Xpel Inc (XPEL)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 58,047 | 61,083 | 59,595 | 60,843 | 66,545 | 63,166 | 62,870 | 58,003 | 53,108 | 50,540 | 43,972 | 41,352 | 39,863 | 38,918 | 36,965 | 29,433 | 23,370 | 21,078 | 18,333 | 17,164 |
| Interest expense (ttm) | US$ in thousands | 996 | 1,263 | 1,251 | 1,197 | 1,247 | 1,423 | 1,729 | 1,713 | 1,410 | 1,093 | 748 | 470 | 303 | 219 | 241 | 272 | 250 | 189 | 145 | 99 |
| Interest coverage | 58.28 | 48.36 | 47.64 | 50.83 | 53.36 | 44.39 | 36.36 | 33.86 | 37.67 | 46.24 | 58.79 | 87.98 | 131.56 | 177.71 | 153.38 | 108.21 | 93.48 | 111.52 | 126.43 | 173.37 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $58,047K ÷ $996K
= 58.28
The interest coverage ratio of Xpel Inc has shown fluctuating trends over the analyzed periods. The ratio, which indicates the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT), was quite healthy initially at over 100, reflecting a strong ability to meet its interest obligations. However, the ratio started declining from the second half of 2021, indicating a potential weakening in the company's ability to cover its interest expenses from its operational earnings.
The interest coverage ratio hit its lowest point in March 2022, dropping to 87.98 and continued on a downward trend until December 2022 when it reached 37.67, suggesting a significant decrease in the company's capacity to meet its interest payments from its operating profits. However, from that point on, there was a slight recovery in the ratio, indicating some improvement in Xpel Inc's ability to cover its interest expenses.
It is crucial for the company to monitor this ratio closely, as a declining trend could indicate increasing financial risk and potential difficulties in servicing its debt obligations. Management may need to focus on improving operational efficiency or seeking alternative financing options to ensure the company's financial stability and mitigate the risks associated with high levels of interest payments.