XPEL Inc
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
XPEL$38.39-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001767258-24-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001767258-24-000037
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 107 current paragraphs.
62 unchanged; 26 reworded; 19 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Other product revenue for the three months ended June 30, 2024 decreased 5.8% compared to the three months ended June 30, 2023 due primarily to a decrease in our ceramic coating product revenue. Revenue for our FUSION product line for the three months ended June 30, 2024 was $1.7 million compared to $1.8 million for the three months ended June 30, 2023.
Current report
Geographically, outside of China, we experienced continued growth in most of our regions including 9.7% growth in the US region. These increases were primarily due to increasing product awareness and adoption.
Current report
Product revenue for the six months ended June 30, 2024 increased 1.2% over the six months ended June 30, 2023. Product revenue represented 75.0% of our consolidated revenue compared to 78.8% in the six months ended June 30, 2023. Revenue from our paint protection film product line increased 0.3% over the six months ended June 30, 2023. Paint protection film sales represented 53.2% and 56.4% of our consolidated revenues for the six months ended June 30, 2024 and 2023, respectively.
Current report
Revenue from our window film grew 3.6% compared to the six months ended June 30, 2023. Window film sales represented 18.3% and 18.8% of our total consolidated revenues for the six months ended June 30, 2024 and 2023, respectively. This increase was driven by continued demand resulting from increased product adoption in multiple regions partially offset by weakness in China during the first quarter of this year. Architectural window film revenue increased 30.9% compared to the six months ended June 30, 2023 to $4.9 million and represented 13.3% of total window film revenue and 2.4% of total revenue. This increase was driven by increased demand for our architectural window films resulting from increased product awareness and adoption.
Current report
Other product revenue for the six months ended June 30, 2024 increased 4.0% compared to the six months ended June 30, 2023. Our FUSION ceramic coating product revenue grew 5.7% compared to the six months ended June 30, 2023 to $3.1 million.
Current report
Service revenue grew 25.2% over the three months ended June 30, 2023. Within this category, software revenue increased 28.8% over the three months ended June 30, 2023. This increase was due to an increase in total subscribers to our DAP software. Cutbank credit revenue increased 1.8% from the three months ended June 30, 2023 which is comparable to the associated growth in paint protection film revenue. Installation labor revenue increased 33.9% over the three months ended June 30, 2023 due mainly to increased demand across our dealership services and OEM networks.
Current report
Service revenue for the six months ended June 30, 2024 grew 25.3% over the six months ended June 30, 2023. Within this category, software revenue grew 30.5% over the six months ended June 30, 2023. This increase was due to an increase in total subscribers to our DAP software. Cutbank credit revenue increased 0.8% over the six months ended June 30, 2023 which is comparable to associated growth in paint protection film revenue. Installation labor revenue increased 34.3% over the six months ended June 30, 2023 due mainly to increased demand across our dealership services and OEM networks.
Current report
Product costs for the three months ended June 30, 2024 increased 3.5% over the three months ended June 30, 2023. Cost of product sales represented 46.6% and 48.5% of total revenue in the three months ended June 30, 2024 and 2023, respectively. Cost of service revenue grew 24.1% during the three months ended June 30, 2024. For both product and service, cost of sales increased commensurate with the related growth in revenue. Refer to the Gross Margin section below for discussion of this cost relative to revenue.
Current report
Product costs for the six months ended June 30, 2024 increased 1.8% over the six months ended June 30, 2023. Cost of product sales represented 46.7% and 48.8% of total revenue in the six months ended June 30, 2024 and 2023, respectively. Cost of service revenue grew 27.4% during the six months ended June 30, 2024. For both product and service, cost of sales increased commensurate with the related growth in revenue. Refer to the Gross Margin section below for discussion of this cost relative to revenue.
Current report
Gross margin for the three months ended June 30, 2024 grew approximately $3.9 million, or 8.8%, compared to the three months ended June 30, 2023. For the three months ended June 30, 2024, gross margin represented 43.5% of revenue compared to 43.0% for the three months ended June 30, 2023.
Current report
Gross margin for the six months ended June 30, 2024 grew approximately $5.8 million, or 7.2%, compared to the six months ended June 30, 2023. For the six months ended June 30, 2024, gross margin represented 42.9% of revenue compared to 42.5% for the six months ended June 30, 2023.
Current report
Product gross margin for the six months ended June 30, 2024 increased approximately $0.2 million, or 0.3%, over the six months ended June 30, 2023 and represented 37.7% and 38.1% of total product revenue for the six months ended June 30, 2024 and 2023, respectively. This decrease in product gross margin percentage was primarily due to lower product revenue and increases in non-bill of material costs contained with in product cost of goods sold.
Current report
Service gross margin increased approximately $3.3 million, or 26.0%, over the three months ended June 30, 2023. This represented 59.7% and 59.3% of total service revenue for the three months ended
Current report
June 30, 2024 and 2023, respectively. This increase in service gross margin percentage was primarily due to operating leverage across our installation networks.
Current report
For the six months ended June 30, 2024, sales and marketing expenses increased 39.4% compared to the same period in 2023. This increase was due to increased personnel and marketing costs incurred to support the ongoing growth of the business. These expenses represented 10.3% and 7.9% of total consolidated revenue for the six months ended June 30, 2024 and 2023, respectively.
Current report
General and administrative expenses grew approximately $6.6 million, or 22.1% over the six months ended June 30, 2023. This increase in cost was due primarily to increases in personnel, occupancy costs and professional fees to support our ongoing growth. These costs represented 18.3% and 16.0% of total consolidated revenue for the six months ended June 30, 2024 and 2023, respectively.
Current report
Income tax expense for the three months ended June 30, 2024 decreased $0.6 million from the three months ended June 30, 2023. Our effective tax rate was 18.8% for the three months ended June 30, 2024 compared with 20.6% for the three months ended June 30, 2023. The decrease in the effective tax rate was due primarily to tax benefits associated with increased research and development expenditures.
Current report
Net income for the six months ended June 30, 2024 decreased 20.1% to $21.7 million.
Current report
Operating activities. Cash provided by operations for the six months ended June 30, 2024 was $21.9 million compared to $27.4 million during the six months ended June 30, 2023. This reduction in cash flows from operating activities was due mainly to reduced profitability in the current year.
Removed paragraphs (3)
Previous report
Other product revenue for the three months ended March 31, 2024 grew 18.5% to $3.3 million and represented 3.7% of revenue. This increase was driven by an increase in demand for our non-film related products such as ceramic coating, plotters, chemicals and other film installation tools and accessories. Our FUSION ceramic coating product revenue grew 24.4% to $1.4 million. This increase was due mainly to increased demand for our ceramic coating products.
Previous report
Software revenue increased 32.2% from the three months ended March 31, 2023. The increase was due primarily to increases in total subscribers to our software. Software revenue represented 2.1% and 1.7% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. Installation labor revenue increased 34.7% due mainly to increased labor revenue in our dealership services business resulting from increased car counts associated with improving U.S. new car dealership inventories.
Previous report
Operating Activities. Cash used in operations totaled approximately $5.0 million for the three months ended March 31, 2024, compared to operating cash inflows of $0.7 million for the three months ended March 31, 2023. This decrease was driven by a decline in net income and a net increase in working capital.
Reworded paragraphs (26)
Previous wording
We believe the items we have outlined above are important factors that could cause estimates included in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this report or elsewhere by us or on our behalf. We have discussed these factors in more detail in the Annual Report. These factors are not necessarily all of the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this report could also have material adverse effects on actual results. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our shareholders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution when considering our forward-looking statements.
Current wording
We believe the items we have outlined above are important factors that could cause estimates included in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this report or elsewhere by us or on our behalf. We have discussed these factors in more detail in the Annual Report. These factors are not necessarily all of the factors that could affect us. Unpredictable or unanticipated factors that we have not discussed in this Report could also have material adverse effects on actual results. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our shareholders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution when considering our forward-looking statements.
Previous wording
XPEL also continues to expand its delivery channels by acquiring select installation facilities in key markets and acquiring international partners to enhance our global reach. As we expand globally, we strive to tailor our distribution model to adapt to target markets. We believe this flexibility allows us to penetrate and grow market share more efficiently. Our acquisition strategy centers on our belief that the closer the Company is to its end customers, the greater its ability to drive increased product sales. During 2023, we completed four acquisitions in furtherance of this objective. We believe our channel strategy uniquely positions us to be wherever the demand takes us and is a key part of our ability to drive sustained growth.
Current wording
XPEL also continues to expand its delivery channels by acquiring select installation facilities in key markets and acquiring international partners to enhance our global reach. As we expand globally, we strive to tailor our distribution model to adapt to target markets. We believe this flexibility allows us to penetrate and grow market share more efficiently. Our acquisition strategy centers on our belief that the closer the Company is to its end customers, the greater its ability to drive increased product sales. We believe our channel strategy uniquely positions us to be wherever the demand takes us and is a key part of our ability to drive sustained growth.
Previous wording
The following table is a reconciliation of Net income to EBITDA for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table is a reconciliation of Net income to EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
The following table summarizes the Company’s consolidated results of operations for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table summarizes the Company’s consolidated results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
The following table summarizes revenue results for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table summarizes revenue results for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product. The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product. The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Product Revenue. Product revenue decreased 0.7% over the three months ended March 31, 2023. Product revenue represented 74.2% of our total revenue for the three months ended March 31, 2024 and 78.4% for the three months ended March 31, 2023. Revenue from our paint protection film product line decreased 1.1% for the three months ended March 31, 2024. Paint protection film sales represented 54.4% and 57.7% of our consolidated revenues for the three months ended March 31, 2024 and 2023, respectively. This decrease was due to lower demand in the U.S., primarily in the after-market channel, and lower sales to XPEL's China distributor. Sales to China reached a record high in the fourth quarter of 2023. Consequently, first quarter 2024 China sales were negatively impacted as our distributor sold through the inventory purchased at the end of last year.
Current wording
Product Revenue. Product revenue for the three months ended June 30, 2024 increased 2.8% over the three months ended June 30, 2023. Product revenue represented 75.7% of our total revenue compared to 79.1% in the three months ended June 30, 2023. Revenue from our paint protection film product line increased 1.5% over the three months ended June 30, 2023. Paint protection film sales represented 52.1% and 55.3% of our total consolidated revenues for the three months ended June 30, 2024 and 2023, respectively. The total increase in paint protection film sales was due to increased demand for our film products across multiple regions mostly offset by lower sales into China. Sales into China continue to be negatively impacted as our distributor continues to work through excess inventory levels accumulated in the fourth quarter of last year.
Previous wording
Revenue from our window film product line declined 2.9% for the three months ended March 31, 2024. Window film sales represented 16.1% and 17.5% of our consolidated revenues for the three months ended March 31, 2024 and 2023, respectively. This decline was due mainly to lower revenue into China. Excluding China, total window film revenue grew 10.3%. Architectural window film revenue increased 33.1% to $1.8 million. This increase was due mainly to increased product awareness and demand in most of our regions.
Current wording
Revenue from our window film product line grew 8.4% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Window film sales represented 20.0% and 19.9% of our total consolidated revenues for the three months ended June 30, 2024 and 2023, respectively. This increase was driven by continued demand resulting from increased product adoption in multiple regions. Architectural window film revenue increased 29.6% compared to the three months ended June 30, 2023, to $3.1 million, and represented 14.1% of total window film revenue and 2.8% of total revenue for the three months ended June 30, 2024. This increase was due mainly to increased product awareness and adoption in many of our regions.
Previous wording
Geographically, outside of the U.S. and China, we experienced solid growth in most operating regions during the three months ended March 31, 2024, due mainly to increased product awareness and adoption.
Current wording
Geographically, we saw revenue growth in most regions during the six months ended June 30, 2024. These increases were due primarily to increased product awareness and attach rates.
Previous wording
Service revenue consists of fees for DAP software access and cutbank credit revenue, which represents the value of pattern access provided with eligible product revenue, revenue from the labor portion of installation sales in our Company-owned installation centers, revenue from our dealership services businesses and revenue from training services provided to our customers. Due mainly to increases in the Company's dealership services business resulting from increased car counts, increased content per vehicle and from our OEM business, service revenue grew 25.5% over service revenue for the three months ended March 31, 2023. Service revenue represented 25.8% and 21.6% of our consolidated revenue from the three months ended March 31, 2024 and 2023, respectively.
Current wording
Service revenue. Service revenue consists of revenue from fees for DAP software access, cutbank credit revenue, which represents the value of pattern access provided with eligible product revenue, revenue from the labor portion of installation sales in our Company-owned installation centers, revenue from our dealership services business and revenue from training services provided to our customers.
Previous wording
Total installation revenue (labor and product combined) for the three months ended March 31, 2024 increased 34.7% over the three months ended March 31, 2023. This represented 22.1% and 17.2% of our consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. Adjusted product revenue, which combines the cutbank credit revenue service component with product revenue, decreased 0.7% in the three months ended March 31, 2024 versus the three months ended March 31, 2023.
Current wording
Total installation revenue (labor and product combined) increased 33.9% over the three months ended June 30, 2023. This represented 21.1% and 16.9% of our total consolidated revenue for the three months ended June 30, 2024 and 2023, respectively. These increases were primarily due to increased demand across our dealership services and OEM networks. Total installation revenue increased 34.3% over the six months ended June 30, 2023. This represented 21.5% and 17.0% of our total consolidated revenue for the six months ended June 30, 2024 and 2023, respectively. These increases were primarily due to increased demand across our dealership services and OEM networks. Adjusted product revenue, which combines the cutbank credit revenue service component with product revenue, increased 2.8% over the three months ended June 30, 2023. Adjusted product revenue increased 1.2% over the six months ended June 30, 2023.
Previous wording
Cost of sales consists of product costs and the costs to provide our services. Product costs consist of material costs, personnel costs related to warehouse personnel, shipping costs, warranty costs and other related costs to provide products to our customers. Cost of service includes the labor costs associated with installation of product in our Company-run facilities, costs of labor associated with pattern design for our cutting software and the costs incurred to provide training for our customers. Product costs in the three months ended March 31, 2024 decreased 0.1% over the three months ended March 31, 2023 commensurate with our decrease in product sales. Cost of product sales represented 46.8% and 49.1% of total revenue in the three months ended March 31, 2024 and 2023, respectively. Cost of services grew 31.0% during the three months ended March 31, 2024 and represented 11.2% and 9.0% of total revenue for the three months ended March 31, 2024 and 2023, respectively. This increase was due primarily to increased installation labor costs commensurate with the growth in installation labor revenue.
Current wording
Cost of sales consists of product costs and the costs to provide our services. Product costs consist of material costs, personnel costs related to warehouse personnel, shipping costs, warranty costs and other related costs to provide products to our customers. Cost of service includes the labor costs associated with installation of product in our installation facilities, costs of labor associated with pattern design for our cutting software and the costs incurred to provide training for our customers.
Previous wording
The following table summarizes gross margin for product and services for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table summarizes gross margin for product and services for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Product gross margin for the three months ended March 31, 2024 decreased $0.4 million, 1.6% compared to the same period in the prior year. The decrease in product gross margin percentages was primarily due to lower product revenue and increases in non bill of material costs contained within product cost of goods sold.
Current wording
Product gross margin for the three months ended June 30, 2024 increased approximately $0.6 million, or 1.8%, over the three months ended June 30, 2023 and represented 38.4% and 38.7% of total product revenue for the three months ended June 30, 2024 and 2023, respectively. This decrease in product gross margin percentage was primarily due to lower product revenue and increases in non-bill of material costs contained with in product cost of goods sold.
Previous wording
Service gross margin increased approximately $2.3 million, or 21.5%, over the three months ended March 31, 2023. This represented 56.6% and 58.4% of total service revenue for the three months ended March 31, 2024 and 2023, respectively. The decrease in service gross margin percentage was primarily due to a higher percentage mix of lower margin installation labor revenue and cost inefficiencies associated with lower revenue in our company-owned installation centers.
Current wording
Service gross margin increased approximately $5.6 million, or 23.9%, over the six months ended June 30, 2023. This represented 58.2% and 58.9% of total service revenue for the six months ended June 30, 2024 and 2023, respectively. This decrease in gross margin percentage was primarily due to a higher percentage mix of lower margin service revenue and cost inefficiencies associated with lower revenue in our Company-owned installation facilities.
Previous wording
Sales and marketing expenses for the three months ended March 31, 2024 increased $3.7 million, or 55.7%, compared to the same period in 2023. These expenses represented 11.5% and 7.8% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. This increase was primarily due to expenses incurred during the period for our annual dealer conference which occurred in the second quarter of the prior year.
Current wording
Sales and marketing expenses for the three months ended June 30, 2024 increased 26.2% compared to the same period in 2023. We incurred approximately $1.5 million in costs in the prior year quarter related to our annual dealer conference. Normalizing for these costs, sales and marketing expense increased approximately 55%. This increase was due to increased personnel and marketing costs incurred to support the ongoing growth of the business as the Company increased its marketing efforts to dealerships and end customers. These expenses represented 9.4% and 8.0% of total consolidated revenue for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
General and administrative expenses grew approximately $3.9 million, or 27.2%, during the three months ended March 31, 2024 over the three months ended March 31, 2023. These costs represented 20.3% and 16.7% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. The increase was due mainly to increases in personnel, occupancy costs, and professional fees to support the ongoing growth of the business.
Current wording
General and administrative expenses grew approximately $2.7 million, or 17.5% over the three months ended June 30, 2023. This increase in cost was due primarily to increases in personnel, occupancy costs and professional fees to support our ongoing growth. These costs represented 16.7% and 15.3% of total consolidated revenue for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Income tax expense for the three months ended March 31, 2024 decreased $1.2 million from the three months ended March 31, 2023. Our effective tax rate was 21.4% for the three months ended March 31, 2024 compared with 20.7% for the three months ended March 31, 2023.
Current wording
Income tax expense for the six months ended June 30, 2024 decreased $1.8 million from the same period in 2023, Our effective tax rate was 19.6% for the six months ended June 30, 2024 compared with 20.6% for the six months ended June 30, 2023.
Previous wording
Net income for the three months ended March 31, 2024 decreased by $4.8 million, or 41.7%, to $6.7 million.
Current wording
Net income for the three months ended June 30, 2024 decreased 4.5% to $15.0 million.
Previous wording
The primary source of liquidity for our business is available cash and cash equivalents, cash flows provided by operations and borrowing capacity under our credit facility. As of March 31, 2024, we had cash and cash equivalents of $8.6 million. For the three months ended March 31, 2024, cash used in operations was $5.0 million, and as of March 31, 2024 we had approximately $104.3 million in funds available under our credit facilities. We expect to continue to have sufficient access to cash to support working capital needs, pay for capital expenditures (including acquisitions), and to pay interest and service debt. We believe we have the ability and sufficient resources to meet these cash requirements by using available cash, internally generated funds and borrowing under committed credit facilities. We are focused on continuing to generate positive operating cash to fund our operational and capital investment initiatives. We believe we have sufficient liquidity to operate for at least the next 12 months from the date of this quarterly report.
Current wording
Our primary sources of liquidity are available cash and cash equivalents, cash flows provided by operations, and borrowings under our credit facilities. As of June 30, 2024, we had cash and cash equivalents of $15.0 million. For the six months ended June 30, 2024, cash provided by operations was $21.9 million. We currently have $117.3 million of credit available to us under our credit facilities. We expect available cash, internally generated funds, and borrowings from our committed credit facilities to be sufficient to support working capital needs, capital expenditures (including acquisitions), and our debt service obligations. We are focused on continuing to generate positive operating cash to fund our operational and capital investment initiatives. We believe we have sufficient liquidity to operate for at least the next 12 months from the date of filing this report.
Previous wording
Investing Activities. Cash flows used in investing activities totaled approximately $3.1 million during the three months ended March 31, 2024 compared to $2.4 million during the three months ended March 31, 2023.
Current wording
Investing activities. Cash used in investing activities totaled approximately $10.6 million during the six months ended June 30, 2024 compared to $8.3 million during the six months ended June 30, 2023. This increase was due primarily to higher acquisition-related payments during 2024.
Previous wording
Financing Activities. Cash flows provided by financing activities during the three months ended March 31, 2024 totaled approximately $5.0 million compared to $1.9 million in the prior year. This increase was due to an increase in borrowings under our credit facility during the 2024 quarter.
Current wording
Financing activities. Cash flows used in financing activities during the six months ended June 30, 2024 totaled $8.1 million compared to cash flows provided by financing activities during the same period in the prior year of $13.1 million. This change was due primarily to the timing of repayments on our credit facility.
Previous wording
Debt obligations, including balances outstanding on committed credit facilities and contingent liabilities as of March 31, 2024 and December 31, 2023 totaled approximately $25.0 million and $19.9 million, respectively.
Current wording
Debt and contingent obligations as of June 30, 2024 and December 31, 2023 totaled approximately $11.9 million and $19.9 million, respectively.
Previous wording
The Company has a revolving credit facility providing for secured revolving loans and letters of credit in an aggregate amount of up to $125 million, which is subject to the terms of a credit agreement dated April 6, 2023 (the "Credit Agreement"). As of March 31, 2024 and December 31, 2023, the Company had outstanding balances of $24 million and $19 million under this agreement, respectively.
Current wording
The Company has a revolving credit facility providing for secured revolving loans and letters of credit in an aggregate amount of up to $125 million, which is subject to the terms of a credit agreement dated April 6, 2023 (the "Credit Agreement"). As of June 30, 2024 and December 31, 2023, the Company had outstanding balances of $11 million and $19 million under the Credit Agreement, respectively.
Previous wording
Borrowings under the Credit Agreement bear interest, at XPEL’s option, at a rate equal to either (a) Base Rate or (b) Adjusted Term SOFR. In addition to the applicable interest rate, the Credit Agreement includes a commitment fee ranging from 0.20% to 0.25% per annum for the unused portion of the aggregate commitment and an applicable margin ranging from 0.00% to 0.50% for Base Rate Loans and 1.00% to 1.50% for Adjusted Term SOFR Loans. At March 31, 2023, these rates were 8.5% and 6.4%, respectively. Both the margin applicable to the interest rate and the commitment fee are dependent on XPEL’s Consolidated Total Leverage Ratio. The Credit Agreement's maturity date is April 6, 2026. All capitalized terms in this description of the credit facility that are not otherwise defined in this report have the meaning assigned to them in the Credit Agreement.
Current wording
Borrowings under the Credit Agreement bear interest, at XPEL’s option, at a rate equal to either (a) Base Rate or (b) Adjusted Term SOFR. In addition to the applicable interest rate, the Credit Agreement includes a commitment fee ranging from 0.20% to 0.25% per annum for the unused portion of the aggregate commitment and an applicable margin ranging from 0.00% to 0.50% for Base Rate Loans and 1.00% to 1.50% for Adjusted Term SOFR Loans. At June 30, 2024, these rates were 8.5% and 6.4%, respectively. Both the margin applicable to the interest rate and the commitment fee are dependent on XPEL’s Consolidated Total Leverage Ratio. The Credit Agreement's maturity date is April 6, 2026. All capitalized terms in this description of the Credit Agreement that are not otherwise defined in this report have the meaning assigned to them in the Credit Agreement.
Previous wording
The terms of the Credit Agreement include certain affirmative and negative covenants that require, among other things, XPEL to maintain legal existence and remain in good standing, comply with applicable laws, maintain accounting records, deliver financial statements and certifications on a timely basis, pay taxes as required by law, and maintain insurance coverage, as well as to forgo certain specified future activities that might otherwise encumber XPEL and certain customary covenants. The Credit Agreement provides for two financial covenants, as follows.
Current wording
The terms of the Credit Agreement include certain affirmative and negative covenants that require, among other things, XPEL to maintain legal existence and remain in good standing, comply with applicable laws, maintain accounting records, deliver financial statements and certifications on a timely basis, pay taxes as required by law, and maintain insurance coverage, as well as to forgo certain specified future activities that might otherwise encumber XPEL. The Credit Agreement provides for 2 financial covenants, as follows: