ProPetro Holding Corp (PUMP)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-161,429	120,810	165,473	-67,823	-132,117
Interest expense	US$ in thousands	7,815	5,308	1,605	614	2,383
Interest coverage		-20.66	22.76	103.10	-110.46	-55.44

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $-161,429K ÷ $7,815K
= -20.66

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates stronger ability to cover interest expenses.

Analyzing the interest coverage data of ProPetro Holding Corp from 2020 to 2024, we observe significant fluctuations in the ratio over time:

1. In December 31, 2020, the interest coverage ratio was -55.44, indicating that the company had insufficient operating income to cover its interest expenses, which raises concerns about its financial health and ability to service debt.

2. By the end of 2021, the interest coverage ratio further deteriorated to -110.46, suggesting a worsening financial situation as the company struggled even more to cover its interest payments.

3. However, there was a notable improvement in December 31, 2022, with the interest coverage ratio jumping to 103.10. This sharp increase reflects a significant increase in operating income relative to interest expenses, indicating a strong ability to meet interest payments.

4. The ratio decreased in December 31, 2023, to 22.76, but still remained at a healthy level, implying that the company's operating income was comfortably covering its interest obligations.

5. Lastly, in December 31, 2024, the interest coverage ratio dropped to -20.66. This decline suggests that the company may be facing challenges in meeting its interest payments due to a decrease in operating income or an increase in interest expenses.

Overall, the fluctuating trend in ProPetro Holding Corp's interest coverage ratio signals varying degrees of financial stability and performance over the years. It is essential for stakeholders to closely monitor these changes to assess the company's ability to manage its debt obligations effectively.