XPEL, Inc.

Q2 revenue was a record $143.1 million, up 14.7% year over year. U.S. revenue grew 11.7% to a record $78.6 million; China revenue was $15.9 million; Canada grew 10.8%; Europe revenue declined 2.3%; and India/Middle East revenue declined 5%. Gross margin was 44.1%, up from 43.7% in Q1. Window film revenue rose 16.1% to a record $32.5 million, and installation revenue increased just under 11%. SG&A rose 16.7% to $39.9 million. EBITDA grew 17.6% with a 19.3% margin; adjusted EBITDA margin was 20.7%. Operating income increased 20.3% with a 16.2% margin. Net income attributable to stockholders rose 10.7% with a 12.6% margin. EPS was $0.65 and adjusted EPS was $0.68. Cash flow from operations was a record $30.8 million, and CapEx was $65.1 million, including the real estate purchase. Management guided Q3 revenue to $137 million to $139 million, assuming consistent U.S. and APAC trends, normal August seasonality in Europe, modest improvement in the Middle East, and no recapture of deferred business. Management also said it expects gross margin to modestly increase through the rest of the year and noted approximately $0.03 to $0.04 per share of manufacturing start-up and ramp-up costs in Q3.

Ryan Pape described Q2 as a good quarter with performance that exceeded expectations, helped by strong execution across regions and strategic progress on manufacturing. He emphasized the China distributor integration, the new San Antonio and China facility investments, and the belief that these moves will improve innovation, agility, quality, and eventually operating margins. His tone was constructive and confident, but he also acknowledged ongoing dealership headwinds from FTC concerns, Europe timing effects, and regional disruptions in the Middle East.

Barry Wood highlighted the hard numbers behind the quarter: record revenue of $143.1 million, gross margin of 44.1%, EBITDA margin of 19.3%, operating margin of 16.2%, EPS of $0.65, adjusted EPS of $0.68, and record operating cash flow of $30.8 million. He also noted that SG&A was $39.9 million, including about $1.5 million from the China distributor acquisition, and that CapEx was $65.1 million, driven by the real estate purchase. He said the company financed part of that purchase with a $44.8 million 10-year term loan and expects more CapEx in the back half of the year and into Q1.

Analysts focused mainly on the manufacturing build-out, asking whether the expected margin benefit would come as a step-up or gradually. Management said the improvement should come in some step functions rather than a smooth quarter-by-quarter ramp, and that China should contribute faster than the U.S. because it is an existing facility. Another question centered on build-out risk and quality control; Ryan Pape argued XPEL already owns much of the design, sourcing, QA, and process responsibility today, so shifting more production into owned assets should be manageable given the experienced technical team. Management also clarified that SKU reduction is already underway and that tuck-in acquisitions would be aimed at service and OEM-adjacent opportunities, not manufacturing.