Scott A. Tozier
Executive Vice President & Chief Financial Officer at Albemarle
Thanks, Kent, and hello, everyone. On Slide five, let's review our third quarter performance. Net sales were $2.3 billion, up 10% compared to last year. This increase was driven by higher energy storage volumes, thanks to expansion of our mining and conversion assets. Net income attributable to Albemarle was approximately $303 million, down 66% compared to the prior year. Similarly, diluted EPS was $2.57, down 66%. Higher net sales were more than offset by higher cost of goods sold, primarily due to inventory timing, and I'll discuss these timing impacts more in a moment. Our year-to-date results reflect the strong performance and significant growth we've achieved this year despite recent softer lithium pricing. For the nine months ended September 30, net sales are up 55% year-over-year, and net income is up 42%.
Looking at Slide six. Third quarter adjusted EBITDA was $453 million, a decrease of 62% year-over-year, driven primarily by softer lithium market pricing and timing impacts of spodumene inventory and energy storage. The Specialties business was also down due to continued lower volumes and pricing related to softness in certain end markets. For the first three quarters of 2023, adjusted EBITDA was more than $3 billion, up 38% against last year. Again, Energy storage growth reflects the majority of that increase with both volumes and prices up year-over-year.
On Slide seven, as Kent mentioned, we are lowering our total company outlook for 2023. As has been our practice, this outlook assumes recent lithium market price indices are constant for the remainder of the year. And as a result, we have decreased the range for net sales. Under this methodology, 2023 total company net sales would be in the range of $9.5 billion to $9.8 billion. This range represents an increase in net sales of 30% to 35% over the prior year, driven by the ramp of our energy storage volumes. Our adjusted EBITDA outlook is expected to be in the range of $3.2 billion to $3.4 billion. This implies full year EBITDA margins of 34% to 35%. Our full year 2023 adjusted EPS outlook has also been adjusted to a range of $21.50 to $23.50. We expect our net cash from operations to be in the range of $600 million to $800 million.
The decrease in adjusted EBITDA and net cash from operations reflects current lithium market prices and lower expected sales volumes at our Talison joint venture. Our partner at Talison, elected not to take their full allocation in the second half of this year, and this has impacted our equity income for the period. Our capex guidance remains in line with previous forecasts at $1.9 billion to $2.1 billion, which, as a reminder from last quarter, reflects 100% ownership of our conversion assets with the completed revised agreements with Mineral Resources. We expect to provide our full year 2024 outlook on our fourth quarter call in February. Turning to the next slide for more detail on our outlook by segment.
Assuming recent lithium market prices remain constant through the rest of the year, we expect energy storage 2023 net sales in the range of $7 billion to $7.2 billion and adjusted EBITDA to be flat to slightly down on the year as timing impacts of higher-priced spodumene more than offset higher net sales. We are projecting that full year average realized pricing increases will be in the range of 15% to 20% year-over-year and energy storage volume growth in the range of 30% to 35% year-over-year. We continue to expect Q4 to see stronger production volumes as a result of project ramps. In 2024, volume growth is anticipated to continue as Kemerton, Qinzhou and La Negra ramp to meet the expected demand from continued strong EV production.
In the Specialties, we now expect net sales to be approximately $1.5 billion, with adjusted EBITDA expected to be down 40% to 45% year-over-year for the full year. This is due to continued softness in consumer electronics and elastomers, partially offset by strength in demand in other specialties end markets, including pharmaceuticals and oilfield. We continue to monitor the situation in the Middle East and any impacts at our operations in Jordan. Currently, JBC is operating as usual without disruption to our supply chain. Macroeconomic and geopolitical uncertainties will impact market visibility in this business well into 2024.
Ketjen's 2023 full year adjusted EBITDA is now expected to be up 250% to 325% year-over-year due to higher pricing and volumes as well as productivity improvements. During the quarter, we saw higher volumes driven by high refinery utilization. We also saw benefits of higher contract pricing primarily for FCC products which is expected to continue through 2023 and into 2024. We are encouraged to see inflation in Material and Energy costs moderating and expect this trend to continue through 2024. On Slide nine, we have an experienced team that knows how to operate in a variety of price environments. Maintaining our disciplined growth mindset, we are taking a comprehensive review of actions that will support our near-term profitability and cash flow.
As we've done in the past, we're reviewing our project spend and sequencing of our projects to preserve cash. We're also implementing cost and efficiency improvements across our business. For example, we've reduced noncritical travel and are reducing discretionary spending. Our Albemarle Way of Excellence is the standard by which we choose to operate. Slide 10 provides an update to the targets we've made in manufacturing and procurement. We're on track to exceed our goal of $170 million in productivity benefits in 2023. In manufacturing, improvements to our overall equipment effectiveness to improve yield and utilization are expected to exceed $70 million in benefits. In procurement, we strategically sourced to capture lower raw material pricing. In 2024, we expect to increase these initiatives, targeting additional benefits across manufacturing, procurement and back office.
Lowering operational costs in our business is critical to our success as we orient towards sustainable growth. As a reminder, most of our energy storage volumes are sold under long-term contracts with strategic customers. Our expected 2023 sales mix on Slide 11 remains unchanged from last quarter and reflects recent lithium market prices. We expect year-over-year energy storage volume growth to be in the range of 30% to 35% in 2023. This is driven by successful execution and ramping new capacity as well as additional tolling. With additional conversion assets coming online in 2024 and beyond, we still anticipate a 20% to 30% CAGR in Albemarle sales volumes between now and 2027. And we remain on track to nearly triple our volumes to more than 300,000 tons. Slide 13, is the updated bridge for our energy storage-adjusted EBITDA margins.
Full year 2023 margins are expected to normalize in the 40% range from the very high rates we saw in 2022. As always, Talison equity income is included in our adjusted EBITDA on an after-tax basis, that tax drag impacted EBITDA margins by about 7% to 10%. The other impacts on the chart are relatively small and/or offsetting. Higher lithium pricing is offset by other items. This year, we had a 5% negative impact from MARBL JV accounting that goes away next year with the closure of the restructured MARBL JV. That leaves the largest impact to our margins at 20% spodumene inventory lag. We understand this inventory lag is complicated and can be difficult to forecast. So I want to spend a little bit more time on that.
Through the Talison joint venture, Albemarle has access to one of the world's best lithium resources. Greenbushes is a large, high-grade and, therefore, low-cost spodumene mine. We recognize our 49% share of Talison earnings in equity income and cash dividends. Our 50% share of Talison offtake also flows through inventories and cost of goods sold based on market pricing. The timing of inventories and sales can often drive short-term margin variations. Excluding these timing impacts, we expect energy storage-adjusted EBITDA margins to be in the range of 30% to 40%, even at today's prevailing market pricing for lithium and spodumene.
Turning to Slide 15. In the Talison joint venture, we recognized profit associated with our partners' offtake immediately. We recognized profit associated with our offtake when the product is converted and sold which typically takes about six months from when we first extract spodumene from the ground. Throughout 2022 in the first half of 2023, Talison pricing on partner shipments was higher than that realized on our own shipments. Timing differences between the recognition of our profit on our partner's offtake and our offtake resulted in about $800 million of benefit to EBITDA during that period. As spodumene market prices decreased, we expect this effect to reverse as we recognized higher priced spodumene and cost of goods sold and lower prices in equity income. However, we expect this timing-related impact to be temporary, with no impact to adjusted EBITDA at steady market prices.
Again, assuming today's market prices are held constant, we expect energy storage, adjusted EBITDA margins to average in the range of 30% to 40%. Turning to Slide 16. Albemarle's capital allocation priorities remain unchanged: first, investing in high-return organic and inorganic growth; second, maintaining financial flexibility and our investment-grade credit rating; and lastly, funding our dividends. Planned expansions to deliver volumetric growth continue to progress across the company's global portfolio. Although, as I mentioned before, in this softer market, we are taking a hard look at the level of our capex spending and the sequence of our projects. As it relates to inorganic opportunities, we announced a few weeks ago that we decided not to pursue a binding agreement to purchase Liontown and formally withdrew our nonbinding offer.
While we had productive engagement with Liontown and as we learn more, we decided that moving forward with the acquisition at this time was not in Albemarle's best interest. This reflects our disciplined capital allocation and M&A approach. As we look forward, we continue to evaluate a broad range of M&A opportunities. However, in the current environment, the scale of those opportunities are not as big. And we have many options available across three areas: lithium resources, process technology for our core business and for new advanced materials and battery recycling. Turning to Slide 17. Our balance sheet flexibility is a competitive advantage that allows us to grow both organically and through acquisition as well as support shareholder returns. As of year-end 2023, we expect our leverage ratio to be 1.2 times to 1.3 times net debt-to-EBITDA. And with that, I'll turn it back over to Kent for a market update and closing remarks.
