xpel-20210630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38858

XPEL, INC.

(Exact name of registrant as specified in its charter)

Nevada

20-1117381

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

618 W. Sunset Road

San Antonio

Texas

78216

(Address of Principal Executive Offices)

(Zip Code)

Registrant's telephone number, including area code: (210) 678-3700

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	XPEL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 27,612,597 shares of common stock outstanding as of August 9, 2021.

TABLE OF CONTENTS


			Page
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Changes in Stockholders' Equity			4
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			29
Item 4. Controls and Procedures			30

Part II - Other Information
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			31
Signatures			32

Part I. Financial Information

Item 1. Financial Statements

XPEL, INC.

Condensed Consolidated Balance Sheets


	(Unaudited)		(Audited)
	June 30, 2021		December 31, 2020
Assets
Current
Cash and cash equivalents	$	8,733,902	$	29,027,124
Accounts receivable, net	12,625,703		9,944,213
Inventory, net	25,728,267		22,364,126
Prepaid expenses and other current assets	3,207,502		1,441,749

Total current assets	50,295,374		62,777,212
Property and equipment, net	7,556,788		4,706,248
Right-of-use lease assets	9,314,337		5,973,702
Intangible assets, net	21,902,077		5,423,980
Other non-current assets	477,920		486,472
Goodwill	15,826,655		4,472,217
Total assets	$	105,373,151	$	83,839,831
Liabilities
Current
Current portion of notes payable	$	513,891	$	2,568,172
Current portion lease liabilities	1,145,724		1,650,749
Accounts payable and accrued liabilities	21,957,708		16,797,462
Income tax payable	1,382,177		183,961
Total current liabilities	24,999,500		21,200,344

Deferred tax liability, net	646,921		627,806
Other long-term liabilities	865,066		729,408
Non-current portion of lease liabilities	8,190,262		4,331,214
Non-current portion of notes payable	239,055		3,568,191
Total liabilities	34,940,804		30,456,963
Commitments and Contingencies (Note 11)
Stockholders’ equity
Preferred stock, $0.001 par value; authorized 10,000,000; none issued and outstanding	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 27,612,597 issued and outstanding	27,613		27,613
Additional paid-in-capital	10,412,471		10,412,471
Accumulated other comprehensive income (loss)	83,086		66,215
Retained earnings	59,909,177		42,876,569
Total stockholders’ equity	70,432,347		53,382,868


Total liabilities and stockholders’ equity	$	105,373,151	$	83,839,831

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Income (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue
Product revenue	$	58,667,314	$	30,961,996	$	103,598,668	$	54,711,913
Service revenue	10,068,657		4,843,862		17,003,417		9,482,408
Total revenue	68,735,971		35,805,858		120,602,085		64,194,321

Cost of Sales
Cost of product sales	40,592,311		22,556,696		72,138,858		39,318,109
Cost of service	2,896,432		1,510,085		4,929,568		2,840,247
Total cost of sales	43,488,743		24,066,781		77,068,426		42,158,356
Gross Margin	25,247,228		11,739,077		43,533,659		22,035,965

Operating Expenses
Sales and marketing	4,686,693		1,919,529		8,074,523		4,662,778
General and administrative	7,888,213		4,679,092		14,239,704		9,748,863
Total operating expenses	12,574,906		6,598,621		22,314,227		14,411,641

Operating Income	12,672,322		5,140,456		21,219,432		7,624,324

Interest expense	43,940		74,554		96,659		105,112
Foreign currency exchange (gain) loss

SEC Form 10-Q filed by XPEL, Inc.