Performance in the U.S. was impacted by a $1 million to $2 million demand headwind in the referral channel due to the pull-forward of EV sales ahead of credit expirations.
The acquisition of the China distribution business is a cornerstone of the strategy to own direct positions in the world’s largest car markets, contributing $14 million in its first full quarter.
Management is pivoting the product strategy to focus on core high-margin films and immediate adjacencies, intentionally moving away from low-value incremental product additions.
Gross margin of 41.9% was pressured by the sell-through of stepped-up cost inventory from the China acquisition and temporary pricing adjustments.
Operating leverage improved significantly with EBITDA growth of 37.6%, driven by moderating SG&A growth and the integration of acquired high-margin channels.
The DAP software platform is seeing productivity gains from the elimination of legacy tech debt and the implementation of AI-driven development tools.
Q1 2026 revenue guidance of $112 million to $114 million accounts for typical seasonality, Chinese New Year impacts, and ongoing softness in the Canadian market.
Management expects gross margins to trend upward throughout 2026, targeting levels at or above historical peaks as China inventory costs normalize by Q2.
Strategic investments in manufacturing and supply chain are under evaluation, with decisions regarding internal builds versus M&A/JV structures expected by April 2026.
The financial model assumes a normalized effective tax rate of 21% for future planning following one-time legislative benefits in Q4 2025.
Regional P&L leaders are budgeted to deliver increased operating leverage in 2026, offsetting potential incremental costs from supply chain initiatives.
The conversion of Brazil into a direct market caused short-term revenue flatness in Latin America but completes the global direct-presence strategy.
Inventory acquired in the China transaction carries a higher cost basis, which will continue to act as a margin drag until fully liquidated in early 2026.
Canada remains a persistent headwind, with regional revenue declines reflecting a broader 13% sequential drop in local new car sales.
A $3 million share buyback was executed, though future capital allocation will prioritize manufacturing investments and modest leverage for M&A.
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