Forward-looking Statements Some of the information presented in this Quarterly Report on Form 10-Q 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; •future acquisition and divestiture transactions; •expected benefits from proposed transactions; •timing of active and proposed projects; •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; •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; •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; •the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change; •hazards associated with chemicals manufacturing; •the inability to maintain current levels of 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; •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; •volatility and uncertainties in the debt and equity markets; •technology or intellectual property infringement, including through cyber-security breaches, and other innovation risks; •decisions we may make in the future; •the ability to successfully execute, operate and integrate acquisitions and divestitures; •uncertainties as to the duration and impact of the novel coronavirus ("COVID-19") pandemic; and 26 -------------------------------------------------------------------------------- Table of Contents •the other factors detailed from time to time in the reports we file with theU.S. Securities and Exchange Commission ("SEC"). We assume no obligation to provide 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 endedSeptember 30, 2021 and 2020. 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. We believe our 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, 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 market 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 Lithium business contributes to the growth of clean miles driven with electric miles and more efficient use of renewable energy through grid storage; Bromine 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 the Catalysts 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 2021 During the third quarter of 2021: •Our board of directors declared a quarterly dividend of$0.39 per share onJuly 20, 2021 , which was paid onOctober 1, 2021 to shareholders of record at the close of business as ofSeptember 17, 2021 . •OnSeptember 30, 2021 , we signed a definitive agreement to acquire all of the outstanding equity ofGuangxi Tianyuan New Energy Materials Co., Ltd. ("Tianyuan"), for approximately$200 million in cash. Tianyuan's operations include a recently constructed lithium processing plant with a designed annual conversion capacity of up to 25,000 metric tons of lithium carbonate equivalent ("LCE") per year. •Our net sales for the quarter were$830.6 million , up 11% from net sales of$746.9 million in the third quarter of 2020. •Diluted loss per share was$(3.36) , which included an after tax loss of$504.5 million following an arbitration ruling related to a legal matter from a legacyRockwood Holdings, Inc. ("Rockwood") business sold toHuntsman International LLC ("Huntsman") prior toAlbemarle 's acquisition of Rockwood. •Net cash provided by operations was$105.0 million in the third quarter of 2021
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 that for electric vehicles ("EVs"), 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. Amidst these dynamics, 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 27 -------------------------------------------------------------------------------- Table of Contents 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. While global economic conditions have been improving, the COVID-19 pandemic continues to have an impact globally. We have not seen a material impact to our operations to date, however, the ultimate impact on our business will depend on the length and severity of the outbreak throughout the world. All of our information technology systems are running as designed and all sites are operating at normal capacity while we continue to comply with all government and health agency recommendations and requirements, as well as protecting the safety of our employees and communities. We believe we have sufficient inventory to continue to produce at current levels, however, government mandated shutdowns could impact our ability to acquire additional materials and disrupt our customers' purchases. At this time we cannot predict the expected overall financial impact of the COVID-19 pandemic on our business, but we are planning for various economic scenarios and continue to make efforts to protect the safety of our employees and the health of our business. Lithium: We expect results to be higher year-over-year during 2021 in Lithium, due mainly to North American plant restarts, efficiency improvements and tolling, offset by higher unit costs from plant start-ups at La Negra,Chile and Kemerton,Western Australia . We will not be introducing any new capacity during 2021 to drive significant additional sales volume, although we expect our new plants in La Negra and Kemerton to begin producing sales in 2022. EV sales have started to rebound after a marked slowdown during the second quarter of 2020, with full year 2020 and year to date 2021 each showing a healthy increase in total EV sales over the prior year. While the pricing environment has strengthened throughout the year, we expect our average prices for the full year to be flat-to-slightly-up versus 2020. OnSeptember 30, 2021 , we signed a definitive agreement to acquire Tianyuan, which includes a lithium hydroxide conversion plant designed to produce up to 25,000 metric tons of LCE per year. We expect this transaction to close in early 2022, with commercial production from the lithium hydroxide conversion plant to begin in the first half of 2022. We also announced agreements for strategic investments inChina with plans to build two lithium hydroxide conversion plants, each initially targeting 50,000 metric tons per year. In addition, our 60%-owned MARBL joint venture recently announced they intend to resume spodumene concentrate production at the Wodgina spodumene mine, with the production restart expected during the third quarter of 2022. 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 electric vehicles and full battery electric vehicles 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 OEM's, favorable global public policy toward e-mobility/renewable energy usage, and additional stimulus measures taken inEurope in light of the COVID-19 pandemic that we expect to strengthen EV demand. 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. Bromine Specialties: We expect both net sales and profitability to be modestly higher in 2021 as we recover from the lower demand due to shutdowns related to the COVID-19 pandemic and ongoing cost savings initiatives. While we have not experienced a material impact from the COVID-19 pandemic to date, sales in 2020 were adversely impacted. We have begun to see recovery of those sales in 2021, however, bromine volume has been, and is expected to continue to be, lower in the second half of 2021 compared to the first half due to a force majeure declaration for chlorine in theU.S. 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 products. Our long-term drilling outlook is uncertain at this time and will follow a long-term trajectory in line with oil prices. We are focused on profitably growing our globally competitive bromine and derivatives production network to serve all major bromine 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 will 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. Catalysts: Total Catalysts results in 2021 are expected to be down year-over-year. In the first half of 2021, both the refining catalyst and performance catalyst solutions ("PCS") businesses were negatively impacted by theU.S. Gulf Coast winter storm. While we expect PCS volumes to improve slightly over lower 2020 levels, we expect 2021 results to be flat to slightly down year-over-year due to the impact of the storms. In addition, we expect 2021 refining catalyst volumes to be lower year-over-year resulting from a recent change in customer order patterns inNorth America and the impact of theU.S. Gulf Coast winter storm. The fluidized catalytic cracking ("FCC") market is expected to gradually recover from the COVID-19 pandemic in line with increased travel and depletion of global gasoline inventories, however, demand may not return to normal 28 -------------------------------------------------------------------------------- Table of Contents levels until late 2022 or 2023 at the earliest. Hydroprocessing catalysts ("HPC") demand tends to be lumpier than FCC demand and is also expected to continue to be negatively impacted as refiners defer spending into 2021 and 2022. 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 Catalysts 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 inNorth America tight oil, and those in theMiddle East andAsia 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 Catalysts remains well-positioned for the future. In 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 2021, we increased our quarterly dividend rate to$0.39 per share. We continue to focus on cash generation, working capital management and process efficiencies. In addition, we expect our global effective tax rate for 2021 to continue to vary based on the locations in which income is actually earned and remains subject to potential volatility from changing legislation in theU.S. and other tax jurisdictions. 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 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 2021 Compared to Third Quarter 2020
Selected Financial Data (Unaudited)
Net Sales In thousands Q3 2021 Q3 2020 $ Change % Change Net sales$ 830,566 $ 746,868 $ 83,698 11 % ?$46.1 million decrease in net sales following the sale of theFCS business onJune 1, 2021 ?$77.0 million of higher sales volume, primarily in Lithium ?$44.7 million of increased pricing, driven by Bromine Specialties and Lithium ?$8.1 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Gross Profit In thousands Q3 2021 Q3 2020 $ Change % Change Gross profit$ 249,273 $ 254,056 $ (4,783) (2) % Gross profit margin 30.0 % 34.0 % ?Higher sales volume in Lithium, as well as favorable pricing driven by Bromine Specialties and Lithium ?2021 included$13.5 million of out-of-period adjustment expense in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior periods. See Note 1, "Basis of Presentation" for further details ?Increased commission expenses inChile resulting from the higher pricing in Lithium ?Decrease in net sales resulting from the disposal of theFCS business onJune 1, 2021 ?Increased freight costs in Bromine Specialties ?Favorable currency exchange impacts resulting from the weakerU.S. Dollar against various currencies 29
-------------------------------------------------------------------------------- Table of Contents Selling, General and Administrative Expenses In thousands Q3 2021 Q3 2020 $ Change % Change Selling, general and administrative expenses$ 103,477 $ 96,092 $ 7,385 8 % Percentage of Net sales 12.5 % 12.9 % ?Higher compensation, including incentive-based, expenses across all businesses and Corporate ?Partially offset by productivity improvements and a reduction in professional fees and other administrative costs ?$5.9 million decrease in restructuring and other expenses and acquisition and integration related costs for various significant projects
Research and Development Expenses
In thousands Q3 2021 Q3 2020 $
Change % Change
Research and development expenses
(243) (2) %
Percentage of Net sales 1.6 % 1.8 % Gain on Sale of Business In thousands Q3 2021 Q3 2020 $ Change % Change Gain on sale of business $ 984 $
-
Interest and Financing Expenses In thousands Q3 2021 Q3 2020 $ Change % Change
Interest and financing expenses
$ 14,091 (73) %
?Decreased debt balance as certain debt instruments were repaid in the first quarter of 2021 ?Higher capitalized interest from continued capital expenditures in 2021
Other Expense, Net In thousands Q3 2021 Q3 2020 $ Change % Change Other expense, net$ (643,196) $ (3,661) $ (639,535) 17,469 % •$657.4 million of additional accrual recorded following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details •$7.1 million of favorable foreign exchange impacts •$4.2 million of income in 2021 from accretion of discount in preferred equity of W. R. Grace & Co. ("Grace") subsidiary acquired as a portion of the proceeds of theFCS sale •$2.5 million increase in non-operating pension and OPEB benefits Income Tax (Benefit) Expense In thousands Q3 2021 Q3 2020 $ Change % Change Income tax (benefit) expense$ (114,670) $ 30,653 $ (145,323) (474) % Effective income tax rate 22.2 % 25.2 %
•2021 includes
Equity in Net Income of Unconsolidated Investments In thousands
Q3 2021 Q3 2020 $ Change % Change Equity in net income of unconsolidated investments$ 27,706 $ 26,154 $ 1,552 6 %
?Increased earnings from strong operating results and other income from our Catalysts segment joint ventures
?
30
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Table of Contents Net Income Attributable to Noncontrolling Interests In thousands Q3 2021 Q3 2020 $ Change % Change Net income attributable to noncontrolling interests$ (18,348) $ (18,744) $ 396 (2) %
?Decrease in consolidated income related to our JBC joint venture
Net (Loss) Income Attributable to
Q3 2021 Q3 2020 $ Change % Change Net (loss) income attributable toAlbemarle Corporation $ (392,781) $ 98,301 $ (491,082) (500) % Percentage of Net sales (47.3) % 13.2 % Basic (loss) earnings per share$ (3.36) $ 0.92 $ (4.28) (465) % Diluted (loss) earnings per share$ (3.36) $ 0.92 $ (4.28) (465) % ?$504.5 million , net of income taxes, of additional accrual recorded following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details ?Increased sales volume and favorable pricing from Lithium, as well as favorable pricing in Bromine Specialties ?Decreased interest and financing expenses due to lower debt balances ?Productivity improvements and a reduction in professional fees and other administrative costs ?Loss of sales fromFCS business following the disposition onJune 1, 2021 ?2021 included$13.5 million of additional expense in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior periods ?Increased SG&A expenses, primarily related to increased compensation expense ?Earnings per share also impacted by the underwritten public offering of our common stock inFebruary 2021 , increasing share count by 9.8 million shares Other Comprehensive Income (loss), Net of Tax In thousands Q3 2021 Q3 2020 $ Change % Change Other comprehensive income (loss), net of tax$ (38,409) $ 32,731 $ (71,140) (217) % ?Foreign currency translation and other$ (39,274) $ 37,499 $ (76,773) (205) % ?2021 included unfavorable movements in the Euro of approximately$29 million , the Brazilian Real of approximately$7 million and a net unfavorable variance in various other currencies of$4 million ?2020 included favorable movements in the Euro of approximately$26 million , the Chinese Renminbi of approximately$11 million and a net favorable variance in various other currencies totaling approximately$3 million , partially offset by unfavorable movements in the Brazilian Real of approximately$2 million ?Cash flow hedge$ 214 $ 6,993 $ (6,779) ?Net investment hedge $ -$ (12,408) $ 12,408 (100) % 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. Our reportable business segments consist of: (1) Lithium, (2) Bromine Specialties and (3) Catalysts. Summarized financial information concerning our reportable segments is shown in the following tables. The "All Other" category includes only theFCS business, the sale of which was completed onJune 1, 2021 , that does not fit into any of our core businesses. 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 31 -------------------------------------------------------------------------------- Table of Contents 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 reported adjusted EBITDA because management believes it 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 inthe United States ("U.S. GAAP"). Adjusted EBITDA should not be considered as an alternative to Net (loss) income attributable toAlbemarle Corporation , the most directly comparable financial measure calculated and reported in accordance withU.S. GAAP, or any other financial measure reported in accordance withU.S. GAAP. Three Months Ended September 30, Percentage Change 2021 % 2020 % 2021 vs 2020 (In thousands, except percentages) Net sales: Lithium$ 359,229 43.3 %$ 265,646 35.6 % 35 % Bromine Specialties 277,783 33.4 % 237,193 31.8 % 17 % Catalysts 193,554 23.3 % 197,919 26.4 % (2) % All Other - - % 46,110 6.2 % (100) % Total net sales$ 830,566 100.0 %$ 746,868 100.0 % 11 % Adjusted EBITDA: Lithium$ 125,416 57.7 %$ 97,789 45.3 % 28 % Bromine Specialties 86,012 39.5 % 79,448 36.8 % 8 % Catalysts 33,103 15.2 % 37,834 17.5 % (13) % All Other - - % 24,985 11.5 % (100) % Corporate (26,962) (12.4) % (24,001) (11.1) % (12) % Total adjusted EBITDA$ 217,569 100.0 %$ 216,055 100.0 % 1 % 32
-------------------------------------------------------------------------------- Table of Contents See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net (loss) income attributable toAlbemarle Corporation , the most directly comparable financial measure calculated and reported in accordance withU.S. GAAP, (in thousands): Bromine Reportable Consolidated Lithium Specialties Catalysts Segments Total All Other Corporate Total Three months ended September 30, 2021 Net income (loss) attributable toAlbemarle Corporation $ 92,449 $ 73,409 $ 20,039 $ 185,897 $ -$ (578,678) $ (392,781) Depreciation and amortization 34,256 12,603 13,064 59,923 - 2,159
62,082
Restructuring and other(a) - - - - - 754 754 Gain on sale of business(b) - - - - - 984 984 Acquisition and integration related costs(c) - - - - - 1,553
1,553
Interest and financing expenses - - - - - 5,136 5,136 Income tax expense - - - - - (114,670) (114,670) Non-operating pension and OPEB items - - - - - (5,471) (5,471) Legal accrual(d) - - - - - 657,412 657,412 Other(e) (1,289) - - (1,289) - 3,859 2,570 Adjusted EBITDA$ 125,416 $ 86,012 $ 33,103 $ 244,531 $ -$ (26,962) $ 217,569 Three months ended September 30, 2020 Net income (loss) attributable toAlbemarle Corporation $ 69,102 $ 66,548 $ 25,176 $ 160,826 $ 22,798 $ (85,323) $ 98,301 Depreciation and amortization 28,687 12,900 12,658 54,245 2,187 2,247
58,679
Restructuring and other(a) - - - - - 2,251
2,251
Acquisition and integration related costs(c) - - - - - 5,928
5,928
Interest and financing expenses - - - - - 19,227 19,227 Income tax expense - - - - - 30,653 30,653 Non-operating pension and OPEB items - - - - - (2,901) (2,901) Other(f) - - - - - 3,917 3,917 Adjusted EBITDA$ 97,789 $ 79,448 $ 37,834 $ 215,071 $ 24,985 $ (24,001) $ 216,055 (a)In 2021, we recorded facility closure costs related to offices inGermany , and severance expenses inGermany andBelgium , in Selling, general and administrative expenses ("SG&A") related to offices inGermany . In 2020, we recorded severance expenses as part of business reorganization plans, impacting each of our businesses and Corporate, primarily in theU.S. ,Germany and with our Jordanian joint venture partner. During the three months endedSeptember 30, 2020 , we recorded expenses of$2.3 million in SG&A. The balance of unpaid severance is recorded in Accrued expenses and is expected to primarily be paid through 2021. (b)Adjustments to the gain resulting from the sale of theFCS business completed onJune 1, 2021 . (c)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A. (d)Loss recorded in Other expense, net in the three months endedSeptember 30, 2021 following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details. (e)Included amounts for the three months endedSeptember 30, 2021 recorded in: •SG&A -$2.5 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements. •Other expense, net -$0.1 million of a gain resulting from the adjustment of indemnifications related to previously disposed businesses. (f)Included amounts for the three months endedSeptember 30, 2020 recorded in: •SG&A -$3.8 million of a net expense primarily related to the increase of environmental reserves at non-operating businesses we had previously divested. •Other expense, net -$0.2 million loss resulting from the settlement of a historical legal matter of an acquired company. 33
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Table of Contents Lithium In thousands Q3 2021 Q3 2020 $ Change % Change Net sales$ 359,229 $ 265,646 $ 93,583 35 % ?$79.0 million of higher sales volume, driven by strength in both carbonate and hydroxide ?$9.1 million of favorable pricing impacts, primarily in battery- and tech-grade carbonate and hydroxide due to higher prices under certain contracts and mix ?$5.4 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 125,416 $ 97,789 $ 27,627 28 % ?Higher sales volume and favorable pricing impacts ?Increased SG&A expenses from higher compensation, professional fees and other administrative costs ?$7.8 million out-of-period adjustment expense recorded in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior periods ?Increased costs related to tolled volume ?$2.6 million of favorable currency translation resulting from a weaker Chilean Peso Bromine Specialties In thousands Q3 2021 Q3 2020 $ Change % Change Net sales$ 277,783 $ 237,193 $ 40,590 17 % •$38.7 million of favorable pricing impacts, primarily in the flame retardants division •Sales volume was flat resulting from decreased production in 2021 due to force majeure declaration for chlorine in theU.S. •$2.0 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 86,012 $ 79,448 $ 6,564 8 % ?Favorable pricing impacts as demand continues to be strong ?Increased raw material prices, primarily due to the higher cost of BPA and the shortage of available chlorine ?Increased freight costs ?$1.8 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Catalysts In thousands Q3 2021 Q3 2020 $ Change % Change Net sales$ 193,554 $ 197,919 $ (4,365) (2) % ?$3.2 million of unfavorable pricing impacts, primarily in FCC, partially offset by PCS ?$1.8 million of lower sales volume, primarily from clean fuel technologies and PCS due to timing of shipments, partially offset by higher FCC sales volume as oil refineries improve utilization rates ?$0.7 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 33,103 $ 37,834 $ (4,731) (13) % ?Unfavorable pricing impacts and lower sales volume, primarily driven by clean fuel technologies ?Increased raw material and freight costs ?$4.2 million out-of-period adjustment expense recorded in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior periods ?Partially offset by productivity improvements and a reduction in professional fees and other administrative costs ?$10 million of increased earnings from strong operating results and other income from our Catalysts segment joint ventures All Other In thousands Q3 2021 Q3 2020 $ Change % Change Net sales $ -$ 46,110 $ (46,110) (100) %
?Decreased volume resulting from the sale of the
$ -$ 24,985 $ (24,985) (100) %
?Decreased volume resulting from the sale of the
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Table of Contents Corporate In thousands Q3 2021 Q3 2020 $ Change % Change Adjusted EBITDA$ (26,962) $ (24,001) $ (2,961) (12) % ?$3.1 million of unfavorable currency exchange impacts, including a$10.2 million decrease in foreign exchange impacts from our Talison joint venture ?Increase in incentive compensation costs
First Nine Months 2021 Compared to First Nine Months 2020
Selected Financial Data (Unaudited)
Net Sales In thousands YTD 2021 YTD 2020 $ Change % Change Net sales$ 2,433,753 $ 2,249,762 $ 183,991 8 % ?$84.7 million decrease in net sales from theFCS business, which was sold onJune 1, 2021 ?$212.9 million of higher sales volume from reportable segments, primarily in Lithium and Bromine Specialties, partially offset by Catalysts ?$17.6 million of favorable pricing from reportable segments, driven by Bromine Specialties, partially offset by Lithium and Catalysts ?$38.1 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Gross Profit In thousands YTD 2021 YTD 2020 $ Change % Change Gross profit$ 761,377 $ 729,433 $ 31,944 4 % Gross profit margin 31.3 % 32.4 % ?Higher sales volume in Lithium and Bromine Specialties, partially offset by unfavorable pricing in Lithium ?Lower commission expenses inChile resulting from the lower pricing in Lithium ?Decrease in net sales resulting from the disposal of theFCS business onJune 1, 2021 ?Increased production and utility costs of approximately$23 million in Bromine Specialties and Catalysts resulting from theU.S. Gulf Coast winter storm ?2021 included$8.7 million of out-of-period adjustment expense in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior periods. See Note 1, "Basis of Presentation," for further details ?Increased freight costs in Bromine Specialties and Catalysts ?Favorable currency exchange impacts resulting from the weakerU.S. Dollar against various currencies Selling, General and Administrative Expenses In thousands YTD 2021 YTD 2020 $ Change % Change Selling, general and administrative expenses$ 318,180 $ 304,918 $ 13,262 4 % Percentage of Net sales 13.1 % 13.6 % ?$20.0 million charitable contribution, using a portion of the proceeds received from theFCS divestiture, to theAlbemarle Foundation , in addition to the normal annual contributions in 2021 ?Higher compensation, including incentive-based, expenses across all businesses and Corporate ?$8.6 million of expenses in 2021 primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements ?$4.0 million loss resulting from the sale of property, plant and equipment in 2021 ?Partially offset by productivity improvements and a reduction in professional fees and other administrative costs ?$16.8 million decrease in restructuring and other expenses, and acquisition and integration related costs for various significant projects
Research and Development Expenses
In thousands YTD 2021 YTD 2020
$ Change % Change
Research and development expenses
Percentage of Net sales 1.7 % 1.9 %
?Decreased research and development spend in each of the reportable segments
35 -------------------------------------------------------------------------------- Table of Contents Gain on Sale of Business In thousands YTD 2021 YTD 2020 $
Change % Change
Gain on sale of business
?Gain resulting from sale of
Interest and Financing Expenses In thousands YTD 2021 YTD 2020 $ Change % Change
Interest and financing expenses
$ (2,206) 4 % ?$29.0 million loss on early extinguishment of debt, representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of debt during the first quarter of 2021 ?Partially offset by decreased debt balance as certain debt instruments were repaid in the first quarter of 2021 ?Higher capitalized interest from continued capital expenditures in 2021 Other Expense, Net In thousands YTD 2021 YTD 2020 $ Change % Change Other expense, net$ (631,870) $ (1,620) $ (630,250) 38,904 % •$657.4 million of additional accrual recorded following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details •$16.9 million decrease in foreign exchange losses •$7.6 million increase in non-operating pension and OPEB benefits •$4.2 million of income in 2021 from accretion of discount in preferred equity of Grace subsidiary acquired as a portion of the proceeds of theFCS sale •$3.8 million expense related to asset retirement obligation charges in 2021 •$2.7 million gain resulting from the settlement of legal matters in 2020 Income Tax Expense In thousands YTD 2021 YTD 2020 $ Change % Change Income tax expense$ 14,422 $ 64,526 $ (50,104) (78) % Effective income tax rate 10.2 % 19.8 % •2021 includes$152.9 million tax benefit resulting from an accrual recorded following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details •$97.5 million one-time tax expense recorded for the gain on the sale of theFCS business in 2021 •Change in geographic mix of earnings •2021 includes a discrete tax expense due to an out-of-period adjustment for an overstated deferred tax liability recorded during the three-month period endedDecember 31, 2017
Equity in Net Income of Unconsolidated Investments In thousands
YTD 2021 YTD 2020 $ Change % Change Equity in net income of unconsolidated investments$ 62,215 $ 83,872 $ (21,657) (26) %
?Primarily lower earnings from our Lithium segment joint venture, Talison, primarily driven by lower pricing and unfavorable foreign exchange impacts, partially offset by higher volumes ?Increased earnings from strong operating results and other income from our Catalysts segment joint ventures
Net Income Attributable to Noncontrolling Interests In thousands YTD 2021 YTD 2020 $ Change % Change Net income attributable to noncontrolling interests$ (61,977) $ (53,309) $ (8,668) 16 %
?Increase in consolidated income related to our JBC joint venture from higher sales volume
36 -------------------------------------------------------------------------------- Table of Contents Net Income Attributable toAlbemarle Corporation In thousands YTD 2021 YTD 2020 $ Change % Change Net income attributable toAlbemarle Corporation $ 127,496 $ 291,129 $ (163,633) (56) % Percentage of Net sales 5.2 % 12.9 % Basic earnings per share$ 1.10 $ 2.74 $ (1.64) (60) % Diluted earnings per share$ 1.10 $ 2.73 $ (1.63) (60) % ?$504.5 million , net of income taxes, of additional accrual recorded following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details ?Gain on sale ofFCS business of$330.9 million , net of tax ?Increased sales volume from Lithium and Bromine Specialties, as well as favorable pricing in Bromine Specialties ?Lower commission expenses inChile resulting from the lower pricing in Lithium ?Decreased interest and financing expenses due to lower debt balances ?Productivity improvements and a reduction in professional fees and other administrative costs ?Loss of four months of sales fromFCS business following the disposition onJune 1, 2021 ?Increased production and utility costs in Bromine Specialties and Catalysts resulting from the winter storms in the southernU.S. ?2021 included$8.7 million of additional expense in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior year periods ?Increased SG&A expenses, primarily related to additional charitable contribution using proceeds from the sale of theFCS business ?Lower equity in net income of unconsolidated investments from the Talison joint venture ?Earnings per share also impacted by the underwritten public offering of our common stock inFebruary 2021 , increasing share count by 9.8 million shares Other Comprehensive Income (loss), Net of Tax In thousands YTD 2021 YTD 2020 $ Change % Change Other comprehensive income (loss), net of tax$ (40,354) $ (2,585) $ (37,769) 1,461 % ?Foreign currency translation and other$ (46,852) $ 18,377 $ (65,229) (355) % ?2021 included unfavorable movements in the Euro of approximately$40 million , the Japanese Yen of approximately$5 million , the South Korean Won of approximately$4 million and the net unfavorable variance in other currencies totaling approximately$2 million , partially offset by favorable movements in the Chinese Renminbi of approximately$4 million ?2020 included favorable movements in the Euro of approximately$30 million , the Chinese Renminbi of approximately$8 million and the Japanese Yen and Taiwanese Dollar of approximately$3 million each, partially offset by unfavorable movements in the Brazilian Real of approximately$23 million ?Cash flow hedge $ (563)$ (6,822) $ 6,259 ?Net investment hedge$ 5,110 $ (16,083) $ 21,193 (132) % 37
-------------------------------------------------------------------------------- Table of Contents Segment Information Overview. Summarized financial information concerning our reportable segments is shown in the following tables. The "All Other" category includes only theFCS business that does not fit into any of our core businesses. Nine Months EndedSeptember 30 , Percentage
Change
2021 % 2020 % 2021 vs 2020 (In thousands, except percentages) Net sales: Lithium$ 958,539 39.4 %$ 786,186 34.9 % 22 % Bromine Specialties 837,978 34.4 % 701,564 31.2 % 19 % Catalysts 562,141 23.1 % 602,179 26.8 % (7) % All Other 75,095 3.1 % 159,833 7.1 % (53) % Total net sales$ 2,433,753 100.0 %$ 2,249,762 100.0 % 8 %
Adjusted EBITDA:
Lithium$ 341,293 53.1 %$ 270,962 45.3 % 26 % Bromine Specialties 273,298 42.6 % 235,751 39.5 % 16 % Catalysts 79,694 12.4 % 108,081 18.1 % (26) % All Other 29,858 4.6 % 66,407 11.1 % (55) % Corporate (81,892) (12.7) % (83,588) (14.0) % 2 % Total adjusted EBITDA$ 642,251 100.0 %$ 597,613 100.0 % 7 % See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net (loss) income attributable toAlbemarle Corporation , the most directly comparable financial measure calculated and reported in accordance withU.S. GAAP, (in thousands): Bromine Reportable Lithium Specialties Catalysts Segments Total All Other Corporate Consolidated Total Nine months ended September 30, 2021 Net income (loss) attributable toAlbemarle Corporation $ 237,293 $ 235,670
$ 127,496 Depreciation and amortization 99,559 37,628 38,293 175,480 1,870 8,415
185,765 Restructuring and other(a) - - - - - 2,294 2,294 Gain on sale of business(b) - - - - - (428,424) (428,424) Acquisition and integration related costs(c) - - - - - 5,629 5,629 Interest and financing expenses(d) - - - - - 56,170 56,170 Income tax expense - - - - - 14,422 14,422 Non-operating pension and OPEB items - - - - - (16,407) (16,407) Legal accrual(e) - - - - - 657,412 657,412Albemarle Foundation contribution(f) - - - - - 20,000 20,000 Other(g) 4,441 - - 4,441 - 13,453 17,894 Adjusted EBITDA$ 341,293 $ 273,298
$ 642,251 Nine months ended September 30, 2020 Net income (loss) attributable toAlbemarle Corporation $ 188,380 $ 198,905
$ 291,129 Depreciation and amortization 82,582 36,846 37,311 156,739 6,338 7,137
170,214 Restructuring and other(a) - - - - - 10,831 10,831 Acquisition and integration related costs(b) - - - - - 14,349 14,349 Interest and financing expenses - - - - - 53,964 53,964 Income tax expense - - - - - 64,526 64,526 Non-operating pension and OPEB items - - - - - (8,704) (8,704) Other(h) - - - - - 1,304 1,304 Adjusted EBITDA$ 270,962 $ 235,751
$ 597,613
(a)In 2021, we recorded facility closure costs related to offices inGermany , and severance expenses inGermany andBelgium , in SG&A. In 2020, we recorded severance expenses as part of business reorganization plans, impacting each of our businesses and Corporate, primarily in theU.S. ,Germany and with our Jordanian joint venture partner. During the nine months endedSeptember 30, 2020 , we 38 -------------------------------------------------------------------------------- Table of Contents recorded expenses of$0.7 million in Cost of goods sold,$10.4 million in SG&A and a$0.3 million gain in Net income attributable to noncontrolling interests for the portion of severance expense allocated to our Jordanian joint venture partner. The balance of unpaid severance is recorded in Accrued expenses and is expected to primarily be paid through 2021. (b)Gain resulting from the sale of theFCS business completed onJune 1, 2021 . (c)Costs related to the acquisition, integration and potential divestitures for various significant projects, recorded in SG&A. (d)Included in Interest and financing expenses is a loss on early extinguishment of debt of$29.0 million for the nine months endedSeptember 30, 2021 . See Note 9, "Long-Term Debt," for additional information. (e)Loss recorded in Other expense, net in the three months endedSeptember 30, 2021 following an arbitration ruling related to a legal matter from a legacy Rockwood business sold to Huntsman prior toAlbemarle 's acquisition of Rockwood. See Note 10, "Commitments and Contingencies," for further details. (f)Included in SG&A is a charitable contribution, using a portion of the proceeds received from theFCS divestiture, to theAlbemarle Foundation , a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the normal annual contribution made to theAlbemarle Foundation by the Company and is significant in size and nature in that it is intended to provide more long-term benefits in these communities. (g)Included amounts for the nine months endedSeptember 30, 2021 recorded in: •SG&A -$8.6 million of expenses primarily related to non-routine labor and compensation related costs that are outside normal compensation arrangements, a$4.0 million loss resulting from the sale of property, plant and equipment and$1.6 million of charges for an environmental reserve at a site not part of our operations. •Other expense, net -$3.7 million of expenses primarily related to asset retirement obligation charges to update of an estimate at a site formerly owned byAlbemarle . (h)Included amounts for the nine months endedSeptember 30, 2020 recorded in: •SG&A -$3.8 million of a net expense primarily related to the increase of environmental reserves at non-operating businesses we had previously divested. •Other expense, net -$2.5 million net gain resulting from the settlement of legal matters related to a business sold and$0.8 million net gain primarily related to the sale of idle properties inGermany , partially offset by a$0.8 million loss resulting from the adjustment of indemnifications related to previously disposed businesses. Lithium In thousands YTD 2021 YTD 2020 $ Change % Change Net sales$ 958,539 $ 786,186 $ 172,353 22 % ?$193.2 million of higher sales volume, driven by both carbonate and hydroxide ?$41.4 million of unfavorable pricing impacts, primarily in battery-grade carbonate due to lower contract pricing in the first half of 2021 ?$20.6 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 341,293 $ 270,962 $ 70,331 26 % ?Higher sales volume, partially offset by unfavorable pricing impacts ?Lower commission expenses inChile resulting from the lower pricing in Lithium ?Productivity improvements, offsetting the impact of inflation ?Lower equity in net income of unconsolidated investments from the Talison joint venture ?$4.4 million out-of-period adjustment expense recorded in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior year periods ?$4.3 million of unfavorable currency translation resulting from a stronger Chilean Peso Bromine Specialties In thousands YTD 2021 YTD 2020 $ Change % Change Net sales$ 837,978 $ 701,564 $ 136,414 19 % ?$66.9 million of favorable pricing impacts, primarily in the flame retardants division and as a result of a favorable 2021 customer mix ?$59.9 million of higher sales volume related to increased demand across all products ?$9.6 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 273,298 $ 235,751 $ 37,547 16 % ?Higher sales volume and favorable pricing impacts as a result of a favorable 2021 customer mix ?Productivity improvements and a reduction in professional fees and other administrative costs ?Increased raw material prices, primarily due to shortage of available chlorine ?Increased production and utility costs of approximately$6 million resulting from theU.S. Gulf Coast winter storm ?Increased freight costs ?$8.7 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies 39 --------------------------------------------------------------------------------
Table of Contents Catalysts In thousands YTD 2021 YTD 2020 $ Change % Change Net sales$ 562,141 $ 602,179 $ (40,038) (7) % ?$40.0 million of lower sales volume, primarily from lower demand in clean fuel technologies ?$8.0 million of unfavorable pricing impacts, primarily in FCC, partially offset by PCS ?$7.9 million of favorable currency translation resulting from the weakerU.S. Dollar against various currencies Adjusted EBITDA$ 79,694 $ 108,081 $ (28,387) (26) % ?Lower sales volume, primarily from lower demand in clean fuel technologies, as well as unfavorable pricing impacts, primarily in FCC ?Increased production and utility costs of approximately$17 million resulting from theU.S. Gulf Coast winter storm ?$3.1 million out-of-period adjustment expense recorded in Cost of goods sold to correct misstated inventory foreign exchange values relating to prior year periods ?Increased raw material and freight costs ?Partially offset by productivity improvements and a reduction in professional fees and other administrative costs All Other In thousands YTD 2021 YTD 2020 $ Change % Change Net sales$ 75,095 $ 159,833 $ (84,738) (53) %
?Primarily decreased volume resulting from the sale of the
$ 29,858 $ 66,407 $ (36,549) (55) %
?Primarily decreased volume resulting from the sale of the
Corporate In thousands YTD 2021 YTD 2020 $ Change % Change Adjusted EBITDA$ (81,892) $ (83,588) $ 1,696 2 % ?$4.1 million of favorable currency exchange impacts, including a$12.8 million decrease in foreign currency impacts from our Talison joint venture ?Productivity improvements and a reduction in professional fees and other administrative costs ?Increase in incentive compensation costs 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 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 2021, cash on hand, cash provided by operations, net cash proceeds of$289.8 million from the sale of theFCS business and the$1.5 billion net proceeds from our underwritten public offering of common stock funded$652.7 million of capital expenditures for plant, machinery and equipment, debt principal payments of approximately$1.5 billion , early extinguishment of debt fees of$24.9 million and dividends to shareholders of$132.2 million . Our operations provided$490.6 million of cash flows during the first nine months of 2021, as compared to$461.7 million for the first nine months of 2020. The change compared to prior year was primarily due to lower working capital outflows of$39.3 million , excluding the non-cash impact to Accrued expenses from the legal accrual of the legacy Rockwood business matter arbitration ruling, and increased sales in each of our Lithium and Bromine Specialties segments, partially offset by lower earnings from theFCS business sold onJune 1, 2021 and lower dividends received from unconsolidated investments. The inflow from working capital in 2021 was primarily driven by the legal accrual noted above, partially offset by higher tax payments, including on the proceeds from the sale of theFCS business, and increased inventory balances. Overall, our cash and cash equivalents decreased by$151.7 million to$595.0 million atSeptember 30, 2021 from$746.7 million atDecember 31, 2020 . 40 -------------------------------------------------------------------------------- Table of Contents OnJune 1, 2021 , we completed the sale of ourFCS business to Grace for proceeds of approximately$570 million , consisting of$300 million in cash and the issuance toAlbemarle of preferred equity of a Grace subsidiary having an aggregate stated value of$270 million . The preferred equity, guaranteed by Grace, can be redeemed by Grace at any time and will accrue payment-in-kind dividends at an annual rate of 12% beginning onJune 1, 2023 , two years after issuance. OnFebruary 8, 2021 , we completed an underwritten public offering of 8,496,773 shares of our common stock at a price to the public of$153.00 per share. We also granted to the underwriters an option to purchase up to an additional 1,274,509 shares, which was exercised. The total gross proceeds from this offering were approximately$1.5 billion , before deducting expenses, underwriting discounts and commissions. In the first quarter of 2021, we made the following debt principal payments using the net proceeds from this underwritten public offering: •€123.8 million of the 1.125% notes due inNovember 2025 •€393.0 million, the remaining balance, of the 1.875% Senior notes originally due inDecember 2021 •$128.4 million of the 3.45% Senior notes due inNovember 2029 •$200.0 million, the remaining balance, of the floating rate notes originally due inNovember 2022 •€183.3 million, the outstanding balance, of the unsecured credit facility originally entered into onAugust 14, 2019 , as amended and restated onDecember 15, 2020 (the "2019 Credit Facility") •$325.0 million, the outstanding balance, of the commercial paper notes Capital expenditures for the nine-month period endedSeptember 30, 2021 of$652.7 million were primarily associated with plant, machinery and equipment. We expect our capital expenditures to be between$925 million and$975 million in 2021, primarily for Lithium growth and capacity increases, primarily inAustralia ,Chile andSilver Peak ,Nevada , as well as productivity and continuity of operations projects in all segments. Our La Negra,Chile plant is in the commissioning and qualification stage. We currently expect to complete construction of Train I of our Kermerton,Australia plant by the end of 2021. Due to the ongoing labor shortages and COVID-19 pandemic travel restrictions inWestern Australia , Train II construction is now expected to be completed in the second half of 2022. Commercial sales volume from Train I will begin in 2022 and Train II in 2023. OnSeptember 30, 2021 , the Company signed a definitive agreement to acquire all of the outstanding equity of Tianyuan for approximately$200 million in cash. Tianyuan's operations include a recently constructed lithium processing plant strategically positioned near thePort of Qinzhou inGuangxi . The plant has designed annual conversion capacity of up to 25,000 metric tons of LCE and is capable of producing battery-grade lithium carbonate and lithium hydroxide. It currently is in the commissioning stage and is expected to begin commercial production in the first half of 2022. The Company expects the transaction, which is subject to customary closing conditions, to close in early 2022. Net current assets were$487.1 million and$404.3 million atSeptember 30, 2021 andDecember 31, 2020 , respectively. The increase is primarily due to the repayment of the current portion of long-term debt using proceeds from our underwritten public offering of our common stock, partially offset by the accrual recorded following an arbitration ruling resulting from a legacy legal matter of the Rockwood business acquired in 2015, and the use of cash for capital expenditures. 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 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. OnFebruary 25, 2021 , we increased our quarterly dividend rate to$0.39 per share, an increase from the quarterly rate of$0.385 per share paid in 2020. OnJuly 20, 2021 , we declared a cash dividend of$0.39 , which was paid onOctober 1, 2021 to shareholders of record at the close of business as ofSeptember 17, 2021 . AtSeptember 30, 2021 andDecember 31, 2020 , our cash and cash equivalents included$376.8 million and$492.8 million , 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 theU.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 theU.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 2021 and 2020, we repatriated$0.9 million and$1.8 million , respectively, of cash as part of these foreign earnings cash repatriation activities. 41 -------------------------------------------------------------------------------- Table of Contents 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/Year Principal (in millions) Interest Rate Interest Payment Dates Maturity Date November 2019 €371.7 1.125% November 25 November 25, 2025 November 2019 €500.0 1.625% November 25 November 25, 2028 November 2019(a)$171.6 3.45% May 15 and November 15 November 15, 2029 November 2014(a)$425.0 4.15% June 1 and December 1 December 1, 2024 November 2014(a)$350.0 5.45% June 1 and December 1 December 1, 2044 (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 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. Our revolving, unsecured credit agreement dated as ofJune 21, 2018 , as amended onAugust 14, 2019 and further amended onMay 11, 2020 (the "2018 Credit Agreement") currently provides for borrowings of up to$1.0 billion and matures onAugust 9, 2024 . Borrowings under the 2018 Credit Agreement bear interest at variable rates based on an average LIBOR for deposits in the relevant currency plus an applicable margin which ranges from 0.910% to 1.500%, depending on the Company's credit rating from Standard & Poor'sRatings Services LLC ("S&P"),Moody's Investors Services, Inc. ("Moody's") andFitch Ratings, Inc. ("Fitch"). The applicable margin on the facility was 1.125% as ofSeptember 30, 2021 . As ofSeptember 30, 2021 there were no borrowings outstanding under the 2018 Credit Agreement. OnAugust 14, 2019 , the Company entered into the$1.2 billion 2019 Credit Facility with several banks and other financial institutions, which was amended and restated onDecember 15, 2020 . The lenders' commitment to provide new loans under the amended 2019 Credit Facility terminates onDecember 10, 2021 , with each such loan maturing one year after the funding of such loan. The Company can request that the maturity date of loans be extended for a period of up to four additional years, but any such extension is subject to the approval of the lenders. Borrowings under the amended 2019 Credit Facility bear 42 -------------------------------------------------------------------------------- Table of Contents interest at variable rates based on an average LIBOR for deposits in the relevant currency plus an applicable margin which ranges from 1.125% to 1.750%, depending on the Company's credit rating from S&P, Moody's and Fitch. The applicable margin on the 2019 Credit Facility was 1.375% as ofSeptember 30, 2021 . InMarch 2021 , the Company repaid the outstanding balance of €183.3 million under the 2019 Credit Facility. Following the completion of the sale of theFCS business, the Company is permitted to make up to two additional borrowings in an aggregate amount equal to$270 million for general corporate purposes under the 2019 Credit Facility. Borrowings under the under the 2019 Credit Facility and 2018 Credit Agreement (together the "Credit Agreements") 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 Credit Agreements) be less than or equal to 4.50:1 for the fiscal quarters throughSeptember 30, 2021 , 4.00:1 for the fiscal quarter endingDecember 31, 2021 , and 3:50:1 for fiscal quarters thereafter, subject to adjustments in accordance with the terms of the Credit Agreements relating to a consummation of an acquisition where the consideration includes cash proceeds from issuance of funded debt in excess of$500 million . The Credit Agreements also contain 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 Credit Agreements could result in all loans and other obligations becoming immediately due and payable and each such Credit Agreement being terminated. Certain representations, warranties and covenants under the 2018 Credit Agreement were conformed to those under the 2019 Credit Facility following the amendments to those agreements. OnMay 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 . 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 Credit Agreements are available to repay the Commercial Paper Notes, if necessary. Aggregate borrowings outstanding under the Credit Agreements and the Commercial Paper Notes will not exceed the$1.0 billion current maximum amount available under the Credit Agreements. 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. InMarch 2021 we repaid all outstanding Commercial Paper Notes and had none outstanding atSeptember 30, 2021 . The non-current portion of our long-term debt amounted to$2.02 billion atSeptember 30, 2021 , compared to$2.77 billion atDecember 31, 2020 . In addition, atSeptember 30, 2021 , we had availability to borrow$1.27 billion under our commercial paper program and the Credit Agreements, and$131.5 million under other existing lines of credit, subject to various financial covenants under our Credit Agreements. We have the ability and intent to refinance our borrowings under our other existing lines of credit with borrowings under the Credit Agreements, as applicable. Therefore, the amounts outstanding under those line of credit, if any, are classified as long-term debt. We believe that atSeptember 30, 2021 , we were, and 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$81.8 million atSeptember 30, 2021 . None of these off-balance sheet arrangements has, 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 endedDecember 31, 2020 , with the exception of the debt repayments made in the first quarter of 2021, as noted above. Following the debt repayments, our annual maturities of long-term debt atSeptember 30, 2021 and our expected interest payments on those long-term debt obligations are as follows (in millions): 43
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Table of Contents Maturities of Long-term Debt Expected Interest Payments Remainder of 2021 $ 0.6 $ 36.8 2022 - 57.4 2023 - 57.4 2024 425.0 55.9 2025 441.1 39.3 Thereafter 1,169.8 413.7 For variable-rate debt obligations, projected interest payments are calculated using theSeptember 30, 2021 weighted average interest rate of approximately 0.36%. Total expected 2021 contributions to our domestic and foreign qualified and nonqualified pension plans, including theAlbemarle Corporation Supplemental Executive Retirement Plan, should approximate$25 million , including contributions expected to be made in 2020 that were deferred to 2021. We may choose to make additional pension contributions in excess of this amount. We have made contributions of$22.1 million to our domestic and foreign pension plans (both qualified and nonqualified) during the nine-month period endedSeptember 30, 2021 . The liability related to uncertain tax positions, including interest and penalties, recorded in Other noncurrent liabilities totaled$16.7 million atSeptember 30, 2021 and$14.7 million atDecember 31, 2020 . Related assets for corresponding offsetting benefits recorded in Other assets totaled$22.4 million atSeptember 30, 2021 and$24.1 million atDecember 31, 2020 . We cannot estimate the amounts of any cash payments associated with these liabilities for the remainder of 2021 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 during the uncertainty surrounding the COVID-19 pandemic 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. Our growth investments include the recently announced the signing of a definitive agreement to acquire all of the outstanding equity of Tianyuan for approximately$200 million in cash. Tianyuan's operations include a recently constructed lithium processing plant that has designed annual conversion capacity of up to 25,000 metric tons of LCE and is capable of producing battery-grade lithium carbonate and lithium hydroxide. We expect the transaction, which is subject to customary closing conditions, to close in early 2022. In addition, we announced agreements for strategic investments inChina with plans 44 -------------------------------------------------------------------------------- Table of Contents to build two lithium hydroxide conversion plants, each initially targeting 50,000 metric tons per year. We expect construction of these conversion plants to begin in 2022 and be completed by the end of 2024. 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 and reduced capital availability. The COVID-19 pandemic has not had a material impact on our liquidity to date; however, we cannot predict the overall impact in terms of cash flow generation as that will depend on the length and severity of the outbreak. 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 COVID-19 pandemic 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 theU.S. Federal Reserve or similar national reserve banks in other countries decide to tighten the monetary supply in response, for example, to improving economic conditions, 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. OnFebruary 6, 2017 ,Huntsman International LLC ("Huntsman"), a subsidiary of Huntsman Corporation, filed a lawsuit inNew York state court againstRockwood Holdings, Inc. ("Rockwood"),Rockwood Specialties, Inc. , certain former executives of Rockwood and its subsidiaries-Seifollah Ghasemi ,Thomas Riordan ,Andrew Ross , andMichael Valente , andAlbemarle . The lawsuit arises out of Huntsman's acquisition of certain Rockwood subsidiaries in connection with a stock purchase agreement (the "SPA"), datedSeptember 17, 2013 . Before that transaction closed onOctober 1, 2014 ,Albemarle began discussions with Rockwood to purchase all outstanding equity of Rockwood and did so in a transaction that closed onJanuary 12, 2015 . Huntsman's complaint asserted that certain technology that Rockwood had developed for a production facility inAugusta, Georgia , and which was among the assets that Huntsman acquired pursuant to the SPA, did not work, and that Rockwood and the defendant executives had intentionally misled Huntsman about that technology in connection with the Huntsman-Rockwood transaction. The complaint asserted claims for, among other things, fraud, negligent misrepresentation, and breach of the SPA, and sought certain costs for completing construction of the production facility. OnMarch 10, 2017 ,Albemarle moved inNew York state court to compel arbitration, which was granted onJanuary 8, 2018 (although Huntsman unsuccessfully appealed that decision). Huntsman's arbitration demand asserted claims substantially similar to those asserted in its state court complaint, and sought various forms of legal remedies, including cost overruns, compensatory damages, expectation damages, punitive damages, and restitution. After a trial, the arbitration panel issued an award onOctober 28, 2021 , awarding approximately$600 million (including interest) to be paid byAlbemarle to Huntsman, in addition to the possibility of attorney's fees, costs and expenses.Albemarle continues to assess its legal rights and options.Albemarle and Huntsman have initiated discussions regarding a resolution of the matter. Based on our review of the decision by theAAA arbitration panel,Albemarle has decided to view the decision as representing the best estimate available of the outcome of this arbitration. As a result, the consolidated statements of income for the three and nine months endedSeptember 30, 2021 , includes a loss of$657.4 million ($504.5 million net of income tax), inclusive of estimated possible legal fees incurred by Huntsman and other related obligations, to reflect the increase in liabilities for this legal matter. In addition, 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 our Catalysts segment, we promptly retained outside counsel and forensic accountants to investigate potential violations of the Company's Code of Conduct, the Foreign Corrupt Practices Act, and other potentially applicable laws. Based on this internal investigation, we have voluntarily self-reported potential issues relating to the use of third-party sales representatives in our Refining Solutions business, within our Catalysts segment, to theU.S. Department of Justice ("DOJ"), theSEC , and the Dutch Public Prosecutor ("DPP"), and are cooperating with the DOJ, theSEC , and the DPP in their review of these matters. In connection with our internal investigation, we have implemented, and are continuing to implement, appropriate remedial measures. We have commenced discussions with theSEC about a potential resolution. At this time, we are unable to predict the duration, scope, result, or related costs associated with the investigations. We also are unable to predict what action may be taken by the DOJ, theSEC , or the DPP, or what penalties or remedial actions they may ultimately seek. Any determination that our operations or activities are not, or were not, in compliance with existing laws 45 -------------------------------------------------------------------------------- Table of Contents or regulations could result in the imposition of fines, penalties, disgorgement, equitable relief, or other losses. We do not believe, however, that any such fines, penalties, disgorgement, equitable relief, or other losses would have a material adverse effect on our financial condition or liquidity. However, an adverse resolution could have a material adverse effect on our results of operations in a particular period. Overall, with generally strong cash-generative businesses and no significant long-term debt maturities before 2024, we believe we have, and will be able to maintain, a solid liquidity position. We had cash and cash equivalents totaling$595.0 million atSeptember 30, 2021 , of which$376.8 million 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 theU.S. We anticipate that any needs for liquidity within theU.S. in excess of our cash held in theU.S. can be readily satisfied with borrowings under our existingU.S. credit facilities or our commercial paper program. Guarantor Financial InformationAlbemarle Wodgina Pty Ltd Issued Notes Albemarle Wodgina Pty Ltd (the "Issuer"), a wholly owned subsidiary ofAlbemarle Corporation , issued$300.0 million aggregate principal amount of 3.45% Senior Notes due 2029 (the "3.45% Senior Notes") inNovember 2019 . The 3.45% Senior Notes are fully and unconditionally guaranteed (the "Guarantee") on a senior unsecured basis byAlbemarle 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 Mineral Resources Limited's ("MRL") Wodgina hard rock lithium mine project ("Wodgina Project ") inWestern 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 ("MARBL") and for the operation of the Kemerton assets inWestern Australia . We participate in theWodgina Project through our ownership interest in the Issuer. The Parent Guarantor conducts itsU.S. Bromine Specialties and Catalysts 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 endedDecember 31, 2020 . 46 -------------------------------------------------------------------------------- Table of Contents Summarized Statement of Operations Nine Months Ended Year Ended $ in thousands September 30, 2021 December 31, 2020 Net sales(a) $ 1,085,274$ 1,621,651 Gross profit 204,861 357,431
Income (loss) before income taxes and equity in net income of unconsolidated investments(b)(c)
233,685 (205,486)
Net income (loss) attributable to the Parent Guarantor and the Issuer
171,322 (222,097) (a) Includes net sales to Non-Guarantors of$563.6 million and$893.5 million for the nine months endedSeptember 30, 2021 and year endedDecember 31, 2020 , respectively. (b) Includes intergroup expenses to Non-Guarantors of$101.3 million and$132.7 million for the nine months endedSeptember 30, 2021 and year endedDecember 31, 2020 , respectively. (c) The nine months endedSeptember 30, 2021 includes the Parent Guarantor's portion of gain on sale of theFCS business onJune 1, 2021 .
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