XPEL, Inc. (NASDAQ:XPEL) Q4 2022 Earnings Call Transcript

So when we are talking about those dealerships starting to adopt paint protection film in some capacity, no matter how small or how big the coverage, it’s almost certainly touching consumers disproportionately that don’t fit that enthusiast and that’s one of the reasons that we have invested in these businesses and one of the reasons that we are doing this, because that is a direct goal of this. So when you hear us talk about any kind of cut attachment of paint protection film into those dealerships we touch with a dealership services, it’s almost certainly beyond the scope of the traditional enthusiast buyer.

Tim Moore: Great. That’s an color to hear and just given how big that market it’s just gigantic. On pricing, I know you mentioned last quarter and you had a remark earlier about price hikes taken. Is it fair to assume that you might have only been able to take pricing from maybe 50% to 60% of your markets since you probably couldn’t take it in China or a few distributor markets, and what I am getting at is, can that provide an additional pricing power for next year in those other markets you are not taking it?

Ryan Pape: Yeah. I think you are right in that, it’s probably hit less than 50% of the customer base for the — in the quarter or for the portion of it in the quarter, but it actually probably hit even less of the revenue, because it was really product oriented and not service oriented. The pricing on the service side is just handled in a completely different way. So from a customer base, you are probably directionally accurate, and then from a total revenue basis, it’s probably even less than that, it’s probably in the 30s, but it actually 30% of revenue that it touched in some way. So, yeah, we — the — we are continuing to look at that. We have been more restrained in pricing than our competitive set for a variety of intentional reasons. So that is a further opportunity for us this year, but we haven’t made firm decisions on, but the strategy to do what we did and then leave the rest available to us was intentional and it’s something for us this year.

Tim Moore: Great. That’s helpful, Ryan. What about — just on the Rivian relationship, I believe that started ramping up slowly probably in October. Can you just maybe an update on that, and if I remember, is there are three European direct OEM programs that you are doing, how’s that going?

Ryan Pape: Yeah. So the Rivian program did start in terms of our work at our facility near their plant and then it’s been successful and we are in the ramp-up stage now and that’s a combination of getting all the vehicles on the schedule that we need and then having our team available to do the installations. I think the initial feedback is quite positive, and provided we can get the full allocation of vehicles, I think, there’s interest — potential interest from both sides in expanding this. It’s had a higher than expected take rate from the end buyer. So I think it’s positive all the way around and we just need to collectively then scale it up to its full potential. So I think we are super pleased with that relationship. There was a delay in getting that going last year until October and that cost us substantially with that delay, but we were ultimately happy to do it and glad that we did it and it’s now something to build on.