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Subjects: EARNINGS, Conference Call, Webcast

XPEL Reports Fourth Quarter and 2023 Year End Results


XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of protective films and coatings, announced consolidated results1 for the fourth quarter and year ended December 31, 2023.

Fourth Quarter 2023 Highlights:

Year End 2023 Highlights:

Ryan Pape, President and Chief Executive Officer of XPEL, commented, "We are pleased with our full year 2023 performance and closed out the year with solid growth in the fourth quarter. We delivered strong performance across our end markets and product offerings driving improved profitability for the year. We've made important progress in 2023 in key areas including enhancing our focus on new car dealerships, improving our go-to-market strategy in China, India and the Middle East and launching our next generation software platform DAPNext. We look forward to building on the momentum of last year across all of our initiatives, staying close to our customers and furthering the XPEL brand in 2024."

Financial Highlights for the Fourth Quarter 2023 (continued):

Summary consolidated financial information for the fourth quarter 2023 and 2022 (unaudited, dollars in thousands):

 

Three Months Ended December 31,

% Change

 

 

2023

 

 

%

of Total Revenue

 

 

2022

 

%

of Total Revenue

 

2023 vs. 2022

Total Revenue

$

105,538

 

 

100.0

%

 

$

78,481

 

100.0

%

 

34.5

%

Gross Margin

 

40,932

 

 

38.8

%

 

 

31,046

 

39.6

%

 

31.8

%

Operating Expenses

 

26,708

 

 

25.3

%

 

 

20,201

 

25.7

%

 

32.2

%

Net Income

 

11,970

 

 

11.3

%

 

 

8,358

 

10.6

%

 

43.2

%

EBITDA2

 

17,654

 

 

16.7

%

 

 

13,217

 

16.8

%

 

33.6

%

Cash flow (used in) provided by operations

$

(1,117

)

 

n/a

 

 

$

2,361

 

n/a

 

 

n/a

 

Geographical Revenue Summary

 

Three Months Ended
December 31,

 

%

 

% of Total Revenue

 

 

2023

 

 

2022

 

Increase

 

2023

 

 

2022

 

United States

$

55,611

 

$

47,615

 

16.8

%

 

52.7

%

 

60.7

%

Canada

 

11,592

 

 

9,224

 

25.7

%

 

11.0

%

 

11.8

%

China

 

16,584

 

 

6,221

 

166.6

%

 

15.7

%

 

7.9

%

Continental Europe

 

8,529

 

 

6,041

 

41.2

%

 

8.1

%

 

7.7

%

Middle East/Africa

 

4,958

 

 

2,474

 

100.4

%

 

4.7

%

 

3.2

%

United Kingdom

 

3,218

 

 

2,793

 

15.2

%

 

3.0

%

 

3.6

%

Asia Pacific

 

2,751

 

 

2,476

 

11.1

%

 

2.6

%

 

3.2

%

Latin America

 

2,120

 

 

1,378

 

53.8

%

 

2.0

%

 

1.8

%

Other

 

175

 

 

259

 

(32.4

) %

 

0.2

%

 

0.1

%

Total

$

105,538

 

$

78,481

 

34.5

%

 

100.0

%

 

100.0

%

Overall Revenue

Product and Service Revenue

Other Financial Information

Cash Flows from Operations

2024 Outlook

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, February 22, 2024 at 11:00 a.m. Eastern Time to discuss the Company's fourth quarter and year end 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: 997135.

A replay of the teleconference will be available until March 23, 2024 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 49778.

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 2023 are preliminary and unaudited. As the Company completes its quarter-end and fiscal year-end financial close processes and finalizes its financial statements for the fourth quarter and full fiscal year 2023, it is possible that the Company may identify items that require it to make adjustments to the preliminary unaudited financial information set forth above, and those adjustments could be material. Full fiscal year 2023 financial information will be included in the filing of the Company's Annual Report on Form 10-K with the Securities and Exchange Commission which is anticipated on or prior to February 29, 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, 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, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other documents filed from time to time with the SEC by XPEL and available on XPEL's website at www.xpel.com/corporate filings. 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

(In thousands except per share data)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Revenue

 

 

 

 

 

 

 

Product revenue

$

82,067

 

 

$

60,421

 

 

$

311,406

 

 

$

258,174

Service revenue

 

23,471

 

 

 

18,060

 

 

 

84,887

 

 

 

65,819

Total revenue

 

105,538

 

 

 

78,481

 

 

 

396,293

 

 

 

323,993

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

 

 

 

Cost of product sales

 

54,395

 

 

 

40,259

 

 

 

198,008

 

 

 

169,905

Cost of service

 

10,211

 

 

 

7,176

 

 

 

35,871

 

 

 

26,576

Total cost of sales

 

64,606

 

 

 

47,435

 

 

 

233,879

 

 

 

196,481

Gross Margin

 

40,932

 

 

 

31,046

 

 

 

162,414

 

 

 

127,512

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Sales and marketing

 

9,234

 

 

 

6,852

 

 

 

31,788

 

 

 

25,367

General and administrative

 

17,474

 

 

 

13,349

 

 

 

63,654

 

 

 

48,208

Total operating expenses

 

26,708

 

 

 

20,201

 

 

 

95,442

 

 

 

73,575

 

 

 

 

 

 

 

 

Operating Income

 

14,224

 

 

 

10,845

 

 

 

66,972

 

 

 

53,937

 

 

 

 

 

 

 

 

Interest expense

 

301

 

 

 

477

 

 

 

1,248

 

 

 

1,410

Foreign currency exchange (gain) loss

 

(726

)

 

 

(272

)

 

 

(307

)

 

 

562

 

 

 

 

 

 

 

 

Income before income taxes

 

14,649

 

 

 

10,640

 

 

 

66,031

 

 

 

51,965

Income tax expense

 

2,679

 

 

 

2,282

 

 

 

13,231

 

 

 

10,584

Net income

$

11,970

 

 

$

8,358

 

 

$

52,800

 

 

$

41,381

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

Basic

$

0.43

 

 

$

0.30

 

 

$

1.91

 

 

$

1.50

Diluted

$

0.43

 

 

$

0.30

 

 

$

1.91

 

 

$

1.50

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

Basic

 

27,629

 

 

 

27,616

 

 

 

27,622

 

 

 

27,614

Diluted

 

27,633

 

 

 

27,618

 

 

 

27,634

 

 

 

27,616

XPEL, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)

 

 

(Unaudited)
12/31/2023

 

December 31, 2022

Assets

 

 

 

Current

 

 

 

Cash and cash equivalents

$

11,609

 

 

$

8,056

 

Accounts receivable, net

 

24,111

 

 

 

14,726

 

Inventory, net

 

106,509

 

 

 

80,575

 

Prepaid expenses and other current assets

 

3,529

 

 

 

3,464

 

Income tax receivable

 

696

 

 

 

?

 

Total current assets

 

146,454

 

 

 

106,821

 

Property and equipment, net

 

16,980

 

 

 

14,203

 

Right-of-use lease assets

 

15,459

 

 

 

15,309

 

Intangible assets, net

 

34,905

 

 

 

29,294

 

Other non-current assets

 

782

 

 

 

972

 

Goodwill

 

37,461

 

 

 

26,763

 

Total assets

$

252,041

 

 

$

193,362

 

Liabilities

 

 

 

Current

 

 

 

Current portion of notes payable

$

62

 

 

$

77

 

Current portion of lease liabilities

 

3,966

 

 

 

3,885

 

Accounts payable and accrued liabilities

 

32,444

 

 

 

22,970

 

Income tax payable

 

?

 

 

 

470

 

Total current liabilities

 

36,472

 

 

 

27,402

 

Deferred tax liability, net

 

2,658

 

 

 

2,049

 

Other long-term liabilities

 

890

 

 

 

1,070

 

Borrowings on line of credit

 

19,000

 

 

 

26,000

 

Non-current portion of lease liabilities

 

12,715

 

 

 

12,119

 

Non-current portion of notes payable

 

317

 

 

 

?

 

Total liabilities

 

72,052

 

 

 

68,640

 

Commitments and Contingencies (Note 15)

 

 

 

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; 27,630,025 and 27,616,064 issued and outstanding, respectively

 

28

 

 

 

28

 

Additional paid-in-capital

 

12,546

 

 

 

11,073

 

Accumulated other comprehensive loss

 

(1,209

)

 

 

(2,203

)

Retained earnings

 

168,624

 

 

 

115,824

 

Total stockholders' equity

 

179,989

 

 

 

124,722

 

Total liabilities and stockholders' equity

$

252,041

 

 

$

193,362

 

XPEL, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

Three Months ended
December 31,

 

Year Ended
December 31,

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

11,970

 

 

$

8,358

 

 

$

52,800

 

 

$

41,381

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

1,305

 

 

 

947

 

 

 

4,534

 

 

 

3,433

 

Amortization of intangible assets

 

1,399

 

 

 

1,153

 

 

 

5,059

 

 

 

4,401

 

(Gain) loss on sale of property and equipment

 

(2

)

 

 

2

 

 

 

(13

)

 

 

(8

)

Stock compensation

 

496

 

 

 

205

 

 

 

1,640

 

 

 

522

 

Bad debt expense

 

27

 

 

 

117

 

 

 

243

 

 

 

467

 

Deferred income tax

 

(77

)

 

 

(478

)

 

 

(921

)

 

 

(471

)

Accretion on notes payable

 

?

 

 

 

1

 

 

 

?

 

 

 

7

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

2,483

 

 

 

3,268

 

 

 

(7,000

)

 

 

(2,631

)

Inventory, net

 

(13,260

)

 

 

(10,142

)

 

 

(24,843

)

 

 

(28,565

)

Prepaid expenses and other assets

 

7,892

 

 

 

4,241

 

 

 

604

 

 

 

259

 

Income tax payable or receivable

 

(1,517

)

 

 

83

 

 

 

(1,197

)

 

 

1,160

 

Accounts payable and accrued liabilities

 

(11,833

)

 

 

(5,393

)

 

 

6,478

 

 

 

(7,898

)

Net cash (used in) provided by operating activities

 

(1,117

)

 

 

2,362

 

 

 

37,384

 

 

 

12,057

 

Cash flows used in investing activities

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(1,615

)

 

 

(2,402

)

 

 

(6,356

)

 

 

(7,936

)

Proceeds from sale of property and equipment

 

9

 

 

 

7

 

 

 

29

 

 

 

73

 

Acquisitions, net of cash acquired, payment holdbacks, and notes payable

 

(14,038

)

 

 

(1,680

)

 

 

(18,735

)

 

 

(4,673

)

Development or purchase of intangible assets

 

(493

)

 

 

(252

)

 

 

(1,291

)

 

 

(1,620

)

Net cash used in investing activities

 

(16,137

)

 

 

(4,327

)

 

 

(26,353

)

 

 

(14,156

)

Cash flows from financing activities

 

 

 

 

 

 

 

Net borrowings (payments) on revolving credit agreements

 

19,000

 

 

 

?

 

 

 

(7,000

)

 

 

1,000

 

Restricted stock withholding taxes paid in lieu of issued shares

 

?

 

 

 

?

 

 

 

(167

)

 

 

(30

)

Repayments of notes payable

 

(15

)

 

 

(64

)

 

 

(92

)

 

 

(368

)

Net cash provided by (used in) financing activities

 

18,985

 

 

 

(64

)

 

 

(7,259

)

 

 

602

 

Net change in cash and cash equivalents

 

1,731

 

 

 

(2,029

)

 

 

3,772

 

 

 

(1,497

)

Foreign exchange impact on cash and cash equivalents

 

(496

)

 

 

(160

)

 

 

(219

)

 

 

(91

)

Increase (Decrease) in cash and cash equivalents during the period

 

1,235

 

 

 

(2,189

)

 

 

3,553

 

 

 

(1,588

)

Cash and cash equivalents at beginning of period

 

10,374

 

 

 

10,245

 

 

 

8,056

 

 

 

9,644

 

Cash and cash equivalents at end of period

$

11,609

 

 

$

8,056

 

 

$

11,609

 

 

$

8,056

 

Supplemental schedule of non-cash activities

 

 

 

 

 

 

 

Non-cash lease financing

$

2,384

 

 

$

885

 

 

$

4,231

 

 

$

6,094

 

Issuance of common stock for vested restricted stock units

$

327

 

 

$

?

 

 

$

1,201

 

 

$

222

 

Supplemental cash flow information

 

 

 

 

 

 

 

Cash paid for income taxes

$

4,149

 

 

$

2,592

 

 

$

15,293

 

 

$

9,897

 

Cash paid for interest

$

240

 

 

$

407

 

 

$

1,240

 

 

$

1,306

 

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)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Net Income

$

11,970

 

$

8,358

 

$

52,800

 

$

41,381

Interest

 

301

 

 

477

 

 

1,248

 

 

1,410

Taxes

 

2,679

 

 

2,282

 

 

13,231

 

 

10,584

Depreciation

 

1,305

 

 

947

 

 

4,534

 

 

3,433

Amortization

 

1,399

 

 

1,153

 

 

5,059

 

 

4,401

EBITDA

$

17,654

 

$

13,217

 

$

76,872

 

$

61,209

 


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