This article first appeared on GuruFocus .
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Revenue:Record $143.1 million, up 14.7% year-over-year.
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US Region Revenue:Record $78.6 million, up 11.7%.
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Canada Region Revenue:Up 10.8% (approximately 4% excluding distributor timing impacts).
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China Region Revenue:$15.9 million.
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India and Middle East Region Revenue:Declined 5%.
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Europe Region Revenue:Declined 2.3%.
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Window Film Product Line Revenue:Record $32.5 million, up 16.1%, representing 22.7% of total revenue.
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Installation Revenue:Increased just under 11%, representing over 21% of total revenue.
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Gross Margin:44.1%, up from 43.7% in Q1.
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SG&A Expenses:$39.9 million, up 16.7%, representing 27.9% of total revenue.
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EBITDA:Grew 17.6%, with an EBITDA margin of 19.3%.
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Adjusted EBITDA Margin:20.7%.
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Operating Income:Increased 20.3%, with an operating income margin of 16.2%.
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Net Income:Attributable to stockholders grew 10.7%, with a margin of 12.6%.
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Adjusted Net Income:Attributable to stockholders grew 15.6%, with a margin of 13.2%.
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EPS:$0.65 per share; adjusted EPS was $0.68 per share.
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Cash Flow from Operations:Record $30.8 million in the quarter.
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CapEx:$65.1 million, including the real estate purchase.
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Q3 Revenue Guidance:Expected in the $137 million to $139 million range.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record Q2 revenue of $143.1 million, up 14.7% year-over-year, exceeding expectations.
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Strong performance in the U.S. region with record revenue of $78.6 million, up 11.7%.
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China region delivered solid results despite a challenging domestic car market, with revenue of $15.9 million.
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Record cash flow from operations of $30.8 million in the quarter, with improved cash conversion cycle.
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Strategic investments in manufacturing (San Antonio and China) expected to drive margin expansion to mid-20% by 2028.
Negative Points
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Dealership channel continues to face headwinds due to FTC compliance concerns, impacting sales.
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Europe region revenue declined 2.3% due to timing of distribution orders and lower OEM volumes.
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India and Middle East region revenue declined 5% due to the Iran conflict and vehicle availability shortages.
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Gross margin pressure from higher-cost inventory acquired in the China distributor acquisition, with modest price increases needed to offset cost pressures.
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Start-up and ramp-up costs for manufacturing investments are expected to increase to $0.03-$0.04 per share in Q3.
Q & A Highlights
Q: Can you walk through the shape of the gross margin expansion from the manufacturing plans, particularly the cadence of the step-function change expected in mid-2027 and the quicker benefit from the existing facility in China? A: Ryan Pape, President and CEO, explained that the margin expansion will occur in step functions rather than a gradual quarter-over-quarter increase. The China facility, being an existing operation, will provide a quicker turnaround and is a key part of the benefits expected by mid-2027. The company will also look to accelerate the timeline if possible.
Q: How should investors think about the risks associated with this manufacturing build-out, the largest project the company has undertaken, particularly regarding quality control and leadership? A: Ryan Pape, President and CEO, emphasized that the company is already responsible for the quality, supply chain sourcing, and production oversight for the majority of its products, even though it doesn't own the assets. The transition is about using more of its own assets rather than third-party ones. He highlighted the extensive in-house technical team of over 40 people in QA, R&D, and process engineering, which gives him high confidence in the plan.
Q: Where are you in the process of reducing SKUs, and what do you expect to see from that initiative and when? A: Ryan Pape, President and CEO, stated that the company has already arrested the rate of SKU additions and is now focused on reducing the total portfolio. The goal is to improve inventory turns and efficiency, potentially lowering aggregate inventory dollars even as revenue grows. He cautioned that the company cannot risk running out of key products for customers, so the reduction will be strategic, targeting items added over time to be "everything to everyone."
Q: Are the tuck-in acquisitions you mentioned related to the manufacturing strategy? A: Ryan Pape, President and CEO, clarified that the tuck-in acquisitions are not related to manufacturing. They are focused on service and OEM-adjacent areas to bring in new customers, particularly in the dealership or OEM channels. He reinforced that the company has an aversion to large or transformative acquisitions.
Q: Can you provide more detail on the revenue performance in the second quarter, particularly regarding the pull-ahead sales and regional trends? A: Ryan Pape, President and CEO, reported record revenue of $143.1 million, up 14.7%, which exceeded expectations. This included approximately $2 million of pull-ahead sales ahead of price increases. The U.S. region grew 11.7% to a record $78.6 million, with better performance in the independent channel versus dealerships. Canada grew 10.8%, China delivered $15.9 million despite a challenging domestic market, and the Middle East saw a 5% decline due to vehicle availability issues from the Iran conflict.
Q: What is the expected revenue guidance for the third quarter, and what assumptions are built into that? A: Ryan Pape, President and CEO, guided Q3 revenue to be in the $137 million to $139 million range. This assumes consistent U.S. and Asia Pacific trends, normal seasonality in Europe due to August holidays, and modest improvement in the Middle East. The guidance does not include any recapture of deferred Middle East business, which would be upside, and accounts for $1 million to $2 million of pull-forward sales from Q2.
Q: Can you elaborate on the financial results for the quarter, including margins and cash flow? A: Barry Wood, CFO, reported gross margin of 44.1%, up from 43.7% in Q1. EBITDA grew 17.6% with a margin of 19.3%, while adjusted EBITDA margin was 20.7%. Operating income increased 20.3% with a margin of 16.2%. Net income grew 10.7%, with EPS of $0.65 and adjusted EPS of $0.68. Cash flow from operations was a record $30.8 million, benefiting from improved cash conversion and DSO.
Q: What were the costs associated with the manufacturing ramp-up, and how will they impact future quarters? A: Ryan Pape, President and CEO, noted that costs related to the start-up and ramp-up of manufacturing investments in San Antonio and China were approximately $0.03 per share in Q2. These costs are expected to grow to $0.03 to $0.04 per share in Q3 as the operations reach a more full run rate, with Q2 costs including more upfront transaction expenses.
Q: How is the company managing the integration of the China distributor acquisition, and what are the early results? A: Ryan Pape, President and CEO, expressed satisfaction with the integration progress, noting good results despite a challenging Q2 for domestic car sales in China, which were down about 20% year-over-year. The team is doing a great job, and the company is focused on reducing SKUs and consolidating offerings to drive efficiency and working capital improvements.
Q: What is the company's capital allocation strategy going forward? A: Ryan Pape, President and CEO, stated that outside of the required CapEx for the manufacturing initiative, the company will focus on a few small tuck-in acquisitions and continue share repurchases with the rest of its cash flow. This approach is expected to continue well into next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
