Deluxe Corporation (DLX)
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 | 165,336 | 161,573 | 183,369 | 182,379 | 178,698 | 175,532 | 169,528 | 144,058 | 149,218 | 142,395 | 150,340 | 147,975 | 50,063 | 74,584 | -310,510 | -282,622 | -157,177 | -138,555 | 185,019 | 216,286 |
| Interest expense (ttm) | US$ in thousands | 125,643 | 122,965 | 114,730 | 104,147 | 94,455 | 85,478 | 83,173 | 71,354 | 55,554 | 40,434 | 24,023 | 20,664 | 23,139 | 25,684 | 29,311 | 32,379 | 34,681 | 35,409 | 33,943 | 30,834 |
| Interest coverage | 1.32 | 1.31 | 1.60 | 1.75 | 1.89 | 2.05 | 2.04 | 2.02 | 2.69 | 3.52 | 6.26 | 7.16 | 2.16 | 2.90 | -10.59 | -8.73 | -4.53 | -3.91 | 5.45 | 7.01 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $165,336K ÷ $125,643K
= 1.32
Deluxe Corp.'s interest coverage has shown a declining trend over the last few quarters. The interest coverage ratio, which measures the company's ability to meet interest expenses with its operating income, has decreased from 2.71 in Q1 2022 to 1.64 in Q4 2023. This downward trend indicates that the company may be having more difficulty covering its interest expenses with its earnings.
A decreasing trend in the interest coverage ratio could be a cause for concern for lenders and investors as it may signify a higher risk of default on debt payments. Management should closely monitor this ratio and take actions to improve it, such as increasing profitability or reducing debt levels.