Xpel, Inc. ((XPEL)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Xpel, Inc. showcased a commendable performance amidst a volatile market environment. The sentiment was a blend of optimism due to positive revenue growth and strategic positioning, particularly in the U.S. and key international markets, although challenges persist in Latin America and with rising SG&A expenses. Overall, the company’s resilience in navigating these challenges was evident.
Record Revenue Growth
Xpel, Inc. achieved a record revenue growth of 13.5%, reaching $124.7 million, surpassing expectations. The U.S. region was a significant contributor, with an 8.4% increase to $70.4 million, marking a record for the quarter.
Strong Performance in Key Regions
The company reported robust performance across several key regions. Canada saw a 7.4% revenue growth, while China contributed $7.7 million. Additionally, Europe, India, and the Middle East also demonstrated strong performance, further solidifying Xpel’s international presence.
Gross Margin Stability
Xpel maintained gross margin stability, reporting a gross margin of 42.9%, which was a slight increase of 6 basis points sequentially. This stability reflects the company’s effective cost management strategies.
Cash Flow and M&A Readiness
The company generated just under $28 million in operating cash flow and ended the quarter with approximately $50 million in net cash. This strong cash position positions Xpel well for pursuing M&A opportunities, indicating a strategic focus on growth and expansion.
Growth in Window Film Product Line
Xpel’s window film product line experienced significant growth, with a 27% increase driven by automotive window tint, which grew by 22.5%. This highlights the company’s successful product diversification strategy.
Revenue Challenges in Latin America
Despite overall positive performance, Xpel faced revenue challenges in Latin America due to inconsistent revenue timing in large distributor markets in South America, indicating a need for strategic adjustments in this region.
Increase in SG&A Expenses
SG&A expenses rose by 19.3% to $34.2 million, largely due to overhead from distributor acquisitions and $1.6 million in one-time costs. This increase underscores the financial impact of the company’s strategic acquisitions.
Volatility in U.S. Car Market
The U.S. car market experienced volatility, influenced by tariff anxiety and mixed SAAR impacts. However, this volatility was not overwhelmingly negative for Xpel, suggesting resilience in its market strategy.
Forward-Looking Guidance
Looking ahead, Xpel anticipates Q3 revenue to be between $117 million and $119 million. The company is actively pursuing multiple M&A opportunities and remains focused on expanding its personalization platform and launching new products, such as colored paint protection films. This forward-looking guidance reflects Xpel’s commitment to sustained growth and innovation.
In conclusion, Xpel, Inc.’s earnings call highlighted a strong performance with record revenue growth and strategic international positioning. While challenges remain, particularly in Latin America and with rising SG&A expenses, the company’s proactive strategies and forward-looking guidance suggest a promising outlook. Investors and market enthusiasts will likely find Xpel’s resilience and strategic initiatives encouraging as the company navigates a dynamic market landscape.