Albemarle Targets Positive Free Cash Flow for 2025

Image Source: TradingView

By Brian Nelson, CFA

Albemarle (ALB) recently reported better than feared second quarter results with both revenue and non-GAAP earnings per share exceeding the consensus forecast. Net sales of $1.3 billion included volume growth in Energy Storage and Specialties, but the measure still fell 7% versus the prior-year quarter. Adjusted EBITDA was up sequentially, to $336 million, thanks in part to improved fixed cost absorption, ongoing cost savings, and Energy Storage product mix. Adjusted diluted earnings per share came in at $0.11 versus $0.04 in the year ago period.

Management had the following to say about the results:

We delivered strong second quarter results and are maintaining our previous outlook considerations assuming current lithium market pricing persists. Due to recent cash management actions, we now expect to generate positive free cash flow for the year. Our team has established a track record of operational excellence and has successfully executed proactive measures to reduce operating and capital costs while preserving our long-term competitive position.

For the first half of 2025, Albemarle’s cash flow from operations increased $73 million to $538 million, and as management noted, the company expects to achieve positive free cash flow for the full year 2025 assuming current lithium market pricing persists. Albemarle reduced its capital expenditure outlook to the range of $650-$700 million. Assuming $9/kg LCE average lithium market price for 2025, net sales is targeted in the range of $4.9-$5.2 billion, with adjusted EBITDA in the range of $0.8-$1 billion. Albemarle exited the quarter with estimated liquidity of approximately $3.4 billion. We like Albemarle’s upside potential from here, as operations remain depressed from low lithium pricing. The company remains an idea in the ESG Newsletter portfolio.

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