XPEL

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 8:30 a.m. ET President and Chief Executive Officer - Ryan Pape Senior Vice President and Chief Financial Officer - Barry Wood Operator: Good morning, everyone, and welcome to the XPEL, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] It's now my pleasure to turn the floor over to your host, John Nesbett of IMS Investor Relations. John, the floor is yours. John Nesbett: Good morning, and welcome to our conference call to discuss XPEL's second quarter 2026 financial results. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer; and Barry Wood, XPEL's Senior Vice President and Chief Financial Officer, will provide an overview of the business operations and review the company's financial results. Immediately after the prepared comments, we'll take questions from call participants. A transcript of this call will be available on the company's website after the call. Take a moment to read the safe harbor statement. During the course of this call, we'll make certain forward-looking statements regarding XPEL, Inc. and its business, which may include, but are not limited to, anticipated use of proceeds from capital transactions, expansion into new markets and execution of the company's growth strategy. Such statements are based on our current expectations and assumptions, which are subject to known and unknown risk factors and uncertainties that could cause our actual results to be materially different from those expressed in these statements. Some of these factors are discussed in detail in our most recent Form 10-K, including under Item 1A Risk Factors filed with the SEC. XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether a result of new information, future events or otherwise. With that, we will now turn -- I will now turn the call over to Ryan. Please go ahead. Ryan Pape: Thank you, John, and good morning, everyone. Welcome to our second quarter 2026 call. Q2 was a good quarter for us. We had good financial performance and executed on some very important key strategic initiatives. Overall, revenue grew 14.7% to $143.1 million, which was a record for the company. I think it's fair to say this exceeded our expectations going into the quarter. We probably had about $2 million of pull-ahead sales based on our trend analysis ahead of either actual or perceived coming price increases that would go into effect in Q3. So all said, I still think that's really good performance. Our U.S. region turned in another solid quarter with revenue growing 11.7% to $78.6 million, which was a record high for the region. Our independent channel had another strong quarter. In contrast to the broader trend we've seen over previous quarters, we actually saw better performance in the independent channel versus the dealership channel on a relative basis this quarter. We're also still seeing some challenges from dealerships due to FTC concerns that we discussed on our last call, and this headwind remains. We're engaged with our dealership customers and are actually helping many of them to be compliant with FTC requirements. And I think we've been a good partner in terms of helping them ensure that compliance. With these challenges, though, there is opportunity as a flight to quality helps us in many of these scenarios. Our Canada region [Technical Difficulty] grew 10.8% in the quarter. If you recall from last quarter's call, we have a large distributor in Canada, and there's [Technical Difficulty] always some timing impact in terms of their ordering cadence. So last quarter, that was a bit of a drag. Obviously, it helped us this quarter. If we exclude that timing, revenue grew around 4%. So certainly a good for Canada, which has really sort of struggled in the past year. Our China region had a good quarter, revenue coming in at $15.9 million. In September, we'll cross the 1-year anniversary of our acquisition of the distributor there. The team is doing a really great job. I'm very happy in our progress in integrating the acquisition. And these are good results despite a very challenging Q2 for domestic car sales in China. Many focus on the headline sales, which includes exports. But if you subtract those out, which is really what we're focused on in the China market, the domestic sales, they're down something on the order of 20% year-over-year. So super challenging quarter in China for domestic sales. The rest of the APAC region also saw solid growth in the quarter. Our investments in the various countries are paying off. We would not be seeing the growth and development opportunities we have in Japan today and elsewhere if we didn't have the presence that we've built over the past few years. So absolutely convicted in that strategy and how that's going to pay off for us. We did begin to see some impacts from the Iran conflict in our India and Middle East region, where revenue declined 5% in the quarter. Overall, this impact was not as great as we feared. And in large part, it seems to be driven due to a shortage of vehicle availability in the region rather than a broader sort of collapse in consumer demand and confidence. I think when we looked at the quarter going in, we would have expected a larger impact. So we're pleased with that. And I also think given the vehicle availability issue, we'll see whether that means we can actually recapture some of that business in the second half if sales that we would have had are really deferred and not lost because the cars upon which we detach products just simply weren't available to be sold. So all in all, I think not quite as bad as feared in terms of the impact for our business. Certainly, a bright spot within that for us is the ongoing growth and development of the business in India, where we saw 60-plus percent growth in the quarter, obviously, on a much smaller base. We have a great team in India. It's the third largest market for car sales in the world. Many don't realize that and obviously still developing. So we're well positioned to continue to grow significantly in India and in the Middle East, very excited about it. We have great leadership driving our direction there. Our Europe region saw revenue decline 2.3% in the quarter. This was driven by multiple factors, including timing of distribution orders and lower year-over-year volumes in some of our OEM operations, which is really just driven from vehicle production cadence more than anything that we control. As compared to the prior year, we saw exceptional strength in vehicle volumes. And also, although we report our revenue by destination shipping address, there's products sold in Europe ultimately destined for the Middle East. So we likely saw impact from that as well. Finally, our LatAm region had another solid quarter. Our Brazil operation is getting up and running. And just as a reminder, that was really a new build distribution opportunity for us and one of the last countries where we're pursuing such a strategy now that we've built out most of the global distribution base that we think we need. So a lot of activity there. It feels like we're really on the right direction. When you put it together, we're expecting Q3 revenue to be in the $137 million to $139 million range, assumes consistent U.S. and Asia Pacific trending. Obviously, there's always a little bit of seasonality to Europe business as you hit holidays in August. So we expect to see that. And then also modest improvement in the Middle East, but we're not expecting really any of that recapture I mentioned. If that were to occur, that's certainly upside for us. And then we probably pulled $1 million or $2 million forward out of this number into the current quarter. So all in all, I think pretty good. Moving on, in May, we announced 2 key investments that will chart the course to accomplish our manufacturing strategy. First, we purchased a 4-building site that included our existing San Antonio facility. This site will serve as a centerpiece of our North American manufacturing and supply chain footprint. We will initially occupy a little over half the footprint of the building for our operations, while the remainder is leased to third parties. We believe this approach creates maximum optionality as we scale up these manufacturing operations. And then secondly, as we mentioned, we acquired a 75% interest in an existing manufacturing facility in China, which will round out our footprint there. And this facility will serve customers in China and some export markets. We don't expect much, if any, of that product to end up in the North American market, although it certainly will be capable of doing so should we need it. Overall, these investments will total approximately $110 million, and that includes what we've acquired and then further build-out and equipment in San Antonio and beyond. So we expect to begin seeing incremental margin benefit starting in mid-2027 and with the operating margin goal of ours reaching mid-20% range on a run rate basis as we exit 2028. Of course, assumes the fundamentals of the rest of the business stays as they are and assumes these projects remain on schedule, which as of today, they are. So really excited about that. It's taken a long time to get to this point, and our team is doing a really great job. Our gross margin in the quarter finished at 44.1%. This is up from 43.7% in Q1. As I said before, we'll be implementing some relatively modest price increases in some regions during Q3 to help offset some of the price-cost pressure we've been seeing, as I mentioned on the previous call. And our expectation remains that gross margin will continue to modestly increase through the rest of the year in spite of that. We'll talk more about that as it happens over the next few quarters. And overall, I think the cadence we're seeing in gross margin is what we expected as we sell through some higher-priced inventory acquired in the China distributor acquisition. If we hadn't seen some of the cost pressure come in, we'd probably see even a little bit incrementally higher gross margin for Q2. But I think really good progress anyway. And as I mentioned, even with that noise, we see a path to drive that higher even as we work towards bringing some of the manufacturing investments online. We did have costs related to the start-up and ramp-up of our manufacturing investments in San Antonio and China. These are approximately $0.03 per share in Q2. We see that growing to $0.03 to $0.04 per share in Q3 based on our current estimates. So some of that is more full run rate in Q3 of those costs, whereas the Q2 costs had more upfront and transaction costs and things of that nature. These are really transformational moves for the company. I know many of our investors are very interested in the future financial benefits. But really, as or more importantly, this is going to do amazing things for the business to increase our rate of innovation and improve our agility and product quality. So it's an exciting time. Our team is really bought in, ready to go and working very hard. Overall, a good quarter in a challenging environment. As we see stability in the dealerships, understanding the rules of the road in which they need to operate and increasing car inventory in the Middle East, really optimistic about the rest of the year. We have a great pipeline of new customers in multiple geographies with car manufacturers around the world. Our personalization platform, referral platform, is putting up record numbers and providing great volume to our aftermarket installers. We see opportunity to expand on this and are looking to launch additional programs this year. And finally, record cash flow from the quarter from operations, as Barry mentioned. We're very focused on the nuts and bolts of the business, especially as we integrate China, where we acquired inventory from our distributor. We're aggressively looking to reduce SKUs and consolidate what we're offering alongside our manufacturing expansion to drive more efficiency in working capital and to always make sure we're giving our customers better products and not just more products. This laser focus continues into other parts of the balance sheet, accounts receivable days sales outstanding and changes that result from being direct in China and other places versus operating through distribution. All these are -- these details matter a lot. Overall, I think we're doing a good job, but we can turn the screws tighter to improve our functioning here and get through the integration pieces even faster. Outside of incremental CapEx that's required for the manufacturing initiative and ensuring that's well funded, we'll be looking at a few small tuck-in acquisitions and then keep our focus on share repurchases with the rest of our cash flow. And we expect that to continue -- that approach to continue into -- well into next year. So a very good quarter for the company. And congratulations to the team. I'd be remiss if I didn't mention the work, we're doing to integrate these acquisitions and organize the back office in preparation of the manufacturing expansion. A lot of unsung heroes here doing really important work. We continue to add substantial complexity to the business. Our team does a great job of sort of digesting that and integrating that, but we need to give them credit, and we also need to give them time to complete that. So a really good job. And with that, I'll turn it over to Barry. Barry, go ahead. Barry Wood: Thanks, Ryan, and good morning, everyone. I'll start with a few more comments on the product lines. Our window film product line grew 16.1% to a record $32.5 million in the quarter, which represented approximately 22.7% of total revenue. And this growth was solid in all the regions, led by the U.S. and China. Our total installation revenue increased just under 11% in the quarter and represented a little over 21% of total revenue, led by strong performance in our corporate-owned stores. And just to call out a note on the overall revenue picture for the first half of the year, our revenue for the first half of the year grew 14% versus the first half of last year. So really good performance in the first half. Our total SG&A expenses grew 16.7% in the quarter to $39.9 million, representing 27.9% of total revenue. And this did include approximately $1.5 million of new SG&A resulting from our China distributor acquisition in September of last year. EBITDA grew 17.6% in the quarter, and our EBITDA margin was 19.3%. Our adjusted EBITDA, which factors out costs related to a ramp-up of the manufacturing initiatives that Ryan was referring to in San Antonio and China, that adjusted EBITDA margin in the quarter grew 20.7%. Our year-to-date EBITDA margin grew 17.7% and our year-to-date EBITDA margin was 17.1%. Operating income increased 20.3%, and our operating income margin was 16.2% in the quarter. Our year-to-date operating income increased 19.1% and our year-to-date operating income margin was 13.9%. Our net income attributable to stockholders for the quarter grew 10.7% and our net income attributable to stockholders' margin was 12.6%. Our adjusted net income attributable to stockholders, which again factors out those items I mentioned before, for the quarter grew 15.6%, and our adjusted net income attributable to stockholder margin was 13.2%. Our EPS was $0.65 per share, and our adjusted EPS was $0.68 per share. And on a year-to-date basis, our net income attributable to stockholders grew 14.1% -- as Ryan alluded to, our cash flow from operations was $30.8 million in the quarter, which was a new record for us. We saw some nice improvement in our cash conversion cycle, including improved DSO in the quarter. So that was -- that certainly was nice to see. CapEx in the quarter was $65.1 million, which includes the real estate purchase. And as Ryan alluded to, we expect to incur more CapEx in the back half of the year and into Q1 and really weighted more towards the equipment that we still need to get into our San Antonio facility. And as you likely saw in our May announcement, we did finance a portion of the real estate purchase with a $44.8 million 10-year term loan. So you'll see some new debt on our balance sheet in Q2 here. And while it was critical in our view, to control our site and own it to expand our manufacturing operations. We'll continue to evaluate that as we move forward, whether to own real estate in the long term or we -- maybe we have other options, but we certainly have optionality in deciding what we do there. So a solid quarter for the company, and we look forward to continuing that momentum in the second half of the year. And with that, operator, we'll now open the call up for questions. Operator: [Operator Instructions] Our first question is coming from Steve Dyer of Craig-Hallum. Matthew Raab: This is Matthew Raab on for Steve. I just want to start on the manufacturing plans. We've talked in the past about the cadence of that margin expansion. I believe you mentioned there's incremental benefit coming in mid-'27. Can you just talk about the shape of that? Is that a step function change in mid-'27? Or are there several quarters of maybe a more modest change? And then with that, you bought the facility in China. And I would have assumed that there's a quicker benefit there given it's an existing facility. So can you just walk through the gross margin expansion in the context of both the U.S. and China? Ryan Pape: Yes. I think you're thinking about it correct in that we'll see some points in time with step-up. So it's not a huge jump up to the terminal run rate, and it's also not necessarily just a gradual quarter-on-quarter increase necessarily. So there are going to be some step functions along the way. To your point with China, yes, definitely a quicker turnaround there. That's definitely part of what we'll see by mid-2027. Obviously, if we can speed that timeline up, we're going to do that, too, but that's what it looks like right now. Matthew Raab: Understood. And then maybe, Ryan, maybe if I put on my devil's advocate hat on, how should we -- how should investors think about the risks associated with this manufacturing build-out this is the largest project that the company has ever undertaken. I mean, how are you managing quality control and the leadership of this build-out? Just walk through that for us. Ryan Pape: Yes. I think that's a great question. I mean, certainly, for dollars invested, it's the largest project that we've done. I think that what I would stress is that for the majority of what we sell, we're responsible for the quality, supply chain, sourcing and overseeing the production of what we're doing already. We just simply don't own the assets that are used to make most of these products that we sell. And so in many respects, when you're thinking about quality, managing quality, total cost of quality, yields and efficiency, these are things that we're already responsible for yet we may not be able to control directly, and we may not be able to drive investment in contracted facilities where small amounts of money can make a big impact on the finished product. So I think if you think about it that way as opposed to thinking that we're buying some sort of product turnkey from a vendor and we're replacing it with our own facilities, that's absolutely not what we're doing. We're involved in every part of these products, the development, sourcing, quality, R&D already. It's really just a change of using more of our own assets versus other people's assets to actually laminate and coat and make the finished products. So I think that if you think about it like that, I would have a lot more confidence probably on the outside looking in than some do. Our technical team, which is, QA, R&D, our labs, manufacturing process engineers. This is some 40-something people. So it's a very extensive and experienced team that's already responsible for most of these things. So I have a high degree of confidence in the plan that we have. Operator: [Operator Instructions] Our next question is coming from Dillon Heins of B. Riley Securities. Dillon Heins: Dillon on for Jeff. I was wondering just you mentioned aggressively looking to reduce the SKUs. I know that can be a rather long-term project. I was just wondering where you are along that and what you expect to see from that and when? Ryan Pape: Yes. Great question. I think that the first -- we probably talked about it maybe as long ago as a year ago, where the first objective there was really to reduce the rate of SKUs in which we -- reduce the rate of additions to the SKU base. So I think we really arrested that several months ago or longer to just say that it's not necessary that we supply everything one of our customers' needs in every basically consumable or commodity product. The joke we would use is our customers don't need to buy toilet paper for their business from us. But I think when you want to serve your customers well, sometimes you can be dragged into that line of thinking. So we really succeeded in that to create sort of laser focus on that. And then now it's really looking at the portfolio of products we have with the film products, be them paint protection film or window film, you can end up with a lot of different SKUs. You've got different widths, different lengths, different thicknesses, maybe different colors or different VLTs or different constructions. And when you look at how these are sold and why they're sold and why they're used, yes, someone will buy them, but that doesn't necessarily make them a viable product. So really now we're at a point of saying, look, can we reduce that? And maybe it's a total SKU count or something like 10%. But you get in there increased efficiency in terms of inventory turns. And inventory has been something that we've talked about for a long time as there was a period of time where it was really growing excessively and it bounces around seasonally, but it's much more stable now. But we're looking to see how do we improve that efficiency, improve the turns as we go. And then as we make everything about our supply chain more efficient over the next few years, which includes a lot less WIP and a lot less products sitting on trucks between facilities and different things, do we have the possibility to actually have lower aggregate inventory dollars at work for the company even on compounded revenue multiple years out. I mean I'm not here to say that's going to happen, but I think it's possible that happens, and it's certainly a goal of ours. But I will caveat everything I said with those that understand our customer profile know that we can't run out of products that our customers need for even a day. They're buying product today in many cases because they need it tomorrow. We know that -- we understand that it's our job to serve them well. So we're not going to cut corners with that. And if there are key products that fit the lineup, obviously, we're going to keep them. But there's plenty of fat that gets added over time, just trying to be everything to everyone, and that's where we have that opportunity. Dillon Heins: Got you. And then just one additional follow-up. You mentioned some tuck-on acquisitions. Is that still regarding the manufacturing? Or I guess, what does that relate to? Ryan Pape: No. Great. I appreciate the question to clarify that. No, it would not be related to that. We're very solid in this plan relative to the own manufacturing footprint that we'd like to have. Where we're looking at tuck-in acquisitions, it's really sort of in the service and OEM adjacent areas where are there things we can do to help bring more net new customers in the fold, be they in the dealership channel or in the OEM channel. And I think there are -- those are things we would pursue. I think we would describe them as tuck-in really just to reinforce our orientation that large acquisitions don't really seem to be readily apparent that we're interested in and transformative acquisitions "are things that we have an outright aversion to". So that's probably where that language comes from. Operator: Well, there appear to be no further questions in the queue. So I will now turn the call back over to the management for any closing comments. Ryan Pape: I want to thank our team for doing an amazing job in absorbing all of our added complexity and projects and know that it's very much appreciated from our leadership team. And I want to thank everyone for joining us today and for getting up early to do so. Have a great day. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation. 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This article first appeared on GuruFocus. Revenue: Record $143.1 million, up 14.7% year-over-year. US Region Revenue: Record $78.6 million, up 11.7%. Canada Region Revenue: Up 10.8% (approximately 4% excluding distributor timing impacts). China Region Revenue: $15.9 million. India and Middle East Region Revenue: Declined 5%. Europe Region Revenue: Declined 2.3%. Window Film Product Line Revenue: Record $32.5 million, up 16.1%, representing 22.7% of total revenue. Installation Revenue: Increased just under 11%, representing over 21% of total revenue. Gross Margin: 44.1%, up from 43.7% in Q1. SG&A Expenses: $39.9 million, up 16.7%, representing 27.9% of total revenue. EBITDA: Grew 17.6%, with an EBITDA margin of 19.3%. Adjusted EBITDA Margin: 20.7%. Operating Income: Increased 20.3%, with an operating income margin of 16.2%. Net Income: Attributable to stockholders grew 10.7%, with a margin of 12.6%. Adjusted Net Income: Attributable to stockholders grew 15.6%, with a margin of 13.2%. EPS: $0.65 per share; adjusted EPS was $0.68 per share. Cash Flow from Operations: Record $30.8 million in the quarter. CapEx: $65.1 million, including the real estate purchase. Q3 Revenue Guidance: Expected in the $137 million to $139 million range. Warning! GuruFocus has detected 2 Warning Signs with XPEL. Is XPEL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q2 revenue of $143.1 million, up 14.7% year-over-year, exceeding expectations. Strong performance in the U.S. region with record revenue of $78.6 million, up 11.7%. China region delivered solid results despite a challenging domestic car market, with revenue of $15.9 million. Record cash flow from operations of $30.8 million in the quarter, with improved cash conversion cycle. Strategic investments in manufacturing (San Antonio and China) expected to drive margin expansion to mid-20% by 2028. Dealership channel continues to face headwinds due to FTC compliance concerns, impacting sales. Europe region revenue declined 2.3% due to timing of distribution orders and lower OEM volumes. India and Middle East region revenue declined 5% due to the Iran conflict and vehicle availability shortages. Gross margin pressure from higher-cost inventory acquired in the China distributor acquisition, with modest price increases needed to offset cost pressures. Start-up and ramp-up costs for manufacturing investments are expected to increase to $0.03-$0.04 per share in Q3. Q: Can you walk through the shape of the gross margin expansion from the manufacturing plans, particularly the cadence of the step-function change expected in mid-2027 and the quicker benefit from the existing facility in China?A: Ryan Pape, President and CEO, explained that the margin expansion will occur in step functions rather than a gradual quarter-over-quarter increase. The China facility, being an existing operation, will provide a quicker turnaround and is a key part of the benefits expected by mid-2027. The company will also look to accelerate the timeline if possible. Q: How should investors think about the risks associated with this manufacturing build-out, the largest project the company has undertaken, particularly regarding quality control and leadership?A: Ryan Pape, President and CEO, emphasized that the company is already responsible for the quality, supply chain sourcing, and production oversight for the majority of its products, even though it doesn't own the assets. The transition is about using more of its own assets rather than third-party ones. He highlighted the extensive in-house technical team of over 40 people in QA, R&D, and process engineering, which gives him high confidence in the plan. Q: Where are you in the process of reducing SKUs, and what do you expect to see from that initiative and when?A: Ryan Pape, President and CEO, stated that the company has already arrested the rate of SKU additions and is now focused on reducing the total portfolio. The goal is to improve inventory turns and efficiency, potentially lowering aggregate inventory dollars even as revenue grows. He cautioned that the company cannot risk running out of key products for customers, so the reduction will be strategic, targeting items added over time to be "everything to everyone." Q: Are the tuck-in acquisitions you mentioned related to the manufacturing strategy?A: Ryan Pape, President and CEO, clarified that the tuck-in acquisitions are not related to manufacturing. They are focused on service and OEM-adjacent areas to bring in new customers, particularly in the dealership or OEM channels. He reinforced that the company has an aversion to large or transformative acquisitions. Q: Can you provide more detail on the revenue performance in the second quarter, particularly regarding the pull-ahead sales and regional trends?A: Ryan Pape, President and CEO, reported record revenue of $143.1 million, up 14.7%, which exceeded expectations. This included approximately $2 million of pull-ahead sales ahead of price increases. The U.S. region grew 11.7% to a record $78.6 million, with better performance in the independent channel versus dealerships. Canada grew 10.8%, China delivered $15.9 million despite a challenging domestic market, and the Middle East saw a 5% decline due to vehicle availability issues from the Iran conflict. Q: What is the expected revenue guidance for the third quarter, and what assumptions are built into that?A: Ryan Pape, President and CEO, guided Q3 revenue to be in the $137 million to $139 million range. This assumes consistent U.S. and Asia Pacific trends, normal seasonality in Europe due to August holidays, and modest improvement in the Middle East. The guidance does not include any recapture of deferred Middle East business, which would be upside, and accounts for $1 million to $2 million of pull-forward sales from Q2. Q: Can you elaborate on the financial results for the quarter, including margins and cash flow?A: Barry Wood, CFO, reported gross margin of 44.1%, up from 43.7% in Q1. EBITDA grew 17.6% with a margin of 19.3%, while adjusted EBITDA margin was 20.7%. Operating income increased 20.3% with a margin of 16.2%. Net income grew 10.7%, with EPS of $0.65 and adjusted EPS of $0.68. Cash flow from operations was a record $30.8 million, benefiting from improved cash conversion and DSO. Q: What were the costs associated with the manufacturing ramp-up, and how will they impact future quarters?A: Ryan Pape, President and CEO, noted that costs related to the start-up and ramp-up of manufacturing investments in San Antonio and China were approximately $0.03 per share in Q2. These costs are expected to grow to $0.03 to $0.04 per share in Q3 as the operations reach a more full run rate, with Q2 costs including more upfront transaction expenses. Q: How is the company managing the integration of the China distributor acquisition, and what are the early results?A: Ryan Pape, President and CEO, expressed satisfaction with the integration progress, noting good results despite a challenging Q2 for domestic car sales in China, which were down about 20% year-over-year. The team is doing a great job, and the company is focused on reducing SKUs and consolidating offerings to drive efficiency and working capital improvements. Q: What is the company's capital allocation strategy going forward?A: Ryan Pape, President and CEO, stated that outside of the required CapEx for the manufacturing initiative, the company will focus on a few small tuck-in acquisitions and continue share repurchases with the rest of its cash flow. This approach is expected to continue well into next year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

SAN ANTONIO, August 05, 2026--(BUSINESS WIRE)--XPEL, Inc. (Nasdaq: XPEL) (the "Company"), a global provider of protective films and coatings, announced consolidated results1 for the second quarter and six months ended June 30, 2026. Second Quarter 2026 Overview: Revenue increased 14.7% to $143.1 million in the second quarter of 2026 compared to $124.7 million in the second quarter of 2025. Gross margin of 44.1% in the second quarter of 2026 compared to 42.9% in the second quarter last year. Net income attributable to stockholders of the company increased 10.7% to $18.0 million, or $0.65 per basic and diluted share, versus net income attributable to stockholders of the Company of $16.3 million, or $0.59 per basic and diluted share in the second quarter of 2025. Adjusted net income attributable to stockholders increased 15.6% to $18.8 million. Adjusted earnings per share was $0.68 per basic and diluted share. Adjusted net income attributable to stockholders and adjusted earnings per share exclude costs related to the start-up and ramp-up of the Company’s San Antonio and China manufacturing investments incurred prior to reaching full operational capacity.2 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased 17.6% to $27.6 million, or 19.3% of revenue, compared to $23.4 million, or 18.8% of revenue in the second quarter of 2025.2 Adjusted EBITDA grew 20.7% to $28.3 million or 19.8% of revenue. Adjusted EBITDA excludes costs related to the start-up and ramp-up of the Company’s San Antonio and China manufacturing investments incurred prior to reaching full operational capacity.2 First Six Months 2026 Overview: Revenue increased 14.0% to $260.4 million in the first six months of 2026 compared to $228.5 million in the same period in 2025. Gross margin of 43.9% in the first six months of 2026 compared to 42.6% in the first six months last year. Net income attributable to stockholders of the company increased 14.1% to $28.4 million, or $1.03 per basic and diluted share, versus net income attributable to stockholders of the Company of $24.9 million, or $0.90 per basic and diluted share in the first six months of 2025. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased 17.7% to $44.5 million, or 17.1% of revenue, compared to $37.8 million, or 16.6% of revenue in the first six months of 2025.2 Ryan Pape, President and Chief Executive Officer of XPEL, commented, "We saw solid top and bottom line performance in the second quarter and finished the first half of the year with nice momentum. We also were able to accomplish the first key objectives of our manufacturing expansion. We look forward to continuing to execute our strategy as we progress through the remainder of the year." Financial Highlights for the Second Quarter 2026: Summary consolidated financial information for the second quarter ended June 30, 2026 and 2025 (unaudited, dollars in thousands): Geographical Revenue Summary Overall Revenue Total revenue grew 14.7% compared to second quarter 2025 ("YoY"). US revenue increased 11.7% YoY. Product and Service Revenue Adjusted product revenue (combining cutbank credits revenue and product revenue) increased 14.4% YoY. Total window film revenue increased 16.1% YoY and represented 22.7% of total revenue. Normalized total service revenue increased 16.0% YoY. Total installation revenue (labor and product combined) grew 10.8% YoY. Other Financial Information Gross margin was 44.1% and 42.9% in the second quarter of 2026 and 2025, respectively. Total operating expenses increased 16.7% YoY. Sales and marketing expenses increased 29.7% YoY and represented 10.8% of revenue. General and administrative expenses increased 9.8% YoY and represented 17.2% of revenue. Other Short Term Liabilities increased primarily due to the remaining purchase price payable pursuant to the acquisition of a manufacturing facility in China. Cash Flows from Operations Cash flows provided by operations were $30.8 million in the second quarter 2026 compared to $27.9 million in the second quarter of 2025. Cash Flows Used in Investing Activities Cash flows used in investing activities were $72.9 million in the second quarter 2026 compared to $1.3 million in the second quarter 2025. This increase was primarily due to our manufacturing investments in San Antonio and China. 2026 Third Quarter Outlook The Company expects third quarter 2026 revenue of approximately $137 - $139 million. Please see the information under "Forward-looking Statements" below regarding certain cautionary statements relating to our 2026 Third Quarter Outlook. Conference Call Information The Company will host a conference call and webcast today, August 5, 2026 at 8:30 a.m. Eastern Time to discuss the Company’s second quarter 2026 results. To access the live webcast, please visit the XPEL, Inc. website at www.xpel.com/events-presentations. To participate in the call by phone, dial (888) 506-0062 approximately five minutes prior to the scheduled start time. International callers please dial (973) 528-0011. Callers should use access code: 840532. A replay of the teleconference will be available until September 4, 2026 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 54245. About XPEL, Inc.XPEL is a leading provider of protective films and coatings, including automotive paint protection film, surface protection film, automotive and architectural window films, and ceramic coatings. With a global footprint, a network of trained installers and proprietary DAP software, XPEL is dedicated to exceeding customer expectations by providing high-quality products, leading customer service, expert technical support and world-class training. XPEL, Inc. is publicly traded on Nasdaq under the symbol "XPEL". 1The results summarized above for 2026 are preliminary and unaudited. As the Company completes its quarter-end financial close processes and finalizes its financial statements for the second quarter of 2026, it is possible that the Company may identify items that require it to make adjustments to the preliminary information set forth above, and those adjustments could be material. Full second quarter 2026 financial information will be included in the filing of the Company’s Quarterly Report on Form 10-Q with the Securities and Exchange Commission which is anticipated on or prior to August 7, 2026. 2See "Non-GAAP Financial Measure" and "Reconciliation of Non-GAAP Financial Measure" below. Forward-looking Statements This release includes forward-looking statements (within the meaning of Section 27A of the Securities act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended) regarding XPEL, Inc. and its business, which may include, but is not limited to, anticipated use of proceeds from capital transactions, expansion into new markets, execution of the company's growth strategy and outlook. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "is expected," "expects," "scheduled," "intends," "contemplates," "anticipates," "believes," "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations and assumptions of the management of XPEL. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors relate to, among others: competition, a prolonged or material contraction in automotive sales and production volumes, disruption in our supply chain, technology that could render our products obsolete, changes in the way vehicles are sold, damage to our brand and reputation, cyber events and other legal and regulatory developments. There are several risks, uncertainties, and other important factors, many of which are beyond the Company’s control, that could cause its actual results to differ materially from the forward-looking statements contained in this press release, including those described in the "Risk Factors" section of Annual Report on Form 10-K. Although XPEL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measure To aid in the understanding of XPEL's ongoing business performance, XPEL uses EBITDA, a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, plus income tax expense plus depreciation and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of XPEL's financial performance under GAAP and should not be considered as an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly title measures. For a full reconciliation of EBITDA to comparable GAAP measure, refer to the reconciliation titled "Reconciliation of Non-GAAP Financial Measure." Reconciliation of Non-GAAP Financial Measure EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) plus interest expense, net, plus income tax expense plus depreciation expense and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of our financial performance under GAAP and should not be considered as alternatives to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805910091/en/ Contacts Investor Relations:John Nesbett/Jennifer BelodeauIMS Investor RelationsPhone: (203) 972-9200Email: [email protected]

Interested in XPEL, Inc.? Here are five stocks we like better. Record Q2 performance: Revenue rose 14.7% year over year to $143.1 million, while EBITDA increased 17.6% and adjusted EPS reached $0.68. U.S., China and broader Asia-Pacific growth offset weakness in dealerships, Europe, India and the Middle East. Manufacturing expansion is a major investment: XPEL plans approximately $110 million in investments across facilities in San Antonio and China, with incremental margin benefits expected to begin around mid-2027 and a target of mid-20% operating margins exiting 2028. Near-term outlook remains measured: Management expects third-quarter revenue of $137 million to $139 million, with modest regional improvement but no assumed recovery of deferred Middle East sales. Price increases, continued SKU reductions and further manufacturing-related costs are expected in the near term. Analysts Recommend These Stocks To Cushion The Automotive Slump XPEL (NASDAQ:XPEL) reported record second-quarter revenue as growth in the United States, China and other Asia-Pacific markets offset continued pressure in dealerships, softer European results and a decline in India and Middle East revenue tied partly to vehicle availability. Revenue increased 14.7% year over year to a record $143.1 million, President and Chief Executive Officer Ryan Pape said. He said the result exceeded management’s expectations, though approximately $2 million of sales may have been pulled forward as customers bought ahead of actual or anticipated price increases set to take effect in the third quarter. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Auto Worker Stikes Have Sparked A Preference For Part Makers The company’s U.S. revenue rose 11.7% to a record $78.6 million. Pape said the independent channel outperformed the dealership channel on a relative basis during the quarter, reversing the broader trend of recent quarters. Dealership customers continued to face challenges related to Federal Trade Commission concerns, although XPEL said it has been helping customers address compliance requirements. Canada revenue increased 10.8%, aided by the ordering timing of a large distributor. Excluding that timing effect, Canadian revenue grew about 4%, according to Pape. → 3 Drone Stocks That Should Soar After the Summer Slump Confident Consumers: 3 Stocks on the Rise China generated $15.9 million in revenue during the quarter. Pape said the company was pleased with the integration of the Chinese distributor acquired nearly a year earlier, despite what he described as a difficult quarter for domestic vehicle sales in China. He said domestic auto sales, excluding exports, were down roughly 20% year over year. The rest of the Asia-Pacific region also recorded solid growth, as prior investments in countries including Japan continued to support expansion, Pape said. India and Middle East revenue declined 5%, reflecting impacts from the Iran conflict and a shortage of available vehicles. Pape said the disruption appeared to be more related to vehicle supply than a broad decline in consumer demand or confidence, and some deferred sales could potentially be recovered later. India itself posted growth of more than 60%, albeit from a smaller base. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Europe revenue declined 2.3%, which management attributed to distribution-order timing, lower year-over-year volumes at some OEM operations and vehicle-production cadence. Pape also noted that some products shipped to Europe are ultimately intended for the Middle East, which may have added to the regional impact. Latin America delivered another solid quarter, while XPEL’s Brazil distribution operation continued to ramp up. Gross margin was 44.1%, up from 43.7% in the first quarter. Pape said XPEL plans relatively modest price increases in certain regions during the third quarter to offset cost pressures and expects gross margin to continue increasing modestly through the remainder of the year. Senior Vice President and Chief Financial Officer Barry Wood said window-film revenue grew 16.1% to a record $32.5 million, representing about 22.7% of total revenue. Installation revenue increased just under 11% and accounted for slightly more than 21% of total revenue, supported by corporate-owned stores. For the first half, revenue rose 14% from the year-earlier period. Second-quarter selling, general and administrative expenses increased 16.7% to $39.9 million, including approximately $1.5 million in new SG&A related to the China distributor acquisition. EBITDA increased 17.6%, with an EBITDA margin of 19.3%. Adjusted EBITDA margin, excluding manufacturing-ramp costs, was 20.7%. Operating income increased 20.3%, with an operating margin of 16.2%. Net income attributable to stockholders rose 10.7%, with a margin of 12.6%. Earnings per share were $0.65, while adjusted EPS was $0.68. Cash flow from operations reached a record $30.8 million, aided by improvement in the cash conversion cycle and days sales outstanding, Wood said. XPEL is advancing a manufacturing strategy centered on a four-building San Antonio site that includes its existing facility, along with a 75% interest in an existing manufacturing facility in China. The projects are expected to involve approximately $110 million in total investments, including acquired assets, buildout and equipment. The San Antonio property will initially use a little more than half of its footprint for XPEL operations, with the remaining space leased to third parties. The China facility is intended to serve China and certain export markets; Pape said the company does not expect much of its output to enter North America. Management expects incremental margin benefits to begin around mid-2027 and is targeting operating margins in the mid-20% range on a run-rate basis exiting 2028, assuming business fundamentals remain stable and projects stay on schedule. Pape said the benefits are expected to arrive in steps rather than as a uniform quarterly increase, with China potentially providing a quicker contribution because it is an existing facility. Manufacturing startup and ramp-up costs reduced second-quarter earnings by roughly $0.03 per share, with management expecting $0.03 to $0.04 per share of such costs in the third quarter. Capital expenditures totaled $65.1 million in the quarter, including the real estate purchase. XPEL financed part of that purchase with a $44.8 million, 10-year term loan and expects further capital spending in the second half and into the first quarter, particularly for San Antonio equipment. For the third quarter, XPEL expects revenue of $137 million to $139 million. The outlook assumes consistent U.S. and Asia-Pacific trends, seasonal effects in Europe and modest improvement in the Middle East, but does not assume recovery of deferred Middle East sales. Management also said it expects to continue reducing product SKUs to improve inventory efficiency, while preserving product availability for customers. Outside manufacturing-related capital spending, the company said it will consider small tuck-in acquisitions in service and OEM-adjacent areas and continue focusing on share repurchases. XPEL, Inc is a leading manufacturer and distributor of advanced protective films and coatings for automotive, marine, aviation, and architectural applications. The company's core products include paint protection film (PPF), window tinting film, and ceramic coatings designed to shield surfaces from scratches, environmental contaminants, and UV damage. XPEL's flagship PPF, known for its self-healing properties, is engineered to maintain a vehicle's factory finish by resisting swirl marks, stone chips, and acid rain. Beyond automotive protection, XPEL has expanded its offerings to include protective films for electronics and architectural surfaces, providing solutions that enhance durability and prolong the life of high-value assets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "XPEL Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Record Q2 revenue of $143.1 million was driven by a 14.7% increase, including approximately $2 million in pull-ahead sales triggered by anticipated Q3 price increases. The U.S. independent channel outperformed the dealership channel, which continues to face headwinds from regulatory compliance concerns regarding FTC requirements. China domestic sales remained resilient despite a broader 20% year-over-year decline in the domestic car market, supported by the successful integration of the regional distributor acquisition. Middle East performance was impacted by the Iran conflict, primarily due to vehicle supply shortages rather than a collapse in consumer demand, with India emerging as a high-growth bright spot. Gross margin improved to 44.1% as the company began selling through higher-priced inventory from the China acquisition, though some cost pressures persisted. Management is aggressively reducing SKUs by approximately 10% to eliminate 'fat' in the portfolio and improve inventory turnover without compromising customer service levels. The strategic shift to in-house manufacturing is designed to increase innovation speed and product quality control rather than just replacing turnkey vendor products. Q3 revenue is projected between $137 million and $139 million, accounting for seasonal European holidays and the $1 million to $2 million in sales pulled forward into Q2. A $110 million investment in manufacturing facilities in San Antonio and China is expected to yield incremental margin benefits starting in mid-2027. Management targets a mid-20% operating margin run rate by the end of 2028, assuming current business fundamentals and project timelines remain stable. Modest price increases are planned for Q3 in specific regions to offset ongoing price-cost pressures and support continued gross margin expansion. Capital allocation will prioritize funding the manufacturing build-out and share repurchases, supplemented by small 'tuck-in' acquisitions in service and OEM-adjacent areas. Financed a portion of the San Antonio real estate purchase with a $44.8 million 10-year term loan., financed via a 10-year term loan, to serve as the centerpiece of North American manufacturing. Manufacturing start-up and ramp-up costs impacted Q2 earnings by $0.03 per share, with an expected impact of $0.03 to $0.04 per share in Q3. The 75% interest acquisition in a China manufacturing facility will serve local and export markets but is not intended to supply the North American market. Management explicitly stated an 'outright aversion' to large, transformative acquisitions, preferring small strategic additions that reinforce existing channels. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Margin improvements will likely occur as 'step functions' rather than a linear quarterly increase, with the China facility offering a quicker turnaround than the U.S. site. Mid-2027 is the confirmed starting point for these incremental benefits. Management mitigated risk concerns by noting they already oversee supply chain, sourcing, and R&D for these products; they are simply moving from contracted to owned assets. The transition is supported by an existing 40-person technical team including process engineers and R&D specialists. The goal is to reduce the total SKU count by roughly 10% to improve efficiency and potentially lower aggregate inventory dollars even as revenue grows. Management emphasized that they will not 'cut corners' on availability for key products, as customers often require next-day fulfillment.

XPEL, Inc. (XPEL) came out with quarterly earnings of $0.68 per share, beating the Zacks Consensus Estimate of $0.61 per share. This compares to earnings of $0.59 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +11.48%. A quarter ago, it was expected that this company would post earnings of $0.33 per share when it actually produced earnings of $0.37, delivering a surprise of +12.12%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. XPEL, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $143.05 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 7.15%. This compares to year-ago revenues of $124.71 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. XPEL shares have lost about 8% since the beginning of the year versus the S&P 500's gain of 13%. While XPEL has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for XPEL was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.59 on $141.49 million in revenues for the coming quarter and $1.92 on $522.45 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Westport Innovations (WPRT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This maker of natural-gas engine technology is expected to post quarterly loss of $0.45 per share in its upcoming report, which represents a year-over-year change of -55.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Westport Innovations' revenues are expected to be $1.88 million, down 97.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report XPEL, Inc. (XPEL) : Free Stock Analysis Report Westport Fuel Systems Inc. (WPRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

SAN ANTONIO, July 23, 2026--(BUSINESS WIRE)--XPEL, Inc. (Nasdaq: XPEL) a global provider of protective films and coatings, today announced it will host a conference call and webcast on Wednesday, August 5, 2026 at 8:30 a.m. Eastern Time to discuss the Company’s second quarter 2026 results. To access the live webcast, please visit the XPEL, Inc. website at https://investor.xpel.com/events-and-presentations. To participate in the call by phone, dial (888) 506-0062 approximately five minutes prior to the scheduled start time. International callers please dial (973) 528-0011. Callers should use access code: 840532. A replay of the teleconference will be available until September 4, 2026 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 54245. About XPEL, Inc. XPEL is a leading provider of protective films and coatings, including automotive paint protection film, surface protection film, automotive and architectural window films, and ceramic coatings. With a global footprint, a network of trained installers and proprietary DAP software, XPEL is dedicated to exceeding customer expectations by providing high-quality products, leading customer service, expert technical support and world-class training. XPEL, Inc. is publicly traded on Nasdaq under the symbol "XPEL". Safe harbor statement This release includes forward-looking statements regarding XPEL, Inc. and its business, which may include, but is not limited to, anticipated use of proceeds from capital transactions, expansion into new markets, and execution of the company's growth strategy. Often, but not always, forward-looking statements can be identified by the use of words such as "plans," "is expected," "expects," "scheduled," "intends," "contemplates," "anticipates," "believes," "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of XPEL. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company, performance and acceptance of the company's products, economic factors, competition, the equity markets generally and many other factors beyond the control of XPEL. Although XPEL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260723767681/en/ Contacts For more information: Investor Relations:John Nesbett/Jennifer BelodeauIMS Investor RelationsPhone: (203) 972-9200Email: [email protected]

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. XPEL (XPEL) surprised the market with its first quarter 2026 earnings, reporting revenue of US$117.35 million and net income of US$10.35 million, above previously lowered expectations for modest growth. See our latest analysis for XPEL. The earnings beat comes after a mixed stretch for the stock, with a 1-day share price return of 0.99% contrasting with a 90-day share price return of negative 15.35%. At the same time, the 1-year total shareholder return of 16.85% points to momentum building over a longer horizon. If this earnings surprise has you rethinking where growth could come from next, it may be worth scanning for other opportunities using our 19 top founder-led companies With earnings and revenue ahead of expectations, a 1-year total return of 16.85% and a 90-day decline of 15.35%, plus a market cap of about US$1.2b, investors may be asking whether XPEL is undervalued today or already pricing in future growth. On a P/E of 22.9x, XPEL trades at a higher earnings multiple than both its peer group average of 19.6x and the broader US Auto Components industry at 19.9x. This points to a premium price tag at the recent $43.96 close. The P/E ratio compares the share price to earnings per share, so a higher figure usually means the market is willing to pay more today for each dollar of current earnings. For a business with US$489.7m of revenue and US$53.0m of net income, that premium can reflect expectations that future earnings will be stronger than what is already on the income statement. In XPEL's case, earnings are forecast to grow about 27% per year, which is faster than both the 16.4% forecast for the US market and the company's own 11.5% annual earnings growth over the past 5 years. Against that, revenue growth is expected to run at 11.1% per year, slightly slower than the 11.4% forecast for the US market, and current return on equity of 18.3% is described as low under the framework used here. The current 22.9x P/E is close to the estimated fair P/E of 23x, which suggests the premium may already align with where the market could rationally settle. Compared with peers and the wider industry, the stock is not trading at a discount. It is more expensive on earnings than both the peer average P/E of 19.6x and the US Auto Components industry P/E of 19.9x. That leaves limited room for error if those higher growth and profitability expectations do not materialise as forecast. Explore the SWS fair ratio for XPEL Result: Price-to-Earnings of 22.9x (ABOUT RIGHT) However, recent 90-day and multi year share price declines, alongside reliance on discretionary auto spending across many regions, could challenge the premium P/E story if sentiment weakens. Find out about the key risks to this XPEL narrative. While the current 22.9x P/E suggests XPEL is roughly in line with its fair ratio of 23x, the SWS DCF model presents a different view. At a share price of $43.96 versus an estimated future cash flow value of $129.90, the stock appears heavily undervalued, raising the question of which signal is more reliable. Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out XPEL for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Still unsure what to make of the mixed signals in this article? Consider taking prompt action: review the underlying drivers yourself and see why investors are focusing on 4 key rewards. If you stop with one stock, you risk missing other opportunities that could fit your goals just as well, so broaden your view with a few targeted screens. Spot potential value opportunities early by scanning 51 high quality undervalued stocks that pair quality fundamentals with appealing pricing signals. Strengthen your search for resilience by checking stocks in the solid balance sheet and fundamentals stocks screener (44 results) that prioritise financial stability. Hunt for future standouts by reviewing the screener containing 23 high quality undiscovered gems that may sit off most investors' radar today. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include XPEL. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Achieved record consolidated gross margins exceeding 30% for the first time, driven by Water Infrastructure margins reaching 56%. Leveraged existing network density to secure low-capital commercial wins, including three new Minimum Volume Commitments (MVCs) and eight interruptible agreements. Attributed Water Infrastructure outperformance to increased recycling and disposal volumes, managing approximately 1.4 million barrels per day. Integrated tactical acquisitions in the Northern Delaware Basin to add 30,000 barrels per day of disposal capacity and 1.8 thousand acre-feet of annual water rights. Reported that Chemical Technology demand is shifting toward high-margin specialty surfactants and friction reducers that enhance reservoir production. Noted that while geopolitical tensions have improved the commodity outlook, customer behavior remains stable with a focus on maintaining existing frac crew counts. Emphasized the strategic value of 'last-mile' logistics, where integrating water transfer with infrastructure assets captures higher service margins. Increased full-year 2026 Water Infrastructure revenue growth guidance to 25%-30%, up from the previous 20%-25% range. Raised 2026 net CapEx guidance to $200 million-$250 million to account for recent acquisitions and accelerated infrastructure project timelines. Anticipates Q2 2026 adjusted EBITDA between $77 million and $80 million, supported by double-digit growth in the Chemical Technology segment. Expects significant free cash flow generation in 2027 as major growth capital projects in New Mexico reach maturation. Projecting a modest low single-digit revenue decline in Water Services for Q2, though margins are expected to remain steady between 20% and 22%. Closed $29 million in acquisitions subsequent to quarter-end, focusing on surface and mineral rights to reduce right-of-way costs and add royalty streams. Identified a short-term drag on operating cash flow due to increased accounts receivable, which management expects to normalize later in the year. Successfully utilized an equity offering to fully repay outstanding revolver borrowings, ending the quarter with $300 million in total liquidity. Highlighted skim oil pricing as a direct revenue tailwind within the Infrastructure segment if elevated commodity prices persist. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management observed that customers are maintaining frac crew counts rather than dropping them as previously planned. Higher prices are driving conversations regarding increased completion intensity and refracking existing volumes to bring oil to market faster. Management confirmed active dialogues regarding water supply for evaporative cooling and ancillary services like power and rentals for data centers. Stated that water availability is a 'gatekeeping item' for these projects, positioning the company's infrastructure as a critical solution provider. Management has not seen any meaningful change in customer schedules or activity due to gas takeaway concerns or flaring limits. Operators are exploring alternative uses for gas, such as on-site power generation, rather than slowing down drilling programs. Reiterated that the business is evolving into a low-maintenance capital model designed to support repeatable dividends. Indicated that while growth remains the immediate priority, the company will be 'value takers' regarding opportunistic stock buybacks. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

Interested in XPEL, Inc.? Here are five stocks we like better. Q1 beat expectations: Revenue rose 13.1% year‑over‑year to $117.4 million, driven by strength in the U.S. and APAC (notably independent installers and March demand), with window film and installation revenues posting strong double‑digit growth. OEM programs and attachment rate are key growth drivers: OEM revenue was just under 7% of total (a company record) and management said rising attachment rates — more vehicles receiving XPEL products — could make demand more capacity‑limited than demand‑constrained. Margins, cash use, and risks shape outlook: Gross margin was 43.7% and EBITDA margin 14.5% while SG&A rose 16.6%; the company expects Q2 revenue of $135–$137 million but flagged Middle East volatility and dealer‑channel regulatory friction as downside risks amid ongoing capex and China integration costs. Analysts Recommend These Stocks To Cushion The Automotive Slump XPEL (NASDAQ:XPEL) reported first-quarter 2026 results that management said came in ahead of internal expectations, driven by strong performance in the U.S. and Asia-Pacific. President and CEO Ryan Pape said the company delivered “solid top and bottom line performance,” with revenue rising 13.1% year over year to $117.4 million. Pape attributed the quarter’s performance to strength across channels, particularly in March. He noted that March “really dictates how the quarter shakes out,” and said results exceeded expectations even against a strong prior-year comparison in the U.S. tied to elevated auto sales and consumers accelerating purchases amid tariff concerns. → Berkshire Hathaway’s Record Cash Hoard: Why and What's Next? Auto Worker Stikes Have Sparked A Preference For Part Makers In the U.S., revenue increased just under 10% to $63.8 million. Pape said the company saw “good performance…across all of our channels,” with the independent installer channel—its largest U.S. revenue component—growing 12% in the quarter. He added that the company’s service business posted “mid-teens plus” growth, and global dealership services installation revenue rose 27%, with the U.S. representing the largest part of that category. Pape said the company encountered some incremental friction in the U.S. dealership channel after certain dealer groups received reminders from the U.S. Federal Trade Commission on pricing disclosure and practices. While he characterized the overall impact as limited, he said the “net result for us is nominally increased churn and new customer acquisition headwinds there,” adding that regulatory attention can create additional friction in the sales process. → A Prada Payday: Is AMC Back in Style? Confident Consumers: 3 Stocks on the Rise Canada’s performance was affected by the timing of sales to XPEL’s largest distributor in the country. Pape said that if results were normalized for the timing shift—pushing revenue into the second quarter—Canada would have posted 5.7% growth year over year rather than a decline. He said the company saw good growth in corporate operations and the dealership channel, with continued weakness in the aftermarket channel. Pape also pointed to April revenue in Canada as the “second highest month we’ve had in 14 or 15 months,” while cautioning that one month does not establish a trend. Internationally, Pape said China revenue was in line with expectations, reflecting seasonality tied to Chinese New Year. He said the company made “good headway” integrating its China distribution acquisition, with OEM and 4S business continuing to grow. Europe posted “good results,” and the company saw “outsized growth” in APAC beyond China, which Pape linked to efforts over several years to become more direct in the region. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% Pape also said Latin America delivered one of its better quarters after being a weak spot over the past year, as the company progresses with a direct operation in Brazil and other initiatives in Mexico and elsewhere. Pape said XPEL did not see a meaningful impact to its Middle East business in the first quarter from the Iran conflict, crediting the team’s ability to manage “a much more complicated and expensive logistics operation” to keep product flowing to customers. He said some customers initially wanted to order more product in anticipation of additional disruptions, but logistics challenges limited that behavior. However, Pape said sentiment in the region turned more negative after March, driven by vehicle shortages. “You can’t put our products on cars that don’t exist to be sold,” he said, adding that the company has heard reports of layoffs among some operators in the region. He described the Middle East as a downside risk for the second quarter, while emphasizing that the company intends to continue expanding and investing there despite near-term volatility. On the Q&A portion of the call, B. Riley Securities analyst Jeff Van Sinderen asked whether Middle East weakness was already reflected in guidance. Pape said it was “a little bit of both,” with some impact embedded in the outlook, but added there could be “further downside risk” if trends develop worse than expected. Pape said interest in OEM programs remains a “continued bright spot,” spanning multiple manufacturers, regions, and program types. He noted that some OEM initiatives require upfront investment that can pressure gross margin or SG&A early on, but become more profitable as they scale. “We’re beginning to see signs of that leverage in the OEM business,” he said. OEM revenue in the first quarter was “just under 7%” of total revenue, which Pape called the largest in company history. He said the channel remains a significant growth opportunity and suggested the company could become “more capacity limited” than demand limited as it onboards new programs, which he described as “a good problem.” Craig-Hallum analyst Matthew Raab asked what is driving XPEL’s U.S. outperformance relative to broader auto trends. Pape said the biggest driver remains “attachment rate growth”—more vehicles receiving some amount of XPEL product. He said content per vehicle is still contributing, but not at the magnitude seen several years ago when paint protection film coverage was shifting rapidly from smaller packages to larger and full-vehicle applications. “If you want sort of the North Star that we’re pursuing, it’s really about attachment,” Pape said. Gross margin was 43.7% in the quarter. Pape said the company continues to work through higher-cost China inventory acquired in the transaction and is seeing benefits from other margin initiatives, but also flagged upward cost pressure tied to oil prices, supply chain disruptions, and the petrochemical industry. He said the company still expects to build on first-quarter gross margin in subsequent quarters, but added it is “not guaranteed” and may not reach the magnitude previously expected, with pricing decisions under review. Asked about gross margin outlook, Pape said the company still expects improvement in the second quarter, but noted uncertainty beyond Q2 due to the evolving pricing and cost environment. He also said the company has been “relatively conservative” on pricing recently, balancing market conditions, but indicated adjustments are likely at least in line with observed input cost pressures. Senior Vice President and CFO Barry Wood said window film revenue rose 24.8% to $23.3 million, representing about 19.8% of total revenue, with particularly strong growth in China and APAC tied to the company’s move to a more direct model and progress in OEM and 4S channels. Total installation revenue increased a little over 24% and represented just under 24% of total revenue. SG&A rose 16.6% to $38.2 million, or 32.6% of revenue. Wood said quarterly SG&A included about $1.2 million related to the annual dealer conference held in January and approximately $0.5 million for an expanded presence at the NADA dealer trade show, which he said the company plans to continue. SG&A also included about $2 million of incremental expense related to the China acquisition. Wood said the company expects SG&A growth rates to moderate as the year progresses. Wood reported EBITDA margin of 14.5%, with operating income up 17% and net income attributable to stockholders increasing 20.5% to $10.3 million. Net income margin attributable to stockholders was 8.8%. Wood also said days sales outstanding increased again, citing “noise” in accounts receivable tied to the China transition services agreement, where the seller is collecting on XPEL’s behalf, and the fact that more than 60% of the quarter’s accounts receivable billings were in the OEM channel, which carries extended terms. He added that a reorganization of customer-facing operations initially caused collection practices to lag, but said that has been rectified and the company expects DSOs to trend downward. Cash flow provided by operations was $7.4 million. The company spent approximately $9.7 million in capital expenditures, which Wood said was driven primarily by deposits to preserve optionality on supply chain initiatives. XPEL also executed a roughly $3 million share buyback early in the quarter. Pape provided second-quarter revenue expectations of $135 million to $137 million, reflecting a typical seasonal ramp from Q1 to Q2, “a consistent U.S. trend,” and “modest improvement in Canada.” He cited Middle East weakness and potential delays in dealership services deal flow due to added friction as downside risks. On manufacturing and supply chain initiatives previously discussed by the company, Pape said XPEL has made “substantial progress” this year, largely settled on its course of action after evaluating alternatives, and has begun executing on the strategy. He characterized it as a multi-year initiative and said the company will provide updates at meaningful milestones rather than “play-by-play commentary.” Pape also noted the addition of Mark Thornton to XPEL’s board, describing him as a Procter & Gamble executive with China and APAC experience as well as manufacturing and materials science expertise. XPEL, Inc is a leading manufacturer and distributor of advanced protective films and coatings for automotive, marine, aviation, and architectural applications. The company's core products include paint protection film (PPF), window tinting film, and ceramic coatings designed to shield surfaces from scratches, environmental contaminants, and UV damage. XPEL's flagship PPF, known for its self-healing properties, is engineered to maintain a vehicle's factory finish by resisting swirl marks, stone chips, and acid rain. Beyond automotive protection, XPEL has expanded its offerings to include protective films for electronics and architectural surfaces, providing solutions that enhance durability and prolong the life of high-value assets. The article "XPEL Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.