TSX:TCN - Post Discussion
Post by
retiredcf on Mar 05, 2023 3:22pm
Assessment of Debt
As of the company's most recent earnings, TCN has $5.7B in total debt, of which $3.8B is fixed and has a weighted average time to maturity of 4 years, and the remaining $1.9B is floating which has a weighted average time to maturity of 2.1 years. The company has a debt-to-equity ratio of 1.6, which is somewhat high but has declined from a high of 2.6 in 2020. Its interest coverage ratio is OK, signaling it can service its interest payments. TCN has $142M in cash, it generates ~$200M a year in free cash flows, and its annual interest payments are roughly $200M. The company has collars and caps on its floating rate debt, and so some of this hedging will cause it to be less vulnerable than others to rate increases.
Historically, TCN has managed its debt well and has many levers to pull if interest payments increase. We continue to like TCN and feel that its long-term growth will outweigh near-term pressures from its debt load. (5iResearch)
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