Carpenter Technology Corporation (CRS)

Interest coverage

Jun 30, 2025 Mar 31, 2025 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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 368,800 476,800 425,100 374,100 326,100 283,100 233,500 187,300 127,600 81,400 45,600 700 -20,000 -108,500 -157,600 -220,500 -256,600 -331,000 -224,800 -80,500
Interest expense (ttm) US$ in thousands 60,100 64,500 65,200 65,600 65,500 73,300 73,700 72,700 69,100 58,500 52,700 47,300 44,900 40,700 38,400 36,200 40,900 35,900 31,900 29,300
Interest coverage 6.14 7.39 6.52 5.70 4.98 3.86 3.17 2.58 1.85 1.39 0.87 0.01 -0.45 -2.67 -4.10 -6.09 -6.27 -9.22 -7.05 -2.75

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $368,800K ÷ $60,100K
= 6.14

The interest coverage ratio of Carpenter Technology Corporation exhibits a notable trajectory over the analyzed period. Initially, during September 2020, the ratio was negative at -2.75, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover interest expenses, reflecting financial distress or significant losses. Subsequent quarterly data from December 2020 through September 2021 show the ratio remaining negative and worsening further, reaching as low as -9.22 in March 2021, suggesting continued difficulty in meeting interest obligations.

From the period ending June 2021 onward, the ratio begins to improve gradually, although it remains negative until December 2022. Notably, by September 2022, the interest coverage slightly turned positive at 0.01, marking the first evidence of EBIT exceeding interest expenses since the start of the period. This positive trend continues with ratios climbing to 0.87 in December 2022, 1.39 by March 2023, and reaching 2.58 in September 2023, reflecting increasing earnings sufficient to comfortably cover interest expenses.

The upward trend persists into early 2024, with ratios further improving to 3.17 in December 2023, 3.86 in March 2024, and climbing significantly to 4.98 in June 2024, followed by 5.70 in September 2024, and reaching 6.52 in December 2024. The forecasted ratios for 2025 indicate continued strengthening, with estimates of 7.39 in March, 6.14 in June, and maintaining a substantial buffer in interest coverage.

In summary, the company's interest coverage ratio experienced considerable difficulties during 2020 and 2021, reflecting periods of negative earnings relative to interest expenses. However, starting in late 2022 and into 2023, there is clear evidence of a sustained improvement, transitioning from negative to increasingly positive ratios. This trend suggests an overall recovery in profitability and earnings capacity, positioning Carpenter Technology Corporation to better meet its interest obligations moving forward.