Shares of giant lithium miner Albemarle (ALB 7.20%) fell by as much as 10% in the first hour of trading on Thursday. The price decline was largely driven by the company's earnings report, which it released after the close Wednesday. Investors reacted poorly to the news despite having been forewarned about what to expect. As of 11:35 a.m. EST, Albemarle shares were down by 8.5%.
On Feb. 2, Albemarle provided a fourth-quarter 2020 update. It warned that its sales would be down between 11% and 12%, net income would be lower by 3% to 15%, and that adjusted EBITDA would be off by between 24% and 28%. Adjusted earnings per share were projected to be between $1.11 and $1.19, which was notably lower than the $1.73 per share the company earned in the same quarter of 2019. Although it noted that these numbers were, by and large, better than it had been predicting previously, the final tallies would nonetheless amount to notable year-over-year declines.
When the company officially reported Q4 earnings after the close on Wednesday, its results, unsurprisingly, fell largely within the ranges it had outlined just a couple of weeks earlier. Sales were down 11.4% year over year, net income was off by 6.4%, and adjusted EBITDA was lower by 25%. Earnings per share came in at $1.17. And while that figure was better than the $1.10 per share that Wall Street had been expecting, it was down by nearly a third year over year. For the full year, adjusted earnings were $4.12 per share, down from $6.04 in 2019. But the real kicker was that Albemarle offered guidance on adjusted earnings per share for 2021, forecasting that they'll be in the range of $3.25 to $3.65, which means another down year.
At the end of the day, Albemarle's 2020 results weren't great and management expects the downward trend in earnings to continue in 2021. While Wall Street was probably prepared for the dour fourth-quarter numbers thanks to the company's earnings pre-announcement, the outlook it provided for 2021 seems to have unnerved investors. That's neither unreasonable nor shocking.