管理層發言
Good morning, everyone, and welcome to the XPEL Inc. Fourth Quarter and Year-End 2025 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Jen Belodeau of IMS Investor Relations. Jen, the floor is yours.
Thank you. Good morning, and welcome to our conference call to discuss XPEL's Fourth quarter and year-end 2025 financial results. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer; and Barry Wood, XPEL'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'll 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 from 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 most recent Form 10-K, including under Item 1A Risk Factors filed with the SEC. XPEL 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'll turn the call over to Ryan. Please go ahead, Ryan.
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 largely remain unchanged. The corporate stores, dealership service business, and aftermarket all saw growth in their various components. 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 a 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, 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. And that referral program has really been a bright spot this year. So we saw that manifest with outstanding revenue performance in September and October, which correlated with the end of the EV credits and then the following month, which is really a replenishment cycle for our dealers. Demand in the referral program was down sharply for the rest of the year, but we're seeing signs of that recovering this year. The correlation between our buyer and the EV buyer at large remains a little 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.
However, we see significant rebound in the EV sales through the referral channel, especially in the slower part of the year. So we're pretty optimistic for that moving forward. We definitely felt that in the U.S. in the fourth quarter. Q4 was our first full quarter of post-acquisition China revenue, coming in at $14 million, probably a little bit higher than we expected, and we're well underway in our integration efforts in the region. Our acquisition sets the stage really 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've been engaged in for the past 18 months. As has been the case all year long, we continue to see headwinds in Canada, with 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, which is obviously not helpful.
Europe was a bright spot in Q4, with revenue growing 26.8% in the quarter. We saw really strong performance in our multiple channels there. India and the Middle East performed well, although the timing of distributor orders was a bit of a drag in the quarter, but we're very bullish about what we're doing there, and we're witnessing the beginnings of activation in India across all of our channel types, not just the aftermarket. That's really encouraging. Latin America remained flat. The weakness we observed in Q3 continued into Q4. A big part of that is our conversion of Brazil into a direct market, which is one of our last markets 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. trends, continued softness in Canada, and obviously, considerations for the impact of Chinese New Year, which historically impacts Q1.
We'll see that quarter differently now, where we're selling directly versus the sell-in, so we'll get through that quarter, and then our China sales will start aligning more closely with end-market demand. We're happy to see that. Our gross margin in the quarter finished at 41.9%, relatively flat compared to Q3. As we discussed in last quarter's call, we're managing through some price increases that have largely been mitigated, as well as selling through inventory we acquired in the China distributor purchase. As a result, we’ve experienced a lower margin as we sell through that inventory. However, 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. Reflecting on the year, I'm pleased with our overall performance. Top line growth of 13.3% was solid relative to the environment.
We've done a commendable job managing through some of these headwinds in gross margin and have largely completed our strategy of being direct in these top car markets. I think that's a significant accomplishment and reflects significant expenses we've added that now the team will grow through for us. We continue to advance our DAP platform, which has become more integrated into the business of our customers. We're receiving great feedback on the accelerated rate of development here, and I believe this is due to a couple of factors: most of our legacy tech debt has been eliminated after being in this business for such a long time; and we’re also witnessing productivity gains from AI, much like many are discussing, specifically in that field. We’ve refined our product strategy to focus on our core products and immediate adjacencies and improvements to the core products that comprise most of our sales and where we have technical competence.
I would say, overall, we’ve probably focused on too many incremental product additions rather than fully concentrating on selling more of our core. These are not things we typically discuss on this call. The products we've launched, such as the colored films, windshield films, are directly aligned with the core. However, there’s been this desire behind the scenes to be all things to our customers and supply them with everything they might need to run their business. Reflecting on that, we've really reined that back because we aren’t adding much value there, and our effort needs to be on selling more of the core product. I believe we've successfully pivoted towards that this year, which is quite important. We started the year with an incredible dealer conference despite terrible weather across the country and specifically in Texas, where we hosted the conference. We had 720 registered attendees, which is an all-time record.
It's quite remarkable, given that we've added international conferences which obviously drew demand away from the main conference, despite weakness in the aftermarket. Regardless, it was a fantastic outcome and a strong validation. It was a deluge of customer input that helps us sharpen our focus. Regarding our previously discussed investments in manufacturing and supply chain, our work continues. We expect to have more to discuss over the next several months. However, compared to our previous call, there's no further update today, other than to state that the plan and strategy remains on track. We're excited and optimistic about 2026. I believe this sentiment is shared by our team and many of our customers, certainly as we hear their feedback in person at our conference. We'll see how that unfolds. I think it's an open question what drives the relative optimism we observe, but I find it encouraging, nevertheless.
We've got strong growth prospects across every part of our channel, every customer type, and every geography. As you know, we serve retail customers, aftermarket installers, car dealers, and car manufacturers. We're identifying opportunities in all of these customer segments globally. This further validates the strategy and emphasizes why we require the presence we've built. To that end, our regional leaders and P&L owners are all budgeted to grow their operating leverage this year. Combined with the expected growth in gross margins, we'll see benefits at the operating line of the business, net of any incremental costs we might add while pursuing manufacturing and supply chain improvements, should we add costs prior to realizing savings in COGS. If and when that occurs, we’ll certainly communicate that. Overall, our team is doing an amazing job. I couldn't be happier, and we’ve witnessed incredible focus on what will be important for us moving forward. I want to thank all of them. So with that, I'll turn it over to Barry. Barry, go ahead.
Thanks, Ryan, and good morning, everyone. As Ryan mentioned, it was really a solid revenue quarter for us. Just to highlight a couple of components, our total window film product line grew 10%, which is a good result considering the seasonality of the product. For the year, total window film grew 21.7%, primarily driven by market share gains in auto, along with a nice lift from windshield protection film, our new product. Our total insulation revenue increased a little over 17% in the quarter and 17.2% for the year, with solid performance across each of our core channels within that line item. Our gross margin in the quarter grew 17.1%, and for the year, it grew 13.3%, which I believe are really good results considering some of the headwinds we faced in the quarter and throughout the year. Our total SG&A expenses grew 13.9% in the quarter to $35.7 million, representing 29.2% of total revenue.
This was relatively flat to Q3, which I think is a good result, as we've elevated SG&A in Q4 due to our largest trade show of the year that occurs each November. As we expected, our SG&A growth rates moderated 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. For the year, our SG&A grew 17.1%, representing 29.1% of revenue. EBITDA grew 37.6% versus the prior quarter to $19.6 million, which was essentially flat compared to Q3, despite lower sequential revenue in Q4. Our EBITDA margin finished at 16%. For the year, our EBITDA grew 11.4% to $77.4 million, 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 booked in Q4. For future planning, you can assume a 21% effective rate going forward.
This, along with some FX effects, drove net income attributable to stockholders growth in the quarter by 50.7% to $13.4 million, reflecting an 11% net income margin. Our operating income, which doesn't include 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 $51.2 million, reflecting a 10.8% net income margin, and our 2025 EPS closed out at $1.85 per share. Earlier in the quarter, we did buy back a relatively small amount of shares, totaling approximately $3 million. As we've discussed in our last call, our capital allocation strategy centers on investing in the core of the business, including manufacturing and supply chain. We’ll 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 $2.7 million for the quarter and $66.9 million 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 mirrors our revenue cycle, where our highest cash flow quarters typically occur in the second and third quarters, and this year was no exception. A reminder on revenue cyclicality: Q1 is typically our lowest quarter of the year; Q2 and Q3 are our highest quarters, and Q4 usually falls in between. We had a really good year for the company, and we're excited about the future here at XPEL. With that, operator, we’ll now open the call up for questions.
分析師問答
This is Matthew Raab on for Steve. Just want to ask what's contemplated in the Q1 revenue guide, which was in line with our estimate, at least. We saw auto demand was a little weaker in Q4. It feels like that continued into January, and we'll see how Q1 shakes out. We had some weather impacts recently. 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 kind of what all that means for you guys? I'm just trying to get a sense of where you're seeing some headwinds and maybe if there are some more transitory elements in the very near term.
Yes. Well, it's a great question. I mean, I think the answer to your question is really half yes and half no. I mean, if you look at our business across all the different customer types, I think in 2025, if I'm stating that number correctly, we have something like 20,000 customers that we've transacted with in some form across all the different customer types. That's obviously grown due to the increase in our referral program. We're actually selling to more individuals through that. All these segments have fundamentally different drivers. If you're looking at the OEM business, we're largely at the mercy of production versus sales. For the dealership business, half of it is driven by sales in terms of F&I, and half by inventory changes when products are being preloaded. Distributor pieces are subject to timing impacts in the quarter, which is now a much smaller part of our business. The aftermarket is typically more consistent, but ordering cycles are infrequent, making it difficult to extrapolate from recent ordering.
So I guess all that to say we have a forecasting process in place that continues to improve over time, but there hasn’t been a significant change. Changes to their run rate make that method more vulnerable to having a wider outcome. To your point, it's been a tough winter with poor weather. We've seen lost sales days in some regions that may shift into the rest of the year. We do our best to account for that in our guide, but there are limitations. The other part is, as Barry mentioned regarding seasonality, that March is really the month that makes the first quarter, given it’s when the aftermarket begins to ramp up. Much of what happens in this quarter depends on March. Within the constraints of what we have, we've factored most of that in.
That's great. Maybe switching over to the in-house manufacturing. I'm curious how you see that playing out over time. Do you think this is a gradual build-out over the next several years, where you’ll be adding capacity as you go along? Or are there opportunities for adding bigger chunks? I guess I’m 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 gradual build-out?
Yes. That’s a great question. The answer depends on the final decisions made; it could be either or both. Previously, we discussed that as we approach March and April, we'll be making decisions about that. If there’s more internal new builds, it could result in a more incremental change, with a blend of both. However, if we pursue M&A or some JV opportunities we see, there’s a chance for a more pronounced step change. It's still too early to specify, and we will keep everyone updated on that. There’s an opportunity for either or both scenarios.
Just more of a housekeeping question to start with. I believe the DSOs were up a bit. Could you speak to what's going on there? Also, could you provide more color on what drives your optimism for 2026?
Yes. I'll defer the first question to Barry if he has a comment on that. I don't believe anything significant is reflected there.
There’s nothing significant going on with the DSOs. They are trending up a bit. If I attribute that to anything, it's mainly due to some of the new OEM business we've secured, as the terms on those are longer than what we historically see, but that would probably be the major cause for the uptick—nothing alarming.
Yes. I would add that we occasionally receive questions regarding the aftermarket's health over time—are we seeing any degradation in timely payments or any stress in the channel? The answer is no. I think it’s been quite solid, even though most of our customers are off their peaks. If you could repeat your other question, please.
Yes, sure. Just a bit more color on what supports your optimism for 2026.
Well, as we talked about earlier, you have so many different inputs and subjective factors. I see increased optimism from our team and our customers in general, just from conversations and visits. While it’s a qualitative factor, it matters, especially when customers serve as a pretty good indicator of things that aren’t always measurable or forecastable. We observed feedback like, 'I’ve never seen my shop this empty.' These are anecdotes, but collectively, they hold weight. In terms of structural factors, such as vehicle affordability, there are plans to adjust pricing strategies, and while tariffs have changed recently, there might be some optimism stemming from that prior certainty. Rate trends are improving from their peaks, and those factors are better now heading into the year than they were last year. It's a combination of all these elements. Additionally, assessing our customer pipeline, who we’re winning business from, has been quite positive.
All this is set against a backdrop that might be challenging to see from the outside. When we engage with suppliers and competitors, the demand for many in the industry is down. This isn't about wishing for growth; it's about navigating that reality. In light of our results and our business pipeline, I believe there’s reason to be optimistic. Ultimately, my priority is ensuring we perform better next year than this year, improving our value, service quality, and aligning with what our customers desire.
Okay. That’s all really helpful. If I could squeeze one more in. How do you expect gross margin to trend this year? Any thoughts on Q1 gross margin? Additionally, you mentioned achieving leverage through the P&L. Any insights on OpEx there?
Yes. I’d refer back to our comments from last quarter. As we get through Q1, we'll see those gross margin headwinds abate, including pricing issues and sell-through of the higher-cost inventory we acquired from the China purchase. Our expectation is that as we move into Q2, we’ll report gross margins at or above our best results. I’m not sure exactly when that will transition—whether it’s in March or May—but there’s definitely a sign of improvement. Our corporate SG&A has been managed more effectively over the past 18 months. Most of our investment has been in fields and operations, costing incurred from M&A, and those distribution businesses will add incremental costs. However, our regional leaders are budgeted to promote increased operating margins this year across all regions and all expenses. This implies good upside for us. The only single factor that could complicate this is any decisions related to the various supply chain and manufacturing strategies, which might influence immediate or long-term costs. All of this will be communicated at the appropriate time.
Thank you very much. We appear to have reached the end of our question-and-answer session. I’ll now hand back to Ryan for any closing comments.
I’d like to thank everybody for your time today and for joining us on the call. Have a great day.
Thank you very much, everyone. This concludes today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We appreciate your participation.