American Woodmark Corporation (AMWD)
Interest coverage
| Apr 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 136,879 | 138,702 | 146,547 | 151,060 | 160,175 | 164,738 | 158,297 | 158,768 | 138,680 | 145,301 | 57,466 | 19,251 | -5,380 | -28,729 | 65,708 | 98,063 | 119,794 | 122,589 | 116,249 | 116,638 |
| Interest expense (ttm) | US$ in thousands | 10,341 | 9,439 | 8,555 | 8,060 | 8,207 | 9,538 | 11,909 | 14,378 | 15,994 | 15,766 | 14,131 | 12,069 | 10,189 | 12,572 | 15,650 | 19,271 | 23,128 | 24,336 | 25,514 | 26,969 |
| Interest coverage | 13.24 | 14.69 | 17.13 | 18.74 | 19.52 | 17.27 | 13.29 | 11.04 | 8.67 | 9.22 | 4.07 | 1.60 | -0.53 | -2.29 | 4.20 | 5.09 | 5.18 | 5.04 | 4.56 | 4.32 |
April 30, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $136,879K ÷ $10,341K
= 13.24
The analysis of American Woodmark Corporation's interest coverage ratios over the specified periods reveals significant fluctuations, indicating variations in the company's capacity to meet interest obligations through its earnings before interest and taxes (EBIT).
Initially, the interest coverage ratio demonstrated a steady upward trend, rising from 4.32 as of July 31, 2020, to a peak of approximately 5.18 by April 30, 2021. During this period, the company maintained a comfortable margin of coverage, suggesting consistent earning strength relative to interest expenses.
However, starting in the second quarter of fiscal 2022, a marked decline in the ratio is evident, turning negative with a reported value of -2.29 on January 31, 2022, and worsening to -0.53 by April 30, 2022. Negative ratios indicate that EBIT was insufficient to cover interest obligations, signaling financial distress or exceptionally diminished earnings in this interval. These negative figures likely result from operational challenges, impairment charges, or other extraordinary expenses impacting profitability.
Subsequent periods show a notable recovery in interest coverage. The ratio improved to positive territory, reaching 1.60 on July 31, 2022, and further ascending to 4.07 by October 31, 2022. This upward trajectory continued robustly as the ratio surged past 9.22 on January 31, 2023, indicating a strong return to earnings capacity to cover interest expenses comfortably. The trend persisted with ratios of 8.67, 11.04, and 13.29 in the following quarters, culminating at 17.27 and 19.52 by the first and second quarters of fiscal 2024 respectively.
Looking forward, the interest coverage ratios project a gradual decline from the elevated levels observed in late 2024, with values of 18.74 on July 31, 2024, tapering to approximately 13.24 by April 30, 2025. Despite this modest downward adjustment, the ratios remain well above the level indicative of potential concern, maintaining a strong coverage position.
Overall, the data reflects a period of significant volatility for American Woodmark Corporation’s interest coverage ratios. After experiencing substantial declines into negative territory during the early part of 2022, the company rebounded strongly, achieving historically high ratios indicative of robust earnings relative to interest expenses. The sustained high ratios in 2023 and early 2024 suggest improved earnings capacity and financial stability, with anticipated normalization in subsequent periods.