Lumentum Holdings Inc (LITE)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -179,100 | -371,900 | -66,900 | 315,300 | 529,800 |
| Interest expense | US$ in thousands | 22,200 | 33,800 | 35,500 | 80,200 | 66,700 |
| Interest coverage | -8.07 | -11.00 | -1.88 | 3.93 | 7.94 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $-179,100K ÷ $22,200K
= -8.07
The interest coverage ratio for Lumentum Holdings Inc. over the specified periods demonstrates a significant decline, transitioning from a robust position to a state of negative coverage. As of June 30, 2021, the ratio stood at 7.94, indicating that the company's earnings before interest and taxes (EBIT) were nearly eight times its interest expenses, reflecting a healthy capacity to meet interest obligations. By June 30, 2022, the ratio had decreased substantially to 3.93, suggesting a deterioration in earnings coverage but still indicating that the company could generally service its interest expenses comfortably.
However, a further decline is observed in the subsequent years. As of June 30, 2023, the interest coverage ratio becomes negative at -1.88, indicating that the company's earnings before interest and taxes fell below its interest obligations, implying that the company would need to use non-operating income or borrowings to meet interest payments. This negative trend continues markedly in the following years, with the ratio dropping to -11.00 as of June 30, 2024, and remaining negative at -8.07 by June 30, 2025. Such persistent negative interest coverage signals severe financial distress, suggesting that the company’s core operating earnings are insufficient to cover interest costs, thereby raising concerns about liquidity, solvency, and overall financial health.
Overall, the progression of these ratios highlights a concerning deterioration in Lumentum Holdings Inc.'s ability to service its interest obligations over the analyzed periods, transitioning from a position of comfort to significant financial vulnerability within this timeframe.
Peer comparison
Jun 30, 2025