XPEL Reports Record Revenue of $102.2 Million in Second Quarter 2023 With Gross Margin of 43.0%

SAN ANTONIO--(BUSINESS WIRE)-- XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced results for the quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

• Revenues increased 21.9% to $102.2 million in the second quarter.

• Gross margin percentage improved to 43.0% in the second quarter, a new high for the Company.

• Net income grew 32.3% to $15.7 million, or $0.57 per share, compared to $11.9 million, or $0.43 per share, in the same quarter of 2022.

• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 30.5% to $22.4 million, or 21.9% of revenues compared to $17.2 million in second quarter 2022.¹

First Six Months Highlights:

• Revenues increased 20.8% to $188.1 million in the first six months of 2023.

• Gross margin percentage improved to 42.5% in the first six months of 2023.

• Net income grew 37.9% to $27.2 million, or $0.98 per share, compared to $19.7 million, or $0.71 per share, in the first six months of 2022.

• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 36.0% to $39.5 million, or 21.0% of revenues compared to $29.1 million in first six months of 2022.¹

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We had another solid quarter and reached a significant milestone with quarterly revenue exceeding $100 million for the first time in the Company’s history. Consumer recognition for the long-term value of protective films is increasingly moving beyond the enthusiast market and we’re focused on continuing to introduce the XPEL brand to a broader segment of automotive dealerships and auto buyers.”

For the Quarter Ended June 30, 2023:

Revenues. Revenues increased approximately $18.3 million or 21.9% to $102.2 million as compared to $83.9 million in the second quarter of the prior year.

Gross Margin. Gross margin was 43.0% compared to 39.3% in the second quarter of 2022.

Expenses. Operating expenses increased to $23.8 million, or 23.3% of sales, compared to $17.2 million, or 20.5% of sales in the prior year period.

Net income. Net income was $15.7 million, or $0.57 per basic and diluted share, versus net income of $11.9 million, or $0.43 per basic and diluted share in the second quarter of 2022.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $22.4 million, or 21.9% of sales, as compared to $17.2 million, or 20.5% of sales in the prior year.¹

For the Six Months Ended June 30, 2023:

Revenues. Revenues increased approximately $32.3 million or 20.8% to $188.1 million as compared to $155.8 million in the first half of the prior year.

Gross Margin. Gross margin was 42.5% compared to 39.0% in the first half of 2022.

Expenses. Operating expenses increased to $44.8 million, or 23.8% of sales, compared to $34.9 million, or 22.4% of sales in the prior year period.

Net income. Net income was $27.2 million, or $0.98 per basic and diluted share, versus net income of $19.7 million, or $0.71 per basic and diluted share in the first half of 2022.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $39.5 million, or 21.0% of sales, as compared to $29.1 million, or 18.7% 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, August 9, 2023 at 11:00 a.m. Eastern Time to discuss the Company’s second quarter 2023 results.

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: 695070

A replay of the teleconference will be available until September 8, 2023 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 48731.

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”.

¹See reconciliation of non-GAAP financial measures below.

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. 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 June 30,							Six Months Ended June 30,
				2023			2022				2023			2022
Revenue
Product revenue			$	80,906		$	67,040			$	148,214		$	125,137
Service revenue				21,331			16,850				39,864			30,617
Total revenue				102,237			83,890				188,078			155,754
Cost of Sales
Cost of product sales				49,557			44,227				91,737			82,421
Cost of service				8,686			6,680				16,388			12,633
Total cost of sales				58,243			50,907				108,125			95,054
Gross Margin				43,994			32,983				79,953			60,700
Operating Expenses
Sales and marketing				8,147			5,906				14,824			12,218
General and administrative				15,656			11,328				30,010			22,696
Total operating expenses				23,803			17,234				44,834			34,914
Operating Income				20,191			15,749				35,119			25,786
Interest expense				338			322				860			542
Foreign currency exchange loss				32			457				21			462
Income before income taxes				19,821			14,970				34,238			24,782
Income tax expense				4,080			3,068				7,064			5,076
Net income			$	15,741		$	11,902			$	27,174		$	19,706
Earnings per share
Basic			$	0.57		$	0.43			$	0.98		$	0.71
Diluted			$	0.57		$	0.43			$	0.98		$	0.71
Weighted Average Number of Common Shares
Basic				27,619			27,613				27,617			27,613
Diluted				27,631			27,613				27,629			27,613

XPEL Inc.
Condensed Consolidated Balance Sheets
(In thousands except per share data)
			(Unaudited)			(Audited)
			June 30, 2023			December 31, 2022
Assets
Current
Cash and cash equivalents			$	14,298		$	8,056
Accounts receivable, net				23,983			14,726
Inventories				82,714			80,575
Prepaid expenses and other current assets				4,660			3,464
Total current assets				125,655			106,821
Property and equipment, net				15,523			14,203
Right-of-use lease assets				15,161			15,309
Intangible assets, net				30,590			29,294
Other non-current assets				1,138			972
Goodwill				28,594			26,763
Total assets			$	216,661		$	193,362
Liabilities
Current
Current portion of notes payable			$	—			77
Current portion of lease liabilities				3,871			3,885
Accounts payable and accrued liabilities				31,194			22,970
Income tax payable				331			470
Total current liabilities				35,396			27,402
Deferred tax liability, net				1,481			2,049
Other long-term liabilities				1,176			1,070
Borrowings on line of credit				13,000			26,000
Non-current portion of lease liabilities				12,300			12,119
Total liabilities				63,353			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; 27,620,027 and 27,616,064 issued and outstanding and outstanding, respectively				28			28
Additional paid-in-capital				11,730			11,073
Accumulated other comprehensive loss				(1,448)			(2,203)
Retained earnings				142,998			115,824
Total stockholders’ equity				153,308			124,722
Total liabilities and stockholders’ equity			$	216,661		$	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 June 30,				Six Months Ended June 30,
			2023		2022		2023		2022
Net Income			15,741		11,902		27,174		19,706
Interest			338		322		860		542
Taxes			4,080		3,068		7,064		5,076
Depreciation			1,058		839		2,030		1,596
Amortization			1,211		1,054		2,372		2,131
EBITDA			22,428		17,185		39,500		29,051

 

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Investor Relations:

John Nesbett/Jennifer Belodeau

IMS Investor Relations

Phone: (203) 972-9200

Email: xpel@imsinvestorrelations.com

Source: XPEL, Inc.