Analysis of Debt
Total Debt (Carrying Amount)
Albemarle Corp., balance sheet: debt
US$ in thousands
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 total long-term debt exhibits a volatile trajectory over the five-year period from 2018 to 2022, characterized by an initial phase of aggressive expansion, a period of contraction, and a subsequent rebound in borrowing.
- Total Debt Trajectory
- Total long-term debt increased substantially from 1.71 billion US dollars in 2018 to a peak of 3.57 billion US dollars in 2020. Following this peak, a significant contraction occurred in 2021, where the carrying amount fell to 2.39 billion US dollars, before increasing again to 3.22 billion US dollars by the end of 2022.
- Debt Maturity Composition
- The composition of debt shifted markedly over the analyzed period. The non-current portion of long-term debt consistently represents the vast majority of the total carrying amount. The current portion of long-term debt showed significant volatility, peaking at 804.68 million US dollars in 2020 before declining to a negligible 2.13 million US dollars by December 31, 2022. This indicates a substantial reduction in short-term debt obligations as of the final reporting date.
- Analysis of Borrowing Patterns
- A period of rapid debt accumulation is evident between 2018 and 2020, during which total debt more than doubled. The decline observed in 2021 suggests a strategic deleveraging event or the settlement of significant obligations. However, this trend reversed in 2022, as long-term debt excluding the current portion reached its highest level in the five-year period at 3.21 billion US dollars, shifting the total debt profile almost entirely toward long-term maturity.
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Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Total long-term debt (fair value) | 2,993,027) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.93 |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on long-term debt: 3.94%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 1.13% | 401,265) | 4,514) | |
| 1.63% | 532,000) | 8,645) | |
| 3.45% | 171,612) | 5,921) | |
| 4.65% | 650,000) | 30,225) | |
| 5.05% | 600,000) | 30,300) | |
| 5.45% | 350,000) | 19,075) | |
| 5.65% | 450,000) | 25,425) | |
| 0.36% | 2,997) | 11) | |
| 4.41% | 79,404) | 3,502) | |
| Total | 3,237,278) | 127,617) | |
| 3.94% | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 127,617 ÷ 3,237,278 = 3.94%
Interest Costs Incurred
Albemarle Corp., interest costs incurred
US$ in thousands
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).
Total interest costs incurred exhibited a consistent upward trajectory from 2018 to 2022, rising from US$ 71.7 million to US$ 154.1 million. This represents a cumulative increase of approximately 114.7% over the five-year period, indicating a substantial rise in the cost of servicing debt or an increase in the total volume of debt obligations.
- Interest and Financing Expenses
- Expenditures recognized in the period showed moderate growth between 2018 and 2020, followed by a contraction in 2021 to US$ 61.5 million. A significant surge occurred in 2022, where expenses reached US$ 123.0 million, effectively doubling the previous year's costs. This sharp spike suggests either a substantial increase in borrowing, higher interest rates, or the settlement of floating-rate obligations.
- Interest Capitalized on Significant Capital Projects
- The amount of interest capitalized showed more volatility than total expenses. Capitalization grew steadily from US$ 19.3 million in 2018 to a peak of US$ 50.0 million in 2021, reflecting a period of intense investment in long-term assets. In 2022, this figure decreased to US$ 31.1 million, suggesting a reduction in new capital project initiations or the completion of major projects.
- Composition of Interest Costs
- The distribution between expensed and capitalized interest shifted over the period. In 2021, capitalized interest represented approximately 44.9% of total costs incurred, the highest proportion in the series. Conversely, by 2022, the proportion of expensed interest rose to 79.8% of total costs, marking a transition from project-related financing toward general operational financing costs.
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Adjusted Interest Coverage Ratio
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).
2022 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and financing expenses
= 3,328,692 ÷ 122,973 = 27.07
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 3,328,692 ÷ 154,073 = 21.60
An analysis of interest coverage metrics reveals a period of sustained decline from 2018 through 2021, followed by a sharp recovery in 2022. This pattern indicates a fluctuating capacity to service debt obligations over the observed five-year period.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- A continuous downward trajectory is observed from 2018 to 2021, with the ratio decreasing from 13.06 to a minimum of 2.61. This trend represents a significant compression in the safety margin available to cover interest expenses. However, a substantial reversal occurred in 2022, with the ratio increasing to 21.60, marking the highest value in the period.
- Interest Coverage Ratio (without capitalized interest)
- A mirrored trend is evident in the non-adjusted ratio, which started at 17.87 in 2018 and declined steadily to 4.73 by 2021. Similar to the adjusted metric, a sharp spike to 27.07 was recorded in 2022, suggesting a strong improvement in operational profitability relative to non-capitalized interest costs.
- Comparative Impact of Capitalized Interest
- The adjusted ratio remains consistently lower than the ratio without capitalized interest across all five years. The variance between these two metrics highlights the impact of capitalized interest on the total interest burden. The pressure on debt servicing was most acute in 2021, where the adjusted ratio reached its lowest point, indicating that capitalized interest significantly reduced the available coverage margin during that fiscal year.
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