Notes
to Condensed Consolidated Financial Statements
(Amounts
in thousands, except share and per share data)
(Unaudited)
Note
1. General
Business
Description
Tecnoglass
Inc., a Cayman Islands exempted company (the “Company”, “Tecnoglass,” “TGI,” “we, “us”
or “our”), manufactures hi-specification, architectural glass and windows for the global residential and commercial
construction industries. Currently the Company offers design, production, marketing, and installation of architectural systems for buildings
of high, medium and low elevation size. Products include windows and doors in glass and aluminum, office partitions and interior divisions,
floating facades and commercial window showcases. The Company exports most of its production to foreign countries, selling to customers
in North, Central and South America.
The
Company manufactures both glass and aluminum products. Its glass products include tempered glass, laminated glass, thermo-acoustic glass,
curved glass, silk-screened glass, acoustic glass and digital print glass. Its Alutions plant produces mill finished, anodized, painted
aluminum profiles and rods, tubes, bars and plates. Alutions’ operations include extrusion, smelting, painting and anodizing processes,
and exporting, importing and marketing aluminum products.
The
Company also designs, manufactures, markets and installs architectural systems for high, medium and low-rise construction, glass and
aluminum windows and doors, office dividers and interiors, floating facades and commercial display windows.
Note
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation and Use of Estimates
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations
of the Securities and Exchange Commission (“SEC”) for interim reporting purposes. The results reported in these unaudited
condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These
unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2020. The year-end condensed balance sheet data was derived from the
audited financial statements in the Form 10-K but does not include all disclosures required by US GAAP.
The
preparation of these unaudited condensed consolidated financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities
at the date of the Company’s financial statements. Actual results may differ from these estimates under different assumptions and
conditions. Estimates utilized in the preparation of these unaudited condensed consolidated financial statements relate to the
collectability of account receivables, the valuation of inventories, estimated earnings on uncompleted contracts, useful lives and potential
impairment of long-lived assets. Changes in estimates are reflected in the periods during which they become known. Actual amounts may
differ from these estimates and could differ materially. These financial statements reflect all adjustments that in the opinion of management
are necessary for a fair statement of the financial position, results of operations and cash flows for the period presented, and are
of a normal, recurring nature.
The
Company has one operating segment, Architectural Glass and Windows, which is also its reporting segment, comprising the design, manufacturing,
distribution, marketing and installation of high-specification architectural glass and window product sold to the construction industry.
Principles
of Consolidation
These
unaudited condensed consolidated financial statements consolidate TGI, its subsidiaries Tecnoglass S.A.S (“TG”), C.I. Energía
Solar S.A.S E.S. Windows (“ES”), ES Windows LLC (“ESW LLC”), Tecnoglass LLC (“Tecno LLC”), Tecno
RE LLC (“Tecno RE”), GM&P Consulting and Glazing Contractors (“GM&P”), Componenti USA LLC (“Componenti”)
and ES Metals SAS (“ES Metals”), which are entities in which we have a controlling financial interest because we hold a majority
voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply
the variable interest entity (“VIE”) model to the entity, if it is determined it is not, the entity is evaluated under
the voting interest model. All significant intercompany accounts and transactions are eliminated in consolidation, including unrealized
intercompany profits and losses. The equity method of accounting is used for investments in affiliates and other joint ventures over
which the Company has significant influence but does not have effective control.
TGI
and certain wholly owned subsidiaries with functional currency different than the U.S. dollar have long-term intercompany loan balances
denominated in foreign currencies that are remeasured at the current exchange rate in effect at the balance sheet date. Such loan balances
are not expected to be settled in the foreseeable future. Any gains and losses relating to these loans are included in the accumulated
other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity.
Derivative
Financial Instruments
The
Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the condensed consolidated balance
sheet. The unrealized gains or losses arising from changes in fair value of derivative instruments that are designated and qualify as
cash flow hedges, are recorded in the condensed consolidated statement of comprehensive income. Amounts in accumulated other comprehensive
loss on the condensed consolidated balance sheet are reclassified into the condensed consolidated statement of income in the same period
or periods during which the hedged transactions are settled.
Recently
Issued Accounting Pronouncements
In
June 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-13,
Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the allowance for credit losses
accounting model by requiring immediate recognition of management’s estimates of current expected credit losses. Under the
prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that
might not yet have met the threshold of being probable. The new model is applicable to all financial instruments that are not
accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of
financial instruments and requiring consideration of a broader range of variables when forming loss estimates. ASU 2016-13 is
effective for fiscal years beginning after December 15, 2019, (with early application permitted). The FASB issued ASU 2019-10 and
ASU 2019-11 during the fourth quarter of 2019 that will postpone the effective date to the year beginning after December 15, 2022.
In February 2020, the FASB issued ASU 2020-02 “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842),
which amends SEC Staff Accounting Bulletin No. 119 (SAB119) which contains interpretative guidance from the SEC aligned to the
FASB’s ASC 326. The Company is currently evaluating the potential effect of this ASU on its condensed consolidated financial
statements.
In
March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform
on Financial Reporting”. The amendments in this Update provide optional expedients and exceptions for contracts, hedging relationships,
and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts,
hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference
rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships
entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity
has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this
Update are effective for the Company through December 31, 2022 with early adoption permitted. The Company is currently evaluating the
potential effect of this ASU on its condensed consolidated financial statements.
Note
3. - Inventories, net
Schedule of Inventories
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Raw materials
|
|
$
|
41,026
|
|
|
$
|
47,282
|
|
Work in process
|
|
|
16,826
|
|
|
|
19,345
|
|
Finished goods
|
|
|
4,186
|
|
|
|
4,434
|
|
Stores and spares
|
|
|
8,601
|
|
|
|
8,981
|
|
Packing material
|
|
|
779
|
|
|
|
783
|
|
Total Inventories, gross
|
|
|
71,418
|
|
|
|
80,825
|
|
Less: Inventory allowance
|
|
|
(101
|
)
|
|
|
(83
|
)
|
Total inventories, net
|
|
$
|
71,317
|
|
|
$
|
80,742
|
|
Note
4. – Revenues, Contract Assets and Contract Liabilities
Disaggregation
of Total Net Sales
The
Company disaggregates its sales with customers by revenue recognition method for its only segment, as the Company believes these factors
affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows.
Schedule of Disaggregation by Revenue
|
|
Three
months ended
|
|
|
|
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Fixed price contracts
|
|
$
|
22,433
|
|
|
$
|
25,027
|
|
Product sales
|
|
|
88,447
|
|
|
|
62,271
|
|
Total Revenues
|
|
$
|
110,880
|
|
|
$
|
87,298
|
|
The
following table presents geographical information about revenues.
Schedule of Geographic Information
|
|
Three
months ended
|
|
|
|
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Colombia
|
|
$
|
7,665
|
|
|
$
|
6,472
|
|
United States
|
|
|
100,807
|
|
|
|
78,798
|
|
Panama
|
|
|
256
|
|
|
|
680
|
|
Other
|
|
|
2,152
|
|
|
|
1,348
|
|
Total Revenues
|
|
$
|
110,880
|
|
|
$
|
87,298
|
|
Contract
Assets and Liabilities
Contract
assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales, but have
not been billed to customers and are classified as current and a portion of the amounts billed on certain fixed price contracts that
are withheld by the customer as a retainage until a final good receipt of the complete project to the customers satisfaction. Contract
liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, and represent amounts received
in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred as current,
and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities
are determined on a contract by contract basis at the end of each reporting period. The non-current portion of contract liabilities is
included in other liabilities in the Company’s condensed consolidated balance sheets.
The
table below presents the components of net contract assets (liabilities).
Schedule of Contract Assets and Liabilities
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Contract assets — current
|
|
$
|
23,530
|
|
|
$
|
26,288
|
|
Contract assets — non-current
|
|
|
11,023
|
|
|
|
10,228
|
|
Contract liabilities — current
|
|
|
(29,287
|
)
|
|
|
(24,694
|
)
|
Contract liabilities
— non-current
|
|
|
(999
|
)
|
|
|
(977
|
)
|
Net contract assets
|
|
$
|
4,267
|
|
|
$
|
10,845
|
|
The
components of contract assets are presented in the table below.
Schedule of Contract Assets and Liabilities
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Unbilled contract receivables,
gross
|
|
$
|
11,324
|
|
|
$
|
13,534
|
|
Retainage
|
|
|
23,229
|
|
|
|
22,982
|
|
Total contract assets
|
|
|
34,553
|
|
|
|
36,516
|
|
Less: current portion
|
|
|
23,530
|
|
|
|
26,288
|
|
Contract Assets –
non-current
|
|
$
|
11,023
|
|
|
$
|
10,228
|
|
The
components of contract liabilities are presented in the table below.
Schedule of Contract Assets and Liabilities
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Billings in excess of costs
|
|
$
|
9,978
|
|
|
|
7,191
|
|
Advances from customers
on uncompleted contracts
|
|
|
20,308
|
|
|
|
18,480
|
|
Total contract liabilities
|
|
|
30,286
|
|
|
|
25,671
|
|
Less: current portion
|
|
|
29,287
|
|
|
|
24,694
|
|
Contract liabilities
– non-current
|
|
$
|
999
|
|
|
|
977
|
|
During
the three months ended March 31, 2021, the Company recognized $1,468 of sales related to its contract liabilities at January 1, 2021.
During the three months ended March 31, 2020, the Company recognized $1,279 of sales related to its contract liabilities at January 1,
2020.
Remaining
Performance Obligations
As
of March 31, 2021, the Company had $247.9
million of remaining performance obligations,
which represents the transaction price of firm orders minus sales recognized from inception to date. Remaining performance obligations
exclude unexercised contract options, verbal commitments, Letters of Intent or written mandates, and potential orders under basic ordering
agreements. The Company expects to recognize 100%
of sales relating to existing performance obligations
within three years, of which $167.3
million are expected to be recognized during
the year ending December 31, 2021, $80.6
million during the year ending December 31,
2022 or thereafter.
Note
5. Intangible Assets
Intangible
assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates issued for approved products and required
to market hurricane-resistant glass in Florida. Also, it includes the intangibles acquired during the acquisition of GM&P.
Schedule of Finite-Lived Intangible Assets
|
|
March
31, 2021
|
|
|
|
Gross
|
|
|
Acc.
Amort.
|
|
|
Net
|
|
Trade Names
|
|
$
|
980
|
|
|
$
|
(800
|
)
|
|
$
|
180
|
|
Notice of Acceptances (NOAs), product designs
and other intellectual property
|
|
|
9,325
|
|
|
|
(5,500
|
)
|
|
|
3,825
|
|
Non-compete Agreement
|
|
|
165
|
|
|
|
(135
|
)
|
|
|
30
|
|
Customer Relationships
|
|
|
4,140
|
|
|
|
(3,462
|
)
|
|
|
678
|
|
Total
|
|
$
|
14,610
|
|
|
$
|
(9,897
|
)
|
|
$
|
4,713
|
|
|
|
December
31, 2020
|
|
|
|
Gross
|
|
|
Acc.
Amort.
|
|
|
Net
|
|
Trade Names
|
|
$
|
980
|
|
|
$
|
(751
|
)
|
|
$
|
229
|
|
Notice of Acceptances (NOAs), product designs
and other intellectual property
|
|
|
9,236
|
|
|
|
(5,255
|
)
|
|
|
3,981
|
|
Non-compete Agreement
|
|
|
165
|
|
|
|
(126
|
)
|
|
|
39
|
|
Customer Relationships
|
|
|
4,140
|
|
|
|
(3,277
|
)
|
|
|
863
|
|
Total
|
|
$
|
14,521
|
|
|
$
|
(9,409
|
)
|
|
$
|
5,112
|
|
The
weighted average amortization period is 5.35 years.
During
the three months ended March 31, 2021 and 2020, the amortization expense amounted to $552 and $550, respectively, and was included within
the general and administration expenses in our Condensed Consolidated Statement of Operations.
The
estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2021 is as follows:
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
Year
ending
|
|
(in
thousands)
|
|
2021
|
|
$
|
1,637
|
|
2022
|
|
|
1,184
|
|
2023
|
|
|
869
|
|
2024
|
|
|
553
|
|
2025
|
|
|
246
|
|
Thereafter
|
|
|
221
|
|
Total
|
|
$
|
4,710
|
|
Note
6. Debt
The
Company’s debt is comprised of the following:
Schedule of Long Term Debt
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Revolving lines of credit
|
|
$
|
924
|
|
|
$
|
377
|
|
Finance lease
|
|
|
269
|
|
|
|
350
|
|
Unsecured senior notes
|
|
|
-
|
|
|
|
210,000
|
|
Other loans
|
|
|
462
|
|
|
|
31
|
|
Syndicated loan
|
|
|
239,796
|
|
|
|
22,835
|
|
Less: Deferred cost
of financing
|
|
|
(6,068
|
)
|
|
|
(9,107
|
)
|
Total obligations under
borrowing arrangements
|
|
|
235,383
|
|
|
|
224,486
|
|
Less: Current portion of long-term debt and
other current borrowings
|
|
|
13,748
|
|
|
|
1,764
|
|
Long-term debt
|
|
$
|
221,635
|
|
|
$
|
222,722
|
|
On
October 2020, the Company entered into a $300
million five-year term Senior Secured Credit
Facility consisting of a $250
million delayed draw term loan and a $50
million committed revolving credit facility which
bears interest at a rate of LIBOR, with a 0.75%
floor, plus a spread of between 2.50%
and 3.50%,
based on the Company’s net leverage ratio. The effective interest rate for this credit facility including deferred issuance costs
is 4.37%.
In December 2020, we drew $23.1
million and used the proceeds of the long-term
debt facility to repay several credit facilities. In January 2021, we drew an additional $220
million and used the proceeds to redeem the Company’s
existing $210
million unsecured senior notes, which had an
interest rate of 8.2%
and matured
in 2022. In relation to this, the Company accounted
for debt extinguishment cost of $11.1
million which included a call premium charge
of $8.6
million paid to exercise the call option, and
$2.3 million
non-cash expenses corresponding to the unamortized portion of deferred cost of financing related to fees paid when the unsecured senior
notes were originated in 2017. Subsequent
to the end of the first quarter and based on Tecnoglass’ leverage ratio as of March 31, 2021, the interestrate spread on the Company’s
$300 million Senior Secured Credit Facility decreased 50 basis points to a spread of 2.50% in April 2021.
As
of March 31, 2021 and December 31, 2020, all assets of the company are pledged as collateral for the $300 million Senior Secured Credit
Facility.
The
Company was obligated under various finance leases under which the aggregate present value of the minimum lease payments amounted to
$269 and $350 as of March 31, 2021 and December 31, 2020, respectively. In line with this, the Company recorded right-of-use assets related
to computing equipment for $223 and $321 as of March 31, 2021 and December 31, 2020, respectively. The lease agreements include terms
to extend the lease, however the Company does not intend to extend its current leases. The weighted average remaining lease term approximates
1,5 years. The right-of-use assets’ depreciation and interest expense from the lease liability are recorded on our Condensed Consolidated
Statement of Operations.
Maturities
of long-term debt and other current borrowings are as follows as of March 31, 2021:
Schedule of Maturities of Long Term Debt
|
|
|
-
|
|
2022
|
|
$
|
13,748
|
|
2023
|
|
|
12,220
|
|
2024
|
|
|
15,195
|
|
2025
|
|
|
18,234
|
|
2026
|
|
|
182,055
|
|
Thereafter
|
|
|
-
|
|
Total
|
|
$
|
241,452
|
|
The
Company’s loans have maturities ranging from a few weeks to 5 years. Our credit facilities bear an interest at a weighted average
of rate 3.75% as of March 31, 2021 and have subsequently stepped down to 3.25% in April 2021.
Note
7. Hedging Activity and Fair Value Measurements
Hedging
Activity
During
the quarter ended September 30, 2019, we entered into several foreign currency non-delivery forward and collar contracts to hedge
the fluctuations in the exchange rate between the Colombian Peso and the U.S. Dollar. Our contracts are designated as cash flow hedges
since they are highly effective in offsetting changes in the cash flows attributable to forecasted Colombian Peso denominated costs and
expenses.
Guidance
under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our
credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining
fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an
asset position by evaluating their financial position, including cash on hand, as well as their credit ratings.
As
of March 31, 2021, the fair value of foreign currency collar contracts was not measured contracts since these contracts were settled
in January and February 2021.
We
assess the effectiveness of our foreign currency collar contracts by comparing the change in the fair value of the collar contracts to
the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our foreign currency collar
contracts is reported as a component of accumulated other comprehensive income and is reclassified into earnings in the same line item
in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. The amount of
gains, net, recognized in the “accumulated other comprehensive income” line item in the consolidated balance sheet as of
December 31, 2020, were reclassified to earnings during the first quarter of 2021 for $185.
The
fair value of our foreign currency hedges classified in the consolidated balance sheets as of December 31, 2020, are as follows:
Schedule of Fair Value of Foreign Currency Hedges
|
|
Derivative
Assets
|
|
|
Derivative
Liabilities
|
|
|
|
December
31, 2020
|
|
|
December
31, 2020
|
|
Derivatives
designated as hedging
instruments
under Subtopic 815-20:
|
|
Balance
Sheet Location
|
|
Fair
Value
|
|
|
Balance
Sheet Location
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Delivery
Collar Contracts
|
|
Other
current assets
|
|
$
|
230
|
|
|
Accrued
liabilities
|
|
$
|
(
-
|
)
|
Total
derivative instruments
|
|
Total
derivative assets
|
|
$
|
230
|
|
|
Total
derivative liabilities
|
|
$
|
(
-
|
)
|
The
ending accumulated balance for the foreign currency collar contracts included in accumulated other comprehensive income, net of tax,
was $159 as of December 31, 2020, comprised of a derivative gain of $230 and an associated net tax liability of $71.
The
following table presents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed
consolidated financial statements, for the three months ended March 2021 and 2020:
Schedule of Gains (Losses) on Derivative Financial Instruments
|
|
Derivatives
in Cash Flow Hedging Relationships
|
|
|
|
Amount of
Gain or (Loss)
|
|
|
Location
of Gain or (Loss)
Reclassified
from
Accumulated
|
|
Amount
of Gain or (Loss)
Reclassified
from
|
|
|
|
Recognized
in OCI (Loss)
|
|
|
OCI (Loss) into
|
|
Accumulated
|
|
|
|
on
Derivatives
|
|
|
Income
|
|
OCI
(Loss) into Income
|
|
|
|
Three
Months Ended
|
|
|
|
|
Three
Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-delivery Forwards and Collar
Contracts
|
|
$
|
-
|
|
|
$
|
(5,228
|
)
|
|
Operating
Revenues
|
|
$
|
185
|
|
|
$
|
677
|
|
Fair
Value Measurements
The
Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a
framework for measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted)
in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially
the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure
assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined
based on the lowest level input that is significant to the fair value measurement.
The
carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and advances from customers approximate their fair value due to their relatively short-term maturities. The Company bases its fair value
estimate for long term debt obligations on its internal valuation that all debt is floating rate debt based on current interest rates
in Colombia.
As
of March 31, 2021, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See
Note 6 - Debt. The fair value of long-term debt was calculated based on an analysis of future cash flows discounted with our average
cost of debt, which is based on market rates, which are level 2 inputs.
The
following table summarizes the fair value and carrying amounts of our long-term debt:
Summary of Fair Value and Carrying Amounts of Long Term Debt
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Fair Value
|
|
|
224,192
|
|
|
|
238,753
|
|
Carrying Value
|
|
|
221,635
|
|
|
|
222,722
|
|
Note
8. Income Taxes
The
Company files income tax returns for TG, ES and ES Metals in the Republic of Colombia. GM&P, Componenti and ESW LLC are U.S. entities
based in Florida subject to U.S. federal and state income taxes. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman
Islands do not currently have any tax obligations.
The
components of income tax expense are as follows:
Schedule of Components of Income Tax Expense (Benefit)
|
|
2021
|
|
|
2020
|
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Current income tax
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
(678
|
)
|
|
$
|
(151
|
)
|
Colombia
|
|
|
(2,295
|
)
|
|
|
(2,747
|
)
|
Total current income tax
|
|
|
(2,973
|
)
|
|
|
(2,898
|
)
|
Deferred income Tax
|
|
|
|
|
|
|
|
|
United States
|
|
|
30
|
|
|
|
(319
|
)
|
Colombia
|
|
|
(734
|
)
|
|
|
9,350
|
|
Total deferred income tax
|
|
|
(704
|
)
|
|
|
9,031
|
|
Total income tax (provision)
benefit
|
|
$
|
(3,677
|
)
|
|
$
|
6,133
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
30.8
|
%
|
|
|
25
|
%
|
The
weighted average statutory income tax rate for the three months ended March 31, 2021 and 2020 was 31% and 31%, respectively. The effective
income tax rate of 30.8% as of March 31, 2021 approximates the statutory rate. The effective income tax rate of 25% as of March 31, 2020
reflects 4.2 percentage point favorable impact of unrealized foreign currency transaction losses related remeasurement of to long-term
liabilities of our Colombian subsidiaries which are expected to be realized at a later year in which a lower income tax rate is expected
to apply.
Note
9. Related Parties
The
following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors
and managers:
Schedule of Related Parties
|
|
2021
|
|
|
2020
|
|
|
|
Three
months ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Sales to related parties
|
|
$
|
621
|
|
|
$
|
1,192
|
|
|
|
|
|
|
|
|
|
|
Fees paid to directors and officers
|
|
$
|
1,179
|
|
|
$
|
961
|
|
Payments to other related parties
|
|
$
|
962
|
|
|
$
|
814
|
|
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Due from VS
|
|
$
|
5,515
|
|
|
$
|
6,387
|
|
Due from other related
parties
|
|
|
1,905
|
|
|
|
2,187
|
|
Due from related parties, current
|
|
$
|
7,420
|
|
|
$
|
8,574
|
|
|
|
|
|
|
|
|
|
|
Long Term due from VS
|
|
|
121
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Due to related parties - current
|
|
$
|
4,333
|
|
|
$
|
4,750
|
|
Due to related parties – Non-current
|
|
$
|
651
|
|
|
$
|
645
|
|
Ventana
Solar S.A. (“VS”), a Panama Sociedad anonima, is an importer and installer of the Company’s products in Panama.
Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to
VS for the three months ended March 31, 2021 and 2020 were $241 and $643, respectively.
Payments
to other related parties during the three months ended March 31, 2021 and 2020 include the following:
Schedule of Payments to Other Related Parties
|
|
Three
months ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Charitable contributions
|
|
$
|
277
|
|
|
$
|
349
|
|
Sales commissions
|
|
$
|
382
|
|
|
$
|
259
|
|
Charitable
contributions are donations made to the Company’s foundation, Fundación Tecnoglass-ESW.
Note
10. Shareholders’ Equity
Dividends
On
March 9, 2021, the Company declared a regular quarterly dividend of $0.0275
per share, or $0.11
per share on an annualized basis. The dividend
was paid on April 30, 2021 to shareholders of record as of the close of business on March 31, 2021.
Earnings
per Share
The
following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2021 and
2020:
Schedule of Earnings Per Share, Basic and Diluted
|
|
2021
|
|
|
2020
|
|
|
|
Three months
ended
|
|
|
|
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Numerator for basic and
diluted earnings per shares
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
8,252
|
|
|
$
|
(18,668
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per ordinary share - weighted average
shares outstanding
|
|
|
47,674,773
|
|
|
|
46,117,631
|
|
Effect of dilutive securities
and stock dividend
|
|
|
-
|
|
|
|
-
|
|
Denominator for diluted earnings per ordinary
share - weighted average shares outstanding
|
|
|
47,674,773
|
|
|
|
46,117,631
|
|
Basic earnings (loss) per ordinary share
|
|
$
|
0.17
|
|
|
$
|
(0.40
|
)
|
Diluted earnings (loss) per ordinary share
|
|
$
|
0.17
|
|
|
$
|
(0.40
|
)
|
Note
11. Commitments and Contingencies
Commitments
As
of March 31, 2021, the Company had an outstanding obligation to purchase an aggregate of at least $8,654 of certain raw materials from
a specific supplier before May 2026.
On
May 3, 2019, we consummated a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component
of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino, a Colombia-based subsidiary of
Saint-Gobain. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9
million was contributed through a parcel of land to be used for the building of a second factory. On October 28, 2020, the land was paid
for through the issuance of an aggregate of 1,557,142 ordinary shares of the Company, at $7.00 per share, which represented an approximate
33% premium based on the Company´s share price as of October 27, 2020.
The
joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our
primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original
cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will
not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid if needed (based on debt
availability as a first option).
General
Legal Matters
From
time to time, the Company is involved in legal matters arising in the regular course of business. Some disputes are derived directly
from our construction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary
damages. We are also subject to other type of litigations arising from employment practices, worker’s compensation, automobile
claims and general liability. It is very difficult to predict precisely what the outcome of these litigations might be. However, with
the information at our disposition as this time, there are no indications that such claims will result in a material adverse effect on
the business, financial condition or results of operations of the Company.
Note
12. Subsequent Events
Management
concluded that no additional subsequent events required disclosure other than those disclosed in these financial statements.