Phibro Animal Health Corporation (PAHC)

Interest coverage

Jun 30, 2025 Mar 31, 2025 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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 98,538 86,569 68,447 70,499 43,110 57,317 56,492 56,325 79,606 64,782 64,511 70,963 71,891 75,785 76,366 73,960 75,036 74,847 76,034 75,920
Interest expense (ttm) US$ in thousands 34,602 40,072 36,268 36,470 37,513 36,687 35,296 32,856 28,547 22,795 17,193 14,243 13,270 13,408 14,191 12,863 11,226 10,669 11,249 12,538
Interest coverage 2.85 2.16 1.89 1.93 1.15 1.56 1.60 1.71 2.79 2.84 3.75 4.98 5.42 5.65 5.38 5.75 6.68 7.02 6.76 6.06

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $98,538K ÷ $34,602K
= 2.85

The analysis of Phibro Animal Health Corporation’s interest coverage ratio over the specified period reveals a notable declining trend from September 30, 2020, through March 31, 2025. Initially, the ratio was relatively strong at 6.06 in September 2020, indicating that the company's earnings before interest and taxes (EBIT) significantly exceeded its interest expenses. The ratio peaked at 7.02 in March 2021, suggesting improved earnings capacity during that period.

Subsequently, a gradual decrease became evident. The ratio declined steadily, reaching approximately 5.75 by September 2021 and further dropping to 3.75 by December 2022. This signifies a diminishing ability of the company's operating income to cover its interest obligations, although it still maintained coverage above 1.5 times up to this point.

The downward trend accelerated from December 2022 onward, with the ratio falling to 2.84 by March 2023 and continuing downward to a low of 1.15 by June 2024. Values below 2 generally suggest increasing financial stress and reduced buffer to meet interest expenses comfortably. The ratios during this period imply the company's earnings have become comparatively tighter in relation to its interest obligations.

In the most recent periods, there is a slight improvement, with the ratio rising to 1.93 in September 2024, indicating some alleviation in interest coverage. However, it remains below 2, which continues to signal a precarious position regarding sufficient earnings to comfortably cover interest costs. The projections into the future—if realized—show an expected increase to 2.16 in March 2025 and further to 2.85 in June 2025, suggesting some anticipated recovery in the company's ability to service its interest obligations, although the ratios still reflect tighter coverage compared to initial years.

Overall, the trend indicates a continued decline in interest coverage over the analyzed period, pointing toward potential financial concerns regarding the company's ability to generate sufficient earnings to meet interest payments without strain. The gradual decline highlights the importance of monitoring operational performance and debt management strategies moving forward.