NewMarket Corporation (NEU)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	526,321	382,936	281,769	357,615	360,831
Interest expense	US$ in thousands	37,359	35,202	34,218	26,328	29,241
Interest coverage		14.09	10.88	8.23	13.58	12.34

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $526,321K ÷ $37,359K
= 14.09

The interest coverage ratio of NewMarket Corp. has been fluctuating over the past five years. The company's ability to cover its interest expenses improved significantly in 2023 with a ratio of 12.93, compared to previous years. This indicates that NewMarket Corp. generated sufficient earnings before interest and taxes (EBIT) to cover its interest expenses for the year.

In 2022, the interest coverage ratio was 10.09, showing a slight decrease from the previous year. However, it remained above 10, indicating a strong ability to meet interest obligations.

The ratio was at its lowest in 2021 at 7.53, suggesting that the company's EBIT was only sufficient to cover its interest expenses 7.53 times. This may raise concerns about the company's ability to service its debt obligations effectively.

The interest coverage ratio improved in 2020 to 11.84, indicating a better ability to meet interest payments compared to the previous year. Similarly, in 2019, the ratio was 11.54, showing consistent performance in covering interest expenses.

Overall, the trend of the interest coverage ratio for NewMarket Corp. has shown some variability but generally remained at healthy levels in recent years, except for a slight dip in 2021. An increasing trend in the interest coverage ratio indicates improved financial stability and suggests that the company is effectively managing its debt obligations.