Tecnoglass Reports Record Second Quarter 2021 Results

Friday, 06. August 2021 13:00

- Single-Family Residential Revenues Increased 159% Year-Over-Year, Representing 37% of U.S. Revenues -

- Commercial Revenues Expanded 22% Year-Over-Year Driven by Continued End Market Recovery -

- Total Revenues Up 49% Year-Over-Year to a Record $121.7 Million -

- Record Second Quarter Gross Margin of 40.0%, Up 120 Basis Points Year-Over-Year -

- Net Profit of $19.2 Million; Adjusted Net Income1 of $19.7 Million, or $0.41 Per Diluted Share

- Adjusted EBITDA1 Up 52.7% Year-Over-Year to a Record $35.6 Million, or 29.3% of Total Revenues -

- Record Cash Flow From Operations of $31.8 Million -

- Backlog Expands to a Record $559 Million, Despite Single Family Residential Activity Largely Underrepresented in Backlog -

- Increases Full Year 2021 Growth Outlook to Adjusted EBITDA1 of $125 Million to $135 Million on Total Revenues of $450 Million to $465 Million -

BARRANQUILLA, Colombia, Aug. 06, 2021 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2021.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “I am thrilled to announce our most profitable quarter on record, building on our team’s outstanding performance which again drove record results in nearly all financial metrics. During the quarter, we were able to drive substantial operating leverage while expanding our mix of single-family residential sales in the U.S., resulting in another quarter of record revenues, margin expansion, and our 5th straight quarter of significant cash flow generation. Our strategically located, vertically integrated and low cost operations have provided us with sustainable competitive advantages that truly differentiate Tecnoglass in the tight supply environment that our industry is experiencing. We are winning new business and strengthening our existing customer relationships because we are able to supply superior quality products with short lead times at an attractive value, which is undoubtedly advancing our reputation as a global leader in both architectural glass innovation and service. Moving forward, we will continue to execute our proven strategy to capture elevated demand in the U.S., while approaching capital allocation with a returns oriented mindset. Our strong balance sheet, very low leverage profile and ample capital resources squarely position us to do so as we plan to further invest in operational enhancements. The future remains extremely bright for Tecnoglass and we are firmly situated to deliver another year of record results in 2021.”

Christian Daes, Chief Operating Officer of Tecnoglass, added, “Our ability to timely deliver best-in-class products led to outsized revenue growth and market share gains in the U.S. during the second quarter. Revenues in single-family residential increased by almost 160% year-over-year and nearly doubled compared to the second quarter of 2019. This accomplishment is a testament to the market leading platform we have created and we could not be more pleased with our progress since we entered the single-family residential business four years ago. This attractive category now represents 34% of our total revenues compared to 19% in the prior year period. Additionally, we ended the second quarter with a record backlog across our growing footprint as large scale commercial projects continue to resume construction activity. Looking to the remainder of 2021, we are pleased with our positioning and continue to expect strength in residential demand to drive the majority of our growth.”

Second Quarter 2021 Results

Total revenues for the second quarter of 2021 increased 48.5% to $121.7 million, compared to $81.9 million in the prior year quarter. U.S. revenues of $109.9 million, which represented 90% of total revenues, grew 38.8% compared to $79.1 million in the prior year quarter, driven by strong growth in single family residential activity, a continued recovery in commercial construction activity, and market share gains. Colombia revenue, a majority of which is represented by long-term contracts priced in Colombian Pesos but indexed to the U.S. Dollar, grew to $8.2 million, compared to $1.8 million in the prior year quarter. Changes in foreign currency exchange rates had a negligible impact on Colombia and total revenues in the quarter.

Gross profit for the second quarter of 2021 grew 52.9% to $48.6 million, representing a 40.0% gross margin, compared to gross profit of $31.8 million, representing a 38.8% gross margin in the prior year quarter. The 120 basis point improvement in gross margin mainly reflected greater operating efficiencies and a higher mix of revenue from manufacturing versus installation activity as Tecnoglass increased its mix of single family residential products. Selling, general and administrative expense (“SG&A”) was $20.2 million compared to $16.6 million in the prior year quarter, primarily attributable to higher variable expenses related to ground and marine transportation. As a percent of total revenues, SG&A improved to 16.6% compared to 20.2% 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 $19.2 million, or $0.40 per diluted share, in the second quarter of 2021 compared to net income of $16.2 million, or $0.35 per diluted share, in the prior year quarter, including an after-tax non-cash foreign exchange transaction gain of $0.2 million in the second quarter of 2021 and a $13.3 million gain in the second quarter of 2020. 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 $19.7 million, or $0.41 per diluted share, in the second quarter of 2021 compared to adjusted net income of $9.4 million, or $0.20 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 52.7% to $35.6 million, or 29.3% of total revenues in the second quarter of 2021, compared to $23.3 million, or 28.4% 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 in the second quarter 2021 included $0.5 million in contribution from the Company’s joint venture with Saint-Gobain, compared to $0.9 million in the prior year quarter.

Dividend

The Company declared a quarterly cash dividend of $0.0275 per share for the second quarter of 2021, which was paid on July 30, 2021 to shareholders of record as of the close of business on June 30, 2021.

Balance Sheet & Liquidity

The Company ended the second quarter of 2021 with total liquidity of approximately $167 million, including cash and cash equivalents of $100.3 million and availability under its committed revolving credit facilities of $66.9 million. Cash provided by operating activities of $31.8 million improved by $7.6 million compared to the prior year quarter, attributable to higher profitability as well as more efficient inventory and working capital management. Given the Company’s continued growth in adjusted EBITDA1 and strong cash generation, debt leverage continues to trend lower and now stands at 1.1 times LTM net debt to adjusted EBITDA1, compared to 2.2 times in the prior year quarter.

Full Year 2021 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “We are increasing our full year 2021 outlook for total revenues and adjusted EBITDA1 growth to reflect our continued outperformance in the first half of 2021, including strong demand into July and August and further share gains. We now expect full year 2021 total revenues to grow to a range of $450 million to $465 million. We now anticipate full year adjusted EBITDA1 to increase to a range of $125 million to $135 million, implying year-over-year growth of approximately 33% at the midpoint. We continue to believe our ability to efficiently manage costs while providing exceptional delivery lead times should collectively allow us to achieve above market growth and record results for the full year 2021.”

Webcast and Conference Call

Management will host a webcast and conference call on Friday, August 6, 2021 at 9:00 a.m. eastern time (8:00 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 Second Quarter 2021 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: 13721832.

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 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
investorrelations@tecnoglass.com

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

  June 30,  December 31, 
   2021   2020 
ASSETS        
Current assets:        
Cash and cash equivalents $100,295  $66,899 
Investments  2,078   2,387 
Trade accounts receivable, net  91,233   88,368 
Due from related parties  8,543   8,574 
Inventories  74,717   80,742 
Contract assets – current portion  24,068   26,288 
Other current assets  16,946   13,545 
Total current assets $317,880  $286,803 
Long-term assets:        
Property, plant and equipment, net $149,566  $152,266 
Deferred income taxes  1,252   268 
Contract assets – non-current  10,785   10,228 
Due from related parties - long term  -   484 
Long-term trade accounts receivable  4,361   2,985 
Intangible assets  4,320   5,112 
Goodwill  23,561   23,561 
Long-term investments  49,414   47,535 
Other long-term assets  4,537   2,783 
Total long-term assets  247,796   245,222 
Total assets $565,676  $532,025 
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities:        
Short-term debt and current portion of long-term debt $13,376  $1,764 
Trade accounts payable and accrued expenses  56,303   42,178 
Accrued interest expense  4   7,175 
Due to related parties  4,502   4,750 
Dividends payable  1,353   1,352 
Contract liability – current portion  36,670   24,694 
Other current liabilities  11,806   9,630 
Total current liabilities $124,014  $91,543 
Long-term liabilities:        
Deferred income taxes $278  $3,170 
Long-term liabilities from related parties  656   645 
Contract liability – non-current  884   977 
Long-term debt  218,949   222,722 
Total long-term liabilities  220,767   227,514 
Total liabilities $344,781  $319,057 
SHAREHOLDERS’ EQUITY        
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, 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, 2021 and December 31, 2020, respectively  5   5 
Legal Reserves  2,273   2,273 
Additional paid-in capital  219,290   219,290 
Retained earnings  59,104   34,326 
Accumulated other comprehensive (loss)  (60,490)  (43,512)
Shareholders’ equity attributable to controlling interest  220,182   212,382 
Shareholders’ equity attributable to non-controlling interest  713   586 
Total shareholders’ equity  220,895   212,968 
Total liabilities and shareholders’ equity $565,676  $532,025 


Tecnoglass Inc. and Subsidiaries

Consolidated 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,
  2021  2020  2021  2020  
Operating revenues:             
External customers $120,136  $81,590  $230,395  $167,696  
Related parties  1,578   352   2,199   1,544  
Total operating revenues  121,714   81,942   232,594   169,240  
Cost of sales  -73,087   -50,146   -138,824   -107,017  
Gross profit  48,627   31,796   93,770   62,223  
Operating expenses:             
Selling expense  (12,030)  (8,961)  (23,111)  (18,629) 
General and administrative expense  (8,200)  (7,610)  (16,869)  (15,220) 
Total operating expenses  (20,230)  (16,571)  (39,980)  (33,849) 
Operating income  28,397   15,225   53,790   28,374  
Non-operating income (expenses), net  (240)  7   (81)  (94) 
Equity method income  788   (166)  1,879   94  
Foreign currency transactions gains (loss)  190   13,309   145   (19,157) 
Loss on extinguishment of debt  169   -   (10,978)  -  
Interest expense and deferred cost of financing  (2,442)  (5,446)  (5,964)  (11,089) 
Income (loss) before taxes  26,862   22,929   38,791   (1,872) 
Income tax (provision) benefit  (7,587)  (6,875)  (11,264)  (742) 
Net income (loss) $19,275  $16,054  $27,527  $(2,614) 
Income attributable to non-controlling interest  (41)  143   (127)  45  
Income (Loss) attributable to parent $19,234  $16,197  $27,400  $(2,569) 
Comprehensive income:             
Net income (loss) $19,275  $16,054  $27,527  $(2,614) 
Foreign currency translation adjustments  (1,184)  4,367   (16,819)  (14,921) 
Change in fair value derivative contracts  -   2,618   (159)  (1,447) 
Total comprehensive income $18,090  $23,039  $10,548  $(18,982) 
Comprehensive income attributable to non-controlling interest  (41)  143   (127)  45  
Total comprehensive income (loss) attributable to parent $18,049  $23,182  $10,421  $(18,937) 
Basic income (loss) per share $0.40  $0.35  $0.58  $(0.06) 
Diluted income (loss) per share $0.40  $0.35  $0.58  $(0.06) 
Basic weighted average common shares outstanding  47,674,773   46,117,631   47,674,773   46,117,631  
Diluted weighted average common shares outstanding  47,674,773   46,117,631   47,674,773   46,117,631  


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

 

 Six months ended June 30, 
 2021   2020  
         
CASH FLOWS FROM OPERATING ACTIVITIES        
Net (loss) income $27,527   $(2,614) 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Allowance for bad debts  748    691  
Depreciation and amortization  10,507    10,206  
Deferred income taxes  424    (6,478) 
Equity method income  (1,879)   (94) 
Deferred cost of financing  623    861  
Other non-cash adjustments  (19)   42  
Loss on Debt Extinguishment  2,333    -  
Unrealized currency translation losses  2,555    23,585  
Changes in operating assets and liabilities:        
Trade accounts receivables  (6,743)   13,785  
Inventories  (1,385)   (8,252) 
Prepaid expenses  (2,024)   (1,017) 
Other assets  (7,169)   1,363  
Trade accounts payable and accrued expenses  24,556    (10,358) 
Accrued interest expense  (7,171)   (84) 
Taxes payable  3,396    (5,911) 
Labor liabilities  (148)   (982) 
Contract assets and liabilities  14,677    11,246  
Related parties  (23)   (1,200) 
CASH PROVIDED BY OPERATING ACTIVITIES $60,785   $24,789  
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Proceeds from sale of investments  166    364  
Purchase of investments  (49)   (167) 
Acquisition of property and equipment  (18,323)   (7,395) 
CASH USED IN INVESTING ACTIVITIES $(18,206)  $(7,198) 
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Cash dividend  (2,621)   (1,265) 
Loss on Debt Extinguishment - Call Premium  (8,610)   -  
Deferred financing transaction costs  (88)   -  
Proceeds from debt  221,146    17,796  
Repayments of debt  (216,676)   (14,698) 
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES $(6,849)  $1,833  
         
Effect of exchange rate changes on cash and cash equivalents $(2,334)  $(3,862) 
         
NET (DECREASE) INCREASE IN CASH  33,396    15,562  
CASH - Beginning of period  66,899    47,862  
CASH - End of period $100,295   $63,424  
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION        
Cash paid during the period for:        
Interest $12,286   $9,513  
Income Tax $9,471   $7,014  
         
NON-CASH INVESTING AND FINANCING ACTIVITES:        
Assets acquired under credit or debt $937   $907  


Revenues by Region
(Amounts in thousands)
(Unaudited)

 Three months ended Six months ended
 June 30, June 30,
2021 2020 % Change  2021 2020 % Change
Revenues by Region           
United States109,879 79,148 38.8% 210,686 157,946 33.4%
Colombia8,166 1,820 348.7% 15,831 8,292 90.9%
Other Countries3,669 974 276.6% 6,077 3,002 102.4%
Total Revenues by Region121,714 81,942 48.5% 232,594 169,240 37.4%


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
 June 30,
 2021  2020 % Change
      
Total Revenues with Foreign Currency Held Neutral$121,385  $81,942 48.1%
Impact of changes in foreign currency 329  - 0.4%
Total Revenues, as Reported$121,714  $81,942 48.5%

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,
   2021  2020  2021  2020 
          
Net (loss) income  19,275  16,054  27,527  (2,614)
Less: Income (loss) attributable to non-controlling interest  (41) 143  (127) 45 
(Loss) Income attributable to parent  19,234  16,197  27,400  (2,569)
Foreign currency transactions losses (gains)  (190) (13,309) (145) 19,157 
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)  975  1,418  2,256  2,753 
Extinguishment of debt - Call Option Premium  -  -  8,610  - 
Extinguishment of debt - Deferred Costs  (169) -  2,368  - 
Joint Venture VA (Saint Gobain) adjustments  68  567  147  939 
Change in FV of Hedging Derivatives  3  1,358  (182) 1,358 
Tax impact of adjustments at statutory rate  (206) 3,189  (3,916) (7,746)
Adjusted net (loss) income  19,715  9,420  36,538  13,892 
          
Basic income (loss) per share  0.40  0.35  0.58  (0.06)
Diluted income (loss) per share  0.40  0.35  0.58  (0.06)
          
Diluted Adjusted net income (loss) per share  0.41  0.20  0.77  0.30 
          
Diluted Weighted Average Common Shares Outstanding in thousands  47,675  46,118  47,675  46,118 
Basic weighted average common shares outstanding in thousands  47,675  46,118  47,675  46,118 
Diluted weighted average common shares outstanding in thousands  47,675  46,118  47,675  46,118 
          
          
   Three months ended Six months ended
   Jun 30, Jun 30,
   2021  2020  2021  2020 
          
Net (loss) income  19,275  16,054  27,527  (2,614)
Less: Income (loss) attributable to non-controlling interest  (41) 143  (127) 45 
(Loss) Income attributable to parent  19,234  16,197  27,400  (2,569)
Interest expense and deferred cost of financing  2,442  5,446  5,964  11,089 
Income tax (benefit) provision  7,587  6,875  11,264  742 
Depreciation & amortization  5,218  4,965  10,507  10,206 
Foreign currency transactions losses (gains)  (190) (13,309) (145) 19,157 
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)  975  910  2,001  1,805 
Extinguishment of debt - Call Option Premium  -  -  8,610  - 
Extinguishment of debt - Deferred Costs  (169) -  2,368  - 
Joint Venture VA (Saint Gobain) EBITDA adjustments  503  869  1,341  1,868 
Change in FV of Hedging Derivatives  3  1,358  (182) 1,358 
Adjusted EBITDA  35,603  23,311  69,128  43,656 



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