Tecnoglass Inc.: Tecnoglass Reports Record Third Quarter 2024 Results

- Record Revenue of $238.3 Million, Up 13.1% Year-Over-Year Driven Entirely by Organic Growth -

- Single-Family Residential Revenue increased to a Record $109.7 Million, Up 25.0% Year-Over-Year -

- Gross Margin of 45.8%, Up 290 Basis Points Year-Over-Year -

- Net Income of $49.5 Million, or $1.05 Per Diluted Share -

- Adjusted Net Income¹ of $50.9 Million, or $1.08 Per Diluted Share -

- Adjusted EBITDA¹ of $81.4 Million, Up 14.2% Year-Over-Year, Representing 34.2% of Total Revenues -

- Strong Cash Flow from Operations of $41.5 Million -

- Record Low Net Leverage Ratio of 0.01x at Quarter End -

- Backlog Expands Year-Over-Year for the 30th Consecutive Quarter to a Record $1.04 Billion -

- Board Approves 36% Increase in Quarterly Dividend, Expands Share Repurchase Program to $100 Million, Concludes Review of Strategic Alternatives and Affirms Commitment to Value Creation Strategy -

- Strengthens Full Year 2024 Guidance Range -

Miami, FL, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Tecnoglass, Inc. (NYSE: TGLS) ("Tecnoglass" or the "Company"), a leading producer of high-end aluminum and vinyl windows and architectural glass for the global residential and commercial end markets, today reported financial results for the third quarter ended September 30, 2024.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, "Our third quarter 2024 results once again demonstrate our ability to outperform in challenging market conditions, particularly in our single-family residential business. Our vertically integrated model continues to be a key differentiator, enabling us to control costs and swiftly adapt to market dynamics. Investments in automation and advanced manufacturing are yielding significant returns, enhancing our operational efficiency and capacity to meet growing demand for our innovative products. These factors drove strong gross profit and Adjusted EBITDA growth this quarter. Record backlog in our multi-family/commercial segment, coupled with October's record total invoicing, supports our strengthened 2024 outlook. This all-around solid performance was accentuated by another quarter of strong cash flow. Our ability to consistently outperform our market reinforces our expectation to capitalize on long-term growth opportunities in both residential and commercial markets, backed by our strong balance sheet and cash generation capabilities."

Christian Daes, Chief Operating Officer of Tecnoglass, added, "The third quarter saw another period of record performance, underscoring the strength of our business model in complex market conditions. Demand for our innovative, high-performance products remained strong across key end markets. We're encouraged by robust quoting and bidding activity for commercial projects, supporting our record backlog of $1.04 billion at quarter-end. Our vertically integrated platform ensures a high level of quality, leverages operating efficiencies, and enables quick adaptation to shifts in end market demand. Overall, we remain focused on leveraging our vertically-integrated operations to drive share gains and geographic diversification in 2024 and beyond."

Third Quarter 2024 Results

Total revenues for the third quarter of 2024 increased 13.1% to $238.3 million, the highest revenue quarter in the Company's history, compared to $210.7 million in the prior year quarter. Single-family residential revenues increased 25.0% year-over-year to record levels, reflecting improving market trends and the invoicing of orders placed ahead of the June 30^th expiration of the Florida sales tax waiver. Multi-family/commercial revenues grew 4.6% year-over-year to near record levels. Changes in foreign currency exchange rates had an adverse impact of $0.1 million on total revenues in the quarter.

Gross profit for the third quarter of 2024 was $109.2 million, representing a 45.8% gross margin, compared to gross profit of $90.5 million, representing a 43.0% gross margin, in the prior year quarter. The year-over-year change in gross margin reflected the benefits from stronger pricing, stable raw material costs, favorable product mix and steady foreign exchange rates.

Selling, general and administrative expense ("SG&A") was $41.5 million for the third quarter of 2024 compared to $29.5 million in the prior year quarter, with the increase primarily attributable to higher transportation and commission expenses associated with the revenue growth in the quarter, higher personnel expenses given overall salary adjustments that took place at the beginning of the year, and certain non-recurring expenses related to the Company's previously announced strategic review. Additional costs were incurred from aluminum tariffs on select products, which were largely being passed through to customers and which were subsequently eliminated by the International Trade Commission based on a determination made on October 31^st. As a percent of total revenues, SG&A was 17.4% for the third quarter of 2024 compared to 14.0% in the prior year quarter, primarily due to the aforementioned factors.

Net income was $49.5 million, or $1.05 per diluted share, in the third quarter of 2024 compared to net income of $46.1 million, or $0.96 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction gain of $0.9 million in the third quarter of 2024 and a $1.1 million gain in the third quarter of 2023. These non-cash gains 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 $50.9 million, or $1.08 per diluted share, in the third quarter of 2024 compared to adjusted net income of $46.6 million, or $0.98 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, was $81.4 million, or 34.2% of total revenues, in the third quarter of 2024, compared to $71.3 million, or 33.8% of total revenues, in the prior year quarter. The improvement was driven by higher revenues and improved gross margins. Adjusted EBITDA¹ included a $2.1 million contribution from the Company's joint venture with Saint-Gobain, compared to $0.4 million in the prior year quarter.

Cash Generation, Capital Allocation and Liquidity

Cash provided by operating activities for the third quarter of 2024 was $41.5 million, primarily driven by increased profitability on higher revenues and efficient working capital management. Capital expenditures of $23.7 million in the quarter included scheduled payments on previous investments and a payment for the Miami headquarters and the associated flagship showroom.

During the quarter, the Company returned capital to shareholders through the payment of $5.2 million in cash dividends. During the quarter, the Company made a $17.5 million voluntary prepayment to its syndicate term loan facility. The Company ended the quarter with approximately $26.5 million remaining under the current share repurchasing program.

The Company ended the third quarter of 2024 with total liquidity of approximately $290.0 million, including $122.1 million of cash and cash equivalents and $170.0 million of availability under its revolving credit facilities. Net debt leverage was a record low of 0.01x net debt to LTM Adjusted EBITDA¹, down from 0.2x in the prior year quarter. Given continued strong cash generation, the Company expects to achieve a net cash position by year end.

Board Concludes Review of Strategic Alternatives and Affirms Commitment to Value Creation Strategy

After careful evaluation, the Board has determined that the best path forward is to continue implementing our ongoing business strategy. We believe that maximizing value for all shareholders requires adherence to the Company's proven business model, which has consistently delivered industry-leading returns and enabled above-market growth through organic market share gains. The Company remains focused on leveraging its core strengths, its vertically integrated operations, strategic geographic positioning, and innovative product portfolio which have driven its exceptional track record of growth and profitability.

The Company will continue to pursue multiple avenues for growth, including expanding its vinyl window business, strengthening its presence in key markets through a growing network of showrooms, and capitalizing on the strong demand experienced in both its residential and commercial end markets. With its recently completed facility enhancements, strong balance sheet, and record backlog providing visibility well into 2025, the Company is well-positioned to continue delivering above-market growth while maintaining industry-leading margins and generating robust cash flow.

The Company remains confident in its ability to create substantial value for shareholders through organic growth initiatives and operational excellence, supported by favorable demographic trends in key markets and a proven ability to gain market share even in challenging environments. The Board remains focused on returning capital to shareholders, backed by the announcement of a 36% increase in the Company's quarterly dividend to $0.15 per share, along with the expansion of the Company's share repurchase authorization to $100.0 million to execute during opportunistic times. These actions reflect the Board's confidence in continued cash flow generation capabilities, prudent balance sheet management, and a commitment to delivering superior returns to shareholders while maintaining ample financial flexibility to execute on our growth initiatives. Management will have discretion in the repurchase of common shares, including the timing and amount to be repurchased.

Full Year 2024 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, "Based on our strong execution through the first nine months of 2024 and the visibility provided by our record backlog, we are updating our full year 2024 outlook. We now expect full year revenues to be in the range of $880 million to $900 million, representing growth of approximately 7% at the midpoint of the range. Additionally, we are updating our Adjusted EBITDA¹ target to a range of $270 million to $280 million. The implied Adjusted EBITDA¹ margin of 31% at the midpoint assumes a full year gross margin in the low to mid 40% range, along with continued strong cash flow generation. This outlook reflects our expected tailwinds from continued single-family residential growth through geographic expansion, the ramp up of deliveries of our vinyl windows, timely execution of our multi-family/commercial backlog, and the ongoing benefits of our vertically integrated operations. We remain confident in our ability to drive further value creation through market share gains and operational excellence in 2024."

Webcast and Conference Call

Management will host a webcast and conference call on November 7, 2024, at 10:00 a.m. Eastern 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 1-844-826-3035 (domestic) or 1-412-317-5195 (international). Upon dialing in, please request to join the Tecnoglass Third Quarter 2024 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 1-844-512-2921 (Domestic) or 1-412-317-6671 (International) and entering passcode: 10192850.

About Tecnoglass

Tecnoglass Inc. is a leading producer of high-end aluminum and vinyl windows and architectural glass 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 5.6 million square foot, vertically integrated, and state-of-the-art manufacturing complex provide efficient access to nearly 1,000 customers in North, Central and South America, with the United States accounting for 95% of total 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 Giraldo
CFO
305-503-9062
[e-mail]

Tecnoglass Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)

		September 30, 2024					December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	122,090				$	129,508
Investments			2,688					2,907
Trade accounts receivable, net			208,980					166,498
Due from related parties			1,769					1,387
Inventories			142,942					159,070
Contract assets - current portion			19,330					17,800
Other current assets			49,036					58,590
Total current assets		$	546,835				$	535,760
Long-term assets:
Property, plant and equipment, net		$	341,469				$	324,591
Deferred income taxes			283					169
Contract assets - non-current			12,968					8,797
Intangible assets			3,882					3,475
Goodwill			23,561					23,561
Long-term investments			61,544					60,570
Other long-term assets			5,731					5,794
Total long-term assets			449,438					426,957
Total assets		$	996,273				$	962,717
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt		$	1,819				$	7,002
Trade accounts payable and accrued expenses			99,569					82,784
Due to related parties			7,354					7,498
Dividends payable			5,198					4,265
Contract liability - current portion			94,848					72,543
Other current liabilities			38,533					61,794
Total current liabilities		$	247,321				$	235,886
Long-term liabilities:
Deferred income taxes		$	12,808				$	15,793
Contract liability - non-current			-					14
Long-term debt			122,837					163,004
Total long-term liabilities			135,645					178,811
Total liabilities		$	382,966				$	414,697
SHAREHOLDERS' EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		$	-				$	-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 46,996,408 and 46,996,708 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively			5					5
Legal Reserves			1,458					1,458
Additional paid-in capital			192,369					192,385
Retained earnings			498,821					400,035
Accumulated other comprehensive loss			(79,346	)				(45,863	)
Total shareholders' equity			613,307					548,020
Total liabilities and shareholders' equity		$	996,273				$	962,717

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

		Three months ended								Nine months ended
		September 30,								September 30,
		2024				2023				2024				2023
Operating revenues:
External customers		$	237,439			$	210,268			$	648,456			$	637,362
Related parties			888				475				2,152				1,300
Total operating revenues			238,327				210,743				650,608				638,662
Cost of sales			(129,094	)			(120,216	)			(377,138	)			(330,710	)
Gross profit			109,233				90,527				273,470				307,952
Operating expenses:
Selling expense			(23,190	)			(15,724	)			(60,773	)			(52,531	)
General and administrative expense			(18,348	)			(13,791	)			(52,846	)			(46,228	)
Total operating expenses			(41,538	)			(29,515	)			(113,619	)			(98,759	)
Operating income			67,695				61,012				159,851				209,193
Non-operating income, net			1,365				605				5,176				3,517
Equity method income			1,394				1,108				3,677				3,676
Foreign currency transactions gains (loss)			870				1,142				(4,858	)			931
Interest expense and deferred cost of financing			(1,811	)			(2,325	)			(5,923	)			(6,919	)
Income before taxes			69,513				61,542				157,923				210,398
Income tax provision			(19,978	)			(15,447	)			(43,630	)			(63,366	)
Net income		$	49,535			$	46,095			$	114,293			$	147,032
Income attributable to non-controlling interest			-				(232	)			-				(489	)
Income attributable to parent		$	49,535			$	45,863			$	114,293			$	146,543
Basic income per share		$	1.05			$	0.96			$	2.43			$	3.08
Diluted income per share		$	1.05				0.96			$	2.43			$	3.08
Basic weighted average common shares outstanding			46,996,554				47,599,339				46,996,655				47,649,037
Diluted weighted average common shares outstanding			46,996,554				47,599,339				46,996,655				47,649,037
Other comprehensive income:
Foreign currency translation adjustments			(2,657	)			8,227				(30,948	)			43,276
Change in fair value of derivative contracts			(3,229	)			601				(2,535	)			587
Other comprehensive income			(5,886	)			8,828				(33,483	)			43,863
Comprehensive income		$	43,649			$	54,923			$	80,810			$	190,895
Comprehensive income attributable to non-controlling interest			-				(232	)			-				(489	)
Comprehensive income attributable to parent		$	43,649			$	54,691			$	80,810			$	190,406

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

		Nine months ended September 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	114,293			$	147,032
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses			714				2,537
Depreciation and amortization			19,730				15,841
Deferred income taxes			(992)				7,565
Equity method income			(3,677)				(3,676	)
Deferred cost of financing			938				929
Other non-cash adjustments			113				157
Unrealized currency translation loss (gains)			3,045				(23,280	)
Changes in operating assets and liabilities:
Trade accounts receivable			(38,789)				(10,351	)
Inventories			2,680				(15,271	)
Prepaid expenses			(2,930)				(2,028	)
Other assets			5,050				(25,535	)
Trade accounts payable and accrued expenses			10,063				8,371
Taxes payable			(22,179)				(21,670	)
Labor liabilities			2,949				2,425
Other liabilities			11				245
Contract assets and liabilities			15,921				13,066
Related parties			2,466				(1,871	)
CASH PROVIDED BY OPERATING ACTIVITIES		$	109,406			$	94,486
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received			2,703				-
Purchase of investments			(316)				(303	)
Acquisition of property and equipment			(53,873)				(62,194	)
CASH USED IN INVESTING ACTIVITIES		$	(51,486)			$	(62,497	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend			(14,575)				(12,158	)
Non-controlling interest purchase			(2,500)				-
Stock buyback			(16)				(8,882	)
Proceeds from debt			2,657				109
Repayments of debt			(48,966)				-
CASH USED IN FINANCING ACTIVITIES		$	(63,400	)		$	(20,931	)
Effect of exchange rate changes on cash and cash equivalents		$	(1,936	)		$	4,243
NET (DECREASE) INCREASE IN CASH			(7,418	)			15,301
CASH - Beginning of period			129,508				103,672
CASH - End of period		$	122,090			$	118,973
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest		$	8,049			$	8,543
Income Tax		$	77,953			$	94,914
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired under credit or debt		$	5,571			$	11,626

Revenues by Region
(Amounts in thousands)
(Unaudited)

	Three months ended
	September 30,
	2024		2023		% Change
Revenues by Region
United States	228,198		200,347		13.9	%
Colombia	5,474		7,218		-24.2	%
Other Countries	4,654		3,178		46.4	%
Total Revenues by Region	238,327		210,743		13.1	%

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

The Company believes that total revenues with foreign currency held neutral, which are not performance measures under generally accepted accounting principles ("GAAP"), 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. Management uses such performance measures in managing and evaluating the Company's business. 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
	September 30,
	2024			2023		% Change
Total Revenues with Foreign Currency Held Neutral	238,388			210,743		13.1	%
Impact of changes in foreign currency	(61	)		-
Total Revenues, As Reported	238,327			210,743		13.1	%

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 non-GAAP performance measures. Management believes Adjusted EBITDA and adjusted net (loss) income, in addition to operating profit, net (loss) income and other GAAP measures, are useful to investors to evaluate the Company's results because they exclude 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. Items excluded to arrive at forward-looking non-GAAP measures may have a significant, and potentially unpredictable, impact on our future GAAP results.

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						Nine months ended
			Sep 30,						Sep 30,
			2024			2023			2024			2023
Net (loss) income			49,535			46,095			114,293			147,032
Less: Income (loss) attributable to non-controlling interest			-			(232	)		-			(489	)
(Loss) Income attributable to parent			49,535			45,863			114,293			146,543
Foreign currency transactions losses (gains)			(870	)		(1,142	)		4,858			(931	)
Provision for bad debt			439			638			714			2,537
Non-Recurring expenses (non-recurring professional fees, capital market fees, other non-core items)			1,449			1,800			3,088			5,599
Joint Venture VA (Saint Gobain) adjustments			924			(234	)		3,146			158
Tax impact of adjustments at statutory rate			(621	)		(340	)		(3,778	)		(2,356	)
Adjusted net (loss) income			50,856			46,585			122,321			151,550
Basic income (loss) per share			1.05			0.96			2.43			3.08
Diluted income (loss) per share			1.05			0.96			2.43			3.08
Diluted Adjusted net income (loss) per share			1.08			0.98			2.60			3.18
Diluted Weighted Average Common Shares Outstanding in thousands			46,997			47,599			46,997			47,649
Basic weighted average common shares outstanding in thousands			46,997			47,599			46,997			47,649
Diluted weighted average common shares outstanding in thousands			46,997			47,599			46,997			47,649
			Three months ended						Nine months ended
			Sep 30,						Sep 30,
			2024			2023			2024			2023
Net (loss) income			49,535			46,095			114,293			147,032
Less: Income (loss) attributable to non-controlling interest			-			(232	)		-			(489	)
(Loss) Income attributable to parent			49,535			45,863			114,293			146,543
Interest expense and deferred cost of financing			1,742			2,325			5,854			6,919
Income tax (benefit) provision			19,978			15,447			43,630			63,366
Depreciation & amortization			6,951			5,927			19,730			15,841
Foreign currency transactions losses (gains)			(870	)		(1,142	)		4,858			(931	)
Provision for bad debt			439			638			714			2,537
Non-Recurring expenses (non-recurring professional fees, capital market fees, other non-core items)			1,519			1,800			3,158			5,599
Joint Venture VA (Saint Gobain) EBITDA adjustments			2,145			436			4,367			2,264
Adjusted EBITDA			81,438			71,294			196,603			242,138