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:
- Revenue increased 34.5% to $105.5 million compared to fourth
quarter 2022.
- Net income increased 43.2% to $12.0 million, or $0.43 per basic
and diluted share, versus net income of $8.4 million, or $0.30 per
basic and diluted share in the fourth quarter of 2022.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) grew 33.6% to $17.7 million, or 16.7% of revenue
compared to $13.2 million, or 16.8% of revenue in fourth quarter
2022.2
Year End 2023 Highlights:
- Revenue increased 22.3% to $396.3 million as compared to the
prior year.
- Net income increased by 27.6% to $52.8 million, or $1.91 per
basic and diluted share, compared to $41.4 million, or $1.50 per
basic and diluted share, in 2022.
- EBITDA grew 25.6% to $76.9 million, or 19.4% of revenue, as
compared to $61.2 million, or 18.9% in the prior year.2
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
- Total revenue grew 34.5% year-over-year ("YoY") and 2.8% over
the third quarter 2023 ("QoQ").
- China region grew 166.6% and represented 15.7% of revenue. This
increase was helped by a favorable comparable as the region was
still dealing with the impacts of COVID-19 during the fourth
quarter 2022.
- Middle East/Africa region grew 100.4% YoY and 26.8% QoQ.
Product and Service Revenue
- Total product revenue increased 35.8% YoY and 1.2% QoQ. This
increase was due primarily to increased demand for our film
products across multiple regions.
- Total window film increased 19.2% YoY, declined 25.9% QoQ, and
represented 13.2% of total revenue. The sequential quarterly
decline was due primarily to seasonality.
- Total service revenue increased 30.0% YoY and 8.9% QoQ. This
increase is due primarily to an increase in installation labor
revenue.
- Total installation revenue (labor and product combined) grew
45.7% YoY and represented 18.8% of total revenue. This increase was
due primarily to increased demand in our Company-owned installation
facilities and across our dealership services and OEM
businesses.
- Adjusted product revenue (combining cutbank credits revenue and
product revenue) grew 32.4% YoY.
Other Financial Information
- Gross margin percentage was 38.8% and 39.6% in the fourth
quarter 2023 and 2022 respectively. This decline in gross margin
percentage was due mainly to the significant increase in YoY lower
margin China and Middle East/Africa revenue.
- Total operating expenses grew 32.2% YoY and 11.7% QoQ.
- Sales and marketing expenses grew 34.8% YoY and 19.5% QoQ and
represented 8.8% of revenue.
- General and administrative expenses grew 30.9% YoY and 8.1%
QoQ. This increase was due mainly to increases in personnel,
occupancy costs, information technology costs, research and
development costs and professional fees to support the ongoing
growth of the business.
- Net income grew 43.2% YoY and declined 12.3% QoQ.
- EBITDA grew 33.6% YoY and declined 10.5% QoQ2.
Cash Flows from Operations
- Cash flows used in operations was $1.1 million in the fourth
quarter 2023.
2024 Outlook
- Annual revenue growth of approximately 15%
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222320190/en/
Investor Relations: John Nesbett/Jennifer Belodeau IMS Investor
Relations Phone: (203) 972-9200 Email:
xpel@imsinvestorrelations.com
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