Willscot Mobile Mini Holdings Corp A (WSC)

Interest coverage

Mar 31, 2025 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
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 262,688 273,200 272,266 479,986 651,758 673,459 667,494 643,507 591,067 521,121 228,079 167,879 59,297 -33,210 179,887 12,945 50,257 42,245 -11,405 91,407
Interest expense (ttm) US$ in thousands 229,192 227,311 227,084 225,064 216,762 205,040 189,831 174,037 159,944 145,648 131,342 122,534 118,593 117,987 118,453 122,286 121,593 119,886 116,961 113,932
Interest coverage 1.15 1.20 1.20 2.13 3.01 3.28 3.52 3.70 3.70 3.58 1.74 1.37 0.50 -0.28 1.52 0.11 0.41 0.35 -0.10 0.80

March 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $262,688K ÷ $229,192K
= 1.15

The interest coverage ratio of Willscot Mobile Mini Holdings Corp A exhibits considerable variability over the observed periods. In the latter half of 2020, the ratio was notably low at 0.80 as of June 30, and further declined to a negative value of -0.10 by September 30, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover its interest obligations during these periods, suggesting potential financial stress or challenges in operational profitability.

Subsequent quarters reveal oscillations around the breakeven point, with ratios such as 0.35 and 0.41 during December 2020 and March 2021, respectively, indicating slight improvements but still reflecting strained capacity to cover interest expenses solely from operating earnings. The ratio dropped again to 0.11 in June 2021, underscoring ongoing difficulties.

A marked improvement occurred during September 2021, with a ratio rising sharply to 1.52, signifying that the company's EBIT exceeded interest expenses for the first time since before 2020, potentially due to operational improvements or cost management measures. However, this positive trend was not sustained, as the ratio declined back into negative territory (-0.28) in December 2021, before stabilizing at moderate levels of 0.50 in March 2022.

From mid-2022 onward, a significant upward trend is evident. The ratio increased steadily, reaching 1.37 by June 2022, and further climbing to 3.58 in December 2022. This indicates that the company's operating earnings substantially covered interest obligations, reflecting improved profitability and financial health.

This positive trajectory continued into early 2023, with ratios of 3.70 recorded for both March and June 2023, and remaining relatively stable at 3.52 in September 2023 and 3.28 in December 2023. Such ratios denote a comfortable margin of safety regarding interest obligations, suggesting strong operating performance and reduced financial leverage concerns.

However, in 2024, the ratio shows a declining trend, falling to 3.01 in March, then tumbling notably to 2.13 in June, and further weakening to 1.20 in September and December 2024. These declines imply a diminishing capacity to meet interest expenses from operating earnings, possibly due to increased interest costs, lower earnings, or a combination of both. The ratio remains near the 1.15 level projected for March 2025, indicating a narrow margin that warrants attention for potential liquidity or profitability pressures.

Overall, the interest coverage ratio of Willscot Mobile Mini Holdings Corp A demonstrates periods of significant financial stress, characterized by negative ratios, transitioning into phases of robust coverage in late 2022 and early 2023, followed by a recent deterioration. The trend highlights cyclical or operational challenges that influence profitability and solvency, emphasizing the importance of closely monitoring ongoing financial performance to assess the company's ability to sustain its interest obligations relative to its earnings capacity.