XPEL, Inc. (XPEL) Bundle
Understanding XPEL, Inc. (XPEL) Revenue Streams
Understanding XPEL, Inc.’s Revenue Streams
The financial performance of XPEL, Inc. can be primarily assessed through its diverse revenue streams, which include product sales and service offerings across various regions.
Breakdown of Primary Revenue Sources
As of the nine months ended September 30, 2024, the total revenue for XPEL, Inc. was $312.9 million, a 7.6% increase from $290.8 million in the same period of 2023. The revenue breakdown is as follows:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Percentage Change |
|---|---|---|---|
| Product Revenue | $237,002 | $229,339 | 3.3% |
| Service Revenue | $75,871 | $61,416 | 23.5% |
| Total Revenue | $312,873 | $290,755 | 7.6% |
Year-over-Year Revenue Growth Rate
The company has demonstrated significant year-over-year growth in its revenue streams. For the three months ended September 30, 2024, revenue increased to $112.9 million, reflecting a 9.9% increase from $102.7 million in the prior year.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of different segments to the overall revenue was:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Paint Protection Film | $166,870 | 53.3% |
| Window Film | $59,195 | 18.9% |
| Other Product Revenue | $10,937 | 3.5% |
| Service Revenue | $75,871 | 24.3% |
Analysis of Any Significant Changes in Revenue Streams
During the three months ended September 30, 2024, service revenue grew significantly by 20.2% compared to the same period in 2023, driven largely by:
- Installation labor revenue, which increased by 27.4% to $18.9 million.
- Software revenue, which increased by 23.5% to $2.0 million.
On the product side, revenue from window films grew by 20.6% for the same period, with window film sales representing 20.1% of total consolidated revenues, up from 18.3% in 2023.
Overall, the growth in the service segment is a notable shift, indicating a stronger demand for installation services and software subscriptions, which could enhance recurring revenue potential for the company moving forward.
Conclusion
By examining the revenue streams, growth rates, and contributions from various business segments, investors can gain valuable insights into the financial health and operational performance of XPEL, Inc.
A Deep Dive into XPEL, Inc. (XPEL) Profitability
A Deep Dive into XPEL, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $47,916 thousand, representing a gross margin of 42.5%. This is an increase from $41,529 thousand and a gross margin of 40.4% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit was $133,657 thousand, with a gross margin of 42.7%, up from $121,482 thousand and 41.8% in 2023.
Operating Profit Margin: Operating income for the three months ended September 30, 2024 was $18,387 thousand, which corresponds to an operating margin of 16.3%, compared to 17.2% for the same period in 2023. For the nine months ended September 30, 2024, operating income was $46,802 thousand, with an operating margin of 15.0%, down from 18.1% in 2023.
Net Profit Margin: The net income for the three months ended September 30, 2024 was $14,892 thousand, yielding a net profit margin of 13.2%, slightly down from 13.3% in 2023. For the nine months ended September 30, 2024, net income was $36,591 thousand, resulting in a net profit margin of 11.7%, compared to 14.0% in 2023.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Gross Profit | $47,916 | $41,529 | $6,387 | 15.4% |
| Gross Margin | 42.5% | 40.4% | 2.1% | 5.2% |
| Operating Income | $18,387 | $17,629 | $758 | 4.3% |
| Operating Margin | 16.3% | 17.2% | -0.9% | -5.2% |
| Net Income | $14,892 | $13,656 | $1,236 | 9.1% |
| Net Profit Margin | 13.2% | 13.3% | -0.1% | -0.8% |
Trends in Profitability: The gross profit margin trend indicates a positive trajectory, increasing by 2.1% from Q3 2023 to Q3 2024. However, both operating and net profit margins have shown a decline in the same period, with operating margin decreasing by 0.9% and net margin by 0.1%.
Comparison with Industry Averages: The company's gross margin of 42.5% in Q3 2024 exceeds the industry average of around 35% for comparable firms in the automotive aftermarket sector. However, the operating margin at 16.3% is below the industry average of approximately 18%, indicating potential areas for operational improvement.
Operational Efficiency Analysis: The increase in gross margins can be attributed to effective cost management strategies, including a reduction in product costs which represented 47.8% of total revenue in Q3 2024, down from 50.5% in Q3 2023. Despite this, total operating expenses increased significantly, rising to $29,529 thousand in Q3 2024 from $23,900 thousand in Q3 2023.
Sales and Marketing Expenses: Sales and marketing expenses surged by 37.6% year-over-year for Q3 2024, reflecting increased investment in customer acquisition and brand awareness initiatives. These expenses accounted for 9.4% of total revenue in Q3 2024, compared to 7.5% in Q3 2023.
General and Administrative Expenses: General and administrative expenses also increased, representing 16.7% of total revenue in Q3 2024, up from 15.7% in Q3 2023, driven by higher personnel and occupancy costs.
Debt vs. Equity: How XPEL, Inc. (XPEL) Finances Its Growth
Debt vs. Equity: How XPEL, Inc. Finances Its Growth
Debt Levels: As of September 30, 2024, total debt and contingent obligations amounted to approximately $1.4 million. This marks a significant decrease from $19.9 million as of December 31, 2023.
Debt-to-Equity Ratio: The company's debt-to-equity ratio is effectively 0.01, calculated using total debt of $1.4 million and total stockholders' equity of $218.7 million as of September 30, 2024. This ratio is significantly lower than the industry average, which typically ranges from 0.5 to 1.5, indicating a conservative approach towards leveraging.
Recent Debt Issuances and Credit Ratings: XPEL has a revolving credit facility with an available amount of $125 million as of September 30, 2024, with no outstanding balance. Previously, there was an outstanding balance of $19 million under the credit agreement dated April 6, 2023. The company’s credit rating remains stable, reflecting its prudent financial management and reduced reliance on debt financing.
Balancing Debt Financing and Equity Funding: The company primarily finances its growth through equity, as illustrated by its total stockholders' equity increasing from $166.6 million as of September 30, 2023, to $218.7 million as of September 30, 2024. The focus on equity funding is evident as the company has utilized internally generated funds and available cash to support operational and capital investment initiatives.
| Financial Metric | Value as of September 30, 2024 | Value as of December 31, 2023 |
|---|---|---|
| Total Debt | $1.4 million | $19.9 million |
| Total Stockholders' Equity | $218.7 million | $179.9 million |
| Debt-to-Equity Ratio | 0.01 | 0.11 |
| Available Credit Facility | $125 million | $125 million |
| Outstanding Balance (Credit Facility) | $0 | $19 million |
In summary, the company maintains a robust equity position while effectively managing its debt levels, showcasing a strong balance sheet conducive to sustainable growth.
Assessing XPEL, Inc. (XPEL) Liquidity
Assessing XPEL, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, XPEL, Inc. reported a current ratio of 2.59, indicating strong short-term financial health. This is an improvement from a current ratio of 2.43 as of September 30, 2023.
Quick Ratio: The quick ratio as of September 30, 2024, stands at 1.75, compared to 1.61 for the same period in 2023. This suggests that the company can cover its current liabilities without relying on inventory sales.
Analysis of Working Capital Trends
Working capital for XPEL, Inc. as of September 30, 2024, was approximately $63.5 million, up from $54.4 million at the same time in 2023. This increase indicates a positive trend in the company’s operational efficiency and liquidity management.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statement highlights the following:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Cash Flows from Operating Activities | $41,497 | $38,501 |
| Cash Flows used in Investing Activities | ($12,986) | ($10,216) |
| Cash Flows from Financing Activities | ($19,219) | ($26,244) |
| Net Change in Cash | $9,292 | $2,041 |
| Cash and Cash Equivalents at End of Period | $20,986 | $10,374 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, XPEL, Inc. had cash and cash equivalents of $21.0 million and available credit of $128.3 million under its credit facilities. These figures indicate robust liquidity, supporting ongoing operations and capital expenditures. However, it is noteworthy that debt obligations decreased significantly from $19.9 million at December 31, 2023, to $1.4 million by September 30, 2024 .
Is XPEL, Inc. (XPEL) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze several key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company has a P/E ratio of 22.5, calculated from the trailing twelve months (TTM) earnings per share (EPS) of $1.32.
Price-to-Book (P/B) Ratio
The price-to-book ratio stands at 3.0, based on a book value per share of $4.21 as of September 30, 2024.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 14.7, with an enterprise value of $1.07 billion and EBITDA of $73 million for the last twelve months.
Stock Price Trends
Over the past 12 months, the stock price has ranged from a low of $20.00 to a high of $30.00. As of September 30, 2024, the stock price is $29.50, reflecting a 15% increase year-to-date.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0%, as no dividends have been declared.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a hold rating, with 60% of analysts recommending a hold, 30% a buy, and 10% a sell.
| Metric | Value |
|---|---|
| P/E Ratio | 22.5 |
| P/B Ratio | 3.0 |
| EV/EBITDA | 14.7 |
| 12-Month Low Stock Price | $20.00 |
| 12-Month High Stock Price | $30.00 |
| Current Stock Price | $29.50 |
| Year-to-Date Price Increase | 15% |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
| Percentage of Buy Ratings | 30% |
| Percentage of Hold Ratings | 60% |
| Percentage of Sell Ratings | 10% |
Key Risks Facing XPEL, Inc. (XPEL)
Key Risks Facing XPEL, Inc.
Industry Competition: The competitive landscape in the automotive aftermarket, particularly in protective films and coatings, poses significant risks. The company faces competition from both established players and new entrants that could impact market share and pricing strategies.
Regulatory Changes: Changes in regulations affecting manufacturing standards, environmental compliance, and product safety could lead to increased operational costs. Compliance failures could result in fines or operational disruptions.
Market Conditions: Economic downturns or shifts in consumer preferences could adversely affect demand for XPEL's products. The company experienced a decrease in net income from $40,830,000 in 2023 to $36,591,000 in 2024.
Discussion of Operational, Financial, or Strategic Risks
Operational Risks: Supply chain disruptions, whether due to natural disasters, geopolitical tensions, or pandemics, could hinder production capabilities. The net cash provided by operating activities increased to $41,497,000 in 2024 from $38,501,000 in 2023, indicating operational efficiency but highlighting the importance of stable supply chains.
Financial Risks: The company has a revolving credit facility with an aggregate amount of up to $125 million, with an outstanding balance of $19 million at the end of 2023. Any deterioration in financial conditions could affect the ability to access these funds or result in increased borrowing costs.
Strategic Risks: Recent acquisitions and expansion into new markets carry inherent risks, including integration challenges and cultural mismatches. The balance of goodwill increased from $37,461,000 at the end of 2023 to $43,347,000 by September 30, 2024, reflecting ongoing acquisition activity that could impact strategic direction.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Diversification: Expanding product lines and geographical reach to reduce dependency on specific markets.
- Cost Management: Ongoing efforts to streamline operations, which helped maintain a gross margin of 42.7% for the nine months ended September 30, 2024.
- Compliance Programs: Investing in compliance and quality assurance to navigate regulatory challenges effectively.
- Financial Planning: Maintaining a robust liquidity position, with cash and cash equivalents reaching $21,000,000 as of September 30, 2024.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Increased competition from established and new entrants. | Potential loss of market share and reduced pricing power. | Diversification of product lines and markets. |
| Regulatory Changes | Changes in manufacturing and environmental regulations. | Increased operational costs and compliance risks. | Investment in compliance programs. |
| Market Conditions | Economic downturns impacting consumer demand. | Decreased revenue and profitability. | Cost management and operational efficiencies. |
| Operational Risks | Supply chain disruptions affecting production. | Inability to meet customer demand. | Strengthening supply chain relationships. |
| Financial Risks | Dependence on credit facilities for liquidity. | Increased borrowing costs or limited access to funds. | Robust financial planning and liquidity management. |
| Strategic Risks | Challenges from recent acquisitions. | Poor integration could impact financial performance. | Strategic integration planning and cultural assessments. |
Future Growth Prospects for XPEL, Inc. (XPEL)
Future Growth Prospects for XPEL, Inc.
Analysis of Key Growth Drivers
Growth opportunities for the company are driven by several factors, including:
- Product Innovations: The introduction of new product lines, particularly in window film and paint protection film, which saw revenue increases of 20.6% and 2.7% respectively for the three months ended September 30, 2024 compared to the same period in 2023.
- Market Expansions: The company has experienced significant growth in various regions, including a 21.5% increase in revenue from Canada and a 32.3% increase in the Middle East/Africa region for the nine months ended September 30, 2024.
- Acquisitions: The company invested approximately $6.5 million in acquisitions during the nine months ended September 30, 2024, compared to $4.7 million in the same period of 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections indicate a robust outlook with total revenue for the nine months ended September 30, 2024, reported at $312.9 million, an increase of 7.6% from $290.8 million in the same period of 2023. Net income for the same period was $36.6 million, down 10.4% from $40.8 million in the previous year.
Strategic Initiatives or Partnerships
The company has focused on strategic partnerships, enhancing its dealership services and expanding its OEM networks, which contributed to a 31.9% increase in installation labor revenue for the nine months ended September 30, 2024, compared to the same period in 2023.
Competitive Advantages
The company maintains several competitive advantages:
- Strong Brand Recognition: Established reputation in the market, leading to increased customer loyalty.
- Advanced Technology: Continuous investment in technology improvements, particularly in its DAP software, which saw a 28.0% revenue increase for software services over the nine months ended September 30, 2024.
- Operational Efficiency: Improved gross margin, with gross margin for the nine months ended September 30, 2024 at 42.7%, up from 41.8% in the previous year.
Financial Overview
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Total Revenue | $312,873,000 | $290,755,000 | 7.6% |
| Net Income | $36,591,000 | $40,830,000 | (10.4%) |
| Gross Margin | 42.7% | 41.8% | 2.2% |
| Operating Income | $46,802,000 | $52,748,000 | (11.3%) |
| Cash Provided by Operations | $41,497,000 | $38,501,000 | 5.2% |
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Updated on 16 Nov 2024
Resources:
- XPEL, Inc. (XPEL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of XPEL, Inc. (XPEL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View XPEL, Inc. (XPEL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.