Albemarle Corp. (NYSE:ALB)

Goodwill

Goodwill displayed a generally stable trend with a slight increase from 1,567,169 thousand USD in 2018 to 1,617,627 thousand USD in 2022. The value peaked in 2020 at 1,665,520 thousand USD before experiencing a modest decline and stabilization in subsequent years.

Customer lists and relationships

Values for customer lists and relationships showed moderate fluctuation over the analyzed period. Starting at 428,372 thousand USD in 2018, the amount fell slightly to 422,462 thousand USD in 2019, rose to a peak of 448,748 thousand USD in 2020, and then gradually decreased to 412,670 thousand USD by 2022. This represents an overall moderate decline from the initial value.

Trade names and trademarks

Trade names and trademarks experienced a downward trend, starting from 18,453 thousand USD in 2018 and declining steadily to 13,161 thousand USD in 2022, representing a decrease of approximately 29%. The decline was relatively consistent year over year, indicating a possible impairment or divestiture in this category.

Patents and technology

Patents and technology values showed some volatility, beginning at 55,801 thousand USD in 2018. After minor fluctuations, the category fell significantly to 46,399 thousand USD in 2022 following a peak at 58,096 thousand USD in 2020. This decline suggests reduced capitalization or amortization effects impacting the net value.

Other intangible assets

The “Other” intangible asset category steadily decreased each year from 43,708 thousand USD in 2018 to 35,186 thousand USD in 2022, marking an approximately 20% reduction over the period.

Other intangibles, gross asset value

The gross asset value of other intangibles exhibited a cyclical pattern with an initial decrease from 546,334 thousand USD in 2018 to 536,851 thousand USD in 2019, followed by an increase to 565,418 thousand USD in 2020. Thereafter, it declined steadily each year to reach 507,416 thousand USD in 2022, reflecting an overall net decrease over the five-year period.

Accumulated amortization

Accumulated amortization increased consistently in magnitude each year, moving from -160,191 thousand USD in 2018 to a peak of -231,333 thousand USD in 2021 before slightly decreasing to -219,546 thousand USD in 2022. This upward trend in amortization balances primarily reflects ongoing expense recognition related to intangible assets, with a slight reduction in the final year indicating possible adjustments or impairments.

Other intangibles, net book value

The net book value of other intangibles declined notably from 386,143 thousand USD in 2018 to 287,870 thousand USD in 2022. The greatest drop occurred between 2020 and 2021, suggesting accelerated amortization or impairment charges.

Goodwill and other intangibles (total)

The combined value of goodwill and other intangibles showed fluctuations, peaking at 2,014,625 thousand USD in 2020 before declining to approximately 1,905,497 thousand USD by 2022. This indicates a net contraction after 2020, which may reflect amortization, impairment, or changes in asset composition.

Total Assets

There is a clear upward trend in reported total assets over the period analyzed, increasing consistently from approximately $7.58 billion in 2018 to $15.46 billion by the end of 2022. Adjusted total assets, which account for goodwill adjustments, show a similar increasing pattern but at lower absolute values, rising from about $6.01 billion in 2018 to $13.84 billion in 2022. Both reported and adjusted figures demonstrate significant growth, with a noticeable acceleration in asset expansion particularly between 2021 and 2022.

Shareholders’ Equity

Reported shareholders’ equity reflects a steady increase from around $3.59 billion in 2018 to nearly $7.98 billion in 2022. Adjusted shareholders’ equity also displays continuous growth, moving from approximately $2.02 billion in 2018 to $6.37 billion in 2022. The equity figures reveal strengthening capital bases, with the adjusted amounts steadily maintaining a consistent proportion below the reported values throughout the years, indicating that goodwill adjustments have a substantial effect on equity valuation.

Comparison Between Reported and Adjusted Data

The difference between reported and adjusted totals for both assets and shareholders’ equity points to the impact of goodwill on the company’s financial statements. While both metrics increase over time, the widening gap in 2022 in particular suggests an increase in goodwill or other intangible assets contributing to the reported asset and equity values. This highlights the growing significance of non-physical assets on the company’s balance sheet.

Overall Financial Position

The data indicate robust growth in both total assets and equity, signaling an expanding company with increasing investment or acquisition activity, as implied by the rise in goodwill-adjusted figures. The steady increase in adjusted shareholders’ equity suggests a solid underlying capital structure after excluding intangible asset adjustments. This trend reflects positively on the company’s financial strength and potential for sustaining growth.

Total Asset Turnover

The reported total asset turnover showed a declining trend from 0.45 in 2018 to 0.30 in both 2020 and 2021, followed by a significant increase to 0.47 in 2022. The adjusted total asset turnover, which accounts for goodwill, followed a similar pattern but with higher values throughout the years. It decreased from 0.56 in 2018 to 0.35 in 2021, then rose sharply to 0.53 in 2022. This indicates a period of reduced efficiency in asset utilization until 2021, with a strong recovery in 2022.

Financial Leverage

The reported financial leverage increased from 2.11 in 2018 to a peak of 2.51 in 2019, then gradually declined to 1.94 by 2022. The adjusted financial leverage exhibited a similar pattern but at higher levels, rising from 2.98 in 2018 to 3.52 in 2019, then decreasing steadily to 2.17 in 2022. The data suggest a phase of heightened leverage concentration around 2019, followed by a consistent deleveraging trend in recent years.

Return on Equity (ROE)

Reported ROE declined notably from 19.34% in 2018 to a low of 2.2% in 2021 before rebounding sharply to 33.7% in 2022. The adjusted ROE mirrored this trend, starting higher at 34.37% in 2018, dropping to 3.07% in 2021, then increasing to 42.26% in 2022. This pattern highlights a significant reduction in equity profitability during the mid-period, with a strong recovery by the end of the timeline.

Return on Assets (ROA)

Reported ROA showed a noticeable decrease from 9.15% in 2018 to a nadir of 1.13% in 2021, followed by a recovery to 17.4% in 2022. Adjusted ROA, which incorporates goodwill considerations, followed a similar trajectory, declining from 11.53% in 2018 to 1.32% in 2021, then increasing to 19.44% in 2022. These figures indicate deteriorating asset profitability through 2021, with a significant improvement afterward.

Total Assets

Reported total assets exhibit a consistent upward trend over the five-year period, increasing from approximately 7.58 billion US dollars in 2018 to about 15.46 billion US dollars in 2022. This represents more than a doubling in asset size. Adjusted total assets, which exclude goodwill, also follow a similar pattern, rising from 6.01 billion US dollars in 2018 to nearly 13.84 billion US dollars in 2022, indicating substantial growth in the company's asset base even after adjustments.

Total Asset Turnover

The reported total asset turnover ratio declined steadily from 0.45 in 2018 to 0.30 in both 2020 and 2021 before recovering to 0.47 in 2022. This suggests the company's efficiency in using assets to generate sales weakened during the middle years but improved notably in the most recent year. Adjusted total asset turnover, which considers asset adjustments, reflects a similar trajectory with a peak of 0.56 in 2018, a decline to 0.35 in 2021, and a subsequent increase to 0.53 in 2022. This pattern confirms that after an initial decrease in operational efficiency as assets grew, the company managed to enhance asset utilization efficiency by 2022.

Overall Analysis

The data reveals a period of significant asset growth accompanied by an initial decrease in asset turnover ratios, indicating challenges in maintaining efficiency while expanding the asset base. However, the marked recovery in turnover ratios in 2022 implies successful strategic actions to optimize asset use despite continued growth. The distinctions between reported and adjusted figures highlight the impact of goodwill on asset values and turnover ratios but do not materially alter the overall trends observed.

Over the observed period, total assets exhibited a consistent upward trajectory, indicating steady growth in asset base. Reported total assets increased significantly from 7,581,674 thousand US dollars in 2018 to 15,456,522 thousand US dollars in 2022. Similarly, adjusted total assets—excluding goodwill effects—followed a parallel rising trend, growing from 6,014,505 thousand US dollars to 13,838,895 thousand US dollars during the same timeframe, illustrating substantial asset expansion when adjusted for goodwill.

Shareholders’ equity also demonstrated a positive growth pattern. Reported shareholders’ equity rose from 3,585,321 thousand US dollars at the end of 2018 to 7,982,627 thousand US dollars by the end of 2022, more than doubling over the five-year span. The adjusted shareholders’ equity showed an analogous upward trend, increasing from 2,018,152 thousand US dollars in 2018 to 6,365,000 thousand US dollars in 2022. This indicates strengthened equity capital both reported and adjusted for goodwill, reflecting enhanced financial strength.

Regarding financial leverage, reported ratios fluctuated but displayed a general decline in recent years. The reported financial leverage ratio peaked at 2.51 in 2019, remained relatively stable at 2.45 in 2020, and subsequently decreased to 1.95 in 2021 and marginally to 1.94 in 2022. This decline suggests a reduction in leverage or a relative increase in equity versus debt in the reported financials towards the end of the period.

Adjusted financial leverage ratios, consistently higher than reported figures, also followed a downward trend after peaking in 2019 at 3.52. The ratio decreased to 3.38 in 2020, then more sharply to 2.33 in 2021, and further to 2.17 in 2022. This pattern highlights a significant deleveraging trend once adjustments for goodwill are considered, indicating improved capital structure and potentially lower financial risk.

Overall, the data reflects solid asset growth and increasing equity bases, with a notable trend towards decreasing financial leverage in both reported and adjusted terms, particularly after 2020. This may imply a strategic shift towards strengthening equity financing and reducing reliance on debt over time.

The data presents a comparative overview of reported and goodwill-adjusted shareholders’ equity alongside their respective return on equity (ROE) values over a five-year period ending in 2022.

Shareholders’ equity trends

Both reported and adjusted shareholders’ equity demonstrate a consistent upward trend throughout the period. Reported equity increased from approximately $3.59 billion in 2018 to around $7.98 billion in 2022, indicating a significant growth exceeding 100%. Similarly, adjusted equity rose from about $2.02 billion to roughly $6.37 billion, reflecting substantial enlargement but at a slightly lower absolute level compared to reported figures. The gap between reported and adjusted equity widens over time, suggesting a growing impact of goodwill or other adjustments on the equity base.

Return on Equity (ROE) analysis

ROE values for both reported and adjusted data show a notable variation with certain common patterns. Initially, reported ROE starts high at 19.34% in 2018, then declines steadily to a low of 2.2% in 2021 before surging sharply to 33.7% in 2022. Adjusted ROE follows a similar trajectory but at higher margins: starting at 34.37% in 2018, it decreases to 3.07% by 2021, then rises dramatically to 42.26% in 2022. This pattern indicates a period of reduced profitability on equity leading up to 2021, followed by a strong recovery and improved financial performance in the most recent year.

Insights on adjustments and implications

The adjusted equity figures, which exclude goodwill effects, are consistently lower than the reported figures, suggesting that goodwill represents a significant component of the company's balance sheet. The adjusted ROE consistently exceeds reported ROE, which may imply that goodwill and related intangible assets dilute the apparent return on equity when included. The sharp increase in ROE in 2022, especially in adjusted terms, could point to enhanced operational efficiency or improved earnings generation relative to the equity base excluding goodwill.

Total Assets

The reported total assets showed a consistent upward trend over the five-year period. Starting from approximately 7.58 billion US dollars at the end of 2018, assets increased to roughly 9.86 billion in 2019 and continued rising to 10.45 billion in 2020, then 10.97 billion in 2021, before experiencing a significant jump to 15.46 billion in 2022. Adjusted total assets, which exclude goodwill, followed a similar trend but at lower absolute levels, beginning at about 6.01 billion in 2018 and increasing to 13.84 billion by the end of 2022. This pattern suggests ongoing asset growth with a distinct acceleration in the latest period.

Return on Assets (ROA)

Both reported and adjusted ROA metrics exhibit a fluctuating trajectory with an initial decline followed by a pronounced recovery. Reported ROA declined from 9.15% in 2018 to a low of 1.13% in 2021, indicating diminishing profitability relative to total assets during this interval. In contrast, the adjusted ROA, which likely reflects core operating performance excluding goodwill effects, fell from 11.53% to 1.32% over the same period. Notably, 2022 marks a strong rebound for both measures, with reported ROA surging to 17.4% and adjusted ROA climbing further to 19.44%. This resurgence suggests an improvement in asset utilization efficiency and profitability independent of goodwill adjustments.

Comparative Insights

The gap between reported and adjusted total assets reveals the substantial impact of goodwill on the balance sheet throughout the years. While both asset measures grew, the adjusted figures demonstrate that intrinsic asset value also expanded, particularly evident in 2022. The adjusted ROA consistently surpassed reported ROA, highlighting that the core business generated relatively higher returns when goodwill is excluded. The sharp decrease in ROA metrics from 2018 through 2021 indicates a period of reduced profitability or increased asset base usage inefficiencies, followed by a robust recovery in 2022. This pattern may reflect operational improvements, changes in asset composition, or the effects of external factors influencing profitability and asset management.