Bloomsburg Investment Group Equity Analysis Albemarle Corp. (ALB) Senior Analyst: Mark Robert Goldhorn: Class of 2019 Junior Analysts: Mitchel Thomas: Class of 2019 Ferrell Fludd: Class of 2019 Isaiah Coooper: Class of 2019 Hannah Lare: Class of 2023 Bloomsburg Investment Group Opinion: The Materials Sector strongly believes that we should continue to HOLD our position in Albemarle. While we are still pessimistic about the state of the global economy, we believe that demand will continue to grow substantially over the next decade, regardless of economic conditions. Albemarle's forward looking guidance indicates global lithium demand to expand nearly 500% by 2025, with several other competitors providing similar outlooks. Although Albemarle's Bromine & Catalysts segments may suffer during a global economic contraction, we believe Albemarle's growing production capacity combined with increasing lithium demand will provide stable enough revenue increases to offset underperformance in their other segments. Within the Lithium space, Albemarle continues to be an industry leader, with the highest lithium production capacity in the industry by a large margin. Despite large CAPEX investments in new Lithium projects, the company remains financially healthy, with low levels of debt, adequete levels of cash, and consistantly increasing revenues. On top of that, an unjustified sell off in lithium stocks has left the company with a very low P/E ratio. Overall, we believe that Albemarle is the most attractive company currently operating in the Lithium space and will continue to grow in both the short and long term. Corporate Summary: Corporate Details: Name Albemarle Corp Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. Its Lithium segment offers lithium compounds, including lithium Ticker ALB carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties, as Domicile well as reagents, such as butyllithium and lithium aluminum hydride for applications in lithium batteries for consumer electronics and electric vehicles, high performance Sector Basic Materials greases, thermoplastic elastomers for car tires, rubber soles, plastic bottles, catalysts Industry Specialty Chemicals for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets. It also offers cesium products for the chemical and pharmaceutical Exchange , INC. industries; zirconium, barium, and titanium products for various pyrotechnical applications; technical services, such as the handling and use of reactive lithium Last Close 82.57 products; and recycling services for lithium-containing by-products. The company's Price 52 Wk High 108.74 Bromine Specialties segment offers bromine and bromine-based solutions for fire safety, chemical synthesis, mercury control, water purification, beef and poultry Price 52 Wk Low 71.89 processing, and other industrial applications, as well as oil and gas well drilling, and completion fluids applications; and tertiary amines, biocides, disinfectants, and Latest Dividend 0.37 sanitizers. Its Catalysts segment offers performance catalyst solutions comprising Dividend Yield % TTM 1.66 hydroprocessing catalysts together with isomerization and akylation catalysts; fluidized catalytic cracking catalysts and additives; and performance catalyst solutions Beta 5 Yr (Mo­End) 1.65 comprising organometallics and curatives. It serves energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, Avg Daily Volume (3 Mo) 1,358,016.56 crop protection, and custom chemistry services markets. The company was founded Shares Outstanding (mil) 105.89 in 1994 and is headquartered in Charlotte, North Carolina. Number of Analysts 6 4/22/2019 Albemarle Corp US Dollar Page 1 of 10

Source: Morningstar Direct Albemarle Corp ALB

Corporate Governance: Board of Directors

Luther C. Kissam (Chairman, CEO, and President) - Mr. Luther C. Kissam IV, also known as Luke, has been the Chief Executive Officer of Albemarle Corporation September 1, 2011 and its President since March 7, 2013 also its Chairman since November 7,2016. Mr. Kissam served as President of Albemarle Corp. since March 15, 2010 to March 1, 2012. Mr. Kissam served as Executive Vice President of Albemarle Corp. since May 2009. He served as Secretary of Albemarle Corp. from September 30, 2003 to March 15, 2010. He served as Senior Vice President of Law & Manufacturing of Albemarle Corp., from January 1, 2008 to May 2009 and served as its Executive Vice President Manufacturing and Law from May 2009 to March 15, 2010.

Jerry Kent Masters (Lead Independent Director) - Mr. Jerry Kent Masters serves as the Chief Executive Officer of Foster Wheeler Energy Corporation. He has been Director of Albemarle Corporation since January 12, 2015 and also its Lead Independent Director since May 08, 2018.

Harriett Taggart (Executive Officer) - Dr. Harriett Taggart, also known as Tee, Ph.D. founded Taggart Associates in 2007 and serves as its Managing Director and Principal. She serves as an Officer of Cambridge Bancorp. Dr. Taggart manages a professional practice of Taggart Associates and is actively engaged as an Advisor in early stage business ventures. She is a Consultant of Wellington Management Company LLP. She is an Investment Professional at Golden Seeds LLC. She served as Senior Vice President, Global Sector Portfolio Manager, Global Industry Analyst for the chemicals and related industries, Global Investment Manager/ Sector Portfolio Manager and was a Retired Partner of Wellington Management Company LLP from 1983 to 2006 and was responsible for global investments in publicly-traded stocks of companies in specialty and basic chemicals, environmental services and innovative materials industries. She has been an Independent Director at Albemarle Corporation since February 07, 2007.

James J. O’Brien (Director) – Mr. James J. O'Brien, also known as Jim, serves as the President of ATB Holdings Inc. Mr. O'Brien served as an Executive Chairman and Chief Executive Officer of Ashland Inc. since 2002 to December 2014. He has been an Independent Director of Albemarle Corporation since July 12, 2012

Gerald A. Steiner (Director) - Mr. Gerald A. Steiner, also known as Jerry, serves as an Advisor at Yield Lab, LLC. Mr. Steiner serves as Chief Executive Officer of Arvegenix LLC. Mr. Steiner has been an Independent Director of Albemarle Corporation since July 1, 2013.

Alejandro Daniel Wolff (Director) - Ambassador Alejandro Daniel Wolff has been a Director of Versum Materials, Inc. since October 1, 2016 and as its Lead Director since May 24, 2017. Ambassador Wolff was an Ambassador and Deputy Permanent U.S. Representative to the United Nations from 2005 to 2010. Ambassador Wolff has been a 33-year veteran of the Department of State since joining as a Foreign Service Officer in 1979. He has substantial experience in governmental and international affairs and distinguished leadership experience. He retired from the U.S. Department of State on August 23, 2013. He has been a Director of Albemarle Corporation since January 12, 2015.

Corporate Governance: Top Management

Luke Kissam (Chairman, President & Chief Executive Officer)- Kissam was elected Chief Executive Officer of Albemarle Corporation September 2011. He was elected as the companies Board of Directors effective November 2,2011, and named Chairman of the Board in November 2016. Kissam joined Albemarle in September 2003 as Vice President, General Counsel and Corporate Secretary and served as Senior Vice President, Manufacturing and Law, and Corporate Secretary from January 2008 until his promotion to President in March 2010. Michael Brown (Vice President, Global HSE & Operational Excellence)- Michael Brown is Albemarle’s Vice President of Global HSE & Operational Excellence.Brown has over 21 years of experience with Albemarle and has served in numerous positions, primarily in manufacturing operations. Most recently, Brown worked as the Division Vice President, Manufacturing where he was responsible for production, HSE, strategic sourcing, cost management and organizational development. Brown has experience as a Plant Manager at several union and non-union facilities. He has served in manufacturing leadership roles in each of the company’s four global business units.Prior to that, Brown assumed roles in Strategic Sourcing and Technology Resources. Scott Tozier (Executive Vice President & Chief Financial Officer)-Tozier is Albemarle’s Executive Vice President and Chief Financial Officer. In this role, he is responsible for all financial and fiscal management aspects of the company’s operations. He sets internal controls within the organization to protect the financial interest of stakeholders, provides leadership and coordination in the administrative, business planning, accounting and budgeting efforts of the company and addresses strategic management decisions from a financial standpoint. Customer service, purchasing and logistics functional groups report to him. Raphael Crawford (President, Catalysts)- Crawford joined Albemarle in 2012 as Vice President for the company’s Performance Catalyst Solutions division, with overall responsibility for the direction and results of the business. In 2015, he was appointed Vice President of Albemarle’s Synthesis and Polymer Solutions division as well as the Managing Director for Rockwood Lithium GbmH in . Later in 2015, Crawford became leader of the Bromine Specialties business unit. In 2018, he assumed his current role as the President of the Catalysts business unit. Netha Johnson (President, Bromine Specialties)- Netha Johnson is President of Albemarle’s Bromine Specialties global business unit. As President, Bromine Specialties, Johnson is responsible for overseeing and leading the continued success of the global business unit, while ensuring it supports the company's overall growth strategy. Johnson joined Albemarle in 2018 after more than 20 years of diverse leadership experience, both domestically and internationally. Prior to his role with Albemarle, he served in several roles with 3M Company. Most recently Johnson served as Vice President and General Manager Electrical Markets Division where he was directly responsible for 3M’s electrical and renewable energy solutions. Eric Norris (President, Lithium)- Eric Norris is President of Albemarle’s Lithium global business unit. He recently served as Albemarle’s Chief Strategy Officer. In this role, he managed the company’s strategic planning, M&A and corporate business development programs as well as its investor relations efforts. Norris joined the company in January 2018.

4/22/2019 Albemarle Corp US Dollar Page 2 of 10

Source: Morningstar Direct Albemarle Corp ALB

Corporate Governance: Top Shareholders & Insider Transactions

Top Institutional Shareholders:

1. The Vanguard Group, Inc. - Shares Held: (12,646,075, 11.94%) 2. Franklin Resources, Inc. – Shares Held: (9,164,030, 8.66%) 3. BlackRock, Inc. – Shares Held: (7,445,317, 7.03%) 4. Jennison Associates LLC – Shares Held: (6,954,209, 6.57%) 5. State Street Global Advisors, Inc. - Shares Held: (6,148,661, 5.81%)

Individual Shareholders:

1. Luther C. Kissam IV. (Chairman, President and CEO - Shares Held: (437,741, .41%) 2. Scott A. Tozier (Executive VP & CFO) - Shares Held: (80,807, .08%) 3. Karen G. Narwold (Executive VP) – Shares Held: (64,197, .06%) 4. Douglas L. Maine (Director) – Shares Held: (25,300, .02%) 5. Donald J. LaBauve Jr. (VP, CAO) - Shares Held: (19,950, .02%)

Notable Insider Transactions:

-None to report within the past 2 years.

4/22/2019 Albemarle Corp US Dollar Page 3 of 10

Source: Morningstar Direct Albemarle Corp ALB

Financial Summary, Year End 2016 (in millions) Financial Highlights

Market Capitaliza�on 8,743.00 FY 2018 Financial Highlights Total Revenue 3,374.95 -Revenues increased 9.86% YoY to $3.34 Billion Gross Profit 1,217.26 -EPS exploded 1,193% to $6.40 from $0.49 in 2017 -Reported Net Income Margins of 20.55% from 1.78% the previous year. Opera�ng Income 701.11 -Paid out Annual Dividends of $1.34 per share, a 4.69% increase YoY Net Income Cont Ops 739.14 -ROE increased significantly to 19.5% from 2.6% the previous year -CAPEX increased 79.6% to $546 Million, mostly in Lithium expansion Net Income 693.56 projects Current Assets 1,998.42 -Debt to Equity was 45.4%, lower than all major competitors -Cash Ratio was 0.47, mostly due to ambitious CAPEX projects Cash 555.32 Total Assets 7,581.67 Lithium: -Net Sales increased 21% YoY to $1.29 Billion driven by both price and Current Liabili�es 1,183.17 volume increases. Long­term Liabili�es 2,639.39 -EBITDA margins increased 62 bps to 43% helped by the pricing increases. -Majority of sales volume increases due to new long-supply agreements Total Liabili�es Total Equity 3,585.32 Bromine: -Net Sales increased 7% YoY to $918 Million, with pricing remaining flat Opera�ng Cash Flow 546.17 and volume increasing. Inves�ng Cash Flow ­303.70 -EBITDA margins increased 111 bps 31%. -Cited strong organic growth in flame retardants Financing Cash Flow ­786.53 Change In Cash ­544.06 Catalysts: -Net Sales Increased 11% to $1.07 Billion, with a 8% rise in volume EBITDA 1,047.80 -EBITDA margins remained flat, only rising 4bps to 25% Enterprise Value 9,892.89 Capital Expenditure ­699.99 P/E Ra�o Forward 13.23 PEG Ra�o 1.03 Dividend Yield % TTM 1.66

Investment Growth

Time Period: 4/1/2016 to 3/31/2019

140.0%

120.0%

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

-20.0% 6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017 3/2018 6/2018 9/2018 12/2018 3/2019

Albemarle Corp 33.5% S&P 500 TR USD 46.3% 4/22/2019 Albemarle Corp US Dollar Page 4 of 10

Source: Morningstar Direct Albemarle Corp ALB

FMC Corp. Spins Off Lithium Segment in Livent IPO Albemarle & Corfo Reach Production Agreement On October 11, 2018, FMC's Livent lithium segment debuted on the On January 24th, Albemarle reached a production agreement with the Chilean NYSE with an IPO valuation of $2.43 billion. The spinoff was done to Economic Development Agency (CORFO), concluding a nearly two year legal give FMC shareholders a more pure-play lithium option. The deal battle. CORFO had threatened arbitration proceedings, claiming Albemarle had violated an agreement to provide as much as 25 percent of its annual would also give the newly incorporated Livent to focus on lithium production at a discount to companies seeking to produce battery metals capacity expansion and give management more autonomy going within Chile. The negotiated amendment provides Albemarle with the right to forward. The company is still optimistic about rapid demand produce over 80,000 MT annually of technical and battery grade lithium salts expectations going foward and will likely be a more direct through at least 2043 at its battery grade manufacturing facilities at La Negra, competitor in the lithium space in the future. Chile. In 2019, Albemarle will produce 40,000 to 45,000 MT on an LCE basis at that facility, and the expansion of that site to the full 85,000 MT remains on track to begin commissioning in 2020.

Albemarle Reaffirms Foward Guidance Albemarle Completes $500 Million Buyback Program On March 28, Albemarle announced that excessive rains in Chile In August 2018, Albemarle announced plans to repurchase another $250 polluted fresh water supplies servicing its La Negra production Million in shares to be completed by the end of 2018. This brought the facilities. The incident is expected to reduce the facility's lithium company's total buyback program to half a billion dollars for the year. production by 3,000 - 3,500 MT on an LCE basis. The volume shift is The news came the day after it reported that its quarterly earnings had projected to affect the firm's revenues by $45M and EBITDA by $18M tripled from the previous year, reaffirming the narratrive that lithium in Q1. Days later, the company came out in a press conference and demand will see strong growth in the next decade with the rise of EVs. The company believes that it is acquiring these shares at a good price, said that it had secured new lithium sales contracts and opened new with CEO Luke Kissam stating on the quarterly conference call, "We production facilities ahead of schedule and now reaffirms its FY 2019 believe the stock is currently undervcalued." This shows that top guidance in both EPS and production. management is particularly optimistic on the future of the company.

4/22/2019 Albemarle Corp US Dollar Page 5 of 10

Source: Morningstar Direct Albemarle Corp ALB

Industry Environment: ALB is a specialty chemicals corporation that works with lithium, bromine, and refining catalyst. As a result of their work, their consumers vary widely from energy to transportation in a highly growing industry. Furthermore, while 2018 saw Lithium producers stocks dive, the segment is expected to bounce back for many reasons. The Lithium Hydroxide market is expected to grow rapidly due to the evolution of Lithium batteries versus traditional batteries. Lithium Hydroxide is expected to be in high demand this year due to new EVs expecting to be utilizing the battery due to its higher capacity and longer battery life. Analysts have predicted that this market is expected to increase from 65-75 ktpa to 500 ktpa by 2025. With many countries calling for a ban of fossil fuel usage and planning a full integration of EVs in society, the lithium market has had some concerns on whether the supply can meet the demand necessary to do this. With more analysts predicting the Lithium demand to increase threefold, keeping up with this demand is essential. Moreover, Bromine demand is expected to continue to increase due to the increasing demand for flame retardants driven by the electronic and textile segments of the market. Bromine is toxic, which brings risks to all companies producing flame retardant with the chemical due to environmental concerns.Both Bromine and the refining segment are rather cyclical in their nature and are expected to continue to be so. Overall, the materials sector is expecting impressive growth throughout the industry because of many innovation and market trends occuring in the .

Competitor Comparison

Market Gross Net Net Revenue Revenue % Gross Net Cap Current Receivable Profit Income Income % (mil) Chg Margin % Margin % (mil) Ratio Turnover (mil) (mil) Chg (Daily)

Albemarle Corp 3,374.95 9.86 1,217.26 36.07 693.56 1,164.47 20.55 8,743.00 1.69 5.92 S&P 500 TR USD Russell 2000 TR USD

Competitor Comparison (Cont.)

Free Total P/E P/B Dividend Cash Asset Debt ROA % ROE % Beta 5 Yr Ratio PEG Ratio Ratio Yield % Flow / Turnover to Total Forward Current TTM Sales % Equity TTM Albemarle Corp 0.44 9.05 0.48 19.11 1.65 13.23 1.03 2.44 1.66 S&P 500 TR USD Russell 2000 TR USD

4/22/2019 Albemarle Corp US Dollar Page 6 of 10

Source: Morningstar Direct Albemarle Corp ALB

FMC Corporation (Livent) Sociedad Quimica y Minera de Chile FMC Corporation, a diversified chemical company, provides Sociedad Química y Minera de Chile S.A. produces and distributes specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, industrial chemicals, solutions, applications, and products for the agricultural, potassium, and other products and services. The company offers specialty plant nutrients, consumer, and industrial markets worldwide. The company including potassium nitrate, sodium nitrate, sodium potassium nitrate, specialty mixes, and other specialty fertilizers for crops, such as vegetables, fruits, and flowers under the operates in two segments, FMC Agricultural Solutions and Ultrasol, Qrop, Speedfol, and Allganic brands. It also provides iodine and its derivatives FMC Lithium. The FMC Agricultural Solutions segment for use in medical, pharmaceutical, agricultural, and industrial applications comprising x- ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and develops, manufactures, markets, and sells crop protection disinfectants, pharmaceutical synthesis, electronics, pigments, and dye components under chemicals, including insecticides, herbicides, and fungicides the QIodine brand. In addition, the company offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and that are used in agriculture to enhance crop yield and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting quality by controlling a range of insects, weeds, and powder for steel extrusion, primary aluminum smelting process, pharmaceuticals, and lithium derivatives. Further, it supplies lithium hydroxide for the lubricating greases diseases, as well as in non-agricultural markets for pest industry, as well as cathodes for batteries. The company's lithium products are marketed under the QLithiumCarbonate, QLithiumHydroxide, and QLubelith brands. Additionally, it control. The FMC Lithium segment manufactures lithium offers potassium chloride and potassium sulfate for various crops; and industrial for use in batteries, polymers, pharmaceuticals, greases chemicals, including sodium nitrate, potassium nitrate, potassium chloride, and solar salts under the QSodiumNitrate, QPotassiumNitrate, and QPotassiumChloride brands. The and lubricants, glass and ceramics, and other industrial company sells its products through sales offices and a network of distributors in Chile, applications. FMC Corporation was founded in 1883 and is Latin America, the Caribbean, Europe, North America, Asia, Central and South America, and internationally. Sociedad Química y Minera de Chile S.A. was founded in 1968 and is headquartered in Philadelphia, Pennsylvania. headquartered in Santiago, Chile.

Number of Mines & Production Facilities: 6 Number of Mines & Production Favilities: 7

Annual Lithium Production: 17,000 MT Annual Lithium Production: 70,000 MT

Tianqi Lithium Jiangxi Ganfeng Lithium Tianqi Lithium Corporation produces and sells lithium iangxi Ganfeng Lithium Co., Ltd. manufactures and sells chemical products and other downstream lithium various lithium products in and internationally. Its derivatives worldwide. The company also engages in the principal products include lithium chloride, lithium fluoride, lithium resource development and exploitation, and lithium carbonate, lithium hydroxide, lithium magnesium downstream production processing activities, as well as the alloy, butyl lithium, butyl chloride, catalyst metal lithium, trade of lithium products, including mineral concentrates. battery metal lithium, and other products. Its products also Its products include lithium carbonate, lithium hydroxide, have applications in alkali accumulators and lubricating oils lithium chloride, lithium metal, spodumene, and other of lithium base; gas drying equipment; reducing agents, derivatives for use in lithium-ion primary and secondary concentrating agents, and organic synthetic catalysts; and battery, metal smelting, catalyst and lubricant, glass medicines, spices, agricultural chemicals, dyes, and ceramic, biotechnology, pharmaceutical, building and reducing agents of fine organic synthesis. Jiangxi Ganfeng construction materials, and nuclear industries. The Lithium Co., Ltd. was founded in 2000 and is company was founded in 1995 and is based in Chengdu, headquartered in Xinyu, China. the People’s Republic of China. Number of Mines: N/A Number of Mines: N/A Annual Lithium Production: N/A Annual Lithium Production: 72,000

4/22/2019 Albemarle Corp US Dollar Page 7 of 10

Source: Morningstar Direct Albemarle Corp ALB

Strengths: Weaknesses:

Strong Global Presence: Albemarle is the largest lithium producer in the world, Relatively Low Cash Levels: The company's CAPEX spree to expand Lithium holding about 40% of the global lithium market. The company is see as the production has left it with lower cash levels than it has seen in the past. industry leader among all Lithium firms. Unforeseen expenses could force the company to take on more debt.

Established Customer Base: Albemarle has strong business relationships with Lower Dividend Payouts: Albemarle's 1.8% dividend yield is on the low side of large, important companies like Panasonic, Samsung, Exxon Mobile & Chevron. the industry, however it has has a very reliable and consistant history of dividends The large scale of these companies will bring in high value purchase orders. in the past.

Diversified Product Lines: Albemarle's acquisition of Rockwood Holding's Potential Overreliance on Chile: The majority of Albemarle's lithium production is lithium assets opened up a new business segment for the company that is based out of Chile. This overreliance on the country could negatively impact the looking to be less volatile than Bromine & Catalysts during an economic company if unforeseen events happen at the facilities or the relationship with the slowdown. Chilean government deteriorates.

Expansion Efforts: Albemarle has been on a spending spree in recent years, Compliance Costs: The diversified chemicals industry is heavily regulated by the looking to build up it's Lithium production capacity. It appears the company will government. Companies like Albemarle pay millions of dollars every year to make now shift to focusing on earning back this cash with strong Lithium sales. sure they are staying compliant in their production and waste management practices. Failiure to comply will result in millions of dollars in environmental fines. Strong R&D Team: In 2017, Albemarle announced they had patented an innovative new technology that would enable them to increase total Lithium production in the La Negra production facilities without the need to build more brines. Although details of the technology are pretty much kept under wraps, an expansion of this technology to their other facilities could increase production at lower costs.

Opportunities: Threats:

Projected Boom in Lithium Demand: The rise of EV's and battery powered Commodity Risks: Supply & demand will always play a factor in the profitability of handheld electronics is projected to increase the demand for lithium by an any commodity producer. However, as lithium is not yet actively traded on futures estimated 500% within the next decade. Albemarle's industry leading production markets, this risk is minimized in the short term. However as lithium becomes more capacity. and more prevalent, it is likely it will be regularly traded like gold and oil.

Shift from Coal to Sustainable Methods: As world governments attempt to Chilean Government: As one of Albemarle's main competitors, SQM, is based out adopt cleaner energy sources, large scale lithium ion battery solutions serve as an of Santiago, the Chilean government has every reason to offer better incentives & attractive way to store power. Large battery farms are already servicing small to quotas to SQM. A detoriation of Albemarle's relationship with the Chilean midsize communities in Australia and the UK. government could be disastrous for their production network.

Higher Bargaining Power Compared to Other Commodities: Because lithium is Impacts of Lithium on Refining: The projected explosion in lithium demand is not yet traded on any futures market, producers tend to have more bargaining likely to hurt Albemarle's refining segments. It would be advantageous for power when it comes to pricing. Albemarle to reduce their reliance on refining revenues and potentially sell off these segments at some point in time. Joint Venture with Mineral Rock Resources: Albemarle's joint venture with Mineral Rock Resources gives it a 50% stake in the Greenbushes, Austrailia mine Natural Disasters: Many of Albemarle's production facilities, specifically lithium was announced in 2017. The mine is the largest lithium production facility in the brines, are susceptible to extensive damage by inclement weather or natural world with a total estimated capacity of 160,000 MT per year between all parties disasters. Disruption at these facilities could slow or halt production as well as incur involved. costly repair bills.

High Cost of Entering Lithium Industry: Due to the vast amount of capital Environmental Lawsuits: The industry Albemarle operates in make it prone to needed to constuct production facilities and stay up to date on compliance, costly environmental lawsuits. Standards can vary from country to country and Albemarle is unlikely to see any major new competitors in the space anytime soon. costs are constantly incurred to stay up to date on compliance.

4/22/2019 Albemarle Corp US Dollar Page 8 of 10

Source: Morningstar Direct Albemarle Corp ALB

Valuation: Discount Cash Flow Model (DCF) Using the DCF Model, we arrived at a fair value of $93.94 per share. This valuation would indicate a potential upside of 12.28%. Due to Albemarle’s low Debt to Equity Ratio, we decided to discount future cash flows by the Cost of Equity. Our model assumed slower short term revenue growth rates to account for a global recession, with midterm and perpetuity growth rates picking up afterwards. We believe that overall lithium demand could still remain solid during a global recession, but Albemarle’s other operating segments could be negatively affected. Overall we believe that this valuation is a good representation of the company’s value in the next 12 months.

Valuation: Discount Dividend Model (DDM) Using the DDM Model, we arrived at a fair value of $113.18 per share. The company has a stellar dividend history, having paid dividends every quarter since the company’s inception and having raised the dividend payout every year since 2009. Despite the solid dividend history, the firm still has one of the lowest payout ratios in the industry at just 1.8%.

Valuation: Multiple Valuation Using the Basic Multiples Approach, we arrived a fair value of $288.69 per share. We believe this valuation is excessive and severely overvalues the company based off current data and the company’s own guidance.

4/22/2019 Albemarle Corp US Dollar Page 9 of 10

Source: Morningstar Direct Albemarle Corp ALB

Bloomsburg Investment Group Disclaimer This report was developed by student members of the Bloomsburg Investment Group (BIG). The purpose of the report is to provide research analysis of securi�es to poten�al and exis�ng donors of The BIG Fund. The report is designed to exemplify the abili�es of our members through investment research and analysis. Analysts of the Bloomsburg Investment Group and The BIG Fund are not registered brokers, investment advisors, or licensed financial professionals. The generated opinion of our analysts is not an offer or solicita�on to buy or sell any security, and due diligence is recommended before making any financial transac�on. Informa�on included in this report was compiled from different public sources. Not all relevant data was included into the report, and accuracy is not guaranteed. Students, faculty, and staff of Bloomsburg University may have a financial interest in any company listed in this report.

Sources Cited

4/22/2019 Albemarle Corp US Dollar Page 10 of 10

Source: Morningstar Direct