Semtech Corporation (SMTC)

Interest coverage

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-943,764	-379,463	-329,721	34,425	93,062	191,685	191,740	164,363	145,017	121,003	105,061	87,157	74,956	66,202	62,597	55,610	52,009	68,980	95,887	119,339
Interest expense (ttm)	US$ in thousands	95,082	84,188	60,097	37,080	17,767	5,646	5,284	5,210	5,091	5,135	4,910	4,976	5,336	5,198	6,374	7,718	8,622	9,209	9,369	8,961
Interest coverage		-9.93	-4.51	-5.49	0.93	5.24	33.95	36.29	31.55	28.48	23.56	21.40	17.52	14.05	12.74	9.82	7.21	6.03	7.49	10.23	13.32

January 28, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-943,764K ÷ $95,082K
= -9.93

The interest coverage ratio of Semtech Corporation has fluctuated significantly over the past few quarters. It appears that the company has had challenges in meeting its interest obligations, as indicated by negative values in some periods such as January 28, 2024, October 29, 2023, and July 30, 2023. This suggests that the company's earnings before interest and taxes were insufficient to cover its interest expenses during those periods.

However, there are instances where the interest coverage ratio improved notably, such as in April 30, 2023, when it reached 0.93, and in January 29, 2023, when it increased to 5.24. These improvements indicate a better ability to cover interest payments from operating earnings.

Moreover, the interest coverage ratio showed significant positive trends in the more recent quarters, with values well above 20 starting from August 1, 2021. This suggests that Semtech Corporation has been generating healthy earnings relative to its interest expenses, indicating a stronger financial position in terms of debt servicing capacity.

In conclusion, while there have been fluctuations in the interest coverage ratio of Semtech Corporation, the company has shown an improved ability to cover its interest expenses in recent quarters, potentially signaling better financial health and reduced risk of default.