TXNM Energy, Inc. (TXNM)

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	501,357	397,617	265,620	252,408	277,044	369,443	464,719	447,560	406,384	376,278	345,244	333,055	308,153	309,393	319,026	337,675	307,803	335,682	316,638	134,832
Interest expense (ttm)	US$ in thousands	228,066	222,949	213,123	203,194	190,355	176,571	161,259	144,577	129,874	113,593	102,311	97,213	96,877	98,854	102,873	109,842	114,392	118,016	121,112	119,815
Interest coverage		2.20	1.78	1.25	1.24	1.46	2.09	2.88	3.10	3.13	3.31	3.37	3.43	3.18	3.13	3.10	3.07	2.69	2.84	2.61	1.13

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $501,357K ÷ $228,066K
= 2.20

TXNM Energy, Inc.'s interest coverage ratio has shown a fluctuating trend over the past few years. From March 31, 2020, where the ratio stood at 1.13, it gradually improved to reach a peak of 3.43 on March 31, 2022. This indicates the company's ability to cover its interest expenses with operating profits improved significantly over this period.

However, since March 31, 2022, the interest coverage ratio has been on a declining trend, falling to 1.25 by June 30, 2024. This downward trend suggests a potential weakening in the company's ability to cover its interest expenses in relation to its operating profits.

It's worth noting that the interest coverage ratio fell below 1 at certain points, particularly on September 30, 2023, and December 31, 2023. When the ratio is below 1, it indicates that the company is not generating enough operating profits to cover its interest expenses, raising concerns about its financial health and ability to meet debt obligations.

Overall, while the company has shown improvement in its interest coverage ratio over the years, the recent decline raises flags regarding its ability to comfortably cover interest expenses from operating profits. Management should closely monitor this ratio and take necessary actions to ensure financial stability and sustainability.