Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Albemarle Corp., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The solvency profile of the organization exhibits a distinct cycle of increasing leverage followed by a significant deleveraging phase and a subsequent recovery in debt-servicing capacity. Between 2018 and 2020, there was a consistent rise in reliance on debt relative to equity and assets, which reversed sharply starting in 2021.
- Leverage and Capitalization Ratios
- Debt to equity and debt to assets ratios peaked in 2020 at 0.84 and 0.34, respectively. Following this peak, these ratios declined substantially, reaching 0.40 and 0.21 by the end of 2022. A similar trajectory is observed in the debt to capital ratio, which rose from 0.32 in 2018 to a high of 0.46 in 2020 before retreating to 0.29 in 2022. The inclusion of operating lease liabilities provides a marginal increase to these ratios but does not alter the overall trend of deleveraging.
- Financial Leverage
- Financial leverage reached its maximum in 2019 at 2.51 and remained elevated at 2.45 in 2020. By 2021 and 2022, the ratio stabilized at approximately 1.95 and 1.94, indicating a reduction in the use of debt to finance assets compared to the 2019-2020 period.
- Debt Servicing Capacity
- Interest coverage and fixed charge coverage ratios demonstrated a steady downward trend from 2018 through 2021, suggesting a period of tightening financial flexibility. Interest coverage dropped from 17.87 in 2018 to a low of 4.73 in 2021, while fixed charge coverage fell from 10.82 to 3.21 in the same period. However, 2022 marked a significant reversal, with interest coverage spiking to 27.07 and fixed charge coverage rising to 20.22, reflecting a vastly improved ability to meet fixed financial obligations.
Overall, the financial data indicates that the period of highest solvency risk occurred between 2019 and 2021, characterized by peaking leverage ratios and declining coverage. The 2022 results show a strong recovery, with leverage ratios returning to or falling below 2018 levels and coverage ratios reaching their highest points in the five-year period analyzed.
AI Ask an analyst for more
Debt Ratios
Coverage Ratios
Debt to Equity
Albemarle Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Total Albemarle Corporation shareholders’ equity | 7,982,627) | 5,625,266) | 4,268,227) | 3,932,250) | 3,585,321) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.40 | 0.43 | 0.84 | 0.78 | 0.48 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Linde plc | 0.45 | 0.33 | — | — | — | |
| Sherwin-Williams Co. | 3.41 | 3.95 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Chemicals | 0.66 | 0.52 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Materials | 0.67 | 0.55 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Albemarle Corporation shareholders’ equity
= 3,217,100 ÷ 7,982,627 = 0.40
2 Click competitor name to see calculations.
The analysis of solvency ratios from 2018 to 2022 reveals a period of increased financial leverage followed by a significant strengthening of the capital structure. The debt to equity ratio experienced a peak in 2020 before trending downward to its lowest level of the period by 2022.
- Total Debt Trends
- Total debt exhibited volatility over the five-year period. An initial upward trajectory was observed from 2018 to 2020, with debt increasing from $1.71 billion to a peak of $3.57 billion. A notable reduction occurred in 2021, bringing the balance down to $2.39 billion, although debt levels rose again to $3.22 billion by the end of 2022.
- Shareholders' Equity Growth
- A consistent and accelerating growth trend is observed in shareholders' equity. Equity increased steadily from $3.59 billion in 2018 to $7.98 billion in 2022. The most significant expansion occurred between 2021 and 2022, where equity grew by approximately $2.36 billion, substantially increasing the internal funding base.
- Debt to Equity Ratio Dynamics
- The debt to equity ratio increased from 0.48 in 2018 to a maximum of 0.84 in 2020, reflecting a higher reliance on borrowed funds relative to equity during that interval. A sharp reversal occurred in 2021, with the ratio falling to 0.43. By 2022, the ratio further declined to 0.40, indicating that the aggressive growth in shareholders' equity outweighed the increase in total debt, resulting in a more conservative solvency profile and improved financial stability.
AI Ask an analyst for more
Debt to Equity (including Operating Lease Liability)
Albemarle Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Current operating lease liabilities (included in Accrued expenses) | 35,515) | 31,603) | 22,297) | 23,137) | —) | |
| Noncurrent operating lease liabilities | 99,269) | 126,997) | 116,765) | 114,686) | —) | |
| Total debt (including operating lease liability) | 3,351,884) | 2,552,839) | 3,711,120) | 3,188,080) | 1,705,210) | |
| Total Albemarle Corporation shareholders’ equity | 7,982,627) | 5,625,266) | 4,268,227) | 3,932,250) | 3,585,321) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.42 | 0.45 | 0.87 | 0.81 | 0.48 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | 0.47 | 0.35 | — | — | — | |
| Sherwin-Williams Co. | 4.03 | 4.72 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Chemicals | 0.73 | 0.57 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Materials | 0.72 | 0.60 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Albemarle Corporation shareholders’ equity
= 3,351,884 ÷ 7,982,627 = 0.42
2 Click competitor name to see calculations.
The solvency profile exhibits a non-linear trajectory characterized by an initial increase in leverage followed by a significant strengthening of the equity base. While absolute debt levels fluctuated, the overall financial risk associated with debt-to-equity proportions decreased by the end of the observed period.
- Debt Accumulation and Peak Leverage
- A substantial increase in total debt, including operating lease liabilities, occurred between 2018 and 2020, rising from 1.71 billion to a peak of 3.71 billion. This expansion led to a corresponding increase in the debt-to-equity ratio, which climbed from 0.48 in 2018 to a peak of 0.87 in 2020, indicating a period of increased financial leverage.
- Equity Growth and Deleveraging
- Shareholders' equity demonstrated consistent and accelerating growth throughout the five-year period, increasing from 3.59 billion in 2018 to 7.98 billion by 2022. The most significant expansion occurred between 2021 and 2022, during which equity increased by approximately 42%.
- Solvency Ratio Convergence
- Despite an increase in absolute debt in 2022 compared to 2021, the debt-to-equity ratio continued to decline, reaching 0.42. This suggests that the growth in shareholders' equity has vastly outpaced the accumulation of debt, resulting in a more conservative solvency position by the end of 2022 than was present at the start of 2018.
AI Ask an analyst for more
Debt to Capital
Albemarle Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Total Albemarle Corporation shareholders’ equity | 7,982,627) | 5,625,266) | 4,268,227) | 3,932,250) | 3,585,321) | |
| Total capital | 11,199,727) | 8,019,505) | 7,840,285) | 6,982,507) | 5,290,531) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.29 | 0.30 | 0.46 | 0.44 | 0.32 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Linde plc | 0.31 | 0.25 | — | — | — | |
| Sherwin-Williams Co. | 0.77 | 0.80 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Chemicals | 0.40 | 0.34 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Materials | 0.40 | 0.36 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,217,100 ÷ 11,199,727 = 0.29
2 Click competitor name to see calculations.
The financial solvency profile between 2018 and 2022 is characterized by a period of aggressive leverage expansion followed by a strategic deleveraging of the capital structure. While absolute debt levels remained volatile, the overall capital base expanded consistently, leading to an improved solvency position by the end of the period.
- Total Debt Trajectory
- Total debt experienced a significant upward trend from 2018 to 2020, rising from 1,705,210 thousand US$ to a peak of 3,572,058 thousand US$. A notable reduction occurred in 2021, with debt falling to 2,394,239 thousand US$, before increasing again to 3,217,100 thousand US$ in 2022.
- Total Capital Expansion
- Total capital demonstrated uninterrupted growth throughout the five-year period. The capital base increased from 5,290,531 thousand US$ in 2018 to 11,199,727 thousand US$ by 2022. The most substantial increase occurred between 2021 and 2022, where capital grew by approximately 39%.
- Debt to Capital Ratio Analysis
- The debt to capital ratio reflects a non-linear trend, peaking at 0.46 in 2020. Following this peak, the ratio declined sharply to 0.30 in 2021 and further to 0.29 in 2022. This downward movement in the latter two years indicates that the growth in total capital significantly outpaced the accumulation of new debt, thereby reducing the company's reliance on borrowed funds relative to its total capital structure.
AI Ask an analyst for more
Debt to Capital (including Operating Lease Liability)
Albemarle Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Current operating lease liabilities (included in Accrued expenses) | 35,515) | 31,603) | 22,297) | 23,137) | —) | |
| Noncurrent operating lease liabilities | 99,269) | 126,997) | 116,765) | 114,686) | —) | |
| Total debt (including operating lease liability) | 3,351,884) | 2,552,839) | 3,711,120) | 3,188,080) | 1,705,210) | |
| Total Albemarle Corporation shareholders’ equity | 7,982,627) | 5,625,266) | 4,268,227) | 3,932,250) | 3,585,321) | |
| Total capital (including operating lease liability) | 11,334,511) | 8,178,105) | 7,979,347) | 7,120,330) | 5,290,531) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.30 | 0.31 | 0.47 | 0.45 | 0.32 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | 0.32 | 0.26 | — | — | — | |
| Sherwin-Williams Co. | 0.80 | 0.83 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Chemicals | 0.42 | 0.36 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Materials | 0.42 | 0.38 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,351,884 ÷ 11,334,511 = 0.30
2 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 is characterized by an initial increase in leverage followed by a significant deleveraging phase. Although total debt experienced fluctuations, the consistent expansion of the total capital base resulted in a strengthened solvency position by the end of the analyzed period.
- Debt to Capital Ratio Dynamics
- The debt to capital ratio exhibited an upward trend from 2018 to 2020, rising from 0.32 to a peak of 0.47. This movement indicates an increased reliance on borrowed funds relative to the total capital structure during this interval. A sharp reversal occurred in 2021, with the ratio falling to 0.31, and a further slight decrease to 0.30 was recorded by December 31, 2022.
- Total Debt Volatility
- Total debt, including operating lease liabilities, increased significantly from US$ 1,705,210 thousand in 2018 to a peak of US$ 3,711,120 thousand in 2020. A substantial reduction was observed in 2021, where debt fell to US$ 2,552,839 thousand, before rising again to US$ 3,351,884 thousand in 2022.
- Capitalization Growth
- Total capital showed a consistent and sustained upward trajectory, growing from US$ 5,290,531 thousand in 2018 to US$ 11,334,511 thousand in 2022. The acceleration of capital growth, particularly in 2022, outweighed the simultaneous increase in total debt, which effectively diluted the debt proportion and lowered the overall solvency ratio.
AI Ask an analyst for more
Debt to Assets
Albemarle Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Total assets | 15,456,522) | 10,974,118) | 10,450,946) | 9,860,863) | 7,581,674) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.21 | 0.22 | 0.34 | 0.31 | 0.22 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Linde plc | 0.23 | 0.18 | — | — | — | |
| Sherwin-Williams Co. | 0.47 | 0.47 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Chemicals | 0.28 | 0.23 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Materials | 0.26 | 0.22 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,217,100 ÷ 15,456,522 = 0.21
2 Click competitor name to see calculations.
The company's solvency profile between 2018 and 2022 is characterized by a period of increased leverage followed by a significant expansion of the asset base, which improved the overall debt-to-assets position.
- Total Debt Trends
- An upward trajectory in total debt was observed from 2018 to 2020, with obligations increasing from 1.7 billion US$ to a peak of 3.57 billion US$. A subsequent reduction to 2.39 billion US$ occurred in 2021, followed by a rise to 3.21 billion US$ by the end of 2022.
- Total Asset Growth
- Total assets exhibited consistent growth throughout the period, rising from 7.58 billion US$ in 2018 to 15.45 billion US$ in 2022. A notable acceleration in asset accumulation occurred between 2021 and 2022, where assets increased by approximately 4.48 billion US$.
- Debt to Assets Ratio Analysis
- The debt to assets ratio increased from 0.22 in 2018 to a peak of 0.34 in 2020, reflecting a temporary increase in financial leverage. However, a reversal occurred in 2021 as the ratio fell back to 0.22, and further declined to 0.21 in 2022. This indicates that while absolute debt levels remained higher than in 2018, the aggressive expansion of the asset base effectively diluted the impact of that debt, resulting in a strengthened solvency position by the end of the analyzed period.
AI Ask an analyst for more
Debt to Assets (including Operating Lease Liability)
Albemarle Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current portion of long-term debt | 2,128) | 389,920) | 804,677) | 187,336) | 307,294) | |
| Long-term debt, excluding current portion | 3,214,972) | 2,004,319) | 2,767,381) | 2,862,921) | 1,397,916) | |
| Total debt | 3,217,100) | 2,394,239) | 3,572,058) | 3,050,257) | 1,705,210) | |
| Current operating lease liabilities (included in Accrued expenses) | 35,515) | 31,603) | 22,297) | 23,137) | —) | |
| Noncurrent operating lease liabilities | 99,269) | 126,997) | 116,765) | 114,686) | —) | |
| Total debt (including operating lease liability) | 3,351,884) | 2,552,839) | 3,711,120) | 3,188,080) | 1,705,210) | |
| Total assets | 15,456,522) | 10,974,118) | 10,450,946) | 9,860,863) | 7,581,674) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.22 | 0.23 | 0.36 | 0.32 | 0.22 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | 0.24 | 0.19 | — | — | — | |
| Sherwin-Williams Co. | 0.55 | 0.56 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Chemicals | 0.31 | 0.26 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Materials | 0.28 | 0.24 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,351,884 ÷ 15,456,522 = 0.22
2 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 is characterized by a period of increasing leverage followed by a stabilization phase driven by substantial asset expansion.
- Debt to Assets Ratio Trend
- The ratio exhibited an upward trajectory from 0.22 in 2018 to a peak of 0.36 in 2020. This increase indicates a period where the growth of total debt outpaced the growth of the asset base. Following this peak, the ratio declined to 0.23 in 2021 and returned to 0.22 by the end of 2022, reflecting a return to the company's 2018 solvency level.
- Debt Accumulation and Reduction
- Total debt, including operating lease liabilities, rose from 1.71 billion USD in 2018 to 3.71 billion USD in 2020. A reduction occurred in 2021, with debt falling to 2.55 billion USD, before increasing again to 3.35 billion USD in 2022.
- Asset Growth and Leverage Offset
- Total assets experienced consistent growth over the five-year period, increasing from 7.58 billion USD in 2018 to 15.46 billion USD in 2022. A notable expansion in the asset base occurred in 2022, which effectively neutralized the impact of increasing debt, allowing the debt-to-assets ratio to remain stable at 0.22 despite the higher nominal debt levels.
AI Ask an analyst for more
Financial Leverage
Albemarle Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 15,456,522) | 10,974,118) | 10,450,946) | 9,860,863) | 7,581,674) | |
| Total Albemarle Corporation shareholders’ equity | 7,982,627) | 5,625,266) | 4,268,227) | 3,932,250) | 3,585,321) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.94 | 1.95 | 2.45 | 2.51 | 2.11 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Linde plc | 1.99 | 1.85 | — | — | — | |
| Sherwin-Williams Co. | 7.28 | 8.48 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Chemicals | 2.37 | 2.20 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Materials | 2.61 | 2.49 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Albemarle Corporation shareholders’ equity
= 15,456,522 ÷ 7,982,627 = 1.94
2 Click competitor name to see calculations.
The analyzed period reveals a significant expansion of the balance sheet characterized by substantial growth in both total assets and shareholders' equity, coinciding with a strategic reduction in financial leverage after 2019.
- Asset and Equity Expansion
- Total assets experienced a consistent upward trajectory, increasing from $7.58 billion in 2018 to $15.46 billion by the end of 2022. This expansion was mirrored by shareholders' equity, which grew from $3.59 billion to $7.98 billion over the same timeframe. The most pronounced acceleration in asset growth occurred in 2022, where assets increased by approximately 40% compared to the previous year.
- Financial Leverage Trends
- The financial leverage ratio exhibited volatility in the early part of the period, rising from 2.11 in 2018 to a peak of 2.51 in 2019. However, a sustained downward trend followed, with the ratio decreasing to 2.45 in 2020 and dropping further to 1.95 in 2021 and 1.94 in 2022. This decline indicates a transition toward a more conservative capital structure, as the growth in equity outperformed the growth in total assets in the latter years of the period.
- Solvency Implications
- The convergence of increasing equity and decreasing leverage suggests an improvement in long-term solvency. By 2022, the company achieved a lower reliance on external financing to support its asset base compared to the 2019 peak, thereby reducing financial risk and enhancing the equity cushion available to creditors.
AI Ask an analyst for more
Interest Coverage
Albemarle Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Albemarle Corporation | 2,689,816) | 123,672) | 375,764) | 533,228) | 693,562) | |
| Add: Net income attributable to noncontrolling interest | 125,315) | 76,270) | 70,851) | 71,129) | 45,577) | |
| Add: Income tax expense | 390,588) | 29,446) | 54,425) | 88,161) | 144,826) | |
| Add: Interest and financing expenses | 122,973) | 61,476) | 73,116) | 57,695) | 52,405) | |
| Earnings before interest and tax (EBIT) | 3,328,692) | 290,864) | 574,156) | 750,213) | 936,370) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 27.07 | 4.73 | 7.85 | 13.00 | 17.87 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Linde plc | 32.75 | 45.60 | — | — | — | |
| Sherwin-Williams Co. | 7.58 | 7.72 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Chemicals | 15.52 | 17.53 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Materials | 14.30 | 15.36 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,328,692 ÷ 122,973 = 27.07
2 Click competitor name to see calculations.
The financial data indicates a period of volatility in solvency capacity between 2018 and 2022. From 2018 through 2021, there was a consistent deterioration in the ability to service debt, which was abruptly reversed by a significant increase in operational earnings in 2022.
- Earnings before interest and tax (EBIT)
- A sustained downward trajectory is observed from 2018 to 2021, with EBIT falling from 936.37 million USD to 290.86 million USD. This represents a significant contraction in operational profitability over a four-year period. However, 2022 marked a substantial pivot, as EBIT surged to 3.33 billion USD, reflecting a dramatic recovery in earnings capacity.
- Interest and financing expenses
- Financing costs exhibited a general upward trend, increasing from 52.41 million USD in 2018 to 122.97 million USD in 2022. While a slight decrease occurred in 2021, the overall trajectory indicates an increase in the total debt servicing obligations over the five-year period.
- Interest coverage ratio
- The interest coverage ratio declined steadily from 17.87 in 2018 to a low of 4.73 in 2021, signaling a narrowing margin of safety for debt repayment. This decline was driven by the simultaneous reduction in EBIT and the general rise in interest expenses. In 2022, the ratio rose sharply to 27.07, the highest level in the observed period, as the exponential growth in EBIT far outweighed the increase in financing costs.
AI Ask an analyst for more
Fixed Charge Coverage
Albemarle Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Albemarle Corporation | 2,689,816) | 123,672) | 375,764) | 533,228) | 693,562) | |
| Add: Net income attributable to noncontrolling interest | 125,315) | 76,270) | 70,851) | 71,129) | 45,577) | |
| Add: Income tax expense | 390,588) | 29,446) | 54,425) | 88,161) | 144,826) | |
| Add: Interest and financing expenses | 122,973) | 61,476) | 73,116) | 57,695) | 52,405) | |
| Earnings before interest and tax (EBIT) | 3,328,692) | 290,864) | 574,156) | 750,213) | 936,370) | |
| Add: Operating lease cost | 43,809) | 42,338) | 33,904) | 35,335) | 37,600) | |
| Earnings before fixed charges and tax | 3,372,501) | 333,202) | 608,060) | 785,548) | 973,970) | |
| Interest and financing expenses | 122,973) | 61,476) | 73,116) | 57,695) | 52,405) | |
| Operating lease cost | 43,809) | 42,338) | 33,904) | 35,335) | 37,600) | |
| Fixed charges | 166,782) | 103,814) | 107,020) | 93,030) | 90,005) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 20.22 | 3.21 | 5.68 | 8.44 | 10.82 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Linde plc | 13.32 | 13.02 | — | — | — | |
| Sherwin-Williams Co. | 3.90 | 3.77 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Chemicals | 7.13 | 6.99 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Materials | 8.68 | 8.75 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,372,501 ÷ 166,782 = 20.22
2 Click competitor name to see calculations.
The analysis of solvency metrics between 2018 and 2022 reveals a period of contracting coverage capacity followed by a significant and rapid expansion in the final year.
- Earnings Before Fixed Charges and Tax (EBFCT)
- A consistent downward trend was observed from 2018 to 2021, with EBFCT declining from US$ 973,970 thousand to a period low of US$ 333,202 thousand. This represented a substantial reduction in the income available to service fixed obligations. However, this trajectory reversed sharply in 2022, with EBFCT increasing to US$ 3,372,501 thousand, indicating a massive recovery in earnings capacity.
- Fixed Charges
- Fixed charges remained relatively stable compared to earnings, showing a gradual increase from US$ 90,005 thousand in 2018 to US$ 107,020 thousand in 2020, followed by a slight dip in 2021. In 2022, these charges rose to US$ 166,782 thousand. While fixed costs increased overall, the growth was marginal when compared to the volatility of the company's earnings.
- Fixed Charge Coverage Ratio
- The coverage ratio exhibited a steady decline over the first four years of the period, falling from 10.82 in 2018 to 3.21 in 2021, which signaled a narrowing margin of safety for solvency. This trend was aggressively overturned in 2022, with the ratio reaching 20.22. This peak reflects an exceptionally strong ability to meet fixed obligations, driven by the disproportionate increase in EBFCT relative to the rise in fixed charges.
AI Ask an analyst for more