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]

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] - Gross margin for the year improved to 42.2%, a 120 basis point increase over 2023, while Q4 gross margin was 40.6% [29][30] - Net income for the quarter declined 25.7% to $8.9 million, with an EPS of $0.32 per share, which would have been $0.35 per share without foreign exchange impacts [65] Business Line Data and Key Metrics Changes - Revenue from the US region grew 6.2% in Q4 to $59.1 million, with dealership services revenue growing around 9% [9][10] - OEM revenue declined slightly due to package changes in the Rivian program, but excluding this impact, OEM business grew approximately 16% in the quarter [19][20] - The total window film product line grew 32.9% in the quarter, driven primarily by automotive sales, which increased 31.7% to $14.3 million [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, marking a tough comparison [21] - The company completed distributor acquisitions in Japan, Thailand, and India, which added SG&A costs but are expected to yield revenue growth in the future [24][25] Company Strategy and Development Direction - The company aims to refine and implement its strategy to deploy capital for future growth, focusing on expanding its services business, particularly in the new car dealership space [43][44] - The company is advancing discussions to establish a direct presence in key markets, including China, to enhance operational leverage [24][42] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting improved customer sentiment in the aftermarket but acknowledging challenges from inflation and interest rates [38][40] - The company is focused on optimizing its expense structure and has initiated a comprehensive review to ensure investments are made in the right areas [34][36] Other Important Information - The company completed five acquisitions during the year for a total purchase price of $12.5 million, and its credit facility balance was zero at year-end [68] - Cash flow provided by operations was $6.3 million for the quarter and $47.8 million for the year, an increase from $37.4 million in 2023 [67] Q&A Session Summary Question: Can you provide more details on the sell-through situation in China? - Management indicated that the sell-in and sell-through dynamics have improved, with inventory days for new products being much lower, leading to better sales performance [72][73] Question: What are the expectations for gross margin and operating expenses in Q1? - Management expects gross margins to remain around 42%, with some pressure from the strong dollar, and noted uncertainty regarding future quarterly metrics due to external factors [76][78] Question: What are the plans for marketing spend in 2025? - Management aims to increase marketing spend from 3% to potentially 3.5% of revenue, emphasizing the importance of marketing investments [94][95]

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 [5] - Q4 revenue excluding China grew at 10.5%, while overall revenue growth for the quarter was 1.9% [6][39] - Gross margin for the year was 42.2%, a 120 basis point improvement over the previous year, while Q4 gross margin was 40.6% [20][21] - Net income for the quarter declined 25.7% to $8.9 million, with an EPS of $0.32, which would have been $0.35 without foreign exchange impacts [42][43] Business Line Data and Key Metrics Changes - The dealership services business grew around 9% in Q4, but average units protected in some dealerships declined or were flat compared to the previous year [7][9] - OEM revenue in Q4 declined slightly due to package changes, but excluding this impact, OEM business grew approximately 16% [14] - The total window film product line grew 32.9% in Q4, primarily driven by automotive sales, which grew 31.7% [39] Market Data and Key Metrics Changes - The U.S. region grew 6.2% in Q4, with dealership services being a significant contributor [6][7] - The China region reported revenue of $9.2 million, down from $16.6 million in the same quarter last year, indicating a tough comparison [16] - The company completed distributor acquisitions in Japan, Thailand, and India, with expectations of accelerated revenue growth post-acquisition [18][19] Company Strategy and Development Direction - The company aims to deepen its presence in key global markets, focusing on direct operations rather than distribution relationships [20][29] - There is a strategic focus on expanding the services business, particularly in the new car dealership space, to drive future growth [30] - The company is also working on enhancing its product offerings, including the launch of colored films and windshield protection films [34][35] Management's Comments on Operating Environment and Future Outlook - Management described 2025 as a pivotal year with mixed and uncertain outlooks, citing macroeconomic challenges such as inflation and interest rates [26][28] - There is cautious optimism regarding the aftermarket sentiment, with management noting improved execution and clarity in operations [26][27] - The company is focused on optimizing its expense structure and has initiated a comprehensive review to ensure investments are made wisely [23][25] Other Important Information - The company completed five acquisitions during the year for a total purchase price of $12.5 million, and its credit facility balance was zero at year-end [44] - Cash flow provided by operations for the year was $47.8 million, an increase from $37.4 million in 2023 [44] Q&A Session Summary Question: Insights on the situation in China regarding sell-throughs - Management indicated that the sell-in and sell-through dynamics have improved, with inventory levels being managed more effectively [47][48] Question: Outlook on gross margin and operating expenses for Q1 - Management expects gross margins to remain around 42%, with some pressure from the strong dollar, and noted uncertainty regarding future quarterly metrics [51][52] Question: Thoughts on the launch of colored films and marketing strategies - Management expressed excitement about the launch of colored films, indicating that marketing these products would be easier due to their visibility [56]

Revenue Performance - Revenue increased 1.9% to $107.5 million in Q4 2024, with a 10.5% increase excluding impacts from China[3] - Total revenue for 2024 was $420.4 million, a 6.1% increase compared to the prior year[3] - Total revenue for Q4 2024 was $107.527 million, a 1.9% increase from $105.538 million in Q4 2023[20] - US revenue increased 6.2% YoY, while revenue from China decreased 44.3% YoY[5] - Total installation revenue grew 16.1% YoY, with organic growth of 8.0% YoY[7] - The company expects Q1 2025 revenue to be approximately $97 - $99 million[15] Profitability Metrics - Gross margin was 40.6% in Q4 2024, up from 38.8% in Q4 2023[15] - Net income decreased 25.7% to $8.9 million, or $0.32 per share, compared to $12.0 million, or $0.43 per share in Q4 2023[3] - EBITDA decreased 19.3% to $14.3 million, representing 13.3% of revenue, down from 16.7% in Q4 2023[3] - Net income for Q4 2024 was $8.898 million, down from $11.970 million in Q4 2023, resulting in earnings per share of $0.32 compared to $0.43[20] - EBITDA for Q4 2024 was $14.250 million, down from $17.654 million in Q4 2023, reflecting the impact of increased operating expenses[29] Operating Expenses - Operating expenses increased 17.4% YoY, with sales and marketing expenses rising 24.6% YoY[15] - Operating expenses rose to $31.358 million in Q4 2024, up from $26.708 million in Q4 2023, primarily due to increased sales and marketing expenses[20] Cash and Assets - Cash and cash equivalents increased to $22.087 million as of December 31, 2024, from $11.609 million at the end of 2023[22] - Total assets grew to $285.607 million in 2024, up from $252.041 million in 2023, driven by increases in cash and inventory[22] Liabilities and Financial Stability - Total liabilities decreased to $60.152 million in 2024 from $72.052 million in 2023, indicating improved financial stability[22] Workforce and Cost Savings - A workforce reduction is expected to yield approximately $2 million in annual run rate savings[15] Revenue Breakdown - Product revenue decreased slightly to $81.847 million in Q4 2024 from $82.067 million in Q4 2023, while service revenue increased to $25.680 million from $23.471 million[20]

Group 1 - XPEL stock has decreased over 50% from its peak in July 2021 and has dropped more than 15% in 2024, indicating a potential buying opportunity [1] - The article suggests that the significant decline in stock price may warrant consideration for adding shares [1] Group 2 - The author of the article is a Senior Vice President at Stout, a global investment bank specializing in corporate finance and valuation [1] - The author holds a beneficial long position in XPEL shares through various means [1]

Group 1: Market Overview - The article discusses three underperforming stocks: XPEL, ACM Research, and Monday.com, which have strong fundamentals and Zacks Ranks, presenting potential investment opportunities for 2025 [3][4][13] - The "turn-of-the-year" effect may lead to a rally for these stocks, despite their current underperformance [4][14] Group 2: XPEL - XPEL is a leader in automotive protection products, known for paint protection films and window tinting, and has seen a 25% decline this year [6] - The stock is trading at a historically discounted valuation of 23.2x forward earnings compared to a five-year median of 37.5x, making it attractive for value investors [7] - XPEL has delivered an impressive 40% annualized return since 2019, indicating strong long-term growth potential [6][7] Group 3: Monday.com - Monday.com is a leading work management platform that has performed well but still lags behind the broader market, providing an entry point for growth investors [8] - The stock has a Zacks Rank 1 (Strong Buy) and is projected to see EPS growth of 42.5% annually over the next three to five years [9] - Concerns regarding automation's impact on software companies appear overblown for established platforms like Monday.com [9] Group 4: ACM Research - ACM Research specializes in advanced cleaning solutions for the semiconductor industry, generating most of its revenue in China, which exposes it to geopolitical risks [10] - The stock's forward P/E of 14x is significantly below its five-year median of 28.1x, indicating a historically discounted valuation [11] - With a Zacks Rank 1 (Strong Buy), ACMR is diversifying its geographical sales base to mitigate risks and capitalize on growth opportunities [11]