DAP-U.V - Xpel Technologies

[snowball82]

Close to 700 % return over last year or so and the company continue to growth/get attention.

 

Great to see Jay Leno in a video about paint protection.  The installer is a distributor for 3M products and Xpel.

 

 

Thanks -  be interesting to see their international growth & see if they go into other segments such as for trucks-  the fleet industry may want to appreciate the glass protection and see if it makes sense :)

 

8 year closing high today at 3.40 and like you know, now 550 installers ! Can't wait to see next Q

[gary17]

Snowball

Thanks you for this idea & PKT -- these two have truly been very rewarding for me this year so far.  Let's hope the snowball continues :)

Gary

[snowball82]

Thanks Gary17 as you are probably the only one investor here to like my ideas lol

 

Stock price now 3.69. If they continue to growth like they do we will start to dream about a Nasdaq listing sooner than later...

[Liberty]

Thanks Gary17 as you are probably the only one investor here to like my ideas lol

 

I also appreciate you sharing your ideas. Always interesting stuff that is off the beaten path. Thanks snowball  :)

[LC]

Yes, snowball, don't feel unloved! I actually called a few distributors about Xpel and would have purchased some if my pesky broker wasn't miserable at everything. One day I will move over to IB, one day...

[snowball82]

Thanks guys ! Sometime not sure I'm in the right forum when I speak about small growth stocks... so I invested in undervaluated  stocks based on net assets in the past but my best return had been in exceptional growing companies.

 

Like Charlies Munger said, moat is very important. With Xpel we have a fantastic moat based on brand, network, products and the software. The software, with over 70, 000 vehicule applications is key here. After that great return over last year, the question now is what do you think about the current valuation($ 3.80)/growth  ?

[gary17]

Based on Q2 2014 -- they were making about $500K a quarter.... so assume that's $2M.  Divided by 26M shares that's about $0.07 EPS.

 

Tangible asset is about $8.4M  that's a very decent 25% return on tangible asset....  Tangible equity is like $4.7M so ROE of 42% without using debt or issuing new shares to fund the business growth.... this is a good sign of a strong moat , and quite rare? 

 

If we are talking about long-term intrinsic value though... we should probably think about the 'normal' growth rate....  will the whole world want paint protection? not likely.  I believe you mentioned the Ben Graham  p/e = 8.5 + 2(growth).... If we use that and say growth is about 15% over the next 7 to 10 years... that's about p/e of 22.5.  So we'll see if we see more growth in the next quarterly report to justify the current P/E.

 

Gary

[gary17]

I still like Mr. Buffett's approach: the valuation of a business should be all of the earnings the business can reasonable be expected to earn over its lifetime.  So it comes down to an exercise of estimating future earnings & the businesses's lifetime.    If it has a wonderful moat, and the product will not be replaced, theoretically speaking the intrinsic value is a really, really high one over the course of our lifetime.  It becomes an exercise of understanding the industry & the competitor dynamics and allocating our capital accordingly to take advantage of Mr. Market's miss-pricing. 

 

I think about this all the time.... there were probably times in BRK's history that it was over-valued (?)  But if the investor did not sell; today it is near all time high of well over $200k/share!

 

Growth and value investing seems to be just a fine line apart, in my view!!

[snowball82]

Like you know  the company announced 70% organic revenue growth & 65% growth in pre-Tax net income last Q. No acquisition. No dilution. No warrants or options. What is your price tag for that unique fast growing company ? ;)

[gary17]

Valuation sometimes is an art lol.

I was talking to a friend who remembered the days when priceline was a penny stock. So now it's at 1100. Absolutely no correlation to DAP.u but if the team keeps on doing what they do and deliver good results, I'd say the intrinsic value is always ahead of the current valuation. So for now I feel $4 is probably a bit rich based on Q2 earnings.  But if they release a good quarter, I might say it's worth more.

[snowball82]

I like to think Xpel could be traded on Nasdaq. I had a pleasant experience with Anip. Believe it or not, traded at less than 7 $ over summer 2013 !

[Liberty]

Thanks guys ! Sometime not sure I'm in the right forum when I speak about small growth stocks... so

 

I wouldn't worry about it. Good ideas are good ideas. Berkshire and Fairfax were small growth stocks once upon a time...  ;)

[snowball82]

Thanks Liberty. To understand why we buy, valuation and moat of the company is by far more important. This company is like a Snowball : Xpel is a real compound earning machine :)

[gary17]

Xpel reported this morning.  Very good 72% topline growth & international sales growth, and now has a UK facility. 

 

XPEL ANNOUNCES THIRD QUARTER 2014 REVENUE GROWTH OF 72%

 

XPEL Technologies Corp. (TSXV:DAP.U), a leading supplier of automotive paint and headlamp protection films, announced results for the quarter and first nine months of fiscal year 2014, ended September 30, 2014.

 

Mr. Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We were pleased to deliver strong revenue growth as a result of growing market demand for the XPEL solution and the expansion of our installer base, both domestically and internationally.”

 

For the Quarter Ended September 30, 2014:

 

Revenue: Revenue in the third quarter of fiscal 2014 was $8.4 million, a 72% increase as compared to revenue of $4.9 million in the same prior year quarter and a slight sequential increase compared to revenue of $8.3 million in the second quarter of 2014.

 

Gross Margin: Gross profit as a percentage of revenue decreased slightly to 31% from the previous year but increased sequentially from Q2.

 

Expenses: Selling, general and administrative expenses as a percentage of revenue was 23%, a slight increase compared to 21% in the third quarter last year. The increase is primarily due to one-time acquisition related expenses of $84,000 and other one-time expenses of approximately $130,000.

 

Net Earnings: Net income for the fiscal 2014 third quarter was $473,296 or $0.018 per basic and diluted share based on 25,784,950 shares outstanding, compared with net income of $392,895, or $0.015 per basic and diluted share based on 25,784,950 shares outstanding, for the corresponding prior year period.

 

Mr. Pape continued, “Just prior to the close of the third quarter, we completed our acquisition to establish our new XPEL U.K. facility, providing a foothold to move XPEL closer to customers and partners in the region. The facility includes a training and support center and provides readily available inventory to potential and existing European customers. The acquisition is going well and the new facility was operating profitably after the first month. As expected, during the third quarter we had modest one-time acquisition related expenses and also incurred other one-time expenses that impacted net profitability for the quarter.”

 

For the Nine Months Ended September 30, 2014:

 

Revenue: Revenue in the first nine months of fiscal 2014 was $22.0 million, a 70% increase as compared to revenue of $12.9 million in the same prior year period.

 

Gross Margin: Gross profit as a percentage of revenue remained relatively unchanged at 31%.

 

Expenses: Selling, general and administrative expenses as a percentage of revenue remained relatively unchanged at 21%.

 

Net Earnings: Net income for the first nine months of fiscal 2014 was $1.5 million or $0.06 per basic and diluted share based on 25,784,950 shares outstanding, compared with net income of $1 million, or $0.04 per basic and diluted share based on 25,784,950 shares outstanding, for the corresponding prior year period.

 

“Our balance sheet remains strong, providing us with the financial flexibility to strengthen our employee base and drive our sales and marketing strategy. Inventory is up substantially over the second quarter. This is partially due to our need for more inventory to meet future demand, but also due to a transition in how we manage our production that requires a near term increase but, over time, will help constrain the growth of inventory to sales.”

 

Mr. Pape concluded, “Our ability to consistently expand our base of independent installers and dealerships resulted in significant revenue growth in the quarter. International sales account for 37% of our overall revenues as compared to 33% in the same period last year and we are excited about the added international traction that is being generated with our new U.K. facility. We believe XPEL’s growing brand recognition in the marketplace and our focus on training and support of our partners, position us well for long-term growth.”

[LanceSanity]

When would you start selling? The P/E ratio is a bit high, but so is the growth rate. International sales are still only 37%. An article on MCC suggested a good time to sell is when there's a huge spike in liquidity, suggesting institutions are buying. There aren't many eyes on this stock and probably very little institutional ownership. Maybe there's still more room to run as institutions take notice.

[snowball82]

No intention to sell. Do you think professional fees over last quarter was related to a futur Nasdaq listing ?

[Travis Wiedower]

Purchased a Canadian competitor  today: http://www.bizjournals.com/sanantonio/news/2015/02/06/xpel-technologies-buys-canadian-firm-for-3-8.html

[Liberty]

Purchased a Canadian competitor  today: http://www.bizjournals.com/sanantonio/news/2015/02/06/xpel-technologies-buys-canadian-firm-for-3-8.html

 

More like a distributor: "A majority of Parasol Canada's revenue is derived from the sale of Xpel products."

[gary17]

Q4 & full year results out:

 

XPEL Announces 53% Growth in Fourth Quarter Revenue

XPEL Technologies Corp. (TSXV: DAP.U), a leading supplier of automotive paint and headlamp protection films, announced results for the quarter and fiscal year ended December 31, 2014.

 

Mr. Ryan Pape, President and Chief Executive Officer of XPEL, commented, “2014 was a strong year for our Company, marked by significant revenue growth, international expansion, and the continued strategic development of our distribution channels. We are seeing growing market demand for and recognition of the XPEL brand, both domestically and internationally and are executing on our strategy to ensure that our products and services are available to meet the demands of existing and potential customers worldwide.”

 

For the Quarter Ended December 31, 2014:

 

Revenue: Revenue in the fourth quarter of fiscal 2014 was $7.6 million, a 53% increase as compared to revenue of $5.0 million in the same prior year quarter.

 

Gross Margin: Gross profit as a percentage of sales declined slightly to 31.2% as compared to 31.7% in the previous year.

 

Expenses: Selling, general and administrative expenses as a percentage of revenue was 25.5%, a slight increase compared to 24.4% in the fourth quarter last year. The increase is primarily due to marketing, IT and acquisition costs to support the anticipated long term growth of the business.

 

Net Earnings: Net income for the fiscal 2014 fourth quarter was $1,542,460 or $0.06 per basic and diluted share based on 25,784,950 shares outstanding, compared with net income of $280,776, or $0.01 per basic and diluted share based on 25,784,950 shares outstanding, for the corresponding prior year period. Net income for the fourth quarter of 2014 included a tax gain of $1,127,400 due to a change in tax estimate.

 

Mr. Pape continued, “International expansion and moving closer to our international customers has been a key focus of ours in the back half of 2014 and into 2015. Our new XPEL U.K. facility established a strategic beachhead to service Europe and regions beyond. The facility provides readily available inventory to efficiently fulfill customer orders and in February we began offering regular onsite training courses. We are ramping our sales efforts targeting potential European customers and building a pipeline through both existing and new relationships. Subsequent to the close of the fourth quarter, we announced our acquisition of Parasol Canada, a distributor of paint protection and window tint products for the Canadian market. This acquisition adds to our portfolio of products, provides a dedicated Canadian sales force and allows us to bring our proven U.S. marketing initiatives to this key international market.”

 

For the Year Ended December 31, 2014:

 

Revenue: Revenue in fiscal 2014 was $29.6 million, a 66% increase as compared to revenue of $17.9 million in the same prior year period.

 

Gross Margin: Gross profit as a percentage of sales declined slightly to 31.2% as compared to 32.1% in the previous year.

 

Expenses: Selling, general and administrative expenses as a percentage of revenue increased slightly to 21.8% from 20.7% last year.

 

Net Earnings: Net income for fiscal 2014 was $3,070,117, or $0.12 per basic and diluted share based on 25,784,950 shares outstanding. Net income for 2014 included a $317,475 tax gain due to a change in tax estimate. For fiscal 2013, the company had net income of $1,320,268, or $0.05 per basic and diluted share based on 25,784,950 shares outstanding. Net income for fiscal 2013 includes $714,000 in tax expense.

 

Mr. Pape concluded, “We made great progress in 2014 growing our sales, expanding our base of independent installers and dealerships and broadening our international footprint. We look forward to introducing new products while also continuing to deliver the training and support that differentiates XPEL from our competitors.”

 

 

[Liberty]

http://seekingalpha.com/article/3304475-xpel-technologies-compounders-risk-reward-significantly-better-than-last-year

[A Dhandho Investor]

They will also start offering window tinting products: http://www.windowfilmmag.com/2015/07/xpel-returns-to-sponsor-wfct-2015/

[matthewd98]

The stock is creeping up before Q2 results. Reminds me a lot of last year before it doubled. I don't see why it can't do the same this year given that management guided for over 12M in revenue for the quarter in the CC and the fact that it's seasonally their strongest quarter. Results will most likely be out at the end of the August as they usually take the full 60 days to report.

 

It's also interesting to note that DAP has been the best performing stock over the last 5 years on the TSX-V, returning 11,533.33%. Link: http://www.barchart.com/stocks/performance/5year.php?filter=tsxv

 

Matthew

[snowball82]

Yeah, nice run since the beginning (closed at $ 3.75 today).  Again very rare a CEO can say he sees a 50 % organic growth like during the last conference call !

[snowball82]

I have been very lucky with this one, a 10 baggers soon. So I know many others investors did better than me with this one as they bought before me.... But I work very hard to find the next one. Two small candidates so far but any with that huge organic growth. Xpel is a very unique animal :)

[LesPaul]

Just wanted to comment ...

 

Not very scientific, but I put a lot of stock into the opinions of the 'established' and experienced members of niche forums -- because I feel that the opinions in these forums are far more valuable than product reviews (on amazon.com for example) or the pitch from a salesman. And I think that people underestimate how much of an influence these forums have on the marketing of products and just how widespread that influence can be.