In this segment of "Industry Focus" on Motley Fool Live, recorded on Dec. 2, Fool analysts Nick Sciple and Auri Hughes discuss the recent encouraging revenue numbers and acquisitions for XPEL (XPEL 1.80%).
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Nick Sciple: You look at the past five years through the end of 2020, 30% revenue growth CAGR year-over-year. You look at the most recent quarter, U.S. organic revenue up 49%, year-over-year, Canada organic revenue up 40% year-over-year, and this is in a market where has been well-documented, there's not a lot of car inventory out there on the market.
We're at a low point, that's the slowest Q3 for new car sales in the U.S. in a decade. Obviously, a lot of this film is being installed when folks buy the car new. They want to make sure it stays as good as new for as long as possible to see this incredible growth even against a macro background that isn't necessarily favorable to the business.
Also when you see that the historical track record of growth as well, it's the market that may not sound big when you first hear about it, but actually it's giant and growing when you look at some of the new areas that XPEL is starting to move into with some recent acquisitions.
Auri Hughes: Yeah, and I think when you start from a small base, you can grow substantially larger as they have. The acquisitions are really interesting too. They're really starting to show that horizontal integration, I think that makes sense, I like that they're going after companies that really complement what they're already doing.
Sciple: Yeah, so can you talk about some of these acquisitions. Earlier in the show, we mentioned the historical market for this is like the type of guy who is driving a Ferrari that's going to go get some type of aftermarket work done on their car. But more recently with some other acquisitions, they're moving down-market into actual buying it straight from the dealership with some of these recent acquisitions.
Hughes: Yes, so you've got the dealership one and then the one I was just looking at now is InvisiFRAME, which is this bike aftermarkets parts where they're doing a similar thing actually where they're creating coverings to protect bikes, so again, paint protection is related, different, not cars, but they're going after that. That was a quick win, added $2.7 million and it's a creative.
They also grow and they maintain profitability, which is very interesting to me as well. One of the acquisitions, I think you're referring to is this PermaPlate film, the distributor and installer of automotive window film serving dealerships.
Again, it's a business that relates, they install window film, so it's just a nice complement to what they're doing so they can probably, they know that market, they understand that business. It makes a lot of sense, and they are creative. That's one thing I like is that the acquisitions add to the bottom line or most of them from what I've seen.
