Press Releases

Tecnoglass Reports Third Quarter 2019 Results

November 6, 2019 at 7:00 AM EST

BARRANQUILLA, Colombia, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Tecnoglass, Inc. (NASDAQ: TGLS) (“Tecnoglass” or the “Company”), a leading manufacturer of architectural glass, windows, and associated aluminum products for the global commercial and residential construction industries, today reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

  • Total revenues increased 12% to $108.5 million, with the U.S. representing 86% of revenues
  • Net loss of $1.3 million, or ($0.03) per diluted share, including non-cash FX losses during the period
  • Adjusted net income of $8.3 million, or $0.18 per diluted share
  • Adjusted EBITDA1 increased 5% to $24.0 million
  • Backlog expanded to a record $532 million; up 5% year-over-year and 1.1% quarter-over-quarter
  • Completed aluminum production capacity expansion; remaining high-return automation projects on track to be completed by the end of 2019
  • Declares regular quarterly dividend of $0.14 per share
  • Raises full year 2019 outlook for total revenues and adjusted EBITDA1, representing year-over-year growth of 17% and 18% at mid-points of new respective ranges

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “We delivered another quarter of record revenues and further cemented our position as a U.S. focused growth company, representing 86% our business. We achieved our 20th straight quarter of double-digit growth in the U.S., including residential sales up nearly 60% year-over-year. Colombia revenues up 21% year-over-year excluding FX was encouraging and better than expected. Through our expanding reputation for excellence and our extensive portfolio of innovative products, we are forming many new customer relationships and winning bids across a broader geographic footprint. With our record backlog, we are better positioned than ever to continue driving meaningful share gains, particularly in the U.S. We look forward to deliver another full year of double-digit growth in revenue and Adjusted EBITDA. Beyond 2019, our strong line up of projects paired with our highly efficient, low-cost operations gives us confidence in our ability to generate attractive returns for shareholders for years to come.”

Christian Daes, Chief Operating Officer of Tecnoglass, stated, “Our strategic footprint, first-class product designs and commitment to operational excellence continue to produce industry-leading margins in our business. Our targeted automation initiatives at our production facilities are already in the testing stage and on track to be operational by year end, providing for additional efficiencies within our vertically-integrated operation, mainly on labor and waste reduction. On the product side, the success of our residential offerings continues to surpass our expectations, representing 17% of our trailing-twelve-month U.S. revenues. We are pleased with the trajectory of our business and look forward to executing on our multi-year project pipeline while carefully pursuing additional opportunities to grow our Company.”

Third Quarter 2019 Results

Total revenues for the third quarter of 2019 improved 11.8% to $108.5 million compared to $97.0 million in the prior year quarter. Excluding the impact of unfavorable foreign currency, total revenues increased 13.6% compared to the prior year quarter. U.S. revenues increased 12.9% to $92.8 million compared to $82.2 million in the prior year quarter, driven by stronger residential invoicing, healthy commercial construction activity growth, and market share gains. Colombia revenues of $13.0 million increased 7.4% as reported and 21.2% excluding foreign currency, compared to the prior year quarter, primarily attributable to stronger project activity.

Gross profit increased 3.0% to $35.7 million, representing a 33.0% gross margin compared to gross profit of $34.7 million, representing a 35.8% gross margin in the prior year quarter. The lower gross margin was mainly attributable to an exceptionally favorable mix of higher margin manufacturing revenues during the prior year quarter. The third quarter 2019 had a more balanced mix of manufacturing and service revenue, producing a gross margin consistent with the Company’s normalized level in the low-to-mid 30% range.

Operating expenses were $20.2 million compared to $19.4 million in the prior year quarter. As a percent of total revenues, operating expenses were 18.6% compared to 20.0% in the prior year quarter, primarily reflecting higher sales and lower costs for labor and freight. Excluding one-time items, operating expenses would have been 18.2% as a percent of total revenues compared to 19.7% in the prior year quarter. Operating income increased to $15.6 million compared to $15.3 million in the prior year quarter.

Net loss was $1.3 million, or $0.03 per diluted share in the third quarter of 2019 compared to net income of $6.2 million, or a $0.15 loss per diluted share in the prior year quarter, including non-cash foreign currency transaction losses in both periods related to the re-measurement of USD denominated assets and liabilities against the Colombian Peso as functional currency. Adjusted net income1 was $8.3 million, or $0.18 per diluted share compared to adjusted net income of $9.3 million, or $0.23 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 5% to $24.0 million, or 22.1% of sales compared to $22.8 million, or 23.5% of sales, in the prior year quarter. Adjusted EBITDA in the third quarter 2019 included $1.2 million in contribution from the Company’s joint venture with Saint-Gobain.

High-Return Initiatives

In July 2019 the Company completed its previously announced aluminum production capacity expansion in response to strong customer demand for aluminum products. The Company’s other high-return investments to automate key operations at several glass and aluminum facilities are already in the testing phase and on track to be operational by the end of 2019. As of September 30, 2019, the Company has deployed approximately 80% of its total anticipated $20 million capital investment on growth and efficiency initiatives.

Dividend

The Company declared a regular quarterly dividend of $0.14 per share for the third quarter of 2019, which will be paid on December 20, 2019 to shareholders of record as of the close of business on November 29, 2019.

The dividend will be paid in cash or ordinary shares, to be chosen at the option of holders of ordinary shares during an election period beginning December 2, 2019 and lasting until 5:00 P.M. Eastern Time on December 13, 2019. The value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares shall be the average of the closing price of the Company’s ordinary shares on NASDAQ during the period from December 2, 2019 through December 13, 2019. If no choice is made during this election period, the dividend for this election period will be paid in ordinary shares of the Company.

Full Year 2019 Outlook

For the full year 2019, the Company has increased its outlook for revenues to grow to a range of $430 to $440 million, based on its solid first nine-month performance, a favorable growth environment in its construction end markets and additional anticipated market share gains in the U.S. The Company has also raised its Adjusted EBITDA outlook to a range of $93 million to $97 million, representing growth of 17.6% at the midpoint year-over-year, driven by higher revenues.

Conference Call

Management will host a conference call on Wednesday, November 6, 2019 at 9:00 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. To participate by telephone, please dial:

  • (877) 705-6003 (Domestic)
  • (201) 493-6725 (International)

If you are unable to listen live, a replay of the conference call 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: 13695184.        

About Tecnoglass

Tecnoglass Inc. is a leading manufacturer of architectural glass, windows, and associated aluminum products for the global commercial and residential construction industries. Tecnoglass is the leading architectural glass transformation company in Colombia and the second largest glass fabricator serving the United States. Headquartered in Barranquilla, Colombia, the Company operates out of a 2.7 million square foot vertically‐integrated, state‐of‐the‐art manufacturing complex that provides easy access to North, Central and South America, the Caribbean, and the Pacific. Tecnoglass supplies over 1000 customers in North, Central and South America, with the United States accounting for over 80% of revenues. Tecnoglass' tailored, high‐end products are found on some of the world’s most distinctive properties, including the El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (San Francisco).

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.


1Adjusted net income 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)

    September 30,     December 31,  
2019   2018  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 41,739       $ 33,040    
Investments     2,273         1,163    
Trade accounts receivable, net     112,687         92,791    
Due from related parties     8,388         8,239    
Inventories     82,140         91,849    
Contract assets – current portion     43,384         46,018    
Other current assets     24,906         20,299    
Total current assets   $ 315,517       $ 293,399    
                 
Long term assets:                
Property, plant and equipment, net   $ 146,581       $ 149,199    
Deferred income taxes     7,339         4,770    
Contract assets – non-current     9,104         6,986    
Intangible assets     7,135         9,006    
Goodwill     23,561         23,561    
Long term investments     45,273         -    
Other long term assets     3,079         2,853    
Total long term assets     242,072         196,375    
Total assets   $ 557,589       $ 489,774    
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Short-term debt and current portion of long-term debt   $ 16,168       $ 21,606    
Trade accounts payable and accrued expenses     67,210         65,510    
Accrued interest expense     3,184         7,567    
Due to related parties     5,099         1,500    
Dividends payable     1,615         736    
Contract liability – current portion     12,750         16,789    
Due to equity partners     10,900         -    
Other current liabilities     13,973         8,887    
Total current liabilities   $ 130,899       $ 122,595    
                 
Long term liabilities:                
Deferred income taxes   $ 542       $ 2,706    
Long term payable associated to GM&P acquisition     8,500         8,500    
Long term liabilities from related parties     617         600    
Contract liability – non-current     177         1,436    
Long term debt     247,776         220,709    
Total long term liabilities     257,612         233,951    
Total liabilities   $ 388,511       $ 356,546    
                 
SHAREHOLDERS’ EQUITY                
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2019 and December 31, 2018 respectively   $ -       $ -    
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 45,519,472 and 38,092,996 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively     4         4    
Legal Reserves     1,367         1,367    
Additional paid-in capital     208,250         157,604    
Retained earnings     5,319         10,439    
Accumulated other comprehensive (loss)     (46,765 )       (37,058 )  
Shareholders’ equity attributable to controlling interest     168,175         132,356    
Shareholders’ equity attributable to non-controlling interest     903         872    
Total shareholders’ equity     169,078         133,228    
Total liabilities and shareholders’ equity   $ 557,589       $ 489,774    

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,
    2019     2018     2019     2018    
Operating revenues:                          
External customers   $ 106,741     $ 95,325     $ 323,808     $ 269,317    
Related parties     1,729       1,667       5,713       3,804    
Total operating revenues     108,470       96,992       329,521       273,121    
Cost of sales     72,729       62,299       223,051       187,038    
Gross profit     35,741       34,693       106,470       86,083    
                           
Operating expenses:                          
Selling expense     (11,334 )     (10,922 )     (32,115 )     (28,626 )  
General and administrative expense     (8,855 )     (8,504 )     (26,303 )     (24,578 )  
Total operating expenses     (20,189 )     (19,426 )     (58,418 )     (53,204 )  
                           
Operating income     15,552       15,267       48,052       32,879    
                           
Non-operating income       450         780         1,078       2,588    
Equity method income     295       -       273       -    
Foreign currency transactions (losses) gains     (12,006 )     (2,494 )     (9,921 )     (828 )  
Interest expense and deferred cost of financing     (5,876 )     (5,140 )     (17,220 )     (15,551 )  
                           
(Loss) Income before taxes     (1,585 )     8,413       22,262       19,088    
                           
Income tax provision     266       (2,261 )     (8,590 )     (6,187 )  
                           
Net (loss) income   $ (1,319 )   $ 6,152     $ 13,672     $ 12,901    
                           
Loss (Income) attributable to non-controlling interest     144       145       (30 )     429    
                           
(Loss) Income  attributable to parent   $ (1,175 )   $ 6,297     $ 13,642     $ 13,330    
                           
Comprehensive income:                          
Net income (loss)   $ (1,319 )   $ 6,152     $ 13,672     $ 12,901    
Foreign currency translation adjustments     (8,484 )     (1,998 )     (8,766 )     564    
Chase in fair value derivative contracts     (941 )     -       (941 )     -    
                           
Total comprehensive income (loss)   $ (10,744 )   $ 4,154     $ 3,965     $ 13,465    
Comprehensive (income) loss attributable to non-controlling interest     144       145       (30 )     429    
                           
Total comprehensive income (loss) attributable to parent   $ (10,600 )   $ 4,299     $ 3,935     $ 13,894    
                           
Basic income (loss)per share   $ (0.03 )   $ 0.15     $ 0.31     $ 0.33    
                           
Diluted income (loss) per share   $ (0.03 )   $ 0.15     $ 0.31     $ 0.32    
                           
Basic weighted average common shares outstanding     45,519,472       40,294,762       43,793,163       39,301,161    
                           
Diluted weighted average common shares outstanding     46,112,707       40,887,997       44,386,398       39,894,396    

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

    Nine months ended September 30,  
  2019       2018    
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income   $ 13,672       $ 12,901    
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Provision for bad debts     1,046         (231 )  
Provision for obsolete inventory     -         26    
Depreciation and amortization     17,189         17,483    
Deferred income taxes     (5,140 )       1,233    
Director stock compensation     -         213    
Equity method income     (273 )       -    
Deferred cost of financing     1,213         1,078    
Other non-cash adjustments     41         (100 )  
Changes in operating assets and liabilities:                
Trade accounts receivables     (30,040 )       (10,551 )  
Inventories     3,939         (17,025 )  
Prepaid expenses     (3,013 )       (509 )  
Other assets     (5,081 )       (3,834 )  
Trade accounts payable and accrued expenses     16,535         4,677    
Accrued interest expense     (4,396 )       (4,368 )  
Taxes payable     3,645         (6,361 )  
Labor liabilities     626         934    
Contract assets and liabilities     (5,139 )       (5,480 )  
Related parties     2,724         440    
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ 7,548       $ (9,474 )  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Proceeds from sale of investments     858         1,093    
Acquisition of businesses     (34,100 )       (6,000 )  
Purchase of investments     (1,172 )       (828 )  
Acquisition of property and equipment     (19,887 )       (7,195 )  
CASH USED IN INVESTING ACTIVITIES   $ (54,301 )     $ (12,930 )  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from debt     70,880         16,272    
Cash dividend     (3,714 )       (2,044 )  
Proceeds from equity offering     36,478         -    
Repayments of debt     (47,168 )       (5,288 )  
CASH PROVIDED BY FINANCING ACTIVITIES   $ 56,476       $ 8,940    
                 
Effect of exchange rate changes on cash and cash equivalents   $ (1,024 )     $ 492    
                 
NET INCREASE (DECREASE) IN CASH     8,699         (12,972 )  
CASH - Beginning of period     33,040         40,923    
CASH - End of period   $ 41,739       $ 27,951    
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
Cash paid during the period for:                
Interest   $ 19,206       $ 9,516    
Income Tax   $ 11,090       $ 6,984    
                 
NON-CASH INVESTING AND FINANCING ACTIVITES:                
Assets acquired under credit or debt   $ 1,667       $ 1,249    
Gain in extinguishment of GM&P payment settlement   $ -       $ 3,606    

Revenues by Region
(Amounts in thousands)
(Unaudited)

  Three months ended   Nine months ended
  Septempber 30,   September 30,
2019   2018   % Change   2019   2018   % Change
Revenues by Region                      
United States   92,848     82,223   12.9 %     284,208    215,068   32.1 %
Colombia   13,037     12,138   7.4 %     38,190     49,519   -22.9 %
Other Countries   2,586     2,631    (1.7 %)     7,123     8,534    (16.5 %)
Total Revenues by Region   108,470     96,992   11.8 %     329,521    273,121   20.7 %

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   Nine months ended
  September 30,   September 30,
2019     2018   % Change   2019     2018   % Change
                       
Total Revenues with Foreign Currency Held Neutral 110,144     96,992   13.6 %   334,197     273,121   22.4 %
Impact of changes in foreign currency (1,674 )   -       (4,675 )   -    
Total Revenues, As Reported 108,470     96,992   11.8 %   329,521     273,121   20.7 %

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   Nine months ended
      September 30,   September 30,
      2019     2018   2019     2018
                   
Net (loss) income     (1,319 )   6,152   13,672     12,901
Less: Income (loss) attributable to non-controlling interest     144     145   (30 )   429
 (Loss) Income attributable to parent     (1,175 )   6,297   13,642     13,330
Interest expense and deferred cost of financing     5,876     5,140   17,220     15,551
Income tax (benefit) provision     (266 )   2,261   8,590     6,187
Depreciation & amortization     5,631     6,025   17,189     17,483
Foreign currency transactions losses (gains)     12,006     2,494   9,921     828
Non-Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     963     495   2,388     5,703
Director Stock compensation and provision for obsolete inventory     -     71   -     213
Gain on change in fair value of earnout shares liabilities     -     -   -     -
Gain on change in fair value of warrant liability     -     -   -     -
Add: VA EBITDA adjustements     929     -   1,902     -
Adjusted EBITDA     23,964     22,783   70,852     59,295


      Three months ended   Nine months ended
      September 30,   September 30,
      2019     2018     2019     2018
                   
Net (loss) income     (1,319 )   6,152     13,672     12,901
Less: Income (loss) attributable to non-controlling interest     144     145     (30 )   429
 (Loss) Income attributable to parent     (1,175 )   6,297     13,642     13,330
Foreign currency transactions losses (gains)     12,006     2,494     9,921     828
Deferred cost of financing     405     372     1,213     1,078
Non-Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     963     495     2,388     5,703
Tax impact of adjustments at statutory rate     (4,436 )   (321 )   (4,571 )   1,181
Add: VA Net Income adjustments     490     -     763     -
Adjusted net (loss) income     8,253     9,337     23,356     22,120
                   
Basic income (loss) per share     (0.03 )   0.15     0.31     0.33
Diluted income (loss) per share     (0.03 )   0.15     0.31     0.32
                   
Diluted Adjusted net income (loss) per share     0.18     0.23     0.53     0.55
                   
Diluted Weighted Average Common Shares Outstanding in thousands     46,113     40,888     44,386     39,894
Basic weighted average common shares outstanding in thousands     45,519     40,294     43,793     39,301

tecnoglasslogo.jpg

Source: Tecnoglass Inc.