Business
XPEL Reports Record Revenue of $109.9 million in Second Quarter 2024
SAN ANTONIO--(BUSINESS WIRE)-- XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of protective films and coatings, announced consolidated results1
About this update from Xpel, Inc.
SAN ANTONIO --(BUSINESS WIRE)-- 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: [email protected] Source: XPEL, Inc.