XPEL, Inc. (NASDAQ:XPEL) Q1 2022 Results Conference Call May 10, 2022 11:00 AM ET Company Participants John Nesbett - Investor Relations Ryan Pape - President and Chief Executive Officer Barry Wood - Senior Vice President and Chief Financial Officer Conference Call Participants Ryan Sigdahl - Craig-Hallum Jeff Van Sinderen - B. Riley Operator Good day, ladies and gentlemen, and welcome to the XPEL Inc.’s First Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over t ...

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38858 XPEL, INC. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (State or other jurisdiction of incorporation or organiz ...

XPEL, Inc. (NASDAQ:XPEL) Q4 2021 Earnings Conference Call February 28, 2022 11:00 AM ET Company Participants John Nesbett - Investor Relations Ryan Pape - President and Chief Executive Officer Barry Wood - Senior Vice President and Chief Financial Officer Conference Call Participants Steve Dyer - Craig-Hallum Jeff Van Sinderen - B. Riley Operator Good day, ladies and gentlemen, and welcome to the XPEL, Inc. Fourth Quarter and Year-End 2021 Earnings Call [Operator Instructions]. It is now my pleasure to tur ...

Revenue Breakdown - Surface and Paint Protection film sales represented 68.6% of consolidated revenue for the year ended December 31, 2021[44]. - Automotive window film sales accounted for 13.6% of the company's consolidated revenue for the year ended December 31, 2021[48]. - Architectural window film sales represented less than 2.0% of the company's consolidated revenue for the year ended December 31, 2021[50]. - Monthly subscriptions for the Design Access Program (DAP) contributed 1.7% to the company's consolidated revenue for the year ended December 31, 2021[51]. - Installation services, including product and labor revenue, represented 11.1% of the company's consolidated revenue for the year ended December 31, 2021[52]. - Approximately 54% of the company's consolidated revenue was generated through independent installers and new car dealerships for the year ended December 31, 2021[61]. - Approximately 28% of the company's consolidated revenue was derived from third-party distributors for the year ended December 31, 2021[65]. - The China Distributor accounted for approximately 18% of the company's consolidated revenue for the year ended December 31, 2021[66]. International Expansion - The company began its international expansion in 2014 by establishing an office in the United Kingdom[36]. - The company expanded its presence in France and acquired assets of France Auto Racing in 2020[39]. - The company acquired several businesses in the United States, Canada, and the United Kingdom during 2021 to enhance its market presence[58]. Product Development - The ULTIMATE product line, introduced in 2011, was the industry's first protective film with self-healing properties, contributing to strong revenue growth[35]. - XPEL ULTIMATE PLUS is the flagship product, a self-healing, stain-resistant film with exceptional clarity and durability[38]. - XPEL ULTIMATE FUSION, the newest paint protection film, includes a hydrophobic top-coat for enhanced performance[40]. Operational Risks - The company relies on one distributor for sales of its products in China, which poses a risk due to trade tensions[14]. - The company is exposed to a wide range of risks due to its multinational operations and must manage rapid growth effectively[14]. - The company is subject to various domestic and international anti-corruption laws, increasing exposure as international presence expands[83]. - Compliance with the GDPR and California Consumer Privacy Act may increase operational costs and complexity for the company[84]. - The company has incurred costs to maintain compliance with environmental, health, and safety laws, although these costs have not been material to date[85]. Financial Management - A hypothetical 100 basis point increase in variable interest rates could materially impact the company's financial statements[243]. - The company does not currently hedge its exposure to foreign currency translation adjustments, which may affect financial results[241]. - The company has not experienced significant effects from changes in interest rates during the periods presented[243]. - The company is subject to market risks related to borrowings under its revolving line of credit, which are influenced by interest rate changes[242]. Intellectual Property - The company owns numerous intellectual property rights, which provide a competitive advantage and are actively protected[86]. - The company has processes in place to protect its intellectual property assets globally and intends to continue enforcing its rights[87]. Workforce - The company employs approximately 709 people as of December 31, 2021, with 493 in the United States and 216 internationally[88]. Installation Centers - The company operates 11 Company-owned installation centers, which represented approximately 5% of consolidated revenue for the year ended December 31, 2021[70]. Supplier Dependency - The company sources approximately 75% of its inventory purchases from one supplier, entrotech inc., under a supply agreement set to terminate on March 21, 2022[78].

Financial Data and Key Metrics Changes - Q3 2021 revenue was $68.5 million, flat compared to Q2, but down approximately 5% sequentially when excluding acquisition-related revenue [6][33] - Organic revenue growth for Q3 was approximately 38.4%, with year-to-date revenue growth of 71.4% [33] - Gross margin for Q3 was 35.7%, down from 36.7% in Q2, but up from 34.8% in Q3 2020 [26][27] - Net income increased 26.1% year-over-year to $8.3 million, with an EPS of $0.30 [38] Business Line Data and Key Metrics Changes - Product revenue grew 44.2% to $56.9 million in Q3, with paint protection film growing 35.2% to $43.2 million [33] - Service revenue grew 74.9% in Q3, with total installation revenue from company-owned centers growing 107.6% [34] - The PermaPlate Films acquisition incurred most integration expenses in Q3, expected to complete by year-end [11] Market Data and Key Metrics Changes - U.S. revenue grew 69.5%, with organic growth of 49%, despite new car sales being the slowest in a decade [7] - Canada revenue grew 40.3% to $8.7 million, with strong performance in both U.S. and Canada [12] - China revenue reached $10.6 million, but new car sales were down 13% year-over-year [15] Company Strategy and Development Direction - The company is focused on expanding into mid-range markets through acquisitions like Tint Net and One Armor [8] - Recent acquisitions are aimed at enhancing the product portfolio and increasing market penetration [13][19] - The company plans to maintain an aggressive inventory strategy to mitigate supply chain disruptions [23][24] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing pricing pressures and supply chain challenges, with expectations for continued volatility [60][62] - Anticipated Q4 revenue is expected to be slightly higher than Q2 and Q3, contingent on recovery in new car inventories [25] - Management remains confident in achieving gross margins approaching 40% by mid-year next year [27] Other Important Information - The company plans to build inventory levels to approximately $45 million by year-end to hedge against supply interruptions [24] - Integration of recent acquisitions is a priority, with no new acquisitions planned for the remainder of the year [40] Q&A Session Summary Question: Performance amidst new vehicle inventory challenges - Management acknowledged strong performance despite low new vehicle inventory, attributing it to product adoption and dealer incentives [46] Question: Future acquisition strategy - Management indicated that while installation acquisitions have been a focus, they remain open to expanding the product portfolio [51][54] Question: Supply chain and pricing pressure dynamics - Management elaborated on unpredictable pricing and supply chain shortages, emphasizing the need for inventory buildup [58][63]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38858 XPEL, INC. (Exact name of registrant as specified in its charter) Nevada 20-1117381 (State or other jurisdiction of in ...

Financial Data and Key Metrics Changes - Revenue grew 92% year-over-year to a record $68.7 million, with a sequential growth of 32.5% from the previous quarter [8][30] - Gross margin for the quarter increased to 36.7% from 32.8% in Q2 2020, reflecting a strong performance despite challenges [24][34] - EBITDA margin finished at 19.8%, with net income margin at 14.8%, indicating significant operational leverage [26][36] Business Line Data and Key Metrics Changes - Product revenue grew 89.5% to approximately $58.7 million, with paint protection film growing 86.6% to $45.2 million [32] - Service revenue more than doubled for the quarter, growing 79.3% for the first half of the year [33] - Total installation revenue grew 124%, representing 9.3% of total revenue for the quarter [33] Market Data and Key Metrics Changes - U.S. revenue grew 112.8% year-over-year to $34.3 million, constituting nearly 50% of total revenue [15] - Canada posted record revenue of $8.9 million, while continental Europe grew 80% to $5.2 million [10][12] - Latin America grew over 100% from a small base, and the Middle East grew over 300% [14] Company Strategy and Development Direction - The company is focused on expanding its direct sales capability in Latin America and investing in Europe [11][14] - The acquisition of PermaPlate film is seen as a strategic move to enhance product offerings and market reach [17][50] - The company plans to continue integrating PermaPlate film and expects to achieve a targeted EBITDA run rate of approximately $6 million by year-end [36][38] Management's Comments on Operating Environment and Future Outlook - Management noted that new car inventory shortages are beginning to impact car sales, with July new car sales down 8% from June [22] - Despite potential challenges from inventory issues, the company remains optimistic about its revenue run rate and overall performance [23][24] - Management expects Q3 revenue to be slightly lower than Q2, indicating a cooling off from an exceptional quarter [21] Other Important Information - The company is actively pursuing acquisitions and has a robust pipeline, supported by a new $57 million credit facility [38] - Cash flow from operations was solid at $10.1 million, with higher-than-normal CapEx due to warehouse build-out [37] Q&A Session Summary Question: Impact of new car sales inventory on business - Management indicated that while new car sales are experiencing pressure from inventory shortages, the attach rate for products on sold vehicles continues to increase [41][42] Question: Pricing strategy in the second half of the year - Management confirmed that they are considering price increases in response to rising costs across various areas, but do not expect significant negative impacts on margins [43] Question: Integration of PermaPlate acquisition - Management reported that the integration of PermaPlate is progressing well, with operational and financial integration largely complete [49][50] Question: Outlook for the Chinese market - Management expressed confidence in the strong performance in China but noted potential near-term uncertainties due to increased COVID prevalence and lockdown pressures [47][48]

Revenue Performance - The Company reported total revenue of $120.6 million for the six months ended June 30, 2021, a 88% increase compared to $64.2 million for the same period in 2020[47] - The Company recognized $68.7 million in total revenue for the three months ended June 30, 2021, compared to $35.8 million for the same period in 2020, marking a 92% increase[47] - Total revenue for the three months ended June 30, 2021, was $68.74 million, a 91.8% increase from $35.81 million in the same period of 2020[48] - Pro forma combined revenue for the six months ended June 30, 2021, was $130,481,516, representing a 78.3% increase from $73,227,881 in 2020[75] Product Revenue - Product revenue for the six months ended June 30, 2021, was $103.6 million, up 89% from $54.7 million in the same period of 2020[47] - Paint protection film revenue for the six months ended June 30, 2021, was $81 million, a 84% increase from $44 million in the same period of 2020[47] Acquisitions - The Company acquired PermaPlate Film LLC for $30 million, funded with cash on hand, to expand its distribution and installation capabilities in the automotive window film market[28] - The company completed the acquisition of PermaPlate Film LLC for $30 million on May 25, 2021, aimed at market expansion[70] - The acquisition of PermaPlate Film was completed for a total purchase price of $30 million, with cash allocation of $30 million[72] - The consolidated revenue from the acquired company for the six months ended June 30, 2021, was $2,474,496, and the net income was $367,647[74] Financial Position - The Company entered into a new $57 million revolving line of credit facility to enhance its liquidity and financial flexibility[27] - The company has a $57 million revolving line of credit established on May 21, 2021, to fund working capital needs[55] - Warranty liabilities decreased to $45,764 as of June 30, 2021, from $52,006 as of December 31, 2020, reflecting adjustments based on historical claims data[35] - The Company’s accounts receivable allowance for doubtful accounts was $116,268 as of June 30, 2021, compared to $90,844 as of December 31, 2020[34] - The Company’s balance of contract liabilities was $619,463 as of June 30, 2021, reflecting payments received for which performance obligations have not yet been satisfied[47] - Total property and equipment increased to $12.85 million as of June 30, 2021, compared to $9.21 million at the end of 2020[49] - Intangible assets, net, rose to $21.90 million as of June 30, 2021, from $5.42 million at the end of 2020[51] - Inventory increased to $25.73 million as of June 30, 2021, compared to $22.36 million at the end of 2020[54] - Trade payables increased to $17.77 million as of June 30, 2021, from $12.99 million at the end of 2020[61] Expenses and Liabilities - Depreciation expense for the three months ended June 30, 2021, was $419,607, compared to $293,860 in the same period of 2020[49] - The fair value of contingent liabilities related to acquisitions was $475,031 as of June 30, 2021, down from $571,833 at the end of 2020[68] Goodwill and Intangible Assets - Goodwill from the acquisition, amounting to $11,271,949, is tax-deductible and reflects expected synergies and employee knowledge[73] - The intangible assets acquired have a weighted average useful life of 9 years and will be amortized on a straight-line basis[72] Risk Factors - The company does not currently hedge its exposure to foreign currency translation adjustments, which may impact financial statements[136] - A hypothetical 100 basis point increase in variable interest rates could have a material impact on the company's financial statements if borrowing occurs[137] Stock Options - The company granted 17,520 Restricted Stock Units (RSUs) to key executives at a grant price of $84.19 per unit, vesting over four years[76] Customer Concentration - The largest customer accounted for 18.4% of net sales in Q2 2021, down from 27.9% in Q2 2020[48] Operating Segments - The Company operates as a single operating segment, with its chief operating decision maker reviewing consolidated results monthly to evaluate performance[32]

XPEL, Inc. (NASDAQ:XPEL) Q1 2021 Earnings Conference Call May 10, 2021 11:00 AM ET Company Participants John Nesbett - IMS IR Ryan Pape - President & CEO Barry Wood - CFO Conference Call Participants Jeff Van Sinderen - B. Riley Steve Dyer - Craig-Hallum Operator Greetings, and welcome to the XPEL Inc. First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] please note that this con ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38858 XPEL, INC. (Exact name of registrant as specified in its charter) | Nevada | | 20-1117381 | | | --- | --- | --- | --- | | ...