San Antonio, TX – November 8, 2023 – XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced results for the quarter ended September 30, 2023.
Third Quarter 2023 Highlights:
First Nine Months Highlights:
For comparative performance purposes, during the third quarter, the Company incurred approximately $1.0 million in inventory write-offs which negatively impacted gross margin. The Company’s selling, general and administrative expenses were negatively impacted by approximately $0.3 million in executive relocation costs, $0.3 million in acquisition-related legal costs and $0.5 million in R & D related costs. The Company also incurred approximately $0.3 million in negative foreign exchange impact.
Normalizing for these items, Adjusted EBITDA would have grown approximately 16.7% with Adjusted EBITDA margin of approximately 21.5% and Adjusted EPS would have been approximately $0.56 per share.1
Ryan Pape, President and Chief Executive Officer of XPEL, commented, “It was a busy and solid quarter for the Company. We continue to see strong demand for our products and services and our unique channel strategy positions us to be wherever that demand takes us.”
For the Quarter Ended September 30, 2023:
Revenues. Revenues increased approximately $12.9 million, or 14.4%, to $102.7 million as compared to $89.8 million in the third quarter of the prior year.
Gross Margin. Gross margin was 40.4% compared to 39.8% in the third quarter of 2022.
Expenses. Operating expenses increased to $23.9 million, or 23.3% of sales, compared to $18.5 million, or 20.6% of sales in the prior year period.
Net income. Net income was $13.7 million, or $0.49 per basic and diluted share, versus net income of $13.3 million, or $0.48 per basic and diluted share in the third quarter of 2022.
EBITDA. EBITDA was $19.7 million, or 19.2% of sales, as compared to $18.9 million, or 21.1% of sales in the prior year.1
For the Nine Months Ended September 30, 2023:
Revenues. Revenues increased approximately $45.2 million, or 18.4%, to $290.8 million as compared to $245.5 million in the first nine months of the prior year.
Gross Margin. Gross margin was 41.8% compared to 39.3% in the first nine months of 2022.
Expenses. Operating expenses increased to $68.7 million, or 23.6% of sales, compared to $53.4 million, or 21.7% of sales in the prior year period.
Net income. Net income was $40.8 million, or $1.48 per basic and diluted share, versus net income of $33.0 million, or $1.20 per basic and diluted share in the first nine months of 2022.
EBITDA. EBITDA was $59.2 million, or 20.4% of sales, as compared to $48.0 million, or 19.5% of sales in the prior year.1
1See reconciliation of non-GAAP financial measures below.
Conference Call Information
The Company will host a conference call and webcast today, November 8, 2023 at 11:00 a.m. Eastern Time to discuss the Company’s third quarter 2023 results and conditions, including our fourth quarter outlook.
To access the live webcast, please visit the XPEL, Inc. website at www.xpel.com/investor.
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: 565846
A replay of the teleconference will be available until December 8, 2023 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 49265.
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”.
Safe harbor statement
This release includes forward-looking statements 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, and execution of the company’s growth strategy. 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 of the management of XPEL. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, performance and acceptance of the company’s products, economic factors, competition, the equity markets generally and many other factors beyond the control of XPEL. Without limitation, the risks and uncertainties affecting XPEL are described in XPEL’s most recent Form 10-K (including Item 1A Risk Factors) filed with the SEC, which is available on our website at http://www.xpel.com and at http://www.sec.gov. 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.
For more information contact:
Investor Relations:
John Nesbett/Jennifer Belodeau
IMS Investor Relations
Phone: (203) 972-9200
Email: xpel@imsinvestorrelations.com
| XPEL Inc. Condensed Consolidated Statements of Income (Unaudited) (In thousands except per share data) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Product revenue | $ | 81,125 | $ | 72,616 | $ | 229,339 | $ | 197,753 | |||||||||||||||
| Service revenue | 21,552 | 17,142 | 61,416 | 47,759 | |||||||||||||||||||
| Total revenue | 102,677 | 89,758 | 290,755 | 245,512 | |||||||||||||||||||
| Cost of Sales | |||||||||||||||||||||||
| Cost of product sales | 51,876 | 47,225 | 143,613 | 129,646 | |||||||||||||||||||
| Cost of service | 9,272 | 6,767 | 25,660 | 19,400 | |||||||||||||||||||
| Total cost of sales | 61,148 | 53,992 | 169,273 | 149,046 | |||||||||||||||||||
| Gross Margin | 41,529 | 35,766 | 121,482 | 96,466 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Sales and marketing | 7,730 | 6,297 | 22,554 | 18,515 | |||||||||||||||||||
| General and administrative | 16,170 | 12,162 | 46,180 | 34,859 | |||||||||||||||||||
| Total operating expenses | 23,900 | 18,459 | 68,734 | 53,374 | |||||||||||||||||||
| Operating Income | 17,629 | 17,307 | 52,748 | 43,092 | |||||||||||||||||||
| Interest expense | 85 | 391 | 946 | 933 | |||||||||||||||||||
| Foreign currency exchange loss | 398 | 372 | 419 | 833 | |||||||||||||||||||
| Income before income taxes | 17,146 | 16,544 | 51,383 | 41,326 | |||||||||||||||||||
| Income tax expense | 3,490 | 3,226 | 10,553 | 8,302 | |||||||||||||||||||
| Net income | $ | 13,656 | $ | 13,318 | $ | 40,830 | $ | 33,024 | |||||||||||||||
| Earnings per share | |||||||||||||||||||||||
| Basic | $ | 0.49 | $ | 0.48 | $ | 1.48 | $ | 1.20 | |||||||||||||||
| Diluted | $ | 0.49 | $ | 0.48 | $ | 1.48 | $ | 1.20 | |||||||||||||||
| Weighted Average Number of Common Shares | |||||||||||||||||||||||
| Basic | 27,623 | 27,616 | 27,620 | 27,614 | |||||||||||||||||||
| Diluted | 27,644 | 27,620 | 27,634 | 27,615 | |||||||||||||||||||
| XPEL Inc. Condensed Consolidated Balance Sheets (In thousands except per share data) | |||||||||||
| (Unaudited) | (Audited) | ||||||||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Current | |||||||||||
| Cash and cash equivalents | $ | 10,374 | $ | 8,056 | |||||||
| Accounts receivable, net | 24,115 | 14,726 | |||||||||
| Inventories | 92,458 | 80,575 | |||||||||
| Prepaid expenses and other current assets | 11,091 | 3,464 | |||||||||
| Total current assets | 138,038 | 106,821 | |||||||||
| Property and equipment, net | 15,690 | 14,203 | |||||||||
| Right-of-use lease assets | 14,014 | 15,309 | |||||||||
| Intangible assets, net | 29,461 | 29,294 | |||||||||
| Other non-current assets | 971 | 972 | |||||||||
| Goodwill | 28,602 | 26,763 | |||||||||
| Total assets | $ | 226,776 | $ | 193,362 | |||||||
| Liabilities | |||||||||||
| Current | |||||||||||
| Current portion of notes payable | $ | — | $ | 77 | |||||||
| Current portion of lease liabilities | 3,650 | 3,885 | |||||||||
| Accounts payable and accrued liabilities | 42,059 | 22,970 | |||||||||
| Income tax payable | 836 | 470 | |||||||||
| Total current liabilities | 46,545 | 27,402 | |||||||||
| Deferred tax liability, net | 1,205 | 2,049 | |||||||||
| Other long-term liabilities | 950 | 1,070 | |||||||||
| Borrowings on line of credit | — | 26,000 | |||||||||
| Non-current portion of lease liabilities | 11,523 | 12,119 | |||||||||
| Total liabilities | 60,223 | 68,640 | |||||||||
| 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; 27,628,953 and 27,616,064 issued and outstanding, respectively | 28 | 28 | |||||||||
| Additional paid-in-capital | 12,050 | 11,073 | |||||||||
| Accumulated other comprehensive loss | (2,179) | (2,203) | |||||||||
| Retained earnings | 156,654 | 115,824 | |||||||||
| Total stockholders’ equity | 166,553 | 124,722 | |||||||||
| Total liabilities and stockholders’ equity | $ | 226,776 | $ | 193,362 | |||||||
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) Three Months Ended September 30, | (Unaudited) Nine Months Ended September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Net Income | $ 13,656 | $ 13,318 | $ 40,830 | $ 33,024 |
| Interest | 85 | 391 | 946 | 933 |
| Taxes | 3,490 | 3,226 | 10,553 | 8,302 |
| Depreciation | 1,199 | 890 | 3,229 | 2,486 |
| Amortization | 1,288 | 1,117 | 3,660 | 3,248 |
| EBITDA | $ 19,718 | $ 18,942 | $ 59,218 | $ 47,933 |
| Adjusted EBITDA Reconciliation (In Thousands) | |
| (Unaudited) Three Months Ended September 30, 2023 | |
| EBITDA | $ 19,718 |
| Inventory write-offs | 1,012 |
| Relocation costs | 341 |
| Acquisition-related legal costs | 250 |
| Research and development | 500 |
| Foreign exchange | 293 |
| Adjusted EBITDA | $ 22,114 |
| Adjusted EPS Reconciliation (In Thousands) | |
| (Unaudited) Three Months Ended September 30, 2023 | |
| Net Income | $ 13,656 |
| Inventory write-offs | 806 |
| Relocation costs | 272 |
| Acquisition-related legal costs | 199 |
| Research and development | 398 |
| Foreign exchange | 233 |
| Adjusted net income | $ 15,564 |
| Adjusted earnings per share | |
| Basic | 0.56 |
| Diluted | 0.56 |
| Weighted average number of common shares | |
| Basic | 27,623 |
| Diluted | 27,644 |
Senior VP & Chief Financial Officer
Mr. Wood has served as the Company’s Chief Financial Officer since June 2016. Mr. Wood is responsible for the Company’s Finance/Accounting, Risk Management, Treasury Management, Investor Relations and Corporate Development functions. Prior to joining the Company, Mr. Wood served as Vice President – Dispensing Operations for Optum Rx (previously Catamaran Home Delivery), Chief Financial Officer of PTRX, Inc., a pharmacy benefits and prescription home delivery company and served in various executive finance roles with AT&T (formerly SBC Communication, Inc.). Prior to this, Mr. Wood served as an Audit Manager for Ernst & Young.
Mr. Wood holds an MBA from University of Texas – Dallas and a Bachelor of Science – Accountancy degree from Southern Illinois University – Edwardsville. Mr. Wood also holds Certified Public Accountant and Chartered Global Management Accountant designations.
VP, Asia Pacific
Mr. West joined XPEL in 2021 and currently serves as the VP of Asia Pacific where he oversees all of XPEL’s business affairs in the region.
Prior to his current role, Mr. West was the Director of Automotive Films, followed by Sr. Director of Install Operations. He has been involved with the automotive aftermarket industry for 20 years and owned a successful shop in Anchorage, Alaska. He also founded Tracwrap, which was sold to XPEL in 2013.
He has traveled the world installing, training, and consulting businesses in the automotive films industry. Mr. West holds a bachelor’s degree in civil engineering.
VP, People Services
Ms. Steiner recently joined the Company, serving as VP of People Services.
Ms. Steiner is responsible for shaping the Company’s people strategies and growing the global capabilities of the Company while aligning it with the overall strategic direction of the organization.
Ms. Steiner brings over 20 years of multi-industry, global HR experience. In her most recent role, she was responsible for leading HR for E. & J. Gallo’s US Sales Organization. Prior to that, she was VP of HR, Americas at Otis Elevators and spent 21 years at General Electric in HR and engineering leadership roles.
Ms. Steiner holds a bachelor’s degree in chemical engineering as well as an MBA from The Pennsylvania State University.
VP, Revenue
Mr. Rimas recently joined the Company, serving as VP of Revenue. He leads the global sales team, partnership and commercial strategy.
Mr. Rimas was the President of Repairify, which empowers the vehicle-side repair professional with software, intelligence, and access to the proprietary Repair OnDemand marketplace. Mr. Rimas also has a wide range of experience in many segments of the automotive industry, including retail, financial services, aftermarket, and fleet services.
Mr. Rimas was the co-founder and Managing Partner of FM Capital, where he led and managed many disruptive automotive investments including Autoniq, Frontier Car Group, Vroom, Autopay, and Revolution Parts. Before FM Capital, Mr. Rimas was the Director of Operations of the Red McCombs Automotive Group where he also helped lead successful investments in both HomeNet Automotive (acquired by Cox Automotive) and ClickMotive (acquired by DealerTrack).
Mr. Rimas is the current Chairman of NitroFill and a former board member of ProCare Collision (acquired by Classic Collision). Mr. Rimas is also Managing Partner of AuctionXM, and an advisor to WarrCloud, Zohr, and NuBrakes. Recently, he joined the board of Work Truck Solutions, Vincue, and exited his vehicle reconditioning business (Streamline Recon) in a merger with SolutionWorks.
Mr. Rimas holds a bachelor’s degree in chemistry from Ball State University.
VP, Corporate Development
Mr. Mayall has worked for/with XPEL since 2000 and currently serves as XPEL’s VP of Corporate Development. He joined XPEL full time in 2016 when his businesses, PRO-TECT FILM and PROFORM, were acquired by XPEL.
Mr. Mayall has been involved in the film, adhesive and automotive aftermarket since 1993 where he started as an installer of window films and paint protection films. In 2004 he founded a film distribution and installation company, PRO-TECT FILM, where they grew to be the largest installer of automotive paint protection film and residential safety/security film in Las Vegas at the time it was acquired. During that time he was also co-owner of PROFORM, a design and software business that operated out of Las Vegas until the time it was acquired.
VP, Product
Mr. Joshi currently serves as XPEL’s VP of Product and has worked at XPEL since 2018. Mr. Joshi oversees Product Management, Manufacturing, Research & Development, Purchasing and Planning functions for the company.
Prior to joining XPEL, Mr. Joshi served as the Deputy General Manager at Garware Hi-Tech Films and oversaw the North American business for the company.
Mr. Joshi holds a Bachelor of Technology (B.Tech) in Mechanical Engineering from the College of Engineering, Pune (COEP) and a Master of Science (M.S.) in Management Science & Engineering from Stanford University.
VP, Services
Mr. Gotro joined XPEL in 2022 and currently serves as the VP of Services. In this role he is responsible for overseeing Dealership, Retail, OEM, Design and Training Operations.
Prior to joining XPEL, Mr. Gotro spent 17 years at entrotech in a variety of positions, including Director of OEM Integration and Director of Paint Protection Film. He also worked in consulting.
Mr. Gotro holds a bachelor’s degree in chemical and biomolecular engineering from The Ohio State University.
VP, Controller
Ms. Coffee joined XPEL in January 2008 and currently serves as the Company’s Controller. She is responsible for all Accounting, Treasury Management and Payroll functions for the company. Prior to joining XPEL, Ms. Coffee served as an Accounting Manager for Enterprise Rent-A-Car.
Ms. Coffee holds and M.Ed. from the University of Texas at Austin and a Bachelor of Science in Accounting from the University of North Texas. Ms. Coffee is also a Certified Public Accountant.
Senior VP, General Counsel
Mr. Awodiran recently joined the Company, serving as General Counsel and Corporate Secretary.
Mr. Awodiran is responsible for all legal and compliance matters affecting the Company, including managing the legal function, providing effective advice on Company strategies and their implementations, corporate governance and securities law compliance, Board and Board committee matters, commercial and corporate transactions, ethics, and compliance.
Prior to joining the Company, Mr. Awodiran served as Group Counsel, Securities and Corporate Law and Assistant Corporate Secretary for Ashland Inc., a global additives and specialty ingredients company. Before this, Mr. Awodiran served in various legal roles at Caterpillar Inc. during his 14 years, most recently as Senior Corporate Counsel, supporting the Industrial Power System Division’s global sales and marketing operations.
Mr. Awodiran holds an LL.M. from the University of Illinois at Urbana-Champaign and an LL.B. from the University of Ibadan, Nigeria. Mr. Awodiran obtained his US bar license from New York State.
VP, Operations
Mr. Alvarez joined XPEL in December 2017 and currently serves as the VP of Operations. In this role he is responsible for overseeing all manufacturing, quality, distribution, logistics, purchasing, and customer service functions within XPEL.
Prior to joining XPEL, Mr. Alvarez served in a variety of operational leadership roles within AT&T and KCI/ Acelity.
Mr. Alvarez holds a bachelor’s degree in finance from St. Mary’s University, and an MBA from Texas A&M University – San Antonio.
Chairman, President & CEO
Mr. Pape serves as XPEL’s Chairman, President and Chief Executive Officer and previously served in a variety of positions within the XPEL until his appointment as Chief Executive Officer in 2009.
Prior to joining XPEL in 2004, Mr. Pape was in technology consulting.
Mr. Pape has a Bachelor of Science degree from the University of Texas at Austin.
Mr. Pape has served on XPEL’s Board of Directors since 2010 and currently serves as the Chairman of the Board.
Director
Mr. North serves as CEO of Lazydays RV Holdings, Inc., a $1.3 billion leader in the RV industry providing RV sales, service, and ownership experiences. He previously served as CFO of global auto reseller Copart, Avis Budget Group and Lithia Motors, one of America’s largest automotive retail groups. While at Lithia Motors, Mr. North helped successfully manage the company’s financial transformation as Lithia grew from $2.1 billion in revenue in 2010 to $12.0 billion in 2018.
Mr. North has a deep knowledge of the automotive industry with proven experience in global retail operations, finance, acquisitions and integrations.
He earned a Bachelor of Science degree in Commerce with an emphasis in Finance from Santa Clara University.
Director
Mr. Klonne built a successful career from entry level sales to President and CEO. He played a major part and led the growth of Findley Adhesives from a $20 Million, regional company to a $300 Million global company which led to the ultimate sale of the company to Bostik, S.A.
Mr. Klonne served as CEO of Bostik, Inc, a subsidiary of Bostik, S.A., of Paris France, for nearly 15 years helping grow Bostik, Inc.’s revenue to $1 Billion with over 1,000 employees at 20 sites across North America, Latin America, Europe and Asia.
Mr. Klonne has served on XPEL’s board since 2017 and currently chairs the Audit Committee.
Director
Mr. Crumly has been investing in start-up companies and other entrepreneurial ventures for more than 30 years. Mr. Crumly has been involved in ventures ranging from consumer products to telecommunications from start-up to the transition to the public marketplace.
Mr. Crumly also has years of experience investing in various real estate ventures, from raw land to developed properties and also has interests in the timepiece and estate jewelry market.
Mr. Crumly graduated from Trinity University in San Antonio with a Bachelor of Science.
Director
Ms. Bogart serves as Senior Vice President, General Counsel, Secretary and Corporate Responsibility of Winnebago Industries. Prior to joining Winnebago Industries, Bogart was Senior Vice President, General Counsel and Compliance Officer, Corporate Secretary at Polaris Industries where she joined in November 2009. Previously, Bogart was General Counsel of Liberty Diversified International; Assistant General Counsel and Assistant Secretary at The Toro Company; and a Senior Attorney for Honeywell Inc.
Ms. Bogart is an accomplished business executive who is known for partnering with senior management to achieve long-term strategic transformational goals, working with public company Board of Directors, corporate governance, corporate social responsibility, risk management, strategy, and mergers and acquisitions.
Ms. Bogart has a Bachelor of Arts degree and Juris Doctorate with Distinction from the University of Iowa.