0001767258-26-000038
SEC filingXPEL's Q1 revenue grew 13.1% to $117.4M, driven by broad-based demand, with gross margin expanding 140 bps to 43.7%.
For the three months ended March 31, 2026, XPEL reported total revenue of $117.4 million, a 13.1% increase from $103.8 million in the same period last year. The growth was driven by both product and service revenue. Product revenue rose 12.7% to $88.7 million, while service revenue increased 14.1% to $28.6 million. Gross margin expanded 140 basis points to 43.7%, compared to 42.3% in the prior year, primarily due to a 250 bps improvement in product margin (41.0% vs. 38.5%) from lower product costs, favorable mix, and operating leverage. Service margin declined slightly to 52.0% from 54.3%, reflecting the reduction in fair value of a cutbank credit. Operating income grew 17.0% to $13.0 million, and net income increased 22.4% to $10.5 million, with the effective tax rate falling from 23.9% to 20.9% due to a higher proportion of lower-taxed foreign earnings.
Within product revenue, paint protection film—the largest category—grew 9.3% to $61.7 million, representing 52.5% of total revenue, down from 54.4%. Window film revenue surged 24.8% to $23.3 million, driven by strong adoption in China and APAC following the completion of the China distributor acquisition in late Q3 2025. Other product revenue increased 4.3%. Service revenue growth was led by installation labor, up 23.9% to $23.1 million, benefiting from increased demand across dealership services and OEM networks. Cutbank credits declined 43.0% due to a reduction in estimated fair value. Geographically, revenue grew in most regions, with China up 44.4%, Asia-Other up 25.1%, and EU/UK/Africa up 19.0%, while Canada declined 10.9% due to timing of distributor sales.
Management expressed confidence in sufficient liquidity to operate for at least the next 12 months, citing $45.1 million in cash and $128.2 million available under credit facilities. They expect to fund ongoing operations, capital expenditures, and acquisitions through cash flow from operations and borrowings. The company's strategic priorities include expanding direct sales in top global markets, investing in manufacturing and supply chain to improve operating margins, and leveraging its distribution network. No specific quantitative guidance was provided.
Cash and cash equivalents decreased to $45.1M from $50.9M at year-end 2025, primarily due to $9.9M in capex and $2.9M in share repurchases, partially offset by $7.4M in operating cash flow. The company has zero outstanding debt on its $125M revolving credit facility (due 2028) and a CAD $4.5M Canadian facility also undrawn. Total assets grew to $394.4M, with inventory increasing to $131.6M (reflecting growth and pre-building). Goodwill decreased to $57.4M due to measurement period adjustments and FX.
No material purchase commitments were disclosed. Warranty liabilities were $0.3M, unchanged from year-end. Contingent consideration related to acquisitions totaled $18.2M (Level 3), down from $20.0M due to payments and valuation adjustments. The company has $8.7M in short-term contingent consideration and $9.5M in other long-term liabilities (primarily lease liabilities). Lease liabilities total $20.8M ($5.7M current, $15.1M non-current).
During Q1 2026, XPEL repurchased 68,021 shares for $2.9M (avg. $43.23/share), leaving $44.1M under the $50M program authorized May 2025. No dividends were paid. Debt repayments were minimal ($59k). Capital expenditures totaled $9.9M (8.5% of sales), including $9.7M for property, plant & equipment (notably $9.6M in construction in progress) and $0.2M for intangible asset development. No acquisitions closed in Q1.
The company operates as a single reportable segment. Revenue by geography (based on ultimate destination) shows Q1 2026: US $63.8M (54.4%), Canada $8.4M (7.2%), China $11.7M (10.0%), Asia Other $5.7M (4.9%), EU/UK/Africa $17.9M (15.2%), India/Middle East $6.8M (5.8%), Latin America $3.1M (2.6%). North America remains the largest region (61.6%). The CODM reviews consolidated gross margin ($51.2M) and operating income ($13.0M) for performance evaluation and resource allocation.