Core Insights - The article discusses the author's academic and professional background in Machine Learning, Economics, and Finance, highlighting affiliations with prestigious institutions and experience in financial advisory, particularly in banking and mergers & acquisitions [1]. Group 1 - The author holds a PhD in Machine Learning with a focus on Economics and Finance [1]. - The author has academic affiliations with IESE Business School, ESADE Business School, and the Barcelona Supercomputing Center [1]. - The professional experience includes working at Deloitte Financial Advisory, specializing in banking and mergers & acquisitions [1]. Group 2 - The author's interests include machine learning and generative AI applications in finance and economics [1]. - The author is proficient in programming languages such as Python, R, and SQL [1].

Financial Data and Key Metrics Changes - The meeting confirmed that XPEL had 27,664,765 shares of common stock issued and outstanding as of April 15, 2025, with over 72% of eligible votes represented at the meeting [6][19]. Business Line Data and Key Metrics Changes - No specific financial data or key metrics for individual business lines were provided in the meeting. Market Data and Key Metrics Changes - No specific market data or key metrics were discussed during the meeting. Company Strategy and Development Direction and Industry Competition - The company emphasized the importance of leveraging the creativity and quality of content created by independent dealers to enhance marketing efforts [22][23]. - XPEL has focused on manufacturing localization and product innovation, which has improved their ability to innovate and respond to regional market needs [26][27]. - The company remains cautious regarding acquisitions in light of uncertainty in the automotive market, indicating that they will not overpay for acquisitions and will continue to pursue opportunities prudently [28][31][34]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the automotive market but stated that it has not significantly impacted their acquisition appetite or strategy [28][34]. - They believe that the current market conditions do not necessitate drastic changes in their approach, maintaining a strong balance sheet allows for continued investment [34]. Other Important Information - The proposals for the election of board members, ratification of the independent accounting firm, approval of executive compensation, and adoption of the employee stock purchase plan were all approved by majority votes [19][20]. Q&A Session Summary Question: How does XPEL leverage the creativity of independent dealers in marketing? - Management highlighted the importance of amplifying content created by independent dealers through social media platforms like Instagram, indicating that they support content creators with products to enhance their marketing efforts [22][23][24]. Question: Has localization of production enhanced product innovation speed? - Management confirmed that localization has indeed enhanced their ability to innovate faster, supported by a deeper technical team and a focus on regional needs [26][27]. Question: How has uncertainty in the auto market affected acquisition strategies? - Management stated that while they remain cautious, their appetite for acquisitions has not changed significantly, and they will not overpay for opportunities [28][31][34].

Part I - Financial Information [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show an increase in total assets to $294.8 million, total revenue grew 15.2% year-over-year to $103.8 million, driving net income up by 28.8% to $8.6 million, and the company shifted from using $5.0 million in cash from operations in Q1 2024 to generating $3.2 million in Q1 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $294.8 million from $285.6 million at year-end 2024, primarily driven by a rise in inventory and accounts receivable, while total liabilities slightly decreased to $59.4 million and total stockholders' equity grew to $235.5 million from $225.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $23,541 | $22,087 | | Inventory, net | $115,306 | $110,904 | | Total current assets | $178,299 | $168,344 | | Total assets | $294,822 | $285,607 | | **Liabilities & Equity** | | | | Total current liabilities | $41,582 | $41,518 | | Total liabilities | $59,368 | $60,152 | | Total stockholders' equity | $235,454 | $225,455 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2025, total revenue increased by 15.2% to $103.8 million compared to the same period in 2024, with net income rising by 28.8% to $8.6 million, resulting in both basic and diluted EPS of $0.31, up from $0.24 in the prior-year quarter Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $103,805 | $90,104 | 15.2% | | Gross Margin | $43,896 | $37,876 | 15.9% | | Operating Income | $11,120 | $9,229 | 20.5% | | Net Income | $8,586 | $6,666 | 28.8% | | Diluted EPS | $0.31 | $0.24 | 29.2% | [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For Q1 2025, net cash provided by operating activities was $3.2 million, a significant improvement from the $5.0 million used in Q1 2024, mainly due to higher net income and changes in working capital, while cash used in investing activities decreased to $1.6 million, and cash used in financing activities was $0.2 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $3,228 | $(4,959) | | Net cash used in investing activities | $(1,556) | $(3,114) | | Net cash (used in) provided by financing activities | $(170) | $4,985 | | Increase (Decrease) in cash and cash equivalents | $1,454 | $(2,995) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, confirming it operates as a single segment, with revenue disaggregated by product and geography showing strong growth in paint protection and window films, particularly a significant sales increase in China, and the company maintains a $125 million revolving credit facility, which was undrawn as of March 31, 2025, and was in compliance with all debt covenants - The company operates and manages its business as one operating segment, with the CEO acting as the chief operating decision maker (CODM)[26](index=26&type=chunk)[63](index=63&type=chunk) Revenue by Product Category (in thousands) | Product Category | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Paint protection film | $56,441 | $49,011 | 15.2% | | Window film | $18,635 | $14,549 | 28.1% | | Installation labor | $18,650 | $16,706 | 11.6% | Revenue by Geographic Region (in thousands) | Region | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | $58,073 | $52,048 | 11.6% | | China | $8,107 | $1,450 | 459.1% | | Canada | $9,426 | $11,080 | -14.9% | | Continental Europe | $11,148 | $10,216 | 9.1% | - The company has a $125 million revolving credit facility and a CAD $4.5 million facility As of March 31, 2025, there were no outstanding balances on these facilities, and the company was in compliance with all debt covenants[46](index=46&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 15.2% year-over-year revenue growth to strong performance in window film (up 28.1%) and paint protection film (up 15.2%), particularly a 459.1% surge in China sales as distributor inventory levels normalized, with gross margin improving to 42.3% from 42.0%, and the company maintains a strong liquidity position with $23.5 million in cash and $128.1 million available under its credit facilities, sufficient to fund operations for at least the next 12 months EBITDA Reconciliation (Non-GAAP, in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Income | $8,586 | $6,666 | | Interest | $75 | $473 | | Taxes | $2,694 | $1,818 | | Depreciation | $1,535 | $1,333 | | Amortization | $1,521 | $1,410 | | **EBITDA** | **$14,411** | **$11,700** | - Revenue from the paint protection film line increased by **15.2%**, primarily driven by increased sales into China as prior excess inventory levels at the distributor began to normalize[80](index=80&type=chunk) - Window film revenue grew **28.1%**, with automotive window film up **16.2%** The company also launched a new windshield protection film in Q4 2024, which generated **$1.8 million** in revenue in Q1 2025[81](index=81&type=chunk) - Product gross margin percentage increased from **37.0%** to **38.5%** year-over-year due to lower product costs and improved operating leverage Service gross margin percentage decreased from **56.6%** to **54.3%** due to a higher mix of dealership-related installations[88](index=88&type=chunk)[89](index=89&type=chunk) - The company had cash and cash equivalents of **$23.5 million** and approximately **$128.1 million** available under its credit facilities as of March 31, 2025, and believes it has sufficient liquidity for the next 12 months[95](index=95&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency fluctuations, interest rate changes on its variable-rate debt, and inflation, with operations in multiple foreign currencies but no current hedging, and a hypothetical 200 basis point increase in variable interest rates could materially impact financial statements, while the company may not be able to fully offset inflationary cost pressures through price increases - The company is exposed to currency risk from the British Pound, Canadian Dollar, Euro, Mexican Peso, and several Asian currencies, but does not currently hedge this exposure[109](index=109&type=chunk) - Borrowings under revolving credit facilities are subject to floating interest rates A hypothetical **200 basis point** increase in these rates could have a material impact on the company's financials[111](index=111&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025, with no material changes to the internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective[114](index=114&type=chunk) - No changes occurred in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[116](index=116&type=chunk) Part II - Other Information [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions but believes that a material impact on its financial position, results of operations, or cash flows from these claims is unlikely - The company is party to various legal actions in the ordinary course of business but has determined that the likelihood of any material impact on its financial position is remote[118](index=118&type=chunk)[119](index=119&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company highlights a specific risk related to existing and potential new trade policies, such as tariffs, which could reduce consumer disposable income, delay vehicle purchases or accessory additions, and disrupt supply chains, adversely affecting the company's results of operations and financial condition - The company identifies a risk that new trade policies and tariffs could reduce consumer disposable income, leading to delayed vehicle and accessory purchases, which could adversely affect financial results[121](index=121&type=chunk) - Potential retaliatory trade measures by other countries could disrupt supply chains, increase costs, and create business uncertainty, negatively impacting demand for the company's products[122](index=122&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[123](index=123&type=chunk) [Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[124](index=124&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[125](index=125&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) There was no other information to report for the period - None[126](index=126&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) The report includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, along with XBRL formatted financial statements - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files (101)[127](index=127&type=chunk)

Financial Data and Key Metrics Changes - Revenue grew 15.2% to $103.8 million in Q1 2025, with a notable performance across different regions [5][21] - EBITDA increased 23.2% to $14.4 million, reflecting a 14% EBITDA margin [23] - Net income rose 28.8%, resulting in an 8.3% net income margin and EPS of $0.31 per share [23] Business Line Data and Key Metrics Changes - Total window film product line revenue grew 28.1%, with automotive window tint increasing by 16.2% and architectural window film by 9.6% [22] - U.S. region revenue increased 11.6% to $58.1 million, while Canada region revenue declined 14.9% to $9.4 million [6][7] Market Data and Key Metrics Changes - China revenue was $8.1 million, aligning with expectations, and the company is working on a more direct business model in the region [9][30] - Europe achieved its second-highest revenue quarter, and the Middle East saw record revenue [10] Company Strategy and Development Direction - The company is focused on maintaining a strong capital allocation strategy, prioritizing investments in the business and potential M&A opportunities [17][18] - A $50 million share repurchase plan was approved, indicating confidence in the company's valuation [17] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the market due to tariffs and their potential impact on new car sales, but expressed optimism about current momentum in the U.S. [7][14] - The company is closely monitoring the evolving tariff situation and believes it can mitigate potential impacts [14][32] Other Important Information - The effective tax rate for the quarter was higher than normal at 23.9%, primarily due to foreign taxes [24] - Cash flow from operations was $3.2 million, and the company continues to build cash on its balance sheet [24] Q&A Session Summary Question: Insights on U.S. dealer network and demand velocity - Management indicated mixed responses from dealerships regarding pull-forward demand, suggesting some dealers experienced it while others did not [26][27] Question: Expectations for China business - Management highlighted improved supply chain efficiency and a desire to pursue a more direct business model in China [29][30] Question: Tariff impact on China business - Management stated that tariffs are a non-factor for the company due to diversified manufacturing locations [31][32] Question: Changes in take rate for films in the U.S. - Management believes that pull-forward customers are not their core buyers, and metrics indicate stability in take rates [38][39] Question: Headwinds from dealership inventory and logistics - Management acknowledged potential risks from inventory contraction but deemed it too early to identify it as a significant risk [41][42]

Financial Data and Key Metrics Changes - Revenue grew 15.2% to $103.8 million in Q1 2025, with a solid performance in both top and bottom lines [4] - EBITDA increased 23.2% to $14.4 million, reflecting a 14% EBITDA margin [22] - Net income rose 28.8%, resulting in an 8.3% net income margin and EPS of $0.31 per share [22] - SG&A expenses grew 14.4% to $32.8 million, with a sequential increase of about 4.5% from Q4 [21] Business Line Data and Key Metrics Changes - U.S. region revenue increased 11.6% to $58.1 million, driven by aftermarket independent channel sales [5] - Canada region revenue declined 14.9% to $9.4 million, with an adjusted decline of around 10% [7] - China revenue was $8.1 million, aligning with expectations, and efforts to evolve the go-to-market strategy are ongoing [8] - Total window film product line grew 28.1%, with automotive window tint growing 16.2% and architectural window film growing 9.6% [21] Market Data and Key Metrics Changes - The U.S. market remains the largest, representing 56% of total revenue, with strong performance noted [20] - Europe achieved its second-highest revenue quarter in history, while the Middle East saw record revenue [9] - The Canadian market sentiment is relatively poor, contrasting with the U.S. market's previous year performance [7] Company Strategy and Development Direction - The company is focused on maintaining a strong product offering and is launching additional colored films and surface protection films for architectural applications [16] - A $50 million share repurchase plan has been approved, with a priority on investing in the business through M&A [16] - The company is cautiously pursuing expansion in its services business while ensuring proper valuation for potential acquisitions [17] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the market due to tariffs and their potential impact on new car sales and dealership behavior [15] - The company is not currently changing its business strategy but remains focused on providing quality products and services [15] - There is optimism about Q2 revenue expectations, projected to be in the range of $117 million to $119 million [10] Other Important Information - The effective tax rate for the quarter was higher than normal at 23.9%, primarily due to foreign taxes [22] - Cash flow from operations was $3.2 million, with a strong cash position and substantial debt capacity [23] Q&A Session Summary Question: Insights on U.S. Dealer Network Velocity - Management indicated mixed responses from dealerships regarding pull-ahead demand, with some seeing it and others not [27][28] Question: Expectations for China Business - The company is working to make the supply chain more efficient and aims for a more direct business model in China [30] Question: Tariff Impact on China Business - Management stated that tariffs are a non-factor for the company due to diversified manufacturing locations [32] Question: Changes in Take Rate for Film - Management believes that pull-forward customers are not their core buyers, and metrics indicate stability in demand [39] Question: Headwinds from Dealer Inventory - The transition to steady state inventory is seen as a headwind, but it is too early to call it a significant risk [41] Question: Impact of Audi and Porsche Vehicles Held at Port - Management has not observed any significant impact from vehicles being held at port, with the end market remaining strong [43]

Core Insights - XPEL, Inc. reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, and showing an increase from $0.24 per share a year ago, representing a 24% earnings surprise [1] - The company achieved revenues of $103.81 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.95% and up from $90.1 million year-over-year [2] - XPEL has outperformed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $117.75 million, and for the current fiscal year, it is $1.79 on revenues of $451 million [7] - The estimate revisions trend for XPEL is mixed, leading to a Zacks Rank 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] Industry Context - XPEL operates within the Automotive - Original Equipment industry, which is currently ranked in the bottom 26% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of XPEL's stock may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - Total revenue increased by 15.2% to $103.8 million in Q1 2025 compared to $90.1 million in Q1 2024[3] - Net income rose by 28.8% to $8.6 million, or $0.31 per share, compared to $6.7 million, or $0.24 per share in the same quarter last year[4] - EBITDA increased by 23.2% to $14.4 million, representing 13.9% of total revenue, up from 13.0% in Q1 2024[4] - Gross margin improved to 42.3% in Q1 2025 from 42.0% in Q1 2024[9] - Total product revenue increased by 17.7% year-over-year, representing 75.8% of total revenue[9] Revenue Sources - Revenue from the United States grew by 11.6% year-over-year, contributing 56.0% of total revenue[5] - Revenue from China surged by 459.1% year-over-year, accounting for 7.8% of total revenue[5] Future Projections - The company expects Q2 2025 revenue to be approximately $117 - $119 million[7] Expenses and Investments - Operating expenses increased by 14.4% year-over-year, totaling $32.8 million[3] - The company invested $1,003 million in property, plant, and equipment during the first quarter of 2025, down from $2,017 million in the same period last year[23] Assets and Liabilities - Total assets increased to $294,822 million as of March 31, 2025, up from $285,607 million at December 31, 2024, representing a growth of 3.8%[21] - Total current assets increased to $178,299 million, up from $168,344 million, indicating a growth of 5.7%[21] - Total liabilities decreased slightly to $59,368 million from $60,152 million, a reduction of 1.3%[21] Cash Flow and Retained Earnings - Cash and cash equivalents at the end of the period rose to $23,541 million, compared to $8,614 million at the end of the same period last year, marking an increase of 173.5%[23] - Retained earnings increased to $222,699 million as of March 31, 2025, compared to $214,113 million at the end of 2024, showing a growth of 4.0%[21] - The company reported a net cash provided by operating activities of $3,228 million for the first quarter of 2025, compared to a net cash used of $4,959 million in the same quarter of 2024[23] Stock Repurchase Program - The company announced a $50 million stock repurchase program, subject to market conditions[2] Accounts Receivable - The company’s accounts receivable increased to $33,359 million as of March 31, 2025, compared to $29,146 million at December 31, 2024, representing a rise of 14.5%[21]

Company Overview - XPEL Inc. has shown significant revenue growth, increasing from $159 million in 2020 to an estimated $420 million in 2024, while maintaining operating margins in the mid-double digit range of 14-17% [1] Stock Performance - Despite the strong revenue growth, XPEL Inc.'s stock price has declined approximately 45% over the past year [1]

Revenue Dependence and Risks - The company relies heavily on a single distributor in China, which poses a significant risk to its revenue stream [26] - A substantial portion of the company's revenue is generated from the Chinese market, which is associated with various risks [26] - The company is highly dependent on the automotive industry, and any prolonged contraction in automotive sales could adversely affect its financial condition [26] Operational and Financial Risks - The company faces operational risks related to fluctuations in the cost and availability of raw materials, labor, and transportation [26] - The company has not experienced significant effects from changes in interest rates, but a hypothetical 200 basis point increase could materially impact its financial statements [255] - The company does not currently hedge its exposure to foreign currency translation adjustments, which could affect its financial results [254] - The company is exposed to inflationary pressures that may not be fully offset by price increases, adversely affecting its financial condition [256] Dividend Policy and Financial Performance - The company has not paid any cash dividends in the past and has no plans to do so in the future, potentially affecting its stock value [29] - The company may incur material losses from product liability and warranty claims, which could harm its financial performance [29] - The company acknowledges that its revenue and operating results may fluctuate, making predictions difficult and potentially leading to results that fall short of expectations [26]

Financial Data and Key Metrics Changes - The company reported total revenue of $420.4 million for the year, reflecting just over 6% growth compared to 2023 [8] - Q4 revenue excluding China grew at 10.5%, with the US region growing 6.2% to $59.1 million [9] - Gross margin for the year was 42.2%, a 120 basis point improvement over 2023, while Q4 gross margin was 40.6% [29][30] - Net income for Q4 declined 25.7% to $8.9 million, with an EPS of $0.32 per share [65] Business Line Data and Key Metrics Changes - The dealership services business had revenue growth of around 9%, but this was lower than previous quarters due to inventory normalization [9][10] - OEM revenue in Q4 declined slightly due to package changes in the Rivian program, but excluding this impact, OEM business grew approximately 16% [19][20] - The total window film product line grew 32.9% in Q4, driven primarily by automotive sales [59] Market Data and Key Metrics Changes - The China region reported revenue of $9.2 million, down from $16.6 million in the same quarter last year, making for a tough comparison [21] - The US new vehicle supply was reported at about 1.5 million units in December, indicating a return to more normal inventory levels [12] Company Strategy and Development Direction - The company aims to expand its dealership sales organization and focus on driving business through various customer channels [15][18] - There is a strategic focus on developing services in the new car dealership space, with plans to refine and implement capital deployment strategies in 2025 [43][44] - The company completed distributor acquisitions in Japan, Thailand, and India, with expectations of accelerated revenue growth post-acquisition [25][26] Management Comments on Operating Environment and Future Outlook - Management noted that 2024 was a challenging year due to macro headwinds, particularly in the aftermarket, but expressed cautious optimism for 2025 [7][38] - The sentiment in the aftermarket appears to have improved, with management feeling more clarity and focus on key operational areas [38][39] - Concerns were raised about inflation, interest rates, and potential tariffs impacting the business environment [40][41] Other Important Information - SG&A expenses grew 17.4% to $31.4 million in Q4, with a focus on managing overhead costs [30][34] - The company completed five acquisitions during the year with an aggregate purchase price of $12.5 million [68] Q&A Session Summary Question: Insights on China sell-throughs and timing for direct business - Management indicated that the sell-in and sell-through dynamics in China have improved, with inventory days lower and products selling through more consistently [72][74] Question: Outlook on gross margin and operating expenses - Management expects gross margin to remain around 42%, with some pressure from the strong dollar but opportunities for growth [76][78] Question: Marketing spend and its future - The company plans to increase marketing spend to around 3.5% of revenue in 2025, focusing on dealership and aftermarket segments [94][95]