Hub Group Inc (HUBG)

Interest coverage

		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	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	143,256	145,320	158,426	181,382	222,640	293,603	365,792	439,012	474,588	487,758	430,141	329,451	238,213	151,174	125,192	109,461	105,443	114,501	118,621	138,882
Interest expense (ttm)	US$ in thousands	14,464	14,982	14,937	14,364	13,435	10,954	9,607	7,898	6,631	7,047	6,650	7,102	7,303	7,201	7,645	8,792	9,343	10,166	10,709	10,393
Interest coverage		9.90	9.70	10.61	12.63	16.57	26.80	38.08	55.59	71.57	69.21	64.68	46.39	32.62	20.99	16.38	12.45	11.29	11.26	11.08	13.36

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $143,256K ÷ $14,464K
= 9.90

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.

Analyzing the interest coverage data for Hub Group Inc over the period from March 31, 2020, to December 31, 2024, we can observe the following trends:

- The interest coverage ratio was relatively stable and healthy in the first half of the period, ranging from 11.08 to 16.38, indicating the company had a comfortable buffer to cover its interest payments.

- The interest coverage ratio showed a significant improvement starting from September 30, 2021, increasing steadily to reach its peak at 71.57 on December 31, 2022. This substantial improvement suggests a significant increase in the company's operating income relative to its interest expenses.

- However, from March 31, 2023, onwards, the interest coverage ratio started to decline rapidly, dropping to 9.90 by December 31, 2024. This decline could raise concerns about the company's ability to generate sufficient operating income to cover its interest expenses effectively.

In conclusion, although Hub Group Inc experienced a period of solid improvement in its interest coverage ratio, the significant decline in the ratio towards the end of the period suggests a potential strain on the company's ability to meet its interest obligations from operating income. Further analysis of the company's financial performance and strategic initiatives may be necessary to understand the reasons behind this decline and its implications for the company's financial health.