Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 08, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-38858 | |
Entity Registrant Name | XPEL, INC. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 20-1117381 | |
Entity Address, Address Line One | 618 W. Sunset Road | |
Entity Address, City or Town | San Antonio | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78216 | |
City Area Code | 210 | |
Local Phone Number | 678-3700 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | XPEL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,612,597 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001767258 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current | ||
Cash and cash equivalents | $ 7,295,906 | $ 3,971,226 |
Accounts receivable, net | 7,285,327 | 5,554,313 |
Inventory, net | 16,428,406 | 10,799,611 |
Prepaid expenses and other current assets | 2,071,833 | 706,718 |
Total current assets | 33,081,472 | 21,031,868 |
Property and equipment, net | 3,666,166 | 3,384,206 |
Right-of-Use lease assets | 4,515,591 | |
Intangible assets, net | 3,778,794 | 3,804,026 |
Other assets | 29,385 | 0 |
Goodwill | 2,334,505 | 2,322,788 |
Total assets | 47,405,913 | 30,542,888 |
Current | ||
Current portion of notes payable | 586,154 | 853,150 |
Current portion lease liabilities | 1,062,176 | |
Accounts payable and accrued liabilities | 10,585,352 | 6,292,093 |
Income tax payable | 540,846 | 1,337,599 |
Total current liabilities | 12,774,528 | 8,482,842 |
Deferred tax liability, net | 629,397 | 478,864 |
Non-current portion of lease liabilities | 3,544,207 | |
Non-current portion of notes payable | 399,209 | 968,237 |
Total liabilities | 17,347,341 | 9,929,943 |
Stockholders’ equity | ||
Preferred stock, $0.001 par value; authorized 10,000,000; none issued and outstanding | 0 | 0 |
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 | 11,348,163 | 11,348,163 |
Accumulated other comprehensive loss | (1,113,240) | (1,190,055) |
Retained earnings | 19,984,540 | 10,617,253 |
Equity attributable to stockholders of the company | 30,247,076 | 20,802,974 |
Non-controlling interest | (188,504) | (190,029) |
Total stockholders’ equity | 30,058,572 | 20,612,945 |
Total liabilities and stockholders’ equity | $ 47,405,913 | $ 30,542,888 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Preferred stock shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock shares issued (in shares) | 27,612,597 | 27,612,597 |
Common stock shares outstanding (in shares) | 27,612,597 | 27,612,597 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | ||||
Total revenue | $ 35,617,998 | $ 29,215,325 | $ 90,437,598 | $ 83,127,735 |
Cost of Sales | ||||
Total cost of sales | 23,344,968 | 20,364,785 | 59,388,475 | 58,107,211 |
Gross Margin | 12,273,030 | 8,850,540 | 31,049,123 | 25,020,524 |
Operating Expenses | ||||
Sales and marketing | 1,805,038 | 1,898,586 | 5,468,980 | 4,935,194 |
General and administrative | 4,798,833 | 3,962,674 | 13,466,690 | 10,857,814 |
Total operating expenses | 6,603,871 | 5,861,260 | 18,935,670 | 15,793,008 |
Operating Income | 5,669,159 | 2,989,280 | 12,113,453 | 9,227,516 |
Interest expense | 23,851 | 31,301 | 81,631 | 135,385 |
Foreign currency exchange loss | 136,951 | 85,551 | 151,859 | 108,675 |
Income before income taxes | 5,508,357 | 2,872,428 | 11,879,963 | 8,983,456 |
Income tax expense | 999,072 | 690,523 | 2,503,365 | 2,159,596 |
Net income | 4,509,285 | 2,181,905 | 9,376,598 | 6,823,860 |
Income attributed to non-controlling interest | 6,602 | 15,713 | 9,311 | 5,200 |
Net income attributable to stockholders of the Company | $ 4,502,683 | $ 2,166,192 | $ 9,367,287 | $ 6,818,660 |
Earnings per share attributable stockholders of the Company | ||||
Earnings per share basic and diluted (in dollars per share) | $ 0.16 | $ 0.08 | $ 0.34 | $ 0.25 |
Weighted Average Number of Common Shares | ||||
Weighted-average common shares outstanding, basic and diluted (in shares) | 27,612,597 | 27,612,597 | 27,612,597 | 27,229,720 |
Product revenue | ||||
Revenue | ||||
Total revenue | $ 30,815,251 | $ 25,415,749 | $ 77,295,463 | $ 72,498,871 |
Cost of Sales | ||||
Total cost of sales | 22,283,771 | 19,622,006 | 56,522,834 | 56,032,162 |
Service revenue | ||||
Revenue | ||||
Total revenue | 4,802,747 | 3,799,576 | 13,142,135 | 10,628,864 |
Cost of Sales | ||||
Total cost of sales | $ 1,061,197 | $ 742,779 | $ 2,865,641 | $ 2,075,049 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other comprehensive income | ||||
Net income | $ 4,509,285 | $ 2,181,905 | $ 9,376,598 | $ 6,823,860 |
Foreign currency translation | (143,535) | 165,187 | 69,029 | (261,529) |
Total comprehensive income including portion attributable to non-controlling interest | 4,365,750 | 2,347,092 | 9,445,627 | 6,562,331 |
Total comprehensive income attributable to stockholders of the company | 4,365,735 | 2,346,843 | 9,444,102 | 6,594,905 |
Total comprehensive income attributable to non-controlling interest | $ 15 | $ 249 | $ 1,525 | $ (32,574) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Total | Common Stock | Additional Paid-in-Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Equity attributable to Stockholders of the Company | Non-Controlling Interest |
Beginning stock outstanding balance (in shares) at Dec. 31, 2017 | 27,612,597 | ||||||
Beginning balance at Dec. 31, 2017 | $ 12,495,386 | $ 27,613 | $ 11,348,163 | $ 1,904,719 | $ (596,683) | $ 12,683,812 | $ (188,426) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 6,823,860 | 6,818,660 | 6,818,660 | 5,200 | |||
Foreign currency translation | (261,529) | (223,755) | (223,755) | (37,774) | |||
Ending stock outstanding balance (in shares) at Sep. 30, 2018 | 27,612,597 | ||||||
Ending balance at Sep. 30, 2018 | 19,057,717 | $ 27,613 | 11,348,163 | 8,723,379 | (820,438) | 19,278,717 | (221,000) |
Beginning stock outstanding balance (in shares) at Jun. 30, 2018 | 27,612,597 | ||||||
Beginning balance at Jun. 30, 2018 | 16,710,625 | $ 27,613 | 11,348,163 | 6,557,187 | (1,001,089) | 16,931,874 | (221,249) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 2,181,905 | 2,166,192 | 2,166,192 | 15,713 | |||
Foreign currency translation | 165,187 | 180,651 | 180,651 | (15,464) | |||
Ending stock outstanding balance (in shares) at Sep. 30, 2018 | 27,612,597 | ||||||
Ending balance at Sep. 30, 2018 | 19,057,717 | $ 27,613 | 11,348,163 | 8,723,379 | (820,438) | 19,278,717 | (221,000) |
Beginning stock outstanding balance (in shares) at Dec. 31, 2018 | 27,612,597 | ||||||
Beginning balance at Dec. 31, 2018 | 20,612,945 | $ 27,613 | 11,348,163 | 10,617,253 | (1,190,055) | 20,802,974 | (190,029) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 9,376,598 | 9,367,287 | 9,367,287 | 9,311 | |||
Foreign currency translation | 69,029 | 76,815 | 76,815 | (7,786) | |||
Ending stock outstanding balance (in shares) at Sep. 30, 2019 | 27,612,597 | ||||||
Ending balance at Sep. 30, 2019 | 30,058,572 | $ 27,613 | 11,348,163 | 19,984,540 | (1,113,240) | 30,247,076 | (188,504) |
Beginning stock outstanding balance (in shares) at Jun. 30, 2019 | 27,612,597 | ||||||
Beginning balance at Jun. 30, 2019 | 25,692,822 | $ 27,613 | 11,348,163 | 15,481,857 | (976,292) | 25,881,341 | (188,519) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 4,509,285 | 4,502,683 | 4,502,683 | 6,602 | |||
Foreign currency translation | (143,535) | (136,948) | (136,948) | (6,587) | |||
Ending stock outstanding balance (in shares) at Sep. 30, 2019 | 27,612,597 | ||||||
Ending balance at Sep. 30, 2019 | $ 30,058,572 | $ 27,613 | $ 11,348,163 | $ 19,984,540 | $ (1,113,240) | $ 30,247,076 | $ (188,504) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 9,376,598 | $ 6,823,860 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, plant and equipment | 655,385 | 539,379 |
Amortization of intangible assets | 570,954 | 472,675 |
Impairments | 66,364 | 0 |
Loss on sale of property and equipment | 1,521 | 36,930 |
Bad debt expense | 153,949 | 172,019 |
Deferred income tax | 135,221 | (67,462) |
Accretion on notes payable | 50,346 | 49,311 |
Changes in current assets and liabilities: | ||
Accounts receivable | (1,883,620) | (1,623,508) |
Inventory, net | (5,679,694) | (2,116,295) |
Prepaid expenses and other current assets | (1,372,894) | (429,881) |
Other assets | 61,795 | 0 |
Accounts payable and accrued liabilities | 4,308,679 | 696,860 |
Income tax payable | (799,052) | (205,842) |
Net cash provided by operating activities | 5,645,552 | 4,348,046 |
Cash flows used in investing activities | ||
Purchase of property, plant and equipment | (994,074) | (1,064,909) |
Proceeds from sale of property and equipment | 41,197 | 117,122 |
Acquisition of subsidiaries, net of cash acquired and notes payable | 0 | (429,360) |
Development of intangible assets | (534,720) | (129,947) |
Net cash used in investing activities | (1,487,597) | (1,507,094) |
Cash flows from financing activities | ||
Net repayments on revolving credit agreement | 0 | (2,000,000) |
Repayment of bank loan payable | 0 | (440,126) |
Repayments of notes payable | (908,909) | (444,690) |
Net cash used in financing activities | (908,909) | (2,884,816) |
Net change in cash and cash equivalents | 3,249,046 | (43,864) |
Foreign exchange impact on cash and cash equivalents | 75,634 | (8,470) |
Increase (decrease) in cash and cash equivalents during the period | 3,324,680 | (52,334) |
Cash and cash equivalents at beginning of period | 3,971,226 | 3,498,904 |
Cash and cash equivalents at end of period | 7,295,906 | 3,446,570 |
Supplemental schedule of non-cash activities | ||
Notes payable issued for acquisitions | 0 | 762,690 |
Forgiveness of debt for acquired entities | 0 | 88,216 |
Supplemental cash flow information | ||
Cash paid for income taxes | 3,004,758 | 2,314,334 |
Cash paid for interest | $ 15,890 | $ 84,974 |
INTERIM FINANCIAL INFORMATION
INTERIM FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
INTERIM FINANCIAL INFORMATION | INTERIM FINANCIAL INFORMATION The accompanying (a) condensed consolidated balance sheet as of December 31, 2018 , which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2019 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 Amendment No. 2 to the Form 10 filed with the SEC on May 30, 2019. These condensed consolidated financial statements also should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations section appearing in this report. Certain immaterial amounts in the prior year consolidated financial statements have been reclassified in order to conform to the presentation adopted in the current year. None of these changes in presentation affect previously reported results of operations. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | 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 architectural window films and ceramic coatings. The Company was incorporated in the state of Nevada, U.S.A. in October 2003 and its registered office is 618 W. Sunset Road, San Antonio, Texas, 78216. Basis of Presentation - The condensed consolidated financial statements are prepared in conformity with GAAP and include the accounts of the Company and its wholly owned or majority owned subsidiaries. The ownership interest of non-controlling participants in subsidiaries that are not wholly-owned is included as a separate component of stockholders’ equity. The non-controlling participants’ share of the net income is included as “Income attributable to noncontrolling interest” on the Condensed Consolidated Statements of Income and Comprehensive Income. Intercompany accounts and transactions have been eliminated. The functional currency for the Company is the United States dollar. The assets and liabilities of each of its 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 income in the accompanying consolidated balance sheets. Foreign currency exchange gains and losses are recorded in other expense, net in the accompanying condensed consolidated statements of income. The ownership percentages and functional currencies of the entities included in these condensed consolidated financial statements are as follows: Subsidiaries Functional Currency % Owned by XPEL, Inc. XPEL, Ltd. UK Pound Sterling 85 % Armourfend CAD, LLC US Dollar 100 % XPEL Canada Corp. Canadian Dollar 100 % XPEL B.V. Euro 100 % XPEL Germany GmbH Euro 100 % XPEL de Mexico S. de R.L. de C.V. Peso 100 % XPEL Acquisition Corp. Canadian Dollar 100 % Protex Canada, Inc. Canadian Dollar 100 % Apogee Corp. New Taiwan Dollar 100 % Segment Reporting - Management has concluded that our chief operating decision maker (“CODM”) is our chief executive officer. The Company’s CODM reviews the entire organization’s consolidated results as a whole on a monthly basis to evaluate performance and make resource allocation decisions. Management views the Company’s operations and manages its business as one operating segment. Use of Estimates - The preparation of these condensed consolidated financial statements in conformity to U.S. GAAP requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at 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 an allowance for doubtful accounts of $169,010 and $133,696 as of September 30, 2019 and December 31, 2018 , 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. Liability under the warranty policy is based on a review of historical warranty claims. Adjustments are made to the accruals as claims data experience warrant. Our liability for warranties as of September 30, 2019 and December 31, 2018 was $73,041 and $70,250 , respectively. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases” (“the new lease standard” or “ASC 842”), which requires an entity to recognize both assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The new lease standard requirements were effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Company adopted this standard effective January 1, 2019. In adopting this standard, the Company elected the package of practical expedients afforded thereby. This election allowed the Company, among other things, to carry forward prior lease classifications. Pursuant to the adoption of this standard, Right-Of-Use (“ROU”) assets and operating lease liabilities (current and long-term portions) as of September 30, 2019 were $4,515,591 and $4,606,383 , respectively. Refer to Note 13 for additional information related to the adoption of this standard. Recent Accounting Pronouncements Issued and Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2023 and is required to be applied prospectively. We are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | 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. Revenues from product and services sales are recognized when control of the goods is transferred to the customer which 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 which 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. We apply a practical expedient to expense direct costs of obtaining a contract when incurred because the amortization period would have been 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 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 ASC 606 to omit disclosures regarding remaining performance obligations. When the Company transfers goods or 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 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 nine months ended September 30, 2019 : Balance, December 31, 2018 $ 136,213 Revenue recognized related to payments included in the December 31, 2018 balance (38,405 ) Payments received for which performance obligations have not been satisfied 217,195 Balance, March 31, 2019 315,003 Revenue recognized related to payments included in the March 31, 2019 balance (77,265 ) Payments received for which performance obligations have not been satisfied 1,493,645 Balance, June 30, 2019 1,731,383 Revenue recognized related to payments included in the June 30, 2019 balance (1,659,056 ) Payments received for which performance obligations have not been satisfied 1,345,633 Balance, September 30, 2019 $ 1,417,960 The table below sets forth the disaggregation of revenue by product category for the periods indicated below: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Product Revenue Paint protection film $ 26,527,586 $ 22,533,967 $ 66,150,360 $ 64,672,721 Window film 3,522,815 2,125,910 8,526,886 5,662,725 Other 764,850 755,872 2,618,217 2,163,425 Total 30,815,251 25,415,749 77,295,463 72,498,871 Service Revenue Software $ 859,432 $ 653,090 $ 2,378,944 $ 1,886,176 Cutbank credits 1,957,224 1,641,337 5,487,320 4,583,739 Installation labor 1,843,936 1,414,326 4,790,279 3,854,328 Training 142,155 90,823 485,592 304,621 Total 4,802,747 3,799,576 13,142,135 10,628,864 Total $ 35,617,998 $ 29,215,325 $ 90,437,598 $ 83,127,735 Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product. The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors: Three Months Ended Nine Months Ended 2019 2018 2019 2018 United States $ 15,738,762 $ 13,334,294 $ 44,745,859 $ 33,148,006 China 9,359,531 8,035,746 17,006,451 25,289,752 Canada 4,937,514 3,659,902 13,253,413 11,912,203 Continental Europe 1,945,104 1,606,842 5,341,164 4,610,313 United Kingdom 1,032,399 638,023 2,842,682 2,073,656 Asia Pacific 1,168,570 966,709 3,100,088 2,185,023 Latin America 578,055 362,749 1,576,864 1,593,987 Middle East/Africa 770,842 550,783 2,374,321 2,136,786 Other 87,221 60,277 196,756 178,009 Total $ 35,617,998 $ 29,215,325 $ 90,437,598 $ 83,127,735 Our largest customer accounted for 26.3% and 27.4% of our net sales during the three months ended September 30, 2019 and 2018 , respectively. Our largest customer accounted for 18.8% and 30.1% of our net sales during the nine months ended September 30, 2019 and 2018 , respectively. As of September 30, 2019 and December 31, 2018 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following: September 30, 2019 December 31, 2018 Furniture and fixtures $ 1,101,141 $ 956,467 Computer equipment 1,069,427 939,979 Vehicles 711,959 730,765 Equipment 1,425,975 1,079,503 Leasehold improvements 1,325,282 941,627 Plotters 722,581 544,080 Construction in Progress 338,762 646,576 Total property and equipment 6,695,127 5,838,997 Less: accumulated depreciation 3,028,961 2,454,791 Property and equipment, net $ 3,666,166 $ 3,384,206 Depreciation expense for the three months ended September 30, 2019 and 2018 was $234,297 and $200,512 , respectively. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $655,385 and $539,379 , respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | INTANGIBLE ASSETS, NET Intangible assets consists of the following: September 30, 2019 December 31, 2018 Trademarks $ 301,542 $ 289,734 Software 2,158,500 1,635,731 Trade name 462,775 457,766 Contractual and customer relationships 2,967,383 2,947,264 Non-compete 266,054 261,914 Other 148,965 150,267 Total cost 6,305,219 5,742,676 Less: Accumulated amortization 2,526,425 1,938,650 Intangible assets, net $ 3,778,794 $ 3,804,026 Amortization expense for the three months ended September 30, 2019 and 2018 was $199,582 and $160,506 , respectively. Amortization expense for the nine months ended September 30, 2019 and 2018 was $570,954 and $472,675 , respectively. During the nine months ended September 30, 2019 , the Company sold a franchise territory to a new franchisee in Quebec. In connection with this arrangement, the Company closed its Quebec City installation location and recorded an impairment against all previously recognized intangible assets for that location. The Company recorded an impairment loss of $30,480 related to the intangible assets other than goodwill associated with this closed location. This impairment loss is reflected in general and administrative expense on the condensed consolidated statement of income. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The following table summarizes goodwill transactions for the nine months ended September 30, 2019 and 2018 : Balance at December 31, 2017 $ 1,856,642 Acquisitions of subsidiaries 572,544 Foreign Exchange (31,876 ) Balance at September 30, 2018 $ 2,397,310 Balance at December 31, 2018 $ 2,322,788 Impairment (35,884 ) Foreign Exchange 47,601 Balance at September 30, 2019 $ 2,334,505 During the nine months ended September 30, 2019 , the Company sold a franchise territory to a new franchisee in Quebec. In connection with this arrangement, the Company closed its Quebec City installation location and recorded an impairment against all previously recognized intangible assets for that location. The Company recorded an impairment loss of $35,884 related to the Goodwill associated with this closed location. This impairment loss is reflected in general and administrative expense on the condensed consolidated statement of income. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The components of inventory are summarized as follows: September 30, 2019 December 31, 2018 Film and film based products $ 14,712,742 $ 9,399,067 Other products 1,372,248 1,264,862 Packaging and supplies 473,141 320,738 Inventory reserve (129,725 ) (185,056 ) $ 16,428,406 $ 10,799,611 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT REVOLVING FACILITIES The Company has a $8,500,000 revolving line of credit agreement with The Bank of San Antonio to support its continuing working capital needs. The Bank of San Antonio has been granted a security interest in substantially all of the Company’s current and future assets. The line of credit has a variable interest rate of the Wall Street Journal prime rate plus 0.75% with a floor of 4.25% and matures on May 5, 2020. The interest rate was 6.00% and 6.25% as of September 30, 2019 and December 31, 2018 , respectively. As of September 30, 2019 and December 31, 2018 , no balance was outstanding on this line. The credit agreement contains customary covenants including covenants relating to complying with applicable laws, delivery of financial statements, payment of taxes and maintaining insurance. The credit agreement also requires that XPEL must maintain debt service coverage (EBITDA divided by the current portion of long-term debt +interest) of 1.25 :1 and debt to tangible net worth of 4.0 :1 on a rolling four quarter basis. The credit agreement also contains customary events of default including the failure to make payments of principal and interest, the breach of any covenants, the occurrence of a material adverse change, and certain bankruptcy and insolvency events. As of September 30, 2019 and December 31, 2018 , the Company was in compliance with all debt covenants. XPEL Canada Corp., a wholly owned subsidiary of XPEL, Inc., also has a CAD $4,500,000 revolving line of credit agreement with HSBC Bank Canada to support its continuing working capital needs. The line has a variable interest rate of the HSBC Canada Bank’s prime rate plus 0.25% . The interest rate as of both September 30, 2019 and December 31, 2018 was 5.75% . As of September 30, 2019 and December 31, 2018 , no balance was outstanding on this line of credit. This facility is guaranteed by the parent company. NOTES PAYABLE As part of its acquisition strategy, the Company uses a combination of cash and unsecured non-interest bearing promissory notes payable to fund its business acquisitions. The Company discounts the promissory note to fair value using market interest rates at the time of the acquisition. Notes payable are summarized as follows: Weighted Average Interest Rate Matures September 30, 2019 December 31, 2018 Acquisition notes payable 5.02% 2022 $ 985,363 $ 1,821,387 Total debt 985,363 1,821,387 Current portion 586,154 853,150 Total long-term debt $ 399,209 $ 968,237 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The following table presents significant accounts payable and accrued liability balances as of the periods ending: September 30, 2019 December 31, 2018 Trade payables $ 7,126,796 $ 3,905,187 Payroll liabilities 1,000,777 1,194,237 Contract liabilities 1,417,960 136,213 Other liabilities 1,039,819 1,056,456 $ 10,585,352 $ 6,292,093 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Financial instruments include cash and cash equivalents (level 1), accounts receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value because of the near-term maturities of these financial instruments. The carrying value of the Company’s notes payable approximates fair value due to the relatively short-term nature and interest rates of the notes. For discussion of the fair value measurements related to goodwill refer to Note 6, Goodwill of the financial statements for periods ended September 30, 2019 and December 31, 2018 . The estimated fair value of debt is based on market quotes for instruments with similar terms and remaining maturities (Level 2 inputs and valuation techniques). ASC 820 prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy: Level 1 – Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or Tax Reform Act. The Tax Reform Act makes broad and complex changes to the U.S. tax code that impacted the Company’s fiscal year ended December 31, 2018, including but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, generally eliminating the U.S. federal income taxes on dividends received from foreign subsidiaries and joint ventures after December 31, 2017, and imposing a one-time deemed repatriation tax on certain unremitted earnings of foreign subsidiaries and joint ventures. The Company recorded income tax expense during the three months ended September 30, 2019 and 2018 of $999,072 and $690,523 , respectively. The Company recorded income tax expense during the nine months ended September 30, 2019 and 2018 of $2,503,365 and $2,159,596 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES CONTINGENCIES In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with customers, suppliers and former employees. Management believes that adequate provisions have been recorded in the accounts where required. Management also has determined that the likelihood of any litigation and claims having a material impact on our results of operations, cash flows or financial position is remote. SUPPLY AGREEMENT Through our Amended and Restated Supply Agreement that we entered into with our primary supplier in March 2017, we have exclusive rights to commercialize, market, distribute and sell its automotive aftermarket products through March 21, 2020, which term automatically renews for successive two year periods thereafter unless terminated at the option of either party with two months ’ notice. During such term, we have agreed to use commercially reasonable efforts to purchase a minimum of $5,000,000 of products quarterly from this principal supplier, with a yearly minimum purchasing requirement of $20,000,000 . |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES We lease space under non-cancelable operating leases for office space, warehouse facilities, and installation locations. These leases do not have significant rent holidays, rent escalation provisions, leasehold improvement incentives, or other build-out clauses. Neither do these leases contain contingent rent provisions. We also lease vehicles and equipment to support our global operations. We have elected the practical expedient to combine lease and non-lease components. We have also elected to adopt the package of practical expedients that allow us not to reassess whether expired leases are or contain leases, not to reassess the lease classification of existing leases, and not to reassess initial direct costs for existing leases. Some of our leases contain options to renew. The exercise of lease renewals is at our sole discretion; therefore, the renewals to extend the lease terms are not included in our ROU assets as it is not reasonably certain that they will be exercised. We regularly evaluate the renewal options and, when they are reasonably certain of exercise, we include the renewal period in our lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We have a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, we apply a portfolio approach for determining the incremental borrowing rate. Balance sheet information related to operating leases is as follows: September 30, 2019 Operating lease right-of-use assets $ 4,515,591 Current portion of operating lease liabilities 1,062,176 Noncurrent portion of operating lease liabilities 3,544,207 Total operating lease liabilities $ 4,606,383 We had operating lease expense of $286,534 and $876,868 for the three and nine months ended September 30, 2019 , respectively. Variable lease payments for the same periods were $119,425 and $358,776 , respectively. For the same periods, we also had short-term lease expenses of $15,636 , and $56,239 , respectively, and we made cash payments of $293,148 and $868,074 , respectively, on leases subject to the accounting treatment described above in Note 2. Weighted-average information associated with the measurement of our remaining operating lease obligations is as follows: September 30, 2019 Weighted-average remaining lease term (in years) 6.0 Weighted-average discount rate 5.86 % The following table summarizes the maturity of our operating lease liabilities as of September 30, 2019 : 2019 $ 282,149 2020 1,071,630 2021 962,701 2022 888,620 2023 781,377 Thereafter 1,528,116 Total operating lease payments 5,514,593 Less: interest (908,210 ) Total operating lease liabilities $ 4,606,383 During the three and nine months ended September 30, 2018 , rent expense related to operating leases was approximately $310,075 and $852,553 , respectively. Future minimum lease payments, under non-cancelable operating leases as of December 31, 2018 were as follows: 2019 $ 869,492 2020 736,169 2021 667,551 2022 601,593 2023 528,427 Thereafter 1,372,388 $ 4,775,620 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation - The condensed consolidated financial statements are prepared in conformity with GAAP and include the accounts of the Company and its wholly owned or majority owned subsidiaries. The ownership interest of non-controlling participants in subsidiaries that are not wholly-owned is included as a separate component of stockholders’ equity. The non-controlling participants’ share of the net income is included as “Income attributable to noncontrolling interest” on the Condensed Consolidated Statements of Income and Comprehensive Income. Intercompany accounts and transactions have been eliminated. |
Segment Reporting | Segment Reporting - Management has concluded that our chief operating decision maker (“CODM”) is our chief executive officer. The Company’s CODM reviews the entire organization’s consolidated results as a whole on a monthly basis to evaluate performance and make resource allocation decisions. Management views the Company’s operations and manages its business as one operating segment. |
Use of Estimates | Use of Estimates - The preparation of these condensed consolidated financial statements in conformity to U.S. GAAP requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at 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 - Accounts receivable are shown net of an allowance for doubtful accounts of $169,010 and $133,696 as of September 30, 2019 and December 31, 2018 , 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 | Provisions and Warranties - |
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Issued and Not Yet Adopted | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, “Leases” (“the new lease standard” or “ASC 842”), which requires an entity to recognize both assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The new lease standard requirements were effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. The Company adopted this standard effective January 1, 2019. In adopting this standard, the Company elected the package of practical expedients afforded thereby. This election allowed the Company, among other things, to carry forward prior lease classifications. Pursuant to the adoption of this standard, Right-Of-Use (“ROU”) assets and operating lease liabilities (current and long-term portions) as of September 30, 2019 were $4,515,591 and $4,606,383 , respectively. Refer to Note 13 for additional information related to the adoption of this standard. Recent Accounting Pronouncements Issued and Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2023 and is required to be applied prospectively. We are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements. |
Revenue Recognition | 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. Revenues from product and services sales are recognized when control of the goods is transferred to the customer which 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 which 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. We apply a practical expedient to expense direct costs of obtaining a contract when incurred because the amortization period would have been 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 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 ASC 606 to omit disclosures regarding remaining performance obligations. When the Company transfers goods or 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 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. |
Fair Value Measurements | Financial instruments include cash and cash equivalents (level 1), accounts receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value because of the near-term maturities of these financial instruments. The carrying value of the Company’s notes payable approximates fair value due to the relatively short-term nature and interest rates of the notes. For discussion of the fair value measurements related to goodwill refer to Note 6, Goodwill of the financial statements for periods ended September 30, 2019 and December 31, 2018 . The estimated fair value of debt is based on market quotes for instruments with similar terms and remaining maturities (Level 2 inputs and valuation techniques). ASC 820 prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy: Level 1 – Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 – Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Ownership Interests and Functional Currencies | The ownership percentages and functional currencies of the entities included in these condensed consolidated financial statements are as follows: Subsidiaries Functional Currency % Owned by XPEL, Inc. XPEL, Ltd. UK Pound Sterling 85 % Armourfend CAD, LLC US Dollar 100 % XPEL Canada Corp. Canadian Dollar 100 % XPEL B.V. Euro 100 % XPEL Germany GmbH Euro 100 % XPEL de Mexico S. de R.L. de C.V. Peso 100 % XPEL Acquisition Corp. Canadian Dollar 100 % Protex Canada, Inc. Canadian Dollar 100 % Apogee Corp. New Taiwan Dollar 100 % |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Transactions Within Contract Liabilities | The following table summarizes transactions within contract liabilities for the nine months ended September 30, 2019 : Balance, December 31, 2018 $ 136,213 Revenue recognized related to payments included in the December 31, 2018 balance (38,405 ) Payments received for which performance obligations have not been satisfied 217,195 Balance, March 31, 2019 315,003 Revenue recognized related to payments included in the March 31, 2019 balance (77,265 ) Payments received for which performance obligations have not been satisfied 1,493,645 Balance, June 30, 2019 1,731,383 Revenue recognized related to payments included in the June 30, 2019 balance (1,659,056 ) Payments received for which performance obligations have not been satisfied 1,345,633 Balance, September 30, 2019 $ 1,417,960 |
Disaggregation of Revenue | The table below sets forth the disaggregation of revenue by product category for the periods indicated below: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Product Revenue Paint protection film $ 26,527,586 $ 22,533,967 $ 66,150,360 $ 64,672,721 Window film 3,522,815 2,125,910 8,526,886 5,662,725 Other 764,850 755,872 2,618,217 2,163,425 Total 30,815,251 25,415,749 77,295,463 72,498,871 Service Revenue Software $ 859,432 $ 653,090 $ 2,378,944 $ 1,886,176 Cutbank credits 1,957,224 1,641,337 5,487,320 4,583,739 Installation labor 1,843,936 1,414,326 4,790,279 3,854,328 Training 142,155 90,823 485,592 304,621 Total 4,802,747 3,799,576 13,142,135 10,628,864 Total $ 35,617,998 $ 29,215,325 $ 90,437,598 $ 83,127,735 |
Revenue Estimate by Geographic Areas | The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors: Three Months Ended Nine Months Ended 2019 2018 2019 2018 United States $ 15,738,762 $ 13,334,294 $ 44,745,859 $ 33,148,006 China 9,359,531 8,035,746 17,006,451 25,289,752 Canada 4,937,514 3,659,902 13,253,413 11,912,203 Continental Europe 1,945,104 1,606,842 5,341,164 4,610,313 United Kingdom 1,032,399 638,023 2,842,682 2,073,656 Asia Pacific 1,168,570 966,709 3,100,088 2,185,023 Latin America 578,055 362,749 1,576,864 1,593,987 Middle East/Africa 770,842 550,783 2,374,321 2,136,786 Other 87,221 60,277 196,756 178,009 Total $ 35,617,998 $ 29,215,325 $ 90,437,598 $ 83,127,735 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment consists of the following: September 30, 2019 December 31, 2018 Furniture and fixtures $ 1,101,141 $ 956,467 Computer equipment 1,069,427 939,979 Vehicles 711,959 730,765 Equipment 1,425,975 1,079,503 Leasehold improvements 1,325,282 941,627 Plotters 722,581 544,080 Construction in Progress 338,762 646,576 Total property and equipment 6,695,127 5,838,997 Less: accumulated depreciation 3,028,961 2,454,791 Property and equipment, net $ 3,666,166 $ 3,384,206 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consists of the following: September 30, 2019 December 31, 2018 Trademarks $ 301,542 $ 289,734 Software 2,158,500 1,635,731 Trade name 462,775 457,766 Contractual and customer relationships 2,967,383 2,947,264 Non-compete 266,054 261,914 Other 148,965 150,267 Total cost 6,305,219 5,742,676 Less: Accumulated amortization 2,526,425 1,938,650 Intangible assets, net $ 3,778,794 $ 3,804,026 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table summarizes goodwill transactions for the nine months ended September 30, 2019 and 2018 : Balance at December 31, 2017 $ 1,856,642 Acquisitions of subsidiaries 572,544 Foreign Exchange (31,876 ) Balance at September 30, 2018 $ 2,397,310 Balance at December 31, 2018 $ 2,322,788 Impairment (35,884 ) Foreign Exchange 47,601 Balance at September 30, 2019 $ 2,334,505 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The components of inventory are summarized as follows: September 30, 2019 December 31, 2018 Film and film based products $ 14,712,742 $ 9,399,067 Other products 1,372,248 1,264,862 Packaging and supplies 473,141 320,738 Inventory reserve (129,725 ) (185,056 ) $ 16,428,406 $ 10,799,611 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable are summarized as follows: Weighted Average Interest Rate Matures September 30, 2019 December 31, 2018 Acquisition notes payable 5.02% 2022 $ 985,363 $ 1,821,387 Total debt 985,363 1,821,387 Current portion 586,154 853,150 Total long-term debt $ 399,209 $ 968,237 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | The following table presents significant accounts payable and accrued liability balances as of the periods ending: September 30, 2019 December 31, 2018 Trade payables $ 7,126,796 $ 3,905,187 Payroll liabilities 1,000,777 1,194,237 Contract liabilities 1,417,960 136,213 Other liabilities 1,039,819 1,056,456 $ 10,585,352 $ 6,292,093 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Balance Sheet Information Related To Leases | Balance sheet information related to operating leases is as follows: September 30, 2019 Operating lease right-of-use assets $ 4,515,591 Current portion of operating lease liabilities 1,062,176 Noncurrent portion of operating lease liabilities 3,544,207 Total operating lease liabilities $ 4,606,383 |
Schedule of Weighted Average Remaining Lease Term and Discount Rate Information | Weighted-average information associated with the measurement of our remaining operating lease obligations is as follows: September 30, 2019 Weighted-average remaining lease term (in years) 6.0 Weighted-average discount rate 5.86 % |
Schedule of Maturities of Operating Lease Liabilities | The following table summarizes the maturity of our operating lease liabilities as of September 30, 2019 : 2019 $ 282,149 2020 1,071,630 2021 962,701 2022 888,620 2023 781,377 Thereafter 1,528,116 Total operating lease payments 5,514,593 Less: interest (908,210 ) Total operating lease liabilities $ 4,606,383 |
Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases | Future minimum lease payments, under non-cancelable operating leases as of December 31, 2018 were as follows: 2019 $ 869,492 2020 736,169 2021 667,551 2022 601,593 2023 528,427 Thereafter 1,372,388 $ 4,775,620 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Ownership Percentages and Functional Currencies (Details) | Sep. 30, 2019 |
XPEL, Ltd. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 85.00% |
Armourfend CAD, LLC | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
XPEL Canada Corp. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
XPEL B.V. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
XPEL Germany GmbH | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
XPEL de Mexico S. de R.L. de C.V. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
XPEL Acquisition Corp. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
Protex Canada, Inc. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
Apogee Corp. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 169,010 | $ 133,696 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Provisions and Warranties (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Warranty liability | $ 73,041 | $ 70,250 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted Accounting Pronouncements (Details) | Sep. 30, 2019USD ($) |
Accounting Policies [Abstract] | |
Operating lease right-of-use assets | $ 4,515,591 |
Total operating lease liabilities | $ 4,606,383 |
REVENUE - Schedule of Transacti
REVENUE - Schedule of Transactions Within Contract Liabilities (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Change in Contract with Customer, Liability [Abstract] | |||
Beginning contract liabilities | $ 1,731,383 | $ 315,003 | $ 136,213 |
Revenue recognized related to payments in beginning balance | (1,659,056) | (77,265) | (38,405) |
Payments received for which performance obligations have not been satisfied | 1,345,633 | 1,493,645 | 217,195 |
Ending contract liabilities | $ 1,417,960 | $ 1,731,383 | $ 315,003 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 35,617,998 | $ 29,215,325 | $ 90,437,598 | $ 83,127,735 |
Product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 30,815,251 | 25,415,749 | 77,295,463 | 72,498,871 |
Paint protection film | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 26,527,586 | 22,533,967 | 66,150,360 | 64,672,721 |
Window film | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,522,815 | 2,125,910 | 8,526,886 | 5,662,725 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 764,850 | 755,872 | 2,618,217 | 2,163,425 |
Service revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,802,747 | 3,799,576 | 13,142,135 | 10,628,864 |
Software | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 859,432 | 653,090 | 2,378,944 | 1,886,176 |
Cutbank credits | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,957,224 | 1,641,337 | 5,487,320 | 4,583,739 |
Installation labor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,843,936 | 1,414,326 | 4,790,279 | 3,854,328 |
Training | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 142,155 | $ 90,823 | $ 485,592 | $ 304,621 |
REVENUE - Revenue Estimate By G
REVENUE - Revenue Estimate By Geographic Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 35,617,998 | $ 29,215,325 | $ 90,437,598 | $ 83,127,735 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 15,738,762 | 13,334,294 | 44,745,859 | 33,148,006 |
China | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 9,359,531 | 8,035,746 | 17,006,451 | 25,289,752 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,937,514 | 3,659,902 | 13,253,413 | 11,912,203 |
Continental Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,945,104 | 1,606,842 | 5,341,164 | 4,610,313 |
United Kingdom | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,032,399 | 638,023 | 2,842,682 | 2,073,656 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,168,570 | 966,709 | 3,100,088 | 2,185,023 |
Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 578,055 | 362,749 | 1,576,864 | 1,593,987 |
Middle East/Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 770,842 | 550,783 | 2,374,321 | 2,136,786 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 87,221 | $ 60,277 | $ 196,756 | $ 178,009 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Largest Customer | Customer Concentration Risk | Revenue from Contract with Customer Benchmark | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk percentage | 26.30% | 27.40% | 18.80% | 30.10% |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule of Property, Plant and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 6,695,127 | $ 5,838,997 |
Accumulated depreciation | 3,028,961 | 2,454,791 |
Property and equipment, net | 3,666,166 | 3,384,206 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,101,141 | 956,467 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,069,427 | 939,979 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 711,959 | 730,765 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,425,975 | 1,079,503 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,325,282 | 941,627 |
Plotters | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 722,581 | 544,080 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 338,762 | $ 646,576 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 234,297 | $ 200,512 | $ 655,385 | $ 539,379 |
INTANGIBLE ASSETS, NET - Schedu
INTANGIBLE ASSETS, NET - Schedule of Intangible Assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 6,305,219 | $ 5,742,676 |
Accumulated amortization | 2,526,425 | 1,938,650 |
Intangible assets, net | 3,778,794 | 3,804,026 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 301,542 | 289,734 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 2,158,500 | 1,635,731 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 462,775 | 457,766 |
Contractual and customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 2,967,383 | 2,947,264 |
Non-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 266,054 | 261,914 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 148,965 | $ 150,267 |
INTANGIBLE ASSETS, NET - Narrat
INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 199,582 | $ 160,506 | $ 570,954 | $ 472,675 |
Impairment of intangible assets, excluding goodwill | $ 30,480 |
GOODWILL - Schedule of Goodwill
GOODWILL - Schedule of Goodwill (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill beginning balance | $ 2,322,788 | $ 1,856,642 |
Acquisitions of subsidiaries | 572,544 | |
Foreign Exchange | 47,601 | (31,876) |
Impairment | (35,884) | |
Goodwill ending balance | $ 2,334,505 | $ 2,397,310 |
GOODWILL - Narrative (Details)
GOODWILL - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill impairment loss | $ 35,884 |
INVENTORIES - Schedule of Inven
INVENTORIES - Schedule of Inventory (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Film and film based products | $ 14,712,742 | $ 9,399,067 |
Other products | 1,372,248 | 1,264,862 |
Packaging and supplies | 473,141 | 320,738 |
Inventory reserve | (129,725) | (185,056) |
Inventory, net | $ 16,428,406 | $ 10,799,611 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - Line of Credit - Revolving Credit Facility | 9 Months Ended | ||
Sep. 30, 2019CAD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
The Bank of San Antonio | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 8,500,000 | ||
Line of credit facility interest rate | 6.00% | 6.00% | 6.25% |
Amount outstanding | $ 0 | $ 0 | |
Covenant, debt service coverage ratio required, minimum | 1.25 | 1.25 | |
Covenant, debt to intangible net worth ratio required, minimum | 4 | 4 | |
HSBC Bank Canada | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 4,500,000 | ||
Line of credit facility interest rate | 5.75% | 5.75% | 5.75% |
Amount outstanding | $ 0 | $ 0 | |
Prime Rate | The Bank of San Antonio | |||
Line of Credit Facility [Line Items] | |||
Basis spread on prime rate | 0.75% | ||
Debt instrument floor rate | 4.25% | ||
Prime Rate | HSBC Bank Canada | |||
Line of Credit Facility [Line Items] | |||
Basis spread on prime rate | 0.25% |
DEBT - Schedule of Notes Payabl
DEBT - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Total debt | $ 985,363 | $ 1,821,387 |
Current portion | 586,154 | 853,150 |
Total long-term debt | $ 399,209 | 968,237 |
Acquisition Notes Payable Due 2022 | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (as a percent) | 5.02% | |
Total debt | $ 985,363 | $ 1,821,387 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Schedule of Accounts Payable and Accrued Liability (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts Payable and Accrued Liabilities [Abstract] | ||||
Trade payables | $ 7,126,796 | $ 3,905,187 | ||
Payroll liabilities | 1,000,777 | 1,194,237 | ||
Contract liabilities | 1,417,960 | $ 1,731,383 | $ 315,003 | 136,213 |
Other liabilities | 1,039,819 | 1,056,456 | ||
Accounts payable and accrued liabilities | $ 10,585,352 | $ 6,292,093 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 999,072 | $ 690,523 | $ 2,503,365 | $ 2,159,596 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Purchase commitment renewal period | 2 years | |
Purchase commitment renewal option notice | 2 months | |
Quarterly purchase commitment | $ 5,000,000 | |
Annual purchase commitment | $ 20,000,000 |
LEASES - Schedule of Balance Sh
LEASES - Schedule of Balance Sheet Information Related to Leases (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Operating lease right-of-use assets | $ 4,515,591 |
Current portion of operating lease liabilities | 1,062,176 |
Noncurrent portion of operating lease liabilities | 3,544,207 |
Total operating lease liabilities | $ 4,606,383 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Operating lease expense | $ 286,534 | $ 876,868 | ||
Variable lease payment | 119,425 | 358,776 | ||
Short-term lease expense | 15,636 | 56,239 | ||
Operating lease payment | $ 293,148 | $ 868,074 | ||
Operating lease rent expense | $ 310,075 | $ 852,553 |
LEASES - Schedule of Weighted A
LEASES - Schedule of Weighted Average Remaining Lease Term and Discount Rate Information (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 6 years |
Weighted-average discount rate | 5.86% |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Operating Lease Liabilities (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 282,149 |
2020 | 1,071,630 |
2021 | 962,701 |
2022 | 888,620 |
2023 | 781,377 |
Thereafter | 1,528,116 |
Total operating lease payments | 5,514,593 |
Less: interest | (908,210) |
Total operating lease liabilities | $ 4,606,383 |
LEASES - Schedule of Future Min
LEASES - Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 869,492 |
2020 | 736,169 |
2021 | 667,551 |
2022 | 601,593 |
2023 | 528,427 |
Thereafter | 1,372,388 |
Total operating leases future minimum payments due | $ 4,775,620 |