XPEL Reports Record Revenue of $112.9 Million in Third Quarter 2024

SAN ANTONIO--(BUSINESS WIRE)--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 [phone]. Callers should use access code: 861781.

A replay of the teleconference will be available until December 7, 2024 and may be accessed by dialing [phone]. International callers may dial [phone]. 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

Contacts

For more information:

Investor Relations:
John Nesbett/Jennifer Belodeau
IMS Investor Relations
Phone: [phone]
Email: [e-mail]