Good day ladies and gentlemen, and welcome to the fourth quarter 2012 Albermarle Corporation Earnings Conference Call. My name is Carissa and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instruction). As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host, Mr. Lorin Crenshaw, Director of Investor Relations and Communication. Please proceed.

Thank you, Carissa, and welcome everyone to Albemarle's fourth quarter 2012 earnings conference call. Our earnings were released after the close of the market yesterday and you'll find our press release, earnings presentation and non-GAAP reconciliations posted on our website under the Investors section, at albemarle.com. Joining me on the call today are Luke Kissam, Chief Executive Officer; and Scott Tozier, Chief Financial Officer. As a reminder, some of the statements made during this conference call about the future performance of the company may constitute forward-looking statements within the meaning of Federal Securities Laws. Please note the cautionary language about our forward-looking statements contained in our Press Release. That same language applies to this call. Finally, reconciliations related to any non-GAAP financial measures discussed on this call may be found in our press release or earnings presentation, which are posted on our website. With that, I'll turn the call over to Luke.

Thanks Lorin and good morning everyone. We appreciate the opportunity to share our fourth quarter and full year results with you today. I'll begin by commenting on the Company's results and accomplishments for the quarter in the full year. Scott will review select highlights related to business segment performance and financial results and I will end by providing prospective on our outlook for the future. As usual, at the end of our prepared remarks, we'll open it up for your questions. In 2012, we continue to deliver strong returns for our shareholders and build an even stronger foundation for sustainable long-term growth. And we did so in a manner aligned with our core values of safe operations and sustainability. We invested our cash wisely in capital expansions to advance our competitive position and retain our marker leadership in critical existing and emerging markets, while we enjoy advantages of low cost and close proximity to and intimacy with our customers. During 2012, our business demonstrated strong earnings power in the face of a weak global economy, negative impact on our catalyst results due to raw material pricing related to certain metals and lower demand than originally anticipated in some of the markets served by our products, resulting in lower operating rates at some of our production units. We closed out 2012 by delivering fourth quarter net income excluding special items of $105 million, or $1.17 per share, versus $1.13 per share in the fourth quarter of 2011. That resulted in full year earnings of $436 million or $4.85 per share, excluding special items, versus $4.88 per share in 2011. Net sales for the quarter totaled $688 million and were $2.7 billion for the full year, while EBITDA excluding special item was $160 million and $703 million for the quarter and year…

Thanks, Luke. I’m going to start with a review of our business segments and then turn to the details on our P&L and cash flow. Catalyst reported fourth quarter net sales of $294 million, up 2% year-over-year and segment income of $79 million, down 6% year-over-year on segment margins of 27%. Hydroprocessing catalysts finished 2012 with outstanding performance year-over-year, as fourth quarter net sales growth 61% and profits were up 85%. Fourth quarter HPC volumes were up 71% year-over-year and a good mix of specialty products drove record profit levels for the quarter. For the full year, catalyst reported net sales of $1.1 billion, down 4% year-over-year and segment income of $292 million, down 11% year-over-year on segment margins of 27%. For the full year, HPC volumes were down 4%, our profits rose 11% on that favorable customer mix. Fluid cracking catalysts volumes were up 14% in 2012, but this was not enough to overcome the precipitous decline in rare earth prices from an average price of $99/kg in 2011 for lanthanum to an average price of $26/kg in 2012 and ending the year at about $10/kg. Excluding the impact of this rare phenomenon in 2011 and 2012, both FCC revenue and operating profits were up nicely in 2012. Operating profits at Performance catalyst solutions have grown at a healthy compounded growth rate over the past several years, and the business delivered 7% year-over-year growth in 2012. During the quarter and for the full year, polymer catalyst continues to benefit from its strong global positioning amid an ongoing market shift of petrochemicals catalyst spending budgets and R&D efforts towards Single Site Catalyst to drive specialized products, innovation and process efficiencies. Polymer Solutions reported fourth quarter net sales of $200 million, down 4% year-over-year and segment income of $36 million, down…

Thanks Scott. Looking to the future, Albermarle is well positioned for success. The strength of our balance sheet continues to give us financial flexibility. We have invested in capital and businesses that are forecasted to experience above average growth in areas of the world that should give us a competitive advantage. That puts us in a good position once the economy rebounds. While there is much uncertainty for 2013, we expect to grow earnings in 2013, but expect the growth to come in the second half of the year. Looking at each segment, we remain bullish on the prospects in catalyst. Within Refinery Catalyst we expect to continue experiencing volume growth in geographies where fuel demand and fuel standards are rising the fastest, including the Middle East, India and Latin America where several new units are starting up with our technology. Crack spreads in general remain healthy, which bodes well for refinery production rates and demand for high-performing catalyst. The organometallics market outlook is also favorable in view of the continued shift among customers toward designing and producing higher value specialty plastics which require our high performing metallocene activators. This dynamic is expected to drive continued volume growth in polymer catalyst. We also expect demand for LED technology to grow rapidly over the next few years, which bodes well for our pure growth family of high purity products. China has banned the 100 Watt incandescent light bulbs, with the 60 Watt ban scheduled for 2014 and a 15 watt ban in 2016. LED lighting is forecasted to grow from 4% to 30% of the total Chinese lighting market by 2015 with lighting in general in China expected to grow by 10% to 14% per year. Asia will undoubtedly lead the way in LED technology, which is why our Greenfield side…

Operator, we're ready to open the lines for Q&A, but before you do so, I would remind everyone to please limit your questions to two per person at one time, so that everyone has a chance, then feel free to get back in the queue for follow-ons, if time allows. Please proceed.

(Operator Instructions). And your first question comes from the line of PJ Juvekar of Citigroup, please proceed.

Last quarter you talked about utilization rate in Bromine and BFR's to be in the range of 40% to 60%. Can you give us an update on that and are you taking most of the downtime in Arkansas versus Jordan, just sort of elaborate on that?

PJ, the first part of the question on utilization rates, if you look at Bromine for the fourth quarter and then you look at our bromide flame retardants, if you look at Bromine overall we were in that mid-70 range for the fourth quarter, like we said we're going to be and then if you look at the derivatives, we were operating at that low 40% level in the fourth quarter. We are approaching both of those upticks in the first quarter of 2013 for Bromine to the low to mid 80's and Bromine derivatives in the 50% range, 50% plus range which really put us in the range where we were operating across the whole year of 2012. And then PJ, I'm sorry but I didn't understand the last piece of your question, you faded out.

What I was asking was the downtime that you took, was it more in Arkansas versus Jordan?

I think the downtime one way or the other, it was about the same. We ran clear completion fluid hard both places. We had a very strong clear completion fluids quarter and we ran Jordon and Magnolia hard on completion fluids and in fact sold some of the inventory levels into the inventory levels in the fourth quarter. Otherwise, we didn’t run tetrabone very hard and that’s the only really too comparative. So it’s pretty equivalent across those two.

And secondly in BFRs, is there is a structural shift in your business that you are selling less into smartphones and tablets than PCs and is that a structural shift and then how does project Gemini relate to that?

It’s not a structural shift into what we are selling. We are still selling into the same products that we were selling before. I think as I interpret your question it’s really, are we in a secular trend away from PCs into tablets and you read as much as I do about that. I think it depends upon what area of the world that you are looking at. It depends upon what price points people are trying to sell but I don’t think if you look at the data on the PC shipments and you look at tablets in the developed world at least, they are moving more to tablets and in the developing world, it’s a still more of a PC type phenomenon as we have discussed before. We are not in the bulk of tablets, maybe in some printed wiring boards and things like that with the enclosures. We are largely not in that. There could be some modifications to what people are talking about from iPhones and to go into tablets to make them cheaper, at a more cost competitive price point and if they do that, it depends what resin system they are going to go to. If they go to polycarbonate, probably not a whole way probability for growth and Brominated Flame Retardants if they go hips (ph) or ABS, there would be opportunity there and where that ultimately shapes out would depend upon the cost of the entire resin system. Our product Gemini is getting good response from our customers. We are running some test, all kind of great. Our reports in that may give us opportunities in certain areas with connectors , chargers, wiring boards and things like that at higher ends. So we are really excited about the possibility of that being a real commercial contributor into the future.

And your next question comes from the line of Robert Koort of Goldman Sachs. Please proceed.

Luke, it looks like you are down to about, as low at a debt to cash ratio as we’d see in the industry and we have seen other companies take advantage of that, you guys did buy some stock back but you seem maybe a little reluctant. Are you getting the ammo ready for a big deal, or what’s holding you back from being a little bit more aggressive, especially if you think 2013 has got a little bit of backend loaded hockey stick. Wouldn’t now be the time to get more aggressive before that ramp up in the second half?

Yeah, I think we are constantly monitoring the situations out there in the markets and our cash and as we said, as we are trying to taking the call, we are going to look for ways to both grow the business and return substantial cash to our investors, and I would expect in the first half of the year we will be studying that and looking out at the possible actions we can do to drive that shareholder value even higher.

When you look at acquisitions, does the scope of those acquisitions lean more towards bolt on technologies in regions that grow the business or synergistic deals where you might have a cost advantage or some takeout opportunity to make a deal work? What’s the spectrum look like in terms of deals that you are considering?

I think Bob, the way I’d look at it is, it would be more bolt on, the ways that would complement our technology and allow us to grow the business, as opposed to a take out. If we saw an opportunity for a takeout that made sense that we could do that, in certain of our businesses that would be doubling down on some exposures that make us hard enough to model as it is. So I think we are looking at ways to try to grow the business and use that complementary technology to allow us to do so.

And your next question comes from the line of Vincent Andrews of Morgan Stanley, please proceed

Could you just talk a little bit more about the inventory levels in Polymer Solutions? I know in one of the slides you talked about bringing the operating rate up but how should we think about that trend, given it sort of flattish year-over-year in the quarter but down sequentially. How should we think about that as we move through ‘13?

Yes so Vince, I think, we worked hard in the second half of the year to bring our inventory levels back into line with, kind of historical averages and we were successful doing that; not just in Polymer Solutions but in all three of our businesses. As we go into 2013 we are expecting to build demands tighter this year and have a smoother operating rate. As Luke mentioned in the Bromine and the Brominated Flame Retardants, we are expecting that to be in the low to mid-50 ranges, going up maybe to the upper 50 range from an operating rate perspective. We will see something, traditional levels in our HPC and FCC catalyst factors as well in kind of that mid-70 to upper 80 ranges depending on what the timing of shipments are. So we're expecting to have a better profile there for inventory next year.

Okay and this is a follow up, did you say what the comparable tax rate was going to be 2013?

Yes, we were expecting between 25% and 26% again, a lot of uncertainty out there with what's happening in the U.S. government but based on the big driver for our tax rate has almost always been certainly less several years the mix of our earnings depending on which country they're coming from. And our current outlook would point us to that 25% to 26% range.

And your next question comes from the line of Kevin McCarthy of Bank of America. Please proceed. Kevin McCarthy – Bank of America: Question on polymer solutions. Your volume number there at plus seven looks like it was the best since the third quarter at 2010. On the other hand though pricing at minus six was the lowest since the first quarter of 2010. So maybe you can help us understand the economy there a bit. Has anything changed from a pricing or U.S. to city perspective, as far as Albermarle is concerned or is that simply a function of what you're seeing in the end use markets or at the market level.

Yes, Kevin I think one of the things that you got to be real careful about that is the mix between mineral flame retardants Bromine and flame retardants and curatives and stabilizers as you look overall at polymer. So let me just talk generically as you look at that. On curatives and stabilizers not a whole lot of price change, maybe a little bit around the edges, not much and we had some good volume growth there but on a lower base. If you look overall at mineral flame retardants, that’s an area we talked about in the past where if you remember the end of 2011 was historical low from a volume perspective there both in our fine percept and in our ground. So really when you look at those two together 11 was the lowest volume we had and we had to give up some price in minerals in order to get some of that volume back up to some operating rates at our German facility. So that's the way it worked. We did that and Europe still been very weak and a lot of that is the European market. So we had to give up some price in mineral flame retardants in that market to be competitive with what’s going out there, given the overall macroeconomic demand in minerals. In Brominated flame retardants, we've had pricing up's and we've had pricing down's in that we’ve seen you remember when Evonik had the explosion in CDT, which was a key raw material for brominated flame retardant was tight that everybody was able to raise prices. Now, because Evonik’s back up running, the CDT prices are come back down and you’ve seen people have to adjust back to historical levels fir HBCD (ph) pricing. So I think there has been some movements in specific areas on brominated flame retardants and some around the edges but the philosophy hasn’t changed in the overall price structure and market dynamics are still the same as they have been for the last couple of years. Kevin McCarthy – Bank of America: Has Tetrabrom stabilized, Luke?

Tetrabrom always get some nibbling around the edges. That’s the first to go and when you say has there been some nibbling around the edges, yes, but it has been you know a couple of pennies on a kilogram here versus $0.50 or something like that. So, it stabilizes as much as Tetrabrom are always stabilized. Kevin McCarthy – Bank of America: Okay and then the second question if I may on catalysts. It sounds like some timing issues in FCC, I think I heard you say HPC profit was perhaps looking flat for the year. What is your outlook for profit in polyolefin catalyst for 2013 versus 2012?

Overall for the year, I would expect that profit to be up and I think that the fact they are up is going to mask, they are going to be able to overcome some of these additional headwinds costs that they had in the beginning of the year for startups from transition from Albemarle volume to our joint venture volumes. So I expect big things out of PCS this year, I think it will be a good growth trend and a piece of that is going to really focus on the LED markets and our pure growth family products and if you listen to the other calls and listen to their LED markets and then the market data, that looks to be a back half of the year, that’s how people view it is. It is going to be start slower and build during the course of the year, the transition to LED. So that’s a part the big growth that we are looking forward to in PCS in 2013.

And your next question comes from the line of Mike Ritzenthaler of Piper Jaffray. Please proceed. Mike Ritzenthaler – Piper Jaffray: On the clear brines, we are wondering why the volumes didn’t benefit the margins a bit more in Fine Chemistry. Is it a function of the relative size of clear brine into Fine Chemistry or is there a some sort of read through on pricing there?

I think the big driver on fourth quarter being down for Fine Chemistry is just coming out of the custom services and some high profit projects that really just didn’t have shipments there, and that really overcame that big growth in clear brine that we talked about. So I don’t think there is any read through there. It’s really just a mix between those products that caused the drop. Mike Ritzenthaler – Piper Jaffray: Okay that makes sense, and on the volume gains in the mineral flame retardants, can you give us a little bit more color on which end markets in 4Q kind of drove those results and the relatively robust outlook that you were talking about in your prepared comments?

I think for the fourth quarter, as Luke mentioned, we were approaching what we had in 2011 fourth quarter. In fact if you just do, we are about 10% up in volume but that’s still only 90% of what we were in the first half of 2009. So very-very low volumes there, even though that year-over-year trend was favorable. Product line there, construction, wire and cable is the big driver here and construction, automotive, particularly in Europe, little bit here in the U.S.; so the drivers for that market. We are seeing a little bit of early quarter uptake right now. We think that’s mostly just inventory recovery out of customers as they burned off inventory in the fourth quarter of last year. So, but more to come, we are watching that area very carefully. As Luke mentioned, a highly competitive segment for us, and one that we will make sure we drive good profit.

And I think in the fourth quarter, what we saw mainly was a lot of driving down inventory levels in the fourth quarter. So I think you have seen this order pattern. It remains to be same whether it’s restocking or whether it’s actually through demand build across the chain.

And your next question comes from the line of Laurence Alexander of Jefferies & Co, Please proceed. Rob Walker – Florence : This is Rob Walker on Florence. I guess at first, have your inventory cost in Catalyst on the FCC side normalize now with current market prices for rare earth, and what was the full profit impact in 2012 from the rare earth price decline?

Yeah, we had given out the number for the full profit declines. We have only stated that it was significant, but if you look at the inventory levels, I’ll ask Scott to address that. The only thing I will say is, you say has it normalized and I guess normalized to what? It was $4 before at end of the year, $4 before all the escalation came up per kilo. If you look at, at the end of the year 2012 it was roughly 10. So it was still twice as high as it was in 2010, but it's probably 10% of what it was it points in time in 2011 or 2012 but Scott may have more specific color on that.

Yes, just to add to that, from an inventory levels we have been able to tighten up that inventory level a little bit. So going into 13, we shouldn't see it, we shouldn't clearly seek nearly the impact that we saw in 2012. It will be a small amount in the first half as the price of lanthanum has continued to drop. At the end of the year it was around $10 to $12. We’re forecasting it’s going to get down close to the $4/kg at the end of the year right now. So there's still some continued drop there. We'll see how that plays out. A lot of the dynamic between China, Mali Corp, Lynas in Malaysia, all those are playing out here and we will see what happens. Rob Walker – Florence : And then finally how much do you anticipate mark-to-market adding in 2013, versus your adjusted 485 number? It looks like it would have been $0.35 in 2012 but only about this quarter $0.05 was in your adjusted 2012 number.

Well let me state it this way; on a year over year basis, on an adjusted EPS perspective mark-to-market will not have any impact next year; it'll be very-very small. Obviously there would be a mark-to-market actuarial adjustment based on gains and losses that we would recognize but that would be in our U.S. GAAP or fully reported numbers. Now if you compare our results versus how we traditionally accounted for pensions, it's roughly a $0.20, $0.19 to $0.20 improvement in that adjusted EPS number. So, if you look at 2012, it was a $0.19 improvement and we would expect something similar in 2013 and that's driven by removing or having previously recognized, restated out the amortization of deferred gains and losses and so that effect will slowly go down overtime as that amortization effect goes away. Rob Walker – Florence : Just to clarify to make sure I understood that, so next year you anticipate about almost $0.20 improvement, which could be about 4% earnings growth.

Now versus the 45. So the 45 already has mark-to-market pension accounting in that. So the year over year impact in 2013 is flat, so there's no impact.

And your next question comes from the line of Mike Sison at Keybanc Capital, please proceed.

Just curious, when you think about how the quarter’s role, you sort of commented the first half would be challenging, maybe flat. Then you also noted in the fourth quarter 2012 you got the taxes and the help there. So that’s a tough quarter to be up. So does the most of the earnings growth, if you get it come in the third, is that sort of the way to look at the year?

Yes, I think you have got to look at it by division. The way the catalyst is shaping up right now, they have got cost in the first half of the year and they have got some increased volumes built in over the second half. So catalyst I think you will see a study build, with some pretty big in third and fourth quarters if those volumes come out the way you expect. You would expect a backend year for Fine Chemistry services. So I would see that being kind of, higher progressively into the second, the third and then the fourth and then most of the time for polymers, as we will come back from Chinese New Year and see what happens although with the last half of the first quarter, usually a stronger second and third quarter with a weaker fourth but I think that weaker fourth in polymers will not totally offset the strength that we expect in catalyst if that volume comes through. Mike Sison – KeyBanc Capital: Okay and then just trying to gauge your sentiment Luke. You sort of noted as you did today a lot of positives and headwinds coming in. Do you feel better as you head into 2013 than you did maybe two to three months ago?

I feel better. Yeah I feel better about the strategy, I feel better about, we have more information a day. So with more information, you are able to plan better. I feel good about the sites. We have always said these projects could online, on time and on budget and we have always expected them to and they were always tracking but I was able to go to Korea and see that start up with that Greenfield site. The biggest development I see is the work in the catalyst development unit that we have over there is filled up. So that bodes well for filling up that site quickly in the second half of the year and we are seeing some pickup in our pure growth family of products in catalyst; so that feels good. I just don’t know what is going to happen in electronics longer term; it feels better today than it did three or four months ago. There is some good data and bad data but there is more clarity. So you can plan for when you have more clarity and we pretty well feel good about the clear completion fluids. So, overall I would say today, I feel better than I did four months ago.

And we have time for two more questions. Our next question will come from the line of David Begleiter of Deutsche Bank. Please proceed.

Luke in Bromide, as far as getting a very low utilization rates, are you thinking about closing or probably shuttering some capacity gains, some additional pricing power?

Luke in Bromide, as far as getting a very low utilization rates, are you thinking about closing or probably shuttering some capacity gains, some additional pricing power?

No, because I don’t feel the need to operate those sites wide open. It’s a no win situation if you go out and try to chase that volume and to shutter it down, if you remember, in 2009 and 2010 whenever it’s crying backup, if you remember back, we will run in as hard as we could run and still could not meet the customer demand out there for that build. So to take it out puts me at risk of not being able to meet a customer’s need when the market rebounds there. So we will operate them efficiently as possible from a cost standpoint. We will cross train employees, we will ensure that we are operating them as efficiently as possible but to take them out of service, all that does is I got to write off for the asset that that’s no longer in service. So it’s really, I don’t see where that does us a whole lot of good from an industry standpoint.

Okay, and just on the JBC agreement and the change in the structure for leading to reduce earnings, a little more color on that, any other structures in agreement that could result in your having reduced profitability from that, that data?

Okay, and just on the JBC agreement and the change in the structure for leading to reduce earnings, a little more color on that, any other structures in agreement that could result in your having reduced profitability from that, that data?

What I would tell you is and this is public data, that our potash coal pricing is put there before. So originally the bulk and there are some gradations of this but originally what’s been disclosed publically is that the original profit share was 70% - 30%. 70% Albermarle 30% and it’s being reduced to 60% - 40% in 2013.

And our final question will come from the line of Steven Schwartz of First Analysis. Please proceed.

In Fine Chemistry, this fourth quarter lull due to campaign timing, I presume that is related to you just meeting your volume requirements for your customer, and if you could so just confirm that for me and then, as we start 2013 I presume that you then resume producing volume for those customers plus you have these new awards. So can you frame up what the bump might be in volume and/or profit in this first quarter versus first quarter of 12?

In Fine Chemistry, this fourth quarter lull due to campaign timing, I presume that is related to you just meeting your volume requirements for your customer, and if you could so just confirm that for me and then, as we start 2013 I presume that you then resume producing volume for those customers plus you have these new awards. So can you frame up what the bump might be in volume and/or profit in this first quarter versus first quarter of 12?

Yes, so the lull that occurred in 2012 in the fourth quarter 2012, related to existing time price where they had produced all that they have requested for us to produce for the year and there was a lull in their demand in the fourth quarter or from the timing of the campaign. If you look at the first quarter, some of those contracts are still not up to previous levels and are expected to be for the later in 2013. So you will not see a pickup in 2013, first quarter versus fourth quarter 2012 in those specific businesses.

Okay so but then some of the newer contracts might kick in and help offset some of that.

Okay so but then some of the newer contracts might kick in and help offset some of that.

It might offset some of it but I would still say that, as I said it’s more second half. So they will likely be sequentially down in the first quarter, Steve. Steven Schwartz – First Analysis: And then as my follow up, hopefully just a quick answer for you, Luke you gave the volume impact in FCC due to the turnarounds of that 5000 to 6000 tons or 5%. With respect to the Middle East refinery project, can you give us a reference around that 5,000 to 6000, what’s that worth for you?

Yes, it's hard to give the reference around that because we don't know when they're going to start up and it wasn't volume that was in 2012. So other than that, I can't really get into the details of what it is other than say it's a very large unit that's coming on line that we’re excited that our technology was slated and awarded that contract and we're looking forward to servicing, whether it comes online at the end of 2013 which we hope, which would give us a little kick that I've already figured in when I told you what I thought that volumes would be year-over-year and if it does a role in 2014 and we'll have the volumes in it. Steven Schwartz – First Analysis Corp.: Okay, but relative to your prior thinking, it sounds like it was more than 6000 tons, your prior thinking was.

Yes, so whenever we talked about it I’ll you this project, whenever we originally got it, it was going to be first half of 2013 and now it’s third quarter and now it could slip into 2014. So it’s relative to our thinking at a point in time Steve and I'm not trying to be evasive in the answer but depending upon whatever we've talked in the second quarter or third quarter or fourth quarter, there was a different volume expectation that we have for 2013. And what I'm saying is, the most we're going to get on that is maybe a quarter, a volume and it could slide in 2014. So at a point of time, it was pretty significant, whenever we talked about step out but from where it is today, whether it's in the fourth quarter or whether it's in the first quarter, it's sizeable but it's still significant volume.

At this time I'd like to turn the call over to Mr. Crenshaw for closing remarks.

I would just say thanks for your time and your interest in our results, and invite investors and analysts to call with any further questions. Thank you.

I would just say thanks for your time and your interest in our results, and invite investors and analysts to call with any further questions. Thank you.

Thank you very much. This concludes today's conference. Thank you for your participation, you may now disconnect. Have a wonderful day.