Tecnoglass, Inc. (NASDAQ: TGLS) (“Tecnoglass” or the “Company”), a leading manufacturer of architectural glass, windows, and associated aluminum products serving the global residential and commercial end markets, today reported financial results for the fourth quarter and full year ended December 31, 2020.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “2020 was a milestone year for Tecnoglass. Our exceptional results reflect the resilience and dedication of our team as we capitalized on strong residential macro tailwinds and recovering commercial end market conditions to post our second straight quarter of growth in the U.S. Additionally, we delivered on our goal to produce strong returns on our previously implemented automation and capacity investments, contributing to record full year gross profit and Adjusted EBITDA levels, both on a dollar basis and as a percentage of sales. Just as important, our success is translating into a step-change in cash generation, with our operating cash flow representing over 70% of Adjusted EBITDA in 2020. We were thrilled to exit the year with a much stronger and leaner company, underpinned by a significantly improved capital position to further extend our leadership in the architectural glass industry. We will continue to leverage Tecnoglass’ structural competitive advantages to maintain industry leading margins while capturing additional market share in the U.S. We are well situated to achieve another year of stellar financial performance and returns for our shareholders in 2021.”

Christian Daes, Chief Operating Officer of Tecnoglass, added, “Fourth quarter results were encouraging and marked a return to growth in total revenues to close out an extraordinary year. Single-family residential revenues expanded more than 50% year-over-year in the quarter, and represented nearly 20% of our revenues for the full year 2020. Overall quoting and bidding activity continued to strengthen since mid-year 2020, resulting in defensible backlog position of $545 million. Our strong performance in 2020 was augmented by winning new customers, entering new markets and maintaining our commitment to innovation through the introduction of new best-in-class products, particularly in residential. As we move into 2021, we remain focused on expanding our addressable market in single-family housing in the U.S. Accomplishments to date reflect our dedication to excellence and we are excited to drive further improvement across our business in the coming quarters.”

Fourth Quarter 2020 Results

Total revenues for the fourth quarter of 2020 increased 1.0% to $102.4 million, compared to $101.4 million in the prior year quarter. U.S. revenues of $87.8 million, which represented 86% of total revenues, grew 4.8% compared to $83.8 million in the prior year quarter, primarily driven by strong growth in residential activity. The contribution of U.S. revenue growth to total revenues was partly offset by lower revenue from Colombia, primarily attributable to delayed activity at many customer job sites due to COVID-19 related factors. Changes in foreign currency exchange rates had an adverse impact of $0.7 million on Colombia and total revenues in the quarter.

Gross profit for the fourth quarter of 2020 grew 25.8% to $36.9 million, representing a 36.1% gross margin, compared to gross profit of $29.3 million, representing a 28.9% gross margin in the prior year quarter. The 710 basis point improvement in gross margin mainly reflected greater operating efficiencies from prior automation initiatives and a higher mix of revenue from manufacturing versus installation activity. Selling, general and administrative expense (“SG&A”) was $19.4 million compared to $18.6 million in the prior year quarter, primarily attributable to higher variable expenses related to shipping, as well as COVID-19 related expenses. As a percent of total revenues, SG&A was 18.9% compared to 18.3% in the prior year quarter.

Net income was $18.5 million, or $0.39 per diluted share, in the fourth quarter of 2020 compared to net income of $10.9 million, or $0.23 loss per diluted share, in the prior year quarter, including an after-tax non-cash foreign exchange transaction gain of $13.6 million in the fourth quarter 2020 and a $8.9 million gain in the fourth quarter 2019. As previously disclosed, these gains and losses are related to the accounting re-measurement of U.S. Dollar denominated assets and liabilities against the Colombian Peso as functional currency.

Adjusted net income1 was $10.3 million, or $0.22 per diluted share, in the fourth quarter of 2020 compared to adjusted a net income of $7.5 million, or $0.16 per diluted share, in the prior year quarter. Adjusted net income1, as reconciled in the table below, excludes the impact of non-cash foreign exchange transaction gains or losses and other non-core items, along with the tax impact of adjustments at statutory rates, to better reflect core financial performance.

Adjusted EBITDA1, as reconciled in the table below, increased 19.3% to $25.7 million, or 25.1% of total revenues in the fourth quarter of 2020, compared to $21.5 million, or 21.2% of revenues, in the prior year quarter. The improvement was driven by a stronger gross margin. Adjusted EBITDA1 in the fourth quarter 2020 included $1.6 million in contribution from the Company’s joint venture with Saint-Gobain, compared to $1.1 million in the prior year quarter.

Full Year 2020 Results

Total revenues for the full year 2020 were $374.9 million compared to $430.9 million in the prior year with the decrease mainly related to one month less of invoicing in the second half of March and first half of April as a result of the previously communicated suspension of plant operations, as well as a slower recovery in Latam markets since the onset of the COVID-19 pandemic. Excluding the impact of unfavorable foreign currency exchange, total revenues were lower by 12.3% compared to the prior year.

Gross profit increased 2.5% year-over-year to a full year record of $139.3 million, representing a 37.1% gross margin, compared to $135.8 million, representing a 31.5% gross margin in the prior year. Operating income was $66.1 million compared to $58.8 million in the prior year. Net income was $24.2 million, or a $0.52 per diluted share, compared to net income of $24.3 million, or $0.55 per diluted share in the prior year. Adjusted net income1 was $36.8 million, or $0.79 per diluted share, compared to $30.8 million, or $0.69 per diluted share in the prior year. Adjusted EBITDA1 for the full year 2020 improved to a record $97.8 million, or 26.1% of sales, compared to $92.4 million, or 21.4% of sales, in the prior year.

Dividend

The Company declared a quarterly cash dividend of $0.0275 per share for the fourth quarter of 2020, which was paid on January 29, 2021 to shareholders of record as of the close of business on December 31, 2020.

Balance Sheet & Liquidity

The Company ended 2020 with cash and cash equivalents of $66.9 million compared to $47.9 million in the prior year. Cash provided by operating activities of $71.4 million improved by $45.8 million compared to the prior year, attributable to higher profitability as well as more efficient inventory and working capital management. During 2020 the Company incurred $19.8 million of capital expenditures, compared to $25.0 million in the prior year, with the decrease due to the Company’s $20 million investment into high-return projects to expand and automate key operations at several glass and aluminum facilities, which was largely completed in the fourth quarter of 2019.

On November 2, 2020, Tecnoglass announced a new $300 million Senior Secured Credit Facility, consisting of a $250 million delayed draw term loan and a $50 million committed revolving credit facility, with a maturity date in 2025. The new facility has an initial interest rate spread of 3.00%, which will decrease to a spread of 2.50% in April 2021 based on the Company´s leverage as of the end of the year.

Subsequent to the end of 2020, the Company redeemed in full its $210 million unsecured senior notes, which bear interest at a rate of 8.2%, following the step down in redemption price at the end of January 2021. The $8.6 million call option was fully paid in January alongside with the redemption of the notes. Following the redemption of the senior notes, annualized savings on cash interest expense are expected to approximate $11 million annually. On a pro forma basis giving effect to the pay down of the unsecured senior notes, the Company had total liquidity of approximately $126.9 million, including cash of $66.9 million and availability under its revolving credit facilities of $60 million.

Full Year 2021 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “Our positive momentum continued into the first quarter, with single-family residential representing a growing share of our revenues. Based on our current invoicing schedule and underlying market demand, we are introducing our full year 2021 outlook for revenue to grow to a range of $400 million to $415 million. In addition, we anticipate full year Adjusted EBITDA to grow to a range of $100 million to $110 million, implying growth of approximately 7% at the midpoint, driven by higher revenues, partly offset by higher unit costs for raw materials and a more normalized revenue mix. We expect the stronger demand in the U.S. to continue to offset the slower recovery in Latin American markets. Furthermore, we anticipate our track record of strong cash flow generation to continue in the full year 2021.”

1Adjusted net income (loss) and Adjusted EBITDA in both periods are reconciled in the table below.

Webcast and Conference Call

Management will host a webcast and conference call on Tuesday, March 2, 2020 at 10:00 a.m. eastern time (10:00 a.m. Bogota, Colombia time) to review the Company’s results. The conference call will be broadcast live over the Internet. Additionally, a slide presentation will accompany the conference call. To listen to the call and view the slides, please visit the Investor Relations section of Tecnoglass’ website at www.tecnoglass.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. Due to potential extended wait times to access the conference call via dial-in, the Company encourages use of the webcast. For those unable to access the webcast, the conference call will be accessible by dialing 1-877-705-6003 (domestic) or 1-201-493-6725 (international). Upon dialing in, please request to join the Tecnoglass Fourth Quarter 2020 Earnings Conference Call.

If you are unable to listen live, a replay of the webcast will be archived on the website. You may also access the conference call playback by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and entering pass code: 13715780.

About Tecnoglass

Tecnoglass Inc. is a leading producer of architectural glass, windows, and associated aluminum products serving the multi-family, single-family and commercial end markets. Tecnoglass is the second largest glass fabricator serving the U.S. and the #1 architectural glass transformation company in Latin America. Located in Barranquilla, Colombia, the Company’s 2.7 million square foot, vertically-integrated and state-of-the-art manufacturing complex provides efficient access to over 1,000 global customers, with the U.S. accounting for more than 90% of revenues. Tecnoglass’ tailored, high-end products are found on some of the world’s most distinctive properties, including the El Dorado Airport (Bogota), United Nations Plaza (New York), Icon Bay (Miami), and Salesforce Tower (San Francisco). For more information, please visit www.tecnoglass.com or view our corporate video at https://vimeo.com/134429998.

Forward Looking Statements

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Tecnoglass’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Tecnoglass’ business. These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass’ filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that Tecnoglass’ financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events and changes in assumptions or otherwise, except as required by law.

Investor Relations:

Santiago GiraldoCFO305-503-9062investorrelations@tecnoglass.com

Tecnoglass Inc. and SubsidiariesConsolidated Balance Sheets(In thousands, except share and per share data)(Unaudited)

    December 31,     December 31,  
    2020     2019  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 66,899     $ 47,862  
Investments     2,387       2,304  
Trade accounts receivable, net     88,368       110,558  
Due from related parties     8,574       8,057  
Inventories     80,742       82,714  
Contract assets – current portion     26,288       42,014  
Other current assets     13,545       29,340  
Total current assets   $ 286,803     $ 322,849  
Long-term assets:                
Property, plant and equipment, net   $ 152,266     $ 154,609  
Deferred income taxes     268       4,595  
Contract assets – non-current     10,228       7,059  
Due from related parties - long term     484       1,786  
Long-term trade accounts receivable     2,985       -  
Intangible assets     5,112       6,703  
Goodwill     23,561       23,561  
Long-term investments     47,535       45,596  
Other long-term assets     2,783       2,910  
Total long-term assets     245,222       246,819  
Total assets   $ 532,025     $ 569,668  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Short-term debt and current portion of long-term debt   $ 1,764     $ 16,084  
Trade accounts payable and accrued expenses     42,178       61,878  
Accrued interest expense     7,175       7,645  
Due to related parties     4,750       4,415  
Dividends payable     1,352       67  
Contract liability – current portion     24,694       12,459  
Due to equity partners     -       10,900  
Other current liabilities     9,630       15,563  
Total current liabilities   $ 91,543     $ 129,011  
Long-term liabilities:                
Deferred income taxes   $ 3,170     $ 411  
Long-term payable associated to GM&P acquisition     -       8,500  
Long-term liabilities from related parties     645       622  
Contract liability – non-current     977       187  
Long-term debt     222,722       243,727  
Total long-term liabilities     227,514       253,447  
Total liabilities   $ 319,057     $ 382,458  
SHAREHOLDERS’ EQUITY                
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2020 and December 31, 2019 respectively   $ -     $ -  
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 47,674,773 and 46,117,631 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively     5       5  
Legal Reserves     2,273       1,367  
Additional paid-in capital     219,290       208,283  
Retained earnings     34,326       16,213  
Accumulated other comprehensive (loss)     (43,512 )     (39,264 )
Shareholders’ equity attributable to controlling interest     212,382       186,604  
Shareholders’ equity attributable to non-controlling interest     586       606  
Total shareholders’ equity     212,968       187,210  
Total liabilities and shareholders’ equity   $ 532,025     $ 569,668  

Tecnoglass Inc. and SubsidiariesConsolidated Statements of Operations and Comprehensive Income(In thousands, except share and per share data)(Unaudited)

    Three months ended     Twelve months ended  
    December 31,     December 31,  
    2020     2019     2020     2019  
Operating revenues:                                
External customers   $ 101,732     $ 98,310     $ 372,408     $ 422,118  
Related parties     642       3,081       2,515       8,794  
Total operating revenues     102,374       101,391       374,923       430,912  
Cost of sales     65,464       72,052       235,669       295,103  
Gross profit     36,910       29,339       139,254       135,809  
Operating expenses:                                
Selling expense     (9,799 )     (9,810 )     (38,962 )     (41,925 )
General and administrative expense     (9,571 )     (8,766 )     (34,172 )     (35,069 )
Total operating expenses     (19,370 )     (18,576 )     (73,134 )     (76,994 )
Operating income     17,540       10,763       66,120       58,815  
Non-operating (expenses) income, net     220       487       (12 )     1,565  
Equity method income     598       323       1,387       596  
Foreign currency transactions (losses) gains     13,585       8,948       (8,638 )     (973 )
Interest expense and deferred cost of financing     (4,435 )     (5,586 )     (21,671 )     (22,806 )
Income before taxes     27,508       14,935       37,186       37,197  
Income tax benefit (provision)     (8,980 )     (4,338 )     (13,001 )     (12,928 )
Net (loss) income   $ 18,528     $ 10,597     $ 24,185     $ 24,269  
(Income) Loss attributable to non-controlling interest     (72 )     296       25       266  
(Loss) Income attributable to parent   $ 18,456     $ 10,893     $ 24,210     $ 24,535  
Comprehensive income:                                
Net income   $ 18,528     $ 10,597     $ 24,185     $ 24,269  
Foreign currency translation adjustments     14,538       6,053       (4,407 )     (2,715 )
Change in fair value derivative contracts     1,100       1,450       159       509  
Total comprehensive (loss) income   $ 34,166     $ 18,100     $ 19,937     $ 22,063  
Comprehensive (income) loss attributable to non-controlling interest     (72 )     296       25       266  
Total comprehensive (loss) income attributable to parent   $ 34,094     $ 18,396     $ 19,962     $ 22,329  
Basic (loss) income per share   $ 0,40     $ 0,23     $ 0,52     $ 0,55  
Diluted (loss) income per share   $ 0,40     $ 0,23     $ 0,52     $ 0,55  
Basic weighted average common shares outstanding     46,117,631       46,291,032       46,398,428       44,464,097  
Diluted weighted average common shares outstanding     46,398,428       46,291,032       46,398,428       44,464,097  

Tecnoglass Inc. and SubsidiariesConsolidated Statements of Cash Flows(In thousands)(Unaudited)

    Year ended December 30,  
    2020     2019  
             
CASH FLOWS FROM OPERATING ACTIVITIES                
Net (loss) income   $ 24,185     $ 24,269  
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:                
Provision for bad debts     1,097       1,389  
Depreciation and amortization     20,590       22,735  
Deferred income taxes     6,581       (2,698 )
Equity method income     (1,387 )     (596 )
Deferred cost of financing     972       1,624  
Other non-cash adjustments     20       82  
Unrealized currency translation losses (gains)     7,930       6,509  
Changes in operating assets and liabilities:                
Trade accounts receivables     4,557       (27,712 )
Inventories     (2,121 )     8,419  
Prepaid expenses     (1,426 )     (3,328 )
Other assets     13,948       (7,773 )
Trade accounts payable and accrued expenses     (20,943 )     (1,609 )
Accrued interest expense     (417 )     83  
Taxes payable     (6,622 )     5,075  
Labor liabilities     192       (19 )
Contract assets and liabilities     23,649       (1,545 )
Related parties     629       759  
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ 71,434     $ 25,664  
CASH FLOWS FROM INVESTING ACTIVITIES                
Proceeds from sale of investments     471       1,600  
Proceeds from sale of property and equipment     6       -  
Joint Venture investment     -       (34,100 )
Purchase of investments     (218 )     (1,684 )
Acquisition of property and equipment     (18,323 )     (24,952 )
CASH USED IN INVESTING ACTIVITIES   $ (18,064 )   $ (59,136 )
CASH FLOWS FROM FINANCING ACTIVITIES     -          
Cash dividend     (3,801 )     (5,227 )
Proceeds from equity offering     -       36,478  
Proceeds from debt     41,343       46,584  
Deferred financing transaction costs     (6,384 )     -  
Repayments of debt     (64,694 )     (29,507 )
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   $ (33,536 )   $ 48,328  
Effect of exchange rate changes on cash and cash equivalents   $ (797 )   $ (34 )
NET (DECREASE) INCREASE IN CASH     19,037       14,822  
CASH - Beginning of period     47,862       33,040  
CASH - End of period   $ 66,899     $ 47,862  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
Cash paid during the period for:                
Interest   $ 19,168     $ 19,696  
Income Tax   $ 10,683     $ 12,296  
NON-CASH INVESTING AND FINANCING ACTIVITES:                
Assets acquired under credit or debt   $ 2,242     $ 1,222  

Revenues by Region(Amounts in thousands)(Unaudited)

    Three months ended     Twelve months ended  
    Dec 31,     Dec 31,  
    2020     2019     % Change     2020     2019     % Change  
Revenues by Region                                                
United States     87,841       83,847       4.8 %     341,467       368,055       -7.2 %
Colombia     9,359       14,109       -33.7 %     23,302       52,299       -55.4 %
Other Countries     5,172       3,436       50.5 %     10,155       10,559       -3.8 %
Total Revenues by Region     102,372       101,391       1.0 %     374,923       430,912       -13.0 %

Reconciliation of Non-GAAP Performance Measures to GAAP Performance Measures(In thousands)(Unaudited)

The Company believes that total revenues with foreign currency held neutral non-GAAP performance measures, which management uses in managing and evaluating the Company’s business, may provide users of the Company’s financial information with additional meaningful bases for comparing the Company’s current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non-GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under accounting principles generally accepted in the United States.

    Three months ended     Twelve months ended  
    Dec 31,     Dec 31,  
    2020     2019     % Change     2020     2019     % Change  
Total Revenues with Foreign Currency Held Neutral     103,079       101,391       1.7 %     377,851       430,912       -12.3 %
Impact of changes in foreign currency     (707 )     -               (2,928 )     -          
Total Revenues, As Reported     102,372       101,391       1.0 %     374,923       430,912       -13.0 %

Currency impacts on total revenues for the current quarter have been derived by translating current quarter revenues at the prevailing average foreign currency rates during the prior year quarter, as applicable.

Reconciliation of Adjusted EBITDA and Adjusted net (loss) income to net (loss) income(In thousands, except share and per share data)(Unaudited)

Adjusted EBITDA and adjusted net (loss) income are not measures of financial performance under generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA and adjusted net (loss) income, in addition to operating profit, net (loss) income and other GAAP measures, is useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance. Investors should recognize that Adjusted EBITDA and adjusted net (loss) income might not be comparable to similarly-titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP.

Reconciliations of the non-GAAP measures used in this press release are included in the tables attached to this press release, to the extent available without unreasonable effort. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures.

A reconciliation of Adjusted net (loss) income and Adjusted EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, with amounts in thousands:

    Three months ended     Twelve months ended  
    Dec 31,     Dec 31,  
    2020     2019     2020     2019  
                         
Net (loss) income     18,528       10,597       24,185       24,269  
Less: Income (loss) attributable to non-controlling interest     (72 )     296       25       266  
(Loss) Income attributable to parent     18,456       10,893       24,210       24,535  
Foreign currency transactions losses (gains)     (13,562 )     (8,948 )     10,631       973  
Deferred cost of financing     (333 )     411       1,898       1,624  
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     1,215       2,962       4,115       5,350  
Joint Venture VA (Saint Gobain) adjustments     615       574       1,943       1,337  
Tax impact of adjustments at statutory rate     3,861       1,600       (5,948 )     (2,971 )
Adjusted net (loss) income     10,252       7,492       36,849       30,848  
                                 
Basic income (loss) per share     0,39       0,23       0,52       0,55  
Diluted income (loss) per share     0,39       0,23       0,52       0,55  
                                 
Diluted Adjusted net income (loss) per share     0,22       0,16       0,79       0,69  
                                 
Diluted Weighted Average Common Shares Outstanding in thousands     47,235       46,118       46,398       44,464  
Basic weighted average common shares outstanding in thousands     47,235       46,118       46,398       44,464  
Diluted weighted average common shares outstanding in thousands     47,235       46,118       46,398       44,464  
    Three months ended     Twelve months ended  
    Dec 31,     Dec 31,  
    2020     2019     2020     2019  
                         
Net (loss) income     18,528       10,597       24,185       24,269  
Less: Income (loss) attributable to non-controlling interest     (72 )     296       25       266  
(Loss) Income attributable to parent     18,456       10,893       24,210       24,535  
Interest expense and deferred cost of financing     4,435       5,586       21,671       22,806  
Income tax (benefit) provision     8,980       4,338       13,001       12,928  
Depreciation & amortization     5,170       5,546       20,590       22,735  
Foreign currency transactions losses (gains)     (13,562 )     (8,948 )     10,631       973  
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     1,215       2,962       4,115       5,350  
Director Stock compensation and provision for obsolete inventory     -       -       -       -  
Gain on change in fair value of earnout shares liabilities     -       -       -       -  
Gain on change in fair value of warrant liability     -       -       -       -  
Joint Venture VA (Saint Gobain) EBITDA adjustments     966       1,146       3,576       3,048  
Change in FV of Hedging Derivatives             -               -  
Adjusted EBITDA     25,660       21,523       97,794       92,375  
Tecnoglass (NASDAQ:TGLS)
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