings Pty Ltd (“Talison”) joint venture
▪$9.8 million decrease attributable to unfavorable foreign exchange impacts from the Talison joint venture
Net Income Attributable to Noncontrolling Interests
In thousandsQ3 2023Q3 2022$ Change% Change
Net income attributable to noncontrolling interests$(18,160)$(33,991)$15,831 (47)%
▪Decrease in consolidated income related to our Jordan Bromine Company Limited (“JBC”) joint venture primarily due to lower volume
Net Income Attributable to Albemarle Corporation
In thousandsQ3 2023Q3 2022$ Change% Change
Net income attributable to Albemarle Corporation$302,533 $897,215 $(594,682)(66)%
Percentage of Net sales13.1 %42.9 %
Basic earnings per share$2.58 $7.66 $(5.08)(66)%
Diluted earnings per share$2.57 $7.61 $(5.04)(66)%
▪Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
▪Unfavorable pricing impacts in Energy Storage and Specialties
▪$37.0 million of a decrease related to the fair value adjustment of equity securities in public companies
▪Higher sales volume in Energy Storage
▪Increased earnings from Talison joint venture


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Other Comprehensive (Loss) Income, Net of Tax
In thousandsQ3 2023Q3 2022$ Change% Change
Other comprehensive (loss) income, net of tax$(183,045)$(210,172)$27,127 (13)%
▪Foreign currency translation and other
$(143,957)$(200,520)$56,563 (28)%
▪2023 included unfavorable movements in the Euro of approximately $134 million, the Japanese Yen of approximately $4 million and a net unfavorable variance in various other currencies of $6 million
▪2022 included unfavorable movements in the Euro of approximately $119 million, the Chinese Renminbi of approximately $57 million, the Japanese Yen of approximately $8 million, the Korean Won of approximately $6 million and the Taiwanese Dollar of approximately $5 million, partially offset by a net favorable variance in various other currencies of less than $1 million
▪Cash flow hedge
$(39,088)$(9,652)$(29,436)305 %
Segment Information Overview. We have identified three reportable segments according to the nature and economic characteristics of our products as well as the manner in which the information is used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. Effective January 1, 2023 our reportable business segments consisted of: (1) Energy Storage, (2) Specialties and (3) Ketjen.

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.

Our 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. We define adjusted EBITDA as earnings before interest and financing expenses, income tax expense, depreciation and amortization, as adjusted on a consistent basis for certain non-operating, non-recurring or unusual items in a balanced manner and on a segment basis. These non-operating, non-recurring or unusual items may include acquisition and integration-related costs, gains or losses on sales of businesses, restructuring charges, facility divestiture charges, certain litigation and arbitration costs and 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. We have reported adjusted EBITDA because management believes it provides additional useful measurements to review the Company’s operations, 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, the generally accepted accounting principles in the United States (“U.S. GAAP”). Adjusted EBITDA should not be considered as an alternative to Net (loss) 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 September 30,Percentage Change
2023%2022%2023 vs 2022
(In thousands, except percentages)
Net sales:
Energy Storage$1,697,163 73.4 %$1,414,053 67.6 %20 %
Specialties352,722 15.3 %441,928 21.1 %(20)%
Ketjen260,711 11.3 %235,824 11.3 %11 %
Total net sales$2,310,596 100.0 %$2,091,805 100.0 %10 %
Adjusted EBITDA:
Energy Storage$407,476 89.9 %$1,084,643 91.1 %(62)%
Specialties46,307 10.2 %133,558 11.2 %(65)%
Ketjen15,159 3.3 %4,635 0.4 %227 %
Total segment adjusted EBITDA468,942 103.5 %1,222,836 102.8 %(62)%
Corporate(15,655)(3.5)%(32,870)(2.8)%52 %
Total adjusted EBITDA$453,287 100.0 %$1,189,966 100.0 %(62)%
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See below for a reconciliation of total segment adjusted EBITDA to consolidated Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
Three Months Ended
September 30,
20232022
Total segment adjusted EBITDA$468,942 $1,222,836 
Corporate expenses, net(15,655)(32,870)
Depreciation and amortization(105,445)(77,713)
Interest and financing expenses(29,332)(29,691)
Income tax expense8,551 (196,938)
Acquisition and integration related costs(a)
(10,043)(2,145)
Non-operating pension and OPEB items(620)5,027 
Mark-to-market (loss) gain on public equity securities(b)
(26,445)10,626 
Other(c)
12,580 (1,917)
Net income attributable to Albemarle Corporation$302,533 $897,215 
(a)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A.
(b)(Loss) gain recorded in Other income, net resulting from the net change in fair value of investments in public equity securities.
(c)Included amounts for the three months ended September 30, 2023 recorded in:
•SG&A - $1.8 million of separation and other severance costs to employees in Corporate and the Ketjen business which are primarily expected to be paid out during 2023, $0.7 million of facility closure expenses related to offices in Germany and $0.3 million of a loss from the sale of legacy properties not part of Albemarle’s operations.
•Other income, net - $8.2 million gain from PIK dividends of preferred equity in a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds of a prior legal matter.
Included amounts for the three-month period ended September 30, 2022 recorded in:
•Cost of goods sold - $2.7 million of expense related to one-time retention payments for certain employees during the Ketjen strategic review and business unit realignment.
•SG&A - $1.9 million of expense primarily related to one-time retention payments for certain employees during the Catalysts strategic review and business unit realignment and $1.4 million primarily related to facility closure expenses of offices in Germany.
•Other income, net - $3.0 million gain from the reversal of a liability related to a previous divestiture and a $1.1 million gain resulting from the adjustment of indemnification related to previously disposed businesses.

Energy Storage
In thousandsQ3 2023Q3 2022$ Change% Change
Net sales$1,697,163 $1,414,053 $283,110 20 %
•$570.0 million increase attributable to higher sales volume, primarily driven by new capacity from La Negra III/IV in Chile and Qinzhou, China, as well as increased tolling
•$246.9 million decrease attributable to unfavorable pricing impacts, primarily in battery- and tech-grade carbonate and hydroxide sold under index-referenced and variable-priced contracts, and mix
•$39.9 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$407,476 $1,084,643 $(677,167)(62)%
•Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
•Unfavorable pricing impacts
•Increased SG&A expenses from higher compensation and other administrative costs
•Increased utility and freight costs
•Increased spending for investments to support business growth
•Higher sales volume
•Increased equity in net income from the Talison joint venture, driven by increased sales volume
•Savings from designed productivity improvements
•$23.2 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies

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Specialties
In thousandsQ3 2023Q3 2022$ Change% Change
Net sales$352,722 $441,928 $(89,206)(20)%
•$58.4 million decrease attributable to unfavorable pricing impacts across several divisions
•$32.2 million decrease attributable to lower sales volumes related to decreased demand across all products
•$1.2 million increase attributable to favorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$46,307 $133,558 $(87,251)(65)%
•Lower sales volume and unfavorable pricing impacts
•Increased manufacturing costs resulting from decreased production, increased utilities and material costs
•$6.8 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Ketjen
In thousandsQ3 2023Q3 2022$ Change% Change
Net sales$260,711 $235,824 $24,887 11 %
•$19.9 million increase attributable to favorable pricing impacts, primarily in clean fuel technologies and PCS
•$2.4 million increase attributable to higher sales volume, primarily from the timing of clean fuel technologies sales and shipments
•$2.5 million increase attributable to favorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$15,159 $4,635 $10,524 227 %
•Favorable pricing impacts and higher sales volume
•Decreased utilities and material costs
•Increased freight costs
Corporate
In thousandsQ3 2023Q3 2022$ Change% Change
Adjusted EBITDA$(15,655)$(32,870)$17,215 52 %
▪$16.2 million increase attributable to favorable currency exchange impacts, including a $9.8 million decrease in foreign exchange impacts from our Talison joint venture
▪Increase in interest income due to higher cash balances in 2023
First Nine Months 2023 Compared to First Nine Months 2022

Net Sales
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net sales$7,261,038 $4,699,126 $2,561,912 55 %
•$1.9 billion increase attributable to increased pricing primarily from Energy Storage
•$754.9 million increase attributable to higher sales volume in Energy Storage, partially offset by lower sales volume in Specialties and Ketjen
•$113.1 million of unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Gross Profit
In thousands
YTD 2023
YTD 2022
$ Change% Change
Gross profit$1,889,961 $2,073,268 $(183,307)(9)%
Gross profit margin26.0 %44.1 %
▪Favorable pricing impacts and higher sales volume in Energy Storage
▪Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
▪Increased utility and material costs in each of our businesses
▪Increased commission expenses in Chile resulting from the higher pricing in Lithium
▪Unfavorable currency exchange impacts resulting from the stronger U.S. Dollar against various currencies

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Selling, General and Administrative Expenses
In thousands
YTD 2023
YTD 2022
$ Change% Change
Selling, general and administrative expenses$725,242 $375,989 $349,253 93 %
Percentage of Net sales10.0 %8.0 %
▪$218.5 million legal accrual recorded for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP. See Note 9, “Commitments and Contingencies,” for further details
▪Higher compensation expenses across all businesses and Corporate
▪Higher spending to support business growth, primarily in Energy Storage
▪Partially offset by productivity improvements and a reduction in administrative costs

Research and Development Expenses
In thousands
YTD 2023
YTD 2022
$ Change% Change
Research and development expenses$62,972 $51,827 $11,145 22 %
Percentage of Net sales0.9 %1.1 %
Loss on Sale of Interest in Properties
In thousands
YTD 2023
YTD 2022
$ Change% Change
Loss on sale of interest in properties$— $8,400 $(8,400)
▪Expense related to cost overruns for MRL’s 40% interest in lithium hydroxide conversion assets being built in Kemerton, Western Australia
Interest and Financing Expenses
In thousands
YTD 2023
YTD 2022
$ Change% Change
Interest and financing expenses$(81,686)$(98,934)$17,248 (17)%
▪2022 included a $19.2 million loss on early extinguishment of debt, representing the tender premiums, fees, unamortized discounts, unamortized deferred financing costs and accelerated amortization of the interest rate swap balance from the redemption of debt during the second quarter of 2022
▪2022 also included an expense of $17.5 million related to the correction of out of period errors regarding overstated capitalized interest values in prior periods
▪Increased average debt balance during 2023 compared to 2022 following the issuance of $1.7 billion in new senior notes in May 2022
Other Income, Net
In thousands
YTD 2023
YTD 2022
$ Change% Change
Other income, net$147,628 $32,237 $115,391 358 %
•$62.1 million increase attributable to foreign exchange impacts from gains recorded in 2023
•$42.4 million increase attributable to interest income from higher cash balances in 2023
•$23.8 million of an increase related to the fair value adjustments of equity securities in public companies
•Partially offset by $17.2 million increase attributable to expense related to non-operating pension and OPEB items
Income Tax Expense
In thousands
YTD 2023
YTD 2022
$ Change% Change
Income tax expense$311,399 $366,486 $(55,087)(15)%
Effective income tax rate
26.7 %23.3 %
•2023 included tax impact of a non-deductible $218.5 million legal accrual recorded for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP
•2023 included a tax reserve related to an uncertain tax position in Chile
•2022 included a benefit from global intangible low-taxed income associated with a payment made in 2022 to settle a legacy legal matter
•Change in geographic mix of earnings

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Equity in Net Income of Unconsolidated Investments
In thousands
YTD 2023
YTD 2022
$ Change% Change
Equity in net income of unconsolidated investments$1,417,545 $449,476 $968,069 215 %
▪Increased earnings from strong pricing and volume increases from the Talison joint venture
▪$5.0 million increase attributable to favorable foreign exchange impacts from the Talison joint venture
Net Income Attributable to Noncontrolling Interests
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net income attributable to noncontrolling interests$(82,679)$(95,974)$13,295 (14)%
▪Decrease in consolidated income related to our JBC joint venture primarily due to lower volume
Net Income Attributable to Albemarle Corporation
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net income attributable to Albemarle Corporation$2,191,156 $1,557,371 $633,785 41 %
Percentage of Net sales30.2 %33.1 %
Basic earnings per share$18.68 $13.30 $5.38 40 %
Diluted earnings per share$18.60 $13.23 $5.37 41 %
▪Favorable pricing impacts and higher sales volume in Energy Storage
▪Increased earnings from Talison joint venture
▪$62.1 million increase attributable to foreign exchange impacts from gains recorded in 2023
▪Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
▪$218.5 million legal accrual recorded for the agreements in principle to resolve a previously disclosed legal matter with the DOJ, SEC and DPP. See Note 9, “Commitments and Contingencies,” for further details
▪Increased commission expenses in Chile resulting from the higher pricing in Lithium
▪Increased utility and material costs in each of our businesses
▪Increased SG&A expenses, primarily related to increased compensation expense

Other Comprehensive Income (loss), Net of Tax
In thousands
YTD 2023
YTD 2022
$ Change% Change
Other comprehensive income (loss), net of tax$(140,337)$(324,975)$184,638 (57)%
▪Foreign currency translation and other
$(103,376)$(324,230)$220,854 (68)%
▪2023 included unfavorable movements in the Euro of approximately $90 million, the Japanese Yen of approximately $13 million, partially offset by a net favorable variance in various other currencies of less than $1 million
▪2022 included unfavorable movements in the Euro of approximately $187 million, the Chinese Renminbi of approximately $88 million, the Japanese Yen of approximately $23 million, the Taiwanese Dollar of approximately $11 million, the South Korean Won of approximately $11 million and a net unfavorable variance in various other currencies of less than $1 million
▪Cash flow hedge
$(36,961)$(8,144)$(28,817)354 %
▪Interest rate swap
$— $7,399 $(7,399)(100)%
▪Accelerated the amortization of the remaining interest rate swap balance in 2022 as a result of the repayment of the 4.15% senior notes due in 2024


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Segment Information Overview. Summarized financial information concerning our reportable segments is shown in the following tables.

Nine Months Ended September 30,Percentage Change
2023%2022%2023 vs 2022
(In thousands, except percentages)
Net sales:
Energy Storage$5,403,910 74.5 %$2,680,150 57.0 %102 %
Specialties1,142,802 15.7 %1,354,950 28.9 %(16)%
Ketjen714,326 9.8 %664,026 14.1 %8 %
Total net sales$7,261,038 100.0 %$4,699,126 100.0 %55 %
Adjusted EBITDA:
Energy Storage$2,745,680 89.1 %$1,853,407 83.0 %48 %
Specialties268,665 8.7 %433,534 19.4 %(38)%
Ketjen72,584 2.4 %31,337 1.4 %132 %
Total segment adjusted EBITDA3,086,929 100.2 %2,318,278 103.9 %33 %
Corporate(5,657)(0.2)%(86,173)(3.9)%93 %
Total adjusted EBITDA$3,081,272 100.0 %$2,232,105 100.0 %38 %
See below for a reconciliation of total segment adjusted EBITDA to consolidated Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
Nine Months Ended
September 30,
20232022
Total segment adjusted EBITDA$3,086,929 $2,318,278 
Corporate expenses, net(5,657)(86,173)
Depreciation and amortization(285,801)(215,280)
Interest and financing expenses(a)
(81,686)(98,934)
Income tax expense(311,399)(366,486)
Loss on sale of interest in properties, net(b)
— (8,400)
Acquisition and integration related costs(c)
(21,653)(9,244)
Non-operating pension and OPEB items(1,833)15,345 
Mark-to-market gain on public equity securities(d)
34,401 10,626 
Legal accrual(e)
(218,510)— 
Other(f)
(3,635)(2,361)
Net income attributable to Albemarle Corporation$2,191,156 $1,557,371 
(a)Included in Interest and financing expenses for the nine months ended September 30, 2022 was a loss on early extinguishment of debt of $19.2 million following the May 2022 repayment of Senior Notes due in 2024. In addition, Interest and financing expenses for the six months ended September 30, 2022 is the correction of an out of period error of $17.5 million related to the overstatement of capitalized interest in prior periods.
(b)Expense recorded as a result of revised estimates of the obligation to construct certain lithium hydroxide conversion assets in Kemerton, Western Australia, due to cost overruns from supply chain, labor and COVID-19 pandemic related issues. The corresponding obligation was recorded in Accrued liabilities to be transferred to MRL, which maintains a 40% ownership interest in these Kemerton assets.
(c)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A.
(d)Gain recorded in Other income, net resulting from the net change in fair value of investments in public equity securities.
(e)Accrual recorded in SG&A representing minimum probable loss to resolve the DOJ, SEC and DPP investigation. See Note 9, “Commitments and Contingencies,” for further details.
(f)Included amounts for the six months ended September 30, 2023 recorded in:
•SG&A - $9.2 million of separation and other severance costs to employees in Corporate and the Ketjen business which are primarily expected to be paid out during 2023, $2.1 million of facility closure expenses related to offices in Germany, $1.9 million of charges primarily for environmental reserves at sites not part of our operations and $1.0 million primarily related to shortfall contributions for a multiemployer plan financial improvement plan.
•Other income, net - $10.9 million gain in the fair value of preferred equity of a Grace subsidiary and a $7.2 million gain resulting from insurance proceeds of a prior legal matter, partially offset by $3.9 million of a loss resulting from the adjustment of
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indemnification related to previously disposed businesses and $3.6 million of charges for asset retirement obligations at a site not part of our operations.
Included amounts for the nine-month period ended September 30, 2022 recorded in:
•Cost of goods sold - $2.7 million of expense related to one-time retention payments for certain employees during the Ketjen strategic review and business unit realignment and $0.5 million of expense related to the settlement of a legal matter resulting from a prior acquisition.
•SG&A - $3.4 million primarily related to facility closure expenses related to offices in Germany, $2.8 million of charges for environmental reserves at sites not part of our operations and $1.9 million of expense related to one-time retention payments for certain employees during the Catalysts strategic review and business unit realignment, partially offset by $4.3 million of gains from the sale of legacy properties not part of our operations.
•Other income, net - $3.0 million gain from the reversal of a liability related to a previous divestiture, a $1.1 million gain resulting from the adjustment of indemnification related to previously disposed businesses and a $0.6 million gain related to a settlement received from a legal matter in a prior period.

Energy Storage
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net sales$5,403,910 $2,680,150 $2,723,760 102 %
•$1.9 billion increase attributable to favorable pricing impacts, reflecting tight market conditions in the first part of the year, primarily in battery- and tech-grade carbonate and hydroxide, as well as greater volumes sold under index-referenced and variable-priced contracts, and mix
•$944.0 million increase attributable to higher sales volume, primarily driven by new capacity from La Negra III/IV in Chile and Qinzhou, China, as well as increased tolling
•$100.7 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$2,745,680 $1,853,407 $892,273 48 %
•Favorable pricing impacts and higher sales volume
•Increased equity in net income from the Talison joint venture, driven by increased pricing and sales volume
•Savings from designed productivity improvements
•Higher costs realized in the current period from sales of lithium resulting from the higher priced spodumene used during the lithium conversion process
•Increased SG&A expenses from higher compensation and other administrative costs
•Increased utility and freight costs
•Increased spending for investments to support business growth
•Increased commission expenses in Chile resulting from the higher pricing in Lithium
•$63.1 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Specialties
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net sales$1,142,802 $1,354,950 $(212,148)(16)%
•$167.6 million decrease attributable to lower sales volumes related to decreased demand across all products
•$31.8 million decrease attributable to unfavorable pricing impacts across several divisions
•$12.9 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Adjusted EBITDA$268,665 $433,534 $(164,869)(38)%
•Lower sales volume and unfavorable pricing impacts
•Increased manufacturing costs resulting from decreased production, increased utilities and material costs
•$15.8 million decrease attributable to unfavorable currency translation resulting from the stronger U.S. Dollar against various currencies
Ketjen
In thousands
YTD 2023
YTD 2022
$ Change% Change
Net sales$714,326 $664,026 $50,300 8 %
•$71.3 million increase attributable to favorable pricing impacts, primarily in clean fuel technologies and PCS
•$21.5 million decrease attributable to lower sales volume, primarily from the timing of clean fuel technologies sales
Adjusted EBITDA$72,584 $31,337 $41,247 132 %
•Favorable pricing impacts, partially offset by lower sales volume
•$24 million gain recorded for insurance claim receipts
•Increase in incentive compensation costs
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Corporate
In thousands
YTD 2023
YTD 2022
$ Change% Change
Adjusted EBITDA$(5,657)$(86,173)$80,516 93 %
▪$67.1 million increase attributable to favorable currency exchange impacts, including a $5.0 million increase in foreign exchange impacts from our Talison joint venture
▪Increase in interest income due to higher cash balances in 2023

Financial Condition and Liquidity
Overview
The principal uses of cash in our business generally have been capital investments and resource development costs, funding working capital, and service of debt. We also make contributions to our defined benefit pension plans, pay dividends to our shareholders and have the ability to repurchase shares of our common stock. Historically, cash to fund the needs of our business has been principally provided by cash from operations, debt financing and equity issuances.
We are continually focused on working capital efficiency particularly in the areas of accounts receivable, payables and inventory. We anticipate that cash on hand, cash provided by operating activities, proceeds from divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund capital expenditures and other investing activities, fund pension contributions and pay dividends for the foreseeable future.
Cash Flow
During the first nine months of 2023, cash on hand, cash provided by operations and net proceeds from borrowings of commercial paper and long-term debt of $472.8 million funded $1.5 billion of capital expenditures for plant, machinery and equipment and dividends to shareholders of $140.3 million. Our operations provided $1.4 billion of cash flows during the first nine months of 2023, as compared to $955.6 million for the first nine months of 2022. The change compared to prior year was primarily due to higher dividends received from unconsolidated investments, primarily our Talison joint venture, and increased earnings from the Energy Storage segment, partially offset by an increase in working capital of $327.8 million. The outflow from working capital in 2023 was primarily driven by increased inventory balances from the higher cost of lithium spodumene and higher accounts receivable balances from increased sales volume in Energy Storage. This was partially offset by increased accounts payable which includes the higher pricing on lithium spodumene purchases from our Talison joint venture. Overall, our cash and cash equivalents increased by $102.5 million to $1.6 billion at September 30, 2023 from $1.5 billion at December 31, 2022.
Capital expenditures for the nine-month period ended September 30, 2023 of $1.5 billion were primarily associated with plant, machinery and equipment. We expect our capital expenditures to be between $1.9 billion and $2.1 billion in 2023, primarily for Energy Storage growth and capacity increases, including in Australia, Chile, China and Silver Peak, Nevada, as well as productivity and continuity of operations projects in all segments. Train I of our Kemerton, Western Australia plant is operating and producing battery-grade product subject to customer qualification. Train II has achieved mechanical completion and transitioned to the commissioning stage. In addition, construction of our announced lithium conversion plant in Meishan, China is progressing on schedule, with estimated completion in 2024.
On October 18, 2023, the Company closed on the restructuring of the MARBL lithium joint venture in Australia (“MARBL”) with Mineral Resources Limited (“MRL”). This updated structure is intended to significantly simplify the commercial operation agreements previously entered into, retain full control of downstream conversion assets and to provide greater strategic opportunities for each company based on their global operations and the evolving lithium market.
Under the amended agreements, Albemarle acquired the remaining 40% ownership of the Kemerton lithium hydroxide processing facility in Australia that was jointly owned with Mineral Resources through the MARBL joint venture. Following this restructuring, Albemarle and MRL each own 50% of the Wodgina Lithium Mine Project (“Wodgina”), and MRL operates the Wodgina mine on behalf of the joint venture. Albemarle expects to pay MRL between an estimated $380 million to $400 million in cash, which includes the $180 million of consideration for the remaining ownership of Kemerton as well as a payment for the economic effective date of the transaction being retroactive to April 1, 2022.
Net current assets were $3.2 billion and $2.4 billion at September 30, 2023 and December 31, 2022, respectively. The increase is primarily due to increased inventory and accounts receivable balances from higher lithium pricing. Additional changes in the components of net current assets are primarily due to the timing of the sale of goods and other ordinary transactions leading up to the balance sheet dates. The additional changes are not the result of any policy changes by the
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Company, and do not reflect any change in either the quality of our net current assets or our expectation of success in converting net working capital to cash in the ordinary course of business.
On February 23, 2023, we increased our quarterly dividend rate to $0.40 per share, an increase from the quarterly rate of $0.395 per share paid in 2022. The cash dividend declared on July 18, 2023 was paid on October 2, 2023 to shareholders of record at the close of business as of September 15, 2023.
At September 30, 2023 and December 31, 2022, our cash and cash equivalents included $1.6 billion and $1.3 billion, respectively, held by our foreign subsidiaries. The majority of these foreign cash balances are associated with earnings that we have asserted are indefinitely reinvested and which we plan to use to support our continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, research, operating expenses or other similar cash needs of our foreign operations. From time to time, we repatriate cash associated with earnings from our foreign subsidiaries to the U.S. for normal operating needs through intercompany dividends, but only from subsidiaries whose earnings we have not asserted to be indefinitely reinvested or whose earnings qualify as “previously taxed income” as defined by the Internal Revenue Code. During the first nine months of 2023 and 2022 we repatriated $3.0 million and $1.7 million, respectively, of cash as part of these foreign earnings cash repatriation activities.
While we continue to closely monitor our cash generation, working capital management and capital spending in light of continuing uncertainties in the global economy, we believe that we will continue to have the financial flexibility and capability to opportunistically fund future growth initiatives. Additionally, we anticipate that future capital spending, including business acquisitions, share repurchases and other cash outlays, should be financed primarily with cash flow provided by operations and cash on hand, with additional cash needed, if any, provided by borrowings. The amount and timing of any additional borrowings will depend on our specific cash requirements.
Long-Term Debt
We currently have the following notes outstanding:
Issue Month/YearPrincipal (in millions)Interest RateInterest Payment DatesMaturity Date
November 2019€371.71.125%November 25November 25, 2025
May 2022(a)
$650.04.65%June 1 and December 1June 1, 2027
November 2019€500.01.625%November 25November 25, 2028
November 2019(a)
$171.63.45%May 15 and November 15November 15, 2029
May 2022(a)
$600.05.05%June 1 and December 1June 1, 2032
November 2014(a)
$350.05.45%June 1 and December 1December 1, 2044
May 2022(a)
$450.05.65%June 1 and December 1June 1, 2052
(a)    Denotes senior notes.
Our senior notes are senior unsecured obligations and rank equally with all our other senior unsecured indebtedness from time to time outstanding. The notes are effectively subordinated to all of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries. As is customary for such long-term debt instruments, each series of notes outstanding has terms that allow us to redeem the notes before maturity, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of these notes to be redeemed, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis using the comparable government rate (as defined in the indentures governing these notes) plus between 25 and 40 basis points, depending on the series of notes, plus, in each case, accrued interest thereon to the date of redemption. Holders may require us to purchase such notes at 101% upon a change of control triggering event, as defined in the indentures. These notes are subject to typical events of default, including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness of $40 million or more caused by a nonpayment default.
Our Euro notes issued in 2019 are unsecured and unsubordinated obligations and rank equally in right of payment to all our other unsecured senior obligations. The Euro notes are effectively subordinated to all of our existing or future secured indebtedness and to the existing and future indebtedness of our subsidiaries. As is customary for such long-term debt instruments, each series of notes outstanding has terms that allow us to redeem the notes before their maturity, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal thereof and interest thereon (exclusive of interest accrued to, but excluding, the date of redemption) discounted to the redemption date on an annual
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basis using the bond rate (as defined in the indentures governing these notes) plus between 25 and 35 basis points, depending on the series of notes, plus, in each case, accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date of redemption. Holders may require us to purchase such notes at 101% upon a change of control triggering event, as defined in the indentures. These notes are subject to typical events of default, including bankruptcy and insolvency events, nonpayment and the acceleration of certain subsidiary indebtedness exceeding $100 million caused by a nonpayment default.
On October 28, 2022, we amended our revolving, unsecured credit agreement (the “2018 Credit Agreement”), which provides for borrowings of up to $1.5 billion and matures on October 28, 2027. The 2018 Credit Agreement was originally dated as of June 21, 2018, and was previously amended on August 14, 2019, May 11, 2020 and December 10, 2021. Borrowings under the 2018 Credit Agreement bear interest at variable rates based on a benchmark rate depending on the currency in which the loans are denominated, plus an applicable margin which ranges from 0.910% to 1.375%, depending on the Company’s credit rating from Standard & Poor’s Ratings Services LLC (“S&P”), Moody’s Investors Services, Inc. (“Moody’s”) and Fitch Ratings, Inc. (“Fitch”). With respect to loans denominated in U.S. dollars, interest is calculated using the term Secured Overnight Financing Rate (“SOFR”) plus a term SOFR adjustment of 0.10%, plus the applicable margin. The applicable margin on the facility was 1.125% as of September 30, 2023. As of September 30, 2023 there were no borrowings outstanding under the 2018 Credit Agreement.
Borrowings under the 2018 Credit Agreement are conditioned upon satisfaction of certain conditions precedent, including the absence of defaults. The Company is subject to one financial covenant, as well as customary affirmative and negative covenants. The financial covenant requires that the Company’s consolidated net funded debt to consolidated EBITDA ratio (as such terms are defined in the 2018 Credit Agreement) be less than or equal to 3.50:1 for all fiscal quarters, subject to adjustments in accordance with the terms of the 2018 Credit Agreement relating to a consummation of an acquisition where the consideration includes cash proceeds from issuance of funded debt in excess of $500 million. The 2018 Credit Agreement also contains customary default provisions, including defaults for non-payment, breach of representations and warranties, insolvency, non-performance of covenants and cross-defaults to other material indebtedness. The occurrence of an event of default under the 2018 Credit Agreement could result in all loans and other obligations becoming immediately due and payable and the 2018 Credit Agreement being terminated.
On May 29, 2013, we entered into agreements to initiate a commercial paper program on a private placement basis under which we may issue unsecured commercial paper notes (the “Commercial Paper Notes”) from time-to-time up to a maximum aggregate principal amount outstanding at any time of $750.0 million. On May 17, 2023, we entered into definitive documentation to increase the size of our existing commercial paper program. The maximum aggregate face amount of Commercial Paper Notes outstanding at any time is $1.5 billion (up from $750 million prior to the increase). The proceeds from the issuance of the Commercial Paper Notes are expected to be used for general corporate purposes, including the repayment of other debt of the Company. The 2018 Credit Agreement is available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstanding under the 2018 Credit Agreement and the Commercial Paper Notes will not exceed the $1.5 billion current maximum amount available under the 2018 Credit Agreement. The Commercial Paper Notes will be sold at a discount from par, or alternatively, will be sold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The maturities of the Commercial Paper Notes will vary but may not exceed 397 days from the date of issue. The definitive documents relating to the commercial paper program contain customary representations, warranties, default and indemnification provisions. At September 30, 2023, we had $156.5 million of Commercial Paper Notes outstanding bearing a weighted-average interest rate of approximately 5.52% and a weighted-average maturity of 3 days. The Commercial Paper Notes are classified as Current portion of long-term debt in our condensed consolidated balance sheets at September 30, 2023.
In the second quarter of 2023 the Company received a loan of $300.0 million to be repaid in five equal annual installments beginning on December 31, 2026. This interest-free loan was discounted using an imputed interest rate of 5.5% and the Company will amortize that discount through Interest and financing expenses over the term of the loan.
When constructing new facilities or making major enhancements to existing facilities, we may have the opportunity to enter into incentive agreements with local government agencies in order to reduce certain state and local tax expenditures. Under these agreements, we transfer the related assets to various local government entities and receive bonds. We immediately lease the facilities from the local government entities and have an option to repurchase the facilities for a nominal amount upon tendering the bonds to the local government entities at various predetermined dates. The bonds and the associated obligations for the leases of the facilities offset, and the underlying assets are recorded in property, plant and equipment. We currently have the ability to transfer up to $540 million in assets under these arrangements. At September 30, 2023, there are $14.3 million of bonds outstanding under these arrangements.
The non-current portion of our long-term debt amounted to $3.5 billion at September 30, 2023, compared to $3.2 billion at December 31, 2022. In addition, at September 30, 2023, we had availability to borrow $1.3 billion under our commercial paper program and the 2018 Credit Agreement, and $186.1 million under other existing lines of credit, subject to the financial
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covenant under the 2018 Credit Agreement. We have the ability and intent to refinance our borrowings under our other existing lines of credit with borrowings under the 2018 Credit Agreement, as applicable. Therefore, the amounts outstanding under those lines of credit, if any, are classified as long-term debt. We believe that at September 30, 2023 we were, and that we currently are, in compliance with all of our long-term debt covenants.
Off-Balance Sheet Arrangements
In the ordinary course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, including bank guarantees and letters of credit, which totaled approximately $191.2 million at September 30, 2023. None of these off-balance sheet arrangements has had, or is likely to have, a material effect on our current or future financial condition, results of operations, liquidity or capital resources.
Other Obligations
Our contractual obligations have not significantly changed, based on our ordinary business activities and projected capital expenditures noted above, from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2022.
Total expected 2023 contributions to our domestic and foreign qualified and nonqualified pension plans, including the Albemarle Corporation Supplemental Executive Retirement Plan, are expected to approximate $15 million. We may choose to make additional pension contributions in excess of this amount. We have made contributions of $10.8 million to our domestic and foreign pension plans (both qualified and nonqualified) during the nine-month period ended September 30, 2023.
The liability related to uncertain tax positions, including interest and penalties, recorded in Other noncurrent liabilities totaled $215.4 million at September 30, 2023 and $83.7 million at December 31, 2022. Related assets for corresponding offsetting benefits recorded in Other assets totaled $79.7 million at September 30, 2023 and $32.4 million at December 31, 2022. We cannot estimate the amounts of any cash payments associated with these liabilities for the remainder of 2023 or the next twelve months, and we are unable to estimate the timing of any such cash payments in the future at this time.
We are subject to federal, state, local and foreign requirements regulating the handling, manufacture and use of materials (some of which may be classified as hazardous or toxic by one or more regulatory agencies), the discharge of materials into the environment and the protection of the environment. To our knowledge, we are currently complying, and expect to continue to comply, in all material respects with applicable environmental laws, regulations, statutes and ordinances. Compliance with existing federal, state, local and foreign environmental protection laws is not expected to have a material effect on capital expenditures, earnings or our competitive position, but the costs associated with increased legal or regulatory requirements could have an adverse effect on our operating results.
Among other environmental requirements, we are subject to the federal Superfund law, and similar state laws, under which we may be designated as a potentially responsible party (“PRP”), and may be liable for a share of the costs associated with cleaning up various hazardous waste sites. Management believes that in cases in which we may have liability as a PRP, our liability for our share of cleanup is de minimis. Further, almost all such sites represent environmental issues that are quite mature and have been investigated, studied and in many cases settled. In de minimis situations, our policy generally is to negotiate a consent decree and to pay any apportioned settlement, enabling us to be effectively relieved of any further liability as a PRP, except for remote contingencies. In other than de minimis PRP matters, our records indicate that unresolved PRP exposures should be immaterial. We accrue and expense our proportionate share of PRP costs. Because management has been actively involved in evaluating environmental matters, we are able to conclude that the outstanding environmental liabilities for unresolved PRP sites should not have a material adverse effect upon our results of operations or financial condition.
Liquidity Outlook
We anticipate that cash on hand and cash provided by operating activities, divestitures and borrowings will be sufficient to pay our operating expenses, satisfy debt service obligations, fund any capital expenditures and share repurchases, make acquisitions, make pension contributions and pay dividends for the foreseeable future. Our main focus in the short-term, during the continued uncertainty surrounding the global economy, including recent inflationary trends, is to continue to maintain financial flexibility by continuing our cost savings initiative, while still protecting our employees and customers, committing to shareholder returns and maintaining an investment grade rating. Over the next three years, in terms of uses of cash, we will continue to invest in growth of the businesses and return value to shareholders. Additionally, we will continue to evaluate the merits of any opportunities that may arise for acquisitions of businesses or assets, which may require additional liquidity. Financing the purchase price of any such acquisitions could involve borrowing under existing or new credit facilities and/or the issuance of debt or equity securities, in addition to cash on hand.
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Our growth investments include strategic investments in China with plans to build a battery grade lithium conversion plant in Meishan initially targeting 50,000 metric tonnes of LCE per year. Construction of the Meishan facility is currently underway and is expected to be completed in 2024. We also announced the decision to build two additional processing trains at the Kemerton lithium hydroxide plant in Western Australia. The additional trains would increase the facility’s production by 50,000 metric tonnes per year.
In October 2022, we announced we had been awarded a nearly $150 million grant from the U.S. Department of Energy to expand domestic manufacturing of batteries for EVs and the electrical grid and for materials and components currently imported from other countries. The grant funding is intended to support a portion of the anticipated cost to construct a new, commercial-scale U.S.-based lithium concentrator facility at our Kings Mountain, North Carolina, location. We expect the concentrator facility to create hundreds of construction and full-time jobs, and to supply up to 350,000 metric tonnes per year of spodumene concentrate to our previously announced mega-flex lithium conversion facility. To further support the restart of the the Kings Mountain mine, in August 2023, we announced a $90 million critical materials award from the U.S. Department of Defense.
In addition, we have announced plans to construct a new $1.3 billion lithium mega-flex processing facility in South Carolina capable of annually producing approximately 50,000 metric tonnes of battery-grade lithium hydroxide, with the potential to expand up to 100,000 metric tonnes. Construction is expected to begin in late 2024. In December 2022, we also acquired a location in Charlotte, North Carolina, where we intend to invest at least $180 million to establish the Albemarle Technology Park, a world-class facility designed for novel materials research, advanced process development, and acceleration of next-generation lithium products to market. We anticipate that innovations from the new site will enhance lithium recovery, improve production methods, and introduce new forms of lithium to enable breakthrough levels of battery performance. In addition, we anticipate the creation of at least 200 jobs at the site.
Our cash flows from operations may be negatively affected by adverse consequences to our customers and the markets in which we compete as a result of moderating global economic conditions, continuing inflationary trends and reduced capital availability. We have experienced, and may continue to experience, volatility and increases in the price of certain raw materials and in transportation and energy costs as a result of global market and supply chain disruptions and the broader inflationary environment. As a result, we are planning for various economic scenarios and actively monitoring our balance sheet to maintain the financial flexibility needed.
Although we maintain business relationships with a diverse group of financial institutions as sources of financing, an adverse change in their credit standing could lead them to not honor their contractual credit commitments to us, decline funding under our existing but uncommitted lines of credit with them, not renew their extensions of credit or not provide new financing to us. While the global corporate bond and bank loan markets remain strong, periods of elevated uncertainty related to the stability of the banking system, future pandemics or global economic and/or geopolitical concerns may limit efficient access to such markets for extended periods of time. If such concerns heighten, we may incur increased borrowing costs and reduced credit capacity as our various credit facilities mature. If the U.S. Federal Reserve or similar national reserve banks in other countries decide to continue tightening the monetary supply, we may incur increased borrowing costs (as interest rates increase on our variable rate credit facilities, as our various credit facilities mature or as we refinance any maturing fixed rate debt obligations), although these cost increases would be partially offset by increased income rates on portions of our cash deposits.
As first reported in 2018, following receipt of information regarding potential improper payments being made by third-party sales representatives of our Refining Solutions business, within what is now the Ketjen segment, we investigated and voluntarily self-reported potential violations of the U.S. Foreign Corrupt Practices Act to the DOJ and SEC, and also reported this conduct to the DPP. Since reporting these matters to the DOJ, SEC, and DPP, Albemarle has cooperated with these agencies in their investigations of this historical conduct. We have implemented appropriate remedial measures and strengthened our compliance program and related internal controls.
In September 2023, the Company finalized agreements to resolve these matters with the DOJ and SEC. The DPP has confirmed it will not pursue action in this matter. In connection with this resolution, which relates to conduct prior to 2018, we entered into a non-prosecution agreement with the DOJ and an administrative resolution with the SEC, pursuant to which we paid a total of $218.5 million in aggregate fines, disgorgement, and prejudgment interest to the DOJ and SEC. The resolution does not include a compliance monitorship, although the Company has agreed to certain ongoing compliance reporting obligations.
During the second quarter of 2023, the Company recorded a charge of $218.5 million in Selling, General and Administrative Expenses in its consolidated statement of operations and accrued a corresponding liability on its consolidated balance sheet for these agreements. The agreed upon amounts were paid to the DOJ and SEC in October 2023, with this matter considered finalized and no future financial obligations expected.
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Overall, with generally strong cash-generative businesses and no significant long-term debt maturities before 2025, we believe we have, and will be able to maintain, a solid liquidity position.
We had cash and cash equivalents totaling $1.6 billion at September 30, 2023, of which $1.59 billion is held by our foreign subsidiaries. This cash represents an important source of our liquidity and is invested in bank accounts or money market investments with no limitations on access. The cash held by our foreign subsidiaries is intended for use outside of the U.S. We anticipate that any needs for liquidity within the U.S. in excess of our cash held in the U.S. can be readily satisfied with borrowings under our existing U.S. credit facilities or our commercial paper program.
Guarantor Financial Information
Albemarle Wodgina Pty Ltd Issued Notes
Albemarle Wodgina Pty Ltd (the “Issuer”), a wholly-owned subsidiary of Albemarle Corporation, issued $300.0 million aggregate principal amount of 3.45% Senior Notes due 2029 (the “3.45% Senior Notes”) in November 2019. The 3.45% Senior Notes are fully and unconditionally guaranteed (the “Guarantee”) on a senior unsecured basis by Albemarle Corporation (the “Parent Guarantor”). No direct or indirect subsidiaries of the Parent Guarantor guarantee the 3.45% Senior Notes (such subsidiaries are referred to as the “Non-Guarantors”).
In 2019, we completed the acquisition of a 60% interest in MRL’s Wodgina hard rock lithium mine project (“Wodgina Project”) in Western Australia and formed an unincorporated joint venture with MRL, named MARBL Lithium Joint Venture, for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina spodumene mine and for the operation of the Kemerton assets in Western Australia. We participate in the Wodgina Project through our ownership interest in the Issuer. On July 19, 2023 we announced an agreement to amend the terms of this joint venture to decrease our ownership interest in the MARBL joint venture and the Wodgina Project to 50%, and, on October 18, 2023, we announced the closing of the transactions pursuant to the amended agreements.
The Parent Guarantor conducts its U.S. Specialties and Ketjen operations directly, and conducts its other operations (other than operations conducted through the Issuer) through the Non-Guarantors.
The 3.45% Senior Notes are the Issuer’s senior unsecured obligations and rank equally in right of payment to the senior indebtedness of the Issuer, effectively subordinated to all of the secured indebtedness of the Issuer, to the extent of the value of the assets securing that indebtedness, and structurally subordinated to all indebtedness and other liabilities of its subsidiaries. The Guarantee is the senior unsecured obligation of the Parent Guarantor and ranks equally in right of payment to the senior indebtedness of the Parent Guarantor, effectively subordinated to the secured debt of the Parent Guarantor to the extent of the value of the assets securing the indebtedness and structurally subordinated to all indebtedness and other liabilities of its subsidiaries.
For cash management purposes, the Parent Guarantor transfers cash among itself, the Issuer and the Non-Guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Issuer and/or the Parent Guarantor’s outstanding debt, common stock dividends and common stock repurchases. There are no significant restrictions on the ability of the Issuer or the Parent Guarantor to obtain funds from subsidiaries by dividend or loan.
The following tables present summarized financial information for the Parent Guarantor and the Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the Issuer and the Parent Guarantor and (ii) equity in earnings from and investments in any subsidiary that is a Non-Guarantor. Each entity in the combined financial information follows the same accounting policies as described herein and in our Annual Report on Form 10-K for the year ended December 31, 2022.
Summarized Statement of Operations
$ in thousandsNine Months Ended
September 30, 2023		Year Ended December 31, 2022
Net sales(a)
$1,846,330 $2,981,170 
Gross profit707,002 636,894 
Income before income taxes and equity in net income of unconsolidated investments(b)
150,811 52,048 
Net income attributable to the Parent Guarantor and the Issuer14,865 119,551 
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(a)    Includes net sales to Non-Guarantors of $1.2 billion and $2.2 billion for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively.
(b)    Includes intergroup expenses to Non-Guarantors of $84.5 million and $134.2 million for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively.

Summarized Balance Sheet
$ in thousands
September 30, 2023
December 31, 2022
Current assets(a)
$868,398 $1,274,018 
Net property, plant and equipment3,623,440 3,379,369 
Other noncurrent assets(b)
651,128 687,603 
Current liabilities(c)
$2,386,383 $2,103,749 
Long-term debt2,262,244 2,260,397 
Other noncurrent liabilities(d)
6,884,987 7,173,636 
(a)    Includes receivables from Non-Guarantors of $365.1 million and $605.3 million at September 30, 2023 and December 31, 2022, respectively.
(b)    Includes noncurrent receivables from Non-Guarantors of $9.1 million and $109.3 million at September 30, 2023 and December 31, 2022, respectively.
(c)    Includes current payables to Non-Guarantors of $1.3 billion and $1.6 billion at September 30, 2023 and December 31, 2022, respectively.
(d)    Includes noncurrent payables to Non-Guarantors of $6.4 billion and $6.6 billion at September 30, 2023 and December 31, 2022, respectively.    
The 3.45% Senior Notes are structurally subordinated to the indebtedness and other liabilities of the Non-Guarantors. The Non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the 3.45% Senior Notes or the Indenture under which the 3.45% Senior Notes were issued, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that the Parent Guarantor has to receive any assets of any of the Non-Guarantors upon the liquidation or reorganization of any Non-Guarantor, and the consequent rights of holders of the 3.45% Senior Notes to realize proceeds from the sale of any of a Non-Guarantor’s assets, would be effectively subordinated to the claims of such Non-Guarantor’s creditors, including trade creditors and holders of preferred equity interests, if any, of such Non-Guarantor. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Non-Guarantors, the Non-Guarantors will pay the holders of their debts, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to the Parent Guarantor.
The 3.45% Senior Notes are obligations of the Issuer. The Issuer’s cash flow and ability to make payments on the 3.45% Senior Notes could be dependent upon the earnings it derives from the production from MARBL for the Wodgina Project. Absent income received from sales of its share of production from MARBL, the Issuer’s ability to service the 3.45% Senior Notes could be dependent upon the earnings of the Parent Guarantor’s subsidiaries and other joint ventures and the payment of those earnings to the Issuer in the form of equity, loans or advances and through repayment of loans or advances from the Issuer.
The Issuer’s obligations in respect of MARBL are guaranteed by the Parent Guarantor. Further, under MARBL pursuant to a deed of cross security between the Issuer, the joint venture partner and the manager of the project (the “Manager”), each of the Issuer, and the joint venture partner have granted security to each other and the Manager for the obligations each of the Issuer and the joint venture partner have to each other and to the Manager. The claims of the joint venture partner, the Manager and other secured creditors of the Issuer will have priority as to the assets of the Issuer over the claims of holders of the 3.45% Senior Notes.
Albemarle Corporation Issued Notes
In March 2021, Albemarle New Holding GmbH (the “Subsidiary Guarantor”), a wholly-owned subsidiary of Albemarle Corporation, added a full and unconditional guarantee (the “Upstream Guarantee”) to all securities of Albemarle Corporation (the “Parent Issuer”) issued and outstanding as of such date and, subject to the terms of the applicable amendment or supplement, securities issuable by the Parent Issuer pursuant to the Indenture, dated as of January 20, 2005, as amended and supplemented from time to time (the “Indenture”). No other direct or indirect subsidiaries of the Parent Issuer guarantee these securities (such subsidiaries are referred to as the “Upstream Non-Guarantors”). See Long-term debt section above for a description of the securities issued by the Parent Issuer.
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The current securities outstanding under the Indenture are the Parent Issuer’s unsecured and unsubordinated obligations and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Parent Issuer. All securities currently outstanding under the Indenture are effectively subordinated to the Parent Issuer’s existing and future secured indebtedness to the extent of the value of the assets securing that indebtedness. With respect to any series of securities issued under the Indenture that is subject to the Upstream Guarantee (which series of securities does not include the 2022 Notes), the Upstream Guarantee is, and will be, an unsecured and unsubordinated obligation of the Subsidiary Guarantor, ranking pari passu with all other existing and future unsubordinated and unsecured indebtedness of the Subsidiary Guarantor. All securities currently outstanding under the Indenture (other than the 2022 Notes) are effectively subordinated to all existing and future indebtedness and other liabilities of the Parent’s Subsidiaries other than the Subsidiary Guarantor. The 2022 Notes are effectively subordinated to all existing and future indebtedness and other liabilities of the Parent’s Subsidiaries, including the Subsidiary Guarantor.
For cash management purposes, the Parent Issuer transfers cash among itself, the Subsidiary Guarantor and the Upstream Non-Guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. The transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Parent Issuer and/or the Subsidiary Guarantor’s outstanding debt, common stock dividends and common stock repurchases. There are no significant restrictions on the ability of the Parent Issuer or the Subsidiary Guarantor to obtain funds from subsidiaries by dividend or loan.
The following tables present summarized financial information for the Subsidiary Guarantor and the Parent Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Issuer and the Subsidiary Guarantor and (ii) equity in earnings from and investments in any subsidiary that is an Upstream Non-Guarantor. Each entity in the combined financial information follows the same accounting policies as described herein and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Summarized Statement of Operations
$ in thousandsNine Months Ended
September 30, 2023		Year Ended December 31, 2022
Net sales(a)
$982,219 $2,557,914 
Gross profit94,532 353,515 
Loss before income taxes and equity in net income of unconsolidated investments(b)
(469,074)(121,421)
Loss attributable to the Subsidiary Guarantor and the Parent Issuer(657,443)(77,487)
(a)    Includes net sales to Non-Guarantors of $385.8 million and $1.8 billion for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively.
(b)    Includes intergroup expenses to Non-Guarantors of $56.8 million and $25.4 million for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively.

Summarized Balance Sheet
$ in thousands
September 30, 2023
December 31, 2022
Current assets(a)
$645,390 $1,261,682 
Net property, plant and equipment1,026,542 893,715 
Other non-current assets(b)
1,731,792 1,783,357 
Current liabilities(c)
$2,278,915 $1,981,456 
Long-term debt2,952,614 2,955,934 
Other noncurrent liabilities(d)
6,437,999 6,393,534 
(a)    Includes receivables from Non-Guarantors of $313.7 million and $644.0 million at September 30, 2023 and December 31, 2022, respectively.
(b)    Includes noncurrent receivables from Non-Guarantors of $1.1 billion and $1.2 billion at September 30, 2023 and December 31, 2022, respectively.
(c)    Includes current payables to Non-Guarantors of $1.3 billion and $1.6 billion at September 30, 2023 and December 31, 2022, respectively.
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(d)    Includes noncurrent payables to Non-Guarantors of $6.0 billion and $5.8 billion at September 30, 2023 and December 31, 2022, respectively.
These securities are structurally subordinated to the indebtedness and other liabilities of the Upstream Non-Guarantors. The Upstream Non-Guarantors are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to these securities or the Indenture under which these securities were issued, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Any right that the Subsidiary Guarantor has to receive any assets of any of the Upstream Non-Guarantors upon the liquidation or reorganization of any Upstream Non-Guarantors, and the consequent rights of holders of these securities to realize proceeds from the sale of any of an Upstream Non-Guarantor’s assets, would be effectively subordinated to the claims of such Upstream Non-Guarantor’s creditors, including trade creditors and holders of preferred equity interests, if any, of such Upstream Non-Guarantor. Accordingly, in the event of a bankruptcy, liquidation or reorganization of any of the Upstream Non-Guarantors, the Upstream Non-Guarantors will pay the holders of their debts, holders of preferred equity interests, if any, and their trade creditors before they will be able to distribute any of their assets to the Subsidiary Guarantor.
Summary of Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and estimates from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2022.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Item 1 Financial Statements – Note 18, “Recently Issued Accounting Pronouncements” to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.


Item 3.Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes in our interest rate risk, foreign currency exchange rate exposure, marketable securities price risk or raw material price risk from the information we provided in our Annual Report on Form 10-K for the year ended December 31, 2022, except as noted below.
We had variable interest rate borrowings of $176.6 million outstanding at September 30, 2023, bearing a weighted average interest rate of 4.93% and representing 5% of our total outstanding debt. A hypothetical 100 basis point increase in the interest rate applicable to these borrowings would change our annualized interest expense by $1.8 million as of September 30, 2023. We may enter into interest rate swaps, collars or similar instruments with the objective of reducing interest rate volatility relating to our borrowing costs.
Our financial instruments, which are subject to foreign currency exchange risk, consist of foreign currency forward contracts with an aggregate notional value of $8.7 billion and with a fair value representing a net liability position of $41.4 million at September 30, 2023. Fluctuations in the value of these contracts are generally offset by the value of the underlying exposures being hedged. We conducted a sensitivity analysis on the fair value of our foreign currency hedge portfolio assuming an instantaneous 10% change in select foreign currency exchange rates from their levels as of September 30, 2023, with all other variables held constant. A 10% appreciation of the U.S. Dollar against foreign currencies that we hedge would result in an increase of approximately $80.1 million in the fair value of our foreign currency forward contracts. A 10% depreciation of the U.S. Dollar against these foreign currencies would result in a decrease of approximately $155.0 million in the fair value of our foreign currency forward contracts. The sensitivity of the fair value of our foreign currency hedge portfolio represents changes in fair values estimated based on market conditions as of September 30, 2023, without reflecting the effects of underlying anticipated transactions. When those anticipated transactions are realized, actual effects of changing foreign currency exchange rates could have a material impact on our earnings and cash flows in future periods.

Item 4.Controls and Procedures.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
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forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
No change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the third quarter ended September 30, 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings.
We are involved from time to time in legal proceedings of types regarded as common in our business, including administrative or judicial proceedings seeking remediation under environmental laws, such as Superfund, products liability, breach of contract liability and premises liability litigation. Where appropriate, we may establish financial reserves for such proceedings. We also maintain insurance to mitigate certain of such risks. Additional information with respect to this Item 1 is contained in Note 9 to the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A.Risk Factors.
While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. The risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 describe some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our results of operations and our financial condition. We do not believe that there have been any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 5.Other Information.
N/A.

Item 6.Exhibits.
(a) Exhibits
101 
Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended September 30, 2023, furnished in XBRL (eXtensible Business Reporting Language)).
*Included with this filing.
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for the nine months ended September 30, 2023 and 2022, (ii) the Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2023 and 2022, (iii) the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022, (iv) the Consolidated Statements of Changes in Equity for the nine months ended September 30, 2023 and 2022, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 and (vi) the Notes to the Condensed Consolidated Financial Statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
ALBEMARLE CORPORATION
(Registrant)
Date:November 1, 2023By:
/S/    SCOTT A. TOZIER        
Scott A. Tozier
Executive Vice President and Chief Financial Officer
(principal financial officer)
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