Albemarle Corp. (NYSE:ALB)

The analysis of the reported debt data over the five-year period reveals notable fluctuations and trends in the company's debt structure. Both the current portion of long-term debt and the long-term debt excluding the current portion have experienced significant changes, influencing the total long-term debt carrying amount accordingly.

Current Portion of Long-Term Debt

The current portion of long-term debt showed a declining trend from 2018 to 2019, decreasing from approximately 307,294 to 187,336 thousand US dollars. In 2020, there was a substantial increase, with the amount rising sharply to 804,677 thousand US dollars. Following this peak, the current portion decreased markedly in 2021 to 389,920 thousand US dollars and further declined to a minimal level of 2,128 thousand US dollars in 2022. This pattern indicates a high repayment or refinancing activity affecting the short-term liabilities within the total long-term debt.

Long-Term Debt Excluding Current Portion

The long-term debt excluding the current portion experienced considerable volatility. Starting at 1,397,916 thousand US dollars in 2018, it doubled to nearly 2,862,921 thousand US dollars in 2019. There was a slight decrease in 2020 to 2,767,381 thousand US dollars, followed by a significant reduction in 2021, ending at 2,004,319 thousand US dollars. However, in 2022, it increased again sharply to 3,214,972 thousand US dollars. These fluctuations suggest varying strategies in long-term financing, including possible new borrowings or repayments affecting the debt maturity profile.

Total Long-Term Debt (Carrying Amount)

The total long-term debt carrying amount consolidates the trends observed in its components. It rose substantially from 1,705,210 thousand US dollars in 2018 to a peak of 3,572,058 thousand US dollars in 2020. A decrease occurred in 2021, reducing total debt to 2,394,239 thousand US dollars, followed by an increase again in 2022 to 3,217,100 thousand US dollars. This overall trend reflects the combined impact of changes in both short-term and long-term maturity debt and indicates a company actively managing its debt levels, possibly in response to changing financial conditions or strategic considerations.

Interest and Financing Expenses

The interest and financing expenses demonstrated a generally increasing trend over the analyzed five-year period. Starting at $52,405 thousand in 2018, there was a moderate increase to $57,695 thousand in 2019. This figure rose more substantially to $73,116 thousand in 2020, followed by a slight decline to $61,476 thousand in 2021. However, a significant surge occurred in 2022, with expenses more than doubling to $122,973 thousand, representing the highest value in the reviewed timeframe.

Interest Capitalized on Significant Capital Projects

Interest capitalized on significant capital projects also showed notable variability during the period. Beginning at $19,300 thousand in 2018, the amount increased considerably to $30,200 thousand in 2019 and remained relatively stable at $30,400 thousand in 2020. The figure peaked notably in 2021 at $50,000 thousand, indicating increased capital project activity or changed capitalization policy. In 2022, the capitalized interest decreased to $31,100 thousand, closer to prior years but still above the 2018 level.

Interest Costs Incurred

The total interest costs incurred, which sums interest and financing expenses with interest capitalized, showed a clear upward trajectory throughout the timeframe. The costs rose from $71,705 thousand in 2018 to $87,895 thousand in 2019, continuing to increase to $103,516 thousand in 2020 and $111,476 thousand in 2021. The most substantial increase was observed in 2022, when the interest costs surged to $154,073 thousand, representing the highest annual cost recorded during the reviewed period.

Summary of Trends

The data indicate increasing interest-related costs, with a particularly sharp rise in 2022. Fluctuations in interest and financing expenses and capitalized interest suggest variations in borrowing costs and capital project investments. The peak in capitalized interest in 2021 may reflect increased capital expenditures, while the significant rise in total interest costs in 2022 points to higher overall financing expenses and capitalized interest combined.

Interest coverage ratio (without capitalized interest)

The interest coverage ratio demonstrated a declining trend from 2018 through 2021, falling from 17.87 in 2018 to a low of 4.73 in 2021. This indicates a reduction in the company's ability to cover interest expenses from operating earnings during this period. However, in 2022, there was a substantial recovery, with the ratio increasing sharply to 27.07, which suggests a significant improvement in earnings relative to interest expense.

Adjusted interest coverage ratio (with capitalized interest)

This ratio also followed a similar downward trajectory from 13.06 in 2018 to a low of 2.61 in 2021, indicating that when considering capitalized interest, the company faced even greater challenges in covering interest costs. The recovery in 2022 was notable, rising to 21.6, which reflects an enhanced ability to meet interest obligations after accounting for capitalized interest costs.

Overall Analysis

Both metrics reveal a period of decreasing interest coverage ability from 2018 to 2021, signaling potential financial strain or increased interest expenses relative to earnings. The pronounced improvement in 2022 suggests either increased earnings, reduced interest expenses, or a combination of both, thereby strengthening the company's debt servicing capacity. The adjusted ratio remains consistently lower than the unadjusted ratio, highlighting the effect of capitalized interest on financial leverage assessments.