XPEL Revenues Increase 19.5% to $85.8 Million in First Quarter 2023 With Gross Margin of 41.9%

XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced results for the quarter ended March 31, 2023.

First Quarter 2023 Highlights:

• Revenues increased 19.5% to $85.8 million in the first quarter.
• Gross margin percentage improved to 41.9% in the first quarter, a new high for the Company.
• Net income grew 46.5% to $11.4 million, or $0.41 per share, compared to $7.8 million, or $0.28 per share, in the same quarter of 2022.
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 43.9% to $17.1 million, or 19.9% of revenues compared to $11.9 million in first quarter 2022.1

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We’re off to a great start in 2023 with solid first quarter results. We continue to see good momentum in our business and remain focused on driving growth as we move through 2023.”

For the Quarter Ended March 31, 2023:

Revenues. Revenues increased approximately $14.0 million or 19.5% to $85.8 million as compared to $71.9 million in the first quarter of the prior year.

Gross Margin. Gross margin was 41.9% compared to 38.6% in the first quarter of 2022.

Expenses. Operating expenses increased to $21.0 million, or 24.5% of sales, compared to $17.7 million, or 24.6% of sales in the prior year period.

Net income. Net income was $11.4 million, or $0.41 per basic and diluted share, versus net income of $7.8 million, or $0.28 per basic and diluted share in the first quarter of 2022.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $17.1 million, or 19.9% of sales, as compared to $11.9 million, or 16.5% of sales in the prior year.1

Conference Call Information

The Company will host a conference call and webcast today, May 9, 2023 at 11:00 a.m. Eastern Time to discuss the Company’s first 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 [phone] approximately five minutes prior to the scheduled start time. International callers please dial [phone]. Callers should use access code: 760015.

A replay of the teleconference will be available until June 8, 2023 and may be accessed by dialing [phone]. International callers may dial [phone]. Callers should use conference ID: 48243.

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

March 31,

 

2023

 

2022

Revenue

 

 

 

Product revenue

$

67,308

 

 

$

58,098

Service revenue

 

18,534

 

 

 

13,766

Total revenue

 

85,842

 

 

 

71,864

 

 

 

 

Cost of Sales

 

 

 

Cost of product sales

 

42,180

 

 

 

38,194

Cost of service

 

7,702

 

 

 

5,953

Total cost of sales

 

49,882

 

 

 

44,147

Gross Margin

 

35,960

 

 

 

27,717

 

 

 

 

Operating Expenses

 

 

 

Sales and marketing

 

6,675

 

 

 

6,311

General and administrative

 

14,354

 

 

 

11,369

Total operating expenses

 

21,029

 

 

 

17,680

 

 

 

 

Operating Income

 

14,931

 

 

 

10,037

 

 

 

 

Interest expense

 

523

 

 

 

220

Foreign currency exchange (gain) loss

 

(9

)

 

 

5

 

 

 

 

Income before income taxes

 

14,417

 

 

 

9,812

Income tax expense

 

2,984

 

 

 

2,009

Net income

$

11,433

 

 

$

7,803

 

 

 

 

Earnings per share

 

 

 

Basic

$

0.41

 

 

$

0.28

Diluted

$

0.41

 

 

$

0.28

Weighted Average Number of Common Shares

 

 

 

Basic

 

27,616

 

 

 

27,613

Diluted

 

27,626

 

 

 

27,613

XPEL Inc.

Condensed Consolidated Balance Sheets

(In thousands except per share data)

 

(Unaudited)

 

(Audited)

 

March 31,

2023

 

December 31,

2022

Assets

 

 

 

Current

 

 

 

Cash and cash equivalents

$

8,330

 

 

$

8,056

 

Accounts receivable, net

 

21,353

 

 

 

14,726

 

Inventory, net

 

84,594

 

 

 

80,575

 

Prepaid expenses and other current assets

 

6,035

 

 

 

3,464

 

Total current assets

 

120,312

 

 

 

106,821

 

Property and equipment, net

 

15,311

 

 

 

14,203

 

Right-of-use lease assets

 

15,624

 

 

 

15,309

 

Intangible assets, net

 

28,485

 

 

 

29,294

 

Other non-current assets

 

1,116

 

 

 

972

 

Goodwill

 

26,819

 

 

 

26,763

 

Total assets

$

207,667

 

 

$

193,362

 

Liabilities

 

 

 

Current

 

 

 

Current portion of notes payable

$

—

 

 

$

77

 

Current portion lease liabilities

 

4,261

 

 

 

3,885

 

Accounts payable and accrued liabilities

 

20,541

 

 

 

22,970

 

Income tax payable

 

2,828

 

 

 

470

 

Total current liabilities

 

27,630

 

 

 

27,402

 

Deferred tax liability, net

 

1,935

 

 

 

2,049

 

Other long-term liabilities

 

1,105

 

 

 

1,070

 

Borrowings on line of credit

 

28,000

 

 

 

26,000

 

Non-current portion of lease liabilities

 

12,240

 

 

 

12,119

 

Total liabilities

 

70,910

 

 

 

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; 27,616,064 issued and outstanding

 

28

 

 

 

28

 

Additional paid-in-capital

 

11,376

 

 

 

11,073

 

Accumulated other comprehensive loss

 

(1,904

)

 

 

(2,203

)

Retained earnings

 

127,257

 

 

 

115,824

 

Total stockholders’ equity

 

136,757

 

 

 

124,722

 

Total liabilities and stockholders’ equity

$

207,667

 

 

$

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)

 

Three Months Ended

March 31,

 

2023

 

2022

Net Income

11,433

 

7,803

Interest

523

 

220

Taxes

2,984

 

2,009

Depreciation

972

 

756

Amortization

1,161

 

1,076

EBITDA

17,073

 

11,864

 

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