MicroCapClub Invitational: Xpel Technologies (DAP.U / XPLT)

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Xpel Technologies (DAP.U or XPLT) sells paint protection products that protect the vehicle from damage caused by rocks, gravel, salt, acid rain and sand. The company’s Ultimate Film has driven significant sales growth since 2011. When we first looked at Xpel it reminded us a lot of ZAGG (ZAGG) from back in 2008-09 when sales were just starting to ramp. Xpel has profitably grown revenues from $6 million in 2011, to ~$16 million for the LTM. The company has no debt, and a very clean share structure with only 25.7m shares outstanding with no options or warrants. We expect the growth trend to continue as more independent installers, new car dealerships, and international distributors, partner with Xpel. Several members on MicroCapClub have done exhaustive due diligence traveling to numerous dealers and attending car shows. As the company scales it’s business in 2014 and beyond we expect to start to see operating leverage drop more income to the bottom line. We also believe a possible up-listing to a major exchange in 2014 will bring many more eyes on the name.

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MicroCapClub Invitational: Xpel Technologies (DAP.U / XPLT)

  1. 1. XPEL TECHNOLOGIES CORP. MicroCapClub Invitational
  2. 2. FORWARD LOOKING STATEMENTS This Presentation contains certain forward-looking statements in respect of various matters including upcoming events that involve known and unknown risks and uncertainties that are beyond the control of Management. Those risks and uncertainties include, among other things, risks related to: share prices, liquidity, creditworthiness, currency, insurance, dilution, ability to access capital markets, interest rates, dependence on key personnel and environmental matters. Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions and information currently available; however, Management can give no assurance that actual results will be consistent with these forward-looking statements. Factors and assumptions that were applied in drawing conclusions and could cause actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements, include, but are not limited to, general economic conditions, competition, availability of manufacturing supply or quality, availability and quality of raw materials, the Company’s ability to maintain key employees and other factors identified in the “Risk Factors” section of the Company’s Management’s Discussion and Analysis (MD&A) available at www.xpel.com/relations.
  3. 3. PAINT PROTECTION FILM • Film Protects Painted Surfaces from Rock Chips and other Damage • Made on a Roll, Cut to Fit • Requires Professional Installation • Usually Sold Around Vehicle Purchase Rock Chips - #1 New Car CSI Issue
  4. 4. CORPORATE OVERVIEW • Ticker: TSXV: DAP.U • Founded 1997 • Based in San Antonio, Texas • ~40 Employees • Stock Price*: $1.47 • Market Cap*: $37.9M • ~50% Insider Ownership • No Warrants or Options * Based on 25.7 million shares outstanding as of January 14th, 2014
  5. 5. REVENUE BY QUARTER $6,000,000 $5,000,000 First ULTIMATE Film Sale $4,000,000 $3,000,000 Expand Awareness Campaigns $4,898,729 Revamp Sales Force/Comp $2,000,000 $1,160,767 $1,000,000 $880,755 $0 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013
  6. 6. NET INCOME BY QUARTER $800,000 $600,000 $400,000 New Management $596,895 $392,895 $200,000 $0 ($200,000) ($400,000) ($600,000) ($800,000) ($1,000,000) ($1,200,000) Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 Pre-Tax Net
  7. 7. PRODUCT OVERVIEW Film Services Chemicals DIY • ULTIMATE • DAP • Installation • Headlight • XTREME • Training • Care • Door Edge • Stealth • Installation • Industrial • Headlight • Window Tint • Door Sill • TracWrap
  8. 8. ULTIMATE™ FILM CONSTRUCTION “ULTIMATE” Clear Coat Polyurethane Adhesive Release Liner • 10-Year Warranty • Optically Clear, Minimal “Orange Peel” • Resists Staining • Self Healing
  9. 9. DESIGN ACCESS PROGRAM • Internet-Based Cutting Program • Real Time Design Updates • Over 70,000 Vehicle Applications • Key Differentiator, Pull Through Tool
  10. 10. INSTALLATION TRAINING • 4-Day Starter Course • 1-Day Advanced Course • Training Starts Learning Process • Also Offered Offsite, Internationally
  11. 11. FILM INSTALLATION
  12. 12. XPEL VALUE PROPOSITION • We Sell Solutions First, Products Second • Offer Highest Quality Products • Generate Awareness, Loyalty Through Marketing Campaigns and Referral Programs
  13. 13. SALES DRIVERS Who You Are Enthusiast First Time Buyer/Long Term Owner Serial Vehicle Leaser Your car is your passion This is a largest investment, it needs to be protected Looking to save on You buy what they damage charges at want you to buy return “Coast” Winter Weather China Middle East Early adopter: ex: California Denver, SLC, Alberta Acid Rain Sand Dealership Customer Where You Are
  14. 14. CUSTOMER BASE • Independent Installers ~ 70% of Customers • New Car Dealerships • Retail Public / Catalog • International Distributors ~ 30% of Sales • Largest Customer 7% of Sales International Canada China Middle East
  15. 15. GROWTH PROSPECTS • Dealerships Need Tangible Products • PPF Often Tops List of Most Profitable* • Rock Chips Continues as Top CSI Complaint • Independent Installers Seek New Products • Where Will Penetration Go? *AddOnAuto 2013 Auto Accessories Annual Trend Report
  16. 16. INDUSTRY GROWTH PROSPECTS • Current Industry: 2-4% Penetration • Select Markets 20%+ • US 15M SAAR – 15M * 10% Penetration * $120 wholesale per car – = $180M at wholesale industry size
  17. 17. REQUIREMENTS FOR GROWTH • Invest in XPEL Brand • Increase Product Awareness – Push – Consumer Awareness – Pull – Dealership Education • Develop Labor Force • Open and Expand Markets Globally • Create New Verticals

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