ProPetro Holding Corp (PUMP)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	120,810	8,991	-67,823	-132,117	220,645
Interest expense	US$ in thousands	5,308	1,605	614	2,383	7,141
Interest coverage		22.76	5.60	-110.46	-55.44	30.90

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $120,810K ÷ $5,308K
= 22.76

The interest coverage ratio for ProPetro Holding Corp has varied significantly over the past five years. In 2023, the interest coverage ratio improved substantially to 22.76, indicating that the company earned 22.76 times more operating income than it needed to cover its interest expenses. This is a positive sign of financial health and indicates the company's ability to comfortably meet its interest obligations.

The previous year, in 2022, the interest coverage ratio was 5.60, showing a weaker ability to cover interest payments compared to 2023. While still above the threshold of 1, which generally signifies a company can meet its interest obligations, the ratio was not as strong as in 2023.

In 2021, the interest coverage ratio was significantly negative at -110.46, indicating that the company's operating income was insufficient to cover its interest expenses. This is a concerning sign as it suggests financial distress and the need to reevaluate the company's debt levels and financial structure.

Similarly, in 2020, the interest coverage ratio was -55.44, further indicating financial challenges in meeting interest payments with available operating income.

In 2019, the interest coverage ratio improved notably to 30.90, showing a strong ability to cover interest expenses. This indicates that the company was in a solid financial position at that time.

Overall, ProPetro Holding Corp's interest coverage has shown significant fluctuations, with 2023 reflecting a strong improvement compared to the negative ratios seen in 2021 and 2020. This highlights the importance of continuously monitoring the company's financial health and debt management practices.