Topbuild Corp (BLD)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 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 | 291,601 | 280,041 | 265,338 | 232,536 |
| Interest expense (ttm) | US$ in thousands | 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 | 37,823 | 38,401 | 38,275 | 35,966 |
| Interest coverage | 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 | 7.71 | 7.29 | 6.93 | 6.47 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $900,099K ÷ $74,614K
= 12.06
To analyze TopBuild Corp's interest coverage, we calculate the interest coverage ratio by dividing earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates a company is more capable of servicing its interest payments with its operating income.
Looking at the data provided from Q4 2023 to Q1 2022, we observe a declining trend in TopBuild Corp's interest coverage ratio. The ratio decreased from 15.78 in Q1 2022 to 11.78 in Q4 2023, indicating a potential deterioration in the company's ability to cover its interest expenses.
Although the interest coverage ratios remain above 1 in all periods, suggesting the company is generating sufficient earnings to cover its interest payments, the declining trend warrants attention. A decreasing interest coverage ratio over time may indicate that the company's profitability is weakening relative to its interest expense burden.
It is essential for investors and stakeholders to closely monitor TopBuild Corp's future financial performance to ensure the company remains capable of meeting its interest obligations and maintaining its financial health.