H2O America (HTO)

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	185,860	181,107	174,327	170,333	169,764	160,221	157,087	173,317	155,237	150,233	140,386	121,060	117,296	126,891	123,517	115,659	123,821	123,170	124,150	103,964
Interest expense (ttm)	US$ in thousands	71,906	72,078	71,390	70,625	69,853	67,956	66,144	64,815	62,261	60,105	58,062	55,844	55,189	54,629	54,339	55,272	54,911	54,410	54,255	52,341
Interest coverage		2.58	2.51	2.44	2.41	2.43	2.36	2.37	2.67	2.49	2.50	2.42	2.17	2.13	2.32	2.27	2.09	2.25	2.26	2.29	1.99

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $185,860K ÷ $71,906K
= 2.58

The interest coverage ratio of H2O America over the analyzed period demonstrates a generally stable and gradually improving trend. Starting at 1.99 times as of September 30, 2020, the ratio increased through subsequent quarters, reaching a peak of approximately 2.58 times as of June 30, 2025. This indicates that the company's operating income has remained consistently sufficient to cover interest expenses, maintaining a coverage margin that suggests manageable debt servicing capacity.

Throughout the period, minor fluctuations are observed, with ratios oscillating within a narrow range between approximately 2.09 and 2.67. Notably, the ratio declined slightly from 2.29 at the end of 2020 to a low of 2.09 in September 2021, before trending upward again, reflecting improvements in earning capacity or reductions in interest expense relative to operating income.

This steady upward movement, especially in the later periods, indicates an improving financial position with enhanced ability to meet interest obligations. The ratio values above 2.0 imply that H2O America generates at least twice its interest expenses in operating income, providing a comfortable buffer for debt servicing. Overall, the company's interest coverage ratio signals prudent financial management and a sustainable debt profile during the observed timeframe.