Tecnoglass Reports Record Second Quarter 2022 Results
08/04/2022 - 07:00 AM
- Record Total Revenues of $169.1 Million Up 39% Year-Over-Year , All through Organic Growth -
- Record Single-Family Residential Revenues Increased 86 % Year-Over-Year , Representing 4 5 % of Total Revenues –
- Growth Capex Investments on Track to End Year with Installed Production Capacity of Over $800 Million -
- Gross Margin of 4 3 . 5 %, U p 3 1 0 B asis P oints Year-Over-Year -
- Record Net Income of $ 3 3 . 4 Million and $ 0 . 7 0 Per Diluted Share -
- Record Adjusted Net Income 1 of $ 3 3 . 0 M illion and $ 0 . 69 Per Diluted Share -
- Adjusted EBITDA 1 Up 5 1 . 7 % Year-Over-Year to a Record $ 54 . 6 M illion , or 3 2 . 3 % of Total Revenues -
- Cash Flow From Operations of $ 3 5.9 M illion -
- Backlog Expand ed 19. 5 % Year-Over-Year to a Record $ 668 M illion –
- Board Increases Quarterly Dividend by 15% -
- Increases Full Year 202 2 Growth Outlook to Adjusted EBITDA 1 of $ 2 0 8 M illion to $ 2 20 M illion on Total Revenues of $ 6 20 M illion to $ 6 40 M illion -
BARRANQUILLA, Colombia, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Tecnoglass, Inc. ( NYSE : TGLS) (“Tecnoglass” or the “Company”) , a leading manufacturer of architectural glass, windows, and associated aluminum products serving the global residential and commercial end markets, today reported financial results for the second quarter ended June 30, 2022.
José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, "We are very pleased to report another quarter of record results led by continued strong demand for our single-family residential products and further sequential growth in our commercial business. The benefit of our vertically integrated business model and highly efficient manufacturing capacity are allowing us to maintain exceptional lead times for our customers, resulting in market share gains and profitable growth. The prudent investments we have made in automation, capacity enhancements and product innovation, in addition to our disciplined cost controls, are supporting our industry-leading adjusted EBITDA margin, which remains in excess of 30% . We believe the momentum in our business and established track record of exceptional cash flow further validates Tecnoglass’ unique vertically integrated business model and strategic positioning in attractive high-growth geographies across the U.S. We are excited by the trajectory of our business and look forward to delivering on our upwardly revised outlook for the full year 2022.”
Christian Daes, Chief Operating Officer of Tecnoglass, added, “Our activity in key U.S. regions remains strong for single-family and multifamily residential projects, as well as commercial projects, evidenced by record levels of invoicing during the month of July. Ongoing market share gains helped us produce revenue growth of 86% year-over-year in our single-family residential business, with projects in the historically resilient remodel and renovation end market representing approximately 65% of that business. The commercial side of our business has continued to experience sequential growth in each month this year, with the second quarter revenues up 15% compared to the prior year quarter. Furthermore, we ended the quarter with a record backlog of multifamily and commercial projects that now extend well into 2023. We intend to continue outperforming in our markets as a supplier of choice given our ability to maintain timely deliveries that help keep customers on schedule. We are reinvesting a portion of our significant cash flow into high-return capex investments that will allow us to end the year with installed production capacity equivalent to over $800 million of revenue. The Board’s 15% increase in our dividend demonstrates their confidence in our cash flow generation to remain strong. We are well positioned to drive additional success in our Company for many years to come.”
Second Quarter 20 2 2 Results
Total revenues for the second quarter of 2022 increased 38.9% to $169.1 million , compared to $121.8 million in the prior year quarter, driven by strong growth in single-family residential activity, market share gains and the ongoing ramp up of the Company’s commercial activity. Single-family residential revenues increased approximately 86% year-over-year, representing 44.9% of total revenues for the second quarter, helped by continued strong demand within the repair and remodeling space, the ongoing expansion of the Company’s Multimax product line, and a larger customer base. Changes in foreign currency exchange rates had an adverse impact of $0.3 million on both Colombia revenues and total revenues in the quarter.
Gross profit for the second quarter of 2022 grew 49.9% to $73.6 million , representing a 43.5% gross margin, compared to gross profit of $49.1 million , representing a 40.4% gross margin in the prior year quarter. The 310 basis point improvement in gross margin mainly reflected operating leverage on higher sales, greater operating efficiencies related to automation and a higher mix of revenue from manufacturing versus installation activity as Tecnoglass continues to increase its mix of single-family residential products. Selling, general and administrative expense (“SG&A”) was $28.1 million compared to $20.4 million in the prior year quarter, with the majority of the increase attributable to shipping expense as a result of a higher sales volume and higher shipping rates. As a percent of total revenues, SG&A improved to 16.6% compared to 16.7% in the prior year quarter, primarily due to higher sales and better operating leverage on personnel, professional fees and other fixed expenses.
Net income was $33.4 million , or $0.70 per diluted share, in the second quarter of 2022 compared to net income of $19.6 million , or $0.41 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction gain of $2.5 million in the second quarter of 2022 and a $0.2 million gain in the second quarter of 2021. As previously disclosed, these non-cash gains and losses are related to the accounting re-measurement of U.S. Dollar denominated assets and liabilities against the Colombian Peso as functional currency.
Adjusted net income1 was $33.0 million , or $0.69 per diluted share, in the second quarter of 2022 compared to adjusted net income of $20.1 million , or $0.42 per diluted share, in the prior year quarter. Adjusted net income1 , as reconciled in the table below, excludes the impact of non-cash foreign exchange transaction gains or losses and other non-core items, along with the tax impact of adjustments at statutory rates, to better reflect core financial performance.
Adjusted EBITDA1 , as reconciled in the table below, increased 51.7% to $54.6 million , or 32.3% of total revenues, in the second quarter of 2022, compared to $36.0 million , or 29.5% of total revenues, in the prior year quarter. The improvement was driven by higher sales, a stronger gross margin and operating leverage on SG&A. Adjusted EBITDA1 included a $0.9 million contribution from the Company’s joint venture with Saint-Gobain, compared to $0.5 million in the prior year quarter.
Dividend
The Board of Directors of the Company today declared a quarterly cash dividend of $0.07 5 per share, representing a 15% increase from the previous dividend payment. The quarterly dividend will be paid on October 31, 2022 to shareholders of record as of the close of business on September 30, 2022.
Balance Sheet & Liquidity
The Company ended the second quarter of 2022 with total liquidity of approximately $270 million , including cash and cash equivalents of $99 million and availability under its committed revolving credit facilities of $170 million . Given the Company’s continued growth in adjusted EBITDA1 and strong cash generation, debt leverage continues to trend lower and now stands at 0.5 times LTM net debt to adjusted EBITDA1 , compared to 1.1 times in the prior year quarter.
Based on the Company’s record of strong financial performance, in May 2022 the Company amended its Credit Agreement with its syndicate of banks to remove the cap on restricted payments (including stock buybacks and dividend payouts) pursuant to the Company´s leverage ratio as defined in its Credit Agreement remaining below 1.5x net debt to adjusted EBITDA1 .
Full Year 202 2 Outlook
Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “The momentum in our business continued into the third quarter with single-family residential projects representing a growing share of our revenues and the commercial business continuing to grow sequentially each month through this year. Based on our current invoicing schedule and underlying market demand, we are increasing our full year 2022 outlook for revenues to grow to a range of $620 million to $640 million and for adjusted EBITDA1 to increase to a range of $208 million to $220 million . This implies adjusted EBITDA growth of approximately 42% at the midpoint, putting us firmly on the path to achieve another year of record results in full year 2022.”
Webcast and Conference Call
Management will host a webcast and conference call on August 4, 2022 at 10:00 a.m. Eastern time (9:00 a.m. Bogota, Colombia time) to review the Company’s results. The conference call will be broadcast live over the Internet. Additionally, a slide presentation will accompany the conference call. To listen to the call and view the slides, please visit the Investor Relations section of Tecnoglass' website at www.tecnoglass.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those unable to access the webcast, the conference call will be accessible by dialing 1-844-943-2944 (domestic) or 1- 973-528-0098 (international). Upon dialing in, please request to join the Tecnoglass Second Quarter 2022 Earnings Conference Call.
If you are unable to listen live, a replay of the webcast will be archived on the website. You may also access the conference call playback by dialing (800)-332-6854 (Domestic) or (973)-528-0005 (International) and entering passcode: 933766.
About Tecnoglass
Tecnoglass Inc. is a leading producer of architectural glass, windows, and associated aluminum products serving the multi-family, single-family and commercial end markets. Tecnoglass is the second largest glass fabricator serving the U.S. and the #1 architectural glass transformation company in Latin America. Located in Barranquilla, Colombia, the Company’s 3.8 million square foot, vertically-integrated and state-of-the-art manufacturing complex provides efficient access to over 1,000 global customers, with the U.S. accounting for more than 90% of revenues. Tecnoglass' tailored, high-end products are found on some of the world's most distinctive properties, including One Thousand Museum (Miami), Paramount (Miami), Salesforce Tower (San Francisco), Via 57 West (NY), Hub50House (Boston), Aeropuerto Internacional El Dorado (Bogotá), One Plaza (Medellín), Pabellon de Cristal (Barranquilla). For more information, please visit www.tecnoglass.com or view our corporate video at https://vimeo.com/134429998 .
Forward Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Tecnoglass’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Tecnoglass’ business. These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass’ filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that Tecnoglass’ financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events and changes in assumptions or otherwise, except as required by law.
1 Adjusted net income (loss) and Adjusted EBITDA in both periods are reconciled in the table below.
Investor Relations:
Santiago Giraldo CFO 305-503-9062investorrelations@tecnoglass.com
Tecnoglass Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) ( Una udited )
June 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 98,620 $ 85,011 Investments 2,407 1,977 Trade accounts receivable, net 114,218 110,539 Due from related parties 1,669 2,252 Inventories 111,914 84,975 Contract assets – current portion 16,310 18,667 Other current assets 23,554 22,854 Total current assets $ 368,692 $ 326,275 Long-term assets: Property, plant and equipment, net $ 183,594 $ 166,629 Deferred income taxes 2,526 596 Contract assets – non-current 10,588 11,853 Long-term trade accounts receivable 4,279 3,995 Intangible assets 3,029 3,337 Goodwill 23,561 23,561 Long-term investments 55,059 51,160 Other long-term assets 4,282 4,157 Total long-term assets 286,918 265,288 Total assets $ 655,610 $ 591,563 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt and current portion of long-term debt $ 591 $ 10,700 Trade accounts payable and accrued expenses 89,406 68,087 Due to related parties 4,186 3,857 Dividends payable 3,143 3,141 Contract liability – current portion 58,974 45,213 Other current liabilities 24,379 24,017 Total current liabilities $ 180,679 $ 155,015 Long-term liabilities: Deferred income taxes $ 3,403 $ 3,417 Contract liability – non-current 47 78 Long-term debt 184,268 188,355 Total long-term liabilities 187,718 191,850 Total liabilities $ 368,397 $ 346,865 SHAREHOLDERS’ EQUITY Preferred shares, $0.00 01 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively $ - $ - Ordinary shares, $0.00 01 par value, 100,000,000 shares authorized, 47,674,773 and 47,674,773 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 5 5 Legal Reserves 1,458 2,273 Additional paid-in capital 219,290 219,290 Retained earnings 139,709 91,045 Accumulated other comprehensive loss (74,404) (68,751 ) Shareholders’ equity attributable to controlling interest 286,058 243,862 Shareholders’ equity attributable to non-controlling interest 1,155 836 Total shareholders’ equity 287,213 244,698 Total liabilities and shareholders’ equity $ 655,610 $ 591,563
Tecnoglass Inc. and 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, 2022 2021 2022 2021 Operating revenues: External customers $ 168,657 $ 121,401 $ 302,679 $ 232,576 Related parties 467 351 993 731 Total operating revenues 169,124 121,752 303,672 233,307 Cost of sales 95,492 72,622 169,707 138,868 Gross profit 73,632 49,130 133,965 94,439 Operating expenses: Selling expense (16,616 ) (12,030 ) (29,984 ) (23,113 ) General and administrative expense (10,851 ) (8,332 ) (21,126 ) (17,125 ) Other professional fees (678 ) - (3,402 ) - Total operating expenses (28,145 ) (20,362 ) (54,512 ) ) (40,238 ) Operating income 45,487 28,768 79,453 54,201 Non-operating income (expenses), net 161 (229 ) 503 (70 ) Equity method income 1,669 788 3,249 1,879 Foreign currency transactions gains (loss) 2,503 190 (406 ) 145 Gain (loss) on debt extinguishment - 169 - (10,978 ) Interest expense and deferred cost of financing (1,715 ) (2,442 ) (3,183 ) (5,964 ) Income before taxes 48,105 27,244 79,616 39,213 Income tax (provision) (14,692 ) (7,601 ) (25,250 ) (11,289 ) Net income $ 33,413 $ 19,643 $ 54,366 $ 27,924 (Loss) Income attributable to non-controlling interest (219 ) (51 ) (319 ) (140 ) Income attributable to parent $ 33,194 $ 19,592 $ 54,047 $ 27,784 Comprehensive income: Net income $ 33,413 $ 19,643 $ 54,366 $ 27,924 Foreign currency translation adjustments (23,621 ) (1,185 ) (9,987 ) (16,819 ) Change in fair value derivative contracts 1,710 - 4,332 (159 ) Total comprehensive income $ 11,502 $ 18,458 $ 48,711 $ 10,946 Comprehensive (loss) income attributable to non-controlling interest (219 ) (51 ) (319 ) (140 ) Total comprehensive income attributable to parent $ 11,283 $ 18,407 $ 48,392 $ 10,806 Basic income per share $ 0.70 $ 0.41 $ 1.14 $ 0.59 Diluted income per share $ 0.70 $ 0.41 1 $ 1.14 $ 0.59 Basic weighted average common shares outstanding 47,674,773 47,674,773 47,674,773 47,674,773 Diluted weighted average common shares outstanding 47,674,773 47,674,773 47,674,773 47,674,773
Tecnoglass Inc. and Subsidiaries Consolidated Statements of Cash Flows ( I n thousands) ( Una udited )
Six months ended June 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 54,366 $ 27,924 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Allowance for credit losses 580 748 Depreciation and amortization 10,462 10,515 Deferred income taxes (1,016 ) 424 Equity method income (3,249 ) (1,879 ) Deferred cost of financing 726 623 Other non-cash adjustments 6 (19 ) Loss on debt extinguishment - 2,333 Unrealized currency translation losses 911 2,555 Changes in operating assets and liabilities: Trade accounts receivable (4,792 ) (6,069 ) Inventories (31,343 ) (2,082 ) Prepaid expenses (690 ) (2,015 ) Other assets 1,652 (6,718 ) Trade accounts payable and accrued expenses 16,489 23,375 Accrued interest expense (1 ) (7,171 ) Taxes payable 2,260 3,389 Labor liabilities 125 (132 ) Other liabilities (2,047 ) (342 ) Contract assets and liabilities 17,538 14,677 Related parties 1,020 (23 ) CASH PROVIDED BY OPERATING ACTIVITIES $ 62,997 $ 60,113 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments - 166 Proceeds from sale of property and equipment - 7 Purchase of investments (933 ) (49 ) Acquisition of property and equipment (26,250 ) (18,325 ) CASH USED IN INVESTING ACTIVITIES $ (27,183 ) $ (18,201 ) CASH FLOWS FROM FINANCING ACTIVITIES Cash dividend (6,196 ) (2,621 ) Loss on debt extinguishment - call premium - (8,610 ) Deferred financing transaction costs - (88 ) Proceeds from debt 241 221,146 Repayments of debt (15,367 ) (216,676 ) CASH USED IN FINANCING ACTIVITIES $ (21,322 ) $ (6,849 ) Effect of exchange rate changes on cash and cash equivalents $ (883 ) $ (2,334 ) NET INCREASE IN CASH 13,609 32,729 CASH - Beginning of period 85,011 67,668 CASH - End of period $ 98,620 $ 100,397 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 2,387 $ 12,286 Income Tax $ 7,552 $ 9,471 NON-CASH INVESTING AND FINANCING ACTIVITES: Assets acquired under debt or supplier credit $ 5,835 $ 937
Revenues by Region ( Amounts in thousands ) ( Una udited )
Three months ended Twelve months ended June 30, June 30, 2022 2021 % Change 2022 2021 % Change Revenues by Region United States 161,478 109,879 47.0 % 534,103 393,177 35.8 % Colombia 4,816 8,166 -41.0 % 19,385 31,717 -38.9 % Other Countries 2,830 3,708 -23.7 % 13,662 14,689 -7.0 % Total Revenues by Region 169,124 121,752 38.9 % 567,150 439,583 29.0 %
Reconciliation of Non-GAAP Performance Measures to GAAP Performance Measures ( I n thousands ) ( Una udited )
The Company believes that total revenues with foreign currency held neutral non-GAAP performance measures, which management uses in managing and evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non‑GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States.
Three months ended Twelve months ended June 30, June 30, 2022 2021 % Change 2022 2021 % Change Total Revenues with Foreign Currency Held Neutral 169,417 121,752 39.1 % 568,714 439,583 29.4 % Impact of changes in foreign currency (293 ) - (1,564 ) - Total Revenues, As Reported 169,124 121,752 38.9 % 567,150 439,583 29.0 %
Currency impacts on total revenues for the current quarter have been derived by translating current quarter revenues at the prevailing average foreign currency rates during the prior year quarter, as applicable.
Reconciliation of Adjusted EBITDA and Adjusted n et (loss) i ncome to n et (loss) i ncome (In thousands, except share and per share data) ( U naudited)
Adjusted EBITDA and adjusted net (loss) income are not measures of financial performance under generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA and adjusted net (loss) income, in addition to operating profit, net (loss) income and other GAAP measures, is useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance. Investors should recognize that Adjusted EBITDA and adjusted net (loss) income might not be comparable to similarly-titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP.
Reconciliations of the non-GAAP measures used in this press release are included in the tables attached to this press release, to the extent available without unreasonable effort. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures.
A reconciliation of Adjusted net (loss) income and Adjusted EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, with amounts in thousands:
Three months ended Six months ended Jun 30, Jun 30, 2022 2021 2022 2021 Net (loss) income 33,413 19,642 54,366 27,924 Less: Income (loss) attributable to non-controlling interest (219 ) (51 ) (319 ) (140 ) (Loss) Income attributable to parent 33,194 19,591 54,047 27,784 Foreign currency transactions losses (gains) (2,503 ) (190 ) 406 (145 ) Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other) 646 975 1,409 2,258 Non Recurring professional fees 678 - 3,402 - Extinguishment of debt - Call Option Premium - - - 8,610 Extinguishment of debt - Deferred Costs - (169 ) - 2,368 Joint Venture VA (Saint Gobain) adjustments 936 68 972 147 Change in FV of Hedging Derivatives - 3 - (182 ) Tax impact of adjustments at statutory rate 73 (206 ) (1,857 ) (3,917 ) Adjusted net (loss) income 33,024 20,072 58,379 36,923 Basic income (loss) per share 0.70 0.41 1.13 0.58 Diluted income (loss) per share 0.70 0.41 1.13 0.58 Diluted Adjusted net income (loss) per share 0.69 0.42 1.22 0.77 Diluted Weighted Average Common Shares Outstanding in thousands 47,675 47,675 47,675 47,675 Basic weighted average common shares outstanding in thousands 47,675 47,675 47,675 47,675 Diluted weighted average common shares outstanding in thousands 47,675 47,675 47,675 47,675 Three months ended Six months ended Jun 30, Jun 30, 2022 2021 2022 2021 Net (loss) income 33,413 19,643 54,366 27,924 Less: Income (loss) attributable to non-controlling interest (219 ) (51 ) (319 ) (140 ) (Loss) Income attributable to parent 33,194 19,592 54,047 27,784 Interest expense and deferred cost of financing 1,715 2,442 3,183 5,964 Income tax (benefit) provision 14,692 7,601 25,250 11,289 Depreciation & amortization 5,211 5,218 10,462 10,507 Foreign currency transactions losses (gains) (2,503 ) (190 ) 406 (145 ) Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other) 646 975 1,409 2,003 Non Recurring professional fees 678 - 3,402 - Extinguishment of debt - Call Option Premium - - - 8,610 Extinguishment of debt - Deferred Costs - (169 ) - 2,368 Joint Venture VA (Saint Gobain) EBITDA adjustments 936 503 1,761 1,341 Change in FV of Hedging Derivatives - 3 - (182 ) Adjusted EBITDA 54,569 35,975 99,920 69,539