GEO Investing

XPEL Technologies Corp. (XPLT) manufactures, distributes, and sells after-market automotive products primarily in the United States. The company announced that the company acquired Parasol Canada, a distributor of paint protection and window tint products for the Canadian market. The total acquisition price is CAD$4.8 million which was partially funded by US$1.9M in new borrowing. XPEL acquired inventory and receivables of approximately CAD$1.5 million as part of the purchase price.

Management Expects Improved Margins

A majority of Parasol Canada’s revenue is derived from the sale of XPEL products. Commentary from management:

“This acquisition is in line with our strategy to get closer to our end customers, particularly in key international markets. Parasol Canada is a profitable business with a successful management team who will remain with the company. The acquisition allows us to gain a dedicated Canadian sales force, add to our portfolio of products, gain margin and expand our proven U.S. marketing initiatives into Canada, where we believe there is significant opportunity for growth as we integrate under the XPEL brand.”

Benefits of this transaction:

  • The margin of XPEL should  see an immediate increase because Parasol Canada was selling (marking up)  XPEL products to its end customers.
  • Parasol’s 5 year supply agreement to exclusively supply paint protection film and window tint to the 79 locations that comprise the Protex Paint Protection and Pelti Window Film franchise groups will XPEL access to greater sales channels.

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