Lithium is becoming a lucrative business as electric vehicles become more widespread and miners take advantage of them.
Albemarle Corp. ALB,
blasted earnings and revenue forecasts in a first-quarter report on Wednesday afternoon and executives added $1 billion to their full-year sales forecast, sending shares up nearly 20% in trading after the office hours. The performance follows a Tuesday afternoon report from Livent Corp. LTHM,
who did pretty much the same thing.
Both companies mine lithium, an important component of many batteries, especially those designed for electric vehicles. As more automakers have started producing electric vehicles, lithium demand and prices have skyrocketed, as Tesla Inc. TSLA,
CEO Elon Musk pointed this out last month.
“I would definitely encourage entrepreneurs who are looking for opportunities to get into the lithium business. Lithium margins are practically software margins right now,” Musk said during the electric vehicle company’s April 20 earnings call.
“I think we see cases where the spot price of lithium is 10 times higher than the cost of mining. So like we’re talking about 90% margins here. Can more people enter the lithium business? Do you like minting money? Well, the lithium business is for you,” Musk continued.
Albemarle reported first-quarter earnings of $253.4 million, or $2.15 a share, on sales of $1.13 billion, up from $829.3 million a year ago. After adjustments for income tax expense and other items, the company reported earnings of $2.38 per share, more than double the $1.10 per share it reported at the same time. period a year ago. Analysts had expected adjusted earnings of $1.64 per share on sales of $1.04 billion, according to FactSet.
Lithium was the main driver of the outperformance as the material’s net sales nearly doubled from $279 million to $550.3 million and generated significantly higher profits. Albemarle reported adjusted Ebitda of $308.6 million from lithium sales in the quarter, nearly triple the total of $106.4 million reported a year ago.
Albemarle executives raised their net sales and earnings outlook “primarily due to continued price strength in its Lithium and Bromine businesses,” they said in Wednesday’s statement. They now expect annual net sales of $5.2-5.6 billion, after previously reporting $4.2-4.5 billion, and adjusted profit of 9.25-12.25 dollars per share, up from $5.65 to $6.65 per share.
Shares of Albermarle rose 9.3% to $215.47 in Wednesday’s regular session, joining Livent’s surge, then surged above $250 in after-hours trading. Stocks have gained 32.9% over the past year, as the S&P 500 SPX Index,
increased by 0.3%.