XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of
protective films and coatings, announced consolidated results1 for
the second quarter of 2024.
Second Quarter 2024 Overview:
- Revenue increased 7.5% to $109.9 million in the second quarter
of 2024.
- Gross margin of 43.5% in the second quarter of 2024.
- Net income of $15.0 million, or $0.54 per basic and diluted
share, versus net income of $15.7 million, or $0.57 per basic and
diluted share in the second quarter of 2023.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) of $21.8 million, or 19.9% of revenue, compared to
$22.4 million, or 21.9% of revenue in the second quarter of 2023.
2
First Six Months 2024 Overview:
- Revenue increased 6.4% to $200.0 million in the first six
months of 2024.
- Gross margin of 42.9% in the first six months of 2024.
- Net income of $21.7 million, or $0.79 per basic and diluted
share, versus net income of $27.2 million, or $0.98 per basic and
diluted share in the first six months of 2023.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) of $33.5 million, or 16.8% of revenue, compared to
$39.5 million, or 21.0% of revenue in the first six months of
2023.2
Ryan Pape, President and Chief Executive Officer of XPEL,
commented, "We saw record revenue, record operating cash flow and
solid gross margin performance in the second quarter. We are off to
a great start in Q3 and we remain well positioned to capitalize on
growth opportunities wherever they may exist."
Financial Highlights for the Second Quarter 2024:
Summary consolidated financial information for the three months
ended June 30, 2024 and 2023 (unaudited, dollars in thousands):
Three Months Ended June
30,
% Change
2024
%
of Total Revenue
2023
%
of Total Revenue
2024 vs. 2023
Total revenue
$
109,917
100.0
%
$
102,237
100.0
%
7.5
%
Gross margin
47,865
43.5
%
43,994
43.0
%
8.8
%
Operating Expenses
28,679
26.1
%
23,803
23.3
%
20.5
%
Operating income
19,186
17.5
%
20,191
19.7
%
(5.0
)%
Net income
15,033
13.7
%
15,741
15.4
%
(4.5
)%
EBITDA2
21,824
19.9
%
22,428
21.9
%
(2.7
)%
Net cash provided by operating
activities
$
26,896
n/a
$
26,680
n/a
n/a
Geographical Revenue Summary
Three Months Ended
June 30,
% Change
% of Total Revenue
2024
2023
Inc (Dec)
2024
2023
United States
$
64,902
$
59,149
9.7
%
59.0
%
57.9
%
China
4,401
8,103
(45.7
)%
4.0
%
7.9
%
Canada
13,274
11,851
12.0
%
12.1
%
11.6
%
Continental Europe
11,355
9,689
17.2
%
10.3
%
9.5
%
United Kingdom
3,689
3,630
1.6
%
3.4
%
3.6
%
Middle East/Africa
4,803
4,109
16.9
%
4.4
%
4.0
%
Asia Pacific
4,334
3,314
30.8
%
3.9
%
3.2
%
Latin America
3,159
2,119
49.1
%
2.9
%
2.1
%
Other
—
273
(100.0
)%
0.0
%
0.2
%
Total
$
109,917
$
102,237
7.5
%
100.0
%
100.0
%
Overall Revenue
- Total revenue grew 7.5% compared to second quarter 2023 ("YoY")
and 22.0% over the first quarter 2024 ("QoQ"). Excluding China,
total revenue grew 12.1% YoY.
- US revenue grew 9.7% YoY and 24.8% QoQ.
- All other revenue (excluding US and China) grew 16.1% YoY and
11.0% QoQ.
Product and Service Revenue
- Total product revenue increased 2.8% YoY and 24.5% QoQ. This
increase was due to growth in most geographical regions, offset by
a decline in sales to our distributor in China. Excluding China,
total product revenue increased 8.2% YoY.
- Total window film increased 8.4% YoY and 51.3% QoQ and
represented 20.0% of total revenue. Excluding China, total window
film revenue grew 18.6% YoY.
- Total service revenue increased 25.2% YoY and 14.9% 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
33.9% YoY and 16.5% QoQ and represented 21.1% of total revenue.
This increase was due primarily to increased demand in XPEL's
dealership services and OEM businesses.
- Adjusted product revenue (combining cutbank credits revenue and
product revenue) increased 2.8% YoY and 24.1% QoQ. Excluding China,
adjusted product revenue increased 7.8% YoY.
Other Financial Information
- Gross margin percentage was 43.5% and 43.0% in the second
quarter, 2024 and 2023, respectively.
- Total operating expenses grew 20.5% YoY and essentially flat
QoQ.
- Sales and marketing expenses grew 26.2% YoY and declined 1.1%
QoQ and represented 9.4% of revenue.
- General and administrative expenses grew 17.5% YoY and 0.8% QoQ
and represented 16.7% of revenue.
- Net income declined 4.5% YoY and increased 125.5% QoQ.
- EBITDA declined 2.7% YoY2 and increased 86.5% QoQ.
- Cash flows provided by operations increased $0.2 million YoY
and $31.9 million QoQ to a record $26.9 million in the second
quarter 2024.
2024 Outlook
- Annual revenue growth projection remains 8-10%.
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,
August 8, 2024 at 11:00 a.m. Eastern Time to discuss the Company’s
second 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: 871439.
A replay of the teleconference will be available until September
1, 2024 and may be accessed by dialing (877) 481-4010.
International callers may dial (919) 882-2331. Callers should use
conference ID: 50361.
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 second
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
second 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 August 9, 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, 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
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue
Product revenue
$
83,200
$
80,906
$
150,052
$
148,214
Service revenue
26,717
21,331
49,969
39,864
Total revenue
109,917
102,237
200,021
188,078
Cost of Sales
Cost of product sales
51,274
49,557
93,409
91,737
Cost of service
10,778
8,686
20,871
16,388
Total cost of sales
62,052
58,243
114,280
108,125
Gross Margin
47,865
43,994
85,741
79,953
Operating Expenses
Sales and marketing
10,280
8,147
20,671
14,824
General and administrative
18,399
15,656
36,655
30,010
Total operating expenses
28,679
23,803
57,326
44,834
Operating Income
19,186
20,191
28,415
35,119
Interest expense
392
338
865
860
Foreign currency exchange loss
275
32
548
21
Income before income taxes
18,519
19,821
27,002
34,238
Income tax expense
3,486
4,080
5,303
7,064
Net income
$
15,033
$
15,741
$
21,699
$
27,174
Earnings per share
Basic
$
0.54
$
0.57
$
0.79
$
0.98
Diluted
$
0.54
$
0.57
$
0.79
$
0.98
Weighted Average Number of Common
Shares
Basic
27,635
27,619
27,633
27,617
Diluted
27,637
27,631
27,637
27,629
XPEL, Inc.
Consolidated Balance
Sheets
(In thousands except share and
per share data)
(Unaudited)
(Audited)
June 30, 2024
December 31, 2023
Assets
Current
Cash and cash equivalents
$
14,984
$
11,609
Accounts receivable, net
29,466
24,111
Inventory, net
97,591
106,509
Prepaid expenses and other current
assets
4,641
3,529
Income tax receivable
1,224
696
Total current assets
147,906
146,454
Property and equipment, net
17,998
16,980
Right-of-use lease assets
18,464
15,459
Intangible assets, net
33,241
34,905
Other non-current assets
1,127
782
Goodwill
43,094
37,461
Total assets
$
261,830
$
252,041
Liabilities
Current
Current portion of notes payable
$
64
$
62
Current portion lease liabilities
4,723
3,966
Accounts payable and accrued
liabilities
26,244
32,444
Total current liabilities
31,031
36,472
Deferred tax liability, net
1,742
2,658
Other long-term liabilities
515
890
Borrowings on line of credit
11,000
19,000
Non-current portion of lease
liabilities
15,359
12,715
Non-current portion of notes payable
272
317
Total liabilities
59,919
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; 27,638,219 and 27,630,025 issued and
outstanding, respectively
28
28
Additional paid-in-capital
13,926
12,546
Accumulated other comprehensive loss
(2,366
)
(1,209
)
Retained earnings
190,323
168,624
Total stockholders’ equity
201,911
179,989
Total liabilities and stockholders’
equity
$
261,830
$
252,041
XPEL, Inc.
Consolidated Statements of
Cash Flows (Unaudited)
(In thousands)
Three Months Ended
June
Six Months Ended June
30,
2024
2023
2024
2023
Cash flows from operating
activities
Net income
$
15,033
$
15,741
$
21,699
$
27,174
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and
equipment
1,471
1,058
2,804
2,030
Amortization of intangible assets
1,442
1,211
2,852
2,372
Gain on sale of property and equipment
(10
)
(1
)
(28
)
(10
)
Stock compensation
837
355
1,467
657
Provision for credit losses
100
82
189
156
Deferred income tax
(705
)
(479
)
(862
)
(594
)
Changes in assets and liabilities:
Accounts receivable, net
(991
)
(2,415
)
(5,754
)
(9,021
)
Inventory, net
12,644
2,304
8,766
(1,583
)
Prepaid expenses and other current
assets
1,016
1,537
(1,309
)
(975
)
Income taxes receivable and payable
(1,491
)
(2,496
)
(587
)
(136
)
Accounts payable and accrued
liabilities
(2,450
)
9,783
(7,299
)
7,303
Net cash provided by operating
activities
26,896
26,680
21,938
27,373
Cash flows used in investing
activities
Purchase of property, plant and
equipment
(1,811
)
(1,251
)
(3,828
)
(3,306
)
Proceeds from sale of property and
equipment
—
12
—
24
Acquisition of a businesses, net of cash
acquired
(5,171
)
(4,457
)
(5,928
)
(4,457
)
Development of intangible assets
(501
)
(196
)
(841
)
(517
)
Net cash used in investing
activities
(7,483
)
(5,892
)
(10,597
)
(8,256
)
Cash flows from financing
activities
Net payments on revolving line of
credit
(13,000
)
(15,000
)
(8,000
)
(13,000
)
RSUs withheld in lieu of payroll taxes
(87
)
(29
)
(87
)
(28
)
Repayments of notes payable -
acquisitions
(16
)
—
(31
)
(77
)
Net cash used by financing
activities
(13,103
)
(15,029
)
(8,118
)
(13,105
)
Net change in cash and cash
equivalents
6,310
5,759
3,223
6,012
Foreign exchange impact on cash and
cash equivalents
60
210
152
230
Increase in cash and cash equivalents
during the period
6,370
5,969
3,375
6,242
Cash and cash equivalents at beginning
of period
8,614
8,329
11,609
8,056
Cash and cash equivalents at end of
period
$
14,984
$
14,298
$
14,984
$
14,298
Supplemental schedule of non-cash
activities
Non-cash lease financing
$
4,086
$
573
$
5,038
$
1,810
Issuance of common stock for vested
restricted stock units
405
134
462
134
Supplemental cash flow
information
Cash paid for income taxes
$
5,646
$
7,062
$
6,798
$
7,810
Cash paid for interest
$
414
$
372
$
844
$
889
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 June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net Income
$
15,033
$
15,741
$
21,699
$
27,174
Interest
392
338
865
860
Taxes
3,486
4,080
5,303
7,064
Depreciation
1,471
1,058
2,804
2,030
Amortization
1,442
1,211
2,852
2,372
EBITDA
$
21,824
$
22,428
$
33,523
$
39,500
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808935239/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS Investor
Relations Phone: (203) 972-9200 Email:
xpel@imsinvestorrelations.com
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