Leslies Inc (LESL)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 57,117 | 69,241 | 87,353 | 92,694 | 102,179 | 146,719 | 203,193 | 224,230 | 238,357 | 221,929 | 215,221 | 217,735 | 197,538 |
| Interest expense (ttm) | US$ in thousands | 70,395 | 70,536 | 70,055 | 69,149 | 65,438 | 57,863 | 47,035 | 36,737 | 30,240 | 28,028 | 28,580 | 29,757 | 34,410 |
| Interest coverage | 0.81 | 0.98 | 1.25 | 1.34 | 1.56 | 2.54 | 4.32 | 6.10 | 7.88 | 7.92 | 7.53 | 7.32 | 5.74 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $57,117K ÷ $70,395K
= 0.81
Leslies Inc's interest coverage ratio has experienced fluctuations over the past several quarters. The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt, with higher ratios indicating better ability to meet interest obligations.
Looking at the trend in Leslies Inc's interest coverage ratio, we see a general decline from a high of 7.88 in September 2022 to a low of 0.81 in September 2024. This downward trend raises concerns about the company's ability to cover its interest expenses with its operating income.
The interest coverage ratio fell below 1 in September 2024, indicating that the company's operating income was insufficient to cover its interest expenses during that period. This is a red flag for lenders and investors, as it suggests a heightened risk of default on debt obligations.
Moreover, the significant drop in the interest coverage ratio from 4.32 in March 2023 to 0.81 in September 2024 is alarming and may signal financial distress or operational challenges faced by Leslies Inc during this period.
Overall, the declining trend in Leslies Inc's interest coverage ratio, particularly the recent dip below 1, underscores the need for management to closely monitor the company's financial performance and take necessary steps to improve its ability to service debt obligations.
Peer comparison
Sep 30, 2024