Tecnoglass Reports Record First Quarter 2021 Results

– Strong Demand Drove Single-Family Residential Revenues Up 71% Year-Over-Year, with 19% Growth in Commercial

Strong Demand Drove Single-Family Residential Revenues Up 71% Year-Over-Year, with 19% Growth in Commercial Revenues –

– Total Revenues Increase 27.0% Year-Over-Year to $110.9 Million, with 27.9% Growth in the U.S.

– Operational and Structural Advantages Produce Record Gross Margin of 40.7%, Up 590 Basis Points

– Net Profit of $8.2 Million, Inclusive of One-Time Extinguishment of Debt Costs; Adjusted Net Income1 of $16.8 Million, or $0.35 Per Diluted Share

– Record Adjusted EBITDA1 of $33.5 Million or 30.2% of Sales, Up 64.8% Year-Over-Year

Record Cash Flow From Operations of $29.0 Million, Marking 4 Straight Quarters of Exceptional Cash Generation and Supporting Further Leverage Reduction to 1.4x Net Debt to Adjusted EBITDA1

– Completes Debt Refinancing with Repayment of Senior Notes, Resulting in Estimated Annual Cash Interest Expense Savings of $11 Million

– Backlog Expands to a Record $552 Million, Up 1.1% Year-Over-Year

Raises Full Year 2021 Growth Outlook to Adjusted EBITDA1 of $115 Million to $125 Million on Total Revenues of $420 Million to $435 Million

BARRANQUILLA, Colombia, May 07, 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 first quarter ended March 31, 2021.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “I am extremely proud of our outstanding performance so far in 2021 and I have never been more optimistic about the future for Tecnoglass. We delivered record first quarter results across nearly all of our key operating metrics including total revenues, gross profit, operating profit, adjusted EBITDA1 and operating cash flow. This success was largely driven by the continued positive reception of our single family residential products, allowing for additional market share gains. Furthermore, our vertically integrated architectural glass platform and prior automation investments continue to deliver significant structural advantages amid tight labor and material availability impacting our industry. We are optimally positioned to efficiently control our supply chain, manufacture products with shorter lead times and best serve customers in what we expect to be a year of significant growth in demand. Moving forward, we remain confident in our ability to maintain our industry leading margins and gain additional share in the quarters ahead.”

Christian Daes, Chief Operating Officer of Tecnoglass, added, “In the first quarter, we were thrilled to see the positive momentum continue in our business as we reported a sharp acceleration of growth. Encouraging trends in housing starts and de-urbanization combined with our efforts to expand our customer relationships are all supporting the growth of our single-family residential revenue, which increased over 70% year-over-year. Additionally, we are pleased to see our large scale projects resuming activity, in line with improving fundamentals and the ABI index climbing higher into expansion territory for the second consecutive month in March. Looking ahead, our momentum has continued into April and May as new business wins and record levels of backlog leave us well positioned for further value creation.”

First Quarter 2021 Results

Total revenues for the first quarter of 2021 increased 27.0% to $110.9 million, compared to $87.3 million in the prior year quarter. U.S. revenues of $100.8 million, which represented 91% of total revenues, grew 27.9% compared to $78.8 million in the prior year quarter, driven by strong growth in residential activity, recovering 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, was $7.7 million, an increase of 18.4% compared to $6.5 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 first quarter of 2021 grew 48.4% to $45.1 million, representing a 40.7% gross margin, compared to gross profit of $30.4 million, representing a 34.9% gross margin in the prior year quarter. The 590 basis point improvement in gross margin mainly reflected a higher mix of revenue from manufacturing versus installation activity as Tecnoglass increased its mix of single family residential products, and included a full quarter of greater operating efficiencies from prior automation initiatives. Selling, general and administrative expense (“SG&A”) was $19.8 million compared to $17.3 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 was 17.8% compared to 19.8% 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 $8.2 million, or $0.17 per diluted share, in the first quarter of 2021 compared to net loss of $18.8 million, or $0.40 loss per diluted share, in the prior year quarter, including an after-tax non-cash foreign exchange transaction cost of $0.05 million in the first quarter of 2021 and a $32.5 million loss in the first 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. Additionally, during the quarter, Tecnoglass recorded a one-time $8.6 million call option payment and a $2.5 million non-cash extinguishment of debt charge related to the retirement of its senior notes.

Adjusted net income1 was $16.8 million, or $0.35 per diluted share, in the first quarter of 2021 compared to adjusted net income of $4.5 million, or $0.10 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 64.8% to $33.5 million, or 30.2% of total revenues in the first quarter of 2021, compared to $20.3 million, or 23.3% of total revenues, in the prior year quarter. The improvement was driven by higher sales and a stronger gross margin. Adjusted EBITDA1 in the first quarter 2021 included $0.8 million in contribution from the Company’s joint venture with Saint-Gobain, compared to $1.0 million in the prior year quarter.

Dividend

The Company declared a quarterly cash dividend of $0.0275 per share for the first quarter of 2021, which was paid on April 30, 2021 to shareholders of record as of the close of business on March 31, 2021.

Balance Sheet & Liquidity

The Company ended the first quarter of 2021 with cash and cash equivalents of $85.2 million compared to $36.8 million in the prior year quarter. Cash provided by operating activities of $29.0 million improved by $28.4 million compared to the prior year quarter, attributable to higher profitability as well as more efficient inventory and working capital management.

In the first quarter of 2021, the Company redeemed in full its $210 million unsecured senior notes, which bore interest at a rate of 8.2%, following the step down in redemption price at the end of January 2021. The $8.6 million call option was fully paid in January alongside with the redemption of the notes. Giving effect to the redemption of the senior notes, annualized savings on cash interest expense are expected to approximate $11 million annually. Interest expense in the first quarter 2021 declined by 38% year-over-year reflecting a partial quarter of lower borrowings costs following the redemption of the senior notes. On a pro forma basis giving effect to the pay down of the unsecured senior notes, the Company had total liquidity of approximately $145.2 million, including cash of $85.2 million and availability under its revolving credit facilities of $60 million.

Subsequent to the end of the first quarter and based on Tecnoglass’ leverage ratio as of March 31, 2021, the interest rate spread on the Company’s $300 million Senior Secured Credit Facility decreased 50 basis points to a spread of 2.50% in April 2021. Given the Company’s continued growth in adjusted EBITDA1 and strong cash generation, debt leverage continues to trend lower and now stands at 1.4x LTM net debt to adjusted EBITDA1.

Full Year 2021 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “We are increasing our full year outlook for 2021 total revenues and adjusted EBITDA1 growth to reflect Tecnoglass’ exceptional start to 2021, including strong demand into April and May and solid share gains. We now expect full year 2021 total revenues to grow to a range of $420 million to $435 million, primarily driven by strengthening U.S. demand. In addition, we now anticipate full year adjusted EBITDA1 to grow to a range of $115 million to $125 million, implying growth of approximately 23% at the midpoint, and margin expansion. Our vertically integrated business model is providing us with significant competitive advantages, including the ability to actively manage costs and provide exceptional delivery lead times which should allow us to deliver above market growth in the quarters ahead. As we look to the remainder of the year, we are preparing Tecnoglass to accommodate significant demand beyond our current outlook. We are firmly on track to deliver exceptional results and continue our record of strong cash flow generation for the full year 2021.”

Webcast and Conference Call

Management will host a webcast and conference call on Friday, May 7, 2021 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. 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 First 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: 13718684.

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.

1Adjusted net income (loss) and Adjusted EBITDA in both periods are reconciled in the table below.

Investor Relations:

Santiago Giraldo
CFO
305-503-9062
[email protected]

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

    March 31,     December 31,  
2021   2020  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 85,160       $ 66,899    
Investments     2,235         2,387    
Trade accounts receivable, net     90,033         88,368    
Due from related parties     7,420         8,574    
Inventories     71,317         80,742    
Contract assets – current portion     23,530         26,288    
Other current assets     13,537         13,545    
Total current assets   $ 293,232       $ 286,803    
Long-term assets:                
Property, plant and equipment, net   $ 141,967       $ 152,266    
Deferred income taxes     1,989         268    
Contract assets – non-current     11,023         10,228    
Due from related parties – long term     121         484    
Long-term trade accounts receivable     3,435         2,985    
Intangible assets     4,713         5,112    
Goodwill     23,561         23,561    
Long-term investments     48,626         47,535    
Other long-term assets     3,942         2,783    
Total long-term assets     239,377         245,222    
Total assets   $ 532,609       $ 532,025    
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Short-term debt and current portion of long-term debt   $ 13,748       $ 1,764    
Trade accounts payable and accrued expenses     44,969         42,178    
Accrued interest expense     6         7,175    
Due to related parties     4,333         4,750    
Dividends payable     1,352         1,352    
Contract liability – current portion     29,287         24,694    
Other current liabilities     9,778         9,630    
Total current liabilities   $ 103,473       $ 91,543    
Long-term liabilities:                
Deferred income taxes   $ 1,735       $ 3,170    
Long-term liabilities from related parties     651         645    
Contract liability – non-current     999         977    
Long-term debt     221,635         222,722    
Total long-term liabilities     225,020         227,514    
Total liabilities   $ 328,493       $ 319,057    
SHAREHOLDERS’ EQUITY                
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 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 March 31, 2021 and December 31, 2020, respectively     5         5    
Legal Reserves     2,273         2,273    
Additional paid-in capital     219,290         219,290    
Retained earnings     41,181         34,326    
Accumulated other comprehensive (loss)     (59,305 )       (43,512 )  
Shareholders’ equity attributable to controlling interest     203,444         212,382    
Shareholders’ equity attributable to non-controlling interest     672         586    
Total shareholdersequity     204,116         212,968    
Total liabilities and shareholders’ equity   $ 532,609       $ 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  
    March 31,
    2021     2020    
Operating revenues:              
External customers   $ 110,259     $ 86,106    
Related parties     621       1,192    
Total operating revenues     110,880       87,298    
Cost of sales     65,737       56,871    
Gross profit     45,143       30,427    
Operating expenses:              
Selling expense     (11,081 )     (9,668 )  
General and administrative expense     (8,669 )     (7,610 )  
Total operating expenses     (19,750 )     (17,278 )  
Operating income     25,393       13,149    
Non-operating income (expenses), net     159       (101 )  
Equity method income     1,091       260    
Foreign currency transactions losses     (45 )     (32,466 )  
Loss on extinguishment of debt     (11,147 )        
Interest expense and deferred cost of financing     (3,522 )     (5,643 )  
Income (loss) before taxes     11,929       (24,801 )  
Income tax (provision) benefit     (3,677 )     6,133    
Net income (loss)   $ 8,252     $ (18,668 )  
Income attributable to non-controlling interest     (86 )     (98 )  
Income (Loss) attributable to parent   $ 8,166     $ (18,766 )  
Comprehensive income:              
Net income (loss)   $ 8,252     $ (18,668 )  
Foreign currency translation adjustments     (15,635 )     (19,288 )  
Change in fair value derivative contracts     (159 )     (4,065 )  
Total comprehensive income   $ (7,542 )   $ (42,021 )  
Comprehensive income attributable to non-controlling interest     (86 )     (98 )  
Total comprehensive income (loss) attributable to parent   $ (7,628 )   $ (42,119 )  
Basic income (loss) per share   $ 0.17     $ (0.40 )  
Diluted income (loss) per share   $ 0.17     $ (0.40 )  
Basic weighted average common shares outstanding     47,674,773       46,117,631    
Diluted weighted average common shares outstanding     47,674,773       46,117,631    

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

    Three months ended March 31,  
  2021       2020    
                 
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income (loss)   $ 8,252       $ (18,668 )  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
Allowance for bad debts     537         368    
Depreciation and amortization     5,289         5,241    
Deferred income taxes     704         (9,031 )  
Equity method income     (1,091 )       (260 )  
Deferred cost of financing     255         440    
Other non-cash adjustments     (3 )       40    
Debt extinguishment     2,333            
Unrealized currency translation losses     2,411         37,533    
Changes in operating assets and liabilities:                
Trade accounts receivables     (3,419 )       664    
Inventories     2,564         (2,848 )  
Prepaid expenses     (592 )       69    
Other assets     (3,933 )       (4,940 )  
Trade accounts payable and accrued expenses     12,911         (6,274 )  
Accrued interest expense     (7,169 )       (4,546 )  
Taxes payable     1,699         3,113    
Labor liabilities     (559 )       (1,270 )  
Contract assets and liabilities     7,849         2,352    
Related parties     926         (1,435 )  
CASH PROVIDED BY OPERATING ACTIVITIES   $ 28,964       $ 548    
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Proceeds from sale of investments             193    
Purchase of investments     (42 )       (137 )  
Acquisition of property and equipment     (5,696 )       (6,469 )  
CASH USED IN INVESTING ACTIVITIES   $ (5,738 )     $ (6,413 )  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Cash dividend     (1,311 )          
Debt extinguishment – Call Premium     (8,610 )          
Deferred financing transaction costs     (89 )          
Proceeds from debt     221,118         14,353    
Repayments of debt     (213,180 )       (15,073 )  
CASH USED IN FINANCING ACTIVITIES   $ (2,072 )     $ (720 )  
                 
Effect of exchange rate changes on cash and cash equivalents   $ (2,893 )     $ (4,453 )  
                 
NET INCREASE (DECREASE) IN CASH     18,261         (11,038 )  
CASH – Beginning of period     66,899         47,862    
CASH – End of period   $ 85,160       $ 36,824    
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                
Cash paid during the period for:                
Interest   $ 10,268       $ 9,282    
Income Tax   $ 2,507       $ 1,986    
                 
NON-CASH INVESTING AND FINANCING ACTIVITES:                
Assets acquired under credit or debt   $ 745       $ 991    

Revenues by Region
(Amounts in thousands)
(Unaudited)

  Three months ended   Twelve months ended
  Mar 31,   Mar 31,
2021   2020   % Change   2021   2020   % Change
Revenues by Region                      
United States 100,807   78,798   27,9 %   363,476   354,820   2,4 %
Colombia 7,665   6,472   18,4 %   24,495   45,783   -46,5 %
Other Countries 2,407   2,028   18,7 %   10,534   10,441   0,9 %
Total Revenues by Region 110,880   87,298   27,0 %   398,505   411,043   -3,1 %

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

The Company believes that total revenues with foreign currency held neutral 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
  Mar 31,
  2021       2020   % Change
           
Total Revenues with Foreign Currency Held Neutral $ 110,917     $ 87,298   27,1 %
Impact of changes in foreign currency   (37 )       (0,0 %)
Total Revenues, as Reported $ 110,880     $ 87,298   27,0 %

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 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   Twelve months ended
      Mar 31,   Mar 31,
      2021     2020     2021     2020  
                   
Net (loss) income     8,252     (18,668 )   51,105     (1,730 )
Less: Income (loss) attributable to non-controlling interest     (86 )   (98 )   37     161  
(Loss) Income attributable to parent     8,166     (18,766 )   51,142     (1,569 )
Foreign currency transactions losses (gains)     45     32,466     (23,783 )   36,725  
Deferred cost of financing     255     440     1,713     1,671  
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     1,026     895     4,224     5,501  
Extinguishment of debt – Call Option Premium     8,610         8,610      
Extinguishment of debt – Deferred Costs     2,537         2,537      
Joint Venture VA (Saint Gobain) adjustments     79     372     1,650     1,709  
Change in FV of Hedging Derivatives     (185 )       1,809      
Tax impact of adjustments at statutory rate     (3,710 )   (10,935 )   1,284     (14,594 )
Adjusted net (loss) income     16,823     4,472     49,186     29,443  
                   
Basic income (loss) per share     0,17     (0,40 )   1,10     (0,04 )
Diluted income (loss) per share     0,17     (0,40 )   1,10     (0,04 )
                   
Diluted Adjusted net income (loss) per share     0,35     0,10     1,06     0,66  
                   
Diluted Weighted Average Common Shares Outstanding in thousands     47,675     46,118     46,398     44,464  
Basic weighted average common shares outstanding in thousands     47,675     46,118     46,398     44,464  
Diluted weighted average common shares outstanding in thousands     47,675     46,118     46,398     44,464  
                   
                   
      Three months ended   Twelve months ended
      Mar 31,   Mar 31,
      2021     2020     2021     2020  
                   
Net (loss) income     8,252     (18,668 )   51,105     (1,730 )
Less: Income (loss) attributable to non-controlling interest     (86 )   (98 )   37     161  
(Loss) Income attributable to parent     8,166     (18,766 )   51,142     (1,569 )
Interest expense and deferred cost of financing     3,522     5,643     19,550     22,862  
Income tax (benefit) provision     3,677     (6,133 )   22,811     1,916  
Depreciation & amortization     5,289     5,241     20,638     22,135  
Foreign currency transactions losses (gains)     45     32,466     (23,783 )   36,725  
Non Recurring expenses (extinguishment of debt, bond issuance costs, provision for bad debt, acquisition related costs and other)     1,026     895     4,224     5,501  
Extinguishment of debt – Call Option Premium     8,610         8,610      
Extinguishment of debt – Deferred Costs     2,537         2,537      
Joint Venture VA (Saint Gobain) EBITDA adjustments     838     999     3,415     4,047  
Change in FV of Hedging Derivatives     (185 )       1,809      
Adjusted EBITDA     33,525     20,345     110,953     91,617