Albemarle Corp (ALB)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-1,776,545	-2,630,813	-1,661,997	-1,029,388	251,878	1,934,753	2,965,744	3,259,842	2,470,061	1,605,766	846,312	954,549	798,434	954,856	967,765	537,632	505,812	519,761	561,476	635,013
Interest expense (ttm)	US$ in thousands	129,109	157,866	111,722	78,170	77,770	36,395	35,605	34,810	34,604	53,300	53,196	53,108	53,010	33,333	33,308	33,186	33,081	32,198	31,532	30,934
Interest coverage		-13.76	-16.66	-14.88	-13.17	3.24	53.16	83.30	93.65	71.38	30.13	15.91	17.97	15.06	28.65	29.06	16.20	15.29	16.14	17.81	20.53

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-1,776,545K ÷ $129,109K
= -13.76

Albemarle Corp's interest coverage ratio, which measures the company's ability to meet its interest obligations, has shown some fluctuations over the past few years. The ratio stood at a healthy 20.53 as of March 31, 2020, indicating strong earnings relative to its interest expenses.

However, the ratio declined gradually over the following periods, reaching a low of 3.24 by December 31, 2023. A ratio below 1 implies that the company is not generating enough operating income to cover its interest payments, raising concerns about its financial health.

The situation seemed to deteriorate further in the subsequent periods, with negative interest coverage ratios recorded from March 31, 2024, onwards. This suggests that Albemarle Corp's earnings were insufficient to cover its interest expenses, potentially signaling financial distress.

Overall, the declining trend in Albemarle Corp's interest coverage ratio from 2020 to 2024 raises red flags regarding its ability to service its debt obligations. Investors and creditors may closely monitor the company's financial performance and debt management strategies in the coming periods.