Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to the XPEL, Inc. Fourth Quarter and Year End Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions] [Operator

conference to I of your Relations. this the now IMS being over conference host, is note, will recorded. turn Investor Please John Nesbett

may You begin.

John Nesbett

financial conference Good XXXX. year to to And fourth our morning. discuss and welcome XPEL’s results full for quarter call

Wood, today, Officer, Barry after will operations overview the Senior On provide Officer; the and and Executive and we will call comments, from business company’s prepared Immediately Pape, an the Ryan call Vice financial review President President XPEL’s Chief questions and XPEL’s Financial results. the Chief of take participants.

read Take a moment Safe to the statement. Harbor

the from and will make its capital new markets transactions, During anticipated of not certain Inc. may call, which to, XPEL, but expansion company’s include, into regarding of course execution growth strategy. business, be and this proceeds forward-looking the of we limited statements use

can including forward-looking results expects, is by Often, state variations, or may, contemplates, statements core taken use not actions, might will intends, or to words such could, that plan, be scheduled, be be but as be certain will words or or expected, phrases events or of negative taken of identified achieved. or variations proposes such believes, would, always, the anticipates,

on of current statements Such based are management of expectations XPEL.

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

those the factors those events, to results actions, could that statements that cause factors or that to from made important actual other identify to attempted forward-looking has differ estimated differ from materially in XPEL intended. events, actions, anticipated, results described Although cause

as or any otherwise. obligation date XPEL whether applicable of forward-looking publicly except update as a are by No laws, which speak new statements as revise information, of to guaranteed, and undertakes or required securities no events the only result of forward-looking can they be forward-looking statement made statement, future

will Go ahead, Ryan. the that, over With turn to I call Okay. now Ryan Pape.

Ryan Pape

the able Thanks, our exiting XXXX We XX%, end Revenue [XXXX] XX%. want run a us we well. at accomplished gross John, me as year Overall, income conference and XX% welcome grow to operating we to of year from and drive this great year that leverage was our margin grew always XXXX net accomplish year. grew we morning, rate XPEL. were as And good to to and for everyone. grew EBITDA of (sic) XX%, call goal

the headwinds in in had Clearly, but growth we region perform every in into ran led quarter well at other a by the U.S., minute, about solid will I which some which to continues unexpected very almost XX.X% exceptionally QX China, a in talk quarter.

net $XX.X revenue QX million, grew Overall, XX.X%. to and XX.X% income grew EBITDA grew XX.X%

sequentially. So normally, we call, quarter the quarter of was a the good the a operating leverage slower and is less China discussed and world QX for QX for last QX strong during China for our than there. in And rest as forecast

overall growth for lower QX. expected we So

in ultimately The we business, and operating positive payment sudden we which policies was from reversal require news, reopening of upfront disruptive In the the believe is COVID our China, quarter. in to the clearly distributor very China.

to However, extends dealers. our distributor in country terms our

reopening, flow which extent cash significant activity, could have that So widely but the sort feared materialize economic of on was the was the reduced to the prospect necessarily of distributor. didn’t feared constraints at posed

from of China unplanned if from three COVID, available throughout threat have distributors even going And both then been, the the supply similarly, inventory maintain would closures the specific arriving it product but prevent higher on broader concerned about that we of like chain issues was years, port us, issue as also us.

inventory with several to and as requested it So and that the it’s orders a to we them the ultimately, of toward were spare this reopening, to than ask absorb and the end year take our into and to easier eliminate circumstances. the distributor given for to of us that planned, agreed result uncertainty better

a $X.X been or most QX revenue that’s QX XXXX, and was for other So significant million, peak reduced quarter for in a result, XX% regions, came China QX. million obviously, as QX while China, QX in quarter which our considering lower QX QX. at historically has the from approximately by $X.X seasonally was it’s a which sales from estimate normally highest decline in

China of outlook. So to we the our be about restrictions all it positive uncertainty market. think see good positive regarding said, is their equally the and as distributor a these lot that in Removing is there’s I news

they example, an dealer their conference spring. hosting will this large now As be

will these been held in not team are for be the and Our and way like ours in important COVID since conferences in attendance started. attended well historically and have U.S., meaningful a

distributor further to right decide invest is to to for the the been in the with market in It’s when time us difficult up now. conjunction

have expand we move our to better into years, XS intelligence, get support several we on groups relationships, which about OEM plans, plans are those team China. our uncertainty over the We past corporate market plan to distributor, car now. support the the but better had to us But not and with the asking forward to to in us China dealership

film execute plan off uncertainty staff, inventory, additional we on additional our like was under you its taking from held unwise our in unwilling those or to in just from XXXX. product similar prevented introductions circumstances, that We architectural hiring that things to in on but on for China, do do entirety distributor were also reasons, the have

the to XXXX dealers I team’s what always the we need. and ability use and I on beyond, make as am China about a in reengage providing distributor of soon support this to of to and can the much here opportunity are as deeper the state for our opportunities the great and China as overall, we market travel they and go think about we plan I as all have practical operation visit current encouraged our to the So, done. sure in

solid regions most had So challenges our of quarters. absent the in other China,

which is mentioned, the million. be our spot. in Revenue $XX.X to I bright U.S. grew As continues XX.X% market, a to the largest quarter market,

New of continues will to still to it resilient demand. this higher interest to improve car ultimate likely at but most remains and the of buyers on new seen because rates car seem be impact be inventory sales, pent-up new car be point

is ever we in this to seen ours. February continue not which from revenue XXX% of of And seen trading car have down to we the market year, result, such a the and And highest strongest months tangible margin, some of as year. new products we January what more adjustment price see dealerships have is dealership services as the always

So that’s news. good

growth QX. red quarter. Most outside the the for QX other continued U.S. Canada, just Europe, than U.K. Board. of of they did see was lower did region basis regions percentage the the hot a in growth saw on across

all feel other you that So bit. But in little of a performance those overall, solid regions. really very

dollar. Canada, like that Europe to the continues of U.K. revenue, of we due ongoing impact QX, have and Our FX ongoing the this strength in all last seen year

year we So year’s on currency rates. exchange basis, at year prior a are or valuing this last constant

both a quarter, For impacted the quarter, had approximately mentioned great by as the Latin America gross on were region and margin $X million. call. revenue

We eliminated and distribution. -- another layer the direct of more have East gone much in Middle direct

in Middle timing There there. but really is large orders a about was -- the quarter direct quarter-over-quarter excited distribution are slight the East, We orders this versus of to customers. opportunity into smaller decline about

so us tends So and work that that as we are expand to to continue model do, prone better to that we are for we happy to know there.

done were in last Consequence QX Our of XXXX. [ph] acquisition

So we lapped those now. have fully

So TintNet, business there’s effectively, serves. that the being slight new one availability it hand in the the it the you actually the even down XX%-plus drag from versus focus while a QX year markets U.S. on wouldn’t dealership with in prior business, given know vehicle growth,

us cost actually So of that basis for the XXX points in as revenue may much as QX. U.S. have

the off were good and rates. a a So and to thinking February the the stronger Automakers this U.S. seem be environment. in we to fears than start, momentum us be of year. of In some vehicle QX, in uncertain still for recessionary even rising little end are bit January respects, despite interest optimistic face January, still in new and about seeing especially sales the

continue. So, we like trend obviously, that to

is New Year Chinese do. much to China expressed We in in expect quarter of lower of revenue go-forward have as and return their they change we slowest the basis of because QX as typically hand days QX. inventory don’t holiday a for China, year to on on desire the

XX% revenue our putting the XX% about That’s growth to plus. down that other QX growing the in with China U.S., most $XX like million together, year-over-year million obviously aggregate $XX we XX% XX%, and to be expect So range. year-over-year of regions approximately in

particularly year. our was during I pleased where One area performance margin gross the with

margin about year able would talking have our the $XXX,XXX rate. with quarter with ability to XX% We prior we have been whole exit We that. actually. otherwise, XX% gross We inventory to right QX run been one-time had do for a this at write-off, were even and the

helped cost gross in of the some offset really the regions COGS of which the of increases put increase couple during not on of other some some material items. services, points price A did and have We margin. our seen we for quarter a product, non-build for

become see us have less is historically, and gross our accretive But been China to continued And don’t because certainly low, volume China pronounced grown, today is market effect you margin of has has when distribution. really more as and a that smaller with sales the percentage for to as it’s percentage, is China margin lower it. a U.S. much

an margin costs the et And designing be QX. the cost have gross VAP, low especially fixed embedded you through, we abnormally like over revenue that the depreciation, have, equipment term, have earned to when short like production patterns cetera, in for quarter of labor,

in negative have even gross normal would slightly is we more kind exit quarter. XX% in been actually that implicit of margin, some run impact a rate otherwise, higher So to

by progress. great work So the team. good, Good

very are that. pleased with We

$XX I so margin was $XXX,XXX XX.X% XXXX to improvement in our So will XXXX also percentage gross QX XX.X%, It XX.X%. margin gross XX.X% said, XXXX right that finished QX XX%. at note grew plus year at and and gross margin the XX.X% versus tremendous XXXX that as translated, million. percentage at margin I gross percentage full our

tremendous a So, improvement there. obviously,

mix, not question have et driving channel focus And the but XXX-basis-point exit improvement high the see the possibility of really product that coming we this, improve most mix, growth of go cost it to runway where to an all are can we discussed, another certainly of have based what expecting cetera. we the year in open things the on end we It’s XXXX on. on from still how years, actually realm is beyond the by and

incur approximately certainly revenue as to of quarter in we obviously. lower see and also compensation as acquisition. in percent costs, previous this related did costs $XXX,XXX We have that SG&A a fixed costs $XXX,XXX higher to revenue incurred severance We built-in we and contributes the

the original not was the to under achieved not the of paid for agreement earn-out it purchase various eligible as reasons. targets be Technically, terms were the on

However, we of lot sort tangential a of other things to the acquisition. accomplished

to we thing spirit business. the thought in was do of So right for the the it the deal,

So we expense. have incurred that

margin have but know can We and SG&A over SG&A we higher the time we costs, gross traded some quarters. in through the for earn revenue

this when how we such fully because of in SG&A was goods, it, previously an in present in internal as transfer Australia do of now example works, is acquired it’s an to paid former our distributor expense distributor a the Australia, acquisitions wash shipment. that as we cost shipping As

of actually but improved So see SG&A, you as offset gross form margin. in grow the that

can So do, leverage higher we is the -- of these business. trade slight net a we effect where still gross that the gross degree all expense, increased to grow small of margin for effect SG&A there’s we but margin a the that collateral things

QX EBITDA reflecting to margin $XX.X XX.X%. of million, XX.X% grew Now EBITDA an

the in quarter impacted we leverage us. that all with other the good So mentioned things even

about This up million. Our QX. million from $XX inventory $XX approximately year-end finished was actually

reduced our the that, faster. obviously contributed is volume momentum as and have reduce hand China much stays there inventory the Our team on I to in purchasing, but to still pushed

and past concerned more handshake us the our few vendors who commitments supply for many chain inventory accelerated years. honored production dollars over total when have we We have about were to their

competitors been suppliers, the to had our never prioritize have resulted claim. business, on have which to is the we down others three our of these So effectively over fortunate being the years, support product from stock down sometimes to corrugated at anything, every necessarily of the which in of past vendors of the out us component something expense couldn’t

inventory we as on get So of we days relationships that there. reduce maintain hand, imperative it’s the have the that us helped

to just means a a bit that, which team work right So the little move. longer this slowed has through, but bit just me the takes on down it’s

go it growth revenue the to than given XXXX year inventory categories planning or did means across expect reduce And like year, in inventory substantial million, to commit product do this days doesn’t all flow $XX not are this still we and cash we we we on but lower probably or expect hand. XXXX

year, required we normally course should this more a than hoped. albeit than revenue, growth support had in to the So the over of initially the schedule the increase slower offset slightly on

year had Revenue acquisition is our really with looking than the the year business. good success have at double month. month We now of trending period from Australian over prior more prior when

have better unit reduced films align price growth which the selling distributors with on prices by our over economics, the in protection prioritize. to digits country drive We double sometimes also market can and paint

at pays is like and of fewer revenue the our looking where direct a XX So fraction we again, but a million it’s market only people. example of a of which are approach Australia, great dividends, Canada,

we think I successful. why be see will So this

that, So other we enter XXXX, We number in reducing days XXXX a we as inventory countries several intend complete our the with especially dynamics we to working a have capital our with and at of are cash acquisitions done similar looking flow at mind. of committing before, in hand to for rate stop similar to same to have. those with similar on strategy

We new to is released version platform, all now. our DAP of customers DAPNet. our in a beta of This

with more about the that more rewrite making of a them. As them providing much operations we that customers and the to incrementally core DAP previously, of support our value talked business efficient is goal of system our will more of this

a is functionality new we great will team but to and updating a effort forward, as roll more to the of So continue as move this come. release job and around put more the part features Much then weekly out of updates done forward. and lot lot going of and this has core on work into of go a data

long-term the in that are things the today, coming thing a there’s painful business the some done uncertainty. we this have pretty about are as wouldn’t in other and but Overall, think, light year right of have We discussed, I macro fourth lot any way. the of quarter positive even they it I for sort

As all plans see China good a QX there. I said, the start coming as particularly we regions U.S. get momentum, through out of happening, continue we to There’s especially and our of display things of expansion should to positive news product lot

Our film continues architectural to window grow. business

of We up XXXX have are setting the business, new current that business within expansion a long a book segment, had of revenue opportunities product year have runway in and OEM projects today good that a great which and is of the for we about contemplated. X% variety a

revenue looking which the Much to future organic this in is extrapolating XX% we limited the But growth for forecasting. our is into of trends present, we the at point, are view see XX% our year. to at

significant As our I fully lapped earlier, we mentioned acquisition.

acquisitions at this our component inorganic this to do point that growth without year. may there’s no we So considering future

had we the to Of a year. start can good course, change, anything have

while earlier, sort business the throughout XX% and plus year, drive range, we to us give and minus the expect around XXX to a probably. earnings in the to the ending or again, invest for substantially. run This SG&A get year points to growth of in As we gross us us leverage significant allowing X% that’s improvement rate should mentioned XXX-basis-point improve I that expect margin basis

XXXX. our a leverage generate marketing do we significant of on basis, range increasing that are can within and that We percent but revenue spend still for

The fourth overall, performance pleased incredibly with hard. team quarter worked notwithstanding, very year. has am our So, I this

thank the doing and with them are coming of this we about imagine everything and we excited number moving You year. really are pieces I can

take will So, then to with that, and ahead. over I we it Barry questions. turn will some go Barry,

Barry Wood

a and good couple want on Ryan, off items just everyone. our morning, I topline Thanks, to performance. more cover

past, discussed cutbank you paint in during the reclassification. film we the have the But just lines, was at If product to look require protection is as flat revenue accounting quarter.

makes protection PPF. to of line quarter. picture at So in the sense look with cutbank and X% to over grew a paint cutbank you full a Combined, revenue reporting external revenue get PPF when our little our and film combine PPF it

here. So a impact good the size significant China had quarter-over-quarter decline

product Our perform which is our million. film grew continued growing expected window with quarters. product window this year-to-date as XX.X% from down at film line line On to have a seasonality is quarter-over-quarter $XX.X revenue being well and sequentially line XX.X%. does consistent QX, This fairly product highest with QX some the basis, QX

grew XX% revenue vision QX line, business had million. on as basis, million. film, OEM to and year mentioned, a Our a revenue $X.X $XX.X Ryan $X.X grew approximately product million, our window with vision our And XX% is to which also, architectural growing XX% great revenue year-to-date to

XX% year-to-date XX.X% Our was revenue. installation the a combined quarter revenue installation represented total our quarter the Same-store basis, year-to-date growth XX.X% for revenue. represented and revenue, grew and installation on basis. of service, grew XX% -- product and XX% total a and sales XX% in On total

$XX.X and a we as And Our doubt QX XX% like quarter down certainly no SG&A that have certain there before. echo Ryan’s is we we SG&A infrastructure that built feel expense revenue million would XX.X% of about when QX costs comments into on grew we our to SG&A it. fixed revenue, talked I represented have that

returns. we Despite expense very remain nice still saw leverage provide confident in that, to quarter and will continue Ryan future also, our mentioned that this cadence some the and operating great

year-to-date XX.X%. a for margin mentioned, been and to rate would [ph] assume normalizing EBITDA and of EBITDA margin have XX.X%. And XX.X% have run XX%, EBITDA been QX our China grew reflecting margin EBITDA and Ryan approximately was basis, grew on EBITDA if Our you expected $XX.X items XX.X% the million, would

income EPS margin XX.X% income -- and net grew $X.X million, $X.XX per was XX.X%, net of $XX our QX share. reflecting to Our

normalize factor net have the you in items, If EPS been income per China $X.XX share. margin XX.X% approximately would would when and other been for have

was million, of strong from quarter near-term saw in which cash channel the are in to but But ops inventory the the the result to the solid that in was continue of Cash performance great up moderate the all a out. $X.X quarter for cash expect flow as flow generate regardless for year, light and level we have flow we to and inventory long-term, really increase a good we set continues to performance in XXXX. in could

with questions. the call will that, turn we over And for Operator,

Operator

is from proceed. Dyer Steve, Steve Instructions] Craig-Hallum. you. The question first coming Thank with [Operator please

Steve Dyer

Thanks. prepared of the detail always Good morning, guys. lot in A as good appreciated. which remarks, is

Within sort space, of really, you it us help greater profitability to be would there the adding opportunities like really well. in just auto continues pre-loaded there in sounds general, Are are attach sort see of or are this of in dealer seeing terms kind to number they could selling are greater or seeing I color the great? in versus any not, of a buying seeing vehicles you guess dealers what stuff? you business of rates, you more do

Ryan Pape

it’s business, we us, dealership year really the of by I especially we been the has the spot of all have. a of bright the and above. yeah, The some Steve, beginning the Sure. performance that seeing a of into for best lot this little bit metrics, think, end are the year of a of

product coupled revenue business. from the with very so some the seen we to stand -- of mentioned, as to dealers, is parts and it’s a momentum various inventory, adding are good we adding inventory where have of the have we to this. number And of that. large just all But we of Preload, in for so we benefit are lines of return some related more that you

have more customer environment adjustments as that they it’s out this gross go to of just we opportunity not heard that. margin to for the instead the still under one margin these that’s the is it this something away, generate are but dealers inventory back, of to cut in have exclusive the down than you because market to trade is XXX% gross need dollars, where give for the and but reasons and once are And that reason, pressure the

seeing a cases. So that’s in quite are that of -- those we definitely few

we level of protection had then might window that and current that more the more relationships to that some And in was upsell at film also products be of this film. XXXX too things preloaded. acquisition film within guard and cups per there and has PermaPlate have that, that could It be like true really, before. higher a protection adding paint door we only content and success window the have of introducing we did vehicle could be door It been line could edge since and be

the So mentioned. all it bright you all it’s of that above, is a things spot really and the

Steve Dyer

help of it. should you. like out sort are sounds Got we this front or to what generalities acquisitions Can Thank directions expect? sort lay It as year. back burner more of you

Ryan Pape

at No. on one to -- international have were working the really are think things got are we pretty I Yeah. carryover we the But things going couldn’t fruition reason come of or we year distribution. from a to another. good see We list last top just that for on the

the the example fault used every in alignment versus of anyone, of goal that and and with out maximize in we independent but run almost the goals third-party is of distributor where no our goals be. unit the market you of call how profit a can some a of on distribution, business the to We our might see not Australia at case today

get be we want PermaPlate economies there companies definitely so. doing one. more like some what about, just everything Dealership did scale for some activity we of you Steve, add things international are So smaller by to and services markets think that business, makes would enter. doing might that of sense to other these it to we That and key asked other

on table. clearly that’s the So

sort type installation and with change to to way installers core strategy. and of network where inorganic performance what movement to perceive we that, looking which acquisition in an like has at appropriate markets need that that then, been context, some and things to and lastly, looking gaps things lower our of And fill broader you be this at in the

what what expect year. of this three those are on would focused the see really and So is I to we that’s

Steve Dyer

up Perfect. Helpful. cash kind right big, way of bit on And then, for a now, nothing it, up and how can going in of following rates capital sound of debt working that there’s year? that think How terms interest I ring guess, of it you of that of to se. do just per pay like lot from this doesn’t as with a about a roadmap little but sort you funding

Ryan Pape

be obviously, that, debt Well, will it’s that’s looking our so situation, at overall we a ongoing. good reevaluate time to

So terms there’s the some opportunity on to capital improve that side. of of cost just in that

for investing us we key. inventory really do And things. the deals huge leverage, in without we we the set have commitments CapEx type a That’s though number than lower have to and even we these is, should of for one and big if with the number then, CapEx in do even we then not stop ample for had past really year is modest But are the cash the probably of great. a few, have us to

good attractive for shape to with do bit facilities, we with It current a want and doesn’t committing a what that we the not if more little And flow our predicated inventory. $XX about max can the than could reduction $X and you rest that upon mentioned, It’s year. are with cash we got million have more in to just today million have of to then see -- we reducing do. dramatically, of we I this inventory inventory as not think, structure we it’s debt

Steve Dyer

as Thanks right. always guy. All of it. Best luck. Got

Ryan Pape

Steve. Thanks,

Operator

Riley. comes [Operator question Instructions] Please The Jeff next Van Sinderen proceed. with from B.

Jeff Van Sinderen

one-time know too probably far as those? us morning, Good see your Hi. get I wanted sense P&L this to where the those be point? of can’t clean at quarters I far the of as should in but couple are I everybody. behind the next on just, items, future, you guess, the

Ryan Pape

mean, Yeah. I they Jeff, are.

with think laundry every you when one bury historical individually are, historically we at a called don’t I it. We we us standpoint, tend list but have to of aggregate that look if in time, onetime is a things are. quarter mean out things from

what right, truly but those to subject that’s were. out call -- when know, So don’t they we what because we

Jeff Van Sinderen

thoughts around then of And Okay. XXXX? just in the PPF acceleration

Ryan Pape

is businesses the more of numbers key the we -- revenue. the the for I mean, acquisitions, saying bought product into than us are anything That’s drives and you sales time, some what service with Well, that. all Over oscillations China, really we our the right? in with convert

you time, a period you look customers affinity bit, buy see of over we because versus that of our it if at right wrong. that quite ours, that we to kind people So of existing longer or actually done customers aren’t tend an to a have have

minus. if -- I up the the was really, $X.X $X.X or So at China million, million were you U.S. million PPF $X.X plus look sales fourth quarter, think, down our year-over-year.

percentage. So has of that be even substantial out, mentioned, like as Barry now kind grown to of that ignoring but a the installation component the business, which,

the China where it with of to are to reset some we the there we about getting remove and business where and just the and much getting and all want knowing go of full and really trying It’s closer it. to volatility

Jeff Van Sinderen

will automotive of the some film dealer And do PPF and about that, that rate or are you year at those other things similar this services about and as of or faster rate grow you that? to or rate thinking we think think window slower, growth a how

Ryan Pape

because it sources right? as kind know are depends, certain of are extent, revenue fast we agnostic we to So trying -- I how. grow as to Well, a of we really all

them like, are mentioning, sense that as the into a they some have labor. with turns doesn’t sale, sale, for you you do so to that product labor opportunity dealership a make an And sense, decide could in because starts that it

the the really customer, and to that’s trade-off -- that those -- up ones those So that. are planning the two, for between not we

we growth of think see product. the I will all across categories So

a adjustments Some rate and things any the product higher larger we revenue. lines lines to to the smaller and that then service to product buy convert on subject at if product

Jeff Van Sinderen

like? then are it’s any thoughts smooth, you I might back what or second wondering, for I it’s gross kind improvement quarterly am And think you to look on think you said, Do of going half year. do basis be you think of loaded? the the more points just targeting XXX margin progression

Ryan Pape

half other It’s that benefit loaded, have pipeline second while probably see of. that a more and the decisions got things inventory because to in either typically how take go, just been knowing the made you or things have

So, more likely. is probably, loaded second half

do we at think good. that make I be we want that possible And at exit a can it’s we were that to run think sooner, if sure minimum. would I certainly get XXX-basis-point That rate. if we it

Jeff Van Sinderen

taking the my question for of quarter. Okay. Thanks rest best and for the of luck

Ryan Pape

Jeff. Thanks,

Operator

coming proceed. question from next The Tim Please EF Moore Hutton. Okay. is with

Tim Moore

about and out the purchasing revenue trending was item the appreciate feedback quarter indication installation keeps standalone film labor or and I growth was it hear year be penetration of protection protection relay including Were some that? preloaded It PPF your any that Thanks on XXXX, sales as paint nice paint on revenue positively. pretty Barry granularity it’s should for maybe strong. point you we on customers the to the any safe any for and cutbank sales, fourth more last there was type to that non-enthusiast getting in film

Ryan Pape

aren’t the protection there’s our we longer Yeah. on a enthusiast a Well, I mean, to for the that are huge focused we of term market that clearly, company are future, paint learn because that’s middle not know buyer something that themselves. very that as about film going

reach have them. to We

not dealerships where have pretty reaching customer. expensive or either route that primary advertising, a market to through the and access OEMs via or have they to where which is We super them probably

aftermarket by broader it with is than dealership its overwhelmingly through came have what of business scope sort acquired makes how models, the in and nature is of the we grown, the not it it have be. sort enthusiasts and we nature Given just and our to of business much its then

are talking or because So adopt invested the it’s a is enthusiast those these we businesses goal that small paint dealerships that that’s of disproportionately one reasons in film to coverage, in that starting no when that the are some consumers that and about fit matter capacity, this. certainly one don’t touching big we we this, reasons of and direct of have protection how the doing almost how

the cut traditional it’s of with dealership of film attachment us almost paint talk buyer. scope hear services, into a you protection of dealerships when beyond certainly kind any those So enthusiast we about the touch

Tim Moore

those Great. pricing, hikes a remark that That’s know you market you able about quarter to that since you been pricing markets might it’s it am distributor mentioned couldn’t in probably taken. is, at have big taking how are color I just from an hear it? can markets year in gigantic. what fair not you XX% Is earlier On your getting to China you markets, pricing or and take few maybe and that additional just for to assume price I to it an power of a other had provide given and only XX% next last take

Ryan Pape

Yeah.

XX% it’s in completely in the or just for was different it customer product not less actually probably probably and but hit of right it side even than revenue, the hit way. less handled I quarter the -- a the are you because the oriented. pricing the think in on portion that, of of in quarter, for base is the it oriented service really service The

from that total you accurate, a it from the it probably a then customer XX% it’s revenue in touched it’s than less basis, of in probably revenue and even actually So probably but way. some are that, base, XXs, directionally

yeah, are -- to we at look continuing the we that. So, --

for of restrained have than intentional variety our in reasons. We been a more pricing competitive set

us what a to this then haven’t but us leave So firm for that something and opportunity further and the was it’s we year, year. did is us this but we available the intentional on, strategy to decisions made for do rest

Tim Moore

-- Great. you in ramping that, remember, and on up is if October. Rivian direct started update Can OEM three That’s maybe slowly helpful, European Ryan. programs are I that the there just probably you believe that I that how’s are on relationship, just What an about going? doing,

Ryan Pape

Yeah.

schedule the that stage need our that’s the and facility near we So did then are in been in all successful to and the and the ramp-up program and at having getting terms installations. the team vehicles a Rivian of their do plant of we then on our our it’s available start work now combination

quite we from a of rate can vehicles, potential in buyer. is had sides positive, end initial the interest get expected expanding full higher take this. think there’s and than interest It’s from the I the I feedback provided both -- allocation think,

need collectively I it’s we it way So positive to to then just full think around potential. and up all the scale its

build relationship. but a we and getting we that with now with that was are it’s to October that us in super year going to and So that it and There delay, substantially delay happy I that until pleased on. last think glad cost ultimately were we do did something it

with same expansion additional on three of those of of number or And just in some have or discussions Europe, could projects we OEMs Europe respect stage yes, the different touch. that and that and vehicles we to the model today are units in possible expanding with make be

manufacturers different talking other the of sales or coincide usually a cycle a just of in and we that things as to long there process then we model now the projects And ones have introduction that are something. new these types with are with have

where and further there continues are and interest we other there’s strong to do and needing to So to interest willingness be our China things about invest there that. in talking

I -- and to So bright that. think it’s spot a to continue grow expect we it’s overall,

Tim Moore

color That helpful. very is Great.

Just Rivian. as question a follow-up to quick

million For your that Does or include modeling XX% for decent you are sales XX% less? guidance that chunk Rivian this or year. from a $XX to organic

Ryan Pape

we from their a done No. I conservative. mean has has relatively would so I to say, model number of there that standpoint. of our -- pragmatic us for terms continue a we the we vehicles, but there. to job that least not very potential full being our of and say in in are in get great are scaling Rivian production to are -- in to

Tim Moore

is seen are put last lately? cross-selling just, you team Great. or devoted and PPF, that And you more window my seeing and have managers to benefiting you tinting question

Ryan Pape

do pay mean, one our or Sure. we Well, the I that way number thing product don’t the is, we between discriminate service. we team,

on cross-sell an want that that to all gross team customer knows inherently of and experience and a profit in customer every be to products. incentive type our we for strong with creates We all dollars align are so every the and channel have XPEL trying growing to able to

film, the we all aftermarket XPEL to -- know, so customers especially our an we And coatings, paint buying all have experience. many protection window that have want times, products, three are them that we in

brand there’s our really to all of -- them as So and the those count. that when and then knows dollars something our where to you team incentivize core

time, and efficient more strategy. more it’s revenue is from in of And yourself one places visit and keeping more dollars in our location spreading than more their having gross margin and with to dollars out

XXX% goal. I that on aligned are think So we

Tim Moore

question. and Great. my that’s Thanks, Ryan, it

Ryan Pape

you. Thank

Operator

the have to question-and-answer now over turn We of will end and the remarks. closing session I reached the management for call

Ryan Pape

I worked and team want who’s to great thank and so I a continues everyone. importantly, most We hard to do today. exceptionally year, thank had to want our

thank speak to you and will we So quarter. next everyone

Operator

you disconnect Thank at your participation. for and conference lines today’s concludes your time. you This may this

XPEL (XPEL) 28 Feb 232022 Q4 Earnings call transcript