XPEL, Inc. (NASDAQ:XPEL) (the "Company"), a global provider of protective films and coatings, announced results for the fourth quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

Revenue increased 11.9% to $78.5 million compared to fourth quarter 2021.

Net income increased 34.7% to $8.4 million, or $0.30 per basic and diluted share, versus net income of $6.2 million, or $0.22 per basic and diluted share in the fourth quarter of 2021.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew 32.4% to $13.2 million, or 16.8% of revenue compared to $10.0 million, or 14.2% of revenue in fourth quarter 2021.¹

Year End 2022 Highlights:

Revenue increased 25.0% to $324.0 million as compared to $259.3 million in the prior year.

Net income increased by 31.1% to $41.4 million, or $1.50 per basic and diluted share, compared to $31.6 million, or $1.14 per basic and diluted share, in 2021.

EBITDA grew 38.7% to $61.2 million, or 18.9% of revenue, as compared to $44.1 million, or 17.0% in the prior year.¹

In the quarter, the Company's revenue was negatively impacted by approximately $3.5 million resulting from the cancellation of some China orders due to uncertainty created by the change in COVID policies and China's reopening.

The Company also incurred approximately $0.4 million in inventory write-offs which negatively impacted gross margin. The Company's selling, general and administrative expenses were negatively impacted by approximately $0.3 million in severance-related costs and $0.4 million in compensation expense tangential to a previous acquisition.

Normalizing for these items, revenue would have grown approximately 17%, EBITDA margin would have been approximately 18% and EPS would have been approximately $0.36 per share.

Ryan Pape, President and Chief Executive Officer of XPEL, commented, "Despite some headwinds in the fourth quarter, there is a lot to be positive about as we look to 2023. We continue to have tremendous momentum in almost all of our regions, particularly the US which grew 31.6% in the quarter. Automakers seem cautiously optimistic about 2023 and new car inventories continue to improve. This momentum has continued and we are off to a great start in 2023."

For the Quarter Ended December 31, 2022:

Revenue. Revenue increased approximately $8.3 million, or 11.9%, to $78.5 million as compared to $70.1 million in the fourth quarter of the prior year.

Gross Margin. Gross margin was 39.6% compared to 35.2% in the fourth quarter of 2021.

Expenses. Operating expenses increased to $20.2 million, or 25.7% of revenue, compared to $16.2 million, or 23.0% of revenue in the prior year period.

Net income. Net income was $8.4 million, or $0.30 per basic and diluted share, versus net income of $6.2 million, or $0.22 per basic and diluted share in the fourth quarter of 2021.

EBITDA. EBITDA was $13.2 million, or 16.8% of revenue, compared to $10.0 million, or 14.2% of revenue in the fourth quarter of the prior year.¹

For the Year Ended December 31, 2022:

Revenue. Revenue increased approximately $64.7 million, or 25.0%, to $324.0 million as compared to $259.3 million in the prior year.

Gross Margin. Gross margin was 39.4% compared to 35.7% for full year 2021.

Expenses. Operating expenses increased to $73.6 million, or 22.7% of revenue, compared to $52.6 million, or 20.3%, of revenue in full year 2021.

Net income. Net income was $41.4 million, or $1.50 per basic and diluted share, versus net income of $31.6 million, or $1.14 per basic and diluted share in full year 2021.

EBITDA. EBITDA was $61.2 million, or 18.9% of revenue, compared to $44.1 million, or 17.0% of revenue in the prior year.¹

Conference Call Information

The Company will host a conference call and webcast today, February 28, 2023 at 11:00 a.m. Eastern Time to discuss the Company's fourth quarter and year end 2022 results.

To access the live webcast, please visit the XPEL, Inc. website at www.xpel.com/investor.

To participate in the call by phone, dial 888-506-0062 approximately five minutes prior to the scheduled start time. International callers please dial (973) 528-0011. Callers should use access code: 264934.

A replay of the teleconference will be available until March 30, 2023 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 47536.

About XPEL, Inc.

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. With a global footprint, a network of trained installers and proprietary DAP software, XPEL is dedicated to exceeding customer expectations by providing high-quality products, leading customer service, expert technical support and world-class training. XPEL, Inc. is publicly traded on Nasdaq under the symbol "XPEL".

¹ See reconciliation of non-GAAP financial measures below

Safe harbor statement

This release includes forward-looking statements regarding XPEL, Inc. and its business, which may include, but is not limited to, anticipated use of proceeds from capital transactions, expansion into new markets, and execution of the company's growth strategy. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "is expected," "expects," "scheduled," "intends," "contemplates," "anticipates," "believes," "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of XPEL. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, performance and acceptance of the company's products, economic factors, competition, the equity markets generally and many other factors beyond the control of XPEL. Although XPEL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.


XPEL, Inc.
Consolidated Statements of Income
(In thousands except per share data)

	(Unaudited) Three Months Ended December 31,				Year Ended December 31,
		2022		2021		2022		2021
Revenue
Product revenue	$	60,421	$	56,688	$	258,174	$	217,283
Service revenue		18,060		13,444		65,819		41,980
Total revenue		78,481		70,132		323,993		259,263

Cost of Sales
Cost of product sales		40,259		39,446		169,905		151,286
Cost of service		7,176		5,997		26,576		15,300
Total cost of sales		47,435		45,443		196,481		166,586
Gross Margin		31,046		24,689		127,512		92,677

Operating Expenses
Sales and marketing		6,852		5,295		25,367		18,273
General and administrative		13,349		10,865		48,208		34,288
Total operating expenses		20,201		16,160		73,575		52,561

Operating Income		10,845		8,529		53,937		40,116

Interest expense		477		160		1,410		303
Foreign currency exchange (gain) loss		(272)		251		562		373

Income before income taxes		10,640		8,118		51,965		39,440
Income tax expense		2,282		1,914		10,584		7,873
Net income	$	8,358	$	6,204	$	41,381	$	31,567

Earnings per share
Basic	$	0.30	$	0.22	$	1.50	$	1.14
Diluted	$	0.30	$	0.22	$	1.50	$	1.14
Weighted Average Number of Common Shares
Basic		27,616		27,613		27,614		27,613
Diluted		27,618		27,613		27,616		27,613

XPEL, Inc.
Consolidated Balance Sheets
(In thousands except share and per share data)

	December 31, 2022		December 31, 2021
Assets
Current
Cash and cash equivalents	$	8,056	$	9,644
Accounts receivable, net		14,726		13,159
Inventory, net		80,575		51,936
Prepaid expenses and other current assets		3,464		3,672
Income tax receivable		—		617
Total current assets		106,821		79,028
Property and equipment, net		14,203		9,898
Right-of-use lease assets		15,309		12,910
Intangible assets, net		29,294		32,733
Other non-current assets		972		791
Goodwill		26,763		25,655
Total assets	$	193,362	$	161,015
Liabilities
Current
Current portion of notes payable	$	77	$	375
Current portion of lease liabilities		3,885		2,978
Accounts payable and accrued liabilities		22,970		32,915
Income tax payable		470		—
Total current liabilities		27,402		36,268
Deferred tax liability, net		2,049		2,748
Other long-term liabilities		1,070		2,631
Borrowings on line of credit		26,000		25,000
Non-current portion of lease liabilities		12,119		9,830
Non-current portion of notes payable		—		76
Total liabilities		68,640		76,553
Commitments and Contingencies (Note 15)
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; 27,616,064 issued and outstanding		28		28
Additional paid-in-capital		11,073		10,581
Accumulated other comprehensive loss		(2,203)		(590)
Retained earnings		115,824		74,443
Total stockholders' equity		124,722		84,462
Total liabilities and stockholders' equity	$	193,362	$	161,015

Reconciliation of Non-GAAP Financial Measure

EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, plus income tax expense plus depreciation expense and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of our financial performance under GAAP and should not be considered as alternatives to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA Reconciliation

	(Unaudited) Three Months Ended December 31,				Year Ended December 31,
		2022		2021		2022		2021
Net Income	$	8,358	$	6,204	$	41,381	$	31,567
Interest		477		160		1,410		303
Taxes		2,282		1,914		10,584		7,873
Depreciation		947		629		3,433		1,887
Amortization		1,153		1,080		4,401		2,501
EBITDA	$	13,217	$	9,987	$	61,209	$	44,131

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XPEL Reports Fourth Quarter and 2022 Year End Results