XPEL - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the XPEL Inc. Fourth Quarter and Year End 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce John Nesbett with IMS Investor Relations. you. Thank

begin. may You

John Nesbett

you us. Thank for morning. joining Good

of On President our participants. Barry and today financial we results. an Wood, the their and Pape, will XPEL's have Ryan take overview provide Chief will remarks, Chief Immediately, Officer, the business company's call Financial operations review call XPEL's who the prepared Executive we after Officer; and from questions

Harbor take me a Let read Safe moment statement. the to

Inc. plans and the actions, anticipated scheduled forward-looking not and XPEL the by During of but may, such or capital of always, Often, are anticipates, such of intends, the use statements but negative variations new Such current include, of achieved. certain we'll XPEL. as this use words could, management based or into growth and markets occur might words, identified will from to expects, the on of statements business certain make that expectations contemplates, events including the its forward-looking not state expected, course call, proceeds be transactions, limited proposes statements may expansion believes, taken or or strategy. variations be company's execution which regarding be would, of be of results phrases or as can

XPEL. affecting and call of the and of equity markets results known specified this events company all Forward-looking factors competition, products, many the circumstances by and differ discussed factors other beyond economic performance the materially as company's and uncertainties may certain and and occur not the in generally acceptance control dates factors, risk could or of at unknown

factors can may could whether statements, made of differ statement from they date guaranteed. be to statements of or speak those materially XPEL's information, by to described estimated as forward-looking intended. are new actions, applicable or anticipated, in and results other attempted or of differ no that otherwise. revise there cause or actions or publicly actual a events obligation events, to as that laws, to XPEL forward-looking events only results Although result the important update those required as statements, Except forward-looking identify future from No undertakes forward-looking be cause factors which securities any

I'd ahead, turn With the call Ryan. over Okay. to now that, Ryan. Go

Ryan Pape

a and COVID was continued John some everyone. year in XX.X% how and good some of end quarter reflecting in call. another to we we year our quarter revenue the morning closed into which XXXX the early year revenues revenue markets. Thanks, XXX.X especially with as reinstated out bottom COVID year to the XXXX solid the Welcome headwinds, QX growing Momentum was in XX.X lockdowns really related line we growing record QX top end given saw saw strong performance. the of We with XXXX at I compared the saw and with XX.X% we really million of to with pleased finished million

at the regions. Looking

in posting all QX momentum Our U.S. is down growth great all QX from sequentially half second its slightly revenue with was XX% growth region XX% in after QX in but solid a quarter. continued

again start well to up QX and Canada was but the in highest market second performance year the for were was considering QX closed was China million great a quarter. This strong discussing you XX.X% we're of really as a with of to XX% expected. new to has been $XX.X benefit than half timing quarter in was relatively better shipments This the the sales QX over revenue which China been relative represented fourth up XXXX. car initially quarter a of up in a in for us. the and auto strong Sequentially great result. little versus and year. As XXXX. certainly the we've China is U.S. In we out compared China performing XXXX XX% know an the of down XXXX

in year the the outperform is growing acquisition growth Center Protect channel acquisitions recent product Continental Canadian really aftermarket driven third both by from they our being continues was we've outperform sales that our continued our Parts given quarter serve lockdown installation to XX% where and in the Canada year after OEM highlights I pleased week and to last markets of grow in Our incredible of related and to where in in Europe strategy February XX.X% revenue the results. re-entered it posting our really the our last as of expectations with with the seen operate. segments Europe. quarters

business UK lockdowns COVID team even going the in while posted those another impressive great XX% were results our more quarter Our reinstated UK. being considering

So another QX In record a job. Asia-Pacific growth. a had over great quarter we little in with XX%

continues Our Mexico in grew Latin America little job. region do XX%. a to Team great over a

we've where in We nice the record had momentum in also of Middle half second seen East the a the in year. some QX quarter

in more a From growing was to revenue there a compared continued of business saw strong time driver and to see really it's to And was window about down than region. products. we mentioned as a performance have Sequentially window will quarter to regions but given our a as window film of paint product with XX%. development. small team line a protection drive So, be because our good year. over market on a in growth form all which opportunity they QX, manage bit for we standpoint, results seasonality based and growth Seasonality building lot still significant our XX% segment we run three is the film they're in our record these great previously that revenue Latin of to this XXXX Mexico for channel America we're strategy

architectural catalyst focus line to as business film more fourth and our Our of with this seen and may brand window to Veloce continue the XXXX is there QX, acquired Innovation folks bring vision line. a product sales another quarter dedicate compared have to be in to of grew XX% progress over you this pleased the we for

the interest window film earned architectural that business. acquisition outs have ramp will We part as that of to align

still Our are and they by their be the products responsible to up region product that more give backed sell local will these but confidence products in specialized for them as the a team are automotive being grow teams to line.

Our line QX QX A FUSION product continues compared great year. XX% make good in to quarter progress. to grew revenues prior

margin On XX% the front slightly gross is which at margin XXXX XXXX. from gross up closed

ended margin versus at in QX prior of year. Our XX.X% QX gross the XX.X%

the As to we allow depending should side. XX% on particularly to seeing of working able We fluctuate distribution. an on XX% mix. our we We're of range gross from that the second is sales margin out on initiative mix in us versus typically gross the range that that the distribution results XX% our quarter-to-quarter mentioned China gross past margins in direct half XX% on start our dependent year this margin to to be break year of next will typical early and see

XX.X% EBITDA Our QX grew income XXXX income XXXX and grew net XX.X% net our XX.X%. QX EBITDA was and grew our XX.X%.

carried of if revenue want our still and in as there and financial that sure. were just to reasons. So weakest and we momentum Chinese margin clearly QX leverage able Year The said strong revenue China seasonal revenue obviously into to at we has very we're objectives as the overarching we're grow mentioned we I other the do XX% at be and do drive strong in due is business for revenue the gross meaningfully, this in past year in which looking for New able targeting China SG&A that QX we can saw XXXX. over will leverage quarter around operating to tremendous drive to and we've

recall in a of COVID QX As you a impact but China easy comp has doing impacted was year by as COVID even will excluding and we result China an been significantly have great. bit last the

to XX% growth such As overall our couple great QX for a year-over-year in revenue training San distribution XXXX offer in expect be to which mention slowest well world-class be brand result call want in Antonio our over products production seasonally facilities as as A to turn a our other We're before expanding things of center. will Barry. new we new I quarter. space to I more and excess the

new our X about the XX this of for in we're million key we've increasing size recent Our out of inventory as be allow been X training more months. with and million part staff classes training a program and year continues our to another going will facility QX. the that Also business in increasing into million closed we targeting to

various increasing inventory during our our As mitigate on to reflecting we days levels have we happened what mentioned identified risks of COVID-XX. could the after call initial last we're on

SG&A lowers non-product where so working While ultimately logistics we'll do costs. capital costs we're benefit COGSS consuming inventory more and in reductions in to

on another that So side. win

named great opportunity the relationship our Car of Penske. earlier Header brand at of with nice is is It's made team Speedway. Motor title Texas installation a Indy us U.S. Xpel more Texas exposure Series Indy the we for Xnd. to Double and for includes a Car this includes business. Second Speedway existing announcement Another is exciting of complement for and scheduled market our Motor will a multi-year Texas the largest great XXX the be Race sponsorship a will portion be This sponsor month May which

strategy other primarily including to event that and acquisition really international talk product expansion and of a and active state but excited cumulatively on also products around prominent It's we're dollar and finally are we're things front So in more the strategic our that sponsor channel seeing done about great the we such to year to in acquisitions domestic application highly be history. We're close us. this our existing than expectation we've in our verticals. terms able some that we'll

very team. of couldn't Obviously, is and customer when recovery very up. be year both I in that. was things initially ramped proud a great COVID a then more us. in in of focus days the constant early what year the team the our So on challenging the for Their on focused

a by questions. take go humbled XXXX. the great performance and call to then that everyone's and Barry forward and ahead. to turn With we'll really dedication some over Barry So look

Barry Wood

us a great Obviously revenue XXXX Thanks XX.X record standpoint. overall morning XX.X% million revenue XX.X% Ryan good from QX and while grew everyone. quarter was a to XXX.X it grew our million. revenue a to for

saw. I protection Paint back was to think the product paint to first was revenue million, half XX impacted of grew well. paint XX.X% was a for XX.X% million, XXXX subsequent protection film Our China of half film demonstrates comes grew XXX.X we that in for the quarter to revenue grew of the when category revenue. year year quarter sold the the by was record do COVID compared QX protection film a and product QX were when was the Center growth which million and Protect of which our the revenue and while and XXX.X in lower half which million we XX.X% weakness year the the XX.X for the businesses to year half QX second of into impact the for revenue product there XX.X% like Also isolation Product QX grew the record momentum to revenue they growth XX.X% China goes first growth revenue our for XX.X%, them customer and out comp. we service acquisitions previously of product and product as the

So on had as well. an certainly that line that impact

this XX.X% as window revenue year. million really vision revenue QX year of to In XX.X% was Ryan great grew representing year. item XX.X% which grew earlier film this and X.X XX to revenue. Our product represented film performance to the window Window total amazing architectural revenue for line film had includes of our window alluded million this XX% line and film growth

out Our software our to film XX.X% to break million. to growth to really XX.X not enough so Total sales from for are grew QX for X.X window X.X% yet majority year vision our the service year X.X category and and service grew million the while in software QX revenue revenue the of X.X revenue automotive is million the million grew segment. this X.X% XX.X% grew revenue to big

insulation X.X revenue revenue bank installation, bank and the XX%, year cut revenue facilities for overall XX% labor XX.X% grew for million to grew X.X% total Our of owned that million. is and from X.X which for impacts year million the XX.X% note and QX installation Installation XX.X year also for XX% revenue our the install grew for our for the exclude the labor revenue grew grew X.X million revenue if grew component you revenue the and the cut and here credit our to company QX to our and QX for XX.X% in acquisition the quarter. installation XX.X% year

in the particularly which customers margin. So are installation our through for what is QX good gross performance a from business clearly Ryan surrogate our seeing. nice talked

performance much our marketing to particularly bright really SG&A XXXX some don't costs. but us. think spot in pandemic I Obviously do help another travel I SG&A for contributed add there the have So our related and was

grew million administrative represented XX.X% resumption and increasing normalize XX% SG&A and in QX XXXX support X.X% related represented This in XX.X% grew grew to a Sales XXXX. XX.X% grew bit for as trend mainly the and and began our XXXX and to total expenses QX QX sales this anticipate and growth. the million. XX% and XX.X% of the expenses million marketing line XX.X grew Our to to grew of revenue. SG&A sales increased increases move was QX QX million we XXXX X.X expenses X.X administrative marketing expenses revenue. to and to versus XXXX general to marketing some activities expenses attributable XX.X% we into X.X expenses an and year general of expenses In growth QX item revenue versus

result So from all think see all such job is costs but facilities increases and increased new we G&A in a our continue the line good our did on overall here holding costs. a to we'll all Obviously I as nice here.

we again effective year last for near some what them to XX.X% year percent rate and year. was QX and this have QX the not true last have return ups substantial similar were Our for provision did were income as to we tax as they but year did XX.X%

EPS of rate XX.X% around to expect income seasoned million strong XX% operating Based for margin the reflecting quarter to a a as registration this share XXXX. near we grew margin QX our to well-known grew that a being EBITDA statement. flow share be on on in active our have we're Status we way of to practice on margin Status of for year mentioned XX.X to issuer tax in as by up million Wixie per XX.X% a that income QX in XX.X% so capital quick we XX.X% finished not finally, grew effective efficient subsequent shelf us the we do most And EBITDA use all to million and forward. of XX.X% XX very And acquisition income our effective EBITDA this to cash was the you XX.X million the any grew term and of balance to ended which registration is strategy very affords capital for general cash automatically XX-K shelf at per going sheet future Ryan raise XXXX leverage or likely do and is this another XXXX quarter. cap XX.X% arise. our Wixie XX.X%. XX.X% net a common was purpose. us. XXXX future. and X.X for net income Wixie put need to margin with with our filing our market plans to X.X XX.X% current filed reached reflecting morning net did and to million the know the from with EBITDA to XX.X% and expect XXXX We from should companies and net ever XXXX we have simply need do maximize grew a ops million XX.X the nor to we raise optionality we year reflecting $X.XX cash $X.XX and again up

that us XXXX and for up to in looking execute with the and another now questions. great call operator we'll continuing So for open XXXX we're was to year forward

Operator

you. Thank

a of question come be the conducting first [Operator questions now Instructions] B. answer Van and Our line questions. Sinderen with will your Jeff with session. Riley. from proceed We Please

Jeff Van Sinderen

should for Good gaining guess accounts? adding And accounts you XXXX. new morning within about we independent how existing accounts congratulations us can adding more car and everyone I on shops metrics new versus on think dealers? strong the color either install Any give penetration or

Ryan Pape

Yes. Sure. Thanks Jeff.

in this the a mix the the over of both is in it twofold played a and accounts think there way is out from years of and trend balance the and think we strive number growing of always one's same is way aftermarket appropriately has at new I that both. base over about healthy the there's channel new There we and a existing growth to standpoint channel no customers two really time so are because their varied saturate businesses, but those It's grow market us and and we models a have then need customers. to is our for to business consistent in always at will of for most size dealers from characterize the need dealers. existing customers dealership existing varying growth the from hard grows for their a new to their been market. part serves how always market but what's do rates the that is businesses, what is a as which every of more there's It our a interest with the customer that's

does car be customers team existing lot but growth of of certainly added it's doing growth a was really mix dealerships great future aftermarket from good forever going our that We a but in and at rate. exception. to new new So no mix the QX I accounts in a from a our a think new and job

Jeff Van Sinderen

did Okay. that? QX? think what say guess Good. you in XX% is we revenue And you're expecting about I should growth then how

Ryan Pape

and based growth That's of the a a impacts then a XX% rate maybe year run but really yes a with then start really fantastic a to QX. last on Yes. and a XX% and end regions that all expecting just with year to to function revenue due extent March COVID of of above hair that's China, what QX correct. current the for to year We're our in is in last a relatively bit we're looking lesser early muted comp the easy the

Jeff Van Sinderen

think on then in initiatives that a and I believe half year. And mentioned elaborate spoke to bit? you just Can gross this of I Great. you point second margin some Okay. to stabilize you

Ryan Pape

Yes.

So as range of over trade distributors. of main past our where China and to quarters if call our between you'll look example is largest distribution you and go gross margin the driver you we our sell the a at within business six profile a margin that being it the to that. overall we're of XX% back XX% accepting kind range the lower kind

of percent quarters larger gross margin in So where of at aspect seen is our China us kind is out expecting we've we're the as half sales as that every of XX.X cost this be goods working with XX, really on impacts but had. that that the it less will to of get and beyond max what we're of cap year to we you've XX.X XX, that second start

So distribution but up XX, a to could to half be still that we start depending that's second XX and year. at on it to there's starting drive up XX if range over be mix to getting rather than a going China from XX.X, in XX or the maybe not range XX try XX and time the of higher we

Jeff Van Sinderen

in outlook just the EU. talk anything what this and one Okay. on for I for more in the if That's year about initiatives helpful more segment squeeze could EU terms working you're of to

Ryan Pape

and business penetration the know terms at these country need we within or really just of there significantly products of they're look attachment The country the usual sort in to even for penetration attachment it's you distribution a huge. by do. what us any we if and EU of metric rate varies mean country I No. as is to

low of a to of countries. then to attach lot low with continue rate, have other grow the and So do very sales in we very all countries in work lot a

we other we're happening during that strategy countries, to in France and last people run So closer what's put to in develop distribution did region acquisitions like performed really perhaps at the for really really feeling and continued year more get to in the but invest, customer, about to and in look Europe us so it's continue just market. good how COVID it's more

Jeff Van Sinderen

of luck best a half. first and Thanks for Okay.

Operator

[Operator with Steve next with the Our come Thank questions of proceed Instructions] line you. from Craig-Hallum. Please your Dyer questions.

Steve Dyer

back like kind was commentary Thanks. guys. Good impact. second quarter. circling on sounds a helpful. of It Nice your that's more Nice Ryan outlook. gross really just to of half margin which morning positive

the the quarter first we So of should the strength given be lower on of end that given to that expect sort in in range China?

Ryan Pape

for I end expect so sure. would that that have going QX We're when to for to bring look range number we you of for that Yes. China the trade us QX Steve. a that'll in in the good lower at really

Steve Dyer

expect them? kind it and should doing the I more curious deals then of Got there commentary of what guess large around just of further pipeline just of and there anything a sort you've of in same good more more or lot the is volume we of M&A of been meaningful just

Ryan Pape

the Yes. Certainly in or than really seeing. seen I both. before would end in what acquisitions but average that's increase to bit we of been and type what higher then be in we've the we're be would of have pipeline deal incremental I terms of at quantity going size larger a what least ever say we've quite top is with the will I increasing where also from think revenue size terms think that the the

I little strategy strategy. change going is not what but a to very we'll see past. in bit So those think consistent the really the deals be seen we've of with the The complexion

Steve Dyer

It mean of sort sort like sounds we share one-off sort significant terms the grab mix. more it expect laterally of market like And or maybe channel in should sounds of grab, something other of to installers’ a and through. put products I of

Ryan Pape

We're Yes. at looking both.

at. same mix to that over have products the of lot to have at two on products are work looking we we market and that a with we're done not with think to line that the interesting said past take do the other long-term we that product we're products we've certainly expansion As short the but years we've there's time a some

around markets to So domestic bread market our world in there just go execute the then on the customer of that the get the and strategy really and drive adoption all component to and to international use to we a and can. where butter close there's channel penetration and

Steve Dyer

it. then sort sort a of be remainder question seasonality of you you just -- Obviously me. something anticipating QX. normal strong not that year that? or grow commentary on the build And pent to Would then you for on of demand QX Got i.e. the around abnormal or very or up modeling expect able quick for are make something may there's

Ryan Pape

the No. in from dynamic China nor Yes. that even inventory from I easy comp. this then we're again relatively been we strong don't see just the standpoint. track strength is unusual see really in building we one to now performance exiting and anything strong.nothing exceptional the There Seltzer's China aside about no are QX expecting about the year and and carefully not last underlying timer QX we

Steve Dyer

Got it.

Okay. I'll Thanks. jump back in queue. Congratulations guys.

Operator

closing over to Thank the for call you. back I to time. at like any There this management further would are no turn remarks. questions

John Nesbett

to everybody. speaking you Thanks quarter. and appreciate Really Yes. next forward your with time look

Operator

you Thank for your conclude today's This does teleconference. participation.

You may time. your lines at disconnect day. Have great a this

XPEL (XPEL) 11 Mar 212020 Q4 Earnings call transcript