XPEL Announces Second Quarter Results

Published 

XPEL ANNOUNCES SECOND QUARTER RESULTS

– Largest Revenue Quarter in Company History –
– Revenues Increase 156% Over Prior Quarter –

SAN ANTONIO, TEXAS, August 29, 2008…XPEL Technologies Corp. (TSXV: DAP.U) announced today results for the three and six months ended June 30, 2008, as compared to the three and six months ended June 30, 2007.

XPEL’s newly appointed CEO, Nuno Ferreira, commented, “The second quarter was certainly a period of transition for XPEL Technologies Corp. As a customer of XPEL for many years, and then the president of its largest and most profitable subsidiary, I have gained the necessary perspective to assess the things we do well and the things we do not do well. My first order of business has been to familiarize myself with the operations and direction of the Company and work with the management team to set a clear path for our future. It is my belief that the decisions that management has made over the previous 90 days will make significant impact toward restoring XPEL to the profitability we experienced in the third quarter of 2007.” Mr. Ferreira further added, “The decisions we are making today are based on building long-term value and building a company with profitable and sustainable revenue streams for
significant long-term growth.”

Three and Six Months Ended June 30, 2008 as compared to the Three and Six Months Ended June 30, 2007

Revenues. Revenues increased from US$1,067,760 to US$2,738,521 or 156% between quarters and from US$1,918,251 to US$4,724,176, or 146% between the six-month periods. The increase in revenues is primarily a result of the acquisition of Shadow Tinting, Ltd., and its strong installation and wholesale PPF and tint film business in June of 2007. Additionally, design access fees increased slightly between quarters and the six-month periods.

Cost of Sales. Cost of sales for the three and six months ended June 30, 2008 were US$1,317,818 and US$2,150,731, respectively as compared to US$332,079 and US$588,317, for the three and six months ended June 30, 2007. Our cost of sales is primarily related to the selling of bulk paint and headlight film and third-party enabling equipment such as plotters, which are used by the Companys DAP Partners for the production of products using the DAP software.

Expenses. General and administrative expenses for the quarter ended June 30, 2008 increased 95% to US$1,576,631 from US$809,144 in the second quarter of 2007, while general and administrative expenses for the six months ended June 30, 2008 increased 161% to US$2,936,808 from US$1,635,255 in the first six months of 2007. The increased general and administrative expenses were primarily a result of the acquisition of Shadow Tinting, Ltd., in June 2007. Other factors included increased general and administrative expenses as a result of the acquisitions of Paintshield Ltd., and ArmourfendCAD Inc. in the fourth quarter of 2007, as well as non-recurring legal fees.

Sales and Marketing expenses increased US$94,459 from US$98,048 to US$192,507 from the second quarter of 2007 to the second quarter of 2008 and increased US$302,317 from US$166,259 to US$468,576 from the six months ended June 30, 2007 to the six months ended June 30, 2008. The Company incurred sales and marketing expenses during the six months ended June 30, 2008 related to the launch of its XPEL brand of 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 XPELs annual dealer conference in April 2008.

Amortization expense of property, plant and equipment decreased slightly for both the three and six months ended June 30, 2008 as compared to the three and six months ended June 30, 2007.

During the latter half of 2007 the Company acquired intangible assets associated with three acquisitions and associated intellectual property. As a result, the amortization of intangible assets increased approximately US$125,201 between quarters and US$169,094 between the six month periods.

During the quarter ended June 30, 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 US$2,528,625 during the quarter.

Net earnings (loss). The Company had a net loss of US$3,024,795 for the quarter ended June 30, 2008 as compared to a net loss of US$212,961 for the quarter ended June 30, 2007 and a net loss of US$3,591,363 for the six months ended June 30, 2008 as compared to a net loss of US$547,219 for the six months ended June 30, 2007. When adjusted for non-cash expenses such as stock compensation, amortization expense, the impairment of goodwill and non-recurring legal fees, the adjusted net loss for the quarter ended June 30, 2008 was approximately US$143,000 and the adjusted net loss for the six months ended June 30, 2008 was approximately US$622,000, as compared to an adjusted net income of US$23,439 for the quarter ended June 30, 2007 and an adjusted net loss of US$74,122 for the six months ended June 30, 2007.


Certain statements contained herein (It is my belief that the decisions that management has made over the previous 90 days will make significant impact toward restoring XPEL to the profitability we experienced in the third quarter of 2007 and The decisions we are making today are based on building long-term value and building a company with profitable and sustainable revenue streams for significant long-term growth.) 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.


The TSXV has not reviewed and does not accept responsibility for the adequacy and accuracy of this information.

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Company Contact:

Ryan Pape
Chief Executive Officer
210-678-3700

Investor Relations:

John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
(203) 972-9200
[email protected]