Albemarle Corp. (NYSE:ALB)

Finished Goods Inventory

The finished goods inventory remained relatively stable from 2018 to 2021, with values fluctuating between approximately 454 million and 496 million US dollars. However, there is a significant increase in 2022, where it jumps sharply to about 1.68 billion US dollars, indicating a substantial accumulation of finished goods during the most recent year.

Raw Materials and Work in Process

Raw materials and work in process inventories show a consistent upward trend throughout the period. Starting at approximately 158 million US dollars in 2018, this category grew steadily every year, reaching nearly 297 million US dollars in 2022–an increase of almost 88% from 2018 levels. This suggests ongoing investments in inputs and work-in-progress assets.

Stores, Supplies, and Other Inventories

The stores, supplies, and other inventory component also experienced continuous growth from 2018 through 2022. The values increased from around 60 million US dollars in 2018 to almost 100 million US dollars in 2022, reflecting a progressive buildup of these assets over the years.

Total Inventories

Total inventories saw a gradual increase from 700.5 million US dollars in 2018 to approximately 813 million US dollars in 2021. In 2022, this figure surged to about 2.08 billion US dollars, largely driven by the sharp rise in finished goods inventory. This dramatic growth in overall inventory levels in 2022 may suggest increased production, stockpiling in anticipation of higher demand, or potential inefficiencies in inventory management.

The financial data reveals several notable trends related to reported and LIFO reserve adjusted figures over the examined five-year period.

Inventories

Both reported and adjusted inventory values show a generally increasing trend. Reported inventories increase from approximately $700.5 million in 2018 to over $2 billion in 2022. Adjusted inventories, which account for the LIFO reserve, follow a similar pattern, maintaining a consistently higher value by roughly $30 million to $50 million each year, indicating the LIFO adjustment's impact on recorded inventory amounts.

Current Assets

Reported current assets fluctuate slightly between 2018 and 2021, peaking in 2019 at about $2.23 billion before dropping in 2021. However, in 2022, there is a significant increase to over $5.1 billion. Adjusted current assets mirror this pattern, showing a consistent premium over reported values due to inventory adjustments, and also spike sharply in 2022, reflecting either increased liquidity or short-term asset accumulation.

Total Assets

Total assets grow steadily from around $7.58 billion in 2018 to approximately $15.46 billion in 2022 in the reported figures. Adjusted total assets remain slightly higher due to inventory adjustments and show a consistent upward trajectory without any evident downturns, reflecting overall asset base expansion during the period.

Shareholders’ Equity

Reported shareholders’ equity rises each year from about $3.59 billion in 2018 to roughly $7.98 billion at the end of 2022. Adjusted equity values maintain a slightly higher position, indicating that the LIFO reserve adjustments contribute positively to equity values. The steady increase in equity suggests improved retained earnings or capital inflows over time.

Net Income

Net income attributable to the company shows volatility. It starts at approximately $693.6 million in 2018, then declines over the following three years, reaching a low point near $124 million (reported) in 2021. A dramatic rebound occurs in 2022, with net income surging to over $2.68 billion. Adjusted net income values are marginally lower or higher than reported values, with the same general trend. This high fluctuation may indicate cyclical factors, exceptional gains, or operational challenges impacting profitability prior to 2022.

Overall, the data indicates significant growth in inventory, asset base, and equity over the five years, alongside a noteworthy recovery in profitability during the most recent year. The LIFO reserve adjustments consistently increase the carrying values of inventories, current assets, and shareholders’ equity, reflecting the inventory cost flow assumptions' impact on financial statement presentation.

An analysis of the financial ratios over the five-year period reveals notable trends and fluctuations in liquidity, profitability, efficiency, and leverage.

Liquidity (Current Ratio)

The current ratio, both reported and adjusted, shows a general decline from 2018 through 2021, decreasing from around 1.7 to just above 1.0, indicating a reduction in short-term liquidity during these years. However, in 2022, there is a significant rebound with the ratio increasing sharply to approximately 1.9, suggesting an improved ability to meet short-term obligations at that point.

Profitability (Net Profit Margin)

Net profit margin exhibits a downward trend from 20.5% in 2018 to a low point around 3.7-4.2% in 2021. The decline indicates decreasing profitability over this period. Yet in 2022, profitability surges dramatically to nearly 37%, reflecting a substantial improvement in profit generation capabilities. Both reported and adjusted figures follow this same pattern closely.

Efficiency (Total Asset Turnover)

Total asset turnover declines between 2018 and 2020, dropping from about 0.45 to 0.3, then remains flat through 2021. In 2022, there is a recovery to roughly 0.47. This pattern suggests reduced efficiency in using assets to generate sales during 2019-2021, followed by a return to higher efficiency in the most recent year.

Leverage (Financial Leverage Ratio)

The financial leverage ratio increases from approximately 2.1 in 2018 to a peak of about 2.5 in 2019, indicating the company took on more debt relative to equity. It decreases thereafter to around 1.94 by 2022, reflecting a deleveraging trend. This reduction in leverage coincides with the improvements seen in liquidity and profitability in 2022.

Returns (ROE and ROA)

Return on equity (ROE) and return on assets (ROA) both show declining trends from 2018 to 2021, with ROE falling from around 19% to near 2%, and ROA dropping from about 9% to approximately 1%. These declines mirror the profitability and efficiency trends observed. Both ratios sharply increase in 2022, with ROE reaching approximately 34% and ROA about 17.4%, marking a pronounced recovery in returns to shareholders and asset profitability. The adjusted figures correspond closely to the reported data, confirming the consistency of these observations.

Overall, the data indicates a period of deteriorated liquidity, profitability, efficiency, and returns from 2018 through 2021, followed by substantial improvement across all these metrics in 2022. The reduction in financial leverage in the later years coincides with stronger liquidity and profitability, suggesting a more conservative capital structure contributed to the improved financial performance.

The financial data reveals distinctive trends in both reported and inventory LIFO reserve adjusted current assets and current ratios over the five-year period.

Current Assets

Reported current assets exhibited a modest upward trend from 2018 to 2019, rising from approximately 1.999 billion US dollars to 2.225 billion. Following this peak, the values slightly decreased in 2020 and 2021 to around 2.206 billion and 2.008 billion, respectively. However, in 2022, there was a significant increase, reaching approximately 5.187 billion US dollars, more than doubling the 2021 figure.

Adjusted current assets, which account for the inventory LIFO reserve, followed a similar pattern but consistently remained slightly higher than reported values. They increased from about 2.031 billion in 2018 to 2.256 billion in 2019, with minor declines in 2020 and 2021, before surging to approximately 5.245 billion in 2022. This indicates the inventory adjustment had a relatively stable incremental effect on current assets over the years.

Current Ratios

Reported current ratios declined steadily from 1.69 in 2018 to 1.07 in 2021, suggesting a gradual reduction in short-term liquidity over those years. However, in 2022, the ratio sharply increased to 1.89, signaling a much-improved ability to cover short-term liabilities with current assets during that year.

Adjusted current ratios mirrored this trend closely, decreasing from 1.72 in 2018 to 1.10 in 2021, followed by a significant increase to 1.91 in 2022, reinforcing the liquidity improvement indicated by the reported ratios. The adjustment for the inventory reserve slightly increased the current ratio values consistently across all years.

Overall, both metrics reflect a period of declining liquidity from 2018 through 2021, followed by a notable recovery in 2022. The substantial increase in current assets and current ratio in 2022 points to a marked strengthening of the company's short-term financial position, which is similarly captured whether or not the LIFO reserve adjustment is taken into account.

The data reveals significant fluctuations in both reported and adjusted net income attributable to Albemarle Corporation over the five-year period. Reported net income declined steadily from 2018 through 2021, reaching its lowest point in 2021 at 123,672 thousand USD, followed by a sharp increase in 2022 to 2,689,816 thousand USD. The adjusted net income shows a similar pattern, decreasing from 693,262 thousand USD in 2018 to 139,272 thousand USD in 2021, then sharply rising to 2,702,416 thousand USD in 2022.

The net profit margins reflect these income trends. The reported net profit margin also decreased consistently from 20.55% in 2018 to a low of 3.72% in 2021, with a substantial increase to 36.75% in 2022. The adjusted net profit margin tracks closely with the reported figures, moving from 20.54% in 2018 down to 4.18% in 2021, and then rising markedly to 36.92% in 2022.

Net Income Trends

A clear downward trend in net income is observed from 2018 to 2021, indicating challenges during this period. The considerable rebound in 2022 suggests a recovery or significant favorable event impacting earnings.

Profit Margin Trends

Profit margins decrease steadily over four years, touching their lowest point in 2021. The strong margin improvement in 2022 correlates with the net income recovery and points to enhanced profitability or operational efficiency.

Adjusted vs. Reported Figures

The adjusted net income and net profit margin closely mirror the reported figures across all periods, indicating that adjustments for inventory LIFO reserve or other factors do not materially alter the overall profitability trends.

The financial data reveals notable trends in the total assets and asset turnover ratios over the observed five-year period.

Total Assets

Reported total assets demonstrate a consistent upward trajectory, increasing from approximately 7.58 billion US dollars at the end of 2018 to about 15.46 billion US dollars by the end of 2022. This represents a doubling of reported asset size over the period. Adjusted total assets, which take into account the inventory LIFO reserve, closely mirror this trend, starting at approximately 7.61 billion and rising to approximately 15.51 billion by the end of 2022. The marginal positive difference between adjusted and reported assets indicates a relatively stable inventory adjustment effect throughout the period.

Total Asset Turnover

The reported total asset turnover ratio displays a declining pattern from 0.45 in 2018 to 0.30 in 2020, where it stabilizes through 2021 before recovering to 0.47 in 2022. This suggests a decrease in the efficiency of asset utilization initially, followed by a significant improvement in the last year under review. The adjusted total asset turnover ratio follows an almost identical pattern, with figures closely aligned to the reported ratios, suggesting that inventory adjustments have minimal impact on asset turnover efficiency assessments.

In summary, the company's asset base expanded substantially over the period, with corresponding initial declines but eventual recovery in asset turnover ratios. This may indicate initial challenges in generating revenue from the expanding asset base, followed by improved operational efficiency or favorable market conditions by the end of 2022. The consistency between reported and adjusted data signifies a stable inventory valuation impact on overall asset metrics.

Total Assets

The reported total assets exhibited a consistent upward trajectory over the five-year period, increasing from approximately $7.58 billion at the end of 2018 to about $15.46 billion by the end of 2022. The adjusted total assets, which account for inventory LIFO reserve adjustments, follow a similar pattern, with values marginally higher than the reported amounts each year. This parallel trend suggests stability in asset composition with minor adjustments impacting asset valuation.

Shareholders’ Equity

The reported shareholders’ equity showed steady growth across the analyzed period, rising from roughly $3.59 billion in 2018 to $7.98 billion in 2022. The adjusted equity values also consistently exceed the reported figures slightly each year, moving from approximately $3.62 billion to $8.04 billion during the same timeframe. The gap between reported and adjusted equity remains relatively stable, indicating the impact of LIFO reserve adjustments on shareholder equity is consistent over time.

Financial Leverage

Reported financial leverage ratios started at 2.11 in 2018, increased to a peak of 2.51 in 2019, and then demonstrated a declining trend to 1.94 by 2022. The adjusted financial leverage ratios mimic this trend closely, beginning at 2.10, peaking at 2.50, and declining to 1.93. This reduction in leverage after 2019 suggests an improvement in the equity base relative to total assets or a reduction in liabilities, indicating a potentially stronger financial position in recent years.

General Observations

Overall, the entity has experienced significant asset growth, more than doubling total assets over five years. Concurrently, shareholders’ equity has also expanded robustly, which contributes to the decline in leverage observed from 2020 onwards. The consistency between reported and adjusted figures implies that inventory accounting adjustments have a limited but steady effect on the financial statements. The decrease in leverage ratios reflects an improvement in capitalization and possibly reduced financial risk.

The financial data presents a clear trajectory of performance over the five-year period under review. Notably, both net income and shareholders’ equity exhibit fluctuating trends with a significant recovery in the final year.

Net Income

The reported net income demonstrates a downward trend from 2018 through 2021, starting at approximately 693.6 million USD and declining sharply to around 123.7 million USD by 2021. However, this trend reverses substantially in 2022 with net income surging to approximately 2.69 billion USD. The adjusted net income figures follow a similar pattern, closely mirroring the reported values with slight differences, emphasizing consistent adjustments across the period.

Shareholders’ Equity

Shareholders’ equity shows a steady increase over the same timeframe. The reported equity grows from roughly 3.59 billion USD in 2018 to over 7.98 billion USD by the end of 2022. The adjusted equity values are marginally higher but display identical upward momentum, indicating an accumulation of value and possibly reinvestment of earnings or capital infusions during the years.

Return on Equity (ROE)

Return on equity (ROE) reflects the volatility observed in net income. Starting at around 19.3% in 2018, ROE gradually declines to a low of approximately 2.2% in 2021, highlighting diminished profitability relative to equity. In 2022, ROE dramatically increases to about 33.7%, driven by the significant boost in net income. Adjusted ROE closely aligns with reported ROE, confirming the impact of adjustments is minimal in altering the overall profitability trends.

Overall, the data indicates a period of declining profitability from 2018 to 2021, followed by a recovery marked by substantial growth in net income and ROE in 2022. Equity consistently increased, suggesting strengthening capitalization and possibly support for future growth initiatives. The close alignment between reported and adjusted figures throughout signals that inventory LIFO reserve adjustments exerted limited influence on the major financial metrics over the analyzed years.

The data reflects financial performance and asset base trends over the five-year period ending December 31, 2022. Both reported and inventory LIFO reserve adjusted figures are presented, allowing for a comprehensive examination of underlying profitability and asset utilization.

Net Income

Reported net income attributable to the corporation initially shows a peak at 693.6 million USD in 2018, followed by a declining trend through to 2021, reaching a low of 123.7 million USD. However, 2022 marks a significant rebound with net income increasing sharply to approximately 2.69 billion USD. The adjusted net income closely mirrors this pattern with slight downward deviations but ultimately reflecting the same strong upswing in 2022.

Total Assets

Reported total assets display a consistent growth trajectory, rising from roughly 7.58 billion USD in 2018 to over 15.46 billion USD by the end of 2022. Adjusted total assets, which include LIFO reserve considerations, follow a similar increasing trend but are marginally higher than reported figures each year. This steady asset growth suggests ongoing investment and expansion throughout the period.

Return on Assets (ROA)

Reported ROA starts relatively high at 9.15% in 2018, then declines significantly over the next three years down to 1.13% in 2021, indicating reduced efficiency in generating profits from assets. In 2022, a marked improvement is observed with ROA jumping to 17.4%. Adjusted ROA figures show a consistent pattern, slightly lower in the middle years but culminating in a similar pronounced increase in 2022 to 17.42%.

Overall, the financial data indicate a period of reduced profitability and efficiency from 2019 through 2021, despite expanding asset bases. The sharp recovery in 2022 suggests either operational improvements, favorable market conditions, or other significant positive factors affecting earnings. The close alignment between reported and adjusted figures confirms that inventory accounting adjustments had minimal impact on the overall financial trend analysis during these years.