XPEL Inc (XPEL) Reports Double-Digit Revenue Growth in Q3 2023
Revenues for Q3 2023 increased by 14.4% year-over-year to $102.7 million.
Gross margin improved to 40.4% in Q3 2023, with net income rising 2.5% to $13.7 million.
For the first nine months of 2023, revenues and net income grew by 18.4% and 23.6%, respectively.
Adjusted EBITDA and EPS for Q3 2023 would have been higher, excluding certain one-time costs and foreign exchange impacts.
On November 8, 2023, XPEL Inc (NASDAQ:XPEL), a global leader in protective films and coatings, announced its financial results for the third quarter ended September 30, 2023. The company reported record revenue and a modest increase in net income, despite facing some operational headwinds.
Financial Performance Overview
XPEL Inc (NASDAQ:XPEL) delivered a robust financial performance in the third quarter of 2023, with revenue climbing to $102.7 million, marking a 14.4% increase from the same period last year. The company's focus on product innovation and strategic market expansion has continued to pay dividends, as evidenced by the sustained revenue growth. Gross margin also saw an improvement, rising to 40.4% in the third quarter, compared to 39.8% in the third quarter of 2022.
Net income for the quarter grew by 2.5% to $13.7 million, or $0.49 per share, up from $13.3 million, or $0.48 per share, in the third quarter of the previous year. EBITDA followed a similar trajectory, increasing by 4.1% to $19.7 million, representing 19.2% of revenues.
Looking at the first nine months of 2023, XPEL Inc (NASDAQ:XPEL) continued to demonstrate financial strength with an 18.4% increase in revenues to $290.8 million and a significant 23.6% rise in net income to $40.8 million, or $1.48 per share.
Operational Challenges and Adjusted Metrics
Despite the positive headline figures, the company faced several challenges during the quarter, including inventory write-offs and increased operating expenses due to executive relocation, acquisition-related legal costs, and research and development expenses. Additionally, foreign exchange rates negatively impacted the company's financials. Adjusting for these factors, XPEL Inc (NASDAQ:XPEL) would have reported an Adjusted EBITDA of approximately $22.1 million, a 16.7% increase, and an Adjusted EPS of $0.56 per share.
Balance Sheet and Cash Flow
The balance sheet of XPEL Inc (NASDAQ:XPEL) remained solid, with total assets increasing to $226.8 million as of September 30, 2023, up from $193.4 million at the end of 2022. The company's cash and cash equivalents stood at $10.4 million, with a notable increase in accounts receivable and inventories reflecting the company's growth trajectory.
Operating expenses for the quarter rose to $23.9 million, or 23.3% of sales, compared to $18.5 million, or 20.6% of sales, in the same period last year. This increase was partly due to the aforementioned one-time costs.
Management Commentary
Ryan Pape, President and Chief Executive Officer of XPEL, remarked on the company's performance, stating,
It was a busy and solid quarter for the Company. We continue to see strong demand for our products and services and our unique channel strategy positions us to be wherever that demand takes us."
This comment underscores the company's strategic approach to market penetration and customer engagement.
Investor Relations and Forward Outlook
XPEL Inc (NASDAQ:XPEL) hosted a conference call and webcast on the same day as the earnings release to discuss the results and provide insights into the company's outlook for the fourth quarter. The company's commitment to transparency and communication with investors is evident in its proactive approach to investor relations.
In summary, XPEL Inc (NASDAQ:XPEL) delivered a strong performance in the third quarter of 2023, with double-digit revenue growth and improved profitability metrics. While operational challenges did impact the results, the company's adjusted figures reveal underlying strength. As XPEL continues to execute its growth strategy, investors and stakeholders can anticipate further developments and sustained performance in the protective films and coatings market.
For more detailed information and to access the full earnings release, please visit XPEL Inc's investor relations page.
Explore the complete 8-K earnings release (here) from XPEL Inc for further details.
This article first appeared on GuruFocus.
