VALUE: After Hours (S07 E21): From Rock Chips to Roll-Ups: XPEL, TerraVest, and the Value Edge

During their recent episode, Taylor, Carlisle, and Chris Waller discussed From Rock Chips to Roll-Ups: XPEL, TerraVest, and the Value Edge. Here’s an excerpt from the episode:

Tobias: Chris, you want to take us through XPEL? Because I think XPEL is a name that’s reasonably well known. In fintwit, certainly, it’s a name that’s been bandied for years and years now.

Chris: Yes.

Jake: It’s the poster child of a micro-cap homerun.

Tobias: Yeah.

Chris: Yeah. It’s interesting, actually. If you look at Twitter, the number of tweets about the company and how that changes with the share price,-

[laughter]

Chris: -it’s contrary.

Jake: Direct correlation.

Chris: Yeah.

Jake: Yeah.

Chris: Exactly. If anyone doesn’t know, XPEL, it’s a supplier of paint protection film and other types of films. So, these are clear plastic films that get wrapped on your car, typically the front, and protects it from rock chips and scratches and so on, and generally keeps your car looking new. They sell some other products like window film for the car. They’re increasingly moving into films for boats and for your home and so on. But essentially, it’s protection film for your car.

Jake: You can wrap a house? I never thought about that before.

Chris: You can wrap windows. [crosstalk] So, any type office window. That is definitely a smaller business for them, and I don’t think it’s a natural cross sell.

Jake: Yeah.

Chris: The person who’s wrapping your car probably isn’t someone you naturally think to wrap some of your windows. This company has done very well. It’s been run by someone called Ryan Pape. He’s the CEO. He’s not the founder, but he was one of the– I think, maybe the fourth or fifth employee and he owns a lot of stock. He’s done an–

Jake: He went all in really personally on that.

Chris: Yes. So, he really came back to the company, I think, in 2008 or 2009 when the company was really on the verge of bankruptcy. He totally turned that business around. So, he’s done an extraordinary job. He’s not just a great capital allocator, but someone of high integrity.

Tobias: What was wrong with the business when he came back, and what did he do to turn it around?

Chris: Well, at the time, they only really sold software. So, they would sell software where an installer would cut out the exact shape of the film that was needed to wrap on the vehicle. But they didn’t sell the actual film itself. They didn’t particularly have a brand or anything around it. Obviously, it was a small company at the time with very weak balance sheet. And 2008 happened, and that essentially was going to be fatal for the company.

His big strategic change has been to offer a whole suite of products and really build what I call more of a franchise-franchisee relationship, where they’re not just supplying you software, they’re also supplying you the film, they’re supplying you the brand, the lead generation, the training, the aftermarket service. So, they’re supplying a full package.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

VALUE: After Hours (S07 E21): From Rock Chips to Roll-Ups: XPEL, TerraVest, and the Value Edge

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