XPEL Announces 2008 Results
XPEL ANNOUNCES 2008 RESULTS
– 34% Increase in Total Revenues –
– Completed Disposition of 2 subsidiaries –
SAN ANTONIO, TEXAS, May 1, 2009XPEL Technologies Corp. (TSXV: DAP.U) announced today results for the year ended December 31, 2008 as compared to the year ended December 31, 2007.
Ryan Pape, XPEL’s CEO, stated, “Over the past nine months, through management changes, an internal reorganization and the disposition of two subsidiaries, we have brought the cost structure of the business in-line with our revenues. We are beginning to see the benefit of these efforts as we look forward to the first quarter of 2009 where we anticipate net income profitability. As 2009 progresses we will continue to look for opportunities to expand product distribution and enter new strategic markets, while maintaining a cost-effective and prudent approach to operating our business.”
Year Ended December 31, 2008 compared to the Year Ended December 31, 2007
Revenues. Revenues increased from $5,790,459 to $7,776,128, or 34% between periods. The increase in revenues is primarily a result of significant increases in our Installation, kit and material sales between periods. Installation, kit and material sales increased $2,385,563 or 68% between periods and increased as a % of total revenues to 76% of our total revenues for the year ended December 31, 2008. This increase was primarily due to the acquisition of Shadow Tinting, Ltd., and its strong installation and wholesale PPF and tint film business in June of 2007.
Cost of Sales. Cost of sales increased from $2,421,274 to $3,503,109, and increased as a percentage of revenues to 45%. Our cost of sales is primarily related to the selling of XPEL Paint and Headlamp Protection Film and other tools and chemical products used in the industry.
Expenses. General and administrative expenses increased 23% to $4,230,196 in calendar year 2008 from $3,431,910 during calendar year 2007. The increased general and administrative expenses were primarily a result of the acquisition of Shadow Tinting, Ltd., in June 2007 and increased legal fees related to the lawsuit that was settled during the fourth quarter of 2008.
Sales and Marketing expenses increased $269,887 from $443,713 for the twelve months ended December 31, 2007 to $713,600 for the twelve months ended December 31, 2008. The Company incurred sales and marketing expenses during the year ended December 31, 2008 related to the launch of XPEL Protection Film in the fourth quarter of 2007, its sponsorship in the Grand Am Rolex series, expenses related to the NADA trade show in February of 2008 and costs related to our annual dealer conference in April 2008.
Amortization expense of property, plant and equipment increased slightly to $102,573 for the year ended December 31, 2008 from $97,269 for the year ended December 31, 2007.
During the latter half of 2007 the Company acquired intangible assets associated with the aforementioned acquisition and a patent. As a result, the amortization of intangible assets increased approximately $223,745 between years.
During the year ended December 31, 2008, the Company performed a valuation of the goodwill associated with its acquisitions. Based on the carrying value of the goodwill as compared to the implied fair market value of goodwill, the Company recorded impairment expense of $2,525,423 during the period. As the impairment expense was associated with the original acquisitions of ArmourfendCAD, Inc. and Paintshield, Ltd., the total impairment expense of $2.5 million has been included in loss from discontinued operations for the year ended December 31, 2008.
Net loss. The Company had a net loss of $3,917,926 for the year ended December 31, 2008 as compared to a net loss of $823,915 for the year ended December 31, 2007. The net loss included losses from discontinued operations of approximately $2.7 million and $77,000 for the years ended December 31, 2008 and 2007.
When adjusted for non-cash expenses such as stock compensation, amortization expense, unrealized foreign exchange, non-recurring legal fees and the settlement of a lawsuit, as well as the losses from discontinued operations, the adjusted net loss for the year ended December 31, 2008 was approximately $250,000 as compared to an adjusted net loss of approximately $156,000 for the year ended December 31, 2007.
In order to overcome the difficult economic climate that exists today and maintain the momentum first seen in the third quarter of 2008, it is imperative that the Company continue to expand the sales of paint protection film (PPF), increase same store installation sales, increase its DAP revenues and maintain a strong control over expenditures, the sum of which will lead to recurring profitable operations.
Certain statements contained herein.(“Over the past nine months, through management changes, an internal reorganization and the disposition of two subsidiaries, we have brought the cost structure of the business in- line with our revenues. We are beginning to see the benefit of these efforts as we look forward to the first quarter of 2009 where we anticipate net income profitability”) are considered “forward-looking statements.” These statements are based upon the belief of the Company’s management, as well as assumptions made beyond information currently available to the Company’s management. Because “forward-looking statements” are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, price competition, the inability to obtain additional capital, loss of key personnel, unavailability of leased facilities, technological changes, service interruptions, equipment failures, customer attrition, general economic conditions, relationships with vendors, government supervision and regulation, changes in industry practices, the inability to settle legal disputes, and other factors.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Chief Executive Officer
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)