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DAP-U.V - Xpel Technologies


snowball82

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Third Quarter Highlights:

 

Revenues increased 64.3% to $29.3 million compared to third quarter 2017

Gross margin improved to 30.1% compared to 23.8% in third quarter 2017

Earnings per share of $0.08 compared to $0.02 per share in third quarter 2017

 

http://www.xpel.com/news/xpel-reports-record-third-quarter-revenue-growth-64-3-29-3-million-eps-0-08/

 

https://seekingalpha.com/article/4222201-xpel-inc-xplt-ceo-ryan-pape-q3-2018-results-earnings-call-transcript

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It may very well go higher of course.

 

It may be not a consumer fad, but what is it then? I may be mistaken of course, I never used such product and I did not read all the 17 pages of comments, sorry about that.

 

Is it an investment? What is the return on investment for the owner? Taking into account average car ownership lenght etc.?

 

The return on investment is that a car that has been wrapped in PPF will not suffer from damage of rock chips, scratches, etc, given the self-healing nature of the film.

 

In that sense, I would say that the ROI is higher than a lot of other options people frequently buy like chrome finishing, nicer rims, etc.

 

Btw, your reaction that you do not know the ROI of PPF shows that the product still has a large runway left in terms of growth / market penetration. I would invite you to ask friends and family about it, they will probably don’t know it either. But I definitely believe it is not a fad.

 

I think the question of whether it's a fad or not is an open one. Does anyone else here recall when "car bras" were common? These used to be fairly common, but it has been years since I've noticed one. They were 100% a passing fad.

 

https://en.wikipedia.org/wiki/Front-end_bra

 

 

Pain protection film (PPF) is clearly a more useful and less ridiculous product. That said, I would think that unless you have an exceptionally valuable and/or particularly liable to be damaged vehicle, the ROI for a full vehicle application is probably negative. I recognize that most car owners aren't making an explicit economic calculation when pay for PPF to be put on their cars. Instead they are probably motivated by a desire to do everything they can to keep their new car in pristine condition.

 

Does anyone have any info on how PPF affects the value of a used car? If I trade in a 5 year old car with a $5,000 full vehicle PPF treatment will I get more trade in value from the dealership than the same car with no PPF treatment whatsoever? Google doesn't seem to know.

 

 

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:-\I have a $1000 iphone

And i’m happy to spend $50 on a screen protector and $50 on a good case

i guess thts 10% of the cost of the phone

i don’t care about resale value

But in case of a $1000 iPhone there is a way stronger economical case to invest in those two items, even if they are depreciated after two years or so (depending how long you use your phone). A lot of people will accidentally drop their phone multiple times in one year, and just one unlucky drop can cause the screen to break and necessitate a very expensive repair. A scratch on the paint of your car on the other hand is just that, and it doesn't impede the functionality of the car in any way not would anyone think an expensive repair is necessary.

 

PS. And yes, using those two items on your iPhone also increases the resale value of your phone quite a bit. A scratch free second hand iPhone can fetch good money.

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PPF is also popular for cheaper cars. If I remember well, it was the pattern for a car like the Toyota Prius that was the most popular in Xpel's paint protection film cutting database.

 

I also understand that in certain areas of the US, PPF penetration is > 25% and even >50%, which shows it is not only something that is chosen/used for luxury cars.

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I think the best way to find some feedback regarding the use of paint protection is to look on some public forums like Tintdude or the Tesla forum:

 

https://www.tintdude.com/forum/forum/321-paint-protection-film-clear-bra-forum/

 

https://forums.tesla.com/forum/forums/what-paint-protector-best-and-why

 

https://forums.tesla.com/forum/forums/opinion-xpelopticoat-or-doing-nothing

 

 

 

 

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just speculation on my part based on P/E of 10.

 

so if you have a lot of growth , then market is willing to pay premium p/e of 20 or even 25 as we saw briefly this AM.

if like what the CEO said this AM, revenue is in fact declining  then p/e of 10 seems like where the price could be headed.

 

 

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Welcome to small-cap land. Sheesh.

 

The good news is, they are going to list on NASDAQ. And growth is still strong in the U.S. And they are optimistic about Europe and Asia. Also, they have a big take-up on Teslas, which is helpful now that Tesla is becoming established in Europe and Asia ( unless they go broke first  ;D)

 

The bad news is China. Big drop in Q1, and as a result overall revenue will dip Y/Y in Q1. That's probably a first in company history. But China had spiked anyway, and I personally have viewed those sales with an asterisk. Doing business there is not easy or reliable IMO.

 

In spite of the jaw-dropping 25% swing from the peak today, I'm holding on for the long haul.

 

 

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CEO said revenue in Q1 2019 will be a modest decline compare to Q1 2018 -

 

I think China is slowing down quite a bit IMPO  - we are likely going to see this back to $ 3...

 

I just finished listening to the call and agree with you completely: Y/Y Q1 rev "guidance" (note that their Q1 actually ended several days ago) clearly spooked investors. Slowing sales growth was probably priced in to the stock already, but a Y/Y revenue decline was not.

 

Auto sales in China have been horrid so far this year. I suspect that another factor may be the tendency of Chinese firms to....borrow.....the intellectual property and business models of foreign companies. Much has been written about the struggles non-Chinese companies have operating in China.

 

I posted previously in this thread, it's not clear to me if paint protection films are a passing fad or a secular growth story. I can see the use case for ultra high end, classic, and enthusiast-type vehicles, but even luxury cars depreciate so quickly that spending thousands of dollars to protect them from paint chips and scratches seems very questionable.

 

Finally, I am very interested in learning how these types of products affect secondary market values. I haven't seen any data whatsoever on this.

 

 

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Luxury cars don't always depreciate that much.  It depends.  Porsches and Ferraris often hold their value quite well (if you take care of them of course).  Some lower-production models appreciate over time.

 

My brother restores old VWs and Porsches as a hobby.  he has PPF on his 2017 Porsche 911 daily-driver (well, it's a daily driver if he doesn't have to take the minivan to ferry the kiddos to and from school, which he usually has to do).  I asked him if he's ever heard of anyone working on a new technology that would obviate the need for PPF.  Answer: no.  Also asked him why the car mfr doesn't offer this in-house.  Turns out you can't apply PPF for a few months after it rolls off the assembly line since the paint has to cure and de-gas, so that could tie up cash in working capital or at least require the mfr to build out storage.  Also the customer would have to wait longer to get their new baby.

 

Anyone remember car-bras?  Those went away because they sucked.  If you left the bra on when it rained it could F-up your car.  PPF doesn't have that problem.

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Luxury cars don't always depreciate that much.  It depends.  Porsches and Ferraris often hold their value quite well (if you take care of them of course).  Some lower-production models appreciate over time.

 

My brother restores old VWs and Porsches as a hobby.  he has PPF on his 2017 Porsche 911 daily-driver (well, it's a daily driver if he doesn't have to take the minivan to ferry the kiddos to and from school, which he usually has to do).  I asked him if he's ever heard of anyone working on a new technology that would obviate the need for PPF.  Answer: no.  Also asked him why the car mfr doesn't offer this in-house.  Turns out you can't apply PPF for a few months after it rolls off the assembly line since the paint has to cure and de-gas, so that could tie up cash in working capital or at least require the mfr to build out storage.  Also the customer would have to wait longer to get their new baby.

 

Anyone remember car-bras?  Those went away because they sucked.  If you left the bra on when it rained it could F-up your car.  PPF doesn't have that problem.

 

Yeah, like I hinted at in my earlier post the use case for the types of cars that you mention is clear. If you buy a $400,000 Ferrari that you expect will hold its value over time, then it makes sense to pay $3000 - $6000 for a complete PPF application. Ditto for a $120,000+ Porsche 911. Of course the issue is that the #s of new cars in this price range sold is quite limited.

 

What I'm interested in is the use case for a $70,000 Porsche Macan or $60,000 Lexus. If I buy a new car in this price range, have a PPF product installed, then go back to the dealer to trade it in a few years down the road (pardon the pun), how much extra trade in cash, if any, will the dealer give me for the PPF/pristine paint condition? If the answer to this question is $0, then the use case here for mainstream luxury cars like Lexus/Tesla/most BMWs/etc seems very questionable.

 

 

 

 

 

 

 

 

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