Nabors Industries Ltd (NBR)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 252,721 | 201,582 | 238,353 | 130,465 | -110,830 | -162,884 | -282,793 | -381,704 | -342,175 | -312,913 | -344,171 | -307,055 | -542,081 | -707,660 | -642,637 | -690,852 | -406,998 | -327,697 | -336,636 | -310,843 |
| Interest expense (ttm) | US$ in thousands | 185,285 | 179,592 | 179,391 | 176,126 | 177,895 | 178,220 | 176,596 | 175,411 | 171,476 | 174,849 | 185,035 | 194,527 | 206,274 | 207,508 | 206,396 | 206,681 | 204,311 | 208,865 | 208,989 | 218,090 |
| Interest coverage | 1.36 | 1.12 | 1.33 | 0.74 | -0.62 | -0.91 | -1.60 | -2.18 | -2.00 | -1.79 | -1.86 | -1.58 | -2.63 | -3.41 | -3.11 | -3.34 | -1.99 | -1.57 | -1.61 | -1.43 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $252,721K ÷ $185,285K
= 1.36
Interest coverage is a key financial ratio that measures a company's ability to pay interest expenses on its outstanding debt. In the case of Nabors Industries Ltd, the interest coverage ratio fluctuated over the past eight quarters.
In Q4 2023 and Q3 2023, the interest coverage ratio was 1.46, indicating that the company generated enough operating income to cover its interest expenses. This suggests a relatively healthy financial position during these periods.
In Q2 2023, the interest coverage ratio decreased to 1.31, which could indicate a slight weakening in the company's ability to cover its interest payments from operating income.
Q1 2023 saw a further decrease in the interest coverage ratio to 0.88, potentially raising concerns about the company's ability to meet its interest obligations solely from its operating income.
Looking back to Q4 2022, the interest coverage ratio was 0.25, implying a significant strain on the company's ability to cover interest expenses from operating income. The negative interest coverage ratios in Q3 2022, Q2 2022, and Q1 2022 are concerning as they suggest that the company's operating income was insufficient to cover its interest expenses during those periods.
Overall, monitoring Nabors Industries Ltd's interest coverage ratio is crucial for assessing its financial health and ability to meet its debt obligations. The recent improvement in Q4 2023 and Q3 2023 is positive, but the company's historical performance highlights fluctuations that warrant close attention.
Peer comparison
Dec 31, 2023