ODP Corp (ODP)
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 | 221,000 | 287,000 | 280,000 | 267,000 | 247,000 | -61,000 | -16,000 | -128,000 | -137,000 | 141,000 | 133,000 | -258,000 | -244,000 | -154,000 | -166,000 | 290,000 | 238,000 | 159,000 | 160,000 | 224,000 |
| Interest expense (ttm) | US$ in thousands | 20,000 | 21,000 | 17,000 | 16,000 | 16,000 | 18,000 | 24,000 | 26,000 | 28,000 | 28,000 | 27,000 | 32,000 | 43,000 | 56,000 | 72,000 | 84,000 | 89,000 | 98,000 | 107,000 | 115,000 |
| Interest coverage | 11.05 | 13.67 | 16.47 | 16.69 | 15.44 | -3.39 | -0.67 | -4.92 | -4.89 | 5.04 | 4.93 | -8.06 | -5.67 | -2.75 | -2.31 | 3.45 | 2.67 | 1.62 | 1.50 | 1.95 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $221,000K ÷ $20,000K
= 11.05
The interest coverage ratio for ODP Corp has varied significantly over the past few quarters. A high interest coverage ratio indicates that the company is comfortably able to meet its interest payments from its operating income.
In the most recent quarters of 2023, the interest coverage ratio has been consistently strong, exceeding 10 times. This indicates that ODP Corp generated more than enough operating income to cover its interest expenses, reflecting a healthy financial position and reduced risk of default.
However, in the third quarter of 2022, the interest coverage ratio dropped significantly into negative territory, indicating that the company's operating income was insufficient to cover its interest payments during that period. This could be a red flag for lenders and investors as it suggests potential financial distress or liquidity issues.
Overall, while the recent quarters have shown a significant improvement in the interest coverage ratio for ODP Corp, investors and creditors should continue monitoring the company's ability to generate sustainable operating income to cover its interest obligations in the future.
Peer comparison
Dec 31, 2023