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XPEL, Inc. (XPEL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 1.9% YoY to $107.5M (ex-China +10.5%), gross margin was 40.6%, EBITDA fell 19.3% to $14.3M (13.3% margin), and diluted EPS was $0.32; a $1.2M FX loss reduced EPS by a little over $0.03. The U.S. grew 6.2% YoY while China declined 44.3% on a tough comp; all other regions ex-U.S./China grew 17.7% YoY .
  • Management guided Q1 2025 revenue to $97–$99M and announced a workforce reduction targeting ~$2M in annual run-rate savings; Q1 will include ~$0.7M one-time severance and ~$1.2M dealer conference costs .
  • Mix and planned inventory monetization pressured Q4 gross margin vs the FY run-rate; management reiterated a ~42% gross margin “run rate” with potential FX headwinds and continued SG&A discipline actions underway .
  • Near-term catalysts: Rivian program shift/expansion to a full-body STEALTH wrap option plus co-marketed referral program, windshield protection film momentum, and colored films launch in Q2; ongoing rollout of DAP/mobile app features to deepen customer integration .

What Went Well and What Went Wrong

  • What Went Well

    • Ex-China growth remained solid: U.S. +6.2% YoY; all other regions ex-U.S./China +17.7% YoY; Canada +15.3%, APAC +68.9%, LatAm +29.6% .
    • Window film strength and new product traction: total window film +32.9% YoY (17.2% of revenue), automotive window film to $14.3M; windshield protection film contributed ~$1.5M in roughly one month of sales .
    • Strategy execution: CEO emphasized dealership focus, China go-to-market refinement, and acquisition integration; “We saw solid top line performance in the fourth quarter and made great progress in many of our key initiatives…” .

  • What Went Wrong

    • China correction: revenue down 44.3% YoY against a record Q4’23, with management noting a reset to an $8–$9M baseline run-rate and Chinese New Year seasonality ahead .
    • Profit pressure: EBITDA -19.3% YoY to $14.3M (13.3% margin) and EPS to $0.32; FX loss of ~$1.2M reduced EPS by a little over $0.03 .
    • Elevated operating expenses: SG&A +17.4% YoY on acquisitions, field location O/H and event/professional fees; management launched a February workforce reduction and broader cost actions to curb corporate overhead .

Financial Results

P&L summary (chronological: oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$105.5 $112.9 $107.5
Gross Margin %38.8% 42.5% 40.6%
Operating Expenses ($M, % Rev)$26.7 (25.3%) $29.5 (26.2%) $31.4 (29.2%)
Operating Income ($M)$14.2 $18.4 $12.3
Net Income ($M)$12.0 $14.9 $8.9
Diluted EPS ($)$0.43 $0.54 $0.32
EBITDA ($M)$17.7 $21.7 $14.3
EBITDA Margin %16.7% 19.2% 13.3%

Geographic revenue (Q4 YoY)

Region ($M)Q4 2023Q4 2024YoY %
United States$55.6 $59.1 +6.2%
Canada$11.6 $13.4 +15.3%
China$16.6 $9.2 -44.3%
Continental Europe$8.5 $8.9 +4.8%
United Kingdom$3.2 $3.9 +20.6%
Middle East/Africa$5.0 $5.7 +14.1%
Asia Pacific$2.8 $4.6 +68.9%
Latin America$2.1 $2.7 +29.6%

KPIs and other items

KPIQ4 2023Q4 2024Notes
Product Revenue ($M)$82.1 $81.8 Flat YoY
Service Revenue ($M)$23.5 $25.7 +9.4% YoY
Automotive Window Film Rev ($M)n/a$14.3 +31.7% YoY
Window Film as % of Revenuen/a17.2%
Windshield Protection Film ($M)n/a~$1.5 ~1 month contribution
Total Installation Revenue Growthn/a+16.1% YoY Organic +8.0% YoY
Cash from Operations ($M)$(1.1) $6.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025—$97–$99M New
Corporate Cost SavingsAnnual run-rate—~$2M savings from workforce reduction New
One-time SeveranceQ1 2025—~$0.7M New
Dealer Conference Cost (net)Q1 2025—~$1.2M New
Gross Margin Run-rateOngoing~42–43% commentary in prior periods ~42% “run rate,” with FX pressure noted Maintained (qualitative)
China Revenue BaselineOngoing—~$8–$9M/quarter baseline; Q1 seasonally lower due to CNY New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
China strategy and run-rateQ2: Choppy sell-in/sell-through; mid-tier product to expand TAM . Q3: Run-rate ~$8–$9M/quarter; reset model; tough Q4 comp ahead .Q4: China $9.2M; confirms baseline ~$8–$9M; Q1 seasonally lower; advancing toward direct presence .Stabilizing at lower base; execution focus
Dealership servicesQ2: Strong growth; OEM/dealer installs buoyed installation revenue . Q3: Continued strength; U.S. seasonal dip expected in Q4 .Q4: Car counts record-high; revenue +~9% but below Q3 pace; inventory normalization reduces tailwind .Normalizing; content/unit rising
OEM/referral programsQ2: OEM referral pilot (Tesla) launched to drive TAM . Q3: Interest broadening; discussions with OEMs .Q4: Rivian package change (STEALTH full-body wrap) and referral shift for full front PPF; separate program expansion PR 2/27 .Expanding with OEMs
FX, tariffs, macroQ2/Q3: Margin plan intact; watch China mix and macro .Q4: ~$1.2M FX loss; tariffs/retaliatory risks prompt multi-country manufacturing; uncertainty acknowledged .Headwinds managed; optionality added
SG&A disciplineQ2: SG&A growth moderated; leverage targeted . Q3: Flat to Q2 expected; leverage emphasis .Q4: SG&A +17.4% YoY; Feb workforce reduction; targeting several million of corporate cost optimizations .Acceleration of cost actions
Product roadmapQ2: Windshield film launch late Q3/early Q4; colored films soft launch in early 2025 .Q4: Windshield film ~$1.5M in ~1 month; colored films planned Q2; positive customer feedback .Building momentum
DAP/platformQ2/Q3: Referral and installer workflow integrations ramping .Q4: DAP mobile app launched; deeper ops features (work orders, commissions, warranty, scheduling) .Increasing feature depth

Management Commentary

  • Strategic focus: “We saw solid top line performance… increasing our focus on dealerships, refining our go-to-market strategy in China and executing on our acquisition strategy.”
  • On Q4 mix and margins: “Q4 gross margin of 40.6% was off the ’24 run rate, primarily due to mix as we monetize some slower-moving inventory through incentives.”
  • On SG&A actions: “We’ve already taken actions in February, including a workforce reduction that will have us about $2 million in annual run rate savings… targeting several million dollars more of corporate costs.”
  • On China reset: “For the new products we brought into the market, this $8 million to $9 million run rate should be the baseline from here… Q1 will be less… with the Chinese New Year.”
  • On product and platform buildout: “Our windshield protection film has been going quite well… we’re planning to launch our colored film portfolio starting in Q2… launched the first companion mobile app to DAP.”

Q&A Highlights

  • China dynamics: Management reiterated the sell-in/sell-through mismatch is resolved for new products; China should stabilize at ~$8–$9M/quarter with Q1 seasonality, and direct presence remains a top priority .
  • Margins outlook: Gross margin “around 42%” as a run-rate with FX pressure; visibility for 2025 is lower given tariffs/currency and macro uncertainty .
  • Tariff mitigation: Manufacturing capacity now available in three countries to flex production by end market and potential retaliatory tariffs, improving optionality .
  • SG&A and marketing: Marketing at ~3% of revenue today; could push ~3.5% in 2025; salesforce relatively flat in U.S./Canada; dealership/aftermarket focus sharpened .
  • Rivian/OEM evolution: Rivian program shifted to full-body matte wrap in STEALTH package; full-front PPF moved to co-marketed referral program to drive aftermarket network volume .

Estimates Context

  • We attempted to retrieve Wall Street consensus estimates from S&P Global for Q4 2024 and Q1 2025; however, the data was unavailable due to provider request limits at this time. As a result, we cannot present vs-consensus beats/misses for revenue or EPS in this recap. We will update when S&P Global data becomes accessible.

Key Takeaways for Investors

  • Ex-China growth remains healthy (U.S. +6.2%; RoW ex-U.S./China +17.7% YoY), but China correction and mix/FX weighed on profitability; the China baseline reset should aid predictability from here .
  • Q1 2025 revenue guide of $97–$99M embeds seasonality (post-record Q4’23 comp in China, dealer conference costs, severance), with cost actions targeted to improve corporate overhead efficiency through 2025 .
  • Gross margin run-rate (~42%) appears intact over the medium term despite FX headwinds; Q4 margin compression was driven by deliberate inventory monetization and mix .
  • Product catalysts (windshield protection, colored films) plus DAP/mobile app enhancements should support content-per-vehicle and installer productivity; monitoring attach and mix gains through 2025 is key .
  • OEM/referral program evolution (Rivian shift and separate program expansion) broadens TAM and can route incremental volume to certified installers, potentially smoothing demand vs. traditional aftermarket cycles .
  • Tariff/currency optionality improved with three-country manufacturing; watch any policy developments that could impact margins and regional mix through the year .
  • Set-up: Near-term trading likely hinges on Q1 cadence vs the $97–$99M guide and any incremental cost actions; medium-term thesis depends on execution in dealership services, China direct strategy, and OEM/referral scaling to sustain double-digit ex-China growth and margin resilience .