What is the company's debt position and its impact on leverage ratios after the earnings release?
Answer Overview
The excerpt you shared from XPEL’s Q2‑2025 earnings release contains detailed information on revenue, gross margin, and EBITDA, but it does not provide any figures on the company’s debt (e.g., total debt, cash‑and‑cash, net debt) or on the specific leverage ratios (e.g., debt‑to‑EBITDA, debt‑to‑equity, net‑debt‑to‑EBITDA) that analysts typically track after an earnings announcement.
Below is a structured response that explains:
- What we can infer from the data you have
- Why the debt‑related numbers are missing
- Where to locate the debt information
- How the reported earnings would typically affect leverage ratios
- A short “what‑if” illustration using plausible assumptions (for illustrative purposes only).
1. What We Can Infer From the Available Data
| Metric (Q2‑2025) | Value |
|---|---|
| Revenue | $124.7 million (↑ 13.5% YoY) |
| Gross Margin | 42.9 % |
| EBITDA | $23.4 million (↑ 7.1 % YoY) |
| EBITDA % of Revenue | 18.7 % |
These numbers tell us that the company’s operating profitability improved modestly (EBITDA up 7.1 %). A higher EBITDA, all else equal, reduces leverage ratios because most leverage metrics use EBITDA in the denominator.
2. Why Debt‑Related Numbers Are Not Present
- Press‑release focus: Business Wire summaries often highlight the headline financials (revenue, margin, EBITDA) and may omit balance‑sheet details such as debt, cash, or equity.
- Regulatory filing requirement: Full debt data typically appears in the Form 10‑Q (quarterly report) or in the Management’s Discussion & Analysis (MD&A) section of the earnings release, not in a brief news wire.
- Potential confidentiality: Some companies disclose debt only in the detailed filing, especially if the amounts are not material to the headline story.
3. Where to Find the Debt Information
| Source | How to Access |
|---|---|
| Form 10‑Q (Q2‑2025) | Visit the SEC’s EDGAR database and search for “XPEL 10‑Q 2025‑08‑06”. The Balance Sheet will list total debt (short‑term borrowings, long‑term debt) and cash equivalents. |
| Full Earnings Release (PDF/HTML) | The company’s investor‑relations site (e.g., investor.xpel.com) typically provides a downloadable PDF that includes a “Liquidity & Capital Resources” section. |
| Earnings Call Transcript | Often the CFO or CEO discusses net‑debt changes and any refinancing activity. Transcripts can be found on platforms such as Seeking Alpha, Motley Fool, or directly on the IR site. |
| Analyst Reports | Equity research notes (e.g., from Bank of America, Morgan Stanley) will usually summarize the debt position and calculate leverage ratios for their coverage. |
4. How the Reported Earnings Typically Influence Leverage Ratios
| Ratio | Typical Formula | Effect of Higher EBITDA (All Else Equal) |
|---|---|---|
| Debt‑to‑EBITDA | Total Debt ÷ EBITDA | ↓ (EBITDA up → denominator larger) |
| Net‑Debt‑to‑EBITDA | (Total Debt – Cash) ÷ EBITDA | ↓ if cash is unchanged; larger EBITDA reduces the ratio. |
| Debt‑to‑Equity | Total Debt ÷ Shareholders’ Equity | Unchanged unless the earnings impact equity (e.g., retained earnings increase). |
| Interest Coverage | EBITDA ÷ Interest Expense | ↑ (higher EBITDA improves coverage). |
Because XPEL’s EBITDA grew from $21.8 M to $23.4 M (a 7.1 % increase), any static debt balance would cause the Debt‑to‑EBITDA and Net‑Debt‑to‑EBITDA ratios to decline proportionally. For example, if total debt were $50 M and cash $10 M:
- Prior quarter: Net‑Debt = $40 M → Net‑Debt‑to‑EBITDA ≈ 40 / 21.8 ≈ 1.84×
- Current quarter: Net‑Debt‑to‑EBITDA ≈ 40 / 23.4 ≈ 1.71×
That represents a ~7 % reduction in the leverage ratio, matching the EBITDA growth.
If the company also generated cash during the quarter (e.g., via operating cash flow), net‑debt could have decreased further, amplifying the reduction in leverage.
5. Illustrative “What‑If” Scenarios (Illustrative Only)
Assumption Set (fictional, for illustration):
- Total debt (short‑term + long‑term): $55 M (unchanged from Q1)
- Cash & cash equivalents at quarter‑end: $12 M (up from $10 M)
- Interest expense for the quarter: $2.1 M
| Metric | Prior Quarter (Q1‑2025) | Current Quarter (Q2‑2025) |
|---|---|---|
| EBITDA | $21.8 M | $23.4 M |
| Net Debt | $55 M – $10 M = $45 M | $55 M – $12 M = $43 M |
| Debt‑to‑EBITDA | 55 / 21.8 ≈ 2.52× | 55 / 23.4 ≈ 2.35× |
| Net‑Debt‑to‑EBITDA | 45 / 21.8 ≈ 2.07× | 43 / 23.4 ≈ 1.84× |
| Interest Coverage | 21.8 / 2.1 ≈ 10.4× | 23.4 / 2.1 ≈ 11.1× |
Take‑away:
- Leverage falls (both Debt‑to‑EBITDA and Net‑Debt‑to‑EBITDA improve).
- Interest coverage improves, indicating a stronger ability to service debt.
Again, these numbers are purely illustrative; the actual debt balances must be taken from XPEL’s 10‑Q or full earnings release.
Bottom Line
- The news excerpt you provided does not disclose XPEL’s debt balance or leverage ratios.
- To answer your question accurately, you’ll need to consult XPEL’s Form 10‑Q (Q2‑2025) or the full earnings release, where the balance sheet and “Liquidity & Capital Resources” section will list total debt, cash, and any changes in net‑debt.
- Based on the reported 7.1 % EBITDA increase, any unchanged debt level would automatically improve debt‑related leverage ratios (lower Debt‑to‑EBITDA, higher interest coverage).
- If cash increased during the quarter, net‑debt would fall further, amplifying the improvement in leverage.
Next Steps:
1. Retrieve XPEL’s Q2‑2025 Form 10‑Q from the SEC EDGAR database.
2. Locate the “Total Debt” and “Cash & Cash Equivalents” line items.
3. Compute the relevant ratios (Debt‑to‑EBITDA, Net‑Debt‑to‑EBITDA, Debt‑to‑Equity, Interest Coverage) using the $23.4 M EBITDA figure you already have.
If you obtain those balance‑sheet figures and would like help running the calculations or interpreting the results, feel free to share them and I’ll gladly walk you through the exact leverage impact.