Tecnoglass Reports First Quarter 2024 Results
Date: May 09, 2024
Tecnoglass, Inc. (NYSE: TGLS) (“Tecnoglass” or the “Company”), a leading producer of high-end aluminum and vinyl windows and architectural glass for the global residential and commercial end markets, today reported financial results for the first quarter ended March 31, 2024.
José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “I am proud of our team’s resilience to start off 2024. In light of macroeconomic challenges, we maintained a steady course with our multi-family/commercial business executing against our record backlog while our single-family residential sales channel experienced inflationary constraints on consumer spending. That said, we were highly encouraged to see record levels of single-family residential orders during March and April, which we believe signals a positive shift in demand as we move into the second quarter. Our strategic emphasis on working capital efficiency has resulted in strong free cash flow generation, despite challenges in year-over-year margins caused by lower operating leverage, a negative foreign exchange impact and unfavorable revenue mix from increased installation and stand-alone product sales. Despite general macro headwinds, we continue to see a strong book to build, with backlog hitting an all-time high once again, now building visibility well into 2025. We remain optimistic on the strength of our business, bolstered by vigorous quoting activity for our innovative vinyl windows and other offerings, strong customer partnerships, and substantial opportunities for geographic expansion in 2024 and beyond.”
Christian Daes, Chief Operating Officer of Tecnoglass, added, “Our performance in the first quarter reflects our adaptability amidst a dynamic operating landscape. We ended the quarter with another record multi-year backlog of $916 million, reflecting an expanding pipeline for multi-family/commercial projects into 2025. Customer interest in our vinyl products continues to look very encouraging based on quoting activity, and we are on track for deliveries to increase in the second half of 2024. Our strong backlog, strategic investments to broaden our product portfolio, and our best-in-class manufacturing capabilities give us confidence in our ability to drive further value creation in our business as we move forward.”
First Quarter 2024 Results
Total revenues for the first quarter of 2024 decreased 4.9% to $192.6 million compared to $202.6 million in the prior year quarter. Commercial revenues were up slightly, in line with scheduled project deliveries. Lower single-family residential revenues were impacted by slower activity resulting from end consumers experiencing higher interest rates and mortgage rates. Changes in foreign currency exchange rates had an adverse impact of $0.9 million on total revenues in the quarter.
Gross profit for the first quarter of 2024 was $74.7 million, representing a 38.8% gross margin, compared to gross profit of $107.8 million, representing a 53.2% gross margin, in the prior year quarter. The year-over-year change in gross margin reflected an unfavorable foreign exchange impact of nearly 800 basis points, reduced operating leverage on lower revenues, promotional activity on single-family residential products and an increased mix of installation and stand-alone product sales during the quarter partially related to the step down in single family activity during the period. Similar to the fourth quarter of 2023, margins were impacted by a cash effect of a strong Colombian Peso revaluation of approximately 18% year-over-year, and also by a non-cash effect related to an inventory mark-up associated with the valuation of inventory from when it was purchased in the fourth quarter of 2023 to when it was sold in the first quarter of 2024. The non-cash portion of the unfavorable currency effect during the quarter contrasted with a positive effect during the first quarter of 2023 and is related to the accounting of inventories in Pesos as the functional currency. On a sequential basis, gross margin compared to 42.6% in the fourth quarter of 2023 and was also impacted by a sequential Peso revaluation of approximately 5%.
Selling, general and administrative expense (“SG&A”) was $33.6 million for the first quarter of 2024 compared to $34.1 million in the prior year quarter, with the decrease primarily attributable to lower shipping and commission expenses, partially offset by higher personnel expenses given overall salary adjustments taking place at the beginning of the year. As a percent of total revenues, SG&A was 17.5% for the first quarter of 2024 compared to 16.8% in the prior year quarter, primarily due to lower revenues.
Net income was $29.7 million, or $0.63 per diluted share, in the first quarter of 2024 compared to net income of $48.2 million, or $1.01 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction loss of $0.2 million in the first quarter of 2024 and a $1.1 million loss in the first quarter of 2023. 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 $30.9 million, or $0.66 per diluted share, in the first quarter of 2024 compared to adjusted net income of $51.5 million, or $1.08 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, was $51.0 million, or 26.5% of total revenues, in the first quarter of 2024, compared to $85.8 million, or 42.4% of total revenues, in the prior year quarter. The change was primarily attributable to the aforementioned factors impacting gross margin as well as lower year-over-year revenues. Adjusted EBITDA1 included a $0.8 million contribution from the Company’s joint venture with Saint-Gobain, compared to $1.5 million in the prior year quarter.
Cash Generation, Capital Allocation and Liquidity
Cash provided by operating activities for the first quarter of 2024 was $33.4 million, primarily driven by a reduction in working capital. Capital expenditures of $9.9 million in the quarter included payments for previously purchased land for future potential capacity expansion, along with the amortization of a portion of previously disclosed investments in facilities and operational infrastructure.
During the quarter, the Company returned capital to shareholders through the payment of $4.2 million in cash dividends, which was subsequently increased by over 20% from the prior year quarter. Additionally, the Company has approximately $26 million remaining under the current share repurchasing program.
The Company ended the first quarter of 2024 with total liquidity of approximately $306.0 million, including $135.9 million of cash and cash equivalents and $170.0 million of availability under its revolving credit facilities. Given the Company’s strong cash generation, net debt leverage was a record low level of 0.1x net debt to LTM Adjusted EBITDA1, compared to 0.1x in the prior year.
ull Year 2024 Outlook
Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “We continue to anticipate growth in revenue for the full year and are introducing a range of scenarios based on market and company specific dynamics relevant to our outlook. Our base case scenario projects full year revenue of $875 million and Adjusted EBITDA of $267 million, within downside and upside scenarios that assume revenue growth of 2% and 9%, respectively, producing Adjusting EBITDA margins of 29% and 31%, respectively. These scenarios consider a variety of factors including the durability of the recent surge in our single-family residential product orders as the year progresses, an expected increase in vinyl sales, an increased mix of revenues from installation and stand-alone product sales, less volatile FX rates since the beginning of 2024, the timely execution of our multi-family/commercial backlog and a range of outcomes for U.S. federal interest rate decisions through year end. All three scenarios assume healthy growth in free cash flow year-over-year. We remain optimistic about the strength of our business, underpinned by a growing backlog and promising vinyl window demand, which we believe will drive market share expansion and further value creation.”
Webcast and Conference Call
Management will host a webcast and conference call on May 9, 2024, at 10:00 a.m. Eastern 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 1-844-826-3035 (domestic) or 1-412-317-5195 (international). Upon dialing in, please request to join the Tecnoglass First Quarter 2024 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 1-844-512-2921 (Domestic) or 1-412-317-6671 (International) and entering passcode: 10188243.
Source: Globe News Wire
https://www.globenewswire.com/en/news-release/2024/05/09/2878614/0/en/Tecnoglass-Reports-First-Quarter-2024-Results.html
