XPEL Invests $110M in San Antonio Expansion & China Manufacturing

XPEL Inc. (Nasdaq: XPEL), a global provider of protective films and coatings, announced two significant milestones in the execution of the manufacturing and supply chain investment strategy first outlined in November 2025, company officials stated in a press release. The company expects to invest approximately $110 million in aggregate across these initiatives, including real estate, capital expenditures, and the acquisition of a manufacturing facility in China. The total investment falls within the previously communicated $75 million to $150 million investment range.

Expansion of San Antonio Operations

XPEL has purchased a four-building site totaling approximately 435,000 square feet in San Antonio, Texas, in which the company is a substantial tenant. This site will serve as the centerpiece of XPEL’s North American manufacturing and operations footprint. The company believes that acquiring a facility in which it already operates materially reduces execution risk and timelines, allowing it to scale without disruption to ongoing operations while maximizing prior capital investments made into the facility.

Over the next 12 to 24 months, XPEL plans to consolidate a separate leased operations facility into this building. Overall, the company will occupy approximately 230,000 square feet of the total site. The remainder of the site is currently leased to third parties, which provides XPEL with significant flexibility and optionality for further expansion as future needs evolve, noted the release.

This investment is intended to complement, and not replace, the company’s existing supplier relationships, which remain an important part of its overall supply chain strategy.

Ryan Pape, president and chief executive officer of XPEL, commented, “San Antonio has been XPEL’s home for more than two decades, and we’re proud to make a long-term commitment of this scale to our employees and to the city. This site gives us the space to consolidate, the room to grow our in-house manufacturing capabilities, and the flexibility to adapt as our needs evolve. It’s the right footprint for the next phase of the business.”

Acquisition of Manufacturing Facility in China

Separately, XPEL has acquired a manufacturing facility in China. The facility will support the company’s customers in China, where XPEL has invested significantly in its direct go-to-market presence in recent years, including the previously announced acquisition of the company’s Chinese aftermarket distributor in September 2025, the company said.

Pape continued, “Acquiring manufacturing capacity in China is a natural extension of the direct-market strategy we’ve executed across our key international markets. Having local production positions us to better serve the largest car market in the world.”

Funding

XPEL expects to fund the initiative through a combination of cash on hand, cash flow from operations and new financing associated with the real estate purchase. Apart from the real estate financing, the company expects to fund the majority of the remaining investment from operating cash flow over the next two years.

XPEL believes this funding approach preserves meaningful cash flow and debt capacity to continue to pursue other strategic initiatives or return cash to shareholders.

Reaffirmation of 2028 Margin Targets

These investments are consistent with the financial framework the company communicated in November 2025, officials stated. XPEL says it remains committed to its goal of operating margins in the mid-20% range on a run-rate basis by the end of 2028.

Excluding one-time costs associated with these transactions, the company anticipates minimal impact to 2026 EPS from these initiatives as the incremental expense associated with the increased occupancy costs and buildout progression of its operations is expected to be mostly offset by the benefits and synergies from the acquisition of the China manufacturing facility. XPEL anticipates beginning to recognize incremental margin contribution from these initiatives beginning in mid-2027.

Pape added, “The investments we are making—in San Antonio, in China, and across our supply chain—are designed to improve our agility and quality while increasing the rate of innovation and responsiveness to the varied needs of our global customer base.”