XPEL (NASDAQ:XPEL) executives highlighted steady growth, improving profitability and progress on strategic initiatives during the company’s fourth-quarter and full-year 2025 earnings call, while also pointing to mixed regional demand trends and near-term uncertainty tied to auto sales dynamics.
Quarterly performance and demand trends
President and CEO Ryan Pape said the company finished 2025 with “good momentum,” citing fourth-quarter revenue growth of 13.7% and EBITDA growth of 37.6%. In the U.S., XPEL’s largest region, revenue increased 11% in the quarter, with Pape noting that corporate stores, dealership/service business and the aftermarket channel each contributed growth.
The referral program, he said, was a bright spot in 2025, showing “outstanding revenue performance” in September and October before demand fell sharply for the remainder of the year. Pape added that the company is seeing signs of recovery early in 2026 and remains optimistic about EV-related demand through that channel, even as the relationship between XPEL’s buyer profile and broader EV buyers has been difficult to quantify.
Regional results: China integration, Europe strength, Canada headwinds
XPEL’s fourth quarter included its first full quarter following its China distribution acquisition. Pape said China revenue was $14 million, “a little bit higher than we expected,” and that integration efforts are well underway. He said the acquisition positions XPEL for growth in China across three segments:
- Aftermarket
- 4S/dealership channel
- Further OEM partnerships, which he said the company has been engaged in for the past 18 months
Canada remained challenging, with revenue declining slightly year over year. Pape pointed to Canadian auto sales that were down 13% sequentially in the fourth quarter compared with the third quarter.
Europe was a bright spot, with fourth-quarter revenue up 26.8%, which Pape attributed to strong performance across multiple channels. India and the Middle East were described as “good,” though distributor order timing weighed on the quarter. Pape said the company is seeing early “activation” in India across channel types beyond the aftermarket, which he called encouraging. Latin America was flat, with weakness from the third quarter continuing into the fourth quarter, driven in part by the conversion of Brazil into a direct market.
Margins, expenses, and profitability
XPEL’s gross margin was 41.9% in the fourth quarter, relatively flat compared with the third quarter. Pape said the company is managing through price increases that have “largely been mitigated,” as well as the impact of selling through inventory acquired in the China distributor purchase at a stepped-up cost basis, which pressured margins. He said XPEL exited the quarter with an upward margin trend and expects gross margins to improve as 2026 progresses.
Senior Vice President and CFO Barry Wood said SG&A expenses rose 13.9% in the quarter to $35.7 million, representing 29.2% of revenue, and were relatively flat compared with the third quarter despite seasonally higher trade show expenses. For the full year, SG&A increased 17.1% and represented 29.1% of revenue. Wood said SG&A growth moderated in the second half of the year and that the company expects to realize leverage on “leverageable costs” as it grows.
Wood reported fourth-quarter EBITDA of $19.6 million, up 37.6% from the prior-year quarter and essentially flat sequentially despite lower revenue versus the third quarter. EBITDA margin was 16% for the quarter. For 2025, EBITDA increased 11.4% to $77.4 million, with a full-year EBITDA margin of 16.3%.
Net income attributable to stockholders rose 50.7% in the quarter to $13.4 million, reflecting an 11% net income margin. Wood said the quarterly effective tax rate was “a little under 14%” due to provisions in new legislation and other one-time items recorded in the fourth quarter, but he advised investors to assume a 21% effective tax rate going forward. Fourth-quarter EPS was $0.48, and full-year EPS was $1.85. Full-year net income attributable to stockholders increased 12.6% to $51.2 million, representing a 10.8% net income margin.
Product and platform updates
Wood said total window film revenue increased 10% in the fourth quarter, which he characterized as a good result given seasonality. For the full year, window film revenue grew 21.7%, driven primarily by market share gains in automotive and contributions from Windshield Protection Film, which he called a new product. Total installation revenue rose just over 17% in the quarter and 17.2% for the year.
Pape also discussed progress on XPEL’s DAP platform, saying it is becoming more integrated into customer operations and that feedback has been strong on development speed. He attributed that to eliminating legacy technical debt and productivity gains from AI in software development.
He added that the company sharpened its product strategy to focus on core products and immediate adjacencies, saying XPEL had previously devoted too much effort to incremental product additions rather than selling more of its core offerings. Pape said launches discussed publicly—such as colored films and windshield films—are “straight to the core.”
Outlook, capital allocation, and manufacturing plans
For the first quarter, Pape guided revenue to a range of $112 million to $114 million. He said assumptions include ongoing U.S. trends, continued softness in Canada, and the impact of Chinese New Year. He noted that now that XPEL sells directly in China, quarterly sales should more closely match end-market demand rather than distributor “sell-in” patterns.
On cash flow, Wood said operating cash flow was $2.7 million in the fourth quarter and $66.9 million for the year, equating to a little over 86% of EBITDA and about 40% higher than the prior year. He reiterated that Q1 is typically XPEL’s lowest revenue quarter, with Q2 and Q3 the strongest.
Wood said XPEL repurchased approximately $3 million of shares early in the quarter. He described the company’s capital allocation strategy as centered on investing in the core business, including manufacturing and supply chain initiatives, while continuing to evaluate buybacks and M&A, including the use of modest leverage to accelerate returns.
On manufacturing and supply chain investments, Pape said the strategy remains on track, though he did not provide additional detail beyond prior commentary. In response to a question about the cadence of potential margin improvement, Pape said the outcome could be incremental or more step-change in nature depending on whether the company pursues internal new builds, M&A, joint ventures, or a combination, with decisions expected around a “March and April timeline.”
Pape also said accounts receivable days sales outstanding (DSO) ticked up modestly, primarily due to newer OEM business carrying longer payment terms, and that there were no signs of worsening payment behavior in the aftermarket channel.
Looking toward 2026, Pape said he is seeing increased optimism from both XPEL’s team and customers and cited improving factors such as rates being down from their peak, potential changes around vehicle affordability, and a positive pipeline of customer wins, while noting that broader industry demand for many suppliers and competitors has been down.
About XPEL (NASDAQ:XPEL)
XPEL, Inc is a leading manufacturer and distributor of advanced protective films and coatings for automotive, marine, aviation, and architectural applications. The company’s core products include paint protection film (PPF), window tinting film, and ceramic coatings designed to shield surfaces from scratches, environmental contaminants, and UV damage. XPEL’s flagship PPF, known for its self-healing properties, is engineered to maintain a vehicle’s factory finish by resisting swirl marks, stone chips, and acid rain.
Beyond automotive protection, XPEL has expanded its offerings to include protective films for electronics and architectural surfaces, providing solutions that enhance durability and prolong the life of high-value assets.
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