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Date

Feb. 25, 2026 at 11 a.m. ET

Call participants

  • President and Chief Executive Officer — Ryan L. Pape
  • Senior Vice President and Chief Financial Officer — Barry R. Wood
  • Investor Relations — Jen Belladeau

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Takeaways

  • Total Revenue Growth -- Q4 revenue increased 13.7% year over year, with full-year revenue up 13.3%.
  • EBITDA -- Q4 EBITDA rose 37.6% sequentially from Q3 to $19.6 million; full-year EBITDA increased 11.4% to $77.4 million.
  • Gross Margin -- Reported at 41.9% for the quarter, relatively flat to Q3, with management noting an upward trend exiting Q4.
  • Net Income Attributable to Stockholders -- Q4 net income rose 50.7% year over year to $13.4 million, resulting in an 11% margin; full-year net income grew 12.6% to $51.2 million with a 10.8% margin.
  • Earnings Per Share -- Q4 EPS was $0.48; full-year EPS was $1.85.
  • Regional Performance -- Europe achieved 26.8% revenue growth in Q4, while Canada saw revenue decline and Latin America remained flat.
  • China Operations -- First full quarter post-acquisition delivered $14 million in China revenue, noted as "probably a little bit higher than we expected."
  • U.S. Operations -- U.S. revenue grew 11% in Q4; a $1 million to $2 million negative demand impact attributed to EV credit expiration in the referral program channel.
  • Window Film Product Line -- Q4 growth delivered a 10% increase; for the full year, growth was 21.7%, primarily driven by auto market share gains and new windshield protection films.
  • Installation Revenue -- Increased over 17% in Q4 and 17.2% for the year, with strength across core channels.
  • Selling, General & Administrative Expenses (SG&A) -- Q4 SG&A rose 13.9% to $35.7 million, representing 29.2% of revenue; full-year SG&A up 17.1% at 29.1% of revenue.
  • Operating Income -- Increased 25.4% in Q4.
  • Cash Flow Provided by Operations -- $2.7 million for the quarter and $66.9 million for the year, representing over 86% of total EBITDA and 40% growth from the prior year.
  • Share Repurchases -- Approximately $3 million of stock repurchased early in Q4.
  • Effective Tax Rate -- Under 14% for Q4 due to legislative provisions and one-time items; guidance for 21% rate going forward.
  • Q1 Revenue Guidance -- Expected revenue in the $112 million to $114 million range, with assumptions including ongoing U.S. trends, continued Canada softness, and impact of Chinese New Year on the China segment.
  • Gross Margin Outlook -- Management expects improvement as price headwinds and high-cost acquired China inventory are absorbed, guiding for margins to reach or exceed past highs beginning Q2.
  • Dealer Conference -- A record 720 attendees, cited as a new all-time high despite broader macro and weather challenges.
  • Product Strategy Adjustment -- Management confirmed greater focus on core products and immediate adjacencies, pulling back from incremental product adds that did not yield additional value.
  • Integration and Expansion -- China integration progressing; plans continue for direct market entry in Brazil, completing global direct strategy.

Summary

XPEL (XPEL 1.84%) concluded the quarter with double-digit revenue, EBITDA, and net income growth, emphasizing execution across its core regions, new product initiatives, and expanded direct operations in China. Management attributed notable demand shifts in the U.S. to policy changes around EV credits, and cited recovery signals in referral program channels after a sharp post-incentive drop. Strategic focus included maintaining discipline around SG&A, expanded manufacturing and supply chain investments, and pivoting product strategy back to core offerings and nearer-term adjacencies for operational leverage. Regional variability persisted, with Europe outperforming, Canada under pressure, and China showing higher-than-expected post-acquisition sales, as the company continued direct market expansion. Management reaffirmed its Q1 revenue outlook and indicated additional gross margin improvement as cost headwinds abate and integration efforts progress.

  • Management said, "our team is doing an amazing job," while underlining plans to grow operating leverage in all key regions with supporting SG&A controls.
  • Integration of the China distribution acquisition is setting the stage for growth in aftermarket, dealership (4S), and OEM partnership business lines.
  • Cash flow strength and capital discipline were cited, with management noting buybacks remain secondary to reinvestment and targeted M&A to accelerate returns.
  • Management stated that the majority of incremental SG&A spending has supported field operations and M&A-related distribution expenses, with regional leaders margins—budgeted to drive increased operating margins.

Industry glossary

  • 4S: Full-service car dealership format in China, encompassing Sales, Spare parts, Service, and Surveys (customer feedback).
  • DAP platform: XPEL's proprietary software for design, pattern, and installation management used by installers and partners.

Full Conference Call Transcript

Operator: Good morning, and welcome to the XPEL, Inc. fourth quarter and year-end 2025 earnings call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. We do ask that you limit your questions to one plus a follow-up per person. Thank you. If anyone should require operator assistance, please note this conference is being recorded. I will now turn the conference over to your host, Jen Belladeau of IMS Investor Relations. Jen, the floor is yours.

Jen Belladeau: Thank you. Good morning, and welcome to our conference call to discuss XPEL, Inc.’s fourth quarter and year-end 2025 financial results. On the call today, Ryan L. Pape, XPEL, Inc.’s President and Chief Executive Officer, and Barry R. Wood, XPEL, Inc.’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 will take a moment now to read the safe harbor statement.

During the course of this call, we will make certain forward-looking statements regarding XPEL, Inc. and its business which may include, but are not limited to, anticipated use of proceeds, 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 recent Form 10-Ks, including under Item 1A, Risk Factors, filed with the SEC.

XPEL, Inc. undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events, or otherwise. With that out of the way, I will now turn the call over to Ryan. Please go ahead, Ryan.

Ryan L. Pape: Thank you, Jen, and good morning, everyone, and welcome from me also to the fourth quarter 2025 and year-end conference call. 2025 was a significant year for us. We accomplished a lot, including our long-planned China distribution acquisition, significant completion of our plans to have a direct position in the largest car markets of the world, and then also positioning ourselves for significant change going forward with planned investments in manufacturing and supply chain. We closed out the year with good momentum, Q4 revenue growing 13.7% and Q4 EBITDA growing 37.6%.

Our U.S. region, which is the largest, saw revenue growth of 11% in the quarter, which is a good result in light of all the ongoing dynamics, which are largely unchanged. Corporate stores, dealership service business, and aftermarket all saw growth in their various parts. I think our results are probably consistent with the macro car sales trends, Q4 being sequentially down in terms of units reflecting normalization of earlier strength in the year and attempts to front-run tariffs and then get ahead of the EV credit expiration.

In our case, we likely saw greater than expected negative impact in Q4 for the U.S. as a result of that EV pull-forward due to the expiring credits, compared to what we were expecting, as it probably cost us $1 million to $2 million of end-product demand from our referral program channel alone, not including the rest of the market. That referral program has really been a bright spot this year. We saw that manifest with outstanding revenue performance in September and October, which would have correlated with the end of the EV credits.

Then the following month, which is really the replenishment cycle for our dealers, demand in the referral program was down sharply for the rest of the year, but we are seeing signs of that recovering this year. The correlation between our buyer and the EV buyer writ large remains a little bit elusive for us. The credit expiration is known and many have prognosticated on what that would be, but extrapolating exactly how that impacts the sales through our channels has proven a little bit harder. We see significant rebound in EV sales through the referral channel, obviously in the slower part of the year, so we are pretty optimistic for that going forward.

We definitely felt that in the U.S. in the fourth quarter. Q4 was our first full quarter of post-acquisition China. Revenue came in at $14 million, probably a little bit higher than we expected. We are well underway in our integration efforts in the region, and as I mentioned previously, our team is doing a great job. Our acquisition here sets the stage for growth in three segments of the business: the aftermarket, which for the longest time had been the entirety of our business in China; 4S, or dealership; and then further OEM partnerships which we have been engaged in for the past eighteen months.

As has been the case all year long, we continue to see headwinds in Canada, revenue declining slightly compared to the prior year. Canada has been tough all year. You saw car sales in Canada down sequentially 13% in Q4 from Q3, so it is obviously not helpful. Europe was a bright spot in Q4, revenue growing 26.8% in the quarter, with really strong performance in our multiple channels there.

India and the Middle East were good, although timing of distributor orders was a bit of a drag in the quarter, but we are very bullish about what we are doing there, and we are seeing the beginnings of activation in India in all of our channel types, not just the aftermarket, so that is really encouraging. Latin America was flat. Weakness there we saw in Q3 continued into Q4. A big part of that is conversion of Brazil into a direct market, which is really our last or close to last market where we want a direct presence. Our expectation for Q1 revenue is in the $112 million to $114 million range.

This assumes ongoing U.S. trend, continued softness in Canada, and considerations for the impact of Chinese New Year, which historically always impacts Q1. We will see that a little bit differently now where we are selling directly versus the sell-in, so we get through that quarter, and then our China sales will really start matching the end-market demand. We are happy to see that. Our gross margin in the quarter finished at 41.9%, relatively flat to Q3. As we discussed on last quarter’s call, we are managing through some price increases, which have largely been mitigated, as well as selling through acquired inventory that we acquired in the China distributor purchase.

That is obviously at a stepped-up cost basis, so lower margin as we sell through that. We exited the quarter in an upward trend in terms of gross margin and expect gross margins to improve as the year progresses, consistent with our comments on the previous call. As I alluded to earlier, we saw good operating leverage in the quarter, EBITDA growing 37.6%. As we have been discussing, we continue to expect to gain leverage on our added channel costs as we grow all of these operations. Reflecting on the year, I am happy with our overall performance. Top-line growth of 13.3% was solid relative to the environment.

We have done a nice job managing through some of these headwinds in gross margin and being able to largely complete our strategy of being direct in these top car markets. I think that is a significant accomplishment and represents significant expense that we have added that the team is going to grow through for us. We continue to advance our DAP platform. This has become more integrated and continues to become more integrated into the business of our customers.

We are getting great feedback on the accelerated rate of development here, due to a couple of factors: the bulk of our legacy tech debt being eliminated for having been in this business a long time, and we are certainly seeing productivity gains from AI like many are talking about, specifically in that field. We have sharpened our product strategy to focus on our core products and the immediate adjacencies and improvements to the core products that comprise most of our sales and where we have the technical competence. Overall, we probably focused on many incremental product adds rather than the full focus on selling more of our core.

I do not think these are things we talk about on this call. The products we have talked about here that we have launched, like the colored films and windshield films, are really straight to the core, but behind the curtain, there has been a desire to be all things to our customers and supply them everything they might need to run their business. Reflecting on that, we really pulled back on that because we are not adding a lot of value there, and the effort really needs to be on selling more of the core product. We successfully made that pivot this year, and I think that is quite important.

We started the year with an incredible dealer conference despite terrible weather at the time across the country and in Texas where we host the conference. We had 720 registered attendees, an all-time record. Pretty amazing, in my mind, given the fact that we have added international conferences since we started, which obviously takes some of the demand for the main conference, and in spite of the weakness in the aftermarket. Either way, it was really great and good validation, and it is a fire hose to our team of customer input that really helps us sharpen what we are doing. In terms of our previously discussed investments in manufacturing and supply chain, our work there continues.

We expect to have more to discuss over the next several months, but as compared to our previous call, there is really no further update for today except to say the plan and strategy remain on track. We are excited and optimistic about 2026. I think this is a sentiment shared by our team and many of our customers, certainly as we hear their feedback in person at our conference, and we will see how that plays out. I think it is an open question exactly what drives that relative optimism that we see, but I think it is encouraging nevertheless. We have strong prospects for growth in every part of our channel, in every customer type, in every geography.

As you know, we have retail customers, aftermarket installers, car dealers, and car manufacturers, and we are seeing opportunities in all of those customer types around the world. I think that is a validation of the strategy of why we need the presence that we have built. To that end, our regional leaders and P&L owners are all budgeted to grow their operating leverage this year, and combined with the gross margin growth that we expect, we will see benefits at the operating line of the business.

Obviously, that is net of any incremental cost we might add pursuing our manufacturing and supply chain, should we add cost prior to manifesting in any COGS savings, but if and when that happens, we will talk about that. Overall, our team is doing an amazing job. I could not be happier, and we have really seen incredible focus on what is going to be important for us going forward. I want to thank all of them. I will now turn the call over to Barry. Barry, go ahead.

Barry R. Wood: Thanks, Ryan, and good morning, everyone. As Ryan said before, it was a solid revenue quarter for us. Just to note a couple of the components, our total window film product line grew 10%, which is a good result given the seasonality of the product, and for the year, total window film grew 21.7%, which was primarily driven by market share gains in auto along with a nice lift from windshield protection film, our new product. Our total installation revenue increased a little over 17% in the quarter and 17.2% for the year, with solid performance in each of our core channels within that line item.

Our gross margin in the quarter grew 17.1%, and for the year grew 13.3%, which I think are really good results in light of some of the headwinds we faced in the quarter and during the year. Our total SG&A expenses grew 13.9% in the quarter to $35,700,000, representing 29.2% of total revenue, and this was relatively flat to Q3, which I think is a good result, as we have had elevated SG&A in Q4 due to our largest trade show of the year that occurs each November. We saw, as we expected, our SG&A growth rates moderate during the second half of the year.

As Ryan mentioned, we still have some leverageable costs in our cost structure, which we will realize as we continue to grow, and for the year, our SG&A grew 17.1% and represented 29.1% of revenue. Our EBITDA grew 37.6% versus prior quarter to $19,600,000, which was essentially flat versus Q3 despite lower Q4 sequential revenue. Our EBITDA margin finished at 16%. For the year, EBITDA grew 11.4% to $77,400,000, and our 2025 EBITDA margin finished at 16.3%. Our effective tax rate in the quarter was a little under 14%, as we took advantage of some provisions in the new legislation and other one-time items that were booked in Q4.

For future planning purposes, you can assume a 21% effective rate going forward. This, along with some FX effects, drove some of our net income attributable to stockholders growth in the quarter, which increased 50.7% to $13,400,000, reflecting an 11% net income margin. Our operating income, which does not have that noise, increased 25.4% in the quarter. EPS for the quarter was $0.48 per share. For the year, net income attributable to stockholders grew 12.6% to $51,200,000, reflecting a 10.8% net income margin, and our 2025 EPS closed out at $1.85 per share. Early in the quarter, we did buy back a relatively small amount of shares, to the tune of approximately $3,000,000.

As we discussed on our last call, our capital allocation strategy is centered on investing in the core of the business, including manufacturing and supply chain. We will continue to evaluate further buybacks relative to our planned investments in M&A, with an appetite for modest leverage to accelerate our returns. Our cash flow provided by operations was $2,700,000 for the quarter and $66,900,000 for the year, which was a little over 86% of our total EBITDA and right at 40% higher than last year. The cyclicality of our operating cash flows is similar to our revenue cycle, where our highest cash flow quarters typically occur in the second and third quarter, and this year was certainly no different.

Just a reminder on the revenue cyclicality, Q1 is typically our lowest quarter of the year, Q2 and Q3 are our highest quarters, and Q4 is usually lower than Q2 and Q3 but not as low as Q1. It was a really good year for the company, and we are excited for what the future holds for us here at XPEL, Inc. With that, operator, we will now open the call up for questions.

Operator: Thank you very much. We will now open for questions. We do ask that you limit your questions to one plus one follow-up in the interest of time. If you would like to ask a question, please press star-1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star-2 if you would like to remove your question from the queue. Please wait a moment while we poll for questions. Thank you very much. Our first question is coming from Steve Dyer of Craig-Hallum. Steve, your line is live.

Matthew Joseph Raab: Hey, great. This is Matthew Raab on for Steve. I just want to ask, what is contemplated in the Q1 revenue guide, which was in line with our estimate, at least? We saw auto demand was a little bit weaker in Q4. It feels like that continued into January, and we will see how Q1 shakes out. We had some weather impacts recently. You, Ryan, called out the EV mix changes. Luxury was a little worse. So quite a few puts and takes there. Are you able to parse through what all that means for you?

I am just trying to get a sense of where you are seeing some headwinds and maybe if there are some more transitory elements in the very near term.

Ryan L. Pape: Yes, that is a great question. I think the answer to your question is really half yes and half no. If you look at our business across all the different customer types, I think in 2025, if I am saying the number correctly, we have something like 20,000 customers that we have transacted with in some form or fashion across the different customer types, and that has grown through the increase in our referral program. We are actually selling to more individuals with that. All of these things have fundamentally different drivers. If you are looking at the OEM business, for the most part, we are at the mercy of production versus sales.

If you look at the dealership business, half of it is driven by sales, in terms of F&I, and half of it is derived from inventory and growth or reduction in inventory on the ground when products are being preloaded. Distributor pieces are subject to timing impacts in the quarter; all that is a much smaller part of our business now. The aftermarket is typically more consistent, but ordering on such an infrequent cycle that you could really only extrapolate from recent ordering. All that to say that we have a process that we use to forecast the business, and it continues to improve over time, but it has not largely changed.

As things change off of their run rate, in particular, that method is more vulnerable to having a wider outcome. To your point, the weather has been bad. You have seen lost days in some places, days of sales that maybe shifted into the rest of the year. We do our best to capture all that in the guide, but there are limitations. The other part, as Barry mentioned in terms of seasonality, is March is really the month every year that makes the quarter for the first quarter because it is when you start to see the aftermarket pieces come alive.

A lot of what happens depends on March, but within the constraints of what we have, we have factored a lot of that in.

Matthew Joseph Raab: That is great. Maybe switching over to the in-house manufacturing. I am curious how you see that playing out over time. Do you think it is a gradual buildout over the next several years where you are adding capacity as you go along, or are there opportunities for adding bigger chunks? I am trying to get a sense of the cadence of margin expansion as we look out over the next couple of years. Is it a step-function change as you add capacity, or is it more linear with a more gradual buildout over time?

Ryan L. Pape: That is a great question. Depending on the final decisions that are taken, it could be either of those or both, and we talked before that as we get into the March and April timeline, we are going to be making decisions around that. If there is more internal new build, there is probably a more incremental change—step change and then more incremental—but as we pursue M&A and some of the JV opportunities we see, then there is more of an opportunity for a more pronounced step change.

It is still a little bit too early to say, and we will certainly keep everybody updated on that, but there is an opportunity for either or both or some combination of the two.

Matthew Joseph Raab: Understood. I will pass it on. Thank you very much.

Ryan L. Pape: Thanks.

Operator: Thank you very much. Our next question is coming from Jeff Van Sinderen of B. Riley. Jeff, your line is live.

Jeff Van Sinderen: Good morning, everyone. Just more of a housekeeping question to start with. I think the DSOs were up a little bit. Maybe you can speak to what is going on there. And then also kind of a two-part question here: maybe add a bit more color on what underpins your optimism for 2026.

Ryan L. Pape: I will defer the first question to Barry if he has a comment on that. I do not think there is anything significant. No.

Barry R. Wood: There is nothing significant going on with the DSOs. It is trending up a little bit, and if I am going to attribute that to anything, it is going to be some of the new OEM business. The terms on those are a little longer than what you historically see, but that would probably be the main thing that is causing it to tick up. Nothing alarming to see there.

Jeff Van Sinderen: Okay. I would add to that, I think a question that we would get occasionally is when you look at the aftermarket and the health of the aftermarket over time, are you seeing degradation in the timely pay and things like that, if there is stress in any of the channel?

Ryan L. Pape: The answer there is really no. I think it has been quite healthy, even as you have seen all those customers off their peak.

Jeff Van Sinderen: Okay, good to hear.

Ryan L. Pape: If you could repeat your other question. Sorry.

Jeff Van Sinderen: Sure, no problem. Just a bit more color on what underpins your optimism for 2026.

Ryan L. Pape: Like we talked about with the previous question, you have many different inputs in the data, and then you have all of these other more subjective factors. I see increased optimism from our team and from our customers in general just in talking with them and visiting them. That is not a qualitative factor in the data, and you have to weigh that in how you look at the market and the opportunity, mainly because they are a pretty good indicator many times of what you cannot always measure and forecast. You saw that when the aftermarket slowed in the beginning of 2024.

As that happened, you start to hear from people, “I have not been this slow; I have not seen my shop this empty,” and those are anecdotes, but when you take them together, they are not immaterial. If you want to look at more structural things, there is probably some optimism to be had in terms of the overall vehicle affordability. There are plans to trade down content to get pricing right. Who knows? I guess that has changed even within the past week. That is an open question, but maybe some certainty there was previously generating some type of optimism, and rates and things are down from their peaks.

I think all of those are better going into this year than the year before. It is a combination of all of those. The added piece that we have is looking at our pipeline of customers and new customer wins—why we are winning, who we are winning business from. All of that has been quite positive. This is really against the backdrop, which I think is hard to appreciate from the outside looking in; when we talk to suppliers, component suppliers, and different people in the industry, demand for many of our competitors is down. It is not a factor of wishing growth is higher; it is a factor of demand being down.

You have to weigh that against what we see in our results and our pipeline, and that is another tick of the box in terms of being optimistic. For me, I want good numbers in this quarter or that quarter, or this year or that year, but way more important than that, I want to know that we are doing a better job as a company next year than this year. We are providing more value. We are providing better service. We are doing more things our customers want us to do. That is my top priority.

Jeff Van Sinderen: That is all really helpful. If I could squeeze one more in. How do you expect gross margin to trend this year? Maybe any thoughts on Q1 gross margin? I know you mentioned getting some leverage through the P&L; maybe just touch on OpEx if you have any thoughts there.

Ryan L. Pape: I would go back to our comments from last quarter in the sense that as we get through Q1, we will see those gross margin headwinds really abate, being some pricing issues that we have talked about and then sell-through of that higher-cost acquired China inventory, rather. Our expectation would be as we get into Q2, we are posting gross margins at or above the best that we have been. Directionally, I do not know exactly when that phases in—if we see that in April or we see that in May—but there is definitely improvement coming. For corporate SG&A, it has really been wrangled better over the past eighteen months.

Most of the investment has been in the field, in the other operations, costs incurred from the M&A, and costs from these distribution businesses. There will be some incremental costs on those, but as I mentioned in my remarks, when we look at how we have our region leaders budgeted, they are all driving increased operating margins—budgeted to drive increased operating margins this year—into all those regions and all of that expense. I think that is good upside for us.

The only thing that could impact that would be any decisions made in any of these different modalities around the supply chain and manufacturing and what impact that could have immediately or over time, but that will all be well described at the appropriate time.

Jeff Van Sinderen: Okay. Thanks for taking my questions.

Ryan L. Pape: Thanks, Jeff.

Operator: Thank you very much. We appear to have reached the end of our question-and-answer session. I will now hand back over to Ryan for any closing comments.

Ryan L. Pape: I would just like to thank everybody for your time today and for joining us on the call. Have a great day.

Operator: Thank you very much, everyone. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.