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spk03: Good day, ladies and gentlemen, and welcome to the Expel third quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and we will open up the floor for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jen Bellido. Ma'am, the floor is yours.
spk00: Thank you. Good morning, and welcome to our conference call to discuss Expel's financial results for the 2022 third quarter. On the call today, Ryan Pape, Expel's President and Chief Executive Officer, and Barry Wood, Expel'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 will take questions from our call participants. I'll take a moment now to read the Safe Harbor Statement. During the course of this call, we will make certain forward-looking statements regarding Expel Inc. and its business, which may include, but are not limited to, anticipated use of proceeds from capital transactions, expansion 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 plans, is expected, expects, scheduled, intends, contemplates, anticipates, believes, proposes, or variations, including negative variations of such words and phrases, or state that certain actions, events, or results may, could, would, might, or will be taken, occur, or be achieved. Such statements are based on the current expectations of the management of Expel. The forward-looking events and circumstances discussed in this call may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company performance and acceptance of the company's products, economic factors, competition, the equity markets generally, and many other factors beyond the control of Expel. Although Expel has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that 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 securities laws, forward-looking statements speak only as of the date on which they are made, and Expel 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, I'll turn the call over to Ryan Pape. Go ahead, Ryan.
spk07: Thank you, Jen, and good morning, everyone, and welcome for me also to our third quarter 2022 call. Clearly, we had another great quarter, solid top and bottom line performance. Revenue for the quarter grew 31% to $89.8 million, which was another record quarterly revenue for us. In the U.S., we had good results. New car sales for the quarter were pretty much flat from a year ago, but when you dig a little deeper into the numbers, some of the manufacturers had substantially better results than others, including Tesla as one example, so that was helpful to us. U.S. new car inventories are improving, but they're doing so off of record lows. Some manufacturers saw significant increases in inventory in September from September a year ago, while others didn't. We do see benefit of that in terms of our dealership services revenue and gross margin as these inventories recover. Our stay pay costs for some of our employees decline. And we expect the inventory recovery will continue into the fourth quarter and that that's positive for the business. In China, we saw some incremental improvement in the third quarter from the second when some of the larger lockdowns occurred. Q3 revenues in China grew 39% sequentially, but just 4.1% compared to Q3 2021. While China posted good September new car sales, we still see significant uncertainty going into next year. You can just look at the news today from and based on the current forecast, keeping in mind we have a sell-in versus sell-through dynamic in China, we're probably expecting lower sales in Q4, not to the Q2 levels, but probably 2 million plus less than we saw in Q3 for China in Q4. We saw strong performance in most of our other regions, including Canada, Middle East, and Latin America, which all saw record revenues for each quarter, for each quarter. region rather we've reorganized our sales structure in the middle East and are selling more directly to customers, which is certainly helping our performance there, both in terms of revenue and gross margin. And as in keeping with our overall strategy on how we want to go to market and how we want to position the brand. So like in Q2, we saw increasing strength of the U S dollar against the Euro and pound. And then ultimately in Q3, unlike Q2 against the Canadian dollar, during the quarter, which impacts our revenue and gross margin performance in those regions. So on a constant currency basis, revenue and gross margin were negatively impacted by approximately $2 million for the quarter. That is this year compared to prior year exchange rates. As the vast majority of our product costs are in US dollars, the effect impacts to revenue fall through to gross margin for the most part. So despite that, the strong demand which we attribute to our performance in the market and to increasing penetration rates for products in general, allowed us to overcome these FX impacts. But that would have been, that would have taken us to well over $90 million in revenue for the quarter if we had last year's exchange rate. So really good quarter. Looking to the rest of the year, U.S. revenue typically declines sequentially in Q4 from Q3 due to seasonality with holidays, etc., Conversely, China has historically been stronger in Q4 than in Q3. And as I previously mentioned, we expect China to be $2 million plus lower in Q4 than Q3. So given this and the stronger U.S. dollar to end Q3, we expect total Q4 revenue to be slightly less than Q3 in the $83 or $84 million range. This would put our estimated 2022 annual revenue growth at the higher end of the 25% to 27% range we discussed on our last call. Looking beyond Q4, you know, we watch the macro environment like everyone. And for us, it's a set of takes and puts. Clearly, all things equal, rising interest rates impact new vehicle affordability, which could impact new car sales at some point in the future. On the other hand, the manufacturers have been relatively consistent talking about their view of the market, which is that there's pent-up demand from the past two years of low inventory and high new vehicle markups. So that, you know, that would be an offset to the positive for us. And additionally, we're seeing evidence that as inventories recover, dealerships need to trade down from exorbitant market adjustments to tangible physical ads as a way to generate additional profit. And that's a positive for us as well. So in many respects, we've been competing against an accessory with 100% gross margin in the form of these market adjustments that dealerships have been able to impose over the past two years. So a reversal from that trend is also a positive for us. Overall, our view remains the same, that those predisposed to buy new cars are still going to buy our products for their car in almost any environment. And we see that time and time again through the repeat rate at which we see people buy our products from one car to the next. And alongside that, our products continue to be attached to a greater percentage of new cars each month. So that dynamic in no way decouples us from the world around us, but it does give us some margin And then especially when you add to that within the space that we're in, we're executing very well. And our business has continued with the same momentum in October. We continue to make good progress on our overall gross margin initiative, which came in at 39.8% for the quarter. Really a good number when you've seen costs increase in certain areas and then the FX impact, which I mentioned before, which is a direct hit to margin. If we were on a constant currency basis or using last year's exchange rate, it would have been over 40% gross margin for Q3. We haven't taken any pricing this year, although we will begin to phase in some pricing adjustments in the order of 3% to 4% towards the end of the year and the rest of the year. It won't impact all markets and all currency pairs equally. Obviously, there's some areas that have a lot more pain than others with the U.S. dollar, particularly where we have distributor markets. where they bear the brunt of that FX risk. But we will start to do that in the balance of the year. We did finish, as I mentioned, right under our 40% goal for gross margin. So to exit the year, we're right on track to hit that goal like we've been talking about. So very happy about that. We finished Q3, $18.9 million in EBITDA, reflecting a 21.1% EBITDA margin. Both of these are records for the company. Sequentially, EBITDA grew 10.2% and 66% quarter over quarter. So really pleased with this. Q2, Q3 are the strongest quarters of the year for us typically. And then Q4, depending on what happens in China, you can see Q2 and Q3 come out so similar in a positive way. And Q3 beating Q2 is really what we want to see. We're seeing SG&A run higher as a percentage of sales. And in some ways, we're overperforming on gross margin as a result of some of our SG&A investments. So there's a little bit of a trade there. But either way, I think we're pretty happy with that because we're seeing good leverage in the operation, as you can see with that operating margin that we posted this quarter. There are a lot of good things happening in the business beyond just the good numbers this quarter. We're making a large investment in software. We have our next version of our DAP software that will begin rolling out to customers in December. And as we mentioned before, this is the platform upon which we'll be adding a lot of new features for all our different customer types to really extend what we're offering deeper into their business and to provide them that much value for being an Expel dealer. Our vision line has been doing quite well. We've also been able to secure some accounts, some national retailers for work using our national footprint in the U.S. and the amount of our dealer network to do work all around the country. So, you know, hope that trend continues, but that's a promising opportunity for us. And then lastly, our previously announced paint protection film factory direct program with Rivian began accepting orders and started last month in October. As we previously mentioned, the launch of that was delayed, but it has now started. So really excited about that. And we're happy to showcase one of those vehicles in our booth at the SEMA show last month in Las Vegas. On the acquisition front, we closed the acquisition of the paint protection film business of our Australian distributor in October. It's a great example of the continuation of our overarching get close to the customer strategy, as we've discussed many times before. We're already seeing great progress and momentum in Australia in a short time since we acquired the business. And we know from our history that under our leadership and our willingness to invest, we can grow the market in Australia to be many, many times its size. today performs at a fraction of another market relatively close in size, which is Canada. So we hope to close that gap over time. We continue to have other acquisitions in the pipeline, including some that we would have hoped to close already this year, but for one reason or another haven't closed yet, so continue to work on that. We'll continue to monitor the macro. Our acquisitions have been modest. Our cadence is measured. Our debt load is low. So we don't really expect significant change to how we go forward with that at this point. We're still interested in pursuing these acquisitions and putting our cash to work. And obviously, we'll be on the lookout if that outlook needs to change, but it certainly has not changed at this point. So all in all, really good quarter for us. Thanks to our whole team. I think, you know, outside of some underlying positive trends, you know, have to attribute a lot of the success here to just excellent performance by our team. There's really no other more fundamental explanation than that. So thank you to all of them. So with that, we'll turn it over to Barry and then take some questions.
spk04: Barry, go ahead. Thanks, Ryan, and good morning, everyone.
spk06: And just a couple more things to highlight in our top-line performance. Our window film revenue grew 35% quarter over quarter to $15.4 million. Our vision line, which is our commercial residential window film product that Ryan mentioned earlier, was about 11.5% of our total window film revenue, and this product segment more than doubled compared to Q3 2021. And on a year-to-date basis, our total revenue grew 29.8% to $245.5 million. Total installation revenue, combining product and labor, increased a little over 63% and represented 14.7% of total revenue. As we previously discussed, we believe our company-owned installation store performance acts as a nice surrogate for what our aftermarket customers are seeing. So this, you know, coupled with our overall product revenue results indicates demand is strong. Our Q3 SG&A expense grew 31% versus Q3 2021 to $18.5 million and represented 20.6% of total revenue. Sequentially, SG&A was up a little over 7%. And we've talked previously about our internal target for SG&A being 18% of revenue. And in addition to Ryan's point earlier about how some of our SG&A investment is contributing to our gross margin success, another contributing factor to the higher percentage of revenue number is that we have acquisition-related costs like amortization on intangibles acquired that still need to be earned through. As we move forward and given these factors, we expect the higher percentage of revenue level to continue into next year. Our pre-tax operating income for the quarter grew 66.9% to $17.3 million, reflecting 19.3% net operating margin. Our net income grew 59.9% to $13.3 million, which was a record for the company, reflecting a net income margin of 14.8%. EPS for the quarter finished at $0.48 per share. On a year-to-date basis, EBITDA grew 40.6% to $48 million. Net income grew 30.2% to $33 million, and EPS finished at $1.20 per share. And incidentally, our Q3 year-to-date EBITDA, net income, and EPS have exceeded our annual 2021 totals. Now, as we discussed in Q2, our inventory level moderated in Q3, finishing at $69.4 million, which was down sequentially about $5 million from Q2. And this, coupled with our strong operational performance, made for a very solid cash flow quarter. Cash flow from ops for the quarter was $12.2 million, which was a record for the company. So absent closing on any additional acquisitions, we'll use our excess cash to reduce our debt levels as we move forward. So obviously very pleased with the quarter and we look forward to closing out the year strong. With that operator, we'll now turn the call over for questions.
spk03: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is coming from Steve Dyer at Craig Hallam.
spk05: Thanks, guys. Always a very thorough update. Quick, initially quick housekeeping item. Barry, did you talk about or break out architectural film as a percentage of that segment?
spk06: Yes, Steve, I did. And that number was about, let's see, 11.5%, 11.5% of our total window film revenue. Got it.
spk05: Okay, thank you. Taking a step back, when you look at the new car channel, inventory obviously improving sort of slowly, as you talked about, but sort of into the teeth of maybe a wobbly consumer, depending what you read. Are you guys continuing to win dealers, and are you doing window film at that level as well, or is it primarily paint protection film at this point in time? Any color around the mix there, or or initiatives would be helpful.
spk07: Yeah, Steve, we are, and we're doing both. And the window film portion of our dealership business has probably grown to maybe match in many respects the paint protection film business by virtue of the different acquisitions we did last year. So the window film is a really big part of that dealership business for us now. A lot of that's preloaded on the units as they arrive. So that's where we have this extra exposure to the inventory because in many respects we're generating revenue as inventory recovers to some extent even before the vehicles are sold for that segment.
spk05: Got it. And then I'm just curious, you know, I bought a vehicle this last summer where the paint protection film came preloaded and A lot of the sense I got is the vehicle was selling at MSRP plus and there was not a lot of choice that the consumer necessarily had. Just given the pricing of vehicles and the consumer and things like that, are you seeing sort of any indication that there might be sort of less preloading on these vehicles just from an ASP or average transaction price perspective?
spk07: Well, I think you could probably argue that both ways, you know, pay protection film is not still not one of the most common preload. So I'm glad that you were exposed to that window film is much more often a preload and also at a lower at a lower price point. But, you know, as I mentioned in the remarks earlier. While you could say that we've benefited if the dealers could preload paint protection film in the environment we've been in, and we would have suffered from that now if it was harder to do, the other thing that's been happening, though, is rather than put paint protection film on the addendum, which you had to buy in that case, you've seen these market adjustments driving price way above MSRP. And in many respects, that's impossible for us to compete with because it's 100% gross margin ad for the dealer and they don't have to do anything. So I think we're more likely, and we've seen some evidence of this from the dealerships we work with, that that's probably the first thing to unwind. And as that happens, you know, we may be the beneficiary of that because instead of a $10,000 market adjustment where the consumer gets nothing, we can trade them down to a, you know, $2,500 paint protection film package where the customer gets something tangible. So I think that it's a double-edged sword, but I think at least for where we are, we're more likely to benefit from that than not, at least in the midterm.
spk05: Yep, that makes sense. As you look at acquisitions, you know, looking forward, you talked about there's a lot of stuff in the hopper. Any sort of difference or variations in terms of where you're looking? Are you still, I mean, where should we anticipate you guys spending your time and money? Is it installation centers or You know, technology, anything, any help there?
spk07: Yeah, I think we're going to be pretty consistent there where the highest and best use for us is in the channel. And that includes installation. That includes international distribution like we did in Australia. And that's most of what we've done in our history. And that's where we start with this because we know that's where we do our best work. And then I think the second piece to that is product or product technology or product adjacencies. But that's definitely second to further investment in the channel in terms of our priorities.
spk05: Got it. One more and then I'll turn it over. As you look, I know you guys don't guide for next year and there's probably more uncertainty than most quarters even. But I think just can you give us any guardrails or generally how you think about the puts and takes going into next year from a revenue perspective?
spk07: Yeah, I mean, I think, you know, the the uncertainty exists everywhere. But I would tell you today, if you talk to our team who's talking to the field and you look at how we're looking at it, you know, we're still we're still bullish going into next year. At this point, we do think there's pent up demand for new cars and we continue to see increased attachment of our products into the units sold. We see and we firmly believe that if you're if you're predisposed to buy our product and you buy a car, you're going to buy our product. We don't think among our buyer who's buying a new car that our product is discretionary. Now, if you don't buy the car and we see, you know, material reduction in the SAR for next year, at some level that hurts us. But within that, we think our buyer of paint protection film and window film keeps buying the product. So we have to be cautious looking at this, but I think Where we stand today is we're still pretty optimistic, and we've had continued good feedback from the field so far.
spk04: Got it. Very helpful, as always. I'll turn it over. Thanks, guys.
spk02: Your next question is coming from Jeff Van Sinderen at B Reilly.
spk03: Great.
spk09: Thanks. Hi, everyone. So I know you talked about preloading a little bit. by the dealers. I'm wondering if there's more you can share about the drivers of the attach rate continuing to move up. Are there specific brands maybe that are driving that more than others? I think you mentioned Tesla. Just any more granularity, I guess, if you can share there in terms of also maybe the size of the wraps. In other words, are you seeing more full wraps versus partial wraps, just any other granularity there would be helpful.
spk07: Yeah, Jeff, I mean, the trends that we see in the quarter are really the same trends we've seen for some time, which is growing attach rate in general, higher attach rates among EV buyers. And again, you know, we don't necessarily know why that is or how that plays out as EVs become more widespread, but that has been a trend, Tesla included, but not necessarily limited to Tesla. And we have seen growing amounts of film in the paint protection film business per car. And then we've seen, you know, more product content across all of our products, paint protection film, window film, the coatings per car. And we've seen that in the aftermarket over time that continues. We've also seen that in the dealership space where we're, where we've done the acquisitions and, and pushed aggressively. And we've, we've actually seen a, higher content growth in that segment of the market, the dealership, since we did the acquisitions, probably been in the rest of the channel. And that was part of the thesis for doing those dealership acquisitions last year, that we could start to introduce paint protection film and other products in addition to predominantly the window film. So there's nothing new about any of that for Q3. These are sort of the long-term trends that we see playing out. And then we're still able to take a competitive share in some products and win customers that way. And we're doing that now across, you know, more than one product, a paint protection film. But we're also doing that mindful that we want to build a very high value add dealer base. And so we want the best customers, not the most. And so all of those trends have been present and they continue in Q3 and we expect them to continue going forward as well.
spk09: Okay. And then I'm just wondering if you are, since you have your own shops and then obviously a lot of dealer shops that you sell to, are you hearing anything different from the dealer shops by and large versus what you're seeing in your own or hearing in your own shops from customers or just demand profiles, things like that?
spk07: No, we've found and we've talked about it, but we've found that what we've seen in the other businesses that we own is a very good proxy for what our customers see in terms of demand and consumer sentiment and what they're interested in. So we haven't seen that diverge in any way. Okay, good.
spk09: And then I just wanted to touch on the new features on the DAP software upgrades. Just any other color you can give us there?
spk07: Yeah, well, we've had really kind of two projects. One, just the core of the ADAPT software, which is something that our customers of every type use day in, day out to just cut film and install film and run their business. We have a complete new version of that that's upgraded and modern that sort of loses some of the ties to things that are many years old. And that's sort of just the type of upgrades you want to do over time to stay current. But then as that new platform has been built, that's really where we are extending the reach of what we can offer much deeper into the operations of these businesses. Because we know that in the aftermarket in particular, but not exclusively, they're really technology starved and our customers are missing a lot of things that they could use to run their business better. You go into the average... a restaurant or coffee shop and they have 10 times the technology that our customers do because they've been catered to through this tech cycle we've been going through and our customers don't and so you know we have a big initiative to take that to them to help them run better businesses and then you know by extension that should be good for us because we're going to make them more efficient We're going to hopefully help them close deals faster and provide us feedback around our lead generation and other things that are going to make us more effective, and it's going to help them and help us. So we needed that updated platform to exist so that we can then start to layer those features on, and the first part of that is going out in December that our customers will see.
spk09: Okay. Thanks for taking my questions. I can take the rest offline. Best of luck for the rest of Q4.
spk04: Thank you, Jeff.
spk02: Your next question is coming from Tim Moore at EF Hutton.
spk08: Thanks, and congratulations on the great execution and top-line growth and continued margin expansion despite the China lockdown's impact. So just turn to my questions that weren't answered yet. My first one is, are your installers seeing improved lead generation over the last few quarters, you know, making roads more with the non-car technology? enthusiastics category, you know, those who are, you know, possibly receptive to PPF and tinting that might make up half the car buyers? Are you able to kind of track that non-enthusiastic customer base to see if they're growing faster lately?
spk07: Yeah, I think, you know, to categorize our customers as a whole, I think, would be difficult. But, you know, one of the things that we try to look at is how much of our customer base is doing wholesale work for dealerships. And that's where the dealership selling the, the product, but our customer in the aftermarket is installing it. And we don't have great data on that, but we have some, and you know, that doesn't exclude the enthusiast buyer by any, by any stretch, but it does probably represent, um, a broader swath of the buyer when you have the dealership involved. And we continue to see the growth in our overall aftermarket dealer base in doing more dealership work. We're certainly trying to encourage that because that's critical kind of to where your question was going about growing the overall size of the market. I think based on the data we have, we're seeing some success in them doing that, but we don't have perfect data. But I certainly think that that is the trend to some extent.
spk08: That's helpful, Culler, and I appreciate that. indicator snippet. So, Ryan or Barry, what is the OEM channel maybe at the percentage of sales year to date? I think it was 3% last year in your 10K. Is it above 5% now? Is it running something like that?
spk07: We haven't broken it out subsequently, but it's probably gone up modestly, but I don't think it's at 5% at this point.
spk08: Okay, that's good to know. What about When can you kind of, you know, now that Rivian's up and running, when do you think you'll see a material sales contribution from them? Could it be something like $20 million next year from them? You know, considering you're on site at their factory and ConsenSys has a $6 billion sales forecast for next year, which, you know, of course, might not be achieved. But do you have any kind of rough guidance or thoughts around maybe what the sales contribution can be, given your location there?
spk07: You know, obviously, internally, we have a... a range of estimates that I would tell you is quite wide based on take rate, based on vehicle deliveries and the pace of that. And then there's also a timing factor because all the vehicles can't be delivered at once if they need paint protection film installed. So no, we don't have any more color on that yet, except to say that with these programs like we talked about before, the goal is to start modestly and be successful and deliver on them and then grow them. And better to do that than over promise and under deliver. So I think, and I would say we try to make that the case in everything we do, but certainly in this realm. So with that in mind, you know, we've designed the program to start in a modest way and then be able to grow it over time, you know, if we're successful and then as they're successful in selling the product more. So the exact cadence of that, though, just kind of remains to be seen.
spk08: Fair enough. That makes sense. What about on training capacity for new installers that come to your training centers? If you look out to next year and if sales keep growing strongly as they have been and you're on a good trajectory, is that a constraint next year or do you have enough ample training capacity available at your centers?
spk07: I would say we have ample capacity in part because we've been continuously expanding it. We're actually opening dedicated training-only centers in Spain and in France, something that we've never done before, separate from many other type of operations just for training, because we need to get that local to where the installers are and use that to stimulate the market, particularly where you have different languages and cultures involved. But that being just one example of how we've continued to expand the training capacity, at this point, we're not limited by our physical footprint in part because we've grown a lot and have ample facilities but also because we're also doing training outbound training at customer facilities and things when appropriate so it's really more of a of a labor issue and right now we're i would say fully fully staffed or almost fully staffed in that but we've been pretty good at getting ahead of it so i don't think that's going to be a limiting factor next year that's that's terrific here and thanks for the color on that what about just switching gears
spk08: You mentioned the Middle East that you're looking to sell more directly into. What other countries do you think you could do more direct? Is it Europe in general, or are there any spots that are really on the high radar, near-term priority focus to sell more directly?
spk07: Yeah, I mean, I think if you look at where we get our revenue from today, I mean, China would stand out as the biggest market, but that's not one that we're interested in pursuing any type of direct model in the near term. So when you look beyond that, you've got markets perhaps where we have distributors that we could acquire that we think we could improve the performance of, and then you've got markets where there's just very little happening. in europe we sell direct in a lot of places and we have distributors in some countries again sort of language and culture reasons and so there's definitely the opportunity to change that mix in some of those countries going forward you know by acquiring distributors and we would be interested in doing that um points in in asia i think as a whole are some of our most underperforming markets and would justify investment. So that would be one area to look. And then, you know, we've had great success in Mexico in developing that market. And I think we would we would want to look at the rest of Latin America as well. So, I mean, really, I just kind of covered the whole world for you. So I guess the longer short of it is, you know, we would look anywhere for it if it if it made sense. And we're we're pretty well convinced that there is a decent sized market that can be developed for these products. enough to support our own operation pretty much anywhere in the world. And I think Mexico proves that.
spk08: And that's helpful. I mean, the Australian acquisition you did last month is certainly early innings and infancy for that market size. It's just a decade behind. But my last question is about China, actually. And it was nice to see the sequential sales improvement, even though it was up maybe 4% year over year. But I was just wondering, for your main distributor there, which generates super majority of, I think, your revenues in China, if I'm not wrong. Does that distribute or do they have good access and inroads to the EV manufacturers and the EV dealerships, given that probably the electric vehicles have comprised a lot of the new vehicle growth, you know, drastically more as a percentage of new cars sold in China being EVs in the U.S.?
spk07: Yeah. So I would say, you know, relative to dealership attachment in China, That's been relatively low as an industry in terms of penetration of paint protection film into dealerships, but we do see that changing. And we've been working with our distributor really to try and put together some unique deals and maybe even unique products to service that market because we do see a big opportunity. I wouldn't tell you that that is or isn't specific to the domestic Chinese EV manufacturers because it's really you know whether it's EV or not in that context doesn't really make much difference from our standpoint I think it's inclusive of that but it's broader than that but you know finding the right strategy to help the distributor increase the dealership attachment in China is of top importance for us I would say You know, of the things we can control in China, and obviously there's a lot that we can't in the present time, but of the things that we can and that we can help influence, that would be number one.
spk08: That's terrific. That's it for my questions.
spk04: Thanks for answering them, Ryan. Thanks, Tim.
spk02: There appear to be no further questions in queue.
spk03: I would like to turn the floor over to the management team for any closing comments.
spk07: I would just like to thank everyone for joining us on the call today, and I look forward to talking again next year. And a final thank you to all of the Expel team who've done such a great job this year and this quarter.
spk04: Thank you.
spk03: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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