XPEL XPEL Inc

XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of protective films and coatings, announced consolidated results1 for the third quarter of 2024.

Third Quarter 2024 Overview:

• Revenue increased 9.9% to $112.9 million in the third quarter of 2024.
• Gross margin of 42.5% in the third quarter of 2024.
• Net income grew 9.1% to $14.9 million, or $0.54 per basic and diluted share, versus net income of $13.7 million, or $0.49 per basic and diluted share in the third quarter of 2023.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew 10.0% to $21.7 million, or 19.2% of revenue, compared to $19.7 million, or 19.2% of revenue in the third quarter of 2023. 2

First Nine Months 2024 Overview:

• Revenue increased 7.6% to $312.9 million in the first nine months of 2024.
• Gross margin of 42.7% in the first nine months of 2024.
• Net income of $36.6 million, or $1.32 per basic and diluted share, versus net income of $40.8 million, or $1.48 per basic and diluted share in the first nine months of 2023.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $55.2 million, or 17.6% of revenue, compared to $59.2 million, or 20.4% of revenue in the first nine months of 2023.2

Ryan Pape, President and Chief Executive Officer of XPEL, commented, "We saw good performance in the third quarter with solid top and bottom line growth, particularly in the US region where we had record revenue. We look forward to capitalizing on this momentum to close out the year."

Financial Highlights for the Third Quarter 2024:

Summary consolidated financial information for the three months ended September 30, 2024 and 2023 (unaudited, dollars in thousands):

 

Three Months Ended September 30,

 

% Change

 

2024

 

%

of Total

Revenue

 

2023

 

%

of Total

Revenue

 

2024 vs.

2023

Total revenue

$

112,852

 

100.0

%

 

$

102,677

 

100.0

%

 

9.9

%

Gross margin

 

47,916

 

42.5

%

 

 

41,529

 

40.4

%

 

15.4

%

Operating Expenses

 

29,529

 

26.2

%

 

 

23,900

 

23.3

%

 

23.6

%

Operating income

 

18,387

 

16.3

%

 

 

17,629

 

17.2

%

 

4.3

%

Net income

 

14,892

 

13.2

%

 

 

13,656

 

13.3

%

 

9.1

%

EBITDA2

 

21,698

 

19.2

%

 

 

19,718

 

19.2

%

 

10.0

%

Net cash provided by operating activities

$

19,559

 

n/a

 

$

11,128

 

n/a

 

n/a

Geographical Revenue Summary

 

Three Months Ended

September 30,

 

% Change

 

% of Total

Revenue

 

2024

 

2023

 

Inc (Dec)

 

2024

 

2023

United States

$

64,565

 

$

59,002

 

9.4

%

 

57.2

%

 

57.5

%

Canada

 

14,415

 

 

11,471

 

25.7

%

 

12.8

%

 

11.2

%

China

 

9,058

 

 

10,242

 

(11.6

)%

 

8.0

%

 

10.0

%

Continental Europe

 

9,058

 

 

8,705

 

4.1

%

 

8.0

%

 

8.5

%

United Kingdom

 

3,548

 

 

3,499

 

1.4

%

 

3.2

%

 

3.4

%

Middle East/Africa

 

5,286

 

 

3,909

 

35.2

%

 

4.7

%

 

3.8

%

Asia Pacific

 

4,095

 

 

3,233

 

26.7

%

 

3.6

%

 

3.1

%

Latin America

 

2,827

 

 

2,325

 

21.6

%

 

2.5

%

 

2.3

%

Other

 

—

 

 

291

 

(100.0

)%

 

0.0

%

 

0.2

%

Total

$

112,852

 

$

102,677

 

9.9

%

 

100.0

%

 

100.0

%

Overall Revenue

• Total revenue grew 9.9% compared to third quarter 2023 ("YoY") and 2.7% over the second quarter 2024 ("QoQ"). Excluding China, total revenue increased 12.3% YoY and declined 1.6% QoQ.
• US revenue grew 9.4% YoY and was flat QoQ.
• All other revenue (excluding US and China) grew 17.3% YoY and declined 3.4% QoQ.

Product and Service Revenue

• Total product revenue increased 7.2% YoY and 4.5% QoQ. This increase was due to growth in most geographical regions, offset by a decline in sales to our China distributor. Excluding China, total product revenue increased 9.9% YoY.
• Total window film increased 20.6% YoY and increased 2.8% QoQ and represented 20.1% of total revenue.
• Total service revenue increased 20.2% YoY and declined 3.1% QoQ. The increase was mainly due to increases in the Company's dealership services and OEM businesses.
• Total installation revenue (labor and product combined) grew 27.4% YoY and declined 2.7% QoQ and represented 20.0% of total revenue. Organic installation revenue grew 11.3% YoY.
• Adjusted product revenue (combining cutbank credits revenue and product revenue) increased 6.8% YoY and 3.9% QoQ. Excluding China, adjusted product revenue grew 9.3% YoY.

Other Financial Information

• Gross margin percentage was 42.5% and 40.4% in the third quarter, 2024 and 2023, respectively.
• Total operating expenses increased 23.6% YoY and increased 3.0% QoQ.
• Sales and marketing expenses increased 37.6% YoY and increased 3.5% QoQ and represented 9.4% of revenue. This increase was driven primarily by enhanced marketing efforts to support our increased dealership focus and international expansion.
• General and administrative expenses increased 16.8% YoY and increased 2.7% QoQ and represented 16.7% of revenue.
• Net income increased 9.1% YoY and was flat QoQ.
• EBITDA increased 10.0% YoY2 and was flat QoQ.
• Cash flows provided by operations increased $8.4 million YoY and declined $7.3 million QoQ to $19.6 million in the third quarter 2024.

Fourth Quarter 2024 Outlook

• Fourth quarter revenue is estimated at $105 - $107 million. This assumes Q4 YoY US growth of approximately 10% partially offset by Q4 YoY decline in China sales.

Please see the information under "Forward-looking Statements" below regarding certain cautionary statements relating to our 2024 Outlook.

Conference Call Information

The Company will host a conference call and webcast today, November 7, 2024 at 11:00 a.m. Eastern Time to discuss the Company’s third quarter 2024 results.

To access the live webcast, please visit the XPEL, Inc. website at www.xpel.com/events-presentations.

To participate in the call by phone, dial 888-506-0062 approximately five minutes prior to the scheduled start time. International callers please dial (973) 528-0011. Callers should use access code: 861781.

A replay of the teleconference will be available until December 7, 2024 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 51306.

About XPEL, Inc.

XPEL is a leading provider of protective films and coatings, including automotive paint protection film, surface protection film, automotive and architectural window films, and ceramic coatings. With a global footprint, a network of trained installers and proprietary DAP software, XPEL is dedicated to exceeding customer expectations by providing high-quality products, leading customer service, expert technical support and world-class training. XPEL, Inc. is publicly traded on Nasdaq under the symbol “XPEL”.

1 The results summarized above for 2024 are preliminary and unaudited. As the Company completes its quarter-end financial close processes and finalizes its financial statements for the third quarter of 2024, it is possible that the Company may identify items that require it to make adjustments to the preliminary information set forth above, and those adjustments could be material. Full third quarter 2024 financial information will be included in the filing of the Company’s Quarterly Report on Form 10-Q with the Securities and Exchange Commission which is anticipated on or prior to November 8, 2024.

2 See "Non-GAAP Financial Measure" and "Reconciliation of Non-GAAP Financial Measure" below.

Forward-looking Statements

This release includes forward-looking statements (within the meaning of Section 27A of the Securities act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended) regarding XPEL, Inc. and its business, which may include, but is not limited to, anticipated use of proceeds from capital transactions, expansion into new markets, execution of the company's growth strategy and outlook. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "is expected," "expects," "scheduled," "intends," "contemplates," "anticipates," "believes," "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations and assumptions of the management of XPEL. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors relate to, among others: competition, a prolonged or material contraction in automotive sales and production volumes, disruption in our supply chain, technology that could render our products obsolete, changes in the way vehicles are sold, damage to our brand and reputation, cyber events and other legal and regulatory developments. There are several risks, uncertainties, and other important factors, many of which are beyond the Company’s control, that could cause its actual results to differ materially from the forward-looking statements contained in this press release, including those described in the “Risk Factors” section of Annual Report on Form 10-K. Although XPEL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measure

To aid in the understanding of XPEL's ongoing business performance, XPEL uses EBITDA, a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, plus income tax expense plus depreciation and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of XPEL's financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly title measures. For a full reconciliation of EBITDA to comparable GAAP measure, refer to the reconciliation titled "Reconciliation of Non-GAAP Financial Measure."

XPEL, Inc.

Consolidated Statements of Income (Unaudited)

(In thousands except per share data)

 

 

Three Months Ended

September 30,

 

Nine Months

Ended

September 30,

 

2024

 

2023

 

2024

 

2023

Revenue

 

 

 

 

 

 

 

Product revenue

$

86,950

 

 

$

81,125

 

$

237,002

 

$

229,339

Service revenue

 

25,902

 

 

 

21,552

 

 

75,871

 

 

61,416

Total revenue

 

112,852

 

 

 

102,677

 

 

312,873

 

 

290,755

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

 

 

 

Cost of product sales

 

53,967

 

 

 

51,876

 

 

147,376

 

 

143,613

Cost of service

 

10,969

 

 

 

9,272

 

 

31,840

 

 

25,660

Total cost of sales

 

64,936

 

 

 

61,148

 

 

179,216

 

 

169,273

Gross Margin

 

47,916

 

 

 

41,529

 

 

133,657

 

 

121,482

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Sales and marketing

 

10,637

 

 

 

7,730

 

 

31,308

 

 

22,554

General and administrative

 

18,892

 

 

 

16,170

 

 

55,547

 

 

46,180

Total operating expenses

 

29,529

 

 

 

23,900

 

 

86,855

 

 

68,734

 

 

 

 

 

 

 

 

Operating Income

 

18,387

 

 

 

17,629

 

 

46,802

 

 

52,748

 

 

 

 

 

 

 

 

Interest expense

 

97

 

 

 

85

 

 

962

 

 

946

Foreign currency exchange (gain)/loss

 

(332

)

 

 

398

 

 

216

 

 

419

 

 

 

 

 

 

 

 

Income before income taxes

 

18,622

 

 

 

17,146

 

 

45,624

 

 

51,383

Income tax expense

 

3,730

 

 

 

3,490

 

 

9,033

 

 

10,553

Net income

$

14,892

 

 

$

13,656

 

$

36,591

 

$

40,830

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

Basic

$

0.54

 

 

$

0.49

 

$

1.32

 

$

1.48

Diluted

$

0.54

 

 

$

0.49

 

$

1.32

 

$

1.48

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

Basic

 

27,642

 

 

 

27,623

 

 

27,636

 

 

27,620

Diluted

 

27,644

 

 

 

27,644

 

 

27,639

 

 

27,634

 

XPEL, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)

 

 

(Unaudited)

 

(Audited)

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

Current

 

 

 

Cash and cash equivalents

$

20,986

 

 

$

11,609

 

Accounts receivable, net

 

29,583

 

 

 

24,111

 

Inventory, net

 

101,592

 

 

 

106,509

 

Prepaid expenses and other current assets

 

6,296

 

 

 

3,529

 

Income tax receivable

 

264

 

 

 

696

 

Total current assets

 

158,721

 

 

 

146,454

 

Property and equipment, net

 

17,851

 

 

 

16,980

 

Right-of-use lease assets

 

18,380

 

 

 

15,459

 

Intangible assets, net

 

33,601

 

 

 

34,905

 

Other non-current assets

 

1,141

 

 

 

782

 

Goodwill

 

43,347

 

 

 

37,461

 

Total assets

$

273,041

 

 

$

252,041

 

Liabilities

 

 

 

Current

 

 

 

Current portion of notes payable

$

66

 

 

$

62

 

Current portion lease liabilities

 

4,820

 

 

 

3,966

 

Accounts payable and accrued liabilities

 

31,634

 

 

 

32,444

 

Total current liabilities

 

36,520

 

 

 

36,472

 

Deferred tax liability, net

 

1,252

 

 

 

2,658

 

Other long-term liabilities

 

1,077

 

 

 

890

 

Borrowings on line of credit

 

—

 

 

 

19,000

 

Non-current portion of lease liabilities

 

15,205

 

 

 

12,715

 

Non-current portion of notes payable

 

260

 

 

 

317

 

Total liabilities

 

54,314

 

 

 

72,052

 

Commitments and Contingencies (Note 11)

 

 

 

Stockholders’ equity

 

 

 

Preferred stock, $0.001 par value; authorized 10,000,000; none issued and outstanding

 

—

 

 

 

—

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 27,647,223 and 27,630,025 issued and outstanding, respectively

 

28

 

 

 

28

 

Additional paid-in-capital

 

14,700

 

 

 

12,546

 

Accumulated other comprehensive loss

 

(1,216

)

 

 

(1,209

)

Retained earnings

 

205,215

 

 

 

168,624

 

Total stockholders’ equity

 

218,727

 

 

 

179,989

 

Total liabilities and stockholders’ equity

$

273,041

 

 

$

252,041

 

 

XPEL, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2024

 

2023

 

2024

 

2023

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

14,892

 

 

$

13,656

 

 

$

36,591

 

 

$

40,830

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

1,504

 

 

 

1,199

 

 

 

4,308

 

 

 

3,229

 

Amortization of intangible assets

 

1,476

 

 

 

1,288

 

 

 

4,327

 

 

 

3,660

 

Gain on sale of property and equipment

 

(6

)

 

 

(1

)

 

 

(35

)

 

 

(11

)

Stock compensation

 

862

 

 

 

486

 

 

 

2,329

 

 

 

1,144

 

Provision for credit losses

 

91

 

 

 

60

 

 

 

279

 

 

 

216

 

Deferred income tax

 

(553

)

 

 

(250

)

 

 

(1,414

)

 

 

(844

)

 

 

 

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

279

 

 

 

(462

)

 

 

(5,475

)

 

 

(9,483

)

Inventory, net

 

(3,592

)

 

 

(10,000

)

 

 

5,174

 

 

 

(11,583

)

Prepaid expenses and other current assets

 

(1,477

)

 

 

(6,313

)

 

 

(2,785

)

 

 

(7,288

)

Income taxes receivable and payable

 

957

 

 

 

457

 

 

 

370

 

 

 

320

 

Accounts payable and accrued liabilities

 

5,127

 

 

 

11,008

 

 

 

(2,172

)

 

 

18,311

 

Net cash provided by operating activities

 

19,559

 

 

 

11,128

 

 

 

41,497

 

 

 

38,501

 

Cash flows used in investing activities

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(1,257

)

 

 

(1,434

)

 

 

(5,085

)

 

 

(4,741

)

Proceeds from sale of property and equipment

 

40

 

 

 

(4

)

 

 

40

 

 

 

20

 

Acquisition of businesses, net of cash acquired

 

(592

)

 

 

(240

)

 

 

(6,520

)

 

 

(4,697

)

Development of intangible assets

 

(580

)

 

 

(281

)

 

 

(1,421

)

 

 

(798

)

Net cash used in investing activities

 

(2,389

)

 

 

(1,959

)

 

 

(12,986

)

 

 

(10,216

)

Cash flows from financing activities

 

 

 

 

 

 

 

Net payments on revolving line of credit

 

(11,000

)

 

 

(13,000

)

 

 

(19,000

)

 

 

(26,000

)

RSUs withheld in lieu of payroll taxes

 

(88

)

 

 

(138

)

 

 

(175

)

 

 

(167

)

Repayments of notes payable

 

(13

)

 

 

—

 

 

 

(44

)

 

 

(77

)

Net cash used in financing activities

 

(11,101

)

 

 

(13,138

)

 

 

(19,219

)

 

 

(26,244

)

Net change in cash and cash equivalents

 

6,069

 

 

 

(3,969

)

 

 

9,292

 

 

 

2,041

 

Foreign exchange impact on cash and cash equivalents

 

(67

)

 

 

45

 

 

 

85

 

 

 

277

 

Increase/(Decrease) in cash and cash equivalents during the period

 

6,002

 

 

 

(3,924

)

 

 

9,377

 

 

 

2,318

 

Cash and cash equivalents at beginning of period

 

14,984

 

 

 

14,298

 

 

 

11,609

 

 

 

8,056

 

Cash and cash equivalents at end of period

$

20,986

 

 

$

10,374

 

 

$

20,986

 

 

$

10,374

 

 

 

 

 

 

 

 

 

Supplemental schedule of non-cash activities

 

 

 

 

 

 

 

Non-cash lease financing

$

1,172

 

 

$

36

 

 

$

6,210

 

 

$

1,847

 

Issuance of common stock for vested restricted stock units

 

438

 

 

 

740

 

 

 

900

 

 

 

874

 

Supplemental cash flow information

 

 

 

 

 

 

 

Cash paid for income taxes

$

3,458

 

 

$

3,334

 

 

$

10,256

 

 

$

11,144

 

Cash paid for interest

$

151

 

 

$

111

 

 

$

995

 

 

$

1,000

 

 

Reconciliation of Non-GAAP Financial Measure

EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, plus income tax expense plus depreciation expense and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of our financial performance under GAAP and should not be considered as alternatives to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA Reconciliation (in thousands)

 

 

(Unaudited)

 

(Unaudited)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Net Income

$

14,892

 

$

13,656

 

$

36,591

 

$

40,830

Interest

 

97

 

 

85

 

 

962

 

 

946

Taxes

 

3,730

 

 

3,490

 

 

9,033

 

 

10,553

Depreciation

 

1,504

 

 

1,199

 

 

4,308

 

 

3,229

Amortization

 

1,475

 

 

1,288

 

 

4,327

 

 

3,660

EBITDA

$

21,698

 

$

19,718

 

$

55,221

 

$

59,218

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107387812/en/

For more information:

Investor Relations: John Nesbett/Jennifer Belodeau IMS Investor Relations Phone: (203) 972-9200 Email: xpel@imsinvestorrelations.com