xpel-20250630

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 June 30, 2025


☐			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 incorporation or organization)

(I.R.S. Employer Identification No.)

711 Broadway St., Suite 320

San Antonio

Texas

78215

(Address of Principal Executive Offices)

(Zip Code)

Registrant's telephone number, including area code: (210) 678-3700

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	XPEL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 27,672,747 shares of common stock outstanding as of August 8, 2025.

TABLE OF CONTENTS


			Page
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statement of Changes in Equity			4
Condensed Consolidated Statement of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27

Part II - Other Information
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults Upon Senior Securities			30
Item 4. Mine Safety Disclosures			30
Item 5. Other Information			30
Item 6. Exhibits			31

Signatures			31

Part I. Financial Information

Item 1. Financial Statements

XPEL, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)


	(Unaudited)		(Audited)
	June 30, 2025		December 31, 2024
Assets
Current
Cash and cash equivalents	$	49,591	$	22,087
Accounts receivable, net	38,122		29,146
Inventory, net	104,129		110,904
Prepaid expenses and other current assets	5,474		5,314
Income tax receivable	—		893
Total current assets	197,316		168,344
Property and equipment, net	16,875		17,735
Right-of-use lease assets	20,138		19,490
Intangible assets, net	32,491		34,562
Deferred tax asset, net	1,257		—
Other non-current assets	3,456		1,350
Goodwill	46,538		44,126
Total assets	$	318,071	$	285,607
Liabilities
Current
Current portion of notes payable	$	69	$	63
Current portion lease liabilities	5,396		4,666
Accounts payable and accrued liabilities	38,955		36,789
Income tax payable	205		—
Total current liabilities	44,625		41,518
Deferred tax liability, net	—		469
Other long-term liabilities	1,492		1,810

Non-current portion of lease liabilities	16,159		16,126
Non-current portion of notes payable	137		229
Total liabilities	62,413		60,152
Commitments and Contingencies (Note 11)
Stockholders’ equity
Preferred stock, $0.001 par value; authorized 10,000,000; none issued and outstanding	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 27,669,848 and 27,651,773 issued and outstanding, respectively	28		28
Additional paid-in-capital	17,085		15,550
Accumulated other comprehensive loss	(362)		(4,236)
Retained earnings	238,989		214,113
	255,740		225,455
Non-controlling interest	(82)		—
Total stockholders’ equity	255,658		225,455
Total liabilities and stockholders’ equity	$	318,071	$	285,607

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue
Product revenue	$	94,795	$	83,200	$	173,507	$	150,052
Service revenue	29,918		26,717		55,011		49,969
Total revenue	124,713		109,917		228,518		200,021

Cost of Sales
Cost of product sales	58,190		51,274		106,630		93,409
Cost of service	13,006		10,778		24,475		20,871
Total cost of sales	71,196		62,052		131,105		114,280
Gross Margin	53,517		47,865		97,413		85,741

Operating Expenses
Sales and marketing	11,862		10,280		23,737		20,671
General and administrative	22,357		18,399		43,258		36,655
Total operating expenses	34,219		28,679		66,995		57,326

Operating Income	19,298		19,186		30,418		28,415

Interest expense	7		392		83		865
Foreign currency exchange (gain)/loss	(1,039)		275		(1,275)		548

Income before income taxes	20,330		18,519		31,610		27,002
Income tax expense	4,122		3,486		6,816		5,303
Net income	16,208		15,033		24,794		21,699
Net loss attributed to non-controlling interest	(82)		—		(82)		—
Net income attributable to stockholders of the Company	$	16,290	$	15,033	$	24,876	$	21,699

Earnings per share attributable to stockholders of the Company
Basic	$	0.59	$	0.54	$	0.90	$	0.79
Diluted	$	0.59	$	0.54	$	0.90	$	0.79
Weighted Average Number of Common Shares
Basic	27,666		27,635		27,660		27,633
Diluted	27,673		27,637		27,675		27,637

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Other comprehensive income
Net income	$	16,208	$	15,033	$	24,794	$	21,699
Foreign currency translation	3,047		(295)		3,874		(1,157)
Total Comprehensive income	19,255		14,738		28,668		20,542
Total Comprehensive income attributable to:
Stockholders of the Company	19,337		14,738		28,750		20,542
Non-controlling interest	(82)		—		(82)		—
Total comprehensive income	$	19,255	$	14,738	$	28,668	$	20,542

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)


Stockholders' Equity - Three Months Ended June 30,
	Common Stock			Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Equity attributable to Stockholders of the Company		Non-Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance as of March 31, 2024	27,631	$	28	$	13,176	$	175,290	$	(2,071)	$	186,423	$	—	$	186,423
Net income	—	—		—		15,033		—		15,033		—		15,033
Foreign currency translation	—	—		—		—		(295)		(295)		—		(295)
Stock-based compensation	7	—		750		—		—		750				750
Balance as of June 30, 2024	27,638	28		13,926		190,323		(2,366)		201,911		—		201,911

Balance as of March 31, 2025	27,662	28		16,136		222,699		(3,409)		235,454		—		235,454
Net income	—	—		—		16,290		—		16,290		(82)		16,208
Foreign currency translation	—	—		—		—		3,047		3,047		—		3,047
Stock-based compensation	8	—		949		—		—		949		—		949

Balance as of June 30, 2025	27,670	$	28	$	17,085	$	238,989	$	(362)	$	255,740	$	(82)	$	255,658


Stockholders' Equity - Six Months Ended June 30,
	Common Stock			Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Equity attributable to Stockholders of the Company		Non-Controlling Interest		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2023	27,630	$	28	$	12,546	$	168,624	$	(1,209)	$	179,989	$	—	$	179,989
Net income	—	—		—		21,699		—		21,699		—		21,699
Foreign currency translation	—	—		—		—		(1,157)		(1,157)		—		(1,157)
Stock-based compensation	8	—		1,380		—		—		1,380		—		1,380
Balance as of June 30, 2024	27,638	28		13,926		190,323		(2,366)		201,911		—		201,911

Balance as of December 31, 2024	27,652	28		15,550		214,113		(4,236)		225,455		—		225,455
Net income	—	—		—		24,876		—		24,876		(82)		24,794
Foreign currency translation	—	—		—		—		3,874		3,874		—		3,874
Stock-based compensation	18	—		1,535		—		—		1,535		—		1,535

Balance as of June 30, 2025	27,670	$	28	$	17,085	$	238,989	$	(362)	$	255,740	$	(82)	$	255,658

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities
Net income	$	24,794	$	21,699
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	3,093		2,804
Amortization of intangible assets	3,059		2,852
Loss/(Gain) on sale of property and equipment	7		(28)
Stock compensation	1,696		1,467
Provision for credit losses	181		189
Deferred income tax	(1,902)		(862)

Changes in assets and liabilities:
Accounts receivable, net	(7,841)		(5,754)
Inventory, net	7,911		8,766
Prepaid expenses and other current assets	(1,899)		(1,309)
Income taxes receivable and payable	1,052		(587)
Accounts payable and accrued liabilities	966		(7,299)
Net cash provided by operating activities	31,117		21,938
Cash flows used in investing activities
Purchase of property, plant and equipment	(1,946)		(3,828)
Proceeds from sale of property and equipment	15		—
Acquisition of businesses, net of cash acquired	(184)		(5,928)
Development of intangible assets	(788)		(841)
Net cash used in investing activities	(2,903)		(10,597)
Cash flows from financing activities
Net payments on revolving line of credit	—		(8,000)
Restricted stock withholding taxes paid in lieu of issued shares	(161)		(87)
Repayments of notes payable	(98)		(31)
Net cash used in financing activities	(259)		(8,118)
Net change in cash and cash equivalents	27,955		3,223
Foreign exchange impact on cash and cash equivalents	(451)		152
Increase in cash and cash equivalents during the period	27,504		3,375
Cash and cash equivalents at beginning of period	22,087		11,609
Cash and cash equivalents at end of period	$	49,591	$	14,984

Supplemental schedule of non-cash activities
Non-cash lease financing	$	2,840	$	5,038
Issuance of common stock for vested restricted stock units	$	521	$	462
Supplemental cash flow information
Cash paid for income taxes	$	7,457	$	6,798
Cash paid for interest	$	89	$	844

See notes to condensed consolidated financial statements.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. INTERIM FINANCIAL INFORMATION

The accompanying (a) condensed consolidated balance sheet as of December 31, 2024, which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 have been prepared by XPEL, Inc. (“XPEL” or the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. However, in the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position, results of operations and cash flows of the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of results to be expected for the full year or for any other interim period, due to variability in customer purchasing patterns and seasonal, operating and other factors.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 28, 2025 (the "Annual Report") and with the Management's Discussion and Analysis of Financial Condition and Results of Operations section appearing elsewhere in this Report.

2. SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - The Company is based in San Antonio, Texas and sells, distributes, and installs protective films and coatings, including automotive paint protection film, surface protection film, automotive and commercial/architectural window films and ceramic coatings. The Company was incorporated in the state of Nevada, U.S.A. in October 2003.

Basis of Presentation - The condensed consolidated financial statements are prepared in conformity with United States Generally Accepted Accounting Principles ("U.S. GAAP") and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. The functional currency for the Company is the United States ("U.S.") Dollar. The assets and liabilities of each of its wholly-owned foreign subsidiaries are translated into U.S. dollars using the exchange rate at the end of the balance sheet date. Revenues and expenses are translated at the average exchange rates for the period. Gains and losses from translations are recognized in foreign currency translation included in accumulated other comprehensive loss in the accompanying consolidated balance sheets.

Segment Reporting - The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer. During the three months ended June 30, 2025, the Company restructured its reporting to the CODM to include financial information from geographically segmented business units. The Company's CODM reviews geographically segmented data as well as consolidated results on a monthly basis to evaluate performance and make resource allocation decisions. Each geographical segment exhibits similar economic characteristics, shares common products and services, has similar customer types, and uses similar distribution methods. As a result, these segments have been aggregated into a single reportable segment in accordance with the aggregation criteria under ASC 280, Segment Reporting.

Goodwill - Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets. Goodwill is tested for impairment at the reporting unit level on an annual basis (at December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During the three months ended June 30, 2025, the Company restructured its

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

reporting to the CODM leading to the creation of additional reporting units. With the change in its operating segments, the Company reallocated goodwill across its reporting units, utilizing a relative fair value approach. The Company recognized no goodwill impairment during the three and six months ended June 30, 2025, and there is no significant accumulated impairment of goodwill from prior periods. Refer to Note 6, Goodwill for more information related to goodwill.

Use of Estimates - The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Actual outcomes may differ from these estimates under different assumptions and conditions.

Accounts Receivable - Accounts receivable are shown net of allowances for expected credit losses of $0.1 million and $0.2 million as of June 30, 2025 and December 31, 2024, respectively. The Company evaluates the adequacy of its allowances by analyzing the aging of receivables, customer financial condition, historical collection experience, the value of any collateral and other economic and industry factors. Actual collections may differ from historical experience, and if economic, business or customer conditions deteriorate significantly, adjustments to these reserves may be required. When the Company becomes aware of factors that indicate a change in a specific customer’s ability to meet its financial obligations, the Company records a specific reserve for credit losses.

Provisions and Warranties - We provide a warranty on our products. Liabilities under the warranty policy are based on a review of historical warranty claims. Adjustments are made to the accruals as claims and data experience warrant. Our liabilities for warranties as of June 30, 2025 and December 31, 2024 were $0.8 million and $0.7 million, respectively. The following tables present a summary of our accrued warranty liabilities, which are recorded within the Company's accounts payable and accrued liabilities, for the six months ended June 30, 2025 and the twelve months ended December 31, 2024 (in thousands):


	2025
Warranty liability, January 1	$	738
Warranties assumed in period	619
Payments	(602)
Warranty liability, June 30	$	755


	2024
Warranty liability, January 1	$	422
Warranties assumed in period	1,551
Payments	(1,235)
Warranty liability, December 31	$	738

Recent Accounting Pronouncements Issued and Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures”, which makes certain updates to income tax disclosures. This standard becomes effective for annual periods

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

beginning after December 15, 2024, with early adoption permitted. We do not anticipate that the implementation of this standard will have a material impact on our financial statements.

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses”, which makes certain updates to the presentation of expenses. This standard becomes effective for annual reporting periods beginning after December 15, 2026 and interim reports beginning after December 15, 2027, with early adoption permitted. We are assessing the effect that the adoption of this standard will have on our financial statements.

Recent Developments

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain businesses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on the consolidated financial statements.

3. REVENUE

Revenue recognition

The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods and services to a customer, in an amount that reflects the consideration that it expects to receive in exchange for those goods or services. This is achieved through applying the following five-step model:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, the Company satisfies a performance obligation

The Company generates substantially all of its revenue from contracts with customers, whether formal or implied. Sales taxes collected from customers are remitted to the appropriate taxing jurisdictions and are excluded from sales revenue as the Company considers itself a pass-through conduit for collecting and remitting sales taxes, with the exception of taxes assessed during the procurement process of select inventories. Shipping and handling costs are included in cost of sales.

Revenue from product and services sales is recognized when control of the goods, or benefit of the service, is furnished to the customer. This occurs at a point in time, typically upon shipment to the customer or completion of the service. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

Based upon the nature of the products the Company sells, its customers have limited rights of return and those that do occur are immaterial. Discounts provided by the Company to customers at the time of sale are recognized as a reduction in sales as the products are sold.

Warranty obligations associated with the sale of our products are assurance-type warranties that are a guarantee of the product’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. Warranty expense is included in cost of sales.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

We apply a practical expedient to expense direct costs of obtaining a contract when incurred because the amortization period would be one year or less.

Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order. Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order. The Company does not enter into commitments to provide goods or services that have terms greater than one year. In limited cases, the Company does require payment in advance of shipping product. Typically, product is shipped within a few days after prepayment is received. These prepayments are recorded as contract liabilities on the condensed consolidated balance sheet and are included in accounts payable and accrued liabilities (Note 9). As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient under the Accounting Standards Codification Topic 606 ("ASC 606") to omit disclosures regarding remaining performance obligations.

When the Company transfers goods or provides services to a customer, payment is due, subject to normal terms, and is not conditional on anything other than the passage of time. Typical payment terms range from due upon receipt to due within 30 days, depending on the type of customer and relationship. At contract inception, the Company expects that the period of time between the transfer of goods to the customer and when the customer pays for those goods will be less than one year, which is consistent with the Company’s standard payment terms. Accordingly, the Company has elected the practical expedient under ASC 606 to not adjust for the effects of a significant financing component. As such, these amounts are recorded as receivables and not contract assets.

The following table summarizes transactions within contract liabilities for the three and six months ended June 30, 2025 (in thousands):


Balance, December 31, 2024	$	821
Revenue recognized related to payments included in the December 31, 2024 balance	(757)
Payments received for which performance obligations have not been satisfied	1,341
Effect of foreign currency translation	3
Balance, March 31, 2025	1,408
Revenue recognized related to payments included in the March 31, 2025 balance	(1,345)
Payments received for which performance obligations have not been satisfied	1,810
Effect of foreign currency translation	266
Balance, June 30, 2025	$	2,139

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The table below sets forth the disaggregation of revenue by product category for the periods indicated below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Product Revenue
Paint protection film	$	62,666	$	57,315	$	119,106	$	106,326
Window film	27,959		22,018		46,594		36,567
Other	4,170		3,867		7,807		7,159
Total	$	94,795	$	83,200	$	173,507	$	150,052

Service Revenue
Software	$	2,180	$	1,991	$	4,299	$	3,919
Cutbank credits	4,523		4,782		8,195		8,799
Installation labor	22,448		19,458

SEC Form 10-Q filed by XPEL Inc.