Deckers Outdoor Corp. (NYSE:DECK)

The financial data over the periods ending March 31, 2018, through March 31, 2023, reveal several notable trends in leverage, debt management, and coverage ratios.

Leverage Ratios

The traditional debt to equity, debt to capital, and debt to assets ratios remained very low and stable from 2018 to 2020, around 0.02 to 0.03. However, when including operating lease liabilities, these ratios showed a marked increase in 2020, peaking that year before declining and stabilizing at lower levels through 2023. For example, debt to equity including operating lease liability surged to 0.26 in 2020 from 0.03 in previous years, then decreased to approximately 0.14 by 2023. This pattern suggests that the inclusion of operating lease obligations significantly impacted leverage measures in 2020, potentially reflecting accounting changes or lease capitalization effects, followed by reduced reliance or refinancing.

Financial Leverage

Financial leverage, indicating the ratio of total assets to equity, increased from 1.34 in 2018 to a peak of 1.55 in 2020. In the subsequent years, the ratio moderately declined to 1.45 by 2023. This suggests a modest increase in overall leverage peaking in 2020, aligning with increases seen in lease-adjusted debt ratios, before a modest deleveraging trend.

Interest Coverage

Interest coverage ratios remained strong throughout the entire period, consistently exceeding 49 times. Notably, a pronounced spike occurred in 2022, with interest coverage escalating to 272.07, before moderating to 194.52 in 2023. This significant increase in 2022 indicates a substantial improvement in the company's ability to meet interest obligations from operating earnings during that year.

Fixed Charge Coverage

Fixed charge coverage ratios demonstrated steady and continuous improvement over the period, rising from 3.76 in 2018 to 12.81 in 2023. The upward trajectory implies enhanced capacity to cover fixed financial obligations, including lease payments, from operating income.

Overall, the data illustrate that while reported debt levels excluding leases remained minimal and stable, the company's adjusted leverage considering operating leases was notably higher in 2020 but improved thereafter. Concurrently, profitability and cash flow strength appeared robust, as reflected in the high and increasing interest and fixed charge coverage ratios, underscoring strong financial flexibility and reduced risk related to fixed financial obligations over the analyzed timeframe.

The financial data indicates notable trends in the company's capital structure and equity growth over the observed periods.

Total Debt

The total debt shows a gradual decline from $32,082 thousand in March 2018 to $30,901 thousand in March 2020. Data for subsequent years is not available, which limits the ability to comment on more recent debt levels.

Stockholders’ Equity

Stockholders’ equity demonstrates a strong and consistent upward trajectory. Starting at $940,779 thousand in March 2018, equity increased steadily each year, reaching $1,765,733 thousand by March 2023. This represents an approximate growth of 87.6% over the six-year period, indicating a steady accumulation of retained earnings or successful capital infusion.

Debt to Equity Ratio

The debt to equity ratio maintained a very low and stable level of 0.03 from 2018 through 2020, suggesting the company had minimal reliance on debt financing relative to shareholder equity. There is no data available for this ratio from 2021 onward.

Overall, the company's financial position appears to have strengthened considerably due to substantial growth in equity alongside a slight reduction in debt over the reported years. This trend suggests increasing financial stability and a conservative approach to leverage, although the lack of recent debt data limits a full assessment of the current capital structure.

Total Debt (including Operating Lease Liability)

Over the analyzed period, total debt increased substantially. Starting at approximately $32.1 million in 2018, debt levels remained relatively stable through 2019, but rose sharply in 2020 to nearly $296 million. Subsequently, debt declined to around $223 million in 2021 and remained fairly stable in 2022. However, there was a moderate increase again in 2023 to approximately $246 million.

Stockholders’ Equity

Stockholders’ equity exhibited a consistent upward trend over the six years. Beginning at about $940.8 million in 2018, equity rose steadily each year, reaching approximately $1.77 billion by 2023. Notably, there was a significant increase between 2020 and 2021, where equity grew by over $300 million.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt to equity ratio remained very low in 2018 and 2019 at about 0.03, indicating minimal leverage. In 2020, the ratio spiked to 0.26, reflecting a substantial increase in debt relative to equity during that year. The ratio then decreased in 2021 to 0.15 and stabilized around 0.14 in both 2022 and 2023, indicating a modest leverage level compared to equity in the latter period.

Overall Analysis

Throughout the period, the company demonstrated strong equity growth alongside fluctuations in debt levels. The significant debt increase in 2020 coincided with a spike in the debt to equity ratio, suggesting possible strategic borrowing or acquisition-related financing. Subsequent reductions in debt and the accompanying decrease in leverage ratios show a move toward deleveraging while maintaining equity growth. The overall low debt to equity ratios, despite the 2020 peak, imply a conservative capital structure with a focus on equity financing.

The evaluation of the financial data reveals several trends concerning the company's leverage and capital structure over the analyzed periods.

Total Debt

The total debt exhibits a gradual decline from $32,082 thousand in 2018 to $30,901 thousand in 2020. Data for subsequent years is not available, limiting further trend assessment in debt levels.

Total Capital

Total capital shows a consistent and significant upward trajectory, increasing from approximately $972,861 thousand in 2018 to $1,765,733 thousand by 2023. This indicates an expansion in the company's capital base over the period, almost doubling in size.

Debt to Capital Ratio

The debt to capital ratio remains stable at 0.03 from 2018 through 2020, reflecting a low relative level of debt compared to the overall capital. Lack of data for subsequent years prevents an analysis of whether this conservative leverage profile continued.

Overall, the company maintained a low-debt capital structure with incremental increases in total capital, suggesting a conservative approach to financing with equity or retained earnings likely contributing to capital growth. The decline in absolute debt, combined with a rise in total capital, underscores a strengthening financial position in terms of capitalization up to the available data points. Missing data in later years restricts a complete longitudinal analysis.

Total debt (including operating lease liability)

The total debt level remained relatively stable between March 2018 and March 2019, with values of approximately $32 million and $31.5 million respectively. A significant increase occurred in March 2020, where total debt surged to nearly $296 million. Subsequently, total debt decreased to about $223 million in March 2021 and remained close to that level in March 2022. However, by March 2023, total debt increased again to approximately $246 million. Overall, there is noticeable volatility with a sharp rise in 2020, followed by a decrease and a moderate rebound in 2023.

Total capital (including operating lease liability)

Total capital exhibited a consistent upward trend over the entire period. Starting from around $973 million in March 2018, total capital rose steadily each year, reaching approximately $1.08 billion in March 2019, $1.44 billion in March 2020, $1.67 billion in March 2021, $1.76 billion in March 2022, and $2.01 billion in March 2023. This indicates continuous growth in the company's overall capital base throughout the period.

Debt to capital (including operating lease liability) ratio

The debt to capital ratio was very low and stable at 0.03 in both March 2018 and March 2019. In March 2020, there was a sharp increase to 0.21, reflecting the significant rise in total debt relative to total capital during that year. This ratio decreased to 0.13 in March 2021 and remained relatively stable at 0.13 and 0.12 in March 2022 and March 2023 respectively. The data illustrates that although the company's leverage increased substantially in 2020, it was subsequently reduced and maintained at a more moderate level thereafter.

The analysis of the financial data reveals several notable trends over the observed periods.

Total Debt

The total debt shows a slight downward trend from 32,082 thousand USD in March 2018 to 30,901 thousand USD in March 2020. The data for subsequent years is not available, so further trend analysis beyond 2020 cannot be conducted.

Total Assets

Total assets increased significantly throughout the entire period, starting from 1,264,379 thousand USD in March 2018 and rising consistently each year to reach 2,556,203 thousand USD by March 2023. This represents a steady expansion of asset base over six years, indicating growth or acquisition of assets.

Debt to Assets Ratio

The debt to assets ratio remained very low and slightly decreased from 0.03 in March 2018 to 0.02 in March 2020. The absence of data for this ratio beyond 2020 limits further analysis. However, the low ratio indicates that the company maintained a conservative use of debt relative to its asset base during the available periods.

In summary, the company demonstrated a strong asset growth trajectory from 2018 through 2023 while maintaining a relatively low and slightly decreasing debt level up to 2020. This suggests prudent financial management and possible reinvestment of earnings or capital raising through equity rather than increasing financial leverage. Further data would be required to assess trends in debt and debt ratio beyond 2020.

Total Debt (Including Operating Lease Liability)

The total debt experienced a substantial increase beginning in the fiscal year ending March 31, 2020. From approximately $31.5 million in 2019, debt surged to nearly $296 million in 2020. Following this peak, the debt level decreased to around $223 million in 2021 and remained relatively stable in 2022. In the most recent period, ending March 31, 2023, there was an uptick again to approximately $246 million.

Total Assets

Total assets demonstrated consistent growth over the entire period. The asset base increased from roughly $1.26 billion in 2018 to $2.56 billion in 2023. This reflects a steady expansion, with the most notable increases occurring from 2019 to 2021, after which the growth rate remained positive but somewhat moderated.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt-to-assets ratio was very low, at 0.02–0.03, during 2018 and 2019, indicating minimal leverage relative to the asset base. However, the ratio jumped sharply in 2020 to 0.17, corresponding with the substantial increase in total debt that year. From 2021 onward, the ratio stabilized around 0.10, suggesting that while debt remains elevated relative to previous years, the leverage level has become more consistent as assets continued to grow.

Summary

The financial data reveals a significant borrowing event around 2020, which markedly increased the company’s debt load and leverage. Despite the higher debt, total assets have expanded steadily, helping to manage the leverage ratio at a moderate level in subsequent years. The stabilization of the debt-to-assets ratio around 0.10 since 2021 indicates a controlled approach to leveraging, with ongoing asset growth supporting the company’s capital structure.

The analysis of the financial data over the six-year period reveals several notable trends in the assets, equity, and leverage of the company.

Total Assets

Total assets show a consistent upward trajectory from 1,264,379 thousand US dollars in 2018 to 2,556,203 thousand US dollars in 2023, indicating significant growth in the asset base. The increase is steady each year, with the most substantial rise occurring between 2020 and 2021, reflecting likely investment or acquisition activity during this period.

Stockholders’ Equity

Stockholders’ equity also demonstrates a steady increase over the same period, growing from 940,779 thousand US dollars in 2018 to 1,765,733 thousand US dollars in 2023. This reflects strengthening financial stability and retained earnings or capital contributions enhancing the equity base. The growth in equity is consistent year over year, with a notable acceleration in 2021, paralleling the asset expansion.

Financial Leverage

Financial leverage, calculated as the ratio of total assets to stockholders’ equity, shows some fluctuation but generally remains within a narrow range from 1.34 in 2018 to 1.45 in 2023. The ratio peaks at 1.55 in 2020, indicating a higher reliance on debt or liabilities relative to equity during that year, before decreasing and stabilizing around 1.45. This suggests the company managed its leverage prudently, reducing financial risk after the 2020 peak.

Overall, the data indicate robust growth in both assets and equity, accompanied by a conservative approach to leverage that peaked in 2020 but has since moderated. The financial position appears to have strengthened over the six-year period, with increased capital resources supporting the expanded asset base while maintaining reasonable leverage levels.

The analysis of the financial data over the six-year period reveals several key trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratio.

Earnings before interest and tax (EBIT)

EBIT demonstrates a consistent upward trajectory from 225,281 thousand US dollars in 2018 to 669,524 thousand US dollars in 2023. Notable growth occurred between 2019 and 2021, with EBIT increasing from 333,595 to 507,542 thousand US dollars, representing a strong recovery and expansion over these years. The trend continued positively through 2022 and 2023, indicating improved operational profitability.

Interest expense

Interest expenses fluctuated mildly over the same period. Between 2018 and 2021, the expense increased from 4,585 thousand US dollars to 6,028 thousand US dollars, showing a slight rise in financing costs. However, in 2022, the interest expense dropped significantly to 2,083 thousand US dollars, before increasing again to 3,442 thousand US dollars in 2023. These variations suggest changes in debt levels or interest rates during these years.

Interest coverage ratio

The interest coverage ratio, calculated as EBIT divided by interest expense, shows a positive and strong upward trend overall. Starting from a ratio of 49.13 in 2018, it rose sharply to 272.07 in 2022, reflecting a substantial improvement in the company's ability to cover interest obligations from operating earnings. Although the ratio decreased somewhat to 194.52 in 2023, it remains well above earlier values, indicating robust earnings relative to interest costs.

In summary, the entity's operational earnings have consistently increased, outpacing changes in interest expense and leading to significantly improved interest coverage. This points to strengthened financial stability and enhanced capacity to service debt over the analyzed period.

Earnings before Fixed Charges and Tax

Earnings before fixed charges and tax demonstrated a consistent upward trend over the six-year period. Starting at approximately $300.7 million in 2018, this figure increased steadily each year, reaching $722.5 million by 2023. This represents more than a twofold increase, indicating strong growth in operating performance before accounting for fixed financial obligations and taxes.

Fixed Charges

Fixed charges exhibited a general declining trend from 2018 to 2022, decreasing from about $80 million to around $53.2 million. However, there was a slight rebound in 2023 where fixed charges rose to approximately $56.4 million. Overall, fixed charges have reduced over the period but experienced a small increase in the most recent year.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio showed significant improvement throughout the period. Starting at 3.76 in 2018, this ratio increased steadily, reaching 12.81 in 2023. This growth reflects an enhanced ability to cover fixed charges from earnings, suggesting improved financial stability and reduced risk associated with fixed financial obligations. The upward trend in this ratio is aligned with rising earnings and decreasing fixed charges, contributing to stronger coverage.

Overall Analysis

The data indicates that the company has strengthened its earnings capacity substantially over the years while managing to reduce fixed charges until 2022, followed by a minor rise in 2023. The improved fixed charge coverage ratio confirms that earnings growth has outpaced the costs associated with fixed charges, enhancing the company’s financial flexibility. This pattern suggests solid operational performance combined with prudent management of fixed financial commitments.