Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 14, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
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 $0.001 per share | |
Trading Symbol | XPEL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,612,597 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001767258 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current | ||
Cash and cash equivalents | $ 14,787,745 | $ 11,500,973 |
Accounts receivable, net | 7,307,475 | 7,154,084 |
Inventory, net | 18,791,816 | 15,141,153 |
Prepaid expenses and other current assets | 2,369,901 | 2,391,340 |
Income tax receivable | 0 | 93,150 |
Total current assets | 43,256,937 | 36,280,700 |
Property and equipment, net | 4,544,185 | 4,014,653 |
Right-of-Use lease assets | 5,507,396 | 5,079,110 |
Intangible assets, net | 4,638,902 | 3,820,460 |
Other assets | 346,666 | 0 |
Goodwill | 3,396,712 | 2,406,512 |
Total assets | 61,690,798 | 51,601,435 |
Current | ||
Current portion of notes payable | 699,568 | 462,226 |
Current portion lease liabilities | 1,332,472 | 1,126,701 |
Accounts payable and accrued liabilities | 12,431,320 | 10,197,353 |
Income tax payable | 321,263 | 0 |
Total current liabilities | 14,784,623 | 11,786,280 |
Revolving line of credit | 6,000,000 | 0 |
Deferred tax liability, net | 846,768 | 604,715 |
Non-current portion of lease liabilities | 4,224,690 | 4,009,949 |
Non-current portion of notes payable | 852,687 | 307,281 |
Total liabilities | 26,708,768 | 16,708,225 |
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 | 10,412,471 | 11,348,163 |
Accumulated other comprehensive loss | (1,664,286) | (908,764) |
Retained earnings | 26,206,232 | 24,594,878 |
Equity attributable to stockholders of the company | 34,982,030 | 35,061,890 |
Non-controlling interest | 0 | (168,680) |
Total stockholders’ equity | 34,982,030 | 34,893,210 |
Total liabilities and stockholders’ equity | $ 61,690,798 | $ 51,601,435 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
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 | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | ||
Total revenue | $ 28,388,463 | $ 24,725,446 |
Cost of Sales | ||
Total cost of sales | 18,091,575 | 16,575,366 |
Gross Margin | 10,296,888 | 8,150,080 |
Operating Expenses | ||
Sales and marketing | 2,743,249 | 1,599,106 |
General and administrative | 5,069,771 | 4,077,951 |
Total operating expenses | 7,813,020 | 5,677,057 |
Operating Income | 2,483,868 | 2,473,023 |
Interest expense | 30,558 | 28,706 |
Foreign currency exchange loss | 415,577 | 18,426 |
Income before income taxes | 2,037,733 | 2,425,891 |
Income tax expense | 426,379 | 565,888 |
Net income | 1,611,354 | 1,860,003 |
Income attributed to non-controlling interest | 0 | 1,416 |
Net income attributable to stockholders of the Company | $ 1,611,354 | $ 1,858,587 |
Earnings per share attributable stockholders of the Company | ||
Earnings per share basic and diluted (in dollars per share) | $ 0.06 | $ 0.07 |
Weighted Average Number of Common Shares | ||
Weighted-average common shares outstanding, basic and diluted (in shares) | 27,612,597 | 27,612,597 |
Product revenue | ||
Revenue | ||
Total revenue | $ 23,749,917 | $ 21,054,723 |
Cost of Sales | ||
Total cost of sales | 16,761,413 | 15,688,033 |
Service revenue | ||
Revenue | ||
Total revenue | 4,638,546 | 3,670,723 |
Cost of Sales | ||
Total cost of sales | $ 1,330,162 | $ 887,333 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other comprehensive income | ||
Net income | $ 1,611,354 | $ 1,860,003 |
Foreign currency translation | (760,055) | 79,258 |
Total comprehensive income including portion attributable to non-controlling interest | 851,299 | 1,939,261 |
Total comprehensive income attributable to stockholders of the company | 855,832 | 1,933,037 |
Total comprehensive income attributable to non-controlling interest | $ (4,533) | $ 6,224 |
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, 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 | 1,860,003 | 1,858,587 | 1,858,587 | 1,416 | |||
Foreign currency translation | 79,258 | 74,450 | 74,450 | 4,808 | |||
Ending stock outstanding balance (in shares) at Mar. 31, 2019 | 27,612,597 | ||||||
Ending balance at Mar. 31, 2019 | 22,552,206 | $ 27,613 | 11,348,163 | 12,475,840 | (1,115,605) | 22,736,011 | (183,805) |
Beginning stock outstanding balance (in shares) at Dec. 31, 2019 | 27,612,597 | ||||||
Beginning balance at Dec. 31, 2019 | 34,893,210 | $ 27,613 | 11,348,163 | 24,594,878 | (908,764) | 35,061,890 | (168,680) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 1,611,354 | 1,611,354 | 1,611,354 | ||||
Foreign currency translation | (760,055) | (755,522) | (755,522) | (4,533) | |||
Purchase of minority interest | (762,479) | (935,692) | (935,692) | 173,213 | |||
Ending stock outstanding balance (in shares) at Mar. 31, 2020 | 27,612,597 | ||||||
Ending balance at Mar. 31, 2020 | $ 34,982,030 | $ 27,613 | $ 10,412,471 | $ 26,206,232 | $ (1,664,286) | $ 34,982,030 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 1,611,354 | $ 1,860,003 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property, plant and equipment | 270,317 | 200,818 |
Amortization of intangible assets | 233,896 | 184,548 |
Impairments | 0 | 66,364 |
Loss on sale of property and equipment | 3,121 | 12,422 |
Bad debt expense | 22,832 | 58,738 |
Deferred income tax | (31,764) | (41,439) |
Accretion on notes payable | 11,017 | 19,978 |
Changes in current assets and liabilities: | ||
Accounts receivable | (157,943) | (414,560) |
Inventory, net | (3,932,654) | (2,780,162) |
Prepaid expenses and other current assets | (18,366) | (269,154) |
Income tax receivable | 94,729 | 0 |
Other assets | (326,798) | (37,715) |
Accounts payable and accrued liabilities | 2,201,806 | 2,241,833 |
Income tax payable | 290,610 | (86,825) |
Net cash provided by operating activities | 272,157 | 1,014,849 |
Cash flows used in investing activities | ||
Purchase of property, plant and equipment | (776,057) | (400,814) |
Proceeds from sale of property and equipment | 24,659 | 14,629 |
Acquisition of a business, net of cash acquired | (1,247,843) | 0 |
Development of intangible assets | (109,414) | (55,425) |
Net cash used in investing activities | (2,108,655) | (441,610) |
Cash flows from financing activities | ||
Borrowings on revolving credit agreement | 6,000,000 | 0 |
Repayments of notes payable | (143,293) | (188,406) |
Purchase of minority interest | (784,653) | 0 |
Net cash provided by (used in) financing activities | 5,072,054 | (188,406) |
Net change in cash and cash equivalents | 3,235,556 | 384,833 |
Foreign exchange impact on cash and cash equivalents | 51,216 | 20,266 |
Increase in cash and cash equivalents during the period | 3,286,772 | 405,099 |
Cash and cash equivalents at beginning of period | 11,500,973 | 3,971,226 |
Cash and cash equivalents at end of period | 14,787,745 | 4,376,325 |
Supplemental schedule of non-cash activities | ||
Notes payable issued for acquisitions | 893,317 | 0 |
Supplemental cash flow information | ||
Cash paid for income taxes | 77,026 | 759,803 |
Cash paid for interest | $ 2,290 | $ 7,644 |
INTERIM FINANCIAL INFORMATION
INTERIM FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
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, 2019, which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2020 and 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 annual report on Form 10-K as filed with the SEC on March 16, 2020. These condensed consolidated financial statements also should be read in conjunction with the 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. On February 1, 2020, the Company acquired the remaining 15% minority interest in XPEL, Ltd., the subsidiary of the Company operating in the United Kingdom, for a purchase price of £600,000. This purchase is reflected in the Condensed Consolidated Statement of Changes in Stockholders' Equity. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
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 United States Generally Accepted Accounting Principles ("U.S. GAAP") and include the accounts of the Company and its wholly owned or majority owned subsidiaries. In applicable years, 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 presented as foreign currency exchange loss 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 100 % * 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 % * Refer to Note 1 for information related to purchase of minority interest 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 $182,757 and $182,488 as of March 31, 2020 and December 31, 2019, 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. Accounts receivable from a large customer accounted for 11.7% and 18.8% of the Company's total accounts receivable balance as of March 31, 2020 and December 31, 2019, respectively. 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 March 31, 2020 and December 31, 2019 was $66,202 and $65,591, respectively. The following tables present a summary of our accrued warranty liabilities for the three months ended March 31, 2020 and the twelve months ended December 31, 2019: 2020 Warranty liability, January 1 $ 65,591 Warranties assumed in period 83,116 Payments (82,505) Warranty liability, March 31 $ 66,202 2019 Warranty liability, January 1 $ 70,250 Warranties assumed in period 384,214 Payments (388,873) Warranty liability, December 31 $ 65,591 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 | 3 Months Ended |
Mar. 31, 2020 | |
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 provides 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 three months ended March 31, 2020: Balance, December 31, 2019 $ 559,232 Revenue recognized related to payments included in the December 31, 2019 balance (526,202) Payments received for which performance obligations have not been satisfied 1,043,767 Balance, Effect of foreign currency translation (734) Balance, March 31, 2020 $ 1,076,063 The table below sets forth the disaggregation of revenue by product category for the periods indicated below: Three Months Ended 2020 2019 Product Revenue Paint protection film $ 19,771,119 $ 18,456,356 Window film 3,090,106 1,832,917 Other 888,692 765,450 Total 23,749,917 21,054,723 Service Revenue Software $ 851,571 $ 743,768 Cutbank credits 1,613,264 1,465,133 Installation labor 2,021,450 1,298,388 Training 152,261 163,434 Total 4,638,546 3,670,723 Total $ 28,388,463 $ 24,725,446 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 2020 2019 United States $ 15,553,037 $ 12,509,750 China 2,024,510 4,519,197 Canada 4,175,196 3,098,364 Continental Europe 2,793,742 1,421,732 United Kingdom 1,116,428 883,358 Asia Pacific 770,043 871,958 Latin America 477,694 486,129 Middle East/Africa 1,289,056 883,132 Other 188,757 51,826 Total $ 28,388,463 $ 24,725,446 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following: March 31, 2020 December 31, 2019 Furniture and fixtures $ 1,231,283 $ 1,168,894 Computer equipment 1,189,248 1,151,295 Vehicles 712,708 683,213 Equipment 1,685,744 1,648,656 Leasehold improvements 1,811,082 1,479,594 Plotters 952,167 839,455 Construction in Progress 409,052 306,100 Total property and equipment 7,991,284 7,277,207 Less: accumulated depreciation 3,447,099 3,262,554 Property and equipment, net $ 4,544,185 $ 4,014,653 |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | INTANGIBLE ASSETS, NET Intangible assets consists of the following: March 31, 2020 December 31, 2019 Trademarks $ 311,145 $ 309,395 Software 2,396,580 2,288,062 Trade name 475,511 492,408 Contractual and customer relationships 3,767,021 3,010,480 Non-compete 384,855 268,459 Other 201,911 208,012 Total cost 7,537,023 6,576,816 Less: Accumulated amortization 2,898,121 2,756,356 Intangible assets, net $ 4,638,902 $ 3,820,460 Amortization expense for the three months ended March 31, 2020 and 2019 was 233,896 and 184,548, respectively. The Company completed the acquisition of a business during the three months ended March 31, 2020. Refer to Note 12 for additional information related to intangible assets added from this acquisition. |
GOODWILL
GOODWILL | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The following table summarizes goodwill transactions for the three months ended March 31, 2020 and 2019: Balance at December 31, 2018 $ 2,322,788 Impairment (35,884) Foreign Exchange 33,480 Balance at March 31, 2019 $ 2,320,384 Balance at December 31, 2019 $ 2,406,512 Additions 1,184,774 Foreign Exchange (194,574) Balance at March 31, 2020 $ 3,396,712 The Company completed the acquisition of a business during the three months ended March 31, 2020. Refer to Note 12 for additional information related to goodwill added from this acquisition. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The components of inventory are summarized as follows: March 31, 2020 December 31, 2019 Film and film based products $ 16,988,762 $ 13,538,610 Other products 1,431,106 1,226,708 Packaging and supplies 502,101 496,661 Inventory reserve (130,153) (120,826) $ 18,791,816 $ 15,141,153 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2020 | |
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. Borrowings under the credit agreement bear interest at a variable rate of the Wall Street Journal prime rate minus 1.00% with a floor of 3.50%. In May 2020, the Company renewed this line of credit, extending its maturity date to June 5, 2022. The interest rate was 3.50% and 5.50% as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020, a balance of $6,000,000 was outstanding on this line. As of December 31, 2019, 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 (Earnings Before Interest Taxes Depreciation and Amortization, or EBITDA, divided by the current portion of long-term debt + interest) of 1.25:1 and funded debt of no more than 2.5 times EBITDA 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 March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019 was 2.70% and 4.20%, respectively. As of March 31, 2020 and December 31, 2019, 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 March 31, 2020 December 31, 2019 Acquisition notes payable 4.43% 2023 $ 1,552,255 $ 769,507 Total debt 1,552,255 769,507 Current portion 699,568 462,226 Total long-term debt $ 852,687 $ 307,281 |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 3 Months Ended |
Mar. 31, 2020 | |
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: March 31, 2020 December 31, 2019 Trade payables $ 9,023,190 $ 7,440,965 Payroll liabilities 1,548,038 1,367,340 Contract liabilities 1,076,063 559,232 Other liabilities 784,029 829,816 $ 12,431,320 $ 10,197,353 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTSFinancial instruments include cash and cash equivalents (level 1) 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 March 31, 2020 and December 31, 2019. 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
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, 2022, which term automatically renews for successive two |
ACQUISITION OF A BUSINESS
ACQUISITION OF A BUSINESS | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
ACQUISITION OF A BUSINESS | ACQUISITION OF A BUSINESS The Company completed the following acquisition during the three months ended March 31, 2020: Acquisition Date Name/Location/Description Purchase Price Acquisition Type Acquisition Purpose February 1, 2020 Protex Centre, Laval, Quebec, Canada - Paint protection installation shop $2,383,968 Share Purchase Local market expansion The total preliminary purchase price for the acquisition completed during the three months ended March 31, 2020 and a preliminary allocation of that purchase price are set forth in the table below. The purchase agreement provides for customary purchase price adjustments related to acquired working capital that have not yet been finalized. Protex Centre Purchase Price Cash $ 1,490,651 Promissory notes 893,317 $ 2,383,968 Allocation Cash $ 242,808 Accounts receivable 206,808 Inventory 27,732 Prepaid assets 3,764 Other long-term assets 6,197 Property, plant, and equipment 161,702 Software 1,027 Customer relationships 987,556 Non-compete 136,395 Goodwill 1,184,774 Accounts payable and accrued liabilities (142,175) Assumed debt (108,766) Deferred tax liability (281,565) Taxes payable (42,289) $ 2,383,968 Intangible assets acquired in 2020 have estimated useful lives of either 9 or 5 years with a weighted average useful life of 8.51 years. Goodwill for these acquisitions relates to expansion in a local market and is deductible for tax purposes. The goodwill represents the acquired employee knowledge of the various markets, distribution knowledge by the employees of the acquired businesses, as well as the expected synergies resulting from the acquisitions. Acquisition costs incurred related to these acquisitions were immaterial and were included in selling, general and administrative expenses. The acquired company was consolidated into our financial statements on its acquisition date. The amount of revenue and net income of this acquisition which has been consolidated into our financial statements for the three months ended March 31, 2020 was $284,523 and $25,877, respectively. The following unaudited consolidated pro forma combined financial information presents our results, including the estimated expenses relating to the amortization of intangibles purchased, as if this acquisition had occurred on January 1, 2020 and 2019: Three Months Ended March 31, 2020 (unaudited) 2019 (unaudited) Revenue 28,515,222 25,188,734 Net income 1,461,184 1,734,004 The unaudited consolidated pro forma combined financial information does not purport to be indicative of the results which would have been obtained had the acquisition been completed as of the beginning of the earliest period presented or of results that may be obtained in the future. In addition, they do not include any benefits that may result from the acquisition due to synergies that may be derived from the elimination of any duplicative costs. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS As more fully described in Note 8, on May 11, 2020, the Company renewed its revolving line of credit agreement with The Bank of San Antonio for an additional two years. In addition, on May 11, 2020, the Company borrowed $6,000,000 pursuant to a 36-month term loan with the Bank of San Antonio. The term loan bears interest at 3.5% annually, requires monthly payments of principal and interest and matures in June 2023. As more fully described in Note 1, the Company purchased the minority interest in its UK subsidiary. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation - The condensed consolidated financial statements are prepared in conformity with United States Generally Accepted Accounting Principles ("U.S. GAAP") and include the accounts of the Company and its wholly owned or majority owned subsidiaries. In applicable years, 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 |
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 $182,757 and $182,488 as of March 31, 2020 and December 31, 2019, 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 - 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. |
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Issued and Not Yet Adopted | 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 provides 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) 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 March 31, 2020 and December 31, 2019. 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) | 3 Months Ended |
Mar. 31, 2020 | |
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 100 % * 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 % * Refer to Note 1 for information related to purchase of minority interest |
Schedule of Product Warranty Liability | The following tables present a summary of our accrued warranty liabilities for the three months ended March 31, 2020 and the twelve months ended December 31, 2019: 2020 Warranty liability, January 1 $ 65,591 Warranties assumed in period 83,116 Payments (82,505) Warranty liability, March 31 $ 66,202 2019 Warranty liability, January 1 $ 70,250 Warranties assumed in period 384,214 Payments (388,873) Warranty liability, December 31 $ 65,591 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Transactions Within Contract Liabilities | The following table summarizes transactions within contract liabilities for the three months ended March 31, 2020: Balance, December 31, 2019 $ 559,232 Revenue recognized related to payments included in the December 31, 2019 balance (526,202) Payments received for which performance obligations have not been satisfied 1,043,767 Balance, Effect of foreign currency translation (734) Balance, March 31, 2020 $ 1,076,063 |
Disaggregation of Revenue | The table below sets forth the disaggregation of revenue by product category for the periods indicated below: Three Months Ended 2020 2019 Product Revenue Paint protection film $ 19,771,119 $ 18,456,356 Window film 3,090,106 1,832,917 Other 888,692 765,450 Total 23,749,917 21,054,723 Service Revenue Software $ 851,571 $ 743,768 Cutbank credits 1,613,264 1,465,133 Installation labor 2,021,450 1,298,388 Training 152,261 163,434 Total 4,638,546 3,670,723 Total $ 28,388,463 $ 24,725,446 |
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 2020 2019 United States $ 15,553,037 $ 12,509,750 China 2,024,510 4,519,197 Canada 4,175,196 3,098,364 Continental Europe 2,793,742 1,421,732 United Kingdom 1,116,428 883,358 Asia Pacific 770,043 871,958 Latin America 477,694 486,129 Middle East/Africa 1,289,056 883,132 Other 188,757 51,826 Total $ 28,388,463 $ 24,725,446 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment consists of the following: March 31, 2020 December 31, 2019 Furniture and fixtures $ 1,231,283 $ 1,168,894 Computer equipment 1,189,248 1,151,295 Vehicles 712,708 683,213 Equipment 1,685,744 1,648,656 Leasehold improvements 1,811,082 1,479,594 Plotters 952,167 839,455 Construction in Progress 409,052 306,100 Total property and equipment 7,991,284 7,277,207 Less: accumulated depreciation 3,447,099 3,262,554 Property and equipment, net $ 4,544,185 $ 4,014,653 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consists of the following: March 31, 2020 December 31, 2019 Trademarks $ 311,145 $ 309,395 Software 2,396,580 2,288,062 Trade name 475,511 492,408 Contractual and customer relationships 3,767,021 3,010,480 Non-compete 384,855 268,459 Other 201,911 208,012 Total cost 7,537,023 6,576,816 Less: Accumulated amortization 2,898,121 2,756,356 Intangible assets, net $ 4,638,902 $ 3,820,460 |
GOODWILL (Tables)
GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table summarizes goodwill transactions for the three months ended March 31, 2020 and 2019: Balance at December 31, 2018 $ 2,322,788 Impairment (35,884) Foreign Exchange 33,480 Balance at March 31, 2019 $ 2,320,384 Balance at December 31, 2019 $ 2,406,512 Additions 1,184,774 Foreign Exchange (194,574) Balance at March 31, 2020 $ 3,396,712 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The components of inventory are summarized as follows: March 31, 2020 December 31, 2019 Film and film based products $ 16,988,762 $ 13,538,610 Other products 1,431,106 1,226,708 Packaging and supplies 502,101 496,661 Inventory reserve (130,153) (120,826) $ 18,791,816 $ 15,141,153 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable are summarized as follows: Weighted Average Interest Rate Matures March 31, 2020 December 31, 2019 Acquisition notes payable 4.43% 2023 $ 1,552,255 $ 769,507 Total debt 1,552,255 769,507 Current portion 699,568 462,226 Total long-term debt $ 852,687 $ 307,281 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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: March 31, 2020 December 31, 2019 Trade payables $ 9,023,190 $ 7,440,965 Payroll liabilities 1,548,038 1,367,340 Contract liabilities 1,076,063 559,232 Other liabilities 784,029 829,816 $ 12,431,320 $ 10,197,353 |
ACQUISITION OF A BUSINESS (Tabl
ACQUISITION OF A BUSINESS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Completed Acquisitions | The Company completed the following acquisition during the three months ended March 31, 2020: Acquisition Date Name/Location/Description Purchase Price Acquisition Type Acquisition Purpose February 1, 2020 Protex Centre, Laval, Quebec, Canada - Paint protection installation shop $2,383,968 Share Purchase Local market expansion |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The total preliminary purchase price for the acquisition completed during the three months ended March 31, 2020 and a preliminary allocation of that purchase price are set forth in the table below. The purchase agreement provides for customary purchase price adjustments related to acquired working capital that have not yet been finalized. Protex Centre Purchase Price Cash $ 1,490,651 Promissory notes 893,317 $ 2,383,968 Allocation Cash $ 242,808 Accounts receivable 206,808 Inventory 27,732 Prepaid assets 3,764 Other long-term assets 6,197 Property, plant, and equipment 161,702 Software 1,027 Customer relationships 987,556 Non-compete 136,395 Goodwill 1,184,774 Accounts payable and accrued liabilities (142,175) Assumed debt (108,766) Deferred tax liability (281,565) Taxes payable (42,289) $ 2,383,968 |
Pro Forma Information | The following unaudited consolidated pro forma combined financial information presents our results, including the estimated expenses relating to the amortization of intangibles purchased, as if this acquisition had occurred on January 1, 2020 and 2019: Three Months Ended March 31, 2020 (unaudited) 2019 (unaudited) Revenue 28,515,222 25,188,734 Net income 1,461,184 1,734,004 |
INTERIM FINANCIAL INFORMATION (
INTERIM FINANCIAL INFORMATION (Details) | Feb. 01, 2020GBP (£) |
XPEL, Ltd. | |
Noncontrolling Interest [Line Items] | |
Purchase price | £ 600,000 |
XPEL, Ltd. | |
Noncontrolling Interest [Line Items] | |
Percentage of business acquired | 15.00% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Ownership Percentages and Functional Currencies (Details) | Mar. 31, 2020 |
XPEL, Ltd. | |
Noncontrolling Interest [Line Items] | |
Ownership percentage | 100.00% |
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) | 3 Months Ended |
Mar. 31, 2020segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 182,757 | $ 182,488 |
Largest Customer | Accounts Receivable | Customer Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 11.70% | 18.80% |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Provisions and Warranties (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Warranty liability | $ 65,591 | $ 65,591 |
Beginning balance warranty liability | 65,591 | 70,250 |
Warranties assumed in period | 83,116 | 384,214 |
Payments | 82,505 | 388,873 |
Ending balance warranty liability | $ 66,202 | $ 65,591 |
REVENUE - Schedule of Transacti
REVENUE - Schedule of Transactions Within Contract Liabilities (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Change in Contract with Customer, Liability [Abstract] | |
Beginning contract liabilities | $ 559,232 |
Revenue recognized related to payments included in the December 31, 2019 balance | (526,202) |
Payments received for which performance obligations have not been satisfied | 1,043,767 |
Effect of foreign currency translation | (734) |
Ending contract liabilities | $ 1,076,063 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 28,388,463 | $ 24,725,446 |
Product revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 23,749,917 | 21,054,723 |
Paint protection film | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 19,771,119 | 18,456,356 |
Window film | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,090,106 | 1,832,917 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 888,692 | 765,450 |
Service revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 4,638,546 | 3,670,723 |
Software | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 851,571 | 743,768 |
Cutbank credits | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,613,264 | 1,465,133 |
Installation labor | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,021,450 | 1,298,388 |
Training | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 152,261 | $ 163,434 |
REVENUE - Revenue Estimate By G
REVENUE - Revenue Estimate By Geographic Area (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 28,388,463 | $ 24,725,446 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 15,553,037 | 12,509,750 |
China | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,024,510 | 4,519,197 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 4,175,196 | 3,098,364 |
Continental Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,793,742 | 1,421,732 |
United Kingdom | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,116,428 | 883,358 |
Asia Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 770,043 | 871,958 |
Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 477,694 | 486,129 |
Middle East/Africa | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,289,056 | 883,132 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 188,757 | $ 51,826 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Largest Customer | Customer Concentration Risk | Revenue from Contract with Customer Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 7.10% | 18.30% |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule of Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 7,991,284 | $ 7,277,207 |
Accumulated depreciation | 3,447,099 | 3,262,554 |
Property and equipment, net | 4,544,185 | 4,014,653 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,231,283 | 1,168,894 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,189,248 | 1,151,295 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 712,708 | 683,213 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,685,744 | 1,648,656 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,811,082 | 1,479,594 |
Plotters | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 952,167 | 839,455 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 409,052 | $ 306,100 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 270,317 | $ 200,818 |
INTANGIBLE ASSETS, NET - Schedu
INTANGIBLE ASSETS, NET - Schedule of Intangible Assets (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 7,537,023 | $ 6,576,816 |
Accumulated amortization | 2,898,121 | 2,756,356 |
Intangible assets, net | 4,638,902 | 3,820,460 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 311,145 | 309,395 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 2,396,580 | 2,288,062 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 475,511 | 492,408 |
Contractual and customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 3,767,021 | 3,010,480 |
Non-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 384,855 | 268,459 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 201,911 | $ 208,012 |
INTANGIBLE ASSETS, NET - Narrat
INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 233,896 | $ 184,548 |
GOODWILL - Schedule of Goodwill
GOODWILL - Schedule of Goodwill (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill [Roll Forward] | ||
Goodwill beginning balance | $ 2,406,512 | $ 2,322,788 |
Impairment | (35,884) | |
Additions | 1,184,774 | |
Foreign Exchange | (194,574) | 33,480 |
Goodwill ending balance | $ 3,396,712 | $ 2,320,384 |
INVENTORIES - Schedule of Inven
INVENTORIES - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Film and film based products | $ 16,988,762 | $ 13,538,610 |
Other products | 1,431,106 | 1,226,708 |
Packaging and supplies | 502,101 | 496,661 |
Inventory reserve | (130,153) | (120,826) |
Inventory, net | $ 18,791,816 | $ 15,141,153 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2020CAD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | |||
Line of current credit | $ 6,000,000 | ||
Line of Credit | The Bank of San Antonio | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 8,500,000 | ||
Line of credit facility interest rate | 3.50% | 3.50% | 5.50% |
Amount outstanding | $ 0 | ||
Covenant, debt service coverage ratio required, minimum | 1.25 | 1.25 | |
Covenant, funded debt To EBITDA ratio, maximum | 2.5 | 2.5 | |
Line of Credit | HSBC Bank Canada | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 4,500,000 | ||
Line of credit facility interest rate | 2.70% | 2.70% | 4.20% |
Amount outstanding | $ 0 | $ 0 | |
Prime Rate | Line of Credit | The Bank of San Antonio | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Basis spread on prime rate | 1.00% | ||
Debt instrument floor rate | 3.50% | ||
Prime Rate | Line of Credit | HSBC Bank Canada | Revolving Credit Facility | |||
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 ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 1,552,255 | $ 769,507 |
Current portion | 699,568 | 462,226 |
Total long-term debt | $ 852,687 | 307,281 |
Acquisition Notes Payable Due 2022 | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (as a percent) | 4.43% | |
Total debt | $ 1,552,255 | $ 769,507 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - Schedule of Accounts Payable and Accrued Liability (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts Payable and Accrued Liabilities [Abstract] | ||
Trade payables | $ 9,023,190 | $ 7,440,965 |
Payroll liabilities | 1,548,038 | 1,367,340 |
Contract liabilities | 1,076,063 | 559,232 |
Other liabilities | 784,029 | 829,816 |
Accounts payable and accrued liabilities | $ 12,431,320 | $ 10,197,353 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | 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 |
ACQUISITION OF A BUSINESS - Com
ACQUISITION OF A BUSINESS - Completed Acquisitions (Details) | Feb. 01, 2020USD ($) |
Protex Canada, Inc. | |
Business Acquisition [Line Items] | |
Purchase price | $ 2,383,968 |
ACQUISITION OF A BUSINESS - Sch
ACQUISITION OF A BUSINESS - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) | Feb. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 3,396,712 | $ 2,406,512 | $ 2,320,384 | $ 2,322,788 | |
Protex Canada, Inc. | |||||
Business Acquisition [Line Items] | |||||
Cash | 1,490,651 | ||||
Promissory notes | 893,317 | ||||
Total purchase price | $ 2,383,968 | ||||
Cash | 242,808 | ||||
Accounts receivable | 206,808 | ||||
Inventory | 27,732 | ||||
Prepaid assets | 3,764 | ||||
Other long-term assets | 6,197 | ||||
Property, plant, and equipment | 161,702 | ||||
Software | 1,027 | ||||
Customer relationships | 987,556 | ||||
Non-compete | 136,395 | ||||
Goodwill | 1,184,774 | ||||
Accounts payable and accrued liabilities | (142,175) | ||||
Assumed debt | (108,766) | ||||
Deferred tax liability | (281,565) | ||||
Taxes payable | (42,289) | ||||
Total net assets acquired | $ 2,383,968 |
ACQUISITION OF A BUSINESS - Nar
ACQUISITION OF A BUSINESS - Narrative (Details) - Protex Canada, Inc. | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average useful life | 8 years 6 months 3 days |
Acquisitions revenue | $ 284,523 |
Acquisitions operating income | $ 25,877 |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 9 years |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 5 years |
ACQUISITION OF A BUSINESS - Pro
ACQUISITION OF A BUSINESS - Pro Forma Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Business Acquisition [Line Items] | ||
Revenue | $ 28,515,222 | $ 25,188,734 |
Net income | $ 1,461,184 | $ 1,734,004 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - The Bank of San Antonio | May 11, 2020USD ($) |
Term loan | |
Subsequent Event [Line Items] | |
Long-term debt | $ 6,000,000 |
Debt term | 36 months |
Debt interest | 3.50% |
Revolving Credit Facility | Line of Credit | |
Subsequent Event [Line Items] | |
Debt term extension | 2 years |