Neogen Corporation (NEOG)

Interest coverage

		Nov 30, 2024	Aug 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-444,032	25,716	40,963	43,128	28,952	22,750	23,273	22,810	42,935	58,618	60,846	70,243	77,019	74,169	73,858	71,127	70,154	67,523	66,309	67,905
Interest expense (ttm)	US$ in thousands	22,484	32,225	41,219	39,778	37,838	27,237	17,392	8,371	66	72	106	365	898	1,614	3,182	4,488	5,204	5,992	5,774	5,509
Interest coverage		-19.75	0.80	0.99	1.08	0.77	0.84	1.34	2.72	650.53	814.14	574.02	192.45	85.77	45.95	23.21	15.85	13.48	11.27	11.48	12.33

November 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-444,032K ÷ $22,484K
= -19.75

Neogen Corporation's interest coverage ratio indicates its ability to meet interest obligations on its debt. The interest coverage ratio steadily improved from November 30, 2019, to May 31, 2021, showing a strong ability to cover interest payments 12.33 times over to 45.95 times over. By August 31, 2021, and November 30, 2021, the interest coverage ratio significantly increased to 85.77 times over and 192.45 times over, respectively, indicating a substantial improvement in the company's ability to cover interest expenses.

However, starting from February 28, 2022, the interest coverage ratio experienced a significant decline, dropping to 0.99 by November 30, 2024. This sudden decrease may raise concerns about the company's ability to cover interest payments with its operating income. Importantly, the negative interest coverage ratio recorded on November 30, 2024 (-19.75 times over) indicates that Neogen Corporation's operating income was insufficient to cover its interest expenses during that period, which could be a sign of financial distress.

Further monitoring and analysis of Neogen Corporation's financial performance and debt management strategies may be necessary to understand the reasons for the decline in the interest coverage ratio and to assess the company's overall financial health.