DAP.U Xpel Technologies Corp

XPEL Technologies Corp. (TSXV: DAP.U), a leading supplier of automotive paint protection and window films, announced results for the fourth quarter and year ended December 31, 2017.

Fourth Quarter Highlights:

• Revenues increased 52.7% to $20.2 million compared to fourth quarter 2016; Sequential revenue growth of 13.5% compared to third quarter of 2017
• Selling, general and administrative expenses decreased to 21.1% as a percentage of revenue
• Finalized Product Consolidation, Facility Consolidation and Sales and Operations Reorganization; Seeing Positive Impact In Q1 2018

Revenues for the quarter grew 52.7% to $20.2 million. Gross profit as a percentage of sales was 22.6% as compared to 23.9% in the prior quarter. Selling, general and administrative expenses increased to $4.3 million, or 21.1% of revenue, as compared to $3.4 million, or 25.6% of revenue, in the prior year quarter. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased $0.9 million to $1.0 million compared to $0.1 million in the prior year quarter. Net income was $.004 million compared to a net loss of ($.09) million in the prior year quarter.

The Company generated $7.5 million in operating cash flow for the quarter which was used to fund ongoing working capital needs and to reduce its line of credit borrowings by $4.0 million.

The Company incurred certain one-time costs totaling $0.6 million during the quarter related to the consolidation of its product lines, the consolidation of its three existing warehouse facilities into a single facility in San Antonio and the restructuring of its sales and operations. Adjusting for these non-recurring costs, fourth quarter gross profit as a percentage of revenue would have been 24.9%, selling, general and administrative expenses as a percentage of sales would have decreased to 20.3%, EBITDA would have been $1.6 million and Net Income would have been $0.45 million.

Mr. Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We are seeing the positive impact we anticipated from our consolidation and reorganization initiatives and we expect continued strong growth in revenue and significant improvement in bottom line results in 2018. The consolidation of some of our legacy paint protection film lines allows us to enhance our product efficiency by removing our lowest margin products and the working capital requirements associated with them.

Mr. Pape continued, “During fiscal 2017 we delivered strong growth driven by robust demand for our paint protection and window film and we completed three acquisitions in key strategic areas. We remain focused on leveraging the strength of our brand and our unique service model.”

For the Quarter Ended December 31, 2017:

Revenues. Revenues increased approximately $6.99 million to $20.2 million, or 52.7% over the prior year period. On a constant currency basis, revenues grew 51.2% to $20.10 million.

Gross Margin. Gross margin for the quarter grew 44.4% vs prior year quarter and decreased as a percentage of sales from 23.9% to 22.6%.

Expenses. Selling, general and administrative expenses increased $0.9 million or 26.2% vs. prior year period and decreased as a percentage of sales to 21.1% of sales from 25.6% of sales in the prior year. This increase was due mainly to increases in personnel, occupancy, sales and marketing and travel related costs to support the ongoing growth of the business as well as increases in intercompany shipping expense related to the transfer of inventory to our various warehouses to support the needs of our customers. Additionally, the company changed its depreciation method from double declining balance to straight line resulting in additional depreciation expense of approximately $0.09 million vs. prior year quarter.

EBITDA. EBITDA increased $0.925 million to $1.02 million vs prior year quarter.

Net income. Net income for the quarter decreased to $0.004 million.

For the Year Ended December 31, 2017:

Revenues. Revenues increased approximately $15.99 million to $67.75 million, or 30.9% over the prior year. On a constant currency basis, revenues grew 30.6% to $67.6 million.

Gross Margin. Gross margin for the year grew 19.7% vs the prior year and decreased as a percentage of sales from 27.1% to 24.8%.

Expenses. Selling, general and administrative expenses increased $3.7 million or 35.1% vs. prior year period and increased as a percentage of sales to 21.5% of sales from 20.8% of sales in the prior year. This increase was due mainly to increases in personnel, occupancy, sales and marketing and travel related costs to support the ongoing growth of the business as well as increases in intercompany shipping expense related to the transfer of inventory to our various warehouses to support the needs of our customers. Additionally, the company changed its depreciation method from double declining balance to straight line resulting in additional depreciation expense of approximately $0.36 million vs. prior year.

EBITDA. EBITDA decreased $0.13 million to $4.27 million vs prior year.

Net income. Net income for the year decreased to $1.13 million vs $2.16 million in the prior year.

Conference Call Information

The Company will host a conference call to discuss the fourth quarter and year-end results today, March 28, 2018, at 11:00 a.m. Eastern Time.

To access the live webcast, please visit 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 April 28, 2018 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 26998.

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.

         

For more information, contact:

Investor Relations:John Nesbett/Jennifer BelodeauInstitutional Marketing Services (IMS)Phone: (203) 972-9200Email: jnesbett@institutionalms.com

          XPEL TECHNOLOGIES CORP. Consolidated Statements of Income and Comprehensive Income (Expressed in United States Dollars)

(Audited)

            Three Months Ended

December 31,

Twelve Months Ended

December 31,

2017   2016 2017   2016   Revenue $ 20,237,336 $ 13,248,744 $ 67,749,544 $ 51,759,267   Expenses Direct costs 15,661,865 10,080,423 50,975,178 37,744,837 Selling, general and administrative 4,279,869 3,391,406 14,538,310 10,761,879   Income from operations 295,602 (223,085 ) 2,236,056 3,252,551 Interest expense 142,915 42,891 337,670 223,045 (Gain) loss on sale of property, plant and equipment (6,000) - (13,251 ) 4,874 Foreign exchange gain (180,687) (16,288 ) (252,196 ) (4,943 ) (43,772) 26,603 72,223 222,976   Net (loss) income before income taxes 339,374 (249,688 ) 2,163,834 3,029,575 Deferred income tax recovery (73,029 ) (25,634 ) (255,236 ) (97,847 ) Current income tax expense 408,151 (201,172 ) 1,284,725 963,922 335,122 (226,806 ) 1,029,490 866,075   Net (loss) income $ 4,252 $ (22,882 ) $ 1,134,344 $ 2,163,500   Items that may be reclassified to profit or loss: Cumulative differences on translation foreign operations 1,030,178 (150,278 ) (150,556) (211,732 )         Total comprehensive (loss) income $ 1,034,430 $ (173,160 ) $ 983,788 $ 1,951,768   Net (loss) income attributable to: Shareholders of the Company 19,407 (4,480 ) 1,187,344 2,227,512 Non-Controlling interest (15,155 ) (18,402 ) (53,001 ) (41,130 ) Net (loss) income $ 4,252 $ (22,882 ) $ 1,134,344 $ 2,163,500   Total comprehensive (loss) income attributable to: Shareholders of the Company $ 1,049,585 $ (154,758 ) $ 1,036,789 $ 1,992,898 Non-controlling interest (15,155 ) (18,402 ) (53,001 ) (41,130 ) Total comprehensive (loss) income $ 1,034,430 $ (173,160 ) $ 983,788 $ 1,951,768   Earnings per share attributable to owners of the parent Basic and diluted $ 0.0001 $ (0.001 ) $ 0.042 $ 0.084   Weighted average number of common shares Basic and diluted 27,612,597 25,784,950 27,326,261 25,784,950         XPEL TECHNOLOGIES CORP. Consolidated Balance Sheet (Expressed in United States Dollars)

(Audited)

            December 31, December 31, 2017         2016   Assets Current Cash and cash equivalents $ 3,498,904 $ 1,861,089 Accounts receivable 5,164,827 4,754,524 Inventory 9,827,156 7,806,029 Prepaid expenses and other current assets 1,094,275 454,173 Income taxes receivable   -   72,553 Total current assets 19,585,162 14,948,368   Property, plant and equipment 2,153,233 1,352,120 Intangible assets 4,144,374 3,467,218 Deferred tax asset 378,014 135,363 Goodwill   2,490,105   1,891,948 Total assets $ 28,720,887 $ 21,795,017   Liabilities Current Bank indebtedness $ 2,000,000 $ 2,500,000 Accounts payable and accrued liabilities 9,195,211 5,859,981 Income tax payable 1,126,865 168,690 Current portion of bank loan payable 440,126 565,678 Current portion of notes payable – acquisitions   624,308   448,527 Total current liabilities 13,386,510 9,542,876   Deferred tax liability 463,140 524,272 Bank loan payable - 439,688 Notes payable – acquisitions   1,018,492   994,737 Total liabilities 14,868,142 11,501,573   Equity Capital stock 9,210,646 6,635,133 Contributed surplus 2,165,130 2,165,130 Accumulated other comprehensive loss (984,281 ) (833,725 ) Retained Earnings   3,569,429   2,382,085 13,960,925 10,348,623 Non-controlling interest   (108,180 )   (55,179 ) Total liabilities and equity $ 28,720,887 $ 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 MonthsEndedDecember 31, 2017

     

Three MonthsEndedDecember 31,2016

     

Twelve MonthsEndedDecember 31,2017

     

Twelve MonthsEndedDecember 31,2016

Net (loss) income           4,252       (22,881 )       1,134,344       2,163,500 Interest           142,914       42,891         337,670       223,045 Taxes           335,122       (226,806 )       1,029,490       866,075 Depreciation           224,663       80,695         748,364       299,625 Amortization           310,648       218,663         1,017,646       840,501 EBITDA           1,017,599       92,561         4,267,514       4,392,746    

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XPEL Technologies Corp.Investor Relations:Institutional Marketing Services (IMS)John Nesbett/Jennifer Belodeau, 203-972-9200jnesbett@institutionalms.com