Neal Sheorey: Yeah. A couple of things to — Kevin, good morning. This is Neal. Just a couple of things to think about as you think about the quarterly ramp. First of all, as we mentioned in our prepared remarks, in Energy Storage, we expect most of the volume growth or at least two-thirds of the volume growth to occur in the back half of the year as our plants ramp up. So remember that we are still ramping these facilities through the first half of the year and then you’ll start to see that volume kick in as we get into the back half of the year. That’s point number one. Point number two is that as we move through, particularly the first quarter, we are still working off some spodumene inventory that is higher priced. And so as we mentioned again in the prepared remarks, you should expect that that will weigh on our margins in the first quarter.
That is just by nature of the inventory lag that everyone’s very familiar with as we process that spodumene. Why margins then start to improve as we go through the year and we exit the year at this sort of stronger 30% margin that I mentioned in the prepared remarks is because as things normalize and you have a spodumene cost running through our P&L that’s more indicative of the lithium salt prices, you start to see come through the margin strength of our Energy Storage business even in this lower priced environment, which you would expect when you’re sitting on some of the best resource in the world. And so I would — my counsel here is to think about margins rising as you go through the year in one part because of volume, but also in another part as we work through this inventory lag and then get to the back half of the year.
Kevin McCarthy: That makes sense. Thank you for that. And as a follow-up, if I zoom out the lens and look at your segment margins during the last cyclical trough for lithium, they were around 34% or 35% under the old definition of adjusted EBITDA. And so my question would be if prices persist at the $15 per kilogram scenario, what do you think the new trough margins could be moving forward into let’s say 2025 plus? Is that mid-30% level still representative or indicative or do you think they would be materially higher or lower than that?
Neal Sheorey: I mean I’ll jump in here. I mean I think that it’s — let me tell you the variables. The answer is it’s going to be fairly similar, we believe, because what are the factors? One, we are on — again, once spodumene prices are indicative of lithium prices. They haven’t been most of all last year and into the early part of this year just because of the accounting we’ve talked about, the lag we’ve talked about within Talison. And once they are, you’re dealing with a margin. That’s one benefit that gets us back to where we were before. When you talk about the last cyclical trough, prices were even, well, they’re about where, they were lower than where they are now and we’re earning a 34% EBITDA margin.
But the difference then is spodumene was a smaller percentage of our sales mix. It’s a much larger percentage now. It is a slightly higher cost than Chilean brine. That’s one thing to note at these prices. The other is that we didn’t have nearly as many plants in the commissioning stage and these are plants that take a couple years to ramp. They have a fixed cost associated with them. That’s a drag when you’re ramping those plants. The upside benefit of that is, without any further capital investment, we’re going to continue to grow for the next couple of years, as I said to Mike earlier. The downside is it’s a drag that brings your margins down. So that’s — these are the factors that would lead us at these prices, which are, as I said, at this trough, above last — the prior trough, amid sort of 30%s EBITDA margin.
Kevin McCarthy: Very helpful. Thanks a lot.
Operator: Thank you. That’s all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Kent Masters: Thank you and thank you all for joining us today. Albemarle is a global leader in transforming essential resources into the critical ingredients for modern living, with people and planet in mind. Our strategy and path to capitalize on the opportunities of electrification over the coming years is clear and we will continue to operate with the discipline operating model to scale and innovate, deliver profitable growth and advance sustainability. We continue to work to be the partner of choice for our customers and the investment of choice for both the present and the future. Thank you for joining us.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
