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Segment Information | 3 Months Ended
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Mar. 31, 2018
Segment Reporting [Abstract] |
Reportable Segments | Segment Information: In the first quarter of 2018, the PCS product category merged with our former Refining Solutions reportable segment to form a global business focused on catalysts. As a result, our three reportable segments include: (1) Lithium; (2) Bromine Specialties; and (3) Catalysts. Each segment has a dedicated team of sales, research and development, process engineering, manufacturing and sourcing, and business strategy personnel and has full accountability for improving execution through greater asset and market focus, agility and responsiveness. This business structure aligns with the markets and customers we serve through each of the segments. The structure also facilitates the continued standardization of business processes across the organization, and is consistent with the manner in which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. Summarized financial information concerning our reportable segments is shown in the following tables. Results for 2017 have been recast to reflect the change in segments noted above. The “All Other” category includes only the fine chemistry services business 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. The Company’s 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. The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, as adjusted on a consistent basis for certain non-recurring or unusual items in a balanced manner and on a segment basis. These non-recurring or unusual items may include acquisition and integration related costs, utilization of inventory markup, gains or losses on sales of businesses, restructuring charges, facility divestiture 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. The Company has 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, U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP, or any other financial measure reported in accordance with U.S. GAAP.
| Three Months Ended March 31,
| 2018 |  | 2017
| (In thousands)
Net sales: |  |  |
Lithium | $ | 298,032 |  |  | $ | 216,229 |
Bromine Specialties | 225,639 |  |  | 219,191 |
Catalysts | 260,717 |  |  | 253,558 |
All Other | 37,165 |  |  | 32,419 |
Corporate | 76 |  |  | 666 |
Total net sales | $ | 821,629 |  |  | $ | 722,063 |
Adjusted EBITDA: |  |  |
Lithium | $ | 131,014 |  |  | $ | 99,852 |
Bromine Specialties | 69,969 |  |  | 68,488 |
Catalysts | 67,830 |  |  | 69,749 |
All Other | 3,862 |  |  | 5,156 |
Corporate | (23,957 | ) |  | (31,869 | )
Total adjusted EBITDA | $ | 248,718 |  |  | $ | 211,376 |
See below for a reconciliation of adjusted EBITDA, the non-GAAP financial measure, from Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP (in thousands):
| Lithium |  | Bromine Specialties |  | Catalysts |  | Reportable Segments Total |  | All Other |  | Corporate |  | Consolidated Total
Three months ended March 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 108,334 |  |  | $ | 59,536 |  |  | $ | 55,660 |  |  | $ | 223,530 |  |  | $ | 1,760 |  |  | $ | (93,530 | ) |  | $ | 131,760 |
Depreciation and amortization | 24,065 |  |  | 10,433 |  |  | 12,170 |  |  | 46,668 |  |  | 2,102 |  |  | 1,560 |  |  | 50,330 |
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,201 |  |  | 2,201 |
Interest and financing expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,538 |  |  | 13,538 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 20,361 |  |  | 20,361 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,197 | ) |  | (2,197 | )
Legal accrual(b) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,628 |  |  | 17,628 |
Other(c) | (1,385 | ) |  | — |  |  | — |  |  | (1,385 | ) |  | — |  |  | 16,482 |  |  | 15,097 |
Adjusted EBITDA | $ | 131,014 |  |  | $ | 69,969 |  |  | $ | 67,830 |  |  | $ | 268,813 |  |  | $ | 3,862 |  |  | $ | (23,957 | ) |  | $ | 248,718 |
Three months ended March 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Albemarle Corporation | $ | 77,614 |  |  | $ | 58,694 |  |  | $ | 56,966 |  |  | $ | 193,274 |  |  | $ | 3,246 |  |  | $ | (145,307 | ) |  | $ | 51,213 |
Depreciation and amortization | 19,065 |  |  | 9,794 |  |  | 12,783 |  |  | 41,642 |  |  | 1,910 |  |  | 1,518 |  |  | 45,070 |
Utilization of inventory markup(d) | 10,606 |  |  | — |  |  | — |  |  | 10,606 |  |  | — |  |  | — |  |  | 10,606 |
Restructuring and other, net(e) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,905 |  |  | 12,905 |
Gain on acquisition(f) | (7,433 | ) |  | — |  |  | — |  |  | (7,433 | ) |  | — |  |  | — |  |  | (7,433 | )
Acquisition and integration related costs(a) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 14,281 |  |  | 14,281 |
Interest and financing expenses(g) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 68,513 |  |  | 68,513 |
Income tax expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,971 |  |  | 11,971 |
Non-operating pension and OPEB items | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,063 | ) |  | (1,063 | )
Other(h) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,313 |  |  | 5,313 |
Adjusted EBITDA | $ | 99,852 |  |  | $ | 68,488 |  |  | $ | 69,749 |  |  | $ | 238,089 |  |  | $ | 5,156 |  |  | $ | (31,869 | ) |  | $ | 211,376 |
(a) | Included amounts for the three-month periods ended March 31, 2018 and 2017 recorded in (1) Cost of goods sold of $1.0 million and $8.9 million, respectively; and (2) Selling, general and administrative expenses of $1.2 million and $5.4 million, respectively, relating to various significant projects, including the Jiangxi Jiangli New Materials Science and Technology Co. Ltd. (“Jiangli New Materials”) acquisition, which contains unusual compensation related costs negotiated specifically as a result of this acquisition that are outside of the Company’s normal compensation arrangements.
(b) | Included in Other (expenses) income, see Note 10, “Commitments and Contingencies” for additional information.
(c) | Included amounts for the three months ended March 31, 2018 recorded in:
▪ | Cost of goods sold - $1.1 million related to the write-off of fixed assets in our JBC joint venture.
▪ | Selling, general and administrative expenses - $1.4 million gain related to a refund from Chilean authorities due to an overpayment made in a prior year.
▪ | Other (expenses) income, net - $15.6 million of environmental charges related to a site formerly owned by Albemarle, partially offset by a net gain of $0.2 million related to the the reversal of previously recorded expenses of disposed businesses.
(d) | In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately $23.1 million. The inventory markup was expensed over the estimated remaining selling period. For the three-month period ended March 31, 2017, $10.6 million was included in Cost of goods sold related to the utilization of the inventory markup.
(e) | During the first quarter of 2017, we initiated actions to reduce costs at several locations, primarily at our Lithium site in Germany. Based on the restructuring plans, we have recorded expenses of $2.9 million in Cost of goods sold, $4.2 million in Selling, general and administrative expenses and $5.8 million in Research and development expenses, primarily related to severance, expected to be incurred. The unpaid balance is recorded in Accrued expenses at March 31, 2018, with the expectation that the majority of these plans will be completed by the end of 2018.
(f) | Gain recorded in Other (expenses) income, net related to the acquisition of the remaining 50% interest in the Sales de Magnesio Ltda. joint venture in Chile. The calculation of the initial gain recorded during the three months ended March 31, 2017 was based on management’s preliminary estimates and assumptions available at that time.
(g) | During the first quarter of 2017, we repaid the 3.00% Senior notes in full, €307.0 million of the 1.875% Senior notes and $174.7 million of the 4.50% Senior notes, as well as related tender premiums of $45.2 million. As a result, included in Interest and financing expenses is a loss on early extinguishment of debt of $52.8 million, representing the tender premiums, fees, unamortized discounts and unamortized deferred financing costs from the redemption of these senior notes.
(h) | Included in Other (expenses) income, net are $3.2 million of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle and a loss of $2.1 million associated with the previous disposal of a business.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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