STERIS plc (STE)

Interest coverage

		Mar 31, 2025	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	668,042	935,259	909,304	896,591	890,965	849,150	816,666	308,350	267,235	135,278	151,787	571,085	405,113	474,552	302,499	336,531	468,254	469,073	578,877	558,475
Interest expense (ttm)	US$ in thousands	86,261	105,249	125,102	142,374	144,351	138,268	127,880	117,587	108,670	100,423	94,835	91,224	89,592	77,943	63,871	49,500	37,180	36,633	37,547	39,326
Interest coverage		7.74	8.89	7.27	6.30	6.17	6.14	6.39	2.62	2.46	1.35	1.60	6.26	4.52	6.09	4.74	6.80	12.59	12.80	15.42	14.20

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $668,042K ÷ $86,261K
= 7.74

The interest coverage ratio of STERIS plc has shown fluctuations over the past few years. As of March 31, 2025, the interest coverage ratio stands at 7.74, indicating that the company is generating enough operating income to cover its interest payments comfortably.

Looking at the trend, STERIS plc's interest coverage ratio was relatively high in mid-2020 and early 2021, ranging from 12.59 to 15.42, showing a strong ability to meet interest obligations with operating income. However, there was a notable decline in the ratio in late 2021 and throughout 2022, dropping to as low as 1.35 in December 31, 2022, and 1.60 in September 30, 2022. These low values suggest a potential challenge in meeting interest expenses with operating profits during that period.

It's worth noting that there was a gradual improvement in the interest coverage ratio from March 31, 2023, onwards, reaching 7.74 by March 31, 2025. This uptrend indicates an enhancement in the company's ability to cover its interest payments with the operating income generated. However, the ratio can still experience fluctuations, as seen in its history.

Overall, maintaining a healthy interest coverage ratio is essential for ensuring the company's financial health and stability, as it reflects the ability to manage debt obligations and indicates the level of risk associated with the company's debt structure. STERIS plc should continue to monitor and manage its interest coverage ratio to ensure sustainable financial performance in the long term.