Liberty Oilfield Services Inc (LBRT)

Interest coverage

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Earnings before interest and tax (EBIT) US$ in thousands 389,468 760,579 495,890 -181,224 -131,935
Interest expense US$ in thousands 32,214 6,060 1,707 3,635 14,505
Interest coverage 12.09 125.51 290.50 -49.86 -9.10

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $389,468K ÷ $32,214K
= 12.09

The interest coverage ratio for Liberty Oilfield Services Inc has shown significant fluctuations over the past five years. As of December 31, 2020, the company exhibited a concerning ratio of -9.10, indicating that its earnings before interest and taxes were insufficient to cover its interest expenses. This negative figure suggests a potential risk of default on interest payments.

However, the situation worsened in the following year, with an even lower interest coverage ratio of -49.86 as of December 31, 2021. This signifies a deteriorating financial position and heightened distress in meeting interest obligations.

The company's financial performance took a positive turn in 2022, as reflected by a substantial increase in the interest coverage ratio to 290.50. This surge indicates a robust ability to cover interest payments with earnings, thereby reducing the financial risk associated with debt servicing.

In 2023, Liberty Oilfield Services Inc maintained a healthy interest coverage ratio of 125.51, demonstrating continued strength in its ability to meet interest expenses comfortably. This level of coverage suggests a stable and sustainable financial position.

By December 31, 2024, the interest coverage ratio slightly decreased to 12.09 but still remained at a satisfactory level. The company's earnings were sufficient to cover interest costs, although not as significantly as in the previous year.

Overall, Liberty Oilfield Services Inc's interest coverage ratio has experienced fluctuations, ranging from negative figures to exceptionally high levels, reflecting varying degrees of financial stability and risk in meeting interest obligations. It is essential for investors and stakeholders to monitor these trends to assess the company's ability to manage its debt effectively.