Carpenter Technology Corporation (CRS)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	515,700	262,600	126,600	-17,800	-264,800
Interest expense	US$ in thousands	48,400	65,400	64,100	44,900	33,600
Interest coverage		10.65	4.02	1.98	-0.40	-7.88

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $515,700K ÷ $48,400K
= 10.65

The interest coverage ratio for Carpenter Technology Corporation exhibits a significant improvement over the forecasted period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the company’s interest coverage stood at -7.88, indicating a substantial inability to cover interest expenses from operating earnings, and possibly reflecting negative earnings or substantial interest burdens. The negative figure continued into 2022, at -0.40, suggesting a marginal or minimal capacity to meet interest obligations, likely due to continued operational struggles or high-interest costs relative to earnings.

Starting in 2023, a marked transition occurs as the ratio turns positive, reaching 1.98 by June 30, 2023. This indicates that Carpenter Technology Corporation’s operating earnings have begun to sufficiently cover interest expenses, moving into a financially healthier position. The trend of improvement accelerates in subsequent years, with the ratio increasing to 4.02 by June 30, 2024. This suggests a strong capacity to meet interest obligations, reflecting robust earnings relative to debt service requirements.

By June 30, 2025, the interest coverage ratio reaches 10.65, exemplifying a significant enhancement in financial stability and leverage management. Such a high ratio implies that the company is generating ample operating income to comfortably cover its interest expenses multiple times over, thereby reducing insolvency risk and indicating a solid financial position for meeting debt obligations comfortably.

Overall, the progression from a negative interest coverage ratio to a high positive figure illustrates substantial post-2022 improvement in Carpenter Technology Corporation’s profitability and financial leverage management. This trend signals a recovery phase, driven possibly by operational efficiencies, increased sales, or other strategic initiatives that have bolstered earnings and reduced the risk associated with debt servicing.