Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Paying user area
Try for free
Albemarle Corp. pages available for free this week:
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Albemarle Corp. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Albemarle Corp., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes shows a declining trend from 2018 to 2021, decreasing from $827,216 thousand in 2018 to $230,394 thousand in 2021. However, in 2022, there is a significant recovery and growth, with NOPAT reaching $3,022,027 thousand, indicating a strong operational performance reversal in the most recent year.
- Cost of Capital
- The cost of capital has fluctuated within a relatively narrow range from 17.39% in 2018 to 18.65% in 2022. It decreased slightly in 2019 to 15.36%, then increased consecutively each year, reaching the highest point in 2022 at 18.65%. This gradual upward trend from 2019 onwards suggests an increasing expense in capital usage over the period.
- Invested Capital
- Invested capital demonstrates growth overall, rising from $5,433,093 thousand in 2018 to $10,052,399 thousand in 2022. The increase was steady from 2018 through 2020, with a slight decrease observed in 2021, before climbing sharply in 2022. This indicates a substantial expansion in the capital base, particularly in the latest year.
- Economic Profit
- Economic profit has been negative consistently from 2018 to 2021, reflecting value destruction during these years. The deficit widened over time, from -$117,751 thousand in 2018 to -$1,005,208 thousand in 2021. Notably, in 2022, economic profit turned positive to $1,147,576 thousand, correlating with the large increase in NOPAT, signaling improved profitability exceeding the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Albemarle Corp., NOPAT calculation
US$ 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in equity equivalents to net income attributable to Albemarle Corporation.
5 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2022 Calculation
Tax benefit of interest and financing expenses = Adjusted interest and financing expenses × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Albemarle Corporation.
- Net Income Attributable to Albemarle Corporation
- The net income showed a declining trend from 2018 to 2021, decreasing from approximately 693.6 million USD in 2018 to 123.7 million USD in 2021. This represents a substantial drop over four years. However, in 2022, there was a significant and notable rebound, with net income reaching approximately 2.69 billion USD, marking an exceptional increase compared to previous years.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a similar pattern to net income over the observed period. From 2018 to 2021, NOPAT steadily decreased from around 827.2 million USD to 230.4 million USD, indicating a reduction in operating profitability after taxes. In 2022, there was a strong recovery, with NOPAT rising to approximately 3.02 billion USD, which surpasses all previous years by a wide margin.
- Overall Trend Analysis
- Both net income and NOPAT experienced a clear downward trend during the period from 2018 to 2021, reflecting challenges that negatively impacted profitability. The drastic improvement in 2022 suggests a significant positive change in the company's operational performance or market conditions, resulting in substantially higher earnings and operating profits. This marked turnaround may warrant further investigation into underlying drivers, such as changes in revenue, cost structure, or market factors.
Cash Operating Taxes
Albemarle Corp., cash operating taxes calculation
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).
- Income Tax Expense
- The income tax expense shows a decreasing trend from 2018 to 2021, moving from 144,826 thousand US dollars in 2018 down to 29,446 thousand US dollars in 2021. This represents a significant reduction over the four-year period. However, in 2022, the income tax expense sharply increased to 390,588 thousand US dollars, indicating a reversal of the previous downward trend and a substantial rise compared to all prior years in the dataset.
- Cash Operating Taxes
- Cash operating taxes decreased steadily from 107,671 thousand US dollars in 2018 to 72,906 thousand US dollars in 2020. There was a slight increase in 2021, with cash operating taxes rising to 82,002 thousand US dollars. In 2022, there was a notable surge to 324,092 thousand US dollars, mirroring the sharp increase seen in income tax expense for the same year. Overall, the trend from 2018 through 2021 was downward with a peak drop in 2020, followed by a steep upward movement in 2022.
- Summary of Tax-Related Expenses
- Both income tax expense and cash operating taxes generally declined from 2018 through 2021, reaching their lowest values in 2021. The year 2022, however, saw a pronounced increase in these tax-related costs, with figures markedly higher than previous years. This substantial rise in 2022 may reflect changes in taxable income, tax rates, or other external factors affecting the company's tax obligations in that period.
Invested Capital
Albemarle Corp., invested capital calculation (financing approach)
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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of LIFO reserve. See details »
5 Addition of equity equivalents to total Albemarle Corporation shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases exhibit a fluctuating pattern over the analyzed period. Starting from approximately 1.84 billion at the end of 2018, the debt level increased substantially to about 3.19 billion by the end of 2019, marking a notable escalation. This upward trend continued into 2020, reaching roughly 3.71 billion, before experiencing a decline to around 2.55 billion in 2021. However, in 2022, the debt surged again, rising to approximately 3.35 billion. Overall, this indicates periods of increased leveraging interspersed with some reduction, pointing to possible strategic financing adjustments or capital restructuring during these years.
- Total Albemarle Corporation shareholders’ equity
- Shareholders’ equity showed a consistent upward trajectory throughout the five-year span. Beginning with about 3.59 billion at the end of 2018, equity rose steadily each year, reaching approximately 7.98 billion by the end of 2022. The rate of increase became more pronounced in the later years, particularly from 2021 to 2022, suggesting strong retention of earnings and/or additional equity financing. This growth in equity signifies an improvement in the company's net asset base and financial strength, supporting sustainable long-term operations.
- Invested capital
- Invested capital also demonstrated an overall increasing trend, albeit with some variability. Starting at about 5.43 billion in 2018, it increased to roughly 6.90 billion in 2019 and 7.38 billion in 2020. In 2021, there was a noticeable decline to approximately 6.79 billion, before a significant jump to about 10.05 billion in 2022. The sharp increase in the final year suggests substantial new investments or acquisitions that expanded the company’s capital base. Fluctuations in invested capital correspond closely with changes in debt and equity, reflecting shifts in funding strategy and capital deployment over time.
Cost of Capital
Albemarle Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Albemarle Corp., economic spread ratio 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) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a significant negative trend from 2018 through 2021, with losses deepening each year. It worsened from -117,751 thousand US dollars in 2018 to -1,005,208 thousand US dollars by 2021. However, in 2022, there is a notable reversal, with economic profit turning positive to 1,147,576 thousand US dollars, indicating a substantial improvement in financial performance.
- Invested Capital
- Invested capital increased steadily from 5,433,093 thousand US dollars in 2018 to 7,383,741 thousand US dollars in 2020. There was a slight decline in 2021 to 6,792,146 thousand US dollars, followed by a sharp rise in 2022 to 10,052,399 thousand US dollars. The overall trend is upward, reflecting growing asset investment or capital employed over the five-year period.
- Economic Spread Ratio
- The economic spread ratio follows a similar pattern to economic profit, with negative values worsening from -2.17% in 2018 to -14.8% in 2021, suggesting declining returns above the cost of capital during this period. In 2022, the ratio turns positive to 11.42%, further confirming an improvement in economic profitability and indicating that returns now exceed the cost of capital appreciably.
- Overall Analysis
- The company experienced deteriorating economic profitability from 2018 through 2021, as evidenced by increasing negative economic profit and economic spread ratio values. During the same period, invested capital generally increased, indicative of expanding assets or investments possibly not generating adequate returns initially. The turnaround in 2022 with a positive economic profit and economic spread ratio suggests enhanced operational efficiency, better capital utilization, or improved market conditions leading to economic value creation. The significant increase in invested capital in 2022 alongside improved profitability may reflect strategic investments yielding strong returns.
Economic Profit Margin
Albemarle Corp., economic profit margin 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) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a negative trend from 2018 through 2021, with values decreasing increasingly from -117,751 thousand US dollars in 2018 to -1,005,208 thousand US dollars in 2021. This indicates progressively worsening economic profitability over these years. However, in 2022, the trend reversed markedly, with economic profit rising to a positive 1,147,576 thousand US dollars, reflecting a significant turnaround and improvement in economic performance.
- Net Sales
- Net sales showed modest fluctuations between 2018 and 2021, starting at 3,374,950 thousand US dollars in 2018, peaking at 3,589,427 thousand in 2019, then declining to 3,128,909 thousand in 2020 before recovering somewhat to 3,327,957 thousand in 2021. A substantial increase occurred in 2022, with net sales reaching 7,320,104 thousand US dollars, more than doubling the previous year, suggesting either strong market demand growth or expansion activities.
- Economic Profit Margin
- The economic profit margin followed a trajectory similar to economic profit, showing negative values from 2018 to 2021, declining from -3.49% in 2018 to a low of -30.2% in 2021. This margin reflects the company's decreasing efficiency in generating profit relative to net sales during these years. In 2022, the margin shifted significantly to a positive 15.68%, indicating improved profitability and operational efficiency relative to the sales level.