ChampionX Corporation (CHX)
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 | 374,059 | 356,793 | 200,347 | 148,542 | 80,959 | 19,321 | 104,748 | 64,720 | 25,473 | 9,456 | -46,100 | -180,544 | -849,992 | -771,247 | -759,246 | -619,361 | 61,450 | 174,856 | 204,728 | 211,279 |
| Interest expense (ttm) | US$ in thousands | 54,562 | 52,376 | 50,086 | 46,307 | 45,204 | 44,619 | 46,014 | 49,313 | 51,921 | 56,379 | 59,465 | 56,663 | 51,731 | 38,972 | 23,097 | 11,948 | 3,029 | 10,918 | 21,442 | 27,391 |
| Interest coverage | 6.86 | 6.81 | 4.00 | 3.21 | 1.79 | 0.43 | 2.28 | 1.31 | 0.49 | 0.17 | -0.78 | -3.19 | -16.43 | -19.79 | -32.87 | -51.84 | 20.29 | 16.02 | 9.55 | 7.71 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $374,059K ÷ $54,562K
= 6.86
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest payment obligations. ChampionX Corp.'s interest coverage ratio has shown a generally improving trend over the past eight quarters. The interest coverage ratio has consistently been above 1, indicating that the company has generated sufficient operating income to cover its interest expenses.
From Q1 2022 to Q4 2023, there has been a significant upward trend in the interest coverage ratio, reflecting the company's ability to comfortably cover its interest payments. This indicates increasing financial stability and a reduced risk of default on debt obligations. Notably, in the most recent quarter, Q4 2023, the interest coverage ratio reached its highest level at 9.28, suggesting a strong ability to service debt.
The consistent improvement in ChampionX Corp.'s interest coverage ratio over the past two years is a positive indicator of the company's financial health and ability to manage its debt effectively. Investors and creditors may view the upward trend in interest coverage favorably as it demonstrates the company's ability to generate sufficient earnings to cover its interest expenses.
Peer comparison
Dec 31, 2023