XPEL(XPEL)2025-05-06 15:00Financial 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]