8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

May 10, 2022

Date of Report (date of earliest event reported)

XPEL, INC.

(Exact name of registrant as specified in its charter)

Nevada	001-38858		20-1117381
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S. Employer Identification No.)
3251 I-35		78219
San Antonio	Texas
(Address of Principal Executive Offices)		(Zip Code)

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

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition

On May 10, 2022, XPEL, Inc. (“XPEL”) announced its consolidated financial results for the three months ended March 31, 2022. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K, and the information set forth therein is incorporated herein by reference and constitutes a part of this report.

The information contained in Item 2.02 of this report and Exhibit 99.1 to this report shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filings made by XPEL under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

  Item 9.01. Financial Statements and Exhibits

    (d) Exhibits

The following exhibit is to be filed as part of this Form 8-K:

EXHIBIT NO.	IDENTIFICATION OF EXHIBIT
99.1	Press Release Dated May 10, 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	XPEL, Inc.
Dated: May 10, 2022	By: /s/ Barry R. Wood
	Barry R. Wood
	Senior Vice President and Chief Financial Officer

EX-99.1

EX 99.1

XPEL Reports Record Revenue of $71.9 Million in First Quarter 2022; Revenue Growth 38.6%; Gross Margin 38.6%

San Antonio, TX – May 10, 2022– XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights:

•Revenues increased 38.6% to a record $71.9 million in the first quarter.

•Gross margin percentage improved to 38.6% in the first quarter, a new high for the Company.

•Net income grew 14.0% to $7.8 million, or $0.28 per share, compared to $6.8 million, or $0.25 per share, in the same quarter of 2021.

•EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 29.6% to $11.9 million, or 16.5% of revenues compared to $9.2 million in first quarter 2021.1

•Adjusting for costs associated with the Company’s Dealer Conference, which did not occur in 2021 due to COVID-19, EBITDA would have grown 38.2% to $12.7 million or 17.6% of revenues and net income would have grown 23.2% to $8.4 million, or $0.30 per share.

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We delivered a strong first quarter to begin 2022, despite on-going challenges with new car inventory in the US and impacts from COVID-related lockdowns in China. We have taken actions to navigate a unique set of circumstances where we're seeing strong retail demand with simultaneous new car inventory constraints. Despite this unusual environment, we believe we are well-positioned to deliver solid results in coming quarters.”

For the Quarter Ended March 31, 2022:

Revenues. Revenues increased approximately $20.0 million or 38.6% to $71.9 million as compared to $51.9 million in the first quarter of the prior year.

Gross Margin. Gross margin was 38.6% compared to 35.3% in the first quarter of 2021.

Expenses. Operating expenses increased to $17.7 million, or 24.6% of sales, compared to $9.7 million or 18.8% of sales in the prior year period.

Net income. Net income was $7.8 million, or $0.28 per basic and diluted share versus net income of $6.8 million, or $0.25 per basic and diluted share in the first quarter of 2021.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $11.9 million, or 16.5% of sales, as compared to $9.2 million, or 17.7% of sales in the prior year1.

1See reconciliation of non-GAAP financial measures below

Conference Call Information

The Company will host a conference call and webcast today, May 10, 2022 at 11:00 a.m. Eastern Time to discuss the Company’s first quarter 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 (877) 545-0320 approximately five minutes prior to the scheduled start time. International callers please dial (973) 528-0002. Callers should use access code: 822049.

A replay of the teleconference will be available until June 9, 2022 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 45329.

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”.

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.

For more information contact:

Investor Relations:

John Nesbett/Jennifer Belodeau

IMS Investor Relations

Phone: (203) 972-9200

Email: xpel@imsinvestorrelations.com

XPEL, INC.

Condensed Consolidated Statements of Income (Unaudited)

	(Unaudited)
	Three Months Ended March 31,
	2022		2021
Revenue
Product revenue	$	58,097,446	$	44,931,353
Service revenue	13,766,321		6,934,761
Total revenue	71,863,767		51,866,114
Cost of Sales
Cost of product sales	38,193,987		31,546,547
Cost of service	5,953,347		2,033,136
Total cost of sales	44,147,334		33,579,683
Gross Margin	27,716,433		18,286,431
Operating Expenses
Sales and marketing	6,311,220		3,387,830
General and administrative	11,369,291		6,351,491
Total operating expenses	17,680,511		9,739,321
Operating Income	10,035,922		8,547,110
Interest expense	219,726		52,719
Foreign currency exchange loss	5,126		35,612
Income before income taxes	9,811,070		8,458,779
Income tax expense	2,007,938		1,611,720
Net income	7,803,132		6,847,059
Earnings per share
Basic	$	0.28	$	0.25
Diluted	$	0.28	$	0.25
Weighted Average Number of Common Shares
Basic	27,612,597		27,612,597
Diluted	27,612,597		27,612,597

XPEL, INC.

Condensed Consolidated Balance Sheets

	(Unaudited)		(Audited)
	March 31, 2022		December 31, 2021
Assets
Current
Cash and cash equivalents	$	10,595,557	$	9,644,248
Accounts receivable, net	15,178,627		13,159,036
Inventory, net	74,486,843		51,936,164
Prepaid expenses and other current assets	3,749,690		3,671,657
Income tax receivable	—		617,141
Total current assets	104,010,717		79,028,246
Property and equipment, net	11,364,205		9,898,126
Right-of-use lease assets	14,443,369		12,909,607
Intangible assets, net	31,977,505		32,732,771
Other non-current assets	851,431		790,339
Goodwill	25,614,110		25,655,428
Total assets	$	188,261,337	$	161,014,517
Liabilities
Current
Current portion of notes payable	$	351,674	$	375,413
Current portion lease liabilities	3,732,825		2,977,794
Accounts payable and accrued liabilities	42,357,330		32,914,615
Income tax payable	656,090		—
Total current liabilities	47,097,919		36,267,822
Deferred tax liability, net	2,702,639		2,748,283
Other long-term liabilities	2,429,332		2,630,486
Borrowings on line of credit	33,000,000		25,000,000
Non-current portion of lease liabilities	10,790,979		9,830,128
Non-current portion of notes payable	—		75,717
Total liabilities	96,020,869		76,552,436
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; 27,612,597 issued and outstanding	27,613		27,613
Additional paid-in-capital	10,651,532		10,581,483
Accumulated other comprehensive loss	(685,240)		(590,446)
Retained earnings	82,246,563		74,443,431
Total stockholders’ equity	92,240,468		84,462,081
Total liabilities and stockholders’ equity	$	188,261,337	$	161,014,517

Reconciliation of Non-GAAP Financial Measure

EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense 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 March 31,
	2022		2021
Net Income	7,803,132		6,847,059
Interest	219,726		52,719
Taxes	2,007,938		1,611,720
Depreciation	756,344		383,090
Amortization	$	1,076,466	$	262,606
EBITDA	$	11,863,606	$	9,157,194

XML

Cover	May 10, 2022
Cover [Abstract]
Document Type	8-K
Document Period End Date	May 10, 2022
Entity Registrant Name	XPEL, INC.
Amendment Flag	false
Entity Central Index Key	0001767258
Soliciting Material	false
City Area Code	(210)
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	XPEL
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Written Communications	false
Local Phone Number	678-3700
Entity Incorporation, State or Country Code	NV
Entity File Number	001-38858
Entity Tax Identification Number	20-1117381
Entity Address, Postal Zip Code	78219
Entity Address, Address Line One	3251 I-35
Entity Address, State or Province	TX
Entity Address, City or Town	San Antonio