Sensient Technologies Corporation (SXT)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	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	121,110	180,828	192,304	197,117
Interest expense (ttm)	US$ in thousands	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	20,107	20,874	21,345	21,700
Interest coverage		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	6.02	8.66	9.01	9.08

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $155,023K ÷ $25,172K
= 6.16

The interest coverage ratio indicates the ability of a company to meet its interest obligations with its operating income. A higher interest coverage ratio is generally considered favorable as it suggests that the company is more capable of paying off its interest expenses.

Analyzing Sensient Technologies Corp.'s interest coverage ratios over the past 8 quarters, we observe a declining trend from Q1 2022 (16.47) to Q4 2023 (6.16). This trend signifies a potential weakening in the company's ability to cover its interest payments using its operating income.

Despite the downward trend, Sensient Technologies Corp.'s interest coverage ratios remain above 1, indicating that the company is generating sufficient operating income to cover its interest expenses in each of the quarters. However, the decreasing trend may raise concerns about the company's ability to service its debt obligations in the future if this trend continues.

It is crucial for stakeholders and investors to monitor Sensient Technologies Corp.'s interest coverage ratio closely in upcoming quarters to assess if the declining trend persists and to evaluate the company's overall financial health and debt repayment capabilities. Further analysis of the company's financial statements and debt levels may provide more insights into the factors influencing its interest coverage ratios.