Albemarle (ALB -0.43%) stock defied intense selling pressure in the broader market and traded up 8.5% as of 1:10 p.m. ET Thursday. The chemical and lithium stock surged as much as 13.1% during its highest point in trading early morning today.
Albemarle announced its first-quarter earnings after market close on May 4 and reminded investors about the kind of growth potential in the lithium business.
Although Albemarle deals in lithium, bromine, and catalysts, lithium has turned out to be its biggest growth machine in recent quarters. The first quarter was no different, what with Albemarle's lithium sales surging 97% year over year.
Lithium, in fact, accounted for 49% of the company's total sales in the quarter. Although volumes were strong, higher pricing largely drove the segment sales higher. Lithium prices have skyrocketed in recent weeks amid the Russia-Ukraine conflict, with prices of lithium carbonate surging almost 70% year to date, according to data from Tradingeconomics.com.
Overall, here's how Albemarle fared in the first quarter (all changes year over year):
- Net sales: Up 36% to $1.13 billion.
- Net income: Up 164.8% to $253.4 million.
- Earnings per share (EPS): Up 156% to $2.15 a share.
- Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA): Up 87.8% to $431.9 million.
That's an incredible set of numbers, and it's no surprise the market reacted so strongly to Albemarle's earnings.
Better yet, Albemarle has turned even more bullish about the rest of the year. It expects to realize double the price for lithium in 2022 versus last year and sees its lithium adjusted EBITDA rising by 200% or more this year.
Backed by these projections and a strong outlook for its bromines business as well, Albemarle upgraded its full-year sales guidance to between $5.2 billion and $5.6 billion, and expects to convert one-third or more sales into adjusted EBITDA.
Albemarle is a fine company that made judicious investments in lithium early on and is now reaping the fruits of its efforts as demand and prices for lithium have hit unprecedented levels amid the boom in the electric vehicle (EV) industry. Most EVs today run on lithium-ion batteries.
Albemarle specializes in battery-grade lithium, and has several projects in the pipeline to boost lithium production significantly over the next three to four years. With the EV industry set to grow exponentially, Albemarle should be able to reap rich returns. That's what investors bet on today in a down market.