Helmerich and Payne Inc (HP)
Interest coverage
| 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 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 484,184 | 494,717 | 508,276 | 606,392 | 610,662 | 570,981 | 454,555 | 237,233 | 50,522 | -125,266 | -222,371 | -376,325 | -405,916 | -383,541 | -367,342 | -743,332 | -610,120 | -497,995 | -621,369 | -1,353 |
| Interest expense (ttm) | US$ in thousands | 12,969 | 17,334 | 17,322 | 17,300 | 17,283 | 17,245 | 17,293 | 17,444 | 19,203 | 20,970 | 22,561 | 23,930 | 23,955 | 24,015 | 24,177 | 24,513 | 24,474 | 26,363 | 26,495 | 26,567 |
| Interest coverage | 37.33 | 28.54 | 29.34 | 35.05 | 35.33 | 33.11 | 26.29 | 13.60 | 2.63 | -5.97 | -9.86 | -15.73 | -16.94 | -15.97 | -15.19 | -30.32 | -24.93 | -18.89 | -23.45 | -0.05 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $484,184K ÷ $12,969K
= 37.33
The interest coverage ratio measures a company's ability to meet its interest expenses on outstanding debt with its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest payments.
In the case of Helmerich and Payne Inc, there has been fluctuation in the interest coverage ratio over the past few periods. The trend shows improving interest coverage from the negative values in early 2022 to positive values in 2024, indicating a better ability to cover interest expenses with operating income.
The interest coverage ratio peaked at 37.33 in September 2024, indicating a very high ability to cover interest payments. This may be attributed to improved operating performance or a reduction in interest expenses during that period.
It is worth noting that there were periods of negative interest coverage in 2022 which could be a cause for concern as it indicates that the company's operating income was not sufficient to cover interest expenses during those periods. However, the company has shown resilience by improving its interest coverage since then.
Overall, the recent positive trend in Helmerich and Payne Inc's interest coverage ratio suggests an improving financial position in terms of its ability to meet interest obligations, although continued monitoring of this ratio is necessary to ensure the company's long-term financial health.
Peer comparison
Sep 30, 2024