Episode 22: Tony Rimas, Vice President of Global Revenue at XPEL

For our second episode in our second season of Full Throttle, we are joined by Tony Rimas, Vice President of Global Revenue at XPEL. Topics of discussion include Tony's history with Chase Fraser and FM Capital, aftermarket opportunities, XPEL's impact on dealerships, the growth of the company and a future that is global.

0:00 Intro 
3:09 Tony's History with FM Capital 
5:25 What Does XPEL Do?
9:03 How XPEL works with Dealers 
11:40 The State of the Industry from a Private Equity Perspective 

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Transcript

Welcome to the second episode of season two of Full Throttle, The Presidio Group's automotive industry podcast. I'm your host, Jason Stein, multimedia and events director at Presidio. On a regular basis Full Throttle serves as the industry's meeting point for great conversations with leaders across the automotive world,

I think the state of the industry is, is very, very trying times as it relates to high interest rates where you had, you know, PE groups that can lever just about anything and make it mathematically work. And I think they have had to really retrench and, and really focus on the very, very best opportunities that they could find. So they're being very selective right now with their capital, because they're using a lot more equity than ever, debt. And the venture side, I would say the, that asset class is, is a tremendous investment opportunity right now. But I also think for the founder of businesses, if you're out there raising money out I'm not sure if times have ever been worse.

The tech revolution in auto retail is taking on many forms, shapes and sizes. It's making waves and challenging the norms, and it's entering into some familiar spaces. serial entrepreneur Tony Rimas, is impacting dealerships and has been first with FM Capital then in the Repairify space. And now today with expel a global leader in paint protection film window tint and ceramic coatings. He's transforming the automotive landscape with his team and challenging conventional norms. XPEL's unique culture is embracing a there's no tomorrow mindset and has a fixation on excellence. But the role of PPF window tint and ceramic coatings is increasing in terms of customer satisfaction, dealership revenue and fixed operations. Tony's role is to push XPEL a global company to a higher level, all the while telling us about the PE market venture capital and future investments today. Tony is a driven businessman, driving change looking at new opportunities growing as a professional and learning about new categories while he continues to expand. So today we talk about his investments, the choices ahead and what he's learned in his new experience. And he talks about broadening the XPEL horizon as it relates to services for dealerships, and the operating carpark. Tony Rimas, Vice President of Global revenue and expell is my guest today, the second in our second season of Full Throttle.

Hi, this is Tony Rimas and I'm glad to be part of Presidio's Full Throttle podcast today.

Well, it's a pleasure to welcome my next guest on the program. It is, we we oftentimes bump into each other in in various places, usually the Presidio Conference, which will now be in it's on the retail side, and it's multi-year iteration and on the technology side in just the second year, but Tony, welcome in. 

Thanks for having Jason. Let's talk a little bit about your own history just so the audience has a bit of an appreciation for all that you've done in the past and perhaps what you're doing right now. A little bit about FM Capital. You know, we had Chase Fraser on the program recently and I know you have a close affiliation with them. 

Tell me a little bit about that.

Yeah, Chase is a my brother from another mother.

Yes, he's a great guy.

You know, he was he was really the the brains behind what was Fraser McCombs capital originally now First Move capital. And I was the first employee. I want to be clear about that. You know, Mr. McCombs, and him met and, you know, had seen some of the investments that I was able to help originate as a family office team member, and also as a dealership operator. And Chase identified that and that's how the firm started, he was able to then convince the likes of Sandy Schwartz, who's still at Cox enterprises to help, you know, invest in our first fund, alongside the McCombs family, our second fund, I'm sorry.

And during our second Fund, which was about 18-19 years at the Mccomb's family,

I was convinced by the Kinderhook industries team who chase is also involved in he's on several boards, just like I am, to come and run a company called Repairify out of Plano, Texas,

mainly in this in the collision space, and we diversify the business into a lot of sublet repair. I moved to the board of that company in January of 22, or sorry, of 23 and decided to hang it up for a little bit, which didn't last long and joined expel right here in my backyard. I live in Bernie, Texas, which is right outside of San Antonio. And this is kind of the one really the coolest company, in my opinion since Rackspace was based here in San Antonio, and I'll tell you a lot more about it. But that's my background, it gets to XPEL at pretty much 25 years in the auto space and can't seem to get out of it. Don't want to leave either. 

Yeah, exactly. Let's talk about XPEL. What is it do? And I would say how does XPEL do what it does? 

Absolutely. So XPEL originally was founded in 1997. By some software engineers here in San Antonio, Texas. XPEL stands for X Protocol Engine Library, pretty deep.

Our software powers, you know, the best, in my opinion, what we call design software, for the patterns for vehicles for film to be applied to them. So we are a manufacturer of paint protection film, window tints and ceramic coatings. So if you think about our mantra, Jason, we're out to protect everything. But really on the consumer side, we protect their most important assets, a lot of times their their life purchases. But most importantly, as it relates to this podcast, we protect dealer's profits. And because we have really a tangible asset that we actually put onto the vehicle. So you hear about all these FTC cars acts and stuff like that the addendums that are coming out, well, we're a very tangible asset that actually is applied to the car. And it's there. I mean, it actually does protect your vehicle from rock chips, it protect protects you from UV rays from a tint standpoint, and ceramic coatings obviously is is an applicable protection as well.

What in the iteration of of XPEL, I guess, what, what was the genesis of it? How did it start?

Like I said, started out as a software tool to basically cut patterns of the film. So the film comes in rolls, and they actually cut these things on plotters. So if you've seen plotters you print out like construction drawings. Imagine if that you know ink tip is actually replaced with a knife and that precisely cuts the actual film to the pattern of the vehicle so they don't have to use a knife to cut around the seams of your of your vehicle. You don't want someone cutting into your paint or any of your your you know your seals around your windows. And how it evolved was they were originally selling a I guess the competitors film today and decided in in I guess 2015 16 to actually start contract manufacturing their own films and coatings and in 2019 went public on NASDAQ, and the rest is history, you know, you can read all about us, you know, $500 million, you know, run rate top line and, and very profitable. We operate in 40 countries, about half the business is international, half of it is domestic. And it was very, very well known brand Jason in the what I would call the supercar, automotive aftermarket. And we over the like the last call it three years have really started to focus in on dealerships and that daily driver and the rest of the passenger vehicle market. That car park. 

Yeah, as you were explaining it, to me, I was thinking that the exotic car marketing is exactly where it would have the most appeal. But obviously broadening it out has opened up a whole world of opportunities for you.

Absolutely, I think you'll see us a lot more involved in you know, obviously, we're a big SEMA participant, right? You know, we sponsor all types of race teams, whether it's, you know, Penske or the Rahals, or, you know, the BMW rally cars events were everywhere as it relates to the aftermarket racing. But you'll see a lot more of us in the dealership space helping dealers protect profits during the good times and the correcting times. And you know, a lot of consumers because of our well recognized brands see a lot of value in that are willing to pay for it through a dealership. 

We have such a large dealership audience here on the program. So how does XPEL work with dealers? 

So three ways today. So we obviously can sell their parts department product, and their parts department may obviously mark that up and sell it to their in house installers, what have you.

They obviously could install the stuff in house, if you think about it, you buy a roll of film, you have to actually have a professional install it. I want to be very clear about that. And the second way would be in upselling it in F&I where we basically have partnerships with OEMs, and distributors where we're actually putting on some XPEL at some OEM factories today. We can tell you one that is public is Rivian. Every single Rivian actually has some piece of expel actually put on it. And there's an upsell process of actually putting more film on the on the actual vehicle when you check out just like you would in F&I. And then last but not least, is our favorite way. We made an acquisition in 2020 to 2021 of perma plates film division, which we got about 500 installers out of that acquisition. And when we actually do the install, we obviously provide the material but also do the install for the dealerships. So as a public company, that's obviously a lot of revenue recognition. But then furthermore, it's giving us a lot more transparency and more services that dealerships would possibly want to procure or partner with expell on

Fascinating. The space itself, how is it changing? Tony?

It's, it's constantly changing. You're constantly looking for, you know, you know, new assets to protect, you know, think about a person who actually just protected their, their very nice vehicle. But now they want to actually take that same technology and possibly put it on a piece of architecture or real estate that they own. Just lately, we've moved into the Marine space, which if you know anything about boats, boats are not not inexpensive, operating them how much wear and tear they get. So I've learned I've had to learn a lot about some different categories recently. But automotive still remains our core. I think there's a deeper suite, you can go with services there. But you'll see us continue to expand from architecture to Marine, possibly out to RVs and power sports. We obviously are the sponsor of the Moto GP, female rider she's doing so well. We got so lucky to be part of her sponsorship.

Let's go back a little bit.

Back to your history in the the private equity side, I know you're also serving on multiple boards of auto auto tech ventures, right. Venture capital portfolio, you mentioned Kinderhook earlier we started with FM capital. Where's the state of the industry? Right now, if you just step back a little bit, Tony.

You know, I think the state of the industry is is very, very trying times as it relates to high interest rates where you had, you know, PE groups that could lever just about anything and make it mathematically work. And I think they have had to really retrench and, and really focus on the very, very best opportunities that they could find. So they're being very selective right now with their capital, because they're using a lot more equity than ever debt.

And the venture side I would say the that asset class is is a tremendous investment opportunity right now. But I also think for the founder run businesses, if you're out there raising money out, I'm not sure times have ever been worse. I mean, I was actually just finishing, you know, just starting with the Mccomb's family after the tech boom so I think there's a lot of folks out there that if they can get themselves line of sight to profitability, if they're on the operating side, startup side, I think they get there as soon as possible. Because it's pretty rough out there to raise capital, I think there's, it's a great asset class, if you're actually making the investments right now, especially if you're originating new ones. 

In a space, we talked to Fraser a little bit about it, it's changing so fast, I guess if you if you look at your historical context on and where you were with him at that point, and think about now, characterize for us how much the private equity space has changed, or even just funding in general. I mean, it's, it's changed a lot in the last year. 

It's changed a ton in the last year. I mean, what, you know, with this, I hate to use the term because I really don't fully understand generative AI. But at the end of the day, like, the, the focus is now gone from what I would consider leading edge type technology investments to absolutely bleeding edge, you have the PE guys that are looking for something that is just wildly more profitable than they used to in the past. And so you have this, this void, I think out there for all the folks that are actually leading something that actually is doing something, you know, maybe not transformational for the industry, but something significant. So I think that that's the biggest the biggest change for me is like seeing what we're focused on today is so bleeding edge, I'm just kind of wondering if we could actually, you know, how it's going to turn out? Because I think there's a lot of companies solving some here-and-now problems that may be underfunded. 

Yeah. And we actually talked to chase about the impact of AI. And he, he mused that perhaps in the future, you might not even need somebody who's sitting in his seat or in your former seat, or in one of your board seats because it'll all be figured out for us. 

I think I think so I think I would agree with everything except the board seat. I've noticed that with these corrections, that you know, human empathy, that I'd love to see AI try to adapt to where they're trying to understand a situation whether it's good or likely bad, how empathetic it's going to be in that decision making or that board vote. 

Yeah, it's great. What's next for XPEL?

You know, I think broad broadening our horizon as it relates to services for dealerships and services for the operating car park. Today, as you know, we just produce films and coatings, and we apply them. There are a lot of really great service based companies that are doing things right next to us in the bay next to us. So I think there's a there's a real interest there. We continue to basically acquire our international distributors, you can find that in our public filings.

You know, we're going to start to see us expand heavily in the Middle East and in Asia. We just had two superstars that I used to office with here for a brief moment, they moved to, you know, one move to Pune, India, India, the other one moved to Shanghai, for good. And there'll be running those regions. And you know, we're making acquisitions of our own distributors, and in trying to grow those regions like we have here in the US. 

Yeah. Wonderful. Tony, thanks so much for sharing your insight on really where XPEL is going and also some of your, you know, the context that that you're bringing to the table as well. 

Jason, thanks so much for having me. 

Great. Thanks for being on the program. We'll see you soon Tony.

Thanks again to my guest today. Tony Rimas, Vice President of revenue at XPEL. Thanks for listening to full throttle, come back to his later in the month for our next interview on this platform. Email me with suggestions jstein@the presidiogroup.com or go to the website, thepresidiogroup.com. You can follow us as well on LinkedIn. Thanks for listening to the program. We'll see you next time.

Transcribed by https://otter.ai