XPEL(XPEL)2023-02-28 20:45Financial Data and Key Metrics Changes - In Q4 2022, revenue grew 11.9% to $78.5 million, net income increased by 34.7%, and EBITDA rose by 32.4% [9][60] - For the full year 2022, revenue grew by 25%, net income increased by 31%, and EBITDA grew by 39% [7][9] - The gross margin for Q4 was 39.6%, up from 35.2% in Q4 2021, and the full year gross margin was 39.4% compared to 35.7% in 2021 [33][52] Business Line Data and Key Metrics Changes - Paint protection film (PPF) revenue was flat in Q4, but combined with cutbank revenue, it grew over 4% [55] - Window film revenue grew 33.7% quarter-over-quarter to $11.7 million, with a year-to-date growth of 41.7% [56] - Architectural window film revenue grew 95% in Q4 to $1.2 million, with a year-to-date growth of 98% [57] - Total installation revenue grew 27% in Q4 and 77% year-to-date, representing 17.4% of total revenue in Q4 [58] Market Data and Key Metrics Changes - The U.S. market showed exceptional performance with a 31.6% growth in Q4, contributing $47.6 million to revenue [8][19] - Canada, Europe, and the U.K. regions continued to grow, although at a lower percentage than in Q3 [21] - Latin America had a strong quarter, and the Middle East saw a slight decline due to timing of orders [22][23] Company Strategy and Development Direction - The company plans to expand its corporate team in China to better support distributors and enhance market intelligence [16] - There is a focus on acquisitions in international distribution and dealership services to enhance growth [71][72] - The company aims for 20% to 25% organic revenue growth in 2023, with expectations of a 200-basis-point improvement in gross margin [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the China market despite recent challenges, anticipating a positive outlook for 2023 [15][49] - The company is seeing strong momentum in the U.S. market and expects continued growth despite economic uncertainties [25][49] - Management highlighted the importance of maintaining vendor relationships to manage inventory effectively [39][41] Other Important Information - The company incurred one-time expenses related to severance and compensation, but these are expected to be behind them moving forward [35][76] - Cash flow from operations for Q4 was $2.4 million, with expectations for strong long-term cash flow generation [62] Q&A Session Summary Question: Insights on dealer business performance - Management noted strong performance in the dealership business, with increased dealer additions and higher product attach rates [64][66] Question: Future acquisition plans - The company plans to focus on international distribution and dealership services for future acquisitions [69][71] Question: One-time items in financials - Management confirmed that one-time items are likely behind them, with a clean P&L expected in upcoming quarters [76] Question: Growth expectations for PPF and other products - Growth in PPF is heavily dependent on the China market, with expectations for overall growth across all product lines [78][82] Question: Pricing strategies and market coverage - Management indicated that pricing adjustments have been implemented in less than 50% of markets, leaving room for future pricing power [92][95] Question: Update on Rivian relationship and European OEM projects - The Rivian program is ramping up successfully, and there is ongoing interest in expanding European OEM projects [96][100]