XPEL Reports Third Quarter 2022 Results

Rhea-AI Summary

XPEL, Inc. reported strong financial results for Q3 and the first nine months of 2022. Revenues soared by 31.0% to a record $89.8 million in Q3, driven by robust business momentum despite economic challenges. The gross margin improved to 39.8%, while net income rose by 59.9% to $13.3 million, translating to $0.48 per share. Year-to-date, revenues increased 29.8% to $245.5 million, and net income grew by 30.2% to $33.0 million. The company will discuss these results in a conference call today, November 9, 2022.

Positive

• Revenue increased 31.0% to $89.8 million in Q3 2022.
• Gross margin improved to 39.8% in Q3 2022.
• Net income grew 59.9% to $13.3 million, or $0.48 per share in Q3.
• EBITDA rose 66.0% to $18.9 million, or 21.1% of revenues in Q3.
• Year-to-date revenue increased 29.8% to $245.5 million.

Negative

• Operating expenses increased to $18.5 million, or 20.6% of sales in Q3.
• Operating expenses rose to $53.4 million, or 21.7% of sales for the nine months.

SAN ANTONIO, Texas--(BUSINESS WIRE)-- XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced results for the third quarter and nine months ended September 30, 2022.

Third Quarter 2022 Highlights:

• Revenues increased 31.0% to a record $89.8 million in the third quarter.
• Gross margin percentage improved to 39.8% in the third quarter, a new high for the Company.
• Net income grew 59.9% to $13.3 million, or $0.48 per share, compared to $8.3 million, or $0.30 per share, in the same quarter of 2021.
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 66.0% to $18.9 million, or 21.1% of revenues compared to $11.4 million in third quarter 2021.¹

First Nine Months Highlights:

• Revenues increased 29.8% to $245.5 million in the first nine months of 2022.
• Gross margin percentage improved to 39.3% in the first nine months of 2022.
• Net income grew 30.2% to $33.0 million, or $1.20 per share, compared to $25.4 million, or $0.92 per share, in the first nine months of 2021.
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 40.6% to $48.0 million, or 19.5% of revenues compared to $34.1 million in the first nine months of 2021.¹

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “Our strong third quarter results reflect on-going momentum in the business even in the face of economic uncertainty. We saw solid performance across most of our regions and we look forward to continuing to build on this momentum as we close out the year.”

For the Quarter Ended September 30, 2022:

Revenues. Revenues increased approximately $21.2 million or 31.0% to $89.8 million as compared to $68.5 million in the third quarter of the prior year.

Gross Margin. Gross margin was 39.8% compared to 35.7% in the third quarter of 2021.

Expenses. Operating expenses increased to $18.5 million, or 20.6% of sales, compared to $14.1 million, or 20.6% of sales in the prior year period.

Net income. Net income was $13.3 million, or $0.48 per basic and diluted share, versus net income of $8.3 million, or $0.30 per basic and diluted share in the third quarter of 2021.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $18.9 million, or 21.1% of sales, as compared to $11.4 million, or 16.6% of sales in the prior year¹.

For the Nine Months Ended September 30, 2022:

Revenues. Revenues increased approximately $56.4 million or 29.8% to $245.5 million as compared to $189.1 million in the first nine months of the prior year.

Gross Margin. Gross margin was 39.3% compared to 35.9% in the first nine months of 2021.

Expenses. Operating expenses increased to $53.4 million, or 21.7% of sales, compared to $36.4 million or 19.2% of sales in the prior year period.

Net income. Net income was $33.0 million, or $1.20 per basic and diluted share versus net income of $25.4 million, or $0.92 per basic and diluted share in the first nine months of 2021.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $48.0 million, or 19.5% of sales, as compared to $34.1 million, or 18.0% of sales in the prior year¹.

¹ See reconciliation of non-GAAP financial measures below

Conference Call Information

The Company will host a conference call and webcast today, November 9, 2022 at 11:00 a.m. Eastern Time to discuss the Company’s third quarter 2022 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: 868222

A replay of the teleconference will be available until December 9, 2022 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 46864.

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. 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,
	2022			2021			2022			2021
Revenue
Product revenue	$	72,616		$	56,996	.	$	197,753		$	160,595
Service revenue		17,142			11,533	.		47,759			28,536
Total revenue		89,758			68,529	.		245,512			189,131
Cost of Sales
Cost of product sales		47,225			39,701	.		129,646			111,839
Cost of service		6,767			4,374	.		19,400			9,303
Total cost of sales		53,992			44,075	.		149,046			121,142
Gross Margin		35,766			24,454	.		96,466			67,989
Operating Expenses
Sales and marketing		6,297			4,904	.		18,515			12,978
General and administrative		12,162			9,183	.		34,859			23,423
Total operating expenses		18,459			14,087	.		53,374			36,401
Operating Income		17,307			10,367	.		43,092			31,588
Interest expense		391			46	.		933			143
Foreign currency exchange loss		372			149	.		833			122
Income before income taxes		16,544			10,172	.		41,326			31,323
Income tax expense		3,226			1,841	.		8,302			5,959
Net income	$	13,318		$	8,331	.	$	33,024		$	25,364
Earnings per share
Basic	$	0.48		$	0.30	.	$	1.20		$	0.92
Diluted	$	0.48		$	0.30	.	$	1.20		$	0.92
Weighted Average Number of Common Shares
Basic		27,616			27,613	.		27,614			27,613
Diluted		27,620			27,613	.		27,615			27,613

XPEL Inc. Condensed Consolidated Balance Sheets (In thousands except per share data)
	(Unaudited)				(Audited)
	September 30, 2022				December 31, 2021
Assets
Current
Cash and cash equivalents	$	10,245			$	9,644
Accounts receivable, net		17,944				13,159
Inventory, net		69,388				51,936
Prepaid expenses and other current assets		7,065				3,672
Income tax receivable		—				617
Total current assets		104,642				79,028
Property and equipment, net		12,658				9,898
Right-of-use lease assets		15,194				12,910
Intangible assets, net		29,426				32,733
Other non-current assets		921				791
Goodwill		25,417				25,655
Total assets	$	188,258			$	161,015
Liabilities
Current
Current portion of notes payable		140				375
Current portion lease liabilities		3,155				2,978
Accounts payable and accrued liabilities		28,048				32,915
Income tax payable		472				—
Total current liabilities		31,815				36,268
Deferred tax liability, net		2,502				2,748
Other long-term liabilities		899				2,631
Borrowings on line of credit		26,000				25,000
Non-current portion of lease liabilities		12,089				9,830
Non-current portion of notes payable		—				76
Total liabilities		73,305				76,553
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; 27,616,064 issued and outstanding		28				28
Additional paid-in-capital		10,869				10,581
Accumulated other comprehensive loss		(3,411	)			(590	)
Retained earnings		107,467				74,443
Total stockholders’ equity		114,953				84,462
Total liabilities and stockholders’ equity	$	188,258			$	161,015

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,
	2022		2021		2022		2021
Net Income	13,318		8,331		33,024		25,364
Interest	391		46		933		143
Taxes	3,226		1,841		8,302		5,959
Depreciation	890		456		2,486		1,258
Amortization	1,117		735		3,248		1,420
EBITDA	18,942		11,409		47,993		34,144

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221109005226/en/

For more information, contact:

Investor Relations:

John Nesbett/Jennifer Belodeau

IMS Investor Relations

Phone: (203) 972-9200

Email: xpel@imsinvestorrelations.com

Source: XPEL, Inc.

FAQ

What are XPEL's Q3 2022 revenue results?

XPEL reported Q3 2022 revenues of $89.8 million, a 31.0% increase year-over-year.

What was XPEL's net income for Q3 2022?

XPEL's net income for Q3 2022 grew 59.9% to $13.3 million, or $0.48 per share.

How did XPEL perform in the first nine months of 2022?

In the first nine months of 2022, XPEL's revenues increased 29.8% to $245.5 million.

What is the gross margin for XPEL in Q3 2022?

XPEL's gross margin improved to 39.8% in Q3 2022.

When will XPEL discuss its Q3 2022 results?

XPEL will host a conference call on November 9, 2022, at 11:00 a.m. Eastern Time.