XPEL XPEL Inc

XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of protective films and coatings, announced results for the fourth quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

• Revenue increased 11.9% to $78.5 million compared to fourth quarter 2021.

• Net income increased 34.7% to $8.4 million, or $0.30 per basic and diluted share, versus net income of $6.2 million, or $0.22 per basic and diluted share in the fourth quarter of 2021.

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew 32.4% to $13.2 million, or 16.8% of revenue compared to $10.0 million, or 14.2% of revenue in fourth quarter 2021.1

Year End 2022 Highlights:

• Revenue increased 25.0% to $324.0 million as compared to $259.3 million in the prior year.

• Net income increased by 31.1% to $41.4 million, or $1.50 per basic and diluted share, compared to $31.6 million, or $1.14 per basic and diluted share, in 2021.

• EBITDA grew 38.7% to $61.2 million, or 18.9% of revenue, as compared to $44.1 million, or 17.0% in the prior year.1

In the quarter, the Company’s revenue was negatively impacted by approximately $3.5 million resulting from the cancellation of some China orders due to uncertainty created by the change in COVID policies and China’s reopening.

The Company also incurred approximately $0.4 million in inventory write-offs which negatively impacted gross margin. The Company’s selling, general and administrative expenses were negatively impacted by approximately $0.3 million in severance-related costs and $0.4 million in compensation expense tangential to a previous acquisition.

Normalizing for these items, revenue would have grown approximately 17%, EBITDA margin would have been approximately 18% and EPS would have been approximately $0.36 per share.

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “Despite some headwinds in the fourth quarter, there is a lot to be positive about as we look to 2023. We continue to have tremendous momentum in almost all of our regions, particularly the US which grew 31.6% in the quarter. Automakers seem cautiously optimistic about 2023 and new car inventories continue to improve. This momentum has continued and we are off to a great start in 2023.”

For the Quarter Ended December 31, 2022:

Revenue. Revenue increased approximately $8.3 million, or 11.9%, to $78.5 million as compared to $70.1 million in the fourth quarter of the prior year.

Gross Margin. Gross margin was 39.6% compared to 35.2% in the fourth quarter of 2021.

Expenses. Operating expenses increased to $20.2 million, or 25.7% of revenue, compared to $16.2 million, or 23.0% of revenue in the prior year period.

Net income. Net income was $8.4 million, or $0.30 per basic and diluted share, versus net income of $6.2 million, or $0.22 per basic and diluted share in the fourth quarter of 2021.

EBITDA. EBITDA was $13.2 million, or 16.8% of revenue, compared to $10.0 million, or 14.2% of revenue in the fourth quarter of the prior year.1

For the Year Ended December 31, 2022:

Revenue. Revenue increased approximately $64.7 million, or 25.0%, to $324.0 million as compared to $259.3 million in the prior year.

Gross Margin. Gross margin was 39.4% compared to 35.7% for full year 2021.

Expenses. Operating expenses increased to $73.6 million, or 22.7% of revenue, compared to $52.6 million, or 20.3%, of revenue in full year 2021.

Net income. Net income was $41.4 million, or $1.50 per basic and diluted share, versus net income of $31.6 million, or $1.14 per basic and diluted share in full year 2021.

EBITDA. EBITDA was $61.2 million, or 18.9% of revenue, compared to $44.1 million, or 17.0% of revenue in the prior year.1

Conference Call Information

The Company will host a conference call and webcast today, February 28, 2023 at 11:00 a.m. Eastern Time to discuss the Company’s fourth quarter and year end 2022 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: 264934.

A replay of the teleconference will be available until March 30, 2023 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 47536.

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 See 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. 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.

Consolidated Statements of Income

(In thousands except per share data)

 

 

(Unaudited) Three Months Ended December 31,

 

Year Ended December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

 

 

 

 

 

 

 

Product revenue

$

60,421

 

$

56,688

 

$

258,174

 

$

217,283

Service revenue

 

18,060

 

 

13,444

 

 

65,819

 

 

41,980

Total revenue

 

78,481

 

 

70,132

 

 

323,993

 

 

259,263

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

 

 

 

Cost of product sales

 

40,259

 

 

39,446

 

 

169,905

 

 

151,286

Cost of service

 

7,176

 

 

5,997

 

 

26,576

 

 

15,300

Total cost of sales

 

47,435

 

 

45,443

 

 

196,481

 

 

166,586

Gross Margin

 

31,046

 

 

24,689

 

 

127,512

 

 

92,677

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Sales and marketing

 

6,852

 

 

5,295

 

 

25,367

 

 

18,273

General and administrative

 

13,349

 

 

10,865

 

 

48,208

 

 

34,288

Total operating expenses

 

20,201

 

 

16,160

 

 

73,575

 

 

52,561

 

 

 

 

 

 

 

 

Operating Income

 

10,845

 

 

8,529

 

 

53,937

 

 

40,116

 

 

 

 

 

 

 

 

Interest expense

 

477

 

 

160

 

 

1,410

 

 

303

Foreign currency exchange (gain) loss

 

(272)

 

 

251

 

 

562

 

 

373

 

 

 

 

 

 

 

 

Income before income taxes

 

10,640

 

 

8,118

 

 

51,965

 

 

39,440

Income tax expense

 

2,282

 

 

1,914

 

 

10,584

 

 

7,873

Net income

$

8,358

 

$

6,204

 

$

41,381

 

$

31,567

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

Basic

$

0.30

 

$

0.22

 

$

1.50

 

$

1.14

Diluted

$

0.30

 

$

0.22

 

$

1.50

 

$

1.14

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

Basic

 

27,616

 

 

27,613

 

 

27,614

 

 

27,613

Diluted

 

27,618

 

 

27,613

 

 

27,616

 

 

27,613

 

XPEL, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)

 

 

December 31, 2022

 

December 31, 2021

Assets

 

 

 

Current

 

 

 

Cash and cash equivalents

$

8,056

 

$

9,644

Accounts receivable, net

 

14,726

 

 

13,159

Inventory, net

 

80,575

 

 

51,936

Prepaid expenses and other current assets

 

3,464

 

 

3,672

Income tax receivable

 

—

 

 

617

Total current assets

 

106,821

 

 

79,028

Property and equipment, net

 

14,203

 

 

9,898

Right-of-use lease assets

 

15,309

 

 

12,910

Intangible assets, net

 

29,294

 

 

32,733

Other non-current assets

 

972

 

 

791

Goodwill

 

26,763

 

 

25,655

Total assets

$

193,362

 

$

161,015

Liabilities

 

 

 

Current

 

 

 

Current portion of notes payable

$

77

 

$

375

Current portion of lease liabilities

 

3,885

 

 

2,978

Accounts payable and accrued liabilities

 

22,970

 

 

32,915

Income tax payable

 

470

 

 

—

Total current liabilities

 

27,402

 

 

36,268

Deferred tax liability, net

 

2,049

 

 

2,748

Other long-term liabilities

 

1,070

 

 

2,631

Borrowings on line of credit

 

26,000

 

 

25,000

Non-current portion of lease liabilities

 

12,119

 

 

9,830

Non-current portion of notes payable

 

—

 

 

76

Total liabilities

 

68,640

 

 

76,553

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; 27,616,064 issued and outstanding

 

28

 

 

28

Additional paid-in-capital

 

11,073

 

 

10,581

Accumulated other comprehensive loss

 

(2,203)

 

 

(590)

Retained earnings

 

115,824

 

 

74,443

Total stockholders’ equity

 

124,722

 

 

84,462

Total liabilities and stockholders’ equity

$

193,362

 

$

161,015

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

 

 

(Unaudited) Three Months Ended December 31,

 

Year Ended December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Net Income

$

8,358

 

$

6,204

 

$

41,381

 

$

31,567

Interest

 

477

 

 

160

 

 

1,410

 

 

303

Taxes

 

2,282

 

 

1,914

 

 

10,584

 

 

7,873

Depreciation

 

947

 

 

629

 

 

3,433

 

 

1,887

Amortization

 

1,153

 

 

1,080

 

 

4,401

 

 

2,501

EBITDA

$

13,217

 

$

9,987

 

$

61,209

 

$

44,131

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230228005656/en/

Investor Relations: John Nesbett/Jennifer Belodeau IMS Investor Relations Phone: (203) 972-9200 Email: jnesbett@institutionalms.com