SolarWinds Corp (SWI)

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	208,419	191,439	178,280	161,439	150,373	135,040	-165,964	-795,187	-819,579	-857,977	-599,320	-10,288	-32,871	-20,583	4,234	46,921	85,746	69,137	82,561	77,750
Interest expense (ttm)	US$ in thousands	8,604	9,800	10,717	10,709	10,718	10,312	9,881	9,464	9,056	9,103	9,141	9,122	9,103	9,123	9,128	9,151	9,200	9,190	9,213	9,236
Interest coverage		24.22	19.53	16.64	15.08	14.03	13.10	-16.80	-84.02	-90.50	-94.25	-65.56	-1.13	-3.61	-2.26	0.46	5.13	9.32	7.52	8.96	8.42

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $208,419K ÷ $8,604K
= 24.22

The interest coverage ratio for SolarWinds Corp has shown significant fluctuations over the periods analyzed.

- The company experienced a downward trend from March 31, 2021, to June 30, 2021, with the interest coverage dropping to very low levels, indicating a potential inability to cover interest expenses with operating income during these periods.
- This downward trend persisted into the following quarters, with negative interest coverage ratios recorded from September 30, 2021, through December 31, 2022, reaching its lowest point in September 30, 2022. Negative interest coverage ratios often suggest financial distress, as the company may not be generating enough operating income to cover its interest expenses.
- However, starting from March 31, 2023, the interest coverage ratio began to improve, turning positive in September 30, 2023, and continuing to increase through December 31, 2024. This positive trend indicates an enhanced ability to meet interest obligations from operating income.
- The interest coverage ratio reached its highest level as of December 31, 2024, implying that SolarWinds Corp had significantly improved its ability to cover interest expenses with operating profit.

Overall, the analysis suggests that SolarWinds Corp faced challenges with its interest coverage in the past but has shown improvement in recent periods, ultimately enhancing its financial stability.