XPEL Reports First Quarter Revenue of $24.7 Million; Gross Margin Improves to 33%

SAN ANTONIO–(BUSINESS WIRE)–XPEL, Inc. (TSXV: DAP.U), a global provider of protective films and
coatings, announced results for the quarter ended March 31, 2019.

Highlights for the quarter include:

  • 36% growth in US region; strong growth in United Kingdom and Asia
    Pacific
  • Gross margin improvement to 33% from 30% in first quarter last year
  • Pending SEC Registration and Nasdaq listing remains on track

Ryan Pape, President and Chief Executive Officer of XPEL, commented,
“During the first quarter we saw continued strong growth in key regions,
particularly the US, where revenue increased 36% as compared to the
first quarter 2018. As expected, sales to China declined significantly
during the first quarter due mainly to acceleration of sales into China
during the first half of last year. On the product front, we launched
our XPEL FUSION PLUS ceramic coating during the quarter, a natural
extension of our product line that offers a self-cleaning, hydrophobic
coating that’s complementary to the rest of our product offering. We’re
excited about the interest we’re seeing in the product and in its
potential to provide additional revenue opportunities to our installer
network.”

The Company filed Amendment No. 2 to Form 10 with the U.S. Securities
and Exchange Commission which includes results for the quarter ended
March 31, 2019.

For the Quarter Ended March 31, 2019:

Revenues. Revenues decreased approximately $0.4 million or 1.6%
to $24.7 million as compared to $25.1 million in the prior year.

Gross Margin. Gross margin was 33.0% versus 30.3% in the first
quarter of 2018. The increase was related to an improved mix of
increased sales to higher margin customers.

Expenses. Selling, general and administrative expenses increased
to $5.7 million or 22.9% of sales as compared to $4.8 million or 19.2%
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.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation,
and Amortization) of $2.8 million decreased as compared to $3.1 million
in the prior year1.

Net income. Net income decreased slightly to $1.9 million, or
$0.07 per basic and diluted share versus net income of $2.1 million, or
$0.08 per basic and diluted share in the first quarter of 2018.

Mr. Pape continued, “We are continuing to build our brand recognition in
all of our regions. We remain optimistic about the long-term opportunity
in China and continue to focus on adjusting our product assortment and
marketing efforts to keep pace with the evolving needs of our customers
there and in all the markets we serve.

“As we move through 2019 we’re focused on continuing gross margin
improvement, broadening our international presence, enhancing XPEL’s
global brand recognition, furthering our channel acquisition strategy
and expanding our non-automotive product portfolio. We’re encouraged by
the strong interest we’re seeing for our products worldwide and believe
the market recognition for our diverse, high quality portfolio of
products and ancillary services is growing every day.”

Conference Call Information

The Company will host a conference call to discuss the first quarter
results today, May 30, 2019, at 11:00 a.m. Eastern Time.

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 June 30, 2019 and
may be accessed by dialing (877) 481-4010. International callers may
dial (919) 882-2331. Callers should use conference ID: 49192.

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. (TSXV: DAP.U) is publicly
traded on the TSXV 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.

 
XPEL, Inc.
 
Condensed Consolidated Statements of Income (Unaudited)
 
          Three months ended March 31,
2019           2018
 
Revenue
Product revenue $ 21,054,723 $ 22,094,242
Service revenue 3,670,723 3,027,278
Total revenue 24,725,446 25,121,520
 
Cost of Sales
Cost of product sales 15,688,033 16,849,836
Cost of service 887,333 666,539
Total cost of sales 16,575,366 17,516,375
Gross Margin 8,150,080 7,605,145
 
Operating Expenses
Sales and marketing 1,599,106 1,620,510
General and administrative 4,065,529 3,211,187
Total operating expenses 5,664,635 4,831,697
 
Operating Income 2,485,445 2,773,448
 
Interest expense 28,706 56,954
Loss (gain) on sale of property, plant and equipment 12,422
Foreign exchange loss (gain) 18,426 (33,381 )
 
Income before income taxes 2,425,891 2,749,875
Income tax expense 565,888 661,062
Net income 1,860,003 2,088,813
Income (loss) attributed to non-controlling interest 1,416 (8,545)
Net income attributable to stockholders of the company $ 1,858,587 $ 2,097,358
 
Earnings per share attributable to stockholders of the company
Basic and diluted $ 0.07 $ 0.08
 
Weighted average number of common shares
Basic and diluted 27,612,597 27,612,597
 
XPEL, Inc.
 
Consolidated Balance Sheets
 
      (Unaudited)       (Audited)
March 31, December 31,
2019   2018
 
Assets
Current
Cash and cash equivalents $ 4,376,325 $ 3,971,226
Accounts receivable, net 5,948,048 5,554,313
Inventory, net 13,586,897 10,799,611
Prepaid expenses and other current assets   976,605   706,718
Total current assets 24,887,875 21,031,868
Property and equipment, net 3,561,133 3,384,206
Right-of-Use lease assets 4,145,789
Intangible assets, net 3,674,924 3,804,026
Other non-current assets 37,452
Goodwill   2,320,384   2,322,788
Total assets $ 38,627,557 $ 30,542,888
Liabilities
Current
Current portion of notes payable 836,133 853,150
Current portion lease liabilities 1,020,554
Accounts payable and accrued liabilities 8,462,688 6,292,093
Income tax payable   1,253,153   1,337,599
Total current liabilities 11,572,528 8,482,842
Deferred tax liability, net 450,899 478,864
Noncurrent portion of lease liabilities 3,218,052
Notes payable   833,872   968,237
Total liabilities   16,075,351   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 (1,115,605 ) (1,190,055 )
Retained earnings   12,475,840   10,617,253
22,736,011 20,802,974
Non-controlling interest   (183,805 )   (190,029 )
Total stockholders‘ equity   22,552,206   20,612,945
Total liabilities and stockholders‘ equity $ 38,627,557 $ 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
 
          (Unaudited)         (Unaudited)
Three Months Ended Three Months Ended
March 31, 2019 March 31, 2018
 
Net Income $ 1,860,003 $ 2,088,813
Interest expense 28,706 56,954
Income taxes 565,888 661,062
Depreciation expense 200,818 159,318
Amortization expense   184,548   136,637
EBITDA $ 2,839,963 $ 3,102,784
 

___________________________

1   See reconciliation of non-GAAP financial measures below.
 

Contacts

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

XPEL Reports First Quarter Revenue of $24.7 Million; Gross Margin Improves to 33%

SAN ANTONIO–(BUSINESS WIRE)–XPEL, Inc. (TSXV: DAP.U), a global provider of protective films and
coatings, announced results for the quarter ended March 31, 2019.

Highlights for the quarter include:

  • 36% growth in US region; strong growth in United Kingdom and Asia
    Pacific
  • Gross margin improvement to 33% from 30% in first quarter last year
  • Pending SEC Registration and Nasdaq listing remains on track

Ryan Pape, President and Chief Executive Officer of XPEL, commented,
“During the first quarter we saw continued strong growth in key regions,
particularly the US, where revenue increased 36% as compared to the
first quarter 2018. As expected, sales to China declined significantly
during the first quarter due mainly to acceleration of sales into China
during the first half of last year. On the product front, we launched
our XPEL FUSION PLUS ceramic coating during the quarter, a natural
extension of our product line that offers a self-cleaning, hydrophobic
coating that’s complementary to the rest of our product offering. We’re
excited about the interest we’re seeing in the product and in its
potential to provide additional revenue opportunities to our installer
network.”

The Company filed Amendment No. 2 to Form 10 with the U.S. Securities
and Exchange Commission which includes results for the quarter ended
March 31, 2019.

For the Quarter Ended March 31, 2019:

Revenues. Revenues decreased approximately $0.4 million or 1.6%
to $24.7 million as compared to $25.1 million in the prior year.

Gross Margin. Gross margin was 33.0% versus 30.3% in the first
quarter of 2018. The increase was related to an improved mix of
increased sales to higher margin customers.

Expenses. Selling, general and administrative expenses increased
to $5.7 million or 22.9% of sales as compared to $4.8 million or 19.2%
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.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation,
and Amortization) of $2.8 million decreased as compared to $3.1 million
in the prior year1.

Net income. Net income decreased slightly to $1.9 million, or
$0.07 per basic and diluted share versus net income of $2.1 million, or
$0.08 per basic and diluted share in the first quarter of 2018.

Mr. Pape continued, “We are continuing to build our brand recognition in
all of our regions. We remain optimistic about the long-term opportunity
in China and continue to focus on adjusting our product assortment and
marketing efforts to keep pace with the evolving needs of our customers
there and in all the markets we serve.

“As we move through 2019 we’re focused on continuing gross margin
improvement, broadening our international presence, enhancing XPEL’s
global brand recognition, furthering our channel acquisition strategy
and expanding our non-automotive product portfolio. We’re encouraged by
the strong interest we’re seeing for our products worldwide and believe
the market recognition for our diverse, high quality portfolio of
products and ancillary services is growing every day.”

Conference Call Information

The Company will host a conference call to discuss the first quarter
results today, May 30, 2019, at 11:00 a.m. Eastern Time.

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 June 30, 2019 and
may be accessed by dialing (877) 481-4010. International callers may
dial (919) 882-2331. Callers should use conference ID: 49192.

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. (TSXV: DAP.U) is publicly
traded on the TSXV 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.

 
XPEL, Inc.
 
Condensed Consolidated Statements of Income (Unaudited)
 
          Three months ended March 31,
2019           2018
 
Revenue
Product revenue $ 21,054,723 $ 22,094,242
Service revenue 3,670,723 3,027,278
Total revenue 24,725,446 25,121,520
 
Cost of Sales
Cost of product sales 15,688,033 16,849,836
Cost of service 887,333 666,539
Total cost of sales 16,575,366 17,516,375
Gross Margin 8,150,080 7,605,145
 
Operating Expenses
Sales and marketing 1,599,106 1,620,510
General and administrative 4,065,529 3,211,187
Total operating expenses 5,664,635 4,831,697
 
Operating Income 2,485,445 2,773,448
 
Interest expense 28,706 56,954
Loss (gain) on sale of property, plant and equipment 12,422
Foreign exchange loss (gain) 18,426 (33,381 )
 
Income before income taxes 2,425,891 2,749,875
Income tax expense 565,888 661,062
Net income 1,860,003 2,088,813
Income (loss) attributed to non-controlling interest 1,416 (8,545)
Net income attributable to stockholders of the company $ 1,858,587 $ 2,097,358
 
Earnings per share attributable to stockholders of the company
Basic and diluted $ 0.07 $ 0.08
 
Weighted average number of common shares
Basic and diluted 27,612,597 27,612,597
 
XPEL, Inc.
 
Consolidated Balance Sheets
 
      (Unaudited)       (Audited)
March 31, December 31,
2019   2018
 
Assets
Current
Cash and cash equivalents $ 4,376,325 $ 3,971,226
Accounts receivable, net 5,948,048 5,554,313
Inventory, net 13,586,897 10,799,611
Prepaid expenses and other current assets   976,605   706,718
Total current assets 24,887,875 21,031,868
Property and equipment, net 3,561,133 3,384,206
Right-of-Use lease assets 4,145,789
Intangible assets, net 3,674,924 3,804,026
Other non-current assets 37,452
Goodwill   2,320,384   2,322,788
Total assets $ 38,627,557 $ 30,542,888
Liabilities
Current
Current portion of notes payable 836,133 853,150
Current portion lease liabilities 1,020,554
Accounts payable and accrued liabilities 8,462,688 6,292,093
Income tax payable   1,253,153   1,337,599
Total current liabilities 11,572,528 8,482,842
Deferred tax liability, net 450,899 478,864
Noncurrent portion of lease liabilities 3,218,052
Notes payable   833,872   968,237
Total liabilities   16,075,351   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 (1,115,605 ) (1,190,055 )
Retained earnings   12,475,840   10,617,253
22,736,011 20,802,974
Non-controlling interest   (183,805 )   (190,029 )
Total stockholders‘ equity   22,552,206   20,612,945
Total liabilities and stockholders‘ equity $ 38,627,557 $ 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
 
          (Unaudited)         (Unaudited)
Three Months Ended Three Months Ended
March 31, 2019 March 31, 2018
 
Net Income $ 1,860,003 $ 2,088,813
Interest expense 28,706 56,954
Income taxes 565,888 661,062
Depreciation expense 200,818 159,318
Amortization expense   184,548   136,637
EBITDA $ 2,839,963 $ 3,102,784
 

___________________________

1   See reconciliation of non-GAAP financial measures below.
 

Contacts

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

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