Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Albemarle Corp., FCFF 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).
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The financial trajectory from 2018 to 2022 is characterized by significant volatility in cash generation and investment cycles, culminating in a substantial increase in liquidity by the end of the period. While operating cash flows remained positive throughout the five-year span, the free cash flow to the firm exhibited wide fluctuations, indicating aggressive capital allocation strategies.
- Operating Cash Flow Trends
- Net cash provided by operating activities demonstrated a general upward trajectory between 2018 and 2020, rising from 546,165 thousand US$ to 798,914 thousand US$. A notable contraction occurred in 2021, where cash flow dropped to 344,257 thousand US$, representing a decrease of approximately 57% from the previous year. This was followed by a sharp recovery in 2022, with operating cash flows surging to 1,907,849 thousand US$, the highest level in the analyzed period.
- Free Cash Flow to the Firm (FCFF) Volatility
- FCFF remained negative for the initial two years, recording deficits of 97,333 thousand US$ in 2018 and 124,386 thousand US$ in 2019. A brief transition to positive territory occurred in 2020 with 31,086 thousand US$, before a severe decline in 2021 to negative 565,873 thousand US$. This volatility suggests a period of heavy capital expenditure that significantly exceeded operating cash inflows during that specific year.
- Analysis of Capital Investment and Recovery
- The divergence between operating cash flow and FCFF is most pronounced in 2021, where the deficit in FCFF far exceeded the available operating cash. This pattern is indicative of a massive investment phase. The subsequent performance in 2022, where FCFF reached 745,588 thousand US$, suggests that the previous investments may have contributed to the expanded operational capacity and the resulting surge in cash generation.
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Interest Paid, Net of Tax
Albemarle Corp., interest paid, net of tax calculation
US$ 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).
2 2022 Calculation
Cash paid during the year for interest, net of capitalization, tax = Cash paid during the year for interest, net of capitalization × EITR
= 92,095 × 16.10% = 14,827
3 2022 Calculation
Interest capitalized on significant capital projects, tax = Interest capitalized on significant capital projects × EITR
= 31,100 × 16.10% = 5,007
An analysis of interest expenditures from 2018 through 2022 reveals significant volatility in cash outflows and a shifting balance between immediate interest expenses and the capitalization of interest for long-term projects.
- Cash Interest Outflows
- Cash paid for interest, net of capitalization and tax, exhibited a non-linear trend. Following a slight decrease between 2018 and 2019, expenditures increased to 56,688 thousand USD in 2020. A notable contraction occurred in 2021, with payments dropping to a period low of 21,633 thousand USD. However, this was followed by a sharp increase in 2022, reaching a five-year peak of 77,268 thousand USD.
- Capitalized Interest Patterns
- Interest capitalized on significant capital projects showed a consistent upward trend from 2018 to 2021, rising from 15,787 thousand USD to a peak of 39,000 thousand USD. This suggests an escalation in capital-intensive investments during this period. In 2022, capitalized interest decreased to 26,093 thousand USD, indicating a potential slowdown in new project initiations or the completion of major projects that previously allowed for interest capitalization.
- Effective Tax Rate Volatility
- The effective income tax rate fluctuated throughout the period, ranging from a low of 14.60% in 2020 to a high of 22.00% in 2021. Because the interest figures are reported net of tax, these fluctuations in the tax rate influence the reported net costs, with the peak tax rate in 2021 coinciding with the lowest reported cash interest payments.
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Enterprise Value to FCFF Ratio, Current
Albemarle Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 22,214,822) |
| Free cash flow to the firm (FCFF) | 745,588) |
| Valuation Ratio | |
| EV/FCFF | 29.80 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Linde plc | 46.95 |
| Sherwin-Williams Co. | 31.33 |
| EV/FCFF, Sector | |
| Chemicals | 46.86 |
| EV/FCFF, Industry | |
| Materials | 46.73 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Albemarle Corp., historical EV/FCFF 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) | ||||||
| Enterprise value (EV)1 | 33,896,614) | 24,588,783) | 21,240,189) | 11,695,034) | 11,082,644) | |
| Free cash flow to the firm (FCFF)2 | 745,588) | (565,873) | 31,086) | (124,386) | (97,333) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 45.46 | — | 683.27 | — | — | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Linde plc | 31.63 | 23.60 | — | — | — | |
| Sherwin-Williams Co. | 43.34 | 36.70 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Chemicals | 34.12 | 26.76 | — | — | — | |
| EV/FCFF, Industry | ||||||
| Materials | 34.36 | 20.85 | — | — | — | |
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).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 33,896,614 ÷ 745,588 = 45.46
4 Click competitor name to see calculations.
The enterprise value exhibited a consistent and aggressive upward trajectory between 2018 and 2022, increasing from approximately 11.08 billion USD to 33.90 billion USD. This represents a substantial expansion in the overall valuation of the entity over the five-year period.
- Free Cash Flow to the Firm (FCFF) Volatility
- Cash flow generation remained highly unstable, characterized by frequent shifts between negative and positive territory. Negative FCFF was recorded in 2018, 2019, and 2021, with the most significant deficit occurring in 2021 at 565.87 million USD. A strong recovery was observed by the end of 2022, with FCFF reaching 745.59 million USD.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio was only applicable during years of positive cash flow. In 2020, the ratio reached an elevated level of 683.27, reflecting a high valuation relative to a marginal cash flow of 31.09 million USD. By 2022, the ratio compressed significantly to 45.46, indicating a substantial improvement in the capacity to generate free cash flow relative to the enterprise value.
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