Market Overview

XPEL Reports Record Second Quarter Revenue of $30.1 Million; Gross Margin Improves to 35.3%

Share:

XPEL, Inc. (NASDAQ:XPEL), a global provider of protective films and coatings, announced results for the second quarter and six months ended June 30, 2019.

Second Quarter Highlights:

  • Revenues increased 4.5% to $30.1 million compared to second quarter 2018, the highest revenue quarter in the history of XPEL; Sequential revenue growth of 21.7% compared to first quarter of 2019
  • Gross margin improved to 35.3% compared to 29.7% in second quarter 2018
  • Earnings per share of $0.11 compared to $0.09 per share in second quarter 2018

Ryan Pape, President and Chief Executive Officer of XPEL, commented, "We continued to see strong revenue growth in the second quarter in most of our regions led by the US which posted 55.5% growth. As expected, this growth was partially offset by continued declines in China due to the timing of China sales acceleration in the first half of 2018, but we expect that impact to moderate in the third quarter. While overall revenue growth was moderate in the second quarter, we drove substantially improved gross margin through increased sales to our higher margin customers and due to our continued focus on gross margins. We are energized by the opportunities we're seeing across the majority of our geographic markets, and believe we are well positioned for continued growth as we move through the balance of 2019."

For the Quarter Ended June 30, 2019:

Revenues. Revenues increased approximately $1.3 million or 4.5% to $30.1 million as compared to $28.8 million in the prior year.

Gross Margin. Gross margin was 35.3% versus 29.7% in the second quarter of 2018. The increase was related to an improved mix of increased sales to higher margin customers and continued improvements in per unit costs.

Expenses. Selling, general and administrative expenses increased to $6.7 million or 22.1% of sales as compared to $5.1 million or 17.7% of sales in the prior year period. This increase was due mainly to increases in personnel, occupancy, information technology and research and development costs to support the ongoing growth of the business and increased professional fees due to ancillary costs related to the Company's U.S. regulatory filings. Additionally, in the second quarter of 2019 the Company incurred costs associated with its annual dealer conference which was held in the first quarter of 2018 and in the second quarter of 2019.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased to $4.4 million, or 16.4%, as compared to $3.8 million in the prior year1.

Net income. Net income increased to $3.0 million, or $0.11 per basic and diluted share versus net income of $2.6 million, or $0.09 per basic and diluted share in the second quarter of 2018.

For the Six Months Ended June 30, 2019:

Revenues. Revenues increased approximately $0.9 million or 1.7% to $54.8 million as compared to $53.9 million in the first half of the prior year.

Gross Margin. Gross margin was 34.3% versus 30.0% in the first six months of 2018. The increase was related to an improved mix of increased sales to higher margin customers and continued improvements in per unit costs.

Expenses. Selling, general and administrative expenses increased to $12.3 million or 22.5% of sales as compared to $9.9 million or 18.4% of sales in the prior year period. This increase was due mainly to increases in personnel, occupancy, information technology and research and development costs to support the ongoing growth of the business and increased professional fees due to ancillary costs related to the Company's U.S. regulatory filings.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased to $7.2 million, or 5.2%, as compared to $6.9 million in the prior year2.

Net income. Net income increased to $4.9 million, or $0.18 per basic and diluted share versus net income of $4.7 million, or $0.17 per basic and diluted share for the first half of 2018.

Conference Call Information

The Company will host a conference call and webcast today, Wednesday, August 21, 2019 at 11:00 a.m. Eastern Time to discuss the Company's results for the second quarter of 2019.

To access the live webcast, please visit the XPEL, Inc. website at www.xpel.com/investor.

To participate in the call by phone, dial (877) 407-8033 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8033.

A replay of the teleconference will be available until September 21, 2019 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 52951.

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. . (NASDAQ:XPEL, TSXV:XPEL) is publicly traded on Nasdaq and the TSX Venture Exchange.

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. 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release

1see reconciliation of non-GAAP financial measures below.

2see reconciliation of non-GAAP financial measures below.

 

XPEL, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

25,425,489

 

 

$

24,988,880

 

 

$

46,480,212

 

 

$

47,083,121

 

Service revenue

 

 

4,668,665

 

 

 

3,802,011

 

 

 

8,339,388

 

 

 

6,829,289

 

Total revenue

 

 

30,094,154

 

 

 

28,790,891

 

 

 

54,819,600

 

 

 

53,912,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

18,551,030

 

 

 

19,560,320

 

 

 

34,239,063

 

 

 

36,410,156

 

Cost of service

 

 

917,111

 

 

 

665,731

 

 

 

1,804,444

 

 

 

1,332,270

 

Total cost of sales

 

 

19,468,141

 

 

 

20,226,051

 

 

 

36,043,507

 

 

 

37,742,426

 

Gross Margin

 

 

10,626,013

 

 

 

8,564,840

 

 

 

18,776,093

 

 

 

16,169,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

2,064,836

 

 

 

1,479,510

 

 

 

3,663,942

 

 

 

3,036,608

 

General and administrative

 

 

4,589,906

 

 

 

3,620,542

 

 

 

8,667,857

 

 

 

6,895,140

 

Total operating expenses

 

 

6,654,742

 

 

 

5,100,052

 

 

 

12,331,799

 

 

 

9,931,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

3,971,271

 

 

 

3,464,788

 

 

 

6,444,294

 

 

 

6,238,236

 

Interest expense

 

 

29,074

 

 

 

47,130

 

 

 

57,780

 

 

 

104,084

 

Foreign currency exchange loss (gain)

 

 

(3,518)

 

 

 

56,505

 

 

 

14,908

 

 

 

23,124

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

3,945,715

 

 

 

3,361,153

 

 

 

6,371,606

 

 

 

6,111,028

 

Income tax expense

 

 

938,405

 

 

 

808,011

 

 

 

1,504,293

 

 

 

1,469,073

 

Net income

 

 

3,007,310

 

 

 

2,553,142

 

 

 

4,867,313

 

 

 

4,641,955

 

Income (loss) attributed to non-controlling interest

 

 

1,293

 

 

 

(1,968)

 

 

 

2,709

 

 

 

(10,513)

 

Net income attributable to stockholders of the

Company

 

$

3,006,017

 

 

$

2,555,110

 

 

$

4,864,604

 

 

$

4,652,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to stockholders of

the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.11

 

 

$

0.09

 

 

$

0.18

 

 

$

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

27,612,597

 

 

 

27,612,597

 

 

 

27,612,597

 

 

 

27,612,597

 

 

XPEL Inc.

 

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,473,964

 

$

3,971,226

 

Accounts receivable, net

 

 

 

7,549,789

 

 

5,554,313

 

Inventory, net

 

 

 

 

15,304,778

 

 

10,799,611

 

Prepaid expenses and other current assets

 

1,312,016

 

 

706,718

 

Total current assets

 

29,640,547

 

 

21,031,868

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

3,711,031

 

 

3,384,206

 

Right-of-Use lease assets

 

 

 

4,016,516

 

 

-

 

Intangible assets, net

 

 

 

3,595,785

 

 

3,804,026

 

Other non-current assets

 

 

 

35,999

 

 

-

 

Goodwill

 

 

 

 

2,349,501

 

 

2,322,788

 

Total assets

$

43,349,379

 

$

30,542,888

 

Liabilities

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

Current portion of notes payable

 

$

670,516

 

$

853,150

 

Current portion lease liabilities

 

976,339

 

 

-

 

Accounts payable and accrued liabilities

 

 

11,255,718

 

 

6,292,093

 

Income tax payable

 

565,350

 

 

1,337,599

 

Total current liabilities

 

13,467,923

 

 

8,482,842

 

Deferred tax liability, net

 

 

 

549,257

 

 

478,864

 

Non-current portion of lease liabilities

 

 

 

3,137,297

 

 

-

 

Non-current portion notes payable

 

 

 

502,080

 

 

968,237

 

Total liabilities

 

17,656,557

 

 

9,929,943

 

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; 27,612,597 and 27, 612,597

issued and outstanding, respectively

 

 

 

27,613

 

 

27,613

 

Additional paid-in-capital

 

11,348,163

 

 

11,348,163

 

Accumulated other comprehensive loss

 

 

 

 

(976,292

)

 

(1,190,055

)

Retained Earnings

 

 

 

 

15,481,857

 

 

10,617,253

 

 

 

25,881,341

 

 

20,802,974

 

Non-controlling interest

 

 

 

(188,519

)

 

(190,029

)

Total stockholders‘ equity

 

 

 

25,692,822

 

 

20,612,945

 

Total liabilities and stockholders‘ equity

$

43,349,379

 

$

30,542,888

 

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 (loss), 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

 

 

Three Months

Ended

June 30,

2019

Three Months

Ended

June 30,

2018

Six Months

Ended

June 30,

2019

Six Months

Ended

June 30,

2018

Net income

$3,007,310

$2,553,142

$4,867,313

$4,641,955

Interest

29,074

47,130

57,780

104,084

Taxes

938,405

808,011

1,504,293

1,469,073

Depreciation

220,270

179,549

421,088

338,867

Amortization

186,824

175,532

371,372

312,169

EBITDA

$4,381,883

$3,763,364

$7,221,846

$6,866,148

 

View Comments and Join the Discussion!