Greetings, welcome to the XPEL, Inc. Q1 2023 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. John Nesbett of IMS Investor Relations. Sir, you may begin. Good morning, and welcome to our conference call to discuss XPEL's financial results for the Q1 of 2023. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer, and Barry Wood, XPEL's Senior Vice President and Chief Financial Officer, will provide an overview of the business operations and review the company's financial results. Immediately after the prepared comments, we'll take questions from our call participants. I'll now take a moment to read the safe harbor statement. During the course of this call, we'll make certain forward-looking statements regarding XPEL, Inc. and its business, which may include, but not be limited to anticipated use of proceeds from capital transactions, expansion into new markets, and execution of the company's growth strategy. Such statements are based on our current expectations and assumptions, which are subject to known and unknown risk factors and uncertainties that could cause our actual results to materially differ from those expressed in these statements. These factors are discussed in detail in our most recent Form 10-K, including under Item 1A, Risk Factors, filed with the Securities and Exchange Commission. XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. With that, we'll now turn the call over to Ryan. Go ahead, Ryan. Thanks, John, and good morning, everyone. Welcome to our Q1 2023 call. Clearly, we're off to a great start in 2023. In the quarter, revenue grew 19.5% to $85.8 million. This was our second-highest revenue quarter in history, which is great considering Q1 is almost always and historically been our lowest seasonal quarter of the year. U.S. revenue grew 22.8% compared to Q1 2022 to $51 million. This was up sequentially by a little over 7%. Result seems to coincide with Q1 USR performance, which finished better than most expected, and rising new car inventory levels were a contributing factor to this better-than-expected result, and we benefited from that. As we discussed in the past, we've been mindful of potential impacts of the challenges current macro environment, such as higher interest rates that could impact the new car buyer. So far, new car buyers have proven to be quite resilient. I think we're seeing that in our results. The luxury share of the U.S. market reached an all-time high in Q1, which is a good point for us as well because we continue to over-index into that segment of the market. Our China region finished right where we expected and what we talked about with the inventory destocking and changes coming out of the lockdowns last year, revenue declining approximately 25% versus the prior year quarter. We should reach the trough in China sales in Q1. We expect incremental sequential quarter-on-quarter increases for the rest of the year. We're still forecasting annual 2023 total China revenue to be pretty flat relative to 2022, given the slow start of the year. Having said that, now we're bullish on the long-term opportunity in China. As we discussed last call, we're with the end of the COVID restrictions, we're moving quickly to get our team set up and get on the ground in China to support our distributor, car dealership, and OEM relationships that we have. We expect that to be operational towards the end of the Q2. China was able to host their large dealer conference, so similar to what we did in March that was attended by over 1,000 participants, and we were able to have our team on the ground for the first time in three years, and it was very energetic, very positive. We're happy about, you know, that transition and the marketing and the market opening to us. It's gonna be a big part of our focus for the remainder of the year. The other regions had strong revenue quarters as well. Europe, Middle East, APAC, LATAM, all record quarters, which was great. Again, for most of these, Q1 is typically the lowest quarter of the year seasonally, so all positive results there. We think that sets us up for a strong Q2. We expect Q2 revenue to be in the $100 million to maybe $102 million range. That should exceed $100 million in quarterly revenue for the first time in our history. That's a nice milestone. And this assumes just incremental improvement in China, but still down single digits, mid-single digits compared to Q2 2022, for the quarter. Overall, our outlook for the year really hasn't changed substantially from our view in February. Our business has remained strong in spite of the macro uncertainty, and our current view sees that continuing. We're certainly aware of the possibility of some delayed onset pain from this tightening cycle and the impact on vehicle affordability, Right now, we haven't seen it impacting our business. In a quarter with a lot of positives, we certainly wanna highlight our gross margin performance at 41.9%. As you recall, we guided to around 42% gross margin by the end of the year, and we're a little bit ahead of schedule on that, which is great. We continue to see some margin benefit from lower China mix, as we've discussed in the past, and we continue to gain leverage on fixed costs embedded in gross margin. The preponderance of the continued gross margin improvement is mainly the result of our ongoing work around our bill of materials cost and a little bit of pricing benefit from last year. Even though we're here sooner than we planned, we'll expect to finish the year at 42% range plus or minus a few basis points. We may bounce around a little bit Q2 and Q3 as we get there with the different mix of products and different mix of channels. All in all, you know, really good and very happy about that. As a result, Q1 EBITDA grew 43.9% to $17.1 million, reflecting an EBITDA margin of 19.9% and a sequential increase from Q4 a little over 29%. Really nice operating leverage for the quarter there. We just held our 2023 dealer conference. It was a huge success. We had 650 customers in attendance from 33 countries. This was the largest conference we've had in our history. The energy was amazing. Really the conference is not about XPEL. We're not standing there droning on and on about our products or lecturing people on it. It's really about the experience our customers get to improve their business in a small format, breakout session, and interacting with each other. It was amazing, and it's one of the most important things we do every year. We also announced during the conference latest additions to our FUSION PLUS ceramic coating line, which included a FUSION PLUS AIRCRAFT product, as well as some incremental products to our automotive FUSION PLUS line. These products for our coatings business will continue to slowly expand the verticals we target as we've discussed our plans to do over the longer term. You've seen marine products and then now this aircraft product. You know, we're working towards this incremental vertical expansion over time, as well as going deeper in the current verticals like we did with the launch of additional automotive FUSION PLUS products. It's been well received, and we're gonna continue to do more of it. One of the sessions of great importance at our dealer conference was training and a reveal of our DAP NEXT, our newest version of our DAP platform. We got great feedback. There was a lot of excitement about what that means and what's to come. We're gonna be retiring the old version in the next three to four months. That will enable us to even further focus all of our development on the new platform, which is really more than just what we've traditionally done with software as a means to cut and manufacture the product on demand, but really as a tool to help our customers run their businesses better, which by extension is obviously good for them, but then by extension is good for us. With the retirement of the old platform, that'll allow us to put that much more energy driving that forward. That's gonna be a big milestone for us sort of by the end of the summertime. The dealer conference was great overall. I look forward to doing it again next February. Additionally, we completed a small acquisition on May first, which is the first acquisition we've done this year. It was around a $5 million purchase of a dealership services business, which we'll integrate into our overall dealership services segment of the business. It'll add about $4 million in revenue. Great addition for us, expands our footprint, checks all of the strategic boxes. It's immediately accretive, and brings, you know, new product and service revenue as we further expand that dealership services. Our inventory finished at $84.6 million for the quarter, up around $4 million from Q4, which was consistent with our expectations, especially with the reduced demand out of China for Q4 of last year and Q1 of this year. As we discussed in addition to that, you know, we've had a number of vendor commitments we've chosen to honor as we work to bring inventory levels down overall. It continued to take us time to unwind this, but this, you know, should be the peak, and we have a solid plan to manage our days on hand down over the coming quarters to optimize cash flow but still support the planned revenue growth. In this business, the one thing that we do not ever wanna do is run out of product. The wheels fall off when that happens. We're making good progress, and we will see lower days on hand as we progress throughout the year. All in all, really great quarter for us. Appreciate all the efforts of our team, particularly the 150 or so that dedicated their weekend to our dealer conference and put on an amazing show for our customers. Great quarter. With that, Barry, we'll turn it over to Barry to add a little color on the numbers. Go ahead, Barry. Thanks, Ryan, and good morning, everyone. Just to cover off a couple more points on revenue. Looking at the product lines, combined paint protection film and cut bank revenue grew a little over 14% in the quarter and was up sequentially a little over 5%. Our window film product line revenue grew 29.9% quarter-over-quarter to $15 million, which represented 17.5% of our total revenue. This is up sequentially from Q4 by a little over 28%. Really solid quarter for window film. Our Q1 VISION product line revenue grew 6.4% to $1.2 million, and this was up a little over 13% sequentially. Our VISION product line tends to be seasonal, with December, January, and February as low months, but we have momentum in this line as March was a pretty strong month for us. Our OEM revenue had a solid quarter, growing a little over 50% versus Q1 2022 to $3.5 million. Total installation revenue, combining product and service, grew 34% in the quarter and represented 17.2% of total revenue. All in all, really good performance across the board in the quarter. Our Q1 SG&A expense grew 18.9% to $21 million and represented 24.5% of revenue. Our expense growth was a bit muted in the quarter with the out-of-period impact from the timing of our annual dealer conference. The impact was about $800 thousand in Q1 2022, so we'll see those conference expenses hit in Q2 this year. Even considering that, we saw some really nice leverage in the quarter. Our Q1 net income grew 46.5% to $11.4 million, reflecting net income margin of 13.3%, and EPS was $0.41 per share. Sequentially, net income was up just under 37%. One contributing factor is that we had a record revenue month in March, where revenue was about $8 million higher than December. Our DSO has been fairly consistent, so it follows that our AR would increase as it did, so by about $6.6 million over year-end. We're not seeing any movement in terms of customer delinquencies, which as a percent of revenue has remained constant. That was one factor. As Ryan mentioned, we did increase our inventory levels by about $4 million. That had a negative impact as well. Finally, timing of AP payments can impact operating cash flow either way from quarter to quarter. This quarter, that impact was negative by approximately $2.5 million. There's no doubt the increase in our inventory levels over the last few quarters has been a primary driver in our decreased efficiency in our cash conversion cycle. We expect our days sales outstanding and our days payable outstanding to be somewhat consistent in the coming quarters. Given that, we'll begin to see positive impacts to future operating cash flows as our inventory levels normalize. Also in April, we closed on a new $125 million credit facility. The primary driver in doing this was just to get better financial terms in addition to increasing our borrowing capacity. This new facility nicely enhances our financial position to execute on all of our strategic initiatives. While we expect to be able to fund most of our acquisition pipeline with cash, the new facility provides maximum financial flexibility and plenty of dry powder for the foreseeable future. Again, really good start to the year and we've got some good momentum going into Q2. Looking forward to talking again next quarter. With that operator, we'll now turn the call over for questions. Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you. Our first question is coming from Steve Dyer with Craig-Hallum. You may proceed. Thanks. Good morning, guys. Nice results. Thanks, Steve. We talked a bit about this last quarter. I'm just kind of wondering, continue to keep an eye on and sort of in the marketplace, one of the questions is as inventory sort of starts to loosen a little bit, if you're seeing any change just among the preloads, or the, you know, the dealers that preload, the wrap on vehicles here as things get a little looser and maybe that becomes more of a point of negotiation as opposed to preloading it and tell you that you gotta have it. Sure. Yeah, no, I think there's a couple dynamics there. We've seen it both ways. When you look at where our products are most often preloaded, we see it much more with the window tint product line than we do the paint protection film to begin with. The amount of preloading, at least for substantial coverage paint protection film that we see across the whole network is actually relatively low. I don't think we have a huge exposure to that and window film as a preload is really a necessity in many markets. That should be pretty durable in any environment. On the flip side, you know, we've seen, definitely seen interest from dealers in terms of adding, products as the market adjustments that had been so prevalent have been, you know, winding down or being substantially reduced. I don't see significant exposure to that, you know, as that inventory dynamic continues to shift. That's a great color. Thank you. Just on the acquisition that you made in the dealer services segment, wondering if you could just get a little bit more specific as to what this company does, how it integrates with what you're already doing, et cetera? In our dealership services, we're doing, you know, relatively high volume in term by attach rate, installation of paint protection or window film for car dealerships directly. This is typically a type of business that our existing aftermarket network isn't as interested in with the preload high volume. That's what we did with the PermaPlate acquisition and a subsequent acquisition two years ago. This is really just another smaller version of a business like that we can integrate to do that work for dealerships. Okay. I guess given, you know, some marginal revenue there, along with, the Q1 beat, any sort of change to your view on the year of 20%-25% revenue growth? No, I think we're still there and what we're seeing now, you know, keeps us on track for that. I don't think our position really has fundamentally changed. We're not inherently more pessimistic about the year, you know, nor are we more optimistic than we were two months ago. I think we're feeling good about the business. Still a little cautious just as everyone is, but no fundamental change in our outlook. Got it. All right. Appreciate the color, guys. Good luck. Thank you. Thank you. Our next question is coming from Jeff Van Sinderen with B. Riley. You may proceed. Good morning, everyone. Let me add my congratulations. Just wanted to see if maybe you can update us on where we are with the attach rate at this point? I know we've got some moving parts, maybe just touch on that if you could? For PPF? I mean, yeah, for PPF, I mean, I, we, you know, this is a, a slow-moving, but ever-increasing rate, you know, best that we can tell. Depending on how you look at that, you're looking at the U.S., you know, you're still talking, probably high single digits with some amount of paint protection film attached. I would tell you that, you know, from a quarter to quarter or even, you know, multiple quarters sequentially, you know, this isn't something we're able to, define probably more accurately than that. We still see the upward momentum of attach rate for the paint protection film product for sure. Okay, good. Great to see automobile inventory broadly improving on dealer lots. Where do you think we are in the process of inventory levels on dealer lots kind of normalizing and maybe could you speak more about what you're seeing in your dealer services business and how you expect that business to trend over the next coming quarters? Sure. Yeah. I mean, I'm hesitant to correlate, you know, the overall trend with how it impacts our dealership services business, only because for various reasons we're, you know, have geographic concentration and even concentration around certain makes that perform differently just in terms of the manufacturer's ability to restock that inventory. As it pertains to our business directly, we've seen a broad-based improvement in that for the most part. I think probably affecting, you know, 60%, 70% of the dealerships that we service have seen either a substantial improvement in their inventory situation or a complete improvement, and that's been a positive for us this quarter. We've seen in that segment some of the highest numbers we've had, both from a car count standpoint and then from an overall revenue standpoint. That trend has certainly been good for us, and I think as we, you know, as the rest of the 25%-40% of those dealerships sort of that we service kind of get back in that situation, that'll continue to be positive for us. Okay, good. I wonder if you could speak a little bit more about the DAP software feedback on that, what's left to be done on the new, the new software initiative as you basically end of life the old software. I would say in terms of what is left to be done, you know, as anyone who's ever been involved in a software project knows it never ends, so it will never end, so it'll never be done. I think in terms of some of the core things that we're trying to do to help our customers with options for process to be more efficient, for compensation and commission to make sure they're paying people right. Then ultimately, we wanna create a platform to enable more pricing discovery about what the cost of these installations should be. The industry has a very simplistic pricing structure today, and maybe that's fine or maybe it's not. Without the technology and the data behind it, you don't know. From that standpoint, you know, we're talking, you know, many iterative cycles here left to go to bring that value. Right now we're really focused on the incremental wins and then shifting people to this platform. There's gonna be work to do on this for years to come to hit exactly all the things that we wanna do. Okay. Fair enough. Thanks for taking my questions and continued success. Thanks, Jeff. Thank you. Our next question is coming from Tim Moore with EF Hutton. You may proceed. Thanks and congratulations on the strong gross margin and the continued execution of the plan. A few of my questions were already answered, but let me start off with, did I hear correctly that the OEM sales were up 50% sequentially? Can you maybe update if that was driven a bit more by Rivian or if it came from kind of the European smaller OEM relationships you have over there? It was 50% over the prior year, Q1 2022. It's really a combination of things. Certainly Rivian is a contributor of that as that program produced its first revenue in October. You know, we've been working to scale that, you know, each month-on-month sequentially after that. That is a driver of that. At the same time, our other programs have all grown as well in terms of their efficiency or vehicle count or as manufacturing log jams have been released. That's put more vehicles through the system too. It's really a mixed bag, but certainly Rivian is now contributing to that on a year-over-year basis where there, where there wasn't revenue in the prior year. Great. That's helpful color. Just to follow up on window tinting. You know, it seems like some investors are overlooking that growth profile. I know it's a smaller revenue base, but it's been very consistent with the growth rate. How are you maybe trying to improve the attach rate? Do you have... I would assume you have dedicated teams for the window side to drive sales growth. Are they broken off from the PPF team? Our bifurcation there is really about the automotive products and then our architectural window films, where we do have dedicated team on the architectural side. In terms of automotive, you know, that's handled by our core team. You look at we've got the three core product lines, paint protection, window film and the coatings business, and our goal is to drive content per vehicle across all of those. In various channels, in various ways, sometimes a sale of one versus the other is easier. The window film business for automotive obviously is more established. There are more people that are familiar with it, so there are times where we're leading with that and then trying to come back in with paint protection film and coatings or anything else. It really depends. You know, our job is to get as much dollar share content on as many cars as we can, that's job number one. You know, less important than that is, you know, our ideal split among the different product types. I think you've seen that with the window tint is one where we're able to provide, you know, good service and good value and win market share in a slower growing and much more established business. That is either the cause of the paint protection film business and the coatings business, or it will ultimately be a driver of the paint protection film and the coatings business, depending on the order in which it happened. Great. That's helpful, Ryan. My last question is, I was curious, you know, how fast is maybe the ceramic coating growing the past few quarters? I saw those, that news announcement last week for the four new coating options. You know, maybe could you just talk a little bit about ceramic coating? Yeah. Well, still on a small base, we've seen, you know, growth, you know, generally far in excess of our overall growth rates, right? It's a much higher growth product on a, on a smaller base. You know, that's one where we think more product differentiation can actually help grow it faster. You know, not all of the products we sell are necessarily equally benefited by extensive product differentiation. In terms of the ceramic coating, we actually think that it will be as it intersects the installation characteristics and sort of the customer preferences there. You know, the expansion that we did, even within automotive, ignoring sort of the aircraft component, is one that we really think will be a catalyst to continue the high rate of sales growth we've seen there because we have more options for more people on how we get the product on the car. Yeah, really happy about that. Thanks, Ryan and Barry. I look forward to seeing you at the conference this week in New York. That's it for my questions. Thanks, Tim. Thank you. We have reached the end of our question and answer session. I'll now hand the call back over to management for any closing remarks. Yeah, thank you all for joining us, and thanks to our team for a great quarter, and we'll speak to you soon. Bye-bye. Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.