xpel-20210311
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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
March 11, 2021
Date of Report (date of earliest event reported)
XPEL, INC.
(Exact name of registrant as specified in its charter)
Nevada001-3885820-1117381
(State or other jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification No.)
618 W. Sunset Road78216
San AntonioTexas
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareXPELThe 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 March 11, 2021, XPEL, Inc. (XPEL) announced its consolidated financial results for the year ended December 31, 2020. 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
 
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: March 11, 2021By: /s/ Barry R. Wood
Barry R. Wood
Senior Vice President and Chief Financial Officer


EX 99.1
XPEL Reports Record Revenue in Fourth Quarter 2020 of $48.6 million; Fourth Quarter Revenue Increase of 23.1%; Full Year Revenue Increase of 22.3%

San Antonio, TX – March 11, 2021 – 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, 2020.

Fourth Quarter 2020 Highlights:
•Revenues increased 23.1% to $48.6 million compared to fourth quarter 2019 and increased 5.4% sequentially as compared to third quarter 2020
•Net income grew 31.8% to $6.1 million, or $0.22 per basic and diluted share, compared to $4.6 million, or $0.17 per basic and diluted share, in the same quarter of 2019
•EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew 45.3% to $8.1 million, or 16.6% of revenues compared to $5.6 million, or 14.1% in fourth quarter 20191
Full Year Highlights
•Revenues increased 22.3% to $158.9 million compared to full year 2019.
•Net income increased 30.6% to $18.3 million, or $0.66 per basic and diluted share, compared to $14.0 million, or $0.51 per basic and diluted share, in 2019
•EBITDA grew 34.9% to $25.3 million, or 15.9% of revenues, as compared to $18.7 million, or 14.4% of revenues in 20191

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We closed out a strong year by delivering record fourth quarter results – our second consecutive quarter reaching record levels. The XPEL brand continues to grow around the world, and as we move through 2021 we’re focused on continuing the momentum achieved in the back half of 2020.”

The Company also announced the filing of an automatic “shelf” registration statement on Form S-3. Under this shelf registration statement, the Company may sell from time to time in one or more offerings, various series of debt securities, common stock, or other securities.

Barry Wood, Senior Vice President and Chief Financial Officer of XPEL, commented, “While we have no current plans to raise capital, this registration statement provides flexibility and maximizes our optionality in raising capital should the need arise in the future as we execute on our multi-faceted growth strategy."


For the Quarter Ended December 31, 2020:
Revenues. Revenues increased approximately $9.1 million or 23.1% to $48.6 million as compared to $39.5 million in the fourth quarter of the prior year.

Gross Margin. Gross margin was 32.8% compared to 31.5% in the fourth quarter of 2019.



Expenses. Operating expenses increased slightly to $8.6 million, but decreased as a percentage of sales to 17.7%, compared to $7.5 million or 18.9% of sales in the prior year period.

Net income. Net income was $6.1 million, or $0.22 per basic and diluted share versus net income of $4.6 million, or $0.17 per basic and diluted share in the fourth quarter of 2019.


EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $8.1 million, or 16.6% of sales, as compared to $5.6 million in the prior year1.

For the Year Ended December 31, 2020:

Revenues. Revenues increased approximately $29.0 million or 22.3% to $158.9 million as compared to $129.9 million in 2019.

Gross Margin. Gross margin improved to 34.0% compared 33.5% in full year 2019.

Expenses. Operating expenses increased to $30.7 million, and decreased to 19.3% of sales, compared to $26.4 million or 20.3% of sales in 2019.

Net income. Net income was $18.3 million, or $0.66 per basic and diluted share versus net income of $14 million, or $0.51 per basic and diluted share for 2019.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $25.3 million, or 15.9% of sales, as compared to $18.7 million in 20191.


As of December 31, 2020, XPEL had cash and cash equivalents of $29.0 million compared to $11.5 million at December 31, 2019.


1 See reconciliation of non-GAAP financial measures below


Conference Call Information

The Company will host a conference call and webcast on Wednesday, March 11, 2021 at 11:00 a.m. Eastern Time to discuss the Company’s results for the fourth quarter and year end 2020.

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) 407-8033 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8033.

A replay of the teleconference will be available until April 11, 2021 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 40119.


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.



This press release is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.



For more information, contact:
Investor Relations:
John Nesbett/Jennifer Belodeau
IMS Investor Relations
Phone: (203) 972-9200



XPEL Inc.
Consolidated Statements of Income

(Unaudited)
Three Months Ended December 31,Year Ended December 31,
202020192018202020192018
Revenue
Product revenue$42,021,771 $34,909,276 $23,027,479 $136,262,067 $112,204,739 $95,526,350 
Service revenue6,585,560 4,586,007 3,765,400 22,662,381 17,728,142 14,394,264 
Total revenue48,607,331 39,495,283 26,792,879 158,924,448 129,932,881 109,920,614 
Cost of Sales
Cost of product sales30,814,288 25,785,422 17,624,227 98,502,279 82,308,256 73,656,389 
Cost of service1,833,831 1,252,725 752,571 6,397,160 4,118,366 2,827,620 
Total cost of sales32,648,119 27,038,147 18,376,798 104,899,439 86,426,622 76,484,009 
Gross Margin15,959,212 12,457,136 8,416,081 54,025,009 43,506,259 33,436,605 
Operating Expenses
Sales and marketing2,758,614 2,115,397 1,867,047 9,748,292 7,584,377 6,802,241 
General and administrative5,868,645 5,367,845 3,970,547 20,906,785 18,834,535 14,828,361 
Total operating expenses8,627,259 7,483,242 5,837,594 30,655,077 26,418,912 21,630,602 
Operating Income7,331,953 4,973,894 2,578,487 23,369,932 17,087,347 11,806,003 
Interest expense76,000 15,015 33,004 249,480 96,646 168,389 
Foreign currency exchange (gain) loss(104,334)(111,586)47,634 316,093 40,273 156,309 
Income before income taxes7,360,287 5,070,465 2,497,849 22,804,359 16,950,428 11,481,305 
Income tax expense1,271,888 451,991 600,477 4,522,668 2,955,356 2,760,073 
Net income6,088,399 4,618,474 1,897,372 18,281,691 13,995,072 8,721,232 
Income attributed to non-controlling interest— 8,136 3,498 — 17,447 8,698 
Net income attributable to stockholders of the Company$6,088,399 $4,610,338 $1,893,874 $18,281,691 $13,977,625 $8,712,534 
Earnings per share attributable stockholders of the Company
Basic and diluted$0.22 $0.17 $0.07 $0.66 $0.51 $0.32 
Weighted Average Number of Common Shares
Basic and diluted27,612,597 27,612,597 27,612,597 27,612,597 27,612,597 27,612,597 






XPEL Inc.
Consolidated Balance Sheets
December 31, 2020December 31, 2019
Assets
Current
Cash and cash equivalents$29,027,124 $11,500,973 
Accounts receivable, net9,944,213 7,154,084 
Inventory, net22,364,126 15,141,153 
Prepaid expenses and other current assets1,441,749 2,391,340 
Income tax receivable— 93,150 
Total current assets62,777,212 36,280,700 
Property and equipment, net4,706,248 4,014,653 
Right-of-use lease assets5,973,702 5,079,110 
Intangible assets, net5,423,980 3,820,460 
Other non-current assets486,472 — 
Goodwill4,472,217 2,406,512 
Total assets$83,839,831 $51,601,435 
Liabilities
Current
Current portion of notes payable$2,568,172 $462,226 
Current portion of lease liabilities1,650,749 1,126,701 
Accounts payable and accrued liabilities16,797,462 10,197,353 
Income tax payable183,961 — 
Total current liabilities21,200,344 11,786,280 
Deferred tax liability, net627,806 604,715 
Other long-term liabilities729,408 — 
Non-current portion of lease liabilities4,331,214 4,009,949 
Non-current portion of notes payable3,568,191 307,281 
Total liabilities30,456,963 16,708,225 
Commitments and Contingencies (Note 14)
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 outstanding27,613 27,613 
Additional paid-in-capital10,412,471 11,348,163 
Accumulated other comprehensive income (loss)66,215 (908,764)
Retained earnings42,876,569 24,594,878 
53,382,868 35,061,890 
Non-controlling interest— (168,680)
Total stockholders’ equity53,382,868 34,893,210 
Total liabilities and stockholders’ equity$83,839,831 $51,601,435 






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 December 31,Year Ended December 31,
202020192018202020192018
Net Income$6,088,399 $4,618,474 $1,897,372 $18,281,691 $13,995,072 $8,721,232 
Interest76,000 15,015 33,004 249,480 96,646 168,389 
Taxes1,271,888 451,991 600,477 4,522,668 2,955,356 2,760,073 
Depreciation384,275 260,533 196,604 1,274,095 915,918 735,983 
Amortization250,245 210,151 170,126 955,937 781,105 642,801 
EBITDA$8,070,807 $5,556,164 $2,897,583 $25,283,871 $18,744,097 $13,028,478