Standard Motor Products Inc (SMP)

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 109,963 113,191 124,177 123,104 128,951 135,750 121,295 117,019 116,817 126,639 133,215 135,376 134,879 140,227 150,237 131,610 116,179 103,183 82,998 98,640
Interest expense (ttm) US$ in thousands 13,512 10,485 10,961 11,492 13,287 15,101 15,136 13,674 10,617 6,954 3,950 2,624 2,028 1,577 1,387 1,664 2,328 3,074 4,120 5,070
Interest coverage 8.14 10.80 11.33 10.71 9.71 8.99 8.01 8.56 11.00 18.21 33.73 51.59 66.51 88.92 108.32 79.09 49.91 33.57 20.15 19.46

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $109,963K ÷ $13,512K
= 8.14

Standard Motor Products Inc has consistently maintained a healthy interest coverage ratio over the past few years, indicating its ability to meet its interest obligations comfortably through its operating earnings. The interest coverage ratio has shown a general upward trend from March 31, 2020, to June 30, 2021, reaching its peak at 108.32, reflecting a strong financial position during this period. However, starting from September 30, 2021, the interest coverage ratio began to decline gradually, indicating a potential decrease in the company's ability to cover its interest expenses.

The decreasing trend in the interest coverage ratio from September 30, 2021, to December 31, 2024, suggests that the company may be facing challenges in generating sufficient earnings to cover its interest payments. The ratio dropping below 1 may raise concerns about the company's ability to meet its interest obligations from its operating income alone.

Investors and creditors should closely monitor this trend in the interest coverage ratio as it provides insights into the company's financial health and debt servicing capability. A declining interest coverage ratio may indicate increased financial risk and the need for corrective actions to improve profitability or reduce interest expenses.