Tecnoglass Reports Third Quarter 2016 Results
- Reports Net Income of (
- Revenue Increases to Record
- Adjusted EBITDA2 Grows to Record
- Backlog Expands 12% Year-over-Year to Record
- Reaffirms Full Year 2016 Outlook -
Third Quarter 2016 Highlights as Compared to Third Quarter 2015
- Total revenues increased 27.2% to
$80.0 million ; up 27.4% on a constant currency basis - Adjusted EBITDA2 grew 20.9% to
$19.9 million - Operating margin improved 200 basis points to 19.2%
- Authorized four
$0.125 quarterly dividends, or$0.50 on an annualized basis, with first quarterly installment to be paidNovember 1, 2016 - Completed exchange offer of 5.5 million ordinary warrants, which increased outstanding shares available to the public by 72% to 10.1 million shares (including the registration of shares directly to third party
Energy Holding Corp former shareholders)
Third Quarter 2016 Results
Total revenues for the third quarter 2016 increased 27.2% to
Gross profit was
Net loss was
Adjusted EBITDA2 increased 20.9% to
Warrant Exchange Offer
In
Dividend
In
Full Year 2016 Outlook
Based on improving commercial construction markets, additional market share gains and enhanced operating efficiencies, for the full year 2016, the Company continues to expect revenues to grow approximately 20% to
Conference Call
Management will host a conference call on
- (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 (877) 870-5176 (Domestic) or (858) 384-5517 (International) and entering pass code: 13647453 through
About
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
(1) Adjusted net income in both periods excludes the non-cash impact associated with the change in the fair market values of the exchanged and remaining warrants and of the earn-out shares during each respective period, as reconciled in the table below. The respective fair values of the warrants and earn-out shares change in response to market factors not directly controlled by the Company such as the market price of the Company's shares of common stock and the volatility index of comparable companies.
(2) Adjusted EBITDA excludes the impact of warrants and earn-out shares and further excludes foreign exchange gains and losses related to the effect on foreign exchange rates on monetary balance sheet accounts, as reconciled in the table below.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets | |||||||
(In thousands, except share and per share data) | |||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 18,125 | $ | 18,496 | |||
Investments | 2,016 | 1,470 | |||||
Trade accounts receivable, net | 84,629 | 52,515 | |||||
Due from related parties | 32,350 | 28,073 | |||||
Inventories | 60,747 | 46,011 | |||||
Other current assets | 26,324 | 20,814 | |||||
Total current assets | $ | 224,191 | $ | 167,379 | |||
Long term assets: | |||||||
Property, plant and equipment, net | $ | 174,818 | $ | 135,974 | |||
Long term receivables from related parties | 1,688 | 2,536 | |||||
Other long term assets | 11,075 | 10,310 | |||||
Total long term assets | 187,581 | 148,820 | |||||
Total assets | $ | 411,772 | $ | 316,199 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt and current portion of long term debt | $ | 62,401 | $ | 16,921 | |||
Note payable to shareholder | 79 | 79 | |||||
Trade accounts payable | 49,984 | 39,142 | |||||
Due to related parties | 1,780 | 1,283 | |||||
Dividends payable | 4,857 | - | |||||
Current portion of customer advances on uncompleted contracts | 10,836 | 11,841 | |||||
Earnout Share Liability | 18,060 | 13,740 | |||||
Warrant liability | 4,963 | 31,213 | |||||
Other current liabilities | 18,059 | 22,530 | |||||
Total current liabilities | $ | 171,019 | $ | 136,749 | |||
Long term liabilities: | |||||||
Earnout Share Liability | $ | - | $ | 20,414 | |||
Customer advances on uncompleted contracts | 4,847 | 4,404 | |||||
Long term debt | 140,189 | 121,493 | |||||
Total Long Term Liabilities | 145,036 | 146,311 | |||||
Total liabilities | $ | 316,055 | $ | 283,060 | |||
COMMITMENTS AND CONTINGENCIES | |||||||
SHAREHOLDERS' EQUITY | |||||||
Preferred shares, |
$ | - | $ | - | |||
Ordinary shares, |
3 | 3 | |||||
Legal Reserves | 1,367 | 1,367 | |||||
Additional paid-in capital | 95,403 | 45,584 | |||||
Retained earnings | 21,423 | 17,354 | |||||
Accumulated other comprehensive (loss) | (22,479 | ) | (31,169 | ||||
Total shareholders' equity | 95,717 | 33,139 | |||||
Total liabilities and shareholders' equity | $ | 411,772 | $ | 316,199 | |||
Condensed Consolidated Statements of Operations and Other Comprehensive Income | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Operating revenues: | ||||||||||||||||
External customers | $ | 65,429 | $ | 47,148 | $ | 175,100 | $ | 131,078 | ||||||||
Related parties | 14,596 | 15,744 | 43,341 | 41,910 | ||||||||||||
Total operating revenues | 80,025 | 62,892 | 218,441 | 172,988 | ||||||||||||
Cost of sales | 50,407 | 39,186 | 139,149 | 109,798 | ||||||||||||
Gross Profit | 29,618 | 23,706 | 79,292 | 63,190 | ||||||||||||
Operating expenses | (14,284 | ) | (12,890 | ) | (39,997 | ) | (35,064 | ) | ||||||||
Operating income | 15,334 | 10,816 | 39,295 | 28,126 | ||||||||||||
Gain (Loss) on change in fair value of earnout shares liabilities | (2,630 | ) | (2,519 | ) | 4,404 | (10,191 | ) | |||||||||
Gain (Loss) on change in fair value of warrant liability | (12,885 | ) | (10,148 | ) | (287 | ) | (21,461 | ) | ||||||||
Non-operating income (loss), net | 630 | 2,608 | 2,164 | 4,377 | ||||||||||||
Foreign currency transactions gains (losses) | 2,434 | 8,136 | 168 | 11,509 | ||||||||||||
Interest expense | (4,771 | ) | (2,307 | ) | (12,137 | ) | (6,509 | ) | ||||||||
Income (Loss) before taxes | (1,888 | ) | 6,586 | 33,607 | 5,851 | |||||||||||
Income tax provision | 6,035 | 8,524 | 13,493 | 16,927 | ||||||||||||
Net income (loss) | $ | (7,923 | ) | $ | (1,938 | ) | $ | 20,114 | $ | (11,076 | ) | |||||
Comprehensive income (loss): | ||||||||||||||||
Net income (loss) | $ | (7,923 | ) | $ | (1,938 | ) | $ | 20,114 | $ | (11,076 | ) | |||||
Foreign currency translation adjustments | 3,459 | (14,111 | ) | 8,690 | (19,688 | ) | ||||||||||
Total comprehensive income (loss) | $ | (4,464 | ) | $ | (16,049 | ) | $ | 28,804 | $ | (30,764 | ) | |||||
Basic income (loss) per share | $ | (0.28 | ) | $ | (0.08 | ) | $ | 0.73 | $ | (0.44 | ) | |||||
Diluted income (loss) per share | $ | (0.28 | ) | $ | (0.08 | ) | $ | 0.65 | $ | (0.44 | ) | |||||
Basic weighted average common shares outstanding | 28,312,368 | 25,426,250 | 27,489,954 | 25,127,179 | ||||||||||||
Diluted weighted average common shares outstanding | 28,312,368 | 25,426,250 | 30,746,922 | 25,127,179 | ||||||||||||
Nine Months Ended |
||||||||
2016 | 2015 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 20,114 | $ | (11,076 | ) | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Provision for bad debt | - | 1,210 | ||||||
Provision for obsolete inventories | - | (265 | ) | |||||
Director share-based compensation | 229 | - | ||||||
Depreciation and amortization | 10,912 | 8,331 | ||||||
Other income and expenses | (58 | ) | 105 | |||||
Change in fair value of warrant liability | 287 | 21,461 | ||||||
Change in fair value of earnout share liability | (4,404 | ) | 10,191 | |||||
Deferred income taxes | (233 | ) | (1,058 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts receivable | (25,600 | ) | (18,429 | ) | ||||
Inventories | (9,699 | ) | (21,129 | ) | ||||
Prepaid expenses and other current assets | 1,184 | 360 | ||||||
Other assets | (6,702 | ) | (5,849 | ) | ||||
Trade accounts payable | 6,710 | 20,566 | ||||||
Dividend payable | - | - | ||||||
Customer advances on uncompleted contracts | (1,958 | ) | 5,324 | |||||
Related parties | (392 | ) | (10,766 | ) | ||||
Other current liabilities | (4,474 | ) | 11,266 | |||||
CASH (USED) PROVIDED BY OPERATING ACTIVITIES | (14,084 | ) | 10,242 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from sale of investments | 24,226 | 376 | ||||||
Proceeds from sale of property and equipment | - | 143 | ||||||
Purchase of investments | (25,077 | ) | (1,444 | ) | ||||
Acquisition of property and equipment | (15,862 | ) | (18,228 | ) | ||||
CASH USED IN INVESTING ACTIVITIES | (16,713 | ) | (19,153 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from exercise of Unit Purchase Options | 404 | - | ||||||
Proceeds from debt | 187,442 | 79,608 | ||||||
Repayments of debt | (158,181 | ) | (72,461 | ) | ||||
CASH PROVIDED BY FINANCING ACTIVITIES | 29,665 | 7,147 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 761 | 2,705 | ||||||
NET (DECREASE) INCREASE IN CASH | (371 | ) | 941 | |||||
Cash and equivalents - Beginning of period | 18,496 | 15,930 | ||||||
Cash and equivalents - End of period | $ | 18,125 | $ | 16,871 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 8,718 | $ | 4,778 | ||||
Taxes | $ | 25,669 | $ | 11,938 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Assets acquired under capital lease and debt | $ | 19,249 | $ | 44,624 | ||||
Ordinary shares issued in cashless exercise of warrants | $ | 26,537 | - | |||||
Shares issued under earnout share program | $ | 11,690 | 5,765 | |||||
Revenues by Region | ||||||
(Amounts in thousands) | ||||||
(unaudited) | ||||||
Three months ended |
||||||
2016 | 2015 | % Change | ||||
Revenues by Region | ||||||
49,870 | 42,942 | 16.1% | ||||
26,461 | 17,591 | 50.4% | ||||
Other Countries | 3,694 | 2,359 | 56.6% | |||
Total Revenues by Region | 80,025 | 62,892 | 27.2% | |||
Reconciliation of Non-GAAP Performance Measures to GAAP Performance Measures
(Amounts 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
Three months ended |
||||||
2016 | 2015 | % Change | ||||
Total Revenues with Foreign Currency Held Neutral | 27.4% | |||||
Impact of changes in foreign currency | (96) | - | (0.2%) | |||
Total Revenues, As Reported | 27.2% | |||||
Currency impacts on total revenues have been derived by translating current period revenues at the quarter-to-date 2016 average foreign currency rates for the period ending
Reconciliation of Adjusted EBITDA, Adjusted EBIT and Adjusted Net Income to Net Income
(In thousands, except share and per share data)
(unaudited)
Adjusted EBITDA, Adjusted EBIT and Adjusted Net Income are not measures of financial performance under generally accepted accounting principles ("GAAP"). Management believes Adjusted EBITDA, Adjusted EBIT and Adjusted Net Income, in addition to operating profit, net 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, Adjusted EBIT and Adjusted Net 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 EBITDA, Adjusted EBIT and Adjusted Net Income to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, with amounts in thousands:
Three months ended | |||||||||||||||||||||
2016 |
2016 |
||||||||||||||||||||
Adjusted EBITDA | $ | 16,509 | $ | 13,935 | $ | 15,334 | $ | 17,081 | $ | 19,958 | |||||||||||
Depreciation | 3,085 | 3,538 | 3,261 | 3,659 | 3,994 | ||||||||||||||||
Adjusted EBIT | $ | 13,424 | $ | 10,397 | $ | 12,073 | $ | 13,422 | $ | 15,964 | |||||||||||
Interest Expense | 2,307 | 2,765 | 3,124 | 4,242 | 4,771 | ||||||||||||||||
FX Transaction | (8,136 | ) | 1,450 | 1,257 | 1,009 | (2,434 | ) | ||||||||||||||
Tax Provision | 8,524 | 3,764 | 3,643 | 3,815 | 6,035 | ||||||||||||||||
Adjusted Net | $ | 10,729 | $ | 2,418 | $ | 4,049 | $ | 4,356 | $ | 7,592 | |||||||||||
Earn out Share | 2,519 | 667 | (3,704 | ) | (3,330 | ) | 2,630 | ||||||||||||||
Warrant Liability | 10,148 | 3,440 | (5,911 | ) | (6,687 | ) | 12,885 | ||||||||||||||
Net (Loss) Income | $ | (1,938 | ) | $ | (1,689 | ) | $ | 13,664 | $ | 14,373 | $ | (7,923 | ) | ||||||||
Diluted Adjusted | $ | 0.42 | $ | 0.10 | $ | 0.14 | $ | 0.14 | $ | 0.27 | |||||||||||
Earn out Share | 0.10 | 0.03 | (0.13 | ) | (0.11 | ) | 0.09 | ||||||||||||||
Warrant Liability | 0.40 | 0.14 | (0.20 | ) | (0.22 | ) | 0.46 | ||||||||||||||
Diluted Income | |||||||||||||||||||||
(Loss) Per Share | $ | (0.08 | ) | $ | (0.07 | ) | $ | 0.47 | $ | 0.47 | $ | (0.28 | ) | ||||||||
Diluted Weighted | |||||||||||||||||||||
Average Common | 25,426 | 25,448 | 29,328 | 30,745 | 28,312 | ||||||||||||||||
Shares Outstanding | |||||||||||||||||||||
Investor Relations:
Deputy CFO
305-503-9062
investorrelations@tecnoglass.com
Source:
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