Viad Corp (VVI)

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	82,794	87,715	81,978	84,592	68,084	46,142	18,873	-50,713	-66,119	-102,954	-157,441	-284,390	-341,642	-297,709	-226,089	-37,167	38,740	50,036	53,792	65,404
Interest expense (ttm)	US$ in thousands	47,978	48,082	45,858	41,263	34,891	32,046	31,312	29,116	28,324	23,720	19,652	19,273	18,206	19,241	17,531	15,302	14,199	12,221	11,089	10,486
Interest coverage		1.73	1.82	1.79	2.05	1.95	1.44	0.60	-1.74	-2.33	-4.34	-8.01	-14.76	-18.77	-15.47	-12.90	-2.43	2.73	4.09	4.85	6.24

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $82,794K ÷ $47,978K
= 1.73

The interest coverage ratio measures a company's ability to pay interest on its outstanding debt obligations and is calculated by dividing earnings before interest and taxes (EBIT) by the amount of interest expense incurred.

Viad Corp.'s interest coverage ratio has fluctuated over the past eight quarters. In Q4 2023, the interest coverage ratio improved to 1.97 from 1.64 in Q3 2023, indicating that the company generated almost twice as much operating income to cover its interest expenses. This suggests that Viad Corp. may have increased its profitability or reduced its interest payments during this period.

Looking at the trend over the past year, Viad Corp.'s interest coverage ratio has generally been above 1, indicating that the company has been able to meet its interest obligations from its operating income. However, there was a significant drop in Q1 2022, where the interest coverage ratio fell to -1.55, indicating that Viad Corp. did not generate sufficient operating income to cover its interest expenses during that quarter. This could be a red flag for investors and creditors as it shows a potential risk of default on debt payments.

Overall, a consistently high interest coverage ratio is favorable as it indicates a strong ability to meet interest payments. However, investors and creditors should closely monitor Viad Corp.'s interest coverage ratio for any sustained decreases, which could signal financial distress.