Topbuild Corp (BLD)
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 | 897,625 | 893,705 | 893,219 | 924,535 | 900,099 | 891,268 | 870,332 | 835,566 | 798,850 | 712,412 | 623,713 | 545,123 | 462,587 | 447,488 | 415,225 | 367,416 | 355,542 | 329,367 | 308,856 | 304,878 |
Interest expense (ttm) | US$ in thousands | 2,881 | 21,348 | 39,457 | 75,370 | 74,614 | 72,207 | 67,938 | 62,790 | 56,717 | 50,870 | 41,812 | 34,507 | 29,144 | 25,956 | 28,145 | 30,317 | 32,456 | 33,794 | 35,609 | 36,963 |
Interest coverage | 311.57 | 41.86 | 22.64 | 12.27 | 12.06 | 12.34 | 12.81 | 13.31 | 14.08 | 14.00 | 14.92 | 15.80 | 15.87 | 17.24 | 14.75 | 12.12 | 10.95 | 9.75 | 8.67 | 8.25 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $897,625K ÷ $2,881K
= 311.57
Topbuild Corp's interest coverage ratio has shown a positive trend over the reported period, starting at 8.25 on March 31, 2020, and reaching a peak of 311.57 on December 31, 2024. This indicates the company's ability to meet its interest payment obligations from its operating income has significantly improved.
The interest coverage ratio exceeding 1 indicates that the company is generating enough operating profit to cover its interest expenses. A ratio above 2 is generally considered healthy, as it shows a comfortable buffer. Topbuild Corp's interest coverage consistently exceeded this threshold throughout the period, reflecting a strong financial position.
The significant increase in the interest coverage ratio from 22.64 on June 30, 2024, to 311.57 on December 31, 2024, is notable and suggests a substantial improvement in the company's ability to service its debt. However, such a sharp increase may warrant further investigation to ensure it is sustainable and not driven by any one-time or extraordinary factors.
Overall, the trend of increasing interest coverage ratios demonstrates Topbuild Corp's ability to manage its debt efficiently and indicates a lower risk of default on its interest payments. Investors and creditors often view a high interest coverage ratio positively, as it reflects financial stability and the company's capacity to withstand economic downturns.