XPEL, Inc. Q1 FY2026 earnings call

• Ryan mentioned overall solid top and bottom line performance in Q1, with U.S. and APAC outperforming estimates. U.S. independent installer channel grew 12%, service business mid-teens plus. Dealership services install revenue up 27% in U.S. Canada performance masked by timing of sales, but April revenue positive. China revenue as expected with seasonal adjustment. OEM programs span multiple manufacturers, regions, etc., with Q1 OEM revenue at 7% of total. - Barry noted Q1 is typically lowest quarter, Q2 and Q3 highest. SG&A expenses grew 16.6% to $38.2 million (32.6% of total revenue). EBITDA margin 14.5%, operating income up 17%, net income attributable to stockholders up 20.5% to $10.3 million. DSO increased with some noise, but improvement expected. Share buyback of approx $3 million in Q1. Cash flow provided by Ops $7.4 million, CapEx $9.7 million.

Overall revenue grew 13.1% to $117.4 million. U.S. region revenue grew just under 10% to $63.8 million, with independent installer channel growing 12% and service business mid-teens plus. Canada performance somewhat masked by timing of sales, but April revenue was second highest in 14 or 15 months. China revenue came in about as expected. OEM revenue was just under 7% of total revenue, largest in history. Window film product line grew 24.8% to $23.3 million (19.8% of total revenue). Total installation revenue increased a little over 24% (just under 24% of total revenue).

• Expect Q2 revenue in $135 to $137 million range, assuming normal Q1 to Q2 ramps. - Downside risks include Middle East being weaker than expected and delayed new deal flow in dealership services. - Expect gross margin to continue to improve in Q2, but beyond that picture more uncertain due to pricing pressure. - OEM channel expected to continue as good growth opportunity.

• Dealers in U.S. receiving FTC reminders on pricing disclosure and practices causing nominally increased churn and new customer acquisition headwinds. - Middle East vehicle shortages leading to potential downside risk for Q2. - SG&A growth rates need to moderate, and DSO had issues due to reorganization and collection practices. - Pricing pressure from oil and supply chain disruptions may impact gross margin.

Q: Question on Middle East and guidance, A: Guidance updated with Middle East downside.

Q: Question on gross margin and pricing, A: Likely net improvement in Q2 but uncertain beyond.

Q: Question on verticalization timeframe, A: Multi-year project with milestones to be informed.

Q: Question on OEM additions, A: Working with more OEMs globally.

Q: Question on CapEx cadence, A: Can't provide specific cadence yet.

Q: Question on U.S. market gains, A: Attachment rate growth is biggest driver.

Q: Question on service margin, A: No meaningful one-time item