Otter Tail Corporation (OTTR)

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 387,272 390,528 404,103 399,245 377,919 362,780 357,797 372,810 390,439 406,657 365,052 303,808 249,708 206,508 184,709 152,796 147,886 151,164 135,690 134,600
Interest expense (ttm) US$ in thousands 41,816 40,617 38,619 38,113 37,678 37,104 37,188 36,483 36,016 36,367 36,756 37,320 37,770 37,695 36,615 35,722 34,447 33,574 32,545 31,708
Interest coverage 9.26 9.61 10.46 10.48 10.03 9.78 9.62 10.22 10.84 11.18 9.93 8.14 6.61 5.48 5.04 4.28 4.29 4.50 4.17 4.24

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $387,272K ÷ $41,816K
= 9.26

The interest coverage ratio for Otter Tail Corporation has shown a positive trend over the past few years, indicating the company's ability to meet its interest payment obligations. The ratio increased steadily from 4.24 in March 2020 to 10.46 in June 2024. This upward trend suggests that the company's earnings before interest and taxes (EBIT) have been increasing at a faster pace than its interest expenses.

The interest coverage ratio exceeding 1 indicates that the company is generating sufficient earnings to cover its interest payments. With the ratio consistently above 1 and trending upward, Otter Tail Corporation appears to have a strong ability to service its debt obligations through its operating income. This trend is generally viewed positively by investors and creditors as it reflects the company's financial stability and creditworthiness.

It is important for Otter Tail Corporation to maintain this positive trend in interest coverage to ensure sustainable financial health and effectively manage its debt obligations in the future.