Scott Tozier
Executive Vice President and Chief Financial Officer at Albemarle
Thanks, Kent, and hello, everyone. On slide five, let's review our second quarter performance. Net sales were $2.4 billion, up 60% compared to last year. This nearly $1 billion increase was driven by energy storage as a result of both higher market pricing and higher volumes, which were up almost 40%. Net income attributable to Albemarle was approximately $650 million, up 60% compared to the prior year. Diluted EPS was $5.52, also up almost 60%, and adjusted diluted EPS of $7.33 was more than double last year. At the end of July, we reached agreements in principle with the Department of Justice on a matter that we initially disclosed in 2018 related to conduct in our catch-in business occurring prior to 2018. Our Q2 GAAP results include an approximately $219 million accrual to resolve this matter. Looking at slide number six. Second quarter adjusted EBITDA was over $1 billion, an increase of nearly 70% year-over-year, driven primarily by higher pricing as well as higher volumes in Energy Storage.
Our Specialties business was down year-over-year due to lower volumes and pricing related to weakness in certain end markets such as electronics and [Technical Issues], insurance claim receipts and lower energy costs. Let's look at the updated total company outlook on slide seven. We are raising our 2023 guidance for net sales and adjusted EBITDA to reflect current lithium market prices. As has been our practice, this guidance assumes recent lithium market price indices are constant for the remainder of the year. And as a result, we have increased the lower end of the range for net sales. We now expect 2023 total company net sales to be in the range of $10.4 billion to $11.5 billion. We expect third quarter net sales to be relatively flat sequentially followed by an increase in fourth quarter net sales as we ramp energy storage volumes.
We are increasing our adjusted EBITDA guidance to be in the range of $3.8 billion to $4.4 billion. This implies full year EBITDA margins in the range of 37% to 38%, also up from previous guidance. Our full year 2023 adjusted diluted EPS guidance is also increasing to a range of $25 to $29.50, reflecting a year-over-year improvement of about 25% at the midpoint. We expect our net cash from operations to be in the range of $1.2 billion to $1.8 billion. This is a decrease in outlook driven primarily by two factors. First, higher working capital related to the timing of our energy storage shipments. We now expect lithium sales volumes to be weighted towards the back half of the year, particularly in Q4, due to the timing of our growth projects and tolling volumes. This is expected to result in higher accounts receivable at year-end, which will convert to cash in early 2024.
Second, this outlook assumes that the DOJ payment of approximately $219 million is made by year-end. Our capex guidance has increased to $1.9 billion to $2.1 billion. This increase reflects the revised agreements with Mineral Resources. Following these revisions, Albemarle will maintain 100% ownership of the Kemerton, Qinzhou and Meishan lithium processing plants. Apart from this change, capital spending is in line with previous forecasts. Turning to the next slide for more detail on our outlook by segment. We're increasing our full year 2023 energy storage net sales guidance to be in the range of $7.9 billion to $8.8 billion. Energy Storage volume growth is expected to be at the higher end of the previous range of 30% to 40% year-over-year thanks to increased tolling and successful project execution.
We also project average realized pricing increases to be at the higher end of the previous range of 20% to 30% year-over-year, assuming recent lithium market prices continue through the rest of 2023. Adjusted EBITDA for Energy Storage is expected to increase in the range of $3.5 billion to $3.9 billion. This 15% to 30% increase is due to higher net sales, which we expect to more than offset the timing impacts of higher-priced spodumene inventories. In Specialties, we continue to see pressure in our end markets. Weakness in consumer and industrial electronics and elastomers is only partially offset by strong demand in other markets like pharmaceuticals, agriculture and oilfield services. Similar to other specialty chemicals companies, we are reducing our outlook for the full year 2023.
Net sales are now expected in the range of $1.5 billion to $1.6 billion, and adjusted EBITDA is anticipated to be between $385 million and $440 million. Q2 is expected to be the weakest quarter of the year. We took advantage of the recent market slowdown to pull forward planned maintenance and reduce inventory to maximize efficiency and free cash flow in the second half of 2023. Ketjen's 2023 full year adjusted EBITDA is expected to be up 325% to 425% over the prior year. This increase in outlook is due primarily to insurance recoveries, which are not expected to recur, as well as ongoing recovery in refining prices and improved processing costs.
As a reminder, most of our Energy Storage volumes are sold under long-term contracts with strategic customers. On slide nine, we've updated our expected 2023 net sales mix to reflect recent lithium market prices. Due to the recent rebound in lithium pricing, our full year 2023 net sales mix is now expected to be 80% index referenced variable price contracts and 20% spot. There's been no other change to our contract philosophy or structure of these contracts. Our strategy to deliver long-term growth remains on track. Turning to slide 10. We continue to expect year-over-year Energy Storage volume growth in the range of 30% to 40% in 2023. We anticipate coming in at the higher end of that range, primarily driven by the La Negra III/IV expansion, the acquisition of the Qinzhou conversion asset plus additional tolling.
With additional conversion assets coming online in 2024, we still anticipate a 20% to 30% CAGR in Albemarle sales volumes between now and 2027. We remain on track to nearly triple sales volumes to more than 300,000 tonnes. Our revised Energy Storage outlook implies EBITDA margins of around 45% for 2023, up from the prior outlook based on higher market prices. As a reminder, year-over-year margins are expected to normalize from the very high level seen in late 2022 and early 2023, primarily related to spodumene inventory lags at our Talison joint venture. On average, it takes at least six months for spodumene to go from our mines through conversion to our customers. Last year, we saw dramatic increases in prices for lithium and spodumene. Due to the time lag on spodumene inventory, we realized higher lithium pricing faster than higher spodumene cost of goods sold. This year is the reverse.
As prices decline, we are realizing lower lithium prices faster than lower spodumene costs, and we expect the majority of this impact is going to recur in the third quarter. The next item affecting margins is the accounting treatment of the MARBL joint venture. Under the amended agreements with Mineral Resources, we expect to continue to market and toll Wodgina product during 2023. As a result, we will recognize 100% of the net sales from MARBL but only our share of EBITDA. The result is about a 5% lower reported margin for 2023. Finally, our reported EBITDA margins are impacted by tax expense at Talison. Talison net income is included in our EBITDA on an after-tax basis. If you adjusted Talison results to exclude tax, margins would be about 6% [Technical Issues]. Turning to slide 12, we will continue to invest with discipline, allocating our capital and cash flows to support our highest return growth opportunities.
Our primary use of capital remains organic growth projects to leverage our low-cost resources in Australia and the Americas. Beyond organic growth, we also consider a broad range of M&A opportunities primarily across three areas: lithium resources, process technology for our core business and for new advanced materials, and battery recycling. As previously disclosed in March, Albemarle submitted an indicative proposal to acquire Liontown Resources, our preproduction spodumene resource in Australia. To date, the Liontown Board has not meaningfully engaged in progressing the transaction. Another example of our strategy is the acquisition of the Western Lithium subsidiary of Lithium Power International that we completed in July in a cash transaction of just over $20 million.
This purchase provides Albemarle with prospective exploration tenements near our Greenbushes spodumene mine, regarded as one of the world's best hard rock lithium mine. And this week, we announced an investment in Patriot Battery Metals. This investment provides a 4.9% interest in a prospective spodumene deposit located in Northern Quebec. We intend to maintain our track record of a disciplined M&A process to accelerate higher return growth while preserving financial flexibility and maintaining our investment-grade credit rating. Our balance sheet flexibility is a competitive advantage that allows us to grow both organically and through acquisition as well as support our dividend.
And with that, I'll turn it back over to Kent for a market update and closing remarks.
