DAP-U.V - Xpel Technologies

[writser]

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.

 

But if you buy a new Porsche Macan you aren't exactly spending your money like a value investor in the first place. Do people actually buy PPF products for resale 'value' or just because they want their car to look cool?

[LesPaul]

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.

 

But if you buy a new Porsche Macan you aren't exactly spending your money like a value investor in the first place. Do people actually buy PPF products for resale 'value' or just because they want their car to look cool?

 

To look like a baller, for sure.

[Foreign Tuffett]

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.

 

But if you buy a new Porsche Macan you aren't exactly spending your money like a value investor in the first place. Do people actually buy PPF products for resale 'value' or just because they want their car to look cool?

 

Yeah, I'm not trying to suggest that people paying for this stuff are making homo economicus type calculations. But people do think about this sort of thing. Here's a simple scenario to try and elaborate on what I'm asking:

 

1) You buy a car for $70000

2) You have a PPF applied. This costs you $4000

3) Four or five years later, you return to the dealership to trade your car in and buy a new car:

 

Dealer: "I will give you $33,000 in trade in value for your car"

You: "I forgot to mention that my car has a full body PPF film installation. Look how good the paint looks!"

Dealer: "OK, great. I will give you $33,000 in trade in value for your car"

 

Probably this person would be displeased that their $4000 expenditure did not get them even $1 more in equity in their car. 

 

 

[misterkrusty]

I hear you... does PPF make economic sense?  I don't know.  But to the owner, this car is their baby.  The customer base as a whole might not be thinking rationally.  Look at the tattoo industry.

 

I cringe every time I drive over a gravel road, and all I got is a lousy Audi.

 

BTW, my brother bought his 911 slightly used, which is the only sensible way to buy such cars.  It's a base model 911, so prob cost him $50k or so.  But starting with the 2017 model year, Porsche is making twin-turbo a standard feature.  Woo hoo!!  They did it to get around Chinese tariffs on engines larger than 3.0L

[A Dhandho Investor]

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.

 

But if you buy a new Porsche Macan you aren't exactly spending your money like a value investor in the first place. Do people actually buy PPF products for resale 'value' or just because they want their car to look cool?

 

Yeah, I'm not trying to suggest that people paying for this stuff are making homo economicus type calculations. But people do think about this sort of thing. Here's a simple scenario to try and elaborate on what I'm asking:

 

1) You buy a car for $70000

2) You have a PPF applied. This costs you $4000

3) Four or five years later, you return to the dealership to trade your car in and buy a new car:

 

Dealer: "I will give you $33,000 in trade in value for your car"

You: "I forgot to mention that my car has a full body PPF film installation. Look how good the paint looks!"

Dealer: "OK, great. I will give you $33,000 in trade in value for your car"

 

Probably this person would be displeased that their $4000 expenditure did not get them even $1 more in equity in their car.

 

I argued about this earlier in this thread, but buying PPF is not different from upgrading your car with other kinds of options.

 

e.g. suppose a base model car costs 50k and you buy options for 15k (nicer rims, navigation system, leather seats, park assistant, towing hook). After 3 years, this 65k car maybe has depreciated to a value in the range of 15k-20k, where a similar car without options will have a value of 15k and the car with options will have a value of 20k.

 

At that moment, do you think an owner that opted for the full option car will argue that the value of his car should be the price of the car without options + the full value of his options (i.e. 15k + 15k)?

 

This is simply not how this works. The PPF has value in the sense that it better maintains the body of the car, just like it makes sense for certain people to buy nicer rims, whereas others seem to be glad with standard ones.

[A Dhandho Investor]

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.

 

If you listened to the CEO, he explained that the flat revenues in H1 2019 compared to H1 2018 are mainly caused by the Chinese distributer that maybe overestimated demand and ordered large quantities in H1 2018, which makes H1 2019 a difficult comparison given that this customer represents 30% of Xpel's revenues. According to the CEO, the other regions are still growing nicely so I would definitely not question the growth story at this point.

 

Nevertheless, I would be glad to be able to buy more in the 3$ range! There are not that many companies that grew revenues more than 50% in 2018 and net income by more than 500%, without debt, with nice free cash flow, high insider ownership..

[writser]

I hear you... does PPF make economic sense?  I don't know.  But to the owner, this car is their baby.  The customer base as a whole might not be thinking rationally.  Look at the tattoo industry.

 

I think I agree. The company is basically selling dick extensions. Which is a good thing; dick extension sellers can have pretty good pricing power. Price/ (financial) value wise the product is probably total nonsense for 80% (95%?) of all customers.

[rohitc99]

A lot of people, especially teenagers buy nice iphone covers and change them often. They decorate in these covers. These covers dont change the value of the phone, but helps in protecting the phone and is way of expressing themselves. It is a non economic decision

[Hielko]

A lot of people, especially teenagers buy nice iphone covers and change them often. They decorate in these covers. These covers dont change the value of the phone, but helps in protecting the phone and is way of expressing themselves. It is a non economic decision

I think you are almost 100% wrong on that one. Most people I know buy covers and screen protectors because they can't really afford/don't want to buy a new phone when they drop it and don't want to have a phone with cracks in the screen (not to mention that it does have a major effect on the resale value of phones if they have scratches on the screen and/or cracks).

 

With paint protection on cars I think it's a bit different. It doesn't protect your car from fatal damage (like a broken screen basically is for a phone), but it keeps your car looking "like new" for a longer time period. If you have an expensive car or if you are a car enthousiast I can see how that would be attractive, even if it wouldn't increase your resale value of your car one cent. But I doubt that is the case. A car that looks like new on the outside is obviously a lot more attractive than a car that has lots of small paint damages. It will be the first thing people see, while things like how well the enige is maintained is a lot tougher. Of course, you are not going to earn back all the costs of the paint protection, but presumable some of it. But most of the gain should be the fact that you can drive around a number of years in a shiny new car. That's the value of the product.

[NeverLoseMoney]

If I bought a super expensive car I think I would be very annoyed with myself if I personally did something dumb to scratch the paint shortly after purchasing the vehicle. Especially if I passed on purchasing the protection to save some money.

 

I had something like this with a somewhat expensive watch once that I only owned for about a week before being a bit careless and getting a big scratch on it. That does not feel good psychologically. So I think part of paying up for a product like this might be psychological factors like minimizing regret / avoiding pain (especially early on!) and not something economical.

 

Buffett had it right when he once bought a car at a nice discount, because it had minor hail damage. He would feel good about getting a nice discount, he wouldn't feel too bad about the damage, because he didn't cause it and he would feel less bad about future damage, because the car already had some damage when he became the owner.

[misterkrusty]

NLM-  I think you've nailed it.  PPF will certainly avoid some dings and thereby raise the resale value of your car, but perhaps not always to a degree that makes the investment worthwhile.  But the psychological pain of seeing your baby scratched - due to one's decisions on where to drive/park - can be significant.

 

My Audi has close to 100k miles on it yet looks almost new.  Finding a new scratch really bugs me.  I've done a lot of minor spot painting with the help of my brothers' tools. 

 

If I ever spend >$50k on a car, I might just get PPF even though I'll probably only recoup part of the investment.

[Foreign Tuffett]

Overall, Q1 results were better than I expected. They guided for Q1 revenue to decline "modestly" Y/Y, and it declined by 1.6%. A 1.6% decline seems quite modest.

 

The business is performing well everywhere other than China.

 

Gross margin came in solid, and driving it higher is a "top priority."

 

They are doing more installer training and their 2019 conference was "the best attended ever"

 

Revenue was up 10% Y/Y in April. Guidance is for Q2 revenue to be flat Y/Y, but management admitted on the call that they are guiding "conservatively."

 

Finally, anyone else think this may pop higher once it gets a Nasdaq listing? Based in San Antonio, the US is the largest market by revenue, etc. The TSX Venture isn't where this needs to be traded. 

[snowball82]

https://www.sec.gov/Archives/edgar/data/1767258/000135445719000352/Form10_Cert_XPEL.pdf

 

[snowball82]

XPEL Announces Listing on Nasdaq; Registration Statement on Form 10

Declared Effective by SEC

 

SAN ANTONIO--(BUSINESS WIRE)--July 17, 2019--XPEL, Inc. (TSXV: DAP.U)

(“the Company”), a global provider of protective films and coatings, today announced

that its registration statement on Form 10 has been declared effective by the U.S.

Securities and Exchange Commission (“SEC”) and the Company’s common stock

will begin trading on the Nasdaq Stock Market (“NASDAQ”) effective with the

opening of trading on July 19, 2019. Shares of the Company’s common stock will

trade under the symbol “XPEL.”

In connection with its NASDAQ listing, the CUSIP number for the common stock has

been changed to 98379L100. XPEL’s shares will begin trading under the new CUSIP

on the TSX Venture Exchange and commence trading on NASDAQ on July 19, 2019

under the new CUSIP. Shareholders who hold a physical stock certificate are advised

to tender their original certificate to the transfer agent at their earliest convenience in

order to receive a new certificate. No action is required to be taken by shareholders

who hold their shares with a bank or broker with respect to the NASDAQ listing and

CUSIP change.

A Form 10 registers existing shares with the SEC without offering any additional

shares for sale. The Company is now subject to the reporting requirements of the

Securities Exchange Act of 1934 and will file periodic reports such as Form 10-Qs,

Form 10-Ks and Proxy Statements with the SEC.

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “Our listing

on NASDAQ is an exciting milestone for our Company that we’ve been considering

and working toward for quite some time. As a Texas-based company, it makes sense

for XPEL to trade in the U.S. as an SEC registered company, and we believe this

move will enhance our visibility in the marketplace, expose our Company to a larger

audience of investors and ultimately increase liquidity and shareholder value.”

The NASDAQ is the world's largest electronic stock market, listing approximately

3,600 public companies. The exchange trades more shares per day than any other U.S.

equities market. It is also among the world's best-regulated stock markets, employing

sophisticated surveillance systems and regulatory specialists to protect investors and

provide a fair and competitive trading environment.

 

 

[gfp]

This move in the price was due to the Nasdaq listing?

[Foreign Tuffett]

This move in the price was due to the Nasdaq listing?

 

I think so, yes.

[snowball82]

XPEL Announces Voluntary Delisting From TSX Venture Exchange

SAN ANTONIO--(BUSINESS WIRE)--August 16, 2019--XPEL, Inc. (Nasdaq:

XPEL; TSXV: XPEL.U), a global provider of protective films and coatings,

announced that it has applied to voluntarily delist its common stock from the TSX

Venture Exchange (“TSXV”). Accordingly, it is anticipated that, effective at the close

of markets on August 30, 2019, the Company’s shares will no longer be traded on the

TSXV but will continue to trade on the Nasdaq Capital Market (“Nasdaq”) under the

symbol “XPEL”.

 

Trading on the Nasdaq represents the vast majority of the Company’s trading volume.

Given the relatively low trading volume of its shares on the TSXV and the liquidity

provided by the Company’s Nasdaq listing, the Company determined that the costs

associated with maintaining a dual listing were no longer justified.

Upon completion of the delisting, Canadian shareholders will be able to continue to

trade their shares though Nasdaq.

[turar]

Upon completion of the delisting, Canadian shareholders will be able to continue to

trade their shares though Nasdaq.

 

Does this mean brokers convert these to Nasdaq automatically, or do I still need to sell TSXV shares myself manually?

[snowball82]

XPEL Reports Record Second Quarter Revenue of $30.1 Million; Gross

Margin Improves to 35.3%

 

SAN ANTONIO, Texas--(BUSINESS WIRE)--August 21, 2019--XPEL, Inc. (Nasdaq: XPEL), a

global provider of protective films and coatings, announced results for the second quarter and six

months ended June 30, 2019.

Second Quarter Highlights:

• Revenues increased 4.5% to $30.1 million compared to second quarter 2018, the highest

revenue quarter in the history of XPEL; Sequential revenue growth of 21.7% compared to

first quarter of 2019

• Gross margin improved to 35.3% compared to 29.7% in second quarter 2018

• Earnings per share of $0.11 compared to $0.09 per share in second quarter 2018

Ryan Pape, President and Chief Executive Officer of XPEL, commented, “We continued to see

strong revenue growth in the second quarter in most of our regions led by the US which posted

55.5% growth. As expected, this growth was partially offset by continued declines in China due

to the timing of China sales acceleration in the first half of 2018, but we expect that impact to

moderate in the third quarter. While overall revenue growth was moderate in the second quarter,

we drove substantially improved gross margin through increased sales to our higher margin

customers and due to our continued focus on gross margins. We are energized by the

opportunities we’re seeing across the majority of our geographic markets, and believe we are

well positioned for continued growth as we move through the balance of 2019.”

For the Quarter Ended June 30, 2019:

Revenues. Revenues increased approximately $1.3 million or 4.5% to $30.1 million as compared

to $28.8 million in the prior year.

Gross Margin. Gross margin was 35.3% versus 29.7% in the second quarter of 2018. The

increase was related to an improved mix of increased sales to higher margin customers and

continued improvements in per unit costs.

Expenses. Selling, general and administrative expenses increased to $6.7 million or 22.1% of

sales as compared to $5.1 million or 17.7% of sales in the prior year period. This increase was

due mainly to increases in personnel, occupancy, information technology and research and

development costs to support the ongoing growth of the business and increased professional fees

due to ancillary costs related to the Company’s U.S. regulatory filings. Additionally, in the

second quarter of 2019 the Company incurred costs associated with its annual dealer conference

which was held in the first quarter of 2018 and in the second quarter of 2019.

EBITDA. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased

to $4.4 million, or 16.4%, as compared to $3.8 million in the prior year1

.

Net income. Net income increased to $3.0 million, or $0.11 per basic and diluted share versus net

income of $2.6 million, or $0.09 per basic and diluted share in the second quarter of 2018.

[gfp]

The market sure liked it

[snowball82]

The market sure liked it

 

From $ 1.49 to $ 8.45, the market rewarded us well over last 5 years.

[gary17]

Congrats

[Foreign Tuffett]

Congrats

 

Congrats snowball82, that's an epic run

[snowball82]

Thanks. If ivi.v can do well too it will be the perfect trifecta. 

[KJP]

This is a good time for a post-mortem of investment decisions made in very late 2015 and early 2016 after the patent lawsuit was filed. 

 

I bought my first shares a few days before the lawsuit and saw the value of those shares drop 50% in less than a week.  If you look at the posts on this board starting in January 2016, you will see people asserting that 3M's claims looked strong and saying that they were selling their shares.  I didn't credit those posts -- my view was that it was impossible for outsiders to have any real sense of the strengths of 3Ms claims.  But even on that view, it was not clear whether the right decision was to buy more, hold, or sell. 

 

In hindsight, buying more turned out to be the most lucrative decision.  But even dumb decisions can turn out well.  So, I'm curious what people think now based on the information actually available in January 2016.  For people who sold, would you do anything differently today if faced with a similar situation?  I would ask the same thing of people who bought in early 2016:  Why did you do it and did you just get lucky?