Albemarle (ALB -2.94%) is slated to report its second-quarter 2022 results after the market close on Wednesday, Aug. 3. An analyst conference call is scheduled for the next day at 9 a.m. ET.
The world's largest lithium producer's report will follow that of the industry's other major U.S.-based player, Livent, which plans to release its quarterly report after the market close on Tuesday, Aug. 2. (Click here to read Livent's earnings preview.)
Albemarle is heading toward its report on a strong note. Last quarter, it sped by Wall Street's revenue and earnings expectations, with the bottom-line beat an especially big one. Moreover, at the same time, management raised its full-year 2022 guidance for revenue, adjusted earnings per share (EPS), and another key profitability metric, cash from operations.
Guidance was revised upward primarily due to higher prices in the lithium and bromine businesses. Prices for lithium have been soaring, driven by robust demand for lithium-ion batteries to power electric vehicles. The bromine business is getting a tailwind from strong demand for fire safety solutions in various end markets.
Investors cheered the early May report, driving shares up 9.8% on the day of the earnings release.
Management came back for an encore in late May, when it again increased every metric in its 2022 outlook. The catalyst was even higher expected realized lithium prices following the completion of additional lithium contract renegotiations with customers.
Albemarle stock has returned 14.6% over the one-year period through July 11, while the S&P 500's return is 10.5% in the red over this period.
Image source: Getty Images.
Albemarle's key numbers
Here are the year-ago period's results and Wall Street's estimates to use as benchmarks.
| Metric | Q2 2021 Result | Wall Street's Q2 2022 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|
| Revenue | $773.9 million | $1.49 billion | 93% |
| Adjusted earnings per share (EPS) | $0.89 | $3.19 | 258% |
Data sources: Albemarle and Yahoo! Finance. YOY = year over year.
Analysts expect the company's profit margin to continue to expand in the second quarter, as they project year-over-year growth on the bottom line will outpace that on the top line.
For context, in the first quarter, Albemarle's revenue rose 36% year over year to $1.13 billion. Revenue jumped 44%, excluding the impact of the fine chemistry business, which the company sold in June 2021. The top line easily exceeded the $1.03 billion Wall Street consensus estimate.
On an adjusted basis, net income soared 126% to $280.1 million, which translated to EPS surging 116% to $2.38. This result sprinted by the $1.63 analysts had projected.
Let's drill down to the lithium segment's results: In Q1, lithium sales jumped 97% year over year to $550.3 million, driven by a 66% increase in price and a 31% rise in volume. The lithium segment's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rocketed 190% to $308.6 million. The lithium segment accounted for 49% of Albemarle's total revenue, and an outsize 68% of its segment adjusted EBITDA.
Full-year 2022 guidance
Albemarle stock could get a boost if management raises 2022 guidance again.
The following is the chart from my article about the company's second outlook hike.
| Metric | 2021 Result |
New 2022 Guidance (Issued May 23) |
Prior Upward Revision of 2022 Guidance (Issued May 4) | Initial 2022 Guidance (Issued Feb. 16) | Annual Growth Implied by New Guidance* |
|---|---|---|---|---|---|
| Revenue | $3.33 billion | $5.8 billion to $6.2 billion | $5.2 billion to $5.6 billion | $4.2 billion to $4.5 billion | 74% to 86% |
| Adjusted EBITDA | $871 million | $2.2 billion to $2.5 billion | $1.7 billion to $2.0 billion | $1.15 billion to $1.3 billion | 153% to 187% |
| Adjusted EBITDA margin | 26.2% | 38% to 40% | 33% to 36% | 27% to 29% | Increase of 11.8 to 13.8 percentage points |
| Adjusted EPS | $4.04 | $12.30 to $15.00 | $9.25 to $12.25 | $5.65 to $6.65 | 204% to 271% |
| Cash from operations | $344 million | $550 million to $850 million | $500 million to $800 million | $400 million to $500 million | 60% to 147% |
Data source: Albemarle. EBITDA = earnings before interest, taxes, depreciation, and amortization. EPS = earnings per share. *Calculated by author.
