Tecnoglass Reports Record Third Quarter 2022 Results and Announces $50 Million Share Repurchase Program

Date: November 3rd, 2022

BARRANQUILLA, Colombia, Nov. 03, 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 third quarter ended September 30, 2022.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, “The strong efforts of our entire team led to another quarter of record results across nearly all metrics while operating through a complex macro environment. Demand for our high-performance architectural glass, window and aluminum products remains robust, with significant momentum in our single-family residential business, in addition to an acceleration in our commercial orders. We are set up to continue growing faster than the market as a result of our multi-year effort to diversify our business with new customers, products, end markets and geographies. We were especially pleased to achieve a record gross margin in excess of 50%. While this gross margin was well ahead of our normalized level, our performance demonstrates the power of our prior investments in automation and capacity enhancements, our unique, vertically-integrated platform and our strategic positioning in attractive markets. This gives us confidence that our current targeted investments to further modernize, automate and expand our operations will enable us to maintain short lead times, increase revenues and produce solid returns.”

José Manuel Daes continued, “The structural enhancements in our business, our diversified revenue mix, and our prudent working capital management have helped us generate 11 straight quarters of exceptional cash flow. Based on the Board’s confidence in our strategy and cash generation, we are pleased to announce today the authorization of a new $50 million share repurchase program as an additional avenue to build value in our Company. As we move forward, we believe our structural advantages and highly profitable growth strategy will allow us to continue generating exceptional cash flow as we look to deliver value for our shareholders.”

Christian Daes, Chief Operating Officer of Tecnoglass, added, “We are extremely pleased with our ability to produce another quarter of record results and above market growth. Our results reflect our ability to capitalize on strengthening commercial activity in attractive high growth markets in addition to capturing solid demand and share gains through the expansion of our single-family residential business. Our track record of successfully delivering high profile projects and maintaining superb lead times for our customers has earned us an increasing number of opportunities across the U.S., demonstrated by our expanding backlog of multifamily and commercial projects, up 21.1% year-over-year. We are also thrilled with the continued momentum across our business into the fourth quarter, which is reflected in our increased full year 2022 growth outlook. With our innovative product portfolio, strong industry relationships and structural competitive advantages, we believe we are on the path to continue growing faster than our end markets into 2023 and beyond.”

Third Quarter 2022 Results

Total revenues for the third quarter of 2022 increased 53.3% to $201.8 million compared to $131.7 million in the prior year quarter, driven by an increase in the Company’s commercial activity, strong growth in single-family residential activity and market share gains. Single-family residential revenues increased approximately 44% year-over-year, representing 42.5% of total revenues for the third 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 $0.7 million on both Colombia revenues and total revenues in the quarter.

Gross profit for the third quarter of 2022 nearly doubled to $105.3 million, representing a 52.2% gross margin, compared to gross profit of $51.5 million, representing a 39.2% gross margin in the prior year quarter. The 1,300 basis point improvement in gross margin mainly reflected operating leverage on higher sales, favorable pricing dynamics, greater operating efficiencies related to automation and a favorable FX trend given the recent strengthening of the US Dollar. Selling, general and administrative expense (“SG&A”) was $35.2 million compared to $21.7 million in the prior year quarter, with the majority of the increase attributable to higher shipping expenses as a result of a higher sales volume and higher shipping rates. Additionally, the Company incurred a one-time settlement expense related to a project contracted in 2016 that is now fully resolved. As a percent of total revenues, SG&A was 17.4% compared to 16.5% in the prior year quarter. Excluding the aforementioned settlement, SG&A as a percent of total revenues improved by 180 basis points compared to the prior year quarter.

Net income was $46.9 million, or $0.98 per diluted share, in the third quarter of 2022 compared to net income of $20.7 million, or $0.43 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction loss of $0.5 million in the third quarter of 2022 and a $0.2 million gain in the third 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 $48.0 million, or $1.01 per diluted share, in the third quarter of 2022 compared to adjusted net income of $21.2 million, or $0.45 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, more than doubled to $78.5 million, or 38.9% of total revenues, in the third quarter of 2022, compared to $38.5 million, or 29.2% of total revenues, in the prior year quarter. The improvement was driven by higher sales and a stronger gross margin. Adjusted EBITDA1 included a $0.9 million contribution from the Company’s joint venture with Saint-Gobain, compared to $0.8 million in the prior year quarter.

Balance Sheet & Liquidity

The Company ended the third quarter of 2022 with total liquidity of approximately $255 million, including cash and cash equivalents of $84 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 0.4 times net debt to LTM adjusted EBITDA1, compared to 0.9 times in the prior year quarter.

High-Return Capital Investments

During 2022, the Company initiated enhancements at its glass and aluminum facilities to increase production capacity and automate operations. Based on the timing of capital investments, the Company maintains its expectation to increase installed production capacity to an amount equivalent to over $800 million of annual sales by the end of 2022, followed by a further expansion of installed production capacity to an amount equivalent to approximately $950 million of annual sales by the end of the second quarter of 2023.

Dividend

The Company declared a quarterly cash dividend of $0.075 per share for the third quarter of 2022, representing a 15% increase from the previous dividend, which was paid on October 31, 2022 to shareholders of record as of the close of business on September 30, 2022.

Share Repurchase Program

On November 3, 2022, the Company’s Board of Directors authorized Tecnoglass to buy back up to $50 million of its common shares. The timing and amount of any share repurchases under the share repurchase program will be determined by Tecnoglass management at its discretion based on ongoing assessments of the capital needs of the business, the market price of Tecnoglass common stock and general market conditions. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, in block trades, trading plans in accordance with Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or any combination of such methods. Open market purchases will be made in compliance with the “safe harbor” provisions of Rule 10b-18 under the Exchange Act. The program does not obligate Tecnoglass to acquire any particular amount of its common stock, has no set expiration date and may be suspended or discontinued at any time at the Company’s discretion subject to applicable securities laws.

Full Year 2022 Outlook

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “Based on our exceptional third quarter performance and expectations for continued growth for our products through year-end, we are increasing our full year 2022 growth outlook for revenues and adjusted EBITDA1. We now expect 2022 revenues to grow to a range of $680 million to $700 million and for adjusted EBITDA1 to increase to a range of $240 million to $255 million. This implies adjusted EBITDA growth of approximately 67% at the midpoint. We expect to further build upon our strong track record of strategic execution and leverage our vertically integrated business model, which positions us to drive another year of record results and cash flow in the full year 2022.”

Webcast and Conference Call

Management will host a webcast and conference call on November 3, 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 provide conference entry code 487318.

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: 487318.

Source: Yahoo! Finance

https://finance.yahoo.com/news/tecnoglass-reports-record-third-quarter-110000609.html