Greetings, and welcome to the XPEL Technologies’ Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. John Nesbett of IMS. Thank you, Mr. Nesbett. You may now begin.

Good morning and welcome to our conference call to discuss XPEL Technologies’ financial results for the 2014 fourth quarter and year end. On the call today we’ve Ryan Pape, XPEL’s President and Chief Executive Officer who will review the company’s financial results and provide an overview of the business operations. Immediately after his prepared remarks, we’ll take questions from call participants. I’d like to take a moment now to read the safe harbor statement. During the course of this call, we’ll make certain forward-looking statements regarding XPEL Technologies Corp and its business, which may include but not be limited to anticipated use of proceeds from any capital transactions, expansions into new markets, and execution of the company’s growth strategy. Often but not always forward-looking statements can be identified by the use of words such as planned, is expected, expects, scheduled, intends, contemplates, anticipates, believes, proposes or variations of such words or phrases or state that certain actions, events, results may, could, would, might or will be occur or be achieved. Such statements are based on the current expectations of the management of XPEL. The forward-looking events or circumstances discussed in this call may occur by certain specified dates or not at all, and could differ materially as a result of known and unknown risks factors and uncertainties affecting the company's performance and acceptance of the company’s products, economic factors, competition, the equity markets generally and other factors beyond the control of XPEL. Although XPEL has attempted to identify important factors that could cause actual results, events or results to differ materially from those described in the forward-looking statements, there maybe other factors that could cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed except as required by applicable security laws, forward-looking statements speak only as of the date in which they are made. And XPEL undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Okay with that concluded, I’d now like to turn the call over to Ryan Pape. The floor is yours, Ryan.

Thanks John, and good morning and welcome to our inaugural earnings conference call. I trust that all and most of you got a chance to review our fourth quarter and full-year 2014 which were released earlier this morning. We’ve strong fourth-quarter performance and that concluded a year of great progress for the company. We had obviously significant revenue growth. We broadened our international presence, and continued the development of our distribution channels. Through our sales and marketing efforts, we are seeing car dealerships, installers and car enthusiasts alike recognize that XPEL is the premier paint protection film. And as a result our training classes which are a good proxy for our business are as full as they have ever been, and we are seeing the flow of new customers into the industry is really at an all-time high. So first, we’ll run through the financials and then I'll provide a broader overview of the operations. Revenue in the fourth quarter grew 53% to $7.6 million as compared to right about $5 million in the fourth quarter of 2013. We are pleased with this revenue performance and like I said it caps off a very strong year. Revenues were down a bit sequentially from the third quarter into the fourth; due primarily to the reduction in orders from Parasol Canada who reduced inventory prior to our acquisition of them which we consummated in February; and as a result of a reduction in ordering out of China, which I'll speak to a bit later. Now it’s important to note that as the numbers get bigger, the revenue growth percentage we’ve seen you know will moderate somewhat, a non-aggressive reduction from the great growth we’ve seen this year. But it's probably unrealistic to consistently deliver growth in excess of 50% as we become…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Thank you. Our first question comes from [Adam Goldfein], a private investor. Please go ahead.

My first question is about SG&A. And you did address it during your comments, but I thought I heard you say Q4 you had SG&A was 24% of revenue. I had it at 21.8. Is my math wrong?

I think if you're looking at the financial statements, then you are certainly correct. It may just be an error in my notes here.

Okay so that was for the full year I'm looking at. So I guess if I look at the past you know SG&A as a percentage of revenue went, you know was declining as I would expect to get the benefits of operational leverage. This year was the first time that it increased. So my question is and you know you gave some of the reasons, but I guess my question is what would be the expectation going forward to several years into the future, do you have a goal or an expectation for what SG&A expense will be as a percentage of revenue?

We do not have a goal in terms of you know what we expect. I think you know candidly when you look at the revenue growth we’ve had, you know this is a business where if we grow 60% or 70% or 50% you know that 50% or 70% you know more boxes of film that need to go out the door. So it’s taken a lot to keep up with that growth, and you know we’ve sort of eagerly thrown resources at that to make sure that we can deliver the sales; because we only get one opportunity to make that sale with the prospective new customer. So I don't have a target percentage for you, because we are not looking out that far. But it’s certainly a reasonable conclusion to think that the SG&A expense should not continue to rise with revenue as a lot of the increases to SG&A are really just building a foundation of the team that will serve us for a lot more revenue.

Okay, so going forward I guess you would expect that SG&A should decline as a percentage of revenue then?

You know we would expect it to decline over time. I can't tell you whether you should expect that in the first quarter or second-quarter or third-quarter, but that should be the trend.

So my next question is, do you have any estimate of what percentage XPEL has of the paint protection film market?

We’ve some internal numbers that we operate on, but there’s really little to no market research about paint protection film. And our computers are not in a position to release financials that would give us any guidance on really how much they are selling. So it’s obviously something we look at to try and benchmark what we’re doing and estimate the opportunity. But it's not a metric that I am comfortable releasing, because it's just an internally-drive number.

Okay, so do you think you are the market leader or not in terms of the market share?

I can't say for market share because we really just don't know. I think we’re the market leader certainly in terms of how we’re positioned and how we’re perceived.

Okay, yeah that I've heard. Any feeling for how your major competitors -- my impression was that there was you know a large difference in quality that occurred, maybe I think when the ULTIMATE film came out. Do you know if the perceived difference -- or is the competition catching up at all, or are you seeing any -- them getting any closer?

Yeah, I mean if you look at when the ULTIMATE product was launched as compared to all the other paint protection films on the market, and then you look at what's available today. There’s no question that the competitive products are better. So there’s really two components to that though, one; you know we’re hoping to launch, we’ve the next-generation of our film this year, which we’re really excited about. But the other side is you know while it’s nice to have a vastly superior product to all of your computers and certainly you know everyone will want to take that if they can. But just sort of the anecdote that I just gave about a customer who received a paint protection film that was of poor quality, you know arguably you know that does as much harm as having the vastly superior product does us good. Because it creates a perception that as an industry and as a class of products, that the product is somehow inferior. So really you know I welcome better products in the industry. I hope all the products are better, and I'm glad that some of them are better in particular. And that they have displaced other providers’ really inferior products, because it helps elevate the class of paint protection film. And I'm confident that even with other quality products in the market, the way we go to market is so different that we can easily still differentiate ourselves even as products are better.

Okay, you had mentioned the new UK office as sort of your beachhead in Europe. Are you planning on establishing something similar in Continental Europe or is UK close enough to the rest?

The UK is certainly close enough for sort of an operational headquarters. If you look at what we are doing in the US, we have and in Canada, we have inventory deployed at multiple you know strategic locations around the country just for a quick access to product. And I would anticipate that we’ll do that in Europe as well.

Okay, did you give a breakout? I heard a few numbers, like you said 37% of international. Could you just give if you could, a breakout of like how much is the US versus Canada versus Europe or you know --?

Yeah of course for competitive reasons, the only breakout that we gave is a percentage that's outside the US. And certainly that will be revised with the Canadian acquisition coming on board for 2015. So I don't have a region-by-region breakout for you.

Do you have an estimate of how much market penetration the paint protection film has as a percentage of new cars sales? I've heard the number of like 4% or something like that and you were hoping as an industry to get up to something to like 10%, is that around right?

The number that sort of, the consensus has sort of reached really if you look at the US market, is that 4%-5% number. Again without anybody really studying the market, it's hard to say how accurate that is. But I think that it’s probably not too far off, and I think, you know absolutely a key to growth in the industry and through our growth is that the market for paint protection film expands, and that that penetration rate increases and every indication is that, that's happening.

[Operator Instructions]. And the next question is from [Sean Marconi], a private investor. Please go ahead.

I just have a question regarding the reduction of installation facilities in China, and your new exclusive relationship working with Exquisite. From my due diligence, I’d love to have about 90 installation facilities. Can you touch a little more on that, and how all those people get trained?

Yeah, so what we’ve done in China is we’ve gone through a process to try and evaluate what is the best strategy, and that's still ongoing. And what has been determined is that several of the other distributors that we had were not adding value, and were really just competing with the others on price. So that resulted in the termination of a couple of distributors, and then you know ET is the only one that's remained. So slightly different than exclusive agreements or the exclusive by default at the moment, and we’re still evaluating a lot of options for the market. So relative to the training I think and to them, they are not principally in the business of doing installations. They sell to installers and new-car dealerships and things through a network of provincial distributors around the country. But it's not their installation facilities, and so the training is obviously just as critical in China as it is anywhere else. And we’ve got to offer training and through provincial level distributors offer training to local installers, and those who want to come into the market.

And then as you continuously market your brand and build the XPEL brand on a global basis, I found it pretty interesting that you're getting into window tinting and selling XPEL-branded window tint film. Is that something, I mean obviously you guys are focused on the paint protection film market. But is that something that you guys are going to continue to pursue as a revenue growth driver?

Yeah, that's one of the strategic areas that we’re looking at, we’ve actually been investing in and working on. We think that you know the paint protection film is a really hard product to be able to train and grow new customers. And we’re really good at it, so we're really happy about that. Window tint is a bit more commoditized, but the industry is enormous. So it’s sort of a natural fit for us to look at bringing in window tint on the back of paint protection film where we’ve won the hard business, and now we can get the easier sale. So it's something we’re looking at and we’ve spent quite a bit of time and money on that project. And I would expect to see us do more of that in the coming year.

Okay, and then one last question and I'll jump back in the queue since there’s a bunch of people that would like to ask questions. How many suppliers or how many people in the US manufacture paint protection film?

Well, there’s a number of different providers of paint protection films in the US. And the supply chain among them, you know has some differences and some commonality. But there’s probably you know 10 different brands active in the US and of one varying degree or another.

Okay, and would it ever make sense for XPEL to manufacture their own film and how? So is that always something that will just be outsourced?

No, we are open to you know any and all opportunities, certainly as you look at gross margin and trying to weigh margin versus CapEx and other risks. But you know we’ve a long-term view of the industry and we’re interested in and open to and actively look at all possible you know avenues strategically for the business.

Thank you. The next question is from [Max Bolanski] of [indiscernible]. Please go ahead.

As an investor, I would like to just ask you a question going forward. There seems to be a -- you know this is not a criticism but a lack of investor awareness of this company. Do you have any plans to increase investor awareness and/or take this company off the TSX Venture, move it to the [States], and increase liquidity also?

Sure, I think a great question, Max. Relative to just awareness of the company, I think you know we’ve retained IMS to help us with that. I think probably you’ve noticed the increase in the quality of the releases. And obviously you know this being our first conference call which has been planned out for 4 or 5 months shows that we’re serious about getting that message out. So we think that's an initial you know very positive step. We’re asked a long time, a lot of the time about US listing, again to create more liquidity and generate more awareness. You know it’s absolutely something that we want to do. You know being small, having this growth we’ve been focused on our still limited resources on sort of the day-to-day on getting these acquisitions done, and now on completing the integration so that we’re a well-oiled machine. But you know personally as a shareholder I am well aware of the benefits of the US listing, and believe strongly in it. It’s something that is of definite interest to the company. I just cannot provide an exact timeframe at this point.

I'll ask another quick question. What are your expansion plans as far as company-owned stores in the United States? I know you’ve got what is it, four or five of them now? Is there a plan to roll more out?

Sure, so we’ve five locations now. And you know one of the strategies behind those locations was to address a lack of independent installers in certain markets, where there was just literally no one doing the work, and we wanted to come in and do it. The other side was that you know we learned a lot from doing that. Our location in San Antonio is probably one of the top grossing paint protection film installation centers in the world. And San Antonio by many measures relative to paint protection film is sort of an average market. It’s not a good market, but we’ve done it exceptionally well. But as important to that with those locations what they really become is the service centre for that local area. So I'll give you an example, we’ve a location in Houston. Well, we’ve a location in Houston, and that means we’ve inventory in Houston. That means we have salespeople in Houston. That means we’re able to invest in doing a large exhibition at the Houston Auto Show. All of that for the benefit of all of the installers in Houston, because obviously our one location could never satisfy a metro of that size. So what we’ve have seen is that you know while the installation business in Houston is good, the greatest benefit to the company is what we’ve been able to do in support of all of the other installers in that market. And the aggregate films sold in that metro is much higher as a result. So we look at that, we do not have any other locations planned. But we look at it opportunistically and think if it makes sense, if there is a unique need or a unique opportunity we would continue to pursue it as we’ve these others. But we don't have any planned at this point.

Thank you. The next question is from Marco [indiscernible] of Deutsche Bank. Please go ahead.

I just wanted to ask you a quick question about your international sales and just your international growth strategy. You mentioned that 37% of sales in Q4 came from international. I was wondering what your long-term targets for the international markets are? And where do you see that growth heading? Right now, internationally how fast do you think your sales can grow?

I don't know if I can say how fast I think they could grow, but I think from everything that we see, there’s nothing that we see about this product that is specific to the US. We think it really is a global product and there’s global demand. Particularly globally, there is different regions that you know need the product more than others, which is a key contributor. Obviously in the Middle East, the conditions warrant the product in a way that you don't have in mid-America. And that's a positive trend, and so over the long term we think that the percentage of sales overall as a percentage of the total will continue to increase. I think that's a trend that will continue. It’s one that we’re really focused on. So you know the actual international growth rate versus domestic growth rate I think over you know a sort of relatively short period of time is sort of hard to say. Because sometimes these things happen in fits and starts, but we do expect that the international component of the business as a percentage of the total will continue to increase. And I think you know it ultimately could exceed half the business.

Just one quick follow-up. I was wondering in terms of your new products that you're going to be launching in 2015, will those be paint protection products or will you be expanding into other products like window tinting?

We’re planning to upgrade and launch new paint protection film products as well as really enter the market in some other areas.

Thank you. The next question is from Ian Cassel of MicroCapClub. Please go ahead.

My question relates to sort of the products that you are going to be coming out with in 2015, in particular the new or the better paint protection films. Can you talk a little bit about some of the new attributes or added attributes of those films?

I'd love to, but not at this point. We’re are still sort of finalizing the line up. And also we’d like to hold any competitive advantage as long as possible is I am sure you can understand.

Thank you. I’d now like to turn the conference back over to management for any closing remarks.

Yeah, I’d just like to thank everyone. We had good participation, and thank you for participating. And we look forward to speaking with you next quarter.