Tecnoglass, Inc. (NYSE: 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 second quarter ended June 30, 2022.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, "We are very pleased to report another quarter of record results led by continued strong demand for our single-family residential products and further sequential growth in our commercial business. The benefit of our vertically integrated business model and highly efficient manufacturing capacity are allowing us to maintain exceptional lead times for our customers, resulting in market share gains and profitable growth. The prudent investments we have made in automation, capacity enhancements and product innovation, in addition to our disciplined cost controls, are supporting our industry-leading adjusted EBITDA margin, which remains in excess of 30%. We believe the momentum in our business and established track record of exceptional cash flow further validates Tecnoglass’ unique vertically integrated business model and strategic positioning in attractive high-growth geographies across the U.S. We are excited by the trajectory of our business and look forward to delivering on our upwardly revised outlook for the full year 2022.”

Christian Daes, Chief Operating Officer of Tecnoglass, added, “Our activity in key U.S. regions remains strong for single-family and multifamily residential projects, as well as commercial projects, evidenced by record levels of invoicing during the month of July. Ongoing market share gains helped us produce revenue growth of 86% year-over-year in our single-family residential business, with projects in the historically resilient remodel and renovation end market representing approximately 65% of that business. The commercial side of our business has continued to experience sequential growth in each month this year, with the second quarter revenues up 15% compared to the prior year quarter. Furthermore, we ended the quarter with a record backlog of multifamily and commercial projects that now extend well into 2023. We intend to continue outperforming in our markets as a supplier of choice given our ability to maintain timely deliveries that help keep customers on schedule. We are reinvesting a portion of our significant cash flow into high-return capex investments that will allow us to end the year with installed production capacity equivalent to over $800 million of revenue. The Board’s 15% increase in our dividend demonstrates their confidence in our cash flow generation to remain strong. We are well positioned to drive additional success in our Company for many years to come.”

Second Quarter 2022 Results

Total revenues for the second quarter of 2022 increased 38.9% to $169.1 million, compared to $121.8 million in the prior year quarter, driven by strong growth in single-family residential activity, market share gains and the ongoing ramp up of the Company’s commercial activity. Single-family residential revenues increased approximately 86% year-over-year, representing 44.9% of total revenues for the second quarter, helped by continued strong demand within the repair and remodeling space, the ongoing expansion of the Company’s Multimax product line, and a larger customer base. Changes in foreign currency exchange rates had an adverse impact of $0.3 million on both Colombia revenues and total revenues in the quarter.

Gross profit for the second quarter of 2022 grew 49.9% to $73.6 million, representing a 43.5% gross margin, compared to gross profit of $49.1 million, representing a 40.4% gross margin in the prior year quarter. The 310 basis point improvement in gross margin mainly reflected operating leverage on higher sales, greater operating efficiencies related to automation and a higher mix of revenue from manufacturing versus installation activity as Tecnoglass continues to increase its mix of single-family residential products. Selling, general and administrative expense (“SG&A”) was $28.1 million compared to $20.4 million in the prior year quarter, with the majority of the increase attributable to shipping expense as a result of a higher sales volume and higher shipping rates. As a percent of total revenues, SG&A improved to 16.6% compared to 16.7% in the prior year quarter, primarily due to higher sales and better operating leverage on personnel, professional fees and other fixed expenses.

Net income was $33.4 million, or $0.70 per diluted share, in the second quarter of 2022 compared to net income of $19.6 million, or $0.41 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction gain of $2.5 million in the second quarter of 2022 and a $0.2 million gain in the second quarter of 2021. As previously disclosed, these non-cash 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 $33.0 million, or $0.69 per diluted share, in the second quarter of 2022 compared to adjusted net income of $20.1 million, or $0.42 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 51.7% to $54.6 million, or 32.3% of total revenues, in the second quarter of 2022, compared to $36.0 million, or 29.5% of total revenues, in the prior year quarter. The improvement was driven by higher sales, a stronger gross margin and operating leverage on SG&A. Adjusted EBITDA1 included a $0.9 million contribution from the Company’s joint venture with Saint-Gobain, compared to $0.5 million in the prior year quarter.

Dividend

The Board of Directors of the Company today declared a quarterly cash dividend of $0.075 per share, representing a 15% increase from the previous dividend payment. The quarterly dividend will be paid on October 31, 2022 to shareholders of record as of the close of business on September 30, 2022.

Balance Sheet & Liquidity

The Company ended the second quarter of 2022 with total liquidity of approximately $270 million, including cash and cash equivalents of $99 million and availability under its committed revolving credit facilities of $170 million. Given the Company’s continued growth in adjusted EBITDA1 and strong cash generation, debt leverage continues to trend lower and now stands at 0.5 times LTM net debt to adjusted EBITDA1, compared to 1.1 times in the prior year quarter.

Based on the Company’s record of strong financial performance, in May 2022 the Company amended its Credit Agreement with its syndicate of banks to remove the cap on restricted payments (including stock buybacks and dividend payouts) pursuant to the Company´s leverage ratio as defined in its Credit Agreement remaining below 1.5x net debt to adjusted EBITDA1.

Full Year 2022 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “The momentum in our business continued into the third quarter with single-family residential projects representing a growing share of our revenues and the commercial business continuing to grow sequentially each month through this year. Based on our current invoicing schedule and underlying market demand, we are increasing our full year 2022 outlook for revenues to grow to a range of $620 million to $640 million and for adjusted EBITDA1 to increase to a range of $208 million to $220 million. This implies adjusted EBITDA growth of approximately 42% at the midpoint, putting us firmly on the path to achieve another year of record results in full year 2022.”

Webcast and Conference Call

Management will host a webcast and conference call on August 4, 2022 at 10:00 a.m. Eastern time (9:00 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. For those unable to access the webcast, the conference call will be accessible by dialing 1-844-943-2944 (domestic) or 1- 973-528-0098 (international). Upon dialing in, please request to join the Tecnoglass Second Quarter 2022 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 (800)-332-6854 (Domestic) or (973)-528-0005 (International) and entering passcode: 933766.

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 3.8 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 One Thousand Museum (Miami), Paramount (Miami), Salesforce Tower (San Francisco), Via 57 West (NY), Hub50House (Boston), Aeropuerto Internacional El Dorado (Bogotá), One Plaza (Medellín), Pabellon de Cristal (Barranquilla). 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.

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

Investor Relations:

Santiago GiraldoCFO305-503-9062investorrelations@tecnoglass.com

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

    June 30,     December 31,  
    2022     2021  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 98,620     $ 85,011  
Investments     2,407       1,977  
Trade accounts receivable, net     114,218       110,539  
Due from related parties     1,669       2,252  
Inventories     111,914       84,975  
Contract assets – current portion     16,310       18,667  
Other current assets     23,554       22,854  
Total current assets   $ 368,692     $ 326,275  
Long-term assets:                
Property, plant and equipment, net   $ 183,594     $ 166,629  
Deferred income taxes     2,526       596  
Contract assets – non-current     10,588       11,853  
Long-term trade accounts receivable     4,279       3,995  
Intangible assets     3,029       3,337  
Goodwill     23,561       23,561  
Long-term investments     55,059       51,160  
Other long-term assets     4,282       4,157  
Total long-term assets     286,918       265,288  
Total assets   $ 655,610     $ 591,563  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Short-term debt and current portion of long-term debt   $ 591     $ 10,700  
Trade accounts payable and accrued expenses     89,406       68,087  
Due to related parties     4,186       3,857  
Dividends payable     3,143       3,141  
Contract liability – current portion     58,974       45,213  
Other current liabilities     24,379       24,017  
Total current liabilities   $ 180,679     $ 155,015  
Long-term liabilities:                
Deferred income taxes   $ 3,403     $ 3,417  
Contract liability – non-current     47       78  
Long-term debt     184,268       188,355  
Total long-term liabilities     187,718       191,850  
Total liabilities   $ 368,397     $ 346,865  
SHAREHOLDERS’ EQUITY                 
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively   $ -     $ -  
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 47,674,773 and 47,674,773 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively     5       5  
Legal Reserves     1,458       2,273  
Additional paid-in capital     219,290       219,290  
Retained earnings     139,709       91,045  
Accumulated other comprehensive loss     (74,404)       (68,751 )
Shareholders’ equity attributable to controlling interest     286,058       243,862  
Shareholders’ equity attributable to non-controlling interest     1,155       836  
Total shareholders’ equity     287,213       244,698  
Total liabilities and shareholders’ equity   $ 655,610     $ 591,563  

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

    Three months ended     Six months ended  
    June 30,     June 30,  
    2022       2021       2022       2021    
Operating revenues:                                
External customers   $ 168,657       $ 121,401       $ 302,679       $ 232,576    
Related parties     467         351         993         731    
Total operating revenues     169,124         121,752         303,672         233,307    
Cost of sales     95,492         72,622         169,707         138,868    
Gross profit     73,632         49,130         133,965         94,439    
Operating expenses:                                
Selling expense     (16,616 )       (12,030 )       (29,984 )       (23,113 )  
General and administrative expense     (10,851 )       (8,332 )       (21,126 )       (17,125 )  
Other professional fees     (678 )       -         (3,402 )       -    
Total operating expenses     (28,145 )       (20,362 )       (54,512 ) )     (40,238 )  
Operating income     45,487         28,768         79,453         54,201    
Non-operating income (expenses), net     161         (229 )       503         (70 )  
Equity method income     1,669         788         3,249         1,879    
Foreign currency transactions gains (loss)     2,503         190         (406 )       145    
Gain (loss) on debt extinguishment     -         169         -         (10,978 )  
Interest expense and deferred cost of financing     (1,715 )       (2,442 )       (3,183 )       (5,964 )  
Income before taxes     48,105         27,244         79,616         39,213    
Income tax (provision)     (14,692 )       (7,601 )       (25,250 )       (11,289 )  
Net income   $ 33,413       $ 19,643       $ 54,366       $ 27,924    
(Loss) Income attributable to non-controlling interest     (219 )       (51 )       (319 )       (140 )  
Income attributable to parent   $ 33,194       $ 19,592       $ 54,047       $ 27,784    
Comprehensive income:                                
Net income   $ 33,413       $ 19,643       $ 54,366       $ 27,924    
Foreign currency translation adjustments     (23,621 )       (1,185 )       (9,987 )       (16,819 )  
Change in fair value derivative contracts     1,710         -         4,332         (159 )  
Total comprehensive income   $ 11,502       $ 18,458       $ 48,711       $ 10,946    
Comprehensive (loss) income attributable to non-controlling interest     (219 )       (51 )       (319 )       (140 )  
Total comprehensive income attributable to parent   $ 11,283       $ 18,407       $ 48,392       $ 10,806    
Basic income per share   $ 0.70       $ 0.41       $ 1.14       $ 0.59    
Diluted income per share   $ 0.70       $ 0.41   1   $ 1.14       $ 0.59    
Basic weighted average common shares outstanding     47,674,773         47,674,773         47,674,773         47,674,773    
Diluted weighted average common shares outstanding     47,674,773         47,674,773         47,674,773         47,674,773    

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

    Six months ended June 30,  
    2022       2021    
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income   $ 54,366       $ 27,924    
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Allowance for credit losses     580         748    
Depreciation and amortization     10,462         10,515    
Deferred income taxes     (1,016 )       424    
Equity method income     (3,249 )       (1,879 )  
Deferred cost of financing     726         623    
Other non-cash adjustments     6         (19 )  
Loss on debt extinguishment     -         2,333    
Unrealized currency translation losses     911         2,555    
Changes in operating assets and liabilities:                
Trade accounts receivable     (4,792 )       (6,069 )  
Inventories     (31,343 )       (2,082 )  
Prepaid expenses     (690 )       (2,015 )  
Other assets     1,652         (6,718 )  
Trade accounts payable and accrued expenses     16,489         23,375    
Accrued interest expense     (1 )       (7,171 )  
Taxes payable     2,260         3,389    
Labor liabilities     125         (132 )  
Other liabilities     (2,047 )       (342 )  
Contract assets and liabilities     17,538         14,677    
Related parties     1,020         (23 )  
CASH PROVIDED BY OPERATING ACTIVITIES   $ 62,997       $ 60,113    
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Proceeds from sale of investments     -         166    
Proceeds from sale of property and equipment     -         7    
Purchase of investments     (933 )       (49 )  
Acquisition of property and equipment     (26,250 )       (18,325 )  
CASH USED IN INVESTING ACTIVITIES   $ (27,183 )     $ (18,201 )  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Cash dividend     (6,196 )       (2,621 )  
Loss on debt extinguishment - call premium     -         (8,610 )  
Deferred financing transaction costs     -         (88 )  
Proceeds from debt     241         221,146    
Repayments of debt     (15,367 )       (216,676 )  
CASH USED IN FINANCING ACTIVITIES   $ (21,322 )     $ (6,849 )  
                 
Effect of exchange rate changes on cash and cash equivalents   $ (883 )     $ (2,334 )  
                 
NET INCREASE IN CASH     13,609         32,729    
CASH - Beginning of period     85,011         67,668    
CASH - End of period   $ 98,620       $ 100,397    
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
Cash paid during the period for:                
Interest   $ 2,387       $ 12,286    
Income Tax   $ 7,552       $ 9,471    
                 
NON-CASH INVESTING AND FINANCING ACTIVITES:                
Assets acquired under debt or supplier credit   $ 5,835       $ 937    

Revenues by Region(Amounts in thousands)(Unaudited)

  Three months ended   Twelve months ended
  June 30,   June 30,
2022   2021   % Change   2022   2021   % Change
Revenues by Region                      
United States 161,478   109,879   47.0 %   534,103   393,177   35.8 %
Colombia 4,816   8,166   -41.0 %   19,385   31,717   -38.9 %
Other Countries 2,830   3,708   -23.7 %   13,662   14,689   -7.0 %
Total Revenues by Region 169,124   121,752   38.9 %   567,150   439,583   29.0 %

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
  June 30,   June 30,
2022     2021   % Change   2022     2021   % Change
                       
Total Revenues with Foreign Currency Held Neutral 169,417     121,752   39.1 %   568,714     439,583   29.4 %
Impact of changes in foreign currency (293 )   -       (1,564 )   -    
Total Revenues, As Reported 169,124     121,752   38.9 %   567,150     439,583   29.0 %

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   Six months ended
    Jun 30,   Jun 30,
    2022     2021     2022     2021  
                 
Net (loss) income   33,413     19,642     54,366     27,924  
Less: Income (loss) attributable to non-controlling interest   (219 )   (51 )   (319 )   (140 )
(Loss) Income attributable to parent   33,194     19,591     54,047     27,784  
Foreign currency transactions losses (gains)   (2,503 )   (190 )   406     (145 )
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)   646     975     1,409     2,258  
Non Recurring professional fees   678     -     3,402     -  
Extinguishment of debt - Call Option Premium   -     -     -     8,610  
Extinguishment of debt - Deferred Costs   -     (169 )   -     2,368  
Joint Venture VA (Saint Gobain) adjustments   936     68     972     147  
Change in FV of Hedging Derivatives   -     3     -     (182 )
Tax impact of adjustments at statutory rate   73     (206 )   (1,857 )   (3,917 )
Adjusted net (loss) income   33,024     20,072     58,379     36,923  
                 
Basic income (loss) per share   0.70     0.41     1.13     0.58  
Diluted income (loss) per share   0.70     0.41     1.13     0.58  
                 
Diluted Adjusted net income (loss) per share   0.69     0.42     1.22     0.77  
                 
Diluted Weighted Average Common Shares Outstanding in thousands   47,675     47,675     47,675     47,675  
Basic weighted average common shares outstanding in thousands   47,675     47,675     47,675     47,675  
Diluted weighted average common shares outstanding in thousands   47,675     47,675     47,675     47,675  
                 
                 
    Three months ended   Six months ended
    Jun 30,   Jun 30,
    2022     2021     2022     2021  
                 
Net (loss) income   33,413     19,643     54,366     27,924  
Less: Income (loss) attributable to non-controlling interest   (219 )   (51 )   (319 )   (140 )
(Loss) Income attributable to parent   33,194     19,592     54,047     27,784  
Interest expense and deferred cost of financing   1,715     2,442     3,183     5,964  
Income tax (benefit) provision   14,692     7,601     25,250     11,289  
Depreciation & amortization   5,211     5,218     10,462     10,507  
Foreign currency transactions losses (gains)   (2,503 )   (190 )   406     (145 )
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)   646     975     1,409     2,003  
Non Recurring professional fees   678     -     3,402     -  
Extinguishment of debt - Call Option Premium   -     -     -     8,610  
Extinguishment of debt - Deferred Costs   -     (169 )   -     2,368  
Joint Venture VA (Saint Gobain) EBITDA adjustments   936     503     1,761     1,341  
Change in FV of Hedging Derivatives   -     3     -     (182 )
Adjusted EBITDA   54,569     35,975     99,920     69,539  
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