XPEL, Inc. Q4 FY2025 earnings call

• 2025 was significant with long - planned China distribution acquisition and positioning for manufacturing and supply chain investments.
• Q4 revenue grew 13.7% and Q4 EBITDA grew 37.6%.
• U.S. region had growth in corporate stores, dealership service business and aftermarket.
• Adjusted product strategy to focus on core products and immediate adjacencies.
• Started the year with an incredible dealer conference with 720 registered attendees.
• Continued to advance DAP platform which became more integrated.
• Investments in manufacturing and supply chain continue with plan on track.

In the fourth quarter, U.S. region, the largest, saw revenue growth of 11%. Q4 China distribution acquisition revenue came in at $14 million. Europe saw revenue growth of 26.8% in Q4. Canada had slightly declining revenue compared to prior year. India and Middle East were good though distributor orders timing was a drag. Latin America was flat. The U.S. region's growth was a good result given ongoing dynamics. China segment was well underway in integration. Europe was a bright spot.

Expects Q1 revenue in the $112 million to $114 million range. Anticipates gross margins to improve as the year progresses. Q1 assumes ongoing U.S. trend, continued softness in Canada and impact of Chinese New Year.

• Macro car sales trends can impact results.
• EV credit expiration can affect demand, like costing $1 - $2 million from referral program channel in U.S. Q4.
• Tariff changes can influence market dynamics.
• Canada's tough car sales environment is a risk.
• Uncertainties in manufacturing and supply chain decisions.

Q: What's contemplated in the Q1 revenue guide and factors affecting it?

A: The Q1 revenue guide is in the $112 million to $114 million range. It assumes ongoing U.S. trend, continued softness in Canada and impact of Chinese New Year. The business has different customer types with various drivers, and seasonality like March being important for the first quarter.

Q: How do you see in - house manufacturing playing out over time?

A: Depending on final decisions, it could be gradual build - out or bigger chunks. It could be incremental change or step change depending on internal new build or M&A/JV opportunities. We'll update on that as we get into March and April.

Q: Speak to DSOs and what underpins optimism for 2026?

A: DSOs have nothing significant going on, trending up a bit possibly due to longer OEM business terms. Optimism for 2026 comes from increased optimism from team and customers, vehicle affordability factors, positive customer pipeline and new customer wins, and competitors' demand being down while our results and pipeline are positive.

Q: How do you expect gross margin to trend this year and thoughts on Q1 gross margin and OpEx?

A: Expect gross margin headwinds to abate as we get through Q1, with directionally better margins in Q2 and beyond. Corporate SG&A has been wrangled better. Region leaders are budgeted to drive increased operating margins this year.