Vital Energy Inc. (VTLE)

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	-198,448	533,698	492,326	479,000	661,560	445,330	763,481	961,417	762,135	862,477	667,670	257,112	262,038	-125,038	-507,955	-925,398	-773,110	-864,978	-903,881	-187,427
Interest expense (ttm)	US$ in thousands	169,634	174,661	173,847	164,686	149,819	128,258	119,920	121,198	125,121	127,414	126,853	119,916	113,385	108,361	104,783	105,985	105,009	93,914	82,277	70,970
Interest coverage		-1.17	3.06	2.83	2.91	4.42	3.47	6.37	7.93	6.09	6.77	5.26	2.14	2.31	-1.15	-4.85	-8.73	-7.36	-9.21	-10.99	-2.64

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-198,448K ÷ $169,634K
= -1.17

The interest coverage ratio measures a company's ability to meet its interest obligations through its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.

Analyzing the interest coverage ratios of Vital Energy Inc. from March 31, 2020, to December 31, 2024, shows a fluctuating trend. The ratios were consistently negative from March 2020 to March 2022, indicating that the company was not generating enough operating income to cover its interest expenses during this period.

However, starting from June 2022, the interest coverage ratios began to improve, turning positive and showing a steady increase through December 2024. This improvement suggests that Vital Energy Inc. has enhanced its ability to cover its interest obligations with its operating income.

It is essential for investors and creditors to monitor this ratio closely as it reflects the company's ability to manage its debt and indicates its financial health. The increasing trend in interest coverage for Vital Energy Inc. from mid-2022 onwards portrays a positive shift in its financial stability and capacity to service its debts.