XPEL Announces Results For 3rd Quarter
XPEL ANNOUNCES RESULTS FOR 3RD QUARTER
– Net Income and Cash Flow Profitability for 3rd Quarter –
– 2nd Largest Revenue Quarter in XPEL’s History –
SAN ANTONIO, TEXAS, December 2, 2008…XPEL Technologies Corp. (TSXV: DAP.U) announced today results for the three and nine months ended September 30, 2008, as compared to the three and nine months ended September 30, 2007.
XPEL’s CEO, Nuno Ferreira, stated, “We are pleased that many of the decisions we made in the 2nd and 3rd quarter of this year have had an immediate positive impact on our profitability. While some of the decisions have been difficult, we now have a streamlined organization that enables us to focus on new and existing revenue channels in a more cost-effective manner.” Mr. Ferreira added, “We recognize that in addition to providing quality products and services, we must provide stability for our Dealers and we must build value for our shareholders.”
Three and Nine Months Ended September 30, 2008 compared to the Three and Nine Months Ended September 30, 2007
Revenues. Revenues increased from $1,972,063 to $2,377,614, or 21% between quarters and from $3,887,986 to $6,996,289, or 80% between the nine month periods. The increase in revenues is primarily a result of increases in our installation, kit and material sales between periods.
Cost of Sales. Cost of sales increased from $753,455 to $960,183, and increased as a percentage of revenues to 40% between quarters. For the nine month periods cost of sales increased from $1,339,444 to $3,094,495, and increased as a percentage of revenues to 44%. Our cost of sales is primarily related to the re-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 utility.
Expenses. General and administrative expenses increased 39% to $971,907 from $701,290 in the third quarter of 2007 and 58% to $3,698,037 from $2,336,545 in the first nine months of 2007. The increased general and administrative expenses for both the quarter ended September 30, 2008 and the nine months ended September 30, 2008 were primarily a result of increased legal fees related to a lawsuit that was settled subsequent to September 30th and expenses associated with the various acquisitions completed in the latter half of 2007.
Sales and Marketing expenses decreased $28,533 from $86,629 to $58,096 from the third quarter of 2007 to the third quarter of 2008 but increased $273,784 from $252,888 to $526,672 from the nine months ended September 30, 2007 to the nine months ended September 30, 2008. The Company incurred sales and marketing expenses during the nine months ended September 30, 2008 related to the launch of its 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 its annual dealer conference in April 2008. During the third quarter of 2008, the Company ceased the use of the marketing firm which had assisted it in the launch of XPEL Protection Film as well as the marketing efforts associated with its sponsorship in the Grand Am Rolex series.
Amortization expense of property, plant and equipment decreased to $26,443 from $45,298 between quarters and decreased slightly to $77,715 from $107,104 between the nine-month periods.
During the latter half of 2007 the Company acquired intangible assets associated with three acquisitions and a patent. As a result, the amortization of intangible assets increased approximately $99,746 between quarters and approximately $268,840 between nine-month periods.
During the nine months ended September 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 $2,528,625 during the period.
Net earnings (loss). The Company had net income of $250,262 for the quarter ended September 30, 2008 as compared to net income of $384,461 for the quarter ended September 30, 2007. The net income for the quarter included a loss from discontinued operations of approximately $126,000 as well as other income related to the settlement of a lawsuit. When adjusted for non-cash expenses such as stock compensation and amortization expense the adjusted net income for the quarter ended September 30, 2008 was approximately $361,156 as compared to an adjusted net income of $297,036 for the quarter ended September 30, 2007.
The Company had a net loss of $3,336,101 for the nine months ended September 30, 2008 as compared to a net loss of $162,758 for the nine months ended September 30, 2007. The net loss included losses from discontinued operations of approximately $251,000. When adjusted for non-cash expenses such as stock compensation, amortization expense, the impairment of goodwill, non-recurring legal fees and the settlement of a lawsuit, the adjusted net loss for the period ended September 30, 2008 was approximately $327,129 as compared to an adjusted net income of $312,055 for the nine months ended September 30, 2007.
Certain statements contained herein (“we now have a streamlined organization that enables us to focus on new and existing revenue channels in a more cost-effective manner. ”) 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.
Chief Executive Officer
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)