SAN ANTONIO, Texas--(BUSINESS WIRE)--
XPEL Technologies Corp. (TSXV: DAP.U), a leading supplier of automotive paint protection and window films, announced results for the third quarter and nine months ended September 30, 2017.
Mr. Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We were pleased to see continued revenue momentum in the third quarter, which resulted in record quarterly revenue. Our third quarter results reflect strong customer demand across all of our product lines, with robust increases particularly in our export sales.
Revenues for the quarter grew 31.6% to $17.8 million. Gross profit as a percentage of sales was 23.8% as compared to 28.1% in the prior year quarter. Selling, general and administrative expenses increased to $3.6 million or 19.9% of revenue as compared to $2.6 million or 19.1% of revenue in the prior year quarter. Earnings Before Interest, Taxes Depreciation and Amortization (EBITDA) decreased $0.35 million to $1.2 million as compared to EBITDA of $1.5 million. Net income was $0.44 million compared with net income of $0.72 million in the prior year quarter.
The Company incurred certain non-recurring costs during the quarter related to the consolidation of its warehouse facilities and the restructuring of its sales and operations personnel, totaling $0.8 million. Adjusting for these non-recurring costs, gross profit as a percentage of revenue would have been 27.1%. Selling, general and administrative expenses would have increased 28.5%. EBITDA would have been $1.9 million or 24% higher than the prior year quarter. Net Income would have been $1.0 million or 35% higher than the prior year quarter.
Mr. Pape continued, “During the quarter, we started a restructuring of our sales and operations teams including the consolidation of three existing warehouses into a single facility in San Antonio. Consequently, the Company incurred one-time costs affecting both gross margin and S, G & A that, while impacting our bottom line results in the short term, will position us to better scale efficiently over the long term.
“Following the close of the third quarter we completed two acquisitions as we continued to execute our `Get Close to the Customer’ strategy. We announced our intent to acquire Protex Canada, the top franchisor for automotive paint protection and window film in Canada, with more than 75 franchise locations in 4 provinces. This acquisition solidifies our position as the supplier to this leading franchise network and increases our exposure to the growing Canadian market. Furthermore, we acquired Transguard Inc., an installer of automotive paint protection and window film based in Boise, Idaho. The Boise market represents a significant growth opportunity and we look forward to leveraging XPEL’s well-regarded brand and unique service model to capture more customers and market share in the region.”
Mr. Pape concluded, “We made great progress this quarter enhancing our brand, improving our operations and broadening our reach in growing geographic markets. We are focused on continuing to drive topline growth and control expenses, while remaining committed to investing in our infrastructure, sales & marketing activities and product development to scale the business and grow our share in the marketplace.”
For the Quarter Ended September 30, 2017:
Revenue: Revenue in the third quarter of fiscal 2017 was $17.8 million, a 31.6% increase compared to the prior year. On a constant currency basis, revenues increased 30.7% to $17.7 million. The revenue increase is primarily related to increased sales of XPEL’s core products of automotive protection film and window film.
Gross Margin: Gross profit as a percentage of sales was 23.8% as compared to 28.1% in the third quarter last year. The decrease is primarily due to a change in revenue mix resulting from higher export sales in the quarter and certain one-time restructuring costs resulting from our warehouse consolidation. Direct costs include the costs of our physical goods, the costs related to our Design Access Program software, and the costs of labor directly associated with the production of product.
Expenses: Selling, general and administrative expenses increased to $3.6 million or 19.9% of revenue as compared to $2.6 million or 19.1% of revenue in the third quarter of 2016. The expense increase in the quarter was primarily due to increases in personnel, occupancy, information technology and travel related costs to support the growth of the business as well as increases in intercompany shipping costs as we transferred inventory to our various warehouses to support continuing demand. The personnel cost increases included certain one-time costs related to a restructure of various departments within the Company. These costs were partially offset by a reduction in professional fees. Additionally, the Company changed its depreciation method from double declining balance to straight line, resulting in additional depreciation expense of approximately $.09 million as compared to the prior year quarter.
EBITDA: Earnings Before Interest, Taxes Depreciation and Amortization (EBITDA) decreased $0.35 million to $1.2 million as compared to EBITDA of $1.5 million in the same prior year quarter. On a constant currency basis, EBITDA decreased $0.36 million.
Net Income: Net income for the fiscal 2017 third quarter was $0.44 million or $0.016 per basic and diluted share, compared with net income of $0.72 million or $0.028 per basic and diluted share, in the corresponding prior year period. On a constant currency basis, net income for the quarter decreased to $0.43 million.
For the Nine Months Ended September 30, 2017:
Revenue: Revenue in the first nine months of fiscal 2017 was $47.5 million, a 23.4% increase compared to revenue of $38.5 million in the same prior year period. The revenue increase is primarily related to increased sales of XPEL’s core products of automotive protection film and window film.
Gross Margin: Gross profit as a percentage of sales was 25.7% as compared to 28.2% in the first nine months of last year. Gross profit in the first nine months of 2017 was impacted by higher warranty costs in the first quarter and by the previously mentioned change in revenue mix and one-time restructuring costs during the third quarter. Direct costs include the costs of our physical goods, the costs related to our Design Access Program software, and the costs of labor directly associated with the production of product.
Expenses: Selling, general and administrative expenses increased to $10.3 million or 21.6% of revenue as compared to $7.4 million or 19.1% of revenue in the first nine months of 2016. The expense increase in the period was primarily due to increased personnel costs to support the growth of the business; marketing related costs associated with our dealer conference in the first quarter; increases in intercompany shipping costs as we transferred inventory to our various warehouses to support continuing demand and the previously mentioned one-time restructuring costs. Additionally, the Company changed its depreciation method from double declining balance to straight line, resulting in additional depreciation expense of approximately $0.27 million as compared to the prior year period.
EBITDA: Earnings Before Interest, Taxes Depreciation and Amortization (EBITDA) decreased to $3.2 million in the first nine months of 2017 as compared to EBITDA of $4.3 million in the same prior year period.
Net Income: Net income for the first nine months of fiscal 2017 was $1.13 million or $0.041 per basic and diluted share, compared with net income of $2.19 million or $0.085 per basic and diluted share, in the corresponding prior year period.
Conference Call Information
The Company will host a conference call to discuss the second quarter results today, November 16, 2017, at 11:00 a.m. Eastern Time.
To access the live webcast, log onto the XPEL Technologies website at: www.xpel.com/investor
To participate in the call by phone, dial (877) 407-8033 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8033.
A replay of the teleconference will be available until December 16, 2017 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 22634.
About XPEL Technologies Corp.
XPEL leads the industry in designing, manufacturing and distributing high-performance automotive paint and headlamp protection film technologies. Using XPEL’s proprietary software and materials, our professional design team develops products that deliver the ultimate in vehicle protection, meeting the demands of a broad range of makes and models. With more than 70,000 vehicle-specific applications and a global network of trained installers, XPEL is dedicated to exceeding customer expectations in providing high-quality products, customer service and technical support. XPEL Technologies Corp. (TSXV: DAP.U) is publicly traded on the TSXV Exchange. Visit www.xpel.com for more information.
Safe harbor statement
This release includes forward-looking statements regarding XPEL Technologies Corp. 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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
| XPEL TECHNOLOGIES CORP. | |||||||||||||
| Condensed Consolidated Statements of Income and Comprehensive Income | |||||||||||||
|
(Expressed in United States Dollars)
(Unaudited) |
|||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| Revenue | $ | 17,833,249 | $ | 13,549,976 | $ | 47,512,208 | $ | 38,510,523 | |||||
| Expenses | |||||||||||||
| Direct costs | 13,584,452 | 9,741,681 | 35,313,313 | 27,664,414 | |||||||||
| Selling, general and administrative | 3,558,498 | 2,583,189 | 10,258,441 | 7,370,473 | |||||||||
| Income from operations | 690,299 | 1,225,106 | 1,940,454 | 3,475,636 | |||||||||
| Interest expense | 86,701 | 61,654 | 194,755 | 180,154 | |||||||||
| Loss on sale of property, plant and equipment | - | (36) | (7,251) | 4,874 | |||||||||
| Foreign exchange loss (gain) | (55,764) | (3,186) | (71,509) | 11,345 | |||||||||
| 30,937 | 58,432 | 115,995 | 196,373 | ||||||||||
| Net (loss) income before income taxes | 659,362 | 1,166,674 | 1,824,459 | 3,279,263 | |||||||||
| Deferred income tax (recovery) expense | (46,402) | 15,639 | (182,207) | (72,213) | |||||||||
| Current income tax expense | 260,929 | 427,627 | 876,574 | 1,165,094 | |||||||||
| 214,527 | 443,266 | 694,367 | 1,092,881 | ||||||||||
| Net (loss) income | $ | 444,835 | $ | 723,408 | $ | 1,130,092 | $ | 2,186,382 | |||||
| Items that may be reclassified to profit or loss: | |||||||||||||
| Cumulative differences on translation foreign operations | 1,030,178 | (150,278) | 461,389 | (54,366) | |||||||||
| Total comprehensive (loss) income | $ | 1,475,013 | $ | 573,130 | $ | 1,591,481 | $ | 2,132,016 | |||||
| Net (loss) income attributable to: | |||||||||||||
| Shareholders of the Company | 459,990 | 741,810 | 1,161,773 | 2,227,512 | |||||||||
| Non-controlling interest | (15,155) | (18,402) | (31,681) | (41,130) | |||||||||
| Net (loss) income | $ | 444,835 | $ | 723,408 | $ | 1,130,092 | $ | 2,186,382 | |||||
| Total comprehensive (loss) income attributable to: | |||||||||||||
| Shareholders of the Company | $ | 1,490,168 | $ | 591,532 | $ | 1,623,162 | $ | 2,173,146 | |||||
| Non-controlling interest | (15,155) | (18,402) | (31,681) | (41,130) | |||||||||
| Total comprehensive (loss) income | $ | 1,475,013 | $ | 573,130 | $ | 1,591,481 | $ | 2,132,016 | |||||
| Earnings per share attributable to owners of the parent | |||||||||||||
| Basic and diluted | $ | 0.016 | $ | 0.028 | $ | 0.041 | $ | 0.085 | |||||
| Weighted Average Number of Common Shares | |||||||||||||
| Basic and diluted | 27,612,597 | 25,784,950 | 27,612,597 | 25,784,950 | |||||||||
| XPEL TECHNOLOGIES CORP. | |||||||||||
| Condensed Consolidated Balance Sheet | |||||||||||
|
(Expressed in United States Dollars)
(unaudited) |
|||||||||||
| September 30, | December 31, | ||||||||||
| 2017 | 2016 | ||||||||||
| Assets | |||||||||||
| Current | |||||||||||
| Cash and cash equivalents | $ | 2,308,215 | $ | 1,861,089 | |||||||
| Accounts receivable | 7,000,218 | 4,754,524 | |||||||||
| Inventory | 11,889,194 | 7,806,029 | |||||||||
| Prepaid expenses and other current assets | 1,225,708 | 454,173 | |||||||||
| Income taxes receivable | 72,553 | 72,553 | |||||||||
| Total current assets | 22,495,888 | 14,948,368 | |||||||||
| Property, plant and equipment | 1,561,671 | 1,352,120 | |||||||||
| Intangible assets | 3,409,668 | 3,467,218 | |||||||||
| Deferred tax asset | 278,253 | 135,363 | |||||||||
| Goodwill | 2,177,932 | 1,891,948 | |||||||||
| Total assets | $ | 29,923,412 | $ | 21,795,017 | |||||||
| Liabilities | |||||||||||
| Current | |||||||||||
| Revolving line of credit | $ | 6,000,000 | $ | 2,500,000 | |||||||
| Accounts payable and accrued liabilities | 6,528,034 | 5,859,981 | |||||||||
| Income Tax Payable | 729,920 | 168,690 | |||||||||
| Current portion of bank loan payable | 583,860 | 565,678 | |||||||||
| Current portion of note payable– Acquisition 2015 | 376,737 | 349,686 | |||||||||
| Current portion of note payable– Acquisition 2016 | 98,841 | 98,841 | |||||||||
| Total current liabilities | 14,317,392 | 9,542,876 | |||||||||
| Deferred tax liability | 367,985 | 524,272 | |||||||||
| Bank loan payable | - | 439,688 | |||||||||
| Note payable – Acquisition 2015 | 509,906 | 702,589 | |||||||||
| Note payable – Acquisition 2016 | 229,899 | 292,148 | |||||||||
| Total liabilities | 15,425,182 | 11,501,573 | |||||||||
| Equity | |||||||||||
| Capital stock | 6,636,961 | 6,635,133 | |||||||||
| Contributed surplus | 4,776,831 | 2,165,130 | |||||||||
| Accumulated other comprehensive loss | (372,336) | (833,725) | |||||||||
| Retained Earnings | 3,543,858 | 2,382,085 | |||||||||
| 14,585,314 | 10,348,623 | ||||||||||
| Non-controlling interest | (87,084) | (55,179) | |||||||||
| Total liabilities and equity | $ | 29,923,412 | $ | 21,795,017 | |||||||
Non-IFRS Measures
In addition to disclosing results in accordance with IFRS as issued by IASB, the Company also provides supplementary non-IFRS measures as a method of evaluating the Company’s performance.
Management uses EBITDA as a measure of company-wide performance. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Management believes EBITDA is a useful measure to allow period-to-period comparison of the Company’s operating performance. EBITDA does not have a standardized meaning under IFRS and is not necessarily comparable to measures presented by other Companies. EBITDA excludes components that are significant in understanding and assessing our results of operations and cash flows. EBITDA does not represent funds available for Management's discretionary use and is not intended to represent cash flow from operations. EBITDA should not be considered a substitute for Net Income prepared in accordance with IFRS as issued by the IASB.
|
EBITDA Reconciliation |
||||||||||||
|
Three Months Ended September 30, 2017 |
Three Months Ended September 30, 2016 |
Nine Months Ended September 30, 2017 |
Nine Months Ended September 30, 2016 |
|||||||||
| Net (loss) income | 444,835 | 723,408 | 1,130,092 | 2,186,382 | ||||||||
| Interest | 86,701 | 61,654 | 194,755 | 180,154 | ||||||||
| Taxes | 214,527 | 443,266 | 694,367 | 1,092,881 | ||||||||
| Depreciation | 186,955 | 76,350 | 523,701 | 218,930 | ||||||||
| Amortization | 240,866 | 225,220 | 706,999 | 621,838 | ||||||||
| EBITDA | 1,173,844 | 1,529,898 | 3,249,914 | 4,300,184 | ||||||||
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