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:

  • Revenues increased 14.4% to $102.7 million in the third quarter.
  • Gross margin percentage improved to 40.4% in the third quarter.
  • Net income grew 2.5% to $13.7 million, or $0.49 per share, compared to $13.3 million, or $0.48 per share, in the same quarter of 2022.
  • EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 4.1% to $19.7 million, or 19.2% of revenues, compared to $18.9 million in third quarter 2022.1

First Nine Months Highlights:

  • Revenues increased 18.4% to $290.8 million in the first nine months of 2023.
  • Gross margin percentage improved to 41.8% in the first nine months of 2023.
  • Net income grew 23.6% to $40.8 million, or $1.48 per share, compared to $33.0 million, or $1.20 per share, in the first nine months of 2022.
  • EBITDA grew 23.4% to $59.2 million, or 20.4% of revenues compared to $48.0 million in the first nine months of 2022.1

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.

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

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Cost of product sales

 

51,876

 

 

47,225

 

 

143,613

 

 

129,646

Cost of service sales

 

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 exchange (loss) gain

 

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

$

 

 

$

76.60

 

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

 

0

 

 

 

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)

 

(Unaudited)

 

Three Months Ended

September 30,

 

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

 

$

47,993

 

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

 

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

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