Ultra Clean Holdings Inc (UCTT)

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	28,600	72,900	101,000	81,200	112,100	123,300	139,300	178,800	171,600	143,800	129,900	130,300	113,800	80,400	58,100	36,600	26,200	39,206	29,128	42,492
Interest expense (ttm)	US$ in thousands	48,800	46,700	43,800	39,300	33,900	29,700	27,200	27,000	24,200	21,400	18,600	15,300	16,900	18,800	21,300	24,200	25,600	29,578	23,224	16,562
Interest coverage		0.59	1.56	2.31	2.07	3.31	4.15	5.12	6.62	7.09	6.72	6.98	8.52	6.73	4.28	2.73	1.51	1.02	1.33	1.25	2.57

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $28,600K ÷ $48,800K
= 0.59

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Looking at the interest coverage trend for Ultra Clean Holdings Inc over the past few quarters, we can observe fluctuations in the ratio. The interest coverage ratio has experienced variability, ranging from a low of 0.59 to a high of 8.52.

In recent quarters, Ultra Clean Holdings Inc has shown an improvement in its interest coverage ratio, reaching a peak of 8.52 in the quarter ending March 31, 2021. This indicates that the company's operating income was sufficient to cover its interest expenses more than eight times over.

However, the interest coverage ratio declined in the following quarters but remained above 2, indicating that the company was still able to cover its interest obligations comfortably. It is notable that there was a significant decrease in the interest coverage ratio in the most recent quarter, ending December 31, 2023, where it dropped to 0.59. This may raise concerns about the company's ability to meet its interest payments with its operating income.

Overall, while Ultra Clean Holdings Inc has shown fluctuations in its interest coverage ratio, it is essential for investors and stakeholders to closely monitor the company's financial performance to ensure that it can adequately cover its interest expenses in the future.