Regal Beloit Corporation (RRX)
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 | 426,300 | 398,700 | 588,400 | 626,000 | 695,000 | 562,500 | 510,900 | 431,400 | 363,400 | 417,900 | 386,200 | 316,900 | 285,400 | 272,500 | 254,500 | 303,700 | 353,100 | 378,900 | 374,400 | 376,400 |
| Interest expense (ttm) | US$ in thousands | 431,000 | 366,700 | 276,600 | 173,600 | 87,200 | 58,100 | 58,700 | 56,800 | 60,400 | 54,700 | 41,700 | 40,800 | 39,800 | 43,700 | 48,200 | 51,000 | 53,000 | 54,800 | 55,000 | 55,800 |
| Interest coverage | 0.99 | 1.09 | 2.13 | 3.61 | 7.97 | 9.68 | 8.70 | 7.60 | 6.02 | 7.64 | 9.26 | 7.77 | 7.17 | 6.24 | 5.28 | 5.95 | 6.66 | 6.91 | 6.81 | 6.75 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $426,300K ÷ $431,000K
= 0.99
Regal Rexnord Corp's interest coverage ratios have shown a decreasing trend over the past few quarters. The interest coverage ratio measures the company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). A higher ratio indicates a stronger ability to cover interest expenses.
In Q4 2023, the interest coverage ratio was 1.37, reflecting a decline from the previous quarter where it was 1.62. This downward trend in the interest coverage ratio raises concerns about the company's ability to comfortably cover its interest payments.
Comparing the most recent quarter to Q1 2022, where the interest coverage ratio was 4.29, there has been a significant decrease. This suggests that Regal Rexnord Corp's ability to service its debt obligations has weakened over the past year.
Furthermore, the interest coverage ratios in Q2 and Q3 2022 were notably higher at 2.31 and 11.15 respectively. This indicates that the company was previously in a stronger position to cover its interest expenses but has since experienced a decline in its financial performance.
Overall, the decreasing trend in Regal Rexnord Corp's interest coverage ratios highlights a potential red flag regarding its financial health and ability to manage its debt obligations in the near term. It would be prudent for stakeholders to closely monitor the company's financial performance and debt management strategies moving forward.
Peer comparison
Dec 31, 2023