Novanta Inc (NOVT)
Interest coverage
| Dec 31, 2024 | 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 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 110,584 | 105,554 | 103,308 | 109,791 | 110,496 | 115,663 | 114,015 | 105,108 | 103,079 | 97,923 | 84,537 | 77,238 | 64,054 | 59,437 | 56,028 | 53,737 | 55,888 | 51,800 | 52,735 | 54,139 |
| Interest expense (ttm) | US$ in thousands | 23,297 | 17,673 | 9,662 | 1,465 | 1,474 | 1,482 | 1,491 | 1,500 | 1,508 | 1,517 | 1,525 | 1,533 | 1,541 | 1,364 | 1,387 | 1,409 | 1,432 | 1,540 | 1,542 | 1,535 |
| Interest coverage | 4.75 | 5.97 | 10.69 | 74.94 | 74.96 | 78.05 | 76.47 | 70.07 | 68.35 | 64.55 | 55.43 | 50.38 | 41.57 | 43.58 | 40.40 | 38.14 | 39.03 | 33.64 | 34.20 | 35.27 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $110,584K ÷ $23,297K
= 4.75
Novanta Inc's interest coverage ratio has shown a generally positive trend over the analyzed period from March 31, 2020, to December 31, 2024. The interest coverage ratio measures the company's ability to meet its interest payments on outstanding debt.
The interest coverage ratio started at a healthy level of 35.27 in March 2020 and remained relatively stable around the range of 30-40 until June 2022. From there, the ratio saw a significant improvement, reaching its peak at 78.05 in September 2023. This sharp increase indicated that Novanta Inc's earnings were sufficient to cover interest expenses comfortably.
However, there was a notable decline in the interest coverage ratio in the latter part of 2024, dropping to 4.75 by December 31, which could be a cause for concern. A low interest coverage ratio may suggest that the company is struggling to meet its interest obligations with its current level of earnings.
Overall, while Novanta Inc has shown the ability to maintain strong interest coverage ratios in the past, the recent decline raises some red flags regarding its ability to cover interest expenses. It may be important for stakeholders to investigate the reasons behind this decline and assess the company's financial health comprehensively.
Peer comparison
Dec 31, 2024