Traeger Inc

Previous wording

Our revenue decreased by 1.8% and 3.5% for the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023, respectively, and was $168.5 million and $313.4 million for the three and six months ended June 30, 2024, respectively, down from $171.5 million and $324.7 million for the three and six months ended June 30, 2023, respectively. We recorded a net loss of $2.6 million and $7.3 million for the three and six months ended June 30, 2024, respectively, compared to net loss of $30.2 million and $41.1 million for the three and six months ended June 30, 2023, respectively.

Current wording

$435.4 million for the three and nine months ended September 30, 2024, respectively, up from $117.7 million and down from $442.4 million for the three and nine months ended September 30, 2023, respectively. We recorded a net loss of $19.8 million and $27.1 million for the three and nine months ended September 30, 2024, respectively, compared to a net loss of $19.3 million and $60.4 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

In response to these macroeconomic conditions, we have taken actions to identify and execute on cost savings initiatives, while simultaneously seeking to maintain product quality and reliability across the supply chain. For example, we took actions to reduce overhead expenses, execute long-term transportation contracts, enact freight surcharges, and implement operational efficiencies across our pellet mill operations. As a result of these actions, we expect cost savings to improve operating results in the long-term, but given the uncertainty of the current macroeconomic environment, there can be no assurance regarding the outcome of our continuing efforts to help mitigate the effects of these conditions on our business.

Current wording

In response to these macroeconomic conditions, we have taken actions to identify and execute on cost savings initiatives, while simultaneously seeking to maintain product quality and reliability across the supply chain. For example, we have partnered with certain retailers in a direct import program, executed long-term transportation contracts, and implemented operational efficiencies across our pellet mill operations. As a result, we have experienced an increase in gross margin to 42.8% for the nine months ended September 30, 2024 from 36.9% for the nine months ended September 30, 2023. We expect continued cost savings to improve operating results in the long-term, but given the uncertainty of the macroeconomic environment in the near-term, there can be no assurance regarding the outcome of our continuing efforts to help mitigate the effects of these conditions on our business. We will continue to monitor and, if necessary, take additional action to mitigate the effects of the macroeconomic environment on our business.

Previous wording

Although we experience demand for our products throughout the year, we believe there can be certain seasonal fluctuations in our revenue. We have typically experienced moderately higher levels of sales of our grills in the first and second quarters of the year as our retailers purchase inventory in advance of warmer weather, when demand for outdoor cooking products is the highest across our key markets. Higher sales also coincide with social events and national holidays, which occur during the same warm weather timeframe. Additionally, we have experienced higher sales volume of our accessories during the fourth quarter of the year, due in part to seasonal holiday demand.

Current wording

Although we experience demand for our products throughout the year, there is seasonal fluctuations in our revenue. We have typically experienced moderately higher levels of sales of our grills in the first and second quarters of the year as our retailers purchase inventory in advance of warmer weather, when demand for outdoor cooking products is the highest across our key markets. Higher sales also coincide with social events and national holidays, which occur during the same warm weather timeframe. Additionally, we have typically experienced higher sales volume of our accessories during the fourth quarter of the year, due in part to seasonal holiday demand.

Previous wording

In addition, general and administrative expense includes research and development expenses incurred to develop and improve our future products and processes, which primarily consist of employee and facilities-related expenses, including salaries, benefits and stock-based compensation expense, as well as fees for professional services, costs related to prototype tooling and materials, and software platform costs. Research and development expense was $4.8 million and $3.0 million for the three months ended June 30, 2024 and 2023, respectively, and $8.5 million and $5.2 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

In addition, general and administrative expense includes research and development expenses incurred to develop and improve our future products and processes, which primarily consist of employee and facilities-related expenses, including salaries, benefits and stock-based compensation expense, as well as fees for professional services, costs related to prototype tooling and materials, and software platform costs. Research and development expense was $3.3 million and $2.8 million for the three months ended September 30, 2024, and 2023, respectively, and $11.8 million and $8.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Amortization of intangible assets primarily consists of amortization of identified finite-lived customer relationships, distributor relationships, non-compete arrangements and trademark assets that were allocated a considerable portion of the purchase price from the corporate reorganization and acquisition of our Company in 2017, as well as the July 2021 acquisition of Apption Labs Limited and its subsidiaries (collectively, “Apption Labs”) pursuant to a share purchase agreement. These costs are amortized on a straight-line basis over 2.5 to 25 year useful lives and, as a result, amortization expense on these assets is expected to remain stable over the coming years. Future business acquisitions may result in incremental amortization of intangible assets acquired in any such transactions.

Current wording

Amortization of intangible assets primarily consists of amortization of identified finite-lived customer relationships, distributor relationships, non-compete arrangements and trademark assets that were allocated a considerable portion of the purchase price from the corporate reorganization and acquisition of our Company in 2017, as well as the July 2021 acquisition of Apption Labs Limited and its subsidiaries (collectively, "Apption Labs") pursuant to a share purchase agreement (the "Share Purchase Agreement"). These costs are amortized on a straight-line basis over 2.5 to 25 year useful lives and, as a result, amortization expense on these assets is expected to remain stable over the coming years. Future business acquisitions may result in incremental amortization of intangible assets acquired in any such transactions.

Previous wording

The fair values of our contingent consideration earn out obligation associated with the Apption Labs business combination is estimated based on probability adjusted present values of the consideration expected to be transferred using significant inputs. At each reporting date, we revalue the contingent consideration obligation to its fair value and records increases and decreases in fair value in the general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive loss. Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving certain performance targets. For the three and six months ended June 30, 2024, there was no change in fair value of contingent consideration and in April 2024, the Company paid the remaining $15.0 million of contingent consideration based on the achievement of certain earnings and product launch thresholds for fiscal year 2023.

Current wording

The fair values of our contingent consideration earn out obligation associated with the Apption Labs business combination is estimated based on probability adjusted present values of the consideration expected to be transferred using significant inputs. At each reporting date, we revalue the contingent consideration obligation to its fair value and records increases and decreases in fair value in the general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive loss. Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets in the Share Purchase Agreement.

Previous wording

Total other expense consists of interest expense and other income, net. Interest expense includes interest and other fees associated with our Credit Facilities, Receivables Financing Agreement (each as defined below) as well as the amortization of amounts recorded within accumulated other comprehensive income prior to the dedesignation of the interest rate swap derivative contracts as a cash flow hedge. Other income, net also consists of any realized and unrealized gains (losses) from our interest rate swap derivative contract subsequent to the dedesignation of the swap contract from a cash flow hedge, foreign currency realized and unrealized gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the U.S. Dollar and from the foreign currency contracts that we use to manage our exposure to foreign currency exchange rate risk related to our purchases and international operations.

Current wording

Total other expense consists of interest expense and other income (expense), net. Interest expense includes interest and other fees associated with our Credit Facilities, Receivables Financing Agreement (each as defined below) as well as the amortization of amounts recorded within accumulated other comprehensive income prior to the dedesignation of the interest rate swap derivative contracts as a cash flow hedge. Other income (expense), net consists of any realized and unrealized gains (losses) from our interest rate swap derivative contract subsequent to the dedesignation of the swap contract from a cash flow hedge, foreign currency realized and unrealized gains and losses resulting from exchange rate fluctuations on transactions denominated in a currency other than the U.S. Dollar and from the foreign currency contracts that we use to manage our exposure to foreign currency exchange rate risk related to our purchases and international operations.

Previous wording

Revenue decreased by $3.0 million, or 1.8%, to $168.5 million for the three months ended June 30, 2024 compared to $171.5 million for the three months ended June 30, 2023. The decrease was driven by lower sales from MEATER smart thermometer and lower consumables sales, partially offset by higher sales of grills.

Current wording

Revenue increased by $4.3 million, or 3.7%, to $122.1 million for the three months ended September 30, 2024 compared to $117.7 million for the three months ended September 30, 2023. The increase was driven primarily by higher sales of grills partially offset by lower sales from MEATER smart thermometers, lower consumables sales, and lower Traeger branded accessories sales.

Previous wording

Revenue from our consumables decreased by $1.1 million, or 3.1%, to $33.8 million for the three months ended June 30, 2024 compared to $34.9 million for the three months ended June 30, 2023. The decrease was driven by mid-single digit reduction in wood pellet average selling price and volume in addition to low-double digit reduction in food consumables average selling price, partially offset by food consumables volume increase in excess of 20%.

Current wording

Revenue from our consumables decreased by $2.9 million, or 11.2%, to $22.5 million for the three months ended September 30, 2024 compared to $25.4 million for the three months ended September 30, 2023. The decrease was primarily driven by high-single digit reduction in wood pellet unit volume and high-double digit reduction in food consumables unit volume. Lower wood pellet and food consumables unit volume was due to seasonal ordering shifts.

Previous wording

Revenue from our accessories decreased by $3.8 million, or 8.8%, to $39.7 million for the three months ended June 30, 2024 compared to $43.5 million for the three months ended June 30, 2023. The decrease was driven primarily by lower sales of MEATER smart thermometers.

Current wording

Revenue from our accessories decreased by $11.2 million, or 31.3%, to $24.6 million for the three months ended September 30, 2024 compared to $35.8 million for the three months ended September 30, 2023. The decrease was driven primarily by lower sales of MEATER smart thermometers and unit volume reductions in excess of 20% in Traeger branded accessories.

Previous wording

Gross profit increased by $9.0 million, or 14.2%, to $72.3 million for the three months ended June 30, 2024 compared to $63.3 million for the three months ended June 30, 2023. Gross margin increased to 42.9% for the three months ended June 30, 2024 from 36.9% for the three months ended June 30, 2023. The increase in gross margin was driven primarily by favorability from freight and logistics costs, optimization of operations, and favorable foreign exchange rates.

Current wording

Gross profit increased by $7.0 million, or 15.7%, to $51.7 million for the three months ended September 30, 2024 compared to $44.7 million for the three months ended September 30, 2023. Gross margin increased to 42.3% for the three months ended September 30, 2024 from 37.9% for the three months ended September 30, 2023. The increase in gross margin was driven primarily by favorability from freight, logistics, and other supply chain costs.

Previous wording

Change in fair value of contingent consideration, attributable to the revalued earn out obligation associated with the Apption Labs business combination, decreased by $1.8 million for the three months ended June 30, 2024 as compared to the prior year period. The change in fair value was primarily driven by the change during each period in the likelihood of achieving the fiscal year 2023 performance targets. In April 2024, the Company paid the remaining $15.0 million of contingent consideration based on the achievement of certain earnings and product launch thresholds for fiscal year 2023.

Current wording

Change in fair value of contingent consideration, attributable to the revalued earn out obligation associated with the Apption Labs business combination, increased by $2.3 million for the three months ended September 30, 2024 as compared to prior year period. The change in fair value was primarily driven by the change during each period in the likelihood of achieving the fiscal year 2023 performance targets. In April 2024, the Company paid the remaining $15.0 million of contingent consideration based on the achievement of certain earnings and product launch thresholds for fiscal year 2023.

Previous wording

Total other expense increased by $5.0 million, or 213.4%, to $7.4 million for the three months ended June 30, 2024 compared to $2.4 million for the three months ended June 30, 2023. This increase was primarily due to decreases in the realized and unrealized gains on our interest rate swap, partially offset by changes in realized and unrealized gains and losses from foreign currencies.

Current wording

Total other expense increased by $7.0 million, or 126.2%, to $12.5 million for the three months ended September 30, 2024 compared to $5.5 million for the three months ended September 30, 2023. This increase was primarily due to the unrealized losses from our interest rate swap as well as increased interest expense on our First Lien Term Loan Facility, partially offset by changes in realized and unrealized gains and losses from foreign currencies.

Previous wording

Revenue from our grills increased by $1.8 million, or 2.0%, to $95.0 million for the three months ended June 30, 2024 compared to $93.1 million for the three months ended June 30, 2023. The increase was primarily driven by high-double digit increase in volume partially offset by mid-double digit reduction in average selling price. Higher unit volume was driven by effective promotional activity and strategic pricing action on select grills. The decrease in average selling price was primarily due to mix shift to lower priced grills, strategic pricing action on select grills, and higher mix of direct import sales.

Current wording

Revenue from our grills increased by $7.3 million, or 3.0%, to $246.7 million for the nine months ended September 30, 2024 compared to $239.4 million for the nine months ended September 30, 2023. The increase was primarily driven by unit volume growth in excess of 20% partially offset by high-double digit reduction in average selling price. Higher unit volume was driven by effective promotional activity and strategic pricing action on select grills. The decrease in average selling price was primarily due to mix shift to lower priced grills, higher mix of direct import sales, and strategic pricing action on select grills.

Previous wording

Revenue from our accessories decreased by $1.4 million, or 1.8%, to $75.5 million for the six months ended June 30, 2024 compared to $76.9 million for the six months ended June 30, 2023. The decrease was driven primarily by high-single digit reduction in Traeger branded accessories, partially offset by higher sales of MEATER smart thermometers.

Current wording

Revenue from our accessories decreased by $12.5 million, or 11.1%, to $100.1 million for the nine months ended September 30, 2024 compared to $112.6 million for the nine months ended September 30, 2023. The decrease was driven primarily by lower sales of MEATER smart thermometers and low-double digit unit volume reduction in Traeger branded accessories.

Previous wording

Gross profit increased by $16.1 million, or 13.6%, to $134.9 million for the six months ended June 30, 2024 compared to $118.8 million for the six months ended June 30, 2023. Gross margin increased to 43.0% for the six months ended June 30, 2024 from 36.6% for the six months ended June 30, 2023. The increase in gross margin was driven primarily by favorability from freight and logistics costs, optimization of operations, and favorable foreign exchange rates.

Current wording

Gross profit increased by $23.2 million, or 14.2%, to $186.6 million for the nine months ended September 30, 2024 compared to $163.4 million for the nine months ended September 30, 2023. Gross margin increased to 42.8% for the nine months ended September 30, 2024 from 36.9% for the nine months ended September 30, 2023. The increase in gross margin was driven primarily by favorability from freight, logistics, and other supply chain costs, as well as favorability due to changes in foreign exchange rates.

Previous wording

Sales and marketing expense decreased by $0.1 million, or 0.2%, to $49.9 million for the six months ended June 30, 2024 compared to $50.0 million for the six months ended June 30, 2023. As a percentage of revenue, sales and marketing expense increased to 15.9% for the six months ended June 30, 2024 from 15.4% for the six months ended June 30, 2023. The decrease in sales and marketing expense was driven by a decrease in commissions and professional fees, offset by increased employee expenses.

Current wording

Sales and marketing expense increased by $0.2 million, or 0.2%, to $76.1 million for the nine months ended September 30, 2024 compared to $75.9 million for the nine months ended September 30, 2023. As a percentage of revenue, sales and marketing expense increased to 17.5% for the nine months ended September 30, 2024 from 17.2% for the nine months ended September 30, 2023.

Previous wording

General and administrative expense decreased by $16.4 million, or 20.8%, to $62.6 million for the six months ended June 30, 2024 compared to $79.1 million for the six months ended June 30, 2023. As a percentage of revenue, general and administrative expense decreased to 20.0% for the six months ended June 30, 2024 from 24.3% for the six months ended June 30, 2023. The decrease in general and administrative expense was driven by lower stock-based compensation expense of $23.7 million primarily due to the cancellation of the unearned CEO PSUs and IPO PSUs in the comparable prior year period, as well as losses on the disposal of property, plant and equipment, partially offset by higher costs related to legal matters and employee related costs.

Current wording

General and administrative expense decreased by $17.1 million, or 16.5%, to $86.8 million for the nine months ended September 30, 2024 compared to $103.9 million for the nine months ended September 30, 2023. As a percentage of revenue, general and administrative expense decreased to 19.9% for the nine months ended September 30, 2024 from 23.5% for the nine months ended September 30, 2023. The decrease in general and administrative expense was driven by a decrease in stock-based compensation expense of $23.4 million primarily due to the cancellation of the unearned CEO PSUs and IPO PSUs as well as losses on the disposal of property, plant and equipment in the comparable prior year period, partially offset by increased employee and occupancy costs.

Previous wording

Change in fair value of contingent consideration, attributable to the revalued earn out obligation associated with the Apption Labs business combination, decreased by $2.8 million for the six months ended June 30, 2024 as compared to prior year period. The change in fair value was primarily driven by the change in likelihood of achieving the fiscal year 2023 performance targets. In April 2024, the Company paid the remaining $15.0 million of contingent consideration based on the achievement of certain earnings and product launch thresholds for fiscal year 2023.

Current wording

Change in fair value of contingent consideration, attributable to the revalued earn out obligation associated with the Apption Labs business combination, decreased by $0.5 million for the nine months ended September 30, 2024 as compared to prior year period. The change in fair value was primarily driven by the change during each period in the likelihood of achieving the fiscal year 2023 performance targets. In April 2024, the Company paid the remaining $15.0 million of contingent consideration based on the achievement of certain earnings and product launch thresholds for fiscal year 2023.

Previous wording

Total other expense increased by $2.0 million, or 19.8%, to $11.8 million for the six months ended June 30, 2024 compared to $9.9 million for the six months ended June 30, 2023. This increase was primarily due to decreases in the realized and unrealized gains on our interest rate swap, partially offset by changes in realized and unrealized gains and losses from foreign currencies.

Current wording

Total other expense increased by $8.9 million, or 58.0%, to $24.3 million for the nine months ended September 30, 2024 compared to $15.4 million for the nine months ended September 30, 2023. This increase was primarily due to unrealized losses from our interest rate swap as well as increased interest expense on our First Lien Term Loan Facility, partially offset by changes in realized and unrealized gains and losses from our foreign currency contracts.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $18.0 million, $125.0 million borrowing capacity under our Revolving Credit Facility (as defined below) and $31.9 million borrowing capacity under our Receivables Financing Agreement (as defined below). As of June 30, 2024, we had no outstanding loan amounts under the Revolving Credit Facility and had drawn down $23.5 million on the Receivables Financing Agreement. As of June 30, 2024, the total principal amount outstanding under our First Lien Term Loan Facility was $403.7 million. Based on our current business plan and revenue prospects, we continue to believe that our existing cash and cash equivalents, availability under our Revolving Credit Facility and Receivables Financing Agreement, and our anticipated cash flows from operating activities will be sufficient to meet our working capital and operating resource expenditure requirements for at least the next twelve months from the date of this Quarterly Report on Form 10-Q. However, our future working capital requirements will depend on many factors, including our rate of revenue growth and profitability, the timing and size of future acquisitions, and the timing of introductions of new products and investments in our supply chain and implementation of technologies.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $16.9 million, $125.0 million borrowing capacity under our Revolving Credit Facility (as defined below) and $34.9 million borrowing capacity under our Receivables Financing Agreement (as defined below). As of September 30, 2024, we had no outstanding loan amounts under the Revolving Credit Facility and had drawn down $12.0 million on the Receivables Financing Agreement. As of September 30, 2024, the total principal amount outstanding under our First Lien Term Loan Facility was $403.6 million. Based on our current business plan and revenue prospects, we believe that our existing cash and cash equivalents, availability under our Revolving Credit Facility and Receivables Financing Agreement, and our anticipated cash flows from operating activities will be sufficient to meet our working capital and operating resource expenditure requirements for at least the next twelve months from the date of this Quarterly Report on Form 10-Q. However, our future working capital requirements will depend on many factors, including our rate of revenue growth and profitability, the timing and size of future acquisitions, and the timing of introductions of new products and investments in our supply chain and implementation of technologies.

Previous wording

Cash flows related to operating activities are dependent on net loss, non-cash adjustments to net loss, and changes in working capital. The decrease in cash provided by operating activities during the six months ended June 30, 2024 compared to cash provided by operating activities during the six months ended June 30, 2023 is primarily due to an increase in net cash used for working capital, partially offset by a decrease in net loss, adjusted for non-cash items, as compared to the prior year period. The increase in cash used for working capital was primarily due to a decrease in the change in accounts receivable in the current period, primarily driven by the collections of large trade receivable balances in the prior year period that were outstanding at the beginning of the prior year period, partially offset by a decrease in the change in inventory balances in the current period as a result of strategic inventory management in the prior year period to reduce the high inventory levels at the beginning of the prior year period.

Current wording

Cash flows related to operating activities are dependent on net loss, non-cash adjustments to net loss, and changes in working capital. The decrease in cash provided by operating activities during the nine months ended September 30, 2024 compared to cash provided by operating activities during the nine months ended September 30, 2023 is primarily due to an increase in net cash used for working capital, partially offset by a decrease in net loss, adjusted for non-cash items, as compared to the prior year period. The increase in cash used for working capital was primarily due to a decrease in the change in accounts receivable in the current period, primarily driven by the collections of large trade receivable balances in the prior year period that were outstanding at the beginning of the prior year period, partially offset by a decrease in the change in inventory balances in the current period as a result of strategic inventory management in the prior year period to reduce the high inventory levels at the beginning of the prior year period.

Previous wording

The increase in cash used in investing activities during the six months ended June 30, 2024 was primarily related to the purchase of tooling equipment and internal-use software costs, partially offset from the prior year sale of property, plant, and equipment.

Current wording

The decrease in cash used in investing activities during the nine months ended September 30, 2024 was primarily related the prior year construction costs for our new corporate headquarters, partially offset by proceeds received from the prior year sale of property, plant, and equipment.

Previous wording

The decrease in cash used in financing activities during the six months ended June 30, 2024 was primarily driven by the decrease in net borrowing on our Revolving Credit Facility, and payment in the prior year period associated with the acquisition date fair value of contingent consideration.

Current wording

The decrease in cash used in financing activities during the nine months ended September 30, 2024 was primarily driven by the decrease in net borrowing on our Revolving Credit Facility, and payment in the prior year period associated with the acquisition date fair value of contingent consideration.

Previous wording

The First Lien Term Loan Facility accrues interest at a rate per annum that considers both fixed and floating components. The fixed component ranges from 3.00% to 3.25% per annum based on our Public Debt Rating (as defined in the First Lien Credit Agreement). The floating component is based on the Term SOFR (as defined in the First Lien Credit Agreement) for the relevant interest period. The First Lien Term Loan Facility requires periodic principal payments from December 2021 through June 2028, with any remaining unpaid principal and any accrued and unpaid interest due on the maturity date of June 29, 2028. As of June 30, 2024, the total principal amount outstanding on the First Lien Term Loan Facility was $403.7 million.

Current wording

The First Lien Term Loan Facility accrues interest at a rate per annum that considers both fixed and floating components. The fixed component ranges from 3.00% to 3.25% per annum based on our Public Debt Rating (as defined in the First Lien Credit Agreement). The floating component is based on the Term SOFR (as defined in the First Lien Credit Agreement) for the relevant interest period. The First Lien Term Loan Facility requires periodic principal payments from December 2021 through June 2028, with any remaining unpaid principal and any accrued and unpaid interest due on the maturity date of June 29, 2028. As of September 30, 2024, the total principal amount outstanding on the First Lien Term Loan Facility was $403.6 million.

Previous wording

On November 8, 2023, we entered into Amendment No. 9 to the Receivables Financing Agreement in order to extend the expiration of the facility by one year to June 27, 2025. As part of the amendment, the maximum borrowing capacity was decreased from $100.0 million to $75.0 million and a mechanism was added to allow for seasonal adjustments to the maximum borrowing capacity, which can now be set between $30.0 million and $75.0 million. A seasonal adjustment schedule was established upon the effectiveness of Amendment No. 9, and further adjustments can be made up two times annually at our discretion (with consent of the lenders under the Receivables Financing Agreement). We are required to pay fixed interest on outstanding cash advances of 2.5%, a floating interest based on the CP Rate or Adjusted Term SOFR (each as defined in the Receivables Financing Agreement), and an unused capacity charge that ranges from 0.25% to 0.5%. Amendment No. 9 also implemented a new liquidity threshold at $42.5 million of liquidity. If our liquidity falls below this threshold, it may result in an increase in the required level of reserves, which would result in a reduction of our borrowing base under the Receivables Financing Agreement during such a liquidity shortfall.

Current wording

On November 8, 2023, we entered into Amendment No. 9 to the Receivables Financing Agreement in order to extend the expiration of the facility by one year to June 27, 2025. As part of the amendment, the maximum borrowing capacity was decreased from $100.0 million to $75.0 million and allows for seasonal adjustments, at our discretion (with consent of the lenders under the Receivables Financing Agreement), to change the capacity anywhere between $30.0 million and $75.0. million. We are required to pay fixed interest on outstanding cash advances of 2.5%, a floating interest based on the CP Rate (as defined in the Receivables Financing Agreement), and an unused capacity charge that ranges from 0.25% to 0.5%. Amendment No. 9 also implemented a new liquidity threshold at $42.5 million of liquidity. If our liquidity falls below this threshold, it may result in an increase in the required level of reserves, which would result in a reduction of our borrowing base under the Receivables Financing Agreement during such a liquidity shortfall.

Previous wording

As of June 30, 2024, we had drawn down $23.5 million under this facility for general corporate and working capital purposes.

Current wording

As of September 30, 2024, we had drawn down $12.0 million under this facility for general corporate and working capital purposes.

Previous wording

Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K, the notes to the consolidated financial statements included therein and Note 2 –Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates from those discussed in our Annual Report on Form 10-K.

Current wording

Our critical accounting policies and estimates are described under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K, the notes to the consolidated financial statements included therein and Note 2 –Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2024, except as indicated below, there were no material changes to our critical accounting policies and estimates from those discussed in our Annual Report on Form 10-K.