XPEL Reports Record Revenue of $112.9 Million in Third Quarter 2024

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 third quarter of 2024. Third Quarter 2024 Overview: Revenue increased 9.9% to $112.9 million in the third quarter of 2024. Gross margin of 42.5% in the third quarter of 2024. Net income grew 9.1% to $14.9 million , or $0.54 per basic and diluted share, versus net income of $13.7 million , or $0.49 per basic and diluted share in the third quarter of 2023. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew 10.0% to $21.7 million , or 19.2% of revenue, compared to $19.7 million , or 19.2% of revenue in the third quarter of 2023. 2 First Nine Months 2024 Overview: Revenue increased 7.6% to $312.9 million in the first nine months of 2024. Gross margin of 42.7% in the first nine months of 2024. Net income of $36.6 million , or $1.32 per basic and diluted share, versus net income of $40.8 million , or $1.48 per basic and diluted share in the first nine months of 2023. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $55.2 million , or 17.6% of revenue, compared to $59.2 million , or 20.4% of revenue in the first nine months of 2023.2 Ryan Pape , President and Chief Executive Officer of XPEL, commented, "We saw good performance in the third quarter with solid top and bottom line growth, particularly in the US region where we had record revenue. We look forward to capitalizing on this momentum to close out the year." Financial Highlights for the Third Quarter 2024: Summary consolidated financial information for the three months ended September 30, 2024 and 2023 (unaudited, dollars in thousands): Three Months Ended September 30 , % Change 2024 % o f Total Revenue 2023 % o f Total Revenue 2024 vs. 2023 Total revenue $ 112,852 100.0 % $ 102,677 100.0 % 9.9 % Gross margin 47,916 42.5 % 41,529 40.4 % 15.4 % Operating Expenses 29,529 26.2 % 23,900 23.3 % 23.6 % Operating income 18,387 16.3 % 17,629 17.2 % 4.3 % Net income 14,892 13.2 % 13,656 13.3 % 9.1 % EBITDA2 21,698 19.2 % 19,718 19.2 % 10.0 % Net cash provided by operating activities $ 19,559 n/a $ 11,128 n/a n/a Geographical Revenue Summary Three Months Ended S eptember 30, % Change % of Total Revenue 2024 2023 Inc (Dec) 2024 2023 United States $ 64,565 $ 59,002 9.4 % 57.2 % 57.5 % Canada 14,415 11,471 25.7 % 12.8 % 11.2 % China 9,058 10,242 (11.6 )% 8.0 % 10.0 % Continental Europe 9,058 8,705 4.1 % 8.0 % 8.5 % United Kingdom 3,548 3,499 1.4 % 3.2 % 3.4 % Middle East / Africa 5,286 3,909 35.2 % 4.7 % 3.8 % Asia Pacific 4,095 3,233 26.7 % 3.6 % 3.1 % Latin America 2,827 2,325 21.6 % 2.5 % 2.3 % Other — 291 (100.0 )% 0.0 % 0.2 % Total $ 112,852 $ 102,677 9.9 % 100.0 % 100.0 % Overall Revenue Total revenue grew 9.9% compared to third quarter 2023 ("YoY") and 2.7% over the second quarter 2024 ("QoQ"). Excluding China , total revenue increased 12.3% YoY and declined 1.6% QoQ. US revenue grew 9.4% YoY and was flat QoQ. All other revenue (excluding US and China ) grew 17.3% YoY and declined 3.4% QoQ. Product and Service Revenue Total product revenue increased 7.2% YoY and 4.5% QoQ. This increase was due to growth in most geographical regions, offset by a decline in sales to our China distributor. Excluding China , total product revenue increased 9.9% YoY. Total window film increased 20.6% YoY and increased 2.8% QoQ and represented 20.1% of total revenue. Total service revenue increased 20.2% YoY and declined 3.1% 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 27.4% YoY and declined 2.7% QoQ and represented 20.0% of total revenue. Organic installation revenue grew 11.3% YoY. Adjusted product revenue (combining cutbank credits revenue and product revenue) increased 6.8% YoY and 3.9% QoQ. Excluding China , adjusted product revenue grew 9.3% YoY. Other Financial Information Gross margin percentage was 42.5% and 40.4% in the third quarter, 2024 and 2023, respectively. Total operating expenses increased 23.6% YoY and increased 3.0% QoQ. Sales and marketing expenses increased 37.6% YoY and increased 3.5% QoQ and represented 9.4% of revenue. This increase was driven primarily by enhanced marketing efforts to support our increased dealership focus and international expansion. General and administrative expenses increased 16.8% YoY and increased 2.7% QoQ and represented 16.7% of revenue. Net income increased 9.1% YoY and was flat QoQ. EBITDA increased 10.0% YoY2 and was flat QoQ. Cash flows provided by operations increased $8.4 million YoY and declined $7.3 million QoQ to $19.6 million in the third quarter 2024. Fourth Quarter 2024 Outlook Fourth quarter revenue is estimated at $105 - $107 million . This assumes Q4 YoY US growth of approximately 10% partially offset by Q4 YoY decline in China sales. 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, November 7, 2024 at 11:00 a.m. Eastern Time to discuss the Company’s third 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: 861781. A replay of the teleconference will be available until December 7, 2024 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 51306. 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 third 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 third 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 November 8, 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, damage to 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 S eptember 30, Nine Months Ended September 30 , 2024 2023 2024 2023 Revenue Product revenue $ 86,950 $ 81,125 $ 237,002 $ 229,339 Service revenue 25,902 21,552 75,871 61,416 Total revenue 112,852 102,677 312,873 290,755 Cost of Sales Cost of product sales 53,967 51,876 147,376 143,613 Cost of service 10,969 9,272 31,840 25,660 Total cost of sales 64,936 61,148 179,216 169,273 Gross Margin 47,916 41,529 133,657 121,482 Operating Expenses Sales and marketing 10,637 7,730 31,308 22,554 General and administrative 18,892 16,170 55,547 46,180 Total operating expenses 29,529 23,900 86,855 68,734 Operating Income 18,387 17,629 46,802 52,748 Interest expense 97 85 962 946 Foreign currency exchange (gain)/loss (332 ) 398 216 419 Income before income taxes 18,622 17,146 45,624 51,383 Income tax expense 3,730 3,490 9,033 10,553 Net income $ 14,892 $ 13,656 $ 36,591 $ 40,830 Earnings per share Basic $ 0.54 $ 0.49 $ 1.32 $ 1.48 Diluted $ 0.54 $ 0.49 $ 1.32 $ 1.48 Weighted Average Number of Common Shares Basic 27,642 27,623 27,636 27,620 Diluted 27,644 27,644 27,639 27,634 XPEL, Inc. Consolidated Balance Sheets (In thousands except share and per share data) (Unaudited) (Audited) September 30, 2024 December 31, 2023 Assets Current Cash and cash equivalents $ 20,986 $ 11,609 Accounts receivable, net 29,583 24,111 Inventory, net 101,592 106,509 Prepaid expenses and other current assets 6,296 3,529 Income tax receivable 264 696 Total current assets 158,721 146,454 Property and equipment, net 17,851 16,980 Right-of-use lease assets 18,380 15,459 Intangible assets, net 33,601 34,905 Other non-current assets 1,141 782 Goodwill 43,347 37,461 Total assets $ 273,041 $ 252,041 Liabilities Current Current portion of notes payable $ 66 $ 62 Current portion lease liabilities 4,820 3,966 Accounts payable and accrued liabilities 31,634 32,444 Total current liabilities 36,520 36,472 Deferred tax liability, net 1,252 2,658 Other long-term liabilities 1,077 890 Borrowings on line of credit — 19,000 Non-current portion of lease liabilities 15,205 12,715 Non-current portion of notes payable 260 317 Total liabilities 54,314 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; 27,647,223 and 27,630,025 issued and outstanding, respectively 28 28 Additional paid-in-capital 14,700 12,546 Accumulated other comprehensive loss (1,216 ) (1,209 ) Retained earnings 205,215 168,624 Total stockholders’ equity 218,727 179,989 Total liabilities and stockholders’ equity $ 273,041 $ 252,041 XPEL, Inc. Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three Months Ended S eptember 30, Nine Months Ended September 30 , 2024 2023 2024 2023 Cash flows from operating activities Net income $ 14,892 $ 13,656 $ 36,591 $ 40,830 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant and equipment 1,504 1,199 4,308 3,229 Amortization of intangible assets 1,476 1,288 4,327 3,660 Gain on sale of property and equipment (6 ) (1 ) (35 ) (11 ) Stock compensation 862 486 2,329 1,144 Provision for credit losses 91 60 279 216 Deferred income tax (553 ) (250 ) (1,414 ) (844 ) Changes in assets and liabilities: Accounts receivable, net 279 (462 ) (5,475 ) (9,483 ) Inventory, net (3,592 ) (10,000 ) 5,174 (11,583 ) Prepaid expenses and other current assets (1,477 ) (6,313 ) (2,785 ) (7,288 ) Income taxes receivable and payable 957 457 370 320 Accounts payable and accrued liabilities 5,127 11,008 (2,172 ) 18,311 Net cash provided by operating activities 19,559 11,128 41,497 38,501 Cash flows used in investing activities Purchase of property, plant and equipment (1,257 ) (1,434 ) (5,085 ) (4,741 ) Proceeds from sale of property and equipment 40 (4 ) 40 20 Acquisition of businesses, net of cash acquired (592 ) (240 ) (6,520 ) (4,697 ) Development of intangible assets (580 ) (281 ) (1,421 ) (798 ) Net cash used in investing activities (2,389 ) (1,959 ) (12,986 ) (10,216 ) Cash flows from financing activities Net payments on revolving line of credit (11,000 ) (13,000 ) (19,000 ) (26,000 ) RSUs withheld in lieu of payroll taxes (88 ) (138 ) (175 ) (167 ) Repayments of notes payable (13 ) — (44 ) (77 ) Net cash used in financing activities (11,101 ) (13,138 ) (19,219 ) (26,244 ) Net change in cash and cash equivalents 6,069 (3,969 ) 9,292 2,041 Foreign exchange impact on cash and cash equivalents (67 ) 45 85 277 Increase/(Decrease) in cash and cash equivalents during the period 6,002 (3,924 ) 9,377 2,318 Cash and cash equivalents at beginning of period 14,984 14,298 11,609 8,056 Cash and cash equivalents at end of period $ 20,986 $ 10,374 $ 20,986 $ 10,374 Supplemental schedule of non-cash activities Non-cash lease financing $ 1,172 $ 36 $ 6,210 $ 1,847 Issuance of common stock for vested restricted stock units 438 740 900 874 Supplemental cash flow information Cash paid for income taxes $ 3,458 $ 3,334 $ 10,256 $ 11,144 Cash paid for interest $ 151 $ 111 $ 995 $ 1,000 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 , 2024 2023 2024 2023 Net Income $ 14,892 $ 13,656 $ 36,591 $ 40,830 Interest 97 85 962 946 Taxes 3,730 3,490 9,033 10,553 Depreciation 1,504 1,199 4,308 3,229 Amortization 1,475 1,288 4,327 3,660 EBITDA $ 21,698 $ 19,718 $ 55,221 $ 59,218 View source version on businesswire.com : https://www.businesswire.com/news/home/20241107387812/en/ For more information: Investor Relations: John Nesbett / Jennifer Belodeau IMS Investor Relations Phone: (203) 972-9200 Email: [email protected] Source: XPEL, Inc.

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