Kratos Defense & Security Solutions (KTOS)
Interest coverage
| 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 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 22,800 | 29,800 | 38,200 | 43,500 | 37,900 | 32,000 | 25,600 | 9,000 | 200 | -15,000 | -12,800 | 2,700 | 8,200 | 27,400 | 28,200 | 30,900 | 30,500 | 29,600 | 30,600 | 27,900 |
| Interest expense (ttm) | US$ in thousands | 1,800 | 3,700 | 8,700 | 13,800 | 18,800 | 21,300 | 20,300 | 19,300 | 17,100 | 17,700 | 18,800 | 20,600 | 23,400 | 23,400 | 23,400 | 23,400 | 23,300 | 22,800 | 22,300 | 21,800 |
| Interest coverage | 12.67 | 8.05 | 4.39 | 3.15 | 2.02 | 1.50 | 1.26 | 0.47 | 0.01 | -0.85 | -0.68 | 0.13 | 0.35 | 1.17 | 1.21 | 1.32 | 1.31 | 1.30 | 1.37 | 1.28 |
March 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $22,800K ÷ $1,800K
= 12.67
The interest coverage ratios of Kratos Defense & Security Solutions have demonstrated a notable evolution over the analyzed period, reflecting significant shifts in the company's ability to service its interest obligations through its earnings before interest and taxes (EBIT).
From June 30, 2020, through September 30, 2021, the interest coverage ratio consistently remained above 1.0, specifically fluctuating between 1.17 and 1.37. This indicates that during this period, the company's EBIT was generally sufficient to cover its interest expenses, suggesting a relatively stable financial position with manageable debt servicing requirements.
However, a marked deterioration occurred starting in the quarter ending March 31, 2022, where the ratio sharply declined to 0.35. This decline further deepened in subsequent quarters, with ratios falling into negative territory in September 2022 (-0.68) and December 2022 (-0.85). Negative interest coverage ratios imply that EBIT was insufficient to meet interest obligations, signalling significant financial stress and potential challenges in debt servicing.
Despite this downturn, there was a gradual improvement starting from March 2023, where the ratio approached near zero at 0.01. This upward trend continued through the subsequent quarters, reaching 0.47 by June 2023 and further increasing to 1.26 in September 2023 and 1.50 in December 2023. The ratio's progression beyond 1.0 indicates a recovery in the company's ability to generate EBIT sufficient to cover interest expenses.
Projected forward, the ratios exhibit a strong positive trajectory: rising to 2.02 in March 2024, 3.15 in June 2024, and markedly improving to 4.39 in September 2024, then reaching 8.05 in December 2024, and culminating at 12.67 in March 2025. These figures suggest a robust capacity to meet interest obligations, signifying extensive operational or financial improvements.
Overall, the company's interest coverage has experienced a substantial decline from moderate levels in 2020 and 2021 to distress levels in early 2022, followed by a notable turnaround. The recent and projected ratios reflect an improving financial situation, emphasizing enhanced earnings generation capacity and reduced risk associated with debt servicing over the forecast horizon.
Peer comparison
Mar 31, 2025