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

About this update from Xpel, Inc.

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 View source version on businesswire.com : https://www.businesswire.com/news/home/20230809890981/en/ Investor Relations: John Nesbett / Jennifer Belodeau IMS Investor Relations Phone: (203) 972-9200 Email: [email protected] Source: XPEL, Inc.

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