Sensient Technologies Corporation (SXT)

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	191,579	157,646	151,657	153,591	155,023	188,185	191,147	194,800	196,751	195,946	195,411	175,920	170,028	164,423	158,620	164,992	152,656	103,375	101,008	106,251
Interest expense (ttm)	US$ in thousands	28,781	28,918	27,516	26,215	25,172	23,447	20,825	17,556	14,547	12,500	11,865	12,104	12,544	13,191	13,651	13,937	14,811	15,981	17,420	19,012
Interest coverage		6.66	5.45	5.51	5.86	6.16	8.03	9.18	11.10	13.53	15.68	16.47	14.53	13.55	12.46	11.62	11.84	10.31	6.47	5.80	5.59

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $191,579K ÷ $28,781K
= 6.66

The interest coverage ratio of Sensient Technologies Corporation has shown a generally positive trend over the past several periods. The ratio has consistently increased from 5.59 as of March 31, 2020, to a peak of 16.47 as of June 30, 2022. This indicates that the company's operating income is more than sufficient to cover its interest expenses, demonstrating strong financial health and ability to meet its debt obligations comfortably.

However, starting from September 30, 2022, the interest coverage ratio begins to decline. While it remains above 10, indicating a healthy level of coverage, the decreasing trend may suggest a potential decrease in the company's ability to cover its interest payments in the future. By December 31, 2024, the interest coverage ratio had decreased to 6.66, indicating a lower level of protection for creditors.

It is important for investors and creditors to monitor this trend closely as a declining interest coverage ratio could signal increasing financial risk for the company. Sensient Technologies Corporation may need to closely manage its debt levels and profitability to ensure continued financial stability and meet its debt obligations efficiently.