엑스펠 2026년 3분기 실적 발표회: 마진 확대, 4분기 매출 1억 2,500만~1억 2,700만 달러 전망

엑스펠(NASDAQ: XPEL)이 매출총이익률이 3분기 연속 확대됨에 따라 2026년 3분기 매출과 순이익이 증가했다고 발표했다. 페인트 보호 필름(PPF), 캐나다 및 중국 시장의 성장이 미국 딜러 채널과 중동 지역의 지속적인 압박을 상쇄했다.

핵심 요약

• 3분기 매출은 전년 동기 대비 9.9% 증가한 1억 3,780만 달러를 기록했으며, 지배주주지분 순이익은 26.3% 증가한 1,630만 달러를 기록했다.
• 매출총이익률은 중국 유통업체 인수와 제품 원가 절감에 힘입어 전년 동기 대비 280bp, 2분기 대비 50bp 상승한 44.6%를 기록했다.
• 조정 EBITDA는 31% 가까이 성장하며 조정 EBITDA 이익률 18.9%를 기록했다. 조정 EPS는 0.62달러였다.
• 페인트 보호 필름 매출은 15.7% 증가한 7,350만 달러, 윈도우 필름 매출은 11.8% 증가한 3,090만 달러를 기록했다.
• 경영진은 미국 시장의 한 자릿수 초반 성장과 딜러 채널의 지속적인 약세를 반영해 4분기 매출을 1억 2,500만 달러에서 1억 2,700만 달러로 예상하고 있다.
• 엑스펠은 텍사스 제조 공장이 2027년 중반경 가동을 시작할 것으로 예상하며, 2028년 말 기준 영업이익률 연율(run rate) 20%대 중반 달성 목표를 유지하고 있다.

주요 재무 데이터

연초 대비 누적 매출은 12.5% 증가했다. 조정 EBITDA는 23.4% 증가하여 17.9%의 이익률을 기록했으며, 조정 EPS는 보고 기준 EPS인 1.62달러 대비 1.67달러에 달했다.

사업 및 영업 실적

페인트 보호 필름은 엑스펠의 가장 큰 제품군으로 전체 매출의 53.4%를 차지했다. 윈도우 필름은 22.4%를 차지했으며, 시공 매출은 4.5% 증가하여 전체 매출의 21%를 약간 하회했다.

미국 매출은 7% 증가한 7,670만 달러를 기록했다. 애프터마켓 시공업체 채널은 9% 약간 넘게 성장했으나, 딜러 채널 매출은 보합세를 보였다. 경영진은 딜러 채널의 약세 원인으로 딜러 가격 책정 및 추가 옵션 판매 관행에 대한 미국 연방거래위원회(FTC)의 조사와 10월 1일 시행된 캘리포니아주의 CARS 법안을 둘러싼 불확실성을 꼽았다.

캐나다 매출은 독립 시공점, 딜러, 유통 채널 전반의 성장에 힘입어 17.9% 증가한 1,530만 달러를 기록했다. 중국 매출은 52% 증가한 1,540만 달러를 기록했으나, 3분기는 전년도 유통업체 모델과 직영 판매를 비교하는 마지막 분기였다. 경영진은 중국 내수 자동차 판매량이 전년 동기 대비 20% 이상 감소했다고 덧붙였다.

기타 아시아 태평양 지역은 약 14% 성장했으며, 경영진은 일본에서의 성과를 강조했다. 유럽, 영국 및 아프리카 지역은 약 2% 감소한 1,620만 달러를 기록했으며, 인도 및 중동 지역은 걸프 지역 전반의 차량 공급과 수요 약화 속에 16.6% 하락했다. 인도는 성장 시장으로 남아 있으며, 엑스펠은 대규모 OEM 계약이 2027년부터 실적에 기여하기 시작할 것으로 예상된다고 밝혔다.

라틴 아메리카 매출은 12% 성장했다. 엑스펠은 또한 브라질 상파울루에 직영 영업소, 물류창고 및 교육 시설을 개설했다.

엑스펠은 자사의 OEM 수주 파이프라인이 회사 역사상 최대 규모라고 설명했다. 경영진은 2027년에 추진 가능한 프로젝트들이 모두 진행될 경우 이론적으로 과거 누적 프로젝트 물량의 약 2배에 달할 것이라 밝혔으나, 프로젝트들이 단계적으로 도입될 것으로 예상된다는 점을 강조했다. 최근 인수한 비스코(VISCO) 그래픽 사업은 기존에 엑스펠이 거래하지 않던 주요 완성차 업체들과의 네트워크와 더불어 OEM 그래픽 및 맞춤형 제작 역량을 더해준다.

엑스펠의 커머스 및 추천 플랫폼을 통한 판매량은 전년 동기 대비 약 20% 증가했다. 회사는 기존 프로그램을 유럽으로 확대 적용할 준비를 하고 있으며, 새로운 OEM과 추가 프로그램을 출시할 계획이다.

경영진 전망

경영진은 2026년 4분기 매출을 1억 2,500만 달러에서 1억 2,700만 달러로 예상한다. 이 전망은 다음 사항을 전제로 한다:

• 미국 매출의 한 자릿수 초반 성장.
• 미국 딜러 채널의 추가적인 성장 둔화.
• 미국 애프터마켓의 지속적인 부진.
• 중동 지역 영업 환경의 개선 부재.
• 2025년 9월 유통업체 인수 이후 중국 내 직영 매출 간 직접 비교.

텍사스 제조 공장의 초기 가동 비용은 4분기에도 주당 약 0.03~0.04달러 수준을 유지할 것으로 예상된다. 엑스펠은 주로 텍사스 제조 공장 증설을 위해 4분기 설비투자(CapEx)를 800만 달러에서 1,000만 달러로 예상하고 있다.

경영진은 장비 인도와 공장 건설 작업이 2027년 1분기 말에서 2분기 사이에 마무리되어 연중 텍사스 공장이 가동을 시작할 것으로 예상하고 있다. 2028년 말 기준 영업이익률 연율 20%대 중반 달성이라는 회사의 목표는 변함이 없다.

엑스펠은 또한 2027년 상반기 동안 중국 및 미국 이외의 시장으로 공급되는 제품에 중국 제조 시설을 활용할 계획이다. 경영진은 이것이 추가적인 매출총이익률 개선 기회를 창출할 것으로 기대하고 있으나, 구체적인 가동 일정이나 재무적 기여도는 제시하지 않았다.

리스크 및 관전 포인트

• 미국 딜러 고객들이 규제 및 공시 요구사항에 불균등하게 대응하면서 신규 프로그램이 지연되고 기존 매출에 영향을 미치고 있다.
• 미국 애프터마켓은 딜러 채널 위험 노출과 일부 소비 약화를 반영하여 3분기 말과 4분기 초에 둔화되었다.
• 중국은 유통업체 매출에서 직영 매출 인식으로의 전환 수혜가 4분기에 종료됨에 따라 기저효과로 인한 어려운 비교 시기에 진입한다.
• 호르무즈 해협 주변의 지정학적 및 경제적 혼란이 걸프 시장의 차량 공급과 수요를 계속해서 압박하고 있다.
• 일부 유럽 시장은 제3자 유통업체의 실적 부진과 중동으로 향할 예정이었던 것으로 추정되는 제품 물량 감소로 인해 지속적으로 제약을 받고 있다.
• 텍사스 및 중국 공장이 예상되는 이익을 창출하기 시작하기 전에 제조업 관련 투자가 비용 부담을 늘리고 있다.

애널리스트 Q&A 하이라이트

경영진은 신규 수주한 인도 OEM 계약이 엑스펠의 인도 매출 규모 대비 중요할 것으로 보이지만, 고객사를 공개하거나 계약 규모를 수치화하지는 않았다고 밝혔다.

미국 딜러 채널과 관련해 경영진은 4분기 상황이 3분기보다 점진적으로 악화할 것으로 예상한다. 딜러들이 판매 관행, 가격 공시, 웹사이트 및 준법 시스템 변경을 완료함에 따라 4분기를 잠재적 저점으로 보고 있다. 회사는 2027년에 보다 안정적인 환경 조성을 기대하고 있으나 공식적인 연간 실적 전망(가이던스)은 제시하지 않았다.

경영진은 중기 매출 목표를 달성하기 위한 여러 경로를 지속적으로 확인하고 있다고 설명했다. 특히 미국 시장에서의 기회 확대를 포함해 2027년 OEM 사업이 매우 견조할 것으로 기대하고 있다.

매출총이익률과 관련해 경영진은 전년 동기 대비 280bp 상승의 일부가 중국 유통업체 인수에 따른 것이라고 설명했다. 개선 폭의 최소 절반은 지속적인 제품 자재명세서(BOM) 원가 절감 노력에서 비롯되었으며, 가격 상승의 기여는 미미했다. 중국 제조 공장은 3분기에 추가적인 이익률 개선 효과를 제공하지 않았다.

엑스펠은 턴키(Turnkey) 시공 서비스와 이커머스 추천 플랫폼이 OEM 성장을 견인할 것으로 기대하고 있다. 턴키 프로그램은 완성차 업체에 더 큰 통제권을 제공하며, 분산된 시공업체 네트워크는 더 유연한 가용 용량을 제공한다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, and welcome to the XPEL, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Jennifer Belodeau. The floor is yours.

Jennifer Belodeau

Good morning, and welcome to our conference call to discuss XPEL's Third quarter 2026 financial results. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer; and Barry Wood, XPEL's Senior Vice President and Chief Financial Officer, will provide an overview of the business operations and review the company's financial results. Immediately after the prepared comments, we will take questions from our call participants. A transcript of this call will be available on the company's website after the call. I'll take a moment now to read the safe harbor statement.

During the course of this call, we will make certain forward-looking statements regarding XPEL, Inc. and its business, which may include, but are not limited to, anticipated use of proceeds from capital transactions, expansion into new markets and execution of the company's growth strategy. Such statements are based on our current expectations and assumptions, which are subject to known and unknown risk factors and uncertainties that could cause our actual results to be materially different from those expressed in these statements. Some of these factors are discussed in detail in our most recent Form 10-K, including under Item 1A Risk Factors filed with the SEC. XPEL undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. During this call, we will also reference certain non-GAAP measures, including EBITDA and adjusted EBITDA, adjusted net income and adjusted EPS. A reconciliation to the most comparable GAAP measures is included in our earnings release.

With that out of the way, I'll turn the call over to Ryan Pape. Go ahead, Ryan.

Ryan Pape

Thanks, Jen, and good morning, everyone, also, and I extend my welcome to our third quarter '26 call. Q3 was a solid quarter for us, grew revenue, expanded gross margin for the third consecutive quarter and converted that into strong earnings growth even in the face of additional investments we've been making in a somewhat challenging environment.

Overall, revenue grew 9.9% to $137.8 million. This was sort of in line with what we expected coming into the quarter. Our U.S. region grew 7% to $76.7 million. Our installer channel in the aftermarket, our largest portion of the U.S. business had another good quarter, growing at a little over 9%. The soft spot continues to be in the dealership channel, where revenue there was roughly flat and certainly challenged based on the historical trend we've had. As we've discussed on the last two calls, the FTC scrutiny on dealer pricing and add-on practices has created a lot of uncertainty for dealers, and this impacts us indirectly.

California's CARS Act, which took effect October 1, has added to that and is roughly the same in terms of what its aims are. The impact this year has been larger and lasted longer than we might have hoped. And it also affects our aftermarket business indirectly in that we have customers classified in that category, which serve dealers in this way, but we don't break that out separately.

That said, we think Q4 in the first full quarter under the California law is the trough in terms of sentiment and understanding of this, and we're optimistic about 2027 here for a few reasons. One, the rules are becoming clear. They certainly don't prohibit our products or anything close. But in addition to a broader focus on overall pricing and fee disclosure that these acts contemplate, regulators are targeting add-ons that are undisclosed, mandatory or of no real value. And the CARS Act requires that add-ons be disclosed as optional and provide real benefit to the customer. Our products, though, deliver tangible, visible and warranty protection and dealers can sell them in full compliance.

And I think the other side of the rules becoming clear is we've actually seen the FTC issue more specific FAQs and guidance. So dealers are not left to guess on what is intended. And that's really happened in the past few months. Dealers are adapting. Much of this year's impact has come from dealers retooling their sales processes, for example, moving from pre-installed packages to offering products as as optional accessories in some cases or updating their advertising and websites to reflect the cost of accessories. We're implementing technology necessary to do so.

So that's a transition, not a change in consumer demand. The dealers are resilient, as they complete these changes, we expect a more stable and predictable environment in '27. And also, we're helping dealers comply. We work with them on disclosure, documentation and our warranty system. And in a tougher regulatory environment, many dealers and particularly some of the national consolidators that we work with, they want to simplify and high-grade their vendors to make this easier for them. That's a little bit longer sales cycle, but it really plays to our strengths and is something that we're very focused on and represents meaningful upside for us.

So we feel this will settle out as we get into next year, remain bullish on the channel overall. What's unchanged is that dealers and consumers alike, like the products that we sell, and we just need to ensure that we've equipped them fully to sell them in the best and easiest possible way.

We also saw the aftermarket slow in the end of Q3 and beginning of Q4 in the U.S. We saw more of our customers who were flat or reduced growth or down over the period that had been the trend in the first part of the year. I think this is in part related to sell-through into dealerships, but it also represents some element of consumer weakness that we've seen develop in the second part of the year. We've seen that before in the aftermarket channel in fits and starts. And I think we're seeing some of that now. But like we've seen before, we expect that to reverse at some point.

Canada had a strong quarter, revenue growing 17.9% to $15.3 million. Unlike last quarter, the growth was broad-based. Independent dealership and our distribution channels all grew. So it really wasn't just about timing or something like that. China revenue grew 52% to $15.4 million. And as a reminder, we acquired our distributor there in September of '25, so this is the last quarter where we're comparing against indirect sales in the prior year and direct sales this year. Domestic car sales in China were down and have been down 20% plus year-over-year in the quarter and really this whole year. Our team continues to execute well. Our OEM and forest business continues to build. The decisions we've taken to own more of our downstream distribution and to localize manufacturing are definitely the right ones to have made in the current environment and I think are contributing to outperformance by us relative to our peers in this environment there.

The rest of Asia Pacific grew about 14%. continue to see the benefit of the direct presence we've built and are building across the region. And I certainly want to highlight Japan, which is a priority market for us and really starting to make nice traction there in a direct model that we were never able to do in a distribution model. Our EU, U.K. and Africa region declined about 2% to $16.2 million. The headwinds here are poor performance for some of our countries where we still have third-party distributors, which still exists embedded in that region and continued impact to sale of product that we believe is ultimately exported to the Middle East. We'll be reviewing the distributor mix and strategy for next year. And as a reminder, our revenue breakout is based on where we sell the product.

Our India and Middle East region declined 16.6% last quarter. Our guidance assumed modest improvement in the Middle East. Instead, I think the geopolitical conditions and resulting economic conditions downstream actually worsened. The Iran conflict and disruption around the Strait of Hormuz continues to weigh on vehicle availability and demand really across the Gulf. A recent press article cited Saudi new car sales down something like 38.5% in August, for example, and this is our largest market there. So obviously, we're impacted by that. India, though, as part of the region is a real bright spot, posting big growth, still from the smaller base, but a very large car market and one where we see just incredible emerging demand. We were recently awarded a substantial OEM contract there that we expect to begin contributing to our growth in '27.

Latin America grew 12%. We just opened our greenfield direct Brazil sales operation last month. We have seen a press release that we opened the headquarters warehouse and training in Sao Paulo. We have a great team there, really excited about the region in general and particularly Brazil as a market. With Brazil, we've largely completed our direct presence in country build-out. As you may recall, we've expanded our local distribution presence significantly, and I might say aggressively over the past few years, including Japan, India, Thailand and then acquisitions in China, obviously, on top of the base we started with.

Overall, we're pleased with the results of this initiative. And continue to see those businesses generating increasing operating leverage within their local cost structure as we scale beyond the fixed investment. So very happy with the strategy we have there and the plan.

Our OEM business pipeline remains very strong. We have more open and potential projects theoretically for '27 than our cumulative history to date, probably by 2x, if they were all to occur and you could physically do that, which they won't. But history suggests that these projects will phase in incrementally over time around model-year changes and platform changes. And this is certainly our longest sales cycle portion of our business. But the queue, you might even say backlog for us is by far as large as it's ever been. It is really, really something impressive.

And we also have seen significant interest in the U.S. market in terms of these opportunities, whereas up to now, a larger portion of the volume is driven out of Europe. So still seeing demand from Europe, but it's good to see a good queue of things from the U.S. as well, obviously.

In the quarter, we acquired a small OEM graphics business, VISCO, which produces graphics and supplies film to a number of major OEMs. It's a U.S.-based business. And really, with many of those that it supplies, we don't currently do business. So not only does this add capability in terms of OEM graphics that we can take to our existing customers, who were really, at the OEM level, increasingly interested in how our products look, not just that they protect. And I think this is an important evolution of the business that we sort of see happening in real time and really helps to expand the TAM of what we're doing.

So financially, it wasn't a material acquisition, but we now have additional products in the personalization space we can take to our current OEM customers and by extension, probably bring into the aftermarket. But we've also sort of appended our customer list with a number of major OEMs that weren't existing customers. And that will be useful for the graphics business. But obviously, our ambitions there are way beyond that. So I think a really smart move by our team to add these capabilities and really add these relationships. So we're excited to show you what that's going to be over the next couple of quarters and some of the new capabilities that's given us in the personalization space, certainly for OEM, but then where else can we take that. So we're excited about that.

Our commerce and referral platform, which we formally refer to as the referral program has sales volumes up approximately 20% from last year. So it's obviously outperforming, way outperforming sort of what the industry can generate organically, which is very encouraging. We continue to invest in this. We're in the final stages of expanding one of our existing programs to Europe. And as mentioned in Q2, we have an additional program with a new OEM that we have planned to launch this year and hopefully, it will launch by the end of the year.

So overall, we think this has just tremendous ability to change how our products are sold and is one of the best ways to find new customers and customers that don't interface with us and customers that want a modern online transaction, which is surprisingly lacking in this space. So that remains a top, top focus in today, but into '27 in terms of what our team is investing in and focusing on.

Our gross margin in the quarter was 44.6%, up from 44.1% in Q2 and up 280 basis points from Q3 of last year. Last quarter, we said we expected gross margin to continue to modestly increase through the rest of the year, and that's certainly what's happened. Overall, although still present, the input cost pressure was not as significant as we feared earlier in the year. As a result, we moderated our 2026 pricing plans and took less price than we had contemplated. Pricing impact in Q3 was 1% or less across the entire business effectively.

As we noted last quarter, some customers bought ahead in Q2 in anticipation of increases. That buying turned out to be ahead of increases that were smaller than expected or nonexistent in many cases. So obviously, we called that out that, that $2 million probably came out of Q3. But we'll review this again as we go into next year. Costs related to the start-up of our Texas manufacturing operations were approximately $0.03 a share in Q3. This is really all costs with no benefit yet, which was in line with what we talked about on our last call. And we expect that to be relatively constant at $0.03 to $0.04 per share in Q4 as well.

On our manufacturing investments, we're making really good progress. In Texas equipment and construction schedules remain on time, on schedule. We still expect to begin bringing the facility online towards the middle of next year. Overall, our view of the project and our mid-20s operating margin goal on a run rate basis exiting 2028 remains unchanged, and we're excited to continue to progress on plan.

We'll begin leveraging the China facility that we acquired for additional products destined for non-China, non-U.S. markets over the first half of next year. So that represents upside on our investment there to leverage those assets even in the face of the challenging domestic market in China. Looking ahead, we expect Q4 revenue to be in the $125 million to $127 million range. This assumes low single-digit growth in the U.S. As I mentioned earlier, we saw a growth deceleration in the aftermarket channel for the U.S. at the end of Q3, beginning of Q4. So we're factoring that in at this point. We also assume the continued softness in the dealership channel will continue through Q4 as we discussed earlier in my remarks. And this also reflects that China is now on a like-for-like basis. We acquired our distributor in September of last year.

So for the past four quarters, our China growth benefited from recognizing the distributors' revenue and really their margin as our own revenue and reflected a smoothing out of sell-in versus sell-through versus the underlying demand drivers. So Q4 is the first quarter where we're comparing direct against direct, and that's happening, obviously, in the domestic China market, that is down more than 20% in terms of volume. Furthermore, we've assumed no improvement in the Middle East environment, although obviously, that could change.

Overall, the near-term macro challenges in some of these regions, there are near-term macro challenges in some of these regions we need to contend with. But we're confident these will sort out as we move into next year. We've seen periods of strength and weakness in the consumer and the aftermarket ebb and flow over time. And as you see in the results of Canada last quarter versus prior year versus prior quarter, these things move around over time. Certainly happy to be beyond election season in the U.S. And we have tremendous momentum in our platform programs with our new and existing partners.

Financially, we're performing very well even with added costs from our manufacturing investments ahead of the benefits and our margin initiatives independent of those investments and really the SG&A cost control are driving operating leverage. The balance sheet is strong and gives us complete flexibility moving forward.

So really, I want to thank our team. Everybody is working extremely hard. We have a business with a lot of moving pieces. The upside of that is it gives us many avenues to attack what we want to accomplish. But it's a lot of work, and I appreciate our team. Everyone is -- we've got a huge contingent at the Industry SEMA Show in Las Vegas this week, which we're always well represented, and we couldn't accomplish what we're doing without them. So I want to give a lot of credit.

And with that, Barry, I'll turn it over to you.

Barry Wood

Thanks, Ryan, and good morning, everyone. I'll start with a few comments on the product lines. First, our paint protection film product line grew 15.7% to $73.5 million and represented 53.4% of total revenue. Our window film product line grew 11.8% to $30.9 million, which represented approximately 22.4% of total revenue. Our total installation revenue increased 4.5% in the quarter and represented just under 21% of total revenue. We saw good growth in OEM and corporate-owned locations, but this growth was somewhat muted by the challenges in the dealership space, as Ryan was mentioning.

Our year-to-date revenue increased 12.5% versus the prior year, which again is a really solid performance given some of the macro headwinds we've been seeing. Our total SG&A expenses grew 13.3% in the quarter to $40.4 million, representing 29.3% of total revenue. Approximately $3.2 million of that increase was new SG&A from our China operations, including the manufacturing facility we acquired in May. So excluding these costs, our SG&A grew just a little over 4% in the quarter.

EBITDA grew 28.3% in the quarter to $25.3 million, and our EBITDA margin was 18.6%. Our adjusted EBITDA grew just under 31% in the quarter, and our adjusted EBITDA margin was 18.9%. So really nice leverage in the quarter, driven mostly by that continuing gross margin expansion we've been seeing. Our year-to-date adjusted EBITDA grew 23.4% and our year-to-date adjusted EBITDA margin was 17.9%. Operating income increased 25.8% and our operating income margin was 15.3% in the quarter. Our year-to-date operating income increased 21.5% and our year-to-date operating income margin was 14.4%.

Our net income attributable to stockholders for the quarter grew 26.3% to $16.3 million, and our net income attributable to stockholders margin was 11.9%. Our adjusted net income attributable to stockholders grew 31.7% to $17 million, and our adjusted net income attributable to stockholders margin was 12.4%. Our EPS was $0.59 per share in the quarter and adjusted EPS was $0.62 per share. And again, the only adjusting items this quarter is the manufacturing start-up costs that Ryan mentioned.

On a year-to-date basis, our net income attributable to stockholders grew 18.3% and EPS was $1.62 compared to $1.37 last year. Our year-to-date adjusted net income attributable to stockholders grew 22.2% and our adjusted EPS was $1.67 per share. Cash flow from ops was $21.1 million in the quarter and $59.3 million year-to-date. CapEx in the quarter was $1.9 million, and we expect total CapEx in Q4 to be right in the $8 million to $10 million range. The majority of that is related to our Texas manufacturing expansion.

During the quarter, we executed approximately $3 million in share buybacks. And again, just to reiterate, our capital allocation priorities remain unchanged. We'll fund the manufacturing build-out. We'll be looking at small tuck-in acquisitions like you've seen us do before. And then thirdly, return to shareholders through share repurchases. Our current goal is to continue to increase the size of the repurchases going forward while ensuring we retain our flexibility for other initiatives.

We ended the quarter with $45.7 million in cash, nothing drawn on the revolver and $44.4 million outstanding on our term loan. Our DSO increased in the quarter as what happened you've seen previously from us, our previous China distribution acquisition, we have a transition services agreement with them. So our AR includes just right at about $5.5 million related to the transition services agreement with the acquisition of our Chinese manufacturer where the seller is collecting on our behalf. So excluding that, our DSO was effectively flat. So a solid quarter for the company for sure, and we look forward to finishing the year strong.

And with that, operator, we'll now open the call up for questions.

Operator

[Operator Instructions] Our first question comes from Steve Dyer with Craig-Hallum.

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Matthew Raab

This is Matthew Raab on for Steve. Just want to start on the substantial OEM contract that will contribute in '27. Any color on which OEM that is and any potential sizing?

Ryan Pape

No, not something we can release yet. And just I think the comment on that was in India specifically. And it's estimated to be certainly for our India revenue quite material. And as that gets launched, we'll certainly be saying more about it at the appropriate time.

Matthew Raab

Understood. And then just on the top line performance. I mean, I hear you on the softness in Q3 with the dealer channel and the Middle East. And you mentioned that the dealer channel probably troughs in Q4. How much of an impact was that in the Q4 guide? And is it safe to say that you're expecting Q4 growth in the dealer channel to be worse than Q3? Or are there other factors involved in the Q4 guide?

Ryan Pape

No, I think that's a correct statement. Really seeing the Q3 trend continue into Q4 and probably be incrementally worse. What's been interesting as we look at how the dealers respond to this is just how different the responses by different dealers at different times. And it's really certainly an impact on existing revenue, but it's also a function of delays and hesitation on new programs. And so it's a risk to the current, but also slowing down the adds. And I think it's really important to call out just how different the perspectives are in trying to ensure compliance around these issues from one dealer group to the next. I mean they have fundamentally different approaches.

Some are focused on ensuring systems compliance and technical compliance, and some are focused on changing business practices and changing how they actually sell things or how they might sell our product. And there's not a consistent way that, that's being addressed across the industry. And that's really part of what has made this challenging to really understand kind of the full impact at any one point in time. But yes, I think we're expecting that trend to be incrementally worse in Q4, really as a continuation of what continued to develop in Q3.

And then as those adjustments are made and everything that's going to happen is going to happen in terms of how people look at this issue overall, then everything going forward in '27 really will be done with that already in place. And if it's a compliance issue, a technical issue or a systems issue to ensure you're fully transparent in pricing, that's done. And if it's something where your group has decided to change how you sell things, that decision has been made. And then either way, as you move forward, you're doing it with those decisions, those decisions already having been made for most people, I think.

Matthew Raab

Understood. So presumably, Q4 trough turns better in '27. Curious if you're willing to take a stab at a broad brushstroke of what 2027 could look like from an overall growth perspective?

Ryan Pape

Well, I mean, if you look at what happened the first part of this year, really through Q3, we were certainly able to accomplish, kind of, a low aggregate, low double-digit revenue growth. And we still see ample ways to accomplish that as we get into '27. I mean I think that the dealer piece is really one of uncertainty and regulation just slowing business. It really has nothing to do with the underlying demand for what we're doing. So I think as those decisions are made, we get back into the mode of saying how best to grow that.

The aftermarket, yes, we've seen that slow in Q3 into Q4. Some of that is embedded in the -- or as a result from the dealership space. But we've seen the consumer behavior ebb and flow before. And I fully expect us to see that recover and improve next year as well. So don't have guidance for us for next year, obviously, but we see ample ways to drive to the, kind of, medium-term revenue guidance we've been giving. I think next year will be particularly strong on the OEM side, particularly in the U.S., like we mentioned. So when there's sort of weakness in one area, the other seems to come out stronger.

Matthew Raab

That's great. And then last one for me, maybe switching over to the gross margin. So nearly 300 basis points improved in the quarter. How much of that was from the acquisition of the distributor in China in September of '25, so lapping those benefits? And then was there any benefit from the manufacturing in China? It seems like pricing was relatively small. And then any other factors you're willing to call out at this point as we look forward? Maybe just make that bridge for us.

Ryan Pape

Yes. I mean I think it's split somewhat between all of those things. Obviously, there is a pickup in gross margin from acquiring our distributor. Roughly, you could think of a distribution type relationship. If you're going to have a distributor to resell your products, generally, they're going to want to make 20% to 25% gross margin just to make that a viable distribution business. So that kind of delta, we've picked up from the China business, although as you look at it as a percent of our overall sales, China is still -- it's important, but it's relatively small.

So we picked up a portion of that almost 300 basis points. So certainly the China add and then we've also been making progress over the past several years in some of our product lines in terms of actually just reducing our bill of materials cost, and that has continued. So that's at least half of the overall gross margin bump is just the work we've been doing overall. Tiny bit on pricing, but as we talked about, that's pretty minimal.

So it's really China and then the sort of long-standing initiatives we have to take cost out of the product. So the manufacturing facility in China has not yielded incremental margin benefits to us yet. That is the opportunity for sort of the first half of '27 as I mentioned, where we'll start producing some product at that facility that's really not destined for China that's going to go elsewhere in the world that was previously produced elsewhere. And that actually will then be an effective gross margin upside opportunity for that product.

So don't have the exact ramp for you on that on how much or what timing in '27. But that's something we'll see benefit of at some point through the first half of the year, and that will be a true return on that China manufacturing facility purchase. And we have all the costs for embedded in our cost structure now, and we'll get the first incremental gross margin next year.

Operator

We now hear from Jeff Van Sinderen with B. Riley Securities.

Jeff Van Sinderen

Can you speak a little bit more about the outlook for the various components of the OEM business, including the sort of online referral type? And I guess, how you expect the OEM business to evolve for the foreseeable future?

Ryan Pape

Yes, Jeff, good question. I think that the beauty that we have in how we've organized our business is that from a strategy standpoint, we can be relatively agnostic as to the type of program we construct to meet the needs of the OEM. And just to put that sort of a finer point on that, we can sell the OEM's product. And we've got a number of product only. We've got a number of initiatives open that would be exactly that. The acquisition of VISCO in the graphics space really adds to that because that's what the business is for the most part. It's a product business to the OEMs.

And then the second piece which has been the preponderance of our business to date is we can provide a complete turnkey labor solution, where we're installing the product and servicing it in the field from a warranty and field service standpoint. And then the third piece is through our referral platform, we can build these bespoke e-commerce experiences that leverage our full dealer channel to get the consumer, get the product installed. And all of those have a place and they all have various advantages, trade-offs and other opportunities. So we're equally willing to deploy any and all of those for whatever meets the best needs of the customer.

Our opinion would be that we'll probably continue to see the most growth with the second option being labor service and then the third option being the referral platform, leveraging our installer network. And the reason there's a good use for both is that labor gives the OEM complete control. They're selling a turnkey product. It's an option or an accessory on the build. But the limitations of that is you may be space constrained on doing that work in terms of how many vehicles and what type of throughput you could get in any one manufacturing site. There's generally not tons of extra space to do new things at these facilities or near them.

The e-commerce and referral platform really has sort of not infinite capacity, but it's very burstable and it has a lot of capacity because, obviously, you're doing it in a distributed way. But you have to be content to sell that in a different way to the customer, too, because it's not going to be sold as a check-the-box option on the build of the car. So in any event, point is that there's a place for all of it. We see the labor service and then the referral e-commerce as the two that are going to be leading the charge for the most part.

Jeff Van Sinderen

Okay. That's helpful. Can you provide more color on the Texas facility build-out and the next milestones to expect there?

Ryan Pape

Yes. I mean the real milestone is -- I mean, the real inflection point will be as we get into the spring, call it, end of Q1 into Q2 where there's equipment being delivered that will be married up with facility construction, which takes us to that sort of middle of '27 inflection point of powering things on and starting to produce.

So I think that between now and then, it's really a project management exercise to ensure that everyone and everything involved stays on track and on schedule. But that really middle of the year is the inflection point where those two halves of that come together. And obviously, we track every detail of this every day. And so we'll continue to do that as we get into next year and provide updates should that timing change in any way.

Operator

With no remaining questions in our queue, I turn the floor back over to your host and management for closing remarks.

Ryan Pape

I want to thank everybody for joining us today, and thank our team for doing an amazing job and look forward to speaking with everyone next quarter.

Operator

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.