Q2 2025 Albemarle Corp Earnings Call

Kent Masters: I will now hand it over to Meredith Bandy, Vice President of Investor Relations and Sustainability.

I will now hand it over to Meredith Bandy. Vice president of investor relations and sustainability.

Meredith Bandy: Thank you, and welcome everyone to Albemarle Corporation's second quarter 2025 earnings conference call. Our earnings were released after market closed yesterday, and you will find the press release and earnings presentation posted to our website under the Investor section at albemarle.com. Joining me on the call today are Kent Masters, Chief Executive Officer, and Neal Sheorey, Chief Financial Officer. Netha Johnson, Chief Operations Officer, and Eric Norris, Chief Commercial Officer, are also available for Q&A. As a reminder, some of the statements made during this call, including our outlook, guidance, expected company performance, and strategic initiatives, may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation that also applies to this call. Please also note that some of our comments today refer to non-GAAP financial measures. Reconciliations can be found in our earnings materials.

Thank you and welcome everyone to album RS. Second quarter 2025 earnings conference call. Our earnings were released after market closed yesterday and you'll find the press release and earnings presentation posted to our website under the investor section at albera cam.

Joining me on the call today are Kent Masters, chief executive officer and Neil Sheree Chief Financial Officer. Nathan Johnson, chief operations officer, and Eric, Norris Chief commercial officer are also available for Q&A.

as a reminder, some of the statements May during this call, including our Outlook guidance, expected company, performance and strategic initiatives, May constitute forward-looking statements

Please note the cautionary language about forward-looking statements contained in, our press release and earnings presentation. That also applies to this call.

Meredith Bandy: Now I will turn the call over to Kent.

Please also note that some of our comments today, refer to non-gaap financial measures. Reconciliations can be found in our earnings materials.

And now, I'll turn the call over to Kent.

Kent Masters: Thank you, Meredith. For the second quarter, we reported net sales of $1.3 billion, including strong volume growth in energy storage and specialties. Adjusted EBITDA was $336 million, reflecting year-over-year cost and productivity improvements in energy storage product mix. As a result of this performance and cash actions we pursued in the quarter, we also improved our leverage metrics and strengthened our financial flexibility. We are maintaining our 2025 outlook considerations and now expect to achieve positive free cash flow in 2025. Both assume the current low lithium market pricing persists for the remainder of the year. This is largely due to our team's successful execution of measures to reduce operating and capital cost and preserve financial flexibility. For example, as of June, we achieved a 100% run rate of our $400 million cost and productivity improvement target, the high end of our initial target range.

Thank you, Meredith.

For the second quarter, we reported net sales of 1.3 billion dollars, including strong volume growth, and energy, storage and specialties.

Adjusted ibid doll was 336 million reflecting year-over-year cost and productivity improvements and energy storage product mix.

As a result of this performance and cash actions, we pursued in the quarter, we also improved our leverage metrics and strengthened our financial flexibility.

2025.

Both assumed the current low lithium market pricing persist for their remainder of the year.

This is largely due to our team's successful execution of measures to reduce operating and capital costs and preserve financial flexibility.

For example, as of June, we achieved a 100% run rate of our $400 million cost and productivity improvement target.

Kent Masters: We are also further reducing our full-year 2025 expected capital expenditures to the range of $650 to $700 million, down about 60% versus last year. Finally, we enhanced our financial flexibility by redeeming preferred shares we held for an aggregate value of $307 million. On a relative basis, we see macro conditions stabilizing, and our in-market and operations have generally followed the trajectory we expected this year. Lithium demand continues to grow strongly, with estimated global lithium consumption up about 35% year to date, including strong volume in stationary storage and EVs. We continue to expect the direct impacts of tariffs announced since April to be minimal on our enterprise, thanks to the exemptions and our global footprint. Finally, in the Middle East, our operations in Jordan have continued uninterrupted by the recent Iran-Israel conflict. We will dive into these and other macro conditions later in the call.

The high-end number: our initial target range.

We are also further reducing our full year 2025 expected, Capital expenditures to the range of 650 to 700 million down about 60% versus last year.

Finally, we enhanced our financial flexibility by redeeming preferred shares we held for an aggregate value of $307 million.

On a relative basis. We see macro conditions stabilizing and are in markets and operations, have generally followed the trajectory we expected this year.

Lithium demand continues to grow strongly with estimated Global lithium consumption up, about 35% year to date, including strong volume and stationary, storage and EVS.

We continue to expect the direct impacts of tariffs announced since April to be minimal on our Enterprise. Thanks to the exemptions and our Global footprint.

Finally, in the Middle East, our operations in Jordan, have continued uninterrupted by the recent Iran Israel conflict.

Kent Masters: Now, I will turn it over to Neal, who will provide more details on our financial performance and outlook considerations. I will conclude our prepared remarks with an update on our macro and in-market conditions, including further details on our lithium market forecast before opening the call for Q&A.

We'll dive into these and other macro conditions later in the call.

Now, I'll turn it over to Neil, who will provide more details on our financial performance and outlook considerations. I will conclude our prepared remarks with an update on our macro and marketing conditions, including further details on our lithium market forecast, before opening the call for Q&A.

Neal Sheorey: Thank you, Kent, and good morning, everyone. I will begin with a review of our Q2 financial performance on slide five. We reported Q2 net sales of $1.3 billion, which declined year over year, mainly due to lower lithium market pricing. The pricing impact was partially offset by higher volumes in energy storage and specialties. Q2 adjusted EBITDA was $336 million, also down year over year. Lower input costs and ongoing cost and productivity improvements helped to mitigate the impact of lower lithium pricing and reduce pre-tax equity earnings. EBITDA improved sequentially, largely due to higher energy storage and specialties volumes and continued cost savings. Adjusted earnings per share was higher year over year, due primarily to a prior year charge related to asset write-offs and associated contract cancellation costs. Slide six highlights the drivers of our year-over-year EBITDA performance.

Thank you, Kent, and good morning everyone. I will begin with a review of our second quarter financial performance on slide 5.

We reported second quarter net sales of $1.3 billion, which declined year-over-year mainly due to lower lithium market pricing.

The pricing impact was partially offset by higher volumes in energy, storage and specialties,

Second quarter, adjusted ebit dub was 336 million also down year-over-year.

lower input costs and ongoing cost and productivity improvements help to mitigate the impact of lower lithium pricing and reduce pre-tax Equity earnings

EPA improved sequentially, largely due to higher energy, storage, and Specialties volumes, along with continued cost savings.

adjusted earnings per share was higher year-over-year, due primarily to a prior year, charge related to asset write-offs and Associated contract, cancellation costs

Neal Sheorey: Q2 adjusted EBITDA was down slightly due to lower lithium pricing and pre-tax equity income, mostly offset by reduced COGS related to the timing of Talison inventory flow-through, as well as the benefits of our cost and efficiency improvements. The EBITDA impact of volumetric growth is primarily captured in the COGS impact, as our year-over-year volume growth enabled improved fixed cost absorption and reduced reliance on third-party tollers. Our SG&A costs were down more than 20% year over year due to our cost savings initiatives. Adjusted EBITDA increased by 35% in specialties year over year due to higher volumes and pricing, as well as reduced costs. Corporate EBITDA increased primarily due to cost reductions and foreign exchange gains. Moving to slide seven. As always, we are providing outlook scenarios based on recently observed lithium market pricing.

Slide 6 highlights the drivers of our year-over-year EPA performance.

Q2 adjusted, Evita was down slightly due to lower lithium pricing and pre-tax equity income. This was mostly offset by reduced COGS related to the timing of Talus and inventory flow-through, as well as the benefits of our cost and efficiency improvements.

The IBA impact of volumetric growth is primarily captured in the cogs impact as our year-over-year volume growth enabled, improved fixed cost, absorption and reduce Reliance on third-party tollers.

Our SG&A costs were down more than 20% year-over-year due to our cost-savings initiatives.

Adjusted EBITDA increased by 35% in Specialties year-over-year, due to higher volumes and pricing, as well as reduced costs.

Corporate, EBA increased primarily due to cost, reductions and foreign exchange gains.

Moving to slide 7.

Neal Sheorey: On this slide, we have presented ALBEMARLE's comprehensive company roll-up for each lithium market price scenario. All three scenarios reflect the results of assumed flat market pricing across the year in conjunction with energy storage's current book of business, with ranges based on expected volume and mix. Our approximately $9 per kilogram scenario is based on Q2 average market pricing. For reference, the average lithium market price year to date was also just over $9 per kilogram LCE. If we were to assume current pricing held for the balance of the year, the price would similarly be about $9 per kilogram LCE. As you see here, we are maintaining our outlook consideration ranges.

As always, we are providing Outlook scenarios based on recently observed lithium market pricing.

And on this slide, we have presented Albemarle, marls, and a comprehensive company roll-up for each lithium market price scenario.

All three scenarios reflect the results of assumed flat market pricing across the year, in conjunction with energy storage's current book of business, with ranges based on expected volume and mix.

Our approximately $9 per kilogram scenario is based on Q2 average market pricing.

For reference, the average lithium market price year to date was also just over $9 per kilogram lce.

And if we were to assume current pricing held for the balance of the year, the price would similarly be about $9 per kilogram LCE.

Neal Sheorey: In particular, the approximately $9 per kilogram range is expected to apply, assuming recent pricing persists for the remainder of the year. We have been able to maintain our outlook ranges due to a combination of successful execution of our cost and productivity improvements, operational excellence, including energy storage project ramps, and strong first half 2025 demand from energy storage contract customers. Turning to slide eight for additional outlook commentary by segment. First, in energy storage, we now expect sales volume growth on an LCE basis to be near the high end of our 0% to 10% range, thanks to year-to-date record production from our integrated conversion network, plus improved mine performance at Wagina and strong performance at the solar yield improvement project. Energy storage long-term agreements continue to perform in line with our forecast, and we have no significant contracts up for renewal this year.

Particular, the approximately $9 per kilogram range is expected to apply, assuming recent pricing persists for the remainder of the year.

We've been able to maintain our Outlook ranges due to a combination of successful, execution of our cost and productivity improvements.

operational excellence, including energy storage project, ramps and strong first half 2025, demand from energy, storage contract customers

Turning to slide 8 for additional Outlook commentary by segment.

First, an energy storage. We now expect sales volume growth on an lce basis to be near the high end of our 0 to 10% range. Thanks to year-to-date record production from our integrated conversion Network plus improved, my performance at wa and strong performance at the solar yield Improvement project.

Neal Sheorey: We realized a strong first half energy storage EBITDA margin of about 30%, thanks to lower input costs and a higher than average proportion of lithium salts sold under long-term agreements. As a result, we experienced better than expected product mix in the second quarter. Second half margin is expected to be lower due to a smaller proportion of our lithium salts sales being under long-term agreements. Also, some spodumene sales that were previously expected in June shift in July. Net-net, we continue to expect the full-year EBITDA margin to average in the mid-20% range, assuming our $9 per kilogram price scenario. In specialties, we continue to expect modest volume growth for the full year, with Q3 net sales and EBITDA projected to be similar to Q2. Finally, at Ketchen, we expect modest improvements in full-year 2025.

Energy storage long-term agreements continue to perform in line with our forecast, and we have no significant contracts up for renewal this year.

We realized a strong first, half energy storage, EBA margin of about 30%, thanks to lower input costs and a higher than average proportion of lithium salts, sold under long-term agreements.

As a result, we experience better than expected product. Mix in the second quarter.

Second half margin is expected to be lower due to a smaller proportion of our lithium salt sales being under long-term agreements. Also, some Spa domain sales that were previously expected in June will shift to July.

Net, net, we continue to expect the full-year IBA margin to average in the mid-20% range, assuming our $9 per kilogram price scenario.

In Specialties, we continue to expect modest volume growth for the full year, with Q3 net sales and IBA projected to be similar to Q2.

Neal Sheorey: We see Q4 being the strongest quarter of the year, with higher volumes for both FCC and CFT. Please refer to our appendix slides for additional modeling considerations across the enterprise. Slide nine highlights our strong focus on cash management actions. As a result of our commitment to effective execution and converting earnings into cash, we continue to expect full-year operating cash conversion in excess of 80%. Additionally, we now expect to achieve positive full-year 2025 free cash flow as a result of our operating cash flow generation and our reduced capital expenditure forecast, which we lowered to a range of $650 million to $700 million. Turning to our balance sheet and liquidity metrics on slide 10. The measures we've implemented to control costs, reduce capital spending, enhance cash conversion, and drive other cash actions have strengthened our financial flexibility.

Finally, at keqin, we expect modest improvements in full year 2025. We see Q4 being the strongest quarter of the year with higher volumes for both FCC and CFT.

Please refer to our appendix slides for additional modeling considerations across the Enterprise.

Slide 9 highlights our strong focus on cash management actions.

As a result of our commitment to effective execution and converting earnings into cash, we continue to expect full-year operating cash conversion in excess of 80%.

Additionally, we now expect to achieve positive full year, 2025 free cash flow as a result of our operating cash flow generation and are reduced capital expenditure forecast which we lowered to a range of 650 to 700 million.

Turning to our balance sheet and liquidity metrics on Slide 10.

Neal Sheorey: We ended the second quarter with available liquidity of $3.4 billion, including $1.8 billion in cash and cash equivalents, and the full $1.5 billion available under our revolver. At the end of the quarter, we closed on the redemption of our holdings, a preferred equity in a WR Grace subsidiary for an aggregate value of $307 million, including $288 million in cash received in June 2025. This transaction further contributed to our strong liquidity position. We continue to improve our leverage ratios, ending the quarter with a net debt to adjusted EBITDA ratio of 2.3 times, well below the covenant limit. As a result of our cash performance and liquidity strength, we intend to utilize our cash for deleveraging. As a first step, we expect to repay our $440 million euro bonds with cash on hand as those bonds mature in November. With that, I'll turn it over to Kent.

The measures we've implemented to control costs. Reduce Capital spending enhanced cash, conversion and drive other cash actions have strengthened our financial flexibility.

We ended the second quarter with available liquidity of 3.4 billion, including 1.8 billion in cash and cash equivalents and the full 1.5 billion available under our revolver.

At the end of the quarter, we closed on the Redemption of our Holdings, a preferred equity in a WR. Grace subsidiary for an aggregate value of 307 million, including 288 million, in cash, received in June 2025.

This transaction further contributed to our strong liquidity position.

We continue to improve our leverage, ratios ending the quarter with a net debt to adjusted Evita ratio of 2.3 times. Well, below the Covenant limit

As a result of our cash performance and liquidity strength, we intend to utilize our cash for deleveraging.

As a first step, we expect to repay our €440 million bonds with cash on hand as those bonds mature in November.

With that, I'll turn it over to Ken.

Kent Masters: Thanks, Neal. I would like to start by covering more details on the in-market and macro conditions, starting on slide 11. First, I will cover our JV operations in Jordan, given the recent activity in the Middle East. That business continued to operate safely and uninterrupted and even achieved record production in the second quarter. This is thanks in part to our NEBO project, which provides both financial and sustainability benefits. NEBO leverages innovative proprietary technology to recycle a co-product stream into additional sellable product. The result is higher volumes, lower costs, and improved energy and water efficiency. The project reached mechanical completion in March and continues to ramp on plans. Here in the United States, the IRA was recently passed. It is a complex piece of legislation, and we are actively assessing its implications to Albemarle as rulemaking continues to take shape.

Thanks Neil.

I'd like to start by covering more details on the in Market macro conditions, starting on slide 11.

First, I will cover our JV operations in Jordan, given the recent activity in the Middle East.

That business continued to operate safely and uninterrupted and even achieved record production in the second quarter.

This is thanks in part to our Nebo project which provides both financial and sustainability benefits.

Sellable product.

The result is higher volumes lower cost and improve energy and water efficiency.

The project reached mechanical completion in March and continues to ramp on plan.

Here in the United States. The oh, Triple B was recently passed.

Kent Masters: For example, there are several corporate tax implications that appear to be neutral to positive for Albemarle. As expected, the act also amends certain aspects of the Inflation Reduction Act and reinforces the value of our global assets, especially lithium production in the United States and Chile. The 45X tax credit remains in place for U.S. production of batteries and critical materials, with phase-out beginning in 2031 and ending in 2034. Albemarle continues to expect 45X tax credits for critical minerals production at Silver Peak and Kings Mountain. As with 30D, some customers may be willing to pay a premium for domestic or free trade agreement lithium production. Finally, on the product demand side, global lithium demand remains strong, thanks to strong demand for both stationary storage and EVs.

It is a complex piece of legislation and we are actively assessing its implications to albam morale. As rulemaking continues to take shape.

For example, there are several corporate tax implications that appear to be neutral to positive for Alomar.

As expected. The ACT. Also immense certain aspects of the inflation reduction Act and reinforces the value of our Global assets, especially lithium production in the United States and Chile.

The 45x tax credit remains in, place for us, production of batteries, and critical materials with phase out, beginning in 2031 and ending in 2034.

Alomar continues to expect 45x tax credits, for critical minerals production at Silver Peak and Kings Mountain.

As with 30D, some customers may be willing to pay a premium for domestic or Free Trade Agreement lithium production.

Kent Masters: Global stationary storage battery production was up 126% year to date through May, with strong growth in all three major regional markets. Turning to slide 12 for more on global EV demand. 2025 EV demand growth continued its strong start led by China, where EV sales were up 41% year to date. Interestingly, Chinese BEV sales have been the strongest segment of the market, up 44% compared to PHEVs, up 38%. This is in part due to recent subsidies in China that made the net purchase price for entry-level BEVs very attractive for consumers. European EV sales continued to strengthen during the quarter, with year-to-date sales up 27% through May, thanks to a continuation of the step change in regulatory emission targets.

Finally on the product, demand side Global, lithium demand remains strong. Thanks to strong demand for both stationary storage and EVS.

Global stationary storage battery production was up, 126% year to date. Through May with strong growth. In all 3, major regional markets,

Turning to slide 12 for more on global EV demand.

2025 EV demand growth continued, its strong start led by China where EV sales were up 41% year to date.

Interestingly Chinese Bev sales have been the strongest segment of the market up 44%. Compared to phb's up 38%.

This is in part due to recent subsidies in China that made the net purchase price for entry-level BEVs very attractive for consumers.

Kent Masters: The outlook in North America is less certain, particularly in the United States, due to the potential impact of tariffs and the removal of the 30D tax credit in September. North America is the smallest of the major regional markets, with approximately 10% of global EV sales, which highlights its relatively low impact on global demand today. Strength in China and Europe more than offset weakness in North America, reinforcing confidence in the industry's long-term growth potential and highlighting regional dynamics. Turning to slide 13, we continue to expect lithium demand to be more than double from 2024 to 2030, unchanged from our previous outlook, driven primarily by stationary storage and electric vehicle demand. We are also maintaining our expected 2025 demand growth range of 15% to 40%, including the anticipated impact of tariffs announced to date and the OBBBB. Slide 14 gives more detail on expected market balances.

European EV sales continue to strengthen during the quarter, with year-to-date sales up 27% through May. This growth is thanks to a continuation of the step change in regulatory emission targets.

The Outlook in North America is less certain particularly in the United States, due to the potential impact of tariffs and the removal of the 30d tax credit in September.

North America is the smallest of the major regional markets, with approximately 10% of global EV sales, which highlights its relatively low impact on global demand today.

Strength in China and Europe more than offset weakness in North America, reinforcing confidence in the industry's long-term growth potential and highlighting regional dynamics.

Turning to slide 13. We continue to expect lithium demand to be more than double from 2024 to 2030 unchanged from our previous Outlook driven primarily by stationary storage and electric vehicle demand.

We are also maintaining our expected 2025 demand growth range of 15% to 40%, including the anticipated impact of tariffs announced today and the, oh, Triple B.

Slide 14 gives more detail on expected market balances.

Kent Masters: We estimate that the lithium market has been in surplus since late 2022, as high pricing in 2021 and 2022 led to supply expansions. At lithium pricing in excess of $70 per kilogram, effectively every project was able to secure funding. Now, as pricing stays lower for longer, new project development has begun to slow while demand continues to be robust. Year to date, lithium demand growth has outstripped supply growth by nearly 20%, thanks to strong stationary storage and EV trends and supply curtailments announced over the last year. If current pricing persists, demand growth is expected to outstrip supply growth by up to 10% per year on average between 2024 and 2030. As a result, we expect that surpluses may peak as early as this year, with the market expected to be more balanced next year and potentially returning to deficits in 2027 and beyond.

We estimate that the lithium Market has been in Surplus since late 22 as high pricing in 21 and 22 led to supply expansions.

At lithium pricing in excess of $70 per kilogram, effectively every project was able to secure funding. Now, as pricing stays lower for longer, new project development has begun to slow while demand continues to be robust. Year to date, lithium demand growth has outstripped supply growth by nearly 20%, thanks to strong stationary storage and EVs.

Surplus and supply curtailment announced over the last year.

Current pricing persists. Demand growth is expected to outstrip supply growth by up to 10% per year on average between 2024 and 2030.

Kent Masters: This analysis assumes that recent pricing of $9 per kilogram does not support most new or greenfield projects. Low-cost projects, in particular brownfield expansions of existing low-cost resources, are assumed to progress. It is also worth noting that this analysis does not include any impacts from recently announced or prospective supply curtailments in China. We remain confident in the long-term outlook of the lithium industry and the energy transition. In the meantime, we will remain patient and disciplined. Advancing to slide 15. As we shared before, we continue to progress broad initiatives designed to maintain our long-term competitive advantages along these four pillars: optimizing our conversion network, improving cost and efficiency, reducing capital expenditures, and enhancing financial flexibility. We are building a culture of continuous improvement. Our results this quarter once again showcase that mindset. Slide 16 highlights our progress on these actions.

As a result, we expect that surpluses may peak as early as this year, with the market expected to be more balanced next year and potentially returning to deficits in 2027 and beyond.

This analysis assumes that recent pricing of 9 dollars per kilogram does not support most new or Greenfield projects.

Low-cost projects in particular, Brownfield expansions of existing low-cost resources are assumed to progress.

Perspective, Supply, curtailment in China.

We remain confident in the long-term Outlook of the lithium industry and the energy transition.

In the meantime, we will remain patient and disciplined.

Advancing to slide 15.

as we share before we continue to progress broad initiatives designed to maintain our long-term competitive advantages, along these 4 pillars,

Optimizing our conversion Network.

Improving cost and efficiency.

Reducing capital expenditures and enhancing financial flexibility.

We are building a culture of continuous Improvement our results. This quarter once again, showcased that mindset.

Kent Masters: In terms of optimizing our lithium conversion network, we started off this year targeting energy storage sales volume growth of 0% to 10%. Today, we expect that to be at the high end of the range, thanks in part to record year-to-date production across our integrated conversion network, allowing for better fixed cost absorption and reduced tolling volumes. Second, we have continued to progress our cost and productivity programs. We began the year with a target of $300 million to $400 million cost and productivity improvements by year-end. Today, we announced a 100% run rate against the high end of that initial range, or $400 million. Over the past quarter, we've executed projects to capture further reductions to non-headcount spending, supply chain efficiencies, and further volume improvements at key manufacturing sites. This isn't a one-time action. We're building the muscle and mindset to identify opportunities to achieve savings and efficiencies.

Slide 16 highlights our progress on these actions.

In terms of optimizing our lithium conversion network, we started off this year targeting energy storage sales volume growth of 0% to 10%.

Today, we expect that to be at the high end of the range. Thanks in part to record year-to-date production across our integrated conversion Network allowing for better fixed cost absorption and reduced tolling volumes.

Second we have continued to progress our cost and productivity programs. We began the year where the target of 300 to 400 million dollars cost and productivity improvements by year. End today we announced a 100% run rate against the high end of that initial range or $400 million.

Over the past quarter we've executed projects to capture further reductions to non headcount spending supply chain efficiencies and further volume Pro improvements at Key manufacturing sites.

This isn't a 1-time action.

Kent Masters: Third, we began the year targeting 2025 CapEx down approximately 50% year over year. The team continues to identify additional opportunities to reduce capital expenditure by prioritizing only on the highest return, quickest payback projects, and optimizing value and project scope on existing projects. As a result, we now expect CapEx in the range of $650 million to $700 million, down approximately 60% year over year. As a result of all these actions, plus our focus on enhancing financial flexibility and driving cash conversion, we initially expected to be at break-even free cash flow for the full year. We now expect to achieve positive free cash flow. In summary, on slide 17, Albemarle delivered solid second quarter performance while continuing to act decisively to preserve long-term growth optionality and maintain our industry-leading position through the cycle.

We're building the muscle and mindset to identify opportunities to achieve savings and efficiencies.

third, we began the year targeting 2025 capex down approximately 50% year-over-year

For the team continues to identify additional opportunities to reduce capital expenditure by prioritizing only on the highest return, quickest payback projects, and optimizing value and project scope on existing projects.

As a result, we now expect CapEx in the range of $650 million to $700 million, down approximately 60% year-over-year.

As a result of all these actions, plus our focus on enhancing financial flexibility and driving cash conversion, we initially expected to be at break-even free cash flow for the full year.

We now expect to achieve positive, free cash flow.

Kent Masters: We are maintaining our full-year 2025 company outlook considerations, building on the progress we've made to drive enterprise-wide cost improvements and achieve positive full-year free cash flow. We are progressing broad-based comprehensive actions to manage controllable factors and generate value across the cycle. I am confident we are taking the necessary steps to maintain our competitive position and to capitalize on the long-term secular opportunities in our markets. With that, I'd like to turn the call back over to the operator to begin the Q&A portion.

In summary, on slide 17, Alomar delivered solid second quarter performance while continuing to act decisively to preserve long-term growth optionality and maintain our industry-leading position through the cycle.

We are maintaining our full-year 2025 company outlook considerations, building on the progress we've made to drive enterprise-wide cost improvements and achieve positive full-year free cash flow.

We are progressing broad-based, comprehensive actions to manage controllable factors and generate value across the cycle.

I am confident. We are taking the necessary steps to maintain our competitive position and to capitalize on the long-term secular opportunities in our markets.

With that. I'd like to turn the call back over to the operator. To begin. The Q&A portion.

Kent Masters: We will now move to our Q&A portion. If you would like to ask a question, please press star five to raise your hand. As a reminder, that is star five to raise your hand. Also, please bear in mind this Q&A session is limited to one question and one follow-up per person. Our first question comes from Rock Hoffman with Bank of America. Your line is open.

We will now move to our Q&A portion. If you'd like to ask a question. Please press star 5 to raise your hand as a reminder that is Star 5 to raise your hand.

Also, please bear in mind, this Q&A session is limited to 1 question and 1 follow-up per person.

Our first question comes from Rock Hoffman with Bank of America. Your line is open.

Analyst: Hi, thanks for taking my question. Could you just go into why the 2H mix may change between a contract and spot versus where you were in Q2? Does this mix potentially extend beyond 2025, implying less than a 50/50 split between the two in 2026?

Hi, thanks for taking my question. Uh, could you just go into why the 2 H mix? Uh, may change between, uh, contract and spot versus where you were in 2q, and does this mix, uh, potentially extend beyond 2025 implying less than a 50/50 split between the 2 and 2026.

Kent Masters: No, it's probably not that exact. It's essentially about our customer demand, right? They draw more on contracts at a certain period than others. Maybe it's a little different than we had forecast, but it's essentially our customers drawing more volume than we had anticipated in this quarter. We see it moving around between quarters, which is why we have the comments that you see in our guidance.

Um, know, and it's probably not that exact. I mean, it's, it's essentially about our customer Demand, right, and they draw more on contracts at a certain period, uh, and then others, maybe it's a little different than we had forecast, but it's essentially our customers drawing more volume than, uh, than we had anticipated in this quarter and and we don't we see it moving around between quarters, which is why we uh comments that you see it, uh, and our guidance.

Analyst: I see. Just as a quick follow-up, given how volatile lithium pricing has been over the last handful of days, what numerically is your underlying assumption of flat pricing? If pricing does fall off these current levels, how much can it fall before you risk missing your low-case guidance for EBITDA and free cash flow?

Your underlying Assumption of flat pricing and the pricing does fall off these current levels. Um, how much can it fall before you risk? Kind of missing your low case, guidance for Ava and free cash flow?

Kent Masters: Our guidance says that the current price is in that range, and we have not changed our view of that since it moved in the last month. It is not something that is based on pricing that moved in the last week or weeks. It is our view of where we are in the market. Did that answer the question?

Yeah, so we I mean our guidance says that the kind of current price in that range and and and we haven't change. We didn't change our view of that since it it moved in the last month. So it's not something that's based on pricing that moved in the last week or, or, or weeks, uh, it's kind of our view of, uh, of where we are in the market.

Does that answer the question?

Analyst: I guess, I need numerical detail on that assumption. Is it $9 per kg for Q2, which is assumed?

Yeah, uh, I guess I need numerical detail on that. The assumption is, is it $9 per kg for two weeks, which is assumed or...

Neal Sheorey: Yeah, hi Rock. This is Neal. As we said in the prepared remarks, and you will see it actually on our modeling consideration slide too, maybe this is an important point that I think some investors look at just one price in one region to calculate a market price, and that is not exactly the lithium market. So we take a basket approach here. Not only are we taking the price in China, we are taking the price in Asia, ex-China, we are also taking carbonate and hydroxide. Regardless, when you mix all of that together, basically no matter how you slice it, it has been about $9 so far this year, and that is therefore the price effectively today, and that is what we are drawing forward as well.

Yeah. Hi Roc. This is this is Neil. Um, yeah. As we um, said in the, in the um, prepared remarks and and you'll see it actually on our modeling consideration. Slide 2 may maybe this is an important point that when I think, uh, some investors look at just 1 price and 1 region to calculate a market price, and that's not exactly the lithium market. So we take a basket approach here. So not only are we taking the price in China we're taking in the price in Asia X, China. We're ALS taking carbonate and hydroxide. But regardless, when you mix all of that together basically no matter how you slice it, it's been about $9 so far this year and that's therefore the

The price effectively today and that's what we're drawing forward, uh, as well.

Kent Masters: Understood. Thank you.

Understood, thank you.

Kent Masters: Our next question will come from David Deckelbaum with Deutsche Bank. Your line is open.

Analyst: Thank you. Good morning. Ken, can you talk about what you're seeing from a lithium supply standpoint? How much of global supply is offline? What's happening in China vis-à-vis some of the integrated and non-integrated producers on the spodumene side and the lipolite side? I'm sorry. Thank you.

Our next question will come from David beg letter with Deutsche Bank. Your line is open. Thank you. Good morning. Uh, Ken, can you talk about what you're seeing from a lithium supply standpoint? How much of Global Supply is offline? What's happening in China? Visa V, some of the integrated. Uh and not not integrated. Producers on the spot. You mean side. Uh and they the light side. I'm sorry. Thank you.

Kent Masters: Yeah, so look, we continue to think that more capacity needs to come out of the market. I do not think it has changed dramatically this quarter versus previously. There have been a couple that have come offline in China. It is not clear exactly why they have come offline. So we are watching that pretty closely. I am not sure we are drawing any big conclusions from that. I do not think it is dramatically different than last quarter. Really, I guess the only change is a couple of sites coming offline in China, and exactly why those came off, not clear.

Yeah, so look, we continue to think that more capacity needs to come out of the market. It is, uh, and I don't think it's changed dramatically this quarter versus previously. There have been a couple that have come off the line in, uh,

In China, it's not clear exactly why they've come offline. So uh that we're watching that pretty closely, I'm not sure. We're drawing any big conclusions from that so I I don't think it's dramatically different than than last quarter really. I guess the only change is a couple of uh sites coming offline in China and uh exactly why those came off. Uh

Analyst: Got it. Just back to the pricing question, can you talk to what you think underlies the recent pricing volatility in China over the last, call it, month that we're seeing, a month to five weeks here?

Not clear.

Got it and just back to the pricing question, can you talk to what you think, uh, underlies? The recent pricing volatility in China over the last, call it months that we're seeing month to 5 weeks here.

Kent Masters: Yeah, so I'd say it's some of the uncertainty around the supply as well, and government policies. As you know, the China market is very speculative. So we're watching that very closely, but we've not read a ton into it.

Yeah, so I’d say it’s some of the uncertainty around the supply as well. So, and government policies, and as you know, the China market is very speculative. So it, uh, but we’re watching that very closely. But we not.

Analyst: Perfect. Thank you.

read a ton into it.

Perfect, thank you.

Kent Masters: Our next question will come from Lawrence Alexander with Jefferies. Your line is open.

Our next question will come from Lawrence Alexander with Jeffrey. Your line is open.

Analyst: Good morning. If it takes several years to get back to tighter conditions, can you maintain free cash flow positive if we are at $9 per kilo on average in 2026, 2027, 2028? Or can you walk through what incremental adjustments or headwinds you would face in the next few years relative to 2025?

Good morning. If um that uh it takes several years to get back to tighter conditions.

Um, can you maintain free cash flow positive if we're at $9 per kilo on average in 2026, 2027, 2020, and 2028? Or can you walk through kind of what incremental adjustments or headwinds you would face in the next few years relative to 2025?

Neal Sheorey: Yeah, hi Lawrence. This is Neal. Look, certainly that is the goal of all the actions that we are taking and the things that we continue to work on going forward. Maybe just a couple of examples as we turn the page into 2026. Obviously, today we are very happy about reporting that we hit our 100% run rate against the high end of our cost and productivity target. So 100% of $400 million, not only are we at the high end of our range, but we are hitting that run rate six months early. Clearly, you will get the full benefit of that as you turn into 2026.

Yeah. Hi Lawrence, this is, uh, this is Neil. Well, look, uh, certainly that is the goal of all the actions that we are taking and the things that we continue to work on going forward. Um, you know, maybe just a couple of examples as we turn the page into 2026. Obviously today, we're...

Neal Sheorey: Of course, we are also ramping our facilities as quickly as we can so that we can get the full capability out of our own facilities, and we are able then to back off on tolling and move more of our own material through our own facilities. That will be a benefit as we move into 2026. I think one of the key things from a free cash flow, two key things from a free cash flow standpoint. The first is, obviously, we are in an unusual situation here in 2025 where our JV in Australia, in particular, is going through its own growth program.

Neal Sheorey: Clearly, as that one gets to the end of that growth program and dials back its capital expenditures, it all depends on where pricing goes, but obviously, that will potentially release some more cash for dividends, and we can get back to a more normal case with dividends coming from our JVs. I just have to say, in terms of things in our own control, our own capital expenditures and the work that we have been doing already to continue to be just much more efficient about our capital spending, much more stringent about which projects are moving forward and which are not. You have seen how we have continued to whittle down our CapEx number through the year. Obviously, we are not stopping here. We are going to continue to look at the book of projects and continue to work on that.

1 of the, the key things from a free cash flow 2, key things from a free, cash flow standpoint. Uh, the first is obviously we are uh in an unusual situation here in in 2025 where um our JV in Australia in particular is going through its own growth program. So clearly as that 1 gets to the end of that growth program and dials back. Its, uh, Capital expenditures, you know, it all depends on where pricing goes, but uh, obviously that will uh, potentially release some more cash for dividends and we can get back to a more normal case with dividends coming from our JVS. And then I just have to, um, say in terms of our things in our own control, our own Capital expenditures, and the work that we've been doing, uh, already to, um, continue to be just much more efficient about our Capital spending much more stringent about which projects are moving forward and which aren't, um, you've seen how we've continued to whittle down our capex. Number through the year and

Neal Sheorey: That could potentially be something that I think we can hold this kind of CapEx level at least for another year, if not longer, depending on how market conditions develop.

And obviously we're not stopping here. We're going to continue to look at at at the book of of projects and continue to work on that and that you know could potentially be something that I think we can hold this kind of capex level at least for another year. Um you know if not longer depending on how market conditions, develop

Kent Masters: Our next question will come from John Roberts with Mizuho. Your line is open.

Our next question will come from John Roberts with Meizuo. Your line is open.

Analyst: Thank you. At the current capital spending level, do you fall back to flat lithium volumes here at some point in the next few quarters, or what is your volume growth outlook?

Um thank you at the current capital spending level. Do you fall back to Flat lithium volumes here at some point in the next few quarters? Or what's your volume growth Outlook?

Kent Masters: No, so hi John. So I think we, I mean, the investments that we've made and the programs that are still going forward around that give us growth for a period of time. Eventually, we run out of that, but it's not in the next few quarters. It's years, not quarters.

No, so I hi John. So I I think we, I mean, the Investments that we've made, and the programs that are on that are still going forward around that, give us growth for a period of time. Eventually, like we run out of that, but it's not in the next, it's not the next few quarters, it's years, not quarters.

Analyst: Great. Thank you.

Okay, thank you.

Kent Masters: Our next question will come from David Deckelbaum with TD Cowen. Your line is open. Please ask your question.

Our next question will come from David Deco, bond with Cohen. Your line is open. Please ask your question.

Analyst: Ken, I am just going to ask two questions on growth. One is, Neal, maybe you can chime in as well, but obviously, the spends that you guys have rationalized this year go into next year. You are finishing up some growth projects, obviously, in Australia. Should volume growth, is it solely going to be coming from Greenbushes in 2026 as you think of like the broader corporate portfolio?

Yeah, can I just going to ask 2 questions on growth? Just just 1 is um you know, and Neil maybe you can chime in as well but the

Obviously the spends that you guys have rationalized this year, go into next year um you know you're finishing up some growth projects obviously in Australia uh should volume growth is is it solely going to be coming from Green bushes in in 26? Um as you think of like the broader corporate portfolio?

Kent Masters: No, I think we've got, it is not going to be just Greenbushes. That is probably the biggest, that is the biggest piece of it, but we have capacity at Wodgina and the Salar de Atacama as we ramp the solar yield project. There is still a bit more to come there. It, and look, we try at every asset, both conversion and mine standpoint, to gain productivity in both costs, but also in molecules on every asset all the time. So it is not just Greenbushes. That is the biggest piece because that is the one big investment that will come on, but it is broader than that.

Neal Sheorey: Yeah, maybe David, just to add to that too, is obviously lithium, you know, those are the larger assets and bigger pounds, so you kind of tend to focus on that. But I do want to highlight that we are still pushing out incremental pounds from specialties, and in the prepared remarks, we talked about one example of that in Jordan where we've started up a project that has, you know, great financial and environmental benefits, but it also is pushing out more pounds incrementally. So, I think there are a few different avenues across the company where you'll continue to see growth.

No, I think we've got uh we'll it's not going to be just green bushes. That's probably the biggest, that's the biggest piece of it, but we have capacity at uh, wa uh and uh and the slaughter Atacama, as we ramp the salar yield project, that there's still, there's a bit more to come there. So it and look, we're we try it every asset, both conversion and mind standpoint, the game productivity, and both cost, but also in molecules uh, on every asset all the time. So it it's not just green bushes. That's that's the biggest piece because that's the, that's the 1, big investment that will come on. But, uh, it's broader than that.

Analyst: I appreciate that, Neal. Maybe you can talk a little bit just about the cash deleveraging opportunities beyond the $440 that is coming due in the fourth quarter of this year. How should we think about how you are approaching the balance sheet in 2026 as considering the cash balance that you have, but then also if we are going to stay in this sort of $9,000 a ton reference range, how do you think about the next goals in the balance sheet or pushes and pulls in 2026 and 2027?

Yeah. Maybe David just to add to that too. Is uh, obviously lithium, you know, those are the the larger assets and bigger bigger pounds. So you, you you kind of tend to focus on that but I do want to highlight that we are still pushing out incremental pounds from Specialties. And and in the prepared remarks, we talked about 1 example of that um in Jordan where we've started up a project that has you know, great financial and environmental benefits but it also is pushing out more pounds incrementally. So you know, I think there are a few different Avenues across the the company where you'll continue to see growth.

I appreciate that. Neil. Um, if you can talk a little bit, just about the cash deal, leveraging opportunities Beyond, uh, the 440 that's coming due, uh, in the fourth quarter of this year, how how should we think about how you're approaching the balance sheet? Uh, in 26, is considering the cash balance that you have? But then also if we're going to stay in this, this sort of uh

9,000 a ton reference range. Um, how do you think about the next goals in the balance sheet and or pushes and pulls in 26 and 27?

Neal Sheorey: Yeah, thanks for that question. Look, you know, I think we've been very consistent that across the cycle, we're targeting a leverage ratio of 2.5 times or less. We're very happy to be there at 2.3 times as we exited Q2. But, you know, we are at the bottom of the quarter, or sorry, bottom of the cycle, and so clearly we've made deleveraging really one of our top capital allocation priorities. The first thing that I, of course, want to address is the maturity that we have in November, and hopefully we did that with our remarks today. As we look forward, you know, I think we are studying that.

Neal Sheorey: It's a little early for me to say exactly what our plans are around that, other than to say deleveraging does remain a top priority for us, mainly because I want to make sure, as you said, if pricing is going to stay at this level lower for longer, then it behooves us to just make sure we strengthen the balance sheet and we're prepared for that.

Are at the bottom of the quarter or sorry bottom of the of the cycle. And so clearly we've made deleveraging really our our 1 of our top Capital allocation uh priorities. And so the first thing that I, of course, want to address is the maturity that we have in November and hopefully we did that with our remarks today as we look forward. You know, I think we'll, we'll, we are studying that it's a little early for me to say, exactly what our plans are around that other than to say, deleveraging does remain a a top priority for us. Um, mainly because I want to make sure as you said, if pricing is going to stay at this level, uh, lower for longer than, uh, it behooves us to just make sure we strengthen the balance sheet and we're we're prepared for that.

Analyst: Thanks for the responses.

Thanks for the responses.

Kent Masters: Our next question will come from Josh Spector with UBS. Your line is open.

Our next question will come from Josh Spectre with UBS?

Analyst: Hi, good morning. It's Chris Perrella on for Josh. Could you just walk through the puts and takes of the energy storage margins going into Q3 and then going into Q4, the assumptions there? With the pull forward on volume, have you sold out, maxed out your contract tons in the first half of the year? That would imply the balance of the year is mostly spot.

Your line is open.

Hi, good morning. It's Chris Pella on for Josh. Um, could you just walk through the the puts and takes of the energy storage, Mar margins going into the third quarter and then going into the fourth quarter of the the assumptions there, and with the pull forward on volume, have you sold out, maxed out your contract tur, uh, tons in the first half of the Year and that would imply, you know, a, the balance of the year is, is mostly spot.

Neal Sheorey: Chris, this is Neal. I am happy to start on that question. Let me answer the back end of your question first. No, we have not maxed out the contract volumes. What we saw in the first half of the year is, as Kent mentioned, we just saw a heavier demand on our contracts in the first half of the year, and that is where we got a little bit better mix than we expected. Additionally, by the way, I should say that, and we mentioned this in our prepared remarks, we had some spodumene sales that we expected to ship in June, and they just, quite frankly, they just tipped over into the third quarter. They have shipped now in July. That is really another part of the mix.

Neal Sheorey: If you think about the puts and takes for the balance of the year, I am saying this here in July, a lot of things could change, but as we look at the order book today, what we are seeing is probably softer demand on those contracts in the third quarter. To your point, you will probably see a little bit more spot mix from a mixed perspective in the third quarter. Then we are seeing a little bit stronger demand from a contract perspective coming into the fourth quarter. That is how you should think about things, maybe across the back end of the year. It is July, things can move around. They have moved around, as you have seen already for the first half of the year, but that is the best visibility we have right now.

Uh, Chris this uh, this is Neil. I'm I'm happy to start on that question. So let me answer the back end of your question first. Uh no. We haven't maxed out the the contract volumes. Um, really what? We saw in the first half of the Year is as Kent mentioned. Um we just saw a heavier Demand on our on our contracts in the first half of the year and that's where we we got a little bit better uh mixed than we expected. Um, as we look additionally by the way, I should say that and we mentioned this in our prepared remarks. We had some spot jameen sales that we expected to ship in in June and they just quite frankly, they just tipped over into the into the third quarter. So they they have shipped now in in July. So that's really another part of of the mix. If you think about the puts and takes for the balance of the year, now this is I I'm saying this here in July, a lot of things could change but as we look at the order book today, um, what we're seeing is probably uh softer Demand on those contracts in the third quarter. So,

Kent Masters: Yeah, and let me add to that, just because it is mixed, not like our contracts are satisfied in the first half. That's definitely not the case. It's mixed, so it's moved around a little bit. We expect to see it really between Q2 and Q3, and then Q4 should be more traditional.

To your point, you'll probably see a little bit more spot mix, um, from a, from a mixed perspective and the third quarter. And then we're seeing a little bit, uh, Stronger demand from a contract perspective coming in to the fourth quarter. So, that's how you should think about things. Um, maybe across the back end of the year, but look, it's it's July things can move around. They have moved around uh, as you've seen already for the first half of the year but that's the the best visibility we have right now.

Yeah, and I just let me add to that just because it is mixed not, uh, not like our, our contracts are satisfied in the first half, that's definitely not the case it's mixed. So it's moved around a little bit. We expect to see it really in the between second and third quarter, and then Force should be more traditional

Analyst: Just to follow up, the feedstock cost, you were expected to get slammed with that in Q2. Is that now going to hit in Q3, or there was higher cost spodumene that you had to work through? Is that not the case anymore, or what's, I guess, what's depressing the margin even more in Q3?

And then just a follow-up to feed stock cost you were expected to get slammed with that in the second quarter. Is that now going to hit in the third quarter or there was higher cost spamming that you you had to work through.

Uh, is that not the case anymore? Or what's I guess what's depressing, the margin even more in the third quarter.

Neal Sheorey: Yeah, Chris, the way it has worked out, I think we did work through a little bit of it in Q2, but yeah, you are right. It is primarily more of it is going to get worked off in Q3, just based on how the inventory is flowing through the system.

The Chris, the way it's worked out, I think we, we did work through a little bit of a of an of it in the second quarter. But yeah, you're right. It's primarily more of its going to get worked off in the third quarter. Just based on how the inventory is flowing through the system.

Analyst: Thank you.

Thank you.

Kent Masters: Our next question comes from Aleksey Yefremov with KeyBanc CM. Your line is open.

Our next question comes from Alexi. Yeah. With KeyBank CM, your line is open.

Kent Masters: Thank you. Good morning. I just wanted to follow up on the second half guidance. Should we just think about this as the basis of the run rate for next year, or is the mix maybe not representative? It is not rich enough because it does not have enough LTAs in it. So, really a question about the second half as the basis to think about next year's EBITDA? I think you are reading too much into it. It is mixed between customers moving back and forth. It is about, we said about 50% of our mix now has got long-term agreements with floors. That will be the case going into 2026. We do have a couple of contracts that run off in 2026, but as we have said before, we do not really expect those to run out. We will negotiate those and extend those. That is our expectation.

Uh, thank you, uh, good morning. Uh, I just wanted to follow up on the second half guidance. She would just think about this as, as the basis, sort of of the Run rate for next year or or is the mix, maybe, uh, not representative if it's uh it's sort of not rich.

Uh because it doesn't have enough lta's in it. Um so really a question about

2, second half as the basis to think about next year, as you.

Kent Masters: I think I would not get carried away between the first half, second half. The mix is going to be the same, and it moves around by quarter.

And uh, that'll be the case going into 26. And there we do have a couple contracts that run off in 26. But as we said before, we don't really expect those to run out, we we will negotiate those and extend those that. That's our expectation. So I think, uh, I wouldn't get carried away between the first half. Second half, the mix is going to be the same and it moves around by quarter.

Analyst: Okay, that is helpful. I think I remember earlier, before you revised your CapEx lower for this year, you were signaling there would be additional opportunities to lower CapEx next year. Did you pull those opportunities forward, or could you bring CapEx down even more after you just stepped it down?

Okay, that's helpful. And I think I remember earlier, uh, before you revised your capex lower for, for this year, you, you were signaling that would be additional opportunities to lower cap packs. Next year did, did you pull those opportunities forward or or could you bring capex down even more after after you just stepped it down?

Kent Masters: We are pretty focused on CapEx and operating cost. We are focused on all of those pieces. I think you see us working across that portfolio to drive cost out of the business, includes CapEx. We are not going to say what the CapEx rate will be next year, but we are very focused on it. Our goal would be to drive it down, but we are going to, we have got to see exactly what those are as we go into planning for next year. We have adjusted our forecast for this year, and we have a pretty good track record of hitting those when that is the case. Then we are very focused on driving that out.

Absolutely. We're we're pretty. We're focused on, uh, on capex and operating costs when we're focused on all of those pieces. And I think you see us working kind of across that portfolio to drive cost out of the business includes capex. So, uh, we're not going to say what the capex break will be next year, but we're we're very focused on it. Our goal would be to to drive it down, but we're going to, you know, we've got a see exactly what those are as we go into planning for next year. But, uh,

Kent Masters: There is a, we are getting close to the level where it is hard to take big chunks. It is getting to be smaller pieces as we go, but we continue to be focused on that.

We've adjusted our forecast for this year and we have a pretty good track record of hitting those when when that's the case and then, uh, we're very focused on driving that out, but there is a, we're getting close to the level where, uh, it's hard to take big chunks. It's getting to be smaller pieces as we go, but we, but we continue to be focused on that.

Analyst: Thanks a lot, Ken.

Uh, Thanks a Lot K.

Kent Masters: Our next question comes from Joel Jackson with BMO. Your line is open.

Our next question comes from Joel Jackson with BMO. Your line is open.

Analyst: Hi, good morning. Your JV partner at Greenville, one of your JV partners at Greenville, just talked about, you know, first or at CCP3 end of the year, not first concentrate. It's a bit of a nuance there, but is that right? Are we not expecting really any volumes now into maybe early into 2026, maybe in early to mid-2026? What's your thoughts there?

Hi, good morning. Um, you were JB partner at, uh, bringing 1 of your ticket Partners at Green, which is, uh, talked about. Um,

Um, you know, first or at CCP 3, end of the year, not first concentrated, it was a bit of a Nuance there. But is that right? Are we not expecting? Really any volumes? Now until maybe early into 26, maybe even early to mid 26? Uh what's your thoughts there?

Kent Masters: Yeah, I would say it is probably, before we start seeing volume there, it is going to be in 2026, or I would say early in 2026. Probably not, maybe not day one, but early in 2026.

Uh yeah, I would say it's probably before we start seeing volumes there, it's going to be 26 or I'd say early in 26. Uh, probably not, maybe not day 1, but early in 26.

Analyst: Okay. Also a bit of a different question. We obviously saw what happened with empty materials over the last month or so. We know the DOE has been out there with programs. DOD has money. Lithium is not rare earths, but looking at Kings Mountain, is that a project that is strategic to the U.S. to the point where Albemarle would want to start doing due diligence with different government organizations, trying to get the profile of that project up, and maybe trying to look at a way to be something like an empty materials kind of important for the country?

Okay. And and then also a bit of a different question. Um, you know, we obviously saw what happened with empty materials over the last month or so, um, we know the doe has been out there, uh, with programs DOD has money, you know, lithium is not Rare Earth, but looking at Kings Mountain.

Is that a project that is strategic to the US to the point where all model would want to start doing due diligence with different government organizations, trying to get the profile of that project up and maybe trying to look at a way to be something like an MP materials kind of importance uh for the country.

Kent Masters: Yeah, so I would say, look, we are encouraged by the focus that the Trump administration has put on critical minerals. As you say, rare earths is kind of at the very top of their list, but lithium is something that they are looking at as well. We have been saying for some time that to build out a U.S. full supply chain, primarily conversion as well, you need public partnership.

Yes, I would say. Look, we we're uh encouraged by the focus that the Trump Administration has put on critical minerals uh

Kent Masters: It is interesting to see government moving on something like MP Materials to do exactly that in the rare earth space. We have been talking with the government for some time about the need for those type things. We think it is encouraging. We like the focus that the government is putting on critical minerals, and we are very happy to have conversations about it.

As you say rare earth is kind of a very top of their list, but lithium is something that they're looking at as well. We've been saying for some time that to build out a US full supply chain, primarily conversion as well. Uh, you need public private Partnerships, and it's interesting to see government moving on something like MP materials to do exactly that in the Rare Earth space. So and we've been talking with uh, the government for some time about the need for those type things. So I, you know it, we think it's encouraging. We like the focus that the government is putting on critical minerals and we're very happy to have conversations about it.

Operator: Our next question will come from Vincent Andrews with Morgan Stanley. Your line is open.

Rachel Smith: Thank you. In the morning, I just wanted to ask on the mix, is there a production geography aspect of it too? In other words, do your contracts skew a little bit more towards Atacama volume or are they evenly split geographically in your production facilities?

Our next question will come from Vincent Andrews with Morgan Stanley. Your line is open

Uh, thank you this morning. Um, just wanted to ask on the, on the mix. Um, is there a production geography aspect of it too. In other words, your contract, skew a little bit more towards Atacama volume or the evenly split uh, geographically in your, in your production facilities.

Kent Masters: Yeah, I would say that, I mean, it's split around, right? It's not exactly in one location, but all of our contracts pretty much are Western with Western players. Now that doesn't talk about the facility that it comes from or actually where the ship to location is necessarily, but almost all of our long-term agreements are with Western players.

so, uh,

Yeah. I I would I would say that. I mean it's it's uh it it split around, right? It's not exactly in 1 location. All of our contracts, pretty much are Western with Western players. Uh, now, that, that, that doesn't talk about the facility that it comes from, or actually, where the ship to location is necessarily. But almost all all of our long-term Agreements are with, uh,

West Western players.

Rachel Smith: Okay. As a follow-up, obviously, nice job reducing the CapEx. Could you just give us a sense of the most recent reduction? What is that coming out of? Also, do you have an updated maintenance CapEx number for us now that the CapEx number has moved lower again?

Maintenance capex number for us. Now that the the capex number has moved lower again.

Kent Masters: We are not giving guidance on kind of maintenance versus growth capital, but it is coming out of a lot of small places. It is just focused on capital, pushing things out, tightening things up. As we get into planning for next year, then maybe we can give you a little bit more detail on that. At this point, we have lowered our guidance this year, and we would anticipate continuing to drive capital out of the plan, but it is getting harder, I would say.

Yeah, so we're not we're not giving guidance on kind of Maintenance versus, uh, growth Capital, but it's, it's coming out of a lot of small places, right? And it, it's just focused on Capital, pushing things out, tightening things up, uh, and uh, as we get into planning for next year, then maybe we can give you a little bit more detail on that, but

this point, we've lowered our guidance this year, and we would anticipate, uh,

Rachel Smith: Okay. Thank you very much.

Continuing to drive Capital out of the plan but it's getting harder. I would say

Okay, thank you very much.

Operator: Our next question comes from Colin Rusch with Oppenheimer. Your line is open.

Our next question comes from Colin Rusch with Oppenheimer. Your line is open.

Rachel Smith: Thanks so much. I guess I have a two-part question. One, thinking about the government involvement with market dynamics on critical materials, have you seen any indication that they might start setting pricing in the market? A secondary question is around refining capacity and technology. You guys had been kind of adjacent or involved in a project around dry processing. I just want to get an update on how you guys are thinking about potential technology evolution around some of that conversion or refining process technology in North America.

Thanks so much. I guess I have a, a 2-part question. Um, you know, 1 thinking about the, the government involvement with, um, you know, market dynamics on on critical materials. So, have you seen any indication that they might start setting pricing in the market? And then a secondary question is around, uh, refining capacity and Technology. You guys had been, you know, kind of adjacent or involved in a project around dry, uh, dry processing. Uh, just want to get an update on on how you guys are thinking about potential technology, Evolution around some of the the conversion and refining process technology, uh, in North America.

Kent Masters: Okay. So, I guess, that is two quite different questions. The first around government involvement in pricing. We do not see that. They have not really been involved in that. I guess the closest thing you would see is the MP Materials deal. They have done purchases from a DOD standpoint. They did set a price for that, but I do not see that as getting involved in the market. So we do not really see that, or we have not seen that. On the technology, I am not exactly sure.

Kent Masters: We look at process chemistry as a key advantage for us in conversion, but that includes DLE, which is probably the biggest focus we have on new technology, but it is also streamlining the technology that we have in our hard rock conversion assets. I am not sure what the dry comment was, what technology that is around dry processing because I am not familiar with that.

Okay so I I guess I mean the it's too quite different question. So the first round the government involvement in pricing so uh we're not we don't see that but not really been involved in that. I guess the closest thing you'd see is the MP material steel is they've done purchases from uh uh the dod standpoint. They they did set a price for that but that's I don't see that as getting involved in the market. So we don't really we don't really see that uh or we haven't seen that. Uh and then on the technology I'm not exactly I'm sure that we we we look at

Process chemistry as a key Advantage for us and conversion. Uh, but that includes like dle which is probably what the biggest Focus we have on on new technology but it's also streamlining the technology that we have uh and uh and our Hard Rock conversion assets.

I'm not sure what the dry, uh, Comet was what technology that is uh, around Drive processing because I I'm not familiar with that.

Rachel Smith: That was a process that Tesla was working on, in and around their San Antonio facility where they were doing that with a different closed-loop system. I can take that offline. The follow-up question here is around China policy. You guys have gone through a number of policy cycles around EVs. Obviously, that government is focused on short-term sales historically, then following up with incremental policy adjustments to maintain market integrity. Can you just give us an update on your current thoughts on the evolution of the EV policy in China and how you see that evolving over the next two to three years?

Yeah. That was it was a process um, that that Tesla was working on, um, you know, in around their, their San Antonio facility, where they were, uh, you know, doing that with a, a different inclusive system. But I, I can take that offline. I guess the the follow-up question here is around China. Um, China policy and you guys have gone through a number of uh, policy sit.

Cycles around EVs and and obviously, uh, you know that government is focused on short-term, uh, sales historically then, um, you know, following up with incremental policy adjustments to to kind of maintain Market Integrity. Um, can you just give us an update on your your current thoughts on evolution of the EV policy in China? And how you see that evolving over the next 2 to 3 years?

Kent Masters: Yeah. So, I mean, look, you're right in that you see them making adjustments and incentives. I think those are around the edges. The broader policy is, I think, a key technology for the Chinese. They see it as a way to own a segment and do an export to the world around that. So they've spent a lot of time in development on R&D all the way through the value chain from EVs and batteries, cathode, even the lithium supply chain. So I think they see it as a strategic segment for them as a way to export materials from China and create more jobs in China. A lot of what you see on the increment around incentives for EVs, I think, is just trying to balance activity and what's happening around that. I don't read that much into those.

Yeah. So I mean look you you're I mean you're writing that you see them making adjustments and incentives. I think those are around the edges. The the broader policy is uh, I think it's a key technology for the Chinese. They they see it as a way to, uh,

Kent Masters: Those are short-term incentive programs, but I think long-term, they see it as a strategic segment.

Rachel Smith: Great. Thanks so much, guys.

Own own own a, uh, a a segment and do, and Export to the world around that. So, they've spent a lot of time in development on R&D all the way through the value chain, from EVs and batteries cathode even even the lithium supply chain. So, I think they see it as a strategic, uh, segment for them, as a way to export, uh, materials from China and create more jobs in China. And then a lot of what you see on the increment around incentives for EVS. I think it's just kind of kind of balance activity of what that what's happening around that. I don't read that much into those. For those are short term incentive programs, but I think long term, they see it as a strategic segment.

Great. Thanks so much, guys.

Operator: Our next question will come from Ben Kallo with Baird. Your line is open. Ben Kallo with Baird, your line is now open.

Our next question will come from Ben callow with be your line is open.

And callow with be your line is now open.

Ben Kallo: Sorry about that. You talked about contract renewals for things that roll off next year. I am just wondering, from your customer perspective, how contracts are structured with the current prices. My second question is on the prepayment that you guys got, I think, last quarter. How is that contract versus what is out there right now? Because the prepayment, to my mind, thinks that it is at cheaper prices compared to the prepay?

I think the last quarter, um, how was that contract? Uh, uh, versus what's out there right now? Because the prepayment to my mind thinks that it's uh, at cheaper prices. Uh, if they're going to prepay,

Kent Masters: Okay. So, Ben, that was a little bit unclear. You were asking about the contract structures and then the prepayment. I think that they are two different things, right? I do not think our traditional customers are people through in the value chain. The prepayment is kind of a unique deal that we did. I do not see that changing our overall contract structure overall. Maybe Eric can comment on how I think you were asking how our customers are seeing our contract structure versus spot market?

Okay, so Ben we that was a little unclear. So you were, you were asking about the contract structures and then the prepayment. So I, I think that, I mean, there are 2 different things, right? I don't think you would have hired traditional, uh, customers or people through in the value chain. Uh, the the prepayment is, is kind of was a unique, uh,

Ben Kallo: When you renew it, I am sorry about that. When you renew it next year, like how they are viewing current prices and restructuring the contracts.

A deal that we did, I don't see that changing our overall contract structure overall and, uh, maybe Eric can comment on the, how I think you were asking how our customers are seeing our contract structure versus spot Market.

No, when you redo, sorry about that. When when you renew it, when you redo it uh, next year, um, like how uh, they're they're viewing current prices and restructuring the the contracts.

Kent Masters: We have an active pipeline process where our existing customers and potential new looking out three, four years. This is what we traditionally have done. Admittedly, in the low-price environment, we had slowed that a bit, but we are seeing renewed interest as OEMs look towards the end of the decade and have their own calculus around how they see supply playing out that they want the security. We have two contracts that towards about, yeah, one or two contracts that towards the end of next year come off. Both of those were in discussions at various stages with those two customers to extend them or to renew or enter into new contracts.

So we have and we have an active pipeline process where we're for existing customers and potential new looking out free 4 years. Just as we traditionally have done uh admittedly in the low price environment. We uh had slowed that a bit but we're seeing renewed interest as oems look towards the end of the decade.

And and have their own calculus around, how they see Supply playing out that they want the security.

Um we have 2 contracts that towards it's about yeah, 1 or 2 contracts. That towards the end of next year come off.

Kent Masters: The structures are going to be similar to what we have done in the past. They are going to be exposed to the market, but there is also some measures of protection that we are looking at for ourselves and security, obviously, that the customer is looking at for themselves. So more to come, but that is a part of our ongoing process.

Neal Sheorey: Ben, this is Neal. If I could just circle back to your prepayment, I think what I was hearing is you were asking something about the price that kind of underlies the prepayment. I just want to highlight, and we said this when we struck the deal back in Q1, it is market indexed. I could not quite hear your question. It sounded like you were asking if it was outside of the market. It is not. It is the way the mechanics work, it is linked to the market.

Both of those were in the discussions at various stages, with those 2 customers to get to extend them, um, or to renew or enter into new contract, the structures are going to be similar to what we've done in the past, they're going to be exposed to the market. But um there's also some some measures of protection that that that we're looking at for ourselves um and security obviously that the customer is looking at for themselves, so more to come. Um uh but that's that's a part of our ongoing process.

Ben Kallo: Okay. You guys had the grace, I think it was you said early redemption, and that is a good lever for the balance sheet. Is there anything else like dividend or anything else that, if we stretched the 27 where the chart shows pricing still, you can tell where it is or there is excess supply? Are there other levers like the dividend or anything else that you could pull for cash?

And Ben, this is, this is Neil. If I could just circle back to your prepayment, I, I think what I was hearing is you were asking something about the the price that kind of underlines, uh, underlies, the prepayment. I just want to highlight and we said this when we, when we struck the deal back in the first quarter, it's it's Market indexed. Um, so I I don't I couldn't quite hear your question. It sounded like you were asking if it was outside of the market, it isn't. Is it is the the way the Mechanics Work is it's linked to the market.

Okay. Um, and uh, you know, you guys, uh, have the grace, uh, uh, I think it, you said early Redemption, um, and that, that's a good lever for the balance sheet. Is there anything else like dividend or anything else? Like, if we stretch in the 27, where like your the chart shows pricing still, uh, you, you kind of where it is or or there's excess Supply. Uh, are are there other lever levers, like the dividend or anything else that you can pull for cash?

Neal Sheorey: Well, Ben, this is Neal again. That's exactly what we're working on every day here. We are constantly pulling on all of these different levers, whether that is CapEx, whether that's cost savings, whether that's productivity measures, pumping more volume out of our plants so we get better fixed cost absorption. The simplest answer to your question is yes, there are definitely additional levers that we keep working on to make sure that we can generate a strong cash performance. In this case, we had a unique moment where we were able to do the pick redemption. This just highlights that we're looking at all kinds of things that we'll work on.

Well, been, uh, I mean, uh, this is Neil again. Um,

Kent Masters: Traditional and non-traditional.

Neal Sheorey: That's right.

Kent Masters: We're pretty, I think the message we want to leave is that we're pretty focused on it.

Ben Kallo: Thank you very much, guys.

That's exactly what we're working on. Every day here is we, we are constantly pulling on all of these different levers, whether that is capex, whether that's cost savings, whether that's productivity measures, pumping more volume, out of our plants so we get better fixed costs absorption. So the simplest answer to your question is. Yes, there are definitely additional levers that we keep working on to make sure that we can. We can generate a strong cash performance. In this case. We, uh, had a unique moment where we were able to do the the pick Redemption. Um, but, you know, this just highlights that we're looking at all kinds of things. Um, that will work on it. I probably traditional and non-traditional. That's right. But we are, when we're pretty, I think the message we want to leave is that we're pretty focused on it. Yeah.

Thank you very much, guys.

Operator: Our next question will come from Arun Viswanathan with RBC. Your line is open.

Our next question will come from Arun vishwanathan with RBC. Your line is open.

Rachel Smith: Sorry about that. Thanks for taking my question. Hope you guys are well. I just wanted to ask about the guidance as well. It looks like midpoint of your scenario is still about $900 million, which kind of implies a pretty low EBITDA level for the second half. Could you just walk through some of those dynamics, I guess, on the pricing and volume assumption side? Or is there anything else as well? Thanks.

Sorry about that. Thanks for taking my question. I hope you guys are well, um, yeah, just wanted to ask about the guidance as well. Um, you know, looks like, uh, midpoint of your scenarios um, you know, still about 900 million which kind of implies a pretty low uh Evita level for the second half. Um,

Could you just walk through some of those Dynamics? I guess, uh, on the pricing and volume assumption side um, or is there? Um, yeah. If, if you had anything else as well, thanks

Neal Sheorey: Yeah, Arun, this is Neal. I can start, and if others would like to add on, it really is, I hate to be repetitive, but it kind of goes back to some of the things that we said on the Q&A. It really is a mix effect as we kind of move through the quarters of the year. I think the important thing to start with is we are still hanging on to those modeling guidance ranges. Even though pricing has kind of dribbled down in the first half of the year, we still, if we draw the pricing across for the rest of the year, we are still holding on to that range because of all the things that we are working on.

Neal Sheorey: But yeah, just the way things have worked out, we have just seen stronger demand on our energy storage contracts in the first half of the year. As we move through the back half of the year, we will see some of that not quite as strong, but really, it has just been that some of the volume has been more in the first half than it has been in the second half. It is really nothing more than that. Outside of that, in terms of things in our control, we have been going much faster on our cost and productivity actions. We have been ramping our plants, I would say, even better than what we expected. So it is really the confluence of all those things that lets us, even in this low-price environment, to hang on to those ranges.

Neil. I can, I can start and, and uh, if others would like to add on, um, it it really is. Uh, I hate to be repetitive but it kind of goes back to some of the things that we said, um, on the Q&A. It really is a a mix effect. Um, as we kind of move through the quarters of the year, I think the important thing to to start with is we are still hanging on to those modeling guidance ranges. Uh, even though pricing has kind of dribbled down in the first half of the year, it, it we still if we draw the pricing across for the rest of the year, we're still holding on to that, um, that range because of all the things that we're working on. But yeah, as just the way, things have worked out, we've just seen stronger, um, Demand on our energy storage contracts, in the first half of the year as we move through the back end, uh, back half of the year, uh, we'll see some of that not quite as strong, but really it's just been that. Some of the volume has been more in the first half than it has been in the second half. Its really nothing more than that.

Kent Masters: Yeah, just to reiterate on that, the price has moved down from when we were doing this at the beginning of the year, and we've held on to those ranges even at this price range. The second half of our book of business is roughly exposed to the spot market. As that drifts down, it gets more difficult, and the actions are offsetting that. That is how I would describe it.

And then outside of outside of that in terms of things in our control, we have been going much faster on our cost and productivity actions. We've been uh, ramping our plants, I'd say even better than what we expected. So it's really the Confluence of all those things that lets us even in this low price environment to hang on to those those ranges.

Yeah. And just to and reiterate on that. I mean the price has moved down from when we were doing this at the beginning of the year and we've held on to those ranges at at even at this price range. So it's uh,

It the second half, half of our, our book of business is roughly exposed to the spot market and so as that drifts down, it gets more difficult, and the actions are offsetting that, so that's how I would describe it.

Rachel Smith: Okay. Apologies if I missed this earlier. You mentioned that you do think more capacity could come offline. I guess, what do you expect to see there over the next six to nine months? How much of capacity, say, on economic? Are there any further comments on inventory levels that you could share as well? Thanks.

Okay, I apologize if I missed this earlier, you mentioned that, um, you do think more capacity could come offline? Um, I guess, uh, what do you expect to see there over the next 6, to 9 months, how much of capacity to say uneconomic? And um, are there any, uh, further comments on inventory levels that you you could uh, share as well? Thanks.

Kent Masters: Yeah. So look, we're not going to speculate on who might come offline. That would be complete speculation. But we do know people are under a lot of pressure out there. And the ones you would look at are people that have one asset. That's the only way they're generating cash, and they're not generating cash now. So if they are startups that are trying to start up and are not getting the revenue when they anticipated, those are probably the ones that I would look at. But we're not going to speculate on who might come out.

Yeah, so look we're not going to speculate on who might come offline. I mean that would be complete speculation so but we we do know people are under a lot of pressure out there. Uh, and the ones you would look at are people that are uh have 1 asset. That's the only way they're generating cash and they've not generating cash now. So if they are or startups that are trying to start up and uh are not getting the revenue that when they anticipated. So those are probably the ones that I would look at. But we're not going to speculate on who might come out.

Operator: Our next question will come from Kevin McCarthy with Vertical Research. Your line is open.

Our next question will come from Kevin McCarthy with vertical, research. Your line is open.

Rachel Smith: Hi, this is Matt Hauer for Kevin McCarthy. To maybe frame the supply question in a different way, where would you estimate that global lithium operating rates were in Q2? Where do you think they would need to be to restore pricing power in a sustainable way?

Hi, this is Matt. How are you on for Kevin McCarthy? Um, to maybe frame the supply question in a different way, where would you estimate that global lithium operating rates were in the second quarter? And where do you think they would need to be to restore pricing power in a sustainable way?

Kent Masters: Look, we know on a hard rock conversion in China, operating rates are about 50%. There is way excess capacity in conversion. It brings it back to the resource. That is what we talk about, people coming offline. I am not sure what the operating rates are. They are pretty high. People are, you know, that is how you kind of operate mines. They need to operate that way. Otherwise, they become big problems from a cash standpoint. Conversion has a very hard rock conversion. That is all pretty much in China. That is a known figure. It is about a 50% rate. There is a significant overcapacity there. That means you need to look at the resource. Those are probably operating pretty high.

So uh, look look, we we know, uh, on the on a convert Hard Rock conversion in China, operating rates are about 50%. So there's way excess capacity in conversion, so then it brings it back to the resource, uh, and, and that's what we talk about people coming offline. So, uh,

I'm not sure we, the, what the operating rates are, I mean, they're pretty high, uh, and, uh, people are, you know, they and that's how you kind of operate minds. They need to operate that way. Otherwise, they become big problems from a cash standpoint. So conversion has a very, uh, Hard Rock conversion. Uh, and all that's all pretty much in China. We, that's that's a known figure. It's about a 50% rate. So there's there's a significant over capacity there. That means you need to look at the resource. And those are probably operating pretty high.

Rachel Smith: Okay. Thank you. Regarding your lithium demand forecast, you left it unchanged at 15% to 40% for this year. Given that more than half of the year is in the books, why did you decide to leave the estimate so broad? Other than tariffs, what is driving the uncertainty that you did not feel comfortable narrowing that range?

Okay, thank you. And then um,

Regarding your lithium demand forecast. Uh, you left it. Unchanged at 15 to 40% for this year and given that, uh, more than half of the years in the books. Why did you decide to leave the estimate so broad, you know, like other than the tariffs, you know what's driving the uncertainty and that you didn't feel comfortable uh, narrowing that range.

Kent Masters: There is a lot of uncertainty. Tariffs are part of it, but you got regulation in multiple jurisdictions around that. So the U.S. has been a little weaker. Europe and China have been stronger. That was our forecast at the beginning of the year. With all of the uncertainty that we saw, frankly, none of that uncertainty has gone away. It may have broadened a little bit, but given the environment we are in, that is the forecast that we see. It has been puts and takes. The U.S. looks a little bit weaker than we had originally anticipated, but Europe and China are significantly stronger. The energy storage market is significantly stronger than we had anticipated early on. There is still a lot of uncertainty, so we have just left the range.

Oh, there's a lot of. I mean, there's a lot of uncertainty. I mean, tariffs are part of it but you got regulation in multiple deer stations around that. So, uh,

It may have uh broadened a little bit, but it's given the environment we're in. That's a forecast that we see it's been uh, and it's been puts and takes like us is looks a little bit weaker than we'd originally anticipated, but Europe and China are significantly stronger. And the energy storage Market is significantly stronger than uh than we anticipated uh early on. But there's still a lot of uncertainty. So we just we've left the range.

Rachel Smith: Okay. Thank you.

Okay, thank you.

Operator: Our last question will come from Patrick Cunningham with Citigroup. Your line is open.

Our last question will come from Patrick Cunningham with Citigroup, your line is open.

Meredith Bandy: Hi, this is Rachel. We actually offer Patrick. Can you dive deeper into the $400 million cost and productivity savings achieved? What are expectations for incremental savings in the back half and into 2026?

Hi. This is Rachel. We actually offer Patrick. Um, can you dive deeper into the 400 million cost and productivity savings achieved? And what our expectations for incremental Savings in the back half and into 26?

Kent Masters: Oh, so the cost out. Okay, sorry. I was not sure that I heard that. So yeah, that is, I mean, we are pretty much, it is the program that we have put out. Neal, you want to talk about some of the detail?

Neal Sheorey: Yeah, sure, sure. First of all, a decent part of that, if you remember, it is not quite 50-50, but we had put out a target of a certain amount of this was going to be headcount-related SG&A type of savings. We went after that very, very quickly. That is something that we obviously worked on rapidly as we were exiting last year. Another chunk of that is a manufacturing cost and productivity set of actions. That one, we have been progressing that really well. Obviously, now one quarter on in here through the second quarter, we are now getting a lot more traction around that. That is what has really allowed us to push to the high end of this range.

Oh, so the cost out. Okay. Sorry took that I wasn't sure that I heard that though. Uh, so yeah that's I mean we're pretty much. It's the program that we put out. Neil. You want to talk about some of the detail? Yeah, yeah sure sure. So, um, you know, first of all, uh, a a decent part of that. If you remember it, it's not quite 50/50. But we had put out a target of, you know, um a certain amount of this was going to be uh headcount related sgna. Um, uh type of savings and we went after that very, very quickly. And so that is something that we obviously

Neal Sheorey: We are just doing block and tackling around this, just working on all of the different things that we have in the pipeline around cost out and productivity and just going after those things. In terms of going forward, it is a little early for me to say where we go beyond $400 million. I think you heard Kent Masters say earlier on the Q&A, we are not stopping here. We are continuing to look at what we can do from a cost standpoint, from a CapEx standpoint. A little early for me to give any commitments on that, but we are still looking at that, obviously, in this environment.

Worked on, um, you know, sort of rapidly as we were exiting, uh, last year. And then another chunk of that is uh, a manufacturing cost and productivity, uh, set of actions and, um, that 1 we have been progressing that really well. And obviously Now 1 quarter on in here, through the second quarter, we're now getting a lot more traction around that, that's what's really allowed us to sort of push to the the high end of this range. Um, so we're just doing, you know, uh, block and tackling around this just working on all of the different things that we have in the pipeline around cost out and productivity. And just going after those things, um, in terms of going forward, it's a little early for me to say, where we go beyond 400 million. I think you heard Kent say earlier on the Q&A, we're not stopping here. Um, we're continuing to look at uh, what we can do from a cost standpoint from a capex standpoint, a little early for me to give any any, uh, commitments on that. But we're still looking at that. Um,

Kent Masters: Yeah. I would say our process for taking this on and building a culture around cost out, I think it's quite mature in the manufacturing space, less mature in the other areas. Supply chain, a little less, the broader supply chain for manufacturing, a little less mature. Our back office processing and getting cost out of that is less mature than that. We'll continue on manufacturing, and then we've got to build the capability to be stronger in the other areas. A lot of what's come out of this now is overheads and quite a bit for manufacturing. It'll probably start skewing toward the other directions.

Obviously in this environment. Yeah and I would say our process for taking this on and building a culture around cost out, I think it's it's quite mature in the manufacturing, space less mature and the other areas. So uh supply chain, a little less, the broader supply chain from manufacturing, a little less mature, kind of our back office processing getting cost out of that is less mature than that. So we're we continue on manufacturing and then we got to build the capability to be stronger in the other areas. So a lot of what

Come out of this. Now it's overheads and quite a bit from manufacturing. It'll probably start skewing toward the other directions.

Meredith Bandy: Got it. Thank you. That is very helpful. Just another quick one, you are now guiding to free cash flow positive. What are your expectations for working capital in the second half?

Got it. Thank you. That's very helpful. Just another quick 1 is um you're now going to free cash flow positive. Um, what are your expectations for working capital in the second half?

Neal Sheorey: Look, generally speaking, as we get into the second half of the year, that is obviously a little bit of the higher season, particularly in the lithium business. I would expect working capital to be actually a tailwind to cash. You probably have seen so far this year, it has been a little bit of a headwind as we have been building up to the high season. I think the combination of that, plus obviously pricing is slightly lower too, so there could be a little bit of a release of working capital. Net-net, I do expect working capital to be a source of cash as we go into the back end of the year.

Uh, you know, look generally speaking, as we get into the second half of the year. That's obviously a little bit of the higher season, um, particularly in the lithium business. And, and so, I would expect working capital to be actually a Tailwind, to, to cash. You probably have seen so far this year, it's been a little bit of a headwind as we've, you know, been building up to the high season. Um, so I think the combination of that plus, obviously pricing is slightly lower too, so there could be a little bit of a release of working capital. So net net. I do expect working capital to be uh, uh, a source of cash. As we go into the back end of the year.

Meredith Bandy: Got it. Thank you.

Got it. Thank you.

Operator: Thank you. That is all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.

Thank you. That is all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.

Kent Masters: Thank you, operator. As we conclude, I want to acknowledge our team's quick response and the ability to execute in this fast-changing market. These are the qualities that drove our strong results this quarter and the ones we will lean on going forward. This will help us sustain our long-term competitive advantages and preserve growth optionality as markets improve. Thank you for joining us today. We look forward to seeing you face-to-face at the upcoming events. I think those are listed on slide 18. Thank you for joining us. Stay safe and take care.

Thank you, operator. And as we conclude, I I want to acknowledge our team's quick response and the ability to execute in this fast-changing market. These are the qualities that drove our strong results to this quarter, and the ones we'll lean on going forward.

And we'll help us sustain our long-term competitive advantages and preserve growth. Optionality as markets improve.

Thank you for joining us today. We look forward to seeing you face to face at the upcoming events. I think those are listed on slide 18. The thank you for joining us. Stay safe, and take care.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

This concludes today's conference call. Thank you for your participation. You may now disconnect