XPEL - 10-Q quarterly report FY

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38858

XPEL, INC.

(Exact name of registrant as specified in its charter)

Nevada

20-1117381

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

711 Broadway St., Suite 320

San Antonio

Texas

78215

(Address of Principal Executive Offices)

(Zip Code)

Registrant's telephone number, including area code: (210) 678-3700

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	XPEL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 27,560,985 shares of common stock outstanding as of May 8, 2026.

TABLE OF CONTENTS


			Page
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Changes in Stockholders' Equity			4
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			30
Item 4. Controls and Procedures			30

Part II - Other Information
Item 1. Legal Proceedings			32
Item 1A. Risk Factors			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 3. Defaults Upon Senior Securities			33
Item 4. Mine Safety Disclosures			33
Item 5. Other Information			33
Item 6. Exhibits			34

Signatures			34

Part I. Financial Information

Item 1. Financial Statements

XPEL, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)


	(Unaudited)		(Audited)
	March 31, 2026		December 31, 2025
Assets
Current
Cash and cash equivalents	$	45,106	$	50,864
Accounts receivable, net	53,515		49,846
Inventory	131,575		122,755
Prepaid expenses and other current assets	7,002		6,651
Income tax receivable	—		581
Total current assets	237,198		230,697
Property and equipment, net	24,102		15,797
Right-of-use lease assets	19,656		21,561
Intangible assets, net	48,446		49,620
Deferred tax asset, net	625		—
Other non-current assets	7,020		5,574
Goodwill	57,400		59,277
Total assets	$	394,447	$	382,526
Liabilities
Current
Current portion of notes payable	$	—	$	59
Current portion lease liabilities	5,741		6,094
Accounts payable and accrued liabilities	61,365		54,289
Income tax payable	1,389		—
Other short-term liabilities	8,728		10,558
Total current liabilities	77,223		71,000
Deferred tax liability, net	—		120
Other long-term liabilities	9,553		9,511

Non-current portion of lease liabilities	15,081		16,710

Total liabilities	101,857		97,341
Commitments and Contingencies (Note 12)
Stockholders’ equity
Preferred stock, $0.001 par value; authorized 10,000,000; none issued and outstanding	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 27,705,220 and 27,682,807 issued, respectively	28		28
Additional paid-in-capital	18,680		18,049
Accumulated other comprehensive loss	(943)		(135)
Retained earnings	275,684		265,339
Treasury stock, 146,645 and 78,624 shares at cost, respectively	(5,938)		(2,999)
Stockholders' equity	287,511		280,282
Non-controlling interest	5,079		4,903
Total stockholders’ equity	292,590		285,185
Total liabilities and stockholders’ equity	$	394,447	$	382,526

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,
	2026		2025
Revenue
Product revenue	$	88,714	$	78,712
Service revenue	28,640		25,093
Total revenue	117,354		103,805

Cost of Sales
Cost of product sales	52,365		48,439
Cost of service	13,759		11,470
Total cost of sales	66,124		59,909
Gross Margin	51,230		43,896

Operating Expenses
Sales and marketing	15,163		11,875
General and administrative	23,056		20,901
Total operating expenses	38,219		32,776

Operating Income	13,011		11,120

Interest expense	4		75
Foreign currency exchange gain	(280)		(235)

Income before income taxes	13,287		11,280
Income tax expense	2,782		2,694
Net income	10,505		8,586
Net income attributed to non-controlling interest	160		—
Net income attributable to stockholders of the Company	$	10,345	$	8,586

Earnings per share attributable to stockholders of the Company
Basic	$	0.37	$	0.31
Diluted	$	0.37	$	0.31
Weighted Average Number of Common Shares
Basic	27,589		27,655
Diluted	27,666		27,676

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2026		2025
Other comprehensive income
Net income	$	10,505	$	8,586
Foreign currency translation	(808)		827
Total Comprehensive income	9,697		9,413
Total Comprehensive income attributable to:
Stockholders of the Company	9,537		9,413
Non-controlling interest	160		—
Total comprehensive income	$	9,697	$	9,413

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)


Stockholders' Equity - Three Months Ended March 31,
	Common Stock			Additional Paid-in-Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Equity attributable to Stockholders of the Company		Non-Controlling Interest		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balance as of December 31, 2024	27,652	$	28	$	15,550	—	$	—	$	214,113	$	(4,236)	$	225,455	$	—	$	225,455
Net income	—	—		—		—	—		8,586		—		8,586		—		8,586
Foreign currency translation	—	—		—		—	—		—		827		827		—		827
Stock-based compensation	10	—		586		—	—		—		—		586		—		586
Balance as of March 31, 2025	27,662	28		16,136		—	—		222,699		(3,409)		235,454		—		235,454

Balance as of December 31, 2025	27,683	28		18,049		(79)	(2,999)		265,339		(135)		280,282		4,903		285,185
Net income	—	—		—		—	—		10,345		—		10,345		160		10,505
Foreign currency translation	—	—		—		—	—		—		(808)		(808)		—		(808)
Stock-based compensation	22	—		631		—	—		—		—		631		—		631
Purchase of treasury shares	—	—		—		(68)	(2,939)		—		—		(2,939)		—		(2,939)
Minority interest contribution	—	—		—		—	—		—		—		—		16		16
Balance as of March 31, 2026	27,705	$	28	$	18,680	(147)	$	(5,938)	$	275,684	$	(943)	$	287,511	$	5,079	$	292,590

See notes to condensed consolidated financial statements.

XPEL, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2026		2025
Cash flows from operating activities
Net income	$	10,505	$	8,586
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	1,623		1,535
Amortization of intangible assets	2,059		1,521
Gain on sale of property and equipment	(10)		—
Stock compensation	934		679
Provision for credit losses	343		73
Deferred income tax	(442)		(766)

Changes in assets and liabilities:
Accounts receivable, net	(4,267)		(3,915)
Inventory, net	(8,959)		(4,188)
Prepaid expenses and other current assets	(1,492)		(551)
Income taxes receivable and payable	1,493		2,954
Accounts payable and accrued liabilities	5,592		(2,700)
Net cash provided by operating activities	7,379		3,228
Cash flows used in investing activities
Purchase of property, plant and equipment	(9,715)		(1,003)
Proceeds from sale of property and equipment	40		2
Acquisition of businesses, net of cash acquired	—		(42)
Development of intangible assets	(218)		(513)
Net cash used in investing activities	(9,893)		(1,556)
Cash flows from financing activities
Restricted stock withholding taxes paid in lieu of issued shares	(303)		(93)
Repayments of notes payable	(59)		(77)
Payments of deferred acquisition consideration	(270)		—
Purchase of treasury shares	(2,939)		—
Net cash used in financing activities	(3,571)		(170)
Net change in cash and cash equivalents	(6,085)		1,502
Foreign exchange impact on cash and cash equivalents	327		(48)
(Decrease) increase in cash and cash equivalents during the period	(5,758)		1,454
Cash and cash equivalents at beginning of period	50,864		22,087
Cash and cash equivalents at end of period	$	45,106	$	23,541

Supplemental schedule of non-cash activities
Non-cash lease financing	$	158	$	832
Issuance of common stock for vested restricted stock units	$	1,227	$	190
Non-cash minority interest contribution	$	16	$	—
Supplemental cash flow information
Cash paid for income taxes	$	1,273	$	519
Cash paid for interest	$	—	$	89

See notes to condensed consolidated financial statements.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. INTERIM FINANCIAL INFORMATION

The accompanying (a) condensed consolidated balance sheet as of December 31, 2025, which has been derived from audited financial statements, and (b) unaudited interim condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared by XPEL, Inc. (“XPEL” or the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. However, in the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position, results of operations and cash flows of the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of results to be expected for the full year or for any other interim period, due to variability in customer purchasing patterns and seasonal, operating and other factors.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 27, 2026 (the "Annual Report") and with the Management's Discussion and Analysis of Financial Condition and Results of Operations section appearing elsewhere in this Report.

2. SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - The Company is based in San Antonio, Texas and sells, distributes, and installs protective films and coatings, including automotive paint protection film, surface protection film, automotive and commercial/architectural window films and ceramic coatings. The Company was incorporated in the state of Nevada, U.S.A. in October 2003.

Basis of Presentation - The condensed consolidated financial statements are prepared in conformity with United States Generally Accepted Accounting Principles ("U.S. GAAP") and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. The functional currency for the Company is the United States ("U.S.") Dollar. The assets and liabilities of each of its wholly-owned foreign subsidiaries are translated into U.S. dollars using the exchange rate at the end of the balance sheet date. Revenues and expenses are translated at the average exchange rates for the period. Gains and losses from translations are recognized in foreign currency translation included in accumulated other comprehensive loss in the accompanying consolidated balance sheets.

Segment Reporting - The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM reviews geographically segmented data as well as consolidated results on a monthly basis to evaluate performance and make resource allocation decisions. Each geographical segment exhibits similar economic characteristics, shares common products and services, has similar customer types, and uses similar distribution methods. As a result, these segments have been aggregated into a single reportable segment in accordance with the aggregation criteria under ASC 280, Segment Reporting.

Goodwill - Goodwill represents the excess purchase price over the fair value of tangible net assets acquired in acquisitions after amounts have been allocated to intangible assets. Goodwill is tested for impairment at the reporting unit level on an annual basis (at December 31) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company recognized no goodwill impairment during the three months ended March 31, 2026 and 2025, and there is no significant accumulated impairment of goodwill from prior periods. Refer to Note 6, Goodwill for more information related to goodwill.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Use of Estimates - The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and underlying assumptions are reviewed on an ongoing basis. Actual outcomes may differ from these estimates under different assumptions and conditions.

Accounts Receivable - Accounts receivable are shown net of allowances for expected credit losses of $0.4 million and $0.1 million as of March 31, 2026 and December 31, 2025, respectively. The Company evaluates the adequacy of its allowances by analyzing the aging of receivables, customer financial condition, historical collection experience, the value of any collateral and other economic and industry factors. Actual collections may differ from historical experience, and if economic, business or customer conditions deteriorate significantly, adjustments to these reserves may be required. When the Company becomes aware of factors that indicate a change in a specific customer’s ability to meet its financial obligations, the Company records a specific reserve for credit losses.

Property, Plant and Equipment - The following table presents geographic property, plant and equipment, net of accumulated depreciation, by region (in thousands):


	March 31, 2026		December 31, 2025
United States	$	19,550	$	11,056
Canada	2,309		2,440
Europe	1,134		1,243
Other	905		931
China	204		127
Consolidated	$	24,102	$	15,797

Goodwill - The following table presents geographic goodwill by region (in thousands):


	March 31, 2026		December 31, 2025
United States	$	24,811	$	24,811
China	10,656		12,165
Canada	10,219		10,392
Europe	5,945		6,084
Other	5,769		5,825
Consolidated	$	57,400	$	59,277

Intangible Assets - The following table presents geographic intangible assets, net by region as of (in thousands):


	March 31, 2026		December 31, 2025
China	$	21,094	$	19,724
United States	19,192		20,164
Canada	3,696		3,948
Europe	2,273		3,488
Other	2,191		2,296
Consolidated	$	48,446	$	49,620

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Provisions and Warranties - We provide a warranty on our products. Liabilities under the warranty policy are based on a review of historical warranty claims. Adjustments are made to the accruals as claims and data experience warrant. Our liabilities for warranties as of March 31, 2026 and December 31, 2025 were $0.3 million and $0.3 million, respectively. The following tables present a summary of our accrued warranty liabilities, which are recorded within the Company's accounts payable and accrued liabilities, for the three months ended March 31, 2026 and the twelve months ended December 31, 2025 (in thousands):


	2026
Warranty liability, January 1	$	307
Warranties assumed in period	341
Payments	(300)
Warranty liability, March 31	$	348


	2025
Warranty liability, January 1	$	738
Warranties assumed in period	472
Payments	(903)
Warranty liability, December 31	$	307

Recent Accounting Pronouncements Issued and Adopted

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which introduces a practical expedient for estimating credit losses on current receivables and contract assets. The expedient assumes that current conditions at the balance sheet date will persist through the forecast period. This standard becomes effective for fiscal years beginning after December 15, 2025, and interim periods within those years, with early adoption permitted. We adopted ASU 2025-05 as of March 31, 2026. The adoption did not have a material impact on our financial statements.

Recent Accounting Pronouncements Issued and Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses (DISE)", which requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. This standard becomes effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently assessing the effect that the adoption of this standard will have on our financial statements.

In September 2025, the FASB issued ASU 2025-06, "Targeted Improvements to the Accounting for Internal-Use Software", to modernize the accounting for software costs. The new guidance amends the existing standard that refers to various stages of a software development project to align better with the current software development methods, such as agile programming. This standard becomes effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods, with early adoption permitted. We are currently assessing the effect that the adoption of this standard will have on our financial statements.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements”. The guidance clarifies interim disclosure requirements and the applicability of Topic 270. This standard becomes effective for interim reporting periods with annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently assessing the effect that the adoption of this standard will have on our financial statements.

In December 2025, the FASB issued ASU 2025-12, “Codification Improvements”. The update includes amendments made to 33 issues. This standard becomes effective for annual reporting periods beginning after December 15, 2026 and interim periods within those annual reporting periods, with early adoption permitted. We are currently assessing the effect that the adoption of this standard will have on our financial statements.

3. REVENUE

Revenue recognition

The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods and services to a customer, in an amount that reflects the consideration that it expects to receive in exchange for those goods or services. This is achieved through applying the following five-step model:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, the Company satisfies a performance obligation

The Company generates substantially all of its revenue from contracts with customers, whether formal or implied. Sales taxes collected from customers are remitted to the appropriate taxing jurisdictions and are excluded from sales revenue as the Company considers itself a pass-through conduit for collecting and remitting sales taxes, with the exception of taxes assessed during the procurement process of select inventories. Shipping and handling costs are included in cost of sales.

Revenue from product and services sales is recognized when control of the goods, or benefit of the service, is furnished to the customer. This occurs at a point in time, typically upon shipment to the customer or completion of the service. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

Based upon the nature of the products the Company sells, its customers have limited rights of return and those that do occur have been immaterial. Discounts provided by the Company to customers at the time of sale are recognized as a reduction in sales as the products are sold.

Warranty obligations associated with the sale of our products are assurance-type warranties that are a guarantee of the product’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. Warranty expense is included in cost of sales.

We apply a practical expedient to expense direct costs of obtaining a contract when incurred because the amortization period would be one year or less.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order. Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order. The Company does not enter into commitments to provide goods or services that have terms greater than one year. In limited cases, the Company does require payment in advance of shipping product. Typically, product is shipped within a few days after prepayment is received. These prepayments are recorded as contract liabilities on the condensed consolidated balance sheet and are included in accounts payable and accrued liabilities (Note 9). As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient under the Accounting Standards Codification Topic 606 ("ASC 606") to omit disclosures regarding remaining performance obligations.

When the Company transfers goods or provides services to a customer, payment is due, subject to normal terms, and is not conditional on anything other than the passage of time. Typical payment terms range from due upon receipt to due within 30 days, depending on the type of customer and relationship. At contract inception, the Company expects that the period of time between the transfer of goods to the customer and when the customer pays for those goods will be less than one year, which is consistent with the Company’s standard payment terms. Accordingly, the Company has elected the practical expedient under ASC 606 to not adjust for the effects of a significant financing component. As such, these amounts are recorded as receivables and not contract assets.

The following table summarizes transactions within contract liabilities for the three months ended March 31, 2026 (in thousands):


Balance, December 31, 2025	$	4,795
Revenue recognized related to payments included in the December 31, 2025 balance	(4,604)
Payments received for which performance obligations have not been satisfied	8,296
Effect of foreign currency translation	(11)
Balance, March 31, 2026	$	8,476

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The table below sets forth the disaggregation of revenue by product category for the periods indicated below (in thousands):


	Three Months Ended March 31,
	2026		2025
Product Revenue
Paint protection film	$	61,664	$	56,441
Window film	23,257		18,635
Other	3,793		3,636
Total	$	88,714	$	78,712

Service Revenue
Software	$	2,226	$	2,118
Cutbank credits	2,095		3,673
Installation labor	23,105		18,650
Other	1,214		652
Total	$	28,640	$	25,093

Total	$	117,354	$	103,805

Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product. The following table represents our estimate of sales by geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors (in thousands):


	Three Months Ended March 31,
	2026		2025
United States	$	63,842	$	58,073
Canada	8,400		9,426
North America	72,242		67,499
China	11,709		8,107
Asia Other	5,693		4,550
Asia Pacific	17,402		12,657
EU, UK, and Africa	17,857		15,010
India and Middle East	6,767		6,077
Latin America	3,086		2,562
Total	$	117,354	$	103,805

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

4. PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following (in thousands):


	March 31, 2026		December 31, 2025
Furniture and fixtures	$	5,097		$	5,155
Computer equipment	5,981			5,892
Vehicles	1,122			1,178
Equipment	6,683			6,294
Leasehold improvements	14,489			14,067
Plotters	6,356			5,990
Construction in Progress	9,592			1,097
Total property and equipment	49,320			39,673
Less: accumulated depreciation	25,218			23,876
Property and equipment, net	$	24,102		$	15,797

Depreciation expense for the three months ended March 31, 2026 and 2025 was $1.6 million and $1.5 million, respectively.

5. INTANGIBLE ASSETS, NET

Intangible assets consists of the following (in thousands):


	March 31, 2026		December 31, 2025
Trademarks	$	1,693	$	1,663
Software	9,284		9,108
Trade name	1,145		2,240
Contractual and customer relationships	64,799		63,944
Non-compete	432		437
Other	731		732
Total at cost	78,084		78,124
Less: Accumulated amortization	29,638		28,504
Intangible assets, net	$	48,446	$	49,620

Amortization expense for the three months ended March 31, 2026 and 2025 was $2.1 million and $1.5 million, respectively.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

6. GOODWILL

The following table summarizes goodwill transactions for the three months ended March 31, 2026 and the twelve months ended December 31, 2025 (in thousands):


Balance at	2026
Balance at December 31, 2025	$	59,277
Purchase price allocation adjustments	(1,633)
Foreign exchange	(244)
Balance at March 31, 2026	$	57,400

Balance at	2025
Balance at December 31, 2024	$	44,126
Additions and purchase price allocation adjustments	13,826
Foreign exchange	1,325
Balance at December 31, 2025	$	59,277

For details related to acquisitions and purchase price allocations completed during the three months ended March 31, 2026, refer to Note 16.

7. INVENTORIES

The components of inventory are summarized as follows (in thousands):


	March 31, 2026		December 31, 2025
Raw materials	$	16,412	$	15,618
Work in process	2,585		1,826
Finished goods	112,578		105,311
	$	131,575	$	122,755

8. DEBT

REVOLVING FACILITIES

On September 11, 2025, the Company entered into the First Amendment (the “Amendment”) to its Credit Agreement, dated April 6, 2023 (as amended, the “Credit Agreement”) with Wells Fargo Bank, N.A., as Administrative Agent, and other lenders party thereto. The Amendment, among other things, extended the maturity of the Credit Agreement from April 6, 2026 to September 11, 2028. The Credit Agreement provides for secured revolving loans and letters of credit in an aggregate amount of up to $125 million, which is subject to the terms of the Credit Agreement. As of March 31, 2026 and December 31, 2025, the Company had no outstanding balances under the Credit Agreement. All capitalized terms in this description of the Credit Agreement, that are not otherwise defined in this Report, have the meaning assigned to them in the Credit Agreement.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Borrowings under the Credit Agreement bear interest, at XPEL’s option, at a rate equal to either (a) Base Rate or (b) Adjusted Term SOFR. In addition to the applicable interest rate, the Credit Agreement includes a commitment fee ranging from 0.20% to 0.25% per annum for the unused portion of the aggregate commitment and an applicable margin ranging from 0.00% to 0.50% for Base Rate Loans and 1.00% to 1.50% for Adjusted Term SOFR Loans. At March 31, 2026, these rates were 6.8% and 4.7%, respectively. Both the margin applicable to the interest rate and the commitment fee are dependent on XPEL’s Consolidated Total Leverage Ratio. The Credit Agreement's maturity date is September 11, 2028.

Obligations under the Credit Agreement are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in all of XPEL’s material property and assets.

The terms of the Credit Agreement include certain affirmative and negative covenants that require, among other things, XPEL to maintain legal existence and remain in good standing, comply with applicable laws, maintain accounting records, deliver financial statements and certifications on a timely basis, pay taxes as required by law, and maintain insurance coverage, as well as to forgo certain specified future activities that might otherwise encumber XPEL and certain customary covenants. The Credit Agreement provides for two financial covenants, as follows:

As of the last day of each fiscal quarter:

1.XPEL shall not allow its Consolidated Total Leverage Ratio to exceed 3.50 to 1.00, and

2.XPEL shall not allow its Consolidated Interest Coverage Ratio to be less than 3.00 to 1.00.

The Company also has a CAD $4.5 million (approximately $3.2 million USD as of March 31, 2026) revolving credit facility through a financial institution in Canada, and is maintained by XPEL Canada Corp., a wholly-owned subsidiary of XPEL. This Canadian facility is utilized to fund the Company's working capital needs in Canada. This facility bears interest at the Royal Bank of Canada’s prime rate plus 0.25% per annum and is guaranteed by the parent company. As of March 31, 2026 and December 31, 2025, no balance was outstanding on this line of credit.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table presents significant accounts payable and accrued liability balances as of the periods ending (in thousands):


	March 31, 2026		December 31, 2025
Trade payables	$	43,172	$	37,771
Payroll liabilities	6,180		7,814
Contract liabilities	8,476		4,795
Other liabilities	3,537		3,909
	$	61,365	$	54,289

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

10. OTHER SHORT-TERM LIABILITIES

The following table presents significant other short-term liability balances as of the periods ending (in thousands):


	March 31, 2026		December 31, 2025
Contingent consideration - acquisitions	$	8,721	$	10,530
Acquisition holdback payments	7		28
	$	8,728	$	10,558

The contingent consideration - acquisitions represents the estimated value of acquired inventory that may be sold above its net realizable value. Acquisition holdback payments refer to portions of the acquisition purchase price withheld at closing to address potential post-closing adjustments/obligations or other amounts otherwise payable.

11. FAIR VALUE MEASUREMENTS

ASC 820 prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy:

Level 1 – Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions.

Financial instruments include cash and cash equivalents, accounts receivable, accounts payable, our line of credit, and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, our line of credit, and short-term borrowings approximate fair value because of the near-term maturities of these financial instruments. The carrying value of the Company’s notes payable approximates fair value due to the relatively short-term nature and interest rates of the notes. The carrying value of the Company's long-term debt approximates fair value due to the interest rates being market rates.

The estimated fair value of debt is based on market quotes for instruments with similar terms and remaining maturities.

The Company has contingent liabilities related to future internal performance milestones and the estimated value of acquired inventory that may be sold above its net realizable value. The fair value of these liabilities was determined using discounted cash flow analyses and Monte Carlo Simulations based on the probability and timing of certain future payments under these arrangements. These liabilities are accounted for as Level 3 liabilities within the fair value hierarchy.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Level 3 liabilities measured at fair value on a recurring basis as of the dates noted below are as follows (in thousands):


	March 31, 2026		December 31, 2025
Level 3:
Contingent Liabilities	$	18,200	$	19,966

The following table presents a summary of the changes in fair value of Level 3 liabilities for the three months ended March 31, 2026 and the twelve months ended December 31, 2025, respectively (in thousands):


	March 31, 2026		December 31, 2025
Beginning balance	$	19,966	$	1,816
New acquisitions and measurement adjustments	—		25,037
Recognized contingent liabilities	(1,904)		(6,341)
Fair value adjustments	(118)		(613)
Effect of foreign currency translation	256		67
Ending balance	$	18,200	$	19,966

Level 3 contingent liabilities were updated during the reporting period as a result of valuation adjustments. The valuation adjustments are reflected in general and administrative expenses in the Consolidated Statements of Income for the three months ended March 31, 2026 and the twelve months ended December 31, 2025, respectively.

12. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business activities, the Company may be contingently liable for litigation and claims including those pertaining to customers, suppliers and former employees. Management believes that adequate provisions have been recorded in the accounts where required. Management also has determined that the likelihood of any class action or other litigation and claims having a material impact on our results of operations, cash flows or financial position is remote.

13. CAPITAL STOCK

Common Stock

Common stock shares issued at March 31, 2026 and December 31, 2025 were 27,705,220 and 27,682,807, respectively. Common stock shares outstanding at March 31, 2026 and December 31, 2025 were 27,558,575 and 27,604,183, respectively. Par value of these shares for these same dates was $0.03 million.

Preferred Stock

At March 31, 2026 and December 31, 2025 there were no preferred stock shares issued and outstanding.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Treasury Stock

On May 6, 2025, the Board approved a stock repurchase program that authorized the Company to purchase up to $50 million of the Company’s Common Stock. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities and other factors. The repurchase program may be suspended or discontinued at any time.

During the three months ended March 31, 2026, the Company repurchased 68,021 shares on the open market at an average price of $43.23 per share, for a total amount of $2.9 million, excluding brokerage commissions and accrued excise tax. No shares were repurchased during the three months ended March 31, 2025. As of March 31, 2026 and December 31, 2025, $44.1 million and $47.0 million were available for share repurchases under the program, respectively.

14. EARNINGS PER SHARE

We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes effect of granted incremental restricted stock units.

The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands except per share values):


	Three Months Ended March 31,
Numerator	2026		2025
Net income attributable to stockholders of the Company	$	10,345	$	8,586
Denominator
Weighted average basic shares	27,589		27,655
Dilutive effect of restricted stock units	77		21
Weighted average diluted shares	27,666		27,676
Earnings per share
Basic	$	0.37	$	0.31
Diluted	$	0.37	$	0.31

15. SEGMENT INFORMATION

The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM reviews geographically segmented data as well as consolidated results on a monthly basis to evaluate performance and make resource allocation decisions. Each geographical segment exhibits similar economic characteristics, shares common products and services, has similar customer types, and uses similar distribution methods. As a result, these segments have been aggregated into a single reportable segment in accordance with the aggregation criteria under ASC 280, Segment Reporting.

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The CODM reviews balance sheet information on a consolidated basis which is reflected in the Company's Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025. The CODM uses gross margin and income from operations to evaluate return on total assets in deciding whether to invest in the development and expansion of our consolidated operations or into strategic transactions, such as acquisitions. Both metrics are also used to monitor budget versus actual results, perform competitive benchmarking analyses, and are considered in evaluating our executives’ compensation.

The following table presents our significant expense categories included in our reported measure of segment profitability for the periods represented (in thousands):


	Three Months Ended March 31,
	2026		2025
Total revenue	$	117,354	$	103,805
Less:
Direct product costs	52,365		48,439
Direct non-product costs	13,759		11,470
Gross margin	51,230		43,896
Less:
Personnel costs	16,977		14,245
Sales and marketing costs	5,483		3,684
Facility expenses	3,404		2,672
Depreciation and amortization	3,069		2,510
Travel and entertainment	2,302		2,750
Information technology	1,906		1,548
Professional fees	2,322		1,656
Shipping	1,029		1,149
Other	1,727		2,562
Income from operations	13,011		11,120
Interest expense	4		75
Income tax expense	2,782		2,694
Foreign currency exchange gain	(280)		(235)
Net income	$	10,505	$	8,586

XPEL, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

16. ACQUISITIONS OF BUSINESSES

The Company completed no acquisitions during the three months ended March 31, 2026. Purchase price accounting for acquisitions completed during the year ended December 31, 2025 is not yet finalized as the valuation models related to identified intangible assets and goodwill included in these acquisitions are not yet complete. We anticipate finalizing the accounting for these acquisitions within 12 months of the completion of each respective acquisition date. Purchase price accounting for prior years has been finalized.

During the three months ended March 31, 2026, the Company recorded measurement period adjustments related to the 2025 acquisitions. These adjustments increased the provisional fair value of customer relationships by approximately $1.6 million with a corresponding decrease to goodwill of approximately $1.6 million. These adjustments resulted from updated valuation information and refined appraisals received during the measurement period. The adjustments were recognized in the current period in accordance with ASC 805 and had no material impact on the Company's results of operations for the current or prior periods.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and other users to assess the financial condition and results of operations of XPEL, Inc. (“XPEL” or the “Company”). Statements that are not historical are forward-looking and involve risks and uncertainties discussed under the heading “Forward-Looking Statements” in this Report and under “Business," "Risk Factors,” "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Financial Statements and Supplementary Data" in the Annual Report which is available on the SEC’s website at www.sec.gov.

Forward-Looking Statements

This quarterly report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to the safe harbor created by those sections. In addition, the Company or others on the Company’s behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences and/or web casts open to the public, in press releases or reports, on the Company’s internet web site, or otherwise. All statements other than statements of historical facts included in this Report or expressed by the Company orally from time to time that address activities, events, or developments that the Company expects, believes, or anticipates will or may occur in the future are forward-looking statements, including, in particular, the statements about the Company’s plans, objectives, strategies, and prospects regarding, among other things, the Company’s financial condition, results of operations and business, and the outcome of contingencies, such as legal proceedings. The Company has identified some of these forward-looking statements in this Report with words like “believe,” “can,” “may,” “could,” “would,” “might,” “forecast,” “possible,” “potential,” “project,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” “approximate,” “outlook,” or “continue” or the negative of these words or other words and terms of similar meaning. The use of future dates is also an indication of a forward-looking statement. Forward-looking statements may be contained in the notes to the Company’s condensed consolidated financial statements and elsewhere in this Report, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are based on current expectations about future events affecting the Company and are subject to uncertainties and factors that affect all businesses operating in a global market as well as matters specific to the Company. These uncertainties and factors are difficult to predict, and many of them are beyond the Company’s control. Factors to consider when evaluating these forward-looking statements include, but are not limited to:

Operational Risks

•A material disruption from our contract manufacturers or suppliers, or our inability to obtain a sufficient supply of products from alternate suppliers, could cause us to be unable to meet customer demands or increase our costs.

•Any continued reliance on contract manufacturers and suppliers exposes us to product quality and variable cost risks.

•Our results depend on the timely availability of raw materials, components, and commodities at acceptable prices.

•If we do not manage or control the quality of our products, we may be unable to meet customer demands and incur higher costs.

•Our planned investment in manufacturing and supply chain assets exposes us to execution risks.

Risks Related to Our Business in China

•Failure to meet the PRC government’s complex regulatory requirements on and significant oversight over our business operation could result in a material adverse change in our operations and the value of our securities.

•We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.

Risks Related to Our Business and Industry

•We are highly dependent on the automotive industry. A prolonged or material contraction in automotive sales and production volumes could adversely affect our business, results of operations and financial condition.

•Our operating results can be adversely affected by inflation, changes in the cost or availability of raw materials, labor, energy, transportation and other necessary supplies and services.

•The after-market automotive product supply business is highly competitive. Competition presents an ongoing threat to the success of our Company.

Strategic Risks

•We depend on our relationships with independent installers and new car dealerships and their ability to sell and service our products. Any disruption in these relationships could harm our sales.

•We may not be able to identify, finance and complete suitable acquisitions and investments, and any completed acquisitions and investments could be unsuccessful or consume significant resources.

•If we are unable to maintain our network of sales and distribution channels, it could adversely affect our net sales, profitability and the implementation of our growth strategy.

Legal, Regulatory and Compliance Risks

•We may incur material losses and costs as a result of product liability and warranty claims.

•Violations of the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. could have a material adverse effect on us.

•Our failure to satisfy international trade compliance regulations, and changes in U.S. government sanctions, could have a material adverse effect on us.

•Changes in U.S. administrative policy, including changes to existing trade agreements and any resulting changes in international relations, could adversely affect our financial performance.

Liquidity Risks

•We may seek to incur substantial indebtedness in the future.

•We cannot be certain that additional financing will be available on reasonable terms when required, or at all.

•Our variable rate indebtedness exposes us to interest rate volatility, which could cause our debt service obligations to increase significantly.

Risks Relating to Common Stock

•If research analysts issue unfavorable commentary or downgrade our Common Stock, the price of our Common Stock and its trading volume could decline.

•Short sellers of our stock may be manipulative and may have driven down and may again drive down the market price of our Common Stock.

•Our stock price has been, and may continue to be, volatile.

•We may issue additional equity securities or engage in other transactions that could dilute our book value or affect the priority of our Common Stock, which may adversely affect the market price of our Common Stock.

General Risk Factors

•General global economic and business conditions affect demand for our products.

•A public health crisis could impact our business.

•Economic, political and market conditions can adversely affect our business, financial condition and results of operations.

We believe the items we have outlined above are important factors that could cause estimates included in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this Report or elsewhere by us or on our behalf. We have discussed these factors in more detail in the Annual Report as supplemented in this Report. These factors are not necessarily all of the factors that could affect us. Unpredictable or unanticipated factors that we have not discussed in this Report could also have material adverse effects on actual results. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our shareholders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution when considering our forward-looking statements.

Company Overview

We are a supplier of protective films, coatings and related services primarily to the automobile aftermarket, new car dealerships and automobile original equipment manufacturers, or OEMs. The majority of our revenue is derived from the sale of our automotive products and related services while the remainder of our revenue is derived from non-automotive products including architectural window film and marine and flat surface protection films.

The Company began as a software company designing vehicle patterns used to produce cut-to-fit protective film for headlights and painted surfaces of automobiles. In 2007, we began selling automotive paint protection film products to complement our software business. As paint protection film technology improved and became more durable, awareness and adoption of paint protection film has continued to increase, driving significant industry growth over the last several years. Initial adoption of paint protection film came primarily from luxury car enthusiasts in the United States and Canada. These enthusiasts were primarily served by a growing automotive aftermarket of independent installers of automotive paint protection and window films. Internationally, nascent demand began to build as awareness and adoption in the United States and Canada continued to increase. Over the last few years, new car dealership interest in the product has increased due to their exposure to the aftermarket installer network, while OEM interest in the product increased through their exposure to the new car dealerships who were selling the product.

Strategic Overview

Our strategy initially centered on how best to serve and grow our network of independent installers in the US and Canada and to sell products internationally through independent distributors while simultaneously building and enhancing the XPEL brand. This “best-in-class” service strategy was then extended to new car dealerships and OEMs. Internationally, while our initial market entry has primarily been through indirect distribution, we desire to ultimately sell directly to the majority of the top 25 car markets in the world, which is an important element of our acquisition strategy. To that end, we have acquired distributors in several international markets including India, Thailand, Japan and, most recently, China.

To complement our channel network and distribution, we are investing in manufacturing and the supply chain with a goal to be a high quality, low cost producer for our products which we expect will significantly improve our operating margin and allow more control over the end-to-end manufacturing process.

Key Business Metric - Non-GAAP Financial Measures

Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets. We believe that the most important measure to the Company is Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”).

EBITDA is a non-GAAP financial measure. We believe EBITDA provides helpful information with respect to our operating performance as viewed by management, including a view of our business that is not dependent on (i) the impact of our capitalization structure and (ii) items that are not part of our day-to-day operations. Management uses EBITDA (1) to compare our operating performance on a consistent basis, (2) to calculate incentive compensation for our employees, (3) for planning purposes including the preparation of our internal annual operating budget, (4) to evaluate the performance and effectiveness of our operational strategies, and (5) to assess compliance with various metrics associated with the agreements governing our indebtedness. Accordingly, we believe that EBITDA provides useful information in understanding and evaluating our operating performance in the same manner as management. We define EBITDA as net income plus (a) total depreciation and amortization, (b) interest expense, net, and (c) income tax expense.

The following table is a reconciliation of Net Income to EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):


	(Unaudited)
	Three Months Ended March 31,
	2026		2025		% Change
Net Income	$	10,505	$	8,586	22.4	%
Interest	4		75		(94.7)	%
Taxes	2,782		2,694		3.3	%
Depreciation	1,623		1,535		5.7	%
Amortization	2,059		1,521		35.4	%
EBITDA	$	16,973	$	14,411	17.8	%

Use of Non-GAAP Financial Measures

EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of our financial performance under GAAP and should not be considered as alternatives to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of ongoing operations; and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Results of Operations

The following tables summarize the Company’s consolidated results of operations for the three months ended March 31, 2026 and 2025 (dollars in thousands):


	Three Months Ended March 31, 2026		% of Total Revenue		Three Months Ended March 31, 2025		% of Total Revenue		$ Change		% Change
Total revenue	$	117,354	100.0	%	$	103,805	100.0	%	$	13,549	13.1	%
Total cost of sales	66,124		56.3	%	59,909		57.7	%	6,215		10.4	%
Gross margin	51,230		43.7	%	43,896		42.3	%	7,334		16.7	%
Total operating expenses	38,219		32.6	%	32,776		31.6	%	5,443		16.6	%
Operating income	13,011		11.1	%	11,120		10.7	%	1,891		17.0	%
Other income	(276)		(0.2)	%	(160)		(0.2)	%	(116)		72.5	%
Income tax	2,782		2.4	%	2,694		2.6	%	88		3.3	%
Net income	$	10,505	9.0	%	$	8,586	8.3	%	$	1,919	22.4	%

The following tables summarize revenue results for the three months ended March 31, 2026 and 2025 (dollars in thousands):


	Three Months Ended March 31,				%		% of Total Revenue
	2026		2025		Inc (Dec)		2026		2025
Product Revenue
Paint protection film	$	61,664	$	56,441	9.3	%	52.5	%	54.4	%
Window film	23,257		18,635		24.8	%	19.8	%	18.0	%
Other	3,793		3,636		4.3	%	3.3	%	3.5	%
Total	$	88,714	$	78,712	12.7	%	75.6	%	75.9	%

Service Revenue
Software	$	2,226	$	2,118	5.1	%	1.9	%	2.0	%
Cutbank credits	2,095		3,673		(43.0)	%	1.8	%	3.5	%
Installation labor	23,105		18,650		23.9	%	19.7	%	18.0	%
Training and other	1,214		652		86.2	%	1.0	%	0.6	%
Total	$	28,640	$	25,093	14.1	%	24.4	%	24.1	%

Total	$	117,354	$	103,805	13.1	%	100.0	%	100.0	%

Because many of our international customers require us to ship their orders to freight forwarders located in the United States, we cannot be certain about the ultimate destination of the product. The following table represents our estimate of sales by summarized geographic regions based on our understanding of ultimate product destination based on customer interactions, customer locations and other factors for the three months ended March 31, 2026 and 2025 (dollars in thousands):


	Three Months Ended March 31,				%		% of Total Revenue
	2026		2025		Inc (Dec)		2026		2025
United States	$	63,842	$	58,073	9.9	%	54.4	%	56.0	%
Canada	8,400		9,426		(10.9)	%	7.2	%	9.1	%
North America	72,242		67,499		7.0	%	61.6	%	65.1	%
China	11,709		8,107		44.4	%	10.0	%	7.8	%
Asia Other	5,693		4,550		25.1	%	4.8	%	4.3	%
Asia Pacific	17,402		12,657		37.5	%	14.8	%	12.1	%
EU, UK, and Africa	17,857		15,010		19.0	%	15.2	%	14.4	%
India and Middle East	6,767		6,077		11.4	%	5.8	%	5.9	%
Latin America	3,086		2,562		20.5	%	2.6	%	2.5	%
Total	$	117,354	$	103,805	13.1	%	100.0	%	100.0	%

Product Revenue. Product revenue for the three months ended March 31, 2026 increased 12.7% over the three months ended March 31, 2025. Product revenue represented 75.6% of our total revenue compared to 75.9% in the three months ended March 31, 2025. Revenue from our paint protection film product line increased 9.3% over the three months ended March 31, 2025. Paint protection film sales represented 52.5% and 54.4% of our total consolidated revenues for the three months ended March 31, 2026 and 2025, respectively. The total increase in paint protection film sales was due to increased demand for our film products across multiple regions.

Revenue from our window film product line grew 24.8% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Window film sales represented 19.8% and 18.0% of our total consolidated revenues for the three months ended March 31, 2026 and 2025, respectively. This increase was driven by continued demand resulting from increased product adoption in multiple regions for automotive window film led by our China and APAC regions resulting primarily from increasing our direct presence is these regions.

Geographically, we experienced continued growth in most of our regions during the three months ended March 31, 2026 including 44.4%, 25.1%, 19.0%, and in China, Asia-Other, and EU/UK/Africa, respectively. The increase in China was driven primarily by increased demand and incremental direct revenue resulting from the completion of our acquisition of our China distributor late in the third quarter of 2025. The increases in Asia-Other and EU/UK/Africa were driven primarily by increased product adoption and increased demand. Revenue from our Canada region declined 10.9% primarily due to timing of distributor sales. Normalizing for this timing, revenue would have grown 5.7%.

Service revenue. Service revenue consists of revenue from fees for DAP software access, cutbank credit revenue, which represents the value of pattern access provided with eligible product revenue, revenue from the labor portion of installation sales in our Company-owned installation centers, revenue from our dealership services business and revenue from training services provided to our customers.

Service revenue grew 14.1% over the three months ended March 31, 2025. Installation labor revenue increased 23.9% over the three months ended March 31, 2025 due mainly to increased demand across our dealership services and OEM networks. Cutbank credit revenue declined due primarily to a reduction in the estimated fair value of a cutbank credit.

Total installation revenue (labor and product combined) increased 24.3% over the three months ended March 31, 2025. This represented 23.7% and 21.5% of our total consolidated revenue for the three months ended March 31, 2026 and 2025, respectively. These increases were primarily due to increased demand across our dealership services and OEM networks. Adjusted product revenue, which combines the cutbank credit revenue service component with product revenue, increased 10.2% over the three months ended March 31, 2025.

Cost of Sales

Cost of sales consists of product costs and the costs to provide our services. Product costs consist of material costs, personnel costs related to warehouse personnel, shipping costs, warranty costs and other related costs to provide products to our customers. Cost of service includes the labor costs associated with installation of product in our installation facilities, costs of labor associated with pattern design for our cutting software and the costs incurred to provide training for our customers.

Product costs for the three months ended March 31, 2026 increased 8.1% over the three months ended March 31, 2025. Cost of product sales represented 44.6% and 46.7% of total revenue in the three months ended March 31, 2026 and 2025, respectively. Cost of service revenue grew 20.0% during the three months ended March 31, 2026. Refer to the Gross Margin section below for discussion of this cost relative to revenue.

Gross Margin

Gross margin for the three months ended March 31, 2026 grew approximately $7.3 million, or 16.7%, compared to the three months ended March 31, 2025. For the three months ended March 31, 2026, gross margin represented 43.7% of revenue compared to 42.3% for the three months ended March 31, 2025.

The following tables summarizes gross margin for product and services for the three months ended March 31, 2026 and 2025 (dollars in thousands):


	Three Months Ended March 31,				%		% of Category Revenue
	2026		2025		Inc (Dec)		2026		2025
Product margin	$	36,349	$	30,273	20.1	%	41.0	%	38.5	%
Service margin	14,881		13,623		9.2	%	52.0	%	54.3	%
Total	$	51,230	$	43,896	16.7	%	43.7	%	42.3	%

Product gross margin for the three months ended March 31, 2026 increased approximately $6.1 million, or 20.1%, over the three months ended March 31, 2025 and represented 41.0% and 38.5% of total product revenue for the three months ended March 31, 2026 and 2025, respectively. The increase in gross margin percentage was due primarily to decreases in product costs, favorable changes in product mix and improved operating leverage.

Service gross margin increased approximately $1.3 million, or 9.2%, over the three months ended March 31, 2025. This represented 52.0% and 54.3% of total service revenue for the three months ended March 31, 2026 and 2025, respectively. The decrease was primarily due to the reduction in the estimated fair value of a cutbank credit. Excluding this reduction, service gross margin was 54.6%.

Operating Expenses

Sales and marketing expenses for the three months ended March 31, 2026 increased 27.7% compared to the same period in 2025. This increase was primarily due to increased personnel and marketing costs associated with ongoing growth in multiple markets as the Company increased the number of sponsorships and increased marketing efforts to dealerships and end customers. These expenses represented 12.9% and 11.4% of total consolidated revenue for the three months ended March 31, 2026 and 2025, respectively.

General and administrative expenses grew approximately $2.2 million, or 10.3% over the three months ended March 31, 2025. This increase in cost was due primarily to increases in personnel, occupancy costs and professional fees. Total General and Administrative expenses represented 19.6% and 20.1% of total consolidated revenue for the three months ended March 31, 2026 and 2025, respectively.

Income Tax Expense

Income tax expense for the three months ended March 31, 2026 increased $0.1 million from the three months ended March 31, 2025. Our effective tax rate was 20.9% for the three months ended March 31, 2026 compared with 23.9% for the three months ended March 31, 2025. The decrease in our effective rate was primarily due to a higher proportion of foreign earnings taxed at lower rates.

Net Income

Net income for the three months ended March 31, 2026 increased 22.4% to $10.5 million.

Liquidity and Capital Resources

Our primary sources of liquidity are available cash and cash equivalents, cash flows provided by operations and borrowing capacity under our credit facilities. As of March 31, 2026, we had cash and cash equivalents of $45.1 million. For the three months ended March 31, 2026, cash provided by operations was $7.4 million and as of March 31, 2026 we had $128.2 million in funds available under our credit facilities. We expect to continue to have sufficient access to cash to support working capital needs, pay for capital expenditures (including acquisitions), and to pay interest and service debt. We believe we have the ability and sufficient resources to meet these cash requirements by using available cash, internally generated funds and borrowings under committed credit facilities. We are focused on continuing to generate positive operating cash to fund our operational and capital investment initiatives. We believe we have sufficient liquidity to operate for at least the next 12 months from the date of this quarterly report.

Operating activities. Cash provided by operations totaled $7.4 million for the three months ended March 31, 2026, compared to $3.2 million during the three months ended March 31, 2025. This increase in cash flows from operating activities was mainly due to the timing of income tax payments and increases in accounts payable and other accrued liabilities offset by increases in inventory related to planned seasonal volume increases.

Investing activities. Cash used in investing activities totaled approximately $9.9 million during the three months ended March 31, 2026 compared to $1.6 million during the three months ended March 31, 2025. This increase was due primarily to an increase in deposits related to our supply chain initiatives.

Financing activities. Cash used in financing activities during the three months ended March 31, 2026 totaled $3.6 million compared to $0.2 million during the same period in the prior year. This change was due primarily to the purchase of treasury shares during 2026.

Debt and contingent obligations as of March 31, 2026 and December 31, 2025 totaled approximately $18.2 million and $20.0 million, respectively.

Future Liquidity and Capital Resource Requirements

We expect to fund ongoing operating expenses, capital expenditures, acquisitions, interest payments, tax payments, credit facility maturities, future lease obligations, and payments for other long-term liabilities with cash flow from operations and borrowings under our credit facility. In the short-term, we are contractually obligated to make lease payments and make payments on contingent liabilities related to certain completed acquisitions. In the long-term, we are contractually obligated to make lease payments, for contingent liabilities, and for repayment of borrowings on our line of credit. In addition, if an opportunity presents itself, we may increase our borrowing under available credit arrangements or sell debt or equity securities, although we may not be able to complete any such financing on terms acceptable to us or at all. We believe that we have sufficient cash and cash equivalents, as well as borrowing capacity, to cover our estimated short-term and long-term funding needs.

Credit Facilities

On September 11, 2025, XPEL entered into the Amendment to the Credit Agreement with Wells Fargo Bank, N.A., as Administrative Agent, and other lenders party thereto. The Amendment, among other things, extended the maturity of the Credit Agreement from April 6, 2026 to September 11, 2028. The Credit Agreement provides for secured revolving loans and letters of credit in an aggregate amount of up to $125 million, which is subject to the terms of the Credit Agreement. As of March 31, 2026 and December 31, 2025, the Company had no outstanding balances under the Credit Agreement. All capitalized terms in this description of the credit facility that are not otherwise defined in this Report have the meaning assigned to them in the Credit Agreement.

Obligations under the Credit Agreement are secured by a first priority perfected security interest, subject to certain permitted encumbrances, in all of XPEL’s material property and assets.

As of the last day of each fiscal quarter:

1.XPEL shall not allow its Consolidated Total Leverage Ratio to exceed 3.50 to 1.00, and

2.XPEL shall not allow its Consolidated Interest Coverage Ratio to be less than 3.00 to 1.00

As of March 31, 2026 and December 31, 2025, the Company was in compliance with all debt covenants.

Critical Accounting Estimates

There have been no material changes to the Company’s critical accounting estimates from the information provided in the Annual Report on Form 10-K.

Related Party Relationships

There are no family relationships between or among any of our directors or executive officers. There are no arrangements or understandings between any two or more of our directors or executive officers, and there is no arrangement, plan or understanding as to whether non-management stockholders will exercise their voting rights to continue to elect the current Board. There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of our affairs.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have operations that expose us to currency risk in the British Pound Sterling, the Canadian Dollar, the Euro, the Mexican Peso, the New Taiwanese Dollar, the Australian Dollar, the Indian Rupee, the Chinese Yuan Renminbi, the Japanese Yen, and the Thai Baht. Amounts invested in our foreign operations are translated into U.S. Dollars at the exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded as accumulated other comprehensive income, a component of stockholders’ equity in our consolidated balance sheets. We do not currently hedge our exposure to potential foreign currency translation adjustments.

Borrowings under our revolving lines of credit subject us to market risk resulting from changes in interest rates related to our floating rate bank credit facilities. For such borrowings, a hypothetical 200 basis point increase in variable interest rates may result in a material impact to our financial statements. We do not currently have any derivative contracts to hedge our exposure to interest rate risk. During each of the periods presented, we have not experienced a significant effect on our business due to changes in interest rates.

If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

Management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, our CEO and CFO have each concluded that as of the end of the period covered by this Report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

From time to time, we are made parties to actions filed or have been given notice of potential claims relating to the ordinary conduct of our business, including those pertaining to commercial disputes, product liability, patent infringement and employment matters.

While we believe that a material impact on our financial position, results of operations or cash flows from any such future claims or potential claims is unlikely, given the inherent uncertainty of litigation, it is possible that an unforeseen future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact. We do and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and receivables and make appropriate adjustments to such estimates based on experience and developments in litigation. As a result, the current estimates of the potential impact on our financial position, results of operations and cash flows for the proceedings and claims described in the notes to our consolidated financial statements could change in the future.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Part I, Item IA of the Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

In May 2025, the Board approved a stock repurchase program that authorized the Company to purchase up to $50 million of the Company’s Common Stock. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities and other factors. The repurchase program may be suspended or discontinued at any time. It is XPEL’s intention to comply with applicable securities laws, including insider trading laws, when engaging in transactions in the Company’s common stock.

The following table provides information relating to our purchases of our Common Stock during the three months ended March 31, 2026:


	Total number of shares (or units) purchased (a)(b)	Average Price paid per share (or unit) (a)(b)		Total number of shares (or units) purchased as part of publicly announced plans or programs (c)	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (d)(e)
January 1-31	—	$	—	—	$	—
February 1-28	—	—		—	—
March 1-31	68,021	43.23		68,021	44,059,160
Total	68,021	$	43.23	68,021	$	44,059,160

(a)(b) In May 2025, the Company's Board of Directors authorized the Company to repurchase up to $50 million of the Company's common stock. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities and other factors. The repurchase program may be suspended or discontinued at any time.

(d) Shares that may be purchased under the program exclude shares of Common Stock that may be surrendered to satisfy statutory minimum tax withholding obligations in connection with the vesting of restricted stock units and performance stock units issued to employees.

(e) Excludes a 1% excise tax imposed by the Inflation Reduction Act.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are being filed or furnished with this quarterly report on Form 10-Q:


Exhibit No.	Description	Method of Filing
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

101	The following materials from XPEL’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Comprehensive Income, (iv) the unaudited Consolidated Statements of Equity, (v) the unaudited Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements	Filed herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		XPEL, Inc. (Registrant)

	By:	/s/ Barry R. Wood
		Barry R. Wood
		Senior Vice President and Chief Financial Officer
May 8, 2026		(Authorized Officer and Principal Financial and Accounting Officer)

XPEL - 10-Q quarterly report FY

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