Cigna earnings beat by $0.04, revenue topped estimates
Xpel Inc. reported stronger-than-expected results for the first quarter of 2025, with earnings per share (EPS) of $0.31, surpassing the forecasted $0.27. The company’s revenue also exceeded expectations, reaching $103.8 million against a forecast of $97.34 million. Following the announcement, Xpel’s stock price rose by 16.7%, closing at $34.10, up from the previous close of $29.22. According to InvestingPro analysis, the company appears undervalued with a "GREAT" overall financial health score of 3.24 out of 5, suggesting strong fundamentals supporting the price surge.
Key Takeaways
- Xpel’s Q1 2025 EPS of $0.31 beat the forecast by 14.8%.
- Revenue increased by 15.2% year-over-year to $103.8 million.
- The stock surged 16.7% post-earnings announcement.
- U.S. revenue grew by 11.6%, while Canadian revenue declined by 14.9%.
- The company launched new colored films and plans further product innovations.
Company Performance
Xpel’s performance in Q1 2025 demonstrated significant growth, particularly in the U.S. market, where revenue increased by 11.6% to $58.1 million. Despite a decline in Canada, the company’s overall revenue grew by 15.2% compared to the same period last year. The automotive window tint segment was a key driver, with a growth of 16.2%.
Financial Highlights
- Revenue: $103.8 million, up 15.2% year-over-year
- Earnings per share: $0.31, up from the forecast of $0.27
- Gross margin: 42.3%
- EBITDA: $14.4 million, up 23.2%
- Net income: Increased 28.8% with an 8.3% net income margin
Earnings vs. Forecast
Xpel’s actual EPS of $0.31 exceeded the forecasted $0.27 by 14.8%, while revenue outperformed expectations by approximately 6.6%. This marks a positive deviation from previous quarters, where the company often met rather than exceeded forecasts.
Market Reaction
The market reacted positively to Xpel’s earnings beat, with the stock price increasing by 16.7%. The share price reached $34.10, nearing its 52-week high of $48.58. This movement reflects strong investor confidence in the company’s growth trajectory and strategic initiatives. Analysts maintain a Strong Buy consensus with price targets ranging from $38 to $55, suggesting further upside potential. InvestingPro data shows the stock has been notably volatile, with a beta of 1.83, making it an interesting watch for momentum investors.
Outlook & Guidance
For Q2 2025, Xpel projects revenue between $117 million and $119 million. The company continues to focus on product innovation, including the launch of additional colored films and surface protection films for architectural applications. Despite global tariff uncertainties, Xpel remains optimistic about future growth. Want deeper insights? InvestingPro subscribers get access to 10+ additional ProTips and comprehensive financial analysis, including detailed Fair Value calculations and health scores across growth, profitability, and momentum metrics.
Executive Commentary
CEO Ryan Pape stated, "We’re off to a good start this year. Solid top and bottom line performance in the first quarter." He also highlighted the company’s focus on maintaining strong product offerings and customer support.
Risks and Challenges
- Tariff Uncertainty: Potential impacts on international operations, particularly in China.
- Supply Chain Efficiency: Continued improvements needed in China to support growth.
- Market Saturation: Potential challenges in maintaining growth in mature markets.
- SG&A Expenses: Increased by 14.4%, necessitating careful management.
Q&A
During the earnings call, analysts inquired about the impact of tariffs on Xpel’s China operations and the potential for demand pull-forward due to tariff concerns. The company clarified that tariffs have had minimal impact thus far and that they are monitoring dealership inventory changes closely. Get the full picture with InvestingPro’s exclusive Research Report, part of our coverage of 1,400+ US stocks, offering comprehensive analysis and actionable insights for informed investment decisions.
Full transcript - Xpel Inc (XPEL) Q1 2025:
Conference Operator: everyone, and welcome to the XPEL Incorporated First Quarter twenty twenty five Earnings Call. At this time, all participants have been placed on a listen only mode and the floor will be open for questions following the presentation. Please note this conference is being recorded. I will now turn the conference over to your host, John Nesbitt, Vice President
John Nesbitt, Vice President, XPEL: of Good morning and welcome to our conference call to discuss XPEL’s First Quarter twenty twenty five 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 will take questions from our call participants. A transcript of this call will be available on the company’s website after the call. I’ll now 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 ks, including under Item 1A Risk Factors filed with the SEC. XPEL undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
Okay, with that, I’ll now turn the call over to Ryan. Go ahead, Ryan.
Ryan Pape, President and Chief Executive Officer, XPEL: Thank you, John, and good morning, everyone, well. Welcome to the first quarter twenty twenty five call. We’re off to a good start this year. Solid top and bottom line performance in the first quarter. Revenue grew 15.2% to $103,800,000 I think a good headline number for us, and obviously more detail as you look at our different regions.
Our U. S. Region grew 11.6% to $58,100,000 in the quarter. This included sales into the aftermarket independent channel that grew over 10. So I think a good result there relative to what we’ve been seeing.
U. S. Car sales in the quarter were good. New car buyer seems to be wanting to get ahead of the tariffs. So obviously, you saw a really good SAAR in March, which hard to know how that helps and hurts us in this dynamic, but it’s not a bad thing when more cars are sold.
So what that means for the rest of the year, I think, remains to be seen. Obviously, still a lot of uncertainty, really impossible to predict what happens and how it might impact the business. But we have good momentum in The U. S. Right now, and I see that continuing, all things equal.
Canada region, revenue declined 14.9% to $9,400,000 in the quarter. If we adjust for some timing differences from the previous year, revenue decline was around 10%, so still rather significant. Sentiment from customers in Canada is, I would say, relatively poor, similar to how The US started the year last year, if you recall, in the first quarter. It was very challenging for The US, and Canada outperformed handily in that quarter. So we started to enter the busy season, and Canada’s passed their election, so we’ll keep working hard there.
Think the worst probably behind us, but time will tell. China revenue came in at $8,100,000 This was in line with what we expected. At this point, everything is proceeding on track relative to all of our plans in China. We’re still engaged with our distributor on evolving the go to market to be more direct in China, and we’ll probably have more to discuss in that over the next quarter or two. We saw solid growth in most of the other regions.
Europe had its second highest quarter in history from a revenue standpoint, which was better off of some of the sluggishness in Q4. I think our view on Europe for the year is probably improving at this point. And we saw record revenue in The Middle East. As I mentioned earlier, it’s impossible to predict what’s going to happen in the coming quarters with all the tariff noise, so we won’t be providing any guidance for the year. It’s hard to say what the near term impacts will be.
We saw good momentum in April. Obviously, that could change, but we’re feeling pretty good about that. Our view right now is Q2 revenue should be in the $117,000,000 to $119,000,000 range. Again, the environment we’re in, it could be on either side of that potentially. A good gross margin performance in the quarter, which came in at 42.3%.
This probably approximates our sort of near term run rate plus or minus. And as we discussed previously, we still see upside opportunity for that over the midterm. Although our expectations of achieving that this year may be somewhat muted just given all of the noise and things we’re having to do. So we saw nice leverage in the quarter on our SG and A growth nice leverage in the quarter as our SG and A growth rates moderated. As we discussed on the last call, we did do a restructuring initiative at about $400,000 in costs related to that in SG and A for the quarter, another $300,000 in Q2.
We’re making good progress on our expense initiatives, and that will continue to be a focus for us. But to be clear, we’re continuing to invest in SG and A where it drives future revenue of the business. Examples of that being in our in country distribution businesses, which we’re actively building, or services expansion where there may be SG and A investment needed. But the focus on SG and A is really on our overhead and back office, where we have to spend more conservatively, but also where we’ve invested substantially over the past several years to build the team that we have. So I feel pretty good about that.
It continues to be a laser focus for us going forward, but I think we’re making progress. Our EBITDA grew 23.2% for the quarter to 14,400,000.0 which is a great result. I briefly touched on the tariff situation earlier. Our team obviously is closely monitoring the ever changing situation, and we can take steps to mitigate potential impacts. From a product standpoint, we don’t anticipate significant impact from the tariffs based on how we make and how we sell products and where we do it, including in China.
So there may be transient noise if we have the wrong product in the wrong place for a quarter, or if we’re having to consider having to consider planning around tariffs and retaliatory tariffs doesn’t help with our goal of optimizing and ultimately reducing total inventory because it’s just less efficient. But we’re in a good position. I think much harder to understand is the impact on the new car business and the resulting trickle down impact to our business of tariffs. Questions we’re asking are, will there be pull ahead in demand? Maybe we’ve seen some of that in March or April.
Will buyers ultimately substitute one vehicle for another if there’s a large pricing disparity? If that substitution happens, how does that impact their decision to accessorize? Will new vehicle inventory become constrained due to production cuts or other factors? How will that impact dealership behavior? Is that good or bad for us?
So, these are the kind of things that I think we’re working to strategize on. But really our response to all of them is pretty simple. We’re not actively doing anything today to change what the business does except to stay focused on providing best products, services, and support to all of our customers. And as things change, or if things change relative to the car market and the impacts on the business, we’ll of course adjust our business and strategy appropriately. On the product front, we’ve talked a lot over the past couple calls, but windshield film continues to do well.
We’re launching additional colored films in Q2, as well as surface protection films for architectural application. I think what you’ll see in that line is our internal mantra to protect everything. We’ll see a lot more protection applications in the architectural space going forward. Today we announced our board approved $50,000,000 share repurchase plan authorization. We still view the number one priority for capital allocation is investing in the business via M and A primarily, and then secondarily, possibility of more CapEx to drive our costs lower.
Having said that, there’s always a price where buying yourself is obvious. And now we have the vehicle in place to do that. Relative to our inorganic activities, we’ve discussed our efforts to expand services business. So that work continues. We’re, I would say, prudently cautious in our approach given the end market for that business and sort of some of the uncertainty, but we continue to work through that.
And I think a big part of managing that correctly is to ensure we get the right valuation for anything we look at. And that valuation, the valuations of some of the targets we’re looking at, that they move appropriately relative even to our valuations move. So these are things we’re focused on, but continuing to push ahead even in light of that uncertainty. So all in all, I think a good quarter. The team’s really done a good job.
Everybody’s really focused on all the details that matter to ensure we optimize the business and run it in the best possible way. I couldn’t be more thankful for that. So, with that, we’ll turn it over to Barry. Barry, take it away.
Barry Wood, Senior Vice President and Chief Financial Officer, XPEL: Thanks, Ryan, and good morning, everyone. As we said, our total revenue growth in the quarter was 15.2%. And if you take China out of that, the revenue growth in the quarter would have been approximately 8%. Obviously, the Canada performance had a bit of a drag to that, but I think a good takeaway for the quarter is The U. S.
Business, which is our largest and most mature market and represents 56% of our total revenue grew at 11.6% and was almost flat sequentially. That and the strong performance in most of our other regions are certainly all positives for the quarter. Our total window film product line grew 28.1% in the quarter, with our new windshield protection film product contributing to that. Automotive window tint grew 16.2% in the quarter, and architectural window film grew 9.6%. Sequentially, total window film revenue was flat to Q4.
As Ryan also mentioned, our SG and A expense grew 14.4% in the quarter to $32,800,000 Sequentially, this was up about 4.5% versus Q4. And in addition to the $400,000 of RIF costs that Ryan mentioned, we also had approximately $1,200,000 in net costs associated with our dealer conference included in our Q1 SG and A. Ryan also mentioned our solid EBITDA performance, grew 23.2% to $14,400,000 and this was about a 14% EBITDA margin for us. Sequentially, EBITDA was up a little over 1% versus Q4. And net income for the quarter increased 28.8%, reflecting an 8.3% net income margin and EPS for the quarter was $0.31 per share.
And just to note, our effective tax rate for quarter was higher than normal at 23.9% due mainly to some foreign taxes paid that will not reoccur. For planning purposes moving forward, you should assume a 21% effective tax rate in future quarters. Cash flow provided by ops was $3,200,000 for the quarter, and we continue to build cash on the balance sheet and have substantial debt capacity. So we feel good about our ability and are well positioned to execute on our capital allocation priorities as we move forward here. And with that, operator, we’ll now open up the call up for questions.
Conference Operator: Certainly. Everyone at this time will be conducting a question and answer session.
Conference Operator: Session.
Conference Operator: Thank you. Your first question is coming from Jeff Van Sinderen from B. Riley Securities. Your line is live.
Jeff Van Sinderen, Analyst, B. Riley Securities: Good morning everyone and congrats on the strong metrics in the quarter. Wanted to see if you could give us any more color on kind of what you’re seeing and hearing from a U. S. Dealer network in terms of velocity of business, maybe a little bit of pull forward there, just given the overall general macro uncertainty out there?
Ryan Pape, President and Chief Executive Officer, XPEL: Yeah, Jeff, thanks for the question. I mean, I think if you look at the data, if you look at the March SAAR as an example, I think it suggests some amount of pull ahead. I think as you talk to dealerships, you get maybe more of mixed answer. Some definitely think they saw that, some not so much. So I think it sort of stands to reason that we probably see some of that.
And then I think the question there is if the age of the fleet has continued to grow, obviously there’s pent up demand. If we pull ahead now, are we going to pay for that later? Or will that just be sort of the permanent pull ahead to help fill some of the deficit of what hasn’t been sold? But I think there’s definitely some of that that’s occurring.
Jeff Van Sinderen, Analyst, B. Riley Securities: Okay. And then if we could shift to China for a minute, just wondering any more color you can provide on what we might expect there. Obviously, business was up a lot year over year in the quarter. I’m just wondering any more thoughts you can share there.
Ryan Pape, President and Chief Executive Officer, XPEL: Well, I think what you’re seeing, Jeff, is our work paying off to make the entire supply chain more efficient and the sell in, sell through match. And so you’re not seeing these oscillations in revenue quarter to quarter like we had. And obviously that was painful by comparison in Q4 and positive by comparison in Q1, but it’s going be much more normalized going forward. And then I think our approach, current issues notwithstanding, is that we very much want to pursue a more direct business model in China like we have in other markets. And that’s something we’re still very actively working on and will continue over this quarter.
Jeff Van Sinderen, Analyst, B. Riley Securities: Okay, great. And then just one more if I could squeeze it in on the tariff situation, realize that’s really fluid and kind of a tough question. But tariff impact on the China business, how do we think about that?
Ryan Pape, President and Chief Executive Officer, XPEL: Yeah, no, it’s a great question. I mean, I think that the conventional view on China as it impacts tariffs is from the perspective of a Chinese supply base supplying into The US market. And obviously, there’s a massive tariff load on that. For us, that’s a non factor because we just don’t trade in that way. There isn’t meaningful flow of goods for us from China to The US.
So then the second impact is really from retaliatory tariffs being the flow of US goods into China now. And for us there is historically more exposure there. But with the diversification of our manufacturing and manufacturing locations, product being made, the paint protection film products being made in three countries globally, we’re able to supply the portion of that China demand that formerly came out of The US from elsewhere. So we’re really, I think, in a good position to weather that. As we said, there’s the supply chain.
Not everything is always in the right place every exact second. So as you have to react to these, you’re incurring logistics expense and probably inflation of working capital a little bit, then maybe there’s some tariffs paid on a very transitory basis to get things in the right place. But to the heart of your question, China tariff and then retaliatory tariff impact for us is really a non factor.
Jeff Van Sinderen, Analyst, B. Riley Securities: Okay, great to hear. Thanks for taking my questions. I’ll take the rest offline.
Ryan Pape, President and Chief Executive Officer, XPEL: Thanks, Jeff.
Conference Operator: Thank you. And once again, everyone, if you have any questions or comments, please Your next question is coming from Steve Dyer from Craig Hallum. Your line is live.
Conference Operator: Hey, thanks. This is Matthew Robb on for Steve. I want to ask you a question on pull forward of demand, but I’ll ask it in a little different way. On the take rate for and film, mostly in The U. S, have you seen any meaningful change there from what is kind of a typical steady state versus the last few weeks of Q1 and thus far into Q2?
I guess I would have thought that a buyer that’s rushing out to get a car probably wouldn’t add film, but just curious on that.
Ryan Pape, President and Chief Executive Officer, XPEL: Yes. I think hypothesis is certainly one that we’ve been asking ourselves too, is if you are a if there is a pull forward customer and you are one of those, how does that impact your take rate? And I think our instinct is that that’s probably not our core buyer necessarily. So I think we’re not really of the mindset that we’ve sort of benefited from that in some outsized way that the pull forward is actually bringing demand forward for us. I think our view on that is probably that it’s not.
But I think in metrics we have, there’s really nothing that stands out to highlight the answer to your question. I think everything seems pretty stable from our perspective.
Conference Operator: Okay. Got it. And then on preloading in the dealership channel, noted it was pretty close to a steady state last quarter. Given dealer inventory is turning a little bit lower and that probably continues in the near term, has that or will that be a headwind for you guys? And then are there any strategies that you can take to offset?
Ryan Pape, President and Chief Executive Officer, XPEL: I think the biggest headwind for us was the shift from the majority of dealerships or a plurality of dealerships building inventory and moving to that sort of steady state inventory environment that maybe we transitioned to in more of the second half of last year. That was really the onset of that headwind. So now it’s sort of stable in that sense. If inventory contracts, certainly we saw that at the onset of COVID or the aftermath of COVID and the supply chain shortages, you know, inventory contracting is a near term negative for that. But I think it’s probably too early to really see that that’s going to happen here.
I think that’s certainly a risk if there’s production cuts and production cuts combined with pull forward of demand or something, that would be a negative for that. But right now, I don’t I think it’s too early to really call that out as an actual risk for us.
Conference Operator: Okay. Yeah. And then just sort of curious, has there been any headwind from Audi and Porsche vehicles being held at port? At least that’s what our checks have said, starting maybe late in Q1, but probably more impactful in Q2. Have you guys seen that?
Has that any impact on the
Ryan Pape, President and Chief Executive Officer, XPEL: we’ve not seen that. I mean, we’re sort of watching all of the talk track around what folks are doing with logistics and whether they’re holding shipments or not. So I think we’ve not seen that. Mean, that end market’s been pretty good for us. So I think that’ll be kind of a wait and see.
Conference Operator: Okay, that’s great. That’s all for me. Thanks, guys.
Ryan Pape, President and Chief Executive Officer, XPEL: Yep, thank you.
Conference Operator: Thank you. That concludes our Q and A session. I will now hand the conference back to management for closing remarks. Please go ahead.
Ryan Pape, President and Chief Executive Officer, XPEL: Want to thank everybody for joining us today for the first quarter call, and thanks to our whole team at XPEL for doing great work and look forward to talking with everyone soon.
Conference Operator: Thank you. Everyone, this concludes today’s event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
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