Albemarle Corp. (NYSE:ALB)

The data reveals several noteworthy trends in the financial performance and cost structure over the five-year period ending in 2022.

Cost of Goods Sold and Gross Profit

The cost of goods sold (COGS) as a percentage of net sales increased steadily from -63.93% in 2018, peaking at -70.01% in 2021 before sharply decreasing to -58% in 2022. Correspondingly, gross profit declined from 36.07% in 2018 to a low of 29.99% in 2021, followed by a significant rebound to 42% in 2022. This indicates improved cost efficiency or favorable pricing dynamics in the latest year.

Selling, General and Administrative Expenses (SG&A)

SG&A expenses fluctuated mildly between -13.22% and -14.86% from 2018 through 2021 but demonstrated a large reduction to -7.16% in 2022. This reduction substantially contributed to the improvement in operating profitability observed in 2022.

Research and Development Expenses (R&D)

R&D expenses generally decreased from -2.08% in 2018 to -0.98% in 2022, indicating a gradual reduction in investment relative to sales, which could impact future innovation capacity.

Gain or Loss on Sale of Business/Properties

This line shows volatility with a notable gain of 6.23% in 2018, absence of reported amounts in 2019 and 2020, a gain of 8.89% in 2021, and a slight loss in 2022 (-0.11%). These gains contributed positively to operating results in select years.

Operating Profit

Operating profit as a percentage of net sales decreased from 27.01% in 2018 to a nadir of 16.17% in 2020, then recovered sharply to 33.74% in 2022, reflecting improved management of costs and possibly enhanced operational efficiencies.

Interest and Financing Expenses

Interest expenses remained relatively stable around -1.55% to -2.34% across the period, with a slight decline to -1.68% in 2022, suggesting consistent debt servicing costs.

Other Income (Expenses), Net

Other income/expenses fluctuated significantly, with a large negative impact in 2021 (-18.13%) likely weighing on profitability. However, 2022 saw a positive reversal to 1.18%, contributing to improved income before taxes.

Income Before Income Taxes and Equity in Net Income

This metric declined substantially from 23.55% in 2018 to 4.02% in 2021, before surging to 33.24% in 2022, illustrating considerable volatility influenced by operational performance and other income/expense factors.

Income Tax Expense

Income tax expense declined from -4.29% in 2018 to -0.88% in 2021, then increased to -5.34% in 2022, indicating a higher tax burden in the most recent year aligned with elevated pre-tax income.

Income Before Equity in Net Income of Unconsolidated Investments

Following a declining trend from 19.26% in 2018 to 3.13% in 2021, this figure rebounded strongly to 27.91% in 2022, consistent with overall income trends.

Equity in Net Income of Unconsolidated Investments, Net of Tax

Equity income increased steadily from 2.64% in 2018 to 10.55% in 2022, reflecting growing contributions from unconsolidated investments.

Net Income

Net income as a percentage of net sales declined from 21.9% in 2018 to a low of 6.01% in 2021, then surged to 38.46% in 2022. The net income attributable to Albemarle Corporation also followed this pattern, weakening considerably before a robust recovery. The reduction in noncontrolling interests in 2022 (-1.71%) partially offset the net income gain.

In summary, the company experienced a period of declining profitability from 2018 through 2021, driven primarily by rising costs of goods sold, increased other expenses, and shrinking operational earnings. The year 2022 marked a significant turnaround with substantial improvements in gross margin, lower SG&A and R&D expenses relative to sales, higher equity income contributions, and a positive shift in other income/expense items. These factors collectively led to markedly higher operating and net income margins in 2022 compared to prior years.