Group 1 - XPEL, Inc. is a global leader in protective automotive films and coatings, generating revenue primarily through paint protection films (PPF), window tint, ceramic coatings, and supporting software and tools for installers [2][3] - The company benefits from recurring revenue driven by ongoing demand for PPF on new vehicles, repeat business from dealerships and installers, and an expanding global distribution network [2][3] - XPEL's strong brand reputation in premium PPF and tint solutions, along with high-margin products, positions it favorably in the automotive aftermarket sector [2][4] Group 2 - The growth potential of XPEL is enhanced by its ability to expand into new regions and verticals, leveraging trusted brand and established dealer relationships [3][4] - The company's products not only protect vehicles but also enhance resale value, improve aesthetics and durability, and provide comfort and energy efficiency [3] - XPEL's integrated approach, balancing high-quality products, strong customer relationships, and strategic expansion, creates a compelling investment case with predictable revenue growth [4][6] Group 3 - The company's stock price was trading at $38.48 as of September 8th, with a forward P/E of 21.87 [1] - Previous analyses indicated that the company's stock price had depreciated approximately by 11.25% as of January 2025, amid macro and regional challenges [5] - The current bullish thesis emphasizes recurring revenue, scalable distribution, and the integrated approach to dealer and customer relationships [6]

Group 1 - XPEL has acquired the assets of its exclusive distributor in the aftermarket in China [2] - The acquired business is projected to generate annual revenues of approximately $45 - $50 million [2] - This acquisition is expected to add incremental revenue of approximately $13 - $18 million to XPEL [2]

Revenue and Income - Total revenue for the three months ended June 30, 2025, was $124.7 million, a 13.4% increase from $109.9 million in the same period of 2024[45] - Revenue from paint protection film for the three months ended June 30, 2025, was $62.7 million, up 9.3% from $57.3 million in the prior year[45] - Net income attributable to stockholders for the three months ended June 30, 2025 was $16,290,000, compared to $15,033,000 for the same period in 2024, representing an 8.4% increase[65] - Earnings per share for the three months ended June 30, 2025 was $0.59, up from $0.54 in the same period of 2024, reflecting a 9.3% increase[65] - The company reported gross margin of $53,517,000 for the three months ended June 30, 2025, compared to $47,865,000 for the same period in 2024, indicating a 11.9% increase[68] Assets and Liabilities - Total property and equipment, net, as of June 30, 2025, was $16.9 million, a decrease from $17.7 million as of December 31, 2024[46] - Total intangible assets, net, as of June 30, 2025, were $32.5 million, down from $34.6 million as of December 31, 2024[47] - Accounts receivable net of allowances for expected credit losses were $0.1 million as of June 30, 2025[29] - Warranty liabilities as of June 30, 2025, were $0.8 million, compared to $0.7 million as of December 31, 2024[30] - The company reported a warranty liability of $0.8 million as of June 30, 2025, reflecting an increase in warranty claims[30] - Contingent liabilities measured at fair value increased from $1,816,000 at December 31, 2024 to $2,076,000 at June 30, 2025[62] Financial Ratios and Compliance - The company maintained a Consolidated Total Leverage Ratio of 3.50 to 1.00 and a Consolidated Interest Coverage Ratio of 3.00 to 1.00 as of June 30, 2025, in compliance with debt covenants[55] Inventory and Credit Facilities - Finished goods inventory increased from $89,556,000 at December 31, 2024 to $95,233,000 at June 30, 2025, while total inventory decreased from $110,904,000 to $104,129,000[49] - The company had no outstanding balances under its $125 million revolving credit facility as of June 30, 2025[50] Goodwill and Amortization - Goodwill increased from $37,461,000 at December 31, 2023 to $46,538,000 at June 30, 2025, reflecting additions of $7,762,000 in 2024 and $1,074,000 in 2025[48] - Amortization expense for the three months ended June 30, 2025, was $1.5 million, compared to $1.4 million for the same period in 2024[47] - The company recognized no goodwill impairment during the three and six months ended June 30, 2025[27] Regulatory and Risk Assessment - The company is currently assessing the impact of the One Big Beautiful Bill Act on its consolidated financial statements[34] - The company has operations exposed to currency risk in multiple currencies, including the British Pound and Canadian Dollar, without current hedging strategies in place[125]

Financial Data and Key Metrics Changes - The company reported a record revenue growth of 13.5% to $124.7 million in Q2 2025, exceeding expectations [5] - Gross margin for the quarter was 42.9%, up six basis points sequentially, but down from the previous year's second quarter due to revenue mix [15] - EBITDA for the quarter was $25 million, reflecting a growth of 14.7% when normalizing for one-time costs [18] - Net income increased by 7.8% for the quarter, with a net income margin of 13% [26] - Earnings per share (EPS) was $0.59 for the quarter, normalizing for one-time costs would result in an EPS of $0.63 [27] Business Line Data and Key Metrics Changes - Total product revenue increased by 13.9%, while total service revenue grew by 12% quarter over quarter [24] - The automotive window tint product line grew by 22.5%, contributing significantly to overall product revenue growth [24] - The company experienced strong performance in the dealer service business, with revenue growth outpacing the aftermarket channel [30] Market Data and Key Metrics Changes - The U.S. region revenue grew by 8.4% to $70.4 million, marking a record for the quarter [6] - Canada region revenue increased by 7.4%, showing recovery after a slow start to the year [8] - China revenue was $7.7 million, reflecting a more normalized revenue recognition cadence [10] - Latin America saw a revenue decline due to inconsistent timing in large distributor markets [11] Company Strategy and Development Direction - The company is focused on consolidating international distribution and expanding its direct sales model in key markets like Brazil [19][44] - There is an emphasis on enhancing the personalization platform to increase consumer awareness and drive product sales [20][35] - The company plans to launch new products, including colored paint protection films, to expand its product offerings [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance relative to competitors despite a challenging environment [13] - The company anticipates Q3 revenue to be in the range of $117 million to $119 million, facing a tough comparison to the previous year's highest revenue quarter [12] - Management expects low double-digit growth in China, driven by increased efforts in the OEM and PDI channels [52] Other Important Information - The company ended the quarter with approximately $50 million in net cash on the balance sheet [18] - There were one-time costs of $1.6 million in SG&A for the quarter, related to restructuring and M&A activities [17] Q&A Session Summary Question: Any more color on the dealer service business trends? - Management noted that the dealer service business continues to grow faster than the aftermarket channel, with July setting records in terms of vehicles and revenue [30] Question: Can you delve into the personalization platform initiatives? - The personalization platform aims to increase consumer awareness and facilitate online transactions, ultimately driving revenue for installers [35] Question: Any considerations for gross margin and OpEx in the second half? - Management indicated that the overall cost structure is stable, with no significant changes expected for the rest of the year [38] Question: Thoughts on M&A opportunities with the current cash position? - The company is actively pursuing M&A opportunities, focusing on consolidating international distribution and expanding dealership business [44] Question: How is the U.S. market positioned for the second half and into 2026? - Management emphasized the importance of focusing on controllable factors to increase attach rates, regardless of fluctuations in new car sales [49] Question: What is the growth outlook for China? - The company expects low double-digit growth in China, with significant upside potential from pursuing OEM and PDI channels [52]

Company Overview and Performance Highlights [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Overview) XPEL achieved record **$124.7 million USD** revenue in Q2 2025, a 13.5% year-over-year increase, with EBITDA and net income growing, especially after excluding one-time expenses Second Quarter 2025 Financial Performance (USD in millions) | Metric | Q2 2025 | Q2 2024 | YoY Growth | Notes | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $124.7 | $109.9 | 13.5% | Record revenue | | **Gross Margin** | 42.9% | 43.5% | -0.6% | | | **EBITDA** | $23.4 | $21.8 | 7.1% | 18.7% of revenue (19.9% in 2024) | | **EBITDA (Normalized)** | $25.0 | - | 14.7% | Excludes approximately $1.6 million one-time expenses | | **Net Income** | $16.2 | $15.0 | 7.8% | | | **Basic and Diluted EPS** | $0.59 | $0.54 | - | | | **Net Income (Normalized)** | $17.5 | - | 16.7% | Excludes one-time expenses | | **Basic and Diluted EPS (Normalized)** | $0.63 | - | - | Excludes one-time expenses | - The company incurred approximately **$1.6 million USD** in one-time expenses during the second quarter, primarily related to restructuring costs, legal and due diligence fees, and acquisition strategies[2](index=2&type=chunk) [First Six Months 2025 Performance Overview](index=1&type=section&id=First%20Six%20Months%202025%20Overview) For the first six months of 2025, XPEL's revenue grew 14.2% to **$228.5 million USD**, with EBITDA and net income also achieving double-digit growth, indicating strong first-half momentum First Six Months 2025 Financial Performance (USD in millions) | Metric | First Six Months 2025 | First Six Months 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | **Revenue** | $228.5 | $200.0 | 14.2% | | **Gross Margin** | 42.6% | 42.9% | -0.3% | | **EBITDA** | $37.8 | $33.5 | 12.9% | | **Net Income** | $24.8 | $21.7 | 14.3% | | **Basic and Diluted EPS** | $0.90 | $0.79 | - | - President and CEO Ryan Pape expressed satisfaction with the first-half results and anticipates continued growth momentum in the second half of the year[1](index=1&type=chunk) Detailed Financial Analysis [Consolidated Financial Highlights for Q2 2025](index=2&type=section&id=Financial%20Highlights%20for%20the%20Second%20Quarter%202025) This section presents unaudited consolidated financial highlights for Q2 2025 and Q2 2024, detailing key financial metrics and their year-over-year changes Consolidated Financial Summary (USD in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $124,713 | $109,917 | 13.5 | | Gross Profit | $53,517 (42.9%) | $47,865 (43.5%) | 11.8 | | Operating Expenses | $34,219 (27.4%) | $28,679 (26.1%) | 19.3 | | Net Income | $16,208 (13.0%) | $15,033 (13.7%) | 7.8 | | EBITDA | $23,369 (18.7%) | $21,824 (19.9%) | 7.1 | | Net Cash Provided by Operating Activities | $27,888 (22.4%) | $26,896 (24.5%) | 3.7 | [Revenue Summary by Geographical Region](index=2&type=section&id=Geographical%20Revenue%20Summary) In Q2 2025, XPEL achieved significant revenue growth across multiple regions, with China showing the strongest increase at **75.1%**, and record revenues in the US, Europe, and the Middle East Geographical Revenue Breakdown (USD in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | 2025 Share of Total Revenue | 2024 Share of Total Revenue | | :--- | :--- | :--- | :--- | :--- | :--- | | United States | $70,380 | $64,902 | 8.4% | 56.4% | 59.0% | | Canada | $14,254 | $13,274 | 7.4% | 11.5% | 12.1% | | **North America** | **$84,634** | **$78,176** | **8.3%** | **67.9%** | **71.1%** | | China | $7,705 | $4,401 | 75.1% | 6.2% | 4.0% | | Rest of Asia | $5,428 | $4,120 | 31.7% | 4.3% | 3.8% | | **Asia Pacific** | **$13,133** | **$8,521** | **54.1%** | **10.5%** | **7.8%** | | EU, UK, and Africa | $17,360 | $15,261 | 13.8% | 13.9% | 13.9% | | India and Middle East | $6,746 | $4,800 | 40.5% | 5.4% | 4.4% | | Latin America | $2,840 | $3,159 | (10.1)% | 2.3% | 2.8% | | **Total** | **$124,713** | **$109,917** | **13.5%** | **100.0%** | **100.0%** | - The company achieved record revenues in the United States, Europe, and the Middle East[6](index=6&type=chunk) [Revenue by Product and Service Type](index=2&type=section&id=Product%20and%20Service%20Revenue) In Q2 2025, XPEL's product and service revenues both grew, with window film revenue increasing most significantly at **27.0%**, and product revenue remaining the primary component - Total product revenue increased by **13.9%** year-over-year, accounting for **76.0%** of total revenue[6](index=6&type=chunk) - Total window film revenue increased by **27.0%** year-over-year, representing **22.4%** of total revenue[6](index=6&type=chunk) - Total service revenue increased by **12.0%** year-over-year, comprising **24.0%** of total revenue[6](index=6&type=chunk) - Total installation revenue (combining labor and products) increased by **17.9%** year-over-year[6](index=6&type=chunk) - Adjusted product revenue (combining cutbank credit revenue and product revenue) increased by **12.9%** year-over-year[6](index=6&type=chunk) [Operating Expenses and Margins](index=2&type=section&id=Operating%20Expenses%20and%20Margins) In Q2 2025, the company's gross margin slightly decreased, while both selling and marketing expenses and general and administrative expenses saw double-digit increases - Gross margin was **42.9%** in Q2 2025, compared to **43.5%** in the same period of 2024[6](index=6&type=chunk) - Selling and marketing expenses increased by **15.4%** year-over-year[6](index=6&type=chunk) - General and administrative expenses increased by **21.5%** year-over-year[6](index=6&type=chunk) [Cash Flows from Operating Activities](index=3&type=section&id=Cash%20Flows%20from%20Operations) In Q2 2025, the company generated **$27.9 million USD** in cash flow from operating activities - Cash flow provided by operating activities was **$27.9 million USD** in Q2 2025[7](index=7&type=chunk) Business Outlook [Third Quarter 2025 Outlook](index=3&type=section&id=2025%20Outlook) The company projects Q3 2025 revenue to be between **$117 million** and **$119 million USD** - The company expects Q3 2025 revenue to be approximately **$117 million** to **$119 million USD**[8](index=8&type=chunk) Corporate Information and Disclosures [About XPEL, Inc.](index=3&type=section&id=About%20XPEL%2C%20Inc.) XPEL is a leading provider of protective films and coatings, offering high-quality products and customer service through a global network and proprietary software - 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[11](index=11&type=chunk) - The company boasts a global presence, a network of trained installers, and proprietary DAP software, committed to delivering high-quality products, leading customer service, expert technical support, and world-class training

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]